{"id": "R46337", "title": "Transfer of Defense Articles: Sale and Export of U.S.-Made Arms to Foreign Entities", "released_date": "2020-04-30T00:00:00", "summary": ["The sale and export of U.S.-origin weapons to foreign countries (\"defense articles and defense services,\" officially) are governed by an extensive set of laws, regulations, policies, and procedures. Congress has authorized such sales under two laws:", "The Foreign Assistance Act (FAA) of 1961, 22 U.S.C. \u00c2\u00a72151, et seq. The Arms Export Control Act (AECA) of 1976, 22 U.S.C. \u00c2\u00a72751, et seq.", "The FAA and AECA govern all transfers of U.S.-origin defense articles and services, whether they are commercial sales, government-to-government sales, or security assistance/security cooperation grants (or building partnership capacity programs provided by U.S. military personnel). These measures can be provided by Title 22 (Foreign Relations) or Title 10 (Armed Services) authorities. Arms sold or transferred under these authorities are regulated by the International Traffic in Arms Regulations (ITAR) and the U.S. Munitions List (USML), which are located in Title 22, Parts 120-130 of the Code of Federal Regulations (CFR).", "The two main methods for the sale and export of U.S.-made weapons are the Foreign Military Sales (FMS) program and Direct Commercial Sales (DCS) licenses. Some other arms sales occur from current Department of Defense (DOD) stocks through Excess Defense Articles (EDA) provisions.", "For FMS, the U.S. government procures defense articles as an intermediary for foreign partners' acquisition of defense articles and defense services, which ensures that the articles have the same benefits and protections that apply to the U.S. military's acquisition of its own articles and services. For DCS, registered U.S. firms may sell defense articles directly to foreign partners though licenses and agreements received from the Department of State. Firms are still required to obtain State Department approval, and for major sales DOD review and congressional notification is required. In some cases where U.S. firms have entered into international partnerships to produce some major weapons systems, comprehensive export regulations under 22 CFR 126.14 are intended to allow exports and technical data for those systems without having to go through the licensing process.", "Congress has amended the FAA and AECA to restrict arms sales to foreign entities for a variety of reasons . These include restrictions on transfers to countries that violate human rights and states that support terrorism, as well as limitations on specific countries at certain times, such as any Middle East countries whose import of U.S. arms would adversely affect Israel's qualitative military edge. Arms transfers to Taiwan are governed under the Taiwan Relations Act of 1979, P.L. 96-8 , 22 U.S.C. \u00c2\u00a7 3301 et seq. Under the AECA, Congress can also overturn individual notified arms sales via a joint resolution . During the 116 th Congress, such joint resolutions were introduced in opposition to planned arms sales to Saudi Arabia, but did not pass .", "All U.S. defense articles and defense services sold, leased, or exported under the AECA are subject to end-use monitoring (to provide reasonable assurance that the recipient is complying with the requirements imposed by the U.S. government with respect to use, transfers, and security of the articles and services) to be conducted by the President (Section 40A of the AECA) to ensure compliance with U.S. arms export rules and policies. FMS transfers are monitored under DOD's Golden Sentry program and DCS transfers are monitored under the State Department's Blue Lantern program."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["The sale of U.S-origin armaments and other \"defense articles \" has been a part of national security policy since at least the Lend-Lease programs in the lead-up to U.S. involvement in World War II. Historically, Presidents have used sales of defense articles and services to foreign governments and organizations to further broad foreign policy goals, ranging from sales to strategically important countries during the Cold War, to building global counterterrorism capacity following the terrorist attacks of September 11, 2001.", "The sale of U.S. defense articles to foreign countries is governed by a broad set of statutes, public laws, federal regulations, and executive branch policies, along with international agreements. An interconnected body of legislative provisions, authorizations, and reporting requirements related to the transfer of U.S. defense articles appears in both the National Defense Authorization Acts (NDAA) and in the State Department, Foreign Operations, and Related Programs (SFOPS) Appropriations Acts. These laws reflect the roles that both the Department of State and the Department of Defense (DOD) take in the administration of the sale, export, and funding of defense articles to foreign countries, which can be found in both Title 22 (Foreign Relations) and Title 10 (Armed Services) of the United States Code . ", "Congress enacted the current statutory framework for the sale and export of defense articles to other countries mainly through two laws\u00e2\u0080\u0094The Foreign Assistance Act of 1961(FAA), 22 U.S.C \u00c2\u00a72151, et seq., and the Arms Export Control Act of 1976 (AECA), 22 U.S.C. \u00c2\u00a72751, et seq. Among other provisions, the FAA established broad policy guidelines for the overall transfer of defense articles and services from the United States to foreign entities (foreign countries, firms, and/or individuals) to include both sales and grant transfers, while the AECA also governs the sales of defense articles and services to those entities.", "This report describes the major statutory provisions governing the sale and export of defense articles\u00e2\u0080\u0094Foreign Military Sales (FMS) and Direct Commercial Sales (DCS)\u00e2\u0080\u0094and outlines the process through which those sales and exports are made. FMS is the program through which the U.S. government, through interaction with purchasers, acts as a broker to procure defense articles for sales to certain foreign countries and organizations, also called eligible purchasers . In DCS, the U.S. government does not act as a broker for the sale, but still must license it, unless export of the item is exempt from licensing according to regulations in the International Traffic in Arms Regulations (ITAR), contained in Subchapter M, 22 CFR 120-130, described below. The President designates what items are deemed to be defense articles or defense services, and thus subject to DCS licensing, via the U.S. Munitions List (USML). All persons (other than U.S. government personnel performing official duties) engaging in manufacturing, acting as a broker, exporting, or importing defense articles and services must register with the State Department according to ITAR procedures. ", "The State Department is required under the AECA to notify Congress 15 to 30 days prior to all planned FMS and DCS cases over a certain value threshold. Congress can, pursuant to the AECA, hold or restrict such sales via a joint resolution.", "The report also provides a select list of specific legislative limitations on arms sales and end use monitoring requirements found in the Arms Export Control Act. Future updates will consider policy implications and issues for Congress."], "subsections": [{"section_title": "Sales and Security Assistance/Cooperation Programs", "paragraphs": ["In FY2018, the latest year complete agency data is available, the value of authorized U.S. arms sales to foreign governments and export licenses issued totaled about $184.3 billion. Foreign entities purchased $47.71 billion in FMS cases and the value of privately contracted DCS authorizations licensed by the State Department (distinct from actual deliveries of licensed articles and services) totaled $136.6 billion ( Table 1 and Table 2 ). That same year, the State Department requested $7.09 billion (base and OCO) for all of its Title 22 security assistance authorities in its International Security Assistance account, while DOD executed $4.42 billion for Title 10 security cooperation authorities, totaling $11.51 billion, or 24.1% of what foreign entities spent on FMS and 8.4% of the amount of DCS approved licenses. "], "subsections": []}, {"section_title": "Security Assistance/Security Cooperation Programs", "paragraphs": ["While most arms sales and exports are paid for by the recipient government or entity, transfers funded by U.S. security assistance or security cooperation grants to foreign security forces comprise a small portion of arms exports, but they are beyond the scope of this report. These transfers are generally considered foreign assistance, and are authorized pursuant to the FAA, annual National Defense Authorization Acts, and other authorities codified in Title 22 and Title 10 of the U.S. Code. With the exception of Title 10 authorities, the FAA and AECA also govern all of the transfers of U.S.-origin defense articles and services, whether they are commercial sales, government-to-government sales, or security assistance/security cooperation. ", "Major Title 22 grant-based security assistance authorities pertaining to defense articles are", "Foreign Military Financing (FMF), Nonproliferation, Anti-Terrorism, Demining, and Related Programs (NADR), Peacekeeping Operations (PKO).", "Major Title 10 grant-based security cooperation authorities are", "Authority to Build the Capacity of Foreign Security Forces (\"333 authority\"), Defense Institution Reform Initiative (DIRI), Ministry of Defense Advisors (MDOA) program, and Southeast Asia Maritime Security Initiative (MSI).", "DOD, through its Defense Security Cooperation Agency (DSCA), executes most security assistance and security cooperation programs. FMF, IMET, EDA, and equipment lease cases involving the transfer of U.S-origin arms are treated as FMS cases and reported as such by DSCA. Cases executed pursuant to Title 10 authorities are also treated as FMS cases, but are referred to by practitioners as \"pseudo-FMS\" cases because they often involve a focus on training of foreign forces as well as on the transfer of arms."], "subsections": []}]}, {"section_title": "Sales and Exports of U.S. Defense Articles in Statute, Administration Policy, and Regulation", "paragraphs": ["The broad set of statutes, public laws, federal regulations, executive branch policies, and international agreements governing the sale of U.S. defense articles to foreign countries include the following . "], "subsections": [{"section_title": "The Foreign Assistance Act of 1961 and the Arms Export Control Act of 1976", "paragraphs": ["As noted above, the primary statutes covering the sale and export of U.S. defense articles to foreign countries are the FAA (P.L. 87-195, as amended) and AECA ( P.L. 90-629 , as amended) . The FAA expresses, as U.S. policy, that", "the efforts of the United States and other friendly countries to promote peace and security continue to require measures of support based upon the principle of effective self-help and mutual aid, [and that its purpose is] to authorize measures in the common defense against internal and external aggression, including the furnishing of military assistance, upon request, to friendly countries and international organizations. ", "The AECA states that", "it is the sense of Congress that all such sales be approved only when they are consistent with the foreign policy of the United States, the purposes of the foreign assistance program of the United States as embodied in the Foreign Assistance Act of 1961, as amended, the extent and character of the military requirement and the economic and financial capability of the recipient country, with particular regard being given, where appropriate, to proper balance among such sales, grant military assistance, and economic assistance as well as to the impact of the sales on programs of social and economic development and on existing or incipient arms races.", "The FAA also establishes the U.S. policy for how recipient countries are to utilize defense articles sold or otherwise transferred. Section 502 states that ", "defense articles and defense services to any country shall be furnished solely for internal security (including for antiterrorism and nonproliferation purposes), for legitimate self-defense, to permit the recipient country to participate in regional or collective arrangements or measures consistent with the Charter of the United Nations, or otherwise to permit the recipient country to participate in collective measures requested by the United Nations for the purpose of assisting foreign military forces in less developed friendly countries (or the voluntary efforts of personnel of the Armed Forces of the United States in such countries) to construct public works or to engage in other activities helpful to the economic and social development of such friendly countries.", "Section 22 of the AECA, provides the statutory basis for the U.S. Foreign Military Sales program and allows the U.S. government to interact with purchaser as a broker to procure defense articles for sales to certain foreign countries and organizations, also called eligible purchasers . Under this provision, the President may, without requirement for charge to any appropriation or contract authorization, enter into contracts to sell defense articles or defense services to a foreign country or international organization if it provides the U.S. government with a dependable undertaking to pay the full amount of the contract. ", "Section 38 of the AECA furthermore provides the statutory basis for the U.S. Direct Commercial Sales of defense articles and services. Under this provision, the U.S. government does not act as a broker for the sale, but still must license it, unless specifically provided for in regulations in the International Traffic in Arms Regulations, contained in Subchapter M, 22 CFR 120-130, described below. The President designates what items are deemed to be defense articles or defense services, and thus subject to DCS licensing, via the U.S. Munitions List. All persons (other than U.S. government personnel performing official duties) engaging in manufacturing, acting as a broker, exporting, or importing defense articles and services must register with the State Department according to ITAR procedures. The provision also requires the President to review the items on the USML and to notify the House Foreign Affairs Committee, the Senate Foreign Relations Committee, and the Senate Banking Committee if any items no longer warrant export controls, pursuant to the ITAR."], "subsections": []}, {"section_title": "National Security Presidential Memorandum Regarding U.S. Conventional Arms Transfer Policy: NSPM-10", "paragraphs": ["In April 2018, the Trump Administration, citing the AECA, issued a National Security Presidential Memorandum, NSPM-10, outlining its policy concerning the transfer of conventional arms. The memorandum reflects many of the policy statements of the FAA and AECA in aiming to \"bolster the security of the United States and our allies and partners,\" while preventing proliferation by exercising restraint and continuing to participate in multilateral nonproliferation arrangements such as the Missile Technology Control Regime (MTCR) and Wassenaar Arrangement on Export Controls for Conventional Arms and Dual-Use Goods and Technologies. It explicitly commits the U.S. government to continue to meet the requirements of all applicable statues, including the AECA, the FAA, the International Emergency Economic Powers Act, and the annual NDAAs. NSPM-10 also prioritizes efforts to \"increase trade opportunities for United States companies, including by supporting United States industry with appropriate advocacy and trade promotion activities and by simplifying the United States regulatory environment.\"", "In addition, NSPM-10 directs the executive branch to consider the following in making arms transfer decisions:", "the national security of the United States, including the transfer's effect on the technological advantage of the United States; the economic security of the United States and innovation; relationships with allies and partners; human rights and international humanitarian law; and nonproliferation implications."], "subsections": []}, {"section_title": "Title 22, Code of Federal Regulations, Foreign Relations", "paragraphs": ["The AECA, Section 38, also authorizes the President to issue regulations on the import and export of defense articles. As noted above, the catalog of defense articles subject to these regulations is called the United States Munitions List. The USML is found in federal regulations at 22 CFR 121. The series of federal regulations for importing and exporting of defense articles\u00e2\u0080\u0094the International Traffic in Arms Regulations\u00e2\u0080\u0094is contained in Subchapter M, 22 CFR 120-130. The USML lists defense articles by category and identifies which of those articles are \"significant military equipment\" further restricted by provisions in the AECA.", "The President has delegated authority for administering the USML and associated regulations to the Secretary of State, who in turn has delegated this authority to the Deputy Assistant Secretary of State for Defense Trade Controls in the Bureau of Political-Military Affairs (PM). The Directorate of Defense Trade Controls (DDTC) is responsible for ensuring that commercial exports of defense articles and defense services advance U.S. national security objectives. DDTC also administers a public web portal for U.S. firms seeking assistance with exporting defense articles and services."], "subsections": []}, {"section_title": "DOD's Security Assistance Management Manual", "paragraphs": ["The Department of Defense has a substantial role in the sale of defense articles to foreign countries through FMS, which DOD administers in coordination with the Department of State mainly through the Defense Security Cooperation Agency. DSCA provides procedures for FMS and certain other transfers of defense articles and defense services to foreign entities in its Security Assistance Management Manual (SAMM). The SAMM is used mainly by the military services, the Office of the Secretary of Defense, Special Operations Command (SOCOM), the regional combatant commanders, and country teams in U.S. embassies overseas, and it may also be consulted by foreign countries and U.S. defense contractors. The SAMM also provides the timelines and methods for coordinating FMS, cases with the State Department."], "subsections": []}]}, {"section_title": "Sales and Exports of U.S. Defense Articles in International Agreements25", "paragraphs": ["The United States participates in two international agreements that broadly affect the transfer of U.S. defense articles: The Missile Technology Control Regime and the Wassenaar Arrangement on Export Controls for Conventional Arms and Dual-Use Goods and Technologies. Other international agreements, such as the Treaty on the Nonproliferation of Nuclear Weapons (NPT), the Convention on the Physical Protection of Nuclear Material, the Chemical Weapons Convention, and the Biological and Toxin Weapons Convention, may limit exports of defense-related material, but only material linked to the development of nuclear, chemical, and biological weapons."], "subsections": [{"section_title": "Missile Technology Control Regime", "paragraphs": ["The Missile Technology Control Regime, while not a treaty, is an informal and voluntary association of countries seeking to reduce the number of systems capable of delivering weapons of mass destruction (other than manned aircraft), and seeking to coordinate national export licensing efforts aimed at preventing their proliferation. The MTCR was originally established in 1987 by Canada, France, Germany, Italy, Japan, the United Kingdom and the United States. Since then, participation has grown to 35 countries. ", "Member nations, by consensus, agree on common export guidelines (the MCTR Guidelines) on transfer of systems capable of delivering weapons of mass destruction, as well as an integral common list of controlled items (the MTCR Equipment, Software and Technology Annex). The annex is a list of controlled items \u00e2\u0080\u0093 both military and dual-use \u00e2\u0080\u0093 including virtually all key equipment, materials, software, and technology needed for the development, production, and operation of systems capable of delivering nuclear, biological, and chemical weapons. The annex is divided into \"Category I\" and \"Category II\" items. Partner countries exercise restraint when considering transfers of items contained in the annex, and such transfers are considered by each partner country on a case-by-case basis.", "The State Department, Directorate of Defense Trade Controls, administers the U.S. implementation of the MTCR and incorporates the MTCR guidelines and annex into the International Traffic in Arms Regulations and the U.S. Munitions List."], "subsections": []}, {"section_title": "The Wassenaar Arrangement", "paragraphs": ["In 1996, 33 countries, including the United States, agreed to the Wassenaar Arrangement on Export Controls for Conventional Arms and Dual-Use Goods and Technologies. The arrangement aims \"to contribute to regional and international security and stability, by promoting transparency and greater responsibility in transfers of conventional arms and dual-use goods and technologies, thus preventing destabilising accumulations.\" It maintains two control lists. One is a list of weapons, including small arms, tanks, aircraft, and unmanned aerial systems. The second is a list of dual-use technologies including material processing, electronics, computers, information security, and navigation/avionics. Dual-use, in this context, means items and technologies that can be used in both civilian and military applications.", "DDTC incorporates the Wassennar Arrangement into the ITAR and USML. Under the Export Control Act of 2018 (Subtitle B, Part 1, P.L. 115-232 ), the Department of Commerce is to \"establish and maintain a list\" of controlled items, foreign persons, and end-uses determined to be a threat to U.S. national security and foreign policy. The legislation also directs the Commerce Department to require export licenses; \"prohibit unauthorized exports, re-exports, and in-country transfers of controlled items\"; and \"monitor shipments and other means of transfer.\""], "subsections": []}]}, {"section_title": "Foreign Military Sales Process", "paragraphs": ["The FMS program is the U.S. government-brokered method for delivering U.S. arms to eligible foreign purchasers, normally friendly nations, partner countries, and allies. The program is authorized through the AECA, with related authorities delegated by the President, under Executive Order 13637, to the Secretaries of State, Defense, and Commerce. ", "The State Department (DOS) is responsible for the export (and temporary import) of defense articles and\u00c2\u00a0services governed by the AECA, and reviews and submits to Congress an annual Congressional Budget Justification (CBJ) for security assistance. This also includes an annual estimate of the total amount of sales and licensed commercial exports expected to be made to each foreign nation as required by 22 U.S.C \u00c2\u00a72765(a)(2)).", "DOD generally implements the FMS program as a military-to-military program and serves as intermediary for foreign partners' acquisition of U.S. defense articles and services. Using what is commonly called the Total Package Approach , U.S. security assistance organizations must offer, in addition to specific defense articles, a sustainment package to help the buyer maintain and operate the article(s) effectively and in accord with U.S. intent. DOD follows the Defense Federal Acquisition Regulation Supplement (DFARS), except where deviations are authorized. Acquisition on behalf of eligible FMS purchasers must be in accordance with DOD regulations and other applicable U.S. government procedures. This arrangement affords the foreign purchaser the same benefits and protections that apply to DOD procurement, and it is one of the principal reasons why foreign governments and international organizations might choose to procure defense articles through FMS. FMS requirements may be consolidated with U.S. requirements or placed on separate contracts, whichever is more expedient and cost-effective.", "Purchasers must agree to pay in U.S. dollars, by converting their own national currency or, under limited circumstances, though reciprocal arrangements. When the purchase cannot be financed by other means, credit financing or credit guarantees can be extended if allowed by U.S. law. FMS cases can also be directly funded by DOS using Foreign Military Financing appropriations. "], "subsections": [{"section_title": "Letters of Request (LOR) Start the Process", "paragraphs": ["When an eligible foreign purchaser (government or otherwise) decides to purchase or otherwise obtain a U.S. defense article or service, it begins the process by making the official request in the form of a letter of request (LOR) (See Figure 1 for an illustration of the process from receipt to case closure.) The letter may take nearly any form, from a handwritten request to a formal letter, but it must be in writing. The purchaser submits the LOR to a U.S. security cooperation organization (SCO), normally an Office of Defense Cooperation nested within the U.S. Embassy in the country, or directly to DSCA or an implementing agency (IA). The IA is usually a military department or DOD agency (e.g., Army Security Assistance Command, Navy International Programs Office, Air Force International Affairs). The LOR can be submitted in-country or through the country's military and diplomatic personnel stationed in the United States. Unless an item has been designated as \"FMS Only,\" DOD is generally neutral as to whether a country purchases U.S.-origin defense articles/services through FMS or DCS (discussed below). The AECA gives the President discretion to designate which military end-items must be sold exclusively through FMS channels. This discretion is delegated to the Secretary of State under Executive Order 13637 and, as a matter of policy, this discretion is generally exercised upon the recommendation of DOD. ", "Once the U.S. SCO receives the LOR, it transmits the request to the relevant agencies (e.g., DSCA, IA) for consideration and export licensing. U.S. government responses to LORs include price and availability (P&A) data, letters of offer and acceptance (LOAs), and other appropriate actions that respond to purchasers' requests. If the IA recommends disapproval, it notifies DSCA, which coordinates the disapproval with DOS, as required, and formally notifies the customer of the disapproval."], "subsections": []}, {"section_title": "Letters of Offer and Acceptance (LOA) Set Terms", "paragraphs": ["After approving the transfer of a defense article, the United States responds with a letter of offer and acceptance. The LOA is the legal instrument used by the USG to sell defense articles, defense services including training, and design and construction services to an eligible purchaser. The LOA itemizes the defense articles and services offered and when implemented becomes an official tender by the USG. Signed LOAs and their subsequent amendments and modifications are also referred to as \"FMS cases.\" The time required to prepare LOAs varies with the complexity of the sale. "], "subsections": []}, {"section_title": "Reports to Congress", "paragraphs": ["Within 60 days after the end of a quarter, the State Department, on behalf of the President, sends to the Speaker of the House, HFAC, and the chairman of the SFRC a report of, inter alia,", "LOAs offering major defense equipment valued at $1 million or more; all LOAs accepted and the total value; the dollar amount of all credit agreements with each eligible purchaser; and all licenses and approvals for exports sold for $1 million or more."], "subsections": []}, {"section_title": "Case Executions Deliver Articles", "paragraphs": ["The IA takes action to implement a case once the purchaser has signed the LOA and necessary documentation and provided any required initial deposit. The standard types of FMS cases are defined order, blanket order, and cooperative logistics supply support arrangement (CLSSA). A CLSSA usually accompanies sales of major defense articles, providing an arrangement for supplying repair parts and other services over a specified period after delivery of the articles. Defined order cases or lines are commonly used for the sale of items that require item-by-item security control throughout the sales process or that require separate reporting; blanket order cases or lines are used to provide categories of items or services (normally to support one or more end items) with no definitive listing of items or quantities. Defined order and blanket order cases are routinely used to provide hardware or services to support commercial end items, obsolete end items (including end items that have undergone system support buyouts), and selected non-U.S. origin military equipment. The case must be implemented in all applicable data systems (e.g., Defense Security Assistance Management System [DSAMS], Defense Integrated Financial System [DIFS], DSCA 1200 System, and Military Department [MILDEP] systems) before case execution occurs. The IA issues implementing instructions to activities that are involved in executing the FMS case. ", "Case execution is the longest phase of the FMS case life cycle. Case execution includes acquisition, logistics, transportation, maintenance, training, financial management, oversight, coordination, documentation, case amendment or modification, case reconciliation, and case reporting. Case managers, normally assigned to the IAs, track FMS delivery status in coordination with SCOs. FMS records, such as case directives, production or repair schedules, international logistics supply delivery plans, requisitions, shipping documents, bills of lading, contract documents, billing and accounting documents, and work sheets, are normally unclassified. All case transactions, financial and logistical, must be recorded as part of the official case file. Cost statements and large accounting spreadsheets must be supported by source documents. ", "LOA requirements are fulfilled through existing U.S. military logistics systems. With the exception of excess defense articles (EDA) or obsolete equipment, items are furnished only when DOD plans to ensure logistics support for the expected item service life. This includes follow-on spare parts support. If an item will not be supported through its remaining service life, including EDA and obsolete defense articles, an explanation should be included in the LOA.", "FMS cases may be amended or modified to accommodate certain changes. An amendment is necessary when a change requires purchaser acceptance. The scope of the case is a key issue for the IA to consider in deciding whether to prepare an amendment, modification, or new LOA. In defined order cases, scope is limited to the quantity of items or described services, including specific performance periods listed on the LOA. In blanket order cases, scope is limited to the specified item or service categories and the case or line dollar value. In CLSSAs, scope is limited by the LOA description of end items to be supported and dollar values of the cases. A scope change takes place when the original purpose of a case line or note changes. U.S. government unilateral changes to an FMS case are made by a modification and do not require acceptance by the purchaser."], "subsections": []}, {"section_title": "Customs Clearance", "paragraphs": ["In all FMS cases, the firms then ship the defense articles to the foreign partner via a third-party freight forwarding company. The security cooperation organization, part of the U.S. embassy country team, may receive the item and hand it over to the purchaser, or the purchaser may receive it directly. The U.S. government and the purchaser's advanced planning for transportation of materiel is critical for case development and execution. DOD policy requires that the purchaser is responsible for transportation and delivery of its purchased materiel. Purchasers can use DOD distribution capabilities on a reimbursable basis at DOD reimbursable rates via the Defense Transportation System (DTS). Alternatively, purchasers may employ an agent, known as a Foreign Military Sales freight forwarder, to manage transportation and delivery from the point of origin (typically the continental United States) to the purchaser's desired destination. Ultimately, the purchaser is responsible for obtaining overseas customs clearances and for all actions and costs associated with customs clearances for deliveries of FMS materiel, including any intermediate stops or transfer points.", "Generally, title to FMS materiel is transferred to the purchaser upon release from its point of origin, normally a DOD supply activity, unless otherwise specified in the LOA. However, U.S. government security responsibility does not cease until the recipient's designated government representative assumes control of the consignment. "], "subsections": []}]}, {"section_title": "Direct Commercial Sales Process", "paragraphs": [], "subsections": [{"section_title": "DOS Role in DCS", "paragraphs": ["While an export license is not required for the FMS transfers, registered U.S. firms may sell defense articles directly to foreign partners via licenses received from the State Department. In this case, the request for defense articles and/or defense services may originate as a result of interaction between the U.S. firm and a foreign government, may be initiated through the country team in U.S. embassies overseas, or may be generated by foreign diplomatic or defense personnel stationed in the United States. A significant difference between DCS licenses and FMS cases is that in DCS, the U.S government does not participate in the sale or broker the defense articles or services for transfer by the U.S. government to the foreign country.", "While DCS originates between registered U.S. firms and foreign customers, an application for an export license goes through a review process similar to FMS ( Figure 2 , below). DOS and DOD have agency review processes that assess proposed DCS transfers for foreign policy, national security, human rights, and nonproliferation concerns. In order for a U.S. firm to export defense articles or services on the U.S. Munitions List, it must first register with the State Department, Directorate of Defense Trade Controls. It must then obtain export licenses for all defense articles and follow the International Traffic in Arms Regulations. Once granted, an export license is valid for four years, after which a new application and license are required.", "To export a defense article through DCS, a U.S. defense firm must comply with ITAR requirements. The three Directorates of the State Department's Bureau of Political-Military Affairs publish policy, issue licenses, and enforce compliance in accord with the ITAR in order to ensure commercial exports of defense articles and defense services advance U.S. national security and foreign policy objectives. If marketing efforts involve the disclosure of technical data or the temporary export of defense articles, the defense firm must also obtain the appropriate export license from DDTC. ", "DOD's Defense Technology Security Administration (DTSA) serves as a reviewing agency for the export licensing of dual-use commodities and munitions items and provides technical and policy assessments of export license applications. Specifically, it identifies and mitigates national security risks associated with the international transfer of critical information and advanced technology in order to maintain the U.S. military's technological edge and to support U.S. national security objectives. ", "The ITAR includes many exemptions from the licensing requirements. Some are self-executing by the exporting firm who is to use them and normally are based on prior authorizations. Other exemptions (for example, the exemption in 22 CFR 125.4(b)(1) regarding technical data) may be requested or directed by the supporting military department or DOD agency. "], "subsections": []}, {"section_title": "DOD Role in DCS", "paragraphs": ["In contrast to FMS, DOD does not directly administer sales or facilitate transportation of items purchased under DCS, although, unless the host country requests that purchase be made through FMS, DOD tries to accommodate a U.S. defense firm's preference for DCS, if articulated. In addition, DOD does not normally provide price quotes for comparison of FMS to DCS. If a company or country prefers that a sale be made commercially rather than via FMS, and when a company receives a request for proposal from a country and prefers DCS, the company may request that DSCA issue a DCS preference for that particular sale. The particulars of each recipient country, U.S. firm, and sale determine whether FMS or DCS is preferred.", "Before approving DCS preference for a specific transaction, DSCA considers the following:", "Items provided through blanket order and those required in conjunction with a system sale do not normally qualify for DCS preference. FMS procedures may be required in sales to certain countries and for sales financed with Military Assistance Program (MAP) funds or, in most cases, with FMF funds. The DSCA Director may also recommend to the DOS that it mandate FMS for a specific sale. DCS preferences are valid for one year; therefore, during this time, if the IA receives from the purchaser a request for pricing and availability (P&A) or an LOA for the same item, it should notify the purchaser of the DCS preference.", "U.S. firms may request defense articles and services from DOD to support a DCS to a foreign country or international organization. Defense articles must be provided pursuant to applicable statutory authority, including 22 U.S.C. 2770, which authorizes the sale of defense articles or defense services to U.S. companies at not less than their estimated replacement cost (or actual cost in the case of services). ", "The SCO chief and other relevant members of the country team normally meet with visiting U.S. defense industry representatives regarding their experiences in country. The SCO chief responds to follow-up inquiries from industry representatives with respect to any reactions from host country officials or subsequent marketing efforts by foreign competitors. The SCO chief alerts embassy staff to observe reactions of the host country officials on U.S. defense industry marketing efforts. As appropriate, the SCO chief can pass these reactions to the U.S. industry representatives. However, the SCO may not work on behalf of any specific U.S. firm; its only preference can be for purchasers to \"buy American.\" If the SCO chief believes that a firm's marketing efforts do not coincide with overall U.S. defense interests or have potential for damaging U.S. credibility and relations with the country, the SCO chief relays these concerns, along with a request for guidance, throughout the country team and to the Combatant Command, Military Department, and DSCA."], "subsections": []}]}, {"section_title": "Excess Defense Articles", "paragraphs": ["If a partner is unable to purchase, or wishes to avoid purchasing, a newly-manufactured U.S. defense article, it may request transfer of Excess Defense Articles from DOD to its designated recipient. EDA refers to DOD and United States Coast Guard (USCG)-owned defense articles that are no longer needed and, as a result, have been declared excess by the U.S. Armed Forces. This excess equipment is offered at reduced or no cost to eligible foreign recipients on an \"as is, where is\" basis. As such, EDA is a hybrid between sales and grant transfer programs. DOD states that the EDA program works best in assisting friends and allies to augment current inventories of like items with a support structure already in place. All FMS eligible countries can request EDA. An EDA grant transfer to a country must be justified to Congress for the fiscal year in which the transfer is proposed as part of the annual congressional justification documents for military assistance programs. There is no guarantee that any EDA offer will be made on a grant basis; each EDA transfer is considered on a case-by-case basis. EDA grants or sales that contain significant military equipment or with an original acquisition cost of $7 million or more require a 30-calendar day congressional notification.", "Title to EDA items transfers at the point of origin, except for items located in Germany; those EDA items transfer title at the nearest point of debarkation outside of Germany. All purchasers or grant recipients must agree that they will not transfer title or possession of any defense article or related training or other defense services to any other country without prior consent from DOS pursuant to 22 U.S.C. \u00c2\u00a72753 and 22 U.S.C. \u00c2\u00a72314. "], "subsections": []}, {"section_title": "Interagency Relationships in Arms Sales", "paragraphs": ["The decision-making and execution involved in a transfer of defense articles or services includes myriad stakeholders, from the President and Congress to small, two-person Security Cooperation Organizations in embassies around the world. Having granted to the President authority to carry out arms sales and exports, Congress oversees its conduct. In further delegation of authority, the Secretaries of State and Defense, through their departments, carry out functions outlined in statute, federal regulations, and executive orders."], "subsections": [{"section_title": "State Department Policy Prerogatives", "paragraphs": ["All security assistance programs are subject to the continuous supervision and general direction of the Secretary of State, to be consistent with U.S. foreign policy interests. DOS ensures partner and purchaser eligibility for arms transfer(s) and obtains required assurances from recipient countries and organizations. The State Department also reviews and approves export license requests for direct commercial sales of items on the United States Munitions List. As mentioned above, DOS submits to Congress, in its Congressional Budget Justification, an annual estimate of the total amount of transfers expected to be made to each foreign nation and an annual arms sale proposal report (Javits Report) required by law.", "Within the State Department, the Bureau of Political-Military Affairs (PM) is the main administrator for arms transfers, whether FMS or DCS. PM provides policy direction for sale and export of defense articles related to international security, security assistance, military operations, defense strategy and plans, and defense trade.", "Under PM, the Office of Regional Security and Arms Transfers (RSAT) manages the sale/transfer of U.S.-origin defense articles and services to foreign governments. PM/RSAT, which is responsible for ensuring that all FMS cases are properly reviewed within the State Department for consistency with U.S. foreign policy and national security objectives, receives all FMS cases from DSCA, DOD's FMS implementing agency. PM/RSAT officers coordinate with other department bureaus and offices and provide recommendations to PM leadership on whether to approve potential FMS sales. Finally, PM/RSAT officers work with PM leadership and DOD to make the required notifications, to include briefing congressional staff on the Javits Report.", "Each U.S. embassy country team, under the direction of the State Department and led by the Chief of Mission (usually the U.S. Ambassador), prepares an Integrated Country Strategy (ICS) detailing mission plans for engagements with the host country, including defense education, training, arms transfers, and other cooperation. Within the country team, the senior defense official (SDO) directs the preparation of the defense cooperation portion of ICS. The embassy's SCO (see footnote 41 ), normally called the Chief of the Office of Defense Cooperation (ODC Chief), annually forecasts and documents the budget for defense cooperation activities, based upon his or her own contacts with the host nation military and those of the SDO and other military stationed in-country. Both the SDO and ODC Chief work under the direct supervision of the Chief of Mission but report to, and are evaluated by, the geographic combatant command (COCOM) in the operational area where the host nation lies. They manage the delicate task of balancing the COCOM's view of necessary security cooperation and capacity-building activities with relevant State Department officials' views. The SDO and ODC Chief may submit their recommendations directly to both the Head of Mission and to the COCOM. Where there is a large ODC, with subordinate service representative offices, the service representatives may submit service-specific forecasts and budgets to their service and its implementing agency as well. The COCOM views may or may not be reflected in the mission's ICS submission, as the Head of Mission ultimately decides what the mission will forward. ", "Many countries that receive U.S.-made defense articles and services have organizations similar to an ODC in their embassies or consulates in the United States. They interact with both State Department and DOD officials, as well as U.S. defense contractors, to initiate and coordinate pre-LOR (for FMS) or pre-DCS actions. "], "subsections": []}, {"section_title": "DOD Policy and Implementation Role", "paragraphs": ["Notwithstanding the primary role of the State Department, DOD plays a central role in shaping arms sales policy and implementing arms transfers (as noted in sections above outlining the processes for FMS and DCS). DOD Directive 5132.03 promulgates DOD Policy and Responsibilities Relating to Security Cooperation, based on the National Defense Strategy and the National Military Strategy. ", "Within DOD security cooperation, the Theater Campaign Plan (TCP) balances U.S. government strategic imperatives with host nation military-to-military engagement. Each country section of the TCP identifies significant security cooperation initiatives planned for the country and articulates specific, measurable, attainable, relevant, and time-bound objectives in support of such initiatives. The regional COCOM's corresponding, subordinate country cooperation plans drive the specific transfers of defense articles and services, including major arms transfers and training events. The objectives set within these strategies take into account the host nation's security environment, political will, willingness and ability to protect sensitive information and technologies, and absorptive capacity, as well as policy and legal constraints.", "The COCOM then passes its recommendations for FMS and EDA arms transfers to the Chairman of the Joint Chiefs of Staff (CJCS) and to the Under Secretary of Defense for Policy (USD (P)) for inclusion in the integrated country strategy and the joint regional strategy; they also identify obstacles to execution of plans, including shortfalls in security cooperation authorities or resources, joint capability shortfalls, or shortfalls in partners' capabilities. The CJCS is generally charged with providing military advice to the Secretary of Defense concerning security cooperation. The CJCS and the USD(P) are charged with developing and managing a process to address obstacles to campaign plan execution that the COCOMs identify.", "The office of the USD(P) is generally charged with representing DOD in security assistance and security cooperation matters, setting DOD's security cooperation priorities, and harmonizing these within a whole-of-government approach to engagements with allied and partner nations. The one assistant charged purely with leading security cooperation is the Director of the Defense Security Cooperation Agency. Selected tasks of this officer, normally a 3-star general or flag officer, working directly for the USD (P), include", "providing guidance to the DOD Components and DOD representatives to U.S. missions (i.e. senior defense officials) for the execution of DOD security cooperation programs; managing and administering those Title 10 and 22 programs for which DSCA has responsibility, consistent with security cooperation priorities; and coordinating the development of foreign disclosure and sales policies and procedures for defense information, technology, and systems (with the USD(P) and USD (Sustainment).", "In sum, DOD generally implement security cooperation programs on behalf of the Department of State, as part of broader foreign policy and national security strategies. Based on its authority under Title 22, the State Department must arbitrate among a large number stakeholders (e.g., partner nations, embassy country teams, COCOMs, Joint Staff and Office of the Secretary of Defense) and interests (e.g., economic gain for U.S. firms, technology security, long-term national security of the United States and its partners). "], "subsections": []}]}, {"section_title": "End-Use Monitoring (EUM)", "paragraphs": ["The Arms Export Control Act (AECA) directs the President to establish a program that provides for the end-use monitoring for all defense articles and defense services sold, leased, or exported under the act. The program is required to provide reasonable assurance that the recipient is complying with the requirements imposed by the U.S. government with respect to use, transfers, and security of the articles and services, as well as that such articles and services are being used for the purposes for which they were provided. The executive branch has two formal EUM programs: Blue Lantern is for Direct Commercial Sales, while Golden Sentry is for Foreign Military Sales. If exported defense articles require specialized physical security and accounting, the Golden Sentry program conducts specialized Enhanced EUM."], "subsections": [{"section_title": "State Department's Blue Lantern\u00c2 Program (DCS)", "paragraphs": ["The State Department's Directorate for Defense Trade Controls administers the Blue Lantern program for articles and services on the USML exported via DCS. According to DOS, it includes pre-license, post-license, and post-shipment checks to verify the bona fides of foreign country consignees and end users, as well as verifying the legitimacy of proposed transactions and the compliance with U.S. defense export rules and policies. Typically conducted by U.S. embassy and consular staff, verifications occur in over 100 countries every year. If the Blue Lantern check determines an unfavorable use, it may result in the denial or revocation of the export license, the violator's entry on DDTC's watch list, or referral to Homeland Security Investigations or the FBI. In FY2018, with 35,779 authorized DCS export license applications, DOS initiated 466 Blue Lantern checks (268 pre-license, 89 post-shipment, and 109 containing both pre-license and post-shipment checks) in over 70 countries. In the same year, DOS closed 585 Blue Lantern cases, with 168 labeled \"unfavorable.\""], "subsections": []}, {"section_title": "DOD's Golden Sentry\u00c2 Program (FMS)", "paragraphs": ["The Defense Security Cooperation Agency administers DOD's Golden Sentry program, which is the FMS counterpart of State's Blue Lantern program. Golden Sentry's objective is to ensure compliance with technology control requirements and to provide reasonable assurance that the recipients are complying with U.S. government requirements with respect to the use, transfer, and security of defense articles and services. The program includes actions to prevent misuse or unauthorized transfer of the articles or services from title transfer until disposal, with the type of article or service generally determining the level of monitoring required.", "In routine EUM, DOD's Security Cooperation Organizations (SCOs) are required to observe and report any potential misuse or unapproved transfer of FMS articles or services to the regional COCOM, DSCA, and the State Department. They must conduct their checks at least quarterly, and must document their checks in reporting to DSCA. In the case of arms, ammunition, and explosives, SCOs are required to apply the same standards of U.S. control to the items upon release to the purchaser."], "subsections": []}, {"section_title": "Enhanced EUM\u00e2\u0080\u0094Golden Sentry", "paragraphs": ["Some security-sensitive exported or transferred defense articles require specialized physical security and accounting. These items are designated as requiring Enhanced End-Use Monitoring (EEUM) by a military service's export policy, or by interagency agreement, or through DOD policy resulting from consultation with Congress. The EEUM program is administered through Golden Sentry and requires DOD's SCOs in-country to conduct planned and coordinated visits to host nation installations, where they verify by serial number each EEUM-designated item on an annual basis."], "subsections": []}]}, {"section_title": "Questions for Congressional Consideration", "paragraphs": [], "subsections": [{"section_title": "Do Current Levels of Arms Sales and Exports Fulfill Statutory and Policy Objectives?\u00c2", "paragraphs": ["Section 1 of the AECA states, \"An ultimate goal of the United States continues to be a world which is free from the scourge of war and the dangers and burdens of armaments; in which the use of force has been subordinated to the rule of law; and in which international adjustments to a changing world are achieved peacefully. In furtherance of that goal, it remains the policy of the United States to encourage regional arms control and disarmament agreements and to discourage arms races.\" The AECA proceeds to acknowledge and allow that arms transfers and cooperation are necessary to \"maintain and foster the environment of international peace and security essential to social, economic, and political progress.\" These two paragraphs appear to draw a distinction between the policy aims of arms production and transfer on the one hand and, on the other, the burden [emphasis added] thereof as separate from economic endeavor and progress.", "Current Administration policy contained in NSPM-10 is to \"bolster the security of the United States and our allies and partners,\" while preventing proliferation by exercising restraint and continuing to participate in multilateral nonproliferation arrangements such as the Missile Technology Control Regime and the Wassenaar Arrangement. It explicitly commits the U.S. government to continue to meet the requirements of all applicable statues, including the AECA, the FAA, the International Emergency Economic Powers Act, and the annual NDAAs. ", "It also prioritizes efforts to \"increase trade opportunities for United States companies, including by supporting United States industry with appropriate advocacy and trade promotion activities and by simplifying the United States regulatory environment.\" The document adds \"a dynamic defense industrial base\" as a named employment source and stipulates \"economic security\" as a requirement for national security and defense.", "Congress may consider whether current sales and exports of defense articles and services, at current levels, bolster the security of the U.S. and its allies, while simultaneously fostering U.S. industry and innovation. Overall, should the goals of increasing trade opportunities for U.S. companies be an explicit goal of U.S. arms sales policy? ", "In light of the potential differences between 10 U.S.C. \u00c2\u00a7 2151 and the current United States Conventional Arms Transfer Policy, Congress may consider", "whether to reformulate the goals of the Arms Export Control Act in light of the contemporary national security situation, whether and to what extent economic security comprises a facet of national security including any effect on the defense industrial base (DIB) and the national technical industrial base (NTIB), and whether to determine the value of U.S. national arms production and export as part of overall U.S. exports and the degree to which desirability of arms production contributes to real long term economic growth."], "subsections": []}, {"section_title": "Are Current Methods of Conducting Sales of Defense Articles and Services Consistent with the Intent and Objectives of the AECA?", "paragraphs": ["In FY2018, foreign entities purchased $47.71 billion in FMS cases and the value of privately contracted DCS authorizations licensed by the State Department totaled $136.6 billion (see Table 1 and Table 2 , above). Congress may consider if this amount of annual arms sales is consistent with the intent of statute governing these sales. The FAA expresses, as U.S. policy, \"the efforts of the United States and other friendly countries to promote peace and security continue to require measures of support based upon the principle of effective self-help and mutual aid.\" The AECA states that \"all such sales be approved only when they are consistent with the foreign policy of the United States, the purposes of the foreign assistance program\u00e2\u0080\u00a6, and the economic and financial capability of the recipient country, with particular regard being given, where appropriate, to proper balance among such sales, grant military assistance, and economic assistance as well as to the impact of the sales on programs of social and economic development and on existing or incipient arms races.\"", "Section 1 of the AECA further limits U.S. arms sales, as policy, to levels extant when it was enacted: ", "It is the sense of the Congress that the aggregate value of defense articles and defense services- ", "(1) which are sold under section 2761 or section 2762 of this title; or", "(2) which are licensed or approved for export under section 2778 of this title to, for the use, or for benefit of the armed forces, police, intelligence, or other internal security forces of a foreign country or international organization under a commercial sales contract; ", "in any fiscal year should not exceed current levels.", "Congress may consider whether and how it measures the relation between the 1976 level of arms sales and any contemporary level."], "subsections": []}, {"section_title": "Are End Use Monitoring Programs Resourced Adequately?", "paragraphs": ["Some critics of current EUM programs point to a potential disparity between the number of defense articles exported and the number of EUM investigations completed. For example, in the State Department's Blue Sentry Program in FY2018, DDTC authorized 35,779 export license applications. DOS initiated 466 Blue Lantern checks (268 pre-license, 89 post-shipment, and 109 containing both pre-license and post-shipment checks) in over 70 countries. This represents approximately 1.3 percent of adjudicated license applications. The State Department employed five full-time employees and six contractors to administer the program. Some analysts have argued that such a small staff could not possibly track everything that happens to billions of dollars' worth of defense articles transferred to dozens of foreign countries each year. Acting Assistant Secretary of State for Political-Military Affairs Tina Kaidanow testified that under current programs, there are a number of steps that the U.S government can take to endure proper end use of exported defense articles. She noted further that most U.S defense manufacturers are responsible for ensuring compliance with the ITAR, with personnel dedicated to ensuring such compliance while working closely with the State Department to address any compliance issues that may arise."], "subsections": [{"section_title": "Appendix. Selected Legislative Restrictions on Sales and Export of U.S. Defense Articles", "paragraphs": ["Since the enactment of the Foreign Assistance Act (FAA) in 1961, Congress has amended both the FAA and the AECA, as well as Title 10 U.S.C. (governing DOD) in order to limit the sale and export of U.S. defense articles to certain foreign countries. Additional limitations have been enacted in the annual State/Foreign Operations and Related Programs Appropriations Acts, and through the National Defense Authorization Acts. The following illustrative examples are not intended to be comprehensive.", "Restrictions Based on Human Rights Violations", "Section 502B(a)(2) of the FAA (22 U.S.C. 2304(a)(2)) prohibits, absent the exercise of a presidential waiver, security assistance to any country where the government engages in a consistent pattern of gross violations of internationally recognized human rights. \"Security assistance\" is defined here to include \"sales of defense articles or services, extensions of credits (including participations in credits), and guaranties of loans\" under the AECA. The U.S. \"Leahy Laws,\" Section 620M of the FAA and 10 U.S.C. \u00c2\u00a7 362, prohibit U.S. security assistance to foreign security force units when credible evidence exists that the unit has committed a gross violation of human rights. However, these laws do not define security assistance, and in practice the executive branch applies them only to U.S.-funded transactions, excluding FMS or DCS. The Child Soldiers Prevention Act of 2008 ( P.L. 110-547 , 22 U.S.C \u00c2\u00a72370c-1), prohibits assistance to and licensing for direct commercial sales of military equipment to the government of a country that is clearly identified as having governmental armed forces, police, or other security forces, or government-supported armed groups, that recruit or use child soldiers. The Victims of Trafficking and Violence Protection Act of 2000, P.L. 106-386 , amended Section 502B of the FAA to require that the President report to the Congress on countries found to be involved in extreme forms of trafficking of persons. The act prohibits nonhumanitarian and nontrade-related aid, including security assistance, to countries that do not comply with minimum standards for eliminating trafficking in persons, subject to presidential waiver. ", "Restrictions on Countries Supporting Terrorism", "Section 40 of the AECA (22 U.S.C. \u00c2\u00a72780) prohibits exporting or otherwise providing, directly or indirectly, any munitions item to a country whose government has repeatedly provided support for acts of international terrorism. Section 40A (22 U.S.C. \u00c2\u00a72781) prohibits any defense article or defense service from being sold or licensed for export to any county the President determines is not cooperating fully with United States antiterrorism efforts. The prohibitions contained in this section do not apply with respect to any transaction subject to reporting requirements under title V of the National Security Act of 1947, 50 U.S.C. \u00c2\u00a73091 et seq.", "Restrictions on the Process of Foreign Military Sales", "Section 830 of the FY2017 National Defense Authorization Act, P.L. 114-328 , required the Secretary of Defense to prescribe regulations to require the use of firm fixed-price contracts for Foreign Military Sales.", "Restrictions and Limitations on Specific Countries and Regions", "Libya: Section 404 of the International Security and Cooperation Act of 1985, P.L. 99-83 , which amended the FAA (22 U.S.C. \u00c2\u00a72439aa-8), authorized the President to prohibit any goods or technology, including technical data or other information, from being exported to Libya. Middle East Countries, Excluding Israel: Section 36(h)(1) of the AECA, P.L. 90-629 , 22 U.S.C \u00c2\u00a72776(h)(1), requires any certification relating to a proposed sale to Middle East countries, excluding Israel, to include a determination that the sale or export of the defense articles or defense services will not adversely affect Israel's qualitative military edge over military threats to Israel. West Bank and Gaza: Section 699 of the FY2003 Foreign Relations Authorization Act, P.L. 107-228 , prohibits the sale of defense articles or defense services to any person or entity whom \"the President determines, based on a preponderance of the evidence, \u00e2\u0080\u00a6 has knowingly transferred proscribed weapons to Palestinian entities in the West Bank or Gaza,\" for two years after congressional notification. Iraq: The FY2008 NDAA, Section 1228, P.L. 110-181 , required the President to implement a policy to control the export and transfer of defense articles into Iraq, with no defense articles to be provided to the Government of Iraq until the President certified to Congress that a registration and monitoring system was in place. Arab League Boycott of Israel: Section 564 of the Foreign Relations Authorization Act, Fiscal Years 1994 and 1995, P.L. 103-236 , stated, \"No defense article or defense service may be sold or leased by the United States Government to any country or international organization that, as a matter of policy or practice, is known to have sent letters to United States firms requesting compliance with, or soliciting information regarding compliance with, the Arab League secondary or tertiary boycott of Israel\u00e2\u0080\u00a6\" Saudi Arabia and Kuwait: Section 104 of the Dire Emergency Supplemental Appropriations and Transfers for Relief from the Effects of Natural Disasters, for Other Urgent Needs, and for Incremental Costs of \"Operation Desert Shield/Desert Storm\" Act of 1992, P.L. 102-229 , prohibited any funds appropriated in the act to conduct, support, or administer any sale of defense articles or defense services to Saudi Arabia or Kuwait until that country paid in full their commitments to the United States made during Operation Desert Shield/Storm.", "Restrictions on Defense Articles Related to Nuclear, Biological, and Chemical\u00c2\u00a0Weapons", "The AECA has a series of provisions limiting the export of defense items related to nuclear, biological, and chemical weapons (22 U.S.C. \u00c2\u00a72799aa). Those controls are explained in detail in CRS Report R41916, The U.S. Export Control System and the Export Control Reform Initiative , by Ian F. Fergusson and Paul K. Kerr."], "subsections": []}]}]}]}}
{"id": "R46226", "title": "Liberia: Background and U.S. Relations", "released_date": "2020-02-14T00:00:00", "summary": ["Introduction . Congress has shown enduring interest in Liberia, a small coastal West African country of about 4.8 million people. The United States played a key role in the country's founding, and bilateral ties generally have remained close despite significant strains during Liberia's two civil wars (1989-1997 and 1999-2003). Congress has appropriated considerable foreign assistance for Liberia, and has held hearings on the country's postwar trajectory and development. In recent years, congressional interest partly has centered on the immigration status of over 80,000 Liberian nationals resident in the United States. Liberia participates in the House Democracy Partnership, a U.S. House of Representatives legislative-strengthening initiative that revolves around peer-to-peer engagement.", "Background. Liberia's conflicts caused hundreds of thousands of deaths, spurred massive displacement, and devastated the country's economy and infrastructure, aggravating existing development challenges. Postwar foreign assistance supported a recovery characterized by high economic growth and modest improvements across various sectors. An Ebola outbreak from 2014-2016 cut short this progress; nearly 5,000 Liberians died from the virus, which overwhelmed the health system and spurred an economic recession. The outbreak also exposed enduring governance challenges, including weak state institutions, poor service delivery, official corruption, and public distrust of government.", "Politics. Optimism surrounding the 2018 inauguration of President George Weah\u00e2\u0080\u0094which marked Liberia's first electoral transfer of power since 1944\u00e2\u0080\u0094arguably has waned as his administration has become embroiled in a series of corruption scandals and the country has encountered new economic headwinds. According to the International Monetary Fund (IMF), the economy contracted by 1.4% in 2019, down from 1.2% growth in 2018, as rising inflation has undermined household purchasing power. Weah's government has struggled to deliver on ambitious pro-poor campaign pledges, as diminishing foreign aid flows, poor tax administration, and low global prices for Liberia's top export commodities have strained state finances. Public discontent with alleged mismanagement and corruption has given way to large anti-government protests in the capital city of Monrovia.", "The Economy and Development Issues . Liberia faces substantial obstacles to broad-based, sustainable development. Infrastructure gaps, poor electricity provision, corruption, and an uncompetitive business climate impede growth. Exports of raw rubber, gold, iron ore, diamonds, and palm oil are key sources of government revenues and foreign exchange, but these industries provide few high-paying jobs to local Liberians, and much of the population relies on subsistence agriculture. Nearly one-third of Liberians face moderate to severe chronic food insecurity despite the country's fertile land, extensive coastline, and abundant rainfall.", "Human Rights. Human rights conditions have improved considerably since the early 2000s, though corruption, episodic security force abuses against civilians, and di scrimination against women and marginalized communities persist. Press freedoms have come under threat during Weah's presidency; reporters have faced harassment and occasional violence from government officials, including legislators, and some journalists reportedly self-censor to evade persecution. Accountability for wartime abuses remains a highly sensitive issue, and several individuals who played key roles in Liberia's conflicts retain influence and/or serve in elected office. Several perpetrators of wartime abuses have faced trial in the U.S. court system, most on immigration-related fraud or perjury charges related to nondisclosure of involvement in such abuses in applications for U.S. asylum, residency, or citizenship.", "U.S. Assistance. Since the end of Liberia's second conflict in 2003, the United States has provided more than $2.4 billion in State Department- and USAID-administered assistance to support Liberia's post-war stabilization and development. This does not include nearly $600 million in emergency assistance for Liberia's Ebola response, aid channeled through other U.S. agencies, or U.S. funding for a long-running U.N. peacekeeping mission that completed its mandate in 2018. Current U.S. assistance, which totaled $96.5 million in FY2019, centers on supporting agriculture-led development and strengthening the health system, public service delivery, civil society capacity, and justice and security sectors. An ongoing $256.7 million Millennium Challenge Corporation (MCC) Compact seeks to enhance Liberia's power sector and roads infrastructure."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["The United States and Liberia have maintained diplomatic relations for more than 150 years. Close ties endured in the 20th century\u00e2\u0080\u0094underpinned by U.S. investment in the rubber sector and robust political, development, and defense cooperation during the Cold War\u00e2\u0080\u0094but they came under strain during Liberia's two civil wars (1989-1997 and 1999-2003). The United States provided substantial humanitarian assistance in response to those conflicts and helped mediate an end to each war, and the U.S. military briefly deployed a task force to assist peacekeepers and support aid delivery after the conflict. U.S.-Liberia ties improved considerably during the tenure of former President Ellen Johnson Sirleaf (in office 2006-2018) and have remained close under current President George Weah (inaugurated in 2018).", "Congress has shown enduring interest in Liberia and has held periodic hearings on the country. Since the end of the second civil war, Congress has appropriated over $2.4 billion in State Department- and USAID-administered assistance to support Liberia's stabilization, recovery, and development. Such aid has centered on promoting good governance, strengthening the rule of law, reforming the security sector, improving service delivery, and spurring inclusive economic development. Congress provided roughly $600 million in additional State Department- and USAID-administered assistance to help combat the 2014-2016 Ebola outbreak in Liberia, where the U.S. government\u00e2\u0080\u0094in collaboration with Liberian authorities and U.N. agencies\u00e2\u0080\u0094played a lead role in the response. In recent years, several Members of Congress have sought to adjust the immigration status of over 80,000 Liberian nationals resident in the United States, some of whom originally came to the United States as refugees. Members regularly travel to Liberia, including under a House Democracy Partnership legislative engagement program initiated in 2006."], "subsections": []}, {"section_title": "Historical Background", "paragraphs": ["The United States and Liberia established diplomatic relations in 1864, nearly two decades after Liberia declared independence from the American Colonization Society, a U.S. organization that resettled freed slaves and freeborn African-Americans in Liberia. A small elite dominated by \"Americo-Liberians,\" descendants of this settler population, held a monopoly on state power until a 1980 military coup d'\u00c3\u00a9tat. Under President Samuel Doe, economic mismanagement, corruption, and repression along ethnic lines characterized much of the ensuing decade. In 1989, Charles Taylor, a Liberian former civil servant who had fled to the United States after falling out with Doe, launched a rebellion from neighboring C\u00c3\u00b4te d'Ivoire. Factional violence soon engulfed the country. Hundreds of thousands died and \"virtually all\" Liberians fled their homes at some point during Liberia's first civil war. ", "After a series of abortive ceasefires, the war ended in a peace accord and general elections in 1997, which Taylor won by a wide margin. In 1999, an incursion by Liberian rebels based in neighboring Guinea grew into a second nationwide conflict that pitted Taylor's army against two insurgent factions. After years of fighting, a rebel assault on the capital, Monrovia, and mounting international pressure\u00e2\u0080\u0094including U.N. sanctions and a public demand from President George W. Bush that Taylor resign\u00e2\u0080\u0094ultimately forced Taylor to step down in 2003. Days later, a peace agreement officially ended the conflict and laid the foundations for a transitional government. The U.N. Security Council established a peacekeeping mission, the U.N. Mission in Liberia (UNMIL), in September 2003 to help stabilize the country.", "Liberia's wars impeded social service provision, devastated the economy, and destabilized the broader region. Notably, Taylor provided material support to rebels in neighboring Sierra Leone during that country's civil war (1991-2002). In 2006, Taylor was arrested in Nigeria (where he had been granted asylum upon stepping down in 2003) on a warrant issued by the Special Court for Sierra Leone (SCSL), a U.N.-mandated judicial body created to prosecute crimes perpetrated during the Sierra Leonean civil war. In 2012, the SCSL convicted Taylor of war crimes in relation to his support for Sierra Leonean rebels; he is now serving a 50-year sentence in a prison in the United Kingdom. To date, a similar tribunal to prosecute atrocities committed during Liberia's wars has not been established, spurring perceptions of impunity and mounting calls by civil society and some legislators for the creation of a war crimes court for Liberia (see \" Postwar Transitional Justice Efforts \"). Taylor's ex-wife and several former associates remain active in Liberian politics, as do figures formerly associated with various armed factions."], "subsections": [{"section_title": "The Sirleaf Administration (2006-2018)", "paragraphs": ["President Ellen Johnson Sirleaf, a Harvard-educated former Finance Minister and U.N. official, won election in 2006, putting an end to a three-year transitional government led by Taylor's vice president. During her two terms in office, Sirleaf won praise for overseeing a postwar transition marked by political stability and, until the Ebola outbreak in 2014, rapid economic growth. Africa's first elected female head of state, Sirleaf bolstered confidence among donors, drawing large inflows of U.S., Chinese, and multilateral assistance. Such aid financed the rehabilitation of infrastructure and a range of other development and stabilization efforts. Sirleaf also secured almost $5 billion in external debt relief and oversaw an expansion in state revenues. The United States\u00e2\u0080\u0094long the largest bilateral donor to Liberia\u00e2\u0080\u0094provided significant assistance to Sirleaf's administration, funding programs to spur economic growth and development, reform the security sector, promote good governance, and build state capacity (see \" U.S. Relations and Assistance \"). ", "The Sirleaf administration took steps to rehabilitate Liberia's global standing. The U.N. Security Council had imposed various sanctions in response to Liberia's civil wars, including embargoes on imports of arms into the country and on exports of rough diamonds and timber of Liberian origin. As Liberia stabilized and the Sirleaf government enacted sectoral reforms, these sanctions were gradually lifted. The Security Council lifted the last arms embargo, on non-state actors, in 2016, ending the U.N. sanctions regime. (The Obama Administration lifted U.S. targeted sanctions on Taylor and key associates in late 2015.) Also in 2016, UNMIL officially transferred national security duties to Liberian authorities in anticipation of full withdrawal in 2018. ", "Sirleaf's international standing arguably surpassed her popularity among Liberians. Despite rapid economic growth, her administration struggled to meet high expectations for Liberia's postwar trajectory. Extreme poverty remained widespread throughout her tenure, and her government failed to implement key recommendations of Liberia's postwar Truth and Reconciliation Commission (TRC), such as the creation of a war crimes court. Several corruption scandals arose during her tenure, and she drew criticism for appointing her sons to state posts. Her administration's response to the 2014-2016 Ebola outbreak reportedly featured financial irregularities and a heavy-handed approach by security forces. Some of these shortcomings reasonably could be attributed to structural challenges, such as corruption, low institutional capacity, deficiencies in education and health service provision, and infrastructure gaps. ", "The October 2017 presidential and legislative polls were Liberia's third set of postwar general elections. Constitutional term limits barred Sirleaf from seeking reelection. Approaching the polls, the opposition Congress for Democratic Change party, led by professional soccer star-turned-politician George Weah, allied with the National Patriotic Party of Jewel Howard-Taylor (an ex-wife of Charles Taylor) to form the Coalition for Democratic Change (CDC). Weah won the presidency with 62% of votes in a runoff against incumbent Vice President Joseph Boakai of Sirleaf's Unity Party (UP). Despite some violence and a short-lived legal challenge over alleged fraud in the first round of polls, election observers from the U.S. National Democratic Institute (NDI) lauded the election as a \"historic achievement for the country.\" Concurrent House of Representatives elections resulted in a slim plurality for Weah's party, which took 21 out of 73 seats, ahead of the UP, which took 20. Ten parties and thirteen independents claimed the rest. ", "The United States, the European Union (EU), and other donors provided substantial support for the 2017 elections. U.S. support included the $17 million, USAID-funded Liberia Elections and Political Transition (LEPT) project, under which the U.S. International Foundation for Electoral Systems (IFES) and NDI provided technical assistance to the National Elections Commission (NEC), supported voter education initiatives targeting women and people with disabilities, and enhanced civil society oversight of voting and other electoral processes. "], "subsections": []}]}, {"section_title": "The Weah Administration (2018-Present)", "paragraphs": ["President Weah, who took office in January 2018, gained prominence as a European league soccer star prior to his foray into politics. His lack of formal education was a point of criticism during an unsuccessful bid for the presidency in 2005; he went on to earn a high school diploma and, later, an undergraduate business degree in the United States. In 2014, he won a Senate seat representing Montserrado County, which surrounds Monrovia. His choice of then-Senator Jewel Howard-Taylor as his running mate in the 2017 election hinted at the enduring influence of Charles Taylor and his associates in Liberia's politics. As a legislator, Howard-Taylor sparked controversy by attempting to make homosexuality a felony punishable by death and to amend the constitution to declare Liberia a Christian state, despite its sizable Muslim minority.", "Goodwill surrounding Weah's inauguration\u00e2\u0080\u0094which marked Liberia's first electoral transfer of power since 1944 and paved the way for UNMIL's withdrawal\u00e2\u0080\u0094has dissipated as several high-profile corruption scandals have undermined his political standing. Weah initially drew criticism for failing to disclose his assets prior to taking office, as required of all senior public officials. He ultimately declared his assets in 2018, though the disclosure has remained confidential. Since Weah's inauguration, a number of his associates reportedly have been awarded public contracts, including for large infrastructure projects. Meanwhile, Weah's attempt to nominate a political ally, former Speaker of the House Alex Tyler, to the board of ArcelorMittal, Liberia's largest iron ore producer, prompted significant pushback in local media, given an open inquiry into bribery allegations against Tyler. Weah ultimately withdrew the nomination. (Tyler was later acquitted.)", "Among the highest-profile scandals that have arisen under Weah was the reported disappearance, in late 2018, of a shipping container holding 15.5 billion Liberian dollars ($104 million). Officials issued contradictory statements about the \"missing millions,\" which the Sirleaf government had procured but whose delivery to Liberia extended into the Weah administration. A U.S. Embassy-contracted inquiry by Kroll Associates, a corporate investigations firm, found no evidence that banknotes had disappeared but documented \"discrepancies at every stage\" of the procurement and delivery processes. The review also raised concerns regarding the \"potential misappropriation of banknotes\" and \"opportunities for money laundering\" in the course of the Weah government's mid-2018 infusion of $25 million U.S. dollars into the monetary system to replace Liberian dollars in an effort to control inflation. (Liberia has two official currencies, the Liberian dollar and the U.S. dollar.) Several former central bank officials, including former President Sirleaf's son, have been charged in the scandal. A USAID technical assistance program, to be implemented by Kroll Associates, aims to enhance the Central Bank's currency management processes.", "Concerns also have centered on the Weah administration's management of donor assistance, a key source of financing for development efforts. In mid-2019, the U.S. ambassador to Liberia and several foreign counterparts sent a joint letter to the government signaling discontent with the Weah administration's use of aid funds for unintended purposes. The Weah administration publicly acknowledged that it had used aid funds to pay state salaries, but claimed that it had later restored donor accounts. Separately, press reports emerged that the U.N. Resident Coordinator in Liberia had sent a letter to the government over concerns about delayed and inaccurate financial reporting on U.N.-funded activities. In late 2019, the World Bank reportedly demanded that the government refund certain ineligible expenses identified during a project review. According to the State Department's congressionally mandated fiscal transparency report, \"foreign assistance receipts, largely project-based, were neither adequately captured in the budget nor subject to the same audit and domestic oversight as other budget items\" in 2018, the latest reporting year. ", "In June 2019, simmering discontent over alleged corruption and mismanagement by the Weah administration gave way to large-scale anti-government protests in Monrovia. Headed by the Council of Patriots (COP), a coalition of opposition politicians and activists, the demonstrators called for an audit of all state ministries and petitioned Weah to publicly disclose his assets. The government drew criticism for its response to the protests, during which it blocked social media access. In January 2020, thousands of protesters joined COP-led demonstrations in Monrovia, which police dispersed with tear gas. The Independent National Commission on Human Rights, a state body, has called for an inquiry into allegations of excessive force by security forces. In a joint statement, the ambassadors of the United States, EU, and Economic Community of West African States (ECOWAS) lauded the security forces' management of the demonstrations but noted \"with regret\" the government's decision to disperse peaceful protesters without warning. Human rights groups and press freedom advocates have condemned what they have described as a crackdown on COP leader Henry Costa, a radio host who currently lives in the United States. "], "subsections": []}, {"section_title": "The Economy and Development Issues", "paragraphs": ["Annual GDP growth averaged 7.4% over the decade following the end of Liberia's second conflict, as substantial donor assistance helped power a fragile postwar recovery and modest development gains. Foreign direct investment (FDI) significantly increased under President Sirleaf, mostly concentrated in the mining, palm oil, rubber, and timber industries. The 2014 Ebola outbreak and a simultaneous slump in global commodity prices cut short this expansion: Liberia's economy contracted by 1.6% in 2016 before rebounding to 2.5% growth the following year owing to expanded gold, rubber, and palm oil exports. The International Monetary Fund (IMF) projects a contraction of 1.4% in 2019 due to slowing aggregate demand, followed by a recovery to 1.4% growth in 2020 due to an expected rise in consumption. Since 2017, a weakening of the Liberian dollar (which depreciated by 26% in 2018) and rising inflation (which stands at around 30%) have undermined local purchasing power and living standards. The World Bank projects a rise in the household poverty rate from 42% in 2018 to 44% by 2021; the rural poverty rate, estimated at 72%, is more than double that of urban areas\u00e2\u0080\u0094a longstanding pattern.", "The IMF predicts average annual growth of 3.0% between 2020 and 2023, a rate likely insufficient to raise living standards adequately for a population growing at 2.6% per year. Infrastructure gaps, low electricity access (estimated at 17% nationally and 3% in rural areas), poor service delivery, corruption, and an uncompetitive business climate all threaten growth prospects. Liberia ranked fifth lowest globally in the World Bank's 2018 Human Capital Index (HCI), a survey of health and education indicators. The government has struggled to marshal donor assistance for its ambitious Pro-Poor Agenda for Prosperity and Development (PAPD, 2018-2023), which centers on infrastructure investments and social service improvements. ", "The government relies heavily on exports of rubber, gold, iron ore, diamonds, and palm oil for state revenues and foreign exchange, but these sectors have created minimal local employment. The multinational firms ArcelorMittal and Firestone, which are engaged in the extraction of iron and rubber, respectively, are among Liberia's largest private sector actors, though low global commodity prices have prompted both companies to downsize operations in recent years. Most working-age Liberians remain engaged in subsistence agriculture. According to the World Bank, infrastructure gaps, high transport costs, limited market information, and inadequate public sector support have discouraged a shift toward more productive agricultural activity. ", "At the same time, few households produce enough food for family consumption, and Liberia depends on imports of key staple foods, such as rice and cassava, despite ample rainfall and fertile land. Rural poverty drives high rates of food insecurity and malnutrition. Liberia ranked 112 out of 117 countries surveyed on the International Food Policy Research Institute's 2019 Global Hunger Index, a composite ranking of undernourishment and related indicators. A 2018 analysis by the Liberian government and international partners found that 18% of Liberians faced moderate to severe food insecurity, meaning they regularly lack food and consistently do not consume a diet of adequate quality. Roughly 36% of children under five years old are \"stunted,\" or too short for their age\u00e2\u0080\u0094a risk indicator of impaired cognitive and physical development. ", "Low global oil prices and a poor business climate have dimmed interest in Liberia's nascent oil and gas sector. Several U.S. oil firms, including Chevron, ExxonMobil, and Anadarko Petroleum, have relinquished licenses to offshore blocks, in some cases following unsuccessful exploration activities. According to the State Department, foreign investors have cited corruption as a key obstacle to engagement in Liberia, with graft perceived to be \"most pervasive in government procurement, contract and concession awards, customs and taxation systems, regulatory systems, performance requirements, and government payments systems.\""], "subsections": []}, {"section_title": "Human Rights", "paragraphs": ["According to State Department monitors, key human rights challenges in 2018 included extrajudicial killings by police, arbitrary and prolonged detention, and harsh and overcrowded prison conditions. Additional challenges included discrimination and violence against women and marginalized communities. While Weah earned plaudits for supporting a new press freedom act, which repealed various criminal statutes that had been used to harass and arrest journalists, his government also has targeted opposition media figures and shuttered critical news outlets. Reporters have faced harassment and violence from government officials, including members of the national legislature, and press outlets self-censor to evade persecution.", "Sexual and gender-based violence is widespread; the State Department reports that rape remains \"a serious and pervasive problem\" despite efforts to address the issue by successive governments as well as nongovernmental organizations operating in Liberia. Access to justice is constrained by an under-resourced, uneven, and often ineffective justice system in which judicial corruption is common, and by social practices and attitudes that discourage reporting and prosecution. In August 2019, President Weah signed into law the Domestic Violence Act, which criminalizes various forms of intimate partner violence, including spousal rape\u00e2\u0080\u0094long excluded from legal definitions of sexual assault. That legislation ultimately did not include a provision that would have criminalized female genital mutilation/cutting (FGM/C), which Liberia's legislature has not prohibited despite considerable pressure from the Sirleaf and Weah administrations, donors, and domestic and international civil society groups. The practice remains widespread and is politically sensitive. Same-sex relations are illegal under Liberian law, and lesbian, gay, bisexual, transgender, and intersex individuals face violence, discrimination, harassment, and hate speech.", "Interethnic grievances over access to land and other resources have been a source of social and political tension and conflict. Surrounding the 2017 polls, NDI election observers documented derogatory statements and other forms of discriminatory behavior targeting Liberia's Muslim community (roughly 12% of the population) and the largely Muslim Mandingo ethnic group (3%), some of whom were barred from registering or voting. Mandingo mobilization formed the backbone of the 1997-2003 insurgency against Taylor. ", "Since 2017, Liberia has ranked as a Tier 2 Watch List country on the State Department's annual Trafficking in Persons (TIP) report, submitted pursuant to the Trafficking Victims Protection Act of 2000 (TVPA, Division A of P.L. 106-386 ). Per the TVPA, failure to improve from Tier 2 Watch List ranking for three consecutive years results in a downgrade to Tier 3 (worst) status, which may carry restrictions on access to certain types of U.S. assistance. The Administration granted Liberia a waiver from such a downgrade in 2019 because the State Department found that Liberia's \"government has devoted sufficient resources to a written plan that, if implemented, would constitute significant efforts to meet the minimum standards\" for TIP elimination."], "subsections": [{"section_title": "Postwar Transitional Justice Efforts", "paragraphs": ["Accountability for wartime human rights violations in Liberia remains a highly sensitive topic. A postwar Truth and Reconciliation Commission (TRC), which operated between 2005 and 2010, recommended the establishment of a war crimes tribunal, but no such court has been established. This is partly attributable to opposition from former combatants and others likely to be targeted by such a tribunal, some of whom are current or former elected officials. The TRC recommended the prosecution of at least three members of the current legislature. Such individuals wield influence not only within the legislature but also as vote mobilizers at the national level; for instance, Senator Prince Johnson, one of two former armed faction leaders currently serving in Liberia's legislature, arguably was critical to President Weah's winning 2017 political coalition. Opponents of a possible war crimes court also include former President Sirleaf, whom the TRC identified as having provided financial support to Charles Taylor in the early years of Liberia's first civil war. Some Liberians may oppose potential transitional justice measures out of a reluctance to revisit wartime atrocities or fear of rekindling social tensions. ", "In September 2019, President Weah appeared to endorse the establishment of a war crimes court and requested that the legislature advise him on the issue. After Weah's announcement, a resolution calling for a war crimes tribunal quickly garnered the two-thirds support required for passage in Liberia's House of Representatives. Weah subsequently walked back his support for the court, however, and it remains to be seen whether Weah's announcement paves the way for the creation of a court and/or the implementation of other transitional justice measures."], "subsections": [{"section_title": "U.S. Judicial Responses", "paragraphs": ["Some perpetrators of wartime atrocities have faced justice abroad, including in the United States. In 2009, Charles Taylor's U.S.-born son, Roy M. Belfast Jr. (AKA Charles \"Chuckie\" Taylor), was sentenced to 97 years in prison by a U.S. District Court for wartime acts of torture. Belfast remains the only individual prosecuted in the U.S. judicial system specifically for atrocities committed during Liberia's conflicts. Others have faced immigration-related charges, however, often in relation to fraud or perjury linked to nondisclosure of involvement in wartime abuses in applications for U.S. asylum, residency, or citizenship. Several Liberian nationals have been convicted on such offenses, which can carry lengthy prison sentences and/or result in deportation and loss of citizenship or residency permission. Former armed faction leader George Boley was deported from the United States in 2012 in connection with his involvement in the use of child soldiers. This marked the first deportation under the Child Soldiers Accountability Act ( P.L. 110-340 ), which made use of child soldiers a ground for deportation from the United States. "], "subsections": []}]}]}, {"section_title": "U.S. Relations and Assistance", "paragraphs": ["As noted above, the United States played a key role in Liberia's founding, and bilateral ties generally have been close, characterized by substantial U.S. assistance. U.S. engagement in Liberia expanded significantly during the administration of President Sirleaf, under successive U.S. Administrations and with bipartisan support from Congress. Sirleaf addressed a joint session of Congress in 2006, and between FY2006 and FY2018, Congress appropriated over $2.1 billion in State Department- and USAID-administered aid to Liberia to support stabilization, development, security sector reform, and health programs. This total does not include assistance provided via other U.S. agencies and substantial Millennium Challenge Corporation (MCC) aid funding (see below). It also excludes U.S. funding for UNMIL provided through assessed contributions to the U.N. peacekeeping budget, as well as U.S. support for Liberia's Ebola response or programs funded through regionally or centrally managed programs.", "The Trump Administration has expressed support for strong U.S.-Liberia ties. In late 2019, Assistant Secretary of State for African Affairs Tibor Nagy hosted the fourth U.S.-Liberia Partnership Dialogue, a high-level diplomatic engagement that most recently focused on \"youth engagement, trafficking in persons, economic growth, and strengthening health and education systems.\" Congress has continued to appropriate sizable bilateral foreign assistance for the country (see below), and has held hearings on its development and governance prospects. Congress also has fostered relations through a House Democracy Partnership (HDP) program with the Liberian legislature, which is one of 21 HDP partner legislatures worldwide. Launched in 2006, the Liberia HDP program has focused on the development of Liberian parliamentary capacity, including through peer-to-peer visits. In October 2019, five Members of Congress visited Liberia, where they met with various legislators and President Weah. ", "Immigration Issues. Liberian immigration to the United States has played a significant role in bilateral relations. According to the U.S. Census Bureau, there were roughly 85,000 foreign-born individuals from Liberia living in the United States in 2018 (latest available). Liberians in the United States first received Temporary Protected Status (TPS) in 1991 during the first civil war. In the years since, qualifying Liberians have been granted TPS and/or Deferred Enforced Departure (DED)\u00e2\u0080\u0094temporary blanket relief from removal provided by the President\u00e2\u0080\u0094in the context of Liberia's conflicts and, later, the Ebola outbreak. Efforts to extend the immigration status of Liberians eligible for such protections have drawn bipartisan congressional support. ", "In March 2019, three days before DED was to expire for certain Liberians resident in the United States since 2002, President Trump reaffirmed the termination but extended the wind-down period through March 30, 2020. In his memorandum, President Trump stated that \"Extending the wind-down period will preserve the status quo while the Congress considers remedial legislation\" to provide Liberian DED beneficiaries with relief from removal. Congress ultimately granted such relief in the National Defense Authorization Act for 2020 ( P.L. 116-92 ), which directs the Secretary of Homeland Security to adjust the status of eligible Liberian applicants\u00e2\u0080\u0094those continuously present in the United States since November 20, 2014, or the immediate family of such individuals, among other criteria\u00e2\u0080\u0094to lawful permanent resident (LPR) status. "], "subsections": [{"section_title": "Current U.S. Assistance", "paragraphs": ["Appropriated State Department and USAID-administered assistance for Liberia totaled $112.3 million in FY2018 and $96.5 million in FY2019. Recent U.S. aid largely has focused on health system strengthening and support for public service delivery, civil society capacity building, agriculture sector development, and justice sector improvements. Most U.S. development assistance is implemented by nongovernmental organizations, but the United States has a direct government-to-government financing agreement with Liberia's Ministry of Health that supports health service delivery. The State Department has funded programs to train, equip, advise, and professionalize the Armed Forces of Liberia (AFL), which was established with U.S. support after Liberia's second civil war, and to build the capacity of civilian law enforcement. DOD has conducted periodic trainings for AFL personnel and provided support to Liberia's defense ministry. Liberia also benefits from a State Partnership Program with the Michigan National Guard. The country hosts 94 Peace Corps Volunteers (PCVs) working on projects related to education and health. In December 2019, the U.S. Embassy withdrew PCVs from several regions due to liquidity challenges associated with withdrawing money from local banks. ", "FY2020 aid allocations for Liberia pursuant to P.L. 116-94 have yet to be made public. The Administration requested $32.6 million in State Department- and USAID-administered aid for Liberia in FY2021, which would represent a 66% decrease from FY2019 appropriations. In successive years, Congress has appropriated aid for Liberia far in excess of the levels proposed in the Trump Administration's budget requests. "], "subsections": [{"section_title": "Millennium Challenge Corporation (MCC) Engagement", "paragraphs": ["Liberia is currently implementing a five-year, $256.7 million MCC C ompact that entered into force in 2016. The Compact targets two constraints to economic growth: (1) a lack of access to reliable and affordable electricity, and (2) inadequate road infrastructure. The energy project seeks to provide a new hydropower turbine to the Mt. Coffee Hydropower Plant, train electricity sector personnel, and support the creation of an independent energy sector regulator. The roads project aims to build the capacity of Liberian authorities to plan road maintenance. Liberia previously benefitted from a $15 million MCC Threshold Program (2010-2013) focused on expanding girls' access to education, enhancing land rights and access, and promoting trade. ", "In FY2019 and FY2020, Liberia did not secure a passing grade on half of its MCC Scorecard\u00e2\u0080\u0094a prerequisite for a potential second compact. According to its FY2020 scorecard, Liberia failed to meet standards in fiscal and trade policy, regulatory quality, inflation control, land rights and access, government effectiveness, rule of law, and a range of human development measures."], "subsections": []}]}]}, {"section_title": "Outlook", "paragraphs": ["Pressures on Weah's administration are likely to mount. State finances are under increasing strain due to weak economic growth, poor tax administration, declining donor aid, and the departure of UNMIL, which came to play a key role in Liberia's economy. At a time when the government faces popular expectations for dividends from Liberia's postwar transition\u00e2\u0080\u0094including for better infrastructure, improved public services, job creation, and poverty reduction\u00e2\u0080\u0094surging inflation and a depreciation of the Liberian dollar have contributed to falling purchasing power, rising poverty, and a mounting food security crisis. The IMF has welcomed austerity measures on the part of the government, including cuts to the public sector wage bill, and in late 2019 approved a four-year, $213.6 million program to support macroeconomic adjustments and other reforms. Austerity policies are likely to be domestically unpopular, however, and it remains to be seen whether the Weah administration continues to pursue reforms that may be politically challenging.", "Efforts to address corruption and other governance demands are likely to encounter pushback from key segments of Liberia's political landscape. Corruption has been a longstanding concern in Liberia and remains prevalent throughout the government, according to the State Department, which has documented a \"culture of impunity\" in the civil service. Any attempts to enact meaningful anti-corruption measures may thus founder on a lack of political will from legislators and other officials who profit from the current system. Meanwhile, Weah's stated commitment to address mounting calls from civil society and some legislators for postwar transitional justice measures has met with opposition from some legislators who are central to his political coalition.", "Recent protests and instances of inflammatory rhetoric have raised concerns over political tensions in the country. In May 2019, the U.S. Embassy condemned ethnically divisive statements by politicians, reproaching those who \"incite unlawful acts through ill-considered rhetoric that could jeopardize Liberia's hard-won peace and security.\" The U.S. Embassy also has warned Liberia's opposition against using charged rhetoric, as it has called on the Weah administration to respect political freedoms. Mounting socioeconomic pressures and calls for governance reform and postwar accountability are key challenges facing Liberia's fledgling democracy; how the country's political class responds to such forces will have implications for Liberia's trajectory. ", "U.S.-Liberia ties remain close, and the United States appears poised to continue supporting the country's development, albeit with potentially lower aid allocations than in past years. The United States continues to exert significant influence in the country, and Liberian authorities appear receptive to U.S. engagement, as suggested by President Weah's recent suspension of an official whom the U.S. ambassador had accused of promoting societal divisions. At the same time, the Weah administration's mismanagement of donor assistance may be of concern to some Members of Congress, as may enduring corruption, rising political tensions, persistent institutional weaknesses, and continued inaction on transitional justice measures. Members of Congress may continue to debate the relative effectiveness of various tools for advancing U.S. interests in Liberia, including diplomacy, foreign assistance, and possible punitive measures. "], "subsections": []}]}}
{"id": "R46218", "title": "Illicit Drug Smuggling Between Ports of Entry and Border Barriers", "released_date": "2020-02-07T00:00:00", "summary": ["Policy discussions around border security often involve questions about how illicit drugs flow into the United States. These include questions about the smugglers, types and quantities of illicit drugs crossing U.S. borders, primary entry points, and methods by which drugs are smuggled. Further, these discussions often center on the shared U.S.-Mexico border, as it is a major conduit through which illicit drugs flow.", "There are no comprehensive data on the total quantity of foreign-produced illicit drugs smuggled into the United States at or between official ports of entry (POEs) because these are drugs that have generally evaded seizure by border officials. In lieu of these data, officials, policymakers, and analysts sometimes rely on certain drug seizure data to help understand how and where illicit drugs are crossing U.S. borders. Data from U.S. Customs and Border Protection (CBP) indicate that, by weight, more marijuana, cocaine, methamphetamine, heroin, and fentanyl were seized at POEs than between them in FY2019.", "While available indicators suggest that drug seizures are more concentrated at POEs, it is the flow of drugs between them that have been a primary topic of recent policy discussions around border security. Specifically, there has been some debate about whether, how, and to what extent physical barriers along the Southwest border between the POEs may deter or alter the smuggling of foreign-produced, illicit drugs into the country. Since the early 1990s, there have been efforts to build pedestrian and vehicle barriers along the Southwest border in part to deter the unauthorized entry of migrants and smugglers. Analysts have suggested that in some cases, smugglers have responded by moving contraband under, over, or through the barriers, as well as around them\u00e2\u0080\u0094including by changing their concealment techniques to move illicit drugs more effectively through POEs.", "Drug smugglers utilize subterranean, cross-border tunnels to move illicit drugs\u00e2\u0080\u0094primarily marijuana\u00e2\u0080\u0094from Mexico into the United States. Their construction has increased in sophistication; tunnels may include amenities such as ventilation, electricity, and railways, and tunnel architects may take advantage of existing infrastructure such as drainage systems. Traffickers move contraband over border barriers through myriad mechanisms, from tossing loads by hand and launching bundles from compressed air cannons to driving vehicles on ramps up and over certain types of fencing, as well as employing ultralight aircraft and unmanned aircraft systems (UASs) and drones. Smugglers may also attempt to go through various types of border barriers; strategies include cutting holes in the barriers and bribing border officials to provide keys to openings in them. Smugglers may also move illicit drugs around border barriers. For instance, along the Southwest border, they may use boats to move contraband around fencing that extends into the Pacific Ocean, move drugs over land areas without constructed barriers, or smuggle goods through the POEs.", "A key question policymakers may ask is what effect an increase in border barrier length or enhancement of barrier style might have on drug smuggling between the POEs. Specifically, they may question whether or how additional border barrier construction might substantially alter drug smugglers' routes, tactics, speed, or abilities to breach these barriers and bring contraband into the country, and whether or how it has done so in the past. A comprehensive analysis of this issue is confounded by a number of factors, the most fundamental being that the exact quantity of illicit drugs flowing into the United States is unknown . Without this baseline, analysts, enforcement officials, and policymakers rely on other data points to help inform whether or how border barriers may affect illicit drug smuggling."], "reports": {"section_title": "", "paragraphs": ["B order officials are dually responsible for facilitating the lawful flow of people and goods, while at the same time preventing unauthorized entries and stopping illicit drugs and other contraband from entering the United States. As such, policy discussions around border security often involve questions about how illicit drugs flow into the country. These include questions about the smugglers, types and quantities of illicit drugs crossing U.S. borders, primary entry points, and methods by which drugs are smuggled. Further, these discussions often center on the shared U.S.-Mexico border, as it is a major conduit through which illicit drugs flow into the United States.", "Mexican transnational criminal organizations (TCOs) are a dominant influence in the U.S. illicit drug market and \"remain the greatest criminal drug threat to the United States; no other groups are currently positioned to challenge them.\" They produce and transport foreign-sourced drugs into the United States and control lucrative smuggling corridors along the Southwest border. Drug intelligence and seizure data provide some insight into drug smuggling into the country. Generally, intelligence suggests that more foreign-produced cocaine, methamphetamine, heroin, and fentanyl flow into the country through official ports of entry (POEs) than between the ports. Seizure data from U.S. Customs and Border Protection (CBP) follows this pattern as well. Conversely, more foreign-produced marijuana has historically been believed to flow into the country between the ports rather than through them. However, CBP seizure data indicate that, like cocaine, methamphetamine, heroin, and fentanyl, more marijuana was seized at POEs than between them in FY2019.", "While indicators suggest that large amounts of illicit drugs are flowing through POEs and that drug seizures are more concentrated at the ports, it is the flows between them that have been a primary topic of recent policy discussions around border security. This report focuses on the smuggling of illicit drugs between POEs. It briefly describes how these drugs are smuggled between the ports and then illuminates the discussion of how border barriers may shift or disrupt smuggling methods and routes. "], "subsections": [{"section_title": "Illicit Drug Smuggling Between Ports of Entry", "paragraphs": ["Notably, there are no data that capture the total quantity of foreign-produced illicit drugs smuggled into the United States at or between POEs; drugs successfully smuggled into the country have evaded seizure by border officials and are generally not quantifiable. In lieu of these data, officials, policymakers, and analysts sometimes rely on certain drug seizure data to help understand how and where illicit drugs are crossing U.S. borders.", "By weight, marijuana continues to be the illicit drug most-seized by border officials both at and between POEs, though total annual marijuana seizures have declined both at and between the ports in recent years. Historically, border officials have reported seizing more marijuana between POEs than at them. However, more marijuana, by weight, was seized at the ports than between them in FY2019. Of the 556,351 pounds of marijuana seized by CBP in that year, 289,529 pounds (52%) were seized at the ports, and 266,822 pounds (48%) were seized by the Border Patrol between the ports. ", "While marijuana remains the primary drug seized by the Border Patrol between POEs, the annual quantity seized, in pounds, has declined since FY2013 (see Figure 1 ). Conversely, the amount of methamphetamine seized by the Border Patrol has increased annually since FY2013, and seizures of cocaine, heroin, and fentanyl have fluctuated."], "subsections": [{"section_title": "Smuggling Methods", "paragraphs": ["Smugglers employ a variety of methods to move illicit drugs into the United States between POEs, through land, aerial, and subterranean routes. These methods include the use of underground tunnels, ultralight aircraft and unmanned aerial systems (UASs), maritime vessels, and backpackers, or \"mules.\" As noted, the smuggling between the official POEs has received heightened attention in policy discussions about border security. Specifically, there has been some debate about how physical barriers along the Southwest border between the POEs may deter or alter the smuggling of foreign-produced, illicit drugs into the country."], "subsections": [{"section_title": "Border Barriers and Smuggling", "paragraphs": ["Since the early 1990s, there have been efforts to build barriers along the Southwest border, in part, to deter the unauthorized entry of migrants and smugglers. More recently, in debates about physical barriers along the Southwest border, the prevention of drug smuggling and trafficking has been cited as a key goal and a reason to expand and enhance the physical barriers. For instance, the January 25, 2017, Executive Order 13767 stated that it is executive branch policy to \"secure the southern border of the United States through the immediate construction of a physical wall on the southern border, monitored and supported by adequate personnel so as to prevent illegal immigration, drug and human trafficking, and acts of terrorism.\" Analysts suggest that smugglers may respond (if they have not already, given the hundreds of miles of border barriers already in place) by moving contraband under, over, or through the barriers, as well as around them\u00e2\u0080\u0094including by changing their concealment techniques to move illicit drugs more effectively through POEs."], "subsections": [{"section_title": "Under Barriers", "paragraphs": ["Mexican traffickers utilize subterranean, cross-border tunnels to smuggle illicit drugs\u00e2\u0080\u0094primarily marijuana\u00e2\u0080\u0094from Mexico into the United States. Since the first one was discovered in 1990, tunnel construction has increased in sophistication. Tunnels may include amenities such as ventilation, electricity, elevators, and railways, and tunnel architects may take advantage of existing infrastructure such as drainage systems. For instance, in August 2019 officials discovered a sophisticated drug smuggling tunnel running more than 4,300 feet in length (over three-quarters of a mile) and an average of 70 feet below the surface from Tijuana, Mexico, to Otay Mesa, CA\u00e2\u0080\u0094the longest smuggling tunnel discovered to date. ", "CBP and Immigration and Customs Enforcement (ICE) have primary responsibility for investigating and interdicting subterranean smuggling. CBP has invested in technology and services to help close certain capability gaps such as predicting potential tunnel locations as well as detecting and confirming existing tunnels\u00e2\u0080\u0094including their trajectories\u00e2\u0080\u0094and tunneling activities. Reportedly, among the challenges in detecting tunnels is the variance in types of soil along the Southwest border, which requires different types of detection sensors. ICE, CBP, and other agencies coordinate through initiatives such as the Border Enforcement Security Task Force (BEST) program, where they have focused Tunnel Task Forces in various border sectors. The Government Accountability Office (GAO) recommended in 2017 that CBP and ICE further establish standard operating procedures, including best practices applicable to all border sectors, to coordinate their counter-tunnel efforts. Policymakers may question whether current agency coordination is sufficient or whether the agencies have implemented or should implement GAO's recommendation."], "subsections": []}, {"section_title": "Over Barriers", "paragraphs": ["Traffickers have moved contraband over border barriers through a variety of mechanisms, from tossing loads by hand and launching bundles from compressed air cannons to driving vehicles on ramps up and over certain types of fencing, as well as employing ultralight aircraft and unmanned aircraft systems (UASs) and drones. While ultralights are used to transport bulkier marijuana shipments, \"UASs can only convey small multi-kilogram amounts of illicit drugs at a time and are therefore not commonly used, though [officials see] potential for increased growth and use.\" For instance, in August 2017, border agents arrested a smuggler who used a drone to smuggle 13 pounds of methamphetamine over the border fence from Mexico into California.", "Border officials have tested several systems to enhance detection of ultralights and UASs crossing the border. Currently, CBP uses a variety of radar technology, including the Tethered Aerostat Radar System. These technologies are not, however, focused specifically on detecting illicit drugs being smuggled into the country over barriers; rather, they are more broadly used to help detect unauthorized movement of people and goods. Policymakers may examine technologies acquired and used by border officials, including whether they allow officials to keep pace with the evolving strategies of smugglers moving illicit drugs over the U.S. borders\u00e2\u0080\u0094specifically, over border barriers. In addition, they may examine whether, as GAO has recommended, CBP is assessing its performance in interdicting UASs and ultralights against specific performance targets to better evaluate the outcome of using these technologies."], "subsections": []}, {"section_title": "Through Barriers", "paragraphs": ["Various forms of physical barriers exist along the Southwest border, generally intended to prevent the passage of vehicles and pedestrians. Barrier styles and materials include expanded metal, steel mesh, chain link, steel and concrete bollards, and others. Smugglers have found ways to defeat them. They have cut holes and driven vehicles through fencing and, in at least one instance, have bribed border officials to provide keys to the fencing and inside knowledge about unpatrolled roads and sensor locations. More recently, smugglers have reportedly sawed through steel and concrete bollards on the newly constructed border barrier; \"after cutting through the base of a single bollard, smugglers can push the steel out of the way, creating an adult-size gap\" through which people and drugs can pass."], "subsections": []}, {"section_title": "Around Barriers", "paragraphs": ["Some have noted that border barriers may deter some portion of illegal drug smuggling, while an unknown portion will be displaced to areas without fencing. Specifically, along the Southwest border, barriers may shift some portion of smuggling traffic to other areas of the land border between the United States and Mexico as well as to the ocean. Some of these alternate areas may have terrain that acts as some sort of a barrier, presenting different challenges than those from constructed border barriers. These challenges may, in turn, deter or alter drug smuggling. In addition, there have been reports that the newly constructed border barrier in the San Diego border sector has coincided with an increase of maritime smuggling along that coast. Smugglers use small open vessels (\"pangas\"), which can travel at high speeds. They also use recreational boats and small commercial fishing vessels that can be outfitted with hidden compartments to \"blend in with legitimate boaters.\"", "In addition to moving illicit drugs across water or open areas of the land border without manmade barriers, the addition or enhancement of border barriers could lead some smugglers to move their contraband through POEs. The most recent data from CBP indicate that, in pounds, more illicit drugs\u00e2\u0080\u0094specifically marijuana, cocaine, methamphetamine, heroin, and fentanyl\u00e2\u0080\u0094are already being moved through POEs than between them. Policymakers may question whether any drug smuggling displaced to the POEs as a result of additional or augmented border barriers is a substantive change."], "subsections": []}]}, {"section_title": "Border Barriers and Their Influences on Illicit Drug Smuggling Between POEs", "paragraphs": ["A question policymakers may ask is what effect, if any, increased miles or enhanced styles of border barriers may have on drug smuggling between the POEs. Specifically, they may question whether additional border barrier construction will substantially alter drug smugglers' routes, tactics, speed, or abilities to breach these barriers and bring contraband into the country. A comprehensive analysis of this issue is confounded by a number of factors, the most fundamental being that the exact quantity of illicit drugs flowing into the United States is unknown . Without this baseline, analysts, enforcement officials, and policymakers rely on other data, albeit selected or incomplete, to help inform whether or how border barriers may affect illicit drug smuggling. ", "Border barriers are only one component of tactical infrastructure employed at the border. Infrastructure, in turn, is only one element (along with technology and personnel) of border security. Isolating the potential effects of changes in border barriers from those of other infrastructure investments, as well as from the effects of changes in technology and personnel, is a very difficult task. The Department of Homeland Security (DHS) has made efforts to estimate the effectiveness of border security on the Southwest border between POEs; however, the department recognizes inevitable shortcomings of these estimates due, in part, to unknown flows of people and goods. Further, its estimates of border security effectiveness do not make precise attributions of effectiveness to personnel, technology, or infrastructure\u00e2\u0080\u0094or even more specifically, the portion of infrastructure that is border barriers.", "There are also factors beyond the immediate personnel, technology, and infrastructure of border security efforts that may affect drug smuggling. These include \"the demand and supply for drugs, the type of drug being shipped, terrain and climate conditions, and smuggler counterintelligence functions.\" And, it may be difficult to separate the results of border security efforts from the effects of those external factors on drug smuggling. Moreover, changes in drug smuggling cannot always be directly linked to changes in border security efforts. ", "Policymakers may continue to question how DHS is identifying and evaluating any potential changes in drug smuggling between the POEs. More specifically, they may examine whether or how DHS is linking observed changes in drug seizure data\u00e2\u0080\u0094sometimes used as one proxy for drug smuggling\u00e2\u0080\u0094to specific border security efforts such as expanded border barriers. They may also consider how any return on investment in border barriers (measured by effects on illicit drug seizures) compares to the relative return from other border security enhancements. Relatedly, policymakers may continue to examine how DHS defines \"success\" or \"effectiveness\" of border barriers in deterring or altering drug smuggling. For instance, is an effective barrier one that deters the smuggling of illicit drugs altogether, or might it be one that slows smugglers, changes their routes, or alters their techniques so that border officials have more time, opportunity, or ability to seize the contraband? In addition, policymakers may question whether or how border barriers contribute to gathering intelligence that can be used by the broader drug-control community and whether that potential outcome is a measure of effectiveness."], "subsections": []}]}]}]}}
{"id": "R46096", "title": "Leveraged Lending and Collateralized Loan Obligations: Frequently Asked Questions", "released_date": "2019-12-04T00:00:00", "summary": ["Leveraged lending generally refers to loans made to businesses that are highly indebted or have a low credit rating. Most leveraged loans are syndicated, meaning a group of bank or nonbank lenders collectively funds a leveraged loan made to a single borrower, in contrast to a traditional loan held by a single bank. In some cases, investors hold leveraged loans directly. However, more than 60% of leveraged loans are securitized into collateralized loan obligations (CLOs)\u00e2\u0080\u0094securities backed by cash flow from pools of leveraged loans. These securities are then sold to investors. The largest investors in leveraged loans and CLOs are mutual funds, insurance companies, banks, and pension funds.", "During the past decade, the U.S. leveraged loan market experienced periods of growth; it grew by 20% in 2018, bringing the amount outstanding to more than $1 trillion. According to some industry observers, deteriorating credit quality and decreasing investor safeguards have accompanied this growth; however, default rates have remained low. The share of leveraged loans originated by and held by banks has declined, whereas the roles of nonbank participants, such as investment management and finance companies, have increased. In addition, some observers have noted similarities between leveraged lending and CLO market characteristics and those of certain mortgage lending and mortgage-backed securities (MBS) markets in the lead-up to the 2007-2009 financial crisis. As a result, leveraged lending has raised a number of interrelated policy issues.", "Observers express concerns that leveraged lending presents certain financial and economic risks, as both a potential source of systemic risk and a mechanism that could exacerbate a future recession (even if it does not cause financial instability). Leveraged lending could pose systemic risk because it couples high risk with opacity, potentially leading to unexpectedly high losses and financial disruption. Some experts have argued that potential leveraged loan losses or illiquidity could lead to contagion effects, wherein one financial firm's distress affects other firms and activities. However, banks' limited exposure to leveraged loans and stronger postcrisis capital and liquidity positions might mitigate contagion effects. For these reasons, some financial authorities (e.g., the chairman of the Federal Reserve) have indicated that although leveraged loans raise some concerns, they \"do not appear to present notable risks to financial stability.\" Even if leveraged loans do not cause financial instability, some nonfinancial firms that rely on leveraged lending could lose access to financing during the next downturn, which could negatively affect their operations if they were unable to find alternative funding. Overall borrowing by nonfinancial firms is historically high, which could lead to a larger-than-normal cutback in their spending or more corporate failures in the next recession, exacerbating that recession.", "Some assert that because certain leveraged loans, such as those involved in private nonbank transactions, face different regulation than leveraged lending by banks and comparable bond issuances, the market might be ineffectively regulated. In addition, some analysts have argued that a lack of transparency in the leveraged lending market prevents the industry and regulators from fully monitoring risks that could be addressed through increased data collection and sharing.", "To date, Congress and the financial regulators have mainly limited the policy response to leveraged lending to monitoring risks. A more active regulatory intervention would be complicated by the fact there are few specific regulations governing leveraged lending. (One exception is a supervisory guidance issued by bank regulators in 2013, which the regulators have stressed is nonbinding but the Government Accountability Office declared to be a regulation for Congressional Review Act purposes in 2017.) Addressing systemic risk is under the purview of federal financial regulators, including the Financial Stability Oversight Council (FSOC), an interagency council headed by the Treasury Secretary. Although FSOC recommended in its 2018 Annual Report that the financial regulators \"continue to monitor levels of nonfinancial business leverage, trends in asset valuations, and potential implications for the entities they regulate,\" it did not recommend regulatory or legislative changes to address leveraged lending."], "reports": {"section_title": "", "paragraphs": ["R apid growth in leveraged lending, a relatively complex form of credit, in the current economic expansion has raised concerns with some policymakers because they have noted similarities between leveraged lending and mortgage lending and mortgage-backed securities (MBS) markets in the lead-up to the 2007-2009 financial crisis. This report explains how leveraged lending works; identifies the borrowers, lenders, and investors who participate in the market; and examines the characteristics of a leveraged loan. It then explains the characteristics of collateralized loan obligations (CLOs)\u00e2\u0080\u0094securities backed by cash flow from pools of leveraged loans\u00e2\u0080\u0094and their investors. Understanding CLOs is crucial to a discussion of the policy issues surrounding leveraged lending because more than 60% of investment in leveraged lending occurs through CLOs. The report also provides data on trends and investor composition. Once these basics are explained, the report explores the regulation of\u00e2\u0080\u0094and some of the potential risks posed by\u00e2\u0080\u0094leveraged lending and CLOs. Finally, it discusses how policymakers have addressed leveraged lending issues to date."], "subsections": [{"section_title": "What Is Leveraged Lending?", "paragraphs": ["Put simply, leveraged lending refers to loans to companies that are highly indebted (in financial jargon, highly leveraged ). Conceptually, a leveraged loan is understood to be a relatively high-risk loan made to a corporate borrower, but there is no consensus definition of leveraged lending for measurement purposes. Instead, different observers or industry groups use various working definitions that may refer to the borrower's corporate credit rating or a ratio of the company's debt to some measure of its ability to repay that debt, such as earnings or net worth. Because they are high risk, leveraged loans typically have relatively high interest rates, and thus offer higher potential returns for lenders. "], "subsections": [{"section_title": "Who Are the Borrowers?", "paragraphs": ["Leveraged loans are made to companies from all industries, and the concentration of leveraged lending in each industry varies over time based on industries' economic conditions. In the second quarter of 2018, healthcare and service were the top two industries using leveraged lending. Leveraged loans are often used to complete a buyout or merger, restructure a company's balance sheet (by buying back shares, for example), or refinance existing debt."], "subsections": []}, {"section_title": "Who Are the Lenders?", "paragraphs": ["Several types of institutions provide funds to borrowers in leveraged lending, including banks, insurance companies, pension funds, mutual funds, hedge funds, and other private investment funds. Put simply, those institutions are the lenders. However, this concise explanation does not capture certain important characteristics and dynamics within the leveraged lending market.", "The institution that originates a leveraged loan rarely, if ever, subsequently holds the loan entirely on its own balance sheet, because a lender often would be wary of taking on a large exposure to a single highly indebted company. Instead, the originating lender typically will either (1) partner with colenders, (2) sell pieces of a single loan to investors, or (3) bundle part or all of the loan into a pool of other leveraged loans in a process called securitization , then sell pieces of the pool to investors. The first two options\u00e2\u0080\u0094referred to as syndicat ion and participation , respectively\u00e2\u0080\u0094are described in more detail below. The third option creates securities called collateralized loan obligations (CLOs), which are described in more detail in the \" What Are CLOs? \" section. When examining statistics or regulations related to leveraged loans, this report will distinguish between institutions that issue (i.e., originate or create) leveraged loans and institutions that hold (i.e., invest in or purchase pieces of) leveraged loans or CLOs. ", "One notable recent trend is the migration of activity from the banking sector to the nonbank sector. Historically, banks played a primary role in both issuing and holding leveraged loans. However, in recent decades, nonbank credit investors, such as private investment funds and finance companies, have increasingly overtaken market share. As shown in Figure 1 , in the primary market , where leveraged loans are first created, bank financing has fallen from about 70% in the mid-1990s to below 10% in 2018, whereas all other nonbank financing combined now comprises more than 90% of leveraged loan investments. As discussed below, this migration of activity from the banking industry to nonbank institutions has implications for systemic risk and how leveraged loans are regulated. "], "subsections": []}, {"section_title": "What Are Loan Syndication and Participation?", "paragraphs": ["In general, a single lender does not want to hold a whole leveraged loan because such loans are large and risky. Instead, lenders typically use economically similar but contractually different arrangements\u00e2\u0080\u0094syndication and participation\u00e2\u0080\u0094to divide the loan among multiple lenders. Under both arrangements, multiple lenders provide a portion of the loan's funding and share in its risk and returns. ", "The contractual relationship between the parties differs in syndications and participations. In a syndicated loan, the borrower enters into a single loan agreement with multiple lenders. Hence, all lenders have a direct contractual relationship with the borrower. Alternatively, a single lender could enter into the loan agreement with the borrower, and this originating lender could then sell portions of the loan, called participations , to other lenders. In this case, the borrower has a direct contractual relationship with the originating lender, who in turn has contractual relationships with the other participants. In either case, the loan has in effect been split up between multiple lenders, even though the particulars of the various parties' contractual rights and responsibilities differ.", "Syndication and participation require a relatively high degree of coordination among various institutions and stakeholders, and industry practice is that one company acts as an arranger of the deal. The arranger gathers information about the borrower and the loan's purpose, determines appropriate pricing and loan terms, and brings together lenders to join a loan syndication or buy participations. After the deal is closed, the arranger or another company acts as the loan's agent by collecting the payments and fees and passing the appropriate amounts to the loan's holders. The arranger and agent collect fees for these services. ", "Traditionally, arrangers and agents were banks, who would also hold a large portion of the loan, and the colenders were also banks. Since the mid-1990s, colenders have increasingly been nonbank lenders, such as finance companies and private investment funds, and the portions of loans held by banks have decreased. In some cases, nonbank lenders have taken on the arranger and agent roles. How syndications and participations are regulated is covered in \" How Are Leveraged Loans Regulated? \""], "subsections": []}, {"section_title": "What Are Covenants and Covenant-Lite Loans?", "paragraphs": ["Leveraged loan agreements typically include covenants \u00e2\u0080\u0094provisions in the loan contract that set conditions the borrower must meet to avoid technical default (as opposed to a payment default, wherein a scheduled payment is missed). Often these conditions relate to indications of the borrower's ability to repay the loan, such as cash flow and financial performance, or restrict certain actions the borrower may take, such as management changes or asset sales. If the borrower violates a covenant, the lender can accelerate or call the loan (possibly forcing the borrower into bankruptcy), but often lenders will instead restructure the loan with stricter terms that may include additional restrictions on the borrower's behavior.", "Lenders see covenants as an important mechanism to monitor the borrower's ability to repay the loan and avoid repayment defaults. Loan agreements that include fewer or more lax covenants than are found in traditional leveraged lending contracts are often characterized as covenant-lite . A number of industry observers have noted that covenant-lite loans are becoming more common, and some have argued this indicates credit standards are declining and could lead to higher losses in the future. However, the causes of the increase in covenant-lite loans and the level of concern this trend warrants are subject to debate."], "subsections": []}, {"section_title": "What Is the Size of the Leveraged Lending Market, and How Much Has It Grown Recently?", "paragraphs": ["The Federal Reserve states that there were approximately $1.15 trillion of leveraged loans outstanding at the end of 2018. For comparison, this amount was similar to U.S. auto loans ($1.16 trillion) or credit card debt ($1.06 trillion) outstanding. ", "In recent years, leveraged lending has grown much faster than other categories of credit reported by the Federal Reserve (see Table 1 ). The $1.15 trillion outstanding was a 20.1% increase from a year earlier\u00e2\u0080\u0094more than four times the growth of overall business credit\u00e2\u0080\u0094and annual growth has averaged 15.8% since 2000. By comparison, student loans outstanding grew 5.3% last year and have averaged 9.7% annual growth since 1997. ", "In part, the rapid growth in leveraged loans reflects growing nonfinancial business indebtedness, but overall nonfinancial business indebtedness grew only about a fifth as quickly as leveraged lending. This suggests that leveraged lending growth may reflect a substitution of one type of debt for another."], "subsections": []}]}, {"section_title": "Who Holds Leveraged Loans?", "paragraphs": ["Investors can hold leveraged loans by either (1) investing directly in individual leveraged loans, typically through syndications and participations or (2) investing in CLOs. Institutions that directly hold large shares of outstanding leveraged loans include mutual funds (19%), banks (8%), and insurance companies (6%), as shown in Figure 2 . According to one study, mutual fund holdings are split fairly evenly between funds offered to institutional investors and funds offered to retail investors. Nearly all of the remainder of leveraged loans (62%) are held by CLOs. Portions, or tranches , of CLOs are then sold, largely to the same types of investors that invest directly in leveraged loans. CLOs will be discussed in more detail in the next section. As discussed above, banks' share of funding in the leveraged loan market has exhibited a long-term decline."], "subsections": []}, {"section_title": "What Are CLOs?", "paragraphs": ["Collateralized loan obligations are securities backed by portfolios of corporate loans. Although CLOs can be backed by a pool of any type of business loan, in practice, U.S. CLOs are primarily backed by leveraged loans, according to the Federal Reserve. The outstanding value of U.S. CLOs has grown from around $200 billion at year-end 2006 to $617 billion at year-end 2018. As noted above, about 60% of leveraged loans are held in CLOs.", "CLOs offer a way for investors to receive cash flows from many loans, instead of being completely exposed to potential payments or defaults on a single loan. To isolate financial risks, CLOs are structured as bankruptcy-remote special purpose vehicles (SPVs) that are separate legal entities. Each CLO has a portfolio manager, who is responsible for constructing the initial portfolio as well as the CLO's ongoing trading activities. CLO managers are primarily banks, investment firms (including hedge funds), and private equity firms. ", "CLOs are sold in separate tranches , which give the holder the right to the payment of cash flow on the underlying loans. The different tranches are assigned different payment priorities, so some will incur losses before others. This tranche structure redistributes the loan portfolios' credit risk. The tranches are often known as senior , mezzanine , and equity tranches, in order from highest to lowest payment priority, credit quality, and credit rating. Through this process, the loan portfolio's risks are redistributed to the lower tranches first, and tranches with higher credit ratings are formed. ", "In general, the financial industry views CLOs' tranched structure as an effective method for providing economic protection against unexpected losses. As Figure 3 illustrates, in the event of default, the lower CLO tranches would incur losses before others. Hence, tranches with higher payment priority have additional protection from losses and receive a higher credit rating. The pricing of the tranches also reflects this difference in asset quality and credit risk, with lower tranches offering potentially higher returns to compensate for greater risks taken. "], "subsections": []}, {"section_title": "Who Holds CLOs?", "paragraphs": ["CLOs are often sold to institutional investors, including asset managers, banks, insurance companies, and others. The asset management industry, which includes hedge funds and mutual funds, mainly holds the riskier mezzanine and equity tranches, and banks and insurers hold most of the lower-risk senior CLO tranches. The Federal Reserve estimated that U.S. investors held approximately $556 billion in CLOs based on U.S. loans at the end of 2018. Of this, an estimated $147 billion in U.S. CLO holdings were issued domestically. Detailed data on domestic CLOs' holders are not available; certain detailed data, however, can be found in the reporting of cross-border financial holdings, which comprise a large majority of U.S. CLOs. The cross-border financial reporting indicates that $409 billion of U.S. CLO holdings were issued in the Cayman Islands, apparently the only offshore issuer. Figure 4 provides an overview by investor type for domestic holdings of these CLOs."], "subsections": []}, {"section_title": "Could Leveraged Loans Exacerbate an Economic Downturn?", "paragraphs": ["The rapid growth of leveraged lending has led to concerns that this source of credit could dry up in the next downturn. A slowdown in leveraged loan issuance could pose challenges for the (primarily) nonfinancial companies relying on leveraged loans for financing. Were these firms to lose access to financing, they could be forced to reduce their capital spending, among other operational constraints, if they were unable to find alternative funding sources. Capital spending (physical investment) by businesses is typically one of the most cyclical components of the economy, meaning it is highly sensitive to expansions and recessions. Overall borrowing by nonfinancial firms is historically high at present. This raises concerns that heavily indebted firms could experience a debt overhang \u00e2\u0080\u0094where high levels of existing debt curtail a firm's ability to take on new debt\u00e2\u0080\u0094in the next downturn. If a debt overhang at nonfinancial firms leads to a larger-than-normal reduction in capital spending or more corporate failures, this might exacerbate the overall downturn.", "If a downturn in the leveraged loan market had a negative effect on financial stability, as discussed in the next section, negative effects on the overall economy could be greater."], "subsections": []}, {"section_title": "What Are the Risks Associated with Leveraged Loans and CLOs?", "paragraphs": ["Leveraged loans and CLOs pose potential risks to investors and overall financial stability. Some risks, such as potential unexpected losses for investors, are presented by both leveraged loans and CLOs. Some apply to only one, such as risks posed by securitization presented by CLOs. This section considers the risks posed by both, highlighting differences between the two where applicable.", "Risks to investors. Like any financial instrument, leveraged loans and CLOs pose various types of risk to investors. In particular, they pose credit risk \u00e2\u0080\u0094the risk that loans will not be repaid in full (due to default, for example). Credit risk is heightened because the borrowers are typically relatively indebted, have low credit ratings, and, in the case of covenant-lite loans, certain common risk-mitigating protections have been omitted. The ways borrowers often use the funds raised from leveraged loans, such as for leveraged buyouts, can also be high risk. Nevertheless, the overall risk of leveraged loans should not be exaggerated\u00e2\u0080\u0094leveraged loans have historically had lower default rates and higher recovery rates in default than high-yield ( junk ) bonds, another form of debt issued by financially weaker firms. Credit risk is mitigated to a certain degree because leveraged loans are typically secured and their holders stand ahead of the firm's equity holders to be repaid in the event of bankruptcy. Furthermore, leveraged loans typically have floating interest rates, so interest rate risk is borne by the borrower, not the investor.", "As mentioned in the \"What Are CLOs?\" section, when leveraged loans are securitized and packaged into CLOs, the credit risk of the original leveraged loans is redistributed by the CLOs' tranched structure, with senior tranches (mostly held by banks and insurers) often receiving the highest credit rating (e.g., AAA) and junior tranches (mostly held by hedge funds and other asset managers) receiving lower credit ratings. Subordinated debt and equity positions provide additional protection to the senior tranches. Tranching distributes CLO credit risk differently across investors in different tranches.", "Up to this point in the credit cycle, the risks associated with leveraged loans and CLOs have largely not materialized\u00e2\u0080\u0094leveraged loan default rates have been relatively low because of low interest rates and robust business conditions. But some analysts fear that default rates could spike if economic conditions worsen, interest rates rise, or both\u00e2\u0080\u0094and these possibilities may not have been properly priced in. Default rates on leveraged loans rose from below 1% to almost 11% during the last recession. An unanticipated spike in default rates would impose unexpected losses on leveraged loan and CLO holders.", "Systemic risk. Investment losses associated with changing asset values, by themselves, are routine in financial markets across many types of assets and pose no particular policy concern if investors have the opportunity to make informed decisions. The main policy concern is whether leveraged loans and CLOs pose systemic risk ; that is, whether a deterioration in leveraged loans' performance\u00e2\u0080\u0094particularly if it were large and unexpected\u00e2\u0080\u0094could lead to broader financial instability. This depends on whether channels exist through which problems with leveraged loans could spill over to cause broader problems in financial markets. Losses on leveraged loans or liquidity problems with leveraged loans could lead to financial instability through various transmission channels discussed below.", "During the financial crisis, problems with mortgage-backed securities (MBS) demonstrated how a class of securities can pose systemic risk. Similar to CLOs, MBS are complex, opaque securities backed by a pool of underlying assets that are typically tranched, with the senior tranches receiving the highest credit rating. Unexpected declines in housing prices and increases in mortgage default rates revealed that MBS\u00e2\u0080\u0094both highly rated and lowly rated tranches\u00e2\u0080\u0094had been mispriced, with the previous pricing not accurately reflecting the underlying risks. The subsequent repricing led to a cascade of systemic distress in the financial system: liquidity in the secondary market for MBS rapidly declined and fire sales pushed all MBS prices even lower. MBS losses caused certain leveraged and interconnected financial institutions, including banks, investment firms, and insurance companies, to experience capital shortfalls and lose access to the short-term borrowing markets on which they relied. Ultimately, these problems caused financial panic and a broader decline in credit availability as financial institutions deleveraged \u00e2\u0080\u0094reducing new lending activity to restore their capital levels\u00e2\u0080\u0094in response to MBS losses. The resulting reduction in credit in turn caused a sharp decline in real economic activity. ", "CLOs today share some similarities with MBS before the crisis, but there are important differences. Similarities include the rapid growth in available credit and erosion of underwriting standards. Both types of securities are relatively complex and opaque, potentially obfuscating the underlying assets' true risks. Outstanding leveraged loans and CLOs are small relative to overall securities markets, which in isolation is prima facie evidence that they pose limited systemic risk, even if they were to become illiquid or subject to fire sales. However, before the financial crisis, policy concerns were mainly focused on potential problems in subprime mortgage markets, which were also relatively small. Nevertheless, problems with subprime mortgages turned out to be the proverbial tip of the iceberg, as the deflating housing bubble caused losses in the much-larger overall mortgage market. Analogously, a disruption in the leveraged lending market could create spillover effects in related asset classes, similar to how problems that started with subprime mortgages eventually spread to the entire mortgage market and nonmortgage asset-backed securities in the financial crisis. Ultimately, the underlying cause of the MBS meltdown was the bursting of the housing bubble. Despite the high share of business debt to gross domestic product (GDP) at present, experts are divided on whether there is any underlying asset bubble in corporate debt markets (analogous to the housing bubble) that could lead to a destabilizing downturn. ", "In addition, it is not clear whether unexpected losses in leveraged lending would lead to broader systemic deleveraging by financial firms or problems for systemically important institutions. Losses on leveraged loans or CLOs might not cause problems for leveraged financial institutions, such as banks, because (1) their leveraged loan and CLO holdings are small relative to total assets and limited mostly to AAA tranches; and (2) banks face higher capital and liquidity requirements to protect against losses or a liquidity freeze, respectively, than they did before the crisis. Furthermore, the largest holders of leveraged loans and CLOs are asset managers. They generally hold these assets as agents on their clients' behalf and thus are normally not vulnerable to insolvency from asset losses because those losses are directly passed on to account holders, who own the assets. ", "Another source of systemic risk relates to a liquidity mismatch for certain holders. There is potentially an incentive for investors in leveraged loan mutual funds and exchange traded funds (ETFs), respectively, to redeem their shares on demand for cash or sell their shares during episodes of market or systemic distress, similar to a bank run. Because the underlying leveraged loans and CLOs are illiquid, investors who are first to exit could limit their losses if they redeem them while the fund still has cash on hand and is not forced to sell the underlying assets at fire sale prices. This incentive could act as a self-fulfilling prophecy, as the incentive to run could cause mass redemptions that then force fire sales that reduce the fund's value. Leveraged loan mutual funds generally allow withdrawal on demand, but other run risk may be limited because \"U.S. CLOs are not required to mark-to-market their assets, and early redemption by investors is generally not permissible\" and other private investment funds, such as hedge funds, often feature redemption restrictions.", "Although the financial crisis is a cautionary tale, there are other historical examples where a sudden shift in an asset class's performance did not lead to financial instability. For example, a collapse in the junk bond market following a spike in defaults from 1989 to 1990 did not pose problems for the broader financial system or economy. In addition, while CLO issuance slowed during the last financial crisis, the rating agency and data provider Standard & Poor's reports that CLO default rates remained low and \"no tranches originally rated AAA or AA experienced a loss\" throughout the crisis. However, the amount of CLOs outstanding was much smaller then compared to now, and product features have changed over time. More recently, in December 2018, relatively large investor withdrawals from bank loan mutual funds did not result in instability in the leveraged loan market."], "subsections": []}, {"section_title": "How Are Leveraged Loans Regulated?", "paragraphs": ["The goals of financial regulation, and the tools used to achieve those goals, vary based on the type of financial institution, market, or instrument involved. Thus, to answer this question, it is useful to break down leveraged loan regulation by the type of institution and activity (issuance, investment, and securitization). ", "Leveraged lending falls under the purview of multiple regulators with different regulatory approaches and authorities. This regulatory fragmentation could encourage activities to migrate to less-regulated sectors, limits the official data available, and may complicate the evaluation and mitigation of any potential systemic risk to financial stability associated with leveraged lending. ", "Following the 2007-2009 financial crisis, the Financial Stability Oversight Council (FSOC), an interagency council of regulators headed by the Treasury Secretary, was created to address threats to financial stability and issues where regulatory fragmentation hinders an effective policy response. In its 2018 Annual Report, FSOC recommended that the financial regulators \"continue to monitor levels of nonfinancial business leverage, trends in asset valuations, and potential implications for the entities they regulate.\" Outside of monitoring risk, FSOC has not, to date, recommended any regulatory or legislative changes to address leveraged lending."], "subsections": [{"section_title": "How Are Leveraged Loan Issuance and Syndication Regulated?", "paragraphs": ["The regulations applicable to leveraged loan issuance and syndication differ between banks and nonbank lenders. In both cases, though, leveraged lending falls under the laws and regulations applied to business lending in general, rather than rules that apply specifically to leveraged lending.", "In general, banks are required to act in a safe and sound manner to mitigate the potential for failure and are subject to supervision to ensure that they are doing so. As such, regulators generally will check banks' leverage loan origination, syndication, and participation practices as part of regular examinations. This supervision could uncover cases in which a bank is originating or syndicating excessively risky leveraged loans. In addition, the bank regulators have issued guidance documents, most recently in 2013, describing certain standards and practices and communicating regulator expectations related to leveraged lending. Whether this guidance qualifies as regulation that must go through the rulemaking process is a matter of debate examined in the \" What Is the Status of the Bank Regulators' Leveraged Loan Guidance? \" section later in this report. In any case, the guidance covers only the leveraged loan activities of banks, is not meant to cover nonbank activity or bank investment in CLOs, and cannot address potential systemic risk originating outside of the banking system. ", "Nonbank participants, with the exception of insurance companies, generally are not subject to similar oversight. To the extent that banks' role in leveraged lending is decreasing, and particularly in cases where a bank is not involved in a leveraged loan at all, this could result in reduced regulatory oversight of leveraged loan issuance and syndication."], "subsections": []}, {"section_title": "What Regulations Do Investors Face When They Hold Leveraged Loans or CLOs?", "paragraphs": ["Regulations applicable to holding leveraged loans or CLOs depend on what type of entity is involved. Nonbank investment funds, banks, and insurance companies all face different requirements. As with regulations applying to issuance, these rules generally are not uniquely or specifically applied to leveraged loans and CLOs, but rather to all types of loans and assets held by these institutions.", "Banks. Banks face a number of prudential (or safety and soundness) regulations related to all bank activities, including leveraged lending. Capital requirements and the Volcker Rule are notable prudential regulations banks must consider when engaged in leveraged lending. ", "Certain payments banks make on capital are flexible, unlike the rigid payment obligations they face on deposits and liabilities. Thus, capital gives banks the ability to absorb some amount of losses without failing. Banks are required to satisfy several requirements to ensure they hold enough capital. In general, these requirements are expressed as minimum ratios between certain balance sheet items that banks must maintain. L everage ratios require banks to hold a certain amount of capital for all loans regardless of riskiness, whereas r isk -weighted ratios require banks to hold an amount of capital based on the riskiness of the loan. When a bank holds leveraged loans or CLO tranches or makes credit available to others to finance leveraged loans or CLOs, it must comply with both types of requirements. Based on the characteristics of individual loans and assets, a bank might be required to hold a relatively large amount of capital for leveraged loans and CLOs to comply with risk-weighted ratios.", "Banks also face certain permissible activity restrictions , which prohibit them from engaging in certain risky activities. Section 619 of the Dodd-Frank Act (called the Volcker Rule) is one such regulation that prohibits banks from proprietary trading and certain relationships with hedge funds and certain other funds. The latter restriction may be pertinent to banks' involvement in CLOs, depending on how they are structured. Although CLOs may be structured in a manner similar to loan participations (which generally are allowed under the Volcker Rule), they can also be structured such that banks' ownership interests appear similar to those associated with hedge funds (which is generally not allowed under the Volcker Rule). The Volcker Rule establishes criteria for a CLO to qualify for an exemption. Moreover, the final rule provides guidance on how banks may construct CLO structures to avoid retaining impermissible ownership or equity interests that resemble hedge funds. ", "In addition, banks are subject to periodic examination by federal bank regulators. If examiners determine a bank is holding overly risky loans, they can give it a worse rating (which in turn could increase the fees it pays for deposit insurance or restrict it from certain activities) or direct it to take corrective action. Because leveraged loans are considered more risky than other loan types, they may be more likely to draw examiners' attention and elicit a response.", "Furthermore, the bank regulators established the Shared National Credit Program in 1977 to more closely monitor and assess risk related to large syndicated loans. The program requires banks to report data on syndicated loans larger than $100 million. ", "To inform banks of their regulatory obligations and regulator expectations related to leveraged lending, the federal bank regulatory agencies have issued a guidance document to banks. Whether this document qualifies as an official regulation, as well as, whether it inappropriately discouraged banks from engaging in leveraged lending, is a subject of debate covered in this report's section \" What Is the Status of the Bank Regulators' Leveraged Loan Guidance? \" below.", "Asset management . Relative to banking, investment funds in the asset management industry involve different operational frameworks and regulatory requirements. The asset management industry's operating framework is an agent-based model that separates investment management functions from investment ownership. In this model, risk is largely borne by the investors who own the assets, not by the companies managing them. This is different from the model used for banking, in which banks own and retain the assets and risks. Asset managers are generally not subject to safety and soundness regulations that apply to banks.", "The Securities and Exchange Commission (SEC) is the primary regulator overseeing the asset management industry. The main components of the SEC's asset management regulatory regime include disclosure requirements, investor access restrictions, examinations, and risk mitigation controls. In addition, the SEC's Office of Compliance Inspections and Examinations (OCIE) is responsible for conducting examinations and certain other risk oversight of the asset management industry. Examples of violations involving leveraged loan capital markets participants that could trigger a SEC investigation include market manipulation and violation of fiduciary duties. Industry self-regulatory organizations under SEC oversight, such as the Financial Industry Regulatory Authority (FINRA), could also examine broker-dealers involved with leveraged lending. ", "Restrictions or requirements for investment funds in the leveraged lending and CLO markets depend on whether a fund is public (broadly accessible by investors of all types) or private (accessible only by institutional and individual investors who meet certain size and sophistication criteria). Public funds that invest in leveraged lending and CLOs include mutual funds and exchange-traded funds (ETFs), whereas private fund investors include hedge funds and private equity. Depending on the types of the funds, they could also be subject to other requirements, such as disclosure of portfolio holdings through prospectus, conflict of interest mitigation through fiduciary requirements, liquidity and leverage restrictions, as well as operational compliance requirements to safeguard client assets. ", "Insurance. Insurance firms are regulated for safety and soundness, but at the state level rather than by a federal entity. Insurance firms also face risk-based capital requirements that affect how many leveraged loans and CLOs they hold. Insurance capital requirements focus significantly on the riskiness of insurers' contingent liabilities (i.e., potential claims), in addition to the riskiness of the assets they hold. The National Association of Insurance Commissioners (NAIC) assigns a risk assessment to the assets (including leveraged loans and CLOs) insurance companies purchase to back their claims. Riskier assets get less credit toward fulfilling those capital requirements. Thus, the risk assessment assigned to individual leveraged loans and CLOs largely determines the limits that capital requirements impose on insurers' holdings of those loans and securities. In 2017, 97% of CLOs held by insurers received an investment-grade rating from the NAIC (NAIC-1 or NAIC-2), posing less expected risk and requiring less capital to guard against that risk than lower-rated holdings.", "A significant difference between the insurance and banking industries, and thus how they are regulated for safety and soundness, is the importance of matching the durations of assets and liabilities in insurance, particularly life insurance. Insurance often entails much longer-term liabilities than does banking, allowing insurers to safely hold longer-term assets to match these longer-term liabilities. This allowance for duration matching may influence the leveraged loans and CLOs an insurer can safely hold. However, insurance regulators have recently increased their focus on the liquidity of insurers' assets, which could discourage insurers from holding many leveraged loans and CLOs because of their relative illiquidity."], "subsections": []}, {"section_title": "How Is the Securitization Process to Create CLOs Regulated?", "paragraphs": ["Through the securitization process, securities (CLOs) backed by leveraged loans are issued and sold to investors. This section highlights the regulatory requirements applied to CLOs and CLO managers. Notably, it discusses the initial application of risk-retention rules to CLOs, and their subsequent partial removal. ", "The securitization process traditionally allowed managers creating the securities to fully transfer their portfolio assets (and risks) to capital markets investors. This process could result in a misalignment of incentives between managers and investors because the managers did not share much of the securitized products' risks, which has been referred to as a lack of \"skin in the game.\" The 2007-2009 financial crisis revealed this misalignment as a structural flaw that contributed to the crisis. To address the issue, the SEC and other financial regulators adopted credit risk-retention rules under the Dodd-Frank Wall Street Reform and Consumer Protection Act ( P.L. 111-203 ) for securitization structures, including CLOs, in December 2016. The risk retention rule requires CLO managers to retain 5% of the original value of CLO assets, thus aligning their own interests with those of investors (i.e., imposing skin in the game). Subsequently, in 2018, the U.S. Court of Appeals ruled that managers of open-market CLOs, which are reportedly the most common form of CLOs, are no longer subject to risk-retention rules. However, other types of CLOs are still subject to risk-retention requirements.", "CLOs are securities instruments. The federal securities laws, including the Securities Act of 1933 (P.L. 73-22) and the Securities Exchange Act of 1934 (P.L. 73-291), require all offers and sales of CLO securities to either be registered under its provisions or qualify for an exemption from registration. Registration requires public disclosure of material information, such as the underlying security's financial details. However, most CLOs are created under private exemptions, which require less registration than public offerings but confine offerings to a more limited investor base. ", "As discussed above, a CLO manager oversees the securitization process. CLO managers are generally registered as investment advisers under the Investment Advisers Act of 1940. As a result, they are subject to the SEC's registration and compliance requirements as well as the fiduciary duties that obligate them to place clients' interests above their own."], "subsections": []}]}, {"section_title": "What Is the Status of the Bank Regulators' Leveraged Loan Guidance?", "paragraphs": ["Bank regulators use guidance to provide clarity to banks on supervision, such as how supervisors treat specific activities in their exams. In 2013, the federal bank regulators jointly issued an updated 15-page guidance document that described their \"expectations for the sound risk management of leveraged lending activities.\" Subsequently, banks asserted that following the guidance constrained them from making sound loans and that regulators enforced the guidance as if it were a binding regulation. As opposed to guidance, a regulation can be issued only if the agency follows the Administrative Procedure Act's requirements (5 U.S.C. \u00c2\u00a7551 et seq.), including the notice and comment process and other relevant requirements. Under the Congressional Review Act (CRA; P.L. 104-121 ), regulators must submit new regulations and certain guidance documents to Congress, which can then prevent a regulation or guidance from taking effect by enacting a joint resolution of disapproval. Because the bank regulators appeared to have the view that the document did not meet the CRA's definition of \"rule,\" they did not submit it to Congress. ", "In 2017, Senator Pat Toomey asked the Government Accountability Office (GAO) to analyze the guidance and determine whether it qualified as a rule subject to CRA review. GAO concluded that the guidance is a rule subject to CRA review. Following GAO's determination, the bank regulators reportedly sent letters to Congress indicating they would seek further feedback on the guidance, and Federal Reserve Chairman Jerome Powell indicated at a hearing on February 27, 2018, that the Federal Reserve has emphasized to its bank supervisors that the guidance was nonbinding. The Comptroller of the Currency, Joseph Otting, reportedly stated in 2018 that the guidance provides flexibility for leveraged loans that do not meet its criteria, provided banks operate in a safe and sound manner. To date, no changes have been made to the guidance and no joint resolution of disapproval under the CRA has been introduced. The Congressional Research Service has been unable to locate a submission of the guidance to Congress following the GAO finding that it was required under the CRA."], "subsections": []}, {"section_title": "How Has Congress Responded to Leveraged Lending?", "paragraphs": ["The House Financial Services Committee held a hearing on June 4, 2019, entitled Emerging Threats to Stability: Considering the Systemic Risk of Leveraged Lending . Two unnumbered draft bills related to leveraged lending were considered at this hearing. The draft Leveraged Lending Data and Analysis Act would require the Office of Financial Research, a Treasury office that supports FSOC, to gather information, assess risks, and make recommendations in a report to Congress on leveraged lending. The draft Leveraged Lending Examination Enhancement Act would require the Federal Financial Institutions Examination Council (FFIEC), an interagency council of federal bank regulators, to set prudential standards for leveraged lending by depository institutions. It would also require the FFIEC to report quarterly on leveraged lending by depository institutions."], "subsections": []}]}}
{"id": "R45998", "title": "Contaminants of Emerging Concern under the Clean Water Act", "released_date": "2019-11-07T00:00:00", "summary": ["Recent decades have seen increased national attention to the presence of \"emerging contaminants\" or \"contaminants of emerging concern\" (CECs) in surface water and groundwater. Although there is no federal statutory or regulatory definition of CECs, generally, the term refers to unregulated substances detected in the environment that may present a risk to human health, aquatic life, or the environment and for which the scientific understanding of potential risks is evolving. CECs can include many different types of manufactured chemicals and substances\u00e2\u0080\u0094such as those in pharmaceuticals, industrial chemicals, agricultural products, and microplastics\u00e2\u0080\u0094as well as naturally occurring substances, such as algal toxins. Data on CECs that would help determine their risk to humans and aquatic life or other aspects of the environment are often limited. Increased monitoring and detections of one particular group of chemicals, per- and polyfluoroalkyl substances (PFAS), has recently heightened public and congressional interest in these CECs and has also prompted a broader discussion about how CECs are identified, detected, and regulated and whether additional actions should be taken to protect human health and the environment. While several statutes provide authorities to the U.S. Environmental Protection Agency (EPA) and states to address CECs, this report examines authorities available under the Clean Water Act (CWA)\u00e2\u0080\u0094which Congress established to restore and protect the quality of the nation's surface waters.", "EPA has several CWA authorities it may use to address CECs, although it faces some challenges in doing so. Under the CWA, a primary mechanism to control contaminants in surface waters is through permits. The statute prohibits the discharge of pollutants from any point source (i.e., a discrete conveyance) to waters of the United States without a permit. The CWA authorizes EPA and states to limit or prohibit discharges of pollutants in the National Pollutant Discharge Elimination System (NPDES) permits they issue. These permits incorporate technology-based and water-quality-based requirements.", "The CWA authorizes EPA and states to address CECs through technology-based effluent limitations using national Effluent Limitation Guidelines and Standards (ELGs) or by setting technology-based effluent limits in NPDES permits on a case-by-case basis. The CWA requires EPA to publish ELGs, which are the required minimum standards for industrial wastewater discharges. The CWA also requires EPA to annually review all existing ELGs and to publish a biennial plan that includes a schedule for review and revision of promulgated ELGs, identifies categories of sources discharging toxic or nonconventional pollutants that do not have ELGs, and establishes a schedule for promulgating ELGs for any newly identified categories. In cases where EPA has not established an ELG for a particular industrial category or type of facility, or where pollutants or processes were not considered when an ELG was developed, the permitting authority (EPA or states) may still impose technology-based effluent limits on a case-by-case basis. Although EPA and states have these authorities available to address CECs, there are some challenges to doing so, including a lack of data available to support new ELGs or updates to existing ELGs. Agency officials stated that it is difficult for the agency to keep pace with the growth of new chemicals in commerce.", "The CWA also authorizes EPA and states to address CECs through water-quality-based requirements. States are required to adopt water quality standards for waters of the United States and review them at least once every three years. The CWA requires EPA to publish, and \"from time to time thereafter revise\" water quality criteria that reflect the latest scientific knowledge. States use EPA's criteria as guidance in developing their water quality standards. The CWA directs states to adopt criteria to protect their water bodies' designated uses and to also adopt criteria for all pollutants on the Toxic Pollutant List, for which EPA has published criteria. Once a state adopts water quality criteria for a contaminant as part of its water quality standards, several CWA tools are available to the state for achieving them. The primary tool is to establish water-quality-based effluent limitations in NPDES permits. Although EPA and states have authority to address CECs through water-quality-based requirements, they often lack data needed to support development of criteria or water-quality-based effluent limitations.", "The CWA also authorizes EPA to designate contaminants as toxic pollutants or as hazardous substances, which may trigger other actions under the CWA and the Comprehensive Environmental Response, Compensation, and Liability Act.", "Recent congressional interest in CECs has focused on addressing one particular group of CECs\u00e2\u0080\u0094PFAS\u00e2\u0080\u0094and on addressing them through other statutes. However, in the 116 th Congress, H.R. 3616 and H.Amdt. 537 , Section 330A, of the House-passed version of the National Defense Authorization Act for FY2020 ( H.R. 2500 ), would direct EPA to add PFAS to the CWA Toxic Pollutant List and publish ELGs that establish effluent limitations and standards for PFAS within specified time frames."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["Over the past couple of decades, national attention to \"emerging contaminants\" or \"contaminants of emerging concern\" (CECs) in surface water and groundwater has been increasing. Although there is no federal statutor y or regulatory definition of CECs, generally, the term refers to unregulated substances detected in the environment that may present a risk to human health, aquatic life, or the environment. CECs can include many different types of manmade chemicals and substances\u00e2\u0080\u0094such as those in personal care products, pharmaceuticals, industrial chemicals, lawn care and agricultural products, and microplastics\u00e2\u0080\u0094as well as naturally occurring substances such as algal toxins or manganese. ", "CECs often enter the environment, including ground and surface waters, via municipal and industrial wastewater discharges and urban and agricultural storm runoff. Although municipal and industrial wastewater are both treated prior to discharge into waterways, treatment facilities are often not designed to remove CECs. The availability of data on CECs\u00e2\u0080\u0094such as concentration and pervasiveness in the environment or exposure or toxicity data that would help determine their risk to humans and aquatic life\u00e2\u0080\u0094may be limited. ", "In some cases, detections of CECs in the environment have triggered a call for action from federal, state, and local government, as well as Congress. Increased monitoring and detections of one particular group of chemicals, per- and polyfluoroalkyl substances (PFAS), has recently heightened public and congressional interest in these CECs and has also prompted a broader discussion about how CECs are identified, detected, and regulated and whether additional actions should be taken to protect human health and the environment. ", "Several statutes\u00e2\u0080\u0094including the Safe Drinking Water Act; the Toxic Substances Control Act (TSCA); the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA); and the Clean Water Act (CWA) \u00e2\u0080\u0094provide authorities to the U.S. Environmental Protection Agency (EPA) and states to address particular CECs. In the 116 th Congress, Members have introduced more than 40 bills to address PFAS through various means. Multiple bills, including House- and Senate-passed National Defense Authorization Act (NDAA) bills for FY2020 ( H.R. 2500 and S. 1790 , respectively), would direct EPA to take regulatory and other actions to address PFAS under several environmental statutes. Two of these bills ( H.R. 2500 and H.R. 3616 ) would direct EPA to address PFAS using authorities provided to the agency under the CWA, which Congress established to restore and protect the quality of the nation's surface waters.", "Global concern about another group of CECs\u00e2\u0080\u0094microplastics\u00e2\u0080\u0094and their potential impacts has also been mounting. Recent studies have found that treated effluents from wastewater treatment plants can be key sources of microplastics, as can runoff from agricultural sites where sewage sludge from the wastewater treatment process has been applied as fertilizer. As with many other CECs, wastewater treatment facilities are generally not designed to screen for microplastic debris, such as microbeads, plastic fragments, or plastic fibers from clothing. Congress has shown interest in addressing the impacts of plastic pollution. In 2015, Congress passed legislation to ban plastic microbeads from rinse-off personal care products (\"Microbead-Free Waters Act of 2015,\" P.L. 114-114 ). More recently, some Members in the 116 th Congress announced plans to introduce comprehensive legislation to address plastic waste in fall 2019.", "Some stakeholders have asserted that EPA could be more effective in using its existing CWA authorities to address CECs, while others have suggested a need to identify and address potential gaps in CWA authorities through amendments to the statute. This report examines authorities available to address CECs under the CWA."], "subsections": []}, {"section_title": "Addressing CECs through the Clean Water Act", "paragraphs": ["EPA has several CWA authorities it may use to address CECs, although it faces some challenges in doing so. The CWA's stated objective is \"to restore and maintain the chemical, physical, and biological integrity of the Nation's waters.\" To help achieve this objective, the CWA prohibits the discharge of pollutants from any point source (i.e., a discrete conveyance, such as a pipe, ditch, etc.) to waters of the United States without a permit. Under the CWA, one of the primary mechanisms to protect or improve surface water quality is to limit or prohibit discharges of contaminants, including CECs, in National Pollutant Discharge Elimination System (NPDES) permits. The CWA authorizes EPA and delegated states to set limits or prohibit discharges of pollutants in permits through technology-based effluent (i.e., discharge) limitations and standards and through water-quality-based effluent limitations, which are established through water quality standards and criteria. Technology-based effluent limitations are specific numerical limits (i.e., maximum allowable levels of specific pollutants) that represent the minimum level of control that must be established in a permit. In cases where technology-based effluent limitations are not adequate to meet applicable water quality standards, the permits also incorporate water-quality-based effluent limitations. Water-quality-based effluent limitations are specific limits established in a permit that, if not exceeded in the discharge, allow for attainment of water quality standards in the receiving water. Water quality standards\u00e2\u0080\u0094established by states, territories, tribes, and EPA\u00e2\u0080\u0094define the desired condition or level of protection of a water body and what is needed to achieve or protect that condition. In addition, the CWA authorizes EPA to designate contaminants as toxic pollutants (CWA \u00c2\u00a7307) or as hazardous substances (CWA \u00c2\u00a7311), which may trigger other actions under the CWA and CERCLA. This section first identifies the authorities available under the CWA, their applicability to CECs, and potential challenges with EPA use of these authorities."], "subsections": [{"section_title": "Technology-Based Requirements", "paragraphs": ["The CWA requires EPA to establish technology-based effluent limitations for various categories of point sources/dischargers . Technology-based requirements consider the performance of specific technologies as well as economic achievability. These limits do not specify what technologies must be employed; rather , they establish the levels of specific pollutants that are allowable in the discharge based on the performance of technologies identified as representing specified levels of control (e.g., best available technology economically achievable, best conventional pollutant control technology). CWA Section 301 prescribes the levels of control required. EPA broadly classifies NPDES permittees as either (1) publicly owned treatment works (POTWs) or (2) non-POTWs, which include all other point sources and are also often called n on municipal facilities or industrial facilities .", "The CWA requires POTWs to meet secondary treatment standards as determined by EPA. Secondary standards are based on performance data for POTWs that use physical and biological treatment to remove or control conventional pollutants.", "As shown in Figure 1 , the CWA requires non-POTW dischargers to achieve specified levels of control based on (1) whether a discharger directly or indirectly discharges into a water of the United States (an indirect discharger discharges to a POTW for treatment prior to discharge into a water of the United States), (2) whether the discharger is a new or existing source, and (3) the category of pollutant (conventional, toxic, or nonconventional ). "], "subsections": [{"section_title": "Effluent Limitation Guidelines and Standards (ELGs)", "paragraphs": ["The CWA requires EPA to publish national regulations for non-POTW dischargers\u00e2\u0080\u0094called Effluent Limitation Guidelines and Standards (ELGs)\u00e2\u0080\u0094which set minimum standards for specific pollutants in industrial wastewater discharges based on the specified levels of control. Since 1972, EPA has developed ELGs for 59 industrial categories. For direct dischargers, states or EPA incorporate the limits established in ELGs into the NPDES permits they issue. For indirect dischargers, pretreatment standards established in ELGs to prevent pass through and interference at the POTW apply.", "The CWA requires EPA to annually review all existing ELGs to determine whether revisions are appropriate. In addition, CWA Section 304(m) requires EPA to publish a plan every two years that includes a schedule for review and revision of promulgated ELGs, identifies categories of sources discharging toxic or nonconventional pollutants that do not have ELGs, and establishes a schedule for promulgating ELGs for any newly identified categories. ", "In its 2002 draft Strategy for National Clean Water Industrial Regulations , EPA described a process for identifying existing ELGs that the agency should consider revising as well as industrial categories that may warrant development of new ELGs. As outlined in the strategy, EPA considers four main factors when prioritizing existing ELGs for possible revision: (1) the amount and type of pollutants in an industrial category's discharge and the relative hazard to human health or the environment, (2) the availability of an applicable and demonstrated wastewater treatment technology, process change, or pollution prevention measure that can reduce pollutants in the discharge and the associated risk to human health or the environment; (3) the cost, performance, and affordability or economic achievability of the wastewater treatment technology, process change, or pollution prevention measure; and (4) the opportunity to eliminate inefficiencies or impediments to pollution prevention or technological innovation or promote innovative approaches. EPA considers nearly identical factors in deciding whether to develop new ELGs. ", "EPA uses a variety of screening-level analyses to address these factors. These analyses evaluate discharge monitoring reports and EPA's Toxic Release Inventory to rank industrial categories according to the total toxicity of their wastewater. In 2012, the Government Accountability Office recommended that the annual review include additional industrial hazard data sources to augment its screening-level reviews. In response, EPA has begun to use additional data sources that provide information about CECs or new pollutant discharges, industrial process changes, and new and more sensitive analytical methods, among other things. For example, EPA has reviewed data from the agency's Office of Pollution Prevention and Toxics to identify potential CECs. ", "If EPA identifies an industrial discharge category warranting further review, it conducts a more detailed review, which may lead to a new or revised guideline.", "EPA published its most recent effluent guidelines program plan\u00e2\u0080\u0094the Final 2016 Effluent Guidelines Program Plan \u00e2\u0080\u0094in April 2018. It identified one new rulemaking to revise the Steam Electric Power Generating Point Source Category ELG but concluded that no other industries warrant new ELGs at this time. In its plan, EPA also announced that it is initiating three new studies: a holistic look at the management of oil and gas extraction wastewater from onshore facilities, an industry-wide study of nutrients, and an industry-wide study of PFAS."], "subsections": []}, {"section_title": "Options to Address CECs through Technology-Based Requirements", "paragraphs": ["Both EPA and states have authority under the CWA to address CECs through technology-based effluent limitations using ELGs or by setting technology-based effluent limits in NPDES permits on a case-by-case basis. In addition, the CWA authorizes EPA to add contaminants to the Toxic Pollutant List."], "subsections": [{"section_title": "ELGs", "paragraphs": ["When EPA develops an ELG for a new industrial category or revises an existing ELG, it is for the industrial category\u00e2\u0080\u0094not a specific pollutant. However, as evidenced in the agency's most recent effluent guidelines program plan, EPA may initiate a cross-industry review of particular pollutants (such as the agency is doing with PFAS and nutrients). EPA uses such reviews to prioritize further study of the industrial categories that may be candidates for ELG development or revision to control the discharges of those particular pollutants. If EPA were to determine that new or revised ELGs are warranted to control discharges of those pollutants, and the agency had the necessary data to support the development or revision, the agency could initiate a rulemaking process to do so. "], "subsections": []}, {"section_title": "Establishing Technology-Based Effluent Limits in NPDES Permits on a Case-by-Case Basis", "paragraphs": ["The CWA also authorizes EPA and states to impose technology-based effluent limits in NPDES permits on a case-by-case basis when \"EPA-promulgated effluent limitations are inapplicable.\" This includes when EPA has not developed ELGs for the industry or type of facility being permitted or pollutants or processes are present that were not considered when the ELG was developed. This provides a means for the permitting authority to restrict pollutants in a facility's discharge even when an ELG is not available. CWA regulations require best professional judgment to set case-by-case technology-based effluent limits, applying criteria that are similar to the analysis EPA uses to develop ELGs but are performed by the permit writer for a single facility. "], "subsections": []}, {"section_title": "Toxic Pollutant List", "paragraphs": ["The CWA also authorizes EPA to designate contaminants as toxic pollutants, which can trigger other actions under the CWA and CERCLA. (For a discussion of the effect of designating a contaminant as a toxic pollutant on the treatment of that contaminant under CERCLA, see \" Designating CECs as Toxic Pollutants or Hazardous Substances .\") CWA Section 307 authorizes EPA to designate toxic pollutants and promulgate ELGs that establish requirements for those toxic pollutants. Section 307(a)(1) directed EPA to publish a specified list of individual toxic pollutants or combination of pollutants and, from time to time, add or remove any pollutant that possesses certain properties. EPA adopted the initial list of 65 toxic pollutants in 1978, as directed by Congress. Since that time, the list of 65 toxic pollutants has generally not changed. ", "Section 307(a)(1) directs EPA to \"take into account the toxicity of the pollutant, its persistence, degradability, the usual or potential presence of the affected organisms in any waters, the importance of the affected organisms, and the nature and extent of the effect of the toxic pollutant on such organisms\" when revising the Toxic Pollutant List. Section 307(a)(2) authorizes EPA to develop effluent limitations for any pollutant on the Toxic Pollutant List based on best available technology. Notably, however, EPA has the authority to develop effluent limitations for any pollutant regardless of whether it is on the Toxic Pollutant List.", "Adding a pollutant to the Toxic Pollutant List would trigger an additional requirement for states. Section 303(c)(2)(B) of the CWA requires states, whenever reviewing, revising, or adopting water quality standards, to adopt numeric criteria for all toxic pollutants listed pursuant to Section 307, for which EPA has published water quality criteria under Section 304(a). EPA and states use both the ELGs for industrial categories and state water quality standards in establishing pollutant limits in permits under Section 402. (See Figure 1 .)"], "subsections": []}]}, {"section_title": "Challenges to Addressing CECs through Technology-Based Requirements", "paragraphs": ["EPA and states face a number of challenges in addressing CECs through technology-based effluent limitations. In particular, EPA officials stated that in developing a new ELG or updating an existing ELG, the agency needs to gather extensive supporting information. This effort includes identifying the pollutants of concern; evaluating the levels, prevalence, and sources of those pollutants of concern; determining whether the pollutants are in treatable quantities and whether effective treatment technologies are available; and developing economic data to project the cost of treatment, among other things.", "Also, EPA and state officials have asserted that it is difficult for the agency and its CWA programs to keep pace with the growth of new chemicals in commerce. Accordingly, the agency is generally reactive rather than proactive in addressing CECs. EPA officials stated that identifying demonstrated treatment technologies and documenting their efficiency is especially challenging. The officials further stated that the most difficult task is showing that any technology selected as the basis for an ELG is economically achievable for the industry.", "In addition, EPA and states often lack analytical methods to measure an emerging contaminant. Even where analytical methods are available, there is still often a lack of data on the levels of the contaminant in dischargers' effluent and/or in the receiving surface waters. The two sources of data most readily available to EPA\u00e2\u0080\u0094discharge monitoring report data and toxic release inventory data\u00e2\u0080\u0094are limited to specific contaminants on which industry is required to report. EPA stated that the agency's capacity to collect data\u00e2\u0080\u0094including obtaining clearance to request and collect the data and undertaking the extensive effort to do so\u00e2\u0080\u0094is limited in light of their staffing levels and resources. ", "Should EPA have enough data to determine that a new or revised ELG is warranted and announce its intent to do so in an effluent guidelines program plan, the time it takes to issue the regulation varies, according to EPA officials. CWA Section 304(m) establishes a three-year time limit for new ELGs. For revised ELGs, the EPA officials stated that the time can vary depending upon the availability of data and the level of complexity\u00e2\u0080\u0094some may be very technical and involve many wastestreams. Two of the more recently issued ELGs\u00e2\u0080\u0094revisions of the oil and gas extraction and steam electric power generating categories\u00e2\u0080\u0094took five and six years, respectively. "], "subsections": []}]}, {"section_title": "Water-Quality-Based Requirements", "paragraphs": ["Under the CWA, water quality standards translate the goals of the act (e.g., fishable and swimmable waters, no toxic pollutants in toxic amounts) into measurable objectives to protect or improve water quality. States, territories, and authorized tribes (hereinafter referred to collectively as states) are required to adopt water quality standards for waters of the United States, subject to EPA approval. They may also adopt standards for additional surface waters if their own state laws allow them to do so. ", "Water quality standards consist of three key required components:", "1. Designated uses for each water body\u00e2\u0080\u0094for example, recreation (swimming or boating), aquatic life support, fish consumption, public water supply, agriculture; 2. Criteria , which describe the conditions in a water body necessary to support the designated uses\u00e2\u0080\u0094expressed as concentrations of pollutants or other quantitative measures or narrative statements; and 3. An antidegradation policy for maintaining existing water quality. ", "States have the primary authority to adopt, review, and revise their water quality standards and implementation procedures. The CWA requires states to review their water quality standards at least once every three years. EPA is required to review the states' water quality standards."], "subsections": [{"section_title": "Water Quality Criteria", "paragraphs": ["Water quality criteria prescribe limits on specific contaminants or conditions in a water body that protect particular designated uses of the water body. Both the EPA and states have roles in establishing water quality criteria under CWA Section 304(a) and 303(c)(2), respectively. "], "subsections": [{"section_title": "EPA Role", "paragraphs": ["CWA Section 304(a) requires EPA to develop and publish and \"from time to time thereafter revise\" criteria for water quality that accurately reflect the latest scientific knowledge. These criteria are recommendations to states for use in developing their own water quality standards. EPA has developed several different types of criteria, including human health criteria, aquatic life criteria, and recreational criteria. EPA has also published guidelines for deriving water quality criteria, which the agency uses to develop new criteria under Section 304(a). These guidelines also serve as guidance to states as they adjust water quality criteria developed under Section 304(a) to reflect local conditions or develop their own scientifically defensible water quality criteria. ", "EPA most recently updated its human health criteria in 2015, revising 94 of the 122 existing human health criteria. EPA last updated its methodology for deriving human health criteria in 2000, incorporating \"significant scientific advances in key areas such as cancer and non-cancer risk assessments, exposure assessments, and bioaccumulation in fish.\" ", "EPA's national recommended aquatic life criteria table currently includes 58 criteria. Many of these criteria were published prior to 1990. In the past 10 years, EPA has published two new criteria. EPA has not updated its guidelines for deriving aquatic life criteria since 1985. According to EPA, however, the guidelines allow for best professional judgment, which they have used in more recent criteria development and updates. The agency recognizes that since 1985, there has been substantial scientific advancement that warrants updating these guidelines. EPA formally initiated the guidelines revision process in 2015. However, according to EPA officials, the agency has shifted its focus from updating the guidelines to determining whether available data and research support development of human health criteria for PFAS. In doing so, EPA officials indicated they plan to use information gathered for the guidelines revision and also noted that they are not tied to the 1985 guidelines due to the best professional judgment clause included therein. ", "EPA's recreational water quality criteria are national recommendations for all inland and coastal waters that have a primary contact recreation (i.e., swimming) designated use. EPA establishes recreational water quality criteria to help protect against illness caused by organisms\u00e2\u0080\u0094such as viruses, bacteria, and their associated toxins\u00e2\u0080\u0094in water bodies. In 2012, EPA updated its recreational water quality criteria, which it had last issued in 1986. Additionally, in June 2019, EPA published final recreational water quality criteria for two algal toxins, which are commonly present in harmful algal blooms, to supplement the 2012 recreational water quality criteria. In addition, EPA is currently developing recreational water quality criteria for coliphage, a viral indicator of fecal contamination. "], "subsections": []}, {"section_title": "State Role", "paragraphs": ["States use EPA's criteria as guidance in developing their own water quality standards. CWA Section 303(c)(2) requires states to adopt criteria to protect the designated uses of their water bodies and to also adopt criteria for all toxic pollutants listed pursuant to Section 307(a)(1), for which EPA has published criteria under Section 304(a). States' water quality criteria must be based on sound scientific rationale, contain sufficient parameters or constituents to protect the designated uses, and support the most sensitive use for water bodies with multiple designated uses. EPA regulations further require that states should establish numeric criteria based on CWA Section 304(a) guidance, CWA Section 304(a) guidance modified to reflect site-specific conditions, or other scientifically defensible methods. Where numeric criteria cannot be established, states are required to establish narrative criteria or criteria based on biomonitoring methods. States may adopt more stringent criteria than what EPA recommends, including for pollutants or parameters for which EPA has not promulgated 304(a) criteria."], "subsections": []}]}, {"section_title": "Options to Address CECs through Water-Quality-Based Requirements", "paragraphs": ["EPA and states may establish water quality criteria for CECs. If EPA were to establish criteria under CWA Section 304(a) for a CEC, that action alone would not necessarily require states to adopt criteria for that contaminant. As explained above, the CWA requires that states adopt criteria to protect their designated uses into their water quality standards. EPA's regulations provide that if a state does not adopt new or revised criteria for parameters for which EPA has published new or updated recommendations, then the state shall provide an explanation. States are explicitly required, as explained above, to adopt criteria for a contaminant if EPA designates it as a toxic pollutant under CWA Section 307 and publishes criteria for that contaminant under Section 304(a). ", "Once a state has adopted water quality criteria for a contaminant as part of its state water quality standards and those standards have been approved, several CWA tools are available for achieving those standards. The primary tool is to limit or prohibit discharges of the contaminant in NPDES permits. In some cases, the technology-based effluent limits may already enable attainment of state water quality standards. In instances where they do not, the permit writer is required to establish water-quality-based effluent limitations. If a water body is not attaining its designated use (i.e., is \"impaired\" for that use), the Total Maximum Daily Load (TMDL) may also be used. A TMDL, essentially a \"pollution diet\" for a water body, is the maximum amount of a pollutant that a water body can receive and still meet water quality standards and an allocation of that amount to the pollutant's sources (including a margin of safety). TMDLs consider point sources, which can be addressed through permits, as well as nonpoint (diffuse) sources, which are more often addressed through best management practices and related efforts under CWA Section 319 nonpoint source management programs. "], "subsections": []}, {"section_title": "Challenges to Addressing CECs through Water-Quality-Based Requirements", "paragraphs": ["A key challenge is often a lack of data about the occurrence, concentration, and persistence of CECs in the environment, as well as the effects on human health and aquatic life. Detection of a contaminant does not necessarily trigger regulatory measures. Information on the potential for the contaminant to adversely affect human health and aquatic life, potential exposure pathways, and other data would also be needed to inform such decisions. ", "Developing new water quality criteria or updating existing criteria can often be time intensive, particularly in cases where data are limited. The general process for developing criteria involves a number of steps, including problem formulation and developing an analysis plan; gathering data and analyzing relevant studies; drafting the criteria document; a rigorous review process (e.g., branch level, office level, interagency, and independent external peer review); public notice and comment, and revising and publishing the criteria. According to EPA officials, the time it takes to develop or update criteria is often a function of the data that are available. EPA officials noted that developing criteria can take several years or longer. For example, the 2016 update for the aquatic life water quality criteria for selenium\u00e2\u0080\u0094an effort characterized by EPA as complicated, in part because of the contaminant's bioaccumulative properties\u00e2\u0080\u0094took 10 years to complete. In other cases, such as when a contaminant has an existing EPA Integrated Risk Information System value, developing or updating the human health water quality criteria for that contaminant may take less time, according to EPA officials. ", "In May 2019, a report from the Contaminants of Emerging Concern Workgroup, convened by the Association of State Drinking Water Administrators and the Association of Clean Water Administrators, provided recommendations from state regulators regarding the ways state and federal agencies could improve the management of CECs. The report stated the following: ", "The use of existing authorities and processes under the CWA and [Safe Drinking Water Act] to establish new criteria or standards is onerous, can take decades to implement, and does not meet public expectations for timely identification and prioritization of CECs\u00e2\u0080\u00a6. However slow these federal processes are, many state agencies do not have the infrastructure (i.e., sufficient funds and/or staffing levels), regulatory authority, or technical expertise to derive their own criteria or set their own standards for drinking water, surface water, groundwater, and fish tissue.", "Among numerous other recommendations provided in the report, the CEC workgroup recommended that EPA work with states to generate a list of priority CECs. To that end, EPA officials stated that they are developing a more formalized prioritization process for determining which contaminants warrant criteria development that will incorporate input from multiple stakeholders (including states), leverage information collected under the Safe Drinking Water Act, and incorporate monitoring and other data (e.g., ambient water concentrations)."], "subsections": []}]}, {"section_title": "Designating CECs as Toxic Pollutants or Hazardous Substances", "paragraphs": ["Two sections of the CWA\u00e2\u0080\u0094Sections 307 and 311\u00e2\u0080\u0094authorize EPA to designate contaminants as toxic pollutants and hazardous substances, respectively. Designating a contaminant under Section 307 or Section 311 of the CWA has implications for how the contaminant is treated under CERCLA. CERCLA defines the term hazardous substance to include toxic pollutants designated under CWA Section 307 and hazardous substances designated under CWA Section 311 (as well as substances designated under certain other statutes and other chemicals that EPA may designate as hazardous substances). "], "subsections": [{"section_title": "Toxic Pollutants\u00e2\u0080\u0094CWA Section 307", "paragraphs": ["EPA's authority to designate contaminants under CWA Section 307 as toxic pollutants and the CWA-related implications of that designation are discussed above under \" Toxic Pollutant List .\""], "subsections": []}, {"section_title": "Hazardous Substances\u00e2\u0080\u0094CWA Section 311", "paragraphs": ["CWA Section 311(b)(2)(A) authorizes EPA to promulgate a rule designating as a \"hazardous substance\" any element or compound that, when discharged as specified under the section, would present an imminent and substantial danger to public health or welfare, including but not limited to fish, shellfish, wildlife, shorelines, and beaches. EPA is authorized to revise the list of hazardous substances subject to these criteria as may be appropriate. EPA finalized the initial list of hazardous substances in 1978 and thereafter revised the list in 1979, 1989, and 2011. ", "Pursuant to Section 311(b)(4), EPA established \"harmful\" quantities for these substances that are subject to the reporting of discharges prohibited under Section 311(b)(3). Section 311(b)(5) requires a person in charge of a vessel or facility to notify the National Response Center, administered by the U.S. Coast Guard, as soon as that person has knowledge of a discharge. Discharges permitted under other provisions of the CWA or otherwise allowable under certain other federal, state, and local regulations are excluded from reporting under CWA Section 311. ", "CWA Section 311(c) authorizes federal actions to remove a prohibited discharge of a hazardous substance (or oil). CWA Section 311(f) establishes liability for the recovery of removal costs, including restoration of damaged natural resources. Section 311(e) authorizes enforcement orders to require a responsible party to abate an imminent and substantial threat to public health or welfare from a prohibited discharge, or threat of a harmful discharge, of a hazardous substance (or oil)."], "subsections": []}, {"section_title": "Implications of CWA Designations on CERCLA", "paragraphs": ["If EPA were to designate a CEC, or any contaminant, as a toxic pollutant or hazardous substance under the CWA, that contaminant would, by statutory definition, be defined as a hazardous substance under CERCLA. CERCLA authorizes federal actions to respond to a release, or substantial threat of a release, of a hazardous substance into the environment in coordination with the states. CERCLA similarly authorizes response actions for releases of other pollutants or contaminants that may present an imminent and substantial danger to public health or welfare. CERCLA also establishes liability for response costs and natural resource damages but only for hazardous substances and not for other pollutants or contaminants.", "CERCLA response authority is available for releases of pollutants or contaminants but without liability to require a potentially responsible party to perform or pay for response actions. Designating a CEC as a toxic pollutant or hazardous substance under the CWA would have the effect of establishing liability for their release as a hazardous substance under CERCLA. However, releases in compliance with a CWA permit would be exempt from liability under CERCLA as a \"federally permitted release\" based on the premise that the permit requirements would mitigate potential risks.", "CWA Section 311 also establishes liability for releases of hazardous substances, but CERCLA liability and enforcement mechanisms are broader than the CWA. In practice, CERCLA has been the principal federal authority used to respond to discharges of hazardous substances into surface waters and to enforce liability, although the enforcement authorities of CWA Section 311 remain available to EPA. For a broader discussion of CERCLA, see CRS Report R41039, Comprehensive Environmental Response, Compensation, and Liability Act: A Summary of Superfund Cleanup Authorities and Related Provisions of the Act , by David M. Bearden."], "subsections": []}]}]}, {"section_title": "Legislation in the 116th Congress", "paragraphs": ["Recent congressional interest in CECs has largely focused on addressing one particular group of CECs\u00e2\u0080\u0094PFAS\u00e2\u0080\u0094and addressing them through several statutes, such as the Safe Drinking Water Act. However, legislation in the 116 th Congress proposes to address PFAS using CWA authorities. H.R. 3616 \u00e2\u0080\u0094the Clean Water Standards for PFAS Act of 2019\u00e2\u0080\u0094and Section 330A of H.R. 2500 , the House-passed version of the NDAA for FY2020, would direct EPA to add PFAS to the CWA Toxic Pollutant List and publish ELGs and pretreatment standards for PFAS within specified time frames. In addition, Section 330G of the House-passed version of the NDAA bill, Sections 6731-6736 of S. 1790 (the Senate NDAA bill), H.R. 1976 , and S. 950 would direct the U.S. Geological Survey (USGS) to carry out nationwide sampling\u00e2\u0080\u0094in consultation with states and EPA\u00e2\u0080\u0094to determine the concentration of perfluorinated compounds in surface water, groundwater, and soil. These bills would also require USGS to prepare a report for Congress and provide the sampling data to the EPA as well as other federal and state regulatory agencies that request it. Additionally, the bills would require the data to be used to \"inform and enhance assessments of exposure, likely health and environmental impacts, and remediation priorities.\" Some Members have also introduced legislation to require comprehensive PFAS toxicity testing ( H.R. 2608 ).", "In addition to focusing on PFAS, several bills proposed in the 116 th Congress look more broadly at how to address CECs. For example, some aim to improve federal coordination and research and support states in addressing emerging contaminants. S. 1507 , S. 1251 , and Sections 6741-6742 of S. 1790 would direct the White House Office of Science and Technology Policy to establish a National Emerging Contaminant Research Initiative. The bills would also direct EPA to develop a program to provide technical assistance and support to states for testing and analysis of emerging contaminants and establish a database of resources available through the program to assist states with testing for emerging contaminants. While these efforts are more focused on CECs in drinking water, the bill directs the EPA to ensure that the database is available to groups that have interest in emerging contaminants, including wastewater utilities. "], "subsections": []}, {"section_title": "Conclusion", "paragraphs": ["While Congress is currently debating how to best address the concerns related to widespread detections of PFAS, attention to other emerging contaminants (e.g., microplastics and algal toxins) has also increased with the availability of new detection methods and increased monitoring. Observers note that in the coming years, other CECs will likely emerge and prompt similar calls for immediate action to protect public health and the environment. Many observers argue that federal actions to address CECs currently tend to be reactive rather than proactive. Many of these observers assert that more focus and attention is needed on assessing the toxicity of chemical substances before they are introduced into commerce. Congress is currently considering legislation to improve federal coordination and responses to CECs.", "Specific to the CWA, some observers advocate for oversight to identify and address potential gaps or barriers in CWA authorities and processes that make it difficult for EPA and states to quickly respond when CECs are detected. Other observers assert that EPA could better use its existing authorities to address CECs. For example, EPA has not updated its ELGs for certain industrial categories in decades. Accordingly, some observers assert that various ELGs do not reflect advancements in science or technology that could lead to new effluent limitations for CECs. Similarly, some stakeholders assert that EPA could better prioritize which CECs warrant water quality criteria development. EPA's ability to address these and other recommendations depends on the availability of resources, treatment technologies, and scientific and economic data. Moving forward, Congress may be interested in evaluating EPA appropriations for the CWA programs that support EPA's efforts to address discharges of CECs. Congress may also be interested in overseeing the Administration's implementation of these programs."], "subsections": []}]}}
{"id": "R46145", "title": "Nature-Based Infrastructure: NOAA\u2019s Role", "released_date": "2020-01-02T00:00:00", "summary": ["The National Oceanic and Atmospheric Administration (NOAA) currently supports natural, nature-based, or green infrastructure and other related types of features (hereinafter referred to as nature-based infrastructure) as part of its statutory mandates to support, research, restore, and conserve natural resources. NOAA's nature-based activities primarily fall under three line offices: the National Marine Fisheries Service, National Ocean Service, and Office of Oceanic and Atmospheric Research.", "NOAA uses the term nature-based infrastructure and other related terms interchangeably to describe natural systems or engineered systems that mimic natural processes built to minimize flooding, erosion, and runoff. Nature-based infrastructure projects may include features that are completely natural, such as open lands and trees (e.g., coastal mangroves), or may incorporate varying degrees of hard or \"gray\" steel and concrete structures, such as seawalls. Often, multiple types of nature-based infrastructure features are combined within a project. Stakeholder selection of nature-based infrastructure features may depend on a combination of factors, including available funding, space constraints, technical feasibility, hydrologic impact, and community acceptance, among other factors. According to NOAA, nature-based infrastructure can provide several benefits such as flood, erosion, and runoff management, wave buffering, improved water quality, wildlife habitat, opportunity for groundwater recharge, recreation uses, and aesthetic appeal, among others. The extent to which nature-based infrastructure features provide these benefits is partially dependent on the types of features used and the location.", "Historically, Congress has directed funding to some federal agencies for the design and construction of hard infrastructure, such as breakwaters, revetments, and bulkheads or seawalls that provide a measurable and expected level of flood, erosion, and runoff management. However, these features also have demonstrated limitations and some unintended consequences. Researchers and practitioners have studied the potential impacts and benefits of hard structures relatively well, whereas similar research on nature-based infrastructure is ongoing.", "Practitioners and decisionmakers have been using the term nature-based infrastructure and supporting nature-based infrastructure features since at least the late 2000s (although these types of features have likely been studied and implemented under various terms for several decades). Nature-based infrastructure may continue to be appealing due to (1) stakeholder emphasis on infrastructure features that benefit both humans and the environment in multiple ways and (2) recognition that infrastructure may be longer lasting if it can adjust to changing environmental conditions in the short and long terms. Members of Congress may consider whether and how federal agencies, including NOAA, can support nature-based infrastructure activities by federal agencies.", "Congress has neither defined nature-based infrastructure in statutes related to NOAA activities nor directed in statute that the agency support such activities. Congress has provided some statutory direction related to nature-based infrastructure for the U.S. Army Corps of Engineers (USACE) and the Environmental Protection Agency (EPA). Congress may consider whether to define nature-based infrastructure for NOAA or explicitly authorize NOAA to support nature-based infrastructure in specific cases, similar to USACE and EPA, or require NOAA to consider nature-based infrastructure activities across the agency. Congress also may consider requiring federal (and federal with nonfederal) coordination of nature-based infrastructure activities in an existing federal working group (e.g., the System Approach to Geomorphic Engineering community of practice), a new group, or other mechanism. Finally, as NOAA does not identify its nature-based infrastructure activities as separate budget line items, Congress may consider (1) directing NOAA, and other federal agencies, to report its nature-based infrastructure spending and (2) whether to retain existing or establish new mechanisms to fund nature-based infrastructure activities at NOAA."], "reports": {"section_title": "", "paragraphs": ["T he National Oceanic and Atmospheric Administration (NOAA) currently supports natural, nature-based, or green infrastructure and other related types of features (hereinafter referred to as nature-based infrastructure) as part of its statutory mandates to support, research, restore, and conserve natural resources. Practitioners and decisionmakers have been using the term nature-based infrastructure and supporting nature-based infrastructure features since at least the late 2000s (although these types of features have been assigned various names over time). Nature-based infrastructure may continue to be appealing due to (1) stakeholder emphasis on infrastructure features that benefit both humans and the environment in multiple ways and (2) recognition that infrastructure may be longer lasting if it can adjust to changing environmental conditions in the short and long terms. Members of Congress may consider whether and how to support nature-based infrastructure activities at federal agencies, including NOAA, with these objectives, among others, in mind. ", "This report describes how NOAA characterizes nature-based infrastructure and the agency's current activities supporting research and implementation of nature-based infrastructure. The report also discusses potential issues for Congress including (1) definitions of nature-based infrastructure in statute, (2) NOAA's authority to support nature-based infrastructure, (3) how NOAA coordinates with other federal agencies and nonfederal entities on nature-based infrastructure activities, and (4) how NOAA funds nature-based infrastructure activities and its total nature-based infrastructure-related expenditures. "], "subsections": [{"section_title": "Nature-Based Infrastructure as Defined by NOAA", "paragraphs": ["NOAA has defined natural infrastructure and nature-based infrastructure in NOAA Administrative Order (NAO) 216-117: NOAA National Habitat Policy. NOAA defines natural infrastructure as \"healthy ecosystems, including forests, wetlands, floodplains, dune systems, and reefs, which provide multiple benefits to communities, including storm protection through wave attenuation or flood storage capacity and enhanced water services and security.\"", "Similarly, NOAA defines nature-based infrastructure as \"engineered systems where natural features are combined with more hard or structural engineering approaches to create a hybrid system.\"", "However, across NOAA's publicly accessible documents and websites, the agency appears to use the terms nature-based infrastructure, natural infrastructure, and green infrastructure interchangeably. Table 1 lists several types of nature-based infrastructure features as identified by NOAA. According to NOAA, nature-based infrastructure projects may include features that are completely natural, such as open lands and trees, or may incorporate varying degrees of hard or \"gray\" steel and concrete structures, such as bulkheads ( Figure 1 ). Often, multiple types of nature-based infrastructure features are combined within a project. The selection of nature-based infrastructure features often depends on a combination of available funding, space constraints, land or roof availability, technical feasibility, hydrologic impact, and community acceptance, among other factors.", "According to NOAA, nature-based infrastructure can provide several benefits in addition to flood, erosion, and runoff management, such as improved water quality, wildlife habitat, opportunity for groundwater recharge, recreation uses, and aesthetic appeal, among others. The extent to which nature-based infrastructure features provide these benefits is partially dependent on the location and types of features used. "], "subsections": []}, {"section_title": "NOAA's Nature-Based Infrastructure Activities", "paragraphs": ["NOAA's National Habitat Policy (NAO 216-117) directs the agency to protect, maintain, and restore ocean, coastal, and Great Lakes ecosystems by \"applying natural and nature-based infrastructure,\" among other activities. According to the agency, this work is supported by a variety of statutory mandates and authorities. Congress has not defined in statute nature-based or related terms for NOAA, nor has it explicitly directed NOAA to broadly support nature-based features or related activities across the agency. ", "NOAA's nature-based infrastructure activities fall primarily under three line offices: the National Marine Fisheries Service (NMFS), National Ocean Service (NOS), and Office of Oceanic and Atmospheric Research (OAR). According to NOAA, many of the agency's nature-based infrastructure activities are related to restoration and conservation projects; the projects are typically local or regional in scale and take place within coastal or Great Lakes states. ", "NMFS's Restoration Center administers the community-based restoration grant program with congressionally appropriated funds to support nature-based infrastructure activities, among other restoration activities, implemented by institutions of higher education; nonprofit and for-profit organizations; U.S. territories; and state, local, and tribal governments. The NOAA Restoration Atlas, a project-tracking database, lists over 2,000 community-based restoration projects, many of which include nature-based infrastructure features and multiple benefits. For instance, the Restoration Center provided funds for the planting of marshgrass along the coast of Northumberland County, VA, to reduce shoreline erosion and improve fish habitat ( Figure 2 ). ", "Several programs and activities under NOS support research and implementation of nature-based infrastructure. For example, the Coral Reef Conservation Program, National Coastal Zone Management Program, and National Estuarine Research Reserve System provide technical assistance and administer competitive grant programs to a variety of entities, such as institutions of higher education; nonprofit organizations; and local, state, and tribal governments, among others. Coastal scientists with NOAA's National Centers for Coastal Ocean Science have estimated the economic value of nature-based infrastructure to stabilize coastlines along the Pacific Northwest. Additionally, the Damage Assessment, Remediation, and Restoration Program, a program with components in both NMFS and NOS, supports nature-based infrastructure implementation through funds recovered in settlements or litigation. For example, it has supported the design and implementation of a living shoreline with breakwaters in Pensacola, FL, to (1) create and restore salt marsh and reef habitat and (2) protect and stabilize the shoreline, with funds from the BP Deepwater Horizon spill settlement ( Figure 3 ).", "Under OAR, the Climate Program Office and the National Sea Grant College Program (Sea Grant) both support research and implementation of nature-based infrastructure through competitive grant programs on a variety of topics, including nature-based infrastructure. For example, the Climate Program Office has awarded grants to institutions of higher learning and agencies within state government to support the development and application of methodologies to value nature-based infrastructure. Sea Grant also may support research or provide technical assistance for nature-based infrastructure projects. For instance, Alaska Sea Grant organized trainings in \"Green Infrastructure for Coastal Resilience\" for municipal and borough planners, designers, landscape architects, public housing authority planners, academics, and nonprofits. In another case, New York Sea Grant funded the monitoring of nature-based shoreline erosion management measures in various regions of New York. ", "Additional NOAA programs may have roles related to nature-based infrastructure, such as reviewing projects that may use nature-based infrastructure and providing underlying data for decisionmaking. For example, the NMFS Office of Protected Resources is often involved in reviewing nature-based infrastructure projects that may affect protected species under NOAA's jurisdiction. NOAA may also direct appropriated funding to nonfederal organizations, such as the National Fish and Wildlife Foundation, to support nature-based infrastructure activities. For example, NOAA provides funds and program oversight to the foundation's National Coastal Resilience Fund, which in FY2019 funded grants to \"create, expand, and restore natural systems in areas that will both increase protection for communities from coastal storms, sea- and lake-level changes, inundation, and coastal erosion while also improving valuable habitats for fish and wildlife species,\" among other objectives."], "subsections": []}, {"section_title": "Potential Policy Issues for Congress", "paragraphs": [], "subsections": [{"section_title": "Definitions in Statute", "paragraphs": ["Congress has not defined the term nature-based infrastructure , or similar terms, in statute for NOAA as it has for USACE and EPA. For example, in P.L. 114-322 Congress defined natural and nature-based features and directed USACE to consider the features when studying the feasibility of flood risk management, hurricane and storm damage reduction, and ecosystem restoration projects (33 U.S.C. \u00c2\u00a72289a). In P.L. 115-436 , which amended the Clean Water Act, Congress defined green infrastructure and directed EPA to promote green infrastructure use, among other activities (33 U.S.C. \u00c2\u00a71362(27) and 33 U.S.C. \u00c2\u00a71377a). ", "Congress may consider whether and how to define the term and the types of nature-based infrastructure for NOAA. Some Members of Congress have proposed definitions within the context of new NOAA programs. For example, H.R. 1317 in the 116 th Congress would provide definitions for natural , nature-based , and nonstructural features to be used as criteria for new NOAA financial assistance programs. Two other nearly identical bills in the 116 th Congress, H.R. 3115 and S. 1730 , define the term living shoreline for the use within a new agency-administered grant program. ", "A NOAA-specific definition of nature-based infrastructure and similar terms in statute may help the agency prioritize and manage its nature-based infrastructure activities. A definition also could potentially limit the types of nature-based infrastructure, by inhibiting the development and adoption of new designs and features that are not captured in a statutory definition. Further, a NOAA-specific definition may conflict with other federal agency definitions for nature-based infrastructure. Congress may consider whether one definition should be used among all federal agencies to minimize the potential for confusion. A single definition across all federal agencies, however, could conflict with the various missions and activities of the different federal agencies. "], "subsections": []}, {"section_title": "Authorities for Nature-Based Infrastructure", "paragraphs": ["Congress has directed NOAA to support, research, restore, and conserve natural resources in a variety of statutes. Congress has not enacted authorities specifically for nature-based infrastructure activities; however, NOAA has interpreted some of its authorities to include support for nature-based infrastructure activities. For example, in 2009 Congress directed NOAA to create the Coastal and Estuarine Land Conservation Program (CELCP) under the Coastal Zone Management Act (CZMA; P.L. 111-11 , 16 U.S.C. \u00c2\u00a71456-1 and \u00c2\u00a71456d). Congress established the CELCP to provide grants to nonfederal entities to protect \"important coastal and estuarine areas that have significant conservation, recreation, ecological, historical, or aesthetic values\" (16 U.S.C. \u00c2\u00a71456d), which may include natural or open lands, identified by NOAA as nature-based infrastructure in Table 1 . Similarly, Congress instructed NOAA to conduct and support \"activities to conserve coral reefs and coral reef ecosystems\" (16 U.S.C. \u00c2\u00a7\u00c2\u00a76401-6409). NOAA has identified coral reefs as a type of nature-based infrastructure ( Table 1 ); coral reefs have been shown to buffer waves and provide protection from shoreline erosion. ", "Some stakeholders contend that NOAA is already authorized to support nature-based infrastructure features through its existing statutes. Others in Congress, however, have proposed legislation that would expand the type of nature-based infrastructure activities NOAA currently supports. For example, in the 116 th Congress, H.R. 1317 would direct NOAA to \"improve the resilience of the built and natural environment to natural disasters and climate change\" by using natural, nature-based, and nonstructural features, among other features. Another bill, H.R. 3115 , would require NOAA to administer grants for \"designing and implementing ... living shorelines; and ... innovative uses of natural materials and systems to protect coastal communities, habitats, and natural system functions,\" among other provisions. Expanding NOAA's authority for nature-based infrastructure activities has been met with some opposition. For example, some in Congress have argued that a new NOAA grant program that H.R. 3115 would authorize \"strays from the long-standing Congressional intent of providing eligible coastal states and territories the flexibility to design programs that best address local challenges by inserting federal priorities into a state-run program.\" "], "subsections": []}, {"section_title": "Coordination of Nature-Based Infrastructure Activities", "paragraphs": ["NOAA often supports nature-based infrastructure activities alongside other federal and nonfederal partners. For example, the agency has provided financial and technical support to the aforementioned Pensacola Bay Living Shoreline Project, which also receives support from the Florida Department of Environmental Protection. In addition, NOAA has been a part of several federal interagency and interorganizational efforts to better understand and support nature-based infrastructure. For instance, NOAA was a part of the federal Coastal Green Infrastructure and Ecosystem Services Task Force established in response to Hurricane Sandy Rebuilding Strategy recommendations. The task force was co-chaired by NOAA and the U.S. Geological Survey and resulted in the development of a 2015 report. Report recommendations focused on \"coastal green infrastructure\" metrics, production functions (e.g., how can the United States better track how ecosystem changes may impact infrastructure), ecosystem-service valuation, social factors, and decisionmaking support. ", "NOAA also has been a member of the interorganizational Systems Approach to Geomorphic Engineering (SAGE) working group. SAGE includes representatives from federal and state agencies, academic and research institutes, nongovernmental organizations, and the private sector. SAGE is a \"community of practice\" and aims to share advances in the science, engineering, policy, and financing of nature-based infrastructure across organizations. For example, organizations, including NOAA, have been a part of SAGE pilot projects in selected locations working to address issues such as shoreline loss using nature-based infrastructure. SAGE also brings organizations together to discuss technical, policy, and financial issues through periodic meetings and serves as a public resource aggregator by compiling links to technical guidance, conference proceedings, research, and other materials.", "Congress may deliberate whether and how to direct NOAA to manage nature-based infrastructure activities within the agency or with non-NOAA organizations in specific ways. For example, Congress may require NOAA to coordinate its nature-based infrastructure within an intra-agency working group or task force. Alternatively, Congress could establish an advisory board or similar group to provide recommendations for better intra-agency, interagency, and interorganizational coordination. For coordination with organizations outside of NOAA, Congress may authorize in statute an already established working group, such as SAGE, or create a new group focused on nature-based infrastructure. ", "Some stakeholders may argue that a statutory requirement for NOAA to coordinate with federal and nonfederal partners may facilitate information sharing, promote the efficient use of available funding, and streamline permitting across federal agencies. Others may argue that unless Congress specifically authorizes NOAA to support nature-based infrastructure activities, the agency should (1) focus resources solely on meeting current congressional directives and/or (2) coordinate at their own discretion. "], "subsections": []}, {"section_title": "Funding for Nature-Based Infrastructure", "paragraphs": ["Congress funds NOAA to support, research, restore, and conserve natural resources primarily through the annual appropriations process. NOAA reports its spending to Congress on a program-by-program basis, but nature-based infrastructure activities are not tracked specifically as line items in either the agency's annual budget request or in congressional appropriations bills and reports. For example, Congress appropriated $68 million to the National Sea Grant College Program in FY2019; however, NOAA does not track what portion of that funding was used to support nature-based infrastructure activities. Similarly, NOAA does not report the proportion of funding supporting nature-based infrastructure activities in other NOAA programs. Congress may consider requiring NOAA to track and/or report its spending on nature-based infrastructure activities. Other federal agencies also likely do not track spending related to nature-based infrastructure activities, and Congress may consider requiring all federal agencies to report their nature-based infrastructure expenditures. Congress has sometimes required federal agencies to submit crosscut budgets detailing individual agency expenditures (e.g., USACE water resources research and technology institutes expenditures as required under 42 U.S.C. \u00c2\u00a710303) as well as some interagency expenditures (e.g., Great Lakes restoration activity expenditures as required under 33 U.S.C. \u00c2\u00a71268a). ", "Stakeholders hold different views about whether or how Congress should fund nature-based infrastructure activities. Congress could continue to appropriate funds that support NOAA's core capabilities and mission, without specifying they be used for nature-based infrastructure activities. Alternatively, Congress could, for example, appropriate funds for existing or new NOAA programs that provide grants to nonfederal entities explicitly for research and implementation of nature-based infrastructure. Several bills introduced in the 116 th Congress address funding for nature-based infrastructure activities in various ways. For example, H.R. 3115 would create a new grant program to fund the installation of living shorelines, a type of nature-based infrastructure feature. H.R. 1317 would (1) issue a U.S. Postal Service semipostal stamp and use some of its proceeds to fund prize competitions and research catalog development, and (2) authorize appropriations for capitalization funds to establish state community resilience revolving funds for the implementation of nature-based infrastructure, among other projects. S. 2284 would establish the Carbon Dividend Trust Fund with requisite fund transfers to federal agencies. As proposed in S. 2284 , NOAA's portion of the fund transfer would support several programs, including a coastal resiliency program that would be required to prioritize the consideration of natural and nature-based infrastructure. However, some Members of Congress have argued that the establishment of new grant programs, such as the living shoreline grant program in H.R. 3115 , are \"duplicative and wasteful,\" as Congress already appropriates funding to NOAA that may be used to support nature-based infrastructure."], "subsections": []}]}]}}
{"id": "R46115", "title": "Regulation Best Interest (Reg BI): The SEC\u2019s Rule for Broker-Dealers", "released_date": "2020-01-30T00:00:00", "summary": ["On June 5, 2019, the Securities and Exchange Commission (SEC) voted to adopt Regulation Best Interest (Reg BI) under the Securities and Exchange Act of 1934 (P.L. 73-291). Reg BI reforms requirements for broker-dealers when they make investment recommendations to retail customers. According to the SEC, Reg BI is meant to \"enhance the broker-dealer standard of conduct beyond existing ... obligations [by] requiring broker-dealers ... to: (1) act in the best interest of the retail customer at the time the recommendation is made, without placing the financial or other interest of the broker-dealer ahead of the interests of the retail customer; and (2) address [various broker-dealer] conflicts of interest [with those clients].\" Broker-dealers have until June 2020 to comply.", "Broker-dealers execute securities trades and provide investment recommendations. They are licensed and regulated by state securities regulators, the SEC, and the Financial Industry Regulatory Authority (FINRA), a SEC-regulated entity that they must also join. Traditionally, broker-dealers provided transaction-specific discrete investment recommendations and were compensated via commissions for individual transactions.", "Broker-dealers have generally made investment recommendations under the suitability standard , a FINRA rule requiring that recommendations are merely consistent with customers' interests. By contrast, investment advisers\u00e2\u0080\u0094another type of financial professional that typically offers more ongoing investment counsel (such as retirement planning) and is compensated by fixed fees or a percentage of total assets managed\u00e2\u0080\u0094have generally followed the fiduciary standard , a nonstatutory obligation derived from court rulings and decisions from SEC enforcement cases. It requires a more demanding level of financial professional client care than does broker-dealers' suitability standard: advisers are expected to serve their clients' best interests above their own.", "Partly motivated by reporting on widespread investor confusion over the differences between broker-dealers and investment advisers and their respective client obligations, Section 913 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank, P.L. 111-203 ) directed the SEC to evaluate gaps in existing regulations for advisers and broker-dealers. It gave the SEC authority to impose a fiduciary standard of care on broker-dealers akin to that already applied to advisers. Dodd-Frank also required the SEC to study this issue. The resulting 2011 staff study recommended that the SEC adopt a uniform fiduciary standard.", "In 2016, the Obama Administration's Department of Labor (DOL) issued controversial regulations that subjected financial professionals who work with private-sector retirement plans governed by the Employee Retirement Income Security Act of 1974 ( P.L. 93-406 ) to an elevated fiduciary level of customer duty. The largely unimplemented reform, which earned praise from investor advocates, was vacated in a 2018 court case brought by various business interests who successfully argued that it was statutory overreach. Currently, Trump Administration DOL officials are reportedly working on a new standard projected to align with Reg BI.", "SEC officials and various business groups argue that Reg BI properly balances the need for an enhanced broker-dealer standard of care with the need to preserve the broker-dealer business model, a model deemed to have special appeal to less-affluent investors. Critics, including investor advocates, argue that it effectively preserves the inadequate suitability standard, exposing investors to harm from unaddressed broker-dealer conflicts of interest. In June 2019, the House passed H.R. 3351 , the FY2020 Financial Services and General Government appropriations bill. It included an amendment sponsored by House Financial Services Committee Chair Maxine Waters that would have forbidden the SEC from using any of its congressional spending authority to implement, administer, enforce, or publicize the final rules and interpretations with respect to Reg BI. On December 20, 2019, President Trump signed H.R. 1865 , the Further Consolidated Appropriations Act, 2020, which became P.L. 116-94 and will fund the federal government through FY2020. It does not contain the aforementioned SEC restrictions contained in H.R. 3351 ."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Overview", "paragraphs": ["On June 5, 2019, the commissioners of the Securities and Exchange Commission (SEC) voted to adopt Regulation Best Interest (Reg BI). Reg BI is arguably the centerpiece and most controversial part of a set of regulatory reforms related to financial professionals adopted by the SEC on that day. A new rule under the Securities and Exchange Act of 1934 (P.L. 73-291), Reg BI changes broker-dealers' obligations in their relationships with retail customers. According to the SEC, the regulation is meant to \"enhance the broker-dealer standard of conduct beyond existing ... obligations [by] requiring broker-dealers ... to: (1) act in the best interest of the retail customer at the time the recommendation is made, without placing the financial or other interest of the broker-dealer ahead of the interests of the retail customer; and (2) address [various broker-dealer] conflicts of interest [with those clients].\" ", "H.R. 3351 , the FY2020 Financial Services and General Government appropriations bill as passed by the House included an amendment sponsored by House Financial Services Committee Chair Maxine Waters that would have forbidden the SEC from using any of its congressional spending authority to implement, administer, enforce, or publicize the final rules and interpretations with respect to Reg BI. This language, however, was not included in H.R. 1865 / P.L. 116-94 , the Further Consolidated Appropriations Act, 2020, as enacted.", "This report examines Reg BI in that it (1) provides background on the roles and the regulation of two types of financial professionals, broker-dealers and investment advisers; (2) provides background on the Obama Administration Department of Labor's 2016 fiduciary rule for broker-dealers under the Employee Retirement Income Security Act of 1974 (ERISA, P.L. 93-406 ); (3) describes the component obligations required to fulfill Reg BI's best interest broker-dealer standard; (4) examines state-based broker-dealer fiduciary regulatory and statutory developments; (5) examines congressional concerns and actions regarding Reg BI; (6) presents some key supportive and critical perspectives on Reg BI; and (7) examines research with potential relevance to the debate over the potential costs and benefits of Reg BI."], "subsections": []}, {"section_title": "Background on Broker-Dealers and Investment Advisers", "paragraphs": ["Broker-dealer firms or their affiliated persons act as brokers when they execute securities trades for their clients and as dealers when they trade their own securities for their own benefit. They are often discussed as a joint entity because most broker-dealers must register with the SEC, and must generally be members of and comply with the rules and guidance of a self-regulatory organization (SRO), the Financial Industry Regulatory Authority (FINRA, an SEC-regulated nonprofit). In addition, broker-dealer sales personnel (called registered representatives) register with their state securities regulator.", "SEC-registered broker-dealers are largely regulated under the Securities Exchange Act of 1934 (P.L. 73-291) and comprise a small set of large and medium-sized broker-dealers and thousands of smaller broker-dealers who compete in small niche or regional markets. Broker-dealers, or simply brokers, have significant range in the kinds of services they provide and generally divide into two groups, full-service and discount brokerage firms. ", "Broker-dealers typically provide discrete, transaction-specific investment recommendations and are compensated via the commissions they receive for each individual transaction. A broker-dealer's investment recommendations suite may include buying securities from or selling securities to retail customers on a principal basis or recommending the purchase of proprietary products. In their investment recommendations, they are generally subject to what is known as the suitability standard , which requires them to \"reasonably believe that a client recommendation is suitable given the client's investor profile.\"", "Investment a dvisers are firms or persons who provide investment advice directly to their clients. Clients include individuals and institutional investors, such as mutual funds and hedge funds. Pursuant to the Investment Advisers Act of 1940 (IAA, which regulates key aspects of investment advisers; P.L. 76-768), advisers with more than $110 million in assets under management (AUM) must register with the SEC. States generally register and regulate investment adviser firms with between $25 million and $110 million in AUM.", "Investment advisers typically provide ongoing investment advice and services with respect to client portfolio management. Their compensation is generally determined by the client's account AUM size, a fixed fee, or other arrangements, such as a fee-based compensation model.", "Although not expressly written in the IAA, court rulings and decisions from SEC enforcement cases have helped establish the fiduciary standard , the prevailing standard of retail customer care for investment advisers. Under this standard, advisers are generally expected to serve the best interests of their clients and are required to subordinate their own interests to those of their clients. Ideally, advisers are also expected to either eliminate material conflicts of interest or be fully transparent to the client about the existence of such conflicts.", "By contrast, broker-dealers are generally subject to a less demanding standard of client care that is found in FINRA's Rule 2111, the suitability standard . Triggered when a broker-dealer makes an investment recommendation, the \"standard requires that a firm or associated person have a reasonable basis to believe a recommended transaction or investment strategy involving a security or securities is suitable for the customer.... [It] is based on the information obtained through reasonable diligence of the firm or associated person to ascertain the customer's investment profile.\" ", "Also, unlike investment advisers, brokers do not have an ongoing duty to monitor their clients' financial positions.", "Broker-dealers are, however, subject to a fiduciary standard (1) when they have control of a client's discretionary account (meaning that they have a client's authority to buy and sell securities on the client's behalf) generally, according to case law; or (2) in a few states\u00e2\u0080\u0094California, Missouri, South Dakota, and South Carolina\u00e2\u0080\u0094where state courts have reportedly \"imposed an unambiguous fiduciary standard\" on them. ", "The overall number of SEC-registered broker-dealers fell from more than 6,000 in 2005 to fewer than 4,000 in 2018, in contrast to an increase of SEC-registered investment advisers from about 9,000 in 2005 to more than 13,000 in 2018."], "subsections": []}, {"section_title": "Blurred Lines Between Broker-Dealers and Investment Advisers, the Dodd-Frank Act, and a Uniform Fiduciary Standard", "paragraphs": ["During the late 1980s and early 1990s, the landscape for the delivery of investment advice began to shift as broker-dealers increasingly offered financial advisory services somewhat akin to investment advisers, including investment and retirement planning. The expansion was reportedly helped along by the brokers' reliance on the IAA's \"solely incidental\" exemption from compliance with the act, and the growth of dually registered firms (i.e., firms registered with FINRA and the SEC as both broker-dealers and investment advisers). ", "Compounding the potential retail customer perplexity over who is an investment adviser and who is a broker-dealer is the existence of \"dozens of titles [in the broker world], including generic titles, such as financial advisor and financial consultant, as well as advertisements that reportedly claim that 'we do it all.'\" ", "As a consequence of these developments, various surveys report that retail customers are often confused over the distinctions between broker-dealers and advisers and the unique set of customer obligations attached to each of them. This was encapsulated in an observation made in a Rand Corporation study: \"[T]he industry is becoming increasingly complex, firms are becoming more heterogeneous and intertwined, and investors do not have a clear understanding of the different functions and fiduciary responsibilities of financial professionals.\"", "In 2009, the U.S. Department of the Treasury issued a white paper on potential financial reforms in the wake of the financial crisis, Financial Regulatory Reform \u00e2\u0080\u0094 A New Foundation: Rebuilding Financial Supervision and Regulation . A section of the report observed that for many investors there was little if any difference in the way they perceived brokers and advisers. It then argued that \"retail customers repose the same degree of trust in their brokers as they do in investment advisers, but the legal responsibilities of the intermediaries may not be the same.\" ", "The white paper then recommended the enactment of new legislation \"requiring that broker-dealers who provide investment advice about securities to investors have the same fiduciary obligations as registered investment advisers.\"", "On the heels of the Treasury report and driven in part by similar concerns regarding investor confusion over the roles of investment advisors and broker-dealers, Section 913 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act, P.L. 111-203 ) did a number of things in this area. Among them was granting the SEC authority to impose fiduciary rules on broker-dealers subject to certain conditions and requiring the SEC to study various aspects of financial professionals' standards of retail customer care. Among other questions, the study was asked to evaluate \"whether there are legal or regulatory gaps, shortcomings, or overlaps in legal or regulatory standards in the protection of retail customers relating to the standards of care for providing personalized investment advice about securities to retail customers that should be addressed by rule or statute.\"", "Released in 2011, the staff study recommended that the SEC bolster investor protection and reduce investor confusion regarding the differences between brokers and investment advisers. The staff study then recommended \"establishing a uniform fiduciary standard for investment advisers and broker-dealers when providing investment advice about securities to retail customers that is consistent with the standard that currently applies to investment advisers.\" ", "After the study, then-SEC Chair Mary Schapiro noted that the SEC staff had been tasked with considering the various ramifications of the recommended rulemaking. No such rulemaking was proposed or adopted by the SEC under Chair Schapiro or her successor, Chair Mary Jo White, who in 2015 reportedly said that the agency should \"implement a uniform fiduciary duty for broker-dealers and investment advisers where the standard is to act in the best interest of the investor.\""], "subsections": []}, {"section_title": "The 2016 DOL Fiduciary Rules", "paragraphs": ["In April 2016, the Obama Administration's Department of Labor (DOL) adopted new rules under the Employee Retirement Income Security Act of 1974 (ERISA; P.L. 93-406 ). Previously, under ERISA, securities brokers-dealers who provided services to retirement plans and who were not fiduciaries were generally subject to a suitability standard. ", "The 2016 DOL rules represented a significant change from this. Under them, broker-dealers were generally deemed to be fiduciaries while providing recommendations to retirement plan participants. Major parts of the rules were not to be implemented until 2018.", "In making the case for the reform, the Obama Administration argued that the definition of investment advice needed to be revised given the changed nature of how Americans were readying themselves for retirement after ERISA's enactment in 1975. More specifically, the number of participants in traditional defined benefit (DB) plans had significantly declined, whereas the number of participants in defined contribution (DC) plans, such as 401(k) plans, had surged. The Administration argued that DC plan participants tend to confront more decision options, such as contribution amounts, investment allocations, rollovers, and withdrawals, than do DB plan participants. As such, it was argued that those in DB plans may have greater need for investment assistance and advice subject to the more strenuous fiduciary standard.", "Supporters of DOL's fiduciary rules, including investor advocates, argued that financial advisers (including broker-dealers) would no longer be able to direct clients to products that awarded them larger commissions at the client's expense. Detractors, including broker-dealers, financial planners, and various Members of Congress, stressed that the rules would increase the cost of retirement accounts and would curtail various investors' access to investment advice. ", "In February 2017, President Trump released a presidential memorandum ordering the Labor Department to reexamine the rule. Later, between April and November 2017, DOL ordered a series of delays for key parts of the rule that stretched until July 2019. ", "On March 15, 2018, the Fifth Circuit Court of Appeals vacated the DOL rules. It ruled that DOL had exceeded its statutory authority under ERISA in writing the rules. The decision formally halted implementation of the rules. The adjudication was the result of a lawsuit brought by various business groups, including the U.S. Chamber of Commerce (a major business trade group), the Financial Services Roundtable (a group that represents the nation's largest firms in banking, insurance, and investment services), and the Securities Industry and Financial Markets Association (SIFMA, a major trade group for broker-dealers, investment banks and asset managers). ", "The Trump Administration's DOL has not challenged the Fifth Circuit's decision. However, in fall 2018, DOL officially announced that it was \"considering regulatory options in light of the Fifth Circuit opinion\" and projected a September 2019 date for the potential new final rules. ", "In June 2019, various DOL officials, including then-DOL Secretary Alexander Acosta, reportedly said that the agency \"was working with the SEC to promulgate new rules.\"", "The same month, Jeanne Klinefelter Wilson, deputy assistant secretary of the Employee Benefits Security Administration, the DOL unit that oversees ERISA, observed that although DOL and the SEC operate under different regulations, \"the goal is to proceed under a raw common framework and propose Department of Labor rules [that] track as closely as possible with [the] SEC's best-interest regulations.\"", "In July 2019, President Trump nominated Eugene Scalia to succeed Alexander Acosta as Secretary of Labor. Scalia was later confirmed for that post by the Senate on September 26, 2019. ", "While a partner with the law firm Gibson, Dunn, & Crutcher, Scalia presented oral arguments on behalf of the plaintiffs in the aforementioned case in which the court vacated DOL's fiduciary rule. Scalia has reportedly described the rule as \"an immensely controversial and burdensome rule that really pushed the envelope of the agency's regulatory authority.\"", "The possibility has been raised that Secretary Scalia may have to recuse himself from involvement in the development of a fiduciary rule because of government ethics rules that guard against conflicts of interest by prohibiting officials from participating in issues they were involved with in the private sector. "], "subsections": []}, {"section_title": "The Reg BI Final Rule", "paragraphs": ["On June 5, 2019, the SEC commissioners separately approved parts of a package of final rules related to the duty of care financial professionals owe to retail investors. ", "The package contained ", "Reg BI; the Form Customer Relationship Summary, a short-form disclosure that would identify key distinctions in the types of services offered by broker-dealers and investment advisers to their clients; applicable legal standards, and potential conflicts of interest; a clarification of the fiduciary duty owed by investment advisers to their clients under the Investment Advisers Act; and an interpretation of the \"solely incidental\" broker-dealer exclusion under the IAA aimed at clarifying when a broker-dealer's exercise of investment advisory activities redefines it as an investment adviser according to the IAA. ", "As observed earlier, in addition to its stated goal of requiring a broker-dealer to act in the best interest of a retail customer making recommendations, Reg BI also seeks to address some remaining conflict-of-interest concerns. Reg BI will do so by requiring broker-dealers to \"address conflicts of interest by establishing, maintaining, and enforcing policies and procedures reasonably designed to identify and fully and fairly disclose material facts about conflicts of interest, and in instances where [the SEC] ... determined that disclosure is insufficient to reasonably address the conflict, to mitigate or, in certain instances, eliminate the conflict.\" ", "According to SEC officials, under Reg BI, which the SEC deliberately constructed to be a principles-based set of obligations rather than an expressly defined one, when retail investor clients receive and use a broker-dealer recommendation, the broker-dealer will be required to act in the retail customer's best interest without placing the broker-dealer's financial or other interests ahead of the retail customer's. The SEC interprets Regulation BI to apply to recommendations of (1) \"any securities transaction\" (purchase, sale, and exchange); and (2) any \"investment strategy\" involving securities (including account recommendations). ", "In addition to investors receiving broker-dealer recommendations for non-retirement-based investment accounts, Reg BI also defines an applicable retail investor to include a \"person receiving recommendations for his or her own retirement account, including but not limited to IRAs and individual accounts in workplace retirement plans, such as 401(k) plans and other tax-favored retirement plans.\" It also interprets applicable broker-dealer \"account recommendations to include \u00e2\u0080\u00a6 recommendations to roll over or transfer assets from one type of account to another (e.g., converting a workplace retirement plan account to an IRA).\"", "Broker-dealers will have until June 30, 2020, to comply with Reg BI. ", "Officials at FINRA have reportedly characterized Reg BI as \"sort of federalizing [broker-dealer] sales practice issues.\" Noting that \"most of the [broker-dealer] sales practice requirements historically have come from the FINRA rulebook,\" they indicated that FINRA will likely have to adjust its rules to align with Reg BI. "], "subsections": [{"section_title": "The \"Best Interest\" Rule's Component Obligations", "paragraphs": ["Under Reg BI, the dictate that a broker-dealer cannot place its financial or other interests ahead of its retail customers' interests is known as the general obligation . To satisfy the general obligation, a broker-dealer must comply with three underlying component obligations: (1) a duty of disclosure; (2) a duty of compliance; and (3) a duty of customer care. These obligations are described below. ", "In addition, a fourth component obligation\u00e2\u0080\u0094a duty to address certain conflicts of interests\u00e2\u0080\u0094is one of two broad mandates under Reg BI. Given its significance, a separate section (see \" The Conflict of Interest Obligation Under Reg BI \") then discusses that obligation. "], "subsections": [{"section_title": "The Disclosure, Compliance, and Duty of Customer Care Obligations", "paragraphs": ["The disclosure obligation. Under this obligation, a broker must, prior to or at the time of the recommendation, provide to the retail customer, in writing, full and fair disclosure of all material facts related to the scope and terms of the relationship, including all material facts relating to conflicts of interest associated with the recommendation. The compliance obligation. Reg BI requires broker-dealers to establish written policies and procedures reasonably designed to achieve compliance with Reg BI as a whole. This requirement reflected the SEC's decision to adopt certain commenters' suggestions that the proposed requirement to develop policies and procedures align with the conflict-of-interest obligation described below. The compliance obligation provides flexibility to allow broker-dealers to establish compliance policies and procedures that accommodate a broad range of business models. It does not enumerate specific requirements that broker-dealers must include in their policies and procedures. Instead, each broker-dealer should consider the scope, size, and risks associated with the firm's operations and the types of business in which the firm engages when adopting its policies and procedures. According to the Reg BI release, a reasonably designed compliance program generally would also include controls, remediation of noncompliance, training, and periodic review and testing. The duty of care obligation . Under the duty of care obligation, a broker-dealer must exercise reasonable diligence, care, and skill when making a recommendation to a retail customer. As part of this, the broker-dealer must understand the potential risks, rewards, and costs associated with the recommendation. The broker-dealer must consider such factors in light of the retail customer's investment profile, while ensuring that an ensuing recommendation is in that customer's best interest."], "subsections": []}, {"section_title": "The Conflict of Interest Obligation Under Reg BI", "paragraphs": ["The broad conflict of interest mandate under Reg BI says that broker-dealers must \"address conflicts of interest by establishing, maintaining, and enforcing policies and procedures reasonably designed to identify and fully and fairly disclose material facts about conflicts of interest, and in instances where [the SEC] ... determined that disclosure is insufficient to reasonably address the conflict ... mitigate or, in certain instances, eliminate the conflict.\" ", "Conflicts of interest occur when the interests of an entity working on behalf of a customer and the interests of that customer are misaligned. This dynamic informs the relationship between broker-dealers and customers because of various factors that potentially encourage broker-dealers to boost their compensation or to benefit in other ways to the possible detriment of their customers, such as the transaction-based commission compensation model. ", "Federal securities laws and FINRA's rules address broker-dealer conflicts through three distinct approaches: (1) the express prohibition of certain actions; (2) mitigation through the client suitability requirement when giving investment advice; and (3) the required disclosure of material conflicts of interest when making client recommendations. ", "Expanding on these, the conflict of interest component obligation under Reg BI requires broker-dealers to have written policies and procedures reasonably designed to identify and, at a minimum, disclose or eliminate conflicts of interest, including the following:", "Mitigating conflicts that may encourage them to place their interests, or their firm's interests, ahead of the customer's. Mitigation alters a broker-dealer's policies and procedures to \"reduce the incentive for the associated person to make a recommendation that places the associated person's or firm's interests ahead of the retail customer's interest.\" Examples include (1) avoiding broker-dealer compensation targets that disproportionately expand compensation via certain sale increases; and (2) establishing a differential compensation based on neutral factors to minimize broker-dealer employee compensation incentives that incentivize the promotion of certain types of investment accounts over others. (This is similar to a provision in the 2016 DOL fiduciary rules. ) Establishing, maintaining, and enforcing written policies and procedures designed to \"identify and eliminate any sales contests, sales quotas, bonuses, and non-cash compensation that are based on the sales of specific securities or specific types of securities within a limited period of time.\" (This is similar to a provision in the earlier DOL fiduciary rule. ) Preventing customer offerings that have material limitations, including product menus that are very limited in scope or that solely offer proprietary products that can cause a broker-dealer to place his or her interests or the firm's interests ahead of the customer's. (This is said to be a broader and more rigorous requirement than current FINRA rules on noncash compensation. )"], "subsections": []}]}]}, {"section_title": "The States' Requirements and Reg BI", "paragraphs": ["Broker-dealers are subject to state securities laws, known as \"Blue Sky Laws,\" state common laws, and judicial rulings from a state's highest court. ", "As discussed earlier, reports indicate that the common law derived from judicial rulings in four states\u00e2\u0080\u0094California, Missouri, South Dakota, and South Carolina\u00e2\u0080\u0094imposes an \"unambiguous fiduciary standard\" for broker-dealers who do business in the states. State common laws, however, lack the authority of state regulations and statutes.", "Under state Blue Sky laws, it is generally unlawful for any person to transact business in a state as a broker-dealer or agent unless they are registered with the state's securities regulatory authority.", "During the past few years, several states have been attempting to impose either state statutory or regulatory requirements stipulating that state-registered broker-dealers have a fiduciary duty to their retail customers. And as of September 2019, New Jersey, Nevada, Massachusetts, and New York reportedly had ongoing initiatives that would impose fiduciary requirements on broker-dealers in various stages of development. ", "Of these state initiatives, only Massachusetts' (proposed in June 2019) began after the Reg BI proposal and final rule. Explaining the rationale for the Massachusetts initiative, Secretary of the Commonwealth William Galvin blamed the inadequacies of Reg BI: \"We are proposing this standard, because the SEC has failed to provide investors with the protections they need against conflicts of interest in the financial industry, with its recent 'Regulation Best Interest' rule.\"", "Barbara Roper, director of investor protection at the Consumer Federation of America, a consumer advocacy group, has raised concerns that the state-based fiduciary laws could create loopholes to the detriment of broker-dealer customers. She noted that the Nevada initiative would not recognize insurance agents as financial planners, excluding them from the fiduciary regulation, which she argued could significantly disadvantage consumers within the state. ", "Meanwhile, the brokerage industry and its trade groups have reportedly been lobbying states, such as New Jersey, to halt state-based fiduciary actions. Their arguments are two-pronged: (1) states should reconsider their fiduciary efforts in light of Reg BI; and (2) if adopted, multiple state-based fiduciary broker-dealer standards will result in a messy patchwork of \"laws that would be duplicative of, different than, and possibly in conflict with federal standards.\" ", "Jay Clayton, the SEC chair, has raised related concerns; he identified \"the potential patchwork of inconsistent state-level standards [as a development that he] and many others believe ... will increase costs, limit choice for retail investors and make oversight and enforcement more difficult.\"", "By contrast, SEC Commissioner Robert Jackson, who provided the sole dissenting vote on Reg BI, has characterized the state fiduciary effort as a potentially encouraging fix to the perceived inadequacies of Reg BI.", "The National Securities Markets Improvement Act (NSMIA; P.L. 104-290 ) is often cited as being in potential conflict with the state fiduciary proposals. Aimed at increasing financial services industry efficiency, the act expanded federal regulators' authority by taking some authority away from state securities regulators. Among other things, it also prohibited states from imposing additional or different books and records requirements on broker-dealers outside of federal requirements. The provision is often cited as a potential source for a legal challenge in the event that any of the state broker-dealer fiduciary regimes are adopted. ", "Before the SEC's adoption of Reg BI, SIFMA, a critic of the state fiduciary proposals, asked the agency to consider inserting language into Reg BI noting that NSMIA provides for federal preemption of such actions. The final rule does not contain any such language, a position advocated by an association of state and provincial securities regulators, the North American Securities Administrators Association. Instead, the commentary accompanying the rule notes that \"the preemptive effect of Regulation Best Interest on any state law governing the relationship between regulated entities and their customers would be determined in future judicial proceedings based on the specific language and effect of that state law.\" "], "subsections": [{"section_title": "Action by Eight Attorneys General", "paragraphs": ["On September 9, 2019, Attorneys General (AGs) from California, Connecticut, Delaware, Maine, New Mexico, New York, Oregon, and the District of Columbia filed a suit in the United States District Court, Southern District of New York, asking the court to vacate Reg BI. In arguing that it should be vacated, the AGs alleged that the regulation injures retail investors in two significant ways: (1) it fails to restrict the provision of conflicted advice as directed by Section 913(g) of the Dodd-Frank Act, which permits the SEC to promulgate rules to provide for a uniform fiduciary standard; and (2) it increases the potential that retail investors will receive conflicted information because it compounds previously existing investor confusion with respect to the duties that broker-dealers owe such investors in the provision of investment advice. The AGs also argued that the standard of customer care provided by Reg BI fails to meaningfully go beyond FINRA's existing \"suitability obligation.\""], "subsections": []}]}, {"section_title": "Congressional Concerns and Actions", "paragraphs": ["In September 2018, 35 House and Senate Democratic Members\u00e2\u0080\u0094including House Committee on Financial Services then-ranking member Maxine Waters, who now chairs the committee, and Senate Committee on Banking, Housing, and Urban Affairs ranking member Sherrod Brown\u00e2\u0080\u0094sent a letter to SEC Chair Jay Clayton criticizing the then-proposed Reg BI. The letter stated the following:", "Regulation BI falls woefully short\u00e2\u0080\u00a6 We urge the SEC to revise its proposal consistent with [the Dodd-Frank law] and require brokers to abide by the same high standard that currently applies to investment advisers so that their advice to retail investors is provided without regard to their financial and other interests. Regulation BI for brokers and the SEC's interpretation of the \"fiduciary\" obligation owed by investment advisers fail to clearly do this, enabling investors to 'consent' to harmful conduct in complex and legalistic disclosures that most will never read and would not understand if they did.", "In March 2019, in advance of the SEC's adoption of Reg BI, Chair Waters reportedly said the following: ", "[W]e have to be concerned about best interests of our consumers and our seniors in particular. When you have investment advisors who are not acting in [consumer's] best interest, but are acting in their own best interest, it does not bode well for our senior investors in particular. So we are going to continue to pay attention to that. I don't know what the SEC has decided about what their role should be in this [fiduciary realm], but it's of interest to us.", "On June 26, 2019, the House passed H.R. 3351 , the Financial Services and General Government Appropriations Act for FY2020. The bill included an amendment sponsored by Chair Waters that would have forbidden the SEC from using any of its congressional spending authority \"to implement, administer, enforce or publicize the final rules and interpretations\" with respect to Reg BI. On December 20, 2019, President Trump signed H.R. 1865 , the Further Consolidated Appropriations Act, 2020, which became P.L. 116-94 and will fund the federal government through FY2020. It does not contain the aforementioned SEC restrictions contained in H.R. 3351 . ", "Responses to the congressional action generally reflect where observers stand on the merits of Reg BI itself."], "subsections": []}, {"section_title": "Various Perspectives on Reg BI", "paragraphs": ["Like the wide-ranging comments that followed the release of the proposed Reg BI in 2018, the adoption of the final 2019 rule also elicited an expansive range of responses. This section first identifies the three broad reactions to the reform. It then provides quoted excerpts from various observers and stakeholders that either (1) provide support for or (2) are critical of several concerns regarding Reg BI, including its failure to provide for a broker-dealer fiduciary standard. "], "subsections": [{"section_title": "The Division of Views on Reg BI", "paragraphs": ["The three broad divisions with respect to overall views on Reg BI are as follows:", "those who have given it qualified support, such as Rick Fleming, the SEC's investor advocate, who characterized it as \"not as strong as it could be\" but \"a step in the right direction\"; those who broadly support it, including the U.S. Chamber of Commerce, a major business trade group, and SIFMA; and those who are broadly critical, including the Consumer Federation of America and the Public Investors Arbitration Bar Association (PIABA, a bar association whose members represent investors in disputes with the securities industry). "], "subsections": []}, {"section_title": "Significant Supportive and Critical Perspectives on Debated Assertions About Reg BI", "paragraphs": ["This section provides excerpts of quotes from various stakeholders and observers, which provide contrasting supportive and critical views on policy concerns integral to the debate surrounding Reg BI. Framed as debatable assertions, they are as follows: (1) Reg BI represents meaningful progress over the suitability requirement; (2) Reg BI's failure to define best interest is a problem; (3) the absence of a uniform fiduciary standard is not a problem; (4) the absence of a Reg BI fiduciary standard is not a problem; and (5) Reg BI meaningfully addresses outstanding conflict of interest issues. "], "subsections": [{"section_title": "Reg BI Represents Meaningful Progress over the Suitability Requirement", "paragraphs": [], "subsections": [{"section_title": "Supportive Comments", "paragraphs": ["In a letter to Members of the House, SIFMA said the following in support of Reg BI:", "Reg BI is the most comprehensive enhancement of the standard of conduct rules governing broker-dealers since the enactment of the Securities Exchange Act of 1934. The new SEC rules dramatically and undeniably exceed the previous suitability standard by requiring a duty of loyalty, meaning that a broker's recommendations must be in the customer's best interest and that the broker cannot place its own interests ahead of its customer. The regulations impose a duty of diligence, care and skill in making the recommendations, thereby holding the broker accountable for failures of knowledge or skill.", "SEC Chairman Jay Clayton said the following in a July 2019 speech:", "Regulation Best Interest\u00e2\u0080\u0094or \"Reg. BI\"\u00e2\u0080\u0094imposes a new standard of conduct specifically for broker-dealers that substantially enhances their obligations beyond the current \"suitability\" requirements\u00e2\u0080\u00a6. Reg. BI is satisfied only if the broker-dealer complies with four specified component obligations: Disclosure, Care, Conflict of Interest, and Compliance. Each of these obligations includes a number of prescriptive requirements, all of which must be satisfied to comply with the rule.", "The U.S. Chamber of Commerce said the following in a press release supporting Reg BI:", "The new best interest standards create strong new protections for investors against bad actors, provide clearer information that will help Americans invest and save for their futures, allow investors to choose the right type of advice to fit their needs, and help small businesses provide retirement benefits for their employees. We hope that the Department of Labor moves forward on similar protections for ERISA plans that dovetail with the SEC's approach."], "subsections": []}, {"section_title": "Critical Comments", "paragraphs": ["SEC Commissioner Robert Jackson, who provided the sole dissenting vote on Reg BI, said the following in a statement after the rule's adoption:", "As to brokers, today's rule, like the proposal, fails to require that investor interests come first. Congress expressly authorized us to take that step in Dodd-Frank\u00e2\u0080\u0094authority we should have used today. Instead, the core standard of conduct set forth in Regulation Best Interest remains far too ambiguous about a question on which there should be no confusion. As a result, conflicts will continue to taint the advice American investors receive from brokers.", "Micah Hauptman, financial services counsel at the Consumer Federation of America, reportedly said the following:", "[Reg BI is] a bait and switch on investors. The SEC claims to be imposing a new best interest standard on brokers, but it won't change any practices in the brokerage industry. Instead, Reg BI simply codifies the existin g standard under FINRA rules, just like the brokerage industry asked them to. [The investing public is] getting hoodwinked. ", "Barbara Roper, director of investor protection for the Consumer Federation of America, reportedly said the following:", "[The SEC is saying] we'll let you have the conflict and then just mitigate it. Two different advisors both can call what they do financial planning or retirement planning, and one could have a duty to you for the whole relationship, but for the other\u00e2\u0080\u0094a broker\u00e2\u0080\u0094it's transaction by transaction. "], "subsections": []}]}, {"section_title": "Reg BI's Failure to Define Best Interest is a Problem", "paragraphs": [], "subsections": [{"section_title": "Supportive Comments", "paragraphs": ["Barbara Roper, of the Consumer Federation of America, said the following in testimony before the House Committee on Financial Services Committee, Subcommittee on Investor Protection, Entrepreneurship and Capital Markets: ", "If the goal behind Reg BI truly is to enhance protections for investors, and not simply to preserve the status quo, the Commission must start by clarifying what it means by \"best interest,\" and it must do so in a way that offers protections beyond those already afforded under FINRA rules.... The Commission must adopt a principles-based definition of best interest clarifying that a broker acts in a customer's best interest when she recommends, from among the reasonably available suitable options, those investments, investment strategies, services, or accounts that she reasonably believes are the best available match for that investor, taking into account both the investor's needs and the investments' material characteristics. While there will often not be a single \"best\" option, satisfying a best interest standard should require the broker to narrow down the acceptable options beyond the dozens or even hundreds of investments that would satisfy the existing suitability standard in a given situation.\"", "Massachusetts Secretary of the Commonwealth William Galvin reportedly said the following: ", "Crucially, the term \"best interest\" is not defined in the rulemaking package. This ambiguity will lay the groundwork for the same debates and litigation that exist today under the \"suitability\" standard that applies to broker/dealers."], "subsections": []}, {"section_title": "Critical Comments", "paragraphs": ["SEC Chairman Jay Clayton said the following in a July 2019 speech:", "[Some commenters to the Reg BI proposal asked whether the SEC should] provide a detailed, specific, situation-by-situation definition of \"best interest\" in the rule text.... Our view was that the best approach would be to apply the specific component obligations of Reg. BI, including the \"best interest\" requirement in the Care Obligation, in a principles-based manner. Under Reg. BI, whether a broker-dealer has acted in the retail customer's best interest will turn on an objective assessment of the facts and circumstances of how the specific components of the rule are satisfied. This principles-based approach is a common and effective approach to addressing issues of duty under law, particularly where the facts and circumstances of individual relationships can vary widely and change over time, including as a result of innovation. [The] approach is \u00e2\u0080\u00a6 similar to an investment adviser's fiduciary duty, which has worked well for advisers' retail clients and our markets. Indeed, there is no definition of \"best interest\" under the Advisers Act. ", "Thomas Wade, director of financial services policy at the American Action Forum, said the following:", "[With respect to Reg BI's lack of a clear definition] the SEC provides for a spectrum of advisor-investor obligation, allowing investors to choose their desired level of protection based on their risk appetite and finances. The criticism of allowing this fluidity\u00e2\u0080\u0094that investors may not understand the duty of care provided by their advisor\u00e2\u0080\u0094has been mitigated by the SEC requirement that brokers at stand-alone broker-dealerships not be able to use the word \"advisor\" in their title.", "Financial news summary service FINSUM said the following regarding Reg BI's lack of a \"best interest\" definition:", "Having a highly defined rule leaves it more vulnerable to loopholes. With the current contextual structure, one has to worry whether their behavior could be considered \"best interest\" depending on an amorphous standard. It seems like a better way to keep bad actors in line."], "subsections": []}]}, {"section_title": "The Absence of a Uniform Fiduciary Standard in Reg BI is not a Problem", "paragraphs": [], "subsections": [{"section_title": "Supportive Comments", "paragraphs": ["In the text of Reg BI, the SEC said the following regarding a uniform fiduciary standard:", "We have also declined to craft a new uniform standard that would apply equally and without differentiation to both broker-dealers and investment advisers. Adopting a \"one size fits all\" approach would risk reducing investor choice and access to existing products, services, service providers, and payment options, and would increase costs for firms and for retail investors in both broker-dealer and investment adviser relationships.", "In a July 2019 speech, SEC Chairman Jay Clayton said the following regarding the decision to not adopt a uniform fiduciary standard:", "A number of commenters expressly or impliedly advocated for regulation that would collapse the distinction, with a substantial majority of those commentators favoring the generally applicable investment adviser model where clients pay an asset-based fee or a flat fee for generally broad-based financial advice from a fiduciary\u00e2\u0080\u00a6. [T]his is a good model, and for many investors, this type of investment adviser relationship may better match their needs than the typical broker-dealer relationship. However, for many other investors, the broker-dealer model, particularly after the implementation of Reg. BI\u00e2\u0080\u0094either alone or in combination with an investment adviser relationship\u00e2\u0080\u0094provides the better match. For example, a retail customer that intends to buy and hold a long-term investment may find that paying a one-time commission to a broker-dealer is more cost effective than paying an ongoing advisory fee to an investment adviser to hold the same investment. That same investor might want to use a brokerage account to hold those long-term investments, and an advisory account for other investments.", "SIFMA described the following findings from a study in support of the idea that a uniform fiduciary standard could negatively impact customer choice:", "SIFMA has released a study conducted by Oliver Wyman for the Securities and Exchange Commission that examines the impact of unifying the fiduciary standard of care that retail investors receive from financial advisers and broker-dealers.... Oliver Wyman collected data from a broad selection of retail brokerage firms that serve 33% of households and represent 27% of all retail financial assets. The key insight from the survey is that broker-dealers play a critical role in the financial services industry that cannot be easily replicated with alternative services models. Therefore, if the proposed standardization is adopted, retail investors (particularly small investors) could see a negative impact on the choice of advisory model, product access, and affordability of advisory services."], "subsections": []}, {"section_title": "Critical Comments", "paragraphs": ["The Financial Planning Coalition, an industry group, said the following:", "Adoption of a uniform fiduciary standard of care will not affect the availability of investment advice or the range of products for moderate- or low-income consumers.... Research shows that the costs to broker-dealers to implement a fiduciary standard would be minimal.", "Duane Thompson, senior policy analyst at Fi360, reportedly said the following:", "Instead of having a uniform fiduciary standard for identical advisory services, there will continue to be two somewhat different market conduct standards to what can be identical advisory services. It's another tangible sign that the broker-dealer business model has changed dramatically in recent years, where advice is a dominant feature of what they provide.", "According to a media report, the AARP's Reg BI comment letter to the SEC said the following:", "[AARP is asking the SEC to] adopt a uniform fiduciary standard for financial professionals that applies to all types of retail accounts. There is no question that there is confusion among retail investors in the marketplace as a result of standards that are not uniform and do not address the perpetually evolving universe of investment products and industry practices."], "subsections": []}]}, {"section_title": "The Absence of a Reg BI Fiduciary Standard is not a Problem", "paragraphs": [], "subsections": [{"section_title": "Supportive Comments", "paragraphs": ["In a 2015 speech, SEC Commissioner Daniel M. Gallagher said the following regarding the fiduciary duty:", "Much of the debate on these issues seems to assume that the \"fiduciary duty\" is some sort of talismanic protection that can overcome any competing regulatory concerns. All too often, this is the approach taken by those who simply do not know how the fiduciary duty works in practice. They do not understand or choose to ignore the limitations of the fiduciary duty.", "In a 2018 speech, SEC Commissioner Hester Peirce said the following:", "The word \"fiduciary\" hangs heavily over any discussion about standards for financial professionals. The word carries a lot of different meanings, and legal context matters\u00e2\u0080\u00a6. Never mind that it took many pages of regulation and lots of interpretation to explain what \"fiduciary\" meant in the new DOL iteration. Never mind that even lawyers and financial professionals do not have a universal understanding of what the term means.", "The SEC addressed the fiduciary standard in the text of Reg BI as follows:", "We have declined to subject broker-dealers to a wholesale and complete application of the existing fiduciary standard under the Advisers Act because it is not appropriately tailored to the structure and characteristics of the broker-dealer business model (i.e., transaction-specific recommendations and compensation), and would not properly take into account, and build upon, existing obligations that apply to broker-dealers, including under FINRA rules. Moreover, we believe (and our experience indicates), that this approach would significantly reduce retail investor access to differing types of investment services and products, reduce retail investor choice in how to pay for those products and services, and increase costs for retail investors of obtaining investment recommendations. ", "In a July 2019 speech, SEC Chairman Clayton said the following:", "Reg. BI\u00e2\u0080\u0094imposes a new standard of conduct specifically for broker-dealers that substantially enhances their obligations beyond the current \"suitability\" requirements.... [I]t establishes a general obligation that draws from key fiduciary principles, requiring broker-dealers to act in the best interest of their retail customers and not place their own interest ahead of the retail customer's interest.", "In the same speech, Chairman Clayton also said the following:", "This [principles-based] approach is similar to an investment adviser's fiduciary duty, which has worked well for advisers' retail clients and our markets.... [And the determination of whether a broker-dealer is acting in a retail customer's best interests, will be based on] an objective assessment of the facts and circumstances of how the specific components of Regulation Best Interest are satisfied at the time that the recommendation is made (and not in hindsight).", "In a June 2019 statement, SEC Commissioner Elad L. Roisman said the following:", "Regulation Best Interest also will impose heightened disclosure requirements about brokers, their investment offerings, and associated conflicts of interest in order to better inform retail customers about their service provider and investing options. Not even the so-called fiduciary standard under the Investment Advisers Act includes the obligation to eliminate or mitigate conflicts.", "In the same statement, Commissioner Roisman also said the following:", "In 2016, for example, the DOL acted unilaterally to adopt its so-called \"Fiduciary Rule\" that would have applied to providers of retirement investment accounts\u00e2\u0080\u0094a significant proportion of the registrants under the SEC's jurisdiction. DOL's rule quickly proved unworkable for many, if not all, providers of pay-as-you-go financial services, raising compliance costs, exposing firms to new litigation risks, and in some cases forcing them to choose whether to continue serving some of their smallest customers. According to some, the rule resulted in huge swaths of U.S. investors losing access to affordable financial advice and others paying much higher fees on their retirement accounts, without receiving any increases in service or other discernable benefits. I am glad that this rule is not in effect.", "Representative Trey Hollingsworth reportedly said the following: ", "I am very upset that we continue to talk about polls that ask: Do you believe that this fiduciary rule is a good idea? People say yes. What's not disclosed in that is that you, lower and middle income America, won't get the benefit of that because you don't have an account size that's enough to ensure that those people will continue to give you advice."], "subsections": []}, {"section_title": "Critical Comments", "paragraphs": ["The Financial Planning Coalition said the following:", "Adoption of a fiduciary standard of care will not negatively affect the availability of investment advice or the range of products for moderate- and low-income consumers.... Research shows that the costs to broker-dealers to implement a fiduciary standard would be minimal, and that broker-dealers and investment advisers who provide financial services under a fiduciary standard experience stronger asset and revenue growth than those under a suitability standard.", "In comments to the SEC, the CFA Institute, an investment profession industry group, said the following:", "[B]rokers who are providing non-incidental advice must, by virtue of the Advisers Act, adhere to a fiduciary standard of care and therefore refrain from putting their own interests ahead of their clients' interests. Imposing a fiduciary standard on broker-dealer recommendations, therefore, would still be in keeping with these investor expectations.", "Representative Carolyn Maloney reportedly said the following during a House subcommittee hearing on Reg BI:", "[Under Reg BI] brokers have to act in the \"best interest of customers,\" which sounds good, but the rule does not even define what this means. In fact, the rule allows brokers to continue to take their own financial interest into account when making client regulations. They can remain conflicted as long as they offer some basic amount of disclosure. This is dangerous for investors.", "An industry observer wrote the following regarding the absence of a fiduciary standard:", "[This rulemaking] presented a perfect opportunity to firm up what \"best interest\" means, but the SEC declined to do so. I have mixed feelings about this, because best interest can vary from client to client, and this allows flexibility when needed. However, the grey area has proven to be problematic, because, as you can imagine, it's hard to hold someone accountable to a flexible and unclear standard of care.", "John Britt, a retired SEC enforcement attorney, reportedly said the following: ", "If a securities professional recommends that his client purchase a particular stock, he is giving investment advice. And if he's giving investment advice, he should have a fiduciary duty to his client\u00e2\u0080\u0094nothing less.... [This is] fake regulation."], "subsections": []}]}, {"section_title": "Reg BI Meaningfully Addresses Outstanding Broker-Dealer Conflict of Interest Issues", "paragraphs": [], "subsections": [{"section_title": "Supportive Comments", "paragraphs": ["The SEC addressed conflicts of interest in the text of Reg BI as follows:", "The conflicts of interest associated with incentives at the associated person level and limitations on the securities or products that may be recommended to retail customers have raised particular concerns in the context of the broker-dealer, transaction-based relationship. Accordingly, the Commission believes specific disclosure and additional mitigation requirements are appropriate to address those conflicts. Sales contests, sales quotas, bonuses and non-cash compensation that are based on the sales of specific securities within a limited period of time create high-pressure situations for associated persons to increase the sales of specific securities or specific types of securities within a limited period of time and thus compromise the best interests of their retail customers. The Commission does not believe such conflicts of interest can be reasonably mitigated and, accordingly, they must be eliminated. ", "In a written statement to Congress, former SEC Chairman Harvey L. Pitt said the following:", "[N]othing ... requires broker-dealers to recommend the least expensive or least remunerative securities or investment strategies, as long as the firm and its associated individuals comply with the disclosure, care and conflict of interest obligations that would be created by the Regulation. This is significant, because the mere fact that a brokerage firm, or an account executive, receive additional remuneration for pursuing certain strategies or securities does not, ipso facto, make the recommendation improper, unsuitable, or contrary to the best interests of the retail customer.", "In a July 2019 speech, SEC Chairman Jay Clayton said the following:", "Some critics have gone so far as to fault Reg. BI for failing to require elimination of all conflicts of interest. This criticism is misguided\u00e2\u0080\u0094there are conflicts of interest inherent in all principal-agent relationships, and the broker-customer relationship and the investment adviser-client relationship are no exception. Reg. BI recognizes that these conflicts exist, and requires that firms address those conflicts and provide recommendations that are in the best interest of their retail customers.", "Thomas Wade, of the American Action Forum, said the following:", "[It has been argued] that the best interest standard is a greater protection than fiduciary, as brokers must mitigate and eliminate conflicts of interests, where under the fiduciary duty all that was required was disclosure."], "subsections": []}, {"section_title": "Critical Comments", "paragraphs": ["The Consumer Federation of America said the following in a fact sheet criticizing Reg BI:", "The rule's conflict obligations don't prohibit firms from creating incentives that encourage and reward advice that is not in customers' best interests. Nor does the rule require firms to manage any conflicts to the benefit of the customer. For example, policies and procedures to \"mitigate\" financial conflicts don't have to be reasonably designed to prevent the broker from placing its interests ahead of the customer's interests.", "A media report detailed SEC Commissioner Jackson's criticism of Reg BI's approach to conflicts of interest as follows:", "The rule would be much improved with the addition of provisions that \"limit or ban compensation practices that lead brokers to engage in conflicted activities,\" he says. \"[Y]ou can expect people in the marketplace to do that which they're paid to do,\" he says. \"If you pay them extra to put people in in-house products that are bad for the people, you can expect that there will be conflicts that will be difficult to mitigate, so I've urged for changes there as well.\"", "Commissioner Jackson also said the following in his statement on Reg BI:", "Troubling broker compensation practices that put investors at risk are addressed [in a very limited fashion] when they are \"based on the sales of specific securities within a limited period of time,\" or \"create high-pressure situations.\" These restrictions merely mimic those in longstanding FINRA proposals, and I cannot see why our rules should permit pay practices that create any pressure for brokers to harm investors.\"", "An industry observer wrote the following regarding Reg BI and conflicts of interest:", "The SEC fact sheet [as part of the press release accompanying Reg BI] ... did take positive steps from the proposed rule, but still left significant worries. For instance, sales competitions with award trips, bonuses and other rewards tend to prioritize growth over customer care (think Wells Fargo) were to some degree shot down in the rule, but not entirely. While specific product sales leading to bonuses appear to be shot down, an overall competition or bonus system for selling a suite of products is not clearly prohibited. This could really just cause companies to redo their bonus and competition models and allow them to continue. ", "The Consumer Federation of America said the following in a press release:", "Even where conflicts would have to be \"mitigated,\" the Commission doesn't make clear that mitigation has to be designed to support compliance with the best interest standard."], "subsections": []}]}]}]}, {"section_title": "An Analysis of Reg BI Reform", "paragraphs": ["In its 700-page Reg BI release, the SEC spoke of its inability to employ data-based research to gain insight into the reform's probable impact: ", "Because the Commission does not have, has not received, and, in certain cases, does not believe it can reasonably obtain data that may inform on certain economic effects, the Commission is unable to quantify certain economic effects.... [E]ven in cases where it has some data or it has received some data regarding certain economic effects, the quantification of these effects is particularly challenging due to the number of assumptions that it would need to make to forecast how broker-dealers will respond to Regulation Best Interest, and how those responses will, in turn, affect the broader market for investment advice and the retail customers' participation in financial markets. ", "The release, however, included a discussion of theoretical costs and benefits from an alternative to Reg BI that would have imposed fiduciary standards on broker-dealers akin to those that generally apply to investment advisers. ", "The release asserted that a major theoretical benefit to such a uniform fiduciary standard would be reduced customer confusion surrounding what obligations both brokers and investment advisers have toward them. Moreover, the release argued that such a change could also reduce potential customer costs associated with choosing a financial professional who is not a good fit since both brokers and investment advisers would be subject to the same standard of customer care. ", "The release noted, however, that a uniform fiduciary standard could result in a standard of care for brokers \"that is not appropriately tailored to the structure and characteristics of the broker-dealer model (i.e., transaction specific recommendations and compensation).\" Because of this possibility, it argued that the range of options in the financial advice market would shrink. It contended that at least in the short run, brokers would face greater compliance costs, possibly encouraging them to transition into offering advice in an investment adviser capacity and discouraging them from continuing to offer advice in a broker capacity. ", "In turn, the release observed that brokers formally exiting their roles as broker-dealers could limit retail customers' access to particular securities or investment strategies as well as how they would pay for such advice. As a result, customers' costs for such advice could increase. The release then examined the potential fallout from a hypothetical scenario in which brokers operate under a new fiduciary standard but uniformly remain broker-dealers. According to the release, this could result in increased compliance costs for brokers that could be fully or partially passed on to their clients. That possibility, it argued, could lead to some customers problematically engaging less expensive investment advice providers outside of the regulated world of investment advisers and broker-dealers.", "Some data-based research has also examined the implications of a hypothetical final rulemaking that imposed a fiduciary standard on brokers. Several examples of this research are examined below, illustrating that research has resulted in disparate views on the nature of such impact. ", "The Deloitte -SIFMA Study . In 2017, the business consultant Deloitte and SIFMA, the broker-dealer trade group, released the results of a collaborative survey conducted by Deloitte on SIFMA members. The study yielded results from the responses of 21 large national corporate SIFMA members on their reactions to the partially implemented DOL fiduciary rule, which the members had responded to by making plans to modify their retail customer-based services and products. Of the 21 respondents, 53% reported that they had either eliminated or limited access to brokerage advice services and 67% had migrated away from open choice to fee-based or limited brokerage services. The study also found that a \"trend towards fee-based accounts was likely accelerated by the rule.\" It noted that \"[t]ypically, fee-based accounts offer a higher level of service than brokerage accounts and often include automatic rebalancing of accounts, comprehensive annual reviews, enhanced reporting to account holders, and access to third party money managers. The fees are generally an 'all-in' asset-based fee that is generally higher than the fees paid in an advised brokerage account.\" ", "Finke and Langdon . As indicated earlier, some states have common laws that impose a fiduciary standard of care on brokers, but many do not. By surveying broker-dealer registered representatives subject to differing state common law-based fiduciary requirements, Finke and Langdon, two academics, exploited those differences to ascertain whether a relatively stricter fiduciary standard of care affected brokers' willingness to provide advisory services to retail consumers. Among other things, the 2012 research found that the number of registered representatives conducting business within a state as a percentage of total households did not significantly change whether or not a state had a stricter fiduciary standard. It also found no significant differences among such financial professionals in states with a strict fiduciary standard compared with states that did not have a fiduciary standard with respect to (1) whether they were limited in their ability to recommend certain products or to serve clients with limited wealth; (2) the percentage of clients with lower incomes and higher levels of wealth; (3) their ability to provide a broad range of investment products including those that involve commission-based compensation; and (4) the ability to provide tailored customer advice.", "Bhattacharya , Padi , and Illanes . The researchers analyzed patterns of sales behavior for annuities issued by a large national financial company sold between 2013 and 2015 by broker-dealers based in adjacent counties separated by state lines. Released in 2019, the analysis hinged on the fact that some of the counties were in states with common law-based broker fiduciary standards, but adjacent counties were in states without such standards. Among other things, they found that subjecting brokers to a fiduciary duty shifted the suite of investment products that they sell to retail investors. Relative to counties without broker fiduciary obligations, brokers in counties with fiduciary standards saw increased costs of doing business, but the jurisdictions also witnessed direct improvements in the quality of the financial advice."], "subsections": []}]}}
{"id": "98-696", "title": "Resolving Legislative Differences in Congress: Conference Committees and Amendments Between the Houses", "released_date": "2019-05-22T00:00:00", "summary": ["The Constitution requires that the House and Senate approve the same bill or joint resolution in precisely the same form before it is presented to the President for his signature or veto. To this end, both houses must pass the same measure and then attempt to reach agreement about its provisions.", "The House and Senate may be able to reach agreement by an exchange of amendments between the houses. Each house has one opportunity to amend the amendments from the other house, so there can be Senate amendments to House amendments to Senate amendments to a House bill. House amendments to Senate bills or amendments are privileged for consideration on the Senate floor; Senate amendments to House bills or amendments generally are not privileged for consideration on the House floor. In practice, the House often disposes of amendments between the houses under the terms of a special rule reported by the Rules Committee. The Senate sometimes disposes of House amendments by unanimous consent, but the procedures associated with the exchange of amendments can become complicated.", "Alternatively, the House and Senate can each disagree to the position of the other on a bill and then agree to create a conference committee to propose a package settlement of all their disagreements. Most conferees are drawn from the standing committees that had considered the bill initially. The House or Senate may vote to instruct its conferees before they are appointed, but such instructions are not binding.", "Conferees generally are free to negotiate in whatever ways they choose, but eventually their agreement must be approved by a majority of the House conferees and a majority of the Senate conferees. The conferees are expected to address only the matters on which the House and Senate have disagreed. They also are expected to resolve each disagreement within the scope of the differences between the House and Senate positions. If the conferees cannot reach agreement on an amendment, or if their agreement exceeds their authority, they may report that amendment as an amendment in true or technical disagreement.", "On the House and Senate floors, conference reports are privileged and debatable, but they are not amendable. The Senate has a procedure to strike out portions of the conference agreement that are considered, under Senate rules, to be \"out of scope material\" or \"new directed spending provisions.\" The House also has a special procedure for voting to reject conference report provisions that would not have been germane to the bill in the House. After agreeing to a conference report, the House or Senate can dispose of any remaining amendments in disagreement. Only when the House and Senate have reached agreement on all provisions of the bill can it be enrolled for presentation to the President."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["The process of resolving the legislative differences that arise between the House of Representatives and the Senate is one of the most critical stages of the legislative process. It is also potentially one of the most complicated. Each chamber continues to be governed by its own rules, precedents, and practices, but at this stage, each house also must take into account the preferences and, to some extent, the procedures of the other.", "This report summarizes the procedures the two houses of Congress use most frequently to resolve their legislative differences. It is based upon an interpretation of the rules and published precedents of the House and Senate and an analysis of the application of these rules and precedents in recent practice. It bears emphasizing that this report is not exhaustive, nor is it in any way an official statement of House or Senate procedures. It may serve as a useful introduction or general guide, but it should not be considered an adequate substitute for a study of House and Senate rules and precedents themselves or for consultations with the parliamentarians of the House and Senate on the meaning and possible application of the rules and precedents.", "Readers may wish to study the provisions of the rules\u2014especially House Rule XXII\u2014and examine the applicable precedents as explained in House Practice: A Guide to the Rules, Precedents, and Procedures of the House , especially pages 339-374 (on \"Conferences Between the Houses\") and pages 857-883 (on \"Senate Bills; Amendments Between the Houses\"), and in Riddick's Senate Procedure (Senate Document No. 101-28), especially pages 126-143 (on \"Amendments Between Houses\") and pages 449-493 (on \"Conferences and Conference Reports\")."], "subsections": []}, {"section_title": "The Need for Resolution", "paragraphs": ["Before Congress can submit a bill or joint resolution to the President for his approval or disapproval, the Senate and the House of Representatives must agree on each and every provision of that measure.", "It is not enough for both houses to pass versions of the same measure that are comparable in purpose but that differ in certain technical or even minor details; the House and Senate must agree on identical legislative language. Nor is it enough for the two chambers to approve separate bills with exactly the same text; the House and Senate both must pass the same bill. In sum, both chambers of Congress must pass precisely the same measure in precisely the same form before it can become law.", "Each of these requirements\u2014agreement on the identity of the measure (e.g., H.R. 1 or S. 1) and agreement on the text of that measure\u2014is considered in turn in the following sections of this report."], "subsections": []}, {"section_title": "Selection of the Measure", "paragraphs": ["Because both chambers must pass the same measure before it can become law, at some point during the legislative process the House must act on a Senate bill or the Senate must act on a House bill. Congress usually meets this requirement without difficulty or controversy. In some cases, however, selecting the measure may require some parliamentary ingenuity and can have policy and political consequences.", "After either house debates and passes a measure, it sends (or \"messages\") that bill to the other chamber. If the second house passes the first house's bill without any amendments, the legislative process is completed: Both houses have passed the same measure in the same form. If the second house passes the bill with one or more amendments, both chambers have acted on the same measure; now they must resolve the differences between their respective versions of the text if the measure is to become law.", "In most cases, either the House or the Senate can be the first chamber to act. However, the Constitution requires that all revenue measures originate in the House, and the House traditionally has insisted that this prerogative extends to appropriations as well as tax measures. Thus, the House normally acts first on such a measure, and, consequently, it is a House-numbered bill or joint resolution that Congress ultimately presents to the President for enacting appropriations or tax laws.", "In some cases, the proponents of a measure may decide that one house or the other should act first. For example, a bill's supporters may first press for floor action in the chamber where they think the measure enjoys greater support. They may hope that success in one house may generate political momentum that will help the measure overcome the greater opposition they expect in the second chamber. Alternatively, one house may defer floor action on a bill unless and until it is passed by the other, where the measure is expected to encounter stiff opposition. The House leadership, for example, may decide that it is pointless for the House to invest considerable time, and for Representatives to cast possibly unnecessary and politically difficult votes, on a controversial bill until after an expected Senate filibuster on a comparable Senate bill has been avoided or overcome.", "As these considerations imply, major legislative proposals frequently are introduced in both houses\u2014either identical companion bills or bills that address the same subject in rather different ways. If so, the appropriate subcommittees and committees of the House and Senate may consider and report their own measures on the same subject at roughly the same time. Thus, when one house passes and sends a bill to the other, the second chamber may have its own bill on the same subject that has been (or is soon to be) reported from committee and available for floor consideration. In such cases, the second chamber might act initially on its own bill, rather than the bill received from the other house. ", "This is particularly likely to happen when the committee of the second house reports a bill that differs significantly in approach from the measure passed by the first chamber. The text selected for floor consideration generally sets the frame of reference within which debate occurs and amendments are proposed. In most cases, the House or Senate modifies, but does not wholly replace, the legislative approach embodied in the bill it considers. It is usually advantageous, therefore, for a committee to press for floor consideration of its approach, rather than the approach proposed by the other house.", "In large part for this reason, the House (or the Senate) sometimes acts on its own bill even though it has already received the other chamber's bill on the same subject. Under these circumstances, however, it would not be constructive for the House to pass its bill and then send it to the Senate. If the House were to do so, then each chamber would have in its possession a bill passed by the other, but both chambers would not yet have acted on the same measure. To avoid this potential problem, the second house often acts initially on its own bill, and then it also acts on the other chamber's bill on the same subject. ", "In these situations, the House customarily debates, amends, and passes the House bill and, immediately thereafter, takes up the counterpart Senate bill. The floor manager then moves to \"strike out all after the enacting clause\" of the Senate bill (the opening lines of every bill\u2014\"Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled\") and replace the stricken text with the full text of the House bill as just passed. The House often agrees by unanimous consent to consider the Senate bill and approves the House substitute routinely. The Senate bill, as amended, is then passed by voice vote or without objection.", "In some cases, a special rule includes provisions for such action on a companion Senate bill. For instance, a special rule may state", "The House hereby takes from the Speaker's table the bill S. l and adopts an amendment to strike out all after the enacting clause of the said Senate bill and insert in lieu thereof the provisions contained in H.R. 1 as passed by the House.", "In this way, the House actually passes two bills on the same subject and with identical provisions, but it is the Senate bill (which both chambers now have passed) that is the subject of further action.", "The Senate acts in a comparable fashion. The Senate might debate and amend its bill and, after passage, take up the House bill by unanimous consent, strike out all after the enacting clause, insert the amended text of the Senate bill, and pass the House bill, as it has been amended by the Senate's amendment in the nature of a substitute. To occur swiftly, these procedures require unanimous consent. Sometimes the Senate begins consideration of a House-numbered bill to avoid the need for unanimous consent at the end of the process, particularly when the measure is a revenue or appropriations measure.", "If the first house's bill has been referred to committee in the second chamber and is still there, it is first necessary to discharge the committee from further consideration of the bill. This also is normally accomplished routinely, either by unanimous consent or, in the House, pursuant to the provisions of a special rule. To avoid the need for this action, the Speaker often leaves a Senate bill on \"the Speaker's table,\" instead of referring it to the appropriate House committee, if there is reason to expect that the House will soon act on a companion House bill. Similarly, a House bill may be taken up on the Senate floor without first being referred to committee when a companion Senate bill has been reported from committee and is on the Senate's legislative calendar.", "By these devices, the House and Senate arrange to act on the same bill, even if they have passed that measure with fundamentally different texts. In most cases, these arrangements are noncontroversial and routine. Under some circumstances, however, complications and difficulties can arise.", "The House operates under a rule that requires that all amendments must be germane to the measure being considered; the Senate does not. Unless the Senate imposes a germaneness requirement on itself by unanimous consent or by invoking cloture, most measures are subject to whatever nongermane floor amendments Senators wish to offer. Consequently, the Senate may select a House bill on one subject as a convenient \"vehicle\" and amend it to include provisions on other, unrelated subjects. Sometimes the use of unrelated legislative vehicles is accepted by both the House and the Senate as a useful, or even necessary, device to cope with different political and parliamentary conditions prevailing in the two chambers. "], "subsections": []}, {"section_title": "Two Methods of Resolution", "paragraphs": ["Once the House and Senate have passed different versions of the same measure, there are basically two methods they can use to resolve the differences between their versions.", "One method involves a conference committee\u2014a panel of Members representing each house that attempts to negotiate a version acceptable to both chambers. Historically, Congress has sent most major bills to conference committees.", "The other method makes a conference committee unnecessary by relying instead on amendments between the houses\u2014Senate amendments to the House position, House amendments to the Senate position, or both. The two houses shuttle the measure back and forth between them, each chamber proposing an alternative to the position of the other or insisting on its own position, in the hope that both houses eventually will agree on the same position.", "The essential nature of each method can be described relatively simply. However, potential variations abound. Occasionally, some combination of the two methods may be used. For example, the House and Senate may begin the process of resolving their differences by amending each other's amendments. Then they may decide to go to conference if the first method is not totally, or even partially, successful. Alternatively, the two houses may decide immediately to create a conference committee, but that conference committee might resolve only some of the differences between their two versions. If so, the two chambers may accept whatever agreements the conferees have reached and then attempt to deal with the remaining disagreements through an exchange of amendments between the houses.", "Under some circumstances, the process can become even more complicated. Certain patterns of action are most common, but the possible variations make the procedures at this stage of the legislative process the most difficult to predict with any assurance. Moreover, either house may refuse to act at any time and at any stage of this process, and if that chamber remains adamant in its refusal to act, the measure dies.", "In general, the House or Senate cannot take any action by either method unless it is in formal possession of the \"papers\"\u2014the official copies of the measure and whatever amendments, motions, and accompanying messages have been approved by the House and Senate. In attempting to resolve their differences, the two chambers act sequentially, not simultaneously."], "subsections": []}, {"section_title": "Amendments Between the Houses", "paragraphs": ["The need to resolve differences arises when one house passes a measure that the second chamber subsequently passes with one or more amendments. It is these amendments that create the differences between the two houses. The differences may be resolved by one chamber accepting the amendments of the other or by proposing new amendments that the other house agrees to accept.", "Within limits to be discussed, the measure may be sent back and forth between the House and Senate, each house amending the amendments of the other, in the hope that one chamber will agree to the proposals from the other. When the amending opportunities are exhausted, one house must accept the position of the other or the bill can die for lack of agreement. Alternatively, at any stage during this process, either house can request a conference, thereby proposing to use the other method for resolving their differences. (Then, if the conference is not totally successful, it may be necessary to return once again to amendments between the houses.) The second chamber's amendments to the bill are the text that is subject to amendments between the houses, and that text may be amended in two degrees. ", "Assume that the House has passed H.R. 1 and the Senate has passed the same bill with an amendment. When the Senate sends the bill back to the House, the House may amend the Senate amendment. (Technically, the House concurs in the Senate amendment with a House amendment.) This House amendment to the Senate amendment is a first-degree amendment.", "When the Senate receives from the House the bill with the House amendment to the Senate amendment, the Senate may concur in the House amendment to the Senate amendment. If the Senate does so, the differences between the chambers have been resolved. Alternatively, the Senate may amend the House amendment. (Technically, the Senate concurs in the House amendment to the Senate amendment with a further Senate amendment.) This further Senate amendment is a second-degree amendment.", "When the bill and the accompanying papers (that is, the various House and Senate amendments and messages) are now returned to the House, that chamber may not propose a further amendment. That would be a prohibited amendment in the third degree. The House may concur in the final Senate amendment, in which case the differences are resolved, or it may disagree to the Senate amendment. (Note that this is the first point at which disagreement has been expressed; a later section of this report discusses the importance of reaching the stage of disagreement.)", "If the House disagrees to the final Senate amendment (or to any Senate amendment at some earlier stage), the Senate may recede from its amendment and concur in the last position offered by the House (thereby achieving agreement), or the Senate may insist on its amendment. In turn, if both chambers are adamant, the House may insist on its disagreement, the Senate may adhere to its amendment, and the House finally may adhere to its disagreement. If this stage is reached, the bill is almost certain to die unless one house or the other recedes from its last position. (This same sequence of events can begin in the Senate, with the subsequent actions of the chambers reversed.)", "The two houses may reach agreement at any stage of this process if one chamber concurs in the amendment of the other or recedes from its own amendment. Alternatively, stalemate could be reached more quickly\u2014for instance, if the chambers refuse to alter their original positions and proceed directly through the stages of disagreement, insistence, and adherence, bypassing the intermediate stages at which they could offer new proposals in the form of first- and second-degree amendments between the houses. Fortunately, the House and Senate rarely reach the point of insistence and then adherence."], "subsections": []}, {"section_title": "Consideration of Senate Amendments by the House", "paragraphs": ["The House may consider on the floor a House-passed measure with Senate amendments under several circumstances: (1) instead of sending the bill to a conference committee, (2) in the process of sending it to conference, or (3) after the measure has been considered by a conference. This section discusses House action on Senate amendments either instead of or before consideration in conference. House actions on Senate amendments after conference are discussed in later sections of this report on amendments in true and technical disagreement.", "A bill that the House has passed and that the Senate has amended and returned to the House usually remains at \"the Speaker's table\" until it is taken up again on the House floor. It may be referred to a House committee at the discretion of the Speaker, but referral to committee is not mandatory and rarely occurs. The Speaker is most likely to refer the bill to committee if the Senate amendments are major in scope and nongermane in character, and especially if the Senate amendments would fall within the jurisdiction of a House committee that had not considered the bill originally.", "At this stage of the legislative process, the bill and the Senate amendments to it are not privileged for floor consideration by the House\u2014in other words, it is not in order for the House to consider the Senate amendments to the bill\u2014unless the Senate amendments do not include any authorization, appropriation, or revenue provisions that House rules require to be considered in Committee of the Whole. The bill and Senate amendments become privileged for House floor consideration only after the House has reached the stage of disagreement.", "The only motion that can be made on the House floor at this stage is a motion to go to conference with the Senate. This motion can take two forms. If the Senate has passed a House bill with Senate amendments, the motion proposes that the House disagree to the Senate amendments and request or agree to a conference with the Senate. If the Senate has disagreed to House amendments to a Senate bill and returned the bill to the House, the motion proposes instead that the House insist on its amendments and request or agree to a conference. In either case, the motion is entertained at the Speaker's discretion and may be made only if authorized by the committee (or committees) with jurisdiction over the subject of the measure. The same result is achieved far more often by unanimous consent.", "If the Senate amendments require consideration in Committee of the Whole, it is not in order to move to concur in the Senate amendments (thereby reaching agreement), or to move to concur in the Senate amendments with House amendments (thereby proposing a new House position to the Senate). However, such actions sometimes are taken by unanimous consent. The House floor manager may ask unanimous consent, for instance, to take the bill, H.R. 1, with Senate amendments thereto from the Speaker's table and concur in the Senate amendments. Another Member, generally a minority-party member of the committee of jurisdiction, often reserves the right to object, usually only for the purpose of asking the floor manager to explain the purpose of the request and the content of the Senate amendments. Their discussion usually establishes that the Senate amendments are either desirable or minor and, in any case, are acceptable to the Representatives who know and care the most about the measure. The reservation of objection then is withdrawn; the unanimous consent request is accepted, and the differences between the House and Senate are thereby resolved. In similar fashion, the House may\u2014again, by unanimous consent\u2014concur in some or all of the Senate amendments with House amendments.", "It bears repeating that, if there is objection to a unanimous consent request to concur in Senate amendments (with or without House amendments), no motion to that effect can be made if the amendments require consideration in Committee of the Whole. However, at least two alternatives are available. First, the Speaker may recognize the floor manager to move to suspend the rules and concur in the Senate amendments (again, with or without House amendments). Motions to suspend the rules may be considered, at the discretion of the Speaker, on a Monday, Tuesday, or Wednesday. The Speaker also may entertain motions to suspend the rules on other days by unanimous consent or pursuant to a special rule. Such a motion is debatable for 40 minutes, is not amendable, and requires support from two-thirds of the Members present and voting. Second, the Rules Committee may report, and the House may agree to, a special rulemaking in order a motion to concur (with or without amendments). In fact, the special rule may even be drafted in such a way that the vote to agree to the rule is also the vote to concur in the Senate amendments. Such a resolution is known as a self-executing rule and may take the following form:", "Resolved , That immediately upon the adoption of this resolution the bill ( H.R. 1 ), together with the Senate amendments thereto, is taken from the Speaker's table to the end that the Senate amendments be, and the same are hereby, agreed to.", "There are additional rules and precedents concerning the consideration of certain Senate amendments in Committee of the Whole, the germaneness of House amendments to Senate amendments, and the relative precedence of the motion to concur and the motion to concur with amendments. However, these rules and precedents are not often invoked at this stage of House proceedings because the measure and the Senate amendments are either sent directly to conference or they are disposed of by a means that waives these rules and precedents: unanimous consent, suspension of the rules, or special rules. Some of these possibilities are far more likely to arise during House floor action on Senate amendments in true or technical disagreement, and they are discussed in later sections on those subjects."], "subsections": []}, {"section_title": "Consideration of House Amendments by the Senate", "paragraphs": ["When the Senate receives a bill with House amendments, it normally is held at the desk. House amendments are privileged and, therefore, can be laid before the Senate without debate. Moreover, the consideration of these amendments suspends, but does not displace, the pending or unfinished business. Paragraph 3 of Rule VII provides:", "The Presiding Officer may at any time lay, and it shall be in order for a Senator to move to lay, before the Senate, any bill or other matter sent to the Senate by the President or the House of Representatives for appropriate action allowed under the rules and any question pending at that time shall be suspended for this purpose. Any motion so made shall be determined without debate.", "Normally, the majority leader asks the presiding officer to lay before the Senate the House message on a bill; such a message may state that the House has passed a certain Senate bill with amendments that are stated in the message. The message also may inform the Senate that the House has requested a conference. ", "In many situations, House amendments are not called up on the Senate floor until after a process of consultations and negotiations as is characteristic of the Senate. The majority and minority floor managers can be expected to consult with each other and to decide if the House amendments are acceptable or if the two Senators can agree on amendments to those House amendments. Whatever agreement the floor managers reach also is discussed with other interested Senators in the hope of achieving general concurrence. If such concurrence is reached, it is reflected in an expeditious floor decision to agree to the House amendments, with or without further Senate amendments.", "If such an agreement is not reached, then a variety of parliamentary options are available for acting on House amendments. If the goal is to arrange for a conference committee with the House, a motion could be made that can take two forms: ", "1. If the House has passed a Senate bill with House amendments, the motion proposes that the Senate disagree to the House amendments, request or agree to a conference with the Senate, and authorize the presiding officer to appoint conferees. 2. If the House has disagreed to Senate amendments to a House bill and returned the bill to the Senate, the motion proposes instead that the Senate insist on its amendments, request or agree to a conference, and authorize the presiding officer to appoint conferees. ", "In either case, the motion is subject to debate under the regular rules of the Senate, but as discussed in the section on arranging for a conference, a new rule approved in the 113 th Congress provides for an expedited cloture process on the motion. ", "If the goal is to return the amendment(s) to the House to further the legislative process, then the basic choices before the Senate are to propose a change to the House amendment(s), agree to the House amendment(s), or to disagree to the House amendment(s). More formally, the three central motions to dispose of House amendments prior to the stage of disagreement are (1) that the Senate concur in the House amendment(s) with Senate amendment(s), (2) that the Senate concur in the House amendment(s), or (3) that the Senate disagree to the House amendment(s). Any of these motions are debatable and, therefore, subject to being filibustered. However, a fourth motion\u2014to table the House amendments\u2014is not debatable and, if agreed to by the Senate, returns the House amendment with a message that the Senate has disagreed to the House amendment.", "It is possible for multiple motions to dispose of a House amendment to be pending at the same time. The motions to concur, concur with an amendment, and to disagree are listed above in their order of precedence; a motion can be understood to have precedence over another if it may be offered while the other is pending and it is disposed of first. Thus, with a motion to disagree pending, a motion to concur and a motion to concur with an amendment could be offered and would be voted on first. If a motion to concur with an amendment were pending, however, neither a motion to concur nor a motion to disagree could be offered until the Senate disposed of the motion to concur with an amendment. A motion to table is of the highest precedence.", "Furthermore, if the House has proposed several amendments to the Senate bill (or Senate amendment), then the Senate could take different actions on each of the House amendments. When the Senate receives multiple amendments from the House, it considers them in the order that they affect the Senate text. A single motion can be made to dispose of several amendments, so long as it is the same form of disposition (for example, to concur), but such a motion would be subject to division.", "At least in part due to the potential for procedural complexity in relation to consideration of House amendments, in recent Congresses the majority leader has used his right of preferential recognition to offer a motion to concur in House amendments, as well as all the other available amendatory motions related to it. This process has been referred to as \"filling the tree.\" The procedural effect of filling the tree\u2014or offering all of the amendatory motions available in a particular parliamentary situation\u2014is that no Senator can propose an alternative method of acting on the House amendments until the Senate disposes of (or lays aside by unanimous consent) one of the pending motions.", "Filling the tree does not affect the right of Senators to debate the motions regarding House amendments at length. It does not, therefore, bring the Senate any closer to final disposition of the House amendments. If, however, the majority leader can build a coalition of at least 60 Senators (assuming no vacancies in the Senate) in order to invoke cloture, then he can fill the tree to block other Senators from proposing other ways of disposing of House amendments, including perhaps proposing Senate amendments to the House amendments prior to Senate disposition of the House amendments. In recent Congresses, the majority leader has \"filled the tree\" and then filed a cloture motion in order to end consideration of an underlying question. If the Senate agrees to invoke cloture on a motion to dispose of the House amendments, such as a motion to concur, then all other pending motions of a higher precedence fall. The motion on which cloture was invoked can then be considered for a maximum of 30 additional hours."], "subsections": []}, {"section_title": "The Informal Alternative to Conference", "paragraphs": ["If the House and Senate versions of a measure are submitted to conference, the conference committee must meet formally and, if it resolves some or all of the differences between the houses, prepare both a conference report and a joint explanatory statement. To avoid these and other requirements, the two chambers may use the process of sending amendments between the houses as an informal alternative that achieves much the same purpose and result as would a conference committee.", "The purpose of a conference committee is to negotiate a settlement of the legislative differences between the two chambers. But these negotiations do not have to take place in the official setting of a conference committee meeting. They also can occur through informal discussions among the most interested Representatives and Senators and their staffs. If such informal discussions are successful, their results can be embodied in an amendment between the houses.", "As the second house nears or reaches completion of floor action on a measure, the staffs of the respective House and Senate committees are likely to be comparing the two versions of the bill and seeking grounds for settling whatever differences exist. After initial staff discussions, the House and Senate committee leaders themselves may become involved. If these informal and unofficial conversations appear productive, they may continue until a tentative agreement is reached, even though no conference committee has yet been created. If the tentative agreement proves acceptable to other interested Representatives and Senators, a conference committee may be unnecessary.", "Instead, when the bill with the second house's amendments has been returned to the first chamber, the majority floor manager may, under the appropriate rules or practices of that house, call up the bill and propose that the House or Senate (as the case may be) concur in the second chamber's amendments with some amendments. He or she then describes the differences between the House and Senate versions of the measure and explains that the proposed amendments represent a compromise that is agreeable to the interested Members of both houses. The floor managers may express their confidence that, if the first house accepts the amendments, the other chamber also will accept them.", "If the first house does agree to the amendments, the second chamber then considers and agrees to them as well, under its procedures for considering amendments of the \"other body.\" In this way, the differences between the House and Senate are resolved through the kind of negotiations for which conference committees are created, but without resort to a formal conference committee."], "subsections": []}, {"section_title": "The Stage of Disagreement", "paragraphs": ["Since the purpose of conference committees is to resolve legislative disagreements between the House and Senate, it follows that there can be no conference committee until there is disagreement\u2014until the House and Senate formally state their disagreement to each other's positions. A chamber reaches this stage either by formally insisting on its own position or by disagreeing to the position of the other house, and so informing the other house. Once the House or Senate reaches the stage of disagreement, it cannot then agree to (concur in) a position of the other chamber, or agree with an amendment, without first receding from its disagreement.", "The stage of disagreement is an important threshold. Before this threshold is reached, the two chambers presumably are still in the process of reaching agreement. Thus, amendments between the houses, as an alternative to conference, are couched in terms of one chamber concurring in the other's amendments, or concurring in the other's amendments with amendments. For example, when the House concurs in Senate amendments with House amendments, the House does so because it does not accept the Senate amendments\u2014in fact, it disagrees with them. But the House does not state its disagreement explicitly and formally at this stage because crossing the threshold of disagreement has significant procedural consequences, especially in the House.", "Whereas House amendments are always privileged in the Senate, most Senate amendments are not privileged in the House before the House has reached the stage of disagreement. Moreover, the order of precedence among certain motions is reversed in the House (but not in the Senate) after the stage of disagreement has been reached. Before the stage of disagreement, the order of precedence among motions in both chambers favors motions that tend to perfect the measure further; after the stage of disagreement in the House, the order of precedence is reversed, with precedence being given to motions that tend to promote agreement between the chambers. Before the stage of disagreement, for example, a motion to concur with an amendment has precedence over a motion to concur; after the stage of disagreement in the House, a motion to recede and concur has precedence over a motion to recede and concur with an amendment.", "The precedence among motions before and after the stage of disagreement can become important during the process of exchanging amendments between the houses. It is most likely to matter after a conference committee has reported and the House and Senate are considering amendments in true or technical disagreement. For this reason, a more detailed discussion of the subject is reserved to the sections on such amendments."], "subsections": []}, {"section_title": "Arranging for a Conference", "paragraphs": ["If the differences between the House and the Senate cannot be resolved through the exchange of amendments between the houses, two possibilities remain. First, stalemate can lead to the death of the legislation if both chambers remain adamant. Second, the two houses can agree to create a conference committee to discuss their differences and seek a mutually satisfactory resolution. Historically, major bills have been sent to conference, either after an unsuccessful attempt to resolve the differences through amendments between the houses or, more often, without such an attempt having even been made.", "The process of arranging for a conference can begin as soon as the second house passes the bill at issue, either with one or more amendments to parts of the measure or with a single amendment in the nature of a substitute that replaces the entire text approved by the first chamber. The second house then may simply return the bill, with its amendments, to the first chamber if there is reason to believe that the first house might accept the amendments, or that amendments between the houses can be used successfully as an informal alternative to conference. It also may do so if the second house wishes to act first on an eventual conference report, because the chamber that asks for a conference normally acts last on the conference report.", "Alternatively, the second house may pass the bill and immediately insist on its amendments and also request a conference with the first chamber. By insisting on its amendments, the second chamber reaches the stage of disagreement. The bill, the second house's amendments, and the message requesting a conference then are returned to the first house. The first house is not obliged to disagree to the second chamber's amendments and agree to the requested conference. The first house also has the options, for example, of refusing to act at all or concurring in the second chamber amendments, with or without amendments. When one chamber requests a conference, however, the other house normally agrees to the request.", "If the second chamber just returns the bill and its amendments to the first house without insisting on its amendments, the first house may disagree to the amendments and request a conference. The bill, the amendments, and the message requesting the conference then are returned to the second chamber, which usually insists on its amendments (thereby reaching the stage of disagreement) and agrees to the conference.", "Thus, there are essentially two direct routes to conference. (There are more indirect routes, of course, if an attempt is first made to resolve the differences through an exchange of amendments.) The second house may begin the process by insisting on its amendments and requesting the conference. If this does not occur, the first house then may begin the process by disagreeing to the second chamber's amendments and requesting the conference itself. The first route is likely to be followed when the need for a conference is a foregone conclusion.", "However, strategic considerations also may influence how the Senate and House agree to go to conference, especially in view of the convention that the chamber that asks for the conference normally acts last on the conference report. With this in mind, proponents of the legislation may prefer one route to the other. For example, House or Senate conferees can avoid the possibility of facing a motion in one house to recommit the conference report (with or without instructions) if they have arranged for the other house to act first on the report. By the same token, if Senate opponents are expected to filibuster the conference report, proponents may prefer for the Senate to agree to a House request for a conference, so that the Senate will act first on the report. This arrangement avoids compelling Representatives to cast difficult votes for or against a conference report that may not reach a vote in the Senate. On the other hand, a bill's supporters could prefer that the House agree to the conference and then vote first on the report, with the hope that a successful House vote might improve the prospects for later success on the Senate floor.", "In addition, under a provision of Senate Rules added in 2013, it might be easier to arrange for conference (1) after the House has disagreed to a Senate amendment, or (2) after the House has amended a Senate bill (or amendment). At the start of the 113 th Congress, the Senate agreed to a rules change creating a new motion to take the steps necessary to arrange for a conference committee with the House and expediting the cloture process on that motion. Under this rule, if cloture is filed on the new motion to authorize a conference committee, the consolidated motion would be subject to two hours of debate, after which the Senate would vote on cloture. If cloture were invoked by three-fifths of the Senate, a simple majority could approve the motion to authorize a conference, and no further debate of the motion would be in order. The new motion, however, is only in order when a House message has been laid before the Senate. It would not be in order immediately after the Senate has passed a House bill with amendment(s). To arrange for a conference at that stage would require unanimous consent, just as it did prior to the rules change. "], "subsections": []}, {"section_title": "Selection of Conferees", "paragraphs": ["After either house requests or agrees to a conference, it usually proceeds immediately to select conferees (or managers, as they may also be called). The selection of conferees can be critically important, because it is this group\u2014sometimes a small group\u2014of Representatives and Senators who usually determine the final form and content of major legislation.", "In the House, clause 11 of Rule I authorizes the Speaker to appoint all members of conference committees and gives him certain guidelines to follow:", "The Speaker shall appoint all select, joint, and conference committees ordered by the House. At any time after an original appointment, the Speaker may remove Members, Delegates, or the Resident Commissioner from, or appoint additional Members, Delegates, or the Resident Commissioner to, a select or conference committee. In appointing Members, Delegates, or the Resident Commissioner to conference committees, the Speaker shall appoint no less than a majority who generally supported the House position as determined by the Speaker, shall name Members who are primarily responsible for the legislation, and shall, to the fullest extent feasible, include the principal proponents of the major provisions of the bill or resolution passed or adopted by the House.", "These guidelines carry weight as admonitions but they necessarily give the Speaker considerable discretion, and his or her exercise of this discretion cannot be challenged on the floor through a point of order.", "In the Senate, the presiding officer is almost always authorized by unanimous consent to appoint \"the managers on the part of the Senate.\" The Senate could also grant this authority to the presiding officer by agreeing to a motion arranging for a conference (Rule XXVIII, paragraph 2). ", "Before the formal announcement of conferees in each chamber, a process of consultation takes place that vests great influence with the chairman and the ranking minority member of the committee (and sometimes the subcommittee) that had considered the bill originally. These Representatives and Senators almost always serve as conferees. Furthermore, they usually play an influential, and often a controlling, role in deciding the number of conferees from their respective chambers, the party ratio among these conferees, and which of their committee colleagues shall be appointed to the conference committee. In the House, the Speaker often accepts without change the list developed by the House committee leaders; the presiding officer in the Senate always does so.", "If the bill at issue had been considered by more than one committee in either house, all the involved chairmen and ranking minority members from that chamber normally participate in determining its roster of conferees, and the conferees usually are drawn from both or all of those committees. In such cases, the party leaders in each house are more likely to become involved in the selection process\u2014in determining the total number of House or Senate conferees and the division of conferees between or among the committees of jurisdiction, as well as in choosing individual Members to serve. From time to time, the Speaker also exercises the authority granted in the rule to appoint a Representative who offered a key successful floor amendment, even if he or she is not on the committee(s) that reported the legislation.", "In some cases\u2014and especially in cases of multiple committee jurisdiction\u2014House or Senate conferees may be appointed for limited purposes: for example, only for the consideration of Title I of the House version, or only for the consideration of a particular (and possibly nongermane) Senate amendment. Such conferees are expected to limit their participation in the conference to consideration of the matters for which they are appointed. This practice protects the influence in conference of the appropriate House and Senate standing committees.", "Each house determines for itself the size of its delegation to the conference committee. The House and Senate need not select equal numbers of conferees, and they frequently do not. However, unequal numbers of House and Senate managers do not affect the formal power of either house in conference decisions. The conference report requires approval by a majority of the House conferees and a majority of the Senate conferees, rather than a majority of all conferees. Each house usually appoints an odd number of conferees to avoid tie votes."], "subsections": []}, {"section_title": "Instructing Conferees", "paragraphs": ["After the House or Senate decides to go to conference (either by requesting the conference or agreeing to a request from the other house), its conferees usually are appointed immediately. Between these two steps, however, both houses have an opportunity (although usually only a momentary opportunity) to move to instruct the conferees. For example, the managers may be instructed to insist on the position of their house on a certain matter, or even to recede to the position of the other house.", "Instructions are not binding in either house. They are only admonitions, or advisory expressions of position or preference. No point of order lies in either the House or the Senate against a conference report on the ground that conferees did not adhere to the instructions they received.", "In the Senate, a motion to instruct is debatable and amendable. In the House, such a motion is debated under the one-hour rule, and a germane amendment to the instructions is in order only if the House does not order the previous question during or at the end of the first hour of debate. In neither house can conferees be instructed to take some action that exceeds their authority. In the House, clause 7 of Rule XXII also bars instructions that \"include argument.\" Only one valid motion to instruct is in order in the House before its conferees are named, whether or not the motion is agreed to; but if a motion to instruct is ruled out of order, another motion to instruct may be made.", "Under the precedents of the House, a Member of the minority party is entitled to recognition to move to instruct. The Speaker normally looks first to senior minority-party members of the committee that reported the measure at issue. This recognition practice can be used to try to control the instructions that are proposed; for example, instructions on one subject may be precluded if the ranking minority member seeks recognition to offer a motion to instruct on another subject.", "In the House, but not in the Senate, motions to instruct also are in order after House conferees have been appointed but have failed to report an agreement. Clause 7(c)(1) of House Rule XXII provides in part:", "A motion to instruct managers on the part of the House, or a motion to discharge all managers on the part of the House and to appoint new conferees, shall be privileged\u2014", "(A) after a conference committee has been appointed for 45 calendar days and 25 legislative days without making a report....", "By precedent, more than one proper motion to instruct is in order when made pursuant to this clause, and the minority party does not enjoy preferential recognition in offering such motions. According to clause 7(c)(2), the Speaker \"may designate a time in the legislative schedule on that legislative day for consideration\" of the motion to instruct."], "subsections": []}, {"section_title": "Restrictions on the Authority of Conferees", "paragraphs": ["In principle, there are significant restrictions on the kinds of policy agreements that House conferees can accept. In practice, however, these restrictions are not as stringent as they might seem at first.", "Because conference committees are created to resolve disagreements between the House and Senate, the authority of House conferees is limited to the matters in disagreement between the two houses. House conferees have no authority to change matters that are not in disagreement\u2014that is, either matters that appear in the House and Senate versions of the measure in identical form, or matters that were not submitted to the conference in either the House or the Senate version.", "Furthermore, as House conferees consider each matter in disagreement, their authority is limited by the scope of the differences between the House and Senate positions on that matter. The House's managers may agree on the House position, the Senate position, or some middle ground. But they may not include a provision in a conference report that does not fall within the range of options defined by the House position at one extreme and the Senate position at the other. If, for example, the House proposes to appropriate $1 billion for a certain purpose and the Senate proposes $2 billion instead, the House conferees may agree on $1 billion or $2 billion or any intermediate figure. But they may not agree on a figure that is less than $1 billion or more than $2 billion. To do so would exceed the scope of the differences between the House and Senate positions on that matter in disagreement.", "The concept of \"scope\" relates to specific differences between the House and Senate versions of the same measure, not to the implications or consequences of these differences. Thus, House conferees on a general appropriations bill may agree on the higher (or lower) of the House and Senate positions on each appropriation item, even though the sum of their agreements is higher (or lower) than the total sum proposed in either the House or the Senate version of the bill (unless the two versions explicitly state such a total). Also, if one house proposes to amend some existing law and the other chamber does not, the scope of the differences over this matter generally is bounded by the proposed amendments, on the one hand, and the pertinent provisions of existing law, on the other. Thus, the House conferees may agree on the proposed amendments or on alternatives that are closer to existing law.", "Thus, there are significant restrictions on the authority of House conferees: Their authority is restricted by the scope of the differences between the House and Senate over the matters in disagreement between them. However, it is far easier to make this statement than to apply it in all cases. It becomes much more difficult to define the scope of the differences when the differences are qualitative, not quantitative as in the example above. Moreover, how difficult it is to define the scope of the differences also depends on how the second chamber to act on the measure has cast the matters in disagreement.", "If one house takes up a measure from the other and passes the measure with a series of amendments to the first chamber's text, then the matters in disagreement in conference are cast in terms of two or more discrete amendments approved by the second house to pass the bill. These amendments usually are numbered for convenient reference. The two versions of the measure can be compared side by side to identify the provisions that are identical in both versions and those that are the subject of disagreements. Therefore, it is possible to identify both the matters in disagreement and the House and Senate positions on each of them.", "However, the second chamber that acts on a measure typically casts its version in the form of an amendment in the nature of a substitute for the entire text passed by the first house. In such cases, only one amendment is submitted to conference, even though that single amendment may encompass any number of specific differences between the House and Senate versions of the measure. In fact, the text of the bill as passed by one house and the text of the other house's amendment in the nature of a substitute may embody wholly different approaches to the subject of the measure. The two versions may be organized differently and may address the same subject in fundamentally different ways.", "Second house substitutes make it much harder, if not impractical, to specifically identify each matter in disagreement and the scope of the differences over that matter. When a second chamber substitute is in conference, therefore, the conferees must have somewhat greater room for maneuver. Technically, the House and Senate are in disagreement over the entire text of the measure; substantively, the policy disagreements may be almost as profound. In such cases, the conferees resolve the differences between the House and Senate by creating a third version of the measure\u2014a conference substitute for both the version originally passed by the first house and the amendment in the nature of a substitute approved by the second house.", "This latitude may be necessary, but it also means that the conference substitute could take the form of a third and new approach to the subject at hand\u2014an approach that had not been considered on the floor of either house. To inhibit such a result, clause 9 of House Rule XXII states: ", "Whenever a disagreement to an amendment has been committed to a conference committee, the managers on the part of the House may propose a substitute that is a germane modification of the matter in disagreement. The introduction of any language presenting specific additional matter not committed to the conference committee by either House does not constitute a germane modification of the matter in disagreement. Moreover, a conference report may not include matter not committed to the conference committee by either House and may not include a modification of specific matter committed to the conference committee by either or both Houses if that modification is beyond the scope of that specific matter as committed to the conference committee.", "Notwithstanding this specificity, determining whether a conference substitute includes some new \"matter\" is far more difficult than determining whether the conferees' agreement on an appropriation for a program falls within the scope of the differences between the funding levels originally proposed by the House and Senate.", "If the House conferees have exceeded their authority in any one respect in agreeing to a conference report, that report as a whole is tainted and so is subject to a point of order on the House floor. However, there are at least three reasons why it is relatively unusual for a point of order to be made and sustained against a conference report. First, House conferees are aware of the limits within which they are to negotiate, and they usually try not to exceed their authority. Second, conferees frequently are presented with second chamber substitutes, and in those cases, they have somewhat greater discretion in the agreements they can reach.", "Third, even if the House managers propose a conference report that exceeds their authority, there are several ways in which they can protect their report against being subject to a point of order on the House floor. If the conferees were negotiating over separate numbered amendments and their agreement concerning one or more of the amendments is beyond their authority, they can report those amendments back to the House and Senate as amendments in technical disagreement. However, conferees may not report back in disagreement on part of an amendment in the nature of a substitute. Alternatively, the House can approve a conference report by a two-thirds vote under suspension of the rules, a procedure that does not allow points of order to be made on the floor. Finally, and perhaps most importantly in current practice, the House Rules Committee may propose that the House approve a special rule waiving any or all points of order against a conference report and against its consideration.", "Even if a conference report is ruled out of order, it may then be possible to propose precisely the same agreements that were contained in the report in the form of amendments between the houses (if the amendments are not in the third degree and do not contain nongermane matter).", "The Senate's rules and precedents embody roughly the same principles regarding restrictions on the authority of its conferees. Paragraphs 3 and 4 of Senate Rule XXVIII state, in part:", "3. (a) Conferees shall not insert in their report matter not committed to them by either House, nor shall they strike from the bill matter agreed to by both Houses.", "(b) If matter which was agreed to by both Houses is stricken from the bill a point of order may be made against the report, and if the point of order is sustained, the report is rejected or shall be recommitted to the committee of conference if the House of Representatives has not already acted thereon.", "(c) If new matter is inserted in the report, a point of order may be made against the conference report and it shall be disposed of as provided under paragraph 4.", "4. (a) In any case in which a disagreement to an amendment in the nature of a substitute has been referred to conferees\u2014", "(1) it shall be in order for the conferees to report a substitute on the same subject matter;", "(2) the conferees may not include in the report matter not committed to them by either House; and", "(3) the conferees may include in their report in any such case matter which is a germane modification of subjects in disagreement.", "Historically, the Senate has interpreted its rules and precedents affecting the content of conference reports in ways that grant conferees considerable latitude in reaching agreements with the House. According to Riddick's Senate Procedure , for example, a \"conference report may not include new 'matter entirely irrelevant to the subject matter,' not contained in the House- or Senate-passed versions of a measure as distinct from a substitute therefor.\" And regarding conference substitutes, Senate precedents state that, \"in such cases, they [the conferees] have the entire subject before them with little limitation placed on their discretion, except as to germaneness, and they may report any germane bill.\" Under current practice, the Senate takes a commonsense approach to deciding whether new matter is sufficiently relevant to constitute \"a germane modification of subjects in disagreement.\"", "The authority of Senate conferees is further limited by paragraph 8 of Senate Rule XLIV. A Senator can raise a point of order against provisions of a conference report if they constitute \"new directed spending provisions.\" Paragraph 8 defines a \"new directed spending provision\" as", "any item that consists of a specific provision containing a specific level of funding for any specific account, specific program, specific project, or specific activity, when no specific funding was provided for such specific account, specific program, specific project, or specific activity in the measure originally committed to the conferees by either House.", "Paragraph 8 of Senate Rule XLIV applies only to provisions of conference reports that would provide for actual spending. In other words, it applies only to discretionary and mandatory spending provisions and not to authorizations of appropriations. Discretionary spending is provided in appropriations acts and generally funds many of the programs, agencies, and routine operations of the federal government. Mandatory spending, also referred to as direct spending, is provided in or controlled by authorizing law and generally funds entitlement programs, such as Social Security and Medicare.", "The Senate can waive both of these restrictions on the content of conference reports by a three-fifths vote of Senators duly chosen and sworn (60 Senators assuming no vacancies). The process for waiving a point of order and the effect of a successful point of order raised under either of these rules are discussed in a later section of this report on floor consideration of conference reports."], "subsections": []}, {"section_title": "Conference Procedures and Reports", "paragraphs": ["Rules of procedure guide and constrain the legislative activities of both the House and Senate. So it is striking that there are almost no rules governing procedure in conference. The members of each conference committee can select their own chairmen. They also can decide for themselves whether they wish to adopt any formal rules governing such matters as debate, quorums, proxy voting, or amendments, but usually they do not. The only rules imposed by the two houses governing conference committee meetings concern approval of the conference report and the openness of meetings to all conferees and to the public.", "A majority of the House managers and a majority of the Senate managers must approve and sign the conference report. Decisions are never made by a vote among all the conferees combined. All votes take place within the House delegation and within the Senate delegation. This is why there is no requirement or necessity for the two houses to appoint the same number of conferees; five Senate conferees, for example, enjoy the same formal collective power in conference as 25 House conferees.", "Until the mid-1970s, conference meetings were almost always closed to the public; now they are open unless a specific decision is made to close part or all of a meeting. Paragraph 8 of Senate Rule XXVIII states: ", "Each conference committee between the Senate and the House of Representatives shall be open to the public except when managers of either the Senate or the House of Representatives in open session determine by a rollcall vote of a majority of those managers present, that all or part of the remainder of the meeting on the day of the vote shall be closed to the public.", "The comparable House rule is even more stringent. Clause 12 of House Rule XXII requires a majority vote on the House floor to close part or all of a conference meeting. In other words, House conferees cannot vote to close a conference committee meeting unless they have been authorized to do so by a specific roll-call vote of the House. This difference between House and Senate rules has not been a source of public contention because efforts to close conferences normally are made only when they must deal with national security matters. When House managers want the authority to close part or all of a formal conference meeting, they usually offer a motion to this effect at the time the House arranges to go to conference.", "House rules place additional requirements on conference committee meetings. According to clause 12 of House Rule XXII, managers \"should endeavor to ensure\" that meetings only occur if every House manager has been given notice and an opportunity to attend. The House rule also explicitly states that all matters in disagreement are open to discussion at a conference meeting. If a point of order is made and sustained on the House floor that conferees met in violation of clause 12 (or that they never met at all), the conference report is rejected and the House is considered to have requested a further conference with the Senate.", "Similarly, the Senate has agreed that it is the \"sense of the Senate\" that conferees should hold \"regular, formal meetings of all conferees that are open to the public,\" that conferees should be given \"adequate notice\" of such meetings, and that all conferees should be given an opportunity to \"participate in full and complete debates\" of the matters before the conference.", "Few other rules govern conference proceedings, and conference committees do not often vote to establish their own rules. Instead, they generally manage without them. This absence of rules reflects the basic nature of the conference committee as a negotiating forum in which the negotiators should be free to decide for themselves how to proceed most effectively.", "In some cases, conferences are rather formal. One delegation puts a proposal on the table; the other delegation considers it and responds with a counter-proposal. In other cases, conferences resemble free-form discussions in which the issues and the matters in disagreement are discussed without any apparent agenda or direction until the outlines of a compromise begin to emerge. In recent years, conferences on massive omnibus bills have even created \"sub-conferences\" to seek agreements that then can be combined into a single conference report.", "Sometimes customary practices develop among members of House and Senate committees who meet with each other regularly in conference. For example, they may alternate the chairmanship from one conference to the next between the committee or subcommittee chairmen from each house. Conference bargaining also can be facilitated by preliminary staff work. Staff may prepare side-by-side comparisons of the House and Senate versions so that the conferees can understand more easily how the two houses dealt with the same issues or problems. Furthermore, senior staff may engage in preliminary negotiations among themselves, seeking agreements acceptable to their principals, so that the members themselves can concentrate on the more intractable disagreements.", "When the conferees reach full agreement, staff prepare a conference report that indicates how each amendment in disagreement has been resolved. For example, the report may propose that the Senate recede from certain of its amendments to the House bill, that the House recede from its disagreement to certain other Senate amendments, and that the House recede from its disagreement to the remaining Senate amendments and concur in each with a House amendment (the text of which is made part of the report). When the conferees have considered a single amendment in the nature of a substitute, the report proposes that the house that originated the bill recede from its disagreement to the other house's substitute, and concur in that amendment in the nature of a substitute with a substitute amendment that is the new version of the bill on which the conference committee has agreed.", "Two copies of the conference report must be signed by a majority of House conferees and a majority of Senate conferees. No additional or minority views may be included in the report. From time to time, a manager's signature may be accompanied by an indication that he or she does not concur in the conference agreement on a certain numbered amendment. This does not make the report subject to a point of order in the House so long as a majority of House conferees have agreed on each numbered amendment. House rules require that House conferees be given an opportunity to sign the conference agreement at a set time and place. At least one copy of the final conference agreement must be made available for review by House managers with the signature sheets.", "The conference report itself is not the most informative document, because it does not describe the nature of the disagreements that confronted the conferees. Therefore, the rules of both houses require that a conference report be accompanied by a joint explanatory statement. According to paragraph 6 of Senate Rule XXVIII, this statement is to be \"sufficiently detailed and explicit to inform the Senate as to the effect which the amendments or propositions contained in such report will have upon the measure to which those amendments or propositions relate.\" Clause 7(e) of House Rule XXII contains a comparable requirement. Normally, this joint explanatory statement summarizes the House, Senate, and conference positions on each amendment in disagreement (or each provision, in the case of second chamber and conference substitutes). The statement also is prepared in duplicate and signed by majorities of both House and Senate conferees.", "The house that agreed to the conference normally acts first on the conference report. Because this is an established practice, not a requirement of either House or Senate rules, the order of consideration can be reversed, if that is strategically advantageous. For example, the House may wish to delay acting on a report until after the Senate has voted on it because of the possibility that the report may fall victim to a Senate filibuster. Alternatively, Senate conferees may agree that the House should act first if the report is likely to enjoy greater support in the House in the belief (or hope) that the House vote will increase the prospects for approving the report in the Senate.", "Also, the first house to consider a conference report has the option of voting to recommit the report to conference. If either house agrees to the report, the effect of that vote is to discharge that house's conferees, so there is no longer a conference committee to which the report can be recommitted. Therefore, the second house to consider the report does not have the option of recommitting it; it only may accept or reject the report. Sometimes, therefore, the supporters of a bill arrange for one house or the other to act first on the conference report in order to avoid the possibility of a successful recommittal motion. Whatever the case may be, the conferees must see to it that the house they want to act first takes the papers out of the conference.", "If conferees cannot agree on any of the amendments before them, or if they cannot agree on all matters encompassed by one house's bill and the other's substitute, they may report back in disagreement. The House and Senate then can seek a resolution of the differences either through a second conference or through an exchange of amendments and motions between the houses. Conferees also may report in total disagreement if they have reached an agreement on a bill and a second chamber substitute that, in some respect, violates their authority. In such a case, their disagreement is technical, not substantive. After the House receives or the Senate agrees to the report in disagreement, the conferees' actual agreement is presented as a floor amendment to the amendment in disagreement, at which point considerations of the conferees' authority no longer apply. Alternatively, the conferees may submit their report to the House and Senate even though it violates their authority in one or more respects, and then, in the House, the Rules Committee can propose and the House can adopt a resolution protecting the report against points of order."], "subsections": []}, {"section_title": "Floor Consideration of Conference Reports", "paragraphs": ["A conference report may be presented or filed at almost any time the House or Senate is in session, but not when the Senate is in executive session or when the House has resolved into Committee of the Whole. A conference report is unlikely to be considered immediately because both the House and Senate have layover and availability requirements that apply to conference reports.", "In the House, conference reports are subject to a 72-hour \"layover\" requirement. Clause 8(a) of Rule XXII prohibits consideration of a conference report until 72 hours after the report and joint explanatory statement has been available in the Congressional Record or on the House electronic document repository ( http://docs.house.gov ). These requirements do not apply during the last six days of a session. In addition, copies of the report and the statement must be available for at least two hours before consideration of the report begins. Clause 2(b) applies the same requirements and conditions to amendments reported from conference in disagreement. However, the House may waive these restrictions by adopting a resolution reported from the Rules Committee for that purpose.", "A conference report that meets the availability requirements is considered as having been read when called up for consideration in the House. If a report does not meet one or more of the requirements but is called up by unanimous consent, it must be read. However, the House normally agrees by unanimous consent to have the joint explanatory statement read instead of the report, and then it also agrees to dispense with the reading of the statement.", "Conference reports are highly privileged in the House and may be called up at almost any time that another matter is not pending. When called up, the report is considered in the House (not in Committee of the Whole) under the one-hour rule. Clause 8(d) of Rule XXII requires that this hour be equally divided between the majority and minority parties, not necessarily between proponents and opponents. The two floor managers normally explain the agreements reached in conference and then yield time to other Members who wish to speak on the report. If both floor managers support the report, a Member who opposes it is entitled to claim control of one-third of the time for debate. Before a second hour of debate can begin, the majority floor manager moves the previous question. If agreed to, as it invariably is, this motion shuts off further debate, and the House immediately votes on agreeing to the conference report.", "Any points of order against a conference report in the House must be made or reserved before debate on the report begins (or before the joint explanatory statement is read). A conference report can be protected against one or more points of order if the Rules Committee reports and the House adopts a resolution waiving the applicable rules, or if the report is considered under suspension of the rules.", "In the Senate, paragraph 1 of Senate Rule XXVIII requires that a conference report must be \"available on each Senator's desk\" before the Senate may consider it. In addition, under paragraph 9 of that same rule it is not in order to vote on the adoption of a conference report unless it has been available to Members and the general public for at least 48 hours before the vote. This availability requirement can be waived by three-fifths of Senators duly chosen and sworn (60 Senators if there are no vacancies). It can also be waived by joint agreement of the majority and minority leader in the case of a significant disruption to Senate facilities or to the availability of the Internet. Under the rule, a report is considered to be available to the general public if it is posted on a congressional website or on a website controlled by the Library of Congress or the Government Publishing Office. The report and accompanying statement normally are not printed in the Senate section of the Record if they have been printed in the House section. Conference reports also normally are printed only as House documents.", "Conference reports are privileged in the Senate. The motion to consider a report on the Senate floor is in order at most times, and it is not debatable. The Senate's usual practice is to take up conference reports by unanimous consent at times arranged in advance among the floor and committee leaders. Under a standing order the Senate adopted at the close of the 106 th Congress in December 2000, the reading of a conference report is no longer required if the report \"is available in the Senate.\"", "When considered on the Senate floor, a conference report is debatable under normal Senate procedures; it is subject to extended debate unless the time for debate is limited by unanimous consent or cloture, or if the Senate is considering the report under expedited procedures established by law (such as the procedures for considering budget resolutions and budget reconciliation measures under the Budget Act). Paragraph 7 of Senate Rule XXVIII states that, if time for debating a conference report is limited (presumably by unanimous consent), that time shall be equally divided between the majority and minority parties, not necessarily between proponents and opponents of the report. Consideration of a conference report by the Senate suspends, but does not displace, any pending or unfinished business; after disposition of the report, that business is again before the Senate.", "A point of order may be made against a conference report at any time that it is pending on the Senate floor (or after all time for debate has expired or has been yielded back, if the report is considered under a time agreement). If a point of order is sustained against a conference report on the grounds that conferees exceeded their authority\u2014either by including \"new matter\" (Rule XXVIII) or \"new directed spending provisions\" (paragraph 8 of Rule XLIV) in the conference report\u2014then there is a special procedure to strike out the offending portion(s) of the conference recommendation and continue consideration of the rest of the proposed compromise. Under the new procedure, a Senator can make a point of order against one or more provisions of a conference report. If the point of order is not waived (see below), the presiding officer rules whether or not the provision is in violation of the rule. If a point of order is raised against more than one provision, the presiding officer may make separate decisions regarding each provision.", "Senate rules provide further that when the presiding officer sustains a point of order against a conference report on the grounds that it violates either the prohibition of \"new matter\" or \"new directed spending provisions,\" the matter is to be stricken from the conference recommendation. After all points of order raised under this procedure are disposed of, the Senate proceeds to consider a motion to send to the House, in place of the original conference agreement, a proposal consisting of the text of the conference agreement minus the \"new matter\" or \"new directed spending provision\" that was stricken. Amendments to this motion are not in order. The motion is debatable \"under the same debate limitation as the conference report.\" In short, the terms for consideration of the motion to send to the House the proposal without the offending provisions are the same as those that would have applied to the conference report itself.", "If the Senate agrees to the motion, the conference recommendation as altered by the deletion of the \"new matter\" or \"new directed spending provision\" would be returned to the House in the form of an amendment between the houses. The House would then have an opportunity to act on the amendment under the regular House procedures for considering Senate amendments discussed in earlier sections of this report.", "Senate rules also create a mechanism for waiving these restrictions on conference reports. Senators can move to waive points of order against one or several provisions, or they can make one motion to waive all possible points of order under either Rule XXVIII or Rule XLIV, paragraph 8. A motion to waive all points of order is not amendable, but a motion to waive points of order against specific provisions is. Time for debate on a motion to waive is limited to one hour and is divided equally between the majority leader and the minority leader, or their designees. If the motion to waive garners the necessary support, the Senate is effectively agreeing to keep the matter that is potentially in violation of either rule in the conference report.", "The rules further require a three-fifths vote to sustain an appeal of the ruling of the chair and limit debate on an appeal to one hour, equally divided between the party leaders or their designees. The purpose of these requirements is to ensure that either method by which the Senate could choose to apply these rules\u2014through a motion to waive or through an appeal of the ruling of the chair\u2014requires a three-fifths vote of the Senate (usually 60 Senators). A simple majority (51 Senators if there are no vacancies and all Senators are voting) cannot achieve the same outcome.", "Conference reports may not be amended on the floor of either house. Conferees are appointed to negotiate over the differences between the versions of the same bill that the two houses have passed; the delegations return to their respective chambers with identical recommendations in the form of a report that proposes a package settlement of all these differences. The House and Senate may accept or reject the settlement, but they may not amend it directly. If conference reports were amendable, the process of resolving bicameral differences would be far more tortuous and possibly interminable.", "As noted in previous sections, the house that agrees to the request for a conference normally acts first on the report. The first chamber to act may vote to agree or not agree to the report, or it may agree to a preferential motion to recommit the report to conference, with or without non-binding instructions. Successful recommittal motions are quite unusual, in part because such an action implies that the conferees should and could have reached a more desirable compromise. If the first house agrees to the report, the second house only has the options of approving or disapproving the report. At this stage, the report cannot be recommitted. A vote by either house to agree to a conference report has the effect of automatically discharging its conferees and disbanding the conference committee; thus, there is no conference committee to which the second house could recommit the report.", "The defeat of a conference report in either house may kill the legislation, but only if no further action is taken, such as requesting a second conference or proposing a new position through an amendment between the houses. For lack of time, a second conference may not be practical near the end of a Congress, when many conference reports are considered.", "The vote to agree to a conference report normally completes that house's action on the measure, assuming the other house also approves the report. However, some conference reports, especially those on general appropriations bills, may be accompanied by one or more amendments in either true or technical disagreement. Furthermore, House rules include special procedures for coping with conference report provisions originating in the Senate that would not have been germane floor amendments to the bill in the House. These possibilities are discussed in separate sections that follow."], "subsections": []}, {"section_title": "Amendments in True Disagreement", "paragraphs": ["It is generally in the interests of both the House and Senate managers and their parent chambers for the conferees to reach full agreement. Each house already has passed a version of the legislation and has entrusted the responsibility for resolving its differences with the other house to Members who usually were actively involved in developing and promoting the measure. Nonetheless, conferees sometimes cannot reach agreement on all the amendments in disagreement. In such a case, the conferees may return to the House and Senate with a partial conference report dealing with the amendments on which they have reached agreement but excluding one or more amendments that remain in disagreement. The result is complicated and potentially confusing procedural possibilities that, fortunately, do not often arise in current practice.", "The house that agreed to the conference first debates and votes on the partial conference report. After the report is approved, the reading clerk reads or designates the first amendment in disagreement, and the majority floor manager offers a motion to dispose of the amendment. When this process begins in the House, for example, the floor manager may move that the House insist on its disagreement to a Senate amendment. Agreeing to this motion implies that the House adamantly supports its original position and that the House wishes the Senate to recede from its amendment. Alternatively, the floor manager may move that the House either (1) recede from its disagreement to the Senate amendment and concur in that amendment, or (2) recede and concur with a House amendment. In the latter case, this House amendment (which must be germane to the Senate amendment) may be the position that the House managers had been advocating in conference, or it may be a new compromise position they have developed. By agreeing to this motion, the House supports the negotiating position of its conferees and asks the Senate to concur in this new House amendment.", "After the House disposes of the first amendment in disagreement, it acts in similar fashion on each of the other amendments that were not resolved in conference. The House then sends all the papers to the Senate with a message describing its actions. If the Senate agrees to the partial conference report and to the House position on all the amendments in disagreement on which Senate action is required, the legislative process is completed and the bill may be enrolled for presidential action.", "However, the Senate may agree to the partial conference report (which is rarely controversial), but not accept the House position on one or more of the amendments in disagreement. Instead, the Senate may vote to insist on its original position, support the negotiating position of its managers, or propose a new bargaining position to the House. If the House has insisted on its disagreement to a Senate amendment, the Senate may continue to insist on its amendment. If the House has receded from its disagreement to a Senate amendment and concurred in that amendment with a House amendment, the Senate may disagree to the House amendment or it may concur in the House amendment with a further Senate amendment (if such a Senate amendment would not be an amendment in the third degree).", "If one or more amendments remain in disagreement at the end of this process, either method of resolution may be pursued again. The amendments may be \"messaged\" back and forth between the houses until one chamber accepts the position of the other or until stalemate is reached. Alternatively, either house may request a further conference to consider the amendments that remain in disagreement. The same or new conferees may be appointed. Only the amendments in disagreement are submitted to the new conference. The managers may not re-open matters that were resolved in the partial conference report that both houses approved, because these matters are no longer in disagreement. But the partial conference report cannot become law until all the remaining disagreements have been resolved. If the second conference is successful, the managers submit a second report for action on the House and Senate floor. If not, the legislation, including the partial conference report, is probably dead for that Congress.", "Amendments in true disagreement rarely arise when conferees are presented with a second chamber substitute. In such a situation, there is only one amendment before the conference. The conferees either reach agreement or they do not; they may not report only part of the substitute as an amendment in disagreement. If the conferees report back in total disagreement, the House and Senate can then vote to insist on their original positions or propose new versions of the legislation. This hardly ever occurs; but when it does, the bill may die for lack of further action, or the two houses may agree to a new conference to consider the same issues once again.", "Instead, amendments in true disagreement generally have arisen when the second chamber has passed a bill with a series of separate amendments. Since this has happened most often to general appropriations bills that originate in the House (and on which the Senate requests conferences), the House usually has acted first on partial conference reports and amendments in disagreement.", "The possibility of amendments in disagreement can make it exceedingly difficult to anticipate what will happen to a measure that is sent to conference. It is not simply a question of whether or not the conferees will be able to resolve all the amendments in disagreement by reaching compromises that fall within the scope of the differences between the House and Senate versions. If a number of amendments are considered in conference, the managers may reach agreement on some, but not on others. And what then happens to the amendments reported in disagreement depends on the motions that are made and agreed to by the House and Senate.", "Furthermore, the recourse to amendments in disagreement creates new possibilities that were not available in conference. In conference, the managers' options are defined and limited by the scope of the differences between the House and Senate positions before them. However, when the House and Senate act on an amendment in disagreement, they are not subject to this restriction. The concept of \"the scope of the differences\" is a restriction on the authority of managers in conference; it is not a restriction on amendments between the houses. So, for example, the House may amend a Senate amendment in disagreement with a new House position (or technically, the House may recede from its disagreement to the Senate amendment and concur in the Senate amendment with a House amendment) that goes beyond the scope of either house's original position.", "Thus, it is possible, though not very likely in practice, that (1) the conferees could report an amendment in disagreement, (2) the first chamber to act could propose a new position in the form of an amendment to the amendment in disagreement, (3) the second chamber could respond with a further amendment that constitutes a new position of its own, and (4) conferees could be appointed for a second time to attempt to resolve the differences between these two new positions on the same subject. In this second conference, the same general policy question would be at issue, but the scope of the differences between the House and Senate versions (and consequently the options open to the conferees) would not be the same.", "To add to the uncertainties, several other complications can occur in the House as it acts on each amendment in disagreement. These options arise from the different order of precedence among certain motions in the House (but not in the Senate) that prevails before and after the House reaches the stage of disagreement, and the opportunities for crossing and re-crossing that threshold. These complications have arisen most often during action on amendments in disagreement to general appropriations bills.", "Before the House reaches the stage of disagreement, the order of precedence favors motions that tend to perfect the measure further; after the stage of disagreement, the order of precedence is reversed and favors motions that tend to promote agreement between the houses. Thus, if a motion to concur in a Senate amendment is made on the House floor before the stage of disagreement, a motion to concur with an amendment has precedence and may be offered and voted on while the motion to concur is pending. The motion to concur with an amendment has precedence because it tends to perfect the measure. If the House agrees to the motion to concur with an amendment, the straight motion to concur automatically falls without a vote, even though it had been offered first.", "After the House has reached the stage of disagreement, however, a motion that the House recede from its disagreement and concur in a Senate amendment has precedence over a motion to recede and concur with an amendment. The motion to recede and concur tends to promote agreement more directly than the motion to recede and concur with an amendment. If a preferential motion to recede and concur is made and carries, no vote occurs on the motion to recede and concur with an amendment, even if that motion had already been made.", "As if this were not complicated enough, the motion to recede and concur is divisible in the House, as is the motion to recede and concur with an amendment. Any Representative may demand that it be divided into two proposals: first, that the House recede from its disagreement to the Senate amendment; and second, that the House then concur in the Senate amendment (or concur in it with an amendment, depending on which motion has been made). Following a demand for the division of the motion, the House first considers whether it should recede from its disagreement. But if the House votes to recede, it crosses back over the threshold of disagreement; consequently, the precedence of motions reverses, and a motion to concur with an amendment takes precedence over a motion to concur.", "As a result, the possibilities that may arise on the House floor as the House considers each amendment in disagreement depend on (1) which motion is made by the floor manager, (2) what motions have precedence over that motion, and (3) whether an attempt is made to change the order of precedence by demanding a division of the first motion.", "Suppose that the clerk reads an amendment in disagreement and the floor manager moves that the House recede from its disagreement to that amendment and concur therein. Because the House and Senate reached the stage of disagreement before they appointed their conferees, a motion to recede and concur with a House amendment does not have precedence. However, if any Member demands a division of the motion to recede and concur, the House first debates and votes on whether to recede. Normally, the House does vote to recede, because rejecting this motion would imply that the House is unwilling to consider either the Senate amendment or any compromise version. But when the House recedes from its disagreement, it crosses back over the threshold of disagreement, and the order of precedence among motions is reversed. When the House then considers the second half of the divided motion\u2014to concur in the Senate amendment\u2014another Member may move instead that the House concur in the Senate amendment with an amendment, because the motion to concur with an amendment now has precedence over the motion to concur. Only if the House rejects the motion to concur with an amendment would it then vote on the original proposal to concur in the Senate amendment.", "Suppose instead that, after an amendment in disagreement has been read, the floor manager moves that the House recede and concur with an amendment. The stage of disagreement having been reached, a simple motion to recede and concur has precedence and may be offered. But if this motion is divided, the House votes first on whether to recede. And if the House does recede, the threshold of disagreement is again re-crossed and the motion to concur with an amendment has precedence over the second half of the divided motion\u2014that the House concur. Thus, the amendment originally proposed in the motion to recede and concur with an amendment may be offered again as a motion to concur with an amendment\u2014after a preferential motion to recede and concur has been offered, after that motion has been divided, and after the House has voted to recede.", "The array of possible complications on the Senate floor is more limited. First, the order of precedence of motions in the Senate is not reversed after the stage of disagreement has been reached. Second, Senators may not demand the division of a motion to recede and concur or of a motion to recede and concur with an amendment.", "Even in the House, Representatives seldom use the opportunities available to them. Amendments in true disagreement rarely arise, and when they do, the House usually accepts the floor manager's motions to dispose of them. The sheer complexity of some of the parliamentary maneuvers described above probably discourages Members from attempting them for fear that they are more likely to create confusion than achieve some strategic advantage. Nonetheless, the possibility of amendments in true disagreement and the various options for dealing with each of them on the floor make it dangerous to predict with confidence exactly what will happen to a measure once it has been submitted to conference."], "subsections": []}, {"section_title": "Amendments in Technical Disagreement", "paragraphs": ["As discussed in earlier sections of this report, there are important restrictions on the content of conference reports. Conferees may deal only with the matters that are in disagreement between the House and Senate, and they must resolve each of these matters by reaching an agreement that is within the scope of the differences between the House and Senate positions. If a conference report violates these restrictions in any one respect, the entire report is subject to a point of order.", "Yet conferees sometimes find it desirable or necessary to exceed their authority. For example, changing circumstances may make it imperative for Congress to appropriate more money for some program than either the House or the Senate initially approved. Or the conferees may decide that a bill should include provisions on a subject that was not included in the version passed by either house. In such cases, the conferees may be able to achieve their purpose, without subjecting their report to a point of order, by using the device of amendments in disagreement. In doing so, they take advantage of the fact that the restrictions that apply to provisions of conference reports do not govern amendments between the houses.", "If the conferees wish to exceed their authority in resolving one of the amendments in disagreement, they can exclude this amendment from the conference report and present to the House and Senate a partial conference report and an amendment in disagreement. This is called an amendment in technical disagreement. There is no substantive disagreement between the House and Senate conferees; they report the amendment in disagreement only for technical reasons\u2014to avoid the restrictions that apply to conference reports.", "The first house considers the partial conference report and then the amendment in technical disagreement. When that amendment is presented (in the House, for example) the floor manager moves that the House recede from its disagreement to the Senate amendment and concur therein with an amendment that is the decision made in conference. Because this conference recommendation is considered outside of the conference report\u2014as part of a motion to dispose of an amendment in technical disagreement\u2014no point of order lies against the motion or the proposed amendment on the grounds that the amendment exceeds the scope of the differences or proposes a subject not committed to conference by either house. However, the proposed amendment still must be germane in the House.", "If the first house votes for the motion, the second chamber acts on the partial conference report and then on the first house's amendment to the amendment in technical disagreement. When the amendment is presented, the floor manager moves that the Senate concur in the House amendment (assuming that the House acted first). If the Senate agrees to this motion, the process of resolution is completed.", "Until the mid-1990s, conferees used this device regularly, although for a somewhat different purpose, to complete congressional action on general appropriations bills. The rules of the House generally prohibit such bills from carrying unauthorized appropriations and changes in existing law (\"legislation\"). The procedures of the Senate, however, are not as strict. Under a number of conditions, the Senate may consider floor amendments to general appropriations bills that would not have been in order in the House. If approved by the Senate, these amendments are sent to conference and constitute amendments in disagreement with the House. They are properly before the conference, and the conferees may accept them without violating the restrictions on their authority that have been mentioned so far.", "This situation could create a significant problem for the House. On a general appropriations bill, conferees could present the House with a conference report that is not amendable but that includes matter that could not even have been considered, much less approved, by the House when it first acted on the bill on the floor. The remedy for the House can lie in the use of amendments in technical disagreement.", "Clause 5 of House Rule XXII states that House conferees may not agree to a Senate amendment to a general appropriations bill if the amendment would violate the prohibitions in the House's rules against unauthorized appropriations and legislation on such bills (in clause 2 of Rule XXI), \"unless specific authority to agree to the amendment first is given by the House by a separate vote with respect thereto.\" Otherwise, the same clause provides, the Senate amendment in question \"shall be reported in disagreement by the conference committee back to the two Houses for disposition by separate motion.\" The same two options are available to conferees in the case of a Senate amendment proposing to appropriate funds in any bill that is not a general appropriations bill.", "In practice, House conferees never seek separate House floor votes in advance. Instead, the conferees report any amendments to which Rule XXII, clause 5(a), applies as amendments in technical disagreement. After the House agrees to the partial conference report, it considers these amendments. As each of the Senate amendments is presented to the House, the majority floor manager offers a motion that the House recede from its disagreement and either concur in the Senate amendment or concur in it with a House amendment. In either case, the floor manager's motion incorporates the agreement reached in conference. After the House agrees to these motions, the Senate approves the partial report and then agrees to corresponding motions to dispose of the amendments that require Senate action. Whereas the House has dealt with most or all of the amendments separately, the Senate usually has disposed of most or all of them en bloc by unanimous consent. (The House may dispose of a number of such amendments en bloc , also by unanimous consent, when they are noncontroversial and when the floor manager proposes that the House recede and concur in each of them.)", "By this means, the House could respond, on a case-by-case basis, to Senate amendments to general appropriations bills that would not have been in order in the House. This procedure enabled the House to protect itself against having simply to vote for or against a conference report containing such Senate amendments (or modifications of them) and, therefore, having to choose between rejecting the report (and jeopardizing the bill) or violating the principles of its own rules. By voting on the motions made by the House floor manager, the House could decide in each instance whether to accept the judgment of its conferees that wisdom or necessity dictated an exception to a strict separation of appropriations from both authorizations and changes in existing law. Moreover, the House and Senate have the same options for dealing with amendments in technical disagreement that are available for disposing of amendments in true disagreement.", "Thus, amendments in technical disagreement was a useful device to deal with the differences between House and Senate rules governing matters that may be included in general appropriations bills. This device was convenient for appropriations conferees because the Senate typically passed House appropriations bills with many separate, numbered amendments. Consequently, the conferees could report as many of these amendments as necessary as amendments in technical disagreement. In the last several Congresses, however, there have been far fewer amendments in technical disagreement accompanying appropriations conference reports.", "In many instances, the Senate has passed House appropriations bills with amendments in the nature of substitutes, and it is not possible to report back from conference with part of such an amendment in disagreement. Also, the House Rules Committee has reported, and the House has adopted, special rules waiving points of order against many of the appropriations conference reports. Anticipating that their reports would receive this protection, appropriations conferees could include all their agreements within their reports, without regard for considerations of scope or the matters in disagreement and without fear that they would make their reports vulnerable to points of order on the House floor."], "subsections": []}, {"section_title": "House Consideration of Nongermane Senate Amendments", "paragraphs": ["The contrast between House and Senate rules and procedures governing general appropriations bills poses one problem for bicameral relations that arises during the process of resolving legislative differences. A past remedy was the use of amendments in technical disagreement. Another and similar problem results from the contrast between House and Senate rules concerning the germaneness of amendments\u2014a problem for which the House has devised a somewhat different remedy.", "House rules require amendments to be germane (unless this requirement is waived by a special rule). By contrast, Senate rules require that amendments be germane only when offered to general appropriations measures or budget measures (both budget resolutions and reconciliation bills) or when offered after the Senate has invoked cloture. In addition, the Senate sometimes imposes a germaneness requirement on itself as part of unanimous consent agreements governing consideration of individual measures, although such agreements may include exceptions that make specific nongermane amendments in order.", "Consider the potential consequences of this difference for the House. The Senate may pass a House bill with one or more nongermane amendments. Each of these amendments is \"conferenceable\" (an unofficial term that is used from time to time by participants in the legislative process) as an amendment in disagreement between the House and Senate. The conferees may include it (or a modification of it) in their conference report without violating their authority. However, this situation could force the House into an up-or-down vote on a conference report including nongermane matters that were not debated on the House floor, that would have been subject to points of order if offered as House floor amendments, and that might not even have been considered by the appropriate House committees.", "The remedy for the House appears in clause 10 of House Rule XXII. This clause creates an opportunity for the House to identify nongermane matter originating in the Senate and to consider it separately. Of course, the House can and usually does adopt a special rule reported from the Rules Committee that waives the point of order this clause creates.", "Clause 10 states that when the House begins consideration of a conference report or a motion to dispose of a Senate amendment to which the House has disagreed, a Member may make a point of order (before debate begins) against matter contained in the report or the motion on the grounds that the matter in question would not have been germane if it had been offered as a House floor amendment to the measure (in the form the measure passed the House). If the Speaker sustains the point of order (thereby establishing that the matter in question is nongermane), the Member may then move that the House reject the nongermane matter. This motion is debatable for 40 minutes, to be equally divided between and controlled by proponents and opponents. After the House votes on the motion, another such point of order may be made against different nongermane matter; and if it is sustained, another motion to reject is in order.", "If the House defeats any and all motions to reject, the House thereby decides to retain the nongermane matter. The House may vote not to reject nongermane language for at least two reasons: (1) a majority of Representatives may support the nongermane matter on its merits, or (2) the House may conclude that the Senate is so insistent on its nongermane language that rejecting it could seriously jeopardize enactment of the entire bill.", "If the House does vote to reject any nongermane matter in a conference report, the report is considered as having been rejected. This is consistent with the principle that conference reports are not amendable. Clause 10(d)(2) states that, in most cases, the House then proceeds automatically to decide \"whether the House shall recede and concur in the Senate amendment with an amendment consisting of so much of the conference report as was not rejected.\" In other words, the House votes to amend the Senate amendment with a House amendment that consists of the remainder of the conference agreement without the nongermane matter.", "If the Senate accepts this new House amendment, resolution is reached. If not, the Senate may disagree to the House amendment and request a new conference with the House. In this way, the House can isolate nongermane Senate matter for separate consideration, but neither chamber can impose its will on the other.", "Clause 10(d)(3) makes in order three possible motions, in an established order of precedence, that Members may make if the House votes to reject nongermane matter contained not in a conference report but in a motion that the House recede and concur in a Senate amendment, with or without amendment. In brief, these motions allow the House to amend the Senate amendment or to again disagree to it, perhaps also requesting a new conference with the Senate to resolve this disagreement."], "subsections": []}]}}
{"id": "R45965", "title": "Judiciary Appropriations, FY2020", "released_date": "2020-05-18T00:00:00", "summary": ["Funds for the judicial branch are included annually in the Financial Services and General Government (FSGG) appropriations bill. The bill provides funding for the U.S. Supreme Court; the U.S. Court of Appeals for the Federal Circuit; the U.S. Court of International Trade; U.S. courts of appeals and district courts; the Administrative Office of the U.S. Courts; the Federal Judicial Center; the U.S. Sentencing Commission; federal defender organizations that provide legal representation to defendants financially unable to retain counsel in federal criminal proceedings; security and protective services for courthouses, judicial officers, and judicial employees; and fees and allowances paid to jurors.", "The judiciary's FY2020 budget request of $8.29 billion was submitted to Congress on March 11, 2019. By law, the President includes, without change, the appropriations request submitted by the judiciary in the annual budget submission to Congress.", "The FY2020 budget request included $7.62 billion in discretionary funds, representing a 5.1% increase over the FY2019 enacted level of $7.25 billion provided in the Consolidated Appropriations Act, 2019 ( P.L. 116-6 ; February 15, 2019).", "The FY2020 budget request also included $669.8 million in mandatory funds to pay the salaries and benefits of certain types of federal judges and to also provide for judicial retirement accounts.", "The House Appropriations Committee held a markup ( H.R. 3351 ) on June 11, 2019, and recommended the judiciary receive a total of $7.51 billion in discretionary funds. The House passed H.R. 3351 on June 26, 2019. The Senate Appropriations Committee held a markup ( S. 2524 ) on September 19, 2019, and recommended the judiciary receive a total of $7.42 billion in discretionary funds.", "The FSGG appropriations bill was not enacted prior to the beginning of FY2020 on October 1, 2019. Subsequently, the judiciary was funded through November 21, 2019, by the Continuing Appropriations Act, 2020 ( P.L. 116-59 , September 27, 2019) and from November 22, 2019, through December 20, 2019, by the Further Continuing Appropriations Act, 2020 ( P.L. 116-69 , November 21, 2019).", "Final FY2020 appropriations for the judiciary were included in the FY2020 Consolidated Appropriations Act ( P.L. 116-93 ). Congress provided a total of $8.19 billion, with $7.49 billion in discretionary funds and $705.5 million in mandatory funds. The act passed the House on December 17, 2019, the Senate on December 19, 2019, and was signed by the President on December 20, 2019.", "In recent years, appropriations for the judiciary have comprised approximately 0.2% of total budget authority."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["This report provides an overview of the judiciary's FY2020 budget request, as well as information about Congress's consideration of the judiciary's request. The first section of this report includes subsections covering each major action involving the judiciary's FY2020 budget request, including", "the initial submission by the President of the judiciary's request on March 11, 2019; a hearing held on March 7, 2019, by the House Financial Services and General Government Appropriations Subcommittee on the budget request for the U.S. Supreme Court; the House subcommittee markup on June 3, 2019; the House Appropriations Committee markup on June 11, 2019; passage by the House on June 26, 2019; the Senate subcommittee markup on September 17, 2019; the Senate Appropriations Committee markup on September 19, 2019; enactment of a continuing resolution on September 27, 2019 ( P.L. 116-59 ); enactment of a second continuing resolution on November 21, 2019 ( P.L. 116-69 ); and enactment of FY2020 appropriations for the judiciary in the FY2020 Consolidated Appropriations Act ( P.L. 116-93 , December 20, 2019).", "The second section of the report provides information about the specific discretionary appropriations requested by the judiciary for FY2020, as well as information about the mandatory appropriations and administrative provisions included in the appropriations process. The third section provides information about the various courts, judicial entities, and judicial services that are covered by appropriations for the judiciary. The report also identifies some of the courts and judicial services that are not covered by such appropriations (but are covered by other appropriations bills). Finally, the report provides information about ongoing policy issues affecting the judiciary that may be of interest to Congress during FY2020."], "subsections": []}, {"section_title": "FY2020 Consideration: Overview of Actions", "paragraphs": ["This section provides an overview of the major actions involving congressional consideration of FY2020 judiciary appropriations. The final status of FY2020 judiciary appropriations is summarized in Table 1 ."], "subsections": [{"section_title": "Submission of FY2020 Budget Request on March 11, 2019", "paragraphs": ["The President's proposed FY2020 budget request was submitted on March 11, 2019. It contained a request for $8.29 billion in new budget authority for judicial branch activities, including $7.62 billion in discretionary funds and $669.8 million in mandatory funding for judges' salaries and judicial retirement accounts. By law, the judicial branch appropriations request is submitted to the President and included in the budget submission without change. ", "Appropriations for the judiciary comprise approximately 0.2% of total budget authority. "], "subsections": []}, {"section_title": "Subcommittee Hearings on the Supreme Court's FY2020 Budget Request", "paragraphs": ["The Financial Services and General Government Appropriations Subcommittee held hearings on the FY2020 budget request of $106.8 million for the U.S. Supreme Court. This request was included in the judiciary's overall FY2020 budget request of $8.29 billion and represents approximately 1.3% of that total.", "Associate Justices Samuel A. Alito and Elena Kagan testified before the subcommittee regarding the Supreme Court's budgetary request. It was the first public hearing since 2015 regarding the Supreme Court's budget. ", "According to Representative Mike Quigley (IL), chairman of the subcommittee, it is his \"intent to hold a hearing with the Supreme Court at least once a year to discuss the resources needed for the highest court\" and to hear the Justices' \"thoughts regarding America's court system.\" He also expressed his view that \"hearings such as this one is a great way for the public to get more exposure to our third branch.\"", "One issue raised during the subcommittee's hearings was the use of cameras or video recordings in Supreme Court proceedings. In his opening remarks, Chairman Quigley stated that \"one government institution remains closed to the public eye\u00e2\u0080\u0094the U.S. Supreme Court\" and \"due to antiquated practices and policies, we have no video record\" of the Court's most important decisions. He further stated that \"it is not unreasonable for the American people to have an opportunity to hear firsthand the arguments and opinions that will shape their society for years to come.\"", "Justice Alito, in response, stated that while the Court wants as much access for the public as possible, it does not \"want access at the expense of damaging the decision-making process.\" Similarly, Justice Kagan stated that cameras might adversely affect the way the Court functioned. She emphasized that the kind of questioning a Justice uses in the courtroom might be taken out of context in a video broadcast. For example, video of Court proceedings shown by a news program might cause viewers to perceive that a Justice has a particular view or opinion on an issue when, instead, the Justice is playing devil's advocate and posing challenging questions to one or both sides in a case.", "Other issues discussed or mentioned at the subcommittee hearing include cost-cutting measures the Court has undertaken by revising existing contracts and cutting back on discretionary spending in order to meet the cost-of-living adjustment for federal employees; the priority the Court has placed on enhancing its physical and cybersecurity with previous funds appropriated by Congress; the implementation of a new electronic case filing system; and a revamp of the Court's website to make it more user-friendly and highlight important information (e.g., the current term calendar). Justice Alito also noted in his testimony that the Court was not requesting any new programmatic increases in funds."], "subsections": []}, {"section_title": "House Appropriations Subcommittee on Financial Services and General Government Markup", "paragraphs": ["On June 3, 2019, the House subcommittee held a markup of the FY2020 Financial Services and General Government (FSGG) bill. The subcommittee, by voice vote, recommended a total of $7.51 billion in discretionary funds for the judiciary. "], "subsections": []}, {"section_title": "House Appropriations Committee Markup", "paragraphs": ["On June 11, 2019, the House Appropriations Committee held a markup of the FY2020 FSGG bill. The committee recommended $7.51 billion in discretionary funds for the judiciary.", "The $7.51 billion in discretionary funding recommended for the judiciary represents approximately 31% of the total $24.55 billion in discretionary funding included in the entire FSGG appropriations bill (which also funds such entities as the Department of the Treasury, the Executive Office of the President, the Consumer Product Safety Commission, the Federal Trade Commission, the Securities and Exchange Commission, and the Small Business Administration).", "The FY2020 FSGG bill was ordered reported by a roll call vote of 30-21 ( H.R. 3351 , H.Rept. 116-122 ). No amendments were offered during the committee markup that were related to the judiciary.", "The House report that accompanied the committee's markup addressed the issue of video access to Supreme Court proceedings, which had been discussed at the subcommittee's hearings on the Supreme Court's FY2020 budget request. The committee stated that \"providing the American people with the opportunity to access Supreme Court arguments in real time via video and/or live audio would greatly expand the Court's accessibility to average Americans and provide historical and educational value.\" Consequently, the committee encouraged the Court \"to take steps to permit video and live audio coverage in all open sessions of the court unless the Court decides that allowing such coverage in any case would violate the due process of one or more of the parties before the Court.\""], "subsections": []}, {"section_title": "Passage by the House", "paragraphs": ["The FSGG appropriations bill was passed by a roll call vote of 224-196 in the House on June 26, 2019. No amendments were offered during House consideration that were related to the judiciary."], "subsections": []}, {"section_title": "Senate Appropriations Subcommittee on Financial Services and General Government Markup", "paragraphs": ["On September 17, 2019, the Senate subcommittee held a markup of the FY2020 Financial Services and General Government (FSGG) bill and approved it by voice vote. The subcommittee recommended a total of $7.42 billion in discretionary funds for the judiciary."], "subsections": []}, {"section_title": "Senate Appropriations Committee Markup", "paragraphs": ["On September 19, 2019, the Senate Appropriations Committee held a markup of the FY2020 FSGG bill. The committee recommended $7.42 billion in discretionary funds for the judiciary.", "The $7.42 billion in discretionary funding recommended for the judiciary represents approximately 31% of the total discretionary funding included in the entire FSGG appropriations bill (which also funds such entities as the Department of the Treasury, the Executive Office of the President, the Consumer Product Safety Commission, the Federal Trade Commission, the Securities and Exchange Commission, and the Small Business Administration).", "The FY2020 FSGG bill was ordered reported by a roll call vote of 31-0 ( S. 2524 , S.Rept. 116-111 ). No amendments were offered during the committee markup that were related to the judiciary.", "The Senate report that accompanied the committee's markup emphasized that it \"is imperative that the Federal judiciary devote its resources primarily to the retention of staff.\" Additionally, the report stated that \"it is also important that the judiciary contain controllable costs such as travel, construction, and other expenses.\" The Senate report did not address the issue of video access to Supreme Court proceedings, which had been discussed at the House subcommittee's hearing on the Supreme Court's FY2020 budget request."], "subsections": []}, {"section_title": "Enactment of First Continuing Appropriations Resolution", "paragraphs": ["Final enactment of the judiciary's budget did not occur prior to the beginning of FY2020. Consequently, the judiciary was funded through November 21, 2019, by the Continuing Appropriations Act, 2020. The act passed the House on September 19, 2019, and the Senate on September 26, 2019. It was signed by the President on September 27, 2019."], "subsections": []}, {"section_title": "Enactment of Second Continuing Appropriations Resolution", "paragraphs": ["Final enactment of the judiciary's budget did not occur prior to November 22, 2019. Consequently, the judiciary was funded from November 22, 2019, through December 20, 2019, by the Further Continuing Appropriations Act, 2020. The act passed the House on November 19, 2019, and the Senate on November 21, 2019. It was signed by the President on November 21, 2019."], "subsections": []}, {"section_title": "Final Enactment of FY2020 Regular Appropriations for the Judiciary", "paragraphs": ["Enactment of the judiciary's budget for FY2020 was included in the FY2020 Consolidated Appropriations Act. The total amount in discretionary funds appropriated for the judiciary was $7.49 billion, and the amount in mandatory funds provided for the judiciary was $705.48 million. The act passed the House on December 17, 2019, and the Senate on December 19, 2019. It was signed by the President on December 20, 2019."], "subsections": []}, {"section_title": "Enactment of Supplemental Appropriations for Response to COVID-19", "paragraphs": ["On March 27, 2020, the House passed\u00e2\u0080\u0094and the President signed\u00e2\u0080\u0094the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) to address the nationwide impact of Coronavirus Disease 2019 (COVID-19). The act, in part, provides funding for the federal judiciary to respond to the pandemic. Specifically, the CARES Act makes appropriations to the federal judiciary \"to prevent, prepare for, and respond to coronavirus, domestically or internationally.\" By law, Congress designated such appropriations to be for an emergency requirement.", "The three judiciary accounts that received funds under the act include the Supreme Court of the United States\u00e2\u0080\u0094Salaries and Expenses account ($500,000); the Courts of Appeals, District Courts, And Other Judicial Services\u00e2\u0080\u0094Salaries and Expenses account ($6 million); and the Defender Services account ($1 million)."], "subsections": []}]}, {"section_title": "FY2020 Judiciary Budget Request", "paragraphs": [], "subsections": [{"section_title": "Discretionary Appropriations", "paragraphs": ["The judiciary's FY2020 discretionary budget request totaled $7.62 billion and represented a 5.1% increase from the $7.25 billion in discretionary appropriations enacted by Congress for FY2019. ", " Table 2 lists, for each account included in the judiciary's discretionary budget, (1) the amount enacted by Congress for FY2019, (2) the judiciary's FY2020 request, (3) the FY2020 amount that passed the House, (4) the FY2020 amount that was reported by the Senate Appropriations Committee, and (5) the FY2020 enacted amount."], "subsections": []}, {"section_title": "Three Largest Discretionary Accounts for FY2020", "paragraphs": ["Of the judiciary's FY2020 total discretionary request for $7.62 billion (see the second column in Table 2 ), the greatest percentage was for the Salaries and Expenses\u00e2\u0080\u0094Courts of Appeals, District Courts, and Other Judicial Services account\u00e2\u0080\u0094representing 70.6% of the request. The second-greatest percentage was for the Defender Services account, representing 16.2% of the total discretionary request. The third-greatest percentage was for the Court Security account, representing 8.4% of the request. The remaining 4.8% of the FY2020 discretionary request was for the other accounts listed in the table.", "Similarly, of the $7.49 billion that was enacted by Congress for the judiciary's FY2020 budget, the greatest percentage was for the Salaries and Expenses\u00e2\u0080\u0094Courts of Appeals, District Courts, and Other Judicial Services account (see the final column in Table 2 )\u00e2\u0080\u0094representing 70.1% of the enacted amount. The second-greatest percentage was for the Defender Services account, representing 16.5% of the total enacted amount. The third-greatest percentage was for the Court Security account, representing 8.5% of the enacted amount. The remaining 4.8% of the FY2020 enacted amount was for the other accounts listed in the table."], "subsections": []}, {"section_title": "Three Largest Percentage Increases from FY2019 Enacted Amounts", "paragraphs": ["Of the accounts listed in Table 2 , the largest percentage increase between the amount enacted in FY2019 and the amount requested by the judiciary for FY2020 was for the Defender Services account\u00e2\u0080\u0094a 7.3% increase from the FY2019 amount enacted to the FY2020 request. The second-greatest increase was for the Vaccine Injury Trust Fund account, a 6.3% increase. The third-greatest increase was for the Court Security account, a 5.6% increase.", "Of the same accounts listed in the table, the largest percentage increase between the amount enacted in FY2019 and the amount enacted by Congress for FY2020 was for the Fees of Jurors and Commissioners account\u00e2\u0080\u0094a 7.6% increase from the FY2019 enacted amount. The second-greatest increase was for the Defender Services account, a 7.3% increase. The third-greatest increase was for the Vaccine Injury Trust Fund account, a 7.1% increase. "], "subsections": []}, {"section_title": "Percentage of Judiciary's FY2020 Request Enacted by Congress", "paragraphs": ["Overall, Congress enacted $7.49 billion, or 98.2%, of the judiciary's FY2020 budget request of $7.62 billion.", "Additionally, the enacted FY2020 amount for each account was, in each case, at least 95% of the judiciary's FY2020 request for that account. For example, for the Supreme Court\u00e2\u0080\u0094Building and Grounds account, Congress provided $15.6 million\u00e2\u0080\u0094representing 95.1% of the judiciary's FY2020 request of $16.4 million. ", "Altogether, for seven accounts, Congress appropriated less than the amount requested by the judiciary in its FY2020 budget submission. For two accounts, Congress passed the same amount as was requested by the judiciary. And for three accounts, Congress appropriated more than the amount requested by the judiciary in its FY2020 budget submission. ", "The federal courts, judicial entities, and judicial programs funded by the various accounts listed in Table 2 are discussed below in greater detail in the section of the report titled Courts, Programs, and Other Items Funded by the Judiciary Budget ."], "subsections": [{"section_title": "Discretionary Appropriations in Recent Years", "paragraphs": [], "subsections": [{"section_title": "FY2019", "paragraphs": ["FY2019 judiciary funding was provided in Division D, Title III, of the Consolidated Appropriations Act, 2019 ( P.L. 116-6 ), which was enacted on February 15, 2019. The act provided $7.25 billion in discretionary funds for the judiciary. "], "subsections": []}, {"section_title": "FY2018", "paragraphs": ["FY2018 judiciary funding was provided in Division E, Title III, of the Consolidated Appropriations Act, 2018 ( P.L. 115-141 ), which was enacted on March 23, 2018. The act provided $7.11 billion in discretionary funds for the judiciary."], "subsections": []}, {"section_title": "FY2017", "paragraphs": ["FY2017 judiciary funding was provided in Division E, Title III, of the Consolidated Appropriations Act, 2017 ( P.L. 115-31 ), which was enacted on May 5, 2017. The act provided $6.93 billion in discretionary funds for the judiciary."], "subsections": []}]}, {"section_title": "Use of Nonappropriated Funds", "paragraphs": ["The judiciary also uses nonappropriated funds to help offset its funding requirements. The majority of these nonappropriated funds are from the collection of fees, primarily court filing fees and fees associated with obtaining case and docket information online from various federal courts. These monies are used to offset expenses that would otherwise be covered by the discretionary Salaries and Expenses subaccount for the courts of appeals, district courts, and other judicial services. The numbers presented in this report reflect the net resources for the judiciary, and do not include these offsetting nonappropriated funds."], "subsections": []}]}, {"section_title": "Mandatory Appropriations", "paragraphs": ["Mandatory appropriations are used to meet the constitutional and statutory obligations associated with the salaries and expenses of certain types of judgeships (and, consequently, are not considered discretionary appropriations for the judiciary). ", "Such mandatory appropriations fall into two categories: (1) funds used to pay the salaries of Article III judges (Supreme Court Justices, U.S. courts of appeals judges, etc.) and certain other types of federal judges (e.g., bankruptcy judges); and (2) funds used for several judicial retirement accounts\u00e2\u0080\u0094specifically, the Judicial Officers' Retirement Fund (28 U.S.C. \u00c2\u00a7377(o)); the Judicial Survivors' Annuities Fund (28 U.S.C. \u00c2\u00a7376(c)); and the U.S. Court of Federal Claims Judges' Retirement Fund (28 U.S.C. \u00c2\u00a7178(1)).", "The mandatory appropriations enacted for FY2020 totaled $705.5 million. Of the FY2020 mandatory amount, $465.4 million, or 66.0%, is for salaries and expenses associated with judgeships that the judiciary is constitutionally (or statutorily) required to pay. The remaining $240.1 million (or 34.0% of FY2020 mandatory appropriations) was to provide for judicial retirement funds.", "There was a similar breakdown in the use of mandatory funds for FY2019. Of the $637.0 million in mandatory appropriations provided for FY2019, $425.3 million (or 66.8%) was to fund the salaries and expenses associated with Article III judges and certain other types of federal judges. The remaining $211.7 million (or 33.2% of FY2019 mandatory appropriations) was to provide for judicial retirement funds."], "subsections": []}, {"section_title": "Administrative Provisions", "paragraphs": ["The judiciary's FY2020 request also contained administrative provisions related to (1) the authorization of salaries and expenses for the judiciary's use of experts and consultant services; (2) allowing the transfer between judiciary accounts of up to 5% of any appropriation, with some accounts prohibited from increasing by more than 10% as a result of any such transfer of appropriations; (3) a limitation of $11,000 for official reception and representation expenses incurred by the Judicial Conference of the United States; (4) language enabling the judiciary to contract, under certain circumstances, for repairs costing less than $100,000; (5) the continuation of a court security pilot program; and (6) a one-year extension of various temporary judgeships.", "The bill passed by the House included each of these six provisions. The bill, however, specified that no judiciary account, \"except in certain circumstances,\" may increase by more than 10% as a result of the transfer of appropriations between judiciary accounts. ", "The Senate committee-reported bill included each of these six provisions. The bill, however, limited (similar to the House bill) \"to 10 percent the amount that may be transferred into any one appropriation.\" ", "The final enacted FY2020 appropriations for the judiciary included each of the six administrative provisions. In terms of the second provision identified above, the enacted bill allows the transfer between judiciary accounts of up to 5% of any appropriation, with some accounts prohibited from increasing by more than 10% as a result of any such transfers. Any transfer that occurs must also be treated as a reprogramming of funds under the act and meet certain other requirements. "], "subsections": []}]}, {"section_title": "Courts, Programs, and Other Items Funded by the Judiciary Budget", "paragraphs": [], "subsections": [{"section_title": "U.S. Supreme Court", "paragraphs": ["The U.S. Supreme Court is the final arbiter in the federal court system. Congress has authorized nine judgeships for the Court. Among the nine Justices on the Court, one is also appointed as Chief Justice of the United States. Justices are appointed by the President with the advice and consent of the Senate."], "subsections": []}, {"section_title": "U.S. Courts of Appeals", "paragraphs": ["U.S. courts of appeals, or circuit courts, take appeals from U.S. district court decisions and are also empowered to review the decisions of many administrative agencies. When hearing a challenge to a district court decision from a court located within its geographic circuit, the task of a court of appeals is to determine whether or not the law was applied correctly by the district court. Cases presented to U.S. circuit courts are generally considered by judges sitting in three-member panels (circuit courts do not use juries).", "The nation is divided into 12 geographic circuits, each with a U.S. court of appeals. There is also one nationwide circuit, the U.S. Court of Appeals for the Federal Circuit (discussed in the text below).", "Altogether, 167 judgeships for these 12 regional circuit courts are currently authorized by law. The First Circuit (comprising Maine, Massachusetts, New Hampshire, Rhode Island, and Puerto Rico) has the fewest number of authorized judgeships, 6, while the Ninth Circuit (comprising Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon, and Washington) has the most, 29.", "U.S. circuit court judges are appointed by the President with the advice and consent of the Senate. Such appointments are considered to be effective for life (under Article III of the U.S. Constitution), meaning judges remain in office until they die, assume senior status, resign, retire, or are removed by Congress through the process of impeachment."], "subsections": []}, {"section_title": "U.S. Court of Appeals for the Federal Circuit", "paragraphs": ["This court has nationwide jurisdiction over certain types of cases, including international trade, government contracts, patents, trademarks, certain money claims against the United States government, federal personnel, veterans' benefits, and public safety officers' benefits claims. The court also reviews certain administrative agency decisions. ", "In FY2018, the court's jurisdiction consisted of \"administrative law cases (20%), intellectual property cases (67%), and cases involving money damages against the United States government (13%).\"", "There are 12 judgeships authorized for the U.S. Court of Appeals for the Federal Circuit. Judges serving on the Federal Circuit are appointed by the President with the advice and consent of the Senate. Such appointments are considered to be effective for life (under Article III of the U.S. Constitution), meaning judges remain in office until they die, assume senior status, resign, retire, or are removed by Congress through the process of impeachment."], "subsections": []}, {"section_title": "U.S. Court of International Trade", "paragraphs": ["This court has nationwide jurisdiction over civil actions related to the customs and international trade laws of the United States. Most of the cases heard by the court \"involve antidumping and countervailing duties, the classification and valuation of imported merchandise, actions to recover unpaid customs duties and civil penalties, and various actions arising generally under the tariff laws.\" In 2018, the court reported a total of 242 case filings.", "There are nine judgeships authorized for the U.S. Court of International Trade. Judges serving on the Court of International Trade are appointed by the President with the advice and consent of the Senate. Such appointments are considered to be effective for life (under Article III of the U.S. Constitution), meaning judges remain in office until they die, assume senior status, resign, retire, or are removed by Congress through the process of impeachment."], "subsections": []}, {"section_title": "U.S. District Courts (Including Territorial Courts)", "paragraphs": ["District courts are the federal trial courts of general jurisdiction. These trial courts determine facts and apply legal principles to resolve disputes. Trials are conducted by a district court judge or, in some cases, a magistrate judge.", "Each state has at least one district court (there is also one district court in each of the District of Columbia, the Commonwealth of Puerto Rico, the U.S. Virgin Islands, Guam, and the Commonwealth of the Northern Mariana Islands). States with more than one district court are divided into judicial districts, with each district having one district court. For example, California is divided into four judicial districts\u00e2\u0080\u0094each with its own district court. Altogether there are 94 district courts.", "At present, there are 677 district court judgeships authorized by law. Congress has authorized between 1 and 28 judgeships for each district court, with district courts serving more populous areas generally having more authorized judgeships. Among judicial districts with Article III judgeships, the Eastern District of Oklahoma (Muskogee) has the fewest number (with 1 authorized judgeship), while the district courts located in the Southern District of New York (Manhattan) and the Central District of California (Los Angeles) have the greatest number (each with 28 authorized judgeships).", "U.S. district court judges are appointed by the President with the advice and consent of the Senate. Such appointments are considered to be effective for life (under Article III of the U.S. Constitution), meaning judges remain in office until they die, assume senior status, resign, retire, or are removed by Congress through the process of impeachment. ", "Territorial district court judges, serving the U.S. Virgin Islands, Guam, and the Commonwealth of the Northern Mariana Islands, are also appointed by the President with the advice and consent of the Senate (under Article IV of the U.S. Constitution). These appointments, however, are not effective for life but are for a fixed 10-year term in office."], "subsections": [{"section_title": "U.S. Magistrate Judges", "paragraphs": ["Certain types of trials and proceedings held by district courts can also be conducted by magistrate judges. A district court judge may refer certain matters to a magistrate judge (e.g., a magistrate judge may be assigned to hold a pretrial conference or an evidentiary hearing). A magistrate judge may also conduct any type of civil trial as long as the parties consent (i.e., there is consent jurisdiction ), and they may also preside over all misdemeanor criminal trials as long as a defendant has waived his right to a trial before a district judge. Magistrate judges cannot preside over felony criminal cases (but can handle pretrial matters and preliminary proceedings in such cases).", "As of September 2018, the Judicial Conference has authorized 547 full-time magistrate judge positions, 29 part-time positions, and 3 combination clerk/magistrate judge positions. Magistrate judges are non-Article III judges appointed by district court judges. Full-time magistrate judges serve a term of eight years and may be reappointed.", "In 2018, magistrate judges disposed of a total of 1,219,163 matters\u00e2\u0080\u0094this included 348,421 civil matters that had been referred to them by district court judges; 17,112 civil cases in which they were the presiding judges for all proceedings by consent of the parties; 213,964 felony pretrial matters (e.g., disposing of certain types of motions); and 426,865 felony preliminary proceedings (e.g., search warrant applications). Other matters disposed of by magistrate judges included Class A misdemeanor cases, petty offense cases, and cases brought by prisoners (involving, for example, habeas corpus petitions and civil rights claims).", "The number of magistrate judge positions is determined by the Judicial Conference of the United States. A magistrate judge is appointed by majority vote of the active district court judges serving on the court to which the magistrate judge would serve. A full-time magistrate judge serves a term of eight years and may be reappointed. "], "subsections": []}]}, {"section_title": "U.S. Bankruptcy Courts", "paragraphs": ["Federal courts have exclusive jurisdiction over bankruptcy matters (i.e., a bankruptcy case cannot be filed in state court). Bankruptcy courts are units of the federal district courts and exercise jurisdiction over bankruptcy matters as granted by statute and referred to them by their respective district courts.", "In 2018, debtors filed a total of 773,375 bankruptcy petitions\u00e2\u0080\u0094a 2% decline from 2017. Of all petitions filed in 2018, nonbusiness (mostly consumer) petitions accounted for approximately 97% and business petitions accounted for 3%.", "As of September 2018, there were a total of 350 bankruptcy judgeships authorized by Congress (i.e., the number of bankruptcy judges is determined by Congress). Bankruptcy judges are non-Article III judges appointed by the court of appeals for the circuit where the bankruptcy court is located. Judges are appointed for a term of 14 years and may be reappointed."], "subsections": []}, {"section_title": "U.S. Court of Federal Claims", "paragraphs": ["This court had nationwide jurisdiction over various types of monetary claims against the federal government, including \"those involving tax refunds, federal taking of private property for public use, pay and dismissal of federal civilian employees, pay and dismissal of military personnel, land claims brought by Native Americans and/or their tribe(s), contract disputes, bid protests, patents and copyright, congressional reference, and the National Vaccine Injury Compensation Act.\"", "Each January, pursuant to 28 U.S.C. \u00c2\u00a7791(c), the clerk of the Court of Federal Claims submits to Congress a statement of all the judgments rendered by the court. The statement \"notes the names of the claimants, the amounts, the dates of entry and nature of the claims, and the disposition for all judgments rendered the previous fiscal year.\"", "In 2018, filings increased in the court by 16% to 2,224. The increase was due, in part, to a 223% increase in cases involving taken property and a 30% increase in contract/injunction cases.", "The court consists of 16 non-Article III judges who are appointed for a term of 15 years by the President with the advice and consent of the Senate."], "subsections": []}, {"section_title": "Probation and Pretrial Services", "paragraphs": ["Federal probation and pretrial services officers investigate and supervise defendants and offenders within the federal criminal justice system. A pretrial services officer \"supervises defendants awaiting trial who are released\" and provides reports \"upon which the court can determine the conditions of release or detention while criminal cases are pending adjudication.\" ", "A probation officer \"provides the court with reliable information concerning the offender, the victim, and the offense committed, as well as an impartial application of the sentencing guidelines.\" Officers also \"supervise offenders sentenced to probation, as well as offenders coming out of federal prison who are required to serve a term of supervised release.\"", "In 2018, pretrial services officers prepared 95,442 pretrial services reports for judges\u00e2\u0080\u0094an increase of 12% from 2017. Of these reports, 97% were prebail reports. Additionally, officers provided pretrial services supervision for approximately 23,600 defendants\u00e2\u0080\u0094an increase of 2% from 2017. Such supervision included providing various support services (e.g., substance abuse treatment and location monitoring) and informing the courts and U.S. attorneys of any apparent violations of release conditions.", "In 2018, a total of 129,706 individuals were under postconviction supervision by probation officers\u00e2\u0080\u0094a decrease of 4% from 2017. Of those under postconviction supervision, 47% had been convicted of drug offenses; 18% had been convicted of property offenses; and 14% had been convicted of firearms offenses. Federal probation officers also prepared 67,039 presentence investigative reports\u00e2\u0080\u0094an increase of 5% from 2017."], "subsections": []}, {"section_title": "Defender Services", "paragraphs": ["The Sixth Amendment of the U.S. Constitution guarantees the right to representation by counsel in serious criminal proceedings. The federal judiciary has, historically, exercised \"responsibility for appointing counsel in federal criminal proceedings for those unable to bear the cost of representation.\" ", "This account in the judiciary budget funds the operations of federal defender organizations responsible for providing representation to defendants financially unable to retain counsel in federal criminal proceedings. At present, there are 81 authorized federal defender organizations that employ more than 3,700 lawyers, investigators, paralegals, and support personnel. ", "This account also provides funds to reimburse the services of private appointed counsel (i.e., panel attorneys ) in federal criminal proceedings. The rates paid to panel attorneys cover both attorney compensation and office overhead. There are case maximum amounts that limit the compensation paid to a panel attorney based on the type of case to which he or she is appointed. Consequently, the costs associated with this account are driven, in part, by the number and type of prosecutions brought by U.S. Attorneys offices. "], "subsections": []}, {"section_title": "Court Security", "paragraphs": ["This account provides for protective guard services and security systems and equipment for United States courthouses and other facilities housing federal court operations.", "The majority of funding for court security is transferred to the U.S. Marshals Service (USMS), which is responsible for ensuring \"the safe and secure conduct of judicial proceedings\" and for providing \"protection for federal judges, other court officials, witnesses, jurors, the visiting public and prisoners.\" ", "At present, the Marshals protect 711 judicial facilities and approximately 2,200 federal judges. The Marshals also have protective responsibility for approximately 26,000 federal prosecutors and court officials. In FY2018, the Marshals assessed or handled 4,542 threats and inappropriate communications against protected persons.", "As part of its mission to protect the federal judicial process, the U.S. Marshals Service administers the Judicial Facility Security Program (funded by the Court Security account). The program \"oversees the daily operation and management of security services performed by approximately 5,300 court security officers\" and \"installs and maintains security systems for the protection of federal courthouses and other judicial facilities.\""], "subsections": []}, {"section_title": "Fees of Jurors and Commissioners", "paragraphs": ["This account in the judiciary's budget funds the fees and allowances provided to petit and grand jurors and compensation for jury and land commissioners. Petit jurors serve on a trial jury, while grand jurors serve on a grand jury. Petit jurors are paid $50 per day but can, after serving 10 days on a jury, receive up to $60 per day. Grand jurors are also paid $50 per day but can, after serving 45 days on a grand jury, receive up to $60 per day.", "Petit and grand jurors are also reimbursed for reasonable transportation expenses and parking fees. Jurors can receive a subsistence allowance that covers their meals and lodging if they are sequestered during their service.", "A jury commissioner is appointed in some cases to work with the clerk of court to manage the random selection of petit and grand jurors. The compensation paid to a jury commissioner is $50 per day (plus the reimbursement of reasonable expenses related to his or her service).", "According to the U.S. Administrative Office of U.S. Courts, \"costs associated with this account can be unpredictable and are driven by the number of jury trials, the length of those trials, and statutory rates for reimbursement paid to jurors.\""], "subsections": []}, {"section_title": "Vaccine Injury Compensation Trust Fund", "paragraphs": ["The National Childhood Vaccine Injury Act of 1986 created a program to provide compensation to people found to be injured by certain vaccines. The program \"is designed to encourage vaccination by providing a streamlined system for compensation in rare instances where an injury results from vaccination\" and provides \"an alternative to traditional products liability and medical malpractice litigation for persons injured by their receipt or one or more of the standard childhood vaccines.\" ", "The program, according to the Department of Justice, \"has succeeded in providing a less adversarial, less expensive, and less time-consuming system of recovery than the traditional tort system that governs medical malpractice, personal injury, and product liability cases.\"", "The Vaccine Injury Compensation Trust Fund provides funding for the compensation program, covering claims related to vaccine-related injuries or deaths for covered vaccines administered on or after October 1, 1988. An individual who believes he or she has been injured by a covered vaccine can seek compensation from the fund by filing a claim against the Secretary of the Department of Health and Human Services in the U.S. Court of Federal Claims. Since the program began in 1988, over 6,000 individuals have received more than $3.9 billion (combined) for such claims. ", "The Department of the Treasury manages the fund's investments and produces a monthly Vaccine Injury Compensation Report ."], "subsections": []}, {"section_title": "Administrative Office of the U.S. Courts", "paragraphs": ["The Administrative Office of U.S. Courts (AO) \"is the agency within the judicial branch that provides a broad range of legislative, legal, financial, technology, management, administrative, and program support services to federal courts.\" A main responsibility of AO is to provide staff support and counsel for the Judicial Conference, the national policymaking body for the federal courts, and the Conference's committees. ", "With input from the Judicial Conference, AO also develops the annual judiciary budget for submission by the President and approval by Congress."], "subsections": []}, {"section_title": "Federal Judicial Center", "paragraphs": ["As the federal judiciary's research and education entity, the Federal Judicial Center (FJC) \"develops orientation and continuing education programs for judges and other court personnel. It also studies judiciary operations and recommends to the Judicial Conference how to improve the management and administration of the federal courts.\"", "The operations of the FJC are \"overseen by a board of directors whose members are the Chief Justice, the director of the Administrative Office, and seven judges chosen by the Judicial Conference.\""], "subsections": []}, {"section_title": "United States Sentencing Commission", "paragraphs": ["The United States Sentencing Commission is an independent agency that is located within the federal judiciary. It was created by Congress in 1984 \"to reduce sentencing disparities and promote transparency and proportionality in sentencing.\" As such, the commission establishes and amends sentencing guidelines for the federal criminal justice system, as well as \"monitors sentencing recommendations by probation officers and operates an information center on sentencing practices.\"", "The commission consists of seven voting members appointed by the President and confirmed by the Senate, with members serving staggered six-year terms. No more than four members of the commission can be members of the same political party, and at least three members must be federal judges. In order for a sentencing guideline to be amended, the amendment must receive the affirmative votes of four members of the commission. ", "The commission has a staff of approximately 100 employees. The commission is also advised by \"four standing advisory groups representing the views of practitioners, probation officers, victims, and tribal lands.\" The purpose, in part, of the advisory group representing the views of tribal lands is to provide the commission \"its views on federal sentencing issues related to American Indian defendants and victims and to offenses committed in Indian Country.\""], "subsections": []}]}, {"section_title": "Selected Courts Not Funded by the Judiciary Budget", "paragraphs": ["Three specialized courts within the federal court system are not funded under the judiciary budget: the U.S. Court of Appeals for the Armed Forces (funded in the Department of Defense appropriations bill), the U.S. Court of Appeals for Veterans Claims (funded in the Military Construction, Veterans Affairs, and Related Agencies appropriations bill), and the U.S. Tax Court (funded under Independent Agencies, Title V of the FSGG bill). Additionally, federal courthouse construction is funded within the General Services Administration account under Independent Agencies, Title V of the FSGG bill."], "subsections": []}, {"section_title": "Selected Ongoing Policy Issues for FY2020", "paragraphs": [], "subsections": [{"section_title": "Number of U.S. District and Circuit Court Judgeships", "paragraphs": ["Congress determines through legislative action both the size and structure of the federal judiciary. Consequently, the creation of any new permanent or temporary U.S. circuit and district court judgeships must be authorized by Congress. ", "The Judicial Conference of the United States, the policymaking body of the federal courts, makes biennial recommendations to Congress that identify any circuit and district courts that, according to the Conference, require new permanent judgeships to appropriately administer civil and criminal justice in the federal court system. In evaluating whether a court might need additional judgeships, the Judicial Conference examines whether certain caseload levels have been met, as well as court-specific information that might uniquely affect a particular court.", "The Judicial Conference's most recent recommendation, released in March 2019, calls for the creation of five permanent judgeships for the U.S. Court of Appeals for the Ninth Circuit (composed of California, eight other western states, and two U.S. territories). The Conference also recommends creating 65 permanent U.S. district court judgeships, as well as converting 8 temporary district court judgeships to permanent status.", "According to the Judicial Conference, since the enactment of the most recent omnibus judgeship bill in 1990 ( P.L. 101-650 ), the number of U.S. circuit court judgeships has remained at 179 while appellate court case filings increased by 15% through the end of FY2018. During this same time period, Congress enacted legislation that increased the number of permanent and temporary district judgeships by 4% (from 645 to 673) while district court case filings increased by 39%. In terms of specific types of cases, civil cases increased by 34% during the same period, and cases involving criminal felony defendants increased by 60%.", "The House Appropriations Committee, in its report that accompanied the committee's passage of the FSGG funding bill, noted that the Judicial Conference recently recommended the creation of a \"significant number of new Article III judgeships\" for the nation's circuit and district courts. The committee also expressed its concern that, \"absent executive and congressional action to fill existing judicial vacancies and the passage of comprehensive bipartisan legislation to create new judgeships, the ability of the federal courts to administer justice in a swift, fair, and effective manner could be compromised.\""], "subsections": []}, {"section_title": "Judicial Security", "paragraphs": ["There is ongoing congressional interest in the safe conduct of court proceedings and the security of federal judges. Congress has, in the past, appropriated funds specifically to enhance the personal security of judges. For example, an FY2005 supplemental appropriations act included a provision providing funds for home intrusion detection systems for federal judges. Additionally, the Court Security Improvement Act of 2007 included various measures to enhance security for judges and court personnel, as well as courtroom safety for the public. The act, for example, amended 18 U.S.C. \u00c2\u00a7930(e)(1) to prohibit the possession of dangerous weapons (other than firearms, which were already prohibited) in federal court facilities.", "The judiciary works closely with the U.S. Marshals Service (USMS) to ensure that adequate protective policies, procedures, and practices are in place for the federal courts. As discussed in the text above, the Marshals are largely responsible for protecting federal courthouses, judges, and other judicial employees. In FY2018, after the USMS assessed the level of danger in explicit threats and inappropriate communications directed at judges and other court officers, there were 531 predicated protective investigations opened \"based on the presence of or potential for criminal activity.\"", "The House Appropriations Committee, in the report accompanying its markup of the FY2020 judiciary budget, stated that the committee considers it a priority to improve the physical security of federal judicial facilities and \"to ensure the integrity of the judicial process.\""], "subsections": []}, {"section_title": "Cost Containment by the Judiciary", "paragraphs": ["The judiciary continues the cost containment initiatives that it began in 2004.\u00c2\u00a0Specific areas of focus for containing costs include office space rental, personnel expenses, information technology, and operating costs. The Senate report that accompanied the Appropriations Committee's markup addressed the issue of cost containment, stating that the \"judicial branch is subject to the same funding constraints facing the executive and legislative branches. It is imperative that the Federal judiciary devote its resources primarily to the retention of staff. Further, it is also important that the judiciary contain controllable costs such as travel, construction, and other expenses.\"", "Of particular focus by the judiciary is an effort to cut costs associated with office space and rental payments. The Administrative Office of U.S. Courts (AO) announced in December 2018 that the federal judiciary \"has succeeded dramatically in its five-year quest to reduce building space and rent costs, exceeding its original reduction goals by nearly 30 percent.\" Additionally, AO noted that \"rent has been cut more than $36 million a year,\" with additional savings anticipated in the future.", "In its FY2020 budget summary, the Administrative Office of U.S. Courts (AO) emphasized that, as of September 30, 2018, approximately 1.1. million usable square feet had been removed from the judiciary's rent bill.", "Examples of the judiciary's space reduction campaign include the following:", "The bankruptcy court for the District of New Hampshire \"was relocated from leased space in Manchester into the District Court in Concord, NH. Savings: 20,000 square feet.\"", "In New York, the bankruptcy court in Buffalo \"relocated into the district courthouse. In Manhattan, the Bankruptcy Court reduced space by digitizing paper records. Combined savings: 39,000 square feet.\"", "The bankruptcy court in San Francisco \"saved over 25,000 square feet and $1.5 million in annual rent by moving into the Phillip Burton Federal Building and U.S. Courthouse.\"", "Courthouse \"library reductions in Camden, NJ; Wilmington, DE; Harrisburg, PA; Philadelphia; and U.S. Virgin Islands saved over 18,000 square feet.\"", "The Sixth Circuit's library headquarters in Cincinnati \"relocated to space formerly used for Clerk's Office file storage. Total savings: 15,000 square feet.\"", "Courthouses for which there was no permanently assigned judge, that is, non resident courthouses , \"were closed in Bryson City, NC; Wilkesboro, NC; Beaufort, SC; and Parkersburg, WV. Total savings: over 35,000 square feet.\"", "\"In Miami, 33,000 square feet and $900,000 in annual rent were saved by relocating the Bankruptcy Court into the C. Clyde Atkins U.S. Courthouse. Two magistrate judges were relocated, and a circuit library and jury assembly area were vacated.\"", "The Administrative Office of U.S. Courts also noted that, in addition to space reduction, the judiciary has \"undertaken significant efforts to develop alternative organizational models that may result in cost savings, including expanding shared administrative services within and among\" district courts.", "The House Appropriations Committee noted in its report that it recognizes the judiciary's \"cost containment efforts over the past 12 years and is pleased with the [its] savings and cost avoidance.\" The committee noted, specifically, that the reduction of usable square feet from the judiciary's rent bill \"equates to an annual cost avoidance of nearly $36,000,000 and $105,000,000 over the past five years.\""], "subsections": []}]}]}}
{"id": "R46354", "title": "COVID-19 and China: A Chronology of Events (December 2019-January 2020)", "released_date": "2020-05-13T00:00:00", "summary": ["In Congress, multiple bills and resolutions have been introduced related to China's handling of a novel coronavirus outbreak in Wuhan, China, that expanded to become the coronavirus disease 2019 (COVID-19) global pandemic. This report provides a timeline of key developments in the early weeks of the pandemic, based on available public reporting. It also considers issues raised by the timeline, including the timeliness of China's information sharing with the World Health Organization (WHO), gaps in early information China shared with the world, and episodes in which Chinese authorities sought to discipline those who publicly shared information about aspects of the epidemic. Prior to January 20, 2020\u00e2\u0080\u0094the day Chinese authorities acknowledged person-to-person transmission of the novel coronavirus\u00e2\u0080\u0094the public record provides little indication that China's top leaders saw containment of the epidemic as a high priority. Thereafter, however, Chinese authorities appear to have taken aggressive measures to contain the virus.", "The Appendix includes a concise version of the timeline. A condensed version is below:", "Late December: Hospitals in Wuhan, China, identify cases of pneumonia of unknown origin.", "December 30: The Wuhan Municipal Health Commission issues \"urgent notices\" to city hospitals about cases of atypical pneumonia linked to the city's Huanan Seafood Wholesale Market. The notices leak online. | Wuhan medical workers, including ophthalmologist Li Wenliang, trade messages about the cases in online chat groups.", "December 31: A machine translation of a Chinese media report about the outbreak is posted to ProMED, a U.S.-based open-access platform for early intelligence about infectious disease outbreaks. WHO headquarters in Geneva sees the ProMED post and instructs the WHO China Country Office to request verification of the outbreak from China's government. | The Wuhan Municipal Health Commission issues its first public statement on the outbreak, saying it has identified 27 cases.", "January 1: Wuhan authorities shut down the city's Huanan Seafood Wholesale Market.", "January 3: Dr. Li Wenliang is reprimanded by local Wuhan police for spreading allegedly false statements about the outbreak online. | Chinese Center for Disease Control and Prevention (China CDC) Director-General Gao Fu tells U.S. Centers for Disease Control and Prevention (U.S. CDC) Director Robert Redfield about a pneumonia outbreak in Wuhan.", "January 4: In its first public statement on the outbreak, WHO tweets, \"China has reported to WHO a cluster of pneumonia cases\u00e2\u0080\u0094with no deaths\u00e2\u0080\u0094in Wuhan, Hubei Province.\"", "January 6: Department of Health and Human Services (HHS) Secretary Alex M. Azar II and U.S. CDC Director Redfield offer to send U.S. CDC experts to China. | U.S. CDC issues a \"Watch Level 1 Alert\" for Wuhan and advises travelers to Wuhan to avoid animals, animal markets, and animal products.", "January 11 : A team led by Prof. Yong-zhen Zhang of Fudan University in Shanghai posts the genetic sequence of the virus on an open-access platform, sharing it with the world. | China CDC and two other Chinese teams subsequently also post genetic sequences of the virus on an open-access platform. | China shares the virus' genomic sequence with WHO.", "January 1 2: Dr. Li Wenliang is hospitalized with symptoms of the novel coronavirus.", "January 20: China confirms person-to-person transmission of the novel coronavirus and infections among medical workers.", "January 21: U.S. CDC announces the first novel coronavirus case in the United States, in a patient who returned from Wuhan on January 15, 2020.", "January 23: Wuhan suspends public transportation and bars residents from leaving the city.", "January 28: Chinese leader Xi Jinping and WHO Director-General Tedros Adhanom Ghebreyesus meet in Beijing.", "January 30: WHO Director-General Tedros declares the epidemic a Public Health Emergency of International Concern. | President Trump announces the formation of the President's Coronavirus Task Force.", "January 31: President Trump suspends entry into the United States of most foreigners who were physically present in mainland China during the preceding 14-day period, effective February 2. | HHS Secretary Azar declares a public health emergency for the United States to aid response to the novel coronavirus."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["In Congress, multiple bills and resolutions have been introduced related to China's handling of a novel coronavirus outbreak in Wuhan, China, that expanded to become the coronavirus disease 2019 (COVID-19) global pandemic. This report provides a timeline of key developments in the early weeks of the pandemic, based on available public reporting to date. The timeline starts with the onset of symptoms among the first known patients later identified as having COVID-19. The timeline documents the subsequent responses in China, at the World Health Organization (WHO), and in the United States through January 31, 2020, the day U.S. Department of Health and Human Services (HHS) Secretary Alex M. Azar II declared the pandemic had become a public health emergency for the United States. ", "The report opens with short sections on disease terminology and the Chinese geographic and political context of the outbreak in its early weeks. The report next offers discussion of select issues raised by the timeline. A detailed timeline follows. A concise timeline is included in an Appendix . "], "subsections": []}, {"section_title": "Disease Terminology", "paragraphs": ["On February 11, 2020, the International Committee on Taxonomy of Viruses named the novel coronavirus \"severe acute respiratory syndrome coronavirus 2\" (SARS-CoV-2). The name references the virus' genetic link to the coronavirus responsible for the 2002-2003 severe acute respiratory syndrome (SARS) outbreak, which began in China's Guangdong Province and sparked global panic, infecting 8,096 people worldwide and causing 774 deaths. Also on February 11, WHO named the disease caused by SARS-CoV-2 \"coronavirus disease 2019\" (COVID-19). Earlier, from January 30, 2020, to February 11, WHO referred to the virus by the interim name \"2019 novel coronavirus\" (2019 nCoV), and to the disease by the interim name, \"2019 novel coronavirus acute respiratory disease\" (2019-nCoV acute respiratory disease).", "China initially referred to the illness its doctors were observing in Wuhan as \"pneumonia of unknown cause.\" Beginning on January 1, 2020, official Chinese sources began referring to it as a \"viral pneumonia.\" On January 12, 2020, the day after China shared the genomic sequence of the novel coronavirus with WHO and on an open-source platform, Wuhan authorities began using the term, \"novel coronavirus infection pneumonia.\" The government and media in China continue to refer to the disease by that name."], "subsections": []}, {"section_title": "Chinese Geographic and Political Context", "paragraphs": ["Chinese doctors first identified cases of the disease later named COVID-19 in Wuhan, capital of China's Hubei Province. Wuhan, with a population of 11.2 million, is the largest city in central China, a region comprised of six provinces with a combined population of 368 million. Situated at the intersection of the Yangtze River and its largest tributary, the Hanshui River, the city is a major transportation hub, with river, highway, high-speed rail, and air links to the rest of China. Until the pandemic led airlines to suspend service, the city also offered direct air routes to destinations around the world. Wuhan is a major industrial base and boasts a concentration of elite universities and research centers.", "The Wuhan Municipal Health Commission, the city's health agency, is in the third tier of a national health hierarchy that extends from the National Health Commission in Beijing down through the Health Commission of Hubei Province, whose offices are also located in Wuhan. The Wuhan Municipal Health Commission reports both to the Wuhan People's Government and to the provincial health commission. The Wuhan Municipal Health Commission directly oversees a dozen hospitals and the Wuhan Center for Disease Control and Prevention (Wuhan CDC), which has a staff of about 220. ", "Wuhan is divided into 13 districts. Each has its own health bureau and CDC, which report both to the district government and the next higher-level entity in their hierarchies, the Wuhan Municipal Health Commission and Wuhan CDC. Jianghan District, home to the Huanan Seafood Wholesale Market, where a number of earliest known COVID-19 patients worked, has a population of 730,000. Population density in Jianghan District is on par with Manhattan.", "In China's political system, Communist Party secretaries are the most powerful officials at every level of government. They oversee the party bureaucracy and make major decisions. A deputy party secretary usually serves concurrently as head of the parallel state bureaucracy, which implements the Party's decisions. ", "At the national level, Communist Party General Secretary Xi Jinping is China's top leader. He serves concurrently as Chairman of the Party's Central Military Commission and as State President. The Party's second-most senior official, Li Keqiang, serves as Premier of the State Council, or cabinet, overseeing China's state bureaucracy. Both men are members of China's most senior decisionmaking body, the seven-man Communist Party Politburo (or Political Bureau) Standing Committee. At the outset of the epidemic, the top officials of Hubei Province were Party Secretary Jiang Chaoliang and Governor Wang Xiaodong, with the latter serving concurrently as a provincial deputy party secretary. The Party removed Jiang from office on February 13, 2020, and replaced him with former Shanghai Mayor Ying Yong, an associate of Party General Secretary Xi. Governor Wang remains in office. In the city of Wuhan, the top officials at the outset of the epidemic were Party Secretary Ma Guoqiang, who served concurrently as a deputy party secretary for Hubei Province, and Mayor Zhou Xianwang, who served concurrently as the city's deputy party secretary. The Party removed Ma from his provincial and municipal party posts on February 13, 2020, and replaced him with the former Party Secretary of the eastern China city of Jinan, Wang Zhonglin. Mayor Zhou remains in office. At the outset of the epidemic, the top officials of the Hubei Provincial Health Commission were Party Secretary Zhang Jin and Director Liu Yingzi. The Party removed both from their posts on February 11, 2020, replacing them with a former deputy director of China's National Health Commission, Wang Hesheng. The top official of the Wuhan Municipal Health Commission remains Zhang Hongxing. He has served as both Party Secretary and Director of the commission since early 2019."], "subsections": []}, {"section_title": "Issues Raised by the Timeline", "paragraphs": [], "subsections": [{"section_title": "China's Interactions with WHO", "paragraphs": ["In 2002-2003, China's government was widely criticized for waiting more than two months to report the outbreak of SARS to WHO and to its own people. China has shared information about COVID-19 more quickly and comprehensively. The timeline shows, for example, that Chinese authorities allowed experts from the WHO China Country Office and WHO's Western Pacific Regional Office to conduct what WHO describes as \"a brief visit to Wuhan\" January 20-21, 2020. The timeline nonetheless raises questions for some about China's interactions with WHO at key moments in the early weeks of the pandemic.", "Article 6 of the International Health Regulations (IHR) (2005), an international agreement to which China, the United States, and 194 other countries are parties, outlines State Parties' obligations, including:", "Each State Party shall assess events occurring within its territory.... Each State Party shall notify WHO, by the most efficient means of communication available, by way of the National IHR Focal Point, and within 24 hours of assessment of public health information, of all events which may constitute a public health emergency of international concern within its territory....", "Following a notification, a State Party shall continue to communicate to WHO timely, accurate and sufficiently detailed public health information available to it on the notified event, where possible including case definitions, laboratory results, source and type of the risk, number of cases and deaths, conditions affecting the spread of the disease and the health measures employed; and report, when necessary, the difficulties faced and support needed in responding to the potential public health emergency of international concern.", "The timeline suggests that in the early weeks of the pandemic, Chinese authorities may not always have communicated with WHO in the \"timely, accurate and sufficiently detailed\" way IHR (2005) requires."], "subsections": [{"section_title": "\"Verification\" vs. \"Notification\" of the Outbreak", "paragraphs": ["It appears China may not have proactively notified WHO of the outbreak, as required by Article 6.1 of IHR (2005). According to Dr. Michael Ryan, Executive Director of WHO's Health Emergencies Programme, WHO headquarters in Geneva first learned about the outbreak in Wuhan not directly from Chinese authorities, but rather from the Program for Monitoring Emerging Diseases (ProMED), a U.S.-based open-source platform for early intelligence about infectious disease outbreaks. ", "At 11:59 p.m. Eastern Standard Time (EST), a ProMed user posted a machine translation of a Chinese-language report about the outbreak from a news organization, Yicai , the financial news arm of China's state-owned Shanghai Media Group. Yicai had published its report online just under three hours earlier. It detailed the contents of two Wuhan Municipal Health Commission \"urgent notices\" about atypical pneumonia cases, which the commission had sent the day before to medical institutions in Wuhan, and which internet users in Wuhan had leaked online within minutes. ", "Another document from Wuhan that circulated widely online overnight on December 30-31\u00e2\u0080\u0094a photograph of a patient lab report showing a positive result for SARS, with the SARS finding circled in red\u00e2\u0080\u0094alerted Chinese news organizations to the possible significance of the \"urgent notices.\" The head of emergency medicine at Wuhan Central Hospital, Dr. Ai Fen, had shared the image online with a former classmate and a group of colleagues in the time between the issuance of the two Wuhan Municipal Health Commission \"urgent notices\" on December 30. Another Wuhan Central Hospital doctor, Li Wenliang, had shared the image with a group of his former classmates in a private online WeChat group a few hours later. (Dr. Li would later be reprimanded by Wuhan authorities for his social media posts, celebrated by the Chinese public as a whistleblower, and fall victim to COVID-19. He died on February 7, 2020, at the age of 33. )", "For WHO, the ProMED post appears to have triggered Articles 9 and 10 of IHR (2005). Article 9 provides for WHO to \"take into account reports from sources other than notifications or consultations\" by State Parties, and then \"attempt to obtain verification from the State Party in whose territory the event is allegedly occurring.\" Article 10 requires State Parties to respond to verification requests from WHO within 24 hours. ", "Speaking at a WHO press conference on April 20, 2020, Ryan said as soon as WHO headquarters learned about the outbreak from ProMed on December 31, it asked the WHO China Country Office to request \"verification of the event\" from the government of China under IHR (2005). Ryan noted, \"member states are required to respond within 24 to 48 hours of any request from the WHO for clarification or verification of an event or a signal that we believe may be significant.\" (IHR (2005) stipulates 24 hours, not 48.)", "China's official timeline says it began \"regularly informing\" WHO of developments related to the outbreak on January 3. On January 4, WHO tweeted, \"China has reported to WHO a cluster of pneumonia cases\u00e2\u0080\u0094with no deaths\u00e2\u0080\u0094in Wuhan, Hubei Province.\" WHO's Ryan said the WHO China Country Office formally requested verification of the outbreak on January 1, \"[t]hat process continued and on 4 th January WHO tweeted the existence of the event.\" Whether intentionally or otherwise, WHO's first formal statement about the outbreak, on January 5, was not clear on how the WHO Country Office learned about the outbreak. It used passive voice to state that the China Country Office \"was informed\" on December 31, 2019, of cases of pneumonia of unknown cause in Wuhan."], "subsections": []}, {"section_title": "Sharing Identification of a Novel Coronavirus and the Virus' Genomic Sequence", "paragraphs": ["China's government appears to have potentially hesitated before informing WHO both when it determined a novel coronavirus was responsible for the outbreak and when its scientists sequenced the virus' genome. On January 9, 2020, WHO announced, \"Chinese authorities have made a preliminary determination of a novel (or new) coronavirus, identified in a hospitalized person with pneumonia in Wuhan.\" On January 11, 2020, WHO tweeted, \"BREAKING: WHO has received the genetic sequences for the novel #coronavirus (2019-nCoV) from the Chinese authorities.\" China appears to have determined that a novel coronavirus was responsible days before January 9, 2020, however. Its scientists also sequenced the virus' genome days earlier than January 11, 2020. ", "According to Caixin , a respected Chinese news organization, hospitals in Wuhan sent samples from their pneumonia cases to commercial companies for analysis in late December 2019. Several of those companies informed the hospitals that the patient samples indicated a novel coronavirus. One company, BGI Genomics, completed genomic sequencing of the novel coronavirus on December 26, 2019, Caixin reports. The next entity reported to have sequenced the genome was the Wuhan Institute of Virology (WIV), an affiliate of the Chinese Academy of Sciences. Chinese state media say WIV sequenced the virus' genome on January 2.", "A timeline in a March 26, 2020, article by China CDC experts and others in T he New England Journal of Medicine indicates China CDC sequenced the genome on January 3, 2020. China's official timelines provide January 7 as the date China CDC sequenced the genome. January 9, 2020, media reports about the CDC's sequencing breakthrough appear to have prompted WHO to issue its statement announcing identification of a novel coronavirus.", "A fourth group of scientists, led by Prof. Yong-zhen Zhang of Fudan University in Shanghai, sequenced the genome on January 5, 2020, and was the first to share it with the world. They deposited the sequence with the U.S. National Institutes of Health's GenBank, a database of publicly available DNA sequences, on January 5, submitted a paper on their work to the journal Nature on January 7, 2020, and posted the genome on Virological.org, an open-access hub for pre-publication data and analyses, on the morning of January 11. Later on January 11, 2020, a team from China CDC and two other teams shared genomic sequences of the novel coronavirus on Global Initiative on Sharing All Influenza Data (GISAID), an international platform for sharing influenza data, and WHO tweeted that Chinese authorities had provided WHO with genetic sequences for the virus."], "subsections": []}, {"section_title": "Biological Samples", "paragraphs": ["Chinese authorities do not appear to have shared biological samples with WHO or other international partners as of January 28, 2020, and possibly as of April 25. A line in a January 28, 2020, WHO press release about WHO Director-General Dr. Tedros Adhanom Ghebreyesus' meeting with Chinese leader Xi Jinping indicates that China's government had yet to share biological samples with the organization. Among other things, Director-General Tedros and Xi discussed, \"continuing to share data, and for China to share biological material with WHO,\" the WHO press release stated. On April 25, 2020, State Department Spokesperson Morgan Ortagus tweeted, \"China has not shared any #COVID19 virus or clinical samples to the best of our knowledge.\" "], "subsections": []}]}, {"section_title": "Chinese Authorities' Information Sharing", "paragraphs": ["The timeline indicates that information Chinese authorities provided to the Chinese public and to the world in the early weeks of the epidemic was often incomplete and understated the extent of the virus' spread. China shared more information beginning January 20, 2020. On January 21, for example, China's National Health Commission began issuing daily updates on case numbers. Information gaps in the early weeks and other information-sharing issues include the following.", "Wuhan doctors suspected person-to-person transmission of the mysterious new pneumonia as early as late December. Dr. Zhang Jixian of the Hubei Provincial Hospital of Integrated Chinese and Western Medicine later told China's state news agency that she reported a family cluster of cases to her superiors on December 27, 2019, because, \"It is unlikely that all three members of a family caught the same disease at the same time unless it is an infectious disease.\" When visitors from Hong Kong, Macao, and Taiwan visited Wuhan January 13-14, 2020, an official from China's National Health Commission told them, \"limited human-to-human transmission cannot be excluded.\" A WHO expert echoed that position in a January 14, 2020, press conference, stating that China had experienced \"limited\" human-to-human transmission of the novel coronavirus, mainly in families. Chinese authorities first publicly confirmed person-to-person transmission on January 20. Wuhan medical personnel began falling ill with symptoms similar to their patients' in December, but Chinese authorities did not acknowledge medical worker infections until January 20. The best-known victim of the novel coronavirus in China is Dr. Li Wenliang of Wuhan Central Hospital, whom Wuhan police reprimanded on January 3, 2020, for sharing information about the virus online. Li was hospitalized on January 12, 2020, and died on February 7, 2020. Among other reports of medical worker infections, a single \"super-spreader\" patient who underwent surgery at the Wuhan Union Hospital on January 7, 2020, was later found to have infected 14 medical staff. Wuhan's Municipal Health Commission issued no updates while a five-day-long political meeting took place in the city January 6-10. For the duration of a second major political meeting in the city, January 12-17, the Wuhan Municipal Health Commission issued daily updates, but reported no new infections. The commission's report on January 11, issued on the day between the two political meetings, gave the impression the epidemic was shrinking. On January 5, the commission had reported a cumulative 59 cases in the city. On January 11, it revised the cumulative number of cases down to 41, a number that remained constant through January 16. The absence of updates from January 6 to 10, and the official statements that no new cases had been detected between January 3 and January 16, may have given Wuhan residents a false sense of security that the outbreak was under control. The United States made multiple offers over the course of January 2020 to send a U.S. Centers for Disease Control and Prevention (U.S. CDC) team to China to assist with response to the outbreak. Any team that went would also have learned information about the epidemic of relevance to the U.S. response. The timeline shows U.S. officials offered to send a U.S. CDC team on January 4, January 6, and January 27. On January 27, President Trump supported the offer with a tweet, saying, \"We have offered China and President Xi any help that is necessary. Our experts are extraordinary!\" No U.S. CDC team traveled to China in this period, although Weigong Zhou, an employee of U.S. CDC, and Clifford Lane, an employee of the U.S. National Institutes of Health (NIH), did participate in a WHO-China Joint Mission to China from February 16 to 24, 2020. Although Chinese experts have published a stream of papers in English-language scientific journals since the epidemic began, including several important papers in January 2020, some in the international community have expressed frustration over what China has not shared. One area of interest is analysis of samples from the Huanan Seafood Wholesale Market (also referred to in some sources as South China Seafood City). China CDC provided summary details of its findings to Chinese state media\u00e2\u0080\u0094it found 33 of 585 samples tested positive for SARS-Cov-2\u00e2\u0080\u0094but China CDC has not issued details of its scientific analysis of the samples and appears to have not taken samples from animals in the market. Chinese media reports indicate that local authorities disinfected the market on at least the two nights before it closed, potentially also compromising samples. On May 6, 2020, Secretary of State Michael R. Pompeo stated, \"China is still refusing to share the information we need to keep people safe, such as viral isolates, clinical specimens, and details about the many COVID-19 patients in December 2019, not to mention 'patient zero.'\"", "It remains unclear who was responsible for decisions to withhold information in the early weeks. In a nationally televised interview, Wuhan Mayor Zhou Xianwang pointed to China's Law on Prevention and Control of Infectious Diseases , which he said restricted Wuhan from sharing information without permission from higher-ups."], "subsections": []}, {"section_title": "Chinese Authorities' Efforts to Discourage Information Sharing", "paragraphs": ["In addition to examples of incomplete information provided by Chinese authorities, the timeline of events through January 31, 2020, includes instances of official actions to discipline those who shared information about the epidemic publicly, as well as examples of censorship. They include the following:", "Wuhan Municipal Public Security officers reprimanded at least eight people for allegedly \"spreading rumors\" about the outbreak and thereby creating a \"negative social influence.\" It remains unclear whether two of the best known medical workers reprimanded for sharing early information about the outbreak, Wuhan Central Hospital's Dr. Ai Fen and Dr. Li Wenliang, are counted among the eight, or if theirs are additional cases. The day after the team of scientists led by Prof. Yong-zhen Zhang of Fudan University in Shanghai became the first to share the genetic sequence of the novel coronavirus with the world, Shanghai authorities closed down Professor Zhang's laboratory for \"rectification,\" implying it is being investigated for unspecified wrongdoing. Hong Kong's South Morning Post , which reported the development, wrote that it was \"not clear whether the closure was related to the publishing of the sequencing data before the authorities.\" Official Chinese timelines omit mention of the team's work. Official censorship has blocked access to enterprising reporting undertaken by both Chinese and foreign news organizations. Dr. Ai Fen's first-person account in a national magazine, People ( Renwu ), for example, was deleted from Renwu's website the day it appeared, though Chinese internet users have worked to keep it accessible. Chinese activists have archived it and many other censored reports on sites such as Terminus2049. Some of those activists are now missing."], "subsections": []}, {"section_title": "Chinese Leadership Signaling Related to the Novel Coronavirus", "paragraphs": ["Prior to January 20, the public record provides little evidence that China's top leaders saw containment of the epidemic as a high priority. ", "China's state media reported three meetings of China's top decisionmaking body, the seven-man Communist Party Politburo (also known as \"Political Bureau\") Standing Committee, in the month of January 2020, on January 7, 13, and 25. Contemporaneous reporting on the first two meetings made no mention of the epidemic, although on February 15 the Communist Party released February 3 remarks in which General Secretary Xi recalled having \"raised a demand for prevention and control of the novel coronavirus pneumonia\" at the January 7 meeting. People's Daily , the newspaper of the Communist Party Central Committee, made no mention of the epidemic in its pages until January 21, when it carried six articles, including two on the front page. Chinese officials at all levels monitored the paper closely for signals about leadership priorities. General Secretary Xi, in his capacity as State President, made an official visit to Burma from January 17-18, 2020, to celebrate the 70 th anniversary of bilateral diplomatic relations. State media coverage of the trip gave no indication that Xi and his Burmese hosts discussed the epidemic or efforts by China to contain it.", "The Chinese leadership's approach to the epidemic changed dramatically on January 20. On that day, a medical expert lauded for his role in the SARS epidemic, Zhong Nanshan, officially confirmed human-to-human transmission and medical worker infections. China's National Health Commission declared novel coronavirus-caused pneumonia a statutory notifiable infectious disease under the PRC Law on the Prevention and Treatment of Infectious Diseases . China also amended the PRC Health and Quarantine Law , opening the way for mandatory quarantines and lock-downs. The day ended with General Secretary Xi issuing an \"important instruction,\" carried in all major media, to prioritize novel coronavirus prevention and control work."], "subsections": []}, {"section_title": "The Role of China's Holiday Calendar", "paragraphs": ["China's holiday calendar likely set back efforts to contain the outbreak and contributed to its spread overseas. The Lunar New Year, also known as Spring Festival, is China's most important holiday. In 2020, it fell on January 25. Ahead of the holiday, millions of Wuhan residents left the city to return to their hometowns to spend the festival with their extended families. A smaller number of Wuhan residents got on planes to holiday destinations abroad. In Wuhan, a community of 40,000 households with a two-decade tradition of mass potluck banquets ahead of the Lunar New Year went ahead with its 20 th annual potluck on January 18, 2020, contributing to the virus' spread."], "subsections": []}]}, {"section_title": "Timeline", "paragraphs": ["Note that when times are listed, the timeline also notes the time zone, whether Chinese Standard Time (CST) for China, Eastern Standard Time (EST) for the eastern part of the contiguous United States, or Central European Time (CET) for Geneva, Switzerland, the headquarters location for WHO. "], "subsections": [{"section_title": "November 17, 2019-December 8, 2019", "paragraphs": [], "subsections": [{"section_title": "China (Wuhan)", "paragraphs": ["Retrospectively, the date the earliest known COVID-19 patient first developed symptoms remains unclear. ", "In a March 2020 report, the Hong Kong-based South China Morning Post , citing Chinese \"government data seen by the Post ,\" indicates that the first known patient was a 55-year-old from Hubei Province who became ill on November 17. Asked in March 2020 about the Post report, China CDC Director Gao Fu states, \"There is no solid evidence to say we already had clusters in November.\" In a January 24, 2020, article in The Lancet medical journal, doctors from a Wuhan infectious disease hospital and their co-authors state that among the first 41 cases in Wuhan later identified as being COVID-19, the first patient showed symptoms on December 1. In January 11-12 communications with WHO and in an authoritative February 17 report, Chinese authorities provide December 8 as the day when the first known patient later identified as having COVID-19 became symptomatic. "], "subsections": []}]}, {"section_title": "December 24, 2019", "paragraphs": ["Doctors at Wuhan Central Hospital take fluid samples from the lungs of a 65-year-old patient with pneumonia and send them to Vision Medicals, a genomics company in Guangzhou, Guangdong Province, for testing."], "subsections": []}, {"section_title": "December 26, 2019", "paragraphs": [], "subsections": [{"section_title": "China (Wuhan)", "paragraphs": ["Another Wuhan hospital sends a sample from a pneumonia patient to publicly-listed genomics company BGI Genomics for analysis."], "subsections": []}]}, {"section_title": "December 27, 2019", "paragraphs": [], "subsections": [{"section_title": "China (Wuhan)", "paragraphs": ["Dr. Zhang Jixian, Director of Respiratory and Critical Care Medicine at the Hubei Provincial Hospital of Integrated Chinese and Western Medicine in Wuhan, files a report with her supervisors about three members of a single family whom she found to be suffering from pneumonia of unknown cause. She later recalls concluding, \"It is unlikely that all three members of a family caught the same disease at the same time unless it is an infectious disease.\" The hospital notifies Center for Disease Control for its district of Wuhan, Jianghan District.", "Vision Medicals, the genomics company to which Wuhan Central Hospital sent samples from the lungs of the 65-year-old patient for analysis on December 24, calls with the results. According to an account Dr. Zhao Su, the hospital's head of respiratory medicine, gave news organization Caixin in February 2020, \"They just called us and said it was a new coronavirus.\" ", "Wuhan Central Hospital admits a 41-year-old man with pneumonia, collects biological samples from him, and sends the swabs to another laboratory, CapitalBio Medlab Co. Ltd., for analysis."], "subsections": []}]}, {"section_title": "December 29, 2019", "paragraphs": [], "subsections": [{"section_title": "China (Wuhan)", "paragraphs": ["The Hubei Provincial Hospital of Integrated Chinese and Western Medicine has identified additional cases of pneumonia of unknown cause. Other hospitals in Wuhan are reporting similar cases. Wuhan Municipal CDC organizes an expert team to investigate.", "BGI Genomics is the first known entity to complete sequencing of the novel coronavirus virus, based on the sample sent to it on December 26. A BGI Genomics source later tells Caixin the company did not know the virus was responsible for multiple illnesses and so did not understand the significance of its work at the time."], "subsections": []}]}, {"section_title": "December 30, 2019", "paragraphs": [], "subsections": [{"section_title": "China (Wuhan)", "paragraphs": ["3:10 p . m . (CST) : The Wuhan Municipal Health Commission issues an \"urgent notice\" intended only for medical institutions in Wuhan. It states that cases of pneumonia of unknown cause have emerged from the city's Huanan Seafood Wholesale Market. It orders hospitals to compile statistics on all such cases admitted in the previous week and report them by email to the Health Commission by 4 p.m. A later investigation by the National State Supervisory Commission, an agency tasked with investigating graft and malfeasance among public servants, will reveal that someone leaks the notice online within 12 minutes of its being issued.", "About 12 p.m. CST : Dr. Ai Fen, head of the emergency department at Wuhan Central Hospital, receives a WeChat message from a former classmate at another hospital, Tongji Hospital, asking about a message circulating online: \"Don't go to Huanan [Market]. A lot of people there have fevers\u00e2\u0080\u00a6.\" Dr. Ai sees the message from her classmate while she is reviewing a computed tomography (CT) scan of an infected patient's lungs. She records an 11-second clip of the CT scan and sends it to him.", "A bout 4 p.m . CST : Dr. Ai Fen reads Capital Bio's laboratory report on the patient admitted on December 27, which states that his sample has tested positive for Severe Acute Respiratory Disease (SARS). (The finding is later determined to be erroneous. The patient was infected with the novel coronavirus, later named SARS-CoV-2.) Dr. Ai telephones the hospital's public health department and its infectious disease department to report the finding and tells the director of the respiratory disease department in person. Then she draws a red line around the \"SARS\" finding and shares an image of the report online with her classmate at Tongji Hospital, as well as with a group of colleagues. She will later say she does so \"to remind everyone to pay attention to protecting themselves.\" ", "5:43 p . m . CST : Wuhan Central Hospital ophthalmologist Li Wenliang sends a message to a group of his medical school classmates on the WeChat social media platform, reporting, \"7 confirmed SARS cases from the Huanan Fruit and Seafood Market.\" Dr. Li does not personally know Dr. Ai Fen, but he sends an image of the laboratory report Dr. Ai shared with her associates less than two hours earlier. He also sends the 11-second lung CT scan of a patient's lungs that Dr. Ai shared with her classmate at noon. ", "6:50 p . m . CST : The Wuhan Municipal Health Commission issues a second \"urgent notice\" to medical institutions, instructing them on how to manage patients with pneumonia of unknown cause and ordering them to track such cases and report them in a timely fashion to district CDCs and the Wuhan Municipal Health Commission. A later investigation by China's State Supervisory Commission will reveal that someone leaks the notice online within 10 minutes of its being issued."], "subsections": []}]}, {"section_title": "December 31, 2019", "paragraphs": [], "subsections": [{"section_title": "China (Wuhan)", "paragraphs": ["The Wuhan Municipal Health Commission alerts China's National Health Commission and China CDC in Beijing to the cases. The National Health Commission dispatches a working group and the first of several expert teams to Wuhan.", "Morning CST: Several Chinese media outlets confirm the authenticity of the Wuhan Health Commission's \"urgent notices\" of the day before, which spread rapidly across social media overnight. Yicai (also known as China Business News ), the financial news arm of state-owned Shanghai Media Group, confirms the notices are genuine by calling the Wuhan Municipal Health Commission's public hotline number. Yicai publishes a story on the outbreak in Wuhan online at 10:16 a.m. CST. Another Chinese news organization, Xin Jing Bao , confirms the authenticity of the documents with Wuhan CDC, and publishes its own story 37 minutes later. "], "subsections": []}, {"section_title": "United States (Brookline, MA)", "paragraphs": ["11:59 p.m. EST ( December 30 ) / 5:59 a.m. CET (Geneva)/12:59 p.m. CST ) : A user of the U.S.-based listserv Program for Monitoring Emerging Diseases or ProMED posts a machine translation of Yicai's article."], "subsections": []}, {"section_title": "China (Wuhan)", "paragraphs": ["1:38 p . m . CST : The Wuhan Municipal Health Commission posts on its website its first public statement on the outbreak. It states that some medical institutions in the city have treated cases of pneumonia linked to the city's Huanan Seafood Wholesale Market. The commission says it asked medical institutions to search for cases related to the market and do retrospective investigations, and they identified 27 cases, including seven cases in which patients are seriously ill. The commission notes that hygiene investigation and environmental sanitation measures at the market are underway. ", "Doctors at Wuhan's Jinyintan Hospital request that the Wuhan Institute of Virology under the Chinese Academy of Sciences conduct whole-genome sequencing on samples from six patients."], "subsections": []}, {"section_title": "WHO", "paragraphs": ["World Health Organization (WHO) headquarters in Geneva learns of \"a cluster of pneumonia cases in China\" from the ProMED platform. (See \" United States (Brookline, MA) \".) WHO headquarters requests that the WHO China Country Office follow up with Chinese authorities. "], "subsections": []}, {"section_title": "Taiwan and WHO", "paragraphs": ["Taiwan's Centers for Disease Control sends an email to WHO. It reads, \"News resources today indicate that at least seven atypical pneumonia cases were reported in Wuhan, CHINA. Their health authorities replied to the media that the cases were believed not SARS; however the samples are still under examination, and cases have been isolated for treatment. I would greatly appreciate if you have relevant information to share with us.\" Taiwan's Central Epidemic Command Center later notes, \"To be prudent, in the email we took pains to refer to atypical pneumonia, and specifically noted that patients had been isolated for treatment. Public health professionals could discern from this wording that there was a real possibility of human-to-human transmission of the disease.\""], "subsections": []}]}, {"section_title": "January 1, 2020", "paragraphs": [], "subsections": [{"section_title": "China (Wuhan)", "paragraphs": ["Between 5 a.m. and 6 a.m. CST : Wuhan's Jianghan District government suspends operation of the Huanan Seafood Wholesale Market linked to cases of atypical pneumonia. (In addition to selling seafood, the market also sold live wild animals, including hedgehogs, badgers, snakes, and turtledoves. ) Vendors tell the news organization Xin Jing Bao that workers wearing masks have been spraying disinfectant in the market late at night since at least December 30, 2019. ", "Morning CST : A team from China's National Institute for Viral Disease Control and Prevention, part of Beijing-based China CDC, visits the Huanan Seafood Wholesale Market and collects 515 environmental samples, which it sends back to the institute for analysis. CDC experts will return on January 12, 2020, to take 70 more samples from stalls where vendors sold wild animals. Other scientists will later fault the team for not undertaking direct animal sampling in the market before it closed, as without such samples, it may be difficult to determine whether animals at the market were reservoirs for the virus.", "5:38 p.m. CST : The Wuhan Municipal Public Security Bureau announces on its official Weibo social media account that it has investigated eight people for \"spreading rumors.\" The bureau's announcement states that while medical institutions in the city have admitted multiple pneumonia cases, some netizens posted and shared \"inaccurate information\" online, creating a \"negative social influence.\" The eight \"law breakers\" have been \"dealt with,\" the bureau says. It warns others against \"manufacturing rumors, believing rumors, or spreading rumors.\" Chinese Central Television (CCTV), the Xinhua News Agency, and national other news outlets report on the Wuhan Municipal Public Security Bureau's announcement, also warning against spreading rumors. ", "The Hubei Provincial Health Commission reportedly orders genomics companies to stop testing samples from Wuhan and to destroy existing samples."], "subsections": []}, {"section_title": "WHO", "paragraphs": ["Following the protocols of Article 9 of the International Health Regulations (IHR) (2005), an international agreement on responses to infectious disease outbreaks, WHO's China Country Office formally requests that the government of China provide \"verification\" of the outbreak. "], "subsections": []}]}, {"section_title": "January 2, 2020", "paragraphs": [], "subsections": [{"section_title": "China (Wuhan)", "paragraphs": ["At just after 8 a.m. CST, a senior official of Wuhan Central Hospital subjects Dr. Ai Fen to what she later describes as \"an unprecedented and very severe rebuke.\" The official tells her not to speak to anyone, including her husband, about the pneumonia cases. She will comply, but will later express regret about lives lost because she didn't \"keep screaming.\"", "Using samples from patients at Wuhan's Jinyintan Hospital, the Wuhan Institute of Virology identifies the novel coronavirus and sequences its genome."], "subsections": []}, {"section_title": "China (Beijing)", "paragraphs": ["China CDC and the Chinese Academy of Medical Sciences (CAMS) receive biological samples from four patients in Hubei Province and begin work to identify the pathogen responsible for their illnesses."], "subsections": []}]}, {"section_title": "January 3, 2020", "paragraphs": [], "subsections": [{"section_title": "China (Wuhan)", "paragraphs": ["About 1:30 p.m. CST : Wuhan Central Hospital's Dr. Li Wenliang, accompanied by a colleague, arrives at the Wuchang Sub-station of the Wuhan Public Security Bureau to discuss his December 30 posts to the WeChat group. Li is required to sign a letter of reprimand, which he will post online on January 31. The letter states that Li's \"false statement\" \"severely disturbed social order\" and violated the People's Republic of China's Law on Penalties for Administration of Public Security . (Article 25 of the law prohibits \"intentionally disturbing the public order by spreading rumors or making false reports of dangerous situations, epidemic situations, or police actions.\" )", "5:08 pm CST : The Wuhan Municipal Health Commission reports it has identified 44 patients with symptoms consistent with pneumonia of unknown origin, some of whom worked at the Huanan Seafood Wholesale Market and 11 of whom are severely ill. "], "subsections": []}, {"section_title": "China (Shanghai)", "paragraphs": ["Professor Yong-zhen Zhang of the Shanghai Public Health Clinical Center and School of Public Health at Fudan University in Shanghai receives biological samples for analysis from Wuhan Central Hospital. The samples are from a 41-year-old pneumonia patient who worked at the Huanan Seafood Wholesale Market in Wuhan and was admitted to Wuhan Central Hospital on December 26, 2019."], "subsections": []}, {"section_title": "China (Beijing)", "paragraphs": ["China CDC completes genomic sequencing of the novel coronavirus, according to a March 26 paper by China CDC experts and others in the The New England Journal of Medicine . (China's official timeline gives January 7 as the date China CDC completed sequencing of the virus.)", "China's National Health Commission issues a directive on management of biological samples in major infectious disease outbreaks. The directive reportedly \"ordered institutions not to publish any information related to the unknown disease, and ordered labs to transfer any samples they had to designated testing institutions, or to destroy them.\" "], "subsections": []}, {"section_title": "United States and China (Beijing)", "paragraphs": ["U.S. Centers for Disease Control and Prevention (U.S. CDC) Director Robert Redfield emails and then speaks with his Chinese counterpart, Gao Fu (George F. Gao), Director-General of China CDC, who tells him about the atypical pneumonia outbreak in Wuhan. (China later says this is the first of 30 briefings it will provide to the U.S. government through February 3. ) Redfield then calls HHS Secretary Alex M. Azar II at home to brief him on the call. Secretary Azar reportedly tells his chief of staff to notify the White House's National Security Council."], "subsections": []}]}, {"section_title": "January 4, 2020", "paragraphs": [], "subsections": [{"section_title": "WHO", "paragraphs": ["In its first public statement on the outbreak, WHO tweets, \"China has reported to WHO a cluster of pneumonia cases\u00e2\u0080\u0094with no deaths\u00e2\u0080\u0094in Wuhan, Hubei Province. Investigations are underway to identify the cause of this illness.\" The tweet appears to reflect that China has formally verified the outbreak, as the WHO China Country Office requested it do on January 1."], "subsections": []}, {"section_title": "United States and China (Beijing)", "paragraphs": ["The U.S. CDC offers to send technical experts to China. U.S. CDC Director Robert Redfield emails China CDC Director-General Gao Fu, saying, \"I would like to offer [U.S.] CDC technical experts in laboratory and epidemiology of respiratory infectious diseases to assist you and China CDC in identification of this unknown and possibly novel pathogen.\" Neither the United States nor China has disclosed how Gao responds, if at all, but no U.S. CDC team goes to China at this time."], "subsections": []}]}, {"section_title": "January 5, 2020", "paragraphs": [], "subsections": [{"section_title": "China (Wuhan)", "paragraphs": ["The Wuhan Municipal Health Commission announces that it has identified 59 patients with symptoms consistent with pneumonia of unknown origin. It states that a preliminary investigation has uncovered no \"clear evidence of human-to-human transmission\" or infections among medical workers."], "subsections": []}, {"section_title": "China (Shanghai)", "paragraphs": ["The team led by Prof. Yong-zhen Zhang of Fudan University in Shanghai identifies a novel coronavirus and sequences its genome. The team reports its work to Chinese authorities and submits the sequence to GenBank, a genetic sequence database operated by the U.S. National Institutes of Health that serves as \"an annotated collection of all publicly available DNA sequences.\" (China's official timelines omit mention of the team's work, perhaps because it was not coordinated by China's National Health Commission. China's official timelines state that successful sequencing of the genome happened two days later, with China CDC's reported sequencing of the virus on January 7. ) "], "subsections": []}, {"section_title": "WHO", "paragraphs": ["WHO issues its first formal public statement on the outbreak, a \"disease outbreak news\" item. It states, \"On December 31, 2019, the WHO China Country Office was informed of cases of pneumonia of unknown etiology (unknown cause) detected in Wuhan City, Hubei Province of China.\" The statement adds, \"Based on the preliminary information from the Chinese investigation team, no evidence of significant human-to-human transmission and no health care worker infections have been reported.\" WHO says it \"advises against the application of any travel or trade restrictions on China based on the current information available on this event.\""], "subsections": []}]}, {"section_title": "January 6, 2020", "paragraphs": [], "subsections": [{"section_title": "China (Wuhan)", "paragraphs": ["The annual full session of the Wuhan Municipal People's Congress opens. The congress will last five days and occupy 515 of the city's most important citizens, including the city's entire top leadership. While the congress is in session, the Wuhan Municipal Health Commission will issue no updates on the status of the epidemic."], "subsections": []}, {"section_title": "United States", "paragraphs": ["U.S. CDC issues a \"Watch Level 1 Alert (be aware and practice usual precautions)\" for Wuhan, due to \"a pneumonia outbreak of unknown cause.\" It advises travelers to Wuhan to \"Avoid animals (alive or dead), animal markets, and products that come from animals (such as uncooked meat),\" \"Avoid contact with sick people,\" and \"Wash hands often with soap and water.\" It also advises anyone who has traveled to Wuhan and feels sick to isolate at home except for seeking medical care.", "HHS Secretary Azar and CDC Director Robert Redfield renew Redfield's offer to send U.S. CDC experts to China, this time in the form of an official letter. Azar later recalls, \"We made the offer to send the [U.S.] CDC experts in laboratory and epidemiology of respiratory infectious diseases to assist their Chinese colleagues to get to the bottom of key scientific questions like, how transmissible is this disease? What is the severity? What is the incubation period and can there be asymptomatic transmission?\" "], "subsections": []}]}, {"section_title": "January 7, 2020", "paragraphs": [], "subsections": [{"section_title": "China (Wuhan)", "paragraphs": ["A 69-year-old patient undergoes neurosurgery at Wuhan Union Hospital. Four days later, he will develop symptoms that will later be identified as those of the novel coronavirus. Following his admission, he will infect 14 medical workers, making him the virus' first identified \"super-spreader.\" Chinese authorities will not disclose infections among medical personnel until January 20."], "subsections": []}, {"section_title": "China (Beijing)", "paragraphs": ["China's leader, Xi Jinping, convenes an all-day meeting of the country's seven-man Politburo Standing Committee, the country's highest decisionmaking body. Media reports of the meeting at the time do not mention the epidemic. In a February 3 speech made public on February 15, however, Xi states that at the January 7 meeting, he \"raised a demand for prevention and control of the novel coronavirus pneumonia.\"", "9 p . m . CST : A China CDC team reportedly sequences the genome of the novel coronavirus. Chinese state media will announce this on January 9."], "subsections": []}, {"section_title": "China (Shanghai)", "paragraphs": ["The team led by Prof. Yong-zhen Zhang of Fudan University in Shanghai submits an article to the peer-reviewed journal Nature detailing the team's sequencing of the novel coronavirus."], "subsections": []}]}, {"section_title": "January 8, 2020", "paragraphs": [], "subsections": [{"section_title": "China (Hong Kong Special Administrative Region)", "paragraphs": ["In an article with a Hong Kong byline, \"New Virus Discovered by Chinese Scientists Investigating Pneumonia Outbreak,\" The Wall Street Journal is the first major publication to report that Chinese scientists have genetically sequenced a novel coronavirus. The Wall Street Journal says \"Chinese scientists\" sequenced the virus, but it does not identify them or their institutions. "], "subsections": []}, {"section_title": "United States and China (Beijing)", "paragraphs": ["U.S. and Chinese CDC Directors speak by phone about \"technological exchanges and cooperation,\" according to China's official timeline."], "subsections": []}]}, {"section_title": "January 9, 2020", "paragraphs": [], "subsections": [{"section_title": "China (Beijing)", "paragraphs": ["9:45 a.m. CST : The Xinhua news agency publishes an interview in which a prominent medical expert states that the pneumonia cases in Wuhan appear to be caused by a novel coronavirus.", "10:32 a.m. CST: CCTV reports that on January 7, China CDC successfully sequenced the genome of the novel coronavirus responsible for the Wuhan outbreak. "], "subsections": []}, {"section_title": "WHO", "paragraphs": ["WHO issues a statement about the preliminary determination of a novel coronavirus, observing, \"Preliminary identification of a novel virus in a short period of time is a notable achievement.\" It adds, \"WHO does not recommend any specific measures for travelers. WHO advises against the application of any travel or trade restrictions on China based on the information currently available.\""], "subsections": []}]}, {"section_title": "January 10, 2020", "paragraphs": [], "subsections": [{"section_title": "China (Wuhan)", "paragraphs": ["The annual full session of the Wuhan Municipal People's Congress concludes after five days, during which the Wuhan Municipal Health Commission issued no updates on the epidemic. ", "The Wuhan Institute of Virology is among the institutions that have now developed testing kits. All suspected novel coronavirus patients in Wuhan are tested."], "subsections": []}, {"section_title": "WHO and China", "paragraphs": ["Chinese National Health Commission Party Secretary and Director Ma Xiaowei and China CDC Director-General Gao Fu speak separately by telephone with WHO Director General Tedros about the epidemic. According to China's official timeline, the Chinese government shares \"specific primers and probes for detecting the novel coronavirus\" with WHO.", "WHO issues \"Advice for International Travel and Trade in Relation to the Outbreak of Pneumonia Caused by a New Coronavirus in China.\" It recommends against entry screening for travelers, stating, \"It is generally considered that entry screening offers little benefit, while requiring considerable resources.\" Reflecting information from China, it states, \"From the currently available information, preliminary investigation suggests that there is no significant human-to-human transmission, and no infections among health care workers have occurred.\""], "subsections": []}]}, {"section_title": "January 11, 2020", "paragraphs": [], "subsections": [{"section_title": "China (Wuhan)", "paragraphs": ["In its first statement since January 5, the Wuhan Municipal Health Commission states that it has identified no new infections since January 3 and that cases preliminarily attributed to novel coronavirus pneumonia stand at 41\u00e2\u0080\u009418 fewer than the 59 cases of pneumonia of unknown cause the commission reported on January 5. The commission announces the first death of a coronavirus patient, a 61-year-old man who was a long-time customer of the Huanan Seafood Wholesale Market. The commission states again that it has not found evidence of person-to-person transmission or infections among health care workers. "], "subsections": []}, {"section_title": "China (Beijing and Wuhan)", "paragraphs": ["9 :08 a.m. CST : The team led by Prof. Yong-Zhen Zhang of Fudan University in Shanghai becomes the first to share the genomic sequence of the novel coronavirus with the world. Australian virologist Edward C. Holmes tweets that he has posted an \"initial genome sequence of the coronavirus associated with the Wuhan outbreak\" on Virological.org, a hub for pre-publication data and analyses. On Virological.org, Holmes writes that he is acting on behalf of the consortium of scientists led by Prof. Zhang, and that the team has also deposited the sequence with GenBank.", "After the Shanghai team's announcement, China CDC's National Institute for Viral Disease Control and Prevention shares three sequences on Global Initiative on Sharing All Influenza Data (GISAID), an international platform for sharing influenza data. Two other Chinese teams share sequences to GISAID, too."], "subsections": []}, {"section_title": "WHO", "paragraphs": ["WHO tweets, \"BREAKING: WHO has received the genetic sequences for the novel #coronavirus (2019-nCoV) from the Chinese authorities. We expect them to be made publicly available as soon as possible.\" China later says the Chinese institutions that jointly share the genomic sequence with WHO are China CDC, the Chinese Academy of Medical Sciences, and the Wuhan Institute of Virology under the Chinese Academy of Sciences, as designated agencies of the National Health Commission."], "subsections": []}]}, {"section_title": "January 12, 2020", "paragraphs": [], "subsections": [{"section_title": "China (Wuhan)", "paragraphs": ["The annual full session of the People's Congress of Hubei Province opens in Wuhan. It will last five-and-a-half days and involve 683 delegates. Representatives from the U.S. and United Kingdom consulates in Wuhan attend the opening ceremony. While the congress is in session, the Wuhan Municipal Health Commission will issue daily updates, but will report no new infections.", "Dr. Li Wenliang is hospitalized with symptoms of the novel coronavirus. In a January 31 Weibo micro-blog post, he recalls thinking at this time, \"How can the bulletins still be saying there is no human-to-human transmission, and no medical worker infections?\" Chinese authorities do not disclose medical worker infections until January 20.", "A team from China's National Institute for Viral Disease Control and Prevention, part of China CDC, return to the shuttered Huanan Seafood Wholesale Market to collect 70 additional samples from stalls where vendors sold wild animals. China CDC previously collected an initial 515 environmental samples from the market on January 1, 2020."], "subsections": []}, {"section_title": "China (Shanghai)", "paragraphs": ["The Shanghai Health Commission orders Dr. Yong-zhen Zhang's laboratory at the Shanghai Public Health Clinical Centre and School of Public Health at Fudan University to close for unspecified \"rectification.'\" No reason is given. According to Hong Kong's South Morning Post , it is \"not clear whether the closure was related to the publishing of the sequencing data before the authorities.\""], "subsections": []}, {"section_title": "WHO and China", "paragraphs": ["WHO issues a statement noting, \"China shared the genetic sequence of the novel coronavirus on 12 January, which will be of great importance for other countries to use in developing specific diagnostic tests.\" WHO also states, \"The evidence is highly suggestive that the outbreak is associated with exposures in one seafood market in Wuhan. The market was closed on 1 January 2020. At this stage, there is no infection among healthcare workers, and no clear evidence of human to human transmission.\""], "subsections": []}]}, {"section_title": "January 13, 2020", "paragraphs": [], "subsections": [{"section_title": "Taiwan, Hong Kong, Macao, and Wuhan", "paragraphs": ["Two experts from Taiwan's Communicable Disease Control Medical Network and its Centers for Disease Control arrive in Wuhan for a two-day visit to investigate the outbreak. With colleagues from the Chinese Special Administrative Regions of Hong Kong and Macao, they visit Wuhan's Jinyintan Hospital, where an official from China's National Health Commission tells them, \"limited human-to-human transmission cannot be excluded.\" One of the Taiwan experts recalls thinking, \"that means human-to-human transmission absolutely.\""], "subsections": []}, {"section_title": "China (Beijing)", "paragraphs": ["The Communist Party's top decisionmaking body, the Politburo Standing Committee, meets in Beijing to discuss reports to be delivered at upcoming annual full meetings of the national legislature, the National People's Congress, and a political advisory body. (Both meetings will subsequently be postponed due to the epidemic.) Chinese media reports on the meeting do not mention the novel coronavirus."], "subsections": []}, {"section_title": "Thailand", "paragraphs": ["Thai authorities confirm the first case of the coronavirus outside of China. The individual confirmed to have the virus is a Chinese national who traveled to Thailand from Wuhan."], "subsections": []}]}, {"section_title": "January 14, 2020", "paragraphs": [], "subsections": [{"section_title": "WHO", "paragraphs": ["WHO headquarters tweets, \"Preliminary investigations conducted by the Chinese authorities have found no clear evidence of human-to-human transmission of the novel #coronavirus (2019-nCov) identified in #Wuhan, #China.\" ", "Dr. Maria Van Kerkhove, acting head of WHO's emerging diseases unit, tells a press conference in Geneva the same day, \"it is certainly possible that there is limited human-to-human transmission.\""], "subsections": []}]}, {"section_title": "January 15, 2020", "paragraphs": [], "subsections": [{"section_title": "China (Wuhan)", "paragraphs": ["The Wuhan Municipal Health Commission reports no new infections or deaths, stating that the cumulative number of cases in the city has remained steady at 41.", "In a question-and-answer statement dated January 14 but posted to its website on January 15, the Wuhan Municipal Health Commission confirms that the case reported by Thai authorities on January 13 is a resident of Wuhan. The commission also answers the question, \"Up to now, has there been person-to-person transmission?\" The commission answers, \"Existing investigative results indicate no clear evidence of person-to-person transmission. We cannot rule out the possibility of limited person-to-person transmission, but the risk of sustained person-to-person transmission is low.\""], "subsections": []}]}, {"section_title": "January 17, 2020", "paragraphs": [], "subsections": [{"section_title": "China (Wuhan)", "paragraphs": ["The annual full session of the People's Congress of Hubei Province, which opened on January 12, concludes. After the session closes, the Wuhan Municipal Health Commission announces new infections for the first time since January 3. It states that four new infections bring the number of confirmed cases in the city to 45, with two deaths."], "subsections": []}, {"section_title": "China and Burma", "paragraphs": ["Chinese leader Xi Jinping arrives in Burma (also known as Myanmar) at the start of a state visit to celebrate the 70 th anniversary of bilateral diplomatic relations and the \"China-Myanmar Year of Culture and Tourism.\" It is his first overseas trip of the year. Chinese media coverage of his trip does not mention the novel coronavirus."], "subsections": []}, {"section_title": "United States", "paragraphs": ["U.S. CDC and the Department of Homeland Security's U.S. Customs and Border Protection begin health screenings for travelers arriving from Wuhan at three U.S. airports. The airports, identified as receiving the greatest number of travelers from Wuhan, are San Francisco (SFO), New York (JFK), and Los Angeles (LAX)."], "subsections": []}]}, {"section_title": "January 18, 2020", "paragraphs": [], "subsections": [{"section_title": "China (Wuhan)", "paragraphs": ["To celebrate the Lunar New Year, more than 40,000 households in Wuhan's Bubuting neighborhood hold their 20 th annual potluck banquet. Observers later blame the banquet for contributing to the spread of the virus in Wuhan. In a January 22 interview with CCTV, Wuhan Mayor Zhou Xianwang says the decision to go forward with the banquet was \"based on the judgment that in this epidemic, transmission between people was limited.\"", "Evening CST : A six-person National Health Commission high-level expert group led by Dr. Zhong Nanshan, a hero from China's struggle against SARS in 2002-2003, arrives in Wuhan."], "subsections": []}, {"section_title": "China and Burma", "paragraphs": ["Chinese leader Xi Jinping returns to Beijing after a two-day state visit to Burma."], "subsections": []}, {"section_title": "United States", "paragraphs": ["In a telephone call, HHS Secretary Azar briefs President Donald J. Trump about the epidemic for the first time."], "subsections": []}]}, {"section_title": "January 19, 2020", "paragraphs": [], "subsections": [{"section_title": "China (Guangdong Province)", "paragraphs": ["China's National Health Commission confirms the first case of the new coronavirus outside of Hubei Province, in a 66-year-old resident of Shenzhen, Guangdong Province, next to Hong Kong. The patient had traveled to Wuhan on December 29, 2019, developed symptoms on January 3, and returned to Shenzhen on January 4. "], "subsections": []}, {"section_title": "China (Wuhan)", "paragraphs": ["The Wuhan Municipal Health Commission announces that the city's cumulative total of cases is 62, with two deaths.", "The Chinese National Health Commission high-level expert team receives a briefing from the Wuhan Municipal Health Commission and visits the Jinyintan Hospital, where novel coronavirus patients are being treated, and Wuhan CDC. At 5 p.m. CST, the expert team boards a plane for Beijing."], "subsections": []}]}, {"section_title": "January 20, 2020", "paragraphs": [], "subsections": [{"section_title": "China (Wuhan)", "paragraphs": ["The Wuhan Municipal Health Commission announces its cumulative case count is 198, an increase of 136 cases from the day before, with three deaths.", "The city of Wuhan establishes a \"Novel Coronavirus Infection Pneumonia Epidemic Prevention and Control Command Center\" headed by Wuhan Mayor Zhou Xianwang. "], "subsections": []}, {"section_title": "China (Beijing)", "paragraphs": ["8 a.m. to 12 p.m. CST: The National Health Commission high-level expert group led by Dr. Zhong Nanshan briefs China's cabinet, the State Council, on findings from the group's visit to Wuhan the day before.", "5:00 p.m. -7:00 p.m. CST : In a group interview organized by the National Health Commission, the head of the Chinese National Health Commission's High-Level Expert Group, Dr. Zhong Nanshan, publicly confirms for the first time that the novel coronavirus is being transmitted from person to person and that medical personnel have been infected. ", "7:27 p.m. CST : Xinhua News Agency reports that Chinese leader Xi Jinping has issued an \"important instruction\" to prioritize prevention and control work. He tells Communist Party and government bodies at all levels to put people's lives and health \"in first place.\" He also orders \"timely issuance of epidemic information and deepening of international cooperation.\"", "China's National Health Commission classifies the novel coronavirus-caused pneumonia as a Category B statutory notifiable infectious disease under the PRC Law on the Prevention and Treatment of Infectious Diseases . This empowers hospitals to put those with the disease under mandatory isolation or quarantine and allows the government to blockade epidemic areas. The commission also declares the new disease an infectious disease subject to quarantines for the purposes of the PRC Frontier Health and Quarantine Law , allowing authorities to impose quarantines and other measures on travelers entering and exiting China."], "subsections": []}, {"section_title": "WHO and China (Wuhan)", "paragraphs": ["Experts from the WHO China Country Office and WHO's Western Pacific Regional Office arrive in Wuhan for a brief field visit. They visit Wuhan's Tianhe Airport, Zhongnan Hospital, and Hubei Provincial CDC. They will leave the next day."], "subsections": []}]}, {"section_title": "January 21, 2020", "paragraphs": [], "subsections": [{"section_title": "China (Wuhan)", "paragraphs": ["The Wuhan Municipal Health Commission reports that 15 medical personnel in the city have been infected with the novel coronavirus."], "subsections": []}, {"section_title": "China (Guangzhou)", "paragraphs": ["4:00 p.m. CST: At a Guangdong Provincial Government press conference, Dr. Zhong Nanshan, head of the National Health Commission's high-level expert group, discloses that in Wuhan, a single patient infected 14 medical personnel. "], "subsections": []}, {"section_title": "China (Beijing)", "paragraphs": ["People's Daily , the authoritative newspaper of the Communist Party Central Committee, breaks its silence on the novel coronavirus epidemic. Its January 21 issue carries six articles on the epidemic, including two on the front page."], "subsections": []}, {"section_title": "WHO", "paragraphs": ["WHO issues its first situation report on the novel coronavirus. It reports 278 confirmed cases in China and four outside the country."], "subsections": []}, {"section_title": "United States", "paragraphs": ["U.S. CDC confirms the first novel coronavirus case in the United States, in a patient who returned from Wuhan on January 15, 2020."], "subsections": []}]}, {"section_title": "January 22, 2020", "paragraphs": [], "subsections": [{"section_title": "United States", "paragraphs": ["U.S. CDC issues a \"Watch Level 2 Alert (Practice Enhanced Precautions)\" for the pneumonia caused by the novel coronavirus. In addition to advice issued on January 6, U.S. CDC now also advises that older travelers and those with underlying health issues \"should discuss travel to Wuhan with their healthcare provider.\""], "subsections": []}]}, {"section_title": "January 23, 2020", "paragraphs": [], "subsections": [{"section_title": "China (Wuhan)", "paragraphs": ["2 a.m. CST : Wuhan Municipality's Novel Coronavirus Infection Pneumonia Epidemic Prevention and Control Command Center issues its first order. It states, \"From 10 a.m. on January 23, 2020, the entire city's public transportation, subway, ferries, and long-distance travel will be suspended. Without special reasons, city residents must not leave Wuhan. Channels for departing Wuhan from the airport and railway station are temporarily closed.\" "], "subsections": []}, {"section_title": "China (Beijing)", "paragraphs": ["3 :55 p.m. CST: In an \"urgent notice,\" China's Ministry of Transport orders transportation authorities across China to suspend passenger travel into Wuhan by road and waterway, and to bar transportation operators from taking passengers out of Wuhan."], "subsections": []}, {"section_title": "China (Hubei Province)", "paragraphs": ["The epidemic command centers of other cities in Hubei Province start ordering lockdowns.", "9:09 p.m. CST: Hubei Province's epidemic command center suspends all intra-provincial flights, trains, buses, and ferry travel in and out of the city of Wuhan."], "subsections": []}, {"section_title": "China (Zhejiang, Guangdong, and Hunan)", "paragraphs": ["The provinces of Zhejiang, Guangdong, and Hunan are the first to raise their public health emergency response levels to Level I (\"extremely significant\"), the highest of four levels in China's public health emergency management system. The Level I alert makes provincial governments responsible for coordinating emergency measures related to the epidemic undertaken by government, health authorities, medical institutions, centers for disease control and prevention, and border and quarantine authorities."], "subsections": []}, {"section_title": "WHO", "paragraphs": ["A WHO Emergency Committee convened under the International Health Regulations (2005) is unable to reach consensus on whether the outbreak constitutes a Public Health Emergency of International Concern. The committee requests to reconvene in 10 days' time. The 15-member body includes a U.S. citizen, Dr. Martin Cetron of U.S. CDC, and a citizen of China, Wannian Liang of China's National Health Commission."], "subsections": []}, {"section_title": "United States", "paragraphs": ["The State Department orders the mandatory departure of nonemergency U.S. personnel and their family members from the U.S. consulate in Wuhan.", "National Security Adviser Robert O'Brien briefs President Trump for the first time on \"the potential pandemic threat\" of the novel coronavirus."], "subsections": []}]}, {"section_title": "January 24, 2020", "paragraphs": [], "subsections": [{"section_title": "China (Hubei Province)", "paragraphs": ["Hubei Province's newly-established epidemic command center raises the province's public health emergency response level to Level I. Additional cities in the province impose travel and transport restrictions, putting tens of millions of residents under partial lockdown.", "An article published in T he Lancet medical journal raises questions about whether Wuhan's Huanan Seafood Wholesale Market is the source of the virus. The co-authors, including experts from Wuhan's leading infectious disease hospital, report that among the first 41 patients identified in Wuhan, the first patient to show symptoms, on December 1, 2019, had no exposure to the market. Two of the next three patients to show symptoms, all on December 10, also had no exposure to the market."], "subsections": []}, {"section_title": "WHO", "paragraphs": ["WHO updates its advice for international travelers. Whereas on January 10 it advised against entry screening for travelers, it now notes that in the current outbreak \"the majority of exported cases were detected through entry screening.\" It thus \"advises that measures to limit the risk of exportation or importation of the disease should be implemented, without unnecessary restrictions of international traffic.\""], "subsections": []}, {"section_title": "United States", "paragraphs": ["President Trump tweets, \"China has been working very hard to contain the Coronavirus. The United States greatly appreciates their efforts and transparency. It will all work out well. In particular, on behalf of the American People, I want to thank President Xi!\"", "The State Department raises its travel alert for Hubei Province to Level 4 (\"Do not travel\"), its highest alert level, due to the coronavirus outbreak."], "subsections": []}]}, {"section_title": "January 25, 2020", "paragraphs": ["Lunar New Year's Day, also known as Spring Festival."], "subsections": [{"section_title": "China (Beijing)", "paragraphs": ["China's Politburo Standing Committee meets for the third time since January 7. This is the first meeting at which the novel coronavirus is contemporaneously acknowledged to be on the agenda. State media reports the body discusses prevention and control of the outbreak and establishes a high-level working group, known as a central leading group, to oversee control efforts. "], "subsections": []}, {"section_title": "China", "paragraphs": ["By 9 p.m. CST, 30 of mainland China's 31 provincial-level jurisdictions have raised their public health alerts to Level I. The only such jurisdiction not to do so is Tibet, which has not so far identified a suspected or confirmed case of novel coronavirus infection. "], "subsections": []}]}, {"section_title": "January 26, 2020", "paragraphs": [], "subsections": [{"section_title": "China (Wuhan)", "paragraphs": ["China's National Institute for Viral Disease Control and Prevention, part of China CDC, announces it has confirmed the presence of the novel coronavirus in environmental samples collected from Wuhan's Huanan Seafood Wholesale Market earlier in the month. According to Xinhua, 33 of 585 samples from the market test positive. Of these, all but two were collected from an area of the market where wildlife vendors were concentrated. Xinhua says the results indicate \"the virus stems from wild animals on sale at the market.\""], "subsections": []}, {"section_title": "China (Beijing)", "paragraphs": ["The Communist Party of China announces the establishment of the new top-level Party body focused on combating the epidemic, the Central Leading Small Group for Work to Counter the Novel Coronavirus Infection Pneumonia Epidemic. The Party names Premier Li Keqiang, the Communist Party's second-most senior official, to head the body.", "At a press conference in Beijing, a senior official says his ministry is working to divert personal protective equipment (PPE) that Chinese factories make for export\u00e2\u0080\u0094about 50,000 sets a day\u00e2\u0080\u0094to domestic use. Vice Minister Wang Jiangping of the Ministry of Industry and Information Technology presents the challenge as one of tweaking China's standards rules to allow PPE made to European and U.S. standards to be used in China. Wang says China has also begun procuring PPE from abroad, with 220,000 sets of PPE purchased on the international market currently on their way to China."], "subsections": []}]}, {"section_title": "January 27, 2020", "paragraphs": [], "subsections": [{"section_title": "China (Wuhan)", "paragraphs": ["In a nationally televised interview, Wuhan Mayor Zhou Xianwang acknowledges having failed to disclose information \"in a timely manner\" and says China's Law on Prevention and Control of Infectious Diseases restricted Wuhan from sharing information without permission from higher-ups. Zhou also acknowledges that an estimated 5 million people left Wuhan before travel restrictions went into effect.", "Premier Li Keqiang, head of the Communist Party's Leading Group on Prevention and Control of the Novel Coronavirus Epidemic, visits Wuhan and thanks front-line workers."], "subsections": []}, {"section_title": "China (Beijing)", "paragraphs": ["In an effort to reduce the movement of people across the country, China's government extends the Lunar New Year Holiday to February 2, 2020. It had originally been scheduled to last from January 24 to 30. The government will later extend the holiday to February 13, 2020, in Hubei Province."], "subsections": []}, {"section_title": "United States and China (Beijing)", "paragraphs": ["HHS Secretary Azar speaks to the Chinese National Health Commission Director Ma Xiaowei, and repeats his offer to send a U.S. CDC team to China to assist with COVID-19 public health response efforts. Neither side discloses how Minister Ma responds, if at all, but no CDC team goes to China at this time. Weigong Zhou, an employee of U.S. CDC, and Clifford Lane, an employee of the U.S. National Institutes of Health (NIH), will, however, participate in a WHO-China Joint Mission to China from February 16 to 24."], "subsections": []}, {"section_title": "United States", "paragraphs": ["President Trump tweets, \"We are in very close communication with China concerning the virus. Very few cases reported in USA, but strongly on watch. We have offered China and President Xi any help that is necessary. Our experts are extraordinary!\"", "U.S. CDC issues its highest-level travel health notice, Level 3, recommending that travelers avoid all nonessential travel to China. The State Department raises its own travel advisory for all of China to Level 3 of 4, urging U.S. citizens to \"reconsider travel\" to China, while retaining its Level 4 travel advisory for Hubei Province."], "subsections": []}]}, {"section_title": "January 28, 2020", "paragraphs": [], "subsections": [{"section_title": "China (Beijing)", "paragraphs": ["China's Supreme People's Court criticizes Wuhan Public Security Bureau officers for their reprimand of the eight Wuhan citizens accused of spreading rumors about the new disease. \"It might have been a fortunate thing if the public had believed the 'rumors' then and started to wear masks and carry out sanitization measures, and avoid the wild animal market,\" the court posts on its WeChat account."], "subsections": []}, {"section_title": "China (Beijing) and WHO", "paragraphs": ["President Xi Jinping and WHO Director-General Tedros Adhanom Ghebreyesus meet in Beijing. According to WHO, they agree \"that WHO will send international experts to visit China as soon as possible.\" (They will begin their mission to China nearly three weeks later, on February 16.) WHO also requests that China \"share biological material with WHO,\" indicating that China has not yet shared biological samples with WHO. WHO quotes Tedros as saying, \"We appreciate the seriousness with which China is taking this outbreak, especially the commitment from top leadership, and the transparency they have demonstrated, including sharing data and [the] genetic sequence of the virus.\""], "subsections": []}, {"section_title": "WHO", "paragraphs": ["WHO raises its global level risk assessment to \"high,\" one rung below its risk assessment for China, which is \"very high.\""], "subsections": []}]}, {"section_title": "January 29, 2020", "paragraphs": [], "subsections": [{"section_title": "United States and China", "paragraphs": ["A U.S. State Department-organized charter flight leaves Wuhan carrying 195 U.S. government personnel and their family members, private U.S. citizens and their family members, and some third country nationals. The flight will arrive in California the same day. The United States is the first country to evacuate its citizens from Wuhan. The State Department will organize four more evacuation flights from Wuhan before the end of February.", "Secretary of State Michael R. Pompeo speaks by telephone with Yang Jiechi, a member of the Communist Party of China's 25-person Politburo, the country's second highest decisionmaking body. The call is the most senior-level U.S.-China conversation related to the novel coronavirus to date. According to the State Department, Pompeo \"expressed condolences for the Chinese citizens who lost their lives as a result of the coronavirus outbreak.\" He also thanked Yang for assistance in evacuating Americans from Wuhan. According to China's state news agency, Xinhua, \"Pompeo conveyed sympathy for the casualties\" in China and \"expressed appreciation for China's timely response to U.S. concerns after the outbreak of the epidemic.\"", "The State Department authorizes the voluntary departure of nonemergency personnel and family members of U.S. government employees from remaining diplomatic posts in mainland China: the Embassy in Beijing and consulates in the Chinese cities of Chengdu, Guangzhou, Shanghai, and Shenyang."], "subsections": []}]}, {"section_title": "January 30, 2020", "paragraphs": [], "subsections": [{"section_title": "WHO", "paragraphs": ["WHO Director-General Tedros reconvenes the Emergency Committee under the International Health Regulations (2005). The committee advises him that the novel coronavirus outbreak constitutes a \"Public Health Emergency of International Concern\" (PHEIC). Tedros declares the PHEIC. He states, \"Let me be clear: this declaration is not a vote of no confidence in China. On the contrary, WHO continues to have confidence in China's capacity to control the outbreak.\" He also states, \"WHO doesn't recommend limiting trade and movement.\" "], "subsections": []}, {"section_title": "United States", "paragraphs": ["At a campaign rally in Iowa, President Trump states, \"maybe we've never had a better relationship [with China] and we[']re working with them very closely on the Coronavirus. We're working with them very, very closely. We only have five people [infected]. Hopefully everything's going to be great. They have somewhat of a problem, but hopefully it's all going to be great. But, we're working with China just so you know, and other countries very, very closely, so it doesn't get out of hand, but it's something that we have to be very, very careful with, right? We have to be very careful.\"", "The President announces the formation of the President's Coronavirus Task Force, headed by HHS Secretary Azar, with coordination provided by the National Security Council.", "The State Department elevates its travel advisory for all of China to Level 4 (\"do not travel\") and advises Americans in China to \"consider departing using commercial means.\""], "subsections": []}]}, {"section_title": "January 31, 2020", "paragraphs": [], "subsections": [{"section_title": "China", "paragraphs": ["Daily confirmed cases peak in areas of China outside Hubei, with 875 new confirmed cases reported outside the province."], "subsections": []}, {"section_title": "China (Wuhan)", "paragraphs": ["Dr. Li Wenliang posts to social media platform Weibo from his iPhone, recounting the details of his encounter with the law and his struggle with the virus. The next day, Li will share in his last-ever social media post that he has tested positive for the novel coronavirus. Li will die from COVID-19 on February 7, at age 33."], "subsections": []}, {"section_title": "United States", "paragraphs": ["The State Department orders the departure of all under-age-21 family members of U.S. personnel in China.", "President Trump signs Proclamation 9984, effective February 2, suspending entry into the United States of most foreigners who were physically present in mainland China during the preceding 14-day period. The order does not apply to lawful permanent residents, most immediate relatives of U.S. citizens and lawful permanent residents, and some other groups.", "HHS Secretary Azar declares a public health emergency for the United States \"to aid the nation's healthcare community in responding to 2019 novel coronavirus.\" He also announces that beginning February 2, all U.S. citizens returning to the United States who have been in Hubei Province in the previous 14 days will be subject to up to 14 days of mandatory quarantine. Azar states, \"The United States appreciates China's efforts and coordination with public health officials across the globe and continues to encourage the highest levels of transparency.\""], "subsections": []}, {"section_title": "WHO", "paragraphs": ["WHO's daily situation report reports a cumulative tally of 9,748 confirmed cases in mainland China and 78 cases in the rest of the world."], "subsections": [{"section_title": "Appendix. Concise Timeline of COVID-19 and China (December 2019 to January 2020)", "paragraphs": ["First identified in Wuhan, China, in December 2019, coronavirus disease 2019 (COVID-19) is now a global pandemic. The timeline below includes key developments in the responses of China, the World Health Organization (WHO), and the United States through January 31, 2020, the day U.S. Department of Health and Human Services (HHS) Secretary Alex M. Azar II declared the pandemic had become a public health emergency for the United States.", "Late December: Hospitals in Wuhan, China identify cases of pneumonia of unknown origin.", "December 30: The Wuhan Municipal Health Commission issues \"urgent notices\" to city hospitals about cases of atypical pneumonia linked to the city's Huanan Seafood Wholesale Market. The notices leak online. | Wuhan medical workers, including ophthalmologist Li Wenliang, trade messages about the cases in online chat groups.", "December 31: Chinese media outlets confirm the authenticity of the official \"urgent notices\" that spread online overnight and publish reports about the outbreak. A machine translation of one such media report is posted to ProMED, a U.S.-based open-access platform for early intelligence about infectious disease outbreaks. WHO headquarters in Geneva sees the ProMED post. Following protocols established in International Health Regulations (IHR) (2005), an international health agreement, WHO headquarters instructs the WHO China Country Office to request verification of the outbreak from China's government. | The Wuhan Municipal Health Commission issues its first public statement on the outbreak, saying it has identified 27 cases.", "January 1: WHO's China Country Office requests China verify the outbreak. | Wuhan authorities shut down the city's Huanan Seafood Wholesale Market. A Chinese Center for Disease Control and Prevention (China CDC) team collects environmental samples from the closed market for analysis. | Wuhan's Public Security Bureau announces it has investigated eight people for \"spreading rumors\" about the outbreak.", "January 3: Dr. Li Wenliang is summoned to a local police station, where he is reprimanded for spreading allegedly false statements about the outbreak online. | China CDC Director-General Gao Fu (George F. Gao) tells U.S. Centers for Disease Control and Prevention (U.S. CDC) Director Robert Redfield about a respiratory illness spreading in Wuhan.", "January 4: In its first public statement on the outbreak, WHO tweets, \"China has reported to WHO a cluster of pneumonia cases\u00e2\u0080\u0094with no deaths\u00e2\u0080\u0094in Wuhan, Hubei Province.\" The tweet appears to confirm China's government has verified the outbreak to WHO under IHR (2005).", "January 5: A team led by Prof. Yong-zhen Zhang of Fudan University in Shanghai sequences the novel coronavirus' genome and deposits it in the U.S. National Institutes of Health's GenBank database of publicly available DNA sequences.", "January 6: Department of Health and Human Services (HHS) Secretary Alex M. Azar II and U.S. CDC Director Redfield offer to send U.S. CDC experts to China. | U.S. CDC issues a \"Watch Level 1 Alert\" for Wuhan due to \"a pneumonia outbreak of unknown cause\" and advises travelers to Wuhan to avoid animals, animal markets, and animal products.", "January 7: China CDC reportedly sequences the genome of the novel coronavirus.", "January 11 : Prof. Yong-zhen Zhang's team posts the genetic sequence of the virus on open-access platform Virological.org, becoming the first to share it with the world. | China CDC and two other teams post additional genetic sequences of the virus on Global Initiative on Sharing All Influenza Data (GISAID), another open-access platform. | China shares the virus' genomic sequence with WHO. | WHO issues guidance for international travel, recommending against entry screening for travelers.", "January 12: Dr. Li Wenliang is hospitalized with symptoms of the novel coronavirus. He will die from the disease on February 7.", "January 13: Thai authorities announce the first case of the novel coronavirus outside China. | Experts from Taiwan and the Chinese Special Administration Regions of Hong Kong and Macao visit Wuhan. A National Health Commission official tells them \"limited human-to-human transmission cannot be excluded.\"", "January 14: WHO headquarters tweets, \"Preliminary investigations conducted by the Chinese authorities have found no clear evidence of human-to-human transmission.\" The acting head of WHO's emerging diseases unit tells a press conference in Geneva, \"it is certainly possible that there is limited human-to-human transmission.\" ", "January 17: The Wuhan Municipal Health Commission states cases in the city stand at 45, with two deaths. | U.S. CDC and the U.S. Customs and Border Protection begin health screenings for travelers arriving from Wuhan at three U.S. airports.", "January 18: In a telephone call, HHS Secretary Azar briefs President Trump about the epidemic for the first time.", "January 20: The head of a high-level Chinese National Health Commission expert team, Dr. Zhong Nanshan, confirms person-to-person transmission of the novel coronavirus and infections among medical workers. | Wuhan establishes an epidemic prevention and control command center. | China declares the disease caused by the novel coronavirus a statutory notifiable infectious disease under the PRC Law on the Prevention and Treatment of Infectious Diseases and an infectious disease for the purposes of the PRC Health and Quarantine Law , opening the way for mandatory quarantines and lock downs. | Communist Party General Secretary Xi Jinping issues an \"important instruction\" to prioritize epidemic prevention and control work and orders \"timely issuance of epidemic information and deepening of international cooperation.\" | Experts from WHO's China Country Office and its Western Pacific Regional Office arrive in Wuhan for an overnight visit.", "January 21: WHO issues its first situation report on the novel coronavirus. | U.S. CDC confirms the first novel coronavirus case in the United States, in a patient who returned from Wuhan on January 15, 2020.", "January 23: At 2 a.m. CST, Wuhan's new epidemic command center issues its first order, suspending public transportation and barring residents from leaving the city, effective at 10 a.m. | Provinces around China begin raising their public health alerts to Level I (\"extremely significant\"), making provincial governments responsible for coordinating emergency measures related to the epidemic. | An Emergency Committee convened by WHO under IHR (2005) does not reach consensus on whether the outbreak constitutes a Public Health Emergency of International Concern. | The U.S. State Department orders the mandatory departure of nonemergency U.S. personnel and their families from the U.S. Consulate in Wuhan. | National Security Adviser Robert O'Brien briefs President Donald J. Trump for the first time on \"the potential pandemic threat\" of the novel coronavirus.", "January 24: Additional cities in Hubei Province impose travel and transport restrictions, putting much of the province of 59 million under partial lockdowns. | WHO updates its advice for international travelers to advise measures to limit the risk of importing the disease, including entry screening. | President Trump tweets, \"China has been working very hard to contain the Coronavirus. The United States greatly appreciates their efforts and transparency.\"", "January 25: China's most senior decisionmaking body, the seven-man Communist Party Politburo Standing Committee, meets for the third time since January 7. For the first time, the novel coronavirus is contemporaneously acknowledged to be on the agenda. | All but one of mainland China's 31 provincial-level jurisdictions have by now raised their public health alerts to Level I.", "January 26: China CDC announces it has identified the novel coronavirus in samples collected from Wuhan's Huanan Seafood Wholesale Market earlier in the month. State media suggest this indicates the virus came from wild animals sold at the market. | At a press conference in Beijing, a Vice Minister of Industry and Information Technology says he is working to make personal protective equipment (PPE) manufactured for export available for domestic use. ", "January 27: Premier Li Keqiang, head of a new Communist Party body on prevention and control of the epidemic, visits Wuhan. He is the first member of the Politburo Standing Committee to visit. | HHS Secretary Azar speaks to China's Minister of Health and repeats his offer to send a U.S. CDC team to China. | President Trump tweets, \"We have offered China and President Xi any help that is necessary.\"", "January 28: Chinese leader Xi Jinping and WHO Director-General Tedros Adhanom Ghebreyesus meet in Beijing. Xi agrees to accept a visit from a WHO international expert team. (The mission will begin February 16.) WHO requests that China \"share biological material with WHO,\" indicating China has not so far done so. | WHO raises its global level risk assessment to \"high,\" one rung below its risk assessment for China, which is \"very high.\" | China's Supreme People's Court criticizes the Wuhan Public Security Bureau for its reprimand of the eight Wuhan citizens accused of spreading rumors about the new disease.", "January 29: A U.S. State Department-organized charter flight carrying U.S. government personnel, their families, and private U.S. citizens evacuated from Wuhan arrives in California. | Secretary of State Michael R. Pompeo speaks by telephone with Yang Jiechi, a member of China's second highest decisionmaking body, the Communist Party's 25-person Politburo. The call is the highest-level U.S.-China conversation related to the novel coronavirus to date. Pompeo expresses condolences for Chinese lives lost in the outbreak and thanks Yang for China's assistance in evacuating the Americans from Wuhan.", "January 30: WHO Director-General Tedros declares the epidemic a Public Health Emergency of International Concern. | President Trump states, \"maybe we've never had a better relationship\" with China, and says the two countries are working together \"very closely\" to respond to the epidemic. | The President announces the formation of the President's Coronavirus Task Force, headed by HHS Secretary Azar, with coordination provided by the National Security Council. | The State Department elevates its travel advisory for all of China to Level 4 (\"do not travel\") and advises Americans in China to \"consider departing using commercial means.\"", "January 31: President Trump signs Proclamation 9984, suspending entry into the United States of most foreigners who were physically present in mainland China during the preceding 14-day period, effective February 2. | HHS Secretary Azar declares a public health emergency for the United States \"to aid the nation's healthcare community in responding to 2019 novel coronavirus.\" He also announces that beginning February 2, all U.S. citizens returning to the United States who have been in Hubei Province in the previous 14 days will be subject to up to 14 days of mandatory quarantine. | WHO's daily situation report reports a cumulative total of 9,748 confirmed cases in mainland China and 78 cases in the rest of the world."], "subsections": []}]}]}]}]}}
{"id": "R45791", "title": "Poverty Among Americans Aged 65 and Older", "released_date": "2019-07-01T00:00:00", "summary": ["The poverty rate among Americans aged 65 and older has declined by almost 70% in the past five decades. In 2017, approximately 9.2% of Americans aged 65 and older had income below the poverty thresholds. However, the number of aged poor has increased since the mid-1970s as the total number of elderly has grown. In 2017, 4.7 million people aged 65 and older lived in poverty.", "The poverty rate for Americans aged 65 and older historically was higher than the rates for younger groups, but the aged have experienced lower poverty rates than children under age 18 since 1974 and lower rates than adults aged 18 to 64 since the early 1990s. In 2017, the 9.2% poverty rate among Americans aged 65 and older was lower than the 11.2% poverty rate among adults aged 18 to 64 and the 17.5% poverty rate among children under 18 years old.", "Although the poverty rate has generally declined for older Americans in most demographic groups, certain aged people still live in poverty. For example,", "People aged 80 and older have a higher poverty rate than other elderly Americans. In 2017, approximately 11.6% of people aged 80 and older lived in poverty, compared with poverty rates of 9.3% among individuals aged 75-79, 8.6% among those aged 70-74, and 7.9% among those aged 65-69. Women aged 80 and older had the highest poverty rate among elderly women and men in all age groups, at 13.5% in 2017 for women aged 80 and older, and 18.6% for those living alone. Americans aged 65 and older who were married and living together with spouses at the time of the survey generally had a lower poverty rate than those who were not married. Among women aged 65 and older, about 4.3% of married women had total incomes below the official poverty threshold in 2017, compared with 13.9% of widows, 15.8% of divorced women, and 21.5% of never-married women. Among individuals aged 65 and older, poverty rates were also high among never-married men, at 22.5% in 2017. Poverty rates vary by race and Hispanic origin. Hispanic origin is distinct from race, and people may identify with one or more races. From 1975 to 2017, the poverty rate for Americans aged 65 and older has decreased for those identifying as non-Hispanic white alone, black alone, and Hispanic. In 2017, the poverty rate was lowest among the non-Hispanic white population (5.8% for men and 8.0% for women) and highest among those identifying as black or African American (16.1% for men and 21.5% for women).", "The official poverty measure is defined using cash income only, before taxes, and was computed based on food consumption in 1955 and food costs in 1961, indexed to inflation. That definition prevents the official measure from gauging the effects of noncash benefits, taxes, or tax credits on the low-income population, and it does not consider how certain other costs, such as housing or medical expenses, might affect them as well. After decades of research, the Supplemental Poverty Measure (SPM) was developed to address some of the official poverty measure's limitations. The SPM poverty rate for the aged population is higher than the official poverty rate (14.1% compared with 9.2% in 2017). This higher poverty rate results largely from higher medical out-of-pocket costs among the aged.", "Social Security and Supplemental Security Income (SSI) are the main federally funded programs that provide cash benefits to the aged poor; they accounted for almost 90% of total money income received by Americans aged 65 and older whose incomes were below the poverty thresholds in 2017. The federal government also provides certain noncash benefits to help the elderly poor, such as housing subsidies and Supplemental Nutrition Assistance Program (SNAP). The SPM poverty rate among individuals aged 65 and older would increase by more than 34 percentage points if Social Security benefits were excluded from their income resources, holding other economic behaviors constant. Among the other resources, eliminating SSI, housing subsidies, or SNAP from income would each increase the SPM poverty rate by about one percentage point."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["The poverty rate among Americans aged 65 and older has declined by almost 70% in the past five decades. In 2017, 4.7 million people aged 65 and older had income below the federal poverty thresholds. The poverty rate (i.e., the percentage who were in poverty) among the aged fell from 28.5% in 1966 to 9.2% in 2017.", "Several government programs have contributed to older Americans' increased incomes, including Old Age, Survivor and Disability Insurance (OASDI, commonly known as Social Security) and Supplemental Security Income (SSI). However, certain groups of older Americans, such as widows, divorced women, and never married men and women, are still vulnerable to poverty. Congress may be interested in the effect of existing programs that reduce poverty, as well as potential proposals aimed at improving income among vulnerable groups of older Americans.", "This report presents the time trends and current status of poverty rates among Americans aged 65 and older, as well as poverty rates among different demographic groups of the aged. This report also summarizes federal programs that may provide income to the aged poor.", "Over the past several decades, criticisms of the official poverty measure have led to the development of an alternative research measure called the Supplemental Poverty Measure (SPM), which the Census Bureau also computes and releases. This report compares the official aged poverty measure with the SPM and provides statistics measuring the impact of federal cash benefits (mainly Social Security and SSI), taxes, and in-kind benefits (such as housing, energy, and food assistance) on aged poverty. "], "subsections": []}, {"section_title": "How the Official Poverty Measure Is Computed", "paragraphs": ["Poverty status is determined by comparing a measure of a family's resources against a measure of its needs. Families whose resources are less than a dollar amount representing an austere level of \"needs\" are considered to be in poverty. However, defining resources and needs is not straightforward. The official poverty measure is based on 48 dollar amounts called poverty thresholds that vary by family size and composition, but not by geographic area. These official thresholds were developed in the 1960s, were based on food consumption in 1955 and food costs in 1961, and are updated annually for inflation. As such, they reflect a level of deprivation based on a restrictive food budget, but are not based on a full measurement of families' and individuals' needs and their associated costs. Family resources are measured in dollars and are based on cash income before taxes. All poverty data presented in this report are estimates based on a survey, and like all survey estimates, they are subject to sampling and nonsampling error.", "The poverty research community has discussed the official poverty measure's limitations for decades. Its use of pretax income renders it unhelpful in gauging tax credits' effects on the low-income population. It does not consider in-kind (noncash) benefits, such as housing subsidies as income, and as a result cannot (on its own) illustrate such benefits' effects on the poor population. Although the measure of need represented by the thresholds is updated every year for overall inflation, it may not accurately reflect the current costs of basic needs, because prices for goods and services related to basic needs may not rise at the same rate as prices for luxury items. Since the official measure's initial development, new data sources have offered more detail on the goods and services families consume, but developing an approach that defines basic needs and determines available resources for families to spend on those needs has taken decades of research and discussion. The SPM resulted from that research, and is described briefly in the section, \" The Supplemental Poverty Measure .\"", "Notwithstanding the official measure's limitations, for more than 50 years, it has provided a consistent measure of poverty in the United States, with few methodological changes over that time, and it is based on empirical measures of need (food budgets and food consumption, albeit in 1961 and 1955, respectively) . For these reasons, trends for the aged population based on the official measure are discussed below."], "subsections": []}, {"section_title": "Poverty Status of the Aged", "paragraphs": ["The proportion of Americans aged 65 and older who lived in poverty has declined significantly in the past 50 years. In 1966, 28.5% of Americans aged 65 and older had family incomes below the poverty thresholds. By 2017, the poverty rate among older Americans had dropped to 9.2% (see Figure 1 ). However, whereas the proportion of persons aged 65 and older who live in poverty has fallen over the past five decades, the number of aged poor has increased since the mid-1970s as the total number of elderly people has grown. In 1974, 3.1 million people aged 65 and older had income below the federal poverty thresholds, whereas in 2017, 4.7 million people aged 65 and older had income below the thresholds. ", "The poverty rate for Americans aged 65 and older historically was higher than the rates for adults aged 18 to 64 and children under the age of 18, but today it is the lowest among those three age groups. In 1966, the poverty rate among persons aged 65 and older was 28.5%, compared with 10.5% among adults aged 18 to 64 and 17.6% among children under the age of 18. In 1974, the aged poverty rate fell below the rate among children under the age of 18, and by the early 1990s, the aged poverty rate had fallen below the rate among adults aged 18 to 64. The elderly poverty rate has remained lower than the nonelderly adult poverty rate since that time. The poverty rate among Americans aged 65 and older was 9.2% in 2017, which was lower than the 11.2% poverty rate among adults aged 18 to 64 and the 17.5% poverty rate among children under 18 years old (see Figure 2 )."], "subsections": []}, {"section_title": "Poverty Among the Aged by Demographic Characteristics", "paragraphs": ["Poverty status among Americans aged 65 and older generally varies across different demographic groups. This section describes the aged population's poverty status for selected demographic characteristics based on age groups, gender, marital status, and race and Hispanic origin. "], "subsections": [{"section_title": "Age", "paragraphs": ["People aged 80 and older have a higher poverty rate than older Americans under the age of 80. Figure 3 displays the percentage of Americans aged 65 and older who were in poverty by age groups from 1975 to 2017. In 1975, the poverty rate among individuals who were in the oldest age group (80 and older) was 21.5%, compared with 16.4% among Americans aged 75-79, 14.4% among those aged 70-74, and 12.5% among those aged 65-69. Poverty rates declined over the past 40 years, and in 2017, approximately 11.6% of people aged 80 and older lived in poverty (a 10 percentage-point reduction from 1975), but the share was still higher than the 9.3% poverty rate among individuals aged 75-79, 8.6% among those aged 70-74, and 7.9% among those aged 65-69. Individuals aged 80 and older might be more vulnerable to income risks because they are more likely to have lower or no earnings (as they phase out of the labor force), exhaust existing retirement resources, have reduced purchasing power in certain defined benefit pensions, and incur higher medical expenses. ", "Women aged 80 and older had the highest poverty rate among elderly women and men in all age groups (see Figure 4 ). In 1975, the poverty rate among women aged 80 and older was 25.1%, compared with 15.2% among men in the same age group and 14.9% among women aged 65-69. In 2017, the poverty rate of women aged 80 and older declined to 13.5%, compared with 8.7% among men in the same age group and 8.6% among women aged 65-69.", "Poverty status among individuals aged 80 and older varies depending on whether the person is living with other family members. Poverty rates for those living with other family members in 2017 were less than half the rates for those living alone. In 2017, the poverty rate for men aged 80 and older was 6.3% if they lived with other family members, and 15.5% if they lived alone (see Figure 5 ). In the same year, the poverty rate for women aged 80 and older was about 8.2% if they lived with other family members and 18.6% if they lived alone. "], "subsections": []}, {"section_title": "Marital Status", "paragraphs": ["Americans aged 65 and older who were married and living together at the time of the survey generally had a lower poverty rate than those who were not married (see Figure 6 ). In 1975, about 53.0% of individuals aged 65 and older were married and living together, and this percentage was slightly higher at 56.8% in 2017. Approximately 8.2% of married Americans aged 65 and older and living together had family incomes below the federal poverty threshold in 1975, and this rate declined to 4.4% in 2017. During the same period, the poverty rate among aged nonmarried Americans decreased from 23.4% to 15.5%.", " Figure 7 shows the poverty rate in 2017 by gender and marital status at the survey time. Married couples generally have significantly lower poverty rates than nonmarried individuals, and widowed and divorced women aged 65 or older are more likely to be in poverty than their male counterparts. Among women aged 65 and older, about 4.3% of married women had total incomes below the official poverty threshold in 2017, compared with 13.9% of widows, 15.8% of divorced women, and 21.5% of never-married women. In contrast with the widowed and divorced men in this age group, who are less likely to be poor than widowed and divorced women, poverty rates are also high among never-married men, at a rate of 22.5% in 2017.", "In 2017, roughly 10% of individuals aged 65 and older lived in families with children under 18 years old. Poverty rates among aged men and women varied by the presence of children in the family (see Figure 8 ), although not always in the same direction. Among married men and women, a relatively higher share of those with children lived in poverty (8.0% for men and 7.5% for women) than those without any child (4.2% for men and 4.1% for women). Similarly, among never-married individuals, those with children also had higher poverty rates (25.4% for men and 22.7% for women) than those without children (22.4% for men and 21.4% for women). However, while widows and divorced women with children had higher poverty rates (14.8% and 17.9%, respectively) than those without children (13.8% and 15.6%, respectively), among men the pattern was reversed: 8.1% of widowers with children and 7.9% of divorced men with children were in poverty, lower than their childless counterparts (10.1% and 13.2%, respectively)."], "subsections": []}, {"section_title": "Race and Hispanic Origin18", "paragraphs": ["Poverty rates vary by race and Hispanic origin, as shown in Figure 9 . In surveys, Hispanic origin is asked separately from race; accordingly, persons identifying as Hispanic may be of any race. The poverty rate for Americans aged 65 and older has decreased among persons identifying as black or African American alone, non-Hispanic white alone, and Hispanic from 1975 to 2017. Among aged African Americans, the poverty rate decreased from 36.3% in 1975 to 19.3% in 2017; among the aged non-Hispanic white population, from 13.0% to 7.0%; and among the aged Hispanic population, from 27.7% to 17.0%. During the period for which data are available, the poverty rate for the aged Asian population ranged between 10.0% and 16.0% with no consistent directional trend. ", "As shown in Figure 10 , among the racial and Hispanic origin groups, in 2017, the poverty rate was lowest among the aged non-Hispanic white population (5.8% for men and 8.0% for women) and highest among the aged black population (16.1% for men and 21.5% for women)."], "subsections": []}]}, {"section_title": "Federal Programs for the Aged Poor", "paragraphs": ["Social Security and Supplemental Security Income (SSI) are the two main federal programs that provide cash benefits to the aged poor. In 2017, Social Security accounted for 78.3% of total money income among aged individuals whose family incomes were below 100% of the poverty threshold and 81.3% among those with family incomes below 125% of the poverty threshold (see Table 1 ). In the same year, SSI and other cash public assistance accounted for 11.0% of the total money income for aged individuals whose family incomes were below 100% of the poverty threshold and 7.6% for those with family incomes below 125% of the poverty threshold. ", "Social Security is a federal social insurance program that provides benefits to insured workers and their eligible family members, provided the workers worked in jobs covered by Social Security for a sufficient number of years and meet certain other criteria. Social Security is not designed solely for the poor, but benefits are weighted to replace a greater share of career-average earnings for low-paid workers than for high-paid workers. One study suggests that increased Social Security benefits explained most of the decline in poverty among the aged that occurred during 1967 to 2000 (see Figure 1 ).", "Social Security benefits alone, however, would not be sufficient to eliminate poverty for a large number of older Americans. The poverty rate among Social Security beneficiaries aged 65 and older was 6.5% in 2017. Although the Social Security program contains a special minimum benefit provision that increases benefits to workers who have many years of low earnings and meet certain other criteria, this provision has virtually no effect on the benefits paid to today's new retirees. According to the Census Bureau's analysis, 30.0% of Americans aged 65 and older would live in poverty without Social Security benefits, holding other resources and expenses constant. ", "SSI is a federal assistance program that provides monthly cash benefits to aged, blind, and disabled individuals who have limited income and assets. The program is intended to provide a minimum level of income to adults who have difficulty meeting their basic living expenses due to age or disability and who have little or no Social Security or other income. Some studies show that the SSI program does not provide effective income protection for the oldest Americans. For example, the maximum SSI benefit in 2017 was 75% of the poverty threshold for an elderly single person and 89% of the poverty threshold for an elderly married couple. Thus, aged SSI recipients may still be impoverished. Furthermore, the maximum SSI benefit is more generous for married couples, who are less likely to need assistance than elderly single individuals. Some researchers also suggest that restructuring the Social Security special minimum benefit provision could be more effective in alleviating poverty than making certain reforms to the SSI program, although a combination of reforms to both programs could be useful if regular Social Security benefits are greatly reduced in the future.", "The federal government also provides certain noncash benefits to help the elderly poor, such as housing subsidies and Supplemental Nutrition Assistance Program (SNAP) benefits. Congress funds housing subsidy programs, ranging from public housing to government subsidies to renters, to help poor and vulnerable populations meet their housing needs. SNAP is designed primarily to increase the food purchasing power of eligible low-income households to help them buy a nutritionally adequate low-cost diet. ", "Individuals aged 65 and older may also receive a small portion of income from some other federal programs, including refundable tax credits, school meals, Temporary Assistance for Needy Families (TANF), the Low Income Home Energy Assistance Program (LIHEAP), unemployment insurance, workers' compensation, and the Special Supplemental Nutrition Program for Women, Infants and Children (WIC). The official poverty measure is of limited value for analyzing various federal programs' effects on poverty status among the aged population, but the Supplemental Poverty Measure (SPM), discussed in the following section, addresses some of those impacts."], "subsections": []}, {"section_title": "The Supplemental Poverty Measure", "paragraphs": ["The official poverty measure was developed in the 1960s and was established by the Bureau of the Budget (later the Office of Management and Budget, OMB) for measuring the official poverty rate in the United States. Under the official poverty measure, an individual is counted as poor if his or her family's pretax money income falls below the poverty threshold. One of the main criticisms of the official poverty measure is that pretax money income excludes the value of government noncash benefits (such as health insurance, SNAP, or housing assistance) provided either privately or publicly. It also does not consider taxes paid to federal, state, or local governments, or tax benefits (such as the Earned Income Tax Credit) that families might receive.", "The Census Bureau's SPM was designed to address the official poverty measure's limitations and has been published since 2011. The SPM poverty thresholds measure a standard of living based on expenditures for food, clothing, shelter, and utilities (FCSU) and \"a little more\" for other expenses. Its thresholds\u00e2\u0080\u0094dollar amounts related to the level of need for a family\u00e2\u0080\u0094vary by whether the family rents, owns a home with a mortgage, or owns a home without a mortgage (the latter of which is more common among the aged population than it is among younger populations). It computes the amount of resources available after taxes, includes the values of noncash benefits, and subtracts some expenses (such as work-related expenses and medical out-of-pocket expenses, the latter of which tend to be higher among the aged than among younger populations). ", "In 2017, the most recent data available, the SPM poverty rate for persons aged 65 and older was 14.1% in 2017, compared with 9.2% using the official poverty measure. This higher poverty rate results largely from higher medical out-of-pocket costs among the aged, in spite of lower housing expenses among the aged, who are more likely to have paid off their mortgages."], "subsections": [{"section_title": "Income Sources' Impact on Poverty of the Aged Per the SPM", "paragraphs": ["The data presented in Figure 11 illustrate how changing the definition of the SPM to exclude a particular resource or expenditure can affect the SPM poverty rate among Americans aged 65 and older. The data do not consider the behavioral effects that may occur if the resource or cost were to be eliminated in reality.", "Social Security has the greatest effect, by far, on the poverty status of the aged population. Removing Social Security as a resource while holding the other resources and expenditures constant would increase the SPM aged poverty rate by more than 34.6%. Among the other resources, SSI, housing subsidies, and SNAP had the next-largest impacts on the SPM poverty rate, but were a full order of magnitude smaller (around a single percentage point instead of tens of percentage points). The remaining resources affected the SPM poverty rate by much less than one percentage point. Three of the resources shown are related to child rearing (child support, school lunch, and WIC), and tax credits are often targeted to families with children. Households headed by people aged 65 and older are less likely than nonelderly households to have children present in the family.", "Among the expenses considered in the SPM but not considered in the official measure, medical out-of-pocket costs had the largest effect: deducting those costs from family income raised the SPM poverty rate by 5.4%. Given that the aged population tends to have greater medical need and higher out-of-pocket health care costs than younger populations, it is perhaps not surprising that medical costs had a larger effect than the other costs shown in the figure. The remaining costs were largely related to work, and, congruent with the aged population's lower likelihood to be working compared with younger populations, these costs affected the aged population's SPM poverty rate by less than one percentage point."], "subsections": []}]}, {"section_title": "Additional Considerations", "paragraphs": [], "subsections": [{"section_title": "Poverty Not Measured for Certain Populations", "paragraphs": ["Approximately 1.2 million persons in nursing homes are aged 65 or older. Poverty status is not measured for the institutionalized population, which includes persons in nursing homes, prisons, or military personnel living on base. This exclusion is not trivial considering that the population in nursing homes is about one-fourth as large as the 4.7 million persons aged 65 or older who were in poverty in 2017. "], "subsections": []}, {"section_title": "Health Status Not Directly Included in Poverty Measures", "paragraphs": ["Poverty is used as a measure of well-being, but it measures only economic well-being and does not directly include a person's health status. Health status may influence the amount and types of income a person receives (by affecting, for example, ability to work or receive disability benefits) and is thus considered indirectly. However, the noneconomic aspect of well-being that comes from good health is not considered in the poverty measures discussed in this report. Furthermore, in the SPM, medical out-of-pocket expenses are considered, but the overall value of health insurance programs to the individual, which may well exceed out-of-pocket costs for medical care or insurance premiums, is not. Considering that Medicaid is an important vehicle for long-term care, the benefits Medicaid provides to the aged population could be characterized as fulfilling needs that are not solely medical in nature, but have economic value as well. "], "subsections": []}]}]}}
{"id": "R46277", "title": "Federal Assistance to Troubled Industries: Selected Examples", "released_date": "2020-03-19T00:00:00", "summary": ["Serious disruptions for certain industries caused by the COVID-19 (coronavirus) pandemic have led to calls for federal government assistance to affected industries. Direct federal financial assistance to the private sector on a large scale is unusual, except for geographically narrow assistance following natural disasters. Nonetheless, assistance to business sectors affected by COVID-19 would not be the first occasion on which the federal government has aided troubled or financially distressed industries. Historically, aid\u00e2\u0080\u0094sometimes popularly referred to as \"government bailouts\"\u00e2\u0080\u0094has taken many forms and has occurred under a wide variety of circumstances. Past assistance has involved such instruments as loan guarantees, asset purchases, capital injections, direct loans, and regulatory changes, with the specific mix of policies varying significantly from case to case. These differences make it somewhat subjective as to what should be defined as a \"bailout.\"", "To help inform congressional debate, this report examines selected past instances in which the government has aided troubled industries, providing information about the way in which such assistance was structured, the role of Congress, and the eventual cost. In order to provide greater detail, the examples all involve cases in which federal assistance was (1) widely available to firms within an industry rather than being targeted to a particular firm; (2) extraordinary in nature rather than a type of assistance that is routinely provided; and (3) motivated primarily by a desire to prevent industry-wide business failures. The coverage is not exhaustive, and excludes cases in which assistance was targeted at individual firms rather than at entire industries. In some of these cases, the government was able to recoup much or all of its assistance through fees, interest, warrants, and loan or principal repayments. In others, there were no arrangements made for recoupment or repayment. The episodes considered include the following:", "Railroad Restructuring (1957-1987) Farm Credit System Crisis (1980s) Savings and Loan Crisis (1980s-1990s) Airline Industry (2001-2014) Auto Industry (2008-2014) Troubled Asset Relief Program (TARP) Bank Support (2008-present) Money Market Mutual Fund Guarantee (2008-2009) Agricultural Trade-Aid (2018-2019)", "Assessing extraordinary assistance can be difficult as particular episodes may play out over decades and full data about assistance may be difficult to collect and analyze. Congress has sometimes included particular oversight and reporting requirements in statutes authorizing aid. In addition, there are broader policy concerns raised by government assistance that may be impossible to quantify and do not get captured in tallies of the government's income and expenses.", "Possible benefits of assistance may include avoiding potentially long-lasting disruptions to consumers, workers, local communities, and the overall economy; averting losses to federally guaranteed retirement funds; and maintaining federal tax revenues. Potential drawbacks to assistance include the possibility that it may reduce competition by rewarding incumbents over new entrants and distort the affected product market by causing (or prolonging) overproduction; that it may cause \"moral hazard\" if firms respond to government assistance by acting with less financial prudence in the future; and that it can delay an industry's adjustment to structural problems such as high production cost and excess capacity. In every case, federal assistance to certain industries may raise questions about the fairness of providing assistance to some businesses but not to others."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["Serious disruptions for certain industries caused by the COVID-19 (coronavirus) pandemic have led to calls for federal government assistance to affected industries. Although out of the ordinary, this would not be the first occasion on which the federal government has provided aid to troubled or financially distressed industries. To help inform congressional debate, this report examines selected past instances in which the government has aided troubled industries, providing information about the way in which such assistance was structured, the role of Congress, and the eventual cost.", "Assistance for distressed industries or businesses\u00e2\u0080\u0094sometimes popularly referred to as \"government bailouts\"\u00e2\u0080\u0094historically has taken different forms and has occurred under varying circumstances. Assistance has not been limited to outlays by the Treasury, or to actions explicitly authorized by Congress, or to measures which imposed a net cost on taxpayers on an unadjusted cash-flow basis. Sometimes, the industry distress was being driven by external shocks, such as the 9/11 terrorist attacks or the 2007-2009 financial crisis, and other times it was driven by long-term secular trends, such as changes in the economic outlook for the railroad industry. Past assistance has involved such instruments as loan guarantees, asset purchases, capital injections, direct loans, and regulatory changes, with the specific mix of policies varying significantly from case to case. These differences make it somewhat subjective what should be defined as a \"bailout.\" ", "In order to provide greater detail, the examples discussed in this report all involve cases in which federal assistance was (1) widely available to firms within an industry rather than being targeted to a particular firm; (2) extraordinary in nature rather than a type of assistance that is routinely provided; and (3) motivated primarily by a desire to prevent industry-wide business failures. For each case, the report provides data on the costs and income to government, to the extent that they are available. ", "In some of the cases reviewed in this report, the government was able to recoup much or all of its assistance through fees, interest, warrants, and loan or principal repayments. In others, there were no arrangements made for recoupment or repayment. But the fact that a beneficiary of government assistance repaid a loan or gave the government shares that ultimately increased in value does not necessarily mean that the government \"broke even\" or \"made a profit.\" The government had to borrow, incurring interest payments, to finance these programs, and adjusting federal outlays and receipts for inflation may not account fully for this. In most cases, although not all, government assistance was provided under the assumption that it would be repaid, exposing the government to risk of credit loss that is not accounted for simply by adding up expenditures and receipts. ", "An economist would typically determine whether the government received full compensation for credit assistance by comparing the government's terms to what a private investor would have required for the loan or loan guarantee. Making such adjustments would increase the reported value of federal assistance and in some instances would indicate that taxpayers were not fully compensated\u00e2\u0080\u0094although it is fair to question what terms would have been required, for example, by a hypothetical commercial lender in the depths of the 2007-2009 financial crisis, when private credit markets were not functioning normally. In any case, if such a standard were used, it would be a more demanding one than the government typically uses to measure the costs of federal credit and guarantee programs. The Congressional Budget Office (CBO) has provided assessments of the Troubled Asset Relief Program (TARP) adjusting for borrowing costs and market risk, but CBO has not offered such estimates of other government assistance.", "The final disposition of assets and liabilities arising from assistance often can take years. But not all sources continued to consistently report data long after the initial intervention. Thus, while the cost estimates presented here are based on official sources, they sometimes involve a degree of uncertainty. In some cases, precise information on the timing of outlays and recoupments is unclear and assumptions are necessary in order to compute the inflation adjustments. Where there is uncertainty about the timing of payments, we present a range of possible inflation-adjusted outcomes.", "There are broader policy concerns raised by government assistance that are difficult to quantify and do not get captured in tallies of the government's income and expenses. Potential benefits of assistance can include avoiding potentially long-lasting disruptions to consumers, workers, local communities, and the overall economy; averting losses to federally guaranteed retirement funds; and maintaining federal tax revenues. Potential drawbacks to assistance include the possibility that it may reduce competition by rewarding incumbents over new entrants and distort the affected product market by causing (or prolonging) overproduction; that it may cause \"moral hazard\" if firms respond to government assistance by acting with less financial prudence in the future; and that it can delay an industry's adjustment to structural problems such as high production cost and excess capacity. In every case, federal assistance to certain industries may raise questions about the fairness of providing assistance to some businesses but not to others. "], "subsections": [{"section_title": "Sources", "paragraphs": ["Information on the various assistance programs comes primarily from reports from the Government Accountability Office (GAO), Congressional Research Service (CRS), and executive branch agencies involved in the assistance. Specific sources are cited in the individual sections. Reporting on the programs has varied significantly over the years as different agencies have undertaken the assistance under different statutory authority. In some cases, Congress has included specific reporting requirements when assistance is authorized or other specific oversight mechanisms.", "Historical vote totals are included from http://www.congress.gov and from Congressional Quarterly, CQ Almanac (various years). Various iterations of some bills received multiple votes; for brevity, we only include the final vote taken. ", "Stock prices and market information are from the Wall Street Journal print and online versions.", "Inflation adjustments are based on gross domestic product (GDP) price index data from the Bureau of Economic Analysis."], "subsections": []}]}, {"section_title": "Railroad Restructuring (1957-1987)7", "paragraphs": [], "subsections": [{"section_title": "What Happened to the Company/Industry", "paragraphs": ["Throughout the 1950s, the rail industry was in decline as federal spending on highways and the growth of the airline industry ate into railroads' ability to compete with those other modes of transportation. One large railroad, the New York, Ontario and Western, which had been in financial distress since the 1930s, was liquidated in 1957. Rail industry leaders advocated for one or more of the following in order to counter this trend: permission to shut down unprofitable routes, especially passenger routes; direct subsidies to continue operations; and/or encouragement of large-scale mergers to create economies of scale. Congress' initial legislative response, the Transportation Act of 1958 ( P.L. 85-625 ), created a loan guarantee program for railroads and gave the Interstate Commerce Commission (ICC) sole authority over proposals to curtail service, circumventing the previous role of state agencies. Still, the industry underwent a wave of mergers, consolidating from 110 Class I railroads in 1957 to 71 in 1970. The process culminated in the 1968 merger of arch-rivals Pennsylvania Railroad and New York Central Railroad into the Penn Central, the largest railroad in the world at the time. ", "By this time, a wave of bankruptcies was well underway. The New York, New Haven and Hartford Railroad had gone into bankruptcy in 1961 and was merged into the Penn Central in 1969, its inclusion having been a condition of the Penn Central-New York Central merger's approval by the ICC. The Central Railroad of New Jersey failed in 1967. Then, in declining financial condition due to falling revenues, badly rundown infrastructure, high property taxes, incompatible systems, and high labor costs, the Penn Central itself declared bankruptcy in June 1970, less than three years after its creation. Other railroads operating in the Northeast and Midwest also went bankrupt and could not be reorganized, some having suffered severe damage caused by Hurricane Agnes in 1972. The other troubled carriers included the Ann Arbor Railroad, the Reading Railroad, the Lehigh Valley Railroad, the Boston and Maine Railroad, and the Erie Lackawanna Railroad, itself the result of a merger of former competitors completed in 1960.", "In addition to disrupting passenger and freight transportation, the railroad industry's distress exposed a number of major banks and financial institutions to large potential losses. The commercial paper market, in which firms issue short-term securities to meet near-term financial needs, experienced disruptions following the Penn Central bankruptcy, leading to concerns that the Penn Central's problems could endanger companies in other industries."], "subsections": []}, {"section_title": "Executive or Regulatory Agency Action and Assistance", "paragraphs": ["Several federal agencies, including the Department of Transportation, the Department of Defense, and the Federal Reserve, were unwilling or unable to assist troubled railroads with loan guarantees. The ICC sought to assist railroads by expediting approval of applications for mergers or abandonment of unprofitable lines, but this was not enough to forestall bankruptcies. "], "subsections": []}, {"section_title": "Congressional Action and Assistance", "paragraphs": ["Congress enacted several measures throughout the 1970s to avert the collapse of the rail industry. These actions combined federal financial assistance, deregulation, and the creation of new quasi-governmental private companies. "], "subsections": [{"section_title": "The Rail Passenger Service and Emergency Rail Services Acts of 1970", "paragraphs": ["The Rail Passenger Service Act of 1970 (P.L. 91-518), which was passed by voice vote in both houses of Congress, relieved all railroad companies of the obligation to provide intercity passenger service, creating a quasi-governmental private company called the National Railroad Passenger Corporation\u00e2\u0080\u0094Amtrak\u00e2\u0080\u0094to operate passenger trains over freight railroads' tracks with federal support. The act called for a \"basic system\" of key routes that the railroads would continue to operate until Amtrak began operations on May 1, 1971, and provided for railroad companies to transfer unneeded passenger rail equipment to Amtrak. ", "The Emergency Rail Services Act of 1970 (P.L. 91-663) provided up to $125 million in loan guarantees to railroads to preserve essential service until a more permanent restructuring plan could be put in place. The law was passed in the Senate on a vote of 47-29 and in the House on a vote of 165-121. "], "subsections": []}, {"section_title": "The Regional Rail Reorganization Act of 1973", "paragraphs": ["In March 1973, the bankruptcy court handling the Penn Central's case found that its finances were so precarious that it would likely need to cease all operations before October of that year. In December 1973, the Regional Rail Reorganization Act ( P.L. 93-236 ), also called the 3R Act, created the United States Railway Association (USRA) to provide additional emergency funding and prepare the restructuring and rehabilitation of Penn Central and other bankrupt railroads. The law passed the Senate on a vote of 45-16 and the House on a vote of 284-59. It provided for the creation of Conrail\u00e2\u0080\u0094officially the Consolidated Rail Corporation\u00e2\u0080\u0094as a quasi-private for-profit corporation that would take over operations of various bankrupt railroads in the Northeast and Midwest. USRA was charged with creating a \"Final System Plan\" that identified the lines that would be transferred to Conrail. "], "subsections": []}, {"section_title": "The Railroad Revitalization and Regulatory Reform Act of 1976", "paragraphs": ["The Railroad Revitalization and Regulatory Reform (4R) Act of 1976 ( P.L. 94-210 ), which approved the USRA's \"Final System Plan,\" was enacted on February 5, 1976. It passed the House on a vote of 353-62 and the Senate on a vote of 58-26. Conrail was incorporated five days later, beginning operations on April 1, 1976, at which point its predecessors\u00e2\u0080\u0094including the Penn Central\u00e2\u0080\u0094ceased to exist as railroad companies. In addition to taking responsibility for those railroads' physical infrastructure and freight operations, Conrail operated commuter services in several states.", "The 4R Act provided funding for Conrail, permitted and approved additional property designations under 3R, and facilitated the transfer of ownership of the Penn Central's Northeast Corridor line to Amtrak. Direct federal subsidies to Conrail took several forms including remuneration of direct operating losses, approximately $2.1 billion; capital rehabilitation, approximately $1.2 billion; and \"lifetime protection\" payments to employees of Conrail and its predecessors, approximately $650 million. Much of this flowed through USRA purchases of Conrail equity instruments. In addition, approximately $3 billion was paid to the estates of bankrupt railroads for property taken to create Conrail. Total assistance for Conrail was estimated at approximately $7 billion. ", "The 4R Act also contained reforms aimed at easing ICC regulation of the railroad industry more broadly. Railroads were given greater flexibility to set shipping rates and were allowed for the first time to sign contracts with large shippers specifying rates and terms of service. The act gave the ICC the power to exempt certain types of freight traffic from rate regulation altogether. The act also created the Railroad Rehabilitation and Improvement Financing (RRIF) loan program, currently codified at 45 U.S.C. \u00c2\u00a7\u00c2\u00a7821-838, to offer long-term, low-cost loans to railroad operators. The RRIF program was intended to assist \"short line\" railroads, which took over many small lines that were being abandoned by larger railroads, to finance improvements to infrastructure and investments in equipment."], "subsections": []}, {"section_title": "Restructuring the Milwaukee and Rock Island Railroads", "paragraphs": ["The restructuring of the eastern railroads did not put an end to the industry's difficulties. In the Midwest, the Chicago, Rock Island and Pacific Railroad filed for bankruptcy in 1975, and the Chicago, Milwaukee, St. Paul and Pacific Railroad in 1977. They were not incorporated into Conrail, but were the subject of separate federal legislation. Congress passed the Milwaukee Railroad Restructuring Act ( P.L. 96-101 ) in both the House and the Senate by voice vote in 1979 and the Rock Island Railroad Transition and Employee Assistance Act ( P.L. 96-254 ) in both the House and Senate by voice vote in 1980. Each law contained worker protection provisions and empowered bankruptcy courts to accelerate the sale or abandonment of parts of their networks as part of restructuring. ", "The Chicago, Milwaukee, St. Paul and Pacific Railroad abandoned or sold roughly two-thirds of its network, with the rest ultimately acquired in 1985 by the Canadian Pacific Railroad through an American subsidiary. The case of the Chicago, Rock Island and Pacific Railroad was direr; by March 1980, before Congress had a chance to pass its transition assistance law, the railroad had been deemed incapable of continuing rail operations by the ICC, declared the property of a neutral party (pursuant to 3R), and ceased operations. Its former property was acquired by multiple buyers."], "subsections": []}, {"section_title": "The Staggers Rail Act of 1980", "paragraphs": ["With Conrail's profitability still not much improved, Congress passed the Staggers Rail Act of 1980 ( P.L. 96-448 ), by a 61-8 vote in the Senate and a voice vote in the House. The law expanded upon the deregulation begun in the 3R and 4R Acts. Among other provisions, the Staggers Act prevented the ICC from setting maximum shipping rates, permitted railroads to keep their rate agreements with customers secret, broadened the ICC's power to declare exemptions, and required the submissions of proposals for the future of Conrail. While many of its provisions were unpopular with some shippers, particularly those who could not readily move their freight by truck or barge if they found rail rates excessive, the law helped restore the freight rail sector to profitability and eventually led to increased capital investment in the industry. "], "subsections": []}, {"section_title": "The Northeast Rail Services Act of 1981", "paragraphs": ["While the duty to provide intercity passenger rail had been transferred to Amtrak by the Rail Passenger Service Act of 1970, Conrail was still bound to operate the local commuter routes previously run by its predecessor railroads. The Northeast Rail Services Act of 1981 (NERSA; P.L. 97-35 ) was enacted as Subtitle E of the Omnibus Budget Reconciliation Act of 1981, approved by the Senate on a vote of 80-15 and by the House on a vote of 232-195. NERSA relieved Conrail of all obligations to provide commuter rail service beginning January 1, 1983, in order to improve its profitability. To ensure continuity of operations, however, NERSA required state- or locally-chartered commuter authorities to continue to operate all commuter rail lines previously operated by Conrail, and created a new subsidiary of Amtrak to take over such lines if any state declined to do so (none did). NERSA also stipulated that Conrail's status as a quasi-governmental corporation should be temporary and that the government's stake in the company should eventually be sold to one or more private buyers."], "subsections": []}]}, {"section_title": "Repayment or Recoupment of Assistance", "paragraphs": ["Following the reforms in the 3R and 4R Acts, the Staggers Act, and NERSA, Conrail reported a profit in 1981 and in subsequent years. The government's 85% stake in the company was sold through an initial public offering in 1987 after the government rebuffed attempts by other railroads to acquire it in ways that could have reduced rail competition in the Northeast. (The other 15% was owned by Conrail employees.) The government recouped a total of approximately $2 billion, including a $300 million dividend from Conrail and $1.65 billion from the public offering. This was approximately $5 billion less than total government outlays, when measured in nominal dollars, or $20 billion to $24 billion less than the government's outlays when adjusted for inflation ( Table 1 )."], "subsections": []}, {"section_title": "Final Outcomes", "paragraphs": ["Railroad profitability increased following implementation of the Staggers Act, and railroad companies, devoting themselves entirely to freight traffic, continued to consolidate and shed unprofitable lines. Some 70,000 miles of railroad have been abandoned since 1980, and the number of large railroads\u00e2\u0080\u0094known as Class I railroads\u00e2\u0080\u0094operating in the United States now stands at seven.", "Following its privatization, Conrail continued as an independent company until 1997, when it was acquired by Norfolk Southern Corporation and CSX Corporation in a joint stock purchase valued at approximately $10.3 billion. Norfolk Southern and CSX split most of the Conrail assets after the purchase.", "Amtrak has never generated an operating profit, and has received federal operating support every year since its creation."], "subsections": []}]}, {"section_title": "Farm Credit System Crisis (1980s)15", "paragraphs": [], "subsections": [{"section_title": "What Happened to the Industry", "paragraphs": ["The federal government has a long history of assisting farmers with real estate and operating loans. This intervention has been justified by the presence of asymmetric information between lenders and farmers, lack of competition and resources in rural areas, and policies to target assistance to disadvantaged groups. The two agricultural lenders with the greatest federal connection are the Farm Service Agency (FSA) and the Farm Credit System (FCS), a private cooperative. The first, FSA, is part of the U.S. Department of Agriculture (USDA) and receives federal appropriations to make direct loans and guarantees to farmers who do not qualify for commercial credit. The second, FCS, is privately funded without federal appropriation as a cooperatively owned entity with a statutory mandate to serve only agriculture-related borrowers. The FCS is regulated by the Farm Credit Administration, an independent agency funded by assessments on system institutions. ", "A severe downturn in the agricultural economy beginning in the early 1980s contributed to a financial crisis among many agricultural lenders and their farmer borrowers (the result of low farm income, high interest rates, and declining land prices). Since the FCS had exposure to only a single industry, it held a loan portfolio that developed large delinquencies, much of which was eventually written off as uncollectible. The farm financial crisis caused the FCS to experience operating losses of $2.7 billion in 1985 and $1.9 billion in 1986, for example, which jeopardized its financial stability, including its ability to repay bondholders in private capital markets. While FCS debt is not a government obligation nor guaranteed, many investors perceive its government-sponsored enterprise (GSE) status to imply that the Treasury would not allow FCS default. Moreover, FCS was an important lender to agriculture and held one-third of farm debt at the time."], "subsections": []}, {"section_title": "Congressional Action and Assistance", "paragraphs": [], "subsections": [{"section_title": "The Agricultural Credit Act of 1987", "paragraphs": ["The Agricultural Credit Act of 1987 ( P.L. 100-233 ) was enacted on January 6, 1988, after being approved by the Senate by a vote of 85-2 and the House on a vote of 365-18. The law authorized a $4 billion financial assistance package. It created a new FCS entity, the FCS Financial Assistance Corporation, which utilized $1.26 billion in loans from the U.S. Treasury. The assistance stabilized the FCS by allowing it to repay its bonds and meet its debt obligations. The act required the FCS to work out a schedule for repaying the Treasury, mandated FCS organizational changes, protected FCS borrowers' stock investments in FCS institutions, and specified requirements for restructuring FCS problem farm loans. ", "Among the notable organizational changes, FCS banks became jointly and severally liable for each other's debts (that is, the FCS banks together would be responsible for the cumulative debts of the individual FCS banks if any become insolvent). The act also created an FCS Insurance Corporation, similar to the Federal Deposit Insurance Corporation, to further ensure the ability of the FCS to repay its bonds. ", "Although the primary purpose of the 1987 Act was to rescue and restructure the FCS, the act also led to the creation of a system of borrower rights for the FCS and the FSA. These borrower rights are somewhat unique to agriculture, compared to what was available to homeowners during the 2008 housing crisis. Before the FCS and FSA can initiate foreclosure proceedings, it must offer options to restructure delinquent farm loans when it would be less costly than taking foreclosure action, and it must offer rights of first refusal for an individual or extended family to repay a delinquent loan to avoid foreclosure and preserve a farm homestead."], "subsections": []}]}, {"section_title": "Repayment or Recoupment of Government Assistance", "paragraphs": ["The FCS Financial Assistance Corporation borrowed $1.26 billion from the U.S. Treasury during the farm financial crisis of the 1980s. The FCS made provisions in the early 1990s to systematically repay all of its financial assistance by collecting assessments on system banks and associations. The arrangement for the 15-year debt by the FCS Financial Assistance Corporation to the Treasury was that the government paid the interest for the first five years, FCS and the Treasury split the interest during the second five years, and FCS bore all of the interest during the final five years. In June 2005, the last of the bonds and interest was repaid on schedule to the U.S. Treasury. The FCS Financial Assistance Corporation was dissolved in December 2006."], "subsections": []}, {"section_title": "Final Outcome", "paragraphs": ["Farm Credit System financial performance steadily improved throughout the 1990s and into the present day. The Farm Credit System Insurance Corporation is fully funded to its capitalization goals. The borrowers' rights provisions continue to provide protection to farmers facing new financial difficulties, such as through the financial crisis in 2007-2009 and during the current period of lower farm income."], "subsections": []}]}, {"section_title": "Savings and Loan Crisis (1980s-1990s)20", "paragraphs": [], "subsections": [{"section_title": "What Happened to the Industry21", "paragraphs": ["Savings and loan institutions (S&Ls) were state- or federally chartered deposit-taking institutions whose loans mainly took the form of residential mortgages. Some were mutual institutions owned by their depositors, while others had publicly traded shares. Federally chartered S&Ls were authorized in the 1930s to promote mortgage lending and were regulated by a separate regulator, the Federal Home Loan Bank Board (FHLBB), rather than by the agencies responsible for regulating commercial banks.", "The industry suffered a solvency crisis in the 1980s. When interest rates rose, S&Ls' floating-rate liabilities (e.g., deposits) had a higher interest cost than the industry was earning on fixed-rate assets that had been issued before rates rose (e.g., mortgages). In the presence of government deposit insurance, depositors had little incentive to withdraw their deposits from unprofitable S&Ls, since their deposits were safe even if their S&L failed. This allowed insolvent S&Ls to continue to access the funds needed to keep operating. ", "According to a study by the Federal Deposit Insurance Corporation, \"Net S&L income, which totaled $781 million in 1980, fell to negative $4.6 billion and $4.1 billion in 1981 and 1982\u00e2\u0080\u00a6. In fact, tangible net worth for the entire S&L industry was virtually zero, having fallen from 5.3 percent of assets in 1980 to only 0.5 percent of assets in 1982.\""], "subsections": []}, {"section_title": "Regulatory Agency Action and Assistance", "paragraphs": ["Policymakers were slow to address the crisis because of concerns that resolving large numbers of S&Ls would have a negative effect on homeownership by disrupting mortgage lending. Government policy is generally viewed as exacerbating the crisis in two ways. ", "First, the S&L regulator, the FHLBB, practiced \"regulatory forbearance,\" allowing insolvent firms to keep operating in the hopes that they would eventually become profitable again. Forbearance made the problem larger because it arguably encouraged such \"zombie S&Ls\" to take on more risks, undermining more conservatively run competitors. Regulatory forbearance was motivated in part by the fact that the Federal Savings and Loan Insurance Corporation (FSLIC), the agency responsible for insuring S&L customers' deposits, lacked the funds to honor deposit insurance claims if all the undercapitalized S&Ls were rescued or closed down. Almost 1,000 thrifts still in operation, holding half of total industry assets, were insolvent or nearly insolvent by 1986. By 1987, the FSLIC itself was insolvent. In the meantime, zombie S&Ls incurred additional losses, which increased the ultimate cost to the government.", "Second, deregulation in the early 1980s gave the industry new opportunities to take risks that increased ultimate losses, which arguably occurred because deregulation took place in the context of an already undercapitalized industry with inadequate prudential regulation."], "subsections": []}, {"section_title": "Congressional Action and Assistance", "paragraphs": ["Deposit insurance is self-financing only if insurance premiums match expected losses. Because the FSLIC deposit insurance scheme was inadequate, a government \"bailout\" could only have been avoided if the government had reneged on its promise to guarantee deposits.", "The congressional response to the S&L crisis can be divided into two phases. From 1980 to 1982, legislation was enacted to attempt to restore industry solvency (or buy time to restore industry solvency) through forbearance and the removal of legal restrictions on industry activities. From 1987 on, legislation was enacted to attempt to resolve insolvent S&Ls by granting financial resources and to prevent future losses through new regulatory powers.", "Many of these bills contained wide-ranging provisions, and only the provisions relevant to the S&L crisis are highlighted here. "], "subsections": [{"section_title": "Competitive Equality Banking Act of 1987 (CEBA)", "paragraphs": ["The Competitive Equality Banking Act of 1987 ( P.L. 100-86 ) was passed in the Senate on a vote of 96-2 and in House on a vote of 382-12. The law created the Financing Corporation (FICO) to provide funding to FSLIC by issuing $10.8 billion in long-term bonds to be repaid by assessments on savings and loans and the Federal Home Loan Banks. It also eased regulatory requirements for savings and loans in economically depressed areas.", "According to the FDIC study, \"Although the Competitive Equality Banking Act of 1987 provided the FSLIC with resources to resolve insolvent institutions, the amount was clearly inadequate. Nevertheless, under the new FHLBB chairman, Danny Wall, the FSLIC resolved 222 S&Ls, with assets of $116 billion, in 1988.... But despite these resolutions, at year-end 1988 there were still 250 S&Ls, with $80.8 billion in assets that were insolvent based on regulatory accounting principles.\""], "subsections": []}, {"section_title": "Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA)", "paragraphs": ["The Financial Institutions Reform, Recovery, and Enforcement Act of 1989 ( P.L. 101-73 ) was passed by the House on a vote of 201-175 and by the Senate by division vote (individual votes not recorded). The law abolished FSLIC and transferred its assets, liabilities, and operations to the FSLIC Resolution Fund (FRF). The act abolished FHLBB and transferred its authority to the newly created Office of Thrift Supervision with new regulatory powers, created the Savings Association Insurance Fund, administered by FDIC, created the Resolution Trust Corporation (RTC) to resolve troubled thrifts, and created the Resolution Funding Corporation (REFCORP) to issue debt to finance RTC to be repaid by industry assessments and the federal government."], "subsections": []}, {"section_title": "Resolution Trust Corporation Funding Act of 1991", "paragraphs": ["The Resolution Trust Corporation Funding Act of 1991 ( P.L. 102-18 ) , passed by the House on a vote of 225-188 and passed by the Senate by voice vote, provided $30 billion to the RTC to cover losses of failed thrifts in FY1991. "], "subsections": []}, {"section_title": "Resolution Trust Corporation Refinancing, Restructuring, and Improvement Act of 1991", "paragraphs": ["The Resolution Trust Corporation Refinancing, Restructuring, and Improvement Act of 1991 ( P.L. 102-233 ), passed by the Senate on a vote of 44-33 and passed in the House by division vote 112-63, provided the RTC up to $25 billion until April 1, 1992, to resolve failed savings and loan institutions. The law also restructured the RTC and terminated FICO. "], "subsections": []}, {"section_title": "Resolution Trust Corporation Completion Act of 1993", "paragraphs": ["The Resolution Trust Corporation Completion Act of 1993 ( P.L. 103-204 ) passed the House on vote of 235-191 (with 1 Member voting present), and passed the Senate on a vote of 54-45. The law provided $18.3 billion to finish the savings and loan cleanup. It terminated the RTC on December 31, 1995, and authorized $8.5 billion for the Saving Association Insurance Fund (SAIF), to be spent only if the savings and loan industry could not pay for future failures itself through higher insurance premiums. "], "subsections": []}]}, {"section_title": "Repayment or Recoupment of Government Assistance", "paragraphs": ["The cost of the S&L cleanup was spread among the federal government (through appropriations), government-sponsored enterprises (the Federal Home Loan Bank system), and the industry (through deposit insurance premiums). Two quasi-governmental entities (FICO and REFCORP) were created to provide financing.", "Measuring the cost of the S&L crisis poses unique challenges compared to the other episodes discussed in this report. The resolution of failing thrifts was not a one-time event. Thrifts may fail at any time, even when economic conditions are generally good, and the insurance fund may be called upon to repay depositors. What was unique during the crisis was the magnitude of the failures, which caused premiums to be inadequate for addressing the problem. Thus, a somewhat arbitrary date must be chosen for the beginning and the end of the cleanup.", "Different sources vary slightly on the overall net cost. In January 1995, CBO estimated the cost at $150 billion in 1990 dollars. In 1996, GAO estimated the cost at $160.1 billion. Table 2 presents an estimate from the FDIC Banking Review , as this source provides the most detailed information. It estimated expenses paid by the FRF and RTC to be $152.7 billion, with an additional $7.3 billion in indirect costs from 1986 to 1995. Of the $152.7 billion, direct appropriations covered $99.4 billion and FICO and REFCORP bond proceeds covered $38.3 billion. The government recouped $30.1 billion through industry assessments, interest on bonds paid by the industry, and the value of remaining assets seized from failed S&Ls as of the end of 1999, putting the net direct costs at $122.6 billion and the net total costs at $129.9 billion. (CRS classified the FHLBs as industry for purposes of this table, so their contributions are considered a recoupment rather than a government expense.) It should be noted that this source does not include interest costs on the federal debt used to finance appropriations or the FICO and REFCORP bonds issued to finance the cleanup."], "subsections": []}, {"section_title": "Final Outcome", "paragraphs": ["Cumulatively, 1,043 insolvent firms holding $519 billion in assets were resolved between 1986 and 1995. The industry's finances stabilized by the mid-1990s, by which time the number of S&Ls had fallen by half compared to 1986. The RTC ceased operations at the end of 1995. Some special bonds issued to finance the cleanup remain outstanding until 2030.", "S&Ls were renamed savings associations or thrifts and their regulation was reformed by FIRREA. Further problems with the regulation of the thrift industry in the 2007-2009 financial crisis led to the elimination of the Office of Thrift Supervision and the shifting of its powers to the federal banking regulators by the Dodd-Frank Wall Street Reform and Consumer Protection Act ( P.L. 111-203 )."], "subsections": []}]}, {"section_title": "Airline Industry (2001-2014)34", "paragraphs": [], "subsections": [{"section_title": "What Happened to the Company/Industry", "paragraphs": ["The use of commercial airplanes as assault vehicles to wreak havoc on the United States has no precedent in aviation history. At the time of the September 11, 2001, terrorist attacks on the World Trade Center in New York and the Pentagon in Washington, the airline industry was already experiencing a difficult financial situation due to the recession. In the wake of the attacks, the federal government temporarily grounded all civil air traffic in the United States, including all commercial flights. The attacks contributed to a significant decline in both domestic and international passenger traffic in 2001 that resulted in major financial losses. "], "subsections": []}, {"section_title": "Congressional Action and Assistance", "paragraphs": [], "subsections": [{"section_title": "The Air Transportation Safety and System Stabilization Act", "paragraphs": ["In the aftermath of the 9/11 attacks, Congress moved to provide the airline industry with federal financial support. The Air Transportation Safety and System Stabilization Act (Stabilization Act; P.L. 107-42 ) passed in the House by a vote of 356-54, with two Members voting present, and in the Senate by a unanimous vote. It was signed into law on September 22, 2001, providing the airlines access to up to $15 billion in short-term assistance. This included $5 billion in emergency assistance to compensate the air carriers for losses incurred as a result of the attacks, and $10 billion in the form of guaranteed loans designed to provide longer-term stability to the industry and make it more creditworthy in private markets. The Stabilization Act also supported the airline industry by providing premium war risk insurance for 180 days. This insurance was extended multiple times until it expired in 2014."], "subsections": []}]}, {"section_title": "Executive or Regulatory Agency Action and Assistance", "paragraphs": ["The Secretary of Transportation and the Comptroller General were in charge of the $5 billion direct compensation to air carriers, while the distribution of the loan guarantees was controlled by an \"air transportation stabilization board\" (ATSB) consisting of three voting members\u00e2\u0080\u0094the Chairman of the Federal Reserve Board, the Secretary of the Treasury, and the Secretary of Transportation, or their designees\u00e2\u0080\u0094and a non-voting member, the Comptroller General.", "According to the April 2011 report of the President to the U.S. Congress, as required by the Stabilization Act, 407 air carriers were compensated for direct operating losses as the result of federal ground stop orders as well as any incremental losses incurred between September 11, 2001, and December 31, 2001. Payments totaled nearly $4.6 billion of the $5 billion initially made available. Portions of the remaining balance in the account were rescinded by Congress at various points, with all unobligated balances permanently rescinded by the Omnibus Appropriations Act, 2009 ( P.L. 111-8 , Title I).", "The ATSB was established to review and decide on airlines' applications for loan guarantee assistance. The ATSB received 16 loan guarantee applications from a range of air carriers, including large airlines, small airlines, low-fare airlines, and charter and cargo carriers. It approved and closed on six loan guarantee applications: American West, ATA Airlines (formerly American Trans Air), Aloha Airlines, Frontier Airlines, US Airways, and World Airways. The total amount of loan guarantees was $1,558,600,000."], "subsections": []}, {"section_title": "Repayment or Recoupment of Assistance", "paragraphs": ["Five of the six guaranteed loans were fully repaid by the carriers, while the ATA Airlines loan guarantee had to be exercised when ATA Airlines filed for bankruptcy under Chapter 11. In 2005, the ATSB paid approximately $125 million, the outstanding balance on the ATA loan which the ATSB had guaranteed, but eventually recouped $97.2 million of that amount. ", "The ATSB also established that the government was to be compensated for the risks associated with the guarantees through fees and stock warrants. The six airlines paid more than $240 million in fees and interest; while proceeds of warrant sales totaled $142.6 million. Overall, after deducting ATSB expenses, the 2011 report of the President to the U.S. Congress concluded that the government recovered a net of $338.8 million from the carriers as a result of the ATSB loan guarantee activities (see Table 3 ).", "According to the Federal Aviation Administration's estimate, between September 2001 and December 2014, $1.8 billion in premiums were collected and the total amount of claims paid for three war risk occurrences was $10,107,874. The remaining balance in the Aviation Insurance Revolving Fund is used to back more than $20 billion of the non-premium aviation insurance program that provides critical support to national security and defense by making insurance available to air carriers contracted by the Department of Defense to support military operations."], "subsections": []}, {"section_title": "Final Outcome", "paragraphs": ["The uncommitted balance of the ATSB loan guarantee authority was $8,441,400,000 on June 28, 2002, the deadline for submitting applications. The Consolidated Appropriations Act of 2008 ( P.L. 110-161 , Division D, Title I) rescinded the unobligated balance of program funds. The War Risk Insurance program expansion expired in 2014.", "If direct assistance is excluded, the government recouped more than was paid out on both the loan guarantees and the war risk insurance program. Nevertheless, it was exposed to significant financial risks from both programs."], "subsections": []}]}, {"section_title": "Troubled Asset Relief Program (TARP) Bank\u00c2 Support (2008-Present)38", "paragraphs": [], "subsections": [{"section_title": "What Happened to the Industry", "paragraphs": ["The financial crisis of 2007-2009 grew out of an unprecedented housing boom that turned into a housing bust. Much of the lending for housing during the boom was based on asset-backed securities that used the repayment of housing loans as the basis of these securities. As housing prices fell and mortgage defaults increased, these securities became illiquid and fell sharply in value. This caused capital losses for firms holding them, which threated many firms with insolvency. There was widespread lack of trust in financial markets as participants were unsure which firms might be holding so-called toxic assets that might now be worth much less than previously estimated, thus making these firms unreliable counterparties in financial transactions. This uncertainty prevented firms from accessing credit markets to meet their liquidity needs. The banking industry was at the center of the crisis, both as holders of mortgage backed securities and as lenders making mortgage loans. "], "subsections": []}, {"section_title": "Executive or Regulatory Agency Action and Assistance", "paragraphs": ["The Federal Reserve was created in 1913 largely to act as a lender of last resort in liquidity crises, and its authority was augmented during the Great Depression. As the crisis developed in 2007 and 2008, the Federal Reserve took a variety of steps under its statutory authority to inject liquidity into the financial system. To the degree that the crisis caused solvency problems in financial firms, however, the Federal Reserve was unable to assist, as its authority is limited to lending funds, which offered little assistance to firms that were already highly leveraged and suffering from capital shortfalls."], "subsections": []}, {"section_title": "Congressional Action and Assistance", "paragraphs": [], "subsections": [{"section_title": "Emergency Economic Stabilization Act of 2008", "paragraphs": ["The Emergency Economic Stabilization Act of 2008 (EESA), was brought to the floor of the House as a substitute amendment to H.R. 3997 on September 29, 2008 ; this amendment failed in the House by a vote of 205-228. Another version of EESA, which included the original EESA plus several other provisions not in the first bill, was offered on October 1 in the Senate as an amendment ( S.Amdt. 5685 ) to an unrelated bill, H.R. 1424 , which had previously passed the House. The amendment to H.R. 1424 was approved by a Senate vote of 74-25; it was then taken up by the House and passed by a vote of 263-171, on October 3, 2008. The President signed the amended version of H.R. 1424 , now P.L. 110-343 , the same day as House passage. EESA gave the Department of the Treasury broad authority under the newly created Troubled Asset Relief Program to use up to $700 billion to address the crises. The congressional debate was focused on purchasing the \"toxic\" assets from firms, thus replacing them with safer assets, but the statute also allowed the Treasury to guarantee assets or to directly augment firms' capital.", "Among the programs under the EESA authority, the Treasury created the Capital Purchase Program (CPP) to purchase up to $250 billion in preferred shares from banks, thus adding this amount to capital levels. More than 700 banks participated in the CPP and approximately $205 billion was actually disbursed. In addition, there was a relatively small ($570 million) Community Development Financial Institution program that also purchased preferred shares, but on less stringent terms than the CPP.", "The CPP was augmented with an additional Targeted Investment Program (TIP) preferred share purchases and asset guarantees for two of the most troubled banks, Bank of America and Citigroup. The share purchases were $20 billion to each bank. The asset guarantees were more complicated. Any losses were to be shared between the Treasury, FDIC, and Federal Reserve. The guarantee for Bank of America on $118 billion in assets was offered, but never officially closed. The Citibank guarantee was on $301 billion in assets, but funds were never paid out on any losses.", "EESA was amended in early 2009, specifically allowing earlier repayment of assistance than originally foreseen and adding additional executive compensation requirements on firms with outstanding assistance. P.L. 111-5 passed the House on a vote of 246-183 and the Senate on a vote of 60-38."], "subsections": []}]}, {"section_title": "Repayment or Recoupment of Assistance", "paragraphs": ["In most cases, the Treasury recouped money from sales of preferred shares, primarily back to the issuing banks, as dividends and from warrants that were issued along with the preferred shares and fees paid for the asset guarantees. The Citigroup preferred shares were converted into common equity and sold on the open market. Recoupment from the general TARP bank assistance was completed relatively quickly. For example, by the end of 2011, approximately $255.4 billion had been recouped in total with $17.35 billion of $245.5 billion still outstanding. By 2020, $271.4 billion had been recouped, with $0.04 billion of preferred shares still outstanding. The special assistance for Bank of America was completed by the end of 2009, with a $425 million termination fee paid for the uncompleted asset guarantee and repurchase of the $20 billion in TIP shares resulting in $22.7 billion in recoupment. Citigroup's special assistance finished in December 2009 with $21.8 billion in recoupment from the TIP shares and $3.9 billion in premiums paid for the asset guarantees. Despite the default risk that TARP was exposed to, the government recouped $30.5 billion more than it disbursed on the bank programs (see Table 4 ). "], "subsections": []}, {"section_title": "Final Outcome", "paragraphs": ["The financial crisis passed relatively quickly for the banking industry once the panic conditions of fall 2008 passed. One marker of this is that originally banks were to be required to hold the CPP capital on their books for a minimum of three years, whereas banks began repurchasing CPP preferred shares by March 2009 when the program was still disbursing funds. The overall profitability levels in the banking system returned relatively quickly. "], "subsections": []}]}, {"section_title": "Auto Industry (2008-2014)40", "paragraphs": [], "subsections": [{"section_title": "What Happened to the Industry", "paragraphs": ["In 2008 and 2009, the financial crisis, rising gasoline prices, and a contracting global economy combined to create the worst market in decades for production and sale of motor vehicles in the United States and other industrial countries. While Ford Motor Company had negotiated an $18 billion line of credit in 2007, General Motors (GM) and Chrysler did not have similar long-term financing available when the financial crisis hit, which temporarily made it difficult for most firms to access borrowing markets. In 2009, GM's production dropped by 47% (compared to 2008), and Chrysler's by 57%; total U.S. production among all automakers fell by 34%. The prospect of GM and Chrysler bankruptcies raised other concerns: the failure of their parts suppliers\u00e2\u0080\u0094also used by most other automakers\u00e2\u0080\u0094could cascade financial difficulties throughout the sector; and those supplier failures could overwhelm the federal Pension Benefit Guaranty Corporation with abandoned pension plans. In addition, large affiliated financial companies (which provided auto loans to consumers and dealers) could fail if the automakers entered bankruptcy."], "subsections": []}, {"section_title": "Congressional Action and Assistance", "paragraphs": ["Congress never passed specific legislation to address auto industry issues. The George W. Bush Administration and congressional leaders differed on the type of assistance that should be offered the automakers: initially, the Administration recommended reprogramming a Department of Energy motor vehicle loan program to provide bridge loans. In December 2008, the House of Representatives passed H.R. 7321 , which would have authorized funds from the DOE Advanced Technology Vehicles Manufacturing program (ATVM) as bridge loans to GM and Chrysler. Although that bill passed the House 237-170, the Senate did not vote on it. When this legislation stalled, the George W. Bush Administration announced that it would use the Troubled Asset Relief Program to support the automakers, arguing that failure to provide assistance could make the recession worse and impose other federal costs, such as unemployment insurance for many displaced auto and auto parts employees. "], "subsections": []}, {"section_title": "Executive or Regulatory Agency Action and Assistance", "paragraphs": ["The Bush Administration made initial TARP loans of $24.8 billion to GM, Chrysler, and two auto financing companies (GMAC and Chrysler Financial) in December 2008 and January 2009. When the Obama Administration took office in January 2009, it continued this loan program, bringing total loans to the auto industry to $79.7 billion. In addition, the Obama Administration established an Auto Task Force chaired by the Secretary of the Treasury to work with GM and Chrysler on restructuring plans with creditors, unions, dealers, and other stakeholders. The goal of the spring 2009 restructurings was to avoid bankruptcy filings, but all stakeholders did not agree to the major changes in the companies. Chrysler and GM filed for bankruptcy in April and June 2009, respectively. After about a month, both companies emerged from bankruptcy court, with new owners: the U.S. Treasury owned about 10% of Chrysler and nearly 61% of GM in return for forfeiting repayment of the previous loans. Other owners included the Canadian government, bondholders, and the United Auto Workers. The federal ownership was sold off over the following years. "], "subsections": []}, {"section_title": "Repayment or Recoupment of Assistance", "paragraphs": ["The assistance was repaid or recouped beginning in 2009 in a variety of ways, including initial public offerings, gradual public offerings of other federal shares, and private sales of stock. Table 5 summarizes the amounts of government assistance and the amount of recoupment for auto industry assistance."], "subsections": []}, {"section_title": "Final Outcome", "paragraphs": ["The U.S. Treasury sold its last holdings of Chrysler in June 2011 and GM in December 2013. The proceeds from the sales were not enough to cover the original loans to Chrysler and GM. Chrysler Financial fully repaid its loan, and the federal government's recoupment from GMAC was greater than the amount of its assistance. After restructuring and bankruptcy, GM and Chrysler recovered their positions as major U.S. automakers; GM is independent and Chrysler is part of Fiat Chrysler Automobiles (FCA), a corporation based in Great Britain. Table 6 shows comparisons before and after restructuring and bankruptcy."], "subsections": []}]}, {"section_title": "Money Market Mutual Fund Guarantee (2008-2009)44", "paragraphs": [], "subsections": [{"section_title": "What Happened to the Industry", "paragraphs": ["Money market mutual funds are a type of mutual fund that generally invest in high-quality, short-term assets. Often the value of a share is held at $1 per share and fund gains are paid out as dividends mimicking interest payment. Thus, they are seen as largely analogous to bank deposits, but are not guaranteed by the Federal Deposit Insurance Corporation (FDIC). As part of the market turmoil resulting from the bursting of a nationwide housing bubble, on September 16, 2008, a money market mutual fund called the Reserve Fund \"broke the buck,\" meaning that the value of its shares had fallen below $1. This occurred because of losses it had taken on short-term debt issued by the investment bank Lehman Brothers, which filed for bankruptcy on September 15, 2008. Money market investors had perceived \"breaking the buck\" to be highly unlikely, and its occurrence set off a generalized run on money market mutual funds, as investors simultaneously attempted to withdraw an estimated $250 billion of their investments\u00e2\u0080\u0094even from funds without exposure to Lehman Brothers."], "subsections": []}, {"section_title": "Executive or Regulatory Agency Action and Assistance", "paragraphs": ["To stop the run, the Treasury announced an optional program to guarantee deposits in participating money market funds. The Treasury would finance any losses from this guarantee with assets in the Exchange Stabilization Fund (ESF), funds intended to protect the value of the dollar. The Treasury announced this program without seeking specific congressional authorization, justifying the program on the grounds that guaranteeing money market funds would protect the value of the dollar. The program expired after one year in September 2009. "], "subsections": []}, {"section_title": "Congressional Action and Assistance", "paragraphs": ["The Emergency Economic Stabilization Act of 2008 included language (Section 131) that directed the Treasury Secretary to reimburse the Exchange Stabilization Fund for any funds used for the money market guarantee program and prohibited usage of the ESF in the future for such a program."], "subsections": []}, {"section_title": "Repayment or Recoupment of Assistance", "paragraphs": ["Funds utilizing the guarantee program paid fees for the guarantee of between 0.015% and 0.022% of the amount guaranteed by the program."], "subsections": []}, {"section_title": "Final Outcome", "paragraphs": ["Over the life of the program, the Treasury reported that no money market mutual fund guarantees were invoked and $1.2 billion in fees had been collected (see Table 7 ). More than $3 trillion of deposits were guaranteed and, according to the Bank for International Settlements, 98% of U.S. money market mutual funds were covered by the guarantee, with most exceptions being funds that invested only in Treasury securities."], "subsections": []}]}, {"section_title": "Agricultural Trade Aid (2018-2019)49", "paragraphs": [], "subsections": [{"section_title": "What Happened to the Sector", "paragraphs": ["In early 2018, the Trump Administration\u00e2\u0080\u0094citing concerns over national security and unfair trade practices\u00e2\u0080\u0094imposed increased tariffs on steel and aluminum from a number of countries and on a broad range of U.S. imports from China. Several of the affected foreign trading partners\u00e2\u0080\u0094including China, Canada, Mexico, the European Union, and Turkey\u00e2\u0080\u0094responded to the U.S. tariffs with their own retaliatory tariffs targeting various U.S. products, especially agricultural commodities. ", "As a result of these retaliatory tariffs, both market prices and exports of affected U.S. agricultural products dropped sharply in the immediate aftermath of retaliation before gradually recovering as trade shifted to alternate markets. The most notable result of this trade dispute was a decline in trade between the United States and China. From 2010 through 2016, China was the top destination for U.S. agricultural exports based on value. In 2018, U.S. agricultural exports to China declined 53% in value to $9 billion from $19 billion in calendar year 2017. The retaliatory tariffs affected producers of several major U.S. commodities, including field crops like soybeans and sorghum, livestock products like milk and pork, and many fruits, nuts, and other specialty crops.", "Following the imposition of retaliatory tariffs in 2018, the United States began negotiations with several of the retaliating trade partners to resolve the disputes. However, several of the negotiations were protracted\u00e2\u0080\u0094particularly the U.S.-China trade talks\u00e2\u0080\u0094and trade failed to return to normal patterns during 2018 and 2019. "], "subsections": []}, {"section_title": "Executive or Regulatory Agency Action and Assistance", "paragraphs": ["The Secretary of Agriculture used his authority under Section 5 of the Commodity Credit Corporation (CCC) Charter Act of 1948 (P.L. 80-806; 15 U.S.C. 714 et seq.), as amended, to initiate two ad hoc trade assistance programs in 2018 and 2019. Referred to as \"trade-aid packages,\" these two initiatives represented the Administration's effort to provide short-term assistance to farmers in response to the foreign trade retaliation targeting U.S. agricultural products. The first trade-aid package was announced on July 24, 2018. It targeted production for nine agricultural commodities in 2018 and was valued at up to $12 billion. The second trade-aid package was announced on May 23, 2019. It targeted production for an expanded list of 41 commodities and was valued at up to an additional $16 billion. ", "According to the U.S. Department of Agriculture (USDA), the two trade-aid packages are structured in a similar manner and include three principal components ( Table 8 ): ", "The Market Facilitation Program (MFP) provides direct payments to producers of USDA-specified \"trade damaged\" commodities. USDA used different payment rate formulas to determine the MFP payment distribution for each of the 2018 and 2019 programs (described below). MFP payments are administered by USDA's Farm Service Agency (FSA). The Food Purchase and Distribution Program (FPDP) is for purchases of unexpected surpluses of affected commodities such as fruits, nuts, rice, legumes, beef, pork, milk, and other specified products for redistribution by USDA's Food and Nutrition Service through federal nutrition assistance programs including food banks, schools, and other outlets serving low-income individuals. It is administered by USDA's Agricultural Marketing Service. The Agricultural Trade Promotion (ATP) program provides cost-share assistance to eligible U.S. organizations for activities\u00e2\u0080\u0094such as consumer advertising, public relations, point-of-sale demonstrations, participation in trade fairs and exhibits, market research, and technical assistance\u00e2\u0080\u0094to boost exports for U.S. agriculture, including food, fish, and forestry products. It is administered by USDA's Foreign Agriculture Service in conjunction with the private sector. ", "The two years of trade assistance, as announced by the Secretary of Agriculture, were valued at a potential combined $28 billion, the largest component being the MFP direct payments to producers valued at a combined $24.5 billion ( Table 8 ).", "The broad discretionary authority granted to the Secretary under the CCC Charter Act to implement the trade-aid package also allowed the Secretary to determine how the aid was calculated and distributed. Some important differences between the 2018 and 2019 trade aid packages include the following:", "Although the 2018 and 2019 MFP programs focused payments on the same three commodity groups\u00e2\u0080\u0094non-specialty crops (grains and oilseeds), specialty crops (nuts and fruit), and animal products (hogs and dairy)\u00e2\u0080\u0094the 2019 MFP included an expanded list of eligible commodities (41 eligible commodities in 2019 compared with nine in 2018). The 2018 MFP payments for eligible specialty and non-specialty crops were based on physical production in 2018, and calculated as per-unit payment rates. The 2019 MFP program based its payment rates for specialty crops on harvested acres, and non-specialty crops on planted acres. This change was done to avoid having MFP payments reduced by the lower yields that were expected to occur across major growing regions due to the widespread wet spring and delayed plantings. Then a weighted-average MFP payment-rate-per-acre was calculated at the county level. This was done to minimize influencing producer crop choices and avoid large payment-rate discrepancies across commodities grown within the same county. The end result was a single 2019 MFP payment rate for each county with eligible commodities. Under both 2018 and 2019 MFP programs, payments to dairy producers were based on historical production, while those to hog producers used mid-year inventory data. Payments were made in three tranches under both the 2018 and 2019 MFP programs; cumulative program receipts were subject to annual payment limits and adjusted gross income (AGI) eligibility requirements. The 2018 MFP payments were capped on a per-person or per-legal-entity basis at a combined $125,000 for eligible non-specialty crops, a combined $125,000 for animal products, and, separately, a combined $125,000 for specialty crops. In contrast, the 2019 package used expanded payment limits per individual per commodity group ($250,000) and an expanded maximum combined payment limit across commodity groups ($500,000 versus $375,000 in 2018). Both 2018 and 2019 MFP payment recipients were subject to an AGI eligibility threshold of $900,000, but with an exemption from the AGI criteria if at least 75% of a farm's AGI was from farming operations.", "There is a general consensus among farm policy analysts that the MFP payments provided a substantial income boost to the U.S. agricultural sector in the aggregate during what otherwise would have been a period of low commodity prices and low net farm income. However, an examination of MFP payments data reveals that they were unevenly distributed across both commodities and regions."], "subsections": []}, {"section_title": "Congressional Action and Assistance", "paragraphs": ["No congressional action was involved in the establishment, funding, or implementation of the 2018 and 2019 MFP programs. The ranking member of the Senate Committee on Agriculture, Nutrition, and Forestry, Debbie Stabenow of Michigan, has raised concerns about the methodology used to determine payment rates and the resultant distribution of payments across both commodities and regions. In January 2020, Senator Stabenow requested a comprehensive investigation by GAO into the integrity of USDA's trade aid to farmers affected by the Trump Administration's trade policies."], "subsections": []}, {"section_title": "Repayment or Recoupment of Assistance", "paragraphs": ["There is no provision for repayment or recoupment of any of the funds disbursed under the 2018 and 2019 trade-aid packages. President Trump has claimed that the tariffs imposed on products imported into the United States increased U.S. government revenue, and that these amounts, mainly paid by Chinese exporters, were used to offset the cost of the trade-aid packages. However, economic studies have generally found that the cost of tariffs on imported goods is borne largely by U.S. firms and consumers, not by foreign trading partners."], "subsections": []}, {"section_title": "Final Outcome", "paragraphs": ["USDA's use of CCC authority to initiate and fund agricultural support programs without congressional involvement is not without precedent, but the scope and scale of its use for the two trade-aid packages\u00e2\u0080\u0094at a potential cost of up to $28 billion\u00e2\u0080\u0094have increased congressional and public interest. On February 11, 2020, USDA Inspector General Phyllis Fong told the House Agriculture Appropriations Subcommittee that her office would be undertaking an investigation of the Administration's trade assistance programs, starting with whether USDA had the proper legal authority to make direct payments to farmers. It is also possible that other countries may challenge MFP payments as a violation of U.S. trade commitments to the World Trade Organization."], "subsections": []}]}]}}
{"id": "R46148", "title": "U.S. Killing of Qasem Soleimani: Frequently Asked Questions", "released_date": "2020-01-13T00:00:00", "summary": ["The January 2, 2020, U.S. killing in Iraq of Islamic Revolutionary Guard Corps-Qods Force (IRGC-QF) Commander Qasem Soleimani, generally regarded as one of the most powerful and important officials in Iran, has potentially dramatic implications for the United States. For Congress, it raises possible questions about U.S. policy in the Middle East, broader U.S. global strategy, U.S. relations with partners and allies, the authorization and legality of U.S. military action abroad, U.S. measures to protect its servicemembers and diplomatic personnel, and congressional oversight of these and related issues.", "This report provides background information in response to some frequently asked questions related to the strike and its aftermath, including", "Who was Qasem Soleimani and why did the U.S. military kill him? How have Iranians reacted? How have Iraqis reacted and how does this impact Iraqi policy and government formation? How might the strike and Iraqi reactions impact the U.S. military presence in Iraq and the U.S.-led counter-ISIS campaign (Operation Inherent Resolve)? How does the killing of Soleimani impact Israel and its security? What has been the European reaction? Under what authority did the U.S. military carry out the strike? How have Members of Congress responded legislatively or otherwise? What is the U.S. force posture in the region? How do recent regional developments align with broader U.S. strategy?", "The information contained in this report, which will be updated periodically as events warrant, is current as of January 13, 2020. The following CRS products provide additional background and analysis of issues discussed in this report:", "CRS Report R44017, Iran's Foreign and Defense Policies , by Kenneth Katzman; CRS Report R45795, U.S.-Iran Conflict and Implications for U.S. Policy , by Kenneth Katzman, Kathleen J. McInnis, and Clayton Thomas; CRS In Focus IF11403, The 2019-2020 Iran Crisis and U.S. Military Deployments , by Kathleen J. McInnis; CRS In Focus IF10404, Iraq and U.S. Policy , by Christopher M. Blanchard; CRS Report R42699, The War Powers Resolution: Concepts and Practice , by Matthew C. Weed; CRS Report RL34544, Iran's Nuclear Program: Status , by Paul K. Kerr; and CRS In Focus IF11338, Diplomatic Security and the Role of Congress , by Cory R. Gill and Edward J. Collins-Chase."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction: How did the United States and Iran get here?1", "paragraphs": ["Relations between Iran and the United States have been mostly confrontational since 1979, when Iran's Islamic Revolution removed from power the U.S.-backed government of the Shah and replaced it with a Shia-cleric dominated system. Successive U.S. administrations have treated Iranian policies as a threat to U.S. interests in the Middle East, particularly Iran's support for terrorist and other armed groups and, after 2002, its nuclear program.", "Following its 2018 withdrawal from the 2015 multilateral nuclear agreement with Iran (Joint Comprehensive Plan of Action, JCPOA), the Trump Administration has taken several steps in its campaign of applying \"maximum pressure\" on Iran. These steps include designating the Islamic Revolutionary Guards Corps-Qods Force (IRGC-QF) as a Foreign Terrorist Organization (FTO), ending a U.S. sanctions exception for the purchase of Iranian oil to bring Iran's oil exports to \"zero,\" and deploying additional U.S. military assets to the region. Tensions have increased significantly since May 2019, as Iran (and Iran-linked forces) have apparently responded by attacking and seizing commercial ships, posing threats to U.S. forces and interests (including downing a U.S. unmanned aerial vehicle), causing destruction to some critical infrastructure in the Arab states of the Persian Gulf, and reducing compliance with the provisions of the JCPOA. ", "On December 27, 2019, a rocket attack on a base near Kirkuk in northern Iraq killed a U.S. contractor and wounded four U.S. servicemembers and two Iraqi servicemembers. Two days later, the United States launched retaliatory airstrikes on five facilities (three in Iraq, two in Syria) used by the Iran-backed Iraqi armed group Kata'ib Hezbollah (KH), a U.S.-designated FTO to which the United States attributed the December 27 and other attacks. On December 31, 2019, supporters of Kata'ib Hezbollah and other Iran-backed Iraqi militias surrounded the U.S. Embassy in Baghdad, forcing their way into the compound and setting some outer buildings on fire. No U.S. personnel were reported harmed at the Embassy, but Secretary of Defense Mark Esper announced the deployment of an additional infantry battalion \"in response to increased threat levels against U.S. personnel and facilities, such as we witnessed in Baghdad.\" President Trump tweeted that Iran, which \"orchestrat[ed the] attack,\" would \"be held fully responsible for lives lost, or damage incurred, at any of our facilities. They will pay a very BIG PRICE!\" ", "On January 2, 2020, the U.S. Department of Defense announced in a statement that the U.S. military had killed IRGC-QF Commander Major General Qasem Soleimani in a \"defensive action.\" The statement cited Soleimani's responsibility for \"the deaths of hundreds of Americans and coalition servicemembers\" and his approval of the embassy blockade in Baghdad, and asserted that he was \"actively developing plans to attack American diplomats and servicemembers in Iraq and throughout the region.\" According to subsequent media reports and Administration statements, Soleimani was killed in a U.S. drone strike while leaving Baghdad International Airport early on the morning of January 3 local time; KH founder and Iraqi Popular Mobilization Forces (PMF) leader Abu Mahdi Al Muhandis and other Iranian and Iraqi figures also were killed in the strike."], "subsections": []}, {"section_title": "Who was Qasem Soleimani and why did the U.S. military kill him?5", "paragraphs": ["Soleimani was widely regarded as one of the most powerful and influential figures in Iran, perhaps second only to Supreme Leader Ali Khamene'i, to whom Soleimani reportedly had a direct channel. As head of the IRGC-QF, Soleimani was the driving force behind Iran's external military operations, including the campaign to keep the Asad government in power in Syria. Some analysts argue that his death is likely to have a dramatic impact on Iran's capabilities, with one expert describing him as \"the military center of gravity of Iran's regional hegemonic efforts\" and \"an operational and organization genius who likely has no peer in the upper ranks of the Islamic Revolutionary Guard Corps.\" Others contend that while Soleimani was undoubtedly important, \"he was only the agent of a government policy that preceded him and will continue without him.\" ", "U.S. officials have explained the timing and rationale behind the strike in a number of ways.", "Administration officials claim that Soleimani posed a direct threat and that he was involved in planning an \"imminent\" attack that would put U.S. lives at risk. Some Members of Congress have challenged that assertion, publicly contesting the evidence presented by the Administration in a classified setting. President Trump said in a January 10 interview that he believed Soleimani was involved in planning \"large-scale attacks\" on \"four embassies,\" while Secretary Esper said on January 12 that he \"didn't see\" specific intelligence indicating such a threat. Some Members of Congress have also challenged this rationale in light of reports that another IRGC-QF commander was targeted in Yemen on the same day as the Soleimani strike (see below). The Administration has also argued that striking Soleimani was an attempt to deter future Iranian aggression. Striking Soleimani would appear to be of greater magnitude than previous U.S. responses, such as additional troop deployments, that were carried out with the stated intention of deterring Iran. Those responses arguably did not do so (given the December 27 rocket strike and other Iranian actions). This killing thus may be an attempt to alter Iran's decision-making calculus. Some have suggested that the December 27 death of the American contractor in Iraq and the subsequent embassy blockade compelled President Trump to order the strike.", "Secretary of State Mike Pompeo has underscored that the United States is not seeking further escalation."], "subsections": []}, {"section_title": "How has Iran reacted?15", "paragraphs": ["Iran's leaders, including Supreme Leader Khamene'i and President Hassan Rouhani, have vowed revenge for Soleimani's killing. Khamene'i declared three days of public mourning, and large crowds, estimated in the hundreds of thousands in some cases, attended funeral processions for Soleimani across Iran. One analyst argues that, because of Soleimani's personal popularity across the Iranian political spectrum, his death \"will create a rally to the flag,\" likely strengthening hardliners in advance of legislative elections scheduled for February 2020. Others caution that the crowds, brought about in part by government coercion, are also \"images that are destined for domestic consumption but more so for foreign consumption to display popular support for the regime.\"", "Early on January 8, 2020 (Iraq local time), in its first action since Soleimani's death, Iran launched several ballistic missiles targeting at least two Iraqi military bases where U.S. forces are located. The U.S. Department of Defense said the missiles, of which there were more than a dozen, were launched from Iran. Both the U.S. and Iraqi militaries reported no casualties. President Trump appeared to downplay the attack, tweeting that \"All is well!\" and \"So far, so good!\" Iranian officials conveyed different messages about the strike and whether it represented the entirety of Iran's response. Iranian Foreign Minister Javad Zarif tweeted that Iran \"took & concluded proportionate measures,\" while Supreme Leader Khamene'i tweeted that \"such military actions are not enough.\" Debate remains about whether Iran intended to inflict casualties in the attack: an Iranian general said that Iran \"did not intend to kill,\" while Chairman of the Joints Chief of Staff Army General Mark Milley and Secretary Pompeo have said that Iran did have that intention. Some outside analysts contend that Iran was seeking to demonstrate its ability to kill Americans while stopping short of doing so. ", "Further Iranian response could take several forms. Possible Iranian retaliatory measures could include mobilizing militias it supports to attack U.S. forces deployed in Iraq, Syria, and/or Afghanistan; conducting strikes on oil production facilities or tankers, U.S. military installations, or other targets in the Gulf; activating proxies and operatives to execute \"more asymmetric or unconventional-style hits\" through Europe, South America, or elsewhere; cyber attacks; or other responses. The confrontation also could heighten the prospect of additional Iranian steps in breach of the JCPOA (see below), perhaps dealing a \"fatal blow\" to the accord and international attempts to preserve it. Regarding the threat posed by possible Iranian retaliation, Secretary Pompeo said on January 5 that \"there is a real likelihood that Iran will make a mistake and make a decision to go after some of our forces,\" while also maintaining that, \"There is less risk today to American forces in the region as a result of\" Soleimani's death. ", "Iranian options may be constrained by increased domestic upheaval in the wake of its January 8, 2020, downing of a civilian airliner. Several hours after Iranian forces launched missiles at Iraqi bases, a Ukraine International Airlines passenger flight crashed shortly after taking off from Tehran, killing all 176 on board. The Iranian government stated that the crash was caused by a mechanical failure and pledged to investigate the incident, which it described as unrelated to the missile launch. However, international pressure grew in light of evidence that the plane had been shot down by the Iranian military, and after Canada (which had 57 citizens killed in the crash) and several other countries publicly charged Iran with downing the plane, the Iranian government admitted that the plane had been shot down by a Russian-made Tor-M1 (or SA-15) surface-to-air missile, attributing the firing to \"human error.\" Demonstrators subsequently gathered in Tehran and elsewhere to demand accountability and condemn the government, with President Trump warning Iranian leaders, via Twitter, \"Do not kill your protesters\" and \"the world is watching.\""], "subsections": []}, {"section_title": "Is the United States considering new sanctions on Iran?29", "paragraphs": ["In May 2018, President Trump signed National Security Presidential Memorandum 11, \"ceasing U.S. participation in the JCPOA [Joint Comprehensive Plan of Action] and taking additional action to counter Iran's malign influence and deny Iran all paths to a nuclear weapon.\" The action set in motion a reestablishment of U.S. unilateral economic sanctions that affect U.S. businesses and include secondary sanctions that target commerce originating in other countries that engage in trade with and investment in Iran.", "On January 10, 2020, the President, as promised in the immediate aftermath of the U.S. drone strike that killed Soleimani, announced new sanctions to curtail international trade, transactions, and financing in Iran's construction, mining, manufacturing, and textile sectors. The Secretary of the Treasury, on the same day, announced that eight \"senior Iranian regime officials who have advanced the regime's destabilizing objectives\" were made subject to sanctions, and 17 Iranian metals producers, mining companies, and three partners in China and the Seychelles that facilitated trade in Iran's metal products were also now designated for economic restrictions.", "The sanctions authority announced on January 10, like the authority used to target those engaged in Iran's metals and mining sectors, can be used to target individuals and entities\u00e2\u0080\u0094including financial institutions\u00e2\u0080\u0094in third countries (secondary sanctions) that are found to operate in or engage in the sector, or materially assist, sponsor, or provide \"financial, material, or technological support for, or goods or services to or in support of\" any entity subject to sanctions for its participation in Iran's construction, mining, manufacturing, and textile sectors. Foreign financial institutions, in particular, could be subject to being denied the means to operate in the United States. No designations have been made yet under this new sanctions authority."], "subsections": []}, {"section_title": "Has the strike changed Iran's approach to the JCPOA?31", "paragraphs": ["Following the Trump Administration's May 2018 announcement that the United States would no longer participate in the JCPOA, Iran threatened to exceed the agreement's limits on the country's nuclear activities. In July 2019, the International Atomic Energy Agency (IAEA) verified that some of Iran's nuclear activities were exceeding these limits; the Iranian government has since increased the number of such activities, such as exceeding JCPOA-mandated limits on its heavy water stockpile.", "The Iranian government announced on January 5, 2020, what an official news agency report described as \"the fifth and final step in reducing\" Tehran's JCPOA commitments. The statement explains that Iran \"will set aside the final operational restrictions under the JCPOA which is 'the restriction on the number of centrifuges,'\" but provides no further details. Tehran has stated that the government will continue to cooperate with the IAEA and abide by the JCPOA's monitoring and inspections provisions. The January 5 announcement adds that \"[i]n case of the removal of sanctions and Iran benefiting from the JCPOA,\" Iran \"is ready to resume its commitments\" pursuant to the agreement. This announcement does not mention Soleimani's death and is consistent with a timeline described in a November 5, 2019, speech by Iranian President Hassan Rouhani speech, in which he said, \"In the next two months, we still have a chance for negotiations.\""], "subsections": []}, {"section_title": "Which groups does Iran support in the region?37", "paragraphs": ["Iran's support for armed factions in the region is a key instrument of its policy. Iran's operations in support of its allies (identified below) are carried out by the IRGC-QF, formerly headed by Soleimani. IRGC leaders generally publicly acknowledge operations in support of regional allies, although they often characterize Iran's support as humanitarian aid or protection for Shia minority populations or religious sites. Iran supplies weaponry to its allies including specialized anti-tank systems, artillery rockets, mortars, short-range ballistic missiles, and cruise missiles. ", "Estimates of the dollar value of material support that Iran provides to its allies and proxies vary widely and are difficult to corroborate. Information from official U.S. government sources sometimes provides broad dollar figures without breakdowns or clear information on how those figures were derived. For example, the State Department's September 2018 report \"Outlaw Regime: A Chronicle of Iran's Destructive Activities\" asserts that Iran has spent over $16 billion since 2012 \"propping up the Assad regime and supporting [Iran's] other partners and proxies in Syria, Iraq, and Yemen.\" However, that report appears to cite an outside estimate that does not explain how the estimates were derived. "], "subsections": [{"section_title": "Hezbollah41", "paragraphs": ["The State Department has described Hezbollah, a Lebanon-based militia and U.S.-designated Foreign Terrorist Organization (FTO) that plays a major role in Lebanese politics, as \"Iran's primary terrorist proxy group;\" Iran provides Hezbollah with significant funding, training and weapons. In June 2018, Treasury Under Secretary for Terrorism and Financial Intelligence Sigal Mandelker estimated that Iran provided Hezbollah with more than $700 million per year. According to the State Department, Iran provides Hezbollah with thousands of rockets, short-range missiles, and small arms, and has trained \"thousands\" of Hezbollah fighters at camps in Iran. Israeli security officials have also expressed concern that Iran may be assisting Hezbollah to develop an indigenous rocket and missile production capability. "], "subsections": []}, {"section_title": "Pro-Asad Government Forces (Syria)", "paragraphs": ["Since violence broke out in Syria in 2011, Iran has provided technical assistance, training, and financial support to both the Syrian government and to pro-regime Shia militias operating in Syria. The U.S. Department of the Treasury has designated for sanctions the Iranian Ministry of Intelligence and Security (MOIS), the IRCG-QF, and Iran's national police pursuant to Executive Order 13572 (April 2011), for assisting the Syrian government in its violent crackdown on protestors. Iran also has facilitated the travel of Shia militia fighters from Iraq, Afghanistan, and Pakistan into Syria to bolster the Asad government. Iran has directly backed the activities of these militia fighters with armored vehicles, artillery, and drones. Iran also has provided Syria with billions of dollars in credit to purchase oil, food, and import goods. In mid-2019, the United States imposed sanctions on Iranian ships and shipping facilitators involved in Iranian oil shipments to Syria."], "subsections": []}, {"section_title": "Iraqi Militias", "paragraphs": ["Iran supports a number of armed groups in Iraq, including U.S. designated terrorist organizations such as Kata'ib Hezbollah (KH), Asa'ib Ahl al Haq (AAH), and Harakat Hezbollah al Nujaba. Iran-linked groups in Iraq directly targeted U.S. forces from 2003 through 2011, and U.S. officials blame Iran-linked Iraqi groups for a series of indirect fire attacks on U.S. and Iraqi facilities hosting U.S. civilian and military personnel since 2018. The 115 th and 116 th Congresses have considered proposals directing the Administration to impose U.S. sanctions on some Iran-aligned Iraqi groups, and enacted legislation containing reporting requirements focused on Iranian support to nonstate actors in Iraq and other countries. ", "On January 3, 2020, the State Department designated the AAH as a Foreign Terrorist Organization and two of the group's leaders, Qa'is Khazzali and his brother Laith, as Specially Designated Global Terrorists under E.O.13224, as amended by E.O. 13886. These designations follow action taken by the Department of the Treasury on December 6, 2019, to designate the brothers pursuant to E.O. 13818 for their involvement in serious human rights abuses in Iraq, notably approving lethal force against protestors. ", "Several Iraqi militia forces have vowed revenge against the United States and stated their renewed commitment to expelling U.S. forces from Iraq, but some others have called for a measured approach and disavowed potential attacks on non-military targets as a means of fulfilling their stated objectives. For example, Kata'ib Hezbollah released a statement in the aftermath of the Iranian missile attack on Iraq saying \"emotions must be set aside\" to further the project of expelling the United States. On January 8, Qa'is al Khazali said that the response to the killing of Soleimani and Muhandis \"will be no less than the size of the Iranian response. That is a promise.\" Later Khazali denied responsibility for a January 8 rocket attack targeting the U.S. Embassy while insisting on U.S. military withdrawal and vowing an \"earthshattering\" response. ", "Iran has sometimes intervened militarily in Iraq directly, including by conducting air strikes against Islamic State forces advancing on the border with Iran in 2014 and by launching missiles against Iranian Kurdish groups encamped in parts of northern Iraq in 2018."], "subsections": []}, {"section_title": "Houthis (Yemen)", "paragraphs": ["Iranian leaders have not historically identified Yemen as a core Iranian security interest, but they have given some material support to the Shia Houthi rebels that are fighting Saudi Arabia and the coalition that it leads in support of the Yemeni government. In response to the Saudi-led air campaign in Yemen, the Houthis have fired ballistic missiles on sites within Saudi Arabia on several occasions; Saudi Arabia, with U.S. backing, accuses Iran of providing those missiles. The increasingly sophisticated nature of Iran's support for the Houthis could suggest that Iran perceives the Houthis as a potential proxy to project power on the southwestern coast of the Arabian Peninsula. On the other hand, Special Representative for Iran and Senior Advisor to the Secretary of State Brian Hook stated on December 5, 2019, that Iran's continued involvement in the conflict amidst a nascent Saudi-Houthi de-escalation process since September 2019 shows that \"Iran clearly does not speak for the Houthis\u00e2\u0080\u00a6. Iran is trying to prolong Yemen's civil war to project power.\" In December 2019, the U.S. government offered up to $15 million for information concerning Yemen-based IRGC-QF leader Abdul Reza Shahla'i. Shahla'i reportedly was targeted by a strike or raid in Yemen on January 3, 2020, the day of Soleimani's killing. Unnamed U.S. officials reportedly confirmed the operation, which was unsuccessful, on January 10, leading some analysts and some Members of Congress to question the Administration's assertion that the Soleimani strike was justified by an \"imminent threat.\""], "subsections": []}, {"section_title": "Other groups", "paragraphs": ["In addition to the entities above, the U.S. government alleges that Iran provides support to other regional groups, including Palestinian groups Hamas and Islamic Jihad, the Bahraini group Al Ashtar Brigades, and the Afghan Taliban."], "subsections": []}]}, {"section_title": "How have Iraqis reacted and how does this impact Iraqi policy and government formation?58", "paragraphs": ["Iraqi officials protested the December 29 U.S. airstrikes on KH personnel as a violation of Iraqi sovereignty, and, days later, KH members and other figures associated with Iran-linked militias and PMF units marched to the U.S. Embassy in Baghdad and damaged property, setting outer buildings on fire. Iraqi officials and security forces reestablished order outside the embassy, but tensions remained high, with KH supporters and other pro-Iran figures threatening further action and vowing to expel the United States from Iraq by force if necessary.", "As noted, along with Soleimani, the U.S. airstrike that hit his convoy also killed KH founder and PMF leader Jamal Ja'far al Ibrahimi (commonly referred to as Abu Mahdi al Muhandis). Muhandis was one of the key Iraqi leaders aligned with Iran who worked with Soleimani to develop and maintain Iran's ties to armed groups in Iraq over the last 20 years; Soleimani long served as a leading Iranian emissary to Iraqi political and security figures. The death of Al Muhandis is expected to require renegotiation in the relationships among Iran-aligned Iraqi militias and shape the PMF's future.", "The U.S. operation was met with shock in Iraq, and Prime Minister Adel Abd al Mahdi and President Barham Salih issued statements condemning the strike as a violation of Iraqi sovereignty. The prime minister called for and then addressed a special session of Iraq's unicameral legislature, the Council of Representatives (COR), on January 5, recommending that the quorum of legislators present vote to direct his government to ask all foreign military forces to leave the country. Most Kurdish and Sunni COR members reportedly boycotted the session.", "Those COR members present adopted by voice vote a parliamentary decision directing the Iraqi government to", "withdraw its request to the international anti-IS coalition for military support; remove all foreign forces from Iraq and end the use of Iraq's territory, waters, and airspace by foreign militaries; protest the U.S. airstrikes as breaches of Iraqi sovereignty at the United Nations and in the U.N. Security Council; and investigate the U.S. strikes and report back to the COR within seven days. ", "On January 6, Prime Minister Abd al Mahdi met with U.S. Ambassador to Iraq Matthew Tueller and informed him of the COR's decision, requesting that the United States begin working with Iraq to implement the COR decision. In a statement, the prime minister's office reiterated Iraq's desire to avoid war, to resist being drawn into conflict between outsiders, and to maintain cooperative relations with the United States based on mutual respect. ", "Amid subsequent reports that some U.S. military forces in Baghdad are repositioning for force protection reasons and potentially \"to prepare for onward movement,\" Secretary Esper stated, \"There has been no decision made to leave Iraq, period.\" On January 9, Prime Minister Abd al Mahdi asked Secretary of State Michael Pompeo to \"send delegates to Iraq to prepare a mechanism to carry out the parliament's resolution regarding the withdrawal of foreign troops from Iraq.\" On January 10, the State Department released a statement saying \"At this time, any delegation sent to Iraq would be dedicated to discussing how to best recommit to our strategic partnership, not to discuss troop withdrawal, but our right, appropriate force posture in the Middle East.\" Secretary of State Michael Pompeo said that Prime Minister Abd al Mahdi's office had not characterized their conversation accurately, and said", "We are happy to continue the conversation with the Iraqis about what the right structure is. Our mission set there is very clear: We've been there to perform a training mission to help the Iraqi security forces be successful and to continue the campaign against ISIS, the counter-Daesh campaign. We're going to continue that mission. But as the\u00e2\u0080\u0094as times change and we get to a place where we can deliver upon what I believe and the President believes is our right structure, with fewer resources dedicated to that mission, we will do so.", "Prime Minister Abd al Mahdi's December 2019 resignation marked the beginning of what may be an extended political transition period in Iraq that reopens several contentious issues for debate and negotiation. Principal political decisions now before Iraqi leaders concern (1) identification and endorsement of a caretaker prime minister and cabinet, (2) implementation of adopted electoral system reforms, and (3) the proposed holding of parliamentary and provincial government elections in 2020. Following any national elections, government formation negotiations would recur, taking into consideration domestic and international developments over the interim period, including the fate of foreign military efforts in Iraq and the state of U.S.-Iran-Iraq relations.", "Leaders in Iraq's Kurdistan Regional Government have endorsed the continuation of foreign military support for Iraq, but may be wary of challenging the authority of the national government if Baghdad issues departure orders to foreign partners. On January 7, Kurdistan Democratic Party leader and former KRG President Masoud Barzani said, \"we cannot be involved in any proxy wars.\" Prime Minister Abd al Mahdi traveled to Erbil to consult with Barzani on January 11, generating speculation that Abd al Mahdi may be seeking support for a re-nomination as prime minister."], "subsections": []}, {"section_title": "What is the diplomatic basis for the U.S. military presence in Iraq? 66", "paragraphs": ["In 2014, the Iraqi government submitted two requests to the United Nations Security Council asking for international training, advice, and military assistance in combatting the threats posed by the Islamic State organization. These invitational letters have provided the underlying diplomatic basis for the presence of most U.S. and other international military forces in Iraq since 2014. Supplementary bilateral agreements between the Iraqi government and troop contributing countries set terms for the continued deployment of foreign forces in Iraq, and the presence of U.S. troops contributing to Operation Inherent Resolve (the U.S.-led international coalition to defeat the Islamic State), related training, and advisory support is governed by an exchange of diplomatic notes agreed to in 2014. According to former Special Presidential Envoy for the Global Coalition to Counter ISIL Brett McGurk, the 2014 U.S.-Iraq diplomatic notes, which are not public, contain a one year cancelation clause. The executive authority of the Iraqi government (the Prime Minister) may seek to amend or revoke requests for international assistance submitted to the United Nations or reached with other governments at its discretion: Iraq's constitution does not require the Iraqi executive to seek the approval of legislators in the Council of Representatives. As noted above, Prime Minister Abd al Mahdi and Secretary of State Pompeo have had initial conversations regarding the future of the U.S. presence in Iraq."], "subsections": []}, {"section_title": "Is the United States considering sanctions on Iraq? 69", "paragraphs": ["President Trump has threatened to impose sanctions on Iraq, if Iraq forces U.S. troops to withdraw on unfriendly terms. Depending on the form such sanctions might take, they could elicit reciprocal hostility from Iraq and could complicate Iraq's economic ties to its neighbors and U.S. partners in Europe and Asia. If denied opportunities to build economic ties to the United States and U.S. partners, Iraqi leaders could instead mover closer to Iran, Russia, and/or China with whom they have already established close ties. Since 2018, Iraqi leaders have sought and received temporary relief from U.S. sanctions on Iran, in light of Iraq's continuing dependence on purchases of natural gas and electricity from Iran. The Trump Administration has serially granted temporary permissions for these transactions to continue, while encouraging Iraq to diversify its energy relationships with its neighbors and to become more energy independent. The Administration's most recent such sanction exemption for Iraq is set to expire in February 2020.", "Some press reporting suggests that Administration officials have begun preparing to implement the President's sanctions threat if necessary and considering potential effects and consequences. On May 19, 2019, the Trump Administration renewed the national emergency with respect to the stabilization of Iraq declared in Executive Order 13303 (2003) as modified by subsequent executive orders. Sanctions could be based on the national emergency declared in the 2003 Executive Order, or the President could declare that recent events constitute a new, separate emergency under authorities stated in the National Emergency Act and International Emergency Economic Powers Act (NEA and IEEPA, respectively). Sanctions under IEEPA target U.S.-based assets and transactions with designated individuals; while a designation might not reap significant economic disruption, it can send a significant and purposefully humiliating signal to the international community about an individual or entity. The National Emergencies Act, at 50 U.S.C. 1622, provides a legislative mechanism for Congress to terminate a national emergency with enactment of a joint resolution of disapproval. ", "Short of declaring a national emergency, however, the President has broad authority to curtail foreign assistance (throughout the Foreign Assistance Act of 1961 (22 U.S.C. 2151 et seq.), and related authorizations and appropriations), sales and leases of defense articles and services (particularly Section 3 of the Arms Export Control Act; 22 U.S.C. 2753), and entry into the United States of Iraqi nationals (Immigration and Nationality Act; particularly at 8 U.S.C. 1189)."], "subsections": []}, {"section_title": "How might the strike and Iraqi reactions impact the U.S. military presence in Iraq and the U.S.-led counter-ISIS campaign (Operation Inherent Resolve)?74", "paragraphs": [], "subsections": [{"section_title": "Iraq", "paragraphs": ["More than 5,000 U.S. military personnel and hundreds of international counterparts remain in Iraq at the Iraqi government's invitation, subject to bilateral executive-to-executive agreements. Since Soleimani's death, Canada and Germany have announced withdrawal of some of their training forces from Iraq. Combined Joint Task Force\u00e2\u0080\u0094Operation Inherent Resolve (CJTF-OIR) announced on January 5 that U.S. training and counter-IS operations were being temporarily paused to enable U.S. forces to focus on force protection measures. ", "U.S. officials have reported that through October 2019, the Islamic State group in Iraq continued \"to solidify and expand its command and control structure in Iraq, but had not increased its capabilities in areas where the Coalition was present.\" CJTF-OIR judged that IS fighters \"continued to regroup in desert and mountainous areas where there is little to no local security presence\" but were \"incapable of conducting large-scale attacks.\" Iraqi Security Forces (ISF), Counter Terrorism Service (CTS) and Popular Mobilization Forces (PMF) continue to conduct clearance, counterterrorism, and hold missions against IS fights across northern, central, and western Iraq. Some of these operations are conducted without U.S. and coalition support, while others are partnered with U.S. and coalition forces or supported by U.S. and coalition forces.", "In its latest public oversight reporting, CJTF-OIR described the Iraqi Security Forces as lacking sufficient personnel to hold and constantly patrol remote terrain. According to CJTF-OIR reporting to the DOD inspector general, Iraq's Counterterrorism Service (CTS) has \"dramatically improved\" its ability \"to integrate, synchronize, direct, and optimize counterterrorism operations,\" and some CTS brigades are able to sustain unilateral operations. According to U.S. officials, ISF units are capable of conducting security operations in and around population centers and assaulting identified targets but many lack the will and capability to \"find and fix\" targets or exploit intelligence without assistance from coalition partners. According to November 2019 reporting", "CJTF-OIR said that most commands within the ISF will not conduct operations to clear ISIS insurgents in mountainous and desert terrain without Coalition air cover, intelligence, surveillance, and reconnaissance (ISR), and coordination. Instead, ISF commands rely on the Coalition to monitor \"points of interest\" and collect ISR for them. Despite ongoing training, CJTF-OIR said that the ISF has not changed its level of reliance on Coalition forces for the last 9 months and that Iraqi commanders continue to request Coalition assets instead of utilizing their own systems.", "These conditions and trends suggest that while the capabilities of IS fighters remain limited at present, IS personnel and other armed groups could exploit persistent weaknesses in ISF capabilities to reconstitute the threats they pose to Iraq and neighboring countries. This may be particularly true with regard to remote areas of Iraq or under circumstances where security forces remain otherwise occupied with crowd control or force protection measures. A reconstituted IS threat might not reemerge rapidly under these circumstances, but the potential is evident.", "U.S. and coalition training efforts have shifted to a train-the-trainer and Iraqi ownership approach under the auspices of OIR's Reliable Partnership initiative and the NATO Training Mission in Iraq. Reliable Partnership was redesigned to focus on building a minimally viable counterterrorism capacity among Iraqi forces, with other outstanding capability and support needs to be reassessed after September 2020. In the days following the Soleimani killing, Coalition and NATO training efforts were temporarily suspended, and some countries announced plans to withdraw forces participating in Coalition and NATO training programs. If such trends continue, they could accelerate an already planned transition to greater Iraqi ownership of training efforts and an international reassessment of Iraq's needs and terms for longer-term partnership."], "subsections": []}, {"section_title": "Syria", "paragraphs": ["The January 5 CJTF-OIR statement that announced the pause in counter-IS operations in Iraq following Soleimani's death, referenced above, did not mention the status of U.S. operations against the Islamic State in Syria, where roughly 600 U.S. forces are currently based. Various observers have argued that the absence of ongoing U.S. counterterrorism pressure is likely to provide the Islamic State with the operational space necessary to reconstitute itself in the region. ", "U.S. forces in Syria have at times come into direct conflict with Iran-backed militia forces. In 2017, U.S. forces in Syria conducted strikes against pro-Asad militia fighters that infiltrated the de-confliction area around the U.S. garrison at At Tanf. In late 2019, U.S. forces targeted the Iran-backed militia Kata'ib Hezbollah in Iraq and eastern Syria, in response to an attack by the group on U.S. forces in Kirkuk. U.S. personnel in Syria may be vulnerable to additional attacks by Iran-backed forces. "], "subsections": []}]}, {"section_title": "Under what authority did the U.S. military carry out the strike on Soleimani?80", "paragraphs": ["On January 4, 2020, President Trump submitted a notification to the Speaker of the House and President Pro Tempore of the Senate of the Soleimani drone strike, as required by Section 4(a) of the War Powers Resolution ( P.L. 93-148 ; 50 U.S.C. \u00c2\u00a7 1543(a)(1)), which requires notification within 48 hours of U.S. forces being introduced into conflict or into a situation that could lead to conflict. That notification, pursuant to the War Powers Resolution, also is to set out the constitutional and legislative authority for the action. According to a media report, citing \"congressional officials,\" the notification was classified in its entirety by the Trump Administration, and its contents therefore have not been made publicly available. Speaker Nancy Pelosi criticized the decision to classify the notification in its entirety as \"highly unusual.\"", "In statements after the strike, National Security Adviser Robert O'Brien asserted that the Authorization for Use of Military Force Against Iraq Resolution of 2002 (\"2002 AUMF\"; P.L. 107-243 ) provided the President authority to direct the strike against General Soleimani in Iraq. Congress enacted the 2002 AUMF prior to the 2003 U.S. invasion of Iraq that toppled the government of Saddam Hussein, authorizing the President to use the U.S. military to enforce United Nations Security Council resolutions targeting the Hussein regime and to \"defend the national security of the United States against the continuing threat posed by Iraq.\" The Obama Administration had asserted that U.S. military action after 2014 against the Islamic State in Iraq and Syria was authorized pursuant to the 2002 AUMF as well as the post-September 11, 2001 Authorization for Use of Military Force (\"2001 AUMF\"; P.L. 107-40 ). ", "In a March 2018 report to Congress, the Trump Administration argued that the 2002 AUMF \"has always been understood to authorize the use of force for the related dual purposes of helping to establish a stable, democratic Iraq and for the purpose of addressing terrorist threats emanating from Iraq.\" Speaking in the context of the campaign against the Islamic State, the report stated that the 2002 AUMF \"contains no geographic limitation,\" and asserted that the statute permits the use of military force to protect Iraq outside the territory of Iraq itself if necessary. In a June 2019 letter, the State Department explained that it determined that 2002 AUMF authority permitted the use of military force against Iran \"as may be necessary to protect U.S. and partner forces engaged in counterterrorism operations or operations to establish a stable, democratic Iraq.\" To the extent the Administration considers the actions of Soleimani and the IRGC (designated by President Trump in April 2019 as a terrorist organization) as creating a threat to Iraq's stability or a threat of terrorism, as well as a necessity to protect U.S. or partner forces, this interpretation of the 2002 AUMF would seem to authorize operations such as the Soleimani drone strike both within and outside Iraq."], "subsections": []}, {"section_title": "How have Members of Congress responded legislatively or otherwise?85", "paragraphs": ["Reaction from Members of Congress to the drone strike has been divided, with some Members praising the decision as a blow to Iran's operations placing U.S. and partner forces at risk of attack, and others criticizing the President's decision as possibly precipitating armed conflict between the United States and Iran, and increasing the risk of broader instability in the Middle East. Some Members, including Speaker Nancy Pelosi, have decried the President's failure to inform and consult with Congress prior to the strike, and have questioned the President's authority to conduct such military action. ", "In response to the strike, Senators Tim Kaine and Richard Durbin introduced a joint resolution ( S.J.Res. 63 ) to \"direct the removal of United States Armed Forces from hostilities against the Islamic Republic of Iran that have not been authorized by Congress.\" The resolution states that neither the 2002 AUMF nor the 2001 AUMF provide specific authority to the President to use military force against Iran, and that Congress has not provided such specific authority in any legislation. The resolution further finds that there exists a \"conflict between the United States and the Islamic Republic of Iran\" that constitutes, pursuant to Section 4(a)(1) of the War Powers Resolution ( P.L. 93-148 ; 50 U.S.C. \u00c2\u00a7 1543(a)(1)), \"hostilities or a situation where imminent involvement in hostilities is clearly indicated by the circumstances,\" into which U.S. armed forces have been introduced without authorization. The resolution therefore directs the President to remove U.S. armed forces from hostilities with Iran, \"or any part of its government or military,\" within 30 days of the resolution's enactment. The resolution was introduced pursuant to Section 1013 of the Department of State Authorization Act, Fiscal Years 1984 and 1985 (50 U.S.C. \u00c2\u00a7 1546a), which permits expedited consideration in the Senate of a joint resolution that \"requires the removal of United States Armed Forces engaged in hostilities\" without specific congressional authorization. On January 7, 2020, Representative Ilhan Omar introduced H.J.Res. 82 , the text of which is identical to S.J.Res. 63 .", "After indicating that he had agreed to some changes to S.J.Res. 63 , Senator Kaine introduced an amended version of his original proposal, S.J.Res. 68 , on January 9, 2020. Instead of directing the President to \"remove\" U.S. armed forces from hostilities with Iran, S.J.Res. 68 would direct the President to \"terminate the use of U.S. armed forces for hostilities\" with Iran. This change might be a reflection of concern that requiring \"removal\" of U.S. armed forces might precipitate changes in current deployments, including possible withdrawal of U.S. armed forces in Iraq. The new proposal also eliminates references to Trump Administration statements and policy with regard to Iran.", "On January 3, 2020, Representative Ro Khanna and Senator Bernie Sanders indicated their intent to introduce legislation to prohibit funding for the U.S. use of military force against Iran. Representative Khanna introduced his bill, H.R. 5543 , with 47 cosponsors, on January 7. The bill would state that neither the 2002 AUMF nor 2001 AUMF, nor any other existing provision of law, may be construed to provide authority to use military force against Iran, and would prohibit the use of federal funds to use force against Iran without such specific authorization. The proposed legislation is identical to an amendment adopted in the House version of the National Defense Authorization Act for Fiscal Year 2020, but that was not included in the final version of the act. Senator Sanders introduced a similar bill, S. 3159 , on January 8, 2020.", "On January 8, 2020, Senator Jeff Merkley introduced S.J.Res. 64, which consists of a provision specifying that neither the Authorization for Use of Military Force Against Iraq Resolution of 2002 (\"2002 AUMF\"; P.L. 107-243 ), nor the post-September 11, 2001 Authorization for Use of Military Force (\"2001 AUMF\"; P.L. 107-40 ) \"may be interpreted as a statutory authorization for the use of military force against the Islamic Republic of Iran.\"", "On January 8, 2020, Representative Elissa Slotkin introduced, pursuant to Section 5(c) of the War Powers Resolution (50 U.S.C. \u00c2\u00a7 1544(c)), a concurrent resolution ( H.Con.Res. 83 ) \"to terminate the use of United States Armed Forces to engage in hostilities in or against Iran.\" This resolution would state that Congress has not enacted an authorization for the President to use military force against Iran, and that any decision to use force against Iran should be explained both to Congress, as required by Section 3 of the War Powers Resolution, and the American people. It explains, however, that the \"United States has an inherent right to self-defense against imminent armed attacks.\" In the operative provision, it would therefore directs the President \"to terminate the use of United States Armed Forces to engage in hostilities in or against Iran or any part of its government or military,\" unless Congress specifically authorizes such use of the armed forces, or if such force is necessary and appropriate to defend the United States or its armed forces against \"imminent attack.\" Senator Tom Udall introduced a companion resolution in the Senate, S.Con.Res. 33 , on January 9, 2020.", "The House debated H.Con.Res. 83 on January 9, 2020. During debate, proponents of the resolution argued that the President had taken military action that made wider conflict with Iran more likely, and that it was the constitutional duty of the Congress to require the President to obtain specific legislative authorization for any further military action against Iran only after the Congress had a full opportunity to debate such authorization. Opponents of the measure stated that the President's strike on Soleimani was lawful and necessary to protect the national security of the United States and the safety of U.S. armed forces in Iraq and the Middle East region, and that congressional action to limit the President from carrying out further military action was divisive and would embolden Iran and other enemies of the United States. ", "After general debate, the House voted to adopt H.Con.Res. 83 by a 224-194 roll call vote. The measure will now move to the Senate, where it is to be referred to the Senate Foreign Relations Committee. As a Section 5(c) concurrent resolution receiving privileged consideration pursuant to Section 7 of the War Powers Resolution (50 U.S.C. \u00c2\u00a7 1546), the Committee is required to report the measure to the full Senate for consideration no later than 15 calendar days after referral, upon which the measure becomes the pending business of the Senate and shall be voted upon in the Senate within three calendar days, unless the Senate votes to alter the timeframe by the yeas and nays."], "subsections": []}, {"section_title": "Are the resolutions limiting military action against Iran binding on the President?", "paragraphs": ["Regarding concurrent resolutions. H.Con.Res. 83 was introduced pursuant to Section 5(c) of the War Powers Resolution (50 U.S.C. \u00c2\u00a7 1544(c)), which sets out a process by which Congress can direct termination of an unauthorized presidential use of military force through concurrent resolution, adopted in both houses of Congress but not presented to the President for signature. It has been argued that this provision constitutes an unconstitutional \"legislative veto,\" essentially a legislative action that is intended to have the effect of enacted law but without the step of presentment to the President. In invalidating an unrelated statute as constituting a \"legislative veto,\" the Supreme Court in INS v. Chadha determined that all \"legislative acts\" are subject to the bicameralism and presentment requirements of Article I, \u00c2\u00a77. The Court defined a legislative act as any action \"properly [] regarded as legislative in its character and effect\" or taken with \"the purpose and effect of altering the legal rights, duties and relations of persons ... outside the Legislative Branch.\"", "The courts, however, have not ruled expressly on the constitutionality of Section 5(c), and it is not settled that Section 5(c) resolutions necessarily involve congressional reversal of executive branch action by a simple or concurrent resolution, when such decisions were taken pursuant to a previous congressional delegation of authority to such agency by legislation. It could be argued that Congress adopting a concurrent resolution directing withdrawal from unauthorized hostilities is not a legislative act to repeal existing authority previously delegated by Congress. Congress in the War Powers Resolution has not purported to delegate use of military force decision making authority to the President, setting a legislative veto to reverse such decisions when it sees fit. Nor has it delegated authority to the President to order any specified use of military force. Instead, it can be argued that Congress is indicating its will to formally disapprove an originally unauthorized use of military force, which arguably would not alter the legal rights or duties of the President. Such a resolution would act to reiterate Congress's position, stated in Section 2 of the War Powers Resolution, that the Constitution grants only Congress, not the President, the authority to introduce U.S. armed forces into hostilities in all cases except defense against an armed attack on the United States, its possessions, or U.S. armed forces.", "Regarding Joint Resolutions. A concurrent resolution evidencing the will of Congress to direct the President to withdraw from hostilities that the War Powers Resolution asserts is already unauthorized may nonetheless have less than the desired effect, as it is in one conception merely a reiteration of congressional interpretation of the limits of presidential war powers, an interpretation already rejected in most instances by the President. Using a joint resolution rather than a concurrent resolution as a vehicle to direct the President to cease action against Iran, S.J.Res. 63 (for example) was introduced under Section 1013 of the Department of State Authorization Act, Fiscal Years 1984 and 1985 (50 U.S.C. \u00c2\u00a7 1546a). Congress enacted Section 1013 in the wake of the Chadha decision to provide a separate process by which Congress could expedite consideration of a joint resolution that would require presentment to the President rather than using an expedited Section 5(c) resolution. Utilization of this provision might be preferred by some Members of Congress, as it avoids the legislative veto issue, and perhaps provides a more forceful vehicle by which to require an end to unauthorized presidential introduction of U.S. armed forces into hostilities. On the other hand, such joint resolutions presented to the President are likely to receive a presidential veto, requiring two-thirds majorities in both Houses if such resolutions are to become law. This was a situation Congress sought to avoid when enacting the War Powers Resolution, as it placed a severe test on Congress to act to preserve its role in determining whether the United States would enter a military conflict."], "subsections": []}, {"section_title": "How has the State Department responded to protect its overseas personnel and posts in the Middle East and elsewhere from possible Iranian retaliation?95", "paragraphs": ["Secretary Pompeo has said that although U.S. personnel in the Middle East are safer following the removal of Soleimani from the battlefield, there remains \"an enormous set of risks in the region\" and that the United States is \"preparing for each and every one of them.\" Secretary Pompeo has also remarked that the United States will ensure that its overseas diplomatic facilities are as \"hardened as we can possibly get them\" to defend against possible Iranian action. Following the December 31 blockade of the U.S. Embassy in Baghdad, 100 Marines assigned to the Special Purpose Marine Air-Ground Task Force, Crisis Response\u00e2\u0080\u0093Central Command (SPMAGTF-CR-CC) were deployed at the State Department's request to reinforce the Embassy. Analysts note that this Task Force, which was created after the 2012 attack on a U.S. post in Benghazi, is capable of providing compound defense through the use of air, ground, and, when necessary, amphibious operations. These additional forces augment the Marine Security Guard (MSG) detachment and other security personnel already present at the Embassy. MSGs have worked with the State Department to protect and safeguard U.S. overseas posts for over 60 years. Neither the State Department nor the Department of Defense disclose the number of MSGs serving at each overseas post. General Milley has expressed confidence regarding Embassy Baghdad's security, stating that it is unlikely to be overrun and warning that air and ground capabilities there mean that anyone who attempts to do so \"will run into a buzzsaw.\" ", "Some analysts maintain that because Iran and its proxies have previously demonstrated their capability to perpetrate attacks throughout the world, the State Department must mitigate risks to the safety of U.S. personnel not only in the Middle East but worldwide. State Department regulations enable the Principal Officer at each overseas post (at an embassy, this would be the ambassador), Regional Security Officer (or RSO, the senior Diplomatic Security Service special agent serving at post), and the post's Emergency Action Committee, with the support of Bureau of Diplomatic Security personnel in Washington, DC, to evaluate threats and develop and implement security policies and programs. Some analysts have suggested that past Iranian behavior indicates that the State Department should give special consideration to the threat posed by kidnapping or attacks focused on so-called \"soft targets,\" which include buildings such as schools, restaurants, or other public spaces that often are frequented by diplomats or their families.", "The State Department could also choose to close or change the status of an overseas post in response to evolving threat assessments. This occurred previously in Iraq, when in September 2018 the State Department announced that the U.S. Consulate General in Basrah would be placed on ordered departure, meaning that all U.S. personnel would be evacuated from post. Secretary Pompeo has stated that the State Department is continuing to evaluate the appropriate overseas diplomatic posture for the United States given the Iranian threat. "], "subsections": []}, {"section_title": "How does the killing of Qasem Soleimani impact Israel and its security?105", "paragraphs": ["As policymakers and analysts consider how Iran might respond to the killing of Soleimani, the situation clearly has implications for the state of Israel. Israel and Iran are already engaged in low-level conflict. Since 2017, this has reportedly included periodic cross-border exchanges of fire between Israel and Iran-supported groups in Syria and Lebanon, as well as numerous Israeli air strikes against Iran-linked targets in both countries and Iraq. Israel has indicated that Iranian transfers of precision-guided rockets and missiles to groups, such as Hezbollah in Lebanon, and Iran's presence in Syria, have made the situation on its northern front one of the top threats to Israel's national security (alongside Iran's nuclear program).", "As a result of Soleimani's killing, the Israel Defense Forces have been placed on high alert. Israel has an extensive network of missile defense systems, and Congress annually appropriates funds for joint U.S.-Israeli missile defense research, development, and production. On January 6, the United States Embassy in Israel released a travel advisory, warning of the possibility of rocket fire against the country. However, that same day, senior Israeli military officials held a security cabinet meeting in which they expressed doubt that Iran would target Israel. Prime Minister Binyamin Netanyahu praised President Trump in connection with Soleimani's killing, stating, \"Just as Israel has the right of self-defense, the United States has exactly the same right.\"", "Beyond Israel, there is some concern that Iran could retaliate against Jewish targets worldwide. In 1994, 85 people were killed in a bombing of a Jewish community center in Buenos Aires, Argentina. In 2012, a suicide bomber killed five Israeli tourists in Bulgaria. Various sources have linked Hezbollah and Iran to these attacks. "], "subsections": []}, {"section_title": "What has been the European reaction and are there implications for transatlantic relations?115", "paragraphs": ["Differences over Iran have strained U.S.-European relations during the Trump Administration. The EU opposes the Administration's decision to withdraw from the JCPOA, and has sought to work with Iran and other signatories to prevent its collapse. The EU shares other U.S. concerns about Iran, however, including those related to Iran's ballistic missile program and support for terrorism.", "On January 6, 2020, French President Emmanuel Macron, German Chancellor Angela Merkel, and UK Prime Minister Boris Johnson released a joint statement asserting that ", "We have condemned the recent attacks on coalitions [sic] forces in Iraq and are gravely concerned by the negative role Iran has played in the region, including through the IRGC and the Al-Qods force under the command of General Soleimani.", "There is now an urgent need for de-escalation. We call on all parties to exercise utmost restraint and responsibility. The current cycle of violence in Iraq must be stopped.", "We specifically call on Iran to refrain from further violent action or proliferation, and urge Iran to reverse all measures inconsistent with the JCPOA.", "The statement additionally expressed concern about security and stability in Iraq and emphasized the importance of continuing to combat the Islamic State. In a subsequent statement following a meeting of NATO countries, NATO Secretary General Jens Stoltenberg reiterated many of these points, similarly expressing concern about Iran's destabilizing behavior and calling for de-escalation. European countries are significant contributors to Global Coalition to Defeat ISIS and the NATO training and advisory mission in Iraq, both of which suspended operations following the Soleimani strike. Germany and several other European nations reportedly began moving troops out of Iraq in the days after Soleimani's death.", "Additionally, in recent years, European countries have stepped up criticism of Iran for alleged Iranian plots to assassinate dissidents in Europe. The U.S. State Department said in a 2018 report that Iranian-sponsored terrorist attacks in Europe, after a \"brief lull in the 1990s and early 2000s,\" are \"on the rise.\" In January 2019, in response to a Dutch letter linking Iran to assassinations of Dutch nationals of Iranian origin in 2015 and 2017, the EU imposed sanctions on the internal security unit of Iran's Intelligence ministry and two Iranian operatives for sponsoring acts of terrorism."], "subsections": []}, {"section_title": "What is the U.S. military force posture in the region?123", "paragraphs": ["Since May 2019, the United States has added forces and military capabilities in the region, beginning with the accelerated deployment of the USS Abraham Lincoln (which was relieved in December 2019 by the USS Harry S. Truman Carrier Strike Group). The additional deployments as of October 2019 had added approximately ten thousand U.S. military personnel to a baseline of between 60,000-80,000 U.S. forces in and around the Persian Gulf, which include those stationed at military facilities in the Arab states of the Gulf Cooperation Council (GCC: Saudi Arabia, Kuwait, UAE, Qatar, Oman, and Bahrain), and those in Iraq and Afghanistan. DOD officials indicated that the additional deployments are prudent defensive measures, allowing the U.S. to respond to aggression, if necessary. ", "Other key recent deployments include the following:", "On December 31, 2019, DOD announced deployment to Kuwait of an infantry battalion from the Immediate Response Force (IRF) of the 82 nd Airborne Division, with 750 soldiers to deploy immediately and additional forces from the IRF (about 3,000 military personnel) to deploy thereafter. A small (likely platoon-size) element of the 173 rd Brigade is also deploying to the region, possibly to Lebanon. On January 5, 2020, DOD officials announced that a task force of U.S. Special Operations Forces, including Rangers, was deployed to the Middle East. On January 6, 2020, reports indicated that the 26 th Marine Expeditionary Unit was being directed to the Mediterranean. On January 6, 2020, it was reported that DOD would be sending six B-52 Stratofortress bombers to Diego Garcia in the Indian Ocean, to be available for operations in Iran, if ordered. "], "subsections": []}, {"section_title": "How do recent regional deployments align with broader U.S. strategy?131", "paragraphs": ["According to key Trump Administration documents, including the 2017 National Security Strategy and 2018 National Defense Strategy, effectively competing\u00e2\u0080\u0094economically, diplomatically, and militarily\u00e2\u0080\u0094with China and Russia is the key national security priority facing the United States today. Accordingly, activities that can bolster the United States within this competition are, at least in theory, to be prioritized over other strategic challenges including countering violent extremist groups, a long-standing and critical challenge in the CENTCOM area of responsibility (AOR). Some observers contend that a shift in U.S. resources away from the CENTCOM AOR and towards Europe and Asia is therefore necessary. CENTCOM Commander General Kenneth McKenzie noted in his questions for the record associated with his December 2018 confirmation hearing: ", "The 2018 National Defense Strategy (NDS) will reduce U.S. force posture in the Central Region and realign resources to goals with higher priority in the NDS. The shift of U.S. resources away from USCENTCOM presents a challenge to the command's ability to provide deterrence with forward stationed combat credible forces. This will require USCENTCOM to develop new concepts and strengthen its relationships with regional partners and allies. Additionally, reduced U.S. presence provides an opportunity for competitors to potentially increase their influence with our partners. As stated earlier, this creates increased risk if USCENTCOM also loses funding which will likely be taken from engagement and security cooperation programs necessary to offset our reposturing-both real and perceived. ", "Despite this intended strategic reprioritization, Iran has long been viewed as a central challenge to the United States and U.S. allies and interests in the CENTCOM AOR. General McKenzie argued in his confirmation hearing that \"The long term, enduring most significant threat in the U.S. CENTCOM AOR is Iran,\" which will \"require [CENTCOM] to adopt innovative new techniques to maintain deterrence against Iran, because\u00e2\u0080\u00a6the underpinning of everything else that will go on in the theater is the ability to deter Iran and respond if required to.\"", "These developments have led some observers to question whether the proposed strategic reprioritization of threats, including the redirection of assets and capabilities away from the CENTCOM AOR, is feasible. Others contend that despite recent developments with Iran, the region should still figure as a less important U.S. strategic priority given the scale of the challenges posed by China and Russia. Still others contend that force planning concepts like Dynamic Force Employment\u00e2\u0080\u0094that is, the rapid and unpredictable shift of key U.S. military assets from one theater to another\u00e2\u0080\u0094mitigate some of the risk associated with diverting resources away from CENTCOM. "], "subsections": []}, {"section_title": "What is the potential impact of recent deployments on U.S. military readiness and global basing?136", "paragraphs": ["While the commitment of additional U.S. troops has been relatively modest since May 2019, other threats and contingencies could create a demand for additional U.S. forces that is not currently forecasted and that could create pressures on the U.S. military. Ultimately, any troops that are deployed to CENTCOM, as well as those training to replace them, would be taken out of the \"pool\" of forces available and ready to respond to other possible contingencies. U.S. military forces are a finite resource; the deployment of assets to the CENTCOM AOR would necessarily impact the availability of forces for other theaters and contingencies. ", "U.S. expeditionary operations are enabled by a network of American bases and facilities that are hosted in other allied and partner countries. Yet basing of U.S. troops on foreign soil is a sensitive matter for host countries due to the fact that such deployments of American military forces\u00e2\u0080\u0094which are subject to U.S. rather than host nation legal jurisdiction\u00e2\u0080\u0094are inherently in tension with a host nation's sovereignty. As a result, the political-military dynamics with the countries that host U.S. troops require careful management. Recent events, including the Soleimani strike and Iranian counter-strikes, could complicate bilateral negotiations on U.S. forward bases, both in Iraq as well as in other parts of the world, discussions that are already sensitive due to burden-sharing issues."], "subsections": []}, {"section_title": "Is the U.S. Government adequately prepared for hybrid and irregular warfare?", "paragraphs": ["While the aftermath of the January 8, 2020, Iranian missile counterstrikes is still evolving, many practitioners and experts note that the United States has, at times in recent decades, engaged in hybrid, irregular conflict with Iran (with U.S.-Iran naval clashes during the 1980-1988 Iran-Iraq War being a notable exception). Hybrid and irregular warfare are commonly understood to be instances in which belligerents, to varying extents, collaborate with proxies (including, but not limited to, militias, other countries, criminal networks, corporations, and hackers) and deliberately sow confusion as to what constitutes \"civilian\" versus \"military\" activities in order to create plausible deniability for a given action.", "Some scholars maintain that Iran relies heavily on proxy forces to achieve its objectives:", "[Iran's nonstate] network is the cornerstone of Iranian national security strategy\u00e2\u0080\u00a6 It is in large part because of this extensive network that the United States considers Iran a threat to national security and a destabilizing force in the region. Iran's network of nonstate partners enables the country to project power and increase its influence outside its borders while antagonizing the United States and its regional partners.", "In turn, these groups pursue a range of malign activities to sow instability, complicate ongoing conflicts, and undermine the interests of the United States and its partners, all while remaining under the threshold of war\u00e2\u0080\u0094which Tehran tries to avoid at all costs as its conventional forces lack the capabilities to match those of the United States.", "Many observers expect that U.S.-Iranian conflict will return to a state of mostly irregular/hybrid warfare. However, given the Trump Administration's overall strategic guidance to prioritize great power competition, some are concerned that insufficient attention and resources are now being dedicated toward preparing U.S. forces to wage the kind of irregular/hybrid warfare that may be an enduring feature of strategic dynamics, both in the Persian Gulf and in other parts of the world. Still others express concern that other national security and foreign policy institutions such as the State Department\u00e2\u0080\u0094with nonmilitary capabilities and authorities that could be useful for effectively prosecuting U.S. irregular /hybrid warfare strategies (as well as countering such tactics from adversaries)\u00e2\u0080\u0094are insufficiently organized and resourced relative to the scope and scale of the challenges. "], "subsections": []}]}}
{"id": "R46331", "title": "Health Care-Related Expiring Provisions of the 116th Congress, Second Session", "released_date": "2020-04-28T00:00:00", "summary": ["This report describes selected health care-related provisions that are scheduled to expire during the second session of the 116 th Congress (i.e., during calendar year [CY] 2020). For purposes of this report, expiring provisions are defined as portions of law that are time-limited and will lapse once a statutory deadline is reached, absent further legislative action. The expiring provisions included in this report are those related to Medicare, Medicaid, the State Children's Health Insurance Program (CHIP), and private health insurance programs and activities. The report also includes health care-related provisions enacted in the Patient Protection and Affordable Care Act (ACA; P.L. 111-148 ) or extended under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act; P.L. 116-136 ). In addition, this report describes health care-related provisions within the same scope that expired during the first session of the 116 th Congress (i.e., during CY2019). Although the Congressional Research Service (CRS) has attempted to be comprehensive, it cannot guarantee that every relevant provision is included here.", "This report focuses on two types of health care-related provisions within the scope discussed above. The first, and most common, type of provision provides or controls mandatory spending, meaning it provides temporary funding, temporary increases or decreases in funding (e.g., Medicare provider bonus payments), or temporary special protections that may result in changes in funding levels (e.g., Medicare funding provisions that establish a floor). The second type of provision defines the authority of government agencies or other entities to act, usually by authorizing a policy, project, or activity. Such provisions also may temporarily delay the implementation of a regulation, requirement, or deadline or establish a moratorium on a particular activity. Expiring health care provisions that are predominantly associated with discretionary spending activities\u00e2\u0080\u0094such as discretionary authorizations of appropriations and authorities for discretionary user fees\u00e2\u0080\u0094are excluded from this report.", "Certain types of provisions with expiration dates that otherwise would meet the criteria set forth above are excluded from this report. Some of these provisions are excluded because they are transitional or routine in nature or have been superseded by congressional action that otherwise modifies the intent of the expiring provision. For example, statutorily required Medicare payment rate reductions and payment rate re-basings that are implemented over a specified period are not considered to require legislative attention and are excluded.", "The report provides tables listing the relevant provisions that are scheduled to expire in 2020 and that expired in 2019. The report then describes each listed provision, including a legislative history. An appendix lists relevant demonstration projects and pilot programs that are scheduled to expire in 2020 or that expired in 2019."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Overview", "paragraphs": ["This report describes selected health care-related provisions that are scheduled to expire during the second session of the 116 th Congress (i.e., during calendar year [CY] 2020). For purposes of this report, expiring provisions are defined as portions of law that are time-limited and will lapse once a statutory deadline is reached, absent further legislative action. The expiring provisions included in this report are those related to Medicare, Medicaid, the State Children's Health Insurance Program (CHIP), and private health insurance programs and activities. The report also includes health care-related provisions enacted in the Patient Protection and Affordable Care Act (ACA; P.L. 111-148 ) or extended under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act; P.L. 116-136 ). This report describes health care-related provisions within the same scope that expired during the first session of the 116 th Congress (i.e., during CY2019). Although the Congressional Research Service (CRS) has attempted to be comprehensive, it cannot guarantee that every relevant provision is included here.", "The two types of provisions discussed in this report generally are enacted in the context of authorization laws and thus are typically within the purview of congressional authorizing committees. The duration that a provision is in effect usually is regarded as creating a timeline for legislative decisionmaking. In choosing this timeline, Congress navigates tradeoffs between the frequency of congressional review and the stability of funding or other legal requirements that pertain to the program. ", "The first type of provision in this report provides or controls mandatory spending, meaning it provides temporary funding, temporary increases or decreases in funding (e.g., Medicare provider bonus payments), or temporary special protections that may result in changes in funding levels (e.g., Medicare funding provisions that establish a floor). The second type of provision defines the authority of government agencies or other entities to act, usually by authorizing a policy, project, or activity. Such provisions also may temporarily delay the implementation of a regulation, requirement, or deadline, or establish a moratorium on a particular activity.", "Expiring health care provisions that are predominantly associated with discretionary spending activities\u00e2\u0080\u0094such as discretionary authorizations of appropriations and authorities for discretionary user fees\u00e2\u0080\u0094are excluded from this report.", "Certain types of provisions with expiration dates that otherwise would meet the criteria set forth above are also excluded from this report. Some of these provisions are excluded, because they are transitional or routine in nature or have been superseded by congressional action that otherwise modifies the intent of the expiring provision. For example, statutorily required Medicare payment rate reductions and payment rate re-basings that are implemented over a specified period are not considered to require legislative attention and are excluded.", "The report is organized as follows: Table 1 lists the relevant provisions that are scheduled to expire in 2020. Table 2 lists the relevant provisions that expired during 2019. The provisions in each table are organized by expiration date and applicable health care-related program. ", "The report then describes each listed provision, including a legislative history. The summaries are grouped by provisions scheduled to expire in 2020 followed by those that expired in 2019. Appendix A lists demonstration projects and pilot programs that are scheduled to expire in 2020 or that expired in 2019 and are related to Medicare, Medicaid, CHIP, and private health insurance programs and activities or other health care-related provisions that were enacted in the ACA or last extended under the Further Consolidated Appropriations Act, 2020 ( P.L. 116-94 ). Appendix B lists the status of provisions included in CRS Report R45781, Health Care-Related Expiring Provisions of the 116th Congress, First Session , that did not apply within the scope of this report. Appendix C lists all laws that created, modified, or extended the health care-related expiring provisions described in this report. Appendix D lists abbreviations used in the report."], "subsections": []}, {"section_title": "CY2020 Expiring Provisions", "paragraphs": [], "subsections": [{"section_title": "Social Security Act (SSA) Title V: Sexual Risk Avoidance Education Program and Personal Responsibility Education Program", "paragraphs": [], "subsections": [{"section_title": "Sexual Risk Avoidance Education Program (SSA\u00c2 \u00c2\u00a7510; 42 U.S.C.\u00c2 \u00c2\u00a7710)5", "paragraphs": [], "subsections": [{"section_title": "Background", "paragraphs": ["The Title V Sexual Risk Avoidance Education (SRAE) program, formerly known as the Abstinence Education Grants program, provides funding for education to adolescents aged 10 to 20 exclusively on abstaining from sexual activity outside of marriage. The Department of Health and Human Services (HHS) administers the program, and funding is provided primarily via formula grants. The 50 states, District of Columbia, and the territories are eligible to apply for funds. Jurisdictions request Title V SRAE funds as part of their request for Maternal and Child Health Block Grant funds authorized in SSA Section 501. Funds are allocated to jurisdictions based on their relative shares of low-income children. Funding is also available for eligible entities (not defined in statute) in jurisdictions that do not apply for funding. "], "subsections": []}, {"section_title": "Relevant Legislation", "paragraphs": ["The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 ( PRWORA; P.L. 104-193 ), Section 912 , established the Abstinence Education Grants program and provided $50 million for each of FY1998 through FY2002. The Welfare Reform Extension Act of 2003 (WREA 2003; P.L. 108-40 ), Section 6, provided $50 million for FY2003. An Act to Extend the Temporary Assistance for Needy Families Block Grant Program, and Certain Tax and Trade Programs, and For Other Purposes ( P.L. 108-89 ), Section 101 , provided funding through March 31, 2014 in the manner authorized for FY2002 (i.e., $50 million, but proportionally provided for the first two quarters of FY2004). The Welfare Reform Extension Act of 2004 (WREA 2004 ; P.L. 108-210 ), Section 2 , provided funding through June 30, 2004 in the manner authorized for FY2002. TANF and Related Programs Continuation Act of 2004 ( P.L. 108-262 ) , Section 2 , provided funding through September 30, 2004 in the manner authorized for FY2002. Welfare Reform Extension Act, Part VIII ( P.L. 108-308 ) , Section 2 , provided funding through March 31, 2005 in the manner authorized for FY2004. The Welfare Reform Extension Act of 2005 (WREA 2005 ; P.L. 109-4 ), Section 2, provided funding through June 30, 2005 in the manner authorized for FY2004. TANF Extension Act of 2005 ( P.L. 109-19 ) , Section 2 , provided funding through September 30, 2005 in the manner authorized for FY2004. QI, TMA, and Abstinence Programs Extension and Hurricane Katrina Unemployment Relief Act of 2005 ( P.L. 109-91 ) , Section 102 , provided funding through December 31, 2005 in the manner authorized for FY2005. The Tax Relief and Health Care Act of 2006 (TRHCA; P.L. 109-432 ), Section 401 , provided funding through June 30, 2007 in the manner authorized for FY2006. An Act to Provide for the Extension of Transitional Medical Assistance, and Other Provisions ( P.L. 110-48 ) , Section 1 , provided funding through September 30, 2007 in the manner authorized for FY2006. TMA, Abstinence Education, and QI Programs Extension Act of 2007 ( P.L. 110-90 ) , Section 2 , provided funding through December 31, 2007 in the manner authorized for FY2007. The Medicare, Medicaid, and SCHIP Extension Act of 2007 ( MMSEA; P.L. 110-173 ), Section 202 , provided funding through June 30, 2008 in the manner authorized for FY2007. The Medicare Improvements for Patients and Providers Act of 2008 (MIPPA ; P.L. 110-275 ), Se ction 201 , provided funding through June 30, 2009 in the manner authorized for FY2007. ACA, Section 2954, provided $50 million for each of FY2010 through FY2014. Protecting Access to Medicare Act of 2014 ( PAMA ; P.L. 113-93 ), Section 205 , provided $50 million for FY2015. Medicare Access and CHIP Reauthorization Act of 2015 ( MACRA ; P.L. 114-10 ), Section 214 , provided $75 million for each of FY2016 and FY2017. BBA 2018, Section 50502 , renamed the program and provided $75 million for each of FY2018 and FY2019. Continuing App ropriations Act, 2020, and Health Extenders Act of 2019 ( P.L. 116-59 ), Section 12 01 , provided $10,684,931 for the period of October 1, 2019 through November 21, 2019. Further Continuing Appropriation s Act, 2020, and Further Health Extenders Act of 2019 ( P.L. 116-69 ), Section 120 1 , provided $16,643,836 for the period of October 1, 2019 through December 20, 2019. Further Consolidated Appropriations Act, 2020 ( P.L. 116-94 ) Division N, Section 303, provided $48,287,671 for the period of October 1, 2019 through May 22, 2020. Coronavirus Aid, Relief, and Economic Security Act (CARES Act; P.L. 116-136 ), S ection 3821 provided $75 million for FY2020, which supersedes the funding previously provided by law for all periods of FY2020. Additionally, funding was provided for a specified portion of FY2021 (October 1, 2020 through November 30, 2020) at the same proportional share of amounts provided during that same period in FY2020. "], "subsections": []}, {"section_title": "Current Status", "paragraphs": ["Funding authorized under the CARES Act for the Title V SRAE program expires after November 30, 2020."], "subsections": []}]}, {"section_title": "Personal Responsibility Education Program (SSA\u00c2 \u00c2\u00a7513; 42\u00c2 U.S.C.\u00c2 \u00c2\u00a7713(f))", "paragraphs": [], "subsections": [{"section_title": "Background", "paragraphs": ["The Personal Responsibility Education Program (PREP) is a broad approach to teen pregnancy prevention that seeks to educate adolescents ages 10 through 19 and pregnant and parenting youth under age 21 on both abstinence and contraceptives to prevent pregnancy and sexually transmitted infections (STIs). Education services can address abstinence and/or contraceptives to prevent pregnancy and STIs. PREP includes four types of grants, which are administered by HHS: (1) State PREP grants, (2) Competitive PREP grants, (3) Tribal PREP, and (4) PREP\u00e2\u0080\u0093Innovative Strategies (PREIS). A majority of PREP funding is allocated to states and territories via the State PREP grant. The 50 states, District of Columbia, and the territories are eligible for funding. Funds are allocated by formula based on the proportion of youth aged 10 to 20 in each jurisdiction relative to other jurisdictions."], "subsections": []}, {"section_title": "Relevant Legislation", "paragraphs": ["ACA, Section 2953 , established PREP and provided $75 million annually from FY2010 through FY2014. PAMA, Section 206 provided $75 million for FY2015. MACRA, Section 215 , provided $75 million for each of FY2016 and FY2017. BBA 2018, Section 50503 , provided $75 million for each of FY2018 and FY2019. Continuing Appropriations Act, 2020, and Health Extenders Act of 2019, Section 1202, provided $10,684,931 for the period of October 1, 2019 through November 21, 2019. Further Continuing Appropriations Act, 2020, and Further Health Extenders Act of 2019, Section 1202, provided $16,643,836 for the period of October 1, 2019 through December 20, 2019. Further Consolidated Appropriations Act, 2020, Division N, Section 304, provided $48,287,671 for the period of October 1, 2019 through May 22, 2020. CARES Act , Section 382 2 provided $75 million for FY2020, which supersedes the funding previously provided by law for all periods of FY2020. Additionally, funding was provided for a specified portion of FY2021 (October 1, 2020 through November 30, 2020) at the same proportional share of amounts provided during that same period in FY2020. "], "subsections": []}, {"section_title": "Current Status", "paragraphs": ["Funding authorized under the CARES Act for PREP expires after November 30, 2020."], "subsections": []}]}]}, {"section_title": "SSA Title VXIII: Medicare", "paragraphs": [], "subsections": [{"section_title": "Quality Measure Selection (SSA\u00c2 \u00c2\u00a71890A; 42\u00c2 U.S.C.\u00c2 \u00c2\u00a71395aaa-1)", "paragraphs": [], "subsections": [{"section_title": "Background", "paragraphs": ["SSA Section 1890A requires the HHS Secretary to establish a pre-rulemaking process to select quality measures for use in the Medicare program. As part of this process, the Secretary makes available to the public measures under consideration for use in Medicare quality programs and broadly disseminates the quality measures that are selected to be used, while the consensus-based entity with a contract (National Quality Form, or NQF) gathers multi-stakeholder input and annually transmits that input to the Secretary. NQF fulfills this requirement through its Measure Applications Partnership (MAP), an entity that convenes multi-stakeholder groups to provide input into the selection of quality measures for use in Medicare and other federal programs. MAP publishes annual reports with recommendations for selection of quality measures in February of each year, with the first report published in February 2012. "], "subsections": []}, {"section_title": "Relevant Legislation", "paragraphs": ["ACA, Section 3014(c) , transferred a total of $20 million from the Medicare Hospital Insurance (HI) and Supplementary Medical Insurance (SMI) Trust Funds for each of FY2010 through FY2014 to carry out SSA Section 1890A(a)-(d) (and the amendments made to SSA Section 1890(b) by ACA Section 3014(a)). PAMA, Section 109 , transferred $5 million for the remainder of FY2014 (from April 1, 2014, to September 30, 2014) and $15 million for the first six months of FY2015 (from October 1, 2014, to March 31, 2015) to carry out both SSA Section 1890 and SSA Section 1890A(a)-(d); funds were required to remain available until expended. MACRA, Section 207 , transferred $30 million for each of FY2015 through FY2017 to carry out both SSA Section 1890 and SSA Section 1890A(a)-(d). The funding provided under MACRA for FY2015 replaced the funding provided under PAMA for that year; therefore, the total funding for FY2015 was $30 million. BBA 2018, Section 50206 , transferred $7.5 million for each of FY2018 and FY2019 to carry out both Section 1890 and SSA Section 1890A(a)-(d). The section also added new HHS reporting requirements and modified existing NQF reporting requirements to specify use of funding, among other things. Amounts transferred for each of FY2018 and FY2019 are in addition to any unobligated balances that remained from prior years' transfers. Continuing Appropriations Act, 2020, and Health Extenders Act of 2019 , Section 1401, transferred $1,069,000 for the period beginning October 1, 2019, and ending November 21, 2019. Further Continuing Appropriations Act, 2020, and Further Health Extenders Act of 2019, Section 1401, transferred $1,665,000 for the period beginning October 1, 2019, and ending December 20, 2019. Further Consolidated Appropriations Act, 2020 , Division N, Section 102, transferred $4,830,000 for the period beginning October 1, 2019, and ending May 22, 2020. CARES Act, Section 3802 , provided $20 million for FY2020, which supersedes the funding previously provided by law for all periods of FY2020. Additionally, funding was provided for a specified portion of FY2021 (October 1, 2020 through November 30, 2020) at the same proportional share of amounts provided during that same period in FY2020. "], "subsections": []}, {"section_title": "Current Status", "paragraphs": ["Funding authorized under the CARES Act to carry out the measure selection activities under SSA Section 1890A(a)-(d) expires after November 30, 2020."], "subsections": []}]}, {"section_title": "Contract with a Consensus-Based Entity Regarding Performance Measurement (SSA\u00c2 \u00c2\u00a71890(d); 42\u00c2 U.S.C.\u00c2 \u00c2\u00a71395aaa)", "paragraphs": [], "subsections": [{"section_title": "Background", "paragraphs": ["Under SSA Section 1890, the HHS Secretary is required to have a contract with a consensus-based entity (e.g., NQF) to carry out specified duties related to performance improvement and measurement. These duties include, among others, priority setting, measure endorsement, measure maintenance, and annual reporting to Congress."], "subsections": []}, {"section_title": "Relevant Legislation", "paragraphs": ["MIPPA, Section 183 , transferred, from the Medicare HI and SMI Trust Funds, a total of $10 million for each of FY2009 through FY2012 to carry out the activities under SSA Section 1890. American Taxpayer Relief Act of 2012 ( ATRA ; P.L. 112-240 ) , Section 609(a) , transferred $10 million for FY2013 and modified the duties of the consensus-based entity. Pathway for SGR Reform Act of 2013 ( PSRA ; P.L. 113-67 ) , Section 1109 , required that transferred funding remain available until expended. PAMA, Section 109 , transferred $5 million for the remainder of FY2014 (from April 1, 2014, to September 30, 2014) and $15 million for the first six months of FY2015 (from October 1, 2014, to March 31, 2015) to carry out both SSA Section 1890 and SSA Section 1890A(a)-(d); funds were required to remain available until expended. MACRA, Section 207 , transferred $30 million for each of FY2015 through FY2017 to carry out both SSA Section 1890 and SSA Section 1890A(a)-(d). The funding provided under MACRA for FY2015 effectively replaced the funding provided under PAMA for that year; therefore, the total funding for FY2015 was $30 million. Funds were required to remain available until expended. BBA 2018, Section 50206 , transferred $7.5 million from the Medicare HI and SMI Trust Funds for each of FY2018 and FY2019 to carry out both Section 1890 and SSA Section 1890A(a)-(d). The section also added new HHS reporting requirements and modified existing NQF reporting requirements to specify use of funding, among other things. Amounts transferred for each of FY2018 and FY2019 are in addition to any unobligated balances that remained from prior years' transfers. Continuing Appropriations Act, 2020, and Health Extenders Act of 2019 , Section 1401, transferred $1,069,000 for the period beginning October 1, 2019, and ending November 21, 2019. Further Continuing Appropriations Act, 2020, and Further Health Extenders Act of 2019, Section 1401, transferred $1,665,000 for the period beginning October 1, 2019, and ending December 20, 2019. Further Consolidated Appropriations Act, 2020, Division N, Section 102, transferred $4,830,000 for the period beginning October 1, 2019, and ending May 22, 2020. CARES Act, Section 3802 , provided $20 million for FY2020, which supersedes the funding previously provided by law for all periods of FY2020. Additionally, funding was provided for a specified portion of FY2021 (October 1, 2020 through November 30, 2020) at the same proportional share of amounts provided during that same period in FY2020."], "subsections": []}, {"section_title": "Current Status", "paragraphs": ["Funding authorized under the CARES Act to support the contract with the consensus-based entity under SSA Section 1890 expires after November 30, 2020."], "subsections": []}]}, {"section_title": "Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) Technical Assistance to Small Practices and Practices in Health Professional Shortage Areas (SSA \u00c2\u00a71848(q)(11); 42 U.S.C. \u00c2\u00a71395w\u00e2\u0080\u00934(q))(11)", "paragraphs": [], "subsections": [{"section_title": "Current Law", "paragraphs": ["MACRA made several fundamental changes to how Medicare pays for physician and practitioner services by (1) changing the methodology for determining the annual updates to the conversion factor, (2) establishing new methods for paying for professional services under Medicare Part B, including a merit-based incentive payment system (MIPS) to consolidate and replace several existing incentive programs and to apply value and quality adjustments to the Medicare physician fee schedule (MPFS), and (3) establishing the development of, and participation in, alternative payment models (APMs). ", "To provide technical assistance to small practices and practices in health professional shortage areas, MACRA required the HHS Secretary to enter into contracts or agreements with appropriate entities (such as quality-improvement organizations, regional extension centers, or regional health collaboratives) to offer guidance and assistance to MIPS-eligible professionals in practices of 15 or fewer professionals. Under the technical assistance program, priority is required to be given to professionals located in rural areas, health professional shortage areas, or practices with low composite scores under the new payment system. The guidance and assistance is provided with respect to the MIPS performance categories or with respect to how to transition to the implementation of and participation in an APM. ", "For purposes of implementing the technical assistance program, $20 million from the SMI Trust Fund was made available to the Centers for Medicare & Medicaid Services (CMS) for each of FY2016-FY2020. These amounts are available until expended."], "subsections": []}, {"section_title": "Relevant Legislation", "paragraphs": ["MACRA, Section 101, provided for the transfer of $20 million, for each of FY2016 through FY2020, from the Medicare SMI Trust Fund."], "subsections": []}, {"section_title": "Current Status", "paragraphs": ["No funds to support the technical assistance program have been authorized beyond FY2020."], "subsections": []}]}, {"section_title": "Floor on Work Geographic Practice Cost Indices (SSA\u00c2 \u00c2\u00a71848(e)(1); 42\u00c2 U.S.C.\u00c2 \u00c2\u00a71395w-4(e)(1)(E))", "paragraphs": [], "subsections": [{"section_title": "Background", "paragraphs": ["Payments under the Medicare MPFS are adjusted geographically for three factors to reflect differences in the cost of resources needed to produce physician services: physician work, practice expense, and medical malpractice insurance. The geographic adjustments are indices\u00e2\u0080\u0094known as Geographic Practice Cost Indices (GPCIs)\u00e2\u0080\u0094that reflect how each area compares to the national average in a \"market basket\" of goods. A value of 1.00 represents the average across all areas. These indices are used in the calculation of the payment rate under the MPFS. Several laws have established a minimum value of 1.00 (floor) for the physician work GPCI for localities where the work GPCI was less than 1.00."], "subsections": []}, {"section_title": "Relevant Legislation", "paragraphs": ["MMA , Section 412, provided for an increase in the work geographic index to 1.0 (floor) for any locality for which the work geographic index was less than 1.0 for services furnished from January 1, 2004, through December 31, 2006. TRHCA , Section 102 , extended the floor through December 31, 2007. MMSEA , Section 103, extended the floor through June 30, 2008. MIPPA , Section 134, extended the floor through December 31, 2009. In addition, beginning January 1, 2009, MIPAA set the work geographic index for Alaska to 1.5 if the index otherwise would be less than 1.5; no expiration was set for this modification. ACA , Section 3102, extended the floor through December 31, 2010. Medicare and Medicaid Extenders Act of 2010 (MMEA; P.L. 111-309 ) , Section 103, extended the floor through December 31, 2011. Temporary Payroll Tax Cut Continuation Act of 2011 ( TPTCCA, P.L. 112-78 ) , Section 303, extended the floor through February 29, 2012. Middle Class Tax Relief and Job Creation Act of 2012 (MCTRJCA, P.L. 112-96 ) , Section 3004, extended the floor through December 31, 2012, and required the Medicare Payment Advisory Commission (MedPAC) to report on whether any work geographic adjustment to the MPFS is appropriate, what that level of adjustment should be (if appropriate), and where the adjustment should be applied. The report also was required to assess the impact of such an adjustment, including how it would affect access to care. ATRA , Section 602, extended the floor through December 31, 2013. PAMA , Section 102, extended the floor through March 31, 2015. MACRA , Section 201, extended the floor through December 31, 2017. BBA 2018 , Section 50201, extended the floor through December 31, 2019. Further Consolidated Appropriations Act, 2020, Division N, Section 101 , extended the floor through March 22, 2020. CARES Act, Section 3801, extended the floor through November 30, 2020."], "subsections": []}, {"section_title": "Current Status", "paragraphs": ["The authority for the MPFS GPCI floor expires after November 30, 2020."], "subsections": []}]}, {"section_title": "Home Health Prospective Payment System Rural Add-On for High Utilization Counties (SSA \u00c2\u00a71895; 42 U.S.C. \u00c2\u00a71395fff note)", "paragraphs": [], "subsections": [{"section_title": "Background", "paragraphs": ["Federally certified home health (HH) agencies receive increased payments under the HH prospective payment system (PPS) for Medicare home health care episodes furnished to beneficiaries in rural areas. Before BBA 2018, when provided by legislation, the HH\u00c2\u00a0 rural add-on \u00c2\u00a0was a fixed percent age \u00c2\u00a0increase to the HH PPS that was applied\u00c2\u00a0uniformly to \u00c2\u00a0 Medicare home health episodes of care provided in rural counties.\u00c2\u00a0", "Under BBA 2018, the add-on was applied unvaryingly for the first year the legislation extended the increase d \u00c2\u00a0payment, providing a 3% rural add-on payment to Medicare home health episodes furnished in any rural county that began in CY2018. After CY2018, BBA 2018 provided home health agencies a 3%, 2%, and 1% HH PPS add-on payment for services furnished in rural counties beginning during CY2019-CY2021, respectively, unless the Medicare home health services were, or are, furnished in a rural county with one of the two\u00c2\u00a0 below-described\u00c2\u00a0 designations, in which case alternative add-on payments were /are \u00c2\u00a0provided:", "For home health episodes furnished to beneficiaries who reside in\u00c2\u00a0 low population density\u00c2\u00a0 counties, which are defined as rural counties that have a population density of six or fewer individuals per square mile, BBA 2019 provided 4%, 3%, 2%, and 1% HH PPS add-on payments for services beginning during CY2019-CY2022, respectively , and For home health episodes provided to beneficiaries who reside in\u00c2\u00a0 high utilization\u00c2\u00a0 counties, which are defined as rural counties in the top quartile of all counties rendering home health services (by the number of HH episodes furnished per 100 Medicare eligibles), BBA 2018 provided 1.5% and 0.5% HH PPS add-on payments for home health episodes beginning in CY2019-CY2020, respectively. BBA 2018 provided no add-on payment for episodes furnished in high utilization rural counties that begin in CY2021 or CY2022.", "Under BBA 2018, rural counties were to be categorized only once and such determination applies to payment home health episodes through CY2022. "], "subsections": []}, {"section_title": "Relevant Legislation", "paragraphs": ["The Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 (BIPA 2000; P.L. 106-554 ), Section 508, \u00c2\u00a0established a 10% add-on to Medicare's HH PPS rates for home health episodes provided to beneficiaries in rural areas beginning April 1, 2001, through March 31, 2003. Medicare Prescription Drug, Improvement, and Modernization Act of 2003 ( MMA ; P.L. 108-173 ), Section 421, \u00c2\u00a0provided a 5% add-on for services beginning April 1, 2004, through March 31, 2005. Deficit Reduction Act of 2005 ( DRA ; P.L. 109-171 ) , Section 5201, \u00c2\u00a0provided a 5% add-on for services beginning January 1, 2006, through December 31, 2006. ACA Section, 3131, \u00c2\u00a0provided a 3% add-on for services beginning April 1, 2010, through December 31, 2015. MACRA, Section 210, \u00c2\u00a0provided a 3% add-on for services beginning January 1, 2016 through December 31, 2017. BBA 2018, Section 50208, \u00c2\u00a0provided a 3% add-on for services beginning in CY2018. BBA 2018 provided a 3%, 2%, and 1% add-on for services beginning in years CY2019-CY2021, respectively, unless the services were provided in a low population density or high utilization rural county. For services provided in low population density rural counties, BBA 2018 provided an add-on at 4%, 3%, 2%, and 1% for services beginning in years CY2019-CY2022, respectively. For services furnished in high utilization rural counties, a 1.5% and 0.5% add-on was provided for services beginning in years CY2019-CY2020, respectively.\u00c2\u00a0"], "subsections": []}, {"section_title": "Current Status", "paragraphs": ["After December 31, 2020, home health agencies are no longer set to receive an add-on payment for services provided in rural counties designated as high utilization counties.\u00c2\u00a0"], "subsections": []}]}]}, {"section_title": "Other Medicare Provisions", "paragraphs": [], "subsections": [{"section_title": "Outreach and Assistance for Low-Income Programs (MIPPA \u00c2\u00a7119; 42\u00c2 U.S.C.\u00c2 \u00c2\u00a71395b-3\u00c2 note)", "paragraphs": [], "subsections": [{"section_title": "Background", "paragraphs": ["The Administration for Community Living (ACL) administers federal grant programs that fund outreach and assistance to older adults, individuals with disabilities, and their caregivers in accessing various health and social services. Funding for these programs is provided through discretionary budget authority in annual appropriations to the following entities:", "State Health Insurance Assistance Programs (SHIPs): programs that provide outreach, counseling, and information assistance to Medicare beneficiaries and their families and caregivers on Medicare and other health insurance issues. Area Agencies on Aging (AAA): state-designated public or private nonprofit agencies that address the needs and concerns of older adults at the regional or local levels. AAAs plan, develop, coordinate, and deliver a wide range of home and community-based services. Most AAAs are direct providers of information and referral assistance programs. Aging and Disability Resource Centers (ADRCs): programs in local communities that assist older adults, individuals with disabilities, and caregivers in accessing the full range of long-term services and supports options, including available public programs and private payment options.", "The National Center for Benefits and Outreach Enrollment assists organizations to enroll older adults and individuals with disabilities into benefit programs that they may be eligible for, such as Medicare, Medicaid, the Supplemental Security Income (SSI) program, and the Supplemental Nutrition Assistance Program (SNAP), among others.", "In addition to discretionary funding for these programs, beginning in FY2009, MIPPA provided funding for specific outreach and assistance activities to Medicare beneficiaries. This mandatory funding was extended multiple times, most recently in the CARES Act through November 30, 2020, and provided for outreach and assistance to low-income Medicare beneficiaries including those who may be eligible for the Low-Income Subsidy program, Medicare Savings Program (MSP), and the Medicare Part D Prescription Drug Program. The HHS Secretary is required to transfer specified amounts for MIPPA program activities from the Medicare Trust Funds."], "subsections": []}, {"section_title": "Relevant Legislation", "paragraphs": ["MIPPA , Section 119, authorized and provided a total of $25 million for FY2009 to fund low-income Medicare beneficiary outreach and education activities through SHIPs, AAAs, ADRCs, and coordination efforts to inform older Americans about benefits available under federal and state programs. ACA , Section 3306, extended authority for these programs and provided a total of $45 million for FY2010 through FY2012 in the following amounts: SHIPs, $15 million; AAAs, $15 million; ADRCs, $10 million; and the contract with the National Center for Benefits and Outreach Enrollment, $5 million. ATRA , Section 610, extended authority for these programs through FY2013 and provided a total of $25 million in the following amounts: SHIPs, $7.5 million; AAAs, $7.5 million; ADRCs, $5 million; and the contract with the National Center for Benefits and Outreach Enrollment, $5 million. PSRA , Section 1110, extended authority for these programs through the second quarter of FY2014 and provided funds at FY2013 levels ($25 million) for the first two quarters of FY2014 (through March 31, 2014). PAMA , Section 110, extended authority for these programs through the second quarter of FY2015 (through March 31, 2015). For FY2014, PAMA provided a total of $25 million at the following FY2013 funding levels: SHIPs, $7.5 million; AAAs, $7.5 million; ADRCs, $5.0 million; and the contract with the National Center for Benefits and Outreach Enrollment, $5.0 million. In addition, PAMA provided funds at FY2014 levels for the first two quarters of FY2015 (through March 31, 2015). MACRA , Section 208, extended authority for these programs through September 30, 2017. For FY2015, MACRA provided funding at the previous year's level of $25 million in the following amounts: SHIPs, $7.5 million; AAAs, $7.5 million; ADRCs, $5 million; and the contract with the National Center for Benefits and Outreach Enrollment, $5 million. For FY2016 and FY2017, MACRA provided $37.5 million annually, a $12.5 million per year increase from FY2015 funding levels, in the following amounts: SHIPs, $13 million; AAAs, $7.5 million; ADRCs, $5 million; and the contract with the National Center for Benefits and Outreach Enrollment, $12 million. BBA 2018, Section 50207, extended authority for these programs through September 30, 2019. For FY2018 and FY2019, BBA 2018 provides funding at the FY2017 funding level of $37.5 million annually in the following amounts: SHIPs, $13 million; AAAs, $7.5 million; ADRCs, $5 million; and the contract with the National Center for Benefits and Outreach Enrollment, $12 million. Continuing Appropriations Act, 2020, and Health Extenders Act of 2019, Section 1402, extended authority for these programs through November 21, 2019. For October 1, 2019 to November 21, 2019, they provided a total of $5.343 million in the following amounts: SHIPs, $1.852 million; AAAs $1.069 million; ADRCs, $712,000; and the contract with the National Center for Benefits Outreach and Enrollment, $1.710 million. F urther Continuing Appropriations Act, 2020 , and F urther H ealth Extenders Act of 2019 , Section 1402, extended authority for these programs through December 20, 2019. For November 22, 2019 to December 20, 2019, they provided a total of $2.98 million in the following amounts: SHIPs, $1.033 million; AAAs $597,000; ADRCs, $397,000; and the contract with the National Center for Benefits Outreach and Enrollment, $953,000. Further Consolidated Appropriations Act, 2020, Division N, Section 103, extended authority for these programs through May 22, 2020. For December 21, 2019 to May 22, 2020, it provided a total of $15.823 million in the following amounts: SHIPs, $5.485 million; AAAs $3.165 million; ADRCs, $2.110 million; and the contract with the National Center for Benefits Outreach and Enrollment, $5.063 million. CARES Act, Section 3803, extended authority for these programs through November 30, 2020. For FY2020, it provided a total of $37.5 million in the following amounts (which supersedes the funding previously provided by law for all periods of FY2020): SHIPs, $13 million; AAAs $7.5 million; ADRCs, $5 million; and the contract with the National Center for Benefits Outreach and Enrollment, $12 million. Additionally, funding was provided for these programs for a specified portion of FY2021 (October 1, 2020 through November 30, 2020) at the same proportional share of amounts provided for FY2020."], "subsections": []}, {"section_title": "Current Status", "paragraphs": ["Funding authorized under the CARES Act for low-income outreach and assistance programs will expire after November 30, 2020. However, funds appropriated will be available for obligation until expended."], "subsections": []}]}]}, {"section_title": "SSA Title XIX: Medicaid", "paragraphs": [], "subsections": [{"section_title": "Protection for Recipients of Home and Community-Based Services Against Spouse Impoverishment (SSA \u00c2\u00a71924; 42 U.S.C. 1396r-5 note)", "paragraphs": [], "subsections": [{"section_title": "Background", "paragraphs": ["When determining financial eligibility for Medicaid-covered long-term services and supports (LTSS), there are specific rules under SSA Section 1924 for the treatment of a married couple's assets when one spouse needs long-term care provided in an institution, such as a nursing home. Commonly referred to as \"spousal impoverishment rules,\" these rules attempt to equitably allocate income and assets to each spouse when determining Medicaid financial eligibility and are intended to prevent the impoverishment of the non-Medicaid spouse. For example, spousal impoverishment rules require state Medicaid programs to exempt all of a non-Medicaid spouse's income in his or her name from being considered available to the Medicaid spouse. Joint income of the couple is divided in half between the spouses, and the Medicaid spouse can transfer income to bring the non-Medicaid spouse up to certain income thresholds. Assets of the couple, regardless whose name they are in, are combined and then split in half. The non-Medicaid spouse can retain assets up to an asset threshold determined by the state within certain statutory parameters. Prior to enactment of the ACA, spousal impoverishment rules applied only in situations where the Medicaid participant was receiving LTSS in an institution. States had the option to extend these protections to certain home and community-based services (HCBS) participants under a Section 1915(c) waiver program.", "Beginning January 1, 2014, ACA Section 2404 temporarily substituted the definition of \"institutionalized spouse\" under SSA Section 1924(h)(1) to include application of these spousal impoverishment protections to all married individuals who are eligible for HCBS authorized under certain specified authorities. Thus, beginning January 1, 2014, for a five-year time period, the ACA required states to apply the spousal impoverishment rules to all married individuals who are eligible for HCBS under these specified authorities, not just those receiving institutional care. This modified definition expired on December 31, 2018. The 116 th Congress extended the authority for these protections and included a provision regarding state flexibility in the application of income or asset disregards for married individuals receiving certain HCBS."], "subsections": []}, {"section_title": "Relevant Legislation", "paragraphs": ["ACA, Section 2404, required states to extend spousal impoverishment rules to certain beneficiaries receiving HCBS for a five-year period beginning on January 1, 2014. The Medicaid Extenders Act of 2019 ( P.L. 116-3 ), Section 3 , extended this provision through March 31, 2019. The Medicai d Services Investment and Accountability Act of 2019 ( P.L. 116-16 ), Section 2, extended this provision through September 30, 2019. The Sustaining Excellence in Medicaid Act of 2019 ( P.L. 116-39 ), Section 3, extended this provision through December 31, 2019. Further Consolidated Appropriations Act, 2020 , Section 204, extended this provision through May 22, 2020. CARES Act, Section 3812, further extended this provision through November 30, 2020."], "subsections": []}, {"section_title": "Current Status", "paragraphs": ["The authority for the extension of spousal impoverishment protections for certain Medicaid HCBS recipients will expire after November 30, 2020."], "subsections": []}]}]}, {"section_title": "SSA Title XXI: State Children's Health Insurance Program (CHIP)", "paragraphs": [], "subsections": [{"section_title": "Increase to Enhanced Federal Medical Assistance Percentage (E-FMAP) (SSA\u00c2 \u00c2\u00a72105(b); 42\u00c2 U.S.C.\u00c2 \u00c2\u00a71397ee(b))", "paragraphs": [], "subsections": [{"section_title": "Background", "paragraphs": ["The federal government's share of CHIP expenditures (including both services and administration) is determined by the enhanced federal medical assistance percentage (E-FMAP) rate. The E-FMAP rate is based on the federal medical assistance percentage (FMAP) rate, which is the federal matching rate for the Medicaid program. The FMAP formula compares each state's average per capita income with average U.S. per capita income. FMAP rates have a statutory minimum of 50% and a statutory maximum of 83%.", "The E-FMAP rate is calculated by reducing the state share under the regular FMAP rate by 30%. Statutorily, the E-FMAP (or federal matching rate) can range from 65% to 85%. For some CHIP expenditures, the federal matching rate is different from the E-FMAP rate. For instance, the matching rate for translation and interpretation services is the higher of 75% or states' E-FMAP rate plus 5 percentage points. Also, for services provided to children with family incomes exceeding 300% of the federal poverty level (FPL) with an exception for certain states, the matching rate is the lower regular FMAP rate. "], "subsections": []}, {"section_title": "Relevant Legislation", "paragraphs": ["ACA, Section 2101 , included a provision to increase the E-FMAP rate by 23 percentage points (not to exceed 100%) for most CHIP expenditures from FY2016 through FY2019. Making further continuing appropriations for the fiscal year ending September 30, 2018, and for other purposes ( P.L. 115-120 ), Section 3005, extended the increase to the E-FMAP rate for one year through FY2020. However, for FY2020 the increase to the E-FMAP is 11.5 percentage points instead of 23 percentage points."], "subsections": []}, {"section_title": "Current Status", "paragraphs": ["The increase to the E-FMAP expires after September 30, 2020."], "subsections": []}]}]}, {"section_title": "Public Health Service Act (PHSA)", "paragraphs": [], "subsections": [{"section_title": "Community Health Center Fund (PHSA\u00c2 \u00c2\u00a7330; 42\u00c2 U.S.C.\u00c2 \u00c2\u00a7254b-2(b)(1))", "paragraphs": [], "subsections": [{"section_title": "Background", "paragraphs": ["The Community Health Center Fund (CHCF) provided mandatory funding for federal health centers authorized in PHSA Section 330. These centers are located in medically underserved areas and provide primary care, dental care, and other health and supportive services to individuals regardless of their ability to pay. The mandatory CHCF appropriations are provided in addition to discretionary funding for the program; however, the CHCF comprised more than 70% of health center programs' appropriations in FY2019, the last year where final appropriations data are available. "], "subsections": []}, {"section_title": "Relevant Legislation", "paragraphs": ["ACA, Section 10503, established the CHCF and provided a total of $9.5 billion to the fund annually from FY2011 through FY2015, as follows: $1 billion for FY2011, $1.2 billion for FY2012, $1.5 billion for FY2013, $2.2 billion for FY2014, and $3.6 billion for FY2015. The ACA also provided $1.5 billion for health center construction and renovation for the period FY2011 through FY2015. MACRA, Section 221, provided $3.6 billion for each of FY2016 and FY2017 to the CHCF. An Act to amend the Homeland Security Act of 2002 to require the Secretary of Homeland Security to issue Department of Homeland Security-wide guidance and develop training programs as part of the Department of Homeland Security Blue Campaign, and for other purposes ( P.L. 115-96 ), Section 3101(a), provided $550 million for the first and second quarters of FY2018 to the CHCF. BBA 2018, Section 50901, made a number of changes to the health center program replaced language that had provided two quarters of funding and provided $3.8 billion to the CHCF in FY2018 and $4 billion in FY2019. Continuing Appropriations Act, 2020, and Health Extenders Act of 2019 , Division B, Section 1101 , provided $569,863,014 for the period of October 1, 2019 through November 21, 2019. Further Continuing Appropriations Act, 2020, and Further Health Extenders Act of 2019, Division B, Section 1101 , struck the amount that had been provided in P.L. 116-59 and provided $887,671,223 for the period of October 1, 2019 through December 20, 2019. Further Consolidated Ap propriations Act, 2020, Division N, Section 401, struck the amount that had been provided in P.L. 116-69 , and provided $2,575,342,466 for the period of October 1, 2019 through May 22, 2020. CARES Act , Section 3831, provided $4 billion for FY2020, which supersedes the funding previously provided by law for all periods of FY2020. Additionally, $668,493,151 was provided for the period of October 1, 2020 through November 30, 2020."], "subsections": []}, {"section_title": "Current Status", "paragraphs": ["Funding authorized under the CARES Act for CHCF expires after November 30, 2020. Any unused portion of grants awarded for a given fiscal year prior to November 30, 2020, will remain available until expended."], "subsections": []}]}, {"section_title": "Special Diabetes Programs (PHSA\u00c2 \u00c2\u00a7\u00c2\u00a7330B and 330C; 42\u00c2 U.S.C.\u00c2 \u00c2\u00a7\u00c2\u00a7254c-2(b) and 254c-3(b))", "paragraphs": [], "subsections": [{"section_title": "Background", "paragraphs": ["The Special Diabetes Program for Type I Diabetes (PHSA Section 330B) provides funding for the National Institutes of Health to award grants for research into the prevention and cure of Type I diabetes. The Special Diabetes Program for Indians (PHSA Section 330C) provides funding for the Indian Health Service (IHS) to award grants for services related to the prevention and treatment of diabetes for American Indians and Alaska Natives who receive services at IHS-funded facilities. "], "subsections": []}, {"section_title": "Relevant Legislation", "paragraphs": ["The Balanced Budget Act of 1997 (BBA 97; P.L. 105-33 ), Sections 4921 and 4922, established the two special diabetes programs and transferred $30 million annually from CHIP funds to each program from FY1998 through FY2002. BIPA 2000, Section 931, increased each program's annual appropriations to $70 million for FY2001 through FY2002 and provided $100 million for FY2003. An Act to Amend the Public Health Service Act with Respect to Special Diabetes Programs for Type 1 Diabetes and Indians ( P.L. 107-360 ) , Section 1, increased each program's annual appropriations to $150 million and provided funds from FY2004 through FY2008. MMSEA, Section 302, provided $150 million for each program through FY2009. MIPPA, Section 303, provided $150 million each program through FY2011. MMEA, Section 112, provided $150 million each program through FY2013. ATRA, Section 625, provided $150 million each program through FY2014. PAMA, Section 204, provided of $150 million each program through FY2015. MACRA, Section 213, provided $150 million each program through FY2017. Disaster Tax Relief and Airport and Airway Extension Act of 2017 ( P.L. 115-63 ), Section 301(b), provided $37.5 million for first quarter of FY2018 for the Special Diabetes Program for Indians (Note: it did not provide funding for the Special Diabetes Program for Type I Diabetes.) An Act to amend the Homeland Security Act of 2002 to require the Secretary of Homeland Security to issue Department of Homeland Security-wide guidance and develop training programs as part of the Department of Homeland Security Blue Campaign, and for other purposes, Section 3102, provided $37.5 million for the second quarter for the Special Diabetes Program for Indians and provided $37.5 million for the first and second quarters of FY2018 for the Special Diabetes Program for Type I Diabetes. BBA 2018, Section 50902, replaced language that had provided funding for the first and second quarters of FY2018 to provide $150 million for each program in FY2018 and FY2019. Continuing Appropriations Act, 2020, and Health Extenders Act of 2019 , Division B, Section 1102 , provided $ 21,369,863 for each program for the period of October 1, 2019 through November 21, 2019. Further Continuing Appropriations Act, 2020, and Further Health Extenders Act of 2019, Division B, Section 1102 , struck the amount that had been provided in P.L. 116-59 and provided $ 33,287,671 for each program for the period of October 1, 2019 through December 20, 2019. Further Consolidated Appropriations Act, 2020, Division N, Section 402, struck the amount that had been provided in P.L. 116-69 , and provided $96,575,342 for each program for the period of October 1, 2019 through May 22, 2020. CARES Act, Section 3832, provided $150 million for FY2020 for each program, which supersedes the funding previously provided by law for all periods of FY2020. Additionally, $ 25,068,493 was provided for each program for the period of October 1, 2020 through November 30, 2020."], "subsections": []}, {"section_title": "Current Status", "paragraphs": ["Funding authorized under the CARES Act for the two special diabetes programs expires after November 30, 2020. Any unused portion of grants awarded for a given fiscal year prior to November 30, 2020, will remain available until expended."], "subsections": []}]}, {"section_title": "National Health Service Corps Appropriations (PHSA\u00c2 \u00c2\u00a7338H; 42\u00c2 U.S.C.\u00c2 \u00c2\u00a7254b-2(b)(2))", "paragraphs": [], "subsections": [{"section_title": "Background", "paragraphs": ["The National Health Service Corps (NHSC) provides scholarships and loan repayments to certain health professionals in exchange for providing care in a health professional shortage area for a period of time that varies based on the length of the scholarship or the number of years of loan repayment received. The NHSC receives mandatory funding from the CHCF through PHSA Title III. The NHSC also received discretionary appropriations in FY2011. Between FY2012 and FY2017, the program did not receive discretionary appropriations. Beginning in FY2018 and continuing in FY2019, the program received discretionary appropriations, primarily to expand the number and type of substance abuse providers participating in the NHSC. The mandatory funding from the CHCF represents more nearly three-quarters of the program's funding in both FY2018 and FY2019, the last years where final appropriations data are available. "], "subsections": []}, {"section_title": "Relevant Legislation", "paragraphs": ["ACA, Section 10503, funded $1.5 billion to support the NHSC annually from FY2011 through FY2015, as follows: $290 million for FY2011, $295 million for FY2012, $300 million for FY2013, $305 million for FY2014, and $310 million for FY2015. Funds are to remain available until expended. MACRA, Section 221, funded $310 million for each of FY2016 and FY2017 for the NHSC. An Act to amend the Homeland Security Act of 2002 to require the Secretary of Homeland Security to issue Department of Homeland Security-wide guidance and develop training programs as part of the Department of Homeland Security Blue Campaign, and for other purposes Section 3101 , funded $65 million for the first and second quarters of FY2018 for the NHSC. BBA 2018, Sec tion 50901 , replaced language that had provided two-quarters of funding and funded $310 million for each of FY2018 and FY2019 for the NHSC. Continuing Appropriations Act, 2020, and Health Extend ers Act of 2019, Division B, Section 1101 , provided $18,021,918 for the period of October 1, 2019 through November 21, 2019. Further Continuing Appropriations Act, 2020, and Further Health Extenders Act of 2019, Division B, Section 1101 , struck the amount that had been provided in P.L. 116-59 and provided $28,072,603 for the period of October 1, 2019 through December 20, 2019. Further Consolidated Appropriations Act, 2020, Division N, Section 401, struck the amount that had been provided in P.L. 116-69 , and provided $81,445,205 for the period of October 1, 2019 through May 22, 2020. CARES Act, Section 3831, provided $310 million for FY2020, which supersedes the funding previously provided by law for all periods of FY2020. Additionally, $51,808,219 was provided for the period of October 1, 2020 through November 30, 2020."], "subsections": []}, {"section_title": "Current Status", "paragraphs": ["Funding authorized under the CARES Act for the CHCF component of the NHSC expires after November 30, 2020. Any unused portion of grants awarded for a given fiscal year prior to November 30, 2020, will remain available until expended."], "subsections": []}]}, {"section_title": "Teaching Health Centers (PHSA\u00c2 \u00c2\u00a7340H; 42\u00c2 U.S.C.\u00c2 \u00c2\u00a7256h)", "paragraphs": [], "subsections": [{"section_title": "Background", "paragraphs": ["The Teaching Health Center program provides direct and indirect graduate medical education (GME) payments to support medical and dental residents training at qualified teaching health centers (i.e., outpatient health care facilities that provide care to underserved patients)."], "subsections": []}, {"section_title": "Relevant Legislation", "paragraphs": ["ACA, Section 5508 , established the Teaching Health Center program and provided $230 million for direct and indirect GME payments for the period of FY2011 through FY2015. MACRA, Section 221, provided $60 million for each of FY2016 and FY2017 for direct and indirect GME payments for teaching health centers. Disaster Tax Relief and Airport and Airway Exten sion Act of 2017, Section 301 , provided $15 million for the first quarter of FY2018 for direct and indirect GME payments for teaching health centers. An Act to amend the Homeland Security Act of 2002 to require the Secretary of Homeland Security to issue Department of Homeland Security-wide guidance and develop training programs as part of the Department of Homeland Security Blue Campaign, and for other purposes, Section 3101 , struck the first quarter of funding and provided $30 million for the first and second quarters of FY2018 for direct and indirect GME payments for teaching health centers. It also limited the amount of funding that could be used for administrative purposes. B BA 2018, Section 50901 , made a number of changes to the Teaching Health Center program and replaced language that had provided two-quarters of funding and provided $126.5 million for each of FY2018 and FY2019 for direct and indirect GME payments for teaching health centers. Continuing Appropriations Act, 2020, and Health Extenders Act of 2 019 , Division B , Section 1101 , provided $44,164,384 or the period of October 1, 2019 through November 21, 2019. Further Continuing Appropriations Act, 2020, and Further Health Extenders Act of 2019, Division B, Section 1101 , struck the amount that had been provided in P.L. 116-59 and provided $68,794,521 for the period of October 1, 2019 through December 20, 2019. Further Consolidated Appropriations Act, 2020 , Division N , Section 401, struck the amount that had been provided in P.L. 116-69 , and provided $ 199,589,041 for the period of October 1, 2019 through May 22, 2020. CARES Act, Section 3831, provided $126.5 million for FY2020, which supersedes the funding previously provided by law for all periods of FY2020. Additionally, $21,141,096 was provided for the period of October 1, 2020 through November 30, 2020."], "subsections": []}, {"section_title": "Current Status", "paragraphs": ["Funding authorized under the CARES Act for Teaching Health Center GME payments expires after November 30, 2020, but unused funds remain available until expended."], "subsections": []}]}]}]}, {"section_title": "Other CY2020 Expiring Provisions", "paragraphs": [], "subsections": [{"section_title": "Health Coverage Tax Credit (IRC\u00c2 \u00c2\u00a735; 26 U.S.C.\u00c2 \u00c2\u00a735)", "paragraphs": [], "subsections": [{"section_title": "Background", "paragraphs": ["The Health Coverage Tax Credit (HCTC) subsidizes 72.5% of the cost of qualified health insurance for eligible taxpayers and their family members. Potential eligibility for the HCTC is limited to two groups of taxpayers. One group is composed of individuals eligible for Trade Adjustment Assistance (TAA) allowances because they experienced qualifying job losses. The other group consists of individuals whose defined-benefit pension plans were taken over by the Pension Benefit Guaranty Corporation because of financial difficulties. HCTC-eligible individuals are allowed to receive the tax credit only if they either cannot enroll in certain other health coverage (e.g., Medicaid) or are not eligible for other specified coverage (e.g., Medicare Part A). To claim the HCTC, eligible taxpayers must have qualified health insurance (specific categories of coverage, as specified in statute). The credit is financed through a permanent appropriation under 31 U.S.C. \u00c2\u00a71324(b)(2); therefore, the financing of the HCTC is not subject to the annual appropriations process."], "subsections": []}, {"section_title": "Relevant Legislation", "paragraphs": ["The T rade Act of 2002 ( P.L. 107-210 ), Sections 2 01-203, authorized the Health Coverage Tax Credit, specified the eligibility criteria for claiming the credit, and made conforming amendment to the U.S.C. for purposes of financing the credit. The American Recovery and Reinvestment Act of 2009 ( ARRA, P.L. 111-5 ), Part VI: TAA Health Coverage Improvement Act of 2009 , expanded eligibility for and subsidy of the HCTC including retroactive amendments, and provided $80 million for FY2009 and FY2010 to implement the enacted changes to the HCTC. The Trade Adjustment Assistance Extension Act of 2011 ( P.L. 112-40 ), Section 241 , established a sunset date of before January 1, 2014. The T rade Preferences Extension Act of 2015 ( P.L. 114-27 ), Section 407 , retroactively reauthorized the HCTC and established a new sunset date of before January 1, 2020. Further Consolidated Appropriations Act, 2020, Section 146 , established a new sunset date of before January 1, 2021. "], "subsections": []}, {"section_title": "Current Status", "paragraphs": ["Authorization for the HCTC is scheduled to expire after December 31, 2020."], "subsections": []}]}]}, {"section_title": "CY2019 Expired Provisions", "paragraphs": [], "subsections": [{"section_title": "Pregnancy Assistance Fund", "paragraphs": [], "subsections": [{"section_title": "Pregnancy Assistance Fund (42 U.S.C. \u00c2\u00a718201-42 U.S.C. \u00c2\u00a718204)", "paragraphs": [], "subsections": [{"section_title": "Background", "paragraphs": ["The Pregnancy Assistance Fund (PAF) program focuses on meeting the educational, social service, and health needs of vulnerable expectant and parenting individuals and their families during pregnancy and the postnatal period. The program identifies eligible populations as expectant and parenting teens, college students, and women of any age who experience domestic violence, sexual violence, sexual assault, or stalking. HHS administers the PAF program, and funding is awarded competitively to the 50 states, DC, U.S. territories, and tribal entities (hereinafter, grantees) that apply successfully. Grantees may use funds (1) to establish, operate, or maintain pregnancy or parenting services at institutions of higher education (IHEs), high schools, or community service providers; (2) to provide, in partnership with the state attorney general's office, certain legal and supportive services for women who experience domestic violence, sexual violence, sexual assault, or stalking while they are pregnant or parenting an infant; and (3) to support, either directly or through a subgrantee, public awareness about PAF services for the expectant and parenting population that is eligible for the program."], "subsections": []}, {"section_title": "Relevant Legislation", "paragraphs": ["ACA, Section 10212 , established PAF and provided $25 million annually from FY2010 through FY2019."], "subsections": []}, {"section_title": "Current Status", "paragraphs": ["Funding authorized under the ACA expired after September 30, 2019. "], "subsections": []}]}]}, {"section_title": "SSA Title VXIII: Medicare", "paragraphs": [], "subsections": [{"section_title": "Funding for Implementation of Section 101 of MACRA (MACRA\u00c2 Section\u00c2 101(c)(3))", "paragraphs": [], "subsections": [{"section_title": "Background", "paragraphs": ["Section 101 of MACRA made fundamental changes to the way Medicare payments to physicians are determined and how they are updated. To implement the payment modifications in Section 101 of MACRA, the law authorized the transfer of $80 million from the SMI Trust Fund for each fiscal year beginning with FY2015 and ending with FY2019. The amounts transferred are to be available until expended."], "subsections": []}, {"section_title": "Relevant Legislation", "paragraphs": ["MACRA , Section 101 , provided for the transfer of $80 million, for each of FY2015 through FY2019, from the Medicare SMI Trust Fund."], "subsections": []}, {"section_title": "Current Status", "paragraphs": ["Appropriated funds to support the activities under this subsection have not been enacted for FY2020 or subsequent fiscal years. "], "subsections": []}]}, {"section_title": "Priorities and Funding for Measure Development (SSA \u00c2\u00a71848(s); 42\u00c2 U.S.C.\u00c2 \u00c2\u00a71395w-4(s))", "paragraphs": [], "subsections": [{"section_title": "Background", "paragraphs": ["SSA Section 1848(s) required the HHS Secretary to develop a plan for the development of quality measures for use in the MIPS program, which is to be updated as needed. The subsection also requires the Secretary to enter into contracts or other arrangements to develop, improve, update, or expand quality measures, in accordance with the plan. In entering into contracts, the Secretary must give priority to developing measures of outcomes, patient experience of care, and care coordination, among other things. The HHS Secretary, through CMS, annually reports on the progress made in developing quality measures under this subsection. "], "subsections": []}, {"section_title": "Relevant Legislation", "paragraphs": ["MACRA, Section 102 , provided for the transfer of $15 million, for each of FY2015 through FY2019, from the Medicare SMI Trust Fund."], "subsections": []}, {"section_title": "Current Status", "paragraphs": ["Appropriated funds to support the activities under this subsection have not been enacted for FY2020 or subsequent fiscal years. However, funds appropriated prior to FY2020 are available for obligation through the end of FY2022."], "subsections": []}]}, {"section_title": "Temporary Extension of Long-Term Care Hospital (LTCH) Site Neutral Payment Policy Transition Period (SSA\u00c2 \u00c2\u00a71886(m)(6)(B)(i); 42\u00c2 U.S.C.\u00c2 \u00c2\u00a71395ww(m)(6)(B)(i))", "paragraphs": [], "subsections": [{"section_title": "Background", "paragraphs": ["Medicare pays LTCHs for certain inpatient hospital care under the LTCH prospective payment system (LTCH PPS), which is typically higher than payments for inpatient hospital care under the inpatient prospective payment system (IPPS). PSRA amended the law so that the LTCH PPS payment is no longer available for all LTCH discharges but instead is available only for those LTCH discharges that met specific clinical criteria. Specifically, LTCHs are paid under the LTCH PPS if a Medicare beneficiary either (1) had a prior three-day intensive-care-unit stay at a hospital paid under the IPPS immediately preceding the LTCH stay or (2) is assigned to an LTCH PPS case-mix group that is based on the receipt of ventilator services for at least 96 hours and had a prior hospital stay at a hospital paid under the IPPS immediately preceding the LTCH stay. Discharges involving patients who have a principal diagnosis relating to a psychiatric diagnosis or rehabilitation do not qualify for the LTCH PPS rate. Subsequent legislation provided for other criteria to temporarily receive payment under the LTCH PPS. See section \" Temporary Exception for Certain Spinal Cord Conditions from Application of the Medicare LTCH Site Neutral Payment for Certain LTCHs (SSA\u00c2\u00a0\u00c2\u00a71886(m)(6)(F); 42\u00c2\u00a0U.S.C.\u00c2\u00a0\u00c2\u00a71395ww(m)(6)(F)) .\"", "For LTCH discharges that did not qualify for the LTCH PPS based on these clinical criteria, a \"site neutral payment rate\" similar to the PPS for inpatient acute care hospitals (IPPS) was to be phased-in. The site neutral rate is defined as the lower of an \"IPPS-comparable\" per diem amount, as defined in regulations, or the estimated cost of the services involved."], "subsections": []}, {"section_title": "Relevant Legislation", "paragraphs": ["PSRA, Section 1206(a), established patient criteria for payment under the LTCH PPS and a site neutral payment rate for LTCH patients who do not meet these criteria. During a phase-in period for discharges in cost-reporting periods beginning in FY2016 and FY2017, LTCHs received a blended payment amount based on 50% of what the LTCH would have been reimbursed under the LTCH PPS rate and 50% of the site neutral payment rate. For cost-reporting periods beginning in FY2018 and subsequent years, the LTCH was to receive the site neutral payment rate. BBA 2018, Section 51005 , extended the transition period to site neutral Medicare payments for LTCH patients who do not meet the patient criteria for an additional two years, to include discharges in cost-reporting periods beginning during FY2018 and FY2019. During this period, LTCHs continue to receive the 50/50 blended payment for discharges that do not meet certain LTCH PPS criteria."], "subsections": []}, {"section_title": "Current Status", "paragraphs": ["The extended transition period to site neutral payments during which LTCHs receive a blended payment for discharges that do not meet the patient criteria expired for discharges occurring in cost-reporting periods beginning during FY2020 and subsequent years."], "subsections": []}]}, {"section_title": "Temporary Exception for Certain Spinal Cord Conditions from Application of the Medicare LTCH Site Neutral Payment for Certain LTCHs (SSA\u00c2 \u00c2\u00a71886(m)(6)(F); 42\u00c2 U.S.C.\u00c2 \u00c2\u00a71395ww(m)(6)(F))", "paragraphs": [], "subsections": [{"section_title": "Background", "paragraphs": ["Medicare pays LTCHs for inpatient hospital care under the LTCH PPS, which is typically higher than payments for inpatient hospital care under the IPPS. Effective for cost-reporting periods beginning in FY2016, LTCHS are paid the LTCH PPS rate for patients that meet one of the following two criteria: (1) had a prior three-day intensive-care-unit stay at a hospital paid under the IPPS immediately preceding the LTCH stay or (2) is assigned to an LTCH PPS case-mix group that is based on the receipt of ventilator services for at least 96 hours and had a prior hospital stay at a hospital paid under the IPPS immediately preceding the LTCH stay. Discharges involving patients who have a principal diagnosis relating to a psychiatric diagnosis or rehabilitation do not qualify for the LTCH PPS rate. For LTCH discharges that did not qualify for the LTCH PPS based on these criteria, a site neutral payment rate is being phased-in for cost-reporting periods beginning FY2016 through FY2019. Subsequent legislation provided for other criteria to temporarily receive payment under the LTCH PPS. See section \" Temporary Extension of Long-Term Care Hospital (LTCH) Site Neutral Payment Policy Transition Period (SSA\u00c2\u00a0\u00c2\u00a71886(m)(6)(B)(i); 42\u00c2\u00a0U.S.C.\u00c2\u00a0\u00c2\u00a71395ww(m)(6)(B)(i)) \" for details related to site neutral payment."], "subsections": []}, {"section_title": "Relevant Legislation", "paragraphs": ["The 21 st Century Cures Act (Cures Act; P.L. 114-255 ), Division C, Section 15009 , established an additional temporary criterion for payment under the LTCH PPS related to certain spinal cord conditions for discharges occurring in cost-reporting periods FY2018 and FY2019. Specifically, the LTCH PPS rate would apply to an LTCH discharge if all of the following are met: (1) the LTCH was a not-for-profit on June 1, 2014; (2) at least 50% of the LTCH's CY2013 LTCH PPS-paid discharges were classified under LTCH diagnosis related groups (DRGs) associated with catastrophic spinal cord injuries, acquired brain injury, or other paralyzing neuromuscular conditions; and (3) the LTCH during FY2014 discharged patients (including Medicare beneficiaries and others) who had been admitted from at least 20 of the 50 states, as determined by the HHS Secretary based on a patient's state of residency."], "subsections": []}, {"section_title": "Current Status", "paragraphs": ["The authority for the temporary criterion related to certain spinal cord conditions to receive payment under the LTCH PPS expired for discharges occurring in cost reporting periods during FY2020 and for subsequent years."], "subsections": []}]}, {"section_title": "Transitional Payment Rules for Certain Radiation Therapy Services (SSA \u00c2\u00a71848(b)(11); 42\u00c2 U.S.C.\u00c2 \u00c2\u00a71395w-4(b)(11))", "paragraphs": [], "subsections": [{"section_title": "Background", "paragraphs": ["Currently, Medicare payments for services of physicians and certain non-physician practitioners, including radiation therapy services, are made on the basis of a fee schedule. ", "To set payment rates under the MPFS, relative values units (RVUs) are assigned to each of more than 7,000 service codes that reflect physician work (i.e., the time, skill, and intensity it takes to provide the service), practice expenses, and malpractice costs. The relative value for a service compares the relative work and other inputs involved in performing one service with the inputs involved in providing other physicians' services. The relative values are adjusted for geographic variation in input costs. The adjusted relative values are then converted into a dollar payment amount by a conversion factor.", "CMS, which is responsible for maintaining and updating the fee schedule, continually modifies and refines the methodology for estimating RVUs. CMS is required to review the RVUs no less than every five years; the ACA added the requirement that the HHS Secretary periodically identify physician services as being potentially misvalued, and make appropriate adjustments to the relative values of such services under the Medicare physician fee schedule. ", "In determining adjustments to RVUs used as the basis for calculating Medicare physician reimbursement under the fee schedule, the HHS Secretary has authority, under previously existing law and as augmented by the ACA, to adjust the number of RVUs for any service code to take into account changes in medical practice, coding changes, new data on relative value components, or the addition of new procedures. ", "Under the potentially misvalued codes authority, certain radiation therapy codes were identified as being potentially misvalued in 2015. However, because of concerns that the existing code set did not accurately reflect the radiation therapy treatments identified, CMS created several new codes during the transition toward an episodic alternative payment model. "], "subsections": []}, {"section_title": "Relevant Legislation", "paragraphs": ["Patient Access and Medicare Protection Act (PAMPA; P.L. 114-115 ), required CMS to apply the same code definitions, work RVUs, and direct inputs for the practice expense RVUs in CY2017 and CY2018 as applied in 2016 for these transition codes, effectively keeping the payments for these services unchanged, subject to the annual update factor. PAMPA exempted these radiation therapy and related imaging services from being considered as potentially misvalued services under CMS's misvalued codes initiative for CY2017 and CY2018. PAMPA also instructed the HHS Secretary to report to Congress on the development of an episodic alternative payment model under the Medicare program for radiation therapy services furnished in non-facility settings. BBA 2018 Section 51009, extended the restrictions through CY2019."], "subsections": []}, {"section_title": "Current Status", "paragraphs": ["The payment restrictions expired after December 31, 2019.", "Appendix A. Demonstration Projects and Pilot\u00c2\u00a0Programs", "This appendix lists selected health care-related demonstration projects and pilot programs that are scheduled to expire during the second session of the 116 th Congress (i.e., during calendar year [CY] 2020). The expiring demonstration projects and pilot programs listed below have portions of law that are time-limited and will lapse once a statutory deadline is reached, absent further legislative action. The expiring demonstration projects and pilot programs included here are those related to Medicare, Medicaid, the State Children's Health Insurance Program (CHIP), and private health insurance programs and activities. This appendix also includes health care-related demonstration projects and pilot programs that were enacted in the Patient Protection and Affordable Care Act (ACA; P.L. 111-148 ) or extended in the Coronavirus Aid, Relief, and Economic Security Act (CARES Act; P.L. 116-136 ). No relevant demonstration projects and pilot programs within the same scope expired during the first session of the 116 th Congress (i.e., during CY2019). ", "Although CRS has attempted to be comprehensive, it cannot guarantee that every relevant demonstration project and pilot program is included here.", " Table A-1 lists the relevant demonstration projects and pilot programs that are scheduled to expire in 2020. ", "Appendix B. Provisions Included in the Previous CRS Health Care-Related Expiring Provisions\u00c2\u00a0Report", "This appendix provides information on the provisions that were included in the previous CRS report on health care-related expiring provisions (CRS Report R45781, Health Care-Related Expiring Provisions of the 116th Congress, First Session ) henceforth referred to as \"R45781,\" but were not detailed in the body of this report.", "As does the current report, R45781 included expiring provisions (of the same two types discussed herein) related to Medicare, Medicaid, State Children's Health Insurance Program (CHIP), and private health insurance programs and activities as well as selected other health care-related provisions. R45781 included health care-related provisions that were enacted in the Patient Protection and Affordable Care Act (ACA; P.L. 111-148 ) or, at the time of publication, had been extended under the Bipartisan Budget Act of 2018 (BBA 2018; P.L. 115-123 ). R45781 also described health care-related provisions that, at the time of publication, were set to expire during the first session of the 116 th Congress (i.e., during calendar year [CY] 2019) or had expired during the 115 th Congress (i.e., during CY2017 or CY2018).", "Some of the provisions detailed in R45781 fell within the scope of this report. Such provisions expired in CY2019 or were extended and are set to expire in CY2020. Table B-1 includes the provisions detailed in R45781 that remain expired or were extended to dates beyond the 116 th Congress (i.e., after CY2020). The third column in Table B-1 provides each provision's expiration date as it was in R45781. The fourth column reflects updated information, indicating whether the expiration date remains \"unchanged\" by law or providing the current expiration date for provisions extended pursuant to congressional modification. ", "Two private health insurance provisions were included in R45781 that did not meet the report criteria but were set to expire in 2019. These provisions modified fees and taxes established by the ACA to help fund ACA activities, including those related to private health insurance. As reflected in Table B-1, those fee and tax provisions were permanently repealed in the Further Consolidated Appropriations Act, 2020 ( P.L. 116-94 ).", "Unlike the other provisions that were included in R45781 and were extended past CY2020, the extension for the Patient-Centered Outcomes Research Trust Fund (PCORTF) was legislatively undertaken in a manner that resulted in significant revisions to the program and/or funding mechanisms detailed in R45781. Because of this, this appendix includes an updated provision summary below Table B-1. See, \"Patient-Centered Outcomes Research Trust Fund (IRC \u00c2\u00a79511 and \u00c2\u00a7\u00c2\u00a74375-4377, SSA \u00c2\u00a71183; 26 U.S.C. \u00c2\u00a79511; 26 U.S.C. \u00c2\u00a7\u00c2\u00a74375-4377; 42 U.S.C. \u00c2\u00a71320e-2).\" For more detailed background information on the other provisions included in Table B-1, see CRS Report R45781, Health Care-Related Expiring Provisions of the 116th Congress, First Session .", "Table B-1 does not include demonstration projects or pilot programs. The only project or program in Appendix A of R45781 that was not included in this report is the Demonstration Program to Increase Access to Dental Health Care Service. The demonstration program expired after March 23, 2017.", "Patient-Centered Outcomes Research Trust Fund (IRC \u00c2\u00a79511 and \u00c2\u00a7\u00c2\u00a74375-4377, SSA \u00c2\u00a71183; 26 U.S.C. \u00c2\u00a79511; 26 U.S.C. \u00c2\u00a7\u00c2\u00a74375-4377; 42 U.S.C. \u00c2\u00a71320e-2)", "Background", "SSA Section 1181 establishes the Patient-Centered Outcomes Research Institute (PCORI), which is responsible for coordinating and supporting comparative clinical effectiveness research. PCORI has entered into contracts with federal agencies, as well as with academic and private sector research entities for both the management of funding and conduct of research. PHSA Section 937 requires the Agency for Healthcare Research and Quality (AHRQ) to broadly disseminate research findings that are published by PCORI and other government-funded comparative effectiveness research entities. ", "IRC Section 9511 establishes the Patient-Centered Outcomes Research Trust Fund to support the activities of PCORI and to fund activities under PHSA Section 937. It provides annual funding to the PCORTF over the period FY2010-FY2019 from the following three sources: (1) annual appropriations, (2) fees on health insurance policies and self-insured plans, and (3) transfers from the Medicare HI and SMI Trust Funds. SSA Section 1183 provides for the transfer of the required funds from the Medicare Trust Funds. Transfers to PCORTF from the Medicare HI and SMI Trust Funds are calculated based on the number of individuals entitled to benefits under Medicare Part A or enrolled in Medicare Part B. IRC Sections 4375-4377 impose the referenced fees on applicable health insurance policies and self-insured health plans and describe the method for their calculation. ", "For each of FY2011 through FY2019, IRC Section 9511 requires 80% of the PCORTF funds to be made available to PCORI, and the remaining 20% of funds to be transferred to the HHS Secretary for carrying out PHSA Section 937. Of the total amount transferred to HHS, 80% is to be distributed to AHRQ, with the remainder going to the Office of the Secretary (OS)/HHS.", "Relevant Legislation", "ACA, Section 6301 , provided the following amounts to the PCORTF: (1) $10 million for FY2010, (2) $50 million for FY2011, and (3) $150 million for each of FY2012 through FY2019. In addition, for each of FY2013 through FY2019, the section provided an amount equivalent to the net revenues from a new fee that the law imposed on health insurance policies and self-insured plans. For policy/plan years ending during FY2013, the fee equals $1 multiplied by the average number of covered lives. For policy/plan years ending during each subsequent fiscal year through FY2019, the fee equals $2 multiplied by the average number of covered lives. Finally, the section (in addition to ACA Section 6301(d)) provided for transfers to PCORTF from the Medicare Part A and Part B trust funds; these are generally calculated by multiplying the average number of individuals entitled to benefits under Medicare Part A, or enrolled in Medicare Part B, by $1 (for FY2013) or by $2 (for each of FY2014 through FY2019). Under this provision, PCORTF was to terminate on September 30, 2019. Continu ing Appropriations Act, 2020, and Health Extenders Act of 2019 ( P.L. 116-59 ), Section 1403 , extended the termination date of PCORTF through November 21, 2019. Further Continuing Appropriations Act, 2020, and Further Health Extenders Act of 2019 ( P.L. 116-69 ), Section 1403 , further extended the termination date of PCORTF through December 20, 2019. Further Consolidated Appropriations Act, 2020 ( P.L. 116-94 ), Division N, Section 104 , extends funding for PCORTF through FY2029 by appropriating both the amount equivalent to the net revenues received from the fees on health insurance policies and self-insured plans and providing a direct appropriation in a specified amount (the \"applicable amount\") for each of fiscal years 2020 through 2029. The transfers from the Medicare HI and SMI Trust Funds were not extended. The section extends the termination date of PCTORF through FY2029; extends the termination dates of the fees on health insurance policies and self-insured plans through FY2029; and extends the requirement that 20% of PCORTF funds be transferred to the HHS Secretary for carrying out PHSA Section 937 for each fiscal year through FY2029. The section also makes modifications to the authorizing language for PCORI relating to the composition of its Board; appointments to its Methodology Committee; and the identification of research priorities, among others. ", "Current Status", "Appropriated funds to PCORTF expire after September 30, 2029. Funds transferred to the HHS Secretary under IRC Section 9511 remain available until expended. No amounts shall be available for expenditure from the PCORTF after September 30, 2029, and any amounts in the Trust Fund after such date shall be transferred to the general fund of the Treasury.", "Appendix C. Laws That Created, Modified, or Extended Current Health Care-Related Expiring\u00c2\u00a0Provisions", "Appendix D. List of Abbreviations", "AAA: Area Agencies on Aging", "ACA: Patient Protection and Affordable Care Act ( P.L. 111-148 , as amended) ", "ACL: Administration for Community Living", "ADRC: Aging and Disability Resource Center", "AHRQ: Agency for Healthcare Research and Quality", "APM: Alternative payment model", "ARRA: American Recovery and Reinvestment Act of 2009 ( P.L. 111-5 )", "ASC: Ambulatory Surgery Center", "ATRA: American Taxpayer Relief Act of 2012 ( P.L. 112-240 )", "BBA 97: Balanced Budget Act of 1997 ( P.L. 105-33 )", "BBA 2018 : Bipartisan Budget Act of 2018 ( P.L. 115-123 )", "BIPA 2000 : Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 ( P.L. 106-554 )", "CARES Act: Coronavirus Aid, Relief, and Economic Security Act ( P.L. 116-136 )", "CHCF: Community Health Center Fund", "CHIP: State Children's Health Insurance Program", "CMS: Centers for Medicare & Medicaid Services", "CRS: Congressional Research Service", "CY: Calendar year", "DRA: Deficit Reduction Act of 2005 ( P.L. 109-171 )", "DRG: Diagnosis related group ", "E-FMAP: Enhanced federal medical assistance percentage", "FFCRA: Families First Coronavirus Response Act ( P.L. 116-127 ) ", "FMAP: Federal medical assistance percentage", "FPL: Federal poverty level", "FY: Fiscal year", "GME: Graduate medical education", "GPCI: Geographic Practice Cost Index", "HCBS: Home and community-based services", "HCTC: Health Coverage Tax Credit ", "HH: Home health", "HHS: Department of Health and Human Services", "HI: Hospital Insurance", "IHE : Institution of higher education", "IHS: Indian Health Service", "IPPS: Medicare Inpatient Prospective Payment System", "IVIG: Intravenous immune globulin", "LTCH: Long-term care hospital", "LTCH PPS: Long-term care hospital prospective payment system", "LTSS: Long-term services and supports", "MA: Medicare Advantage", "MACRA: Medicare Access and CHIP Reauthorization Act of 2015 ( P.L. 114-10 )", "MAP: Measure Applications Partnership", "MCTRJCA: Middle Class Tax Relief and Job Creation Act of 2012 ( P.L. 112-96 )", "MedPAC: Medicare Payment Advisory Commission ", "MIPPA: Medicare Improvements for Patients and Providers Act of 2008 ( P.L. 110-275 )", "MIPS: Merit-based incentive payment system", "MMA: Medicare Prescription Drug, Improvement, and Modernization Act of 2003 ( P.L. 108-173 )", "MMEA: Medicare and Medicaid Extenders Act of 2010 ( P.L. 111-309 )", "MMSEA: Medicare, Medicaid and SCHIP Extension Act of 2007 ( P.L. 110-173 )", "MPFS: Medicare physician fee schedule", "MSP: Medicare Savings Program", "NHSC: National Health Service Corps", "NQF: National Quality Forum", "PAF: Pregnancy Assistance Fund", "PAMA: Protecting Access to Medicare Act of 2014 ( P.L. 113-93 )", "PAMPA: Patient Access and Medicare Protection Act ( P.L. 114-115 )", "PCORI: Patient-Centered Outcomes Research Institute", "PCORTF: Patient-Centered Outcomes Research Trust Fund", "PETI: Post-eligibility treatment of income", "PHSA: Public Health Service Act", "PPS: Prospective payment system", "PREIS: Personal Responsibility Education Program Innovative Strategies ", "PREP: Personal Responsibility Education Program", "PRWORA: Personal Responsibility and Work Opportunity Reconciliation Act of 1996 ( P.L. 104-193 )", "PSRA: Pathway for SGR Reform Act of 2013 ( P.L. 113-67 , Division B)", "RVU: Relative value unit", "SHIP: State Health Insurance Assistance Program", "SMI: Supplementary Medical Insurance", "SNAP: Supplemental Nutrition Assistance Program", "SRAE: Sexual Risk Avoidance Education", "SSA: Social Security Act", "SSI: Supplemental Security Income", "TAA: Trade Adjustment Assistance", "TANF: State Temporary Assistance for Needy Families", "TPTCCA: Temporary Payroll Tax Cut Continuation Act of 2011( P.L. 112-78 )", "TRHCA: Tax Relief and Health Care Act of 2006 ( P.L. 109-432 )", "U.S.C.: U.S. Code", "WREA 2003: Welfare Reform Extension Act of 2003 ( P.L. 108-40 )", "WREA 2004: Welfare Reform Extension Act of 2004 ( P.L. 108-210 )", "WREA 2005: Welfare Reform Extension Act of 2005 ( P.L. 109-4 )"], "subsections": []}]}]}]}]}}
{"id": "R44606", "title": "The Commodity Credit Corporation: In Brief", "released_date": "2019-09-04T00:00:00", "summary": ["The Commodity Credit Corporation (CCC) has served as a mandatory funding mechanism for agricultural programs since 1933. The CCC Charter Act enables the CCC to broadly support the U.S. agriculture industry through authorized programs including commodity and income support, natural resources conservation, export promotion, international food aid, disaster assistance, agricultural research, and bioenergy development.", "While CCC is authorized to carry out a number of activities, it has no staff of its own. Rather, U.S. Department of Agriculture (USDA) employees and facilities carry out all of its activities. CCC is overseen by the Secretary of Agriculture and a board of directors, which are also USDA officials. CCC has $100 million in capital stock; buys, owns, sells, and donates commodity stocks; and provides loans to farmers and ranchers. It has a permanent indefinite borrowing authority of $30 billion from the U.S. Treasury. By law, it receives an annual appropriation equal to the amount of the previous year's net realized loss. This replenishes its borrowing authority from the Treasury and allows it to cover authorized expenditures that will not be recovered.", "The majority of CCC activities are authorized through omnibus farm bills\u00e2\u0080\u0094most recently the Agriculture Improvement Act of 2018 ( P.L. 115-334 ). Farm bill authorization allows programs to utilize CCC's borrowing authority, thereby dispensing with the need for an annual appropriation for individual programs. The use of this mandatory authority has expanded over time and has led to tension between authorizing committees and appropriation committees in previous fiscal years.", "The Charter Act also grants the Secretary of Agriculture broad powers and discretion in the use of the CCC. This discretionary use was restricted in annual appropriations legislation from FY2012 through FY2017, effectively reducing the Secretary's discretionary use of CCC. The FY2018 Consolidated Appropriations Act ( P.L. 115-124 ) did not include these restrictions, which has allowed the Trump Administration to use CCC's authority to address market impacts from China's retaliatory tariffs on certain U.S. agricultural commodities in 2018 and 2019."], "reports": {"section_title": "", "paragraphs": ["T he Commodity Credit Corporation (CCC) has served as the financial institution for carrying out federal farm commodity price support and production programs since 1933. It is a wholly government-owned entity that exists solely to finance authorized programs that support U.S. agriculture. It is subject to the supervision and direction of the Secretary of Agriculture at the U.S. Department of Agriculture (USDA). The CCC mission was conceived mostly as one of commodity support, but over time it has expanded to include an increasingly broad array of programs, including export and commodity programs, resource conservation, disaster assistance, agricultural research, and bioenergy development. ", "While CCC operates according to a large number of statutory authorities, its broad powers allow it to carry out almost any operation required to meet the objectives of supporting U.S. agriculture. This broad mandate, and its significant borrowing authority, has traditionally drawn little attention. For most of its history, CCC's responsibilities have been expanded through legislative directives such as the farm bill. In past years, Congress took actions to limit the discretional uses of CCC funds through restrictions in appropriations language. These restrictions highlight a tension between authorizers and appropriators when it comes to the use of the CCC (see \"Tension Between Authorizers and Appropriators\" box). While these restrictions are no longer included, questions remain about what the CCC is, how it operates, what its current uses are, and what it may be used for in the future. This report provides a brief review of CCC's unique history, funding structure, general operation, and recent issues associated with its use. Other CRS reports cover in detail programs and activities authorized through CCC. "], "subsections": [{"section_title": "Origin of the CCC", "paragraphs": ["For over a decade prior to the creation of CCC in 1933, the farm economy struggled with low levels of income from depressed commodity prices and increasing costs for needed supplies and services. The first major federal effort to boost commodity prices was through the Federal Farm Board, established by the Agricultural Marketing Act of 1929. An inadequate and ultimately failed effort to eliminate surpluses was attempted by making loans to cooperative associations for the purpose of carrying out surplus purchase operations. Without the ability to control production, it was impossible to eliminate surplus stocks. This led to proposals to regulate the harvested acreage of farm commodities and quantities sold. The concept of acreage and marketing controls was incorporated in to the Agricultural Adjustment Act of 1933 (AAA).", "The AAA sought to reduce production by paying producers to participate in acreage control programs. Funding came from a tax on companies that processed farm products. Additional provisions of the law dealt with fair marketing practices and voluntary agreements between producers and handlers of commodities to regulate marketing. A financial institution was needed to carry out the newly authorized farm legislation, and this was accomplished with the creation of the Commodity Credit Corporation. Executive Order 6340 of October 17, 1933, directed the incorporation of CCC in the state of Delaware. ", "The Delaware charter authorized CCC, among other things, to buy and sell farm commodities; lend; undertake activities for the purpose of increasing production, stabilizing prices, and insuring adequate supplies; and facilitate the efficient distribution of agricultural commodities. It was originally capitalized with $3 million appropriated by Congress. In 1936, sufficient stock was acquired to raise the capitalization to $100 million. Its capital stock remains at this level today. In 1939, Executive Order 8219 ordered that all rights of the United States arising out of the ownership of CCC be transferred to the Secretary of Agriculture.", "At that time, low prices became so critical for cotton and corn producers that waiting for another season for supply controls to impact the market was judged to be untenable. With the establishment of CCC, it became possible to make nonrecourse loans so that farmers would have funds to hold their products off the market until prices improve. The first loans were made to cotton farmers at the rate of 10 cents per pound, while the average market price was between eight and nine cents per pound. Since loans were higher than the market price and were nonrecourse, they could be satisfied by forfeiting the cotton pledged as collateral against the loan, they served as a form of price support and set the floor for the domestic market. Funding for these first loan operations came from a tax on commodity processing and from CCC's $3 million capital account, which was appropriated under authority of the National Industrial Recovery Act and the Fourth Deficiency Act.", "Constitutional difficulties with some provisions of the AAA, and practical shortcomings with elements of the law, led to additional legislation in the 1930s that continues today as permanent authority for many USDA activities. Subsequent omnibus \"farm bills\" now set most of the policy goals and program constraints for farm price and income support operations that are funded through CCC ."], "subsections": []}, {"section_title": "CCC Charter Act", "paragraphs": ["The Government Corporation Control Act of 1945 (GCCA) required all wholly owned government corporations to be reincorporated as agencies or instrumentalities of the United States. Accordingly, Congress passed the Commodity Credit Corporation Charter Act of 1948 (Charter Act). All CCC rights, duties, assets, and liabilities were assumed by the federal corporation, and the Delaware corporation was dissolved.", "According to the Charter Act, the purpose of CCC is to stabilize, support, and protect farm income and prices; assist in maintaining balanced and adequate supplies of agricultural commodities; and facilitate the orderly distribution of commodities. A list of some of CCC's authorities (paraphrased from Section 5 of the Charter Act, 15 U.S.C. \u00c2\u00a7714(c)) conveys a sense of its broadly stated powers:", "Support agricultural commodity prices through loans, purchases, payments, and other operations. Make available materials and facilities in connection with the production and marketing of agricultural products. Procure commodities for sale to other government agencies; foreign governments; and domestic, foreign, or international relief or rehabilitation agencies and for domestic requirements. Remove and dispose of surplus agricultural commodities. Increase the domestic consumption of commodities by expanding markets or developing new and additional markets, marketing facilities, and uses for commodities. Export, or cause to be exported, or aid in the development of foreign markets for commodities. Carry out authorized conservation or environmental programs.", "Over time, Congress has authorized CCC to fund an increasing number of diverse programs and activities related to its charter (see text box below). In carrying out operations, CCC is directed, to the maximum extent practicable, to use the usual and customary channels, facilities, and arrangements of trade and commerce. "], "subsections": []}, {"section_title": "Management of CCC", "paragraphs": ["The Charter Act makes CCC an agency and instrumentality of the United States within USDA, subject to the supervision and direction of the Secretary of Agriculture. A board of directors appointed by the President, consisting of the Secretary and seven other USDA officials, is responsible for the management of CCC. CCC officers and advisors\u00e2\u0080\u0094also USDA officials\u00e2\u0080\u0094are charged with maintaining liaisons with other governmental and private trade operations on the CCC's behalf.", "The CCC has no personnel of its own. Rather, USDA employees and facilities carry out all of its activities. Administrative functions generally fall to the USDA agencies directed to administer the various CCC programs. The majority of its functions are administered by the Farm Service Agency (FSA), which operates most of the commodity and income support programs. Other agencies that administer CCC programs include the Natural Resources Conservation Service, the Agricultural Marketing Service, the Foreign Agricultural Service, and the United States Agency for International Development (USAID). CCC reimburses other agencies for their administrative costs. ", "CCC cannot acquire property or interest in property unless it is related to providing storage for program implementation or protecting CCC's financial interests. CCC is allowed to rent or lease space necessary to conduct business (e.g., warehousing of commodities)."], "subsections": []}, {"section_title": "Financing CCC", "paragraphs": ["CCC is responsible for the direct spending and credit guarantees used to finance the federal government's agricultural commodity price support and related activities that are undertaken by authority of agricultural legislation (such as farm bills) or the Charter Act itself. It is, in brief, a broadly empowered financial institution. The money CCC needs comes from its own funds (including its $100 million capital stock, appropriations from Congress, and its earnings) and from borrowings. In accordance with government accounting statutes and regulations, CCC is required to submit an annual business-type budget statement to Congress. This is typically released annually with the President's budget request.", "The Office of Management and Budget (OMB) also plays a role in how CCC funds are administered through an apportionment process, which allows OMB to set a limit on the funds available for obligation and subsequent outlay. OMB apportions funds for select CCC programs and operating expenditures. OMB is precluded, however, from apportioning funds \"for price support and surplus removal of agricultural commodities.\""], "subsections": [{"section_title": "Borrowing Authority", "paragraphs": ["Most CCC-funded programs are classified as mandatory spending programs and therefore do not require annual appropriations in order to operate. CCC instead borrows from the U.S. Treasury to finance its programs. CCC has permanent indefinite authority to borrow from the Treasury (and also private lending institutions) within limits set by Congress. As the amount of money needed to carry out its activities has grown over time, the borrowing limit has been steadily increased ( Figure 1 ). At present, CCC's borrowing authority is limited to $30 billion, an amount that has not been increased since 1987. ", "CCC activity is often described using two similar but different measures. The first is net expenditures , which is a combination of outlays and receipts. The second is net realized losses , which are expenditures that will never be recovered."], "subsections": [{"section_title": "Net Expenditures", "paragraphs": ["CCC recoups some money from authorized activities (e.g., sale of commodity stocks, loan repayments, and fees), though not nearly as much money as it spends, resulting in net expenditures. Net expenditures include all cash outlays minus all cash receipts, commonly referred to as \"cash flow.\" CCC outlays or expenditures represent the total cash outlays of the CCC-funded programs (e.g., loans made, conservation program payments, commodity purchases, and disaster payments). Outlays are offset by receipts (e.g., loan repayment, sale of commodities, and fees). In practice a portion of these net expenditures may be recovered in future years (e.g., through loan repayments)."], "subsections": []}, {"section_title": "Net Realized Losses", "paragraphs": ["CCC also has net realized losses, also referred to as nonrecoverable losses. These refer to the outlays that CCC will never recover, such as the cost of commodities sold or donated, uncollectible loans, storage and transportation costs, interest paid to the Treasury, program payments, and operating expenses. The net realized loss is the amount that CCC, by law, is authorized to receive through appropriations to replenish the CCC's borrowing authority (see Figure 2 ).", "The annual appropriation for CCC varies each year based on the net realized loss of the previous year. For example, the FY2019 appropriation ( P.L. 116-6 ) continues to provide an indefinite appropriation, covering the net realized loss for FY2018, which was $15.41 billion, 8% more than the net realized loss in FY2017 of $14.28 billion. The increase does not indicate any action by Congress to change program support but rather changes in farm program payments and other CCC activities that fluctuate based on economic circumstances and weather conditions. Also, CCC's assets, which include loans and commodity inventories, are not considered to be \"losses\" until CCC ultimately disposes of the asset (e.g., by sales, exports, or donations). At that time, the total cost is realized and added to other program expenses less any other program income. "], "subsections": []}]}, {"section_title": "Non-Borrowing Authority Appropriations", "paragraphs": ["Some CCC operations are financed through appropriated funds and are unrelated to the permanent indefinite borrowing authority described above. These activities include a specific statutory authority for separate reimbursement\u00e2\u0080\u0094for example, export credit guarantee programs, foreign donations, concessional sales under the Food for Peace Program (P.L. 83-480, also known as P.L. 480), and disaster aid.", "CCC has what it refers to as a \"parent/child\" account relationship with USAID. CCC allocates funds (as the parent) to USAID (as the child) to fund P.L. 480 Title II and Bill Emerson Humanitarian Trust transportation costs and other administrative costs in connection with foreign commodity donations. CCC then reports USAID's budgetary and proprietary activities in its financial statements. "], "subsections": []}]}, {"section_title": "Issues for Congress", "paragraphs": [], "subsections": [{"section_title": "Expansion of CCC Activities", "paragraphs": ["Over time, a number of new activities have been added to CCC's original mission, including conservation, specialty crop support, and bioenergy development. Some have suggested adding other agriculture-related activities to CCC. The idea of expanding CCC's activities generates both concern and support. Some consider this expansion to be beyond CCC's chartered purpose. Others, however, prefer the stability and consistency of mandatory funding to that of the annual appropriations process. Any expansion of mandatory funding authority, however, would require a spending or revenue offset under current budgetary rules.", "Although Congress as a whole makes final funding decisions, the rise in the number of agricultural programs with mandatory budget authority from the authorizing committees has not gone unnoticed or untouched by appropriators. In previous years, appropriations bills have reduced mandatory program spending below authorized levels. These reductions, as estimated by the Congressional Budget Office, are commonly referred to as changes in mandatory program spending (CHIMPS). CHIMPS can be used to offset increases in discretionary spending that are above discretionary budget caps."], "subsections": []}, {"section_title": "Restrictions on Use", "paragraphs": ["From FY2012 to FY2017, annual appropriation acts limited USDA's discretion to use CCC's authority to remove surplus commodities and support prices (see text box below). The FY2018 omnibus appropriation did not include this limitation, effectively allowing USDA to use CCC's full authority, including its discretion for surplus removal and price support activities, along with other authorized uses.", "USDA's ability to use its administrative powers in the Charter Act, however, may be restricted by executive budgetary rules such as \"administrative PAYGO\"\u00e2\u0080\u0093\u00e2\u0080\u0093that is, the need to offset additional spending created by administrative action. Administrative PAYGO has been cited as a potential roadblock to undertaking certain CCC actions but has also been waived or not raised as an issue in other cases involving CCC. "], "subsections": []}, {"section_title": "Administrative Discretion", "paragraphs": ["The majority of CCC operations are directed by statutory authorities that specifically direct USDA on how to administer CCC activities and in what amounts to fund them. The broad CCC authorities, however, also allow USDA a level of discretion to carry out effectively any operation that supports U.S. agriculture. This discretion has been used throughout CCC's history for a number of different purposes, including responses to natural disasters, economic conditions, and administrative priorities. The scope and scale of this discretion has traditionally been targeted to specific events, crops, or domestic needs. In the decade before FY2018, administrative discretion was partially restricted (see \" Restrictions on Use \"). USDA's use of the unrestricted portion of CCC's authority during this period totaled in the hundreds of millions of dollars (see examples below). ", "This changed in summer 2018, when USDA announced that it would be taking several actions to assist farmers in response to trade damage from retaliatory tariffs targeting various U.S. products. USDA used its administrative discretion to authorize up to $12 billion in assistance\u00e2\u0080\u0094referred to as the \"trade aid\" package\u00e2\u0080\u0094for certain agricultural commodities. This authority was then used again in summer 2019, when USDA announced a second trade aid package authorizing up to an additional $16 billion in assistance.", "Congressional support for discretionary use of CCC typically varies depending on purpose. Some in Congress have questioned how USDA has used CCC, but few have advocated for a restriction or repeal of the discretionary authority in the last two years. Some Members have called on USDA to use CCC for similar assistance to industries within their states and districts. Congress did require USDA to expand payments under the trade aid program in the FY2019 supplemental appropriations. This expansion could be viewed as congressional support for the trade aid package."], "subsections": []}]}, {"section_title": "Conclusion", "paragraphs": ["CCC is a government-owned and broadly empowered financial institution that has a mandate to support U.S. agriculture. Its activities are derived from authorities granted by Congress. While it is the primary funding mechanism used in omnibus farm bills, its existence, use, and operations are frequently misunderstood and often confused with USDA itself. One reason for this confusion may be because much of CCC's functional operations support USDA's program activities\u00e2\u0080\u0093\u00e2\u0080\u0093CCC has no staff of its own; rather, it operates through USDA agencies. ", "These broad authorities that Congress has granted to CCC allow it to carry out almost any operation that is consistent with the objective of supporting U.S. agriculture. It is these same broad powers that make CCC the object of attention from various interest groups and from Congress.", "The mandatory funding nature of CCC activities makes it an attractive funding mechanism. Any expansion of mandatory funding authority by Congress, however, may require a spending/revenue offset or an amendment to current budgetary rules. Recent congressional action restoring CCC's authority have allowed for the Trump Administration's use of CCC to mitigate commodity price declines from retaliatory tariffs on a variety of U.S. agricultural products.", "The use of CCC's discretionary authority for the FY2018 and FY2019 trade aid packages is perhaps less controversial than the total amount authorized. Each package is close to the total amount expended by CCC annually in recent fiscal years, effectively doubling the annual net realized loss. This increase in spending brings CCC close to its borrowing authority limit of $30 billion. If the borrowing authority limit were reached before Congress appropriates the net realized loss reimbursement, all functions and operations of CCC would be suspended, including those authorized in the recently enacted 2018 farm bill. Additionally, since the two trade aid packages were undertaken using CCC's discretionary authority, no congressional budget offset was required, and administrative PAYGO was not raised. The corporation's permanent, indefinite funding authority means that trade aid expenditures are reimbursed annually as a net realized loss, thus increasing total federal spending."], "subsections": []}]}}
{"id": "R46367", "title": "Department of State, Foreign Operations, and Related Programs: FY2021 Budget and Appropriations", "released_date": "2020-05-19T00:00:00", "summary": ["Each year, Congress considers 12 distinct appropriations measures to fund federal programs and activities. One of these is the Department of State, Foreign Operations, and Related Programs (SFOPS) bill, which includes funding for U.S. diplomatic activities, cultural exchanges, development and security assistance, and participation in multilateral organizations, among other international activities. On February 10, 2020, the Trump Administration submitted to Congress its SFOPS budget proposal for FY2021, totaling $44.12 billion (including $158.90 million in mandatory State Department retirement funds). Consistent with Administration requests since FY2018, none of the requested SFOPS funds were designated as Overseas Contingency Operations (OCO) funds; nevertheless, Congress has enacted OCO funds for SFOPS each year during this period.", "The Administration's FY2021 request is about 3% higher than its FY2020 request for SFOPS accounts but nearly 24% below the FY2020 SFOPS funding level enacted by Congress (including COVID-19 supplemental funds). Within these totals, funding is divided among two main components:", "Department of State and Related Agency accounts. These funds, provided in Title I of the SFOPS appropriation, primarily support Department of State diplomatic and security activities and would be reduced by 18.9% from FY2020-enacted levels. Noteworthy cuts are proposed for the Educational and Cultural Exchange Programs (-57.6%), International Organizations (-31.8%) accounts, and the Diplomatic Programs account (-12.6%), which funds many of the State Department's day-to-day operations. The Foreign Ope rations accounts, funded in Title II-VI of the SFOPS bill, fund most foreign assistance activities. These accounts would see a total reduction of 25.7%, with particularly steep cuts proposed for global health programs (-37.5%), peacekeeping operations (PKO, -36.6%), multilateral aid (-28.9%), and humanitarian assistance (-28.3%, not including food aid programs funded through the agriculture appropriation).", "This report provides an overview of the FY2021 SFOPS budget request, discusses trends in SFOPS funding, and highlights key policy issues. An account-by-account comparison of the FY2021 SFOPS request and enacted FY2020 SFOPS appropriations is presented in Appendix A . Appendix B provides a similar comparison, focused specifically on the International Affairs budget. Appendix C depicts the organization of the SFOPS appropriation. The report will be updated to reflect congressional action.", "This report is designed to track SFOPS appropriations, with a focus on comparing funding levels for accounts and purposes across enacted FY2020 SFOPS appropriations, FY2021 Administration requests, and FY2021 SFOPS legislation as it moves through the legislative process. It does not provide significant analysis of international affairs policy issues. For in-depth analysis and contextual information on international affairs issues, please consult the wide range of CRS reports on specific subjects, such as global health, diplomatic security, and U.S. participation in the United Nations."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Overview", "paragraphs": ["On February 10, 2020, the Trump Administration proposed its FY2021 budget for the Department of State, Foreign Operations, and Related Programs (SFOPS) accounts, totaling $44.12 billion (including $158.90 million in mandatory retirement funds). SFOPS funding typically represents about 1% of the annual federal budget and supports a wide range of U.S. activities around the world, including the operations of U.S. embassies, diplomatic activities, educational and cultural exchanges, development, security, and humanitarian assistance, and U.S. participation in multilateral organizations. Figure 1 shows funding for different SFOPS components based on FY2020 budget authority estimates, relative to each other and to the broader federal budget.", "The Administration's request is about 3% higher than the FY2020 request for SFOPS accounts but nearly 23% below the FY2020 SFOPS funding level enacted by Congress, including supplemental funds to help combat the COVID-19 epidemic globally. The Trump Administration has consistently requested far less SFOPS funding than Congress has appropriated. This is a reversal from the Obama Administration, when Congress typically provided less total SFOPS funding than was requested, though the gap narrowed over time during Obama's terms ( Table 1 ).", "If enacted, the requested SFOPS funding level would be the lowest in over a decade ( Figure 2 )."], "subsections": [{"section_title": "The Budget Control Act and Overseas Contingency Operations", "paragraphs": ["Since FY2012, the appropriations process has been shaped by the discretionary spending caps put in place by the Budget Control Act of 2011 (BCA; P.L. 112-25 ). Congress has since sought ways to manage the constraints imposed by the BCA and has repeatedly amended the BCA to raise the caps, most recently by the Bipartisan Budget Act of 2019 (BBA 2019; P.L. 116-37 ). The BBA 2019 raised discretionary spending limits set by the BCA for FY2020 and FY2021, the final two years the BCA caps are in effect. ", "In addition to raising the caps, Congress has worked around the BCA limits by using Overseas Contingency Operations (OCO) funding, which is excluded from BCA discretionary budget limits. Congress began appropriating OCO in the SFOPS budget in FY2012, having previously provided OCO funds for the Department of Defense (DOD). Originally used to support shorter-term, contingency-related programming in Afghanistan, Iraq, and Pakistan that was not considered part of the \"base\" or \"core\" budget, OCO's use expanded considerably in level and scope between FY2012 and FY2017. Global SFOPS OCO funding peaked at $20.80 billion in FY2017 (nearly 35% of SFOPS funds that year), at which point it was used to support 18 different SFOPS accounts, ranging from USAID operating expenses and the Office of Inspector General to International Disaster Assistance and Foreign Military Financing. This broad use has led many observers to question whether the OCO designation makes a meaningful distinction between core and contingency activities, with some describing OCO (in both SFOPS and Defense appropriations) as a slush fund.", "The Administration has not requested OCO funds for SFOPS since FY2018, though it has continued to request OCO funds in the DOD budget. Nevertheless, Congress designated $8.00 billion of enacted SFOPS funding in both FY2019 and FY2020 as OCO, continuing a downward trend in the use of OCO since the FY2017 peak. ", "FY2020 SFOPS funding also included $2.37 billion in supplemental emergency funding to help combat the COVID-19 pandemic abroad. Like OCO-designated funding, emergency-designated funding does not count toward the BCA discretionary spending caps and may therefore be used as an alternative to the OCO designation. Before the use of OCO in SFOPS, funding for contingency activities was often provided through supplemental emergency appropriations. "], "subsections": []}]}, {"section_title": "Congressional Action on FY2021 SFOPS Legislation", "paragraphs": ["Congressional action on SFOPS and other FY2021 appropriations has been delayed to an uncertain degree by disruption of congressional activity related to the Coronavirus Disease 2019 (COVID-19) pandemic. Congress held some hearings on the FY2021 budget request before all hearings were postponed in March 2020. Subcommittee allocations have not been formally established, nor has SFOPS legislation been introduced for FY2021. "], "subsections": []}, {"section_title": "State Department Operations and Related Agency\u00c2 Highlights", "paragraphs": ["The FY2021 request would cut funding for the Department of State and Related Agency appropriations accounts to $14.03 billion, down 18.9% from an enacted FY2020 level of $17.31 billion (including $588 million in COVID-19 supplemental funds). The Administration's request does not include funds to support the State Department's response to the COVID-19 pandemic. To date, Congress has provided all State Department operations funding for COVID-19-related matters through two FY2020 supplemental appropriations acts ( P.L. 116-123 and P.L. 116-136 ).", "The Administration's stated priorities for funding provided via Department of State and Related Agency accounts in FY2021 include", "supporting the Indo-Pacific Strategy; countering Chinese, Russian, and Iranian malign influence; protecting U.S. government personnel, facilities, and data assets; and maintaining American leadership in international organizations while asking other nations to increase their support.", " Table 2 provides a comparative breakout of the Administration's State Department and Related Agency request, by account."], "subsections": [{"section_title": "Selected Programs and Priorities", "paragraphs": ["Consistent with its previous requests, the majority (87.1%) of the funding the Administration is requesting for the Department of State and Related Agency appropriations accounts is for diplomatic programs, diplomatic security and embassy construction, and contributions to international organizations and international peacekeeping activities. For FY2020, such programs composed approximately 88.1% of the Administration's request and 84.8% of the enacted appropriations Congress provided for these accounts. Some of the Administration's priorities within these areas, as identified by the Department of State in its Congressional Budget Justification, are detailed below."], "subsections": [{"section_title": "Diplomatic Programs", "paragraphs": ["The Diplomatic Programs account is the State Department's principal operating appropriation and serves as the source of funding for several key functions. These include", "most domestic and overseas State Department personnel salaries; foreign policy programs administered by State Department regional bureaus, the Bureau of Conflict and Stabilization Operations, and others; public diplomacy programs; and the operations of the department's strategic and managerial units, including the Bureaus of Administration, Budget and Planning, and Legislative Affairs as well as the Office of the Chief of Protocol. ", "The Administration's FY2021 request for Diplomatic Programs totals $8.49 billion, around 12.6% less than the $9.71 billion Congress provided for this account in FY2020 (this amount includes $588 million Congress provided for Diplomatic Programs in FY2020 supplemental COVID-19 funds; see text box for more detail). The Administration's request seeks $138 million for the Global Engagement Center (GEC), which is responsible for leading interagency efforts to recognize, understand, expose, and counter foreign state and non-state propaganda and disinformation efforts aimed at undermining U.S. interests, including those carried out from Russia, China, and Iran. The Administration maintains that this request, which would constitute a $76 million increase in annual funding for the GEC provided through SFOPS, would alleviate the need for DOD to transfer funds for GEC operations. Some Members of Congress and other observers have expressed concern regarding past DOD transfers, arguing that DOD has not transferred funding to the State Department in an expeditious manner or at funding levels that reflect congressional intent. ", "The Administration's request also includes a realignment of personnel and funding from the Bureau of Global Talent Management (formerly the Bureau of Human Resources); the Bureau of Arms Control, Verification, and Compliance; and the Office of the Coordinator for Cyber Issues to establish a new Bureau for Cyber Security and Emerging Technologies (CSET). The State Department first notified Congress of its intent to create this new bureau in June 2019. It will be responsible for supporting \"foreign policies and initiatives to promote U.S. cyber and emerging technology policies and deter adversaries from malicious and destabilizing behavior in their use and application of such technologies.\" Some observers have expressed criticism over elements of the State Department's plan for CSET, arguing that additional cyber-related matters such as global internet governance should be included in the bureau's remit. However, it appears that this issue and related matters will instead remain under the purview of the Bureau of Economic and Business Affairs. "], "subsections": []}, {"section_title": "Diplomatic Security", "paragraphs": ["For FY2021, the Administration requests around $5.38 billion for the State Department's key diplomatic security accounts: $3.70 billion for the Worldwide Security Protection (WSP) allocation within the Diplomatic Programs account and $1.68 billion for the Embassy Security, Construction, and Maintenance (ESCM) account. The Administration's request represents a decrease of 11.4% from the FY2020 enacted funding level (see Table 3 ). ", "The Administration is proposing that Congress decouple WSP from Diplomatic Programs and establish a standalone WSP account (see text box). WSP funds the Bureau of Diplomatic Security (DS), which is responsible for implementing the department's security programs to protect U.S. embassies and other overseas posts, diplomatic residences, and domestic State Department offices. In addition, WSP supports many of the State Department's security and emergency response programs, including those pertaining to operational medicine and security and crisis management training. The ESCM account funds the Bureau of Overseas Building Operations (OBO), which is responsible for providing U.S. diplomatic and consular missions overseas with secure, functional, and resilient facilities and managing nonmilitary U.S. government property abroad.", "The Administration's WSP-funded priorities for FY2021 include the hiring of an additional 110 special agents at DS, which the Administration maintains is necessary to address critical overseas vacancies. In addition, the Administration intends to deploy High Definition Secure Video Systems (HDSVS) at overseas posts worldwide. The Administration has stated these systems will provide enhanced monitoring capabilities at overseas posts, including greater video resolution and enhanced nighttime visibility. At the same time, the Administration has proposed a cut of $109 million for DS operations in Afghanistan, which it says is consistent with the consolidation of DS-managed locations in the country and a corresponding reduction in costs for guard services and logistical support. ", "The Administration's ESCM request includes $866.67 million for the State Department's share of the Capital Security Cost Sharing and Maintenance Cost Sharing Programs, which are the sources of funding for the planning, design, construction, and maintenance of the United States' overseas diplomatic posts. The Administration maintains that this request, when combined with funds contributed by other agencies with personnel at overseas posts and visa fee revenues, will fund these programs at the $2.20 billion level recommended by the Benghazi Accountability Review Board. Construction projects the Administration is seeking to fund through this request include a new embassy compound in Riyadh, Saudi Arabia, and new consulate compounds in Adana, Turkey, and Rio de Janeiro, Brazil. "], "subsections": []}, {"section_title": "Assessed Contributions to International Organizations and Peacekeeping\u00c2 Missions", "paragraphs": ["The Contributions to International Organizations (CIO) account is the funding vehicle for the United States' payments of its assessed contributions (membership dues) to over 40 organizations. These include the United Nations (U.N.) and its specialized agencies (among them, the World Health Organization, or WHO), inter-American organizations such as the Organization of American States, and the North Atlantic Treaty Organization (NATO), among others. U.S. funding to international organizations is also provided through the various SFOPS multilateral assistance accounts, as described in the \" Foreign Operations Highlights \" section of this report. Separately, the United States pays its assessed contributions to most U.N. peacekeeping missions through the Contributions for International Peacekeeping Operations (CIPA) account.", "For FY2021, the Administration is requesting a combined $2.05 billion for these accounts. If enacted, this funding level would mark a 31.8% cut from that provided by Congress for FY2020. Table 4 shows recent funding levels for each account.", "Similar to previous budget requests, the Administration's CIO request prioritizes paying assessments to international organizations \"whose missions substantially advance U.S. foreign policy interests\" while proposing funding cuts to those organizations whose work it says either does not directly affect U.S. national security interests or renders unclear results. With these intentions in mind, the Administration proposed to eliminate funding to the Organization of Economic Cooperation and Development (OECD), while decreasing U.N. regular budget and specialized agency funding by more than one-third. The request intends to maintain near-recent-year levels of U.S. funding for other organizations, including the International Atomic Energy Agency (IAEA). ", "For CIPA, the Administration's FY2021 request reflects its ongoing commitment to reduce costs for U.N. peacekeeping missions by reevaluating their respective mandates, design, and implementation. The Administration has stated that its request, when combined with the application of U.N. peacekeeping credits (excess funds from previous U.N. peacekeeping missions), would allow the United States to provide 25% of all assessed global funding for U.N. peacekeeping missions, which is equal to the statutory cap established by Congress. However, the current U.S. assessment for U.N. peacekeeping (last negotiated in 2018) is 27.9%, meaning that around $345 million of anticipated U.S. assessed funding would be carried over into arrears. This practice has resulted in the accumulation of over $900 million in U.S. peacekeeping arrearages since FY2017. "], "subsections": []}]}]}, {"section_title": "Foreign Operations Highlights", "paragraphs": ["The foreign operations accounts in the SFOPS appropriation compose the majority of U.S. foreign assistance included in the international affairs budget; the remainder is enacted in the agriculture appropriation, which provides funding for the Food for Peace Act, Title II and McGovern-Dole International Food for Education and Child Nutrition programs. The Administration's FY2021 foreign operations request totals $30.09 billion, representing a 3.7% increase from the Administration's FY2020 request and a 25.7% decrease from FY2020-enacted levels. Total foreign assistance requested for FY2021, including the food assistance funds provided in the agriculture appropriation, would represent a 29.1% reduction from FY2020-enacted levels.", "The Administration's budget request articulates five primary goals for U.S. foreign assistance that are meant to align with both the National Security Strategy and the State-USAID Joint Strategic Plan:", "prioritize global strategic challenges, including countering Chinese, Russian, and Iranian influence; support strategic partners and allies, including Israel, Egypt, Jordan, Colombia, and Venezuela; enhance commitment to long-term development; strengthen key areas of U.S. leadership, to include global health and humanitarian assistance; and advance U.S. national security and economic interests.", "These goals are also meant to guide the Administration's regional thematic priorities (see \" Country and Regional Assistance \"), as well as how funds are allocated across assistance types. The Administration's FY2021 budget request proposes cuts in nearly all assistance types ( Table 5 ). The only exception is export promotion assistance, which would see a significant increase. This increase is largely due to proposed funding for the new U.S. Development Finance Corporation (DFC), which the Administration states represents an \"expansion of the role of development finance in advancing U.S. interests around the world,\" and an estimated increase in offsetting collections from the Export-Import Bank. "], "subsections": [{"section_title": "Key Sectors", "paragraphs": ["Consistent with prior year funding and the FY2020 enacted levels, proposed funding for global health programs, humanitarian assistance, and security assistance comprises approximately two-thirds of the $30.09 billion FY2021 foreign operations budget request ( Figure 3 )."], "subsections": [{"section_title": "Global Health Programs", "paragraphs": ["The total FY2021 request for the Global Health Programs (GHP) account is nearly $6.00 billion, representing a 5.4% reduction from the FY2020 budget request and a 37.5% reduction from the FY2020-enacted level, including supplemental appropriations. When compared with FY2020-enacted levels before enactment of supplemental funding for COVID-19, all but one GHP subaccount would be reduced under the budget proposal ( Table 6 ).", "Budget documents indicate that the increase to pandemic influenza funding (when compared with FY2020-enacted appropriations prior to the COVID-19 supplemental funding) would include a $25.00 million deposit of nonexpiring funds to replenish the Emergency Reserve Fund for rapid response to infectious disease outbreaks. Observers have expressed concern about the potential cessation of USAID's PREDICT-II pandemic preparedness program in March 2020. The Administration does not indicate in the budget request, nor has it specified in any public fora, whether PREDICT-II will be continued. However, the University of California, Davis\u00e2\u0080\u0094one of PREDICT-II's implementing organizations\u00e2\u0080\u0094has reportedly received additional funding from USAID to extend PREDICT-II and continue related work through the \"One Health Workforce\u00e2\u0080\u0094Next Generation\" project.", "Requested cuts to GHP subaccounts range from 8.0% for malaria programs to 100% for USAID's HIV/AIDS and vulnerable children subaccounts. The Administration asserts that despite its proposed reduction to HIV/AIDS funding, the requested level would be sufficient to maintain treatment for all current recipients. The proposal also reflects the Administration's effort to limit U.S. contributions to the Global Fund\u00e2\u0080\u0094an international financing mechanism for efforts to combat AIDS, tuberculosis, and malaria\u00e2\u0080\u0094to 25% of all donations, rather than the 33% limit that the United States has provided since the George W. Bush Administration.", "As noted above, the Administration's FY2021 request does not include funds for COVID-19, because the request was prepared prior to the outbreak. Congress enacted, and the President signed into law, three supplemental appropriations acts for COVID-19 preparedness and response in March ( P.L. 116-123 , P.L. 116-127 , and P.L. 116-136 ). As of this report's publishing, the Administration has not submitted a request for additional FY2021 funds to combat the virus. "], "subsections": []}, {"section_title": "Humanitarian Assistance", "paragraphs": ["The FY2021 budget request for humanitarian assistance is nearly $6.27 billion, roughly equivalent to the FY2020 request but down 40.1% from the FY2020-enacted level of $10.46 billion. In successive years, the Administration has requested levels of humanitarian assistance far lower than those enacted the prior year, at times reflecting the fact that humanitarian assistance funds may be carried over from year to year and unobligated balances from prior years may still be available. On a bipartisan basis, for many years, Congress has consistently supported global humanitarian efforts through appropriation levels well above the budget request ( Figure 4 ).", "In addition to the proposed $6.27 billion in new funding for humanitarian assistance, the Administration's request assumes $2.80 billion in carryover funding from past-year humanitarian assistance. The Administration asserts that the FY2021 request, combined with the estimated carryover, totals close to $9.00 billion, which would allow the United States \"to program well above the second highest level ever, and is sufficient to address the needs for Syria, Yemen, and other crisis areas.\" "], "subsections": [{"section_title": "Proposed Humanitarian Account Consolidation", "paragraphs": ["For FY2021, as in FY2020, the Trump Administration proposes to fund all humanitarian assistance through a single International Humanitarian Assistance (IHA) account managed through USAID's new Bureau for Humanitarian Assistance (BHA). The Administration has justified the restructuring as necessary \"to optimize humanitarian assistance, prioritize funding, and use funding as effectively and efficiently as possible.\" The proposal would effectively move the administration of overseas refugee and migration assistance funding\u00e2\u0080\u0094currently funded through the Migration and Refugee Assistance (MRA) and Emergency Refugee and Migration Assistance (ERMA) accounts\u00e2\u0080\u0094from the State Department to USAID. In FY2020, enacted funding for these accounts totaled $3.78 billion. The budget request would eliminate the ERMA account and significantly reduce funding to MRA, with none for overseas needs. Within USAID, the BHA is in the process of combining the functions of the Offices of U.S. Foreign Disaster Assistance and Food for Peace. The budget request would eliminate the International Disaster Assistance (IDA) account (FY2020-enacted funding totaled $4.95 billion), as well as Food for Peace Act, Title II emergency food assistance funding, the latter of which is currently appropriated through the agriculture appropriation but administered by USAID (FY2020-enacted funding totaled $1.73 billion). Funds previously requested in these accounts would be consolidated into the IHA account."], "subsections": []}]}, {"section_title": "Security Assistance", "paragraphs": ["The Administration is requesting $7.73 billion in international security assistance for FY2021, an increase of 4.3% from the FY2020 request and 14.3% below the FY2020-enacted level. The greatest cuts to security assistance accounts would be to Peacekeeping Operations (PKO, -36.6%) and International Military Education and Training (IMET, -27.4%) ( Figure 5 ).", "Consistent with prior year requests and appropriations, the majority of security assistance ($5.19 billion) would be for Foreign Military Financing (FMF) to the Middle East, including $3.30 billion in grants to Israel. As in the Trump Administration's past three budget proposals, the FY2021 request seeks flexibility to provide FMF assistance through a combination of grants and loans, including loan guarantees, rather than the current use of FMF on an almost exclusive grant basis. The Administration asserts that this authority would both \"expand the tools available to the United States to help NATO and Major-Non NATO allies purchase more American-made defense equipment and related services\" and \"increase burden sharing by asking these partners to contribute more national funds to foreign military sales cases.\""], "subsections": []}]}, {"section_title": "Development Assistance and Export Promotion", "paragraphs": ["The remaining third of the FY2021 foreign operations request proposes to allocate funds to development sectors other than those related to global health, independent agencies, multilateral assistance, and export promotion agencies."], "subsections": [{"section_title": "Development Assistance", "paragraphs": ["The FY2021 budget request would reduce funding from FY2020-enacted levels in a number of development sectors ( Table 7 ). Environment-focused aid, for example, would be cut by 86.3%, while funding for education and water and sanitation would fall by 61.2%. As with the FY2020 request, the FY2021 request includes a significant increase from prior year-enacted levels to programming that seeks to promote women in developing economies, largely due to a proposed $200.00 million for the Women's Global Development and Prosperity Initiative (W-GDP). "], "subsections": [{"section_title": "Proposed Economic Support and Development Fund", "paragraphs": ["Under the FY2021 request, most development accounts\u00e2\u0080\u0094Development Assistance (DA); Economic Support Fund (ESF); Assistance to Europe, Eurasia and Central Asia (AEECA); and the Democracy Fund (DF)\u00e2\u0080\u0094would be combined into a single new Economic Support and Development Fund (ESDF). The Administration asserts that this consolidated account would streamline the deployment of resources, increasing efficiency in foreign assistance. Because the consolidated account would incorporate what are now both core and shared USAID accounts, it remains unclear what portion of the new account USAID would manage or implement. The Administration made a similar request in the FY2018, FY2019, and FY2020 budget requests, but Congress did not enact the proposals.", "The FY2021 budget request nestles the Relief and Recovery Fund (RRF) and a proposed new Diplomatic Progress Fund (DPF)\u00e2\u0080\u0094both previously requested as separate budget items\u00e2\u0080\u0094under the proposed ESDF account. According to the justification, the DPF would \"allow the State Department and USAID to respond to new opportunities arising from progress in diplomatic and peace efforts around the world.\" While Congress provided funds for the RRF in previous fiscal years, Congress has not accepted the Administration's proposal for the DPF."], "subsections": []}]}, {"section_title": "Independent Agencies", "paragraphs": ["The Administration's FY2021 request would reduce funding to the Peace Corps (-19.5%) and the Millennium Challenge Corporation (-11.6%). The request also proposes eliminating the Inter-American Foundation (IAF) and the U.S African Development Foundation (USADF), and incorporating staff and small grant activities of the two foundations into USAID's new Bureau for Development, Democracy, and Innovation. The Administration maintains that this consolidation would allow USAID to \"capitalize on the existing expertise, capacity, relationships, and tools that USADF and IAF provide, including their regional and market segment emphases, in order to reinforce U.S. government bilateral development efforts.\" To implement the shuttering of the IAF and USADF, the Administration requests $3.85 million and $4.66 million, respectively."], "subsections": []}, {"section_title": "Multilateral Assistance", "paragraphs": ["SFOPS multilateral assistance accounts provide for U.S. payments to multilateral development banks and international organizations that pool funding from multiple donors to finance development activities. The Administration's FY2021 request would reduce these accounts by 28.9% from FY2020-enacted levels. As in the Trump Administration's three previous requests, the proposal would eliminate funding for the International Organizations and Programs (IO&P) account, which funds U.S. voluntary contributions to international organizations, primarily United Nations entities such as UNICEF. Congress appropriated $390.50 million for IO&P in FY2020. The Administration also proposes eliminating funds for the Global Environment Facility (GEF) and the International Fund for Agricultural Development (IFAD). For the GEF, the Administration asserts that carryover funds from FY2019 and FY2020 appropriations are sufficient to meet the U.S. pledge to the GEF's seventh replenishment."], "subsections": []}, {"section_title": "Export Promotion", "paragraphs": ["The FY2021 request includes an increased investment in the U.S. Development Finance Corporation (DFC), established in 2019 to implement the BUILD Act. However, the Administration would eliminate funding for the U.S. Trade and Development Agency\u00e2\u0080\u0094the request includes $12.11 million for the agency's \"orderly closeout\"\u00e2\u0080\u0094and an 8.3% reduction from FY2020-enacted levels for the Export-Import Bank of the United States' Operations account. As in previous years, the Administration assumes that all export promotion expenditures would be offset by collections. In the FY2021 request, the Administration assumes $711.20 million and $496.00 million in offsetting collections from the Export-Import Bank and the DFC, respectively."], "subsections": []}]}, {"section_title": "Country and Regional Assistance", "paragraphs": ["The Administration organizes much of its country and regional assistance into six thematic priorities ( Figure 6 ). These priorities are also meant to reflect the broader foreign operations goals outlined in \" Foreign Operations Highlights .\"", "Top country recipients under the FY2021 request remain consistent with prior year funding allocations. Israel, Egypt, and Jordan would remain the top three recipients of foreign assistance\u00e2\u0080\u0094though Egypt would move ahead of Jordan when compared with FY2019 actual funding\u00e2\u0080\u0094largely due to the proposed levels of military aid for those three countries. Other countries that the Administration maintains are strategically significant, including Afghanistan and Ukraine, also remain top country recipients in the FY2021 request, as do several African countries that would receive high levels of global health and development aid ( Table 8 ).", "Regionally, the Middle East and Africa would receive the largest shares of aid in the FY2021 request\u00e2\u0080\u0094together comprising about 71.5% of total aid allocated by country or region\u00e2\u0080\u0094consistent with FY2019 year actuals ( Figure 7 ). Proposed funding for Europe and Eurasia and, separately, the Indo-Pacific, come to 3.9% and 9.2%, respectively. Notably, the distribution of assistance within regions vary significantly. For example, Africa receives a majority of GHP funding (58.1% in FY2019 and a proposed 66.7% for FY2021), but accounts for a small proportion of INCLE funding (5.2% in FY2019 and a proposed 4.1% for FY2021). In comparison, the Western Hemisphere region accounts for a small percentage of GHP (2.5% in FY2019 and a proposed 2.2% for FY2021) and a large proportion of INCLE funds (37.7% in FY2019 and a proposed 44.8% for FY2021).", "Appendix A. SFOPS Funding, by Account", "Appendix B. International Affairs Budget", "The International Affairs budget, or Function 150, includes funding that is not in the Department of State, Foreign Operations, and Related Programs (SFOPS) appropriation; in particular, international food assistance programs (Food for Peace Act (FFPA), Title II and McGovern-Dole International Food for Education and Child Nutrition programs) are in the Agriculture Appropriations, and the Foreign Claim Settlement Commission and the International Trade Commission are in the Commerce, Justice, Science appropriations. In addition, the Department of State, Foreign Operations, and Related Programs appropriation measure includes funding for certain international commissions that are not part of the International Affairs Function 150 account.", "Appendix C. SFOPS Organization Chart"], "subsections": []}]}]}}
{"id": "R45985", "title": "Issues in Autonomous Vehicle Testing and Deployment", "released_date": "2020-02-11T00:00:00", "summary": ["Autonomous vehicles have the potential to bring major improvements in highway safety. Motor vehicle crashes caused an estimated 36,560 fatalities in 2018; a study by the National Highway Traffic Safety Administration (NHTSA) has shown that 94% of crashes are due to human errors. For this and other reasons, federal oversight of the testing and deployment of autonomous vehicles has been of considerable interest to Congress. In the 115 th Congress, autonomous vehicle legislation passed the House as H.R. 3388 , the SELF DRIVE Act, and a separate bill, S. 1885 , the AV START Act, was reported from a Senate committee. Neither bill was enacted. In the 116 th Congress, interest in autonomous vehicles remains strong, but similar comprehensive legislative proposals have not been introduced. The America's Transportation Infrastructure Act of 2019, S. 2302 , which has been reported by the Senate Environment and Public Works Committee, would encourage research and development of infrastructure that could accommodate new technologies such as autonomous vehicles.", "In recent years, private and government testing of autonomous vehicles has increased significantly, although it is likely that widespread use of fully autonomous vehicles\u00e2\u0080\u0094where no driver attention is needed\u00e2\u0080\u0094may be many years in the future. The pace of autonomous vehicle commercialization may have slowed due to the 2018 death in Arizona of a pedestrian struck by an autonomous vehicle, which highlighted the challenges of duplicating human decisionmaking by artificial intelligence. The National Transportation Safety Board determined that the fatality was caused by an \"inadequate safety culture\" at Uber\u00e2\u0080\u0094which was testing the vehicle\u00e2\u0080\u0094and deficiencies in state and federal regulation.", "The U.S. Department of Transportation and NHTSA have issued three reports since 2016 that inform the discussion of federal autonomous vehicle policies, suggesting best practices that states should consider in driver regulation; a set of voluntary, publicly available self-assessments by automakers showing how they are building safety into their vehicles; and a proposal to modify the current system of granting exemptions from federal safety standards. On February 6, 2020, NHTSA announced its approval of the first autonomous vehicle exemption\u00e2\u0080\u0094from three federal motor vehicle standards\u00e2\u0080\u0094to Nuro, a California-based company that plans to deliver packages with a robotic vehicle smaller than a typical car.", "Proponents of autonomous vehicles contend that lengthy revisions to current safety regulations could impede innovation, as the rules could be obsolete by the time they took effect. Federal and state regulatory agencies are addressing vehicle and motorist standards, while Congress is considering legislative solutions to some of the regulatory challenges.", "Legislation did not pass the 115 th Congress due to disagreements on several key issues. These included the following:", "The extent to which Congress should alter the traditional division of vehicle regulation, with the federal government being responsible for vehicle safety and states for driver-related aspects such as licensing and registration, as the roles of driver and vehicle merge. The number of autonomous vehicles that NHTSA should permit to be tested on highways by granting exemptions to federal safety standards, and which specific safety standards, such as those requiring steering wheels and brake pedals, can be relaxed to permit thorough testing. How much detail legislation should contain related to addressing cybersecurity threats, including whether federal standards should require vehicle technology that could report and stop hacking of critical vehicle software and how much information car buyers should be given about these issues. The extent to which vehicle owners, operators, manufacturers, insurers, and other parties have access to data that is generated by autonomous vehicles, and the rights of various parties to sell vehicle-related data to others.", "Congress may address these issues in legislation reauthorizing surface transportation programs. The current surface transportation authorization expires at the end of FY2020. Policy decisions about the allocation of radio spectrum and road maintenance also may affect the rate at which autonomous vehicle technologies come into use."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["Fully autonomous vehicles, which would carry out many or all of their functions without the intervention of a driver, may someday bring sweeping social and economic changes and \"lead to breakthrough gains in transportation safety.\" Motor vehicle crashes caused an estimated 36,560 fatalities in 2018; a study by the National Highway Traffic Safety Administration (NHTSA) has shown that 94% of crashes are due to human errors.", "Legislation that would encourage development and testing of autonomous vehicles has faced controversy in Congress. In the 115 th Congress, the House of Representatives passed an autonomous vehicle bill, H.R. 3388 , by voice vote in September 2017. The Senate Committee on Commerce, Science, and Transportation reported a different bill, S. 1885 , in November 2017, but after some Senators raised concerns about the preemption of state laws and the possibility of large numbers of vehicles being exempted from some Federal Motor Vehicle Safety Standards, the Senate bill did not reach the floor. No further action was taken on either bill before the 115 th Congress adjourned.", "Although some Members of Congress remain interested in autonomous vehicles, no legislative proposals have become law. Several fatal accidents involving autonomous vehicles raised new questions about how federal and state governments should regulate vehicle testing and the introduction of new technologies into vehicles offered for sale. A pedestrian was killed in Arizona by an autonomous vehicle operated by Uber on March 18, 2018, and three Tesla drivers died when they failed to respond to hazards not recognized by the vehicles. These accidents suggest that the challenge of producing fully autonomous vehicles that can operate safely on public roads may be greater than developers had envisioned, a new outlook voiced by several executives, including the Ford Motor Co. CEO. However, with the authorization of federal highway and public transportation programs set to expire at the end of FY2020, a surface transportation reauthorization bill could become a focus of efforts to also enact autonomous vehicle legislation."], "subsections": []}, {"section_title": "Advances in Vehicle Technology", "paragraphs": ["While fully autonomous vehicles may lie well in the future, a range of new technologies is already improving vehicle performance and safety while bringing automation to vehicular functions once performed only by the driver. The technologies involved are very different from the predominantly mechanical, driver-controlled technology of the 1960s, when the first federal vehicle safety laws were enacted. These new features automate lighting and braking, connect the car and driver to the Global Positioning System (GPS) and smartphones, and keep the vehicle in the correct lane. Three forces are driving these innovations:", "technological advances enabled by new materials and more powerful, compact electronics; consumer demand for telecommunications connectivity and new types of vehicle ownership and ridesharing; and regulatory mandates pertaining to emissions, fuel efficiency, and safety.", "Manufacturers are combining these innovations to produce vehicles with higher levels of automation. Vehicles do not fall neatly into the categories of \"automated\" or \"nonautomated,\" because all new motor vehicles have some element of automation.", "The Society of Automotive Engineers International (SAE), an international standards-setting organization, has developed six categories of vehicle automation\u00e2\u0080\u0094ranging from a human driver doing everything to fully autonomous systems performing all the tasks once performed by a driver. This classification system ( Table 1 ) has been adopted by the U.S. Department of Transportation (DOT) to foster standardized nomenclature to aid clarity and consistency in discussions about vehicle automation and safety.", "Vehicles sold today are in levels 1 and 2 of SAE's automation rating system. Although some experts forecast market-ready autonomous vehicles at level 3 will be available in a few years, deployment of fully autonomous vehicles in all parts of the country at level 5 appears to be more distant, except perhaps within closed systems that allow fully autonomous vehicles to operate without encountering other types of vehicles. Testing and development of autonomous vehicles continue in many states and cities.", "Technologies that could guide an autonomous vehicle ( Figure 1 ) include a wide variety of electronic sensors that would determine the distance between the vehicle and obstacles; park the vehicle; use GPS, inertial navigation, and a system of built-in maps to guide the vehicle's direction and location; and employ cameras that provide 360-degree views around the vehicle. To successfully navigate roadways, an autonomous vehicle's computers, sensors and cameras will need to accomplish four tasks that a human driver undertakes automatically: detect objects in the vehicle's path; classify those objects as to their likely makeup (e.g., plastic bag in the wind, a pedestrian or a moving bicycle); predict the likely path of the object; and plan an appropriate response. Most autonomous vehicles use dedicated short-range communication (DSRC) to monitor road conditions, congestion, crashes, and possible rerouting. As 5G wireless communications infrastructure is installed more widely, DSRC may evolve and become integrated with it, enabling vehicles to offer greater interoperability, bandwidth, and cybersecurity. Some versions of these autonomous vehicle technologies, such as GPS and rear-facing cameras, are being offered on vehicles currently on the market, while manufacturers are studying how to add others to safely transport passengers without drivers.", "Manufacturers of conventional vehicles, such as General Motors and Honda, are competing in this space with autonomous vehicle \"developers\" such as Alphabet's Waymo. In addition, automakers are aligning themselves with new partners that have experience with ride-sharing and artificial intelligence:", "Ford and Volkswagen have announced that they expect to use autonomous vehicle technology in a new ride-sharing service in Pittsburgh, PA, as early as 2021; GM acquired Cruise Automation, a company that is developing self-driving technology for Level 4 and 5 vehicles. GM has also invested $500 million in the Lyft ride-sharing service; Honda, after breaking off talks about partnering with Waymo, purchased a stake in GM's Cruise Automation; Volvo and Daimler have announced partnerships with ride-sharing service Uber; and BMW partnered with the Mobileye division of Intel, a semiconductor manufacturer, to design autonomous vehicle software."], "subsections": [{"section_title": "Cybersecurity and Data Privacy", "paragraphs": ["As vehicle technologies advance, the security of data collected by vehicle computers and the protection of on-board systems against intrusion are becoming more prominent concerns. Many of the sensors and automated components providing functions now handled by the driver will generate large amounts of data about the vehicle, its location at precise moments in time, driver behavior, and vehicle performance. The systems that allow vehicles to communicate with each other, with roadside infrastructure, and with manufacturers seeking to update software will also offer portals for possible unauthorized access to vehicle systems and the data generated by them.", "Protecting autonomous vehicles from hackers is of paramount concern to federal and state governments, manufacturers, and service providers. A well-publicized hacking of a conventional vehicle by professionals demonstrated to the public that such disruptions can occur. Hackers could use more than a dozen portals to enter even a conventional vehicle's electronic systems ( Figure 2 ), including seemingly innocuous entry points such as the airbag, the lighting system, and the tire pressure monitoring system (TPMS). Requirements that increasingly automated vehicles accept remote software updates, so that owners do not need to take action each time software is revised, are in part a response to concerns that security weaknesses be rectified as quickly as possible.", "To address these concerns, motor vehicle manufacturers established the Automotive Information Sharing and Analysis Center (Auto-ISAC), which released a set of cybersecurity principles in 2016. DOT's autonomous vehicle policies designate Auto-ISAC as a central clearinghouse for manufacturers to share reports of cybersecurity incidents, threats, and violations with others in the vehicle industry.", "Aside from hackers, many legitimate entities would like to access vehicle data, including vehicle and component manufacturers, the suppliers providing the technology and sensors, the vehicle owner and occupants, urban planners, insurance companies, law enforcement, and first responders (in case of an accident). Issues pertaining to vehicle data collection include vehicle testing crash data (how is it stored and who gets to access it); data ownership (who owns most of the data collected by vehicle software and computers); and consumer privacy (transparency for consumers and owner access to data). At present, no laws preclude manufacturers and software providers from reselling data about individual vehicles and drivers to third parties."], "subsections": []}]}, {"section_title": "Pathways to Autonomous Vehicle Deployment Abroad", "paragraphs": ["Autonomous vehicles are being developed and tested in many countries, including those that produce most of the world's motor vehicles. Several analyses have evaluated the factors that are contributing to the advancement of autonomous vehicles in various countries:", "Innovation . Benchmarks in this area include the number and engagement of domestic automakers and technology developers working on automation, the partnerships they forge with academic and related businesses, the prevalence of ride-sharing services, and autonomous vehicle patents issued. V ehicle infrastructure . Autonomous vehicles will need new types of infrastructure support and maintenance, including advanced telecommunications links and near-perfect pavement and signage markings. Planning and implementing these highway improvements may enable autonomous vehicles to be fully functional sooner. In addition, many test vehicles are currently powered by electricity, so the availability of refueling stations could be a factor in their acceptance. Wo rkforce training. The increased reliance on autonomous vehicle technologies may require different workforce skills. Many traditional mechanical parts may disappear, especially if autonomous vehicles operate entirely on battery power, while the arrangement and function of dashboards and seating may be reinvented. Components suppliers that are already addressing this new product demand and reorienting their workforces will assist in the transition to autonomous vehicles. G overnment laws and regulations that encourage development and testing . Fully autonomous vehicles may not have standard features of today's cars, such as steering wheels and brake pedals, as there will not be a driver. By law or regulation, motor vehicles built today are required to have many of these features. Some governments are taking a lead by modifying vehicle requirements for purposes of pilot programs and tests. Permanent changes in standards will most likely be necessary if autonomous vehicle technologies are to be commercialized. L evel of consumer acceptance . Markets are more likely to embrace autonomous vehicles if many residents in cities see autonomous vehicles on the road, a high level of technology is in use (including internet access and mobile broadband), and ride-hailing services are more widely used.", "Several surveys have been conducted analyzing many of these factors. For example, a 2018 Harvard University report highlights plans in China, South Korea, Japan, and the United States to \"seize the benefits\" of autonomous vehicles. In a report on innovation policies in four Asian countries (China, Japan, South Korea, and Singapore), the United Nations Economic and Social Commission for Asia and the Pacific ranked Singapore first in autonomous vehicle readiness because of its policies and new laws governing their deployment and its high consumer acceptance. The report also notes that South Korea's K-City facility is \"intended to be the world's largest testbed for self-driving cars.\"", "A more detailed comparison of factors affecting autonomous vehicle development and deployment has been conducted by KPMG International, which has developed an index to measure how 25 countries are guiding autonomous vehicles ( Table 2 ).", "The Netherlands ranked first overall in the KPMG report, where it was cited as \"an example of how to ready a country for AVs by performing strongly in many areas , \" as well as first in infrastructure. Singapore came in first on policy and legislation because it has a single government entity overseeing autonomous vehicle regulations, it is funding autonomous vehicle pilots, and it has enacted a national standard to promote safe deployment. Contributing to its rank was a World Economic Forum (WEF) report that ranked it first among 139 countries in having an effective national legislature and efficient resolution of legal disputes. Singapore also scored first place on the consumer acceptance metric, primarily because its extensive autonomous testing is being conducted throughout the island nation, thereby familiarizing residents with autonomous passenger vehicles and buses.", "Two other major auto-producing countries\u00e2\u0080\u0094Germany and Japan\u00e2\u0080\u0094fall just below the United States on technology and innovation, according to KPMG, while Japan ranks higher on autonomous vehicle infrastructure ( Table 3 )."], "subsections": []}, {"section_title": "Issues in Federal Safety Regulation", "paragraphs": ["Vehicles operating on public roads are subject to dual regulation by the federal government and the states in which they are registered and driven. Traditionally, NHTSA, within DOT, has regulated auto safety, while states have licensed automobile drivers, established traffic regulations, and regulated automobile insurance. Proponents of autonomous vehicles note that lengthy revisions to current vehicle safety regulations could impede innovation, as the rules could be obsolete by the time they take effect.", "In 2016, the Obama Administration issued the first report on federal regulations affecting autonomous vehicles. Since then, DOT has issued two follow-up reports and has said it anticipates issuing annual updates to its regulatory guidance. In addition, the Federal Communications Commission (FCC) is reconsidering the allocation of electromagnetic spectrum currently reserved for motor vehicle communications, and its decisions may affect how autonomous vehicles evolve."], "subsections": [{"section_title": "Obama Administration Policy Direction", "paragraphs": ["DOT's 2016 report proposed federal and state regulatory policies in these areas:", "A set of guidelines outlining best practices for autonomous vehicle design, testing, and deployment. DOT identified 15 practices and procedures that it expected manufacturers, suppliers, and service providers (such as ridesharing companies) to follow in testing autonomous vehicles, including data recording, privacy, crashworthiness, and object and event detection and response. These reports, called Safety Assessment Letters, would be voluntary, but the report noted that \"they may be made mandatory through a future rulemaking.\" A m odel s tate p olicy that identifies where new autonomous vehicle-related issues fit in the current federal and state regulatory structures. The model state policy, developed by NHTSA in concert with the American Association of Motor Vehicle Administrators and private-sector organizations, suggests state roles and procedures, including administrative issues (designating a lead state agency for autonomous vehicle testing), an application process for manufacturers that want to test vehicles on state roads, coordination with local law enforcement agencies, changes to vehicle registration and titling, and regulation of motor vehicle liability and insurance. A streamlined review process to issue DOT regulatory interpretations on autonomous vehicle questions within 60 days and on regulatory exemptions within six months. Identification of new tools and regulatory structures for NHTSA that could build its expertise in new vehicle technologies, expand its ability to regulate autonomous vehicle safety, and increase speed of its rulemakings. Two new tools could be expansion of existing exemption authority and premarket testing to assure that autonomous vehicles will be safe. Some of the new regulatory options cited would require new statutory authority, while others could be instituted administratively. The report noted that \"DOT does not intend to advocate or oppose any of the tools.\u00e2\u0080\u00a6 [I]t intends \u00e2\u0080\u00a6 to solicit input and analysis regarding those potential options from interested parties.\""], "subsections": []}, {"section_title": "Trump Administration Policy Guidelines and Proposed Safety\u00c2 Rules", "paragraphs": ["The two follow-up reports issued by the Trump Administration describe a more limited federal regulatory role in overseeing autonomous passenger vehicle deployment, while also broadening the scope of DOT oversight by addressing the impact of autonomous technology on commercial trucks, public transit, rail, and ports and ships. The policies described in these reports replace those recommended by the Obama Administration in several ways, including the following:", "Encouraging integration of automation across all transportation modes , instead of just passenger vehicles. The October 2018 report Automated Vehicles 3.0 outlines how each of DOT's agencies will address autonomous vehicle safety within its purview. Establishing six automation principles that will be applied to DOT's role in overseeing passenger cars, trucks, commercial buses, and other types of vehicles. These include giving priority to safety; remaining technology-neutral; modernizing regulations; encouraging a consistent federal and state regulatory environment; providing guidance, research, and best practices to government and industry partners; and protecting consumers' ability to choose conventional as well as autonomous vehicles. Reiterating the traditional roles of federal and state governments in regulating motor vehicles and motorists, respectively. The reports cite best practices that states should consider implementing, such as minimum requirements for autonomous vehicle test drivers, and discuss how DOT can provide states with technical assistance. Recommending voluntary action in lieu of regulation. This could include suggesting that manufacturers and developers of autonomous driving systems issue and make public voluntary safety self-assessments to demonstrate transparency and increase understanding of the new technologies and industry development of \"voluntary technical standards\" to \"advance the integration of automation technologies into the transportation system.\" The NHTSA Voluntary Safety Self-Assessment web page lists 17 companies that have filed self-assessment reports, including three major automakers. To provide a perspective, 64 companies have been issued autonomous vehicle testing permits by the State of California alone. Accelerating NHTSA decisions on requests for exemptions from federal safety standards for autonomous vehicle testing. Promoting development of voluntary technical standards by other organizations, such as the Society of Automotive Engineers, the government's National Institute of Standards and Technology, and the International Organization for Standardization. ", "DOT has indicated that it wants to revise regulations pertinent to autonomous vehicles, such as redefining the terms \"driver\" and \"operator\" to indicate that a human being does not always have to be in control of a motor vehicle. It also said it plans to require changes in standards for the inspection, repair, and maintenance of federally regulated commercial trucks and buses. Along these lines, NHTSA issued a Notice of Proposed Rulemaking in May 2019, requesting comments on testing and verifying how autonomous vehicle technologies may comply with existing federal safety standards."], "subsections": []}, {"section_title": "National Transportation Safety Board Investigation and Recommendations", "paragraphs": ["On November 19, 2019, the National Transportation Safety Board (NTSB) issued its report on the probable cause of a 2018 fatality involving an autonomous vehicle in Tempe, AZ. In that accident, a pedestrian was fatally injured by a test vehicle operated by Uber Technologies with an operator in the driver's seat. The NTSB investigation determined that the probable cause of the crash \"was the failure of the vehicle operator to monitor the driving environment and the operation of the ADS [automated driving system] because she was visually distracted throughout the trip by her personal cell phone.\" Though the vehicle detected the pedestrian 5.6 seconds before the crash, the NTSB reported that \"it never accurately classified her as a pedestrian or predicted her path.\"", "Beyond the immediate cause of this accident, NTSB reported that an \"inadequate safety culture\" at Uber and deficiencies in state and federal regulation contributed to the circumstances that led to the fatal crash. Among the findings were the following:", "Uber's internal safety risk-assessment procedures and oversight of the operator were inadequate, and its disabling of the vehicle's forward collision warning and automatic emergency braking systems increased risks. The Arizona Department of Transportation provided insufficient oversight of autonomous vehicle testing in the state. NHTSA provides insufficient guidance to developers and manufacturers on how they should achieve safety goals, has not established a process for evaluating developers' safety self-assessment reports, and does not require such reports to be submitted, leaving their filing as voluntary.", "NTSB recommended that Uber, the Arizona Department of Transportation, and NHTSA take specific steps to address the issues it identified. It also recommended that the American Association of Motor Vehicle Administrators inform all states about the circumstances of the Tempe crash, encouraging them to require and evaluate applications by developers before granting testing permits."], "subsections": []}]}, {"section_title": "Connected Vehicles and Spectrum Allocation", "paragraphs": ["Federal regulation of the spectrum used in vehicle communications may affect how automation proceeds. Autonomous vehicles, whose artificial intelligence and technology are generally self-contained in each vehicle, are part of a larger category of connected vehicles and infrastructure. Federal, state, and industry research and testing of vehicle-to-vehicle (V2V) and vehicle-to-infrastructure (V2I) communications has been under way since the 1990s. Together, these two sets of technologies, known as V2X, are expected to reduce the number of accidents by improving detection of oncoming vehicles, providing warnings to drivers, and establishing communications infrastructure along roadways that would prevent many vehicles from leaving the road and striking pedestrians. These technologies fall within the broad category of intelligent transportation systems, which have received strong support from Congress due to their potential to improve traffic flow and safety.", "For vehicles to communicate wirelessly, they use radio frequencies, or spectrum, which are regulated by the Federal Communications Commission (FCC). In 1999, the FCC allocated the 5.9 gigahertz (GHz) band solely for motor vehicle safety purposes for vehicles using DSRC. Over the past two decades, industry and government agencies have collaborated to develop, test, and deploy DSRC technologies. States have invested in DSRC-based improvements, and this technology is operating in dozens of states and cities.", "As industry has continued to explore vehicle automation, an alternative, cellular-based technology has recently emerged, known as C-V2X. In December 2019, the FCC proposed rules that would reallocate the lower 45 MHz of the 5.9 GHz band for unlicensed use (e.g., Wi-Fi), and allocate the remaining 30 MHz for transportation and vehicle-related use. Of the 30 MHz, the FCC proposed to grant C-V2X exclusive use of 20 MHz of the segment. It is seeking comment on whether the remaining 10 MHz should remain dedicated to DSRC or be dedicated to C-V2X. The FCC commissioners noted that DSRC has evolved slowly and has not been widely deployed, and the rules are intended to ensure the spectrum supports its highest and best use. This decision has competitive implications for the automotive, electronics, and telecommunications industries, and may affect the availability of safety technologies and the path toward vehicle automation. DOT has called for retaining the entire 5.9 GHz band for exclusive transportation use.", " Figure 3 shows that these two technologies facilitate somewhat different types of vehicle and infrastructure communications. In light of their different characteristics, the European Commission has approved DSRC use for direct V2V and V2I communications, while endorsing cellular-based technology for vehicle access to the cloud and remote infrastructure.", "Industry groups in the United States took varying positions in the FCC proceedings. DSRC advocates argued that this technology has been proven by years of testing and is already deployed in many areas. They generally supported retaining the 5.9 GHz band for exclusive use for DSRC. C-V2X supporters contended that its cellular-based solution is aligned with international telecommunications standards for 5G technologies and should be allowed to use the 5.9 GHz band alongside DSRC. A group of technology companies, including device makers, argued that additional spectrum is needed to accommodate the increasing number of interconnected devices, and that the 5.9GHz band can safely be shared among transportation and non-transportation uses."], "subsections": []}, {"section_title": "Congressional Action", "paragraphs": ["During the 115 th Congress, committees in the House of Representatives and the Senate held numerous hearings in 2017 on the technology of autonomous vehicles and possible federal issues that could result from their deployment. Initially, bipartisan consensus existed on major issues: H.R. 3388 , the SELF DRIVE Act, was reported unanimously by the House Committee on Energy and Commerce, and on September 6, 2017, the House of Representatives passed it without amendment by voice vote.", "A similar bipartisan initiative began in the Senate. Prior to markup in the Committee on Commerce, Science, and Transportation, the then-chairman and ranking member issued a set of principles they viewed as central to new legislation:", "prioritize safety , acknowledging that federal standards will eventually be as important for self-driving vehicles as they are for conventional vehicles; promote innovation and address the incompatibility of old regulations written before the advent of self-driving vehicles; remain technology - neutral , not favoring one business model over another; reinforce separate but complementary federal and state regulatory roles ; strengthen cybersecurity so that manufacturers address potential vulnerabilities before occupant safety is compromised; and educate the public through government and industry efforts so that the differences between conventional and self-driving vehicles are understood.", "Legislation slightly different from the House-passed bill emerged: S. 1885 , the AV START Act, was reported by the Committee on Commerce, Science, and Transportation on November 28, 2017. It was not scheduled for a floor vote prior to adjournment in December 2018 because of unresolved concerns raised by several Senators. To address some of those concerns, a committee staff draft bill that would have revised S. 1885 was circulated in December 2018 that could form the basis of future legislation.", "The House and Senate bills addressed concerns about state action replacing some federal regulation, while also empowering NHTSA to take unique regulatory actions to ensure safety and encouraging innovation in autonomous vehicles. The bills retained the current arrangement of states controlling most driver-related functions and the federal government being responsible for vehicle safety. The House and Senate bills included the following major provisions. Where the December 2018 Commerce Committee staff draft proposed significant changes, they are noted in this analysis.", "P reemption of state laws . H.R. 3388 would have barred states from regulating the design, construction, or performance of highly autonomous vehicles, automated driving systems, or their components unless those laws are identical to federal law. The House-passed bill reiterated that vehicle registration, driver licensing, driving education, insurance, law enforcement, and crash investigations should remain under state jurisdiction as long as state laws and regulations do not restrict autonomous-vehicle development. H.R. 3388 provided that nothing in the preemption section should prohibit states from enforcing their laws and regulations on the sale and repair of motor vehicles.", "S. 1885 would also have preempted states from adopting laws, regulations, and standards that would regulate many aspects of autonomous vehicles, but would have omitted some of the specific powers reserved to the states under the House-passed bill. States would not have been required to issue drivers licenses for autonomous-vehicle operations, but states that chose to issue such licenses would not have been allowed to discriminate based on a disability. The bill provided that preemption would end when NHTSA establishes standards covering these vehicles.", "The Senate staff draft sought to clarify that state and local governments would not lose their traditional authority over traffic laws. It also would have added provisions that state common law and statutory liability would be unaffected by preemption, and would have limited use of arbitration in death or bodily injury cases until new federal safety standards are in effect.", "Exemption authority . Both the House and Senate bills would have expanded DOT's ability to issue exemptions from existing safety standards to encourage autonomous-vehicle testing on public roads. To qualify for an autonomous-vehicle exemption, a manufacturer would have had to show that the safety level of the vehicle equaled or exceeded the safety level of each standard for which an exemption was sought. Current law limits exemptions to 2,500 vehicles per manufacturer per year. The House-passed bill would have phased in increases over four years of up to 100,000 vehicles per manufacturer per year; the Senate bill would have permitted up to 80,000 in a similar phase-in.", "H.R. 3388 provided constraints on the issuance of exemptions from crashworthiness and occupant protection standards; S. 1885 did not address those two issues. DOT would have been directed to establish a publicly available and searchable database of motor vehicles that have been granted an exemption. Crashes of exempted vehicles would have had to be reported to DOT. The Senate bill would not have required the establishment of a database of exempted vehicles, and reporting of exempt vehicle crashes would not have been required.", "The Senate staff draft added a provision to ensure that vehicles exempted from federal standards would have been required to nonetheless maintain the same level of overall safety, occupant protection, and crash avoidance as a traditional vehicle. A DOT review of vehicle exemptions would have been required annually. The draft capped exemptions at no more than five years.", "New NHTSA safety rules. The House bill would have required NHTSA to issue a new regulation requiring developers and manufacturers to submit a \"safety assessment certification\" explaining how safety is being addressed in their autonomous vehicles. The Senate bill included a similar provision requiring a \"safety evaluation report,\" and would have delineated nine areas for inclusion in the reports, including system safety, data recording, cybersecurity risks, and methods of informing the operator about whether the vehicle technology is functioning properly. While manufacturers and developers would be required to submit reports, the legislation did not mandate that NHTSA establish an assessment protocol to ensure that minimum risk conditions are met.", "The Senate staff draft would have clarified the process by which federal motor vehicle safety standards would be updated to accommodate new vehicle technologies, providing additional time for new rulemaking. Within six months of enactment, DOT would have been required to develop and publicize a plan for its rulemaking priorities for the safe deployment of autonomous vehicles.", "To address concerns that autonomous vehicles might not recognize certain potential hazards\u00e2\u0080\u0094including the presence of bicyclists, pedestrians, and animals\u00e2\u0080\u0094and hence possibly introduce new vulnerabilities to motor vehicle travel, the Senate staff draft would have clarified that manufacturers must describe how they are addressing the ability of their autonomous vehicles to detect, classify, and respond to these and other road users. Manufacturers and developers would include this analysis in their safety evaluation reports.", "Cybersecurity. The House-passed bill provided that no highly autonomous vehicle or vehicle with \"partial driving automation\" could be sold domestically unless a cybersecurity plan had been developed by the automaker. Such plans would have to have been developed within six months of enactment and would include", "a written policy on mitigation of cyberattacks, unauthorized intrusions, and malicious vehicle control commands; a point of contact at the automaker with cybersecurity responsibilities; a process for limiting access to autonomous driving systems; and the manufacturer's plans for employee training and for maintenance of the policies.", "The Senate bill would have required written cybersecurity plans to be issued, including a process for identifying and protecting vehicle control systems, detection, and response to cybersecurity incidents, and methods for exchanging cybersecurity information. A cybersecurity point of contact at the manufacturer or vehicle developer would have had to be named. Unlike the House-passed bill, S. 1885 would have directed DOT to create incentives so that vehicle developers would share information about vulnerabilities, and would have specified that all federal research on cybersecurity risks should be coordinated with DOT.", "In addition, S. 1885 would have established a Highly Automated Vehicle Data Access Advisory Committee to provide Congress with recommendations on cybersecurity issues. Federal agencies would have been prohibited from issuing regulations pertaining to the access or ownership of data stored in autonomous vehicles until the advisory committee's report was submitted.", "The staff draft would have added several cybersecurity provisions, including an additional study by the National Institute of Standards and Technology that would recommend ways vehicles can be protected from cybersecurity incidents.", "Privacy. Before selling autonomous vehicles, manufacturers would have been required by the House-passed bill to develop written privacy plans concerning the collection and storage of data generated by the vehicles, as well as a method of conveying that information to vehicle owners and occupants. However, a manufacturer would have been allowed to exclude processes from its privacy policy that encrypt or make anonymous the sources of data. The Federal Trade Commission would have been tasked with developing a report for Congress on a number of vehicle privacy issues.", "Although S. 1885 would not have explicitly required privacy plans by developers and manufacturers, it would have required NHTSA to establish an online, searchable motor vehicle privacy database that would include a description of the types of information, including personally identifiable information (PII), that are collected about individuals during operation of a motor vehicle. This database would have covered all types of vehicles\u00e2\u0080\u0094not just autonomous vehicles\u00e2\u0080\u0094and would have included the privacy policies of manufacturers. The database would also have included an explanation about how PII would be collected, retained, and destroyed when no longer relevant.", "The Senate staff draft would have added new passenger motor vehicle privacy protections.", "Research and advisory panels. Both bills would have established several new advisory bodies to conduct further research on autonomous vehicles and advise DOT on possible new vehicle standards. H.R. 3388 would have established a NHTSA advisory group with a broad cross-section of members to advise on mobility access for senior citizens and the disabled; cybersecurity; labor, employment, environmental, and privacy issues; and testing and information sharing among manufacturers.", "S. 1885 would have established other panels, including a Highly Automated Vehicles Technical Committee to advise DOT on rulemaking policy and vehicle safety; a working group comprising industry and consumer groups to identify marketing strategies and educational outreach to consumers; and a committee of transportation and environmental experts to evaluate the impact of autonomous vehicles on transportation infrastructure, mobility, the environment, and fuel consumption. Separately, DOT would have been required to study ways in which autonomous vehicles and parts could be produced domestically, with recommendations on how to incentivize U.S. manufacturing.", "The Senate staff draft would have consolidated some of the advisory committees in S. 1885 into a Highly Automated Vehicle Advisory Council with diverse stakeholder representation, and mandated to report on mobility for the disabled, senior citizens and populations underserved by public transportation; cybersecurity; employment and environmental issues; and privacy and data sharing.", "No similar comprehensive autonomous vehicle legislation has been introduced in the 116 th Congress, although discussions on a bicameral bill have been ongoing. In addition, the Senate Committee on Environment and Public Works has reported America's Transportation Infrastructure Act of 2019, S. 2302 , which includes several provisions in Subtitle D addressing the possible impact of autonomous vehicles on highway infrastructure. It would establish a grant program to modernize the U.S. charging and fueling infrastructure so that it would be responsive to technology advancements, including autonomous vehicles. The legislation would also require research on ways in which roadway infrastructure should be improved for autonomous vehicles."], "subsections": []}, {"section_title": "State Concerns", "paragraphs": ["State and local rules and regulations may affect how autonomous vehicles are tested and deployed. The National Governors Association (NGA) has noted that state governments have a role with respect to vehicle and pedestrian safety, privacy, cybersecurity, and linkage with advanced communications networks. While supporting technology innovations in transportation, a recent NGA report notes that \"the existing regulatory structure and related incentives have not kept pace with the new technology\" and that \"recent accidents have raised concerns about the safety of drivers, pedestrians and other road users in the period during which autonomous and non-autonomous vehicles share the road.\"", "NGA has joined with other state and local government organizations to call for modifications in forthcoming autonomous vehicle legislation, including", "clarity that states and local governments not only can enforce existing laws governing operation of motor vehicles on public roads, but also originate new statutes and regulations; requiring submission of more detailed automaker and developer reports to DOT on the safety of their technologies, so that states and cities can be assured that autonomous vehicle testing is being conducted in a safe manner; differentiation between limited vehicle testing and the commercial deployment of large numbers of autonomous vehicles through an expanded exemptions process; and expansion of plans for consumer education about \"safe use and interaction\" with respect to autonomous vehicles.", "According to the National Conference of State Legislatures (NCSL), at least 41 states and the District of Columbia considered legislation related to autonomous vehicles between 2013 and October 2019; in that time, 29 states and the District of Columbia enacted legislation, governors in 11 states issued executive orders, and 5 states issued both an executive order and enacted legislation. ( Figure 4 ).", "Of the states that have enacted laws in 2017, 2018, and 2019 pertaining to autonomous vehicles, NCSL reports that the largest number of states have passed laws that clarify certain types of commercial activity, such as how closely autonomous vehicles can follow each other when they are coordinated, as in truck platooning. According to NCSL, no recent state laws have been enacted dealing with cybersecurity or vehicle inspection reports. NCSL has organized and categorized the types of state legislation ( Table 4 ). For a more thorough description of the legislation passed in 2017, 2018, and 2019, the NCSL Table of Enacted State Legislation provides more detail."], "subsections": []}, {"section_title": "Implications for Highway Infrastructure", "paragraphs": ["Deployment of fully autonomous vehicles will require not only a suite of new technologies, but also changes to the highway infrastructure on which those vehicles will operate. Autonomous vehicles being tested today rely on clear pavement markings and legible signage to stay in their lanes and navigate through traffic. Major highways as well as side roads in urban and rural settings will need to accommodate autonomous vehicles in addition to a large fleet of conventional vehicles with human drivers.", "In this transition period to more autonomous vehicles\u00e2\u0080\u0094which many anticipate will last several decades \u00e2\u0080\u0094the Federal Highway Administration (FHWA) is expected to play a significant role through its administration of the Manual on Uniform Traffic Control Devices (MUTCD), which sets standards for all traffic control devices, including signs, intersection signals, and road markings. For example, overhead signage on Interstate Highways contains white lettering on a green background in all 50 states\u00e2\u0080\u0094easily recognizable to any U.S. driver\u00e2\u0080\u0094due to MUTCD standards. FHWA is in the process of updating the 2009 MUTCD to address issues specific to autonomous vehicle technologies. However, state compliance with MUTCD is voluntary, and not all states uniformly apply all standards. Audi reportedly announced in 2018 that it would not make its new Level 3 autonomous vehicle technology, called Traffic Jam Pilot, available in the United States because of \"laws that change from one state to the next, insurance requirements, and things like lane lines and road signs that look different in different regions.\" Other automakers have made similar complaints about U.S. roads.", "In the near term, improvement and better maintenance of pavement markings, signage and intersection design may be the most helpful steps that federal and state transportation officials can take. Despite national standards based on MUTCD, not all states maintain their highway markings at a level that would be useful to guide autonomous vehicles. Inadequate road maintenance may affect the pace of autonomous vehicle deployment. Some 21% of major U.S. roads are in poor condition, and a road with many potholes or temporary pavement repairs may also lack continuous lane markings. Many minor roads, which are generally the responsibility of county or municipal governments, may lack road edge lines as well as center lines, potentially making it difficult for autonomous vehicles to position themselves correctly. Dirt and gravel roads may pose particular challenges for autonomous vehicles, as they generally have no pavement markings and cameras may be unable to detect potholes or edges in low-visibility conditions.", "Closely tied to the need for clearer road markings and signage will be ways in which federal and state transportation agencies develop a standardized method to communicate information to vehicles and motorists about construction, road accidents, detours, and other changes to road environments. Many of the perceived benefits of autonomous vehicles\u00e2\u0080\u0094reduced vehicle fatalities, congestion mitigation, and pollution reduction\u00e2\u0080\u0094may depend on the ability of vehicles to exchange information with surrounding infrastructure. The Transportation Research Board (TRB) has been evaluating how states should begin now to plan and develop the types of connected vehicle infrastructure that will be necessary for full autonomous vehicle deployment. TRB's research is also focused on how cash-strapped transportation agencies can identify the large investments that will in turn be necessary to implement connectivity on top of regular maintenance of highways, bridges, and other traditional infrastructure.", "Other options to facilitate autonomous vehicle travel may include designation of special highway corridors that would include all V2X systems necessary for safe autonomous vehicle operation; three European countries have agreed to build such a corridor.", "Over a longer time line, the importance of highway markings may fade as automakers and developers find new ways for autonomous vehicles to navigate, including greater use of guardrails and roadside barriers, sensors, and three-dimensional maps. If highly detailed mapping is deemed to be one replacement for visual cues such as lane markings, then transportation agencies and automakers may need to develop an open standard so that all vehicles will understand the mapping technology. V2X communications through DSRC and cellular may evolve to provide a mechanism for new types of vehicle guidance."], "subsections": [{"section_title": "Appendix. Image of Nuro Robot, R2X", "paragraphs": [], "subsections": []}]}]}}
{"id": "R46139", "title": "Estonia, Latvia, and Lithuania: Background and U.S.-Baltic Relations", "released_date": "2020-01-02T00:00:00", "summary": ["Estonia, Latvia, and Lithuania, often referred to as the Baltic states , are close U.S. allies and considered among the most pro-U.S. countries in Europe. Strong U.S. relations with these three states are rooted in history. The United States never recognized the Soviet Union's forcible incorporation of the Baltic states in 1940, and it applauded the restoration of their independence in 1991. These policies were backed by Congress on a bipartisan basis. The United States supported the Baltic states' accession to NATO and the European Union (EU) in 2004.", "Especially since Russia's 2014 invasion of Ukraine, potential threats posed to the Baltic states by Russia have been a primary driver of increased U.S. and congressional interest in the region. Congressional interest in the Baltic states has focused largely on defense cooperation and security assistance for the purposes of deterring potential Russian aggression and countering hybrid threats, such as disinformation campaigns and cyberattacks. Energy security is another main area of U.S. and congressional interest in the Baltic region.", "Regional Security Concerns", "U.S., NATO, and Baltic leaders have viewed Russian military activity in the region with concern; such activity includes large-scale exercises, incursions into Baltic states' airspace, and a layered build-up of anti-access/area denial (A2AD) capabilities. Experts have concluded that defense of the Baltic states in a conventional military conflict with Russia likely would be difficult and problematic. The Baltic states fulfill NATO's target of spending 2% of gross domestic product (GDP) on defense, although as countries with relatively small populations, their armed forces remain relatively small and their military capabilities limited. Consequently, the Baltic states' defense planning relies heavily on their NATO membership.", "Defense Cooperation and Security Assistance", "The United States and the Baltic states cooperate closely on defense and security issues. New bilateral defense agreements signed in spring 2019 focus security cooperation on improving capabilities in areas such as maritime domain awareness, intelligence sharing, surveillance, and cybersecurity. The United States provides significant security assistance to the Baltic states; the National Defense Authorization Act for Fiscal Year 2020 ( P.L. 116-92 ) increased and extended U.S. assistance for building interoperability and capacity to deter and resist aggression. Under the U.S. European Deterrence Initiative (EDI), launched in 2014, the United States has bolstered its military presence in Central and Eastern Europe. As part of the associated Operation Atlantic Resolve, rotational U.S. forces have conducted various training activities and exercises in the Baltic states.", "NATO has also helped to bolster the Baltic states' security. At the 2016 NATO summit, the allies agreed to deploy multinational battalions to each of the Baltic states and Poland. The United Kingdom leads the battalion deployed in Estonia, Canada leads in Latvia, and Germany leads in Lithuania. Rotational deployments of aircraft from NATO member countries have patrolled the Baltic states' airspace since 2004; deployments have increased in size since 2014.", "Potential Hybrid Threats", "Since 2014, when the EU adopted sanctions targeting Russia due to the Ukraine conflict, tensions between Russia and the Baltic states have grown. These conditions have generated heightened concerns about possible hybrid threats and Russian tactics, such as disinformation campaigns and propaganda, to pressure the Baltic states and promote anti-U.S. or anti-NATO narratives. A large minority of the Estonian and Latvian populations consists of ethnic Russians; Russia frequently accuses Baltic state governments of violating the rights of Russian speakers. Many ethnic Russians in the Baltic states receive their news and information from Russian media sources, potentially making those communities a leading target for disinformation and propaganda. Some observers have expressed concerns that Russia could use the Baltic states' ethnic Russian minorities as a pretext to manufacture a crisis. Cyberattacks are another potential hybrid threat; addressing potential vulnerabilities with regard to cybersecurity is a top priority of the Baltic states.", "Energy Security", "The Baltic states have taken steps to decrease energy reliance on Russia, including through a liquefied natural gas (LNG) terminal in Lithuania and projects to build pipeline and electricity interconnections with Poland, Finland, and Sweden."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction and Issues for Congress", "paragraphs": ["Many U.S. officials and Members of Congress consider Estonia, Latvia, and Lithuania, often referred to collectively as the Baltic states , to be valued U.S. allies and among the most pro-U.S. countries in Europe. Strong ties between the United States and the Baltic states have deep historical roots. Lithuania, Latvia, and Estonia gained their independence in 1918, after the collapse of the Russian Empire. In 1940, they were forcibly incorporated into the Soviet Union, but the United States never recognized their annexation. The United States strongly supported the restoration of the three countries' independence in 1991, and it was a leading advocate of their accession to NATO and the European Union (EU) in 2004. ", "The United States and the Baltic states work closely together in their respective bilateral relationships and within NATO, as well as in the context of U.S.-EU relations. The U.S.-Baltic partnership encompasses diplomatic cooperation in pursuit of shared foreign policy objectives, extensive cooperation on security and defense, and a mutually beneficial economic relationship. The United States provides considerable security assistance to the Baltic states, including financing assistance and defense sales, intended to strengthen their military capabilities.", "Since 2014, U.S. focus on the Baltic region has increased, driven by concerns about potential threats posed by Russia. Developments related to Russia and the implications for U.S. policy and NATO likely will have continuing relevance for Congress. Estonia, Latvia, and Lithuania are central interlocutors and partners in examining and responding to these challenges. ", "As indicated by annual security assistance appropriations, as well as resolutions and bills adopted or introduced in recent years, Congress supports the maintenance of close relations and security cooperation with the Baltic states. The House Baltic Caucus, a bipartisan group of 70 Members of the House of Representatives, and the Senate Baltic Freedom Caucus, a bipartisan group of 11 Senators, seek to maintain and strengthen the U.S.-Baltic relationship and engage in issues of mutual interest."], "subsections": []}, {"section_title": "Domestic Politics", "paragraphs": ["Although outside observers typically view Estonia, Latvia, and Lithuania as a group, citizens of the three countries tend to point out that alongside the three countries' many similarities are notable differences in national history, language, and culture. Cooperation and convergence among the Baltic states remains the central trend, but each country has its own unique domestic political dynamics and the viewpoints and priorities of the three countries are not always completely aligned. ", "Estonia, Latvia, and Lithuania stand out as the leaders of democracy among post-Soviet states and are the only post-Soviet states that have joined NATO and the EU. Since the restoration of their independence nearly 30 years ago, the three countries' governments have tended to consist of multiparty coalitions, which have maintained broadly pro-market, pro-U.S./NATO, and pro-EU orientations. "], "subsections": [{"section_title": "Estonia", "paragraphs": ["The government of Estonia is led by the center-left Center Party in a coalition with the far-right, anti-immigration Conservative People's Party of Estonia (EKRE) and the conservative Pro Patria (Fatherland) party. Juri Ratas of the Center Party is Estonia's prime minister. ", "The Center Party came in second in Estonia's March 2019 general election with 23.1% of the vote (26 seats in Estonia's 101-seat unicameral parliament, the Riigikogu ); it was able to form a government after it unexpectedly reversed its campaign pledge not to work with the far-right EKRE. EKRE came in third in the election with 17.8% of the vote, more than doubling its share of the vote from the 2015 election and winning 19 seats (a gain of 12 seats). The center-right Reform Party, which led a series of coalition governments from 2005 to 2016, came in first place in the 2019 election, winning 28.9% of the vote (34 seats). However, it was unable to secure enough support from potential coalition partners to form a government.", "The Center Party, whose support comes largely from Estonia's Russian-speaking population (about 30% of the population), previously led a coalition government with Pro Patria and the center-left Social Democratic Party from November 2016 until the 2019 election. In late 2016, a changeover in the party's leadership reoriented the Center Party away from a Russian-leaning outlook to a clear pro-Western stance in support of Estonia's membership in NATO and the EU.", "During the 2019 campaign, the Center Party advocated for a progressive tax system, higher social spending, a simplified path to citizenship for noncitizen residents, and maintenance of the country's dual Estonian- and Russian-language education system. The Reform Party, by contrast, advocated maintenance of a flat tax, tight fiscal policy, and Estonian language exams for obtaining citizenship. The Reform Party also called for rolling back Russian-language education in the country's school system. ", "Observers assert that EKRE benefitted in the 2019 election from antiestablishment sentiment among voters and gained support by appealing to rural Estonians who feel economically left behind. In addition to opposing immigration, EKRE is adamantly nationalist, skeptical of the EU, and anti-Russia. Some analysts suggest there is a potential for friction between the Center Party and EKRE on issues such as citizenship, immigration, and abortion policy. ", "In 2016, Estonia's parliament unanimously elected Kersti Kaljulaid as president. Kaljulaid is the country's youngest president (aged 46 at the time of her election) and its first female president. A political outsider with a background as an accountant at the European Court of Auditors, she was put forward as a surprise unity candidate after Estonia's political parties were unable to agree on the first round of candidates. The president serves a five-year term and has largely ceremonial duties but plays a role in defining Estonia's international image and reflecting the country's values. "], "subsections": []}, {"section_title": "Latvia", "paragraphs": ["Latvia's October 2018 general election produced a fragmented result, with seven parties winning seats in the country's 100-seat unicameral parliament ( Saeima ) . After three months of negotiations and deadlock, a five-party coalition government took office in January 2019. Prime Minister Kri\u00c5\u00a1j\u00c4\u0081nis Kari\u00c5\u0086\u00c5\u00a1 of the center-right New Unity Party (JV) leads the government. ", "JV leveraged its experience as a member of the previous governing coalition to put together and lead the new government despite being the smallest party in the Saeima , with eight seats. The other coalition members are the conservative, nationalist National Alliance (NA) and three new parties: the antiestablishment Who Owns the State? (KPV LV); the New Conservative Party (JKP), which campaigned on an anti-corruption platform; and the liberal Development/For! alliance. The coalition partners hold a combined 61 seats in the Saeima and appear likely to maintain the broadly center-right, fiscally conservative, and pro-European policies followed by recent Latvian governments. ", "At the same time, the strong showings in the election by KPV LV and JKP (each won 16 seats) appeared to reflect deepening public dissatisfaction with corruption and the political establishment following high-profile bribery and money-laundering scandals in 2018. The three parties of the previous coalition government, the centrist Union of Greens and Farmers (ZZS), the Unity Party (rebranded New Unity in 2018), and the NA, lost nearly half their total seats, dropping from a combined 61 seats to 32 seats. ", "The center-left Harmony Social Democratic Party (SDPS), which draws its support largely from the country's ethnic Russian population, remained the largest party in parliament, with 23 seats. With five of the seven parties in the coalition government, the SDPS and ZZS are the parliamentary opposition. The next general election is scheduled to take place in 2022. ", "On May 29, 2019, the Saeima elected Egils Levits to be Latvia's next president. A former judge at the European Court of Justice, Levits formally took office on July 8, 2019. Outgoing President Raimonds Vejonis of the ZZS declined to run for a second term. The president performs a mostly ceremonial role as head of state but also acts as commander-in-chief of the armed forces and has the power to propose and block legislation. "], "subsections": []}, {"section_title": "Lithuania", "paragraphs": ["Lithuania has a centrist coalition government composed of four political parties and led by the center-right Lithuanian Peasants and Greens Union (LV\u00c5\u00bdS). The LV\u00c5\u00bdS emerged as the surprise winner of the country's October 2016 parliamentary election, winning 54 of the 141 seats in the Lithuanian parliament ( Seimas ) after winning one seat in the 2012 election. ", "The prime minister of Lithuania is Saulius Skvernelis, a politically independent former interior minister and police chief who was selected for the position by the LV\u00c5\u00bdS (while remaining independent, Skvernelis campaigned for the LV\u00c5\u00bdS). A major factor in the 2016 election outcome was the perception that Skvernelis and the LV\u00c5\u00bdS remained untainted by a series of corruption scandals that negatively affected support for most of Lithuania's other political parties.", "The LV\u00c5\u00bdS initially formed a coalition government with the center-left Social Democratic Party of Lithuania (LSDP), which led the previous coalition government following the 2012 election. In September 2017, the LSDP left the coalition amid tensions over the slow pace of tax and pension reforms intended to reduce economic inequality. Prime Minister Skvernelis subsequently led a minority government of the LV\u00c5\u00bdS and the Social Democratic Labour Party of Lithuania (LSDDP), a new party that splintered off from the LSDP. ", "In July 2019, the LV\u00c5\u00bdS and the LSDDP reached an agreement to form a new coalition government with the addition of the nationalist-conservative Order and Justice Party and the Electoral Action of Poles in Lithuania-Christian Families Alliance. The four parties in the current coalition control a parliamentary majority, with a combined 76 out of 141 seats in the Seimas . The coalition's domestic agenda focuses primarily on boosting social programs, including greater spending on social insurance and increased benefits for families, students, and the elderly. The opposition parties are the center-right Homeland Union-Lithuanian Christian Democrats, which came in second place in the 2016 election with 31 seats; the LSDP; and the center-right Liberal Movement. The next general election is scheduled to take place in October 2020.", "Gitanas Naus\u00c4\u0097da, a pro-European, politically independent centrist and former banker, won Lithuania's May 2019 presidential election. He replaces Dalia Grybauskait\u00c4\u0097 , who served as president from 2009 to 2019 and was consistently regarded as Lithuania ' s most popular politician. The powers of the Lithuanian presidency, the only presidency in the Baltic states to be directly elected, are weaker than those of the U.S. presidency. However, the Lithuanian president plays an important role in shaping foreign and national security policy, is commander-in-chief of the armed forces, appoints government officials, and has the power to veto legislation. ", "Efforts to combat corruption remain a focus of Lithuania's government. Following a series of bribery scandals involving leading politicians and one of the country's largest companies, the Seimas adopted a new law in 2018 appointing special prosecutors to investigate cases of political corruption."], "subsections": []}]}, {"section_title": "Economic Issues", "paragraphs": ["The 2008-2009 global economic crisis hit the Baltic states especially hard; each of the three countries experienced an economic contraction of more than 14% in 2009. The social costs of the recession and the resulting budget austerity included increased poverty rates and income inequality and considerable emigration to wealthier parts of the EU. The Baltic economies have since rebounded, however, benefitting from strong domestic consumption, external demand for exports, and investment growth (including from EU funding): ", "Estonia's gross domestic product (GDP) grew by 5.8% in 2017 and 4.8% in 2018. It is forecast to grow by 3.2% in 2019 and 2.9% in 2020. Unemployment declined from 16.7% in 2010 to 5.4% in 2018. Latvia's GDP grew by 4.6% in 2017 and 4.8% in 2018; it is forecast to grow by 2.8% in 2019 and 2.8% in 2020. Unemployment declined from 19.5% in 2010 to 7.4% in 2018. Lithuania's GDP grew by 4.1% in 2017 and 3.5% in 2018; it is forecast to grow by 3.4% in 2019 and 2.7% in 2020. Unemployment declined from 17.8% in 2010 to 6.1% in 2018.", "Despite the crisis and aftermath, each of the Baltic states fulfilled a primary economic goal when each adopted the euro as its currency (Estonia in 2011, Latvia in 2014, and Lithuania in 2015). ", "The public finances of the Baltic states remain well within guidelines set by the EU (which require member states to have an annual budget deficit of less than 3% of GDP and maintain government debt below 60% of GDP). Both Estonia and Latvia recorded a budget deficit below 1% of GDP in 2018, and Lithuania had a small budget surplus. Gross government debt in 2018 was approximately 8.3% of GDP for Estonia (making it the EU's least-indebted member state), 35.9% of GDP for Latvia, and 34.2% of GDP for Lithuania. ", "According to a study by the European Commission, foreign direct investment (FDI) in the Baltic states remains below precrisis levels. With considerable investment in the financial services sector, Sweden is the largest foreign investor in the region, followed by Finland and the Netherlands. Estonia has been the most successful of the three Baltic countries in attracting FDI, with FDI equivalent to approximately 100% of gross value added in 2015, compared to approximately 63% for Latvia and 40% for Lithuania. "], "subsections": [{"section_title": "Banking Sector Concerns", "paragraphs": ["U.S. and European authorities have expressed concerns about the practices of banks in the region that cater to nonresidents, largely serving account holders based in Russia and other countries of the former Soviet Union. In 2018, two scandals in particular brought attention to money-laundering challenges in the region. ", "In February 2018, the U.S. Department of the Treasury designated ABLV Bank, then the third-largest bank in Latvia, as a financial institution of primary money laundering concern. Treasury accused it of money laundering, bribery, and facilitating transactions violating United Nations sanctions against North Korea. Following a run on deposits and a decision by the European Central Bank not to intervene, ABLV initiated a process of self-liquidation. The Latvian government subsequently made reforming the banking sector and strengthening anti-money-laundering (AML) practices top policy priorities. ", "A September 2018 report commissioned by Danske Bank, Denmark's largest bank, indicated that between 2007 and 2015, some \u00e2\u0082\u00ac200 billion (approximately $220 billion) worth of suspicious transactions may have flowed through a segment of its Estonian branch catering to nonresidents, primarily Russians. The activity continued despite critical reports by regulatory authorities and whistleblower accounts highlighting numerous failures in applying AML practices. In February 2019, the Estonian Financial Supervision Authority ordered Danske Bank to cease operations in Estonia; Danske Bank subsequently decided to cease its activities in Latvia and Lithuania (and Russia), as well."], "subsections": []}]}, {"section_title": "Regional Relations with the United States", "paragraphs": ["The U.S. State Department describes Estonia, Latvia, and Lithuania as strong, effective, reliable, and valued allies that have helped to promote security, stability, democracy, and prosperity in Europe and beyond. Many citizens of the Baltic states remain grateful to the United States for consistently supporting their independence throughout the Cold War and playing a key role in promoting the restoration of independence in 1991. Most policymakers in the Baltic states tend to see their countries' relationship with the United States as the ultimate guarantor of their security against pressure or possible threats from Russia. All three Baltic states joined NATO and the EU in 2004 with strong U.S. support.", "In addition to maintaining a pro-NATO and pro-EU orientation, the Baltic states have sought to support U.S. foreign policy and security goals. For example, they have worked closely with the United States in Afghanistan, where the three Baltic states have contributed troops to NATO-led missions since 2002-2003. The three countries also have been partner countries in the Global Coalition to Defeat the Islamic State, providing personnel, training, weapons, and funding for efforts to counter the Islamic State in Iraq and Syria since 2014.", "The Trump Administration and many Members of Congress have demonstrated support for strong U.S. relations with the Baltic states. In April 2018, President Donald Trump hosted the presidents of the three Baltic states for a quadrilateral U.S.-Baltic Summit intended to deepen security and defense cooperation and reaffirm the U.S. commitment to the region. The presidential summit was followed by a U.S.-Baltic Business Summit intended to expand commercial and economic ties. ", "During the 115 th Congress, the Senate adopted a resolution ( S.Res. 432 ) congratulating Estonia, Latvia, and Lithuania on the 100 th anniversary of their independence; applauding the U.S.-Baltic partnership; commending the Baltic states' commitment to NATO, transatlantic security, democracy, and human rights; and reiterating the Senate's support for the European Deterrence Initiative (EDI) as a means of enhancing Baltic security (on EDI, see \" U.S. European Deterrence Initiative ,\" below). "], "subsections": [{"section_title": "Security Partnership and Assistance", "paragraphs": ["The United States provides significant security assistance to its Baltic partners. According to the State Department, as of July 2019, U.S. security assistance to the Baltic states has included", "more than $450 million in defense articles sold under the Foreign Military Sales (FMS) program and more than $350 million in defense articles authorized under the Direct Commercial Sales process since 2014; more than $150 million in Foreign Military Financing (FMF) since 2015, with the aim of strengthening the Baltic states' defensive capabilities in areas such as hybrid warfare, electronic warfare, border security, and air and maritime domain awareness and enhancing interoperability with NATO forces; approximately $1.2 million annually per country in International Military Education and Training (IMET) funds contributing to the professional education of military officers; and $290 million in funding from the Department of Defense under Title 10 train and equip programs since 2015, including approximately $173 million in FY2018.", "Since 1993, the Baltic states have participated in the U.S. National Guard State Partnership Program. Under the program, Estonia's armed forces partner with units from the Maryland National Guard, Latvia's armed forces partner with the Michigan National Guard, and Lithuania's armed forces partner with the Pennsylvania National Guard.", "In 2017, the United States signed separate bilateral defense cooperation agreements with each of the Baltic states. The agreements enhanced defense cooperation by building on the NATO Status of Forces Agreement to provide a more specific legal framework for the in-country presence and activities of U.S. military personnel.", "The National Defense Authorization Act for Fiscal Year 2018 ( P.L. 115-91 ) authorized the Department of Defense to conduct or support a security assistance program to improve the Baltic states' interoperability and build their capacity to deter and resist aggression. The program was authorized through 2020 with a spending limit of $100 million.", "In November 2018, the United States and the three Baltic states agreed to develop bilateral defense cooperation strategic road maps focusing on specific areas of security cooperation for the period 2019-2024. In April 2019, the United States and Lithuania signed a road map agreeing to strengthen cooperation in training, exercises, and multilateral operations; improve maritime domain awareness in the Baltic Sea; improve regional intelligence-sharing, surveillance, and early warning capabilities; and build cybersecurity capabilities. In May 2019, the United States signed road map agreements with Latvia and Estonia outlining similar priorities for security cooperation.", "In the 116 th Congress, the National Defense Authorization Act for Fiscal Year 2020 ( P.L. 116-92 ) extended security assistance to the Baltic states for building interoperability and deterrence through 2021 and increased the total spending limit to $125 million. The act also requires the Secretary of Defense and the Secretary of State to jointly conduct a comprehensive assessment of the military requirements necessary to deter and resist Russian aggression in the region. ", "The committee report ( S.Rept. 116-103 ) for the Senate version of the Department of Defense Appropriations Act, 2020 ( S. 2474 ), recommends allocating $400 million to the Defense Cooperation Security Agency to fund a Baltics regional air defense radar system.", "A sense of Congress resolution introduced in the House of Representatives ( H.Res. 416 ) would reaffirm U.S. support for the Baltic states' sovereignty and territorial integrity and encourage the Administration to further defense cooperation efforts. Partially reflected in the National Defense Authorization Act for Fiscal Year 2020, the Baltic Reassurance Act ( H.R. 3064 ) introduced in the House of Representatives would reiterate the U.S. commitment to the security of the Baltic states and require the Secretary of Defense to conduct a comprehensive regional defense assessment."], "subsections": []}, {"section_title": "Economic Relations", "paragraphs": ["U.S. economic ties with the three Baltic states remain relatively limited, although the State Department has stated there are \"growing commercial opportunities for U.S. businesses\" and \"room for growth\" in the relationship. ", "In 2018, U.S. goods exports to Estonia were valued at $346.1 million and goods imports from Estonia were valued at $953.5 million. Main U.S. exports to Estonia are computer and electronic products, chemicals, machinery, and transportation equipment; Estonia's top exports to the United States are computer and electronic products, petroleum products and chemicals, electrical equipment, and medical instruments. U.S. affiliates employ about 3,570 people in Estonia, and U.S. FDI in Estonia was about $100 million in 2017. In 2018, U.S. goods exports to Latvia were valued at $510.4 million and goods imports from Latvia were valued at $727.1 million. Main U.S. exports to Latvia are transportation equipment and computer and electronic products; top U.S. imports from Latvia are beverage products and transportation equipment. U.S. affiliates employ about 1,325 people in Latvia, and U.S. FDI in Latvia was $71 million in 2017. In 2018, U.S. exports to Lithuania were valued at $706.4 million and imports from Lithuania were valued at nearly $1.268 billion. Main U.S. exports to Lithuania are used machinery, chemicals, computer and electronic products, and transportation equipment; top U.S. imports from Lithuania are petroleum and coal products, chemicals, and furniture. U.S. affiliates employ about 2,250 people in Lithuania, and Lithuania has not attracted significant levels of U.S. FDI. "], "subsections": []}]}, {"section_title": "Regional Security Concerns and Responses", "paragraphs": ["Officials in the Baltic region have noted with concern what they view as increasing signs of Russian foreign policy assertiveness. These signs include a buildup of Russian forces in the region, large-scale military exercises, and incursions by Russian military aircraft into Baltic states' airspace. ", "Unlike Georgia and Ukraine, the Baltic states are members of NATO, and many observers contend the alliance's Article 5 collective defense guarantee limits potential Russian aggression in the Baltic region. Nevertheless, imposing various kinds of pressure on the Baltic states enables Russia to test NATO solidarity and credibility. ", "Defense experts assert that Russian forces stationed near the Baltic region, including surface ships, submarines, and advanced S-400 air defense systems, could \"allow [Russia] to effectively close off the Baltic Sea and skies to NATO reinforcements.\" According to a RAND report based on a series of war games staged in 2014 and 2015, a quick Russian strike could reach the capitals of Estonia and Latvia in 36-60 hours. "], "subsections": [{"section_title": "Defense Spending and Capabilities", "paragraphs": ["The breakup of the Soviet Union left the Baltic states with virtually no national militaries, and their forces remain small and limited (see Table 1 ). The Baltic states' defense planning consequently relies heavily on NATO membership, and these states have emphasized active participation in the alliance through measures such as contributing troops to NATO's mission in Afghanistan. In the context of Russia's invasion of Ukraine and renewed concerns about Russia, the Baltic states have significantly increased their defense budgets and sought to acquire new military capabilities.", "Lithuania has the largest military of the three Baltic states, with 19,850 total active duty personnel in 2019. According to NATO, Lithuania has increased its defense spending from $427 million in 2014 to an expected $1.084 billion in 2019, equivalent to 1.98% of GDP (NATO recommends that member states allocate 2% of GDP for defense spending). The defense ministry has moved ahead with plans to acquire new self-propelled artillery systems and portable anti-aircraft missiles, as well as elements of a medium-range air defense system. After abolishing conscription in 2008, Lithuania reintroduced compulsory military service in 2015 due to concerns about Russia, a move that brings 3,000 personnel to the armed forces per year.", "According to NATO, Estonia's defense spending is expected to be 2.13% of GDP ($669 million) in 2019. The country's armed forces total 6,600 active personnel and 12,000 reserves, plus a volunteer territorial defense force with about 15,800 members. Estonia has taken steps to upgrade its air defense system and modernize a range of ground warfare equipment, including anti-tank weapons. Estonia has compulsory military service for men aged 18-27, with an eight-month basic term of conscripted service.", "Latvia's armed forces total 6,210 active personnel. According to NATO figures, Latvia has more than doubled its defense spending as a percentage of GDP over the past five years, from 0.94% of GDP in 2014 to 2.01% of GDP ($724 million) in 2019. Acquisition priorities of the Latvian armed forces include self-propelled artillery, armored reconnaissance vehicles, multi-role helicopters, anti-aircraft missiles, and anti-tank missiles."], "subsections": []}, {"section_title": "U.S. European Deterrence Initiative", "paragraphs": ["Under the European Deterrence Initiative (EDI), which was launched in 2014 and originally called the European Reassurance Initiative, the United States has bolstered security cooperation in Central and Eastern Europe with enhanced U.S. military activities in five areas: (1) increased military presence in Europe, (2) additional exercises and training with allies and partners, (3) improved infrastructure to allow greater responsiveness, (4) enhanced prepositioning of U.S. equipment, and (5) intensified efforts to build partner capacity of newer NATO members and other partners. As of December 2019, there are approximately 6,000 U.S. military personnel involved in the associated Atlantic Resolve mission at any given time, with units typically operating in the region under a rotational nine-month deployment. ", "The United States has not increased its permanent troop presence in Europe (about 67,000 troops, including two U.S. Army Brigade Combat Teams, or BCTs). Instead, it has focused on rotating additional forces into the region, including nine-month deployments of a third BCT based in the United States. The rotational BCT is based largely in Poland, with units also conducting training and exercises in the Baltic states and 14 other European countries. The Fourth Infantry Division Mission Command Element, based in Pozna\u00c5\u0084, Poland, acts as the headquarters overseeing rotational units. ", "EDI funding increased substantially during the first years of the Trump Administration, from approximately $3.4 billion in FY2017 to approximately $4.8 billion in FY2018 and approximately $6.5 billion in FY2019. For FY2020, the Administration requested $5.9 billion in funding for the EDI; defense officials explained that the reduced request was due to the completion of construction and infrastructure projects. In September 2019, the Department of Defense announced plans to defer $3.6 billion of funding for 127 military construction projects in order to fund construction of the U.S.-Mexico border wall, with approximately $770 million of this money to come from EDI-related projects. Affected initiatives in the Baltic states reportedly include the planned construction of a special forces operations and training facility in Estonia."], "subsections": []}, {"section_title": "NATO Enhanced Forward Presence", "paragraphs": ["At the 2016 NATO Summit in Warsaw, the alliance agreed to deploy battalion-sized (approximately 1,100-1,500 troops) multinational battle groups to Poland and each of the three Baltic states (see Figure 2 ). These enhanced forward presence units are intended to deter Russian aggression and emphasize NATO's commitment to collective defense by acting as a tripwire that ensures a response from the whole of the alliance in the event of a Russian attack. ", "Germany leads the multinational battalion in Lithuania, with troop contributions from Belgium, the Czech Republic, Iceland, the Netherlands, and Norway. Canada leads the multinational battalion in Latvia, with troop contributions from Albania, the Czech Republic, Italy, Montenegro, Poland, Slovakia, Slovenia, and Spain. The United Kingdom (UK) leads in Estonia, with contributions from Denmark, France, and Iceland. (The United States leads the multinational battalion in Poland, with contributions from Croatia, Romania, and the UK. )", "NATO continues to resist calls to deploy troops permanently in countries that joined the alliance after the collapse of the Soviet Union due to concerns in some member states that doing so could violate the terms of the 1997 NATO-Russia Founding Act. Accordingly, the enhanced NATO presence has been referred to as continuous but rotational rather than permanent . "], "subsections": []}, {"section_title": "NATO Air Policing Mission", "paragraphs": ["Lacking their own fighter aircraft, the Baltic states rely on their NATO allies to police and defend Baltic airspace. NATO launched the Baltic Air Policing mission in 2004. The mission originally consisted of rotating four-month deployments of four aircraft. Following Russia's invasion of Ukraine in 2014, deployments increased to 8 to 12 aircraft at a time. The Baltic states contribute to mission costs, including by providing ground services for the aircraft and supplying aviation fuel. ", "In September 2019, Belgium took over as the air-policing mission's lead nation, with four Belgian and four Danish F-16s operating from \u00c5\u00a0iauliai Air Base in Lithuania, augmented by four Czech Gripen fighters based at \u00c3\u0084mari Air Base in Estonia. From May to August 2019, in what was the 50 th rotation of the Baltic Air Policing mission, Hungary was the lead nation, with Hungarian Gripens joined at \u00c5\u00a0iauliai by F-18s from Spain and British Eurofighters augmenting from \u00c3\u0084mari."], "subsections": []}, {"section_title": "Potential Hybrid Threats", "paragraphs": ["In recent years, tensions between Russia and the Baltic states have been exacerbated by reciprocal accusations of spying; illicit cyber activity, including the hacking of Baltic states' government websites; and a Russian propaganda offensive directed at Russian speakers in the Baltic states. Baltic states' support for EU sanctions on Russia due to its invasion of Ukraine also has exacerbated tensions, as have Russian retaliatory sanctions targeting agricultural products. ", "Many observers have expressed concerns about Russia targeting the Baltic states with hybrid warfare tactics, such as those it has used in Ukraine. "], "subsections": [{"section_title": "Disinformation Campaigns and Ethnic Russians in Baltic States", "paragraphs": ["The presence of a large ethnic Russian population in the Baltic states is a factor in these concerns, especially given that Russian claims of persecution against Russian communities were part of Russia's pretext for intervention in Ukraine. According to statements by Russian officials, including President Vladimir Putin, one of the central principles of Russian foreign policy is acting as the defender and guarantor of the rights of Russian-speaking people wherever they live. ", "Russia routinely accuses Estonia and Latvia of violating the human rights of Russian-speaking minorities by discriminating against the Russian language in official usage. Although international organizations generally have rejected these charges, some segments of the countries' Russian-speaking communities are poorly integrated into society. About 230,000 people in Latvia and 76,000 people in Estonia, the majority of whom are ethnic Russians, are noncitizen residents who are not allowed to vote or hold public office because they have not passed a citizenship test, which includes language and history components. Additionally, approximately 55,000 Russian citizens live in Latvia and 89,000 Russian citizens live in Estonia. ", "Many in the ethnic Russian community receive their news primarily from Russian-language television and newspapers, and Russian media dominates the information market in Russian-speaking regions. In the past, Latvia and Lithuania have imposed fines and temporary bans on Russian media outlets, such as Rossiya and Sputnik , due to what authorities considered dangerous and unbalanced reporting. ", "Analysts have documented how Russia uses traditional media (e.g., radio, television) and social media to propagate disinformation in the Baltic states and many other European countries. Russian disinformation efforts against the Baltic states typically attempt to polarize society by portraying the Baltic states as illegitimate and dysfunctional, the EU as ineffective and divided, NATO and the United States as imperial powers, and Baltic governments as Russophobe fascist regimes that oppress their ethnic Russian populations. Russian outlets repeatedly have sought to stir up opposition to NATO deployments in the region by fabricating stories of criminal activity by deployed NATO soldiers.", "There is no movement among Russian-speaking communities in the Baltic states advocating absorption by Russia, and survey data indicate that these communities are not a unified, homogenous group in terms of how they view competing political narratives. Analysts believe most members of these communities prefer to live in Estonia or Latvia rather than Russia; noncitizen residents enjoy benefits such as visa-free travel throughout the EU, and average wages are considerably higher than in Russia. Concerns remain, however, that Russia could attempt to foment tensions or civil unrest as a pretext for intervention or in an attempt to seize territory populated by ethnic Russians. "], "subsections": []}, {"section_title": "Cyberattacks", "paragraphs": ["Vulnerability to potential cyberattacks is a primary concern for the Baltic states. Following a period of heightened tensions with Russia in 2007, Estonia's internet infrastructure came under heavy attack from hackers. Estonian officials said some assaults came from Russian government web servers, although many others came from all over the world. According to analysts, what appeared as a series of smaller, individual distributed denial-of-service attacks was most likely a coordinated, large-scale effort. The attacks did little long-term damage, and they gave Estonia experience in facing such incidents and prompted the country to strengthen its cyber defenses. ", "Estonia hosts the NATO Cooperative Cyber Defense Center of Excellence, which opened in 2008. The center fosters cooperation and information sharing on cybersecurity between NATO countries, conducts cyberwarfare research and training, and organizes exercises and conferences preparing NATO countries to detect and fight cyberattacks.", "In 2018, Lithuania adopted a national Cyber Security Strategy and integrated several government agencies into the National Cyber Security Centre (NCSC) under the Ministry of Defense. Lithuania's NCSC registered more than 53,000 cybersecurity incidents in 2018.", "The International Telecommunication Union's Global Cybersecurity Index 2018 ranked Lithuania fourth and Estonia fifth in the world based on measurements of legal, technical, organizational, capacity building, and cooperation measures related to cybersecurity. (The UK was ranked first, United States second, and France third. )"], "subsections": []}]}]}, {"section_title": "Energy Security", "paragraphs": ["In 2014, a decade after joining NATO and the EU, the Baltic states continued to import 100% of their natural gas from Russia. This dependence raised concerns that Russia could use energy as political and economic leverage against the Baltic states, prompting them to diversify their supply sources and improve their integration with European natural gas networks. ", "In 2014, a floating liquefied natural gas (LNG) terminal became operational at the Lithuanian port of Klaip\u00c4\u0097da. The nearly 300-meter-long vessel, the Independence , has the capacity to supply 100% of Lithuania's natural gas needs and 90% of the total natural gas needs of the three Baltic countries combined. In 2014, the Lithuanian gas company Litgas signed a five-year deal with Norway's Statoil (now Equinor) to provide 540 million cubic meters of gas to the facility annually. Gazprom subsequently agreed to cut the price Lithuania pays for natural gas. The United States began exporting LNG to Lithuania in 2017. Currently, Lithuania imports nearly 58% of its natural gas from Russia, accounting for approximately 19% of its primary energy consumption.", "Although Estonia and Latvia continue to import all of their natural gas from Russia, natural gas accounts for a relatively low share of the countries' overall energy supplies. Oil shale accounts for about 85% of Estonia's domestic energy supply, whereas natural gas accounts for less than 6%. Russian natural gas accounts for approximately 24% of Latvia's primary energy consumption; hydropower is Latvia's largest source of energy.", "In addition to Lithuania's LNG facility, numerous initiatives aim to reduce regional energy dependence on Russia through supply diversification and increased interconnectivity. A pipeline from Poland to Lithuania, linking the natural gas networks of the Baltic states to the rest of the EU, is expected to be completed in 2021. The Baltic Connector pipeline linking the gas infrastructures of Estonia and Finland is expected to become operational in 2020. Poland opened an LNG terminal in 2015, and Finland opened one in 2019. ", "As a remnant of the Soviet era, the Baltic states' power grids remain connected and synchronized with those of Russia (including Kaliningrad) and Belarus; a control center in Moscow regulates frequency and manages reserve capacity for the Baltic states' electricity supply. Two strategic projects to integrate the region's power grid into the wider European electricity market became operational in 2016: the LitPol link connecting Lithuania with Poland and the 450-kilometer undersea NordBalt cable connecting Lithuania with Sweden. Previously, two connections between Estonia and Finland were the only infrastructure linking the region's electric grid to the rest of Europe. In 2018, the governments of Estonia, Latvia, and Lithuania reached an agreement with the European Commission on plans to synchronize their electricity grids with the rest of Europe by 2025.", "Many U.S. officials and Members of Congress regard European energy security as a U.S. interest. In particular, there has been concern in the United States that Russian energy dominance could affect the ability to present a united transatlantic position when it comes to other issues related to Russia. Successive U.S. Administrations have encouraged EU member states to reduce energy dependence on Russia through diversification of supply. They also have supported European steps to develop alternative sources and increase energy efficiency. In the 116 th Congress, related bills include the European Energy Security and Diversification Act of 2019 (House-passed H.R. 1616 and S. 704 ), the Protect European Energy Security Act ( H.R. 2023 ), and the Energy Security Cooperation with Allied Partners in Europe Act of 2019 ( S. 1830 )."], "subsections": []}, {"section_title": "Conclusion", "paragraphs": ["The Baltic states are likely to remain strong U.S. allies and important U.S. security partners in Europe. Analysts believe close cooperation between the United States and the Baltic states will continue for the foreseeable future in areas such as efforts to deter potential Russian aggression, the future of NATO, energy security, and economic issues. The Baltic states likely will continue to look to the United States for leadership on foreign policy and security issues.", "During the 116 th Congress, the activities and funding level of the EDI, bilateral security cooperation with the Baltic states, and the regional presence and activities of NATO forces may remain of interest to Members of Congress. Efforts to bolster the capabilities of the Baltic states' armed forces, including through defense sales and the provision of U.S. security assistance, also may be of congressional interest. The Baltic states likely will be of continuing importance in the area of European energy security. ", "In addition, Members of Congress may wish to remain informed about potential security threats to the Baltic states posed by Russia, including conventional military concerns and hybrid threats, such as disinformation campaigns and cyberattacks. Members of Congress may have an interest in assessing how the Baltic states, as well as other NATO and EU member states, can develop capabilities to counter such hybrid threats."], "subsections": []}]}}
{"id": "R45862", "title": "Flexibility for Equitable Per-Pupil Spending Under Title I, Part E of the Elementary and Secondary Education Act", "released_date": "2019-08-06T00:00:00", "summary": ["The Every Student Succeeds Act (ESSA; P.L. 114-95 ) amended the Elementary and Secondary Education Act (ESEA) to add the \"Flexibility for Equitable Per-Pupil Spending\" authority as Title I, Part E. Under Title I-E, the Secretary of Education (the Secretary) has authority to provide local educational agencies (LEAs) with flexibility to consolidate eligible federal funds with state and local funding to create a \"single school funding system based on weighted per-pupil allocations for low-income and otherwise disadvantaged students.\" The Title I-E authority is applicable to LEAs that are implementing \"weighted student funding\" systems to establish budgets for, and allocate funds to, individual public schools. In general, weighted student funding systems base school funding on the number of pupils in each school in specified categories. Under these funding systems, weights are assigned to pupil characteristics that are deemed to be related to the costs of educating such pupils\u00e2\u0080\u0094such as being from a low-income family, being an English Learner (EL), or having a disability\u00e2\u0080\u0094and their educational program (such as grade level or career-technical education).", "Eligible federal funds that may be consolidated in an LEA's weighted student funding system include those available under ESEA Title I-A (Education for the Disadvantaged), Supporting Effective Instruction (Title II-A), English Language Acquisition (Title III-A), and Student Support and Academic Enrichment (Title IV-A). No non-ESEA funds (e.g., funds available under the Individuals with Disabilities Education Act (IDEA) or the Perkins Career and Technical Education (Perkins) Act) may be consolidated. Once eligible federal funds are consolidated in a participating LEA's weighted student funding system, these funds are treated the same way as the state and local funds.", "LEAs participating in Title I-E must have a funding system that uses weights or allocation amounts that provide \"substantially more funding\" than is allocated to other students to ELs, students from low-income families, and students with any other characteristic related to educational disadvantage that is selected by the LEA. The system must also ensure that each high-poverty school receives in the first year of the local flexibility demonstration agreement more per-pupil funding for low-income students than was received for low-income students from federal, state, and local sources in the year prior to entering into the agreement and at least as much per-pupil funding for ELs as was received for ELs from federal, state, and local sources in the prior year. The weighted student funding system must include all school-level actual personnel expenditures for instructional staff, including staff salary differentials for years of employment, and actual nonpersonnel expenditures in the LEA's calculation of eligible federal funds and state and local funds to be allocated to the school level.", "The Title I-E authority is limited to 50 LEAs in school years preceding 2019-2020, but could be offered to any LEA from that year onward, if a \"substantial majority\" of the LEAs participating in previous years have met program requirements. In February 2018, the Secretary announced that the U.S. Department of Education (ED) would begin accepting applications from LEAs to enter into agreements under the Student-Centered Funding Pilot, which is how ED refers to the Title I-E authority. To date, only six LEAs have applied for the Title I-E authority, and only Puerto Rico has been approved to enter into an agreement. Puerto Rico will begin implementing the Title I-E flexibility authority during the 2019-2020 school year. Thus, no LEAs will have implemented weighted student funding systems under Title I-E prior to the 2019-2020 school year.", "While it is unclear why relatively few LEAs have expressed interest in participating in the Title I-E authority, there are several possible explanations, some of which are summarized below:", "ED did not act to implement the Title I-E authority until February 2018, more than two years after the enactment of the ESSA. Local flexibility demonstration agreements are for a three-year period with a possible renewal. LEAs may not feel that the changes needed to implement the required weighted student funding system are worthwhile for a three-year period without knowing for certain if the authority would be extended. States and LEAs that currently have weighted student funding systems often include funds for students with disabilities and career and technical education in their systems. However, LEAs would be prohibited from consolidating IDEA or Perkins funds under the Title I-E authority. Public schools that operate schoolwide programs under Title I-A already have the authority to consolidate state, local, and certain federal funds, including those available under IDEA or Perkins. There may be concerns that some public schools may lose funds by switching to a weighted student funding system. As the Title I-E authority does not include any funding to ease the transition to the new funding system for schools that may be negatively affected, LEAs may be hesitant to participate. Under the ESEA Title I-A program, which accounts for over 76% of the eligible federal funds under Title I-E, funds have historically been provided to public schools with the highest concentrations of low-income students. Under the Title I-E authority, if an LEA chooses to consolidate its Title I-A funds it is likely that the distribution of Title I-A funds would be more diffuse. It is possible that some LEAs may view the consolidation of federal funds and the resulting redistribution of funds among public schools in the LEA as a step toward the portability of federal funds, whereby funds would be associated with individual students rather than schools and could ultimately follow them to any school of their choosing, including a private school."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["The Every Student Succeeds Act (ESSA; P.L. 114-95 ) amended the Elementary and Secondary Education Act (ESEA) to add a new Part E to Title I entitled \"Flexibility for Equitable Per-Pupil Spending.\" Under Title I-E, the Secretary of Education (the Secretary) has the authority to provide local educational agencies (LEAs) with flexibility to consolidate eligible federal funds with state and local funding to create a \"single school funding system based on weighted per-pupil allocations for low-income and otherwise disadvantaged students.\" The ESEA Title I-E authority is applicable to LEAs that are using or agree to implement \"weighted student funding\" systems to establish budgets for, and allocate funds to, individual public schools. These funding systems base school funding on the number of pupils in each school in specified categories. Under these funding systems, weights are assigned to a variety of pupil characteristics that are deemed to be related to the costs of educating such pupils\u00e2\u0080\u0094such as being from a low-income family, being an English Learner (EL), or having a disability. Weights are also assigned on the basis of students' educational program (grade level, career-technical education, gifted and talented, or others). School budgets are based on these weighted pupil counts, in contrast to treating all pupils in the same manner. Under weighted student funding policies, school allocations are based on weighted counts of students enrolled in them; therefore, if students transfer from one public school to another within the same LEA, their weighted budget level transfers with them, although possibly with a time lag.", "The Secretary is permitted to waive a wide range of requirements under various ESEA programs, including provisions related to the allocation of Title I-A funds to schools, for LEAs entering into an agreement under Title I-E if an existing ESEA requirement would prevent the LEA from implementing its weighted student funding system under the agreement. LEAs must, however, meet Title I-E requirements for allocations to schools with students from low-income families and ELs. LEAs must also continue to meet a number of Title I-A and other requirements, though in somewhat modified fashion in some instances. ", "The Title I-E authority is limited to 50 LEAs in school years preceding 2019-2020, but it could be offered to any LEA from that year onward, as long as a \"substantial majority\" of the LEAs participating in previous years have met program requirements. In February 2018, the Secretary announced that she would begin accepting applications from LEAs to enter into local flexibility demonstration agreements under the Student-Centered Funding Pilot, which is how the U.S. Department of Education (ED) refers to the Title I-E authority. To date, six LEAs have applied for the Title I-E authority, and only Puerto Rico has been approved to enter into an agreement. Puerto Rico will begin implementing a weighted student funding system using the Title I-E flexibility authority during the 2019-2020 school year. Thus, no LEAs will have implemented weighted student funding systems under Title I-E prior to the 2019-2020 school year. ", "To provide context for the Title I-E authority, this report begins with a brief discussion of how public elementary and secondary education is financed at the state and local levels. It focuses on the primary types of state school finance programs and school finance \"equalization,\" including an overview of weighted student funding systems. For a more detailed discussion of state and local financing of public schools, see CRS Report R45827, State and Local Financing of Public Schools . ", "Building on this background, the remainder of the report focuses on the Title I-E authority. First, there is an examination of the Title I-E statutory authority and related non-regulatory guidance provided by ED. This is followed by a discussion of current Title I-E implementation issues. The next section considers possible interactions between the Title I-E authority and other ESEA programs, particularly Title I-A. The report concludes with discussion of some issues that may arise related to the Title I-E authority."], "subsections": []}, {"section_title": "Overview of Financing for Public Elementary and Secondary Schools in the United\u00c2 States", "paragraphs": ["This section provides a brief overview of funding sources for public elementary and secondary education. It also discusses school finance \"equalization,\" including an examination of the use of weighted student funding at the state and LEA levels. "], "subsections": [{"section_title": "Sources of Funding for Public Elementary and Secondary Education", "paragraphs": ["The funding of public elementary and secondary schools in the United States involves a combination of local, state, and federal government revenues, in proportions that vary substantially both across and within states. Overall, a total of $678.4 billion in revenues was devoted to public elementary and secondary education in the 2015-16 school year (the latest year for which detailed data on revenues by source are available). State governments provided $318.6 billion (47.0%) of these revenues, local governments provided $303.8 billion (44.8%), and the federal government provided $56.0 billion (8.3%). Over the last several decades, the share of public elementary and secondary education revenues provided by state governments has increased, the share provided by local governments has decreased, and the federal share has varied within a range of 6.0% to 12.7%. The primary source of local revenues for public elementary and secondary education is the property tax, while state revenues are raised from a variety of sources, primarily personal and corporate income and retail sales taxes, a variety of \"excise\" taxes such as those on tobacco products and alcoholic beverages, plus lotteries in several states.", "All states (but not the District of Columbia) provide a share of the total revenues available for public elementary and secondary education. This state share varies widely, from approximately 25% in Illinois to almost 90% in Hawaii and Vermont. The programs through which state funds are provided to LEAs for public elementary and secondary education have traditionally been categorized into five types of programs: (1) Foundation Programs, (2) Full State Funding Programs, (3) Flat Grants, (4) District Power Equalizing, and (5) Categorical Grants. , Of these, Foundation Programs are the most common, although many states use a combination of program types. "], "subsections": []}, {"section_title": "School Finance \"Equalization\"", "paragraphs": ["A goal of all of the various types of state school finance programs is to provide at least some limited degree of \"equalization\" of spending and resources, and/or local ability to raise funds, for public elementary and secondary education across all of the LEAs in the state. Such programs often establish target levels of funding \"per pupil.\" The \"pupil\" counts involved in these programs may simply be based on total student enrollment as of some point in time, or they may be a \"weighted\" count of students, taking into account variations in a number of categories\u00e2\u0080\u0094special pupil needs (e.g., disabilities, low family income, limited proficiency in English), grade levels, specific educational programs (e.g., career and technical education), or geographic considerations (e.g., student population sparsity or local variation in costs of providing education). "], "subsections": [{"section_title": "State Use of Weighted Student Funding", "paragraphs": ["A review of the individual state entries in a recent survey is an instructive indication of the extent to which weighted student counts are used to determine funding levels under current state programs. It shows that at least 32 states used some degree of weighting of the pupil counts used to calculate state aid to LEAs. Most of these states have policies that assign numeric weights to different categories of pupils, while in other states the school finance program specifies different target dollar amounts for specific categories of pupils, which is mathematically equivalent to assigning weights.", "Many states also adjust pupil weights for those in selected grade levels, geographic areas, or programs. Weights are often higher for pupils in the earliest grades or in grades 9-12, though policies vary widely, and a few states prioritize other grade levels such as 7-9. The population sparsity weights recognize the diseconomies of scale in areas with especially small LEAs or schools. The career and technical education weights recognize the extra costs of these types of programs."], "subsections": []}, {"section_title": "Application of Weighted Student Funding in LEA Programs to Finance Individual Schools", "paragraphs": ["As seen above, the concept of pupil weighting is often applied in determining funding levels for LEAs under state school finance programs. After state funds reach LEAs, they are combined with locally raised funds to provide educational resources to students in individual schools. It is this stage in the distribution of educational resources that is relevant to the weighted student funding authority in ESEA Title I, Part E (see subsequent discussion of Title I-E). Below is an overview of both conventional intra-LEA budgeting policies and the use of weighted student funding at the LEA level."], "subsections": [{"section_title": "Conventional Intra-LEA Budgeting Policies", "paragraphs": ["Under the traditional, and still most common, method of allocating resources within LEAs, there are no specific budgets for individual schools. Available state and local funds are managed centrally, by LEA staff, and various resources\u00e2\u0080\u0094facilities, teachers, support staff, school administrators, instructional equipment, etc.\u00e2\u0080\u0094are assigned to individual schools. In this process, LEA staff typically apply LEA-wide standards such as pupil-teacher ratios or numbers of various categories of administrative and support staff to schools of specific enrollment sizes and grade levels. While levels of expenditures per pupil may be determined for individual schools under these budgetary systems, they are calculated \"after the fact,\" based on whatever staff and other resources have been assigned to the school. And while standard ratios of pupils per teacher or other resource measures may be applied LEA-wide in these situations, substantial variations in the amounts actually spent on teachers and other resources in each school can result from systematic variations in teacher seniority and other factors. These variations might be masked by local policies to apply average salaries, rather than specific actual salaries, in school accounting systems. Further, under traditional school budgeting policies there is little or no immediate or direct adjustment of resources or spending when students transfer from one school to another. "], "subsections": []}, {"section_title": "Weighted Student Funding Concept Applied to Intra-LEA Budgeting for\u00c2 Schools", "paragraphs": ["In contrast to traditional, fully centralized budgeting and accounting policies for public schools within LEAs, a number of LEAs have in recent years applied the weighted student funding concept to developing and implementing individual school budgets. These policies are not currently applied to any federal program funds and are applied only to a portion of the state and local revenues received by these LEAs, as they continue to centrally administer and budget for various activities such as school facility construction, operations and maintenance, employee benefits, transportation, food services, and many administrative functions . The LEAs develop school budgets for teachers, support staff, and at least some other resources on the basis of weighted counts of the students currently enrolled in each school, and adjust these budgets when students transfer from one school to another. ", "CRS is not aware of any comprehensive listing of all of the LEAs that are currently implementing weighted student funding policies for intra-LEA allocations to schools. The use of weighted student funding within LEAs is a relatively new practice in most cases, and comprehensive research on its effects is not yet available. However, Dr. Marguerite Roza and her team at the Edunomics Lab at Georgetown University were awarded a three-year grant by the Institute of Education Sciences at ED to study whether spending patterns change with weighted student funding systems and what the effects of these systems are on equity and achievement, particularly for poor and at-risk students. An interview with Dr. Roza based on their preliminary findings revealed that nearly all 19 LEAs in the study that use weighted student funding systems cite equity (89%) and flexibility for school principals (79%) as a main reason for implementing such systems. Dr. Roza also noted that there is not a \"standard\" weighted student funding model used by LEAs and that LEAs differ with respect to the share of their total budgets allocated through weighted student funding systems, how base amounts are defined, and the weights assigned to various categories of students. She also noted that almost all of the LEAs in their study continue to use average salaries in their budgeting rather than actual personnel expenditures."], "subsections": []}]}]}]}, {"section_title": "ESEA Title I-E", "paragraphs": ["The remainder of this report focuses on the new authority for flexible per-pupil spending made available under ESEA Title I-E. The discussion begins with an examination of the Title I-E statutory requirements and implementation of that authority. This is followed by an analysis of how these requirements may interact with ESEA programmatic requirements for several programs, with a focus on interactions with the Title I-A program. The report concludes with discussion of possible issues related to the Title I-E authority. "], "subsections": [{"section_title": "Title I-E Authority", "paragraphs": ["This section discusses the requirements related to the Title I-E authority. All of the statutory provisions are included in ESEA, Section 1501."], "subsections": [{"section_title": "Overview", "paragraphs": ["The purpose of the Title I-E authority is to provide LEAs with flexibility to consolidate eligible federal funds with state and local funding to create a \"single school funding system based on weighted per-pupil allocations for low-income and otherwise disadvantaged students.\" Once consolidated in a participating LEA's weighted student funding system, the eligible federal funds are treated the same way as the state and local funds. There are no required uses associated with the eligible federal funds provided that the expenditures are \"reasonable and necessary\" and the purposes of the eligible federal programs for which funds have been consolidated are met."], "subsections": []}, {"section_title": "Federal Funds Eligible for Consolidation", "paragraphs": ["Eligible federal funds that may be consolidated under the Title I-E authority include ESEA funds received by LEAs under the programs listed below. Programs that provide formula grant funding to LEAs directly or via the state educational agency (SEA) are denoted by an asterisk.", "Title I-A* Migrant Education (Title I-C) Neglected and Delinquent (Title I-D-2)* Supporting Effective Instruction (Title II-A)* Teacher and School Leader Incentive Program (Title II-B-1) Comprehensive Literacy State Development Grants (Title II-B-2) Innovative Approaches to Literacy (Title II-B-2) School Leader Recruitment and Support (Title II, Section 2243) English Language Acquisition (Title III)* Student Support and Academic Enrichment (Title IV-A)* Small, Rural School Achievement Program (Title V-B-1)* Rural and Low-Income School Program (Title V-B-2)*", "In general, a participating LEA may use the consolidated federal funds without having to meet the specific requirements of each of the programs whose funds were consolidated provided the LEA is able to demonstrate the funds allocated through its weighted student funding systems address the purposes of each of the federal programs. For example, under the Student Support and Academic Enrichment (SSAE) grant program, LEAs must use funds for well-rounded education, safe and healthy students, and technology purposes. If SSAE funds were consolidated with state and local funds under a weighted student funding system, then the participating LEA would have to demonstrate that the activities being implemented in its schools meet these purposes. However, the LEA would not have to meet SSAE grant requirements about how much funding was used for each purpose. If a participating LEA consolidates funds from an eligible federal program that provides competitive grants to LEAs into its weighted student funding system, it is still required to carry out the scope and objectives, at a minimum, as described in the LEA's approved application. The majority of federal funds available for LEAs to use under the Title I-E authority are provided through formula grants. ", "LEAs applying for funding flexibility under Title I-E are not required to include funds from every eligible federal program in their weighted student funding systems. If a participating LEA opts not to include some of the eligible federal funds in its system, all current statutory and regulatory requirements will continue to apply to those funds. It should be noted that no non-ESEA funds, such as those available under the Individuals with Disabilities Education Act (IDEA) or Perkins Career and Technical Education (CTE) Act, are considered eligible federal funds for the purposes of the Title I-E authority."], "subsections": []}, {"section_title": "Secretarial Authority", "paragraphs": ["Under the authority granted under Title I-E, the Secretary may enter into a local flexibility demonstration agreement for up to three years with an LEA that is selected to participate and meets the required terms of the agreement (hereinafter referred to as a participating LEA). A participating LEA may consolidate and use funds as stated in the agreement to develop and implement a school funding system based on weighted student funding allocations for low-income and otherwise disadvantaged students.", "Except as discussed below, the Secretary is authorized in entering into these agreements to waive any ESEA provision that would prevent a participating LEA from using eligible federal funds in its weighted student funding system, including Title I-A requirements regarding the allocation of Title I-A funds to public schools (Section 1113(c)). Thus, the waiver authority granted to the Secretary for the purposes of Title I-E is broader than the general waiver authority available under Section 8401. Under the latter, the Secretary is prohibited from waiving provisions such as the allocation or distribution of funds to grantees. ", "However, there are several statutory requirements that participating LEAs must agree to continue to meet. For example, each participating LEA must agree to meet the three Title I-A fiscal accountability requirements in Section 1118, which include maintenance of effort (Section 1118(a)), supplement, not supplant (Section 1118(b)), and comparability (Section 1118(c)). ", "The maintenance of effort provision requires LEA expenditures of state and local funds to be at least 90% of what they were for the second preceding fiscal year for public elementary and secondary education. The use of either a weighted student funding system or a traditional funding system should not directly affect the amount of state and local funds spent on public education, so the use of a weighted student funding system does not present any problems with meeting this requirement. ", "The supplement, not supplant provision requires that Title I-A funds be used so as to supplement and not supplant state and local funds that would otherwise be provided to Title I-A schools. According to ED, an LEA may presume that this requirement has been met if the LEA \"implements its system so that the State and local funds that are included in the system include the funds that Title I, Part A schools would have received if they were not Title I, Part A schools.\" ", "Comparability requires that a comparable level of services be provided with state and local funds in Title I-A schools compared with non-Title I-A schools prior to the receipt of Title I-A funds. Many LEAs currently meet this provision using a pupil-teacher ratio to compare Title I-A and non-Title I-A schools. It is possible that they may not be able to continue to use this method under a weighted student funding system. According to ED, if an LEA demonstrates comparability based on the state and local funds received by each Title I-A school compared to non-Title I-A schools through an equitable funding system, the LEA's weighted student funding system would \"constitute per se comparability.\" Therefore, according to ED, an LEA might find it \"advantageous to demonstrate comparability based on funds rather than a staff-student ratio.\"", "The identification of public schools for purposes of the supplement, not supplant and comparability fiscal accountability provisions requires the identification of public schools as Title I-A schools and their Title I-A funding levels under the current structure of the program. Thus, Title I-A provisions that require LEAs to determine which public schools would receive Title I-A funds and the amount that each school would receive cannot be waived by the Secretary, even though funds would not be distributed based on these determinations if an LEA chose to include Title I-A funds in its weighted student funding system. However, as previously mentioned, an LEA does not have to distribute Title I-A funds based on the current distribution requirements if the LEA includes Title I-A funds in its weighted student funding system. ", "In addition to meeting Title I-A fiscal accountability requirements and provisions related to the identification of Title I-A schools and their Title I-A funding levels, participating LEAs must continue to meet Title I-A program requirements related to the participation of eligible children enrolled in private schools as well as the Section 8501 requirements related to the participation of children enrolled in private schools in other ESEA programs. Prior to allocating funds through its weighted student funding system, each participating LEA must determine the amount of funds from each eligible federal program whose funds have been consolidated that must be reserved to provide equitable services under that program. For example, under Title I-A a participating LEA must still determine the amount of funding that would have been provided to a public school attendance area if the LEA was allocating Title I-A funds in accordance with Section 1113(c). Based on this funding level, the LEA must determine how much Title I-A funding needs to be reserved for serving eligible private school students. The participating LEA must then follow current procedures with respect to consulting with private school officials and providing needed services under each program to eligible private school students. Remaining Title I-A funds not reserved at the LEA level would be distributed through the LEA's weighted student funding formula.", "Participating LEAs are also required to meet all applicable federal civil rights laws (e.g., Title VI of the Civil Rights Act) and all IDEA requirements. These requirements may not be waived by the Secretary. ", "In addition to the requirements in statutory language, there are several other requirements that the Secretary has determined cannot be waived. For example, participating LEAs must continue to meet state-level requirements, such as implementing state academic standards, administering annual state assessments, meeting educational accountability requirements, and issuing an annual local report card, including reporting per-pupil expenditures by school. In addition, state-level requirements delegated by a state to an LEA as part of a subgrant agreement cannot be waived. For example, if a participating LEA is delegated state responsibilities for identifying migratory children and transferring student records, these responsibilities must be met. The Secretary has also determined that a participating LEA that has schools identified for comprehensive or targeted support and improvement under Section 1111 must ensure that such schools develop and implement improvement plans. If a participating LEA chooses to offer public school choice as an intervention in schools identified for comprehensive support and improvement, however, the LEA would no longer be subject to the limitation on funding for transportation. A participating LEA is also required to continue addressing the disparities that result in low-income and minority students in Title I-A schools being taught at higher rates than other students by inexperienced, ineffective, or out-of-field teachers. The Secretary has also noted that a participating LEA may have to meet additional ESEA requirements to ensure that it is meeting the purpose of each eligible federal program included in its weighted student funding system. "], "subsections": []}, {"section_title": "Selection of LEAs", "paragraphs": ["The Secretary is permitted to enter into local flexibility demonstration agreements with up to 50 LEAs having approved applications through the 2018-2019 school year. Each interested LEA must do three things to be selected:", "1. submit a proposed local flexibility demonstration agreement in accordance with the requirements of Section 1501, 2. demonstrate that the submitted agreement meets all statutory requirements, and 3. agree to meet the continued demonstration requirements included in Section 1501.", "Beginning with the 2019-2020 school year, the Secretary is permitted to extend the funding flexibility to any LEA that submits and has approved an application that meets the required terms that apply to local flexibility demonstration agreements provided that a \"substantial majority\" of LEAs that entered into agreements meet two sets of requirements as of the end of the 2018-2019 school year. First, they must meet the requirements for the weighted student funding system included in Section 1501 (discussed below). Second, they must demonstrate annually to the Secretary that compared to the previous fiscal year, no high-poverty school served by the LEA received less per-pupil funding for low-income students or less per-pupil funding for English learners. A high-poverty school is defined as a school in the highest two quartiles of schools served by the LEA based on the enrollment of students from low-income families. As will be discussed in subsequent sections, six LEAs applied for Title I-E authority, and one LEA, Puerto Rico, was approved to implement a local flexibility demonstration agreement for the 2018-2019 school year, but it will not implement the funding flexibility until the 2019-2020 school year. Thus, no LEAs will have implemented weighted student funding systems under Title I-E prior to the 2019-2020 school year."], "subsections": []}, {"section_title": "Local Flexibility Demonstration Agreement Application", "paragraphs": ["LEAs interested in entering into a local flexibility demonstration agreement to consolidate eligible federal funds with state and local funds in a weighted student funding system must submit an application to the Secretary. To assist in the review of applications, the Secretary may establish a peer review process.", "The application must include a description of the LEA's weighted student funding system, including the weights that will be used to allocate funds. It must also include information about the LEA's legal authority to use state and local funds in the system. The application must address the specific system requirements included in Section 1501 (discussed below) and discuss how the system will support the academic achievement of students, including low-income students, the lowest-achieving students, ELs, and students with disabilities.", "The application must detail the funding sources, including eligible federal funds and state and local funds, that will be included in the weighted student funding system. The LEA must provide a description of the amount and percentage of total LEA funding (eligible federal funds, state funds, and local funds) that will be allocated through the system. The application must also state the per-pupil expenditures of state and local education funds for each school served by the LEA for the previous fiscal year. In making this determination, the LEA is required to base the per-pupil expenditures calculation on actual personnel expenditures, including staff salary differentials for years of employment, and actual nonpersonnel expenditures. The LEA must also provide the per-pupil amount of eligible federal funds that each school served by the agency received in the preceding fiscal year, disaggregated by the programs supported by the eligible federal funds. The application must include a description of how the system will ensure that for any eligible federal funds allocated through it, the purposes of the federal programs will be met, including serving students from low-income families, ELs, migratory children, and children who are neglected, delinquent, or at risk, as applicable.", "An LEA is required to provide several assurances in its application. First, it must provide an assurance that it has developed and will implement the local flexibility demonstration agreement in consultation with various stakeholders including teachers, principals, other school leaders, administrators of federal programs affected by the agreement, and community leaders. Second, it must provide an assurance that it will use fiscal controls and sound accounting procedures to ensure that the eligible federal funds included in the weighted student funding system are properly disbursed and accounted for. Third, as previously discussed, it must agree to continue to meet the requirements of ESEA Sections 1117, 1118, and 8501. Finally, it must provide an assurance that it will meet the requirements of all applicable federal civil rights laws (e.g., Title VI of the Civil Rights Act) when implementing its agreement and consolidating and using funds under that agreement."], "subsections": []}, {"section_title": "Requirements for the Weighted Student Funding System", "paragraphs": ["In order to enter into a local flexibility demonstration agreement, each LEA must have a weighted student funding system that meets specific requirements. The system must allocate a \"significant portion of funds,\" including eligible federal funds and state and local funds, to the school level based on the number of students in a school and an LEA-developed formula that determines per-pupil weighted amounts. The system must also allocate to schools a \"significant percentage\" of all of the LEA's eligible federal funds and state and local funds. The percentage must be agreed upon during the application process, and must be sufficient to carry out the purpose of the agreement and meet its terms. In addition, the LEA must demonstrate that the percentage of eligible federal funds and state and local funds that are not allocated through the LEA's system does not undermine or conflict with the requirements of the agreement.", "The LEA's weighted student funding system must use weights or allocation amounts that provide \"substantially more funding\" than is allocated to other students to ELs, students from low-income families, and students with any other characteristic related to educational disadvantage that is selected by the LEA. The system must also ensure that each high-poverty school receives in the first year of the agreement more per-pupil funding from federal, state, and local sources for low-income students than was received for low-income students from in the year prior to entering into an agreement and at least as much per-pupil funding from federal, state, and local sources for ELs as was received for ELs in the year prior to entering into an agreement. The system must include all school-level actual personnel expenditures for instructional staff, including staff salary differentials for years of employment, and actual nonpersonnel expenditures in the LEA's calculation of eligible federal funds and state and local funds to be allocated to the school level.", "After funds are allocated to schools through the weighted student funding formula, the LEA is required to determine or \"charge\" each school for the per-pupil expenditures of eligible federal funds and state and local funds. This determination must include actual personnel expenditures, including staff salary differentials for years of employment, for instructional staff and actual nonpersonnel expenditures. By charging schools based on actual costs, an LEA can ensure that schools do not receive less funding than the weighted student funding system would indicate the school should receive, even if it has lower actual expenditures in some categories compared to the LEA average. , ", "Finally, as discussed by ED, LEAs entering into a local flexibility demonstration agreement must agree to cooperate with ED in monitoring and technical assistance activities. They must also collect and report information that the \"Secretary may reasonably require\" in order to conduct the program evaluation discussed below."], "subsections": []}, {"section_title": "Continued Demonstration Requirements", "paragraphs": ["Each participating LEA must demonstrate to the Secretary on an annual basis that, as compared to the previous year, no high-poverty school served by the LEA received (1) less per-pupil funding for low-income students or (2) less per-pupil funding for ELs from eligible federal funds and state and local funds. On an annual basis, each participating LEA is also required to make public and report to the Secretary for the preceding fiscal year the per-pupil expenditures of eligible federal funds and state and local funds for each school served by the LEA, disaggregated by each quartile of students attending the school based on student level of poverty and by each major racial/ethnic group. Per-pupil expenditure data must include actual personnel expenditures, including staff salary differentials for years of employment, and actual nonpersonnel expenditures. Each year, the participating LEA must also make public the total number of students enrolled in each school served by the agency and the number of students enrolled in each school disaggregated by economically disadvantaged students, students from major racial/ethnic groups, children with disabilities, and ELs. Any information reported or made public by the participating LEA to comply with these requirements shall only be reported or made public if it does not reveal personally identifiable information."], "subsections": []}, {"section_title": "Renewal of Local Flexibility Demonstration Agreement", "paragraphs": ["The Secretary is authorized to renew local flexibility demonstration agreements for additional three-year terms if the participating LEA (1) has met the requirements for weighted student funding systems and the continued demonstration requirements and (2) has a \"high likelihood\" of continuing to meet these requirements. The Secretary must also determine that renewing the agreement is in the interest of students served by programs authorized under Title I and Title III of the ESEA."], "subsections": []}, {"section_title": "Noncompliance", "paragraphs": ["After providing notice and opportunity for a hearing, the Secretary may terminate a local flexibility demonstration agreement if there is evidence that the LEA has failed to comply with the terms of the agreement, the requirements of the system, and continued demonstration requirements. If the LEA believes the Secretary has erred in making this determination for statistical or other substantive reasons, it may provide additional evidence that the Secretary shall consider before making a final determination. "], "subsections": []}, {"section_title": "Program Evaluation", "paragraphs": ["From the amount reserved for evaluation under Section 8601, the Secretary, acting through the Director of the Institute of Education Sciences, shall consult with the relevant program office at ED to evaluate the implementation of local flexibility demonstration agreements and their effect on improving the equitable distribution of state and local funding and increasing student achievement. The statutory language does not require an evaluation of the distribution of eligible federal funds."], "subsections": []}, {"section_title": "Administrative Expenditures", "paragraphs": ["Each participating LEA may use for administrative purposes an amount of eligible federal funds that is not more than the percentage of funds allowed for such purposes under each eligible federal program."], "subsections": []}]}, {"section_title": "Program Implementation", "paragraphs": ["On February 2, 2018, the Secretary announced that she was using the authority made available under Title I-E to launch a Student-Centered Funding Pilot. LEAs interested in using the flexibility for the 2018-2019 school year were required to submit an application by March 12, 2018. LEAs interested in using the flexibility for the 2019-2020 school year had to apply by July 15, 2018."], "subsections": [{"section_title": "First Application Round", "paragraphs": ["Five LEAs submitted applications for the local flexibility demonstration agreement by March 12, 2018: Wilsona School District (CA), Indianapolis Public Schools (IN), Salem-Keizer School District 24J (OR), Upper Adams School District (PA), and the Puerto Rico Department of Education. Puerto Rico's application was approved on June 28, 2018. While Puerto Rico initially intended to implement a weighted student funding system that consolidated eligible federal funds with state and local funds during the 2018-2019 school year, its implementation has been delayed until the 2019-2020 school year. As of July 2019, none of the other applicants have had their applications approved."], "subsections": []}, {"section_title": "Second Application Round", "paragraphs": ["Only the Roosevelt School District in Arizona applied by the July deadline to use the flexibility for the 2019-2020 school year. As of July 2019, its application had not yet been approved. "], "subsections": []}]}, {"section_title": "Recent Budget Requests", "paragraphs": ["This section provides an overview of ED's budget requests for FY2018 through FY2020 as they relate to the Title I-E authority."], "subsections": [{"section_title": "FY2018 Budget Request", "paragraphs": ["In its FY2018 budget request, ED requested that it be permitted to use up to $1 billion of Title I-A funding to support weighted student funding systems and public school choice. The funds would have been used to make Furthering Options for Children to Unlock Success (FOCUS) grants. One use of the FOCUS grant funds would have been to support LEAs in establishing or expanding weighted student funding systems if they agreed to combine their funding flexibility with an open enrollment policy for public school choice. ED proposed that it would establish the requirements for such open enrollment systems with a focus on \"maximizing opportunities for all students, particularly those from low-income families, to select, attend, and succeed in a high-quality public school.\" The proposal suggested that the requirements could include, for example, making school information available to parents in a timely way, supporting school integration efforts, arranging or paying for transportation to schools of choice, and giving priority to low-income students or students in schools identified for improvement under Title I-A. ED also proposed allowing participating LEAs to use the funds to provide temporary payments to individual schools affected by the transition to a weighted funding system. In addition, the proposal included an option for ED to establish \"tiers based on LEA student enrollments\" and give special consideration to LEAs proposing to serve at least one rural school or to consortia of LEAs that agreed to provide interdistrict choice for all students. Implementing this proposal would have required congressional authorization, and Congress did not act on ED's request."], "subsections": []}, {"section_title": "FY2019 Budget Request", "paragraphs": ["In its FY2019 budget request, ED requested funding to make Open Enrollment Grants (OEGs) to LEAs approved to operate Flexibility for Equitable Per-Pupil Funding pilots authorized under Title I-E that agreed to combine their funding flexibility with an open enrollment policy for public school choice. Similar to its FY2018 budget request, ED proposed that it would establish the requirements for such open enrollment systems with a focus on \"maximizing opportunities for all students, particularly those from low-income families, to select, attend, and succeed in a high-quality public school.\" The proposal again suggested that the requirements could include, for example, making school information available to parents in a timely way, supporting school integration efforts, arranging or paying for transportation to schools of choice, and giving priority to low-income students or students in schools identified for improvement under Title I-A. ED also proposed allowing participating LEAs to use the funds to provide temporary payments to individual schools affected by the transition to a weighted funding system, providing information on public school options to parents, and supporting needed administrative systems.", "ED did not request a specific amount of funding for only the OEGs. Rather, it requested $500 million for Scholarships for Private Schools and OEGs to be divided between the programs based on the demand for grants. Implementing either program would have required congressional authorization, and Congress did not act on ED's proposal."], "subsections": []}, {"section_title": "FY2020 Budget Request", "paragraphs": ["In its FY2020 budget request, ED requested $50 million to create Student-Centered Funding Incentive Grants to help increase LEA participation in the agreements authorized under ESEA Section 1501. These grants are not authorized in the ESEA and congressional action would be required to implement the proposal. In its proposal, ED argues that the new grants \"would help demonstrate the viability\" of moving to weighted student funding systems and the potential for these new systems to improve student outcomes while reducing \"LEA red tape.\" ED believes that the proposed grants could help increase participation by providing resources to LEAs to develop procedures to charge schools based on actual (as opposed to average) personnel expenditures and could reduce the potential negative effects on some individual schools of transitioning to a weighted student funding system under Title I-E.", "The grants would only be available to LEAs that have already been approved for an agreement. ED estimates that up to 10 LEAs could be supported through the grants and suggests that it could give \"special consideration\" to LEAs with the highest concentration of poverty. ", "The funds could be used by participating LEAs for activities related to implementing weighted student funding systems. According to ED, this could include using funds to make temporary payments to individual schools to offset reductions in funding resulting from the transition to the system, allowing a \"smooth transition to these new systems.\" Grant funds could also be used by ED to provide technical assistance to LEAs in developing and preparing for the implementation of weighted student funding systems that meet the requirements of Section 1501. In its proposal, ED also mentions that it may consider using existing authority to extend the initial local flexibility demonstration agreement period from three years to six years to help increase LEA participation.", "Regardless of whether Congress acts on ED's proposal to provide Student-Centered Funding Incentive Grants, LEAs that enter into an agreement are currently permitted to use administrative funds consolidated under Section 8203 to support the implementation of their weighted student funding system."], "subsections": []}]}, {"section_title": "Possible Interactions Between Title I-E Authority and Other ESEA\u00c2 Programs", "paragraphs": ["This section discusses some of the ways in which the Title I-E authority might interact with other ESEA programs. As Title I-A is the only ESEA program that includes specific requirements for the allocation of funds to schools within LEAs, it is the primary focus of the discussion. "], "subsections": [{"section_title": "ESEA Programs to Which Title I-E Provisions Apply", "paragraphs": ["Under Title I-E, participating LEAs may consolidate and allocate eligible federal funds to public schools through their weighted student funding formulas. Table 1 details the amount of funding appropriated under each eligible federal program for FY2019.", "The majority of the funding available for consolidation and allocation under the Title I-E authority is provided through formula grants. These grants are either provided directly to LEAs or, in most cases, to LEAs via the state. ", "Most of the attention regarding the possible impact of the weighted student funding authority has been focused on the ESEA Title I-A program. In addition to constituting about 76% of the total FY2019 appropriations for all programs potentially affected by the Title I-E authority ( Table 1 ), it is the only one of the potentially affected federal programs under which most funds are allocated to individual schools under statutory school allocation policies, and therefore the only program where current policies for the allocation of funds to schools can be compared to how funds might be allocated to schools under the weighted student funding authority. The other potentially affected federal programs are either much less focused on individual schools (as opposed to being centrally managed by LEAs), are much less widespread in their distribution of funds among LEAs, and/or are focused largely on SEAs rather than LEAs or schools. Thus, in most cases, ESEA Title I-A funds are likely to be the primary federal program funds directly affected by the ESEA Title I-E authority in most participating LEAs. It is possible, however, depending on which eligible federal funds and the percentage of such funds an LEA decides to include in its weighting student funding system, that the distribution of funds under other ESEA programs that have funds eligible for consolidation could change substantially."], "subsections": []}, {"section_title": "Current Policies for Allocating Title I-A Funds to Schools Within LEAs", "paragraphs": ["As is explained below, the allocation of Title I-A funds within LEAs is focused on providing grants to schools with comparatively high concentrations of students from low-income families, not individual students. Thus, the authority under ESEA Title I-E to combine Title I-A funds with state and local funds under weighted student funding formulas and to have the Title I-A funds follow students to any public school in the LEA, not just those with concentrations of students from low-income families, is a significant shift from the way the program is generally implemented. ", "Under almost all federal education assistance programs, grants are made to states or to LEAs (or subgranted to LEAs by SEAs) with services or resources provided in a manner that is managed by the SEA or LEA. In sharp contrast to this general pattern, most ESEA Title I-A funds are allocated to individual schools, under statutory allocation provisions, although LEAs retain substantial discretion to control the use of a share of Title I-A grants at a central district level. While there are several rules related to school selection, LEAs must generally rank public schools by their percentage of pupils from low-income families, and serve them in rank order. LEAs may choose to consider only schools serving selected grade levels (e.g., only elementary schools or only middle schools) in determining eligibility for grants, so long as all public schools where more than 75% of the pupils from low-income families receive grants (if sufficient funds are available to serve all such schools). LEAs also have the option of serving all high schools where more than 50% of the pupils are from low-income families before choosing to serve schools at selected grade levels.", "All participating schools must generally have a percentage of children from low-income families that is higher than the LEA's average, or 35%, whichever of these two figures is lower. The percentage of students from low-income families for each public school is usually measured directly, although LEAs may choose to measure it indirectly for middle or high schools based on the measured percentages for the elementary or middle schools that students attended previously (sometimes called \"feeder schools\"). LEAs have the option of setting school eligibility thresholds higher than the minimum in order to concentrate available funds on a smaller number of schools, and this is especially the practice in some large urban LEAs. For example, according to data available from ED, in the 2015-16 school year all public schools reported as participating in Title I-A in Chicago had a free and reduced-price lunch child percentage of 55% or higher, whereas the minimum eligibility threshold would generally be 35%.", "In almost all cases, the data used to determine which pupils are from low-income families for the distribution of Title I-A funds to schools are not the same as those used to estimate the number of school-age children in low-income families for purposes of calculating Title I-A allocations to states and LEAs. This is because Census or other data are generally not available on the number of school-age children enrolled in a school, or living in a residential school attendance zone, with income below the standard federal poverty threshold. Thus, LEAs must use available proxies for low-income status. The Title I-A statute allows LEAs to use the following low-income measures for school selection and allocations: (1) eligibility for free and reduced-price school lunches under the federal child nutrition programs, (2) eligibility for Temporary Assistance for Needy Families (TANF), (3) eligibility for Medicaid, or (4) Census poverty estimates (in the rare instances where such estimates may be available for individual schools or school attendance areas). According to the most recent relevant data, approximately 90% of LEAs receiving Title I-A funds use free/reduced-price school lunch (FRPL) data\u00e2\u0080\u0094sometimes alone, sometimes in combination with other authorized criteria\u00e2\u0080\u0094to select Title I-A schools and allocate funds among them. The income eligibility thresholds for free and reduced-price lunches\u00e2\u0080\u0094130% of the poverty income threshold for free lunches, and 185% of poverty for reduced-price lunches\u00e2\u0080\u0094are higher than the poverty levels used in the Title I-A allocation formulas to states and LEAs. For example, for a family of four people during the 2018-2019 school year, the income threshold for eligibility was $32,630 for free lunches and $46,435 for reduced price lunches. By contrast, the poverty threshold for a family of four people in 2018 was $25,100. ", "While Title I-A funds are to be focused on the schools within a recipient LEA with percentages of students from low-income families that are relatively high in the context of their locality, many Title I-A schools do not have high percentages of low-income students when considered from a national perspective. Largely because of the relatively low poverty rate thresholds for LEA eligibility to receive Title I-A grants, many low-poverty LEAs receive Title I-A funds, and often the highest-poverty schools in those LEAs do not have high percentages of students from low-income families compared to the nation as a whole. For example, according to ED, 23% of the nation's public schools that are in the lowest quartile nationwide in terms of their percentage of students from low-income families (35% or below) receive Title I-A grants.", "Title I-A funds are allocated among participating schools in proportion to their number of pupils from low-income families, although grants to eligible schools per pupil from a low-income family need not be equal for all schools. LEAs may choose to provide higher grants per child from a low-income family to schools with higher percentages of such pupils. ", "A Title I-A school at which 40% or more of the students are from low-income families may provide Title I-A services via a schoolwide program, under which all of the students at the school may be served. This is in contrast to the other mode of providing Title I-A services\u00e2\u0080\u0094via targeted assistance schools\u00e2\u0080\u0094wherein Title I-A may be used only for services directed to the lowest-achieving students at the schools.", "The share of funds to be used by each Title I-A LEA to serve educationally disadvantaged pupils attending private schools is determined on the basis of the number of private school students from low-income families living in the residential areas served by public schools selected to receive Title I-A grants. In making this determination, LEAs may use either the same source of data used to select and allocate funds among public schools (i.e., usually FRPL data) or one of a specified range of alternatives. ", "As noted earlier, the allocation of Title I-A funds within LEAs is focused on providing grants to schools with comparatively high concentrations of students from low-income families, not individual students. One rationale for the strategy of concentrating Title I-A funds on relatively high poverty schools is that the level of funding for each participating student is relatively low and can finance a substantial level of services only if combined with Title I-A funding for numerous eligible students in a school. Title I-A funding per student is usually discussed in terms of grant amounts per student served under the program. Especially with the growth of schoolwide programs in recent years, the amount of funding per student deemed to be participating in the program (which includes all students in schoolwide program sites) would be estimated at $645. Even this amount, which is based on dividing the total FY2019 Title I-A appropriation ($15,859,802,000) by the latest published estimate of the number of students participating in Title I-A programs (24.6 million), would be an overestimate, as it does not take into account the share of Title I-A funds that do not reach individual schools because they are used at the state or LEA level for activities such as administration, school improvement, and districtwide programs (e.g., professional development for Title I-A teachers). However, under weighted student funding the more relevant figure would be the level of funding per student from a low-income family. If the standard of low-income most often applied in the current Title I-A school allocation process were used, the number of public school students from low-income families would be slightly higher (25.8 million) and the national average Title I-A grant per pupil from a low-income family would be $614. For the reasons just discussed (i.e., not accounting for funds retained at the state or LEA level), this would also be an overestimate of the amount of funding per student."], "subsections": []}, {"section_title": "Other ESEA Programs Potentially Affected by the Title I-E Authority", "paragraphs": ["Beyond the primary focus on the ESEA Title I-A program, it is possible that LEAs participating in the weighted student funding authority would include funds from at least some of the other potentially affected programs. For example, the one currently approved applicant for the ESEA Title I-E authority, Puerto Rico, plans to allocate 53% of its Title I-A funds plus 55% of its Title II-A and 92% of its Title III-A funds to schools through its weighted student funding formula. Thus, in participating LEAs, at least some federal programs that are currently centrally managed by LEAs may be decentralized and managed, at least in part, by individual schools. The extent to which this occurs may depend on the percentage of funds of an eligible federal program that are allocated through the LEA's weighted student funding formula as opposed to being retained at the state or LEA level. "], "subsections": []}]}, {"section_title": "Possible Issues Regarding the Weighted Student Funding Authority Available Under Title I-E", "paragraphs": ["The last section of the report examines issues related to the Title I-E flexibility authority. The first set of issues examines possible reasons why participation by LEAs in the Title I-E authority has been low and some potential issues related to it. It then considers why LEAs might want to participate in the Title I-E authority based on reasons stated by ED. This is followed by an examination of possible issues that may arise if participation in the Title I-E authority increases. This includes consideration of how the allocation of eligible federal funds, particularly Title I-A funds, could be different if the Title I-E flexibility was adopted more broadly, as well as LEA access to other fund consolidation authority, whether the use of the Title I-E authority could increase the extent to which federal programs are focused on individual schools, whether the Title I-E authority could represent a model for a major change in the distribution of ESEA funds, and whether adequate safeguards exist to ensure that the purposes of federal education programs whose funds are consolidated are met. "], "subsections": [{"section_title": "Why have relatively few LEAs applied for the Title I-E flexibility authority thus far?", "paragraphs": ["As of July 2019, six LEAs have applied for the weighted student funding authority under Title I-E, and one has been approved. The single approved LEA, Puerto Rico, intends to implement the authority beginning in the 2019-2020 school year. One reason for the low rate of participation could be the relatively slow implementation by ED. The authority was provided under the ESSA's amendments to the ESEA, enacted on December 10, 2015. However, ED's initial announcement that the flexibility authority was available was made more than two years later, on February 2, 2018. LEA interest, to the extent that it existed, may have waned over this time period. ", "Another possible constraint on LEA interest in applying for the Title I-E authority is that the authority is applicable for only a three-year period. While potentially renewable, and while such a time limitation may be typical and appropriate for a pilot authority, LEAs may be hesitant to make major changes to, or new investments in, their school finance system or administration of Title I-A and other federal programs for such a limited time period. ", "While it is not a requirement that an LEA already be implementing a weighted student funding system in order to participate in Title I-E, the number of LEAs that have already adopted weighted student funding for their state and local funds, and would therefore be interested in expanding those systems to include a number of federal programs, may be limited. There is no definitive, comprehensive listing of LEAs currently using weighted student funding formulas. While a number of relatively large urban LEAs are doing so, the total number of such LEAs may still be rather small, limiting the number of likely and eligible applicants for the federal weighted student funding authority.", "Potential applicants may be deterred by the limitations to the federal weighted student funding authority. While state- and LEA-level weighted student funding formulas often include state and local funding for students with disabilities and career and technical education programs, the Title I-E authority does not apply to funds under IDEA or the Perkins CTE Act. While it might seem most appropriate for an ESEA flexibility provision to apply only to ESEA programs, and while the IDEA and the Perkins CTE Act involve somewhat different constituencies and interest groups than the ESEA, the Title I-E flexibility authority might be more consistent with many state and local weighted student funding policies, and offer enhanced flexibility to participating LEAs, if it included at least some of the IDEA and Perkins CTE Act funding streams. In addition, as discussed below, schools operating schoolwide programs under Title I-A are already permitted to consolidate federal funds provided through non-ESEA programs (e.g., IDEA and Perkins CTE Act funds) with their state and local funds. ", "It is also possible that LEAs have been deterred by the Title I-E requirement that weighted student funding systems must use actual personnel expenditures, including staff salary differentials for years of employment, in their systems. Based on the preliminary results of an ongoing study on the use of weighted student funding systems in LEAs, most of the LEAs in the study have continued to use average staff salaries, rather than actual personnel expenditures, in their weighted student funding systems.", "In addition, while many requirements under ESEA Title I-A and other ESEA programs are waived in LEAs receiving the weighted student funding flexibility authority, a number of others (e.g., those involving fiscal and academic outcome accountability) remain in effect. This may cause potential-applicant LEAs to determine that the possible reduction in administrative burdens (e.g., from having to track the use of some federal funds, or to allocate them among schools as they have in the past) is not sufficient for them to be motivated to apply."], "subsections": []}, {"section_title": "Could there be changes in individual public school funding levels within LEAs as a result of an LEA entering into a local flexibility demonstration agreement?", "paragraphs": ["If an LEA enters into a local flexibility demonstration agreement, the resulting distribution of state, local, and eligible federal funds under a weighted student funding system that meets the Title I-E requirements could lead to funds shifting among public schools in the LEA. While this may result in public schools serving low-income students, ELs, and other disadvantaged students receiving an increase in funding, it is possible that other public schools may lose funds, possibly a substantial amount or percentage of their current funding. Decreases in funding levels in the course of one school year could potentially be difficult for an individual school to absorb. Without state, local, or federal funds to help ease the transition to a weighted funding system, it is possible that some LEAs may be hesitant to apply to enter into an agreement. Under current law, the Title I-E authority for the Secretary does not include any federal funds to implement local flexibility demonstration agreements or offset the loss of funds in public schools as LEAs implement weighted student funding systems under an agreement. In its budget requests, ED has proposed providing grants to LEAs implementing a local flexibility demonstration agreement for these purposes (see previous discussion of FY2018, FY2019, and FY2020 budget requests), but no such funds have yet been appropriated."], "subsections": []}, {"section_title": "What might happen with respect to expansion of the local flexibility demonstration agreements beyond the original limit of 50 LEAs?", "paragraphs": ["The delay in implementation of the Title I-E authority by the Secretary complicates the schedule envisioned in the Title I-E legislation regarding expansion of eligibility for weighted student funding flexibility to potentially all LEAs. Eligibility for the weighted student funding authority was limited to no more than 50 LEAs for school years preceding 2019-2020. But the statute provides that eligibility may be expanded to any LEA beginning with the 2019-2020 school year, as long as a \"substantial majority\" of the LEAs participating in previous years have met program requirements. However, no LEA will actually begin implementing the Title I-E flexibility authority until the 2019-2020 school year. Thus, a key requirement for program expansion cannot be met. It is unclear how this would be resolved moving forward should additional LEAs express interest in applying for the Title I-E authority."], "subsections": []}, {"section_title": "What goals or purposes might be served by the use of the weighted student funding authority in participating LEAs?", "paragraphs": ["Given the relatively low level of LEA interest in the flexibility offered by Title I-E, there are questions about why an LEA would want to enter into a local flexibility demonstration agreement. In a document titled \"Why should your school district apply for the Student-centered Funding pilot?,\" ED outlined several opportunities that, in its opinion, would be advanced for LEAs that implement the ESEA Title I-E authority. ED states that participating LEAs would have greater flexibility in the use of the affected federal education program funds, because those federal funds could be used in the same manner as state and local funds, with no specifically required or prohibited uses. LEAs would be able to set their own priorities for these funds. ED further states that participating LEAs would experience reduced administrative burdens, because federal funds under the affected programs would not have to be tracked separately. By combining state, local, and federal funds, participating LEAs could prioritize funding for groups of students with particular needs by developing or expanding a weighted student funding system. ED also notes that participating in the Title I-E authority would enhance transparency in the allocation of resources within LEAs and facilitate the involvement of school-level leaders in resource allocation. In addition, advocates of weighted student funding policies in general often argue that they enhance options for student mobility and choice among public schools in an LEA, support school-based management practices, and may increase the targeting of total (local, state and federal) funds on schools attended by disadvantaged students.", "The ED document specifically compares the weighted student funding authority to the schoolwide program authority provided under ESEA Title I-A. The document states that the weighted student funding authority is more expansive than the schoolwide program authority, as it would be available to all public schools within the LEA. (For more information about differences between the Title I-E authority and schoolwide program authority to consolidate federal funds, see the next \"issue\" discussion.) ", "These views of ED and of advocates of weighted student funding may be countered by other views of, or concerns about, the weighted student funding authority, as discussed elsewhere in the \"Issues\" section of this report."], "subsections": []}, {"section_title": "How does the authority granted under Title I-E differ from authority for Title I-A schools operating schoolwide programs to consolidate federal funds with state and local funds?", "paragraphs": ["Title I-A schools that are operating schoolwide programs already have the authority to consolidate their federal, state, and local funds without having to create a weighted student funding system. However, there are several differences between the funding consolidation authority available to Title I-A schools operating schoolwide programs under Section 1114 and the funding consolidation authority available under Title I-E. The authority to consolidate funds under schoolwide programs is only available to Title I-A schools operating those programs (as opposed to operating targeted assistance programs). Schools operating schoolwide programs have the choice of whether to consolidate their federal, state, and local funds or not. Under the Title I-E authority, all public schools in an LEA that has entered into a local flexibility demonstration agreement would be required to consolidate state, local, and eligible federal funds. An individual public school would not have a choice about participating in the weighted student funding system. ", "Schools operating schoolwide programs must conduct a comprehensive needs assessment, develop a comprehensive schoolwide plan, annually review the schoolwide plan, and revise the plan as necessary based on student needs. Schools located in an LEA participating in Title I-E are not required to conduct a comprehensive needs assessment or develop and maintain a comprehensive plan. ", "For any funds consolidated by a school or an LEA, respectively, under either a schoolwide program or a local flexibility demonstration agreement, the school or LEA must ensure that it meets the intent and purposes of each federal program whose funds were consolidated. While federal programs eligible for consolidation under the Title I-E authority are limited to selected ESEA programs, schools operating schoolwide programs have the flexibility to consolidate funds from ESEA programs as well as non-ESEA programs, such as the IDEA and Perkins Act, provided certain requirements are met. Federal funds consolidated under either a schoolwide program or the Title I-E authority are subject to supplement, not supplant requirements."], "subsections": []}, {"section_title": "Could implementation of the weighted student funding authority result in less targeting of Title I-A funds on high-poverty schools?", "paragraphs": ["Title I-A is the only one of the potentially affected federal programs that currently has school-level allocation requirements. It currently is primarily a \"school-based\" program, with funds targeted on the specific schools in each LEA with relatively high concentrations of students from low-income families. In sharp contrast, under the Title I-E flexibility authority Title I-A funds in a participating LEA would be provided to any public school in the LEA that enrolls even one student from a low-income family. While it is not possible precisely to compare the current allocation of Title I-A funds to schools to how they might be allocated under the weighted student funding authority, there would be a distinct contrast in general strategy between the two sets of allocation policies.", "The Title I-A program structure is based implicitly on the assumption, and the findings of past studies, that the relationship between poverty and low achievement is not especially strong for individual pupils, but the correlation between concentrations of poverty and concentrations of low-achieving pupils is quite high. According to proponents of the current structure of Title I-A, this implies that limited Title I-A funds should be concentrated on the highest-poverty schools if they are to address the greatest pupil needs. In addition, the level of Title I-A funding per pupil (a maximum of an estimated $645 per pupil served or $614 per pupil from a low-income family, as discussed above) might be sufficient to pay the costs of substantial supplementary educational services only if combined for relatively large numbers of students in a school. ", "Under the Title I-E flexibility authority, while funds would be allocated among these schools in proportion to their number of students from low-income families, the overall distribution of Title I-A funds would almost undoubtedly be more dispersed among more public schools than under current policies. Concerns regarding economies of scale would argue against the dispersal of Title I-A grants among potentially all schools in a locality. As noted, it is possible that the current level of aid per student can provide a significant amount of resources or services only if combined for a substantial number of pupils in a school. While this would not be a concern at public schools that numerous pupils from low-income families choose to attend, it would be an issue at schools that only a few such children choose to attend. ", "However, this concern might be countered by the fact that under a weighted student funding process, not only Title I-A funds but also state and local funds and potentially other eligible federal program funds would be combined and allocated under a formula giving additional weight to students from low-income families. It is also specifically required that the high-poverty schools in a participating LEA receive in the first year of implementation more total funding per pupil from a low-income family (and at least as much per EL) as in the year preceding initial implementation of the flexibility authority, and at least as much in succeeding years. Thus, while Title I-A funds alone would likely be substantially more widely dispersed among schools than they currently are, it is possible that total federal, state, and local funding to relatively high-poverty schools would increase, especially in LEAs that had not previously adopted weighted student funding policies with respect to their state and local funds."], "subsections": []}, {"section_title": "Would the Title I-E flexibility authority increase the extent to which federal programs other than Title I-A are focused on individual schools?", "paragraphs": ["It is possible that as a result of the Title I-E flexibility, some eligible federal programs may become more focused on the use of funds at the school level as opposed to the state or LEA level. There is currently limited data on how funds under eligible federal programs are distributed to the school level, if at all. It may be helpful from a data analysis perspective to have comprehensive data on the specific federal education funds provided to each public school to examine whether switching to a weighted student funding system that meets the requirements of Title I-E alters this distribution of funds.", "Under the ESEA as amended by the ESSA, Title I-A requires participating states to include in school report cards data on expenditures at each public school. The state report card must provide data on LEA- and school-level per-pupil expenditures of federal, state, and local funds, including actual personnel expenditures and actual nonpersonnel expenditures, disaggregated by the source of funds. The data must be reported for every LEA and public school in the state. These data have not been reported for LEAs and public schools in the past. Based on draft guidance issued by ED, SEAs and LEAs may delay reporting per-pupil expenditures until they issue report cards for the 2018-2019 school year. However, if an LEA decides to delay the reporting of per-pupil expenditures, the SEA and its LEAs are required to provide information on their report cards for the 2017-2018 school year about the steps they are taking to provide such information on the 2018-2019 school year report card.", "While this new reporting requirement does not require schools to disaggregate the receipt of funds under Title I-E eligible federal programs, it will, for the first time, detail the per-pupil expenditure of aggregate federal funds that are allocated or used at the school level. If LEAs participating in the Title I-E authority include Title I-A funds in their agreement, it may be possible to get a sense of whether the allocation of federal funds at individual schools is changing under weighted student funding systems that meet the requirements of Title I-E."], "subsections": []}, {"section_title": "Might the weighted student funding authority represent a model for a major change in strategy for Title I-A and other potentially affected ESEA programs?", "paragraphs": ["In participating LEAs that include Title I-A funds in their weighted student funding systems, Title I-A would be transformed from a \"school-based\" program to an \"individualized grant.\" The Title I-E flexibility authority arguably represents a substantial change in the basic strategy of Title I-A, and to a lesser extent other potentially affected federal education programs. As discussed earlier, from its beginning in 1965 Title I-A has been primarily a school-based program. Funds are to be allocated only to the relatively high-poverty schools in each participating LEA. Within those recipient schools, Title I-A funds are to be used only to serve the lowest-achieving students unless the school meets the 40% low-income threshold, in which case they can be used to serve all students. The level of Title I-A funding per student served is relatively modest, and it is implicitly assumed that such amounts are sufficient to provide substantial services only if combined for relatively large numbers of students from low-income families in a school. Further, there are a number of requirements regarding the authorized uses of Title I-A funds to meet the special educational needs of educationally disadvantaged students in participating schools.", "The weighted student funding pilot represents a very different approach. First, while academic outcome accountability and civil rights requirements will continue to apply to all public schools in states receiving Title I-A funds, and fiscal accountability requirements will continue to apply to certain \"high-poverty\" schools within LEAs, other requirements for targeting schools or uses of funds will be waived. Administrative burdens would be reduced, but so would a number of potentially important requirements for targeting services on students with the greatest educational needs.", "Title I-A and other federal program funds would be combined with state and local funds into weighted grant amounts that would be dispersed among all public schools in the LEA, and that would follow students if they transfer among schools in the LEA (though possibly with a time lag). This is a very different approach from traditional Title I-A programs. The \"individualized grant\" approach embodied in the Title I-E authority might serve as a model that could, in the future, be expanded if desired through congressional action to include students attending public schools in other LEAs of the same state, or possibly even eligible students enrolled in private schools."], "subsections": []}, {"section_title": "Do the provisions of Title I-E provide adequate assurance that the purposes of the eligible ESEA programs will be met by participating LEAs?", "paragraphs": ["The Title I-E flexibility authority provides for the waiver of a wide range of requirements regarding the allocation of Title I-A funds to schools, and regarding the authorized uses of funds under all of the eligible federal programs. However, participating LEAs must ensure that the purposes of the eligible federal programs included in their weighted student funding systems are met. This may be challenging for participating LEAs, at least initially, as more federal funding from non-Title I-A programs is provided to the school level as opposed to being retained and controlled at the LEA level and as Title I-A funds are potentially used for the first time in schools that had not previously received the funds. "], "subsections": [{"section_title": "Appendix. Glossary of Acronyms", "paragraphs": ["CTE: Career and Technical Education", "ED: U.S. Department of Education", "EFIG: Education Finance Incentive Grant ", "EL: English Learner", "ESEA: Elementary and Secondary Education Act", "ESSA: Every Student Succeeds Act ( P.L. 114-95 )", "IDEA: Individuals with Disabilities Education Act", "LEA: Local educational agency", "OEG: Open Enrollment Grant", "SEA: State educational agency", "SSAE: Student Support and Academic Enrichment grants", "TANF: Temporary Assistance for Needy Families"], "subsections": []}]}]}]}]}}
{"id": "R45971", "title": "The Impact of the Federal Income Tax on Poverty: Before and After the 2017 Tax Revision (\u201cTCJA\u201d; P.L. 115-97)", "released_date": "2019-10-17T00:00:00", "summary": ["The federal individual income tax is structured so that the poor owe little or no income tax. In addition, the federal individual income tax (hereinafter referred to simply as the income tax) increases the disposable income of many poor families via refundable tax credits\u00e2\u0080\u0094primarily the earned income tax credit (EITC) and the refundable portion of the child tax credit, referred to as the additional child tax credit, or ACTC. These credits are explicitly designed to benefit low-income families with workers and children and can significantly boost families' disposable income, lifting many of these families above the poverty line.", "Using the federal government's Supplemental Poverty Measure (SPM), CRS estimates that under current law, the income tax reduced total poverty by 15% (from 14.5% in poverty to 12.3% in poverty). The impact of the income tax on the overall poverty rate was larger than the impact of many needs-tested benefits programs targeted toward the poor. In contrast, the income tax's ability to lift the poorest Americans out of poverty\u00e2\u0080\u0094to reduce the \"poverty gap\"\u00e2\u0080\u0094was limited in comparison to many needs-tested programs. (The poverty gap is the difference between the poverty threshold and a family's disposable income, aggregated over all poor families, and is a measure of the degree of poverty.) CRS estimates that under current law, the income tax reduced the poverty gap by about $13.9 billion annually (from $150.8 billion to $136.9 billion), approximately half the effect of other needs-tested programs.", "Virtually all of the poverty reduction from the income tax\u00e2\u0080\u0094both in terms of reducing poverty rates and the poverty gap\u00e2\u0080\u0094was concentrated among families with children and workers. For example, CRS estimates that poverty among children who lived in families with workers fell by almost 40% (from 14.7% in poverty to 8.9% in poverty) as a result of the income tax. For nonaged (i.e., nonelderly) adults in families with children and workers, poverty fell by almost a third (from 12.3% in poverty to 8.3% in poverty). (In contrast, CRS estimates that the poverty rates among individuals who lived in families with no workers were unchanged by the income tax.) Similarly, all of the estimated $13.9 billion in poverty gap reduction from the current income tax occurred among families with children and workers.", "The current income tax includes the effects of legislative changes made by P.L. 115-97 , commonly referred to as the Tax Cuts and Jobs Act (TCJA). The TCJA made numerous changes to the federal income tax system, including many that affect individuals and families. A comparison of the effect of the current income tax (i.e., the post-TCJA income tax) and the pre-TCJA income tax on poverty rates and the poverty gap (assuming all else unchanged) provides one measure of the law's impact on poverty. CRS estimates suggest that the TCJA marginally reduced poverty rates and the poverty gap, with the impact of the post-TCJA income tax similar to the impact of the pre-TCJA income tax. This suggests the law provided relatively small benefits to poor families.", "Insofar as policymakers are interested in expanding the antipoverty impact of the income tax, they could expand or modify the EITC or ACTC, or create new refundable tax credits targeted toward the poor. However, refundable tax credits are subject to several limitations as a poverty reduction policy: the current credits primarily benefit those who work (and have children), limiting their ability to reduce poverty among those who do not or cannot work; they are received only once a year when income tax returns are filed, limiting their ability to help the poor meet ongoing basic needs; and they are difficult for the IRS to administer, subjecting the credits and their recipients to additional scrutiny."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["The federal individual income tax is structured so that the poor owe little or no income tax (although they may pay other federal taxes, like payroll taxes as well as state and local taxes). In addition, the federal income tax increases the disposable income of many poor families via refundable tax credits. These tax credits\u00e2\u0080\u0094primarily the earned income tax credit (EITC) and the refundable portion of the child tax credit, called the additional child tax credit (ACTC)\u00e2\u0080\u0094increase the disposable income of many low-income taxpayers who work and have children, and have been shown to reduce poverty. ", "P.L. 115-97 , commonly referred to as the Tax Cuts and Jobs Act (TCJA), made numerous temporary changes to the federal income tax system, including many that affect individuals and families. Preliminary analyses of the TCJA found that the law provides larger benefits to higher-income individuals and families. This report's analyses find that overall the law had a relatively small impact on poverty compared to the pre-TCJA federal individual income tax. ", "Recent tax legislation considered in the 116 th Congress\u00e2\u0080\u0094including the Economic Mobility Act of 2019 ( H.R. 3300 ) ordered reported by the House Ways and Means Committee on June 20, 2019\u00e2\u0080\u0094would target additional tax benefits to lower-income families. H.R. 3300 would temporarily increase the amount of the EITC for \"childless\" workers, allow all eligible taxpayers to receive the full amount of the ACTC, irrespective of a taxpayer's earned income, and make the child and dependent care tax credit refundable. To provide context for the consideration of new tax legislation, this report examines the relationship between the federal individual income tax and poverty. Given some policymakers' continued interest in using the tax system to reduce poverty and boost the incomes of low-income working families with children, understanding the impact of the income tax in reducing poverty\u00e2\u0080\u0094pre- and post-TCJA\u00e2\u0080\u0094may help inform future policy debates and legislative proposals.", "This report is structured to first provide a brief overview of the major federal income tax provisions that affect lower-income individuals and families, including a comparison of how these provisions changed under the TCJA. The report then provides an analysis of how the pre-TCJA federal income tax affected poverty, followed by a comparison of how the post-TCJA federal income tax affected poverty. The report concludes with some observations on the benefits and limitations of the federal income tax system and refundable tax credits in reducing poverty."], "subsections": [{"section_title": "Key Concepts, Conventions, and Terms Used in this Report", "paragraphs": ["Several major concepts, conventions, and terms used throughout this report are briefly described below. The information in this report provides some insights into how the federal income tax affects families' poverty status, specifically the immediate, short-term impact of the TCJA on poverty. The report does not estimate how the impacts of the TCJA will change over time or how people may change their behavior (e.g., choices between working and not working) in response to the TCJA. ", "The family is the unit of analysis. While federal income tax provisions affect taxpayers, the impact of these provisions is analyzed in terms of families. A taxpayer is generally composed of all individuals listed on a federal income tax return (IRS Form 1040) and includes an individual, his or her spouse (if married), and any dependents. Descriptions of the tax system pre- and post- TCJA will generally refer to how these changes applied to taxpayers (i.e., the below section titled, \" How Major Federal Income Tax Provisions Apply to the Poor \"). In contrast, poverty analysis is done at the family level since families can share many resources and expenses. Hence, in this report analyses of the impact of the income tax , pre- and post-TCJA, are generally done at the family level . In this report, a family is composed of people living together related by blood or marriage (the family), cohabiting partners, and foster children. In some cases, like multigenerational families, a family is composed of multiple taxpayers. In these cases, tax liabilities and/or benefits for all taxpayers are aggregated to determine the impact of the income tax on the family's resources. If a family is determined to be poor, all members of that family are counted as poor. ", "The Supplemental Poverty Measure (SPM) is used to measure the poverty impact of the federal income tax. This report examines the impact of the pre- and post-TCJA federal income tax on poverty, using the federal government's Supplemental Poverty Measure (SPM). Unlike the official poverty measure, the SPM was developed in part to help assess the effects of tax and government benefit policies on the economic well-being of low-income individuals. For more information on the SPM, see Appendix A and CRS Report R45031, The Supplemental Poverty Measure: Its Core Concepts, Development, and Use . ", "The impact s of the federal income tax (pre- and post-TCJA) are estimated using the TRIM3 model and are modeled as if they were in effect in 2016. To estimate the impact of the federal income tax on poverty\u00e2\u0080\u0094in both the pre- and post-TCJA cases\u00e2\u0080\u0094income taxes owed (or the net benefit from refundable credits received) are subtracted from (or added to) the family's other resources, which are then assessed against an SPM poverty threshold. Other taxes that a family may pay\u00e2\u0080\u0094including payroll and excise taxes\u00e2\u0080\u0094are unchanged in these analyses. All poverty estimates in this report are calculated using a computer simulation model called the Transfer Income Model, version 3 (TRIM3). TRIM3 uses data from the 2017 Annual Social and Economic Supplement (ASEC) to the Current Population Survey (CPS), representing income received and tax liabilities or benefits accrued during calendar year 2016. As such, the poverty estimates under the old and new income tax systems are estimated as if they were in effect in 2016 . Hence, for ease of reading, the estimates in this report are described in the past tense. Details on this methodology, including how the TCJA was modeled in TRIM3, can be found in Appendix A ."], "subsections": []}]}, {"section_title": "How Major Federal Income Tax Provisions Apply to the Poor", "paragraphs": ["The federal income tax can increase or decrease a taxpayer's disposable income, which may affect a family's poverty status. Broadly, when a taxpayer receives refundable tax credits greater than the income taxes they owe, they have a negative tax liability , and an increase in disposable income, all else being equal. Conversely, if a taxpayer owes federal income tax, they have a positive tax liability , and reduced disposable income, all else being equal. (If a taxpayer has zero tax liability , their disposable income is unchanged by the income tax.) Unless otherwise mentioned, the term tax liability will refer to federal income tax liability in this report.", "In order to understand how the individual income tax can affect tax liabilities, it can be helpful to broadly understand how income taxes are calculated, and in particular, how major components of the income tax affect poor taxpayers. Importantly, the description below summarizes only the major aspects of the federal income tax calculation that are particularly relevant for poor families. For a more detailed overview of the federal income tax calculation, see CRS Report R45145, Overview of the Federal Tax System in 2018 ; and CRS Infographic IG10014, The U.S. Individual Income Tax System, 2019 . For a more detailed description of the tax provisions summarized below, how they affect income tax liability, and how they were modified by the TCJA, see CRS Report R45092, The 2017 Tax Revision (P.L. 115-97): Comparison to 2017 Tax Law . ", "The TCJA substantially modified the federal tax code, including changing many provisions that affect individuals. Most of these changes are temporary, and are scheduled to expire (\"sunset\") at the end of 2025. The major changes made by the TCJA that are likely to affect many low-income taxpayers are highlighted below."], "subsections": [{"section_title": "Calculating Income Tax Liability", "paragraphs": ["The first step for taxpayers in calculating their income tax liability is to add up their income from various sources to calculate their gross income. "], "subsections": [{"section_title": "Exclusion of Public Assistance", "paragraphs": ["The income tax code excludes certain types of income received by lower-income individuals from gross income. For example, public assistance payments (cash assistance from the Supplemental Security Income program or the Temporary Assistance for Needy Families [TANF] Block Grant) and the value of certain noncash benefits (food benefits from the Supplemental Nutrition Assistance Program [SNAP] or the subsidy value of housing benefits) are excluded from gross income under the income tax system, and hence are not taxable. The TCJA did not make any changes to the exclusion of public assistance. ", "The taxpayer then subtracts from gross income various deductions and exemptions to calculate the amount of income that is taxable\u00e2\u0080\u0094their taxable income . Most low-income taxpayers will subtract from their gross income the standard deduction (and before 2018, personal exemptions) to calculate their taxable income."], "subsections": []}, {"section_title": "The Standard Deduction and Personal Exemptions", "paragraphs": ["The standard deduction is a fixed dollar amount all taxpayers may deduct from their income, with the amount varying by the taxpayer's tax filing status. In 2018, before enactment of the TCJA, the standard deduction would have ranged from $6,500 to $13,000, depending on the taxpayer's filing status. The TCJA almost doubled the standard deduction. The personal exemption is a per-person subtraction from gross income for the taxpayer and, if applicable, his or her spouse and dependents. Before enactment of the TCJA, the personal exemption would have equaled $4,150 per person in 2018. The TCJA effectively eliminated the personal exemption (reduced the amount to $0). When combined, the personal exemptions and the standard deduction represent an amount of income that is not subject to income taxation. As a result of these provisions, many low-income taxpayers have little or no taxable income and hence have little or no income tax liability. (Taxable income cannot be reduced below zero.) ", "After taxpayers have calculated their taxable income, they then apply marginal tax rates to calculate their tax liability before credits. "], "subsections": []}, {"section_title": "Marginal Tax Rates", "paragraphs": ["A marginal tax rate is the tax incurred on each additional dollar of taxable income. Marginal tax rates in the individual income tax code are graduated, meaning the rate increases over successive ranges of taxable income. Many low-income taxpayers who do have taxable income pay taxes at the lowest marginal rate of 10%. The ranges of taxable income and their associated rate are often referred to as tax brackets . Taxpayers determine their tax liability before credits by applying marginal tax rates to their taxable income. Then taxpayers can subtract tax credits to determine their final tax liability. The 10% tax bracket (the lowest tax bracket) was unchanged by the TCJA. In general, marginal tax rates above the 10% rate were reduced under the TCJA. See Table C-2 ."], "subsections": []}, {"section_title": "Refundable Tax Credits", "paragraphs": ["Tax credits reduce the amount a taxpayer owes dollar-for-dollar the value of the credit. Credits can be nonrefundable or refundable. Nonrefundable credits cannot exceed tax liability, and therefore can only reduce tax liability to zero. In other words, \"the maximum value of a nonrefundable credit is capped at a taxpayer's tax liability.\" For example, if a taxpayer owes $1,000 in income taxes and is eligible to receive $4,000 in nonrefundable tax credits, the taxpayer will receive only $1,000 in nonrefundable tax credits, reducing their income tax liability to zero. By contrast, refundable credits are not limited by how much a taxpayer owes in income taxes, meaning those with little to no tax liability, including may poor taxpayers, can receive the full value of the credit. A refundable tax credit provides a net benefit to a taxpayer (i.e., after-tax income is greater than before-tax income) when the amount of the credit is greater than the taxpayer's income tax liability. For example, if a taxpayer owes $1,000 in income taxes but receives $4,000 in refundable tax credits, the taxpayer has a net benefit (and negative tax liability) of $3,000. ", "The two major refundable tax credits claimed by low-income working taxpayers are the EITC and the additional child tax credit (the ACTC, which is the refundable portion of the child tax credit). The amount of the EITC is based on a taxpayer's earned income, marital status, and number of qualifying children. In 2018, before the TCJA, the maximum amount of the credit would have ranged from $520 to $6,444, depending on the number of qualifying children. The TCJA did not alter the EITC itself, though it did change the rules for adjusting it for inflation, which resulted in a slightly smaller EITC under the TCJA than under prior law (a difference of $1 to $13 in 2018, depending on the number of qualifying children claimed by a taxpayer). Before the TCJA the child tax credit equaled a maximum $1,000 per child, and up to the full amount ($1,000 per child) could be received as the ACTC. The ACTC was calculated as 15% of earned income over $3,000, not to exceed $1,000 per child. The TCJA increased the maximum child tax credit from $1,000 to $2,000 per child and increased the maximum amount of credit that could be claimed as the ACTC from $1,000 to $1,400 per child. The formula for calculating the ACTC was also modestly changed. Post-TCJA, the ACTC formula now equals 15% of earned income above $2,500, not to exceed $1,400 per child. While many low-income taxpayers did receive a larger benefit as a result of these changes, the poorest taxpayers received a more modest increase of up to $75 (see Figure C-1 and Figure C-2 )."], "subsections": [{"section_title": "Impact of the TCJA on a Taxpayer's Tax Liability", "paragraphs": ["The ultimate impact of the TCJA on a particular taxpayer's tax liability depends on how the taxpayer's individual circumstances interact with all of these provisions, not just one of them. For example, as a result of all the changes made by the TCJA, a taxpayer may have greater taxable income, but that income may be subject to lower marginal tax rates, and the taxpayer may also be eligible for a larger child credit. Hence, even though on average the TCJA lowered tax liabilities, individual taxpayers' tax liabilities may have been unchanged, increased, or decreased as a result of the law."], "subsections": []}]}]}]}, {"section_title": "The Pre-TCJA Income Tax and Poverty", "paragraphs": ["Under the pre-TCJA income tax, many poor families did not owe federal income taxes, and a significant proportion received a net benefit from refundable credits. As previously discussed, the combination of personal exemptions and the standard deduction\u00e2\u0080\u0094subtracted from gross income to determine income subject to the tax\u00e2\u0080\u0094generally reduced most poor families' taxable income to zero. Additionally, some poor families with little or no income tax liability\u00e2\u0080\u0094particularly those with children and earned income\u00e2\u0080\u0094received refundable tax credits that resulted in their after-tax income being greater than their before-tax income. (CRS estimates that before the income tax was subtracted from [or added to, in the case of negative tax liabilities] a family's resources, there were approximately 21.4 million families\u00e2\u0080\u0094equaling an estimated 46.5 million individuals\u00e2\u0080\u0094in poverty. For more information, see Appendix B .)"], "subsections": [{"section_title": "Poor Families with Positive, Negative, and Zero Tax Liabilities Under the Pre-TCJA Income Tax", "paragraphs": [" Figure 1 illustrates the estimated share of families who owed income taxes (positive tax liability), owed no income taxes (zero tax liability), or owed no income taxes and received a net benefit from refundable tax credits (negative tax liability) by family poverty status. Under the pre-TCJA income tax, the majority of nonpoor families (75.7%) owed income taxes. In contrast, the majority of poor families (62.7%) owed no income taxes, and approximately a quarter (24.3%) owed no income taxes and received a net benefit from refundable tax credits. ", " Figure 2 shows the estimated share of poor families with positive, zero, and negative tax liabilities by the presence of children or aged family members. Nearly 6 in 10 poor families with children (57.5%) had a negative tax liability under the pre-TCJA income tax. In comparison, nearly 2 in 10 poor families without children or aged adults (19.5%) had a negative tax liability. "], "subsections": []}, {"section_title": "The Impact of Pre-TCJA Income Tax on Poverty Rates", "paragraphs": ["Comparing poverty rates before and after a policy change is one way to assess a policy's impact on poverty. To calculate poverty rates under the pre-TCJA income tax, a family's poverty status must be determined before and after tax. A family's before-tax poverty status is based on the family's available financial resources before federal income tax liabilities are subtracted from (or added to, in the case of negative tax liabilities) their disposable income. In contrast, a family's after-tax poverty status is based on the family's financial resources after the federal income tax is subtracted from (or added to, in the case of negative tax liabilities) disposable income. If the income tax boosts income sufficiently to push a poor family above the poverty threshold, they are then counted as nonpoor as a result of the pre-TCJA income tax. As previously discussed, if a family is determined to be poor, all members of that family are counted as poor. Poverty rates are then calculated based on the number of individuals who are poor before and after the pre-TCJA income tax is applied.", " Figure 3 shows the effect of the pre-TCJA income tax system on the poverty rates of individuals based on the types of families in which individuals lived. Overall, the pre-TCJA income tax reduced poverty: the before-tax poverty rate was 14.5%, while the after-tax poverty rate was 12.5%, a net reduction of two percentage points. Figure 3 also indicates that the poverty reduction impact of the income tax was concentrated among individuals who lived in families with children. Specifically, the pre-TCJA income tax reduced child poverty by nearly 30% (from 17.5% in poverty to 12.3% in poverty) and reduced poverty among nonaged (i.e., nonelderly) adults in families with children by a quarter (from 14.5% in poverty to 10.8% in poverty). In contrast, the post-tax poverty rate for nonaged adults in families with no children was higher than the pre-tax poverty rate for this group (the poverty rate for individuals in this group rose from 12.8% to 13.1%).", "Further examination of the impact of the pre-TCJA income tax on poverty rates indicates that all of the antipoverty effect of the federal income tax went to those individuals who lived in families with workers. As illustrated in Table 1 , CRS estimates that among the subset of families who had no workers, poverty rates, including the poverty rates of children and nonaged adults who lived with children, were unchanged by the pre-TCJA income tax. In contrast, among those who lived with a worker, poverty fell by over 20% (from 10.8% in poverty to 8.3% in poverty), with larger reductions for children and nonaged adults who lived in families with children. In other words, the poverty reduction of the pre-TCJA income tax was concentrated among individuals who lived with workers and children."], "subsections": []}, {"section_title": "The Impact of Pre-TCJA Income Tax on the Poverty Gap", "paragraphs": ["The poverty gap is another metric that can be used to understand poverty and to examine the impact of a policy on poverty. The poverty gap is the difference between the poverty threshold (an amount of money below which a family is counted as poor) and a family's disposable income. (The poverty gap for a nonpoor family is $0.) Unlike the poverty rate, which is based on whether a family is below the poverty threshold, the poverty gap provides a way of examining the degree to which a family is below that threshold. ", "For example, assume there are two poor families who have the same poverty threshold of $25,000. The first family has $20,000 of disposable income, hence their poverty gap is $5,000. The second family has $10,000 of disposable income\u00e2\u0080\u0094they are poorer than the first family\u00e2\u0080\u0094and their poverty gap is $15,000. Hence the larger the poverty gap, the poorer the family.", "For this analysis, poverty gaps are summed together across all poor families to determine the aggregate poverty gap. The aggregate poverty gap is calculated both before and after taxes (or refundable credits) are subtracted (or added) to disposable income as calculated under the pre-TCJA income tax. Changes to the aggregate poverty gap from the pre-TCJA income tax measure the degree to which the federal income tax reduced financial hardship among poor families.", " Table 2 provides estimates of the aggregate poverty gap before and after the pre-TCJA income tax. The aggregate poverty gap before the pre-TCJA income tax was $150.8 billion. The poverty gap after the pre-TCJA income tax was $138.1 billion. Thus, the pre-TCJA income tax reduced the aggregate poverty gap by $12.7 billion, all of which went to families with children and at least one worker. For families without children (i.e., families with aged adults and families without children or aged adults), the aggregate poverty gap increased slightly as a result of the pre-TCJA income tax. "], "subsections": []}]}, {"section_title": "The Post-TCJA Income Tax and Poverty", "paragraphs": ["Under the post-TCJA income tax\u00e2\u0080\u0094similar to the pre-TCJA income tax\u00e2\u0080\u0094many poor families did not owe federal income taxes (i.e., had zero tax liability), and a significant proportion owed no income tax and received a net benefit from refundable credits (i.e., had a negative tax liability). The impact of the post-TCJA income tax system on poverty rates and the poverty gap suggests the TCJA provided relatively small benefits to poor families. (CRS estimates that before the income tax was subtracted from [or added to, in the case of negative tax liabilities] a family's resources, there were approximately 21.4 million families\u00e2\u0080\u0094equaling 46.5 million individuals\u00e2\u0080\u0094in poverty. For more information, see Appendix B .)"], "subsections": [{"section_title": "Poor Families with Positive, Negative, and Zero Tax Liabilities Under the Post-TCJA Income Tax", "paragraphs": ["As illustrated in Figure 4 , CRS analysis indicates that the shares of poor and nonpoor families with positive, negative, and zero income tax liabilities were similar pre- and post-TCJA. For both poor and nonpoor families, there is a relatively small decrease (less than 2 percentage points) in the number of families with a positive tax liability. For both poor and nonpoor families, there is a relatively small increase in the share of families with zero tax liability. The share of poor families with a negative tax liability is effectively unchanged, while the share of nonpoor families with a negative tax liability increased by a relatively small amount. ", " Figure 5 compares the estimated share of poor families with positive, zero, and negative income tax liabilities under the pre-TCJA and post-TCJA income tax by family type. This analysis indicates that across all poor family types, the share of poor families that owed taxes (i.e., had positive tax liability) modestly fell as a result of the TCJA. Among poor families with children, CRS analysis indicates that share of these families who did not owe income taxes (i.e., had zero tax liability) increased as a result of the TCJA. In contrast, the share of poor families with children who received an increase in their disposable income from refundable tax credits (i.e., had a negative income tax liability) fell as a result of the TCJA. "], "subsections": []}, {"section_title": "The Impact of the Post-TCJA Income Tax on Poverty Rates", "paragraphs": [" Figure 6 compares estimated after-tax poverty rates between the pre- and post-TCJA income tax. The difference in these poverty rates reflects the impact of the TCJA on poverty. These estimates indicate that the TCJA had a relatively small effect on poverty rates. CRS estimates that the TCJA reduced overall poverty by 1.6% (from 12.5% in poverty under the pre-TCJA income tax to 12.3% in poverty under the post-TCJA income tax). The impact of these changes was concentrated among individuals who lived in families with children. Specifically, the TCJA reduced poverty among children and nonaged adults living in families with children by about 2.4% and 1.9%, respectively (from 12.3% to 12.0% in poverty among children and from 10.8% to 10.6% in poverty among nonaged adults living in families with children). ", "As with the pre-TCJA income tax, the impact of the post-TCJA income tax on poverty rates was concentrated among those who lived in a family with workers. As illustrated in Table 3 , CRS estimates that among the subset of families who had no workers, the poverty rates of children and nonaged adults who lived with children were unchanged by the post-TCJA income tax. In contrast, among those who lived with a worker, poverty fell by nearly 25% (from 10.8% in poverty to 8.1% in poverty), with larger reductions for children and nonaged adults who lived in families with children. As with the pre-TCJA income tax, these estimates suggest that virtually all of the benefits of post-TCJA income tax go to individuals who live with workers and children."], "subsections": []}, {"section_title": "The Impact of the Post-TCJA Income Tax on the Poverty Gap", "paragraphs": ["The post-TCJA income tax reduced the aggregate poverty gap from $150.8 billion to $136.9 billion. The pre-TCJA income tax reduced the aggregate poverty gap to $138.1 billion. Hence, CRS estimates that the changes made by the TCJA reduced the aggregate poverty gap by an additional $1.2 billion compared to the pre-TCJA income tax. Table 4 breaks down this $1.2 billion reduction by family type and indicates that the majority of the additional reduction in the poverty gap\u00e2\u0080\u0094approximately $800 million of the $1.2 billion\u00e2\u0080\u0094occurred among families with children. Almost all of that $800 million went to families with children and workers. "], "subsections": []}, {"section_title": "A Comparison of the Impact of the Post-TCJA Income Tax and Selected Low-Income Assistance Programs on Poverty Rates and the Poverty Gap", "paragraphs": ["A comparison of estimated antipoverty effects of the post-TCJA income tax and other low-income assistance programs indicates that while the income tax substantially reduced the poverty rate , it had more limited effects on the aggregate poverty gap . Figure 7 shows the estimated percentage-point reduction in the poverty rate attributable to the post-TCJA income tax and several low-income assistance programs: the Supplemental Nutrition Assistance Program (SNAP); Supplemental Security Income (SSI); assisted housing programs (Section 8 vouchers and public housing); and Temporary Assistance for Needy Families (TANF) block grant cash assistance. Only SNAP resulted in a comparable reduction in the overall poverty rate compared to the post-TCJA income tax. ", "Estimates of the reduction in the aggregate poverty gap from the post-TCJA income tax compared to selected low-income assistance programs highlight some of the limitations of the income tax in helping the poorest families. As illustrated in Figure 8 , three of the four low-income assistance programs reduced the poverty gap by greater amounts than the income tax. This may occur for several reasons. First, these nontax programs tend to aid the very poor, and even though their benefits are not large enough to lift a family above the poverty threshold, they do provide significant financial assistance. Second, the majority of the income tax's antipoverty provisions\u00e2\u0080\u0094including the EITC and the ACTC\u00e2\u0080\u0094are available only to families with earned income. Poor families who receive the EITC and the ACTC tend to be \"less poor\" than other families who receive SNAP, SSI, and housing assistance."], "subsections": []}]}, {"section_title": "Conclusion", "paragraphs": ["The income tax provides significant monetary benefits to many low-income families. These benefits reduce the overall poverty rate. The analysis in this report suggests, however, that the income tax is less effective, in comparison to many needs-tested programs, in helping the poorest families move out of poverty, as measured by its impact in reducing the aggregate poverty gap. Overall, the impact of the income tax on poverty was marginally changed by the TCJA. Specifically CRS estimates that before taxes, the poverty rate was 14.5%. After the pre-TCJA income tax, the poverty rate fell to 12.5%, while after the post-TCJA income tax it fell to 12.3%. CRS estimates that before taxes, the aggregate poverty gap was $150.8 billion. After the pre-TCJA income tax it fell to $138.1 billion, while after the post-TCJA income tax it fell to $136.9 billion. These benefits went almost exclusively to individuals who lived in families with workers and children. ", "This analysis highlights both the importance of the tax system in reducing poverty, and also some of its limitations. As discussed in this report, the main mechanism by which the income tax reduces poverty is through refundable tax credits, primarily the EITC and the refundable portion of the child tax credit, the ACTC. These credits are available only to families who include a worker (and who generally have children) since their value is based in part on a taxpayer's earned income. Hence these credits provide little if any benefit to those who do not or cannot work, and who are more likely to be poor. ", "There are other limitations to using refundable tax credits to reduce poverty that are not discussed in this report. Notably, the EITC and child tax credit are received once a year as part of a taxpayer's refund after they file their federal income tax return, and are not paid out on a more periodic basis (i.e., monthly) to help families meet their basic needs. Addressing this limitation, the National Academy of Sciences, in its most recent report on reducing child poverty, proposed converting the child tax credit into a monthly child allowance. However, the Internal Revenue Service (IRS) may be ill-equipped to accurately and efficiently pay out tax benefits like the EITC and the child tax credit on a more periodic basis. Even on an annual basis, as they are currently paid out, these credits can be difficult for the IRS to administer and for taxpayers to comply with. The complexity of these tax credits is often cited as the main factor driving their high rate of erroneous claims. ", "Despite these limitations, and the limitations highlighted in this report, the income tax remains a popular (and near-universal) mechanism to provide aid to the working poor, especially those with children. Recent legislative proposals, including the Economic Mobility Act of 2019 ( H.R. 3300 ), would expand refundable tax credits, increasing the size of the EITC for workers without custodial children (the \"childless EITC\"), and increasing the ACTC to $2,000 ($3,000 for young children) for all low-income taxpayers irrespective of earned income. The stated purpose of this legislation is to help working families with children. And yet, by eliminating the phase-in for the ACTC, H.R. 3300 (and the American Family Act of 2019; S. 690 / H.R. 1560 ) also represents a shift in the target population of refundable tax credits, expanding eligibility to poor families with children that do not include a worker. Similarly, the proposed increase in the EITC for taxpayers without custodial children also reflects a shift from providing benefits only to workers with children (although childless EITC recipients may live in families with other children and/or have noncustodial children who do not live with them). Insofar as eligibility and the amount of refundable tax credits are expanded, the antipoverty effects of the income tax may increase.", "Appendix A. Methodology and Data Sources", "To examine how the federal individual income tax affects poverty, this report uses estimates from the Transfer Income Model, version 3 (TRIM3) and data from the Census Bureau's Annual Social and Economic Supplement (ASEC) to the Current Population Survey. TRIM3 is a static microsimulation model that estimates federal and state taxes and certain benefit transfer programs. TRIM3 is primarily funded by the U.S. Department of Health and Human Services and maintained by the Urban Institute. The measure of poverty used is the Census Bureau's Supplemental Poverty Measure (SPM). ", "The Annual Social and Economic (ASEC) Supplement to the Current Population Survey", "The ASEC is a household survey of the noninstitutionalized population conducted by the Census Bureau in March of each year. There are approximately 94,000 households in the ASEC. ", "The ASEC includes questions related to household members' demographic characteristics and family living arrangement at the time of the survey, and work experience and income in the prior year. This report's estimates are based on the 2017 ASEC, which captures information on work experience and income in the prior year\u00e2\u0080\u00942016. The ASEC is used by the U.S. Census Bureau to estimate both the official poverty measure and SPM poverty in its reports. The sample of the ASEC is large enough to make reliable estimates for the nation as a whole and, sometimes, for some of the larger states. However, the sample is not large enough to make state-level estimates for all states. ", "Estimates discussed in this report were weighted from the sample information to make the ASEC representative of the population of U.S. households. Since the estimates in this report come from a sample, they are subject to sampling error. Additionally, the information on the ASEC is based on respondents' answers to the survey questions, and nonresponse or incorrect responses can result in nonsampling error. ", "The ASEC itself does not ask survey respondents about taxes paid or refundable credits received in the prior year. That information\u00e2\u0080\u0094important for determining a family's or an individual's SPM poverty status\u00e2\u0080\u0094must be estimated. This report uses estimates from the TRIM microsimulation model for these estimates. The Census Bureau uses a different microsimulation model in its reports on SPM poverty.", "The TRIM3 Microsimulation Model", "Microsimulation models of tax and transfer programs are composed of computer code that mimics the rules of the tax code and benefit programs. The models determine whether an individual, family, or other unit is eligible to be subject to a tax or eligible for a benefit and then estimates the amount of the tax (or benefit). TRIM assumes that all taxpayers fully comply with the requirements and rules of the tax code. ", "Federal Income Tax Module for 2016", "TRIM3 applies policy rules in effect during the year to the population for that year. The estimates in this report use information from the TRIM3 federal income tax module for 2016. The 2016 federal income tax module makes \"baseline estimates\" of the tax code as it existed for 2016. The model uses data from the ASEC's information on family structure at the time of the survey to place individuals into federal tax filing units (e.g., taxpayer and, for those married filing jointly, the spouse). It also identifies \"extended\" tax filing units, which include dependents, and identifies \"qualifying children\" for the purpose of the EITC and the child tax credit. TRIM3 creates tax units not only for tax filers, but also for all potential filers. The model then uses information on the earnings and other income sources reported on the ASEC for 2016 to determine a tax filing unit's federal income tax liability.", "Additionally, expense and income items not available on the ASEC but required to compute federal income taxes were obtained through a statistical match with the IRS Statistics of Income Public Use File, which is based on a sample of tax returns. TRIM3 estimates of the elderly and disabled tax credit and the child and dependent care tax credit are aligned to target amounts based on IRS data.", "In terms of estimating federal income taxes, there are a number of caveats and limitations of the TRIM3 estimates. These limitations are not idiosyncratic to TRIM3 estimates. They generally result from limitations on the underlying ASEC data and are also present in estimates from the Census Bureau. These limitations include the following:", "Estimates are not reliable for very - high - income taxpayers . The estimates of federal income tax liability are not likely to be reliable for very-high-income taxpayers because the ASEC oversamples lower-income populations, rather than higher-income populations. Thus, TRIM3/ASEC estimates are most often used in reports (such as this report) that focus on lower-income populations. Amounts of refundable tax credits tend to be underestimated . The estimates from TRIM3 (as well as the Census Bureau's microsimulation model) underestimate refundable tax credits. For example, the TRIM3 estimate of the EITC for 2016 (pre-TCJA) was $39.2 billion. The total amount of the EITC claimed in 2016 according to the IRS was $66.7 billion. This discrepancy has long been known by researchers, but has yet to be fully explained. Potential reasons for the discrepancy include the information on the ASEC family structure perhaps not adequately representing that used for filing tax returns; the underreporting of certain forms of earnings (such as self-employment earnings); and the high rates of error made by taxpayers claiming the EITC.", "A Revised Federal Income Tax Module for Estimating Rules under the TCJA", "The Urban Institute, in partnership with the Congressional Research Service (CRS), modified TRIM3's federal income tax module to account for the major provisions of the TCJA affecting individual taxpayers. Thus, the information in the model was revised to reflect", "the new tax brackets and marginal tax rates that apply to them, the suspension of the personal exemption and the increases in the standard deduction, limitations on itemized deductions, including the limitation on the deductibility of state and local taxes (SALT), revised rules for the child tax credit, and other changes to the federal individual income tax code.", "TCJA Changes Not Modeled", "A number of changes to the federal income tax were not modeled. These include changes to the treatment of alimony, the mortgage interest deduction, and elimination of the individual mandate for health insurance. The treatment of alimony was not modeled because the changes will apply only to new or revised orders and will not affect many cases in the near term. Limits on interest qualifying for the mortgage interest deduction were not modeled since there are no data to inform the impact of these changes. Additionally, certain smaller changes are not present in the simulation, such as the elimination of the deduction for bicycle commuting. ", "Inflation Adjustment", "The post-TCJA tax code parameters were deflated to 2016 dollars to answer the question, \"What if the 2018 TCJA parameters were in place in 2016 and 2016 was the first year of their enactment?\" The adjustment was done using the chained Consumer Price Index for All Urban Consumers (C-CPI-U), since the TCJA requires the use of that price index rather than the CPI-U for future price adjustments. Specifically, the 2018 amounts were adjusted to 2016 dollars using the chained CPI; see. Hence the estimates in this report reflect the impact of the post-TCJA tax code as if the first year of its enactment were 2016 (it actually went into effect in 2018).", "The Supplemental Poverty Measure", "The SPM was created to address some of the limitations of the official poverty measure. Particularly relevant for this analysis, the official poverty measure does not take into account taxes (and tax benefits, like refundable credits) and their impact on disposable income. It also does not take into account certain noncash government benefits, such as food benefits from SNAP or the value of housing benefits.", "The measure of total income in this analysis is computed similarly to the way the U.S. Census Bureau computes total financial resources, though there are a few differences. This analysis uses the TRIM3 estimates for TANF, SSI, and SNAP, rather than amounts reported on the ASEC, to address the underreporting of these income sources on the ASEC. Additionally, the measure of child care\u00e2\u0080\u0094deducted as a work expense for the SPM\u00e2\u0080\u0094differs. This analysis uses TRIM3's estimate of child care expenses, which includes estimated copayments for families receiving child care subsidies from the Child Care and Development Block Grant (CCDBG). The Census Bureau also caps child care expenses at the earnings of the lower-earning parent when determining net financial resources. This analysis deducts all child care expenses as a work-related expense of the family.", "Appendix B. Estimated Number of Individuals and Families in Poverty Before the Income Tax, 2016", "Below are estimates of the number of individuals in poverty before the federal income taxes are subtracted from (or added to) financial resources using the TRIM3 microsimulation model. The individual types used in this table are also found in Table 1 and Table 3 of this report.", "Below are estimates of the number of families in poverty before federal income taxes are subtracted from (or added to) financial resources, estimated using the TRIM3 microsimulation model. The family types used in this table are also found in Table 2 and Table 4 of this report.", "Appendix C. How the Major Federal Income Tax Provisions That Affect Low-Income Taxpayers Were Modified by the TCJA", "Below are descriptions of how the major federal income tax provisions that affect low-income taxpayers\u00e2\u0080\u0094deductions, exemptions, tax rates, and refundable credits\u00e2\u0080\u0094were changed by the TCJA. Stylized examples included at the end of each section help illustrate the impact of these changes for a hypothetical family. ", "Standard Deduction and Personal Exemptions", "The standard deduction and personal exemption, when combined, represent the minimum amount of income of a tax unit that is not taxed under the federal income tax. The standard deduction is a fixed dollar amount that taxpayers can subtract from their income when determining the amount of their income subject to taxation (e.g., \"taxable income\"). The TCJA nearly doubled the standard deduction. Specifically, in 2018 the standard deduction for unmarried single filers, head of household filers, and married joint filers increased from $6,500, $9,550, and $13,000 to $12,000, $18,000, and $24,000, respectively. The TCJA suspended the personal exemption, effectively reducing it from $4,150 per person in 2018 to $0. These changes are in effect from 2018 through the end of 2025.", "The combination of the standard deduction and personal exemption is sometimes referred to as the 0% bracket since that income is not taxed. It is also referred to as the tax entry point since every dollar above this amount is generally taxable (and hence considered taxable income). The increase of the standard deduction combined with the effective elimination of the personal exemption result in a similar or higher tax entry point for some families (unmarried individuals with no children, unmarried individuals with one child, and married couples with no children, as illustrated in Table C-1 ), while larger families, including many with children, will have a lower tax entry point under the new tax law. For these families, more of their income will potentially be subject to the federal income tax.", "Stylized Example", "For example, as illustrated in Table C-1 , a married couple with two children would have had a tax entry point in 2018 pre-TCJA of $29,600. If this family had $36,000 of income, only the amount above $29,600\u00e2\u0080\u0094$6,400\u00e2\u0080\u0094would have been taxable. Post-TCJA this tax entry point is now $24,000 for this same family. Hence, of their $36,000 of income, $12,000 would now be taxable income.", "Marginal Tax Rates/Tax Brackets", "A marginal tax rate is the percentage that a taxpayer pays on an additional dollar of taxable income. The federal individual income tax code has seven marginal tax rates ranging from 10% to 37%. The income ranges over which these marginal rates apply, often referred to as tax brackets , differ based on the taxpayer's filing status. The federal income tax is considered a progressive tax by economists because as taxable income increases, income above a given bracket threshold is taxed at a higher marginal rate. ", "Once a tax unit has determined how much\u00e2\u0080\u0094if any\u00e2\u0080\u0094of their income is taxable (i.e., after subtracting the standard deduction from their income post-TCJA), they then apply marginal tax rates to this amount. If poor families have any taxable income, most if not all of it is subject to the lowest marginal tax rate, although some of their income may be subject to the second-lowest bracket (the second-lowest bracket was the 15% bracket pre-TCJA, and is now 12% under the TCJA). The lowest marginal tax rate\u00e2\u0080\u009410%\u00e2\u0080\u0094was unchanged by the TCJA. Changes to marginal tax rates are presented in Table C-2 . These changes are in effect from 2018 through the end of 2025.", "Stylized Example", "For example, for a married couple with two children and $36,000 in income, their taxable income pre-TCJA would have been $6,400 in 2018. That income would have been subject to a 10% marginal rate, for a tax liability\u00e2\u0080\u0094before accounting for tax credits\u00e2\u0080\u0094of $640. Post-TCJA, this same family would have had $12,000 of taxable income, all subject to the 10% marginal rate, which would result in $1,200 of income tax liability before subtracting any tax credits.", "The Child Tax Credit", "After taxpayers calculate their income tax liability before credits, they can subtract the value of any tax credits for which they may be eligible. Taxpayers with little or no tax liability\u00e2\u0080\u0094which includes most of the poor\u00e2\u0080\u0094can still receive the refundable credits, including the refundable portion of the child tax credit (the ACTC). The ACTC is calculated as a percentage of earnings (the refundability rate) above the refundability threshold up to the maximum amount of the refundable portion of the credit. The ACTC plus the amount of the credit that offsets any income tax liability cannot be greater than the maximum credit per child. (Low-income families who do have a positive tax liability will first reduce their income tax liability by the nonrefundable portion of the child tax credit, and then claim the ACTC.) TCJA made several changes to the child tax credit and ACTC, as outlined in Table C-3 .", "In addition to modifying the credit formula, TCJA also enacted a new ID requirement for the credit. Prior to TCJA, taxpayers could provide the taxpayer identification number for the child in order to claim the credit. The most common taxpayer ID is a Social Security number (SSN), but other taxpayer identification IDs included individual taxpayer identification numbers (ITINs). Post-TCJA, taxpayers will now need to provide the SSN for the child in order to claim the credit. These changes are in effect from 2018 through the end of 2025. ", "How much a taxpayer's child tax credit changed following the TCJA depends on their income level. As a result of the changes made in the TCJA, the child tax credit doubled for many middle-income families. With the higher income phaseout thresholds, middle- and higher-income families became child tax credit eligible, as illustrated in Figure C-1 . However, many low-income families received a smaller increase, as illustrated in Figure C-2 .", "Stylized Example", "For example, for a married couple with two children and $25,000 of income, their child credit as a result of the TCJA would increase from $2,000 to $2,900 ($800 of the increase from the refundable portion and $100 from the nonrefundable portion). For this family, once income was $36,000, their child tax credit would increase from $2,000 to $4,000 (with $800 of that increase from the refundable portion and $1,200 from the nonrefundable portion).", "Other Changes ", "The law did not directly change the largest antipoverty program in the tax code, the EITC. However, the law did change the measure of inflation used to adjust numerous provisions in the tax code, including the EITC, beginning in 2018. This new inflation index, the C-CPI-U price index, is projected to grow more slowly than the previous inflation index, the CPI-U. Hence, over time the EITC will grow more slowly. In 2018, the differences in the EITC from the adoption of this new measure will be relatively small, reducing the maximum amount of the credit by $1 for recipients with no children, $7 for recipients with one child, $12 for those with two children, and $13 for those with three or more children. However, as the effects of the slower inflation adjustment compound over time, these changes will grow larger. ", "In addition, the income cutoff points of marginal tax rates will grow more slowly. Over time, if wages grow faster than C-CPI-U, some of the income of low-income taxpayers currently subject to the 10% marginal tax rate may become subject to higher marginal rates."], "subsections": []}]}}
{"id": "R46261", "title": "Development and Regulation of Domestic Diagnostic Testing for Novel Coronavirus (COVID-19): Frequently Asked Questions", "released_date": "2020-03-09T00:00:00", "summary": ["On December 31, 2019, the World Health Organization (WHO) was informed of a cluster of pneumonia cases in Wuhan City, Hubei Province of China. Illnesses have since been linked to a disease caused by a previously unidentified strain of coronavirus, designated Coronavirus Disease 2019, or COVID-19. Despite containment efforts in China, the United States, and elsewhere, by late February there were indications that the COVID-19 outbreak may have entered a new phase, with community spread occurring or suspected in several countries other than China, including in the United States.", "Diagnostic testing is a critical part of the public health response to and clinical management of COVID-19, caused by the SARS-CoV-2 virus. Efforts in the United States to develop and disseminate a test for COVID-19 have faced challenges. Manufacturing and quality issues with the nation's test\u00e2\u0080\u0094developed by the Centers for Disease Control and Prevention (CDC)\u00e2\u0080\u0094resulted in significant delay in access to testing throughout the country. In this context, on February 29, 2020, in an effort to facilitate the expansion of testing capacity as the first cases of community spread were confirmed in the United States, the Food and Drug Administration (FDA) announced a new policy, issued via agency guidance and effective immediately, that would allow certain laboratories\u00e2\u0080\u0094principally clinical and large commercial and reference laboratories\u00e2\u0080\u0094that have developed and validated their own COVID-19 diagnostic to begin to use the test prior to it receiving an Emergency Use Authorization (EUA) from the agency.", "FDA's February 29 guidance aims to facilitate the expansion of diagnostic testing from the public health setting into the clinical health care and commercial settings. Doing so may help the country meet the increasing and substantial demand for testing generated by community spread of the disease and expanded clinical testing guidelines issued by the CDC. This report does not address financing or coverage of diagnostic testing for COVID-19."], "reports": {"section_title": "", "paragraphs": ["O n December 31, 2019, the World Health Organization (WHO) was informed of a cluster of pneumonia cases in Wuhan City, Hubei Province of China. Illnesses have since been linked to a disease caused by a previously unidentified strain of coronavirus, designated Coronavirus Disease 2019, or COVID-19. Despite containment efforts in China, the United States, and elsewhere, by late February there were indications that the COVID-19 outbreak may have entered a new phase, with community spread occurring or suspected in several countries other than China, including in the United States. ", "Diagnostic testing is a critical part of the public health response to and clinical management of the COVID-19 caused by the SARS-CoV-2 virus. Efforts in the United States to develop and disseminate a test for COVID-19 have faced challenges. Manufacturing and quality issues with the nation's test\u00e2\u0080\u0094developed by the Centers for Disease Control and Prevention (CDC)\u00e2\u0080\u0094resulted in essentially all testing going through CDC's laboratory facility in Atlanta through early March, despite distribution of test kits to state and local public health labs beginning in early February. CDC's initial test kits had to be remanufactured and redistributed, which, along with other factors, has significantly delayed access to testing throughout the country. It has been reported that the CDC's Atlanta laboratory is currently under investigation by the Department of Health and Human Services (HHS) for possible quality issues related to its manufacture of the test kits, which may have led to the contamination of one reagent and thus to the quality issues with the test.", "In this context, on February 29, 2020, in an effort to facilitate the expansion of testing capacity as the first cases of community spread were confirmed in the United States, the Food and Drug Administration (FDA) announced a significant new policy. This policy, issued via agency guidance and effective immediately, allows certain laboratories\u00e2\u0080\u0094principally clinical and commercial laboratories\u00e2\u0080\u0094that have developed and validated their own COVID-19 diagnostics to begin to use the tests prior to the test receiving an Emergency Use Authorization (EUA) from the agency. ", "Diagnostic testing for COVID-19, in part because it is caused by a novel pathogen, has been led and carried out to date through the country's public health infrastructure. This includes primarily the CDC and the country's network of state and local public health laboratories. In contrast, in most situations, diagnostic testing is carried out by a number of facilities, including private commercial laboratories (e.g., Quest, LabCorp), hospital and other clinical laboratories, and laboratories in academic medical centers, among others. ", "FDA's February 29 guidance aims to facilitate the expansion of diagnostic testing from the public health setting into the clinical health care and commercial settings, leveraging significant standing resources throughout the country, including facilities, trained personnel, expertise, materials, and equipment. It is FDA's intention that this expansion will help the country meet the increasing and substantial demand for testing generated by community spread of the disease and expanded clinical testing guidelines issued by the CDC. In addition, because many cases of COVID-19 are reportedly mild or asymptomatic, widespread access to testing\u00e2\u0080\u0094which informs development of important metrics such as the case fatality rate\u00e2\u0080\u0094is critical to understanding the scope and extent of the disease in the United States, and to efficiently directing resources to mitigate its impact in the broader community. ", "Diagnostic tests\u00e2\u0080\u0094formally called in vitro diagnostic (IVD) devices\u00e2\u0080\u0094may be commercially developed and distributed as \"kits\" or developed, validated, and carried out by a single laboratory. This second type of test\u00e2\u0080\u0094known as a laboratory-developed test, or an LDT\u00e2\u0080\u0094is the more commonly used type of test because of its flexibility and differing federal regulatory requirements, among other reasons. Although the CDC's test is being manufactured as a test kit and initially has been distributed to specific CDC-qualified labs, the FDA guidance targets LDTs that are generally carried out in clinical and academic settings or private commercial laboratories. All clinical laboratories in the United States, regardless of whether they are part of the country's public health infrastructure or part of the health care delivery system, are regulated by the Clinical Laboratory Improvement Amendments of 1988 (CLIA) program, administered by the Centers for Medicare & Medicaid Services (CMS). ", "Federal agencies involved in the regulation of IVDs include FDA and CMS. FDA derives its authority to regulate the sale and distribution of medical devices, such as IVDs, from the Federal Food, Drug, and Cosmetics Act (FFDCA) and the Public Health Service Act (PHSA). CMS's authority to regulate IVDs is through CLIA ( P.L. 100-578 ). FDA regulates the safety and effectiveness of diagnostic tests, as well as the quality of the design and manufacture of the diagnostic test. CMS regulates the quality of clinical laboratories and the clinical testing process."], "subsections": [{"section_title": "Diagnostic Tests", "paragraphs": [], "subsections": [{"section_title": "What Are IVD Tests?", "paragraphs": ["In vitro diagnostic devices are defined in FDA regulation as a specific subset of medical devices that include \"reagents, instruments, and systems intended for use in the diagnosis of disease or other conditions ... in order to cure, mitigate, treat, or prevent disease ... [s]uch products are intended for use in the collection, preparation, and examination of specimens taken from the human body.\" As indicated by this definition, an IVD may also include components of tests, which can include both non-diagnostic ingredients, called general purpose reagents (GPRs), and the active ingredient in a diagnostic test, referred to as the analyte specific reagent (ASR). ", "In general, an IVD device may be a \"commercial test kit\" (a product developed, produced, and sold by a manufacturer for distribution to multiple laboratories) or a \"laboratory developed test\" (a product developed by and used in a single laboratory). LDTs may use components (e.g., general purpose reagents like a buffer) that are either manufactured in-house by the laboratory or commercially developed and distributed. "], "subsections": []}, {"section_title": "What Is an LDT?", "paragraphs": ["A laboratory-developed test is a class of IVD that is designed, manufactured, and used within a single laboratory. LDTs are often used to test for conditions or diseases that are either rapidly changing (e.g., new strains of known infectious diseases) or the subject of quickly advancing scientific research (e.g., genomic testing for cancer). The majority of genetic tests\u00e2\u0080\u0094a type of IVD that analyzes various aspects of an individual's genetic material (e.g., DNA, RNA)\u00e2\u0080\u0094are LDTs."], "subsections": []}, {"section_title": "How Are IVD Tests Regulated?", "paragraphs": ["In general, oversight of in vitro diagnostic devices focuses on ensuring their safety and effectiveness; their accuracy and reliability; the quality of clinical laboratories that carry out IVD testing; the utility of the information generated by IVDs in clinician and patient decision-making; and the truthfulness of claims made about IVDs that are marketed directly to consumers. As with other medical devices, the application of FDA regulatory requirements to IVDs depends on the IVD's risk classification according to its intended use. Classification is based, in turn, on the risk the device poses to the patient. For IVDs, which are informational tests, the risk to the patient is that of an incorrect test result, either a false positive or a false negative result, either of which may cause serious harm to the individual. In the case of infectious diseases\u00e2\u0080\u0094for example, COVID-19\u00e2\u0080\u0094the risk of a false negative test extends beyond the individual patient into the community at large. The FDA has three classes of medical device: Class I (low risk), Class II (moderate risk), and Class III (high risk). Regulatory controls are dependent on the class of a given medical device. COVID-19 diagnostics would most likely fall in Class III, as they would be considered to be high-risk devices. "], "subsections": []}, {"section_title": "How Are LDTs Regulated?", "paragraphs": ["The regulation of laboratory-developed tests has been the subject of ongoing debate over the past 20 years, driven in large part by an increase in the number and complexity of genetic tests over this time. In general, the FDA has maintained that it has clear regulatory authority over LDTs, as it does with all IVDs that meet the definition of medical device in the FFDCA. However, the FDA traditionally exercised enforcement discretion over LDTs\u00e2\u0080\u0094choosing not to enforce applicable statutory and regulatory requirements with respect to such tests\u00e2\u0080\u0094meaning that most of these tests have neither undergone premarket review nor received FDA clearance or approval for marketing. To date, FDA has instead focused its enforcement efforts on commercial IVD kits, which are broadly commercially marketed. In recent years, despite the absence of specific agency guidance on the regulation of LDTs, FDA has nevertheless begun to assert authority over LDTs, and specifically over some direct-to-consumer (DTC) genetic tests, that it considers to be higher-risk tests."], "subsections": [{"section_title": "What Is CLIA and How Is It Involved in LDT Regulation?", "paragraphs": ["CLIA of 1988 provides CMS with authority to regulate clinical laboratories. CLIA establishes quality standards for clinical laboratory testing and a certification program for clinical laboratories that perform testing using IVD devices. All laboratories that perform diagnostic testing for health-related reasons (i.e., with results returned to the patient or a health care practitioner) are regulated by CMS under the authority of CLIA. For CLIA to apply, testing must be carried out on a human specimen. CLIA certification is based on the level of complexity of testing that the laboratory performs, specifically (1) low (therefore, waived) complexity, (2) moderate complexity, and (3) high complexity. FDA is responsible for categorizing tests according to their level of complexity. CLIA requirements are used to evaluate a test's analytical validity , defined as the ability of a test to detect or measure the analyte it is intended to detect or measure. Laboratories that perform moderate- and high-complexity testing must meet specific standards and requirements as a condition of certification, including proficiency testing (PT), patient test management, quality control, personnel qualifications, and quality assurance. All LDTs, including genetic tests offered as LDTs, are considered high-complexity tests under CLIA. All COVID-19 diagnostics would be considered to be high complexity tests under CLIA."], "subsections": []}]}, {"section_title": "How Are IVDs Regulated by the FDA During an Emergency Such as the Outbreak of COVID-19?", "paragraphs": ["In certain public health or other emergency situations, the HHS Secretary may declare that existing circumstances justify the use of unapproved medical products for certain uses, or approved medical products for unapproved uses. This declaration facilitates access to not-yet-approved medical products in an expedited manner during certain emergency situations. In the case of the COVID-19 disease, HHS Secretary Azar determined that \"there is a public health emergency and [declared] that circumstances exist justifying the authorization of emergency use of in vitro diagnostics for detection and/or diagnosis of the novel coronavirus.\" On the basis of this declaration, FDA issued an Emergency Use Authorization authorizing the emergency use of the CDC-developed diagnostic test for COVID-19. The FDA also issued an EUA to the state of New York for an LDT developed by the state public health labs. To date, these are the only two EUAs for coronavirus diagnostics that the FDA has issued. "], "subsections": [{"section_title": "How Does the Emergency Use Authority Apply to LDTs if They Are Generally Exempted from Premarket Requirements?", "paragraphs": ["During an emergency, all laboratory-developed tests testing for the relevant pathogen (in this case, SARS-CoV-2) must either be approved, cleared, or authorized under an EUA to be legally carried out. As noted above, FDA generally waives most regulatory requirements (e.g., premarket review) for LDTs in normal situations; nevertheless, LDTs may only be used with authorization (e.g., an EUA) during an emergency declaration pursuant to FFDCA Section 564. That is, statutory requirements under FFDCA Section 564 apply to LDTs as they do to other medical products, and they apply to both commercial test kits\u00e2\u0080\u0094which are normally subject to FDA regulatory requirements\u00e2\u0080\u0094and to LDTs. ", "The EUA process is usually used to expedite access to medical products that would otherwise need premarket approval or clearance in emergency situations. However, because premarket approval requirements for LDTs are generally waived through enforcement discretion by the agency, the EUA represents additional regulatory requirements for the use of an LDT in emergency situations. This is because, among other things, in the case of a communicable disease, the test result has implications beyond the individual being tested, and so a false negative result could have serious consequences for the community. Therefore, FDA states that these tests need an EUA in an emergency prior to clinical use as do other medical products. In contrast, for commercial test kits, the EUA represents an abbreviated mechanism that allows the unapproved product to be used without undergoing the FDA premarket review typically required (for a complex molecular test for a novel pathogen, that review would generally be a Premarket Approval, or PMA, for high-risk medical devices).", "Despite a request from the Association of Public Health Laboratories (APHL) to FDA, the agency declined to exercise enforcement discretion with respect to LDTs that detect SARC-CoV-2 and diagnose COVID-19 and the requirement that they receive an EUA prior to use. APHL maintains that these labs are regulated by CLIA, and that this regulatory oversight is sufficient. However, on February 29, 2020, FDA announced a new policy allowing certain laboratories that have developed and validated COVID-19 LDTs to begin to use the test clinically prior to it receiving an EUA from the agency but after validation of the test and notification of the agency (see \" What Steps Did FDA Take to Expand Testing Capacity in Response to the Problems with CDC's Test? \")."], "subsections": []}]}]}, {"section_title": "The CDC 2019-Novel Coronavirus (2019-nCoV) Real-Time Reverse Transcriptase (RT)-PCR Diagnostic Panel", "paragraphs": [], "subsections": [{"section_title": "How Does the CDC's COVID-19 Diagnostic Test Work?", "paragraphs": ["The diagnostic test developed by the CDC, called the 2019-Novel Coronavirus (2019-nCoV) Real-Time Reverse Transcriptase (RT)-PCR Diagnostic Panel, is a complex molecular diagnostic test that relies on generally standard molecular biology laboratory techniques. Specifically, the test uses a technique called Polymerase Chain Reaction (PCR), a standard in vitro technique for amplification of DNA. Because the SARS-CoV-2 virus\u00e2\u0080\u0094the virus that causes COVID-19\u00e2\u0080\u0094is an RNA virus, the RNA must be first reverse transcribed to generate copy DNA, or cDNA, which is then amplified (multiple copies are generated) using PCR. PCR relies on primers\u00e2\u0080\u0094very short single stranded pieces of DNA that are complementary to and bind with specific regions of the viral genome and thus define the specific genomic region to be amplified. The test then relies on a probe, or a single-stranded piece of DNA that is chemically or radioactively labelled, that can bind to and thus detect the amplified target portion of the viral genetic material. ", "CDC's original test used three sets of primers and probes: two to target specific regions of a designated gene within the SARS-CoV-2 viral genome, and a third that was specific to all SARS-like coronaviruses (see \" What Quality Problems Did the CDC's Test Experience on Rollout to the State and Local Public Health Laboratories? \"). The test also includes a number of authorized control samples, including a positive control for SARS-CoV-2 and a \"no template control\" to test for system contamination. Together, these controls help ensure that the test is functioning properly. "], "subsections": []}, {"section_title": "What Type of IVD Is the CDC's Test and Who May Carry It Out?", "paragraphs": ["The CDC's test is being developed by the agency as a test kit and is generally authorized to be distributed to state and local public health laboratories to augment public health testing capacity. The test received an EUA from the FDA on February 4, 2020, under which \"authorized laboratories\" may receive and carry out the test despite the fact that it is not FDA-approved or FDA-cleared, and that it does not meet all related regulatory requirements for marketing. The EUA notes that \"[t]esting is limited to qualified laboratories designated by CDC and, in the United States, certified under the Clinical Laboratory Improvement Amendments of 1988 (CLIA), (42 U.S.C. \u00c2\u00a7263a), to perform high complexity tests.\" CDC-qualified laboratories with a CLIA certification for high-complexity testing able to receive the test kits include U.S. state and local public health laboratories, Department of Defense (DOD) laboratories, and select international laboratories. The public health laboratories must verify the test themselves prior to using it, and are currently required to send presumptive positive cases back to the CDC in Atlanta for confirmatory testing by the agency. "], "subsections": [{"section_title": "What Is the Role of the Commercial Manufacturer IDT in the Development and Distribution of the CDC's Test Kit?", "paragraphs": ["The Trump Administration had estimated that approximately 1 million tests would be broadly available imminently, facilitated by leveraging manufacturing of the CDC test kit by a private company, Integrated DNA Technologies (IDT), a manufacturer that has been working with CDC. According to HHS Secretary Azar on March 5, 2020, IDT will send the CDC test kit to \"hospitals, other labs around the country, commercial, public health \u00e2\u0080\u00a6 labs\" by the end of the week of March 2. The test kit being manufactured by IDT, identical to the CDC test kit and referred to as \"IDT 2019-novel coronavirus kit,\" is being qualified by CDC in lots, and FDA reports that these CDC-qualified, IDT-manufactured test kits are covered by the CDC's EUA authorization of February 4, 2020. ", "FDA notes that if a lab purchases a test kit from IDT, the laboratory does not need its own EUA to carry it out, but that \"[t]esting using CDC's EUA-authorized protocol and CDC qualified lots of reagents is considered to be testing done under the CDC's EUA. Labs performing such testing should follow any applicable conditions set forth in the EUA.\" LabCorp, a large commercial laboratory, is already reporting that it can perform the CDC test \"if needed to meet testing demand\" and that the test is only for use with \"authorized specimens collected from individuals who meet CDC criteria for COVID-19 testing.\" IDT is manufacturing test kits in two sizes, with the largest having a capacity of 500 reactions (approximately 250 individual patients)."], "subsections": []}]}, {"section_title": "What Quality Problems Did the CDC's Test Experience on Rollout to the State and Local Public Health Laboratories?", "paragraphs": ["As noted above, the CDC's test kit used three sets of probes and primers\u00e2\u0080\u0094or reagents\u00e2\u0080\u0094to detect and identify viral DNA beyond that specific to COVID-19. One of these reagents, the one meant to detect any SARS-like coronavirus including SARS-CoV-2, was returning inconclusive results. In response, the CDC validated a new protocol for their test that allows it to be run excluding the faulty reagent, running the test with only the other two diagnostic components. CDC has the authority to modify the test through enforcement discretion granted by FDA. The agency determined that the exclusion of this reagent does not affect the accuracy or the sensitivity and specificity of the test. ", "Certain laboratories have continued to experience problems running the test, even when using the modified protocol, with at least one laboratory reporting that the first reagent was also returning inconclusive results. This problem severely limited the state and local public health laboratories' ability to carry out the CDC's test. ", "In response to these issues, the New York State Department of Health requested and was granted the FDA's second EUA for its own laboratory-developed test, the New York SARS-CoV-2 Real-time RT-PCR Diagnostic Panel. Testing is limited under the EUA to two laboratories in New York\u00e2\u0080\u0094the Wadsworth Center, New York State Department of Public Health, and the New York City Department of Health and Mental Hygiene, Public Health Laboratories. New York was one of the states that had continued difficulty implementing CDC's original test kit, even with the modified protocol. ", "In response, CDC is also manufacturing new test kits after reportedly resolving the manufacturing issue that affected the original test kit. This time, however, CDC is manufacturing test kits with only the two reagents that were unaffected by the quality issue\u00e2\u0080\u0094that are specific to SARS-CoV-2\u00e2\u0080\u0094and those kits are being made available to qualified CDC labs through the International Reagent Resource. , These test kits are expected to result in the public health laboratories having capacity to test up to 75,000 patients.", "Some believe that the CDC's choice to develop and mitigate quality problems with its own COVID-19 diagnostic when an accepted diagnostic was available through the World Health Organization (WHO), which was efficiently distributing a German-developed test globally early in the outbreak, was a decision that cost the United States time in its response to the virus's introduction and spread in the country. Some speculated about the use of the third reagent\u00e2\u0080\u0094that was to detect SARS-like coronaviruses\u00e2\u0080\u0094and whether it had been strictly necessary if the test was still accurate at diagnosing COVID-19 without that reagent included in the test at all, or if it had instead overcomplicated the test. In general, there have been questions raised about the CDC's handling of the development and distribution of its test, and its response to the quality problems that occurred, and the impact this may have had on the country's ability to detect community spread of the disease before it occurred more widely. "], "subsections": []}, {"section_title": "What Steps Did FDA Take to Expand Testing Capacity in Response to the Problems with CDC's Test?", "paragraphs": ["On February 29, 2020, as problems with the rollout of the CDC-developed diagnostic test continued, FDA announced a new policy to immediately leverage LDTs developed in high-complexity commercial, reference, and clinical laboratories nationwide to expand testing capacity. Specifically, the new agency guidance allows CLIA-certified high-complexity laboratories that have developed and validated their own COVID-19 diagnostics to use the tests while the laboratory is preparing, and FDA is reviewing, their EUA submission. , ", "The FDA guidance states that laboratories have 15 days after validating their test to submit an EUA application to FDA, and the guidance recommends confirming the test's first five negative and positive results against an EUA-authorized diagnostic. According to FDA, it \"does not intend to object to the use of these tests for clinical testing while the laboratories are pursuing an EUA with the FDA. Importantly, this policy only applies to laboratories that are certified to perform high-complexity testing consistent with requirements under Clinical Laboratory Improvement Amendments.\" The guidance includes detailed information about FDA's expected methods for test validation. ", "Pursuant to this FDA guidance, on March 5, 2020, LabCorp announced that it had begun offering its LDT, the LabCorp 2019 Novel Coronavirus (COVID-19), NAA test \"for ordering by physicians or other authorized healthcare providers anywhere in the U.S.,\" and that it is currently pursuing an EUA with the agency for the test. This test is to take between three to four days to return results, and a health care provider must order and authorize it, and obtain the required specimen from the patient. Under the FDA's new guidance, Quest has also announced that it will begin testing for coronavirus with its own LDT, beginning March 9, 2020, and that it plans to pursue an EUA with the agency within 15 days, as required by the guidance."], "subsections": []}]}]}}
{"id": "R45951", "title": "Apportionment and Redistricting Process for the U.S. House of Representatives", "released_date": "2019-10-10T00:00:00", "summary": ["The census, apportionment, and redistricting are interrelated activities that affect representation in the U.S. House of Representatives. Congressional apportionment (or reapportionment) is the process of dividing seats for the House among the 50 states following the decennial census. Redistricting refers to the process that follows, in which states create new congressional districts or redraw existing district boundaries to adjust for population changes and/or changes in the number of House seats for the state. At times, Congress has passed or considered legislation addressing apportionment and redistricting processes under its broad authority to make law affecting House elections under Article I, Section 4, of the U.S. Constitution. These processes are all rooted in provisions in Article I, Section 2 (as amended by Section 2 of the Fourteenth Amendment).", "Seats for the House of Representatives are constitutionally required to be divided among the states, based on the population size of each state. To determine how many Representatives each state is entitled to, the Constitution requires the national population to be counted every 10 years, which is done through the census. The Constitution also limits the number of Representatives to no more than one for every 30,000 persons, provided that each state receives at least one Representative. Additional parameters for the census and for apportionment have been established through federal statutes, including timelines for these processes; the number of seats in the House; and the method by which House seats are divided among states. Congress began creating more permanent legislation by the early 20 th century to provide recurring procedures for the census and apportionment, rather than passing measures each decade to address an upcoming reapportionment cycle. Federal law related to the census process is found in Title 13 of the U.S. Code , and two key statutes affecting apportionment today are the Permanent Apportionment Act of 1929 and the Apportionment Act of 1941.", "April 1 of a year ending in \"0\" marks the decennial census date and the start of the apportionment population counting process; the Secretary of Commerce must report the apportionment population of each state to the President by the end of that year. Within the first week of the first regular session of the next Congress, the President transmits a statement to the House relaying state population information and the number of Representatives each state is entitled to. Each state receives one Representative, as required by the Constitution, and the remaining seats are distributed using a mathematical approach known as the method of equal proportions, as established by the Apportionment Act of 1941. Essentially, a ranked \"priority list\" is created that indicates which states will receive the 51 st -435 th House seats, based on a calculation involving the population size of each state and the number of additional seats a state has received. The U.S. apportionment population from the 2010 census was 309,183,463, reflecting a 9.9% increase since 2000, and 12 House seats were reapportioned among 18 states.", "After a census and apportionment are completed, state officials receive updated population information from the U.S. Census Bureau and the state's allocation of House seats from the Clerk of the House. Single-member House districts are required by 2 U.S.C. \u00c2\u00a72c, and certain other redistricting standards, largely related to the composition of districts, have been established by federal statute and various legal decisions. Current federal parameters related to redistricting criteria generally address population equality and protections against discrimination for racial and language minority groups under the Voting Rights Act of 1965 (VRA), as amended. Previous federal apportionment statutes have, at times, included other district criteria, such as geographic compactness or contiguity, and these standards have sometimes been referred to in U.S. Supreme Court cases, but they are not included in the current federal statutes that address the apportionment process. These redistricting principles and others, such as considering existing political boundaries, preserving communities of interest, and promoting political competition, have been commonly used across states, and many are reflected in state laws today.", "The procedural elements of redistricting are generally governed by state laws, and state redistricting practices can vary regarding the methods used for drawing districts, timeline for redistricting, and which actors (e.g., elected officials, designated redistricting commissioners, and/or members of the public) are involved in the process. Mapmakers must often make trade-offs between one redistricting consideration and others, and making these trade-offs can add an additional challenge to an already complicated task of ensuring \"fair\" representation for district residents. Despite technological advances that make it easier to design districts with increasing geographic and demographic precision, the overall task of redistricting remains complex and, in many instances, can be controversial. A majority of states, for example, faced legal challenges to congressional district maps drawn following the 2010 census, and several cases remained pending in 2019\u00e2\u0080\u0094less than a year before the next decennial census date."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["Every 10 years, the U.S. population is counted through the national census, and districts for the U.S. House of Representatives are readjusted to reflect the new population level and its distribution across states through the federal apportionment and state redistricting processes. The requirement to have proportional representation in the House is found in the U.S. Constitution, and constitutional provisions also underlie other elements of the census, apportionment, and redistricting practices. Figure 1 provides a generalized timeline for how these three interrelated processes occur, and the sections of the report that follow provide additional information on apportionment and redistricting. For additional information on the census process, see CRS Report R44788, The Decennial Census: Issues for 2020 , and CRS In Focus IF11015, The 2020 Decennial Census: Overview and Issues ."], "subsections": []}, {"section_title": "Apportionment Process", "paragraphs": ["Apportionment (or reapportionment) refers to the process of dividing seats in the U.S. House of Representatives among the states. Article 1, Section 2, of the U.S. Constitution, as amended by Section 2 of the Fourteenth Amendment, requires that seats for Representatives are divided among states, based on the population size of each state. House seats today are reallocated due to changes in state populations, since the number of U.S. states (50) has remained constant since 1959; in earlier eras, the addition of new states would also affect the reapportionment process, as each state is constitutionally required to receive at least one House seat. ", "The 2010 census reported a 9.9% overall increase in the U.S. apportionment population since the 2000 census, to 309,183,463 individuals. The ideal (or average) district population size increased across all states following the 2010 census, even though some states experienced larger growth levels than others. The average congressional district population for the United States following the 2010 census was 710,767 individuals. ", "The map in Figure 2 illustrates changes in states' ideal district size and changes in the number of House seats allocated to each state between the 1990 and 2010 apportionments. Twelve U.S. House seats shifted across states following the 2010 census; 10 states lost seats and 8 states gained seats, distributed as shown in Table 1 . Table 2 provides additional historical data on the number of states and number of seats affected by each apportionment since 1910.", "Regional patterns of population change observed following previous censuses continued in 2010, as the percentage of House seats distributed across the Northeast and Midwest regions decreased, and the percentage of House seats distributed across the South and West regions increased. California had the largest House delegation following the 2010 census, with 53 seats; Alaska, Delaware, Montana, North Dakota, South Dakota, Vermont, and Wyoming each had a single House seat."], "subsections": [{"section_title": "Federal Requirements/Guidelines for Reapportionment: History and Current Policy", "paragraphs": ["The constitutional requirements for representation in the House based on state population size are provided in Article I, Section 2, as amended by Section 2 of the Fourteenth Amendment. Article I, Section 2, specified the first apportionment of seats for the House of Representatives, and it also includes some standards for subsequent reapportionments. Article I, Section 2, requires that the national population be counted at least once every 10 years in order to distribute House seats across states. Broad parameters for the number of House Members are also contained in Article I, Section 2: there can be no more than one Representative for every 30,000 persons, provided that each state receives at least one Representative. ", "Federal statute establishes a number of other elements of the apportionment process, including how to count the population every 10 years via the decennial census; how many seats are in the House; how those House seats are divided across states; and certain related administrative details. In the 19 th century, Congress often passed measures each decade to address those factors, specifically for the next upcoming census and reapportionment. By the early 20 th century, however, Congress began to create legislation to standardize the process and apply it to all subsequent censuses and reapportionments, unless modified by later acts. ", "One example of such legislation was the permanent authorization of the U.S. Census Bureau in 1902, which helped establish a recurring decennial census process and timeline. Other legislation established the current number of 435 House seats; this number was first used following the 1910 census and subsequently became fixed under the Permanent Apportionment Act of 1929. Congress also created a more general reapportionment formula and process to redistribute seats across states. The timeline for congressional reapportionment and current method for allocating seats among states were contained in the Apportionment Act of 1941, which would then apply to every reapportionment cycle, beginning with the one following the 1950 census. The size of the House, method for reapportionment, and timeline for reapportionment are codified in 2 U.S.C. \u00c2\u00a72a and are further detailed in the section below, alongside the relevant census procedures codified in Title 13 of the U.S. Code . "], "subsections": []}, {"section_title": "Reapportionment Method and Timeline", "paragraphs": ["The apportionment steps detailed below are also summarized by the timeline in Figure 1 . Under federal law, April 1 in any year ending in \"0\" marks the official decennial census date and the beginning of the population counting process. The U.S. Census Bureau calculates the apportionment population for the United States from the information it collects in the decennial census and certain administrative records. The apportionment population reflects the total resident population in each of the 50 states, including minors and noncitizens, plus Armed Forces personnel/dependents living overseas and federal civilian employees/dependents living overseas. The Secretary of Commerce must report the apportionment population to the President within nine months of the census date (by December 31 of the year ending in \"0\"). In past years, the Census Bureau has released apportionment counts to the public at about the same time they are presented to the President. ", "Under requirements in the Constitution, each state must receive at least one House Representative, and under statute, the current House size is set at 435 seats. To determine how the 51 st through 435 th seats are distributed across the 50 states, a mathematical approach known as the method of equal proportions is used, which is specified in statute. Essentially, under this method, the \"next\" House seat available is apportioned to the state ranked highest on a priority list . The priority list rankings are calculated by taking each state's apportionment population from the most recent census, and multiplying it by a series of values. The multipliers used are the reciprocals of the geometric means between every pair of consecutive whole numbers, with those whole numbers representing House seats to be apportioned. The resulting priority values are ordered from largest to smallest, and with the House size set at 435, the states with the top 385 priority values receive the available seats. See the Appendix for additional information on the method of equal proportions and other methods proposed or used in previous apportionments.", "The President then transmits a statement to Congress showing (1) \"the whole number of persons in each State,\" as determined by the decennial census and certain administrative records; and (2) the resulting number of Representatives each state would be entitled to under an apportionment, given the existing number of Representatives and using the method of equal proportions. The President submits this statement to Congress within the first week of the first regular session of the next Congress (typically, early January of a year ending in \"1\"). Within 15 calendar days of receiving the President's statement, the Clerk of the House sends each state governor a certificate indicating the number of Representatives the state is entitled to. Each state receives the number of Representatives noted in the President's statement for its House delegation, beginning at the start of the next session of Congress (typically, early January of a year ending in \"3\"). ", "States may then engage in their own redistricting processes, which vary based on state laws. Federal law contains requirements for how apportionment changes will apply to states in the event that any congressional elections occur between a reapportionment and the completion of a state's redistricting process. In these instances, states with the same number of House seats would use the existing congressional districts to elect Representatives; states with more seats than districts would elect a Representative for the \"new\" seat through an at-large election and use existing districts for the other seats; and states with fewer seats than districts would elect all Representatives through an at-large election."], "subsections": []}]}, {"section_title": "Redistricting Process23", "paragraphs": ["Congressional redistricting involves creating or redrawing geographic boundaries for U.S. House districts within a state. Redistricting procedures are largely determined by state law and vary across states, but states must comply with certain parameters established by federal statute and court decisions. In general, there is variation among states regarding the practice of drawing districts and which decisionmakers are involved in the process. Across states, there are some common standards and criteria for districts, some of which reflect values that are commonly thought of as traditional districting practices. Districting criteria may result either from shared expectations and precedent regarding what districts should be like, or they may result from certain standards established by current federal statute and court decisions. These criteria typically reflect a goal of enabling \"fair\" representation for all residents, rather than allowing arbitrary, or discriminatory, map lines.", "Redistricting efforts intended to unfairly favor one group's interests over another's are commonly referred to as gerrymandering . Packing and cracking are two common terms that describe such districts, but there are various ways in which district boundaries might be designed to advantage or disadvantage certain groups of voters. Packing describes district boundaries that are drawn to concentrate individuals who are thought to share similar voting behaviors into certain districts. Concentrating prospective voters with shared preferences can result in a large number of \"wasted votes\" for these districts, as their Representatives will often be elected by a supermajority that far exceeds the number of votes required for a candidate to win. Cracking may be thought of as the opposite of packing, and occurs when individuals who are thought to share similar voting preferences are deliberately dispersed across a number of districts. This approach dilutes the voting strength of a group and can prevent its preferred candidates from receiving a majority of the vote in any district.", "For some states, redistricting following an apportionment may be necessary to account for House seats gained or lost based on the most recent census population count. Generally, however, states with multiple congressional districts engage in redistricting following an apportionment in order to ensure that the population size of each district remains approximately equal under the equality standard or \"one person, one vote\" principle (discussed under \" Population Equality \" below). Some states might make additional changes to district boundaries in the years following an initial redistricting; in some instances, such changes are required by legal decisions finding that the initial districts were improperly drawn."], "subsections": [{"section_title": "Federal Requirements/Guidelines for Redistricting: History and Current Policy", "paragraphs": ["From time to time, Congress considers legislation that would affect apportionment and redistricting processes. The Constitution requires the apportionment of House seats across states based on population size, but it does not specify how those seats are to be distributed within each state. Most redistricting practices are determined by state constitutions or statutes, although some parts of the redistricting process are affected by federal statute or judicial interpretations. ", "The current system of single-member districts (rather than a general ticket system, where voters could select a slate of Representatives for an entire state) is provided by 2 U.S.C. \u00c2\u00a72c. In addition to requiring single-member districts, Congress has, at times, passed legislation addressing House district characteristics. For example, in the 1800s and early 1900s, some federal apportionment statutes included other standards for congressional districts, such as population equality or geographic compactness. None of these criteria is expressly contained in the current statute addressing federal apportionment. ", "Many of the other federal parameters for congressional redistricting have resulted from judicial decisions. It is not uncommon for states to face legal challenges regarding elements of their redistricting plans. One analysis of the 2010 redistricting cycle, for example, found that redistricting lawsuits had been filed in 38 states, and legal challenges to congressional districts in several states continued into 2019. This report is not intended to be a legal analysis. For additional information on redistricting law, see CRS Report R44199, Congressional Redistricting: Legal and Constitutional Issues , and CRS Report R44798, Congressional Redistricting Law: Background and Recent Court Rulings ."], "subsections": [{"section_title": "Population Equality", "paragraphs": ["One area of redistricting addressed by federal standards is population equality across districts. Legislative provisions, requiring that congressional districts \"[contain] as nearly as practicable an equal number of inhabitants,\" were found in federal apportionment acts between 1872 and 1911. The U.S. Supreme Court has also addressed population size variance among congressional districts within a state, or malapportionment . Under what is known as the \"equality standard\" or \"one person, one vote\" principle, the Court has found congressional districts within a state should be drawn to approximately equal population sizes. Mathematically, there are several ways in which the population difference across districts (or deviation from an ideal district size) may be expressed.", "These equal population standards apply only to districts within a state, not to districts across states. To illustrate how district population sizes can vary across states, Table 3 provides Census Bureau estimates from 1910 to 2010 for the average district population size nationwide, as well as estimates for which states had the largest and smallest average district population sizes. Wide variations in state populations and the U.S. Constitution's requirement of at least one House seat per state make it difficult to ensure equal district sizes across states, particularly if the size of the House is fixed. The expectation that districts in a state will have equal population sizes reinforces the long-standing practice that states redraw district boundaries following each U.S. Census, in order to account for the sizable population shifts that can occur within a 10-year span. ", "To assist states in drawing districts that have equal population sizes, the Census Bureau provides population tabulations for certain geographic areas identified by state officials, if requested, under the Census Redistricting Data Program, created by P.L. 94-171 in 1975. Under the program, the Census Bureau is required to provide total population counts for small geographic areas; in practice, the Bureau also typically provides additional demographic information, such as race, ethnicity, and voting age population, to states."], "subsections": []}, {"section_title": "Racial/Language Minority Protections42", "paragraphs": ["The Voting Rights Act of 1965 (VRA) also affects how congressional districts are drawn. One key statutory requirement for congressional districts comes from Section 2 of the VRA, as amended, which prohibits states or their political subdivisions from imposing any voting qualification, practice, or procedure that results in denial or abridgement of the right to vote based on race, color, or membership in a language minority. Under the VRA, states cannot draw district maps that have the effect of reducing, or diluting, minority voting strength."], "subsections": []}]}, {"section_title": "Other Redistricting Considerations", "paragraphs": ["In addition to requirements of population equality and compliance with the VRA, several other redistricting criteria are common across many states today, including compactness, contiguity, and observing political boundaries. Some of the common redistricting criteria specified by states are presented in Table 4 . These factors are sometimes referred to as traditional districting principles and are often related to geography. The placement of district boundaries, for example, might reflect natural features of the state's land; how the population is distributed across a certain land area; and efforts to preserve existing subdivisions or communities (such as town boundaries or neighborhood areas). Redistricting laws in many states currently include such criteria, but they are not explicitly addressed in current federal statute. Previous federal apportionment statutes, however, sometimes contained similar provisions."], "subsections": [{"section_title": "Compactness and Contiguity", "paragraphs": ["As a districting criterion, compactness reflects the idea that a congressional district should represent a geographically consolidated area. Compactness of congressional districts is a requirement in 30 states, but often, state laws do not specify precise measures of compactness. Generally, a compact district would tend to have smoother boundaries and might resemble a standard geometric shape more than a less compact district. In some conceptualizations, a compact district would have an identifiable \"center\" that seems reasonably equidistant from any of its boundaries.", "Federal apportionment acts between 1842 and 1911 contained a provision requiring that congressional districts be of \"contiguous territory,\" and most states have included similar language in their current redistricting laws. For a district to be contiguous, it generally must be possible to travel from any point in the district to any other place in the district without crossing into a different district. "], "subsections": []}, {"section_title": "Preserving Political Subdivisions", "paragraphs": ["Most states require that redistricting practitioners take into account existing political boundaries, such as towns, cities, or counties. In many instances, districts may not be able to be drawn in ways that encompass entire political subdivisions, given other districting standards, like population equality, that could take precedence. Maintaining political subdivisions can also help simplify election administration by ensuring that a local election jurisdiction is not split among multiple congressional districts. Some state laws direct redistricting authorities to preserve the \"core\" of existing congressional districts; other states prohibit drawing district boundaries that would create electoral contests between incumbent House Members. "], "subsections": []}, {"section_title": "Preserving Communities of Interest", "paragraphs": ["Some states include the preservation of communities of interest as a criterion in their redistricting laws. People within a community of interest generally have a shared background or common interests that may be relevant to their legislative representation. These recognized similarities may be due to shared social, cultural, historical, racial, ethnic, partisan, or economic factors. In some instances, communities of interest may naturally be preserved by following other redistricting criteria, such as compactness or preserving political subdivisions. "], "subsections": []}, {"section_title": "Promoting Political Competition; Considering Existing District or Incumbent", "paragraphs": ["Some states include measures providing that districts cannot be drawn to unduly favor a particular candidate or political party. The term gerrymander originated to describe districts drawn to favor a particular political party, and it is often used in this context today. Redistricting has traditionally been viewed as an inherently political process, where authorities have used partisan considerations in drawing district boundaries. Districts generally may be drawn in a way that is politically advantageous to certain candidates or political parties, unless prohibited by state law. Some states, for example, expressly allow the use of party identification information in the redistricting process, whereas others prohibit it; similarly, some states may allow for practices to protect an incumbent or maintain the \"core\" of an existing district, whereas other states prohibit any practices that would favor or disfavor an incumbent or candidate."], "subsections": []}]}, {"section_title": "State Processes for Redistricting", "paragraphs": ["Redistricting processes are fundamentally the responsibility of state governments under current law and practice. Among the 43 states with multiple House districts, a variety of approaches are taken, but generally, states either allow their state legislatures or a separate redistricting commission to determine congressional district boundaries. The map in Figure 3 displays the redistricting methods currently used across states.", "Historically, and in the majority of states today, congressional district boundaries are primarily determined by state legislatures. Currently, 37 states authorize their state legislatures to establish congressional district boundaries. Most of these states enable the governor to veto a redistricting plan created by the legislature; Connecticut and North Carolina do not allow a gubernatorial veto.", "Other states, in recent years, have begun to use redistricting commissions, which may be more removed from state legislative politics. In eight states that currently have multiple congressional districts (Arizona, California, Colorado, Hawaii, Idaho, Michigan, New Jersey, and Washington), redistricting commissions are primarily responsible for redrawing congressional districts; Montana's state constitution provides for an independent redistricting commission to draw congressional district boundaries, if reapportionment results in multiple seats for the state. In five other states (Maine, New York, Rhode Island, Utah, and Virginia), a commission serves in an advisory capacity during the redistricting process. Commissions may also be used as a \"backup\" or alternate means of redistricting if the legislature's plan is not enacted, such as in Connecticut, Indiana, and Ohio. ", "The composition of congressional redistricting commissions can also vary; many include members of the public selected by a method intended to be nonpartisan or bipartisan, whereas other commissions may include political appointees or elected officials, such as in Hawaii and New Jersey. A commission's membership, the authority granted to it, its relationship to other state government entities, and other features may affect whether a commission is perceived to be undertaking an objective process or a more politicized one. Some proponents of redistricting commissions believe that using independent redistricting commissions can prevent opportunities for partisan gerrymandering and may create more competitive and representative districts. Others, however, believe that political considerations can remain in commission decisionmaking processes, and that the effect of redistricting methods on electoral competitiveness is overstated. For more information on redistricting commissions, see CRS Insight IN11053, Redistricting Commissions for Congressional Districts .", "The timeline for redistricting also varies across states, and can be affected by state or federal requirements regarding the redistricting process; the efficiency of the legislature, commission, or other entities involved in drawing a state's districts; and, potentially, by legal or political challenges made to a drafted or enacted redistricting plan. In general, the redistricting process would usually begin early in a year ending in \"1,\" once each state has learned how many seats it is entitled to under the apportionment following the decennial census. Many states complete the process within the next year. After the 2010 reapportionment, for example, Iowa was the first state to complete its initial congressional redistricting plan on March 31, 2011, and 31 other states completed their initial plans by the end of 2011. The remaining 11 states with multiple congressional districts completed their initial redistricting plans by the middle of 2012, with Kansas becoming the final state to complete its initial plan on June 7, 2012. Some states may redistrict multiple times between apportionments, if allowed under state law or required by a legal challenge to the preliminary redistricting."], "subsections": []}, {"section_title": "Congressional Options Regarding Redistricting", "paragraphs": ["Although redistricting processes in practice today are largely governed by state law, Congress has, at times, considered an expanded federal government role, which could serve to standardize certain elements of the redistricting process across states. Given the historically limited role the federal government has played in the redistricting process, concerns about federalism may arise in the context of certain congressional efforts addressing redistricting. The types of legislative proposals briefly introduced in this section reflect some common examples of redistricting bills introduced in recent Congresses; they are not meant to be an exhaustive list of all the options Congress has considered or could consider related to redistricting. ", "Some legislative proposals in recent Congresses would establish criteria for districts, such as population equality, compactness, contiguity, or preservation of existing political subdivisions. Bills have also been introduced that would require states to use independent redistricting commissions and/or maintain certain standards of public input and transparency regarding the redistricting process. Some congressional bills include provisions to prevent states from redistricting more than once following an apportionment, which is a practice sometimes referred to as \"mid-decade redistricting.\" Other bills would expand oversight by the Department of Justice under certain circumstances related to existing requirements of, or proposed amendments to, the VRA. ", "Most of these bills have been referred to committee but not passed by either chamber. In the 116 th Congress, H.R. 1 served as a subject of multiple committee hearings and was passed by the House. H.R. 1 is a multifaceted bill that addresses multiple areas of election administration, among other topics; with respect to redistricting, it would require states to use independent redistricting commissions, adopt certain redistricting criteria, and prohibit mid-decade redistricting."], "subsections": []}]}, {"section_title": "Concluding Observations", "paragraphs": ["Apportionment and redistricting address fundamental elements of representational democracy. Determining how many elected representatives should serve in the House, and how many people should be in each congressional district, are central questions for those who are concerned with how responsive the House can be to the interests of the American public. During earlier eras in the United States, the number of seats in the House of Representatives generally increased as the American population increased, and district sizes could be kept more equal over time and across states. The House size, however, has been set at 435 seats throughout the last century, while the national population has continued to grow and concentrate in certain geographic areas, leading to larger constituencies across all House districts over time and disparate district sizes across states.", "Certain elements of the apportionment process are established by the U.S. Constitution. This includes the requirement for representation in the House based on state population size; the reallocation of House seats every 10 years upon the completion of a national population count; and the requirements that each state receives at least one Representative and that there can be no more than one Representative for every 30,000 persons. Other elements of the process are addressed through congressional legislation, such as the overall number of House seats or method of distributing seats among the states. Congress more regularly legislated in this area prior to the mid-20 th century, passing decennial acts to address upcoming censuses and apportionments, rather than creating bills intended to apply for all future reapportionment cycles. ", "Whereas apportionment is a process largely governed by federal statute, redistricting is a process, in practice, largely governed by state law. Certain federal standards apply to House districts, generally in the interest of preserving equal access to representation, but the method and timeline by which those districts are created is largely determined by state law. In states with multiple congressional districts, there are a multitude of ways in which district boundaries can be drawn, depending upon the criteria used to create the districts. There is often an expectation that congressional districts will be drawn in a way that ensures \"fair\" representation, but \"fairness\" can be a somewhat subjective determination. ", "Many lawmakers and members of the public may agree on some of the more basic representational principles embedded in apportionment and redistricting law, but can find it difficult to apply those principles in practice. The criteria commonly used for redistricting today reflect a combination of state and federal statutes, judicial interpretations, and practices from past redistricting cycles that may require trade-offs between one consideration and another. Ensuring equal population size across all congressional districts, for example, may be an agreeable goal for many individuals. In practice, however, the geographic and demographic distribution of residents within and across states, coupled with requirements to observe state boundaries, provide all states with at least one Representative, and maintain a constant number of House seats, make this goal more difficult to achieve. Although mapmaking software today can design districts with increasing precision with respect to geographic boundaries and population characteristics, this technological capacity has not necessarily simplified the overall task of redistricting. A majority of states faced legal challenges to congressional district maps drawn following the 2010 census, and several cases remained pending in 2019, reflecting differing perspectives on fairness, representational access, and how competing redistricting criteria should be weighted. "], "subsections": [{"section_title": "Appendix. Determining an Apportionment Method", "paragraphs": ["Congress is a bicameral legislature, in which each state receives equal representation in the Senate and each state's representation in the House is based upon its population. Essentially, any method of apportionment for the House must consider three key variables: (1) the number of House seats; (2) the number of U.S. states; and (3) the apportionment population of each state. A mathematical decision must also be made regarding how fractions of seats are addressed, since House seats must be allocated as whole numbers, and simple division methods are unlikely to produce this outcome for all (or any) states. Because the Constitution does not specify a particular method for apportionment, several options have been considered and utilized throughout history. ", "When determining apportionment, parameters could be set for the number of seats in the House, the population size of a district, or both. The Constitution, to an extent, addresses House size and district size by requiring that each state receives at least one House seat and requiring that there can be no more than one Representative per every 30,000 persons. Yet these provisions provide little practical guidance for what the size of the House or the size of a district should be. Based on the number of states and U.S. apportionment population from the 2010 Census, for example, the House could range from a minimum of 50 seats to a maximum size of over 10,000 seats. As a general principle, House size and district size are inversely related: a larger number of House seats means smaller population sizes for districts, and a smaller number of House seats means larger population sizes for districts. Attempts by the Framers and various Congresses to address apportionment reveal a number of perspectives on how best to create a representative legislature, along with political and logistical considerations related to changes in the size of the House. ", "Prioritizing Equal-Sized Districts or Preserving a Fixed House Size", "An apportionment method prioritizing relatively equal district population size would establish a representation ratio, where there would be one Representative per x number of persons. If the ratio remains the same across apportionment cycles, increases or decreases in the U.S. apportionment population would result in corresponding increases or decreases to the total number of House seats. The representation ratio could also be adjusted to create larger or smaller districts, in order to limit the magnitude of changes to the overall size of the House. If states receive fractional allocations of House seats and there is no constraint on the size of the House, a simple rounding rule could be utilized to arrive at a whole number of seats for the House overall.", "A general example of an apportionment approach prioritizing relatively equal district size follows:", "1. determine an ideal district population size, d ; 2. divide each state's apportionment population, p s1 , p s2 \u00e2\u0080\u00a6 p s50, by d to determine how many House seats a state would be entitled to (its \"quota\" of seats), q ; and 3. determine a rounding rule to apply for states in which q is not a whole number.", "Until the early 20 th century, the size of the House generally increased with each apportionment, due to the addition of new states and population growth, but today, the number of House seats is set at 435 by federal statute. Arguments to expand the House have included expanding the range of interests that House Members would represent and ensuring that Members remained knowledgeable about local issues. Yet concerns have also been raised that it would not be feasible to increase the House size apace with national population growth.", "To be sure that a particular apportionment conforms to a specified size of the House, each state must receive a whole number of seats, and the sum of all states' seats must equal the desired total House size. Many apportionment approaches vary on how to address fractional seats, as remainders will often result when calculating state seat quotas. A general example of an apportionment approach to reach a certain House size follows:", "1. a set number of House seats, H , is agreed upon; 2. divide the national apportionment population, p USA , by H to determine an \"ideal\" or average district population size, d , also known as the \"initial divisor\"; 3. divide each state's apportionment population, p s1 , p s2 \u00e2\u0080\u00a6 p s50, by d to determine how many House seats a state would be entitled to (its \"quota\" of seats), q ; 4. determine a rounding rule to apply to any q values that are not whole numbers (to represent actual House seats, which cannot be divided); and 5. add these rounded (or adjusted), q values; if this sum does not equal H , determine a method to adjust state quotas so that the sum of the resulting q values equals H . ", "The following discussions provide an introduction to several methods that have been used for congressional apportionment in the United States. To illustrate how these methods work, for each method an imaginary example is provided in the accompanying table, in which the size of the House is fixed at 20 Members and the seats are divided among four states (states A, B, C, and D) with the populations specified in the tables.", "Hamilton/Vinton Method (Ranking Fractional Remainders)", "Congress considered various methods of apportionment after the first census of 1790 and passed an initial apportionment bill in 1792 that would have utilized what is now known as the Hamilton/Vinton method. President George Washington, however, exercised his first veto on the measure, in part, because the resulting apportionment calculations would have violated the requirement of at least 30,000 persons per district for multiple states. Representative Samuel Vinton later introduced legislation proposing this method, which was enacted, and this apportionment method was first used in 1850 and continued to inform apportionment considerations throughout the rest of the 19 th century, in conjunction with the Webster method (discussed below). The Hamilton/Vinton method is based on a fixed House size, H . Each state receives the whole number of seats in its quota, q , of seats. The remainders from q are rank-ordered from largest to smallest, and any additional House seats are apportioned to the states with the largest remainders. ", "Jefferson Method (Largest Divisors)", "Following the presidential veto of the Hamilton method, Congress adopted the Jefferson method of apportionment, which was used from 1792 to 1832. The Jefferson method for apportionment is based on a fixed House size, H , and each state's quota of seats, q , is rounded down to the nearest whole number. Often, the sum of the rounded-down q values is less than H . When this occurs, divisor values smaller than d are tested until an adjusted divisor, d adj , is found that results in a set of q values which, when rounded down, sum to H . ", "Webster Method (Major Fractions)", "Some believed that the Jefferson method favored large states, and the Webster method was an approach first used for apportionment in 1842 and last used for apportionment following the 1930 census. The Webster method is similar to the Hamilton/Vinton method but differs in how it addresses remainders of seats. Each state receives the whole number of seats in its quota, q ; then, q remainders greater than or equal to 0.5 are rounded up to the next whole number, and those states receive an additional seat. The example provided in Table A-3 happens to result in the same number of House seats as the other examples in this appendix, which treat the House size, H , as fixed at 20 seats, but performing these initial calculations under the Webster method could result in a subsequent adjustment to the number of House seats. If the House size remains fixed, and the initial sum of seats produced by the Webster method does not equal the desired number of seats, an adjusted divisor, d adj , can be used to calculate q values that, when rounded and summed, result in a specific House size.", "Huntington-Hill Method (Method of Equal Proportions)", "In addition to treating large and small states similarly, some have also believed that an apportionment method should minimize percentage differences in district population sizes (across states) as much as possible. The method of equal proportions, also known as the Huntington-Hill method, seeks to achieve this objective, and has been used for all House apportionments since 1941. This method differs from the Webster method by rounding up remainders for a state's quota, q , at the geometric mean, G , rather than at the arithmetic mean. The geometric mean is found by multiplying two successive numbers together, then taking the square root of their product; here, the successive numbers represent a state's q rounded down to the nearest whole number (its \"lower\" quota) and a state's q rounded up to the nearest whole number (its \"upper\" quota). Each state receives its \"lower\" quota of seats and then may receive an additional seat if its quota, q , is greater than or equal to its geometric mean, G .", "The initial calculation for a state's quota, q , under the method of equal proportions, is made by using the \"ideal\" district size, d , as the divisor. Table A-4 provides a sample apportionment in which the sum of the rounded geometric means happens to result in the desired House size, H , of 20 seats, but, in practice, this often does not occur. If the sum of the rounded geometric means for each state does not result in the desired number of House seats, there is an additional step: seats can be apportioned using a priority list , which essentially ranks each state's claim to the \"next\" House seat apportioned (i.e., the 51 st -435 th seats), after each state receives the one seat it is constitutionally entitled to.", "To generate a priority list, each state's apportionment population is multiplied by a series of multiplier values. The multiplier values are created using the reciprocal of the geometric mean associated with each potential successive seat number for the state (above its constitutionally mandated first seat). For example, the multiplier value for a second House seat in any state would be 1/\u00e2\u0088\u009a(1 x 2) or 0.707, the multiplier for a third House seat would be \u00e2\u0088\u009a(2 x 3) or 0.408, and so on. The products that result from multiplying these values by each state's apportionment population are ranked from largest to smallest to create the priority list, and seats are distributed until H number of seats (currently 385, the number needed to get to a total of 435 seats once each of the 50 states receives its constitutionally required seat) have been apportioned."], "subsections": []}]}]}}
{"id": "R46340", "title": "Federal Response to COVID-19: Department of Veterans Affairs ", "released_date": "2020-05-01T00:00:00", "summary": ["The Department of Veterans Affairs (VA) provides a range of benefits to eligible veterans and their dependents. The department carries out its programs nationwide through three administrations and the Board of Veterans' Appeals (BVA).", "The Veterans Health Administration (VHA) is responsible for health care services and medical and prosthetic research programs. The Veterans Benefits Administration (VBA) is responsible for, among other things, providing disability compensation, pensions, and education assistance. The National Cemetery Administration (NCA) is responsible for maintaining national veterans cemeteries; providing grants to states for establishing, expanding, or improving state veterans cemeteries; and providing headstones and markers for the graves of eligible persons, among other things.", "With a vast integrated health care delivery system spread across the United States, the VHA is statutorily required to serve as a contingency backup to the Department of Defense (DOD) medical system during a national security emergency and to provide support to the National Disaster Medical System and the Department of Health and Human Services (HHS), as necessary, in support of national emergencies. These functions are known as VA's \"Fourth Mission.\"", "Since the onset of the Coronavirus Disease 2019 (COVID-19) pandemic, Congress has passed a number of relief measures affecting the VA and its Fourth Mission.", "T he Families First Coronavirus Response Act ( P.L. 116-127 ), enacted on March 18, 2020, provides $60 million for the VHA in emergency supplemental appropriations. Among other things, the act also prohibits the VA from charging any copayment or other cost-sharing payments for COVID-19 testing or medical visits during any period of this public health emergency.", "P.L. 116-128 , enacted on March 21, allows the VA to continue to provide GI Bill benefits from March 1, 2020, through December 21, 2020, for courses at educational institutions that are converted from in-residence to distance learning by reason of an emergency or health-related situation.", "T he Coronavirus Aid, Relief, and Economic Security Act (CARES Act) ( P.L. 116-136 ), enacted on March 27, provides a total of $19.6 billion in emergency supplemental appropriations for FY2020 for certain VA accounts, as well as temporary statutory relief for various VA programs and services during the COVID-19 public health emergency.", "The Student Veteran Coronavirus Response Act of 2020 ( P.L. 116-140 ), enacted on April 28, 2020, is intended to mitigate the disruption to VA educational benefits, including Vocational Rehabilitation & Employment (VR&E), when schools, programs of education, and work are suspended or closed from March 1, 2020, to December 21, 2020."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["The Department of Veterans Affairs (VA) provides a range of benefits and services to veterans who meet certain eligibility criteria. These benefits and services include, among other things, hospital and medical care; disability compensation and pensions; education; vocational rehabilitation and employment services; assistance to homeless veterans; home loan guarantees; administration of life insurance, as well as traumatic injury protection insurance for servicemembers; and death benefits that cover burial expenses.", "The department carries out its programs nationwide through three administrations and the Board of Veterans' Appeals (BVA). The Veterans Health Administration (VHA) is responsible for health care services and medical and prosthetic research programs. The Veterans Benefits Administration (VBA) is responsible for, among other things, providing disability compensation, pensions, and education assistance. The National Cemetery Administration (NCA) is responsible for maintaining national veterans cemeteries; providing grants to states for establishing, expanding, or improving state veterans cemeteries; and providing headstones and markers for the graves of eligible persons, among other things. ", "In addition to providing health care services to veterans and certain eligible dependents, the VHA must, by statute, serve as a contingency backup to the Department of Defense (DOD) medical system during a national security emergency and provide support to the National Disaster Medical System and the Department of Health and Human Services (HHS) as necessary in response to national crises. The department must also take appropriate actions to ensure VA medical centers are prepared to protect veteran patients and staff during a public health emergency. "], "subsections": []}, {"section_title": "Novel Coronavirus (COVID-19)13", "paragraphs": ["On December 31, 2019, the World Health Organization (WHO) learned of a cluster of pneumonia cases in Wuhan City, Hubei Province of China. The WHO has since linked these illnesses to a disease, called Coronavirus Disease 2019 or COVID-19, caused by a previously unidentified strain of coronavirus, designated SARS-CoV-2. On January 30, 2020, an Emergency Committee convened by the WHO Director-General declared the COVID-19 outbreak to be a Public Health Emergency of International Concern (PHEIC). On January 31, the Secretary of Health and Human Services declared a public health emergency under Section 319 of the Public Health Service Act (42 U.S.C. \u00c2\u00a7247d). On March 11, 2020, the WHO characterized the COVID-19 outbreak as a pandemic. Two days later, on March 13, the President declared the COVID-19 outbreak a national emergency, beginning March 1, 2020. ", "The VHA plays a significant role in the domestic response to a pandemic. The VHA is one of the largest integrated direct health care delivery systems in the nation, caring for more than 7.1 million patients in FY2020 and providing 123.8 million outpatient visits at approximately 1,450 VA sites of care. The VHA employs a workforce of 337,908 full-time equivalent employees (FTEs), largely composed of health care professionals. In addition, the VHA has a statutory mission to contribute to the overall federal emergency response capabilities."], "subsections": []}, {"section_title": "Scope and Limitations of This Report", "paragraphs": ["This report provides an overview of VA's and Congress's response thus far to the rapidly evolving COVID-19 pandemic. The report does not provide an exhaustive description of all of the department's activities, and it is based on publicly available information and daily updates provided from the VA. ", "The report is organized as follows:", "first, it provides details on VHA's, VBA's, and NCA's response activities; second, it provides details on VA's emergency preparedness (\"Fourth Mission\") activities to provide support to the overall federal emergency response; and third, it describes congressional activity related to VA and veterans programs and services.", "The COVID-19 pandemic is a rapidly evolving situation and information changes on a daily, or often hourly, basis. The Appendix provides a summary of VHA's emergency authorities. "], "subsections": []}, {"section_title": "Medical Care for Veterans During the COVID-19\u00c2 Outbreak", "paragraphs": ["VHA's provision of medical care to veterans in response to the COVID-19 outbreak includes implementing mitigation strategies at VHA sites of care, as well as testing and treating veterans diagnosed with or suspected of having COVID-19. (A general description of medical care to veterans is provided in other CRS reports. )", "In late February 2020, the VA provided information to congressional oversight committees on the number of positive and presumptive positive cases of COVID-19. On March 13, 2020, the department began publishing this information publicly on its website, which it updates on a regular basis. The VA has been providing regular updates to congressional oversight committees since that time. ", "The VA has published two public documents that provide valuable information to patients and the public regarding the response to COVID-19: (1) a COVID-19 response plan that provides operational details for both medical care for veterans, as well as other VHA missions, and (2) Coronavirus Frequently Asked Questions (FAQ) for patients. The VA COVID-19 response plan is summarized in more detail in the \" Emergency Preparedness (\"Fourth Mission\") \" section of this report.", "This section describes current health system capacity (including staffing changes), guidance for patients, mitigation at VHA sites of care (including limitations to community care), and testing and treatment for COVID-19."], "subsections": [{"section_title": "Health System Capacity", "paragraphs": ["This subsection reflects point-in-time information provided by the VA to reflect the current capacity of the system.", "As of April 14, 2020, veterans and VHA employees at sites of care spanning the United States have been diagnosed with COVID-19. The vast majority of COVID-19-positive veterans are being treated in outpatient settings, with a minority in VA inpatient intensive care unit (ICU) and acute care settings. The COVID-19 pandemic is a rapidly evolving situation and information changes on a daily, or often hourly, basis.", "In response to the pandemic, the VA increased the number of ICU and acute care beds that are typically available. As of April 29, 2020, bed capacity across the health system is 12,215, with far less than half occupied. No regional or local level occupancy data have been reported. The VA started deploying Vet Centers, which provide a range of counseling services, in locations facing large COVID-19 outbreaks.", "The VA is reporting that the health system has adequate levels of personal protective equipment (PPE), including N95 respirators. Earlier media reports, citing internal VA memoranda, stated that the VA has a shortage of PPE and hospitals are being directed to decide which employees get certain supplies. The media reports suggested that only employees that work directly with COVID-19 patients are to be provided N95 respirators. ", "An April 16, 2020, memorandum to Veterans Integrated Service Networks (VISN) directors from the VA Deputy Under Secretary for Health for Operations and Management confirmed that the VA received a significant number of N95 respirators and is working to secure additional facemasks and surgical masks. The memo specified that facilities have enough masks and respirators to follow CDC-based contingency strategies for supply management. The memo provides system-wide guidance for staff use of respirators and masks.", "Staff providing direct care should use N95 respirators. If N95 respirators are in short supply, staff are directed to use surgical masks for low-risk care on suspected or confirmed COVID-19 patients. Staff providing care for patients in specified institutional settings will be provided with one facemask or surgical mask per day.", "It goes on to provide guidance to VISN directors on how to support medical facility directors in implementing contingency and crisis strategies based on the referenced CDC guidelines. Medical facility directors have authority to determine allocation and crisis standards of care, in the event that resources become scarce.", "The VA is allocating equipment within VISNs, as needed, and it has increased pharmaceutical inventories from 8 days to 10 days and is utilizing certain medications needed for hospitalized COVID-19 patients as national system-wide resources. ", "As described below, the VA has taken a number of actions to ensure that there is adequate staffing and that safeguards are in place to protect frontline employees. These actions are described in the next section."], "subsections": [{"section_title": "Employment Actions Related to the Pandemic Response", "paragraphs": ["Actions related to employment can be separated into two categories: (1) actions to increase the capacity of the health system during the pandemic response and (2) actions to protect current employees from contracting the COVID-19 virus."], "subsections": [{"section_title": "Employment Actions to Increase Health System Capacity", "paragraphs": ["The VA submitted a request to the Office of Personnel Management (OPM) and received approval to waive a requirement that retiree' salaries be reduced when rehired to reflect the retirement annuity they already receive, otherwise known as a dual compensation reduction waiver. The VA is asking retired clinicians to register online to join the workforce and to act as surge capacity if needed. The registration form adds the reemployed retirees to VHA's national provider database and matches them to opportunities based on their specialties.", "The VA has indicated that it is exploring the use of existing hiring authorities to make 30-day appointments where a critical need exists, one-year appointments in remote/isolated areas, and temporary not-to-exceed 120-day appointments. VA on-boarded 3,107 new hires in the period between April 22 and April 28, 2020.", "In addition, activation of the Disaster Emergency Medical Personnel System (DEMPS) allows the VA to deploy personnel from areas that are less impacted by COVID-19 to reinforce staff levels at other facilities as needed (e.g., facilities in New York City and New Orleans). Under DEMPS, movement of personnel must be approved by the VISN and the originating medical center's director."], "subsections": []}, {"section_title": "Employment Actions to Protect Employees", "paragraphs": ["A number of VHA employees have been diagnosed with COVID-19 or are being monitored for COVID-19. As of April 29, 2020, over 2,200 employees have been diagnosed with COVID-19 and 20 employees have died from the disease. The VA has taken specific actions to protect employees, which, in turn, increases health system capacity by reducing the need for front-line employees to take leave during the pandemic.", "The VA is following CDC precautions to reduce the likelihood of transmission of COVID-19 among employees. According to the VA, staff have been given guidance to remain home if symptoms develop, to obtain health checks for symptoms associated with COVID-19 while at work, and to report symptoms through the correct process. Employees are also being encouraged to develop personal and family disaster plans that enable them to continue working. Employees are encouraged to telework, if their work can be accomplished remotely.", "Sites of care are encouraged to use alternative treatment methods wherever possible, such as telemedicine and telehealth. To prevent the spread of infection, the VA has dedicated specific treatment areas for COVID-19 patients. This and other mitigation efforts at VHA sites of care are discussed below."], "subsections": []}]}]}, {"section_title": "Mitigation at VHA Sites of Care", "paragraphs": ["The VHA operates care settings with varying levels of patient risk for developing severe symptoms if COVID-19 is contracted. Each VA medical center is implementing a two-tiered system to mitigate the potential for spread of the virus, with one zone for active COVID-19 cases and a passive zone for care unrelated to COVID-19. The VA has canceled all elective surgeries and limited routine appointments to only those with the most critical need. ", "This section describes mitigation efforts at community living centers (CLCs; nursing homes) and spinal cord injury/disorder (SCI/D) centers, which are high-risk settings, separate from other care settings. The VA has implemented different screening processes and other pandemic responses depending on the care setting.", "On March 26, 2020, the VA Office of Inspector General (OIG) published the results of inspections of VA facilities for implementing the enhanced screening processes and pandemic readiness, which took place between March 19 and March 24. The findings of those inspections for each care setting appear in the appropriate sections below."], "subsections": [{"section_title": "CLCs and SCI/Ds", "paragraphs": ["On March 10, 2020, the VA announced safeguards to protect nursing home residents and spinal cord injury patients. As of that date, no visitors are allowed at either VA nursing homes or spinal cord injury/disorder centers. The only exception to this policy is if a veteran is in the last stages of life, in which case the VA allows visitors in the veteran's room only. The VA is not accepting any new admissions to nursing homes and is limiting new admissions to SCI/D centers.", "The OIG tested the no-access policy at 54 CLCs and found the majority to be in compliance with the policy. Nine of the 54 CLCs tested were prepared to allow OIG staff to enter, despite the no-access policy."], "subsections": []}, {"section_title": "Enhanced Screening at All Sites of Care", "paragraphs": ["The VA implemented enhanced screening procedures at all sites of care to screen for respiratory illness and COVID-19 exposure. Because each facility determines its own enhanced screening procedures, those procedures vary at the local level. However, the VA has designed standardized screening questions for each facility. Screening consists of the following three general questions:", "Do you have a fever or worsening cough or shortness of breath or flu-like symptoms? Have you or a close contact traveled to an area with widespread or sustained community transmission of COVID-19 within 14 days of symptom onset? Have you been in close contact with someone, including health care workers, confirmed to have COVID-19? ", "The VA's COVID-19 response plan provided specific potential questions that sites of care can implement in different care settings. Those screening questions also include screening scenarios for virtual triage via phone, telehealth, or secure messaging.", "If screened individuals are determined to be at risk, staff are instructed to isolate them immediately. If critically ill, individuals are transferred to the emergency department. If stable, individuals are sent home with printed instructions to isolate and contact their primary care providers.", "The OIG evaluated screening procedures at 58 medical centers and 125 community-based outpatient clinics (CBOC). The OIG found that 41 of 58 (71%) of medical centers' screening processes were generally adequate, 16 (28%) had some opportunities for improvement, and one medical center had inadequate screening procedures. The OIG found that the vast majority of CBOCs (97%) had screening processes in place. Four CBOCs had no screening process in place."], "subsections": []}, {"section_title": "Limitations on Community Care", "paragraphs": ["The VA instituted several changes to community care guidance during the COVID-19 pandemic response on community care access under the Veterans Community Care Program (VCCP). Under normal circumstances, veterans generally are eligible for access to medical care from non-VA community providers if they meet certain criteria, including wait time and drive time access standards and if the veteran elects to receive community care.", "The eligibility criteria are mandated by law, and the VA has no authority to waive them. However, as many non-VA providers are postponing or canceling routine care to mitigate the spread of COVID-19, wait times may be just as long or longer in the community. In addition, the VA indicated that community providers should not have veterans attend routine appointments in-person except where the urgency of in-person treatment outweighs the risk of contracting COVID-19.", "VA issued the following guidance to providers:", "convert routine in-person appointments to telehealth; follow CMS, CDC, state, and local guidance regarding screening, testing, case reporting, and PPE; plan for increased high acuity demand; communicate with local VA medical center regarding any veteran cases or exposure to COVID-19; episodes of care ordered through the VA can be extended by 60 days; and work with the third-party administrators of the community care network (CCN) to expand enrollment where possible."], "subsections": []}]}, {"section_title": "Guidance for Patients", "paragraphs": ["The VA is promoting the Coronavirus FAQ document as the main source of guidance for veterans. This document includes answers to broad questions about COVID-19, VA's role, testing, access to care, mental health, and visiting patients. A fact sheet with similar information is also available to patients.", "The VA is advising veterans who may be sick or who are exhibiting flu-like symptoms not to come to a VA facility. Instead, patients are asked to send a secure message through the VHA online portal, My HealtheVet, or to schedule a telehealth appointment. The VA is experiencing high call volumes at some facilities and call centers, so it is advising veterans to use online tools first. However, patients can call their health care providers instead of using the online tools available from the VA.", "In addition, the VA is advising patients to budget additional time for appointments due to enhanced screening measures at VA facilities. These enhanced screening measures, as well as other mitigation strategies at VHA facilities, are described below."], "subsections": []}, {"section_title": "COVID-19 Testing and Treatment65", "paragraphs": ["This section describes the current VA policy on testing patients for COVID-19 and treatment following a COVID-19 diagnosis. "], "subsections": [{"section_title": "COVID-19 Diagnostic Testing", "paragraphs": ["On March 13, 2020, the department began publishing the number of positive cases of COVID-19, and the number of tests conducted, on its public website, which it updates on a regular basis. Individual medical centers have discretion on where to send samples for testing. Samples can be tested at the Palo Alto VA Medical Center, state public health labs, or private labs.", "Individual providers decide whether to test for COVID-19 on a patient-by-patient basis. However, the VA has advised providers that to be tested, patients must be exhibiting respiratory symptoms and have another factor, such as recent travel or known exposure to someone who tested positive.", "Generally, diagnostic testing is a covered service under VA's standard medical benefits package, which is available to all veterans enrolled in the VA health care system. Some veterans are required to pay copayments for care that is not related to a service-connected disability. However, routine lab tests are exempt from copayment requirements. ", "The Families First Coronavirus Response Act ( P.L. 116-127 ), enacted on March 18, 2020, does not allow the VA to charge any copayment or other cost-sharing payments for COVID-19 testing or medical visits during any period of this public health emergency. (For a discussion of P.L. 116-127 , see the \" Congressional Response \" section of this report.)"], "subsections": []}, {"section_title": "COVID-19 Treatment", "paragraphs": ["The VA has not indicated whether it has developed a specific treatment plan for patients diagnosed with COVID-19. Treatment depends largely on the severity of symptoms that each patient experiences.", "The VA is handling coverage and cost of treatment for COVID-19 as it would for any other treatment for a condition that is not service-connected. Treatment for COVID-19 is a covered benefit under the VA standard medical benefits package. However, some veterans may have to pay copayments for both outpatient and inpatient care. ", "Normal coverage rules apply for veterans who report to urgent care or walk-in clinics. To be eligible, a veteran must be enrolled in the VA health care system and must have received VA care in the past 24 months preceding the episode of urgent or walk-in care. Eligible veterans needing urgent care must obtain care through facilities that are part of VA's contracted network of community providers. These facilities typically post information indicating that they are part of VA's contracted network. If an eligible veteran receives urgent care from a noncontracted provider or receives services that are not covered under the urgent care benefit, the veteran may be required to pay the full cost of such care. Certain veterans are required to pay copayments for care obtained at a VA-contracted urgent care facility or walk-in retail health clinic.", "In addition, normal rules apply for veterans who report to non-VA emergency departments. To be eligible for VA payment or reimbursement, a veteran's non-VA care must meet the following criteria:", "The emergency care or services were provided in a hospital emergency department or a similar facility that provides emergency care to the public. The claim for payment or reimbursement for the initial evaluation and treatment was for a condition of such a nature that a prudent layperson would have reasonably expected that delay in seeking immediate medical attention would have been hazardous to life or health. A VA or other federal facility or provider was not feasibly available, and an attempt to use them beforehand would not have been considered reasonable by a prudent layperson. At the time the emergency care or services were furnished, the veteran was enrolled in the VA health care system and had received medical services from the VHA within the 24-month period preceding the furnishing of such emergency treatment. The veteran was financially liable to the provider of emergency treatment for that treatment. The veteran had no coverage under a health plan contract that would fully cancel the medical liability for the emergency treatment. If the condition for which the emergency treatment was furnished was caused by an accident or work-related injury, the veteran is required to first pursue all claims against a third party for payment of such treatment."], "subsections": [{"section_title": "Potential Vaccine Cost-sharing", "paragraphs": ["In the event that a vaccine is approved by FDA and brought to market, it is unclear whether certain veterans would be charged copayments for administration of the vaccine. Under current regulations, the VA is prohibited from charging copayments for \"an outpatient visit solely consisting of preventive screening and immunizations (e.g., influenza immunization, pneumococcal immunization).\""], "subsections": []}]}]}]}, {"section_title": "Homelessness and Housing", "paragraphs": ["Veterans experiencing homelessness live in conditions that could make them particularly vulnerable to COVID-19. Those who are unsheltered lack access to sanitary facilities. For those sleeping in emergency shelters, conditions may be crowded, with short distances between beds, and there may be limited facilities for washing and keeping clean. ", "The VA administers programs to assist veterans experiencing homelessness and also manages several grant programs for nonprofit and public entities to provide housing and services to homeless veterans. These include the Homeless Providers Grant and Per Diem program (GPD), for transitional housing and services; the Supportive Services for Veteran Families program (SSVF), for short- to medium-term rental assistance and services; and Contract Residential Services (CRS), for providing housing for veterans participating in VA's Health Care for Homeless Veterans program. In addition, the Department of Housing and Urban Development (HUD), together with VA, administers the HUD-VA Supportive Housing program (HUD-VASH), through which veterans who are homeless may receive Section 8 vouchers to cover the costs of permanent housing and VA provides case management services."], "subsections": [{"section_title": "VA General Guidance for Homeless Program Grantees", "paragraphs": ["The VA released guidance on March 13, 2020, for its grantees that administer programs for veterans who are homeless. The guidance suggests grantees take a number of actions:", "Develop a response plan, or review an existing plan, and coordinate response planning with local entities, including health departments, local VA medical providers, and Continuums of Care. Plans should address staff health, potential staff shortages, and acquisition of food and other supplies, as well as how to assist veteran clients. Prevent infection through methods recommended by the CDC, such as frequent handwashing, wiping down surfaces, and informing clients about prevention techniques. In congregate living facilities, such as those provided through VA's Grant and Per Diem program, keep beds at least three feet apart (preferably six, if space permits), sleep head-to-toe, or place barriers between beds, if possible. Develop questions to ask clients about their health to determine their needs and how best to serve them. For new clients, interviews should occur prior to entry into a facility (such as over the phone), if possible, or in a place separate from other clients. If a client's answers to questions indicate risk of COVID-19, separate them from other program participants (have an isolation area, if possible), clean surfaces, and reach out to medical professionals. If isolation is not practical, reach out to other providers who might be able to isolate. "], "subsections": []}, {"section_title": "Supportive Services for Veteran Families (SSVF)", "paragraphs": ["The VA has released additional specific guidance and flexibilities for SSVF providers.", "SSVF regulations allow funds to be used for emergency housing, including hotels and motels; however, this use of funds may occur only when no other housing options, such as transitional housing through GPD, are available. In response to COVID-19, however, grantees may use funds for high-risk veterans to live in hotels and motels instead of congregate settings. Due to Public Housing Authority (PHA) closures and remote work, veterans who have HUD-VASH vouchers, but who have not yet moved into a housing unit, may face delays in receiving rental assistance. This delay may occur if a PHA cannot conduct a housing quality standards (HQS) inspection or complete other administrative tasks that allow move-in to occur. In these cases, SSVF grantees may use funds to cover rental assistance until a PHA has completed the tasks allowing the voucher to be used."], "subsections": []}, {"section_title": "HUD-VA Supportive Housing program (HUD-VASH)", "paragraphs": ["For veterans residing in rental housing using HUD-VASH vouchers, HUD has waived certain requirements pursuant to CARES Act ( P.L. 116-136 ) waiver authority to address situations that may arise due to COVID-19. For example, ordinarily HUD will not approve a unit for Section 8 rental assistance (which includes HUD-VASH vouchers) unless it has passed an HQS inspection. However, HUD has waived this requirement and will accept an owner certification that there is \"no reasonable basis to have knowledge that life threatening conditions exist in the unit.\" PHAs must conduct inspections of units as soon as reasonably possible, and no later than October 31, 2020. PHAs may also accept alternative inspection results rather than HQS inspections and allow families to move into units in these cases. For existing tenants, PHAs may change from an annual unit inspection schedule to a biennial schedule without updating their administrative plan. ", "If resident income changes due to an inability to work, or other reason, residents should report the change to their local PHA and rent should be adjusted accordingly. HUD has waived the requirement that PHAs obtain third-party verification of an income change for these income recertifications. In addition, as part of the CARES Act ( P.L. 116-136 ), residents receiving Section 8 rental assistance cannot be evicted for nonpayment of rent for 120 days from the date of the bill's enactment (March 27, 2020)."], "subsections": []}, {"section_title": "VA Loan Programs", "paragraphs": ["The VA administers both guaranteed and direct loans for veterans through the Veterans Benefits Administration. Prior to enactment of the CARES Act, VA encouraged lenders to establish a foreclosure moratorium for borrowers with VA loans, but a moratorium was not required. However, the CARES Act provides for both forbearance (i.e., allowing borrowers to reduce or suspend mortgage payments) and a foreclosure moratorium for federally backed single-family mortgages, including guaranteed VA loans. Direct VA loans do not appear to be included in the CARES Act definition of federally backed mortgage. ", "Borrowers may request forbearance from their loan servicer for up to 180 days, with another 180-day extension, due to financial hardship caused directly or indirectly by COVID-19. The foreclosure moratorium is in effect for 60 days beginning March 18, 2020. For more information about these provisions, see CRS Insight IN11334, Mortgage Provisions in the Coronavirus Aid, Relief, and Economic Security (CARES) Act ."], "subsections": []}]}, {"section_title": "Veterans Benefits Administration", "paragraphs": ["The Veterans Benefits Administration has taken several actions to assure continued delivery of disability compensation, pensions, and education assistance."], "subsections": [{"section_title": "Compensation and Pension Benefits", "paragraphs": ["On March 18, 2020, the Veterans Benefits Administration announced via Facebook and Twitter that all regional offices would be closed to the public starting March 19. The regional offices are to remain open to ensure the continuity of benefits, however, the offices are longer accepting walk-ins for claims assistance, scheduled appointments, counseling, or other in-person services. The VBA is directing veterans who have claims-specific questions or any other questions to use the Inquiry Routing & Information System (IRIS) or to call 1-800-827-1000.", "In a March 26 interview, VA Under Secretary for Benefits, Dr. Paul Lawrence, assured veterans and their families that benefits were still being processed thanks in part to the large telework capability in place for the VBA. Lawrence stated that about 90% of all VBA employees, approximately 22,500 individuals, are set up and teleworking to retain the continuity of processing claims.", "Dr. Lawrence also addressed the issue of veterans who need a compensation and pension exam completed as part of their benefits application. Due to travel restrictions and social distancing policies, Lawrence explained VBA's attempt at still providing the exams but without in-person contact. He stated:", "So we're trying to do more, a lot more through telehealth, You know phone call or a Skype session or something. We can get these exams done that we're flexing in new ways. Where once things were done in person \u00e2\u0080\u00a6 now they're being done electronically. ", "Following Dr. Lawrence's interview, on March 31, the VA issued a press release announcing changes to several in-person meetings and programs to ensure the safety of both the staff and veteran/dependent during this time. Some of these changes included ", "providing educational counseling through online and telephone services; using teleconferencing and VA Video Connect for case management, general counseling and connecting veterans to VR&E services; conducting informal conference hearings by telephone or video conferencing; providing virtual briefings and individualized counseling for transitioning servicemembers; and conducting examinations for disability benefits using tele-compensation and pension (Tele-C&P) exams. If an in-person examination is required, veterans will be notified for scheduling.", "However, on April 6, the VBA announced via email that it is \"suspending in-person C&P examinations until further notice and will continue to conduct C&P exams through ACE and Tele-C&P, when possible.\" The email also provided guidance on filing claims and information to assist veterans with submitting medical documentation without appearing in person. On April 3, the VA announced that claimants who need an extension in filing their paperwork \"can simply submit [the request] with any late-filed paperwork and veterans do not have to proactively request an extension in advance.\""], "subsections": []}, {"section_title": "Educational Assistance", "paragraphs": ["In FY2020, over 900,000 individuals are expected to receive veterans educational assistance from the GI Bills (e.g., the Post-9/11 GI Bill), Vocational Rehabilitation & Employment (VR&E), Veteran Employment Through Technology Education Courses (VET TEC), Veterans Work-Study, Veterans Counseling, and VetSuccess on Campus (VSOC). As a result of COVID-19, some participants' training and education may be disrupted, and some participants may receive a lower level of benefits, or none at all. These concerns may directly affect beneficiaries in several ways, including the following:", "Some students may be required to stop out, discontinue working, or take a leave of absence as a result of their own illness. Some training establishments, educational institutions, and work-study providers may close temporarily or permanently. Some training establishments, educational institutions, and work-study providers may be required to reduce participants' hours, enrollment rate, or rate of pursuit. Some educational institutions may transition some courses to a distance learning format. Some educational institutions may require students living on campus to move off campus. Individuals receiving benefits in foreign countries may encounter any of the above circumstances while residing in a foreign country whose COVID-19 situation may differ from that in the United States, or may stop out, discontinue working, or take a leave of absence and return to the United States.", "Since mid-March, the VA has sent direct emails to GI Bill participants and school certifying officials (SCOs) and held webinars for SCOs to explain its authority and payment processing procedures that are directly relevant to COVID-19 disruptions. ", "On March 13, 2020, the VBA Education Service requested that school-certifying officials \"temporarily refrain from making any adjustments to enrollment certifications\" if resident courses transitioned to distance education pending subsequent VA guidance and/or legislative action. The VBA Education Service administers VA educational assistance programs. Prior to the COVID-19 emergency, educational institutions were required to receive approval before transitioning any courses to a distance learning format for the courses to remain GI Bill-eligible. GI Bill benefits could not be paid for the pursuit of online courses that had not been previously approved as online courses. This limitation was alleviated by recently enacted legislation (for a discussion of P.L. 116-128 , see the \" Congressional Response \" section of this report).", "In addition, on April 3, 2020, the VA announced that it was suspending for sixty days the collection of institutions' and veterans' debt, including for debts under the jurisdiction of the Department of the Treasury. Individuals with an existing repayment plan must request a suspension if they are unable to make payments. In 2019, the VA indicated that approximately 25% of GI Bill participants must resolve an overpayment-related debt at some point.", "The VBA Education Service has announced that it is moving away from paper correspondence, including faxes. In an effort to accomplish this transition, VBA has requested that GI Bill participants provide or update their email addresses. On-the-job training (OJT) and apprenticeship training establishments must submit certifications electronically."], "subsections": []}]}, {"section_title": "National Cemetery Administration", "paragraphs": ["The National Cemetery Administration has provided information for the survivors and dependents of veterans who have passed away and are scheduled to be buried in a National Cemetery during this national emergency. Effective March 23, 2020, the NCA announced that all \"committal services and the rendering of military funeral honors, whether by military personnel or volunteer organizations, will be discontinued until further notice at VA national cemeteries.\"", "VA National Cemeteries will remain open to visitors and for interments, but visitors should follow their local communities' restrictions on visitations and travel. In addition, visitors should be prepared for certain areas of the cemetery typically open to the public to be closed. These areas include public information centers, visitor centers, and chapels. For direct interments, the NCA is limiting attendance to immediate family of deceased family members, up to 10 individuals. In addition, the NCA is to work with families to schedule a committal or memorial service at a later date. ", "On Friday, March 27, the NCA informed funeral directors of a change in the floral arrangement policy, stating that national cemeteries will no longer accept floral arrangements with direct interments.\u00c2\u00a0If families want to place a floral arrangement at the gravesite, they may do so after 4:30 pm on the day of interment or any time after. In addition, the NCA limited floral arrangements to two per gravesite. ", "The NCA announced that the National Cemetery Scheduling Office in St. Louis will continue to provide scheduling services. The NCA has set up an \"Alerts\" web page for the public to check cemetery operating status and is directing the public to its Facebook and Twitter pages for the most recent operating information."], "subsections": []}, {"section_title": "Emergency Preparedness (\"Fourth Mission\")", "paragraphs": ["In 1982, the Veterans Administration and Department of Defense Health Resources Sharing and Emergency Operations Act ( P.L. 97-174 ) was enacted to serve as the primary health care backup to the military health care system during and immediately following an outbreak of war or a national emergency. Since then, Congress has provided additional authorities to VA to \"use its vast infrastructure and resources, geographic reach, deployable assets, and health care expertise, to make significant contributions to the Federal emergency response effort in times of emergencies and disasters.\" ", "Among other authorities, the VHA may care for nonveterans, as well as veterans not enrolled in the VA health care system. The VA also has authority to provide certain health services such as medical counter measures to VA employees. The authority to care for care for nonveterans, applies in situations where the President has declared a major disaster or emergency under the Robert T. Stafford Disaster Relief and Emergency Assistance Act (Stafford Act), or where the HHS Secretary has declared a disaster or emergency activating the National Disaster Medical System established pursuant to Section 2811(b) of the Public Health Service Act (42 U.S.C. \u00c2\u00a7300hh-11(b)). The President's March 13, 2020, declaration of a national emergency under Section 501(b) of the Stafford Act allows VA to use this authority.", "On March 27, 2020, the VA released its COVID-19 Response Plan. The plan defines the VA's national level roles and responsibilities:", "VHA will provide [personal protective equipment] PPE fit-testing, medical screening, and training for [Emergency Support Function #8] ESF #8 and other Federal response personnel. Provide VHA staff as ESF #8 liaisons to [Federal Emergency Management Agency] FEMA the Incident Management Assistance Teams deploying to the state emergency operations center. Provide VHA planners currently trained to support ESF #8 teams. VHA provides vaccination services to VA staff and VA beneficiaries in order to minimize stress on local communities. VHA furnishes available VA hospital care and medical services to individuals responding to a major disaster or emergency, including active duty members of the Armed Forces as well as National Guard and military Reserve members activated by state or Federal authority for disaster response support. VHA provides ventilators, medical equipment and supplies, pharmaceuticals, and acquisition and logistical support through VA National Acquisition Center. [NCA] provides burial services for eligible veterans and dependents and advises on methods for interment during national security emergencies. VHA designates and deploys available medical, surgical, mental health, and other health service support assets. VHA provides one representative to the National Response Coordination Center (NRCC) during the operational period on a 24/7 basis.", "According to the VA, during declared major disasters and emergencies, service-connected veterans receive the highest priority for VA care and services, followed by members of the Armed Forces receiving care under 38 U.S.C. Section 8111A, and then followed by individuals affected by a disaster or emergency described in 38 U.S.C. Section 1785 (i.e., individuals requiring care during a declared disaster or emergency or during activation of the National Disaster Medical System [NDMS]). In general, care is prioritized based on clinical need\u00e2\u0080\u0094that is, urgent, life-threating medical conditions are treated before routine medical conditions (see the Appendix ). The Coronavirus Aid, Relief, and Economic Security Act (CARES Act; P.L. 116-136 ), provided funding for the Public Health and Social Services Emergency Fund to reimburse the VHA to respond to COVID-19 and to provide medical care for nonveterans. However, prior to reimbursing the VHA, the HHS Secretary is required to certify to congressional appropriations committees that funds available under the Robert T. Stafford Disaster Relief and Emergency Assistance Act are insufficient and that funds provided under the CARES Act are necessary to reimburse the VHA for expenses incurred to provide health care to nonveterans . ", "Generally, if a state, tribal, or territorial government needs resources, it can request assistance from the federal government through its local HHS regional emergency coordinator (REC), which is a part of FEMA's NRCC. The VA cannot receive direct requests for assistance from state and local governments. In addition, the VA does not support providing VA medical personnel to nondepartment facilities. The VHA has accepted several \"fourth mission\" assignments from FEMA/HHS. For example, the VHA has responded and provided assistance to New York and New Jersey. On March 29, VA New York Harbor Healthcare System's Manhattan and Brooklyn VA medical centers admitted nonveteran, non-COVID-19 patients, and on April 1, East Orange, New Jersey VA Medical Center, admitted nonveteran critical and noncritical COVID-19 patients. Furthermore, the VHA is providing laboratory services, pharmaceutical and medication supply through the National Acquisition Center (NAC), and mobile pharmacy units, among others, as requested by FEMA/HHS. "], "subsections": []}, {"section_title": "Congressional Response", "paragraphs": ["In response to the COVID-19 pandemic, Congress passed several measures to provide the VA with supplemental appropriations and provided temporary statutory changes to enhance veterans' benefits and services during this public health emergency. "], "subsections": [{"section_title": "Families First Coronavirus Response Act (P.L. 116-127)", "paragraphs": [], "subsections": [{"section_title": "Supplemental Appropriations and Cost-Sharing", "paragraphs": ["On March 18, 2020, the President signed into law the Families First Coronavirus Response Act ( P.L. 116-127 ). The act provides $30 million for VHA's medical services account to fund health services and related items pertaining to COVID-19, and $30 million for VHA's medical community care account (see Table 1 ). These funds are designated as emergency spending and are to remain available until September 30, 2022. Among other things, the act does not allow the VA to charge any copayment or other cost-sharing payments for COVID-19 testing or medical visits during any period of this public health emergency. "], "subsections": []}]}, {"section_title": "P.L. 116-128", "paragraphs": [], "subsections": [{"section_title": "Education Assistance", "paragraphs": ["P.L. 116-128 , as enacted on March 21, 2020, allows the VA to continue to provide GI Bill benefits from March 1, 2020, through December 21, 2020, for courses at educational institutions that are converted from in-residence to distance learning by reason of an emergency or health-related situation. P.L. 116-128 further permits the VA to pay the Post-9/11 GI Bill housing allowance as if the courses were not offered through distance learning throughout the same period. With the exception of those participants covered under this P.L. 116-128 exemption, Post-9/11 GI Bill participants enrolled exclusively in distance education are eligible for no more than one-half the national average of the housing allowance."], "subsections": []}]}, {"section_title": "Coronavirus Aid, Relief, and Economic Security Act, \"CARES Act\" (P.L. 116-136)", "paragraphs": [], "subsections": [{"section_title": "Emergency Supplemental Appropriations", "paragraphs": ["On March 17, 2020, the Administration submitted to Congress a supplemental appropriations request. The Administration sought $16.6 billion for FY2020 for VA's response to the COVID-19 outbreak. This amount included $13.1 billion for the medical services account. According to the request, this additional amount would provide funding for \"healthcare treatment costs, testing kits, temporary intensive care unit bed conversion and expansion, and personal protective equipment.\" The request also included $2.1 billion for the medical community care account to provide three months of health care treatment provided in the community in response to COVID-19. The VA assumes that about 20% of care for eligible veterans will be provided in the community, since community care facilities would be at full capacity with nonveteran patients. ", "Furthermore, the emergency supplemental appropriations request included", "$100 million for the medical support and compliance account to provide 24-hour emergency management coordination overtime payments, to cover costs associated with travel and transport of materials, and to enable VHA' s Office of Emergency Management to manage its response to COVID-19; $175 million for the medical facilities account to upgrade VA medical facilities to respond to the virus; and $1.2 billion for the information technology systems account to upgrade telehealth and related internet technology to deliver more health care services remotely.", "On March 27, the President signed into law the CARES Act ( P.L. 116-136 ). Division B of this act included an emergency supplemental appropriations measure. Title X of Division B provides supplemental appropriations for FY2020 for certain VA accounts totaling $19.6 billion, and is designated as emergency spending. Unless otherwise noted below, funds remain available until September 30, 2021. Funding provided in the CARES Act is broken down as follows (see Table 1 ):", "VBA, general operating expenses account, $13 million, for enhancing telework support for VBA staff and for additional cleaning contracts. VHA, medical services account, $14.4 billion, for increased telehealth services; purchasing of additional medical equipment and supplies, testing kits, and personal protective equipment; and to provide additional support to homeless veterans, among other things. VHA, medical community care account, $2.1 billion, for increased emergency room and urgent care usage in the community. VHA, medical support and compliance account, $100 million, for the provision of 24-hour emergency management coordination overtime payments, and for costs associated with travel and transport of materials. VHA, medical facilities account, $606 million, for the procurement of mobile treatment facilities, improvements in security, and nonrecurring maintenance projects. VA, general administration account, $6.0 million, for maintaining 24-hour operations of crisis response and continuity of operations plans at VA facilities, among other things. VA, information technology systems account, 2.2 billion, for increased telework capacity, purchasing additional laptops for telework and telehealth-enabled laptops for VHA providers to work from home, and to increase bandwidth and IT infrastructure needs, among other things. VA, Office of Inspector General account, $12.5 million, for increased oversight of VA's preparation and response to COVID-19 (funds remain available until September 30, 2022). VA, grants for construction of state extended care facilities account, $150 million, to assist state homes to renovate, alter, or repair facilities to respond to COVID-19."], "subsections": []}, {"section_title": "General CARES Act Provisions Affecting VA Programs and Services", "paragraphs": [], "subsections": []}, {"section_title": "Section 20001. Transfer of Funds", "paragraphs": ["This section allows the VA to transfer funds between the medical services, medical community care, medical support and compliance, and medical facilities accounts. The VA can make any transfer that is less than 2% of the total amount appropriated to an account and may follow after notifying the congressional appropriations committees. Any transfer that is greater than 2% of the total amount appropriated to an account or exceeding a cumulative 2% for all of the funds appropriated to the VA in the CARES Act requires Senate and House Appropriations Committee approval. "], "subsections": []}, {"section_title": "Section 20002. Monthly Reports", "paragraphs": ["This section requires the VA to provide monthly reports to the Senate and House Appropriations Committees detailing obligations, expenditures, and planned activities for all the funds provided to the VA in the CARES Act."], "subsections": []}, {"section_title": "Section 20003. Public Health Emergency", "paragraphs": ["This section defines a public health emergency as an emergency with respect to COVID-19 declared by a federal, state, or local authority. "], "subsections": []}, {"section_title": "Section 20004. Short-Term Agreements or Contracts with Telecommunications Providers to Expand Telemental Health Services for Isolated Veterans During A Public Health Emergency", "paragraphs": ["The VHA provides telehealth services to veteran patients in their communities from any location in the United States, including U.S. territories, the District of Columbia, and the Commonwealth of Puerto Rico. Section 20004 defines telehealth as \"the use of electronic information and telecommunications technologies to support and promote long-distance clinical health care, patient and professional health-related education, public health, and health administration.\" Examples of telecommunications technologies include the internet, videoconferencing, streaming media, and terrestrial and wireless communications. This section allows the VA Secretary to enter into short-term agreements or contracts with telecommunications companies to expand veteran patients' access to telemental health care services . The goal of the short-term agreements and contracts is for the telecommunications companies to provide temporary, complimentary, or subsidized fixed and mobile broadband services to veteran patients. The Secretary is allowed to enter into short-term agreements or contracts with telecommunications companies only during the period of the COVID-19 outbreak. During this period, covered veteran patients can assess VA telemental health care services through telehealth and the VA Video Connect (VVC) mobile application, which the act refers to as the VA program that connects veteran patients with their health care teams using encryption. Veteran patients can access the VVC on their mobile devices, such as laptops and smartphones.", "The short-term agreements or contracts with telecommunications companies must address the telemental health care needs of isolated veterans; therefore, the VA Secretary must prioritize eligibility to veterans who either have low-incomes, live in unserved and underserved areas, reside in rural and highly rural areas, or are considered by the Secretary as having a higher risk of committing suicide and mental health care needs while being isolated during the COVID-19 outbreak. The VA, however, may expand eligibility for telemental health care services to veteran patients who are currently receiving VA care but who are ineligible to receive mental health care services and other health care services through telehealth and/or the VVC."], "subsections": []}, {"section_title": "Section 20005. Treatment of State Homes During Public Health Emergency", "paragraphs": ["The state veterans' home program is a federal-state partnership to construct or acquire nursing home, domiciliary, and adult day health care facilities. VA provides assistance to states in three ways: First, VA provides states with up to 65% of the cost to construct, acquire, remodel, or modify state homes. Second, VA provides per diem payments to states for the care of eligible veterans in state homes. VA may adjust the per diem rates each year. A state home is required to meet all VA standards in order to continue to receive per diem payments. Third, VA is required to support states financially to assist state homes in the hiring and retention of nurses to reduce nursing shortages at state veterans' homes.", "This section modifies the treatment of state homes during the public health emergency by (1) waiving requirements for per diem reimbursements for state homes under the VHA State Home Per Diem Program and (2) authorizing the Secretary to provide equipment to state homes. The section waives the occupancy rate requirement under 38 C.F.R. Section 51.40(c), authorizing a state home to receive per diem payments for veterans who are temporarily absent from nursing home care regardless of the state home's occupancy rate. In addition, the section waives the requirement under 38 C.F.R. Section 51.210(d) that a state home must maintain a certain percentage of veteran residents. Lastly, the section authorizes the Secretary to provide state homes with medication, personal protective equipment, medical supplies, and any other equipment, supplies, and assistance available to VA. The personal protective equipment may be provided through the All Hazards Emergency Cache in addition to any other source available."], "subsections": []}, {"section_title": "Section 20006. Modifications to Veteran Directed Care Program of Department of Veterans Affairs", "paragraphs": ["The Veteran Directed Care Program helps isolated veterans who need assistance with activities of daily living or instrumental activities of daily living, and who are at high risk of nursing home placement, to live in their own homes. Veterans in this program are provided a budget for services that can be managed by the veteran or a family caregiver.", "This section modifies the Veterans Directed Care Program during the public health emergency to require that the Secretary (1) accept telephone or telehealth enrollments and renewals; (2) stop all suspensions or disenrollments unless requested by a veteran or representative, or the veteran and provider make a mutual decision; (3) waive paperwork requirements and penalties for late paperwork; and (4) waive any requirement to stop payments under the program if the veteran or caregiver is out of state for more than 14 days."], "subsections": []}, {"section_title": "Section 20007. Provision by Department of Veterans Affairs of Prosthetic Appliances through Non-Department Providers During Public Health Emergency", "paragraphs": ["In general, VHA prosthetics staff are responsible for providing and fitting prosthetic appliances that meet the best medical needs of the veteran patient. This provision requires the Secretary to ensure that eligible veterans receiving or requiring prosthetic appliances and services are able to obtain them from contracted non-VA providers during this emergency period. "], "subsections": []}, {"section_title": "Section 20008. Waiver of Pay Caps for Employees of Department Of Veterans Affairs During Public Health Emergencies", "paragraphs": ["Under existing regulations, certain VA employees may not receive any combination of premium pay, including overtime pay, that, when added to their base pay, results in total pay above the higher of two rates: GS-15, step 10, or the rate payable for Level V of the Executive Schedule on a biweekly basis. This provision allows the Secretary waive any limitation on pay for any employee of the VA during a public health emergency for work done in support of the emergency. The Secretary is required to provide reports on a monthly basis to the Senate and House Committees on Veterans' Affairs detailing the waivers. "], "subsections": []}, {"section_title": "Section 20009. Provision by Department of Veterans Affairs of Personal Protective Equipment for Home Health Workers", "paragraphs": ["This section requires the Secretary to provide VA home health workers with personal protective equipment from the All Hazards Emergency Cache or any other available source."], "subsections": []}, {"section_title": "Section 20010. Clarification of Treatment of Payments for Purposes of Eligibility for Veterans Pension and Other Veterans Benefits", "paragraphs": ["Under ordinary circumstances, eligibility for a VA pension is, in part, based upon the annual income of the individual. Generally, \"all payments of any kind or from any source (including salary, retirement or annuity payments, or similar income, which has been waived, irrespective of whether the waiver was made pursuant to statute, contract, or otherwise) shall be included\" when calculating a veteran's annual income. ", "This provision of the CARES Act excludes the recovery rebate from a veteran's annual income, thereby preventing it from counting towards the income limit associated with pension eligibility. It explicitly states that the rebate \"shall not be treated as income or resources for purposes of determining eligibility for pension under chapter 15 of title 38.\" Consequently, the direct individual payment included in the CARES Act will not affect a veteran's eligibility for a VA pension. "], "subsections": []}, {"section_title": "Section 20011. Availability of Telehealth for Case Managers and Homeless\u00c2 Veterans", "paragraphs": ["Formerly homeless veterans participating in the HUD-VASH program are assigned VA case managers to assist with their health and other needs. This section requires the VA to ensure that telehealth capabilities are available to veterans and case managers participating in HUD-VASH."], "subsections": []}, {"section_title": "Section 20012. Funding Limits for Financial Assistance for Supportive Services for Very Low-Income Veteran Families in Permanent Housing During A Public Health Emergency", "paragraphs": ["The SSVF program, which provides short- to medium-term rental assistance and supportive services to homeless veterans and their families, is authorized at $380 million through FY2021. Without legislative authority, the VA cannot obligate additional funding for the program. This provision removes the SSVF funding limitation in cases of public health emergencies."], "subsections": []}, {"section_title": "Section 20013. Modifications to Comprehensive Service Programs for Homeless Veterans During A Public Health Emergency", "paragraphs": ["The Homeless Providers Grant and Per Diem (GPD) program provides grants to public entities and private nonprofit organizations for the capital costs associated with developing facilities to serve homeless veterans and also makes per diem payments to grantees for the costs of providing housing and supportive services to homeless veterans. Together, grant and per diem funding is authorized at approximately $258 million per year. In addition, grant costs are limited to 65% of the costs of acquisition, construction, expansion, or remodeling of facilities, and per diem payments are limited to the VA domiciliary care per diem rate, which, for FY2020, is $48.50 per day. This section allows additional appropriations for the GPD program in cases of public health emergencies notwithstanding the FY2020 authorization level, and it also allows the Secretary to waive statutory limitations on grant and per diem payments to grantees.", "Generally, VA, under GPD guidance, requires providers to discharge veterans residing in GPD housing who are absent for more than 14 days. In addition, VA will not make per diem payments after a veteran has been absent for more than 72 consecutive hours. This section requires the VA Secretary to waive the discharge requirement and allows the Secretary to reimburse providers for veterans who have been absent for more than 72 hours."], "subsections": []}]}, {"section_title": "Student Veteran Coronavirus Response Act of 2020 (P.L. 116-140)", "paragraphs": ["The Student Veteran Coronavirus Response Act of 2020 ( P.L. 116-140 ), as enacted on April 28, 2020, responds to concerns that abrupt and temporary closures or suspensions of educational institutions, programs of education, and employment could negatively impact the short-term finances of eligible beneficiaries and their continued pursuit of educational programs. Eligible beneficiaries include participants in several VA educational assistance programs and Vocational Rehabilitation and Employment (VR&E). The act provides special authorities for the period beginning on March 1, 2020, and ending on December 21, 2020, including academic terms beginning prior to December 21, 2020. Selected sections of the bill are discussed below."], "subsections": [{"section_title": "Section 3. Payment of Work-Study Allowances During Emergency Situations", "paragraphs": ["The Veterans Work-Study Program allows GI Bill and VR&E participants to receive additional financial assistance through the VA in exchange for employment. Provisions in this section permit Work-Study payments in accordance with an existing Work-Study agreement or at a lesser amount despite the participant's inability to perform work by reason of an emergency situation. These provisions further require the VA to extend an existing agreement for a subsequent period beginning during the covered period if requested by the Work-Study participant."], "subsections": []}, {"section_title": "Section 4. Payment of Allowances to Veterans Enrolled in Educational Institutions Closed for Emergency Situations", "paragraphs": ["The VA has authority under 38 U.S.C. Section 3680(a)(2)(A) to pay GI Bill and VR&E allowances for up to four weeks when an educational institution temporarily closes under an established policy based on an Executive order of the President or due to an emergency situation. The provisions in this section permit GI Bill and VR&E payments for up to four weeks, in addition to any payments under 38 U.S.C. Section 3680(a)(2)(A), if an educational institution closes or the program of education is suspended due to an emergency situation. "], "subsections": []}, {"section_title": "Section 5. Prohibition of Charge to Entitlement of Students Unable to Pursue a Program of Education Due to an Emergency Situation", "paragraphs": ["In general, the GI Bills provide eligible persons a 36-month entitlement to educational assistance. GI Bill entitlement is restored in the following instances:", "for an incomplete course if an individual is unable to receive credit or lost training time as a result of an educational institution closing; for an incomplete course if an individual is unable to receive credit or lost training time because the course or program is disapproved by a subsequently established or modified policy, regulation, or law; and for the interim (through the end of the academic term but no more than 120 days) Post-9/11 GI Bill housing allowance paid following either a closure or disapproval.", "The provisions in this section require that the VA restore entitlement for an incomplete course if an individual is unable to receive credit or lost training time as a result of a temporary closure of an educational institution or the temporary termination of a course or program of education by reason of an emergency situation."], "subsections": []}, {"section_title": "Section 6. Extension of Time Limitations for Use of Entitlement", "paragraphs": ["Many GI Bill participants must use their educational entitlement within a specified time period beginning upon discharge or release from active duty or eligibility. There are notable exceptions to the time limitation. For example, Post-9/11 GI Bill participants whose last discharge or release from active duty was on or after January 1, 2013, are not subject to a time limitation. The provisions in this section exempt from the time limitation, the period during which an individual is prevented from pursuing a program of education because the educational institution closed (temporarily or permanently) under an established policy based on an Executive order of the President or due to an emergency situation until the individual is able to resume pursuit. The provisions are applicable to the Montgomery GI Bill-Active Duty (MGIB-AD) 10-year limitation, the Post-9/11 GI Bill 15-year limitation and age limitation for children using transferred benefits, the VR&E 12-year limitation and the period of a veteran's vocational rehabilitation program, and the Montgomery GI Bill-Selected Reserve (MGIB-SR) limitation. "], "subsections": []}, {"section_title": "Section 7. Restoration of Entitlement to Rehabilitation Programs for Veterans Affected by School Closure or Disapproval", "paragraphs": ["Typically, programs under VR&E are limited to 48 months of entitlement and veterans pursuing an education program under VR&E must be enrolled to receive a subsistence allowance. For the covered period, the provisions in this section extend protections from entitlement charges following school closures that are established for the GI Bills to veterans participating in education programs under the VR&E program. The provisions further allow the VA to (1) continue paying subsistence allowances to VR&E participants through the end of the academic term but no more than 120 days following either a closure or disapproval and (2) prohibits VA from charging the impacted term against a veteran's VR&E entitlement if the veteran did not receive credit for classes. "], "subsections": []}, {"section_title": "Section 8. Extension of Payment of Vocational Rehabilitation Subsistence Allowances", "paragraphs": ["The provisions in this section provide two additional months of subsistence allowance to veterans who were following a program of employment services under the VR&E program during the covered period."], "subsections": [{"section_title": "Appendix. VHA Emergency Powers", "paragraphs": [], "subsections": []}]}]}]}]}}
{"id": "R46178", "title": "The Charitable Deduction for Individuals: A Brief Legislative History", "released_date": "2020-01-14T00:00:00", "summary": ["This report provides a brief history of the major legislative changes to the charitable deduction that have occurred over the past 100 years, focusing on changes to the amount that taxpayers could deduct. Over the past 100 years, Congress has generally increased the amount that eligible taxpayers can deduct for their charitable donations. These changes are summarized in the below table.", "As Congress has expanded the amount that can be deducted by those who claim the deduction, policymakers have debated the deduction's effectiveness at increasing charitable giving and the broader role of government subsidies for the philanthropic sector\u00e2\u0080\u0094a discussion that continues to this day."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["This report provides a brief history of the major legislative changes to the charitable deduction for individuals, from its enactment in 1917 through the recent changes enacted at the end of 2017. Policymakers considering changes to this tax benefit may find it helpful to understand how this benefit has evolved over the past 100 years. This report does not address all the legislative changes made to this tax benefit, nor does it provide a broad overview of charitable giving in general, charitable giving tax incentives, their economic effects, or policy options to modify them. Those issues are discussed in CRS Report R45922, Tax Issues Relating to Charitable Contributions and Organizations , by Jane G. Gravelle, Donald J. Marples, and Molly F. Sherlock, and CRS In Focus IF11022, The Charitable Deduction for Individuals , by Margot L. Crandall-Hollick and Molly F. Sherlock. ", "This report begins with a brief overview of the current charitable deduction for individuals. It then describes major legislative changes made to the deduction from 1917 through the present day, with the most recent changes being those made in 2017. For the purposes of this report, major legislative changes include those that changed the amount that taxpayers could deduct. The bills summarized in this report do not include those that temporarily modified the charitable deduction in response to a disaster. Laws that modified definitions or changed substantiation requirements for taxpayers claiming the deduction are also generally excluded. This report will be updated as necessary to reflect future legislative changes. "], "subsections": []}, {"section_title": "Current Tax Benefit for Individual Charitable Donations", "paragraphs": ["Under current law, taxpayers who itemize their deductions can\u00e2\u0080\u0094subject to certain limitations\u00e2\u0080\u0094deduct charitable donations to qualifying organizations. (Individuals who take the standard deduction may not deduct their charitable contributions.) Deductions that cannot be claimed in the current tax year can be carried forward for up to five years, subject to certain limitations. "], "subsections": [{"section_title": "Types of Qualifying Organizations", "paragraphs": ["Under current law, charitable contributions are tax deductible when made to qualifying Section 501(c)(3) organizations, governmental units, veterans' organizations, fraternal organizations, and cemetery companies. A Section 501(c)(3) organization is either a public charity or private foundation. ", "Private foundations often are tightly controlled, receive significant portions of their funds from a small number of donors or a single source, and make grants to other organizations rather than directly carry out charitable activities. Most private foundations\u00e2\u0080\u009491% of all private foundations in 2015 \u00e2\u0080\u0094primarily make grants to other charitable organizations and to individuals. These foundations are referred to as nonoperating foundations . Foundations that directly operate their own charitable programs are referred to as operating foundations . ", "In contrast, public charities tend to have broad public support and provide charitable services directly to beneficiaries. Public charities include organizations \"organized and operated exclusively for religious, charitable, scientific, testing for public safety, literary, or educational purposes, or to foster national or international amateur sports competition \u00e2\u0080\u00a6 or for the prevention of cruelty to children or animals.\""], "subsections": []}, {"section_title": "Types of Donations", "paragraphs": ["Tax-deductible donations to qualifying organizations can be in the form of cash, securities, or property. Properties or securities held for more than a year are often referred to as long - term capital gain properties . Properties or securities held for less than a year are often referred to as short - term capital gain properties. (For more information on general valuation rules of noncash property, see Appendix B .) Depending on (1) the type of property donated and (2) the type of qualifying organization that receives the donations, there are limitations on the total dollar amount that the taxpayer can deduct, as illustrated in Table 1 . The limitations are defined as a percentage of the taxpayer's adjusted gross income (AGI)."], "subsections": []}]}, {"section_title": "History of the Charitable Deduction", "paragraphs": ["Enacted in 1917, the deduction for charitable giving has changed over the years from \"a short statutory provision into a complex set of rules.\" Below is a brief legislative history of the major legislative changes to the charitable deduction that have occurred over the past 100 years, focusing on changes to the amount that taxpayers could deduct. Table 2 summarizes these changes. ", "Over the past 100 years, Congress has generally increased the amount that eligible taxpayers can deduct for their charitable donation. The history of the charitable deduction illustrates two main policy objectives of this benefit. In its early years, the charitable deduction served to ensure that resources given to charity would not be treated as income for the purposes of taxation. When the charitable deduction was created, the income tax was in its early years, and applied only to the very top of the income distribution. Thus, when the deduction was created, it could be viewed as having been designed to \"protect voluntary giving to public goods by rich industrialists who had made their fortunes in business.\" Today, many policymakers are focused on the charitable deduction's impact on giving, and its efficacy at inducing additional giving. As the deduction has changed over time, policymakers have continued to discuss its effectiveness at increasing charitable giving, the broader role of the government in the philanthropic sector, and reform proposals\u00e2\u0080\u0094a discussion that continues to this day. "], "subsections": [{"section_title": "The War Income Tax Revenue Act of 1917", "paragraphs": ["The charitable deduction was initially enacted to offset the potential negative effects of increased income taxes on charitable giving among the wealthy. The federal income tax, enacted four years earlier as part of the Tariff Act of 1913, generally applied a top rate of 7% to only the wealthiest Americans. The War Income Tax Revenue Act of 1917 (P.L. 65-50) increased federal income tax rates\u00e2\u0080\u0094the top rate on individuals rose to 67% by 1917 \u00e2\u0080\u0094as a way to pay for the costs of the United States' involvement in World War I. According to the Joint Committee on Taxation (JCT), some ", "[l]egislators feared that the [tax] increase would reduce individuals' income \"surplus\" from which they supported charity. It was thought that a decrease in private support would create an increased need for public support and even higher rates, so the [charitable] deduction was offered as a compromise. ", "In short, some policymakers were concerned that without the charitable deduction, wealthy taxpayers subjected to these higher tax rates would no longer contribute to charities or institutions of higher education (or would contribute less). As Senator Hollis stated,", "Usually people contribute to charities and educational objects out of their surplus. After they have done everything else they want to do, after they have educated their children and traveled and spent their money on everything they really want or think they want, then, if they have something left over, they will contribute it to a college or to the Red Cross or for some scientific purposes. Now when war comes and we impose these very heavy taxes on income, that will be the first place where wealthy men will be tempted to economize, namely in donations to charity. They will say, \"Charity begins at home.\" I should not favor allowing any man to deduct all of his contributions to these objects from his income-tax return, but if we limit it to 20 percent of his income we cannot be doing much harm to the Public Treasury. Look at it this way: For every dollar that a man contributes for these public charities, educational, scientific, or otherwise, the public gets 100 percent; it is all devoted to that purpose.", "And since \"many believed charities could deliver social services better than the government,\" a drop in funding to charitable groups could have led to what many may have perceived as the inefficient provision of social services and public goods by the government. ", "The law allowed a deduction for cash or gifts made to organizations operated for religious, charitable, scientific, or education purposes, or for the prevention of cruelty to animals or children. The overall amount that could be deducted was limited to 15% of net taxable income \"to ensure that individual taxpayers could not eliminate their tax liability through the deduction.\" "], "subsections": []}, {"section_title": "The Revenue Act of 1924", "paragraphs": ["Several years later, Congress waived the 15% limitation for taxpayers who made consistently large charitable donations. Specifically, as a result of the Revenue Act of 1924 (P.L. 68-176), taxpayers who donated \"more than 90% of their net taxable income in the current year and in each of the previous 10 years\" were not subject to the 15% net taxable income limitation. This provision was often referred to as the \"Philadelphia nun\" provision, after Mary Katherine Drexel, a wealthy Philadelphia native who became a nun and underwrote her charitable activities from her sizable inheritance. (In later years, it was also referred to as the \"unlimited charitable deduction\" (UCD), or \"unlimited charitable contribution deduction.\") "], "subsections": []}, {"section_title": "The Individual Income Tax Act of 1944", "paragraphs": ["In 1944, Congress changed the limitation of the charitable deduction, which effectively increased the maximum amount that taxpayers could deduct. As previously discussed, for most taxpayers the charitable deduction was limited to 15% of net taxable income. The Individual Income Tax Act of 1944 (P.L. 78-315) changed the measurement of this limitation from net taxable income to adjusted gross income. Since AGI was generally larger than net taxable income, the maximum amount that could be deducted in dollar terms was larger.", "This law also created a standard deduction, which some charities worried would result in a reduction in charitable giving. The federal income tax, which before the early 1940s had been levied only on high-income Americans, was expanded to apply to most working-age Americans by the end of World War II. According to the IRS,", "In 1939 only about five percent of American workers paid income tax. The United States' entrance into World War II changed that figure. The demands of war production put almost every American back to work, but the expense of the war still exceeded tax-generated revenue. President Roosevelt's proposed Revenue Act of 1942 introduced the broadest and most progressive tax in American history, the Victory Tax. Now, about 75 percent of American workers would pay income taxes.", "This expansion was driven by increasing needs for revenue to finance World War II expenses. As more Americans became subject to the federal income tax, Congress became interested in simplifying tax preparation for these new taxpayers, which motivated the creation of a standard deduction. However, some worried that among those who used the standard deduction, there would be a reduction in charitable giving since there would be no additional tax benefit for these donations.", "Others who advocated for the standard deduction contended that charitable contributions were made for more than just financial reasons, and that especially among lower- and middle-income taxpayers (who were most likely to claim the standard deduction), the tax benefit for giving was not an important factor in their decisions to give. According to Senator Walter George, Chairman of the Senate Finance Committee,", "The committee does not believe that it can be proved that a tax incentive has been an important factor in the making of such gifts by individuals having less than $5,000 of adjusted gross income, and certainly the $500 standard deduction will not remove the tax incentive for persons in the higher brackets, upon whom the charities depend for contributions in substantial amounts. "], "subsections": []}, {"section_title": "Acts Increasing the AGI Limitations: 1952-1964", "paragraphs": ["In 1952, as part of P.L. 82-465, Congress further increased the maximum amount taxpayers could deduct, raising the limitation to 20% of AGI. ", "In 1954, Congress further increased the maximum deduction limit to 30% of AGI (P.L. 83-591) for any contributions to certain charitable organizations \u00e2\u0080\u0094namely churches, educational institutions, or hospitals. The 10% of additional AGI that taxpayers could deduct was allowable only for contributions made to one of these eligible organizations. Deductible donations to other eligible organizations were still limited to 20% of AGI. One commentator noted that this was \"the first time that Congress encouraged certain charitable giving by granting more generous deductions for donations to certain charitable organizations than to others \u00e2\u0080\u00a6 [to] encourage additional contributions to these organizations to offset their rising costs and modest returns on endowment funds.\"", "Congress expanded the list of organizations for which taxpayers could claim the 30% charitable deduction as part of the Revenue Act of 1964 (P.L. 88-272) to include those that \"receive a substantial part of [their] support from a governmental unit \u00e2\u0080\u00a6 or from direct or indirect contributions from the general public.\" This effectively expanded the 30% AGI limitation to most charitable organizations except private nonoperating foundations, which were still subject to the 20% limitation. In addition, the law included a provision that allowed for charitable contributions in excess of the AGI limits to be carried forward up to five years. This five-year carryforward allows taxpayers who contributions exceed the AGI limit in a given year to still potentially receive a tax benefit from that contribution in future years. "], "subsections": []}, {"section_title": "The Tax Reform of 1969", "paragraphs": ["The Tax Reform of 1969 (P.L. 91-172) made several modifications to the charitable deduction, including increasing the maximum AGI limits, phasing out the \"Philadelphia nun\" provision, and creating certain limitations on donations of appreciated property. Many of the current parameters of the charitable deduction for individuals were enacted as part of this law.", "At the time that Congress was debating this legislation, there was increased concern that taxpayers were using tax benefits like the charitable deduction to avoid paying income taxes. In particular,", "\u00e2\u0080\u00a6 the unlimited charitable contribution deduction (UCD) had become a sanctuary in which many of the very wealthy were sheltered from the income tax. Prior to its repeal, the UCD was being used by an estimated 100 taxpayers who generally had economic income in excess of one million dollars. Since the UCD had a particular appeal to taxpayers having large amounts of appreciated capital which could be donated to charitable institutions, with the deduction based on the full market value rather than acquisition value, it not surprisingly became a prime target for reformers.", "The Tax Reform Act of 1969 phased out the \"Philadelphia nun provision\" over five years while also raising the maximum AGI limitation to 50% of AGI for donations of cash/short-term capital gain property to public charities. The increase in the AGI limit was intended to \"offset any decreased incentive resulting from the repeal of the unlimited charitable contributions deduction.\" In addition, the increased AGI limitation was intended to ", "[s]trengthen the incentive effect of the charitable contributions deduction for taxpayers.\u00e2\u0080\u00a6 It is believed that the increase in the limitation will benefit taxpayers who donate substantial portions of their income to charity and for whom the incentive effect of the deduction is strong\u00e2\u0080\u0094primarily taxpayers in the middle- and upper-income ranges.", "The new 50% limitation generally did not apply to gifts of property that had appreciated in value (e.g., capital gains), which were still generally subject to the 30% AGI limitation. In addition, the 20% AGI limitation for donations to private nonoperating foundations (irrespective of the form of the donation) was unchanged by the law."], "subsections": []}, {"section_title": "The Economic Recovery Act of 1981", "paragraphs": ["Under the Economic Recovery Act of 1981 ( P.L. 97-34 ), taxpayers who did not itemize their deductions\u00e2\u0080\u0094i.e., those who took the standard deduction\u00e2\u0080\u0094could claim a new deduction for charitable giving. This was a temporary provision that went into effect in 1982 and was scheduled to expire at the end of 1986. (The law made no change to the itemized deduction for charitable giving.) The amount that nonitemizers could deduct was limited to a percentage of the contributed amount, subject in some years to an additional fixed dollar cap. In 1982 and 1983, 25% of contributions could be deducted, subject to a $100 cap. In 1984, the contribution percentage remained unchanged (25%), but the dollar cap rose to $300. In 1985, 50% of contributions could be deducted, and the contribution cap was eliminated, and in 1986 100% of contributions could be deducted with no contribution cap. In addition to these caps, the amounts that could be deducted were also subject to the AGI limits applicable to the itemized deduction for charitable giving.", "This temporary provision was opposed by the Treasury Department and some economists at the time. For example, Donald Lubick, Assistant Secretary for Tax Policy at the Treasury Department, argued that the main beneficiaries of the above-the-line deduction\u00e2\u0080\u0094lower- and moderate-income taxpayers\u00e2\u0080\u0094would be less responsive than higher-income taxpayers in terms of additional giving. Lubick argued that the above-the-line deduction \"would go, in very large measure, to those who are already giving with respect to their existing gifts,\" providing them with a windfall gain. He testified that an above-the-line deduction \"would result in a large revenue loss to the Treasury and little increased giving for the charities.\"", "But according to JCT, Congress disagreed.", "The Congress believed that allowing a charitable deduction to nonitemizers stimulates charitable giving, thereby providing more funds for worthwhile nonprofit organizations, many of which provide services that otherwise might have to be provided by the Federal government.", "In addition, supporters of this provision believed that \"[p]eople ought not be taxed on money they contribute to charitable causes. This should be true whether or not their other economic actions make it advantageous for them to itemize their deductions.\"", "This tax benefit expired as scheduled at the end of 1986, and was not extended as part of the Tax Reform Act of 1986. According to one commentator, \"The big idea of the '86 Act was to pare away deductions and credits to broaden the base so you could bring the top rates down. And that was a pretty powerful tide and the nonitemizer [deduction] just wasn't strong enough to swim against that current.\""], "subsections": []}, {"section_title": "The Deficit Reduction Act of 1984", "paragraphs": ["As part of the Deficit Reduction Act of 1984 ( P.L. 98-369 ), Congress increased the contribution limits on donations of cash or ordinary income property to private nonoperating foundations from 20% of AGI to 30% of AGI. (Donations of long-term capital gain property to private nonoperating foundations remained limited to 20% of AGI.) In explaining this increase, JCT noted the following:", "Because as a general rule public charities and operating foundations directly carry out charitable function and programs, expend charitable donations more promptly and have public involvement, support, and supervision, the Congress concluded that a tax preference for contributions to public charities and operating foundations [50% AGI limitation] continues to be appropriate. However, acknowledging the substantial role of many grant making foundations in private philanthropy, the Congress believed that the extent of this tax preference should be narrowed by increasing to 30 percent the deduction limitation for gifts by individuals of cash and ordinary-income property to nonoperating foundations."], "subsections": []}, {"section_title": "The Tax Cuts and Jobs Act of 2017", "paragraphs": ["At the end of 2017, President Trump signed into law P.L. 115-97 , often referred to as the Tax Cuts and Jobs Act (TCJA), which made numerous changes to the federal income tax for individuals and businesses. Among the many changes, the law temporarily increased the AGI limit for cash donations made to public charities from 50% to 60%. This change went into effect in 2018, and is scheduled to expire on December 31, 2025.", "According to the House Ways and Means Committee report that accompanied H.R. 1 (the House-passed version of P.L. 115-9 ):", "The Committee believes that a robust charitable sector is vital to our economy, and that charitable giving is critical to ensuring that the sector thrives. For this reason, the Committee believes that it is desirable to provide additional incentives for taxpayers to provide monetary and volunteer support to charities. Increasing the charitable percentage limit for cash contributions to public charities will encourage taxpayers to provide essential monetary support to front-line charities.", "While this change to the charitable deduction may increase the amount that some taxpayers can deduct and hence may encourage more charitable giving, other changes made by the law are expected to result in an overall reduction in charitable giving. TPC estimates that even after including the increased 60% limitation, the changes TCJA made to the tax code could result in charitable donations falling by 5%. ", "Appendix A. Definitions of Commonly Used Terms ", "Appendix B. Valuation of Noncash Donations for the Charitable Deduction", "For noncash donations, there are certain rules on how to value the property. Depending on the type of property and the recipient organizations, the property is generally valued either at its basis (i.e., what the taxpayer originally paid for the property) or its fair market value (how much the taxpayer would receive in an open market for the property at the time it is donated), as summarized in Table B-1 . For an overview of these and other terms often used in the context of the charitable deduction, see Appendix A . If a property increases or appreciates in value, its fair market value when sold will be greater than its basis. If property decreases or depreciates in value, its fair market value when sold will be less than its basis. Hence, deducting the fair market value of an appreciated (depreciated) property results in a larger (smaller) deduction for the taxpayer than the basis value of that same property. "], "subsections": []}]}]}}
{"id": "R46016", "title": "Democracy in Latin America and the Caribbean: A Compilation of Selected Indices", "released_date": "2019-11-20T00:00:00", "summary": ["This report provides a regional snapshot of the political climate in Latin America and the Caribbean, based on the U.S. Department of State's description of each country's political system and selected nongovernmental indices that measure democracy trends worldwide. Using tables and graphs to illustrate regional trends, this report provides a snapshot of democracy indicators from the following sources: (1) the U.S. Department of State's 2018 Country Reports on Human Rights Practices ; (2) Bertelsmann Stiftung's 2018 Bertelsmann Transformation Index (BTI); (3) the Economist Intelligence Unit's (EIU's) Democracy Index 2018 ; (4) Freedom House's Freedom in the World 2019 ; and (5) the Varieties of Democracy Institute's (V-DEM's) Liberal Democracy Index in its Democracy Report 2019 . A bibliography at the end provides sources for further information."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["The current trajectory of democracy around the world is an issue of interest for Congress, which has contributed to U.S. democracy promotion objectives overseas. For decades, U.S. policy has broadly reflected the view that the spread of democracy around the world is favorable to U.S. interests. This report provides a regional snapshot of the political climate in Latin America and the Caribbean, based on the U.S. Department of State's description of each country's political system and selected nongovernmental (NGO) indices that measure democracy trends worldwide. ", "For additional information on democracy in the global context, see CRS Report R45344, Global Trends in Democracy: Background, U.S. Policy, and Issues for Congress , by Michael A. Weber.", "For related information about democracy in Latin American and the Caribbean, see the following products:", "CRS In Focus IF10460, Latin America and the Caribbean: U.S. Policy Overview , by Mark P. Sullivan; CRS Report R45547, U.S. Foreign Assistance to Latin America and the Caribbean: FY2019 Appropriations , by Peter J. Meyer and Edward Y. Gracia; CRS Report 98-684, Latin America and the Caribbean: Fact Sheet on Leaders and Elections , by Carla Y. Davis-Castro; and CRS Report R45733, Combating Corruption in Latin America: Congressional Considerations , coordinated by June S. Beittel. ", "CRS also publishes reports on specific Latin American and Caribbean countries. "], "subsections": []}, {"section_title": "Source Notes", "paragraphs": ["This report compiles information from the U.S. State Department and data from four nongovernmental (NGO) indices. For a discussion about definitions of democracy and critiques of democracy indices, see CRS Report R45344, Global Trends in Democracy: Background, U.S. Policy, and Issues for Congress , by Michael A. Weber. CRS does not endorse the methodology or accuracy of any particular democracy index.", "In parentheses following the country name in the tables below is the nature of the country's political system, as described in the U.S. State Department's 2018 Country Reports on Human Rights Practices . While the publication focuses broadly on human rights conditions in each country, the first sentence of each country report provides a characterization of the country's political system. This U.S. government information is included here for comparison with findings from the democracy indicators published by NGOs.", "Bertelsmann Stiftung, a private foundation based in Germany, has published the Bertelsmann Transformation Index (BTI) biannually since 2006. Key regional findings and country reports are available in English (BTI publishes the full regional report in German). BTI 2018 evaluates the quality of democracy, a market economy, and political management in 129 developing and transition countries. For political transformation specifically, BTI ranks countries using 18 indicators grouped into five criteria: (1) stateness, (2) political participation, (3) rule of law, (4) stability of democratic institutions, and (5) political and social integration. Based on the criteria, BTI assigns a category: democracy in consolidation, defective democracy, highly defective democracy, moderate autocracy , and hardline autocracy . In its regional report, BTI notes that since 2008, it \"has recorded a decline in the quality of democracy in Latin America\u00e2\u0080\u0094not dramatic, but continual.\" BTI evaluates all Central and South American nations. With the exception of Cuba, the Dominican Republic, Haiti, and Jamaica, BTI does not evaluate Caribbean nations.", "The Economist Intelligence Unit (EIU), based in London and New York, has offices and analysts in various countries. Since 2006, EIU has produced a democracy index that provides an annual snapshot of the state of democracy for 165 independent states and two territories. The EIU classifies countries as full democracies , flawed democracies , hybrid regimes , or authoritarian regimes based on an aggregate score of 60 indicators in five categories: (1) electoral process and pluralism, (2) civil liberties, (3) the functioning of government, (4) political participation, and (5) political culture. According to the EIU's Democracy Index 2018 , the Latin America and Caribbean region's overall score went down from 6.26 in 2017 to 6.24 in 2018 (on a 0 to 10 scale). The two countries in the region classified in 2018 as full democracies are Uruguay and, new to the group, Costa Rica. EIU's Democracy Index 2018 identified three countries in the region as authoritarian regimes: Nicaragua moved to join Venezuela and Cuba. EIU evaluates all Central and South American nations. With the exceptions of Cuba, the Dominican Republic, Guyana, Haiti, Jamaica, Suriname, and Trinidad and Tobago, EIU does not evaluate Caribbean nations.", "Freedom House is a U.S.-based NGO that conducts research on democracy, political freedom, and human rights worldwide. It has published Freedom in the World since 1978, and the current report covers 195 countries and 14 territories. Freedom House assigns each country 0 to 4 points on 25 indicators (10 political rights indicators and 15 civil liberties indicators) for a total of up to 100 points. The scores determine numerical ratings for political rights and civil liberties freedoms on a scale of 1 (most free) to 7 (least free). The political rights and civil liberties ratings are averaged to produce an overall status of free, partly free , or not free. Freedom House's report covering 2018 found that Nicaragua was the country with the greatest decline in the world regarding conditions for political rights and civil liberties as compared to 2017. Venezuela had the third-greatest decline; Brazil, El Salvador, and Guatemala also made the top 20 for steepest declines. The report's analysis is based on data that are detailed in full on the Freedom House web page on \"Countries,\" which ranks the state of democracy for 197 countries and 15 territories. This web page lists the top three aggregate scores in Latin America and the Caribbean: Uruguay, Barbados, and Chile; the region's lowest aggregate scores are those for Nicaragua, Venezuela, and Cuba. Freedom House evaluates democracy in all Central and South American and Caribbean nations.", "The Varieties of Democracy Institute (V-DEM), headquartered at the University of Gothenburg in Sweden, collects democracy data through its research team in collaboration with country experts. In 2017, V-Dem published its first global report measuring the status of democracy with an index. Democracy Report 2019 includes the Liberal Democracy Index, which examines 71 indicators included in the Liberal Component Index and the Electoral Democracy Index. V-Dem groups 179 countries into four categories: liberal democracy , electoral democracy , electoral autocracy , and closed autocracy . The current report notes \"the regional average for Latin America is down to 0.51 in 2018, bringing the region back to about 1996-levels.\" V-DEM evaluates all Central and South American nations. With the exceptions of Barbados, Cuba, the Dominican Republic, Guyana, Haiti, Jamaica, Suriname, and Trinidad and Tobago, V-DEM does not evaluate Caribbean nations.", " Table 1 looks at Caribbean countries' global democracy rankings according to EIU's Democracy Index 2018 , Freedom House's Freedom in the World 2019 , V-Dem's Democracy Report 2019 , and Bertelsmann Stiftung's 2018 Transformation Index. Table 2 compares the same reports for Mexico and Central America, as does Table 3 for South America. Each report evaluates a different number of countries, so there are missing rankings for some countries. Countries are listed alphabetically in each table. ", " Figure 1 shows the global rank and classification of all Central and South American and Caribbean countries according to the Political Transformation Rank, a component of the 2018 Bertelsmann Stiftung Transformation Index (BTI).", " Figure 2 shows the global rank and classification of Central and South American and Caribbean countries according to the EIU's Democracy Index 2018 .", " Figure 3 shows the aggregate scores of all Central and South American and Caribbean countries according to the Freedom House country web page for Freedom in the World 2019 . Countries receive 0 to 4 points on 25 indicators (10 political rights indicators and 15 civil liberties indicators) for a total of up to 100 points.", " Figure 4 shows the political rights and civil liberties scores of all Central and South American and Caribbean countries according to Freedom House's Freedom in the World 2019 . The scale used is 1-7, with 1 indicating the most free conditions and 7 the least free.", " Figure 5 shows the liberal democracy index rank and classification of all Central and South American and Caribbean countries according to the Varieties of Democracy Institute's Democracy Report 2019 . ", " Table 4 provides resources for further information about democracy indicators in Central and South America and the Caribbean, although many cover other geographic areas as well. The sources are organized alphabetically by title. This is not an exhaustive list."], "subsections": []}]}}
{"id": "R46010", "title": "Net Metering: In Brief", "released_date": "2019-11-14T00:00:00", "summary": ["Net metering is a policy that allows electricity customers with their own generation capacity to be financially compensated for the energy they produce. Net metering is widely regarded as having an important role in deployment of distributed generation (DG), especially solar energy. State and local governments have authority to establish net metering policies, and some have done so for many years. Congress took action to encourage net metering in the Energy Policy Act of 2005 (EPACT05), and the policy now exists, in some form, in 45 states. Recent state net metering policy modifications, and potential effects on solar energy deployment, may be relevant to congressional discussions regarding the role of renewable energy sources in the nation's electricity system.", "Solar photovoltaic panels (e.g., rooftop solar) accounted for 97% of the generation capacity participating in net metering programs in 2018. Net metering participation roughly quadrupled from 2013 to 2018, according to data from the U.S. Energy Information Administration. Hawaii has the highest participation rate of any state, with 15% of electricity customers participating in net metering in 2018. In a majority of states, however, net metering customers account for less than 1% of total electricity customers.", "States differ in the way net metering customers are compensated. A common method is the retail rate, under which energy from net metering capacity offsets energy consumed from the grid in a one-to-one fashion. This method is often described as the \"meter running backward.\" Retail rate compensation was initially adopted, in large part, for its administrative simplicity. Some stakeholders continue to prefer it for the relatively high payments it gives to net metering customers. Other stakeholders criticize retail rate compensation as overcompensating net metering customers for the electricity they produce. Part of this criticism comes from the fact that electricity retail rates reflect not just costs associated with generating electricity, but also costs associated with building, maintaining, and operating the transmission and distribution systems (\"the grid\"). Electricity rates are typically designed so that utilities can recover their total costs associated with providing electricity. If a sufficiently large number of customers participate in net metering, costs might increase for non-net metering customers in order to pay for the grid benefits. This possibility is known as a cross-subsidy, or sometimes a cost shift. In addition to these concerns about fairness, some critics of retail rate compensation raise concerns about equity, because historically most net metering customers have had above-average incomes. Empirical evidence of the cost increases for non-net metering customers is mixed, partly because studies make different assumptions about costs and benefits associated with DG. Some projections in different states have quantified a potential cross-subsidy, but projections in other states have concluded that the value of cross-subsidies are approximately zero.", "States have considered, and in some cases adopted, alternative compensation approaches to address concerns over cross-subsidies. One type of approach adds a fixed charge to net metering customers' bills to reflect the costs of maintaining the grid. Another type of approach provides an alternative compensation rate (i.e., not the retail rate) that net metering customers receive for the energy they deliver to the grid. Options for alternative compensation rates are avoided cost rates, which reflect primarily the utility's cost of producing electricity, and value of solar (VOS) rates, which additionally consider societal benefits such as reduced air emissions. Generally, rates that consider more benefits (and avoided costs) associated with DG have a higher monetary value and might promote greater levels of DG penetration. States have included different costs and benefits in analyses conducted to estimate alternative compensation rates, resulting in different monetary values for alternative rates. Even if states opted to include the same types of costs and benefits, they might derive different values for rates, since the relative costs and benefits of DG can vary based on local circumstances. Relevant local circumstances include overall penetration of DG, average and marginal electricity costs, congestion in transmission and distribution systems, and potentially other factors.", "Other state net metering policy provisions can affect deployment of DG. They relate to whether to adopt program caps, thereby limiting the number of participants; which technology type and what size generator are eligible; how long customers can \"carry over\" credits associated with surplus electricity generation; and what types of system ownership arrangements may participate in net metering. A related consideration is whether third parties, such as solar leasing firms, may develop DG in the state.", "Some Members of Congress have expressed interest in various aspects of net metering policy since passage of EPACT05. Legislation has sought to limit revisions that states can make to net metering policies; expand access to net metering for different types of electricity generation; and estimate costs and benefits associated with net metering, among other topics."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["For roughly the first 100 years of the electric power industry, electricity generation occurred mostly in large, c entralized power plants. Partly in response to the energy crisis of the 1970s, Congress established policies to promote, among other things, alternatives to centralized power plants, including generation capacity located on customer property. Customer-sited generation is a type of distributed generation (DG) and can be located on commercial, industrial, or residential properties. ", "One policy intended to promote DG is net metering. In the Energy Policy Act of 2005 (EPACT05; P.L. 109-58 ) Congress encouraged states to adopt net metering, defined in the law as ", "service to an electric consumer under which electric energy generated by that electric consumer from an eligible on-site generating facility and delivered to the local distribution facilities may be used to offset electric energy provided by the electric utility to the electric consumer during the applicable billing period. ", "State net metering policies may be relevant to congressional discussions about the role of renewable energy sources, like solar, in the nation's electricity system. Solar photovoltaic (PV) is the most commonly deployed energy type participating in net metering, comprising 97% of net metering capacity in 2018. Other federal and state policies (e.g., tax incentives, renewable portfolio standards, carbon pricing) may interact with net metering policies to determine the deployment pace of distributed solar energy sources and other types of DG. ", "Also, some Members of Congress may be interested in how some states have modified their net metering policies in recent years, including the effect of those modifications on stakeholders. Some recent state policy changes are expected to expand solar energy development, while others are expected to slow it. Among other options, Congress could choose to restrict, encourage, or require certain kinds of state policy modifications, or take no action on state net metering policies, depending on congressional priorities. This report provides background information and discusses current issues related to net metering policy."], "subsections": []}, {"section_title": "What Is Net Metering?", "paragraphs": ["Net metering policies determine how electricity customers with distributed generation are compensated for electricity they deliver to the grid. ", "Net metering is frequently used to mean a policy of net energy metering (NEM), which specifies that electricity delivered to the grid from a net metering customer is compensated on a one-to-one basis for electricity purchased from the grid. Every unit of electricity generated by the customer (typically expressed in kilowatt-hours, kWh) is subtracted from the amount of electricity they consume, for billing purposes. This is frequently described as \"the meter running backward.\" ", "Other analyses and discussions sometimes distinguish different policy options, including: ", "buy-all, sell-all , under which a utility buys all electricity generated by the net metering customer at one (usually, lower) rate and sells all the electricity consumed by the customer at a different rate (usually the same retail rate charged to any other customer); and net billing , under which electricity delivered to the grid is compensated at a pre-determined value, which might be measured as a rate or a fixed amount.", "This report will generally use the term net metering to refer to any of these policies since they are closely related to each other, in that they provide financial support for DG. "], "subsections": []}, {"section_title": "How Common Is Net Metering?", "paragraphs": ["As of April 2019, 45 states had net metering policies in place that require utilities to offer net metering to customers. Some of these policies include alternatives to net energy metering. Further, some of these policies predate EPACT05. In the states that do not require utilities to offer net metering, some utilities voluntarily offer net metering service to customers. ", "According to the U.S. Energy Information Administration (EIA), almost 2 million customers participated in net metering programs in the United States in 2018, compared to over 153 million electricity customers overall. In other words, about 1% of U.S. electricity customers in 2018 participated in net metering. The number of net metering customers increased from 2013 to 2018 as shown in Figure 1 . Data before 2013 also show growth in net metering participation, but EIA changed the way it reported net metering data beginning in 2013, so these data are not shown below, in the interest of consistency. ", "Net metering participation can be measured in other ways, such as total net metering capacity or the amount of electricity delivered to the grid from net metering generators. According to the EIA data, these measures have seen average annual increases similar to customer count.", "Levels of net metering participation vary by state, as shown in Figure 2 . In many states, less than 0.1% of electricity customers participate in net metering. Hawaii has the highest participation rate, with over 15% of customers participating in the state's net metering programs. Some potentially relevant factors for the differences among states include design of state net metering policies, presence of other state policies such as renewable portfolio standards (which may incentivize renewable DG), average electricity prices, and solar resource quality. A full analysis of the factors behind different state participation rates is beyond the scope of this report."], "subsections": []}, {"section_title": "Overview of Electricity Ratemaking", "paragraphs": ["This section provides an overview of how electricity rates are set in general, in order to clarify major areas of debate for state net metering policies. ", "Electricity ratemaking is the process of allocating to customers the total costs that utilities incur when producing and delivering electricity. Many complexities and local factors influence ratemaking. A full discussion is beyond the scope of this report. As an illustrative example, this section discusses typical ratemaking considerations for vertically-integrated investor-owned utilities. In its service territory, this type of utility owns and operates all parts of the electricity system, from electricity generation to transmission and distribution to customers. State regulators conduct the ratemaking process and approve rates that the utility can charge its customers. Regulators design rates so that utilities can recover their costs through customers' bill payments. These costs generally include:", "the costs of building and operating power plants, including fuel costs and compliance with any applicable regulations (e.g., environmental, safety, reliability); the costs of building and maintaining transmission and distribution systems (i.e., the grid); regular utility operating costs, such as ensuring reliable grid operation (i.e., grid services) or collecting meter data for billing; any programmatic costs, such as bill relief for low-income consumers or implementation of other public policies; and a return on the utility investments (i.e., return on equity or ROE).", "A common method for setting rates is to establish volumetric rates (sometimes called flat rates). All customers within a given type, or customer class, will pay the same rate expressed in cents per kilowatt-hour (cents/kWh). The more electricity a customer uses, the higher a bill they will have. Customers' bills will vary each month based on the amount of electricity they consume. Regulators estimate a value for the volumetric rate that will allow the utility to recover its total costs, based on projections of total sales for all customer classes. In this way, the costs for electricity generation, transmission, distribution, and other utility expenses are shared among all customers.", "Costs associated with customer service (e.g., billing, connections) sometimes are separated from the electricity rate and recovered in a separate customer charge. This charge would appear as a fixed value on the customer's bill and would not change from month to month. Customer charges are additional to rates. In other words, a customer's bill would have volumetric charges (rate times kWh consumed) plus a fixed customer charge.", "Some customer classes, such as large industrial facilities or institutions, consume so much electricity that utilities might make special system modifications for them. In some cases, utilities recover these costs in a demand charge that is only paid by those high-consuming customers. Like customer charges, demand charges are generally additional to volumetric charges and do not typically change from month to month."], "subsections": []}, {"section_title": "Net Metering Compensation", "paragraphs": ["EPACT05 encouraged states to adopt net metering, but the law did not specify how customers should be compensated. States with net metering have taken different approaches in implementing their policies, and many states have revised their compensation approaches in recent years. These decisions may affect DG markets. As one study from the National Renewable Energy Laboratory observed, \"compensation mechanisms impact DG deployment because they strongly influence the value proposition of a DG investment for individual customers.\" ", "This section describes some elements of states' approaches to implementing net metering. "], "subsections": [{"section_title": "Retail Rates for Net Metering Customers", "paragraphs": ["A common approach to net metering is to compensate net metering customers at the utility's approved retail rate of electricity. This is frequently described as a net energy metering (NEM) policy, or simply net metering. ", "A 2019 review of state net metering policy revisions describes how state policymakers initially viewed the retail rate as a \"close-enough proxy\" for rate setting, as follows:", "Initially, NEM was largely understood to be an administratively simple, rough-justice approach that was acceptable at a time when markets for solar PV and other DG were uneconomic. In many of the initial decisions about NEM, policy makers assumed that the retail rate was a close-enough proxy for the value of solar or value of DG, and the total numbers of participating customers and kilowatt hours being credited at the retail price were relatively small ... the small number of participating customers multiplied by the small quantity of energy each would deliver to the grid, meant that any error associated with under- or over-estimating the true value would be small.", "Retail rates provide relatively high compensation for net metering generation (see Figure 3 ). As described above (under \"Overview of Electricity Ratemaking\"), this is because the retail rate for any electric utility customer reflects the total costs the utility incurs for delivering electricity, including generating electricity and maintaining the grid. Retail rates may encourage net metering participation to a greater extent than other compensation approaches because customers can recover the upfront costs of a DG system more quickly.", "Some stakeholders have noted the possibility that compensating net metering customers at the retail rate may result in increased costs for non-net metering customers. This possibility, known as a cost shift or cross-subsidy, arises from the fact that the ratemaking process allocates total utility costs among all customers. Net metering customers generate electricity for their own consumption, which reduces the amount of utility-provided electricity they need (and, consequentially, the utility's costs to produce electricity). However, self-generation does not necessarily reduce the amount of other utility-provided services a customer uses (or, generally, the utility's costs to provide those services, such as maintaining the grid). For example, solar net metering customers might consume electricity from the grid at night and derive reliability benefits from the grid even when the sun is shining. Over time, rates for non-net metering customers could increase so the utility could recover the costs of maintaining the grid that are not recovered from net metering customers. Some stakeholders also have noted that residential net metering customers have tended to have higher incomes than non-net metering customers, raising potential equity concerns over cross-subsidies.", "Studies disagree on the extent to which non-net metering customers may be cross-subsidizing net metering customers. Studies have used different methodologies in estimating cross-subsidies, including which costs and benefits are included and over what timeframe the costs and benefits are considered. These methodological differences may help explain the lack of a consensus view on the magnitude of cross-subsidies. Also, any observed cross-subsidies may be affected by local factors, such as DG penetration and electricity demand growth, which may change over time. As a result, an estimate conducted in one state in one year cannot necessarily be extrapolated to all states in all future years. One synthesis of estimates conducted in or around 2015 found that net metering cost shifts range from $444 to $1,752 per net metering customer per year. ", "Observers may disagree on how much of a cross-subsidy is large enough to warrant policy action. Net metering, and any associated cross-subsidies, is only one factor affecting electricity rates. A 2017 study assessed the potential rate effects of a variety of factors, including net metering, energy efficiency, natural gas prices, state renewable portfolio standards, the federal Clean Power Plan (which was never implemented), and utility capital expenditures. That study found that the rate effects of DG would likely be increases between 0.03 cents/kWh and 0.2 cents/kWh, compared to increases up to 3.6 cents/kWh caused by other factors. ", "The possible presence of a cost shift does not necessarily mean that non-net metering customers are transferring money to net metering customers. The extent to which this might occur would depend, among other things, on net metering participation rates and ratemaking decisions made by regulators. There could be a delay in addressing cost shifts through normal ratemaking processes because those processes have inherent time lags. Further, cost shifts are not unique to DG. As noted in a guide for state regulators, \"cost shifting, or subsidies, is unavoidable in practical rate design but regulators endeavor to mitigate these effects in the larger context of the many, often conflicting, rate design principles.\""], "subsections": []}, {"section_title": "Responses to Retail Rates Concerns", "paragraphs": ["Some states are seeking to move from the \"close-enough proxy\" of the retail rate to more precise allocations of system costs and benefits to net metering customers. Often state policy debates focus on addressing concerns about potential cross-subsidies from retail rate compensation. Conceptually, states are exploring two options: adding fixed charges (e.g., customer charge, demand charge) to net metering customers' bills or changing the compensation rate. In practice, states are considering variations of these options, and some states have implemented one of these options or both at the same time."], "subsections": [{"section_title": "Fixed Charges", "paragraphs": ["Adding fixed charges to net metering customers' bills is meant to allow utilities to recover costs for grid maintenance and operation. At the same time, this approach might preserve some perceived advantages for compensating net metering customers at the retail rate (e.g., administrative simplicity, ease of understanding). Proponents of this approach typically include utilities and some advocates for low-income customers. They often assert that adding fixed charges (or other revisions like alternative compensation rates) reduces cost shifting and increases fairness. Opponents typically include the solar industry and environmental advocates. They often contend that net metering promotes competition in the electricity industry and that fixed charges (or other revisions that would discourage DG) ignore societal benefits that DG (especially solar energy) can provide. In addition, while the concept of adding fixed charges may be straightforward, determining a value for fixed charges that accurately reflects net metering customers' use of the grid has been complex and controversial in practice."], "subsections": []}, {"section_title": "Alternative Compensation Rates", "paragraphs": ["Some states have adopted an alternative compensation rate that attempts to represent the energy costs the utility avoids when net metering customers supply some of their own energy (see Figure 3 ). This approach, referred to in this report as an avoided cost rate, is sometimes called an energy rate, a wholesale rate, a supply rate, or variations of these terms. While the retail rate reflects all costs associated with producing energy, operating and maintaining the grid, and other utility expenses, an avoided cost rate primarily reflects costs associated with producing energy. Some states also might consider network upgrades required to reliably integrate DG, especially solar PV. Depending on circumstances, the avoided cost rate might be estimated by a regulator using an independent methodology or by referral to wholesale electricity markets. Avoided cost rates are usually lower than retail rates.", "Another alternative compensation rate applies to net metering customers with installed solar PV. Under this method, net metering customers are compensated according to a value of solar (VOS) rate. As illustrated in Figure 3 , this approach reflects many of the same considerations as an avoided cost rate and, additionally, reflects estimated societal benefits associated with distributed solar PV (e.g., reduced air emissions). Solar advocates generally favor inclusion of societal benefits in all aspects of net metering policy and rate design. Some states (and stakeholders) may consider reduced greenhouse gas emissions a benefit of distributed solar PV as well. VOS is often calculated to be larger than avoided cost rates but smaller than retail rates, though states could potentially determine a VOS rate greater than the retail rate, depending on the perceived benefits of solar included in the analysis. A related compensation rate applies to any distributed energy resource (DER), not just distributed solar generation, and reflects estimated grid and societal benefits of DERs. New York is one state taking this approach. ", "Regardless of which rate is set (i.e., avoided cost or VOS) and how it is calculated, it could be applied in either a buy-all, sell-all net metering arrangement or a net billing arrangement (see definitions in the section \" What Is Net Metering? \").", "Points of debate about alternative compensation approaches have included which costs and benefits to consider, and how to quantify them. One challenge around quantification is that costs and benefits of DG can be time- and location-specific. Another challenge is that costs and benefits might change as the level of DG penetration changes. States vary in their approach to evaluating net metering, as evidenced by a 2018 analysis conducted for the U.S. Department of Energy (DOE). That analysis, which reviewed 15 state studies of net metering costs and benefits released between 2014 and 2017, noted that states used various assumptions, and that \"the set of value categories included, and whether these categories represent costs or benefits, have a significant impact on the overall results of a given study.\" "], "subsections": []}]}]}, {"section_title": "Other State Net Metering Policy Provisions", "paragraphs": ["In addition to differing in net metering compensation, state net metering policies differ in a variety of other aspects. Some differences pertain to provisions on program caps, source eligibility, credit retention, and system ownership. Provisions in these areas can affect deployment of DG. "], "subsections": [{"section_title": "Program Caps", "paragraphs": ["Program caps, sometimes called aggregate capacity limits, set limits on the number of customers or amount of generation capacity that may participate. Program caps can be expressed in units of power (e.g., megawatts; MW), a percentage of electricity demand over some period of time, or other measures as determined by a state. The choice of whether to have program caps and, if so, how to define them can affect the amount of DG that a state's net metering policy might promote. Program caps may be established to reduce risks to the electricity system, such as potential reliability risks from DG, or reduce the likelihood that cross-subsidies would occur. Caps also might reduce the potential for sales losses or other negative financial impacts for utilities. On the other hand, program caps might create a barrier to achieving other policy goals, for example the renewable energy goals that some states have."], "subsections": []}, {"section_title": "Source Eligibility", "paragraphs": ["States specify which generation sources can participate in net metering, often based on capacity limits (i.e., generator size) and technology type. Solar energy is the dominant energy source for net metering capacity, but some states allow other energy types to participate as well. Whether a non-solar project will participate is usually due to cost factors, but other factors such as customer type (e.g., residential, commercial, or industrial) and location (e.g., urban, rural) may be influential as well. For example, combined heat and power facilities might be attractive mostly to large commercial and industrial customers that use steam. Distributed wind projects might be attractive mostly to farms or other customers with relatively large acreage."], "subsections": []}, {"section_title": "Credit Retention", "paragraphs": ["Net metering customers often have periods when their electricity consumption exceeds their generation and periods when the opposite is true. When net metering generation exceeds consumption, net metering customers can deliver this surplus generation to the grid. Many state net metering policies compensate net metering customers in some way for the total amount of electricity they generate, but some states only compensate the surplus generation (i.e., the amount delivered to the grid). Typically, if a net metering customer has a surplus over an entire billing period, the customer receives a credit on the next bill. States have different provisions for how long credits can carry over. Credit retention policies can determine the extent to which customers might reduce their total electricity costs to $0."], "subsections": []}, {"section_title": "System Ownership", "paragraphs": ["Many net metering customers have a single generator located behind a single electricity meter. A single-family home with a rooftop solar installation is one example. Other arrangements are possible though, and some states allow these. Aggregate net metering applies to single customers with multiple electricity meters on their property, for example farms, municipalities, or school districts. Shared net metering applies to multiple customers associated with the same net metering generation capacity, for example participants in community solar projects (sometimes called solar gardens). A version of shared net metering called virtual net metering applies when the shared project is located onsite, for example multi-family dwellings. ", "A related policy is whether third party participation is allowed. In third party participation arrangements, such as solar leasing and power purchase agreements, the solar system is owned by an entity other than the electricity consumer on whose property the system is installed."], "subsections": []}]}, {"section_title": "Areas of Congressional Interest", "paragraphs": ["Some Members of Congress have introduced legislation addressing aspects of states' net metering policies. Some proposals would influence state policies directly. For example, S.Amdt. 3120 in the 114 th Congress would have limited the ability of state regulators to move net metering customers to lower compensation rates or to add fixed charges to their bills. S.Amdt. 3053 , also in the 114 th Congress, would have required state regulators to consider the extent to which their net metering policies created cross-subsidies. H.R. 4175 in the 116 th Congress would require states to consider adopting net billing policies for community solar.", "Other legislation would require studies to better understand the costs and benefits of net metering. For example, in a committee report on an FY2017 appropriations bill, Congress requested a DOE study on \"the costs and benefits of net-metering and distributed solar generation to the electrical grid, utilities and ratepayers.\" DOE transmitted the report to Congress in 2019. In the 116 th Congress, S. 346 and H.R. 1009 would require the National Academies of Sciences, Engineering, and Medicine to study various aspects of net metering such as alternative incentives for DG, net metering planning and operating techniques, and consumer and industry incentives for net metering. "], "subsections": []}]}}
{"id": "R46255", "title": "International Food Assistance: FY2020 Appropriations", "released_date": "2020-03-04T00:00:00", "summary": ["U.S. international food assistance programs provide food, or the means to purchase food, to people around the world at risk of hunger. Congress funds these programs through two appropriations bills: the Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act\u00e2\u0080\u0094also known as the Agriculture appropriations bill\u00e2\u0080\u0094and the Department of State, Foreign Operations, and Related Programs (SFOPS) Appropriations Act. The Agriculture appropriations bill funds the U.S. Department of Agriculture (USDA) except for the Forest Service. The SFOPS appropriations bill funds the U.S. Department of State, U.S. Agency for International Development (USAID), and other non-defense foreign policy agencies. Both bills provide funding for U.S. international food assistance programs. Appropriations for agricultural development programs, such as Feed the Future or international agricultural exchange programs, are not considered part of food assistance spending.", "For FY2020, the Further Consolidated Appropriations Act, 2020 ( P.L. 116-94 ), provided an estimated $4.091 billion in funding for U.S. international food assistance programs. This was an 11% decrease from the $4.581 billion provided in FY2019. Division B of the act provided $1.945 billion in agriculture appropriations for international food assistance programs, including $1.725 billion for the Food for Peace (FFP) Title II program and $220 million for the McGovern-Dole International Food for Education and Child Nutrition Program. Division G of the act provided an estimated $2.146 billion for international food assistance in SFOPS appropriations. This included $80 million in the Community Development Fund and an estimated $2.066 billion for the Emergency Food Security Program (EFSP). Congress funds EFSP within the International Disaster Assistance (IDA) account but does not designate a specific amount for the program. USAID allocates IDA funds to EFSP and other non-food humanitarian response programs. The estimated FY2020 EFSP appropriation is a CRS calculation based on a five-year average of the percentage of IDA funds allocated to EFSP.", "In its FY2020 budget request, the Trump Administration proposed to eliminate the FFP Title II, McGovern-Dole, and Food for Progress programs, which Congress funds within Agriculture appropriations. The Administration proposed to consolidate multiple accounts, including accounts within Agriculture and SFOPS appropriations that fund international food assistance and other humanitarian assistance, into a new International Humanitarian Assistance account. Congress did not adopt these proposals.", "In addition to funding U.S. international food assistance programs, the FY2020 Agriculture appropriations bill included policy-related provisions that directed the executive branch how to carry out certain appropriations. The Explanatory Statement accompanying P.L. 116-94 , as well as committee reports accompanying the House and Senate Agriculture and SFOPS appropriations bills, also included policy provisions related to international food assistance. For example, one provision directed that a certain amount of the funds appropriated for the McGovern-Dole Program be used for local and regional procure ment \u00e2\u0080\u0094food assistance purchased in the country or region where it is to be distributed rather than purchased in the United States."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["The U.S. government administers multiple international food assistance programs that aim to alleviate hunger and improve food security in other countries. Some of these programs provide emergency assistance to people affected by conflict or natural disaster. Other programs provide nonemergency assistance to address chronic poverty and hunger, such as by providing food to people during a seasonal food shortage or training communities on issues related to nutrition. ", "U.S. international food assistance programs originated in 1954 with the Food for Peace Act (P.L. 83-480), also referred to as P.L. 480 . Historically, the United States has provided international food assistance primarily through in-kind aid , whereby U.S. commodities are shipped to countries in need. Congress typically funds in-kind food aid programs through the Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act\u00e2\u0080\u0094known as the Agriculture appropriations bill. The Agriculture appropriations bill funds the U.S. Department of Agriculture (USDA) except for the Forest Service.", "In 2010, the U.S. Agency for International Development (USAID) began providing market-based assistance to supplement in-kind aid in emergency and nonemergency situations. Market-based assistance provides cash transfers, vouchers, or local and regional procurement (LRP)\u00e2\u0080\u0094food purchased in the country or region where it is to be distributed rather than purchased in the United States. Congress funds most market-based assistance through the Department of State, Foreign Operations, and Related Programs (SFOPS) appropriations bill. The SFOPS appropriations bill funds the U.S. Department of State, USAID, and other non-defense foreign policy agencies.", "For FY2020, the Further Consolidated Appropriations Act, 2020 ( P.L. 116-94 ) provided approximately $4.091 billion for U.S. international food assistance programs. This was an 11% decrease from the $4.581 billion provided in FY2019. Division B of P.L. 116-94 provided $1.945 billion for international food assistance programs in Agriculture appropriations, including $1.725 billion for the Food for Peace (FFP) Title II program and $220 million for the McGovern-Dole International Food for Education and Child Nutrition Program. Division G of P.L. 116-94 provided an estimated $2.146 billion for international food assistance programs in SFOPS appropriations. This included an estimated $2.066 billion for the Emergency Food Security Program (EFSP) and $80 million for the Community Development Fund (CDF).", "This report provides an overview of accounts in the Agriculture and SFOPS appropriations bills that fund international food assistance programs. It summarizes the Trump Administration's FY2020 budget request for international food assistance. The report then details the international food assistance provisions in the FY2020 enacted Agriculture and SFOPS appropriations bills\u00e2\u0080\u0094Division B and Division G of P.L. 116-94 , respectively."], "subsections": []}, {"section_title": "International Food Assistance Programs", "paragraphs": ["Congress funds most U.S. international food assistance programs through two annual appropriations bills\u00e2\u0080\u0094the Agriculture appropriations bill and the SFOPS appropriations bill. The following sections detail each account in the Agriculture and SFOPS appropriations bills that funds international food assistance and the programs funded through these accounts. Table 1 lists each international food assistance account along with the respective appropriations bill, funded programs, primary delivery method, and implementing agency. Figure 1 depicts each U.S. international food assistance program by authorizing and appropriations committee jurisdiction and implementing agency."], "subsections": [{"section_title": "Agriculture-Funded International Food Assistance Accounts", "paragraphs": ["Some international food assistance programs under the jurisdiction of the Agriculture appropriations committees receive discretionary funding, while other programs receive mandatory funding. Congress authorizes discretionary funding levels in authorizing legislation. A program's receipt of any of the authorized funding then awaits congressional discretion in annual appropriations. With mandatory funding, Congress authorizes and provides funding in authorizing legislation. Thus, programs with mandatory funding do not require a separate appropriation.", "The Food for Peace Act (P.L. 83-480) is the primary authorizing legislation for international food assistance programs funded through agriculture appropriations. Congress reauthorizes discretionary and mandatory funding levels for these programs in periodic farm bills, most recently the Agriculture Improvement Act of 2018 (2018 farm bill; P.L. 115-334 ). Congress provides discretionary funding for international food assistance programs through three accounts in the Foreign Assistance and Related Programs title of the Agriculture appropriations bill: the Food for Peace Title I Direct Credit and Food for Progress Program account, the Food for Peace Title II Grants account, and the McGovern-Dole International Food for Education and Child Nutrition Program Grants account. Congress has periodically provided additional discretionary funding for international food assistance in the General Provisions title of the Agriculture appropriations bill."], "subsections": [{"section_title": "Food for Peace Title I Direct Credit and Food for Progress Program Account", "paragraphs": ["The Food for Peace (FFP) Title I Direct Credit and Food for Progress Program account provides administrative expenses for the FFP Title I and Food for Progress programs. FFP Title I provides concessional sales \u00e2\u0080\u0094sales on credit terms below market rates (loans)\u00e2\u0080\u0094of U.S. commodities to governments of developing countries and private entities. USDA administers FFP Title I. Congress has not appropriated funds for new FFP Title I sales since FY2006 but continues to appropriate funds to administer the FFP Title I loans provided before FY2006. ", "Food for Progress donates U.S. agricultural commodities to governments or organizations to be monetized \u00e2\u0080\u0094sold on local markets in recipient countries to generate proceeds for economic development projects. Congress has authorized Food for Progress to receive both mandatory and discretionary funding. This account receives annual appropriations to cover administrative expenses. Congress primarily funds programmatic activities through mandatory funding."], "subsections": []}, {"section_title": "Food for Peace Title II Grants Account", "paragraphs": ["The Food for Peace Title II Grants account funds the FFP Title II program. FFP Title II donates U.S. agricultural commodities to recipients in foreign countries. FFP Title II provides both emergency and nonemergency aid. Typically, the majority of FFP Title II funds support emergency aid. USAID administers FFP Title II. Congress appropriates FFP Title II funds to USDA, which then transfers the funds to USAID. Since the mid-1980s, FFP Title II has received the majority of funds appropriated to international food assistance in the Agriculture appropriations bill. FFP Title II also receives some funding for nonemergency assistance from the Community Development Fund in the SFOPS appropriations bill (see \" SFOPS-Funded International Food Assistance Accounts \"). "], "subsections": []}, {"section_title": "McGovern-Dole International Food for Education and Child Nutrition Program Grants Account", "paragraphs": ["This account funds the McGovern-Dole International Food for Education and Child Nutrition Program. McGovern-Dole donates U.S. agricultural commodities to school feeding programs and pregnant or nursing mothers in qualifying countries. USDA administers McGovern-Dole. Since FY2016, Congress has set aside a portion of McGovern-Dole funds for LRP. The 2018 farm bill authorized USDA to use up to 10% of annual McGovern-Dole funds for LRP."], "subsections": []}, {"section_title": "The Farmer-to-Farmer Program Set-Aside", "paragraphs": ["Congress funds the Farmer-to-Farmer Program, also known as FFP Title V, through a set-aside of the total appropriation for Food for Peace Act programs. This program finances short-term placements for U.S. volunteers to provide technical assistance to farmers in developing countries. USAID administers the Farmer-to-Farmer Program. Statute sets minimum program funding as the greater of $10 million or 0.5% of annual funds for Food for Peace Act programs and maximum program funding as the greater of $15 million or 0.6% of annual funds for Food for Peace Act programs."], "subsections": []}, {"section_title": "Programs with Mandatory Funding", "paragraphs": ["Congress has authorized certain U.S. international food aid programs to receive mandatory funding. Food for Progress relies primarily on mandatory funding financed through USDA's Commodity Credit Corporation (CCC). Food for Progress does not typically receive discretionary funding beyond funding for administrative expenses provided by the FFP Title I account. However, in FY2019, Congress provided discretionary funding for Food for Progress in the General Provisions title of the Agriculture Appropriations Act. ", "The Bill Emerson Humanitarian Trust (BEHT) is a reserve of funds held by the CCC. USDA can use BEHT funds to supplement FFP Title II activities, especially when FFP Title II funds alone cannot meet emergency international food needs. If USDA provides aid through BEHT, Congress may appropriate funds to the CCC in a subsequent fiscal year to reimburse the CCC for the value of the released funds. USDA did not release funds from BEHT in FY2019, and Congress did not appropriate any BEHT reimbursement funds to the CCC in FY2020."], "subsections": []}]}, {"section_title": "SFOPS-Funded International Food Assistance Accounts", "paragraphs": ["Congress funds international food assistance programs through two funding accounts in the SFOPS appropriation using discretionary funds."], "subsections": [{"section_title": "International Disaster Assistance", "paragraphs": ["The International Disaster Assistance (IDA) funding account provides for EFSP, which USAID first employed in FY2010 to supplement its emergency FFP Title II in-kind aid. Congress permanently authorized the program in the Global Food Security Act of 2016 ( P.L. 114-195 ). Congress does not specify the exact funding level for EFSP in its annual appropriation; rather, USAID determines the allocation of IDA funds in response to humanitarian need in any given year. Between FY2015 and FY2019, EFSP represented an average of 47% of the whole IDA appropriation."], "subsections": []}, {"section_title": "Development Assistance", "paragraphs": ["Congress designates funding within the Development Assistance (DA) account for CDF. CDF funds complement FFP Title II nonemergency programs. USAID first used CDF in FY2010 to reduce its reliance on monetization \u00e2\u0080\u0094the practice of implementing partners selling U.S. commodities on local markets and using the proceeds to fund programs. As with EFSP, CDF offers USAID the flexibility to pursue market-based interventions including cash transfers, food vouchers, and LRP. Today, CDF continues to complement FFP Title II nonemergency programming but is no longer needed to offset monetization, as the practice is no longer a legislative requirement.", "Congress designates the level of CDF in its reports accompanying annual appropriations (often referred to as a \"soft earmark\"). For more information on CDF, see CRS Report R45879, International Food Assistance: Food for Peace Nonemergency Programs , by Emily M. Morgenstern. "], "subsections": []}]}]}, {"section_title": "The Administration's FY2020 Budget Request", "paragraphs": ["For the third year in a row, the Trump Administration's FY2020 budget request proposed eliminating McGovern-Dole and FFP Title II. However, unlike in the FY2018 and FY2019 requests\u00e2\u0080\u0094in which the President proposed shifting all funding for international food assistance to the IDA account within the SFOPS appropriations bill\u00e2\u0080\u0094the President's FY2020 request proposed creating a new International Humanitarian Assistance (IHA) account. The proposed IHA account would have consolidated four humanitarian assistance accounts\u00e2\u0080\u0094the IDA, Migration and Refugee Assistance, and Emergency Refugee and Migration Assistance accounts that are funded in SFOPS appropriations, along with FFP Title II within Agriculture appropriations\u00e2\u0080\u0094into a single account within the SFOPS appropriations bill. The FY2020 budget request also repeated past proposals to eliminate Food for Progress and merge the DA account with the Economic Support Fund (ESF), Democracy Fund (DF), and Assistance for Europe, Eurasia, and Central Asia (AEECA) accounts to create a new Economic Support and Development Fund (ESDF) within SFOPS appropriations. ", "Congress did not adopt the Administration's FY2020 proposals to eliminate FFP Title II, McGovern-Dole, or Food for Progress or create the new combined IHA and ESDF accounts. The following section summarizes the Administration's FY2020 budget requests for U.S. international food assistance programs in the Agriculture and SFOPS appropriations bills."], "subsections": [{"section_title": "FY2020 Agriculture Funding Request", "paragraphs": ["For FY2020, the Trump Administration requested discretionary funding for one international food assistance program account. The Administration requested $135,000 for the FFP Title I account to carry out existing FFP Title I loans and Food for Progress projects. This amount would have been $14,000 less than the FY2019 enacted amount for the FFP Title I account. The Administration's FY2020 budget request stated that the workload to administer FFP Title I was \"significantly less than previously estimated\" and that \"funds were redirected to meet higher priorities.\"", "The FY2020 request also repeated the FY2018 and FY2019 proposals to eliminate FFP Title II, and McGovern-Dole and the FY2019 proposal to eliminate Food for Progress. Regarding FFP Title II, the Administration stated \"To replace the inefficient food aid provided through Title II, the 2020 request includes funding for emergency food needs within the new, more efficient International Humanitarian Assistance (IHA) account.\" Eliminating FFP Title II would fund all emergency food assistance through the SFOPS appropriations rather than jointly between the SFOPS and Agriculture appropriations bills. ", "Regarding the proposed elimination of McGovern-Dole, the Administration's FY2020 request stated, \"In kind food aid is associated with high transportation and other costs and is inefficient compared to other types of development assistance. In addition, the McGovern Dole program has unaddressed oversight and performance monitoring challenges.\" ", "Food for Progress primarily receives mandatory funding. The FY2020 request proposes to eliminate mandatory funding authority, estimating that this would result in $1.7 billion in savings over 10 years."], "subsections": []}, {"section_title": "FY2020 SFOPS Funding Request", "paragraphs": ["The FY2020 SFOPS budget proposal included a combined IHA account that would have consolidated the four humanitarian assistance accounts. According to budget documents, the IHA account would have supported \"all aspects of humanitarian assistance, including shelter, protection, emergency health and nutrition, the provision of safe drinking water, livelihoods supports, emergency food interventions, rehabilitation, disaster risk reduction, and transition to development assistance programs,\" among other activities. The account would have been managed by the newly consolidated Humanitarian Assistance Bureau at USAID but with a \"senior dual-hat leader\" under the policy authority of the Secretary of State reporting to both the Secretary of State and the USAID administrator. The Administration proposed $5.97 billion for the IHA account, a 37% decrease from the combined FY2019 appropriations for IDA, FFP Title II, Migration and Refugee Assistance, and Emergency Refugee and Migration Assistance.", "The FY2020 SFOPS budget proposal also included a combined ESDF account that would have merged the DA, ESF, DF, and AEECA accounts. The FY2020 proposal included $5.23 billion for ESDF, a 32% decrease from the FY2019 appropriations for the four accounts combined. "], "subsections": []}, {"section_title": "Potential Implications of the FY2020 Funding Request", "paragraphs": ["Moving funding from FFP Title II to a new IHA could have changed how the United States delivers food assistance to recipient countries. Statute requires that nearly all assistance distributed under FFP Title II be in-kind aid. By contrast, EFSP, which Congress currently funds through the IDA account but which the Administration proposed to fund through the new IHA, does not have a statutory requirement to provide a portion of assistance as in-kind aid. EFSP can provide in-kind aid or market-based assistance. Therefore, under current statutes, shifting international food assistance funding from FFP Title II to IHA would have meant this funding would not have needed to adhere to the FFP Title II requirement to provide in-kind aid. This could have increased the portion of food assistance provided as market-based assistance rather than in-kind aid and would have shifted implementation from USDA to USAID.", "Proposals to shift U.S. international food assistance funding from in-kind food aid to market-based food assistance are not new. Both the Obama and George W. Bush Administrations proposed increasing the portion of U.S. international food assistance delivered as market-based assistance. Some proponents of increasing the use of market-based assistance argue that it could improve program efficiency. However, some interested parties assert that the Trump Administration's proposed decrease in overall funding for international food assistance could offset potential efficiency gains, resulting in fewer people receiving assistance. Some opponents of increasing the share of food assistance that is market-based rather than in-kind maintain that in-kind aid ensures that the United States provides high-quality food to recipients. Certain stakeholders, such as some agricultural commodity groups, may also oppose such changes due to their implications for U.S. government purchase of U.S. commodities.", "In addition to the implications above, there are a number of international food assistance issues in which Members of Congress have expressed interest. These include the share of in-kind and market-based food assistance, cargo preference requirements, and congressional jurisdiction, among others. For more information on the broad range of international food assistance-related issues, see CRS Report R45422, U.S. International Food Assistance: An Overview , by Alyssa R. Casey. "], "subsections": []}]}, {"section_title": "Congressional Appropriations", "paragraphs": ["The FY2020 Agriculture Appropriations Act provided funding for U.S. international food assistance programs in the Foreign Assistance and Related Programs title (Title V). This included funding for FFP Title II and McGovern-Dole. The act also provided funding for administrative expenses to manage existing FFP Title I loans that originated while the FFP Title I program was active. Unlike in FY2019, Congress did not provide discretionary funding in FY2020 for the Food for Progress program.", "The FY2020 SFOPS Appropriations Act provided funding for international food assistance programs in Bilateral Assistance (Title III). Figure 2 shows funding trends for international food assistance programs for FY2015-FY2020. Table 2 details appropriations for international food assistance programs for FY2018-FY2020, including proposed funding levels in the FY2020 Administration's request and House and Senate Agriculture and SFOPS appropriations bills."], "subsections": [{"section_title": "FY2020 Agriculture Appropriations", "paragraphs": ["The Further Consolidated Appropriations Act, 2020 ( P.L. 116-94 , Div. B) provided $1.945 billion for international food assistance programs, roughly level with the FY2019 enacted amount of $1.942 billion. The FY2020 enacted amount was less than the $2.085 billion in the House-passed Agriculture appropriations bill ( H.R. 3055 ) but more than the $1.926 billion in the Senate-passed bill ( H.R. 3055 ). Congress did not adopt the Administration's FY2020 proposal to eliminate FFP Title II, McGovern-Dole, and Food for Progress.", "The FY2020 act provided $1.725 billion for FFP Title II, a 0.5% increase from the $1.716 billion provided in FY2019. In FY2020, Congress provided all FFP Title II funding in the Foreign Assistance and Related Programs title (Title V) of the Agriculture appropriations bill. This was a change from FY2019, when Congress provided the majority of FFP Title II funding ($1.5 billion) in the Foreign Assistance title but provided additional funding for FFP Title II ($216 million) in the bill's General Provisions title (Title VII).", "The FY2020 act provided $220 million for McGovern-Dole, a 5% increase from the FY2019 enacted amount of $210. Congress directed a minimum of $20 million of McGovern-Dole funding and a maximum of 10% of total program funding ($22 million) be set aside for LRP. This was an increase from the $15 million set-aside in FY2019. The FY2020 act also provided $142,000 for FFP Title I and Food for Progress administrative expenses, equal to the FY2019 enacted amount.", "Unlike in FY2019, the FY2020 act did not provide discretionary appropriations for Food for Progress. Congress typically funds this program through mandatory funding. The 2018 farm bill ( P.L. 115-334 , \u00c2\u00a73302) authorized new pilot agreements within the Food for Progress program to directly fund economic development projects rather than funding the projects through monetizing commodities. The 2018 farm bill authorized $10 million per year for FY2019-FY2023 for pilot agreements, subject to annual appropriations. Congress did not appropriate funding for Food for Progress pilot agreements in FY2019 or FY2020."], "subsections": []}, {"section_title": "FY2020 SFOPS Appropriations", "paragraphs": ["Division G of the Further Consolidated Appropriations Act, 2020 ( P.L. 116-94 ) provided funds for international food assistance programs appropriated under the SFOPS measure. The enacted IDA appropriation level grew by 0.2%, from $4.385 billion in FY2019 to $4.395 billion in FY2020. As in prior fiscal years, the measure did not determine a specific level for EFSP. IDA funds are designated to \"carry out the provisions of section 491 of the Foreign Assistance Act of 1961 for international disaster relief, rehabilitation, and reconstruction assistance.\" Because the account is meant to respond to international emergencies, Congress tends to appropriate funds in a lump sum instead of directing funds toward specific countries or crises. ", "As in previous fiscal years, the final FY2020 act included $80 million for CDF under DA."], "subsections": []}]}, {"section_title": "Policy-Related Provisions", "paragraphs": ["In addition to providing funding, the Agriculture and SFOPS appropriations bills may contain policy-related provisions that direct the executive branch how to spend certain funds. Provisions included in appropriations act text have the force of law but generally only for the duration of the fiscal year for which the act provides appropriations. Policy-related provisions generally do not amend the U.S. Code . Table 3 compares select policy-related provisions pertaining to U.S. international food aid programs from the Foreign Assistance and Related Programs (Title V) and General Provisions (Title VII) titles of the FY2019 and FY2020 Agriculture Appropriations Acts. There was no language from the SFOPS bills for a similar table.", "The explanatory statement that accompanies the appropriations act, as well as the committee reports that accompany the House and Senate committee-reported bills, can provide statements of support for certain programs or directions to federal agencies on how to spend certain funding provided in the appropriations bill. While these documents generally do not have the force of law, they can express congressional intent. The committee reports and explanatory statement may need to be read together to capture all of the congressional intent for a given fiscal year.", " Table 4 compares selected policy-related provisions pertaining to U.S. international food aid programs from the FY2019 and FY2020 House and Senate committee reports and explanatory statement for the FY2020 Agriculture Appropriations Act. Table 5 compares one selected policy-related provision pertaining to U.S. international food assistance programs from the FY2019 and FY2020 House and Senate committee reports and explanatory statement for the FY2020 SFOPS appropriation. "], "subsections": []}]}}
{"id": "R45808", "title": "The September 11th Victim Compensation Fund (VCF): Background and Potential Reauthorization", "released_date": "2019-07-15T00:00:00", "summary": ["The September 11 th Victim Compensation Fund (VCF) provides cash benefits to certain persons whose health may have been affected by exposure to debris or toxic substances in the aftermath of the September 11, 2001, terrorist attacks on the Pentagon and the World Trade Center, and the terrorist-related aircraft crash at Shanksville, PA. Congress created the original VCF shortly after the 2001 terrorist attacks to provide compensation to persons injured and to the families of persons killed in the attacks and their immediate aftermath. In 2011, Congress reopened the VCF to provide benefits to persons who responded to the terrorist attack sites, were involved in the cleanup of these sites, or lived in lower Manhattan during the attacks. The VCF was reauthorized in 2015, and it is scheduled to sunset on December 18, 2020.", "The VCF has awarded more than $5 billion since its reopening and is in danger of exceeding its current appropriation of $7.375 billion before its sunset date and thus being unable to pay full benefits. In February 2019, the Special Master of the VCF announced that all future VCF awards would be reduced to prevent the VCF from running out of appropriated funds. The Special Master cites increases in death claims, cancer claims, and claims from non-responders as drivers of the increase in VCF benefit costs.", "Reauthorization bills, H.R. 1327 and S. 546 , have been introduced, with H.R. 1327 being ordered reported out of the Judiciary Committee on June 12, 2019. Both bills would reauthorize the VCF without changing any eligibility categories and appropriate \"such sums as may be necessary\" for each fiscal year through FY2090. On July 12, 2019, H.R. 1327 was passed by the House of Representatives with amendments that changed the bill's name, changed the provisions for adjusting the maximum amount of income considered for determining noneconomic loss, added up to two Deputy Special Masters to the program's administration, and made the bill's spending exempt from PAYGO requirements."], "reports": {"section_title": "", "paragraphs": ["T he current September 11 th Victim Compensation Fund (VCF) provides cash benefits to certain persons whose health may have been affected by the aftermath of the September 11, 2001, terrorist attacks on the Pentagon and the World Trade Center, and the terrorist-related aircraft crash at Shanksville, PA. The current iteration of the VCF may be unable to pay full benefits to eligible persons and is scheduled to sunset on December 18, 2020. Current VCF data are provided in this report's Appendix ."], "subsections": [{"section_title": "History of the VCF", "paragraphs": ["On September 22, 2001, the Air Transportation Safety and System Stabilization Act (ATSSA; P.L. 107-42 ) was enacted into law. Quickly passed by Congress in the wake of the September 11, 2001, terrorist attacks, this legislation provided various forms of relief to the American airline industry and affirmed Congress's commitment to improving airline safety. Title IV of the ATSSA also established the VCF to compensate persons injured or the representatives of persons killed in the attacks or their immediate aftermath. ", "The VCF originally closed in 2003 and was reopened in 2011 and expanded to provide compensation to responders to the September 11, 2001, terrorist attacks and others, such as certain New York City residents, who may have suffered health effects in the aftermath of the attacks. The VCF was reauthorized in 2015 and, if not reauthorized in the 116 th Congress, will sunset on December 18, 2020. "], "subsections": [{"section_title": "Original VCF", "paragraphs": ["The original VCF, as created by Title IV of the ATSSA, provided cash benefits to the following groups of persons who suffered physical injury or death as a result of the terrorist attacks of September 11, 2001:", "persons who were present at the World Trade Center, Pentagon, or aircraft crash site in Shanksville, PA, at the time of or in the immediate aftermath of the aircraft crashes at those sites on September 11, 2001; and passengers and crew of any aircraft that crashed on September 11, 2001, as a result of terrorist activity.", "The amount of benefits available to each claimant was determined by a Special Master appointed by the Attorney General. The amount of benefits payable to each claimant was based on each person's economic losses (such as loss of future earnings) and noneconomic losses (such as pain and suffering). The VCF statute specifically prohibited the payment of punitive damages. Benefits were reduced by certain collateral source payments, such as life insurance benefits, available to the claimant. There was no cap on the amount of benefits that any one person could receive or on total benefits paid. ", "By filing a VCF claim, a person waived his or her right to file a civil action or be a party to such an action in any federal or state court for damages related to the September 11, 2001, terrorist-related aircraft crashes. This provision established the VCF as an alternate and expedited route to compensation for victims while providing some protection against lawsuits for damages that may have been brought by victims against the air carriers; airframe manufacturers; the Port Authority of New York and New Jersey, who owned the World Trade Center; or any other entity. ", "Congress provided funding for the VCF through an appropriation of \"such sums as may be necessary\" for benefit payment and administration. The Special Master of the VCF was required to promulgate regulations to govern the program within 90 days of the law's enactment, and all claims had to be filed within two years of the regulations' promulgation, at which time the VCF would close. The original VCF received 7,403 claims and made awards totaling $7.049 billion to 5,560 claimants. "], "subsections": []}, {"section_title": "Reopened VCF", "paragraphs": ["The original VCF was closed to new claims in December 2003. However, concerns about injuries and illnesses incurred by persons involved in emergency response, recovery, and debris removal operations at the September 11 th aircraft crash sites led Congress to reopen the VCF with the enactment of Title II of the James Zadroga 9/11 Health and Compensation Act of 2010 (Zadroga Act; P.L. 111-347 ). The reopened VCF extended eligibility for cash benefits to persons who suffered physical injuries or illnesses as a result of rescue, recovery, or debris removal work at or near the September 11 th aircraft crash sites during the period from September 11, 2001, to May 30, 2002, as well as certain persons who lived, worked, or were near the World Trade Center on September 11, 2001. ", "The VCF was initially reopened for new claims through October 3, 2016. Total benefits and administrative costs paid by the reopened VCF were limited to $2.775 billion, unlike in the original VCF, which had no cap on total funding for benefits, allowing the Special Master to award benefits without considering the benefits' total cost. Under the reopened VCF, attorneys' fees were limited to 10% of the VCF award."], "subsections": []}, {"section_title": "VCF Reauthorization", "paragraphs": ["The reopened VCF was scheduled to stop taking claims on October 3, 2016. The VCF was reauthorized on December 18, 2015, with the enactment of Title IV of Division O of the Consolidated Appropriations Act, 2016 (Zadroga Reauthorization Act of 2015; P.L. 114-113 ). Under this reauthorization, claims approved before the reauthorization date are considered Group A claims. Group A claims are subject to the same rules as claims under the reopened VCF and are subject to the $2.775 billion cap on total benefit payments. All other claims filed before the final VCF deadline of December 18, 2020, are considered Group B claims subject to additional rules and funding caps established by the reauthorization legislation. Thus, all current claims are Group B claims."], "subsections": []}]}, {"section_title": "Overview of the VCF Under Current Law", "paragraphs": [], "subsections": [{"section_title": "VCF Eligibility", "paragraphs": ["To be eligible for VCF benefits, a person must have", "died as a passenger or crew member on one of the aircraft hijacked on September 11, 2001; died as a direct result of the terrorist-related aircraft crashes or rescue, recovery, or debris removal in the immediate aftermath of the September 11, 2001, terrorist attacks; or been present at a September 11 th crash site in the immediate aftermath of the September 11, 2001, terrorist attacks and suffered physical harm as a direct result of the crashes or the rescue, recovery, and debris removal efforts."], "subsections": [{"section_title": "Immediate Aftermath", "paragraphs": ["For the purposes of VCF eligibility, the immediate aftermath of the September 11 th terrorist attacks is the time period from September 11, 2001, to May 30, 2002. "], "subsections": []}, {"section_title": "September 11th Crash Sites", "paragraphs": ["For the purposes of VCF eligibility, the September 11 th crash sites include", "the World Trade Center, Pentagon, or Shanksville, PA, crash sites; the buildings or portions of buildings that were destroyed as a result of the September 11 th terrorist attacks; the area in Manhattan that is south of the line that runs along Canal Street from the Hudson River to the intersection of Canal Street and East Broadway, north on East Broadway to Clinton Street, and east on Clinton Street to the East River; and any area related to debris removal, such as the debris-removal barges and Fresh Kills in Staten Island, New York. "], "subsections": []}, {"section_title": "Physical Harm", "paragraphs": ["To be eligible for the VCF, individuals who did not die as passengers or crew members of one of the hijacked aircraft, or as a direct result of the September 11 th terrorist attacks (including rescue, recovery, and debris removal), must have suffered physical harm as a result of the attacks. For the purposes of VCF eligibility, physical harm is demonstrated by the presence of a World Trade Center (WTC)-related physical health condition as defined for the purposes of the World Trade Center Health Program (WTCHP). "], "subsections": [{"section_title": "WTC-Related Physical Health Condition", "paragraphs": ["A WTC-related physical health condition is a physical health condition covered by the WTCHP. These conditions are those provided in statute at Sections 3312(a) and 3322(b) of the Public Health Service Act (PHSA) and those added through rulemaking by the WTCHP administrator. Per Section 3312(a) of the PHSA, to be covered by the WTCHP and thus compensable under the VCF, a condition must be on the list of covered WTCHP-covered conditions and it must be determined that exposure in the aftermath of the September 11, 2001, terrorist attacks \"is substantially likely to be a significant factor in aggravating, contributing to, or causing the illness or health condition.\" In most cases, the VCF requires that a person's condition be certified by the WTCHP for that condition to be compensable.", "The WTCHP provides guidance on how to evaluate if a person's condition meets the standard to be linked to exposure in the aftermath of the September 11, 2001, terrorist attacks. This evaluation is based on a combination of the amount of time a person was physically present at a site and the specific activities\u00e2\u0080\u0094such as search and rescue, sleeping in a home in Lower Manhattan, or just passing through a site\u00e2\u0080\u0094in which the person engaged. For example, a person who was engaged in search and rescue activities at the World Trade Center site between September 11 and September 14, 2001, must have been present for at least 4 hours for the WTCHP to certify his or her condition and thus compensable by the VCF, whereas a person whose only activity was passing through Lower Manhattan during the same period, and who was not caught in the actual dust cloud resulting from the buildings' collapse, would have to have been in the area for at least 20 hours to be eligible for compensation. The WTCHP evaluates conditions that do not meet the minimum exposure criteria on a case-by-case basis using \"professional judgement\" and \"any relevant medical and/or scientific information.\"", "WTCHP-covered mental health conditions may not be used to establish VCF eligibility, as the VCF does not include any provisions for benefit payments for mental health conditions. "], "subsections": []}, {"section_title": "Cancer as a WTC-Related Physical Health Condition", "paragraphs": ["The WTCHP statute does not include any type of cancer in the list of WTC-related health conditions. However, the statute does require the WTCHP administrator to periodically review the available scientific evidence to determine if any type of cancer should be covered by the WTCHP and, by extension, the VCF. In response to a petition to add conditions to the list of WTC-related health conditions, the WTCHP administrator is required, within 90 days, to either request a recommendation on action from the WTC Scientific/Technical Advisory Committee (STAC) or make a determination on adding the health condition. If the WTCHP administrator requests a recommendation from the STAC, that recommendation must be made within 90 days of its receipt and the WTCHP administrator must act on that request within an additional 90 days. ", "On September 7, 2011, Representatives Carolyn B. Maloney, Jerrold Nadler, Peter King, Charles B. Rangel, Nydia M. Velazquez, Michael G. Grimm, and Yvette Clarke and Senators Charles E. Schumer and Kirsten E. Gillibrand filed a petition, in the form of a letter to the WTCHP administrator, requesting that the administrator \"conduct an immediate review of new medical evidence showing increased cancer rates among firefighters who served at ground zero\" and that the administrator \"consider adding coverage for cancer under the Zadroga Act.\" In response to this petition, the WTC administrator requested that the STAC \"review the available information on cancer outcomes associated with the exposures resulting from the September 11, 2001, terrorist attacks, and provide advice on whether to add cancer, or a certain type of cancer, to the List specified in the Zadroga Act.\" ", "On September 12, 2012, based on the STAC's recommendations, the WTCHP administrator added more than 60 types of cancer, covering nearly every body system and including any cancers in persons less than 20 years of age and any rare cancers, to the list of WTC-related health conditions, thus making these conditions compensable under the VCF. ", "In a review of the decision to add cancers to the list of WTC-related health conditions, the Government Accountability Office (GAO) found that the WTCHP administrator used a hazards-based approach to evaluate cancers. This approach evaluated whether exposures in the aftermath of the September 11, 2001, terrorist attacks were associated with types of cancer but did not evaluate the probability of developing cancer based on a given exposure. A GAO-convened scientific panel indicated that the hazards-based approach the WTCHP administrator used was reasonable given data constraints and the fact that there is a certification process to determine if a cancer or other condition on the list of WTC-related health conditions meets the statutory requirement of being \"substantially likely to be a significant factor in aggravating, contributing to, or causing the illness or health condition.\" The panel also indicated that this approach could have benefited from an independent peer review process. The WTCHP administrator stated that peer review was not possible given the statutory time constraints to act on the petition and the STAC's recommendation. ", "One year later, the WTCHP administrator added prostate cancer to the list of WTC-related health conditions. The WTCHP administrator has also established minimum latency periods for certain types of cancer and maximum onset periods for certain types of aerodigestive disorders. "], "subsections": []}]}]}, {"section_title": "VCF Operations", "paragraphs": ["The Civil Division of the Department of Justice administers the VCF. The VCF Special Master, currently Rupa Bhattacharyya decides VCF eligibility and benefits. A claimant dissatisfied with the Special Master's decision on his or her claim may file an appeal and request a hearing before a VCF hearing officer appointed by the VCF. There is no further right of appeal or judicial review of VCF decisions. A claimant may amend his or her claim after a decision has been made if the claimant has new material relevant to the claim. "], "subsections": [{"section_title": "Registration and Claim Deadlines", "paragraphs": ["All claims for VCF benefits must be filed by December 18, 2020, five years after the VCF reauthorization act's enactment. Before filing a claim, a potential claimant must have registered with the VCF by one of the following applicable deadlines:", "by October 3, 2013, if the claimant knew, or reasonably should have known, that he or she suffered a physical harm or died as a result of the September 11 th attacks or rescue, recovery, or debris removal efforts, and that he or she was eligible for the VCF, on or before October 3, 2011; within two years of the date the claimant knew, or reasonably should have known, that he or she has a WTC-related physical health condition or died as a result of the September 11 th attacks and is eligible for the VCF. ", "If a claimant has a condition that is later added to the list of conditions covered by the WTCHP, then the two-year period begins on the later of the dates when a government entity, such as the WTCHP or a state workers' compensation agency, determines that the condition is related to the September 11 th attacks, or when a claimant's condition is added to the list of conditions covered by the WTCHP. "], "subsections": []}]}, {"section_title": "VCF Benefits", "paragraphs": ["Benefits under the original VCF were not subject to any caps on individual or total payments. When the VCF was reopened, total benefits were subject to a cap of $2.775 billion; however, there were no specific caps on individual benefits. VCF benefits for Group B are subject to caps on noneconomic losses and total benefits. ", "Benefits under the VCF for Group B claims are determined by the Special Master based on the claimant's economic and noneconomic losses. For noneconomic losses, there is a cap of $250,000 for claims based on cancer and $90,000 for all other claims. However, for cases in which a person's death was caused by a WTC-related health condition, the VCF regulations provide that the presumed award for noneconomic loss is $250,000 plus an additional $100,000 for the person's spouse and each dependent. When calculating economic losses, the Special Master is only permitted to consider the first $200,000 in annual income when determining losses to past earnings and future earning capacity, which limits the amount of economic losses that can be paid. There is a total cap of $4.6 billion for VCF Group B awards. As in past iterations of the VCF, benefits are reduced by certain collateral source payments available to claimants, such as life insurance benefits, workers' compensation payments, and government benefits related to the person's injury or death, such as Social Security Disability Insurance (SSDI) and the Public Safety Officers' Benefits Program (PSOB)."], "subsections": []}]}, {"section_title": "VCF Financing", "paragraphs": ["The costs of VCF benefits and administration are not subject to annual appropriations. Rather, costs for Group A benefits and administration were financed by the $2.775 billion in appropriations provided by the Zadroga Act. Costs for Group B benefits and administration are financed by the one-time appropriation of $4.6 billion provided in the Zadroga Reauthorization Act of 2015. Thus, the total funding available for the VCF since its reopening is $7.375 billion. Funding was made exempt from budget sequestration by the Zadroga Reauthorization Act of 2015. "], "subsections": []}, {"section_title": "Special Master's Reduction of Future Awards", "paragraphs": ["Total funding for VCF benefits and administrative costs is capped by the $7.375 billion in appropriations that have been provided in the Zadroga Act and Zadroga Reauthorization Act of 2015, with a total cap of $4.6 billion for VCF Group B awards. The VCF statute requires the Special Master to annually reassess VCF policies and procedures to determine if these policies and procedures satisfy the statutory requirements that claimants with the most debilitating physical conditions have their claims prioritized and that total expenditures for awards and administrative costs associated with Group B claims do not exceed the $4.6 billion in available funding. "], "subsections": [{"section_title": "Special Master's Assessment", "paragraphs": [], "subsections": [{"section_title": "Notice of Inquiry", "paragraphs": ["In October 2018, the Special Master published a Notice of Inquiry in the Federal Register seeking public comments on possible policy changes that the Special Master could consider to ensure there is sufficient funding to administer and pay future VCF claims without exceeding the $4.6 billion cap on Group B expenditures. The Special Master received 28 comments in response to this Notice of Inquiry, of which 16 were relevant to the request for information on possible VCF policy and procedure changes."], "subsections": []}, {"section_title": "Projections of Future VCF Expenditures", "paragraphs": ["In February 2019, the Special Master published her most recent annual assessment of VCF policies and procedures. This report includes two sets of projections of future VCF benefit and administrative costs. One projection is based on historical program data and another projection is based on these historical data, augmented by data on recent program trends. These two models were also used in the 2017 assessment, whereas the 2018 assessment only projected costs based on historical program data. ", "As shown in Table 1 , the Special Master projects under both models that total VCF program costs by the end of the program will far exceed the $7.375 billion in available funding. This is the first time the Special Master projects that program funding will be insufficient to pay all VCF benefits and administrative expenses.", "On June 21, 2019, during testimony before the House Committee on the Judiciary, the Special Master pointed to increases in death claims, cancer claims, and claims from non-responders have played a role in driving projected benefit costs above the amount of available funding Congress provided. The Special Master did not, however, break down how much of the cost increases can be attributed to each of these three factors. "], "subsections": [{"section_title": "Death Claims", "paragraphs": ["As of May 31, 2019, the Special Master has determined that 1,057 death claims are eligible for the reopened VCF. Of these, award decisions based on economic and noneconomic loss have been made in 856 cases. As a comparison, the original VCF paid awards in 2,880 cases of death. Because there is a regulatory presumption of noneconomic loss of $250,000 for the decedent and an additional $100,000 for the spouse and any dependents, noneconomic loss awards in death cases have the potential to be larger than those in injury cases. ", "Since the VCF's reauthorization in 2015, the number of eligible and awarded death cases has increased significantly. For claims paid prior to reauthorization (Group A claims), awards were paid in 17 death cases. Thus, in less than four years since reauthorization, there has been a nearly 5,000% increase in death awards. Of the 839 death awards paid since reauthorization, 517 were awarded in the period between April 30, 2018, and April 30, 2019, with an additional 43 claims paid in May 2019. Through the end of May 2019, there has been an average of more than 35 new eligibility decisions and more than 48 new awards in death claims per month.", "Although the Special Master does not discuss the causes of the increases in death claims, the nature of many of the compensable medical conditions, especially certain types of cancer with low survival rates, means that many persons eligible for compensation from the VCF will likely die as a result of their WTC-related health conditions, thus possibly making their families eligible for death compensation. "], "subsections": []}, {"section_title": "Cancer Claims", "paragraphs": ["Cancers were first added to the VCF as compensable conditions in September 2012. Since then, there have been 8,734 cases with at least one form of cancer determined to be eligible for the VCF. As of the end of April 2019, eligible claims with at least one type of cancer made up 37% of all eligible VCF claims. ", "As shown in Table 2 , the most significant growth in cancer claims occurred shortly after cancers were added to the list of WTC-eligible health conditions and also in the most recent year. Between September 30, 2014, and December 31, 2015, the number of eligible claims with cancer as the only compensable condition (cases that would not otherwise be eligible for the VCF if not for the addition of cancer) increased 194% from 472 claims to 1,387 claims. This increase is understandable and expected given that this was early in the period during which cancer claims were first eligible for compensation. However, the recent increase in eligible cancer-only claims as a percentage of all eligible claims is one of the factors that drove the projected program costs, which were just below total available funds in the 2018 assessment, over the funding cap in the 2019 assessment. In 2018, the number of eligible cancer-only claims increased 58%. At the end of 2018, eligible cancer-only claims made up 18% of all eligible claims. ", "The increase in eligible cancer claims is notable for three reasons. First, no types of cancer were compensable when the VCF was originally reopened in 2010 and no cancers were included in the list of WTC-related health conditions created by Congress in the Zadroga Act. Cancers were added to the list of covered conditions by the WTCHP administrator in two determinations made in 2012 and 2013. These determinations resulted in more than 60 types of cancer covering nearly every body system being compensable under the VCF. ", "Neither the VCF nor WTCHP statutes include any specific provisions requiring any follow-up or continuous review of scientific evidence to determine if, in the nearly seven years since these determinations were made, there is any additional evidence to support or refute including these types of cancers in the list of WTC-related health conditions compensable under the VCF. The GAO cited limitations on data available in 2012 as a reason that its scientific panel found the WTCHP administrator's use of a hazards-based rather than probability model to add cancers to the list of WTC-related health conditions reasonable. Given the increases in the number of persons receiving services from the WTCHP and developing cancer in the years since the 2012 and 2013 cancer determinations, there may be additional data to warrant reevaluating the list of covered cancers or evaluating the likelihood of developing cancer after different types of exposures in the aftermath of the September 11, 2001, terrorist attacks. ", "In addition, the VCF covers a wide range of persons from firefighters and police officers who were the first responders to the attacks, to construction and other workers who were involved in debris removal, and to adults and children who were in lower Manhattan at the time of the attacks, all of whom may have had different types and durations of exposure to toxic substances in the aftermath of the attacks. Although the determination that a person's health condition was linked to his or her exposure in the aftermath of the September 11, 2001, terrorist attacks is based on a combination of duration and nature of exposure, the list of covered conditions, including all cancers except childhood cancer, applies equally to all persons with no accounting for individual exposure experience. ", "Second, the VCF is a program of presumptive eligibility. Thus, when determining eligibility for the VCF, controlling factors such as genetics, age, behaviors such as tobacco use, or exposure to other toxins are not considered and the Special Master does not make a determination as to the probability that a person's exposure in the aftermath of the September 11, 2001, terrorist attacks caused his or her cancer. Rather, the only requirement that a cancer or other health condition be linked to a person's exposure in the aftermath of the attacks is the WTCHP's determination that such exposure \"is substantially likely to be a significant factor in aggravating, contributing to, or causing the illness or health condition.\" In addition, the WTCHP administrator did not consider the likelihood or probability that any given cancer would occur based on the hazards experienced in the aftermath of the September 11, 2001, attacks when cancers were added to list of WTC-related health conditions. ", "This approach is different than the probability of causation model used for some cancer claims under Part B of the Energy Employees Occupational Illness Compensation Program Act (EEOICPA), in which the probability that a person's cancer was caused by occupational exposure to ionizing radiation must be 50% or greater to receive compensation. The VCF's presumptive eligibility model is also in contrast to the probability of causation model recommended by the National Research Council Board on Radiation Effects Research to be used to determine eligibility for benefits under the Radiation Exposure Compensation Act (RECA) for persons who lived near the Nevada Test Site during atmospheric atomic weapons testing. However, the presumptive eligibility model is used for other federal compensation programs, including disability compensation for veterans exposed to radiation and Agent Orange. ", "Third, cancer claims have the potential to result in higher benefits than non-cancer claims. The cap on noneconomic loss awards for cancer claims is $250,000 versus $90,000 for non-cancer claims. "], "subsections": []}, {"section_title": "Non-responder Claims", "paragraphs": ["Since it was reauthorized in 2015, the VCF has paid awards to an increasing number of non-responders. For claims paid prior to reauthorization (Group A claims), awards to non-responders\u00e2\u0080\u0094including those who participated in cleaning or maintenance work near one of the crash sites or persons who lived in, worked in, attended school in, or were visiting lower Manhattan between September 11, 2001, and May 30, 2002\u00e2\u0080\u0094made up 14% of total initial compensation awards. As of the end of 2018, the percentage of total awards made to non-responders had risen to 19% of total initial awards. ", "Although the Special Master cites the increase in non-responder claims as one of the causes of the increase in VCF benefit costs and the recent projection that program costs will exceed available funding, limitations in the data reported by the VCF make analyzing this potential cost driver difficult. In her congressional testimony, the Special Master states \"At the time of Reauthorization in December 2015, not quite 14% of all VCF awards were paid to non-responders. Today, just about 38% of claims filed are from this population.\" However, this is not a direct comparison, as the Special Master is comparing data on awards with data on claims filed, regardless of whether those claims result in awards without any additional information on the percentage of claims filed that may result in awards. In addition, the data reported by the VCF in its annual status reports are, according to the VCF, self-reported data. Finally, in each year's data on claimant categories, there are a number of cases listed as \"no response.\" Of the 20,981 initial awards reported in the VCF's most recent status report, for example, 370 cases, or 2% of total awards, are listed in the \"no response\" category. "], "subsections": []}]}]}, {"section_title": "Reductions of Future Awards", "paragraphs": ["Because award costs under both models are projected to exceed the $7.375 billion in available funding, in February 2019, the Special Master announced the following reductions in the amounts of all future VCF awards for all cases pending as of February 25, 2019:", "For all cases filed on or before February 1, 2019; the calculated award is to be reduced by 50%; For all cases that qualify for expedited processing because the claimant has a terminal illness or significant financial hardship, the calculated award is to be reduced by 50%; and For all cases filed after February 1, 2019, the calculated award is to be reduced by 70%. ", "In all cases, the full amount of any offsets for collateral source payments are to continue to be taken. ", "The award reductions are not to apply to appeals decisions initially issued before February 25, 2019. However, there will be scheduling adjustments for future appeals. For appeals of noneconomic loss decisions, the VCF is to schedule appeals hearings only for cases involving the most severe conditions, such as cancer, interstitial lung disease, and sarcoidosis. For all other noneconomic loss and economic-loss cases, the VCF is not to schedule appeals hearings until after December 18, 2020. These schedule changes are designed to ensure that there is sufficient funding to pay increased noneconomic loss determinations made on appeal for the most severe conditions. "], "subsections": []}]}, {"section_title": "Potential VCF Reauthorization in the 116th Congress", "paragraphs": ["The VCF is scheduled to sunset on December 18, 2020. The 116 th Congress faces the question of whether to reauthorize the program or let it expire. On June 12, 2019, the House Committee on the Judiciary ordered that H.R. 1327 , the Never Forget the Heroes: Permanent Authorization of the September 11 th Victim Compensation Fund Act, be reported. Identical legislation, S. 546 , is pending committee action in the Senate. ", "This reauthorization legislation includes the following major components: ", "authorization for the VCF through FY2090, with a deadline of October 1, 2089, to file claims; removal of the cap on VCF funding; appropriations of \"such sums as may be necessary\" for the VCF for each fiscal year through FY2090; payment of the difference between the full award and the actual amount received for all persons who received reduced awards due to the Special Master's actions; authority for the Special Master to exceed the limit on noneconomic loss if it is determined that a person's pain and suffering is of such severity as to make the award \"insufficiently compensatory\"; and a cost of living adjustment, to be made every five years, to the maximum amount of annual income permitted to be considered by the Special Master when determining economic loss (currently $200,000). ", "The reauthorization legislation would not make any changes to the basic eligibility for VCF awards. The legislation also would not specifically address the three drivers of increased VCF costs that the Special Master identified in her 2019 congressional testimony: (1) increases in death claims, (2) cancer claims, and (3) claims from non-responders. However, because this legislation would provide full funding for the VCF not subject to annual appropriations, any increases in program costs would not result in the VCF having insufficient funding to pay all benefits. The Congressional Budget Office has estimated that this legislation, if enacted, would result in $6.785 billion in direct spending on benefits and administration between FY2019 and FY2024 and $10.180 billion in spending between FY2019 and FY2029. "], "subsections": [{"section_title": "House Passage of Reauthorization Legislation", "paragraphs": ["On July 12, 2019, the House of Representatives passed H.R. 1327 with the following amendments:", "the bill's title was changed to the \"Never Forget the Heroes: James Zadroga, Ray Pfeifer, and Luis Alvarez Permanent Authorization of the September 11 th Victim Compensation Fund Act\"; the appropriations of \"such sums as may be necessary\" for the VCF for each fiscal year through FY2090 is changed to include each fiscal year through FY2092, and the deadline for filing claims is changed from October 1, 2089, to October 1, 2090; the authority for the Special Master to exceed the limit on noneconomic loss is changed from requiring a determination that a person's pain and suffering is of such severity as to make the award \"insufficiently compensatory\" to a determination that the claim \"presents special circumstances\"; the original bill's requirement that the Special Master apply a cost-of-living adjustment to the maximum amount of annual income permitted to be considered when determining economic loss (currently $200,000) every five years was replaced with a provision requiring the Special Master to \"periodically\" adjust the limit \"to account for inflation\"; a provision was added permitting the Attorney General to appoint up to two Deputy Special Masters and providing that the Special Master and the deputies serve at the pleasure of the Attorney General; and a provision was added specifying that the legislation's budgetary effects shall not be entered on the statutory or Senate PAYGO scorecards, thus making the legislation exempt from PAYGO requirements that new legislative spending not increase the deficit."], "subsections": [{"section_title": "Appendix. September 11th Victim Compensation Fund Awards and Amounts", "paragraphs": [], "subsections": []}]}]}]}}
{"id": "R45927", "title": "U.S. Payment System Policy Issues: Faster Payments and Innovation", "released_date": "2019-09-23T00:00:00", "summary": ["Technological advances in digitization and data processing and storage have greatly increased the availability and convenience of electronic payments. New products and services offer faster, more convenient payment for individuals and businesses, and the numerous options on offer foster competition and innovation among end-user service providers. Currently, many new payment services are layered on top of existing electronic payment systems, which may limit their speed.", "Most payments flow through both retail and wholesale payment systems before they are completed. Consumers access retail payment systems to purchase goods and services, pay bills, obtain cash through withdrawals and advances, and make person-to-person transfers. Consumers' financial institutions access wholesale systems to complete the payment. In the United States, systems accessed by consumers are operated by the private sector, whereas systems accessed by banks to complete those transactions are operated by the Federal Reserve (Fed) or the private sector.", "Regulation of retail payment systems is dispersed across multiple state and federal regulators. For example, payment systems are subject to federal consumer protection regulation under the Electronic Fund Transfer Act ( P.L. 95-630 ), anti-money laundering requirements under the Bank Secrecy Act (P.L. 91-508), and various state licensing, safety and soundness, anti-money laundering, and consumer protection requirements. Private wholesale payment systems are regulated by the Fed, and if they are systemically important, they can be designated as \"financial market utilities\" and subject to heightened oversight. Although faster and potentially less costly payment systems may benefit consumers and businesses, the use of new technology in existing and new payment systems raise a number of questions for policymakers. Some observers have argued that certain innovative financial technology, or fintech, payment companies would be more effectively regulated through the federal banking regulatory framework, whereas opponents of this idea assert it would result in the preemption of important state-level consumer protections and in an inappropriate combination of banking and commercial activities. The increased prevalence of data generation, collection, and analysis in payment systems has caused observers to question whether existing regulation adequately addresses issues related to data privacy and cybersecurity. Although the traditional high-levels of industry concentration and the recent entry by technology giants have raised concerns over market power and industry competition, competition to date has been robust and certain analysts argue that internet-based payments that do not require a large investment in infrastructure will prevent the market concentration that exists in older payment services. What effect technological innovation in payments will have on consumer access and whether consumers are adequately protected against potential problems, such as fraudulent or erroneous transactions, are also subjects of debate.", "In August 2019, the Fed announced plans to create an interbank real-time payments (RTP) system by 2023 or 2024. The Fed stated that the new system will be available to all banks with a reserve account at the Fed, and it will require banks using this new system to make those funds available to their customers immediately after being notified of settlement. In addition, several private-sector initiatives are also underway to implement faster payments, some of which would make funds available to the recipient in real time (with deferred settlement) and some of which would provide real-time settlement. Businesses and consumers would benefit from the ability to receive funds more quickly, particularly as a greater share of payments are made online or using mobile technology. The main policy issue regarding the Federal Reserve and RTP is whether Fed entry in this market is desirable, given similar private-sector developments are already underway. There is debate about whether competition from the Fed would be beneficial in terms of cost, efficiency, safety, innovation, ubiquity, and financial stability. In the 116 th Congress, H.R. 3951 and S. 2243 , among other bills, would require the Fed to create a RTP system and would require banks to make payments to account holders in real time."], "reports": {"section_title": "", "paragraphs": ["T his report examines technological innovation in payment systems generally and particular policy issues as a result of retail (i.e., point of sale) payment innovation. The report also discusses wholesale payment, clearing, and settlement systems that send payment messages between banks and transfer funds, including the \"real-time payments\" service being introduced by the Federal Reserve. This report includes an Appendix that describes interbank payment, clearing, and settlement systems related to U.S. payments."], "subsections": [{"section_title": "Background on Payments", "paragraphs": ["The U.S. financial system processes millions of transactions each day to facilitate purchases and payments. In general terms, a payment system consists of the means for transferring money between suppliers and users of funds through the use of cash substitutes, such as checks, drafts, and electronic funds transfers. The Committee on Payment and Settlement Systems (CPSS), consisting of representatives from several international regulatory authorities, has developed generally accepted definitions of standard payment system terminology. As defined by the CPSS, a payment system is a system that consists of a set of instruments, banking procedures, and, typically, interbank funds transfer systems that ensure the circulation of money. These systems allow for the processing and completion of financial transactions.", "From the typical consumer's perspective, making a payment is simple. A person swipes a card, clicks a button, or taps a mobile device and the payment is approved within seconds. However, the infrastructure and technology underlying the payment systems are substantial and complex. To simplify, a payment system has three parts (see Figure 1 ). First, the sender (i.e., the person making the payment) initiates the payment through an end-user service , such as an online payment service or mobile app, instructing the payer's bank to make a payment to the recipient. The payer and recipient interact only with end-user services, which comprise the \"retail\" portion of payments. Second, the payer's bank sends a payment message containing payment details to the recipient's bank through a payment system (sometimes called a clearing service ). Third, the payment is completed (or settled) when the two banks transfer funds through a settlement system. Different systems can perform each of these parts, and systems' developers and operators compete with each other to provide payment and settlement services to consumers, businesses, and banks. These final two inter-bank steps are the \"wholesale\" portion of payments. ", "End-user services, which are operated by the private sector, facilitate a consumer's ability to purchase goods and services, pay bills, obtain cash through withdrawals and advances, and make person-to-person payments. Retail payments tend to generate a large number of transactions that have relatively small value per transaction. Retail payment services can be accessed through many consumer financial products, including credit and debit cards and checking accounts. The most common methods of payment are debit cards, cash, credit cards, direct debits and credits via an automated clearing house (ACH), checks, and prepaid debit cards (see Figure 2 ).", "In the United States, the Federal Reserve (Fed) operates some of the key bank-to-bank payment, clearing, and settlement (PCS) systems that process retail or wholesale transactions, and private-sector organizations operate other systems that clear and settle bank-to-bank payment, including those described in the Appendix ."], "subsections": []}, {"section_title": "Payment Systems and Financial Technology", "paragraphs": ["Technological advances in digitization and data processing and storage have greatly increased the availability and convenience of electronic payments. In recent years, the use of electronic payments has risen rapidly, whereas the use of cash and checks has declined (see Figure 2 ). According the Federal Reserve's most recent triennial payment study (released in 2016), the number of transactions of three electronic payment methods\u00e2\u0080\u0094debit card, credit card, and ACH\u00e2\u0080\u0094grew at annual rates of 7.1%, 8.0%, and 4.9%, respectively. Together, they totaled more than 144 billion transactions with a value of almost $178 trillion in 2015. Meanwhile, check payments declined by an annual rate of 4.4% during that period, and totaled 17.3 billion transactions worth almost $27 trillion in 2015. Less data are available on cash usage and the value of cash transaction in part because they are person-to-person and do not involve a digital record, but a Fed survey estimates that between 2012 and 2015, the share of transactions made in cash fell from 40.7% of all transactions to 32.5%.", "This trend is probably due, at least in part, to various new technological products and services that offer fast, convenient payments for individuals and businesses. Payment apps linked to bank accounts and payment cards can be downloaded onto mobile devices that allow individuals to send payments to each other or to merchants. These services include Venmo (owned by PayPal), Zelle (owned by a consortium of large U.S. banks), and Cash App (owned by Square). Other companies provide hardware and software products that allow individuals and small businesses to accept debit and credit card payments, online or in person. These companies include PayPal, Square, and Stripe. Another advance in payments is allowing consumers to make payments using a mobile device, wherein debit card, credit card, or bank account information is stored in a \"digital wallet\" and sensitive information is protected by transmitting surrogate data (a process called tokenization ) at the point of sale. This service includes Apple Pay, Google Pay, and Samsung Pay.", "These services are generally layered on top of traditional electronic payment systems. To use these services, the consumer or business often must link them to a bank account, debit card, or credit card. The payments are still ultimately settled when the money from the payer's account is deposited in the recipient's account. An exception are payments made by cryptocurrencies, discussed in the text box."], "subsections": []}, {"section_title": "Faster Retail Payments: Policy Issues", "paragraphs": ["Although faster and potentially less costly payment systems benefit consumers and businesses, the use of new technology in existing and new payment systems raise questions about whether existing regulation adequately addresses issues related to cybersecurity and data privacy, industry competition, and consumer access and protection."], "subsections": [{"section_title": "Regulatory Framework", "paragraphs": ["How payments are federally regulated depends, in part, on whether they are being provided by banks. Banks are subject to a variety of prudential regulation, enforcement, and supervision by federal bank regulators. Nonbank payment processors are subject to similar regulation and supervision (but not enforcement) by bank regulators if they are a service provider to a bank, but otherwise are not. Nonbank companies that do not provide services to banks may be regulated as money transmitters at the state level by state agencies and as money service businesses at the federal level by the Department of the Treasury's Financial Crimes Enforcement Network and subject to applicable laws and regulations. These services are subject to federal consumer protection regulation under the Electronic Fund Transfer Act ( P.L. 95-630 ); anti-money laundering requirements under the Bank Secrecy Act (P.L. 91-508); and various state licensing, safety and soundness, anti-money laundering, and consumer protection requirements. ", "A broad issue that permeates many of the specific issues examined in this report is the debate over whether the various companies providing retail payment services are effectively and efficiently regulated. Nonbank money transmission is largely regulated at the state level. Some observers have argued that this state-by-state regulatory regime, designed to protect against risks presented by traditional money transmitters such as Western Union, is overly onerous and ill-suited when applied to new, technology-focused payment companies. State regulators assert they are best positioned to regulate these companies, noting their experience and recent efforts to coordinate and streamline state regulation. A greater federal role in payment regulation could impose more or less stringent standards (with federal preemption of state regulation, in the latter case) than any given state's current standards.", "One potential solution for concerns that the current system is too fragmented and overly burdensome could be to allow certain nonbank payment companies to enter the bank regulatory regime. Two potential mechanisms are under consideration that could allow a technology-focused payment company to be federally regulated\u00e2\u0080\u0094the Office of the Comptroller of the Currency (OCC) special purpose national bank charter and a state-level industrial loan company (ILC) charter with Federal Deposit Insurance Corporation (FDIC) insurance. Both could be particularly desirable for payment firms if they provide an avenue to directly access Fed wholesale payment systems. However, both mechanisms are controversial and subject to contentious debate. ", "The OCC and proponents of the special purpose charter generally view the charter as a way to free companies from what they assert is the unnecessarily onerous regulatory burden of being subject to numerous state regulatory regimes while not overly relaxing regulations\u00e2\u0080\u0094under the special purpose charter, the companies would become subject to the OCC's national bank regulatory regime. Opponents generally assert that the OCC does not have the authority to charter these types of companies and that doing so would inappropriately allow fintech firms offering fast payment services to circumvent important state-level consumer protections. State regulators have filed lawsuits to block the granting of such charters. To date, no companies have applied for such a charter, although ongoing legal uncertainty is likely a discouraging factor.", "ILC charters are controversial because they allow commercial firms\u00e2\u0080\u0094such as retailers, manufacturers, or technology companies\u00e2\u0080\u0094to own banks. The United States has historically adopted policies to separate commerce and banking, and the FDIC has not approved deposit insurance for a new ILC since 2006. Opponents of ILC charters argue that by creating an avenue for a commercial firm to own a depository institution, they blur the line between commerce and banking, exposing the U.S. economy to related risks such as creating possible incentives for imprudent underwriting, inappropriately exposing taxpayers to losses through federal deposit insurance, and leading to entities that can exercise market power. Proponents of ILC charters assert these concerns are overstated. They cite the potential benefits of mixed arrangement (e.g., economies of scale, risk diversification, information efficiencies, customer convenience and savings) and note that certain other stable developed countries allow more blending of banking and commerce than the United States with, they argue, no or little ill effect. Recently, three fintech companies submitted applications to the FDIC for ILC deposit insurance. Two companies, however, have since withdrawn their applications, and the company with a pending application, Square, is a payment system provider."], "subsections": []}, {"section_title": "Cybersecurity", "paragraphs": ["All payment methods expose users to some risks, including money theft or fraudulent payments made using their accounts or identities. In general, improving technology reduces one type of risk but may expose users to new risks. For example, if a pickpocket steals a person's cash, the victim has little recourse. If instead, the pickpocket steals a payment card, the victim can cancel the card and generally would not be held liable for fraudulent purchases. However, identity thieves can steal card information using card reader skimmers, allowing thieves to open and use lines of credit in victims' names without their knowledge. ", "Similarly, new payment technologies reduce certain risks but create others. For example, digital wallets on mobile devices can eliminate the need to carry physical cards that can be lost or stolen and can protect sensitive information at the point of sale through tokenization. However, the device itself can be compromised by software designed to gain unauthorized access to devices, called malware, which may lead to fraudulent charges. In addition, storing payment information on multiple websites, apps, and devices creates more opportunities for hackers to steal it than if the information existed only on the card itself.", "Recent breaches at various financial and nonfinancial companies in which people's sensitive information were compromised illustrate the potential risk and have raised questions over whether policymakers should implement stricter cybersecurity requirements. Some possible policy responses include ", "enacting a federal breach notification law, creating federal cybersecurity standards, or increasing federal authority to penalize companies that fail to adequately protect consumer data. "], "subsections": []}, {"section_title": "Data Privacy", "paragraphs": ["Payment systems necessarily collect detailed consumer information on transactions, including the retail stores a consumer shops at, the businesses and individuals the consumer pays, and the dates, times, and amounts of each transaction. Through analysis, this data have the potential to reveal a lot of information about individual consumers, including where they live and their gender, age, race, ethnicity, and approximate income. Such data are valuable from a business perspective; for example, for targeting product marketing to consumers. In addition, scammers could use this data to facilitate fraud. Electronic payments have resulted in a proliferation in the availability and use of personal information, which has raised policy concerns about how companies use the data, whether consumers understand how their data will be used, and whether consumers should have more control over its use.", "Payment data has the potential to improve consumer outcomes. For example, personal financial management apps or other digital tools could help consumers more easily track payments, automate saving and budgeting, and more efficiently shop for financial products that meet their personal needs. Consumers could also in the future share this data with financial institutions to apply for loans or other banking products. Given these benefits, as well as possible privacy concerns, the question becomes how much access should companies have to individuals' information.", "Privacy policy disclosures to consumers is another important element of privacy policy that might be more difficult as payments become faster using new technology. For example, according to the Bureau of Consumer Financial Protection (CFPB), stakeholders suggest that \"providing disclosures that are clear and sufficient for consumers to make informed decisions is difficult\" in the mobile environment due to small screens, which may make it difficult to read long, technical disclosure documents. These stakeholders indicate that clear privacy policies and more consumer control over the use of consumer data may be important considerations in this new digital environment."], "subsections": []}, {"section_title": "Consumer Protection", "paragraphs": ["When developing a new or faster retail payment system, consumer protection is an important consideration. Although new technology offers consumers many potential benefits, it raises issues of concern, such as consumer liability for fraudulent payment and consumer error or nonreceipt of goods resolution. ", "The Electronic Fund Transfer Act, currently implemented by the CFPB through Regulation E, is the most relevant consumer protection law applying to financial payments. Regulation E protects individual consumers who engage in electronic fund transfers. It mandates consumer disclosures, limits consumer liability for unauthorized transfers, and maintains procedures for resolving errors. Other regulations may also be relevant to a new faster payment system, depending on its structure. For example, the Expedited Funds Availability Act ( P.L. 100-86 ), currently implemented by the Federal Reserve as Regulation CC, prescribes how quickly banks must make funds available to customers.", "When developing a new faster payment system, Congress and federal regulators may consider how a new system should comply with relevant regulations, such as Regulation E. Depending on the structure of the new system, regulators might decide to update these regulations to tailor them as appropriate. For example, current consumer protection rules might not cover all aspects of the system, leaving consumers at risk of financial loss, without clear recourse for some payment-related disputes, or other negative impacts. In this spirit, in 2015, the CFPB released nine consumer protection principles for new faster payments systems, including consumer control over payments, fraud and error resolution protections, and disclosed and clear costs. The CFPB has not acted on these principles through rulemaking or other initiatives since their release in 2015.", "Financial education might be another consumer protection policy option. As new technology is introduced into financial products, consumers may need to learn new skills, sometimes referred to as digital financial literacy , which includes \"knowing how to use devices to safely access financial products and services via digital channels in ways that help consumers achieve their financial goals, protect against financial harm and enhance ability to know where to get help.\" This type of financial education might be particularly important to ensure that lower-income and older consumers are included in a new faster payment system."], "subsections": []}, {"section_title": "Financial Access and Underserved Groups", "paragraphs": ["Innovations in the payment system may benefit some consumers and fail to reach others. New retail payment options that are linked to bank accounts, internet-based, or require mobile devices could disadvantage consumers who rely on cash payments, do not have easy internet or mobile access, or do not feel comfortable using this new technology. As long as payments remain based on the banking system, the unbanked and underbanked may encounter participation limits to faster payments. ", "In contrast, innovation in technology may help marginalized groups gain access to the financial system. The ability to access digital channels using cash may be particularly important for including underserved consumers, leading to the development of new payment products\u00e2\u0080\u0094such as pre-paid cards and services\u00e2\u0080\u0094that allow cash to be placed in an account that can be used to make online payments. ", "The cost of internet and mobile data plans might limit the ability of underserved consumers to access a faster payment system that is internet- or mobile-based. However, as internet access and mobile devices continue to proliferate and decline in cost, barriers to accessing those technologies may decline. For example, most consumers, including unbanked and underbanked consumers, have access to mobile phones and smartphones, and the use of these technologies is growing. According to a national survey, in 2017, 83% of underbanked and 50% of unbanked consumers had access to a smart phone. The survey noted that underbanked consumers were more likely to use mobile banking services than the rest of the U.S. population. ", "A faster payment system may provide certain other benefits besides access for low-income or liquidity-constrained consumers (colloquially, those living \"paycheck to paycheck\") who may more often need access to their funds quickly. In particular, many lower-income consumers say that they use alternative financial services, such as check cashing services and payday loans, because they need immediate access to funds. Faster payments may also help some consumers avoid checking account overdraft fees. Note, however, that some payments that households make would also be cleared faster\u00e2\u0080\u0094debiting their accounts more quickly\u00e2\u0080\u0094 than the current system, which could be harmful to some underserved households."], "subsections": []}, {"section_title": "Market Concentration", "paragraphs": ["Traditional payment systems generally are characterized by strong economies of scale and are subject to network effects , wherein the more widespread a payment method's use and acceptance becomes the more incentive additional consumers and businesses have to adopt it. These economic characteristics may mean payment industries naturally become highly concentrated, because a small number of widely used systems are more efficient than many narrowly used systems. For instance, established payment systems currently have high market concentrations. Debit card payment processing networks are dominated by Visa and Mastercard, and credit card processing networks are mostly operated by Visa, Mastercard, American Express, and Discover. Some observers are concerned that market concentration will also be a feature in new payment systems. Others argue that new payment systems based on the internet may avoid similar concentration observed in traditional systems, because they do not require new entrants to make large initial investments in infrastructure. To date, the entry of multiple new services and companies into the market for end-user payment systems has supported competition and consumer choice. Whether the industry will eventually consolidate remains to be seen. ", "Creating additional concentration concerns is the entrance of some of the largest global technology companies into the payment industry, including U.S. companies such as Google (Google Pay), Apple (Apple Pay), Amazon (Amazon Pay) and Facebook (Facebook Pay and the Libra proposal). Such companies already have large market shares in various technology-related industries and collect huge amounts of consumer data, which could increase as they now seek to expand their scope into the payment industry. Were they to dominate electronic payments, it could pose competition concerns in the payment industry, as well as increase their dominance in their core industries. In addition, these developments raise concerns discussed above (see the \" Regulatory Framework \" section), relating to the implications of mixing commerce with what has traditionally been a core banking activity."], "subsections": []}]}, {"section_title": "Wholesale Payment Systems and Real-Time Payments", "paragraphs": ["Payments between two parties who are both members of the same end-user service\u00e2\u0080\u0094a closed loop paymen t \u00e2\u0080\u0094can occur in real time because the service can instantly communicate between the two parties, verifying that the payer has sufficient funds in the account to make the payment. However, a payment in which one party is outside of a single end-user service typically travels through the banking system, and thus cannot occur in real time unless real-time messaging, clearing, and settlement of the payment is available through wholesale payment systems. For example, a debit or credit card payment to a merchant needs to transfer funds from the sender's bank (in the case of a credit card, the card-issuing bank) and send them to the recipient's bank. Real-time payment can only occur in this scenario if settlement occurs in real-time or if payment occurs before settlement (putting the recipient's bank at risk that the transfer never occurs). Even within an end-user service that would provide real-time payment, if the transfer were made between two members entirely using existing balances within the service, delivery of funds could be delayed if the payer needs to add funds to their account to make payment (via direct debit or credit card transfer, for example) or if the recipient wishes to withdraw funds from the payment service to deposit in its bank account. Thus, the speed of many existing end-user services are ultimately limited by what happens with wholesale payment systems.", "On August 5, 2019, the Fed announced plans to create a wholesale real-time payment (RTP) system. This section discusses the history of the Fed's role in the payment system; compares recent RTP initiatives by the Fed, the private sector, and abroad; and analyzes policy issues raised by these initiatives."], "subsections": [{"section_title": "History of the Fed's Role in the Payment System", "paragraphs": ["The Fed was originally created as a \"banker's bank\" to improve the functioning of a national banking system that was dominated at the time by small, local banks. To that end, providing bank-to-bank check-clearing services was one of the Fed's original, primary functions. Problems with private clearinghouses were one of the central issues in the financial panic that led to the Fed's creation. As other payment methods have emerged over time, the Fed has also provided other types of bank-to-bank payment and settlement systems. The Fed provides these services by linking the accounts that all banks maintain at the Fed to comply with reserve requirements. ", "Throughout the Fed's history, the private sector has operated competing payment and settlement systems that the Fed has regulated (see Appendix for more details). For example, the Fed and the private-sector Electronic Payments Network (owned by The Clearing House , an association of large banks ) currently operate competing automated clearinghouse (ACH) systems, which are payment systems that allow banks (and certain other financial institutions) to send direct debit and credit messages that initiate fund transfers. The Fed also operates two wholesale settlement systems for payments, Fedwire Funds Service and the National Settlement Service. The Clearing House Interbank Payment System (CHIPS) is a competing private-sector gross settlement system. (The Fed does not operate any end-user service directly accessed by individuals or nonfinancial businesses.) "], "subsections": []}, {"section_title": "Real-Time Payments Initiatives", "paragraphs": ["A typical bank-to-bank electronic payment is currently settled on the same or next business day. The Fed plans to introduce an RTP system called FedNow in 2023 or 2024. FedNow would be \"a new interbank 24x7x365 real-time gross settlement service with integrated clearing functionality to support faster payments in the United States,\" that \"would process individual payments within seconds ... (and) would incorporate clearing functionality with messages containing information required to complete end-to-end payments, such as account information for the sender and receiver, in addition to interbank settlement information.\" According to the Fed, FedNow will be available to all banks with a reserve account at the Fed. It will require banks using FedNow to make funds transferred over it available to their customers immediately after being notified of settlement.", "In a November 2018 proposal, the Fed also sought comment on the possibility of the Fed creating \"a liquidity management tool that would enable transfers between Federal Reserve accounts on a 24x7x365 basis to support services for real-time interbank settlement of faster payments, whether those services are provided by the private sector or Federal Reserve Banks.\" The purpose of this tool would be to accommodate the need for banks to move funds between their accounts at the Fed continuously, including outside of business hours in real-time settlement. In the August notice, the Fed stated it was exploring whether this goal could be accomplished by expanding Fedwire Funds Service and the National Settlement Service to permit 24x7x365 real-time gross settlement. Previously, the Fed proposed expanding same-day payment settlements on Fedwire and the National Settlement Service.", "Several private-sector initiatives are also underway to implement faster payments, some of which would make funds available to the recipient in real time (with deferred settlement) and some of which would provide real-time settlement. Notably, the Clearing House introduced its RTP network (with real-time settlement) in November 2017; according to the Clearing House, it currently \"reaches 50% of U.S. transaction accounts, and is on track to reach nearly all U.S. accounts in the next several years.\" ", "In addition, both the Fed and private-sector companies can set joint standards, rules, and a governance framework to facilitate the adoption of faster payments, whether those systems are operated by the Fed or the private sector, and promote interoperability between systems. The Fed convened the Faster Payments Task Force, composed of more than 300 stakeholders, which has issued a number of recommendations to facilitate the adoption of faster payments."], "subsections": []}, {"section_title": "Policy Issues", "paragraphs": ["Other countries have already introduced or are in the process of introducing RTP. According to Fed Chair Jerome Powell, \"the United States is far behind other countries in terms of having real-time payments available to the general public.\" Businesses and consumers would benefit from the ability to receive funds more quickly, particularly as a greater share of payments are made online or using mobile technology. Some have argued that RTP would be especially beneficial to low-income, liquidity-constrained individuals as described in the \" Financial Access \" section above. The main policy issue regarding the Federal Reserve and RTP is whether Fed entry in this market is desirable.", "The Fed bases decisions on whether to introduce new payment systems or system features on three principles:", "\"The Federal Reserve must expect to achieve full recovery of costs over the long run. The Federal Reserve must expect that its providing the service will yield a clear public benefit, including, for example, promoting the integrity of the payments system, improving the effectiveness of financial markets, reducing the risk associated with payments and securities-transfer services, or improving the efficiency of the payments system. The service should be one that other providers alone cannot be expected to provide with reasonable effectiveness, scope, and equity.\"", "Stakeholders are divided over the introduction of FedNow. Some question whether, in light of these principles, the Fed can justify creating a RTP system in the presence of competing private systems. Some fear that FedNow will hold back or crowd out private-sector initiatives already underway and could be a duplicative use of resources. The Treasury Department supports Fed involvement on the grounds that it will help private-sector initiatives at the retail level. Others, including many small banks , fear that aspects of payment and settlement systems exhibit some features of a natural monopoly (because of network effects), and, in the absence of FedNow, private-sector solutions could result in monopoly profits or anticompetitive behavior, to the detriment of financial institutions accessing RTPs and their customers (merchants and consumers). In 2017, the Justice Department sent the Clearing House a letter stating that it did not plan to challenge the Clearing House's RTP system on antitrust grounds, based on the Clearing House's plans at that time. From a societal perspective, it is unclear whether it is optimal to have a single provider or multiple providers in the case of a natural monopoly, particularly when one of those competitors is governmental. Multiple providers could spur competition that might drive down user costs, but more resources are likely to be spent on duplicative infrastructure. ", "RTP competition between the Fed and the private sector also has mixed implications for other policy goals:", "Innovation. Competition typically fosters innovation, but the Fed's unique cost structure could potentially undermine the private sector's success, limiting the latter's willingness to invest in innovations. Ubiquity. The Fed argues that RTP ubiquity is more likely with its involvement because it has existing relationships with all banks and because no single payment system has ever achieved ubiquity historically. However, the Fed's entry into RTP could delay the achievement of universal RTP in the next few years if banks decide to wait until FedNow is available instead of joining the Clearing House's network. Interoperability. Interoperability (the ability to make payments across different systems) is more difficult to achieve with competing firms, but the Fed argues that if no single RTP system is ubiquitous, the ability of any two given institutions to exchange funds is improved if competing systems increase ubiquity. The ability to make payments across ACH networks is an example of how interoperability has currently been achieved between competing Fed and Clearing House systems. However, the technology involved in RTP may make interoperability more difficult. In its proposal, the Fed did not commit to ensure interoperability, but stated that it was a desirable goal. Equity. The Clearing House has attempted to assuage equity concerns by pledging access to its system on equal terms to all banks, regardless of size, but these terms could change, and small banks have raised concerns that they may since the system is owned by large banks. The Clearing House has pointed to the Fed's volume discounts for existing payment systems as evidence that FedNow may not be equitable, however. Security. Security across competing systems could be difficult to coordinate, but systems might also attempt to compete by providing better security features. The Fed argues that competing RTP systems reduces operational and systemic risks because a system with only one provider has a \"single point of failure.\" Repeated data breaches at large financial institutions also point to the difficulty of monitoring cybersecurity in private systems, although government has also proven to be vulnerable to data breaches as well. The Fed states that \"participating banks would continue to serve as a primary line of defense against fraudulent transactions, as they do today ... \" under FedNow.", "The Fed, and by extension the taxpayer, is exposed to default risk because of its provision of intraday and overnight credit (some of which is uncollateralized) when banks use its payment and settlement systems. Currently, when banks use Fed payment and settlement systems, the time lag between payment and settlement can cause mismatches in the amounts due and the amounts available in their accounts. As a result, the Fed extends intraday credit for a fee (if uncollateralized) to avoid settlement failures. Daily overdrafts have been relatively low in recent years, but peaked at $186 billion during the 2007-2009 financial crisis. Introducing real-time payments with deferred settlement could increase the use of intraday credit. The Fed does not state in its final rule whether it expects the level of intraday credit to be affected under FedNow, although it notes that it might need to extend the availability of intraday credit to off-hours. Note that the Fed provides this credit to reduce systemic risk to the banking system, so eliminating intraday credit has the potential to reduce financial stability."], "subsections": []}, {"section_title": "Regulation", "paragraphs": ["RTPs offered by the private sector could fit into the existing regulatory framework. The Fed already regulates and supervises private payment systems for risk management and transparency, but not pricing. RTP could potentially alleviate some existing risks (e.g., if settlement is in real time, credit risk is reduced for the recipient institution) while posing new risks (e.g., RTP requires more active liquidity management). Any RTP system and regulation would need to account for these changing risks. ", "To address systemic risk concerns, a private RTP system could be designated as a systemically important Financial Market Utility (FMU) under Title VIII of the Dodd-Frank Act ( P.L. 111-203 ). The Dodd-Frank Act allows the Financial Stability Oversight Council , a council of financial regulators led by the Treasury Secretary, to designate a payment, clearing, or settlement system as systemically important on the grounds that \"the failure of or a disruption to the functioning of the FMU could create or increase the risk of significant liquidity or credit problems spreading among financial institutions or markets and thereby threaten the stability of the U.S. financial system.\" FMUs, currently including the Clearing House Interbank Payments System, are subject to heightened regulation, and the Fed has supervisory and enforcement powers to ensure those standards are met. Policymakers could consider whether systemic risk concerns are better addressed through Fed operation of payment and settlement systems or Fed regulation of private systems."], "subsections": [{"section_title": "Appendix. Selected Interbank Payment, Clearing, and Settlement Systems Involved in U.S. Payments", "paragraphs": [], "subsections": []}]}]}]}}
{"id": "R46207", "title": "Competition on the Edge of the Internet", "released_date": "2020-01-30T00:00:00", "summary": ["Edge providers are individuals and entities that provide content, applications, services, and devices accessed over the internet. An edge provider can be a personal blog created by an individual or a website created by a billion-dollar company. Some edge providers sell products or subscriptions, while others sell consumer data or use it for digital advertising. Edge provider activities, conducted on the \"edge\" of the internet\u00e2\u0080\u0094hence the name\u00e2\u0080\u0094are not regulated by the Federal Communications Commission (FCC).", "Edge providers rely on internet service providers (ISPs) and mobile carriers to deliver content to users. Some companies that operate as ISPs have become edge providers, and a few edge providers with substantial financial resources have become or intend to become ISPs. This has the potential to affect competition among edge providers, as an ISP may have incentives to prioritize content from affiliated edge providers. To deliver content at speeds similar to edge providers associated with ISPs, unaffiliated edge providers may choose to incur the costs of direct connections to users' ISPs. Other unaffiliated edge providers may build or pay to use another company's content delivery networks, which use geographically dispersed servers to deliver online content and services more quickly. Mobile carriers that also serve as edge providers can also have a competitive advantage. For example, they can include their own apps on mobile devices for free, while charging other edge providers a fee. Mobile carriers can also allow users to access content from affiliated edge providers without incurring charges on the users' data plans. These actions could affect net neutrality, a term associated with the concept that all data traveling through the internet should be treated in a nondiscriminatory manner.", "Some edge providers are acquiring other edge providers for a variety of reasons, including to increase their customer base, to improve the content or services offered, or to eliminate potential competitors. By increasing its customer base, an edge provider could enhance its market position, increasing its leverage in bargaining with ISPs over the speed and quality with which its content is delivered. An edge provider that relies on digital advertising could also benefit from enlarging its customer base, as this would allow it to send advertisements to more individuals and sell more advertisement spaces to advertisers. It may be difficult to distinguish between acquisitions intended to improve the content or services offered and those seeking to eliminate potential competitors. While consumers generally benefit in the former case, the latter case could have negative effects, such as hindering innovation.", "While the FCC does not regulate edge provider activities, the Federal Trade Commission (FTC) and Department of Justice (DOJ) may examine edge providers on a case-by-case basis for potential consumer privacy or antitrust violations. The FTC, DOJ, and at least 47 attorneys general have reportedly opened antitrust investigations of possible anticompetitive behavior, reportedly including Google, Apple, Facebook, and Amazon. The House Judiciary Committee also opened an investigation into competition in digital markets.", "A key question in these investigations is how to define the markets within which edge providers compete. Oftentimes, edge providers offer products and services that can be classified under multiple industries. For example, do video streaming services compete only with each other, with cable networks and movie theaters, or with the entertainment industry as a whole? Should a diversified company be examined as a unified entity, or should its edge provider component be evaluated separately? Estimating the market shares of edge providers that rely on revenue from digital advertising is further complicated by the difficulty of determining \"sales\" for these companies, as they may not obtain revenue from offering their content to users.", "Some edge providers now operate in multiple industries. Some companies have integrated vertically, both generating content as edge providers and delivering it to consumers as internet service providers (ISPs). Other companies have integrated horizontally by acquiring other edge providers, which could increase their customer base and expand the content or services offered, but also eliminate potential competitors. This report focuses on how horizontal and vertical integration may affect edge providers' relationships with ISPs and competition among edge providers."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["Around the world, people use websites on their computers and apps on their mobile devices to access information and services. Creators of these websites and apps are known as \"edge providers.\" The Federal Communications Commission (FCC) first used the term in 2010 to refer to individuals and entities \"providing content, applications, services, and devices accessed over or connected to broadband Internet access service.\" Such activities, conducted on the \"edge\" of the internet\u00e2\u0080\u0094hence the name\u00e2\u0080\u0094can range from an individual creating a personal blog to a billion-dollar company creating a website. At that time, the FCC determined that it would not regulate edge provider activities. Instead, similar to other businesses, edge providers may be examined by the Department of Justice (DOJ) and Federal Trade Commission (FTC) on a case-by-case basis for potential violations of consumer protection or antitrust statutes.", "Federal agencies and Congress are investigating competition among edge providers, particularly companies with large amounts of revenue. The FTC, DOJ, and at least 47 attorneys general are reportedly looking into whether select edge providers\u00e2\u0080\u0094reportedly including Google, Apple, Facebook, and Amazon\u00e2\u0080\u0094have violated antitrust laws. A House Judiciary Committee investigation into competition in digital markets has raised the question of whether existing antitrust laws, competition policies, and current enforcement levels are adequate to address competition issues among edge providers. Competition is generally viewed as a means to ensure low prices for consumers and to spur innovation. Some have raised concern that competition is being harmed by a few dominant edge providers and that regulations may be needed.", "This report examines the potential effects of edge providers' expansion on competition. Due to acquisitions or growth, some edge providers now operate in multiple industries. Some companies have integrated vertically, both generating content as edge providers and delivering it to consumers as internet service providers (ISPs). Other companies have integrated horizontally by acquiring other edge providers, which could increase their customer base and expand the content or services offered, but also eliminate potential competitors. This report focuses on how horizontal and vertical integration may affect edge providers' relationships with ISPs and competition among edge providers."], "subsections": []}, {"section_title": "What Are Edge Providers?", "paragraphs": ["In its 2010 Open Internet Order, the FCC first referred to individuals and entities \"providing content, applications, services, and devices\" over the internet as \"edge providers.\" These can be search engine providers, streaming video or music services, social media platforms, retailers, or other types of businesses. An edge provider can be a blog or personal website maintained by an individual, making it difficult to distinguish between edge providers and end users. It can also be a website maintained by a company that generates billions of dollars in revenue. An edge provider can serve as a conduit for content created by others instead of or in addition to content created by the company itself. Some of the content may be subject to licenses granted by copyright holders, while other content might not face any copyright restrictions. This report focuses on companies that operate at least one edge provider.", "Some edge providers generate revenue by selling products or subscriptions to their content. Others offer their content for free and generate their revenue by using information provided by their users to sell advertising spaces or by selling the information itself. In the third quarter of 2019, Facebook, one of the largest edge providers as measured by market capitalization, reported $17.4 billion in revenue from advertising, which made up 98% of its total quarterly revenue. Google, another large edge provider, reported $33.9 billion in advertising revenue for the same quarter, which made up 84% of its total quarterly revenue.", "ISPs and mobile carriers connect edge providers with those who use their content. On mobile devices, edge providers generally provide their content over apps. Consumers typically obtain apps from online app stores such as Google Play and the Apple App Store. Browser apps\u00e2\u0080\u0094such as Chrome, Safari, and Firefox\u00e2\u0080\u0094allow users to access other edge providers' websites, similar to a browser on a computer. To access the content on apps, users need a data plan from their mobile carrier or a wireless connection to an ISP. ", " Figure 1 presents a simplified example of how edge providers interact with ISPs and users. In this example, Content Provider (CP) A relies on digital advertising for its revenue: advertisers pay CP A to place an ad, and in turn receive revenue from users who pay for the advertised product. CP B receives a direct payment for its content from users. Both edge providers pay the ISP a termination fee to bring the content to the terminal point, the user. Users pay the ISP a subscription fee to access the data provided by CP A and CP B.", "In reality, the process can be more complicated. An edge provider may rely on a different ISP than its users' ISPs, in which case the content would travel through the internet backbone. The internet backbone consists of various networks linking servers and multiple ISPs together. An edge provider may also have direct connections to multiple ISPs or upload its content directly onto the internet backbone. While details on how the internet operates are beyond the scope of this report, a key factor in competition among edge providers is the role ISPs have in the relationship between edge providers and their users."], "subsections": []}, {"section_title": "Vertical Integration of Edge Providers", "paragraphs": ["Edge providers depend entirely on ISPs and mobile carriers to deliver their content to users. A growing number of companies operate both as edge providers and as ISPs, becoming vertically integrated (i.e., operating at multiple stages along a supply chain). Thus, companies that both generate content and deliver it to users are competing with others that either solely generate content or solely deliver it to users.", "Companies that started in the telecommunications and media industries are now among the most popular edge providers. Of the 16 edge providers that attracted the largest number of users in the United States in July 2019 ( Figure 2 ), six \u00e2\u0080\u0094 Google, Facebook, Amazon, PayPal, Twitter, and the Weather Company\u00e2\u0080\u0094started as edge providers."], "subsections": [{"section_title": "Examples of ISPs Becoming Edge Providers", "paragraphs": ["AT&T. AT&T owns part of the internet backbone and is considered a Tier 1 ISP, meaning it has free access to the entire U.S. internet region. It is also a mobile carrier and provides voice services and video programming. In 2018, AT&T acquired Time Warner, a content creator that owns HBO and its affiliated edge provider HBO NOW, as well as other cable channels. The DOJ unsuccessfully attempted to block the merger. AT&T has announced plans to introduce a new edge provider\u00e2\u0080\u0094HBO Max\u00e2\u0080\u0094to stream video programming for no extra charge to AT&T customers who are also HBO subscribers; other customers will reportedly be charged a subscription fee.", "Comcast. Comcast is an ISP, a cable television service, and a voice service provider. In 2011, Comcast became the majority owner of NBCUniversal, which owns television networks and broadcast stations, and thus obtained minority ownership of Hulu, an edge provider that streams video programming to subscribers. In 2019, Walt Disney Company obtained \"full operational control\" of Hulu, but Comcast retained its 33% financial stake. Comcast also announced plans to launch its own video streaming service, Peacock. Comcast reportedly plans to offer three subscription options for Peacock: a free option supported by ads, a premium version with more programming for a fee, and the premium version with no ads for a higher fee. The premium version is to be offered for free to subscribers of Comcast and Cox Communications.", "Verizon. Verizon owns part of the internet backbone and is considered a Tier 1 ISP. It is also a mobile carrier, and offers video, voice, and ISP services. In 2015, Verizon acquired AOL, an ISP and edge provider, and in 2016, it acquired the core business of Yahoo, an edge provider. It combined the edge provider products from these acquisitions\u00e2\u0080\u0094such as Yahoo Finance, Huffington Post, TechCrunch, and Engadget\u00e2\u0080\u0094in 2017 to create Oath."], "subsections": []}, {"section_title": "Examples of Edge Providers Becoming ISPs", "paragraphs": ["Google. Google is the largest subsidiary of the company Alphabet. It offers multiple products, including a search engine, email server, word processing, video streaming, and mapping/navigation system. Google generally relies on other ISPs to deliver its content, but entered the ISP market in 2010 when it announced Google Fiber. Google Fiber provides broadband internet service and video programming. Beginning in 2016, it suspended or ended some of its projects; as of October 2019, it had installed fiber optic cables in 18 cities.", "Facebook. As it attracted more users, Facebook expanded from providing an online platform that connects users to an online platform suitable for various activities, including fundraising, messaging, and commerce. In 2018, a spokesman confirmed that Facebook was pursuing another project, dubbed Athena. Athena is an experimental satellite that would beam internet access through radio signals. If successful, Athena would enable Facebook to become an ISP.", "Amazon. In addition to being a major online retailer, Amazon offers information technology infrastructure services through Amazon Web Services. In 2019, Amazon confirmed plans\u00e2\u0080\u0094dubbed Project Kuiper\u00e2\u0080\u0094to launch 3,236 satellites into low-Earth orbit to provide broadband internet across the world. If successful, Project Kuiper would enable Amazon to become an ISP."], "subsections": []}]}, {"section_title": "Competition Among Edge Providers", "paragraphs": ["Edge providers can compete in various ways. A few examples include offering new content or services, advertising their content, or acquiring potential competitors. Subscription-based edge providers can lower their fees, offer discounts for referrals, or use price promotions to attract new users. This report focuses on the potential effects of vertical integration (e.g., where a company operates as both an edge provider and an ISP) as well as horizontal integration (e.g., where an edge provider acquires another edge provider).", "Common indicators used to determine the level of competition in a market include measuring its concentration and changes in the number of establishments. Market concentration is determined by examining whether most sales are concentrated among a few firms or dispersed among a large number of firms. Changes in the number of establishments can be used as an indicator as well, particularly when firm-level sales are unavailable. For example, if the total number of stores in a market is decreasing, it can suggest, but does not demonstrate, that competition is decreasing.", "To use these indicators to measure competition in a market, one must first define its scope. A common method of defining a market's scope is to use the North American Industry Classification System (NAICS). Two industries that consist of only edge providers are \"Data Processing, Hosting, and Related Services\" (NAICS 519130) and \"Internet Publishing and Broadcasting and Web Search Portals\" (NAICS 518210). Figure 3 shows that the number of establishments in both industries has increased over the past decade. However, most users seeking specific types of content obtain it from only a few edge providers. For example, data from August 2019 show that among social network websites, 95% of the visits from the users in the United States went to three websites: Facebook, Pinterest, and Twitter ( Figure 4 ). Similarly, data from June 2019 show that among mobile social networking apps, the three most popular among users in the United States were Facebook, Instagram (owned by Facebook), and Facebook Messenger ( Figure 5 ).", "Edge providers compete for users based on content and quality of services offered. To increase the number of users, edge providers attempt to provide content that is in high demand and to ensure that the content is delivered as seamlessly as possible. In response to network congestion, most content used to be delivered on a \"best effort\" basis because most of the content was not time-sensitive (e.g., email). The \"best effort\" basis does not guarantee that content will be delivered by a certain time or at a certain speed. This meant that some content was held at a congestion point until a future time, while other content was dispatched in real time. While this practice was suitable for some content, it became problematic for edge providers sending time-sensitive content. Interruptions, latency, or delays in transferring data lower the value of time-sensitive content (e.g., video programming). As a result, some edge providers have been given the option to pay network managers, including ISPs, to ensure their content would be given priority, an industry practice known as paid prioritization.", "Another practice to ensure a more consistent quality of service is to avoid potential congestion points by bypassing parts of the network. For example, edge providers can pay ISPs for a direct connection to their networks, or edge providers can build their own content delivery network (CDN) or pay to use another company's CDN. Examples of CDNs include Microsoft's Azure or Amazon's CloudFront, which is available through Amazon Web Services. A CDN distributes online content and network services from servers located as close as possible to users' ISPs to avoid potential congestion points and reduce the bandwidth needed to send the content; a CDN may also have a direct connection to users' ISPs. As a result, CDNs can serve as a digital intermediary between users' ISPs and other edge providers.", "Congress and the FCC have considered edge providers' access to end users over the internet under the rubric of \"net neutrality,\" a term associated with the concept that ISPs should treat data in a nondiscriminatory manner, regardless of the size or type of content. Policy discussions on net neutrality have focused on the role of the ISP in delivering content to end users. Concerns over practices ISPs might use to manage the flow of content, such as blocking, throttling, and paid prioritization, have become major discussion points. Although the FCC placed a ban on such practices when it issued the 2015 Open Internet Order, the restrictions were subsequently removed by the FCC with the issuance of the 2017 Restoring Internet Freedom Order. Congress has considered bills both banning or removing bans on such practices.", "The ability to pay ISPs for direction connections or prioritization of content could affect competition among edge providers. Although some see paid prioritization as a management tool that ensures time-sensitive content receives priority, others view it as a means to discriminate among content. A nascent edge provider may not have the financial resources to pay for prioritization or for a direct connection, meaning its content could be delivered more slowly than content from competing edge providers that can afford these payments. The potential competitive imbalance between nascent edge providers and more established ones may be further exacerbated by the growing number of vertical mergers."], "subsections": [{"section_title": "Effect of Vertical Integration on Competition", "paragraphs": ["Some of the companies edge providers rely on for distribution are also their competitors because of vertical integration among edge providers and ISPs. For example, while Netflix works with Comcast to deliver its content, Comcast is also its competitor as the operator of cable systems, a partial owner of Hulu, and the owner of the planned video streaming service Peacock.", "Vertical integration could affect competition among edge providers. Companies that operate as both an ISP and edge provider may have a competitive advantage with the quality of content delivery over edge providers that have not paid for a direct connection to the ISP's network. Companies that pay for a direct connection to the network may also be at a competitive disadvantage because they incur an additional cost to obtain a connection that vertically integrated edge providers do not. Edge providers that also operate as CDNs may similarly benefit from better connections to ISPs without incurring a cost borne by edge providers that are not integrated with CDNs or ISPs. For example, Netflix pays Amazon to house its content on Amazon Web Services, although it competes with Amazon Prime Video, which also offers video streaming services. Vertically integrated companies associated with an ISP or CDN could also potentially prioritize their own edge providers' content over rivals' content.", "Similar concerns affect companies that operate as both edge providers and mobile carriers. Edge providers that are also mobile carriers can include their own apps on their customers' mobile devices for free and retain all of the profits from those apps. In contrast, competing edge providers may be charged a fee\u00e2\u0080\u0094such as an initial payment or a percentage of sales\u00e2\u0080\u0094for including their apps in the app store. In this case, nonaffiliated edge providers would face a cost that edge providers affiliated with mobile carriers do not.", "Edge providers associated with mobile devices in general may also have similar advantages. For example, in 2005, Google acquired Android\u00e2\u0080\u0094an operating system for mobile devices\u00e2\u0080\u0094and further developed the software thereafter. Google was fined \u00e2\u0082\u00ac4.34 billion ($5.05 billion) by the European Union (EU) for anticompetitive practices related to Android. Specifically, the European Commission determined that Google violated EU antitrust law by \"bundling\" its Play app store with its Search and Chrome apps (i.e., by requiring smartphone manufacturers that preinstalled the Google Play store to preinstall Google Search and Google Chrome). The ruling stated that by doing so, Google reduced the ability of rival search engines and web browsers to compete effectively, as consumers with Google Search and Google Chrome preinstalled on their devices were less likely to download competing search engines and web browsers.", "Some ISPs, particularly mobile carriers, have introduced \"zero rating\" or sponsored data plans. These plans allow subscribers to consume specific content or services without incurring charges against the subscriber's usage limits. For example, Facebook's Free Basics is a mobile phone app available through various mobile carriers in 65 countries. It provides free access to a limited selection of services and websites, including Facebook. It was banned by the Telecom Regulatory Authority of India for being anticompetitive by offering free access only to online services owned or controlled by Facebook. Similarly, critics claim that these plans favor edge providers affiliated with ISPs and those that are entrenched and well financed. However, supporters claim that these plans encourage consumers to try new services, particularly those that require large amounts of data.", "By combining consumer data collected by its ISP and edge provider components, a vertically integrated company may also have a competitive advantage through its ability to send targeted advertisements. In proposing to acquire Time Warner in 2018, AT&T chief executive Randall Stephenson stated that the merger would expand AT&T's access to customer and viewer data, allowing it to run targeted advertisements, which tend to be more profitable. Some state legislatures have passed or introduced legislation restricting how ISPs may collect or share consumer data; Congress has not passed similar legislation at the federal level. California has enacted data protection legislation, the California Consumer Privacy Act, which went into effect on January 1, 2020. It provides California residents the right to access, delete, and share personal information collected by businesses, including edge providers and ISPs.", "Consumers could benefit from the economic efficiencies obtained from edge providers' vertical integration with ISPs or mobile carriers by receiving content at faster speeds and lower prices. Vertically integrated edge providers could pass on to consumers the cost savings of not paying for a direct connection to the ISP network. For example, subscribers to a streaming service owned by an ISP may be able to receive its content more smoothly and at lower cost than subscribers to a streaming service not affiliated with an ISP. Free apps could benefit consumers as well.", "Vertical integration may also benefit consumers by increasing competition among ISPs. Currently, individual users in many areas have access to a limited number of internet providers because of the high costs associated with broadband deployment. If edge providers enter the ISP market, consumers may benefit from an increase in provider options, potentially resulting in lower prices and/or faster speeds. For example, one study credits Google Fiber for encouraging faster speeds, lower prices, and/or network upgrades among competing ISPs. However, the competitive benefit of edge providers entering the ISP market may be undermined by reduced competition among edge providers."], "subsections": []}, {"section_title": "Effect of Horizontal Integration on Competition", "paragraphs": ["Through mergers and acquisitions among themselves, edge providers have integrated horizontally. Facebook has made at least 79 acquisitions, including Instagram, WhatsApp, Oculus VR, and Chai labs. Google has made over 200 acquisitions, including DoubleClick, Waze, Nest, and YouTube. In some cases, edge providers have acquired companies with unique technologies in the early stages of development, foreclosing potential competition. Whether such acquisitions should be reviewed in the context of antitrust enforcement is controversial. Some commentators advocate limiting mergers among edge providers or breaking up large edge providers to increase competition, while others view mergers as a natural result of a competitive market in which more successful firms acquire smaller ones.", "Edge providers can benefit from acquiring other edge providers that offer different content or services. They can participate in a diverse set of online markets, expand or improve their content, or eliminate potential competitors. Google's acquisition of YouTube enabled it to gain a stronger footing in the online video market. Facebook acquired Divvyshot to improve its photo-sharing platform, particularly for mobile devices. These acquisitions can be viewed as integrating media platforms to improve end users' experience, a positive byproduct of competition, or as reducing competition by preventing the growth of other edge providers. Some have criticized Facebook's acquisition of Instagram\u00e2\u0080\u0094a photo and video-sharing social media app\u00e2\u0080\u0094and advocate for breaking up Facebook and Instagram; critics include some Members of Congress.", "Horizontal integration may increase an edge provider's customer base, which may give it greater bargaining power with ISPs. Because edge providers rely on ISPs to deliver their content, ISPs generally have leverage over edge providers that seek access to their networks. However, edge providers with large numbers of end users may have much greater bargaining power than smaller local or regional ISPs, as they may in some cases account for a large share of an ISP's internet traffic.", "By increasing their customer base through horizontal integration, edge providers can improve their market position. Edge providers that rely on digital advertising can target more individuals with digital advertisements and potentially increase the number of spaces to sell to advertisers. Edge providers can create more detailed profiles of individual users and improve their methods of targeting advertisements by combining consumer data from multiple sources. Some edge providers have acquired firms that control tools used to buy and sell digital advertising, such as advertisement servers that place spaces in auctions to determine which advertisement should be selected. By controlling such tools, an edge provider could have a competitive advantage against other edge providers that need to pay to use these tools.", "Concern about control of digital advertising tools has focused on Alphabet, which has acquired and incorporated into Google several digital advertising tools, including DoubleClick, AdMob, and Admeld. These acquisitions helped Google become the largest seller of digital advertising. Google has reportedly waived fees for using multiple components of its advertising services, bundling them together. This could make it difficult for rivals to offer competing services. Google reportedly required advertisers to use its advertising services to purchase advertisement spaces on YouTube, and used data collected from its edge provider services (e.g., Gmail and Google maps) in its advertising server. The DOJ and state attorneys general are reportedly investigating Google's use of its advertising products."], "subsections": []}]}, {"section_title": "Oversight of Edge Providers", "paragraphs": ["The vertical integration of edge providers and ISPs creates a situation in which certain activities of a company may be regulated by the FCC while closely connected activities are not. On June 15, 2015, Consumer Watchdog, a nonprofit organization that advocates for taxpayer and consumer interests, filed a petition requesting the FCC to regulate edge providers and prevent them from \"tracking personal information and web activity without consumers' knowledge and permission.\" The FCC dismissed the petition on November 6, 2015, citing its 2015 Open Internet Order, which stated that the FCC would not regulate any internet content. The 2017 Restore Internet Freedom Order reversed the 2015 Open Internet Order by reclassifying ISPs under Title I, but it also did not address the regulation of edge providers. Thus, pursuant to the 2015 Open Internet Order, the FCC has left oversight of edge providers to other agencies, principally the FTC and DOJ. The FTC deals with consumer privacy issues under its broad authority to prohibit unfair and deceptive trade practices, and the FTC and DOJ deal with unfair methods of competition that may violate antitrust laws.", "The FTC has expanded its examination of consumer data privacy concerns from its initial edge provider focus to include vertical integration by ISPs. On March 26, 2019, the FTC issued orders to seven ISPs to obtain information on how they collect, retain, use, and disclose information about consumers and their devices. The order specifically addressed the need to better understand ISPs' privacy practices because their vertical integration allows them to provide advertising-supported content produced by related entities within the companies.", "The FTC and DOJ opened antitrust investigations of possible anticompetitive behavior by \"Big Tech\" firms, reportedly including Google, Apple, Facebook, and Amazon. On September 6, 2019, the attorneys general of eight states and the District of Columbia announced an investigation of Facebook and Google for possible antitrust violations. By October 22, 2019, the number of participating attorneys general had reportedly grown to 47.", "A key question in these antitrust investigations could be determining the market for edge providers. Generally, a market is established based on specific goods or services, and their substitutability with other goods and services. However, because some edge providers offer multiple goods and services that could be classified in multiple industries, it has become difficult to determine which market(s) these edge providers belong in. For example, should each product sold on Amazon (e.g., clothes, children's toys, books) be placed in a separate market? If so, should products that are sold by another company on Amazon's website be considered Amazon's products or the selling company's products? Are physical books sold on Amazon in the same market as its Kindle e-books or its Audible audiobooks? Competition analysis generally involves defining the market of a product, which can be particularly complex in the analysis of edge providers.", "Determining the market share for edge providers that rely on digital advertising rather than selling tangible products may be even more complicated. In addition to the complexity of defining which market some of these edge providers fall in, it can be difficult to determine their \"sales,\" as they generally do not obtain revenue from offering their content to users. These edge providers obtain revenue from selling advertisement spaces using users' data or from selling users' data directly. Should the market share for these edge providers be determined by the total advertising revenue obtained from each website or by the amount of user data collected? In the latter case, how should user data be \"priced\"? Should all edge providers that rely on digital advertising be compared to each other in one market, or should these edge providers be separated based on content?"], "subsections": []}, {"section_title": "Considerations for Congress", "paragraphs": ["On June 3, 2019, the House Judiciary Committee announced that it would begin an investigation into competition in digital markets. It has held five hearings, which have raised questions and discussions including or related to the topics covered in this report. Among the major questions related to edge providers that Congress may wish to consider are the following:", "How does vertical integration among ISPs and edge providers affect competition? One of the difficulties in answering this question is the inability to evaluate how the market would have developed absent vertical integration. For example, vertical integration may lead to greater innovation in some cases, but to less innovation in others. It is also unclear how the effect of vertical integration on competition should be measured. As many users of edge providers' services do not pay for those services in a monetary sense, price effects, which are traditionally used to evaluate the extent of competition, may not be a sufficient measure. How could inequities in the amount of consumer data obtained by edge providers affect competition in the future? Consumer data may become increasingly important as machine learning and artificial intelligence technologies are further refined. It could be used to predict behavior among consumers or provide other competitive advantages for edge providers with large amounts of consumer data. Should competition among edge providers be regulated, and if so, to what extent? While the DOJ and FTC examine specific companies on a case-by-case basis for consumer protection or antitrust violations, the establishment of a regulatory framework could help prohibit anticompetitive practices. However, regulations may also disadvantage potential entrants while strengthening incumbents, and may impede innovation. Edge providers offer a wide variety of products and services, which could complicate the establishment of a single regulatory framework. However, other aspects of competition among edge providers, such as their relations with ISPs, are a matter relevant to all edge providers."], "subsections": []}]}}
{"id": "R45869", "title": "Labor, Health and Human Services, and Education: FY2019 Appropriations", "released_date": "2019-08-05T00:00:00", "summary": ["This report offers an overview of actions taken by Congress and the President to provide FY2019 appropriations for accounts funded by the Departments of Labor, Health and Human Services, and Education, and Related Agencies (LHHS) appropriations bill. This bill includes all accounts funded through the annual appropriations process at the Department of Labor (DOL) and Department of Education (ED). It also provides annual appropriations for most agencies within the Department of Health and Human Services (HHS), with certain exceptions (e.g., the Food and Drug Administration is funded via the Agriculture bill). Finally, the LHHS bill provides funds for more than a dozen related agencies, including the Social Security Administration (SSA).", "FY2019 Supplemental Appropriations for the Southern Border : During the 116 th Congress, on July 1, 2019, the President signed into law P.L. 116-26 , a supplemental appropriations act for FY2019 focusing primarily on the provision of humanitarian assistance and security at the southern border. The bill was passed by the House on June 27 and by the Senate on June 26. (An earlier version of the bill had passed the House on June 25. A related bill, S. 1900 , had passed the Senate on June 19; this bill was substantially similar to the final version of P.L. 116-26 .) As enacted, the bill contained nearly $2.9 billion in emergency-designated LHHS appropriations for the Refugee and Entrant Assistance account at HHS. The FY2019 enacted levels presented throughout this report are based on amounts provided by the FY2019 LHHS omnibus ( P.L. 115-245 , see below) and do not include these supplemental funds, which were provided in addition to the annual appropriations.", "FY2019 Supplemental Appropriations for Disaster Relief : During the 116 th Congress, on June 6, 2019, the President signed into law P.L. 116-20 , a supplemental appropriations act for FY2019 focusing primarily on certain expenses arising from hurricanes, typhoons, wildfires, earthquakes, tornadoes, floods, and other natural disasters or emergencies. The bill was passed by the House on June 3 and by the Senate on May 23. (An earlier version of the bill had passed the House on May 10.) As enacted, the bill included roughly $611 million in emergency-designated LHHS appropriations for accounts at DOL, HHS, and ED. The FY2019 enacted levels presented throughout this report are based on amounts provided by the FY2019 LHHS omnibus ( P.L. 115-245 ) and do not include these supplemental funds, which were provided in addition to the annual appropriations.", "FY201 9 LHHS Omnibus: During the 115 th Congress, on September 28, 2018, the President signed into law the Department of Defense and Labor, Health and Human Services, and Education Appropriations Act, 2019 and Continuing Appropriations Act, 2019 ( H.R. 6157 , P.L. 115-245 ). This law contained full-year LHHS appropriations in Division B. This is the first occasion since the FY1997 appropriations cycle that full-year LHHS appropriations were enacted on or before the start of the fiscal year (October 1). The FY2019 LHHS omnibus contained discretionary appropriations totaling $189.4 billion. This amount is 1.5% more than FY2018 enacted levels and 8.9% more than the FY2019 President's budget request. The omnibus also provided $869.8 billion in mandatory funding, for a combined LHHS total of $1.059 trillion. The distribution of discretionary funding was as follows:", "DOL: $12.1 billion, 0.8% less than FY2018. HHS: $90.5 billion, 2.6% more than FY2018. ED: $71.4 billion, 0.8% more than FY2018. Related Agencies: $15.3 billion, 0.1% more than FY2018.", "FY2019 LHHS Senate Action: The Senate Appropriations Committee reported its version of the FY2018 LHHS appropriations bill on June 28, 2018, by a vote of 30-1 ( S. 3158 ). Instead of taking up the committee-reported vehicle, the Senate chose to take up a different appropriations vehicle ( H.R. 6157 ) and amend it to contain FY2019 LHHS appropriations as well. (Those LHHS appropriations, which were added as Division B of H.R. 6157 , were substantially the same as S. 3158 .) During floor consideration of H.R. 6157 , the Senate also adopted 31 amendments to the new LHHS division of the bill (see Appendix B for a summary of these amendments). The Senate passed an amended H.R. 6157 by a vote of 85-7 on August 23, 2018.", "The Senate-passed bill would have provided $189.4 billion in discretionary LHHS funds. This would have been 1.5% more than FY2018, and 8.9% more than the FY2019 President's request. In addition, the Senate-passed bill would have provided an estimated $869.8 billion in mandatory funding, for a combined total of $1.059 trillion for LHHS as a whole. The distribution of discretionary funding would have been as follows:", "DOL: $12.1 billion, 0.8% less than FY2018. HHS: $90.5 billion, 2.7% more than FY2018. ED: $71.4 billion, 0.8% more than FY2018. Related Agencies: $15.4 billion, 0.5% more than FY2018.", "FY2019 LHHS House Action: The House Appropriations Committee's version of the FY2019 LHHS appropriations bill was ordered reported by the full committee on July 11, 2018, by a vote of 30-22, and reported to the House on July 23 ( H.R. 6470 ). This bill would have provided $187.2 billion in discretionary LHHS funds, a 0.3% increase from FY2018 enacted levels. This amount would have been 7.6% more than the FY2019 President's request. In addition, the House committee bill would have provided an estimated $869.8 billion in mandatory funding, for a combined total of $1.057 trillion for LHHS as a whole. The distribution of discretionary funding would have been as follows:", "DOL: $11.9 billion, 2.4% less than FY2018. HHS: $89.3 billion, 1.3% more than FY2018. ED: $71.0 billion, 0.2% more than FY2018. Related Agencies: $15.0 billion, 2.2% less than FY2018.", "The House committee-reported version of the LHHS bill did not receive floor consideration.", "FY2019 President's Budget Request: On February 12, 2018, the Trump Administration released the FY2019 President's budget. The President requested $173.9 billion in discretionary funding for accounts funded by the LHHS bill, which would have been a decrease of 6.8% from FY2018 levels. In addition, the President requested $869.8 billion in annually appropriated mandatory funding, for a total of $1.044 trillion for LHHS as a whole. The distribution of discretionary funding was as follows:", "DOL: $10.9 billion, 11.1% less than FY2018. HHS: $86.7 billion, 1.6% less than FY2018. ED: $63.2 billion, 10.8% less than FY2018. Related Agencies: $13.2 billion, 14.0% less than FY2018."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["This report provides an overview of FY2019 appropriations actions for accounts traditionally funded in the appropriations bill for the Departments of Labor, Health and Human Services, and Education, and Related Agencies (LHHS). This bill provides discretionary and mandatory appropriations to three federal departments: the Department of Labor (DOL), the Department of Health and Human Services (HHS), and the Department of Education (ED). In addition, the bill provides annual appropriations for more than a dozen related agencies, including the Social Security Administration (SSA).", "Discretionary funds represent less than one-fifth of the total funds appropriated in the LHHS bill. Nevertheless, the LHHS bill is typically the largest single source of discretionary funds for domestic nondefense federal programs among the various appropriations bills. (The Department of Defense bill is the largest source of discretionary funds among all federal programs.) The bulk of this report is focused on discretionary appropriations because these funds receive the most attention during the appropriations process.", "The LHHS bill typically is one of the more controversial of the regular appropriations bills because of the size of its funding total and the scope of its programs, as well as various related social policy issues addressed in the bill, such as restrictions on the use of federal funds for abortion and for research on human embryos and stem cells.", "Congressional clients may consult the LHHS experts list in CRS Report R42638, Appropriations: CRS Experts , for information on which analysts to contact at the Congressional Research Service (CRS) with questions on specific agencies and programs funded in the LHHS bill."], "subsections": []}, {"section_title": "Report Roadmap and Useful Terminology", "paragraphs": ["This report is divided into several sections. The opening section provides an explanation of the scope of the LHHS bill (and hence, the scope of this report) and an introduction to important terminology and concepts that carry throughout the report. Next is a series of sections describing major congressional actions on FY2019 appropriations and (for context) a review of the conclusion of the FY2018 appropriations process. This is followed by a high-level summary and analysis of enacted and proposed appropriations for FY2019, compared to FY2018 funding levels. The body of the report concludes with overview sections for each of the major titles of the bill: DOL, HHS, ED, and Related Agencies. These sections provide selected highlights from FY2019 enacted and proposed funding levels compared to FY2018. (Note that the distribution of funds is sometimes illustrated by figures, which in all cases are based on the FY2019 enacted version of the LHHS bill. )", "Finally, Appendix A provides a summary of budget enforcement activities for FY2019. This includes information on the Budget Control Act of 2011 (BCA; P.L. 112-25 ) and sequestration, budget enforcement in the absence of an FY2019 budget resolution, provisional subcommittee spending allocations, and current-year spending levels. This is followed by Appendix B , which provides an overview of the LHHS-related floor amendments that were offered in the Senate during its consideration of H.R. 6157 , an appropriations measure that was amended to contain LHHS appropriations for FY2019."], "subsections": [{"section_title": "Scope of the Report", "paragraphs": ["In general, this report is focused strictly on appropriations to agencies and accounts that are subject to the jurisdiction of the Labor, Health and Human Services, Education, and Related Agencies subcommittees of the House and Senate appropriations committees (i.e., accounts traditionally funded via the LHHS bill). Department \"totals\" provided in this report do not include funding for accounts or agencies that are traditionally funded by appropriations bills under the jurisdiction of other subcommittees.", "The LHHS bill provides appropriations for the following federal departments and agencies:", "the Department of Labor; most agencies at the Department of Health and Human Services, except for the Food and Drug Administration (funded through the Agriculture appropriations bill), the Indian Health Service (funded through the Interior-Environment appropriations bill), and the Agency for Toxic Substances and Disease Registry (also funded through the Interior-Environment appropriations bill); the Department of Education; and more than a dozen related agencies, including the Social Security Administration, the Corporation for National and Community Service, the Corporation for Public Broadcasting, the Institute of Museum and Library Services, the National Labor Relations Board, and the Railroad Retirement Board.", "Note also that funding totals displayed in this report do not reflect amounts provided outside of the annual appropriations process. Certain direct spending programs, such as Social Security and parts of Medicare, receive funding directly from their authorizing statutes; such funds are not reflected in the totals provided in this report because they are not provided through the annual appropriations process (see related discussion in the \" Important Budget Concepts \" section)."], "subsections": []}, {"section_title": "Important Budget Concepts", "paragraphs": [], "subsections": [{"section_title": "Mandatory vs. Discretionary Budget Authority2", "paragraphs": ["The LHHS bill includes both discretionary and mandatory budget authority. While all discretionary spending is subject to the annual appropriations process, only a portion of mandatory spending is provided in appropriations measures. ", "Mandatory programs funded through the annual appropriations process are commonly referred to as appropriated entitlements . In general, appropriators have little control over the amounts provided for appropriated entitlements; rather, the authorizing statute controls the program parameters (e.g., eligibility rules, benefit levels) that entitle certain recipients to payments. If Congress does not appropriate the money necessary to meet these commitments, entitled recipients (e.g., individuals, states, or other entities) may have legal recourse.", "Most mandatory spending is not provided through the annual appropriations process, but rather through budget authority provided by the program's authorizing statute (e.g., Social Security benefits payments). The funding amounts in this report do not include budget authority provided outside of the appropriations process. Instead, the amounts reflect only those funds, discretionary and mandatory, that are provided through appropriations acts.", "Note that, as displayed in this report, mandatory amounts for the Trump Administration's budget submission reflect current-law (or current services) estimates; they generally do not include the President's proposed changes to a mandatory spending program's authorizing statute that might affect total spending. (In general, such proposals are excluded from this report, as they typically would be enacted in authorizing legislation.)", "Note also that the report focuses most closely on discretionary funding. This is because discretionary funding receives the bulk of attention during the appropriations process. (As noted earlier, although the LHHS bill includes more mandatory funding than discretionary funding, the appropriators generally have less flexibility in adjusting mandatory funding levels than discretionary funding levels.)", "Mandatory and discretionary spending is subject to budget enforcement processes that include sequestration. In general, sequestration involves largely across-the-board reductions that are made to certain categories of discretionary or mandatory spending. However, the conditions that trigger sequestration, and how it is carried out, differ for each type of spending. This is discussed further in Appendix A ."], "subsections": []}, {"section_title": "Total Budget Authority Provided in the Bill vs. Total Budget Authority Available in the Fiscal Year", "paragraphs": ["Budget authority is the amount of money a federal agency is legally authorized to commit or spend. Appropriations bills may include budget authority that becomes available in the current fiscal year, in future fiscal years, or some combination. Amounts that become available in future fiscal years are typically referred to as advance appropriations .", "Unless otherwise specified, appropriations levels displayed in this report refer to the total amount of budget authority provided in an appropriations bill (i.e., \"total in the bill\"), regardless of the year in which the funding becomes available. In some cases, the report breaks out \"current-year\" appropriations (i.e., the amount of budget authority available for obligation in a given fiscal year , regardless of the year in which it was first appropriated).", "As the annual appropriations process unfolds, the amount of current-year budget authority is measured against 302(b) allocation ceilings (budget enforcement caps for appropriations subcommittees that traditionally emerge following the budget resolution process). The process of measuring appropria tions against these spending ceilings takes into account scorekeeping adjustments , which are made by the Congressional Budget Office (CBO) to reflect conventions and special instructions of Congress. Unless otherwise specified, appropriations levels displayed in this report do not reflect additional scorekeeping adjustments."], "subsections": []}]}]}, {"section_title": "Status of FY2019 LHHS Appropriations", "paragraphs": [" Table 1 provides a timeline of major legislative actions for full-year LHHS proposals, which are discussed in greater detail below. "], "subsections": [{"section_title": "FY2019 Supplemental Appropriations for the Southern Border", "paragraphs": ["On July 1, the President signed into law P.L. 116-26 , an FY2019 supplemental appropriations act focused primarily on humanitarian assistance and security needs at the southern border. The bill was passed by the House on June 27 and by the Senate on June 26. (An earlier version of the bill had passed the House on June 25. A related bill, S. 1900 , had been reported by the Senate Appropriations Committee on June 19; this bill was substantially similar to the final version of P.L. 116-26 .) ", "As enacted, the FY2019 border supplemental contained nearly $2.9 billion in emergency-designated LHHS appropriations for the Refugee and Entrant Assistance account at HHS. These funds were primarily intended to support the Unaccompanied Alien Children (UAC) program, which provides for the shelter, care, and placement of unaccompanied alien children who have been apprehended in the United States. According to a letter to Congress from the Office of Management and Budget (OMB), as of May 1 the number of apprehensions referred to HHS had increased by almost 50% from the prior year. In this same letter, OMB requested about $2.9 billion in supplemental funds for the UAC program, noting that these funds would provide \"critical child welfare services and high-quality shelter care.\" The letter estimated that these funds would allow HHS to increase shelter capacity to approximately 23,600 beds.", "Of the $2.9 billion appropriated to the UAC account, some funds were set aside for designated activities or purposes, such as state-licensed shelters (not less than $866 million); postrelease services, child advocates, and legal services (not less than $100 million); additional federal field specialists and increased case management and coordination services intended to place children with sponsors more expeditiously and reduce the length of stay in HHS custody (not less than $8 million); project officers/program staff and the development of a discharge rate improvement plan (not less than $1 million); and oversight activities conducted by the HHS Office of the Inspector General ($5 million). ", "In addition to these reservations, the bill also placed a number of conditions on the use of the supplemental funds. For instance, the bill ", "directed HHS to prioritize community-based residential care, state-licensed facilities, hard-sided dormitories, and shelter care other than large-scale institutional facilities (\u00c2\u00a7401); prohibited funds from being used for unlicensed facilities, except in limited circumstances (e.g., on a temporary basis due to a large influx of children) when specified conditions are met (e.g., comprehensive monitoring for an unlicensed facility operating for more than three consecutive months) (\u00c2\u00a7404); required HHS to ensure, when feasible, that certain types of children (e.g., children under age 13, children with special needs, pregnant or parenting teens) are not placed in unlicensed facilities (\u00c2\u00a7406); required HHS to reverse any reprogramming within the account that had been carried out pursuant to a notification submitted to the appropriations committees on May 16 (proviso within UAC appropriation); prohibited funds from being used to prevent a Member of Congress from visiting a UAC facility for oversight purposes (\u00c2\u00a7407); prohibited funds from being used by the Department of Homeland Security (DHS) to detain or remove sponsors (or potential sponsors) of unaccompanied children based on information provided by HHS as part of the sponsor's application, except when specified criteria are met (\u00c2\u00a7409); and prohibited funds from being used to reverse or change certain operational directives previously issued by HHS, except in limited circumstances (\u00c2\u00a7403).", "The bill also included a number of notification and reporting requirements associated with these funds. For instance, the bill required HHS to", "notify the appropriations committees within 72 hours of conducting a formal assessment of a facility for possible lease/acquisition and within seven days of any acquisition/lease of real property (proviso within UAC appropriation); submit to the appropriations committees a discharge rate improvement plan within 120 days of enactment (proviso within UAC appropriation); provide specific information to the appropriations committees at least 15 days before opening an unlicensed facility and provide the committees with monthly reports on the children placed at such facilities (\u00c2\u00a7405); submit to the appropriations committees (and make public) a monthly report on the number and ages of unaccompanied alien children transferred into HHS care after being separated from parents or legal guardians by DHS, along with the reasons for the separations (\u00c2\u00a7408); and submit to the appropriations committees a detailed spending plan of anticipated uses of funds within 30 days of enactment (\u00c2\u00a7410)."], "subsections": []}, {"section_title": "FY2019 Supplemental Appropriations for Disaster Relief", "paragraphs": ["Over the course of FY2019, the 115 th and 116 th Congresses considered supplemental appropriations to several federal departments and agencies for expenses related to various recent wildfires, hurricanes, volcanic eruptions, earthquakes, typhoons, and other natural disasters or emergencies (e.g., H.R. 695 in the 115 th Congress; H.R. 268 , S.Amdt. 201 to H.R. 268 , and H.R. 2157 in the 116 th Congress). Each of these bills included appropriations for several accounts typically funded in the LHHS bill.", "Ultimately, on June 6, the President signed into law P.L. 116-20 , a supplemental appropriations act for FY2019. The bill was passed by the House on June 3 and by the Senate on May 23. (An earlier version of the bill had passed the House on May 10.) ", "As enacted, the bill included roughly $611 million in emergency-designated LHHS appropriations for accounts at DOL, HHS, and ED. With limited exceptions, the bill explicitly directed the LHHS funds toward necessary expenses directly related to Hurricane Florence, Hurricane Michael, Typhoon Mangkhut, Super Typhoon Yutu, wildfires and earthquakes occurring in calendar year 2018, and tornadoes and floods occurring in calendar year 2019.", "The FY2019 supplemental provided the following definite LHHS appropriations:", "$50 million for the dislocated worker assistance national reserve at DOL, of which up to $1 million may be transferred to other DOL accounts for reconstruction and recovery needs and up to $500,000 is to be transferred to the DOL Office of the Inspector General for oversight activities. $30 million to the Child Care and Development Block Grant at HHS to support the costs of renovating, repairing, or rebuilding child care facilities. $90 million to the Children and Families Services Programs account at HHS for necessary expenses related to the disasters and emergencies referenced by the law. Of the total, $55 million is directed to Head Start programs, $25 million is directed to the Community Services Block Grant, $5 million is directed to the Stephanie Tubbs Jones Child Welfare Services program, and up to $5 million may be used for federal administrative expenses. $201 million for the Public Health and Social Services Emergency Fund at HHS for necessary expenses directly related to the disasters and emergencies referenced by the law. Of this amount, HHS is directed to transfer not less than $100 million to the Substance Abuse and Mental Health Services Administration (SAMHSA) Health Surveillance and Program Support account for grants, contracts, and cooperative agreements for behavioral health treatment, treatment of substance use disorders, crisis counseling and related helplines, and other similar programs to support impacted individuals; $80 million to the Health Resources and Services Administration (HRSA) federal health centers program for alteration, renovation, construction, equipment, and other capital improvements to meet the needs of affected areas; not less than $20 million to the Centers for Disease Control and Prevention (CDC) for CDC-Wide Activities and Program Support for response, recovery, mitigation, and other expenses; and up to $1 million to the Office of the Inspector General for oversight activities. $165 million for Hurricane Education Recovery at ED to assist in meeting the educational needs of affected individuals. Of the total, $2 million is to be transferred to the Office of the Inspector General for oversight activities and up to $1 million may be used for program administration.", "In addition, the supplemental provided a combination of definite and indefinite appropriations to the Medicaid program at HHS to support program costs in the Northern Mariana Islands, Guam, and American Samoa."], "subsections": []}, {"section_title": "FY2019 LHHS Omnibus", "paragraphs": ["During the 115 th Congress, on September 28, 2018, the President signed into law the Department of Defense and Labor, Health and Human Services, and Education Appropriations Act, 2019 and Continuing Appropriations Act, 2019 ( H.R. 6157 , P.L. 115-245 ). This was the first occasion since the FY1997 appropriations cycle that full-year LHHS appropriations were enacted on or before the start of the fiscal year (October 1). The House and Senate had previously agreed to resolve differences on the measure via a conference committee. (Conferees on the bill were named in the House on September 4 and in the Senate on September 6.) The conference report ( H.Rept. 115-952 ) was adopted by the Senate on September 18, and the House on September 26.", "LHHS discretionary appropriations in the FY2019 omnibus totaled $189.4 billion. This amount is 1.5% more than FY2018 enacted and 8.9% more than the FY2019 President's budget request. The omnibus also provided $869.8 billion in mandatory funding, for a combined LHHS total of $1.059 trillion. (Note that these totals are based only on amounts provided by the FY2019 LHHS omnibus and do not include the supplemental funds, which were provided in addition to the annual appropriations.)", "See Figure 1 for a breakdown of FY2019 discretionary and mandatory LHHS appropriations."], "subsections": []}, {"section_title": "Earlier Congressional Action on an LHHS Bill", "paragraphs": [], "subsections": [{"section_title": "FY2019 LHHS Action in the House", "paragraphs": ["The House Appropriations Committee's LHHS subcommittee approved its draft bill on June 15, 2018. The full committee markup was held on July 11, 2018, and the bill was ordered to be reported that same day (30-22). The bill was subsequently reported to the House on July 23 ( H.R. 6470 , H.Rept. 115-862 ). It did not receive floor consideration in the House.", "As reported by the full committee, the bill would have provided $187.2 billion in discretionary LHHS funds, a 0.3% increase from FY2018 enacted levels. This amount would have been 7.6% more than the FY2019 President's request. In addition, the House committee bill would have provided an estimated $869.8 billion in mandatory funding, for a combined total of $1.057 trillion for LHHS as a whole."], "subsections": []}, {"section_title": "FY2019 LHHS Action in the Senate", "paragraphs": ["The Senate Appropriations Committee's LHHS subcommittee approved its draft bill on June 26, 2018. The full committee markup was held on June 28, 2018. The committee approved the bill (30-1) and reported it that same day ( S. 3158 , S.Rept. 115-289 ).", "Instead of taking up S. 3158 , the Senate chose to consider and pass H.R. 6157 on August 23, 2018, by a vote of 85-7. The bill was amended on the Senate floor to contain FY2019 LHHS appropriations in Division B. (Division A contained the appropriations act for the Department of Defense.) The text of Division B that was considered for amendment was the same as S. 3158 (with minor alterations). During floor consideration, the Senate also adopted 31 amendments to the new LHHS division of the bill (see Appendix B for a summary of these amendments). ", "The Senate-passed bill would have provided $189.4 billion in discretionary LHHS funds. This would have been 1.5% more than FY2018, and 8.9% more than the FY2019 President's request. In addition, the Senate bill would have provided an estimated $869.8 billion in mandatory funding, for a combined total of $1.059 trillion for LHHS as a whole."], "subsections": []}]}, {"section_title": "FY2019 President's Budget Request", "paragraphs": ["On February 12, 2018, the Trump Administration released the FY2019 President's budget. The President requested $173.9 billion in discretionary funding for accounts funded by the LHHS bill, which would have been a decrease of 6.8% from FY2018 levels. In addition, the President requested $869.8 billion in annually appropriated mandatory funding, for a total of $1.044 trillion for LHHS as a whole."], "subsections": []}, {"section_title": "Conclusion of the FY2018 Appropriations Process", "paragraphs": ["On March 23, 2018, President Trump signed into law the Consolidated Appropriations Act, 2018 ( H.R. 1625 , P.L. 115-141 ). The bill was agreed to in the House on March 22 and in the Senate on March 23. The bill provided regular, full-year appropriations for all 12 annual appropriations acts, including LHHS (Division H). ", "LHHS discretionary appropriations in the FY2018 omnibus totaled $186.5 billion (this total does not include emergency funding provided by an earlier supplemental appropriations act for FY2018, P.L. 115-123 ). This amount was 7.6% more than FY2017 levels and 25.3% more than the FY2018 budget request from the Trump Administration. The omnibus also provided $817.5 billion in mandatory funding, for a combined FY2018 LHHS total of $1.004 trillion."], "subsections": []}]}, {"section_title": "Summary of FY2019 LHHS Appropriations", "paragraphs": [" Table 2 displays FY2019 discretionary and mandatory LHHS budget authority provided or proposed, by bill title, along with FY2018 enacted levels. The amounts shown in this table reflect total budget authority provided in the bill (i.e., all funds appropriated in the bill, regardless of the fiscal year in which the funds become available), not total budget authority available for the current fiscal year. (For a comparable table showing current-year budget authority, see Table A-2 in Appendix A .)", " Figure 2 displays the FY2019 enacted discretionary and mandatory LHHS funding levels, by bill title. (While the dollars and percentages discussed in this section were calculated based on the FY2019 enacted amounts, they are generally also illustrative\u00e2\u0080\u0094within several percentage points\u00e2\u0080\u0094of the share of funds directed to each bill title in FY2018 and under the other FY2019 proposals.) ", "As this figure demonstrates, HHS accounts for the largest share of total FY2019 LHHS appropriations: $899 billion, or 84.9%. This is due to the large amount of mandatory funding included in the HHS appropriation, the majority of which is for Medicaid grants to states and payments to health care trust funds. After HHS, ED and the Related Agencies represent the next-largest shares of total LHHS funding, accounting for 7.1% and 6.7%, respectively. (The majority of the ED appropriations each year are discretionary, while the bulk of funding for the Related Agencies goes toward mandatory payments and administrative costs of the Supplemental Security Income program at the Social Security Administration.) Finally, DOL accounts for the smallest share of total LHHS funds, 1.3%.", "However, the overall composition of LHHS funding is noticeably different when comparing only discretionary appropriations. HHS accounts for a comparatively smaller share of total discretionary appropriations (47.8%), while ED accounts for a relatively larger share (37.7%). Together, these two departments represent the majority (85.5%) of discretionary LHHS appropriations. DOL and the Related Agencies account for a roughly even split of the remaining 14.5% of discretionary LHHS funds."], "subsections": []}, {"section_title": "Department of Labor (DOL)", "paragraphs": ["Note that all amounts in this section are based on regular LHHS appropriations only. Amounts in this section do not include mandatory funds provided outside of the annual appropriations process (e.g., direct appropriations for Unemployment Insurance benefits payments). All amounts in this section are rounded to the nearest million or billion (as labeled). The dollar changes and percentage changes discussed in the text are based on unrounded amounts. For consistency with source materials, amounts do not reflect sequestration or reestimates of mandatory spending programs, where applicable. "], "subsections": [{"section_title": "About DOL", "paragraphs": ["DOL is a federal department comprised of multiple entities that provide services related to employment and training, worker protection, income security, and contract enforcement. Annual LHHS appropriations laws direct funding to all DOL entities (see the text box). The DOL entities fall primarily into two main functional areas\u00e2\u0080\u0094workforce development and worker protection. First, there are several DOL entities that administer workforce employment and training programs\u00e2\u0080\u0094such as the Workforce Innovation and Opportunity Act (WIOA) state formula grant programs, Job Corps, and the Employment Service\u00e2\u0080\u0094that provide direct funding for employment activities or administration of income security programs (e.g., for the Unemployment Insurance benefits program). Also included in this area is the Veterans' Employment and Training Service (VETS), which provides employment services specifically for the veteran population. Second, there are several agencies that provide various worker protection services. For example, the Occupational Safety and Health Administration (OSHA), the Mine Safety and Health Administration (MSHA), and the Wage and Hour Division (WHD) provide different types of regulation and oversight of working conditions. DOL entities focused on worker protection provide services to ensure worker safety, adherence to wage and overtime laws, and contract compliance, among other duties. In addition to these two main functional areas, DOL's Bureau of Labor Statistics (BLS) collects data and provides analysis on the labor market and related labor issues."], "subsections": []}, {"section_title": "FY2019 DOL Appropriations Overview", "paragraphs": [" Table 3 generally displays FY2019 discretionary and mandatory DOL budget authority provided or proposed, along with FY2018 enacted levels. The FY2019 LHHS omnibus decreased discretionary appropriations for DOL by 0.8% compared to the FY2018 enacted levels. Similarly, discretionary DOL appropriations would have decreased, compared to FY2018, under the FY2019 President's budget request (-11.1%), as well as the FY2019 House committee bill (-2.4%) and Senate-passed bill (-0.8%). Of the total funding provided in the bill for DOL, roughly 89% is discretionary."], "subsections": []}, {"section_title": "Selected DOL Highlights", "paragraphs": ["The following sections present highlights from FY2019 enacted and proposed appropriations compared to FY2018 enacted appropriations for selected DOL accounts and programs.", " Table 4 displays funding for DOL programs and activities discussed in this section."], "subsections": [{"section_title": "Employment and Training Administration (ETA)", "paragraphs": ["ETA administers the primary federal workforce development law, the Workforce Innovation and Opportunity Act (WIOA, P.L. 113-128 ). The WIOA, which replaced the Workforce Investment Act, was signed into law in July 2014 and authorizes appropriations for its programs through FY2020. WIOA's provisions went into effect in FY2015 and FY2016.", "Title I of WIOA, which authorizes more than half of all funding for the programs authorized by the four titles of WIOA, includes three state formula grant programs serving Adults, Youth, and Dislocated Workers. While the FY2019 LHHS omnibus provided the same funding for the three WIOA state formula grant programs compared to FY2018, the President's budget would have reduced funding for all three of the state formula grant programs by $80 million (-2.9%), compared to FY2018 enacted levels.", "The FY2019 LHHS omnibus provided $221 million for the Dislocated Workers Activities National Reserve (DWA National Reserve), which was the same level enacted in FY2018. The FY2019 President's budget and the House committee bill would have reduced funding for the DWA National Reserve by $75 million (-34.0%) and $21 million (-9.4%), respectively, while the Senate would have kept DWA National Reserve funding the same as FY2018. Finally, the FY2019 LHHS omnibus maintained a provision in that account (which had originated in the FY2018 omnibus) directing $30 million from the DWA National Reserve toward training and employment assistance for workers dislocated in both the Appalachian and lower Mississippi regions.", "The FY2019 LHHS omnibus provided $160 million for the Apprenticeship Grant program, which is $15 million (+10.3%) more than the level enacted in FY2018. The FY2019 President's budget would have increased funding for the Apprenticeship Grant program by $55 million (+37.9%) compared to the FY2018 enacted level.", "Finally, four ETA programs for which the FY2019 President's budget proposed no funding\u00e2\u0080\u0094the Native Americans program, the Migrant and Seasonal Farmworkers program, the Community Service Employment for Older Americans (CSEOA) program, and the Workforce Data Quality Initiative\u00e2\u0080\u0094received FY2019 appropriations at roughly the same level as FY2018."], "subsections": []}, {"section_title": "Bureau of International Labor Affairs (ILAB)", "paragraphs": ["The FY2019 LHHS omnibus provided the same funding, $86 million, for ILAB as was provided in FY2018. The Senate-passed bill would also have provided $86 million for ILAB. The FY2019 President's budget and the House committee bill each would have decreased funding by $68 million (-78.5%) for ILAB, which provides research, advocacy, technical assistance, and grants to promote workers' rights in different parts of the world. Language in the FY2019 President's budget indicated that the proposed reduction reflected a \"workload decrease associated with the elimination of new grants as well as ILAB's refocusing of its efforts and resources on ensuring that U.S. trade agreements are fair for U.S. workers by monitoring and enforcing the labor provisions of Free Trade Agreements (FTAs) and trade preference programs.\""], "subsections": []}, {"section_title": "Labor-Related General Provisions", "paragraphs": ["Annual LHHS appropriations acts regularly contain general provisions related to certain labor issues. This section highlights selected DOL general provisions in the FY2019 LHHS omnibus.", "The FY2019 LHHS omnibus continued several provisions that have been included in at least one previous LHHS appropriations act, including provisions that", "direct the Secretary of Labor to accept private wage surveys as part of the process of determining prevailing wages in the H-2B program, even in instances in which relevant wage data are available from the Bureau of Labor Statistics (included since FY2016); exempt certain insurance claims adjusters from overtime protection for two years following a \"major disaster\" (included since FY2016); authorize the Secretary of Labor to provide up to $2 million in \"excess personal property\" to apprenticeship programs to assist training apprentices (included since FY2018); authorize the Secretary of Labor to employ law enforcement officers or special agents to provide protection to the Secretary of Labor and certain other employees and family members at public events and in situations in which there is a \"unique and articulable\" threat of physical harm (included since FY2018); and authorize the Secretary of Labor to dispose of or divest \"by any means the Secretary determines appropriate\" all or part of the real property on which the Treasure Island Job Corps Center is located (included since FY2018)."], "subsections": []}]}]}, {"section_title": "Department of Health and Human Services (HHS)", "paragraphs": ["Note that all amounts in this section are based on regular LHHS appropriations only; they do not include funds for HHS agencies provided through other appropriations bills (e.g., funding for the Food and Drug Administration) or outside of the annual appropriations process (e.g., direct appropriations for Medicare or mandatory funds provided by authorizing laws, such as the Patient Protection and Affordable Care Act [ACA, P.L. 111-148 ]). All amounts in this section are rounded to the nearest million or billion (as labeled). The dollar changes and percentage changes discussed in the text are based on unrounded amounts. For consistency with source materials, amounts do not reflect sequestration or reestimates of mandatory spending programs, where applicable. "], "subsections": [{"section_title": "About HHS", "paragraphs": ["HHS is a large federal department composed of multiple agencies working to enhance the health and well-being of Americans. Annual LHHS appropriations laws direct funding to most (but not all) HHS agencies (see text box for HHS agencies supported by the LHHS bill). For instance, the LHHS bill directs funding to five Public Health Service (PHS) agencies: the Health Resources and Services Administration (HRSA), Centers for Disease Control and Prevention (CDC), National Institutes of Health (NIH), Substance Abuse and Mental Health Services Administration (SAMHSA), and Agency for Healthcare Research and Quality (AHRQ). These public health agencies support diverse missions, ranging from the provision of health care services and supports (e.g., HRSA, SAMHSA), to the advancement of health care quality and medical research (e.g., AHRQ, NIH), to the prevention and control of infectious and chronic diseases (e.g., CDC). In addition, the LHHS bill provides funding for annually appropriated components of CMS, which is the HHS agency responsible for the administration of Medicare, Medicaid, the State Children's Health Insurance Program (CHIP), and consumer protections and private health insurance provisions of the ACA. ", "The LHHS bill also provides funding for two HHS agencies focused primarily on the provision of social services: the Administration for Children and Families (ACF) and the Administration for Community Living (ACL). ACF's mission is to promote the economic and social well-being of vulnerable children, youth, families, and communities. ACL was formed with a goal of increasing access to community supports for older Americans and people with disabilities. Finally, the LHHS bill also provides funding for the HHS Office of the Secretary (OS), which encompasses a broad array of management, research, oversight, and emergency preparedness functions in support of the entire department."], "subsections": []}, {"section_title": "FY2019 HHS Appropriations Overview", "paragraphs": [" Table 5 displays enacted and proposed FY2019 funding levels for HHS, along with FY2018 levels. In general, discretionary funds account for about 10% of HHS appropriations in the LHHS bill. Compared to the FY2018 funding levels, the FY2019 LHHS omnibus increased HHS discretionary appropriations by 2.6%. The House committee bill would have increased HHS discretionary appropriations to a lesser degree, by 1.3%, whereas the Senate proposed a more substantial increase of 2.7%. In contrast, the President requested a 1.6% decrease in discretionary HHS funding. ", " Figure 3 provides an HHS agency-level breakdown of FY2019 enacted appropriations. As this figure demonstrates, annual HHS appropriations are dominated by mandatory funding, the majority of which goes to CMS to provide Medicaid benefits and payments to health care trust funds. When taking into account both mandatory and discretionary funding, CMS accounts for $796.9 billion, which is 88.6% of all enacted appropriations for HHS. ACF and NIH account for the next-largest shares of total HHS appropriations, receiving about 4.2% apiece. ", "By contrast, when looking exclusively at discretionary appropriations, funding for CMS constitutes about 4.9% of FY2019 enacted HHS appropriations. Instead, the bulk of discretionary appropriations went to the PHS agencies, which account for 63.5% of discretionary appropriations provided for HHS. NIH typically receives the largest share of all discretionary funding among HHS agencies (41.9% in FY2019), with ACF accounting for the second-largest share (25.6% in FY2019). "], "subsections": []}, {"section_title": "Special Public Health Funding Mechanisms", "paragraphs": ["Annual appropriations for HHS public health service agencies are best understood in the context of certain HHS-specific funding mechanisms: the Public Health Service (PHS) Evaluation Set-Aside and the Prevention and Public Health Fund (PPHF). In recent years, LHHS appropriations have used these funding mechanisms to direct additional support to certain programs and activities."], "subsections": [{"section_title": "Public Health Service Evaluation Tap", "paragraphs": ["The PHS Evaluation Set-Aside, also known as the PHS Evaluation Tap, is a unique feature of HHS appropriations. It is authorized by Section 241 of the Public Health Service Act (PHSA), and allows the Secretary of HHS, with the approval of appropriators, to redistribute a portion of eligible PHS agency appropriations across HHS for program evaluation purposes. ", "The PHSA limits the set-aside to not less than 0.2% and not more than 1% of eligible program appropriations. However, LHHS appropriations acts have commonly established a higher maximum percentage for the set-aside and have distributed specific amounts of \"tap\" funding to selected HHS programs. Since FY2010, and including in FY2019, this higher maximum set-aside level has been 2.5% of eligible appropriations. (While the House committee bill would also have maintained the set-aside at 2.5%, the Senate-passed bill and the President's budget each proposed to increase the set-aside to 2.6% and 2.9%, respectively.)", "Before FY2015, the PHS tap traditionally provided more than a dozen HHS programs with funding beyond their annual appropriations and, in some cases, was the sole source of funding for a program or activity. However, since FY2015 and including in FY2019, LHHS appropriations laws have directed tap funds to a smaller number of programs or activities within three HHS agencies (NIH, SAMHSA, and OS) and have not provided any tap transfers to AHRQ, CDC, and HRSA. This has been particularly notable for AHRQ, which had been funded primarily through tap transfers from FY2003 to FY2014, but has received discretionary appropriations since then. The House committee bill and the Senate-passed bill generally would have maintained the current distributional practice for FY2019. However, the President's budget proposed to expand the activities and agencies funded by the PHS tap to include the Public Health Scientific Services at the CDC, while simultaneously proposing to eliminate tap transfers to some other activities.", "Since FY2015, LHHS appropriations laws have directed the largest share of tap transfers to NIH. The FY2019 omnibus provided $1.1 billion in tap transfers to NIH, a $224 million (+24.3%) increase over the FY2018 level. The FY2019 House committee bill proposed that the NIH transfers be continued at FY2018 levels ($923 million), whereas the Senate-passed bill would have increased the transfer by $95 million (+10.3%). In contrast, the President's request proposed that the transfer be reduced by $182 million (-19.7%)."], "subsections": []}, {"section_title": "Prevention and Public Health Fund", "paragraphs": ["The ACA both authorized and appropriated mandatory funding to three funds to support programs and activities within the PHS agencies. One of these, the Prevention and Public Health Fund (PPHF, ACA \u00c2\u00a74002, as amended), was given a permanent, annual appropriation that was intended to provide support each year to prevention, wellness, and related public health programs funded through HHS accounts. ", "The ACA had appropriated $2 billion in mandatory funds to the PPHF for FY2019, but this amount has been reduced by subsequent laws that decreased PPHF funding for FY2019 and other fiscal years. Under current law, the FY2019 appropriation was $900 million. In addition, this appropriation was subject to a 6.2% reduction due to sequestration of nonexempt mandatory spending. (For more information on sequestration, see the budget enforcement discussion in Appendix A .) After sequestration, the total PPHF appropriation available for FY2019 was $844 million, an increase of $4 million relative to FY2018. Of this amount, the LHHS omnibus allocated $805 million to CDC, $12 million to SAMHSA, and $28 million to ACL. ", "PPHF funds are intended to supplement (sometimes quite substantially) the funding that selected programs receive through regular appropriations. Although the PPHF authority instructs the HHS Secretary to transfer amounts from the fund to HHS agencies, since FY2014 provisions in annual appropriations acts and accompanying reports have explicitly directed the distribution of PPHF funds and prohibited the Secretary from making further transfers for those years. ", "The CDC commonly receives the largest share of annual PPHF funds. The amount provided to the CDC for FY2019, $805 million, was a $4 million (+0.4%) increase relative to FY2018. The House committee bill and the Senate-passed bill each proposed increases to the CDC allocation (to $848 million and $808 million, respectively), while the President's request proposed eliminating the mandatory PPHF appropriation entirely. "], "subsections": []}]}, {"section_title": "Selected HHS Highlights by Agency", "paragraphs": ["This section begins with a limited selection of FY2019 discretionary funding highlights by HHS agency. The discussion is largely based on the enacted and proposed appropriations levels for FY2019, compared to FY2018 enacted levels. These summaries are followed by a brief overview of significant provisions from annual HHS appropriations laws that restrict spending in certain controversial areas, such as abortion and stem cell research. The section concludes with two tables ( Table 6 and Table 7 ) presenting more detailed information on FY2018 enacted and FY2019 proposed and enacted funding levels for HHS."], "subsections": [{"section_title": "HRSA", "paragraphs": ["The FY2019 LHHS omnibus provided $6.9 billion in discretionary budget authority for HRSA. This was $107 million (+1.6%) more than HRSA's FY2018 discretionary funding level and $2.7 billion (-28.4%) less than the FY2019 President's budget request.", "In several cases, the FY2019 President's budget proposed new or increased discretionary budget authority for HRSA programs that had previously been funded exclusively or jointly with mandatory appropriations from authorizing laws, such as the health centers program, the National Health Service Corps, and the Maternal, Infant, and Early Childhood Home Visiting program. Simultaneously, the President's budget proposed to eliminate mandatory funding for these programs. However, authorizing law ultimately provided FY2019 mandatory appropriations for each of these programs and the FY2019 LHHS omnibus maintained discretionary appropriations for them at their FY2018 levels, where applicable.", "The FY2019 LHHS omnibus provided $286 million for Title X Family Planning, the same as FY2018. For the fourth year in a row, the House committee bill had proposed eliminating funding for Title X of the PHSA and also prohibiting the use of other HHS funds to carry out Title X. In contrast, the FY2019 Senate-passed bill and the FY2019 President's budget had proposed a flat funding level for Title X from FY2018, and no prohibition on the use of other HHS funds.", "The FY2019 LHHS omnibus also continued to fund the Rural Communities Opioids Response program within HRSA's Rural Health account. The program was created in FY2018 to support treatment and prevention of substance use disorders in high-risk rural communities. The omnibus appropriated $120 million for the program, an increase of $20 million (+20.0%) from FY2018. HRSA is directed to use this increase to establish three Rural Centers of Excellence on substance use disorders. The LHHS omnibus provided Healthy Start an increase of $12 million (+10.9%) from FY2018 as part of a new initiative to reduce maternal mortality and increased funding to support maternal mortality reduction efforts under the Maternal and Child Health Block Grant by $26 million (+4.0%). "], "subsections": []}, {"section_title": "CDC", "paragraphs": ["The FY2019 LHHS omnibus provided $7.1 billion in discretionary budget authority for CDC. This was $117 million (-1.6%) less than CDC's FY2018 funding level and $1.6 billion (+28.3%) more than the FY2019 President's budget request. The FY2019 LHHS omnibus did not direct any PHS tap funds to the CDC, continuing the practice started in FY2015. (The FY2019 President's budget had requested $136 million in tap funds.) However, the FY2019 LHHS omnibus did supplement discretionary CDC appropriations with $805 million in PPHF transfers to the CDC, which was $4 million (+0.4%) more than FY2018. (Unlike FY2018, the FY2019 LHHS omnibus did not direct any transfers from the HHS Nonrecurring Expenses Fund (NEF) to the CDC.) ", "A number of CDC accounts contained funding set aside to address the opioid crisis. For example, the HIV/AIDS, Viral Hepatitis, Sexually Transmitted Diseases and Tuberculosis Prevention account received an increase of $5 million (+0.4%) from FY2018; the conference report specified that the increase be used for a new initiative targeting infectious disease consequences of the opioid epidemic. With regard to the Injury Prevention and Control account, which was maintained at the FY2018 level of $649 million, the conference report directed HHS to reserve $476 million from this total for the CDC's Prescription Drug Overdose (PDO) activities, noting that these funds should be used to \"advance the understanding of the opioid overdose epidemic and scale up prevention activities.\" In addition, $10 million in PDO funding was to be dedicated to a nationwide opioid awareness and education campaign. The Birth Defects and Developmental Disabilities account received an increase of $15 million (+10.7%), of which $10 million was to support monitoring of mothers and babies affected by the Zika virus as well as other emerging health threats, such as opioid use during pregnancy, and $2 million was reserved specifically for activities related to neonatal abstinence syndrome. "], "subsections": []}, {"section_title": "NIH", "paragraphs": ["The FY2019 LHHS omnibus provided $37.9 billion in discretionary budget authority for NIH. This was $1.8 billion (+4.9%) more than FY2018 and $4.1 billion (+12.3%) more than the President's FY2019 budget request. In addition, the FY2019 LHHS omnibus directed $1.1 billion in PHS tap transfers to NIH, an increase of $224 million (+24.3%) from FY2018. The entirety of the tap transfer was provided to the National Institute of General Medical Sciences (NIGMS), and was paired with a discretionary appropriation of $1.7 billion. The discretionary appropriation was $137 million (-7.3%) less than FY2018, but when combined with the tap transfer, total funding for NIGMS increased by $87 million (+3.1%) from FY2018.", "When accounting for discretionary appropriations and PHS tap transfers, each of the NIH accounts in the LHHS bill received an increase from FY2018 levels. Compared to FY2018, the largest percentage increases went to the National Institute on Aging, which received a total of $3.1 billion (+19.8%), and the Buildings and Facilities account, which received $200 million (+55.2%). In line with recent practice, the conference report on the FY2019 LHHS omnibus directed NIH to reserve a specific amount ($2.34 billion) for Alzheimer's disease research, referring to it as an increase of $425 million from FY2018. Reserving a specific dollar amount for a particular disease or area of research at NIH is a relatively new practice and constitutes a significant departure from past precedent. ", "The FY2019 LHHS omnibus appropriated $711 million to the NIH Innovation Account pursuant to the 21 st Century Cures Act ( P.L. 114-255 ), which was equal to the amount authorized to be appropriated in that act. The conference report also reiterated the purposes authorized in the act, directing that NIH transfer $400 million to the National Cancer Institute to support cancer research, and $57.5 million each to the National Institute of Neurological Disorders and Stroke and the National Institute of Mental Health to support the Brain Research through Advancing Innovative Neurotechnologies (BRAIN) Initiative. The remaining $196 million was divided between the Precision Medicine Initiative ($186 million) and regenerative medicine research ($10 million). "], "subsections": []}, {"section_title": "SAMHSA", "paragraphs": ["The FY2019 LHHS omnibus provided $5.6 billion in discretionary budget authority for SAMHSA. This amount was $584 million (+11.6%) more than SAMHSA's FY2018 funding level and $2.2 billion (+63.4%) more than the President's FY2019 budget request. In addition, the FY2019 LHHS omnibus also directed $134 million in PHS evaluation tap funding and $12 million in PPHF funding to SAMHSA, which was the same amount as FY2018.", "State Opioid Response Grants received $1.5 billion in FY2019, a $500 million (+50%) increase from FY2018, which was the first year in which funding was provided for this program. However, the State Targeted Response to the Opioid Crisis (STR) grants that were appropriated $500 million in each of FY2017 and FY2018 did not receive appropriations in FY2019. The FY2019 LHHS omnibus also included an increase of $50 million (+50.0%) from FY2018 for Certified Community Behavioral Health Centers. Mental Health Programs of Regional and National Significance (PRNS) and Substance Abuse Prevention PRNS each had a reduction of $43 million (-10.1% and -17.2%, respectively) from FY2018, while Substance Abuse Treatment PRNS had an increase of $55 million (+13.7) from FY2018. "], "subsections": []}, {"section_title": "CMS", "paragraphs": ["The FY2019 LHHS omnibus provided $4.4 billion in discretionary budget authority for CMS. This was $20 million (+0.5%) more than FY2018 and $121 million (+2.8%) more than the FY2019 President's budget request. The LHHS omnibus appropriated $765 million for the CMS Health Care Fraud and Abuse Control (HCFAC) account, 2.7% more than FY2018, and slightly less (-0.6%) than the FY2019 President's request. Of the total amount appropriated for HCFAC, $454 million was effectively exempt from the discretionary budget caps. (See Appendix A for an explanation of the LHHS budget cap exemptions.)", "The LHHS omnibus provided the CMS Program Management account with a flat funding level of $3.7 billion. This account supports CMS program operations (e.g., claims processing, information technology investments, provider and beneficiary outreach and education, and program implementation), in addition to federal administration and other activities related to the administration of Medicare, Medicaid, the State Children's Health Insurance Program, and private health insurance provisions established by the ACA. The FY2019 appropriation was the same amount that was proposed by the Senate-passed bill, but more than the amounts proposed by the President's budget (+3.6%) and the House committee bill (+4.8%). The omnibus maintained a general provision (\u00c2\u00a7227), included in LHHS appropriations acts since FY2014, authorizing HHS to transfer additional funds into this account from Medicare trust funds. The terms of the provision required that such funds be used to support activities specific to the Medicare program, limited the amount of the transfers to $305 million, and explicitly prohibited such transfers from being used to support or supplant funding for ACA implementation. The House committee bill would have eliminated this provision. "], "subsections": []}, {"section_title": "ACF", "paragraphs": ["The FY2019 LHHS omnibus provided $23.2 billion in discretionary budget authority for ACF. This was $357 million (+1.6%) more than FY2018 and $7.8 billion (+50.6%) more than the FY2019 President's budget request. The President's budget would have decreased ACF discretionary funding by roughly one-third relative to the prior year (-32.5%). The President's budget would have achieved much of its proposed reduction by eliminating certain programs within ACF, such as the Low Income Home Energy Assistance Program (LIHEAP), Preschool Development Grants (PDG), and the Community Services Block Grant (CSBG). Funding for these three programs was sustained or increased in the FY2019 LHHS omnibus: LIHEAP received $3.7 billion, PDG $250 million, and CSBG $725 million. ", "The LHHS omnibus provided $1.9 billion for the Refugee and Entrant Assistance programs account, an increase of $40 million (+2.2%) relative to FY2018. The LHHS omnibus retained a provision, included in LHHS appropriations since FY2015, authorizing HHS to augment appropriations for the Refugee and Entrant Assistance account by up to 10% via transfers from other discretionary HHS funds. ", "The conference report on the omnibus directed the majority of the appropriation for Refugee and Entrant Assistance programs toward the Unaccompanied Alien Children (UAC) program ($1.3 billion, the same as FY2018). The UAC program provides for the shelter, care, and placement of unaccompanied alien children who have been apprehended in the United States. The LHHS omnibus also included several new general provisions related to the UAC program. For instance, the law authorized HHS to accept donations for the care of UACs (\u00c2\u00a7232), required HHS to submit a report on reunification of children with parents who are no longer in the United States (\u00c2\u00a7233), and prohibited HHS appropriations from being used to prevent a Member of Congress from visiting a UAC facility for oversight purposes (\u00c2\u00a7234). In addition, the conference report on the LHHS omnibus expressed an expectation that HHS would adhere to certain general provisions that had been included in the House committee bill ( H.R. 6470 ), specifically provisions relating to sibling placement (\u00c2\u00a7235), monthly reporting (\u00c2\u00a7236), a report on preliterate children in custody (\u00c2\u00a7541), a report on the mental health needs of children separated from their parents (\u00c2\u00a7542), and a sense of the Congress that immigrant children should not be separated from their parents and should be reunited immediately (\u00c2\u00a7539). ", "A number of new directives and reporting requirements on the UAC program were also included in the conference report itself, as well as reports on the earlier committee-reported FY2019 LHHS bills. The conferees noted that HHS was expected to adhere to the requirements laid out in all three reports (unless a particular requirement in a committee report had been superseded by the LHHS omnibus or its conference report). These requirements addressed a range of topics related to, for instance, the administration of medication, questioning children about religion, sharing information on the whereabouts of children and parents, protecting genetic material, the provision of qualified and independent legal counsel, and expectations for communication with appropriations committees on various UAC issues. "], "subsections": []}, {"section_title": "AHRQ", "paragraphs": ["The FY2019 LHHS omnibus provided $338 million in discretionary budget authority to AHRQ. This was 1.2% more than the FY2018 level of $334 million. The FY2019 LHHS omnibus did not direct any PHS tap transfers to AHRQ, which is in keeping with practices since FY2015 but contrasts with earlier years (FY2003-FY2014) in which AHRQ had been funded primarily with tap transfers. The FY2019 omnibus continued to fund AHRQ as its own operating division, declining the President's proposal to consolidate AHRQ into NIH. The FY2019 President's request had proposed zero funding for AHRQ, proposing instead to continue funding many of AHRQ's activities through a new National Institute for Research on Safety and Quality (NIRSQ) in the NIH. "], "subsections": []}, {"section_title": "ACL", "paragraphs": ["The FY2019 LHHS omnibus provided $2.2 billion in discretionary budget authority for ACL. This was $25 million (+1.2%) more than FY2018. In addition, the FY2019 LHHS omnibus directed $28 million in PPHF transfers to ACL, the same as FY2018. The FY2019 LHHS omnibus specified that the PPHF transfers were for the Alzheimer's Disease Program, Chronic Disease Self-Management, and Elder Falls Prevention. ", "The FY2019 LHHS omnibus did not adopt the President's budget proposals to consolidate Chronic Disease Self-Management and Elder Falls Prevention into the Preventive Health Services Program, or to eliminate funding for the State Health Insurance Program, the Paralysis Resource Center, and the Limb Loss Resource Center.", "The conference report on the FY2019 LHHS omnibus called on ACL to use a portion of the $181 million reserved for Family Caregiver Support Services to establish and carry out activities for two newly authorized advisory councils. Specifically, the report recommended that ACL dedicate $300,000 to the Family Caregiving Advisory Council authorized under the RAISE Family Caregivers Act ( P.L. 115-119 ) and $300,000 to the Advisory Council to Support Grandparents Raising Grandchildren authorized under the Supporting Grandparents Raising Grandchildren Act ( P.L. 115-196 ). In addition, the conference report on the FY2019 LHHS omnibus called for a $5 million (+40.1%) increase under Aging Network Support Activities for a new Care Corps grants program. Care Corps grants are intended to support public agencies and nonprofits in placing volunteers to provide nonmedical care to help family caregivers, seniors, and individuals with disabilities to maintain independence."], "subsections": []}]}, {"section_title": "Restrictions Related to Certain Controversial Issues", "paragraphs": ["Annual LHHS appropriations measures regularly contain broad restrictions related to certain controversial issues. For instance, annual LHHS appropriations acts commonly include provisions limiting the use of federal funds for abortions, the use of human embryos for research, needle exchange programs, and gun control advocacy. ", "Abortions: Since FY1977, annual LHHS appropriations acts have included provisions limiting the circumstances under which LHHS funds (including Medicaid funds) may be used to pay for abortions. Early versions of these provisions applied only to HHS, but since FY1994 most provisions have applied to the entire LHHS bill. Under current provisions, (1) abortions may be funded only when the life of the mother is endangered or in cases of rape or incest; (2) funds may not be used to buy a managed care package that includes abortion coverage, except in cases of rape, incest, or endangerment; and (3) federal programs and state and local governments that receive LHHS funding are prohibited from discriminating against health care entities that do not provide or pay for abortions or abortion services. The FY2019 omnibus retained these existing restrictions (\u00c2\u00a7\u00c2\u00a7506 and 507). In addition, the House committee bill proposed a new provision that was not enacted (\u00c2\u00a7534) based on the Conscience Protection Act ( H.R. 644 , 115 th Congress). Among other things, this provision would have amended the Public Health Service Act to generally prevent federal, state, and local governments from penalizing or discriminating against health care providers who choose not to perform, pay for, or sponsor coverage of abortions. However, the provision was not included in the LHHS omnibus.", "Human Embryo Research: Since FY1996, annual LHHS appropriations have included a provision prohibiting any LHHS funds (including NIH funds) from being used to create human embryos for research purposes or for research in which human embryos are destroyed. The FY2019 omnibus retained these existing restrictions (\u00c2\u00a7508). ", "Needle Exchange Programs: Since FY1990, annual LHHS appropriations have generally included a provision prohibiting any LHHS funds from being used for needle exchange programs (i.e., programs in which sterile needles or syringes are made available to injection drug users in exchange for used needles or syringes to mitigate the spread of related infections, such as Hepatitis and HIV/AIDS). Starting in FY2016, the provision was modified to allow funds to be used for needle exchange programs under the following conditions: (1) federal funds may not be used to purchase the needles, but may be used for other aspects of such programs; (2) the state or local jurisdiction must demonstrate, in consultation with CDC, that they are experiencing, or at risk for, a significant increase in hepatitis infections or an HIV outbreak due to injection drug use; and (3) the program must be operating in accordance with state and local law. The FY2019 omnibus retained these existing restrictions and conditions (\u00c2\u00a7529).", "Gun Control: Since FY1997, annual LHHS appropriations have included provisions prohibiting the use of certain funds for activities that advocate or promote gun control. Early versions of these provisions applied only to CDC; since FY2012, annual appropriations acts also have included HHS-specific restrictions, in addition to restrictions that apply to all LHHS funds (including funds transferred from the PPHF). The FY2019 omnibus retained these existing restrictions (\u00c2\u00a7210 [HHS] and \u00c2\u00a7503(c) [all LHHS, plus PPHF transfers]). ", "Restrictions on ACA Implementation: Since FY2011, annual LHHS appropriations have included provisions limiting or altering the ability of HHS to implement various aspects of the ACA. The content and scope of these provisions has evolved over time. The FY2019 House committee bill contained two provisions related to this topic that were not included in the FY2018 omnibus. First, the FY2019 House committee bill (\u00c2\u00a7528) would have prohibited any funds appropriated in the bill from being used for health insurance \"navigator\" programs required by Section 1311 of the ACA. (Navigators conduct public education activities to help consumers and small businesses make informed decisions about insurance.) Further, the House committee bill would have prohibited LHHS appropriations from being used to \"implement, administer, enforce, or further\" any provision of the ACA, with limited exceptions (\u00c2\u00a7527). The Senate bill did not include comparable provisions. "], "subsections": []}]}, {"section_title": "Department of Education (ED)", "paragraphs": ["Note that amounts in this section are based on regular LHHS appropriations only. They do not include mandatory funds provided outside of the annual appropriations process (e.g., direct appropriations for the Federal Direct Student Loan program and the mandatory portion of the Federal Pell Grant program). Amounts are rounded to the nearest million or billion (as labeled). The dollar and percentage changes discussed are based on unrounded amounts. For consistency with source materials, amounts do not reflect sequestration or reestimates of mandatory spending programs, where applicable. "], "subsections": [{"section_title": "About ED", "paragraphs": ["Federal policymakers established the U.S. Department of Education (ED) in 1980. Its mission is to \"promote student achievement and preparation for global competitiveness by fostering educational excellence and ensuring equal access.\" Typically, about three-quarters of ED's discretionary appropriations go either to local educational agencies\u00e2\u0080\u0094which primarily use the funds to provide educational and related services for economically disadvantaged students and students with disabilities\u00e2\u0080\u0094or to low-income postsecondary students in the form of Pell Grants, which help pay for college. The remainder of ED's discretionary budget provides for a wide range of activities, including (but not limited to) support for minority-serving institutions; educational research; and career, technical, and adult education.", "The federal government provides roughly 7% of overall funding for elementary and secondary education in the United States. The majority of school funding\u00e2\u0080\u0094about 83%\u00e2\u0080\u0094comes from states and local districts, which have primary responsibility for the provision of elementary and secondary education. With regard to higher education, the federal government provided roughly 61% of undergraduate and graduate student aid in academic year (AY) 2017-2018."], "subsections": []}, {"section_title": "FY2019 ED Appropriations Overview", "paragraphs": [" Table 8 displays FY2019 discretionary and mandatory ED budget authority provided and proposed, along with FY2018 enacted levels. Discretionary funds represent the majority of ED's annual appropriations, accounting for roughly 95% of the FY2018 and FY2019 enacted levels. The FY2019 enacted discretionary ED appropriations were 0.8% higher than FY2018 levels. Proposed discretionary ED appropriations for FY2019 compared to FY2018 would have decreased under the President's budget (-10.8%) and increased slightly under the Senate floor and House committee bills (+0.8 and +0.2, respectively). "], "subsections": []}, {"section_title": "Selected ED Highlights", "paragraphs": ["The following sections highlight FY2019 appropriations for selected ED accounts and programs. Table 9 tracks funding levels for major ED budget and appropriations accounts."], "subsections": [{"section_title": "Career and Technical Education", "paragraphs": ["The FY2019 LHHS omnibus appropriated nearly $1.3 billion for career and technical education, a 5.8% increase from the FY2018 level of $1.2 billion. The President's budget requested approximately $1.1 billion for CTE. The Senate bill would have kept CTE funding at the FY2018 level, whereas the House committee bill would have appropriated just over $1.3 billion. ", "The Carl D. Perkins Career and Technical Education Act (Perkins Act) is the primary federal law aimed at developing and supporting career and technical education (CTE) programs at the secondary and postsecondary educational levels. Recipients of Perkins funds are required to use those funds for a variety of purposes that help CTE students attain technical skills and earn an industry-recognized credential, certificate, or a postsecondary degree.", "Prior to the 115 th Congress, the Perkins Act had most recently been reauthorized in 2006 by the Carl D. Perkins Career and Technical Education Act of 2006 (Perkins IV; P.L. 109-270 ). In 2018, the Perkins Act was comprehensively reauthorized once again through the passage of the Strengthening Career and Technical Education for the 21 st Century Act (Perkins V; P.L. 115-224 ). Perkins V was signed into law by President Trump on July 31, 2018, and went into effect on July 1, 2019. "], "subsections": []}, {"section_title": "Student Financial Assistance", "paragraphs": ["The Pell Grant program within the Student Financial Assistance account provides need-based financial aid primarily to low-income undergraduate students to help them cover the cost of higher education. Pell Grants are the largest single source of federal grant aid for undergraduate students; they are projected to provide approximately $30 billion in aid to roughly 7.6 million undergraduate students in the 2019-2020 award year. The FY2019 enacted discretionary appropriation of $22.5 billion provided level funding compared to FY2018. The President's budget, the Senate bill, and the House committee bill all proposed level funding.", "The FY2019 LHHS omnibus increased the discretionary maximum Pell Grant award level to $5,135, which is $100 higher than the FY2018 level. The Senate bill recommended that same amount. The House committee bill did not recommend an increase. The President's budget, which was released before the FY2018 appropriations were finalized, requested the same discretionary maximum Pell Grant award level as in FY2017: $4,860. ", "The total maximum Pell Grant award is the sum of the discretionary maximum award level and the mandatory add-on award level. The discretionary award program costs may be funded through (1) annual discretionary appropriations; (2) a permanent, definite mandatory appropriation; and (3) the Pell Grant program surplus. The mandatory add-on award program costs are funded by a permanent, indefinite mandatory appropriation. Both mandatory appropriation sources are provided outside the annual appropriations process, are authorized by and funded in the Higher Education Act (HEA), and do not appear in Table 9 .", "As a result of Pell Grant award rules established in the HEA, the increase in the discretionary maximum Pell Grant award level increases FY2019 program costs, assuming no other changes. In order to pay for the estimated increase in FY2019 mandatory add-on award program costs, the LHHS omnibus reduced the FY2019 definite mandatory appropriation from $1.409 billion to $1.370 billion (\u00c2\u00a7311). The Senate bill would have reduced the FY2019 definite mandatory appropriation by the same amount, while the House committee bill would not have reduced it. (The President's budget also proposed a reduction in the FY2019 definite mandatory appropriation, but that reduction was to fund a policy proposal that was subsequently implemented by the FY2018 appropriations act.)", "The FY2019 LHHS omnibus implemented another provision related to the Pell Grant program surplus: it rescinded $600 million of the surplus, which offset the cost of appropriations in the act. "], "subsections": []}, {"section_title": "Free Application for Federal Student Aid (FAFSA)", "paragraphs": ["ED collects and processes information from prospective postsecondary students to determine eligibility for federal loans, grants, and other types of financial aid using the Free Application for Federal Student Aid (FAFSA). Through the FAFSA, students provide information on income, assets, and other characteristics. The Higher Education Act (HEA) permits student information from the FAFSA to be shared with state agencies and institutions of higher education to help determine federal and nonfederal aid. ", "The FY2019 LHHS omnibus included a general provision authorizing institutions of higher education to share, with the applicant's explicit written consent, information collected from the FAFSA with a scholarship granting organization or an organization assisting the applicant in applying for and receiving federal, state, local, or tribal assistance (\u00c2\u00a7312). The omnibus prohibits organizations that receive such information from selling or otherwise sharing it. The omnibus specifies that this provision is to remain in effect until Title IV of the HEA is reauthorized. "], "subsections": []}]}]}, {"section_title": "Related Agencies", "paragraphs": ["Note that all amounts in this section are based on regular LHHS appropriations only; they do not include funds provided outside of the annual appropriations process (e.g., mandatory appropriations for Social Security benefit payments). All amounts in this section are rounded to the nearest million or billion (as labeled). The dollar changes and percentage changes in the text are based on unrounded amounts. For consistency with source materials, amounts do not reflect sequestration or reestimates of mandatory spending programs, where applicable."], "subsections": [{"section_title": "FY2019 Related Agencies Appropriations Overview", "paragraphs": [" Table 10 displays FY2019 proposed and enacted funding levels for LHHS related agencies, along with FY2018 enacted levels. In general, discretionary funds constitute about 20% of total appropriations for LHHS related agencies each year. The FY2019 omnibus increased discretionary appropriations for related agencies by about 0.1% compared to FY2018. The President's budget and the House committee bill would have decreased discretionary appropriations for related agencies by about 14.0% and 2.2%, respectively, while the Senate-passed bill would have increased such appropriations by 0.5%.", "The largest share of funding appropriated to related agencies in the LHHS bill consistently goes to the Social Security Administration (SSA). When taking into account both mandatory and discretionary funding, SSA usually represents roughly 97% of total appropriations to related agencies in the LHHS bill. The bulk of mandatory funding provided to SSA from the LHHS bill supports the Supplemental Security Income (SSI) program, which provides means-tested cash assistance to disabled adults and children and to seniors aged 65 or older. ", "When looking exclusively at discretionary funding, SSA received 84.7% of discretionary appropriations for LHHS related agencies in the FY2019 LHHS omnibus. After SSA, the next-largest related agency in terms of appropriations is usually the Corporation for National and Community Service (CNCS), which accounted for about 1.5% of total appropriations and 7.1% of discretionary appropriations to LHHS related agencies in FY2019. Typically, each of the remaining related agencies receives less than $1 billion from the annual LHHS appropriations bill. For more information, see Table 11 ."], "subsections": []}, {"section_title": "Selected Related Agencies Highlights", "paragraphs": ["The following sections highlight FY2019 appropriations issues for selected related agencies. Table 11 tracks funding levels for these related agencies."], "subsections": [{"section_title": "SSA Limitation on Administrative Expenses (LAE)", "paragraphs": ["The SSA LAE account consists mainly of funds that are used by SSA to administer the Social Security and SSI programs and to support CMS in administering portions of Medicare. The account also contains funds that are specifically set aside for certain program integrity activities, such as continuing disability reviews (CDRs) and SSI nonmedical redeterminations. The FY2019 LHHS omnibus provided $12.9 billion to the LAE account, which was a slight increase (+$2 million) over the FY2018 enacted level. The President's request would have provided about $482 million less (-3.7%) for the LAE account relative to FY2018. The Senate-passed bill would have increased LAE funding by $77 million (+0.6%) compared to FY2018, while the House committee bill would have decreased LAE funding by $318 million (-2.5%). ", "Of the $12.9 billion provided to the LAE account for FY2019, nearly $1.7 billion (13.1%) was dedicated to program integrity activities. The program integrity portion of the LAE account included $273 million in \"base\" funding subject to the discretionary spending caps established by the Budget Control Act of 2011, as well as additional funding that was effectively exempt from those caps and subject to an annual limit (\"cap adjustment funding\"; see Appendix A for further information). The FY2019 LHHS omnibus provided $1.4 billion in cap adjustment funding, which was the maximum amount permitted for FY2019. However, because federal law allowed more cap adjustment funding for FY2018 than for FY2019, the combined amount of program integrity funding enacted for FY2019 was $52 million (-3.0%) less than the combined amount enacted for FY2018. All three proposals would have also provided the maximum amount of cap adjustment funding permitted for FY2019. "], "subsections": []}, {"section_title": "Corporation for National and Community Service", "paragraphs": ["The CNCS is an independent federal agency that administers a variety of national and community service programs, such as AmeriCorps and the National Senior Volunteer Corps. The FY2019 LHHS omnibus provided $1.1 billion in total CNCS funding, a $19 million (+1.8%) increase over the FY2018 enacted level. The FY2019 President's budget had requested $123 million (-88.5%) for CNCS, noting that these funds would be used to execute an orderly shutdown of CNCS operations, with the agency's closure slated to be complete by the end of FY2019. Both the House committee bill and the Senate-passed bill declined the President's proposal, with the House proposing to retain CNCS funding at its FY2018 level of $1.1 billion (0.0%), while the Senate-passed bill would have modestly reduced agency funding by $6 million (-0.5%)."], "subsections": []}, {"section_title": "National Labor Relations Board (NLRB)", "paragraphs": ["The NLRB is an independent board that enforces provisions in the National Labor Relations Act (NLRA). The FY2019 LHHS omnibus maintained the FY2018 funding levels for the NLRB of $274 million. The FY2019 President's budget and the House committee bill would have decreased funding for the NLRB by $25 million (-9.2%) and by $13 million (-4.7%), respectively, while the Senate-passed bill would have provided the same amount as FY2018.", "The FY2019 LHHS omnibus retained a provision that has been included in the LHHS bill since FY2012 that prohibits any funds appropriated to the NLRB in the bill, or any prior appropriations act, from being used to issue a directive or regulation to provide employees a means of voting through any electronic method in an election determining representation for collective bargaining (\u00c2\u00a7407). The FY2019 LHHS omnibus, however, did not include two NRLB-related provisions proposed by the House committee bill that would have", "prohibited any funds made available by the bill from being used to issue, enforce, or litigate any administrative action related to changing the interpretation or application of the \"joint employer\" standard in effect as of January 1, 2014 (\u00c2\u00a7408 of H.R. 6470 ) ; and prohibited any funds made available by the bill from being used to enforce the NLRA against any Indian tribe (\u00c2\u00a7409 of H.R. 6470 ).", "Appendix A. Budget Enforcement Activities", "The framework for budget enforcement under the congressional budget process has both statutory and procedural elements. The statutory elements include the discretionary spending limits and mandatory spending sequester derived from the Budget Control Act of 2011 (BCA; P.L. 112-25 ) and the Balanced Budget and Emergency Deficit Control Act of 1985 (BBEDCA; P.L. 99-177 ). The procedural elements are primarily associated with the budget resolution and limit both total discretionary spending and spending under the jurisdiction of each appropriations subcommittee. ", "Readers should note that the statutory budget enforcement requirements that apply to FY2019 discretionary spending under the BCA were altered the prior fiscal year by the Bipartisan Budget Act of 2018 (BBA 2018; P.L. 115-123 ), which was enacted on February 9, 2018. This law increased the defense and nondefense discretionary spending limits for FY2018 and FY2019, and extended mandatory spending sequestration through FY2027. ", "Budget Control Act and Sequestration", "The BCA provides budget process mechanisms to reduce mandatory spending and further reduce discretionary spending over an extended period. For mandatory spending, reductions are to occur through sequestration in each of fiscal years between FY2013-FY2027. For discretionary spending, reductions occurred through sequestration in FY2013, but are to be achieved through lower discretionary spending limits for each of the fiscal years between FY2014-FY2021. The BCA does not require a sequester of discretionary spending in FY2014-FY2021 unless one or both of the statutory discretionary spending limits (defense and nondefense) is breached. Only discretionary spending subject to a given spending limit is affected by a breach of that limit, and the LHHS bill only includes funding in the nondefense category. ", "FY2019", "On February 12, 2018, concurrent with the release of the President's budget, President Trump issued the required FY2019 sequestration order, calling for nonexempt mandatory spending to be reduced on October 1, 2018. The Office of Management and Budget (OMB) estimated that the FY2019 sequestration percentages would equal 2% of nonexempt Medicare spending and 6.2% of other nonexempt nondefense mandatory spending, for a total reduction of $19 billion in FY2019. (OMB also estimated an 8.7% reduction, totaling $809 million, in nonexempt defense mandatory spending, which does not affect LHHS funds.) ", "With regard to discretionary spending, the FY2019 statutory spending limits as specified in BBA 2018 were $647 billion for defense spending and $597 billion for nondefense spending; each of these levels was $18 billion more than their respective FY2018 limits. Once all annual appropriations acts were enacted for FY2019 and allowable adjustments to the spending limits were made, OMB determined that those appropriations did not violate either the defense or the nondefense limit.", "Cap Adjustments, Exemptions, and Special Rules", "The BCA allows for certain adjustments to the discretionary spending limits for FY2012-FY2021. For LHHS, the BCA as originally enacted allowed increases to the nondefense limit (up to a point) to accommodate new budget authority for specified program integrity initiatives at HHS and the Social Security Administration (SSA). The Bipartisan Budget Act of 2015 ( P.L. 114-74 ) amended the list of SSA activities that may be covered by this \"cap adjustment\" to include costs associated with work-related continuing disability reviews, Cooperative Disability Investigations, and fraud prosecutions by Special Assistant U.S. Attorneys. The Bipartisan Budget Act of 2015 also revised the amount of the allowable SSA adjustment amounts to be more generous in FY2017-FY2019 compared to what was previously allowed, but less generous in FY2021.", "The BBA 2018 added a new cap adjustment that also involves a LHHS activity. This new cap adjustment allows increases to the nondefense limit (up to a point) to accommodate new budget authority for the DOL to help fund the reemployment services and eligibility assessments conducted by the states related to unemployment compensation. ", "Separate from these cap adjustments, the 21 st Century Cures Act (Cures Act, P.L. 114-255 ), which was enacted on December 13, 2016, included additional budget enforcement procedures related to the discretionary spending limits. These procedures originally applied to two accounts within the scope of the LHHS bill: the NIH Innovation Account and the Account for the State Response to the Opioid Abuse Crisis. For FY2019, the NIH Innovation Account was the only LHHS funding to be subject to the Cures Act budget enforcement procedures. ", "The Cures Act created the NIH Innovation and State Response to the Opioid Abuse Crisis accounts and authorized appropriations from them for specific fiscal years (FY2017-FY2026 for the NIH Innovation Account and FY2017-FY2018 for the Account for the State Response to the Opioid Abuse Crisis). The Cures Act further provided that subsequent discretionary appropriations from these accounts (up to the amounts authorized for each fiscal year) are to be subtracted from any cost estimates provided for purposes of budget controls. The Cures Act ensured that appropriations from these accounts will not count against any spending limits, such as the statutory discretionary spending limits imposed by the BCA; that is, the amounts appropriated from these accounts will be considered to be outside those limits. ", "An additional set of statutory exemptions and special rules that apply to sequestration are relevant for the LHHS bill. The LHHS bill contains several programs that are exempt from sequestration, including Medicaid, payments to health care trust funds, Supplemental Security Income, Special Benefits for Disabled Coal Miners, retirement pay and medical benefits for commissioned Public Health Service officers, foster care and adoption assistance, and certain family support payments. The LHHS bill also contains several programs that are subject to special rules under sequestration, such as unemployment compensation, certain student loans, health centers, and portions of Medicare.", "Budget Resolution and 302(b) Suballocations", "The procedural elements of budget enforcement generally stem from requirements under the Congressional Budget Act of 1974 ( P.L. 93-44 ) that are associated with the adoption of an annual budget resolution. Through this process, the Appropriations Committee in each chamber receives a procedural limit on the total amount of discretionary budget authority for the upcoming fiscal year, referred to as a 302(a) allocation. The Appropriations Committee subsequently divides this allocation among its 12 subcommittees. These subcommittee-level spending limits 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 its jurisdiction, effectively acting as a cap on each of the 12 regular appropriations bills. Enforcement of the 302(a) allocation and 302(b) suballocations occurs through points of order.", "For the FY2019 appropriations cycle, the House and the Senate did not adopt a budget resolution. Instead, the House and Senate both used authority granted in the BBA 2018 for the Budget Committee chair in each chamber to file enforceable budgetary levels for FY2019. In line with these budgetary levels, the House Appropriations Committee adopted its initial suballocations on May 10, 2018 ( H.Rept. 115-710 ), while the Senate Appropriations Committee adopted its initial suballocations on May 24, 2018 ( S.Rept. 115-260 ). (As the FY2019 appropriations process was underway, both committees periodically updated these suballocations to align them with changing congressional priorities.)", "For current-year LHHS discretionary funding, Table A-1 displays FY2018 enacted levels, the House and the Senate FY2019 initial suballocations, and enacted FY2019 LHHS appropriations. The table shows that the House initially would have kept regular LHHS appropriations at a flat level compared to the prior fiscal year, whereas the Senate would have increased those appropriations by about $2.1 billion relative to FY2018 (+1%). Ultimately, final enacted appropriations were a little less than $1 billion higher than the prior fiscal year. ", "The table also displays funding for which adjustments may be made to the discretionary spending limits under the BCA, including funding for certain LHHS program integrity activities and emergency requirements, where applicable. The \"adjusted appropriations\" total includes this funding.", "Note that compliance with discretionary spending allocations is evaluated based on budget authority available in the current fiscal year , adjusted for scorekeeping by CBO. As such, totals shown in this table may not be comparable to other totals shown in this report. Current-year budget authority totals exclude advance appropriations for future years, but include advance appropriations from prior years that become available in the current year. (Advance appropriations are provided to selected LHHS accounts, generally in order to manage specific planning concerns and ensure continuity of operations at the start of a new fiscal year.)", "Current-Year Budget Authority", " Table A-2 displays the total LHHS current-year budget authority, by title. The amounts shown in this table reflect total budget authority available for obligation in the fiscal year, regardless of the year in which it was first appropriated. Amounts in the FY2018 enacted column include FY2018 budget authority provided by the FY2016 omnibus ( P.L. 114-113 ) and FY2017 omnibus ( P.L. 115-31 ). Similarly, the FY2019 President's budget, House committee, Senate floor, and enacted columns include FY2019 budget authority provided by the FY2017 and FY2018 omnibuses. (For a comparable table showing total budget authority in the bill, rather than current-year budget authority, see Table 2 in this report.) As mentioned above, it is current-year budget authority (adjusted for scorekeeping by CBO) that is used to determine compliance with discretionary spending allocations. ", "Appendix B. Senate Floor Amendments Offered to H.R. 6157", "While the Senate committee-reported version of the LHHS bill ( S. 3158 ) did not receive floor consideration, the text of this measure (with minor alterations) was included in a different appropriations vehicle ( H.R. 6157 ) that was amended on the floor and passed by the Senate on August 23, 2018. Prior to Senate floor consideration, H.R. 6157 contained the text of the FY2019 Department of Defense appropriations only. On the floor, that bill was amended into an omnibus measure that contained appropriations for both the Department of Defense and LHHS. ", "The Senate proceeded to consider H.R. 6157 by unanimous consent on August 16, 2018. At that point, Senator Shelby (the chair of the Senate Appropriations Committee) offered an amendment in the nature of a substitute containing Department of Defense appropriations in Division A, and LHHS appropriations in Division B ( S.Amdt. 3695 ). On August 21, a cloture motion on the measure was presented in the Senate, but a subsequent unanimous consent agreement provided, among other matters, for the Senate to adopt a manager's package comprised of dozens of amendments to the substitute amendment, adopt the substitute amendment (as amended), and then proceed to a vote without the need to invoke cloture. The Senate passed the bill, as amended, by a vote of 85-7.", "Over the course of Senate floor consideration, a total of 32 LHHS amendments were offered to Division B. Twenty-nine of these were adopted by unanimous consent en bloc as part of the manager's package. Of the three that received recorded votes, two were adopted and one was rejected. These amendments and their dispositions are listed in Table B-1 below. "], "subsections": []}]}]}]}}
{"id": "R46309", "title": "Effects of COVID-19 on the Federal Research and Development Enterprise", "released_date": "2020-04-10T00:00:00", "summary": ["The federal research and development (R&D) enterprise is a large and complex system that includes government facilities and employees as well as federally funded work in industry, academia, and the nonprofit sector. The nation's response to the Coronavirus Disease 2019 (COVID-19) pandemic is affecting the federal R&D enterprise, and the federal government and others are trying to address those effects. A number of congressional and other policy issues may arise as the situation develops.", "Implementation of social distancing guidelines had led many laboratories and R&D projects to close. Where possible, researchers have continued to work remotely, but R&D often requires physical access to unique facilities and equipment. Institutions have faced decisions about which projects\u00e2\u0080\u0094such as research on COVID-19 itself\u00e2\u0080\u0094are sufficiently essential that they should continue.", "Many scientific and technical conferences have also been cancelled, with consequences for the sharing and advancement of knowledge and for the conference organizers, which are now often faced with substantial cancellation costs. In some cases, conferences are continuing virtually.", "Even for continuing R&D projects, there may be efficiency and quality impacts, additional costs, and challenges such as the closure of suppliers and service providers. Some resources dedicated to ongoing R&D are also being redirected toward work focused on COVID-19.", "Other potential effects of the pandemic include unplanned costs for the shutdown and restarting of R&D projects that are suspended, delays in the availability of major new R&D equipment, the loss of anticipated revenues by some federal R&D agencies, uncertainty about the future stability of federal R&D funding if COVID-19 affects the government's fiscal situation, and impacts on the graduation schedules and career prospects of students, postdoctoral researchers, and early-career faculty whose research is interrupted.", "Federal actions to date to address these challenges include a wide variety of government-wide and agency-specific policy changes to accommodate the R&D community's needs and provide agencies with additional flexibilities, as well as legislation enacted by Congress to provide supplemental funding for R&D and for R&D organizations affected by closures, and to provide new authorities to agencies.", "Groups representing R&D organizations in industry and academia have proposed a variety of additional steps, including further increases in funding for the federal R&D agencies, more flexibility in the expenses that can be paid using federal R&D awards, and other support for R&D organizations in the form of loans, grants, and tax changes.", "As the near-term and long-term effects of COVID-19 on the nation's R&D enterprise become more apparent, Congress may seek to monitor those effects, develop a deeper understanding of their implications, and consider whether additional legislative actions are necessary."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["The federal research and development (R&D) enterprise is a large and complex system, spanning the country, that includes government facilities and employees as well as federally funded work in industry, academia, and the nonprofit sector. In FY2019, federal agencies obligated an estimated $141.5 billion for R&D, including $39.6 billion for intramural R&D and $101.9 billion for extramural R&D. Its work is essential to U.S. economic prosperity, national security, health care, and other national priorities. It also plays a substantial direct role in the U.S. economy. Today, the operation of the system is being affected profoundly by the Coronavirus Disease 2019 (COVID-19) pandemic and the national response to it.", "This report provides an overview of how the nation's response to COVID-19 is affecting the federal R&D enterprise, how the federal government and others are addressing those effects, and issues that may arise as the situation develops. The scope of this report is limited to the effects of COVID-19 on federally funded R&D. It does not attempt to address effects on the broader U.S. R&D enterprise, the majority of which is funded by and conducted in the private sector. In addition, it does not attempt to address the federal R&D resources now being focused on understanding the science of COVID-19, developing tests and treatments, and otherwise applying R&D to address the pandemic.", "As the scientific, government, and public understanding of COVID-19 has grown, the national response has evolved, and it is likely to continue to evolve. The scope, scale, and dynamism of responses by the federal government, state and local governments, and the private sector are too great to catalog fully in this report. Rather, the report highlights key effects and issues of concern and provides examples of agency actions. "], "subsections": []}, {"section_title": "Effects on R&D Institutions and Projects", "paragraphs": ["Faced with the global spread of a contagious and deadly virus, U.S. institutions have taken a number of extraordinary measures. One key response has been social distancing\u00e2\u0080\u0094limiting close contacts between individuals in order to reduce opportunities for transmission of the virus. This response has led to the closure of many businesses, schools, government offices, and other institutions. Where possible, these institutions have continued to operate via telework and e-learning. Research and development activities, however, often require physical access to unique facilities and equipment. As a result, many R&D organizations\u00e2\u0080\u0094including federal facilities as well as industrial and academic laboratories supported by federal funds\u00e2\u0080\u0094have closed or curtailed operations."], "subsections": [{"section_title": "Closure of Laboratories and Laboratory Activities", "paragraphs": ["Closures of R&D facilities and social distancing requirements for researchers depend less on coordinated national policies than on the independent decisions of individual agencies, universities, and other institutions. For example, the National Aeronautics and Space Administration (NASA) decides the status of each of its centers separately, based on local conditions, according to a four-stage response framework. At the same time, some NASA centers may be at stage 3 (open to mission-essential personnel) while others are at stage 4 (closed except to protect life and critical infrastructure). During March 2020, NASA made the decision to move to stage 3 and subsequently from stage 3 to stage 4 at different times for different centers. Actions by state or local governments may be a factor in the decisions of some facilities. For example, shutdowns at Department of Energy (DOE) laboratories in California and Illinois followed statewide social distancing orders issued by the governors of those states. ", "In some cases, specific R&D activities may be allowed to continue, despite closures, if an institution determines that the work is sufficiently important, that suspending it would be too costly or disruptive, or that it can be conducted remotely. For example, most employees of the National Institute of Standards and Technology (NIST) are on telework with limited access to the laboratories' physical facilities and only with supervisor approval. However, some NIST employees continue to work onsite to provide certain limited essential services, including the sale of Standard Reference Materials, calibration of precision instruments, distribution of time and frequency signals, and maintenance of the National Vulnerability Database.", "Many of these considerations for laboratories and other research facilities apply similarly to research conducted in the field."], "subsections": [{"section_title": "Identification of Essential and Critical R&D Activities", "paragraphs": ["The policies guiding these decisions often use terms like essential or critical . In the NASA response framework, for example, mission-essential work includes work needed for the safety of human life or protection of property and \"work that must be performed to maintain mission/project operations or schedules and cannot be performed remotely/virtually.\" The Office of Management and Budget (OMB) has provided guidance to agencies about what travel (including travel to conduct R&D or to attend scientific meetings) should be considered mission-critical, based on a list of 11 factors, such as whether the travel is for activities essential to national security or whether it is time-sensitive.", "Presidential Policy Directive 21 (PPD-21) identifies the defense industrial base, including defense R&D, as one of 16 critical infrastructure sectors. A memorandum from the Under Secretary of Defense for Acquisition and Sustainment identifies development and testing by Department of Defense (DOD) contractors as an essential part of this critical infrastructure. Some state emergency orders have included exemptions for facilities and organizations that are considered critical infrastructure, suggesting that defense-related R&D may be allowed to continue even when other R&D is suspended. In general, however, state and local authorities\u00e2\u0080\u0094not federal agencies\u00e2\u0080\u0094assume responsibility for adjudicating claims of criticality by private-sector organizations.", "In some cases, the determination of whether an R&D project should continue is based on how severely it would be affected by being suspended. For example, the relative positions of Earth and Mars in their respective orbits typically create a narrow launch window for NASA science missions to Mars. If a mission misses that window, it is likely to be delayed 26 months until the next launch window. While NASA has suspended a number of other major projects, it is continuing work on the Mars 2020 mission, scheduled for a launch window that opens in mid-July 2020. Other time-sensitive projects may include experiments that require continuity of data collection or that involve caring for live animals or maintaining cell cultures.", "University decisions about essential research functions may be informed by local conditions, federal funding agency directives, ethical considerations about the well-being of human subjects and animals in discontinued or scaled-back research, and each university's own risk management decisionmaking. Columbia University has defined essential functions to include, in addition to COVID-19 research and ongoing clinical trials, \"the maintenance of equipment, laboratory resources, critical animal resources, and cell lines.\" Johns Hopkins University has defined three tiers of its clinical research. The top, essential, tier includes trials of potential COVID-19 treatments and trials that address certain acute, life-threatening conditions such as Huntington's disease. Only trials in this tier can continue normally, including enrolling new patients. According to the Association of Public and Land-Grant Universities, research functions that some (but not necessarily all) universities have identified as essential include", "COVID-19 related research; activity that if discontinued would generate significant data and sample loss; activity that if discontinued would pose a safety hazard; activity that maintains critical equipment or core facilities; activity that maintains critical samples, reagents, and materials; activity that maintains animal populations; activity that maintains critically needed plant populations, tissue cultures, or other living organisms; activity in support of essential human subjects research; and clinical trial activity that if discontinued would adversely affect patient care.", "Not all time-sensitive research is necessarily considered essential, however. One example of an activity that is generally not being treated as essential is agricultural research that depends on an annual planting cycle or an animal maturation cycle."], "subsections": []}, {"section_title": "Continuing R&D Remotely", "paragraphs": ["Whether researchers can continue to make progress on a particular R&D project remotely may also depend on the nature of the project. For example, researchers working remotely may be able to perform scientific computations, engage in modeling and simulation, design experimental hardware, analyze data already obtained, and prepare journal articles. In contrast, handling physical and biological samples, caring for laboratory animals, and building or operating specialized equipment likely require a researcher to be present in the laboratory. Research involving human subjects may be interrupted if those subjects are unavailable because of social distancing. In some cases, the extent to which research activities can continue may depend on the duration of the disruption; for example, analyzing data and preparing results for publication may no longer be an option once all existing data have been analyzed and written up. These factors may affect different disciplines differently; for example, research in mathematics, computer science, and theoretical physics may be more amenable to remote working than research in agricultural science, geology, or microbiology."], "subsections": []}]}, {"section_title": "Cancellation of Conferences", "paragraphs": ["Travel restrictions and social distancing requirements have also resulted in the cancellation of numerous scientific and technical conferences. The person-to-person interactions\u00e2\u0080\u0094both formal and informal\u00e2\u0080\u0094that take place at such conferences are an instrumental mechanism for knowledge sharing, peer feedback, the ideation of new research, technology transfer, and interactions between researchers and agency program managers. Other mechanisms, such as scientific papers and electronic communications, also offer other important ways to exchange knowledge and share ideas, but they lack some of the interactive advantages of in-person conferences. Accordingly, the cancellation of scientific and technical conferences may have a detrimental impact on advances in knowledge and the benefits that emerge from such knowledge. These adverse effects apply both to federal scientists and engineers and to their counterparts in academia and the private sector who work on federally funded R&D.", "The impact of cancelling conferences may be particularly significant in certain fields. In computer science, for example, papers published in conference proceedings may be as influential as journal articles, to an extent that is rare in other fields.", "In some cases, conferences are continuing virtually with attempts to facilitate informal interactions that would normally take place in person. For example, the annual Conference on Retroviruses and Opportunistic Infections, originally scheduled to be held in Boston in March 2020, was converted to a virtual conference, with prerecorded presentations, live webcasts, and electronic poster presentations. In April 2020, the annual International Conference on Learning Representations (devoted to machine learning) plans to present papers using prerecorded videos and offer online opportunities to ask questions of speakers, see questions and answers from other participants, take part in discussion groups, meet with sponsors, and join groups for networking.", "Scientific and technical conferences are often run by professional societies and other organizations that rely on them for revenue. Cancellations are likely to result in financial losses for these organizations as expected revenues are not realized and cancellation costs associated with the use of hotels, meeting facilities, and other services are incurred. Such losses can be considerable for the organizations involved. The cancellation of the March 2020 annual meeting of the American Physical Society cost the society about $7 million, about 12% of its typical annual revenues; other societies have reported cancellation losses that wiped out essentially all of their financial reserves. Federal agencies also run scientific and technical conferences. While these conferences are not generally a significant source of agency revenues, some agencies are likely to face one-time cancellation costs that may be considerable.", "Researchers planning to attend conferences that have been cancelled may have incurred nonrefundable travel or lodging expenses. Some agencies have determined that awardees may charge these costs to their research awards despite regulations that would normally prohibit doing so.", "Some of the same considerations apply to other types of meetings. For example, some DOE scientific user facilities have cancelled or postponed their annual user meetings, limiting opportunities for facility outreach and user engagement."], "subsections": []}, {"section_title": "Effects on R&D That Is Not Suspended", "paragraphs": [], "subsections": [{"section_title": "Efficiency and Quality", "paragraphs": ["Even when R&D projects can continue, restrictions may affect efficiency or quality. According to one space policy expert, \"The enforced separation of people working on the same or related tasks will inject delays and miscommunications. It will certainly be an obstacle to schedules and success in activities like preparing for a launch or building an exploratory spacecraft.\" A U.S. researcher working remotely on a particle physics experiment has described the inefficiency of guiding an on-site technician through installing a piece of electronics: \"I've spent probably 3 hours over the past 24 on Skype with somebody\u00e2\u0080\u00a6. He says something then points the webcam at what we're looking at, then we talk a little bit more.\" Others note the need to devote time to emergency planning."], "subsections": []}, {"section_title": "Additional Costs", "paragraphs": ["Institutions may incur unplanned expenses even for R&D that is not suspended. For example, they may need additional computing and networking equipment and services to accommodate researchers working remotely. Janitorial expenses may increase at facilities that remain open, if additional cleaning is required to guard against the spread of infection. Prices may increase for materials and equipment that are in short supply."], "subsections": []}, {"section_title": "Disrupted Access to Supplies and Services", "paragraphs": ["R&D at institutions that remain open may also be affected by disruptions to the supply of materials and equipment or by closures at collaborating research institutions. Laboratories have reported shortages of widely used supplies, such as RNA-extraction kits, swabs, and personal protective equipment, that are in high demand for COVID-19 testing and patient care. Basic laboratory supplies such as reagents and pipette tips, when still available, may be on backorder or available only at multiples of the usual price. Depending on the duration of the pandemic, NASA's plans for a 2021 launch of the James Webb Space Telescope may be jeopardized. It is to be launched from a European Space Agency spaceport in Kourou, French Guiana, but France suspended launch campaigns from the Guiana Space Center on March 16, 2020, due to the COVID-19 pandemic."], "subsections": []}, {"section_title": "Shifts in R&D Focus", "paragraphs": ["In some cases, agencies and researchers are shifting their research focus to COVID-19 related topics. The National Institutes of Health (NIH) has issued several funding opportunity announcements for researchers to submit competitive revisions or seek supplemental funding for existing projects, in order to redirect their research efforts to COVID-19. Other agencies that are typically less focused on health research have also sought to shift their R&D priorities. For example, light source user facilities operated by the DOE Office of Basic Energy Sciences are used for structural biology research in partnership with NIH and universities. According to DOE, these facilities are making \"every effort to give [COVID-19] researchers priority access\" and \"want to ensure they are doing everything possible to enable research into this virus and the search for an effective vaccine or other treatment.\" More generally, DOE wrote an open letter to the research community asking for \"ideas about how DOE and the National Labs might contribute resources to help address COVID-19 through science and technology efforts and collaborations.\" A newly formed consortium of agencies, universities, and companies is making supercomputing resources available \"to accelerate understanding of the COVID-19 virus and the development of treatments and vaccines.\" The NASA Earth Science program has provided guidance to \"investigators looking to reprioritize currently-funded efforts\" and noted that an existing funding opportunity could support \"investigations making innovative use of NASA satellite data to address \u00e2\u0080\u00a6 impacts of the COVID-19 pandemic.\" NIST has announced a new grant opportunity under the Manufacturing USA National Emergency Assistance Program to support rapid, high-impact projects that support the nation's response to the COVID-19 pandemic. Up to $2 million is to be available to Manufacturing USA institutes under the program."], "subsections": []}]}, {"section_title": "Other Financial and Infrastructural Effects", "paragraphs": [], "subsections": [{"section_title": "Shutdown and Restart Costs", "paragraphs": ["Suspending research may result in additional costs for activities such as animal care, maintenance of cell cultures and biological samples, and safe storage of hazardous materials. Restarting research, when conditions permit, may also incur costs for staff time and supplies to bring experimental equipment back to operational status, reestablish laboratory animal populations, or replace masks and other personal protective equipment that was donated to hospitals and first responders during the pandemic. The extent to which these costs may be covered out of existing federal research awards is not yet clear. "], "subsections": []}, {"section_title": "Auditing Issues", "paragraphs": ["There may be future auditing issues for federally funded research that is redirected to address COVID-19, or for federally funded researchers who incurred costs to shut down and restart their projects or donated personal protective gear that had been paid for out of grant funds. Even if these changes had the support of the federal funding agency, the time-sensitive circumstances may mean that not all approvals were adequately documented to satisfy auditing requirements. The flexibilities provided to funding agencies in these circumstances (see \" Federal Actions to Date \" below) may not yet be aligned with corresponding flexibilities for accounting and auditing."], "subsections": []}, {"section_title": "University-Based Shared Research Infrastructure", "paragraphs": ["There are specific challenges for shared university research infrastructure, including core facilities\u00e2\u0080\u0094specialized laboratories with unique instruments and capabilities that provide services to an institution's researchers \u00e2\u0080\u0094as well as animal care facilities and clinical trial infrastructure. These facilities are typically supported mostly through user fees, often paid from federal funds that are supporting a user's research. They are widely used: one university reported that a majority of its grant-funded research in FY2019 relied in part on core facilities, while a majority of its NIH-funded research made use of shared animal care facilities. Much of this infrastructure has closed, creating uncertainty about funding for shutdown and restart costs as well as continuity of pay for technical staff. Some facilities remain open to support research that is continuing, but open facilities may face their own financial challenges in continuing to operate, as the fees that usually support them are likely to be reduced by the suspension of research by some of their users."], "subsections": []}, {"section_title": "Delayed Availability of Major R&D Equipment", "paragraphs": ["Planned R&D may be delayed by interruptions in the development or manufacturing of major equipment. NASA, for example, has suspended work on the James Webb Space Telescope, which had been scheduled for launch in March 2021, and on the Space Launch System rocket and Orion crew capsule, needed for its plans to land humans on the Moon in 2024."], "subsections": []}, {"section_title": "Loss of Revenues by Federal R&D Agencies", "paragraphs": ["Some federal laboratories engage in R&D activities under a Work for Others (WFO) or similar agreement. Using a WFO, a federal agency, federal laboratory, or company can pay to have R&D conducted by another federal laboratory. This often enables access to unique facilities, equipment, and personnel. While the cancellation or suspension of WFO projects due to the COVID-19 response may reduce costs to the sponsoring organization, it may simultaneously reduce revenue that would otherwise have supported the staff, facilities, and equipment of the laboratory that was to perform the work.", "According to the Government Accountability Office, from FY2008 through FY2012, DOE performed about $2 billion worth of R&D annually under WFO agreements, accounting for 13%-17% of total DOE laboratory revenues. Most of the work (88%) was performed for other federal agencies. NIST conducted $94.4 million in research, development and supporting services for other federal agencies in FY2019.", "NIST certifies and provides more than 1,300 Standard Reference Materials (SRM) that are used to perform instrument calibrations, verify the accuracy of specific measurements, and support the development of new measurement methods. NIST SRMs are used by industry, academia, and government to facilitate commerce and trade and advance R&D. NIST revenues from SRMs in FY2019 were $21.8 million. NIST also provides calibration and testing services for industry, academia, and government; its FY2019 revenues for these services were $33.5 million. As of the date of this report, NIST continues to provide SRM and calibration services, but it is unclear how long NIST will be able to provide these services if the pandemic continues for an extended period."], "subsections": []}, {"section_title": "Future Availability of Federal Funding", "paragraphs": ["As some agencies and researchers shift their R&D priorities to respond to the COVID-19 pandemic, the funding available for R&D on other topics may be reduced, at least in the near term. More generally, the federal funding needed for the national response to COVID-19 may reduce the overall federal resources available for R&D. While supplemental appropriations already enacted include additional funds for R&D and institutions that conduct R&D, increased federal spending to address the pandemic, coupled with decreased federal revenue associated with potential economic contraction, may lead to a future fiscal environment with constrained spending across the government. These outcomes may not be clear for some time, however, and may depend on a host of independent decisions by agencies and Congress."], "subsections": []}]}, {"section_title": "Impact on Students, Postdoctoral Researchers, and Early-Career Faculty", "paragraphs": ["University research typically involves postdoctoral researchers (postdocs), graduate students, and sometimes undergraduate students in addition to faculty members. Even if the nature of a particular research project qualifies it to continue despite COVID-19, many universities are limiting the continued participation of postdocs and students. Cancelled or suspended research may be of particular concern to these groups. Continuing to work remotely may also be more challenging for students, postdocs, and early-career faculty who have families, as their children are more likely to be young than those of more senior researchers. Failing to complete a project on time may delay the completion of a degree or make it difficult to demonstrate research success when applying for a job or seeking tenure. Cancelled conferences are also a particular concern for postdocs, students, and other early-career researchers, who often rely on conferences to meet more senior scientists, present their work, and find jobs. In some circumstances, there may be uncertainty about continuity of pay for students employed as research assistants or teaching assistants.", "Because there are disparities between disciplines in the extent to which research can continue while working remotely, students and postdocs in different disciplines may find disparities in how their careers are affected. Disparities may also arise between students and postdocs whose experiments can be suspended and restarted and those whose experiments must simply be abandoned and begun afresh.", "To the extent that research disruptions, delayed graduation, or difficulty obtaining in-field employment discourage students and early-career researchers from continuing in their field of research, those outcomes could create challenges for the future science and engineering workforce. Continued travel restrictions may also affect the enrollment of foreign science and engineering students in U.S. universities in the 2020-2021 academic year. As well as potentially creating financial challenges for some universities, reduced international enrollment could have long-term workforce consequences, given that many foreign students in science and engineering remain in the United States after graduation."], "subsections": []}]}, {"section_title": "Federal Actions to Date", "paragraphs": ["On March 9, 2020, OMB authorized federal agencies to provide certain short-term relief from administrative, financial management, and auditing requirements for grantees involved in research related to COVID-19. On March 18, four organizations representing universities and other research organizations wrote to OMB requesting the expansion of these flexibilities to all research grants. On March 19, OMB provided relief for \"an expanded scope of recipients affected by the loss of operational capacity and increased costs due to the COVID-19 crisis.\" ", "The Appendix summarizes OMB's government-wide administrative actions, extensions of authorities, and guidance. It also provides a link to a compilation maintained by the Council on Governmental Relations (COGR) of guidance from federal agencies, academic institutions, and other organizations, as well as frequently asked questions about how federal agencies that fund R&D are implementing the OMB-directed flexibilities.", "Some agencies have compiled special guidance for awardees. For example, an NIH webpage provides information on changes to proposal submission and award management, updated policies on clinical trials and animal welfare, and revised procedures for peer review. The National Science Foundation (NSF) has issued guidance for contractors operating NSF-funded facilities. COGR has compiled links to such guidance, sorted by agency, along with links to institutional guidance from a long list of individual universities.", "Some agencies have extended the due dates for research proposals, announced that they will accommodate applications received late, or reduced the institutional approvals required for an initial proposal. While these accommodations provide additional flexibility for researchers, delays in receiving and acting on proposals may result in delays in issuing awards.", "Some agencies have announced accommodations for existing awardees, such as no-cost extensions of awards, extensions of financial and other reporting deadlines, changes to the allowability of cancellation fees and costs resulting from the pausing and restarting of research, and allowing the continued payment of salaries and benefits out of grant funds. While these steps give researchers additional flexibility, they may create challenges once research resumes. For example, grant funds that have been spent on cancellation fees, activities required for the suspension of research, or researcher salaries while research is suspended necessarily reduce the balance of funds subsequently available to complete a research project. No-cost extensions extend an award's completion date; they do not provide additional funds to cover costs incurred because of delays. ", "Congress has already enacted some legislation with R&D-related funding and provisions in response to the COVID-19 pandemic. For example", "The Coronavirus Preparedness and Response Supplemental Appropriations Act, 2020 ( P.L. 116-123 ), enacted on March 6, 2020, appropriated $836 million in supplemental funding for NIH, with additional transferrable amounts from other accounts. Some of the $3.1 billion appropriated to the Public Health and Social Services Emergency Fund may also be made available to the Biomedical Advanced Research and Development Authority for the development of COVID-19 medical countermeasures, such as therapies and vaccines. The Coronavirus Aid, Relief, and Economic Security (CARES) Act ( P.L. 116-136 ), enacted on March 27, 2020, appropriated more than $1 billion in supplemental funding for R&D. Most of this total was for research on COVID-19 itself, including $945 million for NIH, $415 million for research, development, testing, and evaluation (RDT&E) in the DOD Defense Health Program, and smaller sums for several other agencies. The act also provided funding to several R&D agencies to offset unanticipated costs arising from the pandemic. For example, NASA received $60 million to cover the costs of mission delays caused by center closures, while the U.S. Forest Service received $3 million to reestablish experiments affected by travel restrictions. Section 18004 of the CARES Act established a $14 billion Higher Education Emergency Relief Fund for colleges and universities. At least half of this total must be allocated for emergency financial aid grants to students. It is not yet clear how much, if any, will be available to address issues directly related to R&D. Section 3610 of the CARES Act authorized federal agencies to reimburse contractors for \"any paid leave, including sick leave, a contractor provides to keep its employees or subcontractors in a ready state\" when they are unable to work on-site due to facility closures and telework is not an option. Although this provision is not specifically directed at R&D, it could be significant for agencies such as DOE and NASA whose R&D facilities are staffed with numerous contractor employees. Section 12004 of the CARES Act authorized the Patent and Trademark Office to temporarily suspend, modify, adjust, or waive timing deadlines under the Patent Act and the Trademark Act during the COVID-19 emergency period. Section 13006 of the CARES Act gave DOD additional flexibility in the use of its other transaction authority for the development of prototypes related to COVID-19. The CARES Act provided NIST laboratories with $6 million in additional funding, including $5 million to support and accelerate measurement science related to viral testing and biomanufacturing; $50 million for the NIST Manufacturing Extension Partnership program to help companies across the country transform operations in support of COVID-19 related needs and to foster development of COVID-19 related supply chains; and $10 million for research related activities at Manufacturing USA's National Institute for Innovation in Manufacturing Biopharmaceuticals (NIIMBL). The CARES Act provided $2.25 million for the Environmental Protection Agency's Science and Technology account to prevent, prepare for, and respond to coronavirus, domestically or internationally, including $1.5 million for research on methods to reduce the risks from environmental transmission of coronavirus via contaminated surfaces or materials. The CARES Act provided NSF with $76 million \"to prevent, prepare for, and respond to coronavirus, domestically or internationally, including to fund research grants and other necessary expenses.\" The Senate Appropriations Committee summary notes that $75 million is to support NSF's RAPID grant mechanism, \"which will support near real-time research at the cellular, physiological, and ecological levels to better understand coronavirus,\" and $1 million is to assist in the administration of these grants.", "In the House, Speaker Pelosi has announced plans for a special committee to oversee the federal response to COVID-19, including the spending of supplemental funding provided under the above legislation."], "subsections": []}, {"section_title": "Potential Additional Federal Actions", "paragraphs": ["Several organizations from industry and academia have put forward policy recommendations to address R&D-related challenges resulting from COVID-19. Congress may also seek to take additional actions through legislation or oversight.", "The Commercial Spaceflight Federation, an industry group, has asked Congress for legislation directing the Internal Revenue Service to provide for immediate refunds of accumulated research and experimentation (R&E) tax credits. It argues that this would allow \"continued innovation through R&D reinvestment.\" In many cases, under current law, companies that qualify for this credit are unable to use the full amount immediately because of insufficient tax liability or other factors; unused amounts can be carried forward for up to 20 years. The credit only applies to R&D funded by a company itself, but companies that conduct R&D with federal funding often fund their own R&D as well.", "Organizations representing research universities, medical schools, and teaching hospitals have asked Congress, among other steps, to give research institutions receiving federal funding additional flexibility to cover researcher salaries and benefits while their institutions are affected, to provide $13 billion in additional extramural research funding, and to allow agencies to reprogram any supplemental funds that are not spent within a year for new awards. The latter proposal, they argued, \"could have a stimulative effect and help to address the nation's research competitiveness.\"", "Noting that \"many scientific societies have been and will continue to be adversely impacted by meeting and conference cancellations as a result of COVID-19,\" the Federation of American Societies for Experimental Biology has asked Congress to include measures such as zero-interest loans and grant to associations, nonprofit organizations, and other tax-exempt organizations in future economic stimulus packages and supplemental appropriations measures.", "While OMB has issued guidance to agencies regarding administrative flexibilities and other issues, as described above, agency implementation of that guidance has varied. Representatives of the Association of American Universities have indicated that more uniform implementation by federal research funding agencies would reduce administrative burdens and uncertainties for award recipients.", "Congress may consider a variety of other legislative and oversight actions, either in the near term while the pandemic continues or retrospectively to improve the response to future crises. These might include", "seeking a clearer understanding of how federally funded R&D is being affected by COVID-19, through hearings, mandates for agency reports, support for academic studies, or mandates for reports by organizations such as the Government Accountability Office or the National Academies of Sciences, Engineering, and Medicine; directing OMB, the Office of Science and Technology Policy, or an interagency task force to develop more uniform guidance on how to identify essential or critical R&D activities, with recommendations for implementing that guidance at government laboratories, universities, companies, and other institutions involved in intramural and extramural federally funded R&D; and establishing a post-pandemic task force on the federal R&D enterprise to examine lessons learned from the COVID-19 pandemic and recommend policy changes to improve the national response of the R&D community in the event of future pandemics."], "subsections": []}, {"section_title": "Concluding Observations", "paragraphs": ["Over time, the near-term and long-term effects of COVID-19 on the nation's R&D enterprise will become more apparent. Congress may monitor these effects and develop a deeper understanding of their implications for the wide-ranging national policy objectives that motivate federal spending on R&D\u00e2\u0080\u0094such as national security, economic growth and job creation, public health, transportation, and agriculture\u00e2\u0080\u0094as well as the implications for the U.S. science and engineering workforce and the education of the next generation of American scientists, engineers, and technicians. ", "The effects of COVID-19 on federally funded R&D, as described in this report, may adversely affect the pace of R&D generally and the pace of the innovation that builds on it. The national and global economic consequences may have implications for economic growth, the workforce, the development of new products and services, and the competitiveness of companies and nations. The extent of these effects cannot yet be known and may not be fully understood for years.", "An optimist might hope for a silver lining. If the R&D community learns to overcome some of the challenges of remote working and travel restrictions, that might create future opportunities, after the COVID-19 pandemic is over, for increased workplace flexibilities and reduced travel expenses. The pandemic has also highlighted issues that Congress may seek to address in the future, such as additional R&D on cybersecurity for virtual collaboration and rural access to broadband internet for off-site work during emergencies."], "subsections": [{"section_title": "Appendix. Government-wide COVID-19 Related Guidance and Other Resources", "paragraphs": ["Office of Management and Budget Memoranda", "OMB has issued a number of memoranda related to the COVID-19 response. These memoranda are written broadly, not focused solely on federal R&D activities. Nevertheless, elements included in these memoranda have relevant information regarding the operation of the federal R&D enterprise. The memoranda are downloadable from the OMB website.", "As of the date of this report, COVID-19-related memoranda include ", "M-20-19 Harnessing Technology to Support Mission Continuity (March 22, 2020)", "Directs agencies to utilize technology to the greatest extent practicable to support mission continuity. The memorandum addresses a set of frequently asked questions to provide additional guidance and assist the IT workforce as it addresses impacts of COVID-19.", "https://www.whitehouse.gov/wp-content/uploads/2020/03/M-20-19.pdf", "M-20-18 Managing Federal Contract Performance Issues Associated with the Novel Coronavirus (COVID-19) (March 20, 2020) ", "Identifies certain agency actions to relieve short-term administrative, financial management, and audit requirements under 2 C.F.R. \u00c2\u00a7200, Uniform Administrative Requirements, Cost P rinciples and Audit Requirements for Federal Awards , without compromising federal financial assistance accountability requirements. These include (1) flexibility with System for Award Management (SAM) registration/recertification for applicants, (2) waiver for Notice of Funding Opportunities (NOFOs) publication, (3) pre-award costs, (4) no-cost extensions on expiring awards, (5) abbreviated noncompetitive continuation requests, (6) expenditure of award funds for salaries and other project activities, (7) waivers from prior approval requirements, (8) exemption of certain procurement requirements, (9) extension of financial and other reporting, and (10) extension of Single Audit submission.", "In accordance with 2 CFR \u00c2\u00a7200.102, \"Exceptions,\" OMB is allowing federal agencies to grant class exceptions in instances where the agency has determined that the purpose of the federal awards is to support the continued research and services necessary to carry out the emergency response related to COVID-19. The memorandum also reminds agencies of existing flexibility to issue exceptions on a case-by-case basis in accordance with 2 CFR \u00c2\u00a7200.102, \"Exceptions.\"", "https://www.whitehouse.gov/wp-content/uploads/2020/03/M-20-18.pdf", "M-20-17 Administrative Relief for Recipients and Applicants of Federal Financial Assistance Directly Impacted by the Novel Coronavirus (COVID-19) Due to Loss of Operations\u00c2\u00a0(March 19, 2020) ", "Identifies steps to help ensure safety while maintaining continued contract performance in support of agency missions, wherever possible and consistent with the precautions issued by the Centers for Disease Control and Prevention (CDC). Agencies are urged to", "work with their contractors, if they have not already, to evaluate and maximize telework for contractor employees, wherever possible; be flexible in providing extensions to performance dates if telework or other flexible work solutions, such as virtual work environments, are not possible, or if a contractor is unable to perform in a timely manner due to quarantining, social distancing, or other COVID-19 related interruptions; take into consideration whether it is beneficial to keep skilled professionals or key personnel in a mobile-ready state for activities the agency deems critical to national security or other high priorities; consider whether contracts that possess capabilities for addressing impending requirements such as security, logistics, or other functions may be retooled for pandemic response consistent with the scope of the contract; and leverage the special emergency procurement authorities authorized in connection with the President's emergency declaration under Section 501(b) of the Robert T. Stafford Disaster Relief and Emergency Assistance Act, 42 U.S.C. \u00c2\u00a7\u00c2\u00a75121-5207 (the Stafford Act).", "The memorandum also provides answers to a set of frequently asked questions intended to assist the acquisition workforce as it addresses impacts due to COVID-19.", "https://www.whitehouse.gov/wp-content/uploads/2020/03/M-20-17.pdf", "M-20-16 Federal Agency Operational Alignment to Slow the Spread of Coronavirus COVID-19 (March 17, 2020) ", "Provided agencies with initial guidance, consistent with the President's Coronavirus Guidelines for America, directing agencies to take appropriate steps to prioritize all resources to slow the transmission of COVID-19, while ensuring mission-critical activities continue. The memorandum further required all agencies, within 48 hours, to review, modify, and begin implementing risk-based policies and procedures based on CDC guidance and legal advice, as necessary to safeguard the health and safety of federal workplaces to restrict the transmission of COVID-19.", "https://www.whitehouse.gov/wp-content/uploads/2020/03/M-20-16.pdf", "M-20-15 Updated Guidance for the National Capital Region on Telework Flexibilities in Response to Coronavirus (March 15, 2020) ", "Directs agencies to offer maximum telework flexibilities to all current telework-eligible employees, consistent with operational needs of the departments and agencies as determined by their heads, as well as to use all existing authorities to offer telework to additional employees, to the extent their work could be telework enabled.", "https://www.whitehouse.gov/wp-content/uploads/2020/03/M20-15-Telework-Guidance-OMB.pdf", "M-20-14 Updated Federal Travel Guidance in Response to Coronavirus (March 14, 2020) ", "Advises that \"only mission-critical travel is recommended at this time.\" The memorandum also authorizes executive branch agency heads to determine what travel meets the mission-critical threshold and provides a list of factors to be considered in this determination.", "https://www.whitehouse.gov/wp-content/uploads/2020/03/M-20-14-travel-guidance-OMB-1.pdf", "M-20-13 Updated Guidance on Telework Flexibilities in Response to Coronavirus (March 12, 2020) ", "Encourages agencies to maximize telework flexibilities (1) to eligible workers within those populations that the CDC identified as being at higher risk for serious complications from COVID-19 (e.g., older adults and individuals who have chronic health conditions, such as high blood pressure, heart disease, diabetes, lung disease, compromised immune systems); and (2) to CDC-identified special populations including pregnant women. Further directs that agencies do not need to require certification by a medical professional, and may accept self-identification by employees in one of these populations. The memorandum also encourages agencies to consult with local public health officials and the CDC about whether to extend telework flexibilities more broadly to all eligible teleworkers in areas in which either such local officials or the CDC have determined there is community spread. Agencies are also encouraged to extend telework flexibilities more broadly to accommodate state and local responses to the outbreak, including, but not limited to, school closures. Agencies are encouraged to consider the mission-critical nature of employees' work in determining telework and leave decisions.", "https://www.whitehouse.gov/wp-content/uploads/2020/03/M-20-13.pdf", "M-20-11 Administrative Relief for Recipients and Applicants of Federal Financial Assistance Directly Impacted by the Novel Coronavirus (COVID-19) (March 9, 2020) ", "Identifies and authorizes agency actions to relieve short-term administrative, financial management and audit requirements under 2 C.F.R. \u00c2\u00a7200, Uniform Administrative Requirements, Cost P rinciples and Audit Requirements for Federal Awards , without compromising federal financial assistance accountability requirements. Notes that OMB is allowing federal agencies to grant class exceptions in instances where the agency has determined that the purpose of the federal awards is to support the continued research and services necessary to carry out the emergency response related to COVID-19. The memorandum also notes agencies' existing flexibility to issue exceptions on a case-by-case basis in accordance with 2 C.F.R. \u00c2\u00a7200.102, \"Exceptions.\"", "https://www.whitehouse.gov/wp-content/uploads/2020/03/M-20-11.pdf", "Compilation of Other Resources", "The Council on Governmental Relations maintains an online compilation of guidance from federal agencies, academic institutions, and other organizations, as well as responses to frequently asked questions about how federal agencies that fund R&D are implementing the OMB-directed flexibilities. See \"Institutional and Agency Responses to COVID-19 and Additional Resources,\" https://www.cogr.edu/institutional-and-agency-responses-covid-19-and-additional-resources ."], "subsections": []}]}]}}
{"id": "R45981", "title": "Dam Safety Overview and the Federal Role", "released_date": "2019-10-24T00:00:00", "summary": ["Dams provide various services, including flood control, hydroelectric power, recreation, navigation, and water supply, but they require maintenance, and sometimes rehabilitation and repair, to ensure public and economic safety. Dam failure or incidents can endanger lives and property, as well as result in loss of services provided by the dam. Federal government agencies reported owning 3% of the more than 90,000 dams listed in the National Inventory of Dams (NID), including some of the largest dams in the United States. The majority of NID-listed dams are owned by private entities, nonfederal governments, and public utilities. Although states have regulatory authority for over 69% of NID-listed dams, the federal government plays a key role in dam safety policies for both federal and nonfederal dams.", "Congress has expressed interest in dam safety over several decades, often prompted by critical events such as the 2017 near failure of Oroville Dam's spillway in California. Dam failures in the 1970s that resulted in the loss of life and billions of dollars of property damage spurred Congress and the executive branch to establish the NID, the National Dam Safety Program (NDSP), and other federal activities. These programs and activities have increased safety inspections, emergency planning, rehabilitation, and repair. Since the late 1990s, some federal agency dam safety programs have shifted from a standards-based approach to a risk-management approach. A risk-management approach seeks to mitigate failure of dams and related structures through inspection programs, risk reduction measures, and rehabilitation and repair, and it prioritizes structures whose failure would pose the greatest threat to life and property.", "Responsibility for dam safety is distributed among federal agencies, nonfederal agencies, and private dam owners. The Federal Emergency Management Agency's (FEMA's) NDSP facilitates collaboration among these stakeholders. The National Dam Safety Program Act, as amended (Section 215 of the Water Resources Development Act of 1996; P.L. 104-303 ; 33 U.S.C. \u00c2\u00a7\u00c2\u00a7467f et seq.), authorizes the NDSP at $13.4 million annually. In FY2019, Congress appropriated $9.2 million for the program, which provided training and $6.8 million in state grants, among other activities.", "The federal government is directly responsible for maintaining the safety of federally owned dams. The U.S. Army Corps of Engineers (USACE) and the Department of the Interior's Bureau of Reclamation own 42% of federal dams, including many large dams. The remaining federal dams are owned by the Forest Service, Bureau of Land Management, Fish and Wildlife Service, Department of Defense, Bureau of Indian Affairs, Tennessee Valley Authority, Department of Energy, and International Boundary and Water Commission. Congress has provided various authorities for these agencies to conduct dam safety activities, rehabilitation, and repair.", "Congress also has enacted legislation authorizing the federal government to regulate or rehabilitate and repair certain nonfederal dams. A number of federal agencies regulate dams associated with hydropower projects, mining activities, and nuclear facilities and materials. Selected nonfederal dams may be eligible for rehabilitation and repair assistance from the Natural Resources Conservation Service, USACE, and FEMA. For example, in 2016, the Water Infrastructure Improvements for the Nation Act (WIIN Act; P.L. 114-322 ) authorized FEMA to administer a high hazard dam rehabilitation grant program to provide funding assistance for the repair, removal, or rehabilitation of certain nonfederal dams.", "Congress may consider how to address the structural integrity of dam infrastructure and mitigate the risk of dam safety incidents, either within a broader infrastructure investment effort or as an exclusive area of interest. Congress may reexamine the federal role for dam safety, while considering that most of the nation's dams are nonfederal. Congress may reevaluate the level and allocation of appropriations to federal dam safety programs, rehabilitation and repair for federal dams, and financial assistance for nonfederal dam safety programs and dams. In addition, Congress may maintain or amend policies for disclosure of dam safety information when considering the federal role in both providing dam safety risk and response information to the public while also maintaining security of these structures."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["Dams may provide flood control, hydroelectric power, recreation, navigation, and water supply. Dams also entail financial costs for construction, operation and maintenance (O&M), rehabilitation (i.e., bringing a dam up to current safety standards), and repair, and they often result in environmental c hange (e.g., alteration of riverine habitat). Federal government agencies reported owning 3% of the more than 90,000 dams in the National Inventory of Dams (NID), including some of the country's largest dams (e.g., the Bureau of Reclamation's Hoover Dam in Nevada is 730 feet tall with storage capacity of over 30 million acre-feet of water). Most dams in the United States are owned by private entities, state or local governments, or public utilities. ", "Dams may pose a potential safety threat to populations living downstream of dams and populations surrounding associated reservoirs. As dams age, they can deteriorate, which also may pose a potential safety threat. The risks of dam deterioration may be amplified by lack of maintenance, misoperation, development in surrounding areas, natural hazards (e.g., weather and seismic activity), and security threats. Structural failure of dams may threaten public safety, local and regional economies, and the environment, as well as cause the loss of services provided by a dam. ", "In recent years, several dam safety incidents have highlighted the public safety risks posed by the failure of dams and related facilities. From 2015 to 2018, over 100 dams breached in North Carolina and South Carolina due to record flooding. In 2017, the near failure of Oroville Dam's spillway in California resulted in a precautionary evacuation of approximately 200,000 people and more than $1.1 billion in emergency response and repair. In 2018, California began to expedite inspections of dams and associated spillway structures. ", "Congress has expressed an interest in dam safety over several decades, often prompted by destructive events. Dam failures in the 1970s resulting in the loss of life and billions of dollars in property damage prompted Congress and the executive branch to establish the NID, the National Dam Safety Program (NDSP), and other federal activities related to dam safety. Following terrorist attacks on September 11, 2001, the federal government focused on dam security and the potential for acts of terrorism at major dam sites. As dams age and the population density near many dams increases, attention has turned to mitigating dam failure through dam inspection programs, rehabilitation, and repair, in addition to preventing and preparing for emergencies.", "This report provides an overview of dam safety and associated activities in the United States, highlighting the federal role in dam safety. The primary federal agencies involved in these activities include the Federal Emergency Management Agency (FEMA), the U.S. Army Corps of Engineers (USACE), and the Bureau of Reclamation (Reclamation). The report also discusses potential issues for Congress, such as the federal role for nonfederal dam safety; federal funding for dam safety programs, rehabilitation, and repair; and public awareness of dam safety risks. The report does not discuss in detail emergency response from a dam incident, dam building and removal policies, or state dam safety programs."], "subsections": []}, {"section_title": "Safety of Dams in the United States", "paragraphs": ["Dam safety generally focuses on preventing dam failure and incidents\u00e2\u0080\u0094episodes that, without intervention, likely would have resulted in dam failure. Challenges to dam safety include aging and inadequately constructed dams, frequent or severe floods (for instance, due to climate change), misoperation of dams, and dam security. The risks associated with dam misoperation and failure also may increase as populations and development encroach upstream and downstream of some dams. Safe operation and proper maintenance of dams and associated structures is fundamental for dam safety. In addition, routine inspections by dam owners and regulators determine a dam's hazard potential (see \" Hazard Potential \" below), condition (see \" Condition Assessment \" below), and possible needs for rehabilitation and repair. "], "subsections": [{"section_title": "Dams by the Numbers", "paragraphs": ["The NID, a database of dams in the United States, is maintained by USACE. For the purposes of inclusion in the NID, a dam is defined as any artificial barrier that has the ability to impound water, wastewater, or any liquid-borne material, for the purpose of storage or control of water that (1) is at least 25 feet in height with a storage capacity of more than 15 acre-feet, (2) is greater than 6 feet in height with a storage capacity of at least 50 acre-feet, or (3) poses a significant threat to human life or property should it fail (i.e., high or significant hazard dams). Thousands of dams do not meet these criteria; therefore, they are not included in the NID. ", "The most common type of dam is an earthen dam (see Figure 1 ), which is made from natural soil or rock or from mining waste materials. Other dams include concrete dams, tailings dams (i.e., dams that store mining byproducts), overflow dams (i.e., dams regulating downstream flow), and dikes (i.e., dams constructed at a low point of a reservoir of water). This report does not cover levees, which are manmade structures designed to control water movement along a landscape.", "The nation's dams were constructed for various purposes: recreation, flood control, ecological (e.g., fisheries management), irrigation and water supply, hydroelectric, mining, navigation, and others (see Figure 2 ). Dams may serve multiple purposes. Dams were built to engineering and construction standards and regulations corresponding to the time of their construction. Over half of the dams with age reported in the NID were built over fifty years ago. Some dams, including older dams, may not meet current dam safety standards, which have evolved as scientific data and engineering have improved over time. "], "subsections": []}, {"section_title": "Dam Failures and Incidents", "paragraphs": ["Dam failures and incidents\u00e2\u0080\u0094episodes that, without intervention, likely would have resulted in dam failure\u00e2\u0080\u0094may occur for various reasons. Potential causes include floods that may exceed design capacity; faulty design or construction; misoperation or inadequate operation plans; overtopping, with water spilling over the top of the dam; foundation defects, including settlement and slope instability; cracking caused by movements, including seismic activity; inadequate maintenance and upkeep; and piping, when seepage through a dam forms holes in the dam (see Figure 3 ). ", "Engineers and organizations have documented dam failure in an ad hoc manner for decades. Some report over 1,600 dam failures resulting in approximately 3,500 casualties in the United States since the middle of the 19 th century, although these numbers are difficult to confirm. Many failures are of spillways and small dams, which may result in limited flooding and downstream impact compared to large dam failures. Flooding that occurs when a dam is breached may not result in life safety consequences or significant property damage. Still, some dam failures have resulted in notable disasters in the United States.", "Between 2000 and 2019, states reported 294 failures and 537 nonfailure dam safety incidents. Recent events\u00e2\u0080\u0094including the evacuation of approximately 200,000 people in California in 2017 due to structural deficiencies of the spillway at Oroville Dam\u00e2\u0080\u0094have led to increased attention on the condition of dams and the federal role in dam safety. From 2015 to 2018, extreme storms (including Hurricane Matthew) and subsequent flooding resulted in over 100 dam breaches in North Carolina and South Carolina. Floods resulting from hurricanes in 2017 also filled reservoirs of dams to record levels in some regions: for example, USACE's Addicks and Barker Dams in the Houston, TX, area; the Puerto Rico Electric Power Authority's Guajataca Dam in Puerto Rico; and USACE's Herbert Hoover Dike in Florida. The March 2006 failure of the private Kaloko Dam in Hawaii killed seven people, and the 2003 failure of the Upper Peninsula Power Company's Silver Lake Dam in Michigan caused more than $100 million in damage."], "subsections": []}, {"section_title": "Hazard Potential", "paragraphs": ["Federal guidelines set out a hazard potential rating to quantify the potential harm associated with a dam's failure or misoperation. As described in Table 1 , the three hazard ratings (low, significant, and high) do not indicate the likelihood of failure; instead, the ratings reflect the amount and type of damage that a failure would cause. Figure 4 depicts the number of dams listed in the NID classified as high hazard in each state; 65% of dams in the NID are classified as low hazard. From 2000 to 2018, thousands of dams were reclassified increasing the number of high hazard dams from 9,921 to 15,629. According to FEMA, the primary factor increasing dams' hazard potential is hazard creep \u00e2\u0080\u0094development upstream and downstream of a dam, especially in the dam failure inundation zone (i.e., downstream areas that would be inundated by water from a possible dam failure). Reclassification from low hazard potential to high or significant hazard potential may trigger more stringent requirements by regulatory agencies, such as increased spillway capacity, structural improvements, more frequent inspections, and creating or updating an emergency action plan (EAP). Some of these requirements may be process and procedure based, and others may require structural changes for existing facilities. "], "subsections": []}, {"section_title": "Condition Assessment", "paragraphs": ["The NID includes condition assessments\u00e2\u0080\u0094assessments of relative dam deficiencies determined from inspections\u00e2\u0080\u0094as reported by federal and state agencies (see Table 2 ). Of the 15,629 high hazard potential dams in the 2018 NID, 63% had satisfactory or fair condition assessment, 15% had a poor or unsatisfactory condition assessment, and 22% were not rated. For dams rated as poor and unsatisfactory, federal agencies and state regulatory agencies may take actions to reduce risk, such as reservoir drawdowns, and may convey updated risk and response procedures to stakeholders. "], "subsections": []}, {"section_title": "Mitigating Risk", "paragraphs": ["In the context of dam safety, risk is comprised of three parts: ", "the likelihood of a triggering event (e.g., flood or earthquake), the likelihood of a dam safety deficiency resulting in adverse structural response (e.g., dam failure or spillway damage), and the magnitude of consequences resulting from the adverse event (e.g., loss of life or economic damages). ", "Preventing dam failure involves proper location, design, and construction of structures, and regular technical inspections, O&M, and rehabilitation and repair of existing structures. Preparing and responding to dam safety concerns may involve community development planning, emergency preparation, and stakeholder awareness. Dam safety policies may address risk by focusing on preventing dam failure while preparing for the consequences if failure occurs."], "subsections": [{"section_title": "Rehabilitation and Repair", "paragraphs": ["Rehabilitation typically consists of bringing a dam up to current safety standards (e.g., increasing spillway capacity, installing modern gates, addressing major structural deficiencies), and repair addresses damage to a structure. Rehabilitation and repair are different from day-to-day O&M. According to a 2019 study by ASDSO, the combined total cost to rehabilitate the nonfederal and federal dams in the NID would exceed $70 billion. The study projected that the cost to rehabilitate high hazard potential dams in the NID would be approximately $3 billion for federal dams and $19 billion for nonfederal dams. Some stakeholders project that funding requirements for dam safety rehabilitation and repair will continue to grow as infrastructure ages, risk awareness progresses, and design standards evolve."], "subsections": []}, {"section_title": "Preparedness", "paragraphs": ["Dam safety processes and products\u00e2\u0080\u0094such as emergency action plans (EAPs) and inundation maps\u00e2\u0080\u0094may support informed decisionmaking to reduce the risk and consequences of dam failures and incidents. An EAP is a formal document that identifies potential emergency conditions at a dam and specifies preplanned actions to minimize property damage and loss of life. EAPs identify the actions and responsibilities of different parties in the event of an emergency, such as the procedures to issue early warning and notification messages to emergency management authorities. EAPs also contain inundation maps to show emergency management authorities the critical areas for action in case of an emergency (see Figure 5 for a map illustration of potential inundation areas due to a dam failure). Many agencies that are responsible for dam oversight require or encourage dam owners to develop EAPs and often oversee emergency response simulations (i.e., tabletop exercises) and field exercises. Requirements for EAPs often focus on high hazard dams. In 2018, the percentage of high hazard potential dams in the United States with EAPs was 74% for federally owned dams and 80% for state-regulated dams.", "Federal agencies have developed tools to assist dam owners and regulators, along with emergency managers and communities, to prepare, monitor, and respond to dam failures and incidents. ", "FEMA's RiskMAP program provides flood maps, tools to assess the risk from flooding, and planning and outreach support to communities for flood risk mitigation. A RiskMAP project may incorporate the potential risk of dam failure or incidents. FEMA's Decision Support System for Water Infrastructure Security (DSS-WISE) Lite allows states to conduct dam failure simulations and human consequence assessments. Using DSS-WISE Lite, FEMA conducted emergency dam-break flood simulation and inundation mapping of 36 dams in Puerto Rico during the response to Hurricane Maria in 2017. DamWatch is a web-based monitoring and informational tool for 11,800 nonfederal flood control dams built with assistance from the U.S. Department of Agriculture. When these dams experience a critical event (e.g., threatening storm systems), essential personnel are alerted via an electronic medium and can implement EAPs if necessary. The U.S. Geological Survey's ShakeCast is a post-earthquake awareness application that notifies responsible parties of dams about the occurrence of a potentially damaging earthquake and its potential impact at dam locations. The responsible parties may use the information to prioritize response, inspection, rehabilitation, and repair of potentially affected dams. "], "subsections": []}]}]}, {"section_title": "Federal Role and Resources for Dam Safety", "paragraphs": ["In addition to owning dams, the federal government is involved in multiple areas of dam safety through legislative and executive actions. Following USACE's publication of the NID in 1975 as authorized by P.L. 92-367, the Interagency Committee on Dam Safety\u00e2\u0080\u0094established by President Jimmy Carter through Executive Order 12148\u00e2\u0080\u0094released safety guidelines for dams regulated by federal agencies in 1979. In 1996, the National Dam Safety Program Act (Section 215 of the Water Resources Development Act of 1996; P.L. 104-303 ) established the National Dam Safety Program, the nation's principal dam safety program, under the direction of FEMA. Congress has reauthorized the NDSP four times and enacted other dam safety programs and activities related to federal and nonfederal dams. A chronology of selected federal dam safety actions is provided in the box below."], "subsections": [{"section_title": "National Dam Safety Program", "paragraphs": ["The NDSP is a federal program established to facilitate collaboration among the various federal agencies, states, and owners with responsibility for dam safety. The NDSP also provides dam safety information resources and training, conducts research and outreach, and supports state dam safety programs with grant assistance. The NDSP does not mandate uniform standards across dam safety programs. Figure 6 shows authorization of appropriations levels for the NDSP and appropriations for the program, including grant funding distributed to states."], "subsections": [{"section_title": "Advisory Bodies of the National Dam Safety Program", "paragraphs": ["The National Dam Safety Review Board (NDSRB) advises FEMA's director on dam safety issues, including the allocation of grants to state dam safety programs. The board consists of five representatives appointed from federal agencies, five state dam safety officials, and one representative from the private sector. The Interagency Committee on Dam Safety (ICODS) serves as a forum for coordination of federal efforts to promote dam safety. ICODS is chaired by FEMA and includes representatives from the Federal Energy Regulatory Commission (FERC); the International Boundary and Water Commission; the Nuclear Regulatory Commission (NRC); the Tennessee Valley Authority; and the Departments of Agriculture, Defense, Energy, the Interior (DOI), and Labor (DOL). "], "subsections": []}, {"section_title": "Assistance to State Dam Safety Programs", "paragraphs": ["Every state (except Alabama) has established a regulatory program for dam safety, as has Puerto Rico. Collectively, these programs have regulatory authority for 69% of the NID dams. State dam safety programs typically include safety evaluations of existing dams, review of plans and specifications for dam construction and major repair work, periodic inspections of construction work on new and existing dams, reviews and approval of EAPs, and activities with local officials and dam owners for emergency preparedness. ", "Funding levels and a lack of state statutory authorities may limit the activities of some state dam safety programs. For example, the Model State Dam Safety Program , a guideline for developing state dam safety programs, recommends one full-time employee (FTE) for every 20 dams regulated by the agency. As of 2019, one state\u00e2\u0080\u0094California\u00e2\u0080\u0094meets this target, with 75 employees and 1,246 regulated dams. Most state dam safety programs reportedly have from two to seven FTEs. In addition, some states\u00e2\u0080\u0094Alabama, Florida, Indiana, Iowa, Kentucky, Vermont, and Wyoming\u00e2\u0080\u0094do not have the authority to require dam owners of high hazard dams to develop EAPs. ", "The National Dam Safety Program Act, as amended (Section 215 of the Water Resources Development Act of 1996; P.L. 104-303 ; 33 U.S.C. \u00c2\u00a7\u00c2\u00a7467f et seq.), authorizes state assistance programs under the NDSP. Two such programs are discussed below (see \" FEMA High Hazard Dam Rehabilitation Grant Program \" for information about FEMA's dam rehabilitation program initiated in FY2019). ", "Grant A ssistance to State Dam Safety Programs . States working toward or meeting minimal requirements as established by the National Dam Safety Program Act are eligible for assistance grants. The objective of these grants is to improve state programs using the Model State Dam Safety Program as a guide. Grant assistance is allocated to state programs via a formula: one-third of funds are distributed equally among states participating in the matching grant program and two-thirds of funds are distributed in proportion to the number of state-regulated dams in the NID for each participating state. Grant funding may be used for training, dam inspections, dam safety awareness workshops and outreach materials, identification of dams in need of repair or removal, development and testing of EAPs, permitting activities, and improved coordination with state emergency preparedness officials. For some state dam safety programs, the grant funds support the salaries of FTEs that conduct these activities. This money is not available for rehabilitation and repair activities. In FY2019, FEMA distributed $6.8 million in dam safety program grants to 49 states and Puerto Rico (ranging from $48,000 to $465,000 per state). ", "Training for State Inspectors . At the request of states, FEMA provides technical training to dam safety inspectors. The training program is available to all states by request, regardless of state participation in the matching grant program."], "subsections": []}, {"section_title": "Progress of the National Dam Safety Program", "paragraphs": ["At the end of each odd-numbered fiscal year, FEMA is to submit to Congress a report describing the NDSP's status, federal agencies' progress at implementing the Federal Guidelines for Dam Safety , progress achieved in dam safety by states participating in the program, and any recommendations for legislation or other actions (33 U.S.C. \u00c2\u00a7\u00e2\u0080\u00af467h). Federal agencies and states provide FEMA with annual program performance assessments on key metrics such as inspections, rehabilitation and repair activities, EAPs, staffing, and budgets. USACE provides summaries and analysis of NID data (e.g., inspections and EAPs) to FEMA.", "Some of the metrics for the dam safety program, such as the percentage of state-regulated high hazard potential dams with EAPs and condition assessments, have shown improvement. The percentage of these dams with EAPs increased from 35% in 1999 to 80% in 2018, and condition assessments of these dams increased from 41% in 2009 to 85% in 2018. The percentage of state-regulated high hazard potential dams inspected has remained relatively stable during the same period\u00e2\u0080\u0094between 85% to 100% dams inspected based on inspection schedules. "], "subsections": []}]}, {"section_title": "Federally Owned Dams", "paragraphs": ["The major federal water resource management agencies, USACE and Reclamation, own 42% of federal dams, including many large dams ( Figure 7 ). The remaining federal dams typically are smaller dams owned by other agencies, including land management agencies (e.g., Fish and Wildlife Service and the Forest Service), the Department of Defense, and the Bureau of Indian Affairs, among others. The federal government is responsible for maintaining dam safety of federally owned dams by performing maintenance, inspections, rehabilitation, and repair work. No single agency regulates all federally owned dams; rather, each federal dam is regulated according to the policies and guidance of the individual federal agency that owns the dam. The Federal Guidelines for Dam Safety provides basic guidance for federal agencies' dam safety programs."], "subsections": [{"section_title": "Inspections, Rehabilitation, and Repair", "paragraphs": ["The Federal Guidelines for Dam Safety recommends that agencies formally inspect each dam that they own at least once every five years; however, some agencies require more frequent inspections and base the frequency of inspections on the dam's hazard potential. Inspections may result in an update of the dam's hazard potential and condition assessment (see Figure 8 for the status of hazard potential and condition assessments of federal dams). Inspections typically are funded through agency O&M budgets. ", "After identifying dam safety deficiencies, federal agencies may undertake risk reduction measures or rehabilitation and repair activities. Agencies may not have funding available to immediately undertake all nonurgent rehabilitation and repair; rather, they generally prioritize their rehabilitation and repair investments based on various forms of assessment and schedule these activities in conjunction with the budget process. At some agencies, dam rehabilitation and repair needs must compete for funding with other construction projects (e.g., buildings and levees). ", "Federal agencies traditionally approached dam safety through a deterministic, standards-based approach by mainly considering structural integrity to withstand maximum probable floods and maximum credible earthquakes. Many agencies with large dam portfolios (e.g., Reclamation and USACE) have since moved from this solely standards-based approach for their dam safety programs to a portfolio risk management approach to dam safety, including evaluating all modes of failure (e.g., seepage of water and sediment through a dam) and prioritizing rehabilitation and repair efforts. The following sections provide more information on specific policies at these agencies."], "subsections": [{"section_title": "U.S. Army Corps of Engineers", "paragraphs": ["USACE implements a dam safety program consisting of inspections and risk analyses for USACE operated dams, and performs risk reduction measures or project modifications to address dam safety risks. USACE uses a Dam Safety Action Classification System (DSAC) based on the probability of failure and incremental risk (see Table 3 ).", "Congress provides funding for USACE's various dam safety activities through the Investigations, O&M, and Construction accounts. The Inventory of Dams line item in the Investigations account provides funding for the maintenance and publication of the NID. The O&M account provides funding for routine O&M of USACE dams and for NDSP activities, including assessments of USACE dams.", "The Construction account provides funding for nonroutine dam safety activities (e.g., dam safety rehabilitation and repair modifications). The Dam Safety and Seepage/Stability Correction Program conducts nonroutine dam safety evaluations and studies of extremely high-risk or very high-risk dams (DSAC 1 and DSAC 2). Under the program, an issue evaluation study may evaluate high-risk dams, dam safety incidents, and unsatisfactory performance, and then provide determinations for modification or reclassification. If recommended, a dam safety modification study would further investigate dam deficiencies and propose alternatives to reduce risks to tolerable levels; a dam safety modification report is issued if USACE recommends a modification. USACE funds construction of dam safety modifications through project-specific line items in the Construction account. Modification of USACE-constructed dams for safety purposes may be cost shared with nonfederal project sponsors using two cost-sharing authorities: major rehabilitation and dam safety assurance. USACE schedules modifications under all of these programs based on funding availability.", "Major rehabilitation is for significant, costly, one-time structural rehabilitation or major replacement work. Major rehabilitation applies to dam safety repairs associated with typical degradation of dams over time. Nonfederal sponsors are to pay the standard cost share based on authorized purposes. USACE does not provide support under major rehabilitation for facilities that were turned over to local project sponsors for O&M after they were constructed by USACE. ", "Dam safety assurance cost sharing may apply to all dams built by USACE, regardless of the entity performing O&M. Modifications are based on new hydrologic or seismic data or changes in state-of-the-art design or construction criteria that are deemed necessary for safety purposes. Application of the authority provided by Section 1203 of the Water Resources Development Act of 1986 ( P.L. 99-662 ; 33 U.S.C. \u00c2\u00a7467n) reduces a sponsor's responsibility to 15% of its agreed nonfederal cost share. In 2015, the Government Accountability Office (GAO) examined cost sharing for USACE dam safety repairs. GAO recommended policy clarification for the usage of the \"state-of-the-art\" provision and improved communication with nonfederal sponsors. Section 1139 of the Water Infrastructure Improvements for the Nation Act (WIIN Act; P.L. 114-322 ) mandated the issuance of guidance on the state-of-the-art provision, and in March 2019, USACE began to implement a new policy that allows for the state-of-the-art provision across its dam portfolio. Prior to the guidance, USACE applied the authority in January 2019 to lower the nonfederal cost share of repairing the Harland County Dam in Nebraska by approximately $2.1 million (about half of the original amount owed). ", "Recent USACE dam safety construction projects have had costs ranging from $10 million to $1.8 billion; most cost in the hundreds of millions of dollars. In FY2018, USACE funded $268 million in work on 10 dam safety construction projects at DSAC 1 and DSAC 2 dams, and funded dam safety studies at 39 projects on DSAC 2 and DSAC 3 dams. In FY2019, USACE estimated a backlog of $20 billion to address DSAC 1 and DSAC 2 dam safety concerns."], "subsections": []}, {"section_title": "Bureau of Reclamation", "paragraphs": ["Reclamation's dam safety program, authorized by Reclamation Safety of Dams Act of 1978, as amended ( P.L. 95-578 ; 43 U.S.C. 506 et seq.), provides for inspection and repairs to qualifying projects at Reclamation dams. Reclamation conducts dam safety inspections through the Safety Evaluation of Existing Dams (SEED) program using Dam Safety Priority Ratings (DSPR; see Table 3 ). Corrective actions, if necessary, are carried out through the Initiate Safety of Dams Corrective Action (ISCA) program. With ISCA appropriations, Reclamation funds modifications on priority structures based on an evolving identification of risks and needs. ", "The Reclamation Safety of Dams Act Amendments of 1984 ( P.L. 98-404 ) requires a 15% cost share from sponsors for dam safety modifications when modifications are based on new hydrologic or seismic data or changes in state-of-the-art design or construction criteria that are deemed necessary for safety purposes. In 2015, P.L. 114-113 amended the Reclamation Safety of Dams Act to increase Reclamation's authority, before needing congressional authorization to approve a modification project, from $1.25 million to $20 million. The act also authorized the Secretary of the Interior to develop additional project benefits, through the construction of new or supplementary works on a project in conjunction with dam safety modifications, if such additional benefits are deemed necessary and in the interests of the United States and the project. Nonfederal and federal funding participants must agree to a cost share related to the additional project benefits. ", "In FY2019, Congress appropriated $71 million for ISCA, which funded 18 dam safety modifications. FY2019 funding also included $20.3 million for SEED and $1.3 million for the Dam Safety Program. As of FY2019, Reclamation estimated that the current portfolio of dam safety modification projects through FY2030 would cost between $1.4 billion to $1.8 billion. ", "The Commissioner of Reclamation also serves as the Department of the Interior's (DOI's) coordinator for dam safety and advises the Secretary of the Interior on program development and operation of the dam safety programs within DOI. In this role, Reclamation provides training to other DOI agencies with dam safety programs and responsibilities, and Reclamation's dam safety officer represents DOI on the ICODS."], "subsections": []}]}]}, {"section_title": "Federal Oversight of Nonfederal Dams", "paragraphs": ["Some federal agencies are involved in dam safety activities of nonfederal dams; these activities may be regulatory or consist of voluntary coordination (see box on \"Nonfederal Dams on Federal Lands\"). ", "Congress has enacted legislation to regulate hydropower projects, certain mining activities, and nuclear facilities and materials. These largely nonfederal facilities and activities may utilize dams for certain purposes. States also may have jurisdiction or ownership over these facilities, activities, and associated dams, and therefore may oversee dam safety in coordination with applicable federal regulations. "], "subsections": [{"section_title": "Regulation of Hydropower Dams", "paragraphs": ["Under the Federal Power Act (16 U.S.C. \u00c2\u00a7\u00c2\u00a7791a-828c), FERC has the authority to issue licenses for the construction and operation of hydroelectric projects, among other things. Many of these projects involve dams, some of which may be owned by a state or local government. According to FERC, approximately 3,036 dams are regulated by FERC's dam safety program. Of these, 1,374 are nonfederal dams listed in the 2018 NID; 791 nonfederal dams are classified as high hazard, with 144 in California, 87 in New York, and 72 in Michigan. Before FERC can issue a license, FERC reviews and approves the designs and specifications of dams and other structures for the hydropower project. Each license is for a stated number of years (generally 30-50 years), and must undergo a relicensing process at the end of the license. ", "Along with nonfederal hydropower licensing, FERC is responsible for dam inspection during and after construction. FERC staff inspect regulated dams at regular intervals, and the owners of certain dams require more thorough inspections. According to 18 C.F.R. \u00c2\u00a712, every five years, an independent consulting engineer, approved by FERC, must inspect and evaluate projects with dams higher than 32.8 feet, or with a total storage capacity of more than 2,000 acre-feet. These inspections are to include a detailed review of the design, construction, performance, and current condition assessment of the entire project. Inspections are to include examinations of dam safety deficiencies, project construction and operation, and safety concerns related to natural hazards. Should an inspection identify a deficiency, FERC would require the project owner to submit a plan and schedule to remediate the deficiency. FERC then is to review, approve, and monitor the corrective actions until the licensees have addressed the deficiency. If a finding is highly critical, FERC has the authority to require risk-reduction measures immediately; these measures often include reservoir drawdowns.", "Following the spillway incident in 2017 at Oroville Dam, CA, California's Department of Water Resources engaged an independent forensic team to develop findings and opinions on the causes of the incident. FERC also convened an after-action panel to evaluate FERC's dam safety program at Oroville focusing on the original design, construction, and operations, including the five-year safety review process. Both the after-action panel and the forensic team released reports in 2018 that raised questions about the thoroughness of FERC's oversight of dam safety. Among other findings, the panel's report concluded that the established FERC inspection process, if properly implemented, would address most issues that could result in a failure; however, the panel's report stated that several failures occurred in the last decade because certain technical details, such as spillway components and original design, were overlooked and not addressed in the inspection or by the owner. For example, both reports highlighted inspectors' limited attention to spillways compared to more attention for main dams. After the Oroville incident, a FERC-led initiative to examine dam structures comparable to those at Oroville Dam identified 27 dam spillways at FERC-licensed facilities with varying degrees of safety concerns; FERC officials stated they are working with dam licensees to address the deficiencies. ", "A 2018 GAO review also found that FERC had been prioritizing individual dam inspections and responses to urgent dam safety incidents, but had not conducted portfolio-wide risk analyses. FERC told GAO in January 2019 that it had begun developing a risk-assessment program to assess safety risks across the inventory of regulated dams and to help guide safety decisions. In addition, FERC produced draft guidelines in 2016 for risk-informed decisionmaking, with a similar risk management approach as USACE and Reclamation. FERC has allowed dam owners, generally those with a portfolio of dams, to pilot risk-informed decisionmaking using the draft guidelines for their inspections and prioritizing rehabilitation and repairs instead of using the current deterministic, standards-based approach."], "subsections": []}, {"section_title": "Regulation of Dams Related to Mining", "paragraphs": ["At mining sites, dams may be constructed for water supply, water treatment, sediment control, or the disposal of mining byproducts and waste (i.e., tailings dams). ", "Under the Federal Mine Safety and Health Act of 1977, as amended (P.L. 91-173; 30 U.S.C. 801 et seq.), the Department of Labor's Mine Safety and Health Administration (MSHA) regulates private dams used in or resulting from mining. According to MSHA, approximately 1,640 dams are in its inventory. Of these, 447 are in the 2018 NID, with 220 classified as high hazard. As a regulator, MSHA develops standards and conducts reviews, inspections, and investigations to ensure mine operators comply with those standards. According to agency policies, MSHA is to inspect each surface mine and associated dams at least two times a year and each underground mine and associated dams at least four times a year. ", "Under Title V of the Surface Mining Control and Reclamation Act of 1977, as amended (SMCRA; P.L. 95-87 ; 30 U.S.C. \u00c2\u00a7\u00c2\u00a71251-1279), DOI's Office of Surface Mining Reclamation and Enforcement (OSMRE) administers the federal government's responsibility to regulate active coal mines to minimize environmental impacts during mining and to reclaim affected lands and waters after mining. OSMRE regulations require private companies to demonstrate that dams are in accordance with federal standards (30 C.F.R. \u00c2\u00a7715.18). According to the 2018 DOI Annual Report on Dam Safety, OSMRE regulates 69 dams at coal mines under OSMRE's federal and Indian lands regulatory authority. Twenty four states have primary regulation authority (i.e., primacy) for dams under SMCRA authority: for primacy, states must meet the requirements of SMCRA and be no less effective than the federal regulations. If the dam is noncompliant with the approved design at any time during construction or the life of the dam's operation, OSMRE or an approved state regulatory program is to instruct the permittee to correct the deficiency immediately or cease operations. "], "subsections": []}, {"section_title": "Regulation of Dams Related to Nuclear Facilities and Materials", "paragraphs": ["The Nuclear Regulatory Commission (NRC) was established by the Energy Reorganization Act of 1974 (42 U.S.C. 5801 et seq.) as an independent federal agency to regulate and license nuclear facilities and the use of nuclear materials as authorized by the Atomic Energy Act of 1954, as amended (P.L. 83-703). Among its regulatory licensing responsibilities pertaining to dams, NRC regulates uranium mill tailings dams, storage water pond dams at in situ leach (ISL) uranium recovery facilities, and dams integral to the operation of other licensed facilities that may pose a radiological safety-related hazard should they fail. Currently, NRC directly regulates eight dams. If NRC shares regulatory authority with another federal agency (e.g., FERC, USACE, Reclamation), NRC will defer regulatory oversight of the dam to the other federal agency. Under NRC's authority to delegate regulatory authority, states may regulate dams associated with nuclear activities based on agreements with NRC (i.e., agreement state programs). "], "subsections": []}]}, {"section_title": "Federal Support for Nonfederal Dams", "paragraphs": ["Nonfederal dam owners generally are responsible for investing in the safety, rehabilitation, and repair of their dams. In 2019, ASDSO estimated that $65.9 billion was needed to rehabilitate nonfederal dams; of that amount, $18.7 billion was needed for high hazard nonfederal dams. Twenty-three states provide a limited amount of assistance for these activities through a grant or low-interest revolving loan program. Some federal programs may specifically provide limited assistance to nonfederal dams; these programs are described below. In addition, more general federal programs, such as the Community Development Block Grant Program, offer broader funding opportunities for which dam rehabilitation and repair may qualify under certain criteria."], "subsections": [{"section_title": "FEMA High Hazard Dam Rehabilitation Grant Program", "paragraphs": ["The WIIN Act authorized FEMA to administer a high hazard dam rehabilitation grant program, which would provide funding assistance for the repair, removal, or rehabilitation of nonfederal high hazard potential dams. Congress authorized the program to provide technical, planning, design, and construction assistance in the form of grants to nonfederal sponsors. Nonfederal sponsors\u00e2\u0080\u0094such as state governments or nonprofit organizations\u00e2\u0080\u0094may submit applications to FEMA on behalf of eligible dams and then distribute any grant funding received from FEMA to these dams. Eligible dams must be in a state with a dam safety program, be classified as high hazard, have developed a state-approved EAP, fail to meet the state's minimum dam safety standards, and pose an unacceptable risk to the public. Participating dams also must comply with certain federal programs and laws (e.g., flood insurance programs, the Robert T. Stafford Disaster Relief and Emergency Assistance Act), have or develop hazard mitigation and floodplain management plans, and commit to provide O&M for 50 years following completion of the rehabilitation activity.", "The WIIN Act authorized appropriations of $10 million annually for FY2017 and FY2018, $25 million for FY2019, $40 million for FY2020, and $60 million annually for FY2021 through FY2026 for the High Hazard Dam Rehabilitation Grant Program (see Figure 9 ). FEMA is to distribute grant money to nonfederal sponsors based on the following formula: one-third of the total funding is to be distributed equally among the nonfederal sponsors that applied for funds, and two-thirds of the total is to be distributed among the nonfederal sponsors proportional to the number of eligible high hazard dams represented by nonfederal sponsors. Individual grants to nonfederal sponsors are not to exceed 12.5% of total program funds or $7.5 million, whichever is less. Grant assistance must be accompanied by a nonfederal cost share of no less than 35%.", "Congress appropriated $10 million in FY2019 for FEMA's High Hazard Dam Rehabilitation Grant Program under the Consolidated Appropriations Act, 2019 ( P.L. 116-6 ), enacted on February 15, 2019. FEMA released a notice of funding opportunity on May 22, 2019, for proposals to be submitted by nonfederal sponsors by July 8, 2019. In FY2019, 26 nonfederal sponsors were awarded grants ranging from $153,000 to $1,250,000 to provide technical, planning, design, and construction assistance for rehabilitation of eligible high hazard potential dams. "], "subsections": []}, {"section_title": "NRCS Small Watershed Rehabilitation Program", "paragraphs": ["The Natural Resources Conservation Service (NRCS), within the U.S. Department of Agriculture, provides assistance for selected watershed activities generally related to managing water on or affecting agricultural or rural areas. The Watershed Protection and Flood Prevention Act (P.L. 83-566) and the Flood Control Act of 1944 (P.L. 78-534) provide the authority for NRCS to construct dams through the Watershed and Flood Prevention Operations program.", "By the end of 2019, more than half of the 11,847 watershed dams constructed with assistance from NRCS will have reached the end of their designed life spans. Congress created a rehabilitation program, known as the Small Watershed Rehabilitation Program, in Section 313 of the Grain Standards and Warehouse Improvement Act of 2000 ( P.L. 106-472 ; 16 U.S.C. \u00c2\u00a71012). Under this authority, watershed dams constructed with assistance from NRCS are eligible for assistance from the Small Watershed Rehabilitation Program. The rehabilitation program is intended to extend the approved service life of the dams and bring them into compliance with applicable safety and performance standards or to decommission the dams so they no longer pose a threat to life and property. From 2000 to 2018, the program authorized the rehabilitation of 288 dams. ", "NRCS may provide 65% of the total rehabilitation costs; this may include up to 100% of the actual construction cost and no O&M costs. The Small Watershed Rehabilitation Program has discretionary funding authority of up to $85 million annually. Since FY2000, Congress has appropriated more than $700 million for rehabilitation projects. The Small Watershed Rehabilitation Program has received an average annual appropriation of $11.2 million over the last five years, including $10 million in FY2019."], "subsections": []}, {"section_title": "USACE Rehabilitation and Inspection Program", "paragraphs": ["USACE's Rehabilitation and Inspection Program (RIP, or the P.L. 84-99 program) is used mainly for levees, but may provide federal support for selected nonfederal dams that meet certain criteria (e.g., the reservoir behind the dam has storage capacity for a 200-year flood event, otherwise referred to as a flood event having 0.5% chance of occurring in any given year). RIP may provide assistance for flood control works if a facility is damaged by floods, storms, or seismic activity. To be eligible for RIP assistance, damaged flood control works must be active in RIP (i.e., subject to regular inspections) and in a minimally acceptable condition at the time of damage. As of 2017, USACE considered 33 nonfederal dams as \"active\" in RIP. Because annual appropriations for USACE's Flood Control and Coastal Emergencies account are limited primarily to flood preparedness activities, USACE generally uses supplemental appropriations for major repairs through RIP. "], "subsections": []}]}]}, {"section_title": "Issues for Congress", "paragraphs": ["Congress may consider oversight and legislation relating to dam safety in the larger framework of infrastructure improvements and risk management, or as an exclusive area of interest. Congress may deliberate the federal role for dam safety, especially as most of the dams in the NID are nonfederal. Further, Congress may evaluate the level and allocation of appropriations to federal dam safety programs, project modifications for federal dams, and financial assistance for nonfederal dam safety programs and nonfederal dams. In addition, Congress may maintain or amend policies for disclosure of dam safety information when considering the federal role in both providing dam safety risk and response information to the public (including those living downstream of dams) while also maintaining security of these structures. "], "subsections": [{"section_title": "Federal Role", "paragraphs": ["Since the 1970s, the federal government has developed and overseen national dam safety standards and has provided technical assistance for the design, construction, and O&M of dams. These activities, as well as the enhancement of federal agencies' dam safety programs, have improved certain dam safety metrics; nonetheless, deficiencies in federal and state programs may have contributed to recent incidents (e.g., the 2017 spillway incident at Oroville Dam, California). ", "Some federal agencies have received criticism of their dam safety programs. For example, in 2014, the Department of Defense (DOD) Inspector General found that DOD did not have a policy requiring installations to implement a dam safety inspection program consistent with the Federal Guidelines for Dam Safety . Since the findings, some service branches of DOD reported developing new dam safety policies including the creation of a dam safety program for the U.S. Marine Corps. Congress may consider other oversight activities similar to, for example, direction requiring USACE, Reclamation, and FERC to brief the Senate Committee on Appropriations on efforts to incorporate lessons learned from Oroville into dam inspection protocols across all three agencies and their state partners. Although incidents and reviews may result in recommending improvements to federal dam safety programs, some agencies report financial and other limitations to revising or expanding their dam safety programs. Congress may consider these obstacles, as identified in its oversight activities, in determining whether new authorities or appropriations are needed.", "Some stakeholders argue that the federal government should continue its activities in maintaining and regulating dams owned by federal agencies and nonfederal dams under federal regulatory authority, while state dam safety programs should retain responsibility for state-regulated dams by following the guidelines of the Model State Dam Safety Program . However, some stakeholders, such as the Association of State Floodplain Managers and ASDSO, advocate for a larger federal role in nonfederal dam safety. They argue that many state dam safety programs and nonfederal dam owners have limited resources and authorities to inspect, conduct O&M, rehabilitate, and repair nonfederal dams. However, land use and zoning are considered nonfederal responsibilities, and some may argue against encroaching on state and local sovereignty and against the potential growth of the federal government's role. ", "Dam removal is a potential policy alternative to rehabilitation and repair of high hazard dams. A dam-removal policy incentive would likely require, for example, evaluation of the current level of use of the dam, whether some or all of its functions could be economically replaced by nonstructural measures, and whether O&M, rehabilitation, and repair are feasible (e.g., the dam owner is absent or repairs are too costly). Congress has previously considered incentives to encourage states to remove dams deemed unnecessary or infeasible to rehabilitate. For instance, Congress authorized dam removal as an activity under FEMA's High Hazard Dam Rehabilitation Grant Program and authorized USACE to study the structural integrity and possible modification or removal for certain dams located in Vermont. When considering dam removal for dam safety purposes, policymakers also may weigh removal costs and the loss of recognized benefits from the dam. "], "subsections": []}, {"section_title": "Federal Funding", "paragraphs": ["Individual dam O&M, rehabilitation, and repair can range in cost from thousands to hundreds of millions of dollars. The responsibility for these expenses lies with dam owners; however, many nonfederal dam owners are not willing or able to fund these costs. As of 2019, ASDSO estimated that rehabilitation and repair of nonfederal high hazard dams in the NID would cost approximately $18.7 billion (overall rehabilitation and repair for nonfederal dams in the NID were estimated at $65.9 billion). Some, such as ASDSO and American Society of Civil Engineers, call for increased federal funding to rehabilitate and repair these dams. They note that upfront federal investment in rehabilitation and repair may prevent loss of lives and large federal outlays in emergency spending if a high hazard dam were to fail. Twenty-three states have created a state-funded grant or low-interest revolving loan program to assist dam owners with repairs. ASDSO states that the programs seem to vary significantly in the scope and reach of the financial assistance available. Congress authorized the \" FEMA High Hazard Dam Rehabilitation Grant Program \" in the WIIN Act, and subsequently provided appropriations of $10 million to the program in Division A (Department of Homeland Security Appropriations Act, 2019) of the Consolidated Appropriations Act, 2019 ( P.L. 116-6 ). For FY2020, the House Committee on Appropriations recommended no money for the grant program, while the Senate Committee on Appropriations recommended $10 million.", "Congress may consider the tradeoffs in focusing federal resources on federal dams versus nonfederal dams. While federal agencies report owning only 3% of dams in the NID, many of these dams are considered large dams that can affect large populations and may require costly investments in dam safety. ", "In FY2019, USACE estimated a backlog of $20 billion to address DSAC 1 and DSAC 2 dam safety concerns. USACE has stated that investments in dam rehabilitation and repair above recent levels of appropriations would help alleviate risks and the likelihood of a major dam incident. Reclamation estimates that the current portfolio of dam safety modification projects for Reclamation-owned dams would cost $1.4 billion to $1.8 billion through FY2030. To address this backlog, Congress has considered authorizing mandatory funding from the Reclamation Fund to provide for dam O&M, rehabilitation, and repair, so the funding would not be subject to the appropriations process. While some Members of Congress and stakeholders support this proposal, such as the Western States Water Council, other Members of Congress argue that increasing mandatory funding would remove congressional oversight and control of the Reclamation Fund and result in increases in spending and budget deficits, among other things. Agencies with portfolios of smaller dams (e.g., Forest Service, Fish and Wildlife Service, National Park Service) report that their biggest challenge for dam safety is lack of resources, especially when dam safety is competing against other facility projects (e.g., buildings, levees). The Fish and Wildlife Service suggested in the FY2016-FY2017 National Dam Safety Program Report that downgrading small impoundments from the definition of a dam would alleviate some financial burdens. The agency reasoned that small impoundments that narrowly qualify as dams based on height and/or storage volume obligate the owners and regulators to perform dam safety functions with little likelihood of providing significant dam safety benefits or any genuine risk reduction.", "Congress may consider continuing current spending levels for dam safety. Under current funding, some metrics for the NDSP, such as the percentage of dams with EAPs and condition assessments, have shown improvement (see \" Progress of the National Dam Safety Program \"). Similar metrics have improved for some federal agencies that own dams, and certain federal dam safety programs have implemented or are beginning to implement risk-based dam safety approaches to managing their dam portfolios (e.g., USACE and Reclamation). ", "Some stakeholders (e.g., a committee convened by ASDSO, the Association of State Floodplain Managers) have recommended alternative funding structures to congressional appropriations, such as a federal low interest, revolving loan program or financial credit for disaster assistance. For example, Congress has previously authorized a Water Infrastructure Finance and Innovation Act (WIFIA) program, creating a new mechanism\u00e2\u0080\u0094credit assistance including direct loans and loan guarantees\u00e2\u0080\u0094for USACE to provide assistance for water resource projects (e.g., flood control and storm damage reduction). Congress may consider amending WIFIA to include making rehabilitation and repair of nonfederal dams eligible for credit assistance, or for establishing a new low-interest loan guarantee program. Although Congress authorized secured and direct loans when it enacted WIFIA in 2014, Congress has not provided appropriations to USACE to implement the programs as of FY2019. Similarly, Congress would need to provide both the authority and appropriations for these financial incentives for dam safety programs. "], "subsections": []}, {"section_title": "Risk Awareness", "paragraphs": ["According to some advocacy groups, many Americans are unaware that they live downstream of a dam. Further, if they are aware, the public may not know if a dam is deficient, has an EAP, or could cause destruction if it failed. A lack of public awareness may stem from a lack of access to certain dam safety information, the public's confidence in dam integrity, or other reasons. Dam safety processes and products (such as inspections, EAPs, and inundation maps) are intended to support decisionmaking and enhance community resilience. Some of the information and resulting products may not be readily available to all community members and stakeholders because access to dam safety information is generally restricted from public access. ", "The September 11, 2001, terrorist attacks drew attention to the security of many facilities, including the nation's water supply and water quality infrastructure, including dams. Damage or destruction of a dam by a malicious attack (e.g., terrorist attack, cyberattack) could disrupt the delivery of water resource services, threaten public health and the environment, or result in catastrophic flooding and loss of life. As a consequence of the September 11, 2001, terrorist attacks, current federal policy and practices restrict public access to most information related to the condition assessment of dams and consequences of dam or component failure. For example, according to USACE, dams in the NID meet the definition of critical infrastructure as defined by the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT) Act of 2001 ( P.L. 107-56 ). Vulnerability assessments of critical infrastructure are restricted from public access. Currently USACE considers condition assessments as a type of vulnerability assessment; therefore, dam condition assessments contained in the NID are restricted only to approved government users. However, FEMA reported that following a 2017 recommendation from the NDSRB, USACE is considering making condition assessments of NID dams unrestricted for public access.", "Congress may consider reevaluating the appropriate amount of information to share (e.g., inundation scenarios from dam failure) to address public safety concerns and what amount and type of information not to share to address concerns about malicious use of that information. There are tradeoffs involved in sharing certain types of data. For example, sharing inundation mapping data with the public may raise awareness of the potential risk of living downstream of a dam, but misinterpretation of that information could cause unnecessary alarm in downstream communities. Currently, inundation mapping data generally are shared with emergency managers and responders rather than with the public at large. Some argue that disclosure to these officials is sufficient, as it provides the information to the officials who bear responsibilities for emergency response. In addition to managing information flow to the public to address risk, Congress might consider the risk of individuals or groups using the information for malicious purposes; namely, the concerns originally raised following the September 11, 2001, terrorist attacks."], "subsections": []}]}]}}
{"id": "R46066", "title": "NATO: Key Issues Following the 2019 Leaders\u2019 Meeting", "released_date": "2020-04-01T00:00:00", "summary": ["Heads of state and government from NATO's 30 member states met in London, United Kingdom (UK), on December 3-4, 2019. Two key goals for the meeting were to commemorate the alliance's past achievements\u00e2\u0080\u00942019 marks NATO's 70 th anniversary\u00e2\u0080\u0094and to advance efforts to address new and emerging security challenges, including Russian aggression, terrorism and instability in the Middle East and North Africa, and cyber and hybrid threats. The meeting also exposed heightened political tension within the alliance and divergent views on a range of issues, including U.S. policy toward NATO and Europe, relations with NATO member Turkey, and relations with Russia.", "In the six years since Russia occupied Crimea and invaded Eastern Ukraine, the United States has played a key role in renewing NATO's focus on territorial defense and deterring Russian aggression. Among other measures, NATO member states have deployed an Enhanced Forward Presence (EFP), totaling about 4,500 troops to the three Baltic States and Poland and including increased military exercises and training activities in Central and Eastern Europe. At the behest of the United States, the alliance also has sought to bolster its response to security threats posed by growing instability in the Middle East and North Africa, primarily through partnerships and training activities. NATO continues to lead a \"train and assist\" mission of about 16,500 troops in Afghanistan. In February 2020, NATO defense ministers agreed to expand NATO's training mission in Iraq, which currently consists of between 300 and 500 military trainers.", "The London meeting came at a tense time for NATO. Some allied governments argue that growing divergence between the United States and many European allies on a range of key foreign and security policy issues, from Iran's nuclear program to fighting the Islamic State terrorist organization in Syria, has impeded cooperation in NATO and exposed strategic rifts within the alliance. Some European allies have expressed particular concern about what they portray as a lack of U.S. coordination on policy in Syria, where many European countries have been assisting U.S.-led efforts to counter the Islamic State. Many allies also have criticized fellow NATO member Turkey for its military operations in Syria and its acquisition of a Russian-made air defense system.", "Although many Members of Congress have criticized specific developments within NATO\u00e2\u0080\u0094regarding burden sharing, for example\u00e2\u0080\u0094Congress as a whole has demonstrated consistent support for NATO. During the Trump Administration, congressional support at times has been viewed by some as an effort to reassure allies troubled by President Trump's criticisms of the alliance. Over the past several years, both chambers of Congress have passed legislation reaffirming U.S. support for NATO (e.g., H.Res. 397, H.R. 676 , H.R. 5515 / P.L. 115-232 , and H.Res. 256 in the 115 th Congress; S. 1790 / P.L. 116-92 in the 116 th Congress) and in some cases have sought to limit the President's ability to withdraw from NATO unilaterally ( H.R. 676 ; S. 1790 / P.L. 116-92 ). At the same time, Congress continues to assess NATO's utility and value to the United States, and some Members are concerned about key challenges facing NATO, including burden sharing, managing relations with Russia and China, and divergent threat perceptions within the alliance."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Overview of 2019 Leaders' Meeting1", "paragraphs": ["Heads of state and government from NATO's 30 member states met in London, United Kingdom (UK), on December 3-4, 2019. NATO and U.S. officials highlighted the following key deliverables from the London Leaders' Meeting:", "Completion of a new Readiness Initiative, under which the alliance would have at its disposal 30 mechanized battalions, 30 air squadrons, and 30 naval combat vessels ready to use within 30 days. Declaration of space as a new operational domain for NATO and advances in combatting cyber and hybrid threats, including establishing new baseline requirements for telecommunications infrastructure. Increased defense spending by European allies and Canada. Renewed commitment to NATO's mission in Afghanistan and counterterrorism efforts in the Middle East and North Africa. Agreement to assess China's impact on NATO and transatlantic security. Initiation of a new \"forward-looking reflection process \u00e2\u0080\u00a6 to further strengthen NATO's political dimension including consultation.\"", "More broadly, NATO officials sought to highlight NATO's achievements and the importance of strong U.S.-European relations to these efforts. The United States was the driving proponent of NATO's creation in 1949 and has been the unquestioned leader of the alliance as it has evolved from a collective defense organization of 12 members focused on deterring the Soviet Union to a globally engaged security organization of 30 members. Successive U.S. Administrations have viewed U.S. leadership of NATO as a cornerstone of U.S. national security strategy that brings benefits ranging from peace and stability in Europe to the political and military support of 28 allies, including many of the world's most advanced militaries. ", "The London meeting came at a tense time for NATO, however. Some European allies question the Trump Administration's commitment to NATO and have criticized the Administration for a perceived unilateral approach to foreign policy issues, including the October 2019 drawdown of U.S. forces from Syria. Many allies also have criticized fellow NATO member Turkey for its military operations in Syria and its acquisition of a Russian-made air defense system. ", "NATO Secretary General Jens Stoltenberg acknowledges ongoing tensions within the alliance but stresses that continued transatlantic cooperation has enabled NATO to be more active today than it has been in decades. Trump Administration officials maintain that the United States remains committed to NATO, and in London, President Trump stressed that NATO \"has a great purpose.\" U.S. officials also highlight the Administration's successful efforts in 2017 and 2018 to substantially increase funding for the U.S. force presence in Europe and note that Secretary General Stoltenberg has credited President Trump with playing a role in securing defense spending increases across the alliance in recent years. Critics of the Trump Administration's NATO policy maintain that renewed Russian aggression has been a key factor behind such increases. "], "subsections": []}, {"section_title": "Key Issues", "paragraphs": ["At the London meeting, NATO leaders stressed their commitment to advancing existing readiness and deterrence initiatives and to confronting emerging security challenges, including by declaring space as an operational domain for NATO. The allies also reinforced their commitment to NATO's ongoing mission in Afghanistan and other counterterrorism efforts and discussed the implications for NATO of China's growing investment in, and engagement with, Europe. "], "subsections": [{"section_title": "Deterrence Through Increased Readiness", "paragraphs": ["In the five years since Russia occupied Crimea and invaded Eastern Ukraine, the United States has supported efforts to renew NATO's focus on territorial defense and deterring Russian aggression. Among other measures, NATO member states have deployed an Enhanced Forward Presence (EFP) totaling about 4,500 troops to the three Baltic States (Estonia, Latvia, and Lithuania) and Poland; increased military exercises and training activities in Central and Eastern Europe; and established new NATO command structures in six Central and Eastern European countries. ", "In London, the allies announced progress on several new initiatives intended to enhance NATO's readiness to respond swiftly to an attack on a NATO member, including by reinforcing the aforementioned EFP battlegroups. A cornerstone of these efforts is full implementation by the end of 2019 of the so-called Four-Thirties Readiness Initiative, proposed by the United States in 2018, under which NATO would have 30 mechanized battalions, 30 air squadrons, and 30 naval combat vessels ready to use within 30 days.", "Although the allies have continued to support and contribute to NATO deterrence initiatives, some analysts question the effectiveness and sustainability of these efforts. For example, the authors of a February 2016 report by the RAND Corporation contend that \"as presently postured, NATO cannot successfully defend the territory of its most exposed members.\" Some allies, including Poland and the Baltic States, have urged other NATO members to deploy more forces to the region to reinforce that alliance's deterrence posture.", "Other allies, including leaders in Western European countries such as Germany, Italy, and France, have stressed the importance of a dual-track approach to Russia that complements deterrence with dialogue. These allies contend that efforts to rebuild cooperative relations with Moscow should receive as much attention as efforts to deter Russia. Accordingly, these allies are reluctant to endorse permanently deploying troops in countries that joined NATO after the collapse of the Soviet Union due to concerns that this would violate the terms of the 1997 NATO-Russia Founding Act; in consideration of these terms, NATO's EFP has been referred to as \"continuous\" but rotational rather than \"permanent.\" "], "subsections": []}, {"section_title": "Addressing New Security Challenges: Cyber, Hybrid, and Space", "paragraphs": ["In London, the allies highlighted progress in responding to cyber and hybrid threats and formally declared space as a new operational domain for the alliance. ", "Since naming cyber defense a core NATO competence in 2014, the alliance has adopted measures to protect NATO networks from cyberattacks and to assist member states in bolstering national cyber defense capabilities. NATO has made available Cyber Rapid Reaction Teams to help allies respond to cyberattacks, and in 2018 it announced plans to establish a new NATO Cyberspace Operations Center in Brussels. The new cyber center will focus on integrating allies' national cyber capabilities into NATO missions and operations. Although NATO member states maintain full ownership of these capabilities\u00e2\u0080\u0094as they do with other military capabilities deployed to NATO missions\u00e2\u0080\u0094the new operations center is tasked with incorporating cyber defense into all levels of NATO planning and operations. ", "NATO also has sought to bolster capabilities to counter heightened hybrid warfare threats, including propaganda, deception, sabotage, and other nonmilitary tactics. NATO's focus has been on enhancing strategic communications, developing appropriate exercise scenarios, and strengthening coordination with the European Union (EU) to respond to hybrid threats. At their meeting in 2018, NATO leaders agreed to establish counter-hybrid support teams to provide tailored assistance to allies in preparing against and responding to hybrid activities. NATO deployed the first of these teams to Montenegro in November 2019. As discussed in more detail below (see \" Assessing China's Impact on NATO and Transatlantic Security \"), in London, NATO leaders endorsed new baseline requirements for allies with respect to the resilience of telecommunications infrastructure, including 5G systems. ", "In London, NATO leaders formally declared space as an operational domain for NATO, alongside air, land, sea, and cyber. Secretary General Stoltenberg stated that the declaration reflects a consensus desire within NATO to strengthen defense and deterrence in all areas, including space, where NATO allies reportedly own about half of the approximately 2,000 satellites estimated to be in orbit currently. Stoltenberg has stressed that NATO has no intention of deploying weapons in space and that NATO's approach will remain defensive and in line with international law. Others have questioned whether China, which has a growing presence in space, might view the NATO declaration as a provocation. "], "subsections": []}, {"section_title": "Defense Spending and Burden-Sharing", "paragraphs": ["A primary focus of the Trump Administration's policy toward NATO has been to urge allies to increase their national defense budgets in line with past agreements intended to ensure an equitable distribution of defense responsibilities within the alliance. In London, President Trump continued these calls but also welcomed substantial increases in European allies' defense spending over the past five years. Secretary General Stoltenberg has credited President Trump with playing a key role in spurring increases in European allied defense spending over the past five years. However, critics of the U.S. President express concern that his strident criticism of what he considers insufficient defense spending by some allies could damage NATO cohesion and credibility. ", "In 2006, NATO members informally agreed to aim to allocate at least 2% of gross domestic product (GDP) to their national defense budgets annually and to devote at least 20% of national defense expenditure to procurement and related research and development. These targets were formalized at NATO's 2014 Wales Summit, when the allies pledged to halt declines in defense expenditures and \"move towards the 2% guideline within a decade.\"", "U.S. and NATO officials say they are encouraged that defense spending by European allies and Canada has grown for five consecutive years (see Figure 1 ). According to Secretary General Stoltenberg, European allies and Canada have added $130 billion in defense spending since 2014; the figure is expected to rise to $400 billion by the end of 2024. In 2014, three allies met the 2% guideline; in 2019, 9 allies are expected to have met the 2% guideline, and 16 allies are expected to have met the 20% benchmark for spending on major equipment. President Trump and others continue to criticize those NATO members perceived to be reluctant to achieve defense-spending targets, however. One such member is Europe's largest economy, Germany, which currently spends about 1.38% of GDP on defense and has plans to reach 1.5% of GDP by 2024. ", "Although all allied governments agreed to the Wales commitments, many, including Germany, emphasize that allied contributions to ongoing NATO missions and the effectiveness of allied military capabilities should be considered as important as total defense spending levels. For example, an ally spending less than 2% of GDP on defense could have more modern, effective military capabilities than an ally that meets the 2% target but allocates most of that funding to personnel costs and relatively little to ongoing missions and modernization. ", "Analysts on both sides of the Atlantic also have argued that a relatively narrow focus on defense inputs (i.e., the size of defense budgets) should be accompanied by an equal, if not greater, focus on defense outputs (i.e., military capabilities and the effectiveness of contributions to NATO missions and activities). The alliance's target to devote at least 20% of each member's national defense expenditure to new equipment and related research and development reflects this goal. ", "Secretary General Stoltenberg has emphasized a broad approach to measuring contributions to the alliance, using a metric of \"cash, capabilities, and contributions.\" Proponents of this approach argue that a broad assessment of allied contributions that takes into account factors beyond the 2% of GDP defense spending metric would be more appropriate given NATO's wide-ranging strategic objectives, some of which may require capabilities beyond the military sphere. ", "In London, allied leaders approved a U.S. proposal to reduce assessed U.S. contributions, and increase German contributions, to NATO's relatively small pot of common funds . National contributions to NATO's common funds\u00e2\u0080\u0094about $2.6 billion total in 2019\u00e2\u0080\u0094pay for the day-to-day operations of NATO headquarters, as well as some collective NATO military assets and infrastructure. According to NATO, in 2018, the U.S. share of NATO's common-funded budgets was about 22% , or about $570 million, followed by Germany (15%), France (11%), and the UK (10%). The U.S. proposal approved in London would bring both the U.S. and German contributions to about 16% each."], "subsections": []}, {"section_title": "Afghanistan and Counterterrorism", "paragraphs": ["In London, the allies renewed their commitment to NATO's ongoing training mission in Afghanistan, despite speculation about a possible drawdown of U.S. forces in the country. In January 2015, following the end of its 11-year-long combat mission in Afghanistan, NATO launched the Resolute Support Mission (RSM) to train, advise, and assist Afghan security forces. Between 2015 and late 2018, NATO allies and partners steadily matched U.S. increases in troop levels to RSM. As of February 2020, about 8,500 of the 16,551 troops contributing to RSM were from NATO members and partner countries other than the United States. After the United States (8,000 troops), the top contributors to the mission were Germany (1,300), the UK (1,100), Italy (895), non-NATO-member Georgia (871), and Romania (797).", "NATO leaders welcomed the February 29, 2020, Joint Declaration between the United States and Afghanistan and agreement between the United States and the Taliban in pursuit of a peaceful settlement to the conflict in Afghanistan. Secretary General Stoltenberg said that NATO would implement adjustments, including troop reductions, to its mission as outlined in the agreements; he stressed, however, that such actions would be \"conditions-based.\" NATO continues to \"reaffirm its longstanding commitment to Afghanistan and ongoing support for the Afghan National Defense and Security Forces.\" In the past, European allies have expressed concern that they were not consulted on possible drawdown plans and stressed that any such plans be carried out in close coordination with the allies. ", "President Trump consistently has called on NATO to expand its counterterrorism efforts beyond Afghanistan, and terrorist threats emanating from the Middle East and North Africa (MENA) region are key European concerns as well. Over the past several years, NATO leaders have launched several new initiatives aimed at countering terrorism and addressing instability in the MENA region. These initiatives include the noncombat NATO Training Mission in Iraq, carried out by between 300 and 500 allied military trainers; the Package on the South, an initiative that includes a range of partnership activities to enhance cooperation initiatives with MENA countries such as Tunisia and Jordan; and establishment of a NATO Regional Hub for the South in Naples, Italy, to coordinate NATO responses to crises emanating from the South. NATO also has deployed aerial surveillance aircraft (AWACS) to assist the global coalition fighting the Islamic State terrorist organization.", "Several factors have limited enhanced NATO engagement on security challenges emanating from the MENA region. These factors include a belief among some allies that the EU is the appropriate institution to lead Europe's response to terrorism and migration issues and a related reluctance to cede leadership on these issues to NATO. France, for example, has advocated strong European responses to terrorism and conflict in the Middle East but has generally opposed a larger role for NATO. Some allies also disagree on what the appropriate response should be to some of the security challenges in the MENA region, with some appearing hesitant to involve NATO in a way that could be seen as endorsing military action. "], "subsections": []}, {"section_title": "Assessing China's Impact on NATO and Transatlantic Security", "paragraphs": ["The Trump Administration and some Members of Congress have urged NATO to assess the security implications of growing Chinese investment in Europe and to work to counter potential negative impacts on transatlantic security. As expressed in the December 2017 U.S. National Security Strategy , U.S. officials have grown increasingly concerned that \"China is gaining a strategic foothold in Europe by expanding its unfair trade practices and investing in key industries, sensitive technologies, and infrastructure.\" U.S. officials express particular concern about Chinese investment in critical infrastructure and telecommunications systems, such as 5G networks. Some U.S. defense officials have suggested that the United States might limit military cooperation and intelligence sharing with allies that allow Chinese investment in 5G networks.", "In London, NATO formally adopted an October 2019 plan by NATO defense ministers to update the alliance's baseline requirements for civilian telecommunications to reflect emerging concerns about 5G technology. The allies agreed to assess the risks to communications systems associated with cyber threats, and the consequences of foreign ownership, control, or direct investment. Although the EU is attempting to develop common guidelines to govern contracting decisions on 5G networks, these decisions would remain the prerogative of individual national governments.", "As noted above, U.S. officials have warned European allies and partners that using Huawei or other Chinese 5G equipment could impede intelligence sharing with the United States due to fears of compromised network security. Although some allies, such as the UK and Germany, have said they would not prevent Chinese companies from bidding on 5G contracts, these allies have stressed that they would not contract with any companies that do not meet their national security requirements. On January 28, 2020, the UK government announced that \"high-risk vendors\" including, but not limited to, Huawei, would be excluded from sensitive \"core\" parts of 5G networks and locations deemed critical national infrastructure, and that such vendors' access to nonsensitive parts of networks would be limited to 35%. Other countries, such as Poland, have considered formally excluding Huawei from their telecommunications sector, and Czech Republic intelligence officials publicly labeled Huawei a national security risk. ", "Despite U.S. concerns about China's growing footprint in Europe, Administration officials have expressed optimism that the United States and Europe can work together to meet the various security and economic issues posed by a rising China. Analysts, too, cite numerous concerns shared on both sides of the Atlantic and contend that joint U.S.-European pressure on China would be more effective than either partner's individual dealings with China. "], "subsections": []}, {"section_title": "Enlargement to North Macedonia25", "paragraphs": ["On March 27, 2020, North Macedonia became NATO's 30 th member (see Figure 2 for a map of NATO members and accession dates). NATO officials had hoped North Macedonia's accession would be complete in time for the London Leaders' Meeting, but elections in some member states delayed the accession ratification process. The U.S. Senate approved U.S. ratification on October 22, 2019."], "subsections": []}]}, {"section_title": "Political Tensions and Divergent Views", "paragraphs": ["Deliberations in London drew attention to heightened tension and divergent views within the alliance on a range of issues, including U.S. policy toward NATO and Europe, Turkey's standing as a member of the alliance, EU security and defense policy, and NATO's relations with Russia. Disagreement within the alliance on whether and how to respond to these and other issues has prompted some, including French President Emmanuel Macron, to question NATO's strategic direction and future. Many officials and analysts on both sides of the Atlantic also have suggested that President Trump's vocal criticism of NATO and the lack of transatlantic coordination on policies related to Syria and Afghanistan have seriously undermined the alliance. Secretary General Stoltenberg and others maintain that disagreement among allies is not a new phenomenon and stress that \"Europe and North American are doing more together in NATO today than we have for decades.\" ", "In an apparent effort to address diverging views within NATO, in London, the allies agreed to initiate a \"forward-looking reflection process \u00e2\u0080\u00a6 to further strengthen NATO's political dimension including consultation.\" On March 31, 2020, Secretary General Stoltenberg announced the appointment of a group of 10 experts tasked with recommending ways to \"reinforce Alliance unity, increase political consultation and coordination between Allies, and strengthen NATO's political role. The group will be cochaired by former U.S. Assistant Secretary of State Wess Mitchell and former German Interior and Defense Minister Thomas De Mazi\u00c3\u00a8re."], "subsections": [{"section_title": "Allied Concerns Regarding the U.S. Commitment to NATO", "paragraphs": ["Some analysts and allied leaders question the Trump Administration's level of commitment to NATO and express concern that President Trump's criticisms of the alliance could cause lasting damage to NATO cohesion and credibility. In addition to admonishing European allies for failing to meet agreed NATO defense spending targets President Trump has repeatedly questioned NATO's value to the United States. Although he is not the first U.S. President to press the allies to increase defense spending, none has done so as stridently and none has called into question the U.S. commitment to NATO as openly or to the same extent as President Trump. In London, President Trump expressed that his Administration remains committed to NATO and to upholding European security, including through increased funding for U.S. defense activities in Europe such as the European Deterrence Initiative (EDI). ", "Some NATO member state governments argue that growing divergence between the United States and many European allies on a range of key foreign and security policy issues, from Iran's nuclear program to fighting the Islamic State terrorist organization in Syria, has impeded cooperation in NATO and exposed strategic rifts within the alliance. Some European allies have expressed particular concern about what they portray as a lack of U.S. coordination on policy in Syria, where many European countries have been fighting alongside the United States to counter the Islamic State. Some maintain that the U.S. drawdown of forces in Syria in October 2019 enabled Turkey's subsequent military operations against Kurdish forces in the country. ", "In a widely reported November 2019 interview, French President Macron cited these divergences when he proclaimed that, \"we are currently experiencing the brain death of NATO.\" Referring to concerns about the drawdown of U.S. forces from Syria in October 2019 and subsequent military operations by Turkey, he lamented, \"You have partners together in the same part of the world, and you have no coordination whatsoever of strategic decision-making between the United States and its NATO allies. None. You have an uncoordinated aggressive action by another NATO ally, Turkey, in an area where our interests are at stake. There has been no NATO planning, nor any coordination.\" In London, President Trump characterized Macron's criticism as \"very, very nasty\" and stressed that \"NATO serves a great purpose\"; Macron said he stood by his earlier criticism of the alliance."], "subsections": []}, {"section_title": "Tensions with Turkey36", "paragraphs": ["Some of Turkey's fellow NATO members have sharply criticized Turkey's October 2019 military operations against Kurdish forces in northern Syria as well as its planned deployment of a Russian S-400 air defense system, with some policymakers calling into question Turkey's qualification for continued membership in the alliance. Turkey has been a NATO member since 1952 and has participated in numerous NATO missions, including ongoing operations in Afghanistan, Iraq, and the Western Balkans. NATO, in turn, has invested substantially in military facilities in Turkey, including naval bases and radar sites. Since 2013, NATO members have provided Turkey with air defense support through the deployment of defensive missile systems along its southern border. ", "During an October 11, 2019, visit to Turkey, Secretary General Stoltenberg acknowledged Turkey's \"legitimate\" security concerns but urged Turkey to \"act with restraint\" and do everything it can to preserve the gains that have been made against the Islamic State. ", "Since 2012, Turkey has on three separate occasions invoked Article 4 of NATO's founding treaty to prompt high-level NATO consultations on a perceived threat from Syria to Turkey's territorial integrity or security. On February 28, 2020, the allies met and expressed full solidarity with Turkey in response to \"indiscriminate air strikes by the Syrian regime and Russia in Idlib province.\" Secretary General Stoltenberg stressed that NATO allies were providing Turkey with air defense support along its border with Syria and aerial surveillance over Syria. NATO has deployed up to three air defense systems along the Turkish-Syrian border since early 2013 in response to a Turkish request for support following shelling by Syrian forces and the shooting down of a Turkish fighter jet in 2012. Although the air defense mission continues, some allies cast doubts on the deployment after Turkey's military incursion into northern Syria in October 2019. Italy withdrew its air defense system from Turkey in December 2019, though it said the decision was not a response to Turkey's actions; Spain continues to deploy a Patriot missile battery along Turkey's border. ", "Secretary General Stoltenberg has said that Turkey's acquisition of the S-400 air defense system is \"not good\" for NATO, but he stressed that Turkey could continue to participate in NATO's integrated air and missile defense systems if the S-400 is excluded from these systems. Some allied leaders have argued that NATO should exclude Turkey from NATO's defense systems if it deploys the S-400.", "The North Atlantic Treaty does not contain provisions explicitly authorizing NATO allies to take action against another NATO member without its consent. However, the United States and other NATO members could take measures to affect the character of allied cooperation with Turkey\u00e2\u0080\u0094for example, by changing their contributions of equipment or personnel, or their participation in specific activities in Turkey. On October 14, 2019, U.S. Defense Secretary Mark Esper stated that he would \"press our other NATO allies to take collective and individual diplomatic and economic measures in response to these egregious Turkish actions.\" "], "subsections": []}, {"section_title": "EU Security and Defense Policy", "paragraphs": ["Some European leaders, including French President Macron, have argued that uncertainty about the future U.S. role in European security should add urgency to long-standing efforts to develop coordinated European defense capabilities and policies, independent of but complementary to NATO. For two decades, the EU has sought to develop its Common Security and Defense Policy to bolster its common foreign policy, strengthen the EU's ability to respond to security crises, and enhance European military capabilities. Improving European military capabilities has been difficult, however, especially given many years of flat or declining European defense budgets. In recent years, the EU has announced several new defense initiatives, including a European Defense Fund (EDF) to support joint defense research and development activities and a new EU defense pact (known as Permanent Structured Cooperation, or PESCO) aimed at spending defense funds more efficiently.", "Secretary General Stoltenberg has expressed support for further EU defense integration and cooperation but emphasizes that these efforts should strengthen the European pillar within NATO\u00e2\u0080\u009422 NATO members are also members of the EU\u00e2\u0080\u0094rather than replace or supplant NATO. Stoltenberg also has stressed that EU defense initiatives should be careful not to duplicate NATO capacities and should complement NATO initiatives. In addition, the Trump Administration has expressed concern that the EDF and PESCO could restrict U.S. defense companies from participating in the development of pan-European military projects. Supporters of EU defense integration highlight that PESCO's initial priority projects were identified in consultation with NATO and that several of these projects focus on enhancing military mobility across Europe, a key NATO priority. "], "subsections": []}]}, {"section_title": "Issues for Congress", "paragraphs": ["Congress was instrumental in creating NATO in 1949 and has played a critical role in shaping U.S. policy toward the alliance ever since. Although many Members of Congress have criticized specific developments within NATO\u00e2\u0080\u0094regarding burden-sharing, for example\u00e2\u0080\u0094Congress as a whole has consistently demonstrated strong support for active U.S. leadership of and support for NATO. ", "Congressional support for NATO traditionally has buttressed broader U.S. policy toward the alliance. During the Trump Administration, however, demonstrations of congressional support for NATO have at times been viewed primarily as an effort to reassure allies about the U.S. commitment to NATO after President Trump's criticisms of the alliance. For example, during the Trump Administration, both chambers of Congress have passed legislation expressly reaffirming U.S. support for NATO at times when some allies have questioned the President's commitment. Some analysts portrayed House Speaker Nancy Pelosi and Senate Majority Leader Mitch McConnell's joint invitation to Secretary General Stoltenberg to address a joint session of Congress on April 3, 2019, in commemoration of NATO's 70 th anniversary as an additional demonstration of NATO's importance to Congress.", "Although Congress has expressed consistent support for NATO and its cornerstone Article 5 mutual defense commitment, congressional hearings on NATO in the 115 th and 116 th Congresses have reflected disagreement regarding President Trump's impact on the alliance. Some in Congress argue that President Trump's criticism of allied defense spending levels has spurred recent defense spending increases by NATO members that were not forthcoming under prior Administrations, despite long-standing U.S. concern. ", "Other Members of Congress counter that President Trump's admonition of U.S. allies and his questioning of NATO's utility have damaged essential relationships and undermined NATO's credibility and cohesion. They contend that doubts about the U.S. commitment to the alliance could embolden adversaries, including Russia, and ultimately weaken other allies' commitment to NATO. Critics also have lamented the Administration's reported lack of coordination with its allies on policies that have significant security ramifications for Europe, such as countering the Islamic State in Syria. ", "Despite disagreement over President Trump's impact on the alliance, most Members of Congress continue to express support for robust U.S. leadership of NATO, in particular to address potential threats posed by Russia. Many Members have called for enhanced NATO and U.S. military responses to Russian aggression in Ukraine, and others have advocated stronger European contributions to collective defense measures in Europe. Increasingly, some Members of Congress have questioned whether NATO should take formal action against an ally, such as Turkey, which pursues foreign and defense policies that they believe could threaten alliance security.", "In light of these considerations, Members of Congress could focus on several key questions regarding NATO's future, including the following: ", "addressing the strategic value of NATO to the United States and the United States' leadership role within NATO; examining whether the alliance should adopt a new strategic concept that better reflects views of the security threat posed by Russia and new and emerging threats in the cyber and hybrid warfare domains (NATO's current strategic concept was adopted in 2010); examining NATO's capacity and willingness to address other security threats to the Euro-Atlantic region, including from the MENA region, posed by challenges such as terrorism and migration; examining the possible consequences of member states' failure to meet agreed defense spending targets; assessing U.S. force posture in Europe and the willingness of European allies to contribute to NATO deterrence efforts and U.S. defense initiatives in Europe, such as the ballistic missile defense program and EDI; examining options to sanction allies that act in ways that jeopardize allied security; revisiting the allies' commitment to NATO's stated \"open door\" policy on enlargement, especially with respect to the membership aspirations of Georgia and Ukraine; and developing a NATO strategy toward China, particularly given U.S. and other allies' concerns about the security ramifications of increased Chinese investment in Europe."], "subsections": []}]}}
{"id": "R46360", "title": "The Credit Union System: Developments in Lending and Prudential Risk Management", "released_date": "2020-05-15T00:00:00", "summary": ["Credit unions make loans to their members, other credit unions, and corporate credit unions that provide financial services to individual credit unions. Historically, credit unions have faced statutory restrictions on their lending activities, including restricting lending activities to their members. Other lending restrictions include a 15% statutory loan interest rate ceiling, with some authority to operate above the cap under certain circumstances; a 15-year maturity limit on most loans (with some exceptions, such as residential mortgages); and an aggregate limit on an individual credit union's member business loan (MBL) activity (in the form of outstanding loan balances) and on the amount that can be loaned to any one member.", "Congress passed the Federal Credit Union Act of 1934 (FCU Act; 48 Stat. 1216) to create a class of federally chartered financial institutions to \"promote thrift among its members and create a source of credit for provident or productive purposes.\" The original concept of a credit union stemmed from small lending cooperatives that not only provided a low-cost source of credit for but also promoted thriftiness among their members. Since their inception, credit unions have been granted additional lending authorities as the marketplace has evolved. Nevertheless, the credit union system still faces more restrictions than the commercial banking system.", "Credit union industry advocates argue that lifting lending restrictions to make the system more comparable with the banking system would increase borrowers' available pools of credit. Community banks, which often compete with credit unions, argue that policies such as raising the business lending cap, for example, would allow credit unions to expand beyond their congressionally mandated mission and could pose a threat to financial stability. By amending the FCU Act several times to expand permissible lending activities, Congress arguably recognizes that the credit union system has evolved into a more sophisticated financial intermediation system. In addition to various FCU Act amendments over the past several decades, Congress has recently passed various legislation that would allow credit unions to expand their lending activities. For example, P.L. 115-174 revised the MBL definition, allowing credit unions to extend loans to one-to-four family dwellings regardless of whether the dwellings are primary residences. In the 116 th Congress, H.R. 1661 has been introduced and, if enacted, would amend the FCU Act to allow the National Credit Union Administration (NCUA)\u00e2\u0080\u0094the primary regulator of federally insured credit unions\u00e2\u0080\u0094the flexibility to extend loan maturities for all loans, including MBLs and student loans.", "Recognizing credit unions' primary mission as meeting consumers' credit and savings needs, Congress emphasized prudential safety and soundness concerns when it established the statutory cap on MBLs and a capital supervisory framework for the credit union system. Following the 2008 financial crisis, the federal bank prudential regulators (i.e., the Federal Reserve, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation) enhanced their prudential capital requirements to increase the U.S. banking system's resilience to systemic risk events. Likewise, the NCUA initially proposed in 2014 to increase capital (net worth) requirements particularly for large credit unions (those with $500 million or more in assets); however, the proposal has been revised and delayed and is currently scheduled to become effective in January 2022. In the meantime, the NCUA has implemented and proposed rules to support expanding lending activities that would increase financial transactions volumes (economies of scale), thus increasing the array of loan product offerings for members and potential revenues for the credit union system. Likewise, Congress has been monitoring the extent to which the adoption of enhanced prudential capital requirements for the credit union system has kept pace with the bank prudential regulatory regime."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["Credit unions are nonprofit depository financial institutions that are owned and operated entirely by their members. In other words, na tural person credit unions, also known as retail credit unions, are financial cooperatives that return profits to their memberships. For this reason, member deposits are referred to as shares , which may be used to provide loans to members, other credit unions, and credit union organizations; and the interest earned by members is referred to as share d ividends , which are comparable to shareholder profit distributions. Credit unions (and banks) engage in financial intermediation , or facilitating transfers of funds back and forth between savers (via accepting deposits) and borrowers (via loans). ", "The National Credit Union Administration (NCUA), an independent federal agency, is the primary federal regulator and share deposit insurer for credit unions. There are three federal bank prudential regulators: the Office of the Comptroller of the Currency (OCC) charters and supervises national depository (commercial) banks; the Federal Deposit Insurance Corporation (FDIC) provides deposit insurance by collecting insurance premiums from member banks and places the proceeds in its Deposit Insurance Fund (DIF), which are subsequently used to reimburse depositors when acting as the receiver of a failed bank; and the Federal Reserve provides lender-of-last-resort liquidity to solvent banks via its discount window. The NCUA, by comparison, serves all three functions for federally regulated credit unions. The NCUA also manages the National Credit Union Share Insurance Fund (NCUSIF), which is the federal deposit insurance fund for credit unions.", "Although scholars are unable to pinpoint the precise origin of the credit union movement, the organization of membership-owned cooperatives to raise funds for members lacking sufficient collateral or wealth necessary to qualify for bank loans dates back to colonial times. During their infancy stages, credit cooperatives basically emerged as a form of microlending in financially underserved localities to provide unsecured small-dollar loans. Small group cooperatives initially relied on pooled funds, donations, and subsidies to make loans (allocated via lotteries or auctions) until evolving into self-sufficient systems more reliant on deposits. The advantage of small memberships for group credit cooperatives allow members to know each other, which facilitates peer monitoring of the lending decisions and borrowers' repayment behavior. The original concept of a credit union stemmed from cooperatives formed to promote thrift among its members and to provide them with a low-cost source of credit.", "Following numerous bank failures and runs during the Great Depression that resulted in an extensive contraction of credit, Congress sought to enhance cooperative organizations' ability to meet their members' credit needs. Congress passed the Federal Credit Union Act of 1934 (FCU Act; 48 Stat. 1216) to create a class of federally chartered financial institutions for \"promoting thrift among its members and creating a source of credit for provident or productive purposes.\" Over time, Congress expanded credit unions' permissible activities because the original concept of a credit union arguably needed to evolve with the marketplace. According to the NCUA,", "When Congress amended the FCU Act in 1977 to add an extensive array of savings, lending and investment powers, it intended to \"allow credit unions to continue to attract and retain the savings of their members by providing essential and contemporary services,\" and acknowledged that credit unions are entitled to \"updated and more flexible authority granting them the opportunity to better serve their members in a highly-competitive and ever-changing financial environment.\" H.R. Rep. 95\u00e2\u0080\u009323 at 7 (1977), reprinted in 1977 U.S.C.C.A.N. 105, 110. Congress acknowledged the difficulty in \"regulating contemporary financial institutions within the framework of an Act that has on a continuing basis required major updating by means of regulation.\"", "Although small memberships may be more advantageous for informal microlending systems, advanced intermediation systems\u00e2\u0080\u0094such as banking and the modern credit union industry\u00e2\u0080\u0094benefit from economies of scale . In other words, more assets (loans), greater access to deposits, and increased transactions volumes provide greater risk diversification and lower average cost per transaction, thus reducing vulnerability to financial disruptions that would be confined to a particular small group. ", "On April 19, 1977, P.L. 95-22 (the Mini Bill of 1977) substantially amended the FCU Act. It authorized the credit union industry to provide many financial products (e.g., loans, checking and savings deposit services) similar to those offered by the commercial banking system. Today, modern credit unions primarily engage in consumer and residential lending, and some originate commercial business loans for members. The lending and investment powers of the credit union industry, however, are still more restrictive than those of commercial banks. ", "Credit unions can make loans only to their members, other credit unions, and credit union organizations, thus limiting who they can serve. A statutory interest rate cap for credit union loans exists (with exceptions that allow for sufficient earnings necessary to maintain credit availability). Loans made by federally insured credit unions are generally limited to 15 years (except for residential mortgages). Federal credit unions' investment authority is limited by statute to loans, government securities, deposits in other financial institutions, and certain other limited investments given their origins to promote thrift rather than be long-term investors. Business lending restrictions include an aggregate limit on an individual credit union's member business loan balances and on the amount that can be loaned to one member.", "If some or all of these restrictions are relaxed to allow the credit union system's lending powers to expand and become more comparable to the banking system, the prudential regulatory regimes arguably may require greater harmonization to protect against comparable financial risk exposures.", "This report focuses on policy developments pertaining to the credit union system. It begins with an overview of recent efforts to further expand system lending capacities. Next, it describes how the system's exposure to mortgage credit (default) risk grew after credit unions were given greater intermediation authorities in the mortgage lending space. It then discusses the system's financial distress and recovery resulting from the 2008 financial crisis, and updates the progress made to improve the system's resiliency to credit and insolvency risks. This discussion will use the balance sheet terminology defined in the box below."], "subsections": []}, {"section_title": "Expanding Permissible Lending Activities", "paragraphs": ["Congress has passed legislation, and the NCUA has implemented and proposed rules, supporting the expansion of lending activities that would increase financial transactions volumes (economies of scale). The expansion of lending activities, as discussed in this section, is likely to generate greater cash flows and revenues for the credit union system. "], "subsections": [{"section_title": "Field of Membership and Common Bonds", "paragraphs": ["A credit union's \"field of membership\" is the legal definition of who is eligible to join. Federal or state governments grant credit union charters on the basis of a \"common bond.\" There are three types of charters: a (1) single common bond (occupation or association based); (2) multiple common bond (more than one group each having a common bond of occupation or association); and (3) community-based (geographically defined) common bond. Individual credit unions are owned by their memberships. Credit union members elect a board of directors from their institution's membership (one member, one vote). Credit unions can make loans only to their members, other credit unions, and credit union organizations. ", "Field of membership restrictions may limit an intermediary's ability to collect deposits, which are used to fund loans. Common bond requirements on credit unions can be considered analogous to U.S. restrictions on interstate and branch banking, which are no longer in place. By limiting access to supplementary sources of funds, a credit union (or bank) becomes more vulnerable to cash flow disruptions (e.g., increases in loan defaults, substantial deposit withdrawals) following adverse events\u00e2\u0080\u0094particularly those that would directly affect its field of membership. Despite field of membership restrictions, some of the larger credit unions may still be able to achieve a sufficiently large and diversified depositor base, allowing them to enjoy greater economies of scale. Nevertheless, all intermediaries of all sizes are still vulnerable to a sudden need for liquid funds following some unexpected or adverse interest rate movements or a national recession, discussed in the section entitled \"Increased Exposure to Mortgage Credit Risk and Recent NCUSIF Management Initiatives.\" For this reason, access to more sources of depositors arguably enhances liquidity management for credit unions and banks, which typically have assets (portfolio loans) that are less liquid than their liabilities (deposits).", "On December 7, 2016, the NCUA published a final rule comprehensively amending its chartering and field of membership rules to maximize access to federal credit union services to the extent permitted by law. Although NCUA cannot change the three initial statutory field of membership categories, it revised certain terms such as local community , rural district , underserved area , and multiple common-bond credit union , among other things to broaden access to federal credit unions. Competitors of credit unions, however, legally challenged the revisions, arguing that an associational charter may limit the ability of a credit union to add underserved areas (e.g., local urban or rural underserved areas as determined by the NCUA) to its field of membership unless it also has a multiple common-bond charter. ", "On August 20, 2019, the D.C. Circuit Court of Appeals upheld the rule but remanded two provisions of the NCUA's revised field of membership rule. One provision, to satisfy a community-based common bond charter, would have allowed a combined statistical area with fewer than 2.5 million people to qualify as a local community; arguably, this provision could have had a discriminatory impact on poor and minority urban residents. The second remanded provision would have raised the population limit for rural districts from the greater of 250,000 or 3% of the relevant state's population to 1 million people; some geographical areas arguably could have been defined to extend beyond the state borders of a credit union's headquarters. The NCUA proposed to clarify its authority to reject fields of membership applications that would want to exclude low- or moderate-income individuals. On November, 7, 2019, the NCUA proposed to re-adopt the provision pertaining to the combined statistical area to clarify existing requirements and add an explicit provision to the rule to address potential discriminatory concerns."], "subsections": []}, {"section_title": "Member Business and Commercial Lending", "paragraphs": ["Lending caps on member business (commercial) loans offered by credit unions did not exist until 1998. Congress included provisions in the Credit Union Membership Access Act of 1998 (CUMAA; P.L. 105-219 ) that established a commercial lending cap that limits most credit unions to lending no more than 12.25% of their assets to small businesses, among other provisions. The following passages from the Senate's CUMAA report explain the rationale for establishing the member business loan (MBL) cap. ", "\"The purpose of H.R. 1151, the CUMAA, as reported from the Committee, is to amend existing law with regard to the field of membership of federal credit unions, to preserve the integrity and purpose of federal credit unions and to enhance supervisory oversight of federally insured credit unions.... The bill significantly strengthens the prudential safeguards applicable to federally insured credit unions and makes the credit union system safer, sounder and more resilient.\" \" Section 203. Limitation on member business loans . In new section 107A(a), the Committee has imposed substantial new restrictions on commercial business lending by insured credit unions. Those restrictions are intended to ensure that credit unions continue to fulfill their specified mission of meeting the credit and savings needs of consumers, especially persons of modest means, through an emphasis on consumer rather than business loans. The Committee action will prevent significant amounts of credit union resources from being allocated in the future to large commercial loans that may present additional safety and soundness concerns for credit unions, and that could potentially increase the risk of taxpayer losses through the National Credit Union Share Insurance Fund ('Fund').\"", "The CUMAA contained the following provisions: ", "The MBL definition was codified and defined as \"any loan, line of credit, or letter of credit, the proceeds of which will be used for a commercial, corporate or other business investment property or venture, or agricultural purpose,\" but it does not include an extension of credit that is fully secured by a lien on a one-to-four-family dwelling that is a member's primary residence. The aggregate amount of MBLs that can be made by an individual credit union was limited to the lesser of 1.75 times the credit union's actual net worth or 1.75 times the minimum net worth amount required to be well-capitalized under the prompt corrective action supervisory framework, typically calculated to be 12.25%. Three exceptions to the aggregate MBL limit were authorized for credit unions (1) that have low-income designations or participate in the Community Development Financial Institutions program; (2) chartered for the purpose of making business loans (as determined by the NCUA); and (3) with a history of primarily making such loans (as determined by the NCUA).", "In addition to the statute, a NCUA regulation limits the aggregate amount of a business loan that can be made to one member or group of associated members at 15% of the credit union's net worth or $100,000, whichever is greater."], "subsections": [{"section_title": "MBL Definition and Requirement Updates", "paragraphs": ["On March 14, 2016, the NCUA implemented final MBL rules to replace the prescriptive requirements (and limitations) with a broad principles-based regulatory approach, which became effective on January 1, 2017. The prescriptive approach, for example, required credit unions to request MBL origination waivers for NCUA approval, among other requirements. According to the NCUA, the prescriptive approach took significant time and resources from both credit unions and NCUA, resulting in delays in processing MBL applications. The principles approach, by contrast, streamlines the MBL underwriting process by granting credit unions more flexibility and individual autonomy to best fit their members' needs. Credit unions are still expected to comply with prudential underwriting practices and commensurate net worth requirements. ", "To facilitate the streamlined underwriting approach, the NCUA updated various MBL exemptions, resulting in several new definitions. For example, a commercial loan is a business loan (1) that is fully guaranteed by a federal or state agency or provides an advance commitment to purchase in full or (2) made to a nonmember or part of a joint lending arrangement with an entity that is not a member of the credit union system. Commercial loans do not count toward the MBL cap.", "On May 24, 2018, Section 105 of the Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA; P.L. 115-174 ) amended the statutory MBL definition (i.e., it removed the words ''that is the primary residence of a member'') to address a disparity in the treatment of certain residential real estate loans made by credit unions and banks. The NCUA has since revised the MBL definition to exclude all extensions of credit that are fully secured by a lien on a one-to-four-family dwelling regardless of the borrower's occupancy status. For this reason, non-owner occupied real estate (e.g., rental property) loans are no longer considered MBLs and do not count toward the aggregate MBL cap.", "In addition to amending the MBL definition, EGRRCPA Section 103 amended the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA; P.L. 101-73 ) to exempt from appraisal requirements certain federally related, rural real estate transactions valued at or below $400,000 if no state-certified or state-licensed appraiser is available. The NCUA implemented this provision in a July 2019 final rule. Depository institution lending typically requires appraised collateral as backing for the loans. The rise in home prices (since the $250,000 appraisal threshold was set in 1994) along with the innovation of less expensive automated appraisal valuations arguably has reduced the need for manual appraisals on less expensive homes, thereby lowering borrowers' closing costs. The NCUA also increased the appraisal threshold to $1 million for commercial real estate and qualified MBLs. The $1 million commercial appraisal threshold is higher than the current $500,000 for banks. The NCUA board, however, did not unanimously agree on the $1 million commercial appraisal threshold because, despite the system's low exposure to commercial real estate risks, the banking system still has more expertise evaluating and managing commercial lending risks than does the credit union system."], "subsections": []}, {"section_title": "Policy Options Related to an MBL Cap Increase", "paragraphs": ["The credit union industry has generally supported efforts to increase or eliminate the MBL cap. At the end of 2018, the NCUA reported that the credit union system originated 4.7% in MBLs relative to its assets. If MBL capacity were increased, some larger credit unions could become more competitive with small community banks as well as with some midsize and regional banks. Credit unions that currently enjoy a presence in the commercial lending market, have a sufficiently large asset base, or already operating close to the existing statutory limit would be more likely to increase their presence in the commercial market if the cap were raised. ", "In addition, the credit union system as a whole can support increased member business lending by increasing its use of participation loans . Financial institutions use loan participations to provide credit jointly. The loan originator, that often structures the loan participation arrangement, typically retains the largest share of the loan and sells smaller portions to other institutions. This practice allows the originator to maintain control of the customer relationship (including the loan servicing) and overcome funding limitations. In addition, all of the institutions involved in the participation loan use their individual portions of the loan to diversify their asset (loan) portfolios, which can be a cost-effective financial risk management tool. The credit union system could, therefore, become a more prominent competitor in the commercial lending market with the banking system, which also uses participation lending arrangements to diversify risks. Nevertheless, because all lending entails exposure to financial risks, having multiple credit unions involved in participations would still pose risk to the NCUSIF. ", "From an economics perspective, a lending cap imposes an arbitrary limit that may be too high for some credit unions and too low for others, thus resulting in MBL shortages in the latter situations. For those credit unions that provide very few or no MBLs, a cap is irrelevant. Credit unions facing an active MBL market must abruptly cease this type of lending when activity volume reaches the cap, which some may argue is set \"too low,\" given that they can no longer satisfy their memberships' financial needs. Hence, a lending cap is arguably a blunt instrument to the extent that it imposes the same requirement on all institutions without taking into account differences in asset size and market purview. ", "Alternatively, a policy tool with a greater focus on the costs to originate MBLs\u00e2\u0080\u0094specifically subjecting the net income derived from MBL activities to a type of tax\u00e2\u0080\u0094would impose financial costs on credit unions without directly capping their lending ability. For example, the unrelated business income tax (UBIT) for tax-exempt organizations could be applied to MBLs. At the entity level, credit unions are exempt from federal income tax because they are not-for-profit financial cooperatives. If, for example, a credit union were to provide financial services (e.g., check-cashing) to nonmembers, any revenue generated from those activities would be subject to UBIT. Likewise, implementing the UBIT for MBLs would allow costs to grow in proportion to the amount of MBL activity while minimizing an abrupt discontinuation of the activity for those credit unions nearing an established policy cap.", "Another policy option, also with similarities to a tax, would be to adopt capitalization requirements comparable to those implemented for the banking system. The CUMAA established the MBL cap and a capital-based supervisory framework as tools to enhance prudential safety and soundness, ultimately providing more protection for the share deposit insurance fund. Enhanced capitalization (net worth) requirements arguably could substitute for an MBL cap. In short, policy tools operating via cost disincentives rather than quantity restrictions may still allow the credit union system to restrain MBL activity but with more flexibility for certain circumstances."], "subsections": []}]}, {"section_title": "Greater Flexibility in Lending Terms", "paragraphs": ["As previously discussed, the credit union system has evolved to a formal intermediation system that provides a range of financial services; however, it still has not acquired all of the lending powers comparable to those of banks. In addition, some of the system's current lending authorities are temporary and must be regularly renewed. This section reviews some of the temporary or limited lending authorities that the credit union industry and some policymakers argue could be enhanced."], "subsections": [{"section_title": "Interest Rate Ceilings and Temporary Exemptions", "paragraphs": ["The FCU Act sets an annual 12% interest rate ceiling (or cap) for loans made by federally chartered credit unions and federally insured state-chartered credit unions. The statutory loan interest rate ceiling was raised to 15% per annum after the Depository Institutions Deregulation and Monetary Control Act of 1980 (DIDMCA; P.L. 96-221 ) was passed. The DIDMCA also authorized the NCUA to set a ceiling above the 15% cap for up to an 18-month period after consulting with Congress, the U.S. Department of the Treasury, and other federal financial agencies. ", "The credit union interest rate ceiling is currently set at 18%. According to NCUA notices, its interest rate ceiling is an annual percentage rate (APR) rather than a pure interest rate. The APR represents the total annual borrowing costs of a loan expressed as a percentage, meaning that it is calculated using both interest rates and origination fees. The text-box below explains more about how to calculate and interpret the APR.", "In December 1980, the NCUA board raised the ceiling to 21%. In May 1987, the board reduced the rate ceiling and has since maintained it at 18%. When setting the interest rate above 15%, the NCUA must (1) review money market interest rate trends and (2) assess how prevailing interest rate movements (volatility) might threaten credit unions' safety and soundness in terms of the ability to sustain their lending activities, the effect on their net-interest income (earnings), and the effect on their liquidity. In July 2018, for example, the board expressed concern that a ceiling below 18% could result in lower net interest income, considered to be the key driver of credit union earnings, thus reducing credit union profitability and limiting borrowers' access to credit. On January 23, 2020, the board retained the current 18% rate ceiling for federally insured credit union loans, from March 11, 2020, through September 10, 2021, after (1) observing rising money market rates over the preceding six-month period; (2) observing adverse liquidity, capital, earnings, and growth trends; and (3) consulting with the relevant federal agencies. ", "The Military Lending Act of 2006 (MLA; P.L. 109-364 ) was passed to protect active duty military personnel and their eligible family members from predatory lending. The MLA limits the Military Annual Percentage Rate (MAPR) to 36% for small-dollar loans and credit products, such as credit cards, deposit advances, overdraft lines of credits, and certain types of installment loans. \u00c2\u00a0The MLA, however, does not apply to mortgages, automobile loans, and secured loans. A credit union borrower typically receives an APR below the MAPR ceiling for covered transactions. Hence, the credit union interest rate ceiling is currently below the federal MLA cap on consumer loans offered to military personnel. ", "The NCUA, however, permits the credit union system to make payday alternative loans (PALs) to its membership with certain restrictions. Under the existing permissible framework, PAL amounts may range from $200 to $1,000; they must have fully amortizing payments; the term length must range from 46 days to 180 days; and the application fee must be $20 or less. If the borrower cannot repay the initial PAL, a credit union may allow for a rollover into a new PAL of the same initial maturity as long as no additional fees are charged or no additional credit is extended. No more than three PALs can be made to a single borrower in a rolling six-month period. This specific loan product, referred to as a PALs I, requires a one-month membership before it can be offered.", "The PALs program has a 28% ceiling, meaning that it is exempt from the 18% interest rate ceiling that covers other loan originations made by federally insured credit unions and from the 36% MAPR ceiling. The MAPR ceiling includes the origination fees, but the NCUA PALs ceiling excludes the $20 origination fee. The PAL loan APR when including the $20 origination fee, in many cases, exceeds the 36% MAPR ceiling. To avoid lending reductions by credit unions to military service customers, the NCUA requested and was granted a PAL exemption from the MAPR so that the PAL application fee is not included in the APR computation. The higher PAL ceiling also does not include an initial origination fee of up to $20 in the APR calculation.", "On October 1, 2019, the NCUA broadened the PALs framework to allow credit unions to offer additional short-term, small-dollar products. A new PALs II product may have an amount up to $2000 and have fully amortizing payments over a 1-to-12-month term. Furthermore, there is no minimum membership length requirement to be eligible for a PALs II, which may allow borrowers to quickly consolidate multiple non-credit union payday loans into one PALs loan. Credit unions may not charge any overdraft or insufficient funds fees for any PALs II drawn against a member's account, which may reduce the likelihood of creating a negative balance in the account while still allowing credit unions to make sufficient (as opposed to maximum) profit in this line of business."], "subsections": []}, {"section_title": "Loan Maturity Length and Exemption Caps", "paragraphs": ["When the FCU Act was initially passed, credit unions were allowed to make loans not to exceed two years. Congress has since increased system-originated loan maturity lengths. ", "On September 22, 1959, Section 8 of P.L. 86-354 amended the FCU Act to increase credit union loan maturities for up to 5 years. On July 5, 1968, Section 1 of P.L. 90-375 amended the FCU Act to allow credit unions to make unsecured loans with maturities not to exceed 5 years and secured loans with maturities not to exceed 10 years. The Mini Bill of 1977 allowed loan maturities not to exceed 12 years. It also allowed credit unions to make residential real estate loans with maturities up to 30 years; home improvement loans and mobile home loans (for principal residence) were allowed for up to 15 years. The Garn-St. Germain Depository Institutions Act of 1982 (Garn-St. Germain Act; P.L. 97-320 , 96 Stat. 1469) permitted mortgage loan refinancing, and extended the maturity limit to 15 years for all second mortgages. The Competitive Equality Banking Act of 1987 (CEBA; P.L. 100-86 ) amended the FCU Act to authorize the NCUA to allow second-mortgage, home-improvement, and mobile home loans beyond 15 years. On October 1989, the NCUA finalized the rule to extend the maturity limit to 20 years. On October 13, 2006, Section 502 of P.L. 109-351 amended the FCU Act to set a 15-year maximum maturity on credit union loans, with some exceptions. For example, residential one-to-four family mortgages may exceed the 15-year maturity term as long as the property is the borrower's primary residence. ", "In the 116 th Congress, H.R. 1661 was introduced on March 8, 2019, and referred to the House Committee on Financial Services. H.R. 1661 , if enacted, would amend Section 107(5) of the FCU Act to allow NCUA the flexibility to extend maturities for all loans, including MBLs and student loans."], "subsections": []}]}]}, {"section_title": "Developments in the Credit Union System's Prudential Risk Management", "paragraphs": ["Congress created the NCUSIF in 1970 to be the insurance fund for all federally regulated credit unions. The NCUA manages the NCUSIF, which is completely funded by insured credit unions. The NCUSIF's primary income source is the premiums collected from credit unions, which pay the fund's operating expenses, cover losses, and build reserves. Premiums were originally set at one-twelfth of 1% of the total amount of member share accounts, but P.L. 98-369 required each federally insured credit union to maintain a fund deposit equal to 1% of its insured share accounts. Examination fees and any penalties NCUA collects from insured institutions are also deposited into the NCUSIF. Fund portions not applied to current operations can be invested in government securities, and the earnings also generate fund income. The NCUSIF's reserves consist of the 1% deposit, plus the fund's accumulated insurance premiums, fees, and interest earnings.", "Prudential safety and soundness regulation, which includes holding sufficient capital reserves, may reduce the financial institutions' insolvency (failure) risk and promote public confidence in the financial system. Although higher capital requirements may not prevent adverse financial risk events from occurring, more capital enhances the financial firms' ability to absorb greater losses associated with potential loan defaults. The enhanced absorption capacity may strengthen public confidence in the soundness of these financial institutions and increase their ability to function during periods of financial stress. For this reason, the NCUA has proposed enhanced net worth (capitalization) requirements for credit unions, which is intended to increase the credit union system's resilience to insolvency risk and to minimize possible losses to the NCUSIF and ultimately to taxpayers. These prudential issues are discussed in this section."], "subsections": [{"section_title": "Increased Exposure to Mortgage Credit Risk and Recent NCUSIF Management Initiatives", "paragraphs": ["Credit unions were granted the authority to increase their participation in the mortgage market during the late 1970s and 1980s. In light of the savings and loan (S&L) crisis, discussed in the text box below, the credit union system was also granted more powers to mitigate interest rate risk stemming from exposure to mortgage market risk. The following list highlights some of these authorities: ", "After the Mini Bill of 1977 was passed, the NCUA adopted regulations on August 7, 1978, permitting credit unions to sell mortgage loans in the secondary market\u00e2\u0080\u0094specifically to Fannie Mae, Freddie Mac, and Ginnie Mae (government-sponsored enterprises, or GSEs) as well as to federal, state, and local housing authorities. On August 16, 1978, federal credit unions were also granted the authority to sell their members' federally guaranteed student loans. The Garn-St. Germain Act, as mentioned, eliminated limits on the size and maturity of first lien mortgages, permitted refinancing of mortgage loans, and extended the maturity limit to 15 years for all second mortgages. The CEBA amended the FCU Act to authorize the NCUA to allow second-mortgage, home-improvement, and mobile home loans beyond 15 years. The Garn-St. Germain Act also amended the FCU Act to allow credit unions to issue and sell securities, which are guaranteed pursuant to Section 306(g) of the National Housing Act. In other words, federal credit unions were given the authority to participate in activities that would allow them to securitize assets. In 1988, the NCUA allowed credit unions to invest in mortgage-backed securities (MBS). Rather than hold, for example, 30-year mortgages, the ability to hold MBS of shorter (e.g., 10 year) maturities reduces asset duration risk (discussed in the text box below). In 1989, credit unions were allowed to use financial derivatives to purchase insurance against declines in GSE-issued MBS values that would occur after a rise in interest rates, thus protecting the overall value of their asset (loan) portfolios. (NCUA noted that the credit union system had experienced a 48% increase in real estate lending in 1987.)", "Consequently, as credit unions and other financial intermediaries increased their participation in the mortgage market, they also grew more susceptible to the financial risks linked to this market. Rising interest rates was a major risk factor in the S&L crisis during the 1980s, whereas rising mortgage defaults or credit risk was a major factor in the financial crisis that occurred in 2008. Because of the greater exposure to mortgage credit risk, the credit union system along with numerous financial entities in 2008 experienced distress after a sharp rise in the percentage of seriously delinquent mortgage loans in the United States.", "According to the NCUA chairman, corporate credit unions faced increasing liquidity pressures during 2008 after a significant portion of their MBSs\u00e2\u0080\u0094following a deterioration of the underlying real estate collateral\u00e2\u0080\u0094lost value and were subsequently downgraded below investment grade. Corporate credit unions operate as wholesale credit unions, meaning that they provide financing, investment, and clearing services for the retail credit unions that interface directly with customers. The corporates accept deposits from, as well as provide liquidity and correspondent lending services to, retail credit unions. This reduces the costs that smaller institutions would bear individually to perform various financial transactions for members. Given that retail credit unions are cooperative owners of corporate credit unions, they are also federally insured by the NCUSIF. The NCUA placed two corporate credit unions into conservatorship in March 2009 and three additional corporates in September 2010. The five corporates under conservatorship at the time had represented approximately 70% of the entire corporate system's assets and 98.6% of the investment losses within the system.", "The share equity ratio\u00e2\u0080\u0094the ratio of total funds in the NCUSIF relative to the estimated amount of share deposits held by credit unions\u00e2\u0080\u0094is an indicator that represents the adequacy of reserves available to protect share depositors and maintain public confidence. The NCUA annually determines the normal operating level for the share equity ratio, which statutorily must fall between 1.2% and 1.5%. The 2006 equity ratio was 1.30% and fell below the statutory minimum to 1.18% by August 2010. The NCUA board may assess a premium when the ratio falls between 1.2% and the declared operating level; however, it is required to assess a premium if the equity ratio falls below 1.2%. Similarly, the NCUA board may declare a dividend if, at the end of the calendar year, the equity level exceeds the normal operating level; it is required to do so if the equity ratio exceeds 1.5%.", "Rather than deplete the NCUSIF, Congress in May 2009 established a Temporary Corporate Credit Union Stabilization Fund (TCCUSF) to accrue and recover losses from the corporates. The TCCUSF borrowed from Treasury to help cover conservatorship costs, and the NCUA also raised assessments on all federally insured credit unions, including those that did not avail themselves of corporate credit union services. The premium assessment reflected a plan to restore the NCUSIF equity ratio to 1.3%, which happened by December 2011. ", "After achieving a positive net position of $1.9 billion as of May 2017, the NCUA, in July 2017, proposed closing the TCCUSF and providing credit unions with a Share Insurance Fund distribution in 2018, estimated to be between $600 million and $800 million. The TCCUSF officially closed on October 1, 2017; its assets and obligations were transferred to the NCUSIF. The NCUA reduced the share equity ratio from 1.39, which had previously been set in September 2017, to 1.38, administering an equity distribution (rebate) of $160.1 million to member institutions."], "subsections": []}, {"section_title": "The Risk-Based Capital Rule", "paragraphs": ["On January 23, 2014, the NCUA announced increases in capital requirements for a subset of natural person credit unions designated as complex . NCUA initially defined a complex credit union to have at least $50 million in assets. On January 27, 2015, the NCUA revised the initial proposed rule, amending the definition as having at least $100 million in assets. On October 29, 2015, the NCUA finalized the risk-based capital rule. Some of the rule's specific requirements included the following: ", "A new asset risk-weighting system was introduced that would apply to complex credit unions, which would be more consistent with the methodology used for U.S. federally insured banking institutions. A new risk-based capital ratio (defined using the narrower risk-based capital measure in the numerator and total risk-weighted assets, which are computed using the new risk-weighting system, in the denominator) of 10% would be required for complex credit unions to be well-capitalized under the prompt corrective action supervisory framework. The risk-based capital ratio was designed to be more consistent with the capital adequacy requirements commonly applied to depository (banking) institutions worldwide. Compliance of complex credit unions with the risk-based capital ratio requirements as well as the existing statutory 7% net-worth asset ratio would have been effective by January 1, 2019, to avoid NCUA supervisory enforcement actions. Non-complex credit unions with assets below $100 million would not have been required to comply with the new risk-weighting system, and they would no longer be required to risk-weight their assets. Instead, non-complex credit unions must comply with the existing statutory 7% net-worth asset ratio. Credit unions with a concentration in commercial lending in excess of 50% of their total assets would be required to hold higher amounts of net worth to abate the higher levels of concentration risk. ", "On December 17, 2019, the NCUA issued a final rule to move the effective date to January 1, 2022. The NCUA also amended the complex credit union's definition by increasing the asset threshold level from $100 million to $500 million. The NCUA also wanted more time to consider the feasibility of adopting a capital framework for the credit union system that would be similar to the community bank leverage ratio framework. Under this framework, banks with less than $10 billion in average total consolidated assets may elect to maintain a leverage ratio of greater than 9% to satisfy both the risk-based and leverage capital requirements to be well-capitalized. Nevertheless, the delays have prompted some Members of Congress to monitor the implementation progress of the risk-based capital rule for credit unions."], "subsections": []}, {"section_title": "Supplemental Capital", "paragraphs": ["Because credit unions do not issue common stock equity, they do not have access to capital sources beyond retained earnings. If alternative sources of capital, referred to as supplemental capital, were to be used in addition to net worth, then credit unions would be able to increase their lending while remaining in compliance with their safety and soundness net worth requirements. The proposal discussed below to adopt supplemental capital requirements would enhance the credit union system's lending capacity and introduce a new prudential risk management tool.", "An NCUA working group has developed three general sources of supplemental capital, all of which would be repaid after reimbursement of the NCUSIF following liquidation of an insolvent credit union. Credit unions could raise ", "voluntary patronage capital (VPC) if (noninstitutional) members were to purchase \"equity shares\" in the organization. VPC equity shares would pay dividends; however, a VPC investor would not obtain any additional voting rights, and no investment would be allowed to exceed 5% of a credit union's net worth. ", "mandatory membership capital (MMC) if a member pays what may be conceptually analogous to a membership fee. MMC capital would still be considered equity for the credit union but, unlike VPC, it would not accrue any dividends. ", "subordinate debt (SD) from external and institutional investors. SD investors would have no voting rights or involvement in a credit union's managerial affairs. SD would function as a hybrid debt-equity instrument, meaning the investor would simply be a creditor with no equity share in the credit union while it is solvent and would not be repaid principal or interest should the credit union become insolvent. SD investors must make a minimum five-year investment with no option for early redemption. ", "A credit union 's net worth is defined in statute; therefore, congressional legislative action would be required to permit other forms of supplemental capital to count toward their net worth prudential requirements. "], "subsections": []}]}, {"section_title": "Conclusion", "paragraphs": ["Credit union industry advocates argue that lifting lending restrictions to make the system more comparable with the banking system would increase borrowers' available pools of credit. Community banks, which often compete with credit unions, argue that policies such as raising the business lending cap, for example, would allow credit unions to expand beyond their congressionally mandated mission and could pose a threat to financial stability. By amending the FCU Act several times to expand permissible lending activities, Congress arguably had recognized that the credit union system has evolved into a more sophisticated financial intermediation system. Congress has also emphasized prudential safety and soundness concerns. Following the 2008 financial crisis, the federal bank prudential regulators implemented prudential requirements to enhance the U.S. banking system's resiliency to systemic risk events. The NCUA initially proposed in 2014 to increase capital requirements particularly for large credit unions (those with $500 million or more in assets); however, the proposal has been revised, delayed, and is currently scheduled to become effective in January 2022. In the meantime, the NCUA has implemented and proposed rules to support expanding lending activities that would increase financial transactions volumes (economies of scale), thus possibly generating greater cash flows and profitability for the credit union system. The adoption of enhanced prudential net worth requirements for the credit union system, however, arguably may facilitate mitigating the financial risks that typically accompany increases in lending."], "subsections": []}]}}
{"id": "R46278", "title": "Policy Topics and Background Related to Mining on Federal Lands", "released_date": "2020-03-19T00:00:00", "summary": ["The 116 th Congress is considering multiple proposed changes to U.S. mineral policy. Currently certain types of mineral production on federal lands provide the federal government and some states and industries with sources of revenue, while other production does not generate similar revenue. Proposed changes to federal mineral policy could impact these revenue streams, industries, and states in a variety of ways.", "The processes and requirements to mine on federal lands vary by mineral category, surface/subsurface management agencies, and estate ownership. Three main statutes create the three categories of minerals applicable to mining on federal lands. The General Mining Law of 1872 covers locatable (or hardrock) minerals, which are now defined as those minerals not defined by other statutes; typical examples include gold, silver, copper, and gemstones, when not found on acquired lands. Leasable minerals are defined by the Mineral Leasing Act of 1920, and include coal, phosphate, potassium, and sodium, among others (leasable minerals also include otherwise locatable minerals on acquired land, per the Mineral Leasing Act for Acquired Lands of 1947). Salable minerals are defined by the Materials Act of 1947, and include common minerals such as sand and gravel.", "Additional processes and requirements apply when the surface rights above the federal mineral estate are privately owned (i.e., split estate), commonly resulting from the Stock Raising Homestead Act of 1916. Similarly, coordination is required between the surface management agency and the agency managing the mineral estate. Two statutes generally apply to mining on federal lands, including the Surface Mining Control and Reclamation Act of 1977 (only applicable to coal) and the Federal Mine Safety and Health Act of 1977, while others may apply, including the Federal Land Policy Management Act of 1976; the National Environmental Policy Act of 1969; the Clean Water Act of 1972; the Clean Air Act; the Endangered Species Act of 1973; and the National Historic Preservation Act of 1966, among others.", "Data regarding mineral production for locatable minerals on federal lands are not collected by the federal government. This lack of data can hinder the development and analysis of policies intending to affect mineral production on federal lands. The 116 th Congress is considering H.R. 2579 , the Hardrock Leasing and Reclamation Act of 2019, which would, among other provisions, require mining operations on federal lands to report production volumes and values, with these data made public.", "Locatable mineral production on federal lands is not subject to royalties. Some interested parties see not charging royalties as a means of encouraging mineral exploration and production, while others may argue the public is not recovering fair market value for the transfer of a public asset to a private entity. H.R. 2579 would also establish a federal royalty policy for all new hardrock mineral mining operations on federal lands, and use these and other fees for the reclamation of abandoned hardrock mines and other environmental conservation activities on lands and waters affected by past hardrock mining.", "Federal land withdrawals may close a given area to mining. Advocates for a specific land withdrawal generally see the proposed use (e.g., military base, national park, national monument, wilderness area) as superseding the potential use of the public land by other interests (e.g., for mining). Proponents of mining generally advocate for limited withdrawals from the mineral estate, as access to public lands for mining represents opportunities for ongoing and future operations. H.R. 1373 would permanently withdraw about one million acres surrounding the Grand Canyon National Park from new mineral entry; it passed the House, and a companion bill, S. 3127 , has been introduced in the Senate. H.R. 5598 would withdraw 234,328 acres of federal lands in the Superior National Forest, including lands covered by previously disputed mineral leases.", "Several bills in the 116 th Congress would address U.S. critical mineral supply (i.e., those minerals defined by the U.S. Geological Survey that meet certain net import dependence criteria and perceived necessity to the U.S. economy). For example, S. 1317 would instruct the U.S. Geological Survey (USGS) to publish information regarding domestic critical mineral resources and would authorize an ongoing research and development program for critical minerals in the Department of Energy. The text of S. 1317 was incorporated into a substitute amendment to S. 2657 . Another example is H.R. 4410 , which would establish a federal cooperative and a federal corporation to process and sell certain critical minerals commonly found with thorium, which is radioactive."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["The 116 th Congress is considering multiple proposed changes to U.S. mineral policy. Currently certain types of mineral production on federal lands provide the federal government and some states and industries with sources of revenue, while other production does not generate similar revenue. Proposed changes to federal mineral policy could impact these revenue streams, industries, and states in a variety of ways.", "The North American Industry Classification System (NAICS) defines the term mining to \"include ore extraction, quarrying, and beneficiating (e.g., crushing, screening, washing, sizing, concentrating, and flotation), customarily done at the mine site.\" Mineral mining in the United States had a value added of $60.6 billion in 2018, which was about 0.3% of total U.S. value added (i.e., GDP). The value-added contribution to total economic output of minerals mined on federal lands is not known, as not all of the underlying data are recorded by the Bureau of Land Management (BLM) or reported by mine operators. Using available data, the U.S. Department of the Interior (DOI) estimates that coal and solid minerals mined on federal lands supported $13.9 billion in value added, $24.2 billion in economic output, and 81,700 jobs in FY2018. ", "This report offers an introduction to the framework created by federal statutes applicable to mining on federal lands. It also highlights some topics in the mining sector that may be relevant to the issue of mining on federal lands for the 116 th Congress, such as the availability of mineral production data; royalties assessed on federal minerals; federal land withdrawals; and critical minerals on federal lands. While the focus of this report is on mining on federal lands, some related topics and concepts are included within this focus."], "subsections": []}, {"section_title": "Statutory Framework for Mining on Federal Lands", "paragraphs": ["The statutory framework applicable to mining on federal lands is a combination of mineral laws, land laws, and laws that impact mining directly or indirectly. These combinations can be complex when discussing specific minerals and mineral topics, as the statutes applying to one situation may be different for another situation.", "This introduction to the statutory framework is presented in four subsections: \" Laws Establishing Mineral Categories ,\" \" Land Laws Applicable to Mining ,\" \" Laws That Apply to Mining on Federal and Non-Federal Lands ,\" and \" Selected Federal Laws That May Impact Mining on Federal Lands .\" This section presents the statutory framework for mining on federal lands; the section \" Processes Related to Mining on Federal Lands \" presents more detail on the regulated processes to mine the different categories of minerals on federal lands."], "subsections": [{"section_title": "Laws Establishing Mineral Categories", "paragraphs": [], "subsections": [{"section_title": "General Mining Law of 1872", "paragraphs": ["The present regulatory framework applicable to mining on federal lands generally places minerals into three categories: locatable (or hardrock ), leasable , and salable . The latter two categories stem from two major changes to the General Mining Law of 1872, which encompassed all mineral deposits on federal lands that were considered valuable. The mining of leasable minerals requires lease and royalty payments; salable minerals generally only require a payment for the quantity purchased. The laws that define the leasable and salable categories are explained in the next two subsections.", "Locatable minerals originally included all minerals, but now this category includes only those minerals not covered by other laws: a locatable mineral is a mineral that is not leasable or salable. Locatable minerals are typically high-value minerals; some examples include gold, copper, lead, gypsum, and gemstones. An otherwise locatable mineral is a leasable mineral if it is on acquired land (see \" Mineral Leasing Act for Acquired Lands \"). Locatable minerals mined on federal lands are not subject to federal royalties."], "subsections": []}, {"section_title": "Mineral Leasing Act of 1920", "paragraphs": ["Leasable minerals are defined by the Mineral Leasing Act of 1920, and include minerals such as coal, phosphate, potassium, and sodium. Pursuant to this act, mining of these minerals on federal land is conducted under a statutory and regulatory framework similar to that of producing oil and natural gas, including lease payments and production royalties. The leasing process may be competitive, and the resulting leases are required to obtain fair market value for the public. "], "subsections": []}, {"section_title": "Materials Act of 1947", "paragraphs": ["Salable minerals (or mineral materials) are defined by the Materials Act of 1947, and include low-value, common minerals and materials (i.e., not considered locatable minerals due to their low value), such as sand, gravel, and pumice. Salable minerals from federal lands are sold to the public at fair market value from community pits, common resource area, or under more formal arrangements for large quantities. Salable minerals can be obtained for free by some entities, including government entities and non-profit organizations. Unless found in unusually valuable deposits, salable minerals are no longer covered by the General Mining Law of 1872. "], "subsections": []}]}, {"section_title": "Land Laws Applicable to Mining", "paragraphs": [], "subsections": [{"section_title": "Federal Lands Overview", "paragraphs": ["The present land area of the United States, excluding territories and possessions, is approximately 2.4 billion acres, and is the culmination of land purchases, cessions, and acquisitions. As the country's land area grew, public policies were enacted to encourage settlement and private land ownership of previously federal lands. These and other policies resulted in changes to the acreage of federal lands; these changes continue, although more slowly in recent years. Four federal land management agencies include the BLM, the Fish and Wildlife Service (FWS), and the National Park Service (NPS) in the DOI, and the Forest Service (FS) in the Department of Agriculture. The BLM managed 244.4 million acres of surface lands (about 10% of the total surface area) and 708.5 million acres of the federal mineral estate (about 29% of the total surface area) of the United States in 2018.", "The laws and regulations applicable to mining on federal lands vary for different arrangements of surface and subsurface ownership, and if the lands are part of the public domain . The following examples illustrate some of the potential complexities related to mining on federal lands for different situations.", "Mining may be allowed in a national forest, whose surface is managed by the U.S. Forest Service and whose subsurface is managed by the BLM. New mining claims are not allowed in national parks. Regulations for mining on acquired lands may be different from regulations for mining on other federal lands, depending on the mineral. The Department of Energy manages and leases about 25,000 acres of federal land that was withdrawn from the public domain for mining uranium, which would otherwise be a locatable mineral. Mineral production data for a given mineral may or may not be publicly available, depending on the type of federal land on which it is found.", "The following three subsections highlight statutes related to federal lands that directly impact mining on federal lands."], "subsections": []}, {"section_title": "Federal Land Policy Management Act of 1976", "paragraphs": ["The Federal Land Policy Management Act (FLPMA) establishes statutory guidance for DOI and BLM management of federal lands, including the federal mineral estate. FLPMA directs the BLM to manage federal lands according to the principles of multiple use and sustained yield . FLPMA codifies the policy that public lands remain in federal ownership, unless the DOI determines disposal of public lands is in the national interest, and that fair market value is to be obtained for use of federal lands. Under FLPMA, the BLM prepares resource management plans (or land use plans ) through a defined process that incorporates public input, including environmental, historical, and societal values, from a variety of stakeholders. Where the BLM is not the surface management agency of a proposed mining operation, FLPMA directs the BLM to coordinate with the surface management agency. FLPMA provides authority to DOI to withdraw lands from mineral entry (i.e., no new mining is allowed)."], "subsections": []}, {"section_title": "Mineral Leasing Act for Acquired Lands", "paragraphs": ["Acquired lands are lands that federal agencies purchased, received by donation or exchange, or acquired through eminent domain; millions of acres have been acquired by the federal government. Generally, minerals that would otherwise be considered locatable are leasable if they are on acquired lands, per the Mineral Leasing Act for Acquired Lands, as amended, which became law in 1947. Specific legislation could allow for different treatment of such minerals on acquired lands."], "subsections": []}, {"section_title": "Stock Raising Homestead Act of 1916", "paragraphs": ["The Stock Raising Homestead Act of 1916 allowed settlers to claim the surface rights of 640 acres of federal land, while the subsurface rights remained with the federal government. When the surface owner does not own the subsurface rights, the joint ownership is designated split estate . No new split estate lands have been created under the Stock Raising Homestead Act since 1976. The process to explore and claim mineral deposits on split estate lands requires additional steps, as the surface owner must be notified, and compensated in the case of damage to the surface resulting from the mining operation."], "subsections": []}]}, {"section_title": "Laws That Apply to Mining on Federal and Non-Federal Lands", "paragraphs": ["Two laws are discussed in this subsection. The first is applicable to all mining, including all mining on federal lands. The second is applicable to all coal mining, about 43% of which was produced on federal lands in 2018. "], "subsections": [{"section_title": "Federal Mine Safety and Health Act of 1977", "paragraphs": ["The Federal Mine Safety and Health Act (FMSHA), as amended, created the Mine Safety and Health Administration (MSHA) within the Department of Labor. MSHA develops and enforces safety and health rules for all U.S. mines regardless of size, number of employees, commodity mined, method of extraction, or land ownership."], "subsections": []}, {"section_title": "Surface Mining Control and Reclamation Act of 1977", "paragraphs": ["The Surface Mining Control and Reclamation Act (SMCRA), as amended, established the Office of Surface Mining Reclamation and Enforcement (OSMRE) within the Department of the Interior. SMCRA applies to all coal mining operations, including those on federal and Native American lands. OSMRE's objectives \"are to ensure that coal mines are operated in a manner that protects citizens and the environment during mining and assures that the land is restored to beneficial use following mining, and to mitigate the effects of past mining by aggressively pursuing reclamation of abandoned coal mines.\" Among other requirements, SMCRA establishes that, as a prerequisite for obtaining a coal mining permit, the applicant is required to post a reclamation bond. "], "subsections": []}]}, {"section_title": "Selected Federal Laws That May Impact Mining on Federal Lands", "paragraphs": ["Other laws and statutes may apply to mining on federal lands in certain situations. Below is a selected list of such statutes with a reference for more information; a range of other federal and state laws may also apply on a case-by-case basis. Application of these laws and statutes vary widely for different mining operations; further discussion is beyond the scope of this report.", " National Environmental Policy Act of 1969 (NEPA) Clean Water Act of 1972 (CWA) Clean Air Act (CAA) Endangered Species Act of 1973 (ESA) National Historic Preservation Act of 1966 (NHPA)"], "subsections": []}]}, {"section_title": "Processes Related to Mining on Federal Lands", "paragraphs": ["The process to mine on federal lands generally begins with the interested person identifying the surface management agency (or owner, if the land is split estate) and the subsurface management agency, if different. The surface management agency can assist with the process to determine whether the area targeted for mining has been previously claimed, leased, or withdrawn from the federal mineral estate. This can occur when lands are designated as national parks, monuments, or military bases, among others. The agency can also ensure that the targeted area and mineral estate are still under federal control, as changes can occur that would give control to private entities, state governments, or Indian governments. The managing agency can also indicate whether the targeted area is acquired land, for which, in most cases, mineral leasing applies. Further, the managing agency can indicate the required information and processes to explore and potentially mine in a given area; such requirements can vary among agencies and within agency offices. Aside from special cases, the BLM is the subsurface management agency for mining on federal lands.", "Additional considerations and regulations may apply to Indian territories, which number more than 300 territories and cover more than 56 million acres. Indian tribes and persons retain the right to develop or allow others to develop mineral resources on their lands. The BLM may be invited to provide assistance, in which case \"the BLM's authorities and responsibilities include, but are not limited to, resource evaluation, approval of drilling permits, mining and reclamation, production plans, mineral appraisals, inspection and enforcement, and production verification.\"", "The subsequent steps in the process to open a new mine on federal lands depend on the type of mineral to be mined (i.e., locatable, leasable, or salable), as the processes vary by mineral category."], "subsections": [{"section_title": "Locatable Minerals", "paragraphs": ["If the mineral of interest is locatable and on federal lands open to mineral entry not previously claimed, exploration that does not result in surface disturbances (e.g., rock-hounding or use of hand-operated tools) can begin without a permit; a permit may be required if surface disturbance is expected. Establishing or staking a claim is the statutorily defined process of physically indicating and publicly recording the specific boundaries of the area containing the mineral(s). The local field office of the applicable surface management agency can assist with this process, but the person exploring is responsible for knowing if a specific area is subject to being claimed (i.e., there is not an existing prior claim on that area, and that the area is open to mineral entry). If a reasonable quantity of a locatable mineral is found on public land that is open to mineral entry and has not yet been claimed, the area can be claimed. ", "The two types of mineral claims defined by statute are lode claims and placer claims. Lode claims pertain to valuable minerals in an undisturbed state or location (i.e., rock in place); placer claims refer to valuable minerals that have been moved and deposited in a location different from the mineral's formation, typically due to erosion (e.g., sediment bars along streams). A lode claim cannot be longer than 1,500 feet along the main axis and wider than 300 feet on each side of the axis; an individual placer claim cannot exceed 20 acres. ", "If the BLM is both the surface and subsurface manager, it then works with the operator to approve a required notice or a plan of operation . The mine operator is required to submit an estimate of the reclamation costs to the BLM for approval, after which the mine operator provides a financial guarantee equal to that amount to the BLM. The financial guarantee is held until operations have ceased and the site has been acceptably reclaimed, as determined by the BLM. A claimant must pay a location fee when first recording the claim. An annual maintenance fee is also required. Claim holders may be required to file annual documentation required by FLPMA. More detailed processes need to be followed if exploring on split-estate lands.", "Under the General Mining Law, mining claims meeting certain conditions are allowed to be patented , which typically transfers all rights to the claim holder. However, starting in 1994, Congress, through appropriations laws, has continually placed one-year moratoria on the patent process."], "subsections": []}, {"section_title": "Leasable Minerals: Other Than Coal", "paragraphs": ["If the mineral of interest is leasable, which generally includes otherwise locatable minerals on acquired lands, exploration requires a permit or license ", "a pr ospecting permit is required to identify valuable deposits of leasable minerals in areas where valuable deposits have not yet been identified; an exploration license is required if additional information is desired by the prospective miner regarding a known deposit. ", "If a valuable deposit is identified by a prospecting permit holder (and other conditions are met), the BLM may issue the holder a preference right lease . The BLM may issue a notice for a competitive lease sale on unleased, leasable parcels known to contain valuable mineral deposits. ", "Some leasable minerals are subject to minimum royalties, including 5% of the value of gross output for sulfur and phosphate; 2% of the value of gross output for potassium and sodium; and 25 cents per ton of marketable production for asphalt. Unless otherwise indicated by the BLM, leases require the payment of rent, royalties, and the posting of a reclamation bond; reclamation includes removal of machinery and structures, in addition to required grading and re-vegetation. Many of the steps needed to obtain mining permits, leases, or licenses require the payment of cost-recovery fees to agencies and local governments."], "subsections": []}, {"section_title": "Leasable Minerals: Coal", "paragraphs": ["Coal is a leasable mineral and follows the general process for leasable minerals. However, coal exploration and coal leasing on federal lands are subject to specific regulations and statutes. Coal exploration begins with a designation that the land in question is suitable for coal leasing. Coal exploration requires an exploration license, an exploration bond, and conformance with various federal statutory obligations, and also includes conformance of the regulations promulgated by SMCRA. After any party expresses interest in exploring for coal, the BLM is to publish a notice of in vitation calling for other interested parties to jointly explore the indicated tract of federal land.", "Existing coal regions on federal lands may have tracts available for lease that do not require additional exploration. While some exceptions exist, coal leases are to be issued through the competitive process lease by application . This process begins when an interested party files an application of interest with the BLM for a tract of land previously identified as suitable for coal mining by the BLM. The BLM publishes notices of the lease sale and invites others to submit sealed bids for the lease. The lease is awarded to the highest bid that is at least equal to the fair market value of the lease (conditional on other requirements being met). ", "Only U.S. citizens, associations, corporations, and public bodies are able to obtain coal leases. No entity is permitted to own or control coal leases on federal lands exceeding 75,000 acres in any one state or 150,000 acres in the United States. Coal leases require an annual rental payment of a minimum of $3 per acre, to be specified in the lease. Coal mining on federal lands requires the payment of royalties. The royalty for surface mined coal is a minimum of 12.5% of the gross value of coal produced, and the royalty for coal mined by underground mining methods is 8%. A coal lease also requires that the successful bidder post a lease bond to the BLM."], "subsections": []}, {"section_title": "Salable Minerals", "paragraphs": ["An individual planning to mine or remove salable minerals must contact the local BLM office and secure a sales contract before conducting any operations. Generally, the BLM authorizes the removal (i.e., disposition) of salable minerals on federal lands by a sales contract ; a free use permit may be available to certain government entities or non-profit organizations. If a mine operator desires to open a new deposit of a salable mineral, exploration and mining follow the general processes for leasable minerals. However, c ommon use areas or community pits may be available for immediate mineral removal, eliminating the need for exploration and other processes. The BLM is to identify the fair market value of the mineral at the specific location, required payment, and limitation on surface disturbances, among other specifications."], "subsections": []}]}, {"section_title": "Policy Topics and Legislative Activity", "paragraphs": ["Four policy areas related to mining on federal lands that have been raised in legislation in the 116 th Congress are presented and discussed below. After a brief presentation of the topic, each section presents policy concerns, options, and examples of related current legislation. Unless noted, bills discussed in this section have been introduced in the House or Senate and referred to committee, but have not seen further legislative activity."], "subsections": [{"section_title": "Data Availability for Locatable Minerals", "paragraphs": ["The BLM currently collects mineral production data for leasable and salable minerals on federal lands, but not for locatable minerals. Locatable mineral production information could be useful for some policy considerations; conversely, the lack of such information could limit policy discussion for those considerations.", "Concern regarding the collection of these data is not new. In 2008 the U.S. Government Accountability Office (GAO) reported, \"according to officials with BLM and the Forest Service, they do not have the authority to collect information from mine operators on the amount of hardrock minerals produced on federal land, or the amount remaining.\" The GAO also highlighted the limitations of the data collected and reported by the U.S. Geological Survey (USGS) by noting, \"it is not possible to determine hardrock mineral production on federal lands from the USGS data.\" The DOI reports production of some hardrock minerals from federal lands, but notes those values are estimates based on state data.", "This lack of locatable mineral production data for federal lands can impact multiple policy areas, including issues discussed in the following sections. Some related policy topics include", "Royalties: Potential changes to existing mining laws to extend royalties to all locatable minerals face the challenge that current production and value of these minerals is not collected. Without this information, analysis of such policy changes may be limited. For example, it may be difficult to estimate increased royalty collection or increased costs to producers. Reclamation Bonds: Knowledge of production data could assist the BLM in determining if the posted reclamation bond continues to be adequate, is excessive, or is inadequate for an ongoing locatable mineral operation on federal lands. Critical Minerals: Executive Order (E.O.) 13817 tasked the DOI with coordinating with other executive branch agencies to publish a list of critical minerals. One criterion used to define a critical mineral is net import reliance , the calculation of which includes domestic production of the critical mineral commodity. It is unclear how locatable mineral production, which is not required to be reported, is incorporated into the calculation of net import reliance.", "Congress could address this question of data availability by requiring the collection of mineral production data from federal lands. For example, Congress could authorize and require a government agency to collect mineral production and production value data, among other operations data. While the BLM could be the agency tasked with this data collection due to its role in managing the federal mineral estate, other agencies could also receive consideration. For example, MSHA currently collects and publicly provides data on all mining operations; the USGS tracks and distributes mineral production from sources around the country; and the Environmental Protection Agency (EPA) administers or oversees certain permits for most domestic mining operations. ", "H.R. 2579 , the Hardrock Leasing and Reclamation Act of 2019 (ordered reported by the House Committee on Natural Resources on October 23, 2019), among other provisions, would establish the requirement that mining operations on federal lands report production volumes and values, and it includes the requirement that these and other data are to be made public."], "subsections": []}, {"section_title": "Royalties", "paragraphs": ["Locatable minerals remain regulated by the General Mining Law and are not subject to federal royalties, unlike leasable minerals. Although the federal government does not assess royalties on locatable minerals, some states assess royalties (i.e., severance taxes) on some minerals mined on federal lands.", "Congress might consider establishing a royalty policy for locatable minerals. As viewed by some, locatable minerals represent public assets, and the public should be compensated if any of these assets are removed for private gain. Royalties on locatable minerals could capture this change in ownership, and the revenue streams could be used to fund national priorities. Others view royalty-free access to locatable minerals as a public benefit, given associated mining employment and mining-related economic activity. If set too high, mineral royalties could restrict mining activity and force marginal operations to cease.", "Congress could also recognize additional complexities stemming from the different types of royalties and their associated characteristics. Three common royalties are unit-based royalties, ad valorem royalties, and profit-based royalties. Unit-based royalties are assessed on units of volume or weight and ensure that some revenue is collected in exchange for the removal of the mineral. Ad valorem royalties are assessed on the sale of the mineral and are subject to fluctuations in mineral prices. Profit-based royalties are assessed on operator profits, allowing deductions for certain costs. Further complexities can include whether to assign different royalty rates to different minerals and how to treat minerals that are byproducts of other minerals.", "As noted above, Congress is currently considering H.R. 2579 , the Hardrock Leasing and Reclamation Act of 2019 (ordered reported by the House Committee on Natural Resources on October 23, 2019), which, among other provisions, would close federal lands to new mining claims under the General Mining Law of 1872 and create a hardrock mine reclamation fund. This bill would establish a federal royalty of 12.5% and a displaced materials reclamation fee of 7 cents per ton of displaced materials for all new hardrock mineral mining operations on federal lands. These fees and other revenue generated by provisions in the bill would be deposited into a newly created fund, the Hardrock Minerals Reclamation Fund. The reclamation fund would target reclamation of abandoned hardrock mines and other environmental conservation activities on lands and waters affected by past hardrock mining activity, independent of land owner. The bill would require the collection and public dissemination of data regarding mine production and royalties paid, and regular inspection of all hardrock mines on federal lands."], "subsections": []}, {"section_title": "Federal Land Withdrawals", "paragraphs": ["New mining operations on federal lands require that the federal lands are open for mineral entry. Some federal lands have undergone withdrawal , which generally means those lands are closed to or withdrawn from mining and other activities. FLPMA defines withdrawal as", "withholding an area of Federal land from settlement, sale, location, or entry, under some or all of the general land laws, for the purpose of limiting activities under those laws in order to maintain other public values in the area or reserving the area for a particular public purpose or program; or transferring jurisdiction over an area of Federal land, other than \"property\" ... from one department, bureau or agency to another department, bureau or agency.", "As indicated in this definition, a withdrawal does not necessarily close land to mining, and a withdrawal that closes land to mining may not restrict other land uses. A land withdrawal can occur through legislation, executive order, or agency action, and a withdrawal is usually for a specified period of time. In the event a withdrawal impacts existing mining claims or leases, the DOI and the involved agencies may allow the claims or leases to continue, or they may offer other federal land in exchange for the existing claims or leases. Many federal land withdrawals close the land to mining, including NPS lands, which are closed to new mining claims. ", "The mining industry generally advocates for limited withdrawals from the mineral estate, as access to public lands for mining represents opportunities for ongoing and future operations. Advocates for a specific land withdrawal (with closure to mineral entry) generally see the proposed use (e.g., military base, national park, national monument, wilderness area) as superseding the potential use of the public land by other interests (e.g., for mining).", "One example of a withdrawal affecting mining on federal lands occurred in 2012 when the Secretary of the Interior withdrew about one million acres of federal land surrounding the Grand Canyon National Park from new mineral development for 20 years. The withdrawn area contained active uranium mining operations and about 3,200 mining claims. H.R. 1373 , among other provisions, would permanently withdraw this area from new mineral entry. H.R. 1373 passed the House; a companion bill has been introduced in the Senate as S. 3127 .", "Another example of a withdrawal with closure to mineral entry is for the Nevada Test and Training Range (NTTR), which is currently comprised of over 2.9 million acres of federal land withdrawn until 2021. The Department of the Air Force is requesting that this land withdrawal be renewed and an additional 300,000 acres be withdrawn to expand the area. The State of Nevada Commission on Mineral Resources has produced a map of the existing and proposed expansion areas, including affected active mining claims. H.R. 5606 and S. 3145 , among other provisions, would expand and renew the withdrawn federal land.", "A third example involves a planned mine by Twin Metals Minnesota (TMM) in the Superior Nation Forest, near the Boundary Waters Canoe Area Wilderness. The Superior National Forest was withdrawn from mineral entry in 1930, but it was reopened to mineral entry in 1950. TMM holds two leases issued in 1966 (renewed twice); no mineral production has occurred under these leases. TMM applied to renew these leases for a third time in 2012, ahead of their 2016 expiration. In 2016, DOI found that TMM does not have a non-discretionary right to renewal, and the FS did not consent to renewing the leases; DOI canceled the leases. In 2017, the DOI found that TMM has a non-discretionary right to renewal, and it renewed the leases. H.R. 5598 , among other provisions, would withdraw 234,328 acres of federal lands in the Superior National Forest, which include the lands covered by the TMM leases."], "subsections": []}, {"section_title": "Critical Minerals", "paragraphs": ["Affordable and reliable access to critical minerals, and materials or products containing critical minerals, has been an issue since before the Great Depression, with the first official list of critical minerals dating to 1921. One recent definition of a critical mineral is", "(i) a non-fuel mineral or mineral material essential to the economic and national security of the United States, (ii) the supply chain of which is vulnerable to disruption, and (iii) that serves an essential function in the manufacturing of a product, the absence of which would have significant consequences for our economy or our national security.", "Numerous lists of critical minerals and materials exist, and the creation of such lists is inherently subjective, as the definition of \"critical\" includes notions of access to markets and costs of possible supply interruptions. Potentially adding further confusion, some agencies and studies conflate or do not clarify distinctions between the related terms critical minerals, critical materials, strategic minerals, and strategic materials.", "Discussions of critical minerals often note that the United States has few known locations of critical minerals that could be economically produced, and the United States does not presently have refining capabilities to process those critical minerals into commodities. The United States imports critical minerals (the USGS calculates net import reliance as part of the process to define a critical mineral) or products containing them, resulting in what is sometimes considered vulnerable dependencies. The limitations of using net import reliance to define a critical mineral or critical material are not fully defined, as manufactured products can contain critical minerals of domestic or foreign origin that have been previously imported or exported.", "Some known critical mineral deposits lie on federal lands. One example is the Idaho Cobalt Operation, which is a cobalt reserve on federal lands. Another example is the Twin Metals Minnesota mining project, which would mine copper, nickel, platinum group metals, and cobalt in the Superior National Forest.", "To provide more information on the likely locations of critical mineral resources, the USGS has begun the Earth Mapping Resources Initiative (Earth MRI). This program has produced a map and dataset covering numerous focus areas for one group of critical minerals: the rare-earth elements. Many of these focus areas occur in the western region and presumably lie on federal lands. As the Earth MRI program continues, it plans to focus on other critical minerals. ", "Policy options to address concerns related to critical minerals typically intend to create or increase access to secure quantities of critical minerals. Expanding mineral production on federal and non-federal lands is one option to create increased access to secure quantities of critical minerals. Other policy options can include non-mining options; two such options are mentioned below. One option that could increase access to critical minerals on federal lands includes creating mapping and mineral exploration programs, such as Earth MRI. Such programs can facilitate and lower the private costs of locating critical mineral reserves. While general knowledge of the likelihood of a deposit can assist new mineral developments, policies supporting such programs may have limited impacts on production from known critical mineral deposits.", "A policy option not focused on increasing domestic mineral production would focus on reducing potential negative effects of supply shocks by stockpiling additional critical minerals at the National Defense Stockpile. Given the number of critical minerals and the higher number of manufacturing input materials made from critical minerals, the costs and complexity of maintaining substantial supplies could limit the effectiveness of this option. An additional complication is that \"the National Defense Stockpile is not to be used for economic or budgetary purposes,\" and much demand for critical minerals stems from private consumption, such as motors and batteries for electric vehicles.", "A third option, also not focused on increasing domestic mineral production, would be to secure more access to critical minerals by supporting a domestic supply chain based on critical minerals captured through recycling consumer products. Such support could include funding research to develop technology that would reduce the costs of recycling critical minerals to a competitive level. Other support could include tariffs or quotas on imported critical minerals, thus allowing recycled domestic sources to be more cost competitive.", "Congress is presently considering bills related to critical minerals and materials, with some containing provisions related to the federal mineral estate. These include", "An amendment in the nature of a substitute to S. 2657 was introduced on February 27, 2020 (including the new title \"American Energy Innovation Act of 2020\"), and incorporated language from several energy and mineral bills reported by the Senate Committee on Energy and Natural Resources. Cloture was invoked on March 2. This bill includes text from S. 1317 and S. 1052 (discussed below). S. 1317 , among other provisions, would instruct the USGS to publish information regarding known and unknown domestic critical mineral resources. The USGS may conduct geological surveys to increase this information. This bill would also establish a research and development program in the Department of Energy (DOE) to increase efficiencies in the critical mineral supply chain, to identify substitutes for critical minerals, and to promote the use of recycling as a source of critical minerals. This research also includes producing forecasts related to critical minerals for a 10-year period, including expected demand, market conditions, and possible substitutes for critical minerals. This bill would repeal the National Critical Materials Act of 1984 and authorize $50 million per year for 10 years to fund its activities. This bill also includes identical language to S. 1052 (discussed below). H.R. 4410 , among other provisions, would establish a federal cooperative and a federal corporation related to rare-earth minerals and thorium; both federal charters would be privately funded and operated. The cooperative would process domestic and international sources of rare-earth minerals and materials into products for sale. The corporation would accept all radioactive material (e.g., thorium) produced by the cooperative, sell any valuable materials, and could conduct research on new uses of such materials. S. 1052 , among other provisions, would direct the DOE to authorize an ongoing program to develop technologies for the extraction of rare-earth elements (REE) from coal and coal byproducts. The bill would authorize $23 million per year for eight years to fund this program. According the committee report accompanying this bill, \"Congress appropriated funding in 2014 for [the National Energy Technology Lab] to develop extraction technologies for REEs from coal byproducts. S. 1052 formally authorizes the program.\" H.R. 2531 , among other provisions, would treat mineral exploration and mining projects related to critical minerals as high-priority infrastructure projects, as defined by E.O. 13807, and would attempt to reduce the time to issue permits to 30 months by allowing the lead agency to determine that NEPA requirements have been met or do not apply to the project. H.R. 3405 , among other provisions, would instruct the Secretary of the Interior to remove uranium from the list of critical minerals, as prepared by the USGS pursuant to E.O. 13817. A previous version of this bill, introduced on June 21, 2019, finds that the United States has reserves of uranium, and that 52% of uranium is imported from stable trading partners. H.R. 3567 , among other provisions, would direct the Under Secretary of Defense for Acquisition and Sustainment, in consultation with others, to establish guidance for the acquisition of items containing rare-earth materials and the supply chain of rare-earth materials from countries that are not U.S. adversaries. The bill would also direct the National Defense Stockpile Manager to dispose of an additional three million pounds of tungsten and to use available funds to acquire approximately $37 million of critical materials over five years; tantalum would be added to the list of critical materials. S. 3356 , among other provisions, would require the DOE to award grants to encourage battery recycling research, development, and demonstration projects. Separately, grants would be awarded to state and local governments and battery retailers to enhance battery recycling collection programs. The bill would authorize $10 million for one year for the existing Lithium-Ion Battery Recycling Prize competition at the DOE, and would authorize to be appropriated $30 million per year for five years."], "subsections": []}]}]}}
{"id": "R46067", "title": "Department of Defense First Agency-wide Financial Audit (FY2018): Background and Issues for Congress", "released_date": "2019-11-27T00:00:00", "summary": ["The Chief Financial Officers Act of 1990 (CFO Act, P.L. 101-576 ) requires annual financial audits of federal agencies' financial statements to \"assure the issuance of reliable financial information ... deter fraud, waste and abuse of Government resources ... [and assist] the executive branch ... and Congress in the financing, management, and evaluation of Federal programs.\" Agency inspectors general (IGs) are responsible for the audits and may contract with one or more external auditors. Congressional interest in the Department of Defense's (DOD's) audits is especially acute because DOD's expenditures represent about half of federal discretionary spending and about 15% of total spending by the federal government. Also, DOD's financial management has been on the Government Accountability Office's high-risk list since 1995. Those on the high-risk list are considered more vulnerable to fraud, waste, abuse, and mismanagement.", "DOD completed its first-ever agency-wide financial audit in FY2018 and recently completed its FY2019 audit. As expected, DOD received an agency-wide disclaimer of o pinion from the DOD IG in both audits\u00e2\u0080\u0094meaning auditors could not express an opinion on the department's financial statements because the financial information was not sufficiently reliable. DOD has stated it could take up to 10 years to receive a clean audit opinion.", "Some reasons for a disclaimer of opinion can include inadequate internal controls (i.e., a series of integrated actions that management uses to guide operations), financial statements not conforming to Generally Accepted Accounting Principles (GAAP), insufficient property and inventory records, and financial management systems that do not provide sufficient evidence for the auditor to express an opinion.", "The FY2018 audit included 2,358 notices of findings and recommendations (NFRs), which capture issues that require corrective action. Approximately 94% of the NFRs were related to three critical areas: financial management systems and information technology; financial reporting and DOD's fund balance with Treasury; and property. These NFRs resulted in 20 agency-wide material weaknesses and 129 component-level material weaknesses. All material weaknesses were related to issues with internal control. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting that results in a reasonable possibility that management will not prevent, or detect and correct, a material financial misstatement. Comprehensive data from the FY2019 audit are not currently available. However, DOD has announced that auditors validated that DOD had resolved over 550 findings, more than 23%, from the department's FY2018 audit and that the audits have helped DOD \"target and prioritize corrective actions as we strive to achieve an unmodified audit opinion.\"", "After describing what a financial audit entails, this report examines the FY2018 audit in detail and addresses several issues for Congress, including the audit's cost (approximately $413 million in FY2018) and the challenges the material weaknesses identified in the FY2018 audit may create for congressional oversight of DOD."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Overview", "paragraphs": ["The Chief Financial Officers Act of 1990 (CFO Act) requires annual financial audits of federal agencies' financial statements to \"assure the issuance of reliable financial information ... deter fraud, waste and abuse of Government resources ... [and assist] the executive branch ... and Congress in the financing, management, and evaluation of Federal programs.\" Agency inspectors general (IGs) are responsible for the audits and may contract with one or more external auditors.", "The Department of Defense (DOD) completed its first agency-wide financial audit in FY2018 and recently completed its FY2019 audit. Comprehensive data for the FY2019 audit are not currently available. Therefore, this report focuses on DOD's FY2018 audit. Congressional interest in DOD's audits is particularly acute because DOD accounts for about half of federal discretionary expenditures and 15% of total federal expenditures.", "The Department of Defense Inspector General (DOD IG) contracted with nine Independent Public Accounting firms (IPAs) to conduct the FY2018 and FY2019 audit. The IPAs conducted 24 separate audits within DOD (see Table 1 for each of the component-level audit opinions). ", "In both FY2018 and FY2019 audits, the DOD IG issued the overall agency-wide opinion of disclaimer of o pinion \u00e2\u0080\u0094meaning auditors could not express an opinion on the financial statements because the financial information was not sufficiently reliable. DOD components that received a disclaimer of opinion represent approximately 56% of the reported DOD assets and 90% of the reported DOD budgetary resources.", "DOD expected to receive a disclaimer of opinion for FY2018 and FY2019. The department has stated it could take a decade to receive an u nmodified (clean) audit opinion. The federal government as a whole is unable to receive a clean opinion on its financial report because agencies with significant assets and budgetary costs, such as DOD, the Department of Housing and Urban Development, and the Railroad Retirement Board, have each received a disclaimer of opinion in recent years. The federal government as a whole potentially could receive a clean audit opinion without all government agencies receiving a clean audit opinion; however, the size of the DOD budget\u00e2\u0080\u0094$708 billion in FY2019\u00e2\u0080\u0094prevents an overall clean opinion without DOD receiving a clean audit opinion. ", "DOD employs 2.9 million military and civilian employees at approximately 4,800 DOD sites in 160 countries. DOD IG personnel and auditors from IPAs visited over 600 sites, sent over 40,000 requests for documentation, and tested over 90,000 sample items. DOD spent $413 million to conduct the FY2018 audit: $192 million on audit fees for the IPAs and $221 million on government costs to support the audit. DOD spent an additional $406 million on audit remediation and $153 million on financial system fixes."], "subsections": []}, {"section_title": "What Is a Financial Audit?", "paragraphs": ["Financial statements are the primary way for an entity to communicate its financial performance to its stakeholders. How each line item on a financial statement (e.g., property) should be valued and reported is based on Generally Accepted Accounting Principles (GAAP), an agreement among practitioners (i.e., accountants, auditors, and regulators).", "In a financial audit, a private or public entity hires an independent auditor to provide reasonable assurance to all stakeholders that its financial statements are free of material misstatement, whether caused by error or fraud. Auditors form opinions by examining the types of risks an organization might face and the controls in place to mitigate those risks. Auditors give unbiased professional opinions on whether financial statements and related disclosures are fairly stated in all material respects for a given period of time in accordance with GAAP.", "As mentioned previously, the CFO Act requires federal agencies' financial statements to be audited annually. The CFO Act assigns responsibility for audits to agency inspectors general (IGs), but an IG may contract with one or more external auditors to perform an audit. The annual audit can inform Congress and the agency about its business processes and areas for improvement.", "An audit of DOD can provide benefits, such as (1) effective and efficient internal operations that can lead to reducing costs and improving operational readiness; (2) improved allocation of assets and financial resources that can enhance DOD's decisionmaking and ability to support the Armed Forces; and (3) improved compliance with statutes and financial regulations.", "For each line item on a financial statement and notes to the financial statement, an auditor will examine a sample of the underlying economic events to determine the reported information's accuracy. The Federal Accounting Standards Advisory Board (FASAB) promulgates financial reporting and accounting standards for federal government entities, and GAO establishes federal auditing standards, including for federal grant recipients in state and local governments.", "GAO issues the Generally Accepted Government Auditing Standards (GAGAS), also commonly known as the Yellow Book , to provide a framework for conducting federal government audits. The Yellow Book requires auditors to consider the visibility and sensitivity of government programs in determining the materiality threshold. Similar to requirements in the private sector, GAGAS requires federal financial reporting to disclose compliance with laws, regulations, contracts, and grant agreements that have a material effect on financial statements.", "Before auditors examine an entity's financial statement, they first evaluate its Enterprise Resource Planning (ERP) systems' (information technology systems') access control and reliability, as well as internal controls. ERP refers to an enterprise-wide information system used to manage and coordinate all of an entity's resources, information, and functions from shared data stores, including financial information. Auditing ERP systems is a critical aspect of evaluating an entity's internal controls."], "subsections": [{"section_title": "Internal Control in the Federal Government", "paragraphs": ["Internal control is a series of integrated actions that management uses to guide an entity's operations. Under GAO standards, effective internal controls should require management to use dynamic, integrated, and responsive judgment rather than rigidly adhering to past policies and procedures. The success or failure of an entity's internal controls depends on its personnel. Management is responsible for designing effective internal controls, but implementation depends on all personnel understanding, implementing, and operating an effective internal control system.", "Federal agencies have been required to report to Congress on internal controls since the Federal Managers' Financial Integrity Act of 1982. In addition, the Federal Financial Management Improvement Act of 1996 requires agencies to report to Congress on the effectiveness of internal control over financial management systems. ", "GAO's Standards for Internal Control in the Federal Government (also known as the Green Book ) provides the overall framework for designing, implementing, and operating an effective internal control system. An audit of an entity's internal controls includes computer systems at the entity-wide, system, and application levels. GAGAS recommends using specific frameworks for internal control policies and procedures, including certain evaluation tools created specifically for federal government entities. Office of Management and Budget (OMB) Circular No. A123, Management's Responsibility for Enterprise Risk Management and Internal Control , provides additional guidance.", "The federal government's internal control framework is based on the framework created by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), which is widely used in the private sector. The COSO framework is dedicated to improving organizational performance and governance through effective internal control, enterprise risk management, and fraud deterrence.", "The COSO framework, depicted in Figure 1 , was created to help practitioners assess internal controls not as an isolated issue, but rather as an integrated framework for how internal controls work together across an organization to help achieve objectives as determined by management. It represents the integrated perspective recommended by COSO for practitioners who are creating and assessing internal controls. The cube may be best understood by examining each set of components separately:", "Categories of objectives. Operations, Reporting, and Compliance are represented by the columns. The objectives are designed to help an organization focus on different aspects of internal controls to help management achieve its objectives.", "Components of internal control. Control Environment, Risk Assessment, Control Activities, Information and Communication, and Monitoring Activities are represented by the rows. The components represent what is required to achieve the three objectives.", "Levels of organizational structure. Entity-Level, Division, Operating Unit, and Function are represented by the third dimension. For an organization to achieve its objectives, according to COSO, internal control must be effective and integrated across all organizational levels."], "subsections": []}, {"section_title": "Internal Control at DOD", "paragraphs": ["Internal controls can help DOD leadership achieve desired financial results through effective stewardship of public resources. Effective internal controls can increase the likelihood that DOD achieves its financial objectives, including getting a clean (i.e., unmodified) audit opinion. Properly designed internal controls can help reduce the amount of detail an auditor will examine, including the number of samples examined. Good internal controls could reduce the amount of time required to conduct an audit, thus reducing its cost.", "At DOD, auditors identified 20 agency-wide internal control material weaknesses and 129 DOD component-level material weaknesses that range from issues with financial management systems to inventory management. ", "A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting that results in a reasonable possibility that management will not prevent, or detect and correct, a material misstatement in the financial statements in a timely manner.", "Many of these material weaknesses are discussed later in this report under \" Issues for Congress .\" Properly designed internal controls can also serve as the first line of defense in safeguarding assets. Internal controls help private and public entities achieve objectives, such as enterprise risk management, fraud deterrence, and sustained and improved performance, by designing processes that control risk.", "The DOD IG identified multiple DOD components that do not have sufficient entity-level internal controls . The lack of entity-level internal controls directly contributed to an increased risk of material misstatements on the components' financial statements and the agency-wide financial statements.", "Until DOD resolves the many issues surrounding internal controls and establishes a better record-keeping system, it might be difficult for auditors to identify other material weaknesses that could prevent DOD from receiving a clean audit opinion. When the current set of internal control issues is resolved, and auditors are better able to analyze DOD records, they might discover additional issues, including new material weaknesses, that need to be resolved\u00e2\u0080\u0094a cascading effect\u00e2\u0080\u0094before DOD receives a clean audit opinion. This cycle might repeat a few times. "], "subsections": []}]}, {"section_title": "FY2018 Audit Results", "paragraphs": ["The DOD auditors issued 2,377 notices of findings and recommendations (NFRs) that resulted in 20 agency-wide material weaknesses and 129 DOD component-level material weaknesses. Appendix A provides an overview of the 20 agency-wide material weaknesses. An auditor creates an NFR to capture issues that require corrective action. DOD then creates a corrective action plan (CAP) to address one or more NFRs. The NFR is later retested, and if the CAP sufficiently addresses the NFR, the auditor is to validate that the issue has been resolved.", "As of June 2019, the majority of NFRs were related to three critical areas: approximately 48% were related to financial management systems and information technology; 30% were related to financial reporting and DOD's fund balance with Treasury; and 16% were related to property. Although the overall number of NFRs increased slightly between December 2018 and June 2019, the number has decreased significantly in certain categories (see Table 2 , Other column). The increase in NFRs in certain categories is an expected result of the audit process. As auditors learn more about DOD and how it functions, they may continue to identify new NFRs, while DOD continues to address some of the previously identified NFRs.", "The Office of the Under Secretary of Defense (Comptroller) has established an audit NFR database. DOD uses the database to consolidate and track the status of all auditor-issued NFRs and prioritize and link them to CAPs. The NFR and CAP component-based metrics are reported and reviewed monthly in the National Defense Strategy meeting with the Deputy Secretary of Defense and Military Service financial management leadership teams.", "The military service branches\u00e2\u0080\u0094Army, Navy, Marine Corps, and Air Force\u00e2\u0080\u0094account for over 60% of NFRs identified in the FY2018 audit (see Table 3 ).", "For DOD to receive a clean audit opinion, civilian leadership and uniformed Armed Forces personnel may need to improve collaboration. According to DOD, it is prioritizing CAPs that align with the National Defense Strategy and provide the greatest potential value to DOD operations and the warfighter. DOD has established actionable financial statement audit priorities at many levels within the department, including at the command level. Those FY2019 priorities include the following: ", "Real Property; Government Property in the Possession of Contractors; Inventory, and Operating Materials and supplies; and Access Controls for IT Systems.", "Given the complexity of DOD operations, auditors began their work for the FY2019 financial audit in late 2018. Comprehensive data for the FY2019 audit are not currently available. However, the auditors issued an overall agency-wide disclaimer of opinion for FY2019. Most financial statement audits stop as soon as the auditor determines the reporting entity is not auditable. DOD, however, has asked the auditors to continue such audits to identify as many problems as possible, with the goals of identifying systemic issues and making faster progress toward business reform. "], "subsections": []}, {"section_title": "Issues for Congress", "paragraphs": ["Although the CFO Act required annual audits of federal agencies' financial statements, DOD did not complete an agency-wide audit until 2018\u00e2\u0080\u009428 years later. One of DOD's strategic goals is to reform its business practices for greater performance and affordability. According to DOD, the annual audit process helps it reform its business practices consistent with the National Defense Strategy (NDS):", "The financial statement annual audit regimen is foundational to reforming the Department's business practices and consistent with the National Defense Strategy. Data from the audits is driving the Department's strategy, goals, and priorities and enabling leaders to focus on areas that yield the most value to the warfighter. The audits are already proving invaluable and have the potential to support long-term, sustainable reform that could lead to efficiencies, better buying power, and increased public confidence in DoD's stewardship of funds.", "Continued congressional oversight of DOD's plan to achieve a clean audit opinion could help DOD achieve a clean audit opinion. As more components receive a clean audit opinion, audit costs might eventually decrease. For FY2018, DOD incurred nearly $1 billion in total audit costs, which was less than 0.25% of DOD's FY2018 budget.", "Although the cost of an audit is a consideration, the more impactful benefits from an annual financial audit, arguably, are the changes in DOD business practices that directly impact the NDS while increasing transparency. The audits identified three critical areas of improvement that are consistent with the NDS: (1) financial management systems and information technology (IT), (2) financial reporting and fund balance with Treasury, and (3) property (real property, inventory, and supplies, and government property in the possession of contractors). Addressing the issues in these critical areas not only could help DOD improve its business practices, but it might also help resolve many of the NFRs, which could enable some audit components to receive clean audit opinions in the next few years instead of in another decade or more."], "subsections": [{"section_title": "Financial Management Systems and Information Technology", "paragraphs": ["According to DOD, its financial management systems and information technology provide a broad range of functionality to support agency financial management, supply chain management, logistics, and human resource management. Reliable systems are mission critical to DOD meeting its NDS and supporting the warfighter. ", "Also, DOD is required to comply with laws and regulations, such as the Federal Managers' Financial Integrity Act of 1982, the Federal Financial Management Improvement Act of 1996, and OMB Circular A-123. These laws and regulations collectively require DOD to maintain a system of internal controls that can produce reliable operational and financial information. The challenges DOD faces in financial management systems and information technology are twofold and compromise nearly half of all NFRs (see Table 2 or Table 3 ). ", "First, DOD's initiatives to address the issues related to access controls for IT systems are partially implemented. A fully implemented plan to address access control issues would potentially restrict access rights to appropriate personnel, monitor user activity, and safeguard sensitive data from unauthorized access and misuse. As part of its corrective action plan, DOD is requiring financial system owners and owners of business systems that contribute financial information to review and limit access only to those who need it and only to the specific areas within the systems that they need to access. ", "DOD has developed security controls and standardized test plans that align with the Federal Information Systems Control Audit Manual methodology used to test systems during an audit. Further, DOD management has directed components without a proper software maintenance policy to establish a baseline policy for those software systems and maintain a record of all software system changes. In addition to requiring components to develop reports on privileged users and transactions, including privileged user activities, the department has directed components to periodically review user access rights and remove unauthorized users. ", "Second, the number and variety of financial systems complicate DOD's financial statement audits. In 2016, DOD reported more than 400 separate information technology systems were used to process accounting information to support DOD's financial statements. Many of these legacy systems were designed and implemented to support a particular function, such as human resource management, property management, or logistics management, and were not designed for financial statement reporting. These systems include newer ERP systems and custom-built legacy systems, financial systems, and nonfinancial feeder systems. Also, aging systems and technology that predate modern data standards and laws, as well as nonaccounting feeder systems, affect data exchange with modern ERPs to facilitate auditable financial reports. ", "DOD's IT modernization program is investing in ERPs and aims to migrate 51 legacy systems to core modern ERPs by the end of 2023. How the remediation plans evolve and how they are implemented as DOD migrates to the new ERPs could be a significant determiner of DOD's ability to address nearly half of the NFRs."], "subsections": []}, {"section_title": "Financial Reporting and Fund Balance with Treasury", "paragraphs": ["According to DOD's auditors, its policies and procedures for compiling and reporting financial statements are not sufficient to identify, detect, and correct inaccurate and incomplete balances in the general ledger. Without an adequate process to identify and correct potential misstatements in the general ledger, balances reported on financial statements, accompanying footnotes, and related disclosures may not be reliable or useful for decisionmaking for Congress, including appropriating the DOD budget. The lack of accurate numbers, arguably, also presents challenges for DOD leadership in making agency financial decisions. ", "DOD's assets increased by nearly $200 billion in FY2018 over FY2017. Fund Balance with Treasury, one of the assets, increased by $78.6 billion. According to DOD, the increase in Fund Balance with Treasury resulted from additional appropriations received in FY2018. DOD is unable to effectively track and reconcile collection and disbursements activity from its financial systems, which resulted in DOD being unable to reconcile its general ledger and Treasury accounts. ", "The fund balance with the Treasury Department is an asset account reported on DOD's general ledger, which shows a DOD component's available budget authority. Similar to a personal checking account, the fund's balance increases and decreases with collections and disbursements of new appropriations and other funding sources. Each DOD component should be able to perform a detailed monthly reconciliation that identifies all the differences between its records and Treasury's records. The reconciliations are essential to supporting the budget authority and outlays reported on the financial statements. ", "The auditors identified several deficiencies in the design and operation of internal controls for fund balance with the Treasury that resulted in DOD-wide material weakness. DOD has undertaken business process improvements to streamline reporting, reduce differences to an insignificant amount, and support account reconciliations."], "subsections": []}, {"section_title": "Property and Inventory", "paragraphs": ["The auditors report that DOD faces challenges with properly recording, valuing, and identifying the physical location of real property, inventory, and government property that is in the possession of contractors. DOD's challenges with property and inventory complicate Congress's ability to perform effective oversight and budget appropriations. Without accurate real estate counts and values, DOD will continue to face challenges in meeting the National Strategy for Efficient Use of Real Property.", "DOD faces similar issues with inventory. It is unable to provide assurance that inventory recorded in the financial statements exists and is valued properly. Without accurate inventory counts, DOD might not be able to support its missions without incurring additional costs. Some appropriated funds could be used to purchase extraneous inventory that DOD might already have on hand, or DOD might rely on inventory that appears in an inaccurate count but does not actually exist. "], "subsections": [{"section_title": "Real Property", "paragraphs": ["The auditors report that DOD is unable to accurately account for all of its buildings and structures. This includes houses, warehouses, vehicle maintenance shops, aircraft hangars, and medical treatment facilities, among others. As an example, during the FY2018 audit, the Air Force identified 478 buildings and structures at 12 installations that were not in the real property system. DOD faces issues with demonstrating the right of occupancy or ownership through supporting documentation and with incomplete or out-of-date systems of record. Accurate property records, valuation, and right of ownership could potentially help inform DOD leadership as it considers any future base realignment and closure.", "According to DOD, military departments are executing real property physical inventories to reconcile with the systems of record. The Army has the largest real property portfolio in the department. All branches of the Armed Forces are facing challenges with obtaining source documents, establishing value for properties, and assessing and reporting expected maintenance costs. ", "The Air Force is focused on correcting its records for buildings, which account for more than 90% of its real property value, first addressing its building inventory at its most significant bases. The Navy has completed its physical inventory and corrected its records. Initial results showed a 99.7% accuracy rate. The Marine Corps has undertaken a process of accurately counting and recording its physical inventory. The Armed Forces will be unable to obtain a clean audit opinion without determining the value of their real property and other assets. "], "subsections": []}, {"section_title": "Inventory, Materials, and Supplies", "paragraphs": ["DOD manages inventory and other property at over 100,000 facilities located in more than 5,000 different locations. The military services and DOD components report inventory ownership on their financial statements, but this inventory can be in the custody of or managed by the military service or another DOD component. For example, as of FY2017 year end, the military services reported that the Defense Logistics Agency held approximately 46% of the Army's inventory, 39% of the Navy's inventory, and 45% of the Air Force's inventory, ranging from clothes to spare parts to engines.", "Given the vast geographic dispersion of DOD resources and the complexity of how they are managed, the system of records and physical inventory must agree with each other for DOD leadership to have an accurate understanding of available resources. GAO highlighted a few examples in its latest high-risk series:", "The Army found 39 Blackhawk helicopters that were not recorded in the property system; 107 Blackhawk rotor blades could not be used but were still in the inventory records; 20 fuel injector assemblies for Blackhawk helicopters did not have documentation to indicate ownership by any specific military service; and 24 gyro electronics for military aircraft that should not be used were still in the inventory records.", "Accurate inventory, materials, and supplies help DOD avoid purchasing materials it does not need and help ensure that the right parts, supplies, and other inventory are available to support mission readiness. Ensuring that parts, supplies, and inventory are usable not only helps with mission readiness but also helps avoid unnecessary warehousing costs. Many of the parts, supplies, and inventory are unique to DOD and require long lead times to contract and manufacture. An accurate physical count and system of records could help shorten the time before items are available for the warfighter. "], "subsections": []}, {"section_title": "Government Property in the Possession of Contractors", "paragraphs": ["At times, DOD might provide contractors with property for use on a contract, such as tooling, test equipment, items to be repaired, and spare parts held as inventory. The government-provided property and contractor-acquired property should be recorded in DOD's property system, and at the end of the contract, it might be disposed of, consumed, modified, or returned to DOD. The auditors report that the DOD property system should be able to accurately distinguish DOD property ownership and possession between DOD and the contractor.", "For DOD to receive a clean audit opinion, it should consider requiring its contractors to maintain and provide auditors with accurate records. Transferring property from DOD to contractors, and from contractors to DOD, requires an accurate real-time system of record keeping."], "subsections": []}]}, {"section_title": "Audit Costs", "paragraphs": ["Total DOD audit-related costs for FY2018, including the cost of remediating audit findings, supporting the audits and responding to auditor requests, and achieving an auditable systems environment, were $973 million (see Table 4 ). DOD predicts that audit-related costs will remain relatively consistent for a few more years until more components begin to achieve unmodified opinions. In addition to the issues previously discussed, there are three agency-level issues or approaches that contribute to DOD audit costs remaining relatively constant in the near term: more substantive testing, completion of audit procedures even for those components that are likely to receive a disclaimer of opinion, and expansion of DOD service provider examinations. ", "While DOD's annual audit costs (i.e., excluding remediation costs) might remain close to FY2018 costs (nearly $413 million) or increase in the near term, the cost is expected to decrease after the first few years, as more components achieve a clean audit opinion. Eventually, DOD audit costs might increase as costs for travel and accounting increase with economic growth. "], "subsections": [{"section_title": "Substantive Testing", "paragraphs": ["To reduce the risk of potential material misstatement without reliable internal controls, auditors seek other ways of validating financial information. Reliance on internal controls is not a pass-or-fail approach; rather, it is incremental. DOD received 20 agency-wide material weaknesses and 129 component-level material weaknesses in internal controls in the FY2018 audit; until those are resolved, DOD auditors must rely on substantive testing, which will keep audit costs relatively high. There are two categories of substantive testing:", "Analytical P rocedures . Substantive testing through analytical procedures might include comparing current-year information with the prior year, examining trend lines, or reviewing various financial ratios. Because FY2018 was the first full financial audit of DOD and many systems of records are not reliable, auditors may have difficulty performing analytical procedures and must rely more on tests of details. Tests of Details. An auditor selects individual items for testing and applies detail procedures, such as verifying that invoiced items from a vendor match payments made by DOD, physically locating an inventory item that is recorded in DOD's financial systems, and verifying mathematical accuracy by recalculating certain records. "], "subsections": []}, {"section_title": "Completion of Audit Procedures", "paragraphs": ["To gain a detailed understanding of the underlying issues that prevent DOD components from receiving clean audit opinions, the department has requested comprehensive completion of audit procedures even after auditors have determined components will receive disclaimers of opinion. While this approach might initially incur higher audit costs, in the long run it might enable DOD to resolve the component-specific issues more quickly and to gain a holistic perspective of system-wide issues. These benefits might help DOD lower its financial audit costs in the long run."], "subsections": []}, {"section_title": "Service Provider Examinations", "paragraphs": ["Some DOD organizations provide common information technology services to other organizations within DOD, such as the Defense Information Systems Agency's (DISA's) Automated Time Attendance and Production System. For FY2018, auditors completed 20 DOD service provider examinations; 14 resulted in unmodified opinions and 6 resulted in qualified opinions. See Table B-1 for more information, including auditors' opinions and the number of FY2018 NFRs issued. Service provider examinations assess whether information technology control activities were designed, implemented, and operated effectively to provide management reasonable assurance that control objectives function as designed or intended in all material respects. The procedures performed by the auditors for examinations are not meant to provide the same level of assurance as a full audit. ", "These examinations' results can be used to reduce redundant testing of control by component-level auditors, saving time and money; see Table 1 for the list of audited DOD components. For FY2019, DOD expects to complete 23 common service provider examinations, compared to 20 in FY2018. The expanded service provider examinations for FY2019 might incrementally increase DOD audit costs over FY2018."], "subsections": []}]}, {"section_title": "Financial Audit Limitations and Benefits", "paragraphs": ["Since passing the CFO Act of 1990, Congress has continued to express interest in DOD completing an annual financial audit. Financial audits can help DOD increase transparency and accountability, improve business processes, and improve the visibility of assets and financial resources, but by design, audits are meant to accomplish a specific purpose, and therefore there are some inherent limitations on the benefits they can provide. Financial audits' limitations and benefits are discussed below. "], "subsections": [{"section_title": "Limitations of Financial Audits", "paragraphs": ["A financial audit is a tool to help improve business processes and readiness on an annual basis. It does not address program effectiveness or efficiency, but it does consider whether an entity's assets, including its budget authority, are used to accomplish its programmatic purpose. To communicate the annual audit's benefits to Congress and other stakeholders, DOD may attempt to measure cost savings or business process improvements, but it may struggle to fully quantify the benefits, as many of the daily operational improvements are likely to be organic and informal.", "Only the most significant issues will be identified in auditors' reports. DOD will likely benefit from auditors' NFRs, as well as ongoing informal dialogue between auditors and DOD personnel. When an auditor identifies an issue, DOD could seek to address the issue immediately rather than wait for a written report. It is inefficient for auditors or DOD to capture and write a report on all issues, large and small. In the private sector, generally, only critical audit matters that involve especially challenging or complex auditor judgments are included in audit reports. Many other issues are addressed in the normal course of business. Reporting or recording every instance of savings or process improvement based on auditors' informal feedback arguably detracts from the audit's purpose. Allowing a degree of flexibility to identify and report the cost savings and process improvements that DOD determines are the most significant may help the department focus effectively on responding to audit findings. ", "Independent audit opinions do not fully guarantee that financial statements are presented fairly in all material respects, but provide reasonable assurance for the following reasons:", "Auditors use statistical methods for random sampling and look at only a fraction of economic events or documents during an audit. It is cost- and time-prohibitive to recreate all economic events. Some line items on financial statements involve subjective decisions or a degree of uncertainty as a result of using estimates. Audit procedures cannot eliminate potential fraud, though an auditor may identify fraud. Financial audits are not specifically designed to detect fraud, but an auditor assesses the potential for fraud, including evaluating internal controls designed by management to prevent and identify potential fraud, waste, and abuse. Auditors are required to consider whether financial statements could be misstated as a result of fraud. Effective internal controls could prevent or mitigate risks for fraudulent financial reporting, misappropriation of assets, bribery, and other illegal acts. Fraud risk factors do not necessarily indicate fraud exists, but risk factors often exist when fraud occurs. In a few years, if DOD has improved its current business practices, future improvements might be less significant and more incremental. Even so, annual audits could potentially be a valuable tool to help DOD continue to improve its business processes. "], "subsections": []}, {"section_title": "Benefits of an Annual Financial Audit", "paragraphs": ["The annual audit gives Congress an independent opinion on DOD's financial systems and business processes. It provides a way for DOD to continue to improve its performance and highlights areas that need to be fixed. DOD has identified four categories of how the annual audit improves its operations, along with some examples: ", "Increases Transparency and Accountability. Holds DOD accountable to Congress and the taxpayers that DOD takes spending taxpayer dollars seriously through efficient practices. Auditing DOD helps improve public confidence in DOD operations, similar to other Cabinet-level agencies that conduct an annual financial audit. Streamlines Business Processes. Audits help reduce component silos and help leadership better understand interdependencies within DOD. The department might be able to improve its buying power and reduce costs, as well as improve operational efficiencies. Improves Visibility of Assets and Financial Resources. More accurate data could enhance DOD readiness and decisionmaking. Getting the appropriate supplies to warfighters helps improve their fighting posture. If a service does not know whether it has enough spare parts to ensure that aircraft are able to fly, it may spend significant amounts of money to get spare parts quickly to meet operational requirements. Accurate cost information related to assets, such as inventory and property, can help DOD make more informed decisions on repair costs and future purchases. Strengthens Internal Controls. Strengthened internal controls help minimize fraud, waste, and abuse. In addition, they help improve DOD's cybersecurity and enhance national security. ", "In addition to the previously described identification of Blackhawk helicopters and parts, DOD is starting to see gains by eliminating recurring annual costs. For example, strengthening internal controls to improve operations at the U.S. Pacific Fleet has freed up purchasing power to fund $4.4 million in additional ship repair costs. Also, the Army has implemented a materiality-based physical inventory best practice to count assets at Army depots. The Army estimates this process improvement could help avoid approximately $10 million in future costs."], "subsections": []}]}]}, {"section_title": "Conclusion", "paragraphs": ["Since passing the CFO Act of 1990, which required 24 agencies to conduct an agency-wide annual financial audit, Congress has continued to express interest in DOD completing an annual audit. DOD completed its first agency-wide audit in FY2018 and a subsequent audit in FY2019. Both audits resulted in a disclaimer of o pinion . ", "The ongoing independent assessment of DOD's financial systems, arguably, provides Congress and DOD leadership with an independent third-party assessment of DOD's financial and business operations. Reliable systems that produce auditable financial information, including an accurate count and valuation of real estate and inventory, could help Congress provide better oversight and ultimately determine how funds appropriated for DOD should be spent in support of the NDS. ", "Further, the annual financial audit of DOD by independent auditors might provide DOD with a competitive advantage when compared to other countries' defense agencies. In many other countries, financial information\u00e2\u0080\u0094including a financial audit of defense agencies\u00e2\u0080\u0094is nonexistent or opaque at best and not readily available to legislators or citizens. ", "Many of DOD's financial management systems are also used for operational purposes. Testing of the financial management systems and other systems that interface with each other as part of the annual audit process can help identify and improve cybersecurity vulnerabilities and the conduct of military operations. DOD's efforts to fix its vulnerabilities and reduce wasteful practices, arguably, could enable it to respond to future threats more effectively.", "The implementation of new ERP systems and the complexity of auditing DOD might result in DOD not achieving a clean audit opinion within the next decade. Without each of the Armed Forces receiving a clean audit opinion, DOD will not be able to receive an agency-wide clean audit opinion even if all other DOD components receive a clean audit opinion. ", "Appendix A. DOD Agency-Wide Material Weaknesses", "Weaknesses and inefficiencies in internal controls are classified based on severity. Auditors identified 20 material weaknesses at DOD (see Table A-1 ) related to internal controls that range from issues with financial management systems to inventory management.", "A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting that results in a reasonable possibility that management will not prevent, or detect and correct, a material misstatement in the financial statements in a timely manner.", "In addition to material weaknesses, the auditors issue two types of deficiencies\u00e2\u0080\u0094a significant deficiency or a control deficiency \u00e2\u0080\u0094 that are less severe than a material weakness, but a combination or multiple instances of either deficiency can result in material weaknesses. ", "A significant deficiency is a deficiency or a combination of deficiencies that are less severe than a material weakness, but important enough to merit management's attention. A control deficiency is a noted weakness or deficiency that auditors typically bring to management's attention, but that does not have an impact on the financial statement unless a combination of them results in a material weakness. Improvements in either type of deficiency could improve the business process and help prevent waste, abuse, and fraud.", "Appendix B. Common Service Providers", "Some organizations within DOD provide common information technology services to other organizations at DOD. These organizations report to higher-level organizations. For FY2018, auditors completed 20 DOD service provider examinations\u00e2\u0080\u009414 resulted in unmodified opinions and 6 resulted in qualified opinions. See Table B-1 for more information, including auditors' opinions and the number of FY2018 NFRs issued. Service provider examinations provide a positive assurance as to whether information technology control activities were designed, implemented, and operate effectively to provide management reasonable assurance that control objectives function as designed or intended in all material respects. Examination procedures are limited in scope as compared to a financial audit. Component-level auditors can use these examinations' results to reduce redundant testing, saving time and money; see Table 1 for the list of audited DOD components. For FY2019, DOD expects to complete 23 common service provider examinations."], "subsections": []}]}}
{"id": "R45973", "title": "The Diversity Immigrant Visa Program", "released_date": "2019-10-15T00:00:00", "summary": ["The purpose of the diversity immigrant visa program (DV program, sometimes called \"the green card lottery\" or \"the visa lottery\") is, as the name suggests, to foster legal immigration from countries other than the major sending countries of current immigrants to the United States. Current law weights the allocation of immigrant visas primarily toward individuals with close family in the United States and, to a lesser extent, toward those who meet particular employment needs. The diversity immigrant category was added to the Immigration and Nationality Act (INA) by the Immigration Act of 1990 ( P.L. 101-649 ) to stimulate \"new seed\" immigration (i.e., to foster new, more varied migration from other parts of the world).", "The DV program currently makes 50,000 visas available annually to natives of countries from which immigrant admissions were less than 50,000 over the preceding five years combined. The formula for allocating these visas is specified in statute: visas are divided among six global geographic regions, and each region and country is identified as either high-admission or low-admission based on how many immigrant visas were given to foreign nationals from each region and country over the previous five-year period. Higher proportions of diversity visas are allocated to low-admission regions and countries. The INA limits each country to 7% (3,500, currently) of the total and provides that Northern Ireland be treated as a separate foreign state.", "Because demand for diversity visas greatly exceeds supply, a lottery system is used to select individuals who may apply for them. Those selected by lottery (\"lottery winners\"), like all other foreign nationals wishing to come to the United States, must undergo reviews performed by Department of State consular officers abroad and Department of Homeland Security immigration officers upon entry to the United States. These reviews are intended to ensure that the foreign nationals are not ineligible for visas or admission to the United States under the grounds for inadmissibility spelled out in the INA. To be eligible for a diversity visa, the INA requires that a foreign national have at least a high school education or the equivalent, or two years' experience in an occupation that requires at least two years of training or experience. The foreign national or the foreign national's spouse must be a native of one of the countries listed as a foreign state qualified for the diversity visa program.", "The distribution of diversity visas by global region of origin has shifted over time, with higher shares coming from Africa and Asia in recent years compared to earlier years when Europe accounted for a higher proportion. Of all those admitted through the program from FY1995 (the first year it was in full effect) through FY2017 (the most recent year for which data are available), individuals from Africa accounted for 40% of diversity immigrants, while Europeans accounted for 31% and Asians for 25%.", "Some argue that the DV program should be eliminated and its visas re-allocated for employment-based visas or backlog reduction in various visa categories. Critics of the DV program warn that it is vulnerable to fraud and misuse and is potentially an avenue for terrorists to enter the United States, citing the difficulties of performing background checks in many of the countries whose citizens are eligible for a diversity visa. Critics also argue that admitting immigrants on the basis of their nationality is discriminatory and that the reasons for establishing the DV program are no longer germane. Supporters of the program argue that it provides \"new seed\" immigrants for a system weighted disproportionately to family-based immigrants from a handful of countries. Supporters contend that fraud and abuse have declined following measures put in place by the State Department, and that the system relies on background checks for criminal and national security matters that are performed on all prospective immigrants seeking to come to the United States, including those applying for diversity visas. Supporters also contend that the DV program promotes equity of opportunity and serves important foreign policy goals."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Background", "paragraphs": ["Family reunification and the admission of immigrants with needed skills are two of the major principles underlying U.S. immigration policy. As a result, current law weights the allocation of immigrant visas heavily toward individuals with close family in the United States and, to a lesser extent, toward individuals who meet particular employment needs. The diversity immigrant category was added to the Immigration and Nationality Act (INA) by the Immigration Act of 1990 ( P.L. 101-649 ) to stimulate \"new seed\" immigration (i.e., to foster new, more varied migration from other parts of the world). Diversity visas are allocated to natives of countries from which the combination of immediate relatives, family preference, and employment preference immigrant admissions were lower than a total of 50,000 over the preceding five years combined."], "subsections": [{"section_title": "Legislative Origins", "paragraphs": ["The Immigration Amendments of 1965 replaced the national origins quota system, which prioritized European source countries, with equally distributed per-country ceilings. In the 1980s, some Members of Congress began expressing concern that U.S. legal immigration admissions were skewed in favor of immigrants from Asia and Latin America because of the 1965 amendments. The first legislative response to this concern occurred in Section 314 of the Immigration Reform and Control Act of 1986 (IRCA), which allowed an extra 5,000 immigrant visas per year for FY1987 and FY1988 to be distributed to natives of 36 countries that had been adversely affected by the 1965 changes to the INA. Over 1 million people applied for what was then called the NP-5 program, and visas were made available according to the chronological order in which qualified applications were mailed to the State Department (DOS). Natives of Ireland received the largest proportion (31%) of the NP-5 visas, followed by natives of Canada (21%) and Great Britain (11%). In 1988, Congress extended the NP-5 program for two more years and made 15,000 additional immigrant visas available each year in FY1989 and FY1990.", "What is now known as the diversity immigrant category was added to the INA by P.L. 101-649 and went fully into effect in FY1995. Section 132 of P.L. 101-649 provided 40,000 visas per year for a transitional program during FY1992-FY1994 for certain natives of foreign states that were adversely affected by the 1965 changes to the INA. At least 40% of these visas were earmarked for natives of Ireland. The current diversity visa category had an annual allocation of 55,000 visas when it went into effect in FY1995. ", "While the diversity visa category has not been directly amended since its enactment, P.L. 105-100 , the Nicaraguan Adjustment and Central American Relief Act of 1997 (NACARA), temporarily decreased the 55,000 annual ceiling to 50,000. Beginning in FY2000, the 55,000 ceiling has been reduced by 5,000 annually to offset immigrant visas made available to certain unsuccessful asylum seekers from El Salvador, Guatemala, and formerly communist countries in Europe who are being granted immigrant status under special rules established by NACARA. The 5,000 offset is temporary, but it is not clear how many years it will be in effect to handle these adjustments of status."], "subsections": []}, {"section_title": "Eligibility Criteria and Application Process", "paragraphs": ["To be eligible for a diversity visa, the INA requires that a foreign national must have at least a high school education or the equivalent, or two years of experience in an occupation that requires at least two years of training or experience. The applicant or the applicant's spouse must be a native of one of the countries listed as a foreign state qualified for the DV program. Minor children of the qualifying diversity immigrant, as well as the spouse, may accompany as lawful permanent residents (LPRs) and are counted toward the 50,000 annual limit. ", "Because the demand for diversity visas is much higher than the supply, a lottery is used to randomly select who may apply for one of the 50,000 diversity visas available annually. (See Figure 1 for an illustration of the process). There is no fee to enter the diversity lottery. Registration for the FY2020 diversity lottery began on October 3, 2018, and closed on November 6, 2018. Beginning on May 7, 2019, and continuing through September 30, 2020, those who registered can use an online system to find out if they had been selected. The FY2018 lottery had 14.7 million entries, representing over 23 million people (including family members). From the millions of entries, approximately 100,000 selectees are randomly chosen. Being chosen as a selectee (\"lottery winner\") does not guarantee receipt of a diversity visa; rather, it identifies those who are eligible to apply for one. To receive a visa, selectees must successfully complete the application process (including security and medical screenings and in-person interviews) by the end of the fiscal year for which they registered for the lottery or they lose their eligibility. ", "DV applicants, like all other foreign nationals applying to come to the United States, must pay applicable fees and undergo reviews and biometric background checks performed by DOS consular officers abroad and Department of Homeland Security (DHS) immigration officers upon entry to the United States. Individuals selected for a diversity visa who are residing in the United States as nonimmigrants must undergo reviews by U.S. Citizenship and Immigration Services (USCIS) prior to adjusting to LPR status. These reviews, which include an in-person interview, are intended to ensure that the applicants are not inadmissible under the grounds spelled out in Section 212(a) of the INA. Grounds for inadmissibility include health, criminal history, security and terrorist concerns, public charge, illegal entry, and previous removal."], "subsections": []}]}, {"section_title": "Trends in Source Regions and Countries", "paragraphs": ["The diversity immigrant visa program currently makes 50,000 visas available annually to natives of countries from which immigrant admissions were lower than a total of 50,000 over the preceding five years. USCIS implements a formula for allocating visas according to statutory specifications: visas are divided among six global geographic regions, and each region and country is identified as either high admission or low admission based on how many immigrant visas each received over the previous five-year period. Higher proportions of diversity visas are allocated to low-admission regions and low-admission countries. Each country is limited to 7%, or 3,500, of the total, and the INA provides that Northern Ireland be treated as a separate foreign state. ", "The distribution of diversity visas by global region of origin has shifted over time (see Figure 2 ). From FY1995 through FY2001, foreign nationals from Europe garnered a plurality of diversity visas, ranging from 38% to 47% of the total. In the early 2000s, the share of DV recipients from Africa was on par with those from Europe. Europe's share dropped by nine percentage points from FY2005 to FY2006 as the shares from African and Asian countries continued to increase. Since FY2008, Europe has accounted for smaller shares than Africa or Asia. Latin America (which includes South America, Mexico, Central America, and the Caribbean), Oceania, and North America accounted for less than 8% each year. In total, from FY1995 through FY2017 immigrants from Africa accounted for 40% of diversity immigrants, while Europeans accounted for 31% and Asians for 25%. These trends are consistent with the statutory formula Congress outlined to allocate diversity visas. ", " Figure 3 presents the countries from which at least 1,000 DV immigrants were admitted in the first five years that the program was in full effect (FY1995-FY1999) and the most recent five years for which data are available (FY2013-FY2017). Early in the program, most of the top countries were in Europe (particularly Eastern Europe) and Africa. In more recent years, there has been a shift toward Africa and Asia. Certain countries\u00e2\u0080\u0094such as Ethiopia, Ukraine, and Egypt\u00e2\u0080\u0094rank high across many years of the program, while others\u00e2\u0080\u0094such as Ireland, Poland, and Venezuela\u00e2\u0080\u0094are limited to particular periods of time. From FY1995-FY2017, natives of six countries received at least 40,000 diversity visas in total: Ethiopia (67,832), Nigeria (58,563), Egypt (56,862), Ukraine (52,654), Albania (47,136), and Bangladesh (40,847). "], "subsections": []}, {"section_title": "Characteristics of Diversity Immigrants", "paragraphs": [], "subsections": [{"section_title": "Regions of Birth", "paragraphs": ["As one would expect, diversity immigrants come from different parts of the world that differ from the leading immigrant-sending regions. Department of Homeland Security data ( Figure 4 ) reveal that Africa accounted for 43% of diversity immigrants admitted in FY2017, but 11% of all LPRs admitted that fiscal year. Europeans made up 7% of all LPRs admitted in FY2017, but 22% of diversity immigrants. In contrast, Latin America (Mexico, Central America, the Caribbean, and South America) was the sending region for 43% of all LPRs admitted in FY2017, but provided 4% of the diversity immigrants during that fiscal year. North America (excluding Mexico) and Oceania account for a small percentage of LPRs admitted by any means.", "The distribution of LPR admissions and DV admissions from Asia illustrates the impact of the two-step visa allocation formula, which considers both regional and national admissions levels. Asia includes many top-sending countries\u00e2\u0080\u0094such as China, India, and the Philippines\u00e2\u0080\u0094for family- and employment-based LPRs, making it a high-admission region. Yet it also includes low-admission countries\u00e2\u0080\u0094such as Nepal, Iran, and Uzbekistan\u00e2\u0080\u0094that rank high for their number of diversity visas. As a result, as Figure 4 illustrates, in FY2017 foreign nationals from Asia represented a somewhat more equivalent share of the 1.1 million LPRs (38%) in relation to their share (30%) of diversity LPRs in contrast to the other world regions. "], "subsections": []}, {"section_title": "Age and Sex", "paragraphs": ["Diversity immigrants are, on average, younger than other LPRs. Department of Homeland Security data (see Figure 5 ) reveal that DV immigrants are more likely to be working-age adults and their children, and less likely to be over the age of 40 than LPRs overall. Also, the foreign-born population of the United States is more likely to be in the prime working-age group (i.e., ages 25 to 64) than the native-born population, and diversity immigrants have a younger age distribution than the foreign-born population as a whole. In addition, 56% of diversity immigrants in FY2017 were male compared to 46% of all LPRs."], "subsections": []}, {"section_title": "Marital Status", "paragraphs": ["Diversity immigrants were less likely to be married than LPRs generally (47% versus 58%) in FY2017, perhaps a function of their relative youth. Over half (52%) of diversity immigrants were single, in contrast to 36% of LPRs overall. Few of either group were likely to be widowed, divorced, or separated. "], "subsections": []}, {"section_title": "Educational Attainment and Labor Market Characteristics", "paragraphs": ["Recent critics of the diversity immigrant visa have argued against the program on the grounds that individuals do not need high levels of education or work experience to qualify for the DV program and that the U.S. admissions system should prioritize \"high-skilled\" immigrants. Neither DHS nor DOS publish data on the educational attainment of DV immigrants, but other sources provide some information. According to now-dated data from the New Immigrant Survey, a widely cited, nationally representative, longitudinal study of individuals who obtained LPR status in 2003, those who entered as principals via the diversity visa category had, on average, 14.5 years of schooling when they entered the United States, which was higher than those who were admitted on family-based visas as spouses or siblings of U.S. citizens (13.0 and 11.5 years, respectively), but lower than those who were admitted as principal employment-based immigrants (15.6 years). Similarly, DV immigrants were more likely to be fluent in English than most family-based immigrants (except for immigrant spouses of native-born U.S. citizens), but less likely than employment-based immigrants to be fluent in English. Using the same data source, the Migration Policy Institute found that 50% of DV immigrants who entered in 2003 had a college degree (32% with a bachelor's and 18% with a graduate degree). It is likely that the educational attainment of recent DV immigrants is higher than it was for those represented in the New Immigrant Survey, given that more recently arrived immigrants have higher levels of education overall than their predecessors. ", "Government data on other labor market characteristics of DV immigrants are also limited. According to the New Immigrant Survey, DV immigrants who entered in 2003 had higher initial unemployment rates than employment-based immigrants and those who immigrated as spouses of U.S. citizens, but lower unemployment rates than those who immigrated as siblings of U.S. citizens. Four to six years after U.S. entry, however, DV immigrants' unemployment rates had dropped significantly and were similar to those of all other groups except employment-based principals (who had the lowest rates at both initial entry and four to six years later). DV immigrants' hourly earnings were similarly situated between that of employment-based immigrant category (which had the highest earnings) and that of the sibling category (which had the lowest). Among male immigrants earning wages, those who entered on diversity visas had the highest percentage growth in real hourly wages between initial entry and re-sampling four to six years later. "], "subsections": []}]}, {"section_title": "Impact of the DV Program on Immigrant Diversity", "paragraphs": ["Given its name and the discourse about \"new seed\" immigrants that preceded the creation of the diversity visa, the question arises whether the DV program has led to an increase in the diversity of immigrant flows to the United States. Leading up to and since its enactment, some observers have noted that, regardless of its name, the DV program was intended to benefit Irish and Italian constituents who had been negatively affected by the Immigration Act of 1965 that resulted in an increase in immigration from Asia and Latin America. During the transition period after the program was created (FY1992-FY1994), at least 40% of diversity visas were earmarked for Irish immigrants, and 92% of diversity visas in FY1994 went to Europeans. Since its full implementation in FY1995, however, immigrants from a wider range of countries and regions have entered via the program (see \" Regions of Birth \" above). ", "The DV program's small size relative to total annual immigrant admissions (DV admissions make up about 5% of annual LPR admissions) limits its impact on the make-up of the immigrant population. Former Representative Bruce Morrison, who helped create the program, stated in a 2005 hearing that it was not Congress's intent to diversify the immigrant flow as a whole (\"It could not have possibly done so at the 50,000 number\"), but rather to add a new pathway for those who would not be able to enter under the family- or employment-based systems. By that standard, the program arguably fulfills its objectives, having admitted more than 1 million immigrants from under-represented countries since FY1995 (see Figure 3 ). ", "Another way to assess the program's impact is to analyze the diversity of annual LPR flows before and after the DV program was established. Using a measure of diversity called the entropy index, CRS found that in FY1990, before the DV program was in effect, the diversity of LPR admissions was 0.52. In every year from FY1995 (when the DV program went into full effect) through FY2017 (the most recent data available), the diversity of annual LPR admissions was higher than in 1990, ranging from 0.67 to 0.72. In each of those years, the diversity of LPR admissions not including the DV admissions was lower than it was with DV admissions included (see the Appendix ), indicating that the admission of DV immigrants does increase the diversity of annual LPR admissions. ", "A full analysis of the impacts of the DV program on admission numbers would also take into account individuals whom DV immigrants subsequently sponsor through the family-based admissions system. Because administrative data on immigrant admissions do not specify these linkages, this type of direct analysis is not currently possible. However, admissions data suggest that, at least for Africans, the DV has led to an increase in immigration via the family-based system (particularly immediate relatives). From 1992 to 2007, admissions of Africans based on family sponsorship grew faster than other categories of admissions for Africans, including diversity, which remained fairly stable over the time period. The DV seems to have diversified the African flow itself by boosting emigration from non-English speaking African countries (whereas English-speaking African countries have longer histories of U.S. immigration and are therefore more likely to be the source of sponsoring immigrant family members). "], "subsections": []}, {"section_title": "Selected Legislative Action", "paragraphs": ["Legislation related to the Diversity Immigrant Visa has focused largely on eliminating the program. Bills to eliminate the diversity visa category have been introduced in nearly every Congress since the program was created and have passed one chamber on more than one occasion. Most recently, S. 744 in the 113 th Congress, a comprehensive immigration reform bill that the Senate passed in 2013 by a vote of 68 to 32, would have eliminated the program. Other bills introduced in the past would have raised the annual limit of diversity visas or temporarily re-allocated diversity visas for other purposes. In the 116 th Congress, several bills to eliminate the DV program have been introduced, including H.R. 479 , H.R. 2278 , S. 1103 , and S. 1632 . In contrast, H.R. 3799 would raise the annual diversity visa allocation to 80,000."], "subsections": []}, {"section_title": "Selected Policy Questions", "paragraphs": ["As Congress weighs whether to eliminate or revise the diversity visa category, it may want to consider various policy questions pertinent to this discussion. "], "subsections": [{"section_title": "Is it fair to have the diversity visa category when there are family members and prospective employees who have been waiting for years for visas to become available?", "paragraphs": ["Given the 3.7 million approved family-based and employment-based petitions waiting for a visa to become available at the close of FY2018, some argue that the 50,000 diversity visas should be used for backlog reduction in these visa categories. Others might observe that the family-based, employment-based, and diversity visa categories are statutorily designed as independent pathways to LPR status and that the problems of the family-based and employment-based backlogs should be addressed separately. Some also argue that the DV program increases fairness in the immigration system by making visas available to individuals who would not otherwise have a chance of obtaining one and by discouraging illegal immigration through expanding access to the legal immigration system. "], "subsections": []}, {"section_title": "Should the United States base admissions decisions on nationality?", "paragraphs": ["Some argue that the diversity visa program reverts to discriminatory national origin quotas, which Congress eliminated through the 1965 amendments to the Immigration and Nationality Act. However, there are other examples of admissions policies that effectively discriminate based on nationality (e.g., H-2A, H-2B, E, and TN nonimmigrant visas, the Visa Waiver Program, and the per country caps on family- and employment-based LPR admissions, all of which limit admissions by nationality). Some also argue that admissions decisions should be based on higher levels of education, job experience, and language skills, or family ties to U.S. residents, rather than country of origin and being selected at random via a lottery. ", "In contrast, others argue that the program bolsters equity of opportunity\u00e2\u0080\u0094a quintessential American value\u00e2\u0080\u0094by providing a pathway for individuals\u00e2\u0080\u0094particularly those from Africa, Eastern Europe, and the former Soviet Union\u00e2\u0080\u0094who do not have family or employer connections in the United States. Some also argue that the more than one million immigrants who have moved to the United States as a result of the program have enriched the United States culturally and economically, and strengthened the nation's global connections. Some also argue that efforts to end it are racially motivated or point out that for most of U.S. history, Africans in particular had little opportunity to come to the United States other than as slaves. "], "subsections": []}, {"section_title": "Is a lottery the best way to choose applicants for diversity visas?", "paragraphs": ["Some equate the use of a lottery system in the DV program to awarding \"green cards\" at random and argue that luck should not come into play in U.S. admissions decisions. Others argue that, given the millions of interested applicants every year, a lottery is a fair method of reducing the applicant pool because it gives all entrants who meet the program's qualifications an equal chance to apply for a diversity visa. They also cite the use of a lottery in other over-subscribed visa categories such as the H-1B and H-2B temporary worker classifications to illustrate that U.S. immigration policy considers it a reasonable tool. "], "subsections": []}, {"section_title": "Is the diversity visa lottery more vulnerable to fraud and misuse than other immigration pathways?", "paragraphs": ["Some observers concerned about immigration fraud surrounding the DV program reference a 2003 State Department Office of Inspector General report and a 2007 GAO report which found fraud vulnerabilities in the DV program. They may also cite the 2017 and 2018 complaints filed by the Department of Justice (DOJ) in two cases seeking the denaturalization of individuals who had gained admission (in 1997 and 2001) to the United States through the DV program. In the first case, DOJ filed a complaint to denaturalize four Somali-born diversity visa recipients who falsely claimed to be a family. In the second case, DOJ filed a complaint to denaturalize a diversity visa recipient who obtained naturalization without having disclosed two prior orders of removal. ", "Those defending the fraud protections of the DV program counter that DOS has since revised the diversity lottery procedures to address fraud vulnerabilities, including a requirement to submit a recent photograph, the addition of biographic and facial recognition checks to reduce duplicate entries, a policy requiring the disqualification of entrants who fail to list their spouse and children on their entries, and technical improvements to limit manipulation of entries by automated bots. They also argue that the risk of fraud is not unique to the DV program and refer to the numerous fraud investigations and arrests of immigrants who entered the United States via other visa categories and the significant resources that DOS commits to fraud prevention for all immigrant and nonimmigrant visa applications through its Fraud Prevention Units at posts overseas. In addition, on June 5, 2019, DOS published an interim final rule to require diversity visa entrants to provide certain information from a valid, unexpired passport on the electronic entry form. This rule is intended to make it more difficult for third parties to submit unauthorized entries, because third parties are less likely to have individuals' passport numbers. "], "subsections": []}, {"section_title": "Are there national security reasons to eliminate the diversity visa?", "paragraphs": ["Some assert that the difficulties of performing background checks in many of the countries whose natives currently qualify for the DV program, as well as broader concerns about terrorism, justify the elimination of the category. Some cite the 2004 warning of the DOS Deputy Inspector General that the diversity visa lottery \"contains significant vulnerabilities to national security\" from state sponsors of terrorism. They argue that DV immigrants, by definition, are not required to have employer or family ties in the United States and thus may be more likely to have nefarious intent. They cite the case of a New Jersey resident responsible for killing eight people with his rental truck in lower Manhattan in 2017, who had immigrated to the United States from Uzbekistan on a diversity visa. In response to that event, the Trump Administration called on Congress to immediately terminate the diversity visa lottery program. ", "Others respond that immigrants coming to the United States in other immigrant visa categories are not restricted if they come from these same countries, and further argue that background checks for national security risks are performed on all prospective immigrants seeking to come to the United States. They also point to the 2005 DOS Inspector General's testimony that DOS's Bureau of Consular Affairs strengthened the DV program by complying with most of the recommendations in the OIG's 2003 report. They similarly note the testimony of one of the creators of the DV Program who contended that \"it is absurd to think that a lottery would be the vehicle of choice for terrorists\" and that attention should instead be focused on greater security risks. They also point out that since the creation of the Visa Security Program in 2003, DHS has aided consular officers in extensively vetting individuals applying for visas. They also reference a 2007 GAO report stating: \"We found no documented evidence that DV immigrants from these, or other, countries posed a terrorist or other threat. However, experts familiar with immigration fraud believe that some individuals, including terrorists and criminals, could use fraudulent means to enter or remain in the United States.\""], "subsections": []}, {"section_title": "Are there foreign policy reasons to continue the diversity visa program?", "paragraphs": ["Citing the millions of diversity visa lottery entries every year from around the world, some argue that the DV program is an efficient means of boosting American goodwill and \"soft power\" abroad, and that a diversity of immigrant origins helps the United States better respond to the challenges of globalization. Some also cite the value of remittances sent by diversity immigrants to their countries of origin as international development assistance without U.S. government expense. Others argue that the DV program encourages \"brain drain\" from developing countries, a concern which acknowledges that many DV immigrants\u00e2\u0080\u0094particularly from Africa\u00e2\u0080\u0094possess education and skills beyond the minimum requirements for program eligibility."], "subsections": []}, {"section_title": "Are the reasons that led to establishment of the diversity visa (e.g., to stimulate \"new seed\" immigration) still germane?", "paragraphs": ["Supporters of the DV program argue that it honors the United States' history as a destination for enterprising immigrants\u00e2\u0080\u0094the \"self-selected strivers\" \u00e2\u0080\u0094who arrive without family ties but with a desire to work hard for a better life. Some point to the present-day preponderance of immigrants from a handful of countries and argue that the diversity visa fosters new and more varied migration to counterbalance an admissions system weighted disproportionately to family-based immigration, which tends to perpetuate the dominance of certain countries. They also point to wide support for legislation that would remove or raise the 7% per-country limits on family- and employment-based immigrant admissions, which would likely result in further concentration of immigrant flows from the top sending countries. Even with the per-country limits and DV program in place, the total foreign-born population has become more concentrated in the top ten source countries compared to 1990 (see \" Impact of the DV Program on Immigrant Diversity \"). Others argue that, after almost 30 years, the diversity visa category has run its course. They might cite the countries\u00e2\u0080\u0094such as Pakistan, Brazil, Nigeria, and Bangladesh\u00e2\u0080\u0094that formerly qualified for the DV program and no longer do due to their increase in admissions, or the growth in immigration from Africa, Eastern Europe, and parts of Asia as an indication that the need for \"new seed\" immigration has been met. Others counter that these trends indicate that the program is meeting its goals and should be continued. They further argue that in many countries around the world, the diversity visa remains the only accessible avenue for immigrating to the United States."], "subsections": [{"section_title": "Appendix. Entropy Index Methodology and Results", "paragraphs": ["The entropy index (also called the Shannon index) is a measure of the diversity of a population. Diversity can be defined as the \"relative heterogeneity of a population.\" It is at its maximum when all subpopulations are present in equal proportions (for the purposes of this report, when each country of birth receives an equal number of LPR admissions). The formula for the entropy index is", "where H is the entropy index, k is the country-of-origin group, and P is the proportion of the total from each country-of-origin group. The index can be standardized by dividing by its maximum, log K. Doing so results in a range of 0 (for the case where all of the population is in one subpopulation) to 1.0 (for the case where all subpopulations are present in equal proportions). ", "For this report, the standardized entropy index was calculated by year for country of birth of total LPR admissions, LPR admissions minus DV admissions, and DV admissions. This was calculated after creating a standardized list of countries across all years so that K was held constant. As shown in Figure A-1 , between FY1995 and FY2017, the entropy index varied, but in all years the index was higher when DV LPRs were included. "], "subsections": []}]}]}]}}
{"id": "R45777", "title": "Livestock Mandatory Reporting Act: Overview for Reauthorization in the 116th Congress", "released_date": "2019-06-19T00:00:00", "summary": ["The U.S. Department of Agriculture's (USDA) Agricultural Marketing Service (AMS) collects livestock and meat price data and related market information from meat packers under the authority of the Agricultural Marketing Act of 1946 (7 U.S.C. \u00c2\u00a71621 et seq. ). This information was collected on a voluntary basis until 2001, when most of it became mandatory. As the livestock industry became increasingly concentrated in the 1990s, fewer animals were sold through negotiated (cash or \"spot\") purchases and with increasing frequency were sold under alternative marketing arrangements that were not publicly disclosed under voluntary reporting. Some livestock producers, believing such arrangements made it difficult to impossible for them to assess \"fair\" market prices for livestock going to slaughter, called for livestock mandatory reporting (LMR) for packers who purchase livestock, process them, and market the meat.", "In response, Congress passed the Livestock Mandatory Reporting Act of 1999 ( P.L. 106-78 ) that mandated price reporting for cattle, boxed beef, and swine and allowed USDA to establish mandatory price reporting for lamb purchases. USDA issued a final rule that included lamb reporting in December 2000 and took effect in April 2001. Since then, the law has been amended to include more detail on swine reporting and has added wholesale pork as a covered product. The act has been reauthorized four times, and most recently the Agriculture Reauthorizations Act of 2015 ( P.L. 114-54 ) reauthorized LMR through September 30, 2020. In addition to extending LMR, the enacted legislation established the \"negotiated formula purchase\" category for swine and added additional swine reporting requirements (e.g., net prices and head counts by type of swine). The act also amended reporting volume thresholds for lamb importers and lamb packers.", "The reauthorization required USDA to conduct a study that analyzed current marketing practices, identified livestock industry stakeholder concerns, and solicited stakeholder legislative and regulatory recommendations for LMR. AMS submitted this report to Congress in April 2018.", "The LMR study found that the meatpacking industry has become more concentrated and vertically integrated since LMR was established. It also found that the industry is responding to domestic and global consumer meat demand with product differentiation and a mix of new products that did not exist when LMR began. And it concluded that the types of transactions for livestock and meat have significantly changed as negotiated trades decrease and are replaced by formula pricing, forward contracts, and other arrangements.", "AMS held several meetings with cattle, swine, and lamb industry stakeholders to gather feedback on the LMR program in 2016 and 2017. Stakeholders represented at the meetings included industry associations, farm groups, meat processors, and food companies. Since then, AMS has implemented reporting changes that address several concerns raised by stakeholders.", "A common concern among stakeholders is the low volume of negotiated purchases and a parallel trend toward increased formula purchases or other marketing arrangements. Other concerns are about confidentiality and a lack of clarity on how transactions are categorized in reports, with some stakeholders advocating for the inclusion of more details about transactions, such as premium levels\u00e2\u0080\u0094especially as the market changes\u00e2\u0080\u0094and reporting on the number of livestock committed to packers.", "Swine and lamb stakeholders have provided specific legislative recommendations to be considered during possible reauthorization of the act in the 116 th Congress. Swine stakeholders have recommended eliminating the \"negotiated formula purchase\" transaction and the reporting of wholesale pork prices based on shipment to Omaha, Nebraska, because these reporting requirements are rarely used in the swine industry today. They also recommended expanding definitions and reporting on certain swine attributes. Lamb stakeholders have recommended setting a lower threshold for the number of lambs processed by a packer to be covered by LMR and requiring custom slaughtered lambs and the number of lambs committed to packers to be reported."], "reports": {"section_title": "", "paragraphs": ["T he Livestock Mandatory Reporting (LMR) Act of 1999 ( P.L. 106-78 , Title IX; 7 U.S.C. \u00c2\u00a7 1635 et seq. ) amended the Agricultural Marketing Act of 1946 (7 U.S.C. \u00c2\u00a71621 et seq. ) to require that meat packers report prices and other information on purchases of cattle, swine, and boxed beef (wholesale cuts of beef) to the U.S. Department of Agriculture (USDA). Lamb and lamb meat were added through initial rulemaking, and the act was amended to include wholesale pork in 2010. In September 2015, Congress reauthorized LMR until September 30, 2020, in the enacted Agriculture Reauthorizations Act of 2015 ( P.L. 114-54 ). In past reauthorizations, most livestock industry stakeholders have supported reauthorization of the act and put forward proposals amending mandatory reporting. This report provides an overview of LMR and its legislative and rulemaking history; a description of the LMR program; and issues that the cattle, swine, and lamb industries have raised with USDA that could be considered during possible reauthorization. Information on House and Senate bills that would reauthorize LMR will be added should they become available."], "subsections": [{"section_title": "Background and History", "paragraphs": ["Before Congress enacted LMR in 1999, the USDA Agricultural Marketing Service (AMS) collected livestock and meat price and related market information from meat packers on a voluntary basis under the authority of the Agricultural Marketing Act of 1946. AMS market reporters collected and reported prices from livestock auctions, feedlots, and packing plants. The information was disseminated through hundreds of daily, weekly, monthly, and annual written and electronic USDA reports on sales of live cattle, hogs, and sheep and wholesale meat products from these animals. The goal was to provide all buyers and sellers with accurate and objective market information.", "By the 1990s, the livestock industry had undergone many changes, including increased concentration in meat packing and animal feeding, production specialization, and vertical integration (firms controlling more than one aspect of production). Fewer animals were sold through negotiated (cash or \"spot\") sales, while an increasing number of purchases were made under alternative marketing arrangements (e.g., formula purchases based on a negotiated price established in the future). These formula purchases were based on prices not publicly disclosed or reported. Some livestock producers, believing that such arrangements made it difficult or impossible for them to assess \"fair\" market prices for livestock going to slaughter, called for mandatory price reporting for packers and others who process and market meat. USDA had estimated in 2000 that the former voluntary system was not reporting transactions of the order of 35%-40% of cattle, 75% of hogs, and 40% of lambs.", "During initial debate in Congress on LMR, opponents, including some meat packers and other farmers and ranchers, argued that a mandate would impose costly new burdens on the industry and could cause the release of confidential company information. Nonetheless, some of these early opponents ultimately supported an LMR law. Livestock producers had experienced low prices in the late 1990s and were looking for ways to strengthen market prices. Some meat packers also supported a national consensus bill at least partly to preempt what they viewed as an emerging \"patchwork\" of state price reporting laws that could alter competition among packers operating under different state laws."], "subsections": []}, {"section_title": "Legislative and Rulemaking History", "paragraphs": ["LMR was enacted in October 1999 as part of the FY2000 Agriculture appropriations act. (See Table 1 , \"Legislative and Rulemaking History.\") The law mandated price reporting for live cattle, boxed beef, and live swine and allowed USDA to establish LMR for lamb purchases and lamb meat sales. The law authorized appropriations as necessary and required USDA to implement regulations no later than 180 days after the law was enacted. LMR was authorized for five years, until September 30, 2004.", "USDA issued a final rule on December 1, 2000. Although reporting for lamb was optional in the LMR statute, USDA established mandatory reporting for lamb in the final rule. The rule was to be implemented on January 30, 2001, but USDA delayed implementation until April 2, 2001, to allow for additional time to test the automated LMR program to ensure program requirements were being met.", "The implementation of LMR did not affect the continuation of the AMS voluntary price-reporting program. AMS continues to publish prices from livestock auctions and feeder cattle and pig sales through voluntary-based market news reports.", "LMR authority lapsed for two months in October 2004 before Congress extended it for one year to September 30, 2005. Authority for LMR lapsed again on September 30, 2005. At that time, USDA requested that all packers who were required to report under the 1999 act continue to submit required information voluntarily. About 90% of packers voluntarily reported, which allowed USDA to continue to publish most reports. In October 2006, Congress passed legislation to reauthorize LMR through September 30, 2010. This act also amended swine reporting requirements from the original 1999 law by separating the reporting requirements for sows and boars from barrows and gilts, among other changes.", "Because statutory authority for the program had lapsed for a year, USDA determined that it had to reestablish regulatory authority through rulemaking in order to continue LMR operations. On May 16, 2008, USDA issued the final rule to reestablish and revise the mandatory reporting program. This rule incorporated the swine reporting changes and was intended to enhance the program's overall effectiveness and efficiency based on AMS's experience in the administration of the program. The rule became effective on July 15, 2008.", "Mandatory wholesale pork price reporting was not included in the original LMR act because the swine industry could not agree on reporting for pork. Section 11001 of the 2008 farm bill ( P.L. 110-246 ) directed USDA to study the effects of requiring packers to report the price and volume of wholesale pork cuts, which was a voluntary reporting activity at the time. The study was released in November 2009 and concluded that there would be benefits from a mandatory pork reporting program.", "On September 27, 2010, the President signed into law the Mandatory Price Reporting Act of 2010 ( P.L. 111-239 ), reauthorizing LMR through September 30, 2015. The act added a provision for LMR of wholesale pork cuts, directed USDA to engage in negotiated rulemaking to make required regulatory changes for mandatory wholesale pork reporting, and established a negotiated rulemaking committee to develop these changes. The committee was composed of representatives of pork producers, packers, processors, and retailers. The committee met three times, was open to the public, and developed recommendations for mandatory wholesale pork reporting. USDA released the final rule on August 22, 2012, and the regulation was implemented on January 7, 2013.", "The Agriculture Reauthorizations Act of 2015 ( P.L. 114-54 ) was enacted into law on September 30, 2015, extending LMR to September 30, 2020. P.L. 114-54 included amendments to swine and lamb reporting and addressed certain issues that livestock stakeholders had raised about LMR. (See \" LMR Provisions Enacted in 2015 \" below.)"], "subsections": [{"section_title": "LMR Provisions Enacted in 2015", "paragraphs": ["The Agriculture Reauthorizations Act of 2015 ( P.L. 114-54 ) extended LMR through September 30, 2020, and established the negotiated formula purchase reporting category for swine. A negotiated formula purchase is a purchase of swine based on a formula, negotiated on a lot-by-lot basis, in which the swine are committed to packers and scheduled for delivery no later than 14 days after the formula is negotiated.", "The enacted legislation also amended swine LMR by requiring the reporting of the low and high range of net swine prices to include the number of barrows and the number of gilts within the ranges and the total number and weighted average price of barrows and gilts. Lastly, the act requires that next-day reports include transaction prices that were concluded after the previous day's reporting deadlines.", "P.L. 114-54 amended lamb reporting regulations to redefine lamb importers and lamb packers . Importer is defined as an entity that imports an average of 1,000 metric tons (MT) of lamb meat per year during the immediately preceding four years. The original threshold was 2,500 MT. If an importing entity does not meet the volume limit, the Secretary of Agriculture may still determine that an entity should be considered an importer. Lamb packer is defined as an entity having 50% or more ownership in facilities, including federally inspected facilities, that slaughtered and processed an average of 35,000 head per year over the immediately preceding five years. The original threshold was 75,000 head. Also, the Secretary may consider other facilities to be packers based on processing plant capacity.", "Lastly, the reauthorization required USDA to study the price-reporting program for cattle, swine, and lamb. The study, to be conducted by AMS and the USDA Office of the Chief Economist, was directed to analyze current marketing practices and identify legislative and regulatory recommendations that are readily understandable; reflect current market practices; and are relevant and useful to producers, packers, and other market participants. AMS submitted the report to Congress in April 2018."], "subsections": []}]}, {"section_title": "The LMR Program", "paragraphs": ["LMR requires livestock buyers and sellers of meat products to report prices and other characteristics of their transactions. Ten types of transactions are reported for livestock, and each is described below. Several other marketing terms are defined in the text box following the description of transactions. Lastly, there is a discussion of LMR confidentiality requirements, AMS reporting, and enforcement measures."], "subsections": [{"section_title": "LMR Livestock Transaction Types", "paragraphs": ["Some types of transactions required under LMR are for specific livestock, such as cattle or swine, others cover all covered species.", "Negotiated purchase: a cash or \"spot\" market purchase by a packer of livestock from a producer under which the base price for the livestock is determined by seller-buyer interaction and agreement on a delivery day. Cattle are delivered to the packer within 30 days of the agreement. Swine are delivered within 14 days. ", "Negotiated grid purchase (cattle): the negotiation of a base price, from which premiums are added and discounts are subtracted, determined by seller-buyer interaction and agreement on a delivery day. Cattle are usually delivered to the packer not more than 14 days after the date the livestock are committed to the packer.", "Forward contract: an agreement for the purchase of livestock, executed in advance of slaughter, under which the base price is established by reference to publicly available prices. For example, forward contracts may be priced on quoted Chicago Mercantile Exchange prices or other comparable public prices.", "Formula marketing arrangement: the advance commitment of livestock for slaughter by any means other than a negotiated or negotiated grid purchase or a forward contract using a method for calculating price in which the price is determined at a future date.", "Swine or pork market formula purchase: a purchase of swine by a packer in which the pricing mechanism is a formula price based on a market for swine, pork, or a pork product other than a future or option for swine, pork, or a pork product.", "Negotiated formula purchase (swine): a purchase of swine based on a swine/pork market formula that is negotiated lot-by-lot and scheduled for delivery and committed to the packer within 14 days of the negotiation. The sales are reported as producer- or packer-sold.", "Other market formula purchase: a purchase of swine by a packer in which the pricing mechanism is a formula price based on one or more futures or options contracts, and the sales are reported as producer- or packer-sold. ", "Other purchase arrangement: a purchase of swine by a packer that is not a negotiated purchase, swine or pork market formula purchase, negotiated formula, or other market formula purchase and does not involve packer-owned swine. The sales are reported as producer- or packer-sold.", "Packer-sold swine: the swine that are owned by a packer (including a subsidiary or affiliate of the packer) for more than 14 days immediately before sale for slaughter and sold for slaughter to another packer.", "Packer-owned: livestock that packers (includes a subsidiary or affiliate of swine packers) own for at least 14 days immediately before slaughter. Information such as weight and dressing percent is reported on packer-owned livestock. "], "subsections": []}, {"section_title": "Meat Transactions", "paragraphs": ["Meat packers are also required to report negotiated sales, formula sales, and forward contracts for boxed beef, boxed lamb, carcass lamb, and wholesale pork. ", "Negotiated sales : a wholesale pork, boxed beef, or boxed lamb trade in which a price is determined by seller and buyer and is scheduled for delivery no more the 14 days from the date the price is established.", "Formula marketing arrangements: agreements in which the price is determined based on publicly available quoted prices.", "Forward sales: a wholesale pork, boxed beef, or boxed lamb sale in which the price is determined by seller and buyer and the delivery is scheduled beyond the time of a negotiate sale (over 14 days). ", "Export sales: meats that are delivered outside the United States but not to Canada or Mexico."], "subsections": []}, {"section_title": "Livestock Transaction Data", "paragraphs": [" Figure 1 and Figure 2 show the monthly percentage since 2002 of cattle and swine purchases by transactions type. Both demonstrate the long-term declining trend in negotiated purchases and the move to formula-based purchases. In January 2002, almost 50% of cattle were traded on a negotiated basis, but negotiated purchases amounted to about 25% of purchases in May 2019. The declining trend in negotiated purchases in swine has gone from 17% in January 2002 to less than 2% in February 2019.", "AMS does not report the number of lambs sold on a formula basis because of confidentiality requirements. Throughout 2017 AMS was unable to report formula purchases in its National Weekly Lamb Report that included both lamb negotiated and formula purchases because of confidentiality requirements. AMS stopped publishing the report in December 2017. In 2016, about 40% of lambs were purchased on a negotiated basis and 60% on a formula basis.", "Currently, AMS reports the number of lambs, their weight and price range, and the weighted average price of purchased lambs on a negotiated basis, as well as comprehensive information that includes the average weight, net price, and dressing percent that combines negotiated and formula purchase information. Sufficient data are not available to publish all of the regular LMR transactions due to the limited number of transactions."], "subsections": []}, {"section_title": "Selected Reporting Requirements", "paragraphs": ["The text box above provides definitions of selected marketing terms that are used in LMR reports. The following sections discuss some of the main LMR reporting requirements, a description of confidentiality, and AMS reporting and enforcement of LMR. The complete LMR reporting requirements for cattle, swine, lamb, beef, pork, and lamb meat are in the LMR statute (7 U.S.C. \u00c2\u00a71635 et seq. ) and the LMR regulations (7 C.F.R. Part 59). LMR reports are available at the AMS Livestock, Poultry, and Grain Market News Portal . A description of selected reporting requirements under the LMR, and of the entities that are subject to them, follow. ", "Packers that are subject to mandatory reporting are defined as federally inspected plants that have slaughtered a minimum annual average of 125,000 head of cattle, 100,000 head of swine, 200,000 head of sows and boars or a combination thereof, or 35,000 lambs during the immediate five preceding years. If a plant has operated for fewer than five years, USDA determines, based on capacity, if the packer must report. Packers are required to report the prices established for steers and heifers twice daily (10 a.m. and 2 p.m. central time), for cows and bulls twice daily (10 a.m. central for current day and 2 p.m. for previous-day purchases), barrows and gilts three times daily (7 a.m. central for prior-day purchases and 10 a.m. and 2 p.m. central), sows and boars once daily (7 a.m. central for prior-day purchases), and lambs once daily (2 p.m. central). Besides the established prices, packers report premiums and discounts and the type of purchase transaction\u00e2\u0080\u0094for example, negotiated sales, formula sales, or forward contracts. Depending on the species, packers are required to report the quantity delivered for the day; the quantity committed to the packer; the estimated weight on a live weight basis or a dressed weight basis; and quality characteristics, such as quality grade. In addition to daily reporting, on the first reporting day of the week, packers file a cumulative weekly report of the previous week's purchases of steers, heifers, and swine. Lamb packers are required to report the previous week's purchases on the first and second reporting day of the week, depending on the data. Steer and heifer and lamb packers are to include data on type of purchase (negotiated, formula, or forward contract), premiums and discounts, and some carcass characteristics (e.g., quality grade and yield, average dressing percentage). Swine packers are required to report the amount paid in premiums that are based on noncarcass characteristics (e.g., volume, delivery timing, hog breed). Also, packers must provide producers a list of such premiums. In addition to livestock purchase prices, packers are required to report sales data for boxed beef, wholesale pork, and carcass and boxed lamb. Sales are reported twice daily for beef and pork and once daily for lamb. Packers are required to provide price, quantity, quality grade for beef and lamb, and type of cut. Packers must also report beef and pork domestic and export sales and domestic boxed lamb sales. Lamb importers who have imported a minimum average of 1,000 MT of lamb in the immediate four preceding years are required to report weekly lamb prices; quantities imported; the type of sale (negotiated, formula, or forward contract); cuts of lamb; and delivery period."], "subsections": []}, {"section_title": "Confidentiality", "paragraphs": ["The LMR law requires that price reporting be confidential to protect packer identity, contracts, and proprietary business information. In determining what data could be published, AMS initially adopted a \"3/60\" confidentiality guideline, which is commonly used throughout the federal government. Under 3/60, at least three entities must report in the regional or national reporting area, and no single entity may account for more than 60% of the reported market volume. Because of concentration in the livestock industry, AMS found that the \"3/60\" guideline resulted in large gaps in data reporting. For example, between April 2, 2001, and June 15, 2001, 24% of daily reports and 20% of weekly reports were not published because of confidentiality provisions.", "In order to address the data gaps, in August 2001 AMS adopted a \"3/70/20\" guideline, which requires that (1) at least three entities report 50% of the time over the most recent 60-day period, (2) no single reporting entity may account for more than 70% of reported volume over the most recent 60-day period, and (3) no single reporting entity may be the only reporting entity for a single report more than 20% of the time over the most recent 60-day period. These new guidelines eliminated most of the data gaps."], "subsections": []}, {"section_title": "AMS Reporting", "paragraphs": ["The Livestock, Poultry, and Grain Market News Division of the AMS Livestock, Poultry, and Seed Program is responsible for compiling and disseminating the information collected under LMR. It continues to operate a voluntary reporting program for livestock, poultry, and grain not covered under LMR.", "Under LMR, AMS publishes 24 daily cattle reports, 20 daily swine reports, and 2 daily lamb reports, and on a weekly basis, 21 cattle reports, 2 swine reports, and 3 lamb reports. It also publishes daily 6 boxed beef reports, 4 wholesale pork reports, and 1 boxed lamb and 1 lamb carcass report, and weekly 11 boxed beef reports, 10 wholesale pork reports, and 1 boxed lamb and 1 lamb carcass report. AMS also publishes 13 monthly cattle reports under LMR.", "According to AMS, LMR provides data for 78% of total slaughtered cattle, 94% of hogs, and 43% of sheep. For meat products, LMR covers 93% of boxed beef production, 87% of wholesale pork, and 43% of boxed lamb. Small operations that fall below required thresholds or nonfederally inspected meat packing facilities account for the remaining percentage of livestock slaughter and meat production. AMS market news operates on an annual appropriation of about $34 million, and the LMR program accounts for about $4 million of that amount."], "subsections": []}, {"section_title": "Enforcement", "paragraphs": ["AMS compliance staff enforces LMR through audits once every six months. AMS accomplishes this by reviewing support documentation for randomly sampled lots.", "AMS classifies noncompliance as major or minor violations. Major violations occur when packers do not submit information or submit incorrect information that affects the accuracy of reports. Minor violations are submissions that have typographical or data entry errors, for example, but have a minimal effect on report accuracy. If noncompliance is found, AMS will ask the packer to correct the problem. If the packer does not correct the problem, AMS may issue a warning letter and conduct additional audits. Ultimately, AMS could fine the packer $10,000 for each violation if corrective action is not taken. Packing plants have the right to appeal any noncompliance findings within 30 days of receiving a request for corrective action.", "In FY2015, AMS switched from quarterly plant visit reports to semiannual compliance reports on plant visits. For FY2018, AMS issued 369 noncompliance violations (270 major and 99 minor) during audits of 457 plants and 4,389 audited lots. "], "subsections": []}]}, {"section_title": "Issues for Reauthorization in 2020", "paragraphs": ["As part of the 2015 reauthorization study requirement, AMS held several meetings with cattle, swine, and lamb industry stakeholders to gather feedback on the LMR program. Stakeholders represented at the meetings included industry associations, farm groups, meat processors and food companies. In several cases AMS has already implemented reporting changes to address industry concerns. A common concern among stakeholders is the limited volume of the negotiated purchase market (see Figure 1 and Figure 2 ). Other concerns cited went to issues of confidentiality and the need for greater clarity in how transactions are categorized in reports. Some stakeholders want to see more detailed information on transactions, such as premiums, especially as pricing models evolve, as well as changes in reporting on the number of livestock committed to packers. The sections below provide summaries of the baseline study and stakeholder feedback."], "subsections": [{"section_title": "Baseline Study", "paragraphs": ["In response to the report requirements in the 2015 reauthorization, AMS commissioned a baseline study that explored underlying changes in the livestock and meat markets that affect LMR. The study's findings include the following:", "1. Since LMR was established, the meatpacking industry has become more concentrated and vertically integrated. Many producers are also looking to vertical integration to remain competitive. 2. The industry is responding to domestic and global consumer meat demand with product differentiation and a mix of new products that did not exist when LMR began. 3. Livestock and meat are traded differently than they were 20 years ago as negotiated trades represent a smaller share of transactions, while formula pricing, forward contracts, and other arrangements comprise an increasing share of the total trade. 4. There are new platforms for pricing, such as internet auctions, that did not exist in early years of LMR. The industry is likely to continue to develop other platforms that vary greatly from traditional trading of livestock and meat. ", "The study's authors concluded that the loss of LMR data during the 2013 government shutdown left the industry without a benchmark to accurately evaluate the markets. During the 2018-2019 shutdown AMS continued LMR reporting.", "Further structural changes\u00e2\u0080\u0094concentration and integration\u00e2\u0080\u0094in the livestock industry create challenges for confidentiality in reporting. In addition, the effectiveness of LMR as a means of providing relevant information for market participants may need to be assessed in the context of changes, such as introduction of branded or specialty programs that are not captured by LMR as it is currently structured. Also, with international trade in meat increasing, the inclusion of more market information on exported meat products could add to transparency in the market. Lastly, the study noted that timely AMS collaboration with the industry is crucial to the usefulness of LMR.", "Stakeholders in the cattle, swine, and lamb industries provided a range of comments and suggestions during their meetings with AMS, and these are summarized below."], "subsections": []}, {"section_title": "Cattle Industry", "paragraphs": ["Cattle stakeholders did not offer legislative recommendations to AMS but suggested changes to LMR reporting. AMS has already addressed some cattle stakeholder concerns. For example, cattle stakeholders raised concerns about how AMS reports delivery periods for negotiated purchases. A period of 15-30 days for deliveries was added in 2008, but AMS was unable to report data because of confidentiality guidelines. Instead data was reported as deliveries of 0-30 days. In response, AMS conducted a study of delivery periods, and in November 2017 it began reporting weighted average negotiated cattle prices for delivery periods of 0-14 and 15-30 days. AMS has also adjusted reporting so that negotiated purchases delivered beyond 30 days are separate from forward contract purchase. Some in the cattle industry expressed the need for greater reporting of committed cattle. For example, hog packers report each morning the number of hogs they have committed to take delivery of during the next 14 days. Conversely, some cattle stakeholders disagree that additional data on committed cattle is needed, pointing out that cattle market numbers are smaller than swine numbers, and therefore the information could be misleading."], "subsections": []}, {"section_title": "Swine Industry", "paragraphs": ["Stakeholders in the swine industry also expressed concern about the low volume of transactions in the negotiated markets. They were also skeptical about whether LMR can adequately capture market information related to changes in consumer preferences for pork\u00e2\u0080\u0094such as organic, antibiotic-free, raised without sow crates, or pork raised without the growth promoter ractopamine. In general, swine stakeholders also want AMS to report more noncarcass premiums, revise its reporting on the pork cutout (cut up parts of the carcass), and provide guidance on how transactions are categorized. ", "Swine stakeholders offered the following six recommendations for legislative changes to LMR:", "1. Remove the \"negotiated formula purchase\" definition and reporting requirement for swine that was included in the 2015 LMR reauthorization; 2. Amend the definition of non-carcass merit premium to more clearly differentiate the reporting requirements from premiums offered for carcass merit; 3. Define and report swine attributes, specifically addressing how attribute premiums, base prices, and net prices are reported by purchase type; 4. Amend the definitions of affiliate to lower the threshold of ownership or control to anything greater than 0 percent; 5. Add to reporting the volume of swine or pork market formula transactions that are priced on the pork carcass cutout; and 6. Remove the requirement for reporting wholesale pork on a free-on-board (FOB) Omaha basis. Wholesale pork is reported on an FOB plant basis and FOB Omaha basis, but most of the pork industry now uses FOB plant as the basis for pricing."], "subsections": []}, {"section_title": "Lamb Industry", "paragraphs": ["The U.S. sheep and lamb industry is a concentrated market that results in price-reporting challenges not necessarily experienced by the larger cattle and hog sectors. As a result, AMS is no longer able to publish lamb formula purchases because too few companies purchase the volume needed to meet reporting confidentiality guidelines. At the request of the lamb industry, AMS commissioned a study of lamb data and confidentiality. The study found that it is not feasible to relax confidentiality guidelines but suggested alternatives such as publishing a comprehensive report, which AMS has done, and developing a standardized pricing model that would produce a price based on the relationship of various reporting attributes.", "The lamb stakeholders raised concerns that AMS was not capturing price information for cooperative-owned lambs and for custom slaughtered lambs. AMS addressed the cooperative owned lamb issue in November 2017 by adding these lamb prices and their carcass weight information to its weekly sheep report. Under custom slaughter, ownership does not change. A producer's lambs are slaughtered on contract and are usually priced on a per-head basis. The lamb carcasses may then be sold to a lamb processor for fabrication (processing the carcasses into various cuts), but prices are not reported to AMS. Lastly, some stakeholders requested reporting of the number of lambs committed to be delivered to packers. However, the industry is not in agreement on reporting of committed lambs because of concern among some that this information would provide market information to import competitors.", "Lamb stakeholders involved in discussions with AMS proposed that three amendments be included in the reauthorization of LMR: ", "1. Lower the reporting threshold for lamb packers from 35,000 head per year on average to 20,000 head per year on average. 2. Define and require reporting of custom slaughtered lambs. 3. Define and require reporting of committed lambs."], "subsections": []}]}, {"section_title": "Congressional Interest", "paragraphs": ["LMR, as enacted and amended over the past 20 years, has increased market transparency for all market participants and livestock analysts. Livestock stakeholders have been generally supportive of LMR and its reauthorization over the years. The five-year reauthorization period has provided an opportunity for Congress to receive input from livestock stakeholders and evaluate whether or not the law and its implementation is fulfilling its purpose. This has proven especially critical when the industry is constantly changing and adapting to market and consumer demands.", "The 2015 reauthorization law that required that USDA provide a report to Congress on the LMR program offers a potential starting point for Congress to consider for possible 2020 reauthorization. Livestock stakeholders have offered specific proposals for Congress to consider should it choose to address reauthorization legislation. Other recommendations may be forthcoming. AMS regularly engages the livestock industry on LMR reporting issues and makes changes to reporting. During consideration of reauthorization, Congress may consider legislation to bolster LMR and whether AMS needs additional regulatory authority to address LMR issues. Stakeholders may have particular interest in adjusting confidentiality requirements for lamb reporting and expanding reporting requirements for certain attributes that address changing livestock markets."], "subsections": []}]}}
{"id": "R46324", "title": "COVID-19: Child Care and Development Block Grant (CCDBG) Supplemental Appropriations in the CARES Act", "released_date": "2020-04-24T00:00:00", "summary": ["On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law ( P.L. 116-136 ). The CARES Act includes $3.5 billion in supplemental appropriations for the Child Care and Development Block Grant (CCDBG). These funds are to be used to \"prevent, prepare for, and respond to coronavirus.\"", "The CCDBG Act (42 U.S.C. \u00c2\u00a7\u00c2\u00a79858 et seq.) is the main federal law supporting child care programs for low-income working families. The CCDBG is administered by the U.S. Department of Health and Human Services (HHS). HHS allocates CCDBG funds to states, territories, and tribes according to a statutory formula. State, territory, and tribal lead agencies submit CCDBG plans to HHS every three years describing how their child care programs will operate. CCDBG funds are used to subsidize the cost of child care for eligible children of low-income working parents. Funds are also used to support activities to improve the quality of child care and for certain other activities.", "The $3.5 billion in supplemental CCDBG funds are provided in addition to FY2020 annual appropriations of $5.8 billion ( P.L. 116-94 ). The additional $3.5 billion represents a 60% increase in total appropriations to the CCDBG in FY2020.", "The CARES Act funds may be used under existing CCDBG Act authorities. In addition, the CARES Act includes a number of provisions that clarify allowable uses and, in some cases, waive certain underlying requirements of the CCDBG Act. For instance, the CARES Act specifies that the funds", "may be used to provide continued payments and assistance to child care providers in cases of decreased enrollment or closures related to coronavirus, and to ensure they are able to remain open or reopen; may be used to continue to pay staff salaries and wages of child care providers (CCDBG lead agencies are encouraged to place conditions on payments to child care providers aimed at ensuring that a portion of the funds they receive go toward costs of salaries and wages); may be used to provide child care assistance to health care sector employees, emergency responders, sanitation workers, and other workers deemed essential during the response to the coronavirus, without regard to typical CCDBG income eligibility requirements (federal law generally limits eligibility to those whose family income does not exceed 85% of state median income, though most states set income limits below this federal threshold); shall be available to eligible child care providers under the CCDBG Act (even if they were not receiving CCDBG funds previously) for the purposes of cleaning and sanitation, and other activities necessary to maintain or resume program operation; are exempt from the minimum spending requirements for quality activities and direct services; may be used for allowable obligations incurred prior to enactment of the CARES Act; may be used for purposes provided in the CARES Act before the lead agency submits any applicable CCDBG plan amendments to HHS (under regulations, lead agencies generally must submit state plan amendments within 60 days of policy change); shall be used to supplement, not supplant, state, territory, and tribal general revenue funds for child care assistance for low-income families; and are to remain available for obligation by HHS through the end of FY2021 and may remain available for obligation by CCDBG le ad a gencies through the end of FY2022."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law ( P.L. 116-136 ). The CARES Act includes $3.5 billion in supplemental appropriations for the Child Care and Development Block Grant (CCDBG). This report provides an overview of the CCDBG provisions in the CARES Act. Among other things, these provisions address allowable uses and flexibilities of the supplemental funds. The report also includes allocations for the additional $3.5 billion in CCDBG appropriations. ", "The CCDBG Act (42 U.S.C. \u00c2\u00a7\u00c2\u00a79858 et seq.) is the main federal law supporting child care programs for low-income working families. The CCDBG is administered by the U.S. Department of Health and Human Services (HHS). HHS allocates CCDBG funds to states, territories, and tribes according to a statutory formula. In addition, certain funds may be reserved for other activities, such as technical assistance and research. State, territory, and tribal lead agencies submit CCDBG plans to HHS every three years describing how their child care programs will operate. CCDBG funds are used to subsidize the cost of child care for eligible children of low-income working parents. Funds are also used to support activities to improve the quality of child care and for certain other costs. "], "subsections": []}, {"section_title": "CCDBG Provisions in the CARES Act", "paragraphs": ["The CARES Act appropriates $3.5 billion in FY2020 emergency supplemental funds to the CCDBG. The funds are to be used to \"prevent, prepare for, and respond to coronavirus.\" The CARES Act funds are provided in addition to FY2020 annual appropriations of $5.8 billion (see P.L. 116-94 ). The additional $3.5 billion represents a 60% increase in total appropriations to the CCDBG in FY2020. The additional funds are to remain available for obligation by HHS through September 30, 2021 (i.e., the end of FY2021). The CARES Act includes a number of provisions that clarify allowable uses and, in some cases, waive certain underlying requirements of the CCDBG Act. Below is a brief discussion of key provisions. "], "subsections": [{"section_title": "Continued Assistance to Child Care Providers", "paragraphs": ["Under the CCDBG Act, lead agencies subsidize the cost of child care for eligible children. Lead agencies commonly provide subsidy payments directly to child care providers. In some cases, lead agencies may provide additional CCDBG funds to eligible providers for other purposes, such as supporting professional development or helping build the supply of quality child care. ", "The CARES Act specifies that CCDBG funds appropriated in the act may be used to provide continued payments and assistance to child care providers ", "in cases of decreased enrollment or closures related to coronavirus, and to ensure that providers are able to remain open or reopen as appropriate and applicable. ", "The CCDBG Act generally encourages (but does not require) lead agencies to make payments to child care providers based on enrollment rather than attendance. Specifically, the law states that lead agencies should \"to the extent practicable\" delink provider reimbursements from an eligible child's occasional absences due to holidays or unforeseen circumstances such as illness. This provision of the law is intended to support the fixed costs incurred by providers. "], "subsections": []}, {"section_title": "Eligible Child Care Providers", "paragraphs": ["The CARES Act specifies that CCDBG funds appropriated in the act shall be available to eligible child care providers under the CCDBG Act for the purposes of cleaning and sanitation, and other activities necessary to maintain or resume the operation of programs. The act clarifies that this provision applies to eligible child care providers even if those providers were not receiving CCDBG assistance prior to the public health emergency resulting from coronavirus. ", "Under the CCDBG Act, eligible child care providers generally must", "be licensed, regulated, or registered by the state (though states may exempt certain providers from this requirement); and meet certain minimum health and safety standards. ", "An exception to these requirements is made in cases of child care providers caring only for relatives. However, such providers must comply with requirements applicable to relative caregivers. "], "subsections": []}, {"section_title": "Continued Pay for Child Care Staff", "paragraphs": ["The CARES Act encourages states, territories, and tribes to place conditions on payments to child care providers aimed at ensuring providers use a portion of the funds to continue to pay staff salaries and wages. Payment of salaries and wages is not explicitly addressed in the CCDBG Act, though presumably it is typical for some share of CCDBG provider payments to support these expenses. According to national estimates from the Bureau of Labor Statistics (BLS), the mean hourly wage for child care workers was $12.27 in May 2019. BLS estimated the mean annual wage for child care workers at $25,510 nationally."], "subsections": []}, {"section_title": "Support for Essential Workers", "paragraphs": ["The CARES Act specifies that states, territories, and tribes are authorized to use CCDBG funds appropriated in the act to provide child care assistance to ", "health care sector employees, emergency responders, sanitation workers, and other workers deemed essential during the response to coronavirus by public officials. ", "Further, the act specifies that such workers may receive CCDBG assistance without regard to the typical income eligibility requirements under the CCDBG Act. ", "The CCDBG Act generally stipulates that eligible children must", "be under age 13 (children may be older in limited circumstances ); reside with a parent who is working or attending job training (unless the child is receiving or needs to receive protective services); have family income no greater than 85% of state median income (SMI), or lower depending on state policy; and have no more than $1 million in family assets.", "While the CARES Act waives income requirements for essential workers as noted above, it does not waive other eligibility requirements (e.g., those related to the child's age or the parent's work status)."], "subsections": []}, {"section_title": "State Plan Amendments", "paragraphs": ["The CARES Act requires HHS to remind states that CCDBG state plans do not need to be amended prior to using \"existing authorities in the CCDBG Act for the purposes provided\" in the CARES Act. Typically, if a state intends to make a substantial change to policies laid out in its CCDBG plan (e.g., a change in eligibility rules, provider payment rates, family copayments), the state would submit a state plan amendment to HHS for approval. Under regulations, a plan amendment must be submitted within 60 days of the effective date of the requirement (i.e., the state may execute the policy change before submitting the amendment). HHS has 90 days to approve or deny a plan amendment.", "In the current circumstances, there are several reasons states might want to amend their plans. For instance, the CARES Act authorizes HHS to provide child care assistance to essential workers regardless of income. This is a substantial change, as federal law and state policies generally condition eligibility on family income. "], "subsections": []}, {"section_title": "Spending Flexibilities and Other Technical Provisions", "paragraphs": ["The CARES Act effectively waives or adjusts certain requirements related to the obligation and expenditure of the CCDBG funds appropriated in the act. "], "subsections": [{"section_title": "Quality Spending", "paragraphs": ["The CCDBG Act generally requires lead agencies to spend at least 9% of their FY2020 allotments on quality activities, plus an additional 3% on activities to improve the quality of care for infants and toddlers. All told, these quality set-asides are intended to account for at least 12% of spending from FY2020 allotments. The CARES Act effectively waives these quality spending minimums for funds provided in the act, offering lead agencies greater flexibility in how funds may be spent. "], "subsections": []}, {"section_title": "Direct Spending", "paragraphs": ["The CCDBG Act includes requirements related to minimum spending on direct services. (The term direct services generally refers to child care assistance provided to families and is often, but not always, provided in the form of a voucher.) For instance, after lead agencies set aside funds to meet minimum quality spending requirements and for spending on administrative costs (capped at 5% for states and territories ), they must use at least 70% of remaining CCDBG funds for direct services. The CARES Act effectively waives direct spending requirements in the CCDBG Act, again offering lead agencies greater flexibility in how funds may be spent. "], "subsections": []}, {"section_title": "Supplement, Not Supplant", "paragraphs": ["The CARES Act specifies that funds provided via the CCDBG are to be used to supplement, not supplant , state, territory, and tribal general revenue funding for child care assistance for low-income families (i.e., the funds provided under the act should not be used to replace existing state, territory, or tribal spending on such activities). CCDBG provisions in annual appropriations acts typically include similar provisions. ", "Past guidance from HHS suggests that this requirement would likely be considered satisfied if a state, territory, or tribe does not make any administrative or legislative changes to reduce general revenue spending after the enactment of a new CCDBG appropriation. An action occurring after this date could potentially be considered a violation of the non-supplantation requirement, unless the lead agency demonstrates that the reduction was not due to increased federal CCDBG funds."], "subsections": []}, {"section_title": "Use of Funds for Prior Obligations", "paragraphs": ["The CARES Act specifies that the CCDBG funds it appropriates may be made available to restore amounts, either directly or through reimbursement, for obligations incurred prior to enactment. These amounts may only be restored with CARES Act funds if they were used to prevent, prepare for, and respond to coronavirus."], "subsections": []}, {"section_title": "Obligation Deadline for Lead Agencies (or Other Recipients)", "paragraphs": ["The CARES Act states that payments made by HHS may be obligated by the state, territory, tribe, or other recipient in the current fiscal year or the succeeding two fiscal years. Effectively, this means that lead agencies have through FY2022 to obligate funds they receive under the CARES Act. The CCDBG Act typically gives states or other recipients two fiscal years, rather than three, to obligate funds. "], "subsections": []}]}]}, {"section_title": "Allocation of CCDBG Funds", "paragraphs": ["CCDBG funds are generally allocated according to a formula set in statute. Under the CCDBG Act formula, HHS is to reserve up to 0.5% for territories and not less than 2% for tribes and tribal organizations. The formula also includes set-asides for technical assistance (up to 0.5%); research, demonstrations, and evaluation (0.5%); and a national toll-free hotline and website (up to $1.5 million). After all reservations have been made, the remaining funds go to states. Funds are allocated to states according to a formula based on their share of children under age five, their share of children receiving free- or reduced-price lunches, and state per capita income.", " Table 1 presents FY2020 CCDBG allocations released by HHS. The table includes allocations from FY2020 annual appropriations ( P.L. 116-94 ), as well as the CARES Act ( P.L. 116-136 ). "], "subsections": []}]}}
{"id": "R46225", "title": "Indigenous Peoples in Latin America: Statistical Information", "released_date": "2020-02-13T00:00:00", "summary": ["This report provides statistical information on indigenous peoples in Latin America, including populations and languages, socioeconomic data, land and natural resources, human rights and international legal conventions. Resource lists for each section (languages; socioeconomics; land and resources; international organizations; and human rights) are available in the appendix as well as a lists of national agencies that oversee indigenous affairs in each Central American or South American country."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["Congress has long been interested in the status of indigenous peoples abroad. In 1992, the 102 nd Congress enacted H.R. 5368 ( P.L. 102-391 ) requiring the State Department's annual human rights report to \"describe the extent to which indigenous people are able to participate in decisions affecting their lands, cultures, traditions and the a llocation of natural resources, and assess the extent of protection of their civil and political rights.\" Issues relating to indigenous peoples periodically have been considered in hearings focused on such issues as environmental protection, energy opportunities, and security cooperation. ", "This report provides statistical information on indigenous peoples in Latin America, including populations and languages, socioeconomic data, land and natural resources, human rights, and international legal conventions. Resource lists for each section (languages; socioeconomics; land and resources; international organizations; and human rights) are available in the tables of Appendix A . Table B-1 lists national agencies that oversee indigenous affairs in each country."], "subsections": [{"section_title": "Terms", "paragraphs": ["Definitions of indigenous peoples vary. The United Nations (U.N.) has not adopted an official definition, but instead relies on self-identification to categorize indigenous populations around the world; many countries do the same. However, the U.N. web page dedicated to indigenous peoples does state \"indigenous peoples are inheritors and practitioners of unique cultures and ways of relating to people and the environment. They have retained social, cultural, economic and political characteristics that are distinct from those of the dominant societies in which they live.\" The annex of the U.N. Declaration on the Rights of Indigenous Peoples states \"indigenous peoples have suffered from historic injustices as a result of, inter alia , their colonization and dispossession of their lands, territories and resources.\"", "The Organization of American States' (OAS) American Declaration on the Rights of Indigenous Peoples repeats the U.N. Declaration language and adds \"indigenous peoples are original, diverse societies with their own identities that constitute an integral part of the Americas.\" According to OAS estimates, there are more than 50 million people of indigenous descent in the Western hemisphere. This report examines those living in Latin American and the Caribbean.", "According to the Manual for National Human Rights Institutions that accompanied the U.N. Declaration on the Rights of Indigenous Peoples, \"indigenous peoples have argued against the adoption of a formal definition at the international level, stressing the need for flexibility and for respecting the desire and the right of each indigenous people to define themselves.\u00e2\u0080\u00a6 As a consequence, no formal definition has been adopted in international law. A strict definition is seen as unnecessary and undesirable.\"", "In counting distinct groups, this report uses the term \"indigenous groups\" rather than \"tribe,\" \"nation,\" \"ethnic minority,\" or \"sociolinguistic group.\"", "A 2019 United Nations report included sections titled \"the need for disaggregated data\" and \"the persistent invisibility of indigenous peoples\" to address data limitations regarding indigenous people around the globe. However, the report notes progress in Latin America: \"only two censuses included self-identification criteria in the 1990 round, but by the 2010 round such criteria were present in 21 of them.\" Despite some advances, the sources cited in this report contain data limitations, which are discussed in Appendix A . The countries listed in each table or graph may differ from others in this report based on the information available in the sources. "], "subsections": []}]}, {"section_title": "Population Data", "paragraphs": ["Latin America is home to 29-45 million indigenous people according to several studies that provided estimates for around 2010. The World Bank stated in a report that \"official data on indigenous people are not conclusive, as many technical and sociological difficulties persist in census data collection. Other sources based on estimates and unofficial data refer to 50 million indigenous inhabitants in Latin America (about 10 percent of the total population). For this report, however, we will refer to the official\u00e2\u0080\u0094albeit imperfect\u00e2\u0080\u0094numbers provided by the national censuses [41.81 million].\" Figure 1 illustrates the total number of indigenous people and their share of the total population according to three sources: a 2009 UNICEF report, a 2015 report from the Economic Commission for Latin America and the Caribbean (ECLAC), and a 2015 World Bank Report. Census projections forecast indigenous population increases in many countries in part due to populations that are younger on average than non-indigenous populations and in part due to an increase in self-identification. ", " Table 1 shows a breakdown by country of indigenous populations and their share of the overall population. CRS created the following tables from several sources; publication dates and methodologies differed. The countries listed in each table may differ from others in this report based on the information available in the sources.", " Figure 2 illustrates the range of estimates regarding the indigenous population as a percentage of the general population in each country. Bolivia's steep decrease in the indigenous population reflects \"reasons that probably have more to do with discrepancies in how the data were collected between the last two censuses than with a real trend to negative growth,\" according to the World Bank. More generally, differences in data collection between censuses and across countries make it difficult to estimate population increases."], "subsections": [{"section_title": "Indigenous Groups and Languages", "paragraphs": ["To raise awareness and mobilize action, the U.N. declared 2019 the International Year of Indigenous Languages, yet figures on indigenous groups and languages vary among sources.", " Figure 3 shows the total number of indigenous groups in Latin America as identified by three sources. A 2009 UNICEF report identified a total of 655 indigenous groups in Latin America. The 2014 ECLAC report cites 826 indigenous groups in Latin America although it does not provide a country breakdown. Of these 826, about 200 indigenous groups live in voluntary isolation, which is defined by an Inter-American Commission on Human Rights report as groups that \"do not maintain sustained contacts with the majority non-indigenous population.\" The World Bank's 2015 report identifies 772 indigenous groups in Latin America.", "According to several sources, indigenous languages number fewer than the number of indigenous groups across the region (see Figure 4 ). The 2015 World Bank report found 558 indigenous languages across 20 countries of Latin America, while a 2009 UNICEF report found 551 languages across the same 20 countries. Of these 551, the latter report found that 111 languages are vulnerable to extinction although five (Quechua, Nahuatl, Aymara, Yucatan Maya, and Ki'che') had over a million speakers each. In 2019, the Summer Institute of Linguistics (SIL International) reported 880 indigenous languages are spoken across the same 20 Latin American countries.", " Table 2 shows a breakdown of Latin America's indigenous groups and languages by country according to two sources. CRS created the table from several sources; publication dates and methodologies differed. The countries listed in each table may differ from others in this report based on the information available in the sources.", "According to the U.S. Census Bureau, approximately 15,000-19,000 indigenous language speakers from Latin America reside in the United States.", "Additional resources about indigenous groups and languages can be found in Table A-1 ."], "subsections": []}]}, {"section_title": "Socioeconomic Data", "paragraphs": ["In a 2015 publication, the World Bank found that 43% of indigenous people in Latin America are poor (living on less than $5.50 a day in 2011 purchasing power parity prices or PPP), and 24% are extremely poor (living on less than $1.90 a day in 2011 PPP prices), more than twice the rates for non-indigenous people. The report also documented education gaps were across the region. Drawing from another World Bank resource, Figure 5 compares rates of indigenous peoples living on less than $5.50 a day compared to the general population in select countries of Central and South America.", "The World Bank provides statistics on access to various services and opportunities for indigenous peoples in select countries of Central and South America, last updated in October 2018. The following graphs compare indigenous rates of access to these amenities compared with the general population rates by country ( Figure 6 , electricity; Figure 7 , internet; Figure 8 , home ownership; Figure 9 , sewage; and Figure 10 , water).", "The World Bank also provides labor and education statistics for indigenous peoples in select countries of Central and South America, last updated in October 2018. The following graphs compare indigenous rates compared with general population rates by country ( Figure 11 , literacy; Figure 12 , school attendance; Figure 13 , unemployment; and Figure 14 , low-skill and high-skill employment).", "In the appendix, Table A-2 lists resources relating to the socioeconomic standing of indigenous peoples in Latin America. "], "subsections": [{"section_title": "Land and Natural Resources", "paragraphs": ["A 2017 World Resources Institute (WRI) report states \"the precise amount of communal land is not known, but many experts argue that at least half of the world's land is held by Indigenous Peoples and other communities. Some estimates are as high as 65 percent or more of the global land area.\" The WRI goes on to specify that \"globally, Indigenous Peoples and local communities have formal legal ownership of 10 percent of the land, and have some degree of government-recognized management rights over an additional 8 percent.\" ", "The United Nations' Economic Commission for Latin America and the Caribbean's (ECLAC) 2014 report Guaranteeing indigenous people's rights in Latin America: Progress in the past decade and remaining challenges states that \"over the past decade, booming international demand for primary goods (minerals, hydrocarbons, soybeans and other agricultural commodities) has boosted economic growth in the countries of Latin America but has had its cost in the form of a growing number of environmental, social and ethnic conflicts involving extractive industries located in or near indigenous territories.\"", "According a 2012 Forest Peoples Programme global report, \"[A]n estimated 350 million people live inside or close to dense forests, largely dependent on these areas for subsistence and income, while an estimated range of 60 million to 200 million indigenous people are almost wholly dependent on forests.\" For the region of Mexico, Central and South America, the report estimates 42-48 million indigenous peoples and 21-26 million forest peoples. Some but not all indigenous peoples are also forest peoples. Some countries did not have population figures for forest people.", "A 2018 Science article classifies drivers of global tree cover loss using satellite imagery. In Latin America, deforestation accounts for over half of the tree cover loss, shifting agriculture about a third, and, to a smaller degree, forestry, wildfire, and urbanization.", "In the 2015 report Indigenous Peoples, Communities of African Descent, Extractive Industries , the IACHR wrote that \"through the implementation of its monitoring mechanisms, the Commission has consistently received information evidencing the human, social, health, cultural and environmental impacts of [extraction, exploitation, and development activities concerning natural resources] on indigenous peoples and Afrodescendent communities. Many extractive and development activities in the hemisphere are implemented in lands and territories historically occupied by indigenous and Afro-descendent communities, which often coincide with areas hosting a great wealth of natural resources.\"", " Table A-3 lists resources about indigenous peoples' lands and natural resources in Latin America. While the titles may not exclusively focus on indigenous peoples, the industries' impact on indigenous people is a part of the analysis of each resource."], "subsections": []}]}, {"section_title": "Human Rights and Multilateral Instruments", "paragraphs": ["Various international human rights mechanisms protect the rights of indigenous peoples of Latin America and the Caribbean. Table 3 identifies those countries that have ratified or voted in favor of the following three multilateral instruments on indigenous peoples' rights: ", "International Labor Organization's Indigenous and Tribal Peoples Convention, 1989 (No. 169). 26 The convention includes sections on land; recruitment and conditions of employment; vocational training, handicrafts and rural industries; and social security and health; education and means of communication. United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP). 27 The 2007 declaration covers such topics as self-determination or autonomy; land and environment; employment; religion; language and media; education; discrimination and violence; and health. American Declaration on the Rights of Indigenous Peoples (ADRIP). 28 The 2016 declaration approved by the Organization of American States includes sections on human and collective rights; cultural identity; organizational and political rights; and social, economic and property rights.", "The United Nations has a Permanent Forum on Indigenous Issues and in 2001 created the Special Rapporteurship on the Rights of Indigenous Peoples, which promote the rights of indigenous peoples across the globe. In 1990, the Organization of American States created the Rapporteurship on the Rights of Indigenous Peoples to promote the rights of indigenous peoples throughout the Western Hemisphere. Table A-4 provides additional resources about the work of international organizations with indigenous peoples.", "In a 2000 report, the Inter-American Commission on Human Rights (IACHR) wrote \"concern for the human rights of indigenous peoples and their members has been a constant feature in the work of the Commission.\" The IACHR has tracked its work involving indigenous peoples. It hosts multiple sessions per year to hold hearings regarding human rights issues affecting a particular country or subregion of the Western Hemisphere. One of the categories for hearings is the rights of indigenous peoples. Table 4 shows the number of IACHR hearings by country involving indigenous peoples' rights. It also shows the number of Inter-American Court of Human Rights cases brought by indigenous peoples against countries.", "In the appendix, Table A-5 lists publications that document various human rights issues confronting indigenous peoples. CRS also publishes a number of reports with country-specific information on indigenous peoples' human rights issues.", "Appendix A. Data Sources and Resources Lists", "The United Nations Children's Fund (UNICEF) and Fundaci\u00c3\u00b3n para la Educaci\u00c3\u00b3n en Contextos de Multiling\u00c3\u00bcismo y Pluriculturalidad (the Foundation for Education in Multilingual and Multicultural Contexts or FUNPROEIB) gathered data in 21 Latin American and Caribbean countries in 2009 for its report in two volumes titled Atlas Socioling\u00c3\u00bc\u00c3\u00adstico de Pueblos Ind\u00c3\u00adgenas en Am\u00c3\u00a9rica Latina . The report notes the limitations of using national censuses.", "In 2014, the United Nations' Economic Commission for Latin America and the Caribbean (ECLAC) gathered population data from 17 Latin American countries using national censuses for Guaranteeing Indigenous People's Rights in Latin America: Progress in the past Decade and Remaining Challenges . The report notes that most countries ask people to self-identify as indigenous with the exception of Peru, which asks people if they speak an indigenous language. ", "In 2015, the World Bank gathered data in 16 countries using national censuses and household survey data in order to publish Indigenous Latin America in the Twenty-First Century: the First Decade . The report notes that the definition of who is indigenous has become increasingly controversial and \"underscores the complexity of identifying indigenous people across the region and argues that the conditions of indigeneity vary over time and are, in some cases, context- and country-specific.\"", "The current edition of Ethnologue documents language counts for each country and divides them into indigenous and non-indigenous categories. Indigenous languages figures were used in Table 2 as non-indigenous is defined as \"a language that did not originate in the country, but which is now established there either as a result of its longstanding presence or because of institutionally supported use and recognition.\" Only living languages were included in the count, not languages classified as extinct. Ethnologue's \"about\" section provides details on the methodology, language names, and status of usage.", "The World Bank's Latin America and Caribbean Equity Lab provides data on poverty, access to services, education and labor (last updated in October 2018). The World Bank notes that ethnic identity is based on self-reported data. Statistics may vary from official statistics reported by governments as the World Bank uses SEDLAC, \"a regional data harmonization effort that increases cross-country comparability.\" ", "The web page of the Inter-American Commission's Human Rights Rapporteurship on the Rights of Indigenous Peoples provides detailed information on hearings and court cases related to indigenous peoples' rights.", "The data on drivers of forest loss in Latin America are from: Philip G. Curtis, Christy M. Slay, Nancy L. Harris, Alexandra Tyukavina, Matthew C. Hansen, \"Classifying drivers of global forest loss,\" Science , Vol. 361, Issue 6407, pp. 1108-1111, September 14, 2018, at https://science.sciencemag.org/content/361/6407/1108 . There are multiple methodologies for each driver of forest loss using map-based estimates and sample-based estimates.", "For each table below, sources are listed in reverse chronological order with the year in parentheses following the title. Multiple sources from the same year are listed alphabetically as are sources without a publication date, such as websites. Some sources are global, with a section dedicated to Latin America.", "Appendix B. National Agencies of Indigenous Affairs "], "subsections": []}]}}
{"id": "R45923", "title": "The Coast Guard\u2019s Need for Experienced Marine Safety Personnel", "released_date": "2019-09-19T00:00:00", "summary": ["For at least four decades, Congress has been concerned about the Coast Guard's ability to maintain an adequate staff of experienced marine safety personnel to ensure that vessels meet federal safety standards. The 2015 sinking of the U.S.-flag cargo ship El Faro during a hurricane near the Bahamas with the loss of 33 lives renewed attention to the Coast Guard's persistent difficulty with hiring and training a marine safety workforce with technical knowledge of vessel construction and accident investigation, as the safety inspections of the vessel were found to have been inadequate. In the Hamm Alert Maritime Safety Act of 2018 ( P.L. 115-265 ), Congress directed the Coast Guard to brief congressional committees of jurisdiction on its efforts to enhance its marine inspections staff. In the Frank LoBiondo Coast Guard Authorization Act of 2018 ( P.L. 115-282 ), Congress requested a report from the Coast Guard detailing the courses and other training a marine inspector must complete to be considered qualified, including any courses that have been dropped from the training curriculum in recent years.", "Congress's concern about the Coast Guard's inspection staff comes at a time when the agency's vessel inspection workload is increasing by about 50% because towing vessels have been added to its responsibilities. Additionally, Congress has been increasing the agency's role in fishing vessel safety. Adding to the Coast Guard's safety responsibilities is the construction of several liquefied natural gas (LNG) export terminals as well as the increasing use of LNG as ship fuel.", "Vessel safety inspections are especially critical for the U.S.-flag fleet, like the El Faro , because a majority of it is much older than the 15 to 20 years of age at which ships in the foreign-flag worldwide oceangoing fleet are typically scrapped. Over half of the U.S.-flag commercial fleet is over 20 years old; the El Faro had been in service for 40 years. Vessels that transport cargo or passengers domestically (from one U.S. point to another U.S. point) must be built in the United States, as required by the Jones Act. The comparatively high cost of domestic ship construction encourages ship owners to keep Jones Act vessels in service well beyond their normal retirement age. In general, older vessels are believed to have a higher risk of structural defects and to require more intensive inspection.", "Currently, the Coast Guard's marine inspection staff consists of 533 military and 138 civilian personnel, while its accident investigation staff consists of 120 military staff and 38 civilians. As a military organization, the Coast Guard frequently rotates its staff among various duty stations, so personnel may not develop the knowledge and experience required of a proficient marine inspector or investigator. A common perception inside the agency that marine safety is an area that retards promotion also may be thwarting efforts to boost this mission's workforce.", "The Coast Guard recently has stated its intention to improve the quality of its inspection workforce and to make marine safety an attractive long-term career path by extending promotion potential. However, its recent statements are similar to statements made 10 years ago, when some Members of Congress advocated transferring the marine safety function to a civilian agency. It is unclear what the agency has accomplished over the last decade regarding its inspection workforce. Government audits dating to 1979 have been consistently critical of the proficiency level of Coast Guard inspectors and accident investigators. Reorganizing the marine safety function under a civilian agency, perhaps as an element of a larger reorganization of navigation functions in the federal government, might improve the quality of safety inspections and investigations, but other federal agencies with transportation-related safety inspection workforces have had similar issues with retaining experienced personnel."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["The U.S. Coast Guard is the agency charged by law with overseeing the safety of vessels and maritime operations. For at least four decades, Congress has been concerned about the Coast Guard's ability to maintain an adequate staff of experienced marine safety personnel with technical knowledge of vessel construction and accident investigation. Recent incidents, particularly the 2015 sinking of the U.S.-flag cargo ship El Faro with the loss of 33 lives during a hurricane near the Bahamas, have revived questions about the Coast Guard's persistent difficulty with hiring and training a marine safety workforce. The safety inspections of the vessel were found to have been inadequate.", "In the Hamm Alert Maritime Safety Act of 2018 ( P.L. 115-265 , \u00c2\u00a7210), Congress directed the Coast Guard to brief congressional committees of jurisdiction on its efforts to enhance its marine inspections staff, the staff responsible for ensuring that vessels are meeting safety standards. In the Frank LoBiondo Coast Guard Authorization Act of 2018 ( P.L. 115-282 , \u00c2\u00a7501) Congress requested a report from the Coast Guard detailing the courses and other training a marine inspector must complete to be considered qualified, including any courses that have been dropped from the training curriculum in recent years.", "This report examines the staffing challenges the Coast Guard faces in assuring marine safety at a time when its responsibilities in this area are increasing significantly. It also considers proposals to realign marine safety functions within the federal government."], "subsections": []}, {"section_title": "The Marine Safety Mission", "paragraphs": ["The Coast Guard engages in two distinct activities with respect to marine safety:", "Vessel inspection . The Coast Guard has a staff of 671 marine inspectors\u00e2\u0080\u0094533 military and 138 civilian\u00e2\u0080\u0094who are responsible for inspecting U.S.-registered passenger and cargo vessels, foreign-flag vessels calling at U.S. ports, mobile offshore drilling units, and towing vessels and barges carrying hazardous cargoes. Foreign-flag vessels are those registered in jurisdictions other than the United States. Accident investigation. The Coast Guard employs 158 accident investigators\u00e2\u0080\u0094120 military and 38 civilian\u00e2\u0080\u0094who conduct casualty investigations of U.S.- and foreign-flag vessels to detect and correct safety hazards, prepare investigation reports, analyze trends, and recommend enforcement action.", "These two assignments fall under the Coast Guard's prevention policy workforce headed by the Assistant Commandant for Prevention Policy, a rear admiral. Reporting to the Assistant Commandant is the Director of Inspections and Compliance, a captain, who oversees the Office of Commercial Vessel Compliance and the Office of Investigations and Casualty Analysis, among other safety-related offices.", "The prevention policy workforce is especially critical for the commercial U.S.-flag fleet because a majority of this fleet is much older than the 15 to 20 years of age at which ships in the worldwide oceangoing fleet are typically scrapped. About 60% of the 217 ships in the dry-cargo U.S.-flag commercial fleet and 53% of U.S.-flag offshore supply vessels (which service oil rigs) are older than 20 years; the El Faro had been in service for 40 years. Some 72% of the 1,497 vessels in the U.S.-flag passenger and ferry fleet are over 20 years old. In general, older vessels require more frequent inspection; the National Transportation Safety Board (NTSB) raised questions about the quality of the Coast Guard's inspections in its investigation of the El Faro sinking, after which the Coast Guard revoked the safety certificate for another vessel of the same design and similar age, forcing its removal from service.", "Generally, inspections of vessels carrying passengers or hazardous cargo, and inspections of older vessels, are more frequent than inspections of general-cargo vessels and newer vessels. Vessels transporting cargo or passengers domestically (from one U.S. point to another U.S. point) must be U.S.-built, as required by the Jones Act. The cost of U.S.-built vessels, particularly deep-draft ships, can be multiples of world prices, which may retard vessel replacement. U.S.-flag vessels on international voyages need not be U.S.-built, and this fleet is younger than the Jones Act fleet.", "Congress's request for information about the Coast Guard's inspection staff comes at a time when the number of vessels requiring inspection is increasing by about 50% because towing vessels have been added to the list. Congress has been increasing the agency's role in fishing vessel safety as well, putting additional demands on the safety workforce. Adding to the Coast Guard's safety responsibilities is the construction of several liquefied natural gas (LNG) export terminals, whose siting, operations, and security are partly or entirely under Coast Guard jurisdiction, as well as the increasing use of LNG as ship fuel."], "subsections": [{"section_title": "Workforce Qualifications, Training, and Pay Scales", "paragraphs": ["According to the Coast Guard, the marine inspector workforce consists of commissioned officers, chief warrant officers (CWOs), and civilians. Officer marine inspectors enter the workforce through a variety of accession sources, including Officer Candidate School, the Direct Commission Officer program for U.S. Maritime Academy graduates, and the Coast Guard Academy. CWOs are divided into two specialties: Marine Safety Specialty Deck and Marine Safety Specialty Engineer. Those who meet the eligibility requirements to compete for CWO are selected through an accession panel.", "An emphasis is placed on past maritime and inspection experience when hiring civilian marine inspectors. Additionally, the Coast Guard hires and trains civilians who are inexperienced in inspections to become marine inspectors through its civilian marine inspector apprenticeship program. The normal entry is a marine inspector apprenticeship tour at a larger port (referred to as a feeder port). A feeder port is located near a unit that is better prepared and equipped to train inspectors.", "The civilian inspectors generally remain at a single location for their entire careers to provide continuity. Most officers complete one to three tours as a field-level marine inspector or marine investigator and do not rotate between tours ashore and afloat. Officers rotate approximately every three years and may be promoted to leadership positions in the marine safety organization. CWOs remain marine inspectors or marine investigators until retirement. On average, a CWO serving as a marine inspector works in this capacity for approximately 8.7 years. Inspector pay scales range from CWO2 to CWO4 (approximately $90,000 to $124,000); officers (O-1 to O-5, approximately $64,000 to $152,000). Civilian marine inspectors are typically classified at GS-12 ($64,000 to $84,000).", "The investigator workforce also comprises commissioned officers, CWOs, and civilians. It has the same path for entry as marine inspection. Many marine investigators have prior experience as inspectors, giving them familiarity with commercial shipping operations and regulations. However, this is not true in all cases, and some marine investigators become familiar with marine inspections through on-the-job training. The typical pay scale for investigators is CWO3 to CWO4 (approximately $106,000 to $124,000) and O-2 to O-4 (approximately $83,000 to $130,000).", "The Coast Guard has recognized the training of the inspection staff as an important concern. As Rear Admiral John Nadeau, then the Coast Guard's Assistant Commandant for Prevention Policy, testified at a January 2018 hearing about the El Faro casualty:", "[T]his is not strictly a capacity problem. There are elements to training. If you just gave me another 1,000 marine inspectors, it wouldn't solve this problem. This problem involves training. This problem involves getting the right information. This problem involves getting the right policy and procedures in place....", "Entry-level marine inspections is not what I am talking about. I need to have a small corps\u00e2\u0080\u0094it is not a lot\u00e2\u0080\u0094a small corps of people that can get out and are highly trained and proficient and stay focused on this area until we get it right.", "In a March 2019 hearing, Rear Admiral Nadeau testified that the agency was improving the quality of its safety inspection workforce:", "[T]he Coast Guard has prioritized marine inspector training, established new staff dedicated to performing third party oversight, increased opportunities for maritime graduates to join the Coast Guard, and prioritized the hiring of civilian marine inspectors....", "The Coast Guard is actively developing a comprehensive training architecture for our marine inspectors. This architecture will provide cohesive strategy, policy, and performance support to ensure that Coast Guard marine inspectors are trained consistently from the basic to the advanced level in a manner that keeps pace with industry, technology, and related regulatory changes. "], "subsections": []}]}, {"section_title": "Managing Marine Safety", "paragraphs": ["The Coast Guard repeatedly has made statements in recent decades laying out its plans to improve the quality of its inspection workforce. Often, these pronouncements have been in response to heightened congressional scrutiny of the agency's marine inspection program in the aftermath of a major marine casualty in which investigators found that subpar vessel inspections played a contributing role. This cycle was described by a retired Coast Guard senior official in 2015:", "[T]he Marine Safety program is a low profile mission within the Coast Guard's multi-mission portfolio. That is true until a confluence of factors markedly raises its visibility and causes great introspection. The program's purpose is to keep bad things from happening. Non-events are virtually impossible to measure. Marine Safety is normally not a major budget item of interest to the Service. The Coast Guard, especially in what has generally been a declining resource environment, will always have many pressing and competing budget needs. And if a major incident occurs, Congress is willing to throw the Service a lifesaver in the form of significant dollars. ", "As employees of a military organization, Coast Guard personnel typically change mission assignments and/or locations every two or three years, so they do not develop the knowledge and experience required of a proficient marine inspector or investigator. As noted, the scope of the vessel types the Coast Guard inspects ranges from small passenger boats to oceangoing ships to mobile offshore drilling rigs. Geographic reassignments can change the category of vessels an individual inspector must evaluate. Vessel technology can be complex and is constantly changing, and the safety regulations are voluminous and technical. An internal Coast Guard study in 2012 revealed that \"41% of marine inspectors were not confident interacting with maritime industry personnel concerning marine inspection issues.\" Even if personnel rotate back into marine inspection after a different assignment, they need time to regain proficiency. The Coast Guard recognizes the difficulty of building marine inspection and investigation proficiency among uniformed officers who rotate assignments frequently. Consequently, each Commandant's initiative or plan to revamp marine inspections has stated a goal of boosting the civilian inspector and investigator workforce and creating more attractive long-term career paths by extending promotion potential.", "However, a perception inside the agency that marine safety is an area that retards promotion could be thwarting efforts to boost the inspection workforce. This is asserted in a study by a career Coast Guard official who spent his last several years working in human resources for the agency:", "[T]he Coast Guard's internal manpower management processes are considered to be at odds with the need to build and maintain a competent marine safety officer corps \u00e2\u0080\u00a6 The perception for decades is that it is difficult for marine safety officers to succeed in the Coast Guard's military officer promotion system. The Service endeavors to manage individual officer specialties, such as marine safety, while at the same time operate an \"up or out\" promotion system that is mandated by law.... officers who follow a marine safety career path consider themselves disadvantaged as they become more senior and face stiffer competition for promotion.... Currently, the perception of disadvantage continues."], "subsections": [{"section_title": "World War II Gives Coast Guard New Role", "paragraphs": ["The Coast Guard's challenges with marine inspection and investigation date to a government reorganization in preparation for World War II. A 1942 executive order transferred the civilian Bureau of Marine Inspection and Navigation (BMIN) from the Department of Commerce to the Coast Guard for the duration of the war and for six months after hostilities ended. After the war ended, President Truman proposed keeping the marine inspection function under the Coast Guard rather than transferring it back to the Department of Commerce.", "Proponents of this approach contended that the Coast Guard had performed the mission adequately during the U.S. involvement in the war and that synergies existed with other Coast Guard missions such as maritime search and rescue. Furthermore, they asserted, there was no need to create additional overhead and administrative expenses by establishing a separate bureau. The maritime industry argued against keeping marine inspections under the Coast Guard. A witness representing the American Petroleum Institute testified in 1947 that under the BMIN, almost all of the inspectors had been former merchant marine officers with 10 to 20 years of experience aboard ships who had practical knowledge of vessel safety vulnerabilities.", "The permanent assignment of marine inspections to the Coast Guard was part of a much larger government reorganization plan advanced by the Truman Administration that was to go into effect unless both houses passed a concurrent resolution of disapproval within a specified period. The House adopted such a resolution, but the Senate did not. Consequently, President Truman's plan became effective in 1946.", "In subsequent years, the Coast Guard's role remained a point of contention. In 1947, a representative of a ship captains' union testified that", "under the old regime, the men in the Bureau of Marine Inspection were the wearers of the purple cloth. Before men could become assistant local inspector and go up to the grade of local inspector and supervising inspector, and so forth, they had to be either a master mariner [ship captain], or a chief engineer \u00e2\u0080\u00a6 with the result that the most mature, and most sensible and most experienced and most intelligent of our profession got into the service. ", "It was very seldom that you found a local inspector under 35 years of age.... They were of mature judgement and they were one of the most respected organizations in the entire marine industry.", "The concern that the Coast Guard would be unable to replace the experience of the ex-BMIN inspectors as they retired persisted over the decades. In 1979, the General Accounting Office (GAO, known since 2004 as the Government Accountability Office) conducted an audit of the Coast Guard's marine inspection program after a series of tanker accidents in or near U.S. waters during the winter of 1976-1977 resulted in losses of life and property and environmental damage. Under the heading \"Trained and Experienced Personnel Needed,\" the GAO report raised questions about the training of marine inspectors:", "Most of the inspectors in the three districts included in our review have had at least one tour of sea duty on Coast Guard cutters. Considering this sea experience, along with the on-the-job and formal training, it would seem that most inspectors would be highly qualified. However, we found that relatively few field unit inspectors could be considered as qualified hull or boiler inspectors. This has occurred because the Coast Guard has not established uniform criteria or procedures to determine whether inspectors are actually qualified and has not scheduled needed vessel inspection training in a timely manner. In addition, the rotation policy caused by the lack of a specialized job classification or career ladder contributes to the difficulty in achieving and maintaining expertise in marine inspection.", "The report note d that the Coast Guard Merchant Marine Safety Manual in effect at the time stated as a customarily accepted fact that it takes three years of experience to become a qualified marine inspector , adding that \"every 2 to 3 years the Coast Guard rotates its staff among various duty stations such as search and rescue, buoy tenders, and high- and medium-endurance cutters , \" and that \" about the time personnel become proficient in one area, such as vessel inspection, they are transferred and assigned to another job.\" The GAO found that \"few field inspectors had previous inspection duty or consecutive assignments at marine inspection offices\" and the Coast Guard had been \"unable to keep experienced and trained staff in the vessel inspection area.\" Some of the Coast Guard field officers interviewed by the GAO commented that inspectors needed to have additional expertise to gain the respect of the maritime industry, and that most inspectors were not knowledgeable enough to provide industry with a precise interpretation of marine rules and regulations.", "In response to the 1979 GAO report, the Coast Guard stated that while it would consider establishing an inspection specialty career classification for both officers and enlisted personnel and extend its inspection assignment tour, its existing job classification system was better suited to the multimission nature of the agency. "], "subsections": []}, {"section_title": "The 1980s", "paragraphs": ["In October 1980, the U.S.-flag ship Poet , carrying a load of corn to Egypt, disappeared with no trace somewhere in the Atlantic. Its disappearance was believed to have coincided with a period of heavy weather; the structural integrity of the 36-year-old ship was suspected as a possible cause. The Coast Guard's Marine Board of Investigation found that the Coast Guard inspector conducting most of the ship's inspections during the year prior to the voyage had no previous experience inspecting commercial vessels, which heightened the Marine Board's concern that structural defects may have gone undetected.", "In February 1983, the Marine Electric , a 40-year-old Jones Act ship carrying coal from Norfolk, VA, to Massachusetts, sank in heavy weather, killing 31 crew members. Investigators concluded that the probable cause of the sinking was the poor condition of the cargo hatches and deck plating, which allowed waves to flood the hull. The Coast Guard's Marine Board of Investigation stated that the ship's Coast Guard inspectors", "lacked the experience to conduct safety examinations of a vessel the size, service, and configuration of the Marine Electric . The incompleteness of these inspections as to the dictates of regulations and policy was attributed to the lack of training and experience on the part of the Coast Guard inspectors.... the inexperience of the inspectors who went aboard the Marine Electric , and their failure to recognize the safety hazard imposed by the deteriorated, weakened and non-tight hatch covers, raises doubts about the capabilities of the Coast Guard inspectors to enforce the laws and regulations in a satisfactory manner.", "At a 1983 congressional hearing examining the marine casualty, a representative of a ship engineers' union noted that \"Coast Guard officers with 12 weeks experience behind a desk are dealing with officers of the merchant marine who have spent 20 years at sea,\" and that \"an inspector can't condemn a dangerous ship if he doesn't know what a dangerous ship is.\" This representative further stated that \"while multi-mission flexibility and frequent rotation may be an optimal way to fulfill the Coast Guard's military readiness mission, it is a serious and even fatal distraction from the regulation of commercial industry.\" The witness urged Congress to transfer ship inspection responsibilities to an agency of civilian career professionals, similar to the Bureau of Marine Inspection and Navigation that existed before World War II. Some committee Members appeared receptive to this idea.", "The witness also raised the issue of whether the more fundamental problem was the age of the U.S. fleet:", "The problem of course is old ships. This means dangerous ships \u00e2\u0080\u00a6 The Poet and the Marine Electric are trying to tell us something: If a ship isn't retired when it gets old, it will retire itself ... Although 40% of the U.S. fleet is at least 20 years old, 75% of the dozen worst U.S. marine tragedies in the past two decades struck these ships aged 20 or older. Twenty is the rounded number when industry experts say a ship should be junked.", "In conclusion, any analysis of the plight of maritime safety is misleading if it does not identify old ships as the core of the problem. The only way to uproot this evil is to mandate an aggressive attack by a dedicated and seasoned staff of professional inspectors\u00e2\u0080\u0094a team that the Coast Guard could never field unless it ended its fundamental multi-missioned military structure.", "In 1985, following up on its 1979 audit, the GAO reported that the Coast Guard had recently completed a two-year project to develop a new marine safety training and qualification program. One change was establishment of uniform standardized on-the-job training and on-the-job qualification requirements. Another change was selection of three \"training ports\" where new inspectors would go for 18 months of intensive training before their initial assignment. The GAO stated that it was too early to assess whether these changes had addressed the qualification problems identified in its 1979 report.", "On March 24, 1989, the U.S.-flag tanker Exxon Valdez grounded on Bligh Reef after departing Valdez, AK, spilling about 11 million gallons of oil. The actions of the ship captain, who was found to be impaired by alcohol, and who had turned over operation of the vessel to a third mate before reaching open waters, was the focus of the marine casualty investigation. In response to the Exxon Valdez incident, among other things, Congress increased funding for Coast Guard safety personnel. According to one Coast Guard senior official, the \"War on Drugs\" in the mid-1980s had shifted resources from the agency's safety mission to its drug interdiction mission."], "subsections": []}, {"section_title": "The 1990s", "paragraphs": ["In the 1990s, the quality of Coast Guard inspections came under scrutiny again as the result of two fatal passenger vessel incidents. On December 5, 1993, the wooden vessel El Toro II , a fishing charter party vessel built in 1961 and carrying 23 people, began sinking in the Chesapeake Bay when water seeped through the hull's planks. There were three fatalities. The Coast Guard's Marine Board of Investigation found that the Coast Guard inspector's knowledge of wooden boat structure was lacking, and that inspection staff were not cognizant of previous inspection reports that would have prompted concern about the vessel's seaworthiness, given the owner's poor track record in making needed repairs to the 32-year-old vessel.", "The second incident occurred on a lake near Hot Springs, AR, in May 1999. The Miss Majestic , an amphibious \"duckboat\" built during World War II to transport troops and supplies, which had since been converted into a tour boat, began taking on water and sank in less than 30 seconds, drowning 13 of its 20 passengers. The Coast Guard's Marine Board of Investigation found that the Coast Guard inspector had not noticed that a critical part was missing from the rear shaft that was the main source of the leak. It determined that the inspector lacked awareness of the importance of this vessel's design components. The board also found that the local Coast Guard office was not keeping adequate inspection records, which would have shown that the vessel's owner had not installed safety equipment that previous inspectors had called for.", "The NTSB concluded that the Coast Guard's inspections of the vessel were \"inadequate and cursory\" and that the \"lack of Coast Guard guidance and training for the inspection of [this vessel design] contributed to the inadequate inspections of the Miss Majestic .\" Moreover, the NTSB found that Coast Guard inspectors over the preceding five years had missed deficiencies with the vessel that might have been obvious even to an untrained observer, such as pinholes in the hull of the vessel caused by corrosion and an improper repair using a rubber patch to conceal a large, wasted area of the hull.", "These marine casualties in the 1990s prompted the Coast Guard and Congress to examine the marine safety mission of the agency once again. In December 1995, the Coast Guard conducted an internal study of its accident investigation activity. One of the recommendations of the internal report was \"To improve the overall quality of the information derived from investigations, an investigations career path should be developed. This would enable the Coast Guard to raise the overall level of expertise in investigations.\" In 1996, the GAO reviewed whether the Coast Guard had fully utilized additional funding Congress provided the agency in the early 1990s to add 875 positions to its Marine Safety Program. At a 1997 congressional hearing, a representative of the passenger vessel industry noted that vessel inspection \"responsibilities fill hundreds of pages of regulations and thousands of pages of referenced consensus standards and rules.\" The industry representative was \"concerned that the problems in the commercial vessel safety program will grow because of a resulting lack of training and experience on the part of many Coast Guard inspectors.\""], "subsections": []}, {"section_title": "The 2000s", "paragraphs": ["Following the terrorist attacks of September 11, 2001, Congress greatly increased the Coast Guard's resources directed toward maritime security matters. The maritime industry's reaction to the Coast Guard's new security responsibilities came to light at a 2007 congressional hearing. Some industry witnesses at the hearing contended that since the Coast Guard had been transferred from the Department of Transportation to the newly created Department of Homeland Security (DHS) in 2002, the agency was more focused on security matters than on safety. One industry witness asserted that the industry's relationship with Coast Guard inspectors had changed from being partners with a mutual interest in safety to being viewed as a security risk.", "The purpose of the 2007 hearing was to examine a proposal by the chairman of the House Transportation and Infrastructure Committee to transfer the Coast Guard's marine safety inspection function to a civilian agency\u00e2\u0080\u0094in other words, to undo the World War II-era reorganization. The chairman argued that \"What we need is what we have in the [Federal Aviation Administration], skilled personnel who have years of seasoning, who aren't shifted year after year from one post to another with only three years on staff.\"", "At the hearing, a witness representing ship captains described how marine inspection was performed in other countries:", "In foreign countries outside the United States, you go to the Netherlands or Germany or Norway, that is a civilian force that comes on. They are all retired masters or chief engineers, and they become the inspection service for that country. When they go aboard a ship, they are interfacing with chief engineers and masters that have a shared experience. There is a great deal of respect for the inspectors, and the inspectors have a great deal of respect for the officers on the ship. It is an effective system. You have expertise. You have competence, and you have motivation. They obviously love the maritime industry because that is their choice. It is not something they have been assigned to as part of their tour of duty and attaining a generalized background in the Coast Guard. I think that is the way to go.", "When a fellow retires after a career at sea and he is 45, 50 years old, he might not be looking for a future career advancement as Coast Guard officer. You make him a civilian inspector, and he would fill the same role that they fill in Germany and most maritime countries. Most maritime countries do not have a uniform Coast Guard acting as the maritime inspection service. They use maritime professionals from the industry to fill that role.", "When they send a petty officer down to represent the United States' interest in enforcing international conventions on foreign flag ships as a port state control officer, the foreign masters, the Germans and the British, take offense that the Coast Guard hasn't sent an officer down or a civilian personnel with a maritime background.", "At the hearing, the Commandant of the Coast Guard explained the dilemma facing the agency regarding its inspection staff:", "Here is the quandary we are faced with. Sooner or later, as you get promoted in the Coast Guard, you become a commanding officer. If you get selected for flag, you become a district commander and maybe even a Commandant. When you get to there, you become a general. You are representing the entire organization.", "We have an issue of needing specialists, subject matter experts, but at some point we need to generalize these folks and give them other experiences if they are going to be promotable and move up to become executives in the organization. In corporate America, for example, if you are a vice president, everybody needs to understand corporate finance.", "What we have developed inside the Coast Guard is the notion of what we call a broadened specialist. What we need to look at is maintaining the subject matter expertise that is critical to mission execution and then how we can broaden these people at a later date and still make them promotable. They want to be able to move up in the organization as well.", "At the 2007 hearing, the Commandant urged the ex-chairman of the Transportation and Infrastructure Committee to defer his proposal until the Coast Guard had a chance to rectify the problem, which the chairman agreed to do. The Commandant outlined the actions he was taking to improve the inspection workforce:", "In the last year, I have directed significant changes and improvements in the training and qualifications of our inspectors to keep pace with the technological advancements and growth in maritime industry. We have made changes to our warrant officer selection system to bring more talented and experienced enlisted personnel into the maritime safety specialty.", "We have learned valuable lessons from joint military and civilian staffing of our sector command centers and our vessel traffic services. These are areas where we used to have Coast Guard personnel only staffing. We now have brought civilian personnel in to provide continuity, corporate memory and way to bridge during the transfer season, so we get the best of training for our people in uniform by maintaining continuity of services.", "I am committed to the establishment of more civilian positions in the marine inspection field. We need people with critical job skills. We need to maintain continuity while providing our military members access to this type of experience. We must leverage and expand this dual staffing model. Getting the inspection program right in terms of training, qualifications and staffing is my highest maritime safety priority.", "The Commandant also argued that marine safety and security were two sides of the same coin; they were not mutually exclusive missions but synergistic to the Coast Guard's other maritime missions.", "The Commandant's first step was an internal study of the issue by a retired Commandant. This internal study acknowledged that the agency's practice of regularly rotating staff geographically or by activity, as military organizations typically do, hindered its ability to develop a cadre of staff with sufficient technical expertise in marine safety. The report noted the following: \"If the inspector is constantly referring to the regulations when conducting an inspection, the customer doesn't have much confidence in the quality of the Coast Guard inspection. I understand that the Coast Guard has sent unqualified personnel or marginally qualified personnel to conduct inspections and investigations.\"", "The report also stated that \"the DHS has no responsibility for transportation safety so getting them to embrace the Marine Safety program could be a heavy lift.\"", "In response to this problem, the agency revamped its safety program and Congress appropriated additional funds specifically for safety personnel. The FY2009 Coast Guard budget request noted that \"the Coast Guard is encountering serious stakeholder concern about our capacity to conduct marine inspections, investigations, and rulemaking.\" Under the revamped safety program, the Coast Guard created additional civilian safety positions, converted military positions into civilian ones, and developed a long-term career path for civilian safety inspectors and investigators.", "A 2008 audit by the DHS Inspector General (IG) confirmed that Coast Guard stated that the problems identified with respect to its safety program workforce also existed among vessel accident investigators. The IG found that accident investigations were hindered by unqualified personnel and recommended hiring more civilians for this activity. The IG also found that the Coast Guard had lowered the qualification standard for accident investigators in August 2007 by removing the requirement that an investigator have experience as a hull or machinery and small passenger vessel inspector. Since vessel casualties commonly involve structural deficiencies in the hull or loss of propulsion, this experience is considered important for an accident investigator. The IG noted that in the United Kingdom, Australia, and Canada, accident investigators are required to be former ship captains or chief engineers with several years of experience.", "The IG report noted issues with rotating assignments and promotion potential in the marine safety area:", "A tour in the Prevention Directorate could mean yearly rotations across specialty areas, such as waterways management and drug and alcohol testing. Given the lack of a career path and the unpredictable nature of investigation assignments, potential Coast Guard candidates also may not want to become investigators. Hull and Machinery Inspectors told us that promotion to the position of marine casualty investigator would not advance their careers. ", "Additionally, according to Coast Guard personnel, tour of duty rotations hinder investigators in acquiring the experience needed for career development. The agency's uniformed investigators generally are not in their positions for more than a single, three-year tour of duty in the same location. The forced rotations preclude the investigators from acquiring the extensive knowledge of local waterways and industries that experienced casualty investigators have told us is needed to be an effective investigator.", "In contrast, civilian marine casualty investigators are not subject to the three year tour of duty rotation standard. Over time, they can gain a greater knowledge of specialties such as local waterways and industries or experience in enforcing maritime regulations to enhance their qualifications. Of the 22 marine casualty investigators that we reviewed, one was a civilian.", "A 2009 study by the Homeland Security Institute, a federally funded research center established by Congress in the Homeland Security Act of 2002 (\u00c2\u00a7312) to assist DHS in addressing policy issues, reiterated the same theme regarding frequent rotations of uniformed staff hindering proficiency in marine inspection and investigation. The study's recommendations were to increase tour lengths as well as require back-to-back tours in these areas and to rely more on civilians for these functions. The study found that the Coast Guard's workforce database was not able to indicate years of service or level of expertise for marine safety personnel. The study found that the Coast Guard had no central office responsible for overall management of the marine safety workforce and therefore there were no agency-wide specific standards for determining qualifications in this area. Lacking documentation, the study's authors relied heavily on interviews with hundreds of Coast Guard personnel and private industry to gather data on the marine safety workforce."], "subsections": []}, {"section_title": "Recent Developments", "paragraphs": ["On April 20, 2010, the mobile offshore drilling unit Deepwater Horizon , 45 miles off the coast of Louisiana, experienced a catastrophic blowout, causing a major explosion and fire, and resulting in its sinking. There were 11 deaths and an oil spill estimated at approximately 206 million gallons, the largest in U.S. history. The Department of the Interior's Minerals Management Service had responsibility for inspection of the drilling apparatus that was the cause of the explosion, but the Coast Guard was responsible for the safety inspection of the rig above water that has commonality with vessels in general (firefighting and lifesaving equipment, evacuation procedures, electrical systems). The ensuing investigation revealed that Coast Guard regulations of offshore structures dated to 1978 and had not been updated as rigs moved farther and farther offshore. For instance, in places where they are not attached to the seabed because of the tremendous depth, these rigs use dynamic positioning systems (propeller systems) to remain in place, but at the time of the accident the Coast Guard had not developed regulations for checking the safety aspects of these critical systems.", "In response to the Deepwater Horizon marine casualty, Congress required the Coast Guard to take several initiatives to improve the quality of its marine inspection workforce in the Coast Guard Authorization Act of 2010 ( P.L. 111-281 ). Under the subtitle \"Workforce Expertise\" (\u00c2\u00a7\u00c2\u00a7521-526), these initiatives included improving career path management, adding apprenticeships to the program, measuring workforce quality and quantity, adding a marine industry training program and a marine safety curriculum at the Coast Guard Academy, and preparing a report on recruiting and retaining civilian marine inspectors and investigators.", "A June 2011 audit by the DHS IG of vessel inspections in the offshore oil and gas industry (involving rigs and vessels that support operation of the rigs) found a positive result for the marine inspection program in this sector. The IG found that 99% of those inspections had been performed by Coast Guard inspectors who had been fully qualified. However, the IG found that the Coast Guard's guidance on how to inspect these vessels and how to record the results of these inspections was deficient.", "A May 2013 audit by the DHS Inspector General found that the agency's efforts had not improved its marine accident reporting system, due to familiar issues surrounding the qualifications and rotation of the personnel:", "The USCG [United States Coast Guard] does not have adequate processes to investigate, take corrective actions, and enforce Federal regulations related to the reporting of marine accidents. These conditions exist because the USCG has not developed and retained sufficient personnel, established a complete process with dedicated resources to address corrective actions, and provided adequate training to personnel on enforcement of marine accident reporting. As a result, the USCG may be delayed in identifying the causes of accidents; initiating corrective actions; and providing the findings and lessons learned to mariners, the public, and other government entities. These conditions may also delay the development of new standards, which could prevent future accidents.", "[T]he Director of Prevention Policy [the marine safety program] provides personnel with career management guidance that suggests they should leave this specialty to improve their promotion potential, because of the USCG's emphasis on personnel attaining a wide variety of experience. Personnel indicated that both investigations and inspections suffer from investing time and money into training people only to have them leave the specialty.", "The IG found that at the 11 sites it visited, two-thirds of accident inspectors and investigators did not meet the Coast Guard's own qualification standards. The IG stated that the shortage of qualified personnel would be further compounded by the new towing vessel safety regime, which would expand the inspection workload by about 50% (or an additional 5,700 vessels to inspect).", "In January 2015, the new Commandant, Paul Zukunft, indicated that human resource competencies would be one of his key focus areas. He referred to the need to grow \"subject matter experts\" for the marine safety workforce and overhaul the generalist-driven military personnel system in favor of a specialist workforce. Commandant Zukunft called for increasing proficiency through more specialization in both the officer and enlisted corps and to extend the time between job rotations. He noted the complexity of systems aboard vessels and new developments in using LNG as fuel, stating that the Coast Guard needed to know these technologies in order to lead the industry on safety rather than having to learn them from industry.", "In February 2015, Commandant Zukunft stated his priorities regarding the marine safety mission:", "I have directed the Vice Commandant to undertake a service-wide effort to revitalize our marine safety enterprise with particular focus on marine inspection and our regulatory framework.... We will increase the proficiency of our marine safety workforce, and we will continue to train new marine inspectors\u00e2\u0080\u0094adding to the more than 500 that have entered our workforce since 2008.... We will review our civilian career management process to eliminate barriers and improve upward mobility. ", "As noted above, the October 2015 sinking of the El Faro has renewed focus on the Coast Guard's marine inspection workforce, but, as in the past, the age of ships in the U.S.-flag fleet has been raised as a corollary safety issue. Regarding the El Faro , the Coast Guard testified in 2018:", "We looked a little further beyond this particular incident, caused us to look at other vessels in the fleet and did cause us concern about their condition.\u00e2\u0080\u00a6 And the findings indicate that it is not unique to the El Faro . We have other ships out there that are in substandard condition.\u00e2\u0080\u00a6 You know, some of our fleet\u00e2\u0080\u0094our fleet is almost three times older than the average fleet sailing around the world today. Just like your old car, those are the ones likely to breakdown. Those are the (inaudible) one\u00e2\u0080\u0094the ones that are more difficult to maintain and may not start when I go out, turn the key. "], "subsections": []}]}, {"section_title": "Considerations in Realigning Marine Safety Functions", "paragraphs": ["As the above history indicates, the measure most often proposed to increase the competence of marine safety personnel is to shift this mission to a civilian workforce in a civilian subagency, either under the Coast Guard or somewhere else in the executive branch with complementary maritime functions. While such a shift could have the advantages stated, one cannot necessarily expect it, in and of itself, to solve the issue completely. Civilian agencies with inspection workforces covering technically demanding industries also have had difficulty retaining experienced staff. For instance, the Federal Aviation Administration has been criticized for increasing its reliance on private-sector inspectors paid by industry rather than enhancing its in-house inspection workforce. The rationale for this reliance on private-industry inspectors is that the pace of technological development in aviation has overwhelmed the capability of government inspectors.", "Similarly, the Department of Transportation's Pipeline and Hazardous Materials Safety Administration, which regulates pipeline safety, has found that experienced inspectors are often hired away as safety compliance officers by pipeline companies. The Department of the Interior has voiced much the same concern with respect to the offshore oil rig inspection workforce of the Bureau of Safety and Environmental Enforcement. Even under a civilian agency, vessel inspectors would be subject to recruitment by private industry, as experienced inspectors are sought by ship owners, banks that finance ships, and insurers, all of which want to ensure ships are built to, and are being maintained to, safety standards. Inspectors are employed by private ship classification societies for this purpose.", "Another consideration with respect to realigning the government's marine safety function is the benefit of housing maritime-related missions in a single agency. As commandants have argued, there are synergies among these missions. For example, the knowledge of and familiarity with vessels and crews that safety inspectors gain via their interactions with them provide risk intelligence relevant to the agency's security mission. Personnel involved in the often perilous mission of search and rescue directly benefit from a competent and effective safety inspection workforce that can reduce the number of such missions. The vessel safety inspection function has synergies with vessel environmental inspections related to oil pollution, ballast water, and emissions. The marine safety function is also complimentary to the Coast Guard's responsibility for deploying and maintaining channel marker buoys and lights and breaking ice in winter. Fisheries enforcement has synergies with fishing safety and security missions. All of these missions require special knowledge for operating on the water, and most require a fleet to do so. Thus, there are both human resource and capital equipment synergies among these missions.", "Notwithstanding these factors, one can also rationalize dismantling parts of the Coast Guard and reorganizing them under other agencies. The Coast Guard has a close relationship with the Navy, even in peacetime. In 1982, Members of Congress sponsored bills to transfer the agency to the Navy or the Department of Defense ( H.R. 4996 , H.R. 5567 ). These proposals were partly in response to the Reagan Administration's proposal to drastically reduce the size of the Coast Guard, replace the commandant with a civilian administrator, and transfer the Coast Guard's aids to navigation mission to the Army Corps of Engineers. During the partial government shutdown in January 2019, when Coast Guard personnel were the only military personnel not paid, calls for shifting the Coast Guard to the Navy or Department of Defense were renewed. While some supporters hope that transferring the Coast Guard to the military might boost the agency's budget, others have argued that the Coast Guard's nondefense-related missions would suffer, as these missions are not a priority for the military. It would appear that such a transfer might not assist the Coast Guard in addressing the issue of rotating staff in the marine safety program.", "In addition to realigning marine safety functions, Congress has discussed rearranging navigation-related functions in the federal government more broadly. Some Members of Congress, dissatisfied with the Army Corps of Engineers' performance in the provision of navigation channel infrastructure, have proposed transferring that function to the Department of Transportation. The Trump Administration also has proposed this transfer as part of a larger reorganization plan involving multiple agencies. Congress has requested a National Academy of Sciences study related to this idea. If such a transfer were to occur, navigation infrastructure functions could be combined with a marine safety inspection and accident investigation within the Department of Transportation. This combination of safety and infrastructure provision parallels the primary missions of the department with respect to other transportation modes. However, Congress has shown reluctance to eliminate any of the Coast Guard's missions. Both in 1967, when the Department of Transportation was created and the Coast Guard was transferred there from the Department of the Treasury, and in 2003 after the Department of Homeland Security was created, and the agency was transferred there from the Department of Transportation, the Coast Guard was transferred as a distinct entity."], "subsections": []}]}}
{"id": "98-988", "title": "Voting and Quorum Procedures in the House of Representatives", "released_date": "2020-03-26T00:00:00", "summary": ["The Constitution requires that a quorum, defined as a majority of the House, be present on the floor when the House transacts business. The House, however, always presumes that a quorum is present unless and until its absence is demonstrated conclusively. The rules of the House strictly limit the occasions on which a Representative may make a point of order that a quorum is not present. In current practice, Members usually make such a point of order only when a vote is taking place. If a majority of the Members fails to respond to a quorum call or participate in an electronically recorded vote conducted in the House, the House must adjourn or take steps necessary to secure the attendance of enough Members to constitute a quorum.", "Questions to be decided on the floor are usually first put to a voice vote. Such votes\u00e2\u0080\u0094in which those present on the floor respond by answering together \"aye\" (after the presiding officer asks how many are in favor) or \"no\" (after the presiding officer asks how many are opposed)\u00e2\u0080\u0094are very common in the House. For such votes, no public record shows how individual Members voted. In practice, such votes might be taken with few Members present on the floor. Before the final result of a voice vote is announced, however, any Member may demand a division vote or seek an electronically recorded vote. Members' positions on these votes are publicly recorded.", "During a vote using the House's electronic voting system, Members have at least 15 minutes to come to the floor and cast their votes. The time for a vote by electronic device immediately following another vote by electronic device can be reduced to five minutes if the Speaker determines that Members will have an adequate opportunity to vote. The Speaker also has the authority to postpone record votes on certain questions identified in House Rules, including to approve a bill or resolution and to suspend the rules to pass a bill. Most postponed votes must be scheduled within two additional legislative days.", "The procedures for securing a vote by electronic device differ based on whether the House is meeting as the House proper or instead in the Committee of the Whole (a parliamentary forum that the House, in current practice, uses to consider amendments to legislation). In the House proper, an electronic vote can be secured in one of three ways. First, one-fifth of the number of Members present on the floor can invoke their constitutional right to demand \"the yeas and nays.\" Second, one-fifth of a quorum (usually 44 Members), can demand a \"recorded vote\" under House rules. Third, if a quorum is not present, a Member can make a point of order that a quorum is not present and object to a voice vote on the grounds that a quorum is not present. Most often, after such a point of order is made, the Speaker postpones further proceedings on the question being voted on. When the House resumes consideration of the question at a time designated by the Speaker, a quorum is typically present, and an electronic vote can be secured using one of the other two methods. (If, instead, the Speaker sustained a point of order against a voice vote on the grounds that a quorum was not present, an electronic vote would take place automatically to decide the question and establish the presence of a quorum.) To be clear, these three procedures result in votes that are indistinguishable from each other in how they are conducted; they differ in how they are ordered.", "When instead the House is meeting in the Committee of the Whole, 25 members can secure an electronic vote on a pending amendment or motion. The chair has the authority to postpone a request for a recorded vote on an amendment, and usually does. This allows the request to be renewed at a time the floor is crowded and a member can likely receive the support of a sufficient second to take the vote by electronic device. In addition, if a quorum (100 members of the Committee of the Whole) is not present, a member first can require that a quorum call take place before the chair counts to determine if there is sufficient support to order an electronically recorded vote. This option is less frequently utilized, and proceedings can be postponed in this case as well.", "In order to prepare for a catastrophic event, in 2005 the House created a procedure to determine a how many Members constitute a quorum when a large number are missing, incapacitated, or incapable of attending House proceedings. The House must hold two lengthy quorum calls and receive a report from the Sergeant at Arms before a quorum will be determined based on the \"provisional number of the House.\" At the time the rule was approved, a Member raised a point of order that the provisional quorum mechanism was unconstitutional. The Speaker does not rule on constitutional questions; instead, the House determines the constitutionality of a proposition by voting to consider it or by adopting it. In this case, a question of consideration was raised, and the House voted to consider the resolution. Thereafter, the resolution was agreed to."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["The rules and practices of the House of Representatives governing quorums and voting on the floor are closely intertwined, and derive from two provisions of Article I of the Constitution. Regarding quorums, clause 1 of Section 5 states in part that \"a Majority of each [House] shall constitute a Quorum to do Business; but a smaller Number may adjourn from day to day, and may be authorized to compel the Attendance of absent Members, in such Manner, and under such Penalties as each House may provide.\" Regarding voting, clause 3 of the same section provides in part that \"the Yeas and Nays of the Members of either House on any question shall, at the Desire of one fifth of those present, be entered on the Journal.\"", "This report discusses how the House now interprets and implements these two constitutional provisions. It focuses on the most important rules and the most common practices; it does not attempt to cover all the precedents the House has established or all the procedures that may be invoked\u00e2\u0080\u0094for example, the procedures for calling the roll instead of using the electronic voting system to decide a question or establish the presence of a quorum. This report also assumes a familiarity with some other aspects of the House's floor procedures."], "subsections": []}, {"section_title": "The Quorum Requirement in Theory and Practice", "paragraphs": ["The Constitution's quorum requirement quoted above seems to make it necessary for a simple majority of the House's members, or a minimum of 218 Representatives if there are no vacancies in the House, to be present on the floor whenever the House conducts business. As any observer of the House soon notices, however, sometimes only a handful of Members are present during House debates. In fact, it is rather unusual for as many as 218 Members to be present on the floor at the same time unless a vote or quorum call is being conducted using the House's electronic voting system. There appears to be an inconsistency, therefore, between an apparently unambiguous constitutional requirement and the well-established and well-accepted practices of the House. How is this inconsistency to be explained?", "First, the House transacts much of its business on the floor by resolving itself into the Committee of the Whole\u00e2\u0080\u0094formally, the Committee of the Whole House on the State of the Union. The primary reason for doing so is that the rules governing debate and amendment in Committee of the Whole are more flexible than those that apply when the House is meeting \"in the House.\" Resolving into Committee of the Whole is also convenient for another reason. The Committee of the Whole is a committee that the House has created in its rules, just as the House has created various standing committees. Although the Committee of the Whole differs from other House committees in that all Representatives are members of it and it meets on the House floor, it still remains a committee of the House. Therefore, a meeting of the Committee of the Whole is not a meeting of the House itself, so the constitutional quorum requirement for the House does not apply in Committee of the Whole. Instead, the House is free to set in its rules whatever quorum requirement it chooses for meetings of the Committee of the Whole. Clause 6(a) of House Rule XVIII provides that a \"quorum of a Committee of the Whole House on the state of the Union is 100 Members,\" not the majority of House Members that constitutes a quorum of the House.", "Second, whether the House is meeting as the House or in Committee of the Whole, a quorum is always presumed to be present unless and until its absence is demonstrated. Reasonably enough, the House presumes that it is complying with the Constitution or its own rules, as the case may be. Furthermore, neither the Speaker nor the chair of the Committee of the Whole is empowered to take the initiative to ensure that this presumption is correct. At no time may the Speaker or the chair interrupt the proceedings on the floor because he or she observes that the necessary quorum is not present or because he or she decides to count those present to determine whether the applicable quorum requirement is being met. Instead, the Speaker or chair responds to an assertion that a Member makes from the floor that a quorum is not present (or less often, when a Member is recognized to move a call of the House).", "A quorum is always presumed to be present unless a Member challenges this presumption from the floor, and the House's standing rules severely limit when he or she may do so. Many of the details of these rules are discussed later in this report. To summarize them here, there is a critical linkage between the House's quorum and voting procedures: About the only times that a Member has a right to make a point of order that a quorum is not present is when a vote is taking place. In a sense, the House in its rules has adopted a definition of business for purposes of the constitutional quorum requirement that is limited to voting. If a majority of all Representatives actually had to be in the chamber from the opening gavel to the adjournment of each daily session, it would become practically impossible for Members to satisfy all their various responsibilities and for the House to do its work in a timely fashion."], "subsections": []}, {"section_title": "Conducting Voice and Division Votes", "paragraphs": ["Either the Constitution or the House's rules require that certain kinds of questions be decided by record votes that are almost always conducted by use of the House's electronic voting system.", "First, the Constitution mandates that any vote to override a presidential veto \"shall be determined by Yeas and Nays\" (Article I, Section 7, clause 2). Second, under clause 10 of Rule XX, the \"yeas and nays shall be considered as ordered when the Speaker puts the question on passage of a bill or joint resolution, or on adoption of a conference report, making general appropriations, or on final adoption of a concurrent resolution on the budget or conference report thereon.\" And third, clause 12(a)(2) of Rule XXII provides for a record vote on any motion to authorize House managers to close the meetings of any conference committee.", "In all other cases, the basic procedures for voting in the House are laid out in House Rules I and XX. The manner in which questions are put to a vote is governed by clause 6 of Rule I, on the duties of the Speaker:", "The Speaker shall put a question in this form: \"Those in favor (of the question), say 'Aye.'\"; and after the affirmative voice is expressed, \"Those opposed, say 'No.'\". After a vote by voice under this clause, the Speaker may use such voting procedures as may be invoked under rule XX.", "Clause 1 of Rule XX then lays out the basic procedures for securing division and record votes:", "(a) The House shall divide after the Speaker has put a question to a vote by voice as provided in clause 6 of rule I if the Speaker is in doubt or division is demanded. Those in favor of the question shall first rise from their seats to be counted, and then those opposed.", "(b) If a Member, Delegate, or Resident Commissioner requests a recorded vote, and that request is supported by at least one-fifth of a quorum, the vote shall be taken by electronic device unless the Speaker invokes another procedure for recording votes provided in this rule. A recorded vote taken in the House under this paragraph shall be considered a vote by the yeas and nays.", "(c) In case of a tie vote, a question shall be lost.", "Whether in the House or in Committee of the Whole, every question, except the few noted above, is first put to a voice vote. The chair instructs those who favor the question to call out \"aye,\" and then those who oppose it to call out \"no.\" The chair then is expected to state that, in his or her opinion, \"the ayes [or the noes] appear to have it,\" and to pause before banging the gavel and announcing that \"the ayes [or noes] do have it and the bill is [or is not] passed\" (or the motion is agreed to, or whatever the case may be).", "If no one challenges the chair's statement, his or her announcement is conclusive, and the question is decided. Furthermore, the vote is considered valid even if only a few Members actually voted. A quorum is presumed to have been present, regardless of how many may have actually participated in the voice vote. ", "After the chair announces his or her opinion as to the outcome of a voice vote, any Member, Delegate, or Resident Commissioner has a right to demand a division vote, although they rarely do this in practice. Even less common, the chair may call for a division vote when a voice vote leaves him or her in doubt. When a division vote is demanded, the chair directs all those in favor of the question to stand and to remain standing until he or she counts them; then in like manner, the chair counts those who stand in opposition to the question. The chair then announces the result, and the question is decided. As is true of a voice vote, the positions of individual Members in a division vote are not recorded, and a division vote is valid even if less than a quorum was present to participate in it, unless the vote is challenged for that reason. Again, the presumption is that a quorum is present on the floor when the vote takes place even if not all of those Members choose to take part in the vote.", "Both voice votes and division votes involve only the Members who happen to be on or very near the floor at the time a vote takes place. No time is provided for Members to come to the floor from their offices or committee rooms. As a result, a small number of Members can determine the outcome of either kind of vote, and that outcome may not be the same as it would be if most or all Members participated. Before the final result of either a voice vote or a division vote is announced, therefore, any Member, Delegate, or Resident Commissioner may request a record vote using the House's electronic voting system. During this kind of vote, Members usually have 15 minutes or more to come to the floor and record their votes, and the vote of each Member is recorded individually and printed in the Congressional Record ."], "subsections": []}, {"section_title": "Seeking an Electronic Vote", "paragraphs": ["The House uses its electronic voting system for taking what are actually several different kinds of votes. They are indistinguishable from each other in how they are conducted, but not in how they are ordered."], "subsections": [{"section_title": "In the House", "paragraphs": ["There are three ways to secure an electronic vote in the House. According to the former Parliamentarian", "On any vote in the House, (1) the vote may be objected to (for lack of a quorum) under Rule XV clause 4 [now clause 6 of Rule XX], thereby precipitating an automatic ordering of the yeas-and-nays; (2) a recorded vote may be ordered by one-fifth of a quorum; or (3) the yeas and nays may be ordered by one-fifth of those present.", "Recall that the Constitution provides that \"the Yeas and Nays of the Members of either House on any question shall, at the Desire of one fifth of those present, be entered on the Journal.\" A vote by the yeas and nays is what has traditionally been called a roll call vote, though today it is also known as a kind of record vote and is taken by use of the House's electronic voting system unless that system were to break down. In that case, the clerk of the House would actually call the roll of Members, following clause 3 of Rule XX\u00e2\u0080\u0094as was done before the electronic system was installed\u00e2\u0080\u0094to implement the Legislative Reorganization Act of 1970. Clause 2(a) of Rule XX now provides that all record votes and quorum calls in the House are to be conducted electronically unless the Speaker exercises the discretion to have the clerk call the names of Members instead. In practice, the electronic voting system is always used unless it is temporarily inoperative. (For this reason, all references in this report to roll call and record votes should be understood to be references to votes taken \"by electronic device.\")", "As noted earlier, there is an important linkage between the House's quorum requirements and its procedures for ordering electronic votes. In the House, a yea-and-nay vote can be ordered, as a matter of constitutional right, by one-fifth of the Members present, but this number need not constitute a quorum. One-fifth of however many Members happen to be present may order the yeas and nays. However, there is an alternative that is even less demanding: Any Member can usually compel an electronic vote on any question on which the House is voting by invoking clause 6(a) of Rule XX, which provides for an electronic vote that also establishes the presence of a quorum. That rule states in part", "When a quorum fails to vote on a question, a quorum is not present, and objection is made for that cause (unless the House shall adjourn)\u00e2\u0080\u0094", "(1) there shall be a call of the House;", "(2) the Sergeant-at-Arms shall proceed forthwith to bring in absent Members; and ", "(3) the yeas and nays on the pending question shall at the same time be considered as ordered . (Emphasis added.)", "Clause 6(b) goes on to provide in part", "If those voting on the question and those who are present and decline to vote together make a majority of the House, the Speaker shall declare that a quorum is constituted, and the pending question shall be decided as the requisite majority of those voting shall have determined. Thereupon further proceedings under the call shall be considered as dispensed with. ", "When the Speaker announces the result of a voice vote or a division vote in the House, a Member may take advantage of the rules just quoted by rising and saying:", "Mr./Madam Speaker, I object to the vote on the ground that a quorum is not present and I make a point of order that a quorum is not present.", "The Member making this statement is invoking the constitutional quorum requirement and challenging the validity of the voice or division vote by asserting that it does not comply with the Constitution because a quorum of the House was not present at the time. ", "In response, the Speaker counts to determine whether, in fact, a quorum (218 Members if there is no more than one vacancy) is present on the floor. If a quorum is present, the Speaker overrules the point of order. If the Representative still wants an electronically recorded vote, he or she may ask for the yeas and nays, and hope that one-fifth of the Members present rise to indicate their support for the request. Alternatively, the Member may ask for a recorded vote, invoking clause 1(b) of Rule XX which states, \"If a Member, Delegate, or Resident Commissioner requests a recorded vote, and that request is supported by at least one-fifth of a quorum, the vote shall be taken by electronic device\" unless the Speaker orders otherwise. ", "Notice that it takes 44 Members (one-fifth of a quorum) to order a recorded vote under this rule, compared to one-fifth of those present to order the yeas-and-nays. When a quorum is present on the floor, it may be easier to obtain sufficient support for a recorded vote than for a yea-and-nay vote, because the number of Members present will probably exceed the minimal quorum of 218 (in which case one-fifth of the number present will exceed 44). In either event, the vote will be taken by using the electronic voting system, regardless of whether it is technically a yea-and-nay vote or a recorded vote ordered under clause 1(b) of Rule XX. ", "If the Speaker discovers that a quorum is not present, the Speaker announces that fact and also states that, under clause 6(a) of Rule XX, an electronic vote is ordered on the question before the House. This vote accomplishes two purposes at once. First, it decides the question (for example, \"Will a bill pass?\"). Second, at the same time, it demonstrates the presence of a quorum (as Members use the 15 or more minutes given them to come to the floor and vote). If a quorum participates in the vote, the presence of a quorum is established, and the House can continue to transact business. (It is rarely necessary for the Sergeant at Arms to \"bring in absent Members,\" because Members usually want to be recorded on all electronic votes.)", "More often than not, however, the Speaker does not respond to such a point of order by counting for a quorum but instead by postponing further proceedings. As discussed fully in the section below, the Speaker has the authority to postpone votes on many questions under clause 8(a)(1) of Rule XX. When the Speaker postpones a vote after an objection to the lack of a quorum, the point of order is considered withdrawn. This is because the Speaker is effectively no longer putting the question to a vote, and it is therefore not in order to make a point of order that a quorum is not present. When proceedings are resumed on the question, the Speaker will put the question again, first by voice vote. In practice, the Speaker resumes proceedings at a time that a quorum is present on the floor. A Member, Delegate, or Resident Commissioner can, at that time, request either a recorded vote or a yea-and-nay vote, and if there is a sufficient second, the vote will be taken by electronic device."], "subsections": []}, {"section_title": "In Committee of the Whole", "paragraphs": ["The constitutional right to demand \"the Yeas and Nays\" applies to both the House and the Senate, but it does not extend to the Committee of the Whole. There is no constitutional right for one-fifth of the Members present to insist on a vote in Committee of the Whole by call of the roll or by use of the electronic voting system. In fact, before 1970, the votes of individual Members were never recorded on any question that was decided in Committee of the Whole, including all the votes on amendments to bills. ", "As part of the same 1970 Legislative Reorganization Act that authorized the electronic voting system, the House amended its rules to provide for recorded votes in Committee of the Whole. Especially with the installation of the new voting system, these votes became the functional equivalent of yea-and-nay votes in the House. However, the requirements and procedures for securing a record vote in Committee of the Whole are somewhat different from those used to obtain comparable votes in the House, even though all these votes are almost always conducted by use of the same electronic system. ", "Under clause 6(e) of House Rule XVIII, \"In the Committee of the Whole House on the state of the Union, the chair shall order a recorded vote on a request supported by at least 25 Members, Delegates, and the Resident Commissioner.\" So before the final result of a voice or division vote is announced, all a Member need do is rise and request a recorded vote\u00e2\u0080\u0094so long as he or she is confident that at least 24 others will rise to support the request. Even when the floor is not crowded, Members typically request a recorded vote on an amendment in this fashion because the chair can postpone the request for a recorded vote on an amendment. The chair is likely to do this and resume proceedings at a time when more Members are present and a sufficient second is likely to support the request. ", "Another option for Members if a quorum is not present is to state", "Mr./Madam Chair, I request a recorded vote and, pending that, I make a point of order that a quorum is not present.", "When the Member requests a recorded vote and, at the same time, makes a point of order that the House rule governing quorums in Committee of the Whole is being violated, the chair is required to act first on the point of order that a quorum is not present (sometimes called a point of no quorum). He or she counts to ascertain the presence of a quorum, which is 100 members of the Committee of the Whole (which includes the Delegates and the Resident Commissioner). If a quorum is present, a recorded vote is ordered only if 25 members of the Committee of the Whole have risen to support the request. ", "If a quorum is not present, the chair could order an immediate quorum call. If the request is for a recorded vote on an amendment, however, the chair will likely instead postpone the vote. If the vote is postponed, the point of order of no quorum is considered withdrawn. ", "If the chair orders a quorum call instead of postponing the vote, members of the Committee of the Whole then come to the floor to record their presence, giving the member who is seeking a recorded vote the chance to convince 24 or more allies to remain on the floor. When the quorum call is concluded and the presence of a quorum has been established, the chair returns to the pending request for a recorded vote. At this time, presumably, there are at least 25 members of the Committee of the Whole standing to support this request; if so, a recorded vote is ordered.", "The key difference between these steps and those that occur in the House proper is that, under the rules, in the House, the quorum call and the electronically recorded vote are combined; the outcome of the automatic record vote demonstrates the presence of a quorum. In Committee of the Whole, on the other hand, there may be a quorum call that is soon followed by a recorded vote on the amendment or motion in question. In current practice, however, typically the chair of the Committee of the Whole postpones further proceedings when a point of no quorum is made, akin to the case when a point of no quorum is made in the House. "], "subsections": []}]}, {"section_title": "Time Allowed for Electronic Votes and Quorum Calls", "paragraphs": [], "subsections": [{"section_title": "\"Not Less Than Fifteen Minutes\"", "paragraphs": ["When an electronic vote or quorum call is ordered, either in the House or in Committee of the Whole, Representatives usually have at least 15 minutes to reach the floor and vote or record their presence. Clause 2(a) of Rule XX so provides \"the minimum time for a record vote or quorum call by electronic device shall be 15 minutes.\"", "Note that 15 minutes is \"the minimum time\"; it is not a fixed or maximum time. In practice, the time allowed is often extended to allow as many Members as possible to be recorded. Although the Speaker or chair of the Committee of the Whole may close a vote at any time after the 15 minutes have elapsed, he or she will sometimes allow at least several more minutes for any Members who are en route to the floor. For this reason, electronic votes frequently consume 20 minutes or longer. ", "The chair's discretion to decide how long to leave a vote open after 15 minutes has elapsed could be used to the majority party's advantage. In the case of a very close vote, the Speaker or chair may close the vote after 15 minutes as soon as his or her side enjoys a majority, especially when the outcome might be reversed if the vote were left open long enough for other Members to reach the floor. However, Speakers have announced that they would not close electronic votes when Members are in the chamber seeking to be recorded. Alternatively, the chair could leave a vote open for much more than 15 minutes if his or her side is losing a close vote and more time is needed to reverse that outcome by persuading Members to change their votes or by waiting for more Members to arrive and vote.", "During an electronic vote or quorum call, Members may change their votes or record their presence at any time before the chair announces the result. However, a Member's vote or presence may not be recorded thereafter. The House Parliamentarian states, \"Requests to correct the Congressional Record and the Journal on votes taken by electronic device are not entertained, it being the responsibility of each Member to utilize the safeguards of electronic system and to verify the proper recording of his vote.\" Also, \"Following the announcement of the result of a call of the House conducted by electronic device ..., the Speaker declined to entertain requests by Members to record their presence.\" A Member who misses an electronic vote may announce from the floor how he or she would have voted and, by unanimous consent, have that statement inserted in the Record in proximity to the vote tally. Alternatively, Members can submit a signed statement stating how they would have voted, and if it is submitted the same day as the vote, it will appear in the Congressional Record right after the vote result in a distinctive type. Whether announced on the floor or submitted in writing, the statements can include explanations for why the Member was unavoidably detained."], "subsections": []}, {"section_title": "Reducing the Time to Five Minutes in the House", "paragraphs": ["Members may be allowed less than 15 minutes to vote by electronic device when one such vote follows shortly after another or when an electronically recorded vote immediately follows a quorum call. In such circumstances, Members do not need 15 minutes to participate in the second or subsequent vote because they are already on the floor. ", "Clause 9 of Rule XX grants the Speaker the discretion to reduce the time for an electronic vote in the House from not less than 15 minutes to not less than five minutes", "1. on any question that follows another vote by electronic device; and", "2. on any question that follows a report from the Committee of the Whole.", "The Speaker can only reduce the time for such votes if, in his or her discretion, Members \"would be afforded an adequate opportunity to vote.\" The Speaker announces in advance the intention to exercise this discretion in any of these circumstances. The Speaker states that the first electronic vote will be a 15-minute vote and the second one, if ordered, will be a five-minute vote. For example, he or she may announce that the vote on adopting a resolution will be a five-minute vote if the House agrees by record vote to order the previous question on the resolution. In this way, Members coming to the floor for the first vote are alerted to remain for the second. Clause 9(b) of Rule XX directs that notice of five-minute voting shall be issued prior to the first vote in a series \"to the maximum extent practicable.\""], "subsections": []}, {"section_title": "Postponing and Clustering Votes in the House", "paragraphs": ["Clause 8 of Rule XX gives the Speaker the discretion to defer votes on some questions when an electronic vote has been ordered or when a point of order has been made against a voice or division vote on the grounds that a quorum was not present. The Speaker's authority applies to votes on", "(1) adopting a resolution or passing a bill, ", "(2) agreeing to a conference report or a motion to instruct conferees, ", "(3) agreeing to an amendment,", "(4) adopting a motion to recommit a bill, ", "(5) adopting a motion to concur in a Senate amendment, with or without amendment,", "(6) ordering the previous question on any of the questions described in (1)-(5), ", "(7) agreeing to the Speaker's approval of the Journal , ", "(8) agreeing to a motion to suspend the rules, and", "(9) agreeing to a motion to reconsider or to lay on the table a motion to reconsider.", "When an electronic vote is ordered on any one of these questions, the Speaker may announce that he or she is postponing the vote to a time he or she designates later on the same legislative day, in case of a Journal vote, or within two legislative days, in case of any of the other votes. The vote or votes are postponed to a certain point in the legislative schedule (for example, after disposition of another bill that is scheduled for consideration). When the House reaches that point, Members vote on the questions in the order in which the votes on them had been postponed. The first of these votes must be a regular 15-minute vote; before it begins, however, the Speaker may announce that each of the succeeding votes will be five-minute votes if no business intervenes.", "This authority is regularly invoked when, on the same day, the House considers a series of motions to suspend the rules. If the Speaker was not able to postpone and cluster votes on these motions, there might be a series of electronic votes at no more than 40-minute intervals (the time allowed for debating each motion) on a Monday or Tuesday, when many Members are in the process of returning to Washington from their districts. The Speaker's authority under clause 8 allows votes to be scheduled later on Monday or \"rolled over\" until Tuesday or Wednesday, when they take place back-to-back with only the first vote in the series consuming at least 15 minutes. In similar fashion, the Speaker can postpone and cluster electronic votes that are ordered on suspension motions on Tuesdays and Wednesdays."], "subsections": []}, {"section_title": "Postponing Requests for Recorded Votes and Reducing the Time to Two Minutes in the Committee of the Whole", "paragraphs": ["There are four circumstances in which the time for completing an electronic vote in Committee of the Whole may be reduced to a minimum of two minutes. They involve a vote occurring immediately after another vote or after a quorum call, or other circumstances when, in the discretion of the chair, two minutes will provide an adequate opportunity to vote. ", "First, clause 6(g) of Rule XVIII empowers the chair of the Committee of the Whole to postpone requests for a record votes on separate amendments to a bill until later during consideration of the bill, and also to cluster the votes on those amendments. That is, the Committee would vote on the amendments later, one right after the other. When the Committee of the Whole resumes proceedings at a time of the chair's choosing, the request for a recorded vote is made again, and a vote by electronic device will be taken if supported by a sufficient second (24 additional Members, Delegates, and the Resident Commissioner). In such cases, the chair may reduce the time for the second and each subsequent vote to no less than two minutes.", "Second, if votes will occur in Committee of the Whole on two or more pending amendments, the chair may announce that there will be at least 15 minutes for the first vote but at least five minutes for each of the succeeding votes, so long as no business or debate intervenes between each vote (clause 6(f) of Rule XVIII). Suppose, for example, that a substitute for a first degree amendment has been offered. The Committee of the Whole will first vote on the substitute and then on the first degree amendment (as amended, if amended by the substitute). The chair may state that there will be a 15-minute vote on the substitute to be followed by a five-minute vote on the first degree amendment as long as no debate occurs and no other motions or amendments are offered between the two votes.", "Third, if votes on amendments have been postponed, when the House resolves into the Committee of the Whole to resume proceedings, time for the votes can be reduced to two minutes if Members, Delegates, and the Resident Commissioner \"would be afforded an adequate opportunity to vote.\" This provision of Rule XVIII, clause 6(g)(2), accounts for circumstances when, for example, the Committee of the Whole rises briefly during a series of votes. It also allows two-minute votes when amendments are postponed and scheduled for a time later in the day or the next day, perhaps after a vote series that begins with questions voted on in the House. In such a situation, a 15-minute vote might occur in the House and then, after the House resolves into the Committee of the Whole, the first amendment vote could be two minutes.", "Fourth, as discussed above, a Member, Delegate, or Resident Commissioner may request a recorded vote in Committee of the Whole on an amendment and, pending that request, make a point of order that a quorum is not present. If the chair determines that a quorum is not present and orders a quorum call, he or she may also announce at that time that, if a recorded vote on the amendment is ordered after the completion of the 15-minute quorum call, the time for the amendment vote itself will be reduced to not less than two minutes (clause 6(b)(3) of Rule XVIII). ", "As noted above, clause 2(a) of Rule XX also provides not less than 15 minutes for Members to respond to quorum calls in the House, but this time may be reduced for quorum calls ordered in Committee of the Whole. The device is what is known informally as a \"notice quorum.\" Clause 6(c) of Rule XVIII gives the chair the discretion to announce, before a quorum call begins, that he or she will declare that a quorum is constituted as soon as 100 members of the Committee of the Whole (which includes the Delegates and Resident Commissioner) have recorded their presence:", "When ordering a quorum call in the Committee of the Whole House on the state of the Union, the Chair may announce an intention to declare that a quorum is constituted at any time during the quorum call when he determines that a quorum has appeared. If the Chair interrupts the quorum call by declaring that a quorum is constituted, proceedings under the quorum call shall be considered as vacated, and the Committee of the Whole shall continue its sitting and resume its business.", "Notice quorums are now uncommon. Quorum calls in Committee of the Whole do not usually take place, because if a recorded vote is requested on an amendment, further proceedings are typically postponed until a time when a series of amendment votes is expected, and a quorum is present. "], "subsections": []}]}, {"section_title": "Securing Quorum Calls and Calls of the House", "paragraphs": ["The key rule governing attempts to secure the presence of a majority of Representatives on the floor during a meeting of the House is clause 7 of Rule XX, which states", "(a) The Speaker may not entertain a point of order that a quorum is not present unless a question has been put to a vote.", "(b) Subject to subparagraph (c) the Speaker may recognize a Member, Delegate, or Resident Commissioner to move a call of the House at any time. When a quorum is established pursuant to a call of the House, further proceedings under the call shall be considered as dispensed with unless the Speaker recognizes for a motion to compel attendance of Members under clause 5(b).", "(c) A call of the House shall not be in order after the previous question is ordered unless the Speaker determines by actual count that a quorum is not present.", "Under subparagraph (a), a Member only has the right to invoke the constitutional quorum requirement when a vote is taking place. At that time, any Representative \"may object to the vote on the ground that a quorum is not present and make a point of order that a quorum is not present.\" At any other time, the equivalent of a quorum call may take place only at the discretion of the Speaker, when he or she recognizes a Member \"to move a call of the House.\" In the former case, the Speaker responds to the point of order by counting to determine whether a quorum is present. If it is, the point of order is overruled and no quorum call ensues; if it is not, the point of order is sustained, and an automatic roll call vote is ordered, taken by electronic device. In the latter case (subparagraph (b)), a Member makes a motion for a call of the House, prompting what is in effect a quorum call to secure the presence of Members, regardless of whether or not a quorum was present when it began.", "Note that the purpose of a quorum call under subparagraph (a), or a call of the House under subparagraph (b), is to secure the presence of a quorum, not to require the attendance of all the Members of the House. Subparagraph (b) provides that, once a quorum responds to a call of the House, \"further proceedings under the call\"\u00e2\u0080\u0094which would be efforts by the Sergeant at Arms to secure the attendance of all the remaining Members\u00e2\u0080\u0094\"shall be considered as dispensed with\" unless the Speaker decides to entertain a motion for that purpose. Similarly, clause 6(b) of Rule XX, quoted earlier, provides for the same \"further proceedings\" to be dispensed with after a quorum call pursuant to subparagraph (a).", "The corresponding rule governing quorums and quorum calls in Committee of the Whole is clause 6 of Rule XVIII. It is this rule that (1) sets the quorum in Committee of the Whole at 100 Members, Delegates, and the Resident Commissioner; (2) authorizes notice quorum calls at the discretion of the chair; and (3) provides for two-minute votes on amendments following regular quorum calls, again at the chair's discretion.", "In addition, the same rule controls when a point of order that a quorum is not present can be made in Committee of the Whole. (Calls of the House are not permitted in Committee of the Whole.) In brief, the rule states that", "the chair need not permit a point of order of no quorum to be made during general debate, and once a quorum in Committee of the Whole has been established on any day, a point of order of no quorum may be made only when \"the Chair has put the pending proposition to a vote.\"", "In other words, no Member has a right to insist on the presence of a quorum during general debate. There is a right to make one point of order of no quorum if it is made during the amending process that follows general debate but only (1) if there was no quorum call during general debate and (2) if this point of order is made before there has been a recorded vote on an amendment or motion during that day's sitting. Once a quorum call or recorded vote has taken place in Committee of the Whole on any day, a Member has the right to make a point of order that a quorum is not present only when the Committee is in the process of voting. "], "subsections": []}, {"section_title": "In the Absence of a Quorum", "paragraphs": ["In the unlikely event that a majority of the House fails either to respond to a quorum call or to participate in an electronic vote, the House's failure to comply with the constitutional quorum requirement is demonstrated. Consequently, the House cannot resume legislative business until the presence of a quorum is recorded. The House has only two options: one is to adjourn; the other is to take steps necessary to secure the attendance of a quorum. In most cases, the House can be expected to adopt the second of these options by invoking clause 5(a) of Rule XX. ", "This clause provides in part that, \"in the absence of a quorum, a majority comprising at least 15 Members, which may include the Speaker, may compel the attendance of absent Members.\" In this instance, the House can act without a quorum being present because the constitutional provision quoted at the beginning of this report authorizes it to do so. That provision states that, in the absence of a quorum, \"a smaller Number may adjourn from day to day, and may be authorized to compel the Attendance of absent Members, in such Manner, and under such Penalties as each House may provide.\"", "The situation and options in Committee of the Whole are comparable. \"Where the Chair has announced the absence of a quorum in Committee of the Whole, no further business may be conducted until a quorum is established or the Committee rises.\" For much the same reason that the Constitution authorizes the House to adjourn without a quorum being present, clause 6(d) of House Rule XVIII states that \"a quorum is not required in the Committee of the Whole House on the state of the Union for adoption of a motion that the Committee rise.\" However, a quorum is necessary to adopt a motion that the Committee rise and report a measure for final passage in the House."], "subsections": []}, {"section_title": "Quorum in the Case of Catastrophic Circumstances24", "paragraphs": ["Article I, Section 5, clause 1 of the Constitution states that \"a Majority of each [House] shall constitute a Quorum to do Business.\" A quorum has long been defined as a majority of the whole number of the House, and the whole number of the House has long been viewed as the number of Members elected, sworn, and living. Whenever the death, resignation, disqualification, or expulsion of a Member results in a vacancy, the whole number of the House is adjusted.", "In the event of a catastrophe, however, it may not be immediately known whether a Member is alive or dead, thereby making it impossible to adjust the whole number of Members. Furthermore, if a Member is incapacitated but living, or unharmed but unable to attend the proceedings of the House, he or she would still count toward the whole number used to determine a quorum. Missing, injured, and stranded Members are still \"elected, sworn, and living.\" If many such Members are affected, and the Congress needs to act, this situation could prove problematic because it may be impossible to establish a quorum. ", "In order to address this issue, in 2005 the House modified clause 5 of Rule XX to prepare for a catastrophic event that leaves a large number of Members missing, incapacitated, or incapable of attending the proceedings of the House. The rule establishes a method for establishing a \"provisional quorum\" in the case of a catastrophic event. This method did not provide a new means for determining the whole number of the House; on the contrary, it is a method to be used provisionally until a quorum can be constituted by a majority of the whole number of the House. Under the rule, if the House is without a majority of Members elected, sworn, and living due to catastrophic circumstances, then a quorum shall be a majority of the \"provisional number\" of the House. "], "subsections": [{"section_title": "Steps Required to Establish the House Is Without a Quorum Due to Catastrophic Circumstances", "paragraphs": ["The rule requires four steps to be taken in order, and without intervening adjournment, to establish that the House is without a quorum due to catastrophic circumstances. Only after the steps described below are taken will a new number required for a quorum be determined based on the provisional number of the House. A majority of Members present may terminate the proceedings by adopting the motion to adjourn. "], "subsections": [{"section_title": "First, Dispose of a Motion to Compel the Attendance of Absent Members", "paragraphs": ["If the absence of a quorum is demonstrated, then under a House rule (dating to 1789) a Member can make a motion to compel the attendance of absent Members. This motion, described in House Rule XX, clause 5(a), must first be disposed of, either favorably or unfavorably, before any other steps are taken to establish that the House is without a quorum due to catastrophic circumstances.", "The motion to compel the attendance of absent Members requires a majority vote for adoption, and that majority must comprise at least 15 Members. If the motion is adopted, then the call of the House occurs through Members presenting themselves, perhaps after receiving notification from the Sergeant at Arms and having their presence recorded by the Clerk. If the motion is not adopted, either because it failed to garner support from a majority of Members present or because the majority supporting it is fewer than 15 Members, then the motion is still considered \"disposed of\" and the other steps necessary to establish that the House is without a quorum due to catastrophic circumstances can occur."], "subsections": []}, {"section_title": "Second, Conduct a 72-Hour Call of the House That Does Not Produce a Quorum", "paragraphs": ["After disposing of the motion to compel the attendance of absent Members, the House must have a call (or series of calls) of the House over a period of 72 hours, excluding time spent in recess. The call could be the one that was ordered by adoption of the motion to compel the attendance of absent Members. The Speaker could also entertain a motion for a call of the House under clause 7(b) of Rule XX. However ordered, if the call failed to produce a quorum based on the existing whole number of the House after 72 hours, then the call could be closed, and additional steps to establish that the House is without a quorum due to catastrophic circumstances could be taken."], "subsections": []}, {"section_title": "Third, the Speaker Must Receive a \"Catastrophic Quorum Failure Report\" and Announce Its Contents to the House", "paragraphs": ["After the call of the House is closed, the Speaker, with the majority and minority leaders, can then receive from the Sergeant at Arms (or designee) a \"catastrophic quorum failure report\" that states that the House cannot establish a quorum because of catastrophic circumstances such as an attack, natural disaster, or contagion. According to the rule, a catastrophic quorum failure report must contain", "the number of known vacancies, a list of former Representatives whose seats are vacant (this list would include any known dead Representatives as well as any Representatives who resigned or who were removed by action of the House if their seats had not yet been filled), a list of Representatives considered incapacitated, a list of Representatives not incapacitated but still incapable of attending the proceedings of the House, and a list of Representatives not accounted for.", "The Sergeant at Arms is directed by the rule to prepare the report in consultation with the Attending Physician to the Congress (or a designee), the Clerk of the House (or a designee), and public health and law enforcement officials. The Speaker, after consultation with the two party leaders, is required to announce the content of the report to the House. This announcement is not subject to appeal."], "subsections": []}, {"section_title": "Fourth, Conduct a 24-Hour Call of the House That Does Not Produce a Quorum", "paragraphs": ["Even after the Speaker's announcement, the House is not considered to be without a quorum due to catastrophic circumstances until the completion of a second extended call of the House. This call of the House can be ordered under the procedures described in clause 5(a) of Rule XX or by a motion for the call under clause 7(b). This second call of the House, or series of calls, could be closed after 24 hours, excluding the time spent in recess, if it does not produce a majority of the whole number of the House. "], "subsections": []}]}, {"section_title": "The Provisional Number of the House", "paragraphs": ["If all four of these steps are completed, then the House has established that it is without a quorum due to catastrophic circumstances. A quorum for conducting business can then be determined based on the \"provisional number of the House.\" The number of Members who respond to the 24-hour call of the House will be the provisional number of the House, and a majority of the provisional number will constitute a quorum for doing business. If Members arrive after the call of the House, the provisional number is increased accordingly. If any Member counted under the 24-hour call of the House to determine the provisional number later ceases to be a Representative due to death, resignation, or action by the House, then the provisional number of the House would also be reduced accordingly.", "The catastrophic quorum failure report must be updated each legislative day; in other words, it must be updated each time the House reconvenes after an adjournment. The Speaker is required to make these updates available to the House. If at any time a sufficient number of Members arrive to constitute a quorum of the whole number of the House, then the provisional number would no longer be in effect. "], "subsections": []}, {"section_title": "Constitutionality of the Provisional Quorum", "paragraphs": ["Some Members expressed concern that the catastrophic quorum rule was unconstitutional. When H.Res. 5 was called up for consideration, a Representative made a constitutional point of order. The Speaker declined to entertain the constitutional point of order, citing numerous earlier precedents barring the Speaker from ruling on the constitutionality of a pending proposal. Instead, typically, the House determines for itself the constitutionality of a proposition either by voting to consider it or voting to adopt it. The Representative then raised the question of consideration, and the House by a vote of 224-192 agreed to consider H.Res. 5 and the provisions in it dealing with the new quorum procedure. Thereafter, H.Res. 5 was agreed to by a vote of 220-195. Whether an attempt will be made to challenge in court the constitutionality of the rule is not yet certain. Neither is it certain that a Member has legal standing to bring such a suit without the new quorum rule ever having been implemented."], "subsections": []}]}, {"section_title": "Individual Votes and Extraordinary Majorities", "paragraphs": [], "subsections": [{"section_title": "The Right and Responsibility to Vote", "paragraphs": ["In general, every Representative is expected to vote on every question, but House rules make an exception for the Speaker. Under clause 7 of Rule I, the Speaker \"is not required to vote in ordinary legislative proceedings, except when such vote would be decisive or when the House is engaged in voting by ballot.\" Although this rule does not prevent Speakers from voting, they usually do not. ", "Every other Member \"shall vote on each question put, unless having a direct personal or pecuniary interest in the event of such question\" (Rule III, clause 1). Each Representative is expected to apply this clause to himself or herself. The House Parliamentarian observes that \"it has been found impracticable to enforce the provision requiring every Member to vote.\" Also, in recent practice, \"the Speaker has held that the Member and not the Chair should determine\" whether a Representative has \"a direct personal or pecuniary interest\" in the outcome of a vote; \"the Speaker has denied the Speaker's own power to deprive a Member of the constitutional right to vote.\" In the same vein, clause 10 of Rule XXIII, the Code of Official Conduct, states that a Member, Delegate, or Resident Commissioner who has been convicted of a crime for which he or she may be sentenced to two years or more in prison \"should refrain\" from voting in the House or in Committee of the Whole.", "Voting is an individual right and responsibility that cannot be delegated or exercised by anyone else. In response to concerns about the possibility of \"ghost voting,\" in which a Member would be recorded as having voted even when there was evidence that he or she could not have done so, the House voted in 1981 to add what is now clause 2 of Rule III:", "(a) A Member may not authorize any other person to cast the vote of such Member or record the presence of such Member in the House or the Committee of the Whole House on the state of the Union.", "(b) No other person may cast a Member's vote or record a Member's presence in the House or the Committee of the Whole House on the state of the Union."], "subsections": []}, {"section_title": "Simple and Extraordinary Majorities", "paragraphs": ["All questions are to be decided on the House floor by simple majority vote unless some constitutional provision or House rule provides otherwise. A simple majority vote is defined as at least one-half-plus-one of the Members voting, provided that a quorum is present; clause 1(c) of Rule XX provides that \"in case of a tie vote, a question shall be lost.\"", "The Constitution requires a two-thirds vote of the Members voting for various purposes:", "to expel a Member, to override a presidential veto, to propose a constitutional amendment, to remove political disabilities (now obsolete), and to determine that a President remains disabled.", "In addition, for other purposes House rules require the support of either two-thirds or three-fifths of the Members voting:", "Two-thirds: to agree to a motion to suspend the rules (clause 1(a) of Rule XV), Two-thirds: to agree to a motion to dispense with the call of the Private Calendar (clause 5(a) of Rule XV), and Two-thirds: to consider a special rule on the same day the Rules Committee reports it (clause 6(a) of Rule XIII)."], "subsections": []}]}]}}
{"id": "R46256", "title": "Health Resources and Services Administration (HRSA): Maternal Health Programs ", "released_date": "2020-03-04T00:00:00", "summary": ["The Health Resources and Services Administration (HRSA) of the Department of Health and Human Services (HHS) is one of the federal agencies charged with addressing U.S. maternal health outcomes. HRSA's Improving Maternal Health in America initiative aims to address U.S. maternal health issues by, among other approaches, improving maternal health data, increasing maternal health research, and prioritizing quality improvement in maternal health care services.", "The FY2019 appropriations report language for the Department of Defense and Labor, Health and Human Services, and Education Appropriations Act, 2019, and Continuing Appropriations Act, 2019 ( P.L. 115-245 ), reserved $26 million within the Special Projects for Regional and National Significance (SPRANS) program for, among other things, the Alliance for Innovation on Maternal Health (AIM) program and the establishment of new maternal health programs under HRSA. Using the SPRANS authority, HRSA established four new maternal health programs designed to improve maternal health outcomes and to prevent and reduce U.S. cases of maternal mortality and severe maternal morbidity (SMM) . SMM refers to medical conditions that adversely affect the maternal health care outcome of labor and delivery, resulting in either short-term or long-term consequences for pregnant and postpartum women. For FY2019, HRSA made awards under each of the four programs, via cooperative agreements, in which HRSA provided financial assistance to the recipients and is involved in program activities. The recipients of awards made under the previously existing AIM program and each of the four new maternal health programs must collaborate with each other.", "Previously Existing Maternal Health Program: Alliance for Innovation on Maternal Health (AIM). This five-year maternal health program funds a single project that promotes the adoption and implementation of hospital-focused maternal safety bundles (evidence-based practices) for health care providers in birthing facilities and hospitals.", "Maternal Health Program 1: Alliance for Inn ovation on Maternal Health (AIM\u00e2\u0080\u0093 Community Care Initiative ) . This five-year maternal health program funds a single project that expands upon the work of the initial AIM program. The program award recipient supports the development, adoption, and implementation of nonhospital maternal safety bundles for health care providers in community-based organizations and outpatient settings.", "Maternal Health Program 2: Rural Maternity and Obstetrics Management Strategies (RMOMS) Program. This four-year maternal health pilot program funds the development, testing, and implementation of service models, with the goal of improving access to, and continuity of, maternal and obstetrics care in rural communities. Program award recipients create strategies to address each of the following four RMOMS focus areas: (1) rural hospital obstetric service aggregation, (2) network approach to coordinating a continuum of care, (3) leveraging telehealth and specialty care, and (4) financial sustainability.", "Maternal Health Program 3: State Maternal Health Innovation (MHI) Program. This five-year maternal health program funds state-focused demonstration projects, with the goal of improving U.S. maternal health outcomes. State-focused demonstration projects undertake three core functions: (1) establishing a state-focused Maternal Health Task Force, (2) improving state-level maternal health data and surveillance, and (3) promoting and implementing innovations in the health care delivery of maternal health care services.", "Maternal Health Program 4: Supporting Maternal Health Innovation (MHI) Program. This five-year maternal health program aims to support states, key stakeholders, and recipients of HRSA-administered awards, with the goal of reducing and preventing U.S. cases of SMM and maternal mortality, and improving U.S. maternal health outcomes. For example, the Supporting MHI program provides capacity-building assistance to the state-focused demonstration projects under the State MHI program and to RMOMS program recipients. In addition, the Supporting MHI program is expected to establish a national resource center designed to help the AIM\u00e2\u0080\u0093Community Care Initiative recipient determine whether any of the nonhospital maternal safety bundles are evidence-informed and could reduce U.S. SMM and maternal mortality.", "To assist Congress as it considers measures on U.S. maternal health, this report provides an overview and the funding history of the five maternal health programs that HRSA administers. For each of the five maternal health programs, the report provides an overview of the program, discusses the main core activities and functions of the program, provides the program's criteria of eligibility and reporting requirements, and discusses the program's funding allocations."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["The Health Resources and Services Administration (HRSA), of the Department of Health and Human Services (HHS), is the federal agency charged with improving the nation's health safety net. HRSA provides access to health care services for those who are uninsured, isolated, or medically vulnerable, and educates health care providers on maternal and child health issues. HRSA's main role in maternal health is through its Maternal and Child Health Bureau (MCHB). The MCHB, in this context, encourages health promotion, promotes risk prevention, and disseminates information to health care professionals with the goal of reducing U.S. cases of severe maternal morbidity (SMM) and maternal mortality. According to the Centers for Disease Control and Prevention (CDC) of HHS ", "S evere maternal morbidity refers to a medical condition such as eclampsia and health failure that adversely affects the maternal health outcome of labor and delivery, resulting in either short-term or long-term consequences for pregnant and postpartum women. U.S. maternal death refers to \"the death of a woman while pregnant or within 42 days of termination of pregnancy, but excludes those from accidental or incidental causes.\" ", "CDC estimates the U.S. rate of SMM by measuring U.S. cases of SMM per 10,000 delivery hospitalizations. According to the CDC, the overall U.S. SMM rate increased by 190.9% between 1993 and 2014, from 49.5 SMM to 144.0 SMM. The CDC estimates the prevalence of U.S. maternal deaths by calculating the U.S. maternal mortality ratio (MMR) , which is the number of U.S. maternal deaths per 100,000 live births. According to the CDC, the U.S. MMR increased by 32.8% from 13.1 maternal deaths per 100,000 live births in 2004 to 17.4 maternal deaths per 100,000 live births in 2018. ", "To address U.S. cases of SMM and maternal mortality, the FY2019 appropriations report language for the Department of Defense and Labor, Health and Human Services, and Education Appropriations Act, 2019, and Continuing Appropriations Act, 2019 ( P.L. 115-245 ), among other things, reserved funds within the Special Projects of Regional and National Significance (SPRANS) for HRSA to administer maternal health programs. SPRANS is a competitive grant program for research and training programs and services related to maternal and child health and to children with special health care needs. ", "The FY2019 appropriation provided $109.6 million to SPRANS, which explicitly included $26 million for HRSA to maintain and establish new maternal health programs. Using the SPRANS authority, HRSA allocated $3 million to the previously existing Alliance for Innovation on Maternal Health (AIM) program and for the establishment of the Alliance for Innovation on Maternal Health (AIM)\u00e2\u0080\u0093Community Care Initiative. Additionally, HRSA allocated $23 million to establish the State Maternal Health Innovation (MHI) program. In FY2019, HRSA also established the Rural Maternity and Obstetrics Management Strategies (RMOMS) program and the Supporting Maternal Health Innovation (MHI) program. The appropriations report language authorizes HRSA to use $1 million of the $23 million appropriated, for the purchase and implementation of telehealth and to support coordination of rural obstetric care. "], "subsections": [{"section_title": "FY2020 Appropriations and FY2021 Budget Request", "paragraphs": ["The FY2020 appropriations report language explicitly provides $5 million to SPRANS for HRSA to carry out the activities through both of the AIM programs and $23 million for the State MHI program; the report language does not explicitly provide funding to the RMOMS program and Supporting MHI program. However, Congress appropriated $119.1 million to SPRANS for FY2020\u00e2\u0080\u0094increasing the FY2019 appropriation level by $10.5 million.", "For FY2020, according to HRSA, the federal agency is providing ", "$2 million to the RMOMS program, $5 million to carry out the activities through both of the AIM programs, and $23 million to the State MHI program.", "For FY2021, according to HRSA, the agency is requesting from Congress", "$12 million for the RMOMS program, $15 million to carry out the activities through both of the AIM programs, and $53 million for the State MHI program.", "HRSA's FY2021 budget documents do not provide information on either prior year or planned funding allocations for the Supporting MHI program. HRSA funds the five programs through cooperative agreements. According to HRSA, a cooperative agreement refers to \"a financial assistance mechanism where substantial involvement is anticipated between HRSA and the recipient during performance of the contemplated project.\" "], "subsections": []}, {"section_title": "Overview of the Five Maternal Health Programs", "paragraphs": [" Figure 1 provides an overview of and the coordination between the five maternal health programs. ", "HRSA is administering the five maternal health programs under the agency's Improving Maternal Health in America initiative."], "subsections": []}]}, {"section_title": "Report Roadmap", "paragraphs": ["To assist Congress as it considers measures on U.S. maternal health programs, this report provides an overview of the previously existing AIM program and the four new maternal health programs that HRSA established in FY2019. For each of the five maternal health programs, the report", "provides an overview of the program, discusses the main core activities or functions of the program, provides the program's criteria of eligibility and reporting requirements, and discusses the program's funding allocations. "], "subsections": []}, {"section_title": "Alliance for Innovation on Maternal Heath (AIM)", "paragraphs": ["The Alliance for Innovation on Maternal Health (AIM) program aims to improve U.S. maternal health outcomes, including maternal safety, by diminishing the number of preventable SMMs and maternal deaths. The initiative funds one cooperative agreement to support continuity of care for pregnant and postpartum women who receive maternal health care services at birthing facilities and hospitals. HRSA established the AIM program in 2014. Since 2014, The American College of Obstetricians and Gynecologists (ACOG), which is a medical professional organization for obstetricians and gynecologists, has been the sole grantee of the AIM program. ", "During the AIM program's most recent four-year performance period. ACOG was responsible for engaging and building partnerships with national stakeholders, promoting the adoption and implementation of hospital-focused maternal safety bundles by state-based teams, and evaluating the delivery of provider education on interconception health. According to HRSA, a maternal safety bundle refers to \"a set of small, straightforward evidence-based practices, that when implemented collectively and reliably in the delivery setting have improved patient outcomes and reduced maternal mortality and [SMM].\"", "Hospital-focused maternal safety bundles are designed for health care providers in birthing facilities and hospitals. The best practices contained in the maternal safety bundles are grouped into four administrative activities: (1) readiness, (2) recognition and prevention, (3) response, and (4) reporting/systems learning. Listed below are the current eight hospital-focused maternal safety bundles.", "For example, the text box below describes the Maternal Mental Health: Depression and Anxiety safety bundle.", "The eight hospital-focused maternal safety bundles, according to HRSA, \"include data metrics, are shown to be clinically effective, and are currently being adopted by states for inpatient use.\" As of January 2020, according to HRSA, an estimated 1,300 hospitals in 27 states participate in the initial AIM program. The current AIM program has a five-year period of performance of September 1, 2018, through August 31, 2023."], "subsections": [{"section_title": "Three Core Activities", "paragraphs": ["Under the AIM program, the award recipient performs three core activities: (1) facilitating multidisciplinary collaborations to reduce the number of preventable SMMs and maternal mortality, (2) guiding the national implementation and adoption of maternal safety bundles, and (3) collecting and analyzing data. The overall goal of the core activities is to achieve the program's outcomes. According to HRSA, the program objectives are to do the following: ", "Maintain the existing 10 AIM state-based teams and accept 25 new state-based teams to expand the implementation of the current maternal safety bundles. Develop new maternal safety bundles and/or resources that aim to address the quality and safety of maternity care practices. Establish a national campaign on SMM and maternal mortality that demonstrates the impact of AIM and maternal safety bundles. Prevent 100,000 cases of SMM and 1,000 maternal deaths. "], "subsections": []}, {"section_title": "Eligible Applicants", "paragraphs": ["Domestic public and private entities are eligible to apply for the AIM program. Eligibility extends to tribes, tribal organizations, community-based organizations, and faith-based organizations."], "subsections": []}, {"section_title": "Reporting Requirements and Performance Measures", "paragraphs": ["The AIM grant recipient is required to provide HRSA with annual progress reports, performances reports, and a final report narrative. The recipient is to submit annual reports on progress made toward achieving the program outcomes. The performance reports are to examine measures such as sustainability, depression screening, well-woman visit/preventive care, and health equity in maternal health outcomes, sustainability. According to HRSA, \"the Project Officer will provide additional information about [the final report narrative] after HRSA makes the award.\""], "subsections": []}, {"section_title": "Program Funding", "paragraphs": ["HRSA may annually allocate no more than $2 million to the sole recipient of the AIM\u00e2\u0080\u0093Community Care Initiative. This funding is dependent upon the availability of appropriated funds, recipient's satisfactory progress in meeting program's objectives, and the interest of the federal government. The AIM program has no cost-sharing or matching requirements. On August 1, 2018, HRSA awarded $2 million to ACOG via a cooperative agreement to continue assisting state-based teams with implementing maternal safety bundles. "], "subsections": []}]}, {"section_title": "Alliance for Innovation on Maternal Health (AIM)\u00e2\u0080\u0093Community Care Initiative", "paragraphs": ["The Alliance for Innovation on Maternal Health (AIM)\u00e2\u0080\u0093Community Care Initiative is a designed to improve U.S. maternal health and safety. The initiative funds one cooperative agreement to support continuity of care for pregnant and postpartum women who receive maternal health care services at medical facilities outside of birthing facilities and hospitals. The AIM\u00e2\u0080\u0093Community Care Initiative builds on the work of the initial AIM program. Together, both AIM programs aim to expand the implementation and adoption of maternal safety bundles to all 50 U.S. states, the District of Columbia, and U.S. territories, as well as tribal entities. ", "The AIM\u00e2\u0080\u0093Community Care Initiative focuses on two priority areas:", "supporting the development and implementation of nonhospital maternal safety bundles for health care providers in outpatient settings and community-based organizations, and addressing preventable SMM and maternal deaths among pregnant and postpartum women who receive care outside of birthing facilities and hospitals.", "The initial AIM program, which focuses on hospital-based services, began developing two nonhospital maternal safety bundles: (1) Postpartum Care Basics for Maternal Safety: From Birth to the Comprehensive Postpartum Visit, and (2) Postpartum Care Basics for Maternal Safety: Transition from Maternity to Well-Woman Care. The AIM\u00e2\u0080\u0093Community Care Initiative is responsible for further developing these two maternal safety bundles. The award recipient is to aim to advance the two nonhospital maternal safety bundles by developing data metrics, testing the bundles' effectiveness in outpatient settings and community-based organizations, and implementing the bundles in medical facilities outside of birthing facilities and hospitals. ", "The initiative recipient is to collaborate with key stakeholders, including other HRSA grant recipients that address maternal and child health issues, on ways to address preventable SMM and maternal deaths among pregnant and postpartum women who receive care outside of birthing facilities and hospitals. In addition, the awardee is to collaborate with the recipient of the Supporting Maternal Health Innovation Program (discussed in the \" Supporting Maternal Health Innovation (MHI)\u00c2\u00a0Program \" section of this report). The two recipients are to work in partnership to develop resource materials for nonhospital-focused maternal safety bundles. After developing the resources, the Supporting MHI recipient is to assist the AIM\u00e2\u0080\u0093Community Care Initiative recipient with disseminating resource materials and other evidence-informed strategies to communities that experience disparities in U.S. maternal morbidity and mortality. The AIM\u00e2\u0080\u0093Community Care Initiative has a five-year period of performance of September 30, 2019, through September 29, 2024."], "subsections": [{"section_title": "Three Core Activities", "paragraphs": ["Under this program, the recipient of the AIM\u00e2\u0080\u0093Community Care Initiative is to perform three core activities: (1) establishing and convening a maternal safety workgroup, (2) facilitating the national implementation of two maternal safety bundles, and (3) collecting and analyzing data. The overall goal of the core activities is to achieve the program's outcomes. According to HRSA, the program objectives are to do the following: ", "Increase knowledge and awareness of nonhospital-focused maternal safety bundles, and identify how bundle contents are related to best practices among providers, community-based organizations, outpatient clinical settings, etc. Increase the capacity to implement and test nonhospital-focused maternal safety bundles. Increase the number of nonhospital-focused maternal safety bundles developed that address emerging topics in the provision of maternal care services. Increase implementation of the nonhospital-focused maternal safety bundles within nonclinical community-based organizations and outpatient clinical settings across states/communities. Increase awareness of staff and providers in both inpatient and outpatient clinical settings regarding the need to address racial/ethnic disparities when implementing all nonhospital-focused maternal safety bundles. Increase the evidence base on the implementation of nonhospital-focused maternal safety bundles.", "The first core activity requires the AIM\u00e2\u0080\u0093Community Care Initiative award recipient to establish a maternal safety workgroup to guide the activities of the program. Members of the maternal safety workgroup must include community-focused public health and clinical experts in the field of maternal health.", "The second core activity requires the award recipient to facilitate the national implementation of nonhospital maternal safety bundles at approximately five test sites. The test sites, which subrecipients will manage, are to be located at outpatient clinical settings and nonclinical organizations. The test sites must provide health care services to pregnant and postpartum women. ", "The award recipient is to collaborate with the initial AIM program's state-based teams and other key stakeholders to determine how to best disseminate the nonhospital maternal safety bundles nationwide. Like the test sites, the nonhospital maternal safety bundles are to be adopted by outpatient clinical settings and community-based organizations that provide health care services to pregnant and postpartum women. HRSA expects the recipient of the AIM\u00e2\u0080\u0093Community Care Initiative to collaborate with the current AIM program award recipient. The AIM program is to maintain a public website containing materials on non-hospital focused maternal safety bundles. The website would be further developed and maintained by the AIM\u00e2\u0080\u0093Community Care Initiative recipient, who would also support the collaboration of the AIM website and the Supporting MHI program website.", "The third core activity requires the award recipient to collect and analyze structure, process, and outcome data. According to HRSA, the recipient will collect and analyze \"quality improvement baseline, process, structure, and outcome data on the implementation of non-hospital focused maternal safety bundles, both within test sites and during national rollout.\""], "subsections": []}, {"section_title": "Eligible Applicants", "paragraphs": ["Domestic public and private entities are eligible to apply for the AIM\u00e2\u0080\u0093Community Care Initiative. Eligibility extends to tribes, tribal organizations, community-based organizations, and faith-based organizations. "], "subsections": []}, {"section_title": "Reporting Requirements and Performance Measures", "paragraphs": ["The AIM\u00e2\u0080\u0093Community Care Initiative awardee is required to provide HRSA with annual progress reports, performance reports, and a final report narrative. The recipient is to submit annual reports on progress made toward achieving the program outcomes/objectives (as described in the \" Three Core Activities \" section above). The performance reports would examine measures such as quality improvement, health equity in maternal health outcomes, sustainability, and well-woman visit/preventive care. The final performance report must include the project's abstract, expenditure data for the final year of the performance period, and the final scores for the performance measures. According to HRSA, \"the Project Officer will provide additional information about [the final report narrative] after HRSA makes the award.\""], "subsections": []}, {"section_title": "Program Funding", "paragraphs": ["HRSA may annually allocate approximately $1,830,000 to the sole recipient of the AIM\u00e2\u0080\u0093 Community Care Initiative. This funding is dependent upon the availability of appropriated funds, recipient's satisfactory progress in meeting program's objectives, and the interest of the federal government. The program has no cost-sharing or matching requirements. The recipient may use the funds for direct, indirect, facility, and administrative costs. Annually, approximately 40% to 50% of the award must cover the costs of subrecipients' test sites and travel/meeting compensation for members of the maternal safety workgroup. In FY2019, HRSA awarded $1.8 million to one recipient."], "subsections": []}]}, {"section_title": "Rural Maternity and Obstetrics Management Strategies (RMOMS) Program", "paragraphs": ["The Rural Maternity and Obstetrics Management Strategies (RMOMS) program is a maternal health care pilot program that funds up to three cooperative agreements for the development, implementation, and testing of models that aim to improve access to and continuity of maternal and obstetrics care in rural communities. RMOMS program recipients serve communities based on factors such as disparities in ethnicity/race, socioeconomic status, primary language, access to maternal health care, and coordinated/continuing maternal and obstetrics care. According to HRSA, the RMOMS program has four goals: ", "1. improve maternal and neonatal health care outcomes, 2. develop sustainable financing models, 3. develop a network whereby coordination of maternal and obstetric care is sustainable within a rural region, and 4. increase access to and the delivery of preconception, pregnancy, labor and delivery, and postpartum health care services. ", "The FY2019 RMOMS program has a four-year performance period, September 1, 2019, through August 31, 2023. ", "The program occurs in two phases.", "Phase one. The first phase occurs during the first year of the performance period. During this year, RMOMS program recipients develop baseline data, models, and work plans. In addition, the program recipients participate in the development of network capacity building and infrastructure. RMOMS program recipients collaborate with HRSA to assess the program's impact using specific measures and data elements, including access, workforce proficiency, cost and cost-effectiveness, clinical outcomes, quality of care, and healthy behaviors.", "The models are designed to address the four RMOMS focus areas described below in the \" Four RMOMS Focus Areas \" section of this report. In addition, each model addresses payment and reimbursement options, workforce skills required of maternal health care providers, and women's access to maternal health care services, including telehealth . According to HRSA, telehealth refers to \"the use of electronic information and telecommunication technologies to support long-distance clinical health care, patient and professional health-related education, public health, and health administration.\" \u00c2\u00a0(Of the $23 million that Congress provided to SPRANS for the establishment of new maternal health grants in FY2019, Congress reserved $1 million for the purchase and implementation of telehealth and to, support coordination of rural obstetric care.) ", "RMOMS program award recipients are to develop and submit to HRSA three-year work plans, which include the baseline data and strategic plans to implement the model.", "Phase two. The second phase occurs during the remaining second through fourth years of the pilot program. During these years, RMOMS program award recipients implement the models based on the recipients' work plans. In addition, the recipients are to provide mothers and infants with case management and care coordination services. The recipients would collaborate with HRSA to identify the data elements to monitor and measure through the model. "], "subsections": [{"section_title": "Four RMOMS Focus Areas", "paragraphs": ["Each RMOMS program award recipient creates strategies to address each of the four RMOMS focus areas: (1) rural hospital obstetric service aggregation, (2) network approach to coordinating a continuum of care, (3) leveraging telehealth and specialty care, and (4) financial sustainability. "], "subsections": []}, {"section_title": "Eligible Applicants", "paragraphs": ["Domestic public or private and nonprofit or for-profit entities are eligible to apply for the RMOMS program. Eligibility extends to tribes, tribal organizations, community-based organizations, and faith-based organizations. Eligible entities, which HRSA refers to as \"applicant organizations,\" are equipped with necessary staff and infrastructure to direct the administrative and programmatic activities of the program. ", "The applicant organization may be located in either an urban or a rural area. However, the application organization must serve a population either in HRSA-designated rural counties or rural census tracts in urban counties. (The Office of Rural Health Policy within HRSA funded the development of Rural Urban Area Codes to classify areas within metropolitan areas as HRSA-designated rural counties and rural census tracts in urban counties.) An entity could have applied twice for the FY2019 RMOMS program: (1) as an applicant organization and (2) as part of a network organization under a different applicant organization. ", "RMOMS applicant organizations must be part of either a formal or an established network. HRSA refers to a network as ", "an organizational arrangement among three or more separately owned domestic public and/or private entities, including the applicant organization. For the purposes of this program, the applicant must have a network of composition that includes: (1) at least two rural hospitals or [critical access hospitals (CAHs)]; (2) at least one health center under section 330 of the Public Health Service Act (Federally Qualified Health Center [FQHC]) or FQHC look-alike; (3) state Home Visiting and Healthy Start Program if regionally available; and (4) the state Medicaid agency. ", "A formal network is a RMOMS Network organization that has signed bylaws, a governing body, and either a memorandum of agreement, memorandum of understanding, or other formal collaborative agreements. HRSA identifies a formal network that has a history of working together as an established network. At least one entity, aside from the applicant organization, within the network must be located in an HRSA-designated rural county or rural census tract in an urban county. Each RMOMS applicant organization and the entities that are part of a network must have separate and different Employer Identification Numbers (EINs) from the Internal Revenue Service. Separate and different EINs are required in order to receive RMOMS program funds. Figure 2 illustrates an example of a RMOMS network. "], "subsections": []}, {"section_title": "Reporting Requirements and Performance Measures", "paragraphs": ["RMOMS program award recipients are required to provide HRSA with annual progress reports, a performance measure report, a sustainability report, and a final closeout report. Recipients are to submit annual reports on progress in achieving the program's four goals (as described in the \" Rural Maternity and Obstetrics Management Strategies (RMOMS) Program \" section of this report). In addition, the annual reports must specifically include progress toward addressing the third RMOMS focus area, \"leveraging telehealth and specialty care.\" After the end of each budget period, RMOMS program recipients are to submit reports on performance measures. HRSA is to inform the program recipients of the performance measures to report on, during the first year of performance. HRSA provides guidance to RMOMS program recipients on how to complete the sustainability report, which is due during the final year of the performance period.", "Each RMOMS program award recipient is to provide the MCHB with a final closeout report within 90 days after the end of the performance period. The final report must include information and data such as barriers encountered, core performance data, and the impact of the overall project. The Notice of Award provides program recipients with additional information about the final report."], "subsections": []}, {"section_title": "Program Funding", "paragraphs": ["HRSA uses two authorities to administer and fund the RMOMS program, according to the program's Notice of Funding Opportunity (see Table 1 ). Using its authority for SPRANS (SSA Section 501(a)(2)), HRSA may provide up to $150,000 to RMOMS program recipients to carry out activities under the RMOMS focus area \"leveraging telehealth and specialty care\" for each year of the pilot program. Using its authority for the Office of Rural Health Policy within HRSA (SSA \u00c2\u00a7711(b)(5)), HRSA may provide up to $450,000 for recipients to carry out the activities under each of the four RMOMS focus areas for the first year of the pilot program. For each of the remaining years of the pilot program, RMOMS may award recipients receive up to $650,000 to carry those activities. Each RMOMS recipient may receive up to $1.8 million per year.", "This funding is dependent upon the availability of appropriated funds, satisfactory recipient performance, and the interest of the federal government.", "RMOMS program award recipients can use funds for direct and indirect costs. In addition, recipients may use funds to cover staff travel expenses to conferences and/or technical assistance workshops. HRSA expects RMOMS program recipients to set-aside funds each year for up to two program staff members to attend a two-and-a-half day technical workshop in Washington, DC. There are no cost-sharing or matching requirements for this program. According to HRSA, the total program costs incurred by the supporting MHI satisfies a cost-sharing or matching requirement. In FY2019, HRSA awarded $9 million to the RMOMS program. "], "subsections": []}]}, {"section_title": "State Maternal Health Innovation (MHI) Program", "paragraphs": ["The State Maternal Health Innovation (MHI) program is a maternal health program that funds up to nine cooperative agreements for state-focused demonstration projects, with the goal of improving U.S. maternal health outcomes. State MHI award recipients are to establish demonstration projects within a state or group of states. The demonstration projects are responsible for converting recommendations on SMM and maternal mortality into actionable items that can be implemented by the states or groups of states. Recommendations\u00e2\u0080\u0094such as providing maternal women with continuous team-based support, improving quality of maternity health care services, and engaging in productive collaborations\u00e2\u0080\u0094derive from HRSA's Maternal Mortality Summit, held in June 2018. State MHI program recipients are required to collaborate with other HRSA program awardees of programs such as AIM, the Healthy Start Program (Healthy Start), and Maternal, Infant, and Early Childhood Home Visiting (MIECHV) programs in their state. The FY2019 State MHI program has a five-year performance period, September 30, 2019, through September 29, 2024."], "subsections": [{"section_title": "Three Core Functions", "paragraphs": ["Each state-focused demonstration project undertakes three core functions: (1) establishing a state-focused Maternal Health Task Force, (2) improving state-level maternal health data and surveillance, and (3) promoting and executing innovation in maternal health service delivery."], "subsections": [{"section_title": "Maternal Health Task Force", "paragraphs": ["Each State MHI award recipient is responsible for establishing, and each state-focused demonstration project operates through, a state-focused Maternal Health Task Force (Task Force). The Task Force comprises multidisciplinary stakeholders, including representatives from the state legislature and local public health professionals from state and federal programs, such as the State Department of Health and MCH Services Block Grant Program (Title V). The Task Force is responsible for carrying out two main objectives.", "First, the Task Force is responsible for identifying maternal health-related gaps at the state level. Examples of such gaps include a state's limited ability to monitor maternal health outcomes and the access barriers that women experience when accessing quality prenatal and maternity care services.", "Second, the Task Force is responsible for creating and implementing a maternal health strategic plan. The strategic plan must include the maternal health care activities outlined in the most recent State Title V Needs Assessment of each state or group of states. However, state-focused demonstration projects are encouraged not to duplicate the maternal mortality-related activities of the MCH Services Block Grant program. State MHI award recipients must develop their strategic plans by September 29, 2020, and update the plans by including additional actionable recommendations by September 29, 2021. ", "Although not a core function, the Task Force is required to participate in the community of learners' sessions, which are convened by the recipient of the Supporting MHI Program. The goal of convening the community is to encourage peer-to-peer learning, including collective problem-solving and brainstorming sessions on ways the State MHI program recipients can effectively implement their program activities."], "subsections": []}, {"section_title": "Maternal Health Data and Surveillance", "paragraphs": ["Each State MHI award recipient is to aim to improve state-level data on maternal health data and surveillance through the state-focused demonstration project. To do so, the award recipient is to identify the leading factors of maternal deaths in the respective state or groups of states. A state-focused demonstration project can address the state or group of states' need for maternal health data and surveillance by conducting at least one of three activities. The demonstration project can coordinate with another state-focused initiative to collect, analyze, and report maternal morbidity and mortality data. The demonstration project may also coordinate with a multidisciplinary state-focused maternal mortality review committee (MMRC). An MMRC is a multidisciplinary team composed of maternal clinical health experts. Generally, an MMRC team researches and makes recommendations on maternal mortality-related issues such as racial maternal health disparities.", "In addition, the demonstration project can analyze valid and reliable data on U.S. maternal health outcomes. For example, the goal of the analysis is to determine the preventability of certain maternal deaths and to establish best practices on how to prevent future deaths. The demonstration project can also publish an annual report on maternal death that includes a discussion on how to prevent such deaths from a policy standpoint."], "subsections": []}, {"section_title": "Maternal Health Service Delivery", "paragraphs": ["Each State MHI award recipient is to promote and execute innovation in maternal health service delivery, for example, by implementing strategies to address gaps in the delivery of maternal health care. State-focused demonstration projects can implement innovative strategies by conducting at least one of the following three activities: (1) identifying critical gaps in access to comprehensive, continuous, and high-quality maternal health care services; (2) identifying critical gaps in maternal health workforce needs; and (3) identifying critical gaps in comprehensive postpartum and interconception care interventions. For example, a state-focused demonstration project can ", "assist state birthing facilities with implementing and adopting AIM maternal safety bundles, address access to maternal health care by convening a state advisory panel on innovation payment models for maternal care, address maternal health workforce needs by identifying legislative mandates that affect maternal women accessing maternal health care services, and address comprehensive postpartum and interconception care intervention by disseminating patient educational information on preventing obstetric emergencies. ", "HRSA encourages award recipients to include the use of telehealth as a component of their demonstration projects. The Supporting MHI program recipient hosts the web-based platform, which the State MHI program recipients use to consolidate their work. In addition, the Supporting MHI recipient plans, hosts, and facilitates the annual in-person meetings for State MHI award recipients."], "subsections": []}]}, {"section_title": "Eligible Applicants", "paragraphs": ["Domestic public and private entities are eligible to apply for the State MHI Program. Eligibility extends to tribes, tribal organizations, community-based organizations, and faith-based organizations. "], "subsections": []}, {"section_title": "Reporting Requirements and Performance Measures", "paragraphs": ["State MHI Program award recipients are required to provide HRSA with annual progress reports, performance reports, and a final report narrative. By September 29, 2020, award recipients must submit annual reports on the maternal deaths and ways to prevent future maternal deaths in the state. Award recipients must include data in their reports that HRSA can measure under the State Title V Needs Assessment. By that same date, according to HRSA, the award recipients must report the following two sets of performance data to the agency: ", "1. Increases within the state from baseline on September 30, 2019, for the following:", "percentage of women covered by health insurance, percentage of women who receive an annual well-woman visit, percentage of pregnant women who receive prenatal care, percentage of pregnant women who receive prenatal care in the first trimester, percentage of pregnant women who receive a postpartum visit, and percentage of women screened for perinatal depression. ", "2. Decreases within the state from baseline on September 30, 2019, for the following:", "rate of pregnancy-related deaths, and racial, ethnic, and/or geographic disparities in pregnancy-related mortality rates. ", "The Supporting MHI award recipient is required to help the State MHI award recipients achieve their performance milestones. The performance reports examine measures such as quality improvement, state capacity for advancing the health of maternal and child health populations, prenatal care, well-woman visit/preventive care, and adequate health insurance coverage. The final performance report must include the project's abstract, expenditure data for the final year of the period of performance, and the final scores for the performance measures. Each State MHI award recipient must submit its final report narrative to HRSA at the end of the project. "], "subsections": []}, {"section_title": "Program Funding", "paragraphs": ["HRSA may annually allocate approximately $18,650,000 to fund up to nine cooperative agreements under the State MHI program. This funding is dependent upon the availability of appropriated funds, satisfactory recipient performance, and the interest of the federal government. In FY2019, the awards ranged from $1.9 million to $2.1 million. State MHI program award recipients can use funds to address state and local priorities. There are no cost-sharing or matching requirements for this program. "], "subsections": []}]}, {"section_title": "Supporting Maternal Health Innovation (MHI)\u00c2 Program", "paragraphs": ["The Supporting Maternal Health Innovation (MHI) program funds up to one cooperative agreement to help states, stakeholders, and recipients of HRSA-administered awards reduce and prevent U.S. cases of SMM and maternal mortality, and improve U.S. maternal health outcomes. States and stakeholders include state health agencies, community-based organizations, and pregnant and postpartum women and their families. HRSA recipients include those of the initial AIM program, AIM\u00e2\u0080\u0093Community Care Initiative, Healthy Start, and MCH Services Block Grant program. Supporting MHI program award recipients aim to achieve the following three program objectives by calendar year 2024:", "Ensure that 75% of HRSA award recipients report improvement in their ability to implement evidence-informed strategies, with the goal of reducing and preventing maternal morbidity and mortality. Support the State MHI program by ensuring that 75% of HRSA award recipients that aim to improve maternal health outcomes can access the peer-to-peer learning opportunities and resources available through the State MHI program. Support the AIM\u00e2\u0080\u0093Community Care Initiative by (1) increasing the dissemination of resource materials to support the adoption of nonhospital-focused maternal safety bundles, and (2) increasing the dissemination of evidence-informed strategies in communities that experience disparities in U.S. maternal morbidity and mortality. ", "The FY2019 Supporting MHI program has a five-year performance period, September 30, 2019, through September 29, 2024."], "subsections": [{"section_title": "Two Core Functions", "paragraphs": ["The State MHI program funds a single project that undertakes two core functions: (1) providing capacity-building assistance, and (2) establishing a national resource center."], "subsections": [{"section_title": "Capacity-Building Assistance", "paragraphs": ["The Supporting MHI project provides capacity-building assistance to the state-focused demonstration projects under the State MHI program and to the recipients under the RMOMS program. In this context, capacity-building assistance refers to technical assistance, training, and dissemination of information. The Supporting MHI program grantee provides the State MHI program and the RMOMS program with technical assistance in the form of programmatic, scientific, and mentoring support. Both programs receive training assistance to develop and deliver curricula. The programs also receive support to disseminate evidence-informed strategies to communities that experience disparities in U.S. maternal morbidity and mortality. The Supporting MHI recipient is to provide capacity-building assistance on 10 topic areas, listed below. ", "The Supporting MHI program award recipient is to gather the community of learners for the State MHI program recipients. The goal of convening the community of learners is to encourage peer-to-peer learning, including collective problem-solving and brainstorming sessions on ways the State MHI program recipients can effectively implement program activities. In addition, the Supporting MHI program recipient is to help the State MHI program recipients assess their progress in meeting program goals and planning and facilitating annual in-person meetings for the recipients."], "subsections": []}, {"section_title": "National Resource Center", "paragraphs": ["The Supporting MHI program recipient is responsible for establishing a national resource center where states, HRSA award recipients, and key stakeholders can access guidance on reducing and preventing U.S. cases of SMM and maternal mortality. The resource center offers assistance with trainings/technical issues, partnership building, policy analysis, and dissemination of information. Trainings and technical assistance are provided to stakeholders and HRSA award recipients on topic areas similar to the 10 topic areas described above. HRSA award recipients under this program may include grantees of Healthy Start, the MIECHV program, and the MCH Services Block Grant program. ", "The Supporting MHI program recipient, through the resource center, would collaborate with stakeholders that serve underserved populations to encourage partnership building. Key stakeholders and HRSA award recipients may reach out to the resource center for assistance with developing partnerships with national maternal health organizations (e.g., ACOG, the Association of Women's Health, Black Mamas Matter Alliance, Society for Maternal Fetal Medicine, and Telehealth Resource Centers). ", "The resource center offers policy analysis assistance to stakeholders and HRSA award recipients. For example, the AIM\u00e2\u0080\u0093Community Care Initiative award recipient can receive assistance in determining whether any of the nonhospital maternal safety bundles are evidence-informed and could reduce U.S. cases of SMM and maternal mortality. In addition, the resource center develops and maintain a public-facing web-based clearinghouse where key stakeholders can access pertinent resources, such as training materials and evidence-informed practices. The website must have the capability to host the State MHI program recipient's online platform. ", "The Supporting MHI program is also responsible for creating and implementing national guidance on reducing U.S. cases of maternal morbidity and mortality. Education and training are the foci of the national guidance. The national guidance provides learning opportunities to key stakeholders on the following nine topic areas:", "The national guidance is intended to help key stakeholders with related activities, such as creating tools for collaborations, disseminating information about the project, and providing culturally competent technical assistance to key stakeholders that provide maternal health services to populations that experience disparities in U.S. maternal morbidity and mortality. "], "subsections": []}]}, {"section_title": "Eligible Applicants", "paragraphs": ["Domestic public and private entities are eligible to apply for the Supporting MHI Program. Eligibility extends to tribes, tribal organizations, community-based organizations, and faith-based organizations. Eligible applicants must be aware of the different HRSA award recipients that address U.S. maternal health outcomes. "], "subsections": []}, {"section_title": "Reporting Requirements and Performance Measures", "paragraphs": ["The Supporting MHI Program awardee is required to provide HRSA with annual progress reports, performance reports, and a final report narrative. By 2024, according to HRSA, the award recipient must submit annual reports on progress made toward achieving the three program objectives listed under the \" Supporting Maternal Health Innovation (MHI)\u00c2\u00a0Program \" section in this report. The performance reports must examine measures such as technical assistance, health equity in maternal health outcomes, state capacity for advancing the health of maternal and child health populations, perinatal and postpartum care, depression screening, and adequate health insurance coverage. The final performance report must include the project's abstract, expenditure data for the final year of the performance period, and the final scores for the performance measures. Each State MHI awardee must submit its final report narrative to HRSA within 90 days from the end of the performance period. "], "subsections": []}, {"section_title": "Program Funding", "paragraphs": ["HRSA may annually award approximately $2.6 million to the sole recipient, as the agency did in FY2019. This funding is dependent upon the availability of appropriated funds, satisfactory recipient performance, and the interest of the federal government. The Supporting MHI program recipient can use the funds for administrative and facility costs. There are no cost-sharing or matching requirements for this program. According to HRSA, the total program costs incurred by the Supporting MHI satisfies a cost-sharing or matching requirement. "], "subsections": []}]}]}}
{"id": "R45818", "title": "Afghanistan: Background and U.S. Policy", "released_date": "2019-07-18T00:00:00", "summary": ["Afghanistan has been a significant U.S. foreign policy concern since 2001, when the United States, in response to the terrorist attacks of September 11, 2001, led a military campaign against Al Qaeda and the Taliban government that harbored and supported it. In the intervening 18 years, the United States has suffered approximately 2,400 military fatalities in Afghanistan, with the cost of military operations reaching nearly $750 billion. Congress has appropriated approximately $133 billion for reconstruction. In that time, an elected Afghan government has replaced the Taliban, and most measures of human development have improved, although Afghanistan's future prospects remain mixed in light of the country's ongoing violent conflict and political contention.", "Topics covered in this report include:", "Security dynamics . U.S. and Afghan forces, along with international partners, combat a Taliban insurgency that is, by many measures, in a stronger military position now than at any point since 2001. Many observers assess that a full-scale U.S. withdrawal would lead to the collapse of the Afghan government and perhaps even the reestablishment of Taliban control over most of the country. Taliban insurgents operate alongside, and in periodic competition with, an array of other armed groups, including regional affiliates of Al Qaeda (a longtime Taliban ally) and the Islamic State (a Taliban foe and increasing focus of U.S. policy). U.S. military engagement . The size and goals of U.S. military operations in Afghanistan have evolved over the course of the 18-year war, the longest in American history. Various factors, including changes in the security situation and competing U.S. priorities, have necessitated adjustments. While some press reports indicate that the Trump Administration may be considering at least a partial withdrawal, U.S. officials maintain that no decision has been made to reduce U.S. force levels. Regional context . Afghanistan has long been an arena for, and victim of, regional and great power competition. Pakistan's long-standing, if generally covert, support for the Taliban makes it the neighbor whose influence is considered the most important. Other actors include Russia and Iran (both former Taliban foes now providing some measure of support to the group); India (Pakistan's main rival); and China. Reconciliation efforts. U.S. officials have long contended that there is no military solution to the war in Afghanistan. Direct U.S.-Taliban negotiations, ongoing since mid-2018, on the issues of counterterrorism and the presence of U.S. troops could offer greater progress than past efforts. However, U.S. negotiators caution that the Taliban's continued refusal to negotiate with the Afghan government could preclude the stated U.S. goal of a comprehensive settlement. Afghan governance and politics. Afghanistan's democratic system has achieved some success since its post-2001 establishment, but corruption, an evident failure to provide sufficient security and services, and infighting between political elites has undermined it. The unsettled state of Afghan politics complicates ongoing efforts to negotiate a settlement: the presidential election has been postponed twice and is now scheduled for September 2019. U.S. and foreign assistance. Military operations have been complemented by large amounts of development assistance; since 2001, Afghanistan has been the largest single recipient of U.S. aid. Most of that assistance has been for the Afghan military (a trend particularly pronounced in recent years), but aid has also supported efforts to build Afghan government capacity, develop the Afghan economy, and promote human rights."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Purpose and Scope", "paragraphs": ["The purpose of this report is to provide information and analysis for Congress on Afghanistan and the nearly two-decade U.S. project there. Topics covered include U.S. military engagement and security dynamics; the regional context; reconciliation efforts; Afghan politics and governance; foreign assistance; and social and economic development. Supplementary materials, including a historical timeline and background on the Soviet war in Afghanistan, are included as appendices. This information is meant to provide background and context for lawmakers as they consider administration budget requests, oversee U.S. military operations and aid programs, and examine the U.S. role in South Asia and the world. For a more frequently updated treatment of current events in Afghanistan and developments in U.S. policy, refer to CRS Report R45122, Afghanistan: Background and U.S. Policy In Brief , by Clayton Thomas. "], "subsections": []}, {"section_title": "Overview", "paragraphs": ["The U.S. and Afghan governments, along with partner countries, remain engaged in combat with a robust Taliban-led insurgency. While U.S. military officials maintain that Afghan forces are \"resilient\" against the Taliban, by some measures insurgents are in control of or contesting more territory today than at any time since 2001. The conflict also involves an array of other armed groups, including active affiliates of both Al Qaeda (AQ) and the Islamic State (IS, also known as ISIS, ISIL, or by the Arabic acronym Da'esh ). ", "Since early 2015, the North Atlantic Treaty Organization (NATO)-led mission in Afghanistan, known as \"Resolute Support Mission\" (RSM), has focused on training, advising, and assisting Afghan government forces. Combat operations by U.S. counterterrorism forces, along with some partner forces, have increased since 2017. These two \"complementary missions\" make up Operation Freedom's Sentinel (OFS).", "Simultaneously, the United States is engaged in a diplomatic effort to end the war, most notably through direct talks with Taliban representatives (a reversal of previous U.S. policy). In January 2019, U.S. and Taliban negotiators reached a draft framework, in which the Taliban would prohibit terrorist groups from operating on Afghan soil in return for the eventual withdrawal of U.S. forces, though lead U.S. envoy Zalmay Khalilzad insists that \"nothing is agreed until everything is agreed.\" As of July 2019, negotiations do not directly involve representatives of the Afghan government, leading some Afghans to worry that the United States will prioritize a military withdrawal over a complex political settlement that preserves some of the social, political, and humanitarian gains made since 2001. A major complicating factor underlying the negotiations is the unsettled state of Afghan politics; Afghanistan held inconclusive parliamentary elections in October 2018 and the presidential election, originally scheduled for April 2019, has been postponed until September 2019. The Afghan government has made some notable progress in reducing corruption and implementing its budgetary commitments, but faces domestic criticism for its failure to guarantee security and prevent insurgent gains.", "The United States has spent more than $132 billion in various forms of reconstruction aid to Afghanistan over the past decade and a half, from building up and sustaining the Afghan National Defense and Security Forces (ANDSF) to economic development. This assistance has increased Afghan government capacity, but prospects for stability in Afghanistan still appear distant. Some U.S. policymakers hope that the country's largely underdeveloped natural resources and geographic position at the crossroads of future global trade routes might improve the economic life of the country, and, by extension, its social and political dynamics. Nevertheless, in light of the ongoing hostilities Afghanistan's economic and political prospects remain uncertain at best. "], "subsections": []}, {"section_title": "U.S. Military Operations", "paragraphs": [], "subsections": [{"section_title": "September 11 and Start of Operation Enduring Freedom (2001-2009)", "paragraphs": ["On September 11, 2001, the United States suffered a series of coordinated terrorist attacks executed by the Islamist terrorist group Al Qaeda. Al Qaeda leadership was based in Afghanistan and protected by the Taliban government that ruled most of that country (see textbox below). U.S. President George W. Bush articulated a policy that equated those who harbor terrorists with terrorists themselves, and asserted that a friendly regime in Kabul was needed to enable U.S. forces to search for Al Qaeda members there. ", "On September 14, 2001, in Congress, S.J.Res. 23 ( P.L. 107-40 ), passed 98-0 in the Senate and with no objections in the House, authorized the use of military force, stating that:", "[t]he President is authorized to use all necessary and appropriate force against those nations, organizations, or persons he determines planned, authorized, committed, or aided the terrorist attacks that occurred on September 11, 2001 or harbored such organizations or persons in order to prevent any future acts of international terrorism against the United States by such nations, organizations or persons.", "The Administration also sought United Nations (U.N.) backing for military action. On September 12, 2001, the U.N. passed Security Council Resolution 1368, expressing the Council's \"readiness to take all necessary steps to respond to the September 11 attacks.\" ", "When the Taliban refused the Bush Administration's demand to extradite Al Qaeda leader Osama bin Laden, the Administration launched military operations against the Taliban to \"disrupt the use of Afghanistan as a terrorist base of operations, and to attack the military capability of the Taliban regime.\" ", "Combat operations in Afghanistan began on October 7, 2001, with the launch of Operation Enduring Freedom (OEF). Initial military operations initially consisted primarily of U.S. air strikes on Taliban and Al Qaeda forces, facilitated by the cooperation between reported small numbers (about 1,000) of U.S. special operations forces and Central Intelligence Agency operatives. The purpose of these operations was to help Afghan forces opposed to the Taliban (led by an armed coalition known as the Northern Alliance) advance by directing U.S. air strikes on Taliban positions. In October 2001, about 1,300 Marines were deployed to pressure the Taliban in the southern province of Kandahar, but there were few pitched U.S.-Taliban battles. ", "Northern Alliance forces\u00e2\u0080\u0094despite promises that they would not enter Kabul\u00e2\u0080\u0094did so on November 12, 2001, to widespread popular approval. The Taliban subsequently lost the south and east to U.S.-supported Pashtun leaders, including Hamid Karzai. The Taliban regime ended on December 9, 2001, when Taliban head Mullah Omar and other leaders fled Kandahar, leaving it under tribal law. A provisional government was set up (see \" Constitution and Political System ,\" below) and on May 1, 2003, U.S. officials declared an end to \"major combat.\"", "From 2003 to mid-2006, U.S. and international troops (as part of the U.N.-mandated and NATO-led International Security Assistance Force, ISAF) trained nascent Afghan forces and fought relatively low levels of insurgent violence with focused combat operations mainly in the south and east. By late 2005, U.S. and partner commanders considered the insurgency mostly defeated and NATO assumed lead responsibility for security in all of Afghanistan during 2005-2006. Those optimistic assessments proved misplaced when violence increased in mid-2006. NATO-led operations during 2006-2008 cleared Taliban fighters from some areas but did not prevent subsequent reinfiltration by the Taliban, nor did preemptive combat and increased development work produce durable success. Taking into account the deterioration of the security situation, the United States and its partners decided to increase force levels."], "subsections": []}, {"section_title": "Obama Administration: \"Surge\" and Drawdown (2009-2014)", "paragraphs": ["Upon taking office, the Obama Administration declared that the Afghanistan mission was a high priority, but that the U.S. level of effort there would eventually need to be reduced. The Administration convened a 60-day inter-agency \"strategy review,\" chaired by former CIA analyst Bruce Riedel and co-chaired by then-Special Representative for Afghanistan and Pakistan Richard Holbrooke and then-Under Secretary of Defense for Policy Michele Flournoy. In response to that review, President Barack Obama announced a \"comprehensive\" strategy on March 27, 2009, that would require the deployment of an additional 21,000 U.S. forces. ", "In June 2009, U.S. Army General Stanley McChrystal, who headed U.S. Special Operations forces from 2003 to 2008, became the top U.S. and NATO commander in Afghanistan. In August 2009, General McChrystal delivered a strategy assessment recommending that the goal of the U.S. military should be to protect the population rather than to search out and combat concentrations of Taliban fighters, warning of the potential for \"mission failure\" in the absence of a fully resourced, comprehensive counterinsurgency strategy. His assessment stated that about 44,000 additional U.S. combat troops would be needed to provide the greatest chance for success. ", "The assessment set off debate within the Administration and launched another policy review. Some senior U.S. officials argued that adding many more U.S. forces could produce a potentially counterproductive sense of U.S. occupation. President Obama announced the following at West Point on December 1, 2009: ", "30,000 additional U.S. forces (a \"surge\") would be sent to \"reverse the Taliban's momentum\" and strengthen the Afghan National Defense and Security Forces (ANDSF); and beginning in July 2011, there would be a transition to Afghan security leadership and a corresponding drawdown of U.S. forces. ", "The troop surge brought U.S. force levels to 100,000, with most of the additional forces deployed to the south. When the surge was announced, the Afghan Interior Ministry estimated that insurgents controlled 13 of the country's 356 districts and posed a \"high-risk\" to another 133. The Taliban had named \"shadow governors\" in 33 out of 34 of Afghanistan's provinces, although some were merely symbolic. ", "Operations by U.S., NATO, and Afghan forces throughout 2010 and 2011 reduced areas under Taliban control substantially and the transition to Afghan security leadership began on schedule in July 2011. In concert with the transition, and asserting that the killing of Osama bin Laden represented a key accomplishment of the core U.S. mission, President Obama announced on June 22, 2011 that:", "U.S. force levels would fall to 90,000 (from 100,000) by the end of 2011. U.S. force levels would drop to 68,000 by September 2012. ", "In his February 2013 State of the Union message, President Obama announced that the U.S. force level would drop to 34,000 by February 2014, which subsequently occurred. Most partner countries drew down their forces at roughly the same rate and proportion as the U.S. drawdown, despite public pressure in some European countries to more rapidly reduce or end military involvement in Afghanistan. During 2010-2012, the Netherlands, Canada, and France ended their combat missions, but they continued to train the ANDSF until the end of 2014.", "On June 18, 2013, NATO and Afghanistan announced that Afghan forces were now taking the lead on security throughout all of Afghanistan. As international forces were reduced in 2014, Afghan and international officials expressed uncertainty about U.S. and partner plans for the post-2014 period. On May 27, 2014, President Obama clarified Administration plans by announcing the size of the post-2014 U.S. force and plan for a U.S. military exit according to the following timeline:", "The U.S. military contingent in Afghanistan would be 9,800 in 2015, deployed in various parts of Afghanistan, consisting mostly of trainers in the NATO-led \"Resolute Support Mission\" (RSM). The U.S. force would decline to about 5,000 by the end of 2016 and consolidate in Kabul and at Bagram Airfield. After 2016, the U.S. military presence would be consistent with normal security relations with Afghanistan (about 1,000 military personnel) under U.S. Embassy authority (without a separate military chain of command in country). Their mission would be to protect U.S. installations, process Foreign Military Sales (FMS) of weaponry to Afghanistan, and train the Afghans on that weaponry. ", "During 2014, the United States and its partners prepared for the end of the ISAF mission. U.S. airpower in country was reduced, ISAF turned over the vast majority of about 800 bases to the ANDSF, and the provincial reconstruction teams (PRTs) were turned over to Afghan institutions. "], "subsections": [{"section_title": "Bilateral Accords: Strategic Partnership Agreement (SPA) and Bilateral Security Agreement (BSA)", "paragraphs": ["On May 1, 2012, President Obama and then-President Hamid Karzai signed an Enduring Strategic Partnership Agreemen t (SPA) between Afghanistan and the United States. The signing followed a long negotiation that focused on resolving Afghan insistence on control over detention centers and a halt to or control over nighttime raids on insurgents by U.S. forces. In addition to provisions designating Afghanistan as a Major Non-NATO Ally, the agreement committed the two countries to negotiating a Bilateral Security Agreement (BSA ) that would detail the terms of U.S. engagement in Afghanistan. The BSA was approved by a loya jirga (consultative assembly) called by then-President Karzai in November 2013, though he then refused to sign; the agreement was eventually signed by President Ashraf Ghani as one of his first acts after taking office in September 2014. The BSA was considered as an executive agreement was not submitted for congressional approval.", "The BSA governs the United States' post-2014 presence in Afghanistan through the end of 2024 \"and beyond\" unless terminated by mutual written agreement or by either country with two years' written notice. The agreement does not set (or otherwise refer to) U.S. and partner force levels, but lays out the parameters and goals of the U.S. military mission and provides for U.S. access to Afghan bases. The BSA also stipulates that \"the United States shall have the exclusive right to exercise jurisdiction over such [U.S.] persons in respect of any criminal or civil offenses committed in the territory of Afghanistan.\" The BSA does not commit the United States to defend Afghanistan from attack from another country, but states that \"the United States shall regard with grave concern any external aggression or threat\" thereof. Some Afghan figures, including Karzai (who remains active in Afghan politics), advocate revising the BSA, but such efforts do not appear to have the support of the current Afghan government."], "subsections": []}]}, {"section_title": "Resolute Support Mission (2015-Present)", "paragraphs": ["The NATO-led ISAF ended at the close of 2014, and was replaced by Resolute Support Mission (RSM) on January 1, 2015. The legal framework for NATO's presence is based on a Status of Forces Agreement signed between the Afghan government and NATO in September 2014 and ratified by the Afghan parliament in November 2014. That agreement defines RSM as a \"non-combat training, advising and assistance mission,\" though combat operations by some U.S. forces, in support of Afghan forces, continue. "], "subsections": [{"section_title": "Alterations to the Drawdown Schedule and Rules of Engagement", "paragraphs": ["Concerns about Taliban gains after 2015 led to several changes to the U.S. mission in the final two years of the Obama Administration. ", "On March 24, 2015, in concert with the visit to Washington, DC of President Ghani and Chief Executive Officer Abdullah Abdullah, President Obama announced that U.S. forces would remain at a level of about 9,800 for all of 2015, rather than being reduced to 5,500 by the end of the year, as originally announced. In January 2016, the Obama Administration authorized U.S. commanders in Afghanistan to attack the local Islamic State affiliate, Islamic State-Khorasan Province (ISKP, more below) forces. In June 2016, President Obama authorized U.S. forces to conduct preemptive combat. According to then-Secretary of Defense Ashton Carter on July 12, 2016, U.S. forces were enabled to \"anticipate battlefield dynamics and ... deploy and employ their forces together [with the ANDSF] in a way that stops a situation from deteriorating [or] interrupts an enemy in the early stages of planning and formulating an attack.\" On July 6, 2016, President Obama again adjusted planned U.S. force levels, stating that the level would drop to 8,400 at the end of 2016, rather than to the 5,500 that was previously announced. The communique of the NATO summit in Warsaw, Poland (July 8-9, 2016), announced that other NATO countries would continue to support RSM beyond 2016, both with force contributions and donations to the ANDSF (the latter until 2020). No force or budget levels were specified in the declaration. "], "subsections": []}, {"section_title": "Developments during the Trump Administration", "paragraphs": ["In a national address on August 21, 2017, President Donald Trump announced a \"new strategy\" for Afghanistan and South Asia. Despite expectations that he would describe specific elements of his new strategy, particularly the prospects for additional troops, President Trump declared \"we will not talk about numbers of troops or our plans for further military activities.\" Some policymakers characterized the strategy as \"short on details\" and serving \"only to perpetuate a dangerous status quo.\" Others welcomed the decision, contrasting it favorably with proposed alternatives such as a full withdrawal of U.S. forces (which President Trump conceded was his \"original instinct\") or heavy reliance on contractors.", "Beyond additional troops, the strategy also gave broader authority for U.S. forces to operate independently of Afghan forces and \"attack the enemy across the breadth and depth of the battle space,\" expanding the list of targets to include those related to \"revenue streams, support infrastructure, training bases, [and] infiltration lanes.\" This was exercised in a series of operations, beginning in fall 2017, against Taliban drug labs. These operations, often highlighted by U.S. officials, sought to degrade what is widely viewed as one of the Taliban's most important sources of revenue, namely the cultivation, production, and trafficking of narcotics. Some analysts have questioned the impact of these strikes, which ended in late 2018. "], "subsections": []}]}, {"section_title": "Security Dynamics: The Taliban and Other Armed Groups", "paragraphs": ["Decades of instability, civil war, and weak central government control have contributed to the existence of a complex web of militant groups in Afghanistan. While the Taliban are by far the largest and best-organized, they operate alongside (and sometimes in competition with) other armed groups, including regional affiliates of both the Islamic State and Al Qaeda."], "subsections": [{"section_title": "Taliban Insurgency", "paragraphs": ["While U.S. commanders have asserted that the ANDSF performs well despite taking heavy casualties, Taliban forces have retained, and by some measures are increasing, their ability to contest and hold territory and to launch high-profile attacks. U.S. officials often have emphasized the Taliban's failure to capture a provincial capital since their week-long seizure of Kunduz city in northern Afghanistan in September 2015, but Taliban militants briefly overran two capitals, Farah and Ghazni, in May and August 2018, respectively. Then-Secretary of Defense James Mattis described the Taliban assault on Ghazni, which left hundreds dead, as a failure for the Taliban, saying \"every time they take [a city] ... they're unable to hold it.\" ", "Since at least early 2017, U.S. military officials have stated that the conflict is \"largely stalemated.\" Arguably complicating that assessment, the extent of territory controlled or contested by the Taliban has generally grown since 2016 by most measures (see Figure 3 ). In November 2015, the Special Inspector General for Afghanistan Reconstruction (SIGAR) began publishing in its quarterly reports a district-level assessment of stability in Afghanistan produced by the U.S. military. This assessment estimated the extent of Taliban control and influence in terms of both territory and population, and was typically accompanied by charts portraying those trends over time as well as a color-coded map of control/influence by district (see Figure 4 ). That data showed a gradual increase in the share of Afghan districts controlled, influenced, or contested by insurgents (46% as of October 2018, the last month such data was evidently collected, compared to 28% in November 2015). According to SIGAR's April 30, 2019 quarterly report, the U.S. military is \"no longer producing its district-level stability assessments of Afghan government and insurgent control and influence.\" SIGAR reports that it was told by the U.S. military that the assessment is no longer being produced because it \"was of limited decision-making value to the [U.S.] Commander.\"", "The Taliban have demonstrated considerable, and some observers would argue growing, tactical capabilities. Due to the high levels of casualties inflicted by the Taliban, the Trump Administration has reportedly urged Afghan forces to pull out of some isolated outposts and rural areas. Reports indicate that ANDSF fatalities have averaged 30-40 a day in recent months, and President Ghani confirmed in November 2018 that Afghan forces had suffered more than 28,000 fatalities since 2015. So-called \"green on blue\" attacks (insider attacks on U.S. and coalition forces by Afghan nationals) are a sporadic, but persistent, problem\u00e2\u0080\u0094several U.S. servicemen died in such attacks in 2018, as did 85 Afghan soldiers. In October 2018, General Miller was present at an attack inside the Kandahar governor's compound by a Taliban infiltrator who killed a number of provincial officials, including the powerful police chief Abdul Raziq; Miller was unhurt but another U.S. general was wounded. ", "The May 2016 death of then-Taliban head Mullah Mansour in a U.S. drone strike demonstrated Taliban vulnerabilities to U.S. intelligence and combat capabilities, although his death did not appear to have a measurable effect on Taliban effectiveness; it is unclear to what extent current leader Haibatullah Akhundzada exercises effective control over the group and how he is viewed within its ranks. "], "subsections": []}, {"section_title": "Haqqani Network", "paragraphs": ["Founded by Jalaluddin Haqqani, a mujahideen commander and U.S. ally during the war against the Soviet occupation, the Haqqani Network is a semiautonomous wing of the Afghan Taliban. As such, it has been cited by U.S. officials as a potent threat to U.S. and allied forces and interests, as well as a \"critical enabler of Al Qaeda.\" ", "Jalaluddin Haqqani served as a minister in the Taliban regime, and after 2001 reestablished a presence in the Pakistani tribal territory of North Waziristan. By 2006, he was credited as \"the architect of the Taliban's current attacks on U.S. and coalition forces in Afghanistan.\" Within a few years, Jalaluddin's son Sirajuddin took over the group's operations, becoming increasingly influential in setting overall insurgency strategy, and was selected as deputy leader of the Taliban in 2015. The Taliban announced the death of Jalaluddin, who reportedly had been ill for years, in September 2018.", "The Haqqani network is blamed for a number of major attacks, including a devastating May 2017 bombing in Kabul's diplomatic district that left over 150 dead and sparked violent protests against the government. The Haqqani network has historically targeted Indian interests in Afghanistan, reinforcing perceptions by some observers and officials that the group often acts as a tool of Pakistani foreign policy. In September 2011, then-Chairman of the Joint Chiefs of Staff Michael Mullen testified in front of the Senate Armed Services Committee that the Haqqani network acts \"as a veritable arm\" of Pakistan's main intelligence agency, the Inter-Services Intelligence Directorate (ISI). Additionally, it reportedly holds captive two professors (Timothy Weeks, an Australian, and American citizen Kevin King, who is reportedly seriously ill) kidnapped from the American University of Afghanistan in August 2016; and a journalist (Paul Overby) seized in 2014 after crossing into Afghanistan to try to interview the Haqqani leadership. ", "The faction's participation in a political settlement potentially could be complicated by its designation as a Foreign Terrorist Organization (FTO) under the Immigration and Naturalization Act. That designation was made on September 9, 2012, after the 112 th Congress enacted S. 1959 (Haqqani Network Terrorist Designation Act of 2012, P.L. 112-168 ), requiring an Administration report on whether the group met the criteria for FTO designation. "], "subsections": []}, {"section_title": "Islamic State-Khorasan Province", "paragraphs": ["Beyond the Taliban, a significant share of U.S. operations are aimed at the local Islamic State affiliate, known as Islamic State-Khorasan Province (ISKP, also known as ISIS-K), although experts debate the degree of threat the group poses. ", "ISKP (also referred to as ISIS-K) has been active in Afghanistan since mid-2014. ISKP was named as an FTO by the State Department on January 14, 2016. The group's presence in Afghanistan crystallized from several small Afghan Taliban and other militant factions that announced affiliation with the organization in 2013; ISKP presence grew further as additional Taliban factions defected to the group and captured some small areas primarily in eastern Afghanistan. ISKP has reportedly received financial assistance from the core organization formerly located in the self-declared \"caliphate\" in parts of Iraq and Syria. Estimates of the number of ISKP fighters generally range from 1,000 to 3,000. ", "To address the ISKP threat, U.S. commanders have had authorization since December 2015 to combat ISKP fighters by virtue of their affiliation with the Islamic State, whether or not these fighters pose an immediate threat to U.S. and allied forces. U.S. operations have repeatedly targeted the group's leaders, with three killed in less than a year: Hafiz Saeed Khan died in a July 2016 U.S. airstrike and successors Abdul Hasib and Abu Sayed were killed in April and July 2017, respectively. ISKP has survived these leadership losses and appears to be a growing factor in U.S. and Afghan strategic planning. ISKP was the target of the much publicized April 2017 use of a GBU-43 (also known as a Massive Ordnance Air Blast, or MOAB), reportedly the first such use of the weapon in combat. A number of U.S. military, as well as CIA personnel, have been killed in anti-ISKP operations.", "ISKP and Taliban forces have sometimes fought over control of territory or because of political or other differences. In April 2018, a U.S. air strike killed the ISKP leader (himself a former Taliban commander) in northern Afghanistan, Qari Hekmatullah. NATO described neighboring Jowzjan province as \"the main conduit for external support and foreign fighters from Central Asian states into Afghanistan.\" ISKP also has claimed responsibility for a number of large-scale attacks, many targeting Afghanistan's Shia minority. ISKP is also reported to have ambitions beyond Afghanistan; an unnamed U.S. intelligence officials was quoted in June 2019 as saying that, absent sustained counterterrorism pressure, \"Afghanistan's IS affiliate will be able to carry out a large-scale attack in the U.S. or Europe within the next year.\""], "subsections": []}, {"section_title": "Al Qaeda63", "paragraphs": ["While the Al Qaeda attacks of September 11 precipitated U.S. military operations in Afghanistan, the group has been a relatively minor player on the Afghan battlefield since. However, the relationship between Al Qaeda and the Taliban has important implications for U.S.-Taliban negotiations and a potential settlement. ", "From 2001 until 2015, Al Qaeda was considered by U.S. officials to have only a minimal presence (fewer than 100 members) within Afghanistan, operating mostly as a facilitator for insurgent groups and mainly in the northeast. However, in late 2015 U.S. Special Operations forces and their ANDSF partners discovered and destroyed a large Al Qaeda training camp in Kandahar Province\u00e2\u0080\u0094a discovery suggesting a stronger Al Qaeda presence in Afghanistan than had been generally understood. In April 2016, U.S. commanders publicly raised their estimates of Al Qaeda fighters in Afghanistan to 100-300, and said that relations between Al Qaeda and the Taliban had become increasingly close; Afghan estimates are generally higher. The United Nations reports that Al Qaeda, while degraded in Afghanistan and facing competition from ISKP, \"remains a longer-term threat.\"", "U.S. efforts to find remaining senior Al Qaeda leaders reportedly focus on bin Laden's successor Ayman al-Zawahiri, who is presumed to be on the Pakistani side of the border. While most successful U.S. strikes on high-ranking Al Qaeda operatives have taken place in Pakistan, several have been killed in Afghanistan in recent years, including operative Abu Bara Al Kuwaiti (October 2014, in Nangarhar Province); and Al Qaeda's commander for northeastern Afghanistan, Faruq Qahtani (October 2016). ", "Al Qaeda is allied with the Taliban; bin Laden pledged allegiance to Taliban founder Mullah Omar and bin Laden successor Ayman al Zawahiri has done the same with Omar's two successors, in turn. According to a January 2019 U.N. report, Al Qaeda \"continues to see Afghanistan as a safe haven for its leadership, based on its long-standing, strong ties with the Taliban.\" Some observers have noted operational cooperation between Al Qaeda and the Taliban, particularly in the east, in recent years. The AQ-Taliban alliance may complicate U.S. demands that the Taliban foreswear support for terrorism as part of a potential U.S. troop withdrawal deal; some analysts have recommended that \"as part of any final deal, the Taliban should be required to state, in no uncertain terms, its official position\" on Al Qaeda.", "Al Qaeda in the Indian Subcontinent (AQIS) is an affiliate of Al Qaeda based in and including members from various terrorist groups in South and Central Asia. Zawahiri announced the group's formation in 2014. In June 2016, the State Department designated the group as an FTO and its leader, Asim Umar, as a specially designated global terrorist. The large terrorist training camp found in Kandahar in 2015 was attributed by U.S. military officials to AQIS."], "subsections": []}]}, {"section_title": "Afghan National Defense and Security Forces (ANDSF)", "paragraphs": ["The primary objective of the post-2015 NATO-led Resolute Support Mission in Afghanistan is training, advising, and assisting the Afghan National Defense and Security Forces (ANDSF) in their struggle against the Taliban and other armed groups. ", "Funding the ANDSF costs an estimated $6 billion per year, of which the U.S. has provided about $4.5 billion in recent years. At the NATO summit in Warsaw in July 2016, U.S. partners pledged $1 billion annually for the ANDSF during 2017-2020. U.S. officials assess that Afghanistan is contributing its pledged funds\u00e2\u0080\u0094$500 million (as calculated in Afghan currency)\u00e2\u0080\u0094despite budgetary difficulties. At the 2012 NATO summit in Chicago, Afghanistan agreed to assume full financial responsibility for the ANDSF by 2024, though current security dynamics and economic trends make that unlikely.", "The Department of Defense (DOD), SIGAR, and others have reported on deficiencies of the ANDSF, citing challenges such as absenteeism, high casualties, illiteracy, inconsistent leadership, and a deficit of logistical capabilities, such as airlift, medical evacuation, resupply, and other associated functions. ANDSF units and personnel also have been associated with credible allegations of child sexual abuse and other potential human rights abuses. ", "A number of metrics related to ANDSF performance have been classified in recent years. In October 2017, SIGAR reported that \"in a significant development,\" U.S. officials \"classified or otherwise restricted information\" SIGAR had previously reported, such as casualty rates, personnel strength, and attrition within the ANDSF. U.S. officials have cited a request from the Afghan government as justification for the decision. Personnel figures and attrition rates for some ANDSF components have since been made available in SIGAR reports.", "Other public information about ANDSF capabilities is also generally not encouraging. Media reports indicate that ANDSF fatalities have averaged 30-40 a day in recent months, and President Ghani stated in January 2019 that more than 45,000 security personnel had paid \"the ultimate sacrifice\" since he took office in September 2014. Partly in response to those casualty rates, Afghan forces are reportedly shuttering small checkpoints (where the majority of successful Taliban attacks take place) in favor of larger bases in more secure territory. U.S. advisors have long advocated for such moves, although critics claim that these steps effectively cede swaths of the country to the Taliban. ", "The major components of the ANDSF are:", "Afghan National Army (ANA). The Afghan National Army has been built from scratch since 2002\u00e2\u0080\u0094it is not a direct continuation of the national army that existed from the nineteenth century until the Taliban era. That army disintegrated during the 1992-1996 mujah i d ee n civil war and the 1996-2001 Taliban period. Of its authorized size of 195,000, the ANA (all components) had about 190,000 personnel as of January 2019. Its special operations component, known as the Afghan Special Security Forces (ASSF) numbers nearly 21,000. The ASSF is trained by U.S. Special Operations Forces, and U.S. commanders say it might be one of the most proficient special forces in the region. Afghan special forces are utilized extensively to reverse Taliban gains, and their efforts reportedly have reportedly made up 70% to 80% of the fighting in recent years. A December 2018 DOD report assessed that ASSF \"misuse increased to unsustainable levels\" in late 2018, saying that the ASSF's deployment for such missions as static defense operations (in lieu of the conventional ANA) undermines anti-Taliban efforts.", "Afghan Air Force (AAF) . Afghanistan's Air Force is emerging as a key component of the ANDSF's efforts to combat the insurgency. The AAF has been mostly a support force but, since 2014, has increased its bombing operations in support of coalition ground forces, mainly using the Brazil-made A-29 Super Tucano. The force is a carryover from the Afghan Air Force that existed prior to the Soviet invasion, though its equipment was virtually eliminated in the 2001-2002 U.S. combat against the Taliban regime. Since FY2010, the United States has appropriated about $8.4 billion for the AAF, including $1.7 billion in FY2019. Still, equipment, maintenance, logistical difficulties, and defections continue to plague the Afghan Air Force, which has about 104 aircraft including four C-130 transport planes and 46 Mi-17 (Russian-made) helicopters. DOD plans to purchase up to 159 UH-160 Black Hawk helicopters for the AAF have been complicated by shortages of Afghan engineers and pilots. ", "Afghan National Police (ANP) . U.S. and Afghan officials believe that a credible and capable national police force is critical to combating the insurgency. DOD reports on Afghanistan assess that \"significant strides have been made in professionalizing the ANP.\" However, many outside assessments of the ANP are negative, asserting that there is rampant corruption to the point where citizens mistrust and fear the ANP. According to SIGAR, as of 2019, the U.S. has obligated $21.4 billion (in Afghanistan Security Forces Funds, ASFF) to support the ANP since FY2005. The force is largely supported by the U.N.-managed Law and Order Trust Fund for Afghanistan (LOTFA).", "The U.S. police training effort was first led by State Department/Bureau of International Narcotics and Law Enforcement (INL), but DOD took over the lead role in April 2005. Police training has been highlighted by SIGAR and others as a potentially problematic area where greater interagency cooperation is needed. The target size of the ANP, including all forces under the ANP umbrella (except the Afghan Local Police, which are now under the command of the Ministry of the Interior), is 124,000; as of December 2018, it has 116,000 personnel. According to a December 2018 DOD assessment, women reportedly have a higher presence in the ANP than they do in the ANA. ", "Afghan Local Police (ALP) . In 2008, the failure of several police training efforts led the Afghan government, with U.S. assistance, to support local forces in protecting their communities, despite some reluctance to create local militias, which previously had been responsible for human rights abuses in Afghanistan. The ALP concept grew out of earlier programs to organize and arm local civilians to provide security in their home districts; fighters are generally selected by local elders. The current number of ALP members (known as \"guardians\") is around 28,000. ", "The ALP have the authority to detain criminals or insurgents temporarily, and transfer them to the ANP or ANA, but have been cited by Human Rights Watch and other human rights groups, as well as by DOD investigations, for killings, rapes, arbitrary detentions, land grabs, and sexual abuse of young boys. Others criticize the ALP as incompatible with the goal of creating nationalized defense and security forces and characterize ALP forces as unaccountable militias serving the interests of local strongmen. There have been discussions around incorporating ALP elements into the ANDSF. The ALP are funded by the United States at approximately $60 million a year (ASFF funds disbursed by CSTC-A). "], "subsections": []}]}, {"section_title": "Regional Dimension", "paragraphs": ["Regional developments and relationships have long influenced events inside Afghanistan. The Trump Administration has linked U.S. policy in Afghanistan to broader regional dynamics, particularly as they relate to South Asia. Key states include Afghanistan's most important neighbors, Pakistan and Iran; the larger regional players India, Russia, and China; and the politically influential Gulf States."], "subsections": [{"section_title": "Pakistan", "paragraphs": ["The neighbor that is considered most crucial to Afghanistan's security is Pakistan, which has played an active and, by many accounts, negative role in Afghan affairs for decades. Experts and officials debate the extent of Pakistan's commitment to Afghan stability in light of its attempts to exert control over events in Afghanistan through ties to insurgent groups. DOD reports on Afghanistan's stability repeatedly have identified Afghan militant safe havens in Pakistan as a key threat to Afghan stability.", "Afghanistan-Pakistan Relations. Many Afghans approved of Pakistan's backing the mujahideen that forced the Soviet withdrawal in 1988-1989, but later came to resent Pakistan as one of three countries to formally recognize the Taliban as the legitimate government. (Saudi Arabia and the United Arab Emirates are the others.) Relations improved after Pakistani President Pervez Musharraf left office in 2008 but remain troubled as Afghan leaders continue to accuse Pakistan of supporting the Taliban and meddling in Afghan affairs. On several occasions, President Ghani has accused Pakistan of waging an \"undeclared war\" on Afghanistan.", "Some analysts argue that Pakistan sees Afghanistan as potentially providing it with \"strategic depth\" against India. Pakistan has long asserted that India uses its diplomatic facilities in Afghanistan to recruit anti-Pakistan insurgents, and that India is using its aid programs to build anti-Pakistan influence there. Long-standing Pakistani concerns over Indian activities in Afghanistan are being exacerbated by President Trump's pledge to further develop the United States' strategic partnership with India as part of the new U.S. approach to Afghanistan and South Asia.", "About 2 million Afghan refugees have returned from Pakistan since the Taliban fell, but 1.4 million registered refugees remain in Pakistan, according to the United Nations, along with perhaps as many as 1 million unregistered refugees. Many of these refugees are Pashtuns, the ethnic group that makes up about 40% of Afghanistan's 35 million people and 15% of Pakistan's 215 million; Pashtuns thus represent a plurality in Afghanistan but are a relatively small minority among many others in Pakistan, though Pakistan's Pashtun population is considerably larger than Afghanistan's. Pakistan condemns as interference statements by President Ghani (who is Pashtun) and other Afghan leaders about an ongoing protest campaign by Pakistani Pashtuns for greater civil and political rights. ", "Afghanistan-Pakistan relations are also complicated by the two countries' long-running dispute over their shared 1,600-mile border, the \"Durand Line.\" Pakistan, the United Nations, and others recognize the Durand Line as an international boundary, but Afghanistan does not. Afghanistan contends that the Durand Line, a border agreement reached between the British Empire and Afghanistan in 1893, was drawn unfairly to separate Pashtun tribes and should be renegotiated. Tensions between the two neighbors have erupted several times in recent years, most recently in 2017, when clashes at the Chaman border crossing (which sits on the Durand Line) reportedly led to civilian and military casualties on both sides. Previous agreements led to efforts to deconflict the situation, but such bilateral mechanisms evidently have proven insufficient. Pakistan claims to have established nearly 1,000 border posts along the Durand Line, nearly five times as many as operated by Afghanistan.", "Pakistan and U.S. Policy in Afghanistan. For several years after the September 11, 2001 attacks, Pakistani cooperation with the United States against Al Qaeda was, arguably, relatively effective. Pakistan arrested more than 700 Al Qaeda figures after the September 11 attacks and allowed U.S. access to Pakistani airspace, some ports, and some airfields for the major combat phase of OEF. However, traditional support for the Taliban by elements of the Pakistani government and security establishment caused strains with the U.S. that were compounded by the May 1, 2011, U.S. raid that killed Osama bin Laden in Pakistan. Relations worsened further after a November 26, 2011, incident in which a U.S. airstrike killed 24 Pakistani soldiers, and Pakistan responded by closing border crossings, suspending participation in the border coordination centers, and boycotting the December 2011 Bonn Conference. Relations improved from the 2011 low in subsequent years but have remained tense.", "President Trump, in announcing a new Afghanistan strategy in August 2017, declared that \"we can no longer be silent about Pakistan's safe haven for terrorist organizations,\" and that while \"in the past, Pakistan has been a valued partner ... it is time for Pakistan to demonstrate its commitment to civilization, order, and to peace.\" Despite that praise for Pakistan as a \"valued partner,\" and U.S. other officials hailing successful Pakistani efforts to secure the release of several Americans held by the Haqqanis in Afghanistan in October 2017, the Trump Administration announced plans in January 2018 to suspend security assistance to Pakistan. That decision has impacted hundreds of millions of dollars of aid. ", "Beyond the issue of aid (which had been withheld in the past, to little apparent effect), observers have speculated about such measures as reexamining Pakistan's status as a major non-NATO ally, increasing U.S. drone strikes on targets within Pakistan, and imposing sanctions on Pakistani officials. Pakistani officials and others warn that such measures could be counterproductive, highlighting the potential geopolitical costs of increasing pressure on Pakistan, especially as they relate to U.S. counterterrorism efforts and Pakistan's critical role in facilitating U.S. ground and air lines of communication to landlocked Afghanistan. "], "subsections": []}, {"section_title": "Iran", "paragraphs": ["Iran has long sought to exert its historic influence over western Afghanistan and to protect Afghanistan's Shia minority. Tensions between Iran and the U.S., whose presence in Afghanistan has long concerned Tehran, may be driving Iran's reported attempts to support the Taliban, its erstwhile foe. ", "Iran historically opposed the Taliban, which Iran saw as a threat to its interests in Afghanistan, especially after Taliban forces captured the western city of Herat in September 1995, and Iran supported the anti-Taliban Northern Alliance with fuel, funds, and ammunition. In September 1998, Iranian and Taliban forces nearly came into direct conflict when Taliban forces killed several Iranian diplomats in the course of the Taliban's offensive in northern Afghanistan. Iran massed forces at the border and threatened military action, but the crisis cooled without a major clash. Iran offered search and rescue assistance in Afghanistan during the U.S.-led war to topple the Taliban, and it also allowed U.S. humanitarian aid to the Afghan people to transit Iran. Iran helped broker Afghanistan's first post-Taliban government, in cooperation with the United States, at the December 2001 Bonn Conference. ", "At the same time, Iran has had diplomatic contacts with the Taliban since at least 2012, when Iran allowed a Taliban office to open in Iran, and high-level Taliban figures have visited Iran. While some analysts see the contacts as Iranian support of the insurgency, others see them as an effort to exert some influence over reconciliation efforts. Iran likely seeks to ensure that U.S. forces cannot use Afghanistan as a base from which to pressure or attack Iran. Since at least early 2017, however, U.S. officials have reported more active Iranian backing for Taliban elements, particularly in western Afghanistan. In November 2018, Trump Administration officials displayed a number of Iranian-origin rockets that they alleged had been provided to the Taliban.", "Iran's support of Taliban fighters, many of whom are Pashtun, is in contrast with Iran's traditional support of non-Pashtun Persian-speaking and Shia factions in Afghanistan. For example, Iran has funded pro-Iranian armed groups in the west and has supported Hazara Shias in Kabul and in Hazara-inhabited central Afghanistan, in part by providing scholarships and funding for technical institutes as well as mosques. There are consistent allegations that Iran has funded Afghan provincial council and parliamentary candidates in areas dominated by the Persian-speaking and Shia minorities. ", "Even as it funds anti-government groups as a means of pressuring the United States, Iran has built ties to the Afghan government. President Ghani generally has endorsed his predecessor's approach on Iran; Karzai called Iran a \"friend\" of Afghanistan and said that Afghanistan must not become an arena for disputes between the United States and Iran. At other times, Afghanistan and Iran have had disputes over Iran's efforts to expel Afghan refugees. There are approximately 1 million registered Afghan refugees in Iran, with as many as 2 million more unregistered. Iran's ties to the Shia community in Afghanistan have facilitated its recruitment of Afghan Shias to fight on behalf of the Asad regime in Syria, though there is some evidence that Shia Afghan refugees have been coerced into joining the war effort (see textbox)."], "subsections": []}, {"section_title": "India", "paragraphs": ["India's past involvement in Afghanistan reflects its long-standing concerns about potential Pakistani influence and Islamic extremism emanating from Afghanistan, though its current role is focused on development. India also views Afghanistan as a trade and transit gateway to Central Asia, but Pakistan blocks a direct route, so India has sought to develop Iran's Chabahar Port.", "India supported the Northern Alliance against the Taliban in the mid-1990s and retains ties to Alliance figures. India saw the Afghan Taliban's hosting of Al Qaeda during 1996-2001 as a major threat because of Al Qaeda's association with radical Islamic organizations in Pakistan that seek to end India's control of part of the disputed territories of the former princely state of Jammu and Kashmir. Some of these groups have committed major acts of terrorism in India, including the attacks in Mumbai in November 2008 and in July 2011. ", "Afghanistan has sought to strengthen its ties to India\u00e2\u0080\u0094in large part to access India's large and rapidly growing economy\u00e2\u0080\u0094but has sought to do so without causing a backlash from Pakistan. In October 2011, Afghanistan and India signed a \"Strategic Partnership.\" The pact affirmed Pakistani fears by giving India, for the first time, a formal role in Afghan security; it provided for India to train ANDSF personnel, of whom thousands have been trained since 2011. However, India has resisted playing a greater role in Afghan security, probably to avoid becoming ever more directly involved in the conflict in Afghanistan or inviting Pakistani reprisals. ", "India's involvement in Afghanistan is dominated by development issues. India is the fifth-largest single country donor to Afghan reconstruction, funding projects worth over $3 billion. Indian officials assert that their projects are focused on civilian, not military, development and are in line with the development priorities set by the Afghan government. As part of the new U.S. strategy for Afghanistan, President Trump called in August 2017 for India to \"help us more with Afghanistan, especially in the area of economic assistance and development,\" though he also derided Indian aid to Afghanistan in January 2019.", "Prime Minister Modi visited Afghanistan in December 2015 and June 2016 to inaugurate major India-sponsored projects, including the new parliament complex in Kabul and the Afghan-India Friendship Dam in Herat province. In May 2016, India, Iran and Afghanistan signed the Chahbahar Agreement, under which India is to invest $500 million to develop Iran's Chahbahar port on the Arabian Sea. That port is designed to facilitate increased trade between India and Afghanistan, bypassing Pakistan. The Trump Administration is providing India with a waiver under applicable Iran sanctions laws to be able to continue to develop the port."], "subsections": []}, {"section_title": "Russia", "paragraphs": ["For years Russia tacitly accepted the U.S. presence in Afghanistan as furthering the battle against radical Islamists in the region. Recently, however, in the context of renewed U.S.-Russian rivalry, Russia has taken a more active role both in the conflict (including providing some political and perhaps material support for the Taliban) and in efforts to bring it to a negotiated end.", "During the 1990s, after the Soviet Union's 1989 withdrawal from Afghanistan and subsequent breakup (see Appendix B ), Russia supported the Northern Alliance against the Taliban with some military equipment and technical assistance in order to blunt Islamic militancy emanating from Afghanistan. After 2001, Russia agreed not to hinder U.S. military operations, later cooperating with the United States in developing the Northern Distribution Network supply line to Afghanistan. About half of all ground cargo for U.S. forces in Afghanistan flowed through the Northern Distribution Network from 2011 to 2014, despite the extra costs as compared to the route through Pakistan. Nevertheless, Russian-U.S. collaboration in Afghanistan, a relative bright spot in the two countries' relationship, has suffered in light of a more general deterioration of bilateral ties.", "Moscow has taken a markedly more assertive role in Afghanistan since at least late 2015. U.S. officials have differed in how they characterize both the nature of and motivation for Russia's actions, but there appears to be widespread agreement that they represent a challenge to U.S. goals. Former Secretary Mattis said that Russia was \"choosing to be strategic competitors\" with the United States in Afghanistan, while former U.S. commander General Nicholson said the Russians were motivated by a desire to \"undermine the United States and NATO.\" Other analysts have noted Russian anxieties about a potential long-term U.S. military presence in Central Asia, a region that has been in Moscow's sphere of influence since the 19 th century. The Russian government frames its renewed interest in Afghanistan as a reaction to the growth of ISKP, for which Russia faults the United States. However, Russian descriptions of ISKP strength and geographic location generally surpass estimates by the United States and others, perhaps overstating the threat to justify supporting the Taliban, which Russia may see as less of a direct danger. ", "The Washington Post, citing unnamed U.S. defense officials, reported in 2017 that Russia had provided weapons (including heavy machine guns) to the Taliban ostensibly to be used against the Islamic State affiliated fighters, but that the weapons had surfaced in places far from ISKP strongholds, like Helmand province. Russia had previously condemned such claims as \"groundless\" and \"absurd fabrications;\" a Taliban spokesman also denied the reports, saying \"our contacts with Russia are for political and diplomatic purposes only.\" General Nicholson echoed such reports in a March 2018 interview, saying, \"We've had weapons brought to this headquarters and given to us by Afghan leaders and said, this was given by the Russians to the Taliban.\"", "Russia also has sought to establish itself as a player in Afghanistan by its efforts to bring about a negotiated settlement. In December 2016, Moscow hosted Chinese and Pakistani officials in a meeting that excluded Afghan representatives, drawing harsh condemnation from the Afghan government. Significantly, Russia has also hosted Taliban officials for talks in Moscow, in February and May 2019\u00e2\u0080\u0094meetings in which Afghan government representatives did not participate."], "subsections": []}, {"section_title": "China", "paragraphs": ["China's involvement in Afghanistan, with which it shares a small, remote border, is motivated by several interests, of which reducing what China perceives as a threat from Islamist militants in Afghanistan and securing access to Afghan minerals and other resources are considered the most important. ", "Since 2012, China has deepened its involvement in Afghan security issues and has taken on a more prominent role as a potential mediator in Afghan reconciliation, though its role in both is still relatively modest. In 2012, China signed a series of agreements with Afghanistan, one of which reportedly promised Chinese training and funding for Afghan forces, though some reports, citing participants, question how beneficial that training is. \u00c2\u00a0In October 2014, China hosted Ghani for his first working trip abroad as president, during which China agreed to provide $330 million in bilateral aid over the coming three years, in addition to other forms of support. As a consequence of that visit, some Taliban figures reportedly visited China, apparently accompanied by Pakistani security officials, as part of an effort to promote an Afghan political settlement. ", "In 2018, Chinese officials denied reports of plans to build a military base in the Wakhan Corridor, a sparsely inhabited sliver of Afghanistan with which China has a 47-mile border, saying, \"no Chinese military personnel of any kind on Afghan soil at any time.\" China did agree to help Afghanistan stand up a \"mountain brigade\" in the Wakhan Corridor to take on any Islamist fighters who return to the country from the Middle East. China fears that some of the returned fighters may be Chinese nationals who may be planning attacks in China's northwestern region of Xinjiang, across the border from Afghanistan. In a September 2018 interview with Reuters, Afghanistan's ambassador to Beijing said China will be doing \"some training\" of Afghan troops as part of that effort, but in China, rather than in Afghanistan, as some reports had suggested. ", "Looking ahead, China may be seeking to play a larger role in reconciliation efforts in Afghanistan; China has considerable influence with its ally Pakistan, which is generally considered the most important regional player in the Afghan conflict. China participates in various multilateral fora dedicated to fostering Afghan peace talks, such as the Quadrilateral Coordination Group (comprising representatives from Afghanistan, China, Pakistan, and the United States). Chinese officials reportedly have met with Taliban representatives several times in the past year as well. ", "Many experts see China's activities in Afghanistan as primarily economically driven. Chinese delegations continue to assess the potential for new investments in such sectors as mining and energy. The cornerstone of China's investment to date has been the development of the Aynak copper mine south of Kabul, but that project has stalled over contractual disputes, logistical problems, and some security issues. Additionally, prospective transportation and trade routes through Afghanistan comport with China's Belt and Road Initiative and previous U.S. efforts to establish a similar New Silk Road. Some experts argue that shared U.S. and Chinese interests in a stable Afghanistan represent a potential area for Sino-American cooperation."], "subsections": []}, {"section_title": "Persian Gulf States", "paragraphs": ["At times the Gulf States have been considered a key part of the effort to stabilize Afghanistan, though donations by Gulf residents have been a major source of Taliban funding. Gulf States have also contributed development funds and have influence with some Afghan clerics and factions. ", "Saudi Arabia has a long history of involvement in Afghanistan; it channeled hundreds of millions of dollars to the mujahideen in the 1980s during the war against the Soviet occupation, and was one of three countries to formally recognize the Taliban government. Saudi Arabia later brokered some of the negotiations between the Afghan government and \"moderate\" Taliban figures. More recently, however, Saudi officials have described the Taliban as \"armed terrorists,\" though some critics allege that the kingdom has not taken measures to stop private donors in the Kingdom from giving financial support to the Taliban. The United Arab Emirate s (UAE) , another country that recognized the Taliban regime, deployed a limited number of troops and aircraft to support NATO security missions in southern Afghanistan. The UAE has donated over $250 million to Afghanistan since 2002 for housing, health care, and education projects. UAE officials were reportedly discussing the UAE aid program for southern Afghanistan at the time of the January 10, 2017 bombing at the Kandahar governor's guest house that killed at least six UAE diplomats, including the UAE's Ambassador to Afghanistan. Qatar did not recognize the Taliban and was not regarded as a significant player on the Afghanistan issue until 2011. Senior Taliban figures opened an informal \"political office\" in Doha, with U.S. acquiescence, as part of efforts to establish talks with the Taliban in 2013. Qatar also has played host to most of the substantive U.S.-Taliban talks being overseen by Special Representative Khalilzad. "], "subsections": []}, {"section_title": "Multilateral Fora", "paragraphs": ["The United States has encouraged Afghanistan's neighbors to support a stable and economically viable Afghanistan and to include Afghanistan in regional security and economic organizations and platforms. Afghanistan has sought to increase its integration with neighboring states through participation in other international fora, including the Shanghai Cooperation Organization (SCO), a security coordination body that includes Russia, China, Uzbekistan, Tajikistan, Kazakhstan, and Kyrgyzstan, to which Afghanistan was granted full observer status in 2012. ", "In addition, several regional meetings series have been established between the leaders of Afghanistan and neighboring countries. These include summit meetings between Afghanistan, Pakistan, the U.S., and China (the Quadrilateral Coordination Group, or QCG). The Quadrilateral Coordination Group met for the sixth time in October 2017. Russia convened a meeting with Pakistan and China to discuss Afghanistan in December 2016 (more below), drawing condemnation from the Afghan government, which was not invited to participate; Afghanistan was invited to, and attended, the second (February 2017) and third (April 2017) meetings, though the United States declined to attend. Economically, the U.S. has emphasized the development of a Central Asia-South Asia trading corridor in an effort to keep Afghanistan stable and economically vibrant as donors wind down their involvement. "], "subsections": []}]}, {"section_title": "Reconciliation Efforts", "paragraphs": ["For years, the Afghan government, the United States, and various neighboring states have engaged in efforts to bring about a political settlement with insurgents. As of July 2019, U.S. officials, led by Special Representative for Afghanistan Reconciliation Zalmay Khalilzad, are currently engaged in direct talks with the Taliban in the most serious discussions to end the U.S. military effort there since it began. However, the Taliban still refuse to negotiate with representatives of the Afghan government , which they seek to delegitimize."], "subsections": [{"section_title": "Afghan Government Initiatives", "paragraphs": ["The Afghan government has overseen several initiatives aimed at bringing the war to an end, including a February 2018 offer from President Ghani to negotiate with the Taliban without preconditions, but there does not appear to have been any substantive engagement between Taliban and Afghan leaders to date.", "On September 5, 2010, an \"Afghan High Peace Council\" (HPC) was formed to oversee the settlement and reintegration process. Then-President Karzai appointed former president Burhanuddin Rabbani to head it, in part to gain crucial support for negotiations with the Taliban; Rabbani was assassinated in September 2011. The HPC was significantly reorganized and effectively relaunched in 2016; at the time, one prominent Afghanistan analyst described it as a \"side-show in the peace process,\" a position that seemed to be confirmed in 2018 when that same analyst assessed that \"there will be no HPC role in the negotiations\" the Afghan government is attempting to start with the Taliban.", "The 2016 reconciliation with the government of one insurgent faction, Hizb-e-Islami-Gulbuddin (HIG), led by former mujah ideen party leader Gulbuddin Hekmatyar, was seen as a possible template for further work toward a political settlement. A former muja hideen commander who is accused of committing human rights abuses during the Afghan civil war of the 1990s, Hekmatyar allied his fighters with the Taliban after 2001, although HIG was not a major factor on the Afghanistan battlefield. In 2010, Hekmatyar signaled his openness to reconciliation with Kabul, and Hekmatyar instructed followers to vote in the 2014 presidential elections. On September 22, 2016, after months of negotiations, Afghan officials and Hekmatyar representatives signed a 25-point reconciliation agreement; U.N. sanctions against Hekmatyar were dropped in February 2017. In May 2017, Hekmatyar returned to Kabul, rallying thousands of supporters at a speech in which he criticized the Afghan government. Hekmatyar declared his candidacy for the 2019 presidential election in January 2019.", "The Taliban have maintained their long-standing refusal to negotiate with representatives of the Afghan government, which they characterize as a corrupt and illegitimate puppet of foreign powers, and Kabul is not directly involved in the ongoing U.S.-Taliban negotiations (more below). Some observers have criticized that arrangement; former U.S. Ambassador to Afghanistan Ryan Crocker argued that by not insisting on the inclusion of the Afghan government in these negotiations \"we have ourselves delegitimized the government we claim to support,\" and advocated that the U.S. halt talks until the Taliban agree to include the Afghan government. A planned meeting between as many as 200 Afghan delegates, including some Afghan officials (in their personal capacity), and the Taliban in Doha collapsed in April 2019 when Taliban representatives objected at the last minute to the size and makeup of the group; that meeting has been postponed indefinitely. A meeting between 50 Afghans and 17 Taliban representatives took place in July 2019; the Afghan delegation included some government officials, who participated in a personal capacity. The two-day \"Intra-Afghan Conference for Peace\" concluded with a joint statement that stressed the importance of an intra-Afghan settlement, and was hailed by Khalilzad as a \"big success.\" ", "Afghan President Ashraf Ghani has promised that his government will not accept any settlement that limits Afghans' rights. In a January 2019 televised address, he further warned that any agreement to withdraw U.S. forces that did not include Kabul's participation could lead to \"catastrophe,\" pointing to the 1990s-era civil strife following the fall of the Soviet-backed government that led to the rise of the Taliban (see textbox above). President Ghani's concern about being excluded from the talks surfaced in mid-March when his national security advisor accused Khalilzad of \"delegitimizing the Afghan government and weakening it,\" and harboring political ambitions within Afghanistan, leading to a sharp rebuke from the State Department. According to a former State Department official, \"The real issue is not the personality of an American diplomat; the real issue is a policy divergence,\" namely, Afghans' concerns about the potential U.S. withdrawal."], "subsections": []}, {"section_title": "U.S.-Taliban Talks", "paragraphs": ["The first direct meetings between U.S. and Taliban representatives began in 2010, centered largely on the issues of a prisoner exchange and the opening of a Taliban political office in Doha, Qatar. Multiple factors, including opposition from the Afghan government led by then-President Hamid Karzai, caused the collapse of talks in March 2012. Qatari and Pakistani mediation led to a 2013 agreement to allow the Taliban to open the Doha office, but because the Taliban opened that office in June 2013 with the trappings of an official embassy, in direct violation of the terms of the agreement, the Qatari government shuttered the office less than a month later. In June 2014, Qatar coordinated the release of U.S. prisoner Bowe Bergdahl in exchange for five high-ranking Taliban officials imprisoned at Guantanamo Bay\u00e2\u0080\u0093individuals who are now part of the Taliban team negotiating with the United States in Doha. No further talks between U.S. and Taliban officials occurred under the Obama Administration."], "subsections": [{"section_title": "Developments under the Trump Administration", "paragraphs": ["In President Trump's August 2017 speech laying out the new strategy for Afghanistan, he referred to a \"political settlement\" as an outcome of an \"effective military effort,\" but did not elaborate on what U.S. goals or conditions might be as part of this putative political process. In remarks the next day, then-Secretary of State Rex Tillerson rejected the idea of preconditioning talks on the Taliban's acceptance of certain arrangements, saying \"the Government of Afghanistan and the Taliban representatives need to sit down and sort this out. It's not for the U.S. to tell them it must be this particular model, it must be under these conditions.\" ", "The Trump Administration decided in July 2018 to enter into direct negotiations with the Taliban, without Afghan government representatives. This came almost a year after the President announced a new strategy for South Asia that many interpreted as a sign of renewed American commitment to Afghanistan. With no progress on the battlefield, the Trump Administration reversed the long-standing U.S. position that any peace process would have to be \"Afghan owned and Afghan led,\" and the first high-level, direct U.S.-Taliban talks occurred in Doha in July 2018. The September 2018 appointment by Secretary of State Mike Pompeo of Ambassador Zalmay Khalilzad, the Afghan-born former U.S. Ambassador to Afghanistan under President George W. Bush, as Special Representative for Afghanistan Reconciliation added more momentum to this effort.", "Since his appointment, Khalilzad has held a near-continuous series of meetings with the Afghan, Pakistani, and other regional governments, as well as with Taliban representatives. After six days of negotiations in Doha in January 2019, Khalilzad stated that, \"The Taliban have committed, to our satisfaction, to do what is necessary that would prevent Afghanistan from ever becoming a platform for international terrorist groups or individuals,\" in return for which U.S. forces would eventually fully withdraw from the country. Khalilzad later cautioned that \"we made significant progress on two vital issues: counter terrorism and troop withdrawal. That doesn't mean we're done. We're not even finished with these issues yet, and there is still work to be done on other vital issues like intra-Afghan dialogue and a complete ceasefire.\" ", "After a longer series of talks that ended on March 12, 2019, Khalilzad announced that an agreement \"in draft\" had been reached on counterterrorism assurances and U.S. troop withdrawal. He noted that after the agreement is finalized, \"the Taliban and other Afghans, including the government, will begin intra-Afghan negotiations on a political settlement and comprehensive ceasefire.\" ", "It remains unclear what kind of political arrangement could satisfy both Kabul and the Taliban to the extent that the latter fully abandons its armed struggle. The Taliban have given contradictory signs, with one spokesman saying in January 2019 that the group is \"not seeking a monopoly on power\" and another in May speaking of the group's \"determination to re-establish the Islamic Emirate in Afghanistan.\" Still, many Afghans, especially women, who remember Taliban rule and oppose the group's policies and beliefs, remain wary. "], "subsections": []}]}]}, {"section_title": "Afghan Governance and Politics", "paragraphs": ["Political contention among Afghans can be seen as both a sign of the country's U.S.- and internationally supported democratic development as well as a troubling reminder of the country's fractured past and a potential impediment to peace."], "subsections": [{"section_title": "Constitution and Political System", "paragraphs": ["During Taliban rule (1996-2001), Afghanistan was run by a small group of mostly Pashtun clerics loyal to Mullah Mohammad Omar, who remained based in Kandahar. No representative body was functioning, and government offices were minimally staffed and lacked modern equipment. The ouster of that government by U.S. forces and their Afghan partners in late 2001 paved the way for the success of a long-stalled U.N. effort to form a broad-based Afghan government. ", "In November 2001, after the Taliban government collapsed, the United Nations invited major Afghan factions, most prominently the Northern Alliance and allies of former King Zahir Shah\u00e2\u0080\u0094but, notably, not the Taliban\u00e2\u0080\u0094to an international conference in Bonn, Germany. There, on December 5, 2001, the factions signed the \"Bonn Agreement\" which authorized an international peacekeeping force and called for a loya jirga (consultative assembly) to establish a Transitional Authority to administer the country until a new constitution could be drafted. That loya jirga elected Afghan Interim Administration chairman Hamid Karzai as president in June 2002, and a subsequent jirga approved a new constitution, establishing the Islamic Republic of Afghanistan, in January 2004. ", "The Afghan constitution sets up a presidential system, with an elected president and bicameral national legislature, the 259-seat lower house of which ( Wolesi Jirga ) is popularly elected. The president serves a five-year term, with a two-term limit, and there are two vice presidents. The president has broad powers. Under article 64, he has the power to appoint all \"high-ranking officials,\" which includes not only cabinet ministers but also members of the Supreme Court, judges, provincial governors and district governors, local security chiefs, and members of supposedly independent commissions such as the Independent Election Commission and the Afghan Independent Human Rights Commission (AIHRC). These appointments are constitutionally subject to confirmation by the National Assembly.", "To some extent, the National Assembly can check the powers of the president, although many observers assert that it has been unable to limit presidential authority. Both the upper and lower houses are required to pass laws and the national budget. The National Assembly has often tried to assert its institutional strength, such as by holding a March 2006 vote to require the cabinet to be approved individually, rather than en bloc , increasing opposition leverage. Votes of no-confidence against ministers, which under Article 92 of the Afghan constitution can be proposed by 20% of lower house members, have often affirmed these powers, with several of Karzai's and Ghani's ministers blocked or removed from office. Because it tends to be composed of more established, notable Afghans who are traditionalist in their political outlook, the upper house has tended to be more politically conservative than the lower house, and more supportive of the president (who appoints a third of its members under the constitution)."], "subsections": []}, {"section_title": "Politics of Ethnicity and Elections", "paragraphs": ["Afghanistan's active political scene is often viewed through the prism of the country's complex ethnic makeup, itself a sensitive political issue. The Afghan constitution references 14 ethnicities as well as \"other tribes,\" (Article 4) and designates six languages (Uzbek, Turkmen, Pachaie, Nuristani, Baluchi, and Pamiri) as possible third official languages (Article 16) after the two official national languages, Pashto and Dari (the Afghan variant of Persian). ", "Reliable figures for the ethnic breakdown of Afghanistan are difficult to come by and, as in many other parts of the world, are heavily freighted with political ramifications. For example, the CIA World Factbook does not provide any estimates at all, stating that \"current statistical data on the sensitive subject of ethnicity in Afghanistan are not available.\" ", "There is generally widespread agreement that four ethnic groups are most dominant in Afghanistan. In descending order of size, they are Pashtuns, Tajiks, Hazaras, and Uzbeks. One representative estimate gives their size as 42%, 27%, 9%, and 9% of the Afghan population, respectively. ", "Pashtuns are generally acknowledged to be the largest ethnic group in Afghanistan, and have traditionally dominated Afghan governance; Presidents Hamid Karzai (2003-2014) and Ashraf Ghani (2014-present) are both ethnic Pashtuns. Pashtuns are concentrated in the south and east of the country, along the border with Pakistan, which has a sizeable Pashtun minority of its own. The Taliban is largely, though not exclusively, Pashtun. Tajiks , who generally speak Dari, are thought to be the second largest group in Afghanistan. The Northern Alliance that opposed the Taliban was led by Tajiks like Ahmad Shah Massoud, and today's Tajik-dominated Jamiat-e-Islami party features significant figures like Foreign Minister Salahuddin Rabbani, former Balkh governor Atta Mohammad Noor, and national Chief Executive Officer (CEO) Abdullah (who is of mixed Tajik-Pashtun ancestry). The Persian-speaking Hazara people live mostly in central Afghanistan and represent most of Afghanistan's Shia minority. They have periodically suffered discrimination, persecution, and violence. Deputy CEO Mohammad Mohaqiq is an ethnic Hazara. They are generally considered to be the most socially liberal ethnic group in Afghanistan. Uzbeks represent Afghanistan's largest Turkic minority population (other Turkic groups in Afghanistan include Turkmen and Kyrgyz), concentrated mostly in the country's north, where they have sometimes come into conflict with Tajiks and other groups. Vice President Abdul Rashid Dostum is generally considered the leader of Afghanistan's Uzbek community. ", "Hamid Karzai won the first nationwide presidential election in October 2004, and reelection in 2009; the latter election, the first to be administered by the Afghan government, was clouded by widespread fraud allegations. The election system (a runoff between the top two candidates if no majority is achieved in the first round) favors the likelihood the president will be an ethnic Pashtun. This was seemingly confirmed in 2014, when Abdullah Abdullah (of mixed ancestry, but associated with the Tajik community) won a plurality of votes with 45% in the first round and then lost with 44% in the second round to now-President Ghani, an ethnic Pashtun.", "The 2014 presidential election was seen as a major test for Afghanistan as the U.S. and international partners drew down in advance of a planned transfer of responsibility for security to Afghan forces. In the first round, held in April 2014, violence was relatively low and there were fewer fraud complaints and deducted votes than in the 2009 election. The second round of voting, in June 2014, was extremely contentious and Abdullah alleged that fraud was responsible for preliminary results that showed him losing to Ghani, with Abdullah supporters reportedly threatening to seize power by force. ", "Intense U.S. involvement, including calls from President Barack Obama and negotiations mediated by Secretary of State John Kerry, eventually led to a September 2014 power sharing agreement between the two men. As part of that accord, Ghani was inaugurated as president and appointed Abdullah as Chief Executive Officer (CEO), a new, extraconstitutional position with powers approximating those of a prime minister. This arrangement, known as the national unity government, remains intact but has encountered extensive difficulties. Abdullah publicly accused Ghani in August 2016 of acting unilaterally and refusing to meet regularly with him. Outward signs of friction seem to have receded since 2017, though tensions clearly remain. ", "A trend in Afghan society and governance that worries some observers is the increasing fragmentation along ethnic and ideological lines. Such fractures have long existed in Afghanistan but were largely contained during Hamid Karzai's presidency. These divisions are sometimes seen as a driving force behind some of the contentious episodes that have challenged Ghani. ", "Vice President Abdul Rashid Dostum, who has criticized Ghani's government for favoring Pashtuns at the expense of the Uzbek minority he is seen to represent, left Afghanistan for Turkey in May 2017. Dostum's departure came in the wake of accusations that he engineered the kidnapping and assault of a political rival, prompting speculation that his departure was an attempt to avoid facing justice in Afghanistan. Dostum returned to Afghanistan in July 2018, quelling protests by his supporters; he remains under indictment but no legal proceedings against him have taken place. \u00c2\u00a0 Ghani's December 2017 dismissal of Atta Mohammad Noor, the powerful governor of the northern province of Balkh who defied Ghani by remaining in office for several months before resigning in March 2018, was another sign of serious political divisions, possibly along ethnic lines. Noor is one of the most prominent members of the Jamiat-e-Islami party, which is seen to represent the country's Tajik minority.", "After multiple delays, elections for the 249-seat Wolesi Jirga (the lower house of Afghanistan's bicameral legislature) were held in October 2018. District council elections, originally scheduled to take place at the same time, were delayed due to a lack of candidates. The elections were preceded by contention among electoral commissioners and an ethnically charged dispute over electronic identity cards. Various technical and logistical challenges have exposed the Independent Election Commission (IEC) to widespread criticism, with one observer describing the process as a \"triumph of administrative chaos.\" ", "Instability marred the election results as well: elections were held a week late in Kandahar and indefinitely postponed in Ghazni, and hundreds of polling stations in areas outside of the government's control were closed. Additionally, ten candidates were assassinated during the campaign and dozens of civilians were killed and hundreds wounded in election-day violence. Still, most reports indicated at least some measure of voter enthusiasm, especially in urban areas; turnout was estimated at around 4 million of 9 million registered voters. Afghanistan scholar Barnett Rubin observed, \"The main obstacle to democracy in Afghanistan is not the willingness of the people to participate, but the capacity of the state to make their participation meaningful.\" Final nationwide results (except for Ghazni, parliamentary elections for which are supposed to be run alongside the 2019 presidential election) were released in May 2019.", "President Ghani and CEO Abdullah, along with over a dozen other candidates, are running in the presidential election now scheduled, after two postponements, for September 2019. President Ghani's mandate expired on May 22, 2019. Many of his chief rivals have said that his government is no longer legitimate and have called for him to step down in favor of an alternate political arrangement. On April 20, 2019, the Afghan Supreme Court reportedly issued a ruling extending the president's term until the election (along with those of his vice presidents; it is unclear what the CEO's status will be), citing a similar 2009 ruling that extended then-President Karzai's term to cover a postponement of the 2009 presidential election. ", "It is unclear whether delays to the presidential election are related to ongoing U.S.-Taliban talks. U.S. officials have denied that the establishment of an interim government is part of their negotiations with the Taliban, but some observers speculate that such an arrangement (which Ghani has rejected) might be necessary to accommodate the reentry of Taliban figures into public life. An interim government, or some other broad national political arrangement, might also facilitate the establishment of a new political system, which a putative settlement might require. The Taliban have stated their intention to replace the 2004 Afghan constitution, which they characterize as \"invalid\" and \"imported from the West,\" with an Islamic system. President Ghani has responded by pointing out that Afghanistan is an Islamic republic and that the constitution prohibits any laws that \"contravene the tenets and provisions\" of Islam, though he has stated his openness to reviewing and amending it within legal processes. Some analysts have argued that the Afghan constitution breeds ethnic conflict by investing the president with considerable powers (including the ability to appoint all provincial governors) and that a more decentralized system is necessary."], "subsections": []}]}, {"section_title": "Aid, Economic Development, and Human Rights", "paragraphs": ["Since the United States and its partners intervened in 2001, the international community has contributed tens of billions of dollars in economic and development assistance to Afghanistan. At the height of this effort, donor aid accounted for more than 75% of Afghanistan's GDP. As of early 2018, donor aid still accounts for about 60% of total Afghan government expenditures (both operating budget and development budget), with domestic revenues making up the rest. Experts and policymakers have debated many aspects of aid to Afghanistan, including amounts, mechanisms for delivery, donor coordination, and distribution within Afghanistan."], "subsections": [{"section_title": "U.S. Assistance to Afghanistan", "paragraphs": ["Between 1985 and 1994, the United States had a cross-border aid program for Afghanistan, implemented by USAID personnel based in Pakistan. Citing the difficulty of administering this program, there was no USAID mission for Afghanistan from the end of FY1994 until the reopening of the U.S. Embassy in Afghanistan in late 2001. During the 1990s, the United States was the largest single provider of assistance to the Afghan people even though no U.S. aid went directly to the Taliban government when it was in power during 1996-2001; monies were provided through relief organizations. Since 2001, the United States has been by far the largest international donor to Afghanistan, spending over $132 billion for development assistance since FY2001 according to SIGAR. U.S. aid has been primarily focused on security assistance, accounting for nearly 63% of those funds (see Figure 6 ). ", " Appendix C at the end of this report portrays U.S. assistance to Afghanistan by year since the fall of the Taliban. The cited figures do not include costs for U.S. combat operations.", "The United States and other donors have been working to transition assistance away from off-budget (internationally managed, excluded from the Afghan national budget) expenditures to on-budget (managed by the Afghan government, also referred to as \"direct contributions\"). About $14.5 billion of U.S. assistance provided to Afghanistan has been directly to the Afghan government ($9.2 billion directly to the Afghan government, $5.3 billion through international trust funds). Since 2010, donors have aimed to increase to half the portion of development assistance delivered on-budget. SIGAR has expressed misgivings about this goal, arguing that \"the Afghan government often lacks both the will and the necessary internal controls to ensure that those funds are spent on what the donor intended\" and that \"should U.S. military and civilian personnel levels decrease, the ability to track on-budget assistance will inevitably suffer.\""], "subsections": [{"section_title": "Aid Conditionality and Oversight", "paragraphs": ["Some laws have required the withholding of U.S. aid subject to Administration certification of Afghan compliance on a variety of issues, including counternarcotics efforts, corruption, vetting of the Afghan security forces, human rights practices, protection of women's rights, and other issues. Successive measures included in annual appropriations measures and National Defense Authorization Acts have conditioned Economic Support Funds (ESF) and International Narcotics Control and Law Enforcement (INCLE) funding to Afghanistan on various requirements, including the submission of various reports, and the certification that the Afghan government is meeting certain benchmarks related to metrics including corruption, democratic development, and women's rights. All the required certifications have been made, and virtually no U.S. funds have been withheld from Afghanistan. ", "The FY2008 defense authorization bill ( P.L. 110-181 ) established a \"Special Inspector General for Afghanistan Reconstruction\" modeled on a similar outside auditor for Iraq. The SIGAR issues quarterly reports and specific audits of aspects of Afghan governance and security, with particular attention to how U.S.-provided funds have been used. The SIGAR, as of July 2019, is John Sopko. ", "Some executive branch agencies have periodically criticized SIGAR audits as inaccurate or as highlighting problems that the agencies are already correcting. For example, DOD took strong exception to a December 4, 2013, audit by the SIGAR that asserted that the U.S. military had failed to adequately manage risk accounting for $3 billion in DOD funds for the ANDSF. SIGAR's annual operations are funded at around $55 million. H.Rept. 116-78 , accompanying the House Appropriations Committee-reported FY2020 State, Foreign Operations, and Related Programs Appropriations bill, directs that \"Not later than 180 days after enactment of this Act, the SIGAR shall submit to the Committees on Appropriations a detailed plan, including funding requirements and personnel data, for the complete drawdown of operations in Afghanistan by the end of fiscal year 2021.\""], "subsections": []}, {"section_title": "Other International Donors and Multilateral Trust Funds", "paragraphs": ["Non-U.S. donors, including such institutions as the EU and the Asian Development Bank, have provided substantial funds for Afghanistan's development. According to SIGAR, most of those funds are through three major international funds: the World Bank-managed Afghanistan Reconstruction Trust Fund (ARTF), the UNDP-managed Law and Order Trust Fund for Afghanistan, and the NATO-managed Afghan National Army Trust Fund (ANATF). As of late 2018, the largest donors to these funds, after the U.S., are the UK, Japan, Germany, the EU, and Canada (see Figure 7 ). Major pledges have been made primarily at donor conferences such as Tokyo (January 2002), Berlin (April 2004), Kabul (April 2005), London (February 2006), Paris (June 2008), London (January 2010), Tokyo (July 2012), and Brussels (October 2016). ", "At the 2012 Tokyo conference, the United States and its partners pledged a total of $16 billion in aid to Afghanistan through 2015 ($4 billion per year for 2012-2015) and agreed to sustain support through 2017 at levels at or near the past decade. Among other major pledges, Japan pledged $3 billion through 2016, and Germany pledged $550 million over four years. The Tokyo Mutual Accountability Framework (TMAF) that resulted from the conference stipulated requirements of the Afghan government in governance, anti-corruption, holding free and fair elections, and human rights practices. As an incentive, if Afghanistan meets the benchmarks, the TMAF increases (to 20% by 2024) the percentage of aid provided through the ARTF and other mechanisms that give Kabul discretion in the use of donated funds.", "Donors met to assess progress on the TMAF benchmarks and pledged more funds for Afghanistan at a donors meeting in Brussels in October 2016. The conference welcomed Afghanistan's new \"National Peace and Development Framework\" and its efforts to fight corruption. At the conclusion of the meeting, donors announced pledges of $15.2 billion for the period of 2017-2020 (and support at lower levels thereafter through 2024). In November 2018, 61 countries and 35 international organizations met in Geneva to measure progress on development and reform in light of the Brussels pledges. At the conference, donor nations reaffirmed their commitment to continue support through 2020 and praised some successes (such as \"bold and important steps\" on the peace process taken by the Afghan government) but left some key issues unaddressed, according to one analyst."], "subsections": []}]}, {"section_title": "Economic and Human Development", "paragraphs": ["Economic development is pivotal to Afghanistan's long-term stability. Some economic sectors in Afghanistan have been developed largely with private investment, including by well-connected Afghan officials or former officials who founded companies. Promoting economic growth has been a major goal of U.S. development assistance, mostly by USAID, but also by other departments. For example, the DOD Task Force for Business and Stability Operations (TFBSO) sought to facilitate additional private investment in Afghanistan. However, A SIGAR report of November 2014 assessed that the Task Force's efforts yielded very little result, and the TFBSO concluded its operations in March 2015.", "Decades of war have stunted the development of most domestic industries. More recently, the economy also has been hurt by a decrease in aid provided by international donors since 2014. Afghanistan's Gross Domestic Product (GDP) has grown an average of 7% per year since 2003, but growth slowed to 2% in 2013 due to aid cutbacks and political uncertainty about the post-2014 security situation. ", "Since 2015, Afghanistan has experienced a \"slight recovery\" with growth of between 2% and 3% in 2016 and 2017, though the increase in the poverty rate (55% living below the national poverty line in 2016-2017 compared to 38% in 2012-2013) complicates that picture. On the other hand, the Afghan government has made progress in increasing revenue (though as mentioned above, the percentage of total budgetary expenditures funded by donor grants is still above 60%). In any event, \"for the foreseeable future, and barring a breakthrough in reconciliation and an end to or at least a substantial reduction in the level of conflict, Afghanistan will remain highly aid dependent.\"", "Efforts by the U.S. and others to build the legitimate economy are showing some results, by some accounts, and are outlined by sector below."], "subsections": [{"section_title": "Infrastructure", "paragraphs": ["U.S. aid has been key to a number of infrastructure initiatives, most notably in constructing roads, improving the electric grid, and developing the telecommunications sector. ", "Roads. Road building in Afghanistan, which reportedly had less than 50 miles of paved roads in 2001, was a major development priority; as former commander of U.S. forces in Afghanistan General Eikenberry (later Ambassador) has said, \"where the roads end, the Taliban begin.\" USAID has spent about $2.1 billion on road construction and maintenance projects, with DOD funding an additional $850 million in such work, according to an October 2016 SIGAR audit report. The major road, the Ring Road (which links the country's five major cities), has been completely repaved using funds from various donors, including substantial funds from the Asian Development Bank, at a total expense of about $4 billion (all donors). Some observers warn that the Afghan government lacks the resources to adequately maintain the roads built with international funds. Many of the roads built have fallen into disrepair and are marked with major potholes, as discussed in detail in the October 2016 SIGAR audit report. As of July 2019, USAID does not appear to have any ongoing roadbuilding projects. Electricity. Considerable U.S. efforts in the energy sector since 2001 arguably have yielded mixed results. According to the January 2019 SIGAR report, total U.S. disbursements for power projects total over $2 billion, including $1.5 billion in USAID Economic Support Funds (ESF) since FY2002 (with $626 million in active power-infrastructure programs) and about $565 million in DOD Afghanistan Infrastructure Funds. While the percentage of Afghans with access to electricity has increased due to these and other development efforts, by most estimates a majority remains without grid-connected power. Afghanistan has a complex power system, operating in nine separate, unconnected grids, and is still largely dependent on the sale of surplus power from its neighbors, importing 80% of its energy. The vast majority (95%) of Afghanistan's domestically generated electricity is provided by hydropower. The United States has worked to create a more independent and cohesive system by assisting in the development of indigenous power production and management capabilities and by connecting Afghanistan's disparate power grids. Telecommunications. Several Afghan telecommunications firms (e.g., Roshan, MTN, and Afghan Wireless) have formed since 2002 and more than $2 billion in private investment has flowed into this sector, according to a 2016 SIGAR report. Cellular networks now reach approximately 90% of Afghans, and the Asia Foundation found in 2018 that over 89% of respondents reported that their household owned at least one mobile phone, up from 52% in 2009. This rapid development, aided by tens of millions of dollars in support from DOD, State, and USAID, has made telecommunications a key driver of the Afghan economy. Various observers have assessed in recent years that the sector contributes millions in tax revenues to the Afghan government, and provides employment to tens of thousands of Afghans, though doubts about its sustainability exist. "], "subsections": []}, {"section_title": "Agriculture", "paragraphs": ["Agriculture has always been key to Afghanistan's economy and stability; even though only about 12% of Afghanistan's land is arable, about 70% of Afghans live in rural areas. Non-opium agriculture contributes about 25% of Afghanistan's GDP (down from around 70% as late as the mid-1990s). Because most GDP gains since 2001 have come from other sectors, experts have identified agriculture as a key potential growth area. Agriculture continues to employ around 40% of Afghanistan's labor force, but policies to encourage the growth of such subindustries as intensive livestock production and horticultural crops could double agriculture GDP and add more than a million jobs in that sector over the next decade, according to the World Bank.", "U.S. policy to boost Afghanistan's agriculture sector is aimed not only at reducing drug production but also at contributing to economic growth. Prior to the turmoil that engulfed Afghanistan in the late 1970s, Afghanistan was a major exporter of agricultural products. Since 2002, USAID has disbursed more than $2 billion on almost 60 agriculture programs for such goals as increasing access to markets and providing alternatives to poppy growing, according to July 2018 SIGAR audit. According to a 2019 factsheet, USAID programs have facilitated over $845 million in increased sales of agriculture products, supporting the equivalent of 647,000 full time equivalent jobs."], "subsections": []}, {"section_title": "Mining and Gems", "paragraphs": ["Afghanistan's mining sector has been largely dormant since the Soviet invasion. Some Afghan leaders complain that not enough has been done to support the potentially lucrative mining sector. The issue became more prominent in June 2010 when the DOD Task Force for Business and Stability Operations announced, based on surveys, that Afghanistan may have untapped minerals, including copper, iron, lithium, gold, and precious gems, worth over $1 trillion. Some experts assert that U.S. hopes for this sector as a driver of long-term economic sustenance for Afghanistan are misplaced. Instability and poor infrastructure are the most important impediments to the development of this sector, but questions about the legality of some projects, and the overall legal framework, have led some to question whether profits will actually support the Afghan people."], "subsections": []}, {"section_title": "Oil, Gas, and Related Pipelines", "paragraphs": ["Years of war have stunted development of a hydrocarbons energy sector in Afghanistan. The country has no hydrocarbons export industry, only a small refining sector that provides some of Afghanistan's needs for gasoline or other fuels. Nevertheless, Afghanistan's prospects in this sector appeared to brighten by the 2006 announcement of an estimated 3.6 billion barrels of oil and 36.5 trillion cubic feet of gas reserves, amounts that could make Afghanistan self-sufficient in energy or even able to export. USAID has funded test projects to develop gas resources in northern Afghanistan, including a $120 million contribution to the $580 million Sheberghan Gas Development Project, which consisted of a number of gas wells and, in partnership with the private sector, building a 200 megawatt gas-fired thermal plant and associated transmission lines in northern Afghanistan. ", "Afghanistan's geographic location could also let it become a transit hub for Central Asian natural gas. The most important current gas project is the Turkmenistan-Afghanistan-Pakistan-India, or TAPI, pipeline. In 2002, the leaders of Turkmenistan, Afghanistan, and Pakistan signed preliminary agreements on a gas pipeline that would originate in southern Turkmenistan and pass through Afghanistan to Pakistan, with possible extensions into India. The leaders of the four countries involved formally \"broke ground\" on the pipeline at a ceremony in Turkmenistan in 2015, and work on the Afghan section began in February 2018. Afghanistan stands to gain access to gas, as well as earn hundreds of millions annually in transit fees, but some describe claims of progress on the project as \"dubious,\" and point to security concerns along the pipeline's intended route through Afghanistan, among other potential issues, as causes for skepticism. "], "subsections": []}, {"section_title": "Education", "paragraphs": ["With more than 60% of Afghans under the age of 24, strengthening the education system is recognized as key to Afghanistan's future but, as in other areas, prospects depend largely on security dynamics. While most sources (including USAID and others) give a figure of 9 million children enrolled in school, the January 2017 SIGAR report relays a December 18, 2016 interview with the Afghan Minister of Education, who said that \"after adjusting numbers for more than 3 million permanently absent registered students from school records, only 6 million students were actually attending classes in Afghanistan.\" Continuing Taliban attacks on schools have caused some (\"over 1,000\" according to a January 2017 address by the acting Minister of Education) to close and hindered efforts to enroll Afghan students. Attacks tripled in 2018, according to a UNICEF report (though at least some of that rise is attributable to violence surrounding the 2018 parliamentary elections, during which many schools were used as polling centers)."], "subsections": []}, {"section_title": "Trade", "paragraphs": ["U.S. policy has been to encourage Afghanistan's trade relationships, particularly those with its neighbors. Afghanistan took a major step forward on building its trade relationships with its accession to the World Trade Organization (WTO) in July 2016, over a decade after it first applied. USAID has funded a number of projects to increase the competitiveness of Afghan products in international markets, which have shown some results; the value of Afghan exports rose from $600 million in 2016 to an estimated $1 billion in 2018. ", "In September 2004, the United States and Afghanistan signed a bilateral trade and investment framework agreement (TIFA), and most of Afghanistan's exports are eligible for duty free treatment under the enhanced Generalized System of Preferences (GSP) program. Still, Afghanistan is a relatively minor trading partner of the United States, with U.S. exports totaling $1.2 billion in 2018 and imports from Afghanistan totaling just $29 million."], "subsections": []}]}, {"section_title": "General Human Rights Issues", "paragraphs": ["U.S. assistance has also been used to promote the broader U.S. policy of enhancing and protecting human rights in Afghanistan and promoting the government's adherence to international standards of human rights practices. Like previous years' State Department human rights reports on Afghanistan, the report for 2018 attributes most of Afghanistan's human rights deficiencies to overall lack of security, loose control over the actions of Afghan security forces, corruption, and cultural norms such as the preclusion of male-female interactions. Successive State Department reports cite torture, rape, and other abuses by officials, security forces, detention center authorities, and police. ", "Afghanistan has a free press, and Afghans freely express a variety of views, including criticism of the central government, in Afghanistan's numerous independent media outlets (though local media may be more constrained by local powerbrokers). Journalists have been targeted by insurgent groups, including in an April 30, 2018, suicide attack that killed nine reporters and photographers in Kabul. Numerous peaceful protests, marches, and sit-ins over the past year are a testament to the government's general respect for freedom of assembly. Several other issues related to the status of human rights in Afghanistan are outlined below. "], "subsections": [{"section_title": "Status of Women", "paragraphs": ["Freedoms for women have expanded since the fall of the Taliban. The advancement of Afghan women has been a stated U.S. policy interest and goal of U.S. assistance efforts, though it is unclear how sustainable these gains are, particularly given ongoing U.S.-Taliban negotiations. Despite these gains, and an expenditure by the U.S. government of roughly $1 billion on programs for which the advancement of women was a component, the U.N. still ranks Afghanistan 163 rd of 164 countries on its 2017 gender development index. Potential changes to the status of women in Afghanistan under a prospective political settlement have drawn scrutiny and speculation from Afghans and outside observers alike.", "Selected Metrics ", "Female literacy: 6% (2001) vs. 16% (2017). Girls in school: 3.5 million enrolled, 2.2 million out-of-school. The Taliban claim to have lifted the ban on educating girls, and in Taliban-controlled areas some girls are attending primary school. Civil service: 22% female (30% target level set in the Tokyo Mutual Accountability Framework). Women in parliament: Article 83 of the Afghan constitution directs that on average at least two women be elected to the lower house of parliament from each of Afghanistan's 34 provinces, creating a quota of 68 women out of 250 seats (about 27%). One third of the upper house of parliament (34 of 102 seats) is selected by the president, and Article 84 directs that half of these seats (17) be filled by women. As of November 2018, 4,735 women serve in the Afghanistan National Defense and Security Forces (ANDSF), making up slightly less than 2% of the force. ", "Afghan Government E fforts", "The Afghan government pursues a policy of promoting equality for women under its National Action Plan for Women of Afghanistan (NAPWA) as required by the Tokyo Mutual Accountability Framework. Afghanistan has a Ministry of Women's Affairs, the primary function of which is to promote public awareness of relevant laws and regulations concerning women's rights. It plays a key role in trying to protect women from domestic abuse by overseeing the operation of as many as 29 women's shelters across Afghanistan. Despite gains since 2001, numerous abuses, such as denial of educational and employment opportunities, forced marriage, and honor killings, continue primarily because of conservative traditions. ", "On August 6, 2009, then-President Karzai issued, as a decree, the \"Elimination of Violence Against Women\" (EVAW) law that makes many of the practices mentioned above unlawful. Efforts by the National Assembly to enact the EVAW in 2010 and in 2013 failed due to opposition from religious conservatives. While prosecutions of abuses against women are increasingly obtaining convictions, a relatively small percentage of reports of violence against women are registered with the judicial system; about one-third of those proceed to trial. ", "President Ghani has signaled his support for women's rights by publicly highlighting the support he receives from his wife, despite the Afghan cultural taboo about mentioning wives and female family members in public. Ghani nominated a woman to Afghanistan's Supreme Court, but the National Assembly rejected her nomination in July 2015. He has also appointed two female governors\u00e2\u0080\u0094one more than during Karzai's presidency\u00e2\u0080\u0094 and three (of 25) cabinet ministers. In February 2018, hundreds of Afghan women gathered at a conference in Kabul to urge Ghani's government to reject any potential peace deal that does not safeguard women's rights. While women are not included in the current U.S.-Taliban negotiations, they comprise 26% of Afghan High Peace Council, and 20% of provincial peace councils, which lead local peacebuilding efforts. A number of women participated in July 2019 talks between Taliban and Afghan representatives (including some government officials who attended in a personal capacity).", "U . S . Policy", "Successive SIGAR audits and reports have identified issues with U.S.-funded programs to support Afghan women. According to SIGAR, Congress appropriated $627 million to address the needs of Afghan women and girls from FY2003 through FY2010; SIGAR reported at least $64.8 million in the three subsequent fiscal years but stated that the \"full extent of [DOD, State, and USAID] efforts was unclear.\" In late 2018, SIGAR assessed that the most prominent and highly funded initiative in this area, USAID's Promoting Gender Equity in National Priority Programs (Promote), is hindered by insufficient evaluation efforts and noted that it was \"unclear whether the Afghan government has the institutional capacity to continue Promote's activities once the program ends.\" "], "subsections": []}, {"section_title": "Religious Freedoms and Minorities", "paragraphs": ["For several successive years, including in its 2018 annual report, the U.S. Commission on International Religious Freedom (USCIRF) has identified Afghanistan as a \"Tier 2\" country, meaning that the government \"engaged in or tolerated\u00e2\u0080\u00a6serious\" violations that are \"characterized by at least one of the elements of the 'systematic, ongoing, and egregious'\" standard. According to USCIRF, \"aspects of the country's constitution and other laws are contrary to international standards for freedom of religion.\"", "Members of minority religions, including Christians, Sikhs, Hindus, and Baha'i's, often face discrimination, but members of these communities also sometimes serve at high levels of government. According to USCIRF, the number of Hindus and Sikhs in Afghanistan has dwindled from nearly 200,000 in 1992 to between 3,000 and 7,000 today. These groups were targeted in a July 2018 ISKP attack against a campaign rally in Jalalabad that killed more than 20, including a Sikh candidate for parliament.", "ISKP has also aggressively targeted Afghanistan's Shia minority (10-20% of the population), most of which are ethnic Hazaras. Afghan Shia leaders appreciated the July 2009 enactment of a \"Shia Personal Status Law\" that gave Afghan Shias the same degree of recognition as the Sunni majority, and provided a legal framework for Shia family law issues. Some rights groups characterized the law as formalizing discrimination against Shia women. "], "subsections": []}, {"section_title": "Human Trafficking", "paragraphs": ["Afghanistan was ranked as \"Tier 2\" in the State Department Trafficking in Persons Report for 2018, a continuation of its 2017 ranking and an improvement from 2016 when Afghanistan was ranked as \"Tier 2: Watch List\" on the grounds that the Afghan government was not complying with minimum standards for eliminating trafficking and had not demonstrated increased efforts against trafficking since the prior reporting period. ", "As part of the government's significant efforts to combat trafficking, the 2018 report cites a revision to the penal code that increases penalties for human trafficking and a new training manual for combating trafficking. Nevertheless, the report says that the government did not report any new prosecutions or convictions of officials involved in trafficking, despite credible allegations. The report asserts that Afghanistan is a source, transit, and destination country for trafficked persons, though trafficking within Afghanistan is more common than trafficking across its borders. Related abuses prevalent in Afghanistan include forced or bonded labor; sex trafficking, including for bacha bazi , a practice in which wealthy men use groups of young boys for social and sexual entertainment (see textbox below); and the recruitment and use of children in combat. "], "subsections": []}]}]}, {"section_title": "Outlook", "paragraphs": ["Insurgents and terrorist groups have demonstrated considerable capabilities in 2018 and 2019, throwing into sharp relief the daunting security challenges that the Afghan government and its U.S. and international partners face. At the same time, prospects for a negotiated settlement have risen, driven by direct U.S.-Taliban talks, though the prospects for such negotiations to deliver a settlement are uncertain. ", "Those talks currently are centered on the U.S. and Taliban priorities, namely counterterrorism and the withdrawal of foreign troops, respectively. Special Representative for Afghan Reconciliation Khalilzad and other U.S. officials maintain that facilitating an intra-Afghan settlement is also a U.S. objective, but the means by which the U.S. could force the Taliban into dialogue with the Afghan government (let alone guarantee the Taliban's adherence to certain political or other conditions) is unclear, especially after a U.S. withdrawal from the country. ", "Observers differ on whether or not the Taliban pose an existential threat to the Afghan government, given the current military balance, but generally agree that alterations to U.S. troop deployments or, perhaps more importantly, U.S. funding for the ANDSF, would pose a challenge to the Afghan government. As President Ghani said in 2018, \"[W]e will not be able to support our army for six months without U.S. [financial] support.\" Increased political instability, fueled by questions about the central government's authority and competence and rising ethnic tensions, may pose as serious a threat to Afghanistan's future as the Taliban does.", "A potential collapse of the Afghan military and/or the government that commands it could have significant implications for the United States, particularly given the nature of negotiated security arrangements. Regardless of how likely the Taliban would be to gain full control over all, or even most, of the country, the breakdown of social order and the fracturing of the country into fiefdoms controlled by paramilitary commanders and their respective militias may be plausible, even probable; Afghanistan experienced a similar situation nearly thirty years ago during its post-Soviet civil war. Under a more unstable future scenario, alliances and relationships among extremist groups could evolve, as could security conditions, offering new opportunities to transnational terrorist groups, whether directly or by default. Human rights would be likely to suffer as well. ", "In light of these uncertainties, Members of Congress and other U.S. policymakers may reassess notions of what success in Afghanistan looks like, examining how potential outcomes might harm or benefit U.S. interests, and the relative levels of U.S. engagement and investment required to attain them. The present condition, which is essentially a stalemate that has endured for several years, could persist; some argue that the United States \"has the capacity to sustain its commitment to Afghanistan for some time to come\" at current levels. ", "In May 2019, former National Security Advisor H.R. McMaster compared the U.S. effort in Afghanistan to an \"insurance policy\" against the negative consequences of the government's collapse. Other analysts counter that \"the threat in Afghanistan doesn't warrant a continued U.S. military presence and the associated costs\u00e2\u0080\u0094which are not inconsequential.\"", "The Trump Administration has described U.S. policy in Afghanistan as \"grounded in the fundamental objective of preventing any further attacks on the United States by terrorists enjoying safe haven or support in Afghanistan.\" For years, some analysts have challenged that line of reasoning, describing it as a strategic \"myth\" and arguing that \"the safe haven fallacy is an argument for endless war based on unwarranted worst-case scenario assumptions.\" Some of these analysts and others dismiss what they see as a disproportionate focus on the military effort, citing evidence that \"the terror threat to Americans remains low\" to argue that \"a strategy that emphasizes military power will continue to fail.\" ", "Core issues for Congress in Afghanistan include Congress's role in authorizing, appropriating funds for, and overseeing U.S. military activities, aid, and regional policy implementation. Additionally, Members of Congress may examine how the United States can leverage its assets, influence, and experience in Afghanistan, as well as those of Afghanistan's neighbors and international organizations, to encourage more equal, inclusive, and effective governance. Congress also could seek to help shape the U.S. approach to talks with the Taliban, or to potential negotiations aimed at altering the Afghan political system, through oversight, legislation, and public statements. ", "How Afghanistan fits into broader U.S. strategy is another issue on which Members might engage, especially given the Administration's focus on strategic competition with other great powers. Some recognize fatigue over \"endless wars\" like that in Afghanistan but argue against a potential U.S. retrenchment that could create a vacuum Russia or China might fill. Others describe the U.S. military effort in Afghanistan as a \"peripheral war,\" and suggest that \"the billions being spent on overseas contingency operation funding would be better spend on force modernization and training for future contingencies.\" ", "Appendix A. Historical Timeline, 1747-2001", "This timeline briefly describes the major political and military events that have shaped Afghanistan's modern trajectory from the Durrani Empire to the U.S. invasion in 2001.", "Appendix B. Soviet War in Afghanistan", "The Soviet Union's invasion of, and withdrawal from, Afghanistan has emerged as a frequently referenced possible historical analogue for the U.S. experience there. While there are clear and dramatic differences between the U.S. and Soviet experiences in Afghanistan, they also share some similarities that are of potential value in assessing various U.S. policy options.", "The Soviet Union deployed troops into Afghanistan in December 1979 to buttress the communist People's Democratic Party of Afghanistan (PDPA) government, which had been established after the 1978 Saur (April) Revolution. Growing instability in Afghanistan, including a nascent grassroots popular uprising against the PDPA's reform program and factional fighting within the PDPA, led Soviet leaders to order the initial invasion of about 80,000 Soviet troops, which quickly took control of urban centers, major lines of communication, and other strategic points. Soviet troops, which numbered over 100,000 at their peak, partnered with Afghan government forces and various paramilitaries but generally bore the brunt of fighting against armed opposition groups, collectively known as the mujahideen . Mujahideen groups, supported by Pakistan, the United States, Saudi Arabia, and others, led a guerilla campaign against Soviet and Afghan government forces characterized by sabotage operations, attacks against military and government sites, and attacks against some civilian targets. The Soviet effort was not just military in nature. The USSR also \"sent thousands of technical specialists and political advisors\" to Afghanistan to \"help stabilize the government and broaden its base of support,\" though these missions were often undermined by \"infighting and lack of coordination among advisers and other Soviet officials.\" ", "By 1985, newly installed Soviet leader Mikhail Gorbachev had decided to seek a withdrawal from Afghanistan. Soviet military losses were substantial (around 13,000 Soviet troops killed and 40,000 wounded over the course of the decade-long intervention), but experts disagree about the extent to which these casualties motivated the decision to withdraw. Other reasons cited include international isolation, the economic cost of the war effort, the potential for political unrest within the USSR, and the greater importance Gorbachev placed on his reform program. Increasingly, Soviet attention turned to both pressuring squabbling Afghan leaders to unify and building up the Afghan military, which suffered from high rates of desertion, attrition, and casualties. U.N.-mediated talks in Geneva between delegations from the governments of Afghanistan (supported by the USSR) and Pakistan (supported by the U.S.) began in March 1982 and continued fitfully until the signing of the Geneva Accords in April 1988. The Soviet withdrawal began in May, per the Accords, and finished on February 15, 1989, when the last Soviet soldier crossed back into the Soviet Union (now Uzbekistan) from Afghanistan. In late 1988, some Soviet officials advocated maintaining a residual force in Afghanistan, citing violations of the Geneva Accords by Pakistan, and the withdrawal was briefly paused. However, the United States and Pakistan, perceiving that the Soviet impulse to pull out would trump concerns about the post-withdrawal political situation, maintained aid to the mujahideen and \"the bluff failed to work.\" ", "Mujahideen forces, as a nonstate movement, were excluded from U.N. negotiations and continued to receive support from the United States, Pakistan, and other backers after the Soviet withdrawal, as the Afghan government continued to receive military and financial support from Moscow. With this support, the Afghan government (led by Najibullah Ahmadzai, commonly known by his first name) defied expectations among some in the U.S. that it would quickly collapse after the Soviet pullout and maintained its position for several years. In September 1991, as the Soviet Union was being engulfed in a major political crisis that would eventually lead to its dissolution in December 1991, Soviet and U.S. officials announced a final cutoff in their countries' support to their respective clients, effective January 1992. With the help of key defections including current Vice President Abdul Rashid Dostum, m ujah i deen and other Afghan groups displaced Najibullah in April 1992, and the country sank into a civil war from which the Taliban would emerge and eventually take control of most of the country. Upon their entry to Kabul in September 1996, one of the Taliban's first acts was to torture and publicly hang Najibullah.", "Appendix C. U.S. Reconstruction Assistance to Afghanistan (SIGAR)"], "subsections": []}]}}
{"id": "R46105", "title": "Supreme Court Criminal Law Decisions: 2019", "released_date": "2019-12-05T00:00:00", "summary": ["In 2019, the Supreme Court issued a sizeable number of criminal law decisions, which addressed several topics, including sentencing, pretrial, statutory construction, and ineffective assistance of counsel. This report discusses the following Supreme Court holdings in greater detail:", "Racially Discriminatory Jury Selection : \"[T]he trial court at Flowers' sixth trial committed clear error in concluding that the State's peremptory strike of [a] black prospective juror \u00e2\u0080\u00a6 was not motivated in substantial part by discriminatory intent.\" Flowers v. Mississippi , 139 S. Ct. 2228 (2019).", "Execution of the Mentally Inc ompetent : \"First, under Ford and Panetti , the Eighth Amendment may permit executing Madison even if he cannot remember committing his crime. Second, under those same decisions, the Eighth Amendment may prohibit executing Madison even though he suffers from dementia, rather than delusions. The sole question on which Madison's competency depends is whether he can reach a 'rational understanding' of why the State wants to execute him.\" Madison v. Alabama , 139 S. Ct. 718 (2019).", "Execution of the Intellectually Disabled : Texas Court of Criminal Appeals erred in assessing and denying a death-row inmate's claim of intellectual disability. Moore v. Texas , 139 S. Ct. 666 (2019).", "Habeas Jurisdiction : Federal courts may not grant state prisoners habeas relief based on Supreme Court precedent established after the completion of state proceedings. Shoop v. Hill , 139 S. Ct. 504 (2019).", "Method of Execution : A death row inmate challenging the state's method of execution must show that the state's method involves a risk of severe pain and that a feasible, readily available alternative method will significantly reduce the risk of pain. \"[E]ven if execution by nitrogen hypoxia were a feasible and readily implemented alternative to the State's chosen method, Mr. Bucklew has still failed to present any evidence suggesting that it would significantly reduce his risk of pain.\" Bucklew v. Precythe , 139 S. Ct. 1112 (2019).", "Violent Crime Sentencing :", "The Armed Career Criminal Act's (ACCA) Section 924(c) residual clause purporting to provide an alternative definition for \"crime of violence\" is constitutionally vague. United States v. Davis , 139 S. Ct. 2319 (2019). Conviction under Florida robbery statute qualifies as a crime of violence under ACCA elements clause. Stokeling v. United States , 139 S. Ct. 544 (2019). Under the ACCA's specific crimes clause, the generic crime of \"burglary\" covers unlawfully entering, or remaining in, a building or structure, including mobile homes, trailers, tents, or vehicles, if they are designed, adapted, or customarily used for overnight accommodations of individuals. United States v. Stitt , 139 S. Ct. 399 (2018). Under the ACCA's specific crimes clause, the generic burglary definition includes entering with an intent to commit a crime or remaining in a building or structure after forming an intent to commit a crime . Quarles v. United , 139 S. Ct. 1872 (2019).", "Excessive Fines : The Eighth Amendment's Excessive Fines Clause is incorporated in the Fourteenth Amendment's Due Process Clause and is therefore binding on the States. Timbs v. Indiana , 139 S. Ct. 682 (2019).", "Supervised Release :", "Imposing a mandatory term of imprisonment after revoking supervised release, based on finding by a preponderance of the evidence that Haymond had breached the conditions of his supervised release, violated the Sixth Amendment's jury trial guarantee and the Fifth Amendment's Due Process beyond-a-reasonable doubt standard for criminal cases. The lower court will decide, at least initially, whether the error was harmless and, if not, the appropriate remedy. United State s v. Haymond , 139 S. Ct. 2369 (2019). A federal supervised release term does not run for a convict held in state pretrial detention if the time in state pretrial detention counts as time served for state conviction purposes. Mont v. United States , 139 S. Ct. 1826 (2019).", "Mens Rea : Conviction of an alien unlawfully present in the United States for unlawful firearms possession requires proof that the alien knew both that (1) he was in possession of a firearm and (2) he was unlawfully present. Rehaif v. United States , 139 S. Ct. 2191 (2019).", "Nondelegation : Authorizing the Attorney General to issue regulations governing registration requirements under the Sex Offender Registration and Notification Act (SORNA) for pre-Act offenders as soon as feasible did not violate the nondelegation doctrine. Gundy v. United States , 139 U.S. 2116 (2019).", "Double Jeopardy : The dual sovereign doctrine of the Fifth Amendment's Double Jeopardy Clause permits successive state and federal prosecutions for the same misconduct. Gamble v. United States , 139 S. Ct. 1960 (2019).", "Drunk Driving : A suspect's loss of consciousness following his probable cause arrest for drunk driving will almost always qualify for the exigent circumstances exception to the Fourth Amendment's warrant requirement. Mitchell v. Wisconsin , 139 S. Ct. 2525 (2019) (plurality).", "Section 1983 Litigation :", "Probable cause to arrest precludes a Section 1983 civil liability claim based on alleged First Amendment retaliation unless \"a plaintiff presents objective evidence that he was arrested when otherwise similarly situated individuals not engaged in the same sort of protected speech had not been.\" Nieves v. Bartlett , 139 S. Ct. 1715 (2019). The statute of limitations for a Section 1983 cause of action alleging falsification of evidence \"began to run when criminal proceedings against him terminated in his favor.\" McDonough v. Smith , 139 S. Ct. 2149 (2019). In assessing a Section 1983 qualified official immunity claim, \"[t]he Court of Appeals should have asked whether clearly established law prohibited the officers from stopping and taking down a man in these circumstances. Instead, the Court of Appeals defined the clearly established right at a high level of generality by saying only that the 'right to be free of excessive force' was clearly established.\" City of Escondido v. Emmons , 139 S. Ct. 500 (2019).", "Ineffective Assistance of Counsel : A defense attorney's failure to honor his client's request to appeal is presumptively prejudicial ineffective assistance of counsel \"even when the defendant has signed an appeal waiver.\" Garza v. Idaho , 139 S. Ct. 738 (2019)."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["This report discusses twenty criminal law cases the United States Supreme Court decided during its 2018 term (Term). Twelve of the cases addressed sentencing issues: capital punishment, violent crime enhancements, supervised release, and excessive fines. Five featured the Court's analysis of pretrial questions associated with drunk driving, double jeopardy, and suits against law enforcement officers. Two decisions sought to discern congressional intent in cases involving firearms and sex offenders. An ineffective of assistance of counsel decision rounded out the Term."], "subsections": []}, {"section_title": "Sentencing", "paragraphs": [], "subsections": [{"section_title": "Capital Punishment", "paragraphs": ["The High Court largely relied on existing case law to dispense with capital punishment cases on its 2018 docket. Thus, it held: (1) The prosecution's repeated, racially motivated misconduct during the defendant's six trials for the same murders precluded a creditable Batson finding that the prosecutor's challenge of an African-American prospective juror was based on race-neutral factors ( Flowers v. Mississippi ); (2) Ford and Panetti barred executing a death row inmate with a deteriorating mental condition that prevented him from understanding that he was being punished for his misconduct, regardless of the cause of his condition, but not if he could merely no longer remember the facts surrounding his offense ( Madison v. Alabama ); (3) A state's resubmission of previously rejected intellectual-disability analysis did not change the result ( Moore v. Texas ); (4) The \"clearly established Supreme Court precedent\" exception to the bar on federal habeas relief for state inmates only applies to precedents in place at the time of state proceedings ( Shoop v. Hill ); and (5) The Baze-Glossip standards apply with equal force both to a general challenge to a method of execution and to an \"as-applied\" challenge based on an inmate's individual circumstances ( Bucklew v. Precythe ). "], "subsections": [{"section_title": "Flowers v. Mississippi, 139 S. Ct. 2228 (2019)", "paragraphs": ["Holding : \"[T]he trial court at Flowers' sixth trial committed clear error in concluding that the State's peremptory strike of [a] black prospective juror \u00e2\u0080\u00a6 was not motivated in substantial part by discriminatory intent.\"", "Background : State authorities prosecuted Flowers six times for an offense in which a furniture store owner and three employees were shot to death. The state supreme court reversed Flowers' first and second convictions \"due to numerous instances of prosecutorial misconduct.\" The state supreme court overturned Flowers' third conviction on the grounds of discriminatory jury selection. The fourth and fifth trials ended in hung juries. A sixth jury convicted Flowers of murder and sentenced him to death. Flowers argued that the prosecutor in his sixth trial used peremptory challenges in a racially discriminatory manner. ", "Peremptory challenges allow prosecutors to have prospective jurors dismissed without having to explain the reason for the challenge. A prosecutor may not exercise peremptory challenges in a racially discriminatory manner. The Supreme Court in Batson v. Kentucky established a three-part test to assess claims of racially discriminatory use of peremptory challenges. First, the accused must make a prima facie showing that the challenge was made for discriminatory reasons. Second, the prosecutor has the burden of proving a race-neutral justification for the challenge. Third, the trial court must determine whether the prosecutor has satisfied his burden. ", "The Mississippi Supreme Court considered the prosecutor's peremptory challenges to be race neutral based on valid and not pretextual reasons. The U.S. Supreme Court initially returned Flowers to the state courts for reconsideration in light of its decision in Foster v. Chatman . In Foster , the High Court held that the record demonstrated that the state judiciary had failed the third Batson test\u00e2\u0080\u0094determining whether the state had satisfied the standard that its peremptory strikes be race-neutral. On remand, the Mississippi Supreme Court maintained its earlier assessment\u00e2\u0080\u0094Flowers' trial court had not erred in finding that the prosecution's peremptory challenges were race-neutral. ", "Supreme Court : The U.S. Supreme Court again reversed and returned the case to the Mississippi courts. The Court, speaking through Justice Kavanaugh, declared \"[f]our critical facts, taken together, require reversal:", "First , in the six trials combined, the State employed its peremptory challenges to strike 41 of the 42 black prospective jurors that it could have struck. \u00e2\u0080\u00a6 Second , in the most recent trial, the sixth trial, the State exercised peremptory strikes against five of the six black prospective jurors. Third , at the sixth trial, in an apparent attempt to find pretextual reasons to strike black prospective jurors, the State engaged in dramatically disparate questioning of black and white prospective jurors. Fourth , the State then struck at least one black prospective juror, Carolyn Wright, who was similarly situated to white prospective jurors who were not struck by the State.", "Justice Alito concurred because of the \"unique combinations of circumstances present.\" Justices Thomas and Gorsuch dissented on the grounds that the prosecutor had presented sufficient race-neutral reasons for the challenges. "], "subsections": []}, {"section_title": "Madison v. Alabama, 139 S. Ct. 718 (2019)", "paragraphs": ["Holding : \"First, under Ford and Panetti , the Eighth Amendment may permit executing Madison even if he cannot remember committing his crime. Second, under those same decisions, the Eighth Amendment may prohibit executing Madison even though he suffers from dementia, rather than delusions. The sole question on which Madison's competency depends is whether he can reach a 'rational understanding' of why the State wants to execute him.\" ", "Background : The Supreme Court's Ford and Panetti decisions lie at the heart of the Court's decision in Madis on . In Ford v. Wainwright , the Court held that the Eighth Amendment prohibits executing a defendant who is insane. In Panetti v. Quarterman , the Court held that the state may not execute a death-row inmate \"whose mental illness deprives him of 'the mental capacity to understand that [he] is being executed as a punishment for crime.\" ", "During a dispute with his former girlfriend, Madison murdered a police officer. He was convicted and sentenced to death. As his case passed through the various stages of state and federal review, Madison suffered a series of strokes leaving him with a continuously eroding mental condition that he asserted precluded his execution.", "After Alabama set Madison's execution date, he petitioned the state court for a stay on the grounds of his mental health. The state court denied his petition. Madison then sought federal habeas corpus relief. The district court concluded that the state court had correctly interpreted federal law. The U.S. Court of Appeals for the Eleventh Circuit, however, held that if Madison could not remember the facts of his crime, he could not understand the link between his crime and the decision to execute him. The Supreme Court reversed and remanded the case with the observation that \"[n]either Panetti nor Ford 'clearly established' that a prisoner is incompetent to be executed because of a failure to remember his commission of the crime, as distinct from a failure to rationally comprehend the concepts of crime and punishment as applied in his case.\" ", "Back in state court, the government contended that: (1) neither Madison's memory loss nor any dementia barred his execution and (2) he had failed to prove that he was either delusional or psychotic which might have provided the grounds to stay his execution. The state court agreed and Madison asked the Supreme Court for review.", "Supreme Court : Speaking for the Court, Justice Kagan emphasized that the critical question was whether Madison lacked the mental capacity to \"reach a 'rational understanding' of why the State wants to execute him.\" The Court returned the case to state court to determine with a reminder that Madison's loss of memory, alone, does not bar his execution but a want of mental capacity would bar to execution regardless of whether the incapacity resulted from dementia or delusion. ", "In dissent, Justice Alito, joined by Justices Gorsuch and Thomas, objected that the case should be resolved solely on the basis for which certiorari was granted: \"Does the Eighth Amendment prohibit the execution of a murderer who cannot recall committing the murder for which the death sentence was imposed?\" "], "subsections": []}, {"section_title": "Moore v. Texas, 139 S. Ct. 666 (2019) (Moore II)", "paragraphs": ["Holding : The Texas Court of Criminal Appeals again erred in assessing and denying a death-row inmate's claim of intellectual disability. ", "Background : In 1980, a Texas state court convicted Moore and sentenced him to death for a murder committed during an attempted robbery. In 2002, the Supreme Court held in Atkins that the Eighth Amendment bars executing an intellectually-disabled death row inmate. In 2014, the Court in Hall held unconstitutional a \"rigid rule\" under which no one with an IQ above 70 could be considered \"intellectually-disabled\" for death penalty purposes. In the same year, a Texas state habeas court found Moore to be intellectually disabled and recommended that he be declared ineligible for the death penalty. The Texas Court of Criminal Appeals declined to do this in Moore I .", "Moore I : The Texas Court of Criminal Appeals faulted the state habeas court for failing to apply the Texas appellate court's Briseno standard for intellectual disability and applying the American Association on Intellectual and Developmental Disabilities' [AAIDD] standards instead. The Supreme Court vacated and remanded the case, faulting the Texas Court of Criminal Appeals' for, among other things, relying on unadjusted IQ scores in spite of the Court's Hall decision and using a lay assessment of intellectual disability in its Briseno standard. ", "Moore II : On remand, the Texas Court of Criminal Appeals again concluded that Moore was not intellectually disabled for capital punishment purposes. The Supreme Court reversed and remanded the case to the Texas Court of Criminal Appeals with a per curiam opinion, which reiterated the standard that the lower court should use and identified instances in which the Texas court had applied the standard improperly. \u00e2\u0080\u0094", "The Supreme Court explained that to designate a death row inmate to be ineligible for execution, \"a court must see: (1) deficits in intellectual functioning\u00e2\u0080\u0094primarily a test related criterion; (2) adaptive deficits, 'assessed using both clinical evaluation and individualized \u00e2\u0080\u00a6 measures;' and (3) the onset of these deficits while the defendant was still a minor.\" The Supreme Court cited \"at least\" five instances of the lower court misapplying the standard:", "First, the Texas Court of Criminal Appeals \"overemphasized Moore's perceived adaptive strengths. But the medical community,\" we said, \"focuses the adaptive-functioning inquiry on adaptive deficits.\"", "Second, the appeals court \"stressed Moore's improved behavior in prison.\" But \"[c]linicians \u00e2\u0080\u00a6 caution against reliance on adaptive strengths developed \"in a controlled setting,\" as a prison surely is.", "Third, the appeals court \"concluded that Moore's record of academic failure \u00e2\u0080\u00a6 childhood abuse [,] and suffering \u00e2\u0080\u00a6 detracted from a determination that his intellect and adaptive deficits were related.\" But \"in the medical community,\" those \"traumatic experiences\" are considered \"' risk factors' for intellectual disability.\" ", "Fourth, the Texas Court of Criminal Appeals required \"Moore to show that his adaptive deficits were not related to 'a personality disorder.' But clinicians recognize that the \"existence of a personality disorder or mental-health issue \u00e2\u0080\u00a6 is 'not evidence that a person does not also have intellectual disability.'\" ", "Fifth, the appeals court directed state courts, when examining adaptive deficits, to rely upon certain factors set forth in a Texas case called Ex parte Briseno . \u00e2\u0080\u00a6 We criticized the use of these factors both because they had no grounding in prevailing medical practice, and because they invited \"lay stereotypes\" to guide assessment of intellectual disability. Emphasizing the Briseno factors over clinical factors, we said, \"creat[es] an unacceptable risk that person with intellectual disability will be executed.\"", "Chief Justice Roberts, who had dissented earlier, concurred in the decision as the arguments the Court rejected earlier were no more persuasive when presented a second time. Justice Alito, joined by Justices Thomas and Gorsuch, contended that the Court had given the lower court insufficient guidance in Moore I and that the case should be returned with clearer instructions."], "subsections": []}, {"section_title": "Shoop v. Hill, 139 S. Ct. 504 (2019)", "paragraphs": ["Holding : Federal courts may not grant state prisoners habeas relief based on \"clearly established\" Supreme Court precedent when the precedent is established after the state proceedings concluded.", "Background : In 1986, an Ohio state court convicted Hill, and sentenced him to death, for kidnaping, raping, and murdering a 12-year old. Hill petitioned for federal habeas corpus relief following his unsuccessful state court appeals. In 2002, the U.S. Court of Appeals for the Sixth Circuit (Sixth Circuit) returned Hill's habeas case to state court to address Hill's claim that his mental retardation prevented his execution in light of Atkins . The state courts found Hill competent for execution, and Hill again filed for federal habeas relief. ", "Ordinarily, a federal court may not grant a state prisoner habeas relief unless the state courts have failed to follow clearly established Supreme Court precedent. Although Moore I occurred after the state court proceedings, the Sixth Circuit thought Moore I showed that Atkins was \"clearly established.\"", "Supreme Court : The Sixth Circuit's reasoning did not convince the Supreme Court. The Court's per curiam opinion noted that following Atkins , the Supreme Court continued to elaborate on Atkins in both H a ll and Moore I . In addition, the Court noted the Sixth Circuit's use of Moore I 's analysis in its proceedings and opinion, concluding that, \"[b]ecause the reasoning of the Court of Appeals leans so heavily on Moore [I] , its decision must be vacated.\" "], "subsections": []}, {"section_title": "Bucklew v. Precythe, 139 S. Ct. 1112 (2019)", "paragraphs": ["Holding : A death-row inmate challenging the state's method of execution must show that the state's method involves a risk of severe pain and that a feasible, readily available alternative method will significantly reduce the risk of pain. The Supreme Court reasoned, \"[E]ven if execution by nitrogen hypoxia were a feasible and readily implemented alternative to the State's chosen method, Mr. Bucklew has still failed to present any evidence suggesting that it would significantly reduce his risk of pain.\" ", "Background : In 1996, Bucklew stole a car; kidnapped, beat, and raped his former girlfriend; murdered a man from whom she had sought refuge; attacked her mother with a hammer; and wounded an officer during the shootout that lead to his capture. Having exhausted his direct appeals and opportunities for collateral review, Bucklew sought a preliminary injunction at the eleventh hour to block his execution, claiming that an unusual medical condition would render the state's method of execution particularly painful and therefore uniquely cruel and unusual in violation of the Eighth Amendment. The federal district court granted the state's motion for summary judgment and the U.S. Court of Appeals for the Eighth Circuit affirmed. ", "Supreme Court : The Supreme Court agreed. A decade earlier, Chief Justice Roberts and two colleagues in Baze v. Rees identified an Eighth Amendment standard governing challenges to methods of execution. First, the state's method must involve a risk of severe pain. Second, \"[t]o qualify, the [proffered] alternative procedure must be feasible, readily implemented, and in fact significantly reduce a substantial risk of severe pain.\" Third, the state must unjustifiably persist in using its more painful method. Justices Thomas and Scalia had concurred in the result, reasoning that \"a method of execution only violates the Eighth Amendment if it is deliberately designed to inflict pain.\" Several years later in Glossip v. Gross , when a second method of execution became more common, the Court applied the same standard (the \"inmates did not show that the risks they identified were substantial and imminent \u00e2\u0080\u00a6 and \u00e2\u0080\u00a6 they did not establish the existence of a known and available alternative method of execution that would entail significantly less severe risk.\"). ", "In 2019, Justice Gorsuch, writing for the Court, rejected Bucklew's contention that his unique situation warranted applying a standard other than that formulated in Baze and Glossip . From Justice Gorsuch's perspective, Baze-Glossip established that an Eighth Amendment analysis always involves comparing alternative levels of suffering. Bucklew failed to present evidence of a feasible, readily available alternative execution method or to establish that any such alternative would significantly reduce the risk of severe pain. ", "The four dissenters argued that Glossip's sweeping language regarding its standard's applicability in all cases must be put in context and subject to the kind of exceptions that Bucklew raised."], "subsections": []}]}, {"section_title": "Violent Crime Cases", "paragraphs": ["Among other things, the Supreme Court's 2019 violent crime cases explored what constitutes a violent crime with respect to three statutes: 18 U.S.C. \u00c2\u00a7 924(e) (The Armed Career Criminal Act (ACCA)), 18 U.S.C. \u00c2\u00a7 924(c) (the firearm-in-furtherance statute), and 18 U.S.C. \u00c2\u00a7 16 (the general definition statute). These provisions are similar with each having an elements clause and a residual clause.", "The ACCA defines the term \"violent felony\" as a felony that:", "(i) has as an element the use, attempted use, or threatened use of physical force against the person of another [the elements clause]; or", "(ii) is burglary, arson, or extortion, involves use of explosives [the specific offense clause], or ", "otherwise involves conduct that presents a serious potential risk of physical injury to another [the residual clause].", "Section 924(c) defines the term \"crime of violence\" to be \"an offense that is a felony and:", "(A) has as an element the use, attempted use, or threatened use of physical force against the person or property of another, or", "(B) that by its nature, involves a substantial risk that physical force against the person or property of another may be used in the course of committing the offense.", "Section 16 defines the term \"crime of violence\" as:", "(a) an offense that has as an element the use, attempted use, or threatened use of physical force against the person or property of another, or", "(b) any other offense that is a felony and that, by its nature, involves a substantial risk that physical force against the person or property of another may be used in the course of committing the offense.", "In 1990, the Supreme Court addressed an ACCA case in Taylor v. United States . Under the ACCA, courts must sentence defendants convicted of federal unlawful possession of a firearm to prison for at least 15 years if the defendant has three or more prior violent felony convictions. Taylor had a prior state burglary conviction in addition to other offenses. The ACCA defines violent felony to include \"burglary,\" which the Court found to mean \"unlawful or unprivileged entry into, or remaining in, a building or structure, with intent to commit a crime.\" To decide whether Taylor's state burglary conviction constituted an ACCA burglary conviction, the Court examined the state burglary statute to determine whether a jury would have to find each element of an ACCA burglary offense. The Court held that Taylor's state burglary conviction did not qualify as an ACCA predicate because his state conviction might not have required proof of each element of the ACCA offense ( e.g ., the state statute covered burglarizing a vehicle, while the ACCA limited burglaries to \"building[s] or structure[s]\").", "Following Taylor , the Court declared the ACCA residual clause (\" otherwise involves conduct that presents a serious potential risk of physical injury \") unconstitutionally vague in Johnson v. United States . Three years later in Sessions v. Dimaya , the Court found the residual clause in 18 U.S.C. \u00c2\u00a7 16(b) (\" any offense that \u00e2\u0080\u00a6 by its nature, involves a substantial risk that physical force against the person or property of another may be used in the course of committing the offense \") to be unconstitutionally vague. In 2019, the Court found that Section 924(c)'s language (\" involves a substantial risk that physical force against the person or property of another may be used in the course of committing the offense \") to be unconstitutionally vague in United States v. Davi s . At the same time, the High Court endorsed penalties under the elements and specific offenses clauses of the ACCA in Stokeling v. United Stat es , United States v. Stitt , and Quarles v. United States ."], "subsections": [{"section_title": "United States v. Davis, 139 S. Ct. 2319 (2019)", "paragraphs": ["Holding : Section 924(c)'s residual clause is constitutionally vague.", "Background : In Davis , the government argued that the vagueness issue that permeated the residual clauses in the ACCA and Section 16(b) cases could be avoided if the courts abandoned the categorical approach and examined the facts underlying a particular conviction to determine whether the offense actually involved a substantial risk of injury to another. ", "Davis committed a series of gas station robberies armed with a sawed off shotgun. He was convicted and sentenced for multiple Hobbs Act robbery offenses, possession of a firearm by a felon, and under Section 924(c)'s residual clause. The U.S. Court of Appeals for the Fifth Circuit held the residual clause to be unconstitutionally vague and vacated the Section 924(c) conviction. ", "Supreme Court : The Supreme Court affirmed the Fifth Circuit's conclusion and returned the case to the lower courts for resentencing. The government had urged the Supreme Court to analyze the case using a \"case-specific\" approach rather than the \"categorical\" approach, conceding that the residual clause is unconstitutionally vague under the categorical standard. The Court acknowledged that a case-specific standard would alleviate at least some constitutional concerns. ", "Justice Gorsuch, writing for the majority, explained that Section 924(c)'s text, context, and history preclude a case-specific approach. First, the residual clause refers to an \"offense\" that risks the use of physical force \"by its nature.\" As Justice Gorsuch stated, \"[I]n plain English, when we speak of the nature of an offense, we're talking about 'what an offense normally \u00e2\u0080\u00a6 entails, not what happened to occur on one occasion.'\" Second, in the federal criminal code, statutes may refer to one of the twin definitions of a \"crime of violence\" in Sections 16 and 924(c). Justice Gorsuch stated: \"To hold, as the government urges, that \u00c2\u00a7 16(b) [the section's residual clause] requires the categorical approach while \u00c2\u00a7 924(c)(3)(B) [that section's residual clause] requires the case-specific approach would make a hash of the federal criminal code.\" Third, Congress initially created the two sections within the same statute. At first, relying on the Section 16 definition for Section 924(c), and soon thereafter copying Section 16's definition into Section 924(c)(3). The Court stated: \"What's more, when Congress copie[d] \u00c2\u00a7 16(b)'s language into \u00c2\u00a7 924(c) in 1986, it proceeded on the premise that the language required a categorical approach. By then courts had, as the government puts it, 'beg[u]n to settle' on the view that \u00c2\u00a7 16(b) demanded a categorical analysis.\" ", "Writing for the four dissenting Justices, Justice Kavanaugh favored a case-specific approach as consistent with Section 924(c)'s language and the principle of constitutional avoidance. "], "subsections": []}, {"section_title": "United States v. Stitt, 139 S. Ct. 399 (2018)", "paragraphs": ["Holding : Under the ACCA's specific crimes clause, the generic crime of \"burglary\" covers unlawfully entering, or remaining in, a building or structure, including mobile homes, trailers, tents, or vehicles, if they are designed, adapted, or customarily used for overnight accommodations of individuals.", "Background : In Stitt, the Supreme Court expanded on Mathis v. United States in which it had held that merely breaking into a plane, boat, or truck may not constitute burglary under the ACCA. In Stitt , the Court said that breaking into a plane, boat, or truck that is designed or adapted for overnight accommodation is ACCA burglary.", "A federal jury convicted Stitt, who had six previous Tennessee aggravated burglary convictions, on a charge of being a felon in possession of a firearm. The Tennessee aggravated burglary statute outlaws \"burglary of a habitation and defines 'habitation' as 'any structure \u00e2\u0080\u00a6 which is designed or adapted for the overnight accommodation of persons.' The term 'habitation' includes 'mobile homes, trailers, and tents,' as well as any 'self-propelled vehicle that is designed or adapted for the overnight accommodation of persons and is actually occupied at the time of initial entry by the defendant.'\" The U.S. Court of Appeals for the Sixth Circuit concluded that the Tennessee statute was broader than the ACCA generic burglary definition and consequently could not serve as an ACCA predicate. ", "Sims, whose case the Supreme Court joined with Stitt's, pleaded guilty to a felon-in-possession charge. His record included two ACCA predicate drug convictions and two convictions under the Arkansas residential burglary statute, which provides that residential burglary occurs when an individual \"enters or remains unlawfully in a residential occupiable structure of another person with the purpose of committing \u00e2\u0080\u00a6 any offense punishable by imprisonment.\" A \"'residential occupiable structure' means a vehicle, building, or other structure: (i)[i]n which any person lives; or (ii) [t]hat is customarily used for overnight accommodation of a person whether or not a person is actually present.\" The U.S. Court of Appeals for the Eighth Circuit \"conclude[d] that Arkansas residential burglary categorically sweeps more broadly than [ACCA] generic burglary. Accordingly, Sims's Arkansas residential burglary convictions do not qualify as ACCA predicate offenses.\"", "Supreme Court : The Supreme Court unanimously overturned both appellate court decisions. In the opinion for the Court, Justice Breyer pointed out that the ACCA generic burglary definition represented an assumption of Congress's understanding of state law at the time of ACCA's enactment. In 1986, a majority of the states included vehicles, designed or adapted for overnight occupancy, within burglary's location element. He also noted that Congress crafted the ACCA with an eye to the risk of violent confrontations between an intruder and an occupant, a risk little altered by the physical characteristics of the lodging where the clash occurs."], "subsections": []}, {"section_title": "Quarles v. United States, 139 S. Ct. 1872 (2019)", "paragraphs": ["Holding : Under the ACCA's specific crimes clause, the generic burglary definition includes entry or remaining in a building or structure with the intent to commit a crime formed while remaining unlawfully present. ", "Background : Grand Rapids, Michigan police officers arrested Quarles after he assaulted his girlfriend and threatened her with a gun. Quarles had previously committed third-degree home invasion and on two occasions committed assault with a deadly weapon. Third-degree home invasion occurs when an individual \"breaks and enters a dwelling or enters a dwelling without permission, and, at any time while he or she is entering, present in, or existing the dwelling, commits a misdemeanor.\" Quarles argued that his home invasion conviction could not count as an ACCA predicate offense because the Michigan statute permitted conviction for conduct that the ACCA did not cover under its generic definition of burglary, which is \"unlawful or privileged entry into, or remaining in, a building or structure, with intent to commit a crime.\" Neither the federal district court nor the U.S. Court of Appeals for the Sixth Circuit accepted Quarles' contention.", "Supreme Court : The Supreme Court affirmed. Writing for a unanimous Court, Justice Kavanaugh noted that, because \"remaining\" is continuous, the generic definition by condemning unlawfully remaining -in refutes \"that burglary only occurs when the defendant has the intent to commit a crime at the exact mome nt when he or she fir st unlawfully remains in a building or structure.\" Justice Kavanaugh encapsulated the Court's view, stating:", "The Armed Career Criminal Act does not define the term \"burglary.\" In Taylor , the Court explained that 'Congress did not wish to specify an exact formulation that an offense must meet in order to count as \"burglary\" for enhancement purposes. And the Court recognized that the definitions of burglary \"vary\" among the States. The Taylor Court therefore interpreted the generic term \"burglary\" in \u00c2\u00a7 924(e) in light of: the ordinary understanding of burglary as of 1986 [when the ACCA was enacted]; the States' laws at that time Congress' recognition of the dangers of burglary; and Congress' stated objective of imposing increased punishment on armed career criminals who had committed prior burglaries. Looking at those sources, the Taylor Court interpreted generic burglary under \u00c2\u00a7 924(e) to encompass remaining-in burglary. Looking at those same sources, we interpret remaining in-in burglary under \u00c2\u00a7 924(e) to occur when the defendant forms the intent to commit a crime at any time while unlawfully present in a building or structure."], "subsections": []}, {"section_title": "Stokeling v. United States, 139 S. Ct. 544 (2019)", "paragraphs": ["Holding : Conviction under Florida robbery statute qualifies as a crime of violence under the ACCA elements clause.", "Backgrou nd : Police discovered a firearm in Stokeling's possession while investigating a burglary of a restaurant where he worked. At the time, he had already been convicted of home invasion, kidnapping, and robbery. At sentencing for the federal firearms charge, Stokeling challenged application of the ACCA. He argued that the Florida robbery statute under which he was convicted included \"sudden snatch\" robbery. Robbery under the ACCA's element clause reached only robberies that had \"as an element the use, attempted use, or threatened use of physical force.\" Thus, he contended the broader Florida robbery statute did not qualify as a crime of violence under the ACCA's element clause. The district court agreed, but the U.S. Court of Appeals for the Eleventh Circuit reversed based on its earlier decisions.", "Supreme Court : The Supreme Court affirmed the Eleventh Circuit's opinion. Writing for the Court, Justice Thomas concluded \"that the elements clause encompasses robbery offenses that require the criminal to overcome the victim's resistance.\" He noted that, as originally crafted, the ACCA recognized only prior robbery and burglary predicate convictions and defined \"robbery\" in terms that \"mirrored the elements of the common-law crime of robbery, which has long required force or violence. At common law, an unlawful taking was merely larceny unless the crime involved 'violence.' And 'violence' was 'committed if sufficient force [was] exerted to overcome the resistance encountered.'\" ", "\"Thus,\" Justice Thomas explained, \"the application of the categorical approach to the Florida robbery statute is straightforward. Because the term 'physical force' in [the] ACCA encompasses the degree of force necessary to commit common-law robbery, and because Florida robbery requires the same degree of 'force,' Florida robbery qualifies as an ACCA-predicate offense under the elements clause.\" ", "Joined by three members of the Court, Justice Sotomayor dissented, writing that the Florida statute allowed conviction based on a minimal level of force while the elements clause did not."], "subsections": []}]}, {"section_title": "Excessive Fines", "paragraphs": [], "subsections": [{"section_title": "Timbs v. Indiana, 139 S. Ct. 682 (2019)", "paragraphs": ["Holding : The Eighth Amendment's Excessive Fines Clause is incorporated in the Fourteenth Amendment's Due Process Clause and therefore binds the States.", "Background : ", "The Eighth Amendment denies federal officials authority to require excessive bail, impose excessive fines, or inflict cruel and unusual punishments. The Due Process Clause of the Fourteenth Amendment imposes on states many Bill of Rights limits on the federal government. The Supreme Court has held that the Due Process Clause incorporates the Eighth Amendment's Cruel and Unusual Punishment Clause.", "With insurance policy proceeds, Timbs bought a new Land Rover to use in his drug trafficking enterprise. Following his conviction, the state trial court did not order confiscation of the Land Rover, reasoning that the vehicle's forfeiture would violate the Eighth Amendment's Excessive Fines Clause as applied to the state through the Fourteenth Amendment. The Indiana Court of Appeals concurred. The Indiana Supreme Court, however, reversed the trial court's decision because it \"decline[d] to find or assume incorporation until the [U.S.] Supreme Court decides the issue authoritatively,\" which the U.S. Supreme Court did in Timbs v. Indiana .", "Supreme Court : Writing for the Court, Justice Ginsburg traced the concept of excessive fines from the Magna Carte to the English Bill of Rights to the laws of a majority of the original thirteen states at the Constitution's ratification and finally to the laws of a vast majority of the states at the Fourteenth Amendment's ratification. Justice Ginsburg wrote:", "Like the Eighth Amendment's proscriptions of \"cruel and unusual punishment\" and \"[e]xcessive bail,\" the protection against excessive fines guards against abuses of government's punitive or criminal-law-enforcement authority. This safeguard, we hold, is \"fundamental to our scheme of ordered liberty,\" with \"dee[p] root[s] in [our] history and tradition.\" The Excessive Fines Clause is therefore incorporated by the Due Process Clause of the Fourteenth Amendment.", "While the Justices agreed that the Fourteenth Amendment incorporates the Eighth Amendment's Excessive Fines Clause, Justices Thomas and Gorsuch viewed this as resulting from the Privileges and Immunities Clause rather than the Due Process Clause.", "In the Supreme Court, the State unsuccessfully challenged a feature of Eighth Amendment law, rather than incorporation itself. In Austin v. United States , the Court had held that forfeitures, authorized at least in part with punitive intent and effect, constitute fines for purposes of the Excessive Fines Clause, regardless of whether confiscation occurs by criminal trial or a civil in rem proceeding. The Court declined to re-examine Austin or to endorse less than full incorporation."], "subsections": []}]}, {"section_title": "Supervised Release", "paragraphs": [], "subsections": [{"section_title": "United States v. Haymond, 139 S. Ct. 2369 (2019)", "paragraphs": ["Holding : By imposing a mandatory term of imprisonment after revoking supervised release based on finding by a preponderance of the evidence that Haymond had breached his conditions of supervised release, a federal court violated the Sixth Amendment's jury trial guarantee and the Fifth Amendment Due Process proof beyond-a-reasonable doubt standard for criminal cases. The Court left for the lower court to determine whether the error was harmless and, if not, the appropriate remedy.", "Background : Haymond involved the federal supervised release statute, 18 U.S.C. \u00c2\u00a7 3583, which subjects federal inmates on their release from prison to certain conditions usually for a maximum of five years. For certain sex offenses, however, the supervised release term is at least five years and may be for the sex offender's entire life. Under the statute, a court may revoke an individual's supervised release and return him to prison if, by a preponderance of the evidence, the court finds that the individual has violated a condition of his release. Ordinarily, when a court revokes supervised release, it re-imprisons the individual for no longer than his remaining time of supervised release and, in any event, for no longer than five years. Under Subsection 3583(k), a court must sentence a sex offender registrant to re-imprisonment for at least five years when the court revokes his supervised release based on a sex offense. ", "A federal jury convicted Haymond of possessing child pornography, which is punishable by imprisonment for not more than 10 years. The district court sentenced him to 38 months in prison and supervised release for 10 years thereafter. The court conditioned Haymond's supervised release on him committing no further crimes, submitting to periodic polygraph examinations, and consenting to searches by his probation officer. Haymond passed several polygraph tests, suggesting he had neither viewed nor possessed child pornography since his release. Yet, when Haymond's probation officer seized Haymond's cell phone, he found images of child pornography cached there. At his revocation hearing, Haymond presented expert testimony that the material could have been put on his cell phone without his knowledge. Nevertheless, the court concluded that it was more likely than not that Haymond had knowingly possessed child pornography in violation of a condition of his release. The court \"with reservations\" ordered him returned to prison for the mandatory minimum five years. The U.S. Court of Appeals for the Tenth Circuit reversed holding the mandatory minimum feature of the sentencing revocation procedure violates the Fifth and Sixth Amendments. ", "Supreme Court : While five Justice agreed that Subsection 3583(k) is unconstitutional, they did not agree why. Joined by Justices Ginsburg, Sotomayor, and Kagan, Justice Gorsuch concluded that the subsection, which increased Haymond's term of imprisonment, applied a preponderance of the evidence standard, rather than providing for a jury to find guilt beyond a reasonable doubt:", "Based on the facts reflected in the jury's verdict, Mr. Haymond faced a lawful prison term of between zero and 10 years\u00e2\u0080\u00a6 But then a judge\u00e2\u0080\u0094acting without a jury and based only on a preponderance of the evidence\u00e2\u0080\u0094found that Mr. Haymond had engaged in additional conduct in violation of the terms of his supervised release. Under \u00c2\u00a7 3583(k), that judicial factfinding triggered a new punishment in the form of a prison term of at least five years and up to life. So \u00e2\u0080\u00a6 the facts the judge found here increased 'the legally prescribed range of allowable sentences in violation of the fifth and Sixth Amendments. In this case, that meant Mr. Haymond faced a minimum of five years in prison instead of a little as none.", "Justice Breyer concurred in the judgment but not the rationale. For Justice Breyer, Subsection 3583(k) has three characteristics that together suggest the punishment is for a new crime rather than a continuation of punishment for the crime for which the jury convicted him:", "First , \u00c2\u00a73583(k) applies only when a defendant commits a discrete set of federal criminal offenses specified in the statute. Second , \u00c2\u00a73583(k) takes away the judge's discretion to decide whether violation of a condition of supervised release should result in imprisonment and for how long. Third , \u00c2\u00a73583(k) limits the judge's discretion in a particular manner: by imposing a mandatory minimum term of imprisonment of 'not less than 5 years' upon a judge's finding that a defendant 'has commit[ted] any' listed 'criminal offense.' Taken together, these features of \u00c2\u00a73583(k) more closely resemble the punishment of new criminal offenses, but without granting a defendant the rights including the jury right, that attend a new criminal prosecution.", "The plurality agreed to remand the case to the lower court to address whether the issue could be resolved by requiring that Subsection 3583(k) revocation hearings be conducted before a jury using the standard of proof beyond a reasonable doubt.", "Joined by Justices Thomas and Kavanaugh, Justice Alito wrote a dissent maintaining that a jury and \"proof beyond a reasonable doubt\" are not constitutionally required for supervisory release revocation proceedings and that to suggest otherwise has serious implications. "], "subsections": []}, {"section_title": "Mont v. United States, 139 S. Ct. 1826 (2019)", "paragraphs": ["Holding : Time served in state pretrial detention while on federal supervised release tolls the running of the term of federal supervised release if time in state pretrial detention counts as time served for state conviction purposes. ", "Background : On March 6, 2012, U.S. prison officials released Mont and he began serving a five-year term of federal supervised release, conditioned on not committing any new federal or state crimes. On June 1, 2016, state authorities arrested Mont on drug trafficking charges and held him in pretrial detention. On March 21, 2017, 15 days after Mont's term of supervised release was scheduled to expire, a state trial court sentenced him to six years in prison on state charges with credit for the 10 months he had served in state pretrial detention. On March 30, 2017, the U.S. District Court scheduled a supervisory release revocation hearing. Although Mont argued his term of supervised release had expired, the court revoked his supervised release and sentenced him to an addition 42 months in federal prison to be served upon completing his state sentence. The U.S. Court of Appeals for the Sixth Circuit (Sixth Circuit) affirmed on the basis of Sixth Circuit precedent interpreting the law governing supervised release. The statute stated, \"[a] term of supervised release does not run during any period in which the person is imprisoned in connection with a conviction for a Federal, State, or local crime unless the imprisonment is for a period of less than 30 consecutive days.\" An earlier Sixth Circuit decision had concluded that, \"[1] when a defendant is held for thirty days or longer in pretrial detention, and [2] he is later convicted for the offense for which he was held, and [3] his pretrial detention is credited as time served toward his sentence, then the pretrial detention is 'in connection with' a conviction and tolls the period of supervised release under \u00c2\u00a7 3624.\" ", "Supreme Court : In Mont, interpreting Section 3624 divided both the federal courts of appeals and the Supreme Court , a majority of which sided with the Sixth Circuit. Writing for the Court, Justice Thomas explained that a person in pretrial detention is \"imprisoned,\" and such imprisonment may be \"in connection with a conviction,\" albeit after the fact. Justice Thomas also noted that Section 3624 does not qualify imprisonment with \" after conviction.\" While the statute identifies a precise point at which supervised release begins, it is less clear where it ends. Referring to the section's statutory setting and purpose, Justice Thomas recognized supervised release to be a \"conditional liberty\" during time of good behavior, but punishment nonetheless. Justice Thomas stated: \"[I]t would be an exceedingly odd construction of the statute to give a defendant the windfall of satisfying a new sentence of imprisonment and an old sentence of supervised release with the same period of pretrial detention.\" ", "Joined by Justices Breyer, Kagan, and Gorsuch, Justice Sotomayor dissented, observing, \"I cannot agree that a person 'is imprisoned in connection with a conviction' before any conviction has occurred.\""], "subsections": []}]}]}, {"section_title": "U.S. Substantive Offense Statutes", "paragraphs": ["The Supreme Court examined the scope of federal statutes that establish various criminal offenses in two cases. In the first, the Court held that, in order to convict a foreign national unlawfully present in the United States with knowingly possessing a firearm, the government must prove that the defendant knew both that he was in possession of a firearm and that he was unlawfully present in the country ( Rehaif v. United States ). In the second, the Justices held that Congress had validly authorized the Attorney General to apply the Sex Offender Registration and Notification Act (SORNA) to offenders convicted before SORNA's enactment ( Gundy v. United States ). "], "subsections": [{"section_title": "Firearms", "paragraphs": [], "subsections": [{"section_title": "Rehaif v. United States, 139 S. Ct. 2191 (2019)", "paragraphs": ["Holding : Conviction of an alien unlawfully present in the United States for unlawful firearms possession requires proof that the alien knew both that he was in possession of a firearm and that he was unlawfully present.", "Background : Rehaif entered the United States on a student visa. When the university to which he was admitted dismissed him for poor performance, it advised him that he would lose his immigration status unless he enrolled elsewhere, which he did not do. He went to a shooting range where he purchased ammunition and practiced using the range's firearms. The ammunition he bought came from out-of-state and the firearms he used were from Austria. Federal law declares it unlawful for an individual, unlawfully present in the United States, to possess a firearm or ammunition that has been transported or shipped in interstate or foreign commerce. A second statute makes it a federal crime to knowingly engage in such unlawful possession.", "At his trial, the U.S. district court advised the jury that the government did not have to prove that Rehaif knew that he was in the U.S. unlawfully. The jury convicted Rehaif, and the court sentenced him to prison for 18 months. The U.S. Court of Appeals for the Eleventh Circuit (Eleventh Circuit) affirmed Rehaif's conviction on several grounds. The Eleventh Circuit noted that conviction requires proof of three elements: \"(1) the defendant falls within one of the categories [of disqualified possessors] \u00e2\u0080\u00a6 ('the status element'); (2) the defendant possessed a firearm or ammunition ('the possession element'); and (3) the possession was 'in or affecting [interstate or foreign] commerce [(the jurisdictional element)].'\" With regard to the status element, binding Eleventh Circuit case law dispensed with a mens rea requirement (sometimes referred to as a scienter, state of mind, or knowledge requirement).", "Supreme Court : The Supreme Court held that \"the Government therefore must prove both that the defendant knew he possessed a firearm and also that he knew he belonged to the relevant category of persons barred from possessing a firearm,\" and reversed Rehaif's conviction. Speaking for a majority of the Court, Justice Breyer pointed out that mens rea questions are first and foremost a matter of congressional intent. He noted that the \"longstanding presumption, traceable to the common law, that Congress intends to require a defendant to possess a culpable mental state regarding 'each of the statutory elements that criminalize otherwise innocent conduct.'\" Nevertheless, he explained that the presumption does not necessarily apply to all of a crime's elements. For example, it rarely attaches to jurisdictional elements, such as interstate shipment or use of the mail, that \"do not describe the 'evil Congress seeks to prevent,' but instead simply ensure that the Federal Government has the constitutional authority to regulate the defendant's conduct.\"", "Justice Breyer acknowledged that the Court has \"typically declined to apply the presumption in favor of scienter in cases involving statutory provisions that form part of a 'regulatory' or 'public welfare' program and carry only minor penalties.\" Public welfare offenses generally involve a regulatory regime designed to protect the public from some exceptionally harmful product or device, such as mislabeled drugs, sulfuric acid, or hand grenades. These offenses ordinarily expose to criminal liability only those, such as manufacturers or shippers, who have placed themselves in a responsible relationship to such a public danger. Qualified regulatory statutes usually proscribe conduct that was innocent at common law and punish offenders relatively lightly. Here, Justice Breyer emphasized, the public welfare exception did not apply because the \"firearms provisions before us are not part of a regulatory or public welfare program, and they carry a potential penalty of 10 years in prison that we have previously described as 'harsh.'\"", "Consequences : On remand, the Court left the Eleventh Circuit to determine whether the erroneous jury instruction constituted harmless error. The Court left unresolved what is required to show that a defendant knew of his status. Federal law bars firearm possession by classes of individuals other than illegal aliens, i.e ., (1) convicted felons; (2) fugitives; (3) drug addicts; (4) the mentally disabled; (5) those dishonorably discharged from the armed services; (6) those who have denounced their U.S. citizenship; (7) those under certain restraining orders; and (8) those convicted of misdemeanor domestic violence. The Court \"express[ed] no view, however, about what precisely the Government must prove to establish a defendant's knowledge of status\" in the case of these other instances of disqualifying status.", "Justice Alito's dissent, which Justice Thomas joined, may have influenced the Court to limit the opinion's scope. Among other criticisms, Justice Alito focused on unlawful possession by others in addition to unlawfully present foreign nationals, stating:", "It [the unlawful possession statute] probably does more to combat gun violence than any other federal law. It prohibits the possession of firearms by, among others, convicted felons, mentally ill persons found by a court to present a danger to the community, stalkers, harassers, perpetrators of domestic violence, and illegal aliens. Today's decision will make it significantly harder to convict persons falling into some of these categories, and the decision will create a mountain of problems with respect to the thousands of prisoners currently serving terms for [unlawful possession] convictions."], "subsections": []}]}, {"section_title": "SORNA", "paragraphs": [], "subsections": [{"section_title": "Gundy v. United States, 139 U.S. 2116 (2019)", "paragraphs": ["H olding : Authorizing the Attorney General to issue regulations, as soon as feasible, governing the registration requirements under the Sex Offender Registration and Notification Act (SORNA) for pre-Act offenders did not violate the nondelegation doctrine.", "Background : In Gundy v. United States , the defendant argued unsuccessfully that the federal statute featured an unconstitutional delegation of Congress's legislative authority. The alignment of the Justices, however, suggests that the Court may revisit the issue in the near future. Four Justices considered the delegation proper; three did not; one joined the Court too late to participate fully; and one voted with the four based on precedents that he considered occasionally marked by \"extraordinarily capacious standards\" and would have voted to reexamine.", "SORNA : Congress passed SORNA in 2006. Congress designed SORNA in order to provide a publicly available, online gateway to federal, state, tribal, and territorial registration systems that met certain minimum federal standards. It authorized the Attorney General to promulgate implementing regulations including provisions concerning SORNA's retroactive application. An individual with a qualifying state offense, who fails to follow SORNA's registration and updating requirements and subsequently travels interstate, is guilty of a federal crime. An individual with a qualifying federal, tribal, or territorial sex offense conviction, who fails to follow SORNA's registration and updating requirements, is also guilty of a federal offense . ", "Second Circuit : While Gundy was on federal supervised release, a Maryland state court convicted him of a state sex offense and a federal court determined that he had violated the terms of his supervised release as a consequence. The federal court sentenced him to prison for two years to be served when he completed his Maryland sentence. While Gundy was serving time in Maryland, Congress passed SORNA and the Attorney General activated its retroactive application. Maryland prison authorities subsequently transferred Gundy to a federal correctional facility in Pennsylvania to serve his federal sentence. Gundy did not register under SORNA either while in state or federal custody. ", "Towards the end of his sentence, federal authorities transferred him to a federal half-way house in New York and approved his request to travel unescorted from Pennsylvania to the half-way house. Thereafter, federal authorities charged him with interstate travel while failing to register as a sex offender. The district court dismissed the indictment under the misimpression that Gundy was not required to register. The U.S. Court of Appeals for the Second Circuit (Second Circuit) reversed. On remand from the Second Circuit, the district court convicted Gundy on the failure to register charge. The Second Circuit rejected his statutory interpretation arguments and observed that Gundy's other arguments on appeal were without merit \"includ[ing] Gundy's argument\u00e2\u0080\u0094\u00e2\u0080\u00a6 made only for preservation purposes\u00e2\u0080\u0094that SORNA violates antidelegation principles.\"", "Supreme Court : Gundy asked the Court to review four questions:", "(1) Whether convicted sex offenders are 'required to register' under the federal Sex Offender Notification and Registration Act ('SORNA') while in custody, regardless of how long they have until release.", "(2) Whether all offenders convicted of a qualifying sex offense prior to SORNA's enactment are 'required to register' under SORNA not later than August 1, 2008.", "(3) Whether a defendant violates 18 U.S.C. \u00c2\u00a7 2250(a), which requires interstate travel, where his only movement between states occurs while he is in the custody of the Federal Bureau of Prisons and serving a prison sentence.", "(4) Whether SORNA's delegation of authority to the Attorney General to issue regulations under 42 U.S.C. \u00c2\u00a7 16913(d) [now 34 U.S.C. \u00c2\u00a7 20913(d)] violates the nondelegation doctrine.", "The Justices addressed only the nondelegation question. While a majority agreed on the result, they did not agree on a rationale. Joined by Justices Ginsburg, Breyer, and Sotomayor, Justice Kagan declared that the \"delegation easily passes constitutional muster\" and voted to affirm the Second Circuit's pronouncement. Justice Alito also voted to affirm but did not join Justice Kagan's opinion, perhaps to avoid a 4-4 split on the Court. He explained that he thought the result was consistent with the Court's earlier cases, although he would prefer to reconsider them. Justice Gorsuch, joined by the Chief Justice and Justice Thomas, dissented. Justice Kavanaugh, who was seated late in the Court's term, did not participate in the case. ", "The participating Justices read the Court's earlier cases differently. Justice Kagan pointed to the low bar the Court's earlier delegation decisions had set but conceded that the decisions had required a guiding \"intelligible principle\" or limiting policy statement to accompany the delegation. Justice Kagan noted, however, that the Court had only held a delegation to be invalid twice and then only because Congress had failed to provide \"' any policy or standard' to confine discretion.\" She concluded that SORNA's direction to the Attorney General \"to require pre-Act offenders to register as soon as feasible\" was a far more confining policy statement than the \"very broad delegations\" the Court had approved in the past.", "Justice Gorsuch disputed the comparison, stating: \"SORNA leaves the Attorney General free to impose on 500,000 pre-Act offenders all of the statute's requirements, some of them, or none of them. . . . In the end, there isn't \u00e2\u0080\u00a6 a single other case where we have upheld executive authority over matters like these on the ground they constitute mere 'details.'\" He found none of the executive fact-finding or overlapping legislative-executive powers in SORNA's delegation to the Attorney General that he discerned in the Court's precedents. ", "Justices Kagan and Alito's opinions looked only at Court precedents. Examining these, Justice Gorsuch declared that, as least in the case of SORNA, his colleagues should have been more demanding. He stated: \"[W]hile Congress can enlist considerable assistance from the executive branch in filling up details and finding facts, it may never hand off to the nation's chief prosecutor the power to write his own criminal code. That 'is delegation running riot.'\""], "subsections": []}]}]}, {"section_title": "Pretrial", "paragraphs": ["Five decisions in the Supreme Court's most recent term dealt with pre-trial matters. One confirmed the continued validity of the double jeopardy dual sovereign doctrine ( Gamble v. United States ). A second addressed circumstances under which the Fourth Amendment permits the warrantless performance of a blood alcohol test on an individual suspected of drunk driving ( Mitchell v. Wisconsin ). Three others discussed the obstacles individuals face when they seek to sue officers for the manner in which the officers performed their law enforcement duties ( Nieves v. Bartlett ; McDonough v. Smith ; and City of Escondido v. Emmons )."], "subsections": [{"section_title": "Double Jeopardy", "paragraphs": [], "subsections": [{"section_title": "Gamble v. United States, 139 S. Ct. 1960 (2019)", "paragraphs": ["Holding : The dual sovereign doctrine of the Fifth Amendment's Double Jeopardy Clause, which permits successive state and federal prosecutions for the same misconduct, remains in force.", "Background : Police stopped Gamble for a traffic violation, smelled marijuana, and searched his car, uncovering a handgun. State authorities prosecuted him for unlawful firearm possession under state law. Federal authorities also prosecuted him for unlawful firearm possession under federal law based on the same incident. Gamble challenged his federal indictment on double jeopardy grounds. In light of the Double Jeopardy Clause's dual sovereignty doctrine, the district court refused to dismiss the indictment and the U.S. Court of Appeals for the Eleventh Circuit (Eleventh Circuit) affirmed. Gamble petitioned the Supreme Court to reconsider the validity of the dual sovereignty doctrine, and the Court agreed. ", "Supreme Court : Gamble continues the status quo. All but two members of the Court voted to continue the dual sovereignty doctrine. Writing the majority opinion, Justice Alito noted that the Double Jeopardy Clause's reference to the \"same offence\" implies a ban only on prosecution under the laws of the same sovereign. Justice Alito reviewed a continuous line of cases beginning in the early Nineteenth Century that endorsed the dual sovereignty doctrine. These precedents pose an obstacle to rejecting the doctrine because s tare decisis counsels against abandoning earlier precedents, which the majority declined to do. ", "Justices Ginsburg and Gorsuch dissented separately because they considered the doctrine \"misguided\" and \"wrong.\""], "subsections": []}]}, {"section_title": "Drunk Driving", "paragraphs": [], "subsections": [{"section_title": "Mitchell v. Wisconsin, 139 S. Ct. 2525 (2019)", "paragraphs": ["Holding : A suspect's loss of consciousness following a probable cause arrest for drunk driving will almost always qualify for the exigent circumstances exception to the Fourth Amendment's warrant requirement. (Plurality).", "Ba ckground : Mitchell is the latest case in which the Court has wrestled with Fourth Amendment requirements in drunk driving cases. In the 1966 decision Schmerber v. California , the defendant hit a tree while drunk and was taken to the hospital. There, the arresting police officer directed a doctor to take a sample of Schmerber's blood for a blood alcohol test. The Supreme Court recognized that the Fourth Amendment protects against warrantless bodily intrusions in drunk driving cases, but it held admissible the test results based on the circumstances. In 2013, the Court held that the natural dissipation of alcohol in blood, without more, does not justify warrantless blood alcohol tests in drunk driving cases. Three years later, the Court decided that officers with probable cause might conduct warrantless breath tests incident to an arrest but they could not administer warrantless blood tests incident to an arrest for drunk driving or under an implied consent theory.", "In Mitchell , officers, acting on a complaint, discovered the defendant stumbling around the edge of a lake with his van parked nearby. They arrested him after he failed a preliminary field breath test and took him to the police station for a more exacting breath test. Along the way, Mitchell became unconscious. When the officers were unable to administer a second breath test at the station because Mitchell had passed out, they took him to a hospital for a blood test. As a result of the test, officials charged him with drunk driving. Mitchell sought unsuccessfully to suppress the results of the blood tests. Wisconsin appellate courts affirmed his conviction, as did a divided U.S. Supreme Court. ", "Supreme Court : For four of the Justices, the issue was a matter of balance. Justice Alito, speaking for the four, listed a series of factors documenting the states' compelling interest in access to a reliable test to determine the extent of a suspect's intoxication:", "Highway safety is a legitimate public interest; In a good year, alcohol-related deaths occur at the rate of no more than one per hour; States rely heavily on blood alcohol limits as an effective means of promoting highway safety; Enforcing blood alcohol limits depends on reliable testing methods; Alcohol in the blood dissipates rapidly so speed is of the essence; When a reliable breathalyzer test cannot be administered, a blood test is the only comparable alternative; and Drivers who cannot remain conscious represent an even greater threat.", "In the eyes of the four, \"the only question left, under our exigency doctrine, is whether this compelling need justifies a warrantless search because there is, furthermore, 'no time to secure a warrant.'\" And they concluded, \"[w]hen police have probable cause to believe a person has committed a drunk-driving offense and the driver's unconsciousness or stupor requires him to be taken to the hospital or similar facility before police have a reasonable opportunity to administer a standard evidentiary breath test, they may almost always order a warrantless blood test to measure the driver's BAC [blood alcohol content] without offending the Fourth Amendment.\" Justice Alito acknowledged that the case should be remanded to the Wisconsin courts to permit Mitchell to offer any evidence that the \"police could not have reasonably judged that a warrant application would interfere with other pressing need or duties.\"", "Justice Thomas concurred in the result because he would have recognized a per se rule under which the dissipation of alcohol in blood would always justify a warrantless, probable cause test.", "With Justices Ginsburg and Kagan, Justice Sotomayor noted that, because Wisconsin admitted there was time to get a warrant, she would have held that \"the Fourth Amendment \u00e2\u0080\u00a6 requires police officers seeking to draw blood from a person suspected of drunk driving to get a warrant if possible.\" Because the lower courts had not addressed the exigent circumstance exception, Justice Gorsuch dissented on the grounds that the decision should have been postponed until the issue had been more fully developed below. "], "subsections": []}]}, {"section_title": "Section 1983", "paragraphs": ["Section 1983 establishes a cause of action for those deprived, under color of law, of some right under the U.S. Constitution or other federal law. The successful plaintiff must overcome at least three hurdles: He must (1) establish that he has been deprived of a right under color of law, e.g ., Nievers v. Bartlett ; (2) satisfy Section 1983's procedural requirements, e.g ., McDonald v. Smith ; and (3) overcome any claim of qualified immunity, e.g., City of Escondido v. Emmons ."], "subsections": [{"section_title": "Nieves v. Bartlett, 139 S. Ct. 1715 (2019)", "paragraphs": ["Holding : The existence of probable cause to arrest precludes a Section 1983 civil liability claim based on an alleged First Amendment retaliatory arrest, unless \"a plaintiff presents objective evidence that he was arrested when otherwise similarly situated individuals not engaged in the same sort of protected speech had not been.\" ", "Background : Officers arrested Bartlett at a raucous \"Arctic Man\" sports festival and \"beer blast\" in a remote area of Alaska. In an earlier encounter with Officer Nieves, Bartlett had refused to speak to Officer Nieves. Bartlett and the officers disputed whether Bartlett: (1) was drunk; (2) was loud and belligerent on two occasions; (3) got into Officer Wright's face to provoke a confrontation, or spoke closely to the officer in order to be heard over the loud music; and (4) refused to back away from Officer Wright, or was slow to back away because of a bad back. ", "Charges against Bartlett were later dismissed, and he sued the officers under Section 1983 on several grounds, including a retaliatory arrest claim. Bartlett alleged that, at the time of his arrest, Officer Nieves said: \"[B]et you wish you would have talked to me now.\" The U.S. District Court dismissed the complaint because it found that the officers had probable cause to arrest Bartlett. The U.S. Court of Appeals for the Ninth Circuit reversed based on Ford v. City of Yakima in which the Ninth Circuit had ruled that probable cause does not preclude a Section 1983 retaliatory arrest claim. ", "Supreme Court : The Supreme Court disagreed, stating: \"Because there was probable cause to arrest Bartlett, his retaliatory arrest claim fails as a matter of law.\" Writing for the Court, Chief Justice Roberts, acknowledged that, as a general rule, a First Amendment retaliatory arrest claim will survive in the face of probable cause to arrest, if the arrestee demonstrates that similarly situated, but silent, individuals had not been arrested. The case triggered four individual opinions. Justice Thomas concurred in part and in the judgment, disagreeing with the majority's disparate-application exception. Justice Gorsuch and Justice Ginsburg concurred in part and dissented in part. Justice Gorsuch's position was that \"the absence of probable cause is not an absolute requirement of such a claim, and its presence is not an absolute defense.\" Justice Ginsburg questioned whether the case was the appropriate vehicle for the rule the majority announced. Justice Sotomayor, in dissent, took the position that probable cause does not always doom a Section 1983 First Amendment retaliatory arrest claim. "], "subsections": []}, {"section_title": "McDonough v. Smith, 139 S. Ct. 2149 (2019)", "paragraphs": ["Holding : Statute of limitations for a Section 1983 cause of action alleging falsification of evidence \"began to run when criminal proceedings against him terminated in his favor.\"", "Background : McDonough was a commissioner on a local board of elections when allegations of forged absentee ballots surfaced. A grand jury indicted McDonough. He was arrested and held for bail. His first trial ended in a mistrial. The jury acquitted him in a second trial. Just short of three years after his acquittal, McDonough sued the special prosecutor in federal court under Section 1983, claiming denial of due process in the form of malicious prosecution and fabrication of evidence. The U.S. District Court dismissed the malicious prosecution claim against the special prosecutor on the grounds of absolute prosecutorial immunity. The court also ruled that the three-year statute of limitations on McDonough's fabrication claim began to run when McDonough became aware of the fabrication not when he was acquitted. Thus, the statute of limitations had expired by the time McDonough filed his Section 1983 complaint. The U.S. Court of Appeals for the Second Circuit (Second Circuit) affirmed.", "Supreme Court : The Second Circuit noted a circuit split over whether the statute of limitations on due process fabrication claims begins to run with the claimant's exoneration or with his knowledge of the fabrication and its improper use. The Supreme Court agree to hear the case in order to resolve the issue.", "Writing for the Court, Justice Sotomayor explained that state law governs the length of the statute of limitations in Section 1983 cases. Federal law, however, determines when the statute of limitations begins to run based on \"common-law principles governing analogous torts.\" The inquiry starts with identifying the constitutional or other federal right said to have been abridged under color of law. Justice Sotomayor accepted the Second Circuit's presumption that the Due Process Clause was the basis for McDonough's fabrication claim. ", "While the Second Circuit had decided that common-law malicious prosecution, with its \"end-of-game\" exoneration requirement, did not match McDonough's fabrication claim, the Court ruled that common-law malicious prosecution was the most closely analogous tort to McDonough's fabrication claim. Justice Sotomayor pointed out that one involves a malice-driven, groundless prosecution, the other a thrust for conviction slaked by the use of fabricated evidence. \"At bottom,\" she declared, \"both claims challenge the integrity of criminal prosecutions undertaken 'pursuant to legal process.'\" Moreover, she noted, the Second Circuit's approach would mean starting the statute of limitations clock when use of the fabricated evidence became obvious\u00e2\u0080\u0094at trial or the return of the indictment. Either alternative presents the risk of parallel criminal and civil proceedings, and worse yet, the risk of inconsistent results. "], "subsections": []}, {"section_title": "City of Escondido v. Emmons, 139 S. Ct. 500 (2019)", "paragraphs": ["Holding : \"The Court of Appeals should have asked whether clearly established law prohibited the officers from stopping and taking down a man in these circumstances. Instead, the Court of Appeals defined the clearly established right at a high level of generality by saying only that the 'right to be free of excessive force' was clearly established.\" ", "Background : Ametria Douglas shared an apartment with Maggie Emmons and Emmons' two children. Douglas' mother called 911 after hearing the sounds of fighting and a plea for help during an interrupted telephone conversation with her daughter. When officers arrived they found Douglas outside in the pool with the children. She assured them it was a false alarm. Nevertheless, the officers went to the apartment in order to conduct a \"welfare check\" (to make sure no one inside was injured or in danger). Emmons, who had charged her husband with domestic violence a month earlier, refused to let them in without a warrant. Then, Marty Emmons, who had been visiting his daughter, came out of the apartment and closed the door behind him. Officer Craig, who had instructed him to leave the door open, threw Marty Emmons to the ground. Marty Emmons subsequently sued Officer Craig and his fellow officers for unlawful search and seizure and the use of excessive force.", "Each of the parties moved for summary judgment in federal district court. Police officers and other public officials \"performing discretionary functions, generally are shielded from liability for civil damages insofar as their conduct does not violate clearly established statutory or constitutional rights of which a reasonable person would have known.\" The district court granted Officer Craig's motion of summary judgment on the excessive use of force claim because it concluded that \"relevant legal authorities do not establish that the underlying conduct violate[d] clearly established law.\" The U.S. Court of Appeals for the Ninth Circuit (Ninth Circuit) reversed and held that Officer Craig was not entitled to qualified immunity because the \"right to be free of excessive force was clearly established at the time of the events in question.\"", "Supreme Court : The Supreme Court reversed and sent the case back to the Ninth Circuit. As it has done in a number of recent cases, the Court reminded the Ninth Circuit that the circumstances of the cases that \"clearly establish\" a constitutional right must be closely analogous to the circumstance of the case at issue. The Court stated: \"This Court has repeatedly told courts \u00e2\u0080\u00a6 not to define clearly established law at a high level of generality.\"\u00e2\u0080\u00a6 'An officer cannot be said to have violated a clearly established right unless the right's contours were sufficiently definite that any reasonable official in the defendant's shoes would have under that he was violating it.'\" Rather than ask whether the right to be free of excessive force was clearly established, the Ninth Circuit \"should have asked whether clearly established law prohibited the officers from stopping and taking down a man in these circumstances.\" On remand, the Ninth Circuit concluded that Officer Craig was entitled to qualified immunity, since it could find no case \"so precisely on point with this one as to satisfy the Court's demand for specificity.\" "], "subsections": []}]}]}, {"section_title": "Appeals", "paragraphs": [], "subsections": [{"section_title": "Ineffective Assistance of Counsel", "paragraphs": [], "subsections": [{"section_title": "Garza v. Idaho, 139 S. Ct. 738 (2019)", "paragraphs": ["Holding : A defense attorney's failure to appeal in spite of a client request is presumptively prejudicial ineffective assistance of counsel \"even when the defendant has signed an appeal waiver.\"", "Background : Garza entered into plea agreements covering state aggravated assault and possession of controlled substance charges. Garza waived his right to appeal in the agreements and his counsel did not file a notice of appeal. Thereafter, Garza sought post-conviction review (state habeas corpus) asserting his trial attorney had ignored his request to appeal and claiming ineffective assistance of counsel. ", "The Sixth Amendment provides the criminally accused the right to \"reasonably effective\" assistance of counsel for his defense. Appellate courts overturn convictions or sentences when the defense counsel made \"errors so serious that counsel was not functioning as the 'counsel' guaranteed the defendant by the Sixth Amendment\" if \"the deficient performance prejudiced the defense.\" Prejudice occurs when \"counsel's errors were so serious as to deprive the defendant of a fair trial, a trial whose result is reliable.\" The Court has held that prejudice may be assumed, stating: \"[W]hen counsel's deficient performance deprives a defendant of an appeal that he otherwise would have taken, the defendant has made out a successful ineffective assistance of counsel claim entitling him to an appeal.\"", "Denying Garza's petition for relief, the trial court stated that Garza's waiver precluded him being a victim of ineffective assistance. The Idaho Court of Appeals and the Idaho Supreme Court affirmed. The U.S. Supreme Court reversed and remanded.", "Supreme Court : In the opinion, Justice Sotomayor focused on two concepts\u00e2\u0080\u0094notice of appeal and waiver of appeal\u00e2\u0080\u0094to rebut that Garza's filing a notice of appeal would breach his plea agreements and deny him their benefits. She explained that a notice of appeal is ministerial being \"a simple, nonsubstantive act that is within the defendant's prerogative.\" She noted: (1) any \"waiver of appeal\" is limited to the language of the particular agreement; (2) some appellate issues cannot be waived; and (3) matters that are within the scope of the waiver are only binding if the prosecution elects to stand on its rights. Thus, she concluded, \"simply filing a notice of appeal does not necessarily breach a plea agreement, given the possibility that the defendant will end up raising claims beyond the waiver's scope. And in any event, the bare decision whether to appeal is ultimately the defendant's, not counsel's, to make.\"", "Justice Sotomayor further found that Idaho's approach was inconsistent with precedent. Justice Sotomayor recalled the Flores-Ortega holding that \"'a lawyer who disregards specific instructions from the defendant to file a notice of appeal acts in a manner that is professionally unreasonable.'\" She stated: \" Flores-Ortega 's reasoning shows why an appeal waiver does not complicate [a] straightforward application\" and further commented: \"As the Court explained, given that past precedents call for a presumption of prejudice whenever 'the accused is denied counsel at a critical state' it makes even greater sense to presume prejudice when counsel's deficiency forfeits an 'appellate proceeding altogether.'\" She noted, \"[a]fter all, there is no disciplined way to 'accord any presumption of reliability \u00e2\u0080\u00a6 to judicial proceedings that never took place,'\" concluding \"[t]hat rationale applies just as well here because \u00e2\u0080\u00a6 Garza retained a right to appeal at least some issues despite the waivers he signed. In other words, Garza had a right to a proceeding and he was denied that proceeding altogether as a result of counsel's deficient performance.\""], "subsections": []}]}]}]}}
{"id": "R45975", "title": "Global Vaccination: Trends and U.S. Role", "released_date": "2019-10-18T00:00:00", "summary": ["For more than 50 years, the United States has taken an interest in the eradication of vaccine-preventable diseases (VPDs) in children worldwide, as well as vaccine research and development, particularly since playing a vital role in the global campaign to eradicate smallpox in the 1960s. Since then, vaccinating children against VPDs has been a major U.S. foreign policy effort.", "Vaccinations are one of the most cost-effective ways to prevent infectious disease and associated morbidity and mortality. According to UNICEF, immunizations save around 3 million lives per year. As of 2019, VPDs continue to cause high levels of morbidity (illness) and mortality (death), and the World Health Organization (WHO) notes that the adoption of new vaccines by low- and middle-income countries (which often have the highest disease burdens) has been slower than in high-income countries. Receiving a vaccination during childhood can protect the recipient from VPDs, decrease the spread of related diseases, and improve child survival prospects (as children, particularly those under five years old, are more likely than adults to die from VPDs).", "Recently, a global resurgence of certain VPDs has caused concern among public health officials and drawn attention to the challenges of vaccine hesitancy and stigma. For example, polio continues to elude global eradication and remains endemic in three countries. In 2019 measles has seen a resurgence in some middle- and high-income countries due to a variety of factors, including reluctance among some individuals and religious communities to vaccinate their children. In April 2019, the WHO reported a n increase in global measles cases compared to the same period in 2018, with the greatest surges in cases in the Americas, the Middle East, and Europe. A number of European countries are at risk of or have lost their measles eradication certificate from the WHO, raising questions about global consensus on the use of vaccines, participation in and support for the Global Alliance for Vaccines and Immunization (GAVI, now called GAVI, the Vaccine Alliance) and other global immunization efforts. Prompted in part by this global resurgence, the WHO has listed \"vaccine hesitancy\" as one of the 10 biggest global public health threats.", "The U.S. government is the second-leading government donor to global vaccination campaigns. Through annual appropriations to the Department of Health and Human Services (HHS) and the Department of State, Congress funds global immunization activities through the Centers for Disease Control and Prevention (CDC), the United States Agency for International Development (USAID), and GAVI. In recent years, annual appropriations by Congress for multilateral immunizations campaigns led by GAVI have averaged $290 million and $226 million for bilateral campaigns led by CDC. USAID works to support routine immunization overseas through health systems strengthening, and Global Polio Eradication Initiative Activities. The authorization, appropriation, and oversight of U.S. funding for global child vaccination is thus an ongoing area of concern for many in Congress. Other key issues for Congress include the extent of donor coordination and burden-sharing for such efforts, and the extent to which global child vaccination promotes U.S. foreign policy, development, and domestic health security (i.e., pandemic preparedness) goals."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["Beginning with the campaign to eradicate smallpox in the 1960s, the United States has been interested in the eradication of vaccine-preventable diseases (VPDs) in children worldwide, as well as vaccine research and development. The success of the smallpox eradication campaign led to the establishment of the World Health Organization's Expanded Programme on Immunization in 1974. Since then, global vaccination campaigns have been broadened and garnered near universal international support. ", "Today, the U.S. government is a leading donor to global vaccination campaigns ( Figure 3 ). In FY2019, Congress appropriated $290 million in foreign aid for the Global Alliance for Vaccines and Immunization (GAVI, now called GAVI, the Vaccine Alliance) and $226 million for Department of Health and Human Services (HHS) to support child vaccine campaigns abroad. The authorization, appropriation, and oversight of U.S. funding for global child vaccination is thus an ongoing area of concern for many in Congress, as is the extent of donor coordination and burden-sharing for such efforts. Additional potential issues include the extent to which global child vaccination promotes U.S. foreign policy, development, and domestic health security (i.e., pandemic preparedness) goals. ", "Donor-backed child vaccination campaigns have reduced mortality in poor countries, though occasionally they have faced setbacks. In the early 1990s, U.S. foreign assistance for large-scale vaccination campaigns led by the World Health Organization (WHO) and the United Nations Children's Fund (UNICEF), and with significant U.S. funding and technical support, contributed to an approximately 80% immunization rate for three doses of the diphtheria, tetanus, and pertussis vaccine (DTP3). Progress, as measured by vaccination rates, stalled on certain vaccines\u00e2\u0080\u0094notably the diphtheria, tetanus, pertussis, and measles vaccines\u00e2\u0080\u0094in the late-1990s for a variety of reasons, including management of vaccine stocks, effective vaccine delivery, and cost of vaccinations. ", "In 2000, a public-private partnership, the Global Alliance for Vaccines and Immunization (GAVI) was launched to address both declining global momentum for child immunization campaigns and declining funding for these programs. Since its inception, GAVI has supported the immunization of 700 million children. As a founding member of GAVI, the United States holds a rotating seat on GAVI's board and provides it with funding (see \" U.S. Role and Funding \"). ", "Vaccinations are considered one of the most cost-effective ways to prevent infectious disease and associated morbidity and mortality. WHO recommends that all children receive 10 vaccines ( Table 1 ). Receiving the recommended childhood vaccinations can protect the recipient from illness and death associated with VPDs, and can reduce infectious disease spread. According to UNICEF, these immunizations save around 3 million lives per year. Globally, coverage of recommended childhood vaccines vary, with VPDs causing high levels of morbidity (illness) and mortality (death), primarily in certain low- and middle-income countries that have had limited success in achieving universal coverage. Recently, some high-income countries, for example France and the United States, have seen exponential increases in cases of VPDs, due primarily to vaccine hesitancy."], "subsections": []}, {"section_title": "Global Vaccine Coverage", "paragraphs": ["According to GAVI, from 2000 through 2018, more than 760 million children worldwide were immunized against VPDs, including 66 million children in 2018. Approximately 100 million children are immunized each year. At the end of 2018, 20 million infants and children worldwide had not received the full schedule of recommended vaccines. According to GAVI, full vaccination coverage could prevent one in seven deaths in under-5 children. Over 1.5 million children die every year from VPDs. Nearly 60% of these children live in 10 countries: Angola, Brazil, DRC, Ethiopia, India, Indonesia, Nigeria, Pakistan, the Philippines, and Vietnam.", "From 1990 to 2017, overall child deaths fell from 12.7 million to 5.8 million, largely due to gains made by global immunization campaigns and expanded national immunization programs. For example, from 2000 to 2017, scaled-up measles vaccination coverage averted an estimated 15.6 million deaths from the disease. ", "Global coverage for several recommended vaccines has continued to climb over the past decade (see Figure 1 ); however, progress in expanding the number of children vaccinated with DTP3 (a three-dose diphtheria, tetanus and pertussis vaccine) has stagnated in recent years, though its coverage remains higher than coverage for other required vaccinations (see Figure 2 ). GAVI reports recent stagnation in coverage is due to \"acute problems that a small number of previously high performing countries have faced.\" Diphtheria, tetanus and pertussis are particularly fatal to neonates, new mothers, and pregnant women. Maternal and neonatal tetanus (MNTE) has been almost eliminated globally, and since 2000 there has been an 85% reduction in newborn deaths from tetanus. As of March 2019, MNTE remains present in 14 countries. In 2018, 86% of children under the age of one received all three doses of the DTP3 vaccine. ", "As global uptake of childhood vaccines improves, an increasing proportion of child deaths are concentrated in sub-Saharan Africa and Southern Asia: four out of every five under-5 child deaths occur in these regions. Figure 2 displays geographical immunization coverage for three doses of the DTP3 vaccine. DTP3 immunization coverage is used as a proxy indicator to estimate the proportion of children vaccinated within their first year of life."], "subsections": [{"section_title": "Global Efforts to Decrease VPDs Among Children", "paragraphs": ["In 2015, U.N. member states adopted the Sustainable Development Goals (SDG) as a common agenda to help alleviate global poverty, improve health and education, reduce inequality, and spur economic growth by 2030. SDG Goal 3 is to end preventable deaths of newborns and under-5 children by 2030, with a targeted reduction of under-5 mortality to 25 per 1,000 live births in every country. (According to 2018 figures, 80 countries worldwide have under-5 mortality rates that are higher than 25 per 1,000 live births.) International efforts to decrease vaccine-preventable deaths among children younger than five years are led by international organizations such as WHO, UNICEF, and GAVI, with significant U.S. support (detailed in the section on U.S. role and funding). Several multilateral initiatives and commitments frame these efforts.", "UNICEF. UNICEF supports immunization programs globally and is the biggest single global purchaser of vaccines. The organization focuses on providing vaccinations, monitoring and improving vaccine supply and quality (e.g., ensuring that vaccines are consistently stored at an appropriate temperature, known as \"the cold chain\"), vaccine innovation (e.g., research and development), and disease eradication and elimination programs. UNICEF has a permanent seat on GAVI's board and procures all vaccines for GAVI-supported programs to ensure a reliable supply of high-quality and affordable vaccines. UNICEF's immunization goals align with WHO targets outlined in the Global Vaccine Action Plan (GVAP) 2011-2020; to reach 90% of children under the age of one with routine immunization, and achieve 80% immunization coverage for every country district by 2020. ", "WHO . The WHO launched its first 10-year strategic framework on vaccines in 2005. The Global Immunization Vision and Strategy Immunization was intended to extend immunization achievements and to continue encouraging governments to maintain a commitment to protect their populations from VPDs. The GVAP for 2011-2020 was released in 2010 to build on the 2005 strategic framework. The GVAP aligns with the WHO's 2015-2030 strategic goals, which include promoting the development of new vaccines and vaccine delivery technologies to meet public health priorities, establishing norms and standards for vaccines and vaccine delivery technology, and ensuring quality. ", "The WHO also develops evidence-based immunization policy recommendations for member states through an independent advisory group, the Strategic Advisory Group of Experts on Immunization (SAGE). SAGE meets biannually to develop recommendations based on available evidence on immunization and vaccines. It also convenes on an emergency basis to discuss disease outbreaks and vaccine-related concerns (e.g., experimental Ebola vaccines). ", "GAVI , the Vaccine Alliance. GAVI is a multilaterally funded public-private partnership. It was founded in 2000 by the United States, the WHO, the United Nations, the World Bank, and the Bill and Melinda Gates Foundation to expand global access to vaccines and prevent deaths from VPDs. GAVI is guided by five year strategic plans, the Phase IV strategy for 2015-2020 aligns with the goals outlined in the GVAP. In 2019, GAVI set the overall goal to immunize 300 million children by 2025, and save 5-6 million lives in the long term. For more information on GAVI, see the section under U.S. Funding for Multilateral Initiatives. "], "subsections": []}, {"section_title": "Factors Affecting Immunization Coverage", "paragraphs": ["Various factors affect global immunization coverage, including vaccine hesitancy and stigma, geographic location, inadequate country capacity, and poverty and socioeconomic status. ", "Vaccine hesitancy and stigma. Recently, a resurgence of certain VPDs has caused concern among public health officials and drawn attention to the challenges of vaccine hesitancy and stigma. For example, polio continues to elude global eradication, and in 2019 some middle- and high-income countries experienced a resurgence of measles, due to a variety of factors, including reluctance among some individuals and religious communities to vaccinate their children. In April 2019, the WHO reported a 300% increase in global measles cases compared to the same period in 2018, with the greatest surges in cases in the Americas, the Middle East, and Europe. ", "Prompted in part by this resurgence, the WHO listed \"vaccine hesitancy\" as one of the 10 biggest global public health threats. Corruption, authoritarian governance, and social or political discrimination can fuel vaccine hesitancy by undermining citizens' trust in authority figures (including government officials and health workers involved in vaccine campaigns). For example, Nigeria was close to eliminating polio for many years but did not do so until recently. Vaccination campaign efforts were hampered in part by conspiracy theories, \"vaccine stigma,\" as well as by ethical concerns about government regulations and pharmaceutical industry practices. Vaccine stigma, for its part, arises when a community normalizes vaccine denial. ", "Geographic location . Geographical distance from health centers negatively impacts vaccination coverage. Underserved populations within any given country often shoulder a heavier burden of disease, and they may lack access to basic medical care. Notably, vaccine coverage disparities between children in urban and rural areas persist throughout the world, and commonly exacerbate disease spread within a certain geographical area. For example, according to the WHO, in some countries (e.g., Nigeria and Indonesia), coverage of the measles vaccine in rural areas is 33% lower than in urban areas. ", "Poverty, s ocioeconomic status , and social determinants of health. Vaccination coverage in low-income countries (41%) lags behind coverage in high-income countries (90%). Medical systems in many low-income countries are often underfunded and unable to vaccinate enough children to stop a virus's spread even with donor aid. In addition, researchers have found that inequities in vaccination coverage are associated with individual socioeconomic determinants, such as a family's income level and the educational status of a child's mother. Children born into poverty are almost twice as likely to die before the age of five as those from wealthier families, and researchers suggest that unequal access to vaccines is a key factor. Vaccine coverage for the richest fifth of the population in some countries is up to 58% higher than for the poorest fifth.", "Fragile and conflict settings . UNICEF reports that 40% of unvaccinated children live in countries affected by armed conflict or other humanitarian challenges. Often, already fragile health care infrastructure is further crippled by armed conflict, which can hinder health workers in carrying out vaccinations and interfere with proper disease treatment and containment. Humanitarian settings such as refugee and internal displacement camps can also foster conditions (e.g., poor nutrition, overcrowding, and unsanitary conditions) conducive to the rapid spread of infectious diseases. According to UNICEF estimates, as of 2015, half of the 10 countries that had under 50% diphtheria, tetanus, and pertussis vaccine coverage\u00e2\u0080\u0094the Central African Republic, Somalia, South Sudan, Syria, and Ukraine\u00e2\u0080\u0094had experienced conflicts or other humanitarian emergencies. Other conflict-affected countries have seen spikes in VPD cases, such as a 2019 surge in measles cases in the Democratic Republic of Congo (DRC), which has killed more people than the ongoing Ebola outbreak in that country. "], "subsections": []}]}, {"section_title": "U.S. Role and Funding", "paragraphs": ["Congress has historically supported global child vaccination programs, both as a component of U.S. foreign assistance and as part of efforts to eradicate infectious diseases that might affect Americans at home or abroad. Through annual appropriations for the Department of Health and Human Services and the Department of State and Foreign Operations (SFOPS), Congress funds global immunization activities through the Centers for Disease Control (CDC), the United States Agency for International Development (USAID), and the Global Alliance for Vaccines and Immunization (GAVI, now called GAVI, the Vaccine Alliance).", "The U.S. Agency for International Development (USAID) and the Centers for Disease Control and Prevention (CDC) are the primary U.S. federal agencies involved in international vaccination provision and immunization campaigns. These campaigns support the 2016-2020 Strategic Framework for Global Immunization and the WHO's 2011-2020 Global Vaccine Action Plan , the agencies work with country governments to strengthen immunization programs by bolstering infectious disease surveillance, increasing laboratory capacity, and strengthening public health workforce capacity. The efforts of both agencies align with the 2010 HHS National Vaccine Plan, the Global Health Security Agenda, and the U.N.'s 2030 Sustainable Development Goals. ", "CDC and USAID also support routine immunizations worldwide through enhanced supply chain management and product procurement assistance. Related efforts are implemented bilaterally and through international partnerships with the WHO, UNICEF, the World Bank, and others. In addition, CDC, along with the Department of Defense, finances the research and development of new vaccines."], "subsections": [{"section_title": "Centers for Disease Control and Prevention (CDC)", "paragraphs": ["The CDC has played a central role in controlling vaccine-preventable diseases since it established the CDC Smallpox Eradication Program in January 1966. The Global Immunization Division of the CDC's Center for Global Health is responsible for coordinating CDC's global immunization activities. To support these activities, the CDC provides scientific and public health expertise in infectious disease epidemiology and surveillance by building laboratory capacity and helping to implement evidence-based prevention strategies. CDC also carries out clinical trials and epidemiologic studies. ", "Funding for the CDC's Global Immunization Program is detailed in Table 2 . The majority of CDC's efforts are focused on polio, with smaller funding allocations for measles and other VPDs. Global vaccination campaigns against polio have lowered the worldwide incidence of polio by 99% compared with that of 1988, and in 2018 only two countries recorded wild polio cases: Afghanistan and Pakistan. Vaccine-derived poliovirus continues to be detected in Nigeria, but as of August 21, 2019, no cases had been confirmed there in three years. ", "The CDC's programming is based on its 2016-2020 Strategic Framework for Global Immunization , which builds on three previous strategic frameworks and outlines five goals: ", "1. Control, eliminate, or eradicate vaccine-preventable diseases to reduce death and disability globally. 2. Strengthen country ownership, policy and practices, and partnerships. 3. Ensure quality of vaccination delivery to achieve high and equitable coverage. 4. Strengthen surveillance and immunization information to prevent, detect, and respond to vaccine-preventable diseases. 5. Conduct and promote research, innovation, and evaluation. ", "To implement the strategic framework, the CDC works with USAID, UNICEF, GAVI, and other stakeholders. The strategy is aligned with the HHS National Vaccine Plan 2010, the Global Health Security Agenda, and the WHO Global Vaccine Action Plan 2011-2020. ", "In FY2019, Congress appropriated more funding for CDC global immunization programs than the Trump Administration sought and more than was appropriated in prior years ( Table 2 ). The Administration's FY2019 and FY2020 budget requests would have reduced funding for global immunization activities and proposed that the CDC \"focus its global immunization activities to continue progress towards polio eradication, as well as measles and rubella elimination in countries with the highest disease burden.\" ", "To strengthen routine immunization campaigns and community-based disease surveillance, USAID works with foreign countries' ministries of health and provides funding to GAVI. These actions are part of the agency's strategy to prevent child and maternal deaths, which it also supports through capacity building for foreign health systems. For example, in Ethiopia, the agency works with Ethiopia's Ministry of Health to train community volunteers to identify symptoms of vaccine-preventable diseases (e.g., paralysis due to polio) and track \"vaccine defaulters\" (individuals who do not receive the full schedule of immunizations) to keep them on schedule. "], "subsections": []}, {"section_title": "U.S. Funding for Multilateral Initiatives", "paragraphs": ["The United States, through contributions to international organizations and GAVI, provides significant support for multilateral immunization and vaccination programs ( Figure 3 ). Such support is intended to complement U.S. bilateral efforts in this arena while enabling the United States to expand its reach and provide opportunities for collaboration and burden sharing. "], "subsections": [{"section_title": "GAVI, the Vaccine Alliance", "paragraphs": ["GAVI is a multilaterally funded public-private partnership. It was founded in 2000 by the United States, the WHO, the United Nations, the World Bank, and the Bill and Melinda Gates Foundation to expand global access to vaccines and prevent deaths from VPDs. The United States played a central role in the creation of GAVI and continues to be involved in GAVI's governance, strategic planning, and funding. U.S. support of GAVI is intended to accelerate access to vaccines, strengthen vaccine delivery platforms, and work with country governments to sustain immunization programs. "], "subsections": [{"section_title": "U.S. Contributions to GAVI", "paragraphs": ["The United States is GAVI's third largest donor, having provided nearly $2 billion of the $21 billion donated to GAVI since its founding ( Figure 3 ). ", "Congress appropriates U.S. funding for GAVI via USAID's Global Health Programs (GHP) account in annual SFOPS appropriations measures. In turn, the United States holds a seat on GAVI's board, as do the WHO and UNICEF, which also receive U.S. funding ( Figure 4 ). ", " Table 3 details U.S. budget requests and enacted appropriations for GAVI from FY2015 to FY2020.", "During the Obama Administration, congressional appropriators met the Administration's requests to increase funding for GAVI year on year. In line with the Trump Administration's broad calls for cuts to foreign assistance, the Administration proposed $250 million for GAVI in FY2019 and in FY2020, a $40 million decrease from the FY2018-enacted level. In FY2019, Congress appropriated $290 million for GAVI, the same level as in FY2018. "], "subsections": []}]}]}]}, {"section_title": "Outlook and Issues for Congress", "paragraphs": ["Congress has continued to demonstrate interest in supporting child vaccinations for VPDs overseas\u00e2\u0080\u0094for example, by appropriating increasing levels of funding for related programs. However, numerous global outbreaks of VPDs have raised concerns about whether the progress made in preventing and eradicating communicable diseases can be maintained. In light of recent events, and in the context of the FY2020 appropriations process (and beyond), Congress may examine a few additional issues. ", "One area that could be explored is the effectiveness of global vaccination campaigns as a tool of domestic pandemic preparedness. U.S. government public health officials have argued that the global resurgence of certain vaccine-preventable diseases, particularly measles and mumps, may threaten U.S. public health. Recent outbreaks of vaccine-preventable diseases in the United States have been traced to travelers from Europe and abroad, and the CDC reports that these travelers, coupled with domestic vaccine hesitancy, are the main cause of outbreaks in the United States. ", "In March 2019, the full Senate Committee on Health, Education, Labor and Pensions (HELP) held a hearing to discuss the reasons behind preventable disease outbreaks, including imported cases of vaccine-preventable diseases linked to international travelers. As these outbreaks continue, Congress may continue to consider its oversight of, and federal government involvement in, issues surrounding vaccines, such as misinformation campaigns and their role in vaccine hesitancy. ", "Another core area of interest relates to U.S. funding, foreign policy objectives, and foreign aid programs supporting immunization. The U.S. government has long-included vaccination as a core component of foreign policy, and as a foreign aid priority. Recently, the Trump Administration requested cuts to global health funding, including for U.S. agencies involved in global vaccination campaigns. The Administration contends that the funding requests will not affect programs and that \"the reduction reflects the Administration's intent to further focus funds on countries, populations, and programs where resources will have the greatest public health impact ... [and] CDC will focus its global immunization activities to continue progress towards polio eradication, as well as measles and rubella elimination in the countries with the highest disease burden.\" Some experts argue that stagnation in vaccination coverage and the resurgence of some vaccine-preventable diseases are \"alarm bells,\" and have expressed concern about flat support for global vaccine campaigns leading to a continued resurgence of vaccine-preventable diseases. These issues raise questions about burden sharing and the role of other high-income country donors in global immunization funding, as well as factors affecting the efficacy of global campaigns to increase vaccination rates. "], "subsections": []}]}}
{"id": "R46204", "title": "The United Nations Framework Convention on Climate Change, the Kyoto Protocol, and the Paris Agreement: A Summary", "released_date": "2020-01-29T00:00:00", "summary": ["The United Nations Framework Convention on Climate Change (UNFCCC) has been the principle forum for cooperation among nations on greenhouse gas (GHG)-induced climate change since its adoption in 1992. Its objective is \"to stabilize greenhouse gas concentrations in the atmosphere at a level that will prevent dangerous human interference with the climate system, in a time frame which allows ecosystems to adapt naturally and enables sustainable development.\"", "Stabilizing GHG concentrations in the atmosphere requires that the balance of \"gross\" emissions of GHG minus the removals of GHG from the atmosphere reach \"net zero.\"", "Two principles agreed in the UNFCCC are that (1) Parties should act \"on the basis of equity and in accordance with their common but differentiated responsibilities and respective capabilities\" and (2) developed country Parties should take the lead in combating climate change. The bifurcation of responsibilities among Parties into developed (Annex I) and developing countries has been a major point of contention. Annex I Parties, including the United States, had stronger obligations, such as more rigorous reporting and reviews. A subset listed in Annex II, including the United States, committed to provide agreed financial resources and technology transfers. The commitments are qualitative and collective, not binding on individual Parties.", "The first subsidiary agreement to the UNFCCC was the 1997 Kyoto Protocol (KP), which entered into force in 2005. The United States signed but did not ratify the KP and so is not a Party. The developed Parties agreed to reduce GHG emissions by 5% below their 1990 levels, with different targets for each Party.", "In 2009, a political declaration, the Copenhagen Accord, led to explicit pledges from many Parties to mitigate GHG, though they remained bifurcated as Annex I and non-Annex I (i.e., developing countries) by both the type of action and the frequency and format of the reporting requirements. In 2010, the Cancun agreements took note of a Copenhagen pledge by developed country Parties to jointly mobilize $100 billion per year by 2020. Funds provided \"may come from a wide variety of sources, public and private, bilateral and multilateral, including alternative sources.\"", "The Paris Agreement (PA) is the second major subsidiary agreement under the UNFCCC. The PA defines a collective, long-term objective to hold the GHG-induced increase in temperature to well below 2 o Celsius (C) and to pursue efforts to limit the temperature increase to 1.5 o C above the pre-industrial level. In the PA, for the first time under the UNFCCC, all Parties participate in a common framework with common guidance, though some Parties are allowed limited flexibility.", "The negotiators intended the PA to be legally binding on its Parties, though not all provisions are mandatory. All Parties must submit \"Nationally Determined Contributions\" (NDCs) containing nonbinding pledges to mitigate GHG emissions. The Parties are to update or submit new NDCs by 2020 and every five years thereafter. Each successive NDC of a Party \"will represent a progression\" and \"reflect its highest possible ambition, reflecting its common but differentiated responsibilities and respective capabilities, in light of different national circumstances.\"", "The PA reiterates the obligation in the UNFCCC for developed country Parties to seek to mobilize financial support to assist developing country Parties with climate change mitigation and adaptation efforts, encouraging all Parties to provide financial support voluntarily. The decision to carry out the PA calls for continuing the Cancun collective mobilization through 2025. The Parties agree to set, prior to their 2025 meeting, a new collective, quantified goal of not less than $100 billion annually to assist developing country Parties.", "President Trump announced his intention in 2017 to withdraw the United States from the PA as soon as it was eligible. The U.S. Department of State notified the United Nations of U.S. withdrawal on November 4, 2019. The withdrawal takes effect on November 4, 2020, unless the U.S. government postpones or rescinds the withdrawal. A Party may reenter the PA 30 days after depositing notice that it has ratified, accepted, or acceded to the PA."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["Multiple decades of scientific studies find that human activities induce global climate change by emitting greenhouse gases (GHGs) from fuel combustion, certain industries, deforestation, and other activities. Scientists researched and assessed the science of GHG-induced climate change for more than 150 years before government policymakers around the world agreed to cooperate to consider how to address its risks to humans and ecosystems. Following several international scientific meetings in 1985-1987, governments decided to establish the Intergovernmental Panel on Climate Change (IPCC), under the auspices of the United Nations Environment Programme and the World Meteorological Organization, to provide them with assessments of climate change science, projected social and economic impacts, and potential response strategies. In 1989, the U.N. General Assembly provided a mandate to negotiate what became, in 1992, the U.N. Framework Convention on Climate Change (UNFCCC).", "The UNFCCC has been the primary multilateral vehicle since 1992 for international cooperation among national governments to address GHG-induced climate change. While the UNFCCC is a focal point for national governments, its periphery is one forum, among others, for information sharing, collaboration, and activism also for subnational governments, financial institutions, the private sector, and nongovernmental organizations. This report is not describing these other, increasingly important aspects of international cooperation on climate change.", "This report summaries the content of the UNFCCC and its two subsidiary international treaties: the 1997 Kyoto Protocol (KP) and the 2015 Paris Agreement (PA). It also describes the existing guidelines to implement the PA, known as the 2018 Katowice Climate Package. The report highlights information relevant to the 2019 climate change conference, known as COP25. This report is not comprehensive. A number of other CRS reports provide greater detail and nuance on these and other aspects of the international climate change negotiations and cooperation. Some are listed at the end of this report."], "subsections": []}, {"section_title": "The U.N. Framework Convention on Climate Change", "paragraphs": ["The UNFCCC has been the primary multilateral vehicle since 1992 for international cooperation to address GHG-induced climate change. As of January 1, 2020, there are 197 Parties to the UNFCCC that have ratified, accepted, or acceded to the international treaty, including the United States. There is broad agreement that participation of all countries would be necessary to achieve the objective of the UNFCCC, which is stated as follows:", "to stabilize greenhouse gas concentrations in the atmosphere at a level that will prevent dangerous human interference with the climate system, in a time frame which allows ecosystems to adapt naturally and enables sustainable development. ", "Achieving the objective would require both abatement of GHG emissions and facilitation of adaptation to adverse impacts of climate change in order to enable sustainable development. Stabilizing GHG concentrations in the atmosphere requires that net GHG emissions\u00e2\u0080\u0094the balance of \"gross\" emissions of GHG to the atmosphere and removals of GHG from the atmosphere\u00e2\u0080\u0094reach \"net zero\" or \"carbon neutrality.\" Removals and sequestration can occur by photosynthesis (vegetation, sea algae) or through advanced technologies. Some increased level of removals, or \"sinks,\" could allow for some amount of human-related GHG emissions to continue. The United States and other Parties to the UNFCCC agreed to this objective when they ratified the treaty.", "As a framework convention, this international treaty provides the structure for collaboration and evolution of efforts over decades, as well as the first qualitative step in that collaboration. The UNFCCC does not, however, include quantitative and enforceable objectives and commitments for any Party.", "The UNFCCC was adopted in 1992 and entered into force in 1994. The UNFCCC's governing body, the Conference of the Parties (COP), met in its 25 th session (COP25) from December 2 to 13, 2019, in Madrid, Spain. Initially, Chilean President Sebasti\u00c3\u00a1n Pi\u00c3\u00b1era stepped forward to host COP25 in place of Brazil following the election of President Jair Bolsonaro. Pi\u00c3\u00b1era sought to underscore his efforts to address climate change but ultimately decided that the summit should take place elsewhere due to mass protests in Chile.", "All Parties to the UNFCCC, including the United States, have a set of common obligations under the treaty:", "to inventory, report, and mitigate their human-related GHG emissions, including emissions and removals from land uses; to cooperate in preparing to adapt to climate change; and to assess and review, through the COP, the effective implementation of the UNFCCC, including the commitments therein.", "Certain obligations are additional or more specific for the countries that had higher incomes in 1992, and those countries are listed in Annex I of the Agreement. They are commonly referred to as Annex I Parties. All others are non-Annex I Parties. These additional or more specific obligations included more frequent reporting and providing financing and technology transfers, among others.", "The bifurcation of Parties and commitments has been a major point of contention and, some would argue, delay in negotiation and implementation of the climate change agreements (see text box). The UNFCCC and its subsidiary agreements do not define the terms developing country or developed country . In the 1990s, the Annex I Parties anticipated that developing country Parties would \"graduate\" into specific commitments and become donor countries as their incomes and emissions grew. As discussed later, related disagreements directly contributed to U.S. nonparticipation in the KP, the collapse of negotiations in Copenhagen in 2009, and the withdrawal or decision of some Parties not to adopt GHG abatement targets in the second period of the KP from 2013 to 2020."], "subsections": [{"section_title": "The Copenhagen Accord", "paragraphs": ["In Copenhagen at COP15 in 2009, the COP was unable to adopt an agreement among all Parties as Bolivia, Cuba, Peru, and Venezuela opposed the text. The decision of the COP included a nonbinding political statement, the Copenhagen Accord, which began a turn toward more explicit commitments by non-Annex I Parties to GHG mitigation under the UNFCCC. The Copenhagen Accord specified that the Annex I Parties would implement quantified economy-wide GHG targets for 2020 in an agreed reporting format. Non-Annex I Parties to the UNFCCC would commit to implement mitigation actions to be submitted in an alternative agreed format. At least 43 Annex I Parties (15 Parties, including the United States, plus the EU-28 jointly submitting a pledge) and 47 non-Annex I Parties had submitted nonbinding pledges. While most countries participated, the pledges remained bifurcated by both the type of action and the reporting requirements. Among other differences, Annex I Parties were to submit quantified economy-wide GHG emissions targets for 2020 relative to a baseyear, while non-Annex I Parties were to submit \"nationally appropriate mitigation actions\" with no associated dates. The submissions would be compiled separately by the Secretariat of the UNFCCC."], "subsections": []}]}, {"section_title": "The Kyoto Protocol (KP)", "paragraphs": ["The first subsidiary agreement to the UNFCCC was the 1997 KP, which entered into force in 2005. The United States signed but did not ratify the KP and so is not a Party to it. The KP established legally binding targets for 37 high-income countries and the European Union (EU) to reduce their GHG emissions on average by 5% below 1990 levels during 2009-2012. It precluded GHG mitigation obligations for developing countries.", "All Parties with the Quantified Emissions Limitation and Reduction Obligations (QELROS) under the KP (i.e., GHG targets) were judged in compliance after the end of the first commitment period of 2009-2012. The domestic GHG emissions of some Parties were higher than their targets, but as envisioned under the KP, Parties could fulfil their obligations by acquiring emission reduction credits through the three market mechanisms of the treaty: the Clean Development Mechanism, Joint Implementation, and emissions trading.", "Most of the high-income Parties\u00e2\u0080\u0094mostly the EU members and other European nations\u00e2\u0080\u0094took on further GHG reduction targets for 2013-2020. The Secretariat's assessment of the emissions of the KP Parties with QELROS, as of November 2018, found:", "Annex I Parties are progressing towards their 2020 targets but gaps remain. Individual Parties have made varying progress towards their 2020 targets: most Parties' emission levels are already below their 2020 targets; some Parties must make further efforts to meet their targets by strengthening implementation of their existing [policies and measures]; and using units from MBMs [market-based mechanisms], if needed, and the contribution from LULUCF [land use, land use change, and forestry], if applicable; other Parties' emissions remained above their base-year level, owing mainly to inadequacy of domestic [policies and measures], high marginal mitigation costs or energy system constraints\u00e2\u0080\u0094they indicated that the use of units from MBMs and, if applicable, the contribution from LULUCF are expected to make a sizable contribution towards achieving their targets.", "The United States did not join the KP, and Canada withdrew before the end of the first commitment period. At least in part, their reasons for disengaging from the KP included the non-Annex I Parties' objections to acceding to quantified GHG reduction commitments. While negotiating the second KP commitment period, Australia, Japan, and other Parties also decided to seek an agreement that included commitments on the same terms from all Parties. This led to a mandate, negotiated at the 2011 COP17 in Durban, South Africa, to develop a protocol, another legal instrument, or an agreed outcome with legal force under the UNFCCC applicable to all Parties no later than 2015. The Durban Mandate resulted in the 2015 PA, discussed below."], "subsections": []}, {"section_title": "The Paris Agreement (PA)", "paragraphs": ["The PA is the second major subsidiary agreement under the UNFCCC. The PA is to eventually replace the KP as the primary subsidiary vehicle for process and actions under the UNFCCC. Obama Administration officials stated that the PA is not a treaty requiring Senate advice and consent to ratification. ", "The U.N. Climate Conference in Madrid included COP25 and the second session of the \"Conference of the Parties serving as the meeting of the Parties to the Paris Agreement\" (CMA2), along with meetings of other related bodies. Though the United States has given notice of withdrawal from the PA, its withdrawal is to take effect no earlier than November 4, 2020. Until then, the United States may participate as a Party. After withdrawal takes effect, the United States may participate in a more limited way as an Observer State.", "The PA was intended to be legally binding on its Parties, though not all provisions in it are mandatory. The PA requires that Parties submit nonbinding pledges, in NDCs, to mitigate their GHG emissions and enhance removals. NDCs may also articulate goals to adapt to climate change and cooperate toward these ends, including mobilization of financial and other support. Some provisions are binding, such as those regarding reporting and review, while others are recommendations or collective commitments to which it would be difficult to hold an individual Party accountable. Key aspects of the agreement include:", "Temperature goal. The PA defines a collective, long-term objective to hold the GHG-induced increase in temperature to well below 2 o Celsius (C) and to pursue efforts to limit the temperature increase to 1.5 o C above the pre-industrial level. As discussed below, a periodic \"Global Stocktake\" is to assess progress toward the goals. Single GHG mitigation framework. The PA establishes a process, with a ratchet mechanism in five-year increments, for all countries to set and achieve GHG emission mitigation pledges until the long-term goal is met. For the first time under the UNFCCC, all Parties participate in a common framework with common guidance, though some Parties are allowed flexibility in line with their capacities. Accountability framework. To promote compliance, the PA balances accountability to build and maintain trust (if not certainty) with the potential for public and international pressure (\"name-and-shame\"). Also, the PA establishes a compliance mechanism designed to use expert-based and facilitative review and response rather than punitive measures. Many Parties and observers are to closely monitor the effectiveness of this strategy. Adaptation. The PA also requires \"as appropriate\" that Parties prepare and communicate their plans to adapt to climate change. Parties agreed that adaptation communications would be recorded in a public registry. Collective financial obligation. The PA reiterates the collective obligation in the UNFCCC for developed country Parties to provide financial resources\u00e2\u0080\u0094public and private\u00e2\u0080\u0094to assist developing country Parties with mitigation and adaptation efforts. It urges scaling up from past financing. The Parties agreed to set, prior to their 2025 meeting, a new collective quantified goal for mobilizing financial resources of not less than $100 billion annually to assist developing country Parties."], "subsections": [{"section_title": "The Katowice Package", "paragraphs": ["At COP24/CMA1 in Katowice, Poland, in 2018, the PA Parties agreed to many of the guidelines and processes so that Parties may implement the PA as intended. Despite these agreements, Parties did not resolve several issues of significance. Negotiations on these issues will likely continue at COP26/CMA3 in Glasgow, Scotland, in November 2020. The Katowice Package, as it is often called, clarified some ambiguities in the PA that were considered important to U.S. interests, including guidelines for Parties to report their NDCs, and the Enhanced Transparency Framework (ETF) with guidelines and formats to allow a Party's NDC to be clearly understood. The Katowice Package thereby supports the effectiveness of the consultative compliance mechanism of the PA (discussed below). Below are brief summaries of key aspects of the Katowice Package."], "subsections": [{"section_title": "NDC Guidelines", "paragraphs": ["The Parties to the PA agreed to new guidelines on how to report NDCs. NDCs are to be updated every five years and \"will\" represent a progress in ambition to abate GHG emissions beyond the previous NDC. While Parties agreed that they \"should\" use a prescribed format for communicating NDCs, the details are still to be worked out. There is not agreement yet on \"common timeframes\" for NDCs\u00e2\u0080\u0094whether NDCs should look five or 10 years into the future. Those Parties that submitted NDCs with time frames up to 2025 (including the United States) must communicate \"new\" NDCs by 2020. Those Parties with NDCs with time frames up to 2030 must communicate or update their NDC in 2020. Were the United States to remain in the PA, it would be required to submit a new NDC in 2020.", "The content of NDCs continues to be nationally determined and nonbinding, but it should reflect what a Party intends to achieve. The guidelines apply to NDCs submitted in 2025, but Parties are invited to use an agreed format in updating their NDCs in 2020. The guidelines also address how to report adaptation measures for Parties that wish to include them in their NDCs."], "subsections": []}, {"section_title": "Voluntary Cooperation and Market Mechanisms", "paragraphs": ["The PA provides in Article 6 for Parties to choose voluntary cooperation with other Parties to implement their NDCs. The purpose is to allow \"higher ambition in their mitigation and adaptation actions and to promote sustainable development and environmental integrity\" (Article 6.1). This article, in other words, allows the use of market mechanisms to achieve GHG mitigation at the lowest possible cost and in concert with sustainable development. This, in theory, can induce Parties to take on stronger GHG mitigation commitments while ensuring that the GHG mitigation constitutes real emission reductions. The debate about the purpose for voluntary cooperation and market mechanisms\u00e2\u0080\u0094and the rules by which they are put into operation\u00e2\u0080\u0094was a major area of work undecided in Katowice."], "subsections": []}, {"section_title": "Adaptation Reporting", "paragraphs": ["Parties agreed to provide information on adaptation priorities, needs, plans, and actions in new \"adaptation communications,\" as well as through the NDCs.", "Parties agreed in Katowice that the Adaptation Fund, originally established under the 1997 Kyoto Protocol, will serve the PA. It will be one of the operating entities to the financial mechanism of the PA in addition to the Global Environment Facility and the Green Climate Fund, discussed below"], "subsections": []}, {"section_title": "Global Stocktake", "paragraphs": ["As prescribed by the PA, a Global Stocktake is to be held every five years. Parties agreed that the Global Stocktake will consider progress toward the UNFCCC's objective and the PA's aims overall. It will use best available science and will cover mitigation, adaptation, financial flows, equity, and means of implementation and support. It will not examine the situations of individual Parties. Parties decided that the next Global Stocktake would be held in 2023. ", "A number of decisions were reached regarding the Global Stocktake, including the information it is expected to receive from the ETF (discussed below) and other sources from PA processes. Input may also come from nonstate actors, including non-Parties, localities and subnational governments, the business community, and all parts of civil society. "], "subsections": []}, {"section_title": "The Enhanced Technology Framework (ETF)", "paragraphs": ["Setting strong requirements for the transparency of each Party's efforts has been a priority of the United States since the negotiation of the UNFCCC. ETF guidelines specify the information that Parties must report with their NDCs. That information is expected to support a \"facilitative multilateral consideration of progress,\" along with biennial transparency reports. Methods for GHG emission estimation and other technical issues will continue to rely on the IPCC's technical advice. According to the U.N. Climate Change Secretariat, all Parties must provide information on the following, as applicable to their NDCs:", "Quantifiable information on the reference point for GHG mitigation actions or targets; Time frame and/or periods (i.e., the start and end dates) for implementation; Scope and coverage of the NDC (i.e., the quantitative target, which sources and gases are covered); National planning processes for developing the NDC and, if available, implementation plans taking into account national circumstances; All assumptions and methodological approaches; How the Party determines that its NDC is fair and ambitious; and How the NDC contributes toward achieving the objective of the UNFCCC.", "The guidelines are to facilitate review and, under the committee (below), consultation intended to encourage compliance with commitments. Whether a Party supplies a timely NDC and reports its NDC according to the guidelines is subject to review by a technical group of experts. The adequacy and appropriateness of Parties' NDCs are not subject to review under the ETF.", "Flexibility in reporting under the PA is afforded only for those provisions in the modalities, procedures, and guidelines that are specified to allow flexibility. These provisions include (1) the frequency and level of details of reporting, (2) the modalities of the review, and (3) the modalities of the facilitative multilateral consideration of progress. A Party may determine whether to make use of flexibilities. That said, using the flexibilities is not without checks in the review processes.", "A developing country that claims inadequate capacity to meet the guidelines and elects to apply a flexibility must make clear in its Biennial Transparency Report that it has applied a flexibility. It must explain the capacity constraint, how it intends to address the constraint, and its intended time frame to make improvements to the constraint(s). The technical review teams may not review these flexibilities."], "subsections": []}, {"section_title": "Committee", "paragraphs": ["The Parties established a 12-member committee to \"facilitate implementation\" of the PA. The committee is intended to support Parties' efforts to meet their obligations under the PA as a soft, pro-compliance mechanism. The PA's compliance processes are consultative, not punitive. The committee may initiate a \"consideration\" should a Party not submit or update its NDC as required or provide mandatory communications. "], "subsections": []}]}, {"section_title": "Financing", "paragraphs": ["In 2009 and 2010, developed countries pledged collectively to mobilize US$100 billion per year by 2020, from public and private sources, to support mitigation and adaptation activities in low-income countries. COP decision 1/CP.21 to adopt the PA (not the PA itself) stated that developed countries intend to continue their existing collective mobilization goal through 2025. Prior to 2025, the Parties shall set a new collective quantified goal for financial resources from a floor of US$100 billion per year. The goal should take into account the needs and priorities of developing countries. Parties may take into consideration the information from the Warsaw International Mechanism for Loss and Damage associated with Climate Change Impacts. ", "The financial pledges are not an enforceable commitment by developed country Parties. Many stakeholders argue, nonetheless, that the resources are essential to help low-income countries contribute to GHG abatement and adaptation in the context of sustainable development. The financial flows are also important politically\u00e2\u0080\u0094in part to build confidence in the functionality of the UNFCCC and PA and to build trust between the lower and higher income economies.", "At COP24 and since then, some countries made pledges toward this goal. Some developing country Parties submitted NDCs with GHG mitigation targets they would achieve unconditionally and more ambitious targets that they would achieve with adequate financial and technical support.", "The Green Climate Fund (GCF) was proposed, during the 2009 COP in Copenhagen to be a new international financial institution connected to the UNFCCC. The fund and its design was agreed during the 2011 COP in Durban, South Africa. The GCF was made operational in 2014. The GCF aims to assist lower-income countries in their efforts to combat climate change through the provision of grants and other concessional financing for mitigation and adaptation projects, programs, policies, and activities. The GCF is capitalized by contributions from donor countries and other sources, potentially including innovative mechanisms and the private sector. ", "The GCF officially opened for capitalization at the U.N. Climate Summit in September 2014. The GCF's initial resource mobilization lasted from 2015 to 2018. As of the most recent published reporting (April 30, 2019), the GCF had raised over $10.2 billion in signed pledges from 48 countries/regions/cities during the resource mobilization period. The GCF board recently approved 10 new projects, increasing the GCF portfolio to 111 projects and increasing the level of related GCF funding to over $5.2 billion in 99 developing countries. On October 25, 2019, during the Pledging Conference for GCF's First Replenishment in Paris, 27 countries made pledges totaling $9.8 billion to cover the next four years of the fund. ", "Parties agreed in Katowice that the Adaptation Fund, which was established under the KP, will serve the PA, in addition to the Global Environmental Facility and the GCF. Thus far, the Adaptation Fund has been financed by a share of the proceeds of the emissions trading mechanisms under the KP, as well as by voluntary contributions. With a transition from the KP to the PA, arrangements for the flow of funds are not completely agreed upon. Parties agreed that a share of the proceeds from one of the new cooperative mechanisms will continue to provide a share of its proceeds to the Adaptation Fund. A number of Parties oppose proposals\u00e2\u0080\u0094particularly from Parties that are relatively small and perceived to be especially vulnerable to climate change\u00e2\u0080\u0094to use the other two market mechanisms under Article 6 to finance the Adaptation Fund.", "Beginning in 2020, developed countries are to submit biennial communications on expected levels of climate finance. The communications are to contain both quantitative and qualitative information. The biennial communications and Secretariat synthesis of the information therein is to inform the Global Stocktakes.", "Starting in 2020, the Standing Committee on Finance is to report on the determination of support needs of developing countries to implement the UNFCCC and the PA. The committee is also to consider financial needs consistent with long-term low-emissions and sustainable development pathways."], "subsections": []}, {"section_title": "Technology", "paragraphs": ["The Technology Framework of the PA is to provide overall guidance to the Technology Mechanism that was established under the UNFCCC. The purpose of both is to foster sharing of information and cooperation to develop new, low-emission technologies and technologies to increase resilience to climate change. Supporters viewed the technology mechanisms as important in transforming the set of technologies available, and the economies that use them, as a means to meet the objective of the UNFCCC.", "The Technology Framework is to have five focus areas: (1) innovation, (2) implementation, (3) enabling environments and capacity-building, (4) collaboration and stakeholder engagement, and (5) support. The Parties intend that the framework should facilitate the active participation of all relevant stakeholders and take into account sustainable development, gender, the special circumstances of the least developed countries and small island developing states, and the enhancement of capacities of indigenous people and \"endogenous technologies.\" The Executive Committee of the Technology Framework is expected to report on the progress and challenges of its work in joint annual reports with the Climate Technology Centre established under the UNFCCC."], "subsections": []}]}, {"section_title": "Related CRS Products", "paragraphs": ["CRS Report R44609, Climate Change: Frequently Asked Questions About the 2015 Paris Agreement , by Jane A. Leggett and Richard K. Lattanzio CRS In Focus IF10239, President Obama Pledges Greenhouse Gas Reduction Targets as Contribution to 2015 Global Climate Change Deal , by Jane A. Leggett CRS Report R44092, Greenhouse Gas Pledges by Parties to the United Nations Framework Convention on Climate Change , by Jane A. Leggett CRS In Focus IF10668, Potential Implications of U.S. Withdrawal from the Paris Agreement on Climate Change , by Jane A. Leggett CRS Report R44761, Withdrawal from International Agreements: Legal Framework, the Paris Agreement, and the Iran Nuclear Agreement , by Stephen P. Mulligan CRS Legal Sidebar WSLG1836, Constitutional Limits on States' Efforts to \"Uphold\" the Paris Agreement , by Stephen P. Mulligan CRS Report R41889, International Climate Change Financing: The Green Climate Fund (GCF) , by Richard K. Lattanzio CRS Report R41845, The Global Climate Change Initiative (GCCI): Budget Authority and Request, FY2010-FY2016 , by Richard K. Lattanzio CRS In Focus IF10248, China's \"Intended Nationally Determined Contribution\" to Addressing Climate Change in 2020 and Beyond , by Jane A. Leggett CRS In Focus IF10296, New Climate Change Joint Announcement by China and the United States , by Jane A. Leggett CRS Report R40001, A U.S.-Centric Chronology of the United Nations Framework Convention on Climate Change , by Jane A. Leggett CRS In Focus IF10904, Potential Hydrofluorocarbon Phase Down: Issues for Congress , by Jane A. Leggett"], "subsections": []}]}}
{"id": "R45795", "title": "U.S.-Iran Conflict and Implications for U.S. Policy", "released_date": "2020-05-08T00:00:00", "summary": ["Since May 2019, U.S.-Iran tensions have heightened significantly, and evolved into conflict after U.S. military forces killed Qasem Soleimani, the commander of the Iran's Islamic Revolutionary Guard Corps-Quds Force (IRGC-QF) and one of Iran's most important military commanders, in a U.S. airstrike in Baghdad on January 3, 2020. The United States and Iran have appeared to be on the brink of additional hostilities since, as attacks by Iran-backed groups on bases in Iraq inhabited by U.S. forces have continued.", "The background to the U.S.-Iran tensions are the 2018 Trump Administration withdrawal from the 2015 multilateral nuclear agreement with Iran (Joint Comprehensive Plan of Action, JCPOA), and Iran's responses to the U.S. policy of applying \"maximum pressure\" on Iran. Since mid-2019, Iran and Iran-linked forces have attacked and seized commercial ships, destroyed some critical infrastructure in the Arab states of the Persian Gulf, conducted rocket and missile attacks on facilities used by U.S. military personnel in Iraq, downed a U.S. unmanned aerial vehicle, and harassed U.S. warships in the Gulf. As part of an effort it terms \"maximum resistance,\" Iran has also reduced its compliance with the provisions of the JCPOA. The Administration has deployed additional military assets to the region to try to deter future Iranian actions.", "The U.S.-Iran tensions still have the potential to escalate into all-out conflict. Iran's materiel support for armed factions throughout the region, including its provision of short-range ballistic missiles to these factions, and Iran's network of agents in Europe, Latin America, and elsewhere, give Iran the potential to expand confrontation into areas where U.S. response options might be limited. Iran has continued all its operations in the region despite wrestling with the COVID-19 pandemic that has affected Iran significantly. United States military has the capability to undertake a range of options against Iran, both against Iran directly and against its regional allies and proxies. A September 14, 2019, attack on critical energy infrastructure in Saudi Arabia demonstrated that Iran and/or its allies have the capability to cause significant damage to U.S. allies and to U.S. regional and global economic and strategic interests, and raised questions about the effectiveness of U.S. defense relations with the Gulf states.", "Despite the tensions and some hostilities with Iran since 2020 began, President Donald Trump continued to state that his policy goal is to negotiate a revised JCPOA that encompasses not only nuclear issues but also Iran's ballistic missile program and Iran's support for regional armed factions. High-ranking officials from several countries have sought to mediate to try to de-escalate U.S.-Iran tensions by encouraging direct talks between Iranian and U.S. leaders. President Trump has stated that he welcomes talks with Iranian President Hassan Rouhani without preconditions, but Iran insists that the United States lift sanctions as a precondition for talks, and no U.S.-Iran talks have been known to take place to date.", "Members of Congress have received additional information from the Administration about the causes of the U.S.-Iran tensions and Administration responses. They have responded in a number of ways; some Members have sought to pass legislation requiring congressional approval for any decision by the President to take military action against Iran.", "Additional detail on U.S. policy options on Iran, Iran's regional and defense policy, and Iran sanctions can be found in CRS Report RL32048, Iran: Internal Politics and U.S. Policy and Options , by Kenneth Katzman; CRS Report RS20871, Iran Sanctions , by Kenneth Katzman; CRS Report R44017, Iran's Foreign and Defense Policies , by Kenneth Katzman; and CRS Report R43983, 2001 Authorization for Use of Military Force: Issues Concerning Its Continued Application , by Matthew C. Weed."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Context for Heightened U.S.-Iran Tensions", "paragraphs": ["U.S.-Iran relations have been mostly adversarial since the 1979 Islamic Revolution in Iran. U.S. officials and official reports consistently identify Iran's support for militant armed factions in the Middle East region a significant threat to U.S. interests and allies. Attempting to constrain Iran's nuclear program took precedence in U.S. policy after 2002 as that program advanced. The United States also has sought to thwart Iran's purchase of new conventional weaponry and development of ballistic missiles. ", "In May 2018, the Trump Administration withdrew the United States from the 2015 nuclear agreement (Joint Comprehensive Plan of Action, JCPOA), asserting that the accord did not address the broad range of U.S. concerns about Iranian behavior and would not permanently preclude Iran from developing a nuclear weapon. Senior Administration officials explain Administration policy as the application of \"maximum pressure\" on Iran's economy to (1) compel it to renegotiate the JCPOA to address the broad range of U.S. concerns and (2) deny Iran the revenue to continue to develop its strategic capabilities or intervene throughout the region. Administration officials deny that the policy is intended to stoke economic unrest in Iran.", "As the Administration has pursued its policy of maximum pressure, including imposing sanctions beyond those in force before JCPOA went into effect in January 2016, bilateral tensions have escalated significantly. Key developments that initially heightened tensions include the following.", "On April 8, 2019, the Administration designated the Islamic Revolutionary Guard Corps (IRGC) as a Foreign Terrorist Organization (FTO), representing the first time that an official military force was designated as an FTO. The designation stated that \"The IRGC continues to provide financial and other material support, training, technology transfer, advanced conventional weapons, guidance, or direction to a broad range of terrorist organizations, including Hezbollah, Palestinian terrorist groups like Hamas and Palestinian Islamic Jihad, Kata'ib Hezbollah in Iraq, al-Ashtar Brigades in Bahrain, and other terrorist groups in Syria and around the Gulf.... Iran continues to allow Al Qaeda (AQ) operatives to reside in Iran, where they have been able to move money and fighters to South Asia and Syria.\" As of May 2, 2019, the Administration ended a U.S. sanctions exception for any country to purchase Iranian oil, aiming to drive Iran's oil exports to \"zero.\" Since May 2019, the Administration has ended five out of the seven waivers under the Iran Freedom and Counter-Proliferation Act (IFCA, P.L. 112-239 )\u00e2\u0080\u0094waivers that allow countries to help Iran remain within limits set by the JCPOA. On May 5, 2019, citing reports that Iran or its allies might be preparing to attack U.S. personnel or installations, then-National Security Adviser John Bolton announced that the United States was accelerating the previously planned deployment of the USS Abraham Lincoln Carrier Strike Group and sending a bomber task force to the Persian Gulf region. On May 24, 2019, the Trump Administration notified Congress of immediate foreign military sales and proposed export licenses for direct commercial sales of defense articles\u00e2\u0080\u0094 training, equipment, and weapons \u00e2\u0080\u0094 with a possible value of more than $8 billion, including sales of precision guided munitions (PGMs) to Saudi Arabia and the United Arab Emirates (UAE). In making the 22 emergency sale notifications, Secretary of State Pompeo invoked emergency authority codified in the Arms Export Control Act (AECA), and cited the need \"to deter further Iranian adventurism in the Gulf and throughout the Middle East.\" "], "subsections": [{"section_title": "Iran's Attacks on Tankers in mid-2019", "paragraphs": ["Iran responded to the additional steps in the U.S. maximum pressure campaign in part by demonstrating its ability to harm global commerce and other U.S. interests and to raise renewed concerns about Iran's nuclear activities. Iran apparently has sought to cause international actors, including those that depend on stable oil supplies, to put pressure on the Trump Administration to reduce its sanctions pressure on Iran. ", "On May 12-13, 2019, four oil tankers \u00e2\u0080\u0094 two Saudi, one Emirat i , and one Norwegian ship \u00e2\u0080\u0094 were damaged . Iran denied involvement, but a Defense Department (DOD) official on May 24, 2019, attributed the tanker attacks to the IRGC. A report to the United Nations based on Saudi, UAE, and Norwegian information found that a \"state actor\" was likely responsible, but did not name a specific perpetrator. On June 13, 2019, two Saudi tankers in the Gulf of Oman were attacked. Secretary of State Michael Pompeo stated, \"It is the assessment of the U.S. government that Iran is responsible for the attacks that occurred in the Gulf of Oman today\u00e2\u0080\u00a6.based on the intelligence, the weapons used, the level of expertise needed to execute the operation, recent similar Iranian attacks on shipping, and the fact that no proxy group in the area has the resources and proficiency to act with such a high degree of sophistication.... \" "], "subsections": []}, {"section_title": "Actions by Iran's Regional Allies", "paragraphs": ["Iran's allies in the region have been conducting attacks that might be linked to U.S.-Iran tensions, although it is not known definitively whether Iran directed or encouraged each attack (see Figure 1 for a map of Iran-supported groups). Trump Administration officials, particularly Secretary of State Pompeo, has stated that the United States will hold Tehran responsible for the actions of its regional allies. Some of the most significant actions by Iran-linked forces during mid-2019 are the following: ", "On May 19, 2019, a rocket was fired into the secure \"Green Zone\" in Baghdad but it caused no injuries or damage. Iran-backed Iraqi militias were widely suspected of the firing and U.S. Defense Department officials attributed it to Iran. The incident came four days after the State Department ordered \"nonemergency U.S. government employees\" to leave U.S. diplomatic facilities in Iraq, claiming a heightened threat from Iranian allies. An additional rocket attack launched from Iraq included a May 2019 attack on Saudi pipeline infrastructure in Saudi Arabia with an unmanned aerial aircraft, first considered to have been launched from Yemen. Further attacks, discussed below, have led to U.S.-Iran hostilities. In June 2019 and periodically thereafter, the Houthis, who have been fighting against a Saudi-led Arab coalition that intervened in Yemen against the Houthis in March 2015, claimed responsibility for attacks on an airport in Abha, in southern Saudi Arabia, and on Saudi energy installations and targets. The Houthis claimed responsibility for the large-scale attack on Saudi energy infrastructure on September 14, 2019, but, as discussed below, U.S. and Saudi officials have concluded that the attack did not originate from Yemen. In a June 13, 2019, statement, Secretary of State Pompeo asserted Iranian responsibility for a May 31, 2019, car bombing in Afghanistan that wounded four U.S. military personnel. Administration reports have asserted that Iran was providing materiel support to some Taliban militants, but outside experts asserted that the Iranian role in that attack is unlikely. "], "subsections": []}, {"section_title": "Tensions turn to Hostilities", "paragraphs": ["In subsequent weeks, U.S.-Iran tensions erupted into direct hostilities as well as further Iranian actions against U.S. partners. "], "subsections": [{"section_title": "Iran and U.S. Downing of Drones", "paragraphs": ["On June 20, 2019, Iran shot down an unmanned aerial surveillance aircraft (RQ-4A Global Hawk Unmanned Aerial Vehicle) near the Strait of Hormuz, claiming it had entered Iranian airspace over the Gulf of Oman. U.S. Central Command officials stated that the drone was over international waters. Later that day, according to his posts on the Twitter social media site, President Trump ordered a strike on three Iranian sites related to the Global Hawk downing, but called off the strike on the grounds that it would have caused Iranian casualties and therefore been \"disproportionate\" to the Iranian shoot down. The United States did reportedly launch a cyberattack against Iranian equipment used to track commercial ships. On July 18, 2019, President Trump announced that U.S. forces in the Gulf had downed an Iranian drone via electronic jamming in \"defensive action\" over the Strait of Hormuz (see Figure 3 ). Iran denied that any of its drones were shot down."], "subsections": []}, {"section_title": "UK-Iran Tensions and Iran Tanker Seizures", "paragraphs": ["U.S.-Iran tensions spilled over into confrontations between Iran and the UK. On July 4, 2019, authorities from the British Overseas Territory Gibraltar, backed by British marines, impounded an Iranian tanker, the Grace I , off the coast of Gibraltar for allegedly violating an EU embargo on the provision of oil to Syria. Iranian officials termed the seizure an act of piracy, and in subsequent days, the IRGC Navy sought to intercept a UK-owned tanker in the Gulf, the British Heritage , but the force was reportedly driven off by a British warship. On July 19, the IRGC Navy seized a British-flagged tanker near the Strait of Hormuz, the Stena Impero , claiming variously that it violated Iranian waters, was polluting the Gulf, collided with an Iranian vessel, or that the seizure was retribution for the seizure of the Grace I . ", "On July 22, 2019, the UK's then-Foreign Secretary Jeremy Hunt explained the government's reaction to the Stena Impero seizure as pursuing diplomacy with Iran to peacefully resolve the dispute, while at the same time sending additional naval vessels to the Gulf to help secure UK commercial shipping. On August 15, 2019, following a reported pledge by Iran not to deliver the oil cargo to Syria, a Gibraltar court ordered the ship (renamed the Adrian Darya 1) released. Gibraltar courts turned down a U.S. Justice Department request to impound the ship as a violator of U.S. sanctions on Syria and on the IRGC, which the U.S. filing said was financially involved in the tanker and its cargo. The ship apparently delivered its oil to Syria despite the pledge and, as a consequence, the United States imposed new sanctions on individuals and entities linked to the ship and to the IRGC. On September 22, 2019, Iran released the Stena Impero . ", "Separate from the UK-Iran dispute over the Grace I and the Stena Impero , Iran seized an Iraqi tanker on August 5, 2019, for allegedly smuggling Iranian diesel fuel to \"Persian Gulf Arab states.\" "], "subsections": []}, {"section_title": "Attack on Saudi Energy Infrastructure in September 201926", "paragraphs": ["Iran appeared to escalate tensions significantly by conducting an attack, on September 14, 2019, on multiple locations within critical Saudi energy infrastructure sites at Khurais and Abqaiq. The Houthi movement in Yemen, which receives arms and other support from Iran, claimed responsibility but Secretary of State Pompeo stated \"Amid all the calls for de-escalation, Iran has now launched an unprecedented attack on the world's energy supply. There is no evidence the attacks came from Yemen.\" Press reports stated that U.S. intelligence indicates that Iran itself was the staging ground for the attacks, in which cruise missiles, possibly assisted by unmanned aerial vehicles, struck nearly 20 targets at those Saudi sites. Iranian officials denied responsibility for the attack.", "The attack shut down a significant portion of Saudi oil production and, whether conducted by Iran itself or by one of its regional allies, escalated U.S.-Iran and Iran-Saudi tensions and demonstrated a significant capability to threaten U.S. allies and interests. President Trump stated on September 16, 2019, that he would \"like to avoid\" conflict with Iran and the Administration did not retaliate militarily. U.S. officials did announce modest increases in U.S. forces in the region and some new U.S. sanctions on Iran. ", "The attacks on the Saudi infrastructure raised several broad questions, including", "What is the extent and durability of the long-standing implicit and explicit U.S. security guarantees to the Gulf states? Have Iran's military technology capabilities advanced further than has been estimated by U.S. officials and the U.S. intelligence community?"], "subsections": []}]}, {"section_title": "U.S. Sanctions Responses to Iranian Provocations", "paragraphs": ["As tensions with Iran increased, the Trump Administration increased economic pressure on Iran to weaken it strategically, and compel it to negotiate a broader resolution of U.S.-Iran differences.", "On May 8, 2019, the President issued Executive Order 13871, blocking U.S.-based property of persons and entities determined to have conducted significant transactions with Iran's iron, steel, aluminum, or copper sectors. On June 24, 2019, President Trump issued Executive Order 13876, blocking the U.S.-based property of Supreme Leader Ali Khamene'i and his top associates. Sanctions on several senior officials, including Iran's Foreign Minister Mohammad Javad Zarif, have since been imposed under that Order. On September 4, 2019, the State Department Special Representative for Iran and Senior Advisor to the Secretary of State Brian Hook said the United States would offer up to $15 million to any person who helps the United States disrupt the financial operations of the IRGC and its Qods Force\u00e2\u0080\u0094the IRGC unit that assists Iran-linked forces and factions in the region. The funds are to be drawn from the long-standing \"Rewards for Justice Program\" that provides incentives for persons to help prevent acts of terrorism. On September 20, 2019, the Trump Administration imposed additional sanctions on Iran's Central Bank by designating it a terrorism supporting entity under Executive Order 13224. The Central Bank was already subject to a number of U.S. sanctions, rendering unclear whether any new effect on the Bank's ability to operate would result. Also sanctioned was an Iranian sovereign wealth fund, the National Development Fund of Iran. In early 2020, U.S. officials indicated that they would use all available options to achieve an extension of the arms transfer ban on Iran provided by U.N. Security Council Resolution 2231, and which expires on October 18, 2020. U.S. officials insisted that the ban be extended in order to prohibit Russia and China from proceeding with planned arms sales to Iran, which would have the effect of increasing the conventional military threat from Iran. See CRS In Focus IF11429, U.N. Ban on Iran Arms Transfers , by Kenneth Katzman. "], "subsections": []}, {"section_title": "JCPOA-Related Iranian Responses30", "paragraphs": ["Since the Trump Administration's May 2018 announcement that the United States would no longer participate in the JCPOA, Iranian officials repeatedly have rejected renegotiating the agreement or discussing a new agreement. Tehran also has conditioned its ongoing adherence to the JCPOA on receiving the agreement's benefits from the remaining JCPOA parties, collectively known as the \"P4+1.\" On May 10, 2018, Iranian Foreign Minister Mohammad Javad Zarif wrote that, in order for the agreement to survive, \"the remaining JCPOA Participants and the international community need to fully ensure that Iran is compensated unconditionally through appropriate national, regional and global measures.\" He added that ", "Iran has decided to resort to the JCPOA mechanism [the Joint Commission established by the agreement] in good faith to find solutions in order to rectify the United States' multiple cases of significant non-performance and its unlawful withdrawal, and to determine whether and how the remaining JCPOA Participants and other economic partners can ensure the full benefits that the Iranian people are entitled to derive from this global diplomatic achievement. ", "Tehran also threatened to reconstitute and resume the country's pre-JCPOA nuclear activities. ", "Several meetings of the JCPOA-established Joint Commission since the U.S. withdrawal have not produced a firm Iranian commitment to the agreement. Tehran has argued that the remaining JCPOA participants' efforts have been inadequate to sustain the agreement's benefits for Iran. In May 8, 2019, letters to the other JCPOA participant governments, Iran announced that, as of that day, Tehran had stopped \"some of its measures under the JCPOA,\" though the government emphasized that it was not withdrawing from the agreement. Specifically, Iranian officials said that the government will not transfer low enriched uranium (LEU) or heavy water out of the country in order to maintain those stockpiles below the JCPOA-mandated limits. A May 8, 2019, statement from Iran's Supreme National Security Council explained that Iran \"does not anymore see itself committed to respecting\" the JCPOA-mandated limits on LEU and heavy water stockpiles. ", "Beginning in July 2019, the International Atomic Energy Agency (IAEA) verified that some of Iran's nuclear activities were exceeding JCPOA-mandated limits; the Iranian government has since increased the number of such activities. Specifically, according to IAEA reports, Iran has exceeded JCPOA-mandated limits on its heavy water stockpile, the number of installed centrifuges in Iran's pilot enrichment facility, Iran's LEU stockpile, and the LEU's concentration of the relevant fissile isotope uranium-235. In addition, Tehran is conducting JCPOA-prohibited research and development activities, as well as centrifuge manufacturing, and has also begun to enrich uranium at its Fordow enrichment facility. ", "The Iranian government announced in a January 5, 2020, statement \"the fifth and final step in reducing\" Tehran's JCPOA commitments, explaining that Tehran would \"set aside the final operational restrictions under the JCPOA which is 'the restriction on the number of centrifuges.' \" The statement provided no details regarding concrete changes to Iran's nuclear program, but the term \"restrictions\" may refer to the JCPOA-mandated limits on installed centrifuges at the country's commercial enrichment facility. According to a March report from the IAEA Director General., Iran has not exceeded these limits. The January 5 announcement added that \"[i]n case of the removal of sanctions and Iran benefiting from the JCPOA,\" Iran \"is ready to resume its commitments\" pursuant to the agreement. In a May 6 speech, Iranian President Hassan Rouhani characterized Tehran's aforementioned actions as a withdrawal from the government's JCPOA commitments \"in an equal scale,\" Whenever the United States and P4+1 \"are ready to observe their full commitments under the JCPOA,\" Iran \"will return to the JCPOA the same day,\" he added. According to an article published May 6, Iran's Permanent Representative to the IAEA Kazzem Gharibabdi stated that Iran could reduce or end its cooperation with the IAEA if the United States and P4+1 continue actions which, Tehran argues, damage the JCPOA."], "subsections": []}, {"section_title": "Conflict Erupts (December 2019-January 2020)", "paragraphs": ["In early December 2019, press reports and U.S. officials indicated that Iran was supplying short- range missiles to allied forces inside Iraq. A series of indirect fire attacks in mid-December 2019 targeted Iraqi military facilities where U.S. forces are co-located. In response, Secretary Pompeo issued a statement saying, \"We must also use this as an opportunity to remind Iran's leaders that any attacks by them, or their proxies of any kind, that harm Americans, our allies, or our interests will be answered with a decisive U.S. response.\" Secretary of Defense Mark Esper stated that he urged then-Iraqi Prime Minister Adel Abd Al Mahdi to \"take proactive actions\u00e2\u0080\u00a6to get that under control.\" ", "On December 27, 2019, a rocket attack on a base near Kirkuk in northern Iraq killed a U.S. contractor and wounded four U.S. service members and two Iraqi service members. Two days later, the U.S. launched retaliatory airstrikes on five facilities (three in Iraq, two in Syria) used by the Iran-backed Iraqi armed group Kata'ib Hezbollah (KH), a U.S.-designated Foreign Terrorist Organization to which the U.S. attributed the attack. KH leader and leading figure in the Iraqi-state affiliated Popular Mobilization Forces Abu Mahdi al Muhandis said dozens of fighters were killed and injured and promised a \"very tough response\" on U.S. forces in Iraq. ", "Iraqi leaders, including those who want to maintain good relations with both the United States and Iran, criticized the strikes as a \"violation of Iraqi sovereignty.\" The hostilities came as Iran sought to preserve its political influence amidst large-scale demonstrations in which hundreds of protestors were killed by security forces and which contributed to Abd Al Mahdi's resignation that month. He continues to serve in a caretaker role while Iraqi political leaders negotiate a transition. In a December 6, 2019 press briefing announcing sanctions designations of several Iran-linked Iraqi groups and individuals, Assistant Secretary of State for Near Eastern Affairs David Schenker said", "the United States Government will work with anyone in the Iraqi Government who is willing to put Iraqi interests first.... This is a sine qua non . But we see in the process of establishing a new government or determining who the next prime minister will be that [IRGC-QF commander] Qasem Soleimani is in Baghdad working this issue. It seems to us that foreign terrorist leaders, or military leaders, should not be meeting with Iraqi political leaders to determine the next premier of Iraq, and this is exactly what the Secretary says about being perhaps the textbook example of why Iran does not behave and is not a normal state. This is not normal. This is not reasonable. This is unorthodox and it is incredibly problematic, and it is a huge violation of Iraqi sovereignty.", "On December 31, 2019, two days after the U.S. airstrikes against KH targets in Iraq and Syria, supporters of KH and other Iran-backed Iraqi militias surrounded and then entered the U.S. Embassy in Baghdad, setting some outer buildings on fire. The militiamen withdrew after their leaders said they obtained acting Prime Minister Abdul Mahdi's promise for \"serious work\" on a parliamentary vote to expel U.S. forces from the country, a long-sought goal of Iran and its Iraqi allies. President Trump tweeted that Iran, which \"orchestrat[ed the] attack,\" would \"be held fully responsible for lives lost, or damage incurred, at any of our facilities. They will pay a very BIG PRICE!\" "], "subsections": []}]}, {"section_title": "U.S. Escalation and Aftermath: Drone Strike Kills Qasem\u00c2 Soleimani", "paragraphs": ["On January 3, 2020, Iraq time, a U.S. military armed drone strike killed IRGC-QF Commander Major General Qasem Soleimani in what the Defense Department termed a \"defensive action.\" The statement cited Soleimani's responsibility for \"the deaths of hundreds of Americans and coalition service members\" and his approval of the Embassy blockade, and stated that he was \"actively developing plans to attack American diplomats and service members in Iraq and throughout the region.\" The strike, conducted while Soleimani was leaving Baghdad International Airport, also killed KH leader Abu Mahdi al-Muhandis, who also headed the broader Popular Mobilization Forces (PMF) made up mostly of militia fighters, and other Iranian and Iraqi figures. Iraq's Council of Representatives (CoR) on January 5, 2020, voted to direct the government \"to work towards ending the presence of all foreign troops on Iraqi soil,\" according to the media office of the Iraqi Parliament. ", "Soleimani was widely regarded as one of the most powerful and influential figures in Iran, with a direct channel to Khamene'i, who serves as Commander-in-Chief of all Iranian armed forces. One expert described him as \"the military center of gravity of Iran's regional hegemonic efforts\" and \"an operational and organization genius who likely has no peer in the upper ranks of the Islamic Revolutionary Guard Corps.\" Others contend that \"he was only the agent of a government policy that preceded him and will continue without him.\""], "subsections": [{"section_title": "Iranian Responses and Subsequent Hostilities", "paragraphs": ["Secretary of State Pompeo underscored that the United States is not seeking further escalation, but Iran's leaders, including Supreme Leader Ali Khamene'i, threatened to retaliate for the Soleimani killing. That retaliation, codenamed \"Operation Martyr Soleimani\" came on January 8, 2020, in the form of an Iranian ballistic missile strike on two Iraqi bases \u00e2\u0080\u0093 Ayn al-Asad in western Iraq and an airbase near Irbil, in Kurdish-controlled northern Iraq. The United States reported no \"casualties,\" according to a statement by President Trump on January 8, 2020, and the United States reportedly had some advanced warning of the attack, via Iraqi officials. The President added that \"Iran appears to be standing down, which is a good thing for all parties concerned and a very good thing for the world,\" and there was no U.S. military retaliation for Iran's missile strike. Still, over the coming weeks, about 110 U.S. military personnel were diagnosed with various forms of traumatic brain injury, mostly concussions from the blast. ", "Iran's ability to hit Ayn al-Asad with some degree of precision indicated growing capability in Iran's missile capabilities. For the past several years, the U.S. intelligence community, in its annual worldwide threat assessment briefings for Congress, has assessed that Iran has \"the largest inventory of ballistic missiles in the region,\" and the 2019 version of the annual, congressionally-mandated report on Iran's military power by the Defense Intelligence Agency indicated that Iran is advancing its drone technology and the precision targeting of the missiles it provides to its regional allies. Israel asserts that these advances pose a sufficient threat to justify Israeli attacks against Iranian and Iran-allied targets in the region, including in Lebanon, Syria, and Iraq. "], "subsections": [{"section_title": "Tensions Resurface in Spring 2020: Iraq and the Gulf", "paragraphs": ["After about two months marked only by casualty-free occasional rocket attacks in Iraq by Iran-backed factions, U.S.-Iran tensions began to rise again in March 2020. On March 11, 2020, a rocket attack on Camp Taji in Iraq, allegedly by KH, killed two U.S. military personnel and one British medic serving with the U.S.-backed coalition fighting the Islamic State organization. On March 13, 2020, the commander of U.S. Central Command (CENTCOM), Gen. Kenneth McKenzie, said the United State used manned aircraft to strike several sites near Baghdad that KH uses as storage areas for advanced conventional weapons, heavy rockets, and associated propellant. According to McKenzie: \"We also assessed that the destruction of these sites will degrade Kata'ib Hezbollah's ability to conduct future strikes.\" ", "However, the deterrent effect of the U.S. strikes appear limited. On March 15, 2020, according to the Defense Department, three U.S. service personnel were injured in another rocket attack on the same location, Camp Taji, of which two were seriously wounded. Some Iraqi military personnel were also wounded. The United States did not retaliate. ", "The new hostilities in Iraq came amid Iraq's struggles to establish a government to succeed that of Adel Abdul Mahdi, who remains a caretaker prime minister. Soleimani's successor, Esmail Qaani, made his first reported visit to Iraq in late March, reportedly in an effort to unite Iran-backed factions on a successor to Abdul Mahdi. The Iraqi political struggles to form a new government reflect the continuing Iranian and U.S. effort to limit each other's influence on Iraqi politics.", "Several weeks after the Iraq rocket attacks, Iran resumed some provocations in the Persian Gulf. On April 14, 2020, the IRGC Navy forcibly boarded and steered into Iranian waters a Hong Kong-flagged tanker. The next day, eleven IRGC Navy small boats engaged in what the State Department called \"high speed, harassing approaches\" of five U.S. naval vessels conducting routine exercises in the Gulf.\" The United States, either separately or as part of the IMSC Gulf security mission discussed above, did not respond militarily to the Iranian actions. However, on April 22, President Trump posted a message on Twitter saying: \"I have instructed the United States Navy to shoot down and destroy any and all Iranian gunboats if they harass our ships at sea.\" U.S. defense officials characterized the President's message as a warning Iran against further such actions, but they stressed that U.S. commanders have discretion about how to respond to future provocative actions by Iran. ", "Also on April 22, the IRGC announced that it had launched a \"military satellite\" into orbit. Secretary of State Pompeo reacted by stating \"I think today's launch proves what we've been saying all along here in the United States [that Iran's space launches are not for purely commercial purposes].\" On May 6, 2020, the Chairman of the Joint Chiefs of Staff Gen. Mark Milley stated \"Well, let me put it this way, they launched a satellite vehicle, I think we publicly had stated it was tumbling. So the satellite itself, not overly concerned about it, but the missile technology, the secondary and second and third order missile technology and the lesson learned from that, that is a concern because, you know, different missiles can do different things and one can carry a satellite, another can carry some sort of device that can explode. So, the bottom line is yes, it is a security concern any time Iran is testing any type of long-range missile.\""], "subsections": []}]}, {"section_title": "Efforts to De-Escalate Tensions", "paragraphs": ["U.S. partner countries and U.N. officials have consistently called for the de-escalation of tensions and the avoidance of war. The EU countries have refused to join the U.S. maximum pressure campaign as a consequence of Iran's provocative acts, although the UK, France, and Germany have urged Iran to negotiate a new JCPOA that includes limits on Iran's missile development. Some U.S. allies have joined a U.S. effort to deter Iran from further attacks on shipping in the Gulf. EU officials have said that they still hope to preserve the JCPOA could be preserved. ", "The United States and Iran do not have diplomatic relations and there have been no known high-level talks between Iran and Administration officials since the Trump Administration withdrew from the JCPOA. Prior to the Soleimani killing, various third country leaders, such as Japanese Prime Minister Shinzo Abe in mid-2019 and again in a visit to Iran in December 2019, have sought to move Tehran and Washington toward direct talks. ", "Several Gulf countries have sent delegations to Iran to try to ease U.S.-Iran tensions that the Gulf leaders say could lead to severe destruction in the Gulf states themselves in the event of conflict. A UAE delegation that visited Tehran in late July 2019 undertook the first UAE security talks with Iran since 2013. In late 2019, Saudi Arabia reportedly sought help from Pakistan and Iraq in undertaking talks with Iran to lower tensions. ", "In August 2019, French President Macron appeared to make progress but ultimately did not produce U.S.-Iran talks. While hosting the G-7 summit in Biarritz, Macron invited Foreign Minister Zarif to meet with him there. No Trump-Zarif meeting took place in Biarritz but, at a press conference at the close of the summit, President Trump reiterated his willingness, in principle, to meet with Iranian President Hassan Rouhani, presumably during the U.N. General Assembly meetings in New York in September. President Trump reportedly considered supporting a French proposal to provide Iran with a credit line as an incentive for Iran to meet with him. However, in the wake of the September 14, 2019 attacks in Saudi Arabia and since, the Supreme Leader has stated that there would be no U.S.-Iran talks and Rouhani and Zarif have since repeatedly restated the view that U.S. sanctions be lifted before any such talks. "], "subsections": []}]}, {"section_title": "Iran-Focused Additional U.S. Military Deployments", "paragraphs": ["For the stated purpose of trying to deter further Iranian attacks and protecting U.S. forces already in the region, the United States added forces and military capabilities in the region. As of early 2020, approximately 14,000 U.S. military personnel had been added to a baseline of more than 60,000 U.S. forces in and around the Persian Gulf, which include those stationed at military facilities in the Arab states of the Gulf Cooperation Council (GCC: Saudi Arabia, Kuwait, UAE, Qatar, Oman, and Bahrain), and those in Iraq and Afghanistan. Defense Department officials indicated that the additional deployments mostly restored forces who were redeployed from the region a few years ago, and did not represent preparation for any U.S. offensive against Iran. ", "Among the additional deployments, the United States sent additional Patriot and Terminal High Altitude Area Defense (THAAD) missile defense systems in the region. Some of the additional forces sent deployed to Prince Sultan Air Base in Saudi Arabia, which is south of Riyadh. U.S. forces used the base to enforce a no-fly zone over southern Iraq during the 1990s, but left there after Saddam Hussein was ousted by Operation Iraqi Freedom in 2003. ", "As 2020 progressed, some U.S. deployments changed. In March 2020, hundreds of U.S forces in Iraq were redeployed from smaller bases in Iraq to larger ones, and some were withdrawn to locations elsewhere in the region. The redeployments reportedly were due to a waning threat in Iraq from the Islamic State organization as well as the apparent need to better defend U.S. forces from attacks by Iran-backed militias. In early May 2019, it was reported that the United States had withdrawn some Patriot air defenses and combat aircraft from Saudi Arabia and other locations in the Gulf, although U.S. officials denied that the deployments signaled an altered assessment of the Iran threat or would degrade U.S. capabilities to deter Iran. "], "subsections": [{"section_title": "Gulf Maritime Security Operation", "paragraphs": ["Iran's naval actions in the Gulf in mid-2019 prompted the formation of a new, U.S.-led military operation to protect commercial shipping in the Gulf. The maritime security and monitoring initiative for the Gulf, the Bab el-Mandeb Strait, and the Suez Canal was termed \"Operation Sentinel.\" Operation Sentinel began activities in August 2019 and was then formally inaugurated as the International Maritime Security Construct (IMSC) in Bahrain in November 2019. It consists of: the United States, the UK, the UAE, Saudi Arabia, Bahrain, Qatar, Kuwait, Albania, and Australia) operating four sentry ships at crucial points in the Gulf. Additionally, Israeli Foreign Minister Yisrael Katz said Israel would join the coalition, but Defense Department officials have not listed Israel as a participant in IMSC to date. China's ambassador to the UAE said in early August 2019 that China was considering joining the mission, although no announcement of China's participation has since been made. The IMSC supplements longstanding multilateral Gulf naval operations that have targeted smuggling, piracy, the movement of terrorists and weaponry, and other potential threats in the Gulf. ", "Other countries have started separate maritime security missions in the Gulf. France leads a maritime security mission, headquartered in Abu Dhabi, that began activities in early 2020. India has sent some naval vessels to the Gulf to protect Indian commercial ships. In December 2019, Japan sent vessels to protect Japanese shipping, also separate from the IMSC. "], "subsections": []}]}, {"section_title": "U.S. Military Action: Options and\u00c2 Considerations", "paragraphs": ["The military is a tool of national power that the United States can use to advance its objectives, and the design of a military campaign and effective military options depend on the policy goals that U.S. leaders seek to accomplish. The Trump Administration has stated that its \"core objective ... is the systemic change in the Islamic Republic's hostile and destabilizing actions, including blocking all paths to a nuclear weapon and exporting terrorism.\" As such, the military could be used in a variety of ways to try to contain and dissuade Iran from prosecuting its \"hostile and destabilizing actions.\" These ways range from further increasing presence and posture in the region to use of force to change Iran's regime. As with any use of the military instrument of national power, any employment of U.S. forces in this scenario could result in further escalation of a crisis. ", "U.S. military action may not be the appropriate tool to achieve systemic change within the Iranian regime, and may potentially set back the political prospects of Iranians sympathetic to a change of regime. Some observers question the utility of military power against Iran due to global strategic considerations. The 2017 National Security Strategy and 2018 National Defense Strategy both noted that China and Russia represent the key current and future strategic challenges to the United States. As such, shifting additional military assets into the United States Central Command (CENTCOM) area of responsibility requires diverting them from use in other theaters such as Europe and the Pacific, thereby sacrificing other long-term U.S. strategic priorities. ", "Secretary of Defense Mark Esper and other U.S. officials have stated that the additional U.S. deployments since May 2019 are intended to deter Iran from taking any further provocative actions and position the United States to defend U.S. forces and interests in the region. Iranian attacks after previous U.S. deployments could suggest that deploying additional assets and capabilities might not necessarily succeed in deterring Iran from using military force. ", "On the other hand, there are risks to military inaction that might potentially outweigh those associated with the employment of force. For example, should Iran acquire a nuclear weapons capability, U.S. options to contain and dissuade it from prosecuting hostile activities could be significantly more constrained than they are at present. ", "For illustrative purposes only, below are some potential additional policy options related to the possible use of military capabilities against Iran. Not all of these options are mutually exclusive, nor do they represent a complete list of possible options, implications, and risks. Congress has assessed its role in any decisions regarding whether to undertake military action against Iran, as discussed later in this report. The following discussion is based entirely on open-source materials. ", "Operations against Iranian a llies or proxies . The Administration might decide to take additional action against Iran's allies or proxies, such as Iran-backed militias in Iraq, Lebanese Hezbollah, or the Houthi movement in Yemen. Such action could take the form of air operations, ground operations, special operations, or cyber and electronic warfare. Further attacks on Iranian allies could be intended to seriously degrade the military ability of the Iranian ally in question and undertaken by U.S. forces, partner government forces, or both. At the same time, military action against Iran's allies could harm the prospects for resolution of the regional conflicts in which Iranian allies operate. Retaliatory Action against Iranian Key Targets and Facilities. The United States retains the option to undertake air and missile strikes, as well as special operations and cyber and electronic warfare against Iranian targets, such as IRGC Navy vessels in the Gulf, nuclear facilities, military bases, ports, oil installations, and any number of other targets within Iran itself. Iran's major Gulf ports are shown in Figure 2 . Blockade. Another option could be to establish a naval and/or air quarantine of Iran. Iran has periodically, including since mid-2019, threatened to block the vital Strait of Hormuz. Some observers have in past confrontations raised the prospect of a U.S. closure of the Strait or other waterways to Iranian commerce. Under international law, blockades are acts of war. Invasion. Although apparently far from current consideration because of the potential risks and costs, a U.S. invasion of Iran to oust its regime is among the options. Press reports in May 2019 indicated that the Administration was considering adding more than 100,000 military forces to the Gulf to deter Iran from any attacks. Such an option, if exercised, might be interpreted as potentially enhancing the U.S. ability to conduct ground attacks inside Iran, although military experts have indicated that a U.S. invasion and/or occupation of Iran would require many more U.S. forces than those cited. Iran's population is about 80 million, and its armed forces collectively number about 525,000, including 350,000 regular military and 125,000 IRGC forces. There has been significant antigovernment unrest in Iran over the past 10 years, but there is no indication that there is substantial support inside Iran for a U.S. invasion to change Iran's regime. "], "subsections": [{"section_title": "Resource Implications of Military Operations", "paragraphs": ["Without a more detailed articulation of how the military might be employed to accomplish U.S. objectives vis-a-vis Iran, and a reasonable level of confidence about how any conflict might proceed, it is difficult to assess with any precision the likely fiscal costs of a military campaign, or even just heightened presence. Still, any course of action listed in this report is likely to incur significant additional costs. Factors that might influence the level of expenditure required to conduct operations include, but are not limited to, the following: ", "The number of additional forces, and associated equipment, deployed to the Persian Gulf or the CENTCOM theater more broadly. In particular, deploying forces and equipment from the continental United States (if required) would likely add to the costs of such an operation due to the logistical requirements of moving troops and materiel. The mission set that U.S. forces are required to prosecute and its associated intensity. Some options leading to an increase of the U.S. posture in the Persian Gulf might require upgrading existing facilities or new construction of facilities and installations. By contrast, options that require the prosecution of combat operations would likely result in significant supplemental and/or overseas contingency operations requests, particularly if U.S. forces are involved in ground combat or post-conflict stabilization operations. The time required to accomplish U.S. objectives. As demonstrated by operations in Iraq and Afghanistan, the period of anticipated involvement in a contingency is a critical basis for any cost analysis. On one hand, a large stabilizing or occupying ground force to perform stabilization and reconstruction operations, for example, would likely require the expenditure of significant U.S. resources. ", "At the same time, there is potential for some U.S. costs to be offset by contributions. The Persian Gulf states and other countries have a track record of offsetting U.S. costs for Gulf security. In the current context, President Trump stated in October 2019 that Saudi Arabia would pay for the deployment of additional U.S. troops and capabilities to assist with the territorial defense of Saudi Arabia and the deterrence of Iranian aggression in the region overall, and subsequent reports indicate that U.S. and Saudi officials are negotiating a cost-sharing arrangement for the new deployments."], "subsections": []}]}, {"section_title": "Congressional Responses", "paragraphs": ["Members of Congress have responded in different ways to tensions with Iran and to related questions of authorization for the use of military force. ", "Various instances of increased U.S.-Iran tensions in the past year have prompted some Members to express concern about or support for potential military operations against Iran. These episodes include the June 2019 attacks against tankers in the Gulf of Oman and Iran's shoot down of a U.S. military drone; the September 2019 attacks on Saudi oil facilities at Abqaiq and Khurais; and the buildup of U.S. forces in the region in response to Iranian activities. ", "Throughout this period, Congress passed legislation with provisions specifying that authorization for the use of force against Iran is not granted. For instance, Section 1284 of the FY2020 NDAA ( P.L. 116-92 , December 2019) states that \"Nothing in this Act, or any amendment made by this Act, may be construed to authorize the use of military force, including the use of military force against Iran or any other country.\" Similarly, Section 9024 of Division A of H.R. 1158 , the Consolidated Appropriations Act, 2020, ( P.L. 116-89 , December 2019) states that \"Nothing in this Act may be construed as authorizing the use of force against Iran.\" ", "However, Congress has not prohibited the use of funds for operations against Iran, despite the introduction of several standalone measures that would do so, such as the Prevention of Unconstitutional War with Iran Act of 2019 ( H.R. 2354 / S. 1039 ).While the House did pass legislation that included a prohibition on funding for the use of force against Iran, including Section 1229 of H.R. 2500 , the National Defense Authorization Act (NDAA) for FY2020, the Senate rejected by a 50-40 vote an amendment ( S.Amdt. 883 ) that would have added similar text to its version of the FY2020 NDAA, and the House-passed language was not included in conference text of the bill.", "In response to these moves, President Trump stated that he had wide-ranging authority to unilaterally initiate the use of military force, as successive Administrations have maintained. For instance, in a June 24 interview, President Trump reiterated that he believed he had the authority to order military action against Iran without congressional approval, adding, \"I do like keeping them [Congress] abreast, but I don't have to do it, legally.\" Secretary Pompeo suggested in an April 2019 hearing that the 2001 authorization for use of military force (AUMF, P.L. 107-40 ) against those responsible for the September 11 terrorist attacks could potentially apply to Iran based on the country's ties with Al Qaeda. However, in a June 28, 2019, letter to House Foreign Affairs Committee Chairman Eliot Engel, Assistant Secretary of State for Legislative Affairs Mary Elizabeth Taylor stated that \"the Administration has not, to date, interpreted either [the 2001 or 2002] AUMF as authorizing military force against Iran, except as may be necessary to defend U.S. or partner forces engaged in counterterrorism operations or operations to establish a stable, democratic Iraq.\"", "The killing of IRGC-QF Commander Soleimani in a U.S. drone strike in Baghdad in January 2020 dramatically increased congressional attention to U.S.-Iran tensions and specifically to the authority under which Soleimani was killed and whether that authority might be used to justify further military action. Immediately after the strike, House Speaker Nancy Pelosi said in a statement that the Administration launched the strike that killed Soleimani \"without an Authorization for Use of Military Force (AUMF) against Iran\" and \"without the consultation of the Congress,\" and called for Congress to be \"immediately briefed on this serious situation.\" ", "Two days later, on January 4, 2020, President Trump submitted a notification to the Speaker of the House and President Pro Tempore of the Senate of the Soleimani drone strike, as pursuant to the War Powers Resolution ( P.L. 93-148 ), including the constitutional and legislative authority for the action. However, according to a media report, the notification \"only contained classified information, according to a senior congressional aide, likely detailing the intelligence that led to the action.\" Speaker Nancy Pelosi criticized the decision to classify the notification in its entirety as \"highly unusual.\" In statements after the strike, National Security Adviser Robert O'Brien asserted that the Authorization for Use of Military Force Against Iraq Resolution of 2002 (\"2002 AUMF\"; P.L. 107-243 ) provided the President authority to direct the strike against General Soleimani in Iraq. The House voted to repeal the 2002 AUMF on January 30, 2020, when it passed the No War Against Iran Act ( H.R. 550 ); no action has been taken by the Senate.", "In response to the strike, numerous pieces of legislation were introduced both commending and condemning the Administration for the action (for more, see CRS Report R46148, U.S. Killing of Qasem Soleimani: Frequently Asked Questions ). Perhaps most significant were two resolutions that would direct the President to terminate the involvement of U.S. forces in conflict with Iran.", "H.Con.Res. 83 , introduced by Representative Elissa Slotkin on January 8, 2020, pursuant to Section 5(c) of the War Powers Resolution. The resolution would direct the President \"to terminate the use of United States Armed Forces to engage in hostilities in or against Iran or any part of its government or military,\" unless Congress specifically authorizes such use of the armed forces, or if such force is necessary and appropriate to defend the United States or its armed forces against \"imminent attack.\" The House voted to adopt H.Con.Res. 83 by a 224-194 vote on January 9, 2020; no action has been taken by the Senate. Questions have been raised about the constitutionality and effect of Section 5(c) concurrent resolutions. ", "S.J.Res. 68 , introduced by Senator Tim Kaine on January 9, 2020, pursuant to Section 1013 of the Department of State Authorization Act, Fiscal Years 1984 and 1985 (50 U.S.C. \u00c2\u00a7 1546a). The resolution would have directed the President to \"terminate the use of U.S. armed forces for hostilities\" with Iran (changed from an earlier version that would have required \"removal\" of U.S. armed forces, perhaps a reflection of concern that the original language might precipitate changes in current deployments). The Senate voted to adopt the resolution by a 55-45 vote on February 13, and the House passed it by a 227-186 vote on March 11. President Trump vetoed the resolution on May 6, 2020, describing it as an \"insulting\" election ploy by congressional Democrats. The statement also stated that the resolution's implication that \"the President's constitutional authority to use military force is limited to defense of the United States and its forces against imminent attack\" was \"incorrect.\" The Senate failed to override the veto by a vote of 49-44 on May 7, 2020."], "subsections": [{"section_title": "Possible Issues for Congress", "paragraphs": ["Given ongoing tensions with Iran, Members are likely to continue to assess and perhaps try to shape the congressional role in any decisions regarding whether to commit U.S. forces to potential hostilities. In assessing its authorities in this context, Congress might consider, among other things, the following:", "Does the President require prior authorization from Congress before initiating hostilities with Iran? If so, what actions, under what circumstances, ought to be covered by such an authorization? If not, what existing authorities provide for the President to initiate hostilities? If the executive branch were to initiate and then sustain hostilities against Iran without congressional authorization, what are the implications for the preservation of Congress's role, relative to that of the executive branch, in the war powers function? How, in turn, might the disposition of the war powers issue in connection with the situation with Iran affect the broader question of Congress's status as an equal branch of government, including the preservation and use of other congressional powers and prerogatives? The Iranian government may continue to take aggressive action short of directly threatening the United States and its territories while it continues policies opposed by the United States. What might be the international legal ramifications for undertaking a retaliatory, preventive, or preemptive strikes against Iran in response to such actions without a U.N. Security Council mandate?", "Conflict with, or increased military activity in or around, Iran could generate significant costs, financial and otherwise. With that in mind, Congress could consider the following:", "The potential costs of heightened U.S. operations in the CENTCOM area of operations, particularly if they lead to full-scale war and significant postconflict operations. The need for the United States to reconstitute its forces and capabilities, particularly in the aftermath of a major conflict. The impact of the costs of war and post conflict reconstruction on U.S. deficits and government spending. The costs of persistent military confrontation and/or a conflict in the Gulf region to the global economy. The extent to which regional allies, and the international community more broadly, might contribute forces or resources to a military campaign or its aftermath."], "subsections": []}]}]}}
{"id": "R45974", "title": "Agriculture and Related Agencies: FY2020 Appropriations", "released_date": "2020-03-26T00:00:00", "summary": ["The Agriculture appropriations bill funds the U.S. Department of Agriculture (USDA) except for the U.S. Forest Service. It also funds the Food and Drug Administration (FDA) and\u00e2\u0080\u0094in even-numbered fiscal years\u00e2\u0080\u0094the Commodity Futures Trading Commission (CFTC).", "Agriculture appropriations include both mandatory and discretionary spending. Discretionary amounts, though, are the primary focus during the bill's development. The largest discretionary spending items are the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC); agricultural research; rural development; FDA; foreign food assistance and trade; farm assistance loans and salaries; food safety inspection; animal and plant health programs; and technical assistance for conservation programs.", "Congress passed and the President signed a full-year FY2020 appropriation on December 20, 2019\u00e2\u0080\u0094the Further Consolidated Appropriations Act ( P.L. 116-94 , Committee Print 38-679 )\u00e2\u0080\u0094that included Agriculture appropriations in Division B. The discretionary total of the FY2020 Agriculture appropriations act is $23.5 billion. This is $183 million more than the comparable amount for FY2019 (+0.8%) that includes the Commodity Futures Trading Commission (CFTC). The appropriation also carries about $129 billion of mandatory spending that is largely determined in authorizing laws. Thus, the overall total of the agriculture portion is $153 billion.", "In addition to these amounts, the FY2020 Further Consolidated Appropriations Act includes budget authority that is designated as emergency spending and does not count against discretionary spending caps. These include $535 million to FDA for Ebola prevention and treatment, and $1.5 billion to USDA for the Wildfires and Hurricanes Indemnity Program (WHIP). The latter amount was offset by a $1.5 billion rescission of unobligated WHIP funding from a prior appropriation and emergency designation.", "The primary components of the $183 million overall increase in the regular appropriation from FY2019 include increases to foreign agricultural assistance (+$235 million), rural development (+$229 million), rural broadband (+$175 million, separate from the rural development increase), agricultural research salaries and grants (+$167 million), FDA (+$91 million), departmental administration (+$82 million), Farm Service Agency (+$47 million), CFTC (+$47 million), the Natural Resources Conservation Service (+$35 million), Animal and Plant Health Inspection Service (+$32 million) and the Agricultural Marketing Service (+$28 million), and miscellaneous appropriations (+$63 million). Most of these increases are offset by decreases such as for construction for agricultural research facilities (-$189 million), Food and Nutrition Service discretionary appropriations (-$54 million), increasing a rescission of carryover balances in WIC (-$500 million), and not renewing temporary appropriations for Food for Peace and rural water and waste disposal grants (-$291 million).", "The Trump Administration had requested $19.2 billion for discretionary-funded accounts within the jurisdiction of Agriculture appropriations subcommittees. The request would have been a reduction of $4.1 billion from FY2019 (-18%).", "Policy provisions are also included that affect how the appropriation is delivered. This year, these provisions include issues such as the relocation of USDA agencies, disaster programs, rural definitions, livestock regulations, nutrition programs, and dietary guidelines.", "Budget sequestration continues to affect mandatory agricultural spending accounts. Sequestration refers to automatic across-the-board reductions in spending authority. In FY2020, sequestration on mandatory spending accounts is 5.9% and totals about $1.4 billion for agriculture accounts. Recent budget acts have extended sequestration through FY2029."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Status of FY2020 Agriculture Appropriations", "paragraphs": ["On December 20, 2019, Congress passed and the President signed into law a full-year FY2020 appropriation\u00e2\u0080\u0094the Further Consolidated Appropriations Act ( P.L. 116-94 , Committee Print 38-679 )\u00e2\u0080\u0094that included Agriculture appropriations in Division B ( Table 1 ).", "During the regular appropriations cycle, the House passed a five-bill minibus appropriation on June 25, 2019 ( H.R. 3055 ), and the Senate passed a four-bill minibus on October 31, 2019 ( H.R. 3055 ). In both cases, Agriculture was in Division B. To develop these bills, the House and Senate Appropriations Committees reported Agriculture subcommittee bills ( H.R. 3164 and S. 2522 , respectively) with their own more detailed reports ( H.Rept. 116-107 and S.Rept. 116-110 , respectively). See Figure 1 for a comparison of timelines and Appendix D for more details.", "The Administration released its budget request in two parts: an overview on March 11, 2019, and more detailed documents on March 18, 2019. In the absence of an enacted appropriation at the beginning of the fiscal year, FY2020 began with two continuing resolutions (CRs).", "For overall spending levels, the House set its subcommittee allocations on May 14, 2019 ( H.Rept. 116-59 ). The Senate set its subcommittee allocation on September 12, 2019 ( S.Rept. 116-104 ), after the Bipartisan Budget Act of 2019 ( P.L. 116-37 ) raised caps on discretionary spending.", "The discretionary total of the FY2020 Agriculture appropriations act is $23.5 billion. This is $183 million more than the comparable amount for FY2019 (+0.8%) that includes the Commodity Futures Trading Commission (CFTC). The appropriation also carries about $129 billion of mandatory spending that is largely determined in authorizing laws ( Table 2 )."], "subsections": []}, {"section_title": "Scope of Agriculture Appropriations", "paragraphs": ["The Agriculture appropriations bill\u00e2\u0080\u0094formally known as the Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act\u00e2\u0080\u0094funds all of the U.S. Department of Agriculture (USDA), excluding the U.S. Forest Service. It also funds the Food and Drug Administration (FDA) in the Department of Health and Human Services and, in even-numbered fiscal years, CFTC.", "Jurisdiction is with the House and Senate Committees on Appropriations and their Subcommittees on Agriculture, Rural Development, Food and Drug Administration, and Related Agencies. The bill includes mandatory and discretionary spending, but the discretionary amounts are the primary focus ( Figure 2 ). Some programs are not in the authorizing jurisdiction of the House or Senate Agriculture Committees, such as FDA, Special Supplemental Nutrition Program for Women, Infants, and Children (WIC), or child nutrition (checkered regions in Figure 2 ).", "The federal budget process treats discretionary and mandatory spending differently: ", "Discretionary spending is controlled by annual appropriations acts and receives most of the attention during the appropriations process. The annual budget resolution process sets spending limits for discretionary appropriations. Agency operations (salaries and expenses) and many grant programs are discretionary. Mandatory spending is carried in the appropriation and usually advanced unchanged, since it is controlled by budget rules during the authorization process. Spending for so-called entitlement programs is determined in laws such as the 2018 farm bill and 2010 child nutrition reauthorizations.", "In the FY2020 appropriation ( P.L. 116-94 ), the discretionary amount is 15% ($23 billion) of the $153 billion total. Mandatory spending carried in the act comprised $129 billion, about 85% of the total, of which about $106 billion is attributable to programs in the 2018 farm bill. ", "Within the discretionary total, the largest spending items are WIC; agricultural research; rural development; FDA; foreign food aid and trade; farm assistance loans and salaries; food safety inspection; animal and plant health programs; and technical assistance for conservation program. ", "The main mandatory spending items are the Supplemental Nutrition Assistance Program (SNAP) and other food and nutrition act programs, child nutrition (school lunch and related programs), crop insurance, and farm commodity and conservation programs that are funded through USDA's Commodity Credit Corporation (CCC). SNAP is referred to as an \"appropriated entitlement\" and requires an annual appropriation. Amounts for the nutrition program are based on projected spending needs. In contrast, the CCC appropriations reimburse spending from a line of credit."], "subsections": []}, {"section_title": "Recent Trends in Agriculture Appropriations", "paragraphs": ["Discretionary Agriculture appropriations were at an all-time high in FY2010, declined through FY2013, and have gradually increased since then. Changes within titles have generally been proportionate to changes in the overall bill, though some areas have sustained relative increases, such as FDA and rural development.", "The stacked bars in Figure 3 represent the discretionary authorization for each appropriations title. The total of the positive stacked bars is the budget authority in Titles I-VI. In FY2018, USDA reorganization affected the placement of some programs between Titles I and II of the bill (most noticeably, the Farm Service Agency). In most years, the cumulative appropriation for the agencies is higher than the official discretionary total in the spending allocation (the blue line) because of the budgetary offset from negative amounts in Title VII (general provisions) and other negative scorekeeping adjustments. These negative offsets are mostly due to rescissions of prior-year unobligated funds and, before FY2018, limits placed on mandatory programs.", "Historical trends may be tempered by inflation adjustments, as shown in the dotted line. The inflation-adjusted totals from FY2011-FY2017 had been fairly steady until increases in the FY2018-FY2020 appropriations."], "subsections": []}, {"section_title": "Action on FY2020 Appropriations", "paragraphs": [], "subsections": [{"section_title": "Administration's Budget Request", "paragraphs": ["The Trump Administration released a general overview of its FY2020 budget request on March 11, 2019, and a detailed budget proposal to Congress on March 18, 2019. USDA released its more detailed budget summary and justification, as did the FDA, and the independent agencies of the CFTC and the Farm Credit Administration. The Administration also highlighted separately some of its proposed reductions and eliminations.", "For accounts in the jurisdiction of the Agriculture appropriations bill, the Administration's budget requested $19.2 billion, a $4.1 billion reduction from FY2019 (-18%; Table 2 , Figure 3 ). The Administration released its budget request for FY2020 after Congress had enacted the omnibus FY2019 appropriation in February 2019 ( P.L. 116-6 ). Amounts in the FY2019 column of the Administration's budget documents are based on FY2018 levels, not enacted FY2019 amounts. "], "subsections": []}, {"section_title": "Discretionary Budget Caps and Subcommittee Allocations", "paragraphs": ["Budget enforcement has procedural and statutory elements. The procedural elements relate to a budget resolution and are enforced with points of order. The statutory elements impose discretionary spending limits and are enforced with budget caps and sequestration."], "subsections": [{"section_title": "Budget Resolution", "paragraphs": ["Typically, each chamber's Appropriations Committee receives a top-line limit on discretionary budget authority, referred to as a \"302(a)\" allocation, from the Budget Committee via an annual budget resolution. The Appropriations Committees then in turn subdivide the allocation among their subcommittees, referred to as the \"302(b)\" allocations. ", "For FY2020, the House did not report or pass a budget resolution. The Senate Budget Committee reported S.Con.Res. 12 , though it received no further action. "], "subsections": []}, {"section_title": "Budget Caps", "paragraphs": ["The Budget Control Act of 2011 (BCA, P.L. 112-25 ) set discretionary budget caps through FY2021 as a way of reducing federal spending. Sequestration is an across-the-board backstop to achieve budget reductions if spending exceeds the budget caps (2 U.S.C. \u00c2\u00a7901(c)). ", "Bipartisan Budget Acts (BBAs) have avoided sequestration on discretionary spending\u00e2\u0080\u0094with the exception of FY2013\u00e2\u0080\u0094by raising those caps four times in two-year increments in 2013, 2015, 2018, and 2019 ( Figure 4 ). Most recently, the BBA of 2019 ( P.L. 116-37 ) raised the cap on nondefense discretionary spending by $78 billion for FY2020 (to $621 billion) and by $72 billion for FY2021 (to $627 billion). The amount for FY2020 is 4.1% greater than the nondefense cap in FY2019. The BBA also provides language to execute (or \"deem\") those higher caps for the appropriations process without a budget resolution."], "subsections": []}, {"section_title": "Discretionary Spending Allocations", "paragraphs": ["In the absence of a budget resolution and before the BBA that occurred in August, the House Appropriations Committee on May 14, 2019, set an overall discretionary target and provided subcommittee allocations ( H.Rept. 116-59 ). The allocation for Agriculture appropriations was $24.3 billion, $1 billion greater (+4.3%) than the comparable amount for FY2019 ( Table 2 ).", "The Senate waited for the overall budget agreement in the BBA of 2019 before setting subcommittee allocations or proceeding to mark up appropriations bills. On September 12, 2019, the Senate Appropriations Committee set its subcommittee allocations ( S.Rept. 116-104 ). The subcommittee allocation was $23.1 billion, $0.1 billion greater (+0.3%) than FY2019.", "Without Congress having agreed on a joint budget resolution, different subcommittee allocations between the chambers further necessitated reconciliation in the final appropriation."], "subsections": []}, {"section_title": "Budget Sequestration on Mandatory Spending", "paragraphs": ["Despite the BBA agreements that raise discretionary spending caps and avoid sequestration on discretionary accounts, sequestration still impacts mandatory spending through FY2029. Sequestration on mandatory accounts began in FY2013, continues to the present, and has been extended five times beyond the original FY2021 sunset of the BCA. See Appendix C for effects."], "subsections": []}]}, {"section_title": "House Action", "paragraphs": ["The House Agriculture Appropriations Subcommittee marked up its FY2020 bill on May 23, 2019, by voice vote. On June 4, 2019, the full Appropriations Committee passed and reported an amended bill ( H.R. 3164 , H.Rept. 116-107 ) by a vote of 29-21. The committee adopted four amendments by voice vote. ", "On June 25, 2019, the House passed a five-bill minibus appropriation ( H.R. 3055 ) with the Agriculture bill as Division B ( Table 1 , Figure 1 ). Under a structured rule, the Rules Committee allowed 35 amendments for floor debate (H.Res. 445, H.Rept. 116-119 ). The House considered 33 of those amendments, of which 31 were adopted and two were rejected. Of the 31 amendments that were adopted, 28 were adopted en bloc by voice vote, two were adopted by recorded votes, and another was adopted separately by voice vote. Of the 31 amendments that were adopted, 14 revised funding amounts with offsets, three added policy statements, and 14 made no substantive changes but were for the purposes of discussion.", "The $24.3 billion discretionary total in the House-passed FY2020 Agriculture appropriation would have been $1 billion more than (+4%) the comparable amount enacted for FY2019 that includes the CFTC ( Table 2 , Figure 3 ). Generally speaking, the House-passed bill did not include most of the reductions proposed by the Administration."], "subsections": [{"section_title": "Comparison of Discretionary Authority: House-Passed Bill to FY2019", "paragraphs": [" Table 3 provides details of the House-passed bill at the agency level. The primary changes from FY2019 that comprised the $1 billion increase, ranked by increases and decreases, include the following:", "Increase Rural Development accounts by $412 million (+14%), including a $144 million increase for the Rural Housing Service (+9%) and a $238 million increase for the Rural Utilities Service (+38%) to support rural water and waste disposal and rural broadband. In addition, the General Provisions title included a $393 million increase for the ReConnect Broadband Pilot Program (+314%). Increase foreign agricultural assistance by $377 million (+19%), including increasing Food for Peace humanitarian assistance by $350 million and McGovern-Dole Food for Education by $25 million. In FY2019, Food for Peace had received a temporary increase of $216 million in the General Provisions title. The larger FY2020 amount would have been to the program's base appropriation rather than the FY2019 approach that used the General Provisions. Increase related agencies appropriations by $232 million, including raising FDA appropriations by $185 million (+6%) and the CFTC by $47 million (+18%). Increase other agricultural program appropriations by $151 million, including the following: Increase departmental administration accounts by a net $205 million (+53%), including funding most of the Administration's request for a $271 million increase for construction to renovate USDA headquarters. Increase USDA regulatory programs by $56 million, including increasing the Animal and Plant Health Inspection Service by $23 million (+2%) and the Agricultural Marketing Service by $33 million (+20%). Decrease agricultural research by a net $134 million (-4%). Agricultural Research Service (ARS) construction would have been reduced by $331 million from FY2019 (-87%), while salaries and expenses would have increased for ARS (+$44 million, +3%) and the National Institute of Food and Agriculture (NIFA) (+$146 million, +10%). Some of these increases would have been offset by a net change of -$175 million in budget authority through the General Provisions title. This was mostly a combination of greater rescissions of carryover balances in WIC (-$300 million) and the absence of continuing the FY2019 appropriations in the General Provisions for Food for Peace (-$216 million, as mentioned above) and rural water and waste disposal (-$75 million). The General Provisions would have provided increases in funding for rural broadband (+$393 million, as mentioned above) and several appropriations for miscellaneous programs (+$33 million)."], "subsections": []}, {"section_title": "Comparison of Mandatory Spending: House-Passed Bill to FY2019", "paragraphs": ["In addition to discretionary spending, the House-passed bill also carried mandatory spending that totaled $131 billion. This was about $2 billion more than in FY2019 generally because of automatic changes from economic conditions and expectations about enrollment in entitlement programs. Reimbursement for the CCC was projected to increase by $10 billion, mostly due to the cost of the first year of the Trump Administration's trade aid assistance package . Estimates for child nutrition programs would have increased by $0.9 billion. Crop insurance spending would have decreased by $6.4 billion, and SNAP spending decreased by about $2.4 billion."], "subsections": []}]}, {"section_title": "Senate Action", "paragraphs": ["The Senate Agriculture Appropriations Subcommittee marked up its FY2020 bill on September 17, 2019. On September 19, 2019, the full Appropriations Committee passed and reported an amended bill ( S. 2522 , S.Rept. 116-110 ) by a vote of 31-0. The committee adopted a manager's amendment with three additions to bill text and 19 additions to report language.", "On October 31, 2019, the Senate passed a four-bill minibus appropriation ( H.R. 3055 , after adopting S.Amdt. 948 , which was composed of four Senate-reported bills and amended by floor amendments). The Agriculture bill is Division B ( Table 1 , Figure 1 ). The Senate adopted 16 amendments to Division B, of which 14 were adopted en bloc by unanimous consent and two were adopted by recorded votes. Of these 16 amendments, eight revised funding amounts with offsets, three revised funding amounts within an existing appropriation, three changed the terms of an appropriation, and two required reports or studies.", "The $23.1 billion discretionary total in the Senate-passed FY2020 Agriculture appropriation would have been $57 million more than (+0.2%) the amount enacted for FY2019 ( Table 2 , Figure 3 ). The Senate bill was $894 million less than (-3.7%) the House-passed bill on a comparable basis without CFTC. Generally speaking, the Senate-passed bill did not include most of the reductions proposed by the Administration. Table 3 provides details of the Senate-passed bill at the agency level. "], "subsections": [{"section_title": "Comparison of Discretionary Authority: Senate-Passed to House-Passed Bill", "paragraphs": ["Compared to the House-passed bill and ranked by increases and decreases, the primary changes in the Senate-passed bill that comprised the -$894 million difference from the House bill included the following:", "Agricultural research would have been $193 million greater in the Senate-passed bill than in the House-passed bill. ARS buildings and facilities would have been $255 million greater than in the House-passed bill, ARS salaries and expenses $77 million greater, and NIFA $132 million less. Departmental administration accounts would have been $97 million greater in the Senate bill than in the House bill, mostly by maintaining appropriations for the Chief Information Officer, General Counsel, and Departmental Administration that would have been reduced as offsets to pay for floor amendments that were adopted in the House bill. Rural Development would have been $407 million less in the Senate-passed bill than in the House-passed bill, mostly by a $300 million less for the Rural Utilities Service ($233 million less for rural water and waste disposal grants, $41 million less for distance learning and telemedicine, and $25 million less for existing non-pilot rural broadband programs), $70 million less for Rural Housing Service, and $22 million less for the Rural Business-Cooperative Service. In addition, for the separate ReConnect Broadband Pilot Program, the General Provisions title in the Senate-passed bill would not have provided for any of the $518 million that the House bill contained. Foreign agricultural assistance would have been $159 million less in the Senate bill than in the House bill, mostly by not increasing Food for Peace as much as in the House bill, and maintaining the McGovern-Dole program at a constant level. FDA appropriations would have been $105 million less in the Senate-passed bill than in the House-passed bill."], "subsections": []}, {"section_title": "Comparison of Mandatory Spending: Senate-Passed to House-Passed Bill", "paragraphs": ["In addition to discretionary spending, the Senate-passed bill also carried mandatory spending that totaled $129 billion. This was $153 million less than in FY2019 and $2.3 billion less than in the House-passed bill. Compared to the House-passed bill, amounts for CCC and crop insurance were the same. Mandatory amounts for the child nutrition programs were about $400 million less than the House bill, and the amount for SNAP was about $1.9 billion less than in the House bill."], "subsections": []}]}, {"section_title": "Continuing Resolutions", "paragraphs": ["In the absence of a final Agriculture appropriation at the beginning of FY2020 on October 1, 2019, Congress passed a CR to continue operations and prevent a government shutdown ( P.L. 116-59 , Division A). The first CR lasted nearly eight weeks until November 21, 2019. On November 21, a second CR ( P.L. 116-69 ) was enacted to last until December 20, 2019. On December 20, Congress passed and the President signed a full-year FY2020 appropriation.", "In general, a CR continues the funding rates and conditions that were in the previous year's appropriation. The Office of Management and Budget (OMB) may prorate funding to the agencies on an annualized basis for the duration of the CR through a process known as apportionment. For the first 52 days (about 14% of FY2020) through November 21, 2019, and the next 29 days (about 8% of FY2020) through December 20, 2019, the CRs", "continued the terms of the FY2019 Agriculture appropriations act (\u00c2\u00a7101) with a proviso for rural development in the anomalies below; and provided sufficient funding to maintain mandatory program levels, including for nutrition programs (\u00c2\u00a7111). This is similar to the approach taken in recent years.", "CRs may adjust prior-year amounts through anomalies or make specific administrative changes. Five anomalies applied specifically to the Agriculture appropriation during the first CR:", "Rural Water and Waste Disposal Program (\u00c2\u00a7101(1)) . Allowed the CR to cover the cost of direct loans in addition to loan guarantees and grants. In FY2019, direct loans did not require appropriation because they had a negative subsidy rate (i.e., fees and repayments more than covered the cost of loan making). In FY2020, OMB estimated a need for a positive subsidy rate. Disaster Assistance for Sugar Beet Processors (\u00c2\u00a7116) . Amended the list of eligible losses that may be covered under the Additional Supplemental Appropriations for Disaster Relief Act of FY2019 ( P.L. 116-20 , Title I) to include payments to cooperative processors for reduced sugar beet quantity and quality. The FY2019 supplemental provided $3 billion to cover agricultural production losses in 2018 and 2019 from natural disasters. Agricultural Research (\u00c2\u00a7117) . Allowed USDA to waive the nonfederal matching funds requirement for grants made under the Specialty Crop Research Initiative (7 U.S.C. \u00c2\u00a77632(g)(3)). The requirement was added in the 2018 farm bill. Summer Food for Children Demonstration Projects (\u00c2\u00a7118) . Allocated funding for the Food and Nutrition Service summer food for children demonstration projects at a rate so that projects could fully operate by May 2020 (prior to summer service, which typically starts in June). Similar provisions have been part of previous CRs. These projects, which include the Summer Electronic Benefit Transfer (EBT) demonstration, have operated in selected states since FY2010. C ommodity C redit C orporation ( \u00c2\u00a7119 ) . Allowed CCC to receive its appropriation about a month earlier than usual so that it could reimburse the Treasury for a line of credit prior to a customary final report and audit. Many payments to farmers were due in October 2019, including USDA's plan to make supplemental payments under its trade assistance program. Without the anomaly, CCC might have exhausted its $30 billion line of credit in October or November 2019 before the audit was completed, which could have suspended payments. A similar provision was part of a CR in FY2019. In addition, the FY2020 CR required USDA to submit a report to Congress by October 31, 2019, with various disaggregated details about Market Facilitation Program payments, trade damages, and whether commodities were purchased from foreign-owned companies under the program. Hemp (\u00c2\u00a7120) . Provided $16.5 million on an annualized basis to the USDA Agricultural Marketing Service to implement the Hemp Production Program ( P.L. 115-334 , \u00c2\u00a710113), which was created in the 2018 farm bill.", "The second CR continued the terms of the first CR until December 20, 2019. It added one new anomaly for Agriculture appropriations: ", "Commodity Assistance Program (\u00c2\u00a7146). Allowed funding for the Commodity Supplemental Food Program (CSFP) to be apportioned at a rate to maintain current program caseload. This meant that funding available under the second CR could exceed amounts that would otherwise would have been available."], "subsections": []}, {"section_title": "FY2020 Further Consolidated Appropriations Act", "paragraphs": ["On December 20, 2019, Congress passed and the President signed a full-year FY2020 appropriation\u00e2\u0080\u0094the Further Consolidated Appropriations Act ( P.L. 116-94 , Committee Print 38-679 ) \u00e2\u0080\u0094that included Agriculture appropriations in Division B. This was the second of two consolidated appropriations acts that were passed in tandem: P.L. 116-93 , which covered four appropriations subcommittee bills, and P.L. 116-94 , which covered eight appropriations subcommittee bills. ", "The official discretionary total of the FY2020 Agriculture appropriation is $23.5 billion. This is $183 million more than (+0.8%) the comparable amount for FY2019 that includes CFTC. The appropriation also carries about $129 billion of mandatory spending that is largely determined in authorizing laws. Thus the overall total of the agriculture portion is $153 billion. ", "In addition to these amounts, the appropriation includes budget authority that is designated as emergency spending and does not count against discretionary spending caps. These include $535 million to FDA for Ebola prevention and treatment, and $1.5 billion to USDA for the Wildfires and Hurricanes Indemnity Program (WHIP). The latter amount was offset by a $1.5 billion rescission of unobligated WHIP funding from a prior appropriation and emergency designation."], "subsections": [{"section_title": "Comparison of Discretionary Authority", "paragraphs": [" Table 3 provides details of the enacted FY2020 Agriculture appropriation at the agency level, and compared with the House- and Senate-passed bills, the Administration's request, and three prior years. The primary changes from FY2019 that comprised the overall $183 million increase, ranked by increases and decreases, include the following:", "Increase foreign agricultural assistance by $235 million (+12%), including increasing Food for Peace humanitarian assistance by $225 million and McGovern-Dole Food for Education by $10 million. In FY2017-FY2019, Food for Peace had received temporary increases in the General Provisions title, including $216 million in FY2019. The larger FY2020 amount replaces the temporary amount with an increase in the program's base appropriation. Increase Rural Development accounts by $229 million (+8%), including a $130 million increase for the Rural Utilities Service (+21%) to support rural water and waste disposal and telemedicine and an $81 million increase for the Rural Housing Service (+5%). In addition, the General Provisions title included a $175 million increase for a rural broadband pilot program (+140%). Increase related agencies appropriations by $138 million, including raising FDA appropriations by $91 million (+3%) and the CFTC by $47 million (+18%). Increase other agricultural program appropriations by $199 million, including the following: Increase departmental administration accounts by a net $82 million (+21%), including funding for construction to renovate USDA headquarters. Increase USDA regulatory programs by $59 million, including increasing the Animal and Plant Health Inspection Service by $32 million (+3%) and the Agricultural Marketing Service by $28 million (+17%). Decrease agricultural research by a net $18 million (-0.5%). Agricultural Research Service (ARS) construction is reduced by $189 million compared with FY2019 (-49%), while salaries and expenses are increased for ARS (+$111 million, +9%) and grants for the National Institute of Food and Agriculture (NIFA) (+$56 million, +4%). Increase Farm Service Agency salaries and expenses by $47 million (+3%). Increase Natural Resources Conservation Service appropriations by $35 million, including Watershed and Flood Prevention by $25 million (+17%), and Conservation Operations by $10 million (+1%). Decrease Food and Nutrition Service discretionary appropriations by $54 million, including decreasing WIC by $75 million (-1%) and increasing Commodity Assistance Programs by $22 million (+7%). Some of these increases are offset by a net change of -$570 million in budget authority through the General Provisions title. This was mostly a combination of greater rescissions of carryover balances in WIC (-$500 million) and the absence of continuing the FY2019 appropriations in the General Provisions for Food for Peace (-$216 million, as mentioned above) and rural water and waste disposal grants (-$75 million). The General Provisions provides increases in funding for rural broadband (+$175 million, as mentioned above) and several appropriations for miscellaneous programs (+$63 million over FY2019). Not included above is emergency funding that is not subject to discretionary budget caps. This includes funding for Ebola ($535 million) and the Wildfires and Hurricanes Indemnity Program (WHIP, $1.5 billion). The latter emergency authorization was offset by an identically sized rescission of prior-year emergency funding for WHIP."], "subsections": []}, {"section_title": "Comparison of Mandatory Spending", "paragraphs": ["In addition to discretionary spending, the House-passed bill also carried mandatory spending\u00e2\u0080\u0094largely determined in separate authorizing laws\u00e2\u0080\u0094that totals $129 billion. This is about $354 million more than (+0.3%) FY2019, generally due to automatic changes from economic conditions and expectations about enrollment in entitlement programs. Reimbursement to the Treasury for the CCC increased by $10.9 billion (+71%), mostly due to the cost of the Trump Administration's trade aid assistance that was announced in 2018. Child nutrition programs increase by $0.5 billion (+2%). Crop insurance spending decreases by $5.5 billion (-35%), and SNAP spending decreases by about $5.6 billion (-8%)."], "subsections": []}]}, {"section_title": "Policy-Related Provisions", "paragraphs": ["Besides setting spending authority, appropriations acts are also a vehicle for policy-related provisions that direct executive branch actions. These provisions, limitations, or riders may have the force of law if they are included in the act's text, but their effect is generally limited to the current fiscal year unless they amend the U.S. Code , which is rare in appropriations acts.", " Table 4 compares some of the primary policy provisions that are included directly in the FY2020 Agriculture appropriations act, and its development in the House and Senate bills. ", "Report language may also provide policy instructions. Although report language does not carry the force of text in an act, it often explains congressional intent, which the agencies may be expected to follow. Statements in the joint explanatory statement and the committee reports are not included in Table 4 .", "In the past, Congress has said that committee reports and the joint explanatory statement need to be read together to capture all of the congressional intent for a fiscal year. For example, the explanatory statement for the FY2020 Further Consolidated Appropriations act instructs that the House and Senate reports should be read together with the conference agreement:", "Congressional Directives. The statement is silent on provisions that were in both the House Report ( H.Rept. 116-107 ) and Senate Report ( S.Rept. 116-110 ) that remain unchanged by this agreement, except as noted in this statement. ", "The House and Senate report language that is not changed by the statement is approved and indicates congressional intentions. The statement, while repeating some report language for emphasis, does not intend to negate the language referred to above unless expressly provided herein. ", "Appendix A. Appropriations in Administrative Accounts", "Appendix B. Appropriations in General Provisions", "Appendix C. Budget Sequestration", "Sequestration is a process to reduce federal spending through automatic, largely across-the-board reductions that permanently cancel mandatory and/or discretionary budget authority. Sequestration is triggered as a budget enforcement mechanism when federal spending would exceed statutory budget goals. Sequestration is currently authorized by the BCA ( P.L. 112-25 ).", "A sequestration rate is the percentage reduction that is subtracted from an appropriated budget authority to achieve an intended budget goal. OMB computes these rates annually. Table C-1 shows the rates of sequestration that have been announced and the total amounts of budget authority that have been cancelled from accounts in Agriculture appropriations. Table C-2 provides additional detail at the program level for mandatory accounts.", "Discretionary Spending", "For discretionary spending, sequestration is authorized through FY2021 if discretionary defense and nondefense spending exceed caps that are specified in statute (2 U.S.C. \u00c2\u00a7901(c)).", "In FY2013, the timing of the appropriations acts and the first year of sequestration resulted in triggering sequestration on discretionary spending. ", "In FY2014-FY2019, BBAs in 2013, 2015, and 2018 ( P.L. 113-67 , P.L. 114-74 , and P.L. 115-123 , respectively) have avoided sequestration on discretionary spending. These BBAs raised the discretionary budget caps that were placed in statute by the BCA and allowed Congress to enact larger appropriations than would have been allowed. The enacted appropriations in FY2014-FY2019 met the spending limitations of the revised budget caps, and therefore no sequestration on discretionary accounts was necessary. ", "For FY2020-FY2021, the BBA of 2019 ( P.L. 116-37 ) similarly provides a higher discretionary cap that may avoid sequestration (see \" Discretionary Budget Caps and Subcommittee Allocations \").", "Mandatory Spending", "Sequestration Occurs and Continues", "For mandatory spending, sequestration is presently authorized and scheduled to continue through FY2029, having been amended and extended by budget acts that were subsequent to the BCA (2 U.S.C. \u00c2\u00a7901a(6)). That is, sequestration of mandatory spending has not been avoided by the BBAs and continues to apply annually to certain accounts ( Table C-2 ).", "The original FY2021 sunset on the sequestration of mandatory accounts has been extended five times as an offset to pay for raising the caps on discretionary spending to avoid sequestration in the near term (or as a general budgetary offset for other authorization acts):", "1. Congress extended the duration of mandatory sequestration by two years (until FY2023) as an offset in BBA 2013. 2. Congress extended it by another year (until FY2024) to maintain retirement benefits for certain military personnel ( P.L. 113-82 ). 3. Congress extended sequestration on nonexempt mandatory accounts another year (until FY2025) as an offset in BBA 2015. 4. Congress extended sequestration on nonexempt mandatory accounts for two years (until FY2027) as an offset in BBA 2018 ( P.L. 115-123 , \u00c2\u00a730101(c)). 5. Congress extended sequestration on nonexempt mandatory accounts by another two years (until FY2029) as an offset in BBA 2019 ( P.L. 116-37 , \u00c2\u00a7402). ", "Exemptions from Sequestration", "Some USDA mandatory programs are statutorily exempt from sequestration. Those expressly exempt by statute are the nutrition programs (SNAP, the child nutrition programs, and the Commodity Supplemental Food Program) and the Conservation Reserve Program. Some prior legal obligations in the Federal Crop Insurance Corporation and the farm commodity programs may be exempt as determined by OMB. ", "Generally speaking, the experience since FY2013 is that OMB has ruled that most of crop insurance is exempt from sequestration, while the farm commodity programs, disaster assistance, and most conservation programs have been subject to it.", "Implementation of Sequestration", "Nonexempt mandatory spending in FY2020 is to be reduced by a 5.9% sequestration rate ( Table C-1 ) and thus would be paid at 94.1% of what would otherwise have been provided. This is projected to result in a reduction of about $1.4 billion from mandatory agriculture accounts in FY2020, including over $900 million from amounts paid by the CCC ( Table C-2 ). ", "For example, for the farm commodity programs that support farm income such as the Agricultural Risk Coverage and Price Loss Coverage programs, payments to farmers are computed by a regular formula authorized in the farm bill, and the final actual payment to the farmer is reduced by the sequestration rate. For programs that operate on a fixed budget authority, such as the Environmental Quality Incentives Program and the Market Assistance Program, the sequestration rate is applied to the available budget authority for the fiscal year. ", "Appendix D. Action on Agriculture Appropriations, FY1996-FY2020"], "subsections": []}]}]}}
{"id": "R45779", "title": "Transformation at the U.S. Agency for International Development (USAID)", "released_date": "2019-06-20T00:00:00", "summary": ["The U.S. Agency for International Development (USAID) has initiated a series of major internal reforms, branded as Transformation at USAID . The reforms are largely in response to Trump Administration directives aimed at making federal agencies more efficient, effective, and accountable. Most of the reforms proposed under this initiative do not involve statutory reorganization, but USAID Administrator Mark Green has sought congressional input as the reform process is developed and launched, especially in the area of changes to USAID organizational structure. Congress has the power to shape USAID reforms through oversight activities, and through funding requirements and restrictions.", "Some of these proposed reforms are consistent with efforts by past USAID Administrators and do not represent major changes of course for USAID. At the same time, USAID policy documents signal a consistent emphasis on \"ending the need for foreign assistance\" by supporting partner countries' \"journey to self-reliance.\" This report highlights reforms that represent new or enhanced approaches to achieving longstanding objectives, including the following:", "Process and p olicy reforms focused on promoting and measuring partner country progress toward economic self-reliance, engaging the private sector in international development, and reforming procurement practices to better support these broader goals. Organizational s tructure reforms intended to enhance the agency's leadership structure, improve the efficiency of humanitarian assistance programming, and consolidate technically specialized offices within the agency. Workforce management reforms, including the creation of a new noncareer hiring mechanism.", "The figure below depicts the timing of key events of Transformation implementation to date.", "Congress may view USAID's reform initiatives through longstanding areas of interest and policy questions, including", "the relationship between the \"journey to self-reliance\" and broader U.S. foreign policy concerns, including great power competition; the consistency of the \"self-reliance\" goal with foreign assistance priorities identified by Congress in annual appropriations legislation; potential impacts of significant USAID funding cuts repeatedly proposed by the Trump Administration; potential impacts of proposed new Senate-confirmed management positions on agency operations; implications of replacing existing strategies, indicators, and mechanisms with new strategies, indicators, and mechanisms proposed in the Transformation initiative; the means for prioritizing goals identified in the new USAID Policy Framework and initiatives such as Prosper Africa, which do not seem appear to fall under the Trans formation umbrella; alignment of USAID policies and foreign assistance indicators with those of other U.S. agencies funding and implementing assistance, including the State Department and the Millennium Challenge Corporation; and the effect on food assistance funded by Congress through multiple channels, including the Food for Peace account, of the proposed bureau restructuring and consolidation of the Offices of U.S. Foreign Disaster Assistance and Food for Peace."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["Many Members of the 116 th Congress have demonstrated an ongoing interest in Trump Administration efforts to reform the U.S. Agency for International Development (USAID). The reforms, branded Transformation at USAID , target a broad range of programs, structures, and processes in an effort to improve the agency's efficiency and effectiveness. The reform process was initiated by an executive order and an Office of Management and Budget (OMB) memorandum, both issued in 2017. The OMB memorandum called on U.S. government agencies to submit reform plans focused on making the government \"lean, accountable, and more efficient.\" ", "USAID provided several preliminary plans to the State Department (to which USAID reports) and OMB in the summer of 2017, but the internal restructuring initiative began in earnest after Mark Green was confirmed as USAID Administrator in August 2017. USAID submitted its own reform plan to OMB, separate from State, though USAID cooperated with the State Department's \"redesign\" initiative as well. OMB's government-wide reform plan, \"Delivering Government Solutions in the 21 st Century,\" released in June 2018, prescribed 32 government-wide reforms, several of which directly related to USAID. These included", "restructuring U.S. humanitarian assistance programs, establishing a new Development Finance Institution to incorporate USAID credit programs, and changing USAID's Washington, DC-based bureau structure. ", "Soon after the release of the OMB report, USAID finalized and began implementing its reforms, newly branded as Transformation . No single public report or other document comprehensively details the Transformation effort or what it encompasses. This CRS report relies on various publications on the USAID website focused on specific reforms or priorities described as being part of the Transformation , the testimony of USAID Administrator Mark Green before Congress on multiple occasions, implementation documents such as the Country Roadmaps and the Private Sector Engagement Strategy, and the new USAID Policy Framework. Each of these sources differs in what they include, and in the emphasis given to different reform components, making it difficult to ascertain the full picture and the prioritization USAID ascribes to the various elements. ", "Role of Congress . Most of the reforms proposed under Transformation do not require congressional approval, but some require advance notification to Congress. Notification does not require congressional action, but it gives Congress the opportunity to weigh in on the action being notified and to apply \"holds\" (nonbinding but generally respected requests that action be deferred until a related Member concern is resolved). Nevertheless, Administrator Green appears to have actively involved Congress in the shaping and implementation of Transformation and has suggested that he does not intend to move forward without congressional support. Congress has the power to shape USAID reforms through both oversight activities and funding requirements and restrictions. ", "This report analyzes key elements of current USAID reform efforts under the Transformation umbrella. Although the report highlights key reforms and changes in USAID policy and practice, it is not a comprehensive overview of this broad initiative. The report first discusses key objectives of Transformation , then describes several process, structure, and workforce reforms intended to support these objectives, with an emphasis on reforms that are distinct from prior USAID reform efforts. The report concludes with a discussion of broader issues that may be relevant to congressional perspectives on USAID reforms ."], "subsections": []}, {"section_title": "Transformation Objectives and Historic Context", "paragraphs": ["Transformation at USAID is an implementation framework for reforms that are multifaceted and still evolving. Administrator Green's testimony at April 2018 budget hearings described Transformation as \"experience-informed, innovation-driven reforms to optimize our structures and procedures and maximize our effectiveness.\" In these broad terms, many of the reforms are similar to general government or organization reform efforts in their focus on efficiency and effectiveness. While much of Transformation reflects incremental policy adjustments, several components signal a distinct vision for USAID's role in foreign affairs.", "As noted, no single public document comprehensively details the components and objectives of Transformation . However, various USAID fact sheets, videos, and statements by Administrator Green since 2018 suggest some of the initiative's key objectives: ", "supporting country transitions toward self-reliant, locally led development; increasing USAID-private sector collaboration in development; supporting U.S. national security strategy; enhancing USAID's core capabilities and strengthening leadership; and using taxpayer dollars more efficiently and effectively.", "A consistent emphasis across USAID policy documents, including those describing Transformation , is the core objective of \"ending the need for foreign assistance\" by supporting partner countries' \"Journey to Self-Reliance.\" As Transformation has evolved, moving partner countries toward economic self-sufficiency has become the primary reform objective cited by USAID\u00e2\u0080\u0094the one that all the specific reform proposals are designed to support. Other stated objectives, such as advancing national security goals, are deemphasized in later Transformation materials.", "Many of the proposed Transformation reforms are consistent with efforts by past USAID Administrators. For example, successive Administrations have sought to refine the deployment of foreign assistance to advance U.S. national security, asserting that it should be a major component of U.S. foreign policy strategy. The Obama Administration's USAID Forward initiative focused on bringing new partnerships, innovation, and a renewed focus on results to USAID's work. Under the George W. Bush Administration and Administrator Henrietta Fore, USAID's Development Leadership Initiative focused on building USAID's workforce capacity and leadership. The self-reliance objective at the center of Transformation has been cited as a goal in various USAID document for decades. Nearly every Administration and USAID Administrator has proposed reforms intended to improve USAID's efficiency and effectiveness, and Transformation may be viewed as the latest step in the agency's evolution. "], "subsections": []}, {"section_title": "Process and Policy Reforms", "paragraphs": ["To implement the objectives and strategic priorities of Transformation , the agency is making several changes to its programs and work processes intended to establish a more flexible and field-responsive approach to programming. Much like the strategic objectives described above, these adjustments build on efforts by previous Administrations, aiming to align USAID's approach to development with the current global landscape."], "subsections": [{"section_title": "The \"Journey to Self-Reliance\"", "paragraphs": ["The organizing principle for USAID policy reforms under Transformation is the \"Journey to Self-Reliance.\" Self-reliance is Transformation's term for a country's ability to plan, finance, and implement solutions to address their own development challenges absent foreign assistance. To operationalize the concept, USAID produced a matrix comprising 17 existing indicators to quantify countries' progress toward ending their need for foreign assistance. These indicators are maintained by third-party sources, including multilateral institutions, think tanks, and nongovernmental organizations (NGOs). USAID selected these indicators based on their perceived alignment with the self-reliance concept, the reputation of reporting institutions, public availability of the underlying data and methodology, comparability across countries, and comprehensiveness of reporting across countries. This matrix, on which all less-developed countries have been plotted (including nonrecipients of U.S. foreign assistance), divides the indicators into two quantitative measures (see Figure 2 ):", "Commitment is meant to indicate whether a country's government and its people demonstrate a desire to rise beyond their current condition. Capacity is meant to illustrate whether a country has sufficient resources to assist itself in moving beyond poverty.", "Taken together, these two indices are meant to provide a comprehensive portrait of a country's development status to inform country-level planning. Under this new approach, USAID's five-year country plans, called Country Development Cooperation Strategies, are to prioritize approaches centered on advancing a country's commitment to self-reliance and augmenting its capacity to achieve it. While USAID has long supported efforts to build partner countries' capacity and emphasized their \"ownership\" of development programs, the \"Journey to Self-Reliance\" may be unique in making self-sufficiency the primary goal shaping USAID country strategies.", "This matrix approach reflects a sweeping theory of development that policymakers and observers have long debated. USAID asserts that the \"Journey to Self-Reliance\" allows for greater tailoring of country-level programming to the unique challenges facing a given country, while also establishing a common metric applicable across all countries. Although the self-reliance indicators are ostensibly a succinct but holistic portrait of a country's development along 17 indicators, they in fact comprise a wide array of issues. USAID argues that this inclusivity strives for an \"absence of judgment\" about the relative importance of each metric, which may be interpreted as an effort to integrate many theories of development into the framework. In fact, the indicators selected are especially oriented toward theories that connect economic growth to a country's democratic institutions and its markets.", "The indicators USAID has selected reflect theories of development that continue to generate debate among researchers and practitioners. For example, the theory that a country must lower its trade barriers (measured by the \"Trade Freedom\" indicator) to achieve prosperity remains heavily contested in academic circles, particularly for developing countries. In addition, the choice to aggregate these indicators into the two composites of \"commitment\" and \"capacity,\" rather than a single indicator, reflects some weighting: each of the seven \"commitment\" indicators contributes relatively more to a country's score than each of the 10 \"capacity\" indicators.", "To address such concerns, USAID argues that missions should examine these indicators in their local context and evaluate them based on each country's unique condition\u00e2\u0080\u0094and that these indicators do not reflect a comprehensive diagnosis of the causes of development. The Administration's attention to country-level indicators suggests a reorientation from recent approaches. Recent Administrations have focused on broad, global development challenges, such as climate change and the HIV/AIDS crisis, while implementing such initiatives in targeted subnational regions and municipalities. Together, these global challenges and targeted interventions refocused strategic planning away from the country level. USAID describes the \"Journey to Self-Reliance\" as a high-level profile of a country's national policy and its institutions, in contrast to past initiatives focused on subnational regions. While USAID notes that progress emerges locally, these indicators track progress only at the national level. It is unclear if this approach will affect USAID's relationship with municipal and regional governments. ", "In the past, commentators have expressed concern that such metrics could be used to cut aid to poor performers, punishing people in need for the actions of their national leaders. USAID asserts that these matrices are not scorecards to determine which countries are \"deserving\" of aid, but instead are a quantitative tool to inform programmatic allocations. Thus, for example, a poor score on open government may cause a mission to direct farmer-support programs through independent NGOs rather than the national government, as the central government may not be trusted to administer its services effectively. While USAID states that it is definitively not grading countries' performance, it is unclear whether the agency will be plotting countries' advancement over time along the self-reliance matrices, as \"journey\" implies. Considering the significant lag time in many indicators' reporting, as well as variance in reporting periods across indicators, it may be difficult to draw straightforward conclusions about the effect of any program or policy (whether the partner government's or USAID's) upon a country's self-reliance. "], "subsections": [{"section_title": "Additional Tools: Financing Self-Reliance and Private Sector Engagement", "paragraphs": ["Within the \"Journey to Self-Reliance\" framework, Transformation emphasizes two primary tools for ending the need for foreign assistance: financing self-reliance and private sector engagement. While many of the self-reliance indicators seek to describe the landscape against which USAID is to deploy its programs, these two components of Transformation seek to provide the tools with which to implement those programs. Financing self-reliance focuses on a country's ability to generate sufficient capital to invest in self-reliance, and private sector engagement seeks to create and partner with a private sector entity through which capital can be invested."], "subsections": [{"section_title": "Financing Self-Reliance", "paragraphs": ["A key component of USAID's self-reliance approach is facilitating access to capital for countries to reinvest in their own progress, in line with broader recent trends in development finance. This investment approach occupies a central place in several global development frameworks, including the U.N. Sustainable Development Goals (SDG) agenda and multilateral development banks' \"billions to trillions\" agenda, which seeks to leverage \"billions\" of Official Development Assistance (ODA) dollars to mobilize \"trillions\" of private sector investments in developing countries. Similarly, the 2015 Addis Ababa Action Agenda on financing for development affirmed the importance of strong local enabling environments and responsible fiscal policy to encourage country-owned growth strategies. ", "Transformation 's focus on financing self-reliance builds upon existing U.S. approaches and commitments toward achieving the SDGs. It combines efforts to advance domestic resource mobilization (e.g., tax collection) with strong management of public finances and fiscal transparency to enable effective and accountable administration of the public sector. This approach is designed to create a strong market-based \"enabling environment\" for private investment, that is, one in which private investors are able to operate with reasonable confidence in the rule of law and protection for their investments. The initiative also prioritizes effective financial markets to enable capital access for economic development investments."], "subsections": []}, {"section_title": "Private Sector Engagement", "paragraphs": ["Private sector engagement is a central conduit through which Transformation envisions repositioning USAID's role in development and supporting partner country self-sufficiency. USAID released a new Private Sector Engagement Policy (PSE Policy) in April 2019. The approach it outlines is not new, but rather builds on longstanding efforts to leverage the resources of nongovernmental actors, including businesses and charitable foundations, to advance international development. The Global Development Alliance (GDA) program, launched in 2001, has long been USAID's flagship mechanism for incubating and executing public-private partnerships for development assistance. The Obama Administration elevated several such programs when launching the U.S. Global Development Lab (the Lab), an innovation-oriented bureau intended to source breakthrough innovations to address development challenges. The Lab's Development Innovation Ventures (DIV) program, for example, seeks to integrate venture capital approaches into USAID's programs. ", "The Transformation focus on private sector engagement tweaks the existing approach and includes several components not seen in previous Administrations. The Obama Administration generally viewed private sector partnerships as one component of a broader Science, Technology, Innovation, and Partnerships (STIP) agenda. This PSE Policy emphasizes business partnerships as a mechanism to attract solutions from scientists and technology innovators. The \"enterprise-driven development\" approach articulated in the PSE Policy may be a shift from economic development programs' focus on the market system to a focus on individual enterprises as their programmatic target. While past efforts, such as the GDA program, created partnerships with the private sector to address individual development challenges, the new PSE Policy seeks to infuse a private sector engagement orientation across all programming.", "The PSE Policy does not clarify the types of private sector partners to be favored. Micro, small, and medium enterprises (MSMEs), for example, a historical focus of USAID programming, are not specifically highlighted, suggesting that this policy may seek to support USAID collaboration with enterprises ranging from multinational corporations to smallholder farmers. Private sector engagement, then, is expected to broaden USAID's partner makeup, integrating nontraditional partners, both in the United States and overseas, by changing the way USAID engages its partners in program design. The PSE Policy is still in early stages of implementation. Many of the tools cited in the strategy have been in place at USAID for several years. The scope and depth of changes in USAID's implementation approach may emerge in the coming months."], "subsections": []}]}]}, {"section_title": "Procurement and Partnering", "paragraphs": ["The USAID Acquisition and Assistance Strategy (A&A Strategy), released in February 2019, gives some indication of the shift in private sector engagement envisioned by Transformation . Restructuring USAID's engagement methodology and sourcing mechanisms is another means by which Transformation aims to build partnerships and promote partner self-sufficiency. Noting that more than 80% of USAID program funds are issued in award and assistance mechanisms to NGOs, the A&A Strategy lays out several shifts to its partnering approach: diversifying USAID's partner base, which has steadily shrunk since 2011; supporting the self-reliance of local partners through capacity building; and establishing a more flexible partnering approach through more collaborative and adaptive award management principles. Reforms from this initiative are still in progress, including the recent launch of a New Partnerships Initiative and expected revisions to USAID's internal series of operational policies, the Automated Directive System. ", "Past experience may inform A&A Strategy implementation. USAID has attempted to expand its partner base in the past, notably under the Obama Administration's USAID Forward initiative. USAID Forward sought to shift funding away from longtime international development firms and NGOs in the U.S. toward organizations based in developing countries, as a means of promoting recipient country \"ownership\" of their development. The Lab also contributed to new partnering modalities and frameworks such as \"co-creation,\" a model for collaborative program design that is increasingly referenced in USAID's public solicitations. Transformation aims to build on these efforts by highlighting tools that encourage greater collaboration with partners and more adaptive management, consistent with revisions to USAID's process for developing and implementing programs (the \"Program Cycle\")."], "subsections": []}]}, {"section_title": "Organizational Structure", "paragraphs": ["The structural component of Transformation is meant to align the agency's organization with the Administration's stated goals for U.S. international development and humanitarian assistance. This part of Transformations has been subject to the most direct congressional oversight. USAID submitted nine Congressional Notifications (CN) to the appropriate committees in July and August 2018 detailing the proposed structural changes. Upon receipt, each CN was put on \"hold,\" signaling that committee members wanted to look into the proposed changes further. The Administrator has signaled that he will not make changes without the approval of all four congressional oversight committees.", "Organizationally, USAID is split into two sections\u00e2\u0080\u0094field missions, and headquarters' bureaus and independent offices\u00e2\u0080\u0094each with its own key functions and personnel. The headquarters' bureaus and offices are divided among four categories: (1) geographic bureaus, (2) functional bureaus, (3) central bureaus, and (4) independent offices (see Figure 3 ). The geographic bureaus directly correspond with country field missions, while the functional bureaus manage cross-cutting sectoral issues, including education, global health, and humanitarian assistance, among others. The central bureaus and independent offices manage day-to-day agency operations, including human resources, security, legislative affairs, and financial management."], "subsections": [{"section_title": "Leadership Structure Reforms", "paragraphs": ["Under Transformation , USAID is seeking to amend the chain of command to include two new Administration-appointed Associate Administrators. Currently, all bureaus report directly to the Administrator and Deputy Administrator. In the reorganization proposal, the Associate Administrators would each be responsible for three bureaus:", "The Associate Administrator for Relief, Response and Resilience (R3) would manage the Bureaus for Humanitarian Assistance (HA), Conflict Prevention and Stabilization (CPS), and Resilience and Food Security (RFS). The Associate Administrator for Strategy and Operations would oversee the Bureaus for Legislative and Public Affairs (LPA), Policy, Resources and Performance (PRP), and Management (M).", "By adding the two Associate Administrators, the Deputy Administrator would be responsible only for overseeing the remaining functional bureaus (Global Health and Development, Democracy and Innovation) and geographic bureaus. In establishing this three-pronged oversight structure, USAID aims to relieve the Administrator of some day-to-day oversight responsibilities, allowing the Administrator greater ability to focus on agency-wide management priorities, and to enable additional, functionally specialized leadership voices to represent the agency on the global stage. Some observers and policymakers have expressed concern with these changes; they worry that adding two political appointees might increase politicization of the agency's development decisions.", "Beyond the proposed leadership additions, reorganization proposals under Transformation are primarily focused on the headquarters' functional and central bureaus and their respective offices. In broad strokes, the agency is moving from four functional bureaus, six central bureaus/offices, and six independent offices to five functional bureaus, three central bureaus, and four independent offices. (For a detailed chart of the proposed structural changes, see the Appendix . ) Two of the proposed changes are presented in greater detail below."], "subsections": [{"section_title": "Bureau for Humanitarian Assistance", "paragraphs": ["Perhaps the most publicized reorganization proposal is the creation of a Bureau for Humanitarian Assistance (HA). This proposal would take the Offices of Food for Peace (FFP) and U.S. Foreign Disaster Assistance (OFDA) out of the Bureau for Democracy, Conflict, and Humanitarian Assistance (DCHA) and combine them into HA. FFP and OFDA would no longer remain separate offices with independent functions; instead, they would be consolidated into one bureau made up of eight offices\u00e2\u0080\u0094three geographically focused and five technical.", "USAID cites two primary reasons for the creation of HA:", "Elevating U.S. humanitarian assistance on the global stage. The Trump Administration maintains that it has placed a greater emphasis on humanitarian assistance than previous Administrations\u00e2\u0080\u0094although such claims are open to debate\u00e2\u0080\u0094but that having two separate offices within USAID leads to confusion when articulating U.S. humanitarian efforts to the international community. In merging FFP and OFDA and creating HA, USAID contends that it will have one unified, and more prominent, voice on humanitarian assistance on the global stage. Removing duplication of efforts. FFP and OFDA currently share some of the funding appropriated under the international disaster assistance (IDA) account. In combining the two offices, USAID asserts that it can better manage IDA funds by removing the distinction between food and nonfood assistance. In doing so, USAID states that it will be able to respond more quickly and effectively to today's increasingly complex humanitarian emergencies.", "Housing the humanitarian offices in a stand-alone bureau is not new to USAID. In the 1990s, the agency had a Bureau for Humanitarian Response, which included both FFP and OFDA as distinct offices. It was not until 2001, after a reorganization, that the humanitarian offices were combined with other functions to become the current DCHA Bureau. The HA structural proposal differs from the Bureau for Humanitarian Response in that it dissolves the FFP and OFDA offices as they currently exist.", "For a number of years, the humanitarian community has engaged with the U.S. government on issues of efficiency, effectiveness, and coordination of humanitarian assistance. Consultations within the U.S. government, Congress, and the broader humanitarian community continue on HA. Specifically, some say the proposed HA elevates USAID's humanitarian functions and is a positive step forward on reform, while others are more skeptical about its broader impact on interagency cooperation, levels of global humanitarian funding, and U.S. leadership and priorities. Food assistance stakeholders, for example, have raised concerns about the dissolution of FFP. Because FFP receives approximately half of its funding through Title II of the Food for Peace Act, most of which must be used to buy U.S. agricultural commodities, some have expressed concern that without the designation of FFP as an independent office, the provision of U.S. in-kind commodities will decline as a percentage of U.S. emergency food assistance. Further, while the proposal notes that FFP's mandated nonemergency programs would remain in HA, some are concerned that the nonemergency programs will be deemphasized in the new bureau context. These FFP-related concerns have been exacerbated by the Administration's repeated requests to eliminate Title II funding in its annual budget requests."], "subsections": []}, {"section_title": "Bureau for Democracy, Development, and Innovation", "paragraphs": ["The prospective creation of the Bureau for Democracy, Development, and Innovation (DDI) is the largest structural change proposed. It seeks to consolidate the agency's \"cross-cutting and sector-specific learning and knowledge management, and other technical assistance,\" noting that the current structure has left these functions \"scattered \u00e2\u0080\u00a6 inconsistent and uncoordinated.\" The proposal pulls technical staff from regional bureaus and moves offices from three different bureaus into one. The new bureau would include 10 offices from the Bureau for Economic Growth, Education, and Environment (E3), two offices from DCHA, and four centers currently housed in the Global Development Lab. In addition, the bureau would include technical experts previously embedded in regional bureaus. These changes are intended to make DDI the technical \"one-stop-shop\" for missions in the field. The new DDI would comprise \"centers\" and \"hubs\" to provide \"missions with coordinated consultancy services,\" from education and environment to private sector engagement, youth, and gender equality.", "DDI has emerged as a controversial component of the structural proposal for Transformation . Supporters believe that in creating one place for \"centers\" and \"hubs,\" field offices will be able to garner more cohesive technical support for their respective programs. Detractors worry that DDI is an amalgamation of offices with unrelated functions, and that its various components will be unwieldy to manage. The Global Development Lab's absorption into a larger bureau, in particular, may cause concern among supporters that innovation in development is set for a demotion among agency priorities. "], "subsections": []}]}]}, {"section_title": "Workforce Management42", "paragraphs": ["Through Transformation , USAID seeks to modify its workforce management structures and processes to strengthen \"the ability of its entire workforce to thrive in, and adapt to, increasingly complex and challenging situations and opportunities.\" These changes include developing and piloting a new noncareer hiring mechanism, developing and operationalizing a leadership philosophy, and establishing and implementing a knowledge management framework. Much like the rest of Transformation , these pieces are described by the agency as being \"employee-led,\" developed by working groups comprising employees from across the agency."], "subsections": [{"section_title": "Hiring Mechanisms: The Adaptive Personnel Project", "paragraphs": ["USAID staff are hired under more than 20 different hiring mechanisms. These include direct-hire (DH) positions, like Civil and Foreign Service, and non-DH positions, including U.S. personal services contractors (USPSCs), fellows, and institutional support contractors (ISCs), among others. DH positions are generally funded using USAID's Operating Expenses (OE) account and come with the full suite of U.S. government benefits. The non-DH positions are primarily funded using program funds, and benefits vary depending on the mechanism. For example, USPSCs have time-limited contracts and receive a subsidy to arrange for their own health care and life insurance on the open market. ISCs are hired through a parent firm and receive their paychecks, health care, and other benefits through that entity.", "A key element of the Transformation workforce reforms is a new hiring mechanism designed to address staffing concerns raised in the aftermath of USAID's 2014-2016 West Africa Ebola response. At the peak of that outbreak, the agency deployed 94% of its crisis roster, leaving the agency with little capacity to respond to other crises. Recognizing that this staffing challenge could easily arise again, the agency convened a working group in late 2016 to start developing a new hiring mechanism for crisis response. By 2018, the working group comprised approximately 80 USAID employees from different bureaus and under different employment mechanisms (e.g., DHs, USPSCs) and was supported by experts from the National Academy of Public Administration (NAPA). Since its creation, the working group and consequent plans have been folded into the larger context of Transformation .", "The new proposed mechanism is the Adaptive Personnel Project (APP), a noncareer, excepted service (potentially Schedule B) mechanism. (Excepted service positions are those not in the Senior Executive or competitive services.) USAID contends that the APP would provide the agency with more workforce flexibility, allowing it to more easily surge and contract with the agency's needs and resources. A few USAID-identified features of the APP include the following:", "Flexible tenure . Positions could be time-limited, much like current USPSC or Foreign Service Limited (FSL) positions (limited to five years and nine years, respectively), but the time limitations would be determined by the relevant hiring managers. This means that the APP could accommodate a 1-year position for a discrete project or a 10-year tenure with an office if the need for the role continues. \"Talent-based . \" Nonexcepted federal positions are required to be classified, with each role assigned to a group, series, title, and pay band. Once in a group and series, an employee is effectively locked in; in order to move into a different group and series, the employee would need to apply for the new position. USAID is working with the Office of Personnel Management (OPM) to structure the APP to either use a multidisciplinary approach to the classification system or not adhere to the classification system, allowing APP employees to move across different functional areas with relative ease. Equity in benefits . Even though APP would be noncareer, APP employees would receive government benefits like their career counterparts. This is a departure from the USPSC structure. Streamlined processes . USAID would create a common performance management system for all APP hires.", "The APP pilot would establish 300 positions for the crisis response offices, including FFP and OFDA (the proposed HA Bureau), OTI, and the Bureau for Global Health. USAID anticipates that many current USPSCs, ISCs, and Participating Agency Service Agreement employees (PASAs) would move into these APP positions, ultimately changing the agency's balance of hiring mechanisms.", "USAID has determined that it requires congressional approval to use program funds for the APP pilot. It notes that it does not have funds from the Operating Expenses account available to fund the pilot and meet the agency's other personnel needs (i.e., funding DH positions). If it receives approvals from Congress and OPM, USAID states that it will move forward with drafting internal policies and procedures to guide the new personnel system. The agency seeks to have the 300 APP positions filled in 2020. If those positions are filled and the onboarding of APP personnel provides the intended flexibilities, USAID is to expand the project to include an additional 1,200 positions in the following two years. "], "subsections": []}]}, {"section_title": "Outlook and Potential Issues for Congress", "paragraphs": ["Congress may have several ongoing areas of interest related to U.S. foreign assistance policy and USAID operations and budget. As Members of Congress consider proposed and ongoing USAID reform activities, several cross-cutting issues may emerge, including the following: ", "Role of foreign assistance in broader U.S. foreign policy. At a time when many in Congress have expressed significant concern about the influence of rival powers such as China and Russia in regions in which USAID is active, Members may consider whether the overarching Transformation goal of ending the need for foreign assistance is consistent with U.S. foreign policy and national security interests. U.S. foreign assistance programs are driven by multiple rationales, including supporting U.S. security and diplomatic and commercial interests. Foreign assistance also is widely recognized as a tool of foreign policy, which promotes social and economic development in partner countries, while also enhancing U.S. influence and leverage in those countries. If USAID is successful in ending the need for foreign assistance, Congress and the Administration may consider alternative forms of engagement with current aid partners to maintain U.S. influence and presence. For example, a reorientation to cultural exchange programs like the Fulbright program, as well as increased business ties and investment agreements, may help maintain strong relationships and U.S. influence in countries transitioning away from U.S. aid. USAID f unding . USAID is carrying out Transformation at the same time that the Administration, for a third straight year, has proposed cuts of over 20% to the agency's annual budget. While some of the proposed reforms could reduce agency costs over time, Transformation documents do not appear to specify how the proposed budget cuts, if enacted, would be reflected in program allocation. To date, Congress has not supported the proposed cuts, and appropriations for USAID have remained fairly level in recent years. New positions from r estructuring . The Transformation proposal to add two new Associate Administrator positions at USAID would increase the number of political appointees at the agency, potentially raising concerns about the politicization of USAID's development decisions. Given the challenges some Administrations have faced in filling existing high-level positions, some observers are concerned that the new positions could sit vacant for months or even years\u00e2\u0080\u0094possibly further hamstringing future Administrations' policy crafting and implementation. Impact on existing USAID activities. Overall, Transformation focuses on the new\u00e2\u0080\u0094new strategies, new indicators, and new hiring mechanisms. There is less discussion of what, if anything, may fall away. For example, in staffing, the agency is creating a hiring mechanism to \"streamline\" the workforce\u00e2\u0080\u0094it discusses plans to eventually phase out one hiring mechanism. This means that as the new hiring mechanism is getting off the ground, the agency would still be managing more than 20 others. Congress may consider asking the agency what other strategies, structures, and processes the agency may plan to phase out or integrate as a result of Transformation . Self- r eliance goals versus c ongressional p riorities. Administrator Green has argued that the self-reliance roadmaps are not just to be used after taking into account congressional directives and country/technical allocations, but as a guide for congressional allocation decisions as well. Congress typically appropriates funds to support priority accounts and sectors (such as global health, basic education, agricultural development, democracy promotion, and women's empowerment) rather than countries. The seeming shift under Transformation to a country-specific aid agenda may conflict with congressional funding of transnational programming, such as countering trafficking and regional trade hubs. Furthermore, the self-reliance indicators themselves may warrant attention. Advising countries that lowering their tariff barriers will signal their commitment to economic prosperity may be difficult to sustain, some may argue, in light of other actions of the Trump Administration, for example. Congress may consult with USAID to ensure its indicator configuration is consistent with its priorities. Other initiatives in Transformation . Transformation was initially launched with several other priorities that do not feature prominently in recent media on the initiative. For example, USAID operational flexibility in nonpermissive environments and programmatic effectiveness in countering violent extremism were core features of Transformation at launch. It is unclear whether these and other priorities have fallen in prominence because they require more interagency coordination, because solutions have been fairly straightforward, because the challenges in those sectors are too intractable to address, or because of other reasons. Congress may also consider seeking additional information on how Transformation would align with the Administration's planned Prosper Africa trade and investment initiative, which is expected to focus, in part, on USAID's three trade hubs in Africa and elements of its trade capacity-building programs. Alignment with State Department . The State Department's Office of Foreign Assistance Resources (F) has maintained a comprehensive database of indicators to quantify the results of U.S. foreign assistance programs since 2006. It is unclear how these indicators, or those used by the Millennium Challenge Corporation, will be used in conjunction with USAID's new self-reliance indicators, if at all. Also unclear is the extent to which the State Department has been engaged with Transformation at USAID, and whether these reforms are aligned with Secretary Pompeo's vision for the future of U.S. diplomatic engagement. Congress may consider whether certain reforms should be broadened to include State Department policies and structure, or elsewhere in government. Impact on Food for Peace programming . The proposed merger of the Offices of U.S. Foreign Disaster Assistance and Food for Peace into the Bureau of Humanitarian Assistance has raised questions about the future of Food for Peace Act Title II programming. The Office of Food for Peace is currently dual-funded, receiving approximately half of its funding through the agriculture appropriations bill and its authorization from regular farm bills. In the proposed HA Bureau, the Office of Food for Peace would cease to exist in name and program officers would be programming food and nonfood assistance side-by-side. Congress has not adopted proposals by multiple Administrations to eliminate Title II programs, and it may seek to further understand how the HA Bureau would be structured to ensure it meets its mandates outlined in the farm bill, including the minimum level of nonemergency programming. "], "subsections": [{"section_title": "Appendix. USAID Structural Transformation", "paragraphs": [], "subsections": []}]}]}}
{"id": "R45898", "title": "U.S.-China Relations", "released_date": "2019-09-03T00:00:00", "summary": ["The United States and the People's Republic of China (PRC or China) are involved in a prolonged stand-off over trade and in competition that is spilling from political and military areas into a growing number of other spheres, including technology, finance, and education, severely straining ties on the 40 th anniversary of the two countries' establishment of diplomatic relations. The two lead the world in the size of their economies, their defense budgets, and their global greenhouse gas emissions. Both countries are permanent members of the United Nations (U.N.) Security Council. In 2018, they were each other's largest trading partners.", "During the Trump Administration, competition has dominated the relationship and areas of cooperation have shrunk. The 2017 National Security Strategy (NSS) describes both China and Russia as seeking to \"challenge American power, influence, and interests, attempting to erode American security and prosperity.\" To pressure China to change its economic practices, the United States has imposed tariffs on hundreds of billions of dollars of U.S. imports from China, with almost all imports from China scheduled to be subject to additional tariffs by December 15, 2019. U.S. tariffs and China's retaliatory tariffs have reordered global supply chains and hit U.S. farmers and manufacturers particularly hard. Twelve rounds of negotiations have not resolved the dispute.", "On August 5, 2019, the U.S. Treasury Department labeled China a currency manipulator for the first time in a quarter century. The Administration has placed restrictions on the ability of U.S. firms to supply PRC telecommunications giant Huawei. The United States has also sought to warn other nations away from business dealings with Huawei and from cooperation with China on infrastructure projects under the framework of China's Belt and Road Initiative (BRI).", "Many analysts ascribe the rising friction in the relationship today not only to the arguably more confrontational inclinations of the Trump Administration, but also to more assertive behavior by China under President Xi Jinping. Xi assumed the top posts in the Communist Party of China in November 2012 and added the state presidency in March 2013. Later in 2013, China began building military outposts in the South China Sea and Xi launched BRI, an ambitious effort to boost economic connectivity\u00e2\u0080\u0094and China's influence\u00e2\u0080\u0094across the globe. In 2015, China began enacting a suite of national security legislation that shrank the space for independent thought and civil society, subjected ordinary citizens to stepped-up surveillance, and imposed onerous conditions on foreign firms operating in China. The same year, China launched its \"Made in China 2025\" plan, seeking to reduce China's reliance on foreign technology and directing the considerable resources of the state toward supporting the development of \"national champion\" Chinese firms in 10 strategic industries. In 2017, at the end of his first five-year term in his Party posts, Xi tasked China's military with turning itself into a \"world-class\" force by mid-century. Also in 2017, his government began forcing more than 1 million of his Turkic Muslim fellow citizens in the northwest region of Xinjiang into reeducation camps.", "Increasingly, the United States and China appear to be seeking to draw other countries into competing camps\u00e2\u0080\u0094those who agree to sign (often vague) BRI cooperation agreements with China (some 125 countries as of April 2019, by China's count), and those who, at the U.S. government's behest, do not; those who do business with Huawei, and those who, similarly at the U.S. government's behest, do not; those who publicly censure China for its actions in Xinjiang, and those who offer support. U.S. allies are sometimes in China's \"camp.\" China represents \"a new kind of challenge,\" Secretary of State Michael R. Pompeo has suggested, because \"It's an authoritarian regime that's integrated economically into the West in ways the Soviet Union never was.\" Important areas of remaining U.S.-China cooperation include maintaining pressure on North Korea to curb its nuclear weapons and missile programs; supporting the Afghanistan peace process; managing international public health challenges, from tuberculosis to influenza; and stemming the flow into the United States of China-produced fentanyl, a class of deadly synthetic opioids."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["The United States and the People's Republic of China (PRC or China) are involved in a prolonged stand-off over trade, and in competition that is spilling from political and military areas into a growing number of other spheres, including technology, finance, and education, severely straining ties on the 40 th anniversary of the two countries' establishment of diplomatic relations. The two countries lead the world in the size of their economies, their defense budgets, and their global greenhouse gas emissions. Both countries are permanent members of the United Nations (U.N.) Security Council. In 2018, they were each other's largest trading partners.", "Trump Administration strategy documents have set the tone for U.S. policy toward China. The December 2017 National Security Strategy (NSS) describes both China and Russia as seeking to \"challenge American power, influence, and interests, attempting to erode American security and prosperity.\" An unclassified summary of the January 2018 U.S. National Defense Strategy describes China as a \"strategic competitor\" and charges that it is pursuing a military modernization program that \"seeks Indo-Pacific regional hegemony in the near-term and displacement of the United States to achieve global preeminence in the future.\" The Department of Defense's (DOD's) June 2019 Indo-Pacific Strategy Report identifies \"the primary concern for U.S. national security\" as \"inter-state strategic competition, defined by geopolitical rivalry between free and repressive world order visions.\" The Trump Administration has leveled its strongest criticism at China's economic practices. In a major October 4, 2018, address on China policy, Vice President Mike Pence charged that China has used \"an arsenal of policies inconsistent with free and fair trade\" to build its manufacturing base, \"at the expense of its competitors\u00e2\u0080\u0094especially the United States of America.\"", "In their public statements on the United States, China's top leaders have generally refrained from direct criticism. In July 2019, PRC Vice President Wang Qishan stated that \"profound shifts are taking place in the relations between major countries,\" noting \"mounting protectionism and populist ideologies\" and \"intensifying geopolitical rivalry and regional turbulence.\" PRC Vice Foreign Minister Le Yucheng, speaking at the same forum, addressed U.S.-China relations directly. The bilateral relationship, Le asserted, is \"now going through the most complex and sensitive period since diplomatic relations were formalized four decades ago.\" Le called for \"a China-US relationship based on coordination, cooperation and stability,\" and pushed back at the idea that China is responsible for U.S. \"challenges.\" The wars in Afghanistan and Iraq \"sapped [U.S.] strategic strength,\" Le asserted, and the global financial crisis \"exposed the deep-seated imbalances in the U.S. economy and society.\" The United States should not make China \"a scapegoat,\" Le argued, for \"[p]roblems such as economic disparity, widening wealth gap and aging infrastructure.\"", "U.S.-China tensions predated the Trump Administration. Frictions over such issues as Taiwan, trade, and China's human rights record have been long-standing, as have been U.S. concerns about the intentions behind China's ambitious military modernization efforts. United States Trade Representative (USTR) reports to Congress going back to the last years of the George W. Bush Administration document mounting U.S. frustrations with China's failure to implement market-opening commitments it made when it acceded to the World Trade Organization (WTO) in December 2001. Previous Administrations concluded, however, that a modus vivendi with China was necessary for a broad array of U.S. policy objectives in the world, and they thus sought to balance competition and cooperation in the U.S.-China relationship. ", "During the Trump Administration, competition has dominated the relationship and areas of cooperation have shrunk. To pressure China to change its economic practices, the United States has imposed tariffs on hundreds of billions of dollars of U.S. imports from China, with almost all imports from China scheduled to be subject to additional tariffs by December 15, 2019. U.S. tariffs and China's retaliatory tariffs have reordered global supply chains and hit U.S. farmers and manufacturers particularly hard. Twelve rounds of negotiations have not resolved the dispute. ", "On August 5, 2019, the U.S. Treasury Department labeled China a currency manipulator for the first time in a quarter century. The Administration has placed restrictions on the ability of U.S. firms to supply PRC telecommunications giant Huawei. The United States has also sought to warn other nations away from business dealings with Huawei and from cooperation with China on infrastructure projects under the framework of China's Belt and Road Initiative (BRI). Feeding a persistent narrative that the Administration seeks to \"decouple\" the U.S. and Chinese economies, on August 23, 2019, President Trump wrote on Twitter, \"Our great American companies are hereby ordered to immediately start looking for an alternative to China, including bringing your companies HOME and making your products in the USA.\" As his authority for such an order, the President cited the International Emergency Economic Powers Act ( P.L. 95-223 ), though he said on August 25, 2019, that he had \"no plan right now\" to trigger the law.", "Many analysts ascribe the rising friction in the relationship today not only to the arguably more confrontational inclinations of the Trump Administration, but also to more assertive behavior by China under President Xi Jinping. Xi assumed the top posts in the Communist Party of China in November 2012 and added the state presidency in March 2013. Later in 2013, China began building military outposts in the South China Sea and Xi launched BRI, an ambitious effort to boost economic connectivity\u00e2\u0080\u0094and China's influence\u00e2\u0080\u0094across the globe. In 2015, China began enacting a suite of national security legislation that shrank the space for independent thought and civil society, subjected ordinary citizens to stepped-up surveillance, and imposed onerous conditions on foreign firms operating in China. The same year, China launched its \"Made in China 2025\" plan, seeking to reduce China's reliance on foreign technology and directing the considerable resources of the state toward supporting the development of \"national champion\" Chinese firms in 10 strategic industries. In 2017, at the end of his first five-year term in his Party posts, Xi tasked China's military with turning itself into a \"world-class\" force by mid-century. That year, his government also began forcing more than 1 million of his Turkic Muslim fellow citizens in the northwest region of Xinjiang into reeducation camps. In March 2018, China's Communist Party-controlled legislature amended the state constitution to remove presidential term-limits, opening the way for Xi to stay in office indefinitely.", "Increasingly, the United States and China appear to be seeking to draw other countries into competing camps\u00e2\u0080\u0094those who agree to sign (often vague) BRI cooperation agreements with China (some 125 countries as of April 2019, by China's count), and those who, at the U.S. government's behest, do not; those who do business with Huawei, and those who, similarly at the U.S. government's behest, do not; those who publicly censure China for its actions in Xinjiang, and those who offer support. U.S. allies are sometimes in China's \"camp.\" China represents \"a new kind of challenge,\" Secretary of State Michael R. Pompeo has suggested, because, \"It's an authoritarian regime that's integrated economically into the West in ways the Soviet Union never was.\" Important areas of remaining U.S.-China cooperation include maintaining pressure on North Korea to curb its nuclear weapons and missile programs; supporting the Afghanistan peace process; managing international public health challenges, from tuberculosis to influenza; and stemming the flow into the United States of China-produced fentanyl, a class of deadly synthetic opioids.", "Many of the Trump Administration's critics share the Administration's concerns about PRC policies and actions, but disagree with the Administration's framing of the relationship and with specific Administration policies. Signatories to an open letter on China addressed to the President and Members of Congress and published in The Washington Post on July 3, 2019, acknowledge \"troubling behavior\" by China. They argue, nonetheless, that China is not \"an economic enemy or an existential national security threat that must be confronted in every sphere; nor is China a monolith, or the views of its leaders set in stone.\" They warn, \"If the U.S. presses its allies to treat China as an economic and political enemy, it will weaken its relations with those allies and could end up isolating itself rather than Beijing.\" ", "Former Obama Administration officials Kurt M. Campbell and Jake Sullivan argue that, \"The basic mistake of engagement was to assume that it could bring about fundamental changes to China's political system, economy, and foreign policy.\" They warn that, \"Washington risks making a similar mistake today, by assuming that competition can succeed in transforming China where engagement failed\u00e2\u0080\u0094this time forcing capitulation or even collapse.\" Campbell and Sullivan call for \"a steady state of clear-eyed coexistence on terms favorable to U.S. interests and values,\" with elements of competition and cooperation in four domains: military, economic, political, and global governance. Peter Varghese, a former senior diplomat for Australia, a U.S. ally, asserts that, \"it would be a mistake for the US to cling to primacy by thwarting China. Those of us who value US leadership want the US to retain it by lifting its game, not spoiling China's.\"", "Many analysts fault the Trump Administration for giving up leverage against China by withdrawing from international agreements and institutions, by allegedly paying insufficient attention to maintaining strong relationships with allies, and by engaging in inconsistent messaging around trade, human rights, and other issues. In January 2017, the Administration notified the 11 other signatories to the Trans-Pacific Partnership (TPP), a proposed free trade agreement (FTA) of Asia-Pacific countries (not including China), that it would not be ratifying the agreement. In June 2018, the Administration announced its withdrawal from the U.N. Human Rights Council.", "Signatories of another high-profile open letter addressed to the President urge him, however, to \"stay the course on your path of countering Communist China.\" The letter states that supporters of engagement with China told American policymakers \"that the PRC would become a 'responsible stakeholder' once a sufficient level of economic modernization was achieved.\" The letter argues, \"This did not happen and cannot so long as the CCP [Chinese Communist Party] rules China.\" The letter assures the President, \"We welcome the measures you have taken to confront Xi's government and selectively to decouple the U.S. economy from China's insidious efforts to weaken it.\""], "subsections": []}, {"section_title": "Basic Facts About the People's Republic of China", "paragraphs": ["The Communist Party of China (CPC) established the PRC 70 years ago, on October 1, 1949, after winning a civil war against the Nationalist (also known as Kuomintang or KMT) forces of the Republic of China (ROC) led by Chiang Kai-shek. Today, China is the world's most populous nation (with a population of 1.39 billion), the world's largest emitter of greenhouse gases (responsible for approximately 30% of global energy-related carbon dioxide emissions in 2016), the world's second-largest economic power (in nominal terms, with a gross domestic product or GDP of $13.6 trillion), and the only Communist Party-led state in the G-20 grouping of major economies. With the United States, France, Russia, and the United Kingdom, China is also one of five permanent members of the U.N. Security Council."], "subsections": [{"section_title": "Leadership", "paragraphs": ["Since 2012, Xi Jinping (his family name, Xi, is pronounced \"shee\") has been China's top leader. He holds a troika of top positions: Communist Party General Secretary, Chairman of the Party's Central Military Commission, and State President. In 2018, China's unicameral legislature, the National People's Congress (NPC), amended the PRC constitution to include a reference to \"Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era,\" putting Xi's guiding philosophy on a par with the philosophies of two powerful predecessors, Mao Zedong and Deng Xiaoping. Another constitutional amendment removed term limits for the state presidency, opening the way for Xi to stay in the position indefinitely after the conclusion of his second five-year term in 2023. ", "Xi is the top official in China's most senior decisionmaking body, the seven-man Communist Party's Politburo Standing Committee (see Figure 1 ), which is drawn from the larger 25-person Politburo. Xi personally chairs multiple Communist Party policy committees, including those on foreign affairs, Taiwan, \"deepening overall reform,\" financial and economic affairs, cyberspace, and \"comprehensive rule of law.\" Some foreign observers refer to him as \"chairman of everything.\" Other members of the Politburo Standing Committee concurrently lead China's other major political institutions, including the State Council, China's cabinet; the NPC; and a political advisory body, the Chinese People's Political Consultative Conference (CPPCC). The arrangement ensures that the Communist Party maintains firm control over all the country's political institutions. Xi has repeatedly reminded his countrymen that, \"The Party exercises overall leadership over all areas of endeavor in every part of the country.\""], "subsections": []}, {"section_title": "Provinces", "paragraphs": ["China presents itself as comprised of 34 provincial-level administrative units (see Figure 2 ). They include 23 provinces; five geographic entities that China calls \"autonomous regions,\" all of which have significant ethnic minority populations (Guangxi, Inner Mongolia, Ningxia, Tibet, and Xinjiang); four municipalities that report directly to the central government (Beijing, Chongqing, Shanghai, and Tianjin); and the two special administrative regions of Hong Kong and Macau, which were returned to China in the 1990s by the governments of the United Kingdom and Portugal respectively. The PRC's count of 23 provinces includes Taiwan, an island democracy of 23 million people that the PRC has never controlled, but over which it claims sovereignty. Taiwan calls itself the Republic of China.", "Provinces have their own revenue streams, and governments at the provincial level and below are responsible for the lion's share of the country's public expenditure, including almost all public spending on education, health, unemployment insurance, social security, and welfare. Provinces also have the right to pass their own laws and regulations, which may extend national laws and regulations, but not conflict with them. Beijing gives provinces considerable leeway in adopting policies to boost economic growth and encourages provinces to undertake approved policy experiments. Provinces do not have their own constitutions, however, and do not have the power to appoint their own leaders."], "subsections": []}, {"section_title": "Signature Policies of China's President Xi", "paragraphs": ["President Xi has sought to rally China's citizens around a \" China Dream of Great Rejuvenation of the Chinese Nation .\" The China Dream incorporates a pledge to build \"a moderately prosperous society in all respects\" by 2021, the centenary of the Party's founding, in part by doubling China's 2010 GDP and per capita income for both urban and rural residents. It also includes a pledge to make China, \"a modern socialist country that is prosperous, strong, democratic, culturally advanced, and harmonious\" by 2049, the centenary of the founding of the People's Republic of China. (The term \"democratic\" refers to Chinese-style \"socialist democracy\" under uncontested Communist Party rule.) The \"China Dream\" includes a \"dream of a strong military.\" ", "Externally, Xi has promoted his vision of a \" community with a shared future for mankind \" (also translated as \"community of common destiny for mankind\"). In a January 2017 speech at the U.N. office in Geneva, Xi described the \"community with a shared future\" as an effort to \"establish a fair and equitable international order.\" In such an order, he said, there should be no interference in countries' internal affairs, and all countries should \"have the right to independently choose their social system and development path,\" an implicit rejection of U.S.-led democracy-promotion efforts around the world. Appearing to address the United States directly, he stated, \"Big countries should treat smaller ones as equals instead of acting as a hegemon imposing their will on others. No country should open the Pandora's box by willfully waging wars or undermining the international rule of law.\" ", "At the CPC's 19 th Congress in late 2017, the CPC incorporated the \"community with a shared future for mankind\" into its charter. Xi boasted of \"a further rise in China's international influence, ability to inspire, and power to shape\" and said China was \"moving closer to center stage.\" In March 2018, China incorporated the \"community with a shared future for mankind\" into the state constitution. Later that year, Xi pledged that China would play \"an active part in leading the reform of the global governance system, and build a more complete network of global partnerships.\" "], "subsections": []}]}, {"section_title": "Brief History of U.S.-PRC Relations", "paragraphs": ["After the Communist Party took power in China in 1949, the United States continued to recognize Chiang Kai-shek's ROC government on Taiwan as the legitimate government of all China. A year later, the United States and China found themselves on opposite sides of the Korean War, a conflict that killed 36,547 U.S. military personnel and at least 180,000 Chinese military personnel. China's name for the conflict is the \"War to Resist U.S. Aggression and Aid Korea.\" Early in the conflict, the United States sent its Seventh Fleet to the Taiwan Strait \"to prevent the Korean conflict from spreading south,\" effectively preventing Communist forces from realizing their goal of finishing the Chinese Civil War by wresting control of Taiwan from Chiang's forces.", "In 1971, changing Cold War dynamics, including the Sino-Soviet split, led the Nixon Administration to undertake a profound shift in U.S. policy. Then-Secretary of State Henry Kissinger made a secret visit to China in July 1971. In October of the same year, the United States supported U.N. General Assembly Resolution 2758, recognizing the PRC's representatives as \"the only legitimate representatives of China to the United Nations,\" and expelling \"the representatives of Chiang Kai-shek.\" President Richard Nixon formally ended nearly a quarter of a century of estrangement between the United States and the PRC with his historic visit to China in February 1972. ", "On January 1, 1979, President Jimmy Carter and China's Deng Xiaoping presided over the establishment of diplomatic relations between their two nations. The joint communiqu\u00c3\u00a9 they signed, one of three that China considers to lay the foundation for the U.S.-China relationship, states that the United States \"acknowledges the Chinese position that there is but one China and Taiwan is part of China.\" It also states that \"the people of the United States will maintain cultural, commercial, and other unofficial relations with the people of Taiwan.\" In April 1979, Carter signed the Taiwan Relations Act (P.L. 96-8, U.S.C. 3301 et seq.), providing a legal basis for the unofficial U.S. relationship with Taiwan and committing the United States to sell defensive arms to Taiwan. The same year, Deng launched a bold program of \"reforming and opening\" to the outside world that would transform China from a backward, isolated country into the economic powerhouse, emerging military power, and shaper of global institutions that it is today.", "Through the 1970s and 1980s, the overriding strategic rationale for the U.S.-China relationship was counterbalancing a shared enemy, the Soviet Union. With the collapse of the Soviet Union in 1991, U.S. and Chinese leaders cast about for a new rationale for their relationship. President Bill Clinton and China's then-leader Jiang Zemin both came to see benefits in expanding bilateral economic ties, including by working together to bring China into the WTO. On October 10, 2000, Clinton signed into law P.L. 106-286 , granting China permanent normal trade relations and paving the way for China to join the WTO, which it did in December 2001. In 2018, the Trump Administration argued that \"the United States erred in supporting China's entry into the WTO on terms that have proven to be ineffective in securing China's embrace of an open, market-oriented trade regime.\" A former George W. Bush Administration official suggests that \"identifying a preferable alternative, even with the benefit of hindsight, is surpassingly difficult.\"", "After the terrorist attacks of September 11, 2001, the George W. Bush Administration settled on counterterrorism cooperation as a new strategic rationale for the U.S.-China relationship, but China complicated that rationale when it persuaded the United States to apply a terrorist label to separatist ethnic Uyghurs from its northwest Xinjiang region. During the Obama Administration, even as U.S.-China friction mounted over economic issues, cyber espionage, human rights, and the South China Sea, the two sides embraced as a strategic rationale for their relationship the need for their cooperation to address some of the world's most pressing challenges, including weak global economic growth, climate change, and nuclear proliferation. Observers broadly credited U.S.-China cooperation for contributing to the conclusion of the July 2015 Joint Comprehensive Plan of Action (JCPOA) nuclear deal with Iran and the December 2015 Paris Agreement under the U.N. Framework Convention on Climate Change.", "Over the past four decades, the U.S.-China relationship has faced some high-profile tests: ", "In June 1989, a decade after normalization of U.S.-China relations, China's leaders ordered the People's Liberation Army (PLA) to clear Beijing's Tiananmen Square of peaceful protestors, killing hundreds, or more. In response, the United States imposed sanctions on China, some of which remain in place today. In 1995-1996, a U.S. decision to allow Taiwan President Lee Teng-hui to make a private visit to the United States and deliver a speech at his alma mater, Cornell University, led to what became known as the Third Taiwan Strait Crisis. China expressed its anger at the visit by conducting a series of missile exercises around Taiwan, prompting the Clinton Administration to dispatch two aircraft carrier battle groups to the area. In May 1999, two decades after normalization of U.S.-China relations, a U.S. Air Force B-2 bomber involved in North Atlantic Treaty Organization (NATO) operations over Yugoslavia mistakenly dropped five bombs on the Chinese Embassy in Belgrade, killing three Chinese journalists and injuring 20 embassy personnel. The event set off anti-U.S. demonstrations in China, during which protestors attacked U.S. diplomatic facilities. In April 2001, a PLA naval J-8 fighter plane collided with a U.S. Navy EP-3 reconnaissance plane over the South China Sea, killing the Chinese pilot. The U.S. crew made an emergency landing on China's Hainan Island, where Chinese authorities detained them for 11 days. Negotiations for return of the U.S. plane took much longer. In February 2012, a Chongqing Municipality Vice Mayor sought refuge in the U.S. consulate in the western China city of Chengdu, where he is believed to have shared explosive information about wrongdoing by his then-boss, an ambitious Politburo member. Thirty-six hours later, U.S. officials handed the Vice Mayor over to officials from Beijing. The Politburo member, Bo Xilai, soon fell from grace in one of the most spectacular political scandals in PRC history. In April 2012, after Chinese legal advocate Chen Guangcheng, who is blind, escaped house arrest in China's Shandong Province, the U.S. Embassy in China rescued him from the streets of Beijing and brought him into the U.S. Embassy compound, where he stayed for six days. High-stakes negotiations between U.S. and PRC diplomats led to Chen moving first to a Beijing hospital, and then, in May 2012, to the United States. "], "subsections": []}, {"section_title": "The Bilateral Relationship: Select Dimensions", "paragraphs": [], "subsections": [{"section_title": "High-Level Dialogues", "paragraphs": ["Presidents Trump and Xi have met face-to-face five times: three times in 2017, once in 2018, and once in 2019 (see Table 1 ). Three of their five meetings have been on the sidelines of summits of the G-20 nations. Even as he has excoriated PRC policies, Trump has generally described his relationship with Xi in warm terms, frequently referring to Xi as \"my friend.\" Writing on Twitter on August 23, 2019, he questioned whether the Federal Reserve chairman or Xi \"is our bigger enemy.\" Three days later, however, the President wrote on Twitter that Xi is \"a great leader & representing a great country\" and stated publicly, \"I have great respect for President Xi.\"", "In their April 2017 meetings, Trump and Xi agreed to establish four high-level dialogues to manage the U.S.-China relationship, replacing dialogues that operated during the Obama Administration (see Table 2 ). All of the dialogues convened in 2017. Perhaps reflecting vacancies in senior positions in the Trump Administration and rising tensions in the U.S.-China relationship, only the Diplomatic and Security Dialogue (D&SD) convened in 2018. None of the dialogues has convened in 2019."], "subsections": []}, {"section_title": "Trade and Economic Relations54", "paragraphs": ["U.S.-China trade and economic relations have expanded significantly over the past three decades. In 2018, China was\u00e2\u0080\u0094in terms of goods\u00e2\u0080\u0094the United States' largest trading partner, third-largest export market, and largest source of imports. China is also the largest foreign holder of U.S. Treasury securities. The economic relationship has grown increasingly fraught, however. In 2017, the Trump Administration launched an investigation into China's policies on intellectual property (IP), subsidies, advancing technology, and spurring innovation. Beginning in 2018, the Trump Administration imposed tariffs on $250 billion worth of Chinese imports. Tariffs appear to have contributed to a sharp contraction in U.S.-China trade in the first half of 2019. On August 1, 2019, President Trump stated that beginning on September 1, 2019, the United States would impose 10% tariffs on nearly all remaining imports from China. His Administration later exempted some goods from the 10% tariffs and delayed the imposition of tariffs on other goods, but on August 23, 2019, the President also announced his intention to raise the tariff rate for these remaining imports from 10% to 15%. The President has sometimes suggested what some observers characterize as an ambivalence toward the trade relationship. In reference to the persistent large size of the U.S. trade deficit with China, the President stated on August 1, 2019, \"If they don't want to trade with us anymore, that would be fine with me. We'd save a lot of money.\""], "subsections": [{"section_title": "Trade", "paragraphs": ["According to U.S. trade data, U.S. exports of goods and services to China totaled $178.0 billion (7.1% of total U.S. exports) in 2018, while imports from China amounted to $558.8 billion (17.9% of total U.S. imports). As a result, the overall bilateral deficit was $380.8 billion, up $43.6 billion (12.9%) from 2017."], "subsections": [{"section_title": "Trade in Goods", "paragraphs": ["U.S. goods exports to China totaled $120.8 billion in 2018, a 7.3% ($9.4 billion) decrease from the 2017 level (see Table 3 ). The value of U.S. goods imports from China was $540.4 billion over the same period, up 6.8% ($34.4 billion) from 2017. The decrease in U.S. exports and increase in U.S. imports resulted in a $43.8 billion (11.7%) increase in the bilateral trade deficit, to $419.6 billion. Exports to China accounted for 7.2% of all U.S. goods exports, while imports from China accounted for 21.1% of all U.S. goods imports.", "Top U.S. goods exports to China in 2018 were capital goods, not including automotive products ($52.9 billion or 43.8% of U.S. goods exports to China), industrial supplies ($40 billion or 33.1%), and automotive vehicles and parts ($10.4 billion or 8.6%). Leading U.S. goods imports from China were consumer goods, not including food and automotive ($248.2 billion or 45.9% of U.S. goods imports from China), industrial supplies ($55.6 billion or 10.3%), and automotive vehicles and parts ($23.1 billion or 4.28%).", "China has levied retaliatory tariffs on most U.S. agricultural and food products. The tariffs reportedly contributed to the sharp overall decline of these exports to China (particularly of U.S. soybeans) in 2018. Total U.S. agricultural exports to China amounted to $9.1 billion, a decline of 53.0% from 2017, while the value of U.S. agricultural imports from China was $4.9 billion, up 8.9% from 2017. China's share of total U.S. agricultural exports declined from 14.1% in 2017 to 6.6% in 2018."], "subsections": []}, {"section_title": "Trade in Services", "paragraphs": ["In 2018, U.S. services exports to China totaled $57.1 billion (up 2.0% or $1.1 billion), while U.S. imports of services from China grew 5.1% ($887 million) to $18.3 billion. The bilateral trade surplus in services stood at $38.8 billion (up 0.6% from 2017). Exports to China accounted for 6.9% of all U.S. services exports, while imports from China accounted for 3.2% of all U.S. services imports.", "Travel represented the largest category of U.S. services exports to China, accounting for 56.1% ($32.1 billion). Other significant categories were charges for the use of IP rights (14.8% of all services exports to China or $8.5 billion) and transport (9.3% or $5.3 billion). Leading U.S. services imports from China were transport (27.4% of all services imports from China or $5.0 billion) and travel (24.7% or $4.5 billion)."], "subsections": []}]}, {"section_title": "Investment", "paragraphs": [], "subsections": [{"section_title": "Foreign Direct Investment62", "paragraphs": ["Despite a surge in U.S. foreign direct investment (FDI) in China following the PRC's entry into the World Trade Organization (WTO) in 2001, levels of investment have remained relatively low. China's foreign investment regulatory regime, combined with policies or practices that favor state-owned enterprises (SOEs), has traditionally limited the sectors open to\u00e2\u0080\u0094and levels of\u00e2\u0080\u0094foreign investment. Amid trade tensions, a U.S. vetting regime with a newly broadened scope for reviewing certain foreign investments for national security implications, and tighter Chinese regulations on capital outflows, Chinese FDI in the United States has slowed since 2016.", "According to the U.S. Bureau of Economic Analysis, net U.S. FDI flows to China in 2018\u00e2\u0080\u0094the most recent year for which data are available\u00e2\u0080\u0094were $7.6 billion (down 22.9% from 2017), while net Chinese FDI flows into the United States were negative (-$754 million, compared to $25.4 billion in 2016), as outflows exceeded inflows (e.g., asset divestitures). Additionally, the stock of U.S. FDI in China was $116.5 billion (up 8.3% from 2017), while that of China in the United States was $60.2 billion (up 3.7%), on an ultimate beneficiary ownership (UBO) basis. China accounts for approximately 2.0% of total U.S. FDI stock abroad."], "subsections": []}, {"section_title": "China's Holdings of U.S. Treasury Securities", "paragraphs": ["As of May 2019, approximately three-fourths (or $1.1 trillion) of China's total U.S. public and private holdings are Treasury securities, which investors generally consider to be \"safe-haven\" assets. Chinese ownership of these securities has decreased in recent years from its peak of $1.3 trillion in 2011. Nevertheless, it remains significantly higher than in 2002, both in dollar terms (up over $1 trillion) and as a percentage of total foreign holdings (from 8.5% to 17.0%). In 2009, China overtook Japan to become the largest foreign holder of Treasury securities."], "subsections": []}]}]}, {"section_title": "Military-to-Military Relations", "paragraphs": ["The United States and China formalized military ties in 1979, the year the two countries established diplomatic relations, although they had cooperated on some security issues previously. The two countries enjoyed high levels of military cooperation until the PRC's 1989 military crackdown in Tiananmen Square, after which the United States suspended military engagement. The Clinton Administration in 1993 resumed military ties, reportedly in an attempt to reassure Chinese military leaders of the United States' benign intentions toward China, but military relations never again achieved the scope and depth of the previous decade. ", "China on several occasions suspended military ties when it perceived the United States to have harmed Chinese interests (for example, in response to U.S. arms sales to Taiwan). In 1999, Congress included a provision in the National Defense Authorization Act for FY2000 ( P.L. 106-65 ) placing restrictions on military relations with China. The act states that the Secretary of Defense may not authorize any military contact with the PLA that would \"create a national security risk due to an inappropriate exposure\" of the PLA to 12 operational areas of the U.S. military. ", "In recent years, U.S.-China military exchanges have included high-level visits, recurrent exchanges between defense officials, and functional and academic exchanges (see Table 4 ). According to U.S. Department of Defense (DOD) reports, the frequency of these engagements has declined in recent years, from 30 in 2016 to 12 planned for 2019. The two militaries also occasionally engage in multilateral fora, such as multinational military exercises, and coordinate or de-conflict activities such as counterpiracy patrols in the Gulf of Aden.", "DOD reporting indicates U.S. objectives for military-to-military relations with China have narrowed in recent years from a broader focus on building trust and fostering cooperation on security issues of mutual interest to a narrower focus on risk reduction. The Trump Administration has been more vocal than past Administrations in expressing its concerns about China's military, and frictions have occasionally flared into public view. Eighteen \"unsafe and/or unprofessional interactions\" between U.S. and PRC military forces in the maritime realm have occurred since 2016, according to a U.S. Pacific Fleet spokesperson. ", "In late May 2018, the United States disinvited China from the 2018 iteration of the biennial U.S.-led multinational Rim of the Pacific (RIMPAC) maritime exercise in response to China's continued militarization of its outposts in the South China Sea. In September 2018, the U.S. Treasury Department sanctioned the PLA's Equipment Development Department and its head for arms purchases from Russia under the Countering America's Adversaries through Sanctions Act (CAATSA) ( P.L. 115-44 ). The PRC's response to that action, and a September 2018 U.S. arms sale to Taiwan, included suspension of the two militaries' year-old Joint Staff Dialogue.", "These tensions notwithstanding, both countries appear committed to military-military engagement. Then-U.S. Secretary of Defense Jim Mattis and Chinese Defense Minister Wei Fenghe met three times in 2018. At a meeting of the two countries' Diplomatic and Security Dialogue in November 2018, they \"recognized that the U.S.-China military-to-military relationship could be a stabilizing factor for the overall bilateral relationship, and committed to a productive mil-mil relationship.\" In May 2019 remarks, Assistant Secretary of Defense for Indo-Pacific Security Affairs Randall Schriver echoed this sentiment, saying, \"We continue to pursue a constructive result-oriented [military-to-military] relationship between our countries.\" "], "subsections": []}, {"section_title": "U.S. Foreign Assistance in China", "paragraphs": ["Since 2001, U.S. assistance efforts in China have aimed to support human rights, democracy, rule of law, and environmental programs and to promote sustainable development and environmental conservation and preserve indigenous culture in Tibetan areas in China. The U.S. government does not provide assistance to PRC government entities or directly to Chinese NGOs. The direct recipients of Department of State and U.S. Agency for International Development (USAID) grants have been predominantly U.S.-based nongovernmental organizations (NGOs) and universities. ", "Between 2001 and 2018, the U.S. government provided approximately $241 million for programs in China administered by the Department of State's Bureau of Democracy, Human Rights, and Labor (DRL); $99 million for Tibetan programs; $72 million for rule of law and environmental efforts in the PRC; $43 million for health programs in China focused upon HIV/AIDS prevention, care, and treatment and countering the spread of pandemic diseases; and $8.0 million for criminal justice reform. DRL programs across China have supported rule of law development, civil society, government transparency, public participation in government, and internet freedom. Since 1993, Peace Corps volunteers have engaged in environmental awareness programs and teaching English as a second language in China. Since 2015, Congress has appropriated funds for Tibetan communities in India and Nepal ($6 million in FY2019). Since 2018, Congress has provided an additional $3 million annually to strengthen institutions and governance in the Tibetan exile communities. (See Table 5 .)", "The Consolidated Appropriations Act, 2019 ( P.L. 116-6 ) appropriated an estimated $25.8 million for programs in China. This total includes ESF funding of $17 million for programs in China (non-Tibetan areas), ESF of $8 million for Tibetan areas in China, and INCLE funding of $800,000 for rule of law programs. Of the ESF appropriation for non-Tibetan areas, DRL administers human rights and democracy programs amounting to $11 million. In addition, P.L. 116-6 provided $17.5 million for Global Internet Freedom efforts, of which China programs are a major recipient. ", "The FY2020 Department of State foreign operations budget justification does not include a funding request for programs in China. Appropriations for such programs are determined largely by congressional foreign operations appropriations legislation."], "subsections": []}]}, {"section_title": "Select Issues in the Bilateral Relationship", "paragraphs": [], "subsections": [{"section_title": "Economic Issues", "paragraphs": [], "subsections": [{"section_title": "Section 301 Investigation and Tariffs", "paragraphs": ["In March 2018, the USTR released the findings of an investigation into PRC policies related to technology transfer, IP, and innovation under Sections 301-308 of the Trade Act of 1974 (19 U.S.C. 2411-2418). The investigation concluded that four IP rights-related PRC policies justified U.S. action: forced technology transfer requirements; cyber-enabled theft of U.S. IP and trade secrets; discriminatory and nonmarket licensing practices; and state-funded strategic acquisition of U.S. assets. Subsequently, the Trump Administration imposed increased 25% tariffs on three tranches of imports from China worth approximately $250 billion (see Table 6 ). China in turn raised tariffs (at rates ranging from 5% to 25%) on approximately $110 billion worth of U.S. products. ", "After negotiations to resolve the standoff broke down in May 2019, the President ordered the USTR to begin the process of levying increased 25% tariffs on nearly all remaining imports from China. Following a 12 th round of talks between U.S. and Chinese trade negotiators in Shanghai at the end of July 2019, the President on August 1, 2019, announced that the United States would impose additional 10% tariffs on these remaining imports beginning September 1, 2019. On August 13, 2019, the Trump Administration announced that some imports from China previously identified as potentially subject to the additional 10% tariffs would be exempted \"based on health, safety, national security and other factors,\" and that for some other imports from China, including cell phones, laptop computers, video game consoles, computer monitors, and some toys and footwear and clothing items, the additional 10% tariffs would be delayed until December 15. ", "China responded to the President's August 1, 2019, announcement by allowing its currency, the renminbi or RMB, to weaken against the U.S. dollar, making Chinese exports more competitive abroad, and in part \"offsetting\" the impact of U.S. tariffs. Chinese companies also suspended new purchases of U.S. agricultural products. On August 23, 2019, China's Ministry of Finance announced plans to impose retaliatory tariffs of 5% to 10% on $75 billion worth of imports from the United States. Tariffs on some products took effect on September 1, 2019; tariffs on the rest are to go into effect on December 15, 2019. The Ministry also announced restoration of 5%-25% tariffs on U.S. autos and auto parts, to go into effect December 15, 2019.", "President Trump responded, in turn, to China's tariff announcements by stating that he would increase the tariff rate for $250 billion worth of imports from China from 25% to 30%, effective October 1, 2019, and that he would increase the proposed tariff rate for the remaining imports from China from 10% to 15%, to go into effect for some products on September 1, 2019, and for other products on December 15, 2019.", "Trade negotiators from the two sides are scheduled to meet for a 13 th round of negotiations in Washington, DC, in September 2019."], "subsections": []}, {"section_title": "Tariffs on Aluminum and Steel", "paragraphs": ["In March 2018, President Trump issued a proclamation imposing a 10% tariff on aluminum and a 25% tariff on steel products from most countries, including China, based on \"national security\" justifications under Section 232 of the Trade Act of 1962 (P.L. 87-794; 19 U.S.C. \u00c2\u00a71862). In response, China raised tariffs by 15% to 25% on $3 billion worth of U.S. imports. China is also pursuing legal action against the United States at the WTO. In turn, the United States filed its own WTO complaints over China's retaliatory tariffs."], "subsections": []}, {"section_title": "Alleged PRC Currency Manipulation", "paragraphs": ["On August 5, the U.S. Treasury Department labeled China a currency manipulator under Section 3004 of the Omnibus Trade and Competitiveness Act of 1988 ( P.L. 100-418 ) and announced that Treasury Secretary Steven Mnuchin would \"engage with the International Monetary Fund [IMF] to eliminate the unfair competitive advantage created by China's latest actions.\" In its annual review of China's economic policies, released on August 9, 2019, however, the IMF stated, \"[e]stimates suggest little FX [foreign exchange] intervention by\" China's central bank, the People's Bank of China. "], "subsections": []}, {"section_title": "Bilateral Trade Deficit", "paragraphs": ["President Trump has raised concerns about U.S. bilateral trade imbalances, particularly with China. Some policymakers view the large U.S. trade deficit as an indicator of an unfair trade relationship resulting from Chinese trade barriers, such as comparatively high tariffs, and currency manipulation. Others view conventional bilateral trade deficit data as misleading, given multinational firms' growing use of global supply chains. Supporters of the latter view note that products may be invented or developed in one country and manufactured or assembled elsewhere\u00e2\u0080\u0094using imported components from multiple foreign sources\u00e2\u0080\u0094and then exported. Conventional U.S. trade data may not fully reflect the value added in each country, and thus are often a relatively poor indicator of who benefits from global trade. Economists generally agree that the overall size of the trade deficit stems largely from U.S. macroeconomic policies and an imbalance between saving and investment in the economy, rather than from foreign trade barriers."], "subsections": []}, {"section_title": "Industrial Policies", "paragraphs": ["The Trump Administration, some Members of Congress, and others charge that the Chinese government employs policies, including subsidies, tax breaks, low-cost loans, trade and investment barriers, discriminatory IP and technology practices, and technology transfer mandates, to support and protect domestic firms, especially state-owned enterprises (SOEs). Chinese government plans, such as \"Made in China 2025,\" appear to signal an expanded role for the government in the economy, which many analysts fear could distort global markets and hurt the global competitiveness of U.S. firms. Separately, some U.S. officials are concerned that participation by Chinese firms in certain global supply chains, such as information and communications technology (ICT) products and services, could pose risks to U.S. national security, primarily because of PRC firms' relationships with the Chinese state."], "subsections": []}, {"section_title": "Intellectual Property Rights (IPR) and Cyber-Theft", "paragraphs": ["As noted in the Section 301 investigation, the Trump Administration considers Chinese IPR violations to be a major source of U.S. economic losses. U.S. firms cite lax IPR enforcement as one of the biggest challenges to doing business in China, and some view the enforcement shortfalls as a deliberate effort by the Chinese government to give domestic firms an advantage over foreign competitors. In 2018, the U.S. National Counterintelligence and Security Center described China as having \"expansive efforts in place to acquire U.S. technology to include sensitive trade secrets and proprietary information.\" It warned that if the threat is not addressed, \"it could erode America's long-term competitive economic advantage.\"", "The U.S. government's first charges against a state actor for cyber-enabled economic espionage were against China. In May 2014, the Obama Administration Justice Department indicted five PRC military officers for hacking into and stealing secrets from U.S. firms in the nuclear power, metals, and solar products industries. All those indicted remain at large. In September 2015, the Obama Administration and China reached a bilateral agreement on cybersecurity during President Xi's state visit to the United States. Under that agreement, Presidents Xi and Obama pledged that neither country's government would conduct or knowingly support cyber-enabled theft of intellectual property for commercial purposes. In February 2018 testimony to Congress, the U.S. intelligence community assessed that PRC cyber activity continued, but at \"volumes significantly lower than before\" the 2015 agreement. In October 2018, however, the cofounder of cybersecurity firm CrowdStrike asserted that after a lull, China was \"back to stealing intellectual property on a massive scale.\" In 2019, the intelligence community's testimony to Congress stated, \"China remains the most active strategic competitor responsible for cyber espionage against the US Government, corporations, and allies.\""], "subsections": []}, {"section_title": "Advanced Technology and Huawei105", "paragraphs": ["The Trump Administration has raised national security concerns over global supply chains of advanced technology products, such as ICT equipment, where China is a major global producer and supplier. In 2017, the President blocked a proposed Chinese acquisition of a U.S. semiconductor firm on national security grounds. On May 15, 2019, citing a \"national emergency,\" President Trump signed Executive Order 13873, authorizing the Secretary of Commerce to ban certain technology transactions involving \"foreign adversaries.\" ", "The Trump Administration has subjected Chinese telecommunications firm Huawei Technologies Co., Ltd. to particular scrutiny. On May 16, 2019, the U.S. Department of Commerce added Huawei and 68 of its non-U.S. affiliates to the Bureau of Industry and Security's (BIS's) Entity List, generally requiring U.S. companies to apply for an export license for the sale or transfer of U.S. technology to those entities, with a \"presumption of denial\" for such applications. The BIS entity list decision cites \"reasonable cause to believe Huawei has been involved in activities contrary to the national security or foreign policy interests of the United States,\" and notes Huawei's indictment in the U.S. District Court for the Eastern District of New York on charges of violating Iran sanctions. On May 20, 20 19, BIS eased the effect of the entity list decision by issuing a three-month temporary general license authorizing some continued transactions with Huawei and its non-U.S. affiliates. On August 19, 2019, BIS added an additional 46 non-U.S. Huawei affiliates to the entity list, while also extending the temporary general license for another three months, to November 18, 2019.", "In apparent response to U.S. actions, China's Ministry of Commerce in June 2019 announced plans for its own \"unreliable entities list,\" to include foreign entities that damage \"the legitimate rights and interests\" of Chinese firms or \"boycott or cut off supplies to Chinese companies for non-commercial reasons.\" ", "Vice President Pence and U.S. Secretary of State Pompeo have repeatedly urged allies not to work with Huawei. In Ottawa, Canada, in May 2019, Pence argued, \"The simple fact is that the legal framework within China gives the Chinese government access to information and data that is collected by Chinese companies like Huawei,\" making Huawei \"incompatible with the security interests of the United States of America or our allies in freedom-loving nations across the world.\" Pompeo warned European allies, partners, and friends in June 2019, \"don't do anything that would endanger our shared security interests or restrict our ability to share sensitive information.\" Of U.S. allies, only Australia has so far barred Huawei completely from its networks. China's Foreign Ministry accuses the United States of seeking to \"strangle [Chinese companies'] lawful and legitimate operations.\"", "The Huawei issue has spilled into U.S.-Canada and Canada-China relations. In 2018, the United States requested that Canada detain top Huawei executive Meng Wanzhou, a daughter of Huawei's founder, and charged her with financial fraud related to alleged violation of Iran sanctions. She faces possible extradition to the United States. China has retaliated against Canada by detaining and later arresting Canadians Michael Kovrig and Michael Spavor on state secrets charges and cutting off imports first of Canadian canola seed, and then of Canadian meat."], "subsections": []}, {"section_title": "China's Status as a \"Developing Country\" in the WTO", "paragraphs": ["The 164-member WTO allows members to designate themselves as either developed or developing economies, with the latter eligible for special and differential treatment (SDT) both in the context of existing WTO obligations and in new negotiations. Developed countries, including the United States and the European Union, have expressed frustration at those rules, under which two-thirds of WTO members, including China, have designated themselves as \"developing.\" ", "On July 26, 2019, President Trump issued a \"Memorandum on Reforming Developing-Country Status in the World Trade Organization.\" The President stated that the WTO dichotomy between developed and developing countries is outdated and \"has allowed some WTO Members to gain unfair advantages in the international trade arena.\" He specifically called out China, stating that \"the United States has never accepted China's claim to developing-country status, and virtually every current economic indicator belies China's claim.\" The President instructed USTR to work to reform the WTO self-declaration practice and, if no substantial progress is made within 90 days, to take certain unilateral actions, such as no longer treating a country as developing if the USTR believes that designation to be improper, and to publish a list of all economies USTR believes to be \"inappropriately\" claiming developing-economy status. ", "Responding to the U.S. memorandum, a PRC Foreign Ministry spokesperson insisted that the principle of SDT \"reflects the core values and basic principles of the WTO\" and \"must be safeguarded no matter how the WTO is reformed.\" At the same time, she stated that in claiming the status, \"China does not intend to shy away from its due international responsibilities.\" The U.S. position, she said, shows the United States to be \"capricious, arrogant and selfish.\""], "subsections": []}, {"section_title": "China's Belt and Road Initiative (BRI)", "paragraphs": ["In 2013, President Xi launched two projects aimed at boosting economic connectivity across continents by land, an effort known as the \"Silk Road Economic Belt,\" and by sea, an effort known as the, \"21 st Century Maritime Silk Road.\" Collectively, China refers to the two projects as the \"Belt and Road Initiative\" (BRI). Under the initiative, PRC institutions are financing transportation and energy infrastructure projects in dozens of countries and PRC government agencies are working to reduce investment and trade barriers and boost people-to-people ties. BRI is also intended to alleviate overcapacity in the Chinese economy, bring new economic activity to China's western provinces, and promote PRC diplomatic and security interests, including securing energy supply routes and perhaps facilitating future Chinese military or intelligence use of Chinese-built ports and other infrastructure around the world. The size and scale of PRC financing, investments, and loans issued under BRI is debated. China does not issue its own authoritative figures.", "PRC financing has the potential to address serious infrastructure shortfalls in recipient countries, but China's initial implementation of BRI has sometimes been rocky. A June 2019 Asia Society Policy Institute report examines BRI projects in Southeast Asia and faults China for a \"laissez-faire approach\" that allows mainly Chinese developers \"to benefit by cutting corners and evading responsibility for legal, social, labor, environmental, and other issues.\" The report identifies such problems as rushed agreements, a failure to conduct feasibility studies and environmental and social impact assessments, and financing terms that create unsustainable debt for host governments. All those issues \"have begun to alienate local communities and taint the BRI brand,\" the report asserts. Some countries have sought to renegotiate the terms of their BRI agreements. ", "The Trump Administration has adopted a sharply critical stance toward BRI. In his October 4, 2018, speech on China policy, Vice President Pence accused China of engaging in \"so-called 'debt diplomacy.'\" The terms of PRC loans, he said, \"are opaque at best, and the benefits flow overwhelmingly to Beijing.\" In Congress, the Better Utilization of Investments Leading to Development (BUILD) Act of 2018 ( P.L. 115-254 ) established a new U.S. International Development Finance Corporation (IDFC) by consolidating existing U.S. government development finance functions. It is widely portrayed as a U.S. response to BRI.", "At the Second Belt and Road Forum in Beijing in April 2019, Xi appeared to respond to criticism from the United States and other countries when he referenced the \"need to ensure the commercial and fiscal sustainability of all projects so that they will achieve the intended goals as planned.\" He declared that in pursuing BRI, \"everything should be done in a transparent way, and we should have zero tolerance for corruption.\" He also vowed to \"adopt widely accepted standards and encourage participating companies to follow general international rules and standards in project development, operation, procurement and tendering and bidding.\" \u00c2\u00a0"], "subsections": []}]}, {"section_title": "Security Issues", "paragraphs": [], "subsections": [{"section_title": "PRC Military Modernization", "paragraphs": ["U.S. policymakers are concerned about the challenges that China's ambitious military modernization program is now posing to U.S. interests in Asia and elsewhere. China's military modernization program has emerged in recent years as a significant influence on U.S. defense strategy, plans, budgets, and programs, and the U.S.-China military competition has become a major factor in overall U.S.-China relations. Since 1978, the PRC has worked to transform the PLA from an infantry-heavy, low-technology, ground forces-centric military into a high-technology, networked force with an increasing emphasis on joint operations, maritime and information domains, offensive air operations, power projection, and cyber and space operations. The PLA is becoming a global military, as demonstrated by a navy increasingly capable of operating far from home. The PLA undertakes counterpiracy patrols in the Gulf of Aden, regular patrols in places like the South China Sea and the Indian Ocean, and task group and goodwill deployments all over the world, and in 2017 established China's first-ever overseas military base in Djibouti. ", "President Xi has set two major deadlines for the PLA: to complete its modernization process by 2035, and to become a \"world class\" military by 2049, the centenary of the establishment of the PRC. According to China's July 2019 defense white paper, China seeks to build \"a fortified national defense and a strong military commensurate with the country's international standing and its security and development interests\" in service of several national defense aims.", "According to DOD, the PLA is seeking to develop \"capabilities with the potential to degrade core U.S. operational and technological advantages.\" As China's military advances, it increasingly is in a position to challenge U.S. dominance in certain domains, including air, space, and cyberspace, where the PLA has directed significant political, organizational, and financial resources in recent years. China also is investing heavily in advanced military technologies such as autonomous and unmanned systems, maneuverable reentry vehicles (including hypersonic missiles), and artificial intelligence and other enabling technologies. ", "Chinese officials insist China's military posture is defensive in nature. In January 2018, a spokesperson for China's Ministry of National Defense stated, \"China resolutely follows the path of peaceful development and upholds a defensive national defense policy.\" The spokesperson added, \"China is not interested in dominance.\" "], "subsections": []}, {"section_title": "North Korea", "paragraphs": ["The United States and China have both committed to the goal of denuclearization of North Korea, but have sometimes disagreed on the best path toward that goal. Between 2006 and 2017, China voted for U.N. Security Council Resolutions imposing ever stricter sanctions on North Korea over its nuclear weapons and missile programs, though it often sought to weaken the resolutions first. With China sharing a 880-mile border and serving as North Korea's primary trading partner, the Trump Administration deems China's sanctions implementation to be \"at times inconsistent, but critical.\" ", "The Treasury Department has designated mainland China-based companies, Hong Kong-based shipping companies, and PRC nationals for alleged violations of U.S. North Korea sanctions. In both 2018 and 2019, the United States led efforts to request that a U.N. sanctions committee declare that North Korea had procured refined petroleum products at levels greater than U.N. sanctions permit, and to halt all new deliveries. Both times, China and Russia are reported to have blocked the effort. North Korea is alleged to have obtained the above-quota petroleum products through illegal ship-to-ship transfers at sea. ", "The announcement of President Trump's June 2018 summit with North Korean leader Kim Jong-un led to a thaw in previously frosty China-North Korea ties. Since March 2018, Kim has visited China four times and President Xi has visited North Korea once, in June 2019. China urges all parties to undertake \"phased and synchronized steps\" in a \"dual-track approach\" to a political settlement of issues on the Korean Peninsula, with one track focused on denuclearization and the other on establishing a peace mechanism."], "subsections": []}, {"section_title": "East China Sea133", "paragraphs": ["In the East China Sea, the PRC is involved in a territorial dispute with Japan over the sovereignty of uninhabited land features known in Japan as the Senkaku Islands and in the PRC as the Diaoyu Dao. The features are also claimed by Taiwan, which refers to them as the Diaoyutai. The United States does not take a position on the sovereignty dispute over the Senkakus, but it does recognize Japanese administration of the features. That recognition, reaffirmed by every U.S. Administration since Nixon, has given the United States a strong interest in the issue because Article 5 of the U.S.-Japan Treaty of Mutual Cooperation and Security covers areas under Japanese administration. The U.S. military regularly conducts freedom of navigation operations (FONOPs) and presence operations, as well as combined exercises with the Japan Self-Defense Force, in and above the East China Sea.", "Since 2012, China has stepped up what it calls \"routine\" patrols to assert jurisdiction in China's \"territorial waters off the Diaoyu Islands.\" In November 2013, China established an air defense identification zone (ADIZ) in the East China Sea covering the Senkakus as well as airspace that overlaps with the existing ADIZs of Japan, South Korea, and Taiwan. "], "subsections": []}, {"section_title": "South China Sea137", "paragraphs": ["China makes extensive, though imprecise, claims in the South China Sea, which is believed to be rich in oil and gas deposits as well as fisheries, and through which a major portion of world's trade passes. On maps, China depicts its claims with a \"nine-dash line\" that, if connected, would enclose an area covering approximately 90% of the sea. China physically controls the Paracel (known in China as the Xisha) Islands in the northern part of the sea, seven of the approximately 200 geographic features in the Spratly (Nansha) Islands chain in the southern part of the sea, and Scarborough Shoal (Huangyan Island) in the eastern part of the sea (see Figure 3 ). Areas claimed by the PRC are also claimed in part by Brunei, Malaysia, the Philippines, and Vietnam, and in entirety by Taiwan, with the fiercest territorial disputes being those between China and Vietnam and China and the Philippines. The South China Sea is bordered by a U.S. treaty ally, the Philippines, and is a key strategic waterway for the U.S. Navy. ", "Since 2013, the PRC has built and fortified artificial islands on seven sites in the Spratly Island chain, and sought to block other countries from pursuing economic or other activity within the exclusive economic zones (EEZs) they are entitled to under the U.N. Convention on the Law of the Sea (UNCLOS). According to DOD, China has placed anti-ship cruise missiles and long-range surface-to-air missiles on the artificial islands and is \"employing paramilitary forces in maritime disputes vis-\u00c3\u00a0-vis other claimants.\" In May 2018, the United States disinvited the PRC from the 2018 edition of the U.S.-hosted RIMPAC maritime exercise over the PRC's continued militarization of the sites. ", "To challenge what the United States considers excessive maritime claims and to assert the U.S. right to fly, sail, and operate wherever international law allows, the U.S. military undertakes both FONOPs and presence operations in the sea. In June 2019, Chinese Minister of National Defense Wei appeared to refer to those operations when he complained that \"some countries outside the region come to the South China Sea to flex muscles, in the name of freedom of navigation.\" He declared that, \"The large-scale force projection and offensive operations in the region are the most serious destabilizing and uncertain factors in the South China Sea.\"", "China and members of the Association of Southeast Asian Nations (ASEAN) are involved in negotiations over a Code of Conduct for the South China Sea. In November 2018, China's Premier, Li Keqiang, set a deadline of 2021 to complete the negotiations. The parties have not made public the latest draft of their negotiating text, but an initial August 2018 draft reportedly included proposed language from China stating that, \"The Parties shall not hold joint military exercises with countries from outside the region, unless the parties concerned are notified beforehand and express no objection.\" Such language would appear to target U.S. military exercises with allies and partners, including such ASEAN members as the Philippines, Thailand, and Vietnam. ", "In 2013, the Philippines sought arbitration under UNCLOS over PRC actions in the South China Sea. An UNCLOS arbitral tribunal ruled in 2016 that China's nine-dash line claim had \"no legal basis.\" The ruling also stated that none of the land features in the Spratlys is entitled to any more than a 12-nautical mile territorial sea; that three of the Spratlys features that China occupies generate no entitlement to maritime zones; and that China violated the Philippines' sovereign rights in various ways. China declined to participate in the arbitration process and declared the ruling \"null and void.\" "], "subsections": []}]}, {"section_title": "Human Rights and Rule of Law146", "paragraphs": ["After consolidating power in 2013, Xi Jinping intensified and expanded the reassertion of party control over society that began during the final years of his predecessor, Hu Jintao, who served as CPC General Secretary from 2002 to 2012. Since 2015, China's government has enacted new national laws that strengthen the role of the state over a wide range of social activities in the name of national security and authorize greater controls over the Internet and ethnic minority groups. Government arrests of human rights advocates and lawyers, which intensified in 2015, were followed by Party efforts to instill ideological conformity in various spheres of society. In 2016, Xi launched a policy known as \"Sinicization,\" by which China's religious populations, particularly Tibetan Buddhists, Muslims, and Christians who worship in churches that are not registered with the government, are required to conform to Han Chinese culture, the socialist system, and Communist Party policies."], "subsections": [{"section_title": "Xinjiang148", "paragraphs": ["In the name of combating terrorism and religious extremism, authorities in China's northwest region of Xinjiang have since 2017 undertaken the mass internment of Turkic Muslims, mainly ethnic Uyghurs (also spelled \"Uighurs\"), in ideological reeducation centers. Scholars, human rights activists, and the U.S. government allege that those detained without formal charges include an estimated 1.5 million Uyghurs out of a population of about 10.5 million, and a smaller number of ethnic Kazakhs. Nearly 400 prominent Uyghur intellectuals reportedly have been detained or their whereabouts are unknown. Many detainees reportedly are forced to express their love of the Communist Party and Xi, sing patriotic songs, and renounce or reject many of their religious beliefs and customs. According to former detainees, treatment and conditions in the camps include beatings, food deprivation, and crowded and unsanitary conditions. ", "PRC officials describe the Xinjiang camps as \"vocational education and training centers\" in which \"trainees\" undertake a curriculum of \"standard spoken and written Chinese, understanding of the law, vocational skills, and deradicalization.\" In July 2019, a Xinjiang official claimed that the majority of those who return from the camps \"find suitable jobs that they really like, and they can earn a satisfactory living.\" Many Uyghurs living abroad say they still have not heard from missing relatives in Xinjiang.", "In July 2019, at the second Ministerial to Advance Religious Freedom hosted by the Department of State, Secretary of State Mike Pompeo said, \"China is home to one of the worst human rights crises of our time; it is truly the stain of the century.\" The Administration was reported to be considering sanctions under the Global Magnitsky Human Rights Accountability Act against officials in Xinjiang, but these actions reportedly were set aside during the U.S.-China bilateral trade negotiations, possibly for fear of disrupting progress. ", "On July 8, 2019, 22 nations at the United Nations Human Rights Council (UNHRC) issued a joint statement to the UNHRC president and U.N. High Commissioner on Human Rights calling on China to \"refrain from the arbitrary detention and restrictions on freedom of movement of Uighurs, and other Muslim and minority communities in Xinjiang\" and to \"allow meaningful access to Xinjiang for independent international observers.\" On July 12, 2019, envoys from 37 countries, including over one dozen Muslim-majority countries, cosigned a counter-letter to the UNHRC in support of China's policies in Xinjiang. As of July 29, 2019, China said the number of countries signing the counter-letter had risen to 50."], "subsections": []}, {"section_title": "Hong Kong161", "paragraphs": ["Hong Kong is a Special Administrative Region (SAR) of the PRC located off China's southern coast with a population of 7.5 million people, including about 85,000 U.S. citizens. Sovereignty of the former British colony reverted to the PRC on July 1, 1997, under the provisions of a 1984 international treaty\u00e2\u0080\u0094known as the \"Joint Declaration\"\u00e2\u0080\u0094negotiated between China and the United Kingdom. Among other things, the Joint Declaration promises Hong Kong a \"high degree of autonomy, except in foreign and defence affairs\" and pledges that Hong Kong's \"current social and economic systems\" will remain unchanged for at least 50 years. As required by the Joint Declaration, on April 4, 1990, China's National People's Congress passed the Basic Law of the Hong Kong Special Administrative Region of the People's Republic of China (Basic Law), which serves as a mini-constitution for the city. The United States-Hong Kong Policy Act of 1992 ( P.L. 102-383 , 22 U.S.C. 5701-5732) affords Hong Kong separate treatment from China in a variety of political, economic, trade, and other areas so long as the HKSAR remains \"sufficiently autonomous.\"", "Since June 2019, hundreds of thousands of Hong Kongers have joined large rallies and marches against proposed legal amendments that would for the first time allow extraditions to Mainland China. Chief Executive Carrie Lam Cheng Yuet-ngor suspended consideration of the amendments in response to the demonstrations in early June, but has also characterized the demonstrations as \"riots,\" and authorized the Hong Kong Police Force to use tear gas, rubber bullets, pepper spray, and truncheons to break up the protests. In response, the demonstrators have expanded their demands to include that Lam fully withdraw the amendments, drop all charges against arrested protesters, renounce her characterization of the demonstrations as \"riots,\" set up an independent commission to investigate alleged police misconduct, and implement the election of the Chief Executive and Legislative Council by universal suffrage, as promised in the Basic Law. ", "China's state media have accused the United States of covertly instigating and directing the unrest in Hong Kong. On August 8, 2019, they circulated a photograph of a political officer at the U.S. Consulate General in Hong Kong meeting with opposition leaders at a hotel, accusing her of being \"the behind-the-scenes black hand creating chaos in Hong Kong.\" Like Chief Executive Lam, President Trump has termed the demonstrations in Hong Kong \"riots.\" The President has indicated that the situation is for China's central government and the HKSAR government to work out, has praised President Xi's handling of the Hong Kong protests, and stated that he does not see the situation in Hong Kong providing leverage in ongoing talks with China. He has also indicated, however, that \"it would be very hard to deal if they [China] do violence. I mean, if it's another Tiananmen Square, it's\u00e2\u0080\u0094I think it's a very hard thing to do if there's violence.\" The cochairs of the Tom Lantos Human Rights Commission and other Members of Congress have called for the Trump Administration to stop U.S. sales of tear gas, pepper spray, and other riot gear to the Hong Kong Police Force.", "Hong Kongers have taken to the streets in large numbers twice before to protest China's alleged failure to fulfill its obligations under the Joint Declaration or to abide by the provisions of the Basic Law. On July 1, 2003, an estimated 500,000 Hong Kong residents rallied against a proposed antisedition bill that they believed would sharply curtail their rights. Large numbers of Hong Kong residents protested again beginning on September 26, 2014, against PRC restrictions on a proposal to elect the Chief Executive by universal suffrage. Those protests became known as the \"Umbrella Movement.\" "], "subsections": []}, {"section_title": "Tibet170", "paragraphs": ["U.S. policy toward Tibet is guided by the Tibetan Policy Act of 2002 ( P.L. 107-228 ), which requires the U.S. government to promote and report on dialogue between Beijing and Tibet's exiled spiritual leader, the Dalai Lama, or his representatives; to help protect Tibet's religious, cultural, and linguistic heritages; and to support development projects in Tibet. The act requires the State Department to maintain a Special Coordinator for Tibetan Issues. (The position has been vacant throughout the Trump Administration.) The act also calls on the Secretary of State to \"make best efforts\" to establish a U.S. consular office in the Tibetan capital, Lhasa; and directs U.S. officials to press for the release of Tibetan political prisoners in meetings with the Chinese government. ", "The U.S. government and human rights groups have been critical of increasingly expansive official Chinese controls on religious life and practice in Tibetan areas of China instituted in the wake of anti-Chinese protests in 2008. Human rights groups have catalogued arbitrary detentions and disappearances; a heightened Chinese security presence within monasteries; continued \"patriotic education\" and \"legal education\" campaigns that require monks to denounce the Dalai Lama; strengthened media controls; and policies that weaken Tibetan-language education. ", "PRC restrictions on access to Tibet for foreigners prompted Congress to pass, and the President to sign, the Reciprocal Access to Tibet Act (RATA) ( P.L. 115-330 ). Enacted in December 2018, RATA requires the Department of State to report to Congress annually regarding the level of access PRC authorities granted U.S. diplomats, journalists, and tourists to Tibetan areas in China. It also states that no individual \"substantially involved in the formulation or execution of policies related to access for foreigners to Tibetan areas\" may be granted a visa or admitted to the United States so long as restrictions on foreigners' access to Tibet remain in place. The Department of State is required to submit annually a list of PRC officials \"substantially involved\" in such policies, and to identify those whose visas were denied or revoked in the previous year.", "Of growing concern to human rights groups and foreign governments is China's insistence on controlling the succession process for the Dalai Lama. Now aged 84, the Dalai Lama is the 14 th in a lineage that began in the 14 th century, with each new Dalai Lama identified in childhood as the reincarnation of his predecessor. As a spokesperson for China's Foreign Ministry restated in March 2019, the PRC's position is that, \"reincarnation of living Buddhas including the Dalai Lama must comply with Chinese laws and regulations and follow religious rituals and historical conventions.\" In July 2019, a Chinese official told visiting Indian journalists that the Dalai Lama's reincarnation would be required to be found in China and approved by the central government in Beijing, adding, \"The Dalai Lama's reincarnation is not decided by his personal wish or by some group of people living in other countries.\" In 2011, however, the Dalai Lama asserted that, \"the person who reincarnates has sole legitimate authority over where and how he or she takes rebirth and how that reincarnation is to be recognized.\" ", "China lobbies strenuously to prevent world leaders from meeting with the Dalai Lama, the 1989 Nobel Peace Prize winner and 2006 recipient of the Congressional Gold Medal. U.S. Presidents since George H. W. Bush have met with the Dalai Lama. President Trump has not so far done so. "], "subsections": []}, {"section_title": "Use of Surveillance Technology", "paragraphs": ["PRC methods of social and political control are evolving to include the widespread use of sophisticated surveillance and big data technologies. Chinese authorities and companies have developed and deployed tens of millions of surveillance cameras, as well as facial, voice, iris, and gait recognition equipment, to reduce crime. The government uses the same equipment to target and track the movements and internet-use of ethnic Tibetans and Uyghurs and critics of the regime. In addition, the government is developing a \"social credit system,\" involving aggregating data on companies and individuals across geographic regions and industries, and \"creating measures to incentivize 'trustworthy' conduct, and punish 'untrustworthy' conduct.\" ", "Increasingly, Chinese companies are exporting data and surveillance technologies around the world. In April 2019, the Australian Strategic Policy Institute (ASPI), an Australian-based nonpartisan think tank, launched a public database, funded by the U.S. Department of State, mapping the overseas activities of a dozen leading Chinese technology companies. Among other projects, it shows Chinese firms involved in installing 5G networks in 34 countries and deploying so-called \"safe cities\" surveillance technologies in 46 countries. In an October 2018 report partly funded by the U.S. Department of State, independent research and advocacy organization Freedom House identified 38 countries in which Chinese companies had installed internet and mobile networking equipment, 18 countries that had deployed intelligent monitoring systems and facial recognition developed by Chinese companies, and 36 countries in which media elites and government officials had traveled to China for trainings on new media or information management. The same report, Freedom on the Net 2018 , ranked China last in internet and digital media freedom of 65 countries tracked, just ahead of Iran, Syria, and Ethiopia, the fourth year China held that position in Freedom House's rankings."], "subsections": []}]}, {"section_title": "Taiwan178", "paragraphs": ["When the Carter Administration established diplomatic relations with the PRC on January 1, 1979, it terminated formal diplomatic ties with self-ruled Taiwan, over which the PRC claims sovereignty. In joint communiques with China signed in 1978 and 1982, the United States stated that it \"acknowledges the Chinese position that there is but one China and Taiwan is part of China,\" but did not state its own position on Taiwan's status. Under the U.S. \"one-China\" policy, the United States maintains only unofficial relations with Taiwan, while upholding the 1979 Taiwan Relations Act ( P.L. 96-8 ), which provides a legal basis for the unofficial relationship and includes commitments related to Taiwan's security. ", "The PRC frequently reminds the United States that, for Beijing, \"The Taiwan question is the most important and sensitive one in China-US relations.\" Beijing is particularly wary of U.S. moves that the PRC sees as introducing \"officiality\" into the U.S.-Taiwan relationship, and regularly protests U.S. legislation supporting Taiwan, U.S. arms sales to Taiwan, and U.S. Navy transits of the Taiwan Strait. (The U.S. Navy conducted seven such transits between January and August 2019.) The United States objects to PRC efforts to isolate Taiwan internationally and to the PRC's real and implied threats of force against Taiwan, including bomber, fighter, and surveillance aircraft patrols around and near the island. ", "After initially questioning the U.S. \"one-China\" policy after his November 2016 election victory, President Trump used a February 9, 2017, telephone call with President Xi to recommit the United States to it. The Trump Administration's NSS states that the United States \"will maintain our strong ties with Taiwan in accordance with our 'One China' policy, including our commitments under the Taiwan Relations Act to provide for Taiwan's legitimate defense needs and deter coercion.\"", "Trump Administration language on Taiwan has evolved since 2017. DOD's June 2019 Indo-Pacific Strategy Report discusses Taiwan without referencing the U.S. \"one-China\" policy. In a first for a high-profile U.S. government report in the era of unofficial relations, it also refers to Taiwan as a \"country.\" The strategy presents Taiwan, along with Singapore, New Zealand, and Mongolia, as Indo-Pacific democracies that are \"reliable, capable, and natural partners of the United States.\" The document asserts that, \"The United States has a vital interest in upholding the rules-based international order, which includes a strong, prosperous, and democratic Taiwan.\" ", "In 2018, the 115 th Congress passed and President Trump signed the Taiwan Travel Act ( P.L. 115-135 ), stating that it should be U.S. policy to allow U.S. officials at all levels, \"including Cabinet-level national security officials, general officers, and other executive branch officials,\" to travel to Taiwan for meetings with counterparts, and to allow high-level Taiwan officials to enter the United States under respectful conditions to meet with U.S. officials, \"including officials from the Department of State and the Department of Defense and other Cabinet agencies.\" In May 2019, the United States hosted a meeting between the U.S. and Taiwan National Security Advisors, the first such meeting publicly disclosed since the United States broke diplomatic relations with Taiwan in 1979. In July 2019, the Trump Administration allowed Taiwan President Tsai Ing-wen to make high-profile \"transit\" visits through New York City and Denver, CO, on her way to and from visiting diplomatic allies in the Caribbean. Each visit spanned three days. The New York City transit included a brief closed-door speech at Columbia University, a walk in Central Park, and an event at Taiwan's representative office for the U.N. representatives of Taiwan's diplomatic partners. Since 1995, U.S. policy has allowed Taiwan presidents to visit the United States only on transit visits through the United States on their way to other locations. ", "The Trump Administration has notified Congress of 11 Taiwan FMS cases on five separate dates. The combined value of the 11 FMS cases is about $11.76 billion. (See Table 7 .) On July 12, 2019, in apparent response to Tsai's visit to New York City and the Administration's July 8, 2019, arms sale notification, China's Ambassador to the United States, Cui Tiankai, wrote on Twitter, \"Taiwan is part of China. No attempts to split China will ever succeed. Those who play with fire will only get themselves burned. Period.\" In response to the Administration's August 20, 2019, notification of the proposed sale of F-16C/D Block 70 fighter planes to Taiwan, Chinese Foreign Ministry spokesperson Geng Shuang said China might sanction U.S. companies, stating, \"China will take every necessary measure to safeguard its interests, including sanctioning American companies involved in the arms sale this time.\""], "subsections": []}, {"section_title": "Select Other Issues", "paragraphs": [], "subsections": [{"section_title": "Climate Change", "paragraphs": ["Both China and the United States are parties to the 1992 United Nations Framework Convention on Climate Change (UNFCCC), the objective of which is to stabilize human-induced climate change. The two countries are widely viewed as having pivotal roles to play in efforts to achieve that goal as they are, respectively, the first- and second-ranking contributors to global greenhouse gas (GHG) emissions.", "While China emits more than twice as much carbon dioxide (CO 2 , the major human-related GHG) as the United States, comparing the nations' levels of effort to address their GHG emissions can be complicated. For example, while China emits more CO 2 to produce a unit of GDP (its \"energy intensity\"), China has reduced and continues to reduce its energy intensity more rapidly due to structural changes and policies. The United States is one of the highest global emitters of GHG per person, at twice China's rates, due in large part to higher incomes and rates of consumption. Some U.S. consumption results in GHG emissions from manufacturing in China. China's emissions per person have been rising with incomes and consumption; its total emissions may continue to rise with incomes and the size of its economy. Under current policies, U.S. emissions may remain largely flat through the 2020s and could grow from the 2030s.", "China has pledged that its emissions will peak before 2030. Under current projections and pledges, it is unclear whether China's GHG emissions will grow, remain stable, or decline toward the \"net zero\" emissions that would be required to stabilize human-induced climate change. China has set ambitious targets for expanding its supply of energy from non-GHG-emitting sources, improving energy efficiency, and reducing air pollution coemitted with GHG. In this decade, China's efforts have demonstrated measurable effects in reducing the penetration of coal use, energy intensity, and air pollution. Policies in place would not likely reduce GHG emissions toward near-zero, however. ", "The United States and China have cooperated on environmental and energy projects for several decades. Although U.S. policy attention to the two countries' Clean Energy Cooperation program has declined, joint research continues on Carbon Capture and Storage (CCS) technologies, energy efficiency, vehicles, water-energy, and nuclear energy. China is developing a national GHG cap and emissions trading system, building on programs in seven regions of the country, but has delayed its target start date several times\u00e2\u0080\u0094currently to 2020.", "The future of U.S.-China relations with regard to climate change is unclear. China appears to have maintained or increased its leadership under the UNFCCC's 2015 Paris Agreement, a framework for cooperatively addressing climate change through coming decades. The U.S. government has indicated its intention to withdraw from the agreement when it becomes eligible to do so in November 2020. Neither government has produced long-term national-level policies and plans to address its country's GHG emissions or to adapt to expected climate changes. Given the size of their economies and their investments in advancing key technologies, the United States' and China's roles in assisting less-developed countries to address climate change could be important for minimizing long-term global costs."], "subsections": []}, {"section_title": "Consular Issues", "paragraphs": ["An ongoing source of friction in the U.S.-China relationship is the PRC's alleged violations of the Vienna Consular Convention and the 1980 U.S.-China Bilateral Consular Convention in its handling of U.S. citizens. One such apparent violation is China's use of exit bans \"to prevent U.S. citizens who are not themselves suspected of a crime from leaving China as a means to pressure their relatives or associates who are wanted by Chinese law enforcement in the United States,\" according to the U.S. mission in China. The mission states that PRC authorities \"also arbitrarily detain and interrogate U.S. citizens for reasons related to 'state security'\" and subject U.S. citizens \"to overly lengthy pre-trial detention in substandard conditions while investigations are ongoing.\"", "Separately, the United States government is seeking China's cooperation in issuing travel documents to PRC nationals whom the United States seeks to repatriate to China. The U.S. mission in China states that as of July 10, 2018, the U.S. government was awaiting travel documents for approximately 2,200 PRC nationals with criminal convictions who were not in Immigration and Customs Enforcement (ICE) custody, and another 139 PRC nationals who were in ICE custody with removal orders. According to the U.S. mission in China, \"The Chinese government consistently refuses to issue travel documents to an overwhelming majority of these individuals.\""], "subsections": []}, {"section_title": "Fentanyl196", "paragraphs": ["According to provisional data from the U.S. Centers for Disease Control and Prevention, synthetic opioids, primarily fentanyl, accounted for more than 31,000 U.S. drug overdose deaths in 2018. The Drug Enforcement Administration (DEA) states, \"Clandestinely produced fentanyl is trafficked into the United States primarily from China and Mexico, and is responsible for the ongoing fentanyl epidemic.\" ", "Responding to pressure from the Trump Administration, China on May 1, 2019, added all fentanyl-related substances to a controlled substances list, the \"Supplementary List of Controlled Narcotic Drugs and Psychotropic Substances with Non-Medical Use.\" Li Yuejin, Deputy Director of China's National Narcotics Control Commission, presented the move as \"an important manifestation of China's participation in the global control of illicit drugs and the maintenance of international security and stability.\" He also said it was \"based on the painful lesson from the United States.\"", "In April 2019, the DEA welcomed the announcement of China's plan to control all fentanyl substances, saying, \"This significant development will eliminate Chinese drug traffickers' ability to alter fentanyl compounds to get around the law.\" On August 1, 2019, however, President Trump criticized China's record, saying of President Xi, \"He said he was going to stop fentanyl from coming into our country\u00e2\u0080\u0094it's all coming out of China; he didn't do that. We're losing thousands of people to fentanyl.\" A spokesperson for China's Foreign Ministry responded, \"The root cause of the fentanyl issue in the United States does not lie with China. To solve the problem, the United States should look harder for the cause at home.\" The spokesperson's comments appeared to refer to China's position that the U.S. opioid epidemic is being driven by U.S. demand, rather than by Chinese supply."], "subsections": []}]}]}, {"section_title": "Legislation Related to China Introduced in the 116th Congress", "paragraphs": ["In the 116 th Congress, more than 150 bills and resolutions have been introduced with provisions related to China. For details, see Table 8 below."], "subsections": [{"section_title": "China in the National Defense Authorization Act for FY2020", "paragraphs": ["A major vehicle for legislation related to China is the annual National Defense Authorization Act. As of early August 2019, the National Defense Authorization Act for FY2020 is engrossed in the House of Representatives and the Senate ( H.R. 2500 and S. 1790 ). Table 9 , Table 10 , Table 11 , and Table 12 identify provisions in the two bills that explicitly reference China, as well as several provisions potentially related or relevant to China."], "subsections": []}]}]}}
{"id": "R45757", "title": "Navy Large Unmanned Surface and Undersea Vehicles: Background and Issues for Congress", "released_date": "2020-03-30T00:00:00", "summary": ["The Navy in FY2021 and beyond wants to develop and procure three types of large unmanned vehicles (UVs). These large UVs are called Large Unmanned Surface Vehicles (LUSVs), Medium Unmanned Surface Vehicles (MUSVs), and Extra-Large Unmanned Undersea Vehicles (XLUUVs). The Navy is requesting $579.9 million in FY2021 research and development funding for these large UVs and their enabling technologies.", "The Navy wants to acquire these large UVs as part of an effort to shift the Navy to a more distributed fleet architecture. Compared to the current fleet architecture, this more distributed architecture is to include proportionately fewer large surface combatants (i.e., cruisers and destroyers), proportionately more small surface combatants (i.e., frigates and Littoral Combat Ships), and the addition of significant numbers of large UVs.", "The Navy wants to employ accelerated acquisition strategies for procuring these large UVs, so as to get them into service more quickly. The Navy's desire to employ these accelerated acquisition strategies can be viewed as an expression of the urgency that the Navy attaches to fielding large UVs for meeting future military challenges from countries such as China.", "The Navy envisions LUSVs as being 200 feet to 300 feet in length and having full load displacements of 1,000 tons to 2,000 tons. The Navy wants LUSVs to be low-cost, high-endurance, reconfigurable ships based on commercial ship designs, with ample capacity for carrying various modular payloads\u00e2\u0080\u0094particularly anti-surface warfare (ASuW) and strike payloads, meaning principally anti-ship and land-attack missiles. Although referred to as UVs, LUSVs might be more accurately described as optionally or lightly manned ships, because they might sometimes have a few onboard crew members, particularly in the nearer term as the Navy works out LUSV enabling technologies and operational concepts. In marking up the Navy's proposed FY2020 budget, some of the congressional defense committees expressed concerns over whether the Navy's accelerated acquisition strategies provided enough time to adequately develop concepts of operations and key technologies for these large UVs, particularly the LUSV. In response, the Navy's FY2021 budget submission proposes to modify the acquisition strategy for the LUSV program so as to provide more time for developing operational concepts and key technologies before entering into serial production of deployable units. Under the Navy's proposed modified LUSV acquisition strategy, the Navy is proposing to use research and development funding to acquire two additional prototypes in FY2021 and one more additional prototype in FY2022 before shifting in FY2023 to the use of procurement funding for the procurement of deployable LUSVs at annual procurement rates in FY2023-FY2025 of 2-2-3.", "The Navy defines MUSVs as being 45 feet to 190 feet long, with displacements of roughly 500 tons. The Navy wants MUSVs, like LUSVs, to be low-cost, high-endurance, reconfigurable ships that can accommodate various payloads. Initial payloads for MUSVs are to be intelligence, surveillance and reconnaissance (ISR) payloads and electronic warfare (EW) systems. The Navy is pursuing the MUSV program as a rapid prototyping effort under what is known as Section 804 acquisition authority. The first MUSV prototype was funded in FY2019 and the Navy wants fund the second prototype in FY2023.", "The first five XLUUVs were funded in FY2019; they are being built by Boeing. The Navy wants procure additional XLUUVs at a rate of two per year starting in FY2023. The Navy's FY2021 budget submission does not include funding for the procurement of additional XLUUVs in FY2021 or FY2022.", "The Navy's large UV programs pose a number of oversight issues for Congress, including issues relating to the analytical basis for the more distributed fleet architecture; the Navy's accelerated acquisition strategies for these programs; technical, schedule, and cost risk in the programs; the proposed annual procurement rates for the programs; the industrial base implications of the programs; potential implications for miscalculation or escalation at sea; the personnel implications of the programs; and whether the Navy has accurately priced the work it is proposing to do in FY2021 on the programs."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["This report provides background information and potential issues for Congress for three types of large unmanned vehicles (UVs) that the Navy wants to develop and procure in FY2021 and beyond:", "Large Unmanned Surface Vehicles (LUSVs); Medium Unmanned Surface Vehicles (MUSVs); and Extra-large Unmanned Undersea Vehicles (XLUUVs).", "The Navy wants to acquire these large UVs as part of an effort to shift the Navy to a new fleet architecture (i.e., a new combination of ships and other platforms) that is more widely distributed than the Navy's current fleet architecture. The Navy is requesting $579.9 million in FY2021 research and development funding for these large UVs and their enabling technologies.", "The issue for Congress is whether to approve, reject, or modify the Navy's acquisition strategies and FY2021 funding requests for these large UVs. The Navy's proposals for developing and procuring them pose a number of oversight issues for Congress. Congress's decisions on these issues could substantially affect Navy capabilities and funding requirements and the shipbuilding and UV industrial bases.", "In addition to the large UVs covered in this report, the Navy also wants to develop and procure smaller USVs and UUVs, as well as unmanned aerial vehicles (UAVs) of various sizes. Other U.S. military services are developing, procuring, and operating their own types of UVs. Separate CRS reports address some of these efforts."], "subsections": []}, {"section_title": "Background", "paragraphs": [], "subsections": [{"section_title": "Navy USVs and UUVs in General", "paragraphs": [], "subsections": [{"section_title": "UVs in the Navy", "paragraphs": ["UVs are one of several new capabilities\u00e2\u0080\u0094along with directed-energy weapons, hypersonic weapons, artificial intelligence, and cyber capabilities\u00e2\u0080\u0094that the Navy says it is pursuing to meet emerging military challenges, particularly from China. UVs can be equipped with sensors, weapons, or other payloads, and can be operated remotely, semi-autonomously, or (with technological advancements) autonomously. They can be individually less expensive to procure than manned ships and aircraft because their designs do not need to incorporate spaces and support equipment for onboard human operators. UVs can be particularly suitable for long-duration missions that might tax the physical endurance of onboard human operators, or missions that pose a high risk of injury, death, or capture of onboard human operators. Consequently UVs are sometimes said to be particularly suitable for so-called \"three D\" missions, meaning missions that are \"dull, dirty, or dangerous.\"", "The Navy has been developing and experimenting with various types of UVs for many years, and has transitioned some of these efforts (particularly those for UAVs) into procurement programs. The Department of the Navy states, for example, that its inventory of 4,094 aircraft at the end of FY2019 included 99 UAVs, that its projected inventory of 3,912 aircraft at the end of FY2020 will include 45 UVs, and that its projected inventory of 4,075 aircraft at the end of FY2021 will include 57 UVs. Even so, some observers have occasionally expressed dissatisfaction with what they view as the Navy's slow pace in transitioning UV development efforts into programs for procuring UVs in quantity and integrating them into the operational fleet."], "subsections": []}, {"section_title": "Navy USV and UUV Categories", "paragraphs": ["As shown in Figure 1 and Figure 2 , the Navy organizes its USV acquisition programs into four size-based categories that the Navy calls large, medium, small, and very small, and its UUV acquisition programs similarly into four size-based categories that the Navy calls extra-large, large, medium, and small. The large UVs discussed in this CRS report fall into the top two USV categories in Figure 1 and the top UUV category in Figure 2 .", "The smaller UVs shown in the other categories of Figure 1 and Figure 2 , which are not covered in this report, can be deployed from manned Navy ships and submarines to extend the operational reach of those ships and submarines. The large UVs covered in this CRS report, in contrast, are more likely to be deployed directly from pier to perform missions that might otherwise be assigned to manned ships and submarines."], "subsections": []}, {"section_title": "Large UVs and Navy Ship Count", "paragraphs": ["Because the large UVs covered in this report can be deployed directly from pier to perform missions that might otherwise be assigned to manned ships and submarines, some observers have a raised a question as to whether the large UVs covered in this report should be included in the top-level count of the number of ships in the Navy. Navy officials state that they have not yet decided whether to modify the top-level count of the number of ships in the Navy to include these large UVs."], "subsections": []}, {"section_title": "Part of More Distributed Navy Fleet Architecture", "paragraphs": ["The Navy wants to acquire the large UVs covered in this report as part of an effort to shift the Navy to a new fleet architecture that is more widely distributed than the Navy's current architecture. Compared to the current fleet architecture, this more distributed architecture is to include proportionately fewer large surface combatants (or LSCs, meaning cruisers and destroyers), proportionately more small surface combatants (or SSCs, meaning frigates and Littoral Combat Ships), and the addition of significant numbers of large UVs.", " Figure 3 provides, for the surface combatant portion of the Navy, a conceptual comparison of the current fleet architecture (shown on the left as the \"ship centric force\") and the new, more distributed architecture (shown on the right as the \"distributed/nodal force\"). The figure does not depict the entire surface combatant fleet, but rather a representative portion of it.", "In the figure, each sphere represents a manned ship or USV. (Since the illustration focuses on the surface combatant force, it does not include UUVs.) As shown in the color coding, under both the current fleet architecture and the more distributed architecture, the manned ships (i.e., the LSCs and SSCs) are equipped with a combination of sensors (green), command and control (C2) equipment (red), and payloads other than sensors and C2 equipment, meaning principally weapons (blue).", "Under the more distributed architecture, the manned ships would be on average smaller (because a greater share of them would be SSCs), and this would be possible because some of the surface combatant force's weapons and sensors would be shifted from the manned ships to USVs, with weapon-equipped LUSVs acting as adjunct weapon magazines and sensor-equipped MUSVs contributing to the fleet's sensor network.", "As shown in Figure 3 , under the Navy's current surface combatant force architecture, there are to be 20 LSCs for every 10 SSCs (i.e., a 2:1 ratio of LSCs to SSCs), with no significant contribution from LUSVs and MUSVs. This is consistent with the Navy's current force-level objective, which calls for achieving a 355-ship fleet that includes 104 LSCs and 52 SSCs (a 2:1 ratio). Under the more distributed architecture, the ratio of LSCs to SSCs would be reversed, with 10 LSCs for every 20 SSCs (a 1:2 ratio), and there would also now be 30 LUSVs and 40 MUSVs. A January 15, 2019, press report states", "The Navy plans to spend this year taking the first few steps into a markedly different future, which, if it comes to pass, will upend how the fleet has fought since the Cold War. And it all starts with something that might seem counterintuitive: It's looking to get smaller.", "\"Today, I have a requirement for 104 large surface combatants in the force structure assessment; [and] I have [a requirement for] 52 small surface combatants,\" said Surface Warfare Director Rear Adm. Ronald Boxall. \"That's a little upside down. Should I push out here and have more small platforms? I think the future fleet architecture study has intimated 'yes,' and our war gaming shows there is value in that.\"", "Another way of summarizing Figure 3 would be to say that the surface combatant force architecture (reading vertically down the figure) would change from 20+10+0+0 (i.e., a total of 30 surface combatant platforms, all manned, and a platform ratio of 2-1-0-0) for a given portion of the surface combatant force, to 10+20+30+40 (i.e., a total of 100 surface combatant platforms, 70 of which would be LUSVs and MUSVs, and a platform ration of 1-2-3-4) for a given portion of the surface combatant force. The Navy refers to the more distributed architecture's combination of LSCs, SSCs, LUSVs, and MUSVs as the Future Surface Combatant Force (FSCF).", " Figure 3 is conceptual, so the platform ratios for the more distributed architecture should be understood as notional or approximate rather than exact. The point of the figure is not that relative platform numbers under the more distributed architecture would change to the exact ratios shown in the figure, but that they would evolve over time toward something broadly resembling those ratios.", "Some observers have long urged the Navy to shift to a more distributed fleet architecture, on the grounds that the Navy's current architecture\u00e2\u0080\u0094which concentrates much of the fleet's capability into a relatively limited number of individually larger and more expensive surface ships\u00e2\u0080\u0094is increasingly vulnerable to attack by the improving maritime anti-access/area-denial (A2/AD) capabilities (particularly anti-ship missiles and their supporting detection and targeting systems) of potential adversaries, particularly China. Shifting to a more distributed architecture, these observers have argued, would", "complicate an adversary's targeting challenge by presenting the adversary with a larger number of Navy units to detect, identify, and track; reduce the loss in aggregate Navy capability that would result from the destruction of an individual Navy platform; give U.S. leaders the option of deploying USVs and UUVs in wartime to sea locations that would be tactically advantageous but too risky for manned ships; and increase the modularity and reconfigurability of the fleet for adapting to changing mission needs.", "For a number of years, Navy leaders acknowledged the views of those observers but continued to support the current fleet architecture. More recently, however, Navy have shifted their thinking, with comments from Navy officials like the one quoted above and Navy briefing slides like Figure 3 indicating that Navy leaders now support moving the fleet to a more distributed architecture. The views of Navy leaders appear to have shifted in favor of a more distributed architecture because they now appear to believe that such an architecture will be", "increasingly needed\u00e2\u0080\u0094as the observers have long argued\u00e2\u0080\u0094to respond effectively to the improving maritime A2/AD capabilities of other countries, particularly China; technically feasible as a result of advances in technologies for UVs and for networking widely distributed maritime forces that include significant numbers of UVs; and no more expensive, and possibly less expensive, than the current architecture.", "The more distributed architecture that Navy leaders now appear to support may differ in its details from distributed architectures that the observers have been advocating, but the general idea of shifting to a more distributed architecture, and of using large UVs as a principal means of achieving that, appears to be similar. The Navy's FY2020 30-year shipbuilding plan mentions a new overarching operational concept for the Navy (i.e., a new general concept for how to employ Navy forces) called Distributed Maritime Operations (DMO). A December 2018 document from the Chief of Naval Operations states that the Navy will \"continue to mature the Distributed Maritime Operations (DMO) concept and key supporting concepts\" and \"design and implement a comprehensive operational architecture to support DMO.\" While Navy officials have provided few details in public about DMO, the Navy does state in its FY2021 budget submission that \"MUSV and LUSV are key enablers of the Navy's Distributed Maritime Operations (DMO) concept, which includes being able to forward deploy and team with individual manned combatants or augment battle groups. Fielding of MUSV and LUSV will provide the Navy increased capability and necessary capacity at lower procurement and sustainment costs, reduced risk to sailors and increased readiness by offloading missions from manned combatants.\" "], "subsections": []}, {"section_title": "Accelerated Acquisition Strategies and Enabling Technologies", "paragraphs": ["The Navy wants to employ accelerated acquisition strategies for procuring large UVs, so as to get them into service more quickly. The Navy's desire to employ these accelerated acquisition strategies can be viewed as an expression of the urgency that the Navy attaches to fielding large UVs for meeting future military challenges from countries such as China.", "The LUSV and MUSV programs are building on USV development work done by the Strategic Capabilities Office (SCO) within the Office of the Secretary of Defense (OSD). SCO's effort to develop USVs is called Ghost Fleet, and its LUSV development effort within Ghost Fleet is called Overlord.", "As shown in Figure 4 , the Navy has identified five key enabling groups of technologies for its USV and UUV programs. Given limitations on underwater communications (most radio-frequency electromagnetic waves do not travel far underwater), technologies for autonomous operations (such as artificial intelligence) will be particularly important for the XLUUV program (and other UUV programs).", "In May 2019, the Navy established a surface development squadron to help develop operational concepts for LUSVs and MUSVs. The squadron will initially consist of a Zumwalt (DDG-1000) class destroyer and one Sea Hunter prototype medium displacement USV ( Figure 5 ). A second Sea Hunter prototype will reportedly be added around the end of FY2020, and LUSVs and MUSVs will then be added as they become available."], "subsections": []}]}, {"section_title": "LUSV, MUSV, and LXUUV Programs in Brief", "paragraphs": [], "subsections": [{"section_title": "LUSV Program", "paragraphs": ["The Navy envisions LUSVs as being 200 feet to 300 feet in length and having full load displacements of 1,000 tons to 2,000 tons, which would make them the size of a corvette. Figure 6 shows a detail from a Navy briefing slide showing images of prototype LUSVs and silhouettes of a notional LUSV and a notional MUSV. In unclassified presentations on the program, the Navy has used images of offshore support ships used by the oil and gas industry to illustrate the kinds of ships that might be used as the basis for LUSVs. ", "The Navy wants LUSVs to be low-cost, high-endurance, reconfigurable ships based on commercial ship designs, with ample capacity for carrying various modular payloads\u00e2\u0080\u0094particularly anti-surface warfare (ASuW) and strike payloads, meaning principally anti-ship and land-attack missiles.", "The Navy wants LUSVs to be capable of operating with human operators in the loop, or semi-autonomously (with human operators on the loop), or fully autonomously, and to be capable of operating either independently or in conjunction with manned surface combatants. Although referred to as UVs, LUSVs might be more accurately described as optionally or lightly manned ships, because they might sometimes have a few onboard crew members, particularly in the nearer term as the Navy works out LUSV enabling technologies and operational concepts. LUSVs are to feature both built-in capabilities and an ability to accept modular payloads, and are to use existing Navy sensors and weapon launchers.", "In marking up the Navy's proposed FY2020 budget, some of the congressional defense committees expressed concerns over whether the Navy's accelerated acquisition strategies provided enough time to adequately develop concepts of operations and key technologies for large UVs, particularly the LUSV. In its report ( S.Rept. 116-48 of June 11, 2019) on the FY2020 National Defense Authorization Act ( S. 1790 ), the Senate Armed Services Committee stated:", "The committee is concerned that the budget request's concurrent approach to LUSV design, technology development, and integration as well as a limited understanding of the LUSV concept of employment, requirements, and reliability for envisioned missions pose excessive acquisition risk for additional LUSV procurement in fiscal year 2020. The committee is also concerned by the unclear policy implications of LUSVs, including ill-defined international unmanned surface vessel standards and the legal status of armed or potentially armed LUSVs.", "Additionally, the committee notes that the Navy's \"Report to Congress on the Annual Long-Range Plan for Construction of Naval Vessels for Fiscal Year 2020\" acknowledges similar issues: \"Unmanned and optionally-manned systems are not accounted for in the overall battle force[.] ... The physical challenges of extended operations at sea across the spectrum of competition and conflict, the concepts of operations for these platforms, and the policy challenges associated with employing deadly force from autonomous vehicles must be well understood prior to replacing accountable battle force ships.\"", "The committee believes that further procurement of LUSVs should occur only after the lessons learned from the current SCO initiative have been incorporated into the next solicitation to enable incremental risk reduction.", "In addition, the committee believes that the LUSV program, which appears likely to exceed the Major Defense Acquisition Program cost threshold, would benefit from a more rigorous requirements definition process, analysis of alternatives, and deliberate acquisition strategy.", "S.Rept. 116-48 also stated:", "While recognizing the need for prototypes to reduce acquisition risk, the committee is concerned that the acquisition strategies for the Large USV, Medium USV, Orca UUV, and Snakehead UUV could lead to procurement of an excessive number of systems before the Navy is able to determine if the USVs and UUVs meet operational needs.", "Therefore, the committee directs the Secretary of the Navy to submit a report to the congressional defense committees, not later than November 1, 2019, that provides acquisition roadmaps for the Large USV, Medium USV, Orca UUV, and Snakehead UUV.", "In its report ( S.Rept. 116-103 of September 12, 2019) on the FY2020 DOD Appropriations Act ( S. 2474 ), the Senate Appropriations Committee stated that", "the Committee is concerned that for several unmanned programs the Navy is pursuing acquisition strategies that would limit future competitive opportunities by awarding system-level prototypes early in the acquisition process and failing to articulate capability, requirements or technology roadmaps to encourage industrial innovation. The Assistant Secretary of the Navy (Research, Development and Acquisition) is directed to submit to the congressional defense committees with the fiscal year 2021 President's budget request such acquisition roadmaps for each unmanned acquisition program that include no less than mission requirements, program requirements for each increment, key technologies, acquisition strategies, test strategies, sub-system and system-level prototyping plans, and cost estimates.", "S.Rept. 116-103 also stated", "The Committee fully supports additional investments in unmanned and autonomous technologies, systems and sub-systems, including surface and sub-surface vessels. However, the Committee is concerned with the proposed acquisition and funding strategies for the MUSV and LUSV in this budget request, to include the Future Years Defense Program. Therefore, the Committee recommends several adjustments, as detailed elsewhere in this report, and directs the Assistant Secretary of the Navy (Research, Development and Acquisition) to review the acquisition strategies for these programs to address congressional concerns, as appropriately balanced with warfighter needs. (Page 194)", "The explanatory statement for the final version of the FY2020 DOD Appropriations Act (Division A of H.R. 1158 / P.L. 116-93 of December 20, 2020) stated:", "The Secretary of the Navy is directed to comply with the full funding policy for LUSVs in future budget submissions. Further, the agreement recommends $50,000,000 for the design of future LUSVs without a vertical launch system [VLS] capability in fiscal year 2020. Incremental upgrade capability for a vertical launch system may be addressed in future fiscal years. It is directed that no funds may be awarded for the conceptual design of future LUSVs until the Assistant Secretary of the Navy (Research, Development and Acquisition) briefs the congressional defense committees on the updated acquisition strategy for unmanned surface vessels.", "In response to the markups from the congressional defense committees, the Navy's FY2021 budget submission proposes to modify the acquisition strategy for the LUSV program so as to provide more time for developing operational concepts and key technologies before entering into serial production of deployable units. Under the Navy's proposed modified LUSV acquisition strategy, the Navy is proposing to use research and development funding to acquire two additional prototypes in FY2021 and one more additional prototype in FY2022 before shifting in FY2023 to the use of procurement funding for the procurement of deployable LUSVs at annual procurement rates in FY2023-FY2025 of 2-2-3. The Navy's FY2021 budget submission states:", "Major changes [in the LUSV program] from [the] FY 2020 President's Budget request to [the] FY 2021 President's Budget request [include the following]:", "(1) The program will award Conceptual Design (CD) contracts to multiple vendors in FY20. The CD effort will support refinement of a LUSV Performance Specification that does not include the Vertical Launch System (VLS). The final Performance Specification will define a LUSV with reservations in the design to support integration of a variety of capabilities and payloads. This effort, which was originally planned to award in Q2 [the second quarter of] FY 2020 will be delayed until early Q4 [the fourth quarter of] FY 2020 in order to support amendment of the CD Request for Proposals (RFP), Performance Specification, and associated artifacts.", "(2) The delay in award of the LUSV CD effort will delay follow-on activities (RFP [Request for Proposals], [and] source selection) leading up to the award of the LUSV Detail Design and Construction (DD&C) contract. DD&C award will be delayed one year, from FY 2021 to FY 2022. The DD&C award will deliver a non-VLS LUSV prototype based on the Performance Specification developed during the CD effort.", "(3) In lieu of the FY 2020 President's Budget request plan of awarding the LUSV DD&C contract in FY21, the Navy is planning to procure up to two additional Overlord prototypes, building on the lessons learned through the Ghost Fleet program and advances in C4I and combat system prototyping efforts.", "(4) The Navy plans to transition LUSV to a program of record in FY 2023 and align [the program's] procurement funding to the Shipbuilding and Conversion, Navy (SCN) account.", "A January 13, 2020, press report stated that the Navy plans to submit a report on the Navy's concepts of operations for LUSVs and MUSVs in April 2020."], "subsections": []}, {"section_title": "MUSV Program", "paragraphs": ["The Navy defines MUSVs as being 45 feet to 190 feet long, with displacements of roughly 500 tons. The Navy wants MUSVs, like LUSVs, to be low-cost, high-endurance, reconfigurable ships that can accommodate various payloads. Initial payloads for MUSVs are to be intelligence, surveillance and reconnaissance (ISR) payloads and electronic warfare (EW) systems. The Navy is pursuing the MUSV program as a rapid prototyping effort under what is known as Section 804 middle tier acquisition authority. The first MUSV prototype was funded in FY2019 and the Navy wants fund the second prototype in FY2023.", "The MUSV program is building on development work by the Defense Advanced Research Projects Agency (DARPA) under its Anti-Submarine Warfare Continuous Trail Unmanned Vessel (ACTUV) effort and the Office of Naval Research (ONR) under its Medium Displacement USV effort. As shown in Figure 1 , this work led to the design, construction, and testing of the prototype Sea Hunter medium displacement USV, which has a reported length of 132 feet (about 40.2 meters) and a displacement of about 140 tons. The Navy's MUSV program is also to employ a fleet-ready command and control (C2) solution for USVs that was developed by the Strategic Capabilities Office for the LUSV program."], "subsections": []}, {"section_title": "XLUUV Program", "paragraphs": ["The XLUUV program, also known as the Orca program, was established to address a Joint Emergent Operational Need (JEON). As shown in Figure 2 , the Navy defines XLUUVs as UUVs with a diameter of more than 84 inches, meaning that XLUUVs are to be too large to be launched from a manned Navy submarine. Consequently, XLUUVs instead will transported to a forward operating port and then launched from pier. The Navy wants XLUUVs to be equipped with a modular payload bay for carrying mines and other payloads.", "The first five XLUUVs were funded in FY2019 through the Navy's research and development appropriation account. The Navy conducted a competition for the design of the XLUUV, and announced on February 13, 2019, that it had selected Boeing to fabricate, test, and deliver the first four Orca XLUUVs and associated support elements. (The other bidder was a team led by Lockheed Martin.) On March 27, 2019, the Navy announced that the award to Boeing had been expanded to include the fifth Orca. Boeing has partnered with the Technical Solutions division of Huntington Ingalls Industries (HII) to build Orca XLUUVs. (A separate division of HII\u00e2\u0080\u0094Newport News Shipbuilding (NNS) of Newport News, VA\u00e2\u0080\u0094is one of the Navy's two submarine builders.)", "The Navy wants procure additional XLUUVs at a rate of two per year starting in FY2023. The Navy's FY2021 budget submission does not include funding for the procurement of additional XLUUVs in FY2021 or FY2022. The Navy is proposing to fund the procurement of XLUUVs in FY2023 and subsequent years through the Other Procurement, Navy (OPN) appropriation account.", "Boeing's Orca XLUUV design will be informed by (but likely differ in certain respects from) the design of Boeing's Echo Voyager UUV ( Figure 7 , Figure 8 , and Figure 9 ). Echo Voyager is 51 feet long and has a rectangular cross section of 8.5 feet by 8.5 feet, a weight in the air of 50 tons, and a range of up to 6,500 nautical miles. It can accommodate a modular payload section up to 34 feet in length, increasing its length to as much as 85 feet. A 34-foot modular payload section provides about 2,000 cubic feet of internal payload volume; a shorter (14-foot) section provides about 900 cubic feet. Echo Voyager can also accommodate external payloads. "], "subsections": []}, {"section_title": "FY2021-FY2025 Funding", "paragraphs": [" Table 1 shows FY2021-FY2025 requested and programmed funding for the large UV programs covered in this report. "], "subsections": []}]}]}, {"section_title": "Issues for Congress", "paragraphs": ["The Navy's proposals for developing and procuring the large UVs covered in this report pose a number of oversight issues for Congress, including those discussed below."], "subsections": [{"section_title": "Analytical Basis for More Distributed Fleet Architecture", "paragraphs": ["One potential oversight issue for Congress concerns the analytical basis for the Navy's desire to shift to a more distributed fleet architecture featuring a significant contribution from large UVs. Potential oversight questions for Congress include the following:", "What Navy analyses led to the Navy's decision to shift toward a more distributed architecture? What did these analyses show regarding the relative costs, capabilities, and risks of the Navy's current architecture and the more distributed architecture? How well developed, and how well tested, are the operational concepts associated with the more distributed architecture?"], "subsections": []}, {"section_title": "Accelerated Acquisition Strategies and Funding Method", "paragraphs": ["Another potential oversight issue for Congress concerns the accelerated acquisition strategies that the Navy wants to use for these large UV programs. Potential oversight questions for Congress include the following:", "What are the potential costs, benefits, and risks of pursuing these accelerated strategies rather than a more traditional acquisition approach that would spend more time developing the technologies and operational concepts for these UVs prior to putting them into serial production? How are those considerations affected by the shift in the international security environment from the post-Cold War era to the new era of renewed major power competition? Are the Navy's proposed changes to the LUSV's accelerated acquisition strategy appropriate and sufficient? To what degree, if any, can these large UV programs contribute to new approaches for defense acquisition that are intended to respond to the new international security environment?"], "subsections": []}, {"section_title": "Technical, Schedule, and Cost Risk", "paragraphs": ["Another potential oversight issue for Congress concerns the amount of technical, schedule, and cost risk in these programs. Potential oversight questions for Congress include the following:", "How much risk of this kind do these programs pose, particularly given the enabling technologies that need to be developed for them? In addition to the Navy's proposed changes to the LUSV's acquisition strategy, what is the Navy doing to mitigate or manage cost, schedule, and technical risks while it seeks to deploy these UVs on an accelerated acquisition timeline? Are these risk-mitigation and risk-management efforts appropriate and sufficient? At what point would technical problems, schedule delays, or cost growth in these programs require a reassessment of the Navy's plan to shift from the current fleet architecture to a more distributed architecture?"], "subsections": []}, {"section_title": "Annual Procurement Rates", "paragraphs": ["Another oversight issue for Congress concerns the Navy's planned annual procurement rates for the LUSV and XLUUV programs during the period FY2021-FY2025. Potential oversight questions for Congress include, What factors did the Navy consider in arriving at them, and in light of these factors, are these rates too high, too low, or about right?"], "subsections": []}, {"section_title": "Industrial Base Implications", "paragraphs": ["Another oversight issue for Congress concerns the potential industrial base implications of these large UV programs as part of a shift to a more distributed fleet architecture, particularly since UVs like these can be built and maintained by facilities other than the shipyards that currently build the Navy's major combatant ships. Potential oversight questions for Congress include the following:", "What implications would the more distributed architecture have for required numbers, annual procurement rates, and maintenance workloads for large surface combatants (i.e., cruisers and destroyers) and small surface combatants (i.e., frigates and Littoral Combat Ships)? What portion of these UVs might be built or maintained by facilities other than shipyards that currently build the Navy's major combatant ships? To what degree, if any, might the more distributed architecture and these large UV programs change the current distribution of Navy shipbuilding and maintenance work, and what implications might that have for workloads and employment levels at various production and maintenance facilities? "], "subsections": []}, {"section_title": "Potential Implications for Miscalculation or Escalation at Sea", "paragraphs": ["Another oversight issue for Congress concerns the potential implications of large UVs, particularly large USVs, for the chance of miscalculation or escalation in when U.S. Navy forces are operating in waters near potential adversaries. Some observers have expressed concern about this issue. A June 28, 2019, opinion column, for example, states", "The immediate danger from militarized artificial intelligence isn't hordes of killer robots, nor the exponential pace of a new arms race.", "As recent events in the Strait of Hormuz indicate, the bigger risk is the fact that autonomous military craft make for temping targets\u00e2\u0080\u0094and increase the potential for miscalculation on and above the high seas.", "While less provocative than planes, vehicles, or ships with human crew or troops aboard, unmanned systems are also perceived as relatively expendable. Danger arises when they lower the threshold for military action.", "It is a development with serious implications in volatile regions far beyond the Gulf\u00e2\u0080\u0094not least the South China Sea, where the U.S. has recently confronted both China and Russia\u00e2\u0080\u00a6.", "As autonomous systems proliferate in the air and on the ocean, [opposing] military commanders may feel emboldened to strike these platforms, expecting lower repercussions by avoiding the loss of human life.", "Consider when Chinese naval personnel in a small boat seized an unmanned American underwater survey glider in the sea approximately 100 kilometers off the Philippines in December 2016. The winged, torpedo-shaped unit was within sight of its handlers aboard the U.S. Navy oceanographic vessel Bowditch, who gaped in astonishment as it was summarily hoisted aboard a Chinese warship less than a kilometer distant. The U.S. responded with a diplomatic demarche and congressional opprobrium, and the glider was returned within the week\u00e2\u0080\u00a6.", "In coming years, the Chinese military will find increasingly plentiful opportunities to intercept American autonomous systems. The 40-meter prototype trimaran Sea Hunter, an experimental submarine-tracking vessel, recently transited between Hawaii and San Diego without human intervention. It has yet to be used operationally, but it is only a matter of time before such vessels are deployed\u00e2\u0080\u00a6.", "China's navy may find intercepting such unmanned and unchaperoned surface vessels or mini-submarines too tantalizing to pass up, especially if Washington's meek retort to the 2016 glider incident is seen as an indication of American permissiveness or timidity.", "With a captive vessel, persevering Chinese technicians could attempt to bypass anti-tamper mechanisms, and if successful, proceed to siphon off communication codes or proprietary artificial intelligence software, download navigational data or pre-programmed rules of engagement, or probe for cyber vulnerabilities that could be exploited against similar vehicles\u00e2\u0080\u00a6. ", "Nearly 100,000 ships transit the strategically vital Singapore Strait annually, where more than 75 collisions or groundings occurred last year alone. In such congested international sea lanes, declaring a foreign navy's autonomous vessel wayward or unresponsive would easily serve as convenient rationale for towing it into territorial waters for impoundment, or for boarding it straightaway\u00e2\u0080\u00a6.", "A memorandum of understanding signed five years ago by the U.S. Department of Defense and the Chinese defense ministry, as well as the collaborative code of naval conduct created at the 2014 Western Pacific Naval Symposium, should be updated with an expanded right-of-way hierarchy and non-interference standards to clarify how manned ships and aircraft should interact with their autonomous counterparts. Without such guidance, the risk of miscalculation increases.", "An incident without any immediate human presence or losses could nonetheless trigger unexpected escalation and spark the next conflict."], "subsections": []}, {"section_title": "Personnel Implications", "paragraphs": ["Another oversight issue for Congress concerns the potential personnel implications of incorporating a significant number of large UVs into the Navy's fleet architecture. Potential questions for Congress include the following: ", "What implications might these large UVs have for the required skills, training, and career paths of Navy personnel? Within the Navy, what will be the relationship between personnel who crew manned ships and those who operate these large UVs?"], "subsections": []}, {"section_title": "FY2021 Funding", "paragraphs": ["Another oversight issue for Congress concerns the funding amounts for these programs that the Navy has requested for these programs for FY2021. Potential oversight questions for Congress include the following:", "Has the Navy accurately priced the work on these programs that it is proposing to do in FY2021? To what degree, if any, has funding been requested ahead of need? To what degree, if any, is the Navy insufficiently funding elements of the work to be done in FY2021? How might the timelines for these programs be affected by a decision to reduce (or add to) the Navy's requested amounts for these programs?"], "subsections": []}]}, {"section_title": "Legislative Activity for FY2021", "paragraphs": [], "subsections": [{"section_title": "Summary of Congressional Action on FY2021 Funding Request", "paragraphs": [" Table 2 summarizes congressional action on the Navy's FY2021 funding request for the LUSV, MUSV, and XLUUV programs and their enabling technologies."], "subsections": []}]}]}}
{"id": "R46144", "title": "FY2020 National Defense Authorization Act: P.L. 116-92 (H.R. 2500, S. 1790)", "released_date": "2020-01-02T00:00:00", "summary": ["The Administration's FY2020 NDAA request would have authorized $568.1 billion designated as base budget funds to cover the routine, recurring costs to man, train, and operate U.S. forces. The request would have authorized an additional $173.8 billion designated as Overseas Contingency Operations (OCO) funds, of which $97.9 billion was requested for base programs. As enacted, the FY2020 NDAA authorizes a total of $729.9 billion for national defense-related activities, which is $12.0 billion (1.6%) less than the Administration requested."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["This report provides an overview of the FY2020 National Defense Authorization Act ( H.R. 2500 , S. 1790 , P.L. 116-92 ) and serves as a portal to other CRS products providing additional context, detail, and analysis concerning particular aspects of that legislation.", "Enacted annually to cover every defense budget since FY1962, the NDAA authorizes funding for the Department of Defense (DOD) activities at the same level of detail at which budget authority is provided by the corresponding defense, military construction, and other appropriations bills. While the NDAA does not provide budget authority, historically it has provided a fairly reliable indicator of congressional sentiment on funding for particular programs. The bill also incorporates provisions of law governing military compensation, the DOD acquisition process, and aspects of DOD policy toward other countries, among other subjects.", "Of the $761.8 billion requested by the Trump Administration for National Defense-related activities in FY2020, $750.0 billion is discretionary spending, of which approximately $741.9 billion falls within the scope of the annual NDAA. This includes $718.4 billion for DOD operations and $23.2 billion for defense-related work by the Energy Department involving nuclear energy, mostly related to nuclear weapons and nuclear power plants for warships. Other funding for defense-related activities, such as counter-intelligence work of the Federal Bureau of Investigation (FBI), falls mostly under the jurisdiction of other congressional committees. (See Figure 1 .)", "The following overview reviews the strategic and budgetary context within which Congress debated the FY2020 NDAA. Subsequent sections of the report summarize the bill's treatment of major components of the Trump Administration's FY2020 budget request as well as provisions attached to the final bill that deal with other issues."], "subsections": []}, {"section_title": "FY2020 NDAA Overview", "paragraphs": ["As enacted, the FY2020 NDAA authorizes a total of $729.9 billion for national defense-related activities, which is $12.0 billion (1.6%) less than the Administration requested. The request included $568.1 billion to be designated as base budget funds to cover the routine, recurring costs to man, train, and operate U.S. forces. The request also included an additional $173.8 billion to be designated as Overseas Contingency Operations (OCO) funds to cover costs associated with the aftermath of the terrorist attacks of September 11, 2001, and other activities.", "OCO-designated funds are exempt from the binding caps on defense spending set by the Budget Control Act of 2011 ( P.L. 112-25 ) and the Administration's request included $97.7 billion to be designated as OCO funding but intended to pay base budget expenses. ( Table 1 .)", "The Senate Armed Services Committee reported its version of the FY2020 NDAA ( S. 1790 , S.Rept. 116-48 ) on June 11, 2019 and the Senate passed the bill on June 27, 2019. The House Armed Services Committee (HASC) reported its version ( H.R. 2500 , H.Rept. 116-120 ) on June 19, 2019 and the House passed the bill on July 12, 2019.", "On September 17, 2019, the House took up the Senate-passed S. 1790 , amended it by eliminating the Senate-passed provisions and replacing them with the provisions of the House-passed H.R. 2500 , and then passed the amended bill by voice vote. House and Senate conferees worked to produce a conference version of S. 1790 . The conference report ( H.Rept. 116-333 ) was agreed to by the House on December 11, 2019 by a vote of 377-48 and agreed to by the Senate on December 17, 2019 by a vote of 86-8. ( Table 2 .)"], "subsections": []}, {"section_title": "Strategic Context", "paragraphs": ["According to the Administration, the FY2020 budget request for DOD reflects a shift in strategic emphasis based on the 2018 National Defense Strategy (NDS), which called for \"increased and sustained investment\" to counter evolving threats from China and Russia. This would mark a change from the focus of U.S. national security policy for nearly the past three decades and a renewed emphasis on competition between nuclear-armed superpowers, which had been the cornerstone of U.S. strategy for more than four decades after the end of World War II.", "During the Cold War, U.S. national security policy and the design of the U.S. military establishment were strategically focused on competing with the Union of Soviet Socialist Republics and containing the global spread of communism. In the years following the collapse of the Soviet Union, U.S. policies were designed\u00e2\u0080\u0094and U.S. forces were trained and equipped\u00e2\u0080\u0094largely with a focus on dealing with potential regional aggressors such as Iraq, Iran, and North Korea and on recalibrating relations with China and Russia. ", "After the terrorist attacks of September 11, 2001, U.S. national security policy and DOD planning focused largely on countering terrorism and insurgencies in the Middle East while containing, if not reversing, North Korean and Iranian nuclear weapons programs. However, as a legacy of the Cold War, U.S. and allied military forces had overwhelming military superiority over these adversaries and, accordingly, operations were conducted in relatively permissive environments.", "The 2014 Russian invasion of the Crimean peninsula and subsequent proxy war in eastern Ukraine fostered a renewed concern in the United States and Europe about an aggressive and revanchist regime in Moscow. Meanwhile, China began building and militarizing islands in the South China Sea in order to lay claim to key shipping lanes. Together, these events highlighted anew the salience in the U.S. national security agenda of dealing with other great powers , that is, states able and willing to use military force unilaterally to accomplish their objectives. At the same time, the challenges that had surfaced at the end of the Cold War\u00e2\u0080\u0094fragile states, genocide, terrorism, and nuclear proliferation, to name a few\u00e2\u0080\u0094remained serious threats to U.S. interests.", "In some cases, adversaries appear to be collaborating to achieve shared or compatible objectives and to take advantage of social and economic tools to advance their agendas. Some states are also collaborating with non-state proxies (including, but not limited to, militias, criminal networks, corporations, and hackers) and deliberately blurring the lines between conventional and irregular conflict and between civilian and military activities. In this complex security environment, it is arguably more difficult than in past eras to manage these myriad problems.", "The Trump Administration's December 2017 National Security Strategy (NSS), the 11-page unclassified summary of the January 2018 National Defense Strategy (NDS), and the 2019 National Intelligence Strategy explicitly reorient U.S. national security strategy (including defense strategy) toward a primary focus on great power competition with China and Russia and on countering their military capabilities. ", "In addition to explicitly making the great power competition the primary U.S. national security concern, the NDS also argues for a focus on bolstering the competitive advantage of U.S. forces, which, the document contends, has eroded in recent decades vis-\u00c3\u00a0-vis the Chinese and Russian threats. The NDS also maintains that, contrary to what was the case for most of the years since the end of the Cold War, U.S. forces now must assume that their ability to approach military objectives will be vigorously contested.", "The Trump Administration's strategic orientation as laid out in the NSS and NDA is consistent with the strategy outlined in comparable documents issued by prior Administrations, in identifying five significant external threats to U.S. interests: China, Russia, North Korea, Iran, and terrorist groups with global reach. In a break from previous Administrations, however, the NDS views retaining the U.S. strategic competitive edge relative to China and Russia as a higher priority than countering violent extremist organizations. Accordingly, the new orientation for U.S. strategy is sometimes referred to a \" 2+3 \" strategy, meaning a strategy for countering two primary challenges (China and Russia) and three additional challenges (North Korea, Iran, and terrorist groups)."], "subsections": []}, {"section_title": "Budgetary Context", "paragraphs": ["In the four decades since the end of U.S. military involvement in Vietnam, annual outlays by the federal government have increased by a factor of nine. The fastest growing segment of federal spending during that period has been mandatory spending for entitlement programs such as Social Security, Medicare, and Medicaid. (See Figure 2 .)", "The Budget Control Act (BCA) of 2011 (P.L. 112-25) was intended to reduce spending by $2.1 trillion over the period FY2012-FY2021, compared to projected spending over that period. One element of the act established binding annual limits (or caps) to reduce discretionary federal spending through FY2021 by $1.0 trillion. Separate annual caps on discretionary appropriations for defense-related activities and nondefense activities are enforced by a mechanism called sequestration .", "Sequestration provides for the automatic cancellation of previous appropriations, to reduce discretionary spending to the BCA cap for the year in question. The caps on defense-related spending apply to discretionary funding for DOD and for defense-related activities of other agencies, comprising the national defense budget function which is designated budget function 050 . ", "Compliance with the BCA defense caps would have required DOD to reduce its planned spending by tens of billions of dollars per year through FY2021. Congress repeatedly has raised the annual spending caps to reduce their impact on projected spending. Nevertheless, the defense cap in effect when the Trump Administration submitted its FY2020 budget request was $576 billion\u00e2\u0080\u0094$97.9 billion less than the Administration requested for base budget spending.", "To avoid breaking that cap, the Administration designated as OCO funding a total of $97.9 billion to fund base budget activities. In marking up their respective versions of the FY2020 NDAA, the Armed Services Committees of the House and Senate each treated those funds as part of the base budget. The issue became moot after the defense spending cap was raised by the Bipartisan Budget Act of 2019 (P.L. 116-37), enacted on August 2, 2019."], "subsections": [{"section_title": "Long-term Trends", "paragraphs": ["The total FY2020 DOD request\u00e2\u0080\u0094including both base budget and OCO funding\u00e2\u0080\u0094continued an upswing that began with the FY2016 budget, which marked the end of a relatively steady decline in real (that is, inflation-adjusted) DOD purchasing power. Measured in constant dollars, DOD funding peaked in FY2010, after which the drawdown of U.S. troops in OCO operations drove a reduction in DOD spending. ( Figure 3 .) "], "subsections": []}]}, {"section_title": "Selected Authorization Issues", "paragraphs": [], "subsections": [{"section_title": "Military Personnel Issues", "paragraphs": ["The enacted version of the FY2020 NDAA \u00e2\u0080\u0093 like the House and Senate versions of the bill -- approves the Administration's proposal for a relatively modest net increase in the number of active-duty military personnel. It also authorizes the Administration's proposed reduction in the end-strength of the Selected Reserve\u00e2\u0080\u0094those members of the military reserve components and the National Guard who are organized into operational units that routinely drill, usually on a monthly basis. ( Ta b le 3 .)"], "subsections": [{"section_title": "Basic Pay Increase5", "paragraphs": ["Section 609 of the enacted FY2020 NDAA authorizes a 3.1% increase in military basic pay, as was requested by the Administration. It is the same increase that would have occurred if neither Congress nor the President had taken any action on the subject. By law, military personnel receive an annual increase in basic pay that is indexed to the annual increase in the Labor Department's Employment Cost Index (ECI) unless either (1) Congress passes a law to provide otherwise; or (2) the President specifies an alternative pay adjustment.", "The initial Senate version of the NDAA was silent regarding the pay raise.", "The initial House version of the bill would have:", "Mandated a 3.1% raise (Section 606); and Authorized the same 3.1% raise, even if the President had specified a different increase (Section 607). This provision was not included in the final version of the bill."], "subsections": []}, {"section_title": "\"Widows' Tax\"7", "paragraphs": ["Following the death of a servicemember, certain beneficiaries may be eligible for survivor benefits from both DOD (under the Survivors Benefit Program or SBP) and the Department of Veterans Affairs (under the Dependency and Indemnity Compensation or DIC). However, by law, surviving spouses who receive both annuities must have their SBP payments reduced by the amount of DIC they receive. Critics refer to this offset as a\u00c2\u00a0 widows' tax . ", "Section 622 of the enacted version of the FY2020 NDAA phases out the DIC offset requirement over a period of three years. Section 630A of the initial House-passed version would have repealed the offset, outright. The initial Senate-passed version was silent on the issue."], "subsections": []}, {"section_title": "Ban on Transgender Military Personnel", "paragraphs": ["A DOD policy adopted on April 12, 2019, prohibits entry into military service of any person who identifies as transgender. The policy allows transgender individuals to apply for a waiver of that prohibition.", "The enacted version of the bill does not challenge the Administration's policy. However, Section 596 of the NDAA conference report requires DOD to report on the number of requested waivers to the transgender ban that have been denied. Section 596 of the House-passed version of the bill would have established a similar reporting requirement.", "Section 530B of the House-passed version of the bill, which was not included in the conference report, would have nullified the transgender ban, extending to gender identity the same legal protection against discrimination that current law provides for race and sex. ", "The Senate version of the NDAA contained no provisions relevant to this issue."], "subsections": []}, {"section_title": "Military Medical Malpractice9", "paragraphs": ["Section 731 of the NDAA conference report authorizes the Secretary of Defense to pay a claim for the death or personal injury of a servicemember resulting from medical malpractice by a DOD health care provider. This addresses a legal doctrine rooted in the Supreme Court's 1950 ruling, in the case of Feres v. United States , that the federal government is immunized from liability \"for injuries to servicemen where the injuries arise out of or are in the course of activity incident to service.\" Many lower federal courts have concluded that this principle, known as the Feres doctrine, generally prohibits military servicemembers from asserting malpractice claims against the United States based on the negligent actions of health care providers employed by the military. ", "Section 729 of the House version of the NDAA bill would have overturned the Feres doctrine by amending the Federal Tort Claims Act to allow servicemembers to pursue tort claims against the United States for medical malpractice committed by health care provider in a Military Treatment Facility (MTF). ", "The Senate bill had no provision covering this subject."], "subsections": []}]}, {"section_title": "Strategic Nuclear-armed Systems", "paragraphs": ["In general, the conference report on the FY2020 NDAA supported the Trump Administration's budget request for nuclear and other long-range strike weapons. This program continues an across the board modernization of the nuclear triad: ballistic missile-launching submarines, long-range bombers, and intercontinental ballistic missiles (ICBMs).", "However, the Trump program also included proposals to diversify the arsenal of nuclear weapons that the triad might deliver. The conference report did not include provisions of the House version of the bill that would have limited some of those efforts."], "subsections": [{"section_title": "\"Low-Yield\" Nuclear Warhead", "paragraphs": ["The NDAA conference report authorizes $29.6 million requested to deploy on some Trident II submarine-launched missiles nuclear warheads with significantly less explosive power than those now in service. According to unclassified sources, each of the several W-76 warheads currently carried by a single Trident II currently has an explosive power (or yield) approximately equal to that of 100 thousand tons of TNT (100 kilotons). The intended yield of the new \"low-yield\" warhead is reported to be about 10 kilotons. The atomic weapons detonated at Hiroshima and Nagasaki were roughly 15 kilotons and 20 kilotons, respectively.", "As requested, the enacted NDAA authorizes $10 million in the Energy Department's national security budget to modify existing warheads and $19.6 million to install them in deployed missiles.", "The Trump Administration contends that a low-yield warhead would discourage potential adversaries from thinking that, if they used relatively small nuclear weapons in a regional conflict, the United States would shrink from retaliating (or threatening to respond) if the only nuclear weapons at its disposal were the considerably more destructive warheads currently in the U.S. arsenal. Critics of the proposal contend that deployment of new, low-yield weapons could increase the risk of nuclear war by making it easier for U.S. officials to consider their use in a limited conflict.", "The House bill would have denied all funds requested for the program and included a provision (Section 1646) that would have barred the use of any funds for this purpose. A floor amendment to strike this provision was rejected by the House on a near-party-line vote of 201-221. The provision was not included in the enacted bill."], "subsections": []}, {"section_title": "ICBMs and Warheads", "paragraphs": ["As enacted, the FY2020 NDAA authorizes more than 97% of the $682.4 million requested to develop a fleet of new ICBMs to replace the 400 Minuteman missiles currently deployed in silos located in Montana, North Dakota, and Wyoming. This total includes $552.4 million of the $570.4 million requested to continue development of the new missile, designated the Ground Based Strategic Defense (GBSD). It also includes, in the Energy Department's national security budget, $112.0 million \u00e2\u0080\u0093 the entire amount requested -- to develop a new warhead (designated W87-1) to equip the new missile, in lieu of the W78 warhead carried by the Minuteman.", "Section 1672 of the enacted bill prohibits any reduction in the number of deployed U.S. ICBMs, currently 400 missiles.", "The Senate version of the bill would have authorized $22 million more than was requested for GBSD. Section 1664 of the Senate bill would have prohibited any reduction in the number of ICBMs", "The House bill would have imposed a reduction of $140.0 million on the $682.4 million request for R&D related to a new ICBM\u00e2\u0080\u0094a cut of about 20%. This included a net reduction of $81.0 million for GBSD and a reduction of $59.0 million for the warhead. The House rejected by a vote of 164-264 an amendment to the House version of the bill that would have delayed the GBSD program and required an independent study of options to extend the service life of the currently deployed Minuteman missiles."], "subsections": []}, {"section_title": "Nuclear Warhead \"Pits\"14", "paragraphs": ["The NDAA conference report authorizes $712.4 million as requested to continue expanding the Energy Department's capacity for manufacturing so-called plutonium pits \u00e2\u0080\u0093 the nuclear triggers that initiate the explosion of a thermonuclear bomb or missile warhead. This includes $241.1 million to begin construction of a new pit production facility at the Energy Department's Savannah River Site, near Aiken, GA. The new facility would put the Energy Department on track to meet a goal of being able to produce 80 pits per year by 2030, a goal set the by Trump Administration in 2018.", "The House bill would have denied authorization of the $241.1 million requested for the Savanah River facility. Section 3114 of the House bill would have repealed a provision of law that codifies the 80 pit per year goal."], "subsections": []}]}, {"section_title": "Long-range, Precision Strike Weapons", "paragraphs": ["In general, the NDAA conference report support's the Administration requests to expand the U.S. arsenal of guided missiles that could accurately strike targets at ranges of 100 miles and more with conventional (that is, nonnuclear) warheads. ( Table 5 .)", "As U.S. strategy has focused more sharply on Russia and China as potential adversaries, DOD has placed increasing emphasis on developing such weapons, partly because those two countries are developing defenses intended to keep U.S. forces at a distance."], "subsections": []}, {"section_title": "Space Programs and Organization", "paragraphs": ["The enacted version of the FY2020 NDAA authorizes the bulk of the Administration's $14.1 billion request for National Security Space operations, which includes funds for DOD's satellite acquisition, space launches, and other space-oriented activities. The requested amount is 17% higher than the amount appropriated for these activities in FY2019\u00e2\u0080\u0094a rate of increase more than triple the Administration's proposed 4.9% increase in the overall DOD budget.", "The final bill authorizes most of the funds requested for DOD's most expensive acquisition programs for space systems, as the House and Senate versions would have done. (See Table 6 .) "], "subsections": [{"section_title": "Space Force", "paragraphs": ["As proposed by the Administration, the FY2020 NDAA establishes the U.S. Space Force as a separate armed service within the Department of the Air Force (a status analogous to that of the Marine Corps as a separate service within the Department of the Navy). The bill authorizes $72.4 million, as requested, to fund operation of the new organization.", "The new organization is to be headed by a four-star general (designated Chief of Space Operations) who is to report directly to the Secretary of the Air Force. After one year, that officer is to become a member of the Joint Chiefs of Staff (JCS), in which capacity he or she may provide advice to the President, without going through the Air Force chain of command, after first informing the Secretary of Defense and the Chairman of the Joint Chiefs of Staff. Similarly, as a member of the JCS, the Chief of Space Operations may make recommendations to Congress, after informing the Secretary of Defense.", "The enacted NDAA authorizes the Secretary of the Air Force to transfer into the new organization all military personnel currently assigned to the Air Force Space Command and other Air Force military personnel. The Administration had proposed transferring into the Space Force personnel currently assigned to all of DOD's space-oriented organizations. ", "The earlier House and Senate versions of the FY2020 NDAA each would have approved some elements of the proposed consolidation, though neither bill would have afforded the new space organization the degree of bureaucratic independence that the Administration proposed. The Senate bill would have authorized the requested $72.4 million for a Space Force within the Air Force to be overseen by a less senior civilian political appointee (an assistant secretary rather than an undersecretary). The House bill would have authorized $15.0 million for the new organization, which would have been designated a Space Corps and which would have had no civilian political overseer."], "subsections": []}]}, {"section_title": "Ballistic Missile Defense", "paragraphs": ["The enacted FY2020 NDAA approves the broad thrusts \u00e2\u0080\u0093 and most of the details\u00e2\u0080\u0094 of the Administration's FY2020 anti-missile defense budget request. The request reflected the results of the Administration's Missile Defense Review, published in January 2019. That study reaffirmed ongoing DOD efforts to (1) expand and improve a network of interceptor missiles that could protect U.S. territory against a relatively small number of intercontinental ballistic missiles (ICBMs) and (2) deploy systems to defense U.S. allies and U.S. forces stationed abroad against attack by missiles of shorter range. ( Table 7 .)", "Many of the enacted bill's differences with the budget request were linked to delays in the development of a more reliable warhead, designated the Redesigned Kill Vehicle (RKV), to be carried by the homeland defense system's interceptor missiles. On August 21, 2019, after the House and Senate each had passed their respective versions of the FY2020 NDAA, DOD cancelled the RKV project. "], "subsections": [{"section_title": "New Interceptor Missile and Additional Radars", "paragraphs": ["The enacted bill authorizes a total of $602.7 million of the $843.8 million requested to develop an improved missile defense for U.S. territory that would include a new interceptor missile carrying the planned new warhead (RKV). The largest component of the net reduction from the request is a transfer of $140.0 million, associated with the RKV project, to develop improvements to the currently deployed homeland defense system. The bill also authorizes $173.4 million ($101.0 less than requested) for development work on a new radar to be located in Hawaii.", "The House bill would have authorized $150.0 million less than requested for development of the new interceptor. The Senate bill would have authorized the amount requested."], "subsections": []}, {"section_title": "Aegis vs. ICBM18", "paragraphs": ["The enacted bill authorizes a total of $53.8 million, distributed over several funding lines, to test the Navy's Standard missile against an ICBM. The Standard, which is part of the Navy's Aegis anti-missile system, was designed to intercept missiles of shorter range than ICBMs. However, new versions of the Standard theoretically would be capable of ICBM intercepts. Section 1680 of the FY2018 NDAA ( P.L. 115-91 ) directed DOD to conduct a test of Aegis against an ICBM-range target.", "The House version of the bill would have eliminated the planned ICBM intercept test of Aegis, authorizing $12.1 million of the amount requested."], "subsections": []}]}, {"section_title": "Ground Combat Systems", "paragraphs": ["The Army presented its FY2020 budget request for weapons acquisition as \"a bold shift\" intended to place greater emphasis on shaping the force to deal with potential threats from Russia and China, as called for by the Administration's FY2018 National Defense Strategy. Compared with the five-year defense plan (FYDP) that had accompanied the Army's FY2019 budget request, the FY2020 FYDP would reduce previously planned spending for many systems currently in production to make funds available for accelerated development of successor weapons, better adapted to the newly emphasized \"peer competitors.\" ", "The enacted version of the FY2020 NDAA largely supported the Army's revised spending plans for ground combat vehicles, anti-aircraft defenses, and long-range precision strike weapons. The versions passed initially by the House and Senate would have done likewise. (See Table 8 .)"], "subsections": [{"section_title": "Anti-Aircraft Defense", "paragraphs": ["The Army's modernization plan would reconstitute the service's short-range anti-aircraft defenses which had atrophied after the Soviet Union collapsed and DOD focused on counter-terrorism and related missions in the aftermath of 9/11. In this period, the Patriot missile\u00e2\u0080\u0094designed in the 1970s to intercept aircraft\u00e2\u0080\u0094was adapted to intercept long-range ballistic missiles as the shortest-range component of a layered defense.", "Since the turn of the century, DOD has focused more attention on other types of aerial threats which (because of their relatively short range or for other reasons) would challenge or thwart existing U.S. anti-missile/anti-aircraft defenses. These threats include unguided, short-range rockets and mortar shells used by insurgents; swarms of relatively small, armed drone aircraft; and technologically sophisticated cruise missiles, such as are deployed by Russia and China.", "The conference report on the bill \u00e2\u0080\u0093 like the House and Senate versions \u00e2\u0080\u0093 generally support this renewed focus on anti-aircraft defense, which includes:", "M-SHORAD (Maneuver-Short Range Air Defense), a variant of the Stryker combat vehicle equipped with and array of guns and guided missiles to protect maneuvering combat units against aerial threats; and IFPC (Indirect Fire Protection Capability), an array of sensors, missile launchers and various types of missiles to protect fixed sites."], "subsections": []}]}, {"section_title": "Naval Forces", "paragraphs": ["The Navy's $23.8 billion shipbuilding budget request for FY2020 reflects a 2016 plan to increase the size of the fleet to 355 ships, a target some 15% higher than the force goal set by the previous Navy plan. The enacted version of the FY2020 NDAA \u00e2\u0080\u0093 like the versions of the bill passed by the House and the Senate \u00e2\u0080\u0093 generally supports the Navy program. The House-passed bill would have cut a total of $1.6 billion from the shipbuilding request, most of which the House Armed Services Committee justified as reflecting \"excess cost growth.\" (See Table 9 .)"], "subsections": [{"section_title": "Aircraft Carrier Funding", "paragraphs": ["As enacted, the NDAA authorized the $2.35 billion requested for construction of two nuclear-powered aircraft carriers. The funding will be split between two carriers\u00e2\u0080\u0094costing roughly $12 billion apiece\u00e2\u0080\u0094for which a contract was signed in January 2019. One of the ships is slated for delivery to the Navy in 2028 and the other in 2032.", "As a general rule, Congress requires DOD to budget for the entire cost of any weapon in a single year, with limited exceptions. However, in the case of certain high-priced items, such as carriers, Congress allows DOD to use incremental funding \u00e2\u0080\u0094spreading the cost of a ship or other item across the budgets of several fiscal years."], "subsections": []}, {"section_title": "Unmanned Surface and Undersea Vessels23", "paragraphs": ["The enacted FY2020 NDAA would rein in spending on the Navy's plan to speed development of several types of relatively large, unmanned surface ships and submarines that could supplement the current force by distributing its firepower and sensor network across a larger number of platforms.", "The FY2020 budget request includes a total of $628.8 million to develop these items, of which more than half\u00e2\u0080\u0094$372.5 million\u00e2\u0080\u0094is to jump-start the acquisition of Large Unmanned Surface Vehicles (LUSVs), based on commercial ship designs and able to carry modular payloads including various types of anti-ship and land attack missiles. Reportedly, the Navy envisions LUSVs as being as long as 300 feet in length and displacing 2,000 tons, in which case they would be roughly half the size of the Perry -class missile frigates the Navy used in the 1980s and 1990s.", "The conference report on the FY2020 NDAA authorizes the full amounts requested to develop a smaller unmanned surface vessel (designated MUSV) and a relatively large robot submarine with a payload volume of up to 2,000 cubic feet. However, it authorizes $196.5 million\u00e2\u0080\u0094slightly more than half the request\u00e2\u0080\u0094for the LUSV project, funding one of the two vessels requested. The joint explanatory statement accompanying the conference report on the bill did not discuss conferees' rationale for the cut. The Senate Armed Services Committee, in its report on the original, Senate-passed version of the bill had questioned the Navy's plan to develop and procure these ships on an accelerated schedule, given their technological and operational novelty."], "subsections": []}]}, {"section_title": "Military Aircraft Procurement", "paragraphs": ["The FY2020 budget request sought to fund the procurement of 385 aircraft across the military services; this is 71 aircraft more than the total included in the projected FY2020 budget request published in early 2018. Generally speaking, the enacted version of the bill, like the versions passed earlier by the House and Senate -- authorizes the Administration's requests, subject to relatively minor additions and reductions reflecting routine congressional oversight.", "One major departure from the request is an increase in the number of F-35 Joint Strike Fighters authorized. "], "subsections": []}, {"section_title": "Other Issues", "paragraphs": [], "subsections": [{"section_title": "Border Wall Construction", "paragraphs": ["To construct a barrier along the U.S.-Mexican border, which Congress has not explicitly authorized as military construction, the Trump Administration used various budget transfer and reprogramming authorities to make available a total of $6.1 billion comprising DOD program savings and unobligated funds from prior fiscal years. In addition, its FY2020 budget request sought $7.2 billion in barrier-related military construction funding, of which $3.6 billion would replenish prior year funds that were transferred to barrier construction and $3.6 billion that would fund new barrier construction in FY2020.", "The enacted version of the FY2020 NDAA reduces from $8.0 billion (in FY2019) to $5.5 billion the total amount of DOD funding that could be transferred. It authorizes none of the $7.2 billion request in connection with the border barrier project.", "The Senate bill would have reduced transfer authority by a smaller amount, the House bill by a larger amount. In addition, Sections 1046 and 2801 of the House bill would have prohibited the use of defense funds appropriated between FY2015 and FY2020 for barrier construction. ( Table 11 .) "], "subsections": []}, {"section_title": "PFAS Contaminants", "paragraphs": ["PFAS (per- and polyfluoroalkyl substances) are a large, diverse group of fluorinated compounds that have been used for several decades in numerous commercial, industrial, and U.S. military applications including use as an ingredient in aqueous film forming foam (AFFF) for extinguishing petroleum-based liquid fuel fires. Releases of certain PFAS have been detected in drinking water sources, other environmental media, and dairy milk at various locations, some of which have been associated with the use of AFFF at U.S. military installations. The House and Senate versions of the FY2020 NDAA each contained multiple provisions related to PFAS that would require DOD, the U.S. Environmental Protection Agency, and other agencies to address potential risks of these chemicals under existing laws or new authorities.", "The conference agreement includes PFAS provisions related to drinking water and agricultural water sources, reporting of releases on the Toxics Release Inventory, data calls and significant new use notices under the Toxic Substances Control Act, environmental remediation at active and decommissioned U.S. military installations and National Guard facilities, DOD use and disposal of AFFF, and other purposes. The conference agreement does not include provisions regarding PFAS standards under the Clean Water Act or Safe Drinking Water Act, or liability for PFAS releases under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA often referred to as \"Superfund\")."], "subsections": []}]}, {"section_title": "Paid Parental Leave for Federal Employees", "paragraphs": ["Sections 1121-1126 of the initial House-passed bill would have provided 12 weeks of paid leave to federal government employees covered by Title V, Chapter 63 of the U.S. Code for reasons covered by the Family and Medical Leave Act of 1993 (FMLA), as amended ( P.L. 103-3 ). That legislation provides entitlement for such leave in the event of the employee's own serious health condition and certain family-related situations including the birth, adoption, or fostering of a child; the serious illness of certain family members; and military family needs. The bill would have permitted the Office of Personnel Management to increase the amount of such paid leave to a total of 16 weeks. The same paid leave entitlement would have been provided to Legislative Branch employees covered by the Congressional Accountability Act (CAA) of 1995. Conforming amendments would have been included to extend benefits to Government Accountability Office (GAO) employees and certain TSA employees.", "The initial Senate-passed bill included no provision related to this subject.", "Sections 7601-7606 of the enacted version of the bill entitle federal employees (as described above) to 12 weeks of paid parental leave in connection with the birth, adoption, or fostering of a child. Federal civil service employees must meet the FMLA 12-months-of-service requirements before becoming eligible for the paid parental leave benefit; by contrast the FMLA eligibility requirements for Legislative Branch employees covered by the CAA and for GAO employees do not apply to the paid parental leave benefit. In addition, use of the paid parental leave benefit by federal civil service employees is conditioned upon an agreement from the employee that he or she will return to work for the employing agency for 12 workweeks following the conclusion of that leave. Should an employee fail to do so and if certain conditions enumerated in the bill do not apply, the employing agency may recoup its contributions to the employee's health care premiums made during the period of leave. No such requirement is provided for Legislative Branch employees covered by the CAA nor for GAO employees. "], "subsections": [{"section_title": "Appendix.", "paragraphs": ["Following, in numerical order, are CRS products cited in this report, including those cited in tables by only their reference number:", "CRS Reports", "CRS Report RS20643, Navy Ford (CVN-78) Class Aircraft Carrier Program: Background and Issues for Congress , by Ronald O'Rourke", "CRS Report RL30563, F-35 Joint Strike Fighter (JSF) Program , by Jeremiah Gertler ", "CRS Report RL32109, Navy DDG-51 and DDG-1000 Destroyer Programs: Background and Issues for Congress , by Ronald O'Rourke ", "CRS Report RL32418, Navy Virginia (SSN-774) Class Attack Submarine Procurement: Background and Issues for Congress , by Ronald O'Rourke ", "CRS Report RL32665, Navy Force Structure and Shipbuilding Plans: Background and Issues for Congress , by Ronald O'Rourke", "CRS Report RL33640, U.S. Strategic Nuclear Forces: Background, Developments, and Issues , by Amy F. Woolf", "CRS Report RL33745, Navy Aegis Ballistic Missile Defense (BMD) Program: Background and Issues for Congress , by Ronald O'Rourke", "CRS Report R41129, Navy Columbia (SSBN-826) Class Ballistic Missile Submarine Program: Background and Issues for Congress , by Ronald O'Rourke ", "CRS Report R41909, Multiyear Procurement (MYP) and Block Buy Contracting in Defense Acquisition: Background and Issues for Congress , by Ronald O'Rourke", "CRS Report R42972, Sequestration as a Budget Enforcement Process: Frequently Asked Questions , by Megan S. Lynch", "CRS Report R43049, U.S. Air Force Bomber Sustainment and Modernization: Background and Issues for Congress , by Jeremiah Gertler ", "CRS Report R43240, The Army's Armored Multi-Purpose Vehicle (AMPV): Background and Issues for Congress , by Andrew Feickert", "CRS Report R43543, Navy LPD-17 Flight II and LHA Amphibious Ship Programs: Background and Issues for Congress , by Ronald O'Rourke", "CRS Report R43546, Navy John Lewis (TAO-205) Class Oiler Shipbuilding Program: Background and Issues for Congress , by Ronald O'Rourke", "CRS Report R43838, Renewed Great Power Competition: Implications for Defense\u00e2\u0080\u0094Issues for Congress , by Ronald O'Rourke", "CRS Report R44039, The Defense Budget and the Budget Control Act: Frequently Asked Questions , by Brendan W. McGarry", "CRS Report R44274, The Family and Medical Leave Act: An Overview of Title I , by Sarah A. Donovan", "CRS Report R44442, Energy and Water Development Appropriations: Nuclear Weapons Activities , by Amy F. Woolf", "CRS Report R44463, Air Force B-21 Raider Long-Range Strike Bomber , by Jeremiah Gertler", "CRS Report R44835, Paid Family Leave in the United States , by Sarah A. Donovan", "CRS Report R44891, U.S. Role in the World: Background and Issues for Congress , by Ronald O'Rourke and Michael Moodie", "CRS Report R44968, Infantry Brigade Combat Team (IBCT) Mobility, Reconnaissance, and Firepower Programs , by Andrew Feickert ", "CRS Report R44972, Navy Frigate (FFG[X]) Program: Background and Issues for Congress , by Ronald O'Rourke ", "CRS Report R45349, The 2018 National Defense Strategy: Fact Sheet , by Kathleen J. McInnis", "CRS Report R45519, The Army's Optionally Manned Fighting Vehicle (OMFV) Program: Background and Issues for Congress , by Andrew Feickert", "CRS Report R45757, Navy Large Unmanned Surface and Undersea Vehicles: Background and Issues for Congress , by Ronald O'Rourke", "CRS Report R45793, PFAS and Drinking Water: Selected EPA and Congressional Actions , by Elena H. Humphreys and Mary Tiemann", "CRS Report R45937, Military Funding for Southwest Border Barriers , by Christopher T. Mann", "CRS Report R45986, Federal Role in Responding to Potential Risks of Per- and Polyfluoroalkyl Substances (PFAS) , coordinated by David M. Bearden", "CRS Report R45996, Precision-Guided Munitions: Background and Issues for Congress , by John R. Hoehn", "CRS Report R45998, Contaminants of Emerging Concern under the Clean Water Act , by Laura Gatz", "CRS Report R46107, FY2020 National Defense Authorization Act: Selected Military Personnel Issues , coordinated by Bryce H. P. Mendez", "CRS In Focus", "CRS In Focus IF10541, Defense Primer: Ballistic Missile Defense , by Stephen M. McCall ", "CRS In Focus IF10999, Defense's 30-Year Aircraft Plan Reveals New Details , by Jeremiah Gertler ", "CRS In Focus IF11102, Military Medical Malpractice and the Feres Doctrine , by Bryce H. P. Mendez and Kevin M. Lewis", "CRS In Focus IF11143, A Low-Yield, Submarine-Launched Nuclear Warhead: Overview of the Expert Debate , by Amy F. Woolf ", "CRS In Focus IF11203, Proposed Civilian Personnel System Supporting \"Space Force , \" by Alan Ott", "CRS In Focus IF11219, Regulating Drinking Water Contaminants: EPA PFAS Actions , by Mary Tiemann and Elena H. Humphreys", "CRS In Focus IF11244, FY2020 National Security Space Budget Request: An Overview , by Stephen M. McCall and Brendan W. McGarry", "CRS In Focus IF11326, Military Space Reform: FY2020 NDAA Legislative Proposals , by Stephen M. McCall", "CRS In Focus IF11353, Defense Primer: U.S. Precision-Guided Munitions , by John R. Hoehn", "CRS In Focus IF11367, Army Future Vertical Lift (FVL) Program , by Jeremiah Gertler", "Congressional Insight", "CRS Insight IN10931, U.S. Army's Initial Maneuver, Short-Range Air Defense (IM-SHORAD) System , by Andrew Feickert ", "CRS Insight IN11052, The Defense Department and 10 U.S.C. 284: Legislative Origins and Funding Questions , by Liana W. Rosen ", "Legal Side Bar", "CRS Legal Sidebar LSB10242, Can the Department of Defense Build the Border Wall? , by Jennifer K. Elsea, Edward C. Liu, and Jay B. Sykes ", "CRS Legal Sidebar LSB10305, The Feres Doctrine: Congress, the Courts, and Military Servicemember Lawsuits Against the United States , by Kevin M. Lewis ", "CRS Legal Sidebar LSB10316, Eliminating the SBP-DIC Offset for Surviving Spouses of Military Servicemembers: Current Proposals and Related Issues , by Mainon A. Schwartz "], "subsections": []}]}]}]}}
{"id": "R46248", "title": "U.S. Farm Programs: Eligibility and Payment Limits", "released_date": "2020-03-03T00:00:00", "summary": ["Under the Agricultural Improvement Act of 2018 ( P.L. 115-334 , 2018 farm bill), U.S. farm program participants\u00e2\u0080\u0094whether individuals or multiperson legal entities\u00e2\u0080\u0094must meet specific eligibility requirements to receive benefits under certain farm programs. Some requirements are common across most programs, while others are specific to individual programs. In addition, program participants are subject to annual payment limits that vary across different combinations of farm programs.", "Since 1970, Congress has used various policies to address the issue of who should be eligible for farm payments and how much an individual recipient should be permitted to receive in a single year. In recent years, congressional policy has focused on tracking payments through multiperson entities to individual recipients (referred to as direct attribution), ensuring that payments go to persons or entities actively engaged in farming (AEF), capping the amount of payments that a qualifying recipient may receive in any one year, and excluding farmers or farming entities with large average incomes from payment eligibility.", "Every participating person or legal entity that participates in a farm program must submit identification information. Other eligibility requirements\u00e2\u0080\u0094which may vary across programs\u00e2\u0080\u0094include U.S. citizenship; the nature and extent of an individual's participation (i.e., AEF criteria), including ownership interests in multiperson entities and personal time commitments (whether as labor or management); means testing (persons with combined farm and nonfarm adjusted gross income [AGI] in excess of $900,000 are ineligible for most program benefits); and conservation compliance requirements. For example, under the FY2019 Additional Supplemental Appropriations for Disaster Relief Act ( P.L. 116-20 ), the AGI requirement as it applies to payments under the Market Facilitation Program may be waived if at least 75% of AGI is from farming, ranching, or forestry-related activities.", "In general, foreign persons (or foreign legal entities) are eligible to participate in farm programs if they meet the eligibility requirements. Exceptions are the four permanent disaster assistance programs created under the 2014 farm bill ( P.L. 113-79 ) and the Noninsured Crop Disaster Assistance program (NAP), which exclude nonresident aliens.", "Current law requires tracking payments through four levels of ownership in multiperson legal entities to the individual recipients. Current payment limits include a cumulative limit of $125,000 for all covered commodities under the Price Loss Coverage (PLC) and Agricultural Risk Coverage (ARC) support programs, with the exception of peanuts, which has its own $125,000 limit. Only one permanent disaster assistance program\u00e2\u0080\u0094the Livestock Forage Disaster Program (LFP)\u00e2\u0080\u0094is subject to a payment limit ($125,000 per crop year). NAP is also subject to a $125,000 per crop year limit per person for catastrophic coverage.", "Family farms receive special treatment with respect to payment limits\u00e2\u0080\u0094every adult member (18 years or older) is deemed to meet the AEF requirements and is potentially eligible to receive farm program payments in an amount up to the individual payment limit. Furthermore, the 2018 farm bill extended the definition of family member to include first cousins, nieces, and nephews. Thus, a family farm with a single active farm operator may still qualify for multiple payment limits based on the number of immediate and extended adult family members. Congress addresses program eligibility and payment limit issues in periodic farm legislation.", "Supporters of payment limits contend that large payments facilitate consolidation of farms into larger units, raise the price of land, and put smaller, family-sized farming operations and beginning farmers at a disadvantage. In addition, they argue that large payments undermine public support for farm subsidies and are costly. Critics of payment limits counter that all farms need support, especially when market prices decline, and that larger farms should not be penalized for the economies of size and efficiencies they have achieved. Further, critics argue that farm payments help U.S. agriculture compete in global markets and that income testing is at odds with federal farm policies directed toward improving U.S. agriculture and its competitiveness. Congress may continue to address these issues, as well as related questions, such as: How does the current policy design of payment limits relate to their distributional impact on crops, regions, and farm size? Is there an optimal aggregation of payment limits across commodities or programs? Do unlimited benefits under the Marketing Assistance Loan (MAL) program reduce the effectiveness of overall payment limits?"], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["Program eligibility requirements and payment limits are central to how various U.S. farm programs operate. These requirements fundamentally address various equity concerns and reflect the goals of government intervention in agriculture. They determine who receives federal farm program payments and how much they receive. ", "Eligibility requirements and payment limits are controversial because they influence what size farms are supported. Policymakers have debated what limit is optimal for annual payments, whether payments should be proportional to production or limited per individual or per farm operation, and whether the limit should be specific to each program or cumulative across all programs. Furthermore, program eligibility requirements and payment limits generate considerable congressional interest because their effects differ across regions and by type of commodities produced and because a substantial amount of annual U.S. farm program payments are at stake: Direct federal outlays have averaged $13.7 billion per year from 1996 through 2018. When federal crop insurance premium subsidies are included, annual farm payments have averaged $17.6 billion over the same period. "], "subsections": [{"section_title": "Report Overview5", "paragraphs": ["This report discusses various eligibility factors and their interaction with current farm programs, including those authorized under the 2018 farm bill as well as several disaster assistance and other ad hoc payment programs initiated under different authorities. It describes current restrictions that limit or preclude payments to farmers based on a number of factors as well as areas where few, if any, restrictions limit farmers' access to such benefits or to the amount of benefits. ", "Much of the information on farm programs and their eligibility criteria and payment limits is summarized in Table A-1 . A second appendix table, Table A-2 , provides a brief history of the legislative evolution of the income eligibility thresholds\u00e2\u0080\u0094that is, means testing. A final appendix table, Table A-3 , contains a history of the legislative evolution of annual payment limits for major commodity programs. This report concludes with a discussion of several issues related to farm program payment limits, including policy design issues, that may be of interest to Congress. "], "subsections": []}, {"section_title": "Background", "paragraphs": ["Farm program payment limits and eligibility requirements may differ by both type of program and type of participating legal entity (e.g., an individual, a partnership, or a corporation). The Farm Service Agency (FSA) has administrative responsibility for collecting and maintaining data used to make eligibility and payment limit determinations for U.S. Department of Agriculture (USDA) farm programs. FSA provides this data to the Natural Resources Conservation Service (NRCS) to administer conservation programs for which they have responsibility. ", "Congress first added payment limits as part of farm commodity programs in the 1970 farm bill (P.L. 91-524). However, such limits have evolved over time in both scope and amount ( Table A-1 ) as the structure of U.S. agriculture, farm policies, and commodity support programs has changed. With each succeeding farm bill, and occasionally via other legislation, Congress has addressed anew who is eligible for farm payments and how much an individual recipient should be permitted to receive in a single year. ", "In recent years, congressional debate has focused on", "attributing payments directly to individual recipients, ensuring that payments go to persons or entities currently engaged in farming, capping the amount of payments that a qualifying recipient may receive in any one year, and excluding farmers or farming entities with incomes above a certain level\u00e2\u0080\u0094as measured by their adjusted gross income (AGI)\u00e2\u0080\u0094from payment eligibility.", "Each of these policy measures\u00e2\u0080\u0094depending on how they are designed and implemented\u00e2\u0080\u0094can have consequences, both intended and unintended, for U.S. agriculture. These consequences include, but are not limited to, farm management structure, crop choices, and farm size. Because U.S. farm program eligibility requirements and annual payment limit policy have such broad potential consequences for U.S. agriculture, a review of both current policies and related issues is of potential interest to Congress. "], "subsections": []}]}, {"section_title": "Program Eligibility", "paragraphs": ["Not all farm businesses are eligible to participate in federal farm programs. A number of statutory and regulatory requirements govern federal farm program eligibility for benefits under various programs. Some farm businesses, although eligible to participate, are restricted from receiving certain benefits or may be limited in the extent of program payments that they may receive.", "Over time, program eligibility rules have evolved, expanding to more programs and including more limitations. Cross-cutting methods of determining program eligibility\u00e2\u0080\u0094such as AGI thresholds\u00e2\u0080\u0094are relatively new. Discussed below are cross-cutting eligibility requirements that affect multiple programs, including participant identification, foreign ownership, nature and extent of participation (i.e., AEF criteria), means tests, and conservation requirements. "], "subsections": [{"section_title": "Participant Identification", "paragraphs": ["Generally, program eligibility begins with identification of participants. Identifying who or what entity is participating and therefore how payments may be attributed is the cornerstone of most farm program eligibility. To be eligible to receive any farm program payment, every person or legal entity\u00e2\u0080\u0094including both U.S. citizens and noncitizens\u00e2\u0080\u0094must provide a name and address and have either a Social Security number (SSN), in the case of a person, or a Taxpayer Identification Number (TIN) or Employee Identification Number (EIN), in the case of a legal entity with multiple persons having ownership interests. In this latter situation, each person with an interest must have a TIN or EIN and must declare his or her interest share in the joint entity using the requisite USDA forms. ", "All participants in programs subject to payment eligibility and payment limitation requirements must submit to USDA two completed forms. The first, CCC-901 (Members' Information), identifies the participating persons and/or entities (through four levels of attribution if needed) and their interest share in the operation. The second form, CCC-902 (Farm Operating Plan), identifies the nature of each person's or entity's stake\u00e2\u0080\u0094that is, capital, land, equipment, active personal labor, or active personal management\u00e2\u0080\u0094in the operation. These forms need to be submitted only once (not annually) but must be kept current in regard to any change in the farming operation. Critical changes to a farming operation might include expanding the number of limitations for payment, such as by adding a new family member, changing the land rental status from cash to share basis, purchasing additional base acres equivalent to at least 20% of the previous base, or substantially altering the interest share of capital or equipment contributed to the farm operation. This information is critical in determining the extent to which each person is actively engaged in the farming operation, as described below."], "subsections": []}, {"section_title": "Three Principal Farm Business Categories", "paragraphs": ["Many types of farm business entities own operations engaged in agricultural production. For purposes of determining the extent to which the participants of a farm operation qualify as potential farm program participants, three major categories are considered ( Table 1 ):", "1. Sole proprietorship or family farm. The farm business is run by a single operator or multiple adult family members\u00e2\u0080\u0094the linkage being common family lineage\u00e2\u0080\u0094whereby each qualifying member is subject to an individual payment limit. Thus, a family farm potentially qualifies for an additional payment limit for each family member (18 years or older) associated with the principal operator. Family farms or sole proprietorships comprised nearly 86% of U.S. farm operations in 2017. 2. Joint operation . Each member of a joint operation\u00e2\u0080\u0094where members need not have a common family relation or lineage\u00e2\u0080\u0094is treated separately and individually for purposes of determining eligibility and payment limits. Thus, a partnership's potential payment limit is equal to the number of qualifying members (plus any special designees such as spouses) times the individual payment limit. 3. Corporation. A legally defined association of joint owners or shareholders that is treated as a single person for purposes of determining eligibility and payment limits. This includes corporations, limited liability companies, and similar entities. Nearly 90% of incorporated farm operations are family held.", "As of 2017, these three categories represented nearly 98% of U.S. farm operations ( Table 1 ). In addition, federal regulations exist for evaluating both the eligibility of and relevant payment limits for other exceptional types of potential recipients, including a spouse, minor children, and other family members, as well as marketing cooperatives, trusts and estates, cash-rent tenants, sharecroppers, landowners, federal agencies, and state and local governments. These institutional arrangements represent a small share (2.2%) of U.S. farm operations, according to USDA's 2017 Census of Agriculture . Special rules also describe eligibility and payment limits in the event of the death of a previously eligible person. "], "subsections": []}, {"section_title": "AEF Requirement", "paragraphs": ["To be eligible for certain farm program benefits, participants\u00e2\u0080\u0094individuals as well as other types of legal entities\u00e2\u0080\u0094must meet AEF requirements. The AEF requirements (where applicable) apply equally to U.S. citizens, resident aliens, and foreign entities. This section briefly reviews the specific requirements for each type of legal entity\u00e2\u0080\u0094person, partnership, or corporation\u00e2\u0080\u0094to qualify as \"actively engaged in farming.\""], "subsections": [{"section_title": "Individual AEF Requirements", "paragraphs": ["An individual producer must meet three AEF criteria: ", "1. The person, independently and separately, makes a significant contribution to the farming operation of (a) capital, equipment, or land; and (b) active personal labor, active personal management, or a combination of active personal labor and management. 2. The person's share of profits or losses is commensurate with his/her contribution to the farming operation. 3. The person shares in the risk of loss from the farming operation. ", "In general, family farms receive special treatment whereby every adult member (i.e., 18 years or older) is deemed to meet the AEF requirements. Family membership is based on lineal ascendants or descendants but is also extended to siblings and spouses. Furthermore, under the 2018 farm bill (\u00c2\u00a71703), for purposes of assessing the availability of individual payment limits, the definition of family member has been extended to include first cousins, nieces, and nephews.", "Current law also allows for special treatment of a spouse: If one spouse is determined to be actively engaged in farming, then the other spouse shall also be determined to have met the requirement. The spousal exception applies to both individual producers (as in a family farm) and producers operating within a partnership. ", "An additional exception is made for landowners who may be deemed in compliance with all AEF requirements if they receive income based on the farm's operating results without providing labor or management. "], "subsections": []}, {"section_title": "Partnership AEF Requirements", "paragraphs": ["In a general partnership, each member is treated separately for purposes of meeting the AEF criteria and determining eligibility. In particular, each partner with an ownership interest must contribute active personal labor and/or active personal management to the farming operation on a regular basis. The contribution must be identifiable, documentable, separate, and distinct from the contributions made by any other partner. Each partner who fails to meet the AEF criteria is ineligible to participate in the relevant farm program."], "subsections": []}, {"section_title": "Corporate AEF Requirements", "paragraphs": ["A corporation, as an association of joint owners, is treated as a single person for purposes of meeting the AEF criteria and determining eligibility. In addition to the AEF criteria cited for a person\u00e2\u0080\u0094of sharing commensurate profits or losses and bearing commensurate risk\u00e2\u0080\u0094each member with an ownership interest in the corporation must make a significant contribution of personal labor or active personal management\u00e2\u0080\u0094whether compensated or not\u00e2\u0080\u0094to the operation that is (a) performed on a regular basis, (b) identifiable and documentable, and (c) separate and distinct from such contributions of other stockholders or members. Furthermore, the collective contribution of corporate members must be significant and commensurate with contributions to the farming operation.", "If any member of the legal entity fails to meet the labor or management contribution requirements, then any program payment or benefit to the corporation will be reduced by an amount commensurate with the ownership share of that member. An exception applies if (a) at least 50% of the entity's stock is held by members that are \"actively engaged in providing labor or management\" and (b) the total annual farm program payments received collectively by the stockholders or members of the entity are less than one payment limitation. "], "subsections": []}, {"section_title": "Special Nonfamily AEF Requirements", "paragraphs": ["Prior to the 2014 farm bill ( P.L. 113-79 ), the definition of active personal labor or management was broad and could be satisfied by undertaking passive activities without visiting the operation, thus enabling individuals who lived significant distances from an operation to claim such labor or management contributions. This was often seen as problematic, as passive investors were receiving farm program payments without actively contributing to the farming operation. ", "Recent farm bills have amended the AEF criteria in an attempt to tighten the requirements. However, the issue remains controversial. In particular, the 2014 farm bill (\u00c2\u00a71604) required USDA to add more specificity to the role that a nonfamily producer must play to qualify for farm program benefits. These AEF regulations were not changed under the 2018 farm bill. ", "As a result of the rule, a limit is placed on the number of nonfamily members of a farming operation who can qualify as a farm manager\u00e2\u0080\u0094depending on the size and complexity of the farm operation. Also, additional recordkeeping requirements now apply for each nonfamily member of a farming operation claiming active personal management status. No such limit applies to the potential number of qualifying family members."], "subsections": []}]}, {"section_title": "Foreign Person or Legal Entity", "paragraphs": ["Generally, foreign persons (or foreign legal entities) are eligible to participate if they meet a particular farm program's eligibility requirements. Exceptions include the four permanent disaster assistance programs\u00e2\u0080\u0094Emergency Assistance for Livestock, Honey Bees, and Farm-Raised Fish Program (ELAP); Livestock Forage Disaster Program (LFP); Livestock Indemnity Program (LIP); and Tree Assistance Program (TAP)\u00e2\u0080\u0094and the Noninsured Crop Disaster Assistance Program (NAP), which explicitly prohibit payments to foreign entities other than resident aliens.", "As of December 31, 2018, foreign persons held an interest in 31.8 million acres of U.S. agricultural land (including forest land). This accounts for 2.5% of all privately held agricultural land in the United States and approximately 1% of total U.S. land.", "Foreign persons or entities can become eligible for most farm program benefits if they have the requisite U.S. taxpayer ID and meet the AEF criteria discussed earlier. In the case where a foreign corporation or similar entity fails to meet the AEF criteria but has shareholders or partners with U.S. residency status, then the foreign entity may\u00e2\u0080\u0094upon written request to USDA\u00e2\u0080\u0094receive payments representative of the percentage ownership interest by those U.S. citizens or U.S. resident aliens that do meet the AEF criteria.", "Current law imposes no specific restrictions on foreign persons or entities with respect to eligibility for crop and livestock insurance premium subsidies. Also, the Dairy Margin Coverage (DMC) program makes no distinction about producer or owner citizenship. Instead, the law states that all dairy operations in the United States shall be eligible to participate in the DMC program to receive margin protection payments. Similarly, no citizenship requirement exists for a sugar processor or a cane or beet producer operating under the U.S. sugar program price guarantees. However, the sugarcane and sugar beets being processed must be of U.S. origin."], "subsections": []}, {"section_title": "AGI Limit", "paragraphs": ["Generally, means testing prohibits persons or legal entities from being eligible to receive any benefit under certain commodity and conservation programs during a crop, fiscal, or program year as appropriate if their income is above an established level. The first means test for farm programs was established by the 2002 farm bill ( P.L. 107-171 ). Income is measured by an individual's or entity's average AGI from the previous three-year period but excluding the most recent complete taxable year. A brief history of the legislative evolution of the AGI threshold is provided in Table A-2 .", "Means testing has recently been applied as a determining factor for the level of payment limit rather than a threshold for eligibility. Supplemental disaster assistance authorized in 2018 and 2019 uses an individual's or entity's average AGI over a three-year period to determine the total payment limits depending on how much of that income is derived from farming. This is discussed further in the \" Payment Limits \" section below.", "Recent farm bills, including the 2018 farm bill, have preserved the three-year average AGI as the relevant measure of income. Now that an AGI limit appears acceptable, the debate has shifted to which programs are covered by the means test and what income level is an appropriate threshold. "], "subsections": [{"section_title": "AGI Defined", "paragraphs": ["Since most U.S. farms are operated as sole proprietorships or partnerships ( Table 1 ), most farm households are taxed under the individual income tax rather than the corporate income tax. For an individual, AGI is the Internal Revenue Service (IRS) reported AGI. AGI measures net income\u00e2\u0080\u0094that is, income after expenses. Farm income is reported on the IRS Schedule F where AGI is net of farm operating expenses. For an incorporated business, a comparable measure to AGI\u00e2\u0080\u0094as determined by USDA\u00e2\u0080\u0094is used to measure income. ", "Since the household is the typical unit of taxation, farm and nonfarm income are combined when computing federal income taxes for farm households. In fact, most federal income tax paid by farm households (80% in 2019) can be attributed to nonfarm income. ", "Farm operations overwhelmingly report operating losses for tax purposes. For example, in 2015, two-thirds of farm sole proprietors reported a net farm loss for tax purposes. The substantial portion of capital investment that can be expensed in the first year is an important determinant of the large loss reporting, along with cash accounting and other practices.", "Program participants are required to give their consent to the IRS annually to verify that they are in compliance with their AGI limit provisions using a specific USDA form (CCC-941). Failure to provide the consent and subsequent certification of compliance results in ineligibility for program payments and a required refund of any payments already received for the relevant year."], "subsections": []}, {"section_title": "Historical Development of the AGI Eligibility Limit", "paragraphs": ["The 2002 farm bill (\u00c2\u00a71604) established the initial AGI threshold for program eligibility at $2.5 million. This AGI criterion applied to most farm programs (listed in Table A-2 ). However, the 2002 farm bill included an exemption if at least 75% of AGI was from farming.", "The 2008 farm bill (\u00c2\u00a71604) replaced the single AGI limit of the 2002 farm bill with three separate AGI limits that distinguished between farm and nonfarm AGI: ", "1. First, a nonfarm AGI limit of $500,000 applied to eligibility for selected farm commodity program benefits, including the Milk Income Loss Contract program, NAP, and the disaster assistance programs. 2. Second, a farm-specific AGI limit of $750,000 applied to eligibility for direct payments. 3. Third, a nonfarm AGI limit of $1 million\u00e2\u0080\u0094but subject to an exclusion if 66.6% of total AGI was farm-related income\u00e2\u0080\u0094applied to eligibility for benefits under conservation programs. ", "However, the AGI limit could be waived in its entirety on a case-by-case basis if implementing a particular conservation program would protect environmentally sensitive land of special significance. The 2008 farm bill also added a provision for married individuals filing a joint tax return whereby the joint AGI could be allocated as if a separate return had been filed by each spouse. This would potentially allow the farmer to exclude any earned income from a spouse as well as a share of any unearned income from jointly held assets for purposes of the eligibility cap. This provision had the potential to significantly reduce the share of farms affected by the AGI cap.", "The 2014 farm bill (\u00c2\u00a71605) returned the eligibility threshold to a single total AGI limit but at a level of $900,000 for individuals and incorporated businesses. It also retained the provision for married individuals filing a joint tax return to allocate the AGI as if a separate return had been filed by each spouse. In the case of a payment to a general partnership or joint venture comprising multiple individuals, the payment would be reduced by an amount that is commensurate with the share of ownership interest of each person who has an average AGI in excess of $900,000. The 2018 farm bill retained the AGI provisions from the 2014 farm bill but added the 2008 farm bill's case-by-case waiver for conservation programs that would protect environmentally sensitive land of special significance.", "In July 2018, USDA announced financial assistance under a new Market Facilitation Program (MFP) in response to retaliatory tariffs targeting various U.S. agricultural commodities. The MFP provides direct payments to producers of selected commodities. To qualify, USDA requires that MFP recipients meet AEF, AGI, and conservation compliance (see below) criteria. For payments under the 2018 MFP, a producer's average AGI for tax years 2014, 2015, and 2016 must be less than $900,000. However, Congress amended the AGI criterion as it applies to MFP payments in the FY2019 Supplemental Appropriations for Disaster Relief Act ( P.L. 116-20 , \u00c2\u00a7103). The MFP-relevant AGI criterion was amended to (1) use the tax years 2013, 2014, and 2015 to calculate average AGI for evaluating eligibility for 2018 MFP payments and (2) allow eligibility for AGI in excess of $900,000 if at least 75% came from farming, ranching, or forestry-related activities. It is unclear if MFP payments made in 2018 under the previous AGI criteria would be re-evaluated against the new AGI specification and would then be subject to repayment if the new AGI formulation made a producer ineligible.", "In May 2019, USDA announced a second round of MFP payments\u00e2\u0080\u0094referred to as 2019 MFP payments. To qualify, USDA requires 2019 MFP recipients to meet AEF, AGI, and conservation compliance criteria. However, the AGI criteria to assess eligibility for the 2019 MFP payments would use the 2015, 2016, and 2017 tax years."], "subsections": []}]}, {"section_title": "Conservation Compliance", "paragraphs": ["Two provisions\u00e2\u0080\u0094highly erodible land conservation (Sodbuster) and wetland conservation (Swampbuster)\u00e2\u0080\u0094are collectively referred to as conservation compliance. To be eligible for certain USDA program benefits, a producer agrees to conservation compliance\u00e2\u0080\u0094that is, to maintain a minimum level of conservation on highly erodible land and not to convert or make production possible on wetlands.", "Conservation compliance has been in effect since the 1985 farm bill ( P.L. 99-198 ). The majority of farm program payments, loans, disaster assistance, and conservation programs are benefits that may be lost if a participant is out of compliance with the conservation requirements. The 2014 farm bill extended conservation compliance to federal crop insurance premium subsidies, and the 2018 farm bill retains this compliance requirement. Most recently, the 2018 farm bill made relatively minor amendments to the compliance provisions. Within U.S. farm policy, conservation compliance continues to be one of the only environmentally based requirements for program participation."], "subsections": []}]}, {"section_title": "Direct Attribution of Payments", "paragraphs": ["The process of tracking payments to an individual through various levels of ownership in single and multiperson legal entities is referred to as \"direct attribution.\" Several types of legal entities may qualify for farm program payments. However, ultimately every legal entity represents some combination of individuals. For example, a joint operation can be made up of a combination of individuals, partnerships, and/or corporate entities. A particular individual may be part of each of these three component entities, as well as additional subentities within each of these components. Farm payments flow down through these arrangements to individual recipients.", "Congress defines legal entity as an entity created under federal or state law that (1) owns land or an agricultural commodity or (2) produces an agricultural commodity. This broad definition encompasses the multiperson legal entities discussed earlier such as family farm operations, joint ventures, corporations, and institutional arrangements. Ownership shares in a multiperson legal entity are tracked via a person's SSN or EIN as reported in CCC-901 and CCC-902. Identification at the individual payment recipient level is critical for assessing the cumulative payments of each individual against the annual payment limit. ", "Direct attribution was originally authorized in the 2008 farm bill (\u00c2\u00a71603(b)(3)). All farm program payments made directly or indirectly to an individual associated with a specific farming operation are combined with any other payments received by that same person from any other farming operation\u00e2\u0080\u0094based on that person's pro rata interest in those other operations. It is this accumulation of an individual's payments\u00e2\u0080\u0094tracked through four levels of ownership in multiperson legal entities\u00e2\u0080\u0094that is subject to the annual payment limit (see text box below). ", "The first level of attribution is an individual's personal farming operation. Subsequent levels of attribution are related to those legal entities in which an individual has an ownership share. If a person meets his or her payment limit at the first level of attribution (i.e., on his or her own personal farming operation), then any payments to legal entities at lower levels of attribution are reduced by that person's pro rata share."], "subsections": []}, {"section_title": "Payment Limits", "paragraphs": ["When the eligibility criteria\u00e2\u0080\u0094including AEF, AGI, conservation compliance, and others\u00e2\u0080\u0094are met, the cumulative benefits across certain farm programs are subject to specific annual payment limits (detailed in Table A-1 ) that can be received by an individual or legal entity in a year. ", "Explicit payment limits date back to the 1970s. Despite their longevity, payment limits are not universal among programs. Payment limits are also enforced differently for different types of legal entities (as mentioned earlier and summarized below). For example, certain program limits may be expanded depending on the number of participants, or they may be subject to exceptions, or they may not exist. The major categories of farm program support and the applicability of annual payment limits, if any, are briefly discussed below."], "subsections": [{"section_title": "Farm Support Programs Subject to Annual Payment Limits", "paragraphs": ["Traditionally, much attention focuses on the annual payment limits for the Title I commodity programs, largely because this has been the conduit for the majority of farm program expenditures. Title I commodity program payment limits were first included in a farm bill in 1970 but have evolved substantially since that initial effort ( Table A-1 ).", "Several major farm support programs\u00e2\u0080\u0094as defined by specific titles of the 2018 farm bill\u00e2\u0080\u0094are currently subject to annual payment limits. ", "Title I (Subtitle A): ARC and PLC . Payments for the two revenue-support programs\u00e2\u0080\u0094Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC)\u00e2\u0080\u0094must be combined for all covered commodities (except peanuts) and reduced by any sequestration prior to assessing whether they are within the $125,000 annual payment limit for an individual. Peanuts are a notable exception to this rule in that ARC and PLC payments for peanuts (after sequestration) are subject to their own annual payment limit of $125,000 per individual. Title I (Subtitle E): LFP . The LFP program is subject to an annual limit of $125,000 per person. Title I (Subtitle F ) : NAP . Available for crops not currently eligible for crop insurance. Payments for catastrophic coverage are limited to $125,000 per crop year per individual or entity. Payments for additional coverage (referred to as buy-up coverage) have a separate limit of $300,000 per crop year per individual or entity.", "In addition to commodity programs authorized in periodic farm bills, the Secretary of Agriculture has broad authority under the CCC charter to make payments in support of U.S. agriculture. These payments may be purely ad hoc in nature, or they may be made according to a formula as part of a temporary program. Payments under this type of authority may or may not be subject to payment limits in accordance with the program's specification. ", "Three such programs have been initiated since 2016\u00e2\u0080\u0094all subject to annual payment limits. ", "1. Cotton Ginning Cost Share (CGCS) Program. The CGCS program has been available only in the 2016 and 2018 crop years. Payments under the CGCS program are subject to an annual payment limit of $40,000 per person. 2. 2018 MFP. USDA established the MFP program in August 2018 as a one-time payment program to help offset the financial losses associated with lost agricultural trade to China as a result of a trade dispute with the United States. MFP payments are subject to a per-person payment limit of $125,000. However, the limit applies separately to three categories of commodities\u00e2\u0080\u0094field crops (corn, sorghum, soybeans, upland cotton, and wheat); livestock (dairy and hogs); and specialty crops (shelled almonds and fresh, sweet cherries). 3. 2019 MFP. In July 2019 USDA established a second round of MFP payments, again subject to per-person payment limits but at a higher rate of $250,000 per commodity category with an overall cap of $500,000 per person. The three eligible categories included non-specialty crops (primarily grain and oilseed crops), specialty crops (selected tree nuts, cranberries, ginseng, sweet cherries, and table grapes), and livestock (hogs and dairy).", "When the farm program benefits for a qualifying recipient exceed the annual limits (as listed in Table A-1 ) for a given year, then that individual is no longer eligible for further benefits under that particular program during that year and is required to refund any payments already received under that program that are in excess of the relevant payment limit for that year."], "subsections": [{"section_title": "Special Treatment of Family Farms", "paragraphs": ["As mentioned earlier, family farms receive special treatment whereby every adult member\u00e2\u0080\u009418 years or older\u00e2\u0080\u0094is deemed to meet the AEF requirements and is potentially eligible to receive farm program payments in an amount up to the individual payment limit. Furthermore, under the 2018 farm bill (\u00c2\u00a71703(a)(1)), the definition of family member was extended to include first cousins, nieces, and nephews. Thus, a family farm with a single active farm operator may still qualify for multiple payment limits based on the number of immediate and extended family members. For example, suppose that a farmer who is married with two adult children also has two neighboring married cousins, each with two children, that occasionally help out with farm work. This farm operation could potentially be eligible for 12 individual payment limits (four on the core farm operation and four from each of the cousin's families) for a total of $1.5 million in program payments."], "subsections": []}, {"section_title": "Multiple Payment Limits for a Partnership", "paragraphs": ["A partnership's potential payment limit is equal to the limit for a single person times the number of persons or legal entities that comprise the ownership of the joint operation plus any additional exemptions or exceptions. Adding a new member can provide one or two (with qualifying spouse) additional payment limits.", "Each member of a partnership or joint venture must meet the AEF criteria and must be within the AGI limit. Furthermore, the partnership's total payment limit is reduced by the share of each single member who has already met his or her payment limit (or portion thereof) on another farm operation outside of the partnership. "], "subsections": []}, {"section_title": "Single Payment Limit for a Corporation", "paragraphs": ["A corporation is treated as a single person for purposes of determining eligibility and payment limits\u00e2\u0080\u0094provided that the entity meets the AEF criteria. Adding a new member to the corporation generally does not affect the payment limit but only increases the number of members that can share a single payment limit."], "subsections": []}]}, {"section_title": "Supplemental Assistance Programs Subject to Payment Limits", "paragraphs": ["In FY2018 and FY2019, Congress provided several supplemental appropriations for production losses resulting from natural disasters and not covered by NAP or crop insurance. The majority of the supplemental funding has been administered by USDA through two versions of a similar program\u00e2\u0080\u0094the Wildfires and Hurricanes Indemnity Program (WHIP). Losses occurring in 2017 were eligible for the \"2017 WHIP.\" An expanded set of losses occurring in 2018 and 2019 are eligible for \"WHIP Plus\" (referred to as WHIP+). In addition to WHIP+, USDA implemented two other ad hoc programs\u00e2\u0080\u0094the On-Farm Storage Loss Program and the Milk Loss Program\u00e2\u0080\u0094as well as block grants with states. USDA established payment limits for WHIP under authority granted to the Secretary in authorizing legislation.", "Payment limits for 2017 WHIP and WHIP+ are based on an individual's or entity's average AGI over a three-year period depending on how much of that income is derived from farming ( Table 2 ). Producers are assumed to be in the lowest payment limit category unless an exception to the payment limit is filed using a USDA form and documentation from a certified public accountant or attorney that at least 75% of the person's or legal entity's average AGI was from adjusted gross farm income. Unlike the aforementioned AGI consent form (CCC-941), verification of payment limit exceptions is not submitted to the IRS for the WHIP programs. Direct attribution applies for both payment limits and determining average AGI."], "subsections": []}, {"section_title": "Conservation Programs Subject to Payment Limits", "paragraphs": ["Limits on conservation programs have existed long before limits on farm support programs have. Most current conservation programs include some limit on the amount of funding a participant may receive, but these limits vary by program. Some programs have multiple limits that vary based on activity or practice implemented. Several major conservation programs in Title II of the 2018 farm bill are currently subject to payment limits.", "Conservation Reserve Program (CRP) . Payments for CRP can vary based on the type of contract and type of payment. In general, annual rental payments for general enrollment contracts and continuous enrollment contracts are limited to 85% and 90% of the average county rental rate, respectively, and not more than $50,000 total per year. Cost-share payments and incentive payments are also limited and may be waived or applied at different levels under subprograms of CRP, such as land enrolled under the Conservation Reserve Enhancement Program or the Soil Health and Income Protection Pilot. Environmental Quality Incentives Program (EQIP). Total cost-share and incentive payments are limited to $450,000 for all EQIP contracts entered into by a person or legal entity between FY2019 and FY2023. Additional limits apply to select EQIP contract payments, including incentive contract payments, which are limited to a total of $200,000 between FY2019 and FY2023; payments for EQIP conservation practices related to organic production, which are limited to a total of $140,000 between FY2019 and FY2023; and eligible water management entity payments, which are limited to a total of $900,000 between FY2019 and FY2023. Conservation Stewardship Program (CSP). A person or legal entity may not receive more than a total of $200,000 for all CSP contracts between FY2019 and FY2023. A CSP contract with any joint operation is limited to $400,000 over the term of the contract period. These limits do not apply to the CSP Grassland Conservation Initiative, in which annual payments are limited to $18 per acre, not to exceed the number of base acres on a farm."], "subsections": []}, {"section_title": "Exceptions That Avoid Payment Limits", "paragraphs": ["Payments under certain Title I and Title II programs in the 2018 farm bill are excluded from annual payment limits. These exceptions are described below. Another exception to payment limits could result if the principal operator or a major partner of a farm operation dies during the course of a program year and any associated program benefits for the deceased are transferred to another farm operator or partner. "], "subsections": [{"section_title": "Selected Farm Programs Without Payment Limits", "paragraphs": ["Certain farm programs are not subject to annual payment limits. This includes any benefits obtainable under the Marketing Assistance Loan (MAL) program, the sugar program, the dairy program, and three of the four disaster assistance programs (ELAP, LIP, and TAP). Also, benefits from crop insurance premium subsidies and indemnity payments on loss claims are not subject to any limits. Finally, any payments made under the Emergency Watershed Protection Program (EWP) are not subject to payment limits.", "Title I (Subtitle B) MAL program. Benefits under the MAL program include loan deficiency payments (LDP), marketing loan gains (MLG), and gains under forfeiture or commodity certificate exchanges. Traditionally, MAL benefits in the form of LDPs and MLGs have been subject to payment limits, whereas MAL benefits derived from forfeiting to the CCC the quantity of a commodity pledged as collateral for a marketing assistance loan or from use of commodity certificates to repay a marketing assistance loan have traditionally been excluded from payment limits. However, the 2018 farm bill (\u00c2\u00a71703(a)(2)) excluded all MAL benefits from payment limits. Title I (Subtitle C) sugar program. The U.S. sugar program does not rely on direct payments from USDA and generally operates with no federal budget outlays. Instead, the sugar program provides indirect price support to producers of sugar beets and sugarcane and direct price guarantees to the processors of both crops in the form of a marketing assistance loan at statutorily fixed prices. Congress has directed USDA to administer the U.S. sugar program at no budgetary cost to the federal government by limiting the amount of sugar supplied for food use in the U.S. market, thus indirectly supporting market prices. This indirect subsidy is implicit and not subject to budgetary restrictions. Furthermore, there is no citizenship requirement for a sugar processor, but the sugarcane and sugar beets being processed under the U.S. sugar program price guarantees must be of U.S. origin. Title I (Subtitle D) dairy program . The margin-based dairy support program was first established under the 2014 farm bill (\u00c2\u00a7\u00c2\u00a71401-1431) without payment limits as the Margin Protection Program (MPP) for dairy. The MPP was revised and renamed as the Dairy Margin Coverage (DMC) program by the 2018 farm bill. Under the DMC, participants benefit from two potential types of support: an implicit premium subsidy and an indemnity-like payment made when program price triggers are met. The fees or premiums charged for participating in the DMC are set in statute rather than being set annually based on historical data and market conditions. Thus, the subsidy is implicit to the premium paid with no limit on the level of participation. Similarly, any payments made under the DMC are not subject to payment limits. Title I (Subtitle E ) disaster assistance program s: ELAP, LIP, and TAP . Payments under three of the disaster assistance programs in Title I of the 2018 farm bill are excluded from any payment limits. This includes ELAP, LIP, and TAP. Title II conservation programs. Total payments under certain conservation programs are limited to the value or cost of the specific conservation measure that the program is paying for rather than a fixed limit. Under the Agricultural Conservation Easement Program and the EWP program, payments are limited to a portion of the total cost of the easement or project rather than a total funding amount. In the case of the Regional Conservation Partnership Program (RCPP), USDA may make payments to producers in an amount necessary to achieve the purposes of the program with no statutory limit on the total amount. Title XI crop- and livestock-related insurance premium subsidies and indemnity payments . The principal support provided for farmers under the federal crop insurance program are federal premium subsidies for both catastrophic and buy-up insurance coverage. Premium subsidies are not subject to any limit on the level of participation or underlying value. Crop insurance indemnities are payments made to cover insurable losses and thus are not subject to any payment limit. To be eligible to purchase catastrophic risk protection coverage, the producer must be a \"person\" as defined by USDA, and to be eligible to purchase any other plan of insurance (such as buy-up coverage, among others), the producer must be at least 18 years of age and have a bona fide insurable interest in a crop as an owner-operator, landlord, tenant, or sharecropper. "], "subsections": []}, {"section_title": "Death of a Principal Operator", "paragraphs": ["A noteworthy exception to payment limits may occur if the principal operator should die during the crop year. In particular, payments received directly or indirectly by a qualifying person (i.e., someone who meets AEF, AGI, and any other eligibility requirements) may exceed the applicable limitation if all of the following apply: ownership interest in farmland or agricultural commodities was transferred because of death, the new owner is the successor to the previous owner's contract, and the new owner meets all other eligibility requirements. This provision also applies to an ownership interest in a legal entity received by inheritance if the legal entity was the owner of the land enrolled in an annual or multiyear farm program contract or agreement at the time of the shareholder's death.", "The new owner cannot exceed the payment amount that the previous owner was entitled to receive under the applicable program contracts at the time of death. However, the new payment limit associated with this transfer would be in addition to the payment limit of the person's own farm operation. If the new owner meets all program and payment eligibility requirements, this provision applies for one program year for ARC and PLC. This reflects the idea that individual resources were committed by both farming operations (the deceased's and the inheritor's) during the growing season with no expectation of death and that individual payment limits should reflect that resource commitment and not impose an unnecessary and unexpected burden on the inheritor."], "subsections": []}]}]}, {"section_title": "Issues for Congress", "paragraphs": ["Limitations on farm program payments raise a number of issues that have led to debate among farm policymakers and agricultural stakeholders and may continue to be of interest to Congress as it considers issues of equity and efficiency in farm programs. "], "subsections": [{"section_title": "Payment Limits and Market Signals", "paragraphs": ["Theoretically, market prices\u00e2\u0080\u0094based on relative supply and demand conditions under competitive market conditions \u00e2\u0080\u0094provide the most useful signals for allocating scarce resources. In other words, in a situation where no policy support is available, most producers would make production decisions based primarily on market conditions. If these conditions hold, then tighter payment limits (i.e., a smaller role for government support policies and production incentives) would imply that more land would be farmed based on market conditions and less land would be farmed based on policy choices. ", "Supporters of payment limits use both economic and political arguments to justify tighter limits. Economically, they contend that large payments facilitate consolidation of farms into larger units, raise the price of land, and put smaller, family-sized farming operations and beginning farmers at a disadvantage. Even though tighter limits would not redistribute benefits to smaller farms, they say that tighter limits could help indirectly by reducing incentives to expand, thus potentially reducing upward price pressure on land markets. This could help small and beginning farmers buy and rent land. Politically, they believe that large payments undermine public support for farm subsidies and are costly. In the past, newspapers have published stories critical of farm payments and how they are distributed to large farms, nonfarmers, or landowners. Limits increasingly appeal to urban lawmakers and have advocates among smaller farms and social interest groups.", "Critics of payment limits (and thus supporters of higher limits or no limits) counter that all farms are in need of support, especially when market prices decline, and that larger farms should not be penalized for the economies of size and efficiencies they have achieved. They say that farm payments help U.S. agriculture compete in global markets and that income testing is at odds with federal farm policies directed toward improving U.S. agriculture and its competitiveness.", "In addition to these concerns, this section briefly reviews other selected payment limit issues and eligibility requirements."], "subsections": []}, {"section_title": "Distributional Impacts on Farm Size", "paragraphs": ["The majority of farm payments go to a small share of large operators. According to USDA's 2017 Agricultural Census, farms with market revenue equal to or greater than $250,000 accounted for 12% of farm households but produced 90% of the value of total U.S. agricultural production and received 62% of federal farm program payments.", "Selecting a particular dollar value as a limit on annual government support payments involves a fundamental choice about who should benefit from farm program payments. This has important, but complex, policy implications. For example, numerous academic studies have shown that government payments are usually capitalized into cropland values, thus raising rental rates and land prices. Higher land values disfavor beginning and small farmers, who generally have limited access to capital. As a result, critics contend that there is a lack of equity and fairness under the current system of farm program payments that appears to favor large operations over small and that payment limits are really about farm size. ", "In contrast, supporters of the current system argue that larger farms tend to be more efficient operators and that altering the system in favor of smaller operators may create inefficiencies and reduce U.S. competitiveness in international markets. Furthermore, they contend that tightening payment limits will have different effects across crops, thus resulting in potentially harmful regional effects."], "subsections": []}, {"section_title": "Potential Crop and Regional Effects of Tighter Payment Limits", "paragraphs": ["Tighter payment limits do not affect all crops and regions equally. As limits are tightened, they will likely first impact those crops with higher per-unit and per-acre production value. Among the major U.S. program crops, higher valued crops include rice, peanuts, and cotton, all of which tend to be produced in the Southeast, the Mississippi Delta, and western states.", "Furthermore, payment limits may influence local economic activity. In particular, payment limits are likely to have a larger economic impact in regions where agricultural production accounts for a larger share of economic output\u00e2\u0080\u0094that is in rural, agriculture-based counties\u00e2\u0080\u0094and where there may be fewer opportunities for diversification to offset any payment-limit-induced reduction in agricultural incomes."], "subsections": []}, {"section_title": "Separate Payment Limit for Peanuts", "paragraphs": ["Under current law, peanuts have a separate program payment limit\u00e2\u0080\u0094a consequence of the 2002 federal quota buyout ( P.L. 107-171 , \u00c2\u00a71603). This separate payment limit affords peanut production an advantage over production of other program crops that are subject to combined payments for ARC and PLC under a single limit. As a result of this feature, a farmer who grows multiple program crops including peanuts has essentially two different program payment limits: ", "1. $125,000 per person for an aggregation of ARC and PLC program payments made to all program crops other than peanuts, and 2. $125,000 per person for ARC and PLC program payments made exclusively to peanuts. ", "Thus, under an extreme scenario involving large payments for both peanuts and other program crops, this could potentially double a peanut farmer's payment limits to as much as $250,000."], "subsections": []}, {"section_title": "No Payment Limit on MAL Benefits", "paragraphs": ["The 2018 farm bill (\u00c2\u00a71703) excluded MAL benefits from any payment limit while also raising the MAL rates for several program crops (\u00c2\u00a71202), including barley, corn, grain sorghum, oats, extra-long-staple cotton, rice, soybeans, dry peas, lentils, and small and large chickpeas. ", "Raising MAL rates has two potential program effects. First, since MAL rates function as floor prices for eligible loan commodities, higher rates increase the potential for greater USDA outlays under MAL. Second, MAL rates are used to establish the floor price in calculating the maximum payment under PLC. Thus, raising the loan rate for a program commodity lowers its potential PLC program payment rate.", "The absence of a limit on benefits received under the MAL program creates the potential for unlimited, fully coupled USDA farm support outlays. As a result, an apparent equity issue emerges when comparing program benefits of a producer facing a hard cap for ARC and PLC payments as compared to a producer with access to MAL benefits.", "Because MAL payments are fully coupled\u00e2\u0080\u0094that is, tied to the production of a specific crop\u00e2\u0080\u0094MAL program outlays count directly against U.S. amber box spending limits under World Trade Organization (WTO) commitments. To the extent that such program outlays might induce surplus production and depress market prices, they could result in potential challenges under the WTO's dispute settlement mechanism."], "subsections": []}, {"section_title": "Policy Design Considerations", "paragraphs": ["When eligibility requirements or payment limits are changed, economically rational producers are likely to alter their behavior to make adjustments to optimize net revenue under the new set of policy and market circumstances. For example, new eligibility requirements or tighter payment limits may result in", "a reorganization of the farm operation to increase the number of eligible persons or to lower the income that counts against a new AGI limit or the farm program payments that count against a smaller payment limit; a change in the crop and program choices or marketing practices, for example, to take advantage of the absence of a payment limit on MAL benefits; a change in crop choices, as agronomic and marketing opportunities allow, to favor a crop with an expanded limit (e.g., peanuts) over crops with more restricted program payment opportunities; or a change in land use, such as instead of farming the same acreage, renting out or selling some land to farmers who have not hit their payment limits.", "Payment limits applied per unit or per base acre represent an alternative to per-person payment limits that may mitigate some potential distortions to producer behavior. An example of such a per-unit payment limit is the 85% payment reduction factor applied to base acres receiving payments under either the PLC or ARC programs. The reduction factor is applied equally across all program payments irrespective of crop choice, farm size, AGI, or total value of payments. Some economists contend that such a payment reduction factor is generally applied for cost-saving reasons rather than for \"fairness\" or equity reasons that at least partially motivate per-person payment limits. "], "subsections": []}, {"section_title": "AGI Limit Concerns: On- versus Off-Farm Income", "paragraphs": ["The 2018 farm bill retained the $900,000 AGI limit established under the 2014 farm bill. This AGI limit applies to all farm income whether earned on the farm or off. Under the 2008 farm bill, the AGI limit was divided into two components: a $500,000 AGI limit for farm-earned income and a $750,000 AGI cap on nonfarm-earned income. ", "Analysis by USDA (2016) found that fewer farms are affected by the single AGI cap ($900,000) compared with the multiple farm ($500,000) and nonfarm ($750,000) AGI caps of the 2008 farm bill. For example, while federal income tax data are not available for the $900,000 cap level, published data from 2013\u00e2\u0080\u0094a year of record-high farm income\u00e2\u0080\u0094found that only about 0.7% of all farm sole proprietors and share rent landlords reported total AGI in excess of $1 million. Thus, it is likely that consolidating the separate AGI farm and nonfarm limits into a single AGI limit with a higher bound has restored eligibility for farm program payments to some farm operations that had previously been disqualified. Other major exemptions from the AGI limit include state and local governments and agencies, federally recognized Indian tribes, and waivers under RCPP.", "The 2014 farm bill shifted the farm safety net focus away from traditional revenue support programs and toward crop insurance programs, which are not subject to the AGI cap. The 2018 farm bill maintains this emphasis on crop insurance as the foundational farm safety net program. During the eight-year period of 2011-2018, federal crop insurance premium subsidies averaged $6.4 billion annually. Extending the AGI cap to crop insurance subsidies was considered during both the 2014 and 2018 farm bill debates. However, concerns were raised that the elimination of subsidies for higher-income participants could affect overall participation in crop insurance and damage the soundness of the entire program. However, USDA has estimated that in most years, less than 0.5% of farms and less than 1% of premiums would be affected by the $900,000 income cap if it were extended to crop insurance subsidies as well as to farm program payments.", "Appendix A. ", "Appendix B. Supplementary Tables"], "subsections": []}]}]}}
{"id": "R45993", "title": "Legalization Framework Under the Immigration and Nationality Act (INA)", "released_date": "2019-11-05T00:00:00", "summary": ["The population of unlawfully present aliens in the United States numbers between ten million and twelve million, according to recent estimates. The Immigration and Nationality Act (INA) takes three primary approaches to regulating this population: removal, deterrence, and\u00e2\u0080\u0094to a lesser extent\u00e2\u0080\u0094legalization. Legalization, as used here, means the granting of a lawful immigration status to an unlawfully present alien so that he or she is no longer subject to removal under the INA. Put differently, an unlawfully present alien \"legalizes\" by obtaining lawful permanent resident status (LPR or \"green card\" status) or any other status (such as a nonimmigrant status) that extinguishes the statutory basis for his or her removal.", "The INA takes a generally restrictive approach to legalization. During much of the 20th century, a statutory provision called \"registry\" allowed unlawfully present aliens to obtain LPR status based on their long-standing presence in the United States. If unlawfully present aliens had entered the United States before a fixed cutoff date and satisfied other requirements, such as a lack of certain types of criminal convictions, they could apply to the Attorney General for LPR status. The registry statute is now effectively obsolete because its cutoff date, which Congress last updated in 1986, remains fixed at 1972.", "The most consequential body of legalization principles in the INA governs when unlawfully present aliens may obtain LPR status through qualifying family relationships or on other qualifying grounds. In general, the INA imposes barriers to the acquisition of LPR status for unlawfully present aliens who come within one of the three major categories that the law uses to select aliens for immigration to the United States: family-based immigrants, employment-based immigrants, and diversity immigrants. Specifically, most unlawfully present aliens who come within these categories must pursue LPR status by departing the United States to apply for an immigrant visa abroad (rather than applying to adjust status within the United States), and their departure typically triggers a ten-year bar on readmission to the United States. There are important exceptions to this general framework, however. In particular, an alien who overstays a nonimmigrant visa and then becomes the immediate relative of a U.S. citizen (through marriage, for example) may generally apply to adjust to LPR status without leaving the country and without facing any time bars on admission.", "Other INA provisions allow for legalization on hardship or humanitarian grounds. Cancellation of removal allows for legalization where the removal of an unlawfully present alien would cause hardship to immediate relatives who are U.S. citizens or LPRs, but the hardship must be \"exceptional and extremely unusual.\" Cancellation of removal also is generally only available as a defense in removal proceedings (aliens cannot apply for it affirmatively), is subject to an annual cap, and, among other requirements, is only available to unlawfully present aliens who have been in the United States for at least ten years. As for humanitarian relief, asylum creates a pathway to LPR status for unlawfully present aliens who have a well-founded fear of persecution or suffered past persecution in their countries of origin. However, aliens generally must apply for asylum within one year of arriving in the United States (unless an exception applies), so asylum is not available to most unlawfully present aliens who have been in the country for long periods of time. Subsidiary protections from persecution and torture\u00e2\u0080\u0094withho lding of removal and protection under the Convention Against Torture (CAT)\u00e2\u0080\u0094do not have the one-year application deadline, but they offer more limited relief that arguably does not qualify as lawful immigration status. Separately, a series of nonimmigrant statuses, including the U visa, offer the prospect of lawful immigration status to unlawfully present aliens who are victims or witnesses of certain crimes.", "U.S. immigration law has also taken other approaches to legalization, separate and apart from the narrow legalization provisions in the INA. First, Congress occasionally has enacted ad hoc legalization laws that, rather than reforming the INA's generally applicable provisions going forward, have offered one-time relief or relief only for discrete populations. Second, executive branch agencies have exercised enforcement discretion to grant unlawfully present aliens discretionary reprieves from removal, such as deferred action or the Deferred Action for Childhood Arrivals (DACA) initiative, which have conferred a weaker form of protection than lawful immigration status. This weaker form of protection is sometimes known as \"quasi-legal status\" and, although it typically confers work authorization and gives an unlawfully present alien an assurance that immigration authorities will not pursue his or her removal during a certain time, it does not extinguish the statutory basis for the alien's removal."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["When a non-U.S. national (alien) enters the United States illegally or overstays a temporary visa, her presence in the country violates the Immigration and Nationality Act (INA). She is subject to removal from the country on that basis alone, regardless of whether she has a criminal history or other factors, and there are few circumstances in which she can legalize her presence to extinguish the statutory basis for her removal. The population of aliens in this situation\u00e2\u0080\u0094that is, aliens whose presence in the United States violates the INA, referred to here as \"unlawfully present aliens\" \u00e2\u0080\u0094currently numbers between ten million and twelve million, according to some recent estimates. About 80% of unlawfully present aliens have been in the United States for more than ten years, according to a study by the Department of Homeland Security (DHS).", "The issue of whether and to what extent to legalize or provide other relief from removal to unlawfully present aliens is a frequent topic of debate in Congress. The issue is sometimes called the \"third leg of the stool\" of immigration reform, after the issues of border enforcement and legal admissions. Many (but not all) proposals for comprehensive immigration reform include provisions that would create pathways to lawful permanent residence for unlawfully present aliens in significant numbers. These bills generally follow a model for one-time legalization programs exemplified by the Immigration Reform and Control Act of 1986, which offered the prospect of lawful permanent resident (LPR) status to much of the unlawfully present population in the United States at that time. Other bills would create legalization programs for discrete segments of the unlawfully present population; the various Dream Act proposals, for example, would offer relief to many childhood arrivals. These legislative proposals contemplate ad hoc legalization measures: they would offer relief to extant populations of unlawfully present aliens, but the proposals would not change generally applicable law concerning legalization going forward. The version of the DREAM Act recently passed by the House of Representatives, for example, would create a pathway to LPR status for some unlawfully present childhood arrivals who entered the United States at least four years before enactment; the bill would not, however, change the INA's approach to future childhood arrivals.", "This report covers the current law that underlies the ad hoc legalization debate. It reviews the limited extent to which, under the INA, an unlawfully present alien can obtain a legal immigration status that extinguishes the statutory basis for removal. In other words, the report explains the narrow circumstances in which unlawfully present aliens can legalize under current law. As used here, \"legalization\" means the acquisition of a lawful immigration status by an unlawfully present alien so that he or she is no longer subject to removal under the INA. Because the INA takes a restrictive approach to legalization, the term is often used synonymously with ad hoc legalization to refer to proposals for programs of one-time relief. This report, in contrast, focuses on legalization under current law.", "To the exclusion of other issues, this report focuses on the circumstances in which the INA allows acquisition of legal status notwithstanding unlawful presence. Many of the statutory provisions discussed that allow legalization in limited circumstances\u00e2\u0080\u0094such as adjustment of status, asylum, and cancellation of removal\u00e2\u0080\u0094apply to lawfully present aliens as well, but those aspects of the statutes are not explored here. Further, most of the statutory provisions treated here have requirements that disqualify aliens with certain criminal convictions or immigration violations. Those requirements are referenced but not analyzed here; another CRS report discusses them in more depth."], "subsections": []}, {"section_title": "Overview of INA Regulation of Unlawful Presence", "paragraphs": ["The INA takes three primary approaches to regulating the unlawfully present population: removal, deterrence, and\u00e2\u0080\u0094to a lesser extent\u00e2\u0080\u0094legalization.", "First, unlawfully present aliens are subject to removal for as long their presence violates the INA; no statute of limitations applies. This regime of perpetual removability has been a feature of U.S. immigration law since 1924. Under it, aliens who enter the country surreptitiously or overstay nonimmigrant visas may be removed even after many years in the United States, whether or not they have committed other crimes or offenses. Enforcement of this legal regime comes with a well-known catch: the federal government does not allocate enough resources to make the removal of all unlawfully present aliens possible. According to DHS estimates and removal statistics, the agency's resources allow it to pursue removal each year of only a small fraction of the approximately ten million to twelve million unlawfully present aliens in the United States. There is an enforcement gap, in other words. In response, executive branch administrations have, to varying degrees, established enforcement priorities to focus their removal resources on aliens who have committed crimes or who meet other criteria. But the point remains that unlawfully present aliens face perpetual risk of removal under the INA, even if only a small percentage are actually placed in removal proceedings each year.", "Second, the INA seeks to deter the arrival or continued presence of unlawfully present aliens. It criminalizes some immigration violations, such as illegal entry and reentry, and bars most aliens who lack lawful immigration status from working or receiving federal public benefits. The INA renders aliens who commit some immigration violations inadmissible (i.e., ineligible for admission), either for a specified time period or for life. Aliens who are unlawfully present in the United States for one year or more, for example, are inadmissible for ten years once they depart, subject to some waiver provisions. Aliens who reenter the country illegally after being removed are inadmissible for life, also subject to limited waiver.", "Finally, legalization: as this report explains, the INA offers limited opportunities for unlawfully present aliens to acquire legal immigration status that extinguishes the statutory basis for their removal. An alien who overstays a nonimmigrant visa and later marries a U.S. citizen (or otherwise becomes the immediate relative of a U.S. citizen) can legalize through the adjustment of status process, so long as he or she has not committed certain crimes and does not fall within other eligibility bars. Beyond that notable exception, the legalization mechanisms in the INA exist mainly to relieve specific types of hardships such as persecution abroad (asylum) or the extreme hardship that U.S. citizens or LPRs would suffer due to the removal of their parents (cancellation of removal). Where these forms of relief do not apply, unlawfully present aliens may seek to legalize by leaving the country and applying for an immigrant visa abroad on the basis of a qualifying family relationship or in an employment or diversity category. In most cases, however, their prior unlawful presence in the United States will make them ineligible to return for ten years. As such, under current law, it is generally more difficult for unlawfully present aliens in the United States to obtain legal immigration status on generally applicable grounds, such as qualifying family relationships, than it is for aliens abroad applying to immigrate on the same grounds."], "subsections": []}, {"section_title": "Early Legalization Law: Registry for Long-Standing Presence", "paragraphs": ["U.S. immigration law developed its current stance toward the unlawfully present population in the middle period of the twentieth century, when Congress strengthened removal statutes and allowed the primary legalization statute\u00e2\u0080\u0094known as the registry statute, which provided for legalization based on long-standing presence\u00e2\u0080\u0094to become obsolete.", "Illegal immigration emerged as a significant issue in the United States with the advent of quantitative immigration restrictions in the 1920s. Until 1875, the only restrictions on immigration into the United States came from state laws providing for the exclusion or expulsion of convicts, paupers, and people with contagious diseases. The Page Act of 1875 imposed the first federal restrictions when it barred convicts and prostitutes. Additional qualitative restrictions, including bars against Chinese laborers and aliens \"likely to become public charges,\" followed in the ensuing decades, culminating in the imposition of a literacy test in 1917.", "The first numerical restrictions on immigration were not imposed until 1921, when the temporary measures of the Emergency Quota Act capped new admissions by nationality (at 3% of the foreign-born population of each nationality, as reflected in the census of 1910). Congress established a permanent and generally more restrictive system of national origins quotas in the Immigration Act of 1924, also known as the Johnson-Reed Act. Numerical limitations of some form have remained a fixture of U.S. immigration law ever since. Some illegal immigration had existed during the regime of qualitative restrictions that began in 1875, but it increased with the introduction of numerical caps.", "The 1924 Act, beyond establishing a permanent quota system, was also notable for its removal provisions. The act rendered aliens who entered or remained in the country in violation of its restrictions subject to deportation \"at any time after entering,\" which meant that no limitations period applied and even long-standing unlawfully present aliens could be deported. This marked a significant change from earlier deportation statutes, which had imposed limitations periods of between one and five years for the removal of illegal entrants. Aliens physically present for longer than the limitations period could not be deported under those laws on the ground that their presence violated the immigration statutes. The 1924 Act eliminated this limitations period going forward.", "Yet soon after U.S. immigration law settled upon this regime of perpetual deportability of unlawfully present aliens, the law also developed a mechanism called \"registry\" for such aliens to legalize on the basis of long-standing presence. Congress enacted the first registry statute in 1929 and revised it periodically thereafter. Generally speaking, the registry statute authorized immigration officials to grant lawful permanent residence to aliens who entered the United States before a date specified in the statute and who resided in the country continuously after entry. To qualify, aliens also had to demonstrate \"good moral character\" and not be ineligible on certain grounds that changed over time (e.g., not have certain criminal convictions). Unlawful presence\u00e2\u0080\u0094whether as a result of surreptitious entry or the overstay of a visa\u00e2\u0080\u0094was not a bar to registry.", "In plain terms, then, the registry statute provided for the legalization of unlawfully present aliens who had been in the United States since a given cutoff date. The first cutoff date, under the 1929 statute, was June 3, 1921. Congress apparently sought to provide relief to aliens who entered the United States before the first numerical restrictions went into effect in 1921 and before immigration officials began systematically recording alien admissions at ports of entry. In 1939, Congress advanced the cutoff date to 1924. About 200,000 aliens appear to have legalized through registry between 1929 and 1945. A few more changes to the cutoff date followed in later decades. A 1958 law advanced the date from 1924 to 1940; a 1965 law moved it up to 1948; and in 1986, the Immigration Reform and Control Act (IRCA) set the current date of 1972.", "Under current law, the registry statute remains in effect, but the 1972 cutoff date renders it mostly obsolete. Registry applications surged on the heels of the 1986 update that set the date at 1972, but applications dwindled to a trickle as the date grew more distant. In 2004, the last year for which DHS published separate statistics on registry in its statistical yearbook, 205 aliens became LPRs through registry. Thus, while the concept of registry persists in U.S. law as a legalization mechanism based on long-standing presence, few (if any) unlawfully present aliens qualify to legalize through registry because few have been present since the 1972 cut-off date."], "subsections": []}, {"section_title": "Legalization for Aliens Eligible to Immigrate", "paragraphs": ["Perhaps the most significant body of legalization principles in the INA governs the extent to which unlawful presence disqualifies an alien from obtaining LPR status through family relationships or on other generally applicable grounds. With the registry statute effectively obsolete, federal law no longer provides for the legalization of unlawfully present aliens based on the duration of their presence in the country alone. But unlawfully present aliens often come within the generally applicable criteria that the law uses to select aliens for immigration to the United States. The INA allocates immigrant visas to three major categories of aliens: family-based immigrants, employment-based immigrants, and diversity-based immigrants. Family-based immigrants account for about two-thirds of permanent immigration to the United States each year; employment-based immigrants account for about 12%; and diversity-based immigrants account for about 4% (refugees, asylees, and some other categories account for the remainder). An unlawfully present alien would come within one of these categories, to give some examples, by marrying a U.S. citizen, having a U.S. citizen son or daughter who turns twenty-one, obtaining an offer of employment that qualifies for an employment-based immigrant visa, or entering and winning a visa slot in the diversity lottery program.", "The law's approach to aliens in this situation\u00e2\u0080\u0094that is, aliens who become eligible for an immigrant visa while living in the United States in violation of the INA\u00e2\u0080\u0094is to impose two interlinking obstacles to their acquisition of LPR status. First , current law prohibits most (but not all) such aliens from obtaining LPR status unless they depart the United States to apply for the immigrant visa at a U.S. consulate abroad. As discussed below, exceptions to this prohibition allow some groups of unlawfully present aliens who are eligible for immigrant visas to become LPRs by adjusting their status from within the United States. The most notable exception benefits those aliens who enter on a nonimmigrant visa, overstay, and then marry a U.S. citizen or otherwise become the immediate relative of a U.S. citizen. Second , most unlawfully present aliens who depart the United States to apply for immigrant visas abroad will face a bar on readmission of three years from the date of their departure (for aliens unlawfully present for more than 180 days) or ten years from the date of their departure (for aliens unlawfully present for one year or more). Unless they receive a discretionary waiver of the ineligibility\u00e2\u0080\u0094a remedy with narrow eligibility criteria\u00e2\u0080\u0094they generally must wait out the bars abroad. In general, then, the INA imposes a double barrier to the legalization of unlawfully present aliens who come within an immigrant visa category: the law prohibits such aliens from seeking LPR status unless they apply from abroad (the first barrier) and then bars their readmission for three or ten years once they depart the United States (the second barrier).", "Crucially, the three- and ten-year bars on readmission apply only if the alien departs the United States following the period of unlawful presence. The law that governs an alien's eligibility to adjust status from within the United States\u00e2\u0080\u0094that is, to obtain LPR status without departing\u00e2\u0080\u0094is therefore hugely important, because in most cases it determines whether an unlawfully present alien in an immigrant visa category must face the three- and ten-year bars before obtaining legal status. In many cases, a grant of advance parole\u00e2\u0080\u0094essentially, an assurance from DHS that it will allow an alien to reenter the country on immigration parole after a trip abroad\u00e2\u0080\u0094can help an unlawfully present alien become eligible to adjust status, as discussed further below."], "subsections": [{"section_title": "Adjustment of Status: Legalization without Departing the United\u00c2 States", "paragraphs": ["Adjustment of status under INA \u00c2\u00a7 245 is the legal mechanism that makes it possible for an alien who is present in the United States and qualifies for an immediately available immigrant visa to acquire LPR status without leaving the country. Like most immigration benefits, adjustment of status is a discretionary remedy: the INA authorizes but does not require immigration authorities to grant it to eligible aliens. This mechanism did not exist in federal immigration statute until 1952. Its inexistence before that date sometimes forced creative administrative maneuverings. In the early 1940s, people fleeing German-occupied Europe who entered the United States on temporary visas or on immigration parole, and who qualified for and had the government's support to acquire LPR status, could gain such status only by departing the country to apply for U.S. immigrant visas. A special arrangement between the U.S. and Canadian governments facilitated such persons' entry into Canada to apply for the visas at the U.S. embassy there, with the understanding that they would return to the United States as LPRs. In 1945, President Truman issued a presidential declaration to exempt from this exit-to-enter procedure\u00e2\u0080\u0094which he considered \"wasteful\"\u00e2\u0080\u0094a group of about 1,000 displaced persons who had been brought from camps in Italy to a War Relocation Camp near Oswego, New York. The first version of the adjustment of status statute was enacted seven years later.", "Under current law, an alien seeking to adjust to LPR status within the United States must meet several requirements, two of which have outsize implications for the unlawfully present population: (1) the alien must have been \"inspected and admitted or paroled into the\u00c2\u00a0 United States ,\" and (2) the alien must have maintained \"lawful status,\" including by not accepting unlawful employment after entry. Accordingly, aliens who entered the United States surreptitiously generally cannot adjust status, because they were neither \"inspected and admitted\" nor \"paroled\" into the United States, and also because they have not maintained lawful status after entry. Similarly, aliens present in the United States after overstaying their nonimmigrant status generally cannot adjust: although they were \"inspected and admitted,\" they failed to maintain lawful status by overstaying. Exceptions exist to both requirements, however, as do administrative procedures that provide relief from them, as explained below. Perhaps most notably, the second requirement\u00e2\u0080\u0094maintenance of lawful status\u00e2\u0080\u0094does not apply to the immediate relatives of U.S. citizens.", "One significant statutory provision\u00e2\u0080\u0094INA \u00c2\u00a7 245(i)\u00e2\u0080\u0094changed the adjustment of status framework by lifting the lawful entry and maintenance of status requirements for aliens eligible for family-based or employment-based immigrant visas, provided they paid a $1,000 fine and met certain other requirements. INA \u00c2\u00a7 245(i) thus cleared the way for many unlawfully present aliens, including unlawful entrants, to adjust status. However, the provision has a cutoff date\u00e2\u0080\u0094it applies only to aliens for whom a visa petition or application for labor certification was submitted before April 30, 2001\u00e2\u0080\u0094that makes it inapplicable to most cases today. Accordingly, under current law, aliens generally may adjust status only if they meet the lawful entry and maintenance of status requirements or fall within an exception to those requirements."], "subsections": [{"section_title": "Lawful Entry Requirement: Exceptions and Significance of Parole Programs", "paragraphs": ["Exceptions to the lawful entry requirement (i.e., the requirement that an alien must have been \"inspected and admitted or paroled\" in order to adjust status) exist for victims of domestic violence, certain statutorily defined \"special immigrants\" who are juveniles or have affiliations with the U.S. Armed Forces, and aliens who meet the INA \u00c2\u00a7 245(i) cutoff date. To illustrate with a domestic violence example, if an alien enters surreptitiously and suffers domestic violence in the United States at the hands of an immediate relative who is a U.S. citizen or LPR, the alien may apply to adjust status notwithstanding the surreptitious entry. Some (but not all) federal courts have held that aliens who acquire Temporary Protected Status (TPS) meet the lawful entry requirement, even if they are present in the United States following a surreptitious entry.", "Where none of these narrowly drawn exceptions applies, however, a grant of immigration parole from DHS can enable an alien who entered the country surreptitiously to adjust status. In other words, a grant of parole can function as a work-around for the bar that unlawful entry typically poses to adjustment of status. This is because, even if the alien was not \"inspected and admitted,\" the alien can qualify to adjust status by being \"paroled.\" DHS most commonly exercises the parole power to permit entry to aliens not yet on U.S. territory who are (or may be) inadmissible. In some circumstances, however, DHS also grants parole to unlawfully present aliens. Grants of parole to aliens physically present in the U.S. come in two forms: (1) \"parole in place,\" which confers parole status on physically present aliens without requiring them to leave and come back; and (2) \"advance parole,\" which allows unlawfully present aliens to depart the United States with an assurance that they will be permitted to reenter on parole. Both varieties of parole satisfy the lawful entry requirement for adjustment of status, even when granted to an alien present following a surreptitious entry, although for advance parole the alien must actually leave and be paroled back into the country.", "The eligibility criteria for both of these parole programs are set by DHS and recorded in internal memoranda and agency manuals; no statute or regulation spells out which aliens may qualify for parole in place or advance parole. Accordingly, it can sometimes be difficult to track DHS's practice in granting these forms of relief. The agency appears, however, to place narrow parameters on both programs. Agency materials state that parole in place is granted \"only sparingly\" and affirmatively endorses granting it only to the immediate relatives of members of the U.S. armed forces. When DHS does grant parole in place to an unlawfully present alien, however, the primary purpose is apparently to help the recipient to adjust status.", "Advance parole, according to agency materials, is available to unlawfully present aliens who receive many types of discretionary reprieves from removal (such as TPS and Deferred Enforced Departure), although DHS sometimes makes clear that it grants advance parole only for a narrow set of travel purposes, including to visit ill family members or attend their funeral. DHS does not appear to grant advance parole for the purpose of facilitating adjustment of status applications by unlawful entrants, but advance parole has that effect. An unlawfully present alien who receives a grant of advance parole and then leaves and reenters the United States pursuant to that grant is not subject to the three- or ten-year bar for unlawful presence. Those bars apply only to aliens who \"depart\" the United States after the period of unlawful presence, and under current case law, a trip abroad pursuant to a grant of advance parole does not count as a \"departure\" for purposes of those bars.", "The applicability of these forms of parole to unlawfully present aliens has generated controversy on both sides of the immigration debate. Some Members of Congress have criticized advance parole and its facilitation of adjustment of status applications as a loophole that subverts enforcement of the statutory bars for unlawful presence. The former INS, pursuing a similar theory, issued a regulation in 1997 that made many parolees ineligible for adjustment of status under INA \u00c2\u00a7 245(a), but multiple federal appellate courts struck down the regulation as incompatible with the statute and DHS repealed the regulation in 2006. On the other side of the debate, some immigration advocates have called for the expansion of parole in place and advance parole as a way to clear a path to legalization for a large segment of the unlawfully present population (namely, those eligible for immigrant visas on the basis of family relationships or other grounds)."], "subsections": []}, {"section_title": "Maintenance of Lawful Status Requirement: INA \u00c2\u00a7 245(c)(2)", "paragraphs": ["Even if the lawful entry requirement is met, INA \u00c2\u00a7 245(c)(2) generally bars aliens from adjusting status if they fail to maintain lawful status in any of three ways: (1) if they are \"in unlawful immigration status on the date of filing the application for adjustment\"; (2) if they have failed \"to maintain continuously a lawful status since entry into the United States\"; or (3) if they have engaged in \"unauthorized employment.\" As such, \u00c2\u00a7 245(c)(2) generally bars unlawfully present aliens from adjusting status, even if they satisfy the lawful entry requirement, due to their lack of lawful immigration status.", "The \u00c2\u00a7 245(c)(2) bar does have exceptions, however. It does not apply to the immediate relatives of U.S. citizens. Thus, as already mentioned, if an alien overstays a nonimmigrant visa and then marries a U.S. citizen, the alien's failure to maintain lawful status does not bar an application for adjustment. Under other exceptions, the bar for failure to maintain lawful status also does not apply to certain domestic violence victims, certain \"special immigrants,\" applicants for employment-based immigrant visas with a lapse or lapses in status not exceeding 180 days in the aggregate, and aliens who meet the April 30, 2001, cutoff date of INA \u00c2\u00a7 245(i)."], "subsections": []}]}, {"section_title": "Application for Immigrant Visa Abroad: Three- and Ten-Year Bars for Unlawful Presence", "paragraphs": ["As the prior section explains, many unlawfully present aliens who are eligible to immigrate based on family relationships or other grounds do not qualify for adjustment of status because of the statutory requirements concerning lawful entry and maintenance of lawful status. These aliens, therefore, cannot obtain LPR status from within the United States. Such aliens may still pursue LPR status by departing the country and applying for an immigrant visa at a U.S. consulate abroad. Most unlawfully present aliens who take this route, however, encounter a significant obstacle: their departure from the United States triggers the three-year unlawful presence bar (for those who were unlawfully present for between 180 and 365 days) or the ten-year unlawful presence bar (for those who were unlawfully present for more than year). Aliens qualify for a discretionary waiver of these bars only if (1) they are the \"spouse or son or daughter\" of a U.S. citizen or LPR\u00e2\u0080\u0094the parents of U.S. citizens or LPRs do not qualify; and (2) their inability to return to the United States during the applicable time bar (three or ten years from the date they departed the United States) would \"result in extreme hardship\" to their U.S. citizen (or LPR) parent or spouse. DHS interprets extreme hardship to mean \"more than the usual level of hardship\u00c2\u00a0that commonly results from family separation\u00c2\u00a0or relocation.\" Aliens who do not receive discretionary waivers must remain outside the United States for the duration of the bar, unless DHS grants them parole or they receive a discretionary waiver on a future visa application.", "Although the eligibility criteria for the unlawful presence waivers are narrow, DHS allows unlawfully present aliens to apply for the waivers from within the United States, before they depart for their visa interviews abroad, so long as the aliens are not inadmissible on other grounds and meet other requirements. This \"provisional waiver\" program mitigates the uncertainty that unlawfully present aliens face as to how long they will have to remain abroad if they leave the United States to apply for an immigrant visa. DHS introduced the provisional waiver program in 2013, but immigration authorities provided relief of a similar nature as early as 1935, when the Immigration and Naturalization Service (INS) began the practice of \"pre-examining\" unlawfully present aliens domestically before channeling them into immigrant visa application procedures in Canada."], "subsections": []}, {"section_title": "Illustrations", "paragraphs": ["The following hypotheticals are intended to demonstrate how the INA provisions described in this section work in practice. Each hypothetical assumes that the alien (1) has not departed the United States after entry and (2) is not inadmissible to the United States for reasons other than unlawful entry or unlawful presence (such as a conviction for a crime of moral turpitude).", "1. An alien is admitted to the United States on a B-2 tourist visa for six months. He overstays. Ten years later, he marries a U.S. citizen, who obtains an approved immigrant visa petition on his behalf. Even though the alien has been out of legal status for ten years, he is eligible to adjust to LPR status. He will not face the ten-year unlawful presence bar unless he departs the United States before obtaining LPR status. 2. Same facts as the previous example, except that the alien enters the United States surreptitiously rather than on a visitor visa. Even with an approved immigrant visa petition as the spouse of a U.S. citizen, he is not eligible to adjust status because of his unlawful entry. To obtain LPR status, he must apply for an immigrant visa at a U.S. consulate abroad. His departure from the country will trigger the ten-year unlawful presence bar. He may apply for a provisional waiver of the bar before departing, but he must show \"extreme hardship\" to his spouse to succeed on the application. 3. An alien enters the United States surreptitiously and subsequently has a daughter. After the daughter (a U.S. citizen) turns twenty-one, she obtains an approved immigrant visa petition for her mother. The mother is not eligible to adjust status due to her unlawful entry. To obtain LPR status, she must apply for an immigrant visa at a U.S. consulate abroad. Her departure from the country will trigger the ten-year unlawful presence bar, and she is not eligible for a waiver. 4. Same facts as the previous example, except that the U.S. citizen daughter is in the military. Her mother may qualify for parole in place, which would make her eligible to adjust status. In that scenario, the mother would not face the ten-year unlawful presence bar unless she departs the United States before obtaining LPR status. 5. An alien enters the United States surreptitiously at age eight. At age twenty-two, he receives a grant of Deferred Action for Childhood Arrivals (DACA). At age twenty-three, he marries a U.S. citizen, who obtains an approved immigrant visa petition on his behalf. The alien is not eligible to adjust status due to his unlawful entry. To obtain LPR status, he must apply for an immigrant visa at a U.S. consulate abroad. His departure from the country will trigger the ten-year unlawful presence bar. He may apply for a provisional waiver of the bar before departing, but he must show \"extreme hardship\" to his spouse to succeed on the application. 6. Same facts as the previous example, except that the alien, after receiving DACA and after the immigrant visa petition is approved, was granted advance parole to visit a sick family member abroad. Upon being paroled back into the United States following his trip abroad, he became eligible to adjust status. He will not face the ten-year unlawful presence bar unless he departs the United States before obtaining LPR status."], "subsections": []}]}, {"section_title": "Legalization in Cases of Hardship to U.S. Relatives: Cancellation of Removal", "paragraphs": ["The INA's cancellation of removal provision authorizes immigration judges to grant LPR status to some unlawfully present aliens who are in removal proceedings and who have lived in the United States for at least ten years. Aliens qualify, however, only if, aside from meeting other requirements, they show that their removal would cause \"exceptional and extremely unusual hardship\" to immediate relatives who are U.S. citizens or LPRs.", "The lineage of this form of relief extends back at least to 1935, when two members of President Franklin Roosevelt's cabinet, frustrated by the lack of a statutory mechanism to grant relief from deportation in hardship cases, used bureaucratic ingenuity to implement \"a two-step procedure whereby the secretary [of labor] granted [an] illegal alien a waiver from deportation and allowed him or her to depart to Canada and to reenter the United States as a legal permanent resident.\" In 1940, Congress rendered this arrangement unnecessary by enacting the first clearly delineated statutory form of relief from deportation in hardship cases, which was called \"suspension of deportation\" until 1996. The Illegal Immigration Reform and Immigrant Responsibility Act (IIRIRA) of 1996 replaced \"suspension of deportation\" with \"cancellation of removal,\" a more restrictive form of relief due in part to its higher threshold for qualifying hardship and its omission of hardship to the alien (as opposed to the alien's U.S. family) as a basis for relief. Under the current version of the INA, one form of cancellation of removal exists for LPRs in removal proceedings, and one exists for non-LPRs, including unlawfully present aliens.", "To qualify for non-LPR cancellation of removal, aliens must have been physically present in the United States for the ten years preceding their application, and, critically, they must make the requisite showing of \"exceptional and extremely unusual hardship\" to their U.S. citizen or LPR immediate relatives. \"Exceptional and unusual hardship\" means a level of hardship to an immediate relative that is \"'substantially' beyond the ordinary hardship that would be expected when a close family member leaves this country.\" The paradigmatic case involves \"a U.S. citizen child with a serious medical condition who, if [cancellation of removal] is denied, would be either involuntarily separated from her parent or relocated to a country where adequate medical treatment is not available.\" Aliens also must show good moral character and not have certain types of criminal convictions.", "Like adjustment of status, cancellation of removal is a discretionary form of relief, meaning that immigration judges retain discretion to deny it even to aliens who meet the statutory criteria. The INA caps cancellations of removal for non-LPRs at 4,000 per year, although the cap does not apply to some groups. If the cap has been reached in a particular fiscal year but the immigration judge determines that a cancellation of removal application should be granted, the judge must reserve decision until a subsequent fiscal year when cap spaces are available. Finally, cancellation of removal is available only as a defense to removal, meaning that aliens can apply for cancellation only if they are in removal proceedings. They cannot apply for relief affirmatively (i.e., outside of removal proceedings).", "When an immigration judge grants cancellation of removal to an unlawfully present alien, the alien becomes an LPR. Some commentators have thus called cancellation of removal a mechanism for \"case-by-case legalization.\" But the major parameters for this mechanism\u00e2\u0080\u0094the annual cap, the fact that aliens cannot apply for it affirmatively but instead only in removal proceedings, and the required hardship showing\u00e2\u0080\u0094sharply limit its availability. The lack of an affirmative channel for requesting cancellation of removal, in particular, has prompted some aliens who believe they clearly qualify for cancellation to proactively prompt DHS to initiate removal proceedings against them. The aliens do this, through their counsel, by making a special request to DHS or by filing an affirmative application for asylum, which upon denial triggers an automatic referral to removal proceedings. This strategy has pitfalls, however: it affirmatively triggers proceedings that could end in removal, and, in any event, immigration judges have discretion to dismiss the proceedings without granting cancellation upon determining that the alien filed \"a meritless asylum application with the USCIS for the sole purpose of seeking cancellation of removal in the Immigration Court.\""], "subsections": []}, {"section_title": "Legalization as Relief from Persecution or Other Harms: Asylum and Other Protections", "paragraphs": ["Other mechanisms in the INA provide for the legalization of unlawfully present aliens who suffer particular types of harms. Asylum offers the prospect of LPR status to unlawfully present aliens who would face a risk of persecution if returned to their countries of origin, while the related protections of withholding of removal and relief under the Convention against Torture (CAT) offer more limited relief from persecution or torture. A series of nonimmigrant visas, including the U visa, offer the prospect of relief to unlawfully present aliens who are the victims or witnesses of certain crimes."], "subsections": [{"section_title": "Asylum", "paragraphs": ["Unlawfully present aliens may qualify for asylum, a lawful immigration status with a pathway to LPR status and citizenship, if they have suffered persecution in their country of origin or have a well-founded fear of suffering such persecution upon returning to that country. The general eligibility criteria for asylum include a requirement that the persecution be on account of an enumerated statutory ground (race, religion, nationality, membership in a particular social group, or political opinion). Aliens who have persecuted others or committed \"serious crimes\" are not eligible.", "The law of asylum is a broad subject that in most respects is conceptually distinct from the issue of legalization. Asylum is a general remedy for aliens in or at the threshold of the United States who suffer persecution, not a form of relief designed specifically for the unlawfully present population. However, asylum can work as a legalization mechanism in some cases. Lawful entry and maintenance of lawful status are not prerequisites to asylum. Periods of unlawful presence do not affect an alien's eligibility. Put differently, aliens present within the United States may qualify for asylum regardless of surreptitious entry or unlawful presence. Thus, for those unlawfully present aliens who have suffered persecution and meet the other statutory requirements, asylum, much like cancellation of removal, offers a path to LPR status. Unlike cancellation of removal, however, unlawfully present aliens may apply for asylum affirmatively.", "As relevant here, a few aspects of asylum law bear directly on the nature and availability of this form of relief to unlawfully present aliens. First, eligibility to apply for asylum is time-restricted. Although aliens may apply for asylum either affirmatively (i.e., on their own accord, even if the government is not seeking to remove them) or defensively (i.e., as a defense in removal proceedings), generally they must apply within one year of arriving in the United States. Thus, asylum is not available to most unlawfully present aliens who have been in the United States for long periods of time.", "Second, asylum offers a secure form of relief to unlawfully present aliens. Asylees are not subject to removal unless their status is terminated for a specified statutory reason; their spouses and minor children may apply to join them in the United States in asylee status; asylees are authorized to work; and, as already mentioned, they have a direct pathway to LPR status and therefore to citizenship. "], "subsections": [{"section_title": "Related Protections: Withholding of Removal and Convention Against Torture\u00c2 Relief", "paragraphs": ["Unlawfully present aliens who do not obtain asylum may qualify for a more limited form of relief under the INA's provision for \"restriction on removal\" (commonly called \"withholding of removal\"), which prohibits the removal of aliens to a country where their \"life or freedom would be threatened\" on account of \"race, religion, nationality, membership in a particular social group, or political opinion.\" Somewhat similarly, statutory and regulatory provisions implementing the Convention Against Torture prohibit the removal of aliens to any country in which there is substantial reason to believe they could be tortured. Unlike asylum, these two forms of relief do not create an avenue to LPR status and do not confer many of the other advantages typically associated with lawful immigration status, such as the ability to seek admission to the United States following a trip abroad or the ability to sponsor family members for admission. As such, withholding of removal and CAT protection arguably do not constitute legalization mechanisms, although they do confer a defense to removal and work authorization on recipients. Withholding and CAT protection also have a stricter burden of proof than asylum. In a different vein, unlike asylum, which is a discretionary form of relief, these two forms of relief are mandatory\u00e2\u0080\u0094immigration judges must grant them to eligible aliens. Nor do withholding of removal or CAT relief have one-year application deadlines."], "subsections": []}]}, {"section_title": "Nonimmigrant Visas for Victims and Witnesses of Certain Crimes", "paragraphs": ["The INA authorizes DHS to grant three special nonimmigrant statuses to unlawfully present aliens who are victims or witnesses of certain crimes and who provide assistance to law enforcement. First and most broadly, aliens who suffer \"substantial physical or mental abuse\" from certain crimes committed against them in the United States (including rape, domestic violence, and kidnapping, among other qualifying offenses) and who assist in the investigation or prosecution of those crimes may qualify for nonimmigrant U visa status. Second, victims of sex trafficking or slavery trafficking who comply with \"reasonable requests for assistance\" from law enforcement may qualify for nonimmigrant T visa status if removal would cause them \"extreme hardship.\" Third, aliens willing to provide \"critical reliable information\" about criminal or terrorist organizations may qualify for nonimmigrant S visa status. The INA caps U visas at 10,000 per year, T visas at 5,000 per year, and S visas at 250 per year across two subcategories (these caps do not apply to immediate family members who qualify derivatively). Recipients of each of the three statuses may adjust to LPR status if they satisfy specific statutory requirements.", "Of these three nonimmigrant statuses, U visa status has the broadest eligibility criteria and, as such, is the most frequently sought by unlawfully present aliens and also the most frequent subject of litigation and commentary. DHS has reached the statutory cap of 10,000 U visas in every fiscal year since 2010 and, as of the first quarter of FY2019, had a backlog of 234,114 pending U visa applications. Unlawfully present aliens on the waiting list for a U visa typically receive a discretionary reprieve from removal\u00e2\u0080\u0094deferred action or parole. However, it takes an average of four years for DHS to vet applicants for eligibility before placing them on the waiting list and granting them deferred action or parole."], "subsections": []}]}, {"section_title": "Other Approaches to Legalization", "paragraphs": ["Although the legalization mechanisms in the INA are narrow, U.S. immigration law has used two other methods to confer legal immigration status or other protections from removal on segments of the unlawfully present population: (1) ad hoc legalization laws that, rather than reforming the INA's generally applicable legalization provisions going forward, offer one-time relief or offer relief only for discrete populations, and (2) discretionary reprieves from removal, such as deferred action, that confer weaker protection sometimes described as \"quasi-legal status.\""], "subsections": [{"section_title": "Ad Hoc Legalization Laws", "paragraphs": ["In the second half of the twentieth century, Congress enacted a major one-time legalization program and also enacted other ad hoc legalization measures for narrowly defined populations.", "The Immigration Reform and Control Act (IRCA) of 1986 contained two primary legalization measures that offered the prospect of LPR status to much of the population of aliens without legal status in the United States at that time. These were one-time legalization measures: they benefited only those aliens without legal status who had been in the United States since 1982 or who had performed agricultural work in the United States for at least ninety days between May 1985 and May 1986. The law specified a limited application period for both programs. The major rationale appears to have been that one-time legalization relief would not undermine\u00e2\u0080\u0094and might even advance\u00e2\u0080\u0094the deterrence of future illegal immigration, which was another major goal of IRCA. In other words, Congress appears to have reasoned that a one-time legalization program for aliens already in the United States, unlike a legalization mechanism baked into the regular framework of the INA, would not encourage aliens to enter or remain in the country in violation of the INA in the future.", "Aside from IRCA, Congress also enacted other legalization laws in the second half of the twentieth century that targeted particular nationalities rather than aliens present at a particular juncture. For example, the Cuban Adjustment Act of 1966, the Nicaraguan Adjustment and Central American Relief Act, and the Chinese Student Protection Act of 1992 all created special mechanisms for some aliens without legal status of particular nationalities to acquire LPR status or to seek LPR status under less exacting criteria than those generally applicable under the INA. A more recent law created a special permanent resident status for long-time residents of the Commonwealth of the Northern Mariana Islands facing revocation of immigration parole. Somewhat like IRCA, these laws created targeted relief for aliens who fell within specific parameters but did not alter the INA's generally restrictive approach to legalization for all other aliens.", "Proposed legalization legislation in the 21st century has generally followed the ad hoc mold of offering relief only to aliens who were unlawfully present in the United States during a specified time period or who fit within narrowly defined groups, or both. The various Dream Act proposals to create a pathway to LPR status for aliens without legal status who were brought to the United States as children, for example, would cover aliens who entered the United States before a particular date (usually several years before enactment) and who have resided in the United States since entry. Legalization provisions in comprehensive immigration reform bills that the Senate passed in 2006 and 2013, beyond providing for relief to childhood arrivals, also would have provided for relief to many or most unlawfully present aliens who lived in the United States during a specified time period and to certain agricultural workers. Other bills would create special adjustment of status mechanisms for recipients of TPS and Deferred Enforced Departure. All of these ad hoc proposals stand in contrast to less common proposals to amend the generally applicable legalization mechanisms in the INA going forward, such as proposals to advance the cutoff date for registry under INA \u00c2\u00a7 249 or for the adjustment of status mechanism for unlawfully present aliens in INA \u00c2\u00a7 245(i)."], "subsections": []}, {"section_title": "Discretionary Reprieves from Removal (\"Quasi-Legal\" Statuses)", "paragraphs": ["In recent decades immigration authorities have increasingly exercised their enforcement discretion to grant unlawfully present aliens temporary reprieves from removal, such as deferred action, DACA, or TPS. These and other types of discretionary reprieves from removal, which are covered at more length in another CRS report, have thus become a significant aspect of the federal government's regulation of the unlawfully present population. Two events, in particular, did much to increase the number of aliens receiving discretionary reprieves: (1) the enactment of the TPS statute in 1990, which created a discretionary reprieve program for nationals of countries that the Secretary of DHS designates as unsafe for return because of armed conflict, natural disaster, or other extraordinary conditions, and (2) the executive branch's implementation of the DACA program in 2012 for certain unlawfully present aliens brought to the United States as children. Together, TPS and DACA appear to cover more than one million aliens whose presence in the United States violates the INA, although that figure may well decline in the near term as a result of recent executive branch efforts to terminate or curtail these reprieve programs.", "The grant of a discretionary reprieve constitutes an assurance from DHS that the recipient does not face imminent removal. Discretionary reprieves are not legalization mechanisms because they do not extinguish the basis of the alien's removability under the INA. They therefore do not offer steadfast protection from removal. For example, if an alien overstays a nonimmigrant visa and then receives a grant of deferred action from DHS, the risk remains that DHS will decide to pursue the alien's removal in the future. Yet discretionary reprieves typically confer other advantages, including eligibility for work authorization and the nonaccrual of unlawful presence during the duration of the reprieve. Legal scholars use an array of terms for the peculiar sort of relief that discretionary reprieves provide: \"quasi-legal status,\" \"liminal\" or \"twilight\" status, and the \"status of nonstatus.\""], "subsections": []}]}, {"section_title": "Conclusion", "paragraphs": ["The INA subjects the more than ten million unlawfully present aliens in the United States to removal without a limitations period and gives them few opportunities to legalize. Political views of this generally restrictive approach to legalization differ: some favor creating expanded, mostly ad hoc pathways to legalization; others find the extant pathways to legalization too permissive and seek to curtail them. ", "The debate is informed by the INA's current approach to legalization. The INA does not provide an avenue for an appreciable number of unlawfully present aliens to obtain lawful status based on long-standing presence, as the registry statute once did. The INA's penalties for unlawful entry and unlawful presence make it difficult for unlawfully present aliens to obtain lawful status based on qualifying family relationships (except, most notably, for nonimmigrant overstays who become immediate relatives of U.S. citizens). And it allows legalization on hardship grounds only in cases of truly extreme hardship to immediate relatives who are U.S. citizens or LPRs.", "Forms of humanitarian relief from persecution and other harms, such as asylum and the U visa program, do not exclude unlawfully present aliens from their reach but nonetheless have specific objectives and tailored eligibility criteria. Meanwhile, discretionary reprieves from removal and the quasi-legal status they confer upon unlawfully present aliens have become major components of the U.S. immigration system."], "subsections": []}]}}
{"id": "R46095", "title": "The National Flood Insurance Program: Selected Issues and Legislation in the 116th Congress ", "released_date": "2019-12-23T00:00:00", "summary": ["The National Flood Insurance Program (NFIP) was established by the National Flood Insurance Act of 1968 (NFIA; 42 U.S.C. \u00c2\u00a74001 et seq.), and was most recently reauthorized until September 30, 2020 ( P.L. 116-93 ). The general purpose of the NFIP is both to offer primary flood insurance to properties with significant flood risk, and to reduce flood risk through the adoption of floodplain management standards. A longer-term objective of the NFIP is to reduce federal expenditure on disaster assistance after floods. The NFIP also engages in many \"non-insurance\" activities in the public interest: it disseminates flood risk information through flood maps, requires community land use and building code standards, and offers grants and incentive programs for household- and community-level investments in flood risk reduction. Unless reauthorized or amended by Congress, the following will occur on September 30, 2020: (1) the authority to provide new flood insurance contracts will expire and (2) the authority for NFIP to borrow funds from the Treasury will be reduced from $30.425 billion to $1 billion.", "Issues that Congress may consider in the context of reauthorization include (1) NFIP solvency and debt; (2) premium rates and surcharges; (3) affordability of flood insurance; (4) increasing participation in the NFIP; (5) the role of private insurance and barriers to private sector involvement; (6) non-insurance functions of the NFIP such as floodplain mapping and flood mitigation; and (7) future flood risks, including future catastrophic events.", "The Federal Emergency Management Agency (FEMA) has identified the need to increase flood insurance coverage across the nation as a major priority for the current reauthorization and beyond, with a goal of doubling flood insurance coverage by 2023 through the increased sale of both NFIP and private policies. The NFIP's premium rates do not reflect the full risk of loss because of various legislative requirements, which may exacerbate the program's fiscal exposure. The categories of properties which pay less than the full risk-based rate are determined by the date when the structure was built relative to the date of adoption of a Flood Insurance Rate Map, rather than the flood risk or the ability of the policyholder to pay. A reformed NFIP rate structure could have the effect of encouraging more private insurers to enter the primary flood market; however, full risk-based premiums could be unaffordable for some households.", "Although the NFIP has always had borrowing authority from Congress, an approach has not been developed by which the NFIP can repay catastrophic flood losses. To ensure the future financial solvency of the NFIP after catastrophic events, FEMA has suggested that a systematic analysis may consider the costs and benefits of using the reserve fund, borrowing authority, reinsurance, other forms of risk transfer, and perhaps a Treasury backstop at some catastrophic loss level.", "The House Financial Services Committee reported a bill for the long-term reauthorization of the NFIP, the National Flood Insurance Program Reauthorization Act of 2019 ( H.R. 3167 ), on October 28, 2019. One bill has been introduced in the Senate, on July 18, 2019, to reauthorize the expiring provisions of the NFIP: the National Flood Insurance Program Reauthorization and Reform Act of 2019 ( S. 2187 ), with a House companion bill ( H.R. 3872 ) introduced on July 22, 2019.", "This report identifies issues for congressional consideration as part of the possible reauthorization of the NFIP and outlines selected provisions that relate to the issues listed above in the bills to reauthorize the NFIP in the 116 th Congress ( H.R. 3167 and S. 2187 )."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["Congress is currently considering legislation for a long-term reauthorization of the National Flood Insurance Program (NFIP). The last long-term reauthorization of the NFIP was by the Biggert-Waters Flood Insurance Reform Act of 2012 (hereinafter BW-12), from July 6, 2012, to September 30, 2017. Congress amended elements of BW-12, but did not extend the NFIP's authorization further, in the Homeowner Flood Insurance Affordability Act of 2014 (HFIAA). Since the end of FY2017, 15 short-term NFIP reauthorizations have been enacted. The NFIP is currently authorized until September 30, 2020.", "The NFIP is managed by the Federal Emergency Management Agency (FEMA). The general purpose of the NFIP is both to offer primary flood insurance to properties with significant flood risk and to reduce flood risk through the adoption of floodplain management standards. A longer-term objective of the NFIP is to reduce federal expenditure on disaster assistance after floods. The NFIP is discussed in more detail in CRS Report R44593, Introduction to the National Flood Insurance Program (NFIP) , by Diane P. Horn and Baird Webel. ", "The NFIP is the primary source of flood insurance coverage for residential properties in the United States. As of December 2019, the NFIP had more than 5 million flood insurance policies providing over $1.3 trillion in coverage. The program collects about $4.6 billion in annual revenue from policyholders' premiums, fees, and surcharges. Over 22,000 communities in 56 states and jurisdictions participate in the NFIP. According to FEMA, the program saves the nation an estimated $1.87 billion annually in flood losses avoided because of the NFIP's building and floodplain management regulations.", "Floods are the most common natural disaster in the United States. All 50 states, plus the District of Columbia (DC), Puerto Rico, Guam, American Samoa, the U.S. Virgin Islands, and the Northern Mariana Islands have experienced flood events since May 2018. Total U.S. flood losses in 2016 were about $28 billion. 2017 was the most costly year for U.S. flood losses on record, with total losses estimated at $276.3 billion. The total for the 2017 hurricanes significantly exceeded the previous record of $214.8 billion (CPI-adjusted), from the 2005 hurricane season. Total U.S. flood losses for 2018 are estimated at $49.4 billion. All of these losses are greater than the $20.3 billion annual average flood losses estimated by the Congressional Budget Office in April 2019."], "subsections": []}, {"section_title": "Expiration of Certain NFIP Authorities", "paragraphs": ["The statute for the NFIP does not contain a comprehensive expiration, termination, or sunset provision for the whole of the program. Rather, the NFIP has multiple different legal provisions that generally tie to the expiration of key components of the program. ", "Unless reauthorized or amended by Congress, the following will occur after September 30, 2020:", "The authority to provide new flood insurance contracts will expire. Flood insurance contracts entered into before the expiration would continue until the end of their policy term of one year. The authority for NFIP to borrow funds from the Treasury will be reduced from $30.425 billion to $1 billion.", "Other activities of the program would technically remain authorized following September 30, 2020, such as the issuance of Flood Mitigation Assistance (FMA) grants. However, the expiration of the key authorities described above would have varied, generally serious effects on these remaining NFIP activities."], "subsections": []}, {"section_title": "Legislative Action in the 116th Congress", "paragraphs": ["The House Financial Services Committee amended and ordered reported a bill for the long-term reauthorization of the NFIP, the National Flood Insurance Program Reauthorization Act of 2019 ( H.R. 3167 ), on June 11, 2019. H.R. 3167 was reported, as amended, on October 28, 2019 ( H.Rept. 116-262 , Part 1). H.R. 3167 would reauthorize the NFIP until September 30, 2024. One bill has been introduced in the Senate, on July 18, 2019, to reauthorize the expiring provisions of the NFIP, the National Flood Insurance Program Reauthorization and Reform Act of 2019 ( S. 2187 ), with a companion bill in the House, H.R. 3872 . These bills have not yet been considered by the committees of jurisdiction. S. 2187 and H.R. 3872 would also reauthorize the NFIP until September 30, 2024. ", "The remainder of this report will summarize relevant background information and proposed changes to selected areas of the NFIP in H.R. 3167 and S. 2187 . The report does not examine every provision in detail, but focuses on selected provisions that would introduce significant changes to the NFIP, particularly those related to the issues identified by the Government Accountability Office (GAO) described below. The provisions in H.R. 3167 and S. 2187 are listed in Table 1 at the end of the report."], "subsections": []}, {"section_title": "Selected Issues for Consideration by the 116th Congress", "paragraphs": ["In a 2017 report, GAO examined actions which Congress and FEMA could take to reduce federal fiscal exposure and improve national resilience to floods, and recommended that Congress should consider comprehensive reform covering six areas: (1) outstanding debt; (2) premium rates; (3) affordability; (4) consumer participation; (5) barriers to private sector involvement; and (6) NFIP flood resilience efforts. ", "As a public insurance program, the goals of the NFIP were originally designed differently from the goals of private-sector companies. As currently authorized, the NFIP also encompasses social goals to provide flood insurance in flood-prone areas to property owners who otherwise would not be able to obtain it, and reduce government's cost after floods. The NFIP also engages in many \"non-insurance\" activities in the public interest: it disseminates flood risk information through flood maps, requires communities to adopt land use and building code standards in order to participate in the program, potentially reduces the need for other post-flood disaster aid, contributes to community resilience by providing a mechanism to fund rebuilding after a flood, and may protect lending institutions against mortgage defaults due to uninsured losses. The benefits of such tasks are not directly measured in the NFIP's financial results from underwriting flood insurance.", "From the inception of the NFIP, the program has been expected to achieve multiple objectives, some of which may conflict with one another:", "To ensure reasonable insurance premiums for all; To have risk-based premiums that would make people aware of and bear the cost of their floodplain location choices; To secure widespread community participation in the NFIP and substantial numbers of insurance policy purchases by property owners; and To earn premium and fee income that, over time, covers claims paid and program expenses."], "subsections": [{"section_title": "NFIP Lapse in Authorization", "paragraphs": ["On December 21, 2018, Congress passed a stand-alone reauthorization bill, the National Flood Insurance Program Extension Act, to ensure that NFIP did not lapse during the funding gap that led to a partial government shutdown from December 21, 2018, to January 25, 2019. However, on December 26, 2018, FEMA announced changes to the operation of the NFIP in response to the shutdown, advising Write-Your-Own (WYO) companies to suspend sales operations, including the sale of new policies and the renewal of existing policies. FEMA's reason for suspending sales operations, despite the reauthorization of the NFIP, was that the WYO companies were entitled to a fee from the sale or renewal of flood insurance policies and that such a fee may be considered an impermissible funding obligation during a lapse in annual appropriations. Following protests from a number of congressional offices, the insurance industry, and the real estate industry, on December 28, 2018, FEMA rescinded the guidance and directed all NFIP insurers to resume normal operations immediately, advising that the NFIP would be considered operational since December 21, 2018, without interruption. Both H.R. 3167 and S. 2187 include a provision to reduce the impact of a future government shutdown on NFIP operations. "], "subsections": [{"section_title": "Provisions Related to NFIP Reauthorization in H.R. 3167", "paragraphs": ["Section 101 would allow for a retroactive effective date in the event of a lapse in appropriations of the NFIP."], "subsections": []}, {"section_title": "Provisions Related to NFIP Reauthorization in S. 2187", "paragraphs": ["Section 101 would allow for continuous operation during any lapse in appropriations, with a provision that amounts in the Reserve Fund may be credited to the National Flood Insurance Fund (NFIF) to enter into and renew contracts for flood insurance. "], "subsections": []}]}, {"section_title": "NFIP Debt and Solvency of the Program", "paragraphs": ["GAO noted that competing aspects of the NFIP, notably the desire to keep flood insurance affordable while making the program fiscally solvent, have made it challenging to reform the program. Promoting participation in the program, while at the same time attempting to fund claims payments with the premiums paid by NFIP policyholders, provides a particular challenge. Throughout its history, the NFIP has been asked to set premiums that are simultaneously \"risk-based\" and \"reasonable.\" Different Administrations and Congresses have placed varied emphases and priorities on those goals for premium setting.", "GAO has reported in several studies that NFIP's premium rates do not reflect the full risk of loss because of various legislative requirements, which exacerbates the program's fiscal exposure. GAO also noted in several reports that while Congress has directed FEMA to provide subsidized premium rates for policyholders meeting certain requirements, it has not provided FEMA with funds to offset these subsidies and discounts, which has contributed to FEMA's need to borrow from the U.S. Treasury to pay NFIP claims.", "The Congressional Budget Office analysis of H.R. 3167 estimated that enacting the changes that are not related to extending the program would increase direct spending by $678 million over the 2020-2029 period."], "subsections": [{"section_title": "NFIP Premiums, Fees, and Surcharges", "paragraphs": ["As of June 2019, the written premium on just over 5 million policies in force was $3.5 billion, with an additional $1.09 billion from fees and surcharges. The maximum coverage for single-family dwellings (which also includes single-family residential units within a 2-4 family building) is $100,000 for contents and up to $250,000 for buildings coverage. The maximum available coverage limit for other residential buildings is $500,000 for building coverage and $100,000 for contents coverage, and the maximum coverage limit for non-residential business buildings is $500,000 for building coverage and $500,000 for contents coverage.", "Included within NFIP premiums are several fees and surcharges mandated by law on flood insurance policies. First, the Federal Policy Fee (FPF) was authorized by Congress in 1990 and helps pay for the administrative expenses of the program, including floodplain mapping and some of the insurance operations. The amount of the Federal Policy Fee is set by FEMA and can increase or decrease year to year. Since October 2017, the FPF has been $50 for Standard Flood Insurance Policies (SFIPs), $25 for Preferred Risk Policies (PRPs), and $25 for contents-only policies. Second, a reserve fund assessment was authorized by Congress in BW-12 to establish and maintain a reserve fund to cover future claim and debt expenses, especially those from catastrophic disasters. By law, FEMA is required to maintain a reserve ratio of 1% of the total loss exposure through the reserve fund assessment. As of June 2019, the amount required for the reserve fund ratio was approximately $13.16 billion. However, FEMA is allowed to phase in the reserve fund assessment to obtain the ratio over time, with an intended target of not less than 7.5% of the 1% reserve fund ratio in each fiscal year (so, using June 2019 figures, not less than approximately $986.8 million each year). The reserve fund assessment has increased from its original status, in October 2013, of 5% on all SFIPs and 0% on PRPs. Since April 2016, FEMA has charged every NFIP policy a reserve fund assessment equal to 15% of the premium. However, FEMA has stated that as long as the NFIP maintains outstanding debt, it would expect that the reserve fund will not reach the required balance, as amounts collected may be periodically transferred to Treasury to reduce the NFIP's debt.", "In addition to the reserve fund assessment, all NFIP policies are also assessed a surcharge following the passage of HFIAA. The amount of the surcharge is dependent on the type of property being insured. For primary residences, the charge is $25; for all other properties, the charge is $250. Revenues from the surcharge are deposited into the reserve fund. The HFIAA surcharge is not considered a premium and is currently not included by FEMA when calculating limits on insurance rate increases. In April 2019, FEMA began charging a 5% premium on all severe repetitive loss properties. One additional surcharge may be levied if a community is on probation from the NFIP. All policyholders in that community will be charged a probation surcharge of $50 for a full one-year period, even if the community brings its program into compliance and is removed from probation. "], "subsections": []}, {"section_title": "Premium Subsidies and Cross-Subsidies", "paragraphs": ["Except for certain subsidies, flood insurance rates in the NFIP are directed to be \"based on consideration of the risk involved and accepted actuarial principles,\" meaning that the rate is reflective of the true flood risk to the property. However, Congress has directed FEMA not to charge actuarial rates for certain categories of properties and to offer discounts to other classes of properties in order to achieve the program's objective that owners of existing properties in flood zones could afford flood insurance. There are three main categories of properties which pay less than full risk-based rates. "], "subsections": [{"section_title": "Pre-FIRM Subsidy", "paragraphs": ["Pre-FIRM properties are those which were built or substantially improved before December 31, 1974, or before FEMA published the first Flood Insurance Rate Map (FIRM) for their community, whichever was later. By statute, pre-FIRM structures are allowed to have lower premiums than what would be expected to cover predicted claims. The availability of this pre-FIRM subsidy was intended to allow preexisting floodplain properties to contribute in some measure to pre-funding their recovery from a flood disaster instead of relying solely on federal disaster assistance. In essence, the flood insurance could distribute some of the financial burden among those protected by flood insurance and the public. As of September 2018, approximately 13% of NFIP policies received a pre-FIRM subsidy. Historically, the total number of pre-FIRM policies is relatively stable, but the percentage of those policies as a share of the total policy base has decreased.", "BW-12 phased out almost all subsidized insurance premiums, requiring FEMA to increase rates on certain subsidized properties at 25% per year until full-risk rates were reached: these included secondary residences, businesses, severe repetitive loss properties, and properties with substantial cumulative damage. Subsidies were eliminated immediately for properties where the owner let the policy lapse, any prospective insured who refused to accept offers for mitigation assistance, and properties purchased after or not insured by NFIP as of July 6, 2012. All properties with subsidies not being phased out at higher rates, or already eliminated, were required to begin paying actuarial rates following a five-year period, phased in at 20% per year, after a revised or updated FIRM was issued for the area containing the property. Thus the subsidies on pre-FIRM properties would have been eliminated within five years following the issuance of a new FIRM to a community. As BW-12 went into effect, constituents from multiple communities expressed concerns about the elimination of lower rate classes, arguing that it created a financial burden on policyholders, risked depressing home values, and could lead to a reduction in the number of NFIP policies purchased. Concerns over the rate increases created by BW-12 led to the passage of HFIAA, which reinstated certain premium discounts and slowed down some of the BW-12 premium rate increases. HFIAA repealed the property-sale trigger for an automatic full-risk rate and slowed the rate of phaseout of the pre-FIRM subsidy for most primary residences, allowing for a minimum and maximum increase in the amount for the phaseout of pre-FIRM subsidies for all primary residences of 5%-18% annually. HFIAA retained the 25% annual phaseout of the subsidy from BW-12 for all other categories of properties. "], "subsections": []}, {"section_title": "Newly Mapped Subsidy", "paragraphs": ["HFIAA established a new subsidy for properties that are newly mapped into a Special Flood Hazard Area (SFHA) on or after April 1, 2015, if the applicant obtains coverage that is effective within 12 months of the map revision date. Certain properties may be excluded based on their loss history. The rate for eligible newly mapped properties is equal to the PRP rate, but with a higher Federal Policy Fee, for the first 12 months following the map revision. After the first year, the newly mapped rate begins to transition to a full-risk rate, with annual increases to newly mapped policy premiums calculated using a multiplier that varies by the year of the map change. As of September 2018, about 4% of NFIP policies receive a newly mapped subsidy. "], "subsections": []}, {"section_title": "Grandfathering", "paragraphs": ["Using the authority to set rate classes for the NFIP and to offer lower than actuarial premiums, FEMA allows owners of properties that were built in compliance with the FIRM in effect at the time of construction to maintain their old flood insurance rate class if their property is remapped into a new flood rate class. This practice is colloquially referred to as \"grandfathering,\" \"administrative grandfathering,\" or the \"grandfather rule,\" and is separate and distinct from the pre-FIRM subsidy. FEMA does not consider the practice of grandfathering to be a subsidy for the NFIP, per se, because the discount provided to an individual policyholder is cross-subsidized by other policyholders in the NFIP. Thus, while grandfathering does intentionally allow policyholders to pay premiums that are less than their actuarial rate, the discount is offset by others in the same rate class as the grandfathered policyholder.", "Congress implicitly eliminated the practice of offering grandfathering to policyholders after new maps were issued in BW-12, but then subsequently reinstated the practice in HFIAA, which repealed the BW-12 provision that terminated grandfathering and allowed grandfathered status to be passed on to the new owners when a property is sold. As of September 2018, about 9% of NFIP policies were grandfathered. "], "subsections": []}]}, {"section_title": "Risk Rating 2.0", "paragraphs": ["FEMA is planning to introduce the biggest change to the way the NFIP calculates flood insurance premiums since its inception, known as Risk Rating 2.0 . The new rates are scheduled to go into effect on October 1, 202 1, for all NFIP policies. ", "The NFIP's current rating structure follows general insurance practices in place at the time that the NFIP was established and has not fundamentally been changed since the 1970s . FEMA uses a nationwide rating system that combines flood zones across many geographic areas, and individual policies do not necessarily reflect topographical features that affect flood risk. FEMA models expected losses for groups of structures that are similar in flood risk and key structural aspects, and assigns the same rate to all policies in a group. For example, two properties that are rated as the same NFIP risk (i.e., both are one-story, single-family homes with no basement and are elevated the same number of feet above the Base Flood Elevation ( BFE )) are charged the same rate per $100 of insurance, although they may be located in different states with differing flood histories or rest on different topography, such as a shallow floodplain versus a steep river valley. In addition, two properties in the same flood zone are charged the same rate, regardless of their location within the zone.", "To calculate the premium, the current rating system considers the flood zone , the building occupancy type , the foundation type, whether the property is pre-FIRM or post-FIRM, whether or not the property is a primary residence , and the property elevation relative to the BFE for properties in an SFHA. The amount and type of coverage and the deductible will also affect the premium.", "NFIP premiums calculated under Risk Rating 2.0 are to reflect an individual property's flood risk, in contrast to the current rating system in which properties with the same NFIP flood risk are charged the same rates. This will involve the use of a larger range of variables than in the current rating system. The current rating system uses two sources of flooding, coastal and fluvial (river). In contrast, Risk Rating 2.0 is to incorporate a broader range of flood frequencies and sources, including pluvial flooding (flooding due to heavy rainfall) , urban flooding , and coastal erosion outside the V-zone (the coastal high - hazard area) . Geographical variables to be used in Risk Rating 2.0 are to include the distance to the water and the type of water (i.e., river, stream, coast), the elevation of the property relative to the flooding source, and the stream order , which is a measure of the relative size of streams and rivers. The structural variables which have been identified by FEMA for use in Risk Rating 2.0 include the foundation type of the structure, the height of the lowest floor of the structure relative to BFE, and the replacement cost value of the structure. The use of distance to water as a variable may mean that premiums for properties at the landward boundary of a SFHA could go down, while premiums for a property at the water boundary could go up. "], "subsections": [{"section_title": "Replacement Cost Value", "paragraphs": ["Under the current rating system, NFIP premium rates are based on the amount of insurance purchased for a structure, not the replacement cost for that structure. For example, for most actuarially rated structures in the A zone, the NFIP currently classifies the first $60,000 of building coverage for single-family residences ($175,000 for businesses) and $25,000 of contents coverage as the basic limit. It charges higher rates for coverage under this amount, because losses are more likely to occur in this range. Rates for additional coverage above the basic limit are lower. The basic and additional rates are loaded to account for the average tendency to buy less insurance than the replacement value. For example, a post-FIRM single-family property in the A-zone , with $250,000 of buildings coverage and a deductible of $3,000, would currently pay a rate of 3% on the first $60,000 and a rate of 2% on the additional $190,000 (plus the Increased Cost of Compliance (ICC) premium and the reserve fund assessment).", "The two-tiered rating structure was used in the industry for two reasons. First, it ensured that the premium collected is sufficient to cover the typical claim even if a policy is under-insured; according to FEMA, most NFIP claims are below $60,000. By charging a high rate for coverage up to $60,000, a policyholder's premium is likely to be sufficient to cover a typical claim. Secondly, it encouraged policyholders to fully insure their structure. By charging a low additional rate, policyholders are encouraged not just to insure a typical claim, but to insure against the unlikely but possible higher claim. ", "For much of the NFIP's existence, the two-tiered rating structure operated with minimal inequity. However, as the range of replacement values widened, particularly through the 2000s, the potential for inequity caused by rating based on coverage instead of structure value grew. Two groups are most subject to inequity. First, structures whose value is closer to the $60,000 basic limit pay more than they would if their rate was based on their structure value because most of their rate is comprised of the lower additional rate. Second, structures whose value is above the $250,000 cap pay less than they would if their rate was based on structure value, because their rate is based on an average structure value that is much less than their actual structure value. In addition, high-valued structures can produce much higher claims than lower-valued structures with the same intensity of damage. ", "If replacement cost value were to be used in setting NFIP premium rates, it is anticipated that those structures with higher replacement costs than current local or national averages would begin paying more for their NFIP coverage than those structures that are below the average, which would pay less. How much more, or how much less, is uncertain."], "subsections": []}, {"section_title": "Premium Increases Under Risk Rating 2.0", "paragraphs": ["The limitations on annual premium increases are set in statute and Risk Rating 2.0 will not be able to increase rates beyond these caps. Rate increases for primary residences are restricted to 5%-18% per year. Individual property increases of up to 18% are allowed, but rate class increases are limited to 15% per year. Other categories of properties are required to have their premium increased by 25% per year until they reach full risk-based rates: this includes non-primary residences , nonresidential properties , business properties , properties with severe repetitive loss , properties with substantial cumulative damage , and properties with substantial damage or substantial improvement after July 6, 2012.", "However, FEMA does not consider everything that policyholders pay to the NFIP to be part of the premium and therefore subject to these caps. When premium rates are calculated for compliance with the statutory caps, FEMA only includes the building and contents coverage , the ICC coverage, and the reserve fund assessment . Other fees and surcharges are not considered premium and, therefore, are not subject to the premium cap limitations, including the FPF, the HFIAA surcharge and, if applicable, the 5% Severe Repetitive Loss premium and/or probation surcharge . "], "subsections": []}, {"section_title": "Summary", "paragraphs": ["The current categories of properties which pay less than the full risk-based rate are determined by the date when the structure was built relative to the date of adoption of the FIRM, rather than the flood risk or the ability of the policyholder to pay. This will not change fully with the introduction of Risk Rating 2.0; although premiums for individual properties will be tied to their actual flood risk, the rate at which the subsidies will be phased out will not change. ", "The move towards actuarially sound rates could place the NFIP on a more financially sustainable path; risk-based price signals could give policyholders a clearer understanding of their true flood risk; and a reformed rate structure could encourage more private insurers to enter the market. However, charging actuarially sound premiums may mean that insurance for some properties is considered unaffordable, or that premiums increase at a rate which may be considered to be politically unacceptable."], "subsections": []}]}, {"section_title": "Provisions Related to NFIP Premiums, Fees, and Surcharges in H.R. 3167", "paragraphs": ["Section 103 would repeal the HFIAA surcharge, which is $25 for primary residences and $250 for all other properties. This provision would decrease the amount that policyholders pay for flood insurance, but would benefit primary residences less than other categories of property. FEMA does not include the HFIAA surcharge in their calculation of premium rate increases, so this change would not have any impact on the rate at which premiums might increase with Risk Rating 2.0. Section 104 would authorize monthly installment payments of NFIP premiums rather than the current annual payment of premiums. The fee for making monthly payments during the first year of implementation could not exceed $25 per year. Section 304 would allow an owner of a share of a cooperative building to purchase flood insurance coverage under the NFIP on the same terms as a condominium owner. Section 402 would authorize FEMA to offer one umbrella policy to owners of multiple structures on the same property. This would apply to both commercial properties and residential properties, including agricultural structures and multi-family rental properties. This could have the effect of making flood insurance easier to buy for the relevant properties. "], "subsections": []}, {"section_title": "Provisions Related to NFIP Premiums, Fees, and Surcharges in S. 2187", "paragraphs": ["Section 102 would prohibit FEMA from increasing the amount of covered costs above 9% per year on any policyholder during the five-year period beginning on the date of enactment. Covered costs include premiums, surcharges (including the surcharge for ICC coverage and the HFIAA surcharge), and the Federal Policy Fee. This would limit the rate of increase of covered costs for all categories of policies, not just policies for primary residences, and would be particularly significant for those policies where the pre-FIRM subsidy is currently being phased out at 25% per year. This cap on premium increases could potentially limit FEMA's ability to implement rate increases under Risk Rating 2.0. Section 102 would also amend the basis on which premiums are determined so that the calculation of an average historical loss year would exclude catastrophic loss years. This would probably lower premiums for all policyholders. Section 104 would authorize monthly installment payments of NFIP premiums rather than the current annual payment of premiums. The fee for making monthly payments during the first year of implementation could not exceed $15 per year. Section 106 would allow an owner of a share of a cooperative building to purchase flood insurance coverage under the NFIP on the same terms as a condominium owner. Section 107 would establish a baseline amount, defined as the maximum original principal obligation of a standard mortgage that may be purchased by the Federal National Mortgage Association (Fannie Mae) in the area where the property is located. The baseline amount would track the Fannie Mae maximum loan limits for single-family dwellings. This section would set the contents coverage limits at 50% of the baseline amount. The coverage limit for single-family dwellings would be set at the baseline amount and the coverage limit for other residential and non-residential properties at 200% of the baseline amount. This provision would increase coverage limits for both buildings and contents insurance, with a larger increase in high-cost areas. Section 306 would increase premiums by 25% each year on any property for which a policyholder refuses a bona fide offer of mitigation assistance until the policyholder accepts the bona fide offer of assistance or the chargeable risk premium is actuarially sound. "], "subsections": []}, {"section_title": "NFIP Borrowing from Treasury", "paragraphs": ["The funding for the NFIP is primarily maintained in an authorized account called the National Flood Insurance Fund (NFIF). Generally, the NFIP has been funded through three methods:", "receipts from the premiums of flood insurance policies, including fees and surcharges; direct annual appropriations for specific costs of the NFIP; and borrowing from the U.S. Treasury when the balance of the NFIF has been insufficient to pay the NFIP's obligations (e.g., insurance claims).", "As provided for in law, all premiums from the sale of NFIP insurance are transferred to FEMA and deposited in the NFIF. Congress then authorizes FEMA to withdraw funds from the NFIF, and use those funds for specified purposes needed to operate the NFIP. In addition to premiums, Congress also provides annual appropriations to supplement floodplain mapping activities. In addition to the mix of discretionary and mandatory funding which are set in appropriations legislation, fluctuating levels of mandatory spending occur in the NFIP in order to pay and adjust claims on affected NFIP policies.", "The NFIP was not designed to retain funding to cover claims for truly extreme events; instead, the National Flood Insurance Act of 1968 allows the program to borrow money from the Treasury for such events. For most of the NFIP's history, the program has generally been able to cover its costs, borrowing relatively small amounts from the Treasury to pay claims, and then repaying the loans with interest. Currently, Congress has authorized FEMA to borrow no more than $30.425 billion from the U.S. Treasury in order to operate the NFIP. The NFIP's debt to the U.S. Treasury cannot be tied directly to any single incident, as any insurance claim paid by the NFIP is in some way responsible for the existing debt of the NFIP (i.e., a dollar paid in claims, and therefore expended by the NFIP, following a minor flooding incident is no different than a dollar paid following a major hurricane). However, the NFIP was forced to borrow heavily to pay claims in the aftermath of three catastrophic flood seasons, the 2005 hurricane season (particularly Hurricanes Katrina, Rita, and Wilma), Hurricane Sandy in 2012, and the 2017 hurricane season (Hurricanes Harvey, Irma, and Maria).", "The 2017 hurricane season brought the NFIP up to the $30.425 billion borrowing limit for the first time. At the start of the 2017 hurricane season, the NFIP owed $24.6 billion. On September 22, 2017, the NFIP borrowed the remaining $5.825 billion from the Treasury to cover claims from Hurricane Harvey, Hurricane Irma, and Hurricane Maria, reaching the NFIP's authorized borrowing limit of $30.425 billion. On October 26, 2017, Congress cancelled $16 billion of NFIP debt, making it possible for the program to continue to pay claims for Hurricanes Harvey, Irma, and Maria. FEMA borrowed another $6.1 billion on November 9, 2017, to fund estimated 2017 losses, including those incurred by Hurricanes Harvey, Irma, and Maria, and anticipated programmatic activities, bringing the debt up to $20.525 billion. The NFIP currently has $9.9 billion of remaining borrowing authority, and did not need to borrow to pay claims for the 2018 hurricane season or other floods in 2018.", "Only current and future participants in the NFIP are responsible for repaying NFIP debt, as the insurance program itself owes the debt to the Treasury and pays for accruing interest on that debt through the premium revenues of policyholders. For example, from FY2006 to FY2016 (i.e., since the NFIP borrowed funds following Hurricane Katrina), the NFIP has paid $2.82 billion in principal repayments and $4.4 billion in interest to service the debt through the premiums collected on insurance policies. The NFIP is currently paying $375-$400 million a year in interest. In a report on NFIP solvency, GAO noted that charging current policyholders to pay for debt incurred in past years is contrary to actuarial principles and insurers' pricing practices. According to actuarial principles, a premium rate is based on the risk of future losses and does not include past costs. GAO also argued that this creates a potential inequality because policyholders are charged not only for the flood losses that they are expected to incur, but also for losses incurred by past policyholders.", "The cancellation of $16 billion of NFIP debt in October 2017 represents the first time that NFIP debt has been cancelled, although Congress appropriated funds between 1980 and 1985 to repay NFIP debt. Earlier in 2017, GAO had considered the option of eliminating FEMA's debt to the Treasury, suggesting that if the debt were eliminated, FEMA could reallocate funds used for debt repayment for other purposes such as building a reserve fund and program operations, and arguing that this would also be more equitable for current policyholders and consistent with actuarial principles. Eliminating the entire NFIP debt would require Congress to cancel debt outright, to appropriate funds for FEMA to repay the debt, or to change the law to eliminate the requirement that FEMA repay the accumulated debt. Under its current authorization, the only means the NFIP has to pay off the debt is through the accrual of premium revenues in excess of outgoing claims, and from payments made out of the Reserve Fund.", "As required by law, FEMA submitted a report to Congress in May 2018 on how the borrowed amount from the U.S. Treasury could be repaid within a 10-year period. The key conclusion of this and past reports is that it is unlikely that the NFIP will be able to repay its current debt fully. If interest rates were to rise, debt payments would increase significantly and FEMA might not be able to retire any of its debt, even in low-loss years. No projections of the NFIP debt have yet been made that take account of the cancellation of $16 billion of NFIP debt or the $10.83 billion in claims from the 2017 hurricane season. However, since 2005 the program has devoted more resources to interest payments than to repaying the debt, and it seems unlikely that this would be different in the future without congressional action."], "subsections": []}, {"section_title": "Provisions Related to NFIP Debt in S. 2187", "paragraphs": ["Section 301 would freeze interest accrual on the NFIP's debt to the Treasury for five years after enactment and provides that interest that would have accrued during this period would not have to be repaid in future. This section would also require FEMA to deposit the amount equal to the interest that would have accrued on the borrowed amounts during the five-year period into the National Flood Mitigation Fund and use this funding to carry out the Flood Mitigation Assistance Grant Program."], "subsections": []}]}, {"section_title": "Increasing Participation in the NFIP", "paragraphs": [], "subsections": [{"section_title": "The Mandatory Purchase Requirement", "paragraphs": ["A long-standing objective of the NFIP has been to increase purchases of flood insurance policies, and this objective of widespread NFIP purchase was one motivation for keeping NFIP premiums reasonable. It was also a motivation for introducing the requirement, in the Flood Disaster Protection Act of 1973, to purchase flood insurance as a condition of receiving a federally backed mortgage for properties in a SFHA, commonly referred to as the mandatory purchase requirement. In a community that participates or has participated in the NFIP, owners of properties in the mapped SFHA are required to purchase flood insurance as a condition of receiving a federally backed mortgage. Federal agencies, federally regulated lending institutions, and government-sponsored enterprises (GSE) must require these property owners to purchase flood insurance as a condition of any mortgage that these entities make, guarantee, or purchase. However, there are no official statistics available from the federal mortgage regulators responsible for compliance with the mandate, and no up-to-date data on national compliance rates with the mandatory purchase requirement. A 2006 study commissioned by FEMA found that compliance with this mandatory purchase requirement may be as low as 43% in some areas of the country (the Midwest), and as high as 88% in others (the West). A more recent study of flood insurance in New York City found that compliance with the mandatory purchase requirement by properties in the SFHA with mortgages increased from 61% in 2012 to 73% in 2016. The escrowing of insurance premiums, which began in January 2016, may increase compliance with the mandatory purchase requirement, but no data on this are available. "], "subsections": []}, {"section_title": "Provisions Related to the Mandatory Purchase Requirement in H.R. 3167", "paragraphs": ["Section 103 would increase the minimum loan amount that triggers the mandatory purchase requirement to $25,000. Currently, loans with an outstanding balance less than $5,000 or a repayment term less than one year are exempted from the mandatory purchase requirement. This provision would potentially allow homeowners and businesses to drop their flood insurance earlier than is currently possible. Section 408 would require GAO to determine the percentages of properties with federally backed mortgages located in SFHAs that satisfy the mandatory purchase requirement, and the percentage of properties with federally backed mortgages located in the 500-year floodplain that would satisfy the mandatory purchase requirement if the mandatory purchase requirement applied to such properties."], "subsections": []}, {"section_title": "Provisions Related to the Mandatory Purchase Requirement in S. 2187", "paragraphs": ["Section 108 would require GAO to determine the percentages of properties with federally backed mortgages located in SFHAs that satisfy the mandatory purchase requirement, and the percentage of properties with federally backed mortgages located in the 500-year floodplain that would satisfy the mandatory purchase requirement if the mandatory purchase requirement applied to such properties."], "subsections": []}, {"section_title": "NFIP Participation Rates", "paragraphs": ["Both the GAO report and the NFIP report to Congress on options for privatizing the NFIP suggested that the mandatory purchase requirement could potentially be expanded to more (or all) mortgage loans made by federally regulated lending institutions for properties in communities participating in the NFIP. This would increase the consumer participation rate in the NFIP and potentially balance the NFIP portfolio with an increased number of lower-risk properties. According to GAO, some private insurers have indicated that such a federal mandate could help achieve the level of consumer participation necessary to make the private sector comfortable with providing flood insurance coverage by increasing the number of policyholders, which would allow private insurers to diversify and manage the risk of their flood insurance portfolio and address concerns about adverse selection. The Association of State Floodplain Managers also suggested that all properties within the SFHA should be required to have flood insurance, not just those with federally backed mortgages.", "NFIP policies are not distributed evenly around the country; about 37% of the policies are in Florida, with 11% in Texas and 9% in Louisiana, followed by California with 5% and New Jersey with 4%. These five states account for approximately 66% of all of the policies in the NFIP. NFIP participation rates are higher in coastal locations than in inland locations, and are highest in the most risky areas due to mandatory purchase requirements. The NFIP could potentially be financially improved with a more geographically diverse policy base and, in particular, through finding ways to increase coverage in areas perceived to be at lower risk of flooding than those in the SFHA.", "FEMA has identified the need to increase flood insurance coverage across the nation as a major priority for the current reauthorization and beyond, and has set a goal of doubling flood insurance coverage by 2023, through the increased sale of both NFIP and private policies. Closing the insurance gap is one of the key objectives of FEMA's 2018-2022 strategic plan."], "subsections": []}, {"section_title": "Provisions Related to Increasing Participation in H.R. 3167", "paragraphs": ["Section 408 would require GAO to conduct a study to address how to increase participation rates through programmatic and regulatory changes, and report to Congress no later than 18 months after enactment. "], "subsections": []}, {"section_title": "Provisions Related to Increasing Participation in S. 2187", "paragraphs": ["Section 108 would require GAO to conduct a study to address how to increase participation rates through programmatic and regulatory changes, and report to Congress no later than 18 months after enactment. "], "subsections": []}]}, {"section_title": "Affordability of Flood Insurance", "paragraphs": ["Some stakeholders have expressed concern related to the perceived affordability of flood insurance premiums and the balance between actuarial soundness and other goals of the NFIP. Particularly following the increase in premiums associated with BW-12 and HFIAA, concerns were raised that risk-based premiums could be unaffordable for some households. Section 100236 of BW-12 called for an affordability study by FEMA and also a study by the National Research Council of the National Academy of Sciences (NRC) regarding participation in the NFIP and the affordability of premiums, which was published in 2015. ", "The NRC report was published in two parts. The first NRC report considered the many ways in which to define affordability and identify which households need financial assistance with premiums. They noted that there are no objective definitions of affordability for flood insurance, nor is there an objective threshold that separates affordable premiums from unaffordable premiums and thus defines affordability either for an individual property owner or renter, or for any group of property owners or renters. They suggested that if affordability were to be addressed through some form of government assistance, a number of questions would need to be answered by Congress or FEMA: (1) Who will receive assistance? (2) What assistance will be provided? (3) How will assistance be provided? (4) How much assistance will be provided? (5) Who will pay for the assistance? (6) How will assistance be administered? ", "The NRC report suggested that eligibility for assistance could be based on (1) being cost-burdened by flood insurance, (2) the loss of pre-FIRM subsidies or grandfathered cross-subsidies, (3) the requirement to purchase flood insurance, (4) housing tenure, (5) household income, (6) mitigation, or (7) community characteristics. The first NRC report identified potential policy measures that might reduce the burden of premium payments, or that might direct mitigation assistance towards households that qualify for assistance. These included means-tested mitigation grants, mitigation loans, means-tested vouchers, federal tax deductions and credits, disaster savings account, expanding the variety of individual mitigation measures that reduce premiums, encouraging the selection of higher premium deductibles, reducing NFIP administrative cost loadings in premiums, eliminating the mandatory purchase requirement, or relying on the Treasury to help pay claims in catastrophic loss years. The report concluded that policymakers will need to decide whether they want to define cost burden with reference to income, housing costs in relation to income, premium paid in relation to property value, or some other measure. ", "GAO also considered the issue of affordability, suggesting that an affordability program that addresses the goals of encouraging consumer participation and promoting resilience would provide means-tested assistance through appropriations rather than through discounted premiums, and prioritize it to mitigate risk. They argued that providing premium assistance through appropriations rather than discounted premiums would address the policy goal of making the fiscal exposure more transparent because any affordability discounts on premium rates would be explicitly recognized in the budget each year. GAO suggested that linking subsidies to ability to pay rather than the existing approach to subsidies would make premium assistance more transparent and thus more open to oversight by Congress and the public. They also argued that means-testing premium assistance would help ensure that only those who could not afford full-risk rates would receive assistance, which could lower the number of policyholders receiving a subsidy and thus increase the amount that the NFIP receives in premiums and reduce the program's federal fiscal exposure. GAO estimated that 47%-74% of policyholders could be eligible for subsidy if income eligibility was set at 80% or 140% of area median income (AMI), respectively. GAO also suggested that instead of premium assistance, it would be preferable to address affordability by providing assistance for mitigation measures that would reduce the flood risk of the property, thus enhancing resilience, and ultimately result in a lower premium rate. Reducing flood risk through mitigation could also reduce the need for federal disaster assistance, further decreasing federal fiscal exposure.", "In HFIAA Section 9, Congress also required FEMA to develop a Draft Affordability Framework \"that proposes to address, via programmatic and regulatory changes, the issues of affordability of flood insurance sold under the National Flood Insurance Program, including issues identified in the affordability study\u00e2\u0080\u00a6.\" FEMA published its Affordability Framework on April 17, 2018. FEMA started the development of the affordability framework by consulting other federal agencies on how to define affordability, noting that neither BW-12 nor HFIAA provided a definition of flood insurance affordability. Based on the guidance of other agencies, they chose to define the concept of affordability from a cost burden or ability to pay perspective. They analyzed the 2015 NFIP portfolio of 4.8 million policies (4.5 million residential policies, of which 90% were single-family homes). In particular, they used American Community Survey (ACS) data to analyze how ACS respondents intersect with the SFHA, using the National Flood Hazard Layer (NFHL) to determine whether there were differences in income between those who live inside and outside the SFHA. They also looked at the difference between NFIP policyholders and potential policyholders, differentiating between flood risk, income, and mortgage status. They used the AMI to identify low-income policyholders. FEMA also classified flood risk in SFHAs as coastal or noncoastal in order to determine whether incomes are higher in areas subject to coastal flooding for the matched NFIP and census data. They found that generally incomes are higher outside the SFHA than they are inside the SFHA. Median income is higher for policyholders and non-policyholders exposed to coastal risk for both homeowners and renters. However, the income differences by source of flood risk were not found to be sizable compared to the differences in income between mortgage holders, outright homeowners, and renters. The data supported FEMA's extensive anecdotal evidence that there is a significant population in the SFHA of lower-income families who have either inherited their homes or are retirees, who are particularly sensitive to the financial burden of flood insurance. ", "FEMA does not currently have the authority to implement an affordability program, nor does FEMA's current rate structure provide the funding required to support an affordability program. If an affordability program were to be funded from NFIP funds, this would require either raising flood insurance rates for NFIP policyholders or diverting resources from another existing use. Alternatively, an affordability program could be funded fully or partially by congressional appropriations. "], "subsections": [{"section_title": "Provisions Related to Affordability in H.R. 3167", "paragraphs": ["Section 102 would create a five-year affordability demonstration program to determine the effectiveness of providing means-tested discounted rates for NFIP policies, with the authority to provide discounted premium rates terminating on May 31, 2024. The discounted premium rates would only be available to owner-occupants of residences with no more than four units, with the further requirement that the property is the primary residence of a household whose income does not exceed 80% of the area median income (AMI). The chargeable premium rate made available under this section would be an amount that does not exceed 2% of the annual AMI for the area in which the property is located. FEMA would be required to provide all participants in this program with a written statement detailing the full actuarial premium rate for the coverage. Within 12 months of enactment, FEMA would be required to issue guidance for the establishment of the affordability demonstration program, and not later than five years after the start of the implementation of the program, FEMA would be required to submit a report to Congress evaluating the effectiveness of the program. This report would include a statement of the number of households participating in the program and the rates of participation by communities participating in the NFIP, including whether such rates of participation have changed by year, and an estimate of the cost of the program to the NFIP. This affordability program could have the potential to benefit areas with low median incomes more than those with high median incomes. In particular, households in an area where 2% of the AMI is more than the average flood insurance premium may not benefit from this provision. For example, The AMI for Washington, DC, in 2017 dollars, is $77,649. Two percent of the AMI is $1,552.98; anyone paying more than this amount would receive a discount so that they would pay no more than $1,552.98. However, the average NFIP premium in Washington, DC is $720.68, so a household with a low income paying this average flood insurance premium of $720.68 in Washington, DC, would not have any chargeable premium rate in excess of 2% of the annual area median income, and thus would not receive a discount. The AMI for Detroit in 2017 dollars is $27,838, and 2% of the AMI is $556.76. The average premium for Detroit is $633.69, so a household with a low income paying the average flood insurance premium would receive a discount of $76.93. Section 106 would authorize FEMA, where appropriate, to consider the impact of the inclusion of replacement cost value of a structure in setting the NFIP premium rate in determining the affordability of flood insurance premiums. "], "subsections": []}, {"section_title": "Provisions Related to Affordability in S. 2187", "paragraphs": ["Section 103 would require FEMA to establish an Affordability Assistance Fund which would be separate from other NFIP funds and available without fiscal year limitation. This Affordability Assistance Fund would be credited with the amounts saved as a direct result of the limitation on the operating costs of Write-Your-Own companies. This section would require FEMA to provide financial assistance in the form of a voucher, grant, or premium credit to an eligible household, defined as one where (1) housing costs exceed 30% of the household's adjusted gross income for the year and the total assets owned by the household are not greater than 22% of the median income of the state in which the household is located; or (2) if the total household income is less than 120% of the AMI, the amount of the premiums, surcharges, and fees for an annual flood insurance policy exceeds 1% of the coverage limit of that policy. ", "The voucher, grant or premium credit would provide an amount equal to the lesser of the difference between either the annual housing expenses or 30% of the annual adjusted gross income of the household and the costs of NFIP premiums. The amount of the assistance would be reduced by 1% for each percent that the income of the eligible household exceeds 120% of the state median income. "], "subsections": []}]}, {"section_title": "The Role of Private Insurance in U.S. Flood Coverage", "paragraphs": ["One of the reasons that the NFIP was originally created was because private flood insurance was widely unavailable in the United States. Until recently the role of the private market in primary residential flood insurance has been relatively limited. The main role of private insurance companies has been in the operational aspect of the NFIP. FEMA provides the overarching management and oversight of the NFIP, and retains the actual financial risk of paying claims for the policy. However, the bulk of the day-to-day operation of the NFIP, including the marketing, sale, writing, and claims management of policies, is handled by private companies. This occurs primarily through the Write-Your-Own (WYO) Program, where private insurance companies are paid to write and service the policies themselves. Roughly 86% of NFIP policies are sold by the private insurance companies participating in the WYO Program. ", "Companies participating in the WYO program are compensated through a variety of methods. Some have argued that the levels of WYO compensation are too generous, while others have argued that reimbursement levels are insufficient to cover all expenses associated with servicing flood policies under the procedures set by FEMA. In BW-12, Congress required FEMA to issue a rulemaking on a \"methodology for determining the appropriate amounts that property and casualty insurance companies participating in the Write Your Own program should be reimbursed for selling, writing, and servicing flood insurance policies and adjusting flood insurance claims on behalf of the National Flood Insurance Program.\" This rulemaking was required within a year of enactment of BW-12. FEMA published an Advanced Notice of Proposed Rulemaking on revisions to the methodology for payments to WYO companies on July 8, 2019.", "A small private flood insurance market exists, which most commonly provides commercial coverage, coverage above the NFIP maximums, or coverage in the lender-placed market. At the moment relatively few private insurers compete with the NFIP in the primary voluntary flood insurance market. Some suggest that this lack of competition has partly developed because the \"non-compete clause\"\u00e2\u0080\u0094a contractual restriction placed on WYO carriers against offering standalone private flood products that compete with the NFIP\u00e2\u0080\u0094has in the past curtailed the potential involvement of the WYO companies. In FY2019, however, FEMA removed restrictions on WYO companies choosing to offer private flood insurance, while maintaining requirements that such private insurance lines remain entirely separate from a WYO company's NFIP insurance business. "], "subsections": [{"section_title": "Barriers to Private Sector Involvement", "paragraphs": ["Private insurer interest in providing flood coverage has increased in recent years. Advances in the analytics and data used to quantify flood risk mean that a number of private insurance companies and insurance industry organizations have expressed interest in private insurers offering primary flood insurance in competition with the NFIP. Private insurance is seen by many as a way of transferring flood risk from the federal government to the private sector. ", "FEMA's subsidized rates are often seen as the primary barrier to private sector involvement in flood insurance. Even without the subsidies mandated by law, the NFIP's definition of full-risk rates differs from that of private insurers. Whereas the NFIP's full-risk rates must incorporate expected losses and operating costs, a private insurer's full-risk rates must also incorporate a return on capital. As a result, even those NFIP policies which are considered to be actuarially sound from the perspective of the NFIP may still be underpriced from the perspective of private insurers. FEMA's new rating system, Risk Rating 2.0, which aims to more closely align premiums and an individual property's flood risk, could affect the competitive balance between the NFIP and private insurers. ", "The rules on the acceptance of private insurance for the mandatory purchase requirement have had a significant impact on the market potential for private insurers. In BW-12, Congress explicitly provided for the acceptance of private flood insurance to fulfill the mandatory purchase mortgage requirement as long as the private flood insurance \"provides flood insurance coverage which is at least as broad as the coverage\" of the NFIP, among other conditions. A final rule implementing this requirement was announced in February 2019 and took effect on July 1, 2019. Press reports described it as generally welcomed by the banking industry, but it is unclear to what extent this new rule will encourage private flood insurance or whether additional legislative changes might be needed if Congress seeks to further encourage development of the private flood insurance market.", "Another barrier to the growth of the private insurance market has been FEMA's policy on continuous coverage. Continuous coverage is required for property owners to retain any subsidies or cross-subsidies in their NFIP premium rates. A borrower may be reluctant to purchase private insurance if doing so means they would lose their subsidy should they later decide to return to NFIP coverage.", "Many insurers also view the lack of access to NFIP data on flood losses and claims as a barrier to more private companies offering flood insurance. It is argued that increasing access to past NFIP claims data would allow private insurance companies to better estimate future losses and price flood insurance premiums, and ultimately to determine which properties they might be willing to insure. However, FEMA's view is that the agency would need to address privacy concerns in order to provide property level information to insurers, because the Privacy Act of 1974 prohibits FEMA from releasing policy and claims data which contains Personally Identifiable Information. "], "subsections": []}, {"section_title": "Reinsurance", "paragraphs": ["In HFIAA, Congress revised the authority of FEMA to secure reinsurance for the NFIP from the private reinsurance and capital markets. FEMA began larger-scale purchases of reinsurance in 2017. The specifics of each reinsurance purchase has varied, but in general, the reinsurance has been designed to pay a certain percentage of the losses from a single, large-scale event, with a higher percentage if losses are higher. Coverage has typically started after $4 billion in losses, a loss level that has only been reached by the NFIP in three events\u00e2\u0080\u0094Hurricane Katrina, Hurricane Sandy, and Hurricane Harvey. As of December 2019, the reinsurance purchases have been a net fiscal positive for the NFIP with a total of $655 million in premiums paid and $1.042 billion received from claims. This is due to the extremely high losses experienced after Hurricane Harvey, which resulted in over $9 billion paid by the NFIP to policyholders. Unless another large-scale flooding event occurs, the balance of premiums versus claims is likely to turn negative in the next two to three years if FEMA continues similar reinsurance purchases.", "The purchase of private market reinsurance reduces the likelihood of FEMA needing to borrow from the Treasury to pay claims. Because reinsurers understandably charge FEMA premiums to compensate for the risk they assume, the primary benefit of reinsurance is to transfer and manage risk rather than to reduce the NFIP's long-term fiscal exposure. "], "subsections": []}, {"section_title": "Provisions Related to Private Insurance in H.R. 3167", "paragraphs": ["Section 107 would direct FEMA, if an NFIP policyholder switches to private flood insurance but has already paid the NFIP premiums for the whole year up front, to provide a prorated refund of the NFIP premium. This section would also direct that Increased Cost of Compliance (ICC) premiums would not be refunded if measures had been implemented using ICC coverage, and that premiums would not be refunded if a claim has been paid or is pending under the policy term for which the refund is sought. Section 401 would direct FEMA to consider private flood insurance that satisfies the mandatory purchase requirement as also satisfying the continuous coverage requirement to keep NFIP premium subsidies in place. Section 404 would allow FEMA to provide current and historical property-specific information on flood insurance program coverage, flood damage assessments, and payment of claims to private insurers, on the condition that private insurers provide the same information to FEMA, homeowners and home buyers. Section 404 could potentially create conflicts with the Privacy Act of 1974, which prohibits federal agencies from releasing data which contains Personally Identifiable Information. In addition, although these data could be used to better inform the participation of private insurers in offering private flood insurance, the availability of NFIP data could make it easier for private insurers to identify the NFIP policies that are \"overpriced\" due to explicit cross-subsidization or imprecise flood insurance rate structures, and adversely select these properties, while the government would likely retain those policies that benefit from those subsidies and imprecisions, potentially increasing the deficit of the NFIP. Section 406 would require FEMA annually to evaluate ceding a portion of the risk of the NFIP to the private reinsurance or capital markets. Section 407 would give FEMA the authority to terminate any WYO arrangement in its entirety upon 30 days written notice for (1) fraud or misrepresentation; (2) nonpayment to FEMA of any amount due; or (3) material failure to comply with the requirements of the arrangement or with the written standards, procedures, or guidance by FEMA. "], "subsections": []}, {"section_title": "Provisions Related to Private Insurance in S. 2187", "paragraphs": ["Section 302 would establish that the total amount of reimbursement paid to WYO companies could not be greater than 22.46% of the aggregate amount of premiums charged by the company. It would also require FEMA to ensure that the commission paid by a WYO company to agents of the company would not be less than 15%. Section 304 would require FEMA, within 12 months of enactment, to develop a schedule to determine the actual costs of WYO companies and reimburse the WYO companies only for the actual costs of the service or products. It would require that all reimbursements made to WYO companies be made public, including a description of the product or service provided to which the reimbursement pertains. Section 305 would require FEMA to report on the feasibility of selling or licensing the use of historical structure-specific NFIP claims data to non-governmental entities, while reasonably protecting policyholder privacy. Section 405 would require FEMA to establish penalties for underpayment of claims by WYO companies that are not less than the penalty for overpayment of a claim. Section 408 would give FEMA the authority to direct a WYO company, on 14 days' notice, to terminate a contract or other agreement with any covered entity that provides services to the WYO company, if FEMA determines that the covered entity has engaged in conduct that is detrimental to the NFIP. Section 415 would authorize FEMA to create a pilot program under which WYO companies and NFIP direct servicers would be required to investigate pre-existing structural conditions that might result in the denial of an NFIP claim, at the request of a policyholder or potential policyholder, before providing or renewing flood insurance coverage. "], "subsections": []}]}, {"section_title": "Flood Mapping", "paragraphs": ["In the debate about the future of the NFIP, the fact that flood insurance is only one of the functions of the NFIP's key responsibilities is sometimes overlooked; the NFIP has always been more than just an insurance program. The main non-insurance policy goal of the NFIP is to mitigate and reduce the nation's comprehensive flood risk through the development and implementation of floodplain management standards. To do this, FEMA develops, in coordination with participating communities, flood maps called Flood Insurance Rate Maps (FIRMs) that depict the community's floodplain and flood risk zones. Currently FIRMs provide the basis for setting insurance rates, although this is to change with Risk Rating 2.0, and identifying properties whose owners are required to purchase flood insurance. The FIRMs also provide the basis for establishing floodplain management standards that communities must adopt and enforce as part of their participation in the NFIP. Flood maps adopted across the country vary considerably in age and in quality, and there is no consistent, definitive timetable for when a particular community will have its maps revised and updated. By law, once every five years, FEMA is required to assess the need to revise and update all floodplain areas and flood-risk zones defined, delineated, or established by the mapping program, based on an analysis of all natural hazards affecting flood risks. This requirement does not dictate, however, that the FIRMs actually be updated once every five years. Generally, flood maps may require updating when there have been significant new building developments in or near the flood zone, changes to flood protection systems (e.g., levees, sea walls, sand dunes), or environmental changes in the community. The FEMA mapping process, and some NFIP flood maps, have been criticized for being out of date, using poor quality data or methods, or not taking account of changed conditions. In addition, the procedure to update maps is time consuming, in large part due to the lengthy statutory consultation and appeals process.", "In BW-12, Congress reestablished and reauthorized a body called the Technical Mapping Advisory Council (TMAC). The TMAC is a federal advisory committee established to review and make recommendations to FEMA on matters related to the national flood mapping program. The TMAC is broadly authorized to review and recommend improvements to how FEMA produces and disseminates flood hazard, flood risk, and flood map information. The TMAC is required to submit an annual report to the FEMA Administrator summarizing its activities, its evaluation of FIRMs and FEMA's mapping activities, and its recommendations for improving elements of the mapping program. Within a year of passage of BW-12, the TMAC was also required to submit to the FEMA Administrator a one-time report with recommendations on how to ensure that FIRMs incorporate the best available climate science to assess flood risks and ensure that FEMA uses the best available methodology to consider the impact of sea level rise and future development on flood risk. This report, the Future Conditions report, was submitted in final form in February 2016. FEMA is legally required to \"incorporate any future risk assessment\" by the TMAC in the Future Conditions report into any revision or update of the NFIP's FIRMs. Further, among the information FEMA is required to include in the updating of FIRMs, is \"any other relevant information as may be recommended by the [TMAC].\" The statute does not provide guidance on how or when the Administrator should act on the TMAC recommendations. However, on an annual basis, BW-12 required FEMA to report to the authorizing committees of jurisdiction in Congress and the Office of Management and Budget (OMB) on the recommendations from the TMAC and how FEMA is addressing TMAC recommendations to improve flood insurance rate maps and flood risk data. If FEMA does not act or defers to act on certain TMAC recommendations, FEMA is also required to explain that decision in the BW-12 mandated annual report. In addition to the Future Conditions report and the 2016 National Flood Mapping Program Review , TMAC has produced three annual reports, for 2015, 2016, and 2017, and a summary of the 2018 annual report."], "subsections": [{"section_title": "Funding for Floodplain Mapping", "paragraphs": ["NFIP flood mapping is currently funded in two ways, through (1) annual discretionary appropriations and (2) discretionary spending authority from offsetting money collected from the Federal Policy Fee (FPF). In FY2015, $100 million was appropriated for flood hazard mapping and risk analysis; in FY2016, $190 million was appropriated; in FY2017, $175.5 million; in FY2018, $262.6 million; and in FY2019, $262.5 million. ", "The FPF is paid to FEMA and deposited in the National Flood Insurance Fund (NFIF). FEMA has the authority to set the amount charged for the FPF, but Congress retains the authority to determine how much to spend, and on what, from the fees collected. The monies available in the NFIF, other than those used to pay claims, are available only to the extent approved in appropriation acts as offsetting collections. In recent years, Congress has generally followed the budget request from FEMA with relation to the authorized offsetting collections appearing in appropriations bills that are funded using the FPF revenue. In addition, Congress generally directs in appropriations law that FPF revenue in excess of the authorized offsetting collection amounts should be spent on floodplain management and mapping. In FY2017, FEMA received $195 million from the FPF and $188.2 million in FY2018. ", "About 66% of the resources from the FPF are allocated to flood mapping, with floodplain management receiving about 19% of the overall income from the FPF. To the extent that the private flood insurance market grows and policies move from the NFIP to private insurers, FEMA will no longer collect the FPF on those policies and less money will be available for floodplain mapping and management. Concerns have been raised about maintaining the activities funded by the FPF, with some stakeholders arguing that a form of FPF equivalency, or some form of user fee, should be applied to private flood insurance. ", "The section below describes selected provisions in H.R. 3167 and S. 2187 related to flood mapping. Additional provisions not described here relate to appeals and publication of projected Special Flood Hazard Areas, communication and outreach regarding map changes, adoption of partial flood maps, and membership of the TMAC. (See Table 1 )."], "subsections": []}, {"section_title": "Provisions Related to Flood Mapping in H.R. 3167", "paragraphs": ["Section 201 would reauthorize the National Flood Mapping Program at $500 million annually for each of fiscal years 2019 to 2023. Section 202 would require FEMA, when updating maps, to include cadastral features with the associated parcel identification data and, where practicable, the address of such features. This section would also require FEMA to coordinate with the U.S. Geological Survey for the sharing of data from stream flow networks, and make a national geospatial data repository available to the public on the FEMA website. This data repository would be required to provide access to the raw data used to include the cadastral features and parcel identification data in FIRMs. Section 202 would also require FEMA, at least every five years, to verify that each FIRM contains data that is current and credible. This last provision would place additional responsibility on FEMA in relation to map updates. Currently FEMA is only required, once every five years or more often as the Administrator determines necessary, to assess the need to revise and update all floodplain areas and flood-risk zones defined, delineated, or established by the mapping process, based on an analysis of all natural hazards affecting flood risks. FEMA could also incur additional costs associated with the acquisition of parcel identification. Section 202 could also create conflicts with the Privacy Act of 1974, which prohibits federal agencies from releasing data which contains Personally Identifiable Information. Section 203 would authorize FEMA to carry out a pilot program to make grants to units of local government to enhance the mapping of urban flooding and associated property damage and the availability of such mapped data to homeowners, businesses, and units of local government to enable them to minimize the risk of such flooding. Section 203 would also require FEMA to submit biennial progress reports to Congress and a final report to include recommendations for implementing strategies, practices, and technologies to mitigate the effects of urban flooding. This section would authorize to be appropriated $1.2 million for FY2020 and $4.3 million for FY2021, to remain available through 2023. This program would provide new information on urban flood risk, which is currently not addressed in NFIP flood models. Section 204 would expand mapping to all areas of the United States and would require FEMA, as soon as practicable, to (1) modernize the flood mapping inventory for communities for which FIRMs have not been modernized; (2) use the most current and most appropriate remote sensing or other geospatial mapping technology; (3) establish a digital display environment and building-specific flood hazard and risk information, not later than five years after enactment; and (4) use this digital display environment to produce, store, and disseminate flood hazard data, models, and maps. Section 204 also prohibits FEMA from disseminating the data collected for the digital display environment to the public or to a private company in a manner that violates the Privacy Act of 1974. This section would also require FEMA, with TMAC, to submit an annual report regarding progress achieved under this section and provide financial and technical assistance to communities to incorporate future flood hazard conditions as an informational layer on their FIRMs. Section 205 would create a new appeal process if FEMA denies a request to update a flood map based on new information regarding flood elevations or other flood mitigation factors. The initial appeal would be through a FEMA administrative process, with the possibility of a further appeal to the Scientific Resolution Panel. Certain expenses would also be refunded or reimbursed under this provision. Section 209 would require FEMA to develop a new flood zone designation for areas behind non-accredited levees, and make flood insurance available to properties located within those levee-impacted areas. Until FEMA develops rates for this new flood zone, a structure located behind a non-accredited levee would be eligible for rates associated with areas of moderate flood hazards."], "subsections": []}, {"section_title": "Provisions Related to Flood Mapping in S. 2187", "paragraphs": ["Section 208 would continue existing authorization of the National Flood Mapping Program at $400 million annually for each of fiscal years 2020 through 2025. This section would also require the TMAC to establish a set of standards for states and local governments and organizations to use in mapping risk and developing alternative maps to NFIP Flood Insurance Rate Maps (FIRMs) within one year after enactment. This section would also require TMAC to develop a procedure for certification of such maps by FEMA within 90 days of submission in the case of any area covered by a FIRM that has not been updated or reissued during the preceding three-year period. Upon certification, the map would be considered the FIRM in effect for all purposes for the NFIP and would not be able to be revised, updated, or replaced before the expiration of the three-year period beginning on the date of submission to FEMA. Section 208 would also authorize partnerships with other federal agencies and private entities to facilitate mapping and require FEMA to use the most up-to-date remote sensing and mapping technology. Section 208 would require FEMA to establish a digital display environment incorporating building-specific flood hazard and risk information, not later than five years after enactment. FEMA would not be allowed to disseminate this database to any person other than the owner or leaseholder of a property contained in the database. Section 208 also would offer an NFIP policyholder a one-time premium credit of not more than $500 to be used for either the purchase of an elevation certificate or for appealing the chargeable premium rate for the property. This section would create a new appeal process if FEMA denies a request to update a flood map based on new information regarding flood elevations or other flood mitigation factors. Certain expenses also would be refunded or reimbursed under this provision. Section 209 would require FEMA to develop a new flood zone designation for areas behind non-accredited levees, and make flood insurance available to properties located within those levee-impacted areas at actuarial rates based upon the risks appropriate for the level of protection that the levee affords. Until FEMA develops rates for this new flood zone, a structure located behind a non-accredited levee would be eligible for rates associated with areas of moderate flood hazards. Section 303 would require FEMA to develop a fee schedule based on recovering the actual costs of providing FIRMs and charge any private entity an appropriate fee for use of such maps. This requirement could provide a mechanism by which private insurance companies could contribute to the costs of floodplain mapping in lieu of paying the FPF."], "subsections": []}]}, {"section_title": "Flood Mitigation", "paragraphs": ["Flood insurance does not prevent flooding; it merely makes it possible to recover more rapidly financially after a flood. It is better to avoid being flooded than to receive funding for flood recovery after a disaster. Flood mitigation creates safer communities and can save money for individuals and taxpayers. The importance of FEMA's mitigation program is illustrated by research findings that for every $1 invested by FEMA in flood mitigation between 1993 and 2003, society as a whole saved $7 due to reduced future flood losses. The NFIP encourages communities to adopt and enforce floodplain management regulations such as zoning codes, subdivision ordinances, building codes, and rebuilding restrictions. Internal FEMA studies have found that structures built to FEMA standards experience 73% less damage than structures not built to those standards. For example, FEMA conducted a \"losses avoided\" study which reviewed 2,240 of the 6,000 mitigated properties in North Carolina and estimated that those mitigation activities avoided losses of $206 million to $234 million.", "Mitigation activities, however, form only a small part of the NFIP activities and are funded entirely by premiums and fees paid by NFIP policyholders. The NFIP offers three programs which encourage communities to reduce flood risk: the Community Rating System (CRS), the FMA Grant Program, and ICC coverage. ", "A greater linkage between insurance risk transfer and physical risk reduction measures could help to address concerns about increasing flood risk. By rewarding behavior that reduces risks through pricing, insurance has the potential to incentivize or even require policyholders and communities to address the underlying flood risk. Insurance provisions could also provide incentives to limit flood damage by rewarding well-designed buildings with lower premiums, lower deductibles, or higher coverage limits. However, a recent study of residential flood insurance markets in 25 countries found little evidence of either governments or insurance companies actively encouraging risk reduction by linking the cost of insurance to mitigation activities, with the sole exception of the NFIP through the CRS. ", "The CRS is a program offered by FEMA to incentivize the reduction of flood and erosion risk, as well as the adoption of more effective measures to protect natural and beneficial floodplain functions. As of June 2017, FEMA estimated that only 5% of eligible NFIP communities participated in the CRS program. However, these communities have a large number of flood policies, so more than 69% of all flood policies are written in CRS-participating NFIP communities. Although the CRS discounts reduce flood insurance premiums for individual communities, CRS discounts are cross-subsidized into the NFIP program, such that the discount for one community ends up being offset by increased premium rates in all communities across the NFIP. For example, the average 11.4% discount for CRS communities is cross-subsidized and shared across NFIP communities through a cost (or load) increase of 13.3% to overall premiums. ", "To reduce comprehensive flood risk, FEMA also operates an FMA Grant Program that is funded through revenue collected by the NFIP, with the goal of mitigating flood-damaged properties to reduce or eliminate NFIP claims. The FMA Program awards grants for a number of purposes, including state and local mitigation planning; the elevation, relocation, demolition, or flood proofing of structures; the acquisition of properties; and other activities. In FY2019, the FMA Program was authorized to use $175 million of NFIP revenue, with $160 million available for FMA grants. States, tribal governments, territories, and local communities can apply for FMA grants. Generally, federal funding is available for up to 75% of eligible costs. However, FEMA may contribute up to 90% for repetitive loss properties and up to 100% for severe repetitive loss properties.", "An area of controversy involves NFIP coverage of properties that have suffered multiple flood losses, which are at greater risk than the average property insured by the NFIP. One concern is the cost to the program; another is whether the NFIP should continue to insure properties that are likely to have further losses. The NFIP currently uses more than one definition of repetitive loss. The statutory definition of a repetitive loss structure is used for applications for FMA grants. A slightly different definition is used for ICC coverage. A third definition is used for internal tracking of insurance data, with a slightly different definition used for the CRS. The definition of severe repetitive loss property is consistent across program elements in the NFIP, using the statutory definition. "], "subsections": [{"section_title": "Provisions Related to Flood Mitigation in H.R. 3167", "paragraphs": ["Section 105 would authorize FEMA to enter into agreements with eligible states and insular areas to provide capitalization grants for the eligible state to establish a state revolving fund for flood mitigation. These state revolving funds would be used to assist homeowners, businesses, certain non-profit organizations, and communities to reduce flood risk in order to decrease the loss of life and property, the cost of flood insurance, and federal disaster payments. A participating state would not be able to receive more than 15% of the total fund in a given fiscal year, with any remainder above this limit to be reallocated to the non-capped states. FEMA would be required to reserve at least 5% of the amount made available in a given fiscal year for tribal governments and insular areas. All participating states would be required to provide matching funds from nonfederal sources in an amount equal to 15% of the amount that the state receives for the revolving fund. States would be required to give priority, to the maximum amount practicable, to projects that (1) address severe repetitive loss and repetitive loss structures; (2) assist low-income homeowners and low-income geographical areas; and (3) address flood risk for pre-FIRM buildings. States would be authorized to provide additional subsidization to recipients from low-income households or geographical areas, including forgiveness of the principal of a loan. Finally, section 105 would authorize to be appropriated $50 million for each of fiscal years 2020 through 2024. Although state revolving funds have a long history related to clean water and drinking water, this would be the first time that such a fund has been set up at the national level to fund flood mitigation. Section 210 would allow state or local zoning authorities to grant local variances for agricultural structures in SFHAs if they determine that (1) elevation or flood-proofing of such a structure is not practicable; (2) the repair or improvement of the structure would not result in any increase in base flood levels during the base flood discharge, threats to public safety, or extraordinary public expense; and (3) not more than one NFIP claim payment exceeding $1,000 has been made for the structure within the 10 years prior to the granting of the variance. Section 302 would define a new \"multiple-loss property\" category, which would include three types of properties: (1) a revised definition of repetitive loss property; (2) a severe repetitive loss property, with the same definition as the existing statutory definition; and (3) a new category of extreme repetitive loss property. The new definition of a repetitive loss property would be a structure that has incurred flood damage for which two or more separate claims of any amount in excess of the loss-deductible have been made. The new definition of an extreme repetitive loss property would be a structure which has incurred flood damage for which at least two separate claims have been made with the cumulative amount of such claims payments exceeding 150% of the maximum coverage available for the structure. Section 302 would also allow FEMA to consider the extent to which a community is working to remedy problems with addressing repeatedly flooded areas in making determinations regarding financial assistance. This section would establish a broader definition of repetitive loss properties than the current definition, which would bring more properties into the multiple-loss categories. Section 303 would require FEMA to offer policyholders a reduction of the risk premium rate, as determined by the Administrator, for the use of approved actions that mitigate the flood risk of their property, including mitigation techniques for buildings in dense urban environments, methods that can be deployed on a block or neighborhood scale, and the elevation of mechanical or other critical systems. This would expand on existing statutory authority by specifically requiring FEMA to provide the premium reduction for approved mitigation methods. Section 305 would require FEMA to create a voluntary community-based flood insurance pilot project to make available, for purchase by participating communities, a single community-wide flood insurance policy. This community policy would cover all residential and non-residential properties in the community and would satisfy the mandatory purchase requirement. A community flood insurance policy would have to include a method of preventing redundant claims payments (in the case of an individual property owner who is covered by both a community flood insurance policy and an individual NFIP policy). FEMA would be required to establish the pilot program within 180 days of enactment, and the program would terminate on September 30, 2022. There is no mention of how the pilot program would treat residents of a community with a community-wide NFIP policy who are also covered by private flood insurance. Section 306 would authorize to be appropriated $200 million per year for each of the first five fiscal years after enactment to carry out the Flood Mitigation Grant Assistance Program (FMA); this is an increase compared to the authorization of $160 million in FY2019. Section 307 would require FEMA to provide Community Rating System (CRS) credits for measures that protect natural and beneficial floodplain functions, and would also require FEMA to provide CRS credits to the maximum number of communities practicable. It would also require FEMA to carry out a program to make grants to consortia of states and communities for the cost of employing or retaining an individual or individuals to coordinate and carry out responsibilities related to participation in the CRS. This section would authorize $7 million per fiscal year for five fiscal years to be appropriated for these grants. Section 308 would require FEMA to develop a community assistance program to increase the capacity of states, tribes, and communities to manage flood risk effectively and participate in the NFIP. This section would authorize to be appropriated $20 million per year for each of fiscal years 2019 through 2024. Section 308 also authorizes FEMA to set aside such amounts as the Administrator considers appropriate for additional assistance to states that exceed the criteria for awarding these grants. "], "subsections": []}, {"section_title": "Provisions Related to Flood Mitigation in S. 2187", "paragraphs": ["Section 201 would require the President to set aside from the Disaster Relief Fund (DRF) an amount equal to 10% of the average amount appropriated to the DRF during the previous 10 fiscal years to provide assistance for mitigation activities for severe repetitive loss structures and properties insured under the NFIP with the largest increase in actuarial risk for the property compared to the actuarial risk for the previous fiscal year as a result of Risk Rating 2.0, as in effect on October 1, 2020. This would represent the first time in which the NFIP would receive any funding from the DRF. Section 203 would give priority under the FMA program to grants for carrying out mitigation activities that reduce flood damage to (1) repetitive-loss properties; (2) properties for which FEMA determines the premium rates are unaffordable or will soon become unaffordable as a result of a risk adjustment under Risk Rating 2.0; and (3) properties for which aggregate losses exceed the replacement value of the properties. In this context, unaffordable is defined as premium rates that are in such an amount that they cause housing costs to exceed 30% of the household's adjusted gross income for the year. This section would also authorize to be appropriated $1 billion for each of the first five full fiscal years after the date of enactment to provide mitigation assistance under this section; this is an increase compared to the authorization of $160 million in FY2019. Section 204 would require FEMA to offer policyholders a reduction of the risk premium rate that is not less than 10% of that rate for the use of approved actions that mitigate the flood risk of their property, including innovative mitigation techniques for buildings in dense urban environments and the elevation of mechanical systems. This would expand on existing statutory authority by specifically requiring FEMA to provide the premium reduction for approved mitigation methods. Section 205 would require FEMA to appoint a regional coordinator in each region served by a FEMA Regional Office to provide technical assistance to small communities to enable those communities to effectively participate in and benefit from the CRS program, and would authorize to be appropriated such sums as may be necessary to carry this out. Because FEMA only has 10 regions, this provision would allow for a smaller number of CRS coordinators than could potentially be appointed under Section 307 of H.R. 3167 , as described above. Section 206 would authorize FEMA to create a low-interest mitigation loan program for NFIP policyholders to be used to undertake mitigation measures with respect to the insured property that cost less than the overall reduction in the risk of the property over 50 years. These loans would be available to all types of residences. Section 207 would authorize FEMA to enter into agreements with eligible states and insular areas to provide capitalization grants for the eligible state to establish a state revolving fund for flood mitigation. The provisions in this section are the same as those in Section 105 of H.R. 3167 , except that Section 207 authorizes to be appropriated such sums as may be necessary to carry out this section for fiscal years 2020 through 2029. Section 207 would also require FEMA to consider activities funded through amounts for a state loan fund in setting NFIP premium rates. This would be the first time that a state revolving fund has been set up at the national level to fund flood mitigation. Section 210 would require FEMA to give priority to flood mitigation activities that provide benefits to an entire floodplain or community, or to a portion of such a community. "], "subsections": []}]}, {"section_title": "Increased Cost of Compliance (ICC) Coverage", "paragraphs": ["The NFIP requires most policyholders to purchase ICC coverage, which is in effect a separate insurance policy to offset the expense of complying with more rigorous building code standards when local ordinances require them to do so. This ICC coverage is authorized in law, with rates for the coverage as well as how much can be paid out for claims, set by FEMA. The amount that can be charged for ICC coverage is capped in law at $75 per year; currently, ICC premiums vary between $4 and $70. ICC coverage provides an amount up to $30,000 in payments for certain eligible expenses. For example, ICC claims payments may be used toward the costs of elevating, demolishing, relocating, or flood-proofing non-residential buildings, or any combination of these actions. FEMA's current policy is that the payment on the building claim plus the ICC claim cannot exceed the statutory maximum payment of $250,000 for residential structures or $500,000 for non-residential structures. ", "According to ICC data, elevation is the most common form of mitigation. Approximately 61% of all ICC claims closed with payment are single family residential claims involving compensation for elevation of a structure to or above the Base Flood Elevation (BFE). Although the cost of elevating a structure depends on the type of building and elevation requirement, the average cost of elevating an existing property has been estimated at $33,239 to $91,732, and suggestions have been made for years that the amount of ICC coverage should be raised."], "subsections": [{"section_title": "Provisions Related to Increased Cost of Compliance Coverage in H.R. 3167", "paragraphs": ["Section 301 would increase the amount of ICC coverage to $60,000, and would exempt the ICC payment amount from the maximum payout of an NFIP policy. This section would also make ICC coverage available to properties identified by FEMA as priorities for mitigation activities before the occurrence of damage. This may allow policyholders to claim ICC coverage in certain circumstances to mitigate their property before a flood, rather than waiting until after they had been flooded. Section 301 would also allow policyholders to use ICC coverage for alternative mitigation methods to reduce flood risk for residential buildings that cannot be elevated due to their structural characteristics, for pre-disaster mitigation projects, and for costs associated with the purchase, clearing, and stabilization of property that is part of an acquisition or relocation program that complies with the provisions set out in Section 301. "], "subsections": []}, {"section_title": "Provisions Related to Increased Cost of Compliance Coverage in S. 2187", "paragraphs": ["Section 202 would increase ICC coverage to $60,000 and would exempt ICC payment amounts from the maximum payout of an NFIP policy. This section would also make ICC coverage available to properties identified by FEMA as priorities for mitigation activities before the occurrence of damage, which may allow policyholders to claim ICC coverage in certain circumstances to mitigate their property before a flood, rather than waiting until after they had been flooded. Section 202 would also allow policyholders to use ICC coverage for alternative mitigation methods to reduce flood risk for residential buildings that cannot be elevated due to their structural characteristics, for pre-disaster mitigation projects, and for costs associated with the purchase, clearing, and stabilization of property that is part of an acquisition or relocation program that complies with the provisions set out in this section. Section 202 would make ICC coverage available to all NFIP policyholders, in and out of SFHAs, if the community has established land use and control measures for the area in which the property is located. "], "subsections": []}]}, {"section_title": "NFIP Modernization and Administrative Reform", "paragraphs": ["Only the disclosure requirements and requirements for studies of the NFIP will be discussed in this report. Table 1 identifies all of the provisions in H.R. 3167 and S. 2187 which are related to administrative reform.", "Although some individual states require real estate transactions to be accompanied by a disclosure of information pertaining to flood or other hazards, there is currently no federal requirement for sellers to disclose flood risk and flood history. Property owners may not have knowledge of the entire past flood history of their property. Under the mandatory purchase requirement, lenders are only required to inform buyers of flood hazards before closing on the loan. The primary purpose of this disclosure is to notify properties located within a SFHA that flood insurance is required as a condition of the loan. This disclosure, late in the process of buying a property, may mean that the buyer has put down money or otherwise committed to purchasing the property. Lenders are not necessarily required to disclose the full flood history of a property, but only the requirement to purchase flood insurance based on its location in a SFHA."], "subsections": [{"section_title": "Provisions Related to Disclosure in H.R. 3167", "paragraphs": ["Section 404 would require FEMA to provide information on flood insurance program coverage, flood damage assessments, and payment of claims on a property to homeowners, with an additional requirement to provide information on whether the property owner may be required to purchase flood insurance due to a previous receipt of federal disaster assistance. This section would also require FEMA to provide information on the number and dollar value of flood insurance claims filed for a property over the life of the property, and other available information to characterize the true flood risk of the property, within 14 days of a request for such information by a buyer under contract for purchase of a property. This disclosure requirement may affect properties with a flood history during real estate transactions by reducing the likelihood of the sale of the property or reducing its value. "], "subsections": []}, {"section_title": "Provisions Related to Disclosure in S. 2187", "paragraphs": ["Section 417 would require that no new flood insurance coverage may be provided after September 30, 2022, unless the relevant public body has imposed, by statute or regulation, a duty on any seller or lessor of improved real estate to provide to any purchaser or lessee a property flood hazard disclosure. The same requirements would apply to lessors of a rental property with a lease of 30 days or longer. This disclosure requirement may affect properties with a flood history during real estate transactions by reducing the likelihood of the sale of the property or reducing its value, or causing prospective lessors to reject the lease. However, this provision could also encourage a higher take-up of contents coverage by renters. "], "subsections": []}, {"section_title": "Provisions Related to Studies of the NFIP in H.R. 3167232", "paragraphs": ["Section 403would require FEMA to provide for an independent actuarial study of the financial position of the NFIP to be conducted annually and submit a report to Congress describing the results of the study. "], "subsections": []}, {"section_title": "Provisions Related to Studies of the NFIP in S. 2187233", "paragraphs": ["Section 105 would require FEMA to conduct a study by September 30 of the second full fiscal year after enactment on the benefits and feasibility of offering coverage for business interruption losses caused by floods in NFIP policies. Section 402 would require FEMA to conduct a study within one year of enactment on the consequences of street-raising on flood insurance coverage for affected properties, including the cost implications for the property owner. The findings of this study would be particularly relevant for policyholders with ground floor residential and business properties which could become basement properties if the adjacent street were to be raised. Section 405 would require GAO to submit a report not later than two years after enactment on any fines or other penalties imposed by FEMA for the underpayment of claims by WYO companies."], "subsections": []}]}, {"section_title": "Future Flood Losses", "paragraphs": ["In the future, and in the context of land development, improved flood mapping, and climate change, an increased number of properties are likely to be identified as at risk of flooding. A 2013 report on the impact of climate change and population growth on the NFIP concluded that by 2100, the 1% annual-chance fluvial floodplain area is projected to grow nationally by about 45%. The study found that no significant decreases in floodplain depth or area are anticipated for any region of the nation at the median estimates; median flows may increase even in areas that are expected to become drier on average. In the populated areas of most interest to the NFIP, about 30% of these increases may be attributed to increased runoff caused by the increase in impermeable land surfaces caused by population growth and development, while the remaining 70% represents the influence of climate change. The implication of this is that, on a national basis, approximately 13.5% of the growth in the fluvial SFHA is likely to be due to population growth and would occur even without any climate change. NFIP models currently do not include pluvial flood risk, but are to include such risks in premium rates with the introduction of Risk Rating 2.0. The National Academies of Science has warned that a warming climate will likely increase the risk of pluvial flooding, as a warmer atmosphere holds more moisture, increasing the frequency and/or intensity of heavy rainfall events. The number and intensity of heavy precipitation events, as well as precipitation totals, have increased across most of the United States since 1950. The largest increases in heavy precipitation events have occurred in the Midwest and Northeast, and such events are predicted to increase in those areas by 40% by 2100. For the coastal environment, the typical increase in the coastal SFHA is projected to be about 55% by 2100, with model results indicating increased variability in expected total losses in any given year, which may be greater than the NFIP's current funding borrowing structure accommodates. ", "Increased flooding is not only a concern for the future; many areas are already experiencing 'nuisance flooding' or 'sunny day flooding' from minor tidal flooding or rainstorms. The frequency and duration of minor tidal flooding has increased significantly in recent decades along many U.S. coasts. While not catastrophic, such flooding can significantly disrupt normal commerce and activity, and the seemingly minor inconveniences and local economic losses from each event can have a cumulative effect that results in considerable hidden costs to residents and businesses. Flood costs can be considerable even in years without a named storm or event. For example, storms like the South Carolina floods in 2015 and the Louisiana floods in 2016 have demonstrated the scale of losses possible from heavy rainfall. In addition, Hurricanes Harvey (2017) and Florence (2018) showed that losses from pluvial flooding can rival or exceed coastal flood losses in a hurricane. "], "subsections": [{"section_title": "Flooding Outside the SFHA", "paragraphs": ["Currently the NFIP distinguishes between the SFHA (1%-annual-chance-floodplain) and the area beyond the SFHA, yet approximately 33% of NFIP claims are for properties outside SFHAs. Recent floods have significantly affected properties which were not mapped in SFHAs. The SFHA boundary can create a false belief that flood risk changes abruptly at the line, and that properties outside the SFHA are safe. In reality, flood risk varies both inside and outside the SFHA. Although the introduction of Risk Rating 2.0 will eliminate the \"in/out\" line for premium rates, the SHFA boundary will continue to be used for the mandatory purchase requirement. ", "Future flood maps may also need to find a way to communicate temporal variation in flood risk. Under Risk Rating 2.0, FIRMs will continue to be used for floodplain management; however, FIRMs represent a 'snapshot' of the flood risk at the time of mapping. They are not an indication of the flood risk decades into the future and thus are not necessarily the best guide for future land-use decisions. For example, New York City and FEMA have developed a new map product to be used for planning and building purposes to better account for future flood risk due to climate change and sea level rise. This map will not be used to price flood insurance premiums."], "subsections": []}, {"section_title": "Future Catastrophic Events", "paragraphs": ["Floodplains and coastal areas across the United States will likely continue to be inhabited and sustain damages from floods, some of which may be catastrophic. Flooding is different from many other risks in that the distribution of potential losses is skewed in a way that certain low-frequency, high-magnitude events may have the potential to exceed the aggregate capacity of private insurers and render the market insolvent. A large pool of flood risk does not result in a normally distributed portfolio of risks over the long run. Flood risks are highly correlated: when a large flood occurs, many geographically adjacent properties are affected. FEMA's report to Congress on privatization of the NFIP concluded that it is difficult to imagine a practical system of flood insurance in which there is not some level of government involvement in the flood risk financing chain. They argued that when low-frequency, high-magnitude events occur with a portfolio of highly correlated risks, the government will ultimately play a role in paying for the economic costs associated with a catastrophic flood, whether or not it chooses to underwrite the risk.", "Although the NFIP has always had borrowing authority from Congress, a robust approach has not been developed by which the NFIP can repay catastrophic flood losses, although the program has taken steps in this direction with the reserve fund assessment, the HFIAA surcharge, and the purchase of reinsurance. The National Research Council affordability report considered the option of forgiving all or part of the NFIP debt within a larger affordability context. In this report, the NRC suggested that after forgiving all or part of the NFIP debt, Congress could designate the Treasury as reinsurer for the NFIP as was the case in the original legislation. The NRC suggested that Congress could, for example, explicitly state that when the total annual losses in the NFIP exceeded some designated threshold (for example, $2 billion to $6 billion, perhaps on the basis of the average of non-catastrophic historical claims years), the Treasury could provide funds for the NFIP to honor all of the claims. The funds could be provided through the Disaster Relief Fund, and, if needed, by an emergency supplemental appropriation. Taken together, the NRC argued, those two actions could result in lower NFIP premiums, enhance affordability, and in turn lead to less spending on disaster assistance. Congress would incur occasional costs by designating the Treasury as the source of funds for payment of claims above the defined threshold in high-loss years but would not need to draw on the Treasury each year to provide assistance to policyholders who face unaffordable premiums.", "The American Academy of Actuaries (AAA) argued that neither private insurers nor government entities can fully absorb any level of catastrophic loss and continue to operate. It noted that private insurance systems have a trigger for socializing risk of extreme events, such as a solvency standard based on a particular event (for example, the 200-year flood), beyond which mechanisms like guaranty funds pay losses. In the case of the NFIP, the premiums charged to policyholders would require a volatility loading large enough to service and eventually repay any debt generated by catastrophic debts over a multi-decadal time horizon. The AAA report suggested that prospectively addressing this requires recognition that there is a maximum amount of short-term loss that can be fully funded by NFIP revenue. One approach would be to establish a sufficiency standard for the loss level that the NFIP revenue would be expected to fund fully. For example, this could be expressed as a maximum loss amount per catastrophic event, determined on the basis of an acceptable annual probability, or a maximum aggregate amount of annual loss. Any losses exceeding the defined sufficiency standard incurred by the NFIP could be agreed to be funded publicly. The AAA report argued that private insurers are held to an analogous standard, after which state guarantee funds reimburse policyholders for claims from insolvent private insurers using funds from assessments paid by solvent insurers. It concluded that adopting an explicit standard of this type for the NFIP would provide clarity as to what its funding sources should be and give taxpayers an understanding of when public contributions to NFIP finances are appropriate.", "The NFIP currently has no financial structure in place, other than borrowing from the Treasury, to guarantee it can pay claims from a catastrophic loss year. To ensure the future financial solvency of the NFIP after catastrophic events, FEMA has suggested that a systematic analysis may consider the costs and benefits of using the reserve fund, borrowing authority, reinsurance, other forms of risk transfer, and perhaps a Treasury backstop at some catastrophic loss level. It may also include a metric for communicating the resiliency of the system to different levels of catastrophic events, in order to define the scenarios that the system can sustain and those it cannot."], "subsections": []}]}]}, {"section_title": "Concluding Comments", "paragraphs": ["GAO concluded that the sequence of actions taken by Congress in NFIP reform is important; for example, requiring full-risk rates for all policyholders and expanding the mandatory purchase requirement would create affordability concerns which would warrant having an affordability assistance program already in place. According to GAO, when addressing barriers to private sector involvement, it would be important to protect NFIP's flood resilience activities at the same time; and addressing the outstanding debt would be best accompanied by premium rate reform to help reduce the likelihood of a recurrence of another unpayable debt buildup.", "As Congress considers a long-term reauthorization of the NFIP, a central question may be who should bear the costs of floodplain occupancy in the future. The NRC study on affordability concluded that the costs of floods can be borne in three possible ways, or in some combination of them. The first scenario is that individual policyholders (whether NFIP or private) bear location cost in the form of insurance premiums paid and damages falling within policy deductible amounts. The second possibility is that the federal taxpayers bear floodplain location costs in several possible ways: if the federal government develops a premium assistance program, or makes up for NFIP premium revenue shortfalls, or pays for pre-flood mitigation, or makes post-flood disaster assistance payments to individual households. In the third scenario, property owners and other floodplain or coastal zone inhabitants bear the costs for losses that are uninsured or otherwise uncompensated. While there are many ways to finance flood risk, the majority of the cost will likely ultimately be allocated across these three stakeholder groups: policyholders (the insured), taxpayers, and the uninsured, requiring potentially difficult policy choices by Congress. "], "subsections": []}]}}
{"id": "R46192", "title": "Injection and Geologic Sequestration of Carbon Dioxide: Federal Role and Issues for Congress", "released_date": "2020-01-24T00:00:00", "summary": ["For several decades the federal government has funded efforts to explore the feasibility of mitigating the release of greenhouse gases (GHGs) while burning fossil fuels as a source of energy. Carbon capture and storage (CCS)\u00e2\u0080\u0094the process of capturing manmade carbon dioxide (CO 2 ) at its source, such as a coal-fired power plant, and storing it before its release into the atmosphere\u00e2\u0080\u0094has been proposed as a technological solution for mitigating emissions into the atmosphere while continuing to use fossil energy. Underground carbon storage, known as geologic sequestration, is the long-term containment of a fluid (including gas or liquid CO 2 in subsurface geologic formations). Long-term storage of CO 2 can also occur incidentally through enhanced oil recovery (EOR), a process of injecting CO 2 into an oil or gas reservoir that can significantly increase the amount of oil or gas produced.", "The U.S. Department of Energy (DOE) leads the federal government's carbon storage research and development (R&D) as part of the agency's fossil energy programs. The agency conducts research on geologic sequestration and EOR, and carries out the Regional Carbon Sequestration Partnerships (RCSP) program\u00e2\u0080\u0094a set of public-private partnerships across the United States to deploy testing and development of CO 2 injection and storage. To date in the United States, nine projects have injected large volumes of CO 2 into underground formations as demonstrations of potential commercial-scale storage. Four of these projects are actively injecting and storing CO 2 \u00e2\u0080\u0094one in an underground saline reservoir to demonstrate geologic sequestration and three in oil and gas reservoirs as part of EOR. Currently, while numerous large-scale storage R&D projects are ongoing in the United States, none of the projects injecting CO 2 solely for geologic sequestration are operating in a commercial capacity.", "The Safe Drinking Water Act (SDWA), administered by the U.S. Environmental Protection Agency (EPA), provides authorities for regulating underground injection of fluids and serves as the framework for regulation of geologic sequestration of CO 2 and EOR. The major purpose of the act's Underground Injection Control (UIC) provisions is to prevent endangerment of underground sources of drinking water from injection activities. EPA has promulgated regulations and established minimum federal requirements for six classes of injection wells. In 2010, EPA promulgated regulations for the underground injection of CO 2 for long-term storage and established UIC Class VI, a new class of wells solely for geologic sequestration of CO 2 . The well performance standards and other requirements established in the Class VI rule are based on the distinctive features of CO 2 injection compared to other types of injection. Two Class VI wells, both in Illinois, are currently permitted by EPA in the United States. No state has issued a permit for a Class VI well. CO 2 injection for EOR is conducted using Class II wells (associated with oil and gas production). SDWA also authorizes states to administer UIC programs in lieu of EPA, known as primacy . For Class VI CO 2 geologic sequestration wells, only North Dakota has primacy. Most oil and gas producing states have primacy for Class II wells and regulate these wells under their own state programs.", "Congress has supported carbon storage via underground injection through recent legislation directing DOE to expand R&D activity and increasing the federal tax credit for underground carbon storage. A policy challenge that Congress may face with underground carbon storage is balancing protection of underground sources of drinking water with supporting and encouraging the development of cost-effective CCS technology. If Congress were to explore future policy in this area, Members may consider the potential health and environmental risks (beyond any related risks to underground sources of drinking water) not addressed by SDWA. Other issues for Congress include unresolved liability and property rights issues, overall CCS project cost, public acceptance of these sequestration projects and participation in their planning, and the relationship of the growth of underground carbon storage with continuing to burn fossil fuels for generating electricity."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["For several decades the federal government has funded efforts to explore the feasibility of mitigating the release of greenhouse gases (GHGs) while burning fossil fuels as a source of energy. Carbon capture and storage (CCS)\u00e2\u0080\u0094the process of capturing manmade carbon dioxide (CO 2 ) at its source, such as a coal-fired power plant, and storing it underground instead of releasing into the atmosphere\u00e2\u0080\u0094has been proposed as a technological solution for mitigating emissions while using fossil energy. Federal policies on CCS have received support in recent Congresses, including support for research and development (R&D) and expansion of tax credits for carbon storage. The U.S. Fourth National Climate Assessment, released in 2018, states that \"the impacts of global climate change are already being felt in the United States and are projected to intensify in the future\u00e2\u0080\u0094but the severity of future impacts will depend largely on actions taken to reduce greenhouse gas emissions and to adapt to the changes that will occur.\" This report focuses on federal policy regarding the underground carbon storage stage of CCS.", "Underground carbon storage is achieved through geologic sequestration and as an incidental benefit of enhanced oil recovery (EOR), which both use injection by well to place CO 2 into deep subsurface geologic formations. Geologic sequestration involves storing CO 2 by placing it permanently in an underground formation. This process is being tested in the United States and several other countries, including several large-scale late-stage R&D projects. EOR involves injecting CO 2 to produce additional oil and gas from underground reservoirs and has been used in the United States since the 1970s. ", "Both geologic sequestration and EOR are regulated under the Safe Drinking Water Act (SDWA) for the purpose of protecting underground sources of drinking water (USDWs). The U.S. Environmental Protection Agency (EPA) and delegated states administer sections of SDWA relevant to underground injection and carbon storage. The U.S. Department of Energy (DOE) also engages in underground carbon storage through supporting R&D activities. Congress has supported carbon storage via underground injection through recent legislation directing DOE to expand R&D activity and increasing the federal tax credit for underground carbon storage. As Congress considers policies on underground carbon storage, including geologic sequestration and EOR, Members may wish to consider the current regulatory framework and status of federal and federally sponsored activities in this area. ", "This report provides background on underground injection and geologic sequestration processes and related federal R&D. It then analyzes the federal framework for regulating land-based underground injection of CO 2 both for geologic sequestration and EOR. Finally, it includes a discussion of several policy issues for Congress and recent relevant federal legislation. Not covered in this report are research and management of CCS elements not directly related to underground injection, including carbon capture and the pipeline and transportation infrastructure for captured CO 2 . Regulation of geologic sequestration on federal land and offshore geologic sequestration of CO 2 are also beyond the scope of this report. For additional information on the technical aspects of CCS, see CRS Report R44902, Carbon Capture and Sequestration (CCS) in the United States , by Peter Folger."], "subsections": []}, {"section_title": "Underground Carbon Storage Process", "paragraphs": [], "subsections": [{"section_title": "Underground Injection", "paragraphs": ["Underground injection has been used for decades to dispose of a variety of fluids, including oil field brines (salty water) and industrial, manufacturing, mining, pharmaceutical, and municipal wastes. Injection wells are also used to enhance oil and gas recovery; for solution mining; and, more recently, to inject CO 2 for geologic sequestration. As of 2018, EPA estimated that there were more than 734,000 permitted injection wells in the United States. According to one estimate, approximately 750 billion gallons (2.8 million tons) of oil field brine are injected underground each year in the United States. ", "CO 2 injection wells are a type of deep injection well used for injection into deep-isolated rock formations. These wells can reach thousands of feet deep. More details on specific well types are provided later in this report. "], "subsections": []}, {"section_title": "Geologic Sequestration", "paragraphs": ["Geologic sequestration is the long-term containment of a fluid (including a gas, liquid, or supercritical CO 2 stream) in subsurface geologic formations. The goal of geologic sequestration of CO 2 is to trap or transform CO 2 emitted from stationary anthropogenic sources permanently underground and ultimately reduce emissions of GHGs from these sources into the atmosphere. CO 2 for sequestration is first captured from a large stationary source, such as a coal-fired power plant or chemical production facility. Although CO 2 is initially captured as a gas, it is compressed into a supercritical fluid\u00e2\u0080\u0094a relatively dense fluid intermediate to a gas and a liquid\u00e2\u0080\u0094before injection and remains in that state due to high pressures in the underground formation. The CO 2 is injected through specially designed wells into geologic formations, typically a half a mile or more below the Earth's surface. These formations include, for example, large deep saline reservoirs (underground basins containing salty fluids) and oil and gas reservoirs no longer in production. Research shows that CO 2 could also be sequestered in deep ocean waters or mineralized. Impermeable rocks above the target reservoir, combined with high CO 2 pressures, keep the CO 2 in a supercritical fluid state and prevent migration into shallower groundwater or into other formations. ", "The National Energy Technology Laboratory (NETL) estimates that the total onshore storage capacity in the United States ranges between about 2.6 trillion and 22 trillion metric tons (hereinafter tons in this report) of CO 2 . (For more details, see Appendix A .) By comparison, U.S. energy-related CO 2 emissions in 2018 totaled 5,269 million tons. Theoretically, the United States contains storage capacity to store all CO 2 emissions from large stationary sources (such as power plants), at the current rate of emissions, for centuries. For additional information on the technical aspects of CCS, see CRS Report R44902, Carbon Capture and Sequestration (CCS) in the United States , and CRS Report R41325, Carbon Capture: A Technology Assessment , by Peter Folger."], "subsections": []}, {"section_title": "EOR", "paragraphs": ["Use of wells to inject CO 2 builds on known processes. Much of the technology is adopted from well-established experience in the oil and gas industry, which as of 2014, injected approximately 68 million tons of CO 2 underground each year in a process known as EOR. Enhanced recovery is also used occasionally in natural gas development. EOR can significantly increase the amount of oil or gas produced from a reservoir. CO 2 is the most common injection agent used in EOR projects.", "CO 2 injected for EOR most commonly comes from natural sources, such as underground CO 2 reservoirs, but some is also captured from anthropogenic sources, such as natural gas production, ammonia production, and coal gasification facilities. In many cases, the CO 2 is transferred from the source to the injection site by pipeline. The CO 2 is typically injected into depleted oil or gas reservoirs using the existing well infrastructure from the original production process. The injected CO 2 travels through the pore spaces of the formation, where it combines with residual oil. The mixture is then pumped to the surface, where the CO 2 is separated from other fluids, recompressed, and reinjected. Through repeated EOR cycles, CO 2 is gradually stored in the reservoir. NETL reports that generally, between 30% and 40% of the CO 2 is stored in each injection cycle, depending on the reservoir characteristics, through what it terms \"incidental storage.\" This portion of the CO 2 \"will be contained indefinitely within the reservoir,\" according to NETL. ", "In 2017, commercial CO 2 -EOR projects were operating in 80 oil fields in the United States, primarily located in the Permian Basin of western Texas. Some analysts project that the federal tax credit for carbon storage and the potential increased supply of CO 2 from carbon capture could lead to expansion in both the number and locations of CO 2 injection for EOR operations. "], "subsections": []}]}, {"section_title": "Federal Research and Development for Underground Carbon Storage", "paragraphs": ["Over the last decade, the focus of federal carbon storage R&D efforts, including geologic sequestration and EOR, has shifted from small demonstration projects to exploration of its technical and commercial viability for storing large volumes of captured CO 2 .", "DOE leads the federal government's underground carbon storage R&D as part of the agency's fossil energy programs. DOE's work includes conducting fundamental laboratory research on wells, storage design, geologic settings, and monitoring and assessment of the injected CO 2 . In 2003, DOE created the Regional Carbon Sequestration Partnerships (RCSP) program\u00e2\u0080\u0094a set of public-private partnerships across the United States to characterize, validate, and develop large-scale field testing of CO 2 injection and storage methods. The RCSP program supports these R&D projects, which include carbon storage through geologic sequestration and EOR, through partnerships with the petroleum and chemical industries and public and private research institutions. ", "Congress has supported DOE's carbon storage work through appropriations and, beginning in 2005, through enacting legislation directing DOE to establish programs in this area. The Energy Policy Act of 2005 (EPAct, P.L. 109-58 ), Section 963, directed DOE to carry out a 10-year carbon capture R&D program to develop technologies for use in new and existing coal combustion facilities. Among the specified objectives of this program, Congress directed DOE, \"in accordance with the carbon dioxide capture program, to promote a robust carbon sequestration program\" and continue R&D work through carbon sequestration partnerships. EPAct Section 354 directed the agency to establish a demonstration program to inject CO 2 for the purposes of EOR while increasing the sequestration of CO 2 . ", "The Energy Independence and Security Act of 2007 (EISA, P.L. 110-140 ) amended EPAct Section 963 and expanded DOE's work in carbon sequestration R&D and demonstration. EISA Title VII, Subtitle A, directed DOE to conduct fundamental science and engineering research in carbon capture and sequestration and to conduct geologic sequestration training and research. Subtitle A also specifically directed DOE to carry out at least seven large-scale projects testing carbon sequestration systems in a diversity of formations, which could include RCSP projects. Subtitle B directed DOE to conduct a national assessment for onshore capacity for CO 2 sequestration.", "To date in the United States, nine DOE-supported projects have injected large volumes of CO 2 into underground formations as part of CCS systems or related EOR R&D projects (see Appendix B ). Three of these active projects involve injection into saline formations for geologic sequestration (for demonstration purposes), five involve injection for EOR purposes, and one involves both sequestration and EOR. Four of these projects are currently injecting and/or storing CO 2 . The Petra Nova facility in Texas is the first operating industrial-scale coal-fired electricity generating plant with a CCS system in the United States. The captured CO 2 is transported by pipeline to an oil field where it is injected for EOR. The project is jointly owned by several energy companies and was partially funded by DOE. In Decatur, IL, ADM is injecting CO 2 from its ethanol production plant into an onsite sandstone formation for geologic sequestration. The Air Products Carbon Capture Project in Port Arthur, TX, has been injecting CO 2 captured from steam methane reformers since 2013 as part of EOR operations. Each of these projects received funds from the American Recovery and Reinvestment Act (ARRA, P.L. 111-5 ). The Michigan Basin Project in Otsego County, MI, is injecting CO 2 from a natural gas facility for EOR. DOE provides partial funding for this project through the RCSP program. All of the projects operate through collaborations among DOE, industry, and local research institutions. ", "Five other projects that injected CO 2 were implemented through the RCSP program. The projects included sequestration into various underground formations and storage associated with EOR with volumes of CO 2 injected and stored ranging from a few hundred tons to over 1 million tons (considered commercial-scale). The RCSP program is currently in the development phase, which DOE defines as large-scale field testing of high volumes of CO 2 storage. These projects have completed injection and are now in the post-injection monitoring phase. All of the existing RCSP projects are scheduled to end by July 2022, but DOE is in the process of selecting additional projects for the program. In the United States, while numerous large-scale storage R&D projects are ongoing, none of the projects injecting CO 2 solely for geologic sequestration are operating in a commercial capacity.", "Worldwide, public-private partnerships have implemented several CO 2 geologic sequestration projects in diverse regions. There are two active projects, both in Norway, where facilities at the Sleipner Gas Field in the North Sea and Snohvit in the Barents Sea conduct offshore sequestration under the Norwegian continental shelf. Chevron's Gorgon Injection Project, a natural gas production facility in Australia, plans to begin sequestering CO 2 in 2020 and store a total of 100 million tons of CO 2 . Canada, Japan and Algeria have carried out smaller-scale CCS projects with sequestration in saline reservoirs. "], "subsections": []}, {"section_title": "Federal Framework for Regulating Geologic Sequestration of CO2 and EOR", "paragraphs": ["This section provides an overview of the federal framework for regulating underground injection of CO 2 for both geologic sequestration and EOR. It describes the primary federal statute for underground injection control (UIC), the general federal and state roles in developing and implementing UIC regulations, and the UIC well classes. The section analyzes the differences between wells used solely for geologic sequestration and wells used for EOR. It also outlines the regulatory requirements for transitioning from EOR wells to geologic sequestration wells. "], "subsections": [{"section_title": "SDWA", "paragraphs": ["SDWA is the primary federal statute governing underground injection activities in the United States, including those associated with geologic sequestration of CO 2 . SDWA Section 1421 directs EPA to promulgate regulations for state UIC programs to protect underground sources of drinking water and prohibits any underground injection activity except when authorized by a permit or rule. The statute defines underground injection as \"the subsurface emplacement of fluids by well injection.\" "], "subsections": [{"section_title": "Federal and State Roles", "paragraphs": ["EPA issues regulations for underground injection, issues guidance to support state program implementation, and in some cases, directly administers UIC programs in states. The agency has established minimum requirements for state UIC programs and permitting for injection wells. These requirements include performance standards for well construction, operation and maintenance, monitoring and testing, reporting and recordkeeping, site closure, financial responsibility, and (for some types of wells) post-injection site care. Most states implement the day-to-day program elements for most categories of wells, which are grouped into \"classes\" based on the type of fluid injected. Owners or operators of underground injection wells must follow the permitting requirements and standards established by the UIC program authorities in their states. ", "SDWA authorizes EPA to delegate primary enforcement authority for UIC programs, known as primacy , to individual states (see Figure 2 ). Section 1422 mandates that states seeking primacy adopt and implement UIC programs that meet all minimum federal requirements under Section 1421. For wells other than certain oil- and gas-related injection wells, states must adopt laws and regulations at least as stringent as EPA regulations and meet other statutory requirements to be granted primacy. EPA grants a state primacy through a federal rulemaking process for one or more classes of wells. If granted primacy for a class of wells, a state administers that UIC program, develops its own requirements, and allows well injection by state rule or by issuing permits. If a state's UIC plan has not been approved or the state has chosen not to assume program responsibility, SDWA requires that EPA directly implement the program in that state. "], "subsections": []}, {"section_title": "UIC Well Classes", "paragraphs": ["Under SDWA authority, EPA has established six classes of underground injection wells based on similarity in the fluids injected. Construction, injection depth, design requirements, and operating techniques vary among well classes. Some wells are used to inject fluids into formations below USDWs, while others involve injection into or above USDWs. EPA regulations set out specific permitting and performance standards for each class of wells. In 2010, EPA issued the first federal rule specific to underground injection of CO 2 , Federal Requirements Under the Underground Control (UIC) Program for Carbon Dioxide (CO 2 ) Geological Sequestration (Class VI Rule). In the rule, the agency promulgated regulations for underground injection of CO 2 for long-term storage and established UIC Class VI, a new class of wells for geologic sequestration of CO 2 . Prior to the Class VI rule's effective date in January 2011, injection of CO 2 was permitted under Class II if used for EOR or Class V if the well was experimental (e.g., DOE-supported research wells). Table 1 lists the classes of UIC wells.", "EPA has delegated UIC program primacy for well Classes I-V to 32 states (see Figure 2 ). EPA has delegated primacy for all six well classes to one state, North Dakota. Seven states and two tribes have primacy for Class II wells only. Including those states, a total of 40 states have primacy for Class II. For Class VI, EPA has direct implementation authority in 49 states and for all territories. For Classes I, III, IV and V only, the agency has delegated primacy for two states. EPA shares UIC implementation responsibility with seven states and two Indian tribes and implements the UIC program for all classes in eight states.", "Additional states are pursuing Class VI primacy: EPA is reviewing Wyoming's application for Class VI primacy, and Louisiana is in a pre-application phase. As with regulations for other well classes, the Class VI rule allows states to apply for primacy for Class VI wells without applying for primacy for other well classes."], "subsections": []}, {"section_title": "Class VI Geologic Sequestration Wells", "paragraphs": ["Underground injection for the purpose of long-term geologic sequestration of CO 2 is subject to SDWA UIC regulations for Class VI wells. Class VI requirements may also apply to CO 2 injection for EOR using Class II wells when EPA or the delegated state determines that there is an increased risk to USDWs. ", "Two Class VI wells, both in Illinois, are currently permitted in the United States. EPA issued these final permits in 2017 for two wells injecting CO 2 into a saline aquifer at the ADM ethanol plant in Illinois. In 2015, EPA issued a final Class VI permit for the FutureGen project, but the permit expired after the project was cancelled without any CO 2 injection taking place. No state has issued a permit for a Class VI well. EPA requires that state primacy for Class VI wells would be implemented under SDWA Section 1422."], "subsections": [{"section_title": "Unique Class VI Requirements", "paragraphs": ["When developing minimum federal requirements for Class VI wells, EPA generally built upon Class I hazardous waste requirements. The agency added new requirements to address the unique properties of CO 2 and geologic sequestration in the Class VI rule. In the preamble to the Class VI rule, EPA noted that \"tailored requirements, modeled on the existing UIC regulatory framework, are necessary to manage the unique nature of CO 2 injection for geologic sequestration.\" EPA bases the regulation of CO 2 injection as a separate class of wells on several unique risk factors to USDWs:", "\u00c2\u00a0", "the large volumes of CO 2 expected to be injected through wells; the relative buoyancy of CO 2 in underground geologic formations; the mobility of CO 2 within subsurface formations; the corrosive properties of CO 2 in the presence of water that can effect well materials; and the potential presence of impurities in the injected CO 2 stream.", "Due to all of these properties, Class VI requirements establish a larger injection site \"area of review\" compared to requirements for other classes. The area of review for Class VI wells \"includes the subsurface three-dimensional extent of the carbon dioxide plume, associated area of elevated pressure, and displaced fluids, as well as the surface area above that delineated region.\" The requirements also obligate well owners or operators to track, model, and predict CO 2 plume movement. The monitoring and post-injection site care requirements in the regulations are based on estimates that commercial-scale CO 2 injection projects are expected to operate between 30 and 60 years. Appendix C compares the major permitting requirements and technical standards for Class II wells related to oil and gas production, which are used for EOR, and Class VI wells for geologic sequestration of CO 2 . ", "To assist states and owner operators with the permitting process, EPA has also issued 11 technical guidance documents on Class VI wells. These documents are not legally enforceable but provide additional information on site characterization, area of review, construction, reporting and recordkeeping, site closure, financial responsibility, and other permit elements."], "subsections": []}]}, {"section_title": "Class II Oil and Gas Related Wells", "paragraphs": ["Class II wells are used to inject fluids associated with oil and gas production, including wells injecting CO 2 for EOR. EOR wells are the most common type of Class II wells. As of 2018, there were approximately 178,000 permitted Class II wells, approximately 135,600 (76%) of which were recovery wells. Most of these wells are located in California, Texas, Kansas, Illinois, and Oklahoma. Approximately 20% of Class II wells are disposal wells and hydrocarbon storage wells. ", "States may request primacy for Class II oil- and gas-related injection operations under SDWA Section 1422 or Section 1425. Section 1422 mandates that state programs meet EPA requirements promulgated under Section 1421 and prohibits underground injection that is not authorized by permit or rule. EPA regulations under Section 1421 specify requirements for siting, construction, operation, monitoring and testing, closure, corrective action, financial responsibility, and reporting and recordkeeping. Sixteen states and three territories have Class II primacy under Section 1422. ", "Section 1425 allows states to administer their own Class II UIC programs using state rules in lieu of EPA regulations provided a state demonstrates that it has an effective program that prevents underground injection that endangers drinking water sources. To receive approval under Section 1425's optional demonstration provisions, a state program must include permitting, inspection, monitoring, and recordkeeping and reporting requirements. Twenty-four states and two tribes have Class II primacy under Section 1425. Most oil- and gas-producing states have primacy for Class II under this section. Overall, nearly 99% of EOR wells are located in states with primacy under Section 1425. For the 10 states without Class II primacy, the District of Columbia, and most tribes, EPA directly implements the Class II program, and federal regulations apply. ", "While both Class II and Class VI wells involve injection of CO 2 into underground reservoirs, the purposes and regulations of these two classes are different. Class II wells inject primarily into oil or gas fields for the purposes of enhancing production from an underground oil and gas reservoir. In Class II wells, only some of the CO 2 stays in the reservoir during each recovery cycle, gradually increasing the total volume of CO 2 stored. In Class VI wells, all of the injected CO 2 is intended to remain in the reservoir for sequestration. CO 2 sequestration in Class VI wells generally involves higher injection pressures, larger expected fluid volumes, and different physical and chemical properties of the injection stream compared to Class II wells.", "Given these differences between the two well classes, EPA Class II regulations specify different requirements than Class VI regulations. Generally, EPA Class II requirements impose less comprehensive performance requirements and provide longer time periods between mandatory testing and reporting compared to EPA Class VI requirements. Unlike EPA Class VI requirements, EPA Class II requirements do not include providing seismicity information, continuous monitoring of the injection pressure and CO 2 stream, monitoring of the CO 2 plume and pressure front, or monitoring of groundwater quality throughout the lifetime of the project. EPA Class II requirements also do not impose post-injection site care or emergency and remedial response requirements, which are included in EPA Class VI requirements. Class II wells can be granted a permit or authorized by rule by either a primacy state or EPA, while Class VI wells cannot be authorized by rule. See Appendix C for more information on EPA Class II well requirements."], "subsections": []}, {"section_title": "Transition of Wells from Class II to Class VI Wells", "paragraphs": ["Class II EOR wells have a different primary purpose than Class VI wells and must transition to a Class VI permit under certain conditions. EPA has determined that \"owners or operators of Class II wells that are injecting carbon dioxide for the primary purpose of long-term storage into an oil or gas reservoir must apply for and obtain a Class VI permit where there is an increased risk to USDWs compared to traditional Class II operations.\" EPA recognizes that there may be some CO 2 trapped in the subsurface at EOR operations. However, if the Class VI UIC program director (either EPA or the primacy state) has determined that there is no increased risk to USDWs, then these operations would continue to be permitted under the Class II requirements. To date, no Class II wells have been transitioned to Class VI."], "subsections": []}]}, {"section_title": "Other Federal Authorities", "paragraphs": ["Regulations promulgated under most other federal environmental statutes have generally not applied to underground injection or geologic sequestration of CO 2 . If the well owner or operator constructs, operates, and closes the injection well in accordance with a UIC Class II or Class VI permit, the injection and storage would typically not be subject to other federal air quality, waste management, or environmental response authorities and related liability. For example, a release of a hazardous substance in compliance with a UIC permit would be exempt as a \"federally permitted release\" from liability and reporting requirements of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). Such federally permitted releases would also be exempt from emergency notification requirements of the Emergency Planning and Community Right-to-Know Act (EPCRA).", "During the development of the UIC Class VI final rule, some stakeholders in the CCS industry asked EPA for clarification on how hazardous waste requirements, established under the Resource Conservation and Recovery Act (RCRA), may apply to CO 2 streams that are geologically sequestered. In response, EPA promulgated a rule excluding CO 2 from RCRA's hazardous waste management requirements when injected into UIC Class VI wells. As a result, when geologically sequestered in compliance with a UIC Class VI well permit, CO 2 streams are not separately subject to RCRA requirements applicable to the management of hazardous waste.", "Certain federal regulations may apply to CCS processes or facilities that support CO 2 injection and sequestration, such as carbon capture and CO 2 transportation and compression. The regulatory frameworks of these activities are beyond the scope of this report."], "subsections": [{"section_title": "Clean Air Act Greenhouse Gas Reporting Program", "paragraphs": ["The Greenhouse Gas Reporting Program (GHGRP) established by EPA under the authority of the Clean Air Act, requires certain sources of GHGs to report emissions data. In 2010, EPA promulgated a rule to include injection and geologic sequestration of CO 2 in the GHGRP. In this rule, the agency determined that facilities that inject CO 2 for long-term sequestration and all other facilities that inject CO 2 underground fall within the GHGRP covered source categories. Therefore, reporting requirements apply to both Class VI wells and Class II wells that inject CO 2 . EPA's purpose for collecting this information is two-fold: to track CO 2 emissions and to quantify the amount of CO 2 being sequestered. ", "Under the GHGRP Rule Subpart RR, facilities that inject a CO 2 stream for long-term containment (i.e., geologic sequestration) must develop and implement a monitoring, reporting, and verification plan. The purpose of this plan is to verify the amount of CO 2 sequestered and collect data on any CO 2 surface emissions from geologic sequestration facilities. Any facility holding a Class VI permit would be subject to Subpart RR and be required to report the mass of CO 2 that is received, injected into the subsurface, produced, emitted by surface leakage, emitted by leaks in equipment, and emitted by venting. Facilities must also report the mass of CO 2 sequestered in subsurface geologic formations. ", "Subpart UU of the rule applies to Class II wells\u00e2\u0080\u0094for the injection of CO 2 for EOR and for small and experimental sequestration projects exempted under Subpart RR. Subpart UU does not require a monitoring, reporting, and verification plan and sets forth different requirements for monitoring and reporting."], "subsections": []}]}]}, {"section_title": "Issues for Congress", "paragraphs": ["If Congress were to address carbon storage through underground injection, there are a variety of policy issues Members may consider. Several policy issues relate to the current SDWA UIC regulatory framework and what elements of CO 2 injection are covered under the statute's purpose and approach. Congress may also wish to consider other issues that may have implications for CO 2 injection and storage policy, including current pathways of federal support for CCS and underground carbon storage, project cost, and stakeholder perspectives on CCS and fossil fuels. "], "subsections": [{"section_title": "Scope of the SDWA UIC Regulatory Framework", "paragraphs": ["SDWA currently serves as the major federal authority for regulating injection of CO 2 for geologic sequestration and carbon storage in general. However, the major purpose of the act's UIC provisions is to prevent endangerment of public water supplies and sources from injection activities. In the preamble to the proposed Class VI Rule, EPA states, \"While the SDWA provides EPA with the authority to develop regulations to protect USDWs from endangerment, it does not provide authority to develop regulations for all areas related to GS [geologic sequestration].\" The agency identified specific policy areas related to geologic sequestration that are beyond the agency's authority, including (but not limited to) capture and transport of CO 2 , managing human health and environmental risks other than drinking water endangerment, determining property rights, and transfer of liability from one entity to another. ", "The agency acknowledges the challenge of balancing SDWA goals with broader efforts to support geologic sequestration. In the preamble to the Class VI Rule, EPA noted that the rule \"ensures protection of USDWs while also providing regulatory certainty to industry and permitting authorities and an increased understanding of GS through public participation and outreach.\""], "subsections": [{"section_title": "Potential Environmental Risks of Geologic Sequestration of CO2", "paragraphs": ["Federal agencies, external analysts, and other stakeholders have expressed a variety of viewpoints on the potential risks associated with injection and geologic sequestration of CO 2 . EPA, the Interagency Task Force on Carbon Capture and Storage, and others have recognized that CO 2 injection and sequestration activities may convey risks to the environment and human health. Some of these risks involve potential endangerment of USDWs that would be covered by SDWA. Other potential impacts, however, are not covered by SDWA or the UIC implementing regulations. ", "For groundwater-related risks, EPA has noted that expansion of CO 2 -EOR and associated CO 2 storage could increase the risk of endangerment to USDWs due to increased injection zone pressures and the large number of wells in oil and gas fields that could serve as leakage pathways. Injected CO 2 could also force brine from the target formation into USDWs, which could affect drinking water. To address potential releases or leakage that could endanger USDWs, in the Class VI rule, EPA included monitoring, reporting, and recordkeeping requirements specific to CO 2 injection. Class VI construction and testing requirements, which are generally more stringent than Class II requirements for EOR, are also intended to prevent USDW endangerment.", "Regarding other types of risk from improperly managed projects, EPA identified risks to air quality, human health, and ecosystems as potential concerns not addressed by SDWA authorities. In its 2010 report, the Task Force concluded that SDWA's limited application to only those groundwater formations that meet the specific statutory definition of USDWs may \"require clarification to support actions to address or remedy ecological or non-drinking water human health impacts arising from the injection and sequestration of CO 2 .\" The Task Force also stated that an accidental large release could result in risks to surface water, local ecology, and human health. (See text box Human Health and Environmental Considerations of CO 2 and Geologic Sequestration .)", "An additional concern with injection and sequestration of CO 2 is the increased potential for earthquakes associated with deep-well injection. Earthquakes induced by CO 2 injection could fracture the rocks in the reservoir or, more importantly, the caprock above the reservoir. Class VI well regulations require that information on earthquake-related history be included in the permit application and that owners or operators not exceed injection pressure that would induce seismicity or initiate fractures.", "NETL and other stakeholders offer other perspectives on potential health and environmental risks. Regarding the risks of CO 2 leakage, NETL outlines several case studies on leakage related to underground carbon storage in a 2019 report. The report states that use of EOR in the United States \"has demonstrated that large volumes of gas can be stored safely underground and over long timeframes when the appropriate best-practices are implemented.\" According to the report, \"Despite over 40 years of operating CO 2 EOR projects, leakage events have rarely been reported,\" although the authors also note that \"there has been no official mechanism for reporting leaks of CO 2 until recently.\" Other stakeholders have also commented that, even given potential health and environmental risks, the benefits of CO 2 sequestration in reducing GHG emissions as part of climate change mitigation efforts outweigh such risks. "], "subsections": []}, {"section_title": "Liability and Property Rights Issues", "paragraphs": ["In the Class VI rule, EPA acknowledged stakeholder interest in liability and long-term stewardship but noted that that the agency does not have the authority to determine property rights or transfer liability from one owner or operator to another. In its report, the Task Force also identified that \"the existing Federal framework largely does not provide for a release or transfer of liability from the owner/operator to other persons\" and noted that some stakeholders view these issues as a barrier to future CCS project deployment. Specific policy questions regarding property rights include who owns and controls the subsurface formations (known as the pore space) targeted for CO 2 sequestration, if and how such property can be transferred or aggregated, and how underground reservoirs that cross state and tribal boundaries should be regulated. State laws and contractual property arrangements, similar to those established for oil and gas development, may address some of these questions, but some analysts identify the need for more clarity. ", "Issues of financial liability and long-term stewardship of injection sites and storage reservoirs also remain largely unresolved. Analysts have raised questions such as (1) who is responsible for the site and reservoir after the 50-year mandated post-injection site care period, (2) what is the role of the federal or state government in assisting site developers and operators with managing the risks associated with sequestration activities, and (3) whether the federal government should be involved in taking on some or all financial responsibility during the life-cycle of sequestration projects. Large-scale commercial geologic sequestration projects would likely require unique liability and stewardship structures that address issues such as the particular characteristics of CO 2 , the entire life-cycle of sequestration projects\u00e2\u0080\u0094from site selection to periods beyond site closure\u00e2\u0080\u0094and the geologic time frame (hundreds or thousands of years) over which sequestration occurs. For more information on legal sequestration issues, see CRS Report RL34307, Legal Issues Associated with the Development of Carbon Dioxide Sequestration Technology , by Adam Vann and Paul W. Parfomak. "], "subsections": []}]}, {"section_title": "Other Policy Considerations", "paragraphs": [], "subsections": [{"section_title": "Research and Development", "paragraphs": ["EPA has stated that \"a supporting regulatory framework for the future development and deployment of [carbon storage] technology can provide the regulatory certainty needed to foster industry adoption of CCS, which is crucial to supporting the goal of any climate change legislation.\" Even with the completion of several large-scale demonstration field projects, analysts recognize uncertainties regarding wide-spread commercial CCS operation in the United States. These technical issues include uncertainties in operations, such as how much CO 2 would be injected, CO 2 sources, availability of appropriate locations, and the exact constituents of CO 2 injection streams. A lack of existing infrastructure for CCS systems\u00e2\u0080\u0094from capture technology to pipelines to transport CO 2 \u00e2\u0080\u0094may also act as barriers to future CCS deployment. ", "Congress has directly supported federal activities in both geologic sequestration of CO 2 and EOR through the EPAct in 2005 and EISA in 2007, directing DOE to carry out R&D activities to further technical knowledge and deployment of CCS. Several bills in the 116 th Congress\u00e2\u0080\u0094including H.R. 1166 / S. 383 , H.R. 3607 , and S. 1201 \u00e2\u0080\u0094would continue or expand DOE's CCS programs, including carbon storage programs. Some of these bills would direct EPA to conduct CCS research and/or direct DOE to develop and implement R&D programs related to geologic sequestration methods, storage siting, and assessment of potential impacts. Provisions in some of these bills would also direct DOE to continue its partnership programs for large-scale sequestration demonstration projects. Other relevant provisions include provisions that would require actions from the Council on Environmental Quality, such as publishing guidance and submitting reports to Congress on CCS research and development."], "subsections": []}, {"section_title": "Project Cost", "paragraphs": ["The cost of constructing and operating a new CCS system or retrofitting an existing facility, such as a coal-fired power plant, with CCS is likely to play a major role in the future deployment of commercially viable sequestration projects. Costs for large-scale geologic sequestration or EOR include expenses directly related to injection and storage, as well as costs of investing in sufficient carbon capture and transportation infrastructure and maintaining ongoing facility operations. Regarding regulatory costs associated with geologic sequestration, in the preamble to the Class VI rule, EPA specified the agency's intention that the rule would not impede geologic sequestration:", "Should this rule somehow impede GS from happening, then the opportunity costs of not capturing with the benefits associated with GS could be attributed to this regulation; however the Agency has tried to develop a rule that balances risk with practicability, site specific flexibility and economic considerations and believes the probability of such impedance is low.", "Analysts expect that the costs of CCS, whether new system or retrofitting of an existing facility, are likely to total several billion dollars per project, which could act as a barrier to future CCS deployment without the continuation of subsidies. Recently, Public Service Company of New Mexico reportedly estimated that retrofitting a 500-megawatt coal-fired power plant with CCS technology could cost between $5 billion and $6 billion. The company reportedly stated that its evaluations showed that it would be more cost effective to switch to another source of energy (such as renewable energy) rather than continue to use coal with the addition of CCS.", "Examples of completed commercial-scale CCS operations and associated costs are limited, causing some uncertainty regarding future investments and the scale of project deployment in the coming decades. In a 2019 report, NETL indicated that \"the potential costs of commercial-scale CCS are still not fully understood, particularly from a fully integrated (capture, transportation, and storage) perspective.\" Costs could vary greatly due to a variety of site-specific factors. The type of capture technology is the largest component of costs, possibly accounting for as much as 80% of the total. The variations in the geology of storage formations also make predicting future geologic sequestration costs particularly difficult.", "Projects that inject some or all the CO 2 for EOR (with incidental carbon storage) involve different cost implications and economic factors from projects injecting solely for permanent CO 2 sequestration. These factors could influence future deployment of these types of projects, as facility owners and operators may consider cost implications when deciding whether to invest in EOR or when deciding between investing projects for EOR or permanent geologic sequestration. EOR operations typically use the existing injection infrastructure in place from earlier oil and gas production activities. Thus, the well exploration and construction costs are \"sunk costs.\" Unlike geologic sequestration projects, these expenses may not be included in total project cost calculations, resulting in comparatively lower costs for injecting and storing the CO 2 . In addition, for EOR projects, overall project costs could be influenced by revenue for the owner or operator from additional oil and gas production. EOR project costs may also be subject to variability and uncertainty, however. NETL notes that the price of oil and the cost and availability of CO 2 are key drivers in the economics of CO 2 EOR.", "Federal tax credits for carbon storage, available since 2009 for both EOR and geologic sequestration, may also play a role in underground injection and storage of CO 2 project costs and investment decisions . These credits are discussed later in this report. "], "subsections": []}, {"section_title": "Public Acceptance and Participation", "paragraphs": ["In the preamble to the proposed Class VI rule, EPA noted that \"GS of CO 2 is a new technology that is unfamiliar to most people, and maximizing the public's understanding of the technology can result in more meaningful public input and constructive participation as new GS projects are proposed and developed.\" EPA also stated that \"the agency expects that there will be higher levels of public interest in GS projects than for other injection activities.\" In the Class VI rule, EPA adopted the existing UIC public participation requirements, which require permitting authorities to provide public notice of pending actions, hold public hearings if requested, solicit and respond to public comments, and involve a broad range of stakeholders.", "At least two cases involving Class VI permits have come before EPA's Environmental Appeals Board. The first case involved the permit for the FutureGen facility, which was never constructed. The second case involved ADM's Illinois facility, currently operating and permitted in Illinois. Public concerns centered on safety and environmental protection issues, including air quality, groundwater quality, and protection of endangered species. Local landowners claimed that the permits do not adequately address how the facility will ensure these protections in the event of leakage or well failure. They also raised concerns about property rights (including mineral rights), potential decreases in property value, and increased traffic associated with the facilities. "], "subsections": []}, {"section_title": "Continued Use of Fossil Fuels", "paragraphs": ["In the EPAct in 2005 and EISA in 2007, Congress recognized connections between geologic sequestration of CO 2 and the continued use of fossil fuel as a major source of electricity in the United States. Consistent with Congress's directives, DOE's CCS research identifies that the purpose of its CCS research, technology development, and testing is \"to benefit the existing and future fleet of fossil fuel power generating facilities by creating tools to increase our understanding of geologic reservoirs appropriate for CO 2 storage and the behavior of CO 2 in the subsurface.\" In the preamble to the proposed Class VI rule, EPA stated that, \"the capture and storage of CO 2 would enable the continued use of coal in a manner that greatly reduces the associated CO 2 emissions while other safe and affordable energy sources are developed in the coming decades.\"", "Some stakeholders have argued for further research, development and deployment of CCS (when coupled with negative carbon technology, such as direct air capture) as a method for achieving the negative emissions trajectories modeled by the IPCC. Some of these stakeholders state that CCS is an appropriate transitional technology to reduce CO 2 emissions from electricity generation and other industrial sources while expanding the capacity of low or zero-carbon power sources, such as renewable energy. ", "In contrast, other stakeholders have argued that CO 2 sequestration could create a disincentive to reduce fossil-fuel-based power plant emissions or shift to renewable energy sources. In particular, some stakeholders note that injecting CO 2 for EOR may actually increase net GHG emissions, as it produces additional oil and gas to be burned as fuel. CCS systems also require energy to compress, transport, and inject the CO 2 , which, if derived from fossil fuel combustion, could detract from the net GHG reduc tion benefits of sequestration."], "subsections": []}, {"section_title": "Carbon Storage Tax Credits", "paragraphs": ["Federal tax credits for carbon storage were first enacted in 2008 by the Energy Improvement and Extension Act ( P.L. 110-343 ). This act added Section 45Q to the Internal Revenue Code, which established tax credits for CO 2 storage through both EOR and geologic sequestration. For EOR, only the CO 2 that is used as tertiary injectant and remains in the reservoir qualifies for the tax credit. CO 2 recaptured or recycled does not qualify. The Bipartisan Budget Act of 2018 (BBA) amended Section 45Q to increase the amount of these tax credits from $22.66 to $50 per ton over time for sequestered CO 2 and from $12.83 to $35 per ton over time for CO 2 used in EOR. The BBA also removed a 75-million-ton cap on total qualified CO 2 captured or injected but required the relevant taxpayer to claim the credit over a 12-year period after operations begin. Additionally, eligible facilities must be operating or must begin construction before 2024. The U.S. Department of the Treasury is currently considering comments on proposed implementing regulations for the BBA tax credit provision and has not released a final rule. In response to the 2019 Internal Revenue Service notice requesting comments on carbon credits for future regulations and guidance, some oil and gas industry commenters expressed concerns with Treasury's proposed approach to measuring \"secure geological storage\" and other requirements, which they assert would impact their ability to plan and invest in CCS projects.", "In the meantime, the tax credit as authorized in the BBA is available to qualified entities. Treasury estimates that in FY2019, the credit will reduce federal income tax revenue by $70 million. Over the FY2020-FY2029 budget window, Treasury estimates that the tax credit will reduce federal income tax revenue by a total of $2.3 billion. As of May 2019, the amount of stored carbon oxide claimed for 45Q credits since 2011 totaled 62,740,171 tons.", "In legislation pending in the 116 th Congress, H.R. 5156 would extend the deadline for the start of construction of a qualified facility to January 1, 2025. S. 2263 would revise the requirements for the secure geologic storage of carbon oxide for EOR and sequestration."], "subsections": []}]}]}, {"section_title": "Recent CCS Legislation", "paragraphs": [" Table 2 , below, lists legislation introduced in the 116 th Congress that includes provisions relating to geologic sequestration of CO 2 (as of date of report publication). Legislation in the 116 th Congress has focused on research and development of CCS, including carbon storage through EOR and geologic sequestration, and adjustments to the 45Q carbon storage tax credit. ", "Appendix A. Estimates of U.S. Storage Capacity for\u00c2\u00a0CO 2", "Appendix B. Large Scale Injection and Geologic Sequestration of CO 2 Projects in the United States", "Appendix C. Comparison of Class II and Class VI Wells"], "subsections": []}]}}
{"id": "R45997", "title": "Federal Regional Commissions and Authorities: Structural Features and Function", "released_date": "2019-11-06T00:00:00", "summary": ["This report describes the structure, activities, legislative history, and funding history of seven federal regional commissions and authorities: the Appalachian Regional Commission; the Delta Regional Authority; the Denali Commission; the Northern Border Regional Commission; the Northern Great Plains Regional Authority; the Southeast Crescent Regional Commission; and the Southwest Border Regional Commission.", "All seven regional commissions and authorities are broadly modeled after the Appalachian Regional Commission structure, which is composed of a federal co-chair appointed by the president with the advice and consent of the Senate, and the member state governors, of which one is appointed the state co-chair. This structure is broadly replicated in the other commissions and authorities, albeit with notable variations and exceptions to local contexts. In addition, the service areas for all of the federal regional commissions and authorities are defined in statute and thus can only be amended or modified through congressional action. While the service areas for the federal regional commissions and authorities have shifted over time, those jurisdictions have not changed radically in their respective service lives.", "Of the seven federal regional commissions and authorities, four could be considered active: the Appalachian Regional Commission; the Delta Regional Authority; the Denali Commission; and the Northern Border Regional Commission.", "The four active regional commissions and authority received $15 million to $165 million in congressional appropriations in FY2019 for their various activities. Each of the four functioning regional commissions and authority engage in economic development to varying extents, and address multiple programmatic activities in their respective service areas. These activities may include, but are not limited to: basic infrastructure; energy; ecology/environment and natural resources; workforce/labor; and business development.", "Though they are federally-chartered, receive congressional appropriations for their administration and activities, and include an appointed federal representative in their respective leadership structures (the federal co-chair and his/her alternate, as applicable), the federal regional commissions and authorities are quasi-governmental partnerships between the federal government and the constituent state(s) of a given authority or commission. This partnership structure, which also typically includes substantial input and efforts at the sub-state level, represents a unique federal approach to economic development and a potentially flexible mechanism for coordinating strategic economic development goals to local, state, and multi-state/regional priorities and contexts.", "Congress has expressed interest in the federal regional commissions and authorities pursuant to its appropriations and oversight authority, as well as its interest in facilitating economic development programming. Given relevant congressional interest, the federal regional commissions and authorities provide a model of functioning economic development approaches that are place-based, intergovernmental, and multifaceted in their programmatic orientation (e.g., infrastructure, energy, environment/ecology, workforce, business development)."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["This report describes the structure, activities, legislative history, and funding history of seven federally-chartered regional commissions and authorities: the Appalachian Regional Commission (ARC); the Delta Regional Authority (DRA); the Denali Commission; the Northern Border Regional Commission (NBRC); the Northern Great Plains Regional Authority (NGPRA); the Southeast Crescent Regional Commission (SCRC); and the Southwest Border Regional Commission (SBRC) ( Table A-1 ). The federal regional commissions are also functioning examples of place-based and intergovernmental approaches to economic development, which receive regular congressional interest. ", "The federal regional commissions and authorities integrate federal and state economic development priorities alongside regional and local considerations ( Figure A-1 ). As federally-chartered agencies created by acts of Congress, the federal regional commissions and authorities depend on congressional appropriations for their activities and administration, and are subject to congressional oversight. ", "Seven federal regional commissions and authorities were authorized by Congress to address instances of major economic distress in certain defined socio-economic regions, with all but one (Alaska's Denali Commission) being multi-state regions ( Figure B-1 ). The first such federal regional commission, the Appalachian Regional Commission, was founded in 1965. The other commissions and authorities may have roots in the intervening decades, but were not founded until 1998 (Denali), 2000 (Delta Regional Authority), and 2002 (the Northern Great Plains Regional Authority). The most recent commissions\u00e2\u0080\u0094Northern Border Regional Commission, Southeast Crescent Regional Commission, and Southwest Border Regional Commission\u00e2\u0080\u0094were authorized in 2008.", "Four of the seven entities\u00e2\u0080\u0094the Appalachian Regional Commission, the Delta Regional Authority, the Denali Commission, and the Northern Border Regional Commission\u00e2\u0080\u0094are currently active and receive regular annual appropriations. ", "Certain strategic emphases and programs have evolved over time in each of the functioning federal regional commissions and authorities. However, their overarching missions to address economic distress have not changed, and their associated activities have broadly remained consistent to those goals as funding has allowed. In practice, the functioning federal regional commissions and authorities engage in their respective economic development efforts through multiple program areas, which may include, but are not limited to basic infrastructure; energy; ecology/environment and natural resources; workforce/labor; and business development. "], "subsections": []}, {"section_title": "Appalachian Regional Commission", "paragraphs": ["The Appalachian Regional Commission was established in 1965 to address economic distress in the Appalachian region. The ARC's jurisdiction spans 420 counties in Alabama, Georgia, Kentucky, Maryland, Mississippi, New York, North Carolina, Ohio, Pennsylvania, South Carolina, Tennessee, Virginia, and West Virginia ( Figure 1 ). The ARC was originally created to address severe economic disparities between Appalachia and that of the broader United States; recently, its mission has grown to include regional competitiveness in a global economic environment."], "subsections": [{"section_title": "Structure and Activities", "paragraphs": [], "subsections": [{"section_title": "Commission Structure", "paragraphs": ["According to the authorizing legislation, the Appalachian Regional Development Act of 1965, as amended, the ARC is a federally-chartered, regional economic development entity led by a federal co-chair, whose term is open-ended, and the 13 participating state governors, of which one serves as the state co-chair for a term of \"at least one year.\" The federal co-chair is appointed by the President with the advice and consent of the Senate. The authorizing act also allows for the appointment of federal and state alternates to the commission. The ARC is a federal-state partnership, with administrative costs shared equally by the federal government and member states, while economic development activities are funded by congressional appropriations."], "subsections": []}, {"section_title": "Regional Development Plan", "paragraphs": ["According to authorizing legislation and the ARC code, the ARC's programs abide by a Regional Development Plan (RDP), which includes documents prepared by the states and the commission. The RDP is comprised of the ARC's strategic plan, its bylaws, member state development plans, each participating state's annual strategy statement, the commission's annual program budget, and the commission's internal implementation and performance management guidelines. ", "The RDP integrates local, state, and federal economic development priorities into a common regional agenda. Through state plans and annual work statements, states establish goals, priorities, and agendas for fulfilling them. State planning typically includes consulting with local development districts (LDDs), which are multicounty organizations that are associated with and financially supported by the ARC and advise on local priorities. ", "There are 73 ARC-associated LDDs. They may be conduits for funding for other eligible organizations, and may also themselves be ARC grantees. State and local governments, governmental entities, and nonprofit organizations are eligible for ARC investments, including both federal- and also state-designated tribal entities. Notably, non-federally recognized, state-designated tribal entities are eligible to receive ARC funding, which is an exception to the general rarity of federal funds being available to non-federally recognized tribal entities.", "ARC's strategic plan is a five-year document, reviewed annually, and revised as necessary. The current strategic plan, adopted in November 2015, prioritizes five investment goals: ", "1. entrepreneurial and business development; 2. workforce development; 3. infrastructure development; 4. natural and cultural assets; and 5. leadership and community capacity.", "The ARC's investment activities are divided into 10 program areas:", "These program areas can be funded through five types of eligible activities:", "1. business development and entrepreneurship, through grants to help create and retain jobs in the region, including through targeted loan funds; 2. education and training, for projects that \"develop, support, or expand education and training programs\"; 3. health care, through funding for \"equipment and demonstration projects\" and sometimes for facility construction and renovation, including hospital and community health services; 4. physical infrastructure, including funds for basic infrastructure services such as water and sewer facilities, as well as housing and telecommunications; and 5. leadership development and civic capacity, such as community-based strategic plans, training for local leaders, and organizational support.", "While most funds are used for economic development grants, approximately $50 million is reserved for the Partnerships for Opportunity and Workforce and Economic Revitalization (POWER) Initiative. The POWER Initiative began in 2015 to provide economic development funding for addressing economic and labor dislocations caused by energy transition principally in coal communities in the Appalachian region. "], "subsections": []}, {"section_title": "Distressed Counties", "paragraphs": ["The ARC is statutorily obligated to designate counties according to levels of economic distress. Distress designations influence funding priority and determine grant match requirements. Using an index-based classification system, the ARC compares each county within its jurisdiction with national averages based on three economic indicators: (1) three-year average unemployment rates; (2) per capita market income; and (3) poverty rates. These factors are calculated into a composite index value for each county, which are ranked and sorted into designated distress levels. Each distress level corresponds to a given county's ranking relative to that of the United States as a whole. These designations are defined as follows by the ARC, starting from \"worst\" distress:", "distressed counties, or those with values in the \"worst\" 10% of U.S. counties; at-risk , which rank between worst 10% and 25%; transitional , which rank between worst 25% and best 25%; competitive , which rank between \"best\" 25% and best 10%; and attainment , or those which rank in the best 10%.", "The designated level of distress is statutorily tied to allowable funding levels by the ARC (funding allowance), the balance of which must be met through grant matches from other funding sources (including potentially other federal funds) unless a waiver or special dispensation is permitted: distressed (80% funding allowance, 20% grant match); at-risk (70%); transitional (50%); competitive (30%); and attainment (0% funding allowance). Exceptions can be made to grant match thresholds. Attainment counties may be able to receive funding for projects where sub-county areas are considered to be at higher levels of distress, and/or in those cases where the inclusion of an attainment county in a multi-county project would benefit one or more non-attainment counties or areas. In addition, special allowances may reduce or discharge matches, and match requirements may be met with other federal funds."], "subsections": []}]}, {"section_title": "Legislative History", "paragraphs": [], "subsections": [{"section_title": "Council of Appalachian Governors", "paragraphs": ["In 1960, the Alabama, Georgia, Kentucky, Maryland, North Carolina, Pennsylvania, Tennessee, Virginia, and West Virginia governors formed the Council of Appalachian Governors to highlight Appalachia's extended economic distress and to press for increased federal involvement. In 1963, President John F. Kennedy formed the President's Appalachian Regional Commission (PARC) and charged it with developing an economic development program for the region. PARC's report, issued in 1964, called for the creation of an independent agency to coordinate federal and state efforts to address infrastructure, natural resources, and human capital issues in the region. The PARC also included some Ohio counties as part of the Appalachian region."], "subsections": []}, {"section_title": "Appalachian Regional Development Act", "paragraphs": ["In 1965, President Lyndon Johnson signed the Appalachian Regional Development Act, which created the ARC to address the PARC's recommendations, and added counties in New York and Mississippi. The ARC was directed to administer or assist in the following initiatives:", "The creation of the Appalachian Development Highway System; Establishing \"Demonstration Health Facilities\" to fund health infrastructure; Land stabilization, conservation, and erosion control programs; Timber development organizations, for purposes of forest management; Mining area restoration, for rehabilitating and/or revitalizing mining sites; A water resources survey; Vocational education programs; and Sewage treatment infrastructure."], "subsections": []}, {"section_title": "Major Amendments to the ARC Before 2008", "paragraphs": [], "subsections": [{"section_title": "Appalachian Regional Development Act Amendments of 1975", "paragraphs": ["In 1975, the ARC's authorizing legislation was amended to require that state governors themselves serve as the state representatives on the commission, overriding original statutory language in which governors were permitted to appoint designated representatives. The amendments also included provisions to expand public participation in ARC plans and programs. They also required states to consult with local development districts and local governments and authorized federal grants to the ARC to assist states in enhancing state development planning. "], "subsections": []}, {"section_title": "Appalachian Regional Development Reform Act of 1998", "paragraphs": ["Legislative reforms in 1998 introduced county-level designations of distress. The legislation organized county-level distress into three bands, from \"worst\" to \"best\": distressed counties; competitive counties; and attainment counties. The act imposed limitations on funding for economically strong counties: (1) \"competitive,\" which could only accept ARC funding for 30% of project costs (with the 70% balance being subject to grant match requirements); and (2) \"attainment,\" which were generally ineligible for funding, except through waivers or exceptions. ", "In addition, the act withdrew the ARC's legislative mandate for certain programs, including the land stabilization, conservation, and erosion control program; the timber development program; the mining area restoration program; the water resource development and utilization survey; the Appalachian airport safety improvements program (a program added in 1971); the sewage treatment works program; and amendments to the Housing Act of 1954 from the original 1965 act."], "subsections": []}, {"section_title": "Appalachian Regional Development Act Amendments of 2002", "paragraphs": ["Legislation in 2002 expanded the ARC's ability to support LDDs, introduced an emphasis on ecological issues, and provided for a greater coordinating role by the ARC in federal economic development activities. The amendments also provided new stipulations for the ARC's grant making, limiting the organization to funding 50% of project costs or 80% in designated distressed counties. The amendments also expanded the ARC's efforts in human capital development projects, such as through various vocational, entrepreneurial, and skill training initiatives. "], "subsections": []}]}, {"section_title": "The Appalachian Regional Development Act Amendments of 2008", "paragraphs": ["The Appalachian Regional Development Act Amendments of 2008 is the ARC's most recent substantive legislative development and reflects its current configuration. The amendments included: ", "1. various limitations on project funding amounts and commission contributions; 2. the establishment of an economic and energy development initiative; 3. the expansion of county designations to include an \"at-risk\" designation; and 4. the expansion of the number of counties under the ARC's jurisdiction. ", "The 2008 amendments introduced funding limitations for ARC grant activities as a whole, as well as to specific programs. According to the 2008 legislation, \"the amount of the grant shall not exceed 50 percent of administrative expenses.\" However, at the ARC's discretion, an LDD that included a \"distressed\" county in its service area could provide for 75% of administrative expenses of a relevant project, or 70% for \"at-risk\" counties. Eligible activities could only be funded by the ARC at a maximum of 50% of the project cost, or 80% for distressed counties and 70% for \"at-risk\" counties. The act introduced special project categories, including (1) demonstration health projects; (2) assistance for proposed low- and middle-income housing projects; (3) the telecommunications and technology initiative; (4) the entrepreneurship initiative; and (5) the regional skills partnership. Finally, the \"economic and energy development initiative\" provided for the ARC to fund activities supporting energy efficiency and renewable technologies. The legislation expanded distress designations to include an \"at-risk\" category, or counties \"most at risk of becoming economically distressed.\" This raised the number of distress levels to five. The legislation also expanded ARC's service area. Ten counties in four states were added to the ARC, which represents the most recent expansion. "], "subsections": []}]}, {"section_title": "Funding History", "paragraphs": ["The ARC is a federal-state partnership, with administrative costs shared equally by the federal government and states, while economic development activities are federally funded. The ARC is also the highest-funded of the federal regional commissions and authorities. Its funding ( Table 1 ) has increased 126% from approximately $73 million in FY2008 to $165 million in FY2019. ", "The ARC's funding growth is attributable to incremental increases in appropriations along with an approximately $50 million increase in annual appropriated funds in FY2016 set aside to support the POWER Initiative. The POWER Initiative was part of a wider federal effort under the Obama Administration to support coal communities affected by the decline of the coal industry. The FY2018 White House budget proposed to shutter the ARC as well as the other federal regional commissions and authorities. Congress did not adopt these provisions from the President's budget, and continued to fund the ARC and other commissions. "], "subsections": []}]}, {"section_title": "Delta Regional Authority", "paragraphs": ["The Delta Regional Authority was established in 2000 to address economic distress in the Mississippi River Delta region. The DRA aims to \"improve regional economic opportunity by helping to create jobs, build communities, and improve the lives of the 10 million people\" in 252 designated counties and parishes in Alabama, Arkansas, Illinois, Kentucky, Louisiana, Mississippi, Missouri, and Tennessee ( Figure 2 ). "], "subsections": [{"section_title": "Overview of Structure and Activities", "paragraphs": [], "subsections": [{"section_title": "Authority Structure", "paragraphs": ["Like the ARC, the DRA is a federal-state partnership that shares administrative expenses equally, while activities are federally funded. The DRA consists of a federal co-chair appointed by the President with the advice and consent of the Senate, and the eight state governors, of which one is state co-chair. The governors are permitted to appoint a designee to represent the state, who also generally serves as the state alternate. ", "Entities that are eligible to apply for DRA funding include: ", "1. state and local governments\u00c2\u00a0(state agencies, cities and counties/parishes); 2. public bodies; and 3. non-profit entities. ", "These entities must apply for projects that operate in or are serving residents and communities within the 252 counties/parishes of the DRA's jurisdiction. "], "subsections": []}, {"section_title": "DRA Strategic Planning", "paragraphs": ["Funding determinations are assessed according to the DRA's authorizing statute, its strategic plan, state priorities, and distress designation. The DRA strategic plan articulates the authority's high-level economic development priorities. The current strategic plan\u00e2\u0080\u0094 Moving the Delta Forward , Delta Regional Development Plan III\u00e2\u0080\u0094was released in April 2016 and is in effect through 2021. ", "The strategic plan lists three primary goals: ", "1. workforce competitiveness, to \"advance the productivity and economic competitiveness of the Delta workforce\"; 2. strengthened infrastructure, to \"strengthen the Delta's physical, digital, and capital connections to the global economy\"; and 3. increased community capacity, to \"facilitate local capacity building within Delta communities, organizations, businesses, and individuals.\"", "State development plans are required by statute every five years to coincide with the strategic plan, and reflect the economic development goals and priorities of member states and LDDs. The DRA funds projects through 44 LDDs, which are multicounty economic development organizations financially supported by the DRA and advise on local priorities. LDDs \"provide technical assistance, application support and review, and other services\" to the DRA and entities applying for funding. LDDs receive administrative fees paid from awarded DRA funds, which are calculated as 5% of the first $100,000 of an award, and 1% for all dollars above that amount."], "subsections": []}, {"section_title": "Distress Designations", "paragraphs": ["The DRA determines a county or parish as distressed on an annual basis through the following criteria: ", "1. an unemployment rate of 1% higher than the national average for the most recent 24-month period; and 2. a per capita income of 80% or less than the national per capita income. ", "The DRA designates counties as either distressed or not, and distressed counties received priority funding from DRA grant making activities. By statute, the DRA directs at least 75% of funds to distressed counties; half of those funds must target transportation and basic infrastructure. As of FY2018, 234 of the DRA's 252 counties are considered distressed."], "subsections": []}, {"section_title": "States' Economic Development Assistance Program", "paragraphs": ["The principal investment tool used by the DRA is the States' Economic Development Assistance Program (SEDAP), which \"provides direct investment into community-based and regional projects that address the DRA's congressionally mandated four funding priorities.\" ", "The DRA's four funding priorities are: ", "1. (1) basic public infrastructure; 2. (2) transportation infrastructure; 3. (3) workforce development; and 4. (4) business development (emphasizing entrepreneurship). ", "The DRA's SEDAP funding is made available to each state according to a four-factor, formula-derived allocation that balances geographic breadth, population size, and economic distress ( Table 2 ). ", "The factors and their respective weights are calculated as follows:", "Equity Factor (equal funding among eight states), 50%; Distressed Population (DRA counties/parishes), 20%; Distressed County Area (DRA counties/parishes), 20%; and Population Factor (DRA counties/parishes), 10%. ", "DRA investments are awarded from state allocations. SEDAP applications are accepted through LDDs, and projects are sorted into tiers of priority. While all projects must be associated with one of the DRA's four funding priorities, additional prioritization determines the rank order of awards, which include county-level distress designations; adherence to at least one of the federal priority eligibility criteria (see below); adherence to at least one of the DRA Regional Development Plan goals (from the strategic plan); and adherence to at least one of the state's DRA priorities. ", "The federal priority eligibility criteria are as follows:", "The DRA is also mandated to expend 50% of its appropriated SEDAP dollars on basic public and transportation infrastructure projects, which lend additional weight to this particular criterion. "], "subsections": []}]}, {"section_title": "Legislative History", "paragraphs": ["In 1988, the Rural Development, Agriculture, and Related Agencies Appropriations Act for FY1989 ( P.L. 100-460 ) appropriated $2 million and included language that authorized the creation of the Lower Mississippi Delta Development Commission. The LMDDC was a DRA predecessor tasked with studying economic issues in the Delta and developing a 10-year economic development plan. The LMDDC consisted of two commissioners appointed by the President as well as the governors of Arkansas, Illinois, Kentucky, Louisiana, Mississippi, Missouri, and Tennessee. The commission was chaired by then-Governor William J. Clinton of Arkansas, and the LMDDC released interim and final reports before completing its mandate in 1990. Later, in the White House, the Clinton Administration continued to show interest in an expanded federal role in Mississippi Delta regional economic development. "], "subsections": [{"section_title": "Key Legislative Activity", "paragraphs": ["In 1994, Congress enacted the Lower Mississippi Delta Region Heritage Study Act, which built on the LMDDC's recommendations. In particular, the 1994 act saw the Department of the Interior conduct a study on key regional cultural, natural, and heritage sites and locations in the Mississippi Delta region. In 1999, the Delta Regional Authority Act of 1999 was introduced in the House ( H.R. 2911 ) and Senate ( S. 1622 ) to establish the DRA by amending the Consolidated Farm and Rural Development Act. Neither bill was enacted, but they established the structure and mission later incorporated into the DRA."], "subsections": [{"section_title": "106th Congress", "paragraphs": ["In 2000, the Consolidated Appropriations Act for FY2001 ( P.L. 106-554 ) included language authorizing the creation of the DRA based on the seven participating states of the LMDDC, with the addition of Alabama and 16 of its counties. "], "subsections": []}, {"section_title": "107th Congress", "paragraphs": ["The Farm Security and Rural Investment Act of 2002, or 2002 farm bill ( P.L. 107-171 ), amended voting procedures for DRA states, provided new funds for Delta regional projects, and added four additional Alabama counties to the DRA."], "subsections": []}, {"section_title": "110th Congress", "paragraphs": ["The Food, Conservation, and Energy Act of 2008, or 2008 farm bill ( P.L. 110-234 ) reauthorized the DRA from FY2008 through FY2012 and expanded it to include Beauregard, Bienville, Cameron, Claiborne, DeSoto, Jefferson Davis, Red River, St. Mary, Vermillion, and Webster Parishes in Louisiana; and Jasper and Smith Counties in Mississippi."], "subsections": []}, {"section_title": "113th Congress", "paragraphs": ["The Agricultural Act of 2014, or 2014 farm bill ( P.L. 113-79 ) reauthorized the DRA through FY2018. "], "subsections": []}, {"section_title": "115th Congress", "paragraphs": ["The Agriculture Improvement Act of 2018, or 2018 farm bill ( P.L. 115-334 ), reauthorized the DRA from FY2019 to FY2023, and emphasized Alabama's position as a \"full member\" of the DRA."], "subsections": []}]}]}, {"section_title": "Funding History", "paragraphs": ["Under \"farm bill\" legislation, the DRA has consistently received funding authorizations of $30 million annually since it was first authorized. However, appropriations have fluctuated over the years. Although the DRA was appropriated $20 million in the same legislation authorizing its creation, that amount was halved in 2002, and continued a downward trend through its funding nadir of $5 million in FY2004. However, funding had increased by FY2006 to $12 million. Since FY2008, DRA's annual appropriations have increased from almost $12 million to the current level of $25 million ( Table 3 ). "], "subsections": []}]}, {"section_title": "Denali Commission", "paragraphs": ["The Denali Commission was established in 1998 to support rural economic development in Alaska. It is \"designed to provide critical utilities, infrastructure, and economic support throughout Alaska.\" The Denali Commission is unique as a single-state commission, and in its reliance on federal funding for both administration and activities. "], "subsections": [{"section_title": "Overview of Structure and Activities", "paragraphs": ["The commission's statutory mission includes providing workforce and other economic development assistance to distressed rural regions in Alaska. However, the commission no longer engages in substantial activities in general economic development or transportation, which were once core elements of the Denali Commission's activities. Its recent activities are principally limited to coastal infrastructure protection and energy infrastructure and fuel storage projects. "], "subsections": [{"section_title": "Commission Structure", "paragraphs": ["The Denali Commission's structure is unique as the only commission with a single-state mandate. The commission is comprised of seven members (or a designated nominee), including the federal co-chair, appointed by the U.S. Secretary of Commerce; the Alaska governor, who is state co-chair (or his/her designated representative); the University of Alaska president; the Alaska Municipal League president; the Alaska Federation of Natives president; the Alaska State AFL-CIO president; and the Associated General Contractors of Alaska president. ", "These structural novelties offer a different model compared to the organization typified by the ARC and broadly adopted by the other functioning federal regional commissions and authorities. For example, the federal co-chair's appointment by the Secretary of Commerce, and not the President with Senate confirmation, allows for a potentially more expeditious appointment of a federal co-chair. ", "The Denali Commission is required by law to create an annual work plan, which solicits project proposals, guides activities, and informs a five-year strategic plan. The work plan is reviewed by the federal co-chair, the Secretary of Commerce, and the Office of Management and Budget, and is subject to a public comment period. The current FY2018-FY2022 strategic plan, released in October 2017, lists four strategic goals and objectives: (1) facilities management; (2) infrastructure protection from ecological change; (3) energy, including storage, production, heating, and electricity; and (4) innovation and collaboration. The commission's recent activities largely focus on energy and infrastructure protection. "], "subsections": []}, {"section_title": "Distressed Areas", "paragraphs": ["The Denali Commission's authorizing statute obligates the Commission to address economic distress in rural areas of Alaska. As of 2018, the Commission utilizes two overlapping standards to assess distress: a \"surrogate standard,\" adopted by the Commission in 2000, and an \"expanded standard.\" These standards are applied to rural communities in Alaska and assessed by the Alaska Department of Labor and Workforce Development (DOL&WD), Research and Analysis Section. DOL&WD uses the most current population, employment, and earnings data available to identify Alaska communities and Census Designated Places considered \"distressed.\" ", "Appeals can be made to community distress determinations, but only through a demonstration that DOL&WD data or analysis was erroneous, invalid, or outdated. New information \"must come from a verifiable source, and be robust and representative of the entire community and/or population.\" Appeals are accepted and adjudicated only for the same reporting year in question."], "subsections": []}, {"section_title": "Recent Activities", "paragraphs": ["The Denali Commission's scope is more constrained compared to the other federal regional commissions and authorities. The organization reports that due to funding constraints, the commission reduced its involvement in what might be considered traditional economic development and, instead, focused on rural fuel and energy infrastructure and coastal protection efforts.", "Since the Denali Commission's founding, bulk fuel safety and security, energy reliability and security, transportation system improvements, and healthcare projects have commanded the vast majority of Commission projects. Of these, only energy reliability and security and bulk fuel safety and security projects remain active and are still funded. Village infrastructure protection\u00e2\u0080\u0094a program launched in 2015 to address community infrastructure threatened by erosion, flooding and permafrost degradation\u00e2\u0080\u0094is a program that is relatively new and still being funded. By contrast, most \"traditional\" economic development programs are no longer being funded, including in housing, workforce development, and general economic development activities. "], "subsections": []}]}, {"section_title": "Legislative History", "paragraphs": [], "subsections": [{"section_title": "106th Congress", "paragraphs": ["In 1999, the Consolidated Appropriations Act, 2000 ( P.L. 106-113 ) authorized the commission to enter into contracts and cooperative agreements, award grants, and make payments \"necessary to carry out the purposes of the commission.\" The act also established the federal co-chair's compensation schedule, prohibited using more than 5% of appropriated funds for administrative expenses, and established \"demonstration health projects\" as authorized activities and authorized the Department of Health and Human Services to make grants to the commission to that effect."], "subsections": []}, {"section_title": "108th Congress", "paragraphs": ["The Consolidated Appropriations Act, 2004 ( P.L. 108-199 ) created an Economic Development Committee within the commission chaired by the Alaska Federation of Natives president, and included the Alaska Commissioner of Community and Economic Affairs, a representative of the Alaska Bankers Association, the chairman of the Alaska Permanent Fund, a representative from the Alaska Chamber of Commerce, and representatives from each region."], "subsections": []}, {"section_title": "109th Congress", "paragraphs": ["In 2005, the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users, or SAFETEA-LU ( P.L. 109-59 ), established the Denali Access System Program among the commission's authorized activities. The program was part of its surface transportation efforts, which were active from 2005 through 2009."], "subsections": []}, {"section_title": "112th Congress", "paragraphs": ["2012's Moving Ahead for Progress in the 21 st Century Act, or MAP-21 ( P.L. 112-141 ), authorized the commission to accept funds from federal agencies, allowed it to accept gifts or donations of \"service, property, or money\" on behalf of the U.S. government, and included guidance regarding gifts."], "subsections": []}, {"section_title": "114th Congress", "paragraphs": ["In 2016, the Water Infrastructure Improvements for the Nation Act, or the WIIN Act ( P.L. 114-322 ), reauthorized the Denali Commission through FY2021, and established a four-year term for the federal co-chair (with allowances for reappointment), but provided that other members were appointed for life. The act also allowed for the Secretary of Commerce to appoint an interim federal co-chair, and included clarifying language on the non-federal status of commission staff and ethical issues regarding conflicts of interest and disclosure."], "subsections": []}]}, {"section_title": "Funding History", "paragraphs": ["Under its authorizing statute, the Denali Commission received funding authorizations for $20 million for FY1999, and \"such sums as necessary\" (SSAN) for FY2000 through FY2003. Legislation passed in 2003 extended the commission's SSAN funding authorization through 2008. Its authorization lapsed after 2008; reauthorizing legislation was introduced in 2007, but was not enacted. The commission continued to receive annual appropriations for FY2009 and several years thereafter. In 2016, legislation was enacted reauthorizing the Denali Commission through FY2021 with a $15 million annual funding authorization ( Table 4 )."], "subsections": []}]}, {"section_title": "Northern Border Regional Commission", "paragraphs": ["The Northern Border Regional Commission (NBRC) was created by the Food, Conservation, and Energy Act of 2008, otherwise known as the 2008 farm bill. The act also created the Southeast Crescent Regional Commission (SCRC) and the Southwest Border Regional Commission (SBRC). All three commissions share common authorizing language modeled after the ARC. ", "The NBRC is the only one of the three new commissions that has been both reauthorized and received progressively increasing annual appropriations since it was established in 2008. The NBRC was founded to alleviate economic distress in the northern border areas of Maine, New Hampshire, New York, and, as of 2018, the entire state of Vermont ( Figure 4 ). ", "The stated mission of the NBRC is \"to catalyze regional, collaborative, and transformative community economic development approaches that alleviate economic distress and position the region for economic growth.\" Eligible counties within the NBRC's jurisdiction may receive funding \"for community and economic development\" projects pursuant to regional, state, and local planning and priorities ( Table C-4 ). "], "subsections": [{"section_title": "Overview of Structure and Activities", "paragraphs": ["The NBRC is led by a federal co-chair, appointed by the President with the advice and consent of the Senate, and four state governors, of which one is appointed state co-chair. There is no term limit for the federal co-chair. The state co-chair is limited to two consecutive terms, but may not serve a term of less than one year. Each of the four governors may appoint an alternate; each state also designates an NBRC program manager to handle the day-to-day operations of coordinating, reviewing, and recommending economic development projects to the full membership. ", "While program funding depends on congressional appropriations, administrative costs are shared equally between the federal government and the four states of the NBRC. Through commission votes, applications are ranked by priority, and are approved in that order as grant funds allow. "], "subsections": [{"section_title": "Program Areas", "paragraphs": ["All projects are required to address at least one of the NBRC's four authorized program areas and its five-year strategic plan. The NBRC's four program areas are: (1) economic and infrastructure development (EID); (2) comprehensive planning for states; (3) local development districts; and (4) the regional forest economy partnership."], "subsections": [{"section_title": "Economic and Infrastructure Development (EID)", "paragraphs": ["The NBRC's state EID investment program is the chief mechanism for investing in economic development programs in the participating states. The EID program prioritizes projects focusing on infrastructure, telecommunications, energy costs, business development, entrepreneurship, workforce development, leadership, and regional strategic planning. The EID program provides approximately $3.5 million to each state for such activities. Eligible applicants include public bodies, 501(c) organizations, Native American tribes, and the four state governments. EID projects may require matching funds of up to 50% depending on the level of distress. "], "subsections": []}, {"section_title": "Comprehensive Planning", "paragraphs": ["The NBRC may also assist states in developing comprehensive economic and infrastructure development plans for their NBRC counties. These initiatives are undertaken in collaboration with LDDs, localities, institutions of higher education, and other relevant stakeholders."], "subsections": []}, {"section_title": "Local Development Districts (LDD)", "paragraphs": ["The NBRC uses 16 multicounty LDDs to advise on local priorities, identify opportunities, conduct outreach, and administer grants, from which the LDDs receive fees. LDDs receive fees according to a graduated schedule tied to total project funds. The rate is 5% for the first $100,000 awarded and 1% in excess of $100,000. Notably, this formula does not apply to Vermont-only projects. Vermont is the only state where grantees are not required to contract with an LDD for the administration of grants, though this requirement may be waived. "], "subsections": []}, {"section_title": "Regional Forest Economy Partnership (RFEP)", "paragraphs": ["The RFEP is an NBRC program to address economic distress caused by the decline of the regional forest products industry. The program provides funding to rural communities for \"economic diversity, independence, and innovation.\" The NBRC received $7 million in FY2018 and FY2019 to address the decline in the forest-based economies in the NBRC region. "], "subsections": []}]}, {"section_title": "Strategic Plan", "paragraphs": ["The NBRC's activities are guided by a five-year strategic plan, which is developed through \"extensive engagement with NBRC stakeholders\" alongside \"local, state, and regional economic development strategies already in place.\" The 2017-2021 strategic plan lists three goals: ", "1. modernizing infrastructure; 2. creating and sustaining jobs; and 3. anticipating and capitalizing on shifting economic and demographic trends. ", "The strategic plan also lists five-year performance goals, which are:", "5,000 jobs created or retained; 10,000 households and businesses with access to improved infrastructure; 1,000 businesses representing 5,000 employees benefit from NBRC investments; 7,500 workers provided with skills training; 250 communities and 1,000 leaders engaged in regional leadership, learning and/or innovation networks supported by the NBRC; and 3:1 NBRC investment leverage.", "The strategic plan also takes stock of various socioeconomic trends in the northern border region, including (1) population shifts; (2) distressed communities; and (3) changing workforce needs. "], "subsections": []}, {"section_title": "Economic and Demographic Distress", "paragraphs": ["The NBRC is unique in that it is statutorily obligated to assess distress according to economic as well as demographic factors ( Table C-4 ). These designations are made and refined annually. The NBRC defines levels of \"distress\" for counties that \"have high rates of poverty, unemployment, or outmigration\" and \"are the most severely and persistently economic distressed and underdeveloped.\" The NBRC is required to allocate 50% of its total appropriations to projects in distressed counties. ", "The NBRC's county designations are as follows, in descending levels of distress:", "Distressed counties (80% maximum funding allowance); Transitional counties (50%); and Attainment (0%). ", "Transitional counties are defined as counties that do not exhibit the same levels of economic and demographic distress as a distressed county, but suffer from \"high rates of poverty, unemployment, or outmigration.\" Attainment counties are not allowed to be funded by the NBRC except for those projects that are located within an \"isolated area of distress,\" or have been granted a waiver.", "Distress is calculated in tiers of primary and secondary distress categories and constituent factors:", "Primary Distress Categories 1. Percent of population below the poverty level 2. Unemployment rate 3. Percent change in population Secondary Distress Categories 4. Percent of population below the poverty level 5. Median household income 6. Percent of secondary and/or seasonal homes", "Each county is assessed by the primary and secondary distress categories and factors and compared to the figures for the United States as a whole. Designations of county distress are made by tallying those factors against the following criteria:", "Distressed counties are those with at least three factors from both primary and secondary distress categories and at least one from each category; Transitional counties are those with at least one factor from either category; and Attainment counties are those which show no measures of distress."], "subsections": []}]}, {"section_title": "Legislative History", "paragraphs": [], "subsections": [{"section_title": "110th Congress", "paragraphs": ["The NBRC was first proposed in the Northern Border Economic Development Commission Act of 2007 ( H.R. 1548 ), introduced on March 15, 2007. H.R. 1548 proposed the creation of a federally-chartered, multi-state economic development organization\u00e2\u0080\u0094modeled after the ARC\u00e2\u0080\u0094covering designated northern border counties in Maine, New Hampshire, New York, and Vermont. The bill would have authorized the appropriation of $40 million per year for FY2008 through FY2012 ( H.R. 1548 ). The bill received regional co-sponsorship from Members of Congress representing areas in the northern border region. The NBRC was reintroduced in the Regional Economic and Infrastructure Development Act of 2007 ( H.R. 3246 ), which would have authorized the NBRC, the SCRC, and the SBRC, and reauthorized the DRA and the NGPRA (discussed in the next section) in a combined bill. H.R. 3246 won a broader range of support, which included 18 co-sponsors in addition to the original bill sponsor, and passed the House by a vote of 264-154 on October 4, 2007. Upon House passage, H.R. 3246 was referred to the Senate Committee on Environment and Public Works. The Senate incorporated authorizations for the establishment of the NBRC, SCRC, and the SBRC in the 2008 farm bill. The 2008 farm bill authorized annual appropriations of $30 million for FY2008 through FY2012 for all three new commissions. "], "subsections": []}, {"section_title": "115th Congress", "paragraphs": ["The only major changes to the NBRC since its creation were made in the Agriculture Improvement Act of 2018 ( P.L. 115-334 ), or the 2018 farm bill, which authorized the state capacity building grant program. In addition, the 2018 farm bill expanded the NBRC to include the following counties: Belknap and Cheshire counties in New Hampshire; Genesee, Greene, Livingston, Montgomery, Niagara, Oneida, Orleans, Rensselaer, Saratoga, Schenectady, Sullivan, Washington, Warren, Wayne, and Yates counties in New York; and Addison, Bennington, Chittenden, Orange, Rutland, Washington, Windham, and Windsor counties in Vermont, making it the only state entirely within the NBRC."], "subsections": []}]}, {"section_title": "Funding History", "paragraphs": ["Since its creation, the NBRC has received consistent authorizations of appropriations ( Table 5 ). The 2008 farm bill authorized the appropriation of $30 million for the NBRC for each of FY2008 through FY2013 ( P.L. 110-234 ); the same in the 2014 farm bill for each of FY2014 through FY2018 ( P.L. 113-79 ); and $33 million for each of FY2019 through FY2023 ( P.L. 115-334 ). ", "Due to its statutory linkages to the SCRC and SBRC, all three commissions also share common authorizing legislation and identical funding authorizations. To date, the NBRC is the only commission of the three to receive substantial annual appropriations. Congress has funded the NBRC since FY2010 ( Table 5 ). The NBRC's appropriated funding level has increased from $5 million in FY2014, to $7.5 million in FY2016, $10 million in FY2017, $15 million in FY2018, and $20 million in FY2019."], "subsections": []}]}, {"section_title": "Northern Great Plains Regional Authority", "paragraphs": ["The Northern Great Plains Regional Authority was created by the 2002 farm bill. The NGPRA was created to address economic distress in Iowa, Minnesota, Missouri (other than counties included in the Delta Regional Authority), North Dakota, Nebraska, and South Dakota. ", "The NGPRA appears to have been briefly active shortly after it was created, when it received its only annual appropriation from Congress. The NGPRA's funding authorization lapsed at the end of FY2018; it was not reauthorized."], "subsections": [{"section_title": "Structure and Activities", "paragraphs": [], "subsections": [{"section_title": "Authority Structure", "paragraphs": ["The NGPRA featured broad similarities to the basic structure shared among most of the federal regional authorities and commissions, being a federal-state partnership led by a federal co-chair (appointed by the President, with the advice and consent of the Senate) and governors of the participating states, of which one was designated as the state co-chair. ", "Unique to the NGPRA were certain structural novelties reflective of regional socio-political features. The NGPRA also included a Native American tribal co-chair, who was the chairperson of an Indian tribe in the region (or their designated representative), and appointed by the President, with the advice and consent of the Senate. The tribal co-chair served as the \"liaison between the governments of Indian tribes in the region and the [NGPRA].\" No term limit is established in statute; the only term-related proscription is that the state co-chair \"shall be elected by the state members for a term of not less than 1 year.\"", "Another novel feature among the federal regional commissions and authorities was also the NGPRA's statutory reliance on a 501(c)(3) non-profit corporation\u00e2\u0080\u0094Northern Great Plains, Inc.\u00e2\u0080\u0094in furtherance of its mission. While Northern Great Plains, Inc. was statutorily organized to complement the NGPRA's activities, it effectively served as the sole manifestation of the NGPRA concept and rationale while it was active, given that the NGPRA was only once appropriated funds and never appeared to exist as an active organization. The Northern Great Plains, Inc. was active for several years, and reportedly received external funding, but is currently defunct. "], "subsections": []}, {"section_title": "Activities and Administration", "paragraphs": ["Under its authorizing statute, the federal government would initially fund all administrative costs in FY2002, which would decrease to 75% in FY2003, and 50% in FY2004. Also, the NGPRA would have designated levels of county economic distress; 75% of funds were reserved for the most distressed counties in each state, and 50% reserved for transportation, telecommunications, and basic infrastructure improvements. Accordingly, non-distressed communities were eligible to receive no more than 25% of appropriated funds. ", "The NGPRA was also structured to include a network of designated, multi-county LDDs at the sub-state levels. As with its sister organizations, the LDDs would have served as nodes for project implementation and reporting, and as advisors to their respective states and the NGPRA as a whole. "], "subsections": []}]}, {"section_title": "Legislative History", "paragraphs": [], "subsections": [{"section_title": "103rd Congress", "paragraphs": ["The Northern Great Plains Rural Development Act ( P.L. 103-318 ), which became law in 1994, established the Northern Great Plains Rural Development Commission to study economic conditions and provide economic development planning for the Northern Great Plains region. The Commission was comprised of the governors (or designated representative) from the Northern Great Plains states of Iowa, Minnesota, North Dakota, Nebraska, and South Dakota (prior to Missouri's inclusion), along with one member from each of those states appointed by the Secretary of Agriculture. "], "subsections": []}, {"section_title": "104th Congress", "paragraphs": ["The Agricultural, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act, 1995 ( P.L. 103-330 ) provided $1,000,000 to carry out the Northern Great Plains Rural Development Act. The Commission produced a 10-year plan to address economic development and distress in the five states. After a legislative extension ( P.L. 104-327 ), the report was submitted in 1997. The Northern Great Plains Initiative for Rural Development (NGPIRD), a non-profit 501(c)(3), was established to implement the Commission's advisories. "], "subsections": []}, {"section_title": "107th Congress", "paragraphs": ["The Farm Security and Rural Investment Act of 2002, or 2002 farm bill ( P.L. 107-171 ), authorized the NGPRA, which superseded the Commission. The statute also created Northern Great Plains, Inc., a 501(c)(3), as a resource for regional issues and international trade, which supplanted the NGPIRD with a broader remit that included research, education, training, and issues of international trade."], "subsections": []}, {"section_title": "110th Congress", "paragraphs": ["The Food, Conservation, and Energy Act of 2008, or 2008 farm bill ( P.L. 110-246 ), extended the NGPRA's authorization through FY2012. The legislation also expanded the authority to include areas of Missouri not covered by the DRA, and provided mechanisms to enable the NGPRA to begin operations even without the Senate confirmation of a federal co-chair, as well as in the absence of a confirmed tribal co-chair. The Agricultural Act of 2014, or 2014 farm bill ( P.L. 113-79 ), reauthorized the NGPRA and the DRA, and extended their authorizations from FY2012 to FY2018. "], "subsections": []}]}, {"section_title": "Funding History", "paragraphs": ["The NGPRA was authorized to receive $30 million annually from FY2002 to FY2018. It received appropriations once for $1.5 million in FY2004. Its authorization of appropriations lapsed at the end of FY2018."], "subsections": []}]}, {"section_title": "Southeast Crescent Regional Commission", "paragraphs": ["The Southeast Crescent Regional Commission (SCRC) was created by the 2008 farm bill, which also created the NBRC and the Southwest Border Regional Commission. All three commissions share common authorizing language modeled after the ARC. ", "The SCRC is not currently active. The SCRC was created to address economic distress in areas of Virginia, North Carolina, South Carolina, Georgia, Alabama, Mississippi, and Florida ( Figure 6 ) not served by the ARC or the DRA ( Table 13 ). "], "subsections": [{"section_title": "Overview of Structure and Activities", "paragraphs": ["As authorized, the SCRC would share an organizing structure with the NBRC and the Southwest Border Regional Commission, as all three share common statutory authorizing language modeled after the ARC. ", "As authorized, the SCRC would consist of a federal co-chair, appointed by the President with the advice and consent of the Senate, along with the participating state governors (or their designated representatives), of which one would be named by the state representatives as state co-chair. There is no term limit for the federal co-chair. However, the state co-chair is limited to two consecutive terms, but may not serve a term of less than one year. However, no federal co-chair has been appointed since the SCRC was authorized; therefore, the commission cannot form and begin operations. "], "subsections": []}, {"section_title": "Legislative History", "paragraphs": ["The SCRC concept was first introduced by university researchers working on rural development issues in 1990 at Tuskegee University's Annual Professional Agricultural Worker's Conference for 1862 and 1890 Land-Grant Universities. ", "In 1994, the Southern Rural Development Commission Act was introduced in the House Agricultural Committee, which would provide the statutory basis for a \"Southern Black Belt Commission.\" While the concept was not reintroduced in Congress until the 2000s, various nongovernmental initiatives sustained discussion and interest in the concept in the intervening period. Supportive legislation was reintroduced in 2002, which touched off other accompanying legislative efforts until the SCRC was authorized in 2008."], "subsections": []}, {"section_title": "Funding History", "paragraphs": ["Congress authorized $30 million funding levels for each fiscal year from FY2008 to FY2018, and $33 million in FY2019, and appropriated $250,000 in each fiscal year from FY2010 to FY2019 ( Table 5 ). Despite receiving regular appropriations since it was authorized in 2008, a review of government budgetary and fiscal sources yields no record of the SCRC receiving, obligating, or spending funds appropriated by Congress. In successive presidential administration budget requests (FY2013, FY2015-FY2017), no funding was requested. ", "In the U.S. Treasury 2018 Combined Statement of Receipts, Outlays, and Balances, Part III, the SCRC does not appear, further indicating that the SCRC remains unfunded. Notably, the Commission for the Preservation of America's Heritage Abroad, which has periodically shared a common section with the SCRC in presidential budgets, is listed in the 2018 Combined Statement, as it is elsewhere. "], "subsections": []}]}, {"section_title": "Southwest Border Regional Commission", "paragraphs": ["The Southwest Border Regional Commission (SBRC) was created with the enactment of the Food, Conservation, and Energy Act of 2008, or the 2008 farm bill ( P.L. 110-234 ), which also created the NBRC and the SCRC. All three commissions share common statutory authorizing language modeled after the ARC. ", "The SBRC was created to address economic distress in the southern border regions of Arizona, California, New Mexico, and Texas ( Figure 7 ; Table 1 5 ). The SBRC has not received an annual appropriation since it was created and is not currently active."], "subsections": [{"section_title": "Overview of Structure and Activities", "paragraphs": ["As authorized, the SBRC would share an organizing structure with the NBRC and the SCRC, as all three commissions share common statutory authorizing language modeled after the ARC. ", "By statute, the SBRC consists of a federal co-chair, appointed by the President with the advice and consent of the Senate, along with the participating state governors (or their designated representatives), of which one would be named by the state representatives as state co-chair. As enacted in statute, there is no term limit for the federal co-chair. However, the state co-chair is limited to two consecutive terms, but may not serve a term of less than one year. However, as no federal co-chair has been appointed since the SCRC was authorized, it is not operational."], "subsections": []}, {"section_title": "Legislative History", "paragraphs": ["The concept of an economic development agency focusing on the southwest border region has existed at least since 1976, though the SBRC was established through more recent efforts. ", "Executive Order 13122 in 1999 created the Interagency Task Force on the Economic Development of the Southwest Border, which examined issues of socioeconomic distress and economic development in the southwest border regions and advised on federal efforts to address them. "], "subsections": [{"section_title": "108th Congress", "paragraphs": ["In February 2003, a \"Southwest Regional Border Authority\" was proposed in S. 548 . A companion bill, H.R. 1071 , was introduced in March 2003. The SBRC was reintroduced in the Regional Economic and Infrastructure Development Act of 2003 ( H.R. 3196 ), which would have authorized the SBRC, the DRA, the NGPRA, and the SCRC. "], "subsections": []}, {"section_title": "109th Congress", "paragraphs": ["In 2006, the proposed Southwest Regional Border Authority Act would have created the \"Southwest Regional Border Authority\" ( H.R. 5742 ), similar to S. 458 in 2003. "], "subsections": []}, {"section_title": "110th Congress", "paragraphs": ["In 2007, SBRC was reintroduced in the Regional Economic and Infrastructure Development Act of 2007 ( H.R. 3246 ), which would have authorized the SBRC, the SCRC, and the NBRC, and reauthorized the DRA and the NGPRA in a combined bill. Upon House passage, the Senate incorporated authorizations for the establishment of the NBRC, SCRC, and SBRC in the 2008 farm bill. The 2008 farm bill authorized annual appropriations of $30 million for FY2008 through FY2012 for all three of the new organizations. "], "subsections": []}]}, {"section_title": "Funding History", "paragraphs": ["Congress authorized annual funding of $30 million for the SBRC from FY2008 to FY2018, and $33 million in FY2019. The SBRC has never received annual appropriations and is not active. "], "subsections": []}]}, {"section_title": "Concluding Notes", "paragraphs": ["Given their geographic reach, broad activities, and integrated intergovernmental structures, the federal regional commissions and authorities are a significant element of federal economic development efforts. At the same time, as organizations that are largely governed by the respective state-based commissioners, the federal regional commissions and authorities are not typical federal agencies but federally-chartered entities that integrate federal funding and direction with state and local economic development priorities. ", "This structure provides Congress with a flexible platform for economic development efforts. The intergovernmental structure allows for strategic-level economic development initiatives to be launched at the federal level and implemented across multi-state jurisdictions with extensive state and local input, and more adaptable to regional needs. ", "The federal regional commissions and authorities reflect an emphasis by the federal government on place-based economic development strategies sensitive to regional and local contexts. However, the geographic specificity and varying functionality of the statutorily authorized federal regional commissions and authorities, both active and inactive, potentially raise questions about the efficacy and equity of federal economic development policies.", "More in-depth analysis of these and other such issues related to the federal regional authorities and commissions, and their role as instruments for federal economic development efforts, is reserved for possible future companion products to this report.", "Appendix A. Basic Information at a Glance", "Contact Information", "(for active commissions and authorities)", "Appalachian Regional Commission", "Address:1666 Connecticut Avenue, NW Suite 700 Washington, DC 20009-1068", "Phone:[phone number scrubbed]", "Website: http://www.arc.gov", "Delta Regional Authority", "Address:236 Sharkey Avenue Suite 400 Clarksdale, MS 38614", "Phone:[phone number scrubbed]", "Website: http://www.dra.gov", "Denali Commission", "Address:510 L Street Suite 410 Anchorage, AK 99501", "Phone:[phone number scrubbed]", "Website: http://www.denali.gov", "Northern Border Regional Commission", "Address:James Cleveland Federal Building, Suite 1201 53 Pleasant Street Concord, NH 03301 ", "Phone:[phone number scrubbed]", "Website: http://www.NBRC.gov", "Appendix B. Map of Federal Regional Commissions and Authorities", "Appendix C. Service Areas of Federal Regional Commissions and Authorities", "Appalachian Regional Commission", "Delta Regional Authority", "Denali Commission", "Northern Border Regional Commission", "Northern Great Plains Regional Authority", "Southeast Crescent Regional Commission", "Southwest Border Regional Commission"], "subsections": []}]}}
{"id": "R46245", "title": "ESEA: Title I-A Standards, Assessments, Accountability, Report Cards, and Frequently Asked Questions", "released_date": "2020-02-27T00:00:00", "summary": ["The Elementary and Secondary Education Act (ESEA), as amended by the Every Student Succeeds Act (ESSA; P.L. 114-95 ), provides federal aid for elementary and secondary education. The largest ESEA program is Title I-A, Improving the Academic Achievement of the Disadvantaged. As a condition of receiving Title I-A funds, states and local educational agencies (LEAs) must meet requirements related to academic standards, assessments, accountability, and reporting.", "Academic Standards", "Each state must adopt (1) challenging academic content standards in reading/language arts (RLA), mathematics, and science; and (2) achievement standards representing three levels of achievement. States must also adopt English language proficiency standards for English Learners (ELs), covering four domains: speaking, listening, reading, and writing. States may adopt alternate achievement standards for students with the most significant cognitive disabilities.", "Academic Assessments", "Each state must administer academic assessments in RLA, mathematics, and science. The state is required to administer RLA and mathematics assessments in grades 3 through 8 and once in high school, and it is required to administer science assessments once in each of three grade spans (3-5, 6-8, and 10-12). Each state may assess a certain percentage of students with the most significant cognitive disabilities with an alternate assessment based on alternate achievement standards. Each state must administer an annual assessment of English proficiency to all ELs.", "Accountability Systems", "Each state must submit a plan that describes its accountability system. Accountability systems must establish long-term goals and include indicators based on these long-term goals. The indicators must include (1) student performance on RLA and mathematics assessments in all public schools and may include a measure of student growth for public high schools, (2) a measure of student growth or another indicator that allows for meaningful differentiation in school performance for all public elementary and secondary schools that are not high schools, (3) graduation rates for public high schools, (4) progress in English language proficiency by English learners in all public schools, and (5) at least one indicator of student school quality or student success that allows for meaningful differentiation in all public schools.", "The accountability systems must provide data for all students and allow for the disaggregation of student performance by subgroups: (1) economically disadvantaged students, (2) students from major ethnic/racial groups, (3) children with disabilities, and (4) ELs.", "States must establish a system of meaningfully differentiating among all public schools in the state based on established indicators. The differentiation among schools must include any school in which any subgroup is consistently underperforming. Using the system of meaningful differentiation, a state must identify schools that require comprehensive support and improvement (CSI), including (1) the lowest performing 5% of all schools receiving Title I-A funds, (2) all public high schools failing to graduate 67% or more of their students, (3) schools required to implement additional targeted support and improvement that have not improved in a state-determined number of years, and (4) additional statewide categories of schools (at the state's discretion).", "Additionally, states are required to identify schools for targeted support and improvement (TSI), which includes any school in which a subgroup of students is consistently underperforming. Schools may also be identified for additional targeted support and improvement (ATSI), which includes any school in which one or more subgroups performs at a level that, if reflective of an entire school's performance, would result in its identification for CSI.", "Report Cards", "Each state is required to prepare and disseminate an annual r eport card . The report card must include (1) information about the s tate's accountability system; (2) schools identified for CSI or schools implementing TSI; (3) information on student performance dis aggregated by various subgroups; (4) teacher qualifications; (5) LEA- and school-level per pupil expenditures of federal, state, and local funds; and (5) additional information related to student assessments. Each LEA that receives Title I-A funds is required to prepare and disseminate an an nual LEA report card that includ es information on the LEA and each public school served by the LEA ."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["The primary source of federal aid in support of elementary and secondary education is the Elementary and Secondary Education Act (ESEA)\u00e2\u0080\u0094particularly its Title I-A program, which authorizes federal aid for the education of disadvantaged students. The ESEA was initially enacted in 1965 (P.L. 89-10) \"to strengthen and improve educational quality and educational opportunities in the Nation's elementary and secondary schools.\" It was most recently comprehensively amended and reauthorized by the Every Student Succeeds Act (ESSA; P.L. 114-95 ), which was enacted \"to ensure that every child achieves.\" The ESSA authorized appropriations for ESEA programs through FY2020. FY2020 appropriations for ESEA programs were $25.9 billion. The ESSA also enacted a series of revisions to educational accountability requirements that are applicable to recipients of ESEA funds. ", "Under Title I-A of the ESEA, as amended by the ESSA, if a state accepts Title I-A funds then the state, its local educational agencies (LEAs), and its public schools are required to focus on educational accountability as a condition of receiving federal grant funds. States, LEAs, and individual public schools are held accountable for monitoring and improving achievement outcomes for students and closing achievement gaps. Each state is required to have content standards, academic achievement standards, and aligned assessments in reading/language arts (RLA), mathematics, and science for specific grade levels. States must also have an accountability system that incorporates (1) long-term and interim performance goals for specified measures; (2) weighted indicators based, in part, on these goals; and (3) an annual system for meaningful differentiation that is used to identify schools that need additional support to improve student achievement. These academic accountability requirements must be detailed in each state's Title I-A state plan.", "Each state educational agency (SEA) is required to submit a state plan delineating its academic accountability system, among other state plan requirements, for approval by the U.S. Department of Education (ED) in order to receive Title I-A funds. This plan must be developed by the SEA with \"timely and meaningful consultation\" with other education stakeholders, including the governor, the state board of education, members of the state legislature, school staff, and parents. The plan must be peer-reviewed through a process established by the Secretary of Education (hereinafter referred to as the Secretary) and then approved by the Secretary. The state plan will remain in effect for the duration of the state's participation in Title I-A and must be periodically reviewed and revised as necessary by the SEA to reflect any changes in the state's strategies or programs under Title I-A. As part of this plan, the SEA is required to provide information on its standards, assessments, and academic accountability system. ", "State plans can be submitted for individual formula grant programs or, if permitted by the Secretary, the SEA may submit a consolidated state plan based on requirements established by the Secretary. Following the enactment of the ESSA, all SEAs submitted consolidated state plans. The Secretary has approved these plans for all 50 states, the District of Columbia, and Puerto Rico.", "This report discusses the Title I-A requirements related to academic standards, assessments, and state accountability systems that are in effect under current law. This is followed by a brief discussion of special rules that apply to schools operated or funded by the Bureau of Indian Education (BIE), and an examination of SEA and LEA report card and reporting requirements related to standards, assessments, and accountability systems. Frequently asked questions (FAQs) related to each of these areas are included at the end of the report. "], "subsections": []}, {"section_title": "Academic Standards", "paragraphs": ["As a condition of receiving Title I-A funds, each state must have state standards in specific subject areas that meet certain requirements. This section discusses general requirements related to standards, as well as alternate achievement standards for students with the most significant cognitive disabilities and English language proficiency standards."], "subsections": [{"section_title": "General Requirements Related to Academic Standards", "paragraphs": ["Each state receiving Title I-A funds is required to provide an assurance in its state plan that it has adopted challenging academic content standards and aligned academic achievement standards in RLA, mathematics, and science (and any other subject selected by the state). The achievement standards must include at least three levels of achievement (e.g., basic, proficient, and advanced). Except as discussed below, the same standards and achievement levels must be applied to all public schools and all public school students. The standards must include the same knowledge, skills, and levels of achievement expected of all public school students in the state. In addition, states are required to demonstrate that these academic standards are aligned with entrance requirements for credit-bearing coursework in the state's system of public higher education and relevant state career and technical education standards."], "subsections": []}, {"section_title": "Alternate Achievement Standards", "paragraphs": ["States may adopt alternate achievement standards for students with the most significant cognitive disabilities. The term most significant cognitive disabilities is not defined in federal legislation. States are required to define the term relative to a student's cognitive functioning and adaptive behavior.", "Alternate achievement standards must be aligned with state academic content standards, promote access to the general education curriculum, and reflect professional judgment as to the highest possible standards achievable by such students. The standards must be designated for use in the student's individualized education program (IEP) and developed in accordance with the Individuals with Disabilities Education Act (IDEA). Alternate achievement standards must also ensure that a student is on track to pursue postsecondary education or employment."], "subsections": []}, {"section_title": "English Language Proficiency Standards", "paragraphs": ["States must adopt English language proficiency (ELP) standards that cover the four domains of language: speaking, listening, reading, and writing. The standards must address different proficiency levels of English learners (ELs) and be aligned with the state academic content standards."], "subsections": []}]}, {"section_title": "Academic Assessments", "paragraphs": ["States must implement a set of high-quality academic assessments in mathematics, RLA, science, and any other subject chosen by the state. The assessments must be the same academic assessments used to measure the achievement of all public elementary and secondary schools in the state and be administered to all students in the state within the required grades and subjects. "], "subsections": [{"section_title": "General Requirements Related to Assessments", "paragraphs": ["Academic assessments must be aligned with state academic content standards and provide coherent and timely information about student attainment of the academic standards and whether a student is performing at grade level. The state assessments must be the same for all public elementary and secondary school students in the state. Assessments must be used for purposes for which they are reliable and valid and be of adequate technical quality for each purpose required by the ESEA. Assessments must objectively measure academic achievement, knowledge, and skills without assessing personal or family beliefs and attitudes. They must involve multiple up-to-date measures of student academic achievement, including measures that assess higher-order thinking. Assessments may be administered through a single summative assessment or through multiple statewide interim assessments during the academic year that result in a single summative score. The format of assessments may be \"partially delivered\" in the form of portfolios, projects, or extended performance tasks. ", "In general, a state is required to administer mathematics and RLA assessments in grades 3 through 8 and once in high school. For science, the assessment must be administered at least once in each of three grade spans (3-5, 6-9, and 10-12). For any other subjects chosen by the state, assessments are administered at the discretion of the state. Thus, for any given school year, a state must administer 17 assessments to comply with these Title I-A requirements but no student would be required by federal legislation to take more than 3 assessments (mathematics, RLA, and science).", "The assessments must allow for the participation of all students, including students with disabilities and ELs by using principles of universal design and allowing appropriate accommodations. States, however, may exempt students with the most significant cognitive disabilities, provided these students participate in an alternate assessment based on alternate achievement standards. States may provide the RLA assessment in another language or form for ELs if (1) a student has attended school in the United States for less than three consecutive years, and (2) doing so \"would likely yield more accurate and reliable information on what such student knows and can do.\" Furthermore, an LEA may, on a case-by-case basis, extend the time period during which a student is assessed in a language other than English by up to an additional two years if the student has not reached a level of English language proficiency sufficient to yield valid and reliable results on a test administered in English. ", "Under the ESEA, states are required to use assessment results for accountability purposes, reporting purposes, or both. Assessment results for accountability purposes inform the statewide accountability system. Some assessment results are used for reporting purposes only and have no bearing on the statewide accountability system. For accountability purposes, assessments must enable results to be disaggregated within the SEA, LEAs, and schools by the following groups (commonly referred to as subgroups ): (1) each major racial and ethnic group, (2) economically disadvantaged students compared to students who are not economically disadvantaged, (3) students with disabilities compared to students without disabilities, and (4) English proficiency status. For reporting purposes, in addition to the four aforementioned subgroups of students, assessment results must also be disaggregated by gender, migrant status, homeless status, foster care status, and whether a student has a parent who is a member of the Armed Forces on active duty, including a parent on full-time National Guard duty. ", "For reporting purposes, assessments must also provide for timely individual student reports regarding achievement that allow parents, teachers, principals, and other school leaders to understand and address specific academic needs of a student. Individual student reports of achievement must allow for itemized score analyses to assist LEAs and schools in addressing the needs of students based on their responses to specific assessment items, provided that personally identifiable information is not publicly disclosed."], "subsections": []}, {"section_title": "Assessments for English Learners", "paragraphs": ["States must include all ELs in their statewide assessment systems and disaggregate results for these students. Under certain circumstances, the ESEA allows ELs to participate in assessments in a language other than English. ELs also participate in other English language proficiency assessments. ELs participate in statewide assessment and accountability systems in different ways, depending on their level of language proficiency and number of years of schooling in the United States. The following sections describe the statutory requirements regarding the assessment of ELs."], "subsections": [{"section_title": "Language Assessments for English Learners", "paragraphs": ["Each state plan must identify languages other than English that are spoken \"to a significant extent\" in the student population of the state and indicate the languages for which state assessments are not available and are needed. The state must make every effort to develop such assessments that are needed. The state may request assistance from the Secretary to identify appropriate assessments, but the Secretary shall not mandate a specific assessment."], "subsections": []}, {"section_title": "English Proficiency Assessments", "paragraphs": ["Each state plan must demonstrate that LEAs will administer an annual assessment of English proficiency of all ELs in the schools served by the SEA. Such assessments must be aligned with the state's ELP standards. Regulations reiterate that English proficiency assessments must be administered annually in each domain (reading, writing, speaking, and listening) for all ELs in kindergarten through grade 12 served by the LEA. ELP scores from previous years may not be banked and counted as proficient for a student in the following year. For example, proficient listening scores and speaking scores cannot be banked in first grade and allow for an EL to be administered only reading and writing assessments in the following year. All domains must be assessed annually. "], "subsections": []}, {"section_title": "Exceptions for Recently Arrived English Learners", "paragraphs": ["The ESEA includes provisions regarding recently arrived ELs. As was previously permitted prior to the enactment of the ESSA, a state may exclude an EL from one administration of the RLA assessment if the student has been enrolled in school in the United States for less than 12 months and may exclude the EL's performance on the mathematics or ELP assessment for the first year of the EL's enrollment in school for accountability purposes. However, the EL does still have to participate in the mathematics and ELP assessments.", "The ESSA added a second option regarding the assessment of recently arrived ELs. A state may choose to assess and report the performance of a recently arrived EL on the statewide RLA and mathematics assessments for each year of the student's enrollment. However, for the first year of the student's enrollment, the state may exclude his or her results on the RLA and mathematics assessments from the state's accountability system. In the second year of the student's enrollment, the state must include a measure of student growth on the RLA and mathematics assessments. In the student's third year of enrollment and all subsequent years, the state must include his or her performance on the RLA and mathematics assessments in the state's accountability system. ", "The results of statewide academic assessments must be disaggregated for ELs. A state may include the scores of formerly identified ELs in the EL subgroup for a period of four years after the student ceases to be identified an EL. That is, once an EL becomes proficient in English, his or her score may still be included in the \"EL subgroup\" for RLA and mathematics assessment results for four years."], "subsections": []}]}, {"section_title": "Assessments for Students with Disabilities", "paragraphs": ["States are required to include all students with disabilities in the statewide assessment system. Furthermore, states are required to disaggregate assessment results for students with disabilities. The majority of students with disabilities participate in the general academic assessment with their peers. However, the ESEA allows students with the most significant cognitive disabilities to participate in an alternate assessment based on alternate achievement standards. The following sections describe the statutory requirements regarding the assessment of students with disabilities."], "subsections": [{"section_title": "Alternate Assessments for Students with the Most Significant Cognitive Disabilities", "paragraphs": ["Students with the most significant cognitive disabilities may be eligible to participate in an alternate assessment. As mentioned above, the term most significant cognitive disabilities is not defined in federal legislation. States are required to define the term relative to a student's cognitive functioning and adaptive behavior. The IEP team for a student with a disability determines when the student shall participate in an alternate assessment, using guidelines provided by the state. In this situation, parents must be notified (1) that their child's achievement will be measured with an alternate assessment based on alternate achievement standards, and (2) how participation in an alternate assessment may affect the attainment of a regular high school diploma. ", "A state must ensure that alternate assessments are administered in accordance with ESEA requirements. Alternate assessments must be aligned with alternate achievement standards. The ESEA requires that within a state, the number of students assessed in each subject with alternate assessments does not exceed 1% of the total number of students in the state who are assessed in that subject. A state may request a waiver from the Secretary to exceed the 1% cap. The 1% cap, however, does not apply at the LEA level. An LEA may administer alternate assessments to more than 1% of students, provided that the LEA submits information to the SEA justifying the need to exceed the cap. ", "More specifically, if a state anticipates that it will exceed the 1% cap, it must submit a waiver request to the Secretary. The waiver request must meet the following criteria:", "It must be submitted at least 90 days prior to the start of the state's testing window. It must include (1) the number and percentage of students in each subgroup of students who took the alternate assessment, and (2) data demonstrating that the state has measured the achievement of at least 95% of students in the \"children with disabilities\" subgroup for all grades in which the alternate assessment is administered. It must include state assurances that the state is appropriately monitoring its LEAs. If an LEA anticipates that it will assess more than 1% of students with disabilities using an alternate assessment, the state must ensure that the LEA followed the state's guidelines and the LEA will address any issues of disproportionality in the percentage of students participating in alternate assessments. It must include a plan and timeline for improving the implementation of state guidelines regarding alternate assessments. Such a plan may include revising the definition of students with the \"most significant cognitive disabilities.\" The state must take additional steps to support LEAs and describe how LEAs that assess more than 1% of students will be monitored and evaluated. The state will address any disproportionality in the percentage of students participating in alternate assessments. If the state is requesting to extend the waiver for an additional year, the state must meet all requirements described above and demonstrate substantial progress towards achieving each component of the prior year's plan and timeline.", "The use of alternate assessments must be consistent with tenets of IDEA that emphasize that students with disabilities have access to the general education curriculum. That is, if a student is selected to participate in an alternate assessment, he or she must not be excluded from involvement and progress within the general education curriculum. The state must also describe within the state plan (1) how it has incorporated universal design in alternate assessments, and (2) that general and special educators know how to administer the alternate assessment and provide appropriate accommodations."], "subsections": []}]}, {"section_title": "State and Local Flexibility in Assessment", "paragraphs": ["The ESEA, as amended by the ESSA, provides for some additional flexibility in assessment systems. New provisions allow states to (1) administer advanced mathematics assessments in middle school, (2) administer locally selected assessments in high school, (3) administer computer adaptive assessments, and (4) design an innovative assessment and accountability program. The following sections describe each flexibility."], "subsections": [{"section_title": "Advanced Mathematics Assessments in Middle School", "paragraphs": ["A state may exempt any 8 th -grade student from the regular mathematics assessment if the student participates in a more advanced end-of-course assessment that can be used to measure mathematics achievement within the state's Title I-A accountability system. This flexibility allows the state to avoid double testing students who take advanced mathematics courses in 8 th grade. When the student is in high school, however, he or she must take another mathematics end-of-course or other assessment that is more advanced than the assessment administered in middle school and is used to determine a student's mathematics proficiency in grades 9-12 for Title I-A accountability purposes. "], "subsections": []}, {"section_title": "Locally Selected Assessments", "paragraphs": ["An LEA may administer a locally selected, nationally recognized high school academic assessment (hereinafter referred to as a locally selected high school assessment ) in lieu of the state test in high school, provided that the assessment has been approved by the state. Though specific locally selected high school assessments are not referenced in legislation, education groups posit that the term generally refers to the SAT and ACT, as well as several other types of assessments, such as Advanced Placement or International Baccalaureate exams, ACCUPLACER, and the Armed Services Vocational Aptitude Battery (ASVAB). ", "If a state has already approved one of the above mentioned assessments as the high school assessment used for accountability, the LEA is not required to request using it. For example, if the SAT or ACT is already approved as the statewide assessment in high school, an LEA would not need to request its use as a locally selected high school assessment. In other cases where a state uses a state assessment, such as PARCC or Smarter Balanced, the LEA may request the use of another test like the SAT or ACT in lieu of the state test provided the assessment meets the requirements discussed below.", "Before LEAs may use this flexibility, the state must approve the assessment for use. The SEA is required to establish technical criteria to determine whether a locally selected high school assessment meets the requirements of the statutory flexibility. At a minimum, the SEA must (1) conduct a review of the assessment to determine whether it meets or exceeds the technical criteria established by the SEA, (2) submit evidence for peer review, and (3) approve such assessment for selection and use by any LEA that requests to use it. ", "To receive approval from the SEA, a locally selected high school assessment must meet the following criteria:", "be aligned with the state's academic content standards, address the depth and breadth of the standards, and be equivalent to the state assessment with regard to content coverage, difficulty, and quality; provide comparable, valid, and reliable data on academic achievement as compared to the state assessment (for all students and each subgroup of students) and results must be expressed in terms consistent with the state academic achievement standards; meet the general requirements of assessment systems, including technical criteria, with the exception that the locally selected high school assessment need not be the same assessment used for all students in the state and administered to all students in the state; and provide unbiased, rational, and consistent differentiation between schools within the state.", "The LEA may choose to submit a locally selected high school assessment to the SEA for approval. If the LEA requests to use a locally selected high school assessment, it must notify parents of its request and, upon approval of the request and at the beginning of each subsequent school year in which the assessment is used, inform them that the locally selected high school assessment is different from the state high school assessment."], "subsections": []}, {"section_title": "Computer Adaptive Assessments", "paragraphs": ["States may develop and administer computer adaptive assessments, provided that these assessments meet the general requirements of state assessment systems. A computer adaptive assessment can measure a student's academic ability above and below the student's current grade level. Because of this assessment property, the ESEA specifies additional requirements to ensure compliance with the general assessment requirements. The provision allowing states to use computer adaptive assessments clarifies that the language in Section 1111(b)(2)(B)(i) requiring that all students participate in same academic assessment shall not be interpreted as requiring that all students be administered the same assessment items. The computer adaptive assessment must, at a minimum, measure each student's academic proficiency with respect to state academic standards for the student's grade level and growth toward such standards. Once the assessment has measured the student's proficiency at grade level, it may measure the student's level of academic proficiency above or below his or her grade level.", "States may use computer adaptive assessments for students with the most significant cognitive disabilities, provided that the assessments (1) meet the legislative requirements for alternate assessments, and (2) assess the student's academic achievement and whether the student is performing at grade level. States may also use computer adaptive assessments to assess English language proficiency, provided that the assessments (1) meet the requirements for the assessment of English language proficiency, and (2) assess the student's language proficiency, which may include growth towards proficiency."], "subsections": []}, {"section_title": "Innovative Assessment and Accountability Demonstration Authority", "paragraphs": ["ESEA, Section 1204 includes a new demonstration authority for the development and use of an innovative assessment system . Over time, the innovative assessment system could replace assessments required by Title I-A. States or consortia of states may apply for the demonstration authority to develop an innovative assessment system that \"may include competency-based assessments, instructionally embedded assessments, interim assessments, cumulative year-end assessments, or performance based assessments that combine into an annual summative determination for each student\" and \"assessments that validate when students are ready to demonstrate mastery or proficiency and allow for differentiated student support based on individual learning needs.\" A maximum of seven SEAs, including not more than four states participating in consortia, may receive this authority. Separate funding is not provided under the demonstration authority; however, states may use formula and competitive grant funding provided through the State Assessment Grant program to carry out this demonstration authority.", "States and consortia may apply for an initial demonstration period of three years to develop innovative assessment systems and implement them in a subset of LEAs. If the initial demonstration period is successful, states and consortia may apply for a two-year extension in order to transition the innovative assessment system into statewide use by the end of the extension period. If the SEA meets all relevant requirements and successfully scales the innovative assessment system for statewide use, the state may continue to operate the innovative assessment system.", "In general, applications for the demonstration authority must show that the innovative assessments meet all the general requirements of Title I-A state assessments discussed above. The only explicit differences between state assessment systems and innovative assessment systems are the format of the innovative assessment (i.e., competency-based assessments, instructionally embedded assessments, interim assessments, cumulative year-end assessments, and performance-based assessments) and that the reporting of results from the innovative assessments may be expressed in terms of student competencies aligned with the state's achievement standards. "], "subsections": []}]}, {"section_title": "Administration and Special Requirements Regarding Assessment", "paragraphs": ["There are several additional considerations in the administration of state assessments. Specifically, there are provisions relevant to parent rights regarding student assessment, limitations on assessment time, and participation in the National Assessment of Educational Progress (NAEP)."], "subsections": [{"section_title": "Parent Rights", "paragraphs": ["The ESEA does not preempt a state or local law regarding the decision of a parent not to have his or her child participate in an academic assessment. If a state or local law allows parents to permit their student to \"opt-out\" of an assessment, the student cannot be required to participate in a state assessment. "], "subsections": []}, {"section_title": "Limitation on Assessment Time", "paragraphs": ["There have been concerns over the amount of time schools spend on assessment and assessment preparation activities. Each state may set a limit on the total amount of time devoted to the administration of assessments for each grade, expressed as a percentage of annual instructional hours."], "subsections": []}, {"section_title": "NAEP", "paragraphs": ["As a condition of receiving Title I-A funds, a state must agree to participate in the biennial state NAEP assessments in reading and mathematics in grades 4 and 8 if the Secretary pays the costs of administering these assessments. NAEP is referred to as the \"Nation's Report Card\" because it is the \"largest nationally representative and continuing assessment of what America's students know and can do in various subject areas.\" A sample of public schools and students are selected for the assessments to create a representative sample of students within each state. Participation in the NAEP assessments is voluntary at the individual level. Results are reported at the national and state levels, as well as at the LEA level for a limited number of LEAs that participate in the trial urban district assessment (TUDA). Results are not reported at the school or individual student levels."], "subsections": []}]}]}, {"section_title": "Accountability Systems", "paragraphs": ["In order to receive funds under Title I-A, each state is required to submit a plan to ED that, among other items, describes its accountability system. The system must incorporate the state's academic standards and aligned assessments in RLA and mathematics. In addition, the system must meet numerous requirements discussed below."], "subsections": [{"section_title": "Subgroups and Minimum Number of Students", "paragraphs": ["Each state's accountability system must disaggregate data by specified student subgroups. These subgroups, which must receive separate accountincludeability determinations, include (1) economically disadvantaged students, (2) students from major racial/ethnic groups, (3) children with disabilities, and (4) English learners, provided the number of students in each subgroup meets the state's minimum number of students (also referred to as minimum group size) for inclusion in accountability determinations. Each state establishes its own minimum group size.", "In selecting its minimum group size, each state is required to describe the minimum number of students that are necessary to implement requirements related to the disaggregation of data by subgroup and how the number selected is statistically sound. The state must explain how the minimum number of students was determined, including whether stakeholders were included in the determination process, and how the state ensures that the selected minimum number of students is sufficient to not reveal any personally identifiable information. The same state determined minimum group size number must be used for all students and for each subgroup of students in the state. "], "subsections": []}, {"section_title": "Interim and Long-Term Goals", "paragraphs": ["The system must include state established long-term goals (and measures of interim progress) for all students, and separately for subgroups of students, for academic achievement as measured by proficiency on the state RLA and mathematics assessments and high school graduation rates. In addition, the goals for subgroups of students who are behind on any of these measures must take into account the improvement needed to close statewide achievement gaps. Also, the system must include long-term goals (and measures of interim progress) for increases in the percentage of English learners making progress in achieving English proficiency, as defined by the state."], "subsections": []}, {"section_title": "Indicators", "paragraphs": ["A state must then use a set of indicators that are based, in part, on the long-term goals established by the state to annually measure the performance of all students and each subgroup of students to evaluate public schools. These indicators must include the following: ", "1. Student Proficiency on RLA and Mathematics Assessments. For all public schools, student performance on the RLA and mathematics assessments as measured by student proficiency, and for high schools may also include a measure of student growth on such assessments. 2. Measure s of Student Growth or Another Indicator of School Performance . For public elementary and secondary schools that are not high schools, a measure of student growth or another indicator that allows for meaningful differentiation in school performance. 3. Graduation Rates. For public high schools only. 4. English Language Proficiency. For all public schools, ELs' progress in achieving English language proficiency. 5. School Quality or Student Success. For all public schools, at least one indicator of school quality or student success (e.g., measure of student engagement, postsecondary readiness, school climate) that allows for meaningful differentiation in school performance. "], "subsections": []}, {"section_title": "95% Participation Rate and Calculating Proficiency on Assessments", "paragraphs": ["Each state is required annually to measure the performance of not less than 95% of all public school students and not less than 95% of all public school students in each subgroup on the mathematics and RLA assessments. For example, assume a school had 100 students enrolled in grades where state RLA and mathematics assessments were required (e.g., grades 3-6), but only 80 students participated in the RLA assessment. The school's participation rate for the RLA assessment would be 80% (80/100).", "The state is required to provide a clear and understandable explanation of how it will factor the participation rate requirement into the state's accountability system. Thus, each state is able to determine the extent to which failing to meet the 95% participation rate will be factored into its accountability system for evaluating school performance. For example, a state might decide that failing to meet the 95% participation rate requirement only has consequences if a school fails to meet it for the all students group or a subgroup for multiple years. Alternatively, a state could decide that for any year, failing to meet the participation rate requirement means that a school cannot receive the highest rating level in the state's accountability system.", "For the purposes of measuring, calculating, and reporting student proficiency on the mathematics and RLA assessments, the state must use as the denominator the greater of either (1) 95% of all public school students or 95% of all public school students in the subgroup (whichever is applicable to the calculation), or (2) the number of students participating in the assessments. Returning to the previous example, the school's maximum proficiency rate for the RLA assessment would be calculated by dividing the 80 participating students by 95% of all students in the school (i.e., 95 students) as 95% of the students is higher than the number of participating students. This would mean that the school's proficiency rate on the RLA assessment could be no higher than 84.2%. "], "subsections": []}, {"section_title": "System of Annual Meaningful Differentiation", "paragraphs": ["Based on the aforementioned indicators, the SEA must establish an annual system for meaningfully differentiating all public schools that gives substantial weight to each indicator but in the aggregate provides greater weight to the first four indicators than to the measure of school quality or student success. The system must also identify any school in which any subgroup of students is \"consistently underperforming, as determined by the state,\" based on all the aforementioned indicators and the system for annual meaningful differentiation (AMD). "], "subsections": []}, {"section_title": "Comprehensive Support and Improvement", "paragraphs": ["Based on the state's system for AMD, each SEA must establish a state-determined methodology to identify schools for comprehensive support and improvement (CSI), beginning with school year 2018-2019, and at least once every three years thereafter, ", "1. at least the lowest-performing 5% of all schools receiving Title I-A funds, 2. all public high schools failing to graduate 67% or more of their students, 3. schools required to implement additional targeted support and improvement (see below) that have not improved in a state-determined number of years, and 4. additional statewide categories of schools, at the state's discretion. ", "The first category of CSI schools is the only category strictly limited to Title I-A schools. High schools can be identified for CSI regardless of whether they receive Title I-A funds or not. The third category of schools only includes Title I-A schools that have been identified for additional targeted support and improvement (ATSI) but have failed to improve within a state determined number of years. States have the discretion to determine whether any other schools will be identified for CSI. The statutory language does not specify whether this category of schools must be limited to only schools receiving Title I-A funds. Non-Title I-A schools that are identified for CSI are eligible to receive school improvement funds under Section 1003. However, the receipt of school improvement funds does not make a non-Title I-A school a Title I-A school.", "Each SEA is required to notify each LEA in the state if any of the schools served by the LEA have been identified for CSI. The LEAs in which schools are identified for CSI are then required to work with stakeholders, including principals or other school leaders, teachers, and parents, to develop a comprehensive support and improvement plan that meets the following requirements:", "is informed by all of the aforementioned indicators; includes evidence-based interventions; is based on a school-level needs assessment; identifies resource inequities to be addressed through the comprehensive support and improvement plan; is approved by the school, LEA, and SEA; and upon approval and implementation, is monitored and periodically reviewed by the SEA. "], "subsections": [{"section_title": "Evidence-Based Interventions", "paragraphs": ["The ESEA includes a definition of evidence-based . In general, when the term is used with respect to a state, LEA, or school activity, it means an \"activity, strategy, or intervention\" that (1) demonstrates a statistically significant effect on improving student outcomes or other relevant outcomes based on one of three levels of evidence, or (2) demonstrates a \"rationale based on high-quality research findings or positive evaluation that such activity, strategy, or intervention is likely to improve student outcomes or other relevant outcomes.\" The three levels of evidence for demonstrating a statistically significant effect are the following:", "1. \"strong evidence from at least 1 well-designed and well-implemented study\"; 2. \"moderate evidence from at least 1 well-designed and well-implemented quasi-experimental study\"; and 3. \"promising evidence from at least 1 well-designed and well-implemented correlational study with statistical controls for selection bias.\"", "For activities, strategies, or interventions funded under Section 1003 (School Improvement), which can be used to support CSI and other support and improvement activities, the term evidence-based only includes activities, strategies, or interventions that meet one of the three levels of evidence for a statistically significant effect. School improvement funds may not be used for activities, strategies, or interventions that are likely to improve outcomes based only on a rationale constructed from high-quality research findings or positive evaluations. "], "subsections": []}, {"section_title": "Special Provisions for High Schools", "paragraphs": ["For high schools that are identified for CSI, the SEA may permit differentiated improvement activities that use evidence-based interventions at a school that predominantly serves students who (1) have returned to high school after previously leaving secondary school without a regular high school diploma, or (2) \"based on the grade or age, are significantly off track to accumulate sufficient academic credits to meet high school graduation requirements.\" In addition, if a high school serves fewer than 100 students, the SEA may permit the LEA to \"forego implementation\" of CSI activities."], "subsections": []}, {"section_title": "Public School Choice", "paragraphs": ["An LEA may offer students enrolled in a school identified for CSI the option to transfer to another public school served by the LEA, unless doing so is prohibited by state law. If an LEA offers public school choice, it must give priority to the lowest-achieving children from low-income families. A student who opts to transfer to another school must be permitted to remain in that school until he or she has completed the highest grade available at it. The student must also be permitted to enroll in classes and other activities in the same manner as all other students at the school. An LEA may use not more than 5% of its Title I-A allocation to pay for transportation costs associated with the public school choice option."], "subsections": []}]}, {"section_title": "Targeted Support and Improvement", "paragraphs": ["States are also required to identify for targeted support and improvement (TSI) any school in which a subgroup of students is consistently underperforming. As previously discussed, the state has sole discretion to determine how the term consistently underperforming is defined. SEAs must notify each LEA in the state if a school served by the LEA has been identified as having at least one subgroup that is consistently underperforming and ensure that the LEA notifies such school with respect to which subgroup(s) is consistently underperforming. Once an LEA notifies a school that it has been identified for TSI, the school is required to work in partnership with stakeholders, including principals and other school leaders, teachers, and parents, to develop a school-level TSI plan to improve student outcomes based on the aforementioned indicators for each subgroup of students that was the subject of the notification provided by the SEA. The TSI plan must meet the following requirements:", "is informed by all of the aforementioned indicators; includes evidence-based interventions; is approved by the LEA prior to implementation; upon submission and implementation, is monitored by the LEA; and results in additional action, should implementation of the plan be unsuccessful after a number of years determined by the LEA."], "subsections": [{"section_title": "Additional Targeted Support and Improvement", "paragraphs": ["For a school in which one or more subgroups is performing at a level that, if reflective of an entire school's performance, would result in its identification for CSI as one of the lowest performing 5% of schools in the state, the school must be identified for additional targeted support and improvement (ATSI) activities. Schools identified for ATSI must include an identification of resource inequities as one of its activities. If a Title I-A school identified for ATSI does not improve within a state-determined number of years, the state is required to identify the school for CSI.", "Statutory language includes a special rule with respect to the identification of schools for ATSI. For the 2017-2018 school year, based on the state's system of meaningful differentiation, the SEA was required to notify an LEA if any of its schools met the ATSI identification requirements, as SEAs did not have to identify schools for TSI for the 2017-2018 school year. ED subsequently provided SEAs with an extra year to meet this requirement, so SEAs had to begin identifying schools for ATSI by the 2018-2019 school year. In some states, ATSI schools were identified prior to any TSI schools being identified, as statutory language did not include a requirement for when TSI schools had to be identified for the first time. For subsequent years, schools are required to be identified for ATSI following their initial identification for TSI based on the requirements of Section 1111(c)(4)(C)(iii). Thus, the frequency with which additional schools are identified for ATSI will depend on the frequency with which states identify schools for TSI.", "In determining which schools identified for TSI will also have to meet the additional ATSI requirements, each school is to be evaluated individually. If a school meets the ATSI criteria, then it is subject to the additional requirements and could ultimately be identified for CSI if it is a Title I-A school and fails to improve. There is no cap on the number of schools identified for TSI that may also be identified for ATSI. Thus, it is possible that every school identified for TSI could also be identified for ATSI, depending on how the state chooses to define consistently underperforming , when identifying TSI schools. However, if the state establishes a definition of consistently underperforming that is more restrictive than the ATSI requirement, it is possible that schools that would otherwise qualify for ATSI would not be identified for ATSI, as they would not be identified for TSI. "], "subsections": []}]}, {"section_title": "State Support and Additional Action", "paragraphs": ["If schools identified for CSI fail to improve in a state-determined number of years (not to exceed four years), the state must implement more rigorous State-determined action , and Title I-A schools identified for ATSI that fail to improve within a state-determined number of years must be identified for CSI. In addition, SEAs are required to periodically review the resource allocation to support school improvement in each LEA that serves a \"significant number\" of schools identified for CSI and a \"significant number\" of schools implementing TSI. SEAs are also required to provide technical assistance to each LEA serving a \"significant number\" of schools implementing CSI plans or TSI plans. ", "SEAs have the option to initiate additional improvement in any LEA with (1) a \"significant number of schools that are consistently identified\" for CSI and are not meeting the exit criteria to be removed from this status, or (2) a \"significant number of schools\" implementing TSI plans. As part of these efforts, SEAs may establish alternative evidence-based state-determined strategies for use by LEAs to assist schools identified for CSI. The statutory language does not specify whether LEAs would have to use one or more of the strategies, or whether these would be the only strategies that could be used. Statutory language also does not address the state establishing alternative evidence-based state-determined strategies for LEAs to use to assist schools implementing TSI plans."], "subsections": []}, {"section_title": "Reservation of Funds to Support School Improvement Under Section 1003", "paragraphs": ["Section 1003 of the ESEA provides for a state reservation of Title I-A funds for school improvement. An SEA is required to reserve the greater of (1) 7% of the amount the state receives under Title I-A, or (2) the sum of the amount the state reserved for school improvement under Title I-A in FY2016, and the amount the state received under the School Improvement Grants (SIG) program in FY2016. No LEA is permitted to receive less Title I-A funding than it received in the prior year as a result of this provision in FY2018 and subsequent fiscal years. ", "Of the funds reserved for school improvement, states are required under ESSA provisions to provide at least 95% to LEAs through formula or competitive grants to serve schools that are implementing CSI activities or TSI activities. In allocating funds, an SEA must give priority to LEAs that serve high numbers or a high percentage of schools implementing CSI and TSI plans; demonstrate the strongest need for the funds, as determined by the state; and demonstrate the strongest commitment to using the funds to help the lowest-performing schools to improve student achievement and outcomes. Funds reserved by the SEA must be used for establishing the method by which funds will be allocated to LEAs; monitoring and evaluating the use of funds by LEAs; and, as appropriate, \"reducing barriers and providing operational flexibility to schools\" to implement CSI and TSI activities."], "subsections": []}, {"section_title": "Direct Student Services (Section 1003A)", "paragraphs": ["In addition to the required reservation of Title I-A funds for school improvement, SEAs have the option of reserving up to 3% of the Title I-A funds they receive for direct student services. This optional reservation of funds was not included in the law prior to the ESSA. Of the funds reserved, states must distribute 99% to geographically diverse LEAs using a competitive grant process that prioritizes grants to LEAs that serve the highest percentages of schools identified for CSI or that are implementing TSI plans. Funds may be used by LEAs for a variety of purposes, including to pay the costs associated with the enrollment and participation of students in academic courses not otherwise available at the students' school; credit recovery and academic acceleration courses that lead to a regular high school diploma; activities that lead to the successful completion of postsecondary level instruction and examinations that are accepted for credit at institutions of higher education (IHEs), including reimbursing low-income students for the costs of these examinations ; and public school choice if an LEA does not reserve funds for this purpose under Section 1111."], "subsections": []}, {"section_title": "Teacher and Paraprofessional Requirements", "paragraphs": ["Title I-A also holds states accountable for teachers and paraprofessionals working in a program supported with Title I-A funds. These teachers or paraprofessionals must meet applicable state certification and licensure requirements. In addition, states participating in Title I-A must describe in their state plans how low-income and minority children enrolled in Title I-A schools are not served at disproportionate rates by \"ineffective, out-of-field, or inexperienced teachers.\" The state must also describe the measures that will be used to measure and evaluate the state's success in this area."], "subsections": []}]}, {"section_title": "Special Rules for Bureau of Indian Education Schools", "paragraphs": ["The BIE oversees a total of 183 elementary, secondary, residential, and peripheral dormitory (i.e., \"boarding\") schools across 23 states. Of these 183 schools, 130 are tribally controlled and 53 are operated by the BIE. There are special rules regarding standards, assessment, and accountability for schools operated or funded by the BIE included in Section 1111(k) that apply until the requirements of Section 8204 (discussed below) are met. The special rules are as follows:", "Each BIE school accredited by the state in which it is operating shall use the assessments and other academic indicators the state has developed and implemented to meet the requirements of Section 1111, or such other appropriate assessment and academic indicators as approved by the Secretary of the Interior. Each BIE school that is accredited by a regional accrediting organization (in consultation with and with the approval of the Secretary of the Interior, and consistent with assessments and academic indicators adopted by other schools in the same state or region) shall adopt an appropriate assessment and other academic indicators that meet the requirements of Section 1111. Each BIE school that is accredited by a tribal accrediting agency or tribal division of education shall use an assessment and other academic indicators developed by such agency or division, except that the Secretary of the Interior shall ensure that such assessment and academic indicators meet the requirements of Section 1111.", "ESEA, Section 8204 contains provisions related to the setting aside of funds for the Department of the Interior to participate in the development of standards, assessments, and accountability systems in BIE-funded schools. For the purposes of Title I-A, the Secretary of the Interior, in consultation with the Secretary of Education (if requested by the Secretary of the Interior), shall use a negotiated rulemaking process to develop regulations that define the standards, assessments, and accountability systems for schools funded by the BIE. Using the negotiated rulemaking process, the Secretary of the Interior was required to develop regulations for implementation no later than the 2017-2018 school year.", "The tribal governing body or school board of a school funded by the Bureau of Indian Affairs may waive the aforementioned requirements if they are determined by such body to be inappropriate. If the requirements are waived, the tribal governing body or school board must submit a proposal to the Secretary of the Interior for alternative standards, assessments, and accountability systems within 60 days. The Secretary of the Interior and the Secretary of Education shall approve such standards, assessments, and accountability systems unless the Secretary of Education determines that they do not meet the requirements of ESEA, Section 1111, while taking into account the unique circumstances and needs of the schools and students served.", "The Secretary of the Interior and the Secretary of Education shall provide technical assistance, either directly or through a contract, to a tribal governing body or school board (if requested by such body) to develop alternative standards, assessments, and accountability systems."], "subsections": []}, {"section_title": "Report Cards and Other Reports", "paragraphs": ["Section 1111 includes specific requirements related to annual SEA, LEA, and school public report cards. It also includes requirements related to reporting data to the Secretary and Congress. This section discusses these requirements as well as privacy requirements that apply to Section 1111."], "subsections": [{"section_title": "Report Card Requirements", "paragraphs": ["States and LEAs are required to prepare and disseminate annual report cards that include a range of information. LEAs are also required to prepare and disseminate report cards for each of their public schools."], "subsections": [{"section_title": "State Report Cards", "paragraphs": ["Any state that receives Title I-A funding is required to prepare and widely disseminate an annual, overall state report card. The report card must be concise. It must be presented in an \"understandable and uniform\" format that is developed in consultation with parents. And, to the extent practicable, it must be made available in a language that parents can understand. With respect to the dissemination of the document, an SEA is required to have a single page on its website that includes the state report card, all LEA report cards, and the annual report that the SEA must submit to the Secretary.", "The state report card must include, at a minimum, several elements ranging from information about the state's accountability system to teacher qualifications. Each required element is discussed briefly below. In guidance issued in September 2019, ED included a table that summarizes subgroup disaggregation reporting requirements for each data element. "], "subsections": [{"section_title": "Description of State Accountability System", "paragraphs": ["Each state report card must include a \"clear and concise\" description of the state's accountability system required under Title I-A. This includes a description of the minimum number of students for each subgroup for use in the accountability system. The report card must also include the long-term goals and measures of interim progress for all students and the subgroups for which the SEA is held accountable. In addition, the report card must include a description of the state's system for meaningfully differentiating all public schools in the state, including the following:", "The specific weight assigned to each of the indicators in the state's system for meaningful differentiation. The methodology used by the state to differentiate among schools; The methodology by which a state differentiates a school as \"consistently underperforming\" for any subgroup of students for which the SEA is held accountable. The report card must also indicate the number of years used in determining whether a school is consistently underperforming. The methodology used by the state to identify a school for CSI."], "subsections": []}, {"section_title": "Schools Identified for CSI or TSI", "paragraphs": ["The report card must include the number and names of all public schools in the state identified for CSI or implementing TSI. There is no separate reporting requirement for schools implementing ATSI. The report card must also provide a description of the exit criteria established by the state for exiting CSI status and the number of years that ATSI schools have to fail to improve before being identified for CSI."], "subsections": []}, {"section_title": "Disaggregated Data on Student Performance", "paragraphs": ["Each state report card is required to include information about student performance. The report must include data for all students and data disaggregated by each major racial/ethnic group, economically disadvantaged students, children with disabilities, English proficiency status, gender, migrant status, homeless status, foster care status, and status as a student with a parent who is a member of the Armed Forces on activity duty on student achievement on the mathematics, RLA, and science assessments required under Title I-A at each level of achievement.", "Further, for the (1) \"all students\" group, (2) student subgroups with separate accountability determinations, (3) students who are homeless, and (4) students in foster care, the state report card must include information on performance on the other academic indicator included in the state's accountability system for elementary schools and secondary schools that are not high schools. For the same groups of students, the state report card must report on high school graduation rates, including the four-year adjusted cohort graduation rate and, at the state's discretion, any extended-year adjusted cohort graduation rates used by the state. ", "The state report card must also include other student-specific data. For only students in the EL subgroup, state report cards must provide data on the number and percentage of ELs achieving English language proficiency. For the (1) \"all students\" group, and (2) student subgroups with separate accountability determinations (with the exception of ELs), the state report card must include information on performance on the indicator(s) of school quality or student success used in the state's accountability system, as well as their progress toward meeting the state's long-term accountability system goals, including interim progress. And for the (1) \"all students\" group, (2) student subgroups with separate accountability determinations, (3) gender subgroups, and (4) migrant status group, the state report card must include data on the percentage of students assessed and not assessed."], "subsections": []}, {"section_title": "Civil Rights Data Collection (CRDC) Reports", "paragraphs": ["The state report card is required to include information submitted by the SEA and each LEA in the state pursuant to Section 203(c)(1) of the Department of Education Organization Act (DEOA), which is a reference to data collected through the Civil Rights Data Collection (CRDC) administered by the Office of Civil Rights at ED. The CRDC is conducted every other year and the next CRDC is scheduled to collect data from the 2019-2020 school year. From the data reported on the CRDC, the state report card must include the following information:", "\"measures of school quality, climate, and safety, including rates of in-school suspensions, out-of-school suspensions, expulsions, school-related arrests, referrals to law enforcement, chronic absenteeism (including both excused and unexcused absences), incidences of violence, including bullying and harassment;\" the number and percentage of students in preschool programs; and the number and percentage of students in accelerated coursework to earn postsecondary credit while in high school (e.g., Advanced Placement, International Baccalaureate, dual or concurrent enrollment). ", "For some of the reporting requirements related to the CRDC, the CRDC collects multiple measures from which SEAs and LEAs must select at least one to include on the required report cards. The ESEA requires that these data be included annually on report cards. As the CRDC reports data biennially, SEAs and LEAs are permitted to include the same information for consecutive years provided it is the most recent data provided by ED. SEAs and LEAs also have the option to report, in addition to the ED-provided data, more recent data that the SEAs and LEAs have provided to ED through a more recent CRDC data collection as long as the data provided are reported separately from the ED-provided data.", "Additional statutory language reinforces that the reporting requirement related to the aforementioned data elements is limited to data collected under the authority of Section 203(c)(1) of the DEOA and cannot require disaggregation for subgroups beyond economically disadvantaged students, students from major racial/ethnic groups, children with disabilities, and ELs, as well as by homeless status and foster care status."], "subsections": []}, {"section_title": "Teacher Qualifications", "paragraphs": ["State report cards must provide data, in the aggregate, and disaggregated by high-poverty as compared to low-poverty schools, on the professional qualifications of teachers. More specifically, data must be provided on the number and percentage of inexperienced teachers, principals, and other school leaders; teachers teaching with emergency or provisional credentials; and teachers who are not teaching in the subject or field for which they are certified or licensed. Several of the terms related to the reporting of these data elements, such as high-poverty schools , low-poverty schools , and teachers who are not teaching in the subject or field for which the teacher is certified or licensed are not defined in statutory language. In its guidance, ED suggests that SEAs may want to develop uniform definitions for the undefined terms."], "subsections": []}, {"section_title": "Per-Pupil Expenditures", "paragraphs": ["The state report card must provide data on LEA- and school-level per-pupil expenditures of federal, state, and local funds, including actual personnel expenditures and actual nonpersonnel expenditures of these funds, disaggregated by the source of funds for the preceding fiscal year. The data reported to meet the requirements of Section 1111 cannot be based on average staff salary data. The data must be reported for every LEA and public school in the state. An SEA may provide LEAs with the flexibility to develop their own procedures for calculating per-pupil expenditures or could opt to establish uniform statewide procedures for making these calculations. ", "Per-pupil expenditure data have not been reported for LEAs and public schools in the past. Based on guidance issued by ED, SEAs and LEAs may delay reporting per-pupil expenditures until they issue report cards for the 2018-2019 school year. However, if an LEA decides to delay the reporting of per-pupil expenditures, the SEA and its LEAs are required to provide information on their report cards for the 2017-2018 school year about the steps they are taking to provide such information on the 2018-2019 school year report card. ED has indicated that it expects SEAs and LEAs to make these data public by the end of the school year during which the other report card data are released."], "subsections": []}, {"section_title": "Student Assessments", "paragraphs": ["The state report card must include additional information related to student assessments. It must include the number and percentage of students with the most significant cognitive disabilities who take an alternate assessment (see previous discussion) by grade and subject. It must also include the results on the state's National Assessment of Education Progress (NAEP) for reading and mathematics in grades 4 and 8 compared to the national average. As NAEP is administered biennially, report cards should reflect the most recent data available. ", "In states where data are available, SEAs must include data on the cohort rate for all students and disaggregated for economically disadvantaged students, students from major racial/ethnic groups, children with disabilities, and English learners who graduate from high school and enroll, for the first academic year following the students' graduation, (1) in public postsecondary education programs in the state, and (2) if data are available and to the extent practicable, in private postsecondary education programs in the state or in postsecondary education programs outside of the state."], "subsections": []}, {"section_title": "State-Determined Information", "paragraphs": ["The state may include any additional information on its state report card that it believes will provide members of the public, including parents and students, with information about the progress of each of the state's elementary and secondary schools. Statutory language notes that this may include the number and percentage of students attaining career and technical proficiencies."], "subsections": []}]}, {"section_title": "State Data Cross Tabulations", "paragraphs": ["SEAs are required to provide specific information included on the state report card to the public in an \"easily accessible and user-friendly manner\" that allows the data to be cross-tabulated by, at a minimum, each major racial and ethnic group, gender, English proficiency status, and children with or without disabilities. The ability to cross-tabulate data applies to data reported on", "student achievement on the RLA, mathematics, and science assessments at all achievement levels; performance on the other academic indicator used for public elementary schools and secondary schools that are not high schools; high school graduation rates, including the four-year adjusted cohort graduation rate and, at the state's discretion, any extended-year adjusted cohort graduation rates used by the state; and the percentage of students assessed and not assessed. ", "SEAs may choose to include this information in the annual state report card. The data provided for cross-tabulation purposes must not reveal any personally identifiable information about an individual student and cannot include a number of students in any cross-tabulation that is insufficient to provide statistically reliable information or that would reveal any personally identifiable information about an individual student. It must also be consistent with the Family Educational Rights and Privacy Act (FERPA) of 1974."], "subsections": []}, {"section_title": "LEA and School Report Cards", "paragraphs": ["An LEA that receives Title I-A funds is required to prepare and disseminate an annual LEA report card that includes information on the LEA overall and each public school it serves. Similar to the requirements for state report cards, an LEA report card must be concise. It must be presented in an understandable and uniform format and, to the extent practicable, in a language that parents can understand. The report card must also be publicly accessible, including on the LEA's website. ", "An SEA is required to ensure that each of its LEA collects necessary data and includes information on all of the items that are also required to be reported on the state report card, including the disaggregation of data as specified above, with one exception: the LEA report card does not have to include NAEP scores, as these scores are only available at the LEA level for a subset of all LEAs in the United States. In addition, requirements for the state report card that require comparisons between the state and the nation as a whole are modified to be a comparison between an LEA and the state as a whole in the case of LEA report cards, and a comparison between a school and the LEA as a whole and the state as a whole in the case of school report cards. LEAs are permitted to include additional information on their report cards that the LEA determines will provide members of the public, including parents and students, with information about the progress of each of the state's elementary and secondary schools, regardless of whether the information is also included on the state report card."], "subsections": []}]}, {"section_title": "State Reports to the Secretary", "paragraphs": ["Each SEA receiving Title I-A funds is required annually to report to the Secretary, and make several pieces of information \"widely available\" in the state. The SEA must provide information on student achievement on the mathematics, RLA, and science assessments required under Title I-A, and must disaggregate the results for student subgroups with separate accountability determinations. The report must also include information on the acquisition of English proficiency by ELs. The SEA must include the number and names of each public school in the state that has been identified for CSI and the number and names of each public school in the state that is implementing TSI. There is no separate reporting requirement for schools identified for or implementing ATSI. In addition, the report must include information on the professional qualifications of teachers, including the number and percentage of inexperienced teachers, teachers teaching with emergency or provisional credentials, and teachers who are not teaching in the subject or field in which they are certified or licensed."], "subsections": []}, {"section_title": "Secretary Reports to Congress", "paragraphs": ["The Secretary is required annually to submit a report to the House Committee on Education and the Workforce and the Senate Committee on Health, Education, Labor, and Pensions that provides national and state-level data based on the data that were submitted to the Secretary by the states. The report must be submitted electronically only. There is no requirement that the report be made available publicly."], "subsections": []}, {"section_title": "Privacy", "paragraphs": ["Any information collected and disseminated in response to the aforementioned reporting requirements must be collected and disseminated in such a way that it protects the privacy of individuals consistent with FERPA. In addition, the report cards and reports shall only include data that \"are sufficient to yield statistically reliable information.\" Data reported in the report cards and reports do not have to be disaggregated if doing so will reveal personally identifiable information about a student, teacher, principal, or other school leader. Data also do not have to be disaggregated if doing so will provide data that are insufficient to yield statistically reliable information."], "subsections": []}]}, {"section_title": "Frequently Asked Questions", "paragraphs": ["The last part of this report provides responses to frequently asked questions (FAQs) about various aspects of the educational accountability requirements enacted in the ESEA, as amended by the ESSA. In particular, FAQs related to academic content standards, assessment, accountability systems, and report cards are addressed. "], "subsections": [{"section_title": "Standards", "paragraphs": ["This section highlights two frequently asked questions with respect to the state standards requirements under Title I-A. "], "subsections": [{"section_title": "Does the Secretary tell states what standards they have to use?", "paragraphs": ["The ESEA explicitly says that a state is not required to submit its challenging state academic standards, alternate achievement standards, or English language proficiency standards to the Secretary for review or approval. The Secretary also does not have the authority \"to mandate, direct, control, coerce, or exercise any direction or supervision over any of the challenging State academic standards adopted or implemented by a State.\""], "subsections": []}, {"section_title": "What are the Common Core State Standards? Do states have to use them?", "paragraphs": ["Concerns related to the diversity of accountability systems, student mobility, consistent expectations for students, preparation of students for global competition, and skills students need for employment spurred an effort led by the National Governors Association and the Council of Chief State School Officers to develop common standards for English language arts/literacy and mathematics in grades K-12 (referred to as the Common Core State Standards). This effort is referred to as the Common Core State Standards Initiative (CCSSI). According to the CCSSI, ", "The purpose of this state-led initiative ... is to create a rigorous set of shared standards that states can voluntarily adopt. The standards are crafted to \"define the knowledge and skills students should have within their K-12 education careers so they graduate from high school able to succeed in entry-level, credit-bearing academic college courses and workforce training programs.\" ", "Overall, 45 states, the District of Columbia, four outlying areas, and the Department of Defense Education Activity (DoDEA) adopted the Common Core State Standards at some point in time. Adoption of the Common Core State Standards has always been optional. However, some federal initiatives such as the Race to the Top (RTT) State Grant competition that began in 2009 provided substantial incentives to states that had adopted college- and career-ready standards that met specified requirements, and the Common Core State Standards was the most widely available set of standards that met such requirements. ", "As discussed above, however, the Secretary does not have the authority to tell states what standards they must use to comply with the requirements of Title I-A. Thus, the decision to adopt (or not adopt) the Common Core State Standards as a state's standards rests solely with the state."], "subsections": []}]}, {"section_title": "Assessment", "paragraphs": ["This section discusses some examples of FAQs that have arisen as SEAs and LEAs implement the assessment requirements. The FAQs are related to the use specific assessments, assessment of students with disabilities, and the new assessment flexibilities. "], "subsections": [{"section_title": "Can the Secretary tell states what assessments they have to use?", "paragraphs": ["The ESEA contains multiple provisions that prohibit the Secretary from specifying the assessments that a state must use to comply with the requirements of Title I-A."], "subsections": []}, {"section_title": "Do states have to use the assessments developed to align with the Common Core State Standards?", "paragraphs": ["As previously discussed, the Secretary is prohibited from prescribing which assessments a state must use, provided the assessments selected by the state meet statutory requirements. Through the Race to the Top Assessment Grant competition, the Partnership for the Assessment of Readiness for College and Careers (PARCC) and the SMARTER Balanced Assessment Consortium (Smarter Balanced) received grants to develop assessments aligned with the Common Core State Standards. Many states continue to use assessments developed by these organizations, but doing so is optional."], "subsections": []}, {"section_title": "Can a state or LEA use a test like the SAT or ACT for its high school assessment in its statewide accountability system?", "paragraphs": ["A state may use the SAT or ACT for its high school assessment in its statewide accountability system, provided that the assessment is approved for use in the state plan. In short, the state must provide evidence that the SAT or ACT (1) is aligned with and equivalent to the state's academic content standards; (2) provides comparable, valid, and reliable data compared to the state assessment; (3) meets the general requirements of assessment systems with the exception that it need not be administered to all students in the state; and (4) provides unbiased, rational, and consistent differentiation between schools within the state. While the use of the SAT or ACT is a potentially viable option, the alignment evidence that must be collected and submitted to ED may be a barrier to implementing the flexibility. ", "In March 2016, the SAT administered a newly redesigned assessment, which made a more focused effort to align itself with the Common Core Academic Standards. If there is a high degree of alignment between a state's academic content standards and the Common Core Academic Standards, the SAT may be suitable for use in accountability systems (provided the SAT meets the other requirements). The ACT was redesigned prior to the development of the Common Core Academic Standards; however, a representative from the ACT maintains that there is \"significant overlap\" between the common core and the college- and career-readiness constructs measured by the ACT. An Education Week survey of the states found that 25 require students to take the SAT or ACT, and 12 currently use the SAT or ACT for federal reporting and statewide accountability systems. ", "If the SAT or ACT is not already used by the state in its accountability system, an LEA may request the use of a locally selected high school assessment (such as the SAT, ACT, Advanced Placement or International Baccalaureate exams, ACCUPLACER, or the ASVAB). The locally selected high school assessment must be approved by the state before an LEA uses it for accountability purposes. An Education Week article cites several reasons why states may not be adopting this flexibility more quickly, including the requirements that a state (1) figure out how to pay for the flexibility, (2) design a process for districts to apply for the flexibility, and (3) collect evidence that compares data from the statewide assessment and the locally selected high school assessment. Furthermore, an assessment expert explains in the article that it is difficult to have this flexibility and a comparable accountability system. By allowing the flexibility, states are opening the door to LEAs requesting different assessments from one year to the next. While the locally selected high school assessment must be comparable to the statewide assessment, it will not overlap 100% with the statewide assessment. If assessments continue to change from one year to the next, it may be more difficult to compare results across assessments and track progress over time than if only one assessment was allowed.", "Some states have applied for waivers of the locally selected high school assessments requirements. In one case, a state requested a waiver because an LEA requested to administer the ACT in lieu of the high school assessment before the state approval process was completed. The waiver was not approved, in part because the state had not submitted a timely request and did not demonstrate how the results of the ACT would be comparable to the results of the state test used in other high schools."], "subsections": []}, {"section_title": "Are states applying for the alternate assessment waiver for students with disabilities?", "paragraphs": ["For school year 2017-2018, 28 states requested a waiver to exceed the 1% cap for alternate assessments. Of the 28 states that requested waivers, 23 received them. At least 19 of the 23 states were granted a one-year extension of the waiver for school year 2018-2019, and 3 additional states were granted new waivers for school year 2018-2019.", "The National Center on Educational Outcomes (NCEO) tracks student participation in alternate assessments by state. The most recent NCEO publication reports on participation from school year 2015-2016, before the new alternate assessment requirements were in place. These data provide a baseline for expected rates of participation in alternate assessment in the short term. In general, most states reported alternate assessment participation rates between less than 1% and 2.5%; a participation rate of 2% is twice the allowable rate in statutory language. "], "subsections": []}, {"section_title": "Are states still permitted to identify students for alternate assessments based on modified achievement standards?", "paragraphs": ["The ESEA, as amended by the ESSA, no longer allows the use of modified achievement standards (AA-MAS). Assessment options for students with disabilities have changed over the last several years. In the past, students with disabilities could participate in the general state assessment, alternate assessments based on alternate achievement standards (AA-AAS), or alternate assessments based on AA-MAS. States have been transitioning away from AA-MAS since around 2014. Therefore, students with disabilities who previously participated in AA-MAS are now required to participate either in the general state assessment or the AA-AAS (if they are determined to be students with the most significant cognitive disabilities and eligible to participate in an alternate assessment). ", "The prohibition on the use of modified achievement standards (and therefore the AA-MAS option) may have led to an overidentification of students found eligible to participate in AA-AAS. As discussed above, approximately 40% of states have requested waivers to the 1% cap on AA-AAS, which may suggest that some of the students who were once eligible for AA-MAS are now eligible for AA-AAS. States may need to consider revising their definition of most significant cognitive disability and consider strategies for successfully transitioning students who took the AA-MAS to the general assessment."], "subsections": []}, {"section_title": "Have any states applied for and received the innovative assessment authority?", "paragraphs": ["As of September 2019, the Secretary has granted innovative assessment and accountability demonstration authority to four states: Georgia, Louisiana, New Hampshire, and North Carolina. , , Georgia is piloting two technology-based assessments designed to provide educators with data that can be used to target instruction during the school year. Louisiana is developing a new format for the Louisiana Educational Assessment Program (LEAP) in ELA and social studies. New Hampshire is building on its Performance Assessment for Competency Education (PACE) system. North Carolina is using a customized, end-of-year assessment (referred to as the \"route\"), which is developed for individuals based on their performance on two formative assessments administered during the school year."], "subsections": []}, {"section_title": "What are some possible consequences if numerous students in a school, LEA, or state choose to opt out of the required assessments?", "paragraphs": ["Excessive numbers of opt-outs may have consequences for both assessment and accountability purposes. In terms of assessment, excessive numbers of opt-outs may undermine the validity of the measurement of student achievement because they may create a scenario in which states are measuring student achievement that is not representative of the whole student population. When at least 95% of all students and 95% of students in each student subgroup participate in the assessments, the conclusions based on the results are more likely to be valid and reliable for differentiating schools based on academic achievement.", "In terms of accountability, excessive numbers of opt-outs may lead to states failing to meet the requirement that 95% of all students and 95% of students in each student subgroup are assessed in the Title I-A assessment and accountability system. The specific consequences for failing to meet this 95% threshold for accountability purposes are determined by the state. "], "subsections": []}]}, {"section_title": "Accountability Systems", "paragraphs": ["This section includes FAQs that have arisen as SEAs, LEAs, and schools implement ESEA accountability requirements. They cover topics such as the use of student growth measures, the identification of schools for improvement, and whether accountability requirements can be waived."], "subsections": [{"section_title": "Are SEAs required to use measures of student growth in their accountability system?", "paragraphs": ["No, but states have the discretion to do so. Statutory language requires that the proficiency of students on the RLA and mathematics assessments be included as an indicator for all public schools in a state. It provides states with the option to use measures of student growth on the state assessments for high school students. The use of these growth measures would be in addition to the use of the proficiency measures. Public elementary and secondary schools that are not high schools are required to use, in addition to the proficiency measures, either a measure of student growth, \"if determined appropriate by the state,\" or another \"valid and reliable statewide indicator that allows for meaningful differentiation in school performance.\" Thus, the state also has the option to use student growth as measured by the RLA and mathematics assessments as an indicator for elementary and secondary schools that are not high schools. "], "subsections": []}, {"section_title": "Can an LEA use measures of student growth if they are not part of the state accountability system?", "paragraphs": ["An LEA may use measures of student growth only for limited purposes if the state chooses not to use them. As previously discussed, the SEA is charged with developing and implementing the state accountability system, including selecting the indicators that will be included in the system. The use of student growth measures as indicators in the accountability system is left to the SEA's discretion. If an SEA does not choose to incorporate these measures into the accountability system that is used by the state to meaningfully differentiate schools and identify schools for CSI or TSI, then student growth is not an accountability system indictor. However, an LEA could choose to include student growth measures, for example, in the data that it uses at the LEA level for data analysis purposes or makes publicly available."], "subsections": []}, {"section_title": "Can an LEA substitute its indicators for those used in the state accountability system?", "paragraphs": ["An LEA may only use additional indicators for limited purposes. Statutory language requires SEAs to include specific indicators in the state accountability system and provides SEAs with some flexibility in including other indicators. The indicators included in the state accountability system are required to apply to all public schools in the state. The SEA is required to use its accountability system to determine which schools in the state will be identified for CSI or TSI. While an LEA could choose to add additional indicators, for example, in the data that it uses at the LEA level for data analysis purposes or makes publicly available, the LEA could not use these additional indicators as replacements for the SEA-selected indicators."], "subsections": []}, {"section_title": "Can accountability requirements be waived?", "paragraphs": ["Yes. Section 8401 provides the Secretary with the authority to waive various ESEA statutory and regulatory provisions. An SEA or Indian tribe that receives funds under any ESEA program may submit a request to the Secretary to waive any statutory or regulatory requirement pertaining to the ESEA, unless the Secretary is prohibited by law from waiving such provision. An LEA that receive funds under any ESEA program may also request a waiver of ESEA statutory and regulatory provisions, but the LEA must submit its request to its SEA. The SEA then has the option of submitting the LEA's waiver request if the SEA \"determines the waiver appropriate.\"", "Thus, an SEA could request a waiver related to its accountability system. For example, an SEA could request that only measures of student growth rather than student proficiency be used in the accountability system or that the SEA be permitted to create a combined measure based on student proficiency and student growth. An LEA could submit a waiver request to operate under a modified accountability system, such as an accountability system where the LEA uses different indicators than those selected by the state. However, as the LEA waiver request would have to be approved by the SEA prior to being submitted to the Secretary, it is possible that an SEA would deny the request and require that all public schools be evaluated using the state established accountability system, as is currently required by statutory language."], "subsections": []}, {"section_title": "Do SEAs have to include subgroup performance when identifying the lowest-performing 5% of Title I-A schools for CSI?", "paragraphs": ["In identifying the lowest-performing 5% of Title I-A schools for CSI, statutory language requires each state to select these schools using a \"state-determined methodology\" that is based on the \"system of meaningful differentiation.\" As there are no regulations clarifying the identification of schools for CSI, based on ED's approval of state plans it appears that a state can decide whether to use all of the data included in the system of meaningful differentiation, including data for subgroups, or use only selected elements from the system of meaningful differentiation in its state-determined methodology for identifying CSI schools. There are ED-approved state plans that include subgroup performance in the identification of the lowest performing 5% of schools for CSI and also approved state plans that do not include it. For example, the District of Columbia's state plan bases 25% of a school's overall accountability framework rating on student subgroup performance. Based on this accountability framework, the lowest performing 5% of schools are identified for CSI. On the other hand, North Carolina's state plan only considers a school's total score on the state accountability model for the all students group when identifying the lowest performing 5% of schools."], "subsections": []}, {"section_title": "Do schools identified for ATSI during the 2019-2020 school year and subsequent school years have to be a subset of the schools identified for TSI?", "paragraphs": ["For all years following the first school year in which schools are identified for ATSI, the methodology for identifying schools for TSI begins with an SEA's identification of schools with at least one subgroup that is \"consistently underperforming, as determined by the state.\" As such, an SEA has the flexibility to define this group of schools as broadly or as narrowly as it chooses. This could result in a large group of schools being identified for TSI, of which only a subset will be identified for ATSI. It could also result in an SEA identifying schools for TSI in such a way that every one of these schools would also meet the requirements for being identified for ATSI. ", "Because a school's designation for ATS I hinges on being identified for TSI afte r the first sc hool year in which schools are identified for ATSI , ATS I schools are a subset of TSI schools. Because the ESEA allows SEAs to define what a consistently underperforming subgroup of students means for designation as a TSI school, it appears that an SEA could use the ATS I criteria\u00e2\u0080\u0094a school having at least one subgroup of students whose level of performance, if reflective of the entire school's performance, would cause the school to be among the lowest-performing 5% of schools receiving Title I-A funds in the state\u00e2\u0080\u0094as its definition of a school having a consistently underperforming subgroup of student s. Under such circumstances, the SEA 's TSI and ATS I schools would be the same. A state could also choose to implement a more restrictive definition of a consistently underperforming subgroup of students than the ATSI definition, resulting in fewer schools being identified for ATSI than would otherwise be identified if schools did not have to be initially identified for TSI."], "subsections": []}]}, {"section_title": "The Bureau of Indian Education", "paragraphs": ["As previously discussed, there are special rules regarding standards, assessment, and accountability for schools operated or funded by the BIE that apply until the requirements of Section 8204 are met. Section 8204 requires the Department of the Interior to participate in the development of standards, assessments, and accountability systems in BIE-funded schools using a negotiated rulemaking process. The process was required to result in the development of regulations for the implementation of standards, assessments, and accountability systems no later than the 2017-2018 school year. "], "subsections": [{"section_title": "Has the BIE met the requirements of Section 8204?", "paragraphs": ["On June 10, 2019, the Bureau of Indian Education proposed a rule developed using a negotiated rulemaking process as required by the ESEA to meet the Secretary of the Interior's obligation to define standards, assessments, and accountability system consistent with the ESEA for BIE-funded schools. Comments on the rule were due on August 9, 2019. A final rule had not been issued as of February 14, 2020. "], "subsections": []}]}, {"section_title": "Report Cards", "paragraphs": ["This section includes two FAQs related to state and LEA report cards. "], "subsections": [{"section_title": "When do report cards first need to reflect the new ESSA requirements?", "paragraphs": ["SEA and LEA report cards for the 2017-2018 school year must include the information required by ESSA with the exception of the per-pupil expenditures data. ED is allowing SEAs and LEAs to delay reporting per-pupil expenditures data until report cards for the 2018-2019 school year. SEAs and LEAs are required to explain the delay in reporting per-pupil expenditures if the data are not being reported until the 2018-2019 school year. In addition, while the per-pupil expenditures data do not have to be reported at the same time as other report card data are released, ED expects SEAs and LEAs to make these data public by the end of the school year during which the other report card data are released. "], "subsections": []}, {"section_title": "Do report cards have to indicate why a school was identified for improvement?", "paragraphs": ["SEAs and LEAs are not required to say why a school was identified for CSI, TSI, or ATSI. For example, a report card does not have to indicate whether a school was identified for CSI because it was one of the lowest-performing 5% of Title I-A schools, had a graduation rate of 67% or less, or failed to exit ATSI status in a state-determined number of years. In its report card guidance, ED indicates that SEAs and LEAs \"may wish\" to provide this information on report cards and provides examples of the types of information that an SEA or LEA might consider including. For example, an SEA or LEA might indicate which subgroup(s) led to the school's identification for TSI."], "subsections": [{"section_title": "Appendix. Glossary of Acronyms", "paragraphs": [], "subsections": []}]}]}]}]}}
{"id": "R46327", "title": "The Office of Technology Assessment: History, Authorities, Issues, and Options", "released_date": "2020-04-29T00:00:00", "summary": ["Congress established the Office of Technology Assessment (OTA) as a legislative branch agency by the Office of Technology Assessment Act of 1972 (P.L. 92-484). OTA was created to provide Congress with early indications of the probable beneficial and adverse impacts of technology applications. OTA's work was to be used as a factor in Congress' consideration of legislation, particularly with regard to activities for which the federal government might provide support for, or management or regulation of, technological applications.", "The agency operated for more than two decades, producing approximately 750 full assessments, background papers, technical memoranda, case studies, and workshop proceedings spanning a wide range of topics. In 1995, amid broader efforts to reduce the size of government, Congress eliminated funding for the agency. Although the agency ceased operations, the statute authorizing OTA's establishment, structure, functions, duties, powers, and relationships to other entities (2 U.S.C. \u00c2\u00a7\u00c2\u00a7471 et seq.) was not repealed. Since OTA's defunding, there have been several attempts to reestablish OTA or to create an OTA-like function for Congress.", "During its years of operations, OTA was both praised and criticized by some Members of Congress and outside observers. Many found OTA's reports to be comprehensive, balanced, and authoritative; its assessments helped shaped public debate and laws in national security, energy, the environment, health care and other areas. Others identified a variety of shortcomings. Some critics asserted that the time it took for OTA to define a report, collect information, gather expert opinions, analyze the topic, and issue a report was not consistent with the fast pace of legislative decisionmaking. Others asserted that some of OTA's reports exhibited bias and that the agency was responsive only to a narrow constituency in Congress, that reports were costly and not timely, that there were insufficient mechanisms for public input, and that the agency was inconsistent in its identification of ethical and social implications of developments in science and technology. In debate leading to OTA's defunding, a central assertion of its critics was that the agency duplicated the work of other federal agencies and organizations. Those holding this position asserted that other entities could take on the technology assessment function if directed to do so by Congress. Among the entities identified for this role were the Government Accountability Office (then the General Accounting Office), the Congressional Research Service, the National Academies, and universities.", "Congress has multiple options for addressing its technology assessment needs. Congress could opt to reestablish OTA by appropriating funds for the agency's operation, potentially including guidance for its reestablishment in the form of report language. If it pursues this option, Congress would need to reestablish two related statutorily mandated organizations: the Technology Assessment Board (TAB), OTA's bipartisan, bicameral oversight body; and the Technology Assessment Advisory Council (TAAC), OTA's external advisory body. In 2019, the House included $6.0 million for OTA in the House-passed version of the Legislative Branch Appropriations Act, 2020 ( H.R. 2779 ); no funding was provided in the final act. Congress might also opt to amend OTA's authorizing statute to address perceived shortcomings; to revise its mission, organizational structure, or process for initiation of technology assessments; or to make other modifications or additions.", "Alternatively, Congress could choose to create or develop an existing technology assessment capability in another legislative branch agency, such as the Government Accountability Office (GAO) or Congressional Research Service. Since FY2002, Congress has directed GAO to bolster its technology assessment capabilities. From 2002 to 2019, GAO produced 16 technology assessments. In 2019, GAO, at the direction of Congress, created a new office, Science, Technology Assessment, and Analytics (STAA), and announced plans to increase the number of STAA analysts over time from 49 to 140.", "In addition, Congress could increase its usage of the National Academies of Science, Engineering, and Medicine by funding an expanded number of congressionally mandated technology assessments. Alternatively, Congress could opt to take no action and instead rely on current sources of information\u00e2\u0080\u0094governmental and nongovernmental\u00e2\u0080\u0094to meet its needs.", "In 2018, Congress directed CRS to contract with the National Academy of Public Administration (NAPA) for a study to \"assess the potential need within the Legislative Branch to create a separate entity charged with the mission of providing nonpartisan advice on issues of science and technology. Furthermore, the study should also address if the creation of such entity duplicates services already available to Members of Congress.\" The NAPA study recommended bolstering the science and technology policy efforts of CRS and GAO, as well as the establishment of an Office of the Congressional Science and Technology Advisor (OCSTA) and a coordinating council. NAPA stated that it did not evaluate the option of reestablishing OTA due to Congress' efforts since 2002 to build a technology assessment capability within GAO."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["Congress established the Office of Technology Assessment (OTA) in October 1972 in the Technology Assessment Act of 1972 (P.L. 92-484) to provide ", "competent, unbiased information concerning the physical, biological, economic, social, and political effects of [technological] applications\" [to be used as a] \"factor in the legislative assessment of matters pending before the Congress, particularly in those instances where the Federal Government may be called upon to consider support for, or management or regulation of, technological applications.", "The agency operated for more than two decades, producing approximately 750 full assessments, background papers, technical memoranda, case studies, and workshop proceedings. In 1995, amid broader efforts to reduce the size of government, Congress eliminated funding for the operation of the agency. Congress appropriated funding for FY1996 \"to carry out the orderly closure\" of OTA. Although the agency ceased operations, the statute authorizing OTA's establishment, structure, functions, duties, powers, and relationships to other entities was not repealed.", "Since OTA's defunding, some Members of Congress, science and technology advocates, and others have sought to reestablish OTA or to establish similar analytical functions in another agency or nongovernmental organization. This report describes the OTA's historical mission, organizational structure, funding, staffing, operations, and perceived strengths and weakness. The report concludes with a discussion of issues and options surrounding reestablishing the agency or its functions. The report also includes three appendices. Appendix A provides a historical overview of discussions about the definition of \"technology assessment,\" a topic fundamental to OTA's mission and to any organization that would seek to fulfill OTA's historic role. Appendix B describes selected trends and factors that may contribute to a perceived need for technology assessment. Appendix C provides a history of legislative efforts to reestablish OTA or its functions since the agency was defunded. Appendix D provides a list of technology assessment products produced from 2002 to 2019 by the Government Accountability Office (GAO). Congress's guidance to GAO on technology assessment during this period is provided in the section \" Congress, GAO, and Technology Assessment .\""], "subsections": []}, {"section_title": "Overview of Science and Technology Advice to Policymakers", "paragraphs": ["Groundbreaking emerging technologies\u00e2\u0080\u0094in fields such as artificial intelligence, quantum computing, gene editing, hypersonics, autonomy, and nanotechnology\u00e2\u0080\u0094are widely anticipated to have substantial economic and social impacts, affecting the ways people work, travel, learn, live, and engage with others and the surrounding world. The impacts are likely to be felt by people of all ages, across most industries, and by government. Science, technology, and innovation have been of interest to government leaders throughout the nation's history. The federal government has looked to people and organizations with expertise in the development and application of new technologies to gain insights into their implications and potential public policy responses\u00e2\u0080\u0094both to accelerate and maximize their expected benefits and to reduce or eliminate expected adverse effects. Such policies may include, among other things", "the funding of research and development (R&D) to accelerate the arrival and deployment of technologies and to identify their uses and potential implications; infrastructure policies, such as \"smart\" highways and cities, focused on creating environments where new technologies can flourish; regulations to guide and govern the development and use of technologies to ensure human health and public safety and to protect the environment; tax policies and other incentives to encourage investment in technology development and adoption; trade policies to maximize the global economic and societal potential of new technologies by fostering market access and eliminating tariff and nontariff barriers; intellectual property policies to protect the interests of those investing in technology development and commercialization; and education and training programs to promote U.S. leadership in innovation and ensure the adequacy of the science and technology workforce, as well as to help those who are displaced by new technologies to attain the knowledge and skills needed for other jobs.", "In some cases, a specific science or technology outcome may be the primary objective of a proposed policy, while in other cases science and technology may play a role in a broader policy effort to achieve other societal goals, such as environmental quality, public health and safety, economic competitiveness, or national security. Science and technology activities, programs, and sectors can be affected by tradeoffs resulting from multiple policy objectives. For example, U.S. trade policy for high technology goods and services may involve complementary and competing policy objectives related to intellectual property protection, expansion of markets, protection of U.S. national security, and advancement of geopolitical objectives.", "U.S. government efforts to obtain guidance on scientific and technical issues and their policy implications extend back to the nation's founding. Some of these efforts were informal, with Presidents, Members of Congress, and executive branch officials seeking out insights of knowledgeable individuals on an ad hoc basis. ", "Presidents and congressional leaders also relied on more formal advice from scientific and technical societies, and business and professional organizations for insights and guidance on science, technology, and innovation-related issues. A number of organizations and their members helped fill this role in the early years of the country's development, including the American Philosophical Society, co-founded by Benjamin Franklin in 1743; the American Academy of Arts and Sciences, founded in 1780 in Boston, whose charter members included John Adams and Samuel Adams; the Academy of Natural Sciences of Philadelphia, founded in 1812; the Smithsonian Institution, established by an act of Congress in 1846; and the American Association for the Advancement of Science, founded in 1848. ", "In 1863, Congress chartered the National Academy of Sciences and directed that \"the academy shall, whenever called upon by any department of the Government, investigate, examine, experiment, and report upon any subject of science or art, the actual expense of such investigations, examinations, experiments, and reports to be paid from appropriations which may be made for the purpose, but the Academy shall receive no compensation whatever for any services to the Government of the United States.\" Three related entities were subsequently formed to complement the knowledge and capabilities of the National Academy of Sciences: the National Academy of Engineering, the National Academy of Medicine, and the National Research Council. These four organizations are collectively referred to as the National Academies of Science, Engineering, and Medicine (NASEM) or simply, the National Academies. They are nonprofit, nongovernmental entities.", "In addition, throughout the 20 th century, Congresses and Presidents, using statutory and executive authorities, respectively, established executive branch organizations to provide scientific insight and advice to the President, as well as informing Congress and federal departments and agencies. Advisory and coordinating organizations included the National Advisory Committee for Aeronautics (NACA, est. 1915), the Science Advisory Committee (SAC, est. 1951), the President's Science Advisory Committee (PSAC, est. 1956), the Intergovernmental Science, Engineering, and Technology Panel (ISETAP, est. 1976), the President's Committee on Science and Technology (PCST, est. 1976), and the President's Council of Advisors on Science and Technology (PCAST, est. 1990). Other organizations were established in statute. For example, the National Science Board (NSB, which oversees the National Science Foundation) was established by the National Science Foundation Act of 1950; a key statutory mandate of the NSB is to \"render to the President and to the Congress reports on specific, individual policy matters related to science and engineering and education in science engineering, as Congress or the President determines the need for such reports.\" In addition, many science and technology agencies in the executive branch have deep expertise across a wide spectrum of technologies; several of these have policy-oriented offices or programs.", "While Congress had its own science and technology advisory resources\u00e2\u0080\u0094including the Congressional Research Service (CRS) and the General Accounting Office (GAO, now the Government Accountability Office )\u00e2\u0080\u0094prior to the establishment of OTA, many federal science and technology advisory organizations and agencies were under the authority and direction of the President. Accordingly, during the decade preceding the establishment of OTA, a number of lawmakers expressed a need for Congress to have its own agency to conduct detailed science and engineering analyses and provide information tailored to legislative needs and the legislative process\u00e2\u0080\u0094to supplement the functions performed by GAO and CRS. For example, in a 1963 hearing, Representative George Miller, chairman of the House Committee on Science and Astronautics, stated ", "We are concerned with whether or not hasty decisions are handed down to us, but one of our difficulties is how to evaluate these decisions. We have to take a great deal on faith. We are not scientists \u00e2\u0080\u00a6 [but] I want to say that in our system of government we have our responsibility. We are not the rubber stamps of the administrative branch of Government\u00e2\u0080\u00a6 [We] recognize our responsibility to the people and the necessity for making some independent judgments \u00e2\u0080\u00a6 [but] we do not particularly have the facilities nor the resources that the executive department of the government has.", "In August 1963, Senator Edward L. Bartlett, introduced a bill to establish in the legislative branch a congressional Office of Science and Technology:", "The scientific revolution proceeds faster and faster \u00e2\u0080\u00a6 and the President, in requesting authority for these vast scientific programs undertaken by the Government,\u00e2\u0080\u00a6 has available to him the full advice and counsel of the scientific community\u00e2\u0080\u00a6. The Congress has no such help. The Congress has no source of independent scientific wisdom and advice. Far too often congressional committees for expert advice rely upon the testimony of the very scientists who have conceived the program, the very scientists who will spend the money if the program is authorized and appropriated for.\u00e2\u0080\u00a6 Congress as a body must equip itself to legislate on technological matters with coherence and comprehension.", "In December 1963, Senator Bartlett testified at a hearing of the Committee on House Administration Subcommittee on Accounts on the establishment of a congressional science advisory staff:", "Faceless technocrats in long, white coats are making decisions today which rightfully and by law should be made by the Congress. These decisions dealing with the allocation of our scientific and technical resources must be made\u00e2\u0080\u00a6. I think the Congress should make these decisions. I think they should be made in a rational manner. I think they should be made by an informed legislature which understands the implications, the costs, and the priorities of its judgments.", "Similarly, in a 1970 hearing of the House Subcommittee on Science, Research, and Development on H.R. 17046 (91 st Congress), a bill to establish OTA, subcommittee chair Representative Emilio Daddario stated", "This Subcommittee has recognized a need to pay more attention to the technological content of legislative issues. Since 1963, a large portion of the Subcommittee efforts have been to develop avenues of information and advice for the Congress with outside groups, We have recognized the important need for developing Independent means of obtaining necessary and relevant technological Information for the Congress, without having to depend almost solely on the Executive Branch. In my view, it is only with this capability that Congress can assure its role as an equal branch in our Federal structure.", "During the 1972 House debate on establishing OTA, Representative Chuck Mosher reiterated the need for Congress to have its own science and technology advisory responsive solely to Members of Congress and congressional committees:", "Let us face it, Mr. Chairman, we in the Congress are constantly outmanned and outgunned by the expertise of the executive agencies. We desperately need a stronger source of professional advice and information, more immediately and entirely responsible to us and responsive to the demands of our own committees, in order to more nearly match those resources in the executive agencies.", "Many, perhaps most, of the proposals for new or expanding technologies come to us from the executive branch; or at least it is the representatives of those agencies who present expert testimony to us concerning such proposals. We need to be much more sure of ourselves, from our own sources, to properly challenge the agency people, to probe deeply their advice, to more efficiently force them to justify their testimony\u00e2\u0080\u0094to ask sharper questions, demand more precise answers, to pose better alternatives.", "Peter Blair, author of Congress' Own Think Tank: Learning from the Legacy of the Office of Technology Assessment, asserts that this perspective contributed to the establishment of OTA and other congressional science and technology analytical functions:", "[Many] viewed the creation of OTA, as well as the subsequent creation of CBO, and the expansion of [the Congressional Research Service] and [General Accounting Office] at around the same time, as part of a congressional reassertion of authority responding to Richard Nixon's presidency.", "While advocates for the creation of OTA asserted that its functions would be complementary to GAO and CRS, others expressed concerns about the costs of setting up another bureaucracy and suggested that the roles envisioned for OTA might be done by the existing agencies, perhaps at a lower cost. Some proposed, instead, that the functions intended for OTA be given to CRS or GAO."], "subsections": []}, {"section_title": "The Office of Technology Assessment", "paragraphs": ["For several years in the late 1960s and early 1970s, Congress explored and deliberated on the need for, and value of, technology assessment as an aid in policymaking decisions. In 1972, Congress enacted the Technology Assessment Act of 1972 (P.L. 92-484, codified at 2 U.S.C. \u00c2\u00a7\u00c2\u00a7471 et seq.), establishing the Office of Technology Assessment as a legislative branch agency. ", "The meaning of the term \"technology assessment\" is fundamental to the types of research and analysis that OTA or a successor organization might perform. There is no single authoritative definition of the term. In practice, an implicit definition is provided in the Technology Assessment Act of 1972:", "The basic function of the Office shall be to provide early indications of the probable beneficial and adverse impacts of the applications of technology and to develop other coordinate information which may assist the Congress.", "In the act, Congress found and declared that technological applications were \"large and growing in scale; and increasingly extensive, pervasive, and critical in their impact, beneficial and adverse, on the natural and social environment.\" Accordingly, Congress deemed it \"essential that, to the fullest extent possible, the consequences of technological applications be anticipated, understood, and considered in determination of public policy on existing and emerging national problems.\"", "Further, Congress found that existing legislative branch agencies were not designed to provide Congress with independently developed, adequate, and timely information related to the potential impact of technological applications.", "For these reasons, Congress authorized the establishment of OTA to \"equip itself with new and effective means for securing competent, unbiased information concerning the physical, biological, economic, social, and political effects of such applications.\" The information provided by OTA would serve \"whenever appropriate, as one factor in the legislative assessment of matters pending before the Congress, particularly in those instances where the Federal Government may be called upon to consider support for, or management or regulation of, technological applications.\" ", "In assigning functions, duties, and powers to OTA, Congress further refined its concept of technology assessment; these are described later in this report. For a discussion of the history and varying perspectives on the meaning of the term, see Appendix A ."], "subsections": [{"section_title": "Statutory Organization and Authorities", "paragraphs": ["As previously noted, the authorization for OTA's existence, structure, and functions remains in effect. This section provides an overview of OTA's structure, function and duties, powers, components and related organizations, and other information, as articulated in the agency's organic statute and codified at 2 U.S.C. \u00c2\u00a7\u00c2\u00a7471-481. Because these authorities remain in effect, despite the fact that OTA itself no longer exists, this section describes the authorities using the present tense."], "subsections": [{"section_title": "Structure, Functions, and Duties", "paragraphs": ["The Technology Assessment Act of 1972 authorizes the establishment of an Office of Technology Assessment, composed of a Director and a Technology Assessment Board (TAB). The TAB is to \"formulate and promulgate the policies\" for OTA to be carried out by the Director. ", "OTA's functions and duties include", "identifying existing or probable impacts of technology or technological programs; ascertaining cause-and-effect relationships, where possible; identifying alternative technological methods of implementing specific programs; identifying alternative programs for achieving requisite goals; making estimates and comparisons of the impacts of alternative methods and programs; presenting findings of completed analyses to the appropriate legislative authorities; identifying areas where additional research or data collection is required to provide adequate support for its assessments and estimates; and undertaking such additional associated activities as directed by those authorized to initiate assessments (see below)."], "subsections": []}, {"section_title": "Powers", "paragraphs": ["The statute authorizes OTA \"to do all things necessary\" to carry out its functions and duties including, but not limited to", "making full use of competent personnel and organizations outside of OTA, public or private, and forming special ad hoc task forces or making other arrangements when appropriate; entering into contracts or other arrangements for the conduct of the work of OTA with any agency of the United States, with any state, territory, or possession, or with any person, firm, association, corporation, or educational institution; making advance, progress, and other payments which relate to technology assessment; accepting and utilizing the services of voluntary and uncompensated personnel necessary for the conduct of the work of OTA and providing transportation and subsistence for persons serving without compensation; acquiring by purchase, lease, loan, or gift, and holding and disposing of by sale, lease, or loan, real and personal property necessary for exercising the OTA's authority; and prescribing such rules and regulations as it deems necessary governing the operation and organization of OTA.", "The act also authorizes OTA \"to secure directly from any executive department or agency information, suggestions, estimates, statistics, and technical assistance for the purpose of carrying out its functions.\" It also requires executive departments and agencies to furnish such information, suggestions, estimates, statistics, and technical assistance to OTA upon its request.", "Other provisions prohibit OTA from operating any laboratories, pilot plants, or test facilities, and authorize the head of any executive department or agency to detail personnel, with or without reimbursement, to assist OTA in carrying out its functions."], "subsections": []}, {"section_title": "Technology Assessment Board", "paragraphs": ["Under the act, the Technology Assessment Board (TAB) is to consist of 13 members: six Senators (three from the majority party and three from the minority party), six Members of the House of Representatives (three from the majority party and three from the minority party), and the OTA Director. The Director is to be a nonvoting member. The Senate members are to be appointed by the President pro tempore of the Senate; House members are to be appointed by the Speaker of the House of Representatives.", "The act authorizes the TAB to \"formulate and promulgate the policies\" of OTA. It also authorizes the TAB, upon majority vote, to \"require by subpoena or otherwise the attendance of such witnesses and the production of such books, papers, and documents, to administer such oaths and affirmations, to take such testimony, to procure such printing and binding, and to make such expenditures, as it deems advisable.\" It authorizes the TAB to make rules for its organization and procedures and authorizes any voting member of the TAB to administer oaths or affirmations to witnesses.", "The chair and vice chair of the TAB are to alternate between the House and Senate each Congress. During each even-numbered Congress, the chair is to be chosen from the House members of the TAB, and the vice chair is to be chosen from the Senate members. In each odd-numbered Congress, the chair is to be chosen from the Senate members of the TAB, and the vice chair is to be chosen from among the House members.", "No TAB was established after the 104 th Congress. The House did not formally appoint members in the 104 th Congress, but Senate membership in the TAB was continuous and therefore the Senate members served as OTA's board until the agency ceased operations in 1995."], "subsections": []}, {"section_title": "Director, Deputy Director, and Other Staff", "paragraphs": ["Under the act, the TAB is to appoint the OTA Director for a term of up to six years. The act authorizes the Director to exercise the powers and duties provided for in the act, as well as such powers and duties as may be delegated to the Director by the TAB. The TAB has the authority to remove the Director prior to the end of the six-year term.", "The act authorizes the Director to appoint a Deputy Director. The Director and the Deputy Director are prohibited from engaging in any other business, vocation, or employment; nor is either allowed to hold any office in, or act in any capacity for, any organization, agency, or institution with which OTA contracts or otherwise engages.", "The Director is to be paid at level III of the Executive Schedule and the Deputy Director is to be paid at level IV. The act authorizes the Director to appoint and determine the compensation of additional personnel to carry out the duties of OTA, in accordance with policies established by the TAB."], "subsections": []}, {"section_title": "Initiation of Technology Assessment Activities", "paragraphs": ["Under the act, OTA may conduct technology assessments only at the request of ", "the chair of any standing, special, or select committee of either chamber of Congress, or of any joint committee of the Congress, acting on his or her own behalf or at the request of either the ranking minority member or a majority of the committee members; the TAB; or the Director, in consultation with the TAB."], "subsections": []}, {"section_title": "Technology Assessment Advisory Council", "paragraphs": ["Under the act, OTA is to establish a Technology Assessment Advisory Council (TAAC). The TAAC shall, upon request by the TAB, review and make recommendations to the TAB on activities undertaken by OTA; review and make recommendations to the TAB on the findings of any assessment made by or for OTA; and undertake such additional related tasks as the TAB may direct.", "Under the act, the TAAC is to be composed of 12 members:", "10 members from the public, to be appointed by the TAB, who are to be persons \"eminent in one or more fields of the physical, biological, or social sciences or engineering or experienced in the administration of technological activities, or who may be judged qualified on the basis of contributions made to educational or public activities\"; the Comptroller General, who heads GAO; and the Director of the Congressional Research Service.", "The public members of the TAAC are to be appointed to four-year terms. They are to receive compensation for each day engaged in the actual performance of TAAC duties at the highest rate of basic pay in the General Schedule. The law authorizes reimbursement of travel, subsistence, and other necessary expenses for all TAAC members.", "Under the act, a TAAC member appointed from the public may be reappointed for a second term, but may not be appointed more than twice. The TAAC is to select its chair and vice chair from among its appointed members. The terms of TAAC members are to be staggered, according to a method devised by the TAB."], "subsections": []}, {"section_title": "Services and Assistance from CRS and GAO", "paragraphs": ["The act authorizes the Librarian of Congress to make available to OTA such services and assistance of the Congressional Research Service as are appropriate and feasible, including, but not limited to, all of the services and assistance which CRS is otherwise authorized to provide to Congress. The Librarian is authorized to establish within CRS such additional divisions, groups, or other organizational entities as necessary for this purpose. Services and assistance made available to OTA by CRS may be provided with or without reimbursement from OTA, as agreed upon by the TAB and the Librarian.", "Similarly, the act directs the Government Accountability Office to provide to OTA financial and administrative services (including those related to budgeting, accounting, financial reporting, personnel, and procurement) and such other services. Such services and assistance to OTA include, but are not limited to, all of the services and assistance that GAO is otherwise authorized to provide to Congress. Services and assistance made available to OTA by GAO may be provided with or without reimbursement from OTA, as agreed upon by the TAB and the Comptroller General."], "subsections": []}, {"section_title": "Coordination with the National Science Foundation", "paragraphs": ["Under the act, OTA is to maintain a continuing liaison with the National Science Foundation with respect to grants and contracts for purposes of technology assessment, promotion of coordination in areas of technology assessment, and avoidance of unnecessary duplication or overlapping of research activities in the development of technology assessment techniques and programs."], "subsections": []}, {"section_title": "Information Disclosure", "paragraphs": ["The act requires that OTA assessments\u00e2\u0080\u0094including information, surveys, studies, reports, and related findings\u00e2\u0080\u0094shall be made available to the initiating committee or other appropriate committees of Congress. In addition, the act authorizes the public release of any information, surveys, studies, reports, and findings produced by OTA, except when doing so would violate national security statutes or when the TAB deems it necessary or advisable to withhold such information under the exemptions provided by the Freedom of Information Act."], "subsections": []}, {"section_title": "Other", "paragraphs": ["The act requires OTA's contractors and certain other parties to maintain books and related records needed to facilitate an effective audit in such detail and in such manner as shall be prescribed by OTA. These books and records (and related documents and papers) are to be available to OTA and the Comptroller General, or their authorized representatives, for audits and examinations."], "subsections": []}]}, {"section_title": "Funding", "paragraphs": ["Congress appropriated funds for OTA from FY1974 to FY1996 in annual legislative branch appropriations acts. Funding was provided mainly through regular appropriations acts, but additional funding was provided in some years through supplemental appropriations acts. In some fiscal years, Congress reappropriated unused OTA funds from earlier appropriations, essentially carrying the funds over to the next year. In some years, appropriations were reduced through sequestration or rescission.", "OTA's funding grew steadily throughout its existence, from an initial appropriation of $2 million in FY1974 ($8.6 million in constant FY2019 dollars) to a current dollar peak of $21.3 million in FY1995 ($33.4 million in constant FY2019 dollars). See Figure 1 (current dollars) and Figure 2 (constant FY2019 dollars).", "OTA's budget peaked in constant dollars in FY1992 at $35.1 million in constant FY2019 dollars. OTA received $3.6 million ($5.6 million in constant FY2019 dollars) in FY1996 to close out its operations. According to the Office of Management and Budget, OTA was not funded beyond February 1996."], "subsections": []}, {"section_title": "Staffing", "paragraphs": ["CRS was unable to identify a consistent measurement of OTA staffing that spans the period during which Congress appropriated funds for the agency. Figure 3 includes OTA staffing levels using three different characterizations that were consistent during parts of this time period. The data are from the Budget of the United States Government for fiscal years 1976-1998. Using these measures, staffing was first reported for FY1974 at 42, and rose to 151 in FY1977. Staffing then fell through 1980 before rising again, but remained between 123 and 143 from FY1978 to FY1991. In FY1992, reported staffing jumped to 193, and rose to a reported 210 in FY1993. In FY1994, staffing fell to a reported 197 and continued to drop through the end of the agency's funding in FY1996.", "During most years of OTA's operations, Congress included an annual cap on the agency's total number of \"staff employees\" in annual appropriations laws, beginning with a cap of 130 in the FY1978 Legislative Branch Appropriations Act ( P.L. 95-94 ). This cap was included in subsequent appropriations bills through FY1983. Congress increased the cap to 139 staff employees for FY1984, then increased it again to 143 for FY1985 and maintained this level through FY1995. The cap established a maximum limit on the number of OTA staff employees. ", "In addition to full-time and temporary staff employees, OTA made extensive use of contractors. As shown in Figure 3 , OTA reported the statutory maximum of 143 employees from FY1985 to FY1991. In FY1992, a change in practice may have led to the reporting of contractors in its staffing level, resulting in the reported number of total compensable workyears exceeding total authorized (143) positions. Contractors supplemented the knowledge base of staff employees and were seen by OTA management as critical to the agency's ability to deliver authoritative products on emerging scientific and technological fields, especially with respect to OTA's technology scanning products that sought to characterize possible future science and technology paths and their potential implications."], "subsections": []}]}, {"section_title": "Observations on OTA's Design and Operations", "paragraphs": ["Peter Blair, in Congress' s Own Think Tank , noted that OTA was designed with the intention of serving the unique needs of Congress: ", "The agency's architects intended the reports and associated information OTA produced to be tuned carefully to the language and context of Congress. OTA's principal products\u00e2\u0080\u0094technology assessments\u00e2\u0080\u0094were designed to inform congressional deliberations and debate about issues that involved science and technology dimensions but without recommending specific policy actions.", "Supporters, critics, and analysts have offered a variety of views on the strengths and weaknesses of OTA. Some have found OTA's work to be professional, authoritative, and helpful to Congress. For example, in a 1979 hearing of the Senate Committee on Appropriations, Subcommittee on Legislative Branch Appropriations, Representative Morris Udall, serving as chairman of the OTA Technology Assessment Board, testified that ", "The usefulness of the OTA is clear. The office has a place in the legislative process\u00e2\u0080\u00a6. During my tenure on the Board, I have enjoyed watching OTA develop and building this record to the point where it is now on a decisive and effective course.", "Others offered a variety of criticisms, including issues related to uniqueness/duplication, timeliness, objectivity, and other factors, which likely helped to lay a foundation for its defunding. These are discussed below."], "subsections": [{"section_title": "Uniqueness and Duplication", "paragraphs": ["Some supporters of OTA asserted that the agency served a unique mission, complementary to those of its sister congressional agencies. A 1978 report of the House Committee on Science and Technology Subcommittee on Science, Research, and Technology reporting on its 1977-1978 oversight hearings on OTA stated", "OTA has been set up to do a job for the Congress which is: (a) essential, (b) not capable of being duplicated by other legislative entities, and (c) proving useful and relied upon. OTA should retain its basic operating method of depending to a large extent on out-of-house professional assistance in performing its assessments. Continued congressional support for OTA is warranted.", "Subcommittee chairman Representative Ray Thornton subsequently stated that this report \"doesn't leave much doubt that the office is a valuable asset to the Congress.\"", "However, some critics asserted that the OTA mission and the work it did were already performed, or could be performed, by other organizations\u00e2\u0080\u0094such as GAO (then the General Accounting Office), CRS, or the National Academies.", "This perspective was expressed by Senator Jim Sasser, chairman of the Senate Committee on Appropriations Subcommittee on the Legislative Branch, in a 1979 hearing:", "I am, frankly, troubled by the Office of Technology Assessment. This letter from Chairman Magnuson is just one more example of the type and tenor of questioning I receive from my colleagues and others about the Office of Technology Assessment. Frankly\u00e2\u0080\u00a6this recurring questioning raises doubts in my mind about the need for the Office of Technology Assessment. From time to time I hear that OTA very often duplicates studies conducted by the three other congressional analytical agencies, that is, the General Accounting Office, the Congressional Research Service and the Congressional Budget Office, or [by] executive branch agencies, such as the National Science Foundation.", "Concerns about duplication continued. During House floor debate on the Legislative Branch Appropriations Act, 1995, that eliminated funding for OTA, Representative Ron Packard, chairman of the Legislative Branch Subcommittee, stated", "In our efforts in this bill we have genuinely tried to find where there is duplication in the legislative branch of Government. This is one area where we found duplication, serious duplication. We have several agencies that are doing very much the same thing in terms of studies and reports.", "I am aware of the invaluable service of OTA, but there are other agencies that do the same thing. The CRS has a science division of their agency. GAO has a science capability in their agency. They can do the same thing as OTA\u00e2\u0080\u00a6.", "We ought to eliminate those agencies where duplication exists. This is one of those areas.", "In 2006, Carnegie Mellon University professor Jon M. Peha asserted that, while nonfederal organizations produce high-quality work similar to that performed by OTA, their work is not necessarily duplicative of the type of work OTA was established to perform as the characteristics of their analyses (e.g., directive recommendations, timeliness, format) are qualitatively different and their motivations may be subject to question:", "There still are more sources of information outside of government. These tend to be inappropriate for different reasons. The National Academies sometimes are an excellent resource for Congress, but for a different purpose. The National Academies generally attempt to bring diverse experts together to produce a consensus recommendation about what Congress should do. In many cases, Members of Congress do not want to be told what to do. Instead, they want a trustworthy assessment of their options, with the pros and cons of each, so they can make up their own minds. Universities and research institutes also produce valuable work on some important issues, but it rarely is generated at a time when Congress most needs it, or in a format that the overworked generalists of Congress can readily understand and apply. Moreover, Members of Congress must be suspicious that the authors of any externally produced report have an undisclosed agenda."], "subsections": []}, {"section_title": "Timeliness", "paragraphs": ["Congress established OTA to help it anticipate, understand, and consider \"to the fullest extent possible, the consequences of technological applications \u00e2\u0080\u00a6 in determination of public policy on existing and emerging national problems.\" To do this effectively, Congress needs information, analysis, and options on a timetable with the development and consideration of legislation.", "OTA supporters have noted that in recognizing the need for timeliness, the agency sought to inform congressional decisionmaking through a number of other mechanisms beyond its formal assessments. In addition to its formal assessments and summaries, OTA used the following additional mechanisms to inform Congress: technical and other memoranda, testimony, briefings, presentations, workshops, background papers, working papers, and informal discussions.", "Representative Rush Holt commented in 2006 that OTA's reports \"were so timely and relevant that many are still useful today.\"", "While OTA reports were often lauded for being authoritative and comprehensive, some critics asserted that the time it took for OTA to define a report, collect information, gather expert opinions, analyze the topic, and issue a report was not consistent with the faster pace of legislative decisionmaking:", "Probably the most frequent criticism of OTA from supporters and detractors alike is that it was too slow; some studies took so long that important decisions already were made when the relevant reports were released.", "In its early years, some criticized OTA for producing too many short analyses; later others criticized the agency for concentrating on long-range studies and neglecting committee needs.", "In 2001, the former chairman of the House Committee on Science Robert Walker noted", "Too often the OTA process resulted in reports that came well after the decisions had been made. Although it can be argued that even late reports had some intellectual value, they did not help Congress, which funded the agency, do its job.", "Georgetown Law's Institute for Technology Law and Policy published a report on a June 2018 workshop on strategies for improving science and technology policy resources for Congress. Several participants asserted that \"OTA's model often failed to deliver timely information to Congress, as the comprehensiveness of the studies and the rigor of the peer review process meant that reports could take 18 months or more to publish.\""], "subsections": []}, {"section_title": "Quality and Utility", "paragraphs": ["Some criticisms related to the quality and utility of OTA reports to the legislative process. This concern, and others, were reflected in a 1979 statement by Senator Jim Sasser, chairman of the Senate Appropriations Subcommittee on the Legislative Branch: ", "The accusations are leveled that OTA studies are mediocre, and they are not used in the legislative process, but rather, most of them end up in the warehouse gathering dust, as so many government studies do\u00e2\u0080\u00a6. I am not being personally critical of you at all, but it falls to me to respond to these criticisms which I hear from my colleagues and others.", "In 1984 the Heritage Foundation, a think tank, published a paper, Reassessing the Office of Technology Assessment , lauding the agency's independence and quality:", "OTA performs an important function for Congress. In an increasingly complex age, Congress needs the means to conduct analyses independent of those produced by industry, lobbies, and the executive branch. The quality control procedures of OTA, as a whole, seem as careful and complete as those of its sister agencies, the General Accounting Office and the Congressional Budget Office."], "subsections": []}, {"section_title": "Objectivity", "paragraphs": ["There was and is a consensus that objectivity is essential to technology assessment if it is to serve as a foundation (among others) for congressional decision making. However, not all agree that objectivity is necessary to technology assessment, or even possible. ", "Some assert OTA's work to have been objective. This perspective is reflected in comments by Representative Mark Takano who has stated, \"The foundation for good policy is accurate and objective analysis, and for more than two decades the OTA set that foundation by providing relevant, unbiased technical and scientific assessments for Members of Congress and staff.\" Similarly, Representative Sean Casten has stated, \"OTA gave us an objective set of truths. We may have creative ideas about how to deal with that truth, but let's not start by arguing about the laws of thermodynamics.\"", "A report for the Woodrow Wilson International Center for Scholars by Richard Sclove asserted that OTA's work implied a misleading presentation of objectivity:", "The OTA sometimes contributed to the misleading impression that public policy analysis can be objective, obscuring the value judgments that go into framing and conducting any [technology assessment] study\u00e2\u0080\u00a6. In this regard an authoritative European review of [technology assessment] methods published in 2004 observes that [OTA] \u00e2\u0080\u00a6 represents the 'classical' [technology assessment] approach.... The shortcomings of the classical approach can be summarized in the fact that the whole [technology assessment] process \u00e2\u0080\u00a6 needs relevance decisions, evaluations, and the development of criteria, which is at least partially normative and value loaded.", "Another scholar framed concerns about objectivity as a structural issue arising, in part, from single-party control of Congress during OTA's existence. The author noted the need for careful bipartisan and bicameral oversight to overcome perceptions and accusations of bias:", "Some Members of Congress raised noteworthy concerns. The most serious allegation was bias. It is not surprising that the party in the minority (before 1995) would raise concerns about bias, given that the other party had dominated Congress throughout OTA's existence\u00e2\u0080\u00a6. Bias or the appearance of bias can be devastating. An organization designed to serve Congress must be both responsive and useful to the minority, as well as the majority. Representatives of both parties and both houses must provide careful oversight, so that credit or blame for the organization's professionalism is shared by all.", "Some critics have asserted that OTA was responsive principally to the TAB, \"limiting its impact to a very narrow constituency.\" While the TAB membership was bipartisan and bicameral, this criticism implied that OTA's objectivity was affected to some degree by the perspectives of those serving on the TAB, adding to the notion of structural challenges faced by OTA in achieving objectivity or the appearance of objectivity.", "In the 1980 book, Fat City : How Washington Waste s Your Taxes , author Donald Lambro, a Washington Times reporter, criticized OTA's work as partisan:", "Many of OTA's studies and reports \u00e2\u0080\u00a6 concentrated on issues that were of special concern to [Senator Ted Kennedy]. The views expressed in them were always, of course, right in line with Kennedy's views (or any liberal's, for that matter)\u00e2\u0080\u00a6. The agency's studies have proven to be duplicative, frequently shoddy, not altogether objective, and often ignored. ", "The 1984 Heritage Foundation paper Reassessing the Office of Technology Assessment asserted that despite OTA's quality control procedures, balance and objectivity concerns remained:", "Enough questions have been raised about OTA's procedures and possible biases, therefore, to warrant a thorough congressional review of OTA.", "This was particularly the case, according to the Heritage paper, for products not requested or reviewed by OTA's congressional oversight board, the TAB. The paper singled out for criticism OTA's assessment of the Strategic Defense Initiative (SDI), President Reagan's plan for a weapon system that would serve as a shield from ballistic missiles. The Heritage Foundation paper asserted that the OTA report on SDI was marred by intentional political bias:", "In the [SDI] study, for example, at least one OTA program division placed the political goal of discrediting SDI ahead of balanced and objective analysis.", "Further, the Heritage paper asserted ", "It is also difficult to believe that the flaws in Carter's study and its disclosure of highly sensitive information are the result of naivete and misunderstanding on the part of the OTA. The evidence that some OTA staffers oppose the Administration's Strategic Defense Initiative seems clear and compelling.\"", "The Heritage report notes that experts from the SDI office and from Los Alamos National Laboratory questioned the technical accuracy of the report. The report then notes that three analysts selected by OTA Director Jack Gibbons to review the report (described in the report as having been \"unsympathetic to strategic defense\") commended Carter's study and told Gibbons that he should not withdraw the report.", "In 1988, citing the controversy over the OTA SDI report, Senator Jesse Helms asserted that OTA's work was not objective:", "OTA has been obsessed with proving that President Reagan's strategic defense initiative is both wrongheaded and dangerous almost since the very moment Mr. Reagan announced it in 1983. OTA has long ago lost its pretense that it is an objective scientific analysis group. By and large its reports are useless or irrelevant, but it has demonstrated over and over again that its work on SDI is both pernicious and distorted.", "In 2016, Representative Rush Holt disagreed with the assertion of bias in OTA's SDI report asserting, \"When it came to missile defense, it was pretty clear to [OTA] that [the technology] wouldn't work as claimed, so they said so.\" ", "A 2004 article in the journal The New Atlantis, \"Science and Congress,\" stated that \"the most significant reason for Republican opposition [to reestablishing OTA] is the belief that OTA was a biased organization, and that its whole approach was misguided: a way of giving a supposedly scientific rationale for liberal policy ideas and prejudices.\" The author offered several examples which, if viewed \"through Republican eyes\" support this belief. ", "According to a report published by Georgetown Law's Institute for Technology Law and Policy, participants in a June 2018 workshop identified \"the perception of partisanship\" as one of two OTA weaknesses."], "subsections": []}, {"section_title": "Costs", "paragraphs": ["The issue of the costs of OTA studies was a factor in early oversight of OTA by Congress. On behalf of the chairman of the Senate Appropriations Committee, the chairman of the Legislative Branch subcommittee raised concerns about \"allegations that OTA had either cost or time overruns on a large number of their contracts\" in a 1979 appropriations hearing. OTA responded that contract overruns had stemmed primarily from modification of the scope of contracts. The agency asserted that its operation was based on the extensive use of outside talent, and that contractors were engaged early in an assessment to help OTA staff and supporting panels to define in more detail the nature of the assessment. This could lead to additional contractor work assignments, requiring modifications to contracts or additional contracts to enable completion of assessments."], "subsections": []}, {"section_title": "Public Input", "paragraphs": ["When OTA was established, analysts argued that public input into the technology assessment process was important. The efficacy of the OTA process for gaining such input has been a topic of debate. Some have asserted in retrospect that OTA did not have an effective mechanism for taking in public comments. Some former OTA staff have disputed this perception. One characterized the charge that OTA lacked citizen participation as \"outrageous\u00e2\u0080\u00a6. The OTA process was nothing if not participatory.\" Another former OTA staffer, Fred Wood, recognized OTA's efforts in seeking public participation, but lamented that these efforts fell short at times:", "Public participation [by representatives of organized stakeholder groups] was one of the bedrock principles of the OTA assessment process.... Yet this aspect of OTA's methodology could be time consuming and still fall short of attaining fully balanced participation, while leaving some interested persons or organizations unsatisfied.", "The TAAC served as one vehicle for nongovernmental input into OTA's work. However, in a 1977 hearing, former Representative Emilio Daddario, who introduced the legislation first proposing the creation of an Office of Technology Assessment, testified that the TAAC had been invented in \"a hurried effort to provide for some new method of public input into OTA activities, even though unfortunately its role was ill-defined.\""], "subsections": []}, {"section_title": "Other Criticisms", "paragraphs": ["Some have offered other criticisms of OTA. For example, a Wilson Center report identified the following additional criticisms of OTA: ", "inconsistency in fully identifying and articulating technologies' ethical and social implications; failure to identify social repercussions that could arise from interactions among complexities of seemingly unrelated technologies; a lack of elucidation of circumstances in which a technology can induce a cascade of follow-on socio-technological developments; and failure to develop a \"capacity to cultivate, integrate or communicate the informed views of laypeople.\" "], "subsections": []}]}, {"section_title": "Congressional Perspectives on Technology Assessment Expressed During OTA Defunding Debate", "paragraphs": ["At the time of OTA's defunding, some Members of Congress expressed views on which other agencies and organizations might serve the functions performed by OTA\u00e2\u0080\u0094or however much of those functions was still deemed necessary. ", "The following excerpts from the House and Senate reports accompanying the Legislative Branch Appropriations Act, 1996 ( H.R. 1854 , 104 th Congress) and from floor debate on the bill provide insight into these post-OTA perspectives:", "The report of the House Committee on Appropriations on H.R. 1854 directed that following the defunding of OTA, any of its necessary functions would be performed by other agencies, such as CRS and GAO, and that supplemental information would be provided by nongovernment organizations: ", "If any functions of OTA must be retained, they shall be assumed by other agencies such as Congressional Research Service or the General Accounting Office. Alternatively, the National Academy of Sciences, university research programs, and a variety of private sector institutions will be available to supplement the needs of Congress for objective, unbiased technology assessments.", "In its report on the bill, the Senate Committee on Appropriations report stated its disagreement with the House's intent to transfer OTA functions to CRS. The report asserted a variety of differences between OTA and CRS and stated that assigning OTA functions to CRS would harm CRS:", "During consideration of the bill by the House of Representatives, an amendment was adopted transferring the functions of the Office of Technology Assessment to the Congressional Research Service. The Committee disagrees with this proposal. The purposes, procedures, methodologies, management, and governance of the CRS and the OTA are quite different, and the Committee believes the merger of the two would substantially harm the Congressional Research Service.", "In debate on the Senate version of the bill, Senator Daniel Inouye asserted that OTA filled a unique and important role for which other legislative branch agencies were not suited:", "Some of my colleagues have suggested that we don't need an OTA.... How many of us are able to fully grasp and synthesize highly scientific information and identify the relevant questions that need to be addressed? The OTA was created to provide the Congress with its own source of information on highly technical matters. Who else but a scientifically oriented agency, composed of technical experts, governed by a bipartisan board of congressional overseers, and seeking information directly under congressional auspices, [can give] the Congress and the country accurate and essential information on new technologies? ", "Can other congressional support agencies and staff provide the information we need? I am second to none in my high regard for these agencies, but each has its own distinct role. The U.S. General Accounting Office is an effective organization of auditors and accountants, not scientists. The Congressional Research Service is busy responding to the requests of members for information and research. The Congressional Budget Office provides the Congress with budget data and with analyses of alternative fiscal and budgetary impacts of legislation. Furthermore, each of these agencies is likely to have its budget reduced, or to be asked to take on more responsibilities, or both, and would find it extremely difficult to take on the kinds of specialized work that OTA has contributed.", "Representative Ron Packard, chair of the House Appropriations Committee's Legislative Branch subcommittee, described the elimination of OTA as \"legislative rightsizing\" and asserted the availability of other congressional agencies to fill OTA's role:", "In our efforts in this bill we have genuinely tried to find where there is duplication in the legislative branch of Government. This is one area where we found duplication, serious duplication. We have several agencies that are doing very much the same thing in terms of studies and reports\u00e2\u0080\u00a6. I am aware of the invaluable service of OTA, but there are other agencies that do the same thing. The CRS has a science division of their agency. GAO has a science capability in their agency. They can do the same thing as OTA.", "We evaluated how to best consolidate, and it was our conclusion as a committee that to eliminate OTA and absorb the essential functions into some of these other agencies that are going to continue was the best way to go\u00e2\u0080\u00a6.", "I admit OTA has done a good job. They have good, solid professionals, but those professionals can work with other agencies that will do those same functions, if they are essential. We also have the CRS, GAO, and other agencies, such as the National Academy of Sciences. There are many alternatives, or this work can even be privatized and contracted out for the services. But we do not need this agency that has now outgrown its usefulness \u00e2\u0080\u00a6 has now increased its mission to other areas beyond science.", "In the House, Representative Henry Hyde stated his support for an amendment submitted by Representative Amo Houghton that would have transferred most of the funds and analysts to CRS:", "[The amendment] cuts 50 of 190 jobs. It cuts the budget by 32 percent, from $22 million down to $15 million. And it folds its functions into the Congressional Research Service. So we cut down on the money, we cut down on the personnel, we downsize to the bone, but we do not lose the function. It just seems to me in this era of fiber optics and lasers and space stations, we need access to an objective, scholarly source of information that can save us millions and billions.", "The amendment to transfer funds and personnel to CRS was not passed."], "subsections": []}, {"section_title": "Congress, GAO, and Technology Assessment", "paragraphs": ["Following the defunding of OTA, Congress sought help from other organizations to fill a gap for scientific and technical information that previously would have been performed by OTA. According to one analysis, Congress initially increased its use of the National Academies for obtaining such information, though shortly thereafter its usage of the National Academies returned to pre-OTA defunding levels.", "Another option employed by Congress for technology assessment capabilities has been reliance on the GAO. Beginning in the early 2000s, GAO undertook efforts to develop and improve its technology assessment capabilities. Some of these efforts were initiated by GAO itself, other efforts were initiated at Congress's direction. ", "Congress has not given GAO statutory authority to conduct technology assessments. Rather, Congress provided GAO guidance with respect to its technology assessments and related activities in the form of reports accompanying annual Legislative Branch Appropriations bills since at least 2001. ", "In 2000, five years after Congress defunded OTA, GAO established the Center for Technology and Engineering in its Applied Research and Methods team. This center, led by GAO's Chief Technologist, later became GAO's Center for Science, Technology, and Engineering.", "Shortly thereafter, Congress began to task GAO with technology assessment activities. In 2001, conferees on the Legislative Branch Appropriations Act, 2002 directed in report language that up to $500,000 of GAO's appropriation be obligated to conduct a technology assessment pilot project and that the results be reported to the Senate by June 15, 2002.", "The conference report did not authorize an assessment topic, but three Senators requested GAO to assess technologies for U.S. border control together with a review of the technology assessment process. At the same time, six House Members wrote to GAO supporting the pilot technology assessment project. After consulting congressional staff, GAO agreed to assess biometric technologies. It used its regular audit processes and also its standing contract with The National Academies to convene two meetings that resulted in advice from 35 external experts on the use of biometric technologies and their implications on privacy and civil liberties. The resulting report was issued in November 2002 as Technology Assessment: Using Biometrics for Border Security (GAO-03-174).", "The FY2003 Senate legislative branch appropriations report noted the utility of GAO's work and said that it was providing $1 million for three GAO studies in order to maintain an assessment capability in the legislative branch and to evaluate the GAO pilot process. However, this language was not included in the Senate bill ( S. 2720 , 107 th Congress); the House bill ( H.R. 5121 , 107 th Congress) or the accompanying report; or in P.L. 108-7 , which included as Title H, the Legislative Branch Appropriations Act, 2003. Although funds were not provided for a study, GAO conducted a technology assessment that was published in May 2004 as Cybersecurity for Cri tical Infrastructure Protection .", "For FY2004, the Senate Committee on Appropriations recommended $1 million for two or three technology assessments by GAO, but directed the agency only to conduct this technology assessment work if it was consistent with GAO's mission. The conference report for the Legislative Appropriations Branch, 2004 ( P.L. 108-83 ) noted that ", "For the past two years the General Accounting Office (GAO) has been conducting an evaluation of the need for a technology assessment capability in the Legislative Branch. The results of that evaluation have generally concluded that such a capability would enhance the ability of key congressional committees to address complex technical issues in a more timely and effective manner.", "Further, the conferees directed GAO to report by December 15, 2003, to the House and Senate Committees on Appropriations \"the impact that assuming a technology assessment role would have on [GAO's] current mission and resources.\" ", "In 2004, a bill was introduced in the Senate ( S. 2556 , 108 th Congress) to establish a technology assessment capability within GAO. The bill would have authorized the Comptroller General to initiate technology assessment studies or to do so at the request of the House, Senate, or any committee; to establish procedures to govern the conduct of assessments; to have studies peer reviewed; to avoid duplication of effort with other entities; to establish a five-member technology assessment advisory panel; and to have contracting authority to conduct assessments. In addition, the bill would have authorized $2 million annually to GAO to conduct assessments. The bill was referred to the Committee on Governmental Affairs and no further action was taken. A similar bill was introduced in the House ( H.R. 4670 , 108 th Congress) and referred to the House Committee on Science; no further action was taken.", "For FY2005, GAO requested $545,000 in appropriations for four new full-time equivalent (FTE) positions and contract support to establish a baseline technology assessment capability that would allow the agency to conduct one assessment per year. In its report, the House Appropriations Committee did not address funding for GAO for technology assessment, but encouraged GAO to \"... retain its core competency to undertake additional technology assessment studies as might be directed by Congress.\" An amendment to add $30 million to GAO's FY2005 appropriations for the purpose of establishing a Center for Science and Technology Assessment was rejected by the House. ", "The Senate Committee on Appropriations report on the Legislative Branch Appropriations Act, 2005 ( S. 2666 , 108 th Congress) provided additional guidance to GAO with respect to its technology assessment activities, limiting future technology assessments to those having the support of leadership of both houses of Congress and to technology assessments that \"are intended to address significant issues of national scope and concern.\" In addition, the report directed the GAO Comptroller General to consult with the committee \"concerning the development of definitions and procedures to be used for technology assessments by GAO.\" ", "In 2007, the House Committee on Appropriations recommended $2.5 million for GAO for technology assessments in FY2008, stating that", "as technology continues to change and expand rapidly it is essential that the consequences of technological applications be anticipated, understood, and considered in determination of public policy on existing and emerging national problems. The Committee believes it is necessary for the Congress to equip itself with effective means for securing competent, timely and unbiased information concerning the effects of scientific and technical developments and use the information in the legislative assessment of matters pending before the Congress.", "That same year, the Senate committee report on the Legislative Branch Appropriations Act, 2008 ( S. 1686 , 110 th Congress) recommended $750,000 and four FTE employees to establish a permanent technology assessment function in the GAO. The report also stated that the committee had \"decided not to establish a separate entity to provide independent technology assessment for the legislative branch owing to budget constraints.\" Further, it asserted that GAO's focus on \"producing quality reports that are professional, objective, fact-based, fair, balanced, and nonpartisan is consistent with the needs of an independent legislative branch technology assessment function.\" In addition, the committee directed GAO \"to define an operational concept for this line of work, adapted from current tested processes and protocols,\" and to report to Congress on the concept.", "Conferees on the Consolidated Appropriations Act, 2008 ( H.R. 2764 , 110 th Congress; P.L. 110-161 ) agreed to provide $2.5 million for GAO for technology assessments in FY2008, asserted the importance of technology assessment to Congress's public policy deliberations, and directed the Comptroller General to ensure that \"GAO is able to provide effective means for securing competent, timely and unbiased information to Congress regarding the effects of scientific and technical developments.\"", "For FY2009, conferees continued funding for GAO's technology assessment and reminded the agency that \"for the assessments to be of benefit to the Congress, GAO must reach out and work with both bodies of Congress regarding these studies.\"", "For FY2010, the House Committee on Appropriations recommended continuing GAO technology assessment funding at the FY2009 level. The conference report on Legislative Branch Appropriations Act, 2010, endorsed the chamber reports.", "No direction was given by Congress to GAO in House, Senate, or conference appropriations reports regarding technology assessment for FY2011, FY2012, FY2013, or FY2014. ", "In its report on the Legislative Branch Appropriations Act, 2015 ( H.R. 4487 , 113 th Congress), the Senate Committee on Appropriations commended GAO for the technology assessment advice it provided to Congress for a decade, but asserted that the scale and scope of that work has been limited due to budget constraints. The committee recommended an increase in GAO funding to enhance the agency's technology assessment capabilities and directed GAO to submit a strategic plan for its technology assessment program. The strategic plan was to include proposed solutions to challenges constraining the GAO's technology assessment capabilities, approaches to increase responsiveness to congressional needs and priorities, and strategies to improve technology assessment procedures and methodologies, as well as identify additional authorities and resources that may be needed. ", "In its report on the Legislative Branch Appropriations Act, 2016 ( H.R. 2250 , 114 th Congress), the Senate Committee on Appropriations commended GAO for implementing a new strategic plan for its technology assessment program that expanded the scale and scope of its assessment analysis. Additionally, the committee encouraged GAO to focus hiring efforts on increasing technology assessment staff capacity.", "Conferees on the Consolidated Appropriations Act, 2017 ( H.R. 244 , 114 th Congress) lauded GAO's technology assessment work and encouraged GAO to increase its scientific and technical capacity as its work portfolio requires:", "GAO's work is recognized in the area of technology assessment, since being tasked with this responsibility in 2002. GAO has produced highly technical and scientific reports in response to Congressional requests and statutory requirements. These reports have included technology assessments (TA), and other reports to Congress that incorporate analysis of scientific, technological and engineering issues in their evaluations of federal programs. GAO has also produced best practice guides for use across government on the topics of lifecycle cost estimating, project scheduling, and technology readiness assessment. GAO's work in these areas is led by GAO's Center for Science, Technology, and Engineering (CSTE). GAO's CSTE provides wide-ranging technical expertise across all of GAO's areas of work, including support to various studies of federal programs with science and technology elements, such as cybersecurity, nuclear and environmental issues, and major technical systems acquisitions, among others. Also noted is the work of CSTE's e-Security laboratory and Cost Engineering Sciences groups which conduct computer and network security evaluations and advanced operations research analyses (including cost, schedule, and technical performance), respectively. GAO has provided direct support to the Congress via congressional testimony, review of draft legislation, and the adoption of various report recommendations by Executive Branch agencies. GAO is commended for providing key direct technical support to various congressional committees on technology-focused topics such as the U.S. Capitol Police radio systems acquisition. It is noted that GAO is using rigorous methods in its technical reports, including engaging key external technical experts via group meetings conducted in partnership with the National Academies, cost-benefit analysis, risk analysis, technology maturity assessment, and scenario-based trend identification. Given the persistent and growing demand for this technical work, the Comptroller General is commended for his strategic initiative to build the scientific and technical capacity within GAO and encouraging further growth as the work portfolio requires. GAO is encouraged to continue a communication effort with Congress to ensure lawmakers are aware of these services.", "No direction was given by Congress to GAO in FY2018 appropriations report language regarding technology assessment. ", "Conferees on the Energy and Water, Legislative Branch, and Military Construction and Veterans Affairs Appropriations Act, 2019, directed GAO to expand its technology assessment capacity by reorganizing its S&T function and to create a more prominent office for this purpose within GAO. Congress directed GAO to provide, within 180 days, a plan and timetable for how the new office could expand and enhance GAO's capabilities in scientific and technological assessments:", "Technology Assessment : There is general support in Congress to bolster capacity of and enhance access to quality, independent science and technological expertise. Since 2002, GAO has provided direct support to Congress in the area of technology assessment through objective, rigorous, and timely assessments of emerging science and technologies. The Center for Science, Technology, and Engineering (CSTE) within GAO has developed such a capacity, providing wide-ranging technical expertise across all of GAO's areas of work. However, because the scope of technological complexities continues to grow significantly, the conferees seek opportunities to expand technology assessment capacity within the Legislative Branch.", "The conferees encourage GAO to reorganize its technology and science function by creating a new more prominent office within GAO. GAO is directed to provide the Committees a detailed plan and timeline describing how this new office can expand and enhance GAO's capabilities in scientific and technological assessments. This plan should be developed in consultation with internal stakeholders of the Legislative Branch such as congressional staff and Members of Congress in addition to external stakeholders, including nonprofit organizations and subject matter experts knowledgeable in the field of emerging and current technologies. Further, such a plan should include a description of the revised organizational structure within GAO, provide potential cost estimates as necessary, and analyze the following issues: the appropriate scope of work and depth of analysis; the optimum size and staff skillset needed to fulfill its mission; the opportunity and utility of shared efficiencies within GAO; and the opportunities to increase GAO's engagement and support with Congress. GAO is directed to submit this report to the Committees within 180 days of enactment.", "In January 2019, GAO announced plans to double the size of its current combined science and technology workforce. It also announced the establishment of a new Science, Technology Assessment, and Analytics (STAA) team focused on technology assessments and technical services for the Congress; auditing federal science and technology programs; compiling and utilizing best practices in the engineering sciences; and establishing an audit innovation lab to explore, pilot, and deploy new advanced analytic capabilities, information assurance auditing, and emerging technologies expected to affect auditing practices.", "In April 2019, GAO issued its expansion and enhancement plan, GAO Science, Technology Assessment, and Analytics Team: Initial Plan and Considerations Moving Forward. According to the plan, the new GAO STAA office would perform the agency's existing science- and technology-focused work, as well as its new technology assessment activities. The GAO plan states that the number of STAA staff will increase from 49 to 70 by the end of FY2019 under the plan. STAA staff would eventually grow to as many as 100-140, depending on congressional requests for technology assessments and technical assistance. Functions to be performed by STAA include providing technology assessments and technical assistance to Congress; evaluation of S&T programs within the federal government; best practices guides in the engineering sciences, including cost, schedule, and technology readiness assessments; and an audit innovation lab.", "From 2002 through April 14, 2020, GAO published 16 technology assessment reports, including two in 2019. Appendix D provides a complete list of GAO technology assessments. "], "subsections": []}, {"section_title": "National Academy for Public Administration Study on Congress's Need for Additional Science and Technology Advice and Technology Assessment", "paragraphs": ["In 2018, conferees on the Energy and Water, Legislative Branch, and Military Construction and Veterans Affairs Appropriations Act, 2019 ( H.R. 5895 , P.L. 115-244 ) noted recent testimony and requests for restoring funding for OTA and the need for Congress to have \"deep technical advice necessary to understand and tackle the growing number of science and technology policy challenges.\" "], "subsections": [{"section_title": "Congress's Charge to NAPA", "paragraphs": ["In this regard, Congress directed CRS to contract with the National Academy of Public Administration (NAPA) or a similar external entity to", "produce a report detailing the current resources available to Members of Congress within the Legislative Branch regarding science and technology policy, including the GAO. This study should also assess the potential need within the Legislative Branch to create a separate entity charged with the mission of providing nonpartisan advice on issues of science and technology. Furthermore, the study should also address if the creation of such entity duplicates services already available to Members of Congress. CRS should work with the Committees in developing the parameters of the study and once complete, the study should be made available to relevant oversight Committees.", "In 2018, CRS engaged NAPA to conduct the study and produce a report. In October 2019, NAPA published its report, Science and Technology Policy Assessment: A Congressionally Directed Review . ", "NAPA articulated its mission in addressing the congressional direction as threefold: ", "to detail the current resources available to Members of Congress within the legislative branch regarding science and technology policy, including GAO; to assess the potential need within the legislative branch to create a separate entity charged with the mission of providing nonpartisan advice on issues of science and technology, such as the former Office of Technology Assessment; and to address whether the creation of a separate legislative branch entity would duplicate services already available to Members of Congress."], "subsections": []}, {"section_title": "Assessment of Congressional Need for Additional Science and Technology Advice and Resources Available", "paragraphs": ["In evaluating Congress's need for additional S&T advice, the NAPA study found that \"The range, speed, and impact of technical developments suggest a greater congressional need for internal expertise on S&T related issues,\" but that \"nearly every indictor of congressional capacity is moving the wrong way.\"", "The report identified three types of congressional clients that need such information: Members of Congress, personal office staff, and committee staff. Broadly, NAPA found that most Members are reliant on staff and legislative support agencies (e.g., CRS, GAO) for science and technology policy support, but that the number of committee and personal office staff available for S&T policy work has decreased. NAPA also noted reductions in the number of CRS and GAO staff over 35 years. "], "subsections": [{"section_title": "Members of Congress", "paragraphs": ["The report noted that Members typically do not have professional backgrounds in science and technology and states that Members \"often do not have the subject matter expertise to understand fast-moving, complex S&T issues.\" Therefore, Members without S&T backgrounds, \"rely on expert advisors like personal and committee staff and on legislative branch support agencies like the CRS and the GAO to help them understand technical policy issues.\" The report also cites a 2016 survey of senior congressional staff by the Congressional Management Foundation that found that \"Senators and Representatives lack the time and resources they need to understand, consider, and deliberate public policy and legislation.\""], "subsections": []}, {"section_title": "Committee Staff", "paragraphs": ["NAPA found that committee staff are a critical source of policy expertise, but that the number of committee staff fell by 38% between 1981 and 2015, and by even more in some committees engaged in S&T policy matters. The report also noted the number of hearings\u00e2\u0080\u0094which NAPA describes as an opportunity to \"build subject matter expertise\"\u00e2\u0080\u0094fell by 63% between the 96 th Congress and 114 th Congress."], "subsections": []}, {"section_title": "Personal Staff", "paragraphs": ["NAPA found that congressional offices are \"overwhelmed by constituent communication\" due to growth in digital communications and increases in population, and noted a finding by the Congressional Management Foundation that \"Congressional offices are devoting more resources to managing the growing volume of constituent communications.\" NAPA asserts that this trend, combined with fixed budgets, means that fewer staff are available for policy work.", "In its report, NAPA concluded that \"as the Nation experiences accelerated S&T developments, certain indicators of Congress' ability to absorb, understand, analyze, and deal with the developments have declined.\""], "subsections": []}]}, {"section_title": "Options Identified by NAPA", "paragraphs": ["The report posited three options that it considered to address the gaps it had identified:", "Option 1. Enhance Existing Entities Enhance the capabilities of existing Legislative Branch support agencies, including GAO and CRS, including potential changes to current models;", "Option 2. Create a New Agency Create a separate agency to fill any existing gaps, with attention given to avoiding duplication of effort; and ", "Option 3. Enhance Existing Entities and Create an Advisory Office Both enhance existing entities and create an S&T advisory office, led by a Congressional S&T Advisor, which focuses on strengthening the capacity of Congress to absorb and utilize science and technology policy information provided by GAO, CRS, and other sources."], "subsections": []}, {"section_title": "NAPA Recommendations", "paragraphs": ["The NAPA report recommended option 3 with the following elements:", "GAO should further develop the capability of its Science, Technology Assessment, and Analytics mission team to meet some of the supply gaps identified in the NAPA report, including the need for technology assessments, and make appropriate changes in its organization and operating policies to accommodate the distinctive features of technology assessments and other foresight products. CRS should enhance and expand its quick-turnaround and consultative services in S&T-related policy issues. Congress should create an Office of the Congressional S&T Advisor (OCSTA), which would focus on efforts to build the absorptive capacity of Congress, to include supporting the recruitment and hiring of S&T advisors for House and Senate committees with major S&T oversight responsibilities. OCSTA would also be responsible for horizon scanning. Congress should create a Coordinating Council to be led by the Advisor and that includes representatives from CRS and GAO's STAA, and a National Academies ex officio member with the objective to limit duplication and coordinate available resources to most benefit the Congress."], "subsections": []}, {"section_title": "Technology Assessment and Horizon Scanning", "paragraphs": ["In its report, NAPA differentiates between technology assessments and \"horizon scans.\" NAPA states that horizon scans are reports 20-60 pages in length that seek to identify S&T issues that might arise in the future, including broad developments and important innovations, as well as estimating the timeframes for such developments. NAPA asserts that such information would allow Congress to know whether it is positioned to be successful in responding to such issues in terms of its structure, activities, and agenda. NAPA also states that horizon scanning can serve as an effective early warning system. While the NAPA report asserts that \"no agency expressly claims responsibility for preparing horizon scanning reports as distinct products for Congress,\" it later offers several examples of horizon scanning efforts undertaken by GAO and argues that these efforts \"provide a foundation to further expand capacity in this area.\""], "subsections": []}, {"section_title": "NAPA Evaluation of Whether to Reestablish OTA", "paragraphs": ["Following release of the report, NAPA panel members stated that it did not evaluate the need for reestablishing the Office of Technology Assessment. In this regard, NAPA asserted that it believed Congress had made clear its intent over the last two decades for technology assessment to be a mission of GAO.", "In testimony, panel member Michael McCord asserted that the inability of Congress to reach a consensus about reestablishing OTA for more than two decades shaped the panel's perspective on considering the option. He further asserted that the absence of a consensus in this regard could undermine a reestablished OTA's ability to fulfill the mission its advocates seek. In response to a Member's question as to why the NAPA report did not recommend reinstating OTA or something similar, McCord responded ", "We did not recommend [reestablishing OTA]. [However,] it would be, I think, incorrect to say that [NAPA] would think it's a terrible idea if Congress did that. But you can't help but notice that for 25 years Congress has chosen not to do that. So the question whether the support is there to go that route and sustain it, that's a serious question for us, the viability of doing something that you consistently have chosen not to do\u00e2\u0080\u00a6. You could go that route eventually."], "subsections": []}]}, {"section_title": "Other Perspectives and Recommendations on OTA and the Adequacy of S&T Advice to Congress", "paragraphs": ["In addition to NAPA, other organizations have produced reports on the value of reestablishing OTA and the broader question of the adequacy of S&T advice to Congress.", "In 2018, the R Street Institute (R Street), a nonprofit, nonpartisan, public policy research organization, proposed reestablishment of OTA in its report Bring i n the Nerds: Reviving the Office of Technology Assessmen t . The report identifies and addresses a number of rationales that have been put forth by others as to why OTA should not be reestablished, including cost, political loss of face, perception by some of an ideological bias in OTA's work, providing a foundation for encouraging additional government intervention, and adding another governmental expert bureaucracy. The report concludes that \"Congress can most easily bolster its technology policy knowledge by reviving the OTA.\"", "In September 2019, the Belfer Center for Science and International Affairs of Harvard's Kennedy School published a report, Building a 21 st Century Congress: Improving Congress's Science and Technology Expertise , focused on providing an overview of Congress's S&T-relevant needs and resources identifying potential actions to address what it perceives as gaps in meeting Congress's needs.", "The Belfer Center report asserted that \"Congress is one of the most advised bodies in the world.\" In this regard, Belfer identifies internal resources available to Members\u00e2\u0080\u0094including GAO, CRS, and personal and committee staff\u00e2\u0080\u0094as well as external resources, such as executive branch agencies, think tanks, universities, civil society and nonprofit organizations, lobbyists, industry associations, and the National Academies.", "Yet, even though Congress is provided with such advice and resources, Belfer asserted that", "significant gaps remain that hinder Congress's ability to produce timely, thoughtful, and comprehensive legislation on S&T issues. This results in a multitude of negative and many times public outcomes, such as ineffective or absent S&T legislation.", "The report concluded that \"the core of the problem is a divide between what Congress can absorb and what information it receives.\" This finding is similar to that asserted by NAPA in its October 2019 report, Science and Technology Policy Assessment: A Congressionally Directed Review , on the need for improving the \"absorptive capacity of Congress\" (discussed in the previous section).", "To address these gaps, the Belfer Center report proposed four actions: (1) Congress should create a legislative support body focused on S&T issues; (2) Congress should hire additional S&T talent in personal offices and committees; (3) Congress should provide committee and support agencies with increased funding to allow them to hire additional staff and pay a more competitive salary; and (4) external information providers should produce information in formats that are useful to Congress, generally products that are short, concise, customized for the audience, consistently offered, and timely.", "An earlier report by the Belfer Center describes a \"widening gap between responsive lawmaking in Congress and the deepening complexity of advancements in science and technology\" and that \"certain weakened capabilities have atrophied the organization's absorptive capacity , or the ways by which it recognizes the value of, assimilates, and makes use of knowledge outside of itself.\" The report called for the establishment of a Congressional Futures Office that it describes as \"a new and deeply embedded internal support body\" that would gradually strengthen its \"capabilities through open-ended product-service design and dispersed global networks of expertise.\"", "A 2019 report, Evaluating the 2019 NAPA Report on S&T Policy Assessment and Resources for Congress , by the Lincoln Network and Demand Progress lauded the NAPA report for recognizing that Congress's S&T capacity gap is broader than just technology assessment and recognizing Congress's need for a mechanism to increase what NAPA referred to as Congress's absorptive capacity. The report agreed with NAPA with respect to its praise of GAO's outreach and transparency in its technology assessments activities. However, the report questioned \"whether GAO's culture will be able to adapt to effectively cover the full range of OTA's work (particularly that part concerning non-technical values and horizon scanning).\"", "In addition, the Lincoln Network and Demand Progress report was critical of the absence of details on key features of NAPA's recommendation for an Office of the Congressional S&T Advisor (OCSTA). In particular, the report questioned how OCSTA would pick topics; how it would integrate new resources into committees; how it would engage in horizon scanning; issues related to OCSTA's oversight, statutory powers, and mechanism for coordinating with other legislative support agencies; and whether OCSTA is the right organization for the horizon scanning function.", "The Lincoln Network and Demand Progress also recommended additional analysis on reviving and modernizing OTA, and on evaluating political considerations related to the feasibility of building congressional S&T capacity and the viability of maintaining it. Further, the report noted that NAPA recommended \"beefing up CRS in several areas,\" but noted that NAPA did \"not assess CRS's current capacity for S&T work versus the volume and type of congressional demands.\" The report cited assertions by one former CRS employee that CRS is risk-averse and increasingly politicized, leading to a loss of talent, and by another former CRS employee who asserted that CRS has moved from a policy of nonpartisan advice to one of neutrality which, in his view, has undermined CRS's analytical capabilities. The report recommended additional analysis of any CRS institutional challenges prior to making significant new investments in CRS."], "subsections": []}, {"section_title": "Options for Congress", "paragraphs": ["Since 1995, several Members of Congress have undertaken numerous legislative efforts to restore funding for OTA or to affirm the need for an OTA-like technology assessment function. Appendix C , \"OTA/Technology Assessment-Related Legislation in the 107 th -116 th Congresses,\" describes each of these efforts.", "Options for Congress, if it chooses to reestablish an organizational capability with statutory authorization for conducting technology assessments, include", "reestablishing OTA without any changes to its statute, reestablishing OTA with changes to its statute, charging an existing legislative branch agency with new or expanded technology assessment authority and duties, or seeking technology assessments on a contractual basis from a nongovernmental organization such as the National Academies of Science, Engineering, and Medicine (National Academies).", "Alternatively, Congress could choose to rely on existing sources of scientific and technological analysis and technology assessment. Such sources include, but are not limited to, CRS, GAO federal executive branch agencies, federally chartered advisory committees, federally funded research and development centers, the National Academies, academic researchers, industry and trade associations, professional organizations, businesses, not-for-profit organizations, advocacy groups, think tanks, and labor organizations.", "This section analyzes these options and their purported advantages and disadvantages."], "subsections": [{"section_title": "Option: Reestablish OTA Without Changes to Its Statute", "paragraphs": ["Though OTA was defunded, its statutory authorities remain law. If Congress opts to reestablish OTA without changes to its statutory authority, it may be able to do so solely by appropriating funds to the agency. However, given past report language about closure and abolition, Congress might choose to provide an explicit statement of its intent to reestablish OTA and/or guidance on its reestablishment.", "Since 1995, some Members of Congress have undertaken a variety of legislative efforts seeking to reestablish OTA by authorizing or appropriating funding for OTA or to express a \"sense of the House\" or a \"sense of the Senate\" that OTA should be reestablished. Most recently, in the 116 th Congress, the House approved appropriations of $6 million for OTA in the Legislative Branch Appropriations Act, 2020 ( H.R. 2779 ); these funds were not included in the final legislative branch appropriations act for FY2020 ( P.L. 116-94 ).", "While OTA's statutory authorities remain in law, the appropriations act in which it was defunded referred to the \"orderly closure\" of OTA and the \"abolition of the Office of Technology Assessment,\" and provided for the disposition of \"all records and property of the Office (including the Unix system, all computer hardware and software, all library collections and research materials, and all photocopying equipment)\" If Congress intends to rely on the existing statute to reestablish OTA, then in addition to providing funds for its establishment and operations it might wish to reaffirm that it intends for the office to operate in accordance with the statute as it existed prior to the enactment of P.L. 104-53 . Also, because OTA and certain entities currently exist only in statute, the organization would need to be reestablished as provided for in the statute. For example, Congress would face the need to reestablish and appoint members of the TAB. The TAB would need to appoint an OTA Director. The OTA Director would need to hire OTA analysts and support staff, and possibly contract for additional analytical work. In addition, the newly formed organization would need to obtain office space, acquire assets such as furniture and equipment, and secure information and communications services, among other things.", "A chief advantage of this approach is simplicity, as it would simply require an appropriation and possibly a statement of Congress' intent to restart the agency and guidance regarding aspects of the restarting of the agency. Another potential advantage of this approach is that it might make the agency operational more quickly by avoiding lengthy and possibly contentious debate regarding new or revised authorities or other topics. ", "Disadvantages of this approach include reliance on the original design of OTA, including its structure, management, and performance, without taking efforts to address past and contemporary analyses and criticisms of the agency. An OTA reestablished without addressing these critiques might be subject to criticism from congressional and external skeptics about the need for such an agency and its ability to effectively fulfill its statutory duties. Fiscal constraints may also continue to be a concern to some Members of Congress. Reestablishing OTA at a size comparable to the time of its defunding would require annual appropriations of tens of millions of dollars; OTA funding in FY1995 was $33.4 million in FY2018 dollars. ", "OTA could be established over time with initial funding provided for office space, equipment, management, operational costs, and a small staff of analysts. Congress could gradually provide additional resources to grow the agency's analytical capabilities (e.g., additional analysts, management, contractors) as necessary to meet congressional demand for technology assessment products. For example, Congress defunded the Administrative Conference of the United States (ACUS), like OTA, in 1995. ACUS was reestablished in 2009 through an appropriation of $1.5 million. In FY2019, Congress appropriated $3.1 million for ACUS. Congress could provide funding for the reestablishment of OTA through several mechanisms, for example by allocating additional budget authority to Legislative Branch Appropriations that could be appropriated to OTA or by reallocating funding in the budget and appropriations process from one or more executive branch or legislative branch agency to OTA."], "subsections": []}, {"section_title": "Option: Reestablish OTA with Changes to Its Statute", "paragraphs": ["A second option for Congress is to reestablish OTA by providing funding while also reauthorizing the agency with amendments to its organic statute to address past or contemporary criticisms (\" Observations on OTA's Design and Operations \"). In such an undertaking, Congress might consider statutory changes that address past criticisms of OTA by helping to ensure that, for example", "OTA provides a unique function, differentiated from similar functions performed by other agencies; OTA delivers information, analysis, and options in a timely manner, consistent with the pace of legislative decisionmaking; OTA's technology assessments are relevant to the development and consideration of legislation; OTA's technology assessments are authoritative, thorough, and of high quality; the agency's composition of career civil servants, temporary staff, and contractors aligns with the needs of OTA over the short term and longer term; the public has appropriate opportunity for input; and OTA selects topics and conducts technology assessments in an objective manner, free from potential ideological, political, or other bias.", "Congress may wish to consider the merits of changes in the following areas:", "The definition of technology assessment. A topic of intense discussion and debate in the period prior to OTA's establishment, the definition of technology assessment\u00e2\u0080\u0094in general and specifically with regard to advice for policymakers\u00e2\u0080\u0094remains a topic of discussion today. Congress might take into consideration past and current dialogue and analysis on this topic and whether there is a need to clarify the definition of the term in the context of the work to be performed by OTA. Appendix A provides a sampling of historical congressional and public discussion of the meaning of technology assessment. I nternal organization al structure . A number of the criticisms of OTA were, in part, related to structural issues. For example, as mentioned earlier, some have criticized OTA's focus on meeting the objectives of the TAB as greatly narrowing the agency's constituency. Others have noted that long-term, one-party control of both houses of Congress, regardless of which party is in control, can result in members of the minority party feeling that OTA's work favors the party in power. Congress may wish to consider structural changes that provide for broader input from outside the TAB or mechanisms for bipartisan approval of decisions on reports to be undertaken. Also, the current statute provides for a Director to be appointed by the TAB, and a Deputy Director to be appointed by the Director with TAB approval. Congress may wish to consider whether the positions, appointment processes, and powers of each are appropriate and adequate for accomplishing the mission of OTA. OTA conducted technology assessments on a wide range of topics, making it cost prohibitive to have permanent staff with deep expertise on each topic. OTA met its needs for specialized expertise for particular assessments through the use of contractors with specialized expertise. ( Figure 3 provides a quantitative window into the balance of staff effort and contractor effort at OTA for FY1992-FY1995.) Congress might opt to provide additional guidance to OTA on the composition of the agency's staff (full-time and part-time), the use of contractors (individuals and organizations), and approaches to managing the conduct of technology assessments. External structure . The current statute establishes the TAB, composed of equal numbers of House and Senate members from each party, to formulate and promulgate OTA policies. Congress may wish to consider whether the TAB is the best approach for this function or whether it might be performed by existing committees or subcommittees of Congress, by House and Senate leadership, by agency management, or through another mechanism. The current statute also establishes a TAAC to provide OTA access to external scientific, technical, and management expertise. Congress might consider whether the TAAC was effective in this role, other roles the TAAC might play (e.g., in reviewing proposed technology assessments), and the potential use of other mechanisms to obtain external expertise. Public participation. Some have suggested that OTA lacked a strong public input mechanism and have asserted that modern information and communication technology could be used to facilitate a much broader range of public input than was possible in 1995. The Wilson Center's report, Reinventing Technology Assessment: A 21 st Century Model, suggested that a reestablished U.S. technology assessment agency employ an approach used by a number of parliamentary technology assessment agencies in Europe known as participatory technology assessment (pTA):", "Participatory technology assessment (pTA) enables laypeople, who are otherwise minimally represented in the politics of science and technology, to develop and express informed judgments concerning complex topics. In the process, pTA deepens the social and ethical analysis of technology, complementing the expert-analytic and stakeholder-advised approaches to [technology assessment] used by the former OTA.", "Initiation of technology assessments . The current statute authorizes the following officials and organizations to initiate a technology assessment: the chair of any standing, special, or select committee of either chamber of Congress, or of any joint committee of the Congress, acting on their own behalf or at the request of either the ranking minority member or a majority of the committee members; the TAB; or the Director, in consultation with the TAB. Congress might opt to expand this list to include any Member of Congress or at the request of a certain number of Members of Congress; reduce the list to include only some or one of those currently authorized; or to authorize the OTA Director to initiate assessments without any additional approval. Congress might also provide guidance to the OTA Director on prioritization of requests for technology assessment. Administrative provisions. The statute currently provides a variety of administrative authorities in areas such as personnel; contracting; real and personal property acquisition; recordkeeping; cooperation with executive and legislative branch agencies; and a proscription on operating laboratories, pilot plants, and test facilities. Congress may wish to review the existing authorities with respect to possible modifications, eliminations, or additions to these provisions.", "Potential advantages of this approach include the opportunity to address previously identified OTA issues, to improve agency performance, and to address concerns during debate on reestablishment.", "One disadvantage to this approach may be an inability to achieve a consensus on how the OTA statute should be revised, reducing the likelihood of the agency's reestablishment. For those who see an immediate need for OTA-type analyses, a second disadvantage is that the agency's reestablishment could be delayed by hearings or studies on proposed changes, as well as consideration of amendments that might be offered to the revisions. "], "subsections": []}, {"section_title": "Option: Charge an Existing Agency or Agencies with New or Expanded Technology Assessment Authorities and Duties", "paragraphs": ["At the time OTA was defunded, some Members of Congress anticipated that one or more government agencies might expand their capabilities to meet Congress's need for technology assessments. This section describes options for establishing technology assessment functions within two legislative agencies, GAO and CRS."], "subsections": [{"section_title": "Expand the Government Accountability Office's Technology Assessment Function", "paragraphs": ["In FY2002, at the direction of Congress, GAO began developing a technology assessment capability, publishing reports intended to \"explain the consequences that certain technology will have on the federal government\u00e2\u0080\u0094and on society as a whole.\" Congress might leverage or authorize these efforts.", "One advantage of this approach is that it would build on an existing capability within the legislative branch. At Congress's direction, GAO has produced technology assessments since 2002 and has recently established a new STAA team with a growing staff of science and technology experts. Another advantage would be GAO's reputation for high quality analytical work. ", "One potential disadvantage is that, unlike the singular focus of OTA on technology assessment, this would be only one of several functions of GAO. A Washington Post editorial in 2018 noted that GAO has an institutional culture centered on audits and investigations, and asserted that it lacks \"a larger permanent staff of subject experts with whom legislators can build relationships, as well as the independence to better compete for resources.\"", "An analysis of technology assessment options for Congress written by the American Action Forum, a not-for-profit organization, identified other potential weaknesses. The analysis asserted that GAO reports do not feature many policy options, unlike OTA reports; GAO lacks the in-house expertise OTA had, limiting its ability to counsel Members of Congress; and GAO's consultancy services\u00e2\u0080\u0094\"arguably the most important part of any technology assessment program, given the fast pace of technology policy\"\u00e2\u0080\u0094need reform. The analysis suggested, however, that GAO could potentially address these shortcomings with additional congressional direction and resources. "], "subsections": []}, {"section_title": "Create a Technology Assessment Function in the Congressional Research Service", "paragraphs": ["The Congressional Research Service, a service unit of the Library of Congress, provides comprehensive research and analysis on all legislative and oversight issues of interest to Congress. CRS has a staff of about 600, including approximately 320 analysts and attorneys and 100 information professionals. CRS has expertise in a variety of policy fields, including many fields of science, engineering, and technology as well as S&T policy. ", "Much of CRS's work is provided in the form of consultancy in response to inquiries from Members of Congress, their personal staff, and congressional committee staff. ", "Most of the analytical work of CRS experts is short-term in nature\u00e2\u0080\u0094measured in hours, days, or weeks\u00e2\u0080\u0094and conducted to meet specific requests of staff working on legislative or oversight issues. Some of CRS's longer and more analytically complex reports may take several months to produce. In contrast, OTA reports generally took 18 months or longer to produce.", "CRS does not have a statutory mission to perform technology assessments, nor has CRS otherwise received direction from Congress to conduct technology assessments. CRS has a statutory mission to prepare and provide information, research, and reference materials and services to Congress\u00e2\u0080\u0094to include House and Senate committees, joint committees of Congress, and Members of the Senate and House of Representatives. CRS serves Congress and not the public.", "At the time Congress defunded OTA, some Members of Congress, including those on the House Appropriations Committee, anticipated that the Congressional Research Service might undertake some of the work performed by OTA. In 1999, CRS reorganized its operational structure and embedded science and technology analysts in CRS units in which science and technology issues were an important part of broader issue areas (e.g., energy, environment, health, defense). A smaller cadre of analysts in a discrete science and technology unit focused primarily on science and technology policy issues writ-large (e.g., policies associated with research and development funding and activities, technology transfer, innovation). Some have asserted that this change diminished CRS's ability to fill the gap left by OTA's closure. In his book, Congress's Own Think Tank , Peter Blair asserted that", "The unintended result was a significant dilution of CRS's capability to cover science and technology policy issues. It was never realistic to presume that CRS was in a position to fill the void left by OTA's closure.", "Alternatively, CRS management and some policy analysts believed that the reorganization improved CRS's ability to provide more comprehensive analysis to Congress.", "Potential advantages of using CRS to conduct technology assessments might include CRS's reputation for providing Congress with authoritative, confidential, objective, timely, and nonpartisan analysis in support of congressional legislative and oversight activities, as well as CRS's current cadre of experts in science, engineering, technology, and S&T policy.", "Disadvantages include CRS's lack of experience and expertise in conducting in-depth technology assessments of the type historically performed by OTA. While CRS could potentially acquire such experience and expertise, this approach would require a departure from CRS's current work and organizational culture. It might also require additional financial resources, expanded facilities, the hiring of additional management and staff, and potentially the establishment of a new organizational unit within CRS devoted to technology assessment. While current staff with science, engineering, and technology expertise could contribute to the establishment of such a unit within CRS, that might detract from their ability to provide the analyses and services the agency currently provides to Congress. "], "subsections": []}]}, {"section_title": "Option: Use the National Academies for Technology Assessment", "paragraphs": ["Since its founding under a congressional charter in 1863, the National Academies have been an authoritative source of high-quality expertise on science, engineering, and health matters for Congress and the nation. The National Academies produces analyses in seven major program areas: Behavioral and Social Sciences and Education, Earth and Life Studies, Engineering and Physical Sciences, Gulf Research, Health and Medicine, Policy and Global Affairs, and Transportation Research.", "Members of each component of the National Academies\u00e2\u0080\u0094the National Academy of Sciences, National Academy of Engineering, and National Academy of Medicine\u00e2\u0080\u0094elect new members based on outstanding and continuing achievements in their fields. Academy members, together with other experts, serve pro bono on committees conducting National Academies studies and reports:", "Each year more than 6,000 of the world's foremost scientists, engineers, and health professionals volunteer their time to address some of society's toughest challenges by serving on the hundreds of study committees that are convened to answer specific sets of questions. Our peer-reviewed reports present the evidence-based consensus of these committees of experts.", "At the time of OTA's defunding, some policymakers and analysts postulated that the National Academies (as well as other nongovernmental organizations such as universities) might undertake technology assessments. Representative Jack Kingston, chairman of the Subcommittee on Legislative Branch Appropriations, reiterated this perspective in House floor debate on FY2005 legislative branch appropriations:", "In 1995 on a bipartisan level, we eliminated [OTA], and the belief at that time was that there were other committees that we could turn to to get technology studies and technology assessment. Some of these, for example, are the National Academy of Sciences, the National Academy of Engineering, the Institute of Medicine, and the National Research Council. All of them have hundreds of people who are technically educated.", "However, according to author Peter Blair, while the National Academies saw a short-term increase in congressional requests for reports following the closure of OTA, demand returned to its previous levels shortly thereafter:", "The increased use of the [National Academies], however, was short-lived, lasting only one year\u00e2\u0080\u0094the number of congressionally mandated or requested [National Academies] reports doubled in the 105 th Congress (1997-1998) to 59, up from the historical average of about 22 studies (e.g., in the 104 th Congress [1995-1996] as OTA was closing down), but interestingly then dropped back to the historical average by the 107 th Congress (2001-2002).", "It is unclear why the number of requests for National Academies fell after the initial increase. Among the possibilities: a decrease in demand for science and technology information and advice; a perception that such reports were not meeting Congress's needs in terms of factors such as relevance, timeliness, or actionability; and increased fiscal constraints.", "The National Academies study process is highly structured, methodical, and deliberate. The process includes four major stages: defining the study; committee selection and approval; committee meetings, information gathering, deliberations, and drafting of the report; and report review. This process includes checks and balances \"at every step in the study process to protect the integrity of the reports and to maintain public confidence in them.\" Accordingly, some assert that the National Academies is not structured to respond to congressional needs in a timeframe consistent with the pace of legislative decisionmaking\u00e2\u0080\u0094a criticism also made of OTA.", "In 2006, Peter Blair, in his capacity as executive director of the National Academy of Sciences' Division of Engineering and Physical Sciences, testified at a House Science Committee hearing on scientific and technical advice for Congress. In his written statement, Blair cited timeliness and cost as factors that could impede the National Academies' utility to legislative decisionmakers. With respect to timeliness, Blair stated that the average time for completion of a National Research Council (NRC) study was 18 months, but that it can take longer. He attributed this lengthiness to the study process (described above), coordination of the schedules of busy study committee members, and the time required for peer review, editing, production, and release. Blair noted further that, before a study can even begin, each congressionally mandated National Academies study must be defined and funded under negotiated contracts with federal agency sponsors:", "[It] often takes six to nine months [to move] through a government procurement process to initiate an NRC study even after a mandated study has been enacted in law (or included in report language). For those studies mandated by Congress, an additional delay often results from the time needed to enact the relevant legislation.", "With respect to cost, Blair noted a widely held perception that the cost of National Academies studies was high, attributing this in part to the negotiation of separate contracts \"for each study, unlike the central funding for agency advisory committees.\" ", "Further, Blair noted that it is difficult for an organization to serve many different types of needs:", "Like any process designed to serve many needs, the NRC study process is not perfectly tuned to serve all government needs. For example, our process is less well equipped, currently, to go beyond technical analysis, to gauge the broader policy implications of alternative actions, especially those implications that may involve fundamental value judgments or tradeoffs for which it may be difficult or impossible to achieve consensus. ", "To address some of these perceived shortcomings, Blair suggested the potential utility of establishing a sub-unit of the National Academies that would employ \"a study process specifically adapted to congressional needs, adopting more of an OTA-like study model with base support and contracting capability as well as a task-order like funding mechanism.\" ", "Potential advantages of using the National Academies to perform technology assessments include the organization's long-standing credibility and strong reputation for technical expertise and authoritative, objective, high-quality scientific and technical analysis; its congressional charter to help inform public policymakers on matters of science and technology; and its members' depth and breadth of knowledge across the spectrum of science and engineering disciplines.", "As discussed above, potential disadvantages of relying on the National Academies to provide technology assessments to Congress include concerns about its cost, timeliness, and ability to assess and advise on implications involving non-scientific, non-technical value judgements and trade-offs.", "Ultimately, the National Academies serves Congress as a private, nonprofit corporation negotiating a contract with the government\u00e2\u0080\u0094with all the advantages and disadvantages that process involves\u00e2\u0080\u0094and does not serve as a part of the legislative branch. "], "subsections": []}, {"section_title": "Option: Rely on a Broad Range of Existing Organizations for Scientific and Technical Analysis and Technology Assessment", "paragraphs": ["While some identify a need for an organization to produce the types of technology assessments previously produced by OTA, others assert that Congress already has access to all of the scientific and technical advice it needs. Still others assert that the issue is not a lack of S&T information, but rather whether Congress uses existing sources effectively when making policy decisions. ", "Congress may obtain scientific and technical analysis (and, in some cases, advice and recommendations) from a wide array of entities, including federal executive branch agencies, GAO, CRS, federally chartered advisory committees, federally funded research and development centers, the National Academies, academic researchers, industry and trade associations, professional organizations, businesses, not-for-profit organizations, advocacy groups, think tanks, labor organizations, and others. The types of information and analysis these organizations provide, and their authoritativeness, objectivity, independence, timeliness, and cost, vary widely. ", "A key advantage of relying on existing agencies is that the infrastructure, people, and processes are currently in place, reducing the time and logistical complexities (e.g., hiring, acquiring space, establishing processes and procedures) associated with establishing new organization. In addition, relying on existing organizations may also reduce legislative hurdles associated with establishing a new organization.", "The primary disadvantage of this approach, according to some, is that the information some of these entities currently provide to Congress may lack authoritativeness, objectivity, or independence. A key factor in the creation of OTA in 1972 was a perceived need for Congress to have its own, independent source of scientific and technical expertise, capable of providing in-depth technology assessments, provided by an institution responsive to the needs and timing of the legislative process. Some of the entities identified above, and the analysis they perform, may not embody all these characteristics. "], "subsections": []}]}, {"section_title": "Science and Technology Advice to Congress: Identifying Needs and Avoiding Duplication in Meeting Them", "paragraphs": ["Congress uses information and analysis about science and technology and its implications to inform its deliberations and decisions that affect the U.S. economy, national security, quality of life, standard of living, public health and well-being, and other matters of national policy. A wide range of organizations provide science and technology information and analysis directly and indirectly to Congress. Some of these organizations are public, some private, and some quasi-governmental. Among the public organizations, some are part of the executive branch and others are in the legislative branch (i.e., CBO, CRS, and GAO). Some in Congress believe that there is a need to re-create OTA or an OTA-like organization, or to assign OTA-like responsibilities to an existing organization to meet Congress's unique information needs and produce analysis not currently being provided by existing organizations; others disagree. Some believe that a new organization should be established to handle some or all of the science and technology information and analysis services OTA was authorized to provide.", "Duplication of capabilities has been a concern expressed by some within Congress and external observers during debate about the establishment of OTA, during debate about the defunding of OTA, and during subsequent debate and discussions about reestablishing OTA or OTA-like capabilities. Most parties agree on the need to prevent the creation of duplicative organizations or functions, and to eliminate (or at least minimize) duplicative organizations, duplicative functions within organizations, and duplicative work, along with the costs associated with them.", "To avoid duplication and meet its information and analysis needs, Congress may wish to further the process of", "identifying the science and technology analysis it needs to support its deliberative processes and decisions; determining which federally funded organizations (e.g., federal agencies, quasi-public, and other nonprofit organizations) are currently charged with addressing the identified needs and how effectively the organizations address these needs; identifying areas of overlap or duplication of authorities and activities of the organizations and their components; identifying areas of need that are not being addressed by these organizations; and determining whether such needs can best be met by an existing organization or organizations; whether the identified needs merit the creation of a new organization, organizations, or the extension of the capabilities of an existing organization; or whether the costs of obtaining additional science and technology information and analysis outweighs the need.", "Appendix A. An Historical Overview of the Definition of Technology Assessment", "The definition of the term technology assessment has a long history of discussion and debate. Much of this discussion occurred in the late 1960s and early 1970s during the efforts that ultimately led to the establishment of the Office of Technology Assessment in 1972. This appendix offers a variety of perspectives on the meaning of technology assessment in the context of public policy.", "In the House of Representatives, the Committee on Science and Astronautics' Subcommittee on Science, Research, and Development played a leading role in the exploration of technology assessment to assist policymakers. In 1969, Representative Emilio Q. Daddario, chairman of the subcommittee, stated that technology assessment was identified as a major activity of the subcommittee in 1965. ", "In 1967, Representative Daddario introduced H.R. 6698 (90 th Congress) to establish a Technology Assessment Board for the purpose of", "identifying the potentials of applied research and technology and promoting ways and means to accomplish their transfer into practical use, and identifying the undesirable by-products and side-effects of such applied research and technology in advance of their crystallization and informing the public of their potential in order that appropriate steps may be taken to eliminate or minimize them.", "That same year, Representative Daddario put forth in a written statement, published as a committee print, the following definition of technology assessment:", "Technology Assessment is a form of policy research which provides a balanced appraisal to the policymaker. Ideally, it is a system to ask the right questions and obtain correct and timely answers. It identifies policy issues, assesses the impact of alternative courses of action and presents findings. It is a method of analysis that systematically appraises the nature, significance, status, and merit of a technological program. The method may well vary from case to case\u00e2\u0080\u00a6.", "Technology Assessment is designed to uncover three types of consequences\u00e2\u0080\u0094desirable, undesirable, and uncertain. The benefits that accrue from technology are naturally the driving force for its application. Economic growth is fostered by more convenient and efficient services or by new and less expensive goods. Society benefits when technology is developed around some value or goal, consistent with democracy. Undesirable consequences, sometimes played down by calling them harmful side effects, can be expected with most innovations. Technology means change\u00e2\u0080\u0094change to the natural environment, change in personal habits and behavior, change in social and economic patterns, and not infrequently, change in the legal and political processes. While many of these changes are beneficial, many are disruptive and dislocative. They change situations more rapidly than the pace at which individuals can adjust. The well-known cultural lag finds its logical beginnings in the phenomena. Assessment of the risks is a necessary concomitant to assessment of the benefits. ", "Uncertain consequences are the third type to be identified and assessed. Available information may point out early that an effect will occur and can give no idea of the degree of impact. When the severity of impact is not known further research is often warranted\u00e2\u0080\u00a6. In general, experimentation and pilot projects are required to determine what proscriptions might be necessary before the technology is able to successfully diffuse through society. ", "If assessment is a method of policy research that identifies the amount and type of change for alternative course of action and provides a balanced appraisal of each alternative, then what is the scope of technology assessment? What will it try to measure? What timeframe will it consider? What yardsticks will be used? How does assessment differ from other methods of analysis?", "Answers to these questions will more concisely define Technology Assessment and more closely show its relationship to the policymaking process. ", "Technology Assessment for the Congress will deal for the most part with applications in the United States. It is worth noting though, that the entire world, and even outer space, is the system with which we are concerned\u00e2\u0080\u00a6. The international aspects of Technology Assessment will become more important as the power and ubiquity of man-made forces continue to increase\u00e2\u0080\u00a6.", "To assess technology one has to establish cause and effect relationships from the action or project source to the locale of consequences. ", "A direct or immediate effect is easy to spot and assess. The direct effects, in turn, will cause other consequences\u00e2\u0080\u0094indirect or derivative effects. As the scope of assessment moves outward in time the derivative effects become the result of many causes and not of one specific technological change\u00e2\u0080\u00a6. ", "The function of technology assessment is to identify all of these [impacts and trends]\u00e2\u0080\u0094both short-term and long range. The emphasis though will be on the short-term impacts that can be measured by natural science parameters. That is, the focus of Technology Assessment will be on those consequences that can be predicted with a useful degree of probability. Possible changes in values, attitudes, or motivations are important but not easily predicted. These changes are usually long term and fall beyond the primary focus of Technology Assessment. Therefore, because of their slow evolution, present human values and political motivations will serve as the frame of reference for purposes of measurement and appraisal. ", "Assessment is a form of policy research and is not technological forecasting or program planning. It is a balanced analysis of how a technological program could proceed with the benefits and risks of each policy alternative carefully described. It incorporates prediction and planning, but only to expose the potential consequences of the program. ", "Assessment is an aid to, and not a substitute for, judgment. Technology Assessment provides the decision maker with a list of future courses of action backed up by systematic analysis of the consequences. In this sense it is an analytical study that could be prepared by anyone. Its utility would be enhanced if it was undertaken for a particular policymaking group that could sketch in the nature of the problem for the study team beforehand. In a broader sense, assessment is part of the legislative process. Our subcommittee will gather and assess information before we can make any judgments. Part of this information will be actual assessment studies prepared for the subcommittee by scientific community and the Science Policy Research Division [of the Legislative Research Service, later renamed the Congressional Research Service]. When viewed as either a method of research or a part of the legislative process, Technology Assessment serves to provide information tailored to the constraints and needs of the policymaking process.", "Shortly after assuming office in 1969, President Richard Nixon established the National Goals Research Staff, \"a small, highly technical staff, made up of experts in the collection, correlation and processing of data relating to social needs, and in the projection of social trends.\" The announcement of its formation offers a perspective on the Nixon Administration's view of the importance and role of technology assessment:", "We can no longer afford to approach the long-term future haphazardly. As the pace of change accelerates, the processes of change become more complex. Yet at the same time, an extraordinary array of tools and techniques has been developed by which it becomes increasingly possible to project future trends\u00e2\u0080\u0094and thus to make the kind of informed choices which are necessary if we are to establish mastery over the process of change.", "The functions of the National Goals Research Staff will include", "forecasting future developments, and assessing the long-range consequences of present social trends;", "measuring the probable future impacts of alternative courses of action, including measuring the degree to which changes in one area would likely affect another;", "estimating the actual range of social choice\u00e2\u0080\u0094that is, what alternative sets of goals might be attainable, in light of the availability of resources and possible rates of progress;", "developing and monitoring social indicators that can reflect the present and future quality of American life, and the direction and rate of its change; and", "summarizing, integrating, and correlating the results of related research activities being carried on within the various Federal agencies, and by State and local governments and private organizations.", "The National Goals Research Staff was directed to produce a report by July 4, 1970, \"to help illuminate a possible range of national goals for [the U.S. Bicentennial].\" In July 1970, the organization released its first (and only) report, Towards Balanced Growth: Quantity with Quality , describing technology assessment:", "Advanced technology of all sorts produces unexpected and often unwanted indirect consequences. A movement called \"technology assessment\" now advocates a more pervasive and systematic assessment of the social costs and benefits of both new and existing technology. The main issues are: To what extent should the use of new and old technology be restricted because of adverse side effects? What institutional mechanisms might assess and regulate technology? What effect would such a policy have on economic growth and on the size and nature of our technological and scientific establishments?\u00e2\u0080\u00a6", "In short, what is meant by technology assessment is nothing more than a systematic planning or forecasting process that delineates options and costs, encompassing economic, environmental, and social considerations (both external and internal) and with special focus on technology-related \"bad,\" as well as \"good,\" effects.", "In moving toward the establishment of the Office of Technology Assessment, Congress sought and received input from a number of sources about technology assessment in the context of public policy. ", "At the request of the House Committee on Science and Astronautics, reports on technology assessment were delivered by the National Academy of Sciences (NAS) and the National Academy of Engineering (NAE) in 1969, and the National Academy of Public Administration (NAPA) in 1970. ", "The National Academy of Sciences' report, Technology: Processes of Assessment and Choice , emphasizes the absence of a unitary concept of technology assessment and emphasizes that different views vary with the interests and perspectives of the proponent:", "The choice \u00e2\u0080\u00a6 is between technological advance that proceeds without adequate consideration of its consequences and technological change that is influenced by a deeper concern for the interaction between man's tools and the human environment in which they do their work. ", "For those who hold this more balanced view, the expression \"technology assessment\" may acceptably describe what occurs when the likely consequences of a technological development are explored and evaluated. Their objective is to improve the quality of such efforts at exploration and evaluation of our technological order. But the concept of improved technology assessment is by no means a unitary one; it suggests different things to different people. The contents and focus of the notion vary with the vital interests and perspectives of its many proponents. ", "To some, concerned primarily with the preservation and enhancement of environmental quality , technology assessment suggests evaluation of technical changes or applications from the perspective of their likely impact on various environmental goals and resources\u00e2\u0080\u0094or the exploration of how particular environmental objectives might be affected, beneficially or adversely, by the growth and speed of various technologies\u00e2\u0080\u00a6.", "To others, concerned with the measurement of social change as a step toward the achievement of broad national goals, technology assessment connotes the use of new tools to monitor the impacts on society of technical changes (among others) and to improve the quality of feedback from social effects to technological (and other) developments\u00e2\u0080\u00a6.", "Yet another group is concerned broadly with the need for greater foresight and planning to guide technological change with more timely and comprehensive balancing of total costs against total benefits. To this group, technology assessment means an attempt to project the likely growth and probable impacts of specific technologies.\u00e2\u0080\u00a6", "Another group, concerned with improving the allocation of public resources, views technology assessment as a means of identifying and measuring the possible uses of technologies generated by federally supported research and development activities. Of special concern to this group is the supposed transfer of space and defense technology and management techniques to the civilian sector, particularly for the solution of major social problems related to urbanization, such as housing, crime, transportation, and municipal services.", "And to still others, whose concerns lie with better program and policy evaluation and who do not restrict their attention to resource allocation, technology assessment represents one component of planning-programming-budgeting (PPB). Their emphasis is upon developing more precise definitions of program objectives as they related to national goals and priorities; more specific and unbiased criteria for assessing program potentiality and performance in cost-benefit terms; and more successful ways of modifying old programs or proposing new programs with the help of such analytic devices.", "The National Academy of Engineering's report, A Study of Technology Assessment , states that one of its underlying concerns entering the study\u00e2\u0080\u0094a concern expressed by a number of technology assessment skeptics\u00e2\u0080\u0094was that the outcome of such assessments would primarily be to impede technology commercialization. Nevertheless, the NAE report concluded that technology assessment could prove a useful tool for legislators:", "When the Committee on Public Engineering Policy first undertook its assignment to explore the concept of technology assessment, we were concerned about the concept's utility and practicality. Prior to our feasibility studies, we felt\u00e2\u0080\u0094perhaps as others may have\u00e2\u0080\u0094that results from such assessments might become primarily impediments to the uses of technology. We can now reflect on the collective experience of nearly 50 participants in this work, which is summarized in this report. ", "First of all, we now feel that useful methodologies are available for technology assessment and that more adequate ones can be developed through practice. Second, our experiences show that task forces of experts specifically constituted for particular technology assessments can accumulate data and develop insight on the potential impacts of technology on society. Third, our preliminary work shows that such task forces can propose a variety of national strategies for modulating the effects of technology or society, thereby providing the legislator with a better base for his judgments on the role of government in influencing technology.", "The National Academy of Public Administration's report, A Technology Assessment System for the Executive Branch , noted that assessment at that time had only dealt with narrow first-order effects within the assessing agency's scope of interest, and only technical and economic second-order effects. The report advocates a wider, systemic, and more complex perspective approach to technology assessments: ", "Simply stated, technology assessment is the evaluation of the impacts of new, developing, or established technologies, including, but not limited to, those which the Federal Government may support or regulate\u00e2\u0080\u00a6. Most assessments of the consequences of introducing a technology are incomplete, if not superficial. Commonly, they include few first-order consequences outside the assessing agency's program interests or statutory responsibility, and only technical and economic analyses of second-order consequences. Good assessments should consider the interactions of population, environment, technology, society, and the economy.", "The House Subcommittee on Science, Research, and Development also requested a report from the Legislative Reference Service (LRS, later the Congressional Research Service) of the Library of Congress, which was delivered in 1971. The report, Technical Information for Congress, included the following description of technology assessment:", "Before, during, and after the building of a technological system, it is necessary to identify and study the consequences of its operation. The objective is to improve the management of the total technological society, including the minimizing of consequences which are unintended, unanticipated, and unwanted. Assessment includes forecasting and prediction, retroactive evaluation, and current monitoring and analysis. Measurements involve non-economic, subjective values as well as direct, tangible quantifications. Above all, assessment requires that catastrophic consequences of each proposed new technology be foreseen and avoided before the new technology becomes entrenched in the socioeconomic complex of human organization.", "During this period, other organizations offered their views of technology assessment. In December 1971, The Futurist, a bi-monthly magazine with articles on technological, societal, and public policy trends, offered this definition: ", "[Technology assessment is] a reasoned response to the stress that a rapidly changing and expanding technology puts on our complex and increasingly industrialized, urbanized, and densely populated society. It attempts to make the process of coping with technological development more systematic and rational. Technology assessment can be viewed as a mixture of early warning signals and visions of opportunity. Or as a device for protecting man from his own technological creativity. Or as a formal mechanism for allocating scientific resources, setting technological priorities, and seeking more benign alternatives for technologies already in use. Or as an attempt to control and direct emerging technologies so as to maximize the public benefits while minimizing public risks.", "In the act establishing OTA in 1972 (P.L. 92-484), Congress implicitly defined technology assessment in its findings and declaration of purpose for the agency: ", "As technology continues to change and expand rapidly, its applications are large and growing in scale and increasingly extensive, pervasive, and critical in their impact, beneficial and adverse, on the natural and social environment. Therefore, it is essential that, to the fullest extent possible, the consequences of technological applications be anticipated, understood, and considered in determination of public policy on existing and emerging national problems....", "[I]t is necessary for Congress to equip itself with new and effective means for securing competent, unbiased information concerning the physical, biological, economic, social, and political effects of such applications; and utilize this information, whenever appropriate, as one factor in the legislative assessment of matters pending before the Congress, particularly in those instances where the Federal Government may be called upon to consider support for, or management or regulation of, technological applications.", "In 1973, the Congressional Research Service, in response to a request from the House Subcommittee on Science, Research, and Development of the Committee on Science and Astronautics, prepared Science Policy: A Working Glossary . This glossary, published as a committee print, included the following definition for technology assessment:", "A generalized process for the generation of reliable, comprehensive information about the chain of technical, social, economic, environmental, and political consequences of the substantial use of a technology, to enable its effective social management by decisionmakers. Initially advanced as an instrument to provide advice to political decisionmakers, the concept has been increasingly accepted as a policy service within corporate management of private businesses.", "In one of its first reports, Requirements for Fulfilling a National Materials Policy , published in August 1974, the Office of Technology Assessment stated its mandate as being directed to", "provide early indication of the probable benefits and adverse impacts of technology and to develop other coordinate information which assists the Congress. Among other specific functions the OTA is charged with identifying impacts of technology, ascertaining cause and effect relationships, identifying alternate technological methods, identifying alternate programs, comparing the impacts of alternate programs, presenting analysis to appropriate legislative bodies, and identifying areas where additional research or data collection is required.", "In 1975, the American Bar Association's Section of Science and Technology held a program on \"Technology Assessment\u00e2\u0080\u0094Legal and Policy Implications\" at the organization's annual meeting. In his opening statement, the chair of the section, Ronald A. May, relied on the definition of technology assessment used in a survey conducted on behalf of the National Science Foundation:", "Technology Assessment is \"the process of identifying actual or potential secondary effects of a technological development (or of a set of interrelated technological developments) on social, political, economic, and/or environmental values or institutions.\"", "In his remarks, May posed the question: What does technology assessment mean for lawyers? In response to this question, May noted that", "Ten times as many [technology assessments] that were studied in this survey were \"problem initiated\" as opposed to \"technology initiated.\" In other words, only one out of ten [technology assessments] had been done because somebody developed a new technology and decided they wanted to assess its impact. Stated conversely, in nine out of ten [technology assessments] there was a problem, and the technology was studied on that account. Lawyers are problem solvers, so this is significant.", "May also observed that while technology assessments were performed for the purpose of influencing executive decisions in corporations and to influence agency and legislative decisionmakers, \"very little [technology assessment] was done to influence judicial decision-making.\"", "In 1995, during the period in which Congress was considering whether to discontinue funding for OTA, one critic reflected back to the time leading up to the establishment of OTA, noting concerns held by some that technology assessments would become a tool to stifle innovation and technological commercialization. Alan Porter, director of the Georgia Tech Technology Policy and Assessment Center, noted both the ambiguity of the term technology assessment and those concerns: ", "It should not shock us that two general, widely used, and ambiguous terms\u00e2\u0080\u0094'technology' and 'assessment'\u00e2\u0080\u0094when combined, do not yield a singular meaning. Nonetheless, we can track and even, perhaps, make sense of the usage of 'technology assessment'. The initiation of [technology assessment] in the late 1960s in the USA engendered lively discussion along two distinct streams. The more direct sought to devise an effective policy analysis mechanism to help the U.S. Congress better cope with executive branch proposals. The other, philosophical in bent, concerned the broad roles of technology in society, seeking to help society better manage technology. Both streams struck fear in those committed to technology-based free enterprise, as expressed in charges that TA meant 'technology arrestment.' ", "In a 1970 House Subcommittee on Science, Research, and Development field hearing to explore the relationship between technology assessment and environmental problems, one academic critic asserted that technology assessment as proposed by subcommittee chairman Representative Emilio Daddario was \"conceptually impossible\" and that instead market forces should be used to guide and control technology:", "I feel I cannot let pass unchallenged the assumption that technology assessment of the type described [by the chairman] is a useful or even a harmless exercise, or is, indeed, possible\u00e2\u0080\u00a6. I am not suggesting a less ambitious role for Congress because I think the impact of technology on society is unimportant, but precisely because I think it is extremely important\u00e2\u0080\u0094so important in fact that it should be not left to the Congress of the United States to assess and control technology.\u00e2\u0080\u00a6 ", "The first problem confronting anyone who attempts technology assessment is that it can't be done. It is conceptually and practically impossible to determine what the impact of any particular technological gadget will be, let alone evaluate these effects and find benefit/cost or benefit/risk ratios. Even if our foresight were as good as our hindsight it would be impossible\u00e2\u0080\u00a6. The world, and especially human societies, are just too complex and interrelated for anyone, or any committee, to determine the direct and derivative effects of technology, even in the past\u00e2\u0080\u00a6. Everybody knows, of course, that technology assessment is at best a very difficult task; I am suggesting it is more than difficult, it is conceptually impossible\u00e2\u0080\u00a6. ", "[However,] technology can be and has been guided and controlled, by social institutions which encourage its development and application in socially desirable ways. The primary social institution which has guided technology has been the market\u00e2\u0080\u00a6. On the whole, this system has worked very well, without the need for any official body to assess all the long-term effects of each new technological process as it appeared.", "More recent definitions of technology assessment are also varied and echo the same themes present in the definitions from the 1960s and 1970s.", "Appendix B. Selected Trends and Factors That May Contribute to a Perceived Need for Technology Assessment", "A variety of reports published in 2019, together with proposals by some Members of Congress and others outside of Congress, have asserted that Congress needs a bolstered technology assessment capability to inform its policy decisions. This section describes selected trends and factors that may contribute to this perspective, including the rapid pace of technological change, the globalization of R&D, the role of science and technology (S&T) in the U.S. economy, the role of S&T in national security, the increasing complexity of technology, the advent of new information and communications technologies, and the role of S&T in other aspects of public policy. The role of new and powerful technologies in industry, national security, society, and the global balance of power may have important implications for congressional policy decisions, including policies related to their development and application, as well as in preventing, mitigating, and remediating potential adverse effects.", "Rapid Pace of Technological Change", "Technology\u00e2\u0080\u0094the application of scientific and other knowledge for practical purposes\u00e2\u0080\u0094is advancing rapidly, and by some measures it is growing at an accelerating pace. This growth is fueled, in part, by increased public and private investments in R&D. A variety of technologies have seen rapid growth\u00e2\u0080\u0094magnetic data storage, DNA sequencing, wired and wireless data transmission technologies\u00e2\u0080\u0094some continuing this growth over multiple decades. For example, as illustrated in Figure B-1 , the number of transistors on a microchip since 2001 has grown exponentially. While this chart only shows data since 1971, the rapid growth can be traced back to the invention of the integrated circuit. Similarly, Figure B-2 shows rapid growth in the number of human genome base pairs that can be sequenced per dollar. (Note: Figure B-1 and Figure B-2 show growth on a logarithmic scale where each increment on the y-axis represents a 10-fold increase. A logarithmic scale is often used when analyzing a large range of data.)", "Countries are aggressively pursuing R&D directed at goals such as innovation, competitiveness, economic growth, wealth creation, productivity improvements, national security, and quality of life. Companies are pursing R&D for innovations that yield new and better products and processes, market advantage, and cost reductions, enabling them to serve new and existing markets and increase their profitability. Since OTA was defunded, total global gross expenditures on research and development (GERD) have grown rapidly. In 2017 total GERD was $1.9 trillion, more than 3.9 times its level in 1996 ($504 billion), measured in current purchasing power parity dollars. Measured in constant dollars, the real purchasing power of global R&D increased more than 150% between 1996 and 2017. (See Figure B-3 .)", "These growing global investments in R&D are delivering new technologies, products, and services with potentially substantial societal implications. Some of these advances are evolutionary\u00e2\u0080\u0094offering incremental improvements on the technologies, products, and services already in use\u00e2\u0080\u0094while other advances are revolutionary with the potential, according to some analysts, to disrupt markets, companies, industries, occupations, and the balance of economic and military power. ", " Figure B-4 shows the number of utility patents (\"patents for inventions\") granted by the U.S. Patent and Trademark Office each year from its establishment in 1790 to 2015, another metric illustrating rapid growth in the development of new technology. It took more than 200 years for USPTO to issue its 5 millionth patent; 27 years later, on June 19, 2018, the USPTO issued its 10 millionth patent. ", "While there is consensus on the rapid growth in technology, not all agree that the pace of technological change is accelerating. For example, considering technological change through the lens of technology adoption, one information technology expert notes that", "The time it takes for a new technology to be used in 50 percent of U.S. homes has long been used as a comparative adoption benchmark. By this standard, both radio and television were accepted faster than personal computers or mobile phones. More importantly, most Internet of Things (IoT) technologies\u00e2\u0080\u0094Fitbits, smart watches, 3D printers\u00e2\u0080\u0094are being adopted even more slowly.", "Globalization of Research and Development", "The United States' share of global R&D expenditures fell from 69% in 1960 to 28% in 2017 as other countries increased their R&D investments, both public and private, some quite substantially. In recent years, China has accounted for a large share of global R&D growth. Between 1996 and 2016, China increased its investments from $14.2 billion to $451.2 billion (measured in current PPP dollars), an increase of more than 3,000%, to become the world's second largest funder of R&D, behind only the United States. (See Table B-1 .) During the same period, U.S. R&D grew 158%. In constant 2010 PPP dollars, between 1996 and 2017 China's ", "R&D investment grew by 2,279% while investment by the U.S. in R&D measured in constant 2010 PPP dollars grew by 86%.", "In addition to developing new technologies, nations around the world are adopting and deploying these technologies to meet their economic, social, and military objectives. This development, adoption, and deployment may have significant implications for not only their own countries, but for the United States as well. On the one hand, for example, the adoption of these technologies could increase the prosperity of other countries, creating potential new markets for American products and services. On the other hand, the indigenous development of technological capabilities in countries other than the United States and its allies may limit the United States' ability to control access to military technologies and may reduce the influence of the United States in the establishment of standards for the ethical and safe use of new technologies. The United States might also lose its technology leadership in key fields, long considered a key component in the strength of the U.S. economy.", "Role of Science and Technology in the U.S. Economy", "Economists have long maintained that advances in science and technology play an important role in U.S. and global economic growth, productivity, job creation, and standard of living. These benefits flow from factors such as new and improved products, improvements in manufacturing technologies, the reorganization of work, and enabling and improving services. For example, S&T discovery has played an important role in extracting and exploiting America's energy resources\u00e2\u0080\u0094through the advancement of fracking, horizontal drilling, and sonic imaging technologies used in oil and gas production\u00e2\u0080\u0094and in reducing the cost and improving the performance of alternative energy sources such as solar and wind.", "Role of Science and Technology in National Security", "Science and technology have played a central role in U.S. national security and military strength\u00e2\u0080\u0094from the weapons systems developed during World War II (e.g., nuclear weapons, radar, sonar, microelectronics) to those developed during the Cold War period and after (e.g., advanced nuclear weapons, intercontinental ballistic missiles (ICBMs), multiple independently targetable reentry vehicles (MIRVs), satellites, stealth fighter and bomber aircraft, nuclear-powered naval vessels, precision targeting, and information- and network-centric systems for intelligence, surveillance, and reconnaissance). Military strategists and analysts anticipate future U.S. defense capabilities are likely to rely heavily on advances in leading-edge technologies such as artificial intelligence, autonomy, nanotechnology, advanced computing and communications, augmented reality, and hypersonics.", "Increasing Complexity of Technology", "Innovation has become increasingly multidisciplinary. Some of the most promising fields involve the intersection of two or more powerful technologies, such as artificial intelligence and autonomy (e.g., driverless cars, package delivery by drones); high-speed computing, big data, and biotechnology (e.g., personalized medicine, synthetic biology, epidemiology, identifying the relationships between genes and particular diseases); and sensors and the internet (e.g., supply chain management and optimization, health self-monitoring, persistent scientific observation). The marriage of disparate technologies may lead to powerful and unanticipated new technologies with widespread societal implications. ", "Role of Science and Technology in Other Aspects of Public Policy", "Science and technology also play key roles in many other aspects of public policy. For example, biomedical R&D contributes to the development of new drugs and treatments for illness, disease, and other medical issues. Advances in science and technology in the biomedical field may contribute to human longevity, healthiness, and quality of life. Consequently, they may have implications for a wide array of federal programs. ", "Similarly, advances in science and technology in a variety of fields may contribute to meeting a wide range of public policy objectives: ", "in agriculture, advances could contribute to ensuring national and global food and nutrition needs are met; in transportation, advances may help to save lives and reduce the environmental impacts of automobiles, trucks, trains and other modes of transportation; in energy, advances may help to make energy sources less costly and more abundant, to cost-efficiently tap renewable sources of energy, and to reduce the environmental impacts of its use; advances in understanding weather and climate may help reduce the loss of lives, the cost of property damage, and the time required for recovery; in criminal justice, advances may help to quickly and more accurately identify criminals and to prevent the prosecution of the innocent; and in industrial applications, advances may contribute to economic growth and job creation. ", "At the same time, advances in science and technology can also raise complex societal, ethical, and legal challenges with which legislators grapple. ", "Appendix C. OTA/Technology Assessment-Related Legislation in the 107 th -116 th Congresses", "116 th Congress", "The House Select Committee on the Modernization of Congress voted out recommendations that included \"reestablishing and restructuring an improved Office of Technology Assessment.\" This specific recommendation was not included in the recommendations included in the Moving Our Democracy and Congressional Operations Towards Modernization Resolution ( H.Res. 756 ) which was passed by the House on March 10, 2020. ", "The Legislative Branch Appropriations Act, 2020 ( H.R. 2779 ) would have provided $6.0 million in initial funding to reestablish the Office of Technology Assessment. The House Committee on Appropriations reported the bill on May 16, 2019, accompanied by H.Rept. 116-64 , which states", "As requested by a number of Members of Congress, the Committee bill includes $6,000,000 in initial funding to reestablish the Office of Technology Assessment (OTA). This Legislative Branch agency was created in 1972 and operated until funding was discontinued in 1995. ", "To do its job in this modern era, Congress needs to understand and address the issues and risks resulting from a wide range of rapid technological developments such as cryptocurrencies, autonomous vehicles, gene editing, artificial intelligence, and the ever-expanding use of social media platforms, to give just a few examples. A re-opened OTA will play an important role in providing accurate, professional, and unbiased information about technological developments and policy options for addressing the issues those developments raise. In that role, OTA will complement the work of the Government Accountability Office in the area of science and technology. ", "P.L. 116-94 , the Further Consolidated Appropriations Act, 2020, which included the Legislative Branch Appropriations Act, 2020, as Division E, was enacted December 20, 2019. The act did not include an appropriation for reestablishing OTA.", "On September 19, 2019, Representative Mark Takano introduced H.R. 4426 , the Office of Technology Assessment Improvement and Enhancement Act. On the same day, Senator Thom Tillis introduced S. 2509 , a nearly identical bill with the same title. Both bills bill would amend OTA's statute in a variety of ways, including ", "renaming OTA as the Congressional Office of Technology (the office); directing that the work of the office \"be provided as expeditiously, effectively, and efficiently as possible while maintaining a forward-looking, holistic, and rigorous approach to the assessment of the impacts of technology\"; expanding office reporting to Congress from \"completed analysis\" to \"completed analyses, as well as preliminary findings of ongoing analyses\"; adding three additional duties of the office: \"provide information to Members and committees of Congress in the form of briefings, informal conversations, documents, and similar formats which may be provided expeditiously on the basis of existing research and staff expertise without the need for review by the Board; provide technical assistance to Members of Congress on legislation related to science and technology which may be provided expeditiously on the basis of existing research and staff expertise without the need for review by the Board; and, when requested, provide objective policy options to Members on how Members may achieve goals with respect to science and technology policy\"; expanding the list of who may initiate assessment activities to include any Member of Congress, including a Delegate or Resident Commissioner, and providing the office the authority to determine whether to undertake an assessment according to a number of specified criteria; requiring completed analyses be made available to the public, subject to certain restrictions; authorizing the director of the office to make limited term or temporary appointments scientists, engineers, and other technical and professional personnel on leave of absence from academic, industrial, or research institutions to work for the office; requiring the office to coordinate with CRS and GAO to avoid unnecessary duplication or overlapping of research activities; changing the authority for House and Senate appointments to the Technology Assessment Board to be made jointly by leaders of the majority and minority parties in each body; and requiring the TAB to hold at least one meeting each year at which Members of Congress may appear and present information to the TAB about any technology assessment activities the Members would like the TAB to undertake, and requiring an annual report by the TAB to the Subcommittees on the Legislative Branch of the Committees on Appropriations of the House of Representatives and Senate on the activities of the office during the year, including a description of the technology assessment activities undertaken during the year.", "H.R. 4426 was referred to the House Committee on House Administration; no further action had been taken at the time of this report. S. 2509 was referred to the Senate Committee on Rules and Administration; no further action had been taken at the time of this report.", "115 th Congress", "In September 2018, H.Rept. 115-929 , accompanying the Energy and Water, Legislative Branch, and Military Construction and Veterans Affairs Appropriations Act, 2019 ( P.L. 115-244 ), provided direction to both CRS and GAO on matters related to providing science and technology policy support and technology assessment to Congress. ", "In the report, Congress directed CRS to engage with the National Academy of Public Administration (NAPA) or another external organization to produce a report that identifies resources available to Congress on science and technology policy; assesses the need for a separate entity to provide nonpartisan advice on issues of science and technology to Congress; determines whether such an organization would duplicate services already available to Members. ", "In H.Rept. 115-929 , Congress also expressed its interest in GAO growing its current capabilities to provide expanded technology assessment capacity by reorganizing its technology and science function by creating a new more prominent office within GAO. Congress directed GAO to provide within 180 days a plan and timetable for how the new office could expand and enhance GAO's capabilities in scientific and technological assessments. ", "Other amendments and resolutions introduced in the 115 th Congress also sought to provide funding to reestablish OTA or to affirm the need for its reestablishment:", "Representative Mark Takano introduced H.Amdt. 219 to H.R. 3219 , the Defense, Military Construction, Veterans Affairs, Legislative Branch, and Energy and Water Development National Security Appropriations Act, 2018, on July 26, 2017. The amendment would have provided $2.5 million to reinstitute OTA, offset by funds from the Architect of the Capitol's Capital Construction and Operations Account. The amendment was not agreed to. Representative Mark Takano introduced H.Amdt. 761 to H.R. 5895 , the Energy and Water, Legislative Branch, and Military Construction and Veterans Affairs Appropriations Act, 2019, to reinstitute OTA, offset by funds from an administrative account within the Architect of the Capitol. The amendment was not agreed to.", "Representative Bill Foster introduced H.Res. 849, a resolution \"expressing the sense of the House of Representatives that the Office of Technology Assessment should be reestablished,\" on April 26, 2018, with 21 cosponsors. The resolution would have expressed the sense of the House of Representatives that \"the legislative process would greatly benefit from once again having an office dedicated to giving nonpartisan, technical advice to Congress; the Office of Technology Assessment represents a cost-effective improvement to the governance of the United States; and funding should be restored for the Office of Technology Assessment.\" The resolution was referred to the House Committee on Administration. No further action was taken.", "Earlier Congresses", "In the 107 th -114 th Congresses, there were a number of efforts to reestablish OTA by authorizing or appropriating funding. Other legislative efforts have sought to express a \"sense of the House\" or \"sense of the Senate\" that OTA should be reestablished. A summary of each of these efforts is provided below, in reverse chronological order: ", "In the 114 th Congress, Representative Mark Takano introduced H.Amdt. 117 to H.R. 5325 , the Continuing Appropriations and Military Construction, Veterans Affairs, and Related Agencies Appropriations Act, 2017, and Zika Response and Preparedness Act, on June 10, 2016. The amendment would have provided $2.5 million to reinstitute OTA, offset by funds from the Architect of the Capitol's Capital Construction and Operations Account. The amendment was not agreed to by the House, by a vote of 179-223.", "In the 114 th Congress, Representative Bill Foster introduced H.Res. 605, a resolution \"expressing the sense of the House of Representatives that the Office of Technology Assessment should be reestablished,\" on February 4, 2016, with 14 cosponsors. The resolution would have expressed the sense of the House of Representatives that \"the legislative process would greatly benefit from once again having an office dedicated to giving nonpartisan, technical advice to Congress; the Office of Technology Assessment represents a cost-effective improvement to the governance of our country; and funding should be restored to the Office of Technology Assessment.\" The resolution was referred to the House Committee on Administration. No further action was taken.", "In the 113 th Congress, Representative Rush Holt introduced H.Amdt. 649 to H.R. 4487 , the Legislative Branch Appropriations Act, 2015, on May 1, 2014. The amendment would have provided $2.5 million to reinstitute OTA, offset by funds from the House Historic Buildings Revitalization Trust Fund. The amendment was not agreed to. In the 112 th Congress, Representative Rush Holt introduced H.Amdt. 711 to H.R. 2551 , the Legislative Branch Appropriations Act, 2012, on July 22, 2011. The amendment would have provided $2.5 million to reinstitute OTA, offset by funds from the House Historic Buildings Revitalization Trust Fund. The amendment was not agreed to. In the 110 th Congress, S. 1602 , the Clean, Reliable, Efficient and Secure Energy Act of 2007, was introduced by Senator Chuck Hagel on June 12, 2007. Title V, Subtitle C of the bill would have renamed the Technology Assessment Act of 1972 as the Office of Technology Assessment Reestablishment Act of 2007, and would have authorized appropriations of $25 million per year for OTA for FY2008 through FY2013. The bill was referred to the Senate Committee on Energy and Natural Resources. No further action was taken. In the 108 th Congress, H.R. 125 , a bill \"to reestablish the Office of Technology Assessment,\" was introduced by Representative Rush Holt on January 7, 2003, with 65 cosponsors. The bill would have renamed the Technology Assessment Act of 1972 as the Office of Technology Assessment Reestablishment Act of 2003, and would have authorized appropriations of $20 million per year for OTA for FY2004 through FY2009. The bill was referred to the House Committee on Science's Subcommittee on Space and Aeronautics. No further action was taken. In the 107 th Congress, H.R. 2148 , a bill \"to reestablish the Office of Technology Assessment,\" was introduced by Representative Rush Holt on June 13, 2001, with 87 cosponsors. The bill would have renamed the Technology Assessment Act of 1972 as the Office of Technology Assessment Reestablishment Act of 2001, and would have authorized appropriations of $20 million per year for OTA for FY2002 through FY2007. The bill was referred to the House Committee on Science's Subcommittee on Space and Aeronautics. No further action was taken.", "A CRS search of Congress.gov identified no legislation seeking to reestablish OTA during either the 105 th Congress or 106 th Congress.", "Appendix D. GAO Technology Assessments", "2019 /2020", "Artificial Intelligence in Health Care: Benefits and Challenges of Machine Learning in Drug Development , GAO-20-215SP, December 20, 2019. (This product was reissued with revisions on January 31, 2020.)", "Irrigated Agriculture: Technologies, Practices, and Implications for Water Scarcity , GAO-20-128SP, November 12, 2019.", "2018", "Critical Infrastructure Protection: Protecting the Electric Grid from Geomagnetic Disturbances , GAO-19-98, December 19, 2018.", "Technology Assessment: Artificial Intelligence: Emerging Opportunities, Challenges, and Implications , GAO-18-142SP, March 28, 2018.", "Chemical Innovation: Technologies to Make Processes and Products More Sustainable , GAO-18-307, February 8, 2018.", "2017", "Medical Devices: Capabilities and Challenges of Technologies to Enable Rapid D iagnoses of I nfectious D iseases , GAO-17-347, August 14, 2017.", "Internet of Things: Status and Implications of an Increasingly Connected W orld , GAO-17-75, May 15, 2017.", "2016", "Technology Assessment: Municipal F reshwater S carcity: Using T echnology to I mprove D istribution S ystem E fficiency and T ap N ontraditional W ater S ources , GAO-16-474, April 29, 2016.", "2015", "Technology Assessment: Water in the Energy Sector: Reducing Freshwater Use in Hydraulic Fracturing and Thermoelectric Power Plant Cooling , GAO-15-545, August 7, 2015.", "Technology Assessment: Nuclear Reactors: Status and Challenges in Development and Deployment of New Commercial Concepts , GAO-15-652, July 28, 2015.", "2011", "Technology Assessment: Neutron Detectors: Alternatives to Using Helium-3 , GAO-11-753, September 29, 2011.", "Technology Assessment: Climate Engineering: Technical Status, Future Directions, and Potential Responses , GAO-11-71, July 28, 2011.", "2010", "Technology Assessment: Explosives Detection Technologies to Protect Passenger Rail , GAO-10-898, July 28, 2010.", "2005", "Technology Assessment: Protecting Structures and Improving Communications D uring Wildland Fires , GAO-05-380, April 26, 2005.", "2004", "Technology Assessment: Cybersecurity for Critical Infrastructure Protection , GAO-04-321, May 28, 2004.", "2002", "Technology Assessment: Using Biometrics for Border Security , GAO-03-174, November 15, 2002."], "subsections": []}]}}
{"id": "R45876", "title": "Federal Personal Property Disposal: Procedures and Reforms", "released_date": "2019-08-20T00:00:00", "summary": ["Federal personal property is generally defined as anything the government owns that is not real property. Common examples of personal property include furniture, cars, laptops, scientific equipment, and machinery. Sound management of the government's personal property inventory\u00e2\u0080\u0094which is valued at more than $1 trillion\u00e2\u0080\u0094is necessary to mitigate the risk of waste, fraud, and loss. Federal statutes and regulations require agencies to regularly survey their personal property inventories and dispose of items they no longer need (excess personal property). When an agency identifies excess property, it must first offer it at no charge to other federal agencies. If excess property is not transferred to another federal agency, it is then declared \"surplus\" and may be transferred to a State Agency for Surplus Property (SASP) for distribution to state and local governments and nonprofits. Surplus personal property that is not donated may be sold to the public. Unsold surplus property may be abandoned or destroyed (including through recycling).", "Personal property surveys may identify items that are still needed, are near the end of their useful lives, and need to be replaced. Agencies have the authority to exchange (trade in) or sell the items that need to be replaced and apply the credit (from an exchange) or sales proceeds to the acquisition of similar items. The method of replacement chosen\u00e2\u0080\u0094exchange or sale\u00e2\u0080\u0094should maximize the potential offset to the cost of acquiring new items.", "The government may realize cost savings when agencies regularly survey their inventories and dispose of excess and surplus property in a timely manner. Federal expenditures may be reduced when one agency's excess personal property is used to fill another agency's need and when replacement items are acquired in the most cost-effective manner. Federal expenditures may be further reduced if, as a result of disposing of unneeded items, agencies are able to decrease the amount of space needed to store personal property. Similarly, state and local governments and nonprofits may be able to reduce their expenditures if they obtain surplus federal personal property at no charge.", "According to federal auditors, agencies do not consistently fulfill the government's personal property disposal requirements. Some agencies do not regularly survey their inventories\u00e2\u0080\u0094often because they have not identified who is responsible for implementing the surveys. Agencies have been allowed to establish their own threshold for accountable personal property\u00e2\u0080\u0094items with longer useful lives and higher acquisition costs\u00e2\u0080\u0094below which items are not tracked. As a consequence, some agencies have set accountability thresholds higher than others, thereby excluding more items from regular monitoring and disposition. Agencies have also been able to set their own thresholds for capitalized personal property, which are the items with the longest lives and highest acquisition costs. Capitalized personal property is subject to additional reporting and evaluation requirements, so higher thresholds reduce the scope of oversight. Similarly, some agencies do not identify and dispose of unneeded personal property on an ongoing basis. Rather, they may wait until they face a \"triggering event,\" such as an office relocation or other real property transition. Without adequate planning for these events, the disposal of unneeded personal property could potentially delay the project and increase costs. Many agencies are unclear on how to use their exchange/sale authorities and often do not choose the option that would provide the greatest potential financial benefits to the government.", "The Federal Personal Property Management Act of 2018 ( P.L. 115-419 ) seeks to address these inconsistent policies and practices. The legislation requires the General Services Administration (GSA) to establish government-wide capitalization and accountability thresholds. It also requires GSA to issue guidance that directs agencies to conduct an annual inventory and assessment of capitalized personal property to identify which items, if any, are no longer needed and should be declared excess. The guidance must also require agencies to regularly inventory and assess their accountable personal property.", "Implementation of the Federal Assets Sale and Transfer Act of 2017 (FASTA; P.L. 114-287 ) may result in the disposal of dozens or hundreds of government buildings within the same time frame. FASTA requires agencies to work with GSA to develop a list of recommended real property projects, including the sale, conveyance, consolidation, and reconfiguration of space. GSA submits the recommendations to a newly established Public Buildings Reform Board, which reviews them and submits a revised list to the Office of Management and Budget (OMB) director. If the OMB director approves of the list in its entirety, then all of the recommendations must be implemented within six years. Incorporating personal property plans into the FASTA process may mitigate the risk of delays resulting from the disposition of excess items."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Background", "paragraphs": ["Personal property management is a complex undertaking, as federal agencies must track, evaluate, dispose of, and replace a vast array of items. Personal property is defined as any property that is not real property (land, buildings, and structures), with the exception of certain naval vessels (battleships, cruisers, aircraft carriers, destroyers, and submarines). Everything else that an agency owns is considered personal property: Desks, computers, vehicles, and laboratory equipment are common examples. Given the size and distribution of the federal workforce\u00e2\u0080\u0094more than 4 million federal civilian and military full-time equivalents are housed at thousands of locations across the country and overseas\u00e2\u0080\u0094the acquisition and maintenance of personal property has required sustained investment by the government. In FY2017, federal agencies reported $1.3 trillion in personal property assets. ", "Effective management of federal personal property is necessary to prevent waste, fraud, and loss. Each agency is responsible for implementing policies and procedures\u00e2\u0080\u0094known as internal controls\u00e2\u0080\u0094that mitigate risk and promote the efficient use of federal assets. Internal controls help an agency answer fundamental questions about its personal property inventory, such as:", "Does the agency know what it owns? Does the agency need everything it has? Is the agency disposing of unneeded assets so that other agencies or the public may make use of them? Is the agency getting the best price on replacement items? What safeguards are in place to make it difficult to steal or misuse personal property? ", "The Office of Management and Budget (OMB) provides agencies with broad guidance on establishing internal controls via Circular A-123. Specific guidance for agency personal property policies and procedures is primarily located in the Federal Management Regulation, which is promulgated by the General Services Administration (GSA). In addition, Appendix B of Circular A-123 establishes requirements for internal controls over the management of federal charge cards, which includes safeguards for the receipt of personal property acquired with purchase cards. Personal property management is a relatively decentralized process, and there is no government-wide source of data on agency inventories. ", "Policymakers and federal auditors have shown particular interest in the disposal of personal property, as recent assessments demonstrate that agencies fail to identify and dispose of items they no longer need. Agencies must continually survey their property holdings, identify items that are not needed, and dispose of any unneeded property by", "transferring it at no cost to other federal agencies, donating it to state or local entities, selling it to the public, or abandoning or destroying it. ", "Executive agencies use this process to dispose of tens of thousands of items a year. When agencies do not efficiently track, inventory, and dispose of unneeded (excess) property, agencies increase federal expenditures and waste the unused value of personal property assets. For example, an agency may purchase items they could have obtained at no cost from another agency's excess inventory, and property that is lost or stolen when not properly inventoried may need to be replaced. When federal agencies do not follow a sound property management process, state and local entities may lose the opportunity to acquire excess federal property at no charge, resulting in higher costs for them when serving the public. The federal government also incurs greater storage expenses when agencies hold onto excess property and loses revenue from potential sales. To address these concerns, Congress passed the Federal Personal Property Management Act of 2018 (Personal Property Act; P.L. 115-419 ), which establishes new inventory tracking and assessment requirements for federal agencies.", "This report begins with a discussion of federal personal property management guidance, then examines weaknesses in agency policies and procedures. Next, the report analyzes the Personal Property Act and how it may address weaknesses in the personal property disposal process. The report concludes with observations on the intersection of real property and personal property. "], "subsections": []}, {"section_title": "The Personal Property Disposal Process", "paragraphs": ["The personal property disposal process begins when an agency determines it no longer needs certain items. To ensure that agencies are able to identify unneeded or \"excess\" personal property in a timely manner, they are required to maintain adequate property controls and continually survey their inventories to determine the utility of each item. ", "When an agency identifies excess property, it has the option to transfer an item directly to another federal agency, provided the item had an acquisition cost of less than $10,000. Excess property with an acquisition cost of $10,000 or more may be transferred directly to another federal agency with verbal approval from the appropriate GSA regional office. Generally, direct transfers are made at no charge for the property itself, but the requesting agency is responsible for transportation and shipping costs. Agencies may also perform a direct transfer of computers or peripheral tools (e.g., modems and printers) to schools or educational nonprofits through the Computers for Learning Program, which was established pursuant to Executive Order 12999, \"Educational Technology: Ensuring Opportunities for All Children in the Next Century,\" and encompasses educational institutions for children in pre-kindergarten through secondary school.", "If an agency does not perform a direct transfer of excess personal property, it must promptly report the property to GSA. Excess property may be reported online through the GSAXcess system, electronic batch, or hard copy. Once excess property is reported to GSA, it undergoes a 21-day screening process, during which the property may be viewed online (if it was entered into GSAXcess by the reporting agency) or inspected onsite (at the agency). During the 21-day period, excess personal property may be transferred to other federal agencies as well as to the Senate, the House of Representatives, the Architect of the Capitol, the District of Columbia government, and certain mixed-ownership government corporations.", "If no federal agency requests the excess property, then it is declared \"surplus,\" and GSA has five days to donate it at no charge to eligible recipients. Such recipients include state and local governments; municipal agencies; and nonprofits that provide support for education, public health, or veterans groups. The surplus personal property is not transferred directly to the recipients. Rather, each state has a State Agency for Surplus Property (SASP), which receives the property and distributes it to qualified agencies and organizations.", "Surplus personal property that is not donated within the five-day period may be sold to the general public. GSA makes surplus property for sale available on its public auction website and may also sell property through live auctions, fixed price or negotiated sales, sealed bids, or spot bids. Generally, proceeds from the sale of surplus property are deposited into the U.S. Treasury, less the cost of disposition.", "Items that do not sell may be recycled, abandoned, or destroyed if they have no value or the estimated cost of their continued care and handling exceeds the estimated proceeds from sale. "], "subsections": [{"section_title": "Disposal by Sale or Exchange to Purchase Replacement Items", "paragraphs": ["At times, agencies may need to replace personal property that is not excess or surplus. This occurs when an agency still needs a certain category of property to achieve its mission, but some items are no longer able to adequately perform the job, perhaps due to their age or lack of needed functionality. Vehicles that are near the end of their useful lives fit into this category, as does aging medical equipment. In this instance, executive branch agencies have the authority to exchange (trade in) or sell the old property and apply the exchange allowance or sales proceeds toward the purchase of similar items. The purpose of this authority is to reduce the cost of acquisition, and agencies are required to choose the option\u00e2\u0080\u0094exchange or sale\u00e2\u0080\u0094that results in the greatest savings. An agency that opts to sell personal property must use the proceeds to purchase a new similar item within one year.", "Federal agencies generated $3.1 billion in exchange allowances and sales proceeds that were applied to new purchases between FY2013 and FY2017. Of this total, sales accounted for $2.9 billion and exchanges accounted for $275 million. GSA accounted for 60% of the total allowances and sales proceeds ($1.9 billion), while four other agencies\u00e2\u0080\u0094the Departments of Homeland Security, Agriculture, Defense, and the Interior\u00e2\u0080\u0094together accounted for $934 million. Vehicle sales were the primary source of exchange allowances and sales proceeds, accounting for 71% ($2.6 billion) of the total. "], "subsections": []}]}, {"section_title": "Weaknesses in the Disposal Process", "paragraphs": ["While GSA plays a central role in screening and transferring excess personal property, each executive agency is responsible for continually surveying its own inventory and declaring unneeded property \"excess\" in a timely manner. When agencies do not fulfill these duties, government resources are not used efficiently, and public funds may be expended unnecessarily. A federal agency may purchase items that could have been obtained at no charge from another agency's excess inventory, for example, or a state government may expend public funds to acquire equipment it could have obtained for free from a federal warehouse. In addition, agencies did not always obtain the maximum exchange allowance or sales price when replacement items were needed. The variance in agency disposal policies and practices likely contributes to wasteful and inefficient use of federal personal property."], "subsections": [{"section_title": "Lack of Accountability", "paragraphs": ["Generally, agencies designate officials, known as property custodians, who are responsible for personal property management and disposal. A 2018 report by the Government Accountability Office (GAO) examined the personal property policies of five agencies and found that while all five had broad policies that required ongoing surveys of personal property, only one specified that their custodians were responsible for doing so. A separate audit of the Environmental Protection Agency (EPA) found that while EPA's policies required annual inventories, the agency did not provide adequate oversight of the contractors hired to perform them. As a consequence, the annual inventories were inaccurate and incomplete. When surveys are performed irregularly, or records are of poor quality, an agency is at risk of holding onto excess property that could be better used elsewhere.", "An audit of the Federal Aviation Administration (FAA) found that the agency's organizational structure created problems for implementing the continual survey requirement. Personal property policies at FAA were developed by the Aviation Logistics Organization, but the custodians who were supposed to follow those policies were not subject to the organization's authority. Moreover, auditors found that custodians were not evaluated by their direct supervisor on how well they performed their personal property duties. This lack of oversight may have contributed to the auditor's findings that FAA property custodians did not perform required inventories or maintain accurate records of equipment. Of the FAA's 2,330 cost centers (subdivisions with personal property), nearly 8% had never been inventoried, resulting in thousands of items worth tens of millions of dollars being retained by the agency regardless of FAA's need for them. The misalignment of policies and internal structure resulted in the agency potentially holding onto property it did not need, thereby limiting opportunities for other entities to access these assets and driving up storage costs unnecessarily."], "subsections": []}, {"section_title": "Lack of Adequate Guidance", "paragraphs": ["In some cases, agencies did not provide sufficiently detailed guidance on the types of personal property to survey. Agencies typically divide their inventories into three accounting categories:", "1. Capitalized property generally has the highest original acquisition cost. Property in this category has the longest useful expected life and is depreciated and reported as an asset in an agency's annual financial statement. An example would be equipment with an original acquisition cost above the capitalization threshold. 2. Accountable property is nonexpendable personal property with an expected useful life of two years or longer that an agency decides should be tracked in its property records based on its original acquisition cost and sensitivity. Agencies typically record capitalized property as accountable property because of its high acquisition costs, while laptops are considered accountable because of the sensitive information they may contain, regardless of original cost. Agency vehicles that fall below the capitalization threshold are typically considered accountable property. 3. Non-accountable property falls below the accountable property threshold and is not considered sensitive. Desks and chairs are common examples of non-accountable property, provided they fall below the accountability threshold.", "Agencies are allowed to set their own personal property capitalization and accountability thresholds, which vary across the government. EPA, for example, set its capitalization threshold at $25,000, while the FAA set its capitalization threshold at $100,000. Similarly, the Department of Housing and Urban Development set its threshold for accountable property at $5,000, while GSA set its accountable property threshold at $10,000. The variation in thresholds leads to a variation in inventory management, particularly as it relates to disposal: Agencies often do not track or assess the need for non-accountable items. Some agencies argue that the amount of manpower needed to track low-value items is too high to make it cost-effective, while others say it is not required by law, so they choose not to do so. ", "OMB has taken the position that assessing non-accountable property is necessary for effective internal controls. For example, tracking non-accountable property may prevent unnecessary purchases. After an audit of EPA's Landover warehouse determined that the property stored there had not been fully assessed for need, the agency inventoried thousands of items of non-accountable personal property and transferred $90,000 in excess furniture and carpet to its Research Triangle Park campus and $137,000 in property to another federal agency. Additional cost savings may result from the reduced need for warehouse space. Auditors estimated that disposing of excess non-accountable property at EPA's Landover and Cincinnati warehouses could save $5.8 million in warehouse lease costs over a five-year period.", "Agencies may also lack policies that provide custodians with criteria for determining whether personal property is excess, which can result in inconsistent practices across the government. One exception is the Internal Revenue Service, which provides guidance on assessing need, such as whether an item is still needed in its current location and, if not, whether it would be cost-effective to transport the item to another location. Without clear criteria, it is possible that custodians have deemed property as non-excess that may, in fact, be unneeded by the agency\u00e2\u0080\u0094thereby reducing disposals and increasing the likelihood that agencies will make unnecessary purchases and rent more warehouse space than they would have if the inventory had been performed with more specific guidance."], "subsections": []}, {"section_title": "Lack of Timely Reporting", "paragraphs": ["One consequence of failing to regularly survey accountable and non-accountable property is that agencies do not report excess property in a timely manner. Some unneeded property may sit in warehouses for long periods of time. EPA, for example, kept multiple refrigerators in storage at its Landover warehouse for seven years. During that time, the agency expended funds unnecessarily on storage space for the refrigerators and lost the opportunity to dispose of them to another government agency or nonprofit that serves the public. In many cases, agencies do not report excess property until a \"triggering event\" forces the issue, such as an office relocation, consolidation, or renovation. Typically, agencies try establish a plan to dispose of items such as unneeded furniture or computers during a triggering event to make the transition easier and to make space for new property that may be part of the move. A disposal plan sets milestones, identifies the staff and other resources needed, and gives specific directions on what needs to be done to complete disposition in a timely manner.", "The amount of excess personal property identified during a triggering event may grow as some agencies implement OMB's Reduce the Footprint (RTF) initiative. In an effort to decrease the amount of space federal agencies own and lease, RTF requires each agency subject to the Chief Financial Officers Act to submit an annual Real Property Efficiency Plan. The plan must include new design standards for employee workstations. GSA, for example, reduced its standard for usable square feet in new or renovated offices from 150 per person to 136. (Agencies do not have to retrofit existing buildings under RTF. ) When agencies relocate or renovate, their existing furniture may not fit the reduced space allotments, thereby rendering hundreds or thousands of items of personal property excess at one time. Without careful planning, agencies may find it challenging to dispose of their existing furniture and acquire new furniture during a transition."], "subsections": []}, {"section_title": "Exchange/Sale Authority", "paragraphs": ["As noted, executive agencies have the authority to exchange (trade in) or sell used property and apply the exchange allowance or sales proceeds to the cost of acquiring replacement items. According to federal auditors, not all agencies use this authority to maximize the benefits it affords, and many agencies use the authority sparingly, if at all.", "Knowledge of how to use the exchange/sale authority varies across and within agencies\u00e2\u0080\u0094especially when an agency has a decentralized disposal process. Each of the 172 medical centers of the Department of Veterans Affairs (VA), for example, monitors its needs and orders replacement equipment, but VA officials reported that the exchange/sale process was not well understood in some centers. As a consequence, some medical centers opted to exchange equipment that would have generated a greater monetary return had it been sold, while others were not clear on whether they were permitted to sell equipment when exchange was also an option.", "Some agencies may need additional guidance or training to facilitate greater use of the exchange/sale authority. GAO found that of the 27 agencies that reported exchange/sale transactions from FY2013 through FY2017, a subset of 10 agencies used the authority on a limited basis. While these agencies may not use the authority because they do not have suitable property to sell or exchange, GSA officials said they believe that a primary factor is lack of knowledge. Similarly, a VA official stated that if VA medical centers had better guidance, their use of the exchange/sale authority might increase.", "Auditors have found that some agencies, notably GSA and VA, have not monitored and reported their exchange/sale transactions correctly. GSA officials said they do not know the extent to which internal offices have, or should be using, the authority. Officials stated that the lack of monitoring has been due to the low level of priority that GSA has placed on personal property management in general. VA officials conducted limited monitoring of their use of the authority, and audits found widespread reporting errors. One medical center reported about 1,000 sales transactions under the exchange/sale authority\u00e2\u0080\u0094all of which were incorrect. The medical center had mistaken sales of surplus property for sales of needed (non-excess, non-surplus) property that was being replaced. Another medical center reported no exchange transaction, but auditors found several, including one valued at $500,000. It may be difficult to assess the effectiveness of the authority\u00e2\u0080\u0094including the savings it generates\u00e2\u0080\u0094when monitoring is limited and reporting is inaccurate."], "subsections": []}]}, {"section_title": "Personal Property Legislation", "paragraphs": ["The Personal Property Act ( P.L. 115-419 ) was written to address the inconsistent standards in agency inventory practices and thresholds. To that end, Section 2 of the legislation requires the GSA administrator to issue guidance that will direct agencies to conduct an annual inventory and assessment of capitalized personal property to identify which items, if any, are no longer needed and should be declared excess. The guidance also requires agencies to regularly inventory and assess their accountable personal property.", "The evaluation of need for both capitalized and accountable personal property must consider:", "the age and condition of the personal property, the extent to which the executive agency uses the personal property, the extent to which the mission of the executive agency is dependent on the personal property, and any other aspect of the personal property that the administrator determines is useful or necessary for the executive agency to evaluate.", "Section 2 further requires agencies to establish capitalization and accountability thresholds for acquisitions of personal property. Agencies are also required to establish and maintain records of accountable property in a centralized system. The Personal Property Act was enacted in January 2019. GSA has not issued the required guidance as of the date of this report. "], "subsections": [{"section_title": "Analysis", "paragraphs": ["The Personal Property Act is designed to address several weaknesses in the property disposal process. It requires GSA to give better guidance to agencies for inventorying and assessing their capitalized and accountable property. A concern repeatedly voiced by agency officials and auditors was the lack of clear direction on how to set up an effective property oversight program, particularly with regard to assessing items for continued need. The determination that property is in excess initiates the disposal process, so improving agency assessment policies and practices may reduce the amount of unneeded property that agencies store and result in cost savings for warehouse space. By moving more excess property through the screening process, federal agencies, state and local governments, and nonprofits may have more opportunities to acquire personal property items at no cost, thereby reducing their expenditures as well. While the new guidance requirements do not extend to non-accountable property, they focus on the highest-value items in an agency's inventory. Given that some agencies may lack the manpower to perform ongoing surveys of all of their property, emphasizing management of capitalized and accountable property may be seen as a cost-effective use of limited resources.", "The Personal Property Act also requires GSA to set capitalization and accountability thresholds. Currently, agency thresholds may vary widely. As a result, agencies may treat the same property differently. An item that cost $7,500 might be above the accountability threshold at one agency\u00e2\u0080\u0094and be subject to more stringent inventory and assessment rules of the Personal Property Act\u00e2\u0080\u0094but below the threshold at another. Similarly, capitalized property must be recorded on an agency's balance sheet as an asset. The higher the capitalization threshold, the fewer assets are reported, which in turn affects the representation of the agency's financial position. Capitalized assets must also be depreciated\u00e2\u0080\u0094that is, the cost of an asset must be allocated to the programs and operating periods benefitting from use of the asset. By understating the number of assets an agency owns, high capitalization thresholds also reduce depreciation data, and the full cost of programs and operations may not be captured. Standardizing capitalization thresholds may improve agency financial reporting and program management by capturing a larger number of personal property assets. Standardizing accountability thresholds may also result in more consistent treatment of items with the same acquisition cost. Agencies with accountability thresholds above the level that GSA establishes may be required to expand the scope of their inventory surveys. If so, they may increase the number of items determined to be excess, resulting in reduced expenditures for storage, among other potential benefits."], "subsections": []}]}, {"section_title": "Personal Property Disposal and the Federal Assets Sale and Transfer Act", "paragraphs": ["The disposal of excess personal property is often initiated by \"triggering events,\" such as relocation, reconfiguration, or consolidation. In such cases, agencies appear to be unaware of the full scope of excess property in their inventories until they are tasked with moving or replacing it. If an agency is unprepared to manage the disposal of excess property during a transition to new space, whether temporary or permanent, it may cause delays or increase the costs associated with the move. ", "In August 2017, for example, GSA began the process of reconfiguring federally leased space at 26 Federal Plaza in New York City. The project, which has an estimated completion date of February 2020, required GSA to relocate several federal agencies to One World Trade Center during the reconfiguration. GSA did not have a plan to dispose of the excess personal property left behind at 26 Federal Plaza. Without a disposal plan in place, GSA did not ensure that sufficient staff were available to adequately manage the disposition of so many items. Moreover, GSA did not follow the required screening process in which unneeded property is first offered to federal agencies for 21 days, then offered to SASPs, then for put up for sale to the public, then considered for abandonment or destruction. Instead, GSA primarily relied on informal \"word of mouth\" communication with other federal agencies for disposition. The disposal process was further delayed by inadequate personal property records, which forced the relocated agencies to reassess their inventories. One year after the relocation was complete, \"a large volume of excess personal property\" remained at 26 Federal Plaza. This may delay the reconfiguration and increase the costs associated with the project.", "The issues observed during the 26 Federal Plaza reconfiguration may be experienced on a broader scale during implementation of the Federal Assets Sale and Transfer Act of 2016 (FASTA, P.L. 114-287 ), a sweeping piece of real property management legislation. FASTA requires federal landholding agencies to submit recommendations for the sale, transfer, conveyance, renovation, reconfiguration, or consolidation of unneeded real property. These recommendations are submitted to the GSA administrator, who reviews and edits them and then passes a government-wide list of proposals on to a newly established Public Buildings Reform Board. The board examines GSA's list of proposals, holds hearings on them, solicits additional proposals from the public, and compiles a revised list of recommendations to send to the director of OMB, who may approve or reject the board's recommendations in whole. If they are rejected, the board may resubmit its recommendations after reviewing the OMB director's explanation for the rejection. If the OMB Director approves either the initial or revised list, agencies must begin planning the implementation of all of the recommendations. Initial steps toward implementation must begin within two years and be completed within six years.", "The FASTA process could result in dozens\u00e2\u0080\u0094perhaps hundreds\u00e2\u0080\u0094of real property transitions taking place during the same time period. Many executive agencies may not have accurate inventories of their personal property, may not know the volume of excess inventory they may be required to dispose of, or may lack the resources to manage the disposal of excess personal property at multiple locations. Without adequate preparation, agencies may not be able to dispose of excess personal property in a timely manner, thereby disrupting the transition schedule. One possible way to mitigate these concerns would be for OMB and GSA to develop implementation guidance specific to managing personal property. The guidance might require agencies to prioritize property inventories at sites included in their FASTA recommendations and incorporate personal property disposal into their transition plans. In addition, the guidance might require agencies to request assistance from GSA if they lack the expertise or manpower to effectively dispose of excess property at given sites.", "In the future, policymakers might examine the potential benefits of expanding the Federal Real Property Profile (FRPP) to include personal property as well. The FRPP is a comprehensive, publicly accessible database of federally owned and leased buildings, structures, and land. Among other things, it provides data on the size and status of each property, such as square footage and whether it is needed, excess, or surplus. When populated with accurate data, the FRPP enhances the transparency of the federal real property inventory, facilitates policy analysis, and enables the public to search for information about properties that are currently or may become available for conveyance or purchase. Arguably, adding personal property data to the FRPP may provide similar benefits. An expanded FRPP could include agency inventories of capitalized property, thereby giving the public and policymakers a single source for data on much of the government's most expensive plant, property, and equipment investments. ", "The Personal Property Act requires agencies to have complete inventories of accountable property. Typically, accountable property (e.g., cars, medical equipment) has a shorter useful life than capitalized property and becomes excess sooner. By including data on accountable property, an expanded FRPP might enable policymakers to better evaluate the funding needs of agencies that face aging assets. It might also assist certain government agencies and nonprofits, as they may use the information to estimate when accountable federal property might be declared excess and therefore become available to them. The expanded FRPP might also include information on excess property, although it would need to be updated regularly to reflect the movement of property through the disposal process. Publishing data on excess property in this manner might help hold agencies accountable for completing their inventories and ensuring that disposal is completed in a timely manner."], "subsections": []}]}}
{"id": "R45948", "title": "The Controlled Substances Act (CSA): A Legal Overview for the 116th Congress", "released_date": "2019-10-09T00:00:00", "summary": ["The Controlled Substances Act (CSA) imposes a unified legal framework to regulate certain drugs\u00e2\u0080\u0094whether medical or recreational, legally or illicitly distributed\u00e2\u0080\u0094that are deemed to pose a risk of abuse and dependence. The CSA does not apply to all drugs. Rather, it applies to specific substances and categories of substances that have been designated for control by Congress or through administrative proceedings. The statute also applies to controlled substance analogues that are intended to mimic the effects of controlled substances and certain precursor chemicals commonly used in the manufacturing of controlled substances.", "Controlled substances subject to the CSA are divided into categories known as Schedules I through V based on their medical utility and their potential for abuse and dependence. Substances considered to present the greatest risk to the public health and safety are subject to the most stringent controls and sanctions. A lower schedule number corresponds to greater restrictions, so substances in Schedule I are subject to the strictest controls, while substances in Schedule V are subject to the least strict. Most substances subject to the CSA are also subject to other federal or state regulations, including the Federal Food, Drug, and Cosmetic Act (FD&C Act).", "The Drug Enforcement Administration (DEA) is the federal agency primarily responsible for implementing and enforcing the CSA. DEA may designate a substance for control through notice-and-comment rulemaking if the substance satisfies the applicable statutory criteria. The agency may also place a substance under temporary control on an emergency basis if the substance poses an imminent hazard to public safety. In addition, DEA may designate a substance for control under the United States' international treaty obligations. In the alternative, Congress may place a substance under control by statute.", "The CSA simultaneously aims to protect public health from the dangers of controlled substances diverted into the illicit market while also seeking to ensure that patients have access to pharmaceutical controlled substances for legitimate medical purposes. To accomplish those two goals, the statute creates two overlapping legal schemes. Registration provisions require entities working with controlled substances to register with DEA and implement various measures to prevent diversion and misuse of controlled substances. Trafficking provisions establish penalties for the production, distribution, and possession of controlled substances outside the legitimate scope of the registration system. DEA is primarily responsible for enforcing the registration provisions and works with the Criminal Division of the Department of Justice to enforce the trafficking provisions of the CSA. Violations of the registration provisions generally are not criminal offenses, but certain serious violations may result in criminal prosecutions, fines, and even short prison sentences. Violations of the trafficking provisions are criminal offenses that may result in large fines and lengthy prison sentences.", "Drug regulation has received significant attention from Congress in recent years, with a number of bills introduced in the 116th Congress that would amend the CSA in various ways. For example, after Congress passed several bills in recent years in response to the opioid crisis, additional proposals aimed at addressing the crisis are pending before the 116th Congress, including the John S. McCain Opioid Addiction Prevention Act ( H.R. 1614 , S. 724 ), which would limit practitioners' ability to prescribe opioids; the LABEL Opioids Act ( H.R. 2732 , S. 1449 ), which would require prescription opioids to bear certain warning labels; and the Ending the Fentanyl Crisis Act of 2019 ( S. 1724 ), which would increase criminal liability for illicit trafficking in the powerful opioid fentanyl. The 116th Congress has also considered measures specifically seeking to address the proliferation of synthetic drugs that mimic the effects of fentanyl, including the Stopping Overdoses of Fentanyl Analogues Act ( H.R. 2935 , S. 1622 ) and the Modernizing Drug Enforcement Act of 2019 ( H.R. 2580 ). In addition, multiple recent proposals would seek to address the divergence between federal and state marijuana laws. For example, the Secure And Fair Enforcement Banking Act of 2019 (SAFE Banking Act) ( H.R. 1595 , S. 1200 ) would seek to protect depository institutions that provide financial services to cannabis-related businesses from regulatory sanctions, and the Strengthening the Tenth Amendment Through Entrusting States Act (STATES Act) ( H.R. 2093 , S. 1028 ) would amend the CSA so that most provisions concerning marijuana do not apply to marijuana-related activities that comply with state law. Other proposals, such as the Legitimate Use of Medicinal Marihuana Act ( H.R. 171 ) and the Marijuana Justice Act of 2019 ( H.R. 1456 , S. 597 ) could address the gap between federal and state law in the area of marijuana regulation by moving marijuana from Schedule I to a less restrictive schedule or remove marijuana from the CSA's schedules. Finally, recent legislative proposals would aim to facilitate clinical research involving controlled substances, particularly marijuana. These various proposals raise a number of legal questions as Congress contemplates whether to change the laws governing controlled substances."], "reports": {"section_title": "", "paragraphs": ["P rescription drugs play a vital role in American public health. The Centers for Disease Control and Prevention (CDC) estimates that between 2011 and 2014 just under half of all Americans had used one or more prescription drugs in the last 30 days. On the other hand, unfettered access to drugs may pose serious public health risks. The CDC reports that in 2017 over 70,000 Americans died of overdoses on prescription and nonprescription drugs. The Controlled Su bstances Act (CSA or the Act) seeks to balance those competing interests. The CSA regulates controlled substances \u00e2\u0080\u0094prescription and nonprescription drugs and other substances that are deemed to pose a risk of abuse and dependence. By establishing rules for the proper handling of controlled substances and imposing penalties for any illicit production, distribution, and possession of such substances, the Act seeks to protect the public health from the dangers of controlled substances while also ensuring that patients have access to pharmaceutical controlled substances for legitimate medical purposes.", "This report provides an overview of the CSA and select legal issues that have arisen under the Act, with a focus on legal issues of concern for the 116th Congress. The report first summarizes the history of the CSA and explains how the regulation of drugs under the CSA overlaps with other federal and state regulatory regimes. It then outlines the categories\u00e2\u0080\u0094known as sch edules \u00e2\u0080\u0094into which controlled substances subject to the Act are divided and discusses how substances are added to the schedules. The report next summarizes the CSA's registration requirements, which apply to entities that register with the government to legally handle pharmaceutical controlled substances, before summarizing the CSA's criminal trafficking provisions, which apply to activities involving controlled substances that are not sanctioned under the Act. Finally, the report outlines select legal issues for Congress related to the CSA, including issues related to the response to the opioid crisis, the control of analogues to the potent opioid fentanyl, the growing divergence between the treatment of marijuana under federal and state law, and the legal limits on clinical research involving certain controlled substances."], "subsections": [{"section_title": "Background and Scope of the CSA", "paragraphs": ["Congress has regulated drugs in some capacity since the 19th century. Federal drug regulation began with tariffs, import and export controls, and purity and labeling requirements applicable to narcotic drugs including opium and coca leaves and their derivatives. With the passage of the Harrison Narcotics Tax Act of 1914, Congress began in earnest to regulate the domestic trade in narcotic drugs. The Harrison Act provided for federal oversight of the legal trade in narcotic drugs and imposed criminal penalties for illicit trafficking in narcotics. Over the course of the 20th century, the list of drugs subject to federal control expanded beyond narcotic drugs to include marijuana, depressants, stimulants, and hallucinogens.", "Congress revamped federal drug regulation by enacting the Comprehensive Drug Abuse Prevention and Control Act of 1970. The Comprehensive Drug Abuse Prevention and Control Act repealed nearly all existing federal substance control laws and, for the first time, imposed a unified framework of federal controlled substance regulation. Title II of the Comprehensive Drug Abuse Prevention and Control Act is known as the Controlled Substances Act.", "The CSA regulates certain drugs \u00e2\u0080\u0094whether medical or recreational, legally or illicitly distributed\u00e2\u0080\u0094that are considered to pose a risk of abuse and dependence. In enacting the CSA, Congress recognized two competing interests related to drug regulation: on the one hand, many drugs \"have a useful and legitimate medical purpose and are necessary to maintain the health and general welfare of the American people.\" On the other hand, \"illegal importation, manufacture, distribution, and possession and improper use of controlled substances have a substantial and detrimental effect on the health and general welfare of the American people.\" Accordingly, the Act simultaneously aims to protect public health from the dangers of controlled substances while also ensuring that patients have access to pharmaceutical controlled substances for legitimate medical purposes. ", "To accomplish those two goals, the statute creates two overlapping legal schemes. Registration provisions require entities working with controlled substances to register with the government, take steps to prevent diversion and misuse of controlled substances, and report certain information to regulators. Trafficking provisions establish penalties for the production, distribution, and possession of controlled substances outside the legitimate scope of the registration system.", "The CSA does not apply to all drugs. As discussed below, substances must be specifically identified for control (either individually or as a class) to fall within the scope of the Act. For medical drugs, the CSA primarily applies to prescription drugs, not drugs available over the counter. Moreover, the statute does not apply to all prescription drugs, but rather to a subset of those drugs deemed to warrant additional controls. As for nonpharmaceutical drugs, well-known recreational drugs such as marijuana, cocaine, heroin, and lysergic acid diethylamide (LSD) are all controlled substances, as are numerous lesser-known substances, some of which are identified only by their chemical formulas. Some recreational drugs are not classified as federally controlled substances. Alcohol and tobacco, which might otherwise qualify as drugs potentially warranting control under the CSA, are explicitly excluded from the scope of the Act, as is hemp that meets certain statutory requirements. Finally, it is possible for legitimate researchers and illicit drug manufacturers to formulate new drugs not contemplated by the Act. Those drugs may fall outside the scope of the CSA unless they are classified as controlled substances."], "subsections": []}, {"section_title": "Other Regulatory Schemes", "paragraphs": ["Many drugs classified as controlled substances subject to the CSA are also subject to other legal regimes. For example, all prescription drugs, including those subject to the Act, are subject to the Federal Food, Drug, and Cosmetic Act (FD&C Act). The U.S. Food and Drug Administration (FDA) is the agency primarily responsible for enforcing the FD&C Act, which prohibits the \"introduction or delivery for introduction into interstate commerce of any . . . drug . . . that is adulterated or misbranded.\" The FD&C Act defines misbranding broadly: a drug is considered misbranded if, among other things, its labeling, advertising, or promotion \"is false or misleading in any particular.\" Unlabeled drugs are considered misbranded, as are prescription drugs that FDA has not approved, including imported drugs. In addition, misbranding may include misrepresenting that a substance offered for sale is a brand-name drug (even if the seller believes the substance for sale is chemically identical to the brand-name drug). The FD&C Act provides that a drug is deemed to be adulterated if, among other things, it \"consists in whole or in part of any filthy, putrid, or decomposed substance,\" \"it has been prepared, packed, or held under insanitary conditions,\" its container is made of \"any poisonous or deleterious substance,\" or its strength, quality, or purity is not as represented. ", "The key aims of the FD&C Act are related to but distinct from those of the CSA. The CSA establishes distribution controls to prevent the misuse of substances deemed to pose a potential danger to the public welfare. The FD&C Act, by contrast, is a consumer protection statute that seeks to prevent harm to consumers who obtain drugs (and other public health products) through commercial channels. Any person or organization that produces, distributes, or otherwise works with prescription drugs that are also controlled substances must comply with the requirements of both the CSA and the FD&C Act.", "With respect to both pharmaceutical and nonpharmaceutical drugs, many drugs subject to the Act are also subject to state drug laws. State substance control laws often mirror federal law and are relatively uniform across jurisdictions because almost all states have adopted a version of the Uniform Controlled Substances Act (UCSA). However, states are free to modify the UCSA, and have done so to varying extents. Moreover, the model statute does not specify sentences for violations, so penalties for state controlled substance offenses vary widely.", "There is not a complete overlap between drugs subject to federal and state control for several reasons. First, states may elect to impose controls on substances that are not subject to the CSA. For example, some states have controlled the fentanyl analogues benzylfentayl and thenylfentanyl, but those substances are not currently subject to federal control. Second, states may wish to adopt federal scheduling decisions at the state level but lag behind federal regulators due to the need for a separate state scheduling process. Third, states may decide not to impose state controls on substances subject to the CSA, or they may choose to impose modified versions of federal controls at the state level. Crucially, however, the states cannot alter federal law, and when state and federal law conflict, the federal law controls. Thus, when states \"legalize\" or \"decriminalize\" a federally controlled substance (as many have done recently with respect to marijuana), the sole result is that the substance is no longer controlled under state law. Any federal controls remain in effect and potentially enforceable in those states."], "subsections": []}, {"section_title": "Classification of Controlled Substances", "paragraphs": ["The heart of the CSA is its system for classifying controlled substances, as nearly all the obligations and penalties that the Act establishes flow from the classification system. Drugs become subject to the CSA by being placed in one of five lists, referred to as \"schedules.\" Both the Administrator of the Drug Enforcement Administration (DEA)\u00e2\u0080\u0094an arm of the Department of Justice (DOJ)\u00e2\u0080\u0094and Congress can place a substance in a schedule, move a controlled substance to a different schedule, or remove a controlled substance from a schedule. As discussed below, scheduling decisions by Congress and DEA follow different procedures."], "subsections": [{"section_title": "Overview of Schedules", "paragraphs": ["The CSA establishes five categories of controlled substances, referred to as Schedules I through V. The schedule on which a controlled substance is placed determines the level of restriction on its production, distribution, and possession, as well as the penalties applicable to any improper handling of the substance. As Figure 1 describes, each controlled substance is assigned to a schedule based on its medical utility and its potential for abuse and dependence.", "A lower schedule number corresponds to greater restrictions, so controlled substances in Schedule I are subject to the most stringent controls, while substances in Schedule V are subject to the least stringent. Notably, because substances in Schedule I have no accepted medical use, it is only legal to produce, dispense, and possess those substances in the context of federally approved scientific studies."], "subsections": []}, {"section_title": "Analogues and Listed Chemicals", "paragraphs": ["In addition to the controlled substances listed in Schedules I through V, the CSA also regulates (1)\u00c2\u00a0 controlled substance analogues and (2) listed chemicals .", "Under the CSA, a controlled substance analogue is a substance that FDA has not approved and that is not specifically scheduled under the Act, but that has (1) a chemical structure substantially similar to that of a controlled substance in Schedule I or II, or (2) an actual or intended effect that is \"substantially similar to or greater than the stimulant, depressant, or hallucinogenic effect on the central nervous system of a controlled substance in schedule I or II.\" A substance that meets those criteria and is intended for human consumption is treated as a controlled substance in Schedule I.", "Listed chemicals subject to the CSA are precursor chemicals for controlled substances. They may be placed on one of two lists:", "List I Chemicals \u00e2\u0080\u0094designated chemicals that, in addition to legitimate uses, are used in manufacturing a controlled substance in violation of the CSA and are important to the manufacture of a controlled substance. List II Chemicals \u00e2\u0080\u0094designated chemicals that, in addition to legitimate uses, are used in manufacturing a controlled substance in violation of the CSA.", "List I chemicals include substances such as ephedrine, white phosphorous, and iodine, which are used to produce methamphetamine, as well as chemicals used to manufacture LSD, MDMA, and other drugs. List II chemicals include, among others, solvents such as acetone, hydrochloric acid, and sulfuric acid.", "Listed chemicals are subject to some of the same controls as controlled substances. In addition, entities that sell listed chemicals must record the transactions, report them to regulators, and comply with statutory limits on sales to a single purchaser.", "There are a number of differences between how controlled substance analogues and listed chemicals are regulated. A key difference between controlled substance analogues and listed chemicals is that a substance does not qualify for control as an analogue unless it is intended for human consumption as a substitute for a controlled substance, while listed chemicals generally are not intended for human consumption standing alone but are used as ingredients in the manufacture of controlled substances. In addition, listed chemicals include only specific substances identified for control under the CSA by statute or rulemaking. By contrast, controlled substance analogues need not be individually scheduled; they need only satisfy the statutory criteria."], "subsections": []}, {"section_title": "Scheduling Procedures", "paragraphs": ["Substances may be added to or removed from a schedule or moved to a different schedule through agency action or by legislation."], "subsections": [{"section_title": "Legislative Scheduling", "paragraphs": ["Perhaps the most straightforward way to change a substance's legal status under the CSA is for Congress to pass legislation to place a substance under control, alter its classification, or remove it from control. The procedural requirements for administrative scheduling discussed in the following section do not apply to legislative scheduling. Thus, Congress may use its legislative scheduling power to respond quickly to a drug it views as posing an urgent concern. For example, the Synthetic Drug Abuse Prevention Act of 2012 permanently added two synthetic cathinones (central nervous system stimulants) and certain cannabimimetic substances (commonly referred to as synthetic marijuana) to Schedule I."], "subsections": []}, {"section_title": "Administrative Scheduling", "paragraphs": ["DEA makes scheduling decisions through a complex process requiring participation by other agencies and the public. DEA may undertake administrative scheduling on its own initiative, at the request of the U.S. Department of Health and Human Services (HHS), or \"on the petition of any interested party.\" With regard to the last route for initiating administrative scheduling, the DEA Administrator may deny a petition to begin scheduling proceedings based on a finding that \"the grounds upon which the petitioner relies are not sufficient to justify the initiation of proceedings.\" Denial of a petition to initiate scheduling proceedings is subject to judicial review, but courts will overturn a denial only if it is arbitrary and capricious.", "Before initiating rulemaking proceedings, DEA must request a scientific and medical evaluation of the substance at issue from the Secretary of HHS. The Secretary has delegated the authority to prepare the scientific and medical evaluation to FDA. In preparing the evaluation, FDA considers factors including the substance's potential for abuse and dependence, scientific evidence of its pharmacological effect, the state of current scientific knowledge regarding the substance, any risk the substance poses to the public health, and whether the substance is an immediate precursor of an existing controlled substance. Based on those factors, FDA makes a recommendation on whether the substance should be controlled and, if so, in which schedule it should be placed. FDA's scientific and medical findings are binding on DEA. And if FDA recommends against controlling the substance, DEA may not schedule it.", "Upon receipt of FDA's report, the DEA Administrator evaluates all of the relevant data and determines whether the substance should be scheduled, rescheduled, or removed from control. Before placing a substance on a schedule, the DEA Administrator must make specific findings that the substance meets the applicable criteria related to accepted medical use and potential for abuse and dependence. DEA scheduling decisions are subject to notice-and-comment rulemaking, meaning that interested parties must have the opportunity to submit comments on the DEA Administrator's decision before it becomes final.", "The DEA Administrator's decision whether to schedule, reschedule, or deschedule a substance through the ordinary administrative process is subject to judicial review. Such review is generally deferential: courts accept DEA's interpretation of the CSA as long as the interpretation of ambiguous statutory text is reasonable, and the CSA provides that the DEA Administrator's findings of fact are \"conclusive\" on judicial review if the findings are supported by substantial evidence."], "subsections": []}, {"section_title": "Emergency Scheduling", "paragraphs": ["Ordinary DEA scheduling decisions are made through notice-and-comment rulemaking and can take years to consider and finalize. Recognizing that in some cases faster scheduling may be appropriate, Congress amended the CSA through the Comprehensive Crime Control Act of 1984 to allow the DEA Administrator to place a substance in Schedule I temporarily when \"necessary to avoid an imminent hazard to the public safety.\" Further amendments enacted in the Synthetic Drug Abuse Prevention Act of 2012 extended the maximum length of the temporary scheduling period. Before issuing a temporary scheduling order, the DEA Administrator must provide 30 days' notice to the public and the Secretary of HHS stating the basis for temporary scheduling. In issuing a temporary scheduling order, the DEA Administrator must consider only a subset of the factors relevant to permanent scheduling: the history and current pattern of abuse of the substance at issue; the scope, duration, and significance of abuse; and the risk to the public health. The DEA Administrator must also consider any comments from the Secretary of HHS.", "A substance may be temporarily scheduled for up to two years; if permanent scheduling proceedings are pending, the DEA Administrator may extend the temporary scheduling period for up to one additional year. A temporary scheduling order is vacated once permanent scheduling proceedings are completed with respect to the substance at issue. The CSA provides that emergency scheduling orders are not subject to judicial review.", "DEA has recently used its emergency scheduling power to temporarily control certain analogues to the opioid fentanyl and several synthetic cannabinoids."], "subsections": []}, {"section_title": "International Treaty Obligations", "paragraphs": ["The United States is a party to the Single Convention on Narcotic Drugs of 1961, which was designed to establish effective control over international and domestic traffic in narcotics, coca leaf, cocaine, and marijuana. That treaty requires signatories, among other things, to criminalize \"cultivation, production, manufacture, extraction, preparation, possession, offering, offering for sale, distribution, purchase, sale, . . . importation and exportation of drugs\" contrary to the Convention.", "The United States is also party to the Convention on Psychotropic Substances of 1971, which was designed to establish similar control over stimulants, depressants, and hallucinogens. The Convention on Psychotropic Substances requires parties to adopt various controls applicable to controlled substances, including mandating licenses for manufacture and distribution, requiring prescriptions for dispensing such substances, and adopting measures \"for the repression of acts contrary to laws or regulations\" adopted pursuant to treaty obligations.", "If existing controls of a drug are less stringent than those required by the United States' treaty obligations, the CSA directs the DEA Administrator to \"issue an order controlling such drug under the schedule he deems most appropriate to carry out such obligations.\" Scheduling pursuant to international treaty obligations does not require the factual findings that are necessary for other administrative scheduling actions, and may be implemented without regard to the procedures outlined for regular administrative scheduling."], "subsections": []}]}]}, {"section_title": "Registration Requirements", "paragraphs": ["Once a substance is brought within the scope of the CSA, almost any person or organization that handles that substance, except for the end user, becomes subject to a comprehensive system of regulatory requirements. The goal of the regulatory scheme is to create a \"closed system\" of distribution in which only authorized handlers may distribute controlled substances. Central to the closed system of distribution is the requirement that individuals or entities that work with controlled substances register with DEA. Those covered entities, which include manufacturers, distributors, practitioners, and pharmacists, are referred to as registrants . As DEA has described the movement of a pharmaceutical controlled substance from the manufacturer to the patient,", "[A] controlled substance, after being manufactured by a DEA-registered manufacturer, may be transferred to a DEA-registered distributor for subsequent distribution to a DEA-registered retail pharmacy. After a DEA-registered practitioner, such as a physician or a dentist, issues a prescription for a controlled substance to a patient . . . , that patient can fill that prescription at a retail pharmacy to obtain that controlled substance. In this system, the manufacturer, the distributor, the practitioner, and the retail pharmacy are all required to be DEA registrants, or to be exempted from the requirement of registration, to participate in the process.", "As discussed further below, registrants must maintain records of transactions involving controlled substances, establish security measures to prevent theft of such substances, and monitor for suspicious orders to prevent misuse and diversion. Thus, the registration system aims to ensure that any controlled substance is always accounted for and under the control of a DEA-registered person until it reaches a patient or is destroyed."], "subsections": [{"section_title": "Entities Required to Register", "paragraphs": ["Under the CSA, every person who produces, distributes, or dispenses any controlled substance, or who proposes to engage in any of those activities, must register with DEA, unless an exemption applies. Significantly, the CSA exempts from registration individual consumers of controlled substances, such as patients and their family members, whom the act refers to as \"ultimate users.\" DEA has explained that ultimate users need not register because the controlled substances in their possession \"are no longer part of the closed system of distribution and are no longer subject to DEA's system of corresponding accountability.\"", "Manufacturers and distributors of controlled substances, such as pharmaceutical companies, must register with DEA annually. By contrast, entities that dispense controlled substances, such as hospitals, pharmacies, and individual medical practitioners and pharmacists, may obtain registrations lasting between one and three years. Registrations specify the extent to which registrants may manufacture, possess, distribute, or dispense controlled substances, and each registrant may engage only in the specific activities covered by its registration. In some instances, applicants must obtain more than one registration to comply with the CSA. For example, separate registrations are required for each principal place of business where controlled substances are manufactured, distributed, imported, exported, or dispensed. And certain activities can give rise to additional registration requirements. For instance, a special registration is required to operate an opioid treatment program such as a methadone clinic.", "The CSA directs the DEA Administrator to grant registration if it would be consistent with the public interest, outlining the criteria the DEA Administrator must consider when evaluating the public interest. The criteria vary depending on (1) whether the applicant is a manufacturer, distributor, researcher, or practitioner, and (2) the classification of the controlled substances that are the focus of the application. However, the requirements generally serve to help DEA determine whether the applicant has demonstrated the capacity to maintain effective controls against diversion and comply with applicable laws.", "The registration of an individual or organization expires at the end of the registration period unless it is renewed. Registration also ends when the registrant dies, ceases legal existence, or discontinues business or professional practice. A registration cannot be transferred to someone else without the express, written consent of the DEA Administrator."], "subsections": []}, {"section_title": "Obligations of Registrants", "paragraphs": [], "subsections": [{"section_title": "Recordkeeping and Reporting", "paragraphs": ["The CSA and its implementing regulations impose multiple recordkeeping and reporting requirements on registrants. Registrants must undertake a biennial inventory of all stocks of controlled substances they have on hand, and maintain records of each controlled substance they manufacture, receive, sell, deliver, or otherwise dispose of. In addition, controlled substances in Schedules I and II may only be distributed pursuant to a written order. Copies of each order form must be transmitted to DEA. Records of orders must be preserved for two years and made available for government review upon request.", "Registrants are also required to \"design and operate a system to identify suspicious orders\" and to notify DEA of any suspicious orders they detect. DEA regulations provide that \"[s]uspicious orders include orders of unusual size, orders deviating substantially from a normal pattern, and orders of unusual frequency.\" That list is not exhaustive, however\u00e2\u0080\u0094orders may also be deemed suspicious if, for example, a pharmacy mostly sells controlled substances rather than a more typical mix of controlled and noncontrolled medications, if many customers pay for controlled substances with cash, or if pharmacies purchase drugs at a price higher than insurance would reimburse."], "subsections": []}, {"section_title": "Inspections", "paragraphs": ["The CSA permits the DEA Administrator to inspect the establishment of any registrant or applicant for registration. DEA regulations express the intent of the agency \"to inspect all manufacturers of controlled substances listed in Schedules I and II and distributors of controlled substances listed in Schedule I once each year,\" and other manufacturers and distributors of controlled substances \"as circumstances may require.\" Absent the consent of the registrant or special circumstances such as an imminent danger to health or safety, a warrant is required for inspection. \"Any judge of the United States or of a State court of record, or any United States magistrate judge\" may issue such a warrant \"within his territorial jurisdiction.\" Issuance of a warrant requires probable cause. The CSA defines probable cause as \"a valid public interest in the effective enforcement of this subchapter or regulations thereunder sufficient to justify\" the inspection at issue."], "subsections": []}, {"section_title": "Security", "paragraphs": ["The CSA's implementing regulations require all registrants to \"provide effective controls and procedures to guard against theft and diversion of controlled substances.\" The regulations establish specific physical security requirements, which vary depending on the type of registrant and the classification of the controlled substance at issue. For example, nonpractitioners must store controlled substances in Schedules I and II in a safe, steel cabinet, or vault that meets certain specifications. Nonpractitioners must further ensure that controlled substance storage areas are \"accessible only to an absolute minimum number of specifically authorized employees.\" Practitioners must store controlled substances \"in a securely locked, substantially constructed cabinet.\" In addition to those physical security requirements, practitioners subject to CSA registration may not \"employ, as an agent or employee who has access to controlled substances\" any person who has been convicted of a felony related to controlled substances, had an application for CSA registration denied, had a CSA registration revoked, or surrendered a CSA registration for cause."], "subsections": []}, {"section_title": "Quotas", "paragraphs": ["To prevent the production of excess amounts of controlled substances, which may be prone to diversion, the CSA directs DEA to set production quotas for controlled substances in Schedules I and II and for ephedrine, pseudoephedrine, and phenylpropanolamine. The DEA Administrator is also required to set individual quotas for each registered manufacturer seeking to produce such substances and to limit or reduce individual quotas as necessary to prevent oversupply. With respect to certain opioid medications, the Act further directs the DEA Administrator to estimate the amount of diversion of each opioid and reduce quotas to account for such diversion.", "Relatedly, the Controlled Substances Import and Export Act allows the importation of certain controlled substances and listed chemicals only in amounts the DEA Administrator determines to be \"necessary to provide for the medical, scientific, or other legitimate needs of the United States.\""], "subsections": []}, {"section_title": "Prescriptions", "paragraphs": ["Under the CSA, controlled substances in Schedules II through IV must be provided directly to an ultimate user by a medical practitioner or dispensed pursuant to a prescription. The Act does not mandate that Schedule V substances be distributed by prescription, but such substances may be dispensed only \"for a medical purpose.\" As a practical matter, Schedule V substances are almost always dispensed pursuant to a prescription due to separate requirements under the FD&C Act or state law."], "subsections": []}]}, {"section_title": "Enforcement and Penalties", "paragraphs": ["DEA is the federal agency primarily responsible for enforcing the CSA's registration requirements. If a registrant contravenes the Act's registration requirements, DEA may take formal or informal administrative action including issuing warning letters, suspending or revoking an entity's registration, and imposing fines.", "The DEA Administrator may suspend or revoke a registration (or deny an application for registration) on several bases, including findings that a registrant or applicant has falsified application materials, been convicted of certain felonies, or \"committed such acts as would render his registration . . . inconsistent with the public interest.\" Unless the DEA Administrator finds that there is an imminent danger to the public health or safety, the DEA Administrator must provide the applicant or registrant with notice, the opportunity for a hearing, and the opportunity to submit a corrective plan before denying, suspending, or revoking a registration. Imminent danger exists when, due to the failure of the registrant to comply with the registration requirements, \"there is a substantial likelihood of an immediate threat that death, serious bodily harm, or abuse of a controlled substance will occur in the absence of an immediate suspension of the registration\" Those conditions are satisfied, for example, when a practitioner prescribes controlled substances outside the usual course of professional practice without a legitimate medical purpose in violation of state and federal controlled substances laws. ", "A violation of the CSA's registration requirements\u00e2\u0080\u0094including failure to maintain records or detect and report suspicious orders, noncompliance with security requirements, or dispensing controlled substances without the necessary prescriptions\u00e2\u0080\u0094generally does not constitute a criminal offense unless the violation is committed knowingly. However, in the event of a knowing violation DEA, through DOJ, may bring criminal charges against both individual and corporate registrants. Potential penalties vary depending on the offense. For example, a first criminal violation of the registration requirements by an individual is punishable by a fine or up to a year in prison. If \"a registered manufacturer or distributor of opioids\" commits knowing violations such as failing to report suspicious orders for opioids or maintain effective controls against diversion of opioids, it may be punished by a fine of up to $500,000."], "subsections": []}]}, {"section_title": "Trafficking Provisions", "paragraphs": ["In addition to the registration requirements outlined above, the CSA also contains provisions that define multiple offenses involving the production, distribution, and possession of controlled substances outside the legitimate confines of the registration system, that is, the Act's trafficking provisions . Although the word \"trafficking\" may primarily call to mind the illegal distribution of recreational drugs, the CSA's trafficking provisions in fact apply to a wide range of illicit activities involving either pharmaceutical or nonpharmaceutical controlled substances."], "subsections": [{"section_title": "Prohibitions", "paragraphs": ["The CSA's trafficking provisions make it illegal to \"manufacture, distribute, or dispense, or possess with intent to manufacture, distribute, or dispense, a controlled substance,\" except as authorized under the Act. They also make it unlawful \"knowingly or intentionally to possess a controlled substance,\" unless the substance was obtained in a manner authorized by the CSA. Penalties vary based on the type and amount of the controlled substance in question. Other sections of the CSA define more specific offenses, such as distributing controlled substances at truck stops or rest areas, at schools, or to people under age 21; endangering human life while manufacturing a controlled substance; selling drug paraphernalia; and engaging in a \"continuing criminal enterprise\"\u00e2\u0080\u0094that is, an ongoing, large-scale drug dealing operation. An attempt or conspiracy to commit any offense defined under the Act also constitutes a crime."], "subsections": []}, {"section_title": "Enforcement and Penalties", "paragraphs": ["DOJ enforces the CSA's trafficking provisions by bringing criminal charges against alleged violators. Notably, the CSA's registration system and its trafficking regime are not mutually exclusive, and participation in the registration system does not insulate registrants from the statute's trafficking penalties. In United States v. Moore , the Supreme Court rejected a claim that the CSA \"must be interpreted in light of a congressional intent to set up two separate and distinct penalty systems,\" one for registrants and one for persons not registered under the Act. The Court in Moore held that physicians registered under the CSA can be prosecuted under the Act's general drug trafficking provisions \"when their activities fall outside the usual course of professional practice.\" ", "Numerous judicial opinions provide guidance on what sorts of conduct fall outside the usual course of professional practice. The defendant in Moore was a registered doctor who distributed large amounts of methadone with inadequate patient exams and no precautions against misuse or diversion. The Court held that \"[t]he evidence presented at trial was sufficient for the jury to find that respondent's conduct exceeded the bounds of 'professional practice'\" because, \"[i]n practical effect, he acted as a large-scale 'pusher' not as a physician.\" Appellate courts have relied on Moore to uphold convictions of a pharmacist who signed thousands of prescriptions for sale through an online pharmacy, and a practitioner who \"freely distributed prescriptions for large amounts of controlled substances that are highly addictive, difficult to obtain, and sought after for nonmedical purposes,\" including prescribing one patient more than 20,000 pills in a single year. But several courts have cautioned that a conviction under Moore requires more than a showing of mere professional malpractice. For instance, the U.S. Court of Appeals for the Ninth Circuit (Ninth Circuit) has held that the prosecution must prove that the defendant \"acted with intent to distribute the drugs and with intent to distribute them outside the course of professional practic e ,\" suggesting that intent must be established with respect to the nature of the defendant's failure to abide by professional norms.", "For decades, DOJ has brought criminal trafficking charges against doctors and pharmacists who dispensed pharmaceutical controlled substances outside the usual course of professional practice. In April 2019, DOJ for the first time brought criminal trafficking charges against a pharmaceutical company\u00e2\u0080\u0094Rochester Drug Cooperative\u00e2\u0080\u0094and two of its executives based on the company's sale of the opioids oxycodone and fentanyl to pharmacies that illegally distributed the drugs. Similarly, in July 2019, a federal grand jury indicted defendants including two former executives at the pharmaceutical distributor Miami-Luken, Inc. for conspiracy to violate the CSA's trafficking provisions. ", "Violations of the CSA's trafficking provisions are criminal offenses that may give rise to large fines and significant jail time. Penalties vary according to the offense and may further vary based on the type and amount of the controlled substance at issue. Unauthorized simple possession of a controlled substance may prompt a minimum fine of $1,000 and a term of up to a year in prison. Distribution of large quantities of certain drugs\u00e2\u0080\u0094including Schedule I controlled substances such as heroin and LSD and Schedule II controlled substances such as cocaine and methamphetamine\u00e2\u0080\u0094carries a prison sentence of 10 years to life and a fine of up to $10 million for an individual or a fine of up to $50 million for an organization. Penalties increase for second or subsequent offenses, or if death or serious bodily injury results from the use of the controlled substance. Compared with the CSA's registration provisions, prosecution under the Act's trafficking provisions generally entails greater potential liability\u00e2\u0080\u0094particularly for individual defendants\u00e2\u0080\u0094but also entails a more exacting burden of proof.", "The CSA is not the only means to target misconduct related to the distribution of pharmaceutical and nonpharmaceutical controlled substances. Rather, such conduct can give rise to liability under numerous other provisions of federal and state law. For example, drug companies may face administrative sanctions or criminal charges under the FD&C Act. Companies and criminal organizations may be subject to federal charges under the Racketeer Influenced and Corrupt Organizations Act. And manufacturers and distributors of opioids currently face numerous civil suits under federal and state law based on the companies' marketing and distribution of prescription opioids."], "subsections": []}]}, {"section_title": "Legal Considerations for the 116th Congress", "paragraphs": ["Drug regulation has received significant attention from Congress in recent years, prompting a range of proposals concerning the opioid epidemic; the proliferation of synthetic drugs, in particular analogues to the opioid fentanyl; the divergence between the status of marijuana under state and federal law; and the ability of researchers to conduct clinical research involving Schedule I controlled substances."], "subsections": [{"section_title": "Opioid Crisis", "paragraphs": ["One of the most salient current issues in the realm of controlled substance regulation is the opioid epidemic. Opioids are drugs derived from the opium poppy or emulating the effects of opium-derived drugs. Some opioids have legitimate medical purposes, primarily related to pain management, while others have no recognized medical use. Both pharmaceutical opioids\u00e2\u0080\u0094such as oxycodone, codeine, and morphine\u00e2\u0080\u0094and nonpharmaceutical opioids\u00e2\u0080\u0094such as heroin\u00e2\u0080\u0094may pose a risk of abuse and dependence and may be dangerous or even deadly in excessive doses. The CDC reports that overdoses on prescription and nonprescription opioids claimed a record 47,600 lives in 2017. The CDC further estimates that the misuse of prescription opioids alone costs the United States $78.5 billion per year. ", "In recent years, the opioid crisis has prompted various legislative proposals aiming to prevent the illicit distribution of opioids; curb the effects of the crisis on individuals, families, and communities; and cover the costs of law enforcement efforts and treatment programs. In 2016, Congress enacted the Comprehensive Addiction and Recovery Act of 2016 (CARA) and the 21st Century Cures Act (Cures Act). CARA authorized grants to address the opioid crisis in areas including abuse prevention and education, law enforcement, and treatment, while the Cures Act, among other things, provided additional funding to states combating opioid addiction. In 2018, Congress enacted the Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities Act (SUPPORT Act), which sought to address the opioid crisis through far-ranging amendments to the CSA, the FD&C Act, and other statutes. Key amendments to the CSA under the SUPPORT Act included provisions expanding access to medication-assisted treatment for opioid addiction, specifying the factors for determining whether a controlled substance analogue is intended for human consumption, revising the factors DEA considers when establishing opioid production quotas, and codifying the definition of \"suspicious order\" and outlining the CSA's suspicious order reporting requirements.", "Notwithstanding the flurry of recent legal changes, many recent legislative proposals seek to further address the opioid crisis by amending the CSA. For example, the DEA Enforcement Authority Act of 2019 would revise the standard for \"imminent danger\" required to support an immediate suspension of DEA registration. Specifically, the bill would lower the threshold for what constitutes imminent danger, requiring \" probable cause that death, serious bodily harm, or abuse of a controlled substance will occur in the absence of an immediate suspension of the registration,\" rather than the current statutory requirement that \" a substantial likelihood of an immediate threat that death, serious bodily harm, or abuse of a controlled substance will occur in the absence of an immediate suspension of the registration.\" In addition, the John S. McCain Opioid Addiction Prevention Act would, as part of the CSA's registration regime, require medical practitioners applying for new or renewed CSA registration to certify that they will not prescribe more than a seven-day supply of opioids for the treatment of acute pain. The LABEL Opioids Act would amend the CSA to require that opioids in Schedules I through V bear labels warning that they can cause dependence, addiction, and overdose. Failure to comply with the labeling requirements would violate the CSA's registration requirements.", "Some proposals target specific opioids, especially fentanyl. For instance, the Ending the Fentanyl Crisis Act of 2019 would amend the CSA to reduce the amounts of fentanyl required to constitute a trafficking offense. The Comprehensive Fentanyl Control Act, introduced in the 115th Congress, would likewise have reduced the amount of fentanyl triggering criminal liability. That bill would have also increased penalties applicable to offenses involving fentanyl and provided separate procedures for emergency scheduling of synthetic opioids. The Screening All Fentanyl-Enhanced Mail Act of 2019 seeks to require screening of all inbound international mail and express cargo from high-risk countries to detect and prevent the importation of illicit fentanyl and other synthetic opioids. Finally, the Blocking Deadly Fentanyl Imports Act would aim to gather information about the illicit production of illicit fentanyl in foreign countries and to withhold bilateral assistance from countries that fail to enforce certain controlled substance regulations."], "subsections": []}, {"section_title": "Analogue Fentanyl", "paragraphs": ["A related issue currently before Congress is the proliferation of synthetic drugs, especially synthetic opioids. Synthetic drugs are drugs that are chemically produced in a laboratory; they may have a chemical structure identical to or different from that of a natural drug. Synthetic drugs are often intended to mimic or enhance the effects of natural drugs, but have chemical structures that have been slightly modified to circumvent existing drug laws.", "One particular concern in this area relates to synthetic opioids, including fentanyl analogues and other fentanyl-like substances. Fentanyl is a powerful opioid that has legitimate medical uses including pain management for cancer patients. But, due to its potency, it also poses a particularly high risk of abuse, dependency, and overdose. Prescription fentanyl is a Schedule II controlled substance; multiple nonpharmaceutical substances related to fentanyl are controlled in Schedule I. However, experts have noted that it is relatively easy to manipulate the chemical structure of fentanyl in order to produce new substances that may have similar effects to fentanyl or pose other dangers if consumed but that are not included in the CSA's schedules. ", "Since March 2011, DEA has used its emergency scheduling authority 23 times to impose temporary controls on 68 synthetic drugs, including 17 fentanyl-like substances. Most recently, in February 2018, DEA issued an emergency scheduling order that applies broadly to all \"fentanyl-related substances\" that meet certain criteria related to their chemical structure. Absent further action by DEA or Congress, the temporary scheduling order will expire in February 2020.", "Even if not individually scheduled on a temporary or permanent basis, fentanyl-related substances may still be subject to DEA control as controlled substance analogues. However, to secure a conviction for an offense involving an analogue controlled substance, DOJ must, among other elements, prove beyond a reasonable doubt that the substance at issue (1) is intended for human consumption and (2) has either a chemical structure substantially similar to the chemical structure of a Schedule I or II controlled substance or an actual or intended effect similar to or greater than that of a Schedule I or II controlled substance. Thus, DOJ has stated that analogue controlled substance prosecutions can be burdensome because they raise \"complex chemical and scientific issues,\" and has argued that permanent scheduling of fentanyl analogues will reduce uncertainty and aid enforcement.", "Several proposals in the 116th Congress would seek to permanently schedule fentanyl analogues. For instance, the Stopping Overdoses of Fentanyl Analogues Act would permanently add to Schedule I certain specific synthetic opioids, as well as the whole category of \"fentanyl-related substances,\" as defined in the February 2018 emergency scheduling order. The Modernizing Drug Enforcement Act of 2019 would amend the CSA to add to Schedule I all \"mu opioid receptor agonists\" not otherwise scheduled, subject to certain exceptions. One of the sponsors of the Modernizing Drug Enforcement Act has stated that the bill's aim is \"to automatically classify drugs or other substances that act as opioids, such as synthetic fentanyl, as a schedule I narcotic based on their chemical structure and functions,\" avoiding the need for such substances to be individually scheduled.", "A key challenge in permanently scheduling fentanyl analogues is how to define the substances subject to regulation. Not all analogues of fentanyl have effects similar to fentanyl itself, and due to the large number of potential analogues there are many whose effects are unknown. Defining covered substances based on chemical structure may be overinclusive because the definition may include inactive substances, potentially allowing for prosecution of individuals who possess substances that pose no threat to public health and safety. On the other hand, such a definition may also be underinclusive because it excludes opioids that are not chemically related to fentanyl or that are made using different modifications to fentanyl's chemical structure. Alternatively, defining covered opioids based on their effects rather than their chemical structure could impose a heavy burden on prosecutors, similar to the burden they currently face when bringing analogue controlled substance charges."], "subsections": []}, {"section_title": "Marijuana Policy Gap", "paragraphs": ["Another area raising a number of legal considerations for the 116th Congress is the marijuana policy gap\u00e2\u0080\u0094the increasing divergence between federal and state law in the area of marijuana regulation. As of June 2019, 11 states and the District of Columbia have passed laws removing state prohibitions on medical and recreational marijuana use by adults age 21 or older. An additional 35 states have passed laws permitting medical use of marijuana or CBD. However, marijuana remains a Schedule I controlled substance under federal law, and state legislation decriminalizing marijuana has no effect on that status.", "Because of resource limitations, DOJ typically has not prosecuted individuals who possess marijuana for personal use on private property, but instead has \"left such lower-level or localized marijuana activity to state and local authorities through enforcement of their own drug laws.\" Moreover, in each budget cycle since FY2014 Congress has passed an appropriations rider preventing DOJ from using taxpayer funds to prevent the states from \"implementing their own laws that authorize the use, distribution, possession, or cultivation of medical marijuana.\" The current appropriations rider is in effect through November 21, 2019. Several courts have interpreted the appropriations rider to bar DOJ from expending any appropriated funds to prosecute activities involving marijuana that are conducted in \"strict compliance\" with state law. However, activities that fall outside the scope of state medical marijuana laws remain subject to prosecution. For example, in United States v. Evans , the Ninth Circuit upheld the prosecution of medical marijuana growers who smoked some of the marijuana they grew because the defendants failed to show they were \"qualifying patients\" who acted in strict compliance with state medical marijuana law.", "Notwithstanding the appropriations rider, marijuana-related activity may still give rise to serious legal consequences under federal law. DOJ issued guidance in 2018 reaffirming the authority of federal prosecutors to exercise prosecutorial discretion to target federal marijuana offenses \"in accordance with all applicable laws, regulations, and appropriations.\" Furthermore, regardless whether they are subject to criminal prosecution, participants in the cannabis industry may face numerous collateral consequences arising from the federal prohibition of marijuana because other federal laws impose noncriminal consequences based on criminal activity, including violations for the CSA. For example, cannabis businesses that are legal under state law may be unable to access banking services due to federal anti-money laundering laws, and those businesses may be ineligible for certain federal tax deductions. The involvement of income from a cannabis-related business may also prevent a bankruptcy court from approving a bankruptcy plan. And participation in the cannabis industry, even if legal under state law, may have adverse immigration consequences.", "Numerous proposals currently before Congress aim to address issues related to the marijuana policy gap. Some proposals target specific issues that arise from the divergence between federal and state law. For instance, the Secure And Fair Enforcement Banking Act of 2019 (SAFE Banking Act) would seek to protect depository institutions that provide financial services to cannabis-related businesses from regulatory sanctions. The Ensuring Safe Capital Access for All Small Businesses Act of 2019 would make certain loan programs of the Small Business Administration (SBA) available to cannabis-related businesses.", "Other proposals would seek to address the marijuana policy gap more broadly by attempting to mitigate any conflict between federal and state law. For example, the Strengthening the Tenth Amendment Through Entrusting States Act (STATES Act) would amend the CSA to provide that most provisions related to marijuana \"shall not apply to any person acting in compliance with State law relating to the manufacture, production, possession, distribution, dispensation, administration, or delivery\" of marijuana. The STATES Act would remove the risk of federal prosecution under the CSA for individuals and entities whose marijuana-related activities comply with state law, but the bill does not specifically address the potential consequences of such activity under other areas of federal law. The Responsibly Addressing the Marijuana Policy Gap Act of 2019 would both remove marijuana-related activities that comply with state law from the scope of the CSA and seek to address specific collateral consequences of such activity, including access to banking services, bankruptcy proceedings, and certain tax deductions. By contrast, the State Cannabis Commerce Act would take an approach similar to the current DOJ appropriations rider with respect to all federal agencies: while it would not alter the scope of the CSA's restrictions on marijuana, the State Cannabis Commerce Act would prevent any agency from using appropriated funds \"to prevent any State from implementing any law of the State that .\u00c2\u00a0.\u00c2\u00a0. authorizes the use, distribution, possession, or cultivation of marijuana\" within the state. ", "Additional proposed legislation could address the marijuana policy gap by altering the status of marijuana under the CSA across the board. Some proposals would move marijuana from Schedule I to a less restrictive schedule. Others would remove marijuana from the CSA's schedules completely. ", "Removing marijuana from the coverage of the CSA could, however, raise new legal issues. For instance, by default, the repeal of federal criminal prohibitions rarely applies retroactively. As a result, if Congress were to remove marijuana from the CSA, it might want to consider how to address past criminal convictions related to marijuana and whether to take any action to mitigate the effects of past convictions. In addition, Congress would not be precluded from regulating marijuana in other ways if it were to remove the drug from the ambit of the CSA. For instance, legislation has been introduced that would impose new federal regulations on marijuana akin to those applicable to alcohol and cigarettes. ", "In addition, descheduling marijuana would not, standing alone, alter the status of the substance under the FD&C Act and, thus, would not bring the existing cannabis industry into compliance with federal law. FDA has explained that it \"treat[s] products containing cannabis or cannabis-derived compounds as [it does] any other FDA-regulated products,\" and that it is \"unlawful under the FD&C Act to introduce food containing added CBD or THC into interstate commerce, or to market CBD or THC products as, or in, dietary supplements, regardless of whether the substances are hemp-derived.\" FDA is currently engaged in \"consideration of a framework for the lawful marketing of appropriate cannabis and cannabis-derived products under our existing authorities.\" Congress could also pass legislation to alter FDA regulation of cannabis-based products. For example, the Legitimate Use of Medicinal Marihuana Act would provide that neither the CSA nor the FD&C Act \"shall prohibit or otherwise restrict\" certain activities related to medical marijuana that are legal under state law.", "Reducing or removing federal restrictions on marijuana might also create tension with certain treaty obligations of the United States. The United States is a party to the Single Convention on Narcotic Drugs of 1961, which requires signatories, among other things, to criminalize \"cultivation, production, manufacture, extraction, preparation, possession, offering, offering for sale, distribution, purchase, sale, . . . importation and exportation of drugs\" contrary to the provisions of the Convention. The United States is also party to the Convention on Psychotropic Substances of 1971, which requires parties to impose various restrictions on controlled substances, including measures \"for the repression of acts contrary to laws or regulations\" adopted pursuant to treaty obligations. The two treaties are not self-executing, meaning that they do not have the same status as judicially enforceable domestic law. However, failure to abide by its treaty obligations could expose the United States to international legal consequences."], "subsections": []}, {"section_title": "Research Access", "paragraphs": ["Another significant legal issue before the 116th Congress is the effect of the CSA on researchers' ability to conduct clinical research involving Schedule I controlled substances, including marijuana. Because substances in Schedule I have no accepted medical use, it is only legal to produce, dispense, and possess those substances in the context of federally approved scientific studies. In addition, federal law generally prevents the use of federal funding for such research: a rider to the appropriations bill for FY2019 provides that no appropriated funds may be used \"for any activity that promotes the legalization of any drug or other substance included in schedule I\" of the CSA, except \"when there is significant medical evidence of a therapeutic advantage to the use of such drug or other substance or . . . federally sponsored clinical trials are being conducted to determine therapeutic advantage.\" Some commentators have expressed concerns that the CSA places too many restrictions on research involving controlled substances, particularly Schedule I controlled substances that might have a legitimate medical use. With respect to clinical research involving marijuana specifically, currently there is one farm that legally produces marijuana for research purposes, and researchers have complained that such marijuana is deficient in both quality and quantity.", "In 2015, Congress passed the Improving Regulatory Transparency for New Medical Therapies Act, which imposes deadlines on DEA to issue notice of each application to manufacture Schedule I substances for research and then act on the application. In 2016, DEA stated that it planned to grant additional licenses to grow marijuana for research purposes; however, as of June 2019 no new licenses had been granted. One applicant for a license petitioned the U.S. Court of Appeals for the D.C. Circuit (D.C. Circuit) for a writ of mandamus compelling DEA to issue notice of its application. In July 2019, the D.C. Circuit ordered DEA to respond to the petition. On August 27, 2019, DEA published a notice in the Federal Register (1) providing notice of the 33 applications it has received to manufacture Schedule I controlled substances for research purposes and (2) announcing the agency's intent to promulgate regulations governing the manufacture of marijuana for research purposes. The next day, DEA filed a response to the mandamus petition in the D.C. Circuit, asserting that the petition was moot because DEA had issued the requested notice of application. The petitioner disputes that the matter is moot and asks the court to retain jurisdiction \"to ensure the agency acts with dispatch and processes [petitioner's] application promptly.\" The court has yet to rule on the petition.", "DEA's Federal Register notice stated that the agency intends to review all pending applications and grant \"the number that the agency determines is necessary to ensure an adequate and uninterrupted supply of the controlled substances at issue under adequately competitive conditions.\" The notice further explained that DEA is engaged in an ongoing \"policy review process to ensure that the [marijuana] growers program is consistent with applicable laws and treaties.\" It remains to be seen how many applications DEA will grant and what new regulations will apply to the successful applicants.", "As it did with the Improving Regulatory Transparency for New Medical Therapies Act, Congress could pass further legislation to guide DEA's consideration of applications to manufacture marijuana for research purposes. For instance, the Medical Cannabis Research Act of 2019, which was introduced before the recent developments in the D.C. Circuit and remains pending before Congress, would aim to increase the number of licenses to produce cannabis for research purposes, requiring DEA to approve at least three additional manufacturers within a year of passage.", "Congress could also legislate more broadly to facilitate research involving controlled substances. For example, a proposed amendment to the appropriations bill for FY2020 would have eliminated the appropriations rider restricting the use of federal funding for research involving Schedule I substances. That amendment, which would have applied to research involving all Schedule I controlled substances, was intended to facilitate research involving not only marijuana but also psilocybin, MDMA, and other Schedule I drugs that might have legitimate medical uses."], "subsections": []}]}]}}
{"id": "R45867", "title": "FDA Regulation of Tobacco Products", "released_date": "2020-02-10T00:00:00", "summary": ["Cigarette use remains the leading cause of preventable death in the United States, claiming an estimated 480,000 lives or more each year. Although cigarette use in the United States continues to decline, according to the Centers for Disease Control and Prevention (CDC), 34.2 million American adults smoked cigarettes every day or some days in 2018, and nearly 1.2 million American middle and high school students smoked cigarettes in the past 30 days in 2019.", "In recent years, electronic nicotine delivery systems (ENDS) have become increasingly popular. ENDS is an umbrella term for various types of electronic tobacco products, including electronic cigarettes (e-cigarettes). An e-cigarette is a battery-operated device typically containing nicotine, flavorings, and other chemicals that, when heated, creates inhalable vapor. According to CDC analyses, 8.1 million American adults used e-cigarettes every day or some days in 2018, and about 5.4 million American middle and high school students used an e-cigarette in the past 30 days in 2019. There has been debate in the public health community regarding the impact of ENDS on public health. Some view ENDS as a safer alternative for adult cigarette smokers, while others are alarmed by increased use among youth. Further, the emergence of e-cigarette, or vaping, product use-associated lung injury (EVALI) that has resulted in 60 deaths and the hospitalization of 2,711 individuals as of January 21, 2020 has raised further concern among public health stakeholders, Congress, and the general public.", "FDA Regulation of Tobacco Products", "The Food and Drug Administration (FDA), an agency within the Department of Health and Human Services (HHS), is responsible for regulating the manufacture, marketing, distribution, and sale of tobacco products. FDA's Center for Tobacco Products (CTP)\u00e2\u0080\u0094established in 2009 pursuant to the Family Smoking Prevention and Tobacco Control Act of 2009 (TCA; P.L. 111-31 )\u00e2\u0080\u0094is primarily responsible for tobacco product regulation. The TCA amended the Federal Food, Drug, and Cosmetic Act (FFDCA) to establish a new chapter IX (\"tobacco products\"), which, as enacted, applied to cigarettes, cigarette tobacco, roll-your-own tobacco, and smokeless tobacco. However, FDA has the broad authority to regulate any other tobacco products deemed by the agency to meet the definition of a tobacco product and thus to be subject to chapter IX of the FFDCA. In 2016, pursuant to this authority, FDA promulgated regulations (known as \"the deeming rule\") that extended the agency's authority over all tobacco products that were not already subject to the FFDCA, including ENDS.", "Because tobacco products have no reported health benefits, FDA's regulation of these products differs in certain respects from FDA's regulation of medical products (e.g., prescription drugs, medical devices). Similar to medical product manufacturers, tobacco product manufacturers are subject to manufacturer requirements, including payment of user fees and premarket review, among other requirements. However, while medical product manufacturers are generally required to meet a standard of safety and effectiveness to receive premarket approval from FDA, tobacco product manufacturers are instead generally required to meet a standard \"appropriate for the protection of public health\" to receive marketing authorization. Tobacco product manufacturers, importers, distributors, and retailers are also required to comply with tobacco-specific requirements as a result of the harm that tobacco products pose to human health. Examples of such requirements include the development of tobacco product standards, submission of health information to the agency, and distribution and promotion restrictions, among others.", "Policy Considerations", "Both FDA and Congress have taken steps to address regulation of ENDS in light of EVALI and the youth ENDS epidemic. FDA recently finalized a guidance document expressing its enforcement priorities pertaining to certain ENDS products. Some public health stakeholders contend that the policy will not effectively address youth use of ENDS. In parallel, legislation introduced in the 116 th Congress includes more stringent proposals than those planned by FDA to address youth ENDS use, such as banning all flavors in tobacco products (including ENDS). In FY2020 appropriations, Congress enacted provisions raising the federal age of tobacco purchasing from 18 to 21. To apply certain existing FFDCA requirements to tobacco product manufacturers and retailers, such as requiring ENDS manufacturers and importers to pay user fees, Congressional action would need to be taken."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["Cigarette use remains the leading cause of preventable death in the United States, claiming an estimated 480,000 lives or more each year. Further, between 2009 and 2012, cigarette smoking-attributable economic costs totaled over $289 billion in the United States. Although cigarette use in the United States continues to decline, according to Centers for Disease Control and Prevention (CDC) analyses, 34.2 million American adults smoked cigarettes every day or some days in 2018, and nearly 1.2 million American middle and high school students smoked cigarettes in the past 30 days in 2019. ", "Electronic nicotine delivery systems (ENDS) have become popular in recent years, particularly among youth. ENDS is an umbrella term for various types of electronic tobacco products, including electronic cigarettes (e-cigarettes). An e-cigarette is a battery-operated device typically containing nicotine, flavorings, and other chemicals that, when heated, creates inhalable aerosol (i.e., vapor). According to CDC analyses, 8.1 million American adults used e-cigarettes every day or some days in 2018. About 5.4 million American middle and high school students used an e-cigarette in the past 30 days in 2019.", "There has been debate in the public health community regarding the public health impact of ENDS products. Some view them as a safer alternative for adults who smoke cigarettes because the aerosol produced from e-cigarettes is considered less harmful in the short-term than combusted smoke produced from cigarettes. However, others are alarmed by the marked increase in ENDS use among youth, and are concerned that these products may undo the years of tobacco control efforts that have successfully reduced cigarette smoking among both youth and adults. Further, the emergence of e-cigarette, or vaping, product use-associated lung injury (EVALI) that has resulted in 60 deaths and 2,711 hospitalizations as of January 21, 2020 has raised concern among public health stakeholders, Congress, and the general public.", "The Food and Drug Administration (FDA), an agency within the Department of Health and Human Services (HHS), is responsible for regulating the manufacture, marketing, distribution, and sale of tobacco products. FDA's Center for Tobacco Products (CTP)\u00e2\u0080\u0094established in 2009 pursuant to the Family Smoking Prevention and Tobacco Control Act of 2009 (TCA; P.L. 111-31 )\u00e2\u0080\u0094is primarily responsible for tobacco product regulation. The TCA established FFDCA chapter IX, under which FDA is authorized to regulate tobacco products. Within CTP, the Tobacco Products Scientific Advisory Committee (TPSAC) provides recommendations on tobacco regulatory decisions or any other matter listed in chapter IX of the FFDCA. The TPSAC includes 12 members with diversified experience and expertise. ", "Because tobacco products have no added health benefits, FDA's regulation of these products differs in certain respects from FDA's regulation of medical products under its jurisdiction (e.g., prescription drugs, biologics, and medical devices). Similar to medical product manufacturers, tobacco product manufacturers are subject to manufacturer requirements, including payment of user fees, registration establishment, and premarket review, among others. However, while medical product manufacturers are generally required to meet a standard of safety and effectiveness to receive premarket approval from FDA, tobacco product manufacturers are instead generally required to meet a standard of \"appropriate for the protection of public health\" to receive marketing authorization. In addition, tobacco product manufacturers, importers, distributors, and retailers are required to comply with certain tobacco-specific requirements that have been authorized under the TCA as a result of the unique harms that tobacco products pose to human health. Examples of such requirements include the development of tobacco product standards, testing and reporting of ingredients, submission of health information to the agency, and distribution and promotion restrictions, among others. ", "This report describes (1) FDA's authority to regulate tobacco products; (2) general requirements for manufacturers of tobacco products, many of which are modeled after medical product requirements; (3) requirements that are unique to tobacco product manufacturers, distributors, importers, and retailers; and (4) compliance and enforcement. The report concludes with a discussion of policy issues and considerations for Congress. Appendix A describes the IQOS Tobacco Heating System, Appendix B briefly summarizes the Tobacco Master Settlement Agreement of 1998, Appendix C provides definitions of terms used in this report, and Appendix D provides acronyms used in this report."], "subsections": []}, {"section_title": "FDA's Authority to Regulate Tobacco Products", "paragraphs": ["As amended by the TCA, Section 901 of the FFDCA gives FDA the authority to regulate the manufacture, marketing, sale, and distribution of tobacco products. A tobacco product is defined as \"any product made or derived from tobacco that is intended for human consumption, including any component, part, or accessory of a tobacco product (except for raw materials other than tobacco used in manufacturing a component, part, or accessory of a tobacco product).\" Any article that is a drug, device, or combination product (a combination of a drug, device, or biological product) is excluded from the definition of tobacco product. Drugs, devices, and combination products are subject to chapter V authorities under the FFDCA. However, it is not always clear whether a product that is derived from tobacco should be regulated as a drug, device, combination product, or a tobacco product (e.g., an ENDS product that makes certain health claims). As such, FDA has promulgated regulations to provide assistance to manufacturers intending to market products that are made or derived from tobacco based on the products' \"intended uses.\"", "Upon enactment, the TCA explicitly covered the following tobacco products: cigarettes and cigarette tobacco, roll-your-own tobacco, and smokeless tobacco. However, the TCA gave FDA the broad authority to regulate any other tobacco products deemed by the agency to meet the definition of a tobacco product and thus subject to chapter IX of the FFDCA. In 2016, FDA promulgated regulations (known as \"the deeming rule\") that extended the agency's authority over all tobacco products that were not already subject to the FFDCA, including ENDS, cigars, pipe tobacco, hookah tobacco, nicotine gels, dissolvable tobacco, and other tobacco products that may be developed in the future. Figure 1 shows each of the tobacco products currently under FDA's authority."], "subsections": []}, {"section_title": "Tobacco Product Regulation: Manufacturer\u00c2 Requirements", "paragraphs": ["Tobacco product manufacturers are subject to certain requirements, including payment of user fees, registration establishment, premarket review, and postmarket surveillance, among others. In the sections below, manufacturer requirements are discussed for tobacco products overall, with exceptions for issues unique to certain classes of tobacco products. "], "subsections": [{"section_title": "User Fees", "paragraphs": ["Pursuant to its authorities in the FFDCA, FDA is required to assess and collect user fees from domestic manufacturers and importers of tobacco products and use the funds to support CTP's activities. Similar to FDA's other user fee programs, the agency assesses and collects fees from industry sponsors of certain FDA-regulated products\u00e2\u0080\u0094in this case, tobacco manufacturers and importers\u00e2\u0080\u0094and uses those funds to support statutorily defined activities. However, in contrast to other FDA centers that are generally funded by a combination of discretionary appropriations from the General Fund and user fees, CTP is funded solely by user fees. The tobacco product fee authorities are also indefinite. Thus, unlike medical product fees that are authorized in legislation on a five-year cycle, tobacco product fees do not require reauthorization. As with other FDA user fees, the tobacco fees are only available pursuant to an annual appropriation from Congress, which provides FDA the authority to collect and spend fees. ", "Tobacco user fees are assessed and collected quarterly, and the total user fee amount that can be authorized and collected each year is specified in statute. For fiscal year (FY) 2019 and subsequent fiscal years, this amount is $712 million. The total user fee amount is assessed among six tobacco product classes specified in statute: (1) cigarettes, (2) cigars (including small cigars and cigars other than small cigars), (3) snuff, (4) chewing tobacco, (5) pipe tobacco, and (6) roll-your-own tobacco (see Table 1 for FY2020 data).", "The FFDCA requires that FDA use the Fair and Equitable Tobacco Reform Act of 2004 (FETRA)\u00e2\u0080\u0094enacted as Title VI of the American Jobs Creation Act of 2004 ( P.L. 108-357 )\u00e2\u0080\u0094framework to assess user fees on six classes of tobacco products, and these are the same six classes that are specified in the FETRA provisions. The FETRA provisions specify a two-step formula. The first step determines the allocations for each of the six tobacco product classes, and the second step determines the individual domestic manufacturer and importer allocations within each respective tobacco product class. Because FETRA did not account for the differential taxing of cigars compared to the other tobacco product classes, the FFDCA specifies how user fees will be assessed for cigars.", "FDA has determined that it currently does not have the authority to assess user fees on ENDS manufacturers and importers, or manufacturers or importers of certain other newly deemed tobacco products (e.g., hookah tobacco). This determination was made by FDA because Congress did not specify enumerated classes for these products and did not provide a framework by which FDA could potentially assess user fees for such products. "], "subsections": []}, {"section_title": "Establishment Registration and Product Listing", "paragraphs": ["Owners and operators of domestic tobacco product manufacturers are required to immediately register with FDA upon beginning operations and to subsequently register their establishments by the end of each year. FDA is required to make this registration information public. As part of the registration requirements, domestic tobacco product manufacturers must also submit product listing information, which includes a list of all tobacco products manufactured for commercial distribution. The listing for each tobacco product must be clearly identified by the product category (e.g., smokeless tobacco) and unique name (i.e., brand/sub-brand). If the listed tobacco products differ in any way, such as a difference in a component or part, manufacturers are encouraged to list each tobacco product separately. In addition, the listing must include a reference for the authority to market the tobacco product, and it must provide all consumer information for each tobacco product, such as labeling and a \"representative sampling of advertisements.\" However, given the potential administrative burden on the registrant, FDA specifies in a guidance document that labeling for each individually listed tobacco product is not necessary if information that represents the labeling for a selected set of related products is provided. Registrants are encouraged to submit their materials online using FDA's Unified Registration and Listing System (FURLS) Tobacco Registration and Product Listing Module (TRLM)."], "subsections": [{"section_title": "Tobacco Product Manufacturer Inspections", "paragraphs": ["Every tobacco product manufacturer that registers with FDA is subject to biennial inspections. This inspection requirement starts on the date the establishment registers, and FDA must conduct an inspection at least once in every successive two-year period thereafter. ", "The goal of such inspections is to review processes and procedures, observe and evaluate operations, document and collect information, identify any violations, communicate those violations to the manufacturer, and document any proposed corrective action plans. FDA personnel\u00e2\u0080\u0094upon presenting appropriate credentials and a written notice to the owner, operator, or agent in charge\u00e2\u0080\u0094are authorized to enter the tobacco product manufacturer to inspect the factory and all pertinent equipment and materials \"at reasonable times and within reasonable limits and in a reasonable manner.\" Upon completing the inspection and prior to leaving the premises, FDA is required to produce a written report describing any observed conditions or practices indicating that any tobacco product has been prepared in a way that is injurious to health. "], "subsections": []}]}, {"section_title": "Good Manufacturing Practices (GMPs)", "paragraphs": ["FDA is required to promulgate regulations that outline good manufacturing practices (GMPs) to ensure that \"the public health is protected and that the tobacco product is in compliance\" with chapter IX of the FFDCA. Specifically, statute specifies that the regulations should include the methods, facilities, and controls involved in the manufacture, packing, and storage of a tobacco product. Prior to promulgating the regulations, TPSAC and the public (through an oral hearing) have an opportunity to recommend modifications to the proposed regulations. In addition, the regulations are required to take into account different types of tobacco products, the financial resources of different tobacco manufacturers, and reasonable time for manufacturers to comply with GMPs. A manufacturer may petition to be exempt from such requirements and receive approval from FDA if the agency determines that compliance with GMPs is not required to ensure that the tobacco product would be in compliance with chapter IX of the FFDCA.", "To date, FDA has not promulgated GMP regulations. In 2012, 13 tobacco companies submitted recommendations to be included in the GMP regulations and subsequently met with FDA to review their recommendations and approach to developing them. FDA then established a public docket for additional comments on the tobacco companies' recommendations in 2013. However, FDA did not take further action specific to promulgating GMP regulations after these actions. FDA's 2016 deeming rule stated that \"FDA will have the authority to issue tobacco product manufacturing practice regulations under section 906(e)\" of the FFDCA for ENDS and other newly deemed products. Following the issuance of this rule, numerous ENDS industry stakeholders submitted recommendations to FDA highlighting differences between GMP regulations for ENDS products and other tobacco products (cigarettes, cigarette tobacco, roll-your-own tobacco, and smokeless tobacco). FDA then opened a public docket in November 2017 to allow for comment on these proposed ENDS GMPs, but the agency has not taken further action since then."], "subsections": []}, {"section_title": "Premarket Review Pathways", "paragraphs": ["There are four different premarket review pathways for tobacco products: (1) premarket tobacco application (PMTA), (2) substantial equivalence (SE), (3) substantial equivalence (SE) exemption, and (4) modified risk tobacco product (MRTP). To legally market a new tobacco product, a manufacturer must receive a PMTA marketing authorization order, unless FDA determines that the new tobacco product is substantially equivalent to a predicate tobacco product or is exempt from substantial equivalence. To legally market a new tobacco product with reduced risk claims or modify a legally marked tobacco product to make reduced risk claims, a manufacturer must receive an MRTP order. ", "All tobacco products originally covered by the TCA are required to undergo premarket review, unless they are \"grandfathered products.\" Following the 2016 deeming rule, all newly deemed tobacco products became subject to premarket review requirements as well. In July 2017, FDA announced its Comprehensive Plan for Tobacco and Nicotine Regulation (Comprehensive Plan). A s part of its Comprehensive Plan, FDA issued guidance that pushed back premarket review application deadlines to August 2021 for newly deemed combustible tobacco products (e.g., cigars) and August 2022 for newly deemed noncombustible tobacco products (e.g., ENDS) on the market as of August 8, 2016. This administrative action was subject to legal challenge , after several public health groups (e.g., A merican Academy of Pediatrics, Campaign for Tobacco-Free Kids) filed a lawsuit against FDA . In May 2019, the U.S. District Court for Maryland ruled in favor of the public health organizations, and in July 2019, imposed a 10-month deadline for application submissions for all newly deemed tobacco products (i.e., May 2020) and a one-year deadline for reviewing the applications (i.e., May 2021).", "As shown in Tab le 2 , since 2014, most new tobacco products have been legally marketed through the SE pathway. However, only requirements for the SE exemption pathway have been promulgated in regulations. This has posed some challenges for manufacturers when preparing application submissions for the PMTA, SE, and MRTP pathways. In April 2019, FDA issued a proposed rule on the content and format of SE reports, with public comment open until June 2019. Also in June 2019, FDA finalized its guidance on PMTA submissions specific to ENDS. In September 2019, FDA issued a proposed rule on the content and format of PMTA applications, with public comment open until November 2019. As of February 2020, FDA has not publicly indicated a timeline for issuance of a final rule."], "subsections": [{"section_title": "Premarket Tobacco Product Applications (PMTA) Pathway", "paragraphs": ["A manufacturer must submit a PMTA and receive a PMTA marketing authorization order to legally market a new tobacco product that is not substantially equivalent to a predicate tobacco product or exempt from substantial equivalence. To receive a PMTA order, the application must demonstrate that the product is \"appropriate for the protection of public health.\" This determination is made based on the risks and benefits to the whole population of users and nonusers of the product, while taking into account", "the increased or decreased likelihood that existing users of tobacco products will stop using such products; and", "the increased or decreased likelihood that those who do not use tobacco products will start using such products. ", "PMTA applications must include, among other things, full reports of health risk investigations; a full statement of what is in the product (e.g., components, additives); a full description of manufacturing and processing methods; compliance with tobacco product standards; samples and components of the product; and proposed labeling of the product. FDA has 180 days after receipt of the complete application to determine whether the product will receive a PMTA order. If marketing is authorized, FDA can require that the sale and distribution of the tobacco product is restricted.", "FDA can deny a PMTA application for various reasons. These include if the agency determines that marketing the new tobacco product would not be appropriate for the protection of public health; the methods used for manufacturing, processing, or packing the tobacco product do not align with good manufacturing practices; the proposed labeling of the tobacco product is false or misleading; or the tobacco product does not conform with regulations specifying tobacco product standards. FDA can withdraw or temporarily suspend a PMTA order if the agency finds that the continued marketing of the tobacco product is no longer appropriate for the protection of public health; the PMTA application contained false material; the applicant does not maintain records or create reports about its tobacco product; the labeling of the tobacco product becomes false or misleading; or the tobacco product does not conform to a tobacco product standard without appropriate justification. To determine if there are grounds to withdraw or temporarily suspend a PMTA order, FDA can require by regulation, or on an application-by-application basis, that applicants establish and maintain records, and provide postmarket surveillance reports to FDA following PMTA marketing authorization."], "subsections": []}, {"section_title": "Substantial Equivalence (SE) Pathway", "paragraphs": ["A new tobacco product is considered to be substantially equivalent to a predicate tobacco product if it has the same characteristics as the predicate tobacco product or if it has different characteristics that do not raise different questions of public health. A product may serve as a predicate tobacco product if it was commercially marketed as of February 15, 2007, or if it has previously been determined as substantially equivalent to another predicate tobacco product. A tobacco product may not serve as a predicate product if it has been removed from the market or has been determined to be adulterated or misbranded. ", "If a new tobacco product is considered substantially equivalent to the predicate tobacco product, the manufacturer is required to submit an SE report to FDA justifying a substantial equivalence claim at least 90 days prior to the introduction of the new tobacco product into the market. To accommodate manufacturers following enactment of the TCA, a new tobacco product that was introduced after February 15, 2007, but before March 22, 2011, could stay on the market while FDA reviewed the manufacturer's SE report, provided the report was submitted before March 23, 2011. However, if a manufacturer did not submit the SE report before March 23, 2011, or if the new tobacco product has been on the market since March 22, 2011, the product is not permitted to be marketed without an SE order from FDA, even if FDA takes longer than 90 days to approve and issue the order.", "The contents of SE reports are not specified in statute or regulation, but FDA has provided content recommendations for SE reports in guidance. Among other things, SE reports should include a summary, listing of design features, ingredients and materials, a description of the heating source and composition, and health information. Upon acceptance of the SE report application and FDA's evaluation that the predicate tobacco product selected is eligible, FDA evaluates the scientific data and information in the SE report. FDA will then issue a SE order letter or not substantially equivalent order (NSE order) letter."], "subsections": []}, {"section_title": "Substantial Equivalence (SE) Exemption Pathway", "paragraphs": ["A new tobacco product that has been modified from a legally marketed tobacco product by either adding or removing a tobacco additive, or by increasing or decreasing the quantity of an existing tobacco additive, may be exempt from demonstrating substantial equivalence. For such a product to be exempt, FDA must determine that (1) the modification would be considered minor, (2) an SE report that demonstrates substantial equivalence would not be necessary to ensure that marketing the tobacco product would be appropriate for protection of public health, and (3) an \"exemption is otherwise appropriate.\" Before the product can be legally marketed, FDA must first grant the product an exemption from demonstrating substantial equivalence. Following this, a manufacturer must submit a SE exemption report detailing the minor modification and establishing that FDA has determined that the product is exempt from demonstrating substantial equivalence to a predicate product.", "The content requirements for SE exemption reports are specified in regulation. Among other things, SE exemption reports must contain a detailed explanation of the purpose of the modification; a detailed description of the modification; a detailed explanation of why the modification is minor; a detailed explanation of why a SE report is not necessary; and a certification (i.e., signed statement by a responsible official of manufacturer) summarizing why the modification does not increase the tobacco product's appeal to or use by minors, toxicity, addictiveness, or abuse liability. "], "subsections": []}, {"section_title": "Modified Risk Tobacco Products (MRTP) Pathway", "paragraphs": ["A modified risk tobacco product (MRTP) is defined as \"any tobacco product that is sold or distributed for use to reduce harm or the risk of tobacco-related disease associated with commercially marketed tobacco products.\" For example, some ENDS manufacturers may decide to submit an ENDS product through the MRTP pathway if the application can justify that the product reduces the risk of tobacco-related disease compared with other tobacco products (e.g., cigarettes). However, an MRTP may not be introduced or delivered into interstate commerce until FDA has issued an MRTP order, regardless if it was already legally on the market through another pathway (e.g., SE or SE exemption). Further, any manufacturer that has not received an MRTP order for its tobacco product may not market the product with a label, labeling, or advertising that implies the product has a reduced risk of harm or that uses the words \"light,\" \"mild,\" \"low,\" or similar descriptions. Smokeless tobacco products that use certain descriptors, such as \"does not produce smoke\" or \"smoke-free,\" are not automatically considered MRTPs unless a manufacturer receives MRTP orders for those products. In addition, products that are intended to treat tobacco dependence are not considered MRTPs if they have been approved as a drug or device.", "Manufacturers must include certain information in a MRTP application, including", "a description of the proposed product and any proposed advertising and labeling;", "the conditions for using the product;", "the formulation of the product;", "sample product labels and labeling;", "all documents (including underlying scientific information) relating to research findings conducted, supported, or possessed by the tobacco product manufacturer relating to the effect of the product on tobacco-related diseases and health-related conditions, including information both favorable and unfavorable to the ability of the product to reduce risk or exposure and relating to human health;", "data and information on how consumers actually use the tobacco product; and", "such other information as the Secretary [FDA] may require.", "FDA must refer all complete MRTP applications to TPSAC given the health claims that need to be evaluated and verified in applications for these products. TPSAC then has 60 days to provide recommendations on the application to FDA. FDA can issue an MRTP order for a specified period of time (but not more than five years at one time ) if, among other things, it determines that the tobacco product will significantly reduce harm and the risk of tobacco-related disease to individual tobacco users and benefit the health of the population as a whole by taking into account users and nonusers of tobacco products. To continue to market a MRTP after the order's set term, a manufacturer would need to seek renewal of the MRTP order.", "However, FDA may issue an order for certain tobacco products that may not meet the standard of significantly reducing harm to individual users and benefiting population health as a whole. This is possible if, among things, the manufacturer can demonstrate that the MRTP order for the tobacco product would be appropriate to promote public health; the label, labeling, and advertising for the tobacco product are limited to claims that the product presents less exposure to a substance; scientific evidence is not available and cannot be made available without conducting the long-term epidemiologic studies required to meet the MRTP standard; and the scientific evidence that is available demonstrates if future studies are conducted, they would likely demonstrate a measurable and substantial reduction in morbidity or mortality among users of the tobacco product."], "subsections": [{"section_title": "MRTP Postmarket Requirements", "paragraphs": ["To market a tobacco product that has received an MRTP order, the manufacturer must agree to certain postmarket surveillance and studies that examine consumer perception, behavior, and health pertaining to the product. Manufacturers required to conduct surveillance must submit the surveillance protocol to FDA within 30 days of receiving notice from FDA that such studies are required. Upon receipt of the protocol, FDA has 60 days to determine whether the protocol is sufficient to collect data that will allow FDA to determine if the MRTP order is necessary to protect public health. ", "FDA can also require that labeling and advertising of the product enable the public to understand the significance of the presented information to the consumer's health. Further, FDA can impose conditions on the use of comparing claims between the tobacco product with an MRTP order and other tobacco products on the market, and require that the label of the product disclose substances in the tobacco product that could affect health. ", "FDA must withdraw the MRTP order, after the opportunity for an informal hearing, under specified circumstances. Examples of such circumstances include if new information becomes available that no longer make an MRTP order permissible, if the product no longer reduces risk or exposure based on data from postmarket surveillance or studies, or if the applicant failed to conduct or submit postmarket surveillance or studies."], "subsections": []}]}, {"section_title": "Cessation Products", "paragraphs": ["FDA's Center for Drug Evaluation and Research (CDER) is generally responsible for regulating tobacco-derived products that make health or cessation (i.e., quitting) claims, such as nicotine replacement therapies (NRTs). NRTs contain nicotine as an active ingredient. Two types of prescription NRT products (nasal spray and nicotine inhaler) and three types of over-the-counter (OTC) NRT products have been approved by FDA through CDER, and most of these products have been approved for over 20 years. The three types of OTC products include a nicotine gum, a transdermal nicotine patch, and a nicotine lozenge. Prescription medications that do not have nicotine as an active ingredient have also been approved by CDER for smoking cessation. These medications include Chantix (varenicline tartrate) and Zyban (buproprion hydrochloride).", "In the future, ENDS manufacturers who make health or cessation claims for their products would likely need to receive approval for marketing from CDER (rather than marketing authorization from CTP)."], "subsections": []}]}]}, {"section_title": "Tobacco Product Regulation: Tobacco-Specific Requirements", "paragraphs": ["Tobacco product manufacturers, importers, distributors, and retailers are required to comply with certain tobacco-specific requirements as a result of the unique harms that tobacco products pose to human health. Each of these requirements is described below, and most requirements apply to all tobacco products, with some specified exceptions."], "subsections": [{"section_title": "Tobacco Product Standards", "paragraphs": ["Prior to enactment of the TCA, Congress was concerned that the tobacco industry had the ability to design new tobacco products or modify existing ones that might appeal to children or increase exposure to harmful tobacco product constituents. The TCA gave FDA the authority to adopt tobacco product standards that it deems necessary to protect the public's health, but it explicitly prohibited FDA from creating a standard that bans cigarettes, smokeless tobacco products, cigars, pipe tobacco, or roll-your-own tobacco products. Congress could choose to amend this language at any time.", "A new tobacco product standard can set certain manufacturing, packaging, and distribution and sale requirements for tobacco products. For example, FDA can set requirements for ingredients, additives, components, or parts allowed in a tobacco product; testing of the tobacco product and test results demonstrating compliance with the standard; measurement of characteristics of the tobacco product; appropriate labeling of the tobacco product; and limited sale and distribution of the tobacco product. To adopt a tobacco product standard, FDA is required to consider scientific evidence on", "the risks and benefits to the population as a whole, including users and nonusers of tobacco products, of the proposed standard; the increased or decreased likelihood that existing users of tobacco products will stop using such products; and the increased or decreased likelihood that those who do not use tobacco products will start using such products.", "To propose a new tobacco product standard, FDA is required to publish a proposed rule in the Federal Register and allow for a public comment period of no less than 60 days. If FDA determines that the tobacco product standard is appropriate for the protection of public health based on an evaluation of public comments, a report from TPSAC (if the standard was referred to them), and other evidence, the agency must promulgate a final regulation to establish the standard. This regulation cannot take effect until at least one year after its publication, unless FDA determines that \"an earlier effective date is necessary for the protection of public health.\" ", "FDA is required to periodically reevaluate tobacco product standards to determine if new data need to be reflected. In addition, a tobacco product standard may be amended or revoked either on the initiative of FDA or an interested party via petition (i.e., citizen petition). If FDA or a citizen petition calls for an amendment to or revocation of an existing tobacco product standard, a proposed rule would be issued in the Federal Register for public comment. As with a new tobacco product standard, FDA would make a determination regarding the existing standard based on review of the public comments, a TPSAC report (if relevant), and other evidence. For FDA to revoke a standard, the agency must find that the standard is \"no longer appropriate for the protection of public health.\" "], "subsections": [{"section_title": "Flavors", "paragraphs": ["When enacting the TCA, Congress recognized that flavors, specifically, can make tobacco products more appealing to youth and expose tobacco users to additional carcinogens or other toxic constituents. Although FDA has the authority to establish new tobacco product standards (as previously described), Section 907 of the FFDCA establishes a tobacco product standard explicitly banning characterizing artificial or natural flavors (other than tobacco or menthol), herbs, or spices in any constituent, additive, and component or part of a cigarette. While tobacco and menthol flavors are not included in the prohibition on characterizing flavors in cigarettes, FDA may be able to establish a tobacco product standard addressing menthol in cigarettes. ", "Within one year of its establishment, TPSAC was required to submit a report and recommendations to the Secretary of HHS regarding the impact of menthol cigarette use on public health, specifically addressing use among youth and racial and ethnic minorities. In its final report released in July 2011, TPSAC concluded that \"removal of menthol cigarettes from the marketplace would benefit public health in the United States.\" In July 2013, FDA released an advance notice of public rulemaking (ANPRM) on a tobacco product standard for menthol in cigarettes, seeking comments, data, research, and any other relevant information. A final regulation has not yet been promulgated; however, Former Commissioner Gottlieb expressed interest in accelerating the promulgation of this tobacco product standard.", "FDA released an ANPRM in March 2018, \"Regulation of Flavors in Tobacco Products,\" that requested public comments, data, research results, and other information related to the role of flavors generally in tobacco products, among other things. After one extension, the comment period closed in July 2018 and the agency had received over 500,000 comments. In January 2020, FDA stated its intention to issue a proposed rule that would \"ban the use of characterizing flavors in cigars,\" but did not speak to characterizing flavors in other tobacco products. "], "subsections": []}, {"section_title": "Nicotine", "paragraphs": ["Nicotine is the naturally occurring drug in tobacco that can cause addiction to the product. The FFDCA allows FDA to address nicotine yields of a tobacco product through development of a tobacco product standard, but it prohibits the agency from establishing a tobacco product standard that would require the reduction of nicotine yields to zero.", "A key feature of FDA's Comprehensive Plan is to implement regulatory policies on addiction, appeal, and cessation based on scientific evidence and public input. One stated goal was to lower nicotine in cigarettes to a minimally or non-addictive level to benefit the public's health. In March 2018, FDA released an ANPRM for development of a tobacco product standard that would set a maximum nicotine level for cigarettes. The ANPRM seeks public comment on whether a tobacco product standard should apply to other combusted tobacco products (e.g., cigars, pipe tobacco); what a non-addictive level of nicotine would be; and other feasibility issues if such a tobacco product standard is implemented. The comment period closed in July 2018, after an extension, with nearly 8,000 comments received. As of February 2020, FDA has not taken further regulatory action."], "subsections": []}]}, {"section_title": "Testing and Reporting of Ingredients", "paragraphs": ["FDA has the authority to conduct or to require testing, reporting, or disclosure of tobacco product constituents, including smoke constituents. Pursuant to FFDCA Section 915, FDA is required to promulgate regulations that require the testing and reporting of components or parts of a tobacco product to protect the public health. Because FDA has not yet promulgated these testing and reporting regulations, tobacco product manufacturers are not currently subject to these requirements.", "As part of these regulations, once they are promulgated, FDA may require tobacco product manufacturers to disclose the results of the testing of tar and nicotine through labels, advertising, or other means to protect public health and not mislead consumers about harms associated with use of the tobacco product. Small tobacco product manufacturers would be given additional time to comply, and FDA could additionally delay compliance on a case-by-case basis for small tobacco product manufacturers. "], "subsections": []}, {"section_title": "Health Information", "paragraphs": ["Tobacco product manufacturers are required to submit specified health information to FDA. This health information includes a list of all ingredients, such as substances, compounds, and additives that are added to the tobacco product by the manufacturer. Health information also includes \"a listing of all constituents, including smoke constituents as applicable, identified by the Secretary as harmful or potentially harmful to health in each tobacco product.\" Manufacturers must provide this information within each brand of the tobacco product, and the quantity included in each brand (e.g., Marlboro) and sub-brand (e.g., Marlboro Gold). FDA's compliance policy for ingredient listings, as specified in guidance, focuses on finished tobacco products (i.e., tobacco products packaged and ready for consumption), including cigarettes, cigarette tobacco, roll-your-own tobacco, smokeless tobacco, and newly deemed tobacco products (e.g., ENDS). Further, FDA is focusing on components or parts of finished tobacco products that are made or derived from tobacco or contain ingredients that are burned, aerosolized, or ingested while the tobacco product is being used. As an example, e-liquids of ENDS are currently subject to this ingredient listing requirement, while batteries of ENDS are not."], "subsections": [{"section_title": "Harmful and Potentially Harmful Constituents", "paragraphs": ["As interpreted by FDA in guidance, the phrase harmful and potentially harmful constituents (HPHCs) refers to any chemical or chemical compound in a tobacco product or in tobacco smoke that", "is, or potentially is, inhaled, ingested, or absorbed into the body, including as an aerosol (vapor) or any other emission; and", "causes or has the potential to cause direct or indirect harm to users or non-users of tobacco products.", "Examples of HPHCs include toxicants, carcinogens, and addictive chemicals and compounds. By 2012 (three years after enactment of the TCA), FDA was required to establish a list of HPHCs in each tobacco product and, as applicable, to identify HPHCs by brand and sub-brand of tobacco products. Based on TPSAC's recommendations and after receiving multiple rounds of public comment on these recommendations, FDA established a list of 93 HPHCs in tobacco products. This list specifies whether the HPHC is a carcinogen, respiratory toxicant, cardiovascular toxicant, reproductive or developmental toxicant, and/or addictive. ", "Using FDA's list, manufacturers are required to report HPHCs by brand and quantity of HPHCs in each brand and sub-brand. Given potential monetary and feasibility challenges that were associated with reporting all 93 HPHCs on FDA's list, FDA released an accompanying 2012 draft guidance that provided an abbreviated list of HPHCs that manufacturers of cigarettes, smokeless tobacco, and roll-your-own tobacco would be required to report to FDA. FDA has not issued an update to the 2012 draft guidance. As a result, FDA does not intend to enforce this requirement for newly deemed tobacco products (e.g., ENDS) until after the publication date of the final guidance. However, in August 2019, FDA announced that, for the first time, it is seeking public comment on 19 additional HPHCs that can be found in ENDS products. The public comment period closed in October 2019."], "subsections": []}, {"section_title": "Health Documents", "paragraphs": ["Tobacco product manufacturers are required to submit to FDA all documents developed by the manufacturer or any other party on health, toxicological, behavioral, or physiologic effects of current or future tobacco products, including constituents, ingredients, components, and additives. FDA interprets these documents to include \"cell-based, tissue-based, animal, or human studies, computational toxicology models, information on addiction, intentions to use, cognition, emotion, motivation, and other behavioral effects at both the population-level (epidemiology) as well as the individual level (such as abuse liability).\""], "subsections": []}]}, {"section_title": "Records and Reports on Tobacco Products", "paragraphs": ["FDA has the authority to require, by regulation, tobacco product manufacturers and importers to establish and maintain records to ensure that tobacco products are not adulterated or misbranded and to otherwise protect public health. Through such regulations, FDA can also require manufacturers and importers to report if a tobacco product may have caused or contributed to a \"serious unexpected adverse experience or any significant increase in the frequency of a serious, expected adverse product experience.\" Required reports cannot be overly burdensome and cannot disclose the identity of a patient, except under certain circumstances. ", "FDA has not yet promulgated regulations specifying these requirements. However, FDA issued a proposed rule in April 2019 on the content of a SE report. The proposed rule would require applicants submitting an SE report and receiving an SE order to maintain all records supporting the SE report for at least 4 years. FDA also issued a proposed rule in September 2019 for PMTAs that, among other things, would require manufacturers to \"keep records regarding the legal marketing of certain tobacco products without a PMTA.\""], "subsections": []}, {"section_title": "Distribution and Promotion Requirements", "paragraphs": ["Prior to 2009, restrictions on the distribution of tobacco products were largely enforced at the state level, and promotion of cigarettes and smokeless tobacco was largely overseen by the Federal Trade Commission (FTC). However, in 2009, the TCA explicitly gave FDA the authority to require, by regulation, restrictions on the sale and distribution of a tobacco product if such a regulation would be appropriate for the protection of public health. In addition, the FFDCA specifies that FDA can impose restrictions, by regulation, on the advertising and promotion of a tobacco product consistent with the First Amendment.", "In addition to authorizing FDA to regulate the sale and distribution of tobacco products, the TCA also directed FDA to reissue its 1996 Tobacco Rule. Among other things, the 1996 Tobacco Rule imposed requirements on the sale, labeling, and advertising of cigarettes and smokeless tobacco. The TCA provided that the final rule must be identical to the 1996 rule, with specified exceptions. FDA reissued the 1996 rule in March 2010, and the 2016 deeming rule extended the applicability of sale and distribution restrictions, as well as certain labeling and advertising requirements to newly deemed tobacco products (e.g., ENDS). In FY2020 appropriations, Congress amended the federal minimum age of tobacco product purchasing from 18 to 21.", "Current law and regulations restricting the sale and distribution of tobacco products will be discussed first, followed by current law and regulations on the labeling and advertising of tobacco products."], "subsections": [{"section_title": "Restrictions on Sales and Distribution of Tobacco Products", "paragraphs": ["The FFDCA\u00e2\u0080\u0094pursuant to changes made by the Further Consolidated Appropriations Act, 2020 ( P.L. 116-94 )\u00e2\u0080\u0094prohibits retailers from selling tobacco products to any person younger than 21 years of age and limits FDA's ability to promulgate regulations that restrict the sale of tobacco products to those over 21 years of age. FDA has stated that this new age sales restriction is currently in effect.", "Prior to this statutory change, the minimum age of sale of tobacco products under federal regulations was 18 years of age, and the FFDCA precluded FDA from promulgating regulations restricting the sale of tobacco products to those over 18. As such, current federal regulations, which were promulgated in 2016 prior to the enactment of P.L. 116-94 , prohibit retailers from selling cigarettes, smokeless tobacco products, and newly deemed tobacco products to anyone younger than 18, and require retailers to verify the age of persons purchasing these products who are younger than 27. To conform these regulations to changes made by P.L. 116-94 , FDA is required to update the regulations by June 20, 2020 to specify that retailers may not sell tobacco products to those under 21 years of age and that retailers are required to verify the age of individuals attempting to purchase tobacco products who are younger than 30. The final rule is to take effect not later than September 20, 2020. ", "Regulations also specify that manufacturers, distributors, or retailers may not distribute free samples of cigarettes, smokeless tobacco products, and newly deemed tobacco products, with the exception of smokeless tobacco in qualified adult-only facilities. Vending machine sales of cigarettes, smokeless tobacco, and newly deemed tobacco products are prohibited, unless the vending machine is located in a qualified adult-only facility. Consistent with the limitations specified in statute, these regulations do not prohibit the sale of tobacco products in specific categories of retail outlets (e.g., pharmacies, specialty stores)."], "subsections": [{"section_title": "Synar Regulations", "paragraphs": ["As mentioned, prior to the enactment of the TCA, restrictions on the sale and distribution of tobacco products were primarily enforced at the state level, and compliance with state laws prohibiting tobacco sales to minors varied. Evidence emerged about health problems associated with tobacco use by youth and about the ease with which youth could purchase tobacco products through retail sources. In 1992, the Alcohol, Drug Abuse, and Mental Health Administration (ADAHMA) Reorganization Act ( P.L. 102-321 ) was signed into law, and it included an amendment aimed at decreasing youth access to tobacco. More specifically, Section 1926 (known as the Synar amendment ) of the ADAHMA Reorganization Act required that the Substance Abuse and Mental Health Services Administration (SAMHSA) make available the full Substance Abuse Prevention and Treatment Block Grant (SABG) award funding to states and U.S. territories only if they had laws in effect that prohibit the sale or distribution of tobacco products to individuals younger than 18 years old. The SABG is a block grant program that distributes funds to 60 eligible states, U.S. territories, and freely associated states to plan, execute, and evaluate substance use prevention, treatment, and recovery support services for affected individuals, families, and communities. The SABG provides a consistent federal funding stream to states through formula grants, and it is one of SAMHSA's largest programs.", "The Synar regulations were promulgated by SAMHSA in 1996 to provide further guidance to states on implementation of the Synar amendment. The regulation requires, among other things, that states enact and enforce laws that prohibit the sale or distribution of tobacco products to individuals younger than 18; conduct annual inspections of retailers that are representative of retail outlets accessible to minors; and submit an annual report to SAMHSA on enforcement and compliance actions in order to receive their full SABG funding. As the term tobacco product , is not defined in the regulation, SAMHSA has indicated that each state may decide which tobacco products should be included in tobacco retailer inspections, but encourages states to include tobacco products being used most often by youth. In FY2020 appropriations, Congress further amended the Synar amendment to require states, as a condition of receiving SABG funding, to conduct annual, random inspections of retail outlets to ensure that such outlets are not selling tobacco products to those under age 21 and comply with annual reporting requirements to SAMHSA on enforcement and compliance actions. SAMSHA will be required to update the Synar regulations by June 20, 2020 to account for these changes."], "subsections": []}]}, {"section_title": "Tobacco Product Labeling and Advertisement Requirements", "paragraphs": ["The Federal Cigarette Labeling and Advertising Act of 1965 (FCLAA) and the Comprehensive Smokeless Tobacco Health Education Act of 1986 (CSTHEA) include certain labeling requirements and advertising restrictions on cigarettes and smokeless tobacco, respectively. FTC generally oversees these two acts. For example, one advertising restriction within these acts includes a ban on advertising cigarettes, little cigars, and smokeless tobacco products on radio, television, or other media subject to the jurisdiction of the Federal Communications Commission (FCC). ", "In addition, manufacturers, distributors, and retailers may not sell or distribute tobacco products with labels, labeling, or advertising that are not in compliance with the FFDCA and accompanying FDA regulations. Certain labeling and advertising requirements specific to cigarettes and smokeless tobacco include:", "Manufacturers, distributors, and retailers may not sponsor any athletic, musical, or other social or cultural event with the brand name of a cigarette or smokeless tobacco product. Manufacturers and distributors of imported cigarettes and smokeless tobacco may not market, license, distribute, or sell any product that bears the brand name, logo, or any other identifying patterns associated with the brand name. Labeling and advertising in audio and video formats are limited. For example, audio formats cannot include music or sound effects. ", "Tobacco product package labeling and advertisements must also include warning statements. Table 3 lists the different health warning statements required to be displayed on tobacco product package labeling and in tobacco product advertisements, by product. For example, all ENDS package labeling and advertising is required to include \"WARNING: This product contains nicotine. Nicotine is an addictive chemical.\""], "subsections": [{"section_title": "Cigarette Graphic Warning Labels", "paragraphs": ["The TCA required FDA to promulgate regulations requiring color graphics depicting the negative health consequences of cigarette smoking. In 2011, FDA published a final rule requiring graphic warning labels on cigarette packaging\u00e2\u0080\u0094in addition to nine new warning statements proposed in text\u00e2\u0080\u0094that would take effect 15 months after it was promulgated. The final rule was challenged in court, and in 2012, an appeals court vacated the rule on First Amendment grounds and remanded the issue to the agency. Ultimately, FDA did not seek further judicial review. ", "FDA planned to develop and propose a new graphic warning rule and has continued to conduct research for this rule since 2013. In 2016, multiple health organizations filed a suit against FDA to compel the agency to promulgate a final rule more quickly. In March 2019, FDA was ordered to issue a proposed rule by mid-August 2019 and a final rule by mid-March 2020. The proposed rule, issued on August 16, 2019, specifies requirements for new cigarette health warnings. Among other things, the warnings would occupy the top 50% of the front and rear panels of cigarette packages, and at least 20% of the top area of cigarette advertisements. However, it is to be determined whether this proposed rule will be subject to further litigation."], "subsections": []}]}]}]}, {"section_title": "Compliance and Enforcement", "paragraphs": ["If FDA finds that a retailer, manufacturer, importer, or distributor is not complying with FFDCA chapter IX requirements or FDA regulations, the agency can take corrective action. Such corrective actions include warning letters, civil money penalty (CMP) complaints, and no-tobacco-sale order (NTSO) complaints , as well as seizures, injunctions, and criminal prosecution (with the Department of Justice). "], "subsections": [{"section_title": "Adulterated and Misbranded Tobacco Products", "paragraphs": ["The FFDCA prohibits the adulteration and misbranding of tobacco products, as well as the introduction, receipt, and delivery of adulterated or misbranded tobacco products into interstate commerce."], "subsections": [{"section_title": "Adulterated Tobacco Products", "paragraphs": ["In general, a tobacco product is deemed adulterated if ", "it is contaminated by any substance that may render the product injurious to health; it has been prepared in unsanitary conditions that may have contaminated the product; its packaging is composed of any substance that could be harmful to health; and/or if a manufacturer does not comply with user fee, tobacco product standard, premarket review, and/or GMP requirements (when promulgated). "], "subsections": []}, {"section_title": "Misbranded Tobacco Products", "paragraphs": ["A tobacco product is deemed misbranded if ", "the labeling is false or misleading in any way; its package labeling does not include specified manufacturing information, statements, or warnings required by regulation, or does not comply with an established tobacco product standard; the labeling, packaging, and shipping containers of tobacco products do not contain the label \"sale only allowed in the United States\"; it was manufactured, prepared, propagated, compounded, or processed in a facility that was not registered with FDA; its advertising is false or misleading in any way; and/or it is sold by a retailer to an individual under 21 years of age or is sold in violation of regulations promulgated on the sale and distribution of tobacco products.", "FDA may, by regulation, require prior approval of statements made on labels of tobacco products to ensure that the tobacco product is not misbranded. However, such a regulation cannot require prior approval of an advertisement, except for MRTPs. To date, FDA has not issued such regulations."], "subsections": []}]}, {"section_title": "Tobacco Retailer Compliance Check Inspections", "paragraphs": ["FDA is required to contract with states and territories to carry out compliance check inspections of tobacco retailers. In some instances, FDA has awarded contracts to third-party entities that hire commissionable inspectors to conduct compliance check inspections of tobacco retailers in states and territories where FDA has not been able to contract with a state or territory agency. FDA personnel may also conduct their own investigations.", "FDA ensures that tobacco retailers are in compliance with federal law and regulations through undercover buy inspections. During these inspections, the retailer is unaware an inspection is taking place. A trained minor, in consultation with a commissioned FDA inspector, attempts to purchase a tobacco product. If a first-time violation is reported (e.g., sale to a minor, illegal advertising), a warning letter is sent to the tobacco retailer, and the addressee has 15 working days to respond to the letter, with no associated fines involved. When subsequent violations of tobacco regulations or requirements are detected during these undercover buy inspections, FDA files a CMP complaint. The associated fines vary based on the number of regulation violations and the time period in which the violations occurred. If retailers have repeated violations of the restrictions on the sale and distribution of tobacco products, FDA may seek a NTSO, which would prohibit sale of tobacco products at that retail outlet. A NTSO could be separate or combined with CMPs. According to FDA, as of June 2019, the agency has \"conducted more than a million compliance check inspections and issued nearly 88,000 Warning Letters, 22,000 [CMPs], and 160 [NTSOs].\"", "As mentioned, in FY2020 appropriations, Congress amended the federal minimum age of tobacco product purchasing from 18 to 21. FDA has stated that this new age sales restriction is currently in effect, but also recognizes that the agency and retailers will need to update current practices to account for these changes. As such, FDA has stated that \"during this ramp-up period, FDA will continue to only use minors under the age of 18 in its compliance check program.\""], "subsections": []}, {"section_title": "Notification and Recall", "paragraphs": ["FDA has the authority to issue notifications and recalls of tobacco products once they are on the market. FDA can issue a notification through a public service announcement if the tobacco product \"presents an unreasonable risk of substantial harm to the public health,\" provided that FDA determines there are no other practical means to eliminate such risk.", "A tobacco product manufacturer can initiate or FDA can request a (voluntary) recall if the tobacco product is thought to be in violation of the FFDCA. In addition, FDA has the authority to mandate a tobacco product recall under specified circumstances. If FDA determines that a tobacco product contains a manufacturing or other defect that would \"cause serious, adverse health consequences or death,\" the agency can issue an order requiring the appropriate person (e.g., the manufacturer, retailer, importer, or distributor) to immediately stop distribution of the tobacco product. FDA is required to provide the person subject to the order an opportunity for an informal hearing not later than 10 days after the order is issued. Following the hearing, FDA is required to vacate the order if the agency determines that there is insufficient evidence to maintain the order. If after the informal hearing FDA determines that the order should be amended to include a recall of the tobacco product, FDA must amend the order to require such recall, specifying a timetable for and requiring periodic progress reports on the recall. "], "subsections": []}]}, {"section_title": "Issues for Congress and Policy Considerations", "paragraphs": ["Although the TCA expanded FDA's authority to regulate tobacco products in 2009, stakeholders have recently identified several issues related to the regulation of these products that may be of interest to Congress:", "FDA and public health stakeholders remain concerned about the marked increase in use of ENDS among youth over the past few years, and many in the public health community argue that this increase is largely driven by the availability of youth-friendly flavors in these products. While the public health community generally views ENDS as a safer alternative for adult cigarette smokers, there is concern that increased use of ENDS among youth may undo the years of tobacco control efforts that have successfully reduced cigarette smoking among both youth and adults. The emergence of EVALI has further heightened concern among public health stakeholders, Congress, and the general public. Public health stakeholders have been concerned about youth access to tobacco products more broadly and expressed support for raising the minimum age of access for tobacco products from 18 to 21 years of age. Congress recently made this change legislatively, but some want Congress to take further action to address tobacco use among youth. The remote sales of tobacco products\u00e2\u0080\u0094including ENDS\u00e2\u0080\u0094may be an opportunity for youth to purchase tobacco products illegally, due to difficulties in enforcing purchasing restrictions through this medium. Generally separate from the aforementioned public health issues, another issue concerns FDA's authority to collect tobacco user fees. More specifically, FDA has determined that it currently does not have the authority to assess user fees from ENDS manufacturers and importers, despite these products being deemed subject to FDA regulation.", "These four issues are discussed in detail below, along with potential considerations for policymakers."], "subsections": [{"section_title": "ENDS: Harm Reduction Potential among Adults vs. Use among Youth, Including Flavored ENDS Use", "paragraphs": ["Since the emergence of ENDS in the tobacco marketplace, there has been ongoing debate regarding their public health impact. The public health community generally views them as a harm reduction tool for adults who specifically smoke cigarettes. Harm reduction refers to the replacement of a more harmful activity with a less harmful one when elimination of the activity is difficult or infeasible. ENDS have the potential to reduce harm among adult cigarette smokers who have experienced difficulty quitting, as the aerosol from ENDS \"contains fewer numbers and lower levels of most toxicants than does smoke from combustible tobacco cigarettes.\" ", "Yet the data are complex regarding the effectiveness of ENDS as a harm reduction or cessation tool for adults who smoke cigarettes. As of early 2018, the National Academies of Sciences, Engineering, and Medicine (NASEM) concluded that \"there is general agreement that the number, size, and quality of studies for judging the effectiveness of e-cigarettes as cessation aids in comparison with cessation aids of proven efficacy are limited, and therefore there is insufficient evidence to permit a definitive conclusion at this time.\" Further, the long-term health effects associated with use of ENDS are still largely unknown, and FDA has not yet approved any ENDS products as cessation devices. In spite of these questions, many adult cigarette smokers have expressed an interest in ENDS as a way to quit cigarette smoking. Some argue that having adults completely switch from cigarettes to ENDS can generally be viewed as positive for the public's health, given the morbidity and mortality associated with cigarette smoking. ", "However, many in the public health community are alarmed by the marked increase in use of ENDS products among youth, which are now the most popular tobacco product used among this age group. Research studies suggest that this change has occurred, in large part, as a result of access to flavored ENDS products. The availability of flavored ENDS products has created tension between industry and the public health community. Industry-funded research suggests that availability of flavored ENDS may be more appealing to adult cigarette smokers (in comparison to nonsmoking teens) and could help adult cigarette smokers quit cigarette smoking. Conversely, one systematic review of the literature found that both youth and adults enjoy flavors in e-cigarettes. However, the authors of this review stated that \"in terms of whether flavored e-cigarettes assisted [adults] quitting smoking, we found inconclusive evidence.\" In combination, numerous studies have documented that flavors entice youth to initiate and continue using tobacco products, including ENDS. Further, the NASEM concluded that there is substantial evidence that ENDS use among youth increases the risk of such youth ever using cigarettes, leading to concern that tobacco control efforts that have successfully reduced cigarette smoking among both youth and adults will be diminished. The culmination of these factors raises questions about how to regulate ENDS products going forward and, specifically, how to address flavors in tobacco products (including ENDS).", "In March 2019, FDA released a draft guidance document specifying its intended enforcement activities related to flavored ENDS. This guidance specified that FDA would prioritize enforcement of premarket review, distribution, and sale requirements related to certain flavored ENDS products that may be most accessible to youth. For example, FDA would prioritize enforcement of distribution and sale requirements in retail locations where certain flavored ENDS products may be most accessible to youth, such as in convenience stores and gas stations that do not have adult-only sections. In September 2019, FDA announced that it would finalize this guidance document \"in the coming weeks,\" with the intention of clearing \"the market of flavored e-cigarettes to reverse the deeply concerning epidemic of youth e-cigarette use.\" Delays in guidance finalization led to a Congressional hearing on December 4, 2019 to investigate the cause for delay. In January 2020, FDA released the final guidance document, with some changes compared to the draft guidance. Specifically, the March 2019 draft guidance focused enforcement of premarket authorization requirements based on how and where ENDS products are sold, while the final guidance focuses enforcement of premarket authorization requirements based on ENDS product characteristics (e.g., cartridge-based products). Some public health stakeholders expressed concern that the final guidance does not go far enough to reduce ENDS use among youth. ", "In response to concerns regarding youth access to ENDS products, including flavored ENDS products, Congress may consider further limiting when flavors can be used in ENDS. Congress may also choose to outright ban all flavors (including menthol) in ENDS\u00e2\u0080\u0094as well as in other tobacco products\u00e2\u0080\u0094as some legislation introduced in the 116 th Congress has proposed. Congress may consider proposals that reduce any tobacco product use, including ENDS, among youth while leaving the option of ENDS use open for adult cigarette smokers in order to benefit the public's health. Congress may also consider how availability of flavored tobacco products would fit into those proposals."], "subsections": [{"section_title": "E-cigarette, or Vaping, Product Use-Associated Lung Injury (EVALI)", "paragraphs": ["Amidst a rise in ENDS use among youth, the emergence of EVALI has raised concern among public health stakeholders, the general public, and Congress. According to CDC, data suggest that the outbreak began in June 2019. Emergency department (ED) visits reached a peak in September 2019, but have since declined. As of January 21, 2020, 60 deaths have been confirmed in 27 states and DC, and 2,711 hospitalized EVALI cases have been reported to CDC in all 50 states, DC, Puerto Rico, and the U.S. Virgin Islands. Among hospitalized EVALI patients with available data, 66% were male and 76% were under 35 years old. Further, among a subset of hospitalized EVALI patients, 82% reported using tetrahydrocannabinol (THC)-containing products. Although the causes of EVALI are still unknown, laboratory data suggest that vitamin E acetate\u00e2\u0080\u0094an additive found in some THC-containing ENDS products\u00e2\u0080\u0094is closely associated with EVALI. Vitamin E acetate is commonly used as a dietary supplement and in skin creams. While the ingestion and dermal use of vitamin E acetate is not generally associated with adverse health effects, the safety of inhaling vitamin E acetate has not been closely examined.", "FDA and CDC, along with state and local health departments, have been working together closely to investigate the issue. FDA, the Drug Enforcement Administration (DEA), and local and state authorities have also been investigating the supply chain of ENDS associated with EVALI. FDA and DEA announced that they have seized 44 websites that were advertising the sale of illicit THC-containing vape cartridges, although none of the products advertised on the websites have been linked to any cases of EVALI. ", "Such THC-containing products may raise a larger question of federal oversight pertaining to these products that are available in states permitting the sale of marijuana for recreational or medicinal purposes. Marijuana\u00e2\u0080\u0094including marijuana-derived compounds such as THC\u00e2\u0080\u0094is an illicit substance at the federal level subject to DEA enforcement and regulatory control. However, some states have implemented their own laws on marijuana pertaining to recreational and medicinal use, and the DEA has largely focused resources on criminal networks involved in the illicit marijuana trade. Therefore, THC-containing ENDS products available for sale in states that are allowing recreational and medicinal marijuana may not be the focus of DEA's current enforcement efforts and regulation. Further, ENDS products that do not contain any components, parts, or accessories that are derived from tobacco (e.g., do not contain nicotine) and are not expected to be consumed like a tobacco product may not meet the definition of a tobacco product under the FFDCA. Therefore, such products may not be subject to FDA regulatory requirements pertaining to tobacco products. FDA has indicated that the agency would regulate such products on a \"case-by-case basis, based on the totality of the circumstances.\""], "subsections": []}]}, {"section_title": "Tobacco to 21", "paragraphs": ["Many public health stakeholders have been concerned about youth access to tobacco products more broadly and expressed support for raising the minimum age of purchasing tobacco products from 18 to 21. Numerous scientific studies and Surgeon General Reports have documented that tobacco product use often begins before the age of 18. Nearly 90% of cigarette smokers have tried their first cigarette by age 18, and 98% have tried their first cigarette by age 26. ", "The TCA required FDA to commission a report on the public health impact of raising the minimum age of tobacco product sales. FDA contracted with the Institute of Medicine (now known as the National Academy of Medicine), and concluded in a 2015 report that \"increasing the minimum age of legal access to tobacco products will likely prevent or delay the initiation of tobacco use by adolescents and young adults.\" However, the report noted that \"the impact on initiation of tobacco use of raising the minimum age of legal access to tobacco products to 21 will likely be substantially higher than raising it to 19, but the added effect of raising the minimum age of legal access beyond age 21 to age 25 will likely be considerably smaller.\" ", "In FY2020 appropriations, Congress amended the FFDCA to raise the federal minimum age of tobacco product sales to 21. FDA is also required to update its regulations by June 20, 2020 to reflect the new federal minimum age of tobacco purchasing, as well as the federal minimum age verification requirement (age verification required for individuals less than 30 years of age). The final rule is required to take effect by September 20, 2020. While public health stakeholders view this development in a positive light, some are concerned that the tobacco industry supported this initiative to avoid other measures that could also curb tobacco use\u00e2\u0080\u0094including ENDS use\u00e2\u0080\u0094among youth."], "subsections": []}, {"section_title": "Remote Sales", "paragraphs": ["Related to the issue of youth access to tobacco products\u00e2\u0080\u0094including ENDS\u00e2\u0080\u0094some have identified remote sales (i.e., non-face-to-face sales) as an opportunity for minors to illegally purchase tobacco products, due to difficulties in enforcing purchasing restrictions through this medium. While the Prevent All Cigarette Trafficking (PACT) Act of 2009 ( P.L. 111-154 ) placed certain restrictions on remote sales of cigarettes and smokeless tobacco, it did not outright prohibit them. Further, the PACT Act limits the ability of states and local governments to regulate the delivery carriers involved in remote sales\u00e2\u0080\u0094complicating enforcement efforts\u00e2\u0080\u0094and did not place such restrictions on other tobacco products, such as ENDS.", "Section 906 of the FFDCA requires FDA to promulgate regulations on remote sales of tobacco products, including age verification requirements. In 2011, FDA issued an ANPRM regarding remote sales and distribution of tobacco products, but has not taken further regulatory action since that time. ", "Legislation has been introduced in the 116 th Congress that would ban all tobacco product remote sales, including remote sales of ENDS. As has been proposed previously, Congress may also consider amending the PACT Act to extend its provisions to other tobacco products beyond cigarettes and smokeless tobacco, such as ENDS."], "subsections": []}, {"section_title": "ENDS: User Fees", "paragraphs": ["As mentioned, FDA does not collect user fees from ENDS manufacturers and importers. Given recent concerns around ENDS products, CTP has dedicated a portion of its user fees paid by other tobacco product manufacturers and importers to address ENDS-specific issues. Therefore, some stakeholders have suggested that manufacturers and importers of ENDS products be subject to tobacco user fees to offset costs associated with FDA's current and future ENDS-specific activities. However, FDA has determined that it currently does not have the authority to assess user fees from ENDS manufacturers and importers because Congress did not specify an enumerated class for ENDS products and did not provide a framework by which FDA could potentially assess user fees for ENDS products. ", "Based on FDA's interpretation, in order for ENDS manufacturers to be subject to the tobacco product user fees, Congress would need to provide FDA with the statutory framework for doing so. For example, Congress may consider amending both the FETRA formula and Section 919 of the FFDCA. However, ENDS products are not currently subject to federal excise taxes, and such taxes are a critical component of the FETRA formula (see \" User Fees \"). Therefore, if Congress were to amend FETRA and the FFDCA to explicitly provide FDA the authority to assess user fees on ENDS manufacturers and importers, Congress would likely need to amend the Internal Revenue Code (IRC) to make ENDS products subject to federal excise taxes. Another option for Congress may be to create a new, separate ENDS user fee program. ", "There has been recent congressional and executive branch interest in requiring ENDS manufacturers and importers to pay user fees. Legislation has been introduced in the 116 th Congress that would either amend the FFDCA's current user fee structure by striking the FETRA provisions to allow for assessment of ENDS user fees, or create a new, separate ENDS user fee program. The FY2021 President's budget request also proposes requiring ENDS manufacturers and importers (along with manufacturers and importers of certain other deemed products) to pay $100 million in user fees starting in FY2021. However, based on FDA's current interpretation, user fees could not be collected from ENDS manufacturers and importers without first enacting authorizing legislation.", "Appendix A. The IQOS Tobacco Heating System", "The IQOS Tobacco Heating System (IQOS) is commonly referred to as a \"heat-not-burn\" tobacco product. This new technology differs from ENDS technology because it aerosolizes the tobacco plant itself, rather than a tobacco-derived e-liquid. FDA has determined that the IQOS meets the definition of a cigarette and, as such, is subject to additional FFDCA requirements and regulations specific to cigarettes, such as advertising restrictions.", "The IQOS is composed of three main components: ", "The IQOS Heatstick is a filtered, noncombusted cigarette. A Heatstick is designed to be electrically heated to release nicotine-containing aerosol. The nicotine is derived from a reconstituted tobacco sheet made from ground tobacco powder. The IQOS Holder is an electrically powered and rechargeable unit that holds and warms the Heatstick. The Holder is used for a single Heatstick for about six to seven minutes, after which the Holder needs to be charged and the used Heatstick is discarded. The IQOS Charger recharges and cleans the Holder after each use. ", "Given the novel technology of the IQOS, some industry stakeholders see this product as a potential precedent for the premarket review process that ENDS products will eventually undergo. On May 15, 2017, FDA received PMTAs from Phillip Morris International (PMI) for the IQOS Tobacco Heating System (IQOS). PMI filed four PMTA applications for the IQOS. Three PMTA applications were for the Heatstick\u00e2\u0080\u0094two of which were for menthol flavored heatsticks\u00e2\u0080\u0094and one PMTA application was for the Holder and Charger. ", "Nearly two years later, on April 30, 2019, FDA authorized the IQOS Tobacco Heating System for marketing through these PMTAs. Based on the substantial back and forth between PMI and FDA to elicit the information needed for the complete PMTA applications, there is concern that small ENDS manufacturers may not have the resources to engage in the PMTA process in the future. There is also concern that FDA may need additional resources to accommodate the inevitable influx of lengthy ENDS PMTA applications.", "Appendix B. Tobacco Master Settlement Agreement of 1998", "On November 23, 1998, attorneys general from 46 states, the District of Columbia, and the U.S. territories signed a contractual agreement (the Master Settlement Agreement, or MSA) with the major cigarette companies to settle state lawsuits to recover the costs, borne by Medicaid and other public programs, of treating smoking-related illnesses. The remaining four states \u00e2\u0080\u0094 Mississippi, Florida, Texas, and Minnesota \u00e2\u0080\u0094 had settled individually with the companies prior to the MSA. Under the terms of the MSA, the companies agreed to make annual payments in perpetuity and accept certain restrictions on tobacco product advertising, marketing, and promotion. Specifically, the MSA:", "prohibited cigarette companies from targeting youth in the advertising, promotion, or marketing of their products; banned the use of cartoons in advertising; limited each company to brand-name sponsorship of one sporting or cultural event a year, excluding concerts, team sports, events with a significant youth audience, or events with underage contestants; banned public transit advertising; banned outdoor billboard advertising, excluding billboard advertising for brand-name sponsored events; limited advertising outside retail stores to signs no bigger than 14 sq. ft; banned company payments to promote cigarettes in various media, including movies and TV; banned non-cigarette apparel with brand-name logos except at brand-name sponsored events; banned gifts of non-cigarette items to youth in exchange for cigarettes; restricted the use of nationally recognized non-tobacco brand names for cigarettes; and limited free samples of cigarettes to adult-only facilities.", "Appendix C. Definitions of Terms Used in This\u00c2\u00a0Report", "Appendix D. Acronyms Used in This Report", "On November 23, 1998, attorneys general from 46 states, the District of Columbia, and the U.S. territories signed a contractual agreement (the Master Settlement Agreement, or MSA) with the major cigarette companies to settle state lawsuits to recover the costs, borne by Medicaid and other public programs, of treating smoking-related illnesses. The remaining four states \u00e2\u0080\u0094 Mississippi, Florida, Texas, and Minnesota \u00e2\u0080\u0094 had settled individually with the companies prior to the MSA. Under the terms of the MSA, the companies agreed to make annual payments in perpetuity and accept certain restrictions on tobacco product advertising, marketing, and promotion. Specifically, the MSA:", "prohibited cigarette companies from targeting youth in the advertising, promotion, or marketing of their products; banned the use of cartoons in advertising; limited each company to brand-name sponsorship of one sporting or cultural event a year, excluding concerts, team sports, events with a significant youth audience, or events with underage contestants; banned public transit advertising; banned outdoor billboard advertising, excluding billboard advertising for brand-name sponsored events; limited advertising outside retail stores to signs no bigger than 14 sq. ft; banned company payments to promote cigarettes in various media, including movies and TV; banned non-cigarette apparel with brand-name logos except at brand-name sponsored events; banned gifts of non-cigarette items to youth in exchange for cigarettes; restricted the use of nationally recognized non-tobacco brand names for cigarettes; and limited free samples of cigarettes to adult-only facilities."], "subsections": []}]}]}}
{"id": "R45847", "title": "The Department of Defense\u2019s JEDI Cloud Program", "released_date": "2019-08-02T00:00:00", "summary": ["In September 2017, the Deputy Secretary of Defense issued a memorandum calling for the accelerated adoption of a Department of Defense (DOD) enterprise-wide cloud services solution as a fundamental component of ongoing DOD modernization efforts. As a component of this effort, DOD is seeking to acquire a cloud services solution accessible to the entirety of the Department that can support Unclassified, Secret, and Top Secret requirements, focusing on commercially available cloud service solutions, through the Joint Enterprise Defense Infrastructure (JEDI) Cloud acquisition program.", "DOD intends to conduct a full and open competition that is expected to result in a single award Indefinite Delivery/Indefinite Quantity firm-fixed price contract for commercial items. DOD has indicated that the minimum guaranteed award is $1 million, and that the initial period of performance is two years. The contract is expected to have a maximum ceiling of $10 billion across a potential 10-year period of performance. DOD is in the final stages of evaluating proposals, with Amazon Web Services and Microsoft remaining in contention for the contract. The Department originally expected to award the contract in August 2019. However, Secretary of Defense Dr. Mark T. Esper is reportedly currently reviewing the JEDI Cloud program, which may delay the award.", "Significant industry and congressional attention has been focused on DOD's intent to award the JEDI Cloud contract to a single company. Oracle America filed multiple pre-award bid protests with the Government Accountability Office, which were denied. Oracle America then filed a bid protest lawsuit with the U.S. Court of Federal Claims; the court ruled against Oracle in a July 12, 2019, decision. In filings associated with its bid protests, Oracle America alleged in part that the JEDI Cloud acquisition process was unfairly skewed in favor of Amazon Web Services through potential organizational conflicts of interest associated with three former DOD employees, each of whom was involved to greater or lesser degrees in the early development of the program. DOD investigations determined that Amazon Web Services had no conflicts of interest and established that the actions of the individuals identified by Oracle America did not negatively impact the procurement or grant Amazon Web Services an unfair competitive advantage. However, the investigations did identify individual violations of ethical standards established by the Federal Acquisition Regulation.", "Some industry observers contend that an initial single award appears to contradict broader federal cloud computing implementation guidance and industry best practices that stress the importance of multi-cloud solutions. Others point to the implementation approaches identified by DOD's 2019 Cloud Strategy as evidence that the Department expects the JEDI Cloud to serve certain enterprise-wide functions, performing as one component of a broader multi-cloud, multi-vendor system. Opponents of DOD's use of a single-award contract for the JEDI Cloud program have suggested that this tactic could restrict future competition for enterprise-wide DOD cloud services. Supporters of DOD's approach argue that the JEDI Cloud program's requirement for offerors to develop applications and data schema easily transferable to different platforms suggests that the Department may be equipped to migrate from any service environment developed under the JEDI Cloud contract to another such environment.", "Several Members of Congress have engaged the Administration to express their views regarding the JEDI Cloud acquisition program and pending contract award. The 116 th Congress is considering related authorization and appropriations legislation that could shape future implementation of the program ( H.R. 2740 , H.R. 2500 , and S. 1790 )."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["This report provides analysis of relevant background information and considerations for Congress associated with ongoing Department of Defense (DOD) efforts to obtain enterprise-wide cloud computing services through the Joint Enterprise Defense Infrastructure (JEDI) Cloud acquisition program.", "In September 2017, then-Deputy Secretary of Defense (DSD) Patrick Shanahan issued a memorandum calling for the accelerated adoption of a DOD enterprise-wide cloud services solution as a key component of ongoing DOD modernization efforts. DOD views this adoption process as a two part effort: in the first phase, DOD is seeking to acquire a cloud services solution accessible to the entirety of the Department that can support Unclassified, Secret, and Top Secret requirements, focusing on commercially available cloud service solutions, through the JEDI Cloud acquisition program. In the second phase, DOD seeks to transition selected existing data and applications maintained by the military departments and agencies to the cloud. "], "subsections": []}, {"section_title": "Background", "paragraphs": [], "subsections": [{"section_title": "What Is Cloud Computing?", "paragraphs": ["Broadly speaking, cloud computing refers to the practice of remotely storing and accessing information and software programs on demand through the internet, instead of storing data on a computer's hard drive or accessing it through an organization's intranet. It relies on a cloud infrastructure , a collection of hardware and software that may include components such as servers and a network. This infrastructure can be deployed privately to a select user group, publicly through subscription-based commercial services available to the general public, or through hybrid deployments that combine aspects of both private and public cloud infrastructure.", "Cloud computing capabilities are delivered to end users through three main service models: ", "Software as a Service (SaaS) , which provides end users with access to software applications hosted and managed by the cloud computing provider (such as Dropbox, Slack, or Google web-based applications); Platform as a Service (PaaS) , which provides end users with the ability to construct and distribute web-based software applications through a common interface hosted and managed by the cloud computing provider (such as Google App Engine, Amazon Web Services Elastic Beanstalk, Microsoft Azure, and Oracle Cloud); and Infrastructure as a Service (IaaS) , which provides end users with remote access to infrastructure components\u00e2\u0080\u0094such as servers, virtual machines, and storage\u00e2\u0080\u0094maintained by the cloud computing provider (such as Amazon Elastic Compute Cloud, Google Compute Engine, and Microsoft Azure).", "Many major cloud vendors, such as Microsoft and Amazon, are increasingly offering products and services that combine aspects of these service models.", "Cost, efficiency, accessibility, agility of improvements, security, and reliability are all considerations in public and private sector decisions about cloud service adoption. For a more in-depth discussion of these factors and cloud computing characteristics, deployment models, and service models, see CRS Report R42887, Overview and Issues for Implementation of the Federal Cloud Computing Initiative: Implications for Federal Information Technology Reform Management , by Patricia Moloney Figliola and Eric A. Fischer."], "subsections": []}, {"section_title": "What Is the Current Status of DOD's Adoption of Cloud Services?", "paragraphs": ["Since the establishment of the Federal Cloud Computing Initiative (FCCI) in 2009, the federal government\u00e2\u0080\u0094including DOD\u00e2\u0080\u0094has actively worked to shift portions of its information technology (IT) needs to cloud-based services through strategies such as \"Cloud First,\" which required federal agencies to prioritize the use of cloud-based solutions whenever a secure, reliable, and cost-effective option existed. This move was intended in part to reduce the total investment by the federal government in physical information technology (IT) infrastructure\u00e2\u0080\u0094through actions such as reducing or eliminating data storage at agency-owned and operated data centers\u00e2\u0080\u0094as well as capitalizing on other advantages of cloud adoption. ", "DOD efforts to acquire cloud services have been ongoing; however, DOD has described its current cloud services use as \"decentralized\" and \"disparate,\" creating \"additional layers of complexity\" that impede shared access to common applications and data across the Department. As of mid-2018, DOD reported maintaining more than 500 public and private cloud infrastructures that support Unclassified and Secret requirements. DOD has also acknowledged that its prior lack of \"clear guidance on cloud computing, adoption, and migration,\" as well as acquisition guidance that allowed DOD components to independently pursue the procurement of cloud-based services, has led to \"disjointed implementations with limited capability, siloed data, and inefficient acquisitions that cannot take advantage of economies of scale.\" "], "subsections": []}, {"section_title": "What Is DOD's Current Cloud Strategy?", "paragraphs": ["DOD publicly released its current \"Cloud Strategy\" in February 2019. As part of its cloud strategy, DOD identifies the need to adopt cloud computing services across the Department as a priority, and articulates its intent to develop a \"multi-cloud, multi-vendor \u00e2\u0080\u00a6 ecosystem composed of a General Purpose and [multiple] Fit For Purpose\" (see Figure 1 ) clouds. ", "DOD anticipates that the JEDI Cloud acquisition program will ultimately lead to a foundational enterprise-wide \"General Purpose\" cloud suitable for the majority of DOD systems and applications, enabling DOD to offer IaaS and PaaS at all classification levels. \"Fit For Purpose\" clouds, on the other hand, are envisioned as task-specific \"commercial solution[s]\"\u00e2\u0080\u0094such as the ongoing Defense Enterprise Office Solutions (DEOS) SaaS acquisition program that will create a cloud-based replacement for certain DOD software-based applications such as email and instant messaging services\u00e2\u0080\u0094or \"on-premises cloud solution[s],\" such as DISA's milCloud 2.0, which provides IaaS, to be used in limited situations where the \"General Purpose\" cloud cannot adequately support mission needs.\""], "subsections": []}, {"section_title": "What Acquisition Policies Apply to DOD Procurement of Cloud\u00c2 Services?", "paragraphs": ["While the Federal Acquisition Regulation (FAR) does not explicitly provide acquisition guidance for cloud computing services, certain sections (e.g., FAR Part 39, Acquisition of Information Technology or FAR Part 12, Acquisition of Commercial Items ) may apply depending on the specific acquisition strategy for a particular contract. Certain other government-wide acquisition policies for cloud services, such as the Federal Risk and Authorization Management Program (FedRAMP) security assessment process, apply.", "DOD-specific policies for acquiring cloud services are prescribed in part by Defense Federal Acquisition Regulation Supplement (DFARS) Subpart 239.76, which states that DOD must generally acquire cloud services using commercial terms and conditions\u00e2\u0080\u0094such as license agreements, end user license agreements, terms of service, or other similar legal instruments\u00e2\u0080\u0094consistent with federal law and DOD's needs. A contract to acquire cloud services may generally only be awarded to a provider with provisional Defense Information Security Agency (DISA) authorization to provide such services, consistent with the current version of the DOD Cloud Computing Security Requirements Guide (SRG). ", "To maintain legal jurisdiction over information and data accessed via a cloud services solution, all data stored and processed by or for DOD must reside in a facility under the exclusive legal jurisdiction of the United States\u00e2\u0080\u0094meaning that cloud computing service providers are generally required to store government data that is not physically located on DOD premises at locations within the United States or outlying areas of the United States.", "All cloud services must have an Authorization to Operate (ATO), an official decision made by a senior official that explicitly accepts any associated operational risks (i.e., risks to organizational operations or assets; individuals; other organizations; or the United States). An ATO is based on the implementation of an agreed-upon set of security controls. The 2014 DOD Memorandum Updated Guidance on the Acquisition and Use of Commercial Cloud Computing Services authorized the direct acquisition of cloud services by DOD components, and provided additional guidance for the acquisition of commercial cloud services."], "subsections": []}]}, {"section_title": "The JEDI Cloud Program", "paragraphs": [], "subsections": [{"section_title": "Why Does DOD Require the JEDI Cloud?", "paragraphs": ["In the unclassified summary of the 2018 National Defense Strategy (NDS), the Department articulates the need for significant DOD investment in key technology capabilities such as \"cyber defense, resilience, and the continued integration of cyber capabilities into the full spectrum of military operations,\" as well as \"military application of autonomy, artificial intelligence, and machine learning\" in order to maintain military superiority against near-peer adversaries such as China and Russia. The Department views the cloud computing and data storage capabilities to be acquired through the JEDI Cloud procurement as providing \"foundational technologies\" for these investments. The Joint Chiefs of Staff has also stated that \"efforts for accelerating [cloud adoption] are critical in creating a global, resilient, and secure information environment that enables warfighting and mission command.\" DOD Chief Information Officer (CIO) Dana Deasy has further contended that the Department requires an enterprise-wide cloud \"that allows for data-driven decision making [and] enables DOD to take advantage of our applications and data resources,\" in part to provide worldwide support for DOD operations.", "In recent public statements DOD CIO Deasy, as well as Lt. Gen. Bradford J. Shwedo, Director for Command, Control, Communications and Computers/Cyber of the J6 Command, Control, Communications, and Computers (C4) and Cyber Directorate of the Joint Staff, have also emphasized that delays in pursuing the capabilities included in the JEDI Cloud procurement may adversely affect ongoing Department activities, such as the recently established Joint Artificial Intelligence Center, which seeks to accelerate the delivery of artificial intelligence-enabled capabilities to DOD."], "subsections": []}, {"section_title": "Who Has Responsibility for the JEDI Cloud Program Within DOD?", "paragraphs": ["Initially, the Cloud Executive Steering Group (CESG) oversaw DOD's cloud adoption initiative. The CESG, established in September 2017, reported directly to the Deputy Secretary of Defense (DSD). The CESG was originally chaired by Ellen Lord, then the Under Secretary of Defense for Acquisition, Technology, and Logistics (USD (AT&L)). At first, the CESG included the Director of the Strategic Capabilities Office (SCO), the Managing Partner of the Defense Innovation Unit Experimental (DIUx, now known as the Defense Innovation Unit, or DIU), the Director of the Defense Digital Service (DDS), and the Executive Director of the Defense Innovation Board (DIB) as voting members (see Table 1 ). The DDS Director was tasked with leading phase one of DOD's cloud adoption initiative: the JEDI Cloud program. ", "In January 2018, the DSD announced changes to the membership and leadership of the CESG; the Deputy Chief Management Officer (DCMO; Jay Gibson, who was serving as DCMO at the time, would later become DOD's first CMO) would chair the group, with the Director of Cost Assessment and Program Evaluation (CAPE) and the DOD CIO added to the group's members. ", "In June 2018, the DSD announced that the DOD CIO, as the principal staff assistant and senior advisor to the Secretary of Defense for information technology, would oversee all aspects of DOD's cloud adoption initiative, to include the JEDI Cloud acquisition program. The Cloud Computing Program Office (CCPO), which was established by DDS to serve as the program office for the JEDI Cloud program, was also transitioned to the Office of the CIO at that time."], "subsections": []}, {"section_title": "What Is the Current Status of the JEDI Cloud Contract?", "paragraphs": ["A Request for Information (RFI) for the JEDI Cloud program was issued in October 2017; the Department held an industry day event and issued a draft Request for Proposal (RFP) in early March 2018, with a second draft RFP issued in April 2018. The final JEDI RFP was issued on July 26, 2018, and closed on October 9, 2018. In early April 2019, DOD announced that the Department had completed an initial downselect from four qualified proposals submitted by IBM, Amazon Web Services, Microsoft, and Oracle America. Amazon Web Services and Microsoft remain in contention for the contract. The Department is in the final stages of evaluating proposals, and originally anticipated announcing a contract award decision in August 2019. However, Secretary of Defense Dr. Mark T. Esper is reportedly currently reviewing the JEDI Cloud program, which may delay the award.", "DOD requested $61.9 million in funding for the JEDI Cloud acquisition program for Fiscal Year (FY) 2020."], "subsections": []}, {"section_title": "How Is the JEDI Cloud Contract Structured?", "paragraphs": ["Through the JEDI Cloud contract, DOD intends to conduct a full and open competition that will result in a single award Indefinite Delivery/Indefinite Quantity (ID/IQ) firm-fixed price contract for commercial items (i.e., IaaS and PaaS).", "DOD wants the JEDI Cloud to provide worldwide cloud computing services\u00e2\u0080\u0094including in austere environments\u00e2\u0080\u0094comparable to those made available through commercial cloud services. Accordingly, the Department has specified that an offeror does not need to maintain dedicated or exclusive infrastructure for unclassified services. However, offerors must comply with the JEDI Cloud Cyber Security Plan, and must provide dedicated, exclusive infrastructure for classified services. ", "DOD is further requiring any successful offeror to provide rapid deployment of new commercially available cloud-related services to JEDI Cloud users, and expects ongoing parity with public commercial prices. DOD indicated that the minimum guaranteed award is $1 million. The contract is expected to have a maximum ceiling of $10 billion across a potential 10-year period of performance. Under an ID/IQ contract, the government is only required to purchase the minimum amount specified in the contract, and may ultimately choose not to reach the contract ceiling. The contract period of performance is structured as a two-year base ordering period, with three additional option periods (two three-year options and one two-year option), for a potential total of 10 years (see Table 1 )."], "subsections": []}, {"section_title": "What Is the Source Selection Process for the JEDI Cloud Contract?", "paragraphs": ["DOD indicated that it will award the JEDI Cloud contract to the offeror whose proposal meets specified requirements and represents the best value to the government, based on a two-step evaluation process. In the first step, offerors were evaluated against seven performance-based criteria (see Figure 2 for a full listing).3 Proposals were deemed acceptable or unacceptable for each individual sub-factor as considered sequentially: a judgement of unacceptable immediately disqualified a proposal from further consideration. For example, performance sub-factor 1.1, \"Elastic Usage,\" requires offerors to provide summary data for the months of January and February 2018 in order to demonstrate that additional traffic generated by unclassified usage of the JEDI Cloud would not represent a majority of a proposed solution's commercially available network, computational, and storage capacity. Performance sub-factor 1.2, \"High Availability and Failover,\" in part requires offerors to have no fewer than three existing physical data centers at least 150 miles apart within the United States or outlying areas of the United States. ", "If a proposal received a mark of \"acceptable\" for each sub-factor, it proceeded to the second phase of the source selection process, where it was then evaluated against five additional technical factors, together with submitted price proposals, to determine a \"competitive range\" of offerors. Qualifying offerors within the competitive range were next evaluated against two additional factors: the offeror's approach to meeting small business participation goals and a demonstration of the proposed solution's capabilities. "], "subsections": []}]}, {"section_title": "Reactions from Observers and Congress", "paragraphs": [], "subsections": [{"section_title": "How Has Industry Reacted?", "paragraphs": ["DOD received more than 1,500 comments in response to its draft RFPs. Companies including Amazon Web Services, Google, IBM, and Microsoft initially expressed interest in competing for the JEDI Cloud contract. However, DOD's acquisition strategy also sparked resistance from those who opposed DOD's intent to award the contract to a single company. This concern led some industry associations to publicly contest a single award, arguing that it would be inconsistent with broader federal cloud computing implementation guidance, and could unfairly restrict future competition for DOD cloud services. ", "For example, the trade group ITAPS (IT Alliance for Public Sector) sent a letter to the House and Senate Armed Services committees stating in part that the ", "deployment of a single cloud conflicts with established best practices and industry trends in the commercial marketplace, as well as current law and regulation, which calls for the award of multiple task or delivery order contracts.... Further, the speed of adoption of innovative commercial solutions, like cloud, is facilitated by the use of these best practices.", "In October 2018, Google announced that it would not be submitting a bid for the contract, citing possible conflict with its corporate principles, along with DOD's plans to award the contract to a single vendor, among its reasons for withdrawing."], "subsections": [{"section_title": "GAO Bid Protests and U.S. Court of Federal Claims Case", "paragraphs": ["Oracle America and IBM both filed pre-award bid protests with the Government Accountability Office (GAO) against the JEDI Cloud solicitation; GAO denied Oracle America's protests on November 14, 2018, and dismissed IBM's protests on December 11, 2018. Subsequently, Oracle America filed a bid protest lawsuit with the U.S. Court of Federal Claims. ", "In filings associated with its bid protest lawsuit, Oracle America in part alleged that (1) the performance-based criteria include in the first step of the contract source selection process were \"unduly restrictive and arbitrary\" and (2) the JEDI Cloud acquisition process was unfairly skewed in favor of Amazon Web Services through potential organizational conflicts of interest associated with three former DOD employees, each of whom was involved to greater or lesser degrees in the early development of the program. Two of these former DOD employees were subsequently employed by Amazon Web Services. These claims attracted significant media and congressional attention. ", "DOD investigations determined that Amazon Web Services had no unmitigated organizational conflicts of interest, and established that the actions of the individuals identified by Oracle America did not negatively impact the procurement or grant Amazon Web Services an unfair competitive advantage. However, the investigations did identify individual violations of ethical standards established by FAR Part 3.101-1, which directs government procurement activities to be \"conducted in a manner above reproach,\" and for government employees to strictly \"avoid \u00e2\u0080\u00a6 any conflict of interest or even the appearance of a conflict of interest in Government-contractor relationships.\" These findings were reportedly referred to the DOD Inspector General for further review.", "The U.S. Court of Federal Claims ruled against Oracle America in a July 12, 2019, decision, finding in part that sub-factor 1.2 of the sequentially considered performance-based criteria included in the Department's source selection process was \"enforceable,\" and noting that as Oracle America admitted that its services did not \"meet that criteria at the time of proposal submission, [the Court] conclude[s] that it cannot demonstrate prejudice as a result of other possible errors in the procurement process .\" "], "subsections": []}]}, {"section_title": "How Has DOD Responded to Industry Concerns?", "paragraphs": [], "subsections": [{"section_title": "Potential for Restriction of Future Competition", "paragraphs": ["DOD officials have repeatedly described JEDI Cloud as a test model for DOD's future transition of legacy information technology systems to the cloud and have stressed that it is not intended to be a final solution. DOD CIO Dana Deasy has also highlighted the Department's lack of experience in deploying an enterprise-wide cloud solution, arguing that \"starting with a number of firms while at the same time trying to build out an enterprise capability\" would \"double or triple\" the technical complexity of the program. In the Department's May 2018 report to Congress, DOD indicated that the JEDI Cloud contract would include", "multiple mechanisms to \u00e2\u0080\u00a6 maximize DOD's flexibilities going forward \u00e2\u0080\u00a6 the initial base ordering period is limited to 2 years, which will allow for sufficient time to validate the operational capabilities of JEDI Cloud and the DOD enterprise-wide approach. Option periods ... will only be exercised if doing so is the most advantageous method for fulfilling the DOD's requirements when considering the market conditions at the time of option exercise.", "As detailed in the JEDI Cloud RFP, offerors submitting a proposal to DOD were required to provide detailed transition and data portability plans, to include the complete set of processes and procedures necessary to extract all relevant data (such as system and network configurations, activity logs, source code, etc.) from the JEDI Cloud environment and systematically migrate to another cloud environment."], "subsections": []}, {"section_title": "Use of a Single-Award Contract", "paragraphs": ["Section 2304a of Title 10, U.S. Code establishes a preference for making multiple awards for task or delivery order contracts, and separately prohibits DOD from awarding task or delivery order contracts exceeding $112 million (including all option periods) to a single source unless the head of the agency determines in writing that one or more of four specified circumstances apply. ", "DOD detailed the rationale for using a single-award ID/IQ contract for the JEDI Cloud procurement, pursuant to 10 U.S.C.2304a(d)(4) and the provision's implementing FAR requirements, noting that while the FAR establishes a general preference for multiple award ID/IQ contracts, the FAR also establishes that a contracting officer must not use a multiple award approach if one or more of six conditions apply. Accordingly, the JEDI Cloud contracting officer determined that", "more favorable terms and conditions, including pricing, would be provided through a single award; the expected higher cost of administering multiple contracts \"outweigh[ed] the expected benefits of making multiple awards\" with a DOD-estimated additional cost of $500 million associated with administering multiple contracts; and multiple awards would not be in the best interests of DOD in this particular instance, as a multi-cloud environment could potentially \"create seams between clouds that increase security risks \u00e2\u0080\u00a6 frustrate DOD's attempts to consolidate and pool data \u00e2\u0080\u00a6 [and could] exponentially increase the technical complexity require to realize the benefit of cloud technology.\"", "Together with the JEDI Cloud RFP, the Department also released its determination pursuant to 10 U.S.C. 2304a(d)(3), which prohibits DOD from awarding large task or delivery order contracts to a single source unless a senior official determines if at least one of four exceptions to the prohibition is present, that the JEDI Cloud contract provides only for firm-fixed price task orders or delivery orders for services for which prices are established in the contract for the specified tasks to be performed. However, the JEDI Cloud contract will also contain pricing related clauses intended to allow the Department to benefit from future marketplace competition driving commercial sector cloud services pricing downward, and to provide DOD with access to new cloud services as they become available to the commercial market", "the contract automatically lower DOD's prices when the contractor's public commercial prices are lowered. The lower unit price is fixed. \u00e2\u0080\u00a6 [T]o achieve commercial parity over time, the contract contemplates adding new or improved cloud services to the contract. The new services clause requires \u00e2\u0080\u00a6 approval for the addition of new services and includes mechanisms to ensure that the fixed unit price for the new service cannot be higher than the price that is publicly available in the commercial marketplace in the continental United States. This same clause requires that, if a service \u00e2\u0080\u00a6 is eliminated from the Contractor's publicly available commercial catalog, the Contractor shall offer replacement service(s) \u00e2\u0080\u00a6 at a price no higher than, the service being eliminated. As with any other cloud offering, once the new service is added to the catalog, the unit price is fixed and cannot be changed without contracting officer approval.", "The U.S. Court of Federal Claims questioned DOD's use of the 10 U.S.C. 2304a(d)(3) exception for firm fixed-price task or delivery orders in its determination in tandem with the JEDI Cloud contract's price adjustment clauses, noting that \"prices for new, additional services to be identified and priced in the future, even if they may be capped in some cases, are not, by definition, fixed or established at the time of contracting.\" "], "subsections": []}]}, {"section_title": "What Actions Has Congress Taken?", "paragraphs": [], "subsections": [{"section_title": "Legislative Action in the 115th Congress", "paragraphs": [], "subsections": [{"section_title": "Authorizations", "paragraphs": ["Section 1064 of P.L. 115-232 , the John S. McCain National Defense Authorization Act (NDAA) for FY2019, required the DOD CIO to conduct activities supporting DOD's cloud adoption initiative: ", "developing an approach to rapidly acquire advanced network capabilities, including software-defined networking, on-demand bandwidth, and aggregated cloud access gateways, through commercial service providers; and conducting an analysis of existing systems and applications that would be migrated to the JEDI Cloud environment.", "Section 1064 required the DOD CIO to submit a report on the current status and anticipated implementation of DOD's cloud adoption initiative, and limited the use of authorized FY2019 funds for DOD's cloud adoption until the required report's submission. The Department submitted the required report in January 2019.", "Section 1064 further required DOD to complete an assessment to determine whether an information system or application is already, or can and would be cloud-hosted, prior to approving any new system or application for development or modernization. Finally, and pointedly, Section 1064 requires the Deputy Secretary of Defense to \"ensure that the acquisition approach of the Department [for the JEDI Cloud procurement] continues to follow the [FAR] with respect to competition.\" In the conference report accompanying the FY2019 NDAA ( H.Rept. 115-874 ), the conferees", "emphasize the importance of modernizing networks by adopting advancing [sic] commercial capabilities to achieve DOD's cloud transition and enterprise efficiency goals. \u00e2\u0080\u00a6 The conferees encourage the Department to continue to ensure that cloud technologies are technically suitable, appropriately tested for security and reliability, and integrated with other DOD information technology efforts so as to optimize effective and efficient procurement of such technologies and services and their performance in support of DOD missions. Finally, the conferees note that although transparency and information sharing by the Department on the Cloud Initiative has slightly improved, it continues to be insufficient for conducting congressional oversight. The conferees expect the Department to improve communication with Congress on this issue and will consider additional legislation if an improvement is not seen."], "subsections": []}, {"section_title": "Appropriations", "paragraphs": ["Section 8137 of P.L. 115-245 , which provided FY2019 DOD appropriations, prevented the obligation or expenditure of FY2019 funds to \"migrate data and applications to the proposed [JEDI] ... cloud computing services\" until 90 days after the Secretary of Defense submitted (1) a plan to establish a DOD-wide budget accounting system for funds requested and expended for cloud services, as well as funds requested and expended to migrate to a cloud environment; and (2) a detailed description of DOD's strategy to implement enterprise-wide cloud computing to the congressional defense committees.", "The Department submitted the required report in January 2019."], "subsections": []}]}, {"section_title": "Proposed Legislative Action in the 116th Congress", "paragraphs": [], "subsections": [{"section_title": "Authorizations", "paragraphs": ["The House Armed Services Committee report ( H.Rept. 116-120 ) accompanying the House-passed FY2020 NDAA ( H.R. 2500 ), includes the committee's commendation for DOD's cloud strategy", "Cloud infrastructure, such as [JEDI], allows users to access information from anywhere at any time, effectively removing the need for the user to be in the same physical location as the hardware that stores the data. \u00e2\u0080\u00a6 The ability of cloud infrastructure to scale ensures that the Department efficiently manages and modernizes its information technology needs and demands. The committee endorses the Department's strategy and concept for a flexible enterprise cloud architecture that enshrines the need and value for both general purpose and fit-for-purpose cloud solutions through a multi-cloud, multi-vendor approach.", "Section 1035 of S. 1790 , the Senate-passed FY2020 NDAA, would specify that the DOD CIO and the DOD Chief Data Officer, in consultation with the J6 Command, Control, Communications, and Computers (C4) and Cyber Directorate of the Joint Staff and the DOD CMO, must develop and issue DOD-wide policy and implementing instructions regarding the transition of data and applications to the cloud. Such a policy would be required to \"dramatically improve support to operational missions and management processes, including by the use of artificial intelligence and machine learning technologies.\"", "In its \"Items of Special Interest\" for Title XVI (\"Strategic Programs, Cyber, and Intelligence Matters\"), the Senate Armed Services Committee report ( S.Rept. 116-48 ) for the FY2020 NDAA notes the committee's understanding for the \"potential of commercial clouds to provide cost-effective, state-of-the-art capabilities,\" but highlights the committee's view that tDOD must be able to \"conduct cybersecurity testing\" for commercial cloud products and services, \"including threat-realistic cyberattacks, to assess the cybersecurity of the Department's data and the cyber defense response to the attacks.\" The report directs the Secretary of Defense to provide a related briefing to the House and Senate Armed Services Committees, and recommends the inclusion of information regarding independent cyber assessments for commercially provided infrastructure in Director of Operational Test and Evaluation annual reports."], "subsections": []}, {"section_title": "Appropriations", "paragraphs": ["The House Appropriations Committee report ( H.Rept. 116-84 ) accompanying H.R. 2968 , the House-passed FY2020 Department of Defense appropriations act, highlights the committee's skepticism of DOD's pursuit of a \"single vendor contract strategy\" for the JEDI Cloud procurement", "The Committee continues to be concerned with this approach given the rapid pace of innovation in the industry and that this approach may lock the [DOD] into a single provider for potentially as long as ten years. Since the [DOD] adopted its single vendor strategy in 2017, other federal agencies \u00e2\u0080\u00a6 have decided to pursue a multiple vendor cloud strategy as recommended by the [OMB] \"Cloud Smart\" strategy \u00e2\u0080\u00a6 the Committee believes the [DOD] is deviating from established OMB policy and industry best practices, and may be failing to implement a strategy that lowers costs and fully supports data innovation for the warfighter.", "Accordingly, the House Appropriations Committee report would direct that no funds may be obligated or expended to migrate data and applications to the JEDI Cloud until the DOD CIO provides a report to the congressional defense committees expanding on the Department's plans to transition to a \"multi-cloud, multi-vendor\" environment. The DOD CIO would be directed to provide a listing of anticipated contracting opportunities for the acquisition of commercial cloud services by the Department over the next two years, to include specified elements such as planned contract type and structure; whether the procurement is anticipated to be conducted as a full and open competition or as a sole source award; the estimated timeframe for the release of related solicitations; and the estimated maximum contract value and period of performance, including option periods. The DOD CIO would also be directed to submit quarterly reports on the implementation of its cloud adoption and implementation strategy to the House and Senate Appropriations Committees, beginning 30 days after the enactment of a FY2020 defense appropriations act."], "subsections": []}]}, {"section_title": "Other Congressional Actions", "paragraphs": ["Various Members of Congress have also individually and collectively advocated for the Department to take certain actions relating to the JEDI Cloud procurement. For example, some Members have urged DOD to delay or postpone awarding the JEDI Cloud contract to accommodate an alternate acquisition strategy, or the conclusion of the DOD Inspector General's investigation into the potential violations of ethical standards by former DOD employees. Other Members have supported DOD's acquisition strategy, advocating for the Department to award the JEDI Cloud contract as soon as possible. "], "subsections": []}]}]}, {"section_title": "Considerations for Congress", "paragraphs": ["Significant attention has focused on DOD's intent to award the JEDI Cloud contract to a single company. Some observers contend that an initial single award appears to contradict broader federal cloud computing implementation guidance and industry best practices that stress the importance of multi-cloud solutions. Other experts point to the implementation approaches identified by DOD's Cloud Strategy as an indication that the Department expects the JEDI Cloud to serve certain enterprise-wide functions, performing as one component of a broader multi-cloud, multi-vendor system. Some observers, however, have concluded that the JEDI Cloud requirements are misaligned with DOD's Cloud Strategy, and have urged the Department to rescind and revise the JEDI Cloud RFP. ", "Those opposed to DOD's use of a single-award contract for the JEDI Cloud program have suggested that a single-award contract could potentially restrict future competition for enterprise-wide DOD IaaS and PaaS cloud services. Supporters of DOD's approach argue that the JEDI Cloud program's requirement for offerors to develop platform-agnostic applications and data schema suggests that the Department will be well equipped to migrate from any service environment developed under the JEDI Cloud contract to another such environment. Potential considerations for Congress concerning the ongoing JEDI Cloud acquisition process, as well as any follow-on efforts, include the following issues."], "subsections": [{"section_title": "Oversight of Option Exercise for the JEDI Cloud Contract", "paragraphs": ["As DOD has indicated that it believes the initial two-year base ordering period is sufficient time to validate the JEDI Cloud test model, Congress may consider directing DOD to provide detailed rationale and justification for any extension of the JEDI Cloud contract prior to the exercise of contract options. At the time of option exercise, Congress may also consider directing the Department to report on any notable lessons learned or challenges experienced in the execution of the JEDI Cloud contract. As emphasized in the conference report accompanying the FY2019 NDAA ( H.Rept. 115-874 ), Congress may also wish to monitor the extent to which the Department has \"improved communication with Congress\" to enable sufficient congressional oversight of the JEDI Cloud program and DOD's cloud adoption initiative."], "subsections": []}, {"section_title": "Procurement Integrity", "paragraphs": ["The U.S. Court of Federal Claims decision agreed with the Department's finding that the actions of the individuals identified by Oracle America in its bid protest lawsuit did not negatively impact the procurement or grant Amazon Web Services an unfair competitive advantage. However, the individual violations of ethical standards for federal employees involved in the acquisition of goods and services for the U.S. government\u00e2\u0080\u0094which generated the appearance of unresolved conflicts of interest\u00e2\u0080\u0094identified by DOD in the course of its investigations delayed the JEDI Cloud procurement process. ", "The FAR directs government procurement activities to be \"conducted in a manner above reproach,\" and for government employees to strictly \"avoid \u00e2\u0080\u00a6 even the appearance of a conflict of interest.\" Congress may accordingly consider directing DOD to examine the current emphasis on ethical conduct and the Procurement Integrity Act in education, training, and qualification requirements for designated acquisition positions\u00e2\u0080\u0094as well as considering the need to include equivalent training for DOD servicemembers and civilian employees outside of the defense acquisition workforce who may provide technical expertise or other support for procurement programs\u00e2\u0080\u0094and determine what, if any, changes should be made to associated curriculum and certification requirements."], "subsections": []}]}]}}
{"id": "R45970", "title": "Gun Control: National Instant Criminal Background Check System (NICS) Operations and Related Legislation", "released_date": "2019-10-17T00:00:00", "summary": ["The Federal Bureau of Investigation (FBI) administers a computer system of systems that is used to query federal, state, local, tribal, and territorial criminal history record information (CHRI) and other records to determine an individual's firearms transfer/receipt and possession eligibility. This FBI-administered system is the National Instant Criminal Background Check System (NICS). NICS, or parallel state systems, must be checked and the pending transfer approved by the FBI or state point of contact before a federally licensed gun dealer may transfer a firearm to any customer who is not also a federally licensed gun dealer. Current federal law does not require background checks for intrastate (same state), private-party firearms transactions between nondealers, though such checks are required under several state laws.", "In the 116 th Congress, the House of Representatives passed three bills that would expand federal firearms background check requirements and firearms transfer/receipt and possession ineligibility criteria related to domestic violence.", "The Bipartisan Background Checks Act of 2019 ( H.R. 8 ), a \"universal\" background check bill, would make nearly all intrastate, private-party firearms transactions subject to the recordkeeping and NICS background check requirements of the Gun Control Act of 1968 (GCA). For the past two decades, many gun control advocates have viewed the legal circumstances that allow individuals to transfer firearms intrastate among themselves without being subject to the licensing, recordkeeping, and background check requirements of the GCA as a \"loophole\" in the law, particularly within the context of gun shows. Gun rights supporters often oppose such measures, underscoring that it is already unlawful to knowingly transfer a firearm or ammunition to a prohibited person. In addition, some observers object to these circumstances being characterized as a loophole, in that the effects of the underlying provisions of current law are not unintended or inadvertent.", "The Enhanced Background Checks Act of 2019 ( H.R. 1112 ) would lengthen the amount of time firearms transactions could be delayed pending a completed NICS background check from three business days under current law to several weeks. The timeliness and accuracy of FBI-administered firearms background checks through NICS\u00e2\u0080\u0094particularly with regard to \"delayed proceeds\"\u00e2\u0080\u0094became a matter of controversy following the June 17, 2015, Charleston, SC, mass shooting at the Emanuel African Methodist Episcopal Church. The assailant in this incident had acquired a pistol following a three-business-day-delayed sale under current law and an unresolved background check. While it has never been definitely determined whether the assailant's arrest record would have prohibited the firearms transfer, this incident prompted gun control advocates to label the three-business-day delayed transfer provision of current law as the \"Charleston loophole.\" Gun rights supporters counter that firearms background checks should be made more accurate and timely, so that otherwise eligible customers are not wrongly denied a firearms transfer, and ineligible persons are not allowed to acquire a firearm.", "The Violence Against Women Reauthorization Act of 2019 ( H.R. 1585 ) would expand federal firearms ineligibility provisions related to domestic violence to include former dating partners under court-ordered restraints or protective orders and persons convicted of misdemeanor stalking offenses. Gun control advocates see this proposal as closing off the \"boyfriend loophole.\" Gun rights supporters are wary about certain provisions of this proposal that would allow a court to issue a restraining order ex parte ; that is, without the respondent/defendant having the opportunity for a hearing before a judge or magistrate.", "This report provides an overview of federal firearms background check procedures, analysis of recent legislative action, discussion about possible issues for Congress, and related materials."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["The Federal Bureau of Investigation (FBI) administers a computer system of systems that is used to query federal, state, local, tribal, and territorial criminal history record information (CHRI) and other records to determine if an indiv idual is eligible to receive and possess a firearm. This FBI-administered system is the National Instant Criminal Background Check System (NICS). This system, or parallel state systems, must be checked and the transfer approved by an FBI NICS examiner or state point of contact (POC) before a federally licensed gun dealer may transfer a firearm to any customer who is not similarly licensed federally as a gun dealer. ", "Under current law, persons who buy and sell firearms repeatedly for profit and as a principal source of their livelihood must be licensed federally as gun dealers. Federally licensed gun dealers\u00e2\u0080\u0094otherwise known as federal firearms licensees (FFLs)\u00e2\u0080\u0094are permitted to engage in interstate and, by extension, intrastate (i.e., within a state) firearms commerce with certain restrictions. For example, they may not transfer a handgun to an unlicensed, out-of-state resident.", "Conversely, persons who occasionally buy and sell firearms for personal use, or to enhance a personal collection, are not required to be licensed federally as a gun dealer. Those unlicensed persons, however, are prohibited generally from making interstate firearms transactions\u00e2\u0080\u0094that is, engaging in interstate firearms commerce\u00e2\u0080\u0094without engaging the services of a federally licensed gun dealer. On the other hand, current law does not require background checks for intrastate, private-party firearms transactions between nondealing, unlicensed persons, though such checks might be required under several state laws. Nevertheless, it is unlawful for anybody, FFLs or private parties, to transfer a firearm or ammunition to any person they have reasonable cause to believe is a prohibited person (e.g., a convicted felon, a fugitive from justice, or an unlawfully present alien).", "In the 116 th Congress, the House of Representatives has passed three bills that would significantly expand the federal firearms background check requirements and the current prohibitions on the transfer or receipt and possession of firearms related to domestic violence. Those bills are the ", "Bipartisan Background Checks Act of 2019 ( H.R. 8 ), a bill to expand federal firearms recordkeeping and background check requirements to include private-party, intrastate firearms transfers; Enhanced Background Checks Act of 2019 ( H.R. 1112 ), a bill to extend the amount of time allowed to delay a firearms transfer, pending a completed background check to determine an individual's eligibility; and Violence Against Women Reauthorization Act of 2019 ( H.R. 1585 ), a bill to expand firearms transfer or receipt and possession prohibitions to include dating partners with histories of domestic violence and stalking misdemeanors.", "In addition, several multiple-casualty shootings have highlighted possibly systemic vulnerabilities in the NICS-related federal background check procedures, particularly with regard to making records on prohibited persons accessible to federal data systems queried as part of the federal background check process. This report provides an overview of federal firearms statutes related to firearms transactions in interstate and intrastate commerce, dealer licensing, receipt and possession eligibility, NICS background check procedures, analysis of recent legislative action, and discussion about possible issues for Congress. "], "subsections": []}, {"section_title": "Federal Firearms Statutes", "paragraphs": ["Two major federal statutes regulate firearms commerce and possession in the United States. The Gun Control Act of 1968 (GCA; 18 U.S.C. \u00c2\u00a7921 et seq.) regulates all modern (nonantique) firearms. In addition, the National Firearms Act, enacted in 1934 (NFA; 26 U.S.C. \u00c2\u00a75801 et seq.), regulates certain other firearms and devices that Congress deemed to be particularly dangerous because they were often the weapons of choice of gangsters in the 1930s. Such weapons include machine guns, short-barreled rifles and shotguns, suppressors (silencers), a catch-all class of concealable firearms classified as \"any other weapon,\" and destructive devices (e.g., grenades, rocket launchers, mortars, other big-bore weapons, and related ordnance). ", "Congress passed both the NFA and GCA to reduce violent crimes committed with firearms. More specifically, the purpose of the GCA is to assist federal, state, local, tribal, and territorial law enforcement in the ongoing effort to reduce crime and violence. It is not intended to place any undue or unnecessary federal restrictions or burdens on citizens in regard to lawful acquisition, possession, or use of firearms for hunting, trapshooting, target shooting, personal protection, or any other lawful activity.", "Many observers have long noted that the assassinations of President John F. Kennedy and his brother, Senator Robert F. Kennedy, and civil rights leader Martin Luther King provided the impetus to pass the GCA. Perhaps equally compelling were the August 1, 1966, University of Texas tower mass shooting and social unrest that accompanied the 1960s.", "Under the Attorney General's delegation, the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) is the principal agency that administers and enforces these statutes. In addition, ATF administers several provisions of the Arms Export Control Act of 1976 (AECA) with regard to the importation of certain firearms, firearms parts, and ammunition that are also regulated under the GCA and NFA.", "For the most part, however, the FBI maintains NICS and administers the background check provisions of the GCA. Nonetheless, as discussed below, ATF is charged with investigating whether denied persons made false statements in connection with a firearms transfer; when filling out federal firearms transaction forms. In addition, ATF is also charged with firearms retrieval actions, whenever delayed transactions and incomplete background checks possibly result in prohibited persons acquiring firearms. "], "subsections": [{"section_title": "Firearms and Ammunition Ineligibility", "paragraphs": ["The GCA sets firearms eligibility age restrictions under certain circumstances, as well as prohibits various categories of persons from firearms receipt and possession, among other factors. For example, as enacted, the GCA prohibits federally licensed gun dealers (i.e., FFLs) from transferring", "a long gun (shoulder-fired rifle or shotgun) or ammunition to anyone under 18 years of age; and a handgun or ammunition suitable for a handgun to anyone under 21 years of age.", "In 1994, Congress amended the GCA to prohibit anyone from transferring a handgun to a juvenile, or anyone under 18 years of age. Congress also made it unlawful for a juvenile to possess a handgun. Congress also provided exceptions to these juvenile transfer and possession prohibitions. Exceptions include temporary transfers in the course of employment in ranching or farming, in target practice, or hunting, all with the written consent of the parents or guardians and in accordance with federal and state laws; for self- or household-defense; or in other specified situations. ", "Under the GCA, as amended, there are 10 categories of persons prohibited from receiving firearms. For 9 of those categories, those persons are also prohibited from possessing a firearm. More specifically, under 18 U.S.C. \u00c2\u00a7922(g), there are nine categories of persons prohibited from shipping, transporting, receiving, or possessing a firearm or ammunition, which has been shipped or transported in interstate or foreign commerce:", "1. persons convicted in any court of a felony crime punishable by imprisonment for a term exceeding one year and state misdemeanors punishable by imprisonment for a term exceeding two years; 2. fugitives from justice; 3. unlawful users or addicts of any controlled substance; 4. persons adjudicated as \"a mental defective,\" found not guilty by reason of insanity, or committed to mental institutions; 5. unauthorized immigrants and nonimmigrant visa holders (with exceptions in the latter case); 6. persons dishonorably discharged from the U.S. Armed Forces; 7. persons who have renounced their U.S. citizenship; 8. persons under court-order restraints related to harassing, stalking, or threatening an intimate partner or child of such intimate partner; and 9. persons convicted of a misdemeanor crime of domestic violence.", "Under 18 U.S.C. \u00c2\u00a7922(n), there is a 10 th class of persons prohibited from shipping or transporting firearms or ammunition, or from receiving (but not possessing) firearms or ammunition that had been shipped or transported in interstate or foreign commerce:", "1. persons under indictment in any court of a crime punishable by imprisonment for a term exceeding one year.", "It is unlawful for any person under any circumstances to sell or otherwise dispose of a firearm or ammunition to any of the prohibited persons enumerated above, if the transferor (seller, federally licensed or unlicensed) has reasonable cause to believe that the transferee (buyer/recipient) is prohibited from receiving those items."], "subsections": []}, {"section_title": "Firearms Commerce as a Business", "paragraphs": ["Under the GCA as enacted, persons who, or firms that, are \"engaged in the business\" of importing, manufacturing, or selling firearms must be federally licensed. In 1986, Congress amended the GCA to define the term \"engaged in the business.\" For dealers it means:", "a person who devotes time, attention, and labor to dealing in firearms as a regular course of trade or business with the principal objective of livelihood and profit through the repetitive purchase and resale of firearms, but such term shall not include a person who makes occasional sales, exchanges, or purchases of firearms for the enhancement of a personal collection or for a hobby, or who sells all or part of his personal collection of firearms.", "ATF issues federal firearms licenses to firearms importers, manufacturers, dealers, pawnbrokers, and collectors. As summarized by ATF in January 2016 guidance:", "A person engaged in the business of dealing in firearms is a person who \"devotes time, attention and labor to dealing in firearms as a regular course of trade or business with the principal objective of livelihood and profit through the repetitive purchase and resale of firearms.\"", "Conducting business \"with the principal objective of livelihood and profit\" means that \"the intent underlying the sale or disposition of firearms is predominantly one of obtaining livelihood and pecuniary gain, as opposed to other intents, such as improving or liquidating a personal firearms collection.\"", "Consistent with this approach, federal law explicitly exempts persons \"who make occasional sales, exchanges, or purchases of firearms for the enhancement of a personal collection or for a hobby, or who sells all or part of his personal collection of firearms.\"", "Under the GCA, only FFLs are allowed to transfer firearms commercially from one state to another, that is, to engage in interstate (or foreign) firearms commerce. At the same time, it would be highly improbable for any firearms business to compete successfully in the U.S. civilian gun market by only selling firearms manufactured in the state in which it does business; that is, to engage exclusively in intrastate commerce. As a practical matter, any person who deals in firearms as a business, either in interstate or intrastate commerce, needs to be federally licensed firearms manufacturer, importer, or dealer. ", "FFLs may transfer a long gun\u00e2\u0080\u0094a shoulder-fired rifle or shotgun\u00e2\u0080\u0094to unlicensed persons from another state as long as such transfers are legal in both states and they meet in person to make the transfer. However, FFLs may not transfer a handgun to any unlicensed resident of another state. Since 1986 there have been no similar restrictions on the interstate transfer of ammunition, because Congress repealed those restrictions at the request of ATF. Furthermore, a federal firearms license is not required to sell ammunition; however, such a license is required to either manufacture or import ammunition.", "In addition, FFLs are required to maintain bound logs of firearms acquisitions and dispositions to and from their business inventories by date, make, model, and serial number of individual firearms and transactions records for firearms sales to unlicensed, private persons. ATF periodically inspects these FFLs to monitor their compliance with federal and state law. ", "Under current law, there are statutory prohibitions against ATF, or any other federal agency, maintaining a registry of firearms or firearms owners. Nevertheless, the system of recordkeeping described above allows ATF agents to trace, potentially, the origins of a firearm from manufacturer or importer to a first retail sale and buyer. ATF agents assist other federal agencies, as well as state and local law enforcement, with criminal investigations. The ATF also makes technical judgements about firearms, including the appropriateness of manufacturing and importing certain makes and models of firearms and firearms parts.", "As described in greater detail below, since November 30, 1998, all FFLs are required to initiate a background check for both handguns and long guns on any prospective firearms purchaser who is otherwise unlicensed federally to engage in firearms commerce as a business. The FBI facilitates these background checks nationwide through NICS. However, for some states, these FBI-facilitated background checks are routed to state or local authorities (points of contact, or POCs) for all firearms (handguns and long guns), or just for handgun transfers or permits for other states."], "subsections": []}, {"section_title": "Private Party Transfers", "paragraphs": ["For the most part, the GCA does not regulate firearms transactions between two unlicensed persons, who reside in the same state; that is, private-party, intrastate firearms transfers. Such transfers are not covered under current federal law as long as the parties are:", "not \"engaged in the business\" of dealing in firearms \"as a regular course of trade or business with the principal objective of livelihood and profit\"; residents of the same state, where the transfer is made; not prohibited from receiving or possessing firearms; and the recipients are of age (at least 18 years old). ", "It follows, therefore, that private firearms transactions between persons who are not \"engaged in the business\" of firearms dealing and, thus, who are not required to be federally licensed, are not covered by the recordkeeping or the background check provisions of the GCA if those parties reside in the same state. The meaning of \"state of residence\" is not defined in the GCA, but ATF has defined the term to mean:", "The State in which an individual resides. An individual resides in a State if he or she is present in a State with the intention of making a home in that State. If an individual is on active duty as a Member of the Armed Forces, the individual's State of residence is the State in which his or her permanent duty station is located. An alien who is legally in the United States shall be considered to be a resident of a State only if the alien is residing in the State and has resided in the State for a period of at least 90 days prior to the date of sale or delivery of a firearm. ", "However, these intrastate, private firearms transactions and other matters such as possession, registration, and the issuance of licenses to firearms owners may be covered by state laws or local ordinances. As noted above, unlicensed persons are prohibited generally from engaging in interstate and intrastate firearms commerce as a business; however, they are permitted to change state residences and take their privately owned non-NFA firearms with them under federal law, but they must comply with the laws of their new state of residence.", "The GCA generally prohibits an unlicensed person from directly transferring any firearm\u00e2\u0080\u0094handgun or long gun\u00e2\u0080\u0094to any other unlicensed person who resides in another state. Similarly, it is unlawful for an unlicensed person to receive a firearm from any unlicensed person who resides in another state. On the other hand, the GCA does not prohibit an unlicensed person from transferring a firearm to an out-of-state FFL, who may be willing to serve as a proxy for an unlicensed person to transfer a firearm or firearms to another unlicensed person who resides in the state where the FFL is licensed federally to do business. The facilitating, out-of-state FFL, in turn, must treat that firearm as if it were part of his business inventory, triggering the recordkeeping and background check provisions of the GCA. Generally, the facilitating FFL will charge a fee for such transactions conducted on behalf of an unlicensed person, which would likely be passed on to the unlicensed buyer/transferee in most cases.", "According to a 2015 survey, about one-in-five firearms transfers (22%) are conducted privately between unlicensed persons. In addition, a 2016 survey of state and federal prisoners\u00e2\u0080\u0094conducted by the Department of Justice (DOJ), Bureau of Justice Statistics (BJS)\u00e2\u0080\u0094who possessed a firearm during the offense for which they were serving time suggested that", "more than half (56%) had either stolen the firearm (6%), found it at the scene of the crime (7%), or obtained it off the street or from the underground market (43%); most of the remainder (25%) had obtained the firearm from a family member or friend, or as a gift; and seven percent had purchased the firearm under their own name from a licensed firearm dealer, or FFL.", "Based on this survey data, private firearms sales at gun shows or any similar venue did not appear to be a significant source of guns carried by these offenders, while private transfers among family members, friends, and acquaintances did appear to account for a significant source of such firearms."], "subsections": []}, {"section_title": "ATF Form 4473, Firearms Transaction Record", "paragraphs": ["The ATF Form 4473 and bound log of firearms acquisitions and dispositions are the essential federal documents underlying the recordkeeping process mandated by the GCA. Both FFLs and prospective, federally unlicensed purchasers must truthfully and completely fill out, and sign, an ATF Form 4473. Prospective purchasers attest to three things:", "1. they are not prohibited persons, 2. they are who they say they are, and 3. they are the actual buyers.", "Straw purchases are a federal crime. It is illegal for anybody to pose as the actual buyer, when in fact he is buying the firearm for someone else. Making any materially false statement to an FFL is punishable by a fine and/or up to 10 years imprisonment. There is also a lesser penalty for making any false statement or representation in any record (e.g., the Form 4473) that an FFL is required to maintain. Some straw purchases are also prosecuted under this provision. Violations are punishable by a fine and up to five years imprisonment.", "For their part, FFLs must verify a prospective purchaser's name, date of birth, state residency, and other information by examining government-issued identification, which most often include a state-issued driver's license. ", "FFLs must also file completed Form 4473s in their records. If a purchased firearm from FFLs should be recovered at any crime scene, ATF can trace a firearm from its original manufacturer or importer to the first-time FFL retail seller and the first-time private buyer (by the make, model, and serial number of the firearm). Successful firearms traces have generated leads in criminal investigations. In addition, aggregated firearms trace data provide criminal intelligence on illegal firearms trafficking patterns."], "subsections": []}]}, {"section_title": "1993 Brady Act and Background Checks", "paragraphs": ["After six years of debate, Congress passed the Brady Handgun Violence Prevention Act, 1993 (Brady Act). Sponsors of the Brady Act initially proposed requiring a seven-day waiting period for handgun transfers. Instead, Congress amended the GCA with the Brady Act to require electronic background checks on any federally unlicensed individual seeking to acquire a firearm from an FFL. The Brady Act included both interim and permanent provisions.", "Under the interim provisions, FFLs were required to contact local chief law enforcement officers (CLEOs) to determine the eligibility of prospective customers to be transferred a handgun. CLEOs were given up to five business days to make such eligibility determinations. From February 28, 1994, to November 29, 1998, under the interim provisions, 12.7 million firearms background checks (for handguns) were completed, resulting in 312,000 denials.", "The permanent provisions of the Brady Act became effective when the FBI activated the National Instant Criminal Background Check System (NICS) on November 30, 1998. Under these provisions, FFLs are required to initiate a background check through NICS on any prospective unlicensed customer, who seeks to acquire a firearm from them through a sale, trade, or redemption of firearms exchanged for collateral. Failure to conduct a NICS check is punishable by a fine of up to $1,000 and one year imprisonment, or both. FFLs may engage in firearms transfers among themselves without conducting background checks. ", "The Brady Act includes a provision that prohibits the establishment of a registration system of firearms, firearms owners, or firearms transactions or dispositions with NICS-generated records, except for records on NICS denials for persons who are prohibited from receiving or possessing firearms under the GCA. In addition, in the FY2012 Consolidated Appropriations Act, Congress included a permanent appropriations limitation that requires the FBI to destroy background check records within 24 hours on persons who are eligible to receive firearms.", "From November 30, 1998, through 2018, the FBI NICS Section facilitated nearly 305 million firearms-related background checks transactions. Corresponding data on individual background checks and denials under the permanent provisions of the Brady Act are given and discussed below for both the FBI and for point of contact states that have chosen to either fully or partially implement the Brady Act. "], "subsections": [{"section_title": "NICS Process Under Federal Law", "paragraphs": ["Building on the GCA firearms transaction recordkeeping process, the completed and signed ATF Form 4473 serves as the authorization for an FFL to initiate a check through NICS. The FFL submits a prospective firearms transferee's name, sex, race (or ethnicity), complete date of birth, and state of residence to the FBI through NICS. Social security numbers and other numeric identifiers are optional, but the submission of these data could possibly increase the timeliness of the background check and reduce misidentifications. "], "subsections": [{"section_title": "NICS Responses", "paragraphs": ["The NICS Section is to respond to an FFL or POC state official with a NICS Transaction Number (NTN) and one of four outcomes as follows, as described in greater detail below: ", "1. \"proceed\" with transfer or permit/license issuance, because a prohibiting record was not found; 2. \"denied,\" indicating a prohibiting record was found; 3. \"delayed proceed,\" indicating that the system produced information that suggested the prospective purchaser could be prohibited; or 4. \"canceled\" for insufficient information provided.", "In the case of a \"proceed,\" the background check record is purged from NICS within 24 hours; \"denied\" requests are kept indefinitely. Under the third outcome, \"delayed proceed,\" a firearms transfer may be \"delayed\" for up to three business days while NICS examiners or state designees (i.e., POCs) attempt to ascertain whether the person is prohibited. ", "\"Delayed proceeds\" are often the result of partial, incomplete, and/or even ambiguous criminal history records. The FBI NICS Section often must contact state and local authorities to make final firearms eligibility determinations. Under federal law, at the end of the three-business-day period following a \"delayed proceed,\" FFLs may proceed with the transfer at their discretion if they have not heard from the NICS Section about those matters. The NICS Section, meanwhile, will continue to work the NICS adjudications for up to 30 days, at which point the background checks will drop out of the NICS examiner's queue if unresolved. At 88 days, all pending background check records are purged from NICS, even when they remain unresolved. About two-thirds of FBI NICS Section-administered background checks are completed within hours, if not minutes. Nearly one-fifth are delayed, but are completed within the three-business-day delayed transfer period. ", "If the FBI ascertains that the person is not in a prohibited status at any time within this 88-day period, then the FBI contacts the FFL through NICS with a \"proceed\" response. If the person is subsequently found to be prohibited, the FBI also contacts the FFL to ascertain whether a firearms transfer had been completed following the three-business-day \"delayed transfer\" period. If so, the FBI makes a referral to ATF. In turn, ATF initiates a firearms retrieval process. Such circumstances are referred as a \"delayed denial,\" or more colloquially described as \"lying and buying.\" ", "By comparison, standard denials are known as \"lying and trying,\" under the supposition that most persons knew they were prohibited before they filled out the ATF Form 4473 and underwent a background check. ATF is also responsible for investigating standard denials based on FBI NICS Section referrals. As noted above, making any false statement to an FFL in connection with a firearms transfer is punishable under two GCA provisions.", "As part of the NICS process, under no circumstances are FFLs informed about the prohibiting factor upon which denials are based. However, denied persons may challenge the accuracy of the underlying record(s) upon which their denials are based. They would initiate this process by requesting (usually in writing) the reason for their denial from the agency that initiated the NICS check (the FBI or POC). Under the Brady Act, the denying agency has five business days to respond to the request. Upon receipt of the reason and underlying record for their denials, the denied persons may challenge the accuracy of that record. If the records are found to be inaccurate, the denying agency is legally obligated under the Brady Act to correct that record. If the denials are overturned within 30 days, the transfers in question may proceed. Otherwise, FFLs must initiate another background check through NICS on the previously denied prospective purchaser."], "subsections": []}, {"section_title": "NICS-Queried Computer Systems and Files", "paragraphs": ["The feasibility of establishing NICS was largely founded upon the interstate sharing of federal, state, local, tribal, and territorial criminal history record information (CHRI) electronically through FBI computer systems and wide area network (WAN). Based on the prospective customer's name and other biographical descriptors, NICS queries four national data systems for records that could disqualify a customer from receiving and possessing a firearm under federal or state law. Those systems include the:", "Interstate Identification Index (III) for records on persons convicted or under indictment for felonies and serious misdemeanors; National Crime Information Center (NCIC) for files on persons subject to civil protection orders and arrest warrants, immigration law violators, and known and suspected terrorists; NICS Indices for federal and state record files on persons prohibited from possessing firearms, which would not be included in either III or NCIC; and Immigration-related databases maintained by the Department of Homeland Security's Immigration and Customs Enforcement (ICE) for non-U.S. citizens.", "An internal FBI inspections report found that access to N-DEx could have helped reveal that the individual, who later shot and killed nine people in a Charleston, SC, church, had an arrest record that was possibly sufficient grounds to deny him a firearms transfer. N-DEx is a repository of unclassified criminal justice files that can be shared, searched, and linked across jurisdictional boundaries. ", "For more information about these computer systems and files see Appendix B ."], "subsections": []}, {"section_title": "NICS Participation: POCs and Non-POCs", "paragraphs": ["As shown in Figure 1 , under the Brady Act, states may opt to conduct firearms-related background checks entirely or partially for themselves through state and local agencies serving as POCs, or they may opt to have such checks handled entirely by the FBI, through its NICS Section, which is part of the FBI's Criminal Justice Information Services (CJIS) Division. ", "In 13 full POC states, an FFL initiates a firearms-related background check under the Brady Act by contacting a state or local agency serving as a POC for both long gun- and handgun-related transfers. These states are CA, CO, CT, FL, HI, IL, NJ, NV, OR, PA, TN, UT, and VA. In four partial POC states, an FFL initiates a firearms-related background check by contacting the state and local agencies serving as POCs for handgun transfers, and by contacting the NICS Section through a call center for long gun transfers. These states are MD, NH, WA, and WI. In three partial POC states, an FFL initiates a firearms-related background check under the Brady Act by contacting the state and local agencies serving as POCs for handgun permits, and contacts the NICS Section through a call center for long gun transfers. These states include IA, NC, and NE. In 36 jurisdictions (30 states, the District of Columbia, and the five U.S. territories), an FFL initiates a firearms-related background check by contacting the NICS Section through a call center for all firearms-related background checks, both long gun and handgun transfers. These thirty states are AK, AL, AR, AZ, DE, GA, ID, IN, KS, KY, LA, MA, ME, MI, MN, MO, MS, MT, ND, NM, NY, OH, OK, RI, SC, SD, TX, VT, WY, and WV. The five territories are AS, GU, MP, PR, and VI. Twenty-five states are \"Brady exempt,\" meaning that certain valid, state-issued handgun and concealed carry weapons (CCW) permits may be presented to the FFL in lieu of a background check for firearms transfers through the NICS Section or state and local agencies serving as POCs. Those states are AK, AR, AZ, CA, GA, HI, IA, ID, KS, KY, LA, MI, MS, MT, NC, ND, NE, NV, OH, SC, SD, TX, UT, WV, and WY. For further information, see Appendix C ."], "subsections": []}]}, {"section_title": "NICS Transactions, November 30, 1998, Through 2018", "paragraphs": [" Figure 2 shows annual NICS transactions from November 30, 1998, through 2018 (20 years and one month). FBI transactions are shown on the base of the columns and the state and local POC transactions are shown on the top of the columns. Over this period, the FBI NICS Section and state and local agencies serving as POCs made 304.6 million NICS transactions. The NICS Section handled 128.6 million of these transactions (42.2% of all NICS transactions), whereas POCs initiated 176 million transactions (57.8% of all NICS transactions). ", "There is a one-to-one correspondence between FBI NICS transactions and individual background checks, and the 128.6 million FBI transactions\u00e2\u0080\u0094that is, background checks\u00e2\u0080\u0094resulted in 1.6 million denials (1.24%). Some of these FBI NICS Section-administered background checks were for firearms transactions involving multiple firearms; consequently, NICS transactions/background checks serve as an imperfect proxy for firearms sales.", "Unlike FBI NICS background checks, some state background checks involved more than one background check transaction. In some states, for example, there may be permitting or licensing processes that could take several weeks and administrators would run multiple NICS queries on a single applicant. In other cases, a background check administrator might be unclear about an applicant's first and last name and would run two NICS queries on the applicant, reversing both names as first and last names. More fundamentally, some states are running periodic NICS queries on concealed carry permit holders. These periodic rechecks are not considered individual background checks. ", "The FBI does not have the state data to report on how many state and local background checks correspond with those transactions. Nor does the FBI report the total number of state and local firearms transfer or license denials. The Bureau of Justice Statistics (BJS), however, collects and analyzes the data as part of its Firearm Inquiry Statistics Program and reports annually on the total number of firearms-related background checks and related denials conducted under the Brady Handgun Violence Prevention Act ( P.L. 103-159 ). ", "In June 2017, BJS reported that state and local POCs had conducted 81.7 million firearms-related background checks from November 30, 1998, through 2015. According to the FBI, these POC-conducted background checks corresponded with 123.3 million NICS transactions. About 54.9% of these state transactions involved background checks related to firearms permits/licenses, an unreported percentage of which were for concealed carry permits. It is also noteworthy that some state-issued concealed-carry permits exempt the holder from any further background checks for non-NFA firearms. Hence, state and local NICS transactions also serve as an imperfect proxy for firearms sales. See Appendix C for a list of state permits that have been certified by ATF as Brady exempt. ", "From 2006 through 2018, total NICS transactions more than doubled from 10 million to 26 million or more, peaking in 2016 at 27.5 million and then dropping to 25.2 million in 2017, and rising again to 26.2 million in 2018. For the same years, total NICS transactions/checks handled entirely by the FBI NICS Section increased from 5.3 million to 9.4 million from 2006 to 2016, then dropped to 8.6 million in 2017, and dropped again to 8.2 million in 2018. In addition, NICS transactions handled by state and local agencies increased from 4.8 million to 18.2 million from 2006 to 2016, then dropped to 16.6 million in 2017, but rose again to 17.9 million in 2018. ", "In Figure 2 POC transactions account for an increasing proportion of all NICS transactions, but as discussed above some POC background checks involve more than one NICS transaction, whereas each NICS Section transaction corresponds with a single background check. As shown in Figure 3 , for the years 1999 through 2015, the FBI CJIS Division's NICS Section conducted as many or more background checks than state or local POC agencies. ", " Figure 3 also shows the number of annual denials made pursuant to federal or state law. As noted above, over the 20 years and one month, the FBI CJIS Division's NICS Section conducted 128.7 million background checks, resulting in nearly 1.6 million denials, for an overall initial denial rate of 1.2%. As discussed below, about 2.7% of those denials were appealed and eventually overturned. ", "BJS reported that state and local POC agencies conducted nearly 81.7 million background checks from November 30, 1998, through 2015 for firearms transfers and permits. To date, BJS has not published any data for state and local POC agencies for 2016, 2017, and 2018. Nevertheless, for those 17 years and one month, POC checks resulted in nearly 1.46 million denials, for an overall denial rate of 1.8%, according to BJS. For the same years (and one month), the FBI NICS Section processed 102.4 million background checks, resulting in 1.27 million denials of firearms transfers, for an overall denial rate of 1.2%. See Appendix A for the data shown in Figure 3 , as well as FBI and POC denials by prohibiting categories."], "subsections": [{"section_title": "FBI NICS Section Brady Denials Appealed and Overturned", "paragraphs": ["As with other screening systems, particularly those that are largely name-based, false positives occur as part of the NICS process, but the frequency of these misidentifications is unreported. Nevertheless, the FBI has taken steps to mitigate false positives (i.e., denying a firearms transfer to an otherwise eligible person). In July 2004, DOJ issued a regulation that established the NICS Voluntary Appeal File (VAF), which is part of the NICS Indices (described above). DOJ was prompted to establish the VAF to minimize the inconvenience incurred by some prospective firearms transferees (purchasers) who have names or birth dates similar to those of prohibited persons. So as not to be misidentified in the future, these persons agree to authorize the FBI to maintain personally identifying information about them in the VAF as a means to avoid future delayed transfers. As noted above, current law requires that NICS records on approved firearm transfers, particularly information personally identifying the transferee, be destroyed within 24 hours.", " Figure 4 shows annual NICS Section denials, denials appealed but sustained, and denials overturned from November 30, 1998, through 2018. During this time, it appears that about one-fifth of NICS Section denials were appealed, and about one-tenth of those appealed denials were overturned, or an estimated 2.7% of NICS Section denials, according to the annual CJIS Division's NICS operations reports. The majority of these overturned denials were due to misidentifications. In any screening system, such as NICS, there is a balance between false positives and false negatives. Misidentifications and improperly interpreted criminal history and other records would constitute false positives. Allowing an otherwise prohibited person to acquire a firearm would constitute a false negative. ", "Under the GCA, there is also a provision that allows the Attorney General (previously, the Secretary of the Treasury) to consider petitions from a prohibited person for \"relief from disabilities\" and to have his firearms transfer and possession eligibility restored. Since FY1993, however, a limitation (or \"rider\") on the ATF annual appropriations for salaries and expenses has prohibited the expenditure of any appropriated funding for ATF to process such petitions from individuals.", "Conversely, under the NICS Improvement Amendments Act of 2007 ( P.L. 110-180 ), any federal agency that submits any records on individuals considered to be too mentally incompetent to be trusted with a firearm under the GCA must provide an avenue of administrative relief to those individuals, so if their mental health or other related conditions improve, their firearms rights and privileges may be restored. As a condition of grant eligibility, as described below, states must provide similar administrative avenues of relief for those purposes, that is, \"disability relief.\" See Appendix D for a list of states that have enacted and implemented ATF-certified relief from disability programs under P.L. 110-180 ."], "subsections": []}, {"section_title": "NICS Denials and Firearm Retrieval Actions", "paragraphs": [" Figure 5 shows annual NICS denials and firearm retrieval action from November 30, 1998, through 2018. For the 20 years and one month, the NICS section made an average of 3,600 firearm retrieval action referrals to the ATF annually for follow-up. In many of these cases, an otherwise prohibited person had been transferred a firearm. According to the Government Accountability Office (GAO), following up on these possibly illegal firearms receipts\u00e2\u0080\u0094or \"delayed denial investigations\"\u00e2\u0080\u0094consumes an increasing and considerable amount of ATF resources. For example, such investigations accounted for 32% of ATF investigations opened in FY2003 and 53% in FY2013. ", "It appears that in a relatively small percentage of cases the suspected offenders have been prosecuted federally for what is commonly known as either \"lying and buying\" or \"lying and trying.\" According to the Government Accountability Office (GAO), ATF processed 3,933 delayed denials in FY2017. Of those denials, 38 cases were referred to U.S. Attorney's Offices for prosecution. Nine of those cases were federally prosecuted.", "Also in a relatively small percentage of cases, an FFL could potentially proceed with a firearms transfer after the three-business-day delayed transfer period has expired, but never receive a final NICS determination; or the FFL could potentially decline to transfer the firearm to an unlicensed customer until he received a definitive NICS Section response, which the FFL may not receive from the FBI. "], "subsections": []}]}, {"section_title": "NICS Section Budget", "paragraphs": ["NICS is maintained and administered by the FBI Criminal Justice Information Services (CJIS) Division and its NICS Section, located in Clarksburg, WV. Recent increases in the volume of firearms-related commerce and attendant background checks have strained the NICS Section and additional staff and funding has been requested by the FBI, which Congress has provided through appropriated funding. For FY2016, the NICS Section program budget allocation was $81 million and 668 funded permanent positions. As described below, for FY2019, the FBI anticipated that the NICS Section program budget would be allocated $103 million and 679 positions, representing a $22 million and 11 position increase over FY2016. The Administration's FY2020 request would increase FY2020 NICS Section program budget to $115 million and 719 positions.", "For FY2017, the Obama Administration requested $121.1 million for the NICS program, including an additional $35 million. Of this budget increase $15 million was requested to sustain 75 professional support positions funded for FY2016; and another $20 million was requested to hire 160 contractors to support NICS firearms background checks and related activities. The remaining $5.1 million was requested to annualize operational costs associated with the NICS base budget. Report language accompanying both the Senate- and House-reported FY2017 Commerce, Justice, Science, and Related Agencies appropriations bills ( S. 2837 and H.R. 5393 ) indicated that those bills would have provided the requested $35 million for NICS. The Explanatory Statement accompanying H.R. 244 , submitted by the House Committee on Appropriations Chair, Representative Rodney Frelinghuysen, indicated that P.L. 115-31 included $511.3 million for CJIS, and that this amount would fully support CJIS programs, including NICS. ", "For FY2018, the Trump Administration requested $79.2 million for the NICS program, including an additional $8.9 million to fund an additional 85 permanent positions. Such an increase would have brought the number of funded permanent positions for the NICS program to 676. According to the FBI, the enacted NICS budget allocation for FY2018 was $111.3 million and 679 positions. For FY2019, the Administration did not request any budget increases for the FBI or NICS. The FBI anticipated that the FY2019 NICS budget and staff allocation would be about $103 million and 679 positions. ", "For FY2020, the Administration has requested a NICS budget increase of $4.23 million and 40 positions and $7.8 million in base budget increases, which would bring the total FY2020 NICS budget to $115 million and 719 positions. House-report language accompanying the FY2020 Commerce, Justice, Science, and Related Agencies Appropriations Act ( H.R. 3055 ) indicates that this bill would fully support the NICS Section operations and activities for the upcoming fiscal year."], "subsections": []}, {"section_title": "Improving NICS Access to Prohibiting Records", "paragraphs": ["The efficacy of NICS and firearms-related background checks is dependent in large part on state and local governments making criminal history record information (CHRI), as well as other disqualifying records (e.g., mental incompetency records), accessible electronically to several different national data sharing systems maintained by the FBI. As described above, those systems include principally the III, NCIC, and the NICS Indices. Congress, meanwhile, has authorized two grant programs to incentivize state and local governments to maintain CHRI and other disqualifying records and make them accessible to NICS in a timely manner.", "Under the Brady Act, Congress authorized a grant program known as the National Criminal History Improvement Program (NCHIP), the initial goal of which was to improve electronic access to firearms-related disqualifying records, felony indictment, and conviction records, for the purposes of both criminal and noncriminal background checks. ", "Congress passed the NICS Improvement Amendments Act (NIAA) of 2007 ( P.L. 110-180 ) following the April 16, 2007, Virginia Tech tragedy. Along the lines of the Brady Act, the NIAA included provisions designed to encourage states, tribes, and territories to make available to the Attorney General certain records related to persons who are disqualified from acquiring a firearm, particularly records related to domestic violence misdemeanor convictions and restraining orders, as well as mental health adjudications. As a framework of incentives and disincentives, the Attorney General was authorized to make grants, waive grant match requirements, or reduce law enforcement grant assistance depending upon a state's compliance with the act's goals of bringing firearms-related disqualifying records online.", "The Attorney General was required to report annually to Congress on federal department and agency compliance with the act's provisions. The Attorney General, in turn, has delegated responsibility for grant-making and reporting to DOJ's Bureau of Justice Statistics (BJS). BJS designated the grant program under the act as the \"NICS Act Record Improvement Program (NARIP),\" although congressional appropriations documents generally referred to it as \"NICS improvement\" or the \"NICS Initiative\" program. ", " Figure 6 shows annual congressional appropriations for NCHIP and NARIP for FY1995-FY2019. Over this 25-year period, Congress has appropriated nearly $859 million for NCHIP and $201 million for NARIP, for a total of $1.06 billion. During this time period, NCHIP grants were made available to states for purposes other than just identifying persons ineligible to receive firearms, such as identifying persons ineligible to hold positions involving vulnerable populations (e.g., children, disabled, and elderly). Nevertheless, the principal purpose of NCHIP was to improve the accuracy and timeliness of background checks, particularly those administered pursuant to the Brady Act. ", "For FY2009 through FY2013, Congress authorized $1.3 billion in appropriations for NARIP. Actual appropriations, however, fell short of such authorizations. For those fiscal years, Congress appropriated $63.6 million for NARIP, although neither the House nor Senate Committee on Appropriations adopted \"NARIP\" as a grant program designation. Instead, the appropriations statute provided such funding for the grant-making activities authorized under P.L. 110-180 .", "For FY2014 through FY2019, Congress continued to appropriate funding for both NCHIP and the grant-making activities authorized under P.L. 110-180 (i.e., NARIP) under the \"NICS Initiative,\" even though the authorization for appropriations under P.L. 110-180 had lapsed. For those years, Congress appropriated $429.5 million for NCHIP and NARIP, or the \"NICS Initiative,\" of which $137 million was set aside for purposes authorized under NIAA, bringing total appropriated NARIP funding for FY2009 through FY2019 to $200.6 million. Under the NICS Initiative, BJS has awarded a total of $142 million in NARIP grants to 30 states and one Native American tribe from FY2009 through FY2018. To date, however, BJS has not levied any of the reward and penalty provisions of NIAA, possibly because of methodological difficulties in ascertaining state progress towards meeting the goals of this act.", "With NICS Initiative grants (NCHIP and NARIP) in part, state and local governments have increased the availability of mental health- and domestic violence-related records to NICS Indices and other data systems queried by NICS. For example, from CY2007 to CY2018, the number of mental health records in the NICS Indices increased from 518,499 to 5,419,894, a 9.5-fold increase. The number of misdemeanor crime of domestic violence (MCDV) records in the NICS Indices increased from 46,286 to 175,376, nearly tripling (a 278.9% increase). Many instances domestic violence misdemeanor crimes are serious enough in nature that the records are deposited in the III, meaning the offenders were fingerprinted. ", "A Department of Justice-sponsored report found that in many cases such criminal records are not adequately flagged in the III for firearms eligibility determination purposes, leading to NICS delayed transfers in some cases. Inadequately flagged records in the III increase the possibility that a prohibited person might be transferred a firearm after the NICS three-business-day delayed transfer period expires. Similarly, it was reported that domestic violence protection orders are increasingly being placed in the NICS Indices, even though the authors of the report argued that it would probably be most appropriate to place such records in the National Crime Information Center (NCIC), so that such records would be available to law enforcement for purposes besides firearms-related background checks.", "Responding to these issues in part, Congress passed the Fix NICS Act of 2018 ( P.L. 115-141 ). The act reauthorized NARIP, as well as authorized appropriations of $125 million annually for FY2018 through FY2022. It also reauthorized NCHIP itself, as well as authorized appropriations of $250 million annually for FY2018 through FY2022. For FY2018, Congress appropriated $75 million for the \"NICS Initiative,\" of which $25 million was set aside for purposes authorized under NIAA, as amended by the Fix NICS Act (or NARIP). For FY2019, Congress appropriated the same amount and set aside. ", "For FY2020, the Administration has requested $65 million for NCHIP and $10 million for NARIP. The House-reported Commerce, Justice, Science, and Related Agencies Appropriations bill ( H.R. 3055 ; H.Rept. 116-101 ) would provide $80 million for these grant programs under the \"NICS Initiative,\" of which $27.5 million would be set aside for purposes authorized under NIAA, as amended by the Fix NICS Act (or NARIP)."], "subsections": []}]}, {"section_title": "116th Congress and NICS Operations-Related Legislation", "paragraphs": ["This final section of the report briefly summarizes NICS-related legislative action to date in the 116 th Congress. It then provides a summary and some analysis of three bills that have passed the House and await Senate action.", "In the 116 th Congress, the House has passed three bills that would expand federal firearms-related background check requirements. On January 8, 2019, Representative Mike Thompson introduced the Bipartisan Background Checks Bill of 2019 ( H.R. 8 ), a bill that would require a background check for most private-party, intrastate firearms sale, or \"universal\" background checks. On February 6, 2019, the House Committee on the Judiciary held a hearing on \"Preventing Gun Violence in America.\" On February 8, 2019, Representative James Clyburn introduced the Enhanced Background Checks Act of 2019 ( H.R. 1112 ), a bill to lengthen the number of days a firearms transfer could be delayed pending a final firearms eligibility determination. On February 13, 2019, the House Committee on the Judiciary amended and ordered reported both bills: H.R. 8 ( H.Rept. 116-11 ) and H.R. 1112 ( H.Rept. 116-12 ). On February 27 and 28, 2019, respectively, the House amended and passed H.R. 8 and H.R. 1112 .", "On March 7, 2019, Representative Karen Bass introduced the Violence Against Women Reauthorization Act of 2019 ( H.R. 1585 ). On March 27, 2019, the House Committee on the Judiciary amended and reported H.R. 1585 . This bill includes provisions that would expand existing firearms transfer/receipt and possession prohibitions to include dating partners with histories of domestic violence and persons convicted of stalking-related misdemeanor offenses. The House passed H.R. 1585 on April 4, 2019.", "Also, of note, on March 13, 2019, the House Appropriations Subcommittee on Commerce, Justice, Science, and Related Agencies held a hearing on \"Gun Violence Prevention and Enforcement.\" On March 18, 2019, the Federal Bureau of Investigation (FBI) released its FY2020 congressional budget request that includes a $4.2 million increase for the NICS, which would bring the total program budget to $114.7 million for FY2020. On the same date, the Office of Justice Programs (OJP) released its congressional budget request that includes $75 million for state, local, tribal, and territorial governments to upgrade criminal and mental incompetency records and make those records accessible to NICS for firearms eligibility determination purposes. ", "On June 3, 2019, the House Committee on Appropriations reported an FY2020 Commerce, Justice, Science, and Related Agencies (CJS) Appropriations bill ( H.R. 3055 , H.Rept. 116-101 ). House report language indicates that the bill would fully support the FBI request for increased NICS funding. The bill would also provide $80 million for OJP-administered NICS improvement grants under NCHIP and NARIP. ", "On September 26, 2019, Senate Committee on Appropriations reported an FY2020 CJS Appropriations bill ( S. 2584 ; S.Rept. 116-127 ). Senate report language indicates that the bill $131 million to increase NICS capacity and efficacy. This amount is $16.3 million above the Trump Administration's FY2020 request. The bill would also provide $78.3 million for OJP-administered NICS improvement grants under NCHIP and NARIP, of which $25 is for the latter program. ", "In addition, on March 26, 2019, the Senate Committee on the Judiciary held a hearing on \"Red Flag Laws: Examining Guidelines for State Action.\" Seventeen states and the District of Columbia have passed \"Red Flag\" laws. These laws essentially allow concerned persons, including family members in some cases, to petition a court to file an extreme risk protection order against an individual that would allow for the suspension of that individual's firearms eligibility under certain circumstances. These state laws vary considerably from state to state. Related proposals in the 116 th Congress would make subjects of such protective orders ineligible to receive or possess firearms under federal law in any state or would establish grant programs to encourage states to adopt such laws. ", "On September 10, 2019, the House Committee on the Judiciary ordered reported such a bill, the Extreme Risk Protection Order Act ( H.R. 1236 ). In addition, this Committee also ordered reported the Disarm Hate Act ( H.R. 2708 ), which make persons convicted of a misdemeanor hate crime ineligible to receive or possess a firearm or ammunition."], "subsections": [{"section_title": "The Bipartisan Background Checks Act of 2019 (H.R. 8)", "paragraphs": ["The Bipartisan Background Checks Act of 2019 ( H.R. 8 ), a \"universal\" background check bill, would expand federal firearms background checks and, hence, recordkeeping requirements under the Gun Control Act of 1968 (GCA; 18 U.S.C. \u00c2\u00a7921 et seq.) to include firearms transfers made in the same state (intrastate) between unlicensed persons. H.R. 8 would essentially prohibit unlicensed persons from transferring a firearm to any other unlicensed person, unless a federally licensed firearms dealer, or FFL, takes possession of such firearm and facilitates such a transaction by running a background check on the unlicensed prospective transferee (buyer).", "H.R. 8 includes exceptions for transfers between immediate family members; U.S. military, law enforcement members, or armed private security professionals in the course of official duties; temporary transfers under circumstances involving an imminent threat of bodily harm or death; and legitimate activities involving target shooting, hunting, trapping, or fishing.", "H.R. 8 would prohibit any implementing regulations that would (1) require FFLs to facilitate private firearms transactions; (2) require unlicensed sellers or buyers to maintain any records with regard to FFL-facilitated background checks; or (3) place a cap on the fee FFLs may charge for facilitating a private firearms transfer. H.R. 8 would also prohibit FFLs from transferring possession of, or title to, any firearm to any unlicensed person, unless the FFL provides notice of the proposed private firearm transfer prohibition under this bill. Further, H.R. 8 would extend a provision of current law that prohibits the DOJ from charging a fee for a NICS background check.", "Under H.R. 8 , facilitating FFLs would be required to treat firearms to be transferred on behalf of any unlicensed persons as if they were part of their business inventory. Thus, they would be required to comply with the GCA recordkeeping and background check requirements. As part of this process, FFLs would enter the firearm(s) to be exchanged into their bound log of firearms acquisitions and dispositions. The FFLs and unlicensed prospective transferees would then complete and sign a firearms transaction forms (ATF Form 4473) under penalty of law that everything entered onto that form was truthful. FFLs would then initiate a background check on the intending transferee through NICS. And either the FBI NICS Section or a state or local authority\u00e2\u0080\u0094point of contact (POC)\u00e2\u0080\u0094would conduct a background check to determine an intending transferee's firearms eligibility. Such a requirement, if enacted, would close off what some have long characterized as the \"Gun Show loophole.\"", "For the past two decades, many gun control advocates have viewed the legal circumstances that allow individuals to transfer firearms intrastate among themselves without being subject to the licensing, recordkeeping, and background check requirements of the GCA as a \"loophole\" in the law, particularly within the context of these intrastate, private transactions at gun shows and other public venues or through the internet. Gun control advocates also maintain that expanding background checks to cover intrastate, private-party firearms sales would help stem gun trafficking; that is, the illegal diversion of firearms from legal channels of commerce to the black market, where federal, state, local, tribal, and territorial laws could be evaded. They maintain that prohibited persons or their friends or acquaintances could easily buy a firearm at a gun show, from an online seller, or in a person-to-person \"private\" sale. They also point to studies that suggest that there is moderate evidence that expanded background checks might reduce firearms-related homicides and suicides. Gun control advocates underscore that 20 states and the District of Columbia (DC) currently have laws that require background checks for certain types of firearms transfers not currently covered by federal law. Although these laws vary considerably from state to state, 11 states and DC require background checks for nearly all firearms transfers.", "Gun rights advocates contend that intrastate, private transfers are regulated already under federal law, in that it is a felony to transfer a firearm or ammunition knowingly to an underage or prohibited person. They contend further that most criminals would not submit to a background check. They ask, \"Why would anyone submit to a background check unless they believed they were not prohibited and would pass?\" ", "Moreover, they argue that making private-party, intrastate transfers subject to the recordkeeping and background check provisions of the GCA could potentially criminalize firearms transfers under circumstances that could be characterized as legitimate and lawful. For example, it has been argued that H.R. 8 might prohibit a person from sharing a firearm with another person while target shooting on one's own property. Although H.R. 8 would provide exceptions for \"temporary transfers\" for target shooting and other related activities, some gun rights advocates argue that such exceptions are too narrow. For example, they argue further that H.R. 8 would prohibit a person from loaning a neighbor a firearm for a hunting trip with a background check being required for both the loan to the neighbor and the return of the firearm to its lawful owner. Perhaps more fundamentally, H.R. 8 would prohibit a person from loaning a firearm to another person\u00e2\u0080\u0094who may be facing some threat of death or serious bodily injury\u00e2\u0080\u0094for self-defense purposes, unless that threat were \"imminent.\" ", "Gun rights advocates might also see such a measure as a significant step towards a national\u00e2\u0080\u0094albeit decentralized\u00e2\u0080\u0094registry of firearms and firearms owners, since its practical implementation would likely necessitate recordkeeping on such transfers. Such advocates cite an Obama Administration, Department of Justice official who observed that \"universal background checks\" are unenforceable without a comprehensive registry of firearms.", "Legislation to expand federal recordkeeping and background check requirements to cover private, intrastate firearms transfers saw action in the 106 th and 108 th Congresses following the April 20, 1999, Columbine, CO, high school mass shooting; in the 113 th Congress following the December 14, 2012, Newtown, CT, elementary school mass shooting; and in the 114 th Congress following the December 2, 2015, San Bernardino, CA, social services center all-staff meeting and June 12, 2016, Orlando, FL, Pulse night club mass shootings.", "Over time, related legislative proposals have varied in the scope and type of intrastate, private party (nondealer) firearms exchanges between federally unlicensed persons that would fall under their respective background check provisions. Since the 113 th Congress, such proposals fall under two basic types that, respectively, have been labeled as either \"Universal\" or \"Comprehensive\" background check bills. ", "\"Comprehensive\" background checks would cover transfers at gun shows and similar public venues (e.g., flea markets and public auctions) and firearms that are advertised via some public fora, including newspaper advertisements and the Internet. ", "\"Universal\" background checks would cover private transfers under a much wider set of circumstances (sales, trades, barters, rentals, or loans), with more limited exceptions.", "In the Senate, from the 113 th Congress forward, the principal sponsors of \"universal\" background check bills have been Senators Charles Schumer, Christopher Murphy, and Richard Blumenthal. The principal sponsors of \"comprehensive\" background check amendments have been Senators Joe Manchin and Pat Toomey. \"Universal\" background check bills were introduced in the House in the 113 th and 114 th Congresses. While Representatives Peter King and Mike Thompson introduced proposals that were similar to Manchin-Toomey \"comprehensive\" background check bills in the past three Congresses, they have sponsored and supported a \"universal\" background check proposal ( H.R. 8 ) in the 116 th Congress. "], "subsections": []}, {"section_title": "Enhanced Background Checks Act of 2019 (H.R. 1112)", "paragraphs": ["The House-passed Enhanced Background Checks Act of 2019 ( H.R. 1112 ) would revise the GCA background check provision to lengthen the delayed sale period, which is three business days under current law. Under H.R. 1112 , for background checks that do not result in a \"proceed with transfer\" or \"transfer denied,\" the FBI NICS Section and POC state officials would have 10 business days to place a hold on a firearms-related transaction. At the end of 10 business days, the prospective transferee could petition the Attorney General for a final firearms eligibility determination. If the FFL does not receive a final determination within 10 days of the date of the petition, he or she could proceed with the transfer. ", "The timeliness and accuracy of FBI-administered firearms background checks through NICS\u00e2\u0080\u0094particularly with regard to \"delayed proceeds\"\u00e2\u0080\u0094became a matter of controversy following the June 17, 2015, Charleston, SC, mass murder at the Emanuel African Methodist Episcopal Church. The assailant had acquired a handgun from an FFL in the Columbia, SC, area. According to press accounts, the NICS check on the assailant was initiated on April 11, 2015 (a Saturday). The FBI found an arrest record for him, but the arrest record was ambiguous with regard to the arrest's final disposition and the assailant's firearms receipt and possession eligibility. Therefore, the NICS response to the FFL was to delay the transfer for three business days as required under federal law. At his discretion, the FFL made the transfer on April 16, 2015 (a Thursday) as allowed under federal law. According to FBI, the NICS check would have remained active in the NICS examiner's queue for 30 days (until May 11, 2015), and would have remained in an \"active status\" in the NICS system for 88 days (until July 8, 2015). ", "According to the assailant's arrest record, he had been processed for arrest by the Lexington County, SC, Sheriff's Department, so the FBI contacted the Lexington County court, sheriff's department, and prosecutor's office. The Lexington County Sheriff's Department responded that it did not have a record on the alleged assailant and advised the NICS examiner to contact the City of Columbia, SC, Police Department. However, the NICS examiner contacted the West Columbia, SC, Police Department, because it was listed on the NICS contact sheet for Lexington County. In turn, the West Columbia Police Department responded that it did not have a record on the alleged assailant either. The NICS examiner reportedly focused on Lexington County and missed the fact that the City of Columbia, SC, Police Department was listed as the contact for Richland County, the county in which most of the City of Columbia, SC, is located. Consequently, the NICS examiner did not contact the Columbia, SC, Police Department, the agency that actually held the arrest record for the assailant. ", "If the FBI had ascertained during the 88 days that this person was prohibited, the NICS examiner would have likely contacted the FFL to verify whether a firearms transfer had been made after the three-business-day delay, and then would have notified the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) and a firearms retrieval action would have possibly been taken by that agency. In this case, the FBI did not ascertain that the assailant was possibly a prohibited person until after the June 17, 2015, mass shooting. Some gun control advocates have characterized these circumstances as the \"Charleston loophole.\" ", "In addition to the \"Charleston loophole,\" gun control advocates sometimes refer to \"delayed proceeds\" that could result in a possibly prohibited person acquiring a firearm after three business days have expired as \"default proceeds.\" They argue that extending the delayed proceed period would reduce the chance that an otherwise prohibited person might inadvertently be transferred a firearm, a circumstance that would likely necessitate an ATF firearms retrieval action had more time been allotted to complete the background check. ", "According to data acquired by a gun control advocacy group, about 3.59% of FBI-administered background checks in 2017 were unresolved after a delayed proceed response and the three-business-day window had passed. To this advocacy group, this suggested that a relatively small number of people (310,232) would be affected, and any inconvenience to them would be outweighed by increasing the probability that a prohibited person might be prevented from acquiring a firearm. ", "According to the FBI, it referred 6,004 \"delayed denial\" cases to the ATF in 2017 that could have possibly resulted in a finding of ineligibility and subsequent firearms retrieval action. In addition, the FBI reported that 4,864 of those cases involved individuals who were possibly prohibited and had probably acquired a firearm.", "Gun rights advocates would counter that a large percentage (98.1%) of background checks that resulted in a delayed proceed response involved persons who were not actually ineligible, prompting them to refer to such default proceed responses as \"default infringements.\" They maintain that the \"delayed proceeds\" should be viewed as an indicator of understaffing and incomplete recordkeeping on prohibited persons. Gun rights advocates underscore further that if the overall timeliness and accuracy of FBI background checks were improved, the process would be less likely to inconvenience an otherwise eligible person and, at the same time, less likely to allow a firearm to be transferred to a prohibited person. ", "According to the GAO, ATF processed 3,933 delayed denials in FY2017. Of those denials, 38 cases were referred to U.S. Attorney's Offices for prosecution. Nine of those cases were federally prosecuted."], "subsections": []}, {"section_title": "Violence Against Women Reauthorization Act of 2019 (H.R. 1585)", "paragraphs": ["The House-passed Violence Against Women Reauthorization Act of 2019 ( H.R. 1585 ) includes several provisions that seek to reduce firearms-related intimate partner violence (homicides and injury) by amending federal law to prohibit persons convicted of misdemeanor stalking crimes from receiving or possessing a firearm or ammunition. This bill would also revise provisions related to domestic violence protection orders and a definition of \"intimate partner\" under current law. The bill also includes other provisions related to leveraging state, local, tribal, and territorial resources to increase federal investigations and prosecutions of firearms-related eligibility offenses related to domestic violence and stalking. ", "As discussed earlier, there are nine categories of persons prohibited under current law (18 U.S.C. \u00c2\u00a7922(g)) from receiving or possessing firearms or ammunition (e.g., convicted felons, fugitives from justice, and unlawfully present aliens). Under 18 U.S.C. \u00c2\u00a7922(n), a tenth category of prohibited persons\u00e2\u0080\u0094those under felony indictment\u00e2\u0080\u0094are prohibited from receiving, but not possessing firearms. In addition, under 18 U.S.C. \u00c2\u00a7922(d), it is unlawful for any person to transfer or otherwise dispose of a firearm or ammunition to any person, if the transferor has reasonable cause to believe the transferee would be prohibited under one of those 10 categories. Two of the categories speak directly to domestic violence:", "persons under court-order restraints related to harassing, stalking, or threatening an intimate partner or child of such intimate partner (18 U.S.C. \u00c2\u00a7\u00c2\u00a7922(d)(8) and (g)(8)); and", "persons convicted of a misdemeanor crime of domestic violence (MCDV) (18 U.S.C. \u00c2\u00a7\u00c2\u00a7922(d)(9) and (g)(9))."], "subsections": [{"section_title": "Qualifying Domestic Violence Protection Order (DVPO)", "paragraphs": ["According to ATF, a qualifying DVPO order includes the following elements. The defendant/respondent must receive actual notice and opportunity to participate in a hearing before a judge, magistrate, or other judicial official. After such hearing, a DVPO may be issued by a criminal or civil court, such as a divorce court, family court, magistrate, or general jurisdiction court. The plaintiff/petitioner is an \"intimate partner\" of the defendant/respondent (subject). An intimate partner includes:", "1. a spouse or former spouse of the subject; a person who cohabitates or cohabitated with the subject, who resides or resided in a sexual/romantic relationship with the subject, or 2. a person with whom the subject has or had a child in common (regardless of whether they ever married or cohabitated). ", "A qualifying court order must also restrain the subject from harassing, stalking, or threatening an intimate partner or child of that intimate partner, or engaging in conduct that would place either of them in reasonable fear of bodily injury. There must also be a finding that the subject is a credible threat to the physical safety of the intimate partner or child, or explicitly prohibit the use of physical force. "], "subsections": []}, {"section_title": "Qualifying Misdemeanor Conviction of Domestic Violence (MCDV)", "paragraphs": ["According to ATF, a qualifying misdemeanor conviction of domestic violence (MCDV) must include the following elements. Such offense is a misdemeanor crime under federal, state, or tribal law and involves the use or attempted use of physical force, or the threatened use of a deadly weapon. At the time of the offense, the offender must have been:", "1. A current or former spouse, parent, or guardian of the victim; 2. A person with who the victim shared a child in common; 3. A person who was cohabitating with or had cohabitated with the victim as a spouse, parent, or guardian; or 4. A person who was or had been similarly situated to a spouse, parent, or guardian of the victim."], "subsections": []}, {"section_title": "\"Intimate Partner\" Definition", "paragraphs": ["Under current law, the term \"intimate partner\" means, with respect to a person, the spouse of the person, a former spouse of the person, an individual who is a parent of a child of the person, and an individual who cohabitates or has cohabitated with the person (18 U.S.C. \u00c2\u00a7921(a)(32)). H.R. 1585 would expand the \"intimate partner\" definition to include", "a dating partner or former dating partner (as defined in section 2266 [of Title 18, United States Code]); and", "any other person similarly situated to a spouse who is protected by the domestic or family violence laws of the State or tribal jurisdiction in which the injury occurred or where the victim resides. ", "Under 18 U.S.C. \u00c2\u00a72266(a)(10), the term \"dating partner\" refers to a person who is or has been in a social relationship of a romantic or intimate nature with the abuser; and the existence of such a relationship is based on a consideration of (1) the length of the relationship; (2) the type of relationship; and (3) the frequency of interaction between the persons involved in the relationship."], "subsections": []}, {"section_title": "\"Misdemeanor Crime of Stalking\"", "paragraphs": ["H.R. 1585 would make any person convicted of a \"misdemeanor crime of stalking\" a tenth category of persons prohibited from receiving and possessing a firearm under 18 U.S.C. \u00c2\u00a7922(g). The bill would define such a crime as any misdemeanor stalking offense under federal, state, tribal, or municipal law; and one that in a course of harassment, intimidation, or surveillance of another person, places that person in reasonable fear of material harm to the health or safety of her- or himself, an immediate family member of that person, a household member of that person, or a spouse or intimate partner of that person; or that causes, attempts to cause, or would reasonably be expected to cause emotional distress to any of those persons.", "The proposed definition is subject to certain mitigating factors. A person would not be considered to have been convicted of a misdemeanor crime of stalking unless (1) the person was represented by counsel in the case, or (2) they knowingly and intelligently waived the right to counsel in the case. In the case of a prosecution for a misdemeanor crime of stalking for which a person was entitled to a jury trial, a person would not be considered convicted in the jurisdiction in which the case was tried, unless (1) the case was tried by a jury; or (2) the person knowingly and intelligently waived the right to have the case tried by a jury, by guilty plea, or otherwise."], "subsections": []}, {"section_title": "\"Protection Orders\" or \"Court-Order Restraints\"", "paragraphs": ["H.R. 1585 would also expand the scope of \"protection orders\" or \"court-order restraints\" under 18 U.S.C. \u00c2\u00a7\u00c2\u00a7922(d)(8) and (g)(8). Under current law these provisions prohibit any person from firearms receipt, possession, or transfer, who is subject to a court order that:", "(A) was issued after a hearing of which such person received actual notice, and at which such person had an opportunity to participate;", "(B) restrains such person from harassing, stalking, or threatening an intimate partner of such person or child of such intimate partner or person, or engaging in other conduct that would place an intimate partner in reasonable fear of bodily injury to the partner or child; and", "(C) includes a finding that such person represents a credible threat to the physical safety of such intimate partner or child; or by its terms explicitly prohibits the use, attempted use, or threatened use of physical force against such intimate partner or child that would reasonably be expected to cause bodily injury.", "H.R. 1585 would substantively amend the domestic violence protection order prohibition (18 U.S.C. \u00c2\u00a7922(g)(8), and \u00c2\u00a7922(d)(8), by reference) to specifically include restraining orders under state, tribal, or territorial law that are issued after an \"ex parte\" hearing, and to expand it to include restraining orders related to \"witness intimidation.\" The legal term \"ex parte\" (\"for one party\") refers generally to court motions, hearings, or orders granted on the request of and for the benefit of one party only without the respondent/defendant being present. H.R. 1585 would add the following at the end of 18 U.S.C. \u00c2\u00a7922(g)(8)(A):", "in the case of an ex parte order, relative to which notice and opportunity to be heard are provided\u00e2\u0080\u0094(I) within the time required by State, tribal, or territorial law; and (II) in any event within a reasonable time after the order is issued, sufficient to protect the due process rights of the person.", "Notwithstanding the reference to \"due process\" in the amending language, this language could potentially generate considerable debate about the balance between due process and public safety. In addition, at the end of clause 18 U.S.C. \u00c2\u00a7922(g)(8)(B), it would add, \"intimidating or dissuading a witness from testifying in court,\" which may appear less controversial, but critics might argue that such language has little to do with domestic violence.", "As discussed in the body of this report, Congress has passed legislation to encourage states to make DVPO and MCDV records accessible promptly to NICS. Progress has been made, but many state, tribal, and territorial authorities still find such reporting challenging, if not daunting. Gun control advocates, meanwhile, have argued that the definition of \"intimate partner\" ought to be expanded under the DVPO and MCDV definitions of \"intimate partner\" to include current and former dating partners, as well as persons convicted of misdemeanor stalking offenses. Expanding the grounds for firearms transfer or receipt and possession ineligibility is one avenue along which intimate partner gun violence could be addressed, perhaps effectively, but such an expansion could also strain ongoing federal-state efforts to ensure that prohibiting records under current law are accurate and reported to NICS in a timely manner in order to be accessible electronically during background checks.", "Appendix A. FBI and POC Firearms-Related Background Checks Pursuant to the Brady Act", "FBI NICS Section Checks and Denials, November 30, 1998, Through 2018", "As Table A-1 shows, from November 30, 1998, through 2018, the FBI CJIS Division's NICS Section conducted 128.7 million background checks, resulting in nearly 1.6 million denials, for an overall initial denial rate of 1.2%. About 2.7% of those denials were appealed and eventually overturned.", " Table A-2 shows FBI NICS Section denials by prohibiting category. Over the 20-year and one month period (November 30, 1998, through 2018) that NICS has been in operation, over half of FBI firearms transfer denials were based on a prior felony conviction. For 2018, by comparison, a smaller percentage (45.1%) were based on a felony conviction. This percentage decrease can be attributed to at least two factors. One, over time, persons with past felony convictions could be less likely to risk a background check through NICS. Two, since the establishment of NICS, state and local government submissions of prohibiting records\u00e2\u0080\u0094particularly those related to mental incompentency\u00e2\u0080\u0094have increased. As shown in Table A-2 , such records accounted for 2.5% of denials over the 20-year period, but accounted for 6.1% of denials for 2018. ", "As discussed below, Congress prioritized such reporting as part of the NICS Improvement Amendments Act of 2007 ( P.L. 110-180 ), in the aftermath of the April 20, 2007, VA Tech mass shooting. Ten years later, Congress passed the Fix NICS Act of 2017 in an effort to strengthen and streamline provisions previously enacted under P.L. 110-180 , and authorize future appropriations for grant and other programs designed to assist state, tribes, and territories with improving the quality of prohibiting records and increasing their accessibility to NICS ( P.L. 115-141 , Div. S, Title VI).", "State and Local POC Background Checks and Denials, November 30, 1998, Through 2015", "As shown in the Table A-3 below, the Bureau of Justice Statistics (BJS) has reported that state and local POC agencies conducted nearly 81.7 million background checks from November 30, 1998, through 2015 for firearms transfers and permits. These checks resulted in nearly 1.46 million denials, for an overall denial rate of 1.8%, according to BJS. Over the same time period, the FBI NICS Section processed 102.4 background checks, resulting in 1.27 million denials of firearms transfers, for an overall denial rate of 1.2%.", "BJS also reports on the reasons (prohibitors) for some, but not all, state and local POC denials. For example, as shown in Table A-3 , while state and local POCs made 119,368 denials for firearms transfers and permits in 2015, BJS reported the reason for 84,199 (70.5%) of such denials. Similarly, state and local POCs made 102,468 denials in 2014, but BJS reported the reason for 57,001 (55.6%) of them.", "In addition, over the years, BJS sometimes reported for both state and local POC agencies, and in other years only for state POC agencies. Moreover, BJS's methodology for making estimates about state and local POC background checks and denials over the years has been revised. Notwithstanding these data limitations, Table A-4 shows the BJS-reported reasons for some, but not all denials made by state and local POCs for 2014 and 2015.", "Looking at the data in Table A-4 , it is notable that there either appears to be no denials based upon dishonorable discharges or renounced U.S. citizenship, or such denials were not estimated by BJS based on data submitted by state and local POC agencies. In addition, the percentages of felony conviction denials for either year, 2014 or 2015, are roughly half of the percentages of federal denials made by the FBI NICS Section. As a percentage of the total, it could be that these percentages are based on incomplete data and, therefore, are not particularly comparable with the percentages for federal denials, which are based on complete data.", "Appendix B. NICS-Queried Computer Systems and Files", "As part of a NICS check, the transferee's information is crosschecked against three computerized databases/systems to determine firearms transfer and possession eligibility. Those systems are the Interstate Identification Index (III), the National Crime Information Center (NCIC), and the NICS Indices. If prospective transferees indicate that they are non-U.S. citizens, then their information is also checked against the immigration and naturalization databases maintained by the Department of Homeland Security (DHS), Immigration and Customs Enforcement (ICE).", "Interstate Identification Index (III)", "The III, or \"Triple I,\" is a computerized criminal history index pointer system that the FBI maintains so that records on persons arrested and convicted of felonies and serious misdemeanors at either the federal or state level can be shared nationally. This criminal history records exchange system includes arrest and disposition information on individuals charged with felonies and certain misdemeanors. Felony crimes generally include any offense that is punishable by a term of imprisonment exceeding one year. Under state law, there are misdemeanor crimes that are punishable by a term of imprisonment exceeding two years, which are also shared nationally through the III. By virtue of this record sharing, other information accessible through III also includes records on persons under felony indictment, fugitives from justice, persons found not guilty by reason of insanity or adjudicated incompetent to stand trial, persons convicted of misdemeanor crimes of domestic violence, and persons subject to domestic violence protection orders. All records in III are supported by fingerprint records which are exchanged through the Interstate Automated Fingerprint Identification System (IAFIS), though NICS checks do not entail fingerprint-based background checks under current law.", "National Crime Information Center (NCIC)", "The NCIC is a database of documented criminal justice information that is made available to law enforcement and authorized agencies, with the goal of assisting law enforcement in apprehending fugitives, finding missing persons, locating stolen property, and further protecting law enforcement personnel and the public. NCIC includes 21 files, 10 of which are queried by NICS. Those 10 NCIC files include", "Wanted Persons;", "Protection Orders;", "Immigration Violators;", "Protective Interest;", "Foreign Fugitive;", "Supervised Release;", "National Sex Offender Registry;", "Gang File; ", "Known/Appropriately Suspected Terrorist (KST); and", "Violent Person.", "NICS Indices", "The NICS Indices contain records of persons prohibited from receiving or possessing firearms under federal, state, local, tribal, or territorial law that are not shared nationally in either the III or NCIC. Those records include", "felony arrest and disposition records (not included in the III);", "felony indictments;", "fugitives from justice;", "addicts and other unlawful users of controlled substances;", "involuntary commitments to mental institutions and other related adjudications;", "illegal or unlawful aliens;", "dishonorable discharges;", "renunciations of U.S. citizenship;", "domestic violence protection orders;", "domestic violence misdemeanor convictions;", "previous NICS denials under state laws (by POCs); and", "previous NICS denials made federally (by NICS Section).", "Appendix C. ATF-Certified Permanent Brady Permits", "Appendix D. ATF-Certified State Relief from Disabilities Statutes"], "subsections": []}]}]}]}}
{"id": "R45739", "title": "North Macedonia: In Brief", "released_date": "2019-05-29T00:00:00", "summary": ["The United States has supported North Macedonia since its independence from Yugoslavia in 1991 and strongly backs its European Union (EU) and NATO ambitions. (The country's constitutional name was the Republic of Macedonia until February 2019, when it was renamed the Republic of North Macedonia.) On multiple occasions, the United States played a key role in defusing political crises and interethnic tensions in North Macedonia. For more than two decades, a U.S. diplomat led United Nations\u2013brokered negotiations between Greece and then-Macedonia to resolve their bilateral dispute over the latter's use of the name Macedonia. With strong U.S. support, in 2018 North Macedonia and Greece reached the landmark Prespa Agreement, which resulted in the name change and resolved their bilateral dispute.", "Many Members of Congress have supported North Macedonia's integration into Euro-Atlantic institutions. In 2007, the NATO Freedom Consolidation Act (P.L. 110-17) was passed to affirm congressional support for enlargement and make North Macedonia eligible for assistance under the NATO Participation Act of 1994. Resolutions were also sponsored in both chambers in 2018 to support the Prespa Agreement with Greece and endorse North Macedonia's bid for NATO membership. Congressional interest in North Macedonia is also connected to broader policy concerns over the influence of Russia, China, and other external actors in the Western Balkans.", "In 2017, North Macedonia emerged from a destabilizing two-year crisis with a new government that pledged to redouble the country's Euro-Atlantic integration efforts and enact reforms to tackle the corruption and state capture that took root under previous governments. The Prespa Agreement removes Greece's veto over North Macedonia's NATO and EU membership bids. Many expect North Macedonia to become NATO's 30th member in 2019 or 2020 and the EU to decide in 2019 whether to launch formal accession negotiations with the country. Despite positive assessments of North Macedonia's progress, the forthcoming period is generally viewed as critical to consolidating North Macedonia's recent gains and implementing reforms to bolster economic growth, reduce unemployment, and depoliticize state institutions.", "Given U.S. and NATO involvement in conflicts in the Balkans in the 1990s, as well as the U.S. role in defusing crises in North Macedonia, Members of Congress may be interested in North Macedonia's stability during what many U.S. and EU officials consider to be a crucial, albeit fragile, opening for reforms. Members may also consider the role that external actors such as Russia and China have played in recent years or could play going forward, particularly if North Macedonia's EU accession negotiations are further delayed."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": [], "subsections": [{"section_title": "North Macedonia and the United States1", "paragraphs": ["The United States has been a steadfast supporter of North Macedonia since its independence from Yugoslavia in 1991 and strongly backs its European Union (EU) and NATO membership ambitions. (North Macedonia's constitutional name was \"Republic of Macedonia\" until February 2019.) Many Members of Congress have supported North Macedonia's aspirations for integration into Euro-Atlantic institutions. On multiple occasions, U.S. leadership was critical to defusing political crises and interethnic tensions in the country ", "As North Macedonia moves closer to NATO membership, and potentially EU membership, the country shows signs of renewed stability following a political crisis from 2015 to 2017. The years 2019-2020, in which North Macedonia is expected to become NATO's 30 th member and the EU will likely determine whether to launch accession negotiations, are considered key to consolidating the country's recent breakthrough in its relations with Greece and sustaining its reform momentum."], "subsections": []}, {"section_title": "Brief History", "paragraphs": ["North Macedonia is a small, landlocked country in southeastern Europe (see Figure 1 ). For most of recorded history, its present-day territory was part of empires and kingdoms centered on or near the Balkan Peninsula. The Ottoman Empire ruled the area from the 14 th century until the 1912-1913 Balkan wars. Beginning in the 19 th century, this territory (and surrounding territory also referred to as \"Macedonia\") was claimed by Bulgaria, Greece, and Serbia, whose leaders regarded the local Orthodox Christian population as their own kin. After World War I, the territory of present-day North Macedonia was incorporated into the newly created Kingdom of Serbs, Croats, and Slovenes. Following World War II, Macedonia became one of six constituent republics of the Socialist Federal Republic of Yugoslavia. In 1991, it declared independence as the Republic of Macedonia, following Slovenia and Croatia, two other Yugoslav republics.", "For much of the 20 th and 21 st centuries, Macedonian identity and statehood have been challenged or denied by officials in its larger neighbors, including Serbia (until the creation of Yugoslavia), Greece, and Bulgaria. Some analysts believe that the comparatively small size of the population that identifies as Macedonian, coupled with external challenges to the legitimacy of Macedonian identity and statehood, imbues Macedonian nationalism with a sense of vulnerability. This, in turn, has made many Macedonian nationalists reluctant to make concessions on the country's name, most notably in the course of the country's nearly three-decade dispute with Greece (see \"Rapprochement with Greece,\" below)."], "subsections": []}, {"section_title": "Ethnic Relations", "paragraphs": ["Although North Macedonia largely avoided the conflict that devastated other parts of Yugoslavia in the 1990s, it has been destabilized by periods of tension between its Slavic Macedonian majority (nearly 65% of the population) and ethnic Albanian minority (25%). Tensions between Macedonians and Albanians partly reflect diverging views about whether North Macedonia should be the homeland of and for ethnic Macedonians or a multiethnic state with protections for its ethnolinguistic minority communities. Some Macedonian nationalists fear that extending further cultural rights or autonomy to Albanians would change the character of North Macedonia or result in its dismemberment. Many Albanians, on the other hand, fear marginalization. ", "During the 1990s, Albanian leaders in North Macedonia criticized language, citizenship, education, and cultural policies that they believed made Albanians second-class citizens and contributed to their underrepresentation in the public administration. Interethnic clashes periodically occurred but stopped short of full-scale violence. In 2001, however, Albanian insurgents waged a months-long armed campaign against state security forces over what they viewed as systematic discrimination against Albanians. At the government's request, NATO deployed several peacekeeping missions to the country between 2001 and 2003. U.S. and EU officials helped broker the 2001 Ohrid Framework Agreement, which provides for partial devolution of power to municipalities, equal minority representation in the public administration, and greater rights to use the Albanian language and symbols in official settings. While interethnic relations have largely stabilized since 2001, political crises periodically created strain."], "subsections": []}]}, {"section_title": "Politics and Economy", "paragraphs": [], "subsections": [{"section_title": "Political System", "paragraphs": ["North Macedonia is a parliamentary republic with a unicameral, 120-member legislature. The prime minister serves as head of government, while the directly elected president is mostly a ceremonial position. ", "Since independence, political competition has largely centered on the rivalry between North Macedonia's two largest parties: the Social Democratic Union of Macedonia (SDSM) and the center-right, nationalist VMRO-DPMNE. Both parties are considered to be \"ethnic Macedonian\" parties in that they typically field ethnic Macedonian candidates and seek ethnic Macedonians' votes. Some observers contend that competition between SDSM and VMRO-DPMNE has often been a greater source of instability than interethnic tensions. Almost all governments have been led by either SDSM or VMRO-DPMNE, usually in coalition with one or more ethnic Albanian parties.", "Since 2017, Prime Minister Zoran Zaev has led a coalition government comprised of the SDSM, the Albanian Democratic Union for Integration (DUI), and several smaller parties. The coalition holds a slim majority of seats in parliament. The largest opposition party is VMRO-DPMNE. On May 5, 2019, Stevo Pendarovski (SDSM) was elected president of North Macedonia, replacing Gjorge Ivanov (VMRO-DPMNE), who had opposed many of the Zaev government's initiatives.", "In 2018, the Zaev government reached an agreement with Greece to resolve a nearly 30-year dispute (see below, \"Rapprochement with Greece\") and lift Greece's veto over North Macedonia's NATO and EU membership bids. North Macedonia signed its NATO accession protocol in February 2019, and the government has pledged to implement economic and political reforms required for EU membership. Some observers believe that North Macedonia's reform-oriented political climate could grow fragile if the EU delays the country's long-awaited accession negotiations beyond 2019 (see below, \"NATO and EU Membership\"). "], "subsections": [{"section_title": "Democratic Backsliding and 2015-2017 Political Crisis", "paragraphs": ["North Macedonia's reform record and relative stability in the 1990s made it an early Western Balkan frontrunner for EU and NATO membership. Its NATO Membership Action Plan was launched in 1999. In 2004, it became the first Western Balkan country to have its Stabilization and Association Agreement with the EU\u2014considered a first step toward membership\u2014enter into force. North Macedonia became a candidate for EU membership the following year. ", "In the late 2000s, however, the introduction and implementation of reforms began to lag and the country's democracy experienced setbacks. These trends culminated in a political crisis from 2015 to 2017. Some analysts believe Greece's veto of North Macedonia's NATO membership bid at the alliance's 2008 Bucharest Summit triggered this period of backsliding. According to the International Crisis Group, Nikola Gruevski (VMRO-DPMNE), who became North Macedonia's prime minister in 2006 and held the position for the following decade, responded to the \"huge shock\" of the veto by escalating a state-backed \"antiquisation\" campaign that promoted \"an idiosyncratic view of [ethnic] Macedonians' glorious ancient past.\" The initiative alienated the country's Albanian population and widened the rift with Greece. ", "In addition to Gruevski's controversial appeals to Macedonian nationalism, international and domestic NGOs expressed concern over setbacks in the rule of law, judicial independence, and media freedom. Corruption and the ruling party's reported abuse of public institutions also became problematic issues. As a result of these developments and Greece's continued veto threats, North Macedonia's EU and NATO membership bids lagged behind those of its neighbors: Croatia and Albania joined NATO in 2009 and Montenegro in 2017, Croatia became an EU member in 2013, and the EU launched accession negotiations for Montenegro and Serbia in 2012 and 2014, respectively. ", "In 2015, a two-year political crisis was triggered when opposition parties, led by Zaev, accused the Gruevski government of orchestrating an illegal wiretapping network that targeted more than 20,000 individuals, including opposition and government officials, activists, diplomats, and journalists. Transcripts of allegedly wiretapped conversations implicated top government officials in abuses of office, including extortion, blackmail, and electoral fraud, among others. An EU-backed Senior Experts' Group viewed the recordings as the government's attempt to gain leverage over its rivals, judges and prosecutors, and its own officials. The scandal triggered pro- and anti-government protests that threatened to turn violent and renew interethnic tensions. ", "The United States and the EU helped defuse the crisis by brokering the 2015 Przino Agreement, which established a timeline for early elections. These elections, held in 2016, had mixed results: Gruevski's VMRO-DPMNE and Zaev's SDSM were virtually tied with vote shares of 38% (51 seats) and 37% (49 seats), respectively. The SDSM ultimately reached a coalition agreement with the DUI and the Alliance for Albanians. However, the United States and the EU again intervened when President Ivanov refused to give Zaev the mandate to form a government and, shortly thereafter, when a violent mob assaulted SDSM lawmakers and allies in the parliamentary chamber. Several VMRO-DPMNE lawmakers were accused of aiding the attack. "], "subsections": []}, {"section_title": "Renewed Reform Momentum", "paragraphs": ["In May 2017, the SDSM-led coalition formed a government under Zaev. Since then, the political situation in North Macedonia has largely stabilized. Local elections in October 2017 further cemented the SDSM's position: It won mayoral elections in 57 out of 81 municipalities, including most urban areas. The VMRO-DPMNE won just five mayoral elections. These poor results prompted Gruevski to resign as party leader. Hristijan Mickoski was elected to replace him. ", "Prime Minister Zaev has pledged to enact reforms to meet EU and NATO membership requirements, with strong backing from the EU, NATO, and the United States. Zaev considered repairing North Macedonia's bilateral relations with Bulgaria and Greece\u2014EU and NATO members with veto power in both organizations\u2014as a key step to renewing progress toward Euro-Atlantic integration. In 2017, North Macedonia and Bulgaria agreed to a Friendship Treaty (ratified in 2018) that established a framework to improve bilateral relations, which were historically fraught due in part to Bulgaria's non-recognition of Macedonian language and identity. While most regarded the treaty as a positive development, resolving North Macedonia's dispute with Greece was generally considered a greater challenge."], "subsections": [{"section_title": "Rapprochement with Greece", "paragraphs": ["Greece strongly objected to North Macedonia's adoption of the name Republic of Macedonia upon its 1991 independence, viewing it as an implicit territorial claim to Greece's northern region bearing the same name as well as an appropriation of the cultural heritage of ancient Macedon. For nearly three decades, North Macedonia's goal of EU and NATO membership was stymied by Greece's veto threat in both organizations. The unresolved dispute adversely affected North Macedonia's Euro-Atlantic ambitions and undercut reform momentum. The Zaev government's EU and NATO accession platform, as well as receptiveness under Greek Prime Minister Alexis Tsipras, created an opening for a new round of negotiations. North Macedonia and Greece reached the historic Prespa Agreement in June 2018, whereby Macedonia would change its name to North Macedonia and Greece would lift its veto over North Macedonia's Euro-Atlantic integration, among other provisions. ", "The agreement's final enactment, however, was far from certain. It required legislative action in Greece's and North Macedonia's parliaments, where both governments faced sharp challenges from nationalist opponents. To the surprise of some observers, in January 2019 parliaments in both countries passed the required measures, albeit with razor-thin vote margins. ", "U.S. and EU officials have praised Zaev and Tsipras for demonstrating leadership by making concessions that were politically controversial but viewed as important for the long-term prosperity of both countries. Nevertheless, Zaev and Tsipras expended political capital in the process. Zaev's government accepted a controversial partial amnesty of individuals involved in the 2017 attack in parliament in exchange for the support of some VMRO-DPMNE lawmakers, while some Albanian parties made their support contingent on legislation to expand the official use of the Albanian language. Tsipras narrowly survived a no-confidence vote. ", "In another sign of improved ties, in April 2019 Tsipras became the first Greek leader to visit North Macedonia. Analysts note, however, that improved bilateral relations could be tested by parliamentary elections due to be held in Greece by October 2019. Public opinion polls indicate that Tsipras could lose power. His most probable successor, Kyriakos Mitsotakis of the New Democracy party, opposed the Prespa Agreement. While Mitsotakis has since conceded that the agreement is binding and applies to North Macedonia's NATO accession, some observers expressed concern when he stated that a New Democracy\u2013led government would block North Macedonia's EU accession progress if Greek interests are threatened, including commercial interests for products from Greece's Macedonia region. "], "subsections": []}, {"section_title": "Domestic Reforms", "paragraphs": ["Following the breakthrough in North Macedonia's bilateral relations with Bulgaria and Greece, U.S. and EU officials encouraged the Zaev government to implement political and economic reforms. Political instability, weak rule of law, corruption, a large shadow economy, and skilled labor shortages are viewed as impediments to improving conditions in North Macedonia. One of the key challenges will be surmounting the \"deep-seated culture of state capture, cronyism, and corruption\" that took root under previous governments. ", "In 2015, the EU identified Urgent Reform Priorities for North Macedonia. These priorities, along with others from the EU-backed Senior Experts' Group, continue to guide the reform agenda. Priorities include improving judicial independence, implementing public administration and public financial oversight strategies to depoliticize appointments, updating the voters' list to improve trust in elections, and strengthening anticorruption institutions. Analysts believe that the governing coalition's slim majority in parliament may make it difficult to pass reforms without partial support from the opposition VMRO-DPMNE."], "subsections": []}, {"section_title": "2019 Presidential Election", "paragraphs": ["On May 5, 2019, Stevo Pendarovski, a candidate backed by Zaev's SDSM, was elected president of North Macedonia. The presidency is a largely ceremonial office, but relations between the Zaev government and former President Gjorge Ivanov (2009-2019), an ally of former Prime Minister Gruevski, were fraught due to Ivanov's refusal to sign numerous laws backed by the Zaev government. He also opposed the Prespa Agreement. ", "Pendarovski received 52% of the vote, while Gordana Siljanovska-Davkova, the candidate backed by VMRO-DPMNE, received 45%. Pendarovski's campaign centered on the government's progress in guiding North Macedonia to NATO membership, while Siljanovska-Davkova's criticized the Prespa Agreement and pledged to \"use all legal means to prove that it is not in accordance with international law.\" Analysts viewed the presidential elections as a litmus test of public support for the government after the Prespa Agreement and amid broad dissatisfaction over corruption, high unemployment, and poverty. Despite Pendarovski's victory, SDSM officials reportedly believe that the results depict a narrowing pro-government support base. While foreign leaders herald the breakthrough with Greece, voters in North Macedonia are likely eager for the government to implement economic and political reforms that have a more tangible impact on their quality of life\u2014but have received less attention thus far."], "subsections": []}]}]}, {"section_title": "Economy", "paragraphs": ["North Macedonia was one of Yugoslavia's poorest and most underdeveloped regions. Its economy experienced sharp decline during the 1990s. In the 2000s and 2010s, its GDP growth rate fluctuated in response to political instability and global economic trends. With the 2015-2017 political crisis seemingly resolved, the International Monetary Fund projects real GDP growth to be 2% or slightly higher in 2019 and 2020. In its 2018 report on North Macedonia, the European Commission lauded the country's public finance transparency reforms but expressed concern over unemployment, infrastructure deficiencies, weak contract enforcement, and large informal economy. Renewed crisis is one of the greatest risks to economic health going forward.", "Unemployment decreased from over 30% in 2010 to just over 20% in 2018. However, youth unemployment is more than twice as high. Over 20% of the population lives below the poverty line. Unemployment and poverty contribute to high rates of emigration from North Macedonia. An estimated 20%-30% of the population (450,000-630,000 people) emigrated between 1994 and 2013, mostly to Western Europe. ", "The EU is North Macedonia's most important economic partner. Of North Macedonia's total trade in 2017, 70% was with EU member states, while over 80% of North Macedonia's exports went to EU countries. Trade between the two is almost fully liberalized. Successive governments in North Macedonia have prioritized foreign direct investment, which has increased somewhat since the late 1990s due in part to a low corporate tax rate, low labor costs, and free trade zones. In 2017, the top five source countries of foreign direct investment in North Macedonia were EU member states. North Macedonia was rated 10 th in the World Bank's 2019 Ease of Doing Business rankings, the best ranking of any country in the Balkans and East-Central Europe and the fifth-highest in Europe. The Zaev government's 2018 Plan for Economic Growth includes incentives for foreign firms that operate in the country's free economic zones. "], "subsections": []}]}, {"section_title": "Foreign Relations and Security Issues", "paragraphs": [], "subsections": [{"section_title": "NATO and EU Membership", "paragraphs": ["Since independence, successive governments in North Macedonia have viewed NATO and EU membership as the country's top foreign policy priority. The United States strongly supports North Macedonia's prospective membership in both organizations, and U.S. and EU officials consider the Euro-Atlantic integration process to be a source of stability and a driver of political and economic reforms in North Macedonia. Anchoring North Macedonia in Euro-Atlantic institutions is viewed as a way to help prevent the emergence of a strategic vacuum in the Western Balkans. The fixed goal of EU and NATO membership has helped guide reforms under the Zaev government by establishing a reform framework and identifying policy priorities. ", "North Macedonia appears likely to become NATO's 30 th member in late 2019 or early 2020. On February 6, 2019, following the finalization of the Prespa Agreement with Greece, North Macedonia signed its NATO accession protocol. For North Macedonia to join the alliance, all 29 NATO allies must first ratify the protocol in accordance with domestic procedures. On February 8, Greece became the first NATO member to ratify it. In the United States, the Senate is responsible for protocol ratification (by two-thirds majority). President Trump formally transmitted the protocol to the Senate on April 29, 2019. If all 29 NATO members approve the protocol, the NATO secretary general would formally invite North Macedonia to accede to the treaty. In the final step , North Macedonia would need to approve its NATO membership through a referendum or a parliamentary vote. ", "North Macedonia launched its NATO Membership Action Plan in 1999. North Macedonia has contributed to NATO missions in Afghanistan and Kosovo. Its 2018 Strategic Defense Review establishes a timeline for increasing defense spending from its 2013-2017 average of 1.1% of GDP to NATO's 2% target by 2024. The government plans to reach 2% by annually increasing defense spending by 0.2%. The government includes equipment modernization and streamlining the armed forces from approximately 8,200 to 6,800 active personnel as reform priorities. ", "North Macedonia's short-term prospects for EU membership are less certain. It has been an EU candidate since 2005, but its progress toward membership stalled largely due to the name dispute with Greece. Opinion polls indicate a strong base of popular support among Macedonians for EU membership in part due to the widespread belief that membership will improve their quality of life. Many observers, however, question whether there is unanimous support for enlargement among the leaders of the EU's 28 member states. ", "The next step in North Macedonia's membership bid would be for the EU to open accession negotiations. (Montenegro and Serbia's accession negotiations were launched in 2012 and 2014, respectively.) This would begin the lengthy process of harmonizing North Macedonia's domestic legislation with the body of EU treaties, laws, and rules known as the acquis communautaire , which is subdivided into 35 thematic \"chapters.\" In order to open North Macedonia's accession negotiations, leaders from all 28 EU member states must agree. ", "Although the European Commission (the EU's executive) recommended launching accession negotiations with North Macedonia in 2018, France, Denmark, and the Netherlands were reportedly opposed, citing the need for continued reform progress in North Macedonia. As a result, EU leaders delayed launching negotiations and set 2019 as the target date for opening them. However, recent statements from French President Emmanuel Macron have prompted some observers to speculate that France may again seek to delay negotiations. Although the EU asserts that it is committed to further enlargement, analysts suggest that some European leaders and publics are wary amid various concerns about the EU's future and issues such as migration. ", "Observers have expressed concern that another delay in opening accession negotiations could deflate the Zaev government's reform agenda, damage the EU's reputation in the country, and enable Zaev's critics to charge that he sacrificed the country's name without any reward from the EU. It would likely add to the sense of uncertainty as to whether the EU would admit North Macedonia even if it met all membership requirements. Some analysts cite the reform drift, corruption, and democratic setbacks that followed NATO's 2008 Bucharest Summit\u2014when Greece vetoed North Macedonia's membership invitation\u2014as evidence of the backsliding that can occur when EU and NATO membership are perceived as being beyond reach.", "As a candidate country, North Macedonia is eligible for assistance from the EU's Instrument for Pre-Accession Assistance II (IPA II). Between 2014 and 2020, North Macedonia is expected to receive \u20ac664 million ($744 million at current exchange rate) in IPA II allocations. Some EU members provide additional aid to North Macedonia through national assistance programs. "], "subsections": []}, {"section_title": "Relations with Russia", "paragraphs": ["Many analysts believe that EU and NATO membership would help build resilience against Russian influence in North Macedonia. Russia, which opposes NATO enlargement in the Balkans, was critical of the Prespa Agreement. In July 2018, Greece expelled two Russian diplomats in response to accusations that the Kremlin was aiding anti-Prespa protests. Prime Minister Zaev likewise accused a Kremlin-linked businessmen of funding a campaign that urged voters to boycott a referendum on changing the country's name. Pro-boycott narratives were spread through social media. Intelligence officials in North Macedonia and the West reportedly attributed online disinformation campaigns to pro-Russia groups. A U.S. diplomat described the campaign as \"an extraordinarily complex, organized, and toxic amount of disinformation.\" In September, then-U.S. Secretary of Defense James Mattis echoed these concerns during a visit to Skopje. Russia continues to challenge the legitimacy of the Prespa Agreement and push the narrative that the West \"forced\" North Macedonia into NATO. ", "Russia's ability to exert influence in the aftermath of the Prespa Agreement's signing may have been facilitated by a reportedly years-long campaign to increase Russia's intelligence footprint in the country, project soft power through Russian-Macedonian friendship organizations and Kremlin-linked media such as Sputnik and RT , forge alliances with local anti-establishment politicians and groups, and propagate anti-Western narratives that tap into nationalist fears. Russian soft power draws on cultural kinship and shared Orthodox Christian religious tradition with ethnic Macedonians, although Russian-Macedonian ties are less established and historically grounded than Russian ties to other Orthodox Christian populations such as Greeks, Bulgarians, and Serbs. Analysts believe that Russia's goal was to sustain instability and widen political and social divisions in order to undermine North Macedonia's Euro-Atlantic integration."], "subsections": []}, {"section_title": "Relations with China", "paragraphs": ["U.S. and EU officials have voiced concern over China's growing economic clout in the Western Balkans. China has invested in regional infrastructure, energy initiatives, and other sectors as part of its Belt and Road Initiative, an ambitious transcontinental project to expand Chinese trade and investment. In 2016, China's state-owned COSCO Shipping acquired majority stakes in the Piraeus Port Authority in Greece, reportedly with ambitions of using it as an entry point for container shipping to Western Europe via the Balkans. Within the Belt and Road Initiative framework, China established the \"16+1\" group in 2012 (now 17+1) to convene EU and non-EU countries in the Balkans and Central Europe, including North Macedonia, through annual leader summits. ", "China has not invested as heavily in North Macedonia as it has in other Western Balkan countries. The most significant investment thus far is a 2013 loan worth \u20ac580 million ($648 million at exchange current rate) from China's ExIm Bank to help fund two highway projects: Miladinovci-Stip (completed) and Kicevo-Ohrid (under construction). Chinese engineering and construction company Sinhydro was awarded the contract for construction, which began in 2014. ", "Some observers caution that the highway segments may highlight potential perils of Chinese investment in the region. The projects have been mired in several controversies. North Macedonia's Special Prosecutor Office\u2014tasked with investigating abuses of office raised in the wiretapping scandal (see above)\u2014filed unlawful influence charges against Gruevski and the former transport minister for allegedly violating procurement rules by awarding the contract to Sinohydro despite receiving a lower bid from another contractor. Officials reportedly extorted millions of euros from an intentionally inflated project budget. Some of the recordings capture alleged conversations between top officials \"discussing direct payments from\" Sinohydro. Furthermore, the relative ease of receiving Chinese financing, as well as the requirement that the recipient government serve as loan guarantor, could lead to an untenable public debt burden, particularly when project costs unexpectedly increase. Highway construction was halted in 2017 due to planning errors. After the delay, the contract with Sinohydro was amended with a three-year extension, and the Chinese firm reportedly sought an additional $160 million to complete the Kicevo-Ohrid segment, raising the construction costs by 10% over the initial estimate. "], "subsections": []}]}, {"section_title": "U.S. Relations", "paragraphs": ["The United States and North Macedonia enjoy good relations. The United States strongly supports North Macedonia's NATO and EU membership bids. After Greece blocked North Macedonia's NATO entry in 2008, the United States signed a \"Declaration of Strategic Partnership and Cooperation\" with North Macedonia to signal U.S. commitment to expeditiously securing North Macedonia's NATO membership. Furthermore, the United States has cooperated with the EU to defuse political crises in North Macedonia, most recently in 2017. ", "The United States also assists North Macedonia with security challenges, including returned foreign fighters, trafficking, and cybersecurity. North Macedonia's Ministry of Interior estimates that 150 or more of its citizens fought with the Islamic State in Iraq and Syria, of which roughly 80 have since returned. The United States has cooperated with law enforcement and intelligence officials in North Macedonia to identify threats, provided training for judges and prosecutors involved in terrorism cases, and supported organizations that work toward countering violent extremism. The U.S. State Department classifies North Macedonia as a Tier 2 country with regard to trafficking in persons: Despite improvements in its efforts to combat trafficking, the government does not meet the State Department's minimum conditions for its elimination. Finally, U.S. Cyber Command, a unit in the Department of Defense, has worked with authorities in North Macedonia to improve cyber defense capabilities and is reportedly deploying one or more experts for on-site assistance.", "The United States has provided significant amounts of foreign assistance to North Macedonia. From the country's independence in 1991 through FY2015, the United States obligated about $819 million in aid to North Macedonia, according to the USAID Greenbook. In 2007, the NATO Freedom Consolidation Act ( P.L. 110-17 ) was passed, making North Macedonia eligible for assistance under the NATO Participation Act of 1994. As a candidate for EU and NATO membership, North Macedonia is eligible for assistance through the Countering Russian Influence Funds under the Countering America's Adversaries Through Sanctions Act enacted in 2017 ( P.L. 115-44 ). The United States provided $21.6 million in foreign assistance to North Macedonia in FY2017 and $15.3 million in FY2018. The Trump Administration's proposal to decrease foreign assistance levels, however, includes North Macedonia: The Administration requested $6.3 million for FY2019 and $5.7 million for FY2020. ", "Many Members of Congress supported Greece and North Macedonia's negotiations to resolve their bilateral dispute. Resolutions were sponsored in both chambers to support North Macedonia's landmark agreement with Greece and back its NATO membership bid. On February 6, 2019, the chairman and ranking member of the House Committee on Foreign Affairs wrote an open letter to Secretary of State Mike Pompeo urging the Administration to back North Macedonia's accession. With growing concern over Chinese and Russian global influence, some Members have expressed concern over external influence in the Western Balkans region\u2014including North Macedonia. Finally, some observers contend that North Macedonia's strong desire for EU and NATO membership serves as a reminder to officials on both sides of the Atlantic of the worth of the transatlantic partnership, particularly at a time when it has grown strained. North Macedonia Foreign Minister Nikola Dimitrov has often remarked that \"those on the inside forget how cold it is outside.\""], "subsections": []}]}}
{"id": "R45756", "title": "U.S. Military Electronic Warfare Program Funding: Background and Issues for Congress", "released_date": "2020-04-16T00:00:00", "summary": ["Congress, in the FY2019 National Defense Authorization Act, and the Department of Defense (DOD) has identified electronic warfare (EW) as a critical capability supporting military operations to fulfil the current National Defense Strategy. Collectively, DOD considers procurement appropriations and research, development, test and evaluation (RDT&E) appropriations as part of its investment accounts. Using programs identified by the EW Executive Commission (EW EXCOM), this report traces funding for three of the military services (Air Force, Army, and Navy) along with several defense agencies (Defense Advanced Research Projects Agency, Defense Information Systems Agency, the Joint Staff, Office of the Secretary of Defense Operational Test and Evaluation, and U.S. Special Operations Command).", "This report compares DOD's funding requests for FY2019, FY2020, and FY2021 to assess if DOD seeks to increase the funding of the EW portfolio (by increasing funding), decrease its funding, or keep the portfolio relatively unchanged.", "Insights into EW Program Funding", "This report tracks DOD funding requests for approximately 65 research and develop program elements and 30 procurement line items across FY2019 and FY2021. Reviewing these three fiscal years request allows for comparisons across the EW portfolio and provides insights into how EW was prioritized relative to the overall DOD budget. In addition to tracking funding requests in each of the respective fiscal years and identifying what Congress appropriated in FY2019 and FY2020, this report looks at the future years defense program (FYDP) to identify potential trends in the EW portfolio.", "This report looks at the combination of the procurement and RDT&E budget requests to provide a comprehensive, unclassified overview of the total EW program requests within DOD. DOD requested at least $10.1 billion in FY2019, $10.2 billion in FY2020, and $9.7 billion in FY2021 for EW, an amount analogous to the F-35 Joint Strike Fighter program ($10.7 billion in FY2019) or a Ford-class aircraft carrier ($12.5 billion in total ship-building procurement). Based on statements by several senior defense officials and the conclusions of the National Defense Strategy Commission, it could be expected that DOD is likely to substantially increase funding for EW programs. CRS assesses that DOD requested 11.5% more funding for EW RDT&E in FY2021 than what was projected in the FY2019 budget, but 1.7% less than what was projected in the FY2020 budget. Comparing the procurement budget, the FY2021 request seeks to increase funding by 2.2% compared to FY2019 projections, but decrease funding by 10.3% compared to what was projected in the FY2020 request. From a portfolio perspective, CRS assesses that the Administration projects $51.7 billion over the FY2021 Future Years Defense Program (FYDP), $259 million less than the FY2020 FYDP, but $4.5 billion more than the FY2019 FYDP. Overall, it appears the Administration is prioritizing research and development for EW programs, while decreasing procurement, which aligns with the overall FY2021 DOD budget request.", "Potential Issues for Congress", "Based on this analysis, this report identifies three potential issues for Congress", "Is DOD appropriately funding the EW portfolio? How does DOD use appropriated funds for EW programs? Is DOD potentially buying new capabilities with research and development funds, when it should use procurement funding? Does DOD understand what it is developing and procuring within the EW portfolio?"], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["Congress has shown an interest in the Department of Defense's (DOD's) electronic warfare (EW) portfolio, requiring an independent assessment of EW plans and programs in the FY2019 National Defense Authorization Act (NDAA). This report addresses U.S. military EW funding across research, development, test, and evaluation (RDT&E) and procurement appropriations. Using the FY2019 through FY2021 budget request documents, this analysis compares funding profiles between fiscal years, as well as projected funding across the future years defense program (FYDP). Using unclassified sources, CRS estimates that DOD seeks to invest approximately $9.7 billion in FY2021 funding for EW programs. Discussion of specific EW-related programs, as well as an overview of electronic warfare, are outside the scope of this report.", "The following analysis looks at EW funding identified by the DOD's EW Executive Commission (EW EXCOM). The EW EXCOM identified a series of RDT&E program elements from three of the military services (Air Force, Army and Navy), as well as several defense agencies (Defense Advanced Research Projects Agency, Defense Information Systems Agency, the Joint Staff, Office of the Secretary of Defense Operational Test and Evaluation, and U.S. Special Operations Command). Using the program elements identified, this analysis extrapolates procurement funding to provide an overview of DOD investments in electronic warfare in FY2019 and FY2020 and requested investments in FY2021. "], "subsections": []}, {"section_title": "EW in Support of the National Defense Strategy", "paragraphs": ["Over the past two decades, China and Russia have seen U.S. military command and control, intelligence surveillance, and reconnaissance (C2ISR) networks as a critical capability that they must develop capabilities against which to effectively compete. Both countries, as a result, have invested heavily in EW-related systems. According to one analyst, the Russian military views electronic warfare as a \"type of armed struggle using electronic means against enemy C4ISR [command, control, communications, computers] to 'change the quality of information,' or using electronic means against various assets to change the condition of the operational environment.\" Similarly, China has developed sophisticated EW capabilities to disrupt and deny adversary access to command and control systems\u00e2\u0080\u0094particularly space-based systems. Not only has the Chinese military been developing new systems, but it routinely exercises with them. In its most recent annual report to Congress, DOD documented at least four major exercises the People's Liberation Army used to test and demonstrate their capabilities.", "The National Defense Strategy Commission , an independent Congressional commission charged with evaluating the DOD's National Defense Strategy, identified EW as a critical capability to achieve the goals of the National Defense Strategy. Similarly, in its FY2019 through FY202 1 Defense Budget Overview request documents, DOD identified EW as a priority to improve platform and network survivability; provide advanced jamming techniques to disrupt radars, communications, and command and control systems; and provide measures to defend the space domain and maintain power projection forces. "], "subsections": []}, {"section_title": "Methodology", "paragraphs": ["The Executive Branch and the Congress have placed a higher priority on EW programs in recent years. In 2015, the Deputy Secretary of Defense established the EW EXCOM \u00e2\u0080\u0094co-chaired by the Under Secretary of Defense for Acquisition and Sustainment (USD A&S) and Vice Chairman of the Joint Chiefs of Staff\u00e2\u0080\u0094to identify emerging EW technologies. The FY2017 NDAA required the EW EXCOM to develop an EW Strategy. In its strategy, the EW EXCOM identified program elements and projects with EW facets in each of the services' and Defense-wide Research, Development, Test and Evaluation (RDT&E) appropriations. It did not, however, identify procurement lines due to complexity and classification issues . Furthermore, some program elements the EXCOM identified might not clearly refer to EW capabilities, like DARPA's Electronics Technology. Other program elements that support EW operations, however, such as the Navy's E-2D Hawkeye, are not included in the EXCOM's program list.", "With these methodological limitations, this report treats the EW EXCOM's list of 65 program elements and projects as encompassing DOD EW programs. The following analysis compares the FY2019 budget request for these programs with the FY2020 and FY2021 requests. The analysis includes funding for the Army, Navy, Air Force, DARPA, Defense Information Systems Agency (DISA), the Joint Staff, Office of the Secretary of Defense (OSD), Operational Test and Evaluation (OT&E), and Special Operations Command (SOCOM), using program elements identified by EXCOM in its strategy document, which are aggregated at the department or agency level. The FY2021 request includes Space Force programs, which had been part of the Air Force request in prior years.", "Though the EW EXCOM did not identify EW procurement programs, DOD procurement justification documents (P-40s) identify related research and development program elements. Using the Defense Technical Information Center investment budget search tool, this analysis identified the associated EW procurement programs\u00e2\u0080\u009428 in FY2019, 36 in FY2020, and 33 in FY2021. Some research and development efforts\u00e2\u0080\u0094such as the F/A-18 Hornet fighter jet and MQ-9 Reaper drone\u00e2\u0080\u0094did not differentiate funding for EW-specific procurement and therefore included procurement for aircraft. These procurements were excluded so as not to artificially inflate the funding profile. Based on the RDT&E profiles and program element searches, CRS did not identify DISA, Joint Staff, OSD, and DARPA programs with procurement appropriations.", "DOD has stated that it has prioritized EW funding above other programs. This report compares funding requests between the three fiscal years to assess if DOD seeks to increase funding of the EW portfolio (by increasing funding), decrease funding, or keep the portfolio relatively unchanged. To assess these changes, the percentage change from FY2019 to FY2020 is calculated for each appropriations category, and then compared to an overall DOD percentage change."], "subsections": []}, {"section_title": "EW Research and Development Funding", "paragraphs": [], "subsections": [{"section_title": "FY2019 RDT&E Funding", "paragraphs": [" Table 1 , above, provides an overview of the FY2019 EW RDT&E funding request, FY2019-enacted funding, and projected funding for EW program elements in each of the departments and agencies. The FY2019 request serves as a baseline to compare how DOD changed its funding priorities for FY2020. Of note, DOD requested $5.53 billion in EW RDT&E for FY2019 and planned on spending approximately $24.5 billion across the FYDP. The Navy requested the most funding in FY2019 ($2.44 billion), followed by the Air Force ($1.14 billion), the Army ($859.7 million), DARPA ($740 million), and other organizations ($341 million). EW funding was anticipated to peak in FY2019 then curtail through FY2022, followed by a slight increase in FY2023.", " Figure 1 , above, shows the difference between the Administration's FY2019 DOD request and the enacted amount of EW RDT&E. DOD requested a total of approximately $5.5 billion in FY2019; Congress enacted approximately $5.8 billion, $263 million above the requested amount. Of particular note, OSD OT&E received additional funding for subsequent testing. The largest increases between the FY2019 request and enacted levels were for \"Other\" agencies\u00e2\u0080\u0094primarily Operational Test and Evaluation\u00e2\u0080\u0094and the Army. The Navy and DARPA saw slight decreases from their requested levels."], "subsections": []}, {"section_title": "FY2020 RDT&E Funding", "paragraphs": [" Table 2 provides the FY2020 request and projected future year funding levels for EW RDT&E appropriations in DOD's FY2020 budget request. Of particular note, the Administration's DOD budget requested $504 million in additional RDT&E funding for FY2020 compared with the FY2019 request. While it would follow a trend line similar to FY2019's projection, DOD's plan adds additional money to EW capabilities in each of the out-years of the FYDP. This increase can primarily be attributed to the Navy's start of the Next Generation Jammer-Low Band program, as well as the Army's renewed focus on EW capabilities. ", " Figure 2 provides a comparison between requested and appropriated amounts by military department for FY2020. There was an overall increase in $140 million in EW research and development efforts. The Air Force received approximately $139 million in additional funding compared to the requested amount, with the largest increases for Advanced Aerospace Sensor Technologies and EW Quick Reaction Capabilities. The Navy received an additional $58 million for EW research and development efforts, including more funding for the F/A-18 Infrared Search and Track development and Shipboard Information Warfare Exploitation programs. These increases were partially offset by a $31 million reduction in DARPA funding for EW research and development and a $26 million reduction in Army funding for such efforts. DARPA programs all saw relatively small decreases in funding. Army funding decreases included reductions to assured Precision, Navigation and Timing equipment development."], "subsections": []}, {"section_title": "FY2021 Request", "paragraphs": ["The FY2021 RDT&E request includes approximately $5.7 billion across all military departments and agencies. The Navy requested the most, following a similar trend in FY2019 and FY2020. The Army requested the second most, replacing the Air Force in prior years. Table 3 provides an overview of the FY2021 request.", "The Army increased EW RDT&E funding by $305 million when comparing what was projected from the FY2020 request and what was requested in FY2021. The Air Force experienced the most changes, restructuring several program elements and transferring others to the Space Force. The top three programs that received increased funding include (1) the Army's Rapid Capability Development and Maturation program (increased by $247 million compared to the FY2020 projection for FY2021), (2) the F/A-18 Infrared Search and Track (IRST) development (increased $168 million), and (3) the Eagle Passive Active Warning System (increased by $146 million). Programs that saw the largest reductions include the B-2 Defensive Management System (reduced by $164 million), DARPA's Sensors and Processing Systems program (reduced by $142 million), and the Space Force's Protected Tactical Satellite Communications (reduced $48 million)."], "subsections": []}, {"section_title": "FY2019 Request Through FY2021 Request RDT&E Funding Comparison", "paragraphs": ["CRS assesses that the FY2021 request includes 93 program elements associated with electronic warfare and 157 related projects. This represents a slight increase from previous years, partly as a result of the newly established Space Force, the Air Force restructuring research projects, and the Army's restructuring of programs. Figure 3 depicts funding projections from the FY2019, FY2020, and FY2021 requests. The FY2021 request aligns closely with the FY2020 request, reducing funding by $104 million from projections in FY2020. The FY2021 request projects $25.6 billion over five years; FY2019 projected $24.6 billion over the FYDP, FY2020 similarly projected $25.6 billion. ", "DOD has increased planned EW RDT&E funding from $4.9 billion in its FY2019 request to $5.6 billion in its FY2020 request, then down to $5.5 billion in the FY2021 request. The FY2021 request represents an 11.7% increase in funding when compared to FY2019 projections, but a 1.7% decrease from the projected funding from FY2020 request. The overall change from FY2019 to FY2021 (11.7%) is double the requested 4.9% increase in overall DOD funding from FY2019 to FY2020."], "subsections": []}]}, {"section_title": "EW Procurement Funding", "paragraphs": [], "subsections": [{"section_title": "FY2019 Procurement Funding", "paragraphs": [" Table 4 , above, provides an overview of the FY2019 EW procurement request along with enacted procurement appropriations. Overall, the Administration requested $4.55 billion for EW-related procurement activities. The Navy requested the most ($2.43 billion), followed by the Air Force ($919 million) and the Army ($743 million). Funding was projected to decline through FY2021 before increasing in FY2022 and FY2023, as a result of the first increment of the Next Generation Jammer (NGJ) entering production. The NGJ is a series of jamming pods designed to disrupt air defense radars and comminutions, replacing the Vietnam-era ALQ-99 jammers. ", "Congress added $431 million in appropriations, representing a 9.5% increase over what the Administration requested. Figure 4 provides the differences between what was requested versus enacted. Of note, the Air Force received an additional $444 million over the requested amount due to Congress funding an additional EC-37B aircraft\u00e2\u0080\u0094which is designed to jam air defense radars and command and control systems\u00e2\u0080\u0094as well as increases to combat training ranges and simulations and adjustments to the F-15 defensive systems. The Navy and SOCOM saw minor decreases in appropriations."], "subsections": []}, {"section_title": "FY2020 Funding", "paragraphs": ["The Administration requested $4.56 billion in EW procurement for FY2020, adding an additional $303 million compared to what was planned in FY2019. Table 5 provides an overview of the overall FY2020 request. The Navy again requested the largest amount ($2.44 billion), followed by the Air Force ($1.21 billion) and the Army ($574 million). The Air Force's request increased the most (by $306 million) compared with what had been planned for FY2020 in the previous FY2019 request, followed by the Army (by $224 million). This requested increase can be partially attributed to the Army starting a new program for Assured Positioning, Navigation and Timing and the Air Force's transition of the E-11 Battlefield Airborne Communications Node (BACN) to a program of record and increases to E-3 Airborne Warning and Control System (AWACS) modifications."], "subsections": []}, {"section_title": "FY2021 Request", "paragraphs": ["Procurement for EW equipment was $4.2 billion. The Navy and the Air Force requested the largest proportions of the request, following similar trends identified in FY2019 and FY2020. New to the FY2021 request was funding for the Space Force\u00e2\u0080\u0094the newest military service and authorized in the FY2020 National Defense Authorization Act ( P.L. 116-92 ). Table 6 provides an overview of the FY2021 procurement request. Procurement in FY2021 is the lowest of the three fiscal years tracked in this report, only slightly higher than funding levels projected from the FY2019 request.", "There are a few trends to highlight from the FY2021 request. First, Navy procurement saw the largest decreases. The primary programs with significant reductions include MQ-4 Triton procurement (reduced $543 million compared to projections for FY2021 from the FY2020 request), MQ-4 Triton procurement (reduced $373 million), and AN/ALQ-32s (reduced $159 million). Procurement for Assured Precision Navigation, and Timing (PNT) equipment (increased $93 million), Patriot Modifications (increased $85 million), and the Integrated Fire Protection (IFPC) Family of Systems (increased $46 million) received the largest increases compared to the FY2020 request. The funding data suggest the Navy is reevaluating its EW programs, particularly for the surface fleet."], "subsections": []}, {"section_title": "FY2019 Request through FY2021 Request Procurement Funding Comparison", "paragraphs": ["The FY2021 request included approximately $3.7 billion to procure electronic warfare capabilities. This represents a 22.5% reduction in procurement funding compared to what was projected for FY2021 in the FY2020 request ($4.8 billion). The FY2021 FYDP projects $22.8 billion in funding over the next five years; this is compared to the FY2019 FYDP, which projected $22.5 billion, and the FY2020 FYDP, which projected $26.3 billion. Figure 5 depicts each of the FYDPs as a comparison. ", " Figure 5 illustrates the differences between the Administration's plans for EW procurement from FY2019 to FY2021. The FY2020 request added an additional $5.23 billion across the FYDP compared with the FY2019 FYDP. FY2021 added $94 million compared to the FY2019 request, but reduced procurement by $491 million compared to projections from the FY2020 request. The Navy observed the largest decrease in procurement funding, resulting in a reduction of $489 million. The Air Force saw a reduction of $81 million as well, primarily due to the introduction of the Space Force. The Army saw the largest increase, approximately $53 million. ", "It might be argued that DOD is making EW procurement a priority, which is aligned with the strategic direction in the National Defense Strategy and recommendations by the National Defense Strategy Commission. DOD requested an additional 4.9% increase in funding compared to what it projected in FY2019. EW procurement, however, increased by 7.1% from the FY2019 request compared to what was requested in FY2020\u00e2\u0080\u0094a 2.2% increase over the DOD request."], "subsections": []}]}, {"section_title": "Comparison of RDT&E and Procurement Funding", "paragraphs": [" Figure 6 , above, shows the relationship between RDT&E and procurement. Some might be concerned looking exclusively at the planned funding levels for RDT&E since this appropriation declines over the FYDP. However, several programs currently receiving RDT&E funding\u00e2\u0080\u0094such as the NGJ and the E-11 BACN\u00e2\u0080\u0094transition from being developmental programs to fielded systems. Also of note, it appears that the Administration may have changed its plans on fielding new programs. Based on funding projections the Administration plans on accelerating the Next Generation Jammer quicker than previously anticipated. In addition, it appears the Administration decided to accelerate the F-15 electronic warfare systems (F-15 EPAWS). The increase in planned procurement funding in FY2020 is particularly significant compared to the planned funding profile in FY2019.", "Combining both appropriations, DOD requested an additional $662.5 million for EW in FY2021 compared to what it had initially projected in the FY2019 request; however, the FY2021 request is $591.3 million lower than had been projected from the FY2020 request. This represents a 7.3% increase in the portfolio from FY2019 projections but a 5.7% decrease compared to projections from the FY2020 projections."], "subsections": []}, {"section_title": "Potential Issues for Congress", "paragraphs": [], "subsections": [{"section_title": "EW Funding Levels", "paragraphs": ["One potential issue for Congress is the overall funding level for EW programs. DOD requested approximately $9.7 billion dollars in FY2021 for the EW portfolio, based on unclassified budget request documents. Historically, individual EW programs have not been generally seen as large enough for in-depth congressional scrutiny; however, combined, these programs represent funding levels nearly as much as an aircraft carrier ($12.5 billion in total procurement for CVN-80) or the F-35 Joint Strike Fighter procurement ($10.7 billion in FY2019). Congress may ask whether $10.2 billion is sufficient for DOD to execute its missions, or, conversely, whether this funding level is too much. Second, Congress may ask whether each of the military services is funding unique programs, or whether there are overlapping programs that provide similar capabilities. To understand these questions, Congress may consider a historical perspective on how much the DOD allocated for EW to compare if current funding exceeds or under resources the portfolio. A second metric Congress may potentially consider using is the ratio of spending for procurement and RDT&E appropriations to understand where in the lifecycle EW programs currently are, and if the current portfolio is an anomaly.", "Many EW programs are highly classified due to their close relationship with intelligence and command and control programs. As a result, there is potentially insufficient unclassified information to assess how much DOD is currently spending on EW. This limitation of data presents a potential oversight issue for Congress."], "subsections": []}, {"section_title": "Challenges with Appropriations Usage", "paragraphs": ["Some have argued that DOD has not adequately prioritized EW over the past several years. The budget projections described above may support the argument that DOD is now prioritizing investment in EW funding. Congress may consider whether DOD uses research and development funding to procure new electronic components. Congress might consider requiring DOD to report all EW-related funding for procurements, as well as ensuring that DOD is not procuring new or advanced electronics through other appropriations.", "The EW EXCOM has stated that many procurement programs have EW-related spending, and it is difficult and complex to differentiate among them . As a result, this report does not include all EW-related procurement programs, and therefore does not account for all EW funding. If Congress maintains interest in EW procurement, it may consider requiring DOD to report all EW-related procurement programs, as well as to break out specific EW-related initiatives within a larger procurement program."], "subsections": []}, {"section_title": "Assessing EW Plans and Programs", "paragraphs": ["Congress has shown an interest in developing a comprehensive assessment of EW plans and programs across each of the DOD services and agencies. The FY2019 NDAA ( P.L. 115-232 ) required DOD to contract with a scientific organization to perform an independent assessment of DOD-related EW plans and programs. According to the legislation, this assessment identified U.S. programs, orders of battle and doctrine; analyze adversary programs, orders of battle and doctrine; and make recommendations for how the U.S. military might counteract adversary plans and programs. The Center for Strategic and Budgetary Assessments delivered the NDAA mandated study in December 2019; however, the FY2020 NDAA required a similar study to be performed.", "In addition to requesting an independent assessment of EW programs and plans, the FY2019 NDAA required DOD to update its Electronic Warfare Strategy from 2017 and submit it to Congress. Congress has expressed concern that DOD has not synchronized its efforts to ensure its dominance in the electromagnetic spectrum. For DOD to remain competitive, Congress directed the Secretary of Defense and a senior designated official to develop a process and procedure to integrate and enhance EW mission areas across DOD (i.e., to ensure each of the services cooperates and is integrated in the Joint force, as opposed to having service-specific solutions). This section of the NDAA requires DOD to develop a \"defense-wide strategy, planning, and budgeting [process and procedures] with respect to conduct of such operations [electronic attack] by the Department, including activities conducted to counter and deter such operations by malign actors.\" The strategy was delivered in 2019; however, much of the detail of this particular strategy is classified."], "subsections": []}]}]}}
{"id": "R45918", "title": "Patent-Eligible Subject Matter Reform in the 116th Congress", "released_date": "2019-09-17T00:00:00", "summary": ["The statutory definition of patent-eligible subject matter under Section 101 of the Patent Act has remained essentially unchanged for over two centuries. As a result, the scope of patentable subject matter\u00e2\u0080\u0094that is, the types of inventions that may be patented\u00e2\u0080\u0094has largely been left to the federal courts to develop through \"common law\"-like adjudication. In the 20th century, the U.S. Supreme Court established that three main types of discoveries are categorically patent-ineligible: laws of nature, natural phenomena, and abstract ideas.", "Recent Supreme Court decisions have broadened the scope of these three judicial exceptions to patent-eligible subject matter. Over a five-year period, the Supreme Court rejected, as ineligible, patents on a business method for hedging price-fluctuation risk; a method for calibrating the dosage of a particular drug; isolated human DNA segments; and a method of mitigating settlement risk in financial transactions using a computer. These cases established a new two-step test, known as the Alice / Mayo framework, for determining whether a patent claims ineligible subject matter.", "The first step of the Alice / Mayo test addresses whether the patent claims are \"directed to\" a law of nature, natural phenomenon, or abstract idea. If not, the invention is patentable. If the claims are directed to one of the ineligible categories, then the second step of the analysis asks whether the patent claims have an \"inventive concept.\" To have an inventive concept, the patent claim must contain elements that transform the nature of the claim into a patent-eligible application of the ineligible concept, so that the claim amounts, in practice, to something \"significantly more\" than a patent on the ineligible concept itself. If the invention fails the second step of Alice / Mayo , then it is patent-ineligible.", "The Supreme Court's decisions have been widely recognized to effect a significant change in the scope of patentable subject matter, restricting the sorts of inventions that are patentable in the United States. The Alice / Mayo test has been the subject of criticism, with some stakeholders arguing that the Alice / Mayo framework is vague and unpredictable, unduly restricts the scope of patentable subject matter, reduces incentives to invest and innovate, and harms American industry's competitiveness. In particular, the Alice / Mayo test has created uncertainty in the computer technology and biotechnology industries as to whether innovations in medical diagnostics, personalized medicine, methods of treatment, computer software, and artificial intelligence are patent-eligible.", "As a result, some patent law stakeholders, including academics, bar associations, industry representatives, judges, and former Patent and Trademark Office (PTO) officials, have called for the Supreme Court or Congress to act to change the law of patentable subject matter. However, other stakeholders defend the legal status quo, arguing that the Alice / Mayo framework provides an important tool for combating unmeritorious patent litigation, or that the revitalized limits on patentable subject matter have important benefits for innovation.", "Recently, there have been several substantial administrative and legislative efforts to clarify or reform patent-eligible subject matter law. In January 2019, the PTO issued revised guidance to its patent examiners with the aim of clarifying and improving predictability in how PTO patent examiners make Section 101 determinations. In April and May of 2019, a bipartisan and bicameral group of Members released draft legislative proposals that would abrogate the Alice / Mayo framework and transform the law of Section 101 and related provisions of the Patent Act. Following a series of hearings in June 2019, many expect a bill to reform Section 101 to be introduced this fall.", "These proposed changes could have significant effects as to the types of technologies that are patentable. The availability of patent rights, in turn, affects incentives to invest and innovate in particular fields, as well as consumer costs and public access to technological innovation. Understanding the legal background and context can aid Congress as it debates the legal and practical effects that legislative Section 101 reforms would have if enacted."], "reports": {"section_title": "", "paragraphs": ["T he statutory language governing patent-eligible subject matter\u00e2\u0080\u0094that is, the types of inventions that may be patented\u00e2\u0080\u0094has remained remarkably constant over the nearly 250-year history of U.S. patent law. Under the Patent Act of 1793, which Thomas Jefferson authored, \"any new and useful art, mac hine, manufacture or composition of matter, or any new and useful improvement [of the same]\" was patentable. Current law\u00e2\u0080\u0094Section 101 the Patent Act of 1952\u00e2\u0080\u0094permits the patenting of \"any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof.\" Through these four expansive statutory categories, Congress sought to ensure that nearly \"anything under the sun made by man\" is patentable if it meets all the requirements for patentability, such as novelty, enablement, and nonobviousness.", "Consistent with the broad statutory language, Section 101 permits patenting in fields of applied technology such as pharmaceuticals, biotechnology, chemistry, computer hardware and software, electrical engineering, agriculture, mechanical engineering, and manufacturing processes. However, the Supreme Court has long read Section 101 to categorically prohibit patents on three types of discoveries: \"laws of nature, natural phenomena, and abstract ideas.\" Even if \"not required by the statutory text\" of Section 101, the Court has held that these three judicial exceptions \"define[] the reach of the statute as a matter of statutory stare decisis going back 150 years.\"", "In a recent series of decisions, the Supreme Court relied on Section 101 to reject patent claims on", "a method for hedging price-fluctuation risks in commodity markets; a method for measuring metabolites in human blood for the purpose of calibrating the dosage of particular drug; isolated human DNA segments; and a method of mitigating settlement risk in financial transactions using a computer.", "These decisions established a two-step test for patentable subject matter sometimes called the \" Alice/Mayo test\" or the \" Alice / Mayo framework.\" These cases have been widely recognized to effect a significant change in the scope of patentable subject matter, restricting the sorts of inventions that are patentable in the United States. The Alice / Mayo framework has thus shifted, for better or worse, the balance between providing incentives to innovate and the social costs of exclusive rights that is at the heart of patent law. The effects of this change have been particularly pronounced in the fields of computer technology and biomedical technology.", "As a result, there is a significant and ongoing debate about the effects of Alice / Mayo framework, with a number of patent law stakeholders raising concerns about recent patentable subject matter rulings. Critics argue that the Alice/Mayo framework is vague, unpredictable, and not administrable ; muddies patent law by confusing patent eligibility with distinct patent law concerns, such as nonobviousness ; reduces incentives to innovate and invest in particular industries, such as biotechnology; or puts the U.S. industry at a disadvantage with respect to international competitors. Other stakeholders defend the Alice / Mayo framework, arguing that the Court's recent decisions are a part of the ordinary common law development of Section 101; an important tool for combating unmeritorious litigation or preventing overbroad or otherwise harmful patents ; or beneficial to American consumers by lowering prices.", "In response to the concerns of some stakeholders, there have been several significant recent administrative and legislative developments that aim to clarify and/or reform the law of Section 101. On January 7, 2019, the Patent and Trademark Office (PTO) issued Revised Patent Subject Matter Eligibility Guidance designed to assist PTO patent examiners in determining patent eligibility with greater clarity and predictability. On April 17, 2019, Senators Thom Tillis and Chris Coons, along with Representatives Doug Collins, Hank Johnson, and Steve Stivers, released a \"bipartisan, bicameral framework\" for legislative Section 101 reform. On May 22, 2019, following feedback on their first draft framework, the same group of Members released a \"bipartisan, bicameral draft bill\" to reform Section 101. After the release of the draft bill, the Senate Judiciary Committee's Intellectual Property Subcommittee held a series of three public hearings on Section 101 reform, soliciting the views of 45 patent law stakeholders. Senators Tillis and Coons continue to seek input from stakeholders following the hearings, and are expected to make further changes before introducing a formal bill.", "This report provides the necessary background and context to understand the legal and practical effects that these legislative reforms would have if enacted. First, the report reviews the basic legal principles of the U.S. patent system. Second, it examines the historical development and current state of patentable subject matter law. Third, it reviews several articulated rationales for Section 101 and theoretical options for Section 101 reform. Finally, it examines the specifics of the PTO guidance and proposed legislative reforms to Section 101."], "subsections": [{"section_title": "Patent Law Background", "paragraphs": ["Congress's authority to grant patents derives from the Intellectual Property (IP) Clause of the U.S. Constitution, which grants Congress the power \"[t]o promote the Progress of Science and useful Arts, by securing for limited Times to . . . Inventors the exclusive Right to their . . . Discoveries.\" Patents are generally available to any person who \"invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof.\"", "Patent rights do not arise automatically. Rather, to obtain patent protection under the Patent Act, an inventor must formally apply for a patent with the PTO, beginning a process called patent prosecution. During prosecution, a patent examiner at the PTO evaluates the patent application to ensure that it meets all the applicable legal requirements to merit the grant of a patent. To be patentable, an invention must be (1)\u00c2\u00a0directed at patent-eligible subject matter, (2)\u00c2\u00a0useful, (3) new, (4)\u00c2\u00a0nonobvious, and (5) adequately disclosed and claimed in the patent application. If the PTO finds these requirements met, it will issue (i.e., grant) the patent. Patents typically expire 20 years after the date of the initial patent application.", "The current law of patent-eligible subject matter will be discussed separately in detail below. The remainder of this section briefly reviews the other requirements for patentability, the scope and effect of patent claims, and the legal rights granted to the holder of a valid patent."], "subsections": [{"section_title": "Requirements for Patentability", "paragraphs": [], "subsections": [{"section_title": "Section 101: Utility", "paragraphs": ["In addition to subject matter requirements, Section 101 also contains a requirement that a patented invention must be \"useful.\" In particular, courts have held that an invention must have both a specific and substantial utility to be patentable. The utility requirement derives from the Constitution's command that patent laws exist to \"promote the Progress of . . . useful Arts.\" The constitutional purpose of patent law thus requires a \"benefit derived by the public from an invention with substantial utility,\" where the \"specific benefit exists in currently available form.\" This standard for utility is relatively low, however, requiring only that the claimed invention have some \"significant and presently available benefit to the public\" that \"is not so vague as to be meaningless.\""], "subsections": []}, {"section_title": "Section 102: Novelty", "paragraphs": ["Perhaps the most fundamental requirement for patentability is that the claimed invention must be new . Specifically, the PTO will not issue a patent if \"the claimed invention was patented, described in a printed publication, or in public use, on sale, or otherwise available to the public before the effective filing date of the claimed invention.\" In other words, if every limitation of the claimed invention is already disclosed in the \"prior art\"\u00e2\u0080\u0094the information available to the public at the time of the patent application\u00e2\u0080\u0094then the alleged inventor \"has added nothing to the total stock of knowledge,\" and no valid patent may issue to her."], "subsections": []}, {"section_title": "Section 103: Nonobviousness", "paragraphs": ["Even if a claimed invention is novel in the narrow sense that it is not \"identically disclosed\" in a prior-art reference (such as an earlier patent or publication), the invention must further be nono bvious to be patentable. Specifically, an invention cannot be patented if \"the differences between the claimed invention and the prior art are such that the claimed invention as a whole would have been obvious . . . to a person having ordinary skill\" in the relevant technology. When determining obviousness, courts may evaluate considerations such as \"commercial success, long felt but unsolved needs, [or] failure of others . . . to give light to the circumstances surrounding the origin of the subject matter sought to be patented.\" By its nature, obviousness is an \"expansive and flexible\" inquiry that cannot be reduced to narrow, rigid tests. Nonetheless, if an invention merely combines \"familiar elements according to known methods,\" yielding only \"predictable results,\" it is likely to be obvious."], "subsections": []}, {"section_title": "Section 112(a): Written Description, Enablement, Best Mode", "paragraphs": ["Finally, the Patent Act imposes several requirements relating to the technical disclosures in the patent application. These provisions are intended to ensure that the patent adequately describes the invention such that the public can use the invention after the expiration of the patent term. Section 112(a) of the Patent Act requires that patents must contain a \"specification\" that includes", "a written description of the\u00c2\u00a0 invention , and of the manner and \u00c2\u00a0process\u00c2\u00a0 of making and using it, in such full, clear, concise, and exact terms as to enable any person skilled in the art to .\u00c2\u00a0.\u00c2\u00a0.\u00c2\u00a0make and use the same, and shall set forth the best mode contemplated by the \u00c2\u00a0inventor\u00c2\u00a0 or\u00c2\u00a0 joint inventor \u00c2\u00a0of carrying out the \u00c2\u00a0invention.", "This statutory language yields three basic disclosure requirements for patentability. First, to satisfy the written description requirement , the specification must \"reasonably convey[] to those skilled in the art that the inventor had possession of the claimed subject matter as of the filing date\" of the patent application. Second, to satisfy the enablement requirement , the specification must contain enough information to teach a person skilled in the art how \"to make and use the invention without undue experimentation.\" Finally, to satisfy the best mode requirement , if the inventor knew of a preferred way of practicing her invention at the time of the patent application, the specification must disclose that \"preferred embodiment[]\" of the invention. "], "subsections": []}]}, {"section_title": "Patent Claims", "paragraphs": [], "subsections": [{"section_title": "Section 112(b): Definiteness", "paragraphs": ["If granted, the legal scope of the patent is defined by the patent claims , a sequence of statements that formally defines the legal scope of the patentee's asserted rights. In essence, while the specification explains the invention in a technical sense, the claims set forth the legal effect of the patent. Much as a deed may describe the boundaries of a tract of land, the claims define the \"metes and bounds\" of the patent right. Patent claims must be sufficiently definite to be valid\u00e2\u0080\u0094that is, they must \"particularly point[] out and distinctly claim[] the subject matter which the inventor . . . regards as the invention.\" In other words, when the claims are read in context, they must \"inform, with reasonable certainty, those skilled in the art about the scope of the invention.\""], "subsections": []}, {"section_title": "Section 112(f): Functional Claiming", "paragraphs": ["For the most part, the current Patent Act uses a system of peripheral claiming , in which the patent claims formally set out the outer boundaries of the patentee's rights. However, the Patent Act still retains elements of its former system of central claiming , in which the patentee would describe the core principles or examples of what he had invented, but need not formally delineate the outer boundaries of his rights. For example, under the doctrine of equivalents, an accused infringer may be found liable even if his product does not literally meet every element of the patent claims, if the differences between a claim element and its alleged equivalent in the accused product are \"insubstantial.\"", "A potential danger of a peripheral claiming system is that patentees may seek to claim more than they invented by couching the patent claims in broad, functional language\u00e2\u0080\u0094that is, by claiming a result or goal without limitation to any specific structure or device that accomplishes the result. In Halliburton Oil Well Cementing Co. v. Walker , the Supreme Court limited this practice, invalidating as indefinite a \"functional\" patent claim, in which the invention\u00e2\u0080\u0094an apparatus for determining the location of an obstruction in an oil well\u00e2\u0080\u0094was claimed not in terms of specific machinery, but instead as a \"means for\" performing various functions.", "Functional claims (also known as \"means-plus-function\" claims) such as those in Halliburton may be convenient for the patentee, who can express a claim element in terms of a general end, as opposed to an \"exhaustive list\" of every possible apparatus that could be used to perform that goal. On the other hand, as Halliburton recognized, functional claims may be overbroad and ambiguous, or permit the patentee to claim more than he actually invented. In the Patent Act of 1952, Congress enacted current Section 112(f) as a compromise for functional claims, overruling Halliburton but providing a standard to make functional claims more definite.", "Under Section 112(f), a patentee may opt to express a claim element as \"a means or step for performing a specified function without the recital of structure, material, or acts in support thereof.\" If the patentee chooses to claim functionally, however, the claim is construed not to cover all possible means of performing the function, but only \"the corresponding structure, material, or acts described in the specification and equivalents thereof.\" Courts have held that a patentee is presumed to invoke Section 112(f) when the term \"means\" is used in the claims. Conversely, there is a presumption that the patentee does not invoke Section 112(f) if she does not use the term \"means,\" but that presumption may be overcome, such that Section 112(f) will apply to any claim that fails to recite a \"sufficiently definite structure\" for performing a function."], "subsections": []}]}, {"section_title": "Rights of Patent Holders", "paragraphs": ["With some exceptions, a patent is generally granted \"for a term beginning on the date on which the patent issues and ending 20 years from the date on which the application for the patent was filed.\" The Patent Act includes provisions that may modify the 20-year term, including to account for excessive delays in patent examination at the PTO, or delays associated with obtaining marketing approval from other federal agencies.", "Once granted, the holder of a valid patent has the exclusive right to make, use, sell, or import the invention in the United States until the patent expires. Any other person who practices the invention (i.e., makes, uses, sells, offers to sell, or imports it) without permission from the patent holder infringes the patent and is potentially liable for monetary damages and injunctive relief if sued by the patentee. To obtain relief from infringement, the patentee must generally sue in court. Patent law is an area of exclusive federal jurisdiction, and the traditional forum for most patent disputes is federal district court. Although patent suits may be filed in any district court across the country with jurisdiction over the defendant and proper venue, a single specialized court, the U.S. Court of Appeals for the Federal Circuit (Federal Circuit), hears all appeals in patent cases."], "subsections": []}, {"section_title": "Defending Against Patent Suits", "paragraphs": ["Parties accused of patent infringement may defend on several grounds. First, although patents benefit from a presumption of validity, the accused infringer may assert that the patent is invalid . To prove invalidity, the accused infringer must show, by clear and convincing evidence, that the PTO should never have granted the patent because it failed to meet the requirements for patentability. Thus, for example, the accused infringer may argue that the invention lacks novelty, is obvious, or claims nonpatentable subject matter; that the patent fails to enable the invention; or that the patent claims are indefinite. Second, the accused infringer may claim an \"absence of liability\" because of noninfringement . In other words, even presuming the patent is valid, the patentee may fail to prove that the activities of the accused infringer fall within the scope of the patent claims\u00e2\u0080\u0094that is, the accused infringer is not making, using, selling, or importing the patented invention. Finally, the accused infringer may argue that the patent is unenforceable based on the inequitable or illegal activities of the patent holder, such as obtaining the patent through fraud on the PTO.", "Following the passage of the 2011 Leahy-Smith America Invents Act (AIA), the Patent Trial and Appeal Board (PTAB) has become an increasingly important forum for patent disputes. The AIA created several new administrative procedures for challenging patent validity, including (1) post-grant revie w (PGR), which allows any person to challenge patent validity based on any of the requirements of patentability if the PGR petition is filed within nine months of the patent's issuance; (2) inter partes review (IPR), which allows any person other than the patentee to challenge patent validity on limited grounds (novelty or obviousness based on prior patents or printed publications) at any time after nine months following the patent's issuance; and (3) a transitional program for covered business method patents (CBM), a PGR-like process limited to certain patents claiming \"business methods\" that will be available only through September 2020. Of these procedures, IPR is by far the most widely used."], "subsections": []}]}, {"section_title": "The Current Law of Section 101", "paragraphs": ["At the most general level, there are two basic requirements for an invention to claim patent-eligible subject matter. First, the invention must fit into one or more of the four statutory categories in Section 101\u00e2\u0080\u0094the claimed invention must be a (1) process, (2) machine, (3)\u00c2\u00a0manufacture, or (4) composition of matter. Given the (intentionally) expansive nature of these terms, nearly all claimed inventions will satisfy this requirement. Nonetheless, exceptions to this rule do exist. For example, in In re Nuijt en , the Federal Circuit held that a transitory electromagnetic signal was neither a process, manufacture, machine, or composition of matter, and was therefore not patent-eligible subject matter.", "Because most claimed inventions fit into one of the four statutory categories, the second requirement tends to be more practically important, and receives most of the attention. The second patentable subject matter requirement is that the invention cannot claim one of the judicially created categories of ineligible subject matter\u00e2\u0080\u0094the claimed invention must not be a (1)\u00c2\u00a0law of nature; (2) natural phenomenon; or (3) abstract idea. As explained below, the modern Supreme Court has articulated a two-step test for this second requirement, known as the Alice / Mayo framework.", "The Supreme Court has justified the three ineligible categories as necessary to prevent patent monopolies on the \"'basic tools of scientific and technological work,'\" which \"might tend to impede innovation more than it would tend to promote it.\" Thus, the Court has explained that \"a new mineral discovered in the earth or a new plant found in the wild is not patentable subject matter. Likewise, Einstein could not patent his celebrated law that E=mc 2 ; nor could Newton have patented the law of gravity.\" At the same time, the Court has said that even if a mathematical formula or law of nature is not patentable \"in the abstract,\" a practical application of such a principle or law \"to a new and useful end\" is patent-eligible.", "Beyond such broad illustrations, it is not easy to precisely define what an \"abstract idea,\" \"law of nature,\" or \"natural phenomenon\" is. Because these exceptions to patent-eligible subject matter are judicially created, they have no formal statutory definition; their meaning has instead been developed through two centuries of \"common law\" case-by-case adjudication in the federal courts. As such, the scope of patentable subject matter has waxed and waned over time, depending on the trends of recent judicial decisions.", "This section overviews the leading Supreme Court cases addressing patent-eligible subject matter, beginning with formative cases from the 19th century and culminating in the series of recent Supreme Court decisions that have led some to call for legislative reform of Section 101. Table 1 summarizes the facts and holdings of the major cases."], "subsections": [{"section_title": "Historical Development of the Judicial Exceptions to Patent-Eligible Subject Matter", "paragraphs": [], "subsections": [{"section_title": "Nineteenth Century", "paragraphs": ["The 1853 case of Le Roy v. Tatham , the \"fountainhead\" of American patentable subject matter jurisprudence, concerned a patent on machinery to manufacture metal pipes that exploited a newly developed property of lead. Although the Court ultimately did not decide the case on subject matter grounds, Le Roy relied on influential English patent cases to set forth a basic distinction between abstract \"principles\" and natural laws (which may not be patented) and practical applications of those principles (which may be patented). The Court stated that \"[a] principle, in the abstract, is a fundamental truth; an original cause; a motive; these cannot be patented, as no one can claim in either of them an exclusive right.\" On the other hand, a \"new property discovered in matter, when practically applied, in the construction of a useful article of commerce or manufacture, is patentable,\" for the \"invention is not in discovering [the natural principles], but in applying them to useful objects.\"", "In its next term, the Court applied this rule in the famous case of O'Reilly v. Morse , concerning Samuel Morse's patent on the telegraph. Although the Court found that Morse was the first inventor of the telegraph and sustained much of his patent, the Court rejected Morse's eighth claim to any \"use of the motive power of the electric or galvanic current . . . however developed for marking or printing intelligible characters, signs, or letters, at any distances, being a new application of that power of which I claim to be the first inventor or discoverer.\" Observing that \"the discovery of a principle in natural philosophy or physical science, is not patentable,\" Chief Justice Taney's majority opinion held that Morse's eighth claim was \"too broad\" because he had not discovered \"that the electric or galvanic current will always print at a distance, no matter what may be the form of the machinery\" used, but only that the specific \"complicated and delicate machinery\" disclosed in the patent specification would do so.", "In the second half of the nineteenth century, the Court issued a series of important decisions on the patentability of processes. The end result of these cases was a move away from an earlier rule that prohibited \"pure\" method patents as ineligible (i.e., a process claimed independently of the specific machinery used to accomplish the method) either by construing nominal process patents as claiming a machine or limiting the process patents to the machinery disclosed and its equivalents. In Cochrane v. Deener , which involved a patent on an improved manufacturing process for flour, the Court defined a patentable process as \"a mode of treatment of certain materials to produce a given result. It is an act, or a series of acts, performed upon the subject-matter to be transformed and reduced to a different state or thing.\" Cochrane held that such methods are patentable \"irrespective of the particular form of the instrumentalities used.\" Similarly, in Tilghman v. Proctor , the Court held that a method for separating fat into glycerin and fatty acids using water, pressure, and heat was patentable.", "In The Telephone Cases , the Court distinguished Morse to allow Alexander Graham Bell's patent claim on a \"method of and apparatus for transmitting vocal or other sounds telegraphically, as herein described, by causing electrical undulations, similar in form to the vibrations of the air accompanying the said vocal or other sounds, substantially as set forth.\" Chief Justice White interpreted Morse as holding that \"the use of magnetism as a motive power, without regard to the particular process with which it was connected in the patent, could not be claimed, but that its use in that connection could.\" The Court found that Bell's claim, in contrast to Morse's, did not reach uses of electricity to transmit speech that are \"distinct from the particular process with which it is connected in [Bell's] patent,\" and upheld the claim, so construed."], "subsections": []}, {"section_title": "Twentieth Century", "paragraphs": ["In the first half of the 20th century, the Court decided two major cases on the patentability of natural phenomena. In American Fruit Growers v. Brogdex Co. , the Court rejected patent claims on citrus fruit treated with a solution of borax to render it resistant to mold. The Court held that treated fruit was not a \"manufacture\" under Section 101, but a patent-ineligible \"natural article\"; treatment with borax did not \"change in the name, appearance, or general character of the fruit\" or imbue it with a \"new or distinctive form, quality, or property.\" In Funk Brothers Seed Co. v. Kalo Inoculant Co. , the Court rejected patent claims on an inoculant for leguminous plants consisting of multiple species of bacteria, where the particular bacterial strains were selected so as not to inhibit each other (as prior multispecies combinations had). Because the patentee's combination \"produces no new bacteria [and] no change in the six species of bacteria,\" Justice Douglas's majority opinion held that it was only \"the discovery of some of the handiwork of nature and hence is not patentable.\"", "From 1972 to 1981, the Supreme Court decided four patentable subject matter cases. In Gottschalk v. Benson , the Court held that an algorithm for converting binary-coded decimal numerals into pure binary numerals (either by hand, or, more practically, on a computer) was patent-ineligible. Justice Douglas reasoned that \"one may not patent an idea\" and that upholding this patent would \"wholly pre-empt the mathematical formula and in practical effect would be a patent on the algorithm itself.\" Second, in Parker v. Flook , the Court rejected a patent on a method for updating alarm limits during catalytic conversion of hydrocarbons (such as petroleum), which relied in part on a mathematical formula, because the only novel feature of the method was the mathematical formula. Third, in Diamond v. Chakrabarty , the Court upheld a patent on a genetically engineered bacterium useful in breaking down oil (e.g., in cleaning up oil spills). Chief Justice Burger distinguished American Fruit Growers and Funk Brothers because this bacterium, although a living organism, was human-made and possessed \"markedly different characteristics from any [bacteria] found in nature.\" Finally, in Diamond v. Diehr , the Court distinguished Flook to uphold a patent on a process for molding synthetic rubber that relied on a mathematical formula (the Arrhenius equation). Justice Rehnquist's majority opinion reached back to Cochrane v. Deener , holding that the process at issue was patentable because it transformed an article (uncured rubber) into a different state or thing. Even though the method used a mathematical formula, the patent in Diehr did not claim the formula itself and would not \"pre-empt the use of that equation\" in other fields.", "After Diehr , the Court did not decide a major patentable subject matter case for nearly 30 years. Development of the patent-eligible subject matter law was primarily left to the Federal Circuit, whose decisions generally expanded patentable-eligible subject matter, such that by the late 1990s Section 101 became perceived as \"a dead letter.\""], "subsections": []}]}, {"section_title": "The Modern Alice/Mayo Framework", "paragraphs": ["In 2010, the Supreme Court reentered the field of patent-eligible subject matter, deciding four cases on the issue within five years. These cases established the two-step Alice / Mayo test for patentable subject matter.", "The first step of the Alice / Mayo test addresses whether the patent claims are \"directed to\" an ineligible concept: a law of nature, a natural phenomenon, or an abstract idea. The inquiry at step one focuses on the \"claim as whole.\" To be \"directed to\" an eligible concept at step one of Alice / Mayo , the claims must not simply inv olve a patent-ineligible concept. Rather, the \"focus on the claims\" must be a patent-ineligible concept, as opposed to the improvement of a technological process. If the patent claims are not directed to an ineligible concept, then the subject matter is patent-eligible.", "If the claims are directed to an ineligible category, then the invention is not patentable unless the patent claims have an \"inventive concept\" under the second step of the Alice / Mayo test. Step two of Alice / Mayo considers the elements of each patent claim both individually and as an ordered combination in the search for an \"inventive concept\"\u00e2\u0080\u0094additional elements that \"transform the nature of the claim\" into a patent-eligible application of an ineligible concept. To have an \"inventive concept,\" the patent claims must contain elements \"sufficient to ensure that the patent in practice amounts to significantly more than a patent upon the [ineligible concept] itself.\" Claim limitations that are \"conventional, routine and well understood,\" such as generic computer implementation, cannot supply an inventive concept.", "Bilski v. Kappos , the Supreme Court's first modern foray into patentable subject matter doctrine, concerned a patent on a business method for hedging against price-fluctuation risks in energy and commodity markets. The Federal Circuit had held that this method was not patentable as a \"process\" under Section 101 because it failed the \"machine-or-transformation test\"\u00e2\u0080\u0094that is, it was neither \"tied to a particular machine or apparatus\" nor \"transform[ed] a particular article into a different state or thing.\" All nine members of the Supreme Court agreed with that result\u00e2\u0080\u0094that the business method at issue was not patent-eligible\u00e2\u0080\u0094but differed significantly as to their reasoning. Writing for five Justices, Justice Kennedy held that the machine-or-transformation test was not the \"sole test\" for determining whether a process is patent-eligible but nonetheless \"a useful and important clue.\" While the majority rejected the \"atextual\" notion that business methods were categorically unpatentable under Section 101, it relied on Benson and Flook to conclude that this particular patent attempted to claim an unpatentable abstract idea: the \"concept of hedging risk.\" Concurring only in the judgment, Justice Stevens wrote for four Justices who would have held, based on the history of the Patent Act and its constitutional purpose, that business methods were categorically patent-ineligible.", "In Mayo Collaborative Services v. Prometheus Laboratories , the Court addressed the scope of the \"law of nature\" exception. The patent in Mayo claimed a method for measuring metabolites in human blood in order to calibrate the dosage of thiopurine drugs in the treatment of autoimmune disorders. Writing for a unanimous Court, Justice Breyer's opinion held that the patent claims were addressed to a law of nature: \"namely, relationships between concentrations of certain metabolites in the blood and the likelihood that a dosage of a thiopurine drug will prove ineffective or cause harm.\" Because the claims were little \"more than an instruction to doctors to apply the applicable laws when treating their patients,\" the patent lacked any inventive concept and was held to be patent-ineligible.", "The next case, Association for Molecular Pathology v. Myriad Genetics, Inc. , concerned the applicability of the \"natural phenomena\" exception to the patentability of human DNA. The inventor in Myriad had discovered the precise location and genetic sequence of two human genes associated with an increased risk of breast cancer. Based on this discovery, the patentee claimed two molecules associated with the genes: (1) an isolated DNA segment and (2)\u00c2\u00a0a complementary DNA (cDNA) segment, in which the nucleotide sequences that do not code for amino acids were removed in the laboratory. Justice Thomas's unanimous opinion in Myriad held that isolated DNA segments were nonpatentable products of nature because the patent claimed naturally occurring genetic information. The Court concluded, however, that cDNA, as a synthetic molecule distinct from naturally occurring DNA, was patentable even though the underlying nucleotide sequence was dictated by nature.", "Most recently, Alice Corp. v. CLS Bank International examined the scope of the \"abstract idea\" category of nonpatentable subject matter. Alice concerned a patent on a system for mitigating \"settlement risk\"\u00e2\u0080\u0094the risk that only one party to a financial transaction will pay what it owes\u00e2\u0080\u0094using a computer as an intermediary. The Court first held, relying on Bilski , that the invention was directed at \"the abstract idea of intermediated settlement.\" Although this idea was implemented on a computer (which is, of course, a physical machine), the patent lacked an inventive concept because the claims merely \"implement[ed] the abstract idea of intermediated settlement on a generic computer.\"", " Table 1 summarizes the facts and holding of the Supreme Court's major patentable subject matter cases, in reverse chronological order."], "subsections": []}]}, {"section_title": "The Debate Over Alice/Mayo and Section 101 Reform", "paragraphs": ["A substantial group of patent law stakeholders, including inventors, academics, industry representatives, patent attorneys, current and former Federal Circuit judges, and former PTO officials, has criticized the Alice / Mayo framework on various grounds. However, other patent law stakeholders defend the Supreme Court's recent Section 101 decisions."], "subsections": [{"section_title": "Criticisms of the Alice/Mayo Framework", "paragraphs": ["Generally, critics of the Court's recent patentable subject matter jurisprudence raise four principal concerns. First, the Alice / Mayo framework is criticized as excessively vague, subjective, and/or unpredictable in application. For example, the Federal Circuit has indicated that when determining whether a patent claim is \"directed to\" an ineligible concept at step one, the court must determine whether the \"focus\" of the claims is on that concept. At the same time, the Federal Circuit has cautioned that this \"focus\" must be articulated \"with enough specificity to ensure the step one inquiry is meaningful.\" But the appropriate level of specificity can vary from patent to patent and from judge to judge.", "Thus, in the view of many stakeholders, the Supreme Court's patentable subject matter case law and the Federal Circuit's implementation of the Alice / Mayo framework fail to articulate \"objective, predictable criteria\" for making patent-eligibility determinations. Key terms, such as what an \"abstract idea\" is, or precisely how claim elements can make an invention \"significantly more\" than an ineligible category (the \"inventive concept\"), are largely left undefined, making it difficult for patent applicants and litigants to know whether their patent claims will survive judicial scrutiny. Moreover, the Federal Circuit has explicitly recognized that the two steps of the analysis are not clearly defined and may overlap. As a result, many observers characterize the court's Section 101 jurisprudence as a \"highly subjective,\" \"I know it when I see it\" approach. This subjectivity, in the view of critics, injects unpredictability and uncertainty into whether an invention is of a type that is patentable.", "Second, the Alice / Mayo framework is criticized as legally flawed on various grounds. Some stakeholders argue that the Alice / Mayo framework misinterprets Section 101, imposing \"extra-statutory\" requirements for patent eligibility, contrary to congressional intent or the constitutional purpose of patent law. Others argue that Mayo 's requirement of an \"inventive concept\" rests on a historically inaccurate understanding of 19th century English patent law, first imported into American jurisprudence in cases such as Le Roy and Morse . Finally, many commentators and stakeholders argue that the Alice / Mayo framework confuses patent law by conflating eligibility under Section 101 with policy concerns\u00e2\u0080\u0094such as the obviousness of the invention and claim breadth\u00e2\u0080\u0094that are better addressed by other provisions in the Patent Act, such as Sections 102, 103, and 112. For example, patent claims have been found to lack an inventive concept at Alice / Mayo step two where they implement an abstract idea on conventional computer hardware. Issues about what was \"conventional\" or \"well-understood\" at the time of the invention, however, are questions usually reserved for novelty or nonobviousness analysis.", "Third, the Alice / Mayo framework is alleged to have detrimental effects on incentives to innovate, especially in the biotechnology and computer software industries. Given the patent claims at issue in Alice (a computer-implemented business method), Myriad (an isolated human DNA segment), and Mayo (a drug dose optimization method), most observers agree that these two industries have been the most affected by the Supreme Court's recent Section 101 rulings. In the biotechnology industry, stakeholders argue that the Alice / Mayo framework has limited their ability to obtain patents on diagnostic methods and kits, personalized medicine, and isolated natural substances. Views in the computer industry are \"sharply divided,\" but at least some stakeholders argue that Alice has devalued their patents and/or created uncertainty for their business. In both fields, some stakeholders argue that the law of Section 101 is reducing incentives to innovate in these areas and driving investment elsewhere.", "Finally, the uncertainty and unpredictability caused by Alice/Mayo is alleged to put the United States at a disadvantage relative to international competitors. Some stakeholders argue that U.S. competitiveness may be harmed because a lack of patent availability will drive investment in certain industries to other countries where such inventions are more clearly patent-eligible. Others argue that one effect of Alice / Mayo is a loss of any patent protection for certain inventions, which will enable competitors to \"free ride\" off of American innovation."], "subsections": []}, {"section_title": "Defenses of the Alice/Mayo Framework", "paragraphs": ["Defenders of the current law of Section 101 respond that these criticisms of Alice / Mayo are overstated, and/or that the Supreme Court's reinvigoration of Section 101 has important benefits for the patent system. As to the subjective or unpredictable nature of Section 101 doctrine, there is some indication that the Alice / Mayo framework is not quite as unpredictable as is sometimes claimed. Some commentators also observe uncertainty in patentable subject matter law is hardly a new phenomenon, and may even be \"inevitable.\" A subjective or \"amorphous\" approach to patentable subject matter, on this view, may have certain benefits, including flexibility and adaptability to new technologies. Moreover, even if one views the current state of the law as unacceptably vague, courts may eventually clarify or change Section 101 doctrine in line with the long history of common law development in this area.", "As to legal correctness of Alice / Mayo , defenders of the framework note that while the judicially created categories are not directly grounded in the text of Section 101, they have been treated as part of the law \"as a matter of statutory stare decisis going back 150 years.\" As to Mayo 's reliance on 19th century English patent law, some commentators defend the Supreme Court's \"inventive application\" requirement as a faithful reading of this precedent. Finally, although the Alice / Mayo framework may overlap with other patent law doctrines, several commentators and judges of the Federal Circuit argue that Section 101 serves purposes that are distinct from Sections 102, 103, and 112. For example, even if the invention in Myriad \u00e2\u0080\u0094an isolated human DNA sequence discovered to be associated with increased breast cancer risk\u00e2\u0080\u0094was novel, nonobvious, and sufficiently disclosed, some commentators would still argue that the invention should not be patented based on detrimental effects for future innovation or moral concerns about patenting human DNA.", "As to the alleged detrimental effects of the Court's recent Section 101 law on innovation, some stakeholders point to countervailing benefits in either certain industries or more generally. In particular, some stakeholders in industries (such as computer software) affected by litigation by patent assertion entities argue that Section 101 is a useful and important tool for weeding out overly broad or vague patents at the outset of litigation. Other commentators point to general utilitarian or moral benefits of robust exclusions for patents on basic discoveries in science and nature.", "As to concerns about the Alice / Mayo framework's effect on international competitiveness, some commentators view these changes as good for the United States as a geopolitical matter. In particular, restricted patent-eligibility standards may benefit U.S. consumers if a lack of patent protection leads to increased competition and lower prices for certain products without harming innovation."], "subsections": []}, {"section_title": "Potential Rationales for Section 101", "paragraphs": ["More broadly, there is a long-running and thoughtful debate over the functions and purposes that Section 101 serves in the patent system. For its part, the modern Supreme Court has largely settled on the \"preemption rationale\" for the judicially created subject matter exclusions. Recent decisions assert that abstract ideas, laws of nature, and natural phenomena should not be patentable because permitting a monopoly on the \"'basic tools of scientific and technological work' .\u00c2\u00a0. . might tend to impede innovation more than it would tend to promote it,\" in that such patents would \"significantly impede future innovation.\" The gist of the preemption rationale is that Section 101 functions to prevent patents that reach so broadly that they \"threaten downstream innovation\" by preempting all uses of a natural law, abstract idea, or fundamental research tools.", "The preemption rationale is not the only potential justification for Section 101, however. Although a complete survey of the various rationales proffered for Section 101 is beyond the scope of this report, at least four broad categories of rationales for Section 101 have been proposed.", "First, some commentators argue that Section 101's purpose is to identify certain patents or categories of patents that should not be granted because their economic harms exceed their benefits\u00e2\u0080\u0094that is, their net social costs are negative with respect to innovation, or more generally. Preemption theory, which claims that certain overbroad patents should be denied patent protection under Section 101 because of their negative effects on downstream innovation, is an example from this group.", "Second\u00e2\u0080\u0094in what is in some sense a special case of the first rationale\u00e2\u0080\u0094other commentators assert that Section 101's purpose is to identify and deny patents to categories of inventions that would have been developed even without a patent incentive. For example, several commentators have argued the patents on business methods should be excluded under Section 101 either because they affirmatively harm innovation and the economy, or because they are simply unnecessary because sufficient incentives to create business methods would exist even if patents are unavailable.", "Third, some commentators assert that Section 101 (or elements of Section 101 doctrine) are based not on economic considerations but on moral or ethical concerns. For example, the judicial prohibition on patenting products of nature\u00e2\u0080\u0094such as human DNA sequences\u00e2\u0080\u0094may be motivated by noneconomic, deontological notions of human dignity, or the inviolability of natural creation.", "Finally, some commentators believe that Section 101 serves no independent purpose in patent law not already better served by other patentability requirements. On this view, Section 101's judicially created exceptions to patentable subject matter should simply be eliminated as an independent requirement for patentability, in favor of a rigorous application of the other patentability requirements in Sections 102, 103, and 112 of the Patent Act."], "subsections": []}, {"section_title": "Potential Options for Section 101", "paragraphs": ["Before examining the particular approaches introduced by the PTO and in the 116th Congress, this section will review some of the general ways in which Section 101 may or may not be reformed. These different paths are introduced to contextualize the current Section 101 reform proposals within the universe of possible reforms. This list is not exhaustive, nor are each of these options necessarily mutually exclusive.", "At a general level, most of the proposed paths forward for Section 101 fall into one of four categories. First, some oppose any legislative intervention, proposing instead to allow the courts to continue to develop and refine the standards for patent eligibility. Second, some propose replacing the Alice / Mayo framework with an explicit list of subject matter that is patent-eligible or -ineligible, perhaps along the lines of an approach that is used for European patents. Third, some propose replacing the Alice / Mayo framework with a different, usually lower, standard for patent eligibility, such as a requirement that the invention result from human effort, exist outside the human mind, or contribute to the technological arts. Fourth, some propose to do away with any limitations on patentable subject matter, beyond the four statutory categories and other existing statutory patentability requirements."], "subsections": [{"section_title": "Continued Common Law Judicial Development", "paragraphs": ["One option is for Congress to leave Section 101 as it is, and allow the courts (and/or the PTO) to continue developing the law of patent-eligible subject matter. Stakeholders and commentators may support this option for several different reasons. Some may disagree that the Alice / Mayo framework is as indeterminate or as harmful to innovation as the critics claim. Other commentators, even if they accept the criticisms directed at Alice / Mayo , may nonetheless believe that the courts will eventually refine, clarify, or otherwise improve the law of patentable subject matter given more time for judicial development. Still other commentators support the current law of Section 101 as affirmatively good for innovation and society because it precludes property rights in fundamental aspects of science, nature, and ideas, or serves as an important mechanism to weed out overly broad patents or obtain early dismissal of unmeritorious patent litigation.", "Supporters of continued judicial development may point to the recent administrative guidance put forth by the PTO and significant Section 101 decisions of the Federal Circuit over the past five years as promising steps in the administrative and common law development of Section 101 after the Alice , Mayo , and Myriad decisions. Opponents of maintaining the legal status quo, for their part, observe that the Supreme Court has not shown much interest in revisiting its Section 101 jurisprudence despite many opportunities, and that several current and former Federal Circuit judges have called for legislative amendment of Section 101."], "subsections": []}, {"section_title": "Specific Statutory List of Included or Excluded Subject Matter Categories", "paragraphs": ["Another potential route for reform would be to amend Section 101 to replace the Alice / Mayo framework with a more specific list of subject matter that is patent-eligible and/or patent-ineligible. Currently, Section 101 contains a broad list of included subject matter categories (processes, machines, manufactures, and compositions of matter), but most of the doctrine focuses on the three judicially created ineligible categories: laws of nature, natural phenomena, and abstract ideas. The \"laundry list\" approach would seek to make Section 101 clearer and more predictable by specifically defining categories of eligible and/or ineligible subject matter. Depending on how this sort of proposal is structured, it would retain the notion of ineligible classes of subject matter, but define such categories differently, more precisely, and perhaps more narrowly than the common law exceptions under the Alice / Mayo framework.", "The European Patent Convention's (EPC's) approach to patent eligibility offers a potential model for this type of approach. Under EPC article 52(1), patent-eligible subject matter reaches \"all fields of technology, provided that they are new, involve an inventive step and are susceptible of industrial application.\" However, EPC article 52(2) defines specific subject matter that is not patentable when claimed \"as such\":", "(a) discoveries, scientific theories and mathematical methods;", "(b) aesthetic creations;", "(c) schemes, rules and methods for performing mental acts, playing games or doing business, and programs for computers;", "(d) presentations of information.", "EPC article 53 further denies patents on inventions that are \"contrary to [public order] or morality,\" or that claim \"plant and animal varieties,\" or \"methods for treatment of the human or animal body by surgery or therapy and diagnostic methods practised on the human or animal body.\"", "Assuming that the new statutory categories are more clearly delineated than existing judicial categories like the \"abstract idea\" exception, a potential virtue of the laundry-list approach is greater clarity and predictability in the sort of inventions that are patentable. This approach would also more firmly ground subject matter determinations in explicit statutory language. On the other hand, the list-of-specific-exclusions approach would potentially be less flexible and less able to adapt to unforeseen new technologies than other reform options. It might also, to some degree, replace case-by-case judicial judgments of eligibility with more categorical legislative ones, which may be a virtue or a vice depending upon one's perspective."], "subsections": []}, {"section_title": "Replace Judicial Exceptions with a Different Standard", "paragraphs": ["A third group of proposed Section 101 reforms seeks to replace the Alice / Mayo framework with a new statutory standard for assessing patent eligibility. Proposals in this category are fairly diverse, but common elements in proposed new standards would limit patent eligibility to inventions that", "result from human effort; contribute to the technological arts; have practical utility or application; cannot be solely performed in the human mind; do not preempt all practical uses of a law of nature, abstract idea, or natural phenomenon.", "Usually, the proposed new patentability standard would supersede the three judicially created subject matter exclusions and the two-step Alice / Mayo test.", "Several proposed new standards blend more than one of these elements. For example, the American Intellectual Property Law Association has submitted a Section 101 reform proposal that replaces the Alice/Mayo framework with a single exception to patent eligibility if an invention \"exists in nature independently of and prior to any human activity\" or \"is performed solely in the human mind.\" A 2017 proposal by the American Bar Association would explicitly allow patenting \"practical applications\" of laws of nature, natural phenomena, and abstract ideas, so long as the patent claim does not \"preempt the use by others of all practical applications of the law of nature, natural phenomenon, or abstract idea.\"", "It is difficult to generalize given the significant differences among the various proposals in this category, but commentators may debate whether proposed new standards would provide greater clarity and predictability in patent-eligibility law, while still being flexible enough to adapt to new technologies."], "subsections": []}, {"section_title": "Eliminate Implied Patentable Subject Matter Limits", "paragraphs": ["A final option is to eliminate the Alice / Mayo framework and judicially created exceptions to patent eligibility altogether, without replacing them with a new standard. Several commentators have argued that patent-eligibility doctrine serves no purpose that is not already served by the existing statutory patentability requirements of utility, novelty, obviousness, written description, definiteness, and enablement. On this view, the appropriate course would be for Congress to simply eliminate the nonstatutory eligibility requirements (i.e., the judicial prohibitions on patenting laws of nature, natural phenomena, and abstract ideas) in favor of \"rigorous\" application of the patentability requirements of Sections 102, 103, and 112 of the Patent Act.", "Supporters of this approach argue that it advances the underlying policy concerns motivating Section 101 law, but does so in a \"more consistent and more rigorous\" manner. Opponents argue that Section 101 serves important purposes that are distinct from the other patentability requirements, which would be lost if the judicial exceptions were entirely eliminated."], "subsections": []}]}]}, {"section_title": "Proposed Reforms to Section 101", "paragraphs": ["The Supreme Court's recent patentable subject matter jurisprudence has inspired a number of proposed Section 101 reforms from academics, practitioners, and other stakeholders. The specifics of many of these proposals have been reviewed elsewhere. This section examines two major developments in this area in 2019. First, it reviews the PTO's Revised Subject Matter Eligibility Guidance, which seeks to offer clearer guidelines to PTO patent examiners in making Section 101 determinations. Second, this section examines a series of draft legislative proposals put forth by a bipartisan and bicameral group of legislators, which have been the subject of a series of roundtables and congressional hearings on patentable subject matter reform."], "subsections": [{"section_title": "PTO's 2019 Patent Subject Matter Eligibility Guidance", "paragraphs": ["On January 7, 2019, the PTO issued Revised Patent Subject Matter Eligibility Guidance (the PTO's Revised Guidance) to assist PTO patent examiners in determining subject matter eligibility for patent applications. The PTO noted that the \"legal uncertainty\" surrounding the Alice / Mayo framework \"poses unique challenges\" for the agency, which has thousands of patent examiners who must make patent-eligibility determinations on hundreds of thousands of applications each year. Accordingly, the PTO issued revised guidance to its patent examiners to provide \"more clarity and predictability\" in their Section 101 determinations.", "The PTO's Revised Guidance made two major changes to how patent examiners evaluate whether a patent application claims patent-ineligible subject matter. First, the guidance attempts to provide a clearer definition of what constitutes an ineligible \"abstract idea.\" Previously, examiners would make that determination by comparing the patent claim at issue to those found to be ineligible \"abstract ideas\" in previous judicial cases. The PTO found that this approach had become \"impractical\" because of an expanding volume of sometimes contradictory Section 101 case law. The PTO's Revised Guidance \"synthesizes\" the case law into three categories that examiners will treat as \"abstract ideas\":", "(a) Mathematical concepts\u00e2\u0080\u0094mathematical relationships, mathematical formulas or equations, mathematical calculations;", "(b) Certain methods of organizing human activity\u00e2\u0080\u0094fundamental economic principles or practices (including hedging, insurance, mitigating risk); commercial or legal interactions (including agreements in the form of contracts; legal obligations; advertising, marketing or sales activities or behaviors; business relations); managing personal behavior or relationships or interactions between people (including social activities, teaching, and following rules or instructions); and", "(c) Mental processes\u00e2\u0080\u0094concepts performed in the human mind (including an observation, evaluation, judgment, opinion).", "Under the Revised Guidance, patent claims that do not recite matter that falls into one of these three groupings should not be treated as an \"abstract idea\" except in \"rare circumstance[s].\"", "Second, the PTO's Revised Guidance clarifies when examiners will treat a patent claim as \"directed to\" an ineligible category (abstract ideas, laws of nature, or natural phenomena) under step one of the Alice / Mayo test. In particular, the PTO will not treat a claim as \"directed to\" an ineligible concept if \"the claim as a whole integrates the recited judicial exception into a practical application of the exception .\" If the claim does integrate such a practical application\u00e2\u0080\u0094such as improving the functioning of a computer, effecting a particular treatment for a disease, or implementing the exception into a particular machine or manufacture\u00e2\u0080\u0094then the PTO will treat the claim as patent-eligible, without having to examine the patent application for an \"inventive concept\" under step two of the Alice / Mayo framework.", "PTO's Revised Guidance was generally perceived as lowering Section 101 barriers to patentability, especially with respect to computer-related inventions. Some commentators praised the Revised Guidance for providing greater clarity to patent examiners, while other stakeholders criticized the guidance as inconsistent with the Supreme Court's Section 101 decisions.", "Although the PTO's Revised Guidance changes how PTO examiners review new patent applications, it is important to note that the guidance, unlike judicial decisions or statutory reforms, lacks formal legal force\u00e2\u0080\u0094that is, the guidance is not binding on the courts when patents are challenged in litigation. The PTO lacks general substantive rulemaking authority, and Revised Guidance itself states that it is only a \"tool for internal [PTO] management\" that lacks \"the force and effect of law.\" Although the Federal Circuit has issued somewhat contradictory signals on this point, the Guidance would receive, at the most, \"some deference\" if a court found its reasoning to be persuasive."], "subsections": []}, {"section_title": "Legislative Efforts in the 116th Congress: The Tillis-Coons Proposals", "paragraphs": [], "subsections": [{"section_title": "The First Tillis-Coons Proposal", "paragraphs": ["On April 17, 2019, Senators Tillis and Coons, along with Representatives Collins, Johnson, and Stivers, released a \"bipartisan, bicameral framework\" for legislative Section 101 reform (the First Tillis-Coons Proposal). The framework's release followed multiple roundtables with patent law stakeholders on Section 101 and the impact of the Alice/Mayo framework on, for example, innovation in artificial intelligence, medical diagnostics, and personalized medicine.", "The First Tillis-Coons Proposal would have retained the four statutory categories of patentable inventions, but removed the requirement that the invention or discovery be \"new and useful\" from Section 101. Patent eligibility would have instead been determined \"by considering each and every element of the claim as a whole and without regard for considerations properly addressed by [Sections] 102, 103 and 112 [of the Patent Act].\"", "In place of the judicially created exceptions to patent eligibility, which the First Tillis-Coons Proposal would have abrogated by statute, the proposal would have defined, \"in a closed list,\" five \"exclusive\" categories of patent-ineligible subject matter: (1) fundamental scientific principles; (2) products that exist solely and exclusively in nature; (3) pure mathematical formulas; (4) economic or commercial principles; and (5) mental activities. Effectively, this would have codified the judicial exceptions in a narrower form, with the first two ineligible categories roughly corresponding to the \"law of nature\" and \"natural product\" judicial exceptions, and the final three to the types of \"abstract ideas\" identified by the PTO in its 2019 Guidance. The Proposal would have narrowed the construction of these ineligible categories by creating a \"practical application\" test, presumably along the lines of the ABA proposal to expressly permit patenting of a practical application of ineligible subject matter. However, \"simply reciting generic technical language or generic functional language\" would have been insufficient to \"salvage an otherwise ineligible claim.\"", "The First Tillis-Coons Proposal thus blended elements of the PTO's 2019 Revised Guidance with a \"laundry list\" approach of specific ineligible categories, plus new statutory standards for how to apply the list of exceptions to patentable subject matter. The overall effect would be to lower Section 101 barriers to patentability, while still retaining more narrowly defined classes of ineligible subject matter.", "Reactions to the First Tillis-Coons Proposal were mixed. Some argued that the draft proposal was a promising start for much-needed congressional intervention. On the pro- Alice side of the debate, the Electronic Frontier Foundation, for example, criticized the First Tillis-Coons Proposal as a \"disaster\" for innovation because it would eliminate a powerful tool to combat bad patents and patent troll litigation. On the other side of the debate, critics of the Alice/ Mayo framework argued that the First Tillis-Coons Proposal did not go far enough, and urged elimination of any ineligible categories of patentable subject matter."], "subsections": []}, {"section_title": "The Second Tillis-Coons Proposal", "paragraphs": ["On May 22, 2019, following feedback on their first draft framework, the same group of Members released a \"draft bill\" to reform Section 101 (the Second Tillis-Coons Proposal). The Second Tillis-Coons Proposal was released in advance of a series of three hearings held in June before the Senate Judiciary Committee's Subcommittee on Intellectual Property, which were designed to solicit feedback on the draft legislative language. In the subsequent hearings, 45 witnesses testified over three days, with representatives from industry, academia, bar associations, and trade groups; former Federal Circuit Judges and PTO officers; and other patent law stakeholders expressing various views on Section 101 reform.", "As compared to the first proposal, the Second Tillis-Coons Proposal, generally speaking, would make more sweeping changes to Section 101 to expand patent eligibility. Like the First Tillis-Coons Proposal, the draft bill has several provisions that would attempt to separate the Section 101 inquiry from other patentability requirements. Specifically, the draft bill would strike the word \"new\" from Section 101 and establish that patent subject matter eligibility must be determined \"considering the claimed invention as a whole\" and without regard to \"considerations relating to section 102, 103, or 112 of [the Patent Act].\" The Second Tillis-Coons Proposal would further provide that eligibility determinations shall not depend on the \"manner in which the claimed invention was made; whether individual limitations of a claim are well known, conventional or routine; the state of the art at the time of the invention.\" The draft bill also explicitly provides that Section 101 \"shall be construed in favor of eligibility.\"", "Instead of codifying and narrowing the judicial exceptions to patentability, the Second Tillis-Coons Proposal would eliminate them altogether. The draft bill provides that", "No implicit or other judicially created exceptions to subject matter eligibility, including \"abstract ideas,\" \"laws of nature,\" or \"natural phenomena,\" shall be used to determine patent eligibility under section 101, and all cases establishing or interpreting those exceptions to eligibility are hereby abrogated.", "This language would appear to overturn by statute not only the Alice / Mayo framework, but over two centuries of judicial decisions interpreting the \"common law\" exceptions to Section 101.", "The Second Tillis-Coons Proposal would replace the judicial exceptions with a new statutory definition of utility that incorporates elements of various prior proposals for a new Section 101 standard. To be patent-eligible subject matter under the Second Tillis-Coons Proposal, the invention would need to fit into one of the four statutory categories of eligible subject matter (which remain unchanged) and be \"useful.\" To be \"useful,\" an invention or discovery would need to provide \"specific and practical utility in any field of technology through human intervention.\"", "Finally, to combat overbroad patent claims, the Second Tillis-Coons Proposal would alter the functional claiming rules under Section 112(f), which permits patentees to claim their invention in functional terms as opposed to reciting specific physical structures. In particular, the draft bill provides that if any patent claim element is \"expressed as a specified function without the recital of structure, material, or acts in support thereof,\" then that claim element will be limited to the \"corresponding structure, material, or acts described in the specification\" and their equivalents. Consistent with a recent decision of the Federal Circuit, this language would clarify that Section 112(f) applies to any claim element that fails to sufficiently recite a structure for performing a function. This change would arguably make it more difficult for a patentee to avoid the limiting effects of Section 112(f), even if the words \"means for\" are not used in the claim language.", "As with the first proposal, reactions to the Second Tillis-Coons Proposal from patent law stakeholders were mixed. Critics of the Alice/Mayo framework generally applauded the draft bill as bringing much needed clarity and certainty to the law of patent eligibility, particularly with respect to biotechnology innovation. Opponents of the draft bill expressed concern that changes to the Alice / Mayo framework would eliminate an important tool against unmeritorious patent litigation. Critics also questioned the necessity and advisability of such a sweeping change to Section 101 law. Both supporters and opponents raised concerns about potential ambiguities in the proposed definition of \"useful,\" particularly the terms \"human intervention,\" \"practical utility,\" and \"field of technology.\"", "Stakeholders also debated the specific practical effects of the legislative changes at the hearings, such as the effect of elimination of the judicial exceptions on basic scientific research. One notable concern, raised by the American Civil Liberties Union in opposition to the draft bill, was that the Second Tillis-Coons Proposal, by abrogating the Myriad decision, would permit the patenting of human genes. Several witnesses denied that the draft bill would lead to that result because of the bill's \"human intervention\" requirement or other patent law principles. For their part, Senators Tillis and Coons made clear that they have \"no intention\" of overruling the holding of Myriad that no one may patent \"genes as they exist in the human body.\"", "Following the hearings, Senators Tillis and Coons indicated that what they heard reinforced their view that \"patent eligibility is broken and desperately needs to be repaired,\" and that there is a \"necessity for Congress to intervene\" to bring greater clarity to Section 101. Moving forward, they indicated they were \"considering a provision that would exempt research and experimentation from infringement liability\" in response to concerns about inhibiting scientific research. The Senators also indicated that they would continue to welcome input from all stakeholders and would seek to \"clarify\" the proposal regarding the eligibility of gene patents, and potentially \"sharpen the 'field of technology' requirement to ensure that critical advances like artificial intelligence and medical diagnostics qualify [as patent-eligible].\" At the same time, the Senators expressed their view that certain concepts should remain patent-ineligible under a revised Section 101, such as \"economic transactions or social interactions.\" Observers expect a revised formal bill reflecting these provisions this fall."], "subsections": []}]}]}]}}
{"id": "RL31675", "title": "Arms Sales: Congressional Review Process", "released_date": "2020-03-03T00:00:00", "summary": ["This report reviews the process and procedures that currently apply to congressional consideration of foreign arms sales proposed by the President. This includes consideration of proposals to sell major defense equipment, defense articles and services, or the retransfer to third-party states of such military items. Under Section 36(b) of the Arms Export Control Act (AECA), Congress must be formally notified 30 calendar days before the Administration can take the final steps to conclude a government-to-government foreign military sale of major defense equipment valued at $14 million or more, defense articles or services valued at $50 million or more, or design and construction services valued at $200 million or more. In the case of such sales to NATO member states, NATO, Japan, Australia, South Korea, Israel, or New Zealand, Congress must be formally notified 15 calendar days before the Administration can proceed with the sale. However, the prior notice threshold values are higher for sales to NATO members, Japan, Australia, South Korea, Israel, or New Zealand. Commercially licensed arms sales also must be formally notified to Congress 30 calendar days before the export license is issued if they involve the sale of major defense equipment valued at $14 million or more, or defense articles or services valued at $50 million or more (Section 36(c) AECA). In the case of such sales to NATO member states, NATO, Japan, Australia, South Korea, Israel, or New Zealand, Congress must be formally notified 15 calendar days before the Administration is authorized to proceed with a given sale. As with government-to-government sales, the prior notice threshold values are higher for sales to NATO members, Japan, Australia, South Korea, Israel, or New Zealand.", "Furthermore, commercially licensed arms sales cases involving defense articles that are firearms-controlled under category I of the United States Munitions List and valued at $1 million or more must also be formally notified to Congress for review 30 days prior to the license for export being approved. In the case of proposed licenses for such sales to NATO members, Japan, Australia, South Korea, Israel, or New Zealand, 15 days prior notification is required.", "In general, the executive branch, after complying with the terms of applicable U.S. law, principally contained in the AECA, is free to proceed with an arms sales proposal unless Congress passes legislation prohibiting or modifying the proposed sale. Under current law Congress faces two fundamental obstacles to block or modify a presidential sale of military equipment: it must pass legislation expressing its will on the sale, and it must be capable of overriding a presumptive presidential veto of such legislation. Congress, however, is free to pass legislation to block or modify an arms sale at any time up to the point of delivery of the items involved. This report will be updated, if notable changes in these review procedures or applicable law occur."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Congressional Notification Requirements", "paragraphs": ["This report reviews the process and procedures that currently apply to congressional consideration of foreign arms sales proposed by the President. This includes consideration of proposals to sell major defense equipment, defense articles and services, or the retransfer to other states of such military items. In general, the executive branch, after complying with the terms of applicable U.S. law, principally contained in the Arms Export Control Act (AECA) (P.L. 90-629, 82 Stat. 1320), is free to proceed with an arms sales proposal unless Congress passes legislation prohibiting or modifying the proposed sale. The President has the obligation under the law to submit the arms sale proposal to Congress, but only after he has determined that he is prepared to proceed with any such notifiable arms sales transaction.", "The Department of State (on behalf of the President) submits a preliminary or informal notification of a prospective major arms sale 20 calendar days before the executive branch takes further formal action. This informal notification is provided to the committees of primary jurisdiction for arms sales issues. In the Senate, this is the Senate Foreign Relations Committee; in the House, it is the Foreign Affairs Committee. It has been the practice for such informal notifications to be made for arms sales cases that would have to be formally notified to Congress under the provisions of Section 36(b) of the AECA. The informal notification practice stemmed from a February 18, 1976, letter from the Department of Defense making a nonstatutory commitment to give Congress these preliminary classified notifications. Beginning in 2012, the State Department implemented a new informal notification process, which the department calls a \"tiered review,\" in which the relevant committees are notified between 20 and 40 calendar days before receiving formal notification, depending on the system and destination in question. ", "During June 2017 testimony, Acting Assistant Secretary of State Tina Kaidanow described this process as ", "Congressional review period during which the Committees can ask questions or raise concerns prior to the Department of State initiating formal notification. The purpose is to provide Congress the opportunity to raise concerns, and have these concerns addressed, in a confidential process with the Administration, so that our bilateral relationship with the country in question is protected during this process.", "If a committee \"raises significant concerns about a sale or [export] license,\" the State Department \"will typically extend the review period until we can resolve those concerns,\" Kaidanow explained.", "Under Section 36(b) of the AECA, Congress must be formally notified 30 calendar days before the Administration can take the final steps to conclude a government-to-government foreign military sale of major defense equipment valued at $14 million or more, defense articles or services valued at $50 million or more, or design and construction services valued at $200 million or more. In the case of such sales to NATO member states, NATO, Japan, Australia, South Korea, Israel, or New Zealand, Congress must be formally notified 15 calendar days before the Administration can proceed with the sale. However, the prior notice threshold values are higher for NATO members, Japan, Australia, South Korea, Israel, or New Zealand. These higher thresholds are $25 million for the sale, enhancement, or upgrading of major defense equipment; $100 million for the sale, enhancement, or upgrading of defense articles and defense services; and $300 million for the sale, enhancement, or upgrading of design and construction services, so long as such sales to these countries do not include or involve sales to a country outside of this group of states. Section 36(i) requires the President to notify both the Senate Foreign Relations Committee and House Foreign Affairs Committee at least 30 days in advance of a pending shipment of defense articles subject to the 36(b) requirements if the chairman and ranking member of either committee request such notification. Certain articles or services listed on the Missile Technology Control Regime are subject to a variety of additional reporting requirements.", "Commercially licensed arms sales also must be formally notified to Congress 30 calendar days before the export license is issued if they involve the sale of major defense equipment valued at $14 million or more, or defense articles or services valued at $50 million or more (Section 36(c) AECA). In the case of such sales to NATO member states, NATO, Japan, Australia, South Korea, Israel, or New Zealand, Congress must be formally notified 15 calendar days before the Administration can proceed with such a sale. However, the prior notice threshold values are higher for sales to NATO members, Japan, Australia, South Korea, Israel, or New Zealand, specifically: $25 million for the sale, enhancement, or upgrading of major defense equipment; $100 million for the sale, enhancement, or upgrading of defense articles and defense services; and $300 million for the sale, enhancement, or upgrading of design and construction services, so long as such sales to these countries do not include or involve sales to a country outside of this group of states. Furthermore, commercially licensed arms sales of firearms (which are on category I of the United States Munitions List) valued at $1 million or more must also be formally notified to Congress for review 30 days prior to the license for export being approved (15 days prior notice is required for proposed licenses for sales to NATO members, Japan, Australia, South Korea, Israel, or New Zealand).", "Section 36(b)(5)(A) contains a reporting requirement for defense articles or equipment items whose technology or capability has, prior to delivery, been \"enhanced or upgraded from the level of sensitivity or capability described\" in the original congressional notification. For such exports, the President must submit a report to the relevant committees at least 45 days before the exports' delivery that describes the enhancement or upgrade and provides \"a detailed justification for such enhancement or upgrade.\" This requirement applies for 10 years after the Administration has notified Congress of the export. According to Section 36(b)(5)(C), the Administration must, in the case of upgrades or enhancements meeting certain value thresholds, submit a new notification to Congress and the export will be considered \"as if it were a separate letter of offer ... subject to all of the requirements, restrictions, and conditions set forth in this subsection.\" The threshold values are higher for sales to NATO members, Japan, Australia, South Korea, Israel, or New Zealand.", "A congressional recess or adjournment does not stop the 30 calendar-day statutory review period. It should be emphasized that after Congress receives a statutory notification required under Sections 36(b) or 36(c) of the AECA, for example, and 30 calendar days elapse without Congress having blocked the sale, the executive branch is free to proceed with the sales process. This fact does not mean necessarily that the executive branch and the prospective arms purchaser will sign a sales contract and that the items will be transferred on the 31 st day after the statutory notification of the proposal has been made. It would, however, be legal to do so at that time."], "subsections": []}, {"section_title": "Congressional Disapproval by Joint Resolution", "paragraphs": ["Although Congress has more than one legislative option it can use to block or modify an arms sale, one option explicitly set out in law for blocking a proposed arms sale is the use of a joint resolution of disapproval as provided for in Section 36(b) of the AECA. Under that law, the formal notification is legally required to be submitted to the chairman of the Senate Foreign Relations Committee and the Speaker of the House. The Speaker has routinely referred these notifications to the House Foreign Affairs Committee as the committee of jurisdiction. As a courtesy, the Defense Department has submitted a copy of the statutory notification to the House Foreign Affairs Committee when that notification is submitted to the Speaker of the House. Under this option, after receiving a statutory Section 36(b) notification from the executive branch, opponents of the arms sale would introduce joint resolutions in the House and Senate drafted so as to forbid by law the sale of the items specified in the formal sale notification(s) submitted to Congress. If no Member introduces such a measure, the AECA's provisions expediting congressional action, discussed below, do not take effect.", "The next step would be committee hearings in both houses on the arms sale proposal. If a majority of either the House or the Senate committee supported the joint resolution of disapproval, they would report it to their respective chamber in accordance with its rules. Following this, efforts would be made to seek floor consideration of the resolution."], "subsections": [{"section_title": "Senate Procedures", "paragraphs": ["At this point, it is important to take note of procedures crafted to expedite the consideration of arms sales resolutions of disapproval. Since 1976, Section 36(b)(2) of the AECA has stipulated that consideration of any resolution of disapproval in the Senate under Section 36(b)(1) of the AECA shall be \"in accordance with the provisions of Section 601(b) of the International Security Assistance and Arms Export Control Act of 1976\" ( P.L. 94-329 , 90 Stat. 729). Since 1980, this stipulation has also applied to resolutions of disapproval in the Senate relating to commercially licensed arms sales under Section 36(c)(1) of the AECA. The purpose of Section 601(b) was to establish rules to facilitate timely consideration of any resolution of disapproval in the Senate. The rules set forth in Section 601(b) supersede the standing rules of the Senate and include the following:", "Give the committee with jurisdiction [the Senate Foreign Relations Committee] 10 calendar days from the date a resolution of disapproval is referred to it to report back to the Senate its recommendation on any such resolution (certain adjournment periods are excluded from computation of the 10 days); Make it in order for a Senator favoring a disapproval resolution to move to discharge the committee from further consideration of the matter if the committee fails to report back to the Senate by the end of the 10 calendar days it is entitled to review the resolution (the AECA expressly permits a discharge motion after 5 calendar days for sales to NATO, NATO countries, Japan, Australia, South Korea, Israel, and New Zealand); Make the discharge motion privileged, limit floor debate on the motion to one hour, and preclude efforts to amend or to reconsider the vote on such a motion; Make the motion to proceed to consider a resolution of disapproval privileged and preclude efforts to amend or to reconsider the vote on such motion; Limit the overall time for debate on the resolution of disapproval to 10 hours and preclude efforts to amend or recommit the resolution of disapproval; Limit the time (one hour) to be used in connection with any debatable motion or appeal; provide that a motion to further limit debate on a resolution of disapproval, debatable motion, or appeal is not debatable.", "The Senate is constitutionally empowered to amend its rules or to effect a rule change at any time. The fact that an existing rule is in Section 601 of the International Security Assistance and Arms Export Control Act of 1976 is not an obstacle to changing it by Senate action alone should the Senate seek to do so."], "subsections": []}, {"section_title": "House Floor Procedures12", "paragraphs": ["The House of Representatives is directed by Sections 36(b)(3) and 36(c)(3)(B) of the AECA to consider a motion to proceed to the consideration of a joint resolution disapproving an arms sale reported to it by the appropriate House committee as \"highly privileged.\" Generally, this means that the resolution will be given precedence over most other legislative business of the House, and may be called up on the floor without a special rule reported by the Rules Committee. Unlike for the Senate, however, the AECA contains no provision for discharge of the House committee if it does not report on the joint resolution. If reported and called up, the measure will be considered in the Committee of the Whole, meaning that amendments can be offered under the \"five-minute rule.\" Nevertheless, amendments to joint resolutions disapproving arms sales have apparently never been offered in the House.", "The Rules Committee usually sets the framework for floor consideration of major legislation in the House of Representatives, however, and could do so for a joint resolution of disapproval. Upon receiving a request for a rule to govern consideration of such a resolution, the House Rules Committee could set a time limit for debate, exclude any amendments to, and waive any points of order against the resolution. If the House adopted the rule reported by the committee, it would govern the manner in which the legislation would be considered, superseding the statutory provision."], "subsections": []}, {"section_title": "Final Congressional Action", "paragraphs": ["After a joint resolution is passed by both the House and the Senate, the measure would next be sent to the President. Once this legislation reaches the President, presumably he would veto it in a timely manner. Congress would then face the task of obtaining a two-thirds majority in both houses to override the veto and impose its position on the President."], "subsections": []}]}, {"section_title": "Congressional Use of Other Legislation", "paragraphs": ["Congress can also block or modify a proposed sale of major defense equipment, or defense articles and services, if it uses the regular legislative process to pass legislation prohibiting or modifying the sale or prohibiting delivery of the equipment to the recipient country. While it is generally presumed that Congress will await formal notification under Section 36(b) or 36(c) of the AECA before acting in opposition to a prospective arms sale, it is clear that a properly drafted law could block or modify an arms sale transaction at any time\u00e2\u0080\u0094including before a formal AECA notification was submitted or after the 30-day AECA statutory notification period had expired\u00e2\u0080\u0094so long as the items have not been delivered to the recipient country.", "Congressional use of its lawmaking power regarding arms sales is not constrained by the AECA reporting requirements. In order to prevail, however, Congress must be capable of overriding a presidential veto of this legislation, for the President would presumably veto a bill that blocked his wish to make the arms sale in question. This means, in practical terms, that to impose its view on the President, Congress must be capable of securing a two-thirds majority of those present and voting in both houses.", "There are potentially important practical advantages, however, to prohibiting or modifying a sale, if Congress seeks to do so, prior to the date when the formal contract with the foreign government is signed\u00e2\u0080\u0094which could occur at any time after the statutory 30-day period. These likely advantages include (1) limiting political damage to bilateral relations that could result from signing a sales contract and later nullifying it with a new law; and (2) avoiding financial liabilities which the U.S. Government might face for breaking a valid sales contract. The legislative vehicle designed to prohibit or modify a specific arms sale can take a variety of forms, ranging from a rider to any appropriation or authorization bill to a freestanding bill or joint resolution. The only essential features that the vehicle must have are (1) that it is legislation passed by both houses of Congress and presented to the President for his signature or veto and, (2) that it contains an express restriction on the sale and/or the delivery of military equipment (whether it applies to specific items or general categories) to a specific country or countries."], "subsections": []}, {"section_title": "Presidential Waiver of Congressional Review", "paragraphs": ["It is important to note that the President also has the legal authority to waive the AECA statutory review periods. For example, if the President states in the formal notification to Congress under AECA Sections 36(b)(1), 36(c)(2), 36(d)(2) that \"an emergency exists\" which requires the sale (or export license approval) to be made immediately \"in the national security interests of the United States,\" the President is free to proceed with the sale without further delay. The President must provide Congress at the time of this notification a \"detailed justification for his determination, including a description of the emergency circumstances\" which necessitated his action and a \"discussion of the national security interests involved.\" AECA Section 3(d) (2)(A) provides similar emergency authority with respect to retransfers of U.S.-origin major defense equipment, defense articles, or defense services.", "Section 614(a) of the Foreign Assistance Act of 1961 (FAA), as amended, also allows the President, among other things, to waive provisions of the AECA, the FAA, and any act authorizing or appropriating funds for use under either the AECA or FAA in order to make available, during each fiscal year, up to $750 million in cash arms sales and up to $250 million in funds. Not more than $50 million of the $250 million limitation on funds use may be made available to any single country in any fiscal year through this waiver authority unless the country is a \"victim of active aggression.\" Not more than $500 million of cash sales (or cash sales and funds made available combined) may be provided under this waiver authority to any one country in any fiscal year. To waive the provisions of these acts related to arms sales, the President must determine and notify Congress in writing that it is \"vital\" to the \"national security interests\" of the United States to do so. Before exercising the authority granted in Section 614(a), the President must \"consult with\" and \"provide a written policy justification to\" the House Foreign Affairs and the Senate Foreign Relations Committees and House and Senate Appropriations Committees.", "In summary, in the absence of a strong majority in both houses of Congress supporting legislation to block or modify a prospective arms sale, the practical and procedural obstacles to passing such a law\u00e2\u0080\u0094whether a freestanding measure or one within the AECA framework\u00e2\u0080\u0094are great. Even if Congress can pass the requisite legislation to work its will on an arms sale, the President need only veto it and secure the support of one-third plus one of the Members of either the Senate or the House to have the veto sustained and permit the sale.", "It should be noted that Congress has never successfully blocked a proposed arms sale by use of a joint resolution of disapproval, although it has come close to doing so (see section below for selected examples). Nevertheless, Congress has\u00e2\u0080\u0094by expressing strong opposition to prospective arms sales, during consultations with the executive branch\u00e2\u0080\u0094affected the timing and the composition of some arms sales, and may have dissuaded the President from formally proposing certain arms sales."], "subsections": [{"section_title": "2019 Sales to Jordan, Saudi Arabia, and the United Arab Emirates", "paragraphs": ["On May 24, 2019, Secretary of State Michael Pompeo stated that he had directed the State Department \"to complete immediately the formal notification of 22 pending arms transfers\" to Jordan, Saudi Arabia, and the United Arab Emirates. In a determination to Congress, Pompeo invoked the AECA Section 36 emergency provisions described above. The transfers included a variety of defense articles and services, as well as an agreement to coproduce and manufacture components of Paveway precision-guided munitions in Saudi Arabia. On June 20, 2019, the Senate passed S.J.Res. 36 , which prohibited both the Paveway coproduction agreement described above and the transfer of additional such munitions, and S.J.Res. 38 , which prohibited transfers of \"defense articles, defense services, and technical data to support the manufacture of the Aurora Fuzing System for the Paveway IV Precision Guided Bomb Program.\" The same day, the Senate passed en bloc another 20 resolutions of disapproval prohibiting the remaining notified transfers. ", "The House passed S.J.Res. 36 and S.J.Res. 38 on July 17, 2019. The same day, the House also passed S.J.Res. 37 , which prohibited the transfer to the UAE of \"defense articles, defense services, and technical data to support the integration, operation, training, testing, repair, and operational level maintenance\" of the Maverick AGM-65 air-to-surface guided missile and several Paveway systems for use on a number of Emirati-operated aircraft. The resolution also prohibited the transfer of a number of Paveway munitions to the UAE. President Donald Trump vetoed the three bills on July 24. A July 29 Senate vote failed to override these vetoes. "], "subsections": []}, {"section_title": "Examples of AECA Resolutions of Disapproval", "paragraphs": ["On October 14, 1981, the House adopted a resolution ( H.Con.Res. 194 ) objecting to President Reagan's proposed sale to Saudi Arabia of E-3A airborne warning and control system (AWACS) aircraft, Sidewinder missiles, Boeing 707 refueling aircraft, and defense articles and services related to F-15 aircraft. An October 28, 1981, Senate vote on identical legislation failed, however, after President Reagan made a series of written commitments to Congress regarding the proposed sale. Congress later enacted legislation requiring the President to certify that the commitments made in 1981 regarding the proposed sale had been met prior to the delivery of the AWACS planes (Section 127 of the International Security and Development Cooperation Act of 1985; P.L. 99-83 ).", "On April 8, 1986, President Ronald Reagan formally proposed the sale to Saudi Arabia of 1,700 Sidewinder missiles, 100 Harpoon missiles, 200 Stinger missile launchers, and 600 Stinger missile reloads. On May 6, 1986, the Senate passed legislation to block these sales ( S.J.Res. 316 ) by a vote of 73-22. The House concurred with the Senate action on May 7, 1986, by passing H.J.Res. 589 by a vote of 356-62. The House then passed S.J.Res. 316 by a voice vote and (in lieu of H.J.Res. 589 ) sent it to the President. On May 21, 1986, President Reagan vetoed S.J.Res. 316 . But, in a letter that day to then-Senate Majority Leader Robert Dole, President Reagan said he would not include the controversial Stinger missiles and launchers in the sales proposal. On June 5, 1986, the Senate, by a 66-34 vote, sustained the President's veto of S.J.Res. 316 , and the sale of the Sidewinder and Harpoon missiles to Saudi Arabia proceeded.", "More recently, on March 10, 2016, the Senate Foreign Relations Committee rejected a motion to discharge a joint resolution ( S.J.Res. 31 ) prohibiting the sale of several defense articles, particularly eight F-16 Block 52 aircraft. H.J.Res. 82 was the House companion bill. On May 5, 2016, a State Department spokesperson, noting congressional objections to using Foreign Military Financing funds for the aircraft, told reporters that the United States had \"told the Pakistanis that they should put forward national funds for the purchase.\" In late May, the U.S. offer expired after Islamabad failed to submit a letter of acceptance by the required deadline.", "On June 13, 2017, the Senate voted to reject a motion to discharge from the Senate Foreign Relations Committee a joint resolution ( S.J.Res. 42 ) prohibiting certain proposed defense exports to Saudi Arabia, such as \"technical data, hardware, and defense services\" to support the Royal Saudi Air Force's deployment of the Joint Direct Attack Munition and integration of the FMU-152A/B JPB Fuze System into several warhead types. The bill also would have prohibited the transfer of \"defense articles, defense services, and technical data to support the assembly, modification, testing, training, operation, maintenance, and integration\" of certain precision guided munitions for the certain Royal Saudi Air Force planes. H.J.Res 102 was the House companion bill."], "subsections": []}]}]}}
{"id": "R45741", "title": "Memorials and Commemorative Works Outside Washington, DC: Background, Federal Role, and Options for Congress", "released_date": "2019-05-29T00:00:00", "summary": ["Congress frequently faces questions about whether and how to commemorate people and events that have influenced the nation's history. Congress often has chosen to do so by establishing national memorials or by conferring a national designation on existing state, local, or private memorials. The National Park Service (NPS) defines national memorials within the National Park System as \"primarily commemorative\" works that need not be at sites historically associated with their subjects. The Commemorative Works Act (CWA; 40 U.S.C. \u00a7\u00a78901-8910) was enacted to govern the establishment process for memorials located in the District of Columbia (Washington, DC) or its environs that are under the jurisdiction of the NPS or the General Services Administration. The CWA includes provisions related to memorial location, design, construction, and perpetual maintenance. Memorials in Washington, DC, include those with the word national in the name and those that are essentially national memorials but do not bear that title.", "For memorials outside the District of Columbia, no specific law or set of regulations governs their establishment. Congress has established a number of federally administered national memorials throughout the nation, most often as units of the National Park System but also under management of other federal agencies. Various nonfederal entities undertaking commemorative efforts also have petitioned Congress for assistance or statutory recognition, and some individual memorial organizers have titled their works as national memorials without congressional recognition. To clarify options for Congress when considering commemoration of individuals, groups, and events through memorials, this report discusses several types of congressional involvement in memorials outside the District of Columbia. For purposes of the report, these are characterized as", "high federal involvement (e.g., congressional establishment of a national memorial under federal agency administration); medium federal involvement (e.g., congressional authorization for a memorial to be located on federal property or to receive federal funds); low federal involvement (e.g., statutory recognition without additional federal support); and no federal involvement (e.g., a self-declared national memorial).", "The report provides examples of memorials of each type and discusses some options for Congress, with regard to both individual memorial designations and consideration of whether to systematize criteria for memorials outside Washington, DC, similar to the CWA's provisions for District of Columbia memorials. Because this report focuses specifically on memorials outside the District of Columbia, please see CRS Report R41658, Commemorative Works in the District of Columbia: Background and Practice, by Jacob R. Straus, for discussion of memorials governed by the CWA in Washington, DC, and its environs."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["Virtually all societies attempt to remember and memorialize individuals, groups, and events as part of the preservation of shared rhetoric and history. In the United States, there are hundreds, and possibly thousands, of memorials to various individuals, groups, and events. These commemorative works may \"engage the population in maintaining memory on a daily basis\" in a way that \"no documents or records can.\" ", "Decisions about which people, groups, or events to memorialize are made by many different entities, including Congress, federal agencies, state and local governments, and private citizens, among others. For example, for memorials on federal land in the District of Columbia, the Commemorative Works Act (CWA) requires that Congress provide authorization for a new memorial. In other areas, various laws, regulations, and policies may provide for different groups and governments to decide what should be commemorated and how. Once a decision to commemorate is made, decisionmakers face issues related to the location and cost of a memorial. ", "The choice of a memorial's location is significant. Memorials are arguably most meaningful when they are located in a place with a relationship to the individual, group, or event being commemorated. In 2002, for example, a representative from the National Park Service (NPS) testified before Congress about the importance of place:", "No memorial designed for placement in Washington, D.C. could capture the emotion and awe of visitors to the USS Arizona Memorial, lying where it was sunk in Pearl Harbor. The Oklahoma City National Memorial would not have nearly the power it has if it had been constructed anywhere else but at the site of the Murrah Building. The memorial landscapes of Gettysburg or Antietam National Battlefields still haunt visitors who contemplate what occurred there nearly 150 years ago. Indeed, people from all over the world continue to be drawn to these hallowed grounds to reflect on the historical events that took place at the sites or, perhaps, to pay their respects to those who lost their lives there.", "This report considers the extent of federal involvement in memorials located outside the District of Columbia (Washington, DC). A distinction is drawn between memorials located within and outside of Washington, DC, because of the exclusive role the CWA gives Congress to authorize new memorials on federal land in the District of Columbia, and the role of federal agencies\u2014primarily NPS and the General Services Administration (GSA)\u2014in maintaining District-based memorials once dedicated. Other CRS reports provide further discussion of memorials within the District of Columbia."], "subsections": []}, {"section_title": "Federal Role in Establishing and Maintaining Memorials Outside of Washington, DC", "paragraphs": ["No systematic law or set of regulations governs the establishment of memorials outside Washington, DC. While many such works are established without federal involvement, Congress also has established or recognized numerous memorials nationwide, and some have been designated by the executive branch. For purposes of this report, federal involvement in memorials outside the District of Columbia may be classified as \"high,\" \"medium,\" \"low,\" or \"none.\" ( Figure 1 ).", "1. Memorials with \"high\" federal involvement typically are located on federal land; receive federal funds for design, construction, and maintenance; and are managed by federal agencies. These include memorials established by Congress as units of the National Park System or under the administration of another agency. 2. Memorials with \"medium\" federal involvement typically either are located on federal land but do not receive federal funding, or are located on nonfederal land but receive assistance from a federal agency. Examples include a number of memorials designated as NPS affiliated areas, which remain under nonfederal management but receive assistance from NPS. 3. Memorials with \"low\" federal involvement are those for which Congress provides statutory recognition, but which are not located on federal land or affiliated with a federal agency, and do not receive federal funds. 4. Memorials with no federal involvement are those that receive no federal recognition, are located on nonfederal land, and for which nonfederal resources were used to design and build the memorial."], "subsections": [{"section_title": "High Federal Involvement: Federal Agency Management", "paragraphs": ["In some instances, Congress authorizes a memorial to be created on federal land and administered by a federal agency. Such memorials have been established primarily as units of the National Park System, but also may be located within the jurisdiction of other agencies. Some of these memorials include multiple facilities such as a visitor center or kiosk in addition to the primary commemorative work. Congress also regularly enacts legislation to place plaques, markers, and similar works at federal sites, or to name federal sites in memory of individuals, groups, or events. ", "In addition to congressional designations, executive-branch officials also have designated some commemorative works on federal land. Some agencies' regulations and policies allow for agency officials to authorize the placement of plaques, markers, and similar works on agency property, and to name structures or features in memory of a person, group, or event. For example, U.S. Army regulations allow for Army officials to approve memorials to certain distinguished individuals, including deceased Army uniformed and civilian personnel with records of outstanding and honorable service, under specified criteria. "], "subsections": [{"section_title": "Memorials Within the National Park System", "paragraphs": ["To establish a national memorial as a unit of the National Park System, an act of Congress is required. For example, in the 107 th Congress, P.L. 107-226 established the Flight 93 National Memorial in Pennsylvania to \"honor the passengers and crew of United Airlines Flight 93 of September 11, 2001.\" For a discussion of the process for creating a new NPS unit and associated issues, see CRS Report RS20158, National Park System: Establishing New Units .", " Table 1 lists national memorials outside the District of Columbia that are National Park System units. The table entries are organized alphabetically by state and the descriptions are adapted from the National Parks Index . Although two of the memorials do not include the word \"national\" in their names, NPS categorizes them all as national memorials. ", "Although legislation is required to establish a memorial as an NPS unit, agency management policies allow for the NPS director to approve commemorative names and the placement of commemorative works within park units if specified criteria are met, including that there be a \"compelling justification\" for associating the memorialized person or event with the park in question, and a specified time lapse between the commemoration and the person's death or the event's occurrence. "], "subsections": []}, {"section_title": "Other Federal Agency Memorials", "paragraphs": ["Both Congress and executive-branch officials also have established memorials on property administered by agencies other than NPS, such as the Department of Defense and others. These memorials typically are managed by the administering agency as part of its overall management of a larger site. For example, in 2015, Congress designated the Medicine Creek Treaty National Memorial, which is managed by the U.S. Fish and Wildlife Service (FWS), as part of the Billy Frank Jr. Nisqually National Wildlife Refuge in the state of Washington. In 2000, Congress directed the Secretary of the Interior to designate the Battle of Midway National Memorial in the Midway Atoll National Wildlife Refuge, also administered by FWS. "], "subsections": []}]}, {"section_title": "Medium Federal Involvement: Federal Lands or Federal Funds", "paragraphs": ["In some instances, Congress has established a memorial on federal land but required it to be financed by a nonfederal entity, or alternatively, has provided federal financial and/or technical assistance to a nonfederal entity for management of a memorial that is not on federal land. NPS has played a large role in supporting these \"medium-involvement\" commemorative works, but other agencies have participated as well, especially branches of the Department of Defense. "], "subsections": [{"section_title": "Memorials Designated as NPS Affiliated Areas", "paragraphs": ["Congress has designated some sites, including several national memorials, as affiliated areas of the National Park Service. These sites are not units of the National Park System and typically remain in nonfederal ownership and management, but receive technical and/or financial assistance from NPS. For example, P.L. 108-199 , the Consolidated Appropriations Act, 2004, transferred jurisdiction over the Oklahoma City Bombing Memorial from the NPS to the Oklahoma City National Memorial Foundation and provided that the NPS \"is authorized to enter into 1 or more cooperative agreements with the Foundation for the National Park Service to provide interpretive services related to the Memorial.\" The Secretary of the Interior also may designate sites as NPS affiliated areas, but may not provide financial assistance to these sites without an act of Congress. ", " Table 3 lists national memorials that are NPS affiliated areas, including the memorial's name, its location, and a description from the NPS. "], "subsections": []}, {"section_title": "Other Memorials with Partial Federal Involvement", "paragraphs": ["Outside of the NPS affiliated area designation, Congress has sometimes provided for a federal agency to fund or otherwise assist a nonfederally administered memorial. For example, P.L. 107-117 appropriated $4.2 million to the Department of Defense to be used by the Secretary of the Navy as a grant to the U.S.S. Alabama Battleship Foundation, \"to be available only for the preservation of the former USS Alabama (BB\u201360) as a museum and memorial.\" The same law also provided $4.3 million to the Intrepid Sea-Air-Space Foundation to preserve the former USS Intrepid as a museum and memorial.", "Congress has also sometimes provided a \"medium\" level of federal support to a memorial by authorizing its establishment on federal land, but without federal funding. For example, P.L. 115-170 authorized a private organization, Pacific Historic Parks, to establish a commemorative display within a national park unit\u2014the World War II Valor in the Pacific National Monument in Hawaii\u2014to honor soldiers who fought in the Pacific theater. The law specified that federal funds could not be used to design, procure, prepare, install, or maintain the commemorative display, although the NPS director is authorized to accept contributions of nonfederal funds and resources for such purposes. Similarly, P.L. 113-66 (\u00a72842) authorized the Secretary of the Navy to allow a memorial to military divers to be established at a suitable location under the Secretary's jurisdiction; however, the law prohibited the use of federal funds to design, procure, prepare, install, or maintain the memorial. The law required the Secretary to approve the memorial's final design and to ensure that an \"assured\" source of nonfederal funding was established for the memorial's construction and ongoing maintenance. Another example is the National Fallen Firefighters Memorial, which is located on federal land (the National Fire Academy in Emmitsburg, MD) but does not receive federal funds for maintenance. It is maintained by the National Fallen Firefighters Foundation, a nonprofit organization.", "Other variations of federal-nonfederal partnerships have also been established. For example, P.L. 109-163 (\u00a71017) authorized a nonfederal entity, the USS Oklahoma Memorial Foundation, to construct a memorial to the USS Oklahoma on federal land. Although the foundation was required to fund and execute construction of the memorial, the Secretary of the Interior was given ongoing responsibility for its administration. The Silent Heroes of the Cold War National Memorial was dedicated in 2015 by the U.S. Forest Service (FS) at a site in Nevada's Humboldt-Toiyabe National Forest, administered by FS, but was constructed with private funding. "], "subsections": []}]}, {"section_title": "Low Federal Involvement: Statutory Designation of Nonfederal National Memorials", "paragraphs": ["On numerous occasions, Congress has designated an existing nonfederal memorial as a \"national memorial\" without any further federal affiliation. These memorials generally do not receive federal funds or support for maintenance or programming. Legislation designating these national memorials often includes explicit language stating that the memorial is not an NPS unit and that federal funds shall not be provided for the memorial. For example, the statute designating the National Distinguished Flying Cross Memorial in Riverside, CA, stated the following:", "(c) Effect of Designation.\u2014The national memorial designated by this section is not a unit of the National Park System, and the designation of the national memorial shall not be construed to require or permit Federal funds to be expended for any purpose related to the national memorial.", " Table 5 lists statutorily designated national memorials outside of Washington, DC, that are not National Park System units, NPS affiliated areas, or associated with other federal agencies. Some of these memorials do not have the word \"national\" in their name, but are listed in the U.S. Code as national memorials."], "subsections": []}, {"section_title": "No Federal Involvement", "paragraphs": ["In some cases, memorials located outside of the District of Columbia have been called \"national\" memorials without being so designated by Congress. For example, the George Washington Masonic National Memorial in Alexandria, VA, and the National Memorial for Peace and Justice in Montgomery, AL, are privately established and maintained. In cases where nonfederal sponsoring entities have titled works as national memorials without congressional recognition, these works generally do not receive federal funds or support for maintenance or programming. A comprehensive list of such memorials is not currently available."], "subsections": []}]}, {"section_title": "Conclusions and Selected Options", "paragraphs": ["Federal involvement with memorials outside of Washington, DC, currently takes a wide variety of forms. Congress has established national memorials that are entirely federally funded and managed, often as units of the National Park System. Congress has also provided for more limited types of federal involvement, such as funding assistance to a nonfederally located memorial or hosting of a nonfederally funded memorial on federal land. Also, Congress has provided statutory recognition to numerous nonfederal memorials without any additional federal involvement. Beyond these federally endorsed memorials, a wide variety of other entities have established and maintained memorials throughout the country with no federal connection, including some titled as \"national memorials.\" ", "For certain types of commemorations, Congress has taken a more systematized approach. For example, the CWA governs the establishment of memorials on federal lands in the District of Columbia, with provisions for the creation, design, construction, and maintenance of such works. If Congress wished to consider a more systematized approach to the establishment and/or funding of national memorials outside the District of Columbia, there are a number of potential options. For example, Congress could establish a statutory definition of a \"national memorial\" to guide decisionmaking as new proposals for commemoration arise. Congress might consider applying criteria similar to those of the CWA, or to those used by individual agencies for non-CWA memorials, that relate to the types of people and events that may be commemorated, and the amount of time that must pass between an event or individual's death and the commemoration. ", "Congress could potentially limit the number of memorial designations that would be appropriate in a given time period, similar to current limits on the number of commemorative coins the U.S. Mint can issue in a year. For commemorative coins, committee rules have also required a minimum number of cosponsors before a bill might be considered. Creating systematic limitations of this nature for national memorials outside of Washington, DC, could potentially make these designations more valuable (if fewer opportunities for recognition were available) and might allow time to elapse for informed historical judgment before memorials are designated. However, such requirements might also serve to limit the number of contemporary national memorial opportunities and could be seen as reducing Congress's flexibility to make case-by-case decisions about memorials. ", "Conversely, Congress might wish to increase the number of memorials that are nationally recognized outside of Washington, DC, such as through the establishment of a program to identify nonfederal memorials deserving of a national designation. Such a program could potentially include provisions similar to those for the U.S. Civil Rights Network established by P.L. 115-104 , which require the Secretary of the Interior to review studies and take other steps to identify federal and nonfederal sites related to the African American civil rights movement for potential inclusion in the network. Congress also could potentially consider a program to provide grants to nonfederal entities for constructing and/or maintaining national memorials outside of Washington, DC. Such a program could be seen as beneficial in promoting opportunities for public learning and memory, and encouraging suitable maintenance and upkeep of valued commemorative works. Alternatively, it could be opposed (for example, some might claim it would divert federal funds from more highly prioritized uses). ", "Congress might determine that current practices surrounding the creation of national memorials outside the District of Columbia are effective or that the potential cost of changes outweigh the potential benefits. Congress could thus continue to evaluate requests to designate national memorials outside Washington, DC, on a case-by-case basis."], "subsections": []}]}}
{"id": "R46117", "title": "TEACH Grants: A Primer", "released_date": "2019-12-12T00:00:00", "summary": ["The Teacher Education Assistance for College and Higher Education (TEACH) Grant program is intended to encourage individuals to enter the teaching profession by providing recipients with grants of up to $4,000 annually to pursue coursework that leads to a certification in teaching. Congress authorized the TEACH Grant program in the College Cost Reduction and Access Act of 2007 ( P.L. 110-84 ) to address concerns about growing demand for high-quality teachers, especially in low-income schools.", "To be eligible for a TEACH Grant, among other requirements, a postsecondary student has to meet certain academic achievement requirements and be enrolled in a TEACH-Grant eligible program of study. The TEACH Grant program is the only HEA Title IV program with an academic merit requirement.", "As a condition of receiving a TEACH Grant, a recipient must complete four years of teaching in a high-need field and in a school that serves low-income students, within eight years of completing his or her program of study. If a recipient fails to complete the required teaching service, his or her TEACH Grant is converted into a Federal Unsubsidized Direct Loan, which must be repaid in full including interest that accrued since grant disbursement.", "To be eligible to disburse TEACH Grants, among other requirements, an institution of higher education (IHE) must provide a high-quality teacher preparation program that is either accredited by a Department of Education (ED)-recognized accrediting agency of teacher education programs; or is approved by a state, includes a minimum of 10 weeks of full-time pre-service clinical experience, and provides or assists in providing pedagogical coursework. Additionally, such teacher preparation programs must provide or assist in providing supervision and support services to program completers when they are working as teachers.", "Program administration tasks are divided among IHEs, ED, and the loan servicer with which ED contracts. IHEs award and disburse TEACH Grants to recipients, while the loan servicer performs day-to-day administrative tasks after a grant has been disbursed. ED oversees both the IHE's and the loan servicer's functions.", "Since the inception of the program, over 300,000 TEACH Grants, totaling nearly $938 million, have been disbursed. Based on a Government Accountability Office (GAO) analysis, the estimated take-up rate of TEACH Grants by the potentially eligible population in the 2013-2014 academic year was 19%. According to an American Institutes for Research (AIR) study, among TEACH Grant recipients who began their eight-year service period prior to July 2014, 63% saw their grants converted to loans as of July 2016.", "Several issues related to TEACH Grants may garner congressional attention. The bulk of these issues pertain to program design, including the extent to which the program successfully identifies individuals who commit to teaching, the size of the TEACH Grant benefit, challenges associated with finding and sustaining a qualifying teaching placement, teacher preparation program quality at IHEs that disburse TEACH Grants, and the continued application of the \"highly qualified teacher\" definition to the TEACH Grant program. Other issues are related to program implementation, such as challenges associated with certification of teaching service and the absence of an appeals process. Lawmakers may also wish to consider other changes that have been proposed since the TEACH Grant program was authorized. Some of these include permitting partial payback of TEACH Grants converted into loans that is prorated based on the length of service fulfilled for recipients who do not complete the service requirement, allowing teachers whose roles or duties change to continue to fulfill their required teaching service with such new roles or duties, or replacing or sunsetting the program altogether."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["The Teacher Education Assistance for College and Higher Education (TEACH) Grant program provides grants to students who are completing or plan to complete the coursework required to begin a career in teaching. As a condition for receiving a TEACH Grant, a recipient must teach for at least four years in a high-need field at an elementary or secondary school or in an educational service agency that serves students from low-income families within eight years of completing his or her program of study. If a recipient does not fulfill the service obligation, his or her TEACH Grants are converted to Direct Unsubsidized Loans. A recipient must repay these loans in full, including interest charged from the date of each TEACH Grant disbursement. Since the inception of the program in 2008, over 300,000 TEACH Grants have been disbursed, totaling nearly $938 million.", "In recent years, the TEACH Grant program has received significant attention due to challenges associated with administering it. One of the more prominently cited challenges pertains to loan conversions of TEACH Grants when recipients fail to submit annual certification paperwork on time even though they have been teaching in a qualifying position. The absence of an appeals or reconsideration process may increase the amount of such grant-to-loan conversions.", "While the Department of Education (ED) is working to address some of these administrative challenges, a broader issue still persists with the program: two-thirds of recipients are expected to see their grants converted to loans. This high expected failure rate raises several questions regarding the efficacy of the program. ", "Several issues related to TEACH Grants may garner congressional attention. The bulk of these issues are related to program design, including the extent to which the program successfully identifies individuals who commit to teaching, the size of the TEACH Grant benefit, challenges associated with finding and sustaining a qualifying teaching placement, teacher preparation program quality at institutions that disburse TEACH Grants, and the continued application of the \"highly qualified teacher\" definition to the TEACH Grant program. Other issues are related to program implementation, such as challenges associated with certification of teaching service and the absence of an appeals process. Lawmakers may also wish to consider other changes that have been proposed since the TEACH Grant program was authorized.", "This report begins with a brief legislative history of the TEACH Grant program. This is followed by a brief description of how the program is structured and administered, as well as its budgeting approach and participation data. The report concludes with a discussion of issues related to the TEACH Grant program that might garner attention in the 116 th Congress. "], "subsections": []}, {"section_title": "Legislative History", "paragraphs": ["The TEACH Grant program was first authorized in 2007 under the College Cost Reduction and Access Act of 2007 (CCRAA; P.L. 110-84 ). However, as early as 2005, bills were introduced in both the House and the Senate that included an authorization for TEACH Grants, such as H.R. 2835 and its companion bill, S. 1218 . H.R. 2835 presented findings suggesting that there was a shortage of qualified teachers in public schools, and in light of the significant number of teacher retirements expected over the next few years, the country would need to field 2 million new teachers over the next decade. ", "Congress authorized the TEACH Grant program in response to concerns about growing demand for high-quality teachers in low-income schools. This demand was identified as being driven by several factors, including (1) the expected surge of retirements over the next five years and (2) a newly established set of minimum standards for teacher quality as enacted through the No Child Left Behind Act (NCLB; P.L. 107-110 ). Other concerns the TEACH Grant program aimed to address were related to low-income schools, where students were identified as being disproportionately taught by teachers who were inexperienced, unqualified, and out-of-field; and which were struggling to retain teachers for as long as three to five years.", "The committee report accompanying H.R. 2669 , the College Cost Reduction Act of 2007, stated that the TEACH Grant program was created to attract high-achieving individuals into the teaching profession to meet the demand in low-income schools. Given that, on average, teacher salaries tended to be lower than other entry-level jobs out of college, providing a financial incentive to help subsidize the cost of college was viewed as an important tool in offsetting the opportunity cost of entering into teaching. There was also a distinction made in providing financial assistance on the front-end in the form of a grant when an individual started undergraduate or graduate studies versus providing assistance once the individual had been teaching for some time, as with already existing teacher loan forgiveness programs. The idea was that earlier intervention might influence a student's career path and, thus, major, which could potentially incentivize many more individuals to pursue teaching as a career who would have not chosen it otherwise. ", "The program was also focused on incentivizing high-quality individuals to teach in both schools and subject areas for which it is typically harder to attract and retain staff. This was intended to help address some of the recurring issues faced by low-income schools, in particular.", "Opponents of the program believed that this new entitlement was poorly targeted, unproven, and would place a significant financial burden on taxpayers. Further, it was argued that the program was not focused on the goals of increasing access to and persistence in higher education for students with the greatest need. Given that the program was authorized with mandatory funds, it was also contended that there was no mechanism for congressional accountability."], "subsections": [{"section_title": "Changes Since Enactment", "paragraphs": ["Since its enactment, there have been some changes to the statutory provisions of the TEACH Grant program. The most substantive changes were made under the Higher Education Opportunity Act (HEOA; P.L. 110-315 ), which added a provision that required ED to develop a \"plain-language\" disclosure form to accompany each recipient's Agreement to Serve that clearly described the nature of TEACH Grants, the service requirement, and the consequences of not fulfilling this requirement (see \" Service-Related Requirements \" for a description of the Agreement to Serve). The HEOA also included a provision that permitted grant recipients who obtained degrees in fields that were designated as \"high need\" at the time they applied for the grant but were no longer designated as such to still be able to complete their service requirement by teaching in that field. It also required ED to establish regulations describing the extenuating circumstances in which all or part of the service requirement could be waived. Finally, it required ED to prepare and submit to Congress a report every two years on TEACH Grant recipients and the schools and students served by those recipients. "], "subsections": []}, {"section_title": "\"Service Payback\" Programs", "paragraphs": ["At the time of the TEACH Grant program's authorization, the idea of awarding grants or scholarships to subsidize the cost of undergraduate or graduate education in exchange for service (i.e., \"service payback\" programs) was not a new one. Prior to TEACH Grants, the Paul Douglas Teacher Scholarships program was first authorized under the Higher Education Amendments of 1986 ( P.L. 99-498 ) as a discretionary program to provide financial assistance to college students preparing to be elementary and secondary school teachers. Eligible students, who must have graduated in the top 10% of their high school class, could receive a scholarship in the amount of $5,000 per year for a maximum amount of up to $20,000. In exchange, scholarship recipients were required to teach one to two years for every year of scholarship receipt in a preschool or elementary or secondary school, depending on where and what subjects they taught. The program was administered as a formula grant to states, which were responsible for selecting scholarship recipients, verifying that each recipient was meeting service requirements, and submitting performance reports to ED. The program was repealed by the Higher Education Amendments of 1998 ( P.L. 105-244 ), though it was defunded in FY1996 appropriations ( P.L. 104-134 ). In eliminating funding for the program, the committee report that accompanied H.R. 2127 stated that the program was duplicative of other teacher training and student aid programs. It was also characterized as costly to administer and difficult to implement, monitor, and enforce.", "Another example of a teaching service payback program, authorized prior to the TEACH Grant program's inception, is the National Science Foundation's (NSF's) Robert Noyce Teacher Scholarship program, which was enacted under the National Science Foundation Authorization Act of 2002 ( P.L. 107-368 ). It makes awards to institutions of higher education (IHEs) to provide scholarships of $10,000 per year to undergraduate science, technology, engineering, and math (STEM) majors, starting in their junior year, and graduate STEM students. In exchange for this assistance, recipients are expected to obtain teaching certification in a STEM subject and serve as a teacher in a high-need local educational agency (LEA) for at least two years for each year of scholarship receipt. Similar to TEACH Grants, if recipients do not complete their required service, then they must pay all or a portion of their scholarships back in the form of a loan, including interest accrued since disbursement.", "Other examples of existing service payback programs include scholarships at each of the U.S. Service Academies and Reserve Officers' Training Corps (ROTC) Scholarships, which provide tuition assistance in exchange for military service. Boren Scholarships and Fellowships provide financial assistance to undergraduate and graduate students to study less commonly taught languages in international regions critical to U.S. interests in exchange for working in the federal government for at least one year upon graduation. The National Institutes of Health Ruth L. Kirschstein National Research Service Awards provide financial support for training to pre- and postdoctoral students in biomedical, behavioral, and clinical research in exchange for engaging in health-related biomedical, behavioral, and/or clinical research, research training, or health-related teaching for one year upon completion of their program."], "subsections": []}]}, {"section_title": "Program Structure", "paragraphs": ["This section describes how the program is structured, including TEACH Grant recipient eligibility, award amounts, service-related requirements, conditions under which TEACH Grants convert to loans, institutional eligibility to disburse TEACH Grants, and program administration."], "subsections": [{"section_title": "TEACH Grant Recipient Eligibility", "paragraphs": ["To be eligible to receive a TEACH Grant, a student must meet the basic eligibility criteria for the HEA Title IV federal student aid programs. Among the requirements generally applicable to the HEA Title IV student aid programs for award year (AY) 2018-2019 are the following:", "A student must be accepted for enrollment or enrolled in an eligible program at an eligible institution for the purpose of earning a certificate or degree. A student must not be enrolled in an elementary or secondary school and must have a high school diploma (or equivalent). A student must meet citizenship requirements. A male student must have registered with the selective service system when 18-25 years of age. A student must maintain satisfactory academic progress while enrolled. Satisfactory academic progress requires a minimum grade point average (GPA) or its equivalent and passing a minimum percentage of attempted credits or hours. A student must not be in default on a Title IV student loan, or have failed to repay or make an arrangement to repay an overpayment on a Title IV grant or loan, or be subject to a judgment lien for a debt owed to the United States. A student must have repaid any Title IV funds obtained fraudulently. A student may be disqualified for an unusual enrollment history\u00e2\u0080\u0094receiving HEA Title IV aid at multiple schools in the same semester, or receiving aid and withdrawing before earning any credit. A student may be disqualified for a period of time for a federal or state conviction for possession or sale of drugs while receiving HEA Title IV student aid.", "Specific eligibility requirements for the TEACH Grant program include the following:", "A student must also be enrolled as an undergraduate, post-baccalaureate, or graduate student at an IHE that participates in the TEACH Grant program, and in a TEACH Grant-eligible program of study within the IHE. A post-baccalaureate program is a program of instruction for individuals who have completed a bachelor's degree that (1) does not lead to a graduate degree and (2) consists of courses required by a state in order for a student to receive a professional certification or licensing credential that is required for employment as a teacher in an elementary or secondary school in that state. A student must meet certain academic achievement requirements, generally, scoring above the 75 th percentile on one or more portions of an undergraduate, post-baccalaureate, or graduate school admissions test or having a cumulative GPA of at least 3.25 on a 4.0 scale or the numeric equivalent. The TEACH Grant program is currently the only HEA Title IV program with an academic merit requirement. If a student is a current or prospective teacher applying for the TEACH Grant program to obtain a graduate degree, then the student must be a teacher or retiree from another occupation with expertise in a field in which there is a shortage of teachers or a teacher who is using a high-quality alternative certification route."], "subsections": []}, {"section_title": "Award Amounts", "paragraphs": ["A student enrolled full-time in a qualifying program may receive four annual TEACH Grant awards of up to $4,000 each for his or her first bachelor's degree and first post-baccalaureate program of study combined. The aggregate award amount, or the total cumulative award amount , that a student may receive for a bachelor's degree and a post-baccalaureate program of study combined is $16,000. ", "A graduate student enrolled full-time in a qualifying program may also receive two annual TEACH Grant awards of up to $4,000 each for a Master's degree . The aggregate award amount that a student may receive for a graduate degree is $8,000.", "Students enrolled in a qualifying program less - than - full - time are eligible to receive a prorated TEACH Grant award based on their attendance intensity (i.e. , half-time, three-quarter-time, or less-than-half-time) . For example, a student enrolled in a Master's degree program on a half -time basis may receive an annual award of up to $2,000. ", "A TEACH Grant in combination with other student financial assistance canno t exceed the cost of attendance; thus, in some instances, an annual TEACH Grant award may be reduced. "], "subsections": []}, {"section_title": "Service-Related Requirements", "paragraphs": ["When receiving a TEACH Grant, recipients must participate in TEACH Grant counseling that explains the terms and conditions of the TEACH Grant service obligation. They must receive entrance counseling with each TEACH Grant disbursement and exit counseling once they cease or complete their program of study. They must also sign a TEACH Grant Agreement to Serve, which specifies the terms and conditions for receiving a TEACH Grant, including the consequences for not fulfilling the service obligation.", "Upon completion or cessation of their respective program of study, recipients must serve as full-time teachers for at least four academic years within an eight-year period. They must also meet the requirements of a \"highly qualified teacher\" (HQT) as defined in the Elementary and Secondary Education Act (ESEA).", "Recipients must teach at a public or nonprofit private elementary or secondary school that serves low-income students, which is defined as a school: (1) that is in a school district of an LEA that is eligible for assistance under Title I-A of the ESEA and (2) in which more than 30% of the children enrolled in the school meet a measure of poverty identified in statute. A recipient may also teach in an educational service agency (ESA) in which more than 30% of the children meet a measure of poverty identified in statute. Additionally, ED includes in the definition of a school that serves low-income students, schools operated by the Bureau of Indian Education (BIE) or operated on Indian reservations by Indian tribal groups under contract or grant with BIE. ED identifies all qualifying schools in the annual Teacher Cancellation Low-Income Directory (TCLD). ", "Once a recipient locates a vacancy in a high-need field in a qualifying school, he or she must apply for the job and be offered (and accept) a qualifying position at the school. If the school in which a recipient teaches in a qualifying position is designated as a school serving low-income students in his or her first year, and subsequently is no longer designated as such, a grant recipient may still fulfill his or her service obligation by continuing to teach in that school.", "As mentioned above, a recipient must also teach in high-need fields, which are defined as bilingual education and English language acquisition, foreign language, mathematics, reading specialist, science, and special education. High-need fields also include any other field that has been identified as high-need by the federal government, a state government, or an LEA, and approved by ED. ED documents fields that are identified as high-need by the federal government, a state government, or an LEA in the annual Teacher Shortage Area Nationwide Listing (\"Nationwide List\"), following ED approval. ", "Qualifying fields on the Nationwide List must be designated as high-need at the time a TEACH Grant was received or when the individual begins teaching. Depending on their program of study, recipients may be required to declare a major and take coursework in a high-need field in order to be eligible for teacher certification in their state. If recipients choose a field that is on the Nationwide List when they first received the grant but is no longer designated as high-need by the time they start teaching, they may still perform qualifying service by teaching in that field. Further, if recipients are teaching in a field on the Nationwide List that in subsequent years is no longer designated as high-need, they may still teach in that field to fulfill their service obligation. ", "Following completion of or ceasing enrollment in their program of study, recipients must provide two types of certification to the ED-contracted TEACH Grant loan servicer. The first is an initial certification within 120 days of completing or ceasing enrollment in their program. The recipient must verify either (1) employment as a full-time teacher in a qualifying position or (2) intention to be employed in a qualifying position. The loan servicer notifies recipients of when this initial certification is due. The second is annual certification to the loan servicer following each year of teaching service completion. The loan servicer notifies recipients of their annual certification requirement, including how to submit documentation of progress towards completing their service obligation and when that documentation is due. Specifically, by the annual certification date, recipients must provide documentation demonstrating that either (1) they have completed a full year of qualifying teaching service, verified by the chief administrative officer of their school or ESA, or (2) they intend to satisfy the terms and conditions of their TEACH Grant service obligation. Previously, the annual certification date was based on the date the recipient had completed or ceased enrollment in the TEACH Grant-eligible program of study; therefore, annual certification dates varied among recipients. However, on November 1, 2018, ED adopted a standardized annual certification date of October 31 for all recipients. "], "subsections": []}, {"section_title": "Grant-to-Loan Conversion", "paragraphs": ["In general, TEACH Grants convert to an Unsubsidized Direct Loan, with interest accrued as of the date of disbursement of each grant, under the following conditions: ", "Grant recipients voluntarily request that their TEACH Grants be converted to a loan because they decide not to teach or not to teach in a qualifying school or field. Grant recipients do not submit appropriate documentation by the initial or annual certification date or respond to reminder notices from the ED-contracted loan servicer. Grant recipients fail to complete the required four years of service within the eight-year period. This applies regardless of whether the recipient completed any portion of the service obligation. If grant recipients cease enrollment in their eligible program of study prior to completing it, their grant converts to a loan within one year unless they are eligible for a suspension (see below), they re-enroll in an eligible program, or they have begun qualifying teaching. ", "The eight-year period in which a recipient must complete his or her four-year teaching service obligation begins once the recipient's enrollment in the eligible program of study ends. However, a recipient may be eligible to request a suspension of the eight-year period under various circumstances, including the following: ", "enrollment in another TEACH Grant-eligible program (such as a Master's degree program if the recipient received TEACH Grants for a bachelor's degree program), enrollment in a program of study that is required by a state to receive certification or licensure to teach within the state, a condition qualifying for leave under the Family and Medical Leave Act, or a call or order to active duty status for more than 30 days as a member of the Armed Forces reserves or service as a member of the National Guard.", "Suspensions are granted in one-year increments, not to exceed a combined total of three years for the first three reasons or a total of three years for the last reason.", "TEACH Grant service obligations can be canceled if the recipient dies or becomes totally and permanently disabled. Additionally, a recipient may be discharged for all or some of their service obligation if they are called or ordered to active military duty for more than three years. ", "An individual could receive TEACH Grants for more than one program of study. For example, a student could be awarded TEACH Grants for a bachelor's degree and then later awarded TEACH Grants for a Master's degree. In such cases, recipients must complete four years of teaching service for each program of study for which they received TEACH Grants. However, creditable teaching service, approved suspensions, and a service discharge resulting from a call to active military duty may apply to more than one service obligation. "], "subsections": []}, {"section_title": "Institutional Eligibility", "paragraphs": ["To be eligible to disburse TEACH Grants, an IHE must meet general Title IV institutional eligibility requirements specified in statute and regulation. Additionally, IHEs must meet program-specific eligibility requirements. The HEA requires that an IHE (by determination of the Secretary of Education)", "provide high-quality teacher preparation and professional development services, including extensive clinical experience as a part of pre-service preparation; be financially responsible; provide pedagogical coursework, or assistance in the provision of such coursework, and formal instruction related to the theory and practices of teaching; and provide supervision and support services to teachers, or assistance in the provision of such services.", "ED further clarifies in regulation that to be a TEACH Grant-eligible institution , an IHE must", "meet financial responsibility standards or qualify under an alternative standard established in regulation; provide a high-quality teacher preparation program at the bachelor's or Master's degree level that is either accredited by an ED-recognized accrediting agency of teacher education programs; or is approved by a state, includes a minimum of 10 weeks of full-time pre-service clinical experience, or its equivalent, and provides either pedagogical coursework or assistance in the provision of such coursework; and provides supervision and support services to teachers, or assists in the provision of services to teachers, such as identifying and making available information on effective teaching skills or strategies, identifying and making available information on effective practices in the supervision and coaching of novice teachers, and mentoring focused on developing effective teaching skills and strategies; provide a two-year program of study that is acceptable for full credit for either a bachelor's teacher preparation degree or a bachelor's degree program in a high-need field at another TEACH Grant-eligible IHE with which it has an agreement ; offer a bachelor's degree that, in combination with other training or experience, will prepare a student to teach in a high-need field, and have an agreement with another IHE that offers a teacher preparation program or a post-baccalaureate program that prepares students to teach; or offer a post-baccalaureate program of study that is designed to prepare an individual to teach in a high-need field. A post-baccalaureate program is not TEACH Grant-eligible if it is offered by an IHE that also offers a bachelor's degree in education. ", "ED defines a TEACH Grant-eligible program as an eligible program of study, as defined in regulation, that is designed to prepare an individual to teach as a HQT in a high-need field and leads to a bachelor's or Master's degree, or is a post-baccalaureate program of study. A two-year program of study that is acceptable for full credit toward a bachelor's degree is considered to be a program of study that leads to a bachelor's degree. ", "A student who first received a TEACH Grant for enrolling in an eligible program of study is entitled to receive subsequent TEACH Grants to complete that program, even if it is no longer TEACH Grant-eligible. "], "subsections": []}, {"section_title": "Administration", "paragraphs": ["TEACH Grant program administration responsibilities are divided among IHEs, the ED-contracted loan servicer, and ED. IHEs are generally responsible for determining program eligibility and awarding and disbursing grants to recipients. The ED-contracted loan servicer manages the day-to-day program administration tasks such as tracking whether recipients are fulfilling their required service obligation, sending recipients reminders of when annual certification is due, and managing loan repayment if a recipient's grant were to convert to a loan. ED assumes the broader role of setting program policy, providing guidance to the loan servicer and IHEs on how to administer the program, providing oversight of program recipients and the loan servicer, and monitoring for program compliance."], "subsections": [{"section_title": "Institutions of Higher Education (IHE)", "paragraphs": ["The IHE is responsible for determining whether to participate in the TEACH Grant program. It also selects the specific programs of study within the IHE to designate as TEACH Grant-eligible and, thus, decides whether to make TEACH Grants available to students enrolled in those programs. TEACH Grant administration is primarily overseen by the IHE's student financial aid office, sometimes in partnership with teacher preparation program departments. The financial aid office's responsibilities generally consist of evaluating initial and ongoing student eligibility, providing required TEACH Grant counseling to students who elect to participate in the program, disseminating information and materials about TEACH Grants to students and teacher preparation program staff, and packaging and disbursing TEACH Grants to recipients. Teacher preparation program staff's responsibilities could include supporting the financial aid office in evaluating student eligibility, creating awareness about TEACH Grants amongst students, and aiding students in identifying and securing qualifying job placements upon program completion. Additionally, IHEs have some latitude in determining how TEACH Grants are administered. For example, IHEs can choose to make TEACH Grants available only to upperclassmen at the undergraduate level, only to students who have been admitted into a teacher preparation program, or only to students who have declared a major or minor in a high-need field. "], "subsections": []}, {"section_title": "Loan Servicer", "paragraphs": ["ED contracts with a private entity to support TEACH Grant administration at the federal level. Unlike other HEA Title IV grant programs, which are primari ly administered by ED following disbursement, many aspects of the TEACH Grant program are administered by the ED-contracted loan servicer post-disbursement. This is due to the program's service payback structure, which is unique among HEA Title IV aid programs. ", "Following disbursement, the ED-contracted loan servicer is tasked with tracking whether recipients are fulfilling their required service obligation, rather than undertaking administrative tasks typically associated with federal student loans such as collecting and applying loan payments to borrower accounts. The loan servicer does this by accepting and processing recipients' annual certification paperwork. Its responsibilities also include reminding grant recipients of when their employment certification paperwork is due and sending quarterly notices informing recipients of the amount they would owe including interest if their grants were to convert to a loan. If a recipient's grants are converted to a loan, the loan servicer also carries out the more traditional loan servicer responsibilities of tracking loan repayment, providing billing and repayment services, and informing borrowers about their repayment options. The loan servicer also initially responds to customer service inquiries."], "subsections": []}, {"section_title": "Department of Education (ED)", "paragraphs": ["While the ED-contracted loan servicer manages the day-to-day administration of TEACH Grants, ED plays a broader role of setting program policy, providing guidance to the loan servicer and IHEs on how to administer the program, providing oversight of program recipients and the loan servicer, and monitoring for program compliance. This includes monitoring the loan servicer to ensure that it delivers on its responsibilities such as regularly communicating with recipients, adequately tracking recipients' progress toward satisfying grant requirements, and accurately converting TEACH Grants to loans if recipients do not meet grant requirements. It also broadly monitors compliance by participants, including IHEs and students, through monthly reports from the loan servicer and program reviews of IHEs that participate in Title IV programs, among other methods. Additionally, ED seeks to address recipient complaints and settles disputes that include incorrect grant-to-loan conversions. ED is also responsible for broad outreach on how to apply for and receive student aid such as TEACH Grants and developing student borrower guidance, which it maintains centrally on a federal student aid website ( https://studentaid.ed.gov ). "], "subsections": []}]}]}, {"section_title": "Budgeting Approach", "paragraphs": ["Given that a TEACH Grant may be converted to a Direct Loan in certain circumstances, the TEACH Grant program is treated as a federal credit program . Thus, as with all other federal credit programs, the costs to the government, or subsidies , for the TEACH Grant program are estimated in accordance with the requirements of the Federal Credit Reform Act of 1990 (FCRA; Title V of P.L. 101-508 ). These subsidies are reestimated on an annual basis. ", "According to FCRA, the budgetary cost of direct loans and loan guarantees must be measured on the basis of their estimated long-term cost to the government on a present-value basis. For each cohort year of TEACH Grants, the loan subsidy cost is the estimated long-term cost of those TEACH Grants to the government, given underlying assumptions about grant-to-direct loan conversion, loan repayment, and interest rates, and excludes administrative costs. It represents the estimated present value of the cash flows from the government (e.g., grant disbursement), less the estimated present value of the cash flows to the government (e.g., payments made by recipients whose grants convert to loans), discounted to the time when the grants are disbursed. Loan terms and conditions such as interest subsidies, deferments, loan forgiveness, defaults, and discharges are accounted for in these estimates. ", "A positive loan subsidy cost for a cohort of TEACH Grants means that those grants are estimated to result collectively in a cost to the government, whereas a negative loan subsidy cost means that the cohort of grants will collectively achieve budgetary savings for the government (through repayment, with interest, of TEACH Grants that have been converted to loans). Subsidy costs are large and positive for TEACH Grants that have been made since the inception of the program. Subsidy costs are funded through permanent, indefinite budget authority. Administrative costs are funded separately through annual discretionary appropriations. ", "Since FY2013, nonexempt mandatory spending programs have been subject each year to sequestration, a process of automatic \"across-the-board\" reductions in federal spending to reduce the federal budget deficit. This process was triggered by provisions in the Budget Control Act of 2011 (BCA; P.L. 112-25 ). The TEACH Grant program account is not exempt from sequestration. In May 2013, ED implemented the first BCA-required sequester by reducing each recipient's TEACH Grant award by a specified percentage, starting with awards disbursed after March 1, 2013. A sequester has since been applied annually to the TEACH Grant program, resulting in a reduction in the annual award amount in each subsequent fiscal year. Under current law, the annual sequestration of nonexempt mandatory spending programs is scheduled to continue through FY2029. "], "subsections": []}, {"section_title": "Participation", "paragraphs": ["Since the inception of the TEACH Grant program, ED has disbursed over 300,000 grants totaling nearly $938 million. Table 2 presents, by award year since program inception, the number of TEACH Grant awards disbursed, the number of IHEs that disbursed awards, the total amount disbursed, and the average award disbursed. The program saw a significant uptick in awards disbursed in AY2010-2011 and AY2011-2012.", "In recent years, analyses of the program have shed some light on benefit take-up rates and on the extent to which grants are being converted to loans. The Government Accountability Office (GAO), for instance, estimated that in the 2013-2014 academic year, 19% of individuals potentially eligible for TEACH Grants received grants under the program. ", "With regard to loan conversions, an American Institutes for Research (AIR) study found that among TEACH Grant recipients who began their eight-year service period prior to July 2014, 63% had their grants converted to a Direct Unsubsidized Loan as of July 2016. Separately, in its FY2020 Congressional Budget Justification, ED estimates, based on administrative program data, that 66% of students who receive a TEACH Grant will fail to complete their service obligation and will see their grants converted to loans."], "subsections": []}, {"section_title": "Selected Issues", "paragraphs": ["Many issues that span aspects of the TEACH Grant program have arisen and garnered congressional interest. In general, these issues fall into two categories: (1) facets of program design and (2) program implementation. In recent years, legislative proposals have been introduced that would address some of the issues."], "subsections": [{"section_title": "Program Design", "paragraphs": ["Issues that have arisen related to facets of program design focus on whether the way in which the TEACH Grant program is structured contributes to its intended goal of recruiting and retaining high-quality teachers in low-income classrooms. They include whether the program identifies individuals with a commitment to teaching, the size of the benefit, challenges with finding and sustaining a qualifying teaching position, program quality at institutions that are eligible to disburse TEACH Grants, and the continued application of the \"highly qualified teacher\" definition."], "subsections": [{"section_title": "Commitment to Teaching", "paragraphs": ["One issue of interest pertains to whether the TEACH Grant program is effective at identifying individuals committed to teaching and teaching in high-need classrooms. Some data suggest that this may be a programmatic challenge. GAO reported that from August 2013 through September 2014, 14% of TEACH Grant recipients had voluntarily requested that their grants be converted to loans, and of those, 38% reported that the reason for the voluntary conversion was because they no longer intended to teach. ", "One explanation may be that TEACH Grants can be made available to students as early as freshman year in their undergraduate education. Earlier intervention may have the effect of recruiting more individuals to enter into teaching who might not have considered it otherwise. However, those individuals who may not have chosen teaching otherwise might also lack a strong commitment to the endeavor of teaching or teaching in a high-need school. Further, underclassmen are making the choice to accept a potentially high-stakes grant at a point when they may be less likely to have a full understanding of where their career interests lie. These factors may impact the likelihood of a TEACH Grant recipient's successful completion of his or her required service obligation and whether his or her grant converts to a loan. ", "Evidence of the effects of restricting TEACH Grants to students who might be more committed to teaching is inconclusive. Data from a 2018 AIR study suggest that institutions that restrict TEACH Grant availability to juniors and seniors, points at which a student may be more fully committed to a career in teaching, are more likely to have lower grant-to-loan conversion rates. Anecdotal data from the AIR and GAO studies suggest that some institutions restrict TEACH Grants to upperclassmen and graduate students because underclassmen \"tend to change majors more frequently\" and encounter challenges with maintaining the 3.25 GPA required for TEACH Grant eligibility. At the same time, the AIR study also suggests that there is no difference in grant-to-loan conversion rates by undergraduate class and graduate school year, with the only exceptions occurring for juniors and first-year graduate students (who had lower conversion rates). Further, there is no difference in loan conversion rates between recipients who were accepted into a teacher preparation program prior to receiving their first TEACH Grant versus after receiving their first TEACH Grant. ", "Data from a study of the Robert Noyce Teacher Scholarship (\"Noyce Scholarship\"), which is only available to students during the last two years of their undergraduate program or during their graduate program, suggest that the scholarship self-selects candidates who are already committed to teaching given that it is available later in an individual's education trajectory. However, this same study also suggests that the Noyce Scholarship is less useful as a recruitment tool into teaching because it is less likely to influence a recipient's decision to enter into the profession; rather, studies suggest that the Noyce Scholarship is more likely to influence an individual's decision to teach in a high-need school. Even with TEACH Grants potentially available to individuals at any class level, the AIR study findings seem to corroborate this idea that teaching service payback programs may have a greater influence on a recipient's decision to teach in a high-need school versus his or her decision to enter into the teaching profession more generally. The AIR study findings show that 44% of recipients indicated that the grant was somewhat or very influential in their decision to teach, while 58% of recipients indicated that the grant was somewhat or very influential in their decision to teach in a high-need school.", "To address some of these concerns, one legislative proposal would amend TEACH Grants to limit eligibility to upperclassmen and graduate students. Limiting eligibility to upperclassmen may help to ensure that grants are not being awarded to individuals who may not demonstrate a strong commitment to teaching and, thus, are more likely to remain in a high-need classroom and complete their service obligation. At the same time, restricting TEACH Grants may limit the program's ability to recruit individuals who may not have otherwise considered teaching as a career.", "Additionally, there is some evidence from the AIR study that suggest that IHEs market TEACH Grants to students as a means to fund their education, more so than as a means to enter into teaching. Anecdotal evidence from IHEs also suggests that some students accept a TEACH Grant to access additional education funding, with no intention of fulfilling the required teaching service. Additionally, the AIR study found that in academic year 2013-2014, 42% of grant recipients would have been borrowing over their federal annual loan limit if their grants were considered loans from the outset. While these data do not shed light on the share of recipients who took a TEACH Grant only to fund their education and with no intention of teaching, they illustrate the prospect that this source of aid may be playing a role not encompassed in original program aims. "], "subsections": []}, {"section_title": "Size of the Benefit", "paragraphs": ["Under the TEACH Grant program, a qualifying student is eligible for up to $4,000 per year to cover the cost of attendance at an eligible IHE for an eligible program of study. At the undergraduate and post-baccalaureate levels, the maximum cumulative amount a student could receive is $16,000, and at the graduate level, the maximum cumulative amount a student could receive is $8,000. At the time the program was authorized, it was thought that the award amount would help to offset the opportunity cost of entering into teaching, given the below-average compensation teachers receive.", "The estimated low take-up rate of TEACH Grants may be an indicator of several things. It may suggest that some students consider the program but cannot meet the academic requirement, or decide not to take the risk of accepting a grant that could convert to a loan if they are unable to meet program requirements. The low take-up rate could also indicate that the financial benefit may not be large enough to incentivize students to accept a TEACH Grant when they would have otherwise not considered teaching. Some research suggests that teacher scholarship programs can be effective at both recruiting and retaining teachers in high-need schools when the financial incentive \"meaningfully offsets the cost of a teacher's professional preparation.\" One such study cited TEACH Grants as an example of a teacher scholarship program that did not provide a large enough financial benefit. In contrast, the Noyce Scholarship provides $10,000 per year to undergraduate students in their junior or senior year or the same amount per year for graduate studies. In 2013, an independent evaluator found that among Noyce Scholarship recipients who had had at least two years to find a teaching position after obtaining certification, 90% were teaching in high-need school districts. ", "One legislative proposal would triple the annual TEACH Grant award, increasing it from $4,000 to $12,000; however, the proposal would also double the length of service requirement from four years to eight years and require it to be completed within 10 years of program completion. Any increase in the TEACH Grant award amount may have the effect of attracting more individuals to participate in the program. However, if a recipient fails to complete his or her service obligation, it could mean that recipients are left with a larger amount to pay back in loans. The impact on the cost to the government is unclear given that the change may increase the number of individuals who participate in the program and, thus, the cost, but if the rate at which grants convert to loans does not change, then it can be expected that a significant number of individuals' grants would continue to convert to loans, and they will be repaying the government in larger amounts. "], "subsections": []}, {"section_title": "Finding and Sustaining a Qualifying Teaching Position", "paragraphs": ["For a TEACH Grant recipient to fulfill his or her service obligation, he or she is required to teach at a school or in an ESA that serves low-income students and in a high-need field. This is intended to focus federal dollars on helping to produce teachers in schools and fields that historically face teacher shortages.", "Data from the 2017-2018 school year suggest that over 70% of all operational public schools may have met the TEACH Grant definition of a school that serves low-income students. However, despite the seeming prevalence of schools where recipients could fulfill their service obligation, they may still face challenges in locating and maintaining qualifying employment, especially since those schools still may not have vacancies in fields that qualify as high-need. For example, elementary school teachers may not be considered as teaching in a high-need field\u00e2\u0080\u0094where the majority of their time must be spent teaching math or science\u00e2\u0080\u0094because many of them may teach all subjects an equal amount of time. ", "The AIR study found that 39% of TEACH Grant recipients whose grants were converted to loans reported that they did not fulfill their service requirement because they were teaching in positions that did not qualify for TEACH Grant service. Of those recipients, 15% reported that they could not find a job in a high-need field and school, 15% decided they did not want to teach in a high-need field and school, 14% applied to one or more qualifying positions but were not offered the job, and 13% found a higher-paying teaching position at a non-qualifying school. Additionally, 43% of those recipients reported other reasons for not teaching in a qualifying position, such as their school losing its Title I designation, a previously qualifying position being eliminated, confusion about whether the position qualified, teaching students from low-income families in a non-qualifying school, or not being certified in a high-need field. Similarly, the GAO study found that finding and keeping an eligible teaching position can be a challenge for recipients in satisfying grant requirements. Some of the reported reasons include limited hiring by school districts and the length of time it can take to find a qualifying position. Another factor is that promotions to non-teaching administrative positions in eligible schools do not qualify as positions fulfilling TEACH Grant service requirements. ", "Some legislative proposals would expand the fields that would qualify as high-need, adding areas such as early childhood education, technology, engineering, career and technical education, and writing specialist. This change could help to attract individuals to teach in fields that may be considered as high-priority and, thus, provide more options for securing a position in a qualifying school. However, some of these additional fields may not face true shortages in low-income schools. Further, while low-income communities may face a shortage of early childhood educators, it could be challenging for states to identify all qualifying early childhood programs. The HEA defines an early childhood education program as a Head Start or Early Head Start program; a state licensed or regulated child care program; or a program that addresses the cognitive, social, emotional, and physical development of children from birth through age six, and is a state prekindergarten program, a preschool or infant/toddler program authorized under the Individuals with Disabilities Education Act (IDEA), or a program operated by an LEA. ", "Not all recipients receive support from their institutions to find and secure qualifying teaching placements. The AIR study found that 70% of IHEs in its sample provided students with some placement service for identifying qualifying TEACH Grant service positions: 58% provided guidance on how to identify TEACH Grant-qualifying positions, 48% provided an updated list of available positions, and 46% established relationships with schools that have eligible positions. However, none of these practices were correlated with lower grant-to-loan conversion rates. In addition, while the TCLI and Nationwide List help recipients identify TEACH Grant-qualifying schools and fields, respectively, there is no central job search tool that identifies existing TEACH Grant-qualifying vacancies or job announcements.", "It is possible that expanding the types of schools that would qualify as eligible teaching placements could lead to longer retention rates in the classroom, and thus improve grant-to-loan conversion rates. Under the Paul Douglas Teacher Scholarships Program, which preceded TEACH Grants, there was no statutory requirement that the schools in which recipients taught be high-need; although, recipients could reduce the length of their required teaching service if they taught in a geographic area with teacher shortages. The ED Biennial Evaluation Report of the Paul Douglas Teacher Scholarship program from FY1995 and FY1996 showed that through FY1992, 63% of scholarship recipients had completed their teacher certification course of study. Of those, 67% had taught in the past or were teaching as of the 1992-1993 school year. Additionally, 6% of scholarship recipients were repaying or had repaid some part or all of their scholarship as loans. The North Carolina Teaching Fellows Program, which is similar in structure to TEACH Grants, requires that its fellows only teach in North Carolina public schools. One study found that the program is more likely to produce teachers who stay in public classrooms for five years or more. However, that same study also found that fellows tended more than other novice teachers to teach students who are more advantaged. As such, expanding the types of schools in which recipients could complete their service obligation could run counter to the original intent of the program to support low-income schools with recruitment of high-quality teachers."], "subsections": []}, {"section_title": "Program Quality at Institutions Eligible to Disburse TEACH Grants", "paragraphs": ["To be eligible to disburse TEACH Grants, an IHE must provide a high-quality teacher preparation program. Such teacher preparation program must be accredited by an ED-recognized accrediting agency of teacher education programs; or is approved by a state, provides a minimum of 10 weeks of full-time pre-service clinical experience, or its equivalent, and provides or assists in the provision of pedagogical coursework. The program must also provide or assist in the provision of supervision and support services to teachers. ", "The HEA and accompanying regulations do not define what it means for a teacher preparation program to be \"high-quality.\" Title II of the HEA requires states and IHEs to publish report cards on the quality of teacher preparation. States must also report to ED on the quality of teacher preparation programs. Title II of the HEA further requires states to develop criteria to assess program quality, identify programs that are low-performing or at risk of being low-performing based on those criteria, and report this information to ED. ", "In 2014, 12 states identified a total of 45 programs as low-performing or at risk of being low-performing\u00e2\u0080\u0094nearly evenly split between the two designations. Of those 45 programs, 28 were based in IHEs that disburse TEACH Grants. Twenty-two states have never identified a program as low-performing or at risk of being low-performing. ", "In 2016, ED published regulations that would have linked the definition of \"high-quality teacher preparation program\" in \u00c2\u00a7420L(1)(A) of the HEA to teacher preparation program ratings under the HEA Title II state reporting requirements; although, these regulations were subsequently overturned under P.L. 115-14 , pursuant to the Congressional Review Act. Not only did the regulations require that states identify programs that are \"effective,\" but among other things they required states to develop and report on specific indicators for assessing teacher preparation program performance, including the learning outcomes of students taught by program graduates. Further, under these regulations, IHEs operating a program that a state identified as low-performing or at risk of being low-performing for two out of three years would have lost their eligibility to participate in the TEACH Grant program. One argument made for limiting TEACH Grant eligibility to those programs that states identified as \"effective\" was that TEACH Grant recipients might be more likely to fulfill their service obligation if prepared by strong teacher preparation programs. In contrast, some arguments against limiting TEACH Grant eligibility included concerns about the decrease in the number of IHEs that would be eligible to provide TEACH Grants, which may result in fewer students pursuing teaching in high-need fields and low-income schools. It was also stated that such a change could disproportionately impact the entry of low-income students into the teaching profession. ", "To address some of these issues, one legislative proposal would require that a qualifying teacher preparation program be one that is not identified by the state as low-performing or at risk of being low-performing. Given that under current law, states identify few teacher preparation programs as low-performing or at risk of being low-performing, this change could create a minimum standard that is tied to existing statute without implicating a significant number of programs. However, as with ED's 2016 regulations, it may be possible that such a change could limit the number of IHEs that qualify for the TEACH Grant program and, thus, disproportionately impact the entry of low-income students into the profession. "], "subsections": []}, {"section_title": "Continued Application of the Highly Qualified Teacher (HQT) Definition", "paragraphs": ["To meet program service requirements, among other criteria, a TEACH Grant recipient must comply with the requirements for being a HQT, as defined under the ESEA. Prior to December 2015, the ESEA specified minimum standards for teacher quality by defining a HQT, requiring that all teachers of core subjects within any state receiving funds under Title I-A of ESEA meet these standards. ", "In December 2015, the Every Student Succeeds Act (ESSA; P.L. 114-95 ) reauthorized the ESEA and repealed the HQT definition. Now, the ESEA, as amended by the ESSA, does not contain requirements pertaining to minimum standards for teacher quality like those formerly applicable to states receiving ESEA grant funds under NCLB-enacted HQT provisions. However, the ESSA amendments still made the pre-December 2015 HQT requirements applicable to the TEACH Grant program. Depending on whether states implement new minimum standards that veer from the previous HQT standards, TEACH Grant recipients may be required to meet both sets of requirements: meeting state requirements to teach within the state and federal requirements to fulfill TEACH Grant service requirements. It is unclear how the definition of HQT would apply to recipients who fulfill their service obligation in qualifying private schools.", "A recently concluded negotiated rulemaking resulted in draft consensus language that included a definition of HQT. While the new definition is nearly identical to the HQT definition in the NCLB, it also contains new requirements for private school teachers such as passing competency tests that are recognized by five or more states."], "subsections": []}]}, {"section_title": "Implementation Issues", "paragraphs": ["Implementation issues relate to whether the way in which the TEACH Grant program is administered by ED may have impacted the program's success. They include challenges associated with certification of teaching service and the absence of a formal appeals process."], "subsections": [{"section_title": "Challenges with Certification of Teaching Service", "paragraphs": ["Within 120 days of completing or ceasing enrollment in the relevant program of study, TEACH Grant recipients must provide an initial certification of their employment as a teacher in a qualifying teaching position or of their intention to obtain employment in a qualifying teaching position. Thereafter, a recipient must provide an annual certification of having completed or intending to complete (if the time in which it is possible to complete the required teaching service has not lapsed) qualifying teaching service. If certifying completed teaching service, the recipient must provide documentation that demonstrates that he or she (1) is teaching in a low-income school, (2) has taught a majority of classes during the year in a high-need field, and (3) meets HQT requirements. ", "There are a number of issues that have stemmed from the requirement for annual certification, the administrative process by which recipients maintain their grant status. In its review of complaint data from ED's Federal Student Aid Ombudsman, GAO found that 64% of TEACH Grant recipients cited problems with submitting annual certification paperwork. The AIR study also found that 41% of TEACH Grant recipients whose grants have been converted to loans did not fulfill their service requirements due to factors related to annual certification. In particular, 19% did not certify because they did not know about the annual certification process and 13% did not certify because of challenges related to this process. ", "The GAO study documented anecdotal evidence suggesting that students may not fully comprehend the paperwork requirements, despite the requirement that recipients undergo TEACH Grant counseling when each grant is disbursed and once recipients complete their program of study. Further, GAO found evidence suggesting that the ED-contracted loan servicer converted 2,252 grants in good standing to loans in error between August 2013 and September 2014. Of those erroneous conversions, 19% were converted because a recipient did not understand the terms of the grant and certification requirements, including paperwork needed to document teaching service, or the servicer provided \"inaccurate, unclear, confusing, or misleading\" information about program or certification requirements to the recipient.", "This lack of understanding and information about certification requirements may have significant consequences\u00e2\u0080\u0094the AIR study found that recipients whose grants had been converted to loans were half as likely as recipients whose grants were still in good standing to report that they were well-informed about the annual certification requirements.", "Recent news coverage has given attention to the TEACH Grant recipients whose grants were converted to loans due to a failure to certify on time, despite the fact that they had been performing qualified teaching. The failure to certify may occur for a number of reasons, from submitting the certification late to forgetting to submit the certification altogether. Certification documentation must be mailed or faxed, forms of communication for which it is difficult to verify whether the paperwork was received and on time. Additionally, the annual certification date often occurred over the summer when recipients or certifying school personnel are away on vacation. ", "If recipients fail to certify on time, then all of their grants are converted into an Unsubsidized Direct Loan (which includes interest accrued since disbursement of each grant) regardless of whether they are performing qualified teaching service. However, until recently there had not been a formal process for a recipient to appeal such a decision (see \" Lack of a Formal Appeals Process \" below). ", "To help address issues with certification, ED recently established a standardized annual certification date of October 31 of each year. Additionally, through negotiated rulemaking that concluded earlier this year, draft consensus language would require ED to provide additional notifications to recipients about when required certification documentation is due. ", "Some legislative proposals would simplify the certification process by requiring that recipients only certify that they have completed qualified teaching for (1) at least one year by no later than five years after completion of their program of study; (2) at least two years by no later than six years after completion; (3) at least three years by no later than seven years after completion; and (4) at least four years by no later than eight years after completion. Otherwise, recipients would be considered in compliance with program rules unless they proactively request that their grants be converted to loans. Other bills require that ED work with states to simplify the certification process. One bill would establish the annual certification date as October 31 in law."], "subsections": []}, {"section_title": "Lack of a Formal Appeals Process", "paragraphs": ["The consequences of an erroneous or premature grant-to-loan conversion can be disruptive for recipients, including new and unexpected debt and a negative effect on their credit history. Some documentation also suggests that some recipients whose grants were converted into loans were unable to stay in their qualifying teaching positions, and instead had to change to a more lucrative position or other employment in order to make their new loan payments. ", "Erroneous or premature grant-to-loan conversions have largely occurred in two types of circumstances. The first is when grants in good standing are converted to loans due to an administrative error. As mentioned above, GAO reported that from August 2013 through September 2014, ED discovered that 2,252 recipients had their grants converted to loans in error. Fifty-six percent of the errors occurred because the servicer did not give recipients the full 30 days from final notification to submit their certification. Another 15% of the erroneous conversions occurred because recipients were not given the full year from graduation to submit their certification. ED and the ED-contracted loan servicer have implemented changes to combat these erroneous grant-to-loan conversions resulting from administrative error. The loan servicer now conducts system checks and manually reviews all accounts flagged for conversion to determine if the recipient met certification requirements in accordance with regulation. ED also expanded the loan servicer's authority to reconvert loans to grants in certain circumstances without having to elevate disputes to ED.", "The second circumstance is when grants are converted to loans for recipients who are performing qualified teaching but fail to submit their certification paperwork on time, as discussed above. The extent of this problem is not known. Starting in January 2019, ED established a reconsideration process for anyone whose grant had been converted to a loan and who met or was on track to meet the TEACH Grant service requirements within the eight-year window. In February, ED emailed TEACH Grant recipients who were eligible for a TEACH Grant reconsideration. If a qualifying recipient did not receive an email from ED, he or she could still request a reconsideration by calling or emailing the ED-contracted loan servicer. The loan servicer makes a determination of whether a reconsideration request is accepted and to reconvert loans back to grants; however, it is unclear whether any other actions are taken such as helping to repair any damage to the recipient's credit as a result of the grant-to-loan conversion. As of May 2019, of the nearly 6,000 recipients who applied for reconsideration, about 38% had been approved for a reconversion and less than 0.3% had been denied.", "Other changes were proposed in negotiated rulemaking that concluded earlier this year. The resulting draft consensus language would not only establish a reconsideration process in regulation but would also require three other actions by ED as a result of an erroneous grant-to-loan conversion: (1) crediting any qualifying teaching service performed while the grant was wrongly in loan status toward the recipient's service requirement; (2) granting a suspension of the eight-year service obligation period equal to the amount of time that the grant was wrongly in loan status; and (3) providing support to help recipients repair any damage to their credit that resulted from the grant-to-loan conversion.", "Several bills propose to codify a formal appeals process in circumstances in which TEACH Grants were wrongfully converted to loans, and allow grants to be reinstated if an error was made. Additionally, one such bill proposes that, for grants that are found to have been erroneously converted into loans, ED would be required to extend the recipient's eight-year service obligation period by the amount of time his or her grants were wrongly in loan status."], "subsections": []}]}, {"section_title": "Legislative Proposals to Reform TEACH Grants", "paragraphs": ["Apart from the legislative changes mentioned in the preceding sections, there have been a number of additional proposals concerning the TEACH Grant program. Most bills propose to keep but amend the program, while others would replace or repeal it. ", "Some legislative proposals that would retain but amend the TEACH Grant program seek to allow partial payback of the award on a prorated basis based on the length of service completed for recipients who do not complete their full service requirement. The Noyce Scholarship currently implements this practice, and the Paul Douglas Teacher Scholarship program used it as well. This might lessen the risk to recipients of accepting the grant and, therefore, encourage more students to participate in the program and enter into teaching. It may also reduce the financial burden on those who had fulfilled some part of their service in a high-need classroom and field. However, one concern may be that this concession could detract from the program's overall goal to retain teachers in low-income classrooms and high-need fields, as there may be an incentive not to complete all four years of required service.", "In the 115 th Congress, one amendment proposed would have allowed teachers whose roles or duties change to continue to fulfill their required teaching service with such new roles or duties. This could include recipients who are promoted to leadership roles in which they might be spending more time supporting other teachers instead of in the classroom instructing. Under current regulations, a teacher must teach a majority of classes in a high-need field \u00e2\u0080\u0094new roles or duties may not meet service requirements and a recipient may not be able to accept a new position or may have to find another qualifying position that meets service requirements. As research suggests, allowing opportunities for advancement may lead to greater retention rates amongst TEACH Grant recipients, potentially beyond the required four years. However, permitting other positions beyond teaching to qualify could detract from the overarching goal of recruiting and retaining high-quality individuals in the teaching profession. ", "Alternatively, there have also been proposals to replace TEACH Grants and other student financial assistance programs for teachers with a new program altogether. One such proposal would have provided to teachers in qualifying positions a larger maximum loan repayment amount than is available under currently authorized federal teacher loan forgiveness programs, and in graduated amounts beginning with their first year and increasing the longer they stay in a qualifying position. One argument for such a proposal is that the current combination of approaches to student financial assistance programs for teachers\u00e2\u0080\u0094either fully back-loading benefits (as with current teacher loan forgiveness) or fully front-loading benefits (as with TEACH Grants)\u00e2\u0080\u0094has not been sufficient in incentivizing high-quality candidates to join and remain in the teaching profession. However, one consideration is that such a new program would likely result in an increased cost to the federal government. ", "Several bills have proposed to eliminate the TEACH Grant program without creating a new program in its place. As justification for elimination, proponents have stated that because ED projects that the majority of TEACH Grant recipients will not be able to fulfill their service requirements, the program ultimately becomes a \"risky gamble\" for students, as they are more likely than not to incur a significant amount of debt as a result. "], "subsections": []}]}]}}
{"id": "R46347", "title": "COVID-19, U.S. Agriculture, and USDA\u2019s Coronavirus Food Assistance Program (CFAP)", "released_date": "2020-05-08T00:00:00", "summary": ["As COVID-19 has spread throughout the United States, it has reduced domestic economic activity and disrupted domestic and international supply chains for goods and services, including food and agricultural products. These disruptions have produced an immediate and very strong demand shock on the U.S. food supply chain that has sent many commodity prices sharply lower.", "The food supply chain refers to the path that raw agricultural commodities take from the farm where they are produced, through the food processing and distribution network to the consumer where they are used. Supply chain disruptions have been primarily due to two factors: widespread shutdowns of all but essential businesses; and uncertainty about the availability of labor for the food distribution network\u00e2\u0080\u0094whether from illness, fear of illness, or immigration status. The food supply chain has been deemed essential; however, many institutional purchasers (including restaurants, hotels, schools, and entertainment venues) have been closed. According to the U.S. Department of Agriculture (USDA), U.S. consumers normally spend 54% of their food and drink dollars on away-from-home food purchases. Thus, prior to the COVID-19 pandemic a large share of U.S. food products traveling through the food supply chain was going to institutional buyers, often in bulk or vendor-ready form, for away-from-home consumption. In order to redirect this food product flow towards retail outlets and at-home consumption, much of this food would require processing into more consumer-usable forms, repackaging, and relabeling. This requires some level of retooling by food packagers and processors. In addition, several plants in the food processing industry, including meat processing plants, have experienced severe COVID infection outbreaks among workers and been forced to shut (at least temporarily).", "Several industry groups from the U.S. agricultural sector have released estimates of the economic damage experienced by producers and ranchers. Most of these early assessments are limited to evaluating the effect of the price decline on any unsold production of crops or livestock remaining under farmer's control, and the unexpected marketing costs of unsold products due to the shutdown of most institutional buying of agricultural products. Cumulatively, industry estimates of COVID-related losses approach $40 billion (this would represent over 10% of annual cash receipts). The effect on farm net income is expected to be similarly negative.", "In response to the COVID-19 pandemic, Congress has passed and the President has signed four supplemental appropriations acts ( P.L. 116-123 , P.L. 116-127 , P.L. 116-136 , and P.L. 116-139 ) that have included both direct and indirect funding for the U.S. agricultural sector. On April 17, 2020, Secretary of Agriculture Sonny Perdue announced the Coronavirus Food Assistance Program (CFAP), valued at $19 billion, to provide immediate financial relief to farmers, ranchers, and consumers in response to the COVID-19 national emergency. According to Secretary Perdue, CFAP will include $16 billion in direct payments to producers that have been impacted by the sudden drop in commodity prices and the disruption in food supply chains that has occurred since the outbreak, and $3 billion in commodity purchases for distribution through food banks, faith-based organizations, and other nonprofit organizations.", "CFAP direct payments are intended to partially offset the loss of market revenue from the price decline, and the unexpected carry-cost of unsold commodities for producers and ranchers of products that have been negatively affected by COVID-19. USDA has released limited information on the specifics of how CFAP's direct payment program will be implemented. Many of the program specifics are expected to be delineated in an expedited rulemaking process. CFAP direct payments are expected to go out to producers by the end of May or early June.", "CFAP's commodity purchase and distribution program serves the dual roles of supporting commodity market prices by temporarily increasing demand, and of expanding the availability of food distribution to consumers that have lost their jobs or have limited resources. Expectations are that it will be operated differently than, and separate from, existing USDA commodity purchase programs such as Section 32 or Food and Nutrition Service (FNS) food distribution programs in two major ways. First, USDA plans to purchase about $100 million per month of fresh produce, $100 million per month of dairy products, and $100 million per month of meat products (chicken and pork). Second, the CFAP purchase program intends for vendors to deliver household-ready boxes\u00e2\u0080\u0094potentially a diversified mix of the previously mentioned produce, meat and dairy products\u00e2\u0080\u0094which are ready for more convenient and immediate distribution (\"off the truck and into the trunk\") that is consistent with social distancing. Initial program delivery may be as early as May 15. The program is expected to operate through the end of 2020. Potential congressional concerns include how to channel assistance to industries affected by COVID-19, long-term effects of the pandemic, and the capacity of rural banks to help with recovery. Several issues related to CFAP and the U.S. agricultural sector in a post-COVID economy that could be of potential interest to Congress are presented at the end of this report."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["Since the novel coronavirus\u00e2\u0080\u0094designated Coronavirus Disease 2019, or COVID-19\u00e2\u0080\u0094first appeared in the United States in mid-January, it has contributed to substantial economic upheaval across the U.S. economy, including the agricultural sector. ", "In response to the COVID-19 pandemic, Congress has passed and the President has signed four supplemental appropriations acts ( P.L. 116-123 , P.L. 116-127 , P.L. 116-136 , and P.L. 116-139 ) that have included both direct and indirect funding for the U.S. agricultural sector. Using funds from these acts and from other authorities, the U.S. Department of Agriculture (USDA) announced, on April 17, 2020, the Coronavirus Food Assistance Program (CFAP), valued at $19 billion, to provide immediate financial relief to farmers, ranchers, and consumers in response to the COVID-19 national emergency. USDA could provide additional financial assistance for the U.S. agricultural sector beyond CFAP later in the summer when a replenishment payment of $14 billion for the Commodity Credit Corporation becomes available. Congress is also considering providing additional support.", "This report describes some of the actions that USDA has taken in response to the COVID-19 emergency, including CFAP\u00e2\u0080\u0094in particular, how CFAP is funded and how USDA intends to use the funds. The description of USDA COVID-19 response efforts is preceded by: first, a brief review of food supply chain issues where the U.S. agricultural sector has experienced economic harm or is potentially vulnerable to the effects of the COVID-19 pandemic; and second, a review of current assessments of the economic harm to U.S. farm income, as well as to individual commodity sectors, resulting from COVID-19. ", "The report then describes the emergency funds that have been allocated to address the U.S. agricultural sector, and how USDA plans on using those funds, including a detailed description of CFAP producer payments, and USDA's food purchase and distribution efforts. This is followed by a review of the announced positions for selected U.S. agricultural stakeholders in regard to how the COVID-19 pandemic has affected their industries, what their anticipated losses might be, and what their expectations are vis-\u00c3\u00a0-vis congressional funding and USDA's announced program response.", "Finally, several issues related to CFAP and the U.S. agricultural sector in a post-COVID economy that could be of potential interest to Congress are presented at the end of this report.", "An appendix at the end of the report includes a table ( Table A-1 ) that summarizes estimates\u00e2\u0080\u0094from selected studies\u00e2\u0080\u0094of the economic damage to several major agricultural sectors of the United States due to the COVID-19 emergency."], "subsections": []}, {"section_title": "U.S. Agricultural Sector Vulnerability to COVID-19", "paragraphs": ["As COVID-19 has spread throughout the United States, it has reduced domestic economic activity and disrupted domestic and international supply chains for goods and services, including food and agricultural products. These disruptions have produced an immediate and very strong demand shock on the U.S. food supply chain. In particular, the abrupt shutdown of much food service and institutional buying has affected commodity prices throughout the food supply chain.", "On the supply side, there is no food shortage in the United States. Supplies for most commodities remain relatively abundant; however, inflexibilities in the food supply chain (from food product specialization targeting food service and institutional markets that have closed, to pandemic outbreaks at processing plants) have resulted in bottlenecks that have left many farmers with unmarketable surpluses, while some retail outlets have experienced temporary shortages of various food and agricultural products. "], "subsections": [{"section_title": "Temporarily Empty Grocery Store Shelves", "paragraphs": ["During the early weeks of shutdown in March and April, many grocery stores had empty shelves for basic staples such as pasta, rice, sugar, and flour, as well as frozen ready-to-eat foods, household cleaning products, and toilet paper. This was the result of a temporary surge in consumer food stockpiling\u00e2\u0080\u0094much of it in the form of panic buying and potential hoarding\u00e2\u0080\u0094that occurred in March when consumers worried that they might be locked down in their houses for weeks or months. This type of shortage is temporary. Eventually the existing supplies of foodstuffs and other household products work their way through the food supply chain and restock the grocery store shelves. ", "The temporary shortage occurred due to two primary factors. First, consumers had been getting a significant share (54%) of their food from restaurants and other away-from-home venues. All of this demand was suddenly diverted to grocery stores and retail outlets almost overnight. This switch is not simply a matter of redirecting truckloads of products away from institutional buyers towards retail outlets, but also of transforming many products from bulk or vendor-ready forms to consumer-ready forms in smaller packages with new product labelling. Furthermore, truckers would now be making many stops for smaller deliveries to retail outlets along their routes, rather than a few stops to large buyers. All of this would require re-engineering of the food supply networks that ultimately may be temporary once the pandemic eases.", "Second, much of the food supply chain operates on a \"just-in-time\" principle to minimize costs associated with storage and waste of products. Under this principle, many processing plants and transportation routes are designed to operate near full capacity on a routine basis in expectation of slow, steady demand and to avoid the cost of idled resources\u00e2\u0080\u0094this is particularly true for food products and other items like toilet paper that normally do not experience large fluctuations in demand over time. ", "Thus, not all production processes can ramp up on short notice to meet unexpected surges in demand for their products, or to suddenly alter the product form, packaging, labeling, and shipping methods. As a result, shortages due to consumer stockpiling create bulges in the supply chain that may take weeks or months to eliminate as the food supply chain re-engineers itself in response. "], "subsections": []}, {"section_title": "The U.S. Food Supply Is Ample", "paragraphs": ["U.S. and global supplies of major agricultural commodities are in a state of relative abundance\u00e2\u0080\u0094thanks to large harvests over the past several years\u00e2\u0080\u0094which has kept market prices at relatively low levels for the past five years. The surplus supply situation has been compounded by the ongoing trade dispute between the United States and China, which disrupted traditional trade patterns and contributed to lower trade levels (and greater than expected U.S. stock levels) for several major commodities in the second half of 2018 and 2019. ", "Globally, the Food and Agriculture Organization (FAO) of the United Nations reports that stocks for many major agricultural commodities\u00e2\u0080\u0094including wheat, rice, corn, barley, coffee, sugar, butter, cheese, palm oil, soybean oil, poultry, and pork\u00e2\u0080\u0094are at or near 20-year highs. A similar situation exists within the United States. On April 9, 2020, USDA reported that the major U.S. grain and oilseed crops, as well as upland cotton, all had relatively large end-of-year stocks levels last fall (2019) to carry into this year. On April 22, 2020, USDA reported abundant supplies of meat, dairy, fruit, vegetable, and tree nut products in cold storage. Similarly, USDA reports that hog and poultry populations in the United States are historically large, while the cattle population has rebounded from its low point in 2014. In addition, USDA reported that for 2020, U.S. farmers intended to increase corn and soybean planted acres by 8% and 10%, respectively, while adjusting wheat (1%) and cotton acres (<1%) down slightly from 2019. If such large planted acres are realized, under normal weather conditions, they could produce bumper crops and further expand domestic supplies.", "According to news reports, Secretary of Agriculture Sonny Perdue has said that consumers should not worry about a shortage of food, saying the supply chain is just mismatched. Although demand has surged at the retail level in response to the pandemic, demand from restaurants, cafeterias, sports venues, and tourism has plummeted. "], "subsections": []}, {"section_title": "Disruption of Food Supply Chains Impact Commodity Prices", "paragraphs": ["The food supply chain refers to the path that raw agricultural commodities take from the farm where they are produced, through the food processing and distribution network to the consumer where they are used. The domestic food supply chain has the potential to break down at any of a number of different points: availability of inputs and labor for agriculture production; trucks and truck drivers for transporting raw and finished products; food processing plants, plant workers, and food safety inspectors; packaging, warehousing, and storage capacity; and wholesale and retail outlets and their workers. For exported products, the supply chain includes containers, ships, crew, and port workers.", "There is a finite supply of trucks, railcars, and shipping containers, and they may not be situated where they are needed when a temporary surge in demand occurs. Labor shortages at any point along the supply chain can lead to bottlenecks, delays, and regional shortages. Similarly, there is a finite supply of warehousing and cold storage (i.e., refrigerated and frozen) space, which may contribute to temporary regional shortages.", "With respect to COVID-19's impact, supply chain disruptions have been primarily due to two factors: widespread shutdowns of all but essential businesses; and uncertainty about the availability of labor for the food distribution network, from farms to retail outlets\u00e2\u0080\u0094whether from illness, fear of illness, or immigration status. "], "subsections": [{"section_title": "Loss of Institutional Buyers", "paragraphs": ["The first effect of the COVID-19 pandemic on agricultural producers occurred when many states and municipalities closed schools and instituted economy-wide shutdowns of all but essential businesses. The wholesale and retail food distribution network has been deemed essential; however, many institutional purchasers of agricultural products (often referred to as the food services sector, including restaurants, hotels, schools, and entertainment venues) have been closed. ", "According to USDA, U.S. consumers normally spend 54% of their food and drink dollars on away-from-home food purchases. Thus, a large share of U.S. food products traveling through the food supply chain was going to the food services sector, often in bulk or vendor-ready form, for away-from-home consumption. In order to redirect this food product flow towards retail outlets and at-home consumption, much of it would require processing into consumer-usable quantities and forms, requiring repackaging, and relabeling. This requires some level of retooling by food packagers and processors. ", "As a result, the near total stoppage of institutional food purchases contributed to sharp declines in the prices of affected commodities ( Figure 1 ), and led to unanticipated conditions of oversupply from commodities that could no longer move through the food supply chain and were, instead, backing up to the farms that produced them. This left many agricultural producers with excess supplies of perishable products\u00e2\u0080\u0094including fruit, vegetables, milk, and market-ready livestock\u00e2\u0080\u0094that are not easily diverted to alternate uses or retail outlets. In the interim, the temporary glut of perishable products with nowhere to go has led to news reports of producers dumping fresh milk, burying truckloads of raw onions, plowing fields of ripe vegetables back into the ground, and more disturbingly, depopulating millions of market-ready hogs and poultry.", "The surplus of perishable, unsold commodities worsened starting in mid-April, when a surge in COVID-19 infections among workers in meat packing plants and other food processing plants led to multiple plant closures, and contributed to both animal surpluses on farms and public concerns about the reliability of the nation's food supply. "], "subsections": []}, {"section_title": "Uncertainty over Labor Availability", "paragraphs": ["Agriculture has been classified by the federal government as a critical industry that must remain operating, even as much of the rest of the country shuts down to help contain the virus' spread. However, labor shortages at any stage of the supply chain can create temporary food product shortages in affected markets. If labor shortages become severe, they could lead to wider multi-state, and possibly national, food shortages of affected products.", "Many fruit and vegetable production activities are labor-intensive and require an adequate work force at key points in the products cycle\u00e2\u0080\u0094particularly at harvest\u00e2\u0080\u0094to successfully bring the crop to market. In addition, the U.S. agricultural sector relies on a large workforce to operate the production lines in food processing plants, including meat packing plants, as well as fruit and vegetable wholesale and distribution networks. This labor force performs supply chain activities including production, transportation, processing, warehousing, packaging, and retailing. Many of these supply chain activities cannot be automated or done remotely, but rely on workers being on site. For example, USDA reports that more than 1.5 million people worked in food processing in the United States in 2016. Meat processing, which tends to be more labor intensive than other parts of the food sector, accounted for 500,000 of those employees. Workers that are still planting and harvesting crops, or standing on an assembly line in a meat packing plant, during the coronavirus outbreak have a high risk of being infected with the disease given that they live, work, and travel in crowded conditions, and most do not have health care or paid sick leave. ", "Another labor-intensive component of the food supply chain is federal safety inspection, which is undertaken by about 8,000 USDA safety inspectors stationed at every agricultural manufacturing facility throughout the country, as well as about 3,800 safety inspectors from the Food and Drug Administration (FDA). ", "As the food distribution network shifts more food products away from institutional outlets to grocery stores, labor at the retail level has come under greater stress. Many grocery stores have begun implementing preventative measures, like reducing hours to give staff time to rest, clean, and stock shelves, while limiting exposure to customers. All of these COVID-19 related measures tend to slow the food supply chain's throughput rate and thus have prolonged the period of empty or partially filled grocery store shelves. "], "subsections": []}, {"section_title": "Many Meat and Food Processing Plants Slow Operations or Close", "paragraphs": ["Starting in mid-April, a surge in infections among workers in meat packing plants and other food processing plants led to multiple plant closures and contributed to unexpected surpluses of ready-for-market hogs, cattle, and poultry at the farm level. As of May 1, news sources reported that at least 20 meatpacking and 5 food processing plants had been closed. Due to a high degree of consolidation in the meat processing industry, a shutdown of four or five big plants could impact retail supplies. On May 1, the Centers for Disease Control and Prevention (CDC) reported that 115 meat and poultry processing plants (with over 130,000 workers) had a combined 4,913 workers with confirmed cases of COVID-19, including 20 that had died from COVID-19.", "Meat processing plant closures have two opposing effects: on the one hand, demand for livestock in the surrounding region is reduced and this tends to depress cash and futures prices, lowering prices that producers receive and that packers pay for market-ready livestock; on the other hand, the supply of consumer-ready product is reduced, which tends to raise wholesale and retail prices for the affected products. As evidence of this, USDA has reported a widening price gap between farm and wholesale prices for beef. ", "On April 22, news sources reported that, with the closure of Tyson's pork processing plant in Waterloo, IA, about 15% of total U.S. pork processing capacity was off line. According to an official with the Commodity Futures Trading Commission's (CFTC's) Livestock Marketing Task Force, most plants that were still open during this same period were operating at only 50% to 75% of normal production due to employee absenteeism. Furthermore, the CFTC official noted that U.S. pork processing plants normally handled about 2.5 million hogs per week, but that slower operating line speeds had reduced that number to 2.1 million hogs, implying that an additional 400,000 market-ready hogs had to stay on the farm each week. By May 1, weekly hog slaughter had fallen to 1.5 million, implying that nearly a million hogs per week were backing up to the farm.", "On April 28, President Trump signed an executive order using authority under the Defense Production Act (DPA) of 1950, as amended (50 U.S.C. 4501 et seq.), and Section 301 of title 3, United States Code, to order the Secretary of Agriculture to take all appropriate action to ensure that meat and poultry processors continue operations consistent with the guidance for their operations jointly issued by the CDC and Occupational Safety and Health Administration (OSHA). Two issues associated with the reopening of closed plants are the availability of personal protective equipment (PPE) for plant workers, and the liability associated with hospitalization costs and/or deaths of infected plant workers.", "On April 30, Secretary Perdue stated that USDA will ask meat processors to submit written plans to safely operate packing plants and review them in consultation with local officials. Perdue said that USDA will work collaboratively with companies and state and local officials to set safety standards based on guidelines for workers released by the CDC and OSHA, and that USDA was working to insure the availability of the necessary PPE for plants to operate safely. The Secretary also said that President Donald Trump's executive order to open the plants will not remove legal liability, but that the CDC protection guidelines will give meat plants \"a defensible answer\" should they be sued, as long as they follow the guidance."], "subsections": []}, {"section_title": "Commodity Prices Plummet", "paragraphs": ["Since mid-February, prices for many major agricultural commodities have plummeted ( Figure 1 ). Commodity market price declines have been led, in part, by a precipitous fall in the price of crude oil (down 67% between January 2 and April 15), which feeds back into the U.S. market for ethanol and corn, and subsequently through the expanded market for livestock feedstuffs. ", "Prices for the livestock sector\u00e2\u0080\u0094cattle, hogs, poultry, and dairy\u00e2\u0080\u0094were hit particularly hard by the sudden economic shutdown and the associated dilemma of what to do with market-ready livestock, and because of the difficulty in diverting product from restaurants to retail outlets. During the January 2 to April 15 period, prices for lean hogs were down by 53.2%, live cattle 25.1%, and milk 20.6%. ", "The cotton and textile industries were negatively impacted by the widespread shutdown of retail businesses. Demand for clothing and apparel dropped precipitously with the economic closure. This fed back into a collapse of demand that affects manufacturers, which affects cotton mills, and finally to contracts for cotton being canceled. U.S. cotton prices dropped by over 25% between January 2 and April 15 ( Figure 1 ). USDA's Foreign Agricultural Service (FAS) reduced its forecast for global cotton consumption for 2020 by 6.4%. According to FAS, spending on clothing is highly correlated to changes in GDP, and most economic forecasters are expecting strong declines in global GDP in the first half of 2020.", "Reduced travel, slowing economic activity, and petroleum-product demand suppression related to the COVID-19 outbreak, combined with announced plans to increase crude oil supplies by Saudi Arabia and Russia in mid-April, contributed to the severe decline in crude oil prices. Low oil prices contribute to lower agricultural prices via a strong biofuels link between the two sectors. Corn is both the world's foremost livestock feed grain and the principal feedstock in the production of the biofuel ethanol. Ethanol is blended with gasoline in the United States (at about a 10% share) for use in automobiles and light trucks. Thus, declining fuel demand contributes directly to falling prices for gasoline, ethanol, and corn. ", "Ethanol prices fell by nearly 33% from January 2 to April 15 ( Figure 1 ). As of April 21, news sources report that nearly 30% of the nation's 204 biofuel plants have been idled since March 1, while many others have reduced their production volumes. By April 25, the Renewable Fuels Association reported that about 46% of ethanol production capacity was idled. Furthermore, the prices of nearly all feed grains and oilseeds produced in the United States move in tandem with corn prices since they all compete for the same feed markets in consumption and farmland in production. Thus, this combination of the COVID-induced sudden disruption of normal agricultural demand and use, slowing U.S. and global economic activity, and sharply lower oil prices have placed strong downward pressure on commodity prices in international markets since the start of 2020."], "subsections": []}, {"section_title": "International Market Export Restrictions", "paragraphs": ["On top of these domestic disruptive factors, international markets for some major food items, such as rice and wheat, have experienced trade disruptions due to threats or actual imposition of protectionist policies on exports of major food products in certain important producer countries\u00e2\u0080\u0094including Russia (the world's leading wheat exporter), Kazakhstan, and Vietnam. According to the World Trade Organization (WTO), 80 countries and customs territories so far have introduced export prohibitions or restrictions as a result of the COVID-19 pandemic. In response, the United States, China, the European Union, and other members of the WTO representing over 60% of world agricultural exports pledged to refrain from imposing restrictions on the free flow of food out of their countries.", "By threatening to limit supplies to international markets, these protective policies have actually been supportive of rice and wheat prices in international markets ( Figure 1 ). Since January, the nearby futures contract price for rough rice on the Chicago Board of Trade has actually risen by 7%, while the contract for wheat has fallen by 4%, unlike corn and soybean prices that have fallen 20% and 13%, respectively."], "subsections": []}]}]}, {"section_title": "Current Assessments of Economic Damage", "paragraphs": ["U.S. policymakers and business interests are concerned that the COVID-19 pandemic will inflict widespread economic harm on the U.S. and global economies. It is still too early to make any definitive statements about what the eventual\u00c2\u00a0economic impacts will be on the U.S. economy or the agricultural sector, since it is unknown how long the disease will persist and what shape the economic recovery might take. For example, will the overall impact be V-shaped with a quick outbreak followed by a quick recovery, or will it be L-shaped with an elongated tail representing a slow recovery and a gradual reopening of businesses and retail outlets? Or be W-shaped if the virus recycles and re-emerges later in the summer or fall in a more virulent form\u00e2\u0080\u0094as did the H1N1 pandemic in 2009, or the 1918 flu pandemic\u00e2\u0080\u0094thus, causing a new round of shutdowns and economic closures?"], "subsections": [{"section_title": "U.S. and Global GDP Outlook Revised Downward", "paragraphs": ["As commerce slows, economic output is expected to follow with projections of a significant contraction in U.S. gross domestic product (GDP). On April 29, the Bureau of Economic Analysis (BEA) reported the U.S. GDP (adjusted for inflation) had decreased by 4.8% during the first quarter of 2020.", "Many major financial institutions have also issued preliminary assessments of the economic impact of the COVID-19 pandemic with dire predictions. For example, in March, JP Morgan predicted a 25% decline in 2 nd quarter U.S. GDP. The International Monetary Fund (IMF), in early April projected that the U.S. GDP would decline by 5% during 2020 (down 7.9 points from its January 2020 pre-COVID forecast of 2.9% growth). The IMF also forecast that global GDP would decline by 3% (-6.3 points from January), and major economies would also see strong declines in GDP including the Euro-zone (-7.5%, -8.8 point from January), and Japan (-5.2%, -4.8 points from January). ", "On April 24, the Congressional Budget Office (CBO) released an update to its long-run baseline projection for the U.S. economic outlook that included a preliminary assessment of the economic impact of the COVID-19 pandemic. CBO projected that the U.S. economy will experience a sharp contraction in the 2 nd quarter of 2020\u00e2\u0080\u0094inflation-adjusted GDP is expected to decline by about 12% during the 2 nd quarter, equivalent to a decline at an annual rate of -40% for that quarter. CBO also projected a 2.8% increase in real GDP in 2021. In addition, the U.S. unemployment rate is expected to average 11.4% for 2020 and 10.1% for 2021, consistent with CBO's current projection for a slow economic recovery. ", "Between March 14 and May 7, over 33 million American workers have filed first-time claims for unemployment benefits, according to the seasonally adjusted numbers of the U.S. Department of Labor. According to news sources, numbers at that level indicate that over 20% of the U.S. labor force is suffering from layoffs, furloughs, or reduced hours during the coronavirus pandemic. In addition to reflecting the strong likelihood for high unemployment and impactful declines in consumer incomes through 2020, these forecasts also have important implications for the rural, off-farm economy that so many farm households depend on (as described below). "], "subsections": []}, {"section_title": "Major Agricultural Commodity Sectors Suffer Substantial Harm", "paragraphs": ["Several industry groups from the U.S. agricultural sector have released estimates of the economic damage experienced by producers and ranchers. Most of these early assessments are limited to evaluating the effect of the price decline on any unsold production of crops or livestock remaining under farmers' control, and the unexpected marketing costs of unsold products due to the shutdown of most institutional buying of agricultural products. Several of these damage assessments are summarized in Table A-1 . ", "The livestock sector appears to be the hardest hit, as hog and cattle prices have dropped by 53% and 25% from January into mid-April, thus generating large sectoral losses estimated at $13.6 billion to $14.6 billion for the cattle/beef sector, and $5 billion for the hog sector. Early estimates of dairy sector losses exceed $8 billion, while the fresh produce sector losses are estimated at $5 billion. Other major commodity sector losses include corn ($4.7 billion to $6 billion), soybeans ($2 billion), cotton ($610 million to $3.5 billion), and the sheep and wool sector ($300 million).", "The ethanol sector has not reported an overall dollar loss estimate, but reports that nearly 46% of its production capacity is offline (the United States produced 15.8 billion gallons of ethanol in 2019) and the price of ethanol has fallen by almost 33% ( Figure 1 ).", "Prices for several, but not all, of the affected commodities have turned upward slightly since mid-April when USDA's assistance program was announced. Corn prices are the most notable exception as they have continued their decline through the end of April. The corn price decline is partially driven by the catastrophic near collapse of the U.S. ethanol sector. Corn is the primary feedstock for U.S. ethanol production\u00e2\u0080\u0094nearly 38% of annual U.S. corn production is consumed by the ethanol sector."], "subsections": []}, {"section_title": "U.S. Farm Income Projections Revised Downward", "paragraphs": ["USDA's most recent U.S. farm economic outlook for 2020 (released on February 5, 2020) did not include the market effects of the COVID-19 pandemic. USDA is not expected to release its next U.S. farm income projections until September 2, 2020. However, the Food and Agricultural Policy Research Institute (FAPRI), at the University of Missouri, released a preliminary assessment of the impact of COVID-19 on the U.S. farm income outlook in April. FAPRI's preliminary projections assume a V-shaped recession where the market recovers quickly; market outcomes are driven largely by GDP and commodity price declines, and the supply chain disruptions described earlier in this report are not included in the analysis. Macro factors include an inflation-adjusted 5% decline in consumer expenditures from FAPRI's January pre-COVID baseline projections, and a 10% decline in gasoline use.", "Under these assumptions, FAPRI projects substantial price declines for all major grain, oilseed, and livestock commodities in 2019/20 and 2020/21, which result in large declines in farm revenue\u00e2\u0080\u0094including -$11.9 billion in crop and -$20.2 billion in livestock cash receipts ( Table A-1 ). The revenue declines are partially offset by declines in production expenses (-$11.3 billion) and an increase in farm program payments (+$2.3 billion) under the Agricultural Risk Coverage (ARC) and Price Loss Coverage (PLC) programs. However, the sum of the projected changes is for a large decline in U.S. net farm income of -$20 billion for 2020 (down from FAPRI's January forecast of $99 billion in 2020 net farm income, and compared to $95.3 billion in 2019). FAPRI does not include any payments under USDA's proposed CFAP. Although preliminary, FAPRI's early projections are indicative of the potentially large impact that COVID-19 may have on the U.S. agricultural sector. "], "subsections": []}, {"section_title": "Potential Impact on Farm Household Cash Flow", "paragraphs": ["The COVID-19's economic impact is expected to vary across commodity sectors and regions based on the extent of price declines across commodities, the seasonality of production cycles, and off-farm work opportunities, as well as each household's level of near-term debt, tenure status, asset valuations, and other economic factors. Thus, each farm household's situation may be unique. This section briefly describes where COVID-19's economic impact may be felt most immediately. The potential impact on the farm household credit situation is not discussed here. If the economic impact of COVID-19 persists into 2021, a broader range of economic factors are likely to be impacted, such as asset valuations and bankruptcies."], "subsections": [{"section_title": "On-Farm Revenue, Expenses, and Federal Payments All Impacted", "paragraphs": ["The principal market effects to date of COVID-19 have been the commodity price declines experienced in early 2020 ( Figure 1 ), as well as lost sales and the costs associated with unexpected surplus animals, grains, and oilseeds held by farmers. The price declines, in particular, can have several potential effects on farm household income, including", "the selling prices for 2019 crops still held in on-farm inventory; farm program payments for the 2019 crops under the marketing assistance loan (MAL), ARC, and PLC programs; prices and crop insurance payments for the 2020 crop; farm program payments for the 2020 crops under MAL, ARC, and PLC; and changes in input prices.", "The sharp drop in commodity prices is expected to result in reduced farm household revenue. Revenue losses are expected to be partially offset by both increases in government payments under traditional farm revenue support programs (which are available for about two dozen designated program crops) and crop insurance, and by reductions in input expenses. However, the net effect is expected to be an overall decline in farm revenue compared with 2019. For farm operations carrying above average levels of debt, the restricted cash flow can cause severe financial stress. The emergency-response payment and purchase program announced by USDA (described below) is intended to help address, at least partially, the revenue decline and tightening cash flow situation for a wider array of farm households than usually receive government payments."], "subsections": []}, {"section_title": "Off-Farm Income Impacted by Rural Economic Situation", "paragraphs": ["The drop in prices for major farm commodities in early 2020 ( Figure 1 ) suggests that farm revenues are likely to decline. However, of perhaps greater consequence to farm households has been the blow to off-farm income from the widespread economic shutdown and increases in unemployment. On average, 82% of farm household income comes from off-farm revenue sources. As a result, the cash flows of farm households have been diminished from both the on-farm and off-farm effects of the COVID-19 pandemic.", "Another blow to the rural economy is the strong decline in tax revenues, fees, and other sources of income, which hampers the ability of state and local governments to respond to the developing crisis through local programs and initiatives."], "subsections": []}]}]}, {"section_title": "Federal Response to COVID-19 for Agriculture", "paragraphs": ["This section reviews federal supplementary funding appropriated for assistance to the U.S. agricultural sector in response to the COVID emergency, and the USDA programs that were initiated with that supplementary funding. In addition to the supplementary funding, USDA announced that it was increasing certain flexibilities and extensions in several of USDA's farm programs\u00e2\u0080\u0094many authorized by the 2018 farm bill ( P.L. 115-334 )\u00e2\u0080\u0094as part of its effort to support the food supply chain.", "Also, USDA has established a \"Coronavirus Disease (COVID-19)\" web page that assembles information from a broad range of agriculture-related topics and issues, including the expanded program flexibilities. The website includes \"Frequently Asked Questions (FAQs)\" for several prominent issues and agencies, links to additional resources, and a USDA COVID-19 Federal Rural Resource Guide. "], "subsections": [{"section_title": "Supplemental Agriculture Appropriations", "paragraphs": ["In March and April 2020, Congress passed and the President signed four supplemental appropriations acts in response to the COVID-19 pandemic: ", "Coronavirus Preparedness and Response Supplemental Appropriations Act, 2020 ( P.L. 116-123 ); Families First Coronavirus Response Act (FFCRA, P.L. 116-127 ); Coronavirus Aid, Relief, and Economic Security Act (CARES Act, P.L. 116-136 ); and Paycheck Protection Program and Health Care Enhancement Act ( P.L. 116-139 ).", "These acts provide over $36 billion of new appropriations and policy changes in the jurisdiction of the Agriculture appropriations subcommittees, including nearly $10 billion for agricultural assistance, about $26 billion for nutrition assistance programs, and $163 million for the Food and Drug Administration."], "subsections": [{"section_title": "Funds Directly Targeting Agriculture", "paragraphs": ["The CARES Act provides $9.5 billion for USDA to \"support agricultural producers impacted by coronavirus, including producers of specialty crops, producers that supply local food systems, including farmers' markets, restaurants, and schools, and livestock producers, including dairy producers.\" This approach provides funding to the Secretary of Agriculture with general authority to respond to a crisis, and therefore is similar to emergency appropriations for wildfires and hurricanes in 2018 and 2019 in which USDA was tasked to develop a payment program from a general appropriation.", "The CARES Act also replenishes up to $14 billion of funding availability for the Commodity Credit Corporation (CCC). The CCC operates with a $30 billion line of credit with the U.S. Treasury. In April 2020, USDA said that the CCC's borrowing authority was becoming low and that about $6 billion remained after having paid regular farm bill obligations and the final tranche of the 2019 Market Facilitation Program. The $14 billion in the CARES Act is not new spending; rather, it would reimburse the CCC for past spending. After the funds are transferred, which requires waiting for a June 2020 financial statement, the CCC would have renewed access to more funding for future obligations.", "For flexibility in the regular farm commodity support programs, the CARES Act allows Marketing Assistance Loans in FY2020 to be repaid over 12 months (rather than the usual nine months) to provide producers with flexibility in responding to disruptions."], "subsections": []}, {"section_title": "Funds Indirectly Targeting Agriculture and the Rural Economy", "paragraphs": ["Access to food has been a concern during the pandemic, particularly in light of school closures. Rising unemployment may increase participation in the Supplemental Nutrition Assistance Program (SNAP) and other food assistance programs such as The Emergency Food Assistance Program (TEFAP), which provides aid to food banks and other emergency feeding organizations. Financial assistance through SNAP benefits or in-kind assistance through TEFAP may increase demand for agricultural products. ", "The FFCRA and the CARES Act provide a total of $26 billion for various nutrition assistance programs and give USDA certain temporary flexibilities to increase program access and accommodate social distancing. This includes $850 million for TEFAP, which is to increase USDA commodity purchases for food distribution. The FFCRA has language that, \"During fiscal year 2020, the Secretary of Agriculture may purchase commodities for emergency distribution in any area of the United States during a public health emergency designation\" (\u00c2\u00a71101(g)). CBO did not score this provision. USDA is using this authority for a $3 billion commodity purchase and distribution (\"Farmers to Families Food Box\") program (described later in this report). CBO estimated that SNAP policies in the FFCRA will increase mandatory spending by more than $21 billion over FY2020-FY2021, which is subject to appropriation and for which the CARES Act provides some funding.", "For rural development, the CARES Act provides $146 million, including $100 million for rural broadband grants, $25 million for rural telemedicine and distance learning, and $20.5 million to support rural business loans.", "For USDA agency operations, the CARES Act provides $141 million to six USDA agencies or offices. This includes $55 million for the Animal and Plant Health Inspection Service (APHIS), $45 million for the Agricultural Marketing Service (AMS), $33 million Food Safety and Inspection Service (FSIS), $4 million for the Foreign Agricultural Service (FAS), $3 million for the Farm Service Agency (FSA), and $750,000 for the Office of the Inspector General (OIG). The APHIS and AMS amounts are to replace user fee revenues that are expected to decline due to reduced air passenger traffic (APHIS) and because of reduced grading, inspections and audit services (AMS). The amounts for FSIS and FSA are to support temporary employees and adjustments to respond to COVID-19 workload demands. FAS received funding to repatriate staff from foreign postings during the pandemic. ", "Other provisions in the CARES Act outside the jurisdiction of agriculture appropriations may have provided loans and grants to certain agriculture-related businesses, such as through the Small Business Administration (SBA), or to individuals through stimulus checks. Prior to enactment of P.L. 116-139 , the SBA reported that agricultural, forestry, fishing, and hunting businesses received $4.37 billion of Paycheck Protection Loans. "], "subsections": []}]}, {"section_title": "USDA's Coronavirus Food Assistance Program (CFAP)", "paragraphs": ["On April 17, 2020, Secretary of Agriculture Perdue announced the Coronavirus Food Assistance Program (CFAP), valued at $19 billion, to provide immediate financial relief to farmers, ranchers, and consumers in response to the COVID-19 national emergency. According to Secretary Perdue, CFAP will include $16 billion in direct payments to producers that have been impacted by the decline in commodity prices and the disruption in food supply chains related to COVID-19, and $3 billion in commodity purchases for distribution through food banks, faith-based organizations, and other nonprofit organizations. Direct payments are intended to partially offset the loss of market revenue from the price decline, and the unexpected carry-cost of unsold commodities for producers and ranchers of products that have been negatively affected by COVID-19. Commodity purchase and distribution programs serve the dual roles of supporting commodity market prices by temporarily increasing demand, and of expanding the availability of food to consumers who have lost their jobs or have limited resources.", "CFAP funding is from three primary sources: the FFCRA, the CARES Act, and existing USDA authorities under the Commodity Credit Corporation (CCC) Charter Act. In particular, Senator Hoeven, Chairman of the Senate Agriculture Appropriations Committee, stated that the $16 billion designated for the direct payments program derives from the $9.5 billion emergency program spending authorized by the CARES Act and an existing $6.5 billion balance in the CCC. The $3 billion for the commodity purchase portion of CFAP derives from the FFCRA (\u00c2\u00a71101(g)) that authorizes USDA to purchase commodities for emergency distribution in the United States."], "subsections": [{"section_title": "CFAP Direct Payment Program", "paragraphs": ["USDA has released limited information to date on the specifics of how CFAP will be implemented; however, information released by Senator Hoeven's office, coupled with news sources that have gleaned pieces of program information from USDA sources, could provide some context for understanding how CFAP's direct payments program may unfold.", "Senator Hoeven's press release says that the $16 billion is to be allocated across four different commodity groupings as follows: livestock ($9.6 billion or 60%); row crops ($3.9 billion, 24.4%); specialty crops ($2.1 billion, 13.1%); and \"other\" crops ($500 million, 3.1%) ( Figure 2 ). Direct payment spending under the livestock category would be further delineated as $5.1 billion for cattle, $2.9 billion for dairy, and $1.6 billion for hogs. ", "To be eligible for CFAP direct payments, farmers and ranchers must produce commodities that have experienced at least a 5% price decrease between January and April of 2020. The specific prices and dates to be used for this calculation have not yet been announced, but using nearby futures contract prices as a guide would suggest that many commodities\u00e2\u0080\u0094including hogs, cattle, cotton, milk, corn, and soybeans\u00e2\u0080\u0094would relatively easily meet the 5%-decline threshold ( Figure 1 ). Also, the \"other\" category was not specifically defined, but is expected to include commodities such as horticulture, hemp, sheep and goats, or any other commodity where a producer can show a revenue loss associated with at least a 5% price drop since January. ", "USDA has said the direct payments to producers will be based on estimated losses as measured by both: (a) market price declines, and (b) additional marketing costs associated with the unexpected oversupply of unsold production in calendar 2020. Under this structure, CFAP direct payments would be directly proportional, or \"coupled,\" to actual production.", "Determination of the payment amounts and delivery mechanisms may develop similarly to the three tranches associated with payments under the Market Facilitation Programs (MFPs) in 2018 and 2019. The payments are to represent the summation of the two different loss measures described above:", "First, payments, according to Senator Hoeven's news release, are to cover the market price declines of greater than 5% that occurred between January 1, 2020, and April 15, 2020. The payment is to equal 85% of the loss\u00e2\u0080\u0094some policy analysts think that the loss could be calculated using some measure of the price decline times the normal volume of the commodity marketed during that period. Second, payments to cover future marketing losses from unsold product. This additional cost is valued as 30% of the expected losses from April 15 through the next two quarters (i.e., six months) or until mid-October. Again, the expected loss would most likely be calculated using some measure of the price decline times the normal volume of the commodity marketed during that period.", "For its part, USDA has not provided details on: which prices will be used in the formula (such as local elevator prices, regional wholesale prices, or nearby futures contract prices); how the price decline will be measured (that is, will two specific dates be used, or will representative averages of prices in January and April be used); or how the share of production, characterized as \"routine marketing for the relevant period\" and eligibility for payments, will be measured. ", "Many of the program specifics are expected to be delineated in rulemaking. Since enforcement of social distancing remains in effect for the foreseeable future, producers may be asked to self-certify their losses. If so, producers will need to save records and paperwork to demonstrate losses, especially producers that have destroyed their product (e.g., dumping of milk or plowing under specialty crops). It is expected that producers will be compensated for \"dumped\" milk, but whether compensation may be provided for depopulated (i.e., euthanized) livestock and poultry is uncertain. Furthermore, CFAP direct payments are expected to be limited to cover producers who own the commodity or product, thus animals raised under contact are not expected to be covered.", "USDA is expediting the rulemaking process for the direct payment program and expects to begin sign-up for the new program in early May. CFAP direct payments are expected to be issued to producers by the end of May or early June.", "According to the Senator Hoeven press release, payment limits are expected at $125,000 per commodity grouping (livestock, row crops, and specialty crops), with an overall limit of $250,000 per individual or entity. Neither the CARES Act nor the underlying CCC authority requires payment limits. Applying payment limits at this point would be at USDA's discretion, as it chose to do when establishing the MFP and Wildfire and Hurricane Indemnity Program (WHIP) programs that were undertaken at the Secretary's discretion. The American Farm Bureau Federation expects that benefits received under traditional farm support programs such as ARC and PLC will not be added to CFAP payments when evaluating payment limits. In other words, payment limits for CFAP are expected to be independent of other farm program benefits received by a farm."], "subsections": []}, {"section_title": "CFAP Purchase and Distribution Program", "paragraphs": ["In the press release that announced the CFAP, USDA designated $3 billion for a commodity purchase and distribution program. In subsequent announcements, the program has been called the USDA Food Box Distribution Program, and the USDA Farmers to Families Food Box Program. The intention is to capture some of the supply chain and market disruption caused by the closure of restaurants, hotels, and other food service entities. Under the program, agricultural products are to be purchased from farmers and processors to support agricultural markets and reduce food waste. Products are to be distributed to food banks and other nonprofit organizations that serve those in need. This program is operated differently than, and separately from, existing USDA commodity purchase programs such as Section 32, TEFAP, and other Food and Nutrition Service (FNS) food distribution programs. However, food banks, school food authorities, and other nonprofits that participate in other FNS programs are to be eligible to receive food boxes through the USDA Farmers to Families Food Box Program.", "USDA plans to purchase about $100 million per month of fresh produce, $100 million per month of dairy products, and $100 million per month of meat products (chicken and pork). Because of the potential for food waste (lack of marketing options for ripe produce, dumping expressed milk, and euthanizing market-ready livestock) and high demand for food bank distribution during this pandemic discussed earlier in this report, USDA is expediting this purchase program relative to its usual commodity procurement and distribution timeline. Usually, the procurement-to-distribution timeline is two to five months, starting with product selection and identification and/or thorough analysis of market conditions for individual commodities, a solicitation period, review of applications, and manufacturing and delivery from producers to processors (vendors) and intermediaries that may reassemble or briefly store products for distribution and recipients. The current food box program shortens the procurement-to-delivery to as little as one month, with an expected one week interval for each of the bidding, approval, and delivery stages. Solicitation for bids began on April 24, with bids due to USDA on May 1. Contracts are expected to be awarded on May 8, and initial program delivery may be as early as May 15. The program is expected to operate through the end of 2020. ", "Another significant change is the product format. Under normal circumstances, products are often delivered from vendors (who sell to USDA) to recipient organizations in bulk formats that may require re-packaging before distribution to households. The CFAP purchase program intends for vendors to deliver household-ready boxes of the previously mentioned produce, meat and dairy products, or combinations thereof\u00e2\u0080\u0094ready for more convenient and immediate distribution (\"off the truck and into the trunk\") in order to support social distancing.", "In addition to the $3 billion CFAP purchase and distribution program, USDA announced on May 4, 2020, a plan to purchase $470 million of commodities with Section 32 authority that is at the discretion of the department. USDA's initial press release for the CFAP had mentioned availability of $873 million in the Section 32 account. The plan for this initial tranche is to solicit bids from vendors in June 2020 and begin deliveries as soon as July. In this purchase, USDA intends to buy $170 million of produce, $120 million of dairy products, $80 million of poultry, $70 million of fish, and $30 million of pork."], "subsections": []}]}, {"section_title": "Next Steps", "paragraphs": ["In addition to the $9.5 billion in funding to assist U.S. agricultural producers and ranchers with COVID-related losses, the CARES Act also provided $14 billion to replenish the CCC\u00e2\u0080\u0094this additional CCC spending authority is expected to be available in July after CCC prepares its June financial statement. The CCC borrows from the U.S. Treasury to finance its programs consistent with its permanent, indefinite authority to borrow up to $30 billion. Congress usually replenishes the CCC borrowing authority by annually appropriating funding to cover the CCC's net realized losses. The supplemental reimbursement in the CARES Act could increase opportunities for USDA to use its executive authority in CCC to provide further direct support payments, as it did with trade aid payments in 2018 and 2019.", "The CCC's annual borrowing authority has been fixed at $30 billion since 1987. On April 21, 2020, the American Farm Bureau released a report showing that, if adjusted for inflation, the CCC's borrowing authority would be $67.5 billion in 2020. In Congress, Senator John Hoeven has called for increasing the CCC's borrowing authority to $50 billion, while H.R. 6728 would raise CCC's borrowing authority to $68 billion. Increases in CCC's borrowing authority could be permanent or temporary (for certain fiscal years, or the duration of the public health emergency). While farm bills designate CCC to make various types of congressionally directed payments, it is USDA's use of its discretionary authority in recent years that has put pressure on the CCC borrowing limit."], "subsections": [{"section_title": "More USDA Assistance", "paragraphs": ["At present, USDA appears to have used nearly all of its available borrowing authority in the CCC in composing the CFAP payments. By July, USDA may be expected to use some of the $14 billion in supplemental CCC funding in the CARES Act, and its general CCC authority, to provide additional support to the agriculture sector. However, the nature and timing of any further support has not yet been announced by USDA. ", "After it completes the $470 million Section 32 purchase described above, USDA would be expected to have about $400 million remaining in the Section 32 account for the rest of the fiscal year, based on the $873 million that USDA mentioned in its initial CFAP announcement. ", "USDA may also be directed by Congress to provide certain future support to agriculture. Representative Austin Scott has introduced a bill ( H.R. 6611 ) that would provide an additional $50 billion of funding (separate from the CCC, and similar to the $9.5 billion in the CARES Act) for COVID-related agricultural assistance programs."], "subsections": []}, {"section_title": "Rural COVID-19 Task Force Proposed", "paragraphs": ["Many Members of Congress have expressed concerns that rural America is not well prepared to handle the COVID-19 emergency, and that rural problems feed over into agriculture. For example, in April, Senate Democrats released a report warning that more isolated rural areas of the United States \"face disproportional challenges that put them at high risk,\" and that laid out their own rural policy ideas. Several U.S. Representatives and Senators have asked USDA to establish a Rural COVID-19 Task Force to help identify rural needs and tailor the allocation of resources to address them. They suggest that the Task Force could consist of a diverse group of experts and representatives from all sectors of rural areas, including agriculture, health care including mental health, and the private sector. In particular, the Rural COVID-19 Task Force would help to identify rural challenges, develop strategies and policy recommendations, assemble a guide of available federal programs and resources, consult with the USDA and congressional committees, and provide oversight on the distribution of funding.", "In their letter, the Members noted that people living in rural America are more likely to be uninsured, advanced in age, and have pre-existing medical conditions. Rural hospitals and health systems often have fewer ICU beds and resources available to handle an increased demand on rural health care infrastructure during a pandemic. According to the letter, one in five Americans living in rural areas are people of color, who have been disproportionately affected by the current crisis. Many rural areas are without reliable internet access, which limits their ability to work or attend school remotely. "], "subsections": []}]}]}, {"section_title": "U.S. Agricultural Stakeholders", "paragraphs": ["In March and early April, prior to USDA's announcement of CFAP, many industry groups from the U.S. agricultural sector had written public letters to Secretary Perdue and USDA detailing their concerns and the need for federal assistance in response to the economic damage that has hit their different industries as a result of the COVID-19-related emergency. Many of these letters included industry estimates of their sectoral economic losses due to COVID-19 (several of these estimates have been compiled by CRS and are presented in Table A-1 ).", "Following the announcement of CFAP, most industry groups that are targeted for CFAP assistance have expressed appreciation for the aid that USDA has announced. At the same time, several agriculture-related industries do not appear to be eligible for support under the CFAP\u00e2\u0080\u0094including ethanol, poultry, sheep and lamb, specialty livestock such as mink, or horticultural products. Also, agriculture industry groups almost universally note that CFAP can be only the first step in the federal response, as the amounts provided fall well short of industry loss estimates for most sectors.", "Another industry concern involves the announced payment limits associated with CFAP direct payments. Industry groups have stated that a $125,000 payment limit would severely restrict needed aid to individual producers. Some Senators and Representatives have followed up on industry concerns about payment limits by sending a letter to the Administration asking that the limits be removed for livestock, dairy, and specialty crop producers. The issue of payment limits may be addressed in the next round of USDA COVID-19 assistance or related bills (e.g., H.R. 6611 )."], "subsections": []}, {"section_title": "Issues for Congress", "paragraphs": ["Immediate congressional concerns involve how to channel assistance to those industries affected by COVID-19. This involves identifying affected industries, as well as measuring the extent of their losses, and providing some measure of compensation to help foster survival and recovery. Another immediate concern may be monitoring and oversight of the large sums of taxpayer money that will be flowing out through the CCC. Producer self-certification of losses may create a moral hazard and an incentive to over-report losses.", "Congress may consider using its investigative authority to better understand the nature and institutional rigidities inherent in the current food supply chain, and to ascertain whether there is a role for the federal government to help facilitate food supply chain management. Such considerations may include an evaluation of whether there is a need to facilitate less reliance by the private sector on low-cost, just-in-time supply chains. This model has proven to be inflexible in responding to the COVID-19 emergency, which requires rapid product transition from bulk institutional buyers to consumer-ready retail outlets, and greater regional storage capacity to hold temporary surges in unsold product. The potential costs to taxpayers of supporting a more flexible supply chain could include expanded regional warehousing, cold storage, food bank storage, etc. Expediting the food assistance supply chain is also being proposed through \"farm-to-food bank\" programs ( S. 3605 ). These actions could be coupled with new federal programs designed to increase demand by temporarily expanding SNAP benefits and/or federal food purchases when certain market or economic conditions are triggered.", "Congress may also want to consider whether the current farm safety net programs authorized by the farm bill's Title I\u00e2\u0080\u0094targeting of program crops\u00e2\u0080\u0094are sufficiently flexible and responsive when confronted with sudden, widespread price declines and an abrupt cessation of institutional purchases. For example, payments under the current ARC and PLC programs are delayed nearly 13 months after the program crop's harvest and reflect a 12-month average price that may not fully capture the potential short-term price drop related to the COVID outbreak.\u00c2\u00a0Program modifications\u00e2\u0080\u0094such as the inclusion of an early partial payment for ARC and PLC\u00e2\u0080\u0094could offer greater flexibility in responding to short-term cash flow problems for farm households.", "As one alternative, ARC and PLC could be supplemented or replaced by a new payment program that would be: short-term in nature; would better reflect local market conditions to capture disparities in regional economic harm; and would rely on market conditions both to trigger payments and to determine the size of those payments. The payment triggers could be set at catastrophic levels such that they would only be triggered under unique circumstances such as a major price plunge sparked by an event of the magnitude of COVID-19. The payment formula could be designed such that USDA could make payments under such a program before or shortly after harvest.", "In addition, Congress may also consider the long-term effects that might result from the COVID-19 emergency, particularly if the economic recovery is slow and lengthy. Such long-term effects may include heightened indebtedness and potential bankruptcies by farm households across the agricultural sector, as well as accelerated industry consolidation and altered consumption patterns. Without robust agricultural production to serve as the engine of growth, rural America might experience a slower recovery than the rest of the country. Prolonged depressed market conditions due to widespread layoffs, limited employment opportunities, and sustained reductions to rural wages and incomes would provide a weak background to foster agriculture's eventual recovery.", "Congress may also consider that rural banks tend to be smaller and less well-capitalized than banks catering to urban and suburban markets. Farm loan debt forgiveness (e.g., S. 3602 ) and loan repayment flexibilities are also in discussion. A slow rural economic recovery might reduce business and consumer confidence, leading to a reduction in spending and investment, and a tightening of financial conditions that could further slow the return to economic normalcy in rural areas."], "subsections": [{"section_title": "Appendix. Assessing the Economic Impact of COVID-19 on U.S. Agriculture", "paragraphs": ["Studies Project Deep Losses Across Major Commodity Sectors", "Several universities, think tanks, and commodity groups have released early assessments of COVID-19's potential impact on selected commodity sectors ( Table A-1 ). Most of these early assessments are limited to evaluating the effect of the price decline on any unsold production remaining under farmers' control, and the unexpected surplus of unsold products due to the shutdown of most institutional buying of agricultural products. "], "subsections": []}]}]}}
{"id": "R45863", "title": "Bitcoin, Blockchain, and the Energy Sector", "released_date": "2019-08-09T00:00:00", "summary": ["The popularity of cryptocurrencies such as Bitcoin and the underlying blockchain technology presents both challenges and opportunities to the energy sector. As interest in Bitcoin and other cryptocurrencies has increased, the energy demand to support cryptocurrency \"mining\" activities has also increased. The increased energy demand\u00e2\u0080\u0094when localized\u00e2\u0080\u0094can exceed the available power capacity and increase customers' electricity rates. On the other hand, not all cryptocurrencies require energy-intensive mining operations. Some cryptocurrencies can operate under algorithms that require less energy. In addition, blockchain technologies could present opportunities for the energy sector by facilitating energy and financial transactions on a smart grid.", "Bitcoin and other cryptocurrencies can be used to make payments without banks or other third-party intermediaries, and are sometimes considered virtual currency. The technology underlying these cryptocurrencies is blockchain. A blockchain is a digital distributed ledger that enables parties who may not otherwise trust one another to agree on the current ownership and distribution of assets in order to conduct new business. New blocks may be added to a blockchain through a variety of methods. In mining blocks, users seek to add the next block to the chain. For Bitcoin, new blocks are added to the blockchain through a proof-of-work (PoW) algorithm. Under PoW, miners\u00e2\u0080\u0094those seeking to add a block to a blockchain\u00e2\u0080\u0094are presented a difficult computational problem. Once the problem is solved, other users can validate the solution and confirm the block, adding the next block to the chain. In the case of Bitcoin, miners who create and publish new blocks are rewarded with Bitcoin. Less energy intensive, alternative algorithms exist, such as proof of stake and proof of authority.", "Cryptocurrency mining through PoW requires substantial energy to (1) operate the devices computing the calculations required to maintain the integrity of the blockchain and (2) thermally regulate the devices for optimal operation. Devices have different performance capabilities and have different power requirements. Generally, the device, or a cluster of devices, that can perform more calculations per second will require more energy for powering and cooling the device or devices.", "Global power requirement estimates for Bitcoin have increased within the last five years. Network power estimates for 2018 range between 2,500 megawatts (MW) and 7,670 MW, which, for comparison, is nearly 1% of U.S. electricity generating capacity. Opinions differ on whether future growth in Bitcoin will significantly impact energy consumption and subsequent carbon dioxide (CO 2 ) emissions.", "Cryptocurrency mining includes costs associated with equipment, facilities, labor, and electricity. Some users pool computational resources to solve PoW problems faster, and are on a worldwide hunt for cheap, reliable electricity in abundance. While many mining pools are in China, some have been able to utilize closed industrial facilities in the United States that can provide abundant electricity at affordable rates. According to a study in 2017, nearly three-quarters of all major mining pools are based in either China (58%) or in the United States (16%). By some estimates, the state of Washington hosted 15%-30% of all Bitcoin mining operations globally in 2018.", "Governments are developing various policies in response to growth in energy demand by cryptocurrency mining activities. In some areas, applications from potential mining companies have exceeded the available capacity. Other areas have offered reduced electricity rates to attract miners. In the United States, in addition to efforts at the state and local level, there are potential options that could be adopted by the federal government to improve the energy efficiency of mining operations. Potential federal policy options include minimum energy conservation standards, voluntary energy efficiency standards, and data center energy efficiency standards.", "In addition to the challenges that cryptocurrency mining presents to the energy sector, there are also opportunities, particularly for blockchain. These may include electric vehicle charging infrastructure and distributed energy resources, among others. The U.S. electricity grid is critical infrastructure and subject to certain regulations to maintain safe and reliable operations. Opinions differ as to a potential role for blockchain technology in the energy sector.", "The popularity of cryptocurrencies such as Bitcoin and the underlying blockchain technology presents both challenges and opportunities to the energy sector. As interest in Bitcoin and other cryptocurrencies has increased, the energy demand to support cryptocurrency \"mining\" activities has also increased. The increased energy demand\u00e2\u0080\u0094when localized\u00e2\u0080\u0094can exceed the available power capacity and increase customers' electricity rates. On the other hand, not all cryptocurrencies require energy-intensive mining operations. Some cryptocurrencies can operate under algorithms that require less energy. In addition, blockchain technologies could present opportunities for the energy sector by facilitating energy and financial transactions on a smart grid.", "Bitcoin and other cryptocurrencies can be used to make payments without banks or other third-party intermediaries, and are sometimes considered virtual currency. The technology underlying these cryptocurrencies is blockchain. A blockchain is a digital distributed ledger that enables parties who may not otherwise trust one another to agree on the current ownership and distribution of assets in order to conduct new business. New blocks may be added to a blockchain through a variety of methods. In mining blocks, users seek to add the next block to the chain. For Bitcoin, new blocks are added to the blockchain through a proof-of-work (PoW) algorithm. Under PoW, miners\u00e2\u0080\u0094those seeking to add a block to a blockchain\u00e2\u0080\u0094are presented a difficult computational problem. Once the problem is solved, other users can validate the solution and confirm the block, adding the next block to the chain. In the case of Bitcoin, miners who create and publish new blocks are rewarded with Bitcoin. Less energy intensive, alternative algorithms exist, such as proof of stake and proof of authority.", "Cryptocurrency mining through PoW requires substantial energy to (1) operate the devices computing the calculations required to maintain the integrity of the blockchain and (2) thermally regulate the devices for optimal operation. Devices have different performance capabilities and have different power requirements. Generally, the device, or a cluster of devices, that can perform more calculations per second will require more energy for powering and cooling the device or devices.", "Global power requirement estimates for Bitcoin have increased within the last five years. Network power estimates for 2018 range between 2,500 megawatts (MW) and 7,670 MW, which, for comparison, is nearly 1% of U.S. electricity generating capacity. Opinions differ on whether future growth in Bitcoin will significantly impact energy consumption and subsequent carbon dioxide (CO 2 ) emissions.", "Cryptocurrency mining includes costs associated with equipment, facilities, labor, and electricity. Some users pool computational resources to solve PoW problems faster, and are on a worldwide hunt for cheap, reliable electricity in abundance. While many mining pools are in China, some have been able to utilize closed industrial facilities in the United States that can provide abundant electricity at affordable rates. According to a study in 2017, nearly three-quarters of all major mining pools are based in either China (58%) or in the United States (16%). By some estimates, the state of Washington hosted 15%-30% of all Bitcoin mining operations globally in 2018.", "Governments are developing various policies in response to growth in energy demand by cryptocurrency mining activities. In some areas, applications from potential mining companies have exceeded the available capacity. Other areas have offered reduced electricity rates to attract miners. In the United States, in addition to efforts at the state and local level, there are potential options that could be adopted by the federal government to improve the energy efficiency of mining operations. Potential federal policy options include minimum energy conservation standards, voluntary energy efficiency standards, and data center energy efficiency standards.", "In addition to the challenges that cryptocurrency mining presents to the energy sector, there are also opportunities, particularly for blockchain. These may include electric vehicle charging infrastructure and distributed energy resources, among others. The U.S. electricity grid is critical infrastructure and subject to certain regulations to maintain safe and reliable operations. Opinions differ as to a potential role for blockchain technology in the energy sector."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["The rise in popularity of cryptocurrencies and the underlying blockchain technology presents both challenges and opportunities to the energy sector. Cryptocurrencies, such as Bitcoin, are sometimes referred to as virtual currency , a term that can also refer to a broader class of electronic money. A blockchain is a digital ledger that enables parties to agree on the current ownership and distribution of assets in order to conduct new business. When applied to cryptocurrencies, the blockchain allows the validation of transactions to occur by a decentralized network of computers. As cryptocurrencies (such as Bitcoin, the cryptocurrency with the largest market capitalization) have increased in popularity, the energy demand to support cryptocurrency mining activities has also increased. The state of Washington, by some estimates, hosted 15%-30% of all Bitcoin mining operations globally in 2018. When such increases in energy demand for cryptocurrency mining occur at a local level, the resulting peak loads may increase customers' electricity rates depending on pricing structure. However, not all cryptocurrencies require energy-intensive operations. Outside of cryptocurrencies, opportunities arising from blockchain technologies could include facilitating energy and financial transactions on a smart grid.", "This report explains how cryptocurrency is \"mined,\" where mining activity is concentrated, how some states and utilities are responding to localized increases in energy demand from Bitcoin mining facilities, and potential considerations for Congress. Considerations for Congress include potential policy options to address energy conservation and energy efficiency standards as well as options for blockchain technology in the energy sector. This report is part of a suite of CRS products on cryptocurrencies and the underlying technology, distributed ledger technology, and blockchain (see textbox below)."], "subsections": []}, {"section_title": "Blockchain and Cryptocurrencies", "paragraphs": ["Blockchain provides a means of transacting among parties who may not otherwise trust one another. Blockchain networks allow for individuals engaging in transactions to also be the ones to validate them. Cryptocurrencies such as Bitcoin, Ether, Alpha Coin, and Papyrus provide a means of validating transactions in a decentralized network that is outside of an intermediary, such as a bank for financial transactions or a title company for a real estate transaction. This validation can be done in bulk and at relatively high speeds, making cryptocurrency an attractive avenue for certain financial transactions. Cryptocurrencies are built to allow the exchange of some digital asset of value (the cryptocurrency) for a good or service. Bitcoin is the most popular cryptocurrency, garnering the largest market share, and Bitcoin arguably initiated the interest in blockchain technology. ", "Blockchain uses a combination of technologies to work. These technologies include encryption and peer-to-peer (P2P) networks. Transactions are added to a blockchain in an addition-only manner. Once added, a transaction cannot be altered, providing a layer of security and transparency. Transactions are grouped together to form a tranche , or \"block.\" Blocks are added to a blockchain in a manner that links it to the previous block, so any change data in a previous block makes that change known to users immediately as they try to add a new block. Encryption is used to ensure that parties trading assets on a blockchain have rights to that asset, and that data held in the blockchain is tamper resistant. P2P networks are used to distribute information across participating users without a central authority acting as an arbiter of that information."], "subsections": [{"section_title": "Cryptocurrency Mining", "paragraphs": ["There are three primary approaches to gaining ownership of Bitcoin: purchase Bitcoin directly by exchanging conventional money and a paying an exchange fee; earn Bitcoin in return for a product or service; or create Bitcoin through mining . Bitcoin and other cryptocurrencies each implement their own blockchain: mining is the creation and publication of a new block in a blockchain. Early cryptocurrency platforms, like Bitcoin, required the use of mining to validate transactions. In blockchain platforms generally, miners\u00e2\u0080\u0094those seeking to add a block to a blockchain\u00e2\u0080\u0094are incentivized to improve their value in that blockchain through either a monetary, reputational, or stake award, for example. New blocks may be added to a blockchain through a variety of methods. ", "For Bitcoin, new blocks are added to the blockchain through proof-of-work (PoW). Under PoW, miners are presented a difficult computational problem, or puzzle. PoW identifies a numeric value (called a nonce), which is used to generate an authenticator (hash value). Hash values are used to ensure the integrity of data, in this case, that a block of data in the blockchain has not been modified. Hashes are determined by submitting the data through an algorithm that will output a string of characters. By inserting the nonce into the algorithm, miners seek to change the hash value. The problem Bitcoin miners are trying to solve is the creation of a hash value for a given block which begins with a certain number of zeros. They add data to the block through changing the nonce in order to change the hash value and discover the solution. Identifying these valid nonces and hashes is computationally intensive, and the essence of mining. The security properties of hash algorithms are such that a miner tests nonces until a valid hash is found for a block. ", "Generally, by solving the problem or puzzle, miners win the opportunity to post the next block and possibly gain a reward for doing so. In the case of Bitcoin, miners who create and publish new blocks in the blockchain are rewarded with Bitcoin. Once the problem is solved and a valid hash is identified, the miner announces it to the community using P2P networking. Other users can validate the solution immediately\u00e2\u0080\u0094without going through the resource-intensive computation process. Once the majority of the community of users validates and confirms the block, it is added to the chain.", "Miners are held to a strict set of rules that maintain the overall market structure. There are a limited number of Bitcoin to be mined, which creates a value attributed to scarcity. For Bitcoin, new blocks are published every 10 minutes. As the rewards for published blocks halve every 210,000 blocks, the reward of new Bitcoin diminishes roughly every four years (e.g., the reward of 50 Bitcoins per block in 2008 was reduced to 25 in 2012). On October 31, 2018, block 548173 rewarded the miner with 12.5 Bitcoins plus approximately 0.2 Bitcoins in transaction fees. On the date that block was generated, trading for 1 Bitcoin closed at approximately $6,343; as of July 29, 2019, trading for 1 Bitcoin closed at approximately $9,507.", "Bitcoin is rewarded on a first-come, first-served basis, meaning whoever solves and publishes the solution first is rewarded with Bitcoin. Miners throughout the network compete against each other in a race to be the first to resolve the PoW and earn the reward. The competition often is a criticism of the PoW system, as there are many more miners expending energy for these \"useless\" calculations than the one miner that wins the race and correctly resolves the PoW."], "subsections": []}, {"section_title": "Mining Technology", "paragraphs": ["The technology used by miners has advanced over time. Early miners were able to earn Bitcoin relatively easily with affordable equipment. Bitcoin could initially be mined on a central processing unit (CPU) such as a personal laptop or desktop computer. As interest in Bitcoin mining increased, miners discovered that graphic cards could more efficiently run hashing algorithms and aid in mining. Field Programmable Gate Arrays (FPGAs) then replaced graphic cards, as the circuits in an FPGA could be configured and programmed by users after manufacturing. Application-specific integrated circuits (ASICs) have replaced these and graphic cards. ASICs are designed for a particular use\u00e2\u0080\u0094such as Bitcoin mining. ", "As more sophisticated equipment has been adopted, miners have also moved away from working individually to working in larger groups. Many miners have determined it is more cost efficient to join \"mining pools\" that help disperse the energy and equipment costs (and the profits) and increase the speed or likelihood of a successful transaction. ASICs used for Bitcoin mining are usually housed in thermally-regulated data centers with access to low-cost electricity. While these developments have transformed Bitcoin mining into a more consolidated industry, they have not resolved the energy consumption issue or the computational \"waste,\" as different Bitcoin mining pools still must compete against one another using the PoW method."], "subsections": []}]}, {"section_title": "How Much Energy Is Consumed from Bitcoin and Other Cryptocurrency Mining?", "paragraphs": ["Cryptocurrency mining requires energy to (1) operate the devices computing the calculations required to maintain the integrity of the blockchain and (2) thermally regulate the devices for optimal operation. A node, or computing system, on the blockchain may be composed of an individual user or a group of users that have pooled resources; as such, the exact number of connected devices on the network is unknown. Devices have different hashrates\u00e2\u0080\u0094the number of calculations (or hash functions) performed on the network per second\u00e2\u0080\u0094and have different power requirements. Devices with greater hashrates can perform more calculations in the same amount of time than devices with lesser hashrates. For example, \"a hashrate of 14 terahashes [14 trillion attempted mining solutions] per second can either come from a single Antminer S9 running on just 1,372 W [Watts], or more than half a million Sony Playstation-3 devices running on 40 MW [megawatts\u00e2\u0080\u0094million Watts].\" ", "There are four main factors that contribute to energy consumption of cryptocurrency mining:", "1. hardware computing power; 2. network hashrate; 3. the difficulty; and 4. the thermal regulation for the hardware.", "These factors, some of which also interact with the price of Bitcoin, can alter the energy intensity of mining. For instance, in December 2017, the price of Bitcoin rose creating an influx of mining. As the mining network grew, the difficulty and hashrate increased. Miners sought out more powerful equipment as the competition increased, which consumed more energy. ", "Several studies have examined the energy consumption of cryptocurrencies. While technology advancements in devices used for Bitcoin mining have led to increases in the hashrates of mining devices (i.e., improved device efficiency), the network hashrate has also increased as the popularity of Bitcoin increased. According to one recent estimate, as of \"mid-March 2018, about 26 quintillion hashing operations are performed every second and non-stop by the Bitcoin network.\" Estimating the power consumption of the global Bitcoin network depends upon the efficiency of different hardware, the number of machines in use, and the cooling requirements for large-scale mining facilities. Table 1 presents various estimates for the power required by the Bitcoin network. Generally, these estimates use hashrates and miner hashing efficiencies to determine energy consumption. One study relied upon hardware data derived from initial public offering (IPO) filings to estimate power consumption. Fewer studies have examined power requirements for other cryptocurrencies (Bitcoin is the largest cryptocurrency platform in both currency in circulation and transactions processed), although those studies have found comparatively lower power requirements than for Bitcoin. ", "Global power requirement estimates for Bitcoin have increased within the last five years. For comparison, the largest estimate of 7,670 MW in Table 1 is nearly 1% of U.S. electricity generating capacity (or approximately 0.1% of global electricity generating capacity). Opinions differ on whether future growth in Bitcoin will significantly impact energy consumption and subsequent carbon dioxide (CO 2 ) emissions. Some argue that sustainability concerns due to energy consumption are misplaced, and that the competitiveness of Bitcoin mining means that only miners with the most competitive mining hardware and the lowest electricity costs will persist over time. Further, this could lead to fewer miners using energy inefficient hardware, as they may no longer be able to compete effectively. Some anticipate that energy demands will diminish as the reward incentive shifts from discovering new Bitcoin to earning revenue through transaction fees. As a result, some would argue that the energy consumption from mining Bitcoin is a temporary issue. Others recognize the volatility of cryptocurrency markets but observe that network hashrates of several cryptocurrencies have trended upward suggesting that energy consumption (and subsequent CO 2 emissions) will increase. However, these estimates do not include energy required for cooling systems and other operations and maintenance activities associated with cryptocurrency mining. ", "One study on projections of Bitcoin growth considered the potential effects on global CO 2 emissions should Bitcoin eventually replace other cashless transactions. The study found that the associated energy consumption of Bitcoin usage could potentially produce enough CO 2 emissions to lead to a 2 o C increase in global mean average within 30 years. These projections assume that the global portfolio of fuel types (and subsequent CO 2 emissions) used to generate electricity remains fixed according to portfolio profiles from 2014 and does not consider that, in many cases, Bitcoin is often mined in areas with plentiful and affordable renewable energy. Further, the projections do not consider any potential effects of a collapse of Bitcoin prices on hashrates or energy consumption, and whether the capital invested in Bitcoin mining could be used for other cryptocurrencies or for other purposes. Projections of continued growth in energy consumption led some to call for reform in the cryptocurrency industry. Others argue that continued reliance on fossil-fuel-based electricity is the important issue and not the energy intensity of Bitcoin. "], "subsections": [{"section_title": "What Is the Cryptocurrency Industry Doing to Reduce Energy Consumption?", "paragraphs": ["As the Bitcoin network's energy consumption grows, some have questioned whether the PoW algorithm is sustainable. One option to reduce cryptocurrency energy consumption is to shift to alternative protocols for validating transfers. Currently, PoW is the most widely used. However, other protocols, such as Proof-of-Stake (PoS) and Proof-of-Authority (PoA) could potentially accomplish validations more energy efficiently. Many other alternative algorithms exist. Each algorithm presents trade-offs; for example, some algorithmic attributes facilitate scalability and others facilitate speed of transactions. The potential application of blockchain technology to the energy sector (and other sectors) will depend upon the ability for these technologies to provide transparent, secure, scalable, and timely transaction validation. The technical differences and their applicability are discussed in the Appendix ."], "subsections": []}]}, {"section_title": "Where Is Bitcoin Mined?", "paragraphs": ["Several factors contribute to ideal mining locations and include energy costs, regulations, and technology. Often the energy costs are affected by geographical characteristics like proximity to hydroelectric power or lower ambient temperature that reduces the need for cooling. Local and national governments around the world have responded differently to the growth of Bitcoin: some are actively developing cryptocurrency industries, some are restricting cryptocurrencies, and some are regulating cryptocurrencies in an effort to balance financial innovation and risk management. ", "According to a study in 2017, nearly three-quarters of all major mining pools are based in either China (58%) or in the United States (16%). Some countries and regions where significant cryptocurrency mining activities have been identified include Australia, Canada, Georgia, Russia, and Sweden, as shown in Figure 1 . ", "China has taken steps to regulate and tax the trading of Bitcoin, and has even proposed implementing a ban on mining. As of April 2019, it was reported that the National Development and Reform Commission, deemed mining as a \"wasteful and hazardous\" activity. China's share of major mining pools may change substantially in response to regulations and policy actions. In 2013, the Chinese government reportedly restricted Chinese banks from using cryptocurrencies as currency, citing concerns about money laundering and a threat to financial stability. In September 2017, Beijing declared that initial coin offerings (ICO) were illegal and that all mainland cryptocurrency exchanges be shut down. In January 2018, China's Leading Group of Internet Financial Risks Remediation submitted a request to local governments to regulate electricity, taxes, and land use for mining companies, and \"guide the orderly exit of such companies from the Bitcoin mining business.\" Since the implementation of these regulatory measures, Bitcoin trading with the Chinese yuan has reportedly dropped from 90% of global Bitcoin trading to under 1%. However, as illustrated in Figure 1 , China, despite changes in regulation, remained a popular location for mining in 2018, partly due to the comparatively low cost of energy. The generation sources that provide low cost electricity to cryptocurrency miners in China vary regionally. In some regions, the electricity likely is provided from fossil fuel sources; for example, in Inner Mongolia where cryptocurrency miners have been active, thermal power represents 63% of the electric capacity. "], "subsections": []}, {"section_title": "Cryptocurrency Mining and Utilities: Domestic and International Examples", "paragraphs": ["Cryptocurrency mining includes costs associated with equipment, facilities, labor, and electricity. Mining pool companies around the world therefore seek cheap, reliable electricity. While many mining pools are still in China, some have been able to utilize closed industrial facilities in the United States that can provide abundant electricity at affordable rates. As miners are not typically bound by geographic location, locations with favorable electricity rates and policies may encourage operations. Conversely, locations with restrictive regulations or high electricity prices may discourage mining operations. ", "In the United States, the sale of electricity is governed by a patchwork of federal, state, and local regulations. For the sale of electricity, the states generally have regulatory jurisdiction over retail electricity transactions, though federal and municipal authorities may also play a role. State approaches to regulation vary considerably. States and cities that are dealing with an influx of cryptocurrency mining because of affordable electricity rates are instituting local laws as issues arise. Examples of such approaches\u00e2\u0080\u0094both domestic and international\u00e2\u0080\u0094along with the more general benefits and challenges associated with developing a cryptocurrency mining industry are delineated through the selected examples below."], "subsections": [{"section_title": "New York State", "paragraphs": ["The state of New York and the city of Plattsburgh (NY) have developed various policies in response to growth in energy demand by cryptocurrency mining activities. In December 2018, New York State approved Assembly Bill A8783B, creating a new digital currency task force. This task force will include a team of technology experts, investors, and academics all appointed by the Governor, the state Senate, and the Assembly. The task force intends to produce a report in 2020 that includes a discussion of \"the energy consumption necessary for cryptocurrency mining operations and other policy considerations related thereto.\" The task force law does not include any specific measures regarding licensing, but New York State already requires a license for cryptocurrency businesses, known as a \"Bitlicense.\" Introduced in 2014, fewer than 20 licenses have been granted as of January 2019. The Bitlicense is intended to subject crypto mining companies to anti-money laundering and counterterrorism standards, as well as require background checks on all employees. "], "subsections": [{"section_title": "Plattsburgh, NY", "paragraphs": ["Plattsburgh's 20,000 residents reportedly have electricity rates below $0.05 per kilowatt-hour (kWh) year-round (as compared to the U.S. average retail price of about $0.10/kWh). Inexpensive electricity for Plattsburgh is generated from the New York Power Authority's (NYPA's) hydroelectric facility on the St. Lawrence River. Plattsburgh has an agreement with the NYPA to buy 104 MW of power at any time to serve its customers. This has exceeded electricity demand requirements for Plattsburgh, even with several industrial facilities in operation. Plattsburgh has faced a number of challenges balancing the promise and pitfalls of cryptocurrency mining.", "Bitcoin mining companies were attracted to the abundant and cheap electricity, with two cryptocurrency mining businesses reportedly operating in Plattsburgh in 2017. As Plattsburgh residents primarily rely on electricity for home heating, during a particularly cold winter in early 2018, electricity rates increased as the 104 MW of power from the hydropower facility was reportedly exceeded, and electric power had to be purchased from other sources at higher rates. During January and February of 2018, cryptocurrency mining operations were recorded as responsible for approximately 10% of the local power demand. The cost of purchasing additional power to meet the increased demand were proportionally distributed among all customer classes. The costs of purchasing additional power combined with increased energy use in response to cold weather resulted in residential electricity bills that were reportedly up to $300 higher than usual. According to the New York Public Service Commission, the two cryptocurrency companies operating in Plattsburgh at the time contributed to an increase of nearly $10 to monthly electricity bills in January 2018 for residential customers. ", "In March 2018, the city of Plattsburgh also instituted an 18-month moratorium on any new cryptocurrency mining operations\u00e2\u0080\u0094a first in the United States. Also in March 2018, the New York Public Service Commission ruled that municipal power authorities could issue a tariff on high-density-load customers\u00e2\u0080\u0094including cryptocurrency companies\u00e2\u0080\u0094\"that do not qualify for economic development assistance and have a maximum demand exceeding 300 kW and a load density that exceeds 250 kWh per square foot per year.\" Additionally, Plattsburgh began addressing fire safety concerns, heat management, and overall nuisance associated with cryptocurrency mining by passing local laws. None of the new laws specifically address energy consumption, or noise, which is a concern for some local residents."], "subsections": []}, {"section_title": "Massena, NY", "paragraphs": ["In December 2017, Coinmint, a crypto mining company, looking to expand operations, went to Massena, NY (90 miles west of Plattsburgh) and signed a lease to convert a retired Alcoa aluminum plant into a cryptocurrency mining facility. Coinmint reportedly requested from NYPA 15 MW of subsidized power that would in turn lead to 150 jobs and $700 million in local investment. The proposal required the approval of NYPA's board of trustees and was added to their January 2018 agenda for consideration. However, in March 2018, following consideration of the Coinmint proposal, the NYPA board of trustees approved a moratorium on allocating economic development assistance in the form of subsidized power to high-density-load operations until NYPA could analyze all possible impacts. The New York State Public Service Commission approved, in July 2018, new electricity rates for the Massena Electric Department to allow high-density load customers\u00e2\u0080\u0094such as cryptocurrency companies\u00e2\u0080\u0094to be eligible for service under an individual service agreement. This is the second ruling by the commission on cryptocurrency rates."], "subsections": []}]}, {"section_title": "Washington State", "paragraphs": ["By some estimates, the state of Washington hosted 15%-30% of all Bitcoin mining operations globally in 2018. Like New York, Washington has affordable, reliable hydropower. Along the Columbia River in a region known as the Mid-Columbia Basin, five hydroelectric dams reportedly generate nearly six times as much power as the residents and local businesses can utilize. These hydroelectric facilities typically export the surplus electricity to larger electricity demand markets, such as Seattle or Los Angeles, which helps to keep the costs of electricity relatively low for local consumers at about $0.025/kWh (as compared to the U.S. average retail price of about $0.10/kWh).", "Since 2012, the Mid-Columbia Basin has reportedly attracted Bitcoin mining companies because of low-priced electricity, and the resulting growth in energy demand has challenged the cost structure of several of the region's public utility districts (PUDs). Several PUDs imposed a moratorium on new applications for mining operations. The moratorium was issued as public utilities are required to hear and rule on applications for future power contracts. If the applications for mining operations continued to be approved, the contracts could have outpaced the public utilities' original projections and planning for demand increases. For example, in Douglas County\u00e2\u0080\u0094where the bulk of the new mining projects are occurring\u00e2\u0080\u0094a new 84-MW substation that was previously expected to provide enough capacity to serve the area for the next 30 to 50 years under a normal population growth scenario was fully subscribed in less than a year. In response, the PUDs will have to find alternatives for meeting the growing demand, such as purchasing power on the open market. In addition, there are concerns over the cost of upgrading new infrastructure, including substations and transmission lines, and who would bare those costs.", "PUDs in the region are also challenged by \"rogue\" miners, those that set up server equipment in homes without any proper licensing, permits, or infrastructure upgrades. These servers have a larger demand for energy than the infrastructure in a residential community is designed to provide. It is relatively easy for the PUDs to locate rogue miners given the abnormal increase in power demand; once identified, the miners are required to obtain the proper equipment and permits but may simply move operations to another unpermitted location.", "Other PUDs in the region are adapting to increased interest in mining operations. In December 2018, Chelan County PUD approved a new rate for blockchain operations starting April 2019 and lifted a moratorium. While some are concerned that Bitcoin mining operations and related infrastructure could eventually lead to utility stranded assets, others see Bitcoin as a stepping block to a larger possibly more prosperous endeavor\u00e2\u0080\u0094researching alternative uses for blockchain technology. The Department of Commerce for Douglas County intends to build a \"blockchain innovation campus,\" which the county states could both assuage concerns over the volatility of the Bitcoin market and be an investment in the future diversification of the local economy. This approach, however, is not entirely without risk. For example, Giga Watt, a Bitcoin mining firm, declared bankruptcy in 2018, owing creditors nearly $7 million, $310,000 of which is owed to Douglas County Public Utility District. "], "subsections": []}, {"section_title": "International Case Studies", "paragraphs": ["Due to the decentralized nature of cryptocurrency mining, miners are not typically bound by geographic location. These characteristics typically impact mining profits and contribute to selecting the ideal location for operations. While some countries may have favorable energy costs, they may have restrictive regulations (e.g., China). Below are a few international locations that have garnered the attention of cryptocurrency miners. "], "subsections": [{"section_title": "Canada", "paragraphs": ["Canada generates affordable (albeit not the cheapest) hydroelectric power. Further, Canada has the added benefit of being in a cold weather climate, which can reduce overall cooling costs. In 2016, approximately 58% of total electricity generation in Canada was from hydropower resources. Canadian electricity providers generate 13 terawatt hours (TWh) more electricity than their domestic consumers need. Due to this excess in electricity some providers have offered incentives for miners. In January 2018, the public utility Hydro-Quebec offered electricity at a rate of $0.0394/kWh to cryptocurrency miners. ", "Miners responded, and by February 2018, Hydro-Quebec has received around 100 inquiries. Based on these inquiries, 10 TWh of the surplus would have been obligated to mining. Hydro-Quebec did not expect the high degree of new demand (reportedly several thousand megawatts worth of project proposals) for electricity and in March 2018 ceased processing requests until guidelines are developed. ", "In response to concerns with the sharp increase in electricity demand, Hydro-Quebec commissioned a study on the economic benefits of cryptocurrency mining. In May 2018, the study estimated that direct job creation for cryptocurrency mining ranges from 1.2 jobs per MW of a 20 MW operation to 0.4 jobs per MW for a 250 MW operation. Data centers, by comparison, can create between 5 and 25 jobs per MW.", "By June 2018, Hydro-Quebec announced it would triple the price it originally offered to new applicants for cryptocurrency mining operations (although the utility indicated this is a temporary adjustment until a final determination is made). Meanwhile towns across the Quebec Province have placed moratoriums on new mining operations citing energy demand, size, and noise concerns."], "subsections": []}, {"section_title": "Georgia", "paragraphs": ["Georgia has positioned itself as an attractive location for Bitcoin mining operations. In Georgia, mining company Bitfury's electricity rates reportedly range from around $0.05/kWh to $0.06/kWh. Georgia's low price of electricity can be attributed to large hydropower resources. In 2016, hydropower accounted for 81% of the total electricity generated. The low cost of electricity, plus a favorable regulatory environment, makes Georgia a favorable location for Bitcoin mining operations. ", "In 2015, the government of Georgia offered Bitfury a $10 million dollar loan to mine in Georgia. The government expanded a power plant to provide electricity to Bitfury's cryptocurrency mining facility at no additional cost. Local Bitcoin miners, however, are having a difficult time competing with Bitfury. Smaller local mining pools were not offered similar incentives and have been struggling to mine in a low-price environment. ", "Furthermore, some locals criticize the government for providing Bitfury incentives. The Georgian government has created tax-free zones for mining activities and electricity. Without a tax regime in place for mining, some Georgian lawmakers claim that Georgians are losing possible tax revenue. "], "subsections": []}, {"section_title": "Iran", "paragraphs": ["Iran also has relatively cheap electricity making it attractive to mining operations. Iran's electricity mix is dominated by natural gas. According to the U.S. Energy Information Administration, Iran is the third largest producer of dry natural gas in the world at nearly 9.5 trillion cubic feet (Tcf) in 2017 and most of it (6.9 Tcf) was consumed domestically. In addition, Iran subsidizes electricity produced from fossil fuels. According to International Energy Agency data from July 23, 2019, subsidies for electricity were valued at $16.6 billion in 2018. With energy subsidies, average electricity prices in Iran are reportedly around $0.006/kWh, far cheaper than even in China. ", "Despite the low price of electricity in Iran, miners face other challenges, such as U.S. sanctions. The decentralized and pseudonymous nature of Bitcoin transactions may make financial sanctions imposed on governments and individuals difficult to enforce. However, Bitcoin transactions are publicly recorded on its digital ledger. According to the U.S. Department of the Treasury Under Secretary for Terrorism and Financial Intelligence, ", "We are publishing digital currency addresses to identify illicit actors operating in the digital currency space. Treasury will aggressively pursue Iran and other rogue regimes attempting to exploit digital currencies and weaknesses in cyber and [Anti-Money Laundering and Countering the Financing of Terrorism] AML/CFT safeguards to further their nefarious objectives. ", "Since the reintroduction of U.S. sanctions, the Iranian government has recognized a potential role for cryptocurrencies. In January 2019, the Central Bank of Iran presented a draft of new cryptocurrency regulation. Digital currencies, not backed by the Central Bank, will be restricted as a form of payment inside Iran. The draft framework, however, would authorize rial-backed cryptocurrency use, ICOs, mining, and other crypto-related activities. These draft regulations and the possible negative consequences from the United States may keep some miners from relocating to Iran, despite the low cost of electricity.", "Iranian state media reported that Tadvin Electricity Company saw an increase in energy demand of 7% due to cryptocurrency mining activities in June 2018. In response, Iran's Power Ministry is reportedly considering enforcing special tariffs on cryptocurrency miners. The Iranian Cabinet reportedly ratified a bill in August 2019 that introduces new rules for the cryptocurrency market in Iran. The regulations reportedly stipulate that mining cryptocurrencies would be allowed in Iran if certain conditions are met. Conditions reportedly include receiving approval from Iran's Ministry of Industry and conducting mining activities outside of provincial centers (with exceptions for Tehran and Esfahan where additional restrictions may apply)."], "subsections": []}]}]}, {"section_title": "Blockchain Technology Potential for the Energy Sector", "paragraphs": ["Blockchain is a method of quickly validating transactions and of record keeping for large quantities of data. Some blockchains and cryptocurrencies do not operate through a decentralized, permission-less network like Bitcoin. Within the energy sector, a number of opportunities for blockchain technology have been proposed. These opportunities include smart contracts, distributed energy resource record keeping, and ownership records. ", "One of the more easily transferrable options for blockchain is trading Renewable Energy Credits (RECs). Using blockchain to trade RECs could provide customers the ability to purchase RECs without the need for a centralized entity to verify transactions. In October 2018, a subsidiary of the PJM Interconnection LLC\u00e2\u0080\u0094a regional transmission organization that operates an electric transmission system serving part of the Eastern Interconnection electricity grid \u00e2\u0080\u0094announced plans for testing blockchain technology to trade RECs.", "Other more advanced utilizations for blockchain in the energy sector could be highly disruptive. For example, there is increasing interest in net metering and a transactional grid (i.e., where producers of distributed energy resources, such as rooftop solar, can sell the electricity to nearby consumers). Prototype projects have relied upon blockchain technology among other peer-to-peer approaches to facilitate renewable energy transactions at the local level. Other peer-to-peer efforts include managing virtual power plant operations and enabling those who do not own renewable energy systems to pay for a portion of the energy generation of a host's system in exchange for a reduction on their utility bills (e.g., renters paying for a portion of an apartment building's rooftop solar system). ", "If such applications are found to be practical and economical, blockchain technology could alter the manner in which electricity customers and producers interact. Traditionally electric utilities are vertically integrated. Blockchain could disrupt this convention by unbundling energy services along a distributed energy system. For instance, a customer could directly purchase excess electricity produced from their neighbor's solar panels instead of purchasing electricity from the utility. On the one hand, this could result in a more transparent and efficient system. Blockchain could encourage more competition among generators and more flexibility and choice for consumers. On the other hand, unbundling energy services could lead to concerns over distribution control to accommodate the decentralization. Furthermore, storing vast quantities of data about critical infrastructure on distributed ledgers may introduce additional cybersecurity concerns. ", "The sale of electricity via blockchains that are independent of a conventional utility framework may be subject to significant legal interpretation, and potentially represents the intersection of various federal and state statutes and regulations. Jurisdiction over the sale of electricity from a distributed energy resource or electric vehicle charging station hinges upon its definition as either a retail transaction or a sale for resale. Retail transactions are generally defined by the Federal Energy Regulatory Commission (FERC) as \"sales made directly to the customer that consumes the energy product,\" whereas sales for resale are defined as \"a type of wholesale sales covering energy supplied to other electric utilities, cooperatives, municipalities, and Federal and state electric agencies for resale to ultimate consumers.\" States typically regulate retail electricity transactions, while FERC has jurisdiction over the transmission and wholesale sales of electricity in interstate commerce. ", "One survey by the Electric Power Research Institute, collected data on the potential barriers and advantages of blockchain in utilities. Of those surveyed, utilities in the United States were in early pilot stages or in the research phase, while some utilities in Europe had been using blockchain for over a year. Respondents identified opportunities and challenges to investment in blockchain technology with 77% of respondents identifying concerns that the energy industry \"lacks appropriate standards.\""], "subsections": []}, {"section_title": "Options for Congress to Address Cryptocurrency's Energy Consumption", "paragraphs": ["In addition to state and local policy efforts that seek to mitigate the regional effects of growth in cryptocurrency mining, there are options that could be adopted by the federal government to improve the energy efficiency of mining operations. Further, as the financial and energy sectors, among others, explore adopting blockchain, Congress may consider options to curb the energy intensity of the technology."], "subsections": [{"section_title": "Minimum Energy Conservation Standards", "paragraphs": ["An approach to reducing the energy consumption of cryptocurrencies could include the establishment of minimum energy conservation standards for the equipment engaged in mining activities or the cooling equipment that maintains efficient mining operations. ", "The Department of Energy (DOE) administers national energy efficiency standards for appliances and other equipment. DOE maintains federal energy efficiency standards as authorized under the Energy Policy and Conservation Act ( P.L. 94-163 , 42 U.S.C. \u00c2\u00a7\u00c2\u00a76201-6422) as amended. DOE's Appliance and Equipment Standards program sets minimum energy efficiency standards for approximately 60 commercial product categories. ", "There are no national standards for computer products. In 2012, DOE issued a request for information regarding miscellaneous residential and commercial electrical equipment, and in 2014 issued a proposed determination of coverage for computers and battery backup systems. Some view voluntary and market-driven approaches as more appropriate for computer technology than minimum energy conservation standards. Others state the importance of public and private sector collaboration in developing energy efficiency standards that are \"ambitious and achievable.\" Congress may consider whether minimum national energy efficiency standards that address cryptocurrency mining should be established. Such standards could focus on the specific technology used by cryptocurrency miners\u00e2\u0080\u0094ASICs\u00e2\u0080\u0094or could focus on computer and battery backup systems as defined within DOE's proposed determination. ", "DOE published energy conservation standards and test procedures for computer room air conditioners (CRACs) on May 16, 2012. According to the final rule, a CRAC is defined as:", "A basic model of commercial package air conditioning and heating equipment (packaged or split) that is: (1) Used in computer rooms, data processing rooms, or other information technology cooling applications; (2) rated for sensible coefficient of performance (SCOP) and tested in accordance with 10 CFR 431.96, and (3) not a covered consumer product under 42 U.S.C. 6291(1)\u00e2\u0080\u0093(2) and 6292. A computer room air conditioner may be provided with, or have as available options, an integrated humidifier, temperature, and/or humidity control of the supplied air, and reheating function. ", "DOE established 30 different equipment classes for CRAC and set minimum requirements for each class. Initial compliance dates of October 29, 2012, or October 29, 2013, were established, depending upon the equipment class. DOE is required to review test procedures for covered products at least once every seven years. The frequency requirement for reviewing energy efficiency standards of covered products is no later than six years after issuance of a final rule. DOE issued a request for information regarding test procedures for CRACs on July 25, 2017."], "subsections": []}, {"section_title": "Voluntary Energy Efficiency Standards", "paragraphs": ["In addition to minimum national energy efficiency standards issued by DOE, the U.S. Environmental Protection Agency (EPA) and DOE jointly administer the voluntary ENERGY STAR labeling program for energy-efficient products, homes, buildings, and manufacturing plants. ENERGY STAR has standards for miscellaneous residential and commercial electrical equipment\u00e2\u0080\u0094including computers and displays. ENERGY STAR also has specifications for enterprise servers, data storage equipment, small network equipment, large network equipment, and uninterruptible power supplies. Congress may consider whether ENERGY STAR specifications for cryptocurrency mining technology are needed, or whether existing specifications for equipment used in data centers are appropriate. "], "subsections": []}, {"section_title": "Data Center Energy Efficiency Standards", "paragraphs": ["Congress may also choose to consider the creation or adoption of energy efficiency standards for data centers used by mining companies. Verifiable information on cryptocurrency mining power usage is limited and based on what is voluntarily reported. Under these circumstances, it is reported that as cryptocurrency mining centralizes and professionalizes, mining facilities are taking on characteristics (e.g., power and cooling needs) that are similar to other large computing facilities, such as data centers. One option for improving the energy efficiency of Bitcoin mining could be to establish energy efficiency standards for data centers or large computing facilities.", "According to DOE, data centers are energy-intensive compared to other building types. DOE estimates that data centers account for approximately 2% of total U.S. electricity use. In 2014, data centers in the United States consumed an estimated 70 billion kWh, and are projected to consume approximately 73 billion kWh in 2020. The growth in cloud computing services has led to commitments by some data-centric companies to power data centers with renewable energy. ", "Although there are no national efficiency requirements for data centers, the federal government has taken steps to improve the efficiency of its own data centers. In 2010, the Federal Data Center Consolidation Initiative (DCCI) was established. The Federal Information Technology Acquisition Reform Act (FITARA, P.L. 113-291 ) was enacted on December 19, 2014, to establish a long-term framework through which federal IT investments could be tracked, assessed, and managed, to significantly reduce wasteful spending and improve project outcomes. The DCCI was superseded by the Data Center Optimization Initiative (DCOI) in 2016. The DCCI established and the DCOI maintains requirements for agencies to develop and report on strategies \"to consolidate inefficient infrastructure, optimize existing facilities, improve security posture, achieve cost savings, and transition to more efficient infrastructure.\" The DCOI also included energy efficiency goals for data centers: ", "1. Existing tiered data centers to achieve and maintain a power usage effectiveness (PUE) of less than 1.5 by September 30, 2018, and 2. New data centers must be designed and maintain a PUE no greater than 1.4, and are encouraged to achieve a PUE no greater than 1.2.", "For the PUE metric, the DCOI references Executive Order (E.O.) 13693 and the implementation instructions. E.O. 13693 was revoked by and replaced with E.O. 13834, which does not discuss data centers. The implementation instructions for E.O. 13834 state that \"data centers are energy intensive operations that contribute to agency energy and water use and costs,\" and encourage agencies \"to implement practices that promote energy efficient management of servers and Federal data centers,\" and \"to install sub-meters, including advanced energy meters, in data centers where cost effective and beneficial for tracking energy performance and improving energy management.\" The authorization of the DCOI was extended until October 1, 2020, by the FITARA Enhancement Act of 2017 ( P.L. 115-88 ). Congress may choose to consider whether federal data center PUE requirements should be extended to certain types of data centers outside the federal government. For Bitcoin mining facilities, reportedly little is known about their operations, including power usage effectiveness."], "subsections": []}]}, {"section_title": "Options for Federal Regulation of Blockchain Technology for Distributed Energy", "paragraphs": ["Rules and regulations governing the retail sale of electricity generally originate with a state public utility commission. An electric utility is defined in federal law as any person, state, or federal agency \"which sells electric energy.\" Definitions may be found in Public Utility Regulatory Policies, 16 U.S.C. Section 2602. This definition could potentially be interpreted that generators of electricity that make energy trades using blockchain technology are electric utilities by virtue of the fact that they sell electricity, and are therefore subject to all laws, requirements, and regulations pertaining to electric utilities. ", "Congress may choose to consider extending or clarifying FERC's role regulating blockchain technology use in the energy sector. While blockchain could be implemented as a means to validate peer-to-peer distributed electricity trading, these transactions could potentially still be subject to FERC oversight as engaging in a sale for resale. Applications of blockchain technology in the energy sector have been limited in scope to date; wide-scale adoption of blockchain technologies could pose additional vulnerabilities to grid operations. FERC may also have a role in considering whether the existing grid infrastructure is capable of handling more power movement at high speeds in response to blockchain users' transactions. Other potential issues could include data privacy, interoperability of technology solutions, and market structure. FERC has not issued guidance or announced standards associated with blockchain technologies. Within this context, utilities and industry groups may interpret the lack of guidance as a signal to continue business as usual. "], "subsections": [{"section_title": "Appendix. Select Algorithmic Approaches to Crypto-Mining", "paragraphs": ["As the Bitcoin network's energy consumption grows, some have questioned whether the proof-of-work (PoW) algorithm that is used by Bitcoin is sustainable. Many alternative algorithms exist. PoW and two approaches that are conceptually less energy intensive\u00e2\u0080\u0094proof-of-stake and proof-of-authority\u00e2\u0080\u0094are discussed below and illustrated in Figure A-1 .", "Proof-of-Work", "Under proof-of-work (PoW), miners are presented a difficult computational problem, or puzzle. PoW identifies a numeric value (called a nonce), which is used to generate an authenticator (hash value). The hash value ensures a user that the block of data sent has not changed. Hashes are determined by submitting the data through an algorithm that will output a string of characters. By inserting the nonce into the algorithm, miners seek to change the hash value. Identifying these valid nonces and hashes is computationally intensive, and the essence of mining. The security properties of hash algorithms are such that a miner tests nonces until a valid hash is found for a block. ", "Generally, by solving the problem or puzzle, miners win the opportunity to post the next block and possibly receive a reward for doing so. In the case of Bitcoin, miners who create and publish new blocks in the blockchain are rewarded with Bitcoin. Once the problem is solved and a valid hash is identified, the miner announces it to the community. Other users can validate the solution immediately\u00e2\u0080\u0094without going through the resource-intensive computation process\u00e2\u0080\u0094by having transparent access to the entire history of the blockchain's transaction ledger. Once the majority of the community validates and confirms the block, the next block can be added to the chain.", "Proof-of-Stake", "Proof-of-stake (PoS) depends on the community's actual stake in the currency instead of consuming energy in a race to be the first to solve computations. The more currency a \"forger\" (i.e., the PoS term in lieu of the PoW term \"miner\") holds, the more transactions can be validated. This method skips the energy-intense hashing race. All of the currency is already created, and the amount is stagnant. Forgers earn currency through transaction fees for building a new block (and thereby validating a transaction). A new block is determined by the level of stake (e.g., wealth) a forger has invested in the cryptocurrency. Thus, forgers put their own cryptocurrency investment at risk and therefore would likely only build a block for valid transactions. If a forger added a block to the blockchain based on an invalid transaction, it would risk losing its stake.", "Potential energy reductions from use of PoS are leading to changes in some major cryptocurrencies. Ethereum\u00e2\u0080\u0094a platform that uses a cryptocurrency called Ether\u00e2\u0080\u0094plans to move to a PoS system and is currently working on the remaining challenges, such as scaling a PoS system and maintaining a decentralized system. The Ethereum network expects to go through several upgrade phases in order to fully transition to PoS. The timeline for this transition has not yet been revealed, but this new solution upgrade, known as Serenity, was announced at DevCon 4. The Serenity upgrade would utilize a new PoS algorithm called \"Casper\" that is intended to overcome some of the drawbacks (e.g., centralizing a traditionally decentralized currency) of a PoS community.", "Proof-of-Authority", "Proof-of-authority (PoA) is another method of validating transactions in a blockchain. Like much of the terminology associated with blockchain, there is not a formal definition of PoA, and the definition may differ from one group to another, depending on the purpose of the blockchain platform. One understanding of PoA\u00e2\u0080\u0094as it relates to cryptocurrency\u00e2\u0080\u0094has validators curating their own reputation in order to achieve payout. Validators earn their reputation by running software to put transactions into blocks that require a link to properly identify that validator. This method places every person in the network on equal footing\u00e2\u0080\u0094everyone only has one identity. An alternative understanding of PoA, among the supply chain industry, uses a blockchain network to track logistics transparently. PoA provides a level of scalability and security within private networks that PoS or PoW cannot. ", "Limitations of PoS, PoA, and PoW", "PoS, PoA, and PoW algorithms have limitations. While PoS and PoA both reduce energy consumption levels and require far less sophisticated equipment, they both create a more controlling and limited environment. PoW requires community decisionmaking. PoS and PoA are more individualistic. This could undermine the concept of the decentralized nature of the distributed ledger system design, which is one of the fundamental principles in cryptocurrency. Cryptocurrency was developed to move away from the centralized power of the banking system and move toward a decentralized network. The Ethereum upgrade is intended to integrate several new aspects and is expected to achieve a more decentralized system even when compared with PoS. Ethereum's \"Phase Zero\" of the PoS specification was frozen on June 30, 2019, with the formal launch targeted for January 3, 2020.", "PoW is also vulnerable to attacks. PoW blockchains publish new blocks to the longest available chain. Although difficult to accomplish, a malicious actor could devote overwhelming computational resources to rewriting a blockchain\u00e2\u0080\u0094developing different transactions with different nonce and hash values. This is known as the \"51% attack.\" At a point where their chain is the longest, the malicious actor could publish the blockchain, and the system would accept it as the valid one. By rewriting the chain, the malicious actor would reestablish the distribution of resources (i.e., which accounts have Bitcoin and how much the account holds). This would require substantial energy consumption, space, equipment, and money, and would all have to be done covertly to avoid being caught. While this may appear to be difficult to execute, PoW algorithms are not invulnerable."], "subsections": []}]}]}}
{"id": "R46357", "title": "Congressionally Mandated Reports: Overview and Considerations for Congress", "released_date": "2020-05-14T00:00:00", "summary": ["Congress frequently requires the President, departments, agencies, and other entities of the federal government to transmit reports, notifications, studies, and other information on a specified timeline. Reporting requirements may direct agency officials to notify Congress or its committees of forthcoming actions or decisions, describe actions taken on a particular matter, establish a plan to accomplish a specified goal, or study a certain problem or concern.", "Reporting requirements may be designed to serve a range of purposes that facilitate congressional oversight of the executive branch and inform congressional decisionmaking. Required reports may help legislators monitor executive activity, ensure compliance with legislative intent, focus agency attention on matters of importance to Congress, and assess the effectiveness of existing programs and policies. Certain reports on complex or emerging issues may also help originate or inform legislative proposals.", "This report discusses the potential benefits and challenges of reporting requirements, and analyzes a number of statutory reporting requirements enacted during the 115 th Congress. (Patterns gleaned from these data may not be generalizable to requirements enacted in other years.) This report analyzes features common to legislative language establishing reporting requirements. In general, most identified statutory reporting provisions specify", "the information that must be contained in the report; the identity of the official or agency responsible for submission; the recipient of the report; the deadline by which the report must be submitted; and whethe r the requirement is for a one-time or recurring report.", "Depending on the type of reporting requirement, the reporting provision may also include language detailing whether the information reported to Congress must also be made publicly available, and how any potentially classified material contained in the report ought to be handled. Some provisions also permit certain activities only upon the submission of a report or notification to Congress, such as the waiver of sanctions, or the transfer or reprogramming of appropriated funds."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["Congressional oversight of the executive branch is a topic of perennial interest to many Members of Congress, their staff, and the public. Statutory reporting requirements can be useful in facilitating congressional oversight by enhancing congressional access to information about the implementation of public policy. Each year, Congress enacts a variety of requirements for the President, executive departments, agencies, and other federal government entities to provide advance notification of actions and decisions, to create plans and strategies to carry out certain activities, to summarize steps taken toward implementation of particular policies, or to study problems and issue recommendations. Reporting requirements can be used to accomplish a range of different goals. When designing such requirements, policymakers face a number of choices that may affect the content, frequency, and other features of the information that Congress receives as a result.", "This report provides an overview of statutory reporting requirements used by Congress to obtain information from the executive branch; describes the goals that various types of reporting requirements may help achieve; and analyzes statutory requirements enacted during the 115 th Congress to identify common features of legislative language used to establish such requirements."], "subsections": [{"section_title": "Statutory Reporting Requirements and Congressional Oversight", "paragraphs": ["Congress relies in large part on information provided by the executive branch in order to conduct oversight. To that end, Congress frequently enacts statutory provisions that require executive agencies and other federal entities to provide Congress or its committees with specified information. The type and amount of information required by these provisions can vary substantially. Congress often requires federal entities to provide, among other things, notifications of actions or decisions, data and statistics related to particular topics, reports describing the results of studies or evaluations, detailed plans to implement particular policies, and recommendations for legislative actions.", "The volume of statutory reporting requirements has varied over time, and policymakers have periodically taken steps to assess and/or reduce the number of reporting requirements. Still, Congress requires various federal entities to submit thousands of reports, notices, studies, and other materials each year, and new requirements for both singular and recurring reports continue to be enacted. ", "Statutory reporting requirements come in several common forms, and can serve a range of potentially overlapping purposes. These include ensuring compliance with legislative intent, gathering vital data and statistics, monitoring the implementation of public policy, evaluating the effectiveness of particular programs, assessing federal capacity to meet particular challenges, studying issues that are not well-understood, and obtaining recommendations for legislative or other action."], "subsections": []}]}, {"section_title": "Reporting Requirements: Types and Purposes", "paragraphs": ["Each year, Congress typically enacts a range of reporting requirements of varying types. Most requirements can be roughly divided into several categories: ", "notifications of actions or decisions; descriptive reports that summarize actions taken or provide other factual information; plans to accomplish particular goals; and studies or evaluations relating to a specific problem or concern. ", "Each category is discussed in additional detail below."], "subsections": [{"section_title": "Notification Requirements", "paragraphs": ["Many statutory provisions require that specified federal officials, typically Cabinet Secretaries or the heads of other federal entities, notify Congress either before or soon after taking some action. For instance, Congress may grant a Secretary the authority to take a particular action or waive a particular restriction, provided that the Secretary notifies Congress when utilizing such authority. In some instances, notification requirements specify additional information that must be submitted, such as justification supporting the relevant action. The National Defense Authorization Act for FY2019 ( P.L. 115-232 ), for example, provided the following notification requirement:", "(c) WAIVER.\u00e2\u0080\u0094The Secretary of the Navy may waive the limitation under subsection (a) with respect to a naval vessel if the Secretary submits to the congressional defense committees notice in writing of\u00e2\u0080\u0094", "(1) the waiver of such limitation with respect to the vessel;", "(2) the date on which the period of overseas forward deployment of the vessel is expected to end; and", "(3) the factors used by the Secretary to determine that a longer period of deployment would promote the national defense or be in the public interest.", "This type of reporting requirement can help Congress supervise executive branch activities as they occur. Notification requirements may also help Congress monitor the use of a new grant of authority in order to ensure compliance with legislative intent. Additionally, notification requirements may provide legislators an opportunity to prevent or modify certain executive actions with which they disagree, or to consult with relevant officials before such action is carried out. Further, the requirement to keep Congress notified of ongoing developments may provide a disincentive for the executive branch to take actions that might prompt a legislative response."], "subsections": []}, {"section_title": "Descriptive Reports", "paragraphs": ["A broad category of reporting requirements might be labeled descriptive reports on executive branch activities. This category of reports largely consists of descriptions of agency activity and other factual information. Requirements for descriptive reports often direct officials to provide Congress with data and statistics, to summarize actions taken by an agency on a particular policy matter, or to list actions taken during a specified time frame. The scope of content that may be required in this category of reports is wide-ranging. Some common formulations include requirements for agencies to provide", "data and statistics pertaining to a particular program or policy issue; summaries of major agency activities or accomplishments during a specified time frame; descriptions of the operations or results of a particular program; recurring reports on how certain appropriated funds are used; summaries of steps taken to implement a set of recommendations; or reports describing instances in which a Secretary or other executive branch official utilized a particular grant of authority during a specified time frame."], "subsections": []}, {"section_title": "Plans", "paragraphs": ["Congress may require agencies to submit plans to achieve particular goals. Requirements in this category often require agencies to describe timelines for achieving goals, and to establish performance indicators that will be used to measure progress. Certain acts, such as the Government Performance and Results Act (GPRA) and the GPRA Modernization Act of 2010, have established requirements for multiple executive branch agencies to create and submit agency-wide strategic and performance plans on a recurring basis. ", "In addition to agency-wide plans, Congress may enact provisions that require a particular agency to specify how it plans to accomplish specific goals, such as the establishment of a new program, or the implementation of new policies and procedures. For example, the Harry W. Colmery Veterans Educational Assistance Act of 2017 ( P.L. 115-48 ) included the following provision, requiring the Secretary of Veterans Affairs to outline plans to make changes and improvements to a particular information technology system:", "(a) PROCESSING OF CERTAIN EDUCATIONAL ASSISTANCE CLAIMS.\u00e2\u0080\u0094The Secretary of Veterans Affairs shall, to the maximum extent possible, make such changes and improvements to the information technology system of the Veterans Benefits Administration of the Department of Veterans Affairs to ensure that\u00e2\u0080\u0094", "(1) to the maximum extent possible, all original and supplemental claims for educational assistance under chapter 33 of title 38, United States Code, are adjudicated electronically; and ", "(2) rules-based processing is used to make decisions with respect to such claims with little human intervention. ", "(b) IMPLEMENTATION PLAN.\u00e2\u0080\u0094Not later than 180 days after the date of the enactment of this Act, the Secretary of Veterans Affairs shall submit to Congress a plan to implement the changes and improvements described in subsection (a).", "Reporting provisions of this sort might also be accompanied by requirements for regular status updates on how such a plan is being carried out.", "Agencies also may be required to submit plans that describe how funds appropriated for a particular purpose are to be spent, potentially as a precondition for the expenditure of such funds. For instance, a provision of the Consolidated Appropriations Act for FY2017 ( P.L. 115-31 ) required the Secretary of State to report to the House and Senate Committees on Appropriations prior to obligating certain funds:", "(3) PRE-OBLIGATION REQUIREMENTS.\u00e2\u0080\u0094Prior to the obligation of funds made available pursuant to paragraph (2) and following the submission of the Strategy as required in paragraph (1), the Secretary of State shall submit to the Committees on Appropriations a multi-year spend plan as described under this section in the explanatory statement described in section 4 (in the matter preceding division A of this Consolidated Act), including a description of how such funds shall prioritize addressing the key factors in countries in Central America that contribute to the migration of undocumented Central Americans to the United States.", "Requiring an agency to submit a plan to achieve a particular goal can force attention to matters of interest to Congress that an agency might otherwise choose to deprioritize. Further, plans that establish timelines and performance metrics can help policymakers more systematically measure and assess agency progress."], "subsections": []}, {"section_title": "Studies and Evaluations", "paragraphs": ["Congress often asks departments, agencies, and other federal entities to study a problem or emerging issue, evaluate government performance in a particular area, or perform some other analytical task. These provisions often include a requirement that the reporting entity issue recommendations for legislative or other actions to address particular concerns. Unlike descriptive reporting requirements, this category of requirements tends to address forward-looking concerns that may not be well or fully understood. Studies and evaluations required by Congress may serve to highlight issues and call attention to problems; to obtain expertise concerning issues that are technical or complex; to assess government performance and capacity; and to obtain recommendations and inform legislative decisionmaking.", "The John S. McCain National Defense Authorization Act for Fiscal Year 2019 ( P.L. 115-232 ), for example, established the National Security Commission on Artificial Intelligence, which was directed to \"review advances in artificial intelligence, related machine learning developments, and associated technologies,\" and to submit recurring reports to Congress and the President on the commission's findings and recommendations.", "Other reporting requirements direct agencies to conduct an evaluation of a program or policy. For example, The Federal Aviation Administration (FAA) Reauthorization Act of 2018 ( P.L. 115-254 ) directed the Secretary of Transportation to establish an advisory panel \"to review and evaluate the effectiveness of the FAA's personnel management system and performance management program\"; to develop a series of recommendations based on the results of the review; and to report its findings to the Secretary, the FAA Administrator, and the appropriate committees of Congress.", "In addition, Congress also enacts provisions that require the Government Accountability Office (GAO) to conduct studies and evaluations. GAO is a legislative branch agency that performs audits, evaluations, investigations, and other services that support Congress in its oversight role. GAO prepares reports, testimonies, and other products in response to requirements established in statute, contained in committee or conference reports, and in response to requests from committees and individual Members."], "subsections": []}]}, {"section_title": "Potential Benefits and Challenges of Reporting Requirements", "paragraphs": [], "subsections": [{"section_title": "Potential Benefits", "paragraphs": ["As discussed above, reporting requirements may be designed to serve several, potentially overlapping, purposes. These purposes include supervising executive activity, ensuring compliance with legislative intent, focusing agency attention on matters of importance to Congress, gathering factual information, assessing the effectiveness of programs and policies, and obtaining better understanding of complex or emerging issues. Reports on studies and evaluations may also help originate new legislative proposals and better inform legislative decisionmaking. Agency reviews of policies and procedures might provide useful information to Congress regarding potentially outdated or otherwise incompatible provisions of law that might need reconsideration. ", "The addition of reporting requirements might serve as a compromise position for legislators in certain circumstances. For example, Members may disagree on whether to provide the Executive with a certain grant of authority. Granting the authority, provided that the Executive reports to Congress on its use, might serve as a middle ground in such a scenario."], "subsections": []}, {"section_title": "Potential Drawbacks and Other Challenges", "paragraphs": ["Some observers have criticized the reporting burden that Congress places on the executive branch as excessive and costly. Although various entities have periodically attempted to estimate the financial cost of certain reporting requirements, efforts to estimate the total cost of reporting requirements are complicated by, among many factors, the lack of a comprehensive inventory of required reports. Nonetheless, preparing and submitting reports to Congress requires expenditure of agency resources\u00e2\u0080\u0094including time, money, and personnel.", "Ensuring the ongoing relevance of existing reporting requirements is another concern. Many statutory reporting requirements instruct that a report shall be submitted on a recurring basis, often without any sunset provision. Elimination or consolidation of reports that are considered to be duplicative, outdated, ineffective, or excessively costly has been a long-standing challenge for policymakers, and several attempts have been made to address the issue. Again, because no comprehensive inventory of reporting requirements currently exists, assessing the usefulness of existing requirements and deciding whether a contemplated new requirement is duplicative of existing requirements both pose challenges for Congress.", "Agency compliance with reporting requirements poses another difficulty. Due to a variety of factors, including vagueness in some statutory deadlines, and the lack of a complete inventory of reporting requirements and actual submissions, assessing whether required reports have been submitted (and whether the submission was timely) can be difficult. Moreover, the content of reports submitted to Congress may sometimes fall short of statutory requirements or congressional expectations."], "subsections": []}]}, {"section_title": "Designing Reporting Requirements: Considerations for Congress", "paragraphs": ["Although statutory reporting requirements vary widely in the scope and nature of the information they are designed to elicit, most requirements carry several common provisions. When designing these requirements, Congress faces a number of choices that may affect the content, frequency, and other features of the information ultimately received. To better understand various options and legislative considerations for creating reporting requirements, this report analyzes requirements enacted during the 115 th Congress that could be identified using a keyword search."], "subsections": [{"section_title": "Identifying Statutory Reporting Requirements Enacted in the 115th Congress", "paragraphs": [], "subsections": [{"section_title": "Challenges in Identifying Reporting Requirements", "paragraphs": ["CRS is unaware of a search method that can obtain an exact accounting of all reports required to be submitted to Congress. Perhaps the best-known compendium of statutory reporting requirements is Reports to be Made to Congress , a document published annually by the Clerk of the House pursuant to clause 2(b) of House Rule II. This document provides an extensive listing of reporting requirements and is sometimes used by analysts attempting to quantify the reporting burden placed by Congress on the executive branch. Although the information provided in the Clerk's report is valuable and extensive, it may not provide a complete accounting of statutory reporting requirements.", "Reports to Congress might arise from several sources. These include statutory reporting requirements; House, Senate, and conference committee report language; and interactions between Members of Congress and agency officials. The diversity of sources of reporting requirements means that any accounting of requirements based on a single source (such as public laws) will necessarily be incomplete.", "Congress utilizes reporting requirements to obtain a wide array of information through a variety of different products. Accordingly, variation in the legislative language used to refer to reports and their contents\u00e2\u0080\u0094as well as recipients of such reports\u00e2\u0080\u0094poses additional challenges in comprehensively identifying reporting requirements. For instance, Congress may require agencies to conduct and submit information regarding a review, evaluation, assessment, plan, strategy, analysis, or study; it may ask for a report, list, summary, briefing, notification, certification, or some other product; and agencies might be directed to submit this product to Congress, to committees of Congress, or to specified individuals (such as the Speaker of the House, the President Pro Tempore of the Senate, or the chairperson and ranking member of relevant committees)."], "subsections": []}, {"section_title": "Search Method", "paragraphs": ["To identify statutory reporting requirements created during the 115 th Congress, CRS searched the text of public laws enacted in the 115 th Congress for a variety of terms related to reports, and a variety of terms related to Congress. Each search result was examined to determine whether the language required a federal official, agency, or other entity to submit specified information to Congress, congressional committees, or congressional leaders. This search process resulted in the identification and analysis of over 3,000 reporting requirements enacted in statute during the 115 th Congress. "], "subsections": []}, {"section_title": "Limitations", "paragraphs": ["Although the described search method identified many reporting requirements, the results identified should not be considered a complete accounting of the reporting requirements placed on agencies during the 115 th Congress, and may not be representative of all reporting requirements. These limitations include the following:", "The diversity in statutory language used to establish reporting requirements makes it unlikely that any single keyword search will capture all of them. Some legislative provisions require that agencies produce a report, but do not specify a congressional recipient\u00e2\u0080\u0094requiring instead, for instance, that the agency make a copy of such report publicly available on its website. Because this search used the proximity between words related to reports and words related to Congress in order to identify reporting requirements, any requirements that did not specify a congressional recipient are not included. Agency reports to Congress may originate from statutory provisions, committee report language, and other sources. Because this search was conducted exclusively within the text of public laws, any reporting requirements contained in other sources will necessarily be excluded. Reporting requirements identified for this report are only those statutory requirements enacted during the 115 th Congress. Therefore, any patterns gleaned from these data may not be generalizable to requirements enacted in other years."], "subsections": []}]}, {"section_title": "Identified Reporting Requirements Enacted During the 115th Congress: Overview", "paragraphs": ["The search process outlined above identified 3,359 reporting requirements enacted during the 115 th Congress. Several laws contained the bulk of the 3,359 identified requirements. In particular, four acts\u00e2\u0080\u0094the Consolidated Appropriations Acts for FY2017 and FY2018, as well as National Defense Authorization Acts for FY2018 and FY2019 \u00e2\u0080\u0094together contain more than half of all identified requirements.", "Reporting requirements identified in appropriations measures generally differ from those identified in other measures. For instance, identified notification requirements were more common in appropriations acts than in other acts, which generally contained a greater number of provisions requiring agencies to submit other types of reports to Congress (descriptive reports, plans, and studies and evaluations). Appropriations measures enacted in the 115 th Congress contained numerous requirements for agencies and officials to notify Congress before (or soon after) the obligation, transfer, or reprogramming of certain funds. ", "The permanence of reporting provisions constitutes another difference between appropriations and nonappropriations measures. Reporting requirements contained in appropriations acts generally expire at the end of the relevant fiscal year. Still, some requirements contained in appropriations acts reappear in subsequent appropriations bills, effectively making them recurring provisions. "], "subsections": []}, {"section_title": "Specific Components of Statutory Reporting Provisions", "paragraphs": ["Analysis of reporting provisions enacted in the 115 th Congress identified several components common to statutory reporting requirements. Most reporting provisions specify", "the information that must be contained in the report; the identity of the official or agency responsible for submission; the recipient of the report; the deadline by which the report must be submitted; and whether the requirement is for a one-time or recurring report.", "Depending on the type of reporting requirement, the reporting provision may also include language detailing whether the information reported to Congress must also be made publicly available, and how any potentially classified material contained in the report ought to be handled. "], "subsections": [{"section_title": "Contents", "paragraphs": ["Every identified reporting requirement specifies some information that must be submitted to Congress. Analysis of these reporting provisions uncovered a wide range in the nature, type, and specificity of content required. As already mentioned, reporting provisions require many different products to be submitted to Congress, such as notifications, certifications, plans, summary reports, studies, assessments, and evaluations, among many others.", "Instructions regarding the information required to be submitted ranged from general to highly specific. For instance, some reporting provisions direct agencies to produce a \"status update,\" or a \"quarterly report\" on a particular topic, without detailing specific matters that must be analyzed or included in such reports. Other reporting provisions detail in length the components and subcomponents that an agency must include in its report to Congress. Greater specificity in the required contents of a report may help ensure agency attention to matters of congressional interest. However, adding additional components to a requirement may place greater burdens on the responsible agency.", "Although requirements for written reports are most common, Congress also periodically directs agencies to share information in other ways, including through briefings and testimony. For instance, the Save Our Seas Act of 2018 ( P.L. 115-265 ) provided the following:", "(a) IN GENERAL.\u00e2\u0080\u0094Not later than December 19 of 2018, and of each of the 2 subsequent years thereafter, the Commandant shall provide to the Committee on Commerce, Science, and Transportation of the Senate and the Committee on Transportation and Infrastructure of the House of Representatives a briefing on the status of implementation of each action outlined in the Commandant's final action memo dated December 19, 2017, regarding the sinking and loss of the vessel El Faro."], "subsections": []}, {"section_title": "Official or Agency Responsible for Submission", "paragraphs": ["Reporting requirements typically specify one or more federal officials responsible for submitting a report to Congress. Among the reporting requirements CRS identified, Cabinet Secretaries were most commonly directed to submit reports, though in many cases, the heads of other federal entities and subentities (officials with the titles Under Secretary, Deputy Secretary, Assistant Secretary, Director, Administrator, and Chief, among others) were also specified. In a smaller number of cases, no specific official was identified, but instead an agency or other entity (such as a federal commission, task force, board, or some other group) was made responsible for submission.", "Some reporting requirements direct multiple federal agencies to participate in creating and submitting a report. A common formulation is to direct that a report be prepared and submitted by an official, \"jointly,\" \"in consultation,\" or \"in coordination\" with one or more officials from other agencies. For example, the National Defense Authorization Act for FY2018 ( P.L. 1 15-91 ) directed that ", "the Secretary of Defense, in consultation with the Secretary of State, shall submit to the congressional defense committees, the Committee on Foreign Relations of the Senate, and the Committee on Foreign Affairs of the House of Representatives a report that contains a strategy to prioritize United States defense interests in the Indo-Asia-Pacific region.", "Some requirements may also direct federal officials to work with nonfederal entities in the creation of reports. These provisions might be used in cases where Congress desires agency consultation with outside experts on complex issues, or collaboration with other relevant stakeholders. For example, the Weather Research and Forecasting Innovation Act of 2017 ( P.L. 115-25 ) directs the Under Secretary of Commerce for Oceans and Atmosphere to \"assess the National Oceanic and Atmospheric Administration system for issuing watches and warnings regarding hazardous weather and water events,\" and specifies the following:", "(4) Consultation.\u00e2\u0080\u0094In conducting the assessment required by paragraph (1)(A), the Under Secretary shall\u00e2\u0080\u0094", "(A) consult with such line offices within the National Oceanic and Atmospheric Administration as the Under Secretary considers relevant, including the National Ocean Service, the National Weather Service, and the Office of Oceanic and Atmospheric Research; ", "(B) consult with individuals in the academic sector, including individuals in the field of social and behavioral sciences, and other weather services; ", "(C) consult with media outlets that will be distributing the watches and warnings; ", "(D) consult with non-Federal forecasters that produce alternate severe weather risk communication products; ", "(E) consult with emergency planners and responders, including State and local emergency management agencies, and other government users of the watches and warnings system, including the Federal Emergency Management Agency, the Office of Personnel Management, the Coast Guard, and such other Federal agencies as the Under Secretary determines rely on watches and warnings for operational decisions; and ", "(F) make use of the services of the National Academy of Sciences, as the Under Secretary considers necessary and practicable, including contracting with the National Research Council to review the scientific and technical soundness of the assessment required by paragraph (1)(A), including the recommendations developed under paragraph (2)(B)."], "subsections": []}, {"section_title": "Recipient of Report", "paragraphs": ["Among identified requirements, statutory language identifying the recipients of reports varies substantially. Report recipients specified in statute include Congress as a whole, specific congressional committees, committee chairs and ranking members, congressional leaders, executive branch officials, and a combination of several of the above. ", "Most identified reporting requirements direct that the report or notification in question be submitted to one or more standing committees of Congress, or to the chairs and ranking members thereof. Often, a report is directed to be submitted to a single pair of committees (e.g., both the House and Senate Committees on Appropriations), but some statutes designate multiple committees in each chamber as recipients of the report. ", "The second-most-common category of reporting requirements are those that specify Congress as the recipient, without identifying any particular committee. Reports submitted to Congress as a whole, and received by the Speaker of the House or the presiding officer in the Senate, are generally referred to the committee of jurisdiction in each chamber.", "The decision to specify Congress, a single pair of House and Senate committees, or several committees in each chamber may have consequences for dissemination of relevant information. Although some reports may contain information of value to multiple committees, reports submitted to Congress as a whole are generally referred to a single relevant committee in each chamber. Accordingly, directing that a report be submitted to Congress may not always guarantee that the report reaches all interested congressional audiences. ", "Some requirements direct that reports be submitted to the President, agency officials, or other recipients, in addition to Congress or its committees. For instance, some statutes establish independent panels that conduct studies and report their recommendations to both Congress and the President, particularly in cases where the panel may produce recommendations for both legislative and administrative action. Several identified requirements direct an agency to submit a report to both Congress and the Comptroller General, and require the Comptroller General to subsequently assess the contents of such report and submit findings and/or recommendations to Congress. Inclusion of such provisions may help Congress obtain an outside perspective on the matter in question, assess the quality of plans or recommendations issued by agencies, and help ensure that the report produced by the agency in question meets the standards laid out in statute. For instance, the FAA Reauthorization Act of 2018 ( P.L. 115-254 ) included the following provision:", "(a) STRATEGY.\u00e2\u0080\u0094Not later than 180 days after the date of enactment of this Act, the Administrator shall submit to the appropriate congressional committees and the Comptroller General of the United States a strategy to guide operations of surface transportation security inspectors that addresses the following: ", "(1) Any limitations in data systems for such inspectors, as identified by the Comptroller General. ", "(2) Alignment of operations with risk assessment findings, including an approach to identifying and prioritizing entities and locations for inspections. ", "(3) Measurable objectives for the surface transportation security inspectors program. ", "(b) GAO REVIEW.\u00e2\u0080\u0094Not later than 180 days after the date the strategy under subsection (a) is submitted, the Comptroller General of the United States shall review such strategy and, as appropriate, issue recommendations."], "subsections": []}, {"section_title": "Deadlines", "paragraphs": ["Nearly all identified reporting requirements contain some deadline by which the specified information must be submitted. In some cases, a calendar date is provided. More often\u00e2\u0080\u0094particularly in the case of notification requirements\u00e2\u0080\u0094the deadline is fixed to the occurrence of a specified event. For example, reports may be required to be submitted to Congress within a certain amount of time following", "enactment of legislation containing the requirement; a specified action taken by an agency or official (such as the waiver of a requirement, the completion of a review, or a determination that certain conditions have been met); submission of the President's budget request to Congress; termination of a program; and the end of a fiscal year or quarter."], "subsections": [{"section_title": "Calendar Date Deadline Versus Deadline Tied to a Specified Event", "paragraphs": ["The decision to require a report by a certain calendar date, or instead by some amount of time following a specified event, can involve trade-offs between a report's timeliness and the quality of the information received. For instance, setting a calendar-date deadline for submission of a report may help ensure that relevant information is submitted to Congress in a timely and predictable manner. However, any delay in the actual enactment of such a requirement would have the practical effect of reducing the amount of time available to the agency to produce the report. Instead, fixing the deadline to an event\u00e2\u0080\u0094for instance, by instructing that the report be submitted within 180 days of enactment (or some other time frame)\u00e2\u0080\u0094would provide the agency with the same amount of time to complete the report, regardless of when the requirement is enacted. This may help ensure that an agency has sufficient time to produce a report that addresses congressional concerns. ", "On the other hand, tying the deadline to an event rather than establishing a calendar-date deadline may delay the actual submission date of the report in question. Additionally, it may be more difficult for legislators and staff to oversee compliance with complex deadlines. Some report deadlines are tied to events that are less easily observed than the enactment of legislation or the submission of the President's budget request. For instance, reports and notifications may be required to be submitted within some period of time following (or in advance of) a specific action taken by an agency official, such as waiving a requirement, awarding a contract, or certifying that certain conditions have been met. In such cases, knowing when to expect a report to be delivered and assessing agency compliance with statutory requirements may be challenging."], "subsections": []}, {"section_title": "No Fixed Deadline", "paragraphs": ["Occasionally, reporting requirements do not specify a deadline for submission. Instead, these provisions may provide some other incentive for agencies to submit the information\u00e2\u0080\u0094often by making funds available for a particular purpose, or permitting some other action only after the report is submitted. For example, the National Defense Authorization Act for FY2018 ( P.L. 115-91 ) limited the availability of funds authorized to be appropriated for the upgrade of certain vehicles, until the Secretary of the Army submitted specified information:", "(a) LIMITATION.\u00e2\u0080\u0094Of the funds authorized to be appropriated by this Act or otherwise made available for fiscal year 2018 for the upgrade of M113 vehicles of the Army, not more than 50 percent may be obligated or expended until the date on which [the] Secretary of the Army submits to the congressional defense committees the report described in subsection (b).", "(b) REPORT.\u00e2\u0080\u0094The report described in this subsection is a report setting forth the strategy of the Army for the upgrade of M113 vehicles that includes the following:", "(1) A detailed strategy for upgrading and fielding M113 vehicles.", "(2) An analysis of the manner in which the Army plans to address M113 vehicle survivability and maneuverability concerns.", "(3) An analysis of the historical costs associated with upgrading M113 vehicles, and a validation of current cost estimates for upgrading such vehicles.", "(4) A comparison of\u00e2\u0080\u0094", "(A) the total procurement and life cycle costs of adding an echelon above brigade requirement to the Army MultiPurpose Vehicle; and", "(B) the total procurement and life cycle costs of upgrading legacy M113 vehicles.", "(5) An analysis of the possibility of further accelerating Army Multi-Purpose Vehicle production or modifying the fielding strategy for the Army Multi-Purpose Vehicle to meet near-term echelon above brigade requirements."], "subsections": []}]}, {"section_title": "Frequency of Reports", "paragraphs": ["Some reports to Congress are designed to be submitted once, whereas others are to be submitted on a periodic basis. Whether a reporting requirement is one-time or reoccurring may depend on the type of requirement and the nature of the information being reported. "], "subsections": [{"section_title": "One-Time Reports", "paragraphs": ["Many statutes provide for one-time, nonrecurring reports to Congress. Often, these reports are designed to address a particular problem or concern. Studies and evaluations, for instance, are commonly one-time reports. One-time reports constituted the single largest category of identified reporting requirements enacted in the 115 th Congress."], "subsections": []}, {"section_title": "Regularly Recurring Reports", "paragraphs": ["Reports are also commonly required to be submitted at regular intervals. Recurring reports to Congress might include, among other things, periodic status updates on the implementation of a particular policy, annual summaries of agency activity and accomplishments, regularly reported data and statistics related to a particular program or policy issue, and quarterly reports on how certain funds are obligated and expended. ", "Among identified regularly recurring reporting requirements, annual and quarterly reporting intervals were the most common, though intervals ranged from as short as every month to as long as every five years. Requiring reports on a frequent basis may help Congress maintain close supervision of executive activity; on the other hand, frequent reports may increase the burden placed on agency resources.", "A number of identified recurring requirements contain a sunset date for the recurring reporting provision. For example, the SUPPORT for Patients and Communities Act ( P.L. 115-271 ) included the following recurring reporting requirement:", "(3) ADDITIONAL REPORTS.\u00e2\u0080\u0094Not later than 1 year after the date of enactment of this Act, and annually thereafter until the date that is 5 years after the date of enactment of this Act, the Attorney General shall submit to Congress a report providing, for the previous year\u00e2\u0080\u0094", "(A) the number of reports of suspicious orders;", "(B) a summary of actions taken in response to reports, in the aggregate, of suspicious orders; and", "(C) a description of the information shared with States based on reports of suspicious orders.", "In the long term, automatic expiration of recurring reporting requirements may reduce the reporting burden placed on agencies, and help legislators and staff avoid the task of searching for and identifying outdated or duplicative requirements."], "subsections": []}, {"section_title": "Reports Required Under Specified Circumstances", "paragraphs": ["In contrast to requirements for one-time reports and reports provided at fixed intervals, some provisions mandate the submission of a report to Congress only under particular circumstances. Many such provisions, for instance, direct an agency official to report to Congress each time a certain action is taken. Depending on how often the circumstances arise, an individual requirement of this type may give rise to the possibility of zero, one, or multiple actual reports to Congress. For instance, the Veterans Appeals Improvement and Modernization Act of 2017 ( P.L. 115-55 ) directs the Secretary of Veterans Affairs to report to Congress \"whenever\" the Secretary makes a certain determination:", "(a) AUTHORIZATION.\u00e2\u0080\u0094", "(1) IN GENERAL.\u00e2\u0080\u0094The Secretary of Veterans Affairs may carry out such programs as the Secretary considers appropriate to test any assumptions relied upon in developing the comprehensive plan required by section 3(a) and to test the feasibility and advisability of any facet of the new appeals system.", "(2) REPORTING REQUIRED.\u00e2\u0080\u0094Whenever the Secretary determines, based on the conduct of a program under paragraph (1), that legislative changes to the new appeals system are necessary, the Secretary shall submit to the Committee on Veterans' Affairs of the Senate and the Committee on Veterans' Affairs of the House of Representatives notice of such determination.", "Requirements for agencies to notify Congress of actions or decisions commonly fall into this category. Examples include, among many others, provisions that require congressional notification prior to (or soon after) the obligation, transfer, or reprogramming of funds; awarding a certain type of contract; waiving sanctions; waiving a specified limitation; or utilizing some grant of authority. For example, the Agriculture Improvement Act of 2018 ( P.L. 115-334 ) provided that", "[t]he Secretary shall not close any field office of the Natural Resources Conservation Service unless, not later than 30 days before the date of the closure, the Secretary submits to the Committee on Agriculture of the House of Representatives and the Committee on Agriculture, Nutrition, and Forestry of the Senate a notification of the closure.", "As previously discussed, in addition to helping Congress monitor agency activity on a close-to-real-time basis, this type of requirement may provide an opportunity to consult with executive branch officials about a contemplated action, or to take steps to modify, prevent, or reverse the action in cases of disagreement."], "subsections": []}]}, {"section_title": "Other Components", "paragraphs": [], "subsections": [{"section_title": "Actions Permitted Following Submission of Report", "paragraphs": ["As noted above, some statutes create requirements for reports and notifications that, upon or after submission, clear the way for some exercise of authority or permit some other action by executive branch officials. For instance, Congress may provide executive branch officials with the discretion to waive certain requirements, provided that the official provides Congress with justification for the decision. The Countering America's Adversaries through Sanctions Act, for example, includes a number of provisions that permit the President to waive or terminate particular sanctions, contingent upon the submission of specified information to Congress. Other statutes place limitations on how certain funds may be obligated, contracts may be awarded, or other authorities may be used, until a particular report is submitted. "], "subsections": []}, {"section_title": "Public Release", "paragraphs": ["Requiring that a report be made publicly available may enhance access to and awareness of its contents, among both legislators and the general public. Certain reports to Congress are made public by default\u00e2\u0080\u0094for instance, all unclassified GAO reports are made publicly available on the agency website. However, other agencies submitting reports to Congress or its committees may not be required to be make such reports publicly available, absent some explicit instruction. Some reporting provisions do contain such instructions, often directing that a report be made available on an agency's public website. The Consolidated Appropriations Act for FY2018 included a blanket provision that gave agency officials discretion over whether to make certain reports public:", "(1) Requirement.\u00e2\u0080\u0094Any agency receiving funds made available by this Act shall, subject to paragraphs (2) and (3), post on the publicly available Web site of such agency any report required by this Act to be submitted to the Committees on Appropriations, upon a determination by the head of such agency that to do so is in the national interest.", "(2) Exceptions.\u00e2\u0080\u0094Paragraph (1) shall not apply to a report if\u00e2\u0080\u0094", "(A) the public posting of such report would compromise national security, including the conduct of diplomacy; or", "(B) the report contains proprietary, privileged, or sensitive information.", "(3) Timing and Intention.\u00e2\u0080\u0094The head of the agency posting such report shall, unless otherwise provided for in this Act, do so only after such report has been made available to the Committees on Appropriations for not less than 45 days: Provided , That any report required by this Act to be submitted to the Committees on Appropriations shall include information from the submitting agency on whether such report will be publicly posted."], "subsections": []}, {"section_title": "Classified Annex", "paragraphs": ["Some reports required to be submitted to Congress may contain national security classified material, which may restrict who may access the information, how an agency might provide it to Congress, and how it may be accessed. In such cases, reporting provisions may require submission of a nonclassified report, with a classified annex. Separating classified and nonclassified material may increase a given report's usefulness by facilitating policymakers' access to relevant nonclassified materials. "], "subsections": []}]}]}]}, {"section_title": "Concluding Observations", "paragraphs": ["Reporting requirements can serve as a critical component of legislative oversight. They may be designed to accomplish a variety of purposes, including monitoring executive activity, obtaining information on complex or emerging issues, and generating ideas and recommendations for legislative action. However, legislators, agencies, and outside observers have periodically voiced concerns regarding the volume and cost of reporting requirements, whether certain requirements are duplicative and ineffective, and the difficulty in monitoring agency compliance with such requirements. ", "Each concern noted above is complicated by the lack of a comprehensive inventory of existing report requirements and report submissions. Legislators have periodically introduced legislation to create a centralized repository of congressionally mandated reports. For example, the Access to Congressionally Mandated Reports Act ( H.R. 736 , 116 th Congress) would, among other things, require the Government Publishing Office (GPO) to create a publicly available online portal of \"all congressionally mandated reports,\" subject to certain exceptions. The bill was passed by the House on July 7, 2019.", "Establishing a centralized, public repository for congressionally mandated reports may address a number of concerns related to the reporting process. For instance, a comprehensive database of submitted reports may allow Congress to more easily monitor whether an expected report has been submitted, and whether it was submitted in a timely fashion. Additionally, it may facilitate greater accessibility to and awareness of reports submitted to Congress. Greater awareness of reports that have already been submitted may in turn help Congress make better use of information provided by agencies, and also help determine whether contemplated requirements for new reports may be duplicative of existing reports. Lastly, a centralized database of submitted reports may help Congress better assess the reporting burden placed on federal agencies.", "On the other hand, creating a database of all submitted reports would not necessarily provide Congress with a complete picture of reporting requirements . Reports that are required, but are not submitted, would not appear in a repository of submitted reports, potentially limiting its use as a tool for monitoring agency compliance. For reasons already discussed, obtaining a complete inventory of existing requirements would be a complicated and potentially resource-intensive task. Additionally, the establishment of any centralized repository would require ongoing maintenance and other resources as new requirements are established and new reports are submitted. However, an incomplete understanding of the full range of existing requirements may make it difficult or impossible to determine the total volume of reports required, to attempt to identify and eliminate outdated requirements, to assess agency compliance, or to determine whether a contemplated new reporting requirement is duplicative of existing requirements."], "subsections": []}]}}
{"id": "R46336", "title": "COVID-19: Potential Implications for International Security Environment\u2014Overview of Issues and Further Reading for Congress", "released_date": "2020-05-08T00:00:00", "summary": ["Some observers argue the COVID-19 pandemic could be a world-changing event with potentially profound and long-lasting implications for the international security environment and the U.S. role in the world. Other observers are more skeptical that the COVID-19 pandemic will have such effects.", "Observers who argue the COVID-19 pandemic could be world-changing for the international security environment and the U.S. role in the world have focused on several areas of potential change, including the following, which are listed here separately but overlap in some cases and can interact with one another:", "world order, international institutions, and global governance; U.S. global leadership and the U.S. role in the world; China's potential role as a global leader; U.S. relations and great power competition with China and Russia, including the use of the COVID-19 pandemic as a theme or tool for conducting ideological competition; the relative prevalence of democratic and authoritarian or autocratic forms of government; societal tension, reform, transformation, and governmental stability in various countries; the world economy, globalization, and U.S. trade policy; the characteristics and conduct of conflict; allied defense budgets and U.S. alliances; the cohesion of the European Union; the definition of, and budgeting for, U.S. national security; U.S. defense strategy, defense budgets, and military operations; U.S. foreign assistance programs and international debt relief; activities of non-state actors; the amount of U.S. attention devoted to ongoing international issues other than the COVID-19 pandemic; and the role of Congress in setting and overseeing the execution of U.S. foreign and defense policy.", "Issues for Congress may include whether and how the COVID-19 pandemic could change the international security environment, whether the Trump Administration's actions for responding to such change are appropriate and sufficient, and what implications such change could have for the role of Congress in setting and overseeing the execution of U.S. foreign and defense policy.", "Congress's decisions regarding these issues could have significant and even profound implications for U.S. foreign and defense policy, and for the status of Congress as a co-equal branch relative to the executive branch in setting and overseeing the implementation of U.S. foreign and defense policy."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["Some observers argue the COVID-19 pandemic could be a world-changing event with potentially profound and long-lasting implications for the international security environment and the U.S. role in the world. Other observers are more skeptical that the COVID-19 pandemic will have such effects. This report provides a brief overview of some potential implications the COVID-19 pandemic might have for the international security environment and the U.S. role in the world, and a bibliography of CRS reports and other writings for further reading.", "Issues for Congress may include whether and how the COVID-19 pandemic could change the international security environment, whether the Trump Administration's actions for responding to such change are appropriate and sufficient, and what implications such change could have for the role of Congress in setting and overseeing the execution of U.S. foreign and defense policy.", "Congress's decisions regarding these issues could have significant and even profound implications for U.S. foreign and defense policy, and for the status of Congress as a co-equal branch relative to the executive branch in setting and overseeing the implementation of U.S. foreign and defense policy.", " Appendix A presents a list of CRS reports that provide more in-depth discussions of issues presented in this report. Appendix B presents a list of additional writings reflecting various perspectives on these issues. A separate CRS report discusses the question of whether the U.S. role in the world is changing as a result of factors other than the C OVID-19 pandemic."], "subsections": []}, {"section_title": "Overview of Potential Implications", "paragraphs": ["Areas of potential change reflected in writings from observers who view the COVID-19 pandemic as a potentially world-changing event include but are not limited to those discussed below. Although these areas of potential change are presented separately, they overlap in some cases and can interact with one another."], "subsections": [{"section_title": "World Order, International Institutions, and Global Governance", "paragraphs": ["Some observers have focused on the possibility that the COVID-19 pandemic could cause or accelerate a decline or erosion in the U.S.-led liberal international order that has operated since World War II, in the international institutions and norms that contribute to it, and consequently in global governance. A decline or erosion in the U.S.-led liberal order or the international institutions form part of it could set the stage for its replacement by a new or modified world order reflecting changed rules, norms, and practices, or by a more disorderly world."], "subsections": []}, {"section_title": "U.S. Global Leadership and Role in the World", "paragraphs": ["Some observers have focused on how, in their view, the COVID-19 pandemic is demonstrating that the United States is maintaining or reasserting its role as global leader, while other observers suggest that, in their view, the COVID-19 pandemic is demonstrating that the United States has chosen to withdraw from or is no longer capable of performing that role. The COVID-19 pandemic could influence discussions over the costs and benefits to the United States of acting as a global leader, not only with respect to global health but across a range of issues. Related to this, some observers have focused on how the COVID-19 pandemic may be illustrating the strengths or weaknesses of the Trump Administration's \"America First\" approach to the U.S. role in the world, or the merits of the U.S. system of government and economic model as potential examples for other countries to emulate."], "subsections": []}, {"section_title": "China's Potential Role as a Global Leader", "paragraphs": ["Some observers have focused on how the COVID-19 pandemic may be providing insight into whether China desires and is working to become a global leader on par with (or in the place of) the United States, whether China has a capacity for doing so, and how other countries might view China acting in such a role. China's transparency, particularly regarding its actions in the early days of its COVID-19 outbreak in Wuhan, as well as China's so-called donation diplomacy or mask diplomacy\u00e2\u0080\u0094meaning China's actions to send medical supplies and personnel to other countries, and the highlighting of these actions in statements from China's government and state-controlled media\u00e2\u0080\u0094have become new elements of an ongoing discussion regarding China's capacity or suitability for acting as a global leader. This ongoing discussion includes consideration of a range of other issues, including China's actions for implementing its Belt and Road Initiative, China's territorial disputes with other countries, its participation in international organizations, and its technology-development and international lending activities."], "subsections": []}, {"section_title": "U.S. Relations and Great Power Competition with China and\u00c2 Russia", "paragraphs": ["Some observers have focused on how the COVID-19 pandemic has become a significant element in U.S-China relations, and in U.S. great power competition with China and Russia, which the Trump Administration has placed at the center of its national security construct. For some observers, the COVID-19 pandemic presents an opportunity for U.S.-China cooperation on an important international issue of common interest. For other observers, the COVID-19 pandemic is a major new source of dispute and arena of competition between the two countries, and is causing U.S.-China relations to harden more fully into a Cold War-like adversarial situation. Some observers have focused on how the COVID-19 pandemic provides a prominent new factor in the discussion of whether the United States should decouple its economy from China's and reduce its dependence on China for key materials and products, including hospital supplies and pharmaceuticals. Some observers have focused on whether the U.S. and Chinse responses to the COVID-19 pandemic will affect views around the world regarding the relative merits of the U.S. and Chinese forms of government and economic models as potential examples to emulate."], "subsections": []}, {"section_title": "Democracy, Authoritarianism, and Autocracy", "paragraphs": ["Related to the point above about forms of government, some observers have focused on how the COVID-19 pandemic appears to be challenging democratic systems in various countries and providing national leaders with an opportunity or rationale for taking actions to seize greater power and move their countries away from democracy and toward authoritarianism or autocracy, or strengthen or consolidate their already-existing authoritarian or autocratic forms of government. As discussed in another CRS report, a key element of the traditional U.S. role in the world since World War II has been to defend and promote freedom, democracy, and human rights as universal values, while criticizing and resisting authoritarian and illiberal forms of government where and when possible."], "subsections": []}, {"section_title": "Societal Tension, Reform, and Transformation, and Governmental\u00c2 Stability", "paragraphs": ["Beyond the specific point above about potential movement toward greater authoritarianism and autocracy, some observers have focused on the possibility that the COVID-19 pandemic more generally could cause increased social tensions in certain countries, could lead to (or present opportunities for) societal reforms and transformations, and could destabilize and perhaps cause the downfall of governments, akin to the effects of certain past world-changing events, such as World War I. Such changes could alter the political orientations, national strategies, foreign policies, and defense policies of the countries in which they occur, potentially inducing follow-on effects among governments and other global actors that interact with those countries."], "subsections": []}, {"section_title": "World Economy, Globalization, and U.S. Trade Policy", "paragraphs": ["Some observers have focused on the possibility that the COVID-19 pandemic could lead to significant and potentially long-lasting changes to the world economy that in turn could reshape the international security environment. Among other things, observers have focused on the possibility that the COVID-19 situation could be leading the world economy into a significant recession\u00e2\u0080\u0094an effect that could contribute to the societal tensions mentioned in the previous point. Noting that the COVID-19 pandemic has reduced world trade volumes and disrupted global supply chains, they have focused on the question of whether economic globalization will as a result be slowed, halted, or reversed. Observers are monitoring how such effects could influence or be influenced by U.S. trade policy."], "subsections": []}, {"section_title": "Allied Defense Spending and U.S. Alliances", "paragraphs": ["The so-called burden-sharing issue\u00e2\u0080\u0094that is, the question of whether U.S. allies are shouldering a sufficient share of the collective allied defense burden\u00e2\u0080\u0094has long been a point of contention between the United States and its allies around the globe, and it has been a matter of particular emphasis for the Trump Administration. Some observers have focused on the possibility that the costs that U.S. allies are incurring to support their economies during stay-at-home/lockdown periods will lead to offsetting reductions in their defense expenditures. Some observers argue that the NATO allies in Europe in particular may experience contractions in their defense budgets for this reason. More generally, some observers argue that if the COVID-19 pandemic causes a global recession, allied defense budgets could be further reduced\u00e2\u0080\u0094a potential impact that could affect not only NATO allies in Europe, but those in Asia as well."], "subsections": []}, {"section_title": "European Union", "paragraphs": ["Some observers have additionally focused on the question of whether the COVID-19 pandemic is creating tensions among the European Union member states, particularly in connection with actions they are taking to close their national borders, and what impact the COVID-19 pandemic might ultimately have on the cohesion of the European Union."], "subsections": []}, {"section_title": "Definition of, and Budgeting for, U.S. National Security", "paragraphs": ["Some observers have focused on the question of whether the COVID-19 situation will (or should) lead to a revised definition of U.S. national security, particularly one that is less military-centric and more focused on what are sometimes called human-security-oriented challenges or global issues, such as climate change, that are currently more at the periphery of U.S. national security policy and plans. Such a change in definition could lead to a changed allocation of funding between the Department of Defense (DOD) and other government agencies that perform national-security-related tasks, a realignment of resources within DOD between combat-oriented programs and other programs (such as those related to DOD's mission of providing defense support of civil authorities), and perhaps a changed allocation of funding among the agencies other than DOD that perform national-security-related tasks."], "subsections": []}, {"section_title": "U.S. Defense Strategy, Defense Budget, and Military Operations", "paragraphs": ["Some observers have focused on the question of whether the large federal expenditures being made in response to the domestic U.S. economic effects of the COVID-19 pandemic, and the impact these expenditures will have on the federal budget deficit and federal debt, could lead to greater constraints in coming years on U.S. defense spending levels. As a follow-on matter, these observers are additionally focusing on the question of whether responding to such increased constraints will (or should) lead to revisions in U.S. defense strategy, changes in U.S. defense programs, and a reduction or termination of certain overseas U.S. military operations."], "subsections": []}, {"section_title": "U.S. Foreign Assistance and International Debt Relief", "paragraphs": ["Some observers have focused on the question of whether the COVID-19 pandemic is providing a new lens through which to measure the value of U.S. foreign assistance and international debt relief in promoting U.S. interests, particularly in connection with the previously mentioned issue of whether to revise the definition of U.S. national security to make it less military-centric."], "subsections": []}, {"section_title": "Non-state Actors", "paragraphs": ["Some observers have focused on how non-state actors such as international terrorist and criminal organizations are reacting to the COVID-19 pandemic, and on how much priority should be given to countering such actors in the future, particularly in a context of a changed definition of U.S. national security."], "subsections": []}, {"section_title": "U.S. Attention to International Issues Other than COVID-19", "paragraphs": ["Some observers have focused on whether responding to the COVID-19 pandemic is affecting the time and resources that U.S. leaders and agencies can devote to addressing other international issues of concern to the United States that predate but continue to exist in parallel with the COVID-19 pandemic. Administration officials have warned other countries to not take actions during the COVID-19 pandemic to challenge U.S. interests around the world or otherwise test U.S. resolve or responsiveness on the thinking that the COVID-19 pandemic is distracting U.S. officials from other concerns or reducing U.S. capacity for responding to any such challenges."], "subsections": []}, {"section_title": "Role of Congress", "paragraphs": ["At least one observer has focused on the issue of how the COVID-19 pandemic has affected the ability of Congress to conduct oversight of the Administration's foreign policy actions."], "subsections": []}, {"section_title": "Further Reading", "paragraphs": ["For further reading on the issues outlined above, see the CRS reports presented in Appendix A and the additional writings presented in Appendix B ."], "subsections": []}]}, {"section_title": "Potential Issues for Congress", "paragraphs": ["Potential issues for Congress regarding implications of the COVID-19 pandemic for the international security environment and the U.S. role in the world include but are not limited to the following:", "Will the COVID-19 pandemic change the international security environment, and if so, in what ways? How clearly can potential changes be anticipated? How should the United States respond to potential changes in the international security environment arising from the COVID-19 pandemic and its effects, particularly in light of uncertainty regarding the precise nature and likelihood of these changes? How might U.S. action or inaction influence or accelerate these changes? What actions is the Administration developing to respond to potential changes in the international security environment arising from the COVID-19 pandemic? Does Congress have sufficient visibility into these actions? Are these actions appropriate and sufficient? What metrics should Congress use to assess them? What implications do potential changes in the international security environment arising from the COVID-19 pandemic have for the role of Congress in setting and overseeing the execution of U.S. foreign and defense policy? Is Congress appropriately organized for maintaining Congress as a co-equal branch of government relative to the executive branch in addressing these potential changes? If the COVID-19 pandemic becomes a world-changing event for the international security environment and the U.S. role in the world, what implications, if any, might that have for congressional organization and operations?", "Appendix A. Related CRS Reports", "CRS reports that provide more in-depth discussions of specific issues discussed in this report include the following, which are presented in alphabetical order of their titles:", "CRS In Focus IF11496, COVID-19 and Foreign Assistance: Issues for Congress , by Nick M. Brown, Marian L. Lawson, and Emily M. Morgenstern. CRS Insight IN11288, COVID-19 and the Defense Industrial Base: DOD Response and Legislative Considerations , by Heidi M. Peters. CRS Insight IN11279, COVID-19 and U.S. Iran Policy , by Kenneth Katzman. CRS Legal Sidebar LSB10424, COVID-19: An Overview of Trade-Related Measures to Address Access to Medical Goods , by Nina M. Hart. CRS Report R46304, COVID-19: China Medical Supply Chains and Broader Trade Issues , coordinated by Karen M. Sutter. CRS Insight IN11305, COVID-19: Defense Support of Civil Authorities , by Lawrence Kapp and Alan Ott. CRS In Focus IF11421, COVID-19: Global Implications and Responses , by Sara M. Tharakan et al. CRS Insight IN11280, COVID-19: Industrial Mobilization and Defense Production Act (DPA) Implementation , by Michael H. Cecire and Heidi M. Peters. CRS Legal Sidebar LSB10436, COVID-19: International Trade and Access to Pharmaceutical Products , by Nina M. Hart. CRS In Focus IF11434, COVID-19: U.S.-China Economic Considerations , by Karen M. Sutter and Michael D. Sutherland. CRS Report R46270, Global Economic Effects of COVID-19 , coordinated by James K. Jackson. CRS In Focus IF11480, Overview: The Department of Defense and COVID-19 , coordinated by Kathleen J. McInnis. CRS Insight IN11231, The Defense Production Act (DPA) and COVID-19: Key Authorities and Policy Considerations , by Michael H. Cecire and Heidi M. Peters. CRS Insight IN11337, The Defense Production Act (DPA) and the COVID-19 Pandemic: Recent Developments and Policy Considerations , by Michael H. Cecire and Heidi M. Peters. CRS Insight IN11325, U.S. Travel and Tourism and COVID-19 , by Michaela D. Platzer.", "Appendix B. Additional Writings", "In presenting sources of additional reading, this appendix includes some examples of writings reflecting various perspectives on the potential implications of the COVID-19 pandemic on the international security environment and the U.S. role in the world, organized by specific themes or topics. Within each section, the items are presented in chronological order, with the most recent on top.", "General/Multitopic", "Edith M. Lederer, \"UN Chief Says Pandemic Is Unleashing a 'Tsunami of Hate,'\" Associated Press , May 8, 2020.", "Nikolas K. Gvosdev, \"Why the Coronavirus Won't Transform International Affairs Like 9/11 Did,\" National Interest , May 5, 2020.", "Deepanshu Mohan, \"The Geopolitical Contours of a Post-COVID-19 World,\" East Asia Forum , May 2, 2020.", "Andrew Ehrhardt, \"Disease and Diplomacy in the 19th Century,\" War on the Rocks , April 30, 2019.", "Dmitri K. Simes, \"The Perfect Storm,\" National Interest , April 24, 2020.", "Fred Kaplan, \"What Happens if Oil Doesn't Recover? If Demand Doesn't Pick Up This Summer, We Could See Major Shifts in Global Power,\" Slate , April 23, 2020.", "Barry R. Posen, \"Do Pandemics Promote Peace? Why Sickness Slows the March to War,\" Foreign Affairs , April 23, 2020.", "Joseph Cirincione, \"How to Prevent War During the Coronavirus Pandemic, How Will the Coronavirus Threaten Global Peace?\" National Interest , April 22, 2020.", "Frank Hoffman, \"An American Perspective on Post-Pandemic Geopolitics,\" RUSI, April 20, 2020.", "Gordon Bardos, \"Will the Coronavirus Crisis Force America to Look in the Mirror and Reform?\" National Interest , April 18, 2020.", "Nicholas Eberstadt, \"The \"New Normal\": Thoughts about the Shape of Things to Come in the Post-Pandemic World,\" National Bureau of Asian Research, April 18, 2020.", "Steve Coll, \"Woodrow Wilson's Case of the Flu, and How Pandemics Change History,\" New Yorker , April 17, 2020.", "Jackson Diehl, \"The Pandemic Is Killing Truth, Too,\" Washington Post , April 12, 2020.", "Edith M. Lederer, \"UN Chief Warns COVID-19 Threatens Global Peace and Security,\" Associated Press , April 10, 2020.", "Stratfor Worldview, \"How the Coronavirus Pandemic Is Changing the World\u00e2\u0080\u0094and the Future,\" National Interest , April 4, 2020.", "Daniel W. Drezner, \"The Most Counterintuitive Prediction about World Politics and the Coronavirus, What If Nothing Changes?\" Washington Post , March 30, 2020.", "Ali Demirdas, \"Western Values May Not Survive the Coronavirus. European Unity and American Military Power Just Haven't Held Up,\" National Interest , March 28, 2020.", "John Allen et al., \"How the World Will Look after the Coronavirus Pandemic,\" Foreign Policy , March 20, 2020. (Includes short contributions from 12 authors.)", "Maxine Whittaker, \"How Infectious Diseases Have Shaped Our Culture, Habits and Language,\" The Conversation , July 12, 2017.", "World Order, International Institutions, and Global Governance", "Edward Fishman, \"The World Order Is Dead. Here's How to Build a New One for a Post-Coronavirus Era,\" Politic o, May 3, 2020.", "Rebecca Wolfe and Hilary Matfess Sunday, \"COVID and Cooperation: The Latest Canary in the Coal Mine,\" Lawfare , May 3, 2020.", "Joshua Keating, \"The Decline of the Nation-State, Trump's War with the Governors Hints at a New Political Order,\" Foreign Policy , April 29, 2020.", "Yukon Huang and Jeremy Smith, \"Pandemic Response Reflects Unlearned Lessons of U.S.-China Trade War,\" Carnegie Endowment for International Peace, April 27, 2020.", "Mihir Sharma, \"Diplomacy Is Another Victim of the Virus,\" Bloomberg , April 26, 2020.", "Brahma Chellaney, \"The WHO Has Failed the World in its Pandemic Response,\" Strategist (Australian Strategic Policy Institute) , April 23, 2020.", "William C. Danvers, \"The World Bank steps up its role in fighting for the future,\" The Hill , April 22, 2020.", "Eric A. Posner, \"The Limits of the World Health Organization,\" Lawfare , April 21, 2020.", "Amitav Acharya, \"How Coronavirus May Reshape the World Order,\" National Interest , April 18, 2020.", "Joseph S. Nye Jr., \"No, the Coronavirus Will Not Change the Global Order,\" Foreign Policy , April 16, 2020.", "Karen DeYoung and Liz Sly, \"Global Institutions Are Flailing in the Face of the Pandemic,\" Washington Post , April 15, 2020.", "Colin H. Kahl and Ariana Berengaut, \"Aftershocks: The Coronavirus Pandemic and the New World Disorder,\" War on the Rocks , April 10, 2020.", "Lanhee J. Chen, \"Lost in Beijing: The Story of the WHO, China Broke the World Health Organization. The U.S. Has to Fix It or Leave and Start Its Own Group,\" Wall Street Journal , April 8, 2020.", "Colum Lynch, \"Can the United Nations Survive the Coronavirus? In the Absence of U.S. Leadership, the U.N. Is Struggling to Carve Out a Role in the Face of What May Be the Greatest Threat Since Its Founding,\" Foreign Policy , April 8, 2020.", "Timofey V. Bordachev, \"Visions Of The Post-Coronavirus World: Russian Expert On Europe Bordachev: The Liberal World Order Will Not Survive,\" MEMRI, April 6, 2020.", "Matthew Lee and Edith M. Lederer, \"Global Diplomacy Under the Gun in The Time of Ccoronavirus,\" Associated Press , April 4, 2020.", "Thomas Wright, \"Stretching the International Order to Its Breaking Point, The Greatest Error That Geopolitical Analysts Can Make May Be Believing That the Crisis Will Be Over in Three to Four Months,\" Atlantic , April 4, 2020.", "Henry A. Kissinger, \"The Coronavirus Pandemic Will Forever Alter the World Order,\" Wall Street Journal , April 3, 2020.", "Ryan Broderick, \"After The Coronavirus Passes, Your World Will Not Go Back To Normal, Before the Pandemic Began, the Systems That Govern Our World Were Brittle. Today, They Are Broken. When We Emerge, the World Will Be Different, and So Will We,\" Buzzfeed News , April 2, 2020.", "Rick Gladstone, \"U.N. Security Council 'Missing In Action' in Coronavirus Fight,\" New York Times , April 2, 2020.", "Ian Goldin and Robert Muggah, \"End of International Cooperation? How Coronavirus Has Changed the World Permanently,\" National Interest , March 31, 2020.", "U.S. Global Leadership and Role in World", "Jose W. Fernandez, \"In the Coronavirus Era, Trump's 'America First' Means 'Latin America Alone,'\" Foreign Policy, May 7, 2020.", "Drew Hinshaw and Lukas I. Alpert, \"U.S. Makes Diplomatic Push for Taiwan to Attend WHO Summit,\" Wall Street Journal , May 7, 2020.", "Fred Kaplan, \"Trump's Medical Nationalism Will Make It Harder to Defeat COVID-19,\" Slate , May 7, 2020.", "William Booth, Carolyn Y. Johnson, and Carol Morello, \"The World Came Together for a Virtual Vaccine Summit. The U.S. Was Conspicuously Absent,\" Washington Post , May 4, 2020.", "Matthew Petti, \"Trump Administration Defends No-Show At Global Coronavirus Conference,\" National Interest , May 4, 2020.", "Anne Applebaum, \"The Rest of the World Is Laughing at Trump, The President Created a Leadership Vacuum. China Intends to Fill It,\" Atlantic , May 3, 2020.", "Charlotte Klein, \"Trump's 'America First' Mentality May Hamper Global Race For Coronavirus Vaccine,\" Vanity Fair , May 3, 2020.", "Nahal Toosi and Natasha Bertrand, \"Fears Rise that Trump Will Incite a Global Vaccine Brawl, The President's 'America First' Philosophy Courts Disaster for Entire Regions of the World, Diplomats Warn,\" Politico , May 3, 2020.", "Kori Schake, \"America's Built-in Protection Against Bad Leadership, For All Its Failures, the U.S. Has Structural Advantages Over Rival Powers\u00e2\u0080\u0094and Will Come Out of the Pandemic Even Stronger,\" Atlantic , May 1, 2020.", "Colum Lynch, \"WHO Becomes Battleground as Trump Chooses Pandemic Confrontation Over Cooperation,\" Foreign Policy , April 29, 2020.", "J. Stephen Morrison and Anna Carroll, \"WHO and President Trump on the Ledge,\" Center for Strategic and International Studies (CSIS), April 28, 2020.", "Jeffrey Becker, \"COVID-19 Offers a Golden Opportunity to Reengage with the Indo-Pacific,\" Defense One , April 27, 2020.", "Joseph S. Nye, \"How COVID-19 Is Testing American Leadership,\" East Asia Forum , April 26, 2020.", "By John Hudson, Josh Dawsey, and Souad Mekhennet, \"Trump Expands Battle with WHO Far Beyond Aid Suspension,\" Washington Post , April 25, 2020.", "Katrin Bennhold, \"'Sadness' and Disbelief From a World Missing American Leadership,\" New York Times , April 23, 2020.", "David Brunnstrom and Humeyra Pamuk, \"Pompeo Says U.S. May Never Restore WHO Funds after Cutoff over Pandemic,\" Reuters , April 23, 2020.", "Julianne Smith and Garima Mohan, \"In a Crisis, a Fumbling America Confirms Europe's Worst Fears,\" War on the Rocks , April 23, 2020.", "Luke Allen, \"Why Trump Defunded the WHO,\" National Interest , April 20, 2020.", "Yu-Jie Chen and Jerome A. Cohen, \"Trump Is Right That the WHO Has a China Problem. Cutting Funding Isn't the Answer,\" Diplomat , April 20, 2020.", "Jeffrey Cimmino, \"Trump Should Be Tough On the WHO \u00e2\u0080\u0093 And Recommit to Strengthening Global Health Security,\" National Interest , April 19, 2020.", "Brett D. Schaefer, \"The World Health Organization Messed Up\u00e2\u0080\u0094But Don't Defund Them,\" National Interest , April 16, 2020.", "Salvatore Babones, \"Donald Trump Is Right To Dump the WHO,\" National Interest , April 15, 2020.", "Kevin Baron, \"Don't Be Fooled. Trump's Cuts to WHO Aren't About the Coronavirus,\" Defense One , April 15, 2020.", "Bonnie Kristian, \"The Coronavirus Shows How US 'Diplomacy' Is Anything But, Absolutist, America-First Approaches Isolate Us and Make Us Less Safe,\" Defense One , April 15, 2020.", "Eli Lake, \"Trump Is Punishing the WHO for China's Deceptions,\" Bloomberg , April 15, 2020.", "Thomas R. Pickering and Atman Trivedi, \"America First? The Coronavirus Couldn't Care Less,\" Foreign Policy , April 15, 2020.", "Emily Rauhala, \"Trump's Critique of WHO May Be a Diversion, But It Resonates Beyond the White House,\" Washington Post , April 15, 2020.", "Steve Holland, \"Trump to Convene G7 Leaders in Video Call to Discuss Pandemic,\" Reuters , April 14, 2020.", "Fred Kaplan, \"The End of American Leadership, The Coronavirus Pandemic May Mark the Final Shift of Global Power Away from the United States,\" Slate , April 13, 2020.", "Michael Shoebridge, \"Why America Will Emerge Stronger From the Coronavirus Crisis,\" National Interest , April 12, 2020.", "Bill Ong Hing, \"Trump Has Achieved His Goal of Abolishing Asylum, The Pandemic Has Added One More Insurmountable Hurdle for Asylum Seekers,\" Slate , April 10, 2020.", "Mich\u00c3\u00a8le A. Flournoy and Lisa O. Monaco, \"Now's Not the Time for Isolationism, Countries Need to Work Together to Fight Coronavirus, and the U.S. Should Step Up to Lead Those Efforts, Not Back Off From Them,\" Politico , April 8, 2020.", "Todd Prince, \"Pompeo Touts U.S. Foreign Help Against Pandemic As Trump Threatens WHO Funding,\" Radio Free Europe/Radio Liberty , April 8, 2020.", "Joe Buccino, \"The US Must Lead the World Out of This, If the Coronavirus Pandemic Only Causes Us to Look Inward, China Wins,\" Defense One , April 7, 2020.", "Helle C. Dale, \"Even in Pandemic, America Still the Global Leader,\" Heritage Foundation , April 7, 2020.", "John Pomfret, \"Does the Future Still Belong to the U.S. and China?\" Washington Post , April 7, 2020.", "Robert B. Zoellick, \"The World Is Watching How America Handles Coronavirus, The Trump Administration Has Failed to Convey An Impression of Strong International Leadership,\" Wall Street Journal, April 7, 2020.", "Ted Anthony, \"After Virus, How Will Americans' View of the World Change?\" Washington Post , April 6, 2020.", "William J. Burns, \"A Make-or-Break Test for American Diplomacy, The Post-Pandemic World Will Pose a Massive Test for U.S. Statecraft, the Biggest Since the End of the Cold War,\" Atlantic , April 6, 2020.", "Victor Davis Hanson, \"Don't Be Fooled: Trump Is Leading the World Against Coronavirus,\" National Interest , April 5, 2020.", "Lara Jakes, \"When the Face of America Falls Ill: A Virus's Toll on Diplomats,\" New York Times , April 4, 2020.", "Nahal Toosi, \"'Lord of the Flies: PPE Edition': U.S. Cast As Culprit in Global Scrum Over Coronavirus Supplies,\" Politico , April 3, 2020.", "Stephen M. Walt, \"The United States Can Still Win the Coronavirus Pandemic,\" Foreign Policy , April 3, 2020.", "Susan B. Glasser, \"The Coronavirus Is the World's Only Superpower, Trump's America? Not so Much,\" New Yorker , April 2, 2020.", "Robbie Gramer and Colum Lynch, \"In Global Leadership Void on Pandemic, Critics Ask: Where's Pompeo?\" Foreign Policy , April 2, 2020.", "Ash Jain, \"Trump Just Missed a Perfect Opportunity to Reassert American Leadership, The G-20 helped beat Ebola. Why can't it do the same for the coronavirus?\" Foreign Policy , April 2, 2020.", "Adam Tooze, \"America Is Ailing\u00e2\u0080\u0094and Leading the World, The Coronavirus Pandemic Has Been a Humiliation for the United States\u00e2\u0080\u0094and Confirmation of Its Unmatched International Power,\" Foreign Policy , April 1, 2020.", "Robert C. Rubel, \"Canary In The Coal Mine: The US Navy's Dilemmas As An Indication Of A Culminating Point In National Grand Strategy,\" Journal of Political Risk , April 2020.", "Doug Bandow, \"Donald Trump Needs to Focus on Coronavirus (Not Fighting with China and the EU),\" National Interest , March 30, 2020.", "Walter Russell Mead, \"U.S. Leadership Will Survive Coronavirus,\" Wall Street Journal , March 30, 2020.", "Michael Rubin, \" Washington Post's Broadside against Mike Pompeo Is Wildly Unfair,\" Washington Examiner , March 30, 2020. (Responds to the March 29, 2020, writing below by Jackson Diehl.)", "Jeff M. Smith, \"How America Is Leading the 'Quad Plus' Group of Seven Countries in Fighting the Coronavirus,\" National Interest , March 30, 2020.", "Jackson Diehl, \"Pompeo's Pandemic Performance Ensures His Place Among the Worst Secretaries of State Ever,\" Washington Post , March 29, 2020. (For a response, see the March 30, 2020, writing above by Michael Rubin.)", "Brett McGurk, \"America Should Build an International Coalition Now; The United States Has an Urgent Interest in Filling the Global Leadership Void During This Stateless Scourge,\" Atlantic , March 29, 2020.", "Ted Galen Carpenter, \"Donald Trump Offered to Help North Korea on Coronavirus. Why Not Iran?\" National Interest , March 27, 2020.", "Paul R. Pillar, \"Donald Trump's Nationalist Response to the Coronavirus,\" National Interest , March 26, 2020.", "Kevin Baron, \"Trump Could Have Led the World Against the Coronavirus,\" Defense One , March 25, 2020.", "Editorial Board, \"The Coronavirus Pandemic May Mark a Decline in U.S. Leadership,\" Washington Post , March 23, 2020.", "Stephen M. Walt, \"The Death of American Competence, Washington's Reputation for Expertise Has Been One of the Greatest Sources of Its Power. The Coronavirus Pandemic May End It for Good,\" Foreign Policy , March 23, 2020.", "Ronald E. Neumann and Marc Grossman, \"More US Diplomats Need to Be Overseas to Best Serve America,\" The Hill , March 22, 2020.", "Steven Erlanger, \"Another Virus Victim: The U.S. as a Global Leader in a Time of Crisis,\" New York Times , March 20 (updated March 22), 2020.", "Kori Schake, \"The Damage That 'America First' Has Done,\" Atlantic , March 20, 2020.", "Daniel B. Baer, \"The Virus Has Exposed the Recklessness of Trump's 'America First,'\" Foreign Policy , March 18, 2020.", "China's Potential Role as a Global Leader", "David M. Weinberg, \"Know Comment: Hold China culpable for COVID-19, Don't Let Beijing Exploit the Coronavirus Chaos to Position Itself at the Center of a New Global Order,\" Jerusalem Post , May 8, 2020.", "Andreas Kluth, \"How China Is Losing Europe,\" Bloomberg , May 7, 2020.", "Josh Rogin, \"The Pandemic Shows Why Taiwan Is a Far Better Partner than the People's Republic,\" Washington Post , May 7, 2020.", "Eva Dou, \"Fearing Political Dangers, China Spent Years Preparing for This Economic Crash,\" Washington Post , May 5, 2020.", "Diana Fu, \"China Has a Playbook for Managing Coronavirus Chaos,\" Foreign Policy , May 5, 2020.", "William A. Stanton, \"Wuhan Virus Finally Alters Global Perceptions of the PRC: William Stanton,\" Taiwan News , May 5, 2020.", "Shashank Bengali and Alice Su, \"'Put On a Mask and Shut Up': China's New 'Wolf Warriors' Spread Hoaxes and Attack a World of Critics,\" Los Angeles Times , May 4, 2020.", "\"Exclusive: Internal Chinese Report Warns Beijing Faces Tiananmen-like Global Backlash Over Virus,\" Reuters , May 4, 2020. (This article does not list an author.)", "Steven Erlanger, \"Global Backlash Builds Against China Over Coronavirus,\" New York Times , May 3, 2020.", "Lara Marlowe, \"Europe's Relationship with China Is Now One of Mistrust and Hostility,\" Irish Times , May 2, 2020.", "Joel Gehrke, \"US Allies Move Toward Trump, Demanding Coronavirus Investigation Despite Chinese Threats,\" Washington Examiner , May 1, 2020.", "Stuart Lau, \"Coronavirus: European Union Ratchets Up Pressure on China with Call to Cooperate with inquiry,\" South China Morning Post , May 1 (updated May 2), 2020.", "Minxin Pei, \"China's Expensive Bet on Africa Has Failed, Coronavirus Crash in Commodity Prices Has Wasted $200 Billion in Investment and Loans,\" Nikkei Asian Review , May 1, 2020.", "Matt Apuzzo, \"Top E.U. Diplomat Says Disinformation Report Was Not Watered Down for China,\" New York Times , April 30, 2020.", "Niall Gray, \"COVID-19: A 'Reckoning' for UK-China Relations?\" Diplomat , April 29, 2020", "James Griffiths, \"China's Model of Control Has Been Blamed for the Coronavirus Crisis, But for Some It's Looking Increasingly Attractive,\" CNN , April 29, 2020.", "Tanvi Madan et al., \"China's Neighbors Face a Belligerent Post-Pandemic Beijing, Experts Discuss the Regional Fallout of the Coronavirus Crisis,\" Foreign Policy , April 29, 2020.", "William Brent, \"Generosity Is an Easy Win for China After the Coronavirus Pandemic,\" Foreign Policy , April 28, 2020.", "Damien Cave and Amy Qin, \"China Mounts Aggressive Defense to Calls for Coronavirus Compensation,\" New York Times , April 28, 2020.", "Mark Magnier, \"China Is Overreaching in Bid for Greater Global Influence Amid Coronavirus Pandemic, US Advisers Say,\" South China Morning Post , April 28, 2020.", "Eleanor Albert, \"African Countries Respond to Guangzhou's 'Anti-Epidemic Measures,' Widespread Reports of Racism Against Africans Put China into Damage Control Mode,\" Diplomat , April 27, 2020", "Shi Jiangtao, \"Coronavirus: They're Only Answering Xi Jinping's Call but Are China's 'Wolf Warrior' Diplomats Doing More Harm than Good?\" South China Morning Post , April 27, 2020.", "Richard Javad Heydarian, \"The Coming China Backlash, There Is a Pent-up Volcano of Rage Against the Chinese Regime for Its Reckless Coverup of a Devouring Pandemic,\" National Interest , April 25, 2020.", "Keith B. Richburg, \"After Coronavirus, China's Relations With the World Will Never Be the Same,\" National Interest , April 25, 2020.", "Jerry Dunleavy, \"'Xi Jinping's Chernobyl': Experts Say Chinese Disinformation Aims to Distract World from Coronavirus Failures,\" Washington Examiner , April 23, 2020.", "David Ignatius, \"The World Will Demand Answers on COVID-19 Until China Explains What Happened,\" Washington Post , April 23, 2020.", "Veerle Nouwens, \"China and the Coronavirus Pandemic: Internal Doubts, External Mistakes,\" RUSI, April 23, 2020.", "Austin Bay, \"On Point: The COVID-19 Debacle Previews the Chinese Communist Party's Imperial World Order,\" Strategy Page , April 22, 2020.", "Frederic Puglie, \"China to the Rescue: 'Mask Diplomacy' Aims to Win Allies in Latin America,\" Washington Times , April 22, 2020.", "Robert A. Manning, \"Why China Will Be the Biggest COVID-19 Loser,\" The Hill , April 21, 2020.", "Daniel R. DePetris, \"China's Great Pandemic Gamble,\" National Interest , April 20, 2020.", "Charles Dunst, \"Beijing's Propaganda Is Finding Few Takers,\" Foreign Policy , April 20, 2020.", "Jamil Anderlini, \"Why China is Losing the Coronavirus Narrative,\" Financial Times , April 19, 2020.", "Steven Lee Myers, \"China's Aggressive Diplomacy Weakens Xi Jinping's Global Standing,\" New York Times , April 17 (updated April 20), 2020.", "Maria Repnikova, \"Does China's Propaganda Work? The Communist Party's Messaging Is Both More Agile and More Fragile Than It Seems,\" New York Times , April 16, 2020.", "Charles Dunst, \"How China's Mask Diplomacy Backfired,\" American Interest , April 15, 2020.", "Michael Green and Evan S. Medeiros, \"The Pandemic Won't Make China the World's Leader, Few Countries Are Buying the Model or the Message From Beijing,\" Foreign Affairs , April 15, 2020.", "Gerry Shih, \"China's Bid to Repair Its Coronavirus-hit Image Is Backfiring in the West,\" Washington Post , April 14, 2020.", "Dusan Stojanovic, \"China's 'Mask Diplomacy' Wins Support in Eastern Europe,\" Associated Press, April 14, 2020.", "Mohammed Ayoob, \"How the Coronavirus Could Undercut China's Global Standing,\" National Interest , April 13, 2020.", "Chi Wang, \"How China Is Losing the World's Trust Following Its Cover-up of the Coronavirus Crisis,\" South China Morning Post , April 13, 2020.", "Nick Crawford and David Gordon, \"China Confronts Major Risk of Debt Crisis on the Belt and Road Due to Pandemic,\" Diplomat , April 10, 2020.", "John Pomfret, \"Does the Future Still Belong to the U.S. and China?\" Washington Post , April 7, 2020.", "Plamen Tonchev, \"The Belt and Road After COVID-19,\" Diplomat , April 7, 2020.", "Bradley A. Thayer and Lianchao Han, \"The Consequences of the Pandemic for China and the World,\" National Interest , April 4, 2020.", "Edward Lucas, \"China Was Once the Cradle of the Coronavirus Pandemic But It Has Bounced Back with Astonishing Speed, Writes Edward Lucas As He Reveals the Country May Have Won the War for Global Supremacy As Well,\" Daily Mail (UK) , April 3, 2020.", "Philip Wen and Drew Hinshaw, \"China Asserts Claim to Global Leadership, Mask by Mask,\" Wall Street Journal , April 1, 2020.", "Zack Beauchamp, \"The Myth of Authoritarian Coronavirus Supremacy,\" Vox , March 26, 2020.", "Mark Hannah, \"Will America's Coronavirus Response Inspire Countries to Follow China's Model?\" National Interest , March 24, 2020.", "Dan Blumenthal, \"Donald Trump's China Problem Has Arrived,\" National Interest , March 23, 2020.", "Azeem Ibrahim, \"China's Debt Diplomacy Will Get a Coronavirus Boost,\" Foreign Policy , March 23, 2020.", "Yang Jiang, \"China's Moment of Vindication,\" Danish Institute for International Studies, March 20, 2020.", "Morten Soendergaard Larsen and Robbie Gramer, \"China Casts Itself as Global Savior While U.S. and EU Focus on Virus at Home,\" Foreign Policy , March 19, 2020.", "Bradley A. Thayer and Lianchao Han, \"China's Coronavirus Plan: Create a 'Silk Road' of Health Care Leading Towards World Dominance,\" National Interest , March 19, 2020.", "Alan Crawford and Peter Martin, \"China Showers Europe With Virus Aid While Sparring With Trump,\" Bloomberg , March 19, 2020.", "U.S. Relations and Great Power Competition with China and Russia", "Marc Champion, \"Trump's Going All In on a Vaccine. He May Still Get Beaten by China, The Nation That Can Immunize First Stands to Gain Not Just Economic Advantage, But Validation of Its Place in the World,\" Bloomber g, May 8, 2020.", "Editorial Board, \"Donald Trump's Erratic China Policy Undermines Western Unity,\" Financial Times , May 7, 2020.", "Patrick Tucker, \"COVID-19 Is Accelerating Trends in the US-China Relationship,\" Defense One , May 7, 2020.", "Joel Gehrke, \"US and Western Allies Offer Disjointed Response to China Coronavirus Calamity,\" Washington Examiner , May 6, 2020.", "Frances Martel, \"China: If We Have to Pay for Coronavirus, U.S. Has to Pay for AIDS, 2008 Financial Crisis,\" Breitbart , May 7, 2020.", "Kate O'Keeffe, Michael C. Bender, and Chun Han Wong, \"Coronavirus Casts Deep Chill Over U.S.-China Relations,\" Wall Street Journal , May 6, 2020.", "RFE/RL, \"U.S.: Russia, China Spinning Coronavirus Conspiracies To Blame West,\" Radio Free Europe/Radio Liberty , May 6, 2020.", "\"The U.S. Weaponizes COVID-19 Anger Against China's Tech Sector,\" Stratfor, May 6, 2020. (This article does not list an author.)", "Doug Bandow, \"Making China Pay Would Cost Americans Dearly,\" Foreign Policy , May 5, 2020.", "Bloomberg News, \"As Trump Blames China, Beijing Directs Fury at His Top Diplomat,\" Bloomberg , May 5, 2020.", "James Jay Carafano, \"How to Keep the Free World From Becoming a Suburb of Beijing,\" Heritage Foundation, May 5, 2020.", "Ali Wyne, \"Can China Use the Pandemic to Displace the US?\" Defense One , May 5, 2020.", "Stephen Blank, \"The Russo-Chinese Axis Reveals Itself During the Coronavirus Pandemic,\" The Hill , May 4, 2020.", "Ryan Hass, \"Clouded Thinking in Washington and Beijing on COVID-19 Crisis,\" Brookings Institution, May 4, 2020.", "Deb Riechmann and Zeke Miller, \"Trump's Anti-China Rhetoric Aimed at Boosting US Leverage,\" Associated Press , May 4, 2020.", "Denny Roy, \"8 Chinese Arguments Against Western 'Hubris' and Why They Fail,\" Diplomat , May 04, 2020.", "David Wertime, \"'Not the World's Number One': Chinese Social Media Piles On the U.S.,\" Politico , May 4, 2020.", "John Lee, \"US-China Economic Distancing in the Era of Great Power Rivalry and COVID-19,\" United States Studies Centre, May 4, 2020.", "Humeyra Pamuk and Andrea Shalal, \"Trump Administration Pushing to Rip Global Supply Chains from China: Officials,\" Reuters , May 4, 2020.", "David Wertime, \"'Not the World's Number One': Chinese Social Media Piles On the U.S.,\" Politico , May 4, 2020.", "Claudia Rosett, \"China Is Exploiting the Coronavirus Chaos to Advance Its Agenda, President Xi Wants China at the Center of a New Global Order,\" Dallas Morning News , May 3, 2020.", "Walter Lohman James Jay Carafano, \"Here Are Ten Ways To Beat China Over Coronavirus,\" National Interest , May 2, 2020.", "Eric Chan and Peter Loftus, \"Chinese Communist Party Information Warfare: US-China Competition during the COVID-19 Pandemic,\" Journal of Indo-Pacific Affairs (Air University ), May 1, 2020.", "Ahmed Charai, \"How COVID-19 Changes Trump's China Card,\" National Interest , May 1, 2020.", "Bonnie Kristian, \"'Maximum Pressure' on China Is No Solution to a Pandemic,\" Defense News , May 1, 2020.", "Dalibor Rohac, \"The Kremlin's Tried-and-True Formula for Tough Times: Look for Enemies Abroad,\" Washington Post , May 1, 2020.", "Alex Ward, \"Pressure Mounts on Trump to 'Drop the Hammer' on China,\" Vox , May 1, 2020.", "Edward Wong and Ana Swanson, \"Some Trump Officials Take Harder Actions on China During Pandemic,\" New York Times , May 1, 2020.", "Joseph Bosco, \"The Post-Pandemic New Order in US-China Relations,\" The Hill , April 30, 2020.", "Chuck DeVore, \"In a Bid to Weaken America, China Extends a Hand to the States | Opinion,\" Newsweek , April 30, 2020.", "Editorial Board, \"China has turned to bullying to avoid accountability. It may be working on Europe,\" Washington Post , April 30, 2020.", "Mathew Ha and Alice Cho, \"China's Coronavirus Disinformation Campaigns Are Integral to Its Global Information Warfare Strategy,\" Foundation for Defense of Democracies, April 30, 2020.", "Jeff Stein, Carol D. Leonnig, Josh Dawsey, and Gerry Shih, \"U.S. Officials Crafting Retaliatory Actions Against China Over Coronavirus as President Trump Fumes,\" Washington Post , April 30, 2020.", "Peter B. Walker, \"Shift in Mindset Needed So US Can Work with China to Tackle Coronavirus Pandemic and Other Global Issues,\" South China Morning Post , April 30, 2020.", "Joyu Wang and Rachel Yeo, \"China Takes Harder Line on Hong Kong Amid Coronavirus Protest Lull,\" Wall Street Journal , April 30, 2020.", "George Barros, Nataliya Bugayova, and Mason Clark, \"Russia in Review: Kremlin Misdirection Continues Amid COVID and Peace Processes,\" Institute for the Study of War, April 29, 2020.", "Alan Boyd, \"China Drops a Covid-19 Gauntlet on Australia,\" Asia Times , April 29, 2020.", "Lewis Libbby,, \"To Confront China After Coronavirus, We Must See the Bigger Picture,\" National Review , April 29, 2020.", "Kinling Lo and Sarah Zheng, \"Who Is Winning the China-US Race to Run the World Amid the Covid-19 pandemic?\" South China Morning Post , April 29, 2020.", "Clifford D. May, \"How our enemies are handling the pandemic, They're Staying Focused on Their Missions and Doing Just Fine,\" Foundation for Defense of Democracies, April 29, 2020.", "Fu Ying, \"Fu Ying on Why China and America Must Co-operate to Defeat COVID-19,\" Economist , April 29, 2020.", "Damien Cave and Amy Qin, \"China Mounts Aggressive Defense to Calls for Coronavirus Compensation,\" New York Times , April 28, 2020.", "Alex Ward, \"How China Is Ruthlessly Exploiting the Coronavirus Pandemic It Helped Cause,\" Vox , April 28, 2020.", "Shi Jiangtao, \"Coronavirus infects China-US relations as blame game over pandemic intensifies,\" South China Morning Post , April 27, 2020.", "Emily Rauhala, \"Trump's WHO Funding Freeze During Coronavirus Pandemic Gives China an Opening to Expand Its Influence,\" Washington Post , April 27, 2020.", "Patrick Mendis and Dominique Reichenbach, \"Will the Trump White House Make China Great Again in a Post-Pandemic Era?\" National Interest , April 27, 2020.", "James Traub, \"The Future Is Asian\u00e2\u0080\u0094but Not Chinese, A Post-pandemic Cold War Is Developing between the United States and China\u00e2\u0080\u0094but Both Sides Are Losing the Ideological Fight,\" Foreign Poli cy, April 27, 2020.", "Eric Farnsworth, \"China's Coronavirus Play in the Americas,\" National Interest , April 26, 2020.", "Yasmeen Serhan and Kathy Gilsinan, \"Can the West Actually Ditch China?\" Atlantic, April 24, 2020.", "Javed Ali and A'ndre Ggonawela, \"Dueling COVID-19 Blame Narratives Deepen US-China Rift,\" The Hill , April 23, 2020.", "Alexander Gabuev, \"The Pandemic Could Tighten China's Grip on Eurasia,\" Foreign Policy , April 23, 2020.", "Ralph Peters, \"China Lies, China Kills, China Wins,\" Hoover Institution, April 23, 2020.", "Josh Rogin, \"The Coronavirus Crisis Shows the Risks of Scientific Collaboration with China,\" Washington Post , April 23, 2020.", "Peter Suciu, \"Are America and China Headed Towards a South China Sea Showdown? Is Beijing Trying to Push Forward on Its Maritime Claims While the World is Battling Coronavirus?\" National Interest , April 23, 2020.", "John Vandiver, \"Coronavirus Pandemic Leads to Spike in Disinformation Directed at US, NATO in Europe,\" Stars and Stripes , April 23, 2020.", "Hal Brands, \"Modest Multilateralism Is in America's Interest\u00e2\u0080\u0094and China's Too, The Crisis Has Highlighted the Need for More Global Cooperation, but Let's Not Get Carried Away,\" Bloomberg , April 22, 2020.", "James Green, \"China and the United States Are Both Losing the Blame Game,\" Foreign Policy , April 22, 2020.", "Laura Rosenberger, \"China's Coronavirus Information Offensive, Beijing Is Using New Methods to Spin the Pandemic to Its Advantage,\" Foreign Affairs , April 22, 2020.", "Edward Wong, Matthew Rosenberg, and Julian E. Barnes, \"Chinese Agents Helped Spread Messages That Sowed Virus Panic in U.S., Officials Say,\" New York Times , April 22, 2020.", "Dean Cheng, \"China, COVID-19 and 5G; Golden Opportunity For The West,\" Breaking Defense , April 21, 2020.", "Gregory R. Copley, \"China Is Waging A New Kind Of War Against The U.S.,\" Oil Price , April 21, 2020.", "Alan Crawford and Peter Martin, \"China's Coronavirus Diplomacy Has Finally Pushed Europe Too Far,\" Bloomberg , April 21, 2020.", "Jessica Donati, \"U.S. Adversaries Are Accelerating, Coordinating Coronavirus Disinformation, Report Says,\" Wall Street Journal , April 21, 2020.", "John Grady, \"COVID-19 Pandemic Giving China a Firmer Foothold in Europe,\" USNI News , April 21, 2020.", "Hollie McKay, \"China Ups Its Spy Game on US Soil as It Bids to Control Coronavirus Narrative,\" Fox News , April 21, 2020.", "Hannah Roberts, \"Moscow's Coronavirus Offensive,\" Politico , April 21, 2020.", "Betsy Woodruff Swan, \"State Report: Russian, Chinese, and Iranian Disinformation Narratives Echoing Each Other,\" Politico Pro , April 21, 2020.", "Yew Lun Tian, Ben Blanchard, \"China Rattles Sabres as World Battles Coronavirus Pandemic,\" Reuters , April 21, 2020.", "Riley Walters and Dean Cheng, \"How to Hold China Accountable for COVID-19,\" Heritage Foundation, April 21, 2020.", "Tim Ahmann, David Brunnstrom, and Julie Steenhuysen, \"Update 1-China May Be Keeping Coronavirus Data for Commercial Gain\u00e2\u0080\u0094Trump Adviser,\" Reuter s, April 20, 2020.", "James Jay Carafano, \"The Great U.S.-China Divorce Has Arrived,\" National Interest , April 20, 2020.", "Charles Lane, \"This Crisis Has Taught Us the True Cost of Doing Business with China,\" Washington Post , April 20, 2020.", "Klaus W. Larres, \"China Turns on the Charm and Angers Trump as it Eyes a Global Opportunity in Coronavirus Crisis,\" The Conversation , April 20, 2020.", "John Lee, \"Beijing Still Has a Way to Go in Battle for Power,\" United States Studies Centre, April 20, 2020.", "Bradley A. Thayer and Lianchao Han, \"Kissinger's Folly: The Threat to World Order is China,\" The Hill , April 19, 2020.", "Ashley Townshend and Matilda Steward, \"Coronavirus Crisis Shows Both China and the US Aren't Equipped to Lead the World,\" United States Studies Centre, April 19, 2020.", "James Holmes, \"How Donald Trump Should Make China Pay for Coronavirus,\" National Interest , April 18, 2020.", "Cleo Paskal, \"World Tries to Shake Off Its Dangerous China Addiction,\" Sunday Guardian , April 18, 2020.", "Daniel P. Vajdich, \"The Geopolitical Cost of Battling the Coronavirus Separately (China Will Win),\" National Interest , April 18, 2020.", "Robbie Gramer, \"NATO Chief Rebukes China Over Coronavirus Disinformation,\" Foreign Policy, April 17, 2020.", "Jeffery A. Green, \"Stop China's Predatory Investments Before the US Becomes Its Next Victim,\" Defense News , April 17, 2020.", "Fred Kaplan, \"The China Problem, The Chinese Government Bears Some Responsibility for the Pandemic, But We Still Need Its Help to Fight the Virus,\" Slate , April 17, 2020.", "Abraham Denmark, Charles Edel, and Siddharth Mohandas, \"Same as It Ever Was: China's Pandemic Opportunism on Its Periphery,\" War on the Rocks , April 16, 2020.", "\"Is China winning? The geopolitical consequences of covid-19 will be subtle, but unfortunate,\" Economist , April 16, 2020. (This article does not list an author.)", "Elisabeth Braw, \"China Is Bargain Hunting\u00e2\u0080\u0094and Western Security Is at Risk, Beijing Could Use the Coronavirus-Induced Economic Crisis to Go on a Buying Spree. The U.S. and European Governments Must Restrict the Purchasing of Distressed Companies in Sensitive Sectors,\" Foreign Policy , April 15, 2020.", "Kristine Lee, \"It's Not Just the WHO: How China Is Moving on the Whole U.N., Despite His Saber-Rattling, Trump's Pullback Actually Helps Beijing in its New, Inside-Baseball Strategy to Build Influence,\" Politico , April 15, 2020.", "James Palmer, \"Why Chinese Embassies Have Embraced Aggressive Diplomacy, Beijing Is Trying to Maintain Its Narrative as Diplomats Spread Misinformation About the Rest of the World's Coronavirus response,\" Foreign Policy , April 15, 2020.", "Salvatore Babones, \"In the Post-Coronavirus World, Chinese Power is Overrated, A Global Resurgence in National Self-Reliance Might Actually Be a Good Thing for America's Place in the World,\" Foreign Policy , April 14, 2020.", "Martijn Rasser, \"Technology Alliances Will Help Shape Our Post-Pandemic future,\" C4ISRnet , April 14, 2020.", "John Lee Cheong Seong, \"Beijing Tried to Use the Coronavirus Crisis to Enhance Its Global Standing. It's not working; Despite American Errors and Poor Leadership, the Pandemic Only Proves That the Foundations of Underlying Strength Are Still Solid for the United States and Fragile for China,\" South China Morning P ost, April 14, 2020.", "Brian Whitmore, \"Quarantining Sanctions, A Kremlin Diplomatic Gambit Exploits the Pandemic,\" Center for European Policy Analysis (CEPA), April 14, 2020.", "Edward Wong and Paul Mozur, \"China's 'Donation Diplomacy' Raises Tensions With U.S.,\" New York Times , April 14, 2020.", "Jack Detsch, \"U.S. Official: Beware of Chinese Leaders Bearing Coronavirus Gifts,\" Foreign Policy , April 13, 2020.", "Grant Newsham, \"America Takes On The Coronavirus: Is Chinese Help Needed?\" And Magazine , April 13, 2020.", "Isabelle Khurshudyan, \"Russia's State-backed Media Uses the Pandemic to Spin Anti-Western Views. They Are Not Alone,\" Washington Post , April 12, 2020.", "Chen Yun-yu and Emerson Lim, \"U.S., China Stepping Up Military Messaging Amid Pandemic: Analysts,\" Focus Taiwan , April 12, 2020.", "Ren\u00c3\u00a9e DiResta, \"For China, the 'USA Virus' Is a Geopolitical Ploy,\" Atlantic , April 11, 2020.", "Lee Drake, \"What the Trump Administration Needs to Learn from the Plague that Destroyed Athens,\" National Interest , April 11, 2020.", "Bradley A. Thayer Lianchao Han, \"China Is Using The Coronavirus Crisis To Gain Political Capital Against America,\" National Interest , April 11, 2020.", "Bradley A. Thayer Lianchao Han, \"China's Coronavirus Weapon: How Beijing Plans to Leverage the Global Supply Chain,\" National Interest , April 11, 2020.", "Philip Citowicki, \"COVID-19 Escalates the China-Australia Contest in the Pacific,\" Diplomat , April 10, 2020.", "Catie Edmondson, \"China Hawks in Congress See an Opportunity in Coronavirus,\" New York Times , April 10 (updated April 14), 2020.", "Ryan Girdusky, \"Bad Ideology, Not Bad Leadership, Caused Our China Problem,\" Washington Examiner, April 9, 2020.", "Alireza Ahmadi, \"The Trump Era Has Created a New Challenge for China,\" National Interest , April 8, 2020.", "Keith B. Alexander and Jamil N. Jaffer, \"While the World Battles the Coronavirus, Our Adversaries Are Planning Their Next Attack,\" The Hill , April 7 2020.", "James Kraska and Sumantra Maitra, \"The Coronavirus Crisis Has Highlighted America's Failed Foreign Policy Tactics,\" National Interest , April 7, 2020.", "Plamen Tonchev, \"The Belt and Road After COVID-19, Possible Post-pandemic Scenarios for China's Long-term Foreign Policy Strategy,\" Diplomat, April 7, 2020.", "Mark Payumo, \"Why China's Coronavirus Lies Don't Matter If It Plays the Long Information Game, Washington Can Still Beat Beijing's Information Warfare Campaign, But It Needs to Stop Thinking Short-Term,\" National Interest , April 6, 2020.", "Nadia Schadlow, \"Consider the Possibility That Trump Is Right About China, Critics Are Letting Their Disdain for the President Blind Them to Geopolitical Realities,\" Atlantic , April 5, 2020.", "Anthony Vinci and Nadia Schadlow, \"Time for the US to Declare Independence from China,\" Washington Examiner , April 5, 2020.", "Madeleine Albright et al., \"Saving Lives in America, China, and Around the World,\" Asia Society, April 3, 2020.", "Emma Ashford and Matthew Kroenig,\" Will Trump's Pandemic Response Help or Harm U.S. Power? Russia and China Are Stepping in While the United States and Europe Fumble,\" Foreign Policy , April 3, 2020.", "James Jay Carafano, \"America's Post-Coronavirus China Syndrome,\" National Interest , April 1, 2020.", "Matthew Kroenig, \"Why the U.S. Will Outcompete China, The Faith in Autocratic Ascendance and Democratic Decline Is Contrary to Historical Fact,\" Atlantic , April 3, 2020.", "Bruno Ma\u00c3\u00a7\u00c3\u00a3es, \"China Wants to Use the Coronavirus to Take Over the World,\" National Review , April 3, 2020.", "Minxin Pei, \"China's Coming Upheaval, Competition, the Coronavirus, and the Weakness of Xi Jinping,\" Foreign Affairs , April 3, 2020.", "Riley Walters, \"Decreasing U.S.-China Trade Is Worrisome,\" Heritage Foundation, April 3, 2020.", "Tom O'Connor and Naveed Jamali, \"As U.S. Struggles to Fight Coronavirus, China, Russia See Opportunity to Gain Global Power,\" Newsweek , April 1, 2020.", "Matthew Petti, \"Pompeo: China Will Be 'True Strategic Competitor' After Coronavirus,\" National Interest , April 1, 2020.", "Ali Wyne, \"Why China and the U.S. Can't Cooperate to Fight Coronavirus,\" Washington Post , March 26, 2020.", "Peter Rough, \"How China is Exploiting the Coronavirus to Weaken Democracies,\" Foreign Policy , March 25, 2020.", "James Jay Carafano, \"Great Power Competition After the Coronavirus Crisis: What Should America Do?\" National Interest , March 24, 2020.", "Paul Haenle and Lucas Tcheyan, \"U.S.-China Cooperation on Coronavirus Hampered by Propaganda War,\" Carnegie Endowment for International Peace, March 24, 2020.", "Jonathan Marcus, \"Coronavirus: US-China Battle Behind the Scenes,\" BBC News , March 24, 2020.", "Mira Rapp-Hooper, \"China, America, and the International Order After the Pandemic,\" War on the Rocks , March 24, 2020.", "Doug Bandow, \"A War of Words With China Helps Nobody,\" Foreign Policy , March 23, 2020.", "Elisabeth Braw, \"As the West Panics, Putin Is Watching,\" Foreign Policy , March 23, 2020.", "Emily de La Bruyere and Nathan Picarsic, \"Competition Meets Crisis: China's Perverse Opportunity and a Strategic Response,\" National Interest , March 23, 2020.", "Matthew Kroenig, \"Pandemics Can Fast Forward the Rise and Fall of Great Powers,\" National Interest , March 23, 2020.", "Stephen S. Roach and Daniel J. Arbess, \"US Lives and Economic Stability Are Threatened by Coronavirus Conflict with China,\" The Hill , March 23, 2020.", "Gordon G. Chang, \"Donald Trump Can't Cooperate with China on Coronavirus,\" National Interest , March 22, 2020.", "Michael Crowley, Edward Wong, and Lara Jakes, \"Coronavirus Drives the U.S. and China Deeper Into Global Power Struggle,\" New York Times , March 22, 2020.", "Richard Fontaine, \"Virus Competition Is Wrecking China-U.S. Cooperation Hopes, Coronavirus Efforts Are A New Battlefront\u00e2\u0080\u0094and Beijing Is the Only One in the Game,\" Foreign Policy , March 20, 2020.", "James Holmes, \"Beware of Pandemic America, Note to China and Russia: Despite Appearances, the Time of Coronavirus May Not Be an Opportune Time for You to Chisel Away at America's Global Standing,\" National Interest , March 20, 2020.", "Suzanne Nossel, \"China Is Fighting the Coronavirus Propaganda War to Win,\" Foreign Polic y, March 20, 2020.", "Katie Bo Williams, \"US-China Tensions Heat Up As Beijing Seeks Leadership Role,\" Defense One , March 20, 2020.", "David Ignatius, \"The Coronavirus Is A Test of Our National Character,\" Washington Post , March 19, 2020.", "David E. Sanger, David D. Kirkpatrick, Sui-Lee Wee, and Katrin Bennhold, \"Search for Coronavirus Vaccine Becomes a Global Competition, The United States, China and Europe are battling to be the first to find a cure, bringing a nationalist element to a worldwide crisis,\" New York Times , March 19, 2020.", "Dan Blumenthal, \"Coronavirus and the Future of US-China Geopolitical Competition: What We Know So Far,\" Center for Strategic and International Studies, March 18, 2020.", "Kurt M. Campbell and Rush Doshi, \"The Coronavirus Could Reshape Global Order, China Is Maneuvering for International Leadership as the United States Falters,\" Foreign Affairs , March 18, 2020.", "Yasmeen Abutaleb and Josh Dawsey, \"Trump's Soft Touch with China's Xi Worries Advisers Who Say More Is Needed to Combat Coronavirus Outbreak,\" Washington Post , February 16, 2020.", "Democracy, Authoritarianism, and Autocracy", "Steven Feldstein, \"What Democracy Will Fall Next? Hungary Was the First Democratic Victim of the Coronavirus. It May Not Be the Last,\" Foreign Policy , May 7, 2020.", "Kemal Kirisci, \"The Coronavirus Has Led to More Authoritarianism for Turkey,\" National Interest , May 6, 2020. ", "Febriana Firdaus. \"Indonesians Fear Democracy Is the Next Pandemic Victim,\" Foreign Policy , May 4, 2020.", "Margarita R. Seminario and Claudia Fernandez, \"Free Press, Fake News, and Repression during Covid-19: Venezuela, Brazil, and Nicaragua,\" Center for Strategic and International Studies (CSIS), May 4, 2020.", "Jeffrey Smith and Nic Cheeseman, \"Authoritarians Are Exploiting the Coronavirus. Democracies Must Not Follow Suit,\" Foreign Policy , April 28, 2020.", "Alexander Cooley and Daniel Nexon, \"Why Populists Want a Multipolar World, Aspiring Authoritarians Are Sick of the Liberal Order and Eager for New Patrons in Russia and China,\" National Inte rest, April 25, 2020.", "Editorial Board, \"How China's Authoritarian System Made the Pandemic Worse,\" Washington Post , April 17, 2020.", "Andrea Kendall-Taylor and Carisa Nietsche, \"The Coronavirus Is Exposing Populists' Hollow Politics, As the Crisis Worsens, Even More Extreme Groups May Prosper,\" Foreign Policy , April 16, 2020.", "Emily Schultheis, \"Coronavirus Has Paralyzed Europe's Far Right,\" Foreign Policy , April 14, 2020.", "Mason Clark and Aidan Therrien, \"Russia in Review: Kremlin Tests Authoritarian Societal Control Measures During COVID-19 Crisis,\" Institute for the Study of War, April 13, 2020.", "Suzanne Nossel, \"Don't Let Leaders Use the Coronavirus as an Excuse to Violate Civil Liberties,\" Foreign Policy , April 13, 2020.", "Stephen M. Walt, \"The United States Is Getting Infected With Dictatorship,\" Foreign Policy , April 13, 2020.", "Michael Birnbaum and Terrence McCoy, \"As Leaders Seize Powers to Fight Coronavirus, Fear Grows for Democracy,\" Washington Post , April 12, 2020.", "Steve H. Hanke, \"Crises Enliven 'Totalitarian Temptations,'\" Cato Institute, April 10, 2020.", "Elisabeth Zerofsky, \"How Viktor Orb\u00c3\u00a1n Used the Coronavirus to Seize More Power,\" New Yorker , April 9, 2020.", "Tom G. Palmer and Simon Lee, \"How One Pandemic Leads to Another,\" Cato Institute, April 8, 2020.", "Frances Z. Brown and Saskia Brechenmacher, and Thomas Carothers, \"How Will the Coronavirus Reshape Democracy and Governance Globally?\" Carnegie Endowment for International Peace, April, 6 2020.", "James Lamond, \"Authoritarian Regimes Seek To Take Advantage of the Coronavirus Pandemic,\" Center for American Progress, April 6, 2020.", "Seth J. Frantzman, \"Coronavirus Is Empowering Dictators And Changing The World Order,\" National Interest , April 4, 2020.", "Joshua Kurlantzick, \"Dictators Are Using the Coronavirus to Strengthen Their Grip on Power,\" Washington Post , April 3, 2020.", "John Haltiwanger, \"The Coronavirus Just Created a New Dictator in Europe and Has Emboldened the Toxic Behavior of Authoritarians Worldwide,\" Business Insid er, April 1, 2020.", "Luke McGee, \"Power-Hungry Leaders Are Itching to Exploit the Coronavirus Crisis,\" CNN , April 1, 2020.", "Jacob Mchangama and Sarah McLaughlin, \"Coronavirus Has Started a Censorship Pandemic,\" Foreign Policy , April 1, 2020.", "Florian Bieber, \"Authoritarianism in the Time of the Coronavirus, The Pandemic Offers Dictators\u00e2\u0080\u0094and Democracies Alike\u00e2\u0080\u0094an Opportunity for Abuse,\" Foreign Policy , March 30, 2020.", "Selam Gebrekidan, \"For Autocrats, and Others, Coronavirus Is a Chance to Grab Even More Power,\" New York Times , March 30, 2020.", "Anne Applebaum, \"The People in Charge See an Opportunity, Around the World, Rulers Are Using the Pandemic As An Excuse to Grab More Power. And the Public Is Going Along with It,\" Atlanti c, March 23, 2020.", "Melinda Haring and Doug Klain, \"Why Autocrats Love Coronavirus,\" National Interest , March 22, 2020.", "Societal Tension, Reform, and Transformation, and Governmental\u00c2\u00a0Stability", "Robyn Dixon, \"Putin Knows How to Rule Russia as An Autocrat. But He Seems on the Sidelines Amid Coronavirus Crisis,\" Washington Post , May 7, 2020.", "Ann M. Simmons, \"In Russia, Putin Wrestles With Economic Impact of Coronavirus,\" Wall Street Journal , May 6, 2020.", "Nathan Hodge, \"As Coronavirus Hits Record Numbers in Russia, This Is a Dangerous Moment for Putin,\" CNN , May 4, 2020.", "Clara Ferreira Marques, \"Coronavirus Has Exposed Putin's Brittle Regime,\" Bloomberg , May 4, 2020.", "Henry Foy, \"Russia: Pandemic Tests Putin's Grip on Power,\" Financial Times , May 4, 2020.", "Cary Huang, \"Coronavirus: China Faces an Economic Reckoning as Covid-19 Turns World Against Globalisation,\" South China Morning Post , May 3, 2020.", "Andrew Higgins, \"Putin, Russia's Man of Action, Is Passive, Even Bored, in the Coronavirus Era,\" New York Times , April 30, 2020.", "Nael M. Shama, \"In Egypt, the Coronavirus Poses a Political Threat,\" Foreign Policy , April 30, 2020.", "Don Weinland, \"China Slowdown Puts Xi in Political Bind, Coronavirus Threatens Communist Party's Aim of Widespread Prosperity by End of 2020,\" Financial Times , April 28, 2020.", "Editorial Board, \"Russia's Economic Woes Will Clip Vladimir Putin's Wings, Pandemic Combined with Collapsing Oil Prices Spells Real Hardship,\" Financial Times , April 27, 2020.", "Lance Kokonos, \"Coronavirus Is Making Russia's Demographic Disaster Even Worse,\" National Interest , April 25, 2020.", "Leon Aron, \"The Coronavirus Could Imperil Putin's Presidency,\" Wall Street Journal , April 23, 2020.", "Holly Ellyatt, \"Coronavirus Is a 'Challenge' for Putin and 'Huge Danger' for the World, Kremlin Warns,\" CNBC , April 22, 2020.", "Rick Gladstone, \"Oil Collapse and Covid-19 Create Toxic Geopolitical Stew,\" New York Times , April 22, 2020.", "Sarah Rainsford, \"Coronavirus Crisis Tests Putin's Grip on Power in Russia,\" BBC , April 22, 2020.", "Armand Gosu, \"Russia Needs an OPEC+ 2.0 Accord to Avoid a Crisis,\" Middle East Institute, April 21, 2020.", "Patrick Tucker, \"Putin Is Projecting Strength In the Face of Coronavirus. But the Image is Cracked,\" Defense One , April 21, 2020.", "Brian Whitmore, \"The Desanctification of Putin, The Political Costs of COVID-19 Are Beginning to Mount,\" Center for European Policy Analysis (CEPA), April 21, 2020.", "Steven Erlanger, \"Coronavirus Has Lifted Leaders Everywhere. Don't Expect That to Last,\" New York Times , April 15, 2020.", "James Traub, \"After the Coronavirus, the Era of Small Government Will Be Over,\" Foreign Policy , April 15, 2020.", "Frances Z. Brown and Jarrett Blanc, \"Coronavirus in Conflict Zones: A Sobering Landscape,\" Carnegie Endowment for International Peace, April 14, 2020. (Includes links to 12 additional writings by various authors focusing on situations in specific countries and regions.)", "Michael Albertus, \"The Coronavirus Will Cause New Crises in Latin America,\" Foreign Policy , April 16, 2020.", "Samuel Brannen, \"Will Covid-19 End the Age of Mass Protests?\" Center for Strategic and International Studies (CSIS), April 7, 2020.", "Kyle Harper, \"The Coronavirus Is Accelerating History Past the Breaking Point, Every Era Gets the Infectious Diseases\u00e2\u0080\u0094and the Resulting Political Upheaval\u00e2\u0080\u0094It Has Coming,\" Foreign Policy , April 6, 2020.", "Anthony Faiola, Lindzi Wessel, and Shibani Mahtani, \"Coronavirus Chills Protests from Chile to Hong Kong to Iraq, Forcing Activists to Innovate,\" Washington Post , April 4, 2020.", "James Jay Carafano, \"Coronavirus and Regime Change\u00e2\u0080\u0094Will This Plague Topple Nations Great and Small?\" Heritage Foundation , April 1, 2020.", "Nic Cheeseman, \"The Coronavirus Could Topple Governments Around the World,\" Foreign Policy , March 31, 2020.", "Carolyn Whitzman, \"Could Coronavirus Lead To a Fairer World?\" National Interest , March 31, 2020.", "Elizabeth Kolbert, \"Pandemics and the Shape of Human History, Outbreaks Have Sparked Riots and Propelled Public-Health Innovations, Prefigured Revolutions and Redrawn Maps,\" New Yorker , March 20, 2020.", "Simon Mair, \"Why Coronavirus May Change the World (For Better or Worse),\" National Interest , March 30, 2020.", "Nicholas Mulder, \"The Coronavirus War Economy Will Change the World,\" Foreign Policy , March 26, 2020.", "World Economy, Globalization, and U.S. Trade Policy", "Ana Quintana, James Roberts, and Anthony Kim, \"A U.S.\u00e2\u0080\u0093Mexico-Canada (USMCA) Economic Partnership Recovery Plan,\" Heritage Foundation, May 7, 2020.", "Desmond Lachman, \"Could Italy Default on Its Debt Due to the Coronavirus?\" National Interest , May 7, 2020.", "Ruchir Sharma, \"The Pandemic Isn't Changing Everything, It Is Just Speeding Up Trends That Were Already Underway,\" New York Times , May 3, 2020.", "James Crabtree, \"The End of Emerging Markets? Economies such as Brazil, Indonesia, India, Russia, and Turkey face a daunting new reality,\" Foreign Policy , May 3, 2020.", "Kevin Sieff, \"The U.S. Wants Mexico to Keep Its Defense and Health-Care Factories Open. Mexican Workers Are Getting Sick and Dying,\" Washington Post , May 1, 2020.", "Ariel E. Levite and Lyu Jinghua, \"Travails of an Interconnected World: From Pandemics to the Digital Economy,\" Lawfare , April 30, 2020.", "Nathaniel Taplin, \"Trump's Trade Deal With China Is Another Coronavirus Victim, The Pandemic Is Exposing the Perils of Agreements Based on Numerical Targets Rather Than Tariff Reductions or Policy Concessions,\" Wall Street Journal , April 30, 2020.", "Trevor Jackson, \"Terminal Deflation Is Coming, Central Banks' Interventions in the Pandemic Economy Are Unprecedentedly Vast\u00e2\u0080\u0094and Not Nearly Enough,\" Foreign Policy, April 29, 2020.", "Greg Ip, \"Globalization Is Down but Not Out Yet,\" Wall Street Journal , April 28, 2020.", "Zhou Xin, \"Coronavirus: How Will China's Role in the Global Economy Change When Faced with Pandemic Backlash?\" South China Morning Post , April 28, 2020.", "Nicholas Mulder and Adam Tooze, \"The Coronavirus Oil Shock Is Just Getting Started,\" Foreign Policy , April 23, 2020.", "Jack Detsch and Robbie Gramer, \"The Coronavirus Could Upend Trump's China Trade Deal,\" Foreign Policy , April 21, 2020.", "Richard Fontaine, \"Globalization Will Look Very Different After the Coronavirus Pandemic,\" Foreign Policy , April 17, 2020.", "Neil Irwin, \"It's the End of the World Economy as We Know It, Experts Suggest There Will Be 'A Rethink of How Much Any Country Wants to Be Reliant on Any Other Country,'\" New York Times , April 16, 2020.", "Robert Delaney, \"Economic Havoc Wreaked by Coronavirus Has Likely Throttled US-China Trade Deal, Experts Say,\" South China Morning Post , April 15, 2020.", "Joseph E. Stiglitz et al., \"How the Economy Will Look After the Coronavirus Pandemic, The Pandemic Will Change the Economic and Financial Order Forever. We Asked Nine Leading Global Thinkers for Their Predictions,\" Foreign Policy , April 15, 2020.", "Martin Wolf, \"The World Economy Is Now Collapsing, A Microbe Has Overthrown Our Arrogance and Sent Global Output into a Tailspin,\" Financial Times , April 14, 2020.", "Josh Zumbrun, \"Coronavirus-Afflicted Global Economy Is Almost Certainly in Recession,\" Wall Street Journal , April 14, 2020.", "By Raphael S. Cohen Sunday, \"The Coronavirus Will Not Stop Globalization,\" Lawfare , April 12, 2020.", "Dalia Marin, \"How COVID-19 Is Transforming Manufacturing,\" Project Syndicate , April 3, 2020.", "Daniel J. Ikenson, \"The Coronavirus Crisis Is the Worst Time For Trump To Put Up Trade Barriers,\" National Interest , March 30, 2020.", "Simon Lester, \"The Coronavirus Crisis Is the Right Time For Free Trade,\" National Interest , March 30, 2020.", "David Frum, \"The Coronavirus Is Demonstrating the Value of Globalization,\" Atlantic , March 27, 2020.", "Mie Oba, \"Coronavirus and the Future of Globalization,\" Diplomat , March 18, 2020.", "Henry Farrell and Abraham Newman, \"Will the Coronavirus End Globalization as We Know It?\" Foreign Affairs , March 16, 2020.", "Philippe Legrain Marc, \"The Coronavirus Is Killing Globalization as We Know It,\" Foreign Policy , March 12, 2020.", "Allied Defense Spending and U.S. Alliances", "Ben Doherty, \"The Indispensable Nation? Covid-19 Tests the US-Australian Alliance,\" Guardian , May 5, 2020.", "Wallace C. Gregson, \"The Coronavirus Creates New National Security Problems for America,\" National Defense , May 3, 2020.", "Marcus Weisgerber, \"Global Defense Spending Decline Expected As Nations Deal with Coronavirus,\" Defense One , April 28, 2020.", "Tom Kington, \"Back Hard-Hit Businesses? Experts Press EU to Instead Boost Defense Spending,\" Defense News , April 27, 2020.", "Clementine Starling, \"Europe Was Just Getting Better at Moving Militaries,\" Defense One , April 22, 2020.", "Brooks Tigner, Brussels, \"Covid-19: NATO to Review Military Resilience for Post-pandemic World,\" Jane' s, April 17, 2020.", "Richard Fontaine, \"We Need an Atlantic Charter for the Post-coronavirus Era,\" Atlantic , April 16, 2020.", "Deborah Haynes, \"Coronavirus: NATO Chief Denies Alliance Has Responded Too Slowly to Pandemic,\" Sky News , April 15, 2020.", "St\u00c3\u00a9phanie Fillion, \"In Canada, Patience Wearing Thin Over Trump's Antics, A Threat to Militarize the Border and Attempts to Hold Up Lifesaving Medical Supplies Have Roiled the Calmest of Countries,\" Foreign Policy , April 14, 2020.", "Sebastian Sprenger, \"NATO Defense Ministers to Weigh Coronavirus Fallout,\" Defense News , April 14, 2020.", "James Jay Carafano, \"After Coronavirus\u00e2\u0080\u0094We Still Need Europe and They Need Us. Here's What Has to Happen,\" Heritage Foundation , April 13, 2020.", "Derek Chollet, Micha\u00c5\u0082 Baranowski, and Steven Keil, \"Where is NATO? And Where is Trump? The Virus Is Destroying Economies and Paralyzing Societies in Ways Russian Military Planners Could Only Dream,\" Defense One , April 13, 2020.", "Philip H. Gordon and Jeremy Shapiro, \"The Atlantic Alliance Had Preexisting Conditions. The Pandemic Will Worsen Them,\" War on the Rocks , April 13, 2020.", "Quentin Lopinot, \"Europe Is at War with the Coronavirus. Where Does That Leave European Defense?\" Center for Strategic and International Studies (CSIS), April 13, 2020.", "Janusz Bugajski, \"Mind the Gap, And Don't Succumb to Transatlantic Fever,\" Center for European Policy Analysis (CEPA), April 10, 2020.", "Sophia Becker, Christian M\u00c3\u00b6lling, and Torben Sch\u00c3\u00bctz, \"The Coronavirus Threatens NATO. Let's Move to Protect the Alliance,\" Defense News , April 9, 2020.", "Matthew Karnitschnig and Judith Mischke, \"Berlin Lets Mask Slip on Feelings for Trump's America, The Crisis Has Convinced Germans That Trump Puts Other Countries at Risk,\" Politico , April 6 (updated April 7), 2020.", "Andy Blatchford, \"Trump's Moves to Hold Medical Supplies Tip Trudeau to China,\" Politico , April 4 (updated April 5), 2020.", "Dov S. Zakheim, \"NATO's Budget Virus: How the Pandemic Could Slash Military Spending,\" The Hill , March 16, 2020.", "European Union", "Michael Birnbaum, \"E.U. Defends Handling of China Relations After Beijing Censors Op-ed Written by Bloc's Ambassadors,\" Washington Post , May 7, 2020.", "Heather A. Conley, \"Covid-19 May Encourage a No-Deal Brexit,\" Center for Strategic and International Studies (CSIS), May 7, 2020.", "Lorne Cook and Llazar Semini, \"EU Aims to Reassure Balkans with Virus Aid, Economic Support,\" Associated Press , May 6, 2020.", "Christopher Caldwell, \"Can the European Union Survive a Pandemic? The Coronavirus Crisis Has Turned Its Member Nations Against Each Other,\" New Republic , May 5, 2020.", "Rick Noack, \"The Coronavirus Has Brought Back Border Barriers in Europe, Dividing Couples, Families and Communities,\" Washington Post , May 1, 2020.", "Sinan Ulgen, \"The Coronavirus Is Creating a Crisis on Europe's Borders,\" Foreign Policy , May 1, 2020.", "Spencer Wong, \"Is the Coronavirus Ushering in an Era of Eurosceptic Leaders? The Pandemic Could Very Well Be a Watershed Moment in European Politics,\" National Interest , April 29, 2020.", "Elisabeth Braw, \"Forget Washington and Beijing. These Days Global Leadership Comes From Berlin,\" Foreign Policy , April 28, 2020.", "Rikard Jozwiak, \"EU Monitors See Coordinated COVID-19 Disinformation Effort By Iran, Russia, China,\" Radio Farda , April 23, 2020.", "Jennifer Rankin, \"How Covid-19 Poured Cold Water on Netherlands' EU Romance,\" Guardian (UK) , April 23, 2020.", "Peter Rough, \"The European Union Needs More National Flexibility,\" National Review , April 22, 2020.", "Donatienne Ruy, \"Fault Lines and Prospects for European Solidarity,\" Center for Strategic and Budgetary Assessments (CSIS), April 22, 2020.", "Bashkim Smakaj, \"COVID-19 and the Need for Deep EU Reform,\" Euractiv , April 22, 2020.", "HJ Mai, \"The Coronavirus Could Tear the EU Apart,\" Vox , April 21, 2020.", "Stephania Taladrid, \"What the Coronavirus Means for Europe's Future,\" New Yorker , April 21, 2020.", "Sam Fleming, \"EU Coronavirus Recovery Fund Plans Face Political Bear Traps,\" Financial Times, April 20, 2020.", "Andrea Dudik and Flavia Krause-Jackson, \"Albania's European Dream Is Just Out of Reach, As the Coronavirus Widens Fractures in the EU, Hopes of a Larger Europe Fade,\" Bloomberg Business w eek , April 17, 2020.", "Dalibor Rohac, \"Europe Needs an Alexander Hamilton, Not More Budget Hawks,\" Foreign Policy , April 16, 2020.", "Simon Clark and Ben Dummett, \"Coronavirus Accelerates European Efforts to Block Foreign Takeovers,\" Wall Street Journal , April 10, 2020.", "Luke McGee, \"The EU Has Bungled Its Response to Coronavirus and It Might Never Fully Recover,\" CNN , April 10, 2020.", "by Tom Rogan, \"Coronavirus Bailout Lays Bare European Union Nationalist Divisions,\" Washington Examiner , April 10, 2020.", "Samuel Volkin, \"Covid-19 and a Splintered European Union,\" Hub (Johns Hopkins University) , April 10, 2020.", "Oliver Wiseman, \"Will We Meet Again? The Covid-19 Crisis Is Testing European Unity to the Breaking Point,\" City Journal , April 8, 2020.", "Heather A. Conley, \"An Eroding European Union,\" Center for Strategic and International Studies (CSIS), April 6, 2020.", "Katya Adler, \"Coronavirus Outbreak Eats Into EU Unity,\" BBC , April 3, 2020.", "Katharina Konarek, \"COVID-19\u00e2\u0080\u0094A Make-It or Break-It Moment for the European Union,\" The Hill , April 3, 2020.", "Kevin Allison, \"A COVID-19 test for the European Union,\" Gzero Media , March 31, 2020.", "Definition of, and Budgeting for, U.S. National Security", "Joseph Marks, \"The Cybersecurity 202: Security Pros Form Alliance to Help Hospitals Facing Hacking Threats During Pandemic,\" Washington Post , May 4, 2020.", "Greg Barbaccia, \"The Coronavirus Pandemic Will Force a Paradigm Shift in the U.S. Intelligence Community,\" National Interest , April 23, 2020.", "Kori Schake, \"A New Org Chart Won't Stop the Next Pandemic,\" Bloomberg , April 22, 2020.", "Rachel Olney, \"How Will the Pandemic Affect National Security Innovation?\" War on the Rocks , April 21, 2020.", "Christopher Woody, \"After Coronavirus, the US Needs to Worry about a '7 th domain' of Warfare, Top Navy Commander in Europe Says,\" Business Insider , April 17, 2020.", "David E. Sanger, \"Analysis: Will Pandemic Make Trump Rethink National Security?\" New York Times , April 15, 2020.", "Benjamin Jensen, \"When Systems Fail: What Pandemics and Cyberspace Tell Us About the Future of National Security,\" War on the Rocks , April 9, 2020.", "Christopher Preble, \"How will COVID-19 Change US National Security Strategy?\" Responsible Statecraft , April 8, 2020.", "Glenn S. Gerstell and Michael Morell, \"Four Ways U.S. Intelligence Efforts Should Change in the Wake of the Coronavirus Pandemic,\" Washington Post , April 7, 2020.", "Oona A. Hathaway, \"After COVID-19, We Need to Redefine 'National Security,' The Post-9/11 Era Is Over,\" Slate , April 7, 2020.", "Zachery Tyson Brown, \"America's National Security Software Needs an Upgrade, The Outdated U.S. Security Apparatus Was Completely Unprepared for the Coronavirus Pandemic,\" Foreign Policy , April 6, 2020.", "Ben Rhodes, \"The 9/11 Era Is Over, The Coronavirus Pandemic and a Chapter of History That Should Have Expired Long Ago,\" Atlantic , April 6, 2020.", "Gregory D. Koblentz and Michael Hunzeker, \"National Security in the Age of Pandemics,\" Defense One , April 3, 2020.", "Nahal Toosi, \"Coronavirus Rattles America's National Security Priesthood,\" Politico Pro , March 29, 2020.", "Joseph S. Nye, Jr., \"COVID-19's Painful Lesson about Strategy and Power,\" War on the Rocks , March 26, 2020.", "Gary J. Schmitt, \"National Security and the Pandemic of 2020,\" American Interest , March 20, 2020.", "U.S. Defense Strategy, Defense Budget, and Military Operations", "Susan Montoya Bryan (Associated Press), \"US Must Move Ahead with Work on Nukes, Says Nuclear Security Boss,\" Defense New s, May 6, 2020.", "Leo Shane III, \"No Extra Money for Defense Amid Coronavirus Crisis, Think Tank Argues,\" Military Times , May 6, 2020.", "Hal Brands, \"Can a Broke America Fight a Cold War With China? The Coronavirus Has United Americans Against Beijing's Aggressions, But It Will Also Devastate the Pentagon Budget,\" Bloomberg , May 5, 2020.", "Rebeccah L. Heinrichs, \"Expand Missile Defenses During the Pandemic, Don't Cut Them,\" Defense News , May 5, 2020.", "Fred Kaplan, \"Now Is the Time to Cut the Defense Budget,\" Slate , May 5, 2020.", "Paul McLeary, \"Old Weapons Under Fire As COVID Debt Rises,\" Breaking Defense , May 5, 2020.", "Aaron Mehta, \"Esper: Flat Budget Could Speed Cutting of Legacy Programs,\" Defense News , May 5, 2020.", "John M. Donnelly, \"US military poised for post-pandemic shift,\" CQ (Congressional Quarterly) , May 4, 2020.", "Ben Werner, \"SECDEF Esper Preparing For Future Defense Spending Cuts,\" USNI News , May 4, 2020.", "Rebecca Kheel, \"Defense Budget Brawl Looms After Pandemic,\" The Hill , May 3, 2020.", "Anrea Howard, \"The Pandemic and America's Response to Future Bioweapons,\" War on the Rocks , May 1, 2020.", "Paul McLeary, \"Pentagon Wary Of Adversaries Buying Defense Firms Amid Economic Crisis,\" Breaking Defense , April 30, 2020.", "Ben Wolfgang, \"U.S. Military Ramps Up Counterterrorism Operations in Africa Amid Pandemic,\" Washington Times , April 29, 2020.", "David Barno and Nora Bensahel, \"Five Ways the U.S. Military Will Change After the Pandemic,\" War on the Rocks , April 28, 2020.", "Theresa Hitchens, \"DoD Budget Cuts Likely As $4 Trillion Deficit Looms,\" Breaking Defense , April 27, 2020.", "Walter Russell Mead, \"The Century of Bioweapons,\" Wall Street Journal , April 27, 2020.", "Connor O'Brien, \"Defense Boosters Fire Warning Shots over Budget Cuts Due to Pandemic,\" Politico Pro , April 24, 2020.", "Natasha Bertrand, Daniel Lippman, and Lara Seligman, \"Officials Probe the Threat of a Coronavirus Bioweapon,\" Politico Pro , April 23, 2020.", "William D. Hartung, \"Now Isn't the Time to Push for Nuclear Modernization,\" Defense News , April 21, 2020.", "Loren Thompson, \"How Coronavirus Could Permanently Transform The U.S. Military,\" Forbes , April 20, 2020.", "Todd Harrison, \"DoD Must Identify Its 'Crown Jewels' in Preparation for Fiscal Uncertainty,\" Defense News , April 15, 2020.", "Michael J. Mazarr, \"Toward a New Theory of Power Projection,\" War on the Rock s, April 15, 2020.", "Robert Burns, \"Military Sees No Quick Exit From 'New World' of Coronavirus,\" Associated Press , April 14, 2020.", "Tony Bertuca, \"Global Pandemic Threatens to Hobble National Defense Strategy,\" Inside Defense , April 13, 2020.", "David Ignatius, \"The Coronavirus Is Already Reshaping Defense Strategies,\" Washington Post , April 9, 2020.", "Daniel L. Davis, \"Coronavirus Means No More Money for Forever Wars,\" National Interest , April 7, 2020.", "Harrison Schramm, Kevin A. Chlan, Peter Kouretsos, COVID-19, Analysis and Policy Implications , Center for Strategic and Budgetary Assessments, 2020 (released April 7, 2020), 31 pp.", "Jason Sherman, \"Analyst: Pandemic Will Squeeze Defense Spending As Nation's Focus Shifts to Health Care,\" Inside Defense , April 6, 2020.", "Stratfor Worldview, \"Will the Coronavirus Ruin Countries' Ability to Wage War?\" National Interest , April 5, 2020.", "James G. Foggo III, \"Germs: The Seventh Domain of Warfare,\" U.S. Naval Institute Proceedings , April 2020.", "David Barno and Nora Bensahel, \"After the Pandemic: America and National Security in a Changed World,\" War on the Rocks , March 31, 2020.", "Max Boot, \"Covid-19 is Killing Off Our Traditional Notions of National Defense,\" Washington Post , March 31, 2020.", "Jim Thomas, \"A Blueprint for Rebuilding America's Military After the Coronavirus,\" National Interest , March 28, 2020.", "Doug Bandow, \"Now's The Time To Become A Truly 'America First' Military, With Coronavirus Killing the Economy, We Can No Longer Afford to Project Power Everywhere,\" American Conservative , March 26, 2020.", "Doug Bandow, \"How the Coronavirus Shows North Korea Doesn't Matter That Much to America,\" National Interest , March 25, 2020.", "Doug Bandow, \"Coronavirus Means America Is Really Broke. Trump Should Get the Hell Out of Syria,\" National Interest , March 22, 2020.", "U.S. Foreign Assistance and International Debt Relief", "Michael H. Fuchs, Alexandra Schmitt, and Haneul Lee, \"Foreign Aid is Critical to Stopping the Coronavirus,\" National Interest , May 3, 2020.", "Daniel F. Runde, Conor M. Savoy, and Shannon McKeown, \"Covid-19 Has Consequences for U.S. Foreign Aid and Global Leadership,\" Center for Strategic and International Studies (CSIS), May 1, 2020.", "James Kynge and Sun Yu, \"China Faces Wave of Calls for Debt Relief on 'Belt and Road' Projects,\" Financial Times , April 30, 2020.", "Charles Holmes, Anthony Lake, and Witney Schneidman, \"It's Time to Help Africa Fight the Virus, The Continent Is Ripe for a Public Health Disaster, and Western Powers Must Step in to Prevent Another Global Catastrophe,\" Foreign Policy, April 29, 2020.", "Matthew Lee, \"Virus Pandemic Collides with Trump's Disdain for Foreign Aid,\" Associated Press , April 17, 2020.", "Adam Tooze, \"A Global Pandemic Bailout Was Coming\u00e2\u0080\u0094Until America Stopped It,\" Foreign Policy , April 17, 2020.", "Editorial Board, \"Even as Rich Countries Reel, It's Imperative to Help Emerging Markets,\" Washington Post , April 16, 2020.", "Dayo Israel, \"Unless Canceled, Africa's Debt Burden Will Cause COVID-19 to Kill Millions,\" Washington Examiner , April 16, 2020.", "Cara Anna and Aya Batrawy, \"Richest Countries Agree to Freeze Poorer Nations' Debt,\" Associated Press , April 15, 2020.", "Nahal Toosi, \"Trump Hobbles Foreign Aid as Coronavirus Rips Around the World, Confusion at the Top Has Crippled USAID at a Critical Time for the Global Battle Against the Pandemic,\" Politico , April 15, 2020.", "Josh Zumbrun, \"G-7 Countries Support Debt Relief for Poorest Countries If Joined by Full G-20,\" Wall Street Journal , April 14, 2020.", "Robbie Gramer, \"Outgoing USAID Chief Says Pandemic Underscores Importance of Foreign Aid,\" Foreign Policy , April 13, 2020.", "Josh Rogin, \"The Pandemic Means the Trump Administration Must Stop Mistreating USAID,\" Washington Post , April 9, 2020.", "Josh Rogin, \"America's $2 Trillion Coronavirus Stimulus Package Ignores the Rest of the World,\" Washington Post , March 26, 2020.", "Non-state Actors", "Ryan Browne, \"ISIS Seeks to Exploit Pandemic to Mount Resurgence in Iraq and Syria,\" CNN , May 8, 2020.", "Robert Muggah, \"The Pandemic Has Triggered Dramatic Shifts in the Global Criminal Underworld,\" Foreign Policy, May 8, 2020.", "Ashley Jackson, \"For the Taliban, the Pandemic Is a Ladder,\" Foreign Policy , May 6, 2020.", "Brandon Prins, \"Why Coronavirus May Lead to More Piracy,\" National Interest , May 6, 2020.", "Lydia Khalil, \"COVID-19 and America's Counter-Terrorism Response,\" War on the Rocks , May 1, 2020.", "Luke Baker, \"Militants, Fringe Groups Exploiting COVID-19, Warns EU Anti-Terrorism Chief,\" Reuters , April 30, 2020.", "Joseph Hincks, \"With the World Busy Fighting COVID-19, Could ISIS Mount a Resurgence?\" Time , April 29, 2020.", "Luis Fajardo, \"Coronavirus: Latin American Crime Gangs Adapt to Pandemic,\" BBC , April 22, 2020.", "Raffaello Pantucci, \"After the Coronavirus, Terrorism Won't Be the Same,\" Foreign Policy , April 22, 2020.", "Valentina Di Donato and Tim Lister, \"The Mafia Is Poised to Exploit Coronavirus, and Not Just in Italy,\" CNN , April 19, 2020.", "Jim Mustian and Jake Bleiberg, \"'Cartels Are Scrambling': Virus Snarls Global Drug Trade,\" Associated Press , April 19, 2020.", "Colum Lynch, \"How Trump and Putin Weakened U.N. Bid for a Global Cease-Fire, U.S. Officials Worry That Counterterrorism Operations Will Be Constrained,\" Foreign Policy , April 17, 2020.", "Seth J. Frantzman, \"Iran Regime, ISIS and Other Extremists Exploit Coronavirus to Wreak Havoc,\" Jerusalem Post , April 16, 2020.", "Kevin Sieff, Susannah George, and Kareem Fahim, \"Now Joining the Fight Against Coronavirus: The World's Armed Rebels, Drug Cartels and Gangs,\" Washington Post , April 14, 2020.", "Souad Mekhennet, \"Far-Right and Radical Islamist Groups Are Exploiting Coronavirus Turmoil,\" Washington Post , April 10, 2020.", "Yonah Jeremy Bob, \"Coronavirus Economic Impact Could Block Iran from Funding Terror\u00e2\u0080\u0094INSS,\" Jerusalem Post , April 7, 2020.", "Vanda Felbab-Brown, \"What Coronavirus Means for Online Fraud, Forced Sex, Drug Smuggling and Wildlife Trafficking,\" Lawfare , April 3, 2020.", "Cara Anna, \"Extremists See Global Chaos from Virus As An Opportunity,\" Associated Press , April 2, 2020.", "Stratfor Worldview, \"Coronavirus Could Lead To Lots of This in the Near Future,\" National Interest , March 22, 2020. (The article discusses potential actions by non-state actors.)", "U.S. Attention to International Issues Other than COVID-19", "Arjun Kapur, \"Scotland Launched an Invasion During the Black Death. Does History Tell China to Attack Taiwan?\" National Interest , May 2, 2020.", "Con Coughlin, \"China Exploiting the Coronavirus Pandemic to Expand in Asia,\" Gatestone Institute , April 30, 2020.", "Corinne Redfern, \"The Pandemic's Hidden Human Trafficking Crisis, The Coronavirus Has Created More People Vulnerable to Exploitation by Traffickers\u00e2\u0080\u0094and Revealed the World's Unpreparedness to Protect Them,\" Foreign Policy , April 30, 2020.", "Paul Haenle, \"Security Concerns in Asia-Pacific Escalate Amid Coronavirus Scramble, While the Trump Administration Is Consumed with the Coronavirus, China and North Korea Are Seizing the Moment for Strategic Advantage,\" Carnegie Endowment for International Peace, April 29, 2020.", "Bertil Lintner, \"Time May Be Ripe for China to Invade Taiwan, Pandemic Has Left a US Security Vacuum Around the Self-Governing Island China Has Oft-Vowed to 'Reincorporate' with the Mainland,\" Asia Times , April 28, 2020.", "Victor Davis Hanson, \"Pandemic Only 1 of America's Security Concerns,\" Daily Signal , April 23, 2020.", "Gordon Lubold and Dion Nissenbaum, \"With Trump Facing Virus Crisis, U.S. Warns Rivals Not to Seek Advantage,\" Wall Street Journal , April 20, 2020.", "Ellen Mitchell, \"Foreign Powers Test US Defenses Amid Coronavirus Pandemic,\" The Hill , April 19, 2020.", "Karen DeYoung, \"Foreign Policy Challenges Persist for a Distracted U.S. in the Midst of Pandemic,\" Washington Post , April 10, 2020.", "Sylvie Lanteaume (Agence France-Presse), \"Hit by Virus, Pentagon Warns Enemies: Don't Test Us,\" Yahoo News , April 10, 2020.", "\"With the world distracted, China intimidates Taiwan,\" Economist , April 8, 2020. (This article does not list an author.)", "Fred Kaplan, \"The Coronavirus Hasn't Stopped Trump From Undermining Our National Security,\" Slat e, March 26, 2020.", "Role of Congress", "Robbie Gramer and Jack Detsch, \"Pandemic Stymies Congressional Check on Trump's Foreign Policy,\" Foreign Policy , April 8, 2020."], "subsections": []}]}}
{"id": "R45755", "title": "Legislative Branch: FY2020 Appropriations", "released_date": "2020-02-12T00:00:00", "summary": ["The legislative branch appropriations bill provides funding for the Senate; House of Representatives; Joint Items; Capitol Police; Office of Congressional Workplace Rights (formerly Office of Compliance); Congressional Budget Office (CBO); Architect of the Capitol (AOC); Library of Congress (LOC), including the Congressional Research Service (CRS); Government Publishing Office (GPO); Government Accountability Office (GAO); Open World Leadership Center; and the John C. Stennis Center.", "The legislative branch budget request was submitted on March 11, 2019. Following hearings in the House and Senate in February, March, and April, the House Appropriations Committee Subcommittee on the Legislative Branch held a markup on May 1, 2019. No amendments were considered, and the bill was ordered reported to the full committee by voice vote.", "On May 9, 2019, the House Appropriations Committee held a markup of the bill. Two manager's amendments were considered. The first amendment was adopted by voice vote. The second amendment was adopted by voice vote after an amendment to the amendment was not adopted (23-28). The bill was ordered reported ( H.Rept. 116-64 ; H.R. 2779 ). As amended, the bill would have provided $3.972 billion, not including Senate items (+$164.2 million).", "On June 3, the House Committee on Rules announced its intention to consider and report a resolution that would structure the consideration in the House of H.R. 2740 , the Labor, Health and Human Services, and Education appropriations bill. The committee indicated that the resolution would add the text of four additional appropriations bills to the text of H.R. 2740 , including the text of H.R. 2779 as Division B. Although draft amendments were submitted related to legislative branch appropriations, that division was stricken prior to consideration of H.R. 2740 on the House floor.", "On September 26, the Senate Appropriations Committee met to mark up its version of the FY2020 legislative branch appropriations bill. It reported the bill on the same day by recorded vote (31-0). S. 2581 ( S.Rept. 116-124 ) would have provided $3.600 billion, not including House items (+$187.6 million).", "Continuing appropriations resolutions ( P.L. 116-59 and P.L. 116-69 ) provided funding for legislative branch activities until the enactment of P.L. 116-94 on December 20, 2019. Division E provides $5.049 billion (+$202.8 million, or +4.2%, from the FY2019 level). Additional language related to the legislative branch was included in Division P. During consideration of the FY2020 funding levels, Congress also considered $10.0 million in FY2019 supplemental appropriations for GAO for audits and investigations related to storms and disasters ( P.L. 116-20 , enacted June 6, 2019).", "Previously, over the last decade", "The FY2019 level of $4.836 billion represented an increase of $136.0 million (+2.9%) from FY2018, not including the FY2019 supplemental. The FY2018 level of $4.700 billion represented an increase of $260.0 million (+5.9%) from FY2017. The FY2017 level of $4.440 billion represented increase of $77.0 million (+1.7%) from FY2016. The FY2016 level of $4.363 billion represented an increase of $63.0 million (+1.5%) from FY2015. The FY2015 level of $4.300 billion represented an increase of $41.7 million (+1.0%) from FY2014. The FY2014 level of $4.259 billion represented an increase of $198 million (+4.9%) from FY2013. The FY2013 level of $4.061 billion represented a decrease of $246 million (-5.6%), including the sequestration and rescission, from FY2012. The FY2012 level of $4.307 billion represented a decrease of $236.9 million (-5.2%) from FY2011. The FY2011 level of $4.543 billion represented a decrease of $125.1 million (-2.7%) from the $4.669 billion provided for FY2010.", "The smallest of the appropriations bills, the legislative branch bill comprises approximately 0.4% of total discretionary budget authority."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "FY2020 Consideration: Overview of Actions", "paragraphs": ["The first section of this report provides an overview of the consideration of FY2020 legislative branch appropriations, with subsections covering each action to date, including", "the initial submission of the request on March 11, 2019; hearings held by the House Legislative Branch Appropriations Subcommittee in February, March, and April 2019 and hearings held by the Senate Legislative Branch Appropriations Subcommittee in March and April 2019; the House subcommittee markup held on May 1, 2019; the House full committee markup on May 9, 2019, and reporting of H.R. 2779 ; the Office of Management and Budget (OMB) letter from May 8, 2019, with the Administration's position on the legislative branch budget; discussion in June of the potential inclusion of legislative branch funding in H.R. 2740 (Rules Committee Print 116-17); the Senate full committee markup on September 26, 2019, and reporting of S. 2581 ; the enactment on September 27, 2019, of a continuing resolution providing funding through November 21 ( P.L. 116-59 ), and the enactment on November 21, 2019, of a continuing resolution providing funding through December 20 ( P.L. 116-69 ); and the enactment of the Further Consolidated Appropriations Act ( P.L. 116-94 ) on December 20, 2019, which included funding for legislative branch activities for FY2020 in Division E and additional language related to the legislative branch in Division P. ", "It is followed by a section on prior year actions and funding, which contains a historical table and figure. ", "The report then provides an overview of the FY2020 budget requests of individual legislative branch agencies and entities. ", " Table 5 through Table 9 list enacted funding levels for FY2019 and the requested, House-reported, Senate-reported, and enacted levels for FY2020, while the Appendix lists House, Senate, and conference bills and reports; public law numbers; and enactment dates since FY1998."], "subsections": [{"section_title": "Status of FY2020 Appropriations: Dates and Documents", "paragraphs": [], "subsections": []}, {"section_title": "Submission of FY2020 Budget Request on March 11, 2019", "paragraphs": ["The White House submitted its budget for FY2020, which includes the legislative branch budget request, on March 11, 2019. As explained by OMB, ", "The budget covers the agencies of all three branches of Government\u00e2\u0080\u0094Executive, Legislative, and Judicial\u00e2\u0080\u0094and provides information on Government-sponsored enterprises. In accordance with law or established practice, OMB includes information on agencies of the Legislative Branch, the Judicial Branch, and certain Executive Branch agencies as submitted by those agencies without change.", "The independence of the submissions by the legislative branch agencies and entities is codified in Title 31, Section 1105, of the U.S. Code , which states the following: ", "Estimated expenditures and proposed appropriations for the legislative branch and the judicial branch to be included in each budget ... shall be submitted to the President ... and included in the budget by the President without change.", "Furthermore, Division C of the FY2012 Consolidated Appropriations Act ( P.L. 112-74 ) added language to Title 31, Section 1107, relating to budget amendments, stating the following: ", "The President shall transmit promptly to Congress without change, proposed deficiency and supplemental appropriations submitted to the President by the legislative branch and the judicial branch.", "The FY2020 budget contained a request for $5.288 billion in new budget authority for legislative branch activities (+9.3%). "], "subsections": []}, {"section_title": "Senate and House Hearings on the FY2020 Budget Requests", "paragraphs": [" Table 2 lists the dates of hearings of the legislative branch subcommittees in February, March, and April 2019. Prepared statements of witnesses were posted on the subcommittee websites, and hearing transcripts were published by the Government Publishing Office."], "subsections": []}, {"section_title": "House Appropriations Committee Subcommittee on the Legislative Branch Markup", "paragraphs": ["On May 1, 2019, the House Appropriations Committee Subcommittee on the Legislative Branch held a markup of the FY2020 bill. The subcommittee recommended $3.943 billion, a $135.2 million increase (+3.6%) from the comparable 2019 enacted level, not including Senate items, which are historically considered by the Senate and not included in the House bill.", "No amendments were offered, and the bill was ordered reported to the full committee by voice vote."], "subsections": []}, {"section_title": "House Appropriations Committee Legislative Branch Markup", "paragraphs": ["On May 9, 2019, the House Appropriations Committee met to mark up the FY2020 bill reported from its legislative branch subcommittee. The following amendments were considered:", "A manager's amendment, offered by Subcommittee Chairman Tim Ryan of Ohio, that would increase funding for the Veterans' History Project by $1.0 million, add report language, and include one technical change. The amendment was adopted by voice vote. A manager's amendment, offered by Subcommittee Chairman Tim Ryan of Ohio, that would increase the overall funding for the bill by $29.0 million to reflect revised 302(b) subcommittee allocations adopted by the committee on May 8 ( H.Rept. 116-59 ). The amendment would increase total House funding by $19.0 million and Architect of the Capitol funding by $10.0 million. Subcommittee Ranking Minority Member Jaime Herrera Beutler offered an amendment to the manager's amendment that would have stricken this additional funding and instead placed it in a spending reduction account. The amendment to the amendment failed by recorded vote (23-28), and the amendment was adopted by voice vote. ", "The bill was ordered reported by recorded vote (28-22).", "As amended, the bill provided $3.972 billion, not including Senate items (+$164.2 million)."], "subsections": []}, {"section_title": "OMB Letter of May 8, 2019", "paragraphs": ["As it did during consideration of the FY2019 legislative branch appropriations bill, OMB submitted a letter with the Administration's views on the overall size of the legislative branch bill as well as the funding levels for specific accounts. In particular, the Administration letter cited funding levels for the House of Representatives and the Government Accountability Office (GAO)."], "subsections": []}, {"section_title": "Discussion of the Legislative Branch Bill During Consideration of a Rule for Consideration of H.R. 2740", "paragraphs": ["On June 3, the House Committee on Rules announced its intention to consider and report a resolution that would structure consideration in the House of H.R. 2740 , the Labor, Health and Human Services, and Education appropriations bill. The committee indicated that the resolution reported from the Rules Committee would add the text of four additional appropriations bills to the text of H.R. 2740 . This proposal would include the text of H.R. 2779 , the legislative branch appropriations bill as reported by the Committee on Appropriations (to be included as Division B of H.R. 2740 ). The Rules Committee made available the legislative text that included the five appropriations bills and directed Members to draft their amendments to that text (House Rules Committee Print 116-17).", "Proposed amendments were due to the committee by 10:00 a.m. on Friday, June 7, 2019. A total of 41 draft amendments were submitted related to legislative branch appropriations (Division B). ", "Following reported discussions related to the automatic Member pay adjustment, the resolution reported from the House Rules Committee further altered the version of H.R. 2740 that would be considered by the House, removing the text of the legislative branch appropriations bill. The legislative branch appropriations bill neither funds nor adjusts Member salaries. Provisions prohibiting the automatic Member pay adjustment are sometimes included in the annual appropriations bills. A provision prohibiting the automatic Member pay adjustments could be included in any bill, or be introduced as a separate bill.", "H.R. 2740 , the Labor, Health and Human Services, Education, Defense, State, Foreign Operations, and Energy and Water Development Appropriations Act, 2020, was ultimately agreed to in the House on June 19, 2019, without the legislative branch appropriations funding. "], "subsections": []}, {"section_title": "Senate Appropriations Committee Legislative Branch Markup and Reporting", "paragraphs": ["On September 26, the Senate Appropriations Committee met to mark up its version of the FY2020 legislative branch appropriations bill. It reported the bill on the same day (by recorded vote, 31-0; S. 2581 , S.Rept. 116-124 ).", "S. 2581 would have provided $3.600 billion, not including House items, an increase of $187.6 million (+5.5%) from the comparable FY2019 enacted level."], "subsections": []}, {"section_title": "Continuing Appropriations Resolutions Enacted", "paragraphs": ["Prior to the start of FY2020 on October 1, 2019, a continuing appropriations resolution (CR) providing funding for legislative branch activities through November 21, 2019, was enacted ( P.L. 116-59 , September 27). ", "Another CR, providing funding through December 20, 2019, was enacted on November 21, 2019 ( P.L. 116-69 )."], "subsections": []}, {"section_title": "FY2020 Funding Enacted on December 20, 2019", "paragraphs": ["The Further Consolidated Appropriations Act ( P.L. 116-94 ) was enacted on December 20, 2019. ", "The act provides $5.049 billion for legislative branch activities for FY2020 in Division E (+$202.8 million, or +4.2%, from the FY2019 level).", "In addition, Division P (Other Matter) contains titles related to the legislative branch, including", "Title XIV\u00e2\u0080\u0094Library of Congress Technical Corrections . This title includes amendments related to the American Folklife Preservation Act; the National Library Service for the Blind and Print Disabled; establishing a uniform pay scale for Library of Congress Career Senior Executive Positions; and removing a cap on personnel for the Copyright Royalty Judges Program. Title XV\u00e2\u0080\u0094Senate Entities . This title includes amendments to 2 U.S.C. \u00c2\u00a76567 (\"Funds for Secretary of Senate to assist in proper discharge within United States of responsibilities to foreign parliamentary groups or other foreign officials\") and 2 U.S.C. \u00c2\u00a76616 (\"Support services for Senate during emergency; memorandum of understanding with an executive agency\"). Title XVI\u00e2\u0080\u0094Legislative Branch Inspectors General Independence . This title focuses on the Inspectors General for the Library of Congress, the Office of the Architect of the Capitol, and the Government Publishing Office. It includes sections on pay, limits on bonuses, counsel, and authorities; law enforcement authority; budgetary independence; and hiring authority. Title XVII\u00e2\u0080\u0094Managing Political Fund Activity . This title states that the \"Majority Leader and the Minority Leader may each designate up to 2 employees of their respective leadership office staff as designees referred to in the second sentence of paragraph 1 of rule XLI of the Standing Rules of the Senate.\" "], "subsections": []}]}, {"section_title": "Funding in Prior Years: Brief Overview and Trends", "paragraphs": [], "subsections": [{"section_title": "Legislative Branch: Historic Percentage of Total Discretionary Budget Authority", "paragraphs": ["The percentage of total discretionary budget authority provided to the legislative branch has remained relatively stable at approximately 0.4% since at least FY1976. The maximum level (0.48%) was in FY1995, and the minimum (0.31%) was in FY2009. "], "subsections": []}, {"section_title": "FY2019", "paragraphs": ["FY2019 funding was provided in Division B of the Energy and Water, Legislative Branch, and Military Construction and Veterans Affairs Appropriations Act, 2019 ( P.L. 115-244 ), which was enacted on September 21, 2018. The $4.836 billion provided for the legislative branch represents an increase of $136.0 million (+2.9%) from the FY2018 enacted level.", "An additional $10.0 million in FY2019 supplemental appropriations for GAO \"for audits and investigations related to Hurricanes Florence, Lane, and Michael, Typhoons Yutu and Mangkhut, the calendar year 2018 wildfires, earthquakes, and volcano eruptions, and other disasters declared pursuant to the Robert T. Stafford Disaster Relief and Emergency Assistance Act\" was included in two bills considered in the 116 th Congress: H.R. 268 , which passed the House on January 16, 2019, but cloture was not invoked in the Senate; and H.R. 2157 , which passed the House on May 10 (Roll no. 202) and the Senate (with an amendment) on May 23, 2019 (Record Vote Number: 129). H.R. 2157 was enacted June 6, 2019 ( P.L. 116-20 )."], "subsections": []}, {"section_title": "FY2018", "paragraphs": ["FY2018 funding was provided in Division I of the Consolidated Appropriations Act, 2018 ( P.L. 115-141 ), which was enacted on March 23, 2018. The $4.700 billion provided by the act represented an increase of $260.0 million (+5.9%) from the FY2017 enacted level. ", "In addition, P.L. 115-123 , enacted February 9, 2018, provided $14.0 million to GAO \"for audits and investigations relating to Hurricanes Harvey, Irma, and Maria and the 2017 wildfires.\" (Title IX of Division B)."], "subsections": []}, {"section_title": "FY2017", "paragraphs": ["FY2017 funding was provided in Division I of the Consolidated Appropriations Act, 2017 ( P.L. 115-31 ), which was enacted on May 5, 2017. The $4.440 billion provided by the act represented a $77.0 million increase (+1.7%) from the FY2016 enacted level. "], "subsections": []}, {"section_title": "FY2016", "paragraphs": ["FY2016 funding was provided in Division I of the Consolidated Appropriations Act, 2016 ( P.L. 114-113 ), which was enacted on December 18, 2015. The $4.363 billion provided by the act represented a $63.0 million increase (+1.5%) from the FY2015 enacted level. "], "subsections": []}, {"section_title": "FY2015", "paragraphs": ["FY2015 funding was provided in Division H of the Consolidated and Further Continuing Appropriations Act, 2015 ( P.L. 113-235 ), which was enacted on December 16, 2014. The $4.300 billion provided by the act represented an increase of $41.7 million (+1.0%) from FY2014. "], "subsections": []}, {"section_title": "FY2014", "paragraphs": ["Neither a legislative branch appropriations bill nor a continuing resolution (CR) containing FY2014 funding was enacted prior to the beginning of the fiscal year on October 1, 2013. A funding gap, which resulted in a partial government shutdown, ensued for 16 days. The funding gap was terminated by the enactment of a CR ( P.L. 113-46 ) on October 17, 2013. The CR provided funding through January 15, 2014. Following enactment of a CR on January 15, 2014 ( P.L. 113-73 ), a consolidated appropriations bill was enacted on January 17 ( P.L. 113-76 ), providing $4.259 billion for the legislative branch for FY2014."], "subsections": []}, {"section_title": "FY2013", "paragraphs": ["FY2013 funding of approximately $4.061 billion was provided by P.L. 113-6 , which was signed into law on March 26, 2013. The act funded legislative branch accounts at the FY2012 enacted level, with some exceptions (also known as \"anomalies\"), not including across-the-board rescissions required by Section 3004 of P.L. 113-6 . Section 3004 was intended to eliminate any amount by which the new budget authority provided in the act exceeded the FY2013 discretionary spending limits in Section 251(c)(2) of the Balanced Budget and Emergency Deficit Control Act, as amended by the Budget Control Act of 2011 ( P.L. 112-25 ) and the American Taxpayer Relief Act of 2012 ( P.L. 112-240 ). Subsequent to the enactment of P.L. 113-6 , OMB calculated that additional rescissions of 0.032% of security budget authority and 0.2% of nonsecurity budget authority would be required. The act did not alter the sequestration reductions implemented on March 1, which reduced most legislative branch accounts by 5.0%. The accompanying OMB report indicated a dollar amount of budget authority to be canceled in each account containing nonexempt funds. "], "subsections": []}, {"section_title": "FY2012 and Prior", "paragraphs": ["Division G of the FY2012 Consolidated Appropriations Act ( P.L. 112-74 ) provided $4.307 billion for the legislative branch. This level was $236.9 million below (-5.2%) the FY2011 enacted level. P.L. 112-10 provided $4.543 billion for legislative branch operations in FY2011. This level represented a $125.1 million decrease (-2.7%) from the $4.668 billion provided in the FY2010 Legislative Branch Appropriations Act ( P.L. 111-68 ) and the FY2010 Supplemental Appropriations Act ( P.L. 111-212 ). The FY2009 Omnibus Appropriations Act provided $4.402 billion. In FY2009, an additional $25.0 million was provided for GAO in the American Recovery and Reinvestment Act of 2009. P.L. 111-32 , the FY2009 Supplemental Appropriations Act, also contained funding for a new Capitol Police radio system ($71.6 million) and additional funding for the Congressional Budget Office (CBO) ($2.0 million). ", "As seen in Table 3 , legislative branch funding decreased each year from FY2010 through FY2013. Funding did not exceed the FY2010 level until FY2018. ", " Figure 1 shows the same information graphically, while also demonstrating the division of budget authority across the legislative branch in FY2019.", " Figure 2 shows the timing of legislative branch appropriations actions, including the issuance of House and Senate reports, bill passage, and enactment, from FY1996 through FY2020. It shows that fiscal year funding for the legislative branch has been determined ", "on or before October 1 six times during this period (FY1997, FY2000, FY2004, FY2006, FY2010, and FY2019); twice during the first month of the fiscal year (FY1998 and FY1999); twice in November (FY1996 and FY2002); seven times in December (FY2001, FY2005, FY2008, FY2012, FY2015, FY2016, and FY2020); and eight times in the next calendar year (FY2003, FY2007, FY2009, FY2011, FY2013, FY2014, FY2017, and FY2018). FY2017 funding, enacted on May 5, 2017, represented the latest date of enactment during this period. "], "subsections": []}]}, {"section_title": "FY2020 Legislative Branch Funding Issues", "paragraphs": ["The following sections discuss the various legislative branch accounts. ", "During consideration of the legislative branch bills, the House and Senate conform to a \"longstanding practice under which each body of Congress determines its own housekeeping requirements and the other concurs without intervention.\""], "subsections": [{"section_title": "Senate", "paragraphs": [], "subsections": [{"section_title": "Overall Funding", "paragraphs": ["The Senate requested $1.046 billion for FY2020, an 11.9% increase over the $934.8 million provided in FY2019. The Senate-reported bill recommended, and the FY2020 act provides, $969.4 million (+$34.6 million, +3.7%).", "Additional information on the Senate account is presented in Table 6 ."], "subsections": []}, {"section_title": "Senate Committee Funding", "paragraphs": ["Appropriations for Senate committees are contained in two accounts.", "1. The inquiries and investigations account contains funds for all Senate committees except Appropriations. The FY2019 level of $133.3 million was continued in the FY2020 request, the Senate-reported bill, and the FY2020 act. 2. The Committee on Appropriations account contains funds for the Senate Appropriations Committee. The FY2020 enacted level of $15.8 million, which is equivalent to the Senate-requested and -reported level, represents an increase of $297,000 (+1.9%) from the $15.5 million provided in FY2019."], "subsections": []}, {"section_title": "Senators' Official Personnel and Office Expense Account19", "paragraphs": ["The Senators' Official Personnel and Office Expense Account provides each Senator with funds to administer an office. It consists of an administrative and clerical assistance allowance, a legislative assistance allowance, and an official office expense allowance. The funds may be used for any category of expenses, subject to limitations on official mail. ", "The Senate requested $531.1 million, $102.1 million above (+23.8%) the $429.0 million provided in FY2019. Of this amount, $5.0 million is provided for compensating Senate interns. The Senate-reported bill recommended, and the FY2020 act provides, $449.0 million, an increase of $20.0 million (+4.7%)."], "subsections": [{"section_title": "Administrative Provisions", "paragraphs": ["S. 2581 included two administrative provisions: ", "1. One provision, which was first included in FY2016, would require amounts remaining in the Senators' Official Personnel and Expense Account (SOPOEA) to be used for deficit reduction or to reduce the federal debt. This provision was included in P.L. 116-94 . 2. One provision would continue the freeze on Member salaries at the 2009 level. Member salaries are funded in a permanent appropriations account, and the legislative branch bill does not contain language funding or increasing Member pay. A provision prohibiting the automatic Member pay adjustments could be included in any bill, or be introduced as a separate bill. This provision was included in Section 7 of P.L. 116-94 ."], "subsections": []}]}]}, {"section_title": "House of Representatives", "paragraphs": [], "subsections": [{"section_title": "Overall Funding", "paragraphs": ["The House requested $1.356 billion for FY2020, an increase of 10.1% over the $1.232 billion provided for FY2019. The FY2020 act provides $1.366 billion, an increase of 10.8%.", "Additional information on headings in the House of Representatives account is presented in Table 7 ."], "subsections": []}, {"section_title": "House Committee Funding", "paragraphs": ["Funding for House committees is contained in the appropriation heading \"committee employees,\" which typically comprises two subheadings.", "The first subheading contains funds for personnel and nonpersonnel expenses of House committees, except the Appropriations Committee, as authorized by the House in a committee expense resolution. The House requested $139.1 million, an increase of $11.2 million (+8.8%) from the FY2019 enacted level of $127.9 million. The House-reported bill recommended, and the FY2020 act provides, $135.4 million, an increase of $7.5 million (+5.8%).", "The second subheading contains funds for the personnel and nonpersonnel expenses of the Committee on Appropriations. The House requested $25.4 million, an increase of $2.3 million (+10.0%) from the FY2019 enacted level of $23.1 million. The House-reported bill recommended, and the FY2020 act provides, $24.3 million, an increase of $1.2 million (+5.0%)."], "subsections": []}, {"section_title": "Members' Representational Allowance21", "paragraphs": ["The Members' Representational Allowance (MRA) is available to support Members in their official and representational duties. ", "The House-requested level of $613.0 million represents an increase of $39.4 million (+6.9%) from the $573.6 million provided in FY2019. The House-reported bill recommended, and the FY2020 act provides, $615.0 million, an increase of $41.4 million (+7.2%).", "A separate account, included in the House-reported bill and the FY2020 act, contains $11.0 million for interns in House Member offices, and $365,000 for interns in House leadership offices."], "subsections": [{"section_title": "Administrative Provisions", "paragraphs": ["The House requested several administrative provisions related to", " unexpended balances from the MRA; limiting amounts available from the MRA for leased vehicles; providing additional transfer authority; establishing the allowance for compensation of interns in Member offices; providing for cybersecurity assistance from other federal entities; limiting or prohibiting the delivery of the printed B udget of the United States , the Federal Register , and the House telephone directory; allowing the use of expired funds for the payment of death gratuities for House employees; and allowing the use of expired funds for the employee compensation fund and unemployment compensation.", "The House-reported bill contained the provisions related to the unexpended MRA balances, leased vehicles, cybersecurity assistance, and use of expired funds. In addition, the House-reported bill included provisions relating to the compensation of interns in Member and Leadership offices; rescinding amounts in the Stationery and Page Dorm revolving funds; and providing for reduction in the amount of tuition charged for children of House Child Care Center employees. P.L. 116-94 includes the provisions from the House-reported bill."], "subsections": []}]}]}, {"section_title": "Support Agency Funding", "paragraphs": [], "subsections": [{"section_title": "U.S. Capitol Police (USCP)", "paragraphs": ["The USCP is responsible for the security of the Capitol Complex, including, for example, the U.S. Capitol, the House and Senate office buildings, the U.S. Botanic Garden, and the Library of Congress buildings and adjacent grounds. ", "The FY2019 enacted level was $456.3 million. In comparison, levels considered for FY2020 include the following:", "Requested: $463.3 million (+1.5%) House-reported: $463.3 million (+1.5%) Senate-reported: $464.3 million (+1.8%) Enacted: $464.3 million (+1.8%)", "Additional information on the USCP is presented in Table 8 .", "Appropriations for the police are contained in two accounts\u00e2\u0080\u0094a salaries account and a general expenses account. ", "1. Salaries\u00e2\u0080\u0094the FY2019 act provided $374.8 million for salaries. The USCP requested, and the House-reported bill would have provided, $378.1 million (+0.9%). The Senate-reported bill recommended, and the FY2020 act provides, $379.1 million (+1.1%). 2. General expenses\u00e2\u0080\u0094the FY2019 act provided $81.5 million for general expenses. The USCP-requested level of $85.3 million (+4.6%) was contained in the House-reported and Senate-reported bills and the FY2020 act.", "Another appropriation relating to the USCP appears within the Architect of the Capitol account for Capitol Police buildings and grounds. The FY2019 level was $57.7 million. The USCP requested $54.97 million (-4.8%); the House-reported bill would have provided $52.8 million (-8.4%); the Senate-reported bill would have provided $50.3 million (-12.8%); and the FY2020 act provides $55.2 million (-4.3%)."], "subsections": [{"section_title": "Administrative Provision", "paragraphs": ["The USCP requested, and the House-reported bill and P.L. 116-94 contain, an administrative provision increasing the total limit on student loan repayments from $40,000 to $60,000. The Senate-reported bill did not include this provision. "], "subsections": []}]}, {"section_title": "Office of Congressional Workplace Rights", "paragraphs": ["Formerly known as the Office of Compliance, the Office of Congressional Workplace Rights (OCWR) was renamed by the Congressional Accountability Act of 1995 Reform Act ( P.L. 115-397 ). It is an independent and nonpartisan agency within the legislative branch, and it was originally established to administer and enforce the Congressional Accountability Act of 1995. The act applies various employment and workplace safety laws to Congress and certain legislative branch entities.", "The FY2019 enacted level was $6.3 million, which was continued in the FY2020 request, the House-reported and Senate-reported versions of the bill, and the FY2020 act. "], "subsections": []}, {"section_title": "Congressional Budget Office (CBO)", "paragraphs": ["CBO is a nonpartisan congressional agency created to provide objective economic and budgetary analysis to Congress. CBO cost estimates are required for any measure reported by a regular or conference committee that may affect revenues or expenditures.", "The FY2019 level was $50.7 million. In comparison, levels considered for FY2020 include the following:", "Requested: $53.6 million (+5.6%) House-reported: $52.7 million (+3.8%) Senate-reported: $54.9 million (+8.3%) Enacted: $54.9 million (+8.3%)"], "subsections": []}, {"section_title": "Office of Technology Assessment (OTA)", "paragraphs": ["Since the closure of OTA, which was a legislative branch agency established in 1972 and last funded in FY1996, Congress has periodically reexamined funding for scientific and technological studies by the legislative branch. Some Members have expressed support for the refunding of OTA through the distribution of \"Dear Colleague\" letters, at committee hearings and in committee prints, and through the introduction of legislation or amendments.", "Since FY2002, funding for technology assessments has also been provided to GAO, with frequent references in appropriations and conference reports on the legislative branch appropriations bills. ", "More recently, and in response to language in the FY2019 Senate and conference reports, GAO announced the formation of a new Science, Technology Assessment, and Analytics Team on January 29, 2019.", "Additionally, the conference report to accompany the FY2019 legislative branch appropriations bill ( H.R. 5895 ) required a study on technology assessments available to Congress:", "Technology Assessment Study: The Committees have heard testimony on, and received dozens of requests advocating for restoring funding to the Office of Technology Assessment, and more generally on how Congress equips itself with the deep technical advice necessary to understand and tackle the growing number of science and technology policy challenges facing our country. The conferees direct the Congressional Research Service (CRS) to engage with the National Academy of Public Administration or a similar external entity to produce a report detailing the current resources available to Members of Congress within the Legislative Branch regarding science and technology policy, including the GAO. This study should also assess the potential need within the Legislative Branch to create a separate entity charged with the mission of providing nonpartisan advice on issues of science and technology. Furthermore, the study should also address if the creation of such entity duplicates services already available to Members of Congress. CRS should work with the Committees in developing the parameters of the study and once complete, the study should be made available to relevant oversight Committees.", "The FY2020 House-reported bill would have provided $6.0 million for restarting OTA. The funding would remain available through FY2021. H.Rept. 116-64 further stated the following:", "To do its job in this modern era, Congress needs to understand and address the issues and risks resulting from a wide range of rapid technological developments such as cryptocurrencies, autonomous vehicles, gene editing, artificial intelligence, and the ever-expanding use of social media platforms, to give just a few examples. A re-opened OTA will play an important role in providing accurate, professional, and unbiased information about technological developments and policy options for addressing the issues those developments raise. In that role, OTA will complement the work of the Government Accountability Office in the area of science and technology....", "Since the de-funding of OTA in 1995, there have been several unsuccessful attempts to restore the office. During that time, it has become increasingly clear that Congress does not have adequate resources available for the in-depth, high level analysis of fast-breaking technology developments and their public policy implications that was formerly provided by OTA. While the Government Accountability Office (GAO) has increased its technology assessment activities attempting to fill that gap, the structure and culture of GAO somewhat constrain its ability to replicate OTA. The Office's governance by a bipartisan board and its ability to tap outside expert resources and rely on a Technology Assessment Advisory Council provide the capacity to offer policy recommendation options to Congress, which are not available from other Congressional sources.", "The Senate-reported bill would not restart OTA, but S.Rept. 116-124 states that the ", "Committee looks forward to reviewing the recommendations of the National Academy of Public Administration study currently underway, including the evaluation of options available to Congress in the area of science and technology. The Committee will continue to engage key authorizing committees and interested members as these discussions continue.", "S.Rept. 116-124 also addresses the role of the new GAO Science, Technology Assessment, and Analytics Team (STAA), stating", "In consultation with internal and external stakeholders, academic and nonprofit organizations, and Members of Congress, the STAA team submitted its plan for staffing needs, resources, areas of expertise, and the products and services that the team will provide or are currently providing to Congress. The plan demonstrates STAA's value and ability to assess upcoming technological and digital innovations. Presently, the STAA is providing Congress with technology assessments, technical assistance, and reports in the areas of oversight of Federal technology and science programs, as well as best practices in engineering sciences and cybersecurity. The Committee applauds the efforts of GAO's STAA team and encourages STAA to continue providing Congress with unbiased explanatory data while also exploring new areas for independent science and technology guidance, relevant to Congress.", "The National Academy of Public Administration (NAPA) study was released on November 14, 2019. It examined three options:", "Option 1\u00e2\u0080\u0094Enhancing Existing Entities", "Option 2\u00e2\u0080\u0094Creating a New Agency", "Option 3\u00e2\u0080\u0094Enhance Existing Entities and Create an Advisory Office", "NAPA recommended enhancing technology assessment capabilities of both CRS and GAO, while also establishing (1) an Office of the Congressional Science and Technology Advisor\u00e2\u0080\u0094led by an appointee of the House and Senate leadership and assisted by a small staff\u00e2\u0080\u0094and (2) a Congressional Science and Technology Coordinating Council\u00e2\u0080\u0094chaired by the Congressional Science and Technology Advisor\u00e2\u0080\u0094to enhance coordination between GAO and CRS.", "The FY2020 act did not provide funding for restarting OTA. Rather, the explanatory statement accompanying H.R. 1865 stated the following:", "Science and Technology Needs in Congress : The report released on November 14, 2019, by the National Academy of Public Administration (NAPA) identified the existing gaps in science and technology expertise and resources available to Congress. The Committees, Members, stakeholders and other committees of jurisdiction working together will continue to evaluate the recommendations in the report to address this gap....", "Science and Technology Issues : The funding provided will allow GAO to increase support for Congress' work on evolving science and technology issues. The 2019 report from the National Academy of Public Administration (NAPA) identified the need for GAO to focus its advice to Congress on technical assessments and short-to-medium term studies. The study also highlighted that although GAO's support requests from Congress have increased, GAO should consider expanding its outreach to the science and technology community and coordination with CRS to better fill these gaps. GAO is encouraged to dedicate a specific number of experts to work exclusively on GAO's Science, Technology Assessment, and Analytics (STAA) team that was created in January 2019, a recommendation that was included in the NAPA report."], "subsections": []}, {"section_title": "Architect of the Capitol (AOC)", "paragraphs": ["The Architect of the Capitol (AOC) is responsible for the maintenance, operation, development, and preservation of the U.S. Capitol Complex, which includes the Capitol and its grounds, House and Senate office buildings, Library of Congress buildings and grounds, Capitol Power Plant, Botanic Garden, Capitol Visitor Center, and USCP buildings and grounds. The AOC is responsible for the Supreme Court buildings and grounds, but appropriations for their expenses are not contained in the legislative branch appropriations bill.", "The FY2019 level was $733.7 million. In comparison, levels considered for FY2020 include the following:", "Requested: $831.7 million (+13.3%) House-reported: $624.7 million (-2.4%, not including Senate-items) Senate-reported: $585.8 million (+9.2%, not including House-items) Enacted: $695.9 million (-5.2%)", "Operations of the AOC are funded in the following 10 accounts: capital construction and operations, Capitol building, Capitol grounds, Senate office buildings, House office buildings, Capitol Power Plant, Library buildings and grounds, Capitol Police buildings and grounds, Capitol Visitor Center, and Botanic Garden. Additional funding information on the individual AOC accounts is presented in Table 9 ."], "subsections": [{"section_title": "Administrative Provision", "paragraphs": ["The AOC also requested one administrative provision that prohibits the use of funds for bonuses for contractors behind schedule or over budget. This provision has been included in the annual appropriations acts since FY2015. The House-reported version of the provision would apply to FY2020 and each succeeding fiscal year. The Senate-reported bill included the annual provision, which was included in P.L. 116-94 ."], "subsections": []}]}, {"section_title": "Library of Congress (LOC)", "paragraphs": ["The LOC serves simultaneously as Congress's parliamentary library and the de facto national library of the United States. Its broader services to the nation include the acquisition, maintenance, and preservation of a collection of more than 167 million items in various formats; hosting nearly 1.9 million visitors annually; service to the general public and scholarly and library communities; administration of U.S. copyright laws by its Copyright Office; and administration of a national program to provide reading material to the blind and physically handicapped. Its direct services to Congress include the provision of legal research and law-related services by the Law Library of Congress, and a broad range of activities by CRS, including in-depth and nonpartisan public policy research, analysis, and legislative assistance for Members and committees and their staff; congressional staff training; information and statistics retrieval; and continuing legal education for Members of both chambers and congressional staff.", "The FY2019 level was $696.1 million. In comparison, levels considered for FY2020 include the following:", "Requested: $747.1 million (+7.3%) House-reported: $720.3 million (+3.5%) Senate-reported: $735.8 million (+5.7%) Enacted: $725.4 million (+4.2%)", "These figures do not include additional authority to spend receipts.", "The House Appropriations Committee report ( H.Rept. 116-64 ) explains a change in the technology funding practice that affected the four LOC appropriations headings:", "Appropriations Shifts to Reflect Centralized Funding for Information Technology : During fiscal year 2018, in an effort to reduce duplication, increase efficiency, and better utilize specialized expertise, the Library of Congress began providing more Information Technology (IT) services centrally though its Office of the Chief Information Officer (OCIO) rather than in the Library's various component organizations. In fiscal years 2018 and 2019, Library components which have separate appropriations accounts reimbursed the main Library of Congress Salaries and Expenses account through intra-agency agreements for the IT services being provided to them centrally by the OCIO under this initiative.", "For fiscal year 2020, however, the Library has requested that funding for centralized IT services be appropriated directly to the main Salaries and Expenses account for use by the OCIO instead of to the component organizations receiving the services, in order to reflect where services are actually being performed and avoid the need for repeated reimbursement transactions. The Committee has agreed to this request.", "As a result, the Committee bill reflects a shift in appropriations totaling $13,556,000 to the Library of Congress Salaries and Expenses account, with $2,708,000 of that shift coming from the Copyright Office, $8,767,000 coming from the Congressional Research Service, and $2,081,000 coming from the National Library Service for the Blind and Physically Handicapped.", "H.Rept. 116-64 further contains a \"note regarding IT centralization\" accompanying each heading, comparing the FY2020 House-reported level to the FY2019 enacted level after accounting for this shift.", "The Senate Appropriations Committee report ( S.Rept. 116-124 ) similarly addressed the centralization, stating the following: ", "The recommendation for this account also reflects a shift in appropriations associated with the centralization of information technology [IT] funding from across the Library into the Office of Chief Information Officer [OCIO]. A total of $13,556,000 will move to the OCIO in fiscal year 2020, reflecting the cost of IT activities that were funded previously within the Congressional Research Service, Copyright Office, and the National Library Service for the Blind and Physically Handicapped. The realignment of these funds will help facilitate the final phases of IT centralization across the Library. The Committee expects the Library to provide a detailed spend plan, including any increase in FTE levels for the IT modernization intended to be addressed with the funds provided in fiscal year 2020.", "The LOC headings include the following: ", "1. Salaries and expenses \u00e2\u0080\u0094The FY2019 level was $474.1 million. The LOC requested $522.6 million (+10.2%). The House-reported bill would have provided $501.3 million, an increase of $13.7 million when reflecting the centralized IT funding, according to H.Rept. 116-64 . The Senate-reported bill would have provided $514.6 million. The FY2020 act provides $504.2 million. These figures do not include authority to spend receipts ($6.0 million in the FY2019 act, the FY2020 request, the House-reported and Senate-reported bills, and the FY2020 act). 2. Copyright Office \u00e2\u0080\u0094The FY2019 level was $43.6 million. The LOC requested $43.3 million (-0.7%). The House-reported bill would have provided $42.15 million, an increase of $1.3 million when reflecting the centralized IT funding, according to H.Rept. 116-64 . The Senate-reported bill recommended, and the FY2020 act provides, $42.14 million. These figures do not include authority to spend receipts and prior year unobligated balances ($49.8 million in FY2019; $49.7 million in the FY2020 request, the House-reported and Senate-reported bills, and the FY2020 act). 3. Congressional Research Service \u00e2\u0080\u0094The FY2019 level was $125.7 million. The FY2020 request contains $121.6 million (-3.3%). The House-reported bill would have provided $119.9 million, an increase of $2.99 million when reflecting the centralized IT funding, according to H.Rept. 116-64 . The Senate-reported bill recommended, and the FY2020 act provides, $120.5 million. 4. Books for the b lind and p hysically h andicapped \u00e2\u0080\u0094The FY2019 level was $52.8 million. The LOC requested $59.6 million (+13.0%). The House-reported bill would have provided $56.9 million, an increase of $6.2 million when reflecting the centralized IT funding, according to H.Rept. 116-64 . The Senate-reported bill recommended, and the FY2020 act provides, $58.6 million.", "The AOC's budget also contains funds for LOC buildings and grounds. In FY2019, $68.5 million was provided. The FY2020 request contains $121.3 million (+77.1%), the House-reported bill would have provided $86.8 million (+26.7%), the Senate-reported bill would have provided $63.6 million (-7.1%), and the FY2020 act provides $55.7 million (-18.6%)."], "subsections": [{"section_title": "Administrative Provision", "paragraphs": ["The LOC received authority to obligate funds for reimbursable and revolving fund activities ($194.6 million in the FY2019 act; $231.98 million in the FY2020 request , the House-reported and Senate-reported versions of the bill, and the FY2020 act)."], "subsections": []}]}, {"section_title": "Government Publishing Office (GPO)44", "paragraphs": ["The FY2019 enacted level of $117.0 million was continued in the FY2020 request, the House-reported and Senate-reported versions of the bill, and the FY2020 act. This level is approximately equivalent (-0.1%) to the level provided in FY2018 and FY2017. ", "GPO's budget authority is contained in three accounts, with the allocation in the FY2020 request and bills varying slightly from the FY2019 enacted level: ", "1. Congressional publishing\u00e2\u0080\u0094The FY2019 enacted level of $79.0 million is continued in the FY2020 request, the House-reported and Senate-reported versions of the bill, and the FY2020 act. 2. Public information programs of the Superintendent of Documents (salaries and expenses)\u00e2\u0080\u0094The FY2020 requested, House-reported, Senate-reported, and enacted level of $31.3 million is $704,000 (-2.2%) less than the FY2019 enacted level of $32.0 million. 3. GPO Business Operations Revolving Fund \u00e2\u0080\u0094The FY2020 requested, House-reported, Senate-reported, and enacted level of $6.7 million is $704,000 above the FY2019 enacted level of $6.0 million."], "subsections": []}, {"section_title": "Government Accountability Office (GAO)", "paragraphs": ["GAO responds to requests for studies of federal government programs and expenditures. GAO may also initiate its own work. ", "The FY2019 enacted level was $589.8 million. In comparison, levels considered for FY2020 include the following:", "Requested: $647.6 million (+9.8%). House-reported: $615.6 million (+4.4%) Senate-reported: $639.4 million (+8.4%) Enacted: $630.0 million (+6.8%)", "These levels do not include offsetting collections ($35.9 million in the FY2019 act; $24.8 million in the FY2020 request, the House-reported and Senate-reported versions of the bill, and the FY2020 act)."], "subsections": []}, {"section_title": "Open World Leadership Center", "paragraphs": ["Open World requested, and the House-reported bill would have provided, $5.8 million for FY2020, an increase of $200,000 (+3.6%) from the $5.6 million provided each year since FY2016. The Senate-reported bill recommended, and the FY2020 act provides $5.9 million, an increase of $300,000 (+5.4%).", "The Open World Leadership Center administers a program that supports democratic changes in other countries by inviting their leaders to observe democracy and free enterprise in the United States. Congress first authorized the program in 1999 to support the relationship between Russia and the United States. The program encouraged young federal and local Russian leaders to visit the United States and observe its government and society.", "Established at the LOC as the Center for Russian Leadership Development in 2000, the center was renamed the Open World Leadership Center in 2003, when the program was expanded to include specified additional countries. In 2004, Congress further extended the program's eligibility to other countries designated by the center's board of trustees, subject to congressional consideration. The center is housed in the LOC and receives services from the LOC through an interagency agreement.", "The legislative branch bills have included a provision since FY2016, also contained in the FY2020 act: ", "That funds made available to support Russian participants shall only be used for those engaging in free market development, humanitarian activities, and civic engagement, and shall not be used for officials of the central government of Russia. ", "The location and future of Open World, attempts to assess its effectiveness, and its inclusion in the legislative branch budget have been discussed at appropriations hearings and in report language for more than a decade. The funding level for Open World has also varied greatly during this period. For additional discussion, see the \"Prior Year Discussion of Location and Funding of Open World\" section in CRS Report R44899, Legislative Branch: FY2018 Appropriations , by Ida A. Brudnick. "], "subsections": []}, {"section_title": "John C. Stennis Center for Public Service Training and Development", "paragraphs": ["The center was created by Congress in 1988 to encourage public service by congressional staff through training and development programs. The FY2020 request, the House- and Senate- reported versions of the bill, and the FY2020 act contain $430,000, which is approximately the same level provided annually since FY2006. "], "subsections": []}]}, {"section_title": "General Provisions", "paragraphs": ["As in past years, Congress considered a number of general provisions related to the legislative branch. These provisions and their status are listed in Table 4 ."], "subsections": []}, {"section_title": "Introduction to Summary Tables and Appendix", "paragraphs": [" Table 5 through Table 9 provide information on funding levels for the legislative branch overall, the Senate, the House of Representatives, the USCP, and the AOC. ", "The tables are followed by an Appendix , which lists House, Senate, and conference bills and reports; public law numbers; and enactment dates since FY1998."], "subsections": [{"section_title": "Appendix. Fiscal Year Information and Resources", "paragraphs": [], "subsections": []}]}]}]}}
{"id": "R46315", "title": "Congressional Oversight Provisions in the Coronavirus Aid, Relief, and Economic Security (CARES) Act (P.L. 116-136)", "released_date": "2020-04-17T00:00:00", "summary": ["The Coronavirus Aid, Relief, and Economic Security (CARES) Act ( P.L. 116-136 ) includes a variety of oversight provisions designed to increase the information available to Congress regarding the federal government's implementation of the CARES Act and response to the COVID-19 pandemic more generally. Specifically, the CARES Act:", "establishes a Congressional Oversight Commission, establishes a Special Inspector General for Pandemic Recovery, establishes a Pandemic Response Accountability Committee made up of certain agencies' inspectors general, provides additional financial resources for certain Offices of Inspectors General, creates additional reporting and oversight duties for the Government Accountability Office, and institutes new reporting requirements on a variety of agencies based on provisions in the CARES Act.", "As agencies begin to implement the CARES Act and as the COVID-19 pandemic continues to develop, understanding the federal resources and information available can help Congress support both its own oversight activity and the consideration of potential future legislation to respond to COVID-19.", "This report is a reference guide to the oversight mechanisms in the CARES Act and a launching pad for deeper consideration of oversight-related issues. This report complements other CRS products, such as a list of CRS experts covering issue areas related to other provisions of the CARES Act:", "CRS products: Other CRS products on the COVID-19 response efforts can be found on the CRS Coronavirus Disease 2019 resource page at https://www.crs.gov/resources/coronavirus-disease-2019 . CRS subject matter experts: For a list of points of contact for CRS's congressional clients with specific questions regarding the particular authorities and appropriations in the CARES Act, see CRS Report R46299, Coronavirus Aid, Relief, and Economic Security (CARES) Act: CRS Experts , by William L. Painter and Diane P. Horn."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["The Coronavirus Aid, Relief, and Economic Security (CARES) Act ( P.L. 116-136 ) was passed by Congress and signed into law by President Donald Trump on March 27, 2020. The CARES Act provides over $2 trillion in relief to individuals; businesses; state, local, and federal agencies; and industry sectors impacted by the COVID-19 pandemic and the government-led effort to limit its public health impact. Given the scope of the relief provided, the variety of new and existing programs that are to provide this aid, and the number of individuals and entities receiving aid, the administration of the CARES Act is likely to be a complicated and significant undertaking by executive branch agencies and non-federal partners. These complexities may be made even greater by both pressure to provide relief as swiftly as possible and unique logistical challenges posed by the ongoing public health emergency.", "All of those factors make Congress's oversight role during the COVID-19 pandemic especially important and may make it more difficult for Congress to conduct timely oversight. Congress included a variety of oversight mechanisms in the CARES Act. In addition to requiring executive branch officers to submit reports on a variety of topics, provide notice before taking specified actions, and testify before certain committees, the CARES Act provides additional resources to the Government Accountability Office (GAO) and to Offices of Inspectors General (OIGs) that may have additional audit and investigative activity due to the CARES Act. In addition, the CARES Act creates three new oversight entities: a Congressional Oversight Commission, a Special Inspector General for Pandemic Recovery (SIGPR), and the Pandemic Recovery Accountability Committee (PRAC, a group of inspectors general). Each of those entities is empowered to provide oversight of significant aspects of the CARES Act. ", "This report is a reference guide for congressional clients interested in understanding the congressional oversight tools built into the CARES Act. Oversight provisions are broadly organized into sections related to the nature of the oversight mechanism. Within each of these sections, agencies and entities are listed in alphabetical order. To the extent practicable, sections include citations to the CARES Act and to any other relevant laws and regulations."], "subsections": [{"section_title": "Scope of the Report", "paragraphs": ["This report identifies selected provisions in the CARES Act that may facilitate Congress's ability to provide oversight of its implementation. Congress's authority to oversee the executive branch extends beyond these explicit requirements and includes many additional tools and requirements. The fact that many provisions of the CARES Act do not have explicit reporting requirements or other more formal oversight mechanisms does not prevent Congress from engaging in oversight activities related to those programs by seeking information from the executive branch, engaging with stakeholders, holding hearings, and using legislation to direct activities with specificity.", "Requirements on agencies and entities are usually described in this report generally, with minimal discussion of detailed content requirements. The same is true for descriptions of new and altered programs. To the extent practicable, the text and footnotes of the report provide citations to the appropriate provisions of both the CARES Act and existing law to facilitate a more detailed review. ", "The report captures those oversight tools that pertain to inspectors general (who already have obligations to report to Congress in the Inspector General Act of 1978 ) and provisions that explicitly provide for congressional involvement. For instance, the CARES Act requires certain agencies to make information publicly available but does not explicitly direct that this information be submitted to Congress or its committees. Such provisions are not identified in this report but may nevertheless be referred to in practice as congressional reporting requirements.", "Provisions included in the CARES Act may trigger reporting of information under other statutes. Interactions between the CARES Act and current law are not covered in this report."], "subsections": []}]}, {"section_title": "Oversight Provisions", "paragraphs": ["The CARES Act contains a number of oversight provisions. These include: ", "the creation of a congressionally appointed oversight commission established in the legislative branch; provisions related to inspectors general, including the establishment of SIGPR, the PRAC within the Council of the Inspectors General on Integrity and Efficiency (CIGIE), and supplemental appropriations and additional duties provided for inspectors general across multiple agencies; additional funding and responsibilities provided to GAO; and requirements for agencies and entities and their leadership to provide reports to, consult with, provide notice to, and testify before Congress and its committees regarding a range of subjects.", "Each aforementioned category is discussed in greater detail below."], "subsections": [{"section_title": "Congressional Oversight Commission", "paragraphs": ["Section 4020 establishes a legislative branch entity called the Congressional Oversight Commission to conduct oversight of the Department of the Treasury and Federal Reserve Board's economic relief activities under Title IV, Subtitle A (Coronavirus Economic Stabilization Act of 2020) of the CARES Act. The commission is similar in structure to the Congressional Oversight Panel created to participate in the oversight of the Troubled Asset Relief Program in 2008. ", "The commission is composed of five members selected by the majority and minority leadership of the House and the Senate. The commission is empowered to request staff to be detailed from agencies and departments, hire experts and consultants, conduct hearings, and obtain information from agencies to support its oversight activities.", "The commission is required to report to Congress on the relevant activities of Treasury and the Federal Reserve Board, the impact of the programs on the financial well-being of the nation, whether required disclosures in the CARES Act provides market transparency, and the effectiveness of the Coronavirus Economic Stabilization Act of 2020 in minimizing costs and maximizing benefits for taxpayers. ", "The first report of the commission is due within 30 days of Treasury and the Federal Reserve Board's first exercise of authority under the act. Additional reports are then due every 30 days thereafter. The commission terminates on September 30, 2025."], "subsections": []}, {"section_title": "Provisions Pertaining to Inspectors General20", "paragraphs": [], "subsections": [{"section_title": "Special Inspector General for Pandemic Recovery", "paragraphs": ["Section 4018 establishes a Special Inspector General for Pandemic Recovery within the Treasury. The SIGPR is nominated by the President with the advice and consent of the Senate and may be removed from office according to Section 3(b) of the Inspector General Act of 1978. The SIGPR is tasked with conducting audits and investigations of the activities of the Treasury pursuant to the CARES Act, including the collection of detailed information regarding loans provided by Treasury.", "The SIGPR is empowered to hire staff and enter into contracts and has broadly the same authority and status as inspectors general under the Inspector General Act of 1978. The SIGPR is required to report to the \"appropriate committees of Congress\" within 60 days of Senate confirmation, and quarterly thereafter, on the activities of the office over the preceding three months, including detailed information on Treasury loan programs. The SIGPR terminates five years after the enactment of the CARES Act (i.e., March 27, 2025).", "Section 4027 appropriates a total of $500 billion to Treasury. Of that amount, Section 4018 directs that $25 million shall be made available to the SIGPR as no-year funds (i.e., funds that are available until expended)."], "subsections": []}, {"section_title": "Pandemic Response Accountability Committee", "paragraphs": ["Section 15010 establishes the PRAC within the CIGIE. The PRAC is directed to \"promote transparency and conduct and support oversight\" of the government's coronavirus response in order to \"prevent and detect fraud, waste, abuse, and mismanagement\" and \"mitigate major risks that cut across program and agency boundaries.\" In addition, the PRAC is tasked with conducting oversight and audits of the coronavirus response as well as coordinating and supporting related oversight by inspectors general across the federal government. ", "The PRAC is composed of the inspectors general of identified agencies as well as any other inspectors general for agencies involved at the coronavirus response as designated by the chairperson of the council. The CIGIE chairperson designates the PRAC chairperson. In addition, the PRAC is required to appoint an executive director selected in consultation with the majority and minority leadership of the House and the Senate. The PRAC has the same authority to conduct audits and investigations as inspectors general under the Inspector General Act of 1978.", "The PRAC is required to provide management alerts to the President and Congress on \"management, risk, and funding\" issues that may require immediate attention. The PRAC is also required to report to the President and Congress biannually with a summary of PRAC activity and, to the extent practicable, a quantification of the impact of tax expenditures in the CARES Act. Finally the PRAC is required to provide other reports and periodic updates to Congress as it considers appropriate.", "In addition, the PRAC is directed to establish and maintain a \"user-friendly, public-facing website to foster greater accountability and transparency in the use of covered funds.\" The PRAC is required to post specified information, including agencies' use of funds provided in the act. ", "The PRAC terminates on September 30, 2025. Section 15003 appropriates $80 million in no-year funds to support the activities of the PRAC.", "The PRAC's organization and duties have similarities to those of the Recovery Accountability and Transparency Board that was established as part of the American Recovery and Reinvestment Act to conduct oversight of the use of funds in that act."], "subsections": []}, {"section_title": "Supplemental Appropriations and Additional Duties for Inspector General Offices", "paragraphs": ["The CARES Act appropriates $148 million for established inspector general offices in addition to the $25 million for the SIGPR and $80 million for the PRAC discussed above. In total, therefore, the CARES Act provides $253 million to the inspector general community to oversee the federal government's coronavirus response. "], "subsections": [{"section_title": "Department of Agriculture", "paragraphs": ["Title I of Division B, under the heading \"Office of the Inspector General,\" provides $750,000 to the Department of Agriculture OIG. The appropriation expires September 30, 2021, and may be used only to oversee funds appropriated to the department under the CARES Act."], "subsections": []}, {"section_title": "Department of Commerce", "paragraphs": ["Title II of Division B, under the heading \"Department of Commerce\u00e2\u0080\u0094Economic Development Administration,\" provides that of the $1.5 billion appropriated to the Department of Commerce, $3 million is to be transferred to the department's OIG to oversee the use of funds appropriated to the department under the CARES Act. The appropriation expires September 30, 2022."], "subsections": []}, {"section_title": "Department of Defense", "paragraphs": ["Title III of Division B, under the heading \"Office of the Inspector General,\" provides $20 million for the Department of Defense OIG. This appropriation may be used only to oversee the use of funds appropriated to the department under the CARES Act."], "subsections": []}, {"section_title": "Department of Education", "paragraphs": ["Title VII of Division B, under the heading \"Office of the Inspector General,\" provides $7 million to Department of Education OIG. These funds expire on September 30, 2022. This appropriation may be used only to respond to COVID-19 generally and to oversee the use of funds appropriated to the department under the CARES Act."], "subsections": []}, {"section_title": "Department of Health and Human Services", "paragraphs": ["Title VII of Division B, under the heading \"Office of the Secretary,\" requires the Department of Health and Human Services (HHS) OIG to provide a final audit report to the House and Senate Appropriations Committees on payments from $100 billion appropriated to the Public Health and Social Services Emergency Fund to support eligible health care providers with their expenses related to the COVID-19 pandemic. The audit report is due three years after the final payment is made under the program. Section 18113 provides that, of the $27 billion appropriated to the Public Health and Social Services Emergency Fund, up to $4 million shall be transferred to the HHS OIG. Appropriated funds are available until expended and may be used only to oversee the use of funds appropriated to HHS under the CARES Act. In addition, the HHS inspector general is required to consult with the House and Senate Appropriations Committees prior to obligating these funds."], "subsections": []}, {"section_title": "Department of Homeland Security", "paragraphs": ["Title VI of Division B, under the heading \"Disaster Relief Fund,\" provides a total of $45 billion in no-year funds for the Disaster Relief Fund with the Federal Emergency Management Agency (FEMA). Of the total appropriation, $3 million is to be transferred to the Department of Homeland Security (DHS) OIG to oversee the funds appropriated for the Disaster Relief Fund in the CARES Act."], "subsections": []}, {"section_title": "Department of Housing and Urban Development", "paragraphs": ["Title XII of Division B, under the heading \"Office of the Inspector General,\" provides $5 million in no-year funds to the Department of Housing and Urban Development OIG. This appropriation may be used only to oversee the use of funds appropriated to the department under the CARES Act."], "subsections": []}, {"section_title": "Department of the Interior", "paragraphs": ["Title VII of Division B, under the heading \"Departmental Offices,\" provides $158.4 million for the Office of the Secretary, Department of the Interior. This appropriation expires September 30, 2021. Of that appropriation, $1 million is to be transferred to the department's OIG to oversee the use of funds appropriated to the department under the CARES Act."], "subsections": []}, {"section_title": "Department of Justice", "paragraphs": ["Title II of Division B, under the heading \"Office of the Inspector General,\" provides $2 million in no-year funds for the Department of Justice OIG. The appropriation is to be used to oversee funds provided to the department in the CARES Act and the general impact of COVID-19 on the department's activities."], "subsections": []}, {"section_title": "Department of Labor", "paragraphs": ["Section 2115 provides $25 million for the Department of Labor (DOL) OIG. The appropriation does not expire and may be used only to conduct oversight activity related to provisions in the CARES Act. Title XIII of Division B, under the heading \"Departmental Management,\" appropriates $15 million to respond to COVID-19 generally and to support enforcement of the Families First Coronavirus Response Act ( P.L. 116-127 ). Of that appropriation, $1 million in no-year funds are to be transferred to the DOL OIG. "], "subsections": []}, {"section_title": "Department of Transportation", "paragraphs": ["Title XII of Division B, under the heading \"Office of Inspector General,\" provides $5 million in no-year funds to the Department of Transportation OIG. This appropriation may be used only to oversee the use of funds appropriated to the department under the CARES Act."], "subsections": []}, {"section_title": "Department of the Treasury", "paragraphs": ["Section 5001 provides $35 million in no-year funds for the Treasury OIG. The appropriation may be used only to conduct oversight and recoupment activities related to the Coronavirus Relief Fund established by Title V of the CARES Act. Section 5001 also requires the Treasury OIG to oversee the Coronavirus Relief Fund established by the section, which provides funding to state, local, and tribal governments. If the Treasury OIG determines that a state, tribal government, or unit of local government fails to comply with the requirements for the program, the section provides for the recoupment of the funds. Section 4113(d) requires the Treasury OIG to conduct audits of certifications related to employee compensation provided by air carriers in order to receive financial assistance under Section 4113(a)."], "subsections": []}, {"section_title": "Department of Veterans Affairs", "paragraphs": ["Title X of Division B, under the heading \"Office of Inspector General,\" provides $12.5 million for the Department of Veterans Affairs (VA) OIG. These funds expire on September 30, 2022. This appropriation may be used only to oversee the use of funds appropriated to the VA under the CARES Act."], "subsections": []}, {"section_title": "Small Business Administration", "paragraphs": ["Section 1107(a)(3) provides $25 million for the Small Business Administration (SBA) OIG. These funds expire September 30, 2024. "], "subsections": []}]}]}, {"section_title": "Provisions Pertaining to the Government Accountability Office", "paragraphs": ["Title IX of Division B of the CARES Act, under the heading \"Government Accountability Office,\" appropriates $20 million to GAO to conduct additional oversight and provide Congress with several reports. GAO is required to report to House and Senate Appropriations Committees within 90 days of enactment of the CARES Act with a spending plan for the funds and a timeline for audits and investigations."], "subsections": [{"section_title": "GAO Reporting Requirements and Additional Responsibilities", "paragraphs": ["Healthy Start Program : Section 3225 reauthorizes the Healthy Start Program. The section includes a requirement that GAO \"review, access, and provide recommendations\" on the program within four years of enactment of the CARES Act (i.e., March 27, 2024) and report its findings to the appropriate committees. Nurse Loan Repayment Programs : Section 3404 requires the comptroller general to study \"nurse loan repayment programs\" administered by the Health Resources and Services Administration and report to the House Committee on Energy and Commerce and the Senate Committee on Health, Education, Labor, and Pensions, within 18 months of enactment of the CARES Act (i.e., September 27, 2021). Community and Mental Health Services Demonstration Program : Section 3814 extends the end date for the Community Mental Health Services Demonstration Program P.L. 93-288 and directs GAO to provide a report on the program to the House Committee on Energy and Commerce and Senate Committee on Finance. This report is due 18 months after enactment of the CARES Act (i.e., September 27, 2021). Regulation of Over the Counter Drugs : Section 3851 requires GAO to conduct a study on the effectiveness and impact of exclusivity under Sections 505G and 586C of the Federal Food, Drug, and Cosmetic Act. The study is to be submitted to the House Committee on Energy and Commerce and the Senate Committee on Health, Education, Labor, and Pensions within four years of enactment of the CARES Act (i.e., March 27, 2024). Coronavirus Economic Stabilization Act of 2020 : Section 4026(f) directs the comptroller general to conduct a study on \"loans, loan guarantees, and other investments\" made under Section 4003 of the CARES Act and report to the House Committee on Financial Services; the House Committee on Transportation and Infrastructure; the House Committee on Appropriations; the House Committee on the Budget; the Senate Committee on Banking, Housing, and Urban Affairs; the Senate Committee on Commerce, Science, and Transportation; the Senate Committee on Appropriations; and the Senate Committee on the Budget. The initial report under this provision is due nine months after enactment of the CARES Act (i.e., December 27, 2020), and additional reports are required annually thereafter through the \"year succeeding the last year for which loans, loan guarantees, and other investments made under Section 4003 are outstanding.\" Monitoring and Audits by Comptroller General : Section 19010 requires the comptroller general to conduct monitoring and oversight of federal spending in response to the COVID-19 pandemic. The section empowers the comptroller general to access relevant records, make copies of those records, and conduct pertinent interviews. The comptroller general is to offer briefings at least once per month to the House Committee on Appropriations; the House Committee on Homeland Security; the House Committee on Oversight and Reform; the House Committee on Energy and Commerce; the Senate Committee on Appropriations; the Senate Committee on Homeland Security and Governmental Affairs; and the Senate Committee on Health, Education, Labor, and Pensions. The comptroller general is also required to report on GAO's relevant activities to the same committees within 90 days of enactment of the CARES Act (i.e., June 25, 2020), then monthly until one year after enactment (i.e., March 27, 2021), and periodically thereafter."], "subsections": []}]}, {"section_title": "Agency Reporting, Notice, and Consultation Requirements for Federal Entities and Sub-Entities", "paragraphs": [], "subsections": [{"section_title": "Architect of the Capitol", "paragraphs": ["Title IX of Division B, under the heading \"Architect of the Capitol,\" appropriates $25 million to the Architect of the Capitol for expenses related to the COVID-19 pandemic. The Architect of the Capitol is required to provide an expenditure report within 30 days of enactment of the CARES Act (i.e., April 26, 2020) and every 30 days thereafter to the House and Senate Appropriations Committees, the House Committee on House Administration, and the Senate Committee on Rules and Administration."], "subsections": []}, {"section_title": "Armed Forces Retirement Home Trust Fund", "paragraphs": ["Title X of Division B, under the heading \"Armed Forces Retirement Home Trust Fund,\" appropriates $2.8 million from the available funds of the trust fund for expenses related to the COVID-19 pandemic. The chief executive officer of the Armed Forces Retirement Home is required to submit monthly spending reports to the House and Senate Appropriations Committees."], "subsections": []}, {"section_title": "Board of Governors of the Federal Reserve System", "paragraphs": ["Section 4026(b)(2)(A) requires the Board of Governors of the Federal Reserve System to report to the House Committee on Financial Services and the Senate Committee on Banking, Housing, and Urban Affairs whenever it exercises its purchase and loan-making authority under Section 4003(b)(4). Reports are to be submitted within seven days and are required to contain the same information as reports required under Title 12, Section 343(3)(C)(i), of the United States Code . In addition, reports are to be submitted every 30 days regarding outstanding loans and financial assistance under Section 4003(b)(4) in accordance with Title 12, Section 343(3)(C)(ii), of the U.S. Code ."], "subsections": []}, {"section_title": "Centers for Disease Control and Prevention", "paragraphs": ["Title VII of Division B, under the heading \"Centers for Disease Control and Prevention,\" appropriates a total of $4.3 billion to the Centers for Disease Control and Prevention (CDC). Of that total, $500 million is directed to \"public health data surveillance and analytics infrastructure modernization.\" Within 30 days of enactment of the CARES Act (i.e., April 26, 2020), CDC is required to report to the House and Senate Appropriations Committees on the development of a \"public health surveillance and data collection system for coronavirus.\""], "subsections": []}, {"section_title": "Department of Commerce", "paragraphs": ["Section 1108(d) requires the Minority Small Business Development Agency of the Department of Commerce to submit reports to the House Committee on Small Business; the House Committee on Energy and Commerce; the Senate Committee on Commerce, Science, and Technology; and the Senate Committee on Small Business and Entrepreneurship regarding the programs developed pursuant to Section 1108(b). Reports are due six months after enactment of the CARES Act (i.e., September 27, 2020) and annually thereafter."], "subsections": []}, {"section_title": "Department of Defense", "paragraphs": ["Section 13006(a) authorizes the delegation of select procurement authorities within the Department of Defense for transactions related to the COVID-19 pandemic. In the event that a transaction of this type does occur, either the Under Secretary of Defense for Research and Engineering or the Under Secretary of Defense for Acquisition and Sustainment, as applicable, is required to notify the House and Senate Appropriations and Armed Services Committees \"as soon as is practicable.\""], "subsections": []}, {"section_title": "Department of Education", "paragraphs": ["Section 3510(a) allows foreign institutions to use distance education during the declared COVID-19 emergency under certain circumstances. Section 3510(c) requires that the Secretary of Education submit a report to the House Committee on Education and Labor and the Senate Committee on Health, Education, Labor, and Pensions identifying foreign institutions that use distance education under Section 3510(a). The report is due not later than 180 days after enactment of the CARES Act (i.e., September 23, 2020). Additional reports are due every 180 days for the duration of the declared emergency. Section 3510(d) allows foreign institutions to enter written agreements with certain institutions of higher education in the United States to allow students to take courses at the American institutions. Section 3510(d)(4) requires that the Secretary of Education submit a report identifying the foreign institutions using such arrangements to the House Committee on Education and Labor and the Senate Committee on Health, Education, Labor, and Pensions. The report is due not later than 180 days after enactment of the CARES Act (i.e., September 23, 2020). Additional reports are due every 180 days for the duration of the declared emergency. Section 3511(b) authorizes the Secretary of Education to waive certain statutory requirements identified in the section upon the request of a state or Indian tribe. Section 3511(d)(2) requires the Secretary of Education to notify the House Committee on Education and Labor; the Senate Committee on Health, Education, Labor, and Pensions; and the House and Senate Appropriations Committee within seven days of granting any waiver. In addition, Section 3511(d)(4) requires the Secretary of Education to submit a report to the same committees within 30 days of enactment of the CARES Act (i.e., April 26, 2020) with recommendations for additional necessary waivers of statutory requirements. Section 3512(a) authorizes the Secretary of Education to defer payments on loans made to historically black colleges and universities under Title 20, Section 1066, of the U.S. Code . Section 3512(c) requires the Secretary of Education to report to the House Committee on Education and Labor and the Senate Committee on Health, Education, Labor, and Pensions within 180 days of enactment of the CARES Act (i.e., September 23, 2020) and every 180 days thereafter on any institutions receiving this relief. Section 3517(c) requires the Secretary of Education to submit a report to the House Committee on Education and Labor and the Senate Committee on Health, Education, Labor, and Pensions identifying all institutions of higher education receiving waivers of statutory requirements identified in Section 3517(a). Reports are due within 180 days of enactment of the CARES Act (i.e., September 23, 2020) and every 180 days thereafter until the end of the fiscal year following the end of the declared emergency. Section 3518(c) requires the Secretary of Education to submit a report to the House Committee on Education and Labor and the Senate Committee on Health, Education, Labor, and Pensions identifying all institutions of higher education and other recipients who receive grant modifications as authorized in Section 3518(a). Reports are due within 180 days of enactment of the CARES Act (i.e., September 23, 2020) and every 180 days thereafter until the end of the fiscal year following the end of the declared emergency."], "subsections": []}, {"section_title": "Department of Health and Human Services", "paragraphs": ["Section 3212 amends the Public Health Service Act to require that the Secretary of HHS submit a report to the House Committee on Energy and Commerce and the Senate Committee on Health, Education, Labor, and Pensions within four years of enactment of the CARES Act (i.e., March 27, 2024) and every five years thereafter on the \"activities and outcomes\" of the Telehealth Network Grant Program and the Telehealth Resource Centers Grant Program. Section 3213 amends the Public Health Service Act to require the Secretary of HHS to submit a report to the House Committee on Energy and Commerce and the Senate Committee on Health, Education, Labor, and Pensions within four years of enactment of the CARES Act (i.e., March 27, 2024), and every five years thereafter, on the \"activities and outcomes\" of the Rural Health Care Services Outreach Grant Program, the Rural Health Network Development Grant Program, and the Small Health Care Provider Quality Improvement Grant Program. Section 3226(d) requires the Secretary of HHS to submit a report to the House Committee on Energy and Commerce and the Senate Committee on Health, Education, Labor, and Pensions within two years of enactment of the CARES Act (i.e., March 27, 2022) on HHS's efforts to support the blood donation system. Section 3301 amends the Public Health Service Act to, during a public health emergency, eliminate a cap on the value of certain transactions related to the Biomedical Advanced Research and Development Authority that may be entered into by the Secretary of HHS. After the termination of the public health emergency, the Secretary of HHS is required to submit a report to the House Committee on Energy and Commerce and the Senate Committee on Health, Education, Labor, and Pensions that details the use of funds, including a discussion of outcome measures for such transactions. Section 3401 amends the Public Health Service Act and renews a previously enacted requirement that the Secretary of HHS submit reports to the House Committee on Energy and Commerce and the Senate Committee on Health, Education, Labor, and Pensions concerning the need for underrepresented minorities on medical peer review councils. The first report is due September 30, 2025, and subsequent reports are due every five years thereafter. Section 3401 further amends the Public Health Service Act to require the Advisory Council on Graduate Medical Education to submit a report to the House Committee on Energy and Commerce and the Senate Committee on Health, Education, Labor, and Pensions (as well as the Secretary of HHS) no later than September 30, 2023, and every five years thereafter. In these reports, the Advisory Council is directed to discuss its recommendations on the issues outlined in Title 42, Section 294o(a)(1), of the U.S. Code . Section 3402(a) requires the Secretary of HHS to develop a comprehensive and coordinated plan for the health care workforce development programs within one year of enactment of the CARES Act (i.e., March 27, 2021). Section 3402(c) requires the Secretary of HHS to submit a report to the House Committee on Energy and Commerce and the Senate Committee on Health, Education, Labor, and Pensions describing the plan and how it is being implemented within two years of passage of the CARES Act (i.e., March 27, 2022). Section 3403(c) amends the Public Health Service Act to require the Secretary of HHS to submit a report to the House Committee on Energy and Commerce and the Senate Committee on Health, Education, Labor, and Pensions on outcomes associated with the Geriatrics Workforce Enhancement Program. The report is due within four years of the enactment of the Title VII Health Care Workforce Reauthorization Act of 2019 and then every five years thereafter. Section 3404(a)(4)(D) amends the Public Health Service Act to require the Secretary of HHS to submit reports to the House Committee on Energy and Commerce and the Senate Committee on Health, Education, Labor, and Pensions assessing HHS programs to enhance the nursing workforce. Reports are due by September 30, 2020, and biennially thereafter. Further, Section 3404(a)(6)(F) incorporates additional requirements for these reports that are codified in Title 42, Section 296p, of the U.S. Code . Section 3854(c)(2) requires the Secretary of HHS to submit a report to the House Committee on Energy and Commerce and the Senate Committee on Health, Education, Labor, and Pensions when a revised sunscreen order under the Section 3854(c)(1) does not include certain efficacy information. Section 3855(a) requires the Secretary of HHS to submit a letter to the House Committee on Energy and Commerce and the Senate Committee on Health, Education, Labor, and Pensions describing the Food and Drug Administration's (FDA's) evaluations and revisions to the cough and cold monograph for children under the age of six. The letter is due one year after enactment of the CARES Act (i.e., March 27, 2021) and annually thereafter. Section 3862 adds a new part to the Federal Food, Drug, and Cosmetic Act to alter the FDA's management of monographs for over-the-counter drugs. This new part includes two additional reporting requirements on the implementation and impact of the new provisions. The Secretary of HHS is required to report on each of those issues to the House Committee on Energy and Commerce and the Senate Committee on Health, Education, Labor, and Pensions within 120 calendar days after the end of FY2021 and within 120 days after the end of each fiscal year thereafter. In addition, the Secretary of HHS is required, by January 15, 2025, to transmit to Congress recommendations to revise the goals of the program. While developing those recommendations, the Secretary of HHS is required to consult with the House Committee on Energy and Commerce and the Senate Committee on Health, Education, Labor, and Pensions, among others. Title VIII of Division B, under the heading \"Centers for Disease Control and Prevention,\" requires the Secretary of HHS, in consultation with the director of the CDC, to report to the House and Senate Appropriations Committees every 14 days for one year if the HHS Secretary declares an infectious disease emergency and seeks to use the Infections Diseases Rapid Response Fund (as authorized by the third proviso of Section 231 of Division B of P.L. 115-245 ) \"as long as such report[s] would detail obligations in excess of $5,000,000\" or upon request. Title VIII of Division B, under the heading \"Office of the Secretary,\" appropriates $27 billion to the Public Health and Social Services Emergency Fund. Among other things, the provision allows for funds to be used to reimburse the VA for expenses related to the COVID-19 pandemic and for care for certain patients. To provide this reimbursement, the Secretary of HHS must certify to the House and Senate Appropriations Committees that funds available under the Stafford Act are insufficient to cover expenses incurred by the VA. In addition, the Secretary of HHS must notify the House and Senate Appropriations Committees three days prior to making such a certification. Title VIII of Division B, also under the heading \"Office of the Secretary,\" appropriates $100 billion to the Public Health and Social Services Emergency Fund to support eligible health care providers with their expenses related to the COVID-19 pandemic. The Secretary of HHS is required to submit a report to the House and Senate Appropriations Committees within 60 days of enactment of the CARES Act (i.e., May 26, 2020), and every 60 days thereafter, on the obligation of these funds, including state-level data. Section 18111 provides that funds appropriated under the heading \"Department of Health and Human Services\" in Title VII of Division B may be transferred or merged with appropriations to other specified HHS budget accounts so long as the House and Senate Appropriations Committees are notified 10 days in advance of any transfer. Section 18112 requires the Secretary of HHS to provide a spend plan for funds appropriated to HHS to the House and Senate Appropriations Committees within 60 days of enactment of the CARES Act (i.e., May 26, 2020) and then every 60 days until September 30, 2024."], "subsections": []}, {"section_title": "Department of Homeland Security", "paragraphs": ["Title VI of Division B, under the heading \"Department of Homeland Security,\" appropriates $178 million for DHS's response to the COVID-19 pandemic. The provision grants additional authority to transfer these funds between DHS accounts for the purchase of personal protective equipment and sanitization materials. Within five days after making such a transfer, DHS is required to notify the House and Senate Appropriations Committees."], "subsections": []}, {"section_title": "Department of the Interior", "paragraphs": ["Title VII of Division B, under the heading \"Departmental Offices,\" provides $158 million to support for the Department of the Interior's COVID-19 pandemic response. Beginning 90 days after enactment of the CARES Act (i.e., June 25, 2020), and monthly thereafter, the Secretary of the Interior is required to provide a report detailing the use of these funds to the House and Senate Appropriations Committees."], "subsections": []}, {"section_title": "Department of Labor", "paragraphs": ["Title VIII of Division B, under the heading \"Departmental Management,\" appropriates $15 million for DOL's response to the COVID-19 pandemic and provides that the Secretary of Labor may transfer these funds to other specified DOL budget accounts for this purpose. Fifteen days prior to transferring any funds, the Secretary of Labor is required to submit an operating plan to the House and Senate Appropriations Committees describing how funds will be used."], "subsections": []}, {"section_title": "Department of State", "paragraphs": ["Section 21007 authorizes the Secretary of State and the administrator of the U.S. Agency for International Development (USAID) to provide additional paid leave to employees for the period from January 29, 2020, to September 30, 2022, in order to address hardships created by the COVID-19 pandemic. Prior to using this authority, the Secretary of State and the administrator must consult with House and Senate Appropriations Committees, the House Committee on Foreign Affairs, and the Senate Committee on Foreign Relations. Section 21009 authorizes the Secretary of State to use passport and immigrant visa surcharges to pay costs for consular services during FY2020.The Secretary of State is required to report to the House and Senate Appropriations Committees, the House Committee on Foreign Affairs, and the Senate Committee on Foreign Relations within 90 days of the expiration of this authority (i.e., December 29, 2020) on specific expenditures made pursuant to this authority. Section 21010 authorizes the Department of State and USAID to enter into personal services contracts to support their response to the COVID-19 pandemic subject to prior consultation with and notification of the House and Senate Appropriations Committees, the House Committee on Foreign Affairs, and the Senate Committee on Foreign Relations. Within 15 days of using this authority, the Secretary of State is required to report to the same committees on the staffing needs of the Office of Medical Services. Section 21011 authorizes the Secretary of State and the administrator of USAID to administer any legally required oath of office remotely through September 30, 2021. Prior to using this authority, the Secretary of State and the administrator must each submit a report to the House and Senate Appropriations Committees, the House Committee on Foreign Affairs, and the Senate Committee on Foreign Relations describing the process they will use to administer an oath of office in this manner."], "subsections": []}, {"section_title": "Department of Transportation", "paragraphs": ["Section 22002 requires the Secretary of Transportation to notify the House and Senate Appropriations Committees; the House Committee on Transportation and Infrastructure; and the Senate Committee on Commerce, Science, and Transportation within seven days of enactment of the CARES Act (i.e., April 3, 2020), and every seven days thereafter, of the furlough of any National Railroad Passenger Corporation employee due to the COVID-19 pandemic. Section 22005 allows the Secretary of Transportation to waive specified requirements for highway safety grants if the COVID-19 pandemic will substantially impact the ability of the states and the Department of Transportation to meet those grant requirements. The Secretary is required to \"periodically\" report to the relevant committees on any waivers made under this provision."], "subsections": []}, {"section_title": "Department of the Treasury", "paragraphs": ["Section 2201(f)(2) establishes reporting requirements associated with the 2020 Recovery Rebates provided in Section 2201. The Secretary of the Treasury is required to submit a report to the House and Senate Appropriations Committees within 15 days of enactment of the CARES Act (i.e., April 11, 2020) providing a spending plan for the funds provided for this program. In addition, 90 days after enactment (i.e., June 25, 2020), and quarterly thereafter, the Secretary is required to provide reports to the House and Senate Appropriations Committees on actual and projected expenditures under this program. Section 4026(b)(1)(A) requires the Secretary of the Treasury, within seven days after making a loan or loan guarantee under Sections 4003(b)(1), 4003(b)(2), or 4003(b)(3), to report to the chairmen and ranking members of the House Committee on Financial Services; the House Committee on Ways and Means; the Senate Committee on Banking, Housing, and Urban Affairs; and the Senate Committee on Finance. These reports are to include an overview of the actions and financial information about those transactions. Section 4118(a) requires the Secretary of the Treasury to submit a report no later than November 1, 2020, to the House Committee on Transportation and Infrastructure; the House Committee on Financial Services; the Senate Committee on Commerce, Science, and Transportation; and the Senate Committee on Banking, Housing, and Urban Affairs on the financial assistance provided to air carriers and contractors under Subtitle B of Title IV of the CARES Act. Section 4118(b) requires that the Secretary of the Treasury provide an updated report to the same committees no later than November 1, 2021. Section 21012 amends the Bretton Woods Agreements Act to authorize additional lending by the Department of the Treasury pursuant to a decision of the executive directors of the International Monetary Fund. Prior to taking such action, the Secretary of the Treasury is required to report to Congress on the need for such loans to support the international monetary system and the availability of alternative actions."], "subsections": []}, {"section_title": "Department of Veterans Affairs", "paragraphs": ["Title X of Division B, under the heading \"Information Technology Systems,\" appropriates $2.15 billion for information technology expenses related to the COVID-19 pandemic. The VA Secretary is required to submit a spending plan for these funds to the House and Senate Appropriations Committees and must also notify the same committees before any of these funds are reprogrammed among VA's budget subaccounts for information technology. Section 20001 provides additional transfer authority for the Secretary to transfer funds between identified accounts. For transfers that account for less than 2% of the amount appropriated to a particular account, the Secretary is required to notify the House and Senate Appropriations Committees. For all other transfers, the VA Secretary may transfer funds only after requesting and receiving approval from the House and Senate Appropriations Committees. Section 20002 requires the Secretary to submit monthly expenditure reports to the House and Senate Appropriations Committees for all funds appropriated by Title X of Division B. Section 20008 authorizes the Secretary to waive any limitations on pay for VA employees during the COVID-19 public health emergency for work done in support of the response to the emergency. The Secretary is required to submit a report to the House and Senate Veterans' Affairs Committees in each month that such a waiver is in place."], "subsections": []}, {"section_title": "Election Assistance Commission", "paragraphs": ["Title V of Division B, under the heading \"Election Assistance Commission,\" provides a total of $400 million for election security grants to be distributed to the states by the Election Assistance Commission. This provision requires states to submit reports on how these funds were used within 20 days of each election in the 2020 federal election cycle. Within three days of receipt, the commission is required to transmit these reports to the House Committee on House Administration, the Senate Committee on Rules and Administration, and the House and Senate Appropriations Committees."], "subsections": []}, {"section_title": "Federal Emergency Management Agency", "paragraphs": ["Title VI of Division B, under the heading \"Federal Emergency Management Agency,\" appropriates $45 billion to FEMA's Disaster Relief Fund. The FEMA administrator is required to report to the House and Senate Appropriations Committees every 30 days on the actual and projected use of these funds."], "subsections": []}, {"section_title": "General Services Administration", "paragraphs": ["Title V of Division B, under the heading \"General Services Administration,\" appropriates $275 million to the Federal Buildings Fund of the General Services Administration (GSA) for expenses related to the COVID-19 pandemic. The provision requires the administrator of GSA to notify the House and Senate Appropriations Committees quarterly on obligations and expenditures of these funds. Section 15003 requires the GSA administrator to notify Congress in writing if the administrator determines that it is in the public interest to use non-competitive procurement procedures as authorized by the Federal Procurement Policy during a declared public health emergency. "], "subsections": []}, {"section_title": "House of Representatives", "paragraphs": ["Title IX of Division B, under the heading \"House of Representatives,\" appropriates a total of $25 million for expenses related to the COVID-19 pandemic. The chief administrative officer of the House of Representatives is required to submit a spending plan to the House Committee on Appropriations."], "subsections": []}, {"section_title": "Internal Revenue Service", "paragraphs": ["Section 15001 appropriates $250 million to the Internal Revenue Service (IRS). The provision requires that the IRS commissioner submit a spending plan to the House and Senate Appropriations Committees no later than 30 days of enactment of the CARES Act (i.e., April 26, 2020). The provision also provides that, with advance notice to the House and Senate Appropriations Committees, these funds may be transferred between IRS budget accounts as necessary to respond to the COVID-19 pandemic."], "subsections": []}, {"section_title": "Kennedy Center", "paragraphs": ["Title VII of Division B, under the heading \"John F. Kennedy Center for the Performing Arts,\" provides $25 million to support the Kennedy Center's response to the COVID-19 pandemic. The provision requires the Board of Trustees of the Kennedy Center to report to the House and Senate Appropriations Committees by October 21, 2020, with a detailed explanation of the use of the funds."], "subsections": []}, {"section_title": "Register of Copyrights", "paragraphs": ["Section 19011 amends Chapter 7 of Title 17 of the U.S. Code to provide that, through December 31, 2021, if an emergency declared by the President under the National Emergencies Act disrupts the ordinary functioning of the copyright system, the Register of Copyrights may waive or modify specified timing requirements. If the Register of Copyrights takes such action he or she must notify Congress within 20 days."], "subsections": []}, {"section_title": "Small Business Administration", "paragraphs": ["Section 1103(d) requires SBA to report to the House Committee on Small Business and the Senate Committee on Small Business and Entrepreneurship on its activities related to education, training and advising grants under Section 1103(b) of the CARES Act. The initial report under this section is due six months after enactment of the CARES Act (i.e., September 27, 2020), with additional reports annually thereafter. Section 1107(c) requires SBA to provide a spending plan for funds appropriated in Section 1107(a) to the House and Senate Appropriations Committees within 180 days of enactment of the CARES Act (i.e., September 23, 2020). "], "subsections": []}, {"section_title": "U.S. Patent and Trademark Office", "paragraphs": ["Section 12004(a) provides the director of the U.S. Patent and Trademark Office with authority to toll, waive, adjust, or modify specified deadlines in Title 35 of the U.S. Code during the COVID-19 emergency if certain conditions are met. To use this authority, the director is required, under Section 12004(c), to submit a statement to Congress within 20 days explaining his or her action and the rationale underlying it."], "subsections": []}, {"section_title": "General Provisions for Title VII of Division B", "paragraphs": ["In addition to the requirements listed above for specific federal entities and sub-entities, Section 18109 authorizes that funds provided under Title VII of Division B may be used for personal services contracts with prior notification to the House and Senate Appropriations Committees. Title VII of Division B makes appropriations to the Department of the Interior, the Environmental Protection Agency, the Forest Service (Department of Agriculture), the Indian Health Service (HHS), the Agency for Toxic Substances and Disease Registry (HHS), the Institute of American Indian and Alaska Native Culture and Arts Development, the Smithsonian Institution, the Kennedy Center, and the National Foundation on the Arts and Humanities."], "subsections": []}]}, {"section_title": "Requirements for Testimony", "paragraphs": [], "subsections": [{"section_title": "Chairman of the Board of Governors of the Federal Reserve System", "paragraphs": ["Section 4026 requires the chairman of Federal Reserve to testify, on a quarterly basis, before the House Committee on Financial Services and the Senate Committee on Banking, Housing, and Urban Affairs regarding the Federal Reserve's activities under the CARES Act."], "subsections": []}, {"section_title": "Secretary of the Treasury", "paragraphs": ["Section 4003(c)(3)(A)(iii) allows the Secretary of the Treasury to waive compensation limits established by Section 4004 as well as restrictions on \"stock buybacks,\" the payment of dividends, and other capital distributions established by Section 4003(c)(3)(A)(ii) for businesses receiving a loan, loan guarantee, or other investment under the CARES Act. In order to waive those requirements, the Secretary must determine that such action is necessary to \"protect the interests of the Federal Government\" and must also \"make himself available to testify before the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives regarding the reasons for the waiver.\" Section 4026 requires the Secretary of the Treasury to testify, on a quarterly basis, before the House Committee on Financial Services and the Senate Committee on Banking, Housing, and Urban Affairs regarding the Treasury's activities under the CARES Act."], "subsections": []}]}]}]}}
{"id": "R45845", "title": "Social Security: Beneficiaries Affected by Both the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO)", "released_date": "2019-07-30T00:00:00", "summary": ["The Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO) are two separate provisions that reduce Social Security benefits for workers and/or and their eligible family members if the worker receives (or is entitled to) a pension based on employment not covered by Social Security. Certain beneficiaries may be subject to both the WEP and the GPO if they are dually entitled to Social Security retirement and spousal (or survivors') benefits and also receive a noncovered government pension. As of December 2018, 263,775 Social Security beneficiaries were affected by both the WEP and the GPO. They accounted for 38% of spouses and survivors affected by the GPO and 14% of beneficiaries affected by the WEP.", "The provisions' benefit offsets create complications in calculating and administering Social Security benefits. Overpayments to dually entitled Social Security beneficiaries affected by both the WEP and the GPO have been an issue for the Social Security Administration (SSA) since the WEP was enacted in 1983. In January 2013, SSA's Office of the Inspector General (OIG) estimated that SSA has overpaid approximately $349.5 million to 10,546 dually entitled beneficiaries who were identified among those in current-payment status and whose WEP reduction was not applied properly and $320.6 million to 10,122 dually entitled beneficiaries in current-payment status whose GPO offset was not imposed correctly. OIG's estimates further indicated that SSA overpaid those beneficiaries an additional $231.9 million from 2013 to 2017, and that SSA may continue overpaying them approximately $46.4 million annually if no corrective action is taken.", "Other studies show that beneficiaries who were subject to both the WEP and the GPO tended to have lower average Social Security benefits and household wealth than those affected by only the WEP or the GPO. In addition, some state and local government employees might become dually entitled and subject to both provisions through an extension of Social Security coverage under a Section 218 Agreement."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["The Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO) are two separate provisions that reduce regular Social Security benefits for workers and/or their eligible family members if the worker receives (or is entitled to) a pension based on earnings from employment not covered by Social Security. The WEP affects retired or disabled workers and their family members, and the GPO affects spouses and survivors. ", "Some beneficiaries who are entitled to both Social Security retirement benefits and spousal (or survivors') benefits (i.e., dually entitled) may be affected by both the WEP and the GPO. As of December 2018, 263,775 Social Security beneficiaries had their benefits reduced by both provisions, which accounted for 38% of spouses and survivors who were affected by the GPO and 14% of beneficiaries affected by the WEP. The provisions' benefit offsets create complications in calculating and administering Social Security benefits.", "This report examines the current-law provisions of the WEP and the GPO, who is affected by both provisions, and the size of the affected population. It also focuses on issues related to Social Security overpayments associated with dually entitled beneficiaries affected by both provisions, the two offsets' impact on Social Security benefits and household wealth, and how extending Social Security coverage through Section 218 agreements impacts the population affected by both provisions. ", "For an overview of the WEP and the GPO, see CRS In Focus IF10203, Social Security: The Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO) ; and for an explanation of the dual entitlement rule, see CRS In Focus IF10738, Social Security Dual Entitlement . "], "subsections": []}, {"section_title": "Background on the WEP and the GPO", "paragraphs": ["A worker's employment or self-employment is considered covered by Social Security if the services performed in that job result in earnings that are subject to Social Security payroll taxes. About 7% of all workers are not covered by Social Security, mainly state and local government employees covered by alternative state-retirement systems and most permanent civilian federal employees hired before January 1, 1984, who are covered by the Civil Service Retirement System (CSRS) or other alternative retirement plans. Social Security beneficiaries who receive a pension based on employment not covered by Social Security may be affected by the WEP, the GPO, or both. "], "subsections": [{"section_title": "The Windfall Elimination Provision", "paragraphs": ["The WEP was enacted in 1983 as part of major amendments to Social Security. Its purpose was to remove an unintended advantage or windfall that the regular Social Security benefit formula provided to workers who also had pensions from noncovered employment. The regular formula is weighted to replace a greater share of career-average earnings for low-paid workers than for high-paid workers. However, the formula could not differentiate between those who worked in low-paid jobs throughout their careers and other workers who appeared to have been low paid because they worked in jobs not covered by Social Security for many years (these years are shown as zeros for Social Security benefit purposes). The WEP is intended to remove this unintended advantage. ", "Under the WEP, a worker's Social Security benefit is computed using a new formula, rather than the regular benefit formula, which results in a lower initial monthly benefit. The WEP applies to most people who receive both a pension from noncovered work (including certain foreign pensions) and Social Security retired worker benefits based on fewer than 30 years of substantial earnings in covered employment or self-employment. In 2019, the WEP reduces the share of the first $926 of average indexed monthly covered earnings that Social Security benefits replace, from 90% to as low as 40%. That adjustment reduces the associated benefit from $833.40 to as low as $370.40 per month, with a maximum reduction of $463.00. The WEP reduction amount is phased out for workers with between 21 years and 30 years of substantial earnings in employment covered by Social Security. Therefore, the WEP reduction's impact is smaller for workers who have more years of substantial covered employment. In addition, the WEP includes a guarantee that the reduction in the benefit amount caused by the WEP formula is limited to one-half of the noncovered pension."], "subsections": []}, {"section_title": "The Dual Entitlement Rule and the Government Pension Offset", "paragraphs": ["In general, Social Security spousal and survivors benefits are paid to the spouses of retired, disabled, or deceased workers covered by Social Security. The spousal benefit equals 50% of a retired or disabled worker's benefit and the survivors benefit equals 100% of a deceased worker's benefit.", "Under Social Security's dual entitlement rule , a person's spousal benefit is reduced, dollar-for-dollar, by the amount of his or her own Social Security retired- or disabled-worker benefit but not below zero (i.e., a 100% offset). The difference, if any, is paid as a spousal benefit and is added to the worker's Social Security benefit. In effect, the person receives the higher of the two Social Security benefit amounts, but not both. ", "Enacted in 1977, the GPO is intended to replicate the dual entitlement rule for spouses and widow(er)s who receive pensions based on employment not covered by Social Security. The Social Security spousal or survivors benefit is reduced by an amount equal to two-thirds of the noncovered government pension (i.e., a 67% offset). "], "subsections": []}]}, {"section_title": "Social Security Beneficiaries Affected by Both the WEP and the GPO", "paragraphs": ["Social Security beneficiaries will be affected by both the WEP and the GPO if they", "receive a noncovered government pension; are entitled to a WEP-reduced Social Security retired- or disabled-worker benefit; and are dually entitled to a Social Security spousal or survivors benefit (hereinafter \"spousal benefits\") after the reduction of the retired- or disabled-worker benefit.", " Table 1 illustrates four examples of how the WEP and the GPO affect Social Security benefits."], "subsections": [{"section_title": "Affected by the WEP Only: Example 1", "paragraphs": ["Retired workers are affected by only the WEP, and not the GPO, if they either are not entitled to Social Security spousal benefits or their spousal benefits are less than the WEP-reduced retirement benefits (i.e., the spousal benefit is reduced to zero after the dual entitlement rule). To illustrate, in example 1, the retired worker receives a pension based on noncovered employment ($900), thus the worker's benefit is computed based on the WEP formula ($700). The retired worker may also be entitled to a $500 spousal benefit before any reduction, but the spousal benefit is reduced dollar-for-dollar by the amount of the retired worker's benefit ($700), according to the dual entitlement rule, but not below zero. Therefore, this worker's spousal benefit is reduced to zero after the dual entitlement reduction. The worker is not subject to the GPO because he or she does not receive a positive spousal benefit. The worker's total retirement benefits equal $1,600, based on the WEP formula and a noncovered pension ($700+$900=$1,600). "], "subsections": []}, {"section_title": "Affected by the GPO Only: Example 2", "paragraphs": ["Spouses and survivors are affected only by the GPO, but not the WEP, if they are not entitled to Social Security benefits based on their own earnings record, if any. To illustrate, in example 2, the beneficiary does not receive a Social Security worker's benefit ($0), but is entitled to a $1,000 spousal benefit. Because the beneficiary receives a noncovered pension benefit of $900, the spousal benefit is reduced by two-thirds of the noncovered pension ($600), resulting in a net spousal benefit of $400. This beneficiary receives total benefits of $1,300 from reduced Social Security spousal benefits and a noncovered pension ($400+$900=$1,300). "], "subsections": []}, {"section_title": "Affected by Both the WEP and the GPO: Examples 3 and 4", "paragraphs": ["Social Security beneficiaries are affected by both the WEP and the GPO if they receive both WEP-adjusted retired worker benefits based on their own work record and a reduced spousal benefit after the dual entitlement rule (i.e., dually entitled beneficiaries). The spousal benefit reduced by the dual entitlement rule is then subject to the GPO offset. In certain cases, the Social Security spousal benefit is high enough and remains positive after the GPO reduction (partial offset). To illustrate, in example 3, the worker receives a noncovered pension of $900 and a WEP-reduced retired-worker benefit of $700. If the worker is also eligible for a $1,500 spousal benefit, this is reduced by the worker's benefit based on the dual entitlement rule ($700), and further reduced by two-thirds of the noncovered pension based on the GPO ($600), thus the net spousal benefit equals $200 ($1,500- $700-$600). The beneficiary's total benefits of $1,800 include a WEP-reduced retirement benefit, a net spousal benefit after offsets, and a noncovered pension ($700+$200+$900=$1,800). ", "In other cases, the Social Security spousal benefit is reduced to zero after the GPO reduction (fully offset). Example 4 illustrates a scenario in which a WEP-affected worker receives a $1,000 spousal benefit, which is reduced by the worker's benefit based on the dual entitlement rule ($700), and the resulting $300 is further reduced by the GPO offset ($600). The net benefit for this worker based on the spouse's working record ends with zero, because the spousal benefit cannot be reduced below zero. Therefore, this beneficiary will receive total benefits of $1,600 based on the WEP formula and the noncovered pension ($700+$900=1,600). "], "subsections": []}]}, {"section_title": "Number of Social Security Beneficiaries Affected by the WEP and the GPO", "paragraphs": ["As of December 2018, about 2.3 million Social Security beneficiaries, or almost 4% of all beneficiaries, had benefits reduced by the WEP, the GPO, or both. More than 11% of those affected were subject to both provisions. Social Security beneficiaries who were affected by both the WEP and the GPO accounted for 38% of spouses and survivors affected by the GPO and 14% of beneficiaries affected by the WEP. Table 2 breaks down the affected beneficiaries by state and type of offset. "], "subsections": []}, {"section_title": "Selected Issues for Dually Entitled Beneficiaries Affected by the WEP and the GPO", "paragraphs": ["This section highlights issues related to dually entitled Social Security beneficiaries affected by both the WEP and the GPO: Social Security overpayments to affected beneficiaries, the impact of the WEP and GPO on Social Security benefits and household wealth, and the effect of extending Social Security coverage through Section 218 agreements. "], "subsections": [{"section_title": "Overpayments to Those Affected by Both the WEP and the GPO", "paragraphs": ["Overpayments to dually entitled Social Security beneficiaries affected by both the WEP and the GPO have been an issue for SSA since the provisions were implemented. The improper payments occurred in part because SSA did not properly impose the WEP and the GPO on dually entitled beneficiaries who also receive a pension based on noncovered employment. In a January 2013 report, SSA's Office of the Inspector General (OIG) identified 20,668 dually entitled beneficiaries in current-payment status whose WEP or GPO reductions were not applied properly. Among them, OIG estimated that SSA has overpaid approximately $349.5 million to 10,546 dually entitled beneficiaries whose WEP reduction was not applied properly and $320.6 million to 10,122 dually entitled beneficiaries whose GPO offset was not imposed correctly. OIG also estimated that SSA overpaid those beneficiaries an additional $231.9 million from 2013 to 2017, and that if no corrective action is taken, SSA might continue overpaying them by approximately $46.4 million annually. In 2018, OIG identified about 7,409 dually entitled beneficiaries with a GPO reduction on their spousal benefits but no WEP reduction on their retirement benefits and 8,127 dually entitled beneficiaries with a WEP reduction on their retirement benefits but no GPO offset on their spousal benefits.", "To prevent further improper payments to dually entitled beneficiaries who are subject to both the WEP and the GPO, in September 2018, SSA planned to generate system alerts for individuals who apply for retirement and spousal benefits when pension information is already available. OIG indicates that the planned alterations to the system, if implemented properly, might effectively prevent additional WEP and GPO overpayments. ", "Improper payments to Social Security beneficiaries affected by the WEP and the GPO also occurred because some beneficiaries fail to report receipt of or changes in their pensions based on employment not covered by Social Security. If a beneficiary is receiving a noncovered pension based on his or her own employment, the beneficiary must provide evidence from the employer or pension-paying agency (e.g., an award letter) that shows the gross periodic pension amount, including the effective date and expected future pension increases. SSA cited GPO errors as one of the most important causes of the increase in the overpayment error rate between FY2016 and FY2017. ", "Several proposals have been made to improve SSA's collection of pension information from states and localities for administering the WEP and the GPO. For example, the President's FY2020 budget includes a proposal for up to $70 million for administrative expenses, $50 million of which would be available to the states, to develop a mechanism to facilitate reporting of information about pensions based on noncovered employment. In addition, a 1998 report from the General Accounting Office (GAO; now called the Government Accountability Office) recommended that SSA obtain public pension data from the Internal Revenue Service (IRS). SSA has indicated that discussions with the IRS to obtain noncovered pension information are ongoing. "], "subsections": []}, {"section_title": "Impact on Social Security Benefits and Household Wealth", "paragraphs": ["The WEP and the GPO reduce the Social Security benefit received by either member or both members of a couple within a household, and have the largest impact on households affected by both provisions. One study finds that the WEP and the GPO, on average, reduce the present value of lifetime Social Security benefits by about 20% among households affected by either provision and by another 10% among households affected by both provisions. In this study, the households affected by both the WEP and the GPO include those in which either member is affected by both provisions or one member is affected by the WEP and the other is affected by the GPO. The study found that the present value of lifetime Social Security benefits and total household wealth\u00e2\u0080\u0094including the present value of lifetime Social Security benefits, public pension benefits, and other pension benefits, as well as all other assets\u00e2\u0080\u0094were lower among households subject to both the WEP and the GPO than among households subject to either provision alone. "], "subsections": []}, {"section_title": "Effect of Extending Social Security Coverage to Noncovered Workers", "paragraphs": ["About one-quarter of state and local government employees, or approximately 6.4 million individuals, are not covered by Social Security. Social Security coverage may be extended to state and local government employees through a voluntary Section 218 Agreement between a state and the Social Security Administration. If a state or local government employee's position is covered under a public retirement system that provides a minimum retirement benefit comparable to Social Security retired-worker benefits, Social Security coverage may be extended to those positions via employee referendums. If a majority of all eligible employees votes in favor of Social Security coverage, all current and future employees in positions under the public retirement system will be covered.", "The adoption of a Section 218 Agreement during a worker's or a spouse's midcareer may cause some future (dually entitled) Social Security beneficiaries to become subject to the WEP and the GPO. Table 3 illustrates an example of a worker's Social Security benefits with and without an extension of Social Security coverage on the worker's own employment. Without Social Security coverage, the worker in example 1 might have no Social Security retired-worker benefits ($0), and his or her Social Security spousal benefits ($1,000) would be reduced by the GPO (2/3 of noncovered pension = 2/3\u00c3\u0097$900=$600). In this example, the beneficiary would be affected by only the GPO. If the worker's position became covered by Social Security in midcareer, the Social Security retirement benefits based on his or her own earnings record would become positive (assumed to be $450) and the noncovered component of the pension would decrease accordingly ($450) to reflect fewer years of noncovered employment (example 2). This individual would be subject to both the WEP and the GPO. Consequently, the beneficiary would become dually entitled to both Social Security retirement benefits and spousal benefits, and the spousal benefits would be reduced by both the dual entitlement rule ($450) and the GPO (2/3 of noncovered pension=2/3\u00c3\u0097$450=$300). ", " Table 4 illustrates another example of the Social Security and pension benefits of a beneficiary whose spouse becomes covered under Social Security in midcareer. The beneficiary is assumed to receive Social Security retirement benefits based on his or her own covered earnings and a pension benefit based on noncovered employment, which makes the beneficiary subject to the WEP (example 1). Extending the spouse's Social Security coverage would increase the before-offset spousal benefits from zero to positive, which consequently would result in the beneficiary becoming dually entitled (examples 2 and 3). In example 2, the Social Security spousal benefits ($1,000) would be reduced by the worker's own Social Security benefit under the dual entitlement rule ($600). The Social Security spousal benefits would be further reduced by the GPO (2/3 of noncovered pension=2/3\u00c3\u0097$900= $600), and result in a net spousal benefit of zero (because the spousal benefit cannot be reduced below zero). In example 3, the Social Security spousal benefit ($1,300) is higher than the combined benefit reductions from the dual entitlement rule ($600) and the GPO ($600), thus resulting a net spousal benefit of $100. In all three examples, the beneficiary is affected by both the WEP and the GPO. ", "Although a Section 218 Agreement may result in some potential beneficiaries being subject to both the WEP and the GPO, such an extension of Social Security coverage may also have a reverse effect\u00e2\u0080\u0094future Social Security beneficiaries who might be affected by both provisions without the Section 218 Agreement might become subject to only one provision with such an agreement. For example, a potential dually entitled beneficiary subject to both the WEP and the GPO might be exempted from the GPO if he or she switched from a noncovered position to a covered position and stayed in that covered position for at least five years. "], "subsections": []}]}]}}
{"id": "R46317", "title": "Presidential Appointments to Full-Time Positions on Regulatory and Other Collegial Boards and Commissions, 115th Congress", "released_date": "2020-04-20T00:00:00", "summary": ["The President makes appointments to certain positions within the federal government, either using authorities granted to the President alone or with the advice and consent of the Senate. There are some 151 full-time leadership positions on 34 federal regulatory and other collegial boards and commissions for which the Senate provides advice and consent. This report identifies all nominations submitted to the Senate for full-time positions on these 34 boards and commissions during the 115 th Congress.", "Information for each board and commission is presented in profiles and tables. The profiles provide information on leadership structures and statutory requirements (such as term limits and party balance requirements). The tables include full-time positions confirmed by the Senate, incumbents as of the end of the 115 th Congress, incumbents' parties (where balance is required), and appointment action within each board or commission. Additional summary information across all 34 boards and commissions appears in Appendix A .", "During the 115 th Congress, the President submitted 140 nominations to the Senate for full-time positions on these boards and commissions (most of the remaining positions on these boards and commissions were not vacant during that time). Of these 140 nominations, 75 were confirmed, 12 were withdrawn, and 53 were returned to the President. At the end of the 115 th Congress, 22 incumbents were serving past the expiration of their terms. In addition, there were 43 vacancies among the 151 positions.", "Information for this report was compiled using the Senate nominations database at https://www.congress.gov/ , the Congressional Record (daily edition), the Weekly Compilation of Presidential Documents , telephone discussions with agency officials, agency websites, the United States Code , and the 2016 Plum Book ( United States Government Policy and Supporting Positions ).", "This report will not be updated."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["The President is responsible for appointing individuals to certain positions in the federal government. In some instances, the President makes these appointments using authorities granted to the President alone. Other appointments, generally referred to with the abbreviation PAS, are made by the President with the advice and consent of the Senate via the nomination and confirmation process. This report identifies, for the 115 th Congress, all nominations submitted to the Senate for full-time positions on 34 regulatory and other collegial boards and commissions.", "This report includes profiles on the leadership structures of each of these 34 boards and commissions as well as a pair of tables presenting information on each body's membership and appointment activity as of the end of the 115 th Congress. ", "The profiles discuss the statutory requirements for the appointed positions, including the number of members on each board or commission, their terms of office, whether they may continue in their positions after their terms expire, whether political balance is required, and the method for selecting the chair. The first table in each pair provides information on full-time positions requiring Senate confirmation as of the end of the 115 th Congress. The second table tracks appointment activity for each board or commission within the 115 th Congress by the Senate (confirmations, rejections, returns to the President, and elapsed time between nomination and confirmation), as well as further related presidential activity (including withdrawals and recess appointments). ", "In some instances, no appointment action occurred within a board or commission during the 115 th Congress.", "Information for this report was compiled using the Senate nominations database at https://www.congress.gov/ (users can click the \"nominations\" tab on the left-hand side of the page to search the database), the Congressional Record (daily edition), the Weekly Compilation of Presidential Documents , telephone discussions with agency officials, agency websites, the United States Code , and the 2016 Plum Book ( United States Government Policy and Supporting Positions ).", "Congressional Research Service (CRS) reports regarding the presidential appointments process, nomination activity for other executive branch positions, recess appointments, and other related matters are available to congressional clients at http://www.crs.gov ."], "subsections": [{"section_title": "Characteristics of Regulatory and Other Collegial Bodies", "paragraphs": [], "subsections": [{"section_title": "Common Features", "paragraphs": ["Federal executive branch boards and commissions discussed in this report share, among other characteristics, the following: (1) they are independent executive branch bodies located, with four exceptions, outside executive departments; (2) several board or commission members head each entity, and at least one of these members serves full time; (3) the members are appointed by the President with the advice and consent of the Senate; and (4) the members serve fixed terms of office and, except in a few bodies, the President's power to remove them is restricted. "], "subsections": []}, {"section_title": "Terms of Office", "paragraphs": ["For most of the boards and commissions included in this report, the fixed terms of office for member positions have set beginning and end dates, irrespective of whether the posts are filled or when appointments are made. In contrast, for a few agencies, such as the Chemical Safety and Hazard Investigation Board, the full term begins when an appointee takes office and expires after the incumbent has held the post for the requisite period of time. The end dates of the fixed terms of a board's members are staggered, so that the terms do not expire all at once. The use of terms with fixed beginning and end dates is intended to minimize the occurrence of simultaneous board member departures and thereby increase leadership continuity.", "Under such an arrangement, an individual is nominated to a particular position and a particular term of office. An individual may be nominated and confirmed for a position for the remainder of an unexpired term to replace an appointee who has resigned (or died). Alternatively, an individual might be nominated for an upcoming term with the expectation that the new term will be under way by the time of confirmation. Occasionally, when the unexpired term has been for a relatively short period, the President has submitted two nominations of the same person simultaneously\u00e2\u0080\u0094the first to complete the unexpired term and the second to complete the entire succeeding term of office."], "subsections": []}, {"section_title": "Appointment of Chairs and Political Independence", "paragraphs": ["On some commissions, the chair is subject to Senate confirmation and must be appointed from among the incumbent commissioners. If the President wishes to appoint, as chair, someone who is not on the commission, the President simultaneously submits two nominations for the nominee\u00e2\u0080\u0094one for member and the other for chair.", "As independent entities with staggered membership, executive branch boards and commissions have more political independence from the President than do executive departments. Nonetheless, the President can sometimes exercise significant influence over the composition of a board or commission's membership when he designates the chair or has the opportunity to fill a number of vacancies at once. For example, President George W. Bush had the chance to shape the Securities and Exchange Commission (SEC) during the first two years of his presidency because of existing vacancies, resignations, and a member's death. Likewise, during the same time period, President Bush was able to submit nominations for all of the positions on the National Labor Relations Board because of existing vacancies, expiring recess appointments, and resignations. Simultaneous turnover of board or commission membership may result from coincidence, but it also may be the result of a buildup of vacancies after extended periods of time in which the President does not nominate, or the Senate does not confirm, members."], "subsections": []}, {"section_title": "Political Affiliations and Inspectors General", "paragraphs": ["Two other notable characteristics apply to appointments to some of the boards and commissions. First, for 26 of the 34 bodies discussed in this report, the law limits the number of appointed members who may belong to the same political party, usually to no more than a bare majority of the appointed members (e.g., two of three or three of five). Second, advice and consent requirements also apply to inspector general appointments in four of these organizations and general counsel appointments in three."], "subsections": []}]}, {"section_title": "Appointments During the 115th Congress", "paragraphs": ["During the 115 th Congress, President Donald Trump submitted nominations to the Senate for 112 of the 151 full-time positions on 34 regulatory and other boards and commissions. In attempting to fill these 112 positions, he submitted a total of 140 nominations, of which 75 were confirmed, 12 were withdrawn, and 53 were returned to the President. No recess appointments were made. Table 1 summarizes the appointment activity for the 115 th Congress. At the end of the Congress, 22 incumbents were serving past the expiration of their terms. In addition, there were 43 vacancies among the 151 positions."], "subsections": []}, {"section_title": "Length of Time to Confirm a Nomination", "paragraphs": ["The length of time a given nomination may be pending in the Senate has varied widely. Some nominations have been confirmed within a few days, others have been confirmed within several months, and some have never been confirmed. In the board and commission profiles, this report provides, for each board or commission nomination confirmed in the 115 th Congress, the number of days between nomination and confirmation (\"days to confirm\"). ", "Under Senate rules, nominations not acted on by the Senate at the end of a session of Congress (or before a recess of 30 days) are returned to the President. The Senate, by unanimous consent, often waives this rule\u00e2\u0080\u0094although not always. In cases where the President resubmits a returned nomination, this report measures the days to confirm from the date of receipt of the resubmitted nomination, not the original.", "For those nominations confirmed in the 115 th Congress, a mean of 121.0 days elapsed between nomination and confirmation. The median number of days elapsed was 91.0."], "subsections": []}]}, {"section_title": "Organization of the Report", "paragraphs": [], "subsections": [{"section_title": "Board and Commission Profiles", "paragraphs": ["Each of the 34 board or commission profiles in this report is organized into three parts. First, the leadership structure section discusses the statutory requirements for the appointed positions, including the number of members on each board or commission, their terms of office, whether these members may continue in their positions after their terms expire, whether political balance is required, and the method for selecting the chair.", "The first table lists incumbents to full-time positions as of the end of the 115 th Congress, along with party affiliation (where applicable), date of first confirmation, and term expiration date. Incumbents whose terms have expired are italicized. Most incumbents serve fixed terms of office and are removable only for specified causes. They generally remain in office when a new Administration assumes office following a presidential election. ", "The second table lists appointment action for vacant positions during the 115 th Congress. This table provides the name of the nominee, position title, date of nomination or appointment, date of confirmation, and number of days between receipt of a nomination and confirmation, and notes relevant actions other than confirmation (e.g., nominations returned to or withdrawn by the President). ", "When more than one nominee has had appointment action, the second table also provides statistics on the length of time between nomination and confirmation. The average days to confirm are provided in the form of a mean number. "], "subsections": []}, {"section_title": "Additional Appointment Information", "paragraphs": [" Appendix A provides two tables. Table A-1 includes information on each of the nominations and appointments to regulatory and other collegial boards and commissions during the 115 th Congress. It is alphabetically organized and follows a similar format to that of the \"Appointment Action\" sections discussed above. It identifies the board or commission involved and the dates of nomination and confirmation. It also indicates if a nomination was withdrawn, returned, rejected, or if a recess appointment was made. In addition, it provides the mean and median number of days taken to confirm a nomination. ", " Table A-2 contains summary information on appointments and nominations by organization. For each of the 34 independent boards and commissions discussed in this report, it shows the number of positions, vacancies, incumbents whose term had expired, nominations, individual nominees, positions to which nominations were made, confirmations, nominations returned to the President, nominations withdrawn, and recess appointments.", "A list of organization abbreviations can be found in Appendix B ."], "subsections": []}]}, {"section_title": "Chemical Safety and Hazard Investigation Board10", "paragraphs": ["The Chemical Safety and Hazard Investigation Board is an independent agency consisting of five members who serve five-year terms (no political balance is required), including a chair. The President appoints the members, including the chair, with the advice and consent of the Senate. When a term expires, the incumbent must leave office. "], "subsections": []}, {"section_title": "Commodity Futures Trading Commission11", "paragraphs": ["The Commodity Futures Trading Commission consists of five members (no more than three may be from the same political party) who serve five-year terms. At the end of a term, a member may remain in office, unless replaced, until the end of the next session of Congress. The chair is also appointed by the President, with the advice and consent of the Senate. "], "subsections": []}, {"section_title": "Consumer Product Safety Commission12", "paragraphs": ["The statute establishing the Consumer Product Safety Commission calls for five members who serve seven-year terms. No more than three members may be from the same political party. A member may remain in office for one year at the end of a term, unless replaced. The chair is also appointed by the President, with the advice and consent of the Senate. "], "subsections": []}, {"section_title": "Defense Nuclear Facilities Safety Board13", "paragraphs": ["The Defense Nuclear Facilities Safety Board consists of five members (no more than three may be from the same political party) who serve five-year terms. After a term expires, a member may continue to serve until a successor takes office. The President designates the chair and vice chair. "], "subsections": []}, {"section_title": "Election Assistance Commission14", "paragraphs": ["The Election Assistance Commission consists of four members (no more than two may be from the same political party) who serve four-year terms. After a term expires, a member may continue to serve until a successor takes office. The chair and vice chair, from different political parties and designated by the commission, change each year."], "subsections": []}, {"section_title": "Equal Employment Opportunity Commission15", "paragraphs": ["The Equal Employment Opportunity Commission consists of five members (no more than three may be from the same political party) who serve five-year terms. An incumbent whose term has expired may continue to serve until a successor is appointed, except that no such member may continue to serve (1) for more than 60 days when Congress is in session, unless a successor has been nominated; or (2) after the adjournment of the session of the Senate in which the successor's nomination was submitted. The President designates the chair and the vice chair. The President also appoints the general counsel, with the advice and consent of the Senate. "], "subsections": []}, {"section_title": "Export-Import Bank Board of Directors16", "paragraphs": ["The Export-Import Bank Board of Directors comprises the bank president, who serves as chair; the bank first vice president, who serves as vice chair; and three other members (no more than three of these five may be from the same political party). All five members are appointed by the President, with the advice and consent of the Senate, and serve for terms of up to four years. An incumbent whose term has expired may continue to serve until a successor is qualified, or until six months after the term expires\u00e2\u0080\u0094whichever occurs earlier. The President also appoints an inspector general, with the advice and consent of the Senate. "], "subsections": []}, {"section_title": "Farm Credit Administration18", "paragraphs": ["The Farm Credit Administration consists of three members (no more than two may be from the same political party) who serve six-year terms. A member may not succeed himself or herself unless he or she was first appointed to complete an unexpired term of three years or less. A member whose term expires may continue to serve until a successor takes office. One member is designated by the President to serve as chair for the duration of the member's term. "], "subsections": []}, {"section_title": "Federal Communications Commission19", "paragraphs": ["The Federal Communications Commission consists of five members (no more than three may be from the same political party) who serve five-year terms. When a term expires, a member may continue to serve until the end of the next session of Congress, unless a successor is appointed before that time. The President designates the chair. "], "subsections": []}, {"section_title": "Federal Deposit Insurance Corporation Board\u00c2 of\u00c2 Directors20", "paragraphs": ["The Federal Deposit Insurance Corporation Board of Directors consists of five members, of whom two\u00e2\u0080\u0094the comptroller of the currency and the director of the Consumer Financial Protection Bureau\u00e2\u0080\u0094are ex officio. The three appointed members serve six-year terms. An appointed member may continue to serve after the expiration of a term until a successor is appointed. Not more than three members of the board may be from the same political party. The President appoints the chair and the vice chair, with the advice and consent of the Senate, from among the appointed members. The chair is appointed for a term of five years. The President also appoints the inspector general, with the advice and consent of the Senate."], "subsections": []}, {"section_title": "Federal Election Commission22", "paragraphs": ["The Federal Election Commission consists of six members (no more than three may be from the same political party) who may serve for a single term of six years. When a term expires, a member may continue to serve until a successor takes office. The chair and vice chair, from different political parties and elected by the commission, change each year. Generally, the vice chair succeeds the chair."], "subsections": []}, {"section_title": "Federal Energy Regulatory Commission23", "paragraphs": ["The Federal Energy Regulatory Commission, an independent agency within the Department of Energy, consists of five members (no more than three may be from the same political party) who serve five-year terms. When a term expires, a member may continue to serve until a successor takes office, except that such commissioner may not serve beyond the end of the session of the Congress in which his or her term expires. The President designates the chair. "], "subsections": []}, {"section_title": "Federal Labor Relations Authority24", "paragraphs": ["The Federal Labor Relations Authority consists of three members (no more than two may be from the same political party) who serve five-year terms. After the date on which a five-year term expires, a member may continue to serve until the end of the next Congress, unless a successor is appointed before that time. The President designates the chair. The President also appoints the general counsel, with the advice and consent of the Senate."], "subsections": []}, {"section_title": "Federal Maritime Commission25", "paragraphs": ["The Federal Maritime Commission consists of five members (no more than three may be from the same political party) who serve five-year terms. When a term expires, a member may continue to serve until a successor takes office. The President designates the chair. "], "subsections": []}, {"section_title": "Federal Mine Safety and Health Review Commission26", "paragraphs": ["The Federal Mine Safety and Health Review Commission consists of five members (no political balance is required) who serve six-year terms. When a term expires, the member must leave office. The President designates the chair."], "subsections": []}, {"section_title": "Federal Reserve System Board of Governors27", "paragraphs": ["The Federal Reserve System Board of Governors consists of seven members (no political balance is required) who serve 14-year terms. When a term expires, a member may continue to serve until a successor takes office. The President appoints the chair and vice chair, who are separately appointed as members, for four-year terms, with the advice and consent of the Senate."], "subsections": []}, {"section_title": "Federal Trade Commission28", "paragraphs": ["The Federal Trade Commission consists of five members (no more than three may be from the same political party) who serve seven-year terms. When a term expires, the member may continue to serve until a successor takes office. The President designates the chair. "], "subsections": []}, {"section_title": "Financial Stability Oversight Council29", "paragraphs": ["The Financial Stability Oversight Council consists of 10 voting members and 5 nonvoting members, and is chaired by the Secretary of the Treasury. Of the 10 voting members, 9 serve ex officio, by virtue of their positions as leaders of other agencies. The remaining voting member is appointed by the President with the advice and consent of the Senate and serves full time for a term of six years. Of the five nonvoting members, two serve ex officio. The remaining three nonvoting members are designated through a process determined by the constituencies they represent, and they serve for terms of two years. The council is not required to have a balance of political party representation."], "subsections": []}, {"section_title": "Foreign Claims Settlement Commission30", "paragraphs": ["The Foreign Claims Settlement Commission, located in the Department of Justice, consists of three members (political balance is not required) who serve three-year terms. When a term expires, the member may continue to serve until a successor takes office. Only the chair, who is appointed by the President with the advice and consent of the Senate, serves full time."], "subsections": []}, {"section_title": "Merit Systems Protection Board31", "paragraphs": ["The Merit Systems Protection Board consists of three members (no more than two may be from the same political party) who serve seven-year terms. A member who has been appointed to a full seven-year term may not be reappointed to any following term. When a term expires, the member may continue to serve for one year, unless a successor is appointed before that time. The President appoints the chair, with the advice and consent of the Senate, and designates the vice chair."], "subsections": []}, {"section_title": "National Credit Union Administration Board\u00c2 of\u00c2 Directors32", "paragraphs": ["The National Credit Union Administration Board of Directors consists of three members (no more than two members may be from the same political party) who serve six-year terms. When a term expires, a member may continue to serve until a successor takes office. The President designates the chair. "], "subsections": []}, {"section_title": "National Labor Relations Board33", "paragraphs": ["The National Labor Relations Board consists of five members who serve five-year terms. Political balance is not required, but, by tradition, no more than three members are from the same political party. When a term expires, the member must leave office. The President designates the chair. The President also appoints the general counsel, with the advice and consent of the Senate. "], "subsections": []}, {"section_title": "National Mediation Board34", "paragraphs": ["The National Mediation Board consists of three members (no more than two may be from the same political party) who serve three-year terms. When a term expires, the member may continue to serve until a successor takes office. The board annually designates a chair. "], "subsections": []}, {"section_title": "National Transportation Safety Board35", "paragraphs": ["The National Transportation Safety Board consists of five members (no more than three may be from the same political party) who serve five-year terms. When a term expires, a member may continue to serve until a successor takes office. The President appoints the chair from among the members for a two-year term, with the advice and consent of the Senate, and designates the vice chair."], "subsections": []}, {"section_title": "Nuclear Regulatory Commission36", "paragraphs": ["The Nuclear Regulatory Commission consists of five members (no more than three may be from the same political party) who serve five-year terms. When a term expires, the member must leave office. The President designates the chair. The President also appoints the inspector general, with the advice and consent of the Senate. "], "subsections": []}, {"section_title": "Occupational Safety and Health Review\u00c2 Commission38", "paragraphs": ["The Occupational Safety and Health Review Commission consists of three members (political balance is not required) who serve six-year terms. When a term expires, the member must leave office. The President designates the chair."], "subsections": []}, {"section_title": "Postal Regulatory Commission39", "paragraphs": ["The Postal Regulatory Commission consists of five members (no more than three may be from the same political party) who serve six-year terms. After a term expires, a member may continue to serve until his or her successor takes office, but the member may not continue to serve for more than one year after the date upon which his or her term otherwise would expire. The President designates the chair, and the members select the vice chair. "], "subsections": []}, {"section_title": "Privacy and Civil Liberties Oversight Board40", "paragraphs": ["The Privacy and Civil Liberties Oversight Board consists of five members (no more than three may be from the same political party) who serve six-year terms. When a term expires, the member may continue to serve until a successor takes office. Only the chair, who is appointed by the President with the advice and consent of the Senate, serves full time.", "The Implementing Recommendations of the 9/11 Commission Act of 2007, P.L. 110-53 , Title VIII, Section 801 (121 Stat. 352), established the Privacy and Civil Liberties Oversight Board. Previously, the Privacy and Civil Liberties Oversight Board functioned as part of the White House Office in the Executive Office of the President. That board ceased functioning on January 30, 2008. "], "subsections": []}, {"section_title": "Railroad Retirement Board41", "paragraphs": ["The Railroad Retirement Board consists of three members (political balance is not required) who serve five-year terms. When a term expires, the member may continue to serve until a successor takes office. The President appoints the chair and an inspector general with the advice and consent of the Senate."], "subsections": []}, {"section_title": "Securities and Exchange Commission43", "paragraphs": ["The Securities and Exchange Commission consists of five members (no more than three may be from the same political party) who serve five-year terms. When a term expires, the member may continue to serve until the end of the next session of Congress, unless a successor is appointed before that time. The President designates the chair. "], "subsections": []}, {"section_title": "Surface Transportation Board44", "paragraphs": ["The Surface Transportation Board, located within the Department of Transportation, consists of five members (no more than three may be from the same political party) who serve five-year terms. When a term expires, the member may continue to serve until a successor takes office but for not more than one year after expiration. The President designates the chair. "], "subsections": []}, {"section_title": "United States International Trade Commission45", "paragraphs": ["The United States International Trade Commission consists of six members (no more than three may be from the same political party) who serve nine-year terms. A member of the commission who has served for more than five years is ineligible for reappointment. When a term expires, a member may continue to serve until a successor takes office. The President designates the chair and vice chair for two-year terms of office, but they may not belong to the same political party. The President may not designate a chair with less than one year of continuous service as a member. This restriction does not apply to the vice chair. "], "subsections": []}, {"section_title": "United States Parole Commission", "paragraphs": ["The United States Parole Commission is an independent agency in the Department of Justice. The commission consists of five commissioners (political balance is not required) who serve for six-year terms. When a term expires, a member may continue to serve until a successor takes office. In most cases, a commissioner may serve no more than 12 years. The President designates the chair (18 U.S.C. \u00c2\u00a74202). The commission was previously scheduled to be phased out, but Congress has extended its life several times. Under P.L. 113-47 , Section 2 (127 Stat. 572), it was extended until November 1, 2018 (18 U.S.C. \u00c2\u00a73551 note)."], "subsections": []}, {"section_title": "United States Sentencing Commission46", "paragraphs": ["The United States Sentencing Commission is a judicial branch agency that consists of seven voting members, who are appointed to six-year terms, and one nonvoting member. The seven voting members are appointed by the President, with the advice and consent of the Senate, and only the chair and three vice chairs serve full time. The President appoints the chair, with the advice and consent of the Senate, and designates the vice chairs. At least three members must be federal judges. No more than four members may be of the same political party. No more than two vice chairs may be of the same political party. No voting member may serve more than two full terms. When a term expires, an incumbent may continue to serve until he or she is reappointed, a successor takes office, or Congress adjourns sine die at the end of the session that commences after the expiration of the term, whichever is earliest. The Attorney General (or designee) serves ex officio as a nonvoting member. The chair of the United State Parole Commission also is an ex officio nonvoting member of the commission. ", "Appendix A. Summary of All Nominations and Appointments to Collegial Boards and\u00c2\u00a0Commissions", "Appendix B. Board and Commission Abbreviations"], "subsections": []}]}}
{"id": "R45930", "title": "U.N. Peacekeeping Operations in Africa", "released_date": "2019-09-23T00:00:00", "summary": ["Many Members of Congress have demonstrated an interest in the mandates, effectiveness, and funding status of United Nations (U.N.) peacekeeping operations in Africa as an integral component of U.S. policy toward Africa and a key tool for fostering greater stability and security on the continent. As of September 2019, there are seven U.N. peacekeeping operations in Africa:", "the U.N. Multidimensional Integrated Stabilization Mission in the Central African Republic (MINUSCA); the U.N. Multidimensional Integrated Stabilization Mission in Mali (MINUSMA); the U.N. Interim Security Force for Abyei (UNISFA); the U.N. Mission in South Sudan (UNMISS); the U.N. Organization Stabilization Mission in the Democratic Republic of the Congo (MONUSCO); the African Union-United Nations Mission in Darfur (UNAMID); and the U.N. Mission for the Organization of a Referendum in Western Sahara (MINURSO).", "The United States, as a permanent member of the U.N. Security Council, plays a key role in establishing, renewing, and funding U.N. peacekeeping operations, including those in Africa. For 2019, the U.N. General Assembly assessed the U.S. share of U.N. peacekeeping operation budgets at 27.89%; since the mid-1990s Congress has capped the U.S. payment at 25% due to concerns that the current assessment is too high. During the Trump Administration, the United States generally has voted in the Security Council for the renewal and funding of existing U.N. peacekeeping operations, including those in Africa. At the same time, the Administration has been critical of U.N. peacekeeping activities\u00e2\u0080\u0094both overall and in Africa specifically\u00e2\u0080\u0094and called for a review of operations to ensure that they are \"fit for purpose\" and to improve their efficiency and effectiveness.", "Over the years, Congress has considered a range of overarching policy issues and debates regarding U.N. peacekeeping operations in Africa, including", "how effectively such operations fulfill their mandates, particularly related to civilian protection and peacekeeping; under what circumstances a U.N. peacekeeping mission might be an effective tool for addressing or preventing mass atrocities in Africa; to what extent and in what ways can U.N. peacekeeping operations effectively work with abusive or neglectful host governments and state security forces in Africa; how to prevent and address sexual exploitation and abuse by U.N. peacekeepers, particularly in operations in Africa; and the role of Africa-led (as opposed to U.N.-conducted) operations as a response to regional crises.", "This report focuses on U.N. peacekeeping missions in Africa; it does not address broader policy issues related to U.N. peacekeeping, the African Union Mission in Somalia (AMISOM), or the U.N. Support Office in Somalia (UNSOS). For more information on U.N. peacekeeping and U.S. funding, see CRS In Focus IF10597, United Nations Issues: U.S. Funding of U.N. Peacekeeping . For further analysis on the political and security context for the above operations, see CRS In Focus IF11171, Crisis in the Central African Republic ; CRS In Focus IF10116, Conflict in Mali ; CRS In Focus IF10218, South Sudan ; CRS Report R45794, Sudan's Uncertain Transition ; CRS Report R43166, Democratic Republic of Congo: Background and U.S. Relations ; and CRS Report RS20962, Western Sahara ."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["Many Members of Congress have demonstrated an interest in the mandates, effectiveness, and funding status of U.N. peacekeeping operations in Africa as an integral component of U.S. policy toward Africa and a key tool for fostering greater stability and security on the continent. As a permanent member of the U.N. Security Council (the Council) with veto power, the United States plays a key role in establishing, renewing, and funding individual operations, including those in Africa. The United States is the largest financial contributor to U.N. peacekeeping. ", "This report provides an overview of active U.N. peacekeeping operations in Africa, including their mandates, budget and funding mechanisms, key challenges, and U.S. policy toward each mission. It does not address broader U.N. peacekeeping issues or missions elsewhere, non-U.N. peacekeeping and stabilization efforts in Africa, or the activities of the U.N. Support Office in Somalia (UNSOS), which is a U.N.-authorized logistics mission that supports the African Union (AU) Mission in Somalia (AMISOM). ", "For related information, see CRS In Focus IF10597, United Nations Issues: U.S. Funding of U.N. Peacekeeping ; CRS In Focus IF11171, Crisis in the Central African Republic ; CRS In Focus IF10116, Conflict in Mali ; CRS In Focus IF10218, South Sudan , and CRS Report R45794, Sudan's Uncertain Transition ; CRS Report R43166, Democratic Republic of Congo: Background and U.S. Relations ; and CRS Report RS20962, Western Sahara ."], "subsections": []}, {"section_title": "Setting the Context: U.N. Peacekeeping Operations", "paragraphs": ["As of August 2019, the United Nations conducts 14 peacekeeping operations worldwide comprising more than 100,000 military, police, and civilian personnel. Of these operations, seven are in Africa ( Figure 1 ):", "the U.N. Multidimensional Integrated Stabilization Mission in the Central African Republic (MINUSCA), established by the Council in 2014; the U.N. Multidimensional Integrated Stabilization Mission in Mali (MINUSMA), established in 2013; the U.N. Interim Security Force for Abyei (UNISFA), established in 2011; the U.N. Mission in South Sudan (UNMISS), established in 2011; the U.N. Organization Stabilization Mission in the Democratic Republic of the Congo (DRC, MONUSCO), established in 2010 to succeed the U.N. Organization Mission in the DRC (MONUC); the U.N.-African Union Mission in Darfur (UNAMID), established in 2007; and the U.N. Mission for the Organization of a Referendum in the Western Sahara (MINURSO), established in 1991. ", "These include the world's four largest U.N. peacekeeping operations by actively deployed uniformed personnel : MONUSCO, UNMISS, MINUSMA, and MINUSCA. ", "The Africa operations illustrate how U.N. peacekeeping has significantly evolved since the first mission was established in the Middle East in 1948. U.N. peacekeeping once involved implementing cease-fire or peace agreements (as is the case for MINURSO, the oldest of the current Africa operations). Since the 1990s, however, the U.N. Security Council has increasingly authorized operations in complex and insecure environments where there may be no peace to keep and little prospect of a near-term resolution. Peacekeepers, particularly those operating in African missions, are increasingly asked to protect civilians, help extend state authority, disarm rebel groups, work with humanitarian actors, assist in restoring the rule of law, and monitor human rights, often in the absence of a comprehensive or effective cease-fire or peace settlement."], "subsections": [{"section_title": "Establishment and Budget", "paragraphs": ["Members of the Security Council vote to adopt resolutions establishing and renewing peacekeeping operations. The resolutions specify the mission mandate and timeframe and authorize a troop ceiling and funding level for each mission. The Council generally authorizes the U.N. General Assembly (the Assembly) to create a special account for each operation funded by assessed contributions by U.N. member states. The Assembly adopts the peacekeeping scale of assessments every three years based on modifications of the U.N. regular budget scale, with the five permanent Council members assessed at a higher level for peacekeeping than for the regular budget. The latest U.S. peacekeeping assessment, adopted in December 2018, is 27.89%. Other top contributors include China (15.22%), Japan (8.56%), Germany (6.09%), and France (5.61%). The approved U.N. budget for the 2019/2020 peacekeeping fiscal year is $6.51 billion. Of this amount, $4.82 billion (nearly 75%) is designated for the seven missions in Africa. U.N. members voluntarily provide the military and police personnel for each peacekeeping mission. Peacekeepers are paid by their own governments, which are reimbursed by the United Nations at a standard rate determined by the Assembly (about $1,428 per soldier per month). Some African countries\u00e2\u0080\u0094including Ethiopia, Rwanda, and Ghana\u00e2\u0080\u0094are among the largest troop contributors. ", "Some experts and observers have expressed concern regarding possible funding shortages for U.N. peacekeeping operations, particularly those in Africa, and the impact it could have on their effectiveness. In a March 2019 report to the General Assembly (A/73/809), U.N. Secretary-General (SG) Ant\u00c3\u00b3nio Guterres noted an increase in the number of peacekeeping missions that are frequently cash constrained due to member state payment patterns and arrears, and \"structural weaknesses\" in peacekeeping budget methodologies, including inefficient payment schedules and borrowing and funding restrictions. These issues have led to some cash shortages, delays in reimbursements to some troop contributing countries (TCCs), and increased risks to \"not only the functioning of its [U.N.] peacekeeping operations but also the people who serve in difficult environments.\" Ongoing difficulties in paying for peacekeeping operations could have implications for the internal stability of top African TCCs, which may view U.N.-funded troop salary reimbursements as a tool to reward and/or placate their large and potentially restive militaries. To help address the aforementioned issues, SG Guterres proposed several reforms that have been implemented or are under consideration by U.N. member states. The extent to which these efforts might improve the peacekeeping financial situation remains to be seen. "], "subsections": []}, {"section_title": "U.S. Funding", "paragraphs": ["Congress authorizes and appropriates U.S. contributions to U.N. peacekeeping. Some Members have expressed an ongoing interest\u00e2\u0080\u0094via legislation, oversight, and public statements\u00e2\u0080\u0094in ensuring that such funding is used as efficiently and effectively as possible.\u00c2\u00a0U.S. assessed contributions to U.N. peacekeeping operations are provided primarily in annual State, Foreign Operations, and Related Programs (SFOPS) appropriations bills through the\u00c2\u00a0Contributions for International Peacekeeping Activities\u00c2\u00a0(CIPA) account. ", "Congress has often debated the level and impact of U.S. funding for U.N. peacekeeping. In the early 1990s, the U.S. peacekeeping assessment was over 30%, which many Members of Congress found too high. In 1995, Congress set a 25% cap on funding authorized after 1995. Over the years, the gap between the actual U.S. assessment and the cap has led to shortfalls in peacekeeping funding. The State Department and Congress have often covered these shortfalls by raising the cap for limited periods through SFOPS appropriations measures, and allowing for the application of U.N. peacekeeping credits (excess U.N. funds from previous peacekeeping missions) to fund outstanding U.S. balances. During the Obama Administration, these actions allowed the United States to pay its assessments to U.N. peacekeeping missions in full. Congress has elected not to temporarily raise the cap since FY2016. In addition, since mid-2017, the Trump Administration has allowed for the application of peacekeeping credits up to, but not beyond, the 25% cap. As a result, the State Department estimates that the United States accumulated more than $700 million in cap-related arrears through the CIPA account in FY2017, FY2018, and FY2019 combined (in addition to other peacekeeping arrears). These are distributed across U.N. operations, including those in Africa.", "The Trump Administration has voted for the renewal and funding of existing U.N. peacekeeping operations. At the same time, it has been critical of overall and Africa-specific U.N. peacekeeping activities and called for a review of operations to ensure that they are \"fit for purpose\" and more efficient and effective. Most recently, the Administration's FY2020 budget proposed $1.13 billion for U.N. peacekeeping operations, a 27% reduction from the enacted FY2019 level of $1.55 billion (see Table 1 for a breakdown by African operations). The proposal states the Administration's \"commitment to seek reduced costs by reevaluating the mandates, design, and implementation\" of missions and to sharing the cost burdens \"more fairly\" among countries. ", "In addition to its assessed contributions, the United States supports African troop and police contributors by providing training and equipment on a voluntary, bilateral basis. The State Department's Global Peace Operations Initiative (GPOI) is one key source of funding for such support, funded through the SFOPS Peacekeeping Operations (PKO) account as well as ad hoc regional funding allocations. The State Department also provides police assistance through its International Narcotics Control and Law Enforcement (INCLE) account. "], "subsections": []}]}, {"section_title": "Selected Policy Issues", "paragraphs": ["U.S. support for expanding or maintaining individual U.N. peacekeeping operations in Africa\u00e2\u0080\u0094or for approving new operations in response to emerging conflicts on the continent\u00e2\u0080\u0094has fluctuated over time. During the Obama Administration, the United States backed new operations in the Central African Republic (CAR) and Mali\u00e2\u0080\u0094both times at the urging of France, an ally and fellow permanent member of the U.N. Security Council\u00e2\u0080\u0094while overseeing the closure of long-standing operations in Liberia and C\u00c3\u00b4te d'Ivoire as those countries stabilized in the aftermath of internal conflicts. U.N. Security Council members have not formally proposed new U.N.-conducted operations in Africa during the Trump Administration to date, although some have voiced support for authorizing U.N. assessed contributions and/or logistical support for an ongoing African-led operation in the Sahel region (see \"African-led operations\" below). ", "Despite shifts in policy and on the ground, several overarching policy issues and debates continue to arise regarding U.N. peacekeeping in Africa. These fall into several categories discussed below.", "Civilian p rotection m andate fulfillment . Policymakers have debated what changes, if any, can or should be made to enable U.N. peacekeeping operations in Africa to fulfill mandates to protect civilians. This issue has been particularly salient with regard to MONUSCO (in DRC) and MINUSCA (in CAR). Both missions' mandates place a high emphasis on civilian protection amid ongoing conflicts and severe logistics and personnel protection challenges. Armed groups have repeatedly massacred civilians at close proximity to U.N. operating sites. Restrictions (or \"caveats\") imposed by troop-contributing countries on their forces' deployments, often attributable to force protection concerns, may imp ede civilian protection efforts in some cases.", "Mass atrocities . Some experts and observers have debated whether U.N. peacekeeping operations are an effective tool for preventing or addressing mass atrocities. U.S. support for MINUSCA's creation was nested within a high-level effort to prevent further mass atrocities in CAR; fulfilling this goal has proven challenging. In Mali, militias have engaged in a spate of civilian massacres in the center of the country, a region that was largely outside the purview of MINUSMA until the 2019 mandate renewal (as discussed below). ", "Role of host governments . A key challenge is how and to what extent U.N. peacekeeping operations should pursue positive working relationships with host governments whose interests may not align with international stabilization efforts. In practice, peacekeeping personnel may require approvals from host governments to acquire entry visas or access certain parts of the country, for example. Pursuit of positive relations may, however, undermine perceptions of U.N. neutrality or trustworthiness in the context of an active conflict and/or state abuses. U.N. operations in CAR, DRC, and Mali, among others, are mandated to support the extension of state authority, although state security forces are a party to internal conflicts. These same U.N. missions are also tasked with facilitating peace talks between the government and rebel groups. Operations in Sudan and South Sudan have faced obstructions and threats from government officials and security forces, and the role of state security forces in attacks on civilians complicates the missions' civilian protection and reporting mandates.", "Counter t errorism . Some policymakers have questioned what role, if any, U.N. peacekeeping operations should play in addressing transnational terrorism in Africa. This debate has repeatedly arisen in the context of Mali, and may become relevant in other places (such as DRC, where the Islamic State has claimed ties to a local militia group). Despite calls from the Malian government and other regional leaders, the Security Council has declined to mandate MINUSMA explicitly to conduct counterterrorism operations, notwithstanding the mission's civilian protection and stabilization mandates.", "Sexual exploitation and abuse by U.N. peacekeepers . Members of Congress have demonstrated an ongoing interest in how the United Nations might better address sexual abuse and exploitation by U.N. peacekeepers\u00e2\u0080\u0094particularly in MONUSCO and MINUSCA, which have the highest rates of substantiated allegations of sexual abuse and exploitation. Congress has enacted several provisions to address the issue. For example, SFOPS bills since FY2008 have prohibited the obligation of U.N. peacekeeping funding unless the Secretary of State certifies that the United Nations is implementing effective policies and procedures to prevent U.N. employees and peacekeeping troops from engaging in human trafficking, other acts of exploitation, or other human rights violations.", "African troop-contributing countries (TCCs) . Experts and policymakers have debated the advantages and drawbacks of relying on African countries to contribute the bulk of military and police personnel to U.N. peacekeeping operations in Africa. African troop contributors may be willing, but they often display capacity shortfalls and/or poor adherence to human rights standards. For example, in CAR, in a single year (2016), peacekeepers from the Republic of Congo and DRC\u00e2\u0080\u0094among others\u00e2\u0080\u0094were implicated in the abuse of minors, while Burundi's police contingent was repatriated due to abuses by its police services at home. In Mali, which has been the deadliest environment for U.N. peacekeepers since MINUSMA's establishment, top troop contributors include Burkina Faso, Chad, Senegal, and Togo\u00e2\u0080\u0094which are among the world's poorest countries. Moreover, troop contributors that border the host country may have bilateral political interests that complicate their participation in peacekeeping operations. Some countries may also wield their contributions to such missions to deflect international criticism of their domestic political conditions. ", "African-led operations . How and whether to fund and sustain African-led regional stabilization operations in lieu of, or as a complement to, U.N. peacekeeping operations has been debated in U.N. fora, in Africa, and among U.S. policymakers. Stabilization operations initiated by the African Union (AU) or sub-regional organizations are often superseded by U.N. peacekeeping missions. While African regional organizations can authorize rapid military interventions, they are generally unable to finance or sustain them, and donor governments may be reluctant to fund them over long periods. AMISOM\u00e2\u0080\u0094established in 2007 and mandated to take offensive action in support of Somalia's federal government and against Islamist insurgents\u00e2\u0080\u0094has remained the sole African-led military intervention to benefit from a U.N. support operation funded through assessed contributions. At times, U.N. and AU officials, France (a permanent Security Council member), and African heads of state have proposed a similar mechanism for other regional missions (notably in the Sahel), but successive U.S. Administrations have declined to support such proposals, preferring to provide funding on a voluntary and bilateral basis. In recent years, the AU has sought the use of U.N. assessed contributions to help fund its operations directly (see text box ). "], "subsections": []}, {"section_title": "Overview by Operation", "paragraphs": ["The following sections provide background on each active U.N. peacekeeping operation in Africa, including U.S. policy and key issues. Operations are presented in reverse chronological order of their establishment by the U.N. Security Council (starting with most recently authorized). "], "subsections": [{"section_title": "Central African Republic (MINUSCA)", "paragraphs": ["The Security Council established the U.N. Multidimensional Integrated Stabilization Mission in CAR (MINUSCA) in 2014 in response to a spiraling conflict and humanitarian crisis in the country. The crisis began in 2013 when a largely Muslim-led rebel coalition seized control of the central government; largely Christian- and animist-led militias emerged in response and brutally targeted Muslim civilians, resulting in a pattern of killings and large-scale displacement that U.N. investigators later termed \"ethnic cleansing.\" MINUSCA absorbed a preexisting African intervention force, as well as a U.N. political mission in CAR. Although CAR returned to elected civilian-led government in 2016, rebel groups continue to control most of the countryside. Armed factions have continued to kill and abuse civilians, often along sectarian and ethnic lines. Whether a peace accord signed in early 2019 will bring greater stability remains to be seen. ", "MINUSCA is currently mandated to protect civilians, support the extension of state authority, assist the peace process, and protect humanitarian aid delivery, among other tasks. It also has an unusual mandate to pursue \"urgent temporary measures ... to arrest and detain in order to maintain basic law and order and fight impunity,\" under certain conditions. The mission has employed this authority against several militia leaders, with mixed effects on local security dynamics. Localized dynamics on the ground and a lack of domestic security force capacity also have stymied progress on stabilization. An analysis in late 2018 by nongovernment organizations attributed tenuous security improvements in parts of the country to MINUSCA's \"robust military operations,\" as well as to its civilian-led support to local peacebuilding and disarmament efforts, while noting that \"MINUSCA is neither authorized nor well-placed to use force with the objective of eliminating armed groups.\" In 2018, U.N. sanctions monitors issued a scathing assessment of a joint operation by MINUSCA and local security forces in the majority-Muslim \"PK5\" enclave of Bangui that aimed to dismantle a local militia. The sanctions monitors asserted that the operation had failed while also triggering intercommunal tensions and deadly clashes. ", "Despite nearly reaching its full authorized troop ceiling, MINUSCA continues to exhibit operational capacity shortfalls, which the Security Council has attributed to \"undeclared national caveats, lack of effective command and control, refusal to obey orders, failure to respond to attacks on civilians, and inadequate equipment.\" Force protection is a challenge: 35 MINUSCA personnel have been killed in \"malicious acts\" to date. (CAR is also one of the world's deadliest countries for aid workers.) Continued violence has fueled local frustrations with MINUSCA's perceived ineffectiveness\u00e2\u0080\u0094as has a sweeping sexual abuse scandal implicating multiple MINUSCA contingents, as well as French troops deployed under national command. Hostility has also been driven by government officials who oppose an enduring U.N. arms embargo on the country, as well as \"demagogic\" actors who seek to discredit international forces and destabilize the government. In April 2018, demonstrators placed 17 corpses outside MINUSCA headquarters to protest alleged killings of civilians during the aforementioned troubled joint operation with local security forces in the PK5 enclave.", "Despite initial skepticism, the Obama Administration ultimately supported MINUSCA's establishment as part of its efforts to prevent mass atrocities in CAR. The Trump Administration has maintained support to date, and in 2017 backed a troop ceiling increase of 900 military personnel. The State Department's FY2020 budget request projects that \"the role and size of MINUSCA will likely remain unchanged until the government gains the capacity to fully assume its responsibilities to protect civilians, ensure the viability of the state, and prevent violence.\""], "subsections": []}, {"section_title": "Mali (MINUSMA)", "paragraphs": ["The Security Council established the U.N. Multidimensional Integrated Stabilization Mission in Mali (MINUSMA) in 2013 after state institutions collapsed in the face of an ethnic separatist rebellion in the north, a military coup, and an Islamist insurgent takeover of the north of the country. The mission absorbed a short-lived African intervention force and U.N. political mission. France also had launched a unilateral military intervention in early 2013 to free northern towns from Islamist militant control, and pressed for both the African-led mission and the transition to a U.N.-conducted operation. MINUSMA was initially mandated to support Mali's transitional authorities in stabilizing \"key population centers,\" support the extension of state authority throughout the country, and prepare for elections, in addition to protecting civilians and U.N. personnel, promoting human rights, and protecting humanitarian aid, among other tasks. Civilian protection was elevated within the mandate in 2014, as was support for the launching of \"an inclusive and credible negotiation process\" for northern Mali, following a ceasefire between the government and separatist rebels and elections in late 2013. After the government and two northern armed group coalitions signed a peace accord in 2015, the Security Council deemed support for implementation of the accord to be the mission's top priority.", "As of mid-2019, the peace agreement remains largely un-implemented, while the Islamist insurgency (excluded from the peace process by design) has expanded into previously government-controlled central Mali, as well as neighboring Burkina Faso and, to a lesser extent, Niger. Since 2017, observers have raised alarm over a spate of civilian massacres in the center, attributed to state security forces and to ethnically based militias (some of which appear to have ties to state elements), which may constitute \"ethnic cleansing.\" Renewing MINUSMA's mandate in June 2019, the Security Council decided that the mission's \"second strategic priority,\" after support for implementation of the 2015 accord, would be to \"facilitate\" a future Malian-led strategy to protect civilians, reduce intercommunal violence, and reestablish state authority in the center of the country, followed by other tasks (Resolution 2480).", "Unlike most U.N. peacekeeping operations in Africa, MINUSMA includes sizable Western contingents, including from Canada (134), Germany (381), the Netherlands (116), Norway (92), and Sweden (253). The countries contributing the largest uniformed contingents (>1,000 each), however, are nearby (Burkina Faso, Chad, Senegal, Togo) or major global peacekeeping troop contributors (Bangladesh, Egypt). MINUSMA is the world's deadliest current U.N. peacekeeping operation, with 126 personnel cumulatively killed in \"malicious acts\" (roughly 20 per year on average), including at least 20 in the first half of 2019. African contingents have borne the brunt of these fatalities (112 of 126 deaths). ", "In 2013, U.N. policy debates over MINUSMA's establishment centered on the wisdom of authorizing a peacekeeping mission in the context of threats from transnational Islamist terrorist organizations, namely, Al Qaeda in the Islamic Maghreb and its local affiliates and offshoots. Policymakers debated, in particular, whether U.N. personnel would be adequately protected and whether a U.N. operation could or should be given a counterterrorism mandate. Ultimately, MINUSMA was not given an explicit mandate to conduct counterterrorism or counterinsurgency operations. France, meanwhile, has maintained troops in the country as a de facto parallel force to target terrorist cells, a mission for which the U.S. military provides direct logistical support. ", "Malian and other African leaders (backed by France, at times) have repeatedly called for U.N. assessed contributions to provide funding and sustainment for a regional counterterrorism force, most recently the \"G5 Sahel joint force\" initiative launched by Mali and neighboring states in 2017. U.N. Secretary-General Guterres, for his part, has urged the Security Council to establish a U.N. support office, funded through assessed contributions and independent of MINUSMA, to provide logistics and sustainment to a G5 Sahel force. Successive U.S. Administrations have opposed such proposals, citing a preference for voluntary and bilateral support as opposed to assessed contributions."], "subsections": []}, {"section_title": "United Nations Interim Security Force for Abyei (UNISFA)", "paragraphs": ["UNISFA was authorized by the U.N. Security Council on the eve of South Sudan's independence in June 2011, in an effort to mitigate direct conflict between Sudan and South Sudan at a prominent disputed area on their border. The mission's mandate originally focused only on Abyei, a contested border territory and historic flashpoint for conflict that was accorded special semi-autonomous status in the 2005 Comprehensive Peace Agreement (CPA) between Sudan's government and southern rebels. The mandate was expanded in late 2011 to support broader border security arrangements between the two countries, including a Joint Border Verification and Monitoring Mechanism (JBVMM), which the CPA signatories agreed to establish to monitor the full Sudan-South Sudan border. UNISFA's deployment to Abyei defused a violent standoff between the two countries' militaries, but tensions among local communities still have the potential to destabilize the border. ", "Under the CPA, the residents of Abyei were to vote in a referendum in 2011 on whether the area should retain its special status in Sudan or join South Sudan, but an officially sanctioned process has yet to occur. The final status of Abyei is likely to remain unresolved until Sudan and South Sudan negotiate a solution. The April 2019 ouster of Sudan's President Omar al Bashir and the unfolding political transition may affect the situation in Abyei and other border areas.", "UNISFA was most recently reauthorized in May 2019, through November 15, 2019. The Security Council directed the mission to reduce its troop presence to 2,965 by October 2019 (from 4,140 previously authorized), while increasing the number of authorized police from 345 to 640. UNISFA's policing function to date has been hamstrung by Sudan's limited issuance of visas for police personnel. UNISFA is almost entirely composed of personnel from neighboring Ethiopia, based on a 2011 agreement between Sudan and South Sudan to demilitarize the area and allow Ethiopian monitors. There have been 36 UNISFA fatalities since 2011, with eight due to \"malicious acts.\" The most recent peacekeeper fatality occurred in July 2019, when unidentified gunmen attacked a market. ", "The U.N. Security Council has pressed, unsuccessfully, for the establishment of a temporary local administration and police service to maintain order in Abyei until a final political settlement is reached. The absence of a local administration, combined with the presence of armed elements and sporadic intercommunal violence, continues to drive humanitarian needs. UNISFA helps to maintain law and order in the absence of local police, and it engages in efforts to reduce intercommunal conflict. UNISFA's presence and its conflict prevention and mitigation efforts have reportedly helped to defuse tensions during the annual migrations of an estimated 35,000 Misseriya (a nomadic group) and their cattle south through Abyei. The mission also confiscates and destroys weapons and facilitates mine clearance. UNISFA has yet to operationalize its human rights monitoring mandate because of Sudan's nonissuance of visas, and because its facilitation of humanitarian aid has been limited by Sudanese restrictions on aid agencies' operations, aid funding shortfalls, and South Sudan's war. With regard to UNISFA's border security role, Sudan and South Sudan took limited action to stand up the JBVMM in the mission's early years, but there has been recent progress, possibly reflecting warming relations between the two countries. ", "The United States, which served as a facilitator and guarantor of the CPA, has historically placed a high priority on peace between Sudan and what is now South Sudan. In mid-2011, when Sudanese troops and allied militia seized Abyei after its referendum was postponed, the Obama Administration declared the move to be an invasion of area and thus a violation of the CPA. The Security Council similarly condemned Sudan's \"taking of military control\" of Abyei and authorized UNISFA. Sudan's army subsequently withdrew as UNISFA deployed, and the mission's presence has since been seen as a deterrent to conflict between the two countries' forces. While relations between Sudan and South Sudan have improved in recent years, the instability in South Sudan and Sudan's Southern Kordofan state poses risks, and the political transition in Sudan creates further uncertainty regarding stability in the region. U.S. officials have previously expressed concern that the mission has continued longer than intended and that both Sudan and South Sudan have taken advantage of the relative stability its peacekeepers provide. "], "subsections": []}, {"section_title": "U.N. Mission in South Sudan (UNMISS)", "paragraphs": ["UNMISS was established on July 9, 2011, the date of South Sudan's independence from Sudan. It replaced the U.N. Mission in Sudan (UNMIS), which had supported implementation of the peace deal that ended Sudan's north-south civil war. UNMISS, currently authorized through March 2020, is currently the U.N.'s second largest peacekeeping mission ( Figure 1 ). ", "UNMISS was established with the aim of consolidating peace and security in the world's newest country, and helping to establish conditions for development after decades of war. The outbreak of a new internal conflict in December 2013, however, fundamentally changed the mission and its relationship with the host government. The war, now in its sixth year, has displaced more than 4 million people, and by some estimates over 380,000 people have been killed, including at least 190,000 in violent deaths. Shortly after the fighting began, the U.N. Security Council authorized an expansion of the mission from its prewar level of 7,000 troops and 900 police. Months later, as early mediation efforts failed to stop the conflict, the Security Council modified the UNMISS's mandate in Resolution 2155 (2014). As a result, the mandate changed from one that had supported peace-building, state-building, and the extension of state authority to one that sought strict impartiality in relations with both sides of the conflict, while pursuing four key tasks under a Chapter VII mandate: protecting civilians, monitoring and investigating human rights abuses, facilitating conditions conducive to aid delivery, and supporting a ceasefire monitoring. ", "The Security Council again increased UNMISS's force size after the warring sides signed a peace deal in August 2015, and added to its mandate the task of supporting implementation of the peace agreement. The opposing parties formed a new Transitional Government of National Unity (TGNU) in April 2016, but the arrangement collapsed in July 2016, and the war resumed. The Security Council, in an effort to create conditions under which the opposition could safely return to the capital and revive the peace deal, authorized another increase to UNMISS's troop ceiling, to include a Regional Protection Force (RPF), with up to 4,000 troops to be drawn from East African countries. The tasks of the RPF were to include, among others, providing a secure environment in and around the capital of Juba, with the ability to be deployed \"in extremis\" elsewhere as needed. South Sudan's government objected to the RPF's mandate and resisted its deployment; meanwhile, the war spread and the number of armed groups proliferated. ", "When the conflict began, UNMISS bases became shelters for tens of thousands of civilians fleeing the fighting and ethnically targeted attacks. As of September 2019, more than 180,000 people were still sheltering at five bases\u00e2\u0080\u0094also known as Protection of Civilian (POC) sites\u00e2\u0080\u0094including roughly 30,000 at the U.N. base in Juba. This is an unprecedented situation for a U.N. peacekeeping mission, and several of the sites, never intended for long-term settlements, feature living conditions that do not meet refugee camp standards. ", "UNMISS has struggled to protect civilians within and around the POC sites, and responsibility for security of those locations limits its ability to protect civilians and humanitarian workers elsewhere. Nevertheless, U.N. officials and others suggest that thousands of civilians would be dead if not for UNMISS. Many of those sheltering at the sites reportedly fear being targeted based on their ethnicity if they leave.", "Access restrictions and bureaucratic obstruction further stymie the mission's capacity. UNMISS relations with the government have been tense since the war began, and South Sudanese officials have periodically stoked anti-U.N. sentiment based on misperceptions of the mission's role and allegations of partiality. U.N. bases have been attacked on several occasions, and mortar and crossfire have resulted in the deaths of civilians and U.N. staff in the bases. To date, 14 peacekeepers have been killed in \"malicious acts.\" Two U.N. helicopters have been shot down in South Sudan, at least one of them by the army. The role of government forces in violence against civilians severely complicates UNMISS's civilian protection mandate, given the mission's reliance on the consent of the host government to operate.", "In September 2018, South Sudan's two largest warring factions\u00e2\u0080\u0094those of President Salva Kiir and his rival, Riek Machar\u00e2\u0080\u0094signed a new peace deal. Experts debate whether the deal is a viable framework for sustainable peace. The International Crisis Group (ICG) contends that, at minimum, \"it is not a finished product and requires revision, a reality that mediators are not yet ready to admit.\" Implementation of the agreement is significantly behind schedule: the planned formation of a new unity government, delayed from May to November 2019, is in question as concerns about the accord's security arrangements remain unaddressed. The 2018 ceasefire has reduced the fighting in most parts of the country, but clashes continue in some areas, and U.N. reports document \"the continued use of conflict-related sexual violence by the warring parties and \"targeted\" attacks on civilians, notably those \"perceived to be associated with opposition groups.\" Amid mounting concerns that this latest deal could collapse, ICG (among others) argues that international pressure\u00e2\u0080\u0094including from the United States, which played a key role in supporting South Sudan's independence and is the \"penholder\" on the situation in the Security Council\u00e2\u0080\u0094may be critical to preventing a return to full-scale war."], "subsections": []}, {"section_title": "African Union-United Nations Mission in Darfur (UNAMID)", "paragraphs": ["UNAMID was first authorized in 2007, to succeed the African Union Mission in Sudan (AMIS), which deployed in 2004 in response to the unfolding crisis in Darfur, an area roughly the size of France. When UNAMID was established, it was authorized to have a significantly larger force than AMIS\u00e2\u0080\u0094almost 26,000 personnel initially, including 19,555 troops\u00e2\u0080\u0094with a Chapter VII mandate to protect U.N. personnel, aid workers, and civilians, and to support implementation of a 2006 peace deal. The Security Council also tasked UNAMID with monitoring and conflict mitigation responsibilities. UNAMID is the first, and to date only, hybrid peacekeeping operation, with a U.N. chain of command but dual selection and reporting procedures. (Sudan rejected a regular U.N. mission; a U.N.-AU hybrid was the compromise, with most of the troops drawn from African countries.) By 2011, at almost 90% of its authorized strength, it was one of the largest peacekeeping missions in history. ", "UNAMID has faced pressures from multiple fronts, and has been described by some as \"a mission that was set up to fail.\" The government of former President Omar al Bashir (ousted in April 2019) obstructed its operations and long pressed for its exit. Observers have periodically questioned the mission's credibility, amid allegations that it has self-censored reporting on state-backed crimes against civilians and peacekeepers and understated the level of ongoing violence. In 2009, a declaration by the outgoing head of UNAMID that the war in Darfur was over\u00e2\u0080\u0094while violence continued\u00e2\u0080\u0094drew concern from human rights groups and other observers. In 2013, the mission's spokesperson resigned, accusing UNAMID of a \"conspiracy of silence\"; a subsequent U.N. investigation found the mission had underreported and purposefully withheld information from U.N. headquarters concerning attacks by Sudanese forces on civilians and peacekeepers. ", "The Bashir government periodically denied flight clearances and restricted the movement of UNAMID patrols. Access denials, along with insecurity, have long impeded humanitarian operations, and some parts of Jebel Marra, a rebel stronghold, remain inaccessible. Bureaucratic delays, including in the issuance of visas, have also impeded operations. The mission has faced other challenges, ranging from shortfalls in critical equipment and aviation assets to a hostile environment. There have been over 270 UNAMID fatalities since the mission began, with 73 deaths attributed to \"malicious acts.\" In 2013, the U.N. Panel of Experts suggested that the \"lack of a deterrent\" against attacks on peacekeepers and humanitarian aid workers \"may be a contributing factor to the persistence of this phenomenon.\" Over the years, the panel has recommended, unsuccessfully, that several individuals and groups deemed responsible for attacks be sanctioned. The Security Council has made no sanctions designations since 2006. The United States has not designated individuals under its Darfur sanctions regime (E.O. 13400) since 2007.", "The Security Council has reconfigured and gradually reduced UNAMID's mandate and mission since 2014, transferring some of its tasks to the U.N. country team. The country team's limited presence, capacity, and resources, however, have limited its ability to take on new responsibilities. Under pressure from Sudan's government for an exit strategy, the Security Council approved a reduction of troops in 2017, despite criticism from groups like Human Rights Watch that the cuts reflected a \"false narrative about Darfur's war ending\" (see below). Some independent experts suggest that the West suffers from \"Darfur fatigue\" and contend that flagging political will and pressure to cut peacekeeping budgets have driven decisions on UNAMID's exit, tentatively set under Resolution 2429 (2018) for June 30, 2020. Meanwhile, the Council has declared the mission's exit to be contingent on the security situation and progress on specified benchmarks. ", "Over a decade after UNAMID's deployment, peace talks have not resolved Darfur's conflicts. The level of fighting subsided after a major government offensive in early 2016 gave the military dominance in the region. The government subsequently declared a ceasefire to which, per U.S. officials, it has largely adhered, contributing to the Administration's decision to lift some sanctions on Sudan in 2017. Recent U.N. reporting gives a mixed picture of the security situation. A joint U.N.-AU strategic review in 2018 concluded that Sudan's military gains since 2016 had led to the \"consolidation of State authority across Darfur,\" with conditions now described as \"lawlessness and criminality, aggravated by a protracted humanitarian crisis, continued human rights violations and the lack of development.\" A U.N. Secretary-General's report in April 2019 described the security situation in the region as \"relatively stable,\" with the exception of Jebel Marra, where clashes continued and where a January 2019 U.N. Panel of Experts report suggested the government had waged large-scale military operations against rebels in 2018. Some rebels reportedly fled to Libya to rebuild their military capacity for possible return to Sudan. The Secretary-General's report also described serious intercommunal violence, attacks on civilians, and ongoing abuses by government forces as \"an obstacle to lasting peace.\" The scale of displacement in Darfur has changed little in recent years: over 1.7 million people remain internally displaced, most of them in camps, and over 340,000 refugees are in Chad. ", "In the wake of President Bashir's overthrow in April 2019, a joint U.N.-AU assessment team noted a spike in violence in several camps for internally displaced persons (IDPs). Their report suggested, though, that Darfur had generally \"evolved into a post-conflict setting.\" The team submitted that the new political dynamics did not warrant a change of the June 2020 exit date and that conditions had been met for the drawdown to proceed, albeit gradually, with the mission transitioning from peacekeeping to peacebuilding. ", "Several incidents suggest security conditions for U.N. and aid operations in Darfur worsened in mid-2019, however. In May, UNAMID's West Darfur headquarters was looted on the eve of its scheduled handover to Sudanese authorities; military and police personnel were implicated in the incident. In June, humanitarian relief facilities in South Darfur were looted and vandalized. The United Nations has reported that most of the facilities that UNAMID has closed as part of its drawdown have been occupied by state security forces. (The sites were supposed to be handed over to the government to be used for civilian purposes.) An internal UNAMID review of 10 closed sites indicated that nine were being used specifically by the paramilitary Rapid Support Forces (RSF), which have been implicated in human rights abuses. In June, the military leaders who seized power from Bashir demanded that remaining UNAMID bases be transferred to the RSF. The AU rejected the order, which was subsequently reversed. It is unclear whether the RSF has vacated the locations. ", "U.N. human rights officials reported in June 2019 that the human rights situation in Darfur had deteriorated, with increased reports of killing, abduction, sexual violence, and other abuses. The AU Peace and Security Council determined at that time that the \"drastic change on security and political developments \u00e2\u0080\u00a6 has contributed to the deterioration of the security situation in Darfur,\" and called for remaining peacekeepers to be consolidated until the situation stabilized. Amnesty International, which has argued against UNAMID's closure, suggests doing so would \"recklessly and needlessly place tens of thousands of lives at risk by removing their only safeguard against the government's scorched earth campaign.\" On June 27, the U.N. Security Council voted to pause the drawdown until October 31, with roughly 4,200 troops and 2,300 police remaining in Darfur as of July 31.", "It is difficult to predict how the situation in Darfur may evolve in the next year, as UNAMID's prescribed June 2020 exit date approaches. Arguably the most powerful figure among the security officials who seized power from Bashir is RSF commander Mohamed Hamdan Dagalo, aka \"Hemeti,\" a former Janjaweed militia leader from Darfur. By some accounts, his forces have sought to expand their control in Darfur, and since Bashir's ouster they have been implicated in the killing of dozens of Darfuri civilians. He now holds a senior position in the new transitional government, and how he may influence the prospects for peace is subject to debate. Sudan's new reform-oriented prime minister has identified making peace with the country's insurgent groups as his top priority. As that process begins, in the context of a fragile transition, Sudanese, U.N., and AU officials are set to begin discussions on the future of U.N. peacekeepers in Darfur, and on whether a follow-on mechanism to UNAMID may be appropriate. "], "subsections": []}, {"section_title": "Democratic Republic of Congo (MONUSCO)", "paragraphs": ["The currently largest U.N. peacekeeping operation originated as a response to the civil and regional conflict in the Democratic Republic of Congo (DRC) in the late 1990s. In 2010, the Security Council established the U.N. Organization Stabilization Mission in DRC (MONUSCO) to succeed the U.N. Organization Mission in DRC (MONUC, established in 1999), following the conclusion of a formal post-conflict transitional period in DRC. MONUSCO's mandate has generally prioritized the protection of civilians and the extension of state authority in eastern DRC, where multiple armed groups remain active. Other enduring tasks include the protection of U.N. personnel and facilities, support for demobilization of rebel combatants, and support for institutional and security sector reforms. Since 2018, MONUSCO has provided \"life-saving logistics support to the Ebola response\" in the context of the ongoing Ebola outbreak in eastern DRC, according to U.S. officials. In mid-2019, a top MONUSCO official, U.S. citizen David Gressly, became the U.N. Emergency Ebola Response Coordinator, tasked with leading a \"strengthened coordination and support mechanism in the epicenter\" of the outbreak zone.", "Since 2013, the Security Council has authorized an \"intervention brigade\" within MONUSCO\u00e2\u0080\u0094consisting of three infantry battalions, one artillery company, and one special force and reconnaissance company\u00e2\u0080\u0094to disarm rebel groups, including via unilateral and/or offensive operations. The intervention brigade has conducted such operations periodically, but the scope of its activity has been limited by troop contributors' evolving perceptions of their own national security interests in DRC, as well as capacity gaps. Observers have debated whether the concept could be a model for other situations, such as South Sudan and Mali. ", "More broadly, human rights groups allege that MONUSCO forces have repeatedly failed to protect civilians from attacks by armed groups. Such instances may be attributed to multiple factors, including competing tasks, logistical challenges, a lack of capacity and political will among troop contributors, and the role of state actors in violence and their limited commitment to improve stability. MONUSCO personnel also have repeatedly been implicated in sexual abuse and exploitation. Between 2016 and 2018, a surge in political violence in major cities due to election delays placed new strains on the mission, as did the emergence of new conflicts in previously stable regions. Emergent, if nebulous, links between an opaque armed group in eastern DRC and the Islamic State organization may present further challenges. ", "In 2015 and 2016, the Obama Administration successfully sought to preserve MONUSCO's troop ceiling in the lead-up to DRC's turbulent election period, despite pressure from the DRC government, U.N. officials, and some other Security Council members to decrease troop levels. In 2017, with elections pending, the Trump Administration shifted tack and secured a decrease in MONUSCO's troop ceiling, asserting that the mission was propping up a \"corrupt\" government in Kinshasa. The U.N. Secretary-General reported in 2017 that MONUSCO had pursued reforms to \"yield efficiencies,\" but called for governments to \"exercise caution in making further cuts to the Mission's budget that may compromise its ability to deliver on its core priorities.\" ", "U.S. diplomats did not openly pursue, and the Security Council did not adopt, a troop ceiling decrease in the 2018 or 2019 mandate renewals. In March 2019, as DRC underwent a partial political transition following the delayed elections, the Security Council extended MONUSCO's mandate and troop ceiling for nine months and called for an independent strategic review of the mission, including the articulation of an \"exit strategy.\" The State Department's FY2020 budget request asserts that MONUSCO forces \"may begin drawing down in FY2020 as the DRC government assumes greater responsibility for security throughout the country.\" The budget request predated an explosion of Ebola cases in eastern DRC and the U.N.'s stepped-up role in response efforts. U.N. budget negotiations in mid-2019 produced a significant reduction in MONUSCO's civilian personnel and the closure of offices in various areas."], "subsections": []}, {"section_title": "Western Sahara (MINURSO)", "paragraphs": ["Morocco claims sovereignty over the whole of Western Sahara and administers some 85% of it, while the Polisario Front, which is hosted and backed by Algeria, seeks independence for the territory. Security Council Resolution 690 established the U.N. Mission for the Organization of a Referendum in the Western Sahara (MINURSO) in 1991 in the context of a cease-fire and peace settlement roadmap agreed to by Morocco and the Polisario. At the time of MINURSO's establishment, the Security Council called for a referendum to offer Sahrawis\u00e2\u0080\u0094the indigenous inhabitants of Western Sahara\u00e2\u0080\u0094a path to \"self-determination.\" However, successive U.N. efforts to advance a referendum or other resolution options did not obtain the backing of one or both parties (Morocco and the Polisario), and/or of the Security Council. ", "In the absence of a final settlement, the Security Council has maintained MINURSO to observe the 1991 ceasefire. The Security Council has not explicitly referred to a referendum in over a decade, instead calling for Morocco and the Polisario to engage in talks \"without preconditions\" to achieve a \"mutually acceptable\" resolution to the stand-off. Morocco has offered autonomy under Moroccan sovereignty as the only basis for negotiations, while the Polisario continues to call for a referendum on independence. Neither side has shown an interest in compromise. Military tensions escalated in 2016 and again in 2017 as Moroccan and Polisario forces reportedly entered the demilitarized \"buffer zone.\"", "MINURSO's uniformed component consists almost entirely of military observers, who are unarmed. It is not a multidimensional mission in the mold of more recently authorized operations. In 2013, U.S. diplomats reportedly expressed support for adding human rights monitoring to the mission's mandate\u00e2\u0080\u0094which Morocco ardently opposes\u00e2\u0080\u0094prompting Morocco to expel hundreds of U.S. military personnel who were conducting an annual joint exercise in the country. In 2016, Morocco expelled MINURSO civilian staff in response to remarks by then-U.N. Secretary-General Ban Ki-moon referring to Morocco's \"occupation\" of the territory. Some staff, but not all, later returned to the territory. ", "Successive U.S. Administrations appear to have judged that maintaining MINURSO is a relatively small price to pay for preventing a renewed conflict that could draw in other countries in the region. The Trump Administration has maintained support for U.N.-facilitated talks, while also seeking to increase pressure on the parties by shortening MINURSO's mandate renewals from one year to six months. This policy approach was closely associated with former National Security Advisor John Bolton, who has long expressed skepticism of MINURSO and advocated international pressure on Morocco to make concessions. Bolton's stance appeared to contribute to some momentum toward U.N.-facilitated talks in 2018, albeit without clear progress toward a settlement. The U.N. Secretary-General's then-Personal Envoy on the Western Sahara, Horst K\u00c3\u00b6hler, convened \"roundtable\" talks among Morocco, the Polisario, Algeria, and Mauritania in December 2018\u00e2\u0080\u0094the first time official representatives of Morocco and the Polisario had met since 2012\u00e2\u0080\u0094and again in March 2019, but no breakthrough was announced. In May 2019, K\u00c3\u00b6hler unexpectedly announced his resignation, citing health reasons. This development, combined with ongoing political instability in Algeria, has injected new uncertainty into the political process. "], "subsections": []}]}, {"section_title": "Issues for Congress", "paragraphs": ["Members of Congress have examined U.N. peacekeeping operations as a core element of U.S.-Africa policy, and in the context of overarching appropriations and oversight activities. Congressional deliberations on FY2020 SFOPS appropriations\u00e2\u0080\u0094in the context of the Administration's proposal to cut U.S. funding for U.N. peacekeeping overall, and for the Africa missions in particular\u00e2\u0080\u0094have coincided with U.N. Security Council consideration of potentially significant changes to the mandates of several missions, including in Mali, Darfur (Sudan), and DRC, due to evolving conditions on the ground. The Senate Appropriations Committee report on the FY2020 Department of State, Foreign Operations, and Related Programs Appropriations Bill (released on September 18, 2019), leads with the observation that:", "Weak governance and conflict in Africa, the Middle East, and Central and South America are causing historically unprecedented population movements as refugees and internally displaced persons [IDPs] seek safer lives. [\u00e2\u0080\u00a6] The humanitarian requirements of the United Nations [UN] and other entities to address this global emergency have consistently exceeded the willingness and generosity of donors to respond.", "As Congress continues to shape the U.S. approach toward peacekeeping missions' mandates and budgets, it may consider issues such as: ", "how and whether U.N. peacekeeping operations in Africa align with U.S. foreign policy priorities in the region and in individual countries; the impact that decisions on U.S. funding for peacekeeping may have on these countries, and the relative cost of other potential U.S. responses; and the role of other donors and actors in responding to security crises in Africa."], "subsections": []}]}}
{"id": "R46179", "title": "Presidential Pardons: Overview and Selected Legal Issues", "released_date": "2020-01-14T00:00:00", "summary": ["Article II, Section 2 of the U.S. Constitution authorizes the President \"to grant Reprieves and Pardons for Offenses against the United States, except in Cases of Impeachment.\" The power has its roots in the king's prerogative to grant mercy under early English law, which later traveled across the Atlantic Ocean to the American colonies. The Supreme Court has recognized that the authority vested by the Constitution in the President is quite broad, describing it as \"plenary,\" discretionary, and largely not subject to legislative modification. Nonetheless, there are two textual limitations on the pardon power's exercise: first, the President may grant pardons only for federal criminal offenses, and second, impeachment convictions are not pardonable. The Court has also recognized some other narrow restraints, including that a pardon cannot be issued to cover crimes prior to commission.", "The pardon power authorizes the President to grant several forms of relief from criminal punishment. The most common forms of relief are full pardon s (for individuals) and amnesties (for groups of people), which completely obviate the punishment for a committed or charged federal criminal offense, and commutations , which reduce the penalties associated with convictions. An administrative process has been established through the Department of Justice's Office of the Pardon Attorney for submitting and evaluating requests for these and other forms of clemency, though the process and regulations governing it are merely advisory and do not affect the President's ultimate authority to grant relief.", "Legal questions concerning the President's pardon power that have arisen have included (1) the legal effect of clemency; (2) whether a President may grant a self-pardon; and (3) what role Congress may play in overseeing the exercise of the pardon power. With respect to the first question, some 19th century Supreme Court cases suggest that a full pardon broadly erases both the punishment for an offense and the guilt of the offender. However, more recent precedent recognizes a distinction between the punishment for a conviction , which the pardon obviates, and the fact of the commission of the crime , which may be considered in later proceedings or preclude the pardon recipient from engaging in certain activities. Thus, although a full pardon restores civil rights such as the right to vote that may have been revoked as part of the original punishment, pardon recipients may, for example, still be subject to censure under professional rules of conduct or precluded from practicing their chosen profession as a result of the pardoned conduct.", "As for whether a President may grant a self-pardon, no past President has ever issued such a pardon. As a consequence, no federal court has addressed the matter. That said, several Presidents have considered the proposition of a self-pardon, and scholars have reached differing conclusions on whether such an action would be permissible based on the text, structure, and history of the Constitution. Ultimately, given the limited authority available, the constitutionality of a self-pardon is unclear.", "Finally, regarding Congress's role in overseeing the pardon process, the Supreme Court has indicated that the President's exercise of the pardon power is largely beyond the legislature's control. Nevertheless, Congress does have constitutional tools at its disposal to address the context in which the President's pardon power is exercised, including through oversight, constitutional amendment, or impeachment."], "reports": {"section_title": "", "paragraphs": ["A rticle II, Section 2 of the U.S. Constitution authorizes the President \"to grant Reprieves and Pardons for Offences against the United States, except in Cases of Impeachment.\" This executive power of clemency encompasses several distinct forms of relief from criminal punishment, of which a full presidential \"pardon\" is only one. The power has its roots in the king's prerogative to grant mercy under early English law, which later traveled across the Atlantic Ocean to the American colonies. The Supreme Court has recognized that the authority vested by the Constitution in the President is quite broad, extending to \"every offence known to the law\" and available \"at any time after [a crime's] commission, either before legal proceedings are taken or during their pendency, or after conviction and judgment.\" That said, there are some limits to the power conferred by the pardon provision of Article II: for instance, the President may grant pardons only for federal criminal offenses, and impeachment convictions are not pardonable. An administrative process has been established through the Department of Justice's (DOJ's) Office of the Pardon Attorney for submission and evaluation of requests for pardons and other forms of clemency, though this process and the regulations governing are purely advisory in nature and do not affect the President's ultimate authority to grant relief.", "This report provides an overview of the President's pardon power. After briefly discussing the historical background to the power conferred by Article II, Section 2 of the Constitution, the report explores the different forms of clemency that are available, the relatively few limits on the\u00c2\u00a0pardon power, and the process of seeking and receiving clemency. The report concludes by addressing selected legal issues related to the pardon power: (1) the legal effect of pardons and\u00c2\u00a0other forms of clemency; (2) whether the President may grant clemency to himself; and (3)\u00c2\u00a0Congress's role in overseeing the use of the pardon power."], "subsections": [{"section_title": "Historical Background", "paragraphs": ["The concept of governmental relief from the punishment that would otherwise apply to a criminal act has deep historical roots, with some scholars tracing it as far back as ancient Greece and Rome. An English form of pardon power vested in the king, the \"prerogative of mercy,\" first appeared during the reign of King Ine of Wessex (688-725 A.D.). Over time, perceived abuses \"such as royal sales of pardons or use of pardons as bribery to join the military\" prompted Parliament to impose limitations on the pardon power. The king's power to pardon nevertheless endured through the American colonial period and applied in the colonies themselves through delegation to colonial authorities.", "Following the American Revolution, the English legal tradition of a pardon power held by the executive directly influenced the pardon provision included in the U.S. Constitution. At the Constitutional Convention, the two major plans offered\u00e2\u0080\u0094the Virginia and New Jersey plans\u00e2\u0080\u0094did not address pardons. However, in a \"sketch\" of suggested amendments to the Virginia plan, Alexander Hamilton included a pardon power vested in an \"Executive authority of the United States\" that extended to \"all offences except Treason,\" with a pardon for treason requiring Senate approval. It appears that the rationale for the treason limitation was, at least in part, that the head of the executive branch should not be able to absolve himself and possible conspirators of a crime threatening \"the immediate being of the society.\" Hamilton's proposal was included in a subsequent draft of the Constitution, though the requirement of Senate approval for a pardon of treason was replaced with an exception for impeachment, apparently with the thought that exempting impeachment was sufficient to protect against abuse.", "Debate at the Convention over the pardon power was limited, primarily centering on questions of (1) how broad the power should be (i.e., what restrictions or exceptions to the power should exist), and (2) whether the legislature should have a role in the power's exercise. Ultimately, proposals to impose additional limits on pardons beyond an exception for impeachment\u00e2\u0080\u0094such as by calling for Senate approval of pardons or requiring conviction prior to pardon \u00e2\u0080\u0094were rejected, resulting in the expansive power in Article II, Section 2 of the Constitution. Alexander Hamilton made the case for the breadth of this executive-held power in The Federalist , arguing that it \"should be as little as possible fettered or embarrassed\" to ensure \"easy access to exceptions in favour of unfortunate guilt.\" And on this view, \"a single man of prudence and good sense,\" that is, the President, would be \"better fitted, in delicate conjunctures, to balance the motives which may plead for and against the remission of the punishment, than any numerous body whatever.\" In accordance with these principles, the text of the Constitution, as ratified, places few limits on the President's ability to grant pardons, as discussed in more detail below."], "subsections": []}, {"section_title": "Scope of the Pardon Power", "paragraphs": [], "subsections": [{"section_title": "Forms of Clemency", "paragraphs": ["In light of references in scholarship and the popular press to the President's \"pardon power,\" a casual observer might think that Article II, Section 2 of the Constitution authorizes only one form of relief from criminal punishment. That is not the case, however: the text of the Constitution speaks of \"Reprieves and Pardons,\" and the Supreme Court has explained that the \"language of the [provision] is general, that is, common to the class of pardons, or extending the power to pardon to all kinds of pardons known in the law as such, whatever may be their denomination.\" As such, the President has \"plenary\" constitutional authority under the pardon provision \"to 'forgive'\" an accused or convicted person \"in part or entirely, to reduce a penalty in terms of a specified number of years, or to alter it with conditions which are in themselves constitutionally unobjectionable.\"", "At least five forms of clemency fall under this authority:", "1. pardon; 2. amnesty; 3. commutation; 4. remission of fines and forfeitures; 5. reprieve.", "A full pardon is the most expansive form of clemency; it \"releases the wrongdoer from punishment and restores the offender's civil rights without qualification.\" A pardon may be granted at any time prior to charge, prior to conviction, or following conviction, but it appears that it must be accepted to be effective or at least may be refused. For instance, President Woodrow Wilson issued a pardon to George Burdick, an editor at the New York Tribune , for any federal offenses he \"may have committed\" in connection with the publication of an article regarding alleged customs fraud, despite the fact that Burdick had not been charged with any crime at the time of the pardon. The apparent motivation for the pardon was that Burdick had refused to testify before a grand jury investigating the involvement of Treasury Department officials in leaks concerning the wrongdoing, asserting his Fifth Amendment right not to provide testimony that would tend to incriminate him. Despite President Wilson's issuance of the pardon, Burdick \"refused to accept\" it and continued to refuse to answer certain questions put to him before the grand jury. In Burdick v. United States , the Supreme Court assumed that the pardon was within the President's power to issue and concluded that \"it was Burdick's right to refuse it\" and stand on his Fifth Amendment objection.", "Amnesty is essentially identical to a pardon in practical effect, with the principal distinction between the two being that amnesty typically \"is extended to whole classes or communities, instead of individuals[.]\" As an example, President Jimmy Carter granted amnesty to many who violated the Selective Service Act by evading the draft during the Vietnam War.", "In contrast to pardons and amnesty, which obviate criminal punishments in their entirety, commutation merely substitutes the punishment imposed by a federal court for a less severe punishment, such as by reducing a sentence of imprisonment. To take a well-known example, President Richard Nixon conditionally commuted to six and a half years the 13-year sentence of famed labor union leader Jimmy Hoffa, who had been convicted of mail fraud, wire fraud, and obstruction of justice. Along the same lines, the President \"may remit [criminal] fines, penalties, and forfeitures of every description arising under the laws of [C]ongress,\" and, apparently in contrast to a pardon, a commutation or remission is valid even in the absence of the consent of the offender whose punishment is reduced.", "Finally, a reprieve merely \"produces delay in the execution of a sentence\" for a period of time \"when the President shall think the merits of the case, or some cause connected with the offender, may require it,\" such as \"where a female after conviction is found to be [pregnant], or where a convict becomes insane, or is alleged to be so.\" President Bill Clinton, for instance, issued a reprieve delaying by six months the execution date of Juan Raul Garza, who had been convicted of multiple capital homicide offenses, so that DOJ could conduct a study of \"racial and geographic disparities in the federal death penalty system.\"", "As noted above, forms of clemency such as pardons and commutations may be unconditional or may carry specific conditions that must be met for the relief to be effective."], "subsections": []}, {"section_title": "Constraints on the Pardon Power", "paragraphs": ["The federal courts have recognized that the power conferred by Article II, Section 2 of the Constitution is quite broad, establishing virtually \"unfettered executive discretion\" to grant clemency. The judiciary accordingly has been reticent to weigh in on clemency matters within the purview of the executive branch, particularly given separation-of-powers constraints inherent in the Constitution's structure. As a result, there is very little judicial guidance regarding the limits of the President's pardon authority. Two limits are nonetheless obvious from the constitutional text: first, pardons may be granted only for \"offences against the United States,\" that is, federal crimes, and second, pardons may not be granted \"in Cases of Impeachment.\"", "Beyond the limits established in Article II, Section 2 of the Constitution, the power to grant conditional or unconditional clemency, though broad, may also be externally limited by other constitutional provisions and guarantees. The Supreme Court has, at times, alluded to such limits, noting, for example, that the President may attach to a grant of clemency conditions \"which are in themselves constitutionally unobjectionable.\" Notably, in Hoffa v. Saxbe , the federal district court for the District of Columbia was called upon to squarely address the relationship between the President's pardon power and \"the rights and liberties of the individual\" as enshrined in other constitutional provisions. The case involved a commutation that was conditioned on the recipient forgoing participation in labor union management for a period of years. The recipient of the commutation challenged the condition as a violation of his First Amendment rights of free speech and association, among other things. Faced with the issue, the court took the view that \"there are obvious limits beyond which the President may not go in imposing and subsequently enforcing\" clemency conditions and \"arrive[d] at a two-pronged test of reasonableness in determining the lawfulness of a condition: first, that the condition be directly related to the public interest,\" meaning that it \"must relate to the reason for the initial judgment of conviction\" in a way that reflects regard for protection of the public; \"and second, that the condition not unreasonably infringe on the individual commutee's constitutional freedoms.\" Applying this two-pronged test, the district court ultimately concluded that the condition was valid because (1)\u00c2\u00a0the commutation recipient's crimes related to participation in union activities, which the public had a strong interest in the integrity of; and (2) the condition met applicable First Amendment standards.", "Because case law regarding the President's authority to grant clemency is limited, the two-pronged analysis laid out in Hoffa has not been endorsed by the Supreme Court, nor has there been extensive judicial development of alternative frameworks. Nevertheless, though the proposition remains largely theoretical given the dearth of case law, legal scholars have maintained that grants of clemency or clemency conditions at odds with certain constitutional guarantees like equal protection of the law, due process, and the prohibition of cruel and unusual punishment are subject to judicial review and potential invalidation."], "subsections": []}]}, {"section_title": "Clemency Process", "paragraphs": ["While not necessary, clemency is typically granted through an administrative process established in regulations that provide for consideration of applications by the Office of the Pardon Attorney within the Department of Justice (DOJ). The regulations require any person \"seeking executive clemency by pardon, reprieve, commutation of sentence, or remission of fine\" to execute a \"formal petition\" and submit it to the Pardon Attorney. To be eligible to file a pardon petition, at least five years must have elapsed since one's release from confinement or one's conviction (if no prison sentence was imposed). Petitions for commutation generally may be filed only after all other forms of judicial and administrative relief have been pursued, though allowance may be made \"upon a showing of exceptional circumstances.\"", "Once a petition for clemency has been submitted, the Pardon Attorney is to investigate its merit by engaging \"appropriate officials and agencies of the Government\" like the Federal Bureau of Investigation. At the conclusion of the investigation, the Pardon Attorney submits a recommendation through the Deputy Attorney General to the Attorney General as to whether the request for clemency should be granted or denied, and the Attorney General is to then review all pertinent information to \"determine whether the request for clemency is of sufficient merit to warrant favorable action by the President.\" The Attorney General's final recommendation is made to the President in writing.", "The general standard for a pardon request \"of sufficient merit\" is that the petitioner has \"demonstrated good conduct for a substantial period of time after conviction and service of sentence.\" DOJ lists five \"principal factors\" in determining whether a particular application warrants a favorable recommendation:", "1. post-conviction conduct, character, and reputation , including, among other things, financial and employment stability, \"responsibility toward family,\" and participation in community service; 2. the seriousness and relative recentness of the offense , with consideration of victim impact and whether sufficient time has passed \"to avoid denigrating the seriousness of the offense or undermining the deterrent effect of the conviction\"; 3. acceptanc e of responsibility, remorse, and atonement , including victim restitution and any attempts \"to minimize or rationalize culpability\"; 4. the need for relief , such as a legal disability like a bar to licensure, though \"the absence of a specific need should not be held against an otherwise deserving applicant\"; and 5. recommendations and reports from officials like the prosecuting attorneys and sentencing judge.", "Factors considered on a request for commutation include \"disparity or undue severity of sentence, critical illness or old age,\" the \"amount of time already served,\" the \"availability of other remedies,\" \"meritorious service rendered to the government\" (such as cooperation with investigations and prosecutions), and/or \"other equitable factors\" like demonstrated rehabilitation or pressing unforeseen circumstances. Similarly, \"satisfactory post-conviction conduct\" is considered on application for remission of a fine or restitution, as well as \"the ability to pay and any good faith efforts to discharge the obligation.\"", "During President Obama's second term, DOJ announced a \"clemency initiative\" to \"encourage qualified federal inmates to petition to have their sentences commuted[.]\" Under the initiative, DOJ prioritized applications of inmates who met special factors that included (1) being nonviolent, low-level offenders without significant ties to organized criminal enterprises; (2) lacking a significant criminal history; (3) demonstrating good conduct in prison; (4) lacking a history of violence; (5) having served at least 10 years of their sentence; and (6) serving a sentence for which they \"likely would have received a substantially lower sentence\" by operation of law if convicted at the time of consideration. DOJ made recommendations to President Obama on thousands of petitions received through the initiative, many of which were still pending at the end of his second term. The program ended when President Obama left office on January 20, 2017. More broadly, according to statistics kept by the Office of the Pardon Attorney, recent Presidents have granted a relatively small percentage of clemency petitions\u00e2\u0080\u0094for instance, President George W. Bush received over 11,000 petitions for pardon or commutation and granted a total of 200.", "Though DOJ's regulations and requirements guide its consideration of requests for clemency, they do not \"restrict the authority granted to the President under Article II, section 2 of the Constitution.\" In other words, the President is free to grant clemency as he or she sees fit (subject to the constraints described elsewhere in this report), regardless of whether a prospective recipient meets DOJ standards or even participates in the formal petition process through the Office of the Pardon Attorney. For instance, as noted above, while DOJ regulations impose a five-year waiting period for submission of a pardon application through the Pardon Attorney, the President may issue a pardon at any time after the commission of a federal offense even if no charges have been filed, as was the case with President Gerald Ford's pardon of former President Nixon.", "When a pardon or commutation is granted, the recipient is notified, and a \"warrant\" is mailed to him or her (or sent to the officer in charge of the place of confinement in the case of a commutation of a sentence still being served). Though the requirements of notice and delivery are set out in DOJ regulations, it appears that they may be necessary for at least a full pardon to have legal effect. As noted above, an ostensible pardon recipient may be able to reject the pardon, at least when \"personal rights\" like assertion of the Fifth Amendment right against self-incrimination are at issue. Moreover, Presidents have, in the past, revoked pardons prior to delivery and acceptance. For instance, in 1869, after outgoing President Andrew Johnson issued but did not deliver a pardon, incoming President Ulysses S. Grant revoked the pardon, and a federal court upheld the revocation."], "subsections": []}, {"section_title": "Selected Legal Issues for Congress", "paragraphs": ["The President's use of the pardon power in particular circumstances can raise a number of legal questions, many of which may be unresolved given the limited authority addressing federal clemency matters. Three unresolved legal issues may be of particular interest to Congress given recent commentary: (1) the legal effect of clemency; (2) whether a President may issue a self-pardon; and (3) Congress's role in overseeing the exercise of the pardon power."], "subsections": [{"section_title": "Legal Effect of Clemency", "paragraphs": ["The legal effect of limited forms of clemency like commutations is fairly clear: criminal punishment is reduced \"either totally or partially,\" but the relief \"does not change the fact of conviction, imply innocence, or remove civil disabilities that apply to the convicted person as a result of the criminal conviction.\" The legal significance of a full pardon, however, has been a subject of shifting judicial views over time. While early cases suggested that a pardon obviates all legal guilt of the offender, effectively wiping the crime from existence, more recent case law suggests that a pardon removes only the punishment for the offense without addressing the guilt of the recipient or other consequences stemming from the underlying conduct.", "In an 1866 decision, Ex parte Garland , the Supreme Court took a broad view of the nature and consequence of a pardon:", "A pardon reaches both the punishment prescribed for the offense and the guilt of the offender; and when the pardon is full, it releases the punishment and blots out of existence the guilt, so that in the eye of the law the offender is as innocent as if he had never committed the offence. If granted before conviction, it prevents any of the penalties and disabilities consequent upon conviction from attaching; if granted after conviction, it removes the penalties and disabilities, and restores him to all civil rights; it makes him, as it were, a new man, and gives him a new credit and capacity.", "A few years after Garland , the Court appeared to affirm that a pardon \"not merely releases the offender from the punishment prescribed for the offence, but . . . obliterates in legal contemplation the offence itself.\" However, in subsequent decisions, the Court backed away from the broad proposition that a pardon erases both the consequences of a conviction and the underlying guilty conduct. Most notably, in Carlesi v. New York , the Court determined that a pardoned offense could still be considered \"as a circumstance of aggravation\" under a state habitual-offender law, and then in Burdick v. United States , the Court noted that a pardon in fact \"carries an imputation of guilt; acceptance a confession of it.\" Based on this more recent Supreme Court case law, multiple federal Courts of Appeals have concluded that the \"historical language\" from early cases \"was dicta and is inconsistent with current law.\"", "Modern cases instead recognize a distinction between the punishment for a conviction, which the pardon obviates, and \"the fact of the commission of the crime,\" which may be considered in subsequent proceedings or preclude the pardon recipient from engaging in certain activities. A pardon will accordingly relieve the recipient of legal disabilities that \"would not follow from the commission of the crime without conviction,\" such as possession of a firearm or the right to vote, but the conduct and circumstances of the offense may still be considered for purposes of, among other things, certain benefits or licensing determinations or as a basis for censure under rules of professional conduct. Relatedly, courts have held that a pardon does not automatically expunge the record of the conviction itself or require that the court's orders be vacated. Despite the judicial trend toward a narrower understanding of the legal effect of a pardon, however, the Supreme Court has not directly revisited its broad language from Garland , and thus its precise meaning in relation to later pronouncements from the Court remains somewhat unclear."], "subsections": []}, {"section_title": "Presidential Self-Pardons", "paragraphs": ["Whether a President may pardon himself is an unresolved legal question that has been a subject of renewed interest following President Trump's statement in 2018 that he has \"the absolute right\" to do so. No past President has issued a self-pardon, and, as a result, no federal court has directly addressed the matter. That said, legal scholars and commentators have debated the question extensively and reached differing conclusions. Proponents of the view that the President may pardon himself tend to emphasize the lack of limitation in the constitutional language, as well as certain historical views and pronouncements of the Supreme Court as to the breadth of the President's pardoning power in general. ", "By contrast, those asserting that the President lacks the power of self-pardon raise competing textual arguments and suggest that self-pardons would be inconsistent with other constitutional provisions, such as the Article I provision stating that officials convicted in an impeachment trial \"shall . . . be liable and subject to Indictment, Trial, Judgment, and Punishment, according to law.\" An Office of Legal Counsel opinion issued shortly before President Nixon's resignation in 1974 concluded that the President cannot pardon himself \"[u]nder the fundamental rule that no one may be a judge in his own case,\" and some scholars subsequently have supported this opinion. In any event, even were a President to pardon himself, at least one commentator has noted that it is questionable whether a court would issue a definitive ruling as to that pardon's lawfulness given practical considerations and separation-of-powers concerns."], "subsections": []}, {"section_title": "Role of Congress in President's Use of the Pardon Power", "paragraphs": [], "subsections": [{"section_title": "Legislation", "paragraphs": ["The Supreme Court has taken the view that Congress generally cannot circumscribe the President's pardon authority. In Ex parte Garland , the Court remarked that the \"power of the President [to pardon] is not subject to legislative control. Congress can neither limit the effect of his pardon, nor exclude from its exercise any class of offenders. The benign prerogative of mercy reposed in him cannot be fettered by any legislative restrictions.\" Consistent with this broad language, the Court later rejected post-Civil War attempts by Congress to limit the effect of pardons granted to those who aided the Confederate cause on their right to recover for seized property, stating that \"the legislature cannot change the effect of such a pardon any more than the executive can change the law.\" More recently, in rejecting the proposition that a condition attached to clemency must be authorized by statute, the Court indicated that \"the power [of clemency] flows from the Constitution alone, not from any legislative enactments, and . . . it cannot be modified, abridged, or diminished by the Congress.\"", "It thus appears that Congress lacks the authority to substantively constrain the President's power to grant clemency, though Congress may be able to take some actions that would facilitate exercise of the power, such as through appropriations. There is historical precedent for Congress funding positions in DOJ to assist in considering clemency petitions. That said, attempts to indirectly impair the pardon power through appropriations limitations could potentially be viewed as inappropriate.", "Given these limitations, Congress's practice for formally conveying its views on clemency matters has typically involved passing nonbinding resolutions expressing the sense of Congress as to whether clemency should or should not be granted. Legislation has also been introduced in the 116th Congress that would impose certain post hoc procedural requirements on the Attorney General in connection with pardons\u00e2\u0080\u0094specifically, (1)\u00c2\u00a0requiring submission of investigative materials to congressional committees upon the grant of a pardon or commutation arising from an investigation in which the President or a relative is a target, subject, or witness; and (2) requiring publication of pardon information within three days of any grant. Although such legislation may not be a direct substantive constraint on the President's authority to grant clemency, given the relative lack of case law interpreting the pardon power and the sometimes sweeping language the Court has used to describe the President's prerogative, it is unclear whether such legislation would be viewed by the courts as an impermissible imposition on an area of executive authority."], "subsections": []}, {"section_title": "Oversight", "paragraphs": ["Beyond legislation, Congress may have a role to play in pardon decisions through other constitutional processes. For instance, Congress has invoked its Article I authority to conduct oversight as a more indirect constraint on the use of the pardon power. And on that front, Congress has, in the past, been relatively successful in obtaining information from the executive branch on particular clemency decisions, up to and including congressional testimony from the President himself. Nevertheless, DOJ has taken the position that past examples of executive branch compliance with congressional requests for information regarding pardon decisions have been purely voluntary, and that in fact \"Congress has no authority whatsoever to review a President's clemency decision.\" Whether a court, faced with an interbranch dispute regarding congressional demands for information on pardon decisions, would order the executive branch to comply with such demands would likely depend on the court's view of two possible constraints on Congress's oversight authority: (1) the existence of a valid legislative purpose, and (2)\u00c2\u00a0executive privilege.", "With respect to the first constraint, the Supreme Court has said that Congress's power to conduct oversight is inherent in the legislative process and is broad, encompassing \"inquiries concerning the administration of existing laws[,] . . . proposed or possibly needed statutes,\" and \"probes into departments of the federal government to expose corruption, inefficiency, or waste.\" However, a congressional investigation cannot be used \"to expose for the sake of exposure,\" meaning that a valid inquiry \"must be related to, and in furtherance of, a legitimate task of the Congress.\" The Court has also cautioned that Congress \"cannot inquire into matters which are within the exclusive province of one of the other branches of the Government.\" It is on the basis of this language that DOJ has maintained that Congress's oversight authority does not extend to clemency decisions, averring that \"[t]he granting of clemency pursuant to the pardon power is unquestionably an exclusive province of the Executive Branch.\" That said, the Supreme Court has at other times framed the issue of legislative purpose in the context of executive or judicial prerogatives as being whether it is \"obvious that there was a usurpation of functions exclusively vested in the Judiciary or the Executive,\" and a congressional committee seeking information on a clemency decision might accordingly argue that a subpoena or request for information on the decision is not a \"usurpation\" of the clemency function but is merely levied in aid of a \"probe . . . to expose corruption, inefficiency, or waste.\"", "Assuming a valid legislative purpose, the question would become whether materials related to a pardon decision are nevertheless protected from disclosure by executive privilege. Executive privilege \"is a term that has been used to describe the President's power to 'resist disclosure of information the confidentiality of which [is] crucial to the fulfillment of the unique role and responsibilities of the executive branch of our government.'\" The term encompasses at least two distinct forms of privilege that have been recognized by the federal courts: (1) a \"presumptive privilege for Presidential communications\" that extends to \"direct communications of the President with his immediate White House advisers\" made \"'in performance of the President's responsibilities'\" and \"'in the process of shaping policies and making decisions,'\" as well as \"communications authored or solicited and received\" by immediate White House advisers; and (2) a \"deliberative process privilege\" that may extend more broadly to \"decisionmaking of executive officials generally,\" shielding \"documents and other materials that would reveal advisory opinions, recommendations and deliberations comprising part of a process by which governmental decisions and policies are formulated.\" Neither form of privilege is absolute, as either \"can be overcome by a sufficient showing of need.\" However, \"the presidential communications privilege is more difficult to surmount\" than the deliberative process privilege; at least in the context of a congressional subpoena, the U.S. Court of Appeals for the D.C. Circuit has indicated that the former can be overcome on a showing that \"the subpoenaed evidence is demonstrably critical to the responsible fulfillment of the Committee's functions,\" while the latter is subject to a flexible, \"ad hoc\" determination of need and may \"disappear[] altogether when there is any reason to believe government misconduct has occurred.\"", "It does not appear that courts have addressed the application of either form of privilege to information regarding presidential clemency decisions sought by Congress. However, the U.S. Court of Appeals for the D.C. Circuit considered whether the presidential communications privilege would apply to \"internal pardon documents\" of the Offices of the Pardon Attorney and Deputy Attorney General that were not solicited or received by the President or his immediate advisors in Judicial Watch v. Department of Justice , concluding that such documents fell outside the scope of the presidential communications privilege but might still be covered by the deliberative process privilege.", "Based on Judicial Watch and the limited Supreme Court precedent addressing executive privilege, it seems that whether a court would order disclosure to a congressional committee of information concerning a presidential clemency decision in the face of an assertion of executive privilege could depend on whether the information sought is limited to internal agency documents (in which case the deliberative process privilege could apply) or includes communications among and between the President and/or senior White House officials (in which case the presidential communications privilege would appear to apply). Because the threshold of need is higher in the latter case than in the former, it seems more likely that Congress could obtain documents and information generated by the Pardon Attorney that are not requested by or submitted to the President or his advisors. Even in the case of presidential communications, however, a court could still conclude that a congressional committee is entitled to the information if the committee can demonstrate that it is critically needed."], "subsections": []}, {"section_title": "Impeachment", "paragraphs": ["An additional way in which Congress might assert itself with respect to presidential pardon decisions is through impeachment. James Madison alluded to this \"great security\" against abuse of the pardon power when he noted during the Virginia ratification convention that \"if the President be connected, in any suspicious manner, with any person, and there be grounds to believe he will shelter him, the House of Representatives can impeach him[.]\" The Supreme Court also appeared to acknowledge the possibility of impeachment for misuse of clemency in the early 20th century case of Ex parte Grossman . In concluding that the pardon power extended to criminal punishment for contempt of court, the Supreme Court in that case indicated that if the President ever sought to \"deprive a court of power to enforce its orders\" by issuing \"successive pardons of constantly recurring contempts in particular litigation,\" such an \"improbable\" situation \"would suggest a resort to impeachment, rather than a narrow and strained construction of the general powers of the President.\" Consistent with these authorities, several commentators have alluded to the potential availability of impeachment as a check on the President's pardon authority. That said, some have also raised doubts as to the efficacy of impeachment as a constraint on the President, arguing that it is \"useless against a President .\u00c2\u00a0.\u00c2\u00a0. who grants controversial pardons in the very last hours of his tenure\" as some Presidents have. Were a President to be impeached in the House of Representatives for abusing the pardon power and subsequently convicted in the Senate, the remedy would be limited by the Constitution to his removal from office and \"disqualification to hold and enjoy any Office of honor, Trust or Profit under the United States[.]\""], "subsections": []}, {"section_title": "Constitutional Amendment", "paragraphs": ["Finally, Congress can seek to amend the Constitution to clarify or constrain the President's clemency authority. Resolutions have been introduced in the 116th Congress that would amend the Constitution to prohibit the President from granting a pardon to himself or to family members and current or former members of his campaign or administration. However, the requirements for successfully amending the Constitution are, by design, exceptionally stringent\u00e2\u0080\u0094amendments would need to be passed by a two-thirds vote of each House of Congress and ratified by three-fourths of the states. Passing a constitutional amendment as a means of addressing unpopular or controversial pardon decisions accordingly may be difficult."], "subsections": []}]}]}]}}
{"id": "R46368", "title": "U.S. Assistance to Sub-Saharan Africa: An Overview", "released_date": "2020-05-20T00:00:00", "summary": ["Overview. Congress authorizes, appropriates, and oversees U.S. assistance to sub-Saharan Africa (\"Africa\"), which received over a quarter of U.S. aid obligated in FY2018. Annual State Department- and U.S. Agency for International Development (USAID)-administered assistance to Africa increased more than five-fold over the past two decades, primarily due to sizable increases in global health spending and more incremental growth in economic and security assistance. State Department and USAID-administered assistance allocated to African countries from FY2019 appropriations totaled roughly $7.1 billion. This does not include considerable U.S. assistance provided to Africa via global accounts, such as emergency humanitarian aid and certain kinds of development, security, and health aid. The United States channels additional funds to Africa through multilateral bodies, such as the United Nations and World Bank.", "Objectives and Delivery. Over the past decade, roughly 70-75% of annual U.S. aid to Africa has sought to address health challenges, notably relating to HIV/AIDS, malaria, maternal and child health, and nutrition. Much of this assistance has been delivered via disease-specific initiatives, including the President's Emergency Plan for AIDS Relief (PEPFAR) and the President's Malaria Initiative (PMI). Other U.S. aid programs seek to foster agricultural development and economic growth; strengthen peace and security; improve education access and social service delivery; bolster democracy, human rights, and good governance; support sustainable natural resource management; and address humanitarian needs. What impacts the Coronavirus Disease 2019 (COVID-19) pandemic may have for the scale and orientation of U.S. assistance to Africa remains to be seen.", "Aid to Africa during the Trump Administration. The Trump Administration has maintained many of its predecessors' aid initiatives that focus wholly or largely on Africa, and has launched its own Africa-focused trade and investment initiative, known as Prosper Africa. At the same time, the Administration has proposed sharp reductions in U.S. assistance to Africa, in line with proposed cuts to foreign aid globally. It also has proposed funding account eliminations and consolidations that, if enacted, could have implications for U.S. aid to Africa. Congressional consideration of the Administration's FY2021 budget request is underway; the Administration has requested $5.1 billion in aid for Africa, a 28% drop from FY2019 allocations. Congress has not enacted similar proposed cuts in past appropriations measures.", "Selected Considerations for Congress. Policymakers, analysts, and advocates continue to debate the value and effectiveness of U.S. assistance programs in Africa. Some Members of Congress have questioned whether sectoral allocations are adequately balanced given the broad scope of Africa's needs and U.S. priorities in the region. Concern also exists as to whether funding levels are commensurate with U.S. interests. Comprehensive regional- or country-level breakouts of U.S. assistance are not routinely made publicly available in budget documents, complicating estimates of U.S. aid to the region and congressional oversight of assistance programs.", "In addition to authorizing and appropriating U.S. foreign assistance, Congress has shaped U.S. aid to Africa through legislation denying or placing conditions on certain kinds of assistance to countries whose governments fail to meet standards in, for instance, human rights, debt repayment, or trafficking in persons. Congress also has restricted certain kinds of security assistance to foreign security forces implicated in human rights abuses. Some African countries periodically have been subject to other restrictions on U.S. foreign assistance, including country-specific provisions in annual aid appropriations measures restricting certain kinds of assistance. Congress may continue to debate the merits and effectiveness of such restrictions while overseeing their implementation."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["This report is intended to serve as a primer on U.S. foreign assistance to sub-Saharan Africa (\"Africa\") to help inform Congress' authorization, appropriation, and oversight of U.S. foreign aid for the region. It focuses primarily on assistance administered by the State Department and U.S. Agency for International Development (USAID), which administer the majority of U.S. aid to the region. It covers recent funding trends and major focus areas of such assistance, select programs managed by other U.S. agencies and federal entities, and the Trump Administration's FY2021 aid budget request for Africa. In addition to discussing aid appropriations, this report notes a range of legislative measures that have authorized specific assistance programs or placed conditions or restrictions on certain types of aid, or on aid to certain countries. Select challenges for congressional oversight are discussed throughout this report. For more on U.S. engagement in Africa, see also CRS Report R45428, Sub-Saharan Africa: Key Issues and U.S. Engagement .", "Definitions. Unless otherwise indicated, this report discusses State Department- and USAID-administered assistance allocated for African countries or for regional programs managed by the State Department's Bureau of African Affairs (AF), USAID's Bureau for Africa (AFR), and USAID regional missions and offices in sub-Saharan Africa. It does not comprehensively discuss funding allocated to African countries via global accounts or programs, which publicly available budget materials do not disaggregate by country or region. Except as noted, figures refer to actual allocations of funding appropriated in the referenced fiscal year (hereafter, \"allocations\"). "], "subsections": []}, {"section_title": "Recent Assistance Trends and Key Rationales", "paragraphs": ["Africa has received a growing share of annual U.S. foreign assistance funding over the past two decades: the region received 37% of State Department- and USAID-administered aid obligations in FY2018, up from 28% of global obligations in 2008 and 16% in 1998. U.S. aid to Africa grew markedly during the 2000s as Congress appropriated substantial funds to support the President's Emergency Plan for AIDS Relief (PEPFAR), which the George W. Bush Administration launched in 2003. Development and security aid to Africa also increased during that period, albeit to a lesser extent (see Figure 2 ). Assistance for Africa plateaued during the Obama Administration, fluctuating between $7.0 billion and $8.0 billion in annual allocations, excluding emergency humanitarian assistance and other funding allocated from global accounts and programs. Africa received roughly $7.0 billion in annual U.S. aid allocations in the first three years of the Trump Administration, despite the Administration's repeated proposals to curtail aid to the region. ", "Over the past decade, roughly 70% of U.S. assistance to African countries has supported health programs, notably focused on HIV/AIDS, malaria, nutrition, and maternal and child health. U.S. assistance also seeks to encourage economic growth and development, bolster food security, enhance governance, and improve security. ", "As discussed below, African countries also receive assistance administered by other federal agencies. The United States channels additional funding to Africa through multilateral bodies, such as U.N. agencies and international financial institutions like the World Bank.", "Policymakers, analysts, and advocates continue to debate the value and design of assistance programs in Africa. Proponents of such assistance often contend that foreign aid advances U.S. national interests in the region, or that U.S. assistance (e.g., to respond to humanitarian need) reflects U.S. values of charity and global leadership. Critics often allege that aid has done little to improve socioeconomic outcomes in Africa overall, that aid flows may have negative unintended consequences (such as empowering undemocratic regimes), or that other countries should bear more responsibility for providing aid to the region. Assessing the effectiveness of foreign aid is complex\u00e2\u0080\u0094particularly in areas afflicted by conflict or humanitarian crisis\u00e2\u0080\u0094further complicating such debates. Selected considerations concerning U.S. aid to Africa and issues for Congress are discussed in further detail below (see \" Select Issues for Congress \"). "], "subsections": []}, {"section_title": "U.S. Assistance to Africa: Objectives and Delivery", "paragraphs": ["U.S. assistance seeks to address a range of development, governance, and security challenges in Africa, reflecting the continent's size and diversity as well as the broad scope of U.S. policy interests in the region. State Department- and USAID-administered assistance for Africa totaled roughly $7.1 billion in FY2019, not including funding allocated to Africa via global accounts and programs (see \" Select Assistance Provided through Global Accounts and Programs ,\" below).", "Health. At $5.3 billion, health assistance comprised 75% of U.S. aid to Africa in FY2019. The majority of this funding supported HIV/AIDS programs (see Figure 4 ), with substantial assistance provided through the global President's Emergency Plan for AIDS Relief (PEPFAR)\u00e2\u0080\u0094a State Department-led, interagency effort that Congress first authorized during the George W. Bush Administration and reauthorized through 2023 under P.L. 115-305 . Programs to prevent and treat malaria, a leading cause of death in Africa, constituted the second-largest category of health assistance; such funding is largely provided through the USAID-led President's Malaria Initiative (PMI), which targeted 24 countries in Africa (out of 27 globally) as of 2019. ", "Beyond disease-specific initiatives, U.S. assistance has supported health system strengthening, nutrition, family planning and reproductive health, and maternal and child health programs. The United States also has supported global health security efforts, including pandemic preparedness and response activities, notably through the U.S.-supported Global Health Security Agenda. In recent years, USAID and the U.S. Centers for Disease Control and Prevention (CDC) led robust U.S. responses to two Ebola outbreaks on the continent, in West Africa (2014-2016) and the Democratic Republic of Congo (DRC, 2018-present).", "Agriculture and E conomic Growth. U.S. support for economic growth in Africa centers on agricultural development assistance. USAID agriculture programs seek to improve productivity by strengthening agricultural value chains, enhancing land tenure systems and market access road infrastructure, promoting climate-resilient farming practices, and funding agricultural research. Nearly 60% of U.S. agricultural assistance to Africa in FY2019 benefitted the eight African focus countries under Feed the Future (FTF)\u00e2\u0080\u0094a USAID-led, interagency initiative launched by the Obama Administration that supports agricultural development to reduce food insecurity and enhance market-based economic growth. (There are 12 FTF focus countries worldwide; the initiative supports additional countries under \"aligned\" and regional programs.) The Global Food Security Act of 2016 ( P.L. 114-195 , reauthorized through 2023 in P.L. 115-266 ) endorsed an approach to U.S. agricultural and food assistance similar to FTF. ", "Other U.S. economic assistance programs support trade capacity-building efforts, economic policy reforms and analysis, microenterprise and other private sector strengthening, and infrastructure development. Since the early 2000s, USAID has maintained three sub-regional trade and investment hubs focused on expanding intra-regional and U.S.-Africa trade, including by supporting African exports to the United States under the African Growth and Opportunity Act (AGOA, Title I, P.L. 106-200 , as amended) trade preference program. USAID also coordinates Prosper Africa, an emerging Trump Administration trade and investment initiative (see Text B ox ).", "Electrification is another focus of U.S. economic assistance in Africa. Power Africa, a USAID-led initiative that the Obama Administration launched in 2013, seeks to enhance electricity access through technical assistance, grants, financial risk mitigation tools, loans, and other resources\u00e2\u0080\u0094accompanied by trade promotion and diplomatic and advisory efforts. Facilitating private sector contracts is a key focus of the initiative, which aims to build power generation facilities capable of producing 30,000 megawatts of new power and establish 60 million new power connections by 2030. A sub-initiative, Beyond the Grid, supports off-grid electricity access. Power Africa involves a range of U.S. federal entities in addition to USAID, including the Millennium Challenge Corporation (MCC), DFC, Ex-Im Bank, TDA, and Departments of State, Energy, Commerce, and Agriculture. The Electrify Africa Act of 2015 ( P.L. 114-121 ) made it U.S. policy to aid electrification in Africa through an approach similar to that of Power Africa. ", "Peace and Security . The State Department administers a range of programs to build the capacity of African militaries and law enforcement agencies to counter security threats, participate in international peacekeeping and stabilization operations, and combat transnational crime (e.g., human and drug trafficking). State Department security assistance authorities are codified in Title 22 of the U.S. Code . Congress appropriates funds for Title 22 programs in annual Department of State, Foreign Operations, and Related Programs (SFOPS) appropriations, though the Department of Defense (DOD) implements several of these programs. (For information on DOD security cooperation, see \" Assistance Administered by Other U.S. Federal Departments and Agencies .\")", "The Peacekeeping Operations (PKO) account is the primary vehicle for State Department-administered security assistance to African countries ( Figure 5 ). Despite its name, PKO supports not only peacekeeping capacity-building, but also counterterrorism, maritime security, and security sector reform. (A separate State Department-administered account, Contributions to International Peacekeeping Activities [CIPA], funds U.S. assessed contributions to U.N. peacekeeping budgets.) In recent years, the largest PKO allocation for Africa has been for the U.N. Support Office in Somalia (UNSOS), which supports an African Union stabilization operation in that country. PKO funding also supports two interagency counterterrorism programs in Africa: the Trans-Sahara Counter-Terrorism Partnership (TSCTP, in North-West Africa), and the Partnership for Regional East Africa Counterterrorism (PREACT, in East Africa). ", "The Nonproliferation, Anti-terrorism, Demining, and Related Programs (NADR) account funds counterterrorism training and other capacity-building programs for internal security forces, as well as other activities such as landmine removal. International Narcotics Control and Law Enforcement (INCLE) funds support efforts to combat transnational crime and strengthen the rule of law, including through judicial reform and law enforcement capacity-building. The International Military Education and Training (IMET) program offers training for foreign military personnel at facilities in the United States and abroad, and seeks to build military-to-military relationships, introduce participants to the U.S. judicial system, promote respect for human rights, and strengthen civilian control of the military. The United States provides grants to help countries purchase defense articles and services through the Foreign Military Financing (FMF) account.", "USAID also implements programs focused on conflict prevention, mitigation, and resolution. Such assistance seeks to prevent mass atrocities, support post-conflict transitions and peace building, and counter violent extremism, among other objectives. Congress appropriates funding for such programs as economic assistance, as opposed to security assistance. ", "Democracy, Human Rights, and Governance (DRG). State Department- and USAID-administered DRG programs seek to enhance democratic institutions, improve government accountability and responsiveness, and strengthen the rule of law. Activities include supporting African electoral institutions and political processes; training political parties, civil society organizations, parliaments, and journalists; promoting effective and accountable governance; bolstering anti-corruption efforts; and strengthening justice sectors. U.S. assistance also provides legal aid to human rights defenders abroad and funds programs to address particular human rights issues and enable human rights monitoring and reporting. ", "Education and Social Services . U.S. basic, secondary, and higher education programs seek to boost access to quality education, improve learning outcomes, and support youth transitions into the workforce. Some programs specifically target marginalized students, such as girls and students in rural areas or communities affected by conflict or displacement. Youth development activities also include the Young African Leaders Initiative (YALI), which supports young African business, science, and civic leaders through training and mentorship, networking, and exchange-based fellowships. USAID supports four YALI Regional Leadership Centers on the continent\u00e2\u0080\u0094in Ghana, Kenya, Senegal, and South Africa\u00e2\u0080\u0094which offer training and professional development programs. Additional U.S. assistance programs enhance access to, and delivery of, other social services, such as improved water and sanitation facilities. ", "Environment . Environmental assistance programs in Africa focus on biodiversity conservation, climate change mitigation and adaptation, countering wildlife crime, and natural resource management. In recent years, the largest allocation of regional environmental assistance has been for the Central Africa Regional Program for the Environment (CARPE). Implemented by USAID and the U.S. Fish and Wildlife Service, CAPRE promotes conservation, sustainable resource use, and climate change mitigation in Central Africa's Congo Basin rainforest, with a present focus on landscapes in DRC, the Republic of Congo, and the Central African Republic (CAR). Congress has shown enduring interest in international conservation initiatives and efforts to curb wildlife trafficking and other environmental crime, including in Africa."], "subsections": [{"section_title": "Select Assistance Provided through Global Accounts and Programs", "paragraphs": ["As noted, the discussion above does not account for U.S. development, security, or health assistance allocated to African countries via global accounts and programs\u00e2\u0080\u0094funds that are not broken out by region or country in public budget documents. This includes situation-responsive assistance, such as emergency humanitarian aid and certain kinds of governance support, which is appropriated on a global basis and allocated in response to emerging needs or opportunities. Notably, it also includes certain security assistance programs through which some African countries have received considerable funding in recent years. Gaps in region- and country-level aid data may raise challenges for congressional oversight (see \" Select Issues for Congress \"). ", "Emergency Assistance. As of early 2020, there were U.S.- or U.N.-designated humanitarian crises in Burkina Faso, CAR, DRC, Somalia, South Sudan, Sudan, and the Lake Chad Basin (including parts of Cameroon, Chad, Niger, and Nigeria). The United States administers humanitarian aid to Africa under various authorities. Key accounts and programs include: ", "USAID-administered Food for Peace (FFP) assistance authorized under Title II of the Food for Peace Act of 1954 (P.L. 83-480, commonly known as \"P.L. 480\"), which primarily provides for the purchase and distribution of U.S. in-kind food commodities. African countries consistently have received a majority of annual FFP Title II emergency assistance in recent years. ", "USAID-administered International Disaster Assistance (IDA), which funds food and nonfood humanitarian assistance\u00e2\u0080\u0094including the Emergency Food Security Program (EFSP), which funds market-based food assistance, including cash transfers, food vouchers, and food procured locally and regionally.", "State Department-administered Migration and Refugees Assistance (MRA) assistance for refugees and vulnerable migrants."], "subsections": []}]}, {"section_title": "Assistance Administered by Other U.S. Federal Departments and Agencies", "paragraphs": ["While the State Department and USAID administer the majority of U.S. foreign assistance to Africa, other federal departments and agencies also manage or support aid programs in the region. For example, the Departments of Agriculture, Energy, Justice, Commerce, Homeland Security, and the Treasury conduct technical assistance programs and other activities in Africa, and may help implement some State Department- and USAID-administered programs on the continent.", "Other U.S. federal entities involved in administering assistance to Africa notably include:", "The Department of Defense (DOD). In addition to implementing some State Department-administered security assistance programs, DOD is authorized to engage in security cooperation with foreign partner militaries and internal security entities for a range of purposes. The majority of this assistance has been provided under DOD's \"global train and equip\" authority, first established by Congress in the National Defense Authorization Act (NDAA) of FY2006 ( P.L. 109-163 ). In the FY2017 NDAA ( P.L. 114-328 ), Congress codified and expanded the \"global train and equip\" authority under 10 U.S.C. 333 (\"Section 333\"), consolidating various capacity-building authorities that it had granted DOD on a temporary or otherwise limited basis. Section 333 authorizes DOD to provide training and equipment to foreign military and internal security forces to build their capacity to counter terrorism, weapons of mass destruction, drug trafficking, and transnational crime, and to bolster maritime and border security and military intelligence.", "Comprehensive regional- or country-level funding data for DOD security cooperation programs are not publicly available, complicating approximations of funding for African countries. A CRS calculation based on available congressional notification data suggests that Kenya, Uganda, Niger, Chad, Somalia, and Cameroon have been the top African recipients of cumulative DOD global train and equip assistance over the past decade. Congress has authorized additional DOD security cooperation programs in Africa under global or Africa-specific authorities (e.g., to help combat the Lord's Resistance Army rebel group in Central Africa between FY2012 and FY2017). ", "Millennium Challenge Corporation (MCC). Authorized by Congress in 2004, the MCC supports five-year development \"compacts\" in developing countries that meet various governance and development benchmarks. MCC recipient governments lead the development and implementation of their programs, which are tailored to address key \"constraints to growth\" identified during the compact design phase. The MCC also funds smaller, shorter-term \"threshold programs\" that assist promising candidate countries to become compact-eligible. ", "As shown in Appendix B , the MCC has supported 32 compacts or threshold programs in 22 African countries since its inception, valued at roughly $8.0 billion in committed funding. There are seven ongoing compacts and threshold programs in the region. The MCC has suspended or terminated compacts with some African governments for failing to maintain performance against selection benchmarks: it terminated engagement in Madagascar and Mali due to military coups, and suspended development of a second compact for Tanzania in 2016 due to a government crackdown on the political opposition. In late 2019, the MCC cancelled a $190 million tranche of funding under Ghana's second compact over concerns with the Ghanaian government's termination of a contract with a private energy utility. ", "The Peace Corps. The Peace Corps supports American volunteers to live in local communities abroad and conduct grassroots-level assistance programs focused on agriculture, economic development, youth engagement, health, and education. As of September 2019, 45% of Peace Corps Volunteers were serving in sub-Saharan Africa\u00e2\u0080\u0094by far the largest share by region. Conflict and other crises in Africa have episodically led the Peace Corps to suspend programming over concern for volunteer safety, with recent conflict-related suspensions in Mali (in 2015) and Burkina Faso (2017) and temporary suspensions in Guinea, Liberia, and Sierra Leone during the 2014-2016 West Africa Ebola outbreak. In 2019, the Peace Corps announced that it would resume operations in Kenya after suspending activities in 2014 due to security concerns. The Peace Corps ceased all activities and recalled all volunteers worldwide in March 2020 due to COVID-19.", "African Development Foundation (USADF). A federally funded, independent nonprofit corporation created by Congress in the African Development Foundation Act of 1980 (Title V of P.L. 96-533 ), the USADF seeks to reduce poverty by providing targeted grants worth up to $250,000 that typically serve as seed capital for small-scale economic growth projects. The USADF maintains a core focus on agriculture, micro-enterprise development, and community resilience. It prioritizes support for marginalized, poor, and often remote communities as well as selected social groups, such as women and youth\u00e2\u0080\u0094often in fragile or post-conflict countries. USADF also plays a role in selected multi-agency initiatives, such as Power Africa and YALI."], "subsections": []}, {"section_title": "U.S. Aid to Africa During the Trump Administration", "paragraphs": ["In 2018, the Trump Administration identified three core goals of its policy approach toward Africa: expanding U.S. trade and commercial ties, countering armed Islamist violence and other forms of conflict, and imposing more stringent conditions on U.S. assistance and U.N. peacekeeping missions in the region. The Administration also has emphasized efforts to counter \"great power competitors\" in Africa, namely China and Russia, which it has accused of challenging U.S. influence in the region through \"predatory\" economic practices and other means. Other stated policy objectives include promoting youth development and strengthening investment climates on the continent. Budget requests and other official documents, such as USAID country strategies, have asserted other priorities broadly similar to those pursued by past Administrations, such as boosting economic growth, investment, and trade, enhancing democracy and good governance, promoting socioeconomic development, and improving health outcomes.", "The Administration has expressed skepticism of U.S. foreign aid globally, and to certain African countries in particular. For instance, then-National Security Advisor John Bolton pledged in 2018 to curtail aid to African countries whose governments are corrupt and to direct assistance toward states that govern democratically, pursue transparent business practices, and \"act as responsible regional stakeholders [...and] where state failure or weakness would pose a direct threat to the United States and our citizens.\" These objectives do not appear to have been revoked since Bolton's departure from the White House in September 2019. Whether the Administration's budget proposals for aid to Africa have reflected such pledges is debatable, however, as discussed below (\"The FY2021 Assistance Request for Africa: Overview and Analysis\"). ", "The Trump Administration has maintained several assistance initiatives focused substantially or exclusively on Africa\u00e2\u0080\u0094including PEPFAR, the PMI, Feed the Future, Power Africa, and YALI, among others\u00e2\u0080\u0094and, as noted above, has launched Prosper Africa, a new Africa-focused trade and investment initiative. At the same time, the Administration has proposed to sharply reduce U.S. assistance to Africa (and globally), even as Congress has provided assistance for Africa at roughly constant levels in recent fiscal years (see Figure 7 ). The Trump Administration also has proposed changes to the manner in which the United States delivers assistance which, if enacted, could have implications for U.S. aid to Africa. These include:", "C hanges to humanitarian assistance . As part of a consolidation of humanitarian aid accounts, the Administration has repeatedly proposed to eliminate FFP Title II aid, through which African countries received $1.2 billion in emergency food assistance in FY2019. The FY2021 budget request would merge the four humanitarian accounts\u00e2\u0080\u0094FFP Title II, International Disaster Assistance (IDA), Migration and Refugee Assistance (MRA), and Emergency Refugee and Migration Assistance (ERMA)\u00e2\u0080\u0094into a single International Humanitarian Assistance (IHA) account. Budget documents assert that the consolidation would enhance the flexibility and efficiency of humanitarian assistance. ", "Changes to bilateral economic assistance. The Administration has repeatedly proposed to merge a number of bilateral economic assistance accounts\u00e2\u0080\u0094including Development Assistance (DA) and Economic Support Fund (ESF) aid, through which African countries received a cumulative $1.5 billion in FY2019\u00e2\u0080\u0094into a new Economic Support and Development Fund (ESDF) account. The Administration has consistently requested far less in ESDF than prior-year combined allocations for the subsumed accounts. Budget documents contend the consolidation would improve efficiency.", "Cutting Foreign Military Financing for Africa . Unlike previous Administrations, the Trump Administration has not requested FMF for African countries, with the exception of Djibouti, which hosts the only enduring U.S. military installation in Africa. ", "Eliminating the USADF. The Administration annually has proposed to eliminate the USADF and create a grants office within USAID that would assume responsibility for the agency's work. In successive budget requests, the Administration has included one-time closeout funding for the agency (e.g., $4.7 million for FY2021).", "To date, Congress has maintained the existing account structures for the delivery of humanitarian aid and economic assistance and continued to appropriate operating funds to the USADF\u00e2\u0080\u0094most recently under P.L. 116-94 at a level of $33 million for FY2020. Consideration of the President's FY2021 budget request, released in February 2020, is underway. "], "subsections": [{"section_title": "The FY2021 Assistance Request for Africa", "paragraphs": ["Overview. The Administration's FY2021 budget request includes $5.2 billion in aid for Africa, an increase from its FY2020 request ($5.0 billion) but 28% below FY2019 allocations ($7.1 billion). These totals do not include emergency humanitarian aid or funding allocated to African countries from global accounts and programs. Funding for Africa would fall sharply from FY2019 levels across most major funding accounts, including Global Health Programs (which would see a 22% drop), PKO (23%), INCLE (46%), and IMET (16%). Non-health development assistance would see the largest decline from FY2019 levels: the request would provide $797 million in ESDF for Africa, down 48% from $1.5 billion in allocated ESF and DA in FY2019. The request includes $75 million in ESDF for Prosper Africa, up from $50 million requested in FY2020. Separate proposed decreases in U.S. funding for U.N. peacekeeping missions, most of which are in Africa, could have implications for stability and humanitarian operations.", "Analysis. Overwhelmingly weighted toward health assistance, with the balance largely dedicated to traditional development and security activities, the FY2021 request aligns with long-standing U.S. priorities in the region\u00e2\u0080\u0094while at the same time proposing significant cuts to U.S. assistance across all major sectors. Congress has not enacted similar proposed reductions in previous appropriations measures; several Members specifically have raised concerns over the potential ramifications of such cuts for U.S. influence and partnerships abroad. In this regard, it may be debated whether the FY2021 budget, if enacted, would be likely to advance the Administration's stated priority of countering the influence of geostrategic competitors in Africa. For instance, officials have described Prosper Africa as partly intended to counter China's growing influence in the region, yet $75 million in proposed funding for the initiative is arguably incommensurate with the Administration's goal of \"vastly accelerat[ing]\" two way U.S-Africa trade and investment.", "Despite the Administration's pledge to curtail aid to countries that fail to govern democratically and transparently, top proposed recipients in FY2021 include several countries with poor or deteriorating governance records (e.g., Uganda, Rwanda, Nigeria, and Tanzania). Sharp proposed cuts to bilateral economic assistance, through which the United States funds most DRG activities, could have implications for U.S. democracy and governance programming in the region. "], "subsections": []}]}, {"section_title": "Select Issues for Congress", "paragraphs": ["Below is a selected list of issues that Congress may consider as it weights budgetary proposals and authorizes, appropriates funding for, and oversees U.S. foreign aid programs in Africa. References to specific countries are provided solely as illustrative examples.", "Scale and balance . Members may debate whether U.S. assistance to Africa is adequately balanced between sectors given the broad scope of Africa's needs and U.S. priorities on the continent, and whether overall funding levels are commensurate with U.S. interests in the region. Successive Administrations have articulated a diverse range of development, governance, and security objectives in Africa\u00e2\u0080\u0094yet U.S. assistance to the region has remained dominated by funding for health programs since the mid-2000s. Some Members of Congress have expressed concern over the relatively small share of U.S. aid dedicated to other stated U.S. priorities, such as promoting good governance , ex panding U.S.-Africa commercial ties, and mitigating conflict.", "Meanwhile, the Trump Administration's repeated proposals to sharply reduce U.S. assistance to Africa have spurred pushback from some Members. Congressional objections have centered on the risks that aid cuts could potentially pose for U.S. national security, foreign policy goals, and U.S. influence and partnerships in Africa. Notably, the proposed cuts in U.S. assistance come at a time when China and other countries, including Russia, India, Turkey, and several Arab Gulf states, are seeking to expand their roles in the region. ", "Transparency and oversight. While this report provides approximate funding figures based largely on publicly available allocation data, comprehensive estimates of U.S. aid to Africa and amounts dedicated to specific focus areas are difficult to determine. Executive branch budget documents and congressional appropriations measures do not fully disaggregate aid allocations by country or region; meanwhile, databases such as USAID's Foreign Aid Explorer and the State Department's ForeignAssistance.gov provide data on obligations and disbursements but do not track committed funding against enacted levels, raising challenges for congressional oversight.", "As noted above, gaps in region- and country-level assistance data may partly reflect efforts to maintain flexibility in U.S. assistance programs\u00e2\u0080\u0094for instance, by appropriating humanitarian aid to global accounts and allocating it according to need. At the same time, Congress has not imposed rigorous reporting requirements evenly across U.S. foreign aid programs. For instance, while DOD \"global train and equip\" assistance is subject to congressional notification and reporting requirements that require detailed information about country and security force unit recipients and assistance to be provided, there is no analogous reporting requirement governing State Department security assistance. Public budget documents may thus include country- and program-level breakouts of some security assistance, while other funds\u00e2\u0080\u0094such as for the Global Peace Operations Initiative (GPOI), a PKO-funded peacekeeping capacity-building program through which some African militaries have received substantial U.S. training and equipment\u00e2\u0080\u0094are not reflected in bilateral aid budgets. A lack of data on what U.S. assistance has been provided to African countries may obscure policy dilemmas or inhibit efforts to evaluate impact.", "Country Ownership. Policymakers may debate the extent to which U.S. assistance supports partner African governments in taking the lead in addressing challenges related to socioeconomic development, security, and governance. The majority of U.S. aid to Africa is provided through nongovernment actors\u00e2\u0080\u0094such as U.N. agencies, humanitarian organizations, development practitioners, and civil society entities\u00e2\u0080\u0094rather than directly to governments. (Exceptions include U.S. security assistance for African security forces and some healthcare capacity-building programs.) Channeling aid through nongovernment actors may be preferable in countries where the state is unable or unwilling to meet the needs of its population, and may additionally grant the United States greater control and oversight over the use of aid funds. At the same time, experts debate whether this method of assistance adequately equips recipient governments to take primary responsibility for service delivery and other state duties\u00e2\u0080\u0094as well as whether this mode of delivery may limit donor influence and leverage with the recipient country government. ", "Conditions on U.S. assistance. Congress has enacted legislation denying or placing conditions on assistance to countries that fail to meet certain standards in, for instance, human rights, counterterrorism, debt repayment, religious freedom, child soldier use, or trafficking in persons. In general, statutes establishing such conditions accord the executive branch the discretion to designate countries for sanction or waive such restrictions. Congress may continue to debate the merits and effectiveness of such restrictions. In FY2020, several African governments are subject to aid restrictions due to failure to meet standards related to:", "Religious freedom, under the International Religious Freedom Act of 1998 ( P.L. 105-292 ), with Eritrea currently listed as a \"Country of Particular Concern.\" The use of child soldiers, under the Child Soldiers Prevention Act (CSPA, P.L. 110-457 , as amended) and related legislation, with DRC, Mali, Somalia, South Sudan, and Sudan subject to potential security assistance restrictions in FY2020. In October 2019, President Trump exercised his authority under CSPA to waive certain restrictions for DRC, Mali, Somalia, and South Sudan. Trafficking in persons (TIP), under the Trafficking Victims Protection Act of 2000 (TVPA, P.L. 106-386 , as amended) and related legislation, with Burundi, Comoros, DRC, Equatorial Guinea, Eritrea, The Gambia, Mauritania, and South Sudan subject to potential aid restrictions in FY2020. In October 2019, President Trump partially waived such restrictions with regard to DRC and South Sudan, and fully waived them for Comoros.", "Some African countries periodically have been subject to other restrictions on U.S. foreign aid, such as those imposed on governments that rose to power through a coup d'\u00c3\u00a9tat, support international terrorism, or are in external debt arrears. (In contrast to most legislative aid restrictions, a provision in annual appropriations legislation prohibiting most aid to governments that accede to power through a military coup does not grant the executive branch authority to waive the restrictions. ) Congress has also included provisions in annual aid appropriations measures restricting certain aid to specific African countries, notably Sudan and Zimbabwe. ", "In addition, the so-called \"Leahy Laws\" restrict most kinds of State Department- and DOD-administered security assistance to individual units or members of foreign security forces credibly implicated in a \"gross violation of human rights,\" subject to certain exceptions. The executive branch does not publish information on which units or individual personnel have been prohibited from receiving U.S. assistance pursuant to these laws. Congress also has restricted certain kinds of security assistance deemed likely to be used for unintended purposes; for instance, language in annual foreign aid appropriations measures prohibits the use of funds for providing tear gas and other crowd control items to security forces that curtail freedoms of expression and assembly. ", "Unintended consequences. Some observers have raised concerns that the provision of U.S. foreign assistance may have unintended consequences, including in Africa. For instance, some analysts have questioned whether U.S. food assistance may inadvertently prolong civil conflict by enabling warring parties to sustain operations, though others have challenged that assertion. Whether providing certain forms of U.S. aid, notably security assistance, may at times jeopardize U.S. policy goals in other areas is another potential consideration. For instance, some analysts have questioned whether security assistance to African governments with poor human rights records (e.g., Chad, Cameroon, Nigeria, and Uganda) may strengthen abusive security forces or inhibit U.S. leverage on issues related to democracy and governance. Proponents of U.S. security assistance programs in Africa may contend that aspects of such engagements\u00e2\u0080\u0094such as military professionalization and human rights training\u00e2\u0080\u0094enhance security sector governance and civil-military relations, and may thus improve human rights practices by partner militaries."], "subsections": []}, {"section_title": "Outlook", "paragraphs": ["Congress commenced consideration of the President's FY2021 budget request in February 2020. To date, the 116 th Congress has not adopted many of the Administration's proposed changes regarding assistance to Africa, notably its repeated attempts to significantly reduce aid to the region. Allocated funding has instead hovered around $7 billion per year, excluding emergency humanitarian aid. As Congress debates the FY2021 Department of State, Foreign Operations, and Related Programs appropriations measure, Members may consider issues such as:", "The economic, humanitarian, and health-related shocks of the COVID-19 pandemic, which is expected to have a severe impact on Africa's development trajectory;", "Unfolding political transitions in Sudan and Ethiopia, which may have significant implications for governance and conflict trends in the region;", "Conflicts and humanitarian crises in Burkina Faso, Cameroon, the Central African Republic, the Democratic Republic of Congo, Mali, Nigeria, Somalia, and South Sudan;", "Repressive governance in several countries that rank as top recipients of U.S. assistance in Africa, including Rwanda, Tanzania, Uganda, and Zambia;", "The effectiveness of existing conditions on U.S. foreign assistance to Africa, whether additional conditions and restrictions may be necessary, and the appropriate balance between ensuring congressional influence and providing executive branch flexibility;", "U.S.-Africa trade and investment issues, including as they relate to funding and overseeing the Administration's Prosper Africa initiative; and", "The involvement in Africa of foreign powers such as China and Russia, and the implications of such engagement for U.S. national security and policy interests.", "Appendix A. U.S. Assistance to Africa, by Country", "Appendix B. MCC Programs in Africa: A Snapshot"], "subsections": []}]}}
{"id": "R45931", "title": "Federal Student Loans Made Through the William D. Ford Federal Direct Loan Program: Terms and Conditions for Borrowers", "released_date": "2019-09-24T00:00:00", "summary": ["The William D. Ford Federal Direct Loan (Direct Loan) program is the single largest source of federal financial assistance to support students' postsecondary educational pursuits. The U.S. Department of Education estimates that in FY2020, $100.2 billion in new loans will be made through the program. As of the end of the second quarter of FY2019, $1.2 trillion in principal and interest on Direct Loan program loans, borrowed by or on behalf of 34.5 million individuals, remained outstanding.", "For many individuals, borrowing a federal student loan through the Direct Loan program may be among their first experiences in incurring a major financial obligation. Upon obtaining a loan, a borrower assumes a contractual obligation to repay the debt over a period that may span a decade or more.", "Loans were first made through the Direct Loan program in 1994. Since then, Congress has periodically made changes to the program and the terms and conditions of loans. Changes have impacted program aspects such as the availability of loan types, interest rates, loan repayment, loan discharge and forgiveness, and the consequences of default. Over time, the accumulation of changes\u00e2\u0080\u0094many of which are differentially applicable to borrowers or loan types\u00e2\u0080\u0094has resulted in a set of loan terms and conditions that are voluminous and complex. Congress may contemplate making future changes to loan terms and conditions.", "This report has been prepared to provide Congress with a comprehensive description of the terms and conditions and borrower benefits that are applicable to loans made through the Direct Loan program. Emphasis is placed on discussing loan types, provisions related to borrower eligibility, amounts that may be borrowed, interest and fees, loan repayment, repayment relief, loan forgiveness benefits, the consequences of default, and the methods used to ensure borrowers are informed about the terms and conditions of their loans and their obligation to repay them.", "Direct Loan Types", "Four types of loans are available through the Direct Loan program. Direct Subsidized Loans are available only to undergraduate students with financial need. Direct Unsubsidized Loans are available both to undergraduate students and graduate students. Direct PLUS Loans may be borrowed by graduate students and by the parents of undergraduate students dependent upon them for financial support. Direct Consolidation Loans allow borrowers to combine debt from multiple existing federal student loans into a single new loan.", "Eligibility and Amounts That May Be Borrowed", "Whether an individual may borrow a loan and the amount he or she may borrow are determined by the interaction of many factors. Eligibility to borrow varies by loan type, borrower characteristics, program level, and class level. The amount an individual may borrow is subject to annual and aggregate borrowing limits, and federal need analysis and packaging procedures. Loans are made available in amounts constrained by program rules, but\u00e2\u0080\u0094with the exception of Direct PLUS Loans\u00e2\u0080\u0094without consideration of a borrower's ability to repay. Eligibility to borrow a Direct PLUS Loan depends on an individual's creditworthiness.", "Interest on Direct Loan Program Loans", "Procedures for calculating interest vary by loan type, repayment status, and the period during which a loan was made. In limited circumstances, the federal government subsidizes, or does not charge, interest that would otherwise accrue. Interest subsidies are mostly limited to Direct Subsidized Loans; however, certain interest subsidies may be provided on all loan types.", "Loan Repayment Plans", "Numerous repayment plans, each with different payment structures and maximum durations, are available. Among the various plans, income-driven repayment (IDR) plans cap monthly payments at a specific percentage of a borrower's discretionary income. For most repayment plans, monthly payments must cover the interest that accrues; however, the IDR plans allow for negative amortization, in which case monthly payments may be for less than the interest that accrues.", "Deferment and Forbearance", "Periods of deferment and forbearance offer a borrower temporary relief from the obligation to make monthly payments. In certain instances, interest subsidies may be provided during periods of deferment; however, interest subsidies are not available during periods of forbearance.", "Loan Discharge and Loan Forgiveness", "A borrower may be relieved of the obligation to repay his or her loans in certain circumstances. Student loan debt may be discharged on the basis of borrower hardship (e.g., death, total and permanent disability, school closure) or may be forgiven following an extended period of repayment according to an IDR plan or completion of a period of public service.", "Loan Default, Its Consequences, and Resolution", "If a borrower defaults, the loan becomes due in full and the borrower loses eligibility for many benefits, as well as access to other forms of federal student aid. The government also uses numerous means to collect on defaulted student loan debt. A limited set of options is available for a borrower to bring a defaulted loan back into good standing.", "Loan Counseling and Disclosures", "Student borrowers are required to undergo financial counseling, which is designed to provide them with comprehensive information on the terms and conditions of their loans as well as their rights and the responsibilities they assume as borrowers. Loan terms and conditions are specified in a promissory note, which is a contract that establishes the borrower's obligation to repay the loan, and in a plain language disclosure document that uses simplified terms to explain a loan's terms and conditions and the borrower's rights and responsibilities."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["The William D. Ford Federal Direct Loan (Direct Loan) program makes several types of federal student loans available to individuals to assist them with financing postsecondary education expenses. It represents the single largest source of federal financial assistance to support students' postsecondary educational pursuits. The U.S. Department of Education (ED) estimates that in FY2020, 15.9 million new loans, averaging $6,299 each and totaling $100.2 billion, will be made through the Direct Loan pro gram to undergraduate and graduate students, and to the parents of undergraduate students. In addition, ED estimates that 755,000 Direct Consolidation Loans, averaging $61,433 each and totaling $46.4 billion, will be made to existing borrowers of federal student loans. As of the end of the second quarter of FY2019, $1.2 trillion in principal and interest on Direct Loan program loans, borrowed by or on behalf of 34.5 million individuals, remained outstanding. ", "This report presents a comprehensive overview of the terms and conditions that apply to federal student loans made through the Direct Loan program. It begins by providing background information on the history of the Direct Loan program. This is followed by a brief description of the various types of loans that are offered through the program. The report then presents a thorough description of the terms and conditions for loans made through the Direct Loan program. In identifying and describing loan terms and conditions, it focuses on provisions applicable to loans that are currently being made or that have been made in recent years. Emphasis is placed on discussing Direct Loan program provisions that are related to borrower eligibility, amounts that may be borrowed, interest rates and fees, procedures for loan repayment, repayment relief, the availability of loan discharge and loan forgiveness benefits, and the consequences of defaulting. The final section of the report provides a summary of the methods that are used to ensure that borrowers are informed about the terms and conditions of the loans they obtain and their obligation to repay them. ", "This report has been prepared as a resource for Members of Congress, congressional committees, and congressional staff to support them in their legislative, oversight, and representational roles related to federal student loan policy. It is intended to provide a thorough, but nonexhaustive, description of loan terms and conditions and borrower benefits. It is not intended to be relied upon by borrowers as a resource for validating individual eligibility for specific borrower benefits.", " Appendix A to this report contains a directory of resources from which additional information may be obtained about loans made available through the Direct Loan program. Appendix B consists of a glossary of terms. Appendix C contains a set of tables that present historical information on borrowing limits, interest rates, and fees that have applied to loans made through the Direct Loan program."], "subsections": []}, {"section_title": "Background on the Direct Loan Program", "paragraphs": ["The Direct Loan program is authorized under Title IV, Part D of the Higher Education Act of 1965 (HEA; P.L. 89-329, as amended). It was established by the Student Loan Reform Act of 1993 (SLRA), Title IV of the Omnibus Budget Reconciliation Act of 1993 ( P.L. 103-66 ). Federal student loans were first made through the Direct Loan program in 1994.", "In the Direct Loan program, loans are made by the government using federal capital (i.e., funds from the U.S. Treasury), and once made, outstanding loans constitute an asset of the federal government. Some important characteristics of loans made through the Direct Loan program are that the federal government assumes the risk for losses that may occur as a result of borrower default, and that it pays for the discharge of loans in cases of borrower death, total and permanent disability, and other limited instances. The federal government also assumes the cost of loans that are not required to be paid in full due to borrowers satisfying criteria that make them eligible to have a portion or all of the balance of their loans discharged under any of several loan forgiveness programs. For federal budgeting purposes, the program is classified as a direct loan program, which is a type of federal credit program for which mandatory spending authority is provided. ", "ED's Office of Federal Student Aid (FSA) is the primary entity tasked with administering the Direct Loan program. The institutions of higher education (IHEs) that participate in the Direct Loan program originate loans to borrowers through FSA's Common Origination and Disbursement (COD) system. Contractors hired by ED service and collect on the program's loans. ", "When the Direct Loan program was first established, it was intended gradually to expand and then ultimately fully replace the Federal Family Education Loan (FFEL) program, a guaranteed student loan program authorized under Title IV, Part B of the HEA, and through which most federal student loans were being made. The FFEL program had descended from the Guaranteed Student Loan (GSL) program, which was enacted under Title IV of the HEA in 1965 to enhance access to postsecondary education for students from low- and middle-income families by providing them access to low-interest federal student loans. In the FFEL program, loan capital was provided by private lenders who also originated and serviced loans. The federal government guaranteed lenders against loss due to factors such as borrower default, death, total and permanent disability, and in limited instances, bankruptcy. State and nonprofit guaranty agencies administered the federal guarantee. The federal government was also responsible for making several different types of payments to lenders and guaranty agencies to support the operation of the program. The FFEL program was administratively complex and the Direct Loan program was established with the aims of streamlining the federal student loan delivery system and achieving cost savings. ", "Several years into the implementation of the Direct Loan program, statutory provisions specifying that it ultimately succeed the FFEL program were repealed by the Higher Education Amendments of 1998 ( P.L. 105-244 ). From 1994 to 2010, the Direct Loan program and the FFEL program operated side-by-side. During this period, IHEs could elect to participate in the program of their choice. As this decision was made at the institutional level, the program through which an individual could borrow federal student loans was dependent upon the program participation decisions made by the institution a student attended. ", "During the period while loans were being made through both the FFEL and Direct Loan programs, from the perspective of the borrower the terms and conditions of loans offered through the programs were similar in most respects. However, the degree of similarity varied over time. Notable differences included certain characteristics of the repayment plans offered and, beginning in 2008, the availability of the Public Service Loan Forgiveness (PSLF) program only to borrowers of loans made through the Direct Loan program.", "The authority to make loans through the FFEL program was terminated, effective July 1, 2010, by the SAFRA Act, Title II of the Health Care and Education Reconciliation Act of 2010 (HCERA; P.L. 111-152 ). While loans are no longer being made through the FFEL program, as of the end of the second quarter of FY2019, $271.6 billion in principal and interest on FFEL program loans, borrowed by or on behalf of 12.8 million students, remained outstanding and due to be repaid over the coming years. ", "Over the history of the Direct Loan program, Congress has periodically made changes to loan terms and conditions. Such changes have often been made as part of comprehensive amendments to the HEA, which authorizes the Direct Loan program; as part of amendments contained in budget reconciliation measures; or as part of amendments included in annual appropriations measures. Congress may well contemplate making future changes to loan terms and conditions. "], "subsections": []}, {"section_title": "Direct Loan Types", "paragraphs": ["The following types of loans are currently made available to borrowers through the Direct Loan program: ", "Direct Subsidized Loans . These loans are available only to undergraduate students who demonstrate financial need. Direct Subsidized Loans are characterized by having an interest subsidy that applies during an in-school period when a borrower is enrolled in an eligible program on at least a half-time basis, during a six-month grace period, during periods of authorized deferment, and during certain other periods. The Direct Subsidized Loans currently being made have a fixed interest rate that remains constant for the duration of the loan. Direct Unsubsidized Loans . These loans are available to undergraduate students, graduate students, and professional students, without regard to the student's financial need. Direct Unsubsidized Loans generally do not have an interest subsidy. The Direct Unsubsidized Loans currently being made have a fixed interest rate that remains constant for the duration of the loan. The interest rate on loans made to graduate and professional students is higher than the rate on loans made to undergraduate students. Direct PLUS Loans . These loans are available to graduate and professional students, and to the parents of undergraduate students who are dependent upon them for financial support. They are made without regard to financial need and generally do not have an interest subsidy. The Direct PLUS Loans currently being made have a fixed interest rate, which remains constant for the duration of the loan; and the interest rate is higher than the rate on both Direct Subsidized Loans and Direct Unsubsidized Loans. Direct Consolidation Loans . These loans allow individuals who have at least one loan borrowed through either the Direct Loan program or the FFEL program to refinance their eligible federal student loan debt by borrowing a new loan and using the proceeds to pay off their existing federal student loan obligations, including loans that are in default. Direct Consolidation Loans may be obtained without regard to financial need. The Direct Consolidation Loans currently being made have fixed interest rates, which are determined by calculating the weighted average of the interest rates on the loans that are consolidated, rounded up the result to the next higher one-eighth of a percentage point. Upon an individual obtaining a Direct Consolidation Loan, a new repayment period begins, which may be for a longer term than applied to the loans originally borrowed. A Direct Consolidation Loan may have a subsidized component 18 and an unsubsidized component . "], "subsections": []}, {"section_title": "Eligibility and Amounts That May Be Borrowed", "paragraphs": ["Eligibility for an individual to borrow a loan through the Direct Loan program and the amount that he or she may borrow are governed by provisions in the HEA and by policies and procedures implemented by ED. All loan types except Direct PLUS Loans are made available without consideration of a borrower's ability to repay the loan. Eligibility to borrow a Direct PLUS Loan depends on an individual's creditworthiness.", "The section that follows identifies and describes factors that determine an individual's eligibility to borrow one or more types of loans made available through the Direct Loan program. This is followed by a section that describes policies and procedures for determining amounts that may be borrowed. "], "subsections": [{"section_title": "Factors Affecting Eligibility to Borrow", "paragraphs": ["For an individual to be eligible to borrow a loan through the Direct Loan program, the student borrower, or the student on whose behalf a parent borrower would obtain a Direct PLUS Loan, must meet a number of eligibility requirements. A broad set of general eligibility criteria applies to students who may benefit from a Direct Subsidized Loan, a Direct Unsubsidized Loan, or a Direct PLUS Loan. An additional set of requirements applies specifically to applicants seeking to borrow a Direct PLUS Loan. Still other requirements apply to applicants for Direct Consolidation Loans. Eligibility to borrow various types of loans is also affected by a student's dependency status, program level (e.g., undergraduate, graduate, or professional), undergraduate class level, financial need, cost of attendance (COA) of the academic program, estimated financial assistance (EFA) he or she expects to receive from other sources, and certain other factors. Factors that affect eligibility to borrow through the Direct Loan program are discussed below."], "subsections": [{"section_title": "General Student-Based Eligibility Criteria", "paragraphs": ["In general, for a student to be eligible to borrow a Direct Subsidized Loan, a Direct Unsubsidized Loan, or a Direct PLUS Loan, or for a parent to borrow a Direct PLUS Loan on behalf of a student, the student must ", "be enrolled on at least a half-time basis as a regular student in either an eligible program at a participating eligible IHE, a preparatory program necessary for enrollment in an eligible program (for up to one year), or a teacher certification program; not be incarcerated; be a U.S. citizen or national, U.S. permanent resident, or other eligible noncitizen; maintain satisfactory academic progress as defined by the school; not be in default on a federal student loan, nor owing a refund on a grant or loan made under HEA, Title IV without having made satisfactory repayment arrangements; have on file at the IHE attended a statement of educational purpose stating that the loan will be used solely for educational expenses; and meet applicable Selective Service System registration requirements. "], "subsections": []}, {"section_title": "Student Dependency Status", "paragraphs": ["For purposes of awarding federal student aid, dependency status determines whether a student is deemed to be dependent upon his or her parents' financial support, or is independent of their support. Dependency status is determined by a student's responses to questions on the Free Application for Federal Student Aid (FAFSA), which he or she must complete and submit to ED when applying for federal student aid. ", "A student is deemed to be an independent student if he or she", "is, or will be, 24 years of age or older before January 1 of the award year; is married at the time of completing the FAFSA; will be a graduate or professional student at the start of the award year; is currently serving on active duty in the Armed Forces for other than training purposes; is a veteran of the Armed Forces; has legal dependents other than a spouse; was an orphan, in foster care, or a ward of the court, at any time since age 13; is an emancipated minor or is in legal guardianship as determined by a court of competent jurisdiction in the individual's state of legal residence, or was when reaching the age of majority; is an unaccompanied youth who is homeless, or self-supporting and at risk of being homeless; or is a student for whom a financial aid administrator makes a documented determination of independence by reason of other unusual circumstances or based upon a documented determination of independence that was previously made by another financial aid administrator in the same award year.", "A student who does not satisfy any of the criteria to qualify as an independent student is classified as a dependent student .", "Dependency status determines the types of loans available to be borrowed by students and their families, which in turn affects the amounts that may be borrowed. Of particular importance with regard to undergraduate students is the fact that Direct PLUS Loans\u00e2\u0080\u0094the loans with the most flexible borrowing limits\u00e2\u0080\u0094are available to the parents of dependent students but not to the parents of independent students. However, independent undergraduate students are extended higher personal borrowing limits than are dependent students. These differential borrowing limits are predicated on the expectation that the postsecondary education expenses of dependent students will be financed by some combination of students and their parents, whereas the postsecondary education expenses of independent students will typically be financed without parental assistance. ", "Dependency status also determines which individuals in a student's family will have their income and assets considered in need analysis calculations for the student (discussed below). Need analysis calculations for a dependent student are based on the income and assets of both the student and the student's parents, whereas need analysis calculations for an independent student are based on the income and assets of the student (and if applicable, the student's spouse)."], "subsections": []}, {"section_title": "Program Level", "paragraphs": ["The academic level of the program in which a student is enrolled impacts both the types of loans that he or she may borrow and certain terms and conditions of such loans. "], "subsections": [{"section_title": "Undergraduate Studies", "paragraphs": ["Undergraduate students may borrow Direct Subsidized Loans and Direct Unsubsidized Loans, and the parents of undergraduate students who are dependent upon them for financial support may borrow Direct PLUS Loans on the student's behalf. Direct PLUS Loans may not be borrowed by undergraduate students nor by parents on behalf of undergraduate independent students."], "subsections": []}, {"section_title": "Graduate and Professional Studies", "paragraphs": ["Graduate and professional students may borrow Direct Unsubsidized Loans and Direct PLUS Loans. To be eligible to borrow as a graduate or professional student, an individual must be enrolled in a program above the baccalaureate level or in one that leads to a first professional degree, must have completed at least the equivalent of three years of full-time study either prior to entering the program or as part of it, and must not be concurrently receiving Title IV aid as an undergraduate student. Graduate and professional students, all of whom are classified as independent students, are extended higher borrowing limits than undergraduate students. "], "subsections": []}]}, {"section_title": "Undergraduate Class Level", "paragraphs": ["For undergraduates, a student's class level determines the maximum amount the student may borrow on an annual basis. A student's class level is based on his or her progression according to the academic standards of the school the student attends. For undergraduate students, progression to a higher grade level for purposes of awarding a loan through the Direct Loan program does not necessarily correspond to the start of a new academic year (AY). For instance, a student who continues to make satisfactory academic progress but does not progress to the next grade level due to having completed an insufficient number of credits could borrow a loan through the Direct Loan program more than once as a first-year student. Once the student accrues enough credits to progress to the next higher grade level, he or she would become eligible for the higher borrowing limits available to second-year students, and so on. "], "subsections": []}, {"section_title": "Financial Need", "paragraphs": ["Direct Subsidized Loans are need-based and may only be borrowed by students who demonstrate having financial need according to federal need analysis procedures. Applicants seeking to borrow Direct Subsidized Loans must undergo a need test through which the expected family contribution (EFC) to be made by the student, and, if applicable, the student's family, toward paying the student's postsecondary education expenses is determined on the basis of the financial resources available to the student. According to federal student aid need analysis procedures, the sum of the student's EFC and the amount of estimated financial assistance (EFA) he or she expects to receive from sources other than programs authorized under Title IV of the HEA is subtracted from the estimated cost of attendance (COA) of the institution the student attends to determine the amount of need-based financial aid that he or she is eligible to receive. ", "Additional procedures are followed to determine the composition of the student's federal student aid package. For instance, undergraduate students must receive a determination of their eligibility to receive a Federal Pell Grant (a form of need-based aid available only to undergraduates) prior to being certified by their school as being eligible to borrow a Direct Subsidized Loan. This procedure is designed to first provide maximum grant aid to needy students before they incur student loan debt. The amount a student may borrow with a Direct Subsidized Loan may not exceed the amount of the student's unmet financial need after other forms of need-based federal student aid available under HEA, Title IV have been awarded. (For additional information, see the section on \" Limits on Borrowing Determined by Need Analysis and Packaging \" below.) Since July 1, 2012, only undergraduate students have been eligible to borrow Direct Subsidized Loans. "], "subsections": []}, {"section_title": "Direct Subsidized Loan Limitations for Post-July 1, 2013, First-Time Borrowers", "paragraphs": ["Since July 1, 2013, a student who is a first-time borrower may only borrow Direct Subsidized Loans for a period that may not exceed 150% of the published length of the academic program in which he or she is currently enrolled. This is referred to as the Direct Subsidized Loan maximum eligibility period . For undergraduates subject to this provision, a student enrolled in a two-year associate degree program may receive Direct Subsidized Loans for a maximum eligibility period of no more than three years, while a student enrolled in a four-year bachelor's degree program may receive Direct Subsidized Loans for a maximum eligibility period of no more than six years. ", "Subsidized usage periods are used to measure a borrower's progress toward the maximum eligibility period. They are the quotient of dividing the number of days in the borrower's loan period (e.g., semester, quarter) for a Direct Subsidized Loan by the number of days in the academic year for which the borrower receives the Direct Subsidized Loan, rounded to the nearest tenth of a year. Subsidized usage periods are prorated based on intensity of enrollment (i.e., multiplied by 0.75 or 0.50 for three-quarter or half-time enrollment, respectively). A borrower's remaining eligibility period is determined by subtracting a borrower's cumulative subsidized usage periods from the maximum eligibility period.", "This provision also limits a borrower's eligibility for the interest subsidy on Direct Subsidized Loans. If a Direct Subsidized Loan borrower subject to this provision remains enrolled in the same program for which the loan was obtained, or another undergraduate academic program of equal or shorter length, beyond the applicable maximum eligibility period, the borrower will lose the interest subsidy and will become responsible for paying the interest that accrues on his or her Direct Subsidized Loans after the date that the maximum eligibility period was exceeded."], "subsections": []}, {"section_title": "Eligibility Requirements for Direct PLUS Loans", "paragraphs": ["In addition to satisfying the general student-based eligibility criteria, an individual must meet certain other eligibility criteria specifically applicable to Direct PLUS loans. "], "subsections": [{"section_title": "Parent Borrower Eligibility Criteria", "paragraphs": ["Direct PLUS Loans may be borrowed by one or both parents of an undergraduate dependent student who meets the general student-based eligibility criteria described above. Eligible parents include biological parents, adoptive parents, and stepparents (if the stepparent's income and assets are taken into account in determining a student's EFC). A legal guardian may not borrow a Direct PLUS Loan on behalf of a student as a parent borrower. Parent borrowers must also meet the same citizenship and residency requirements as student borrowers; may not be in default on a federal student loan, nor owe a refund on a grant or loan made under Title IV without having made satisfactory repayment arrangements; and may not be incarcerated.", "For a parent to be eligible to borrow a Direct PLUS Loan on behalf of an undergraduate dependent student, the student must have completed a FAFSA. There is no requirement that a parent borrower complete a separate FAFSA. The eligibility of a noncustodial parent to borrow a Direct PLUS Loan on behalf of his or her child is not impacted by that parent's financial information not appearing on the student's FAFSA. "], "subsections": []}, {"section_title": "Creditworthiness Requirements to Borrow Direct PLUS Loans", "paragraphs": ["Eligibility for an individual to borrow a Direct PLUS Loan also depends on that individual's creditworthiness. Only individuals who do not have an adverse credit history, as determined according to procedures specified in regulations, may borrow Direct PLUS Loans. The creditworthiness criteria apply to both parent borrowers and to graduate and professional student borrowers. Creditworthiness is assessed on the basis of a credit report on the applicant obtained from at least one consumer reporting agency. An applicant is considered to have an adverse credit history if he or she either", "has one or more debts totaling more than $2,085 that are 90 days or more delinquent as of the date of the credit report, or that have been placed in collection or been charged off by the creditor as a loss within the two years prior to the credit report; or has been the subject of a default determination, bankruptcy discharge, foreclosure, repossession, tax lien, wage garnishment, or write-off of a debt under HEA, Title IV within the five years prior to the credit report.", "An applicant who is determined to have an adverse credit history may not obtain a Direct PLUS Loan unless he or she either obtains an endorser or demonstrates that extenuating circumstances exist with regard to the applicant's credit history. Extenuating circumstances may include an updated credit report or a letter from a creditor stating that the applicant has made satisfactory repayment arrangements on a derogatory debt. In addition, to obtain a Direct PLUS Loan an applicant who has an adverse credit history must also complete credit counseling. (See the section on \" PLUS Loan Credit Counseling For Borrowers with Adverse Credit .\") An applicant may not, however, be rejected for a Direct PLUS Loan on the basis of having no credit history.", "A dependent undergraduate student whose parents are unable to obtain a Direct PLUS Loan due to their having an adverse credit history may borrow a larger amount in the form of a Direct Unsubsidized Loan. In such a case, the student may borrow up to the borrowing limit applicable to a similarly situated independent undergraduate student. (These amounts are discussed below in the section on \" Amounts That May Be Borrowed .\")"], "subsections": []}]}, {"section_title": "Eligibility Requirements for Direct Consolidation Loans", "paragraphs": ["To be eligible to obtain a Direct Consolidation Loan, a borrower must have an outstanding principal balance on at least one loan that was made through either the Direct Loan program or the FFEL program. In addition, with respect to the loans being consolidated, the applicant must be (1) in the grace period prior to entering repayment; (2) in repayment status, but not in default; or (3) in default, but having made satisfactory repayment arrangements. ", "For the purposes of including a defaulted loan in a Direct Consolidation Loan, making \"satisfactory repayment arrangements\" means that the defaulted borrower has made at least three consecutive voluntary full monthly payments within 20 days of the due date, or has agreed to repay according to one of the Income-Driven Repayment (IDR) plans (described below). A borrower of a defaulted loan who is subject to a court judgment or wage garnishment is ineligible to obtain a Direct Consolidation Loan. ", "In general, a set of loans may be consolidated only once. However, in select circumstances a Direct Consolidation Loan may be used to repay a previously obtained Direct Consolidation Loan or a FFEL Consolidation Loan. Loans made to borrowers within 180 days prior to or after the date of obtaining a Direct Consolidation Loan may be added to that Direct Consolidation Loan. A borrower who has an existing Direct Consolidation Loan and also has other eligible loans that have not been consolidated, or who subsequently obtains other eligible loans, may consolidate those loans with his or her existing loans for purposes of obtaining a new Direct Consolidation Loan. A borrower who has an existing FFEL Consolidation Loan and whose loan is in default or has been referred to a guaranty agency for default aversion assistance may consolidate his or her loan into a Direct Consolidation Loan for purposes of repaying according to one of the IDR plans. Finally, a borrower who has an existing FFEL Consolidation Loan may consolidate that loan into a Direct Consolidation Loan for the purposes of applying for loan forgiveness through the Public Service Loan Forgiveness (PSLF) Program or to receive the No Accrual of Interest on Loans of Certain Active Duty Servicemembers benefit that is only available to borrowers of loans made through the Direct Loan program.", "A Direct Consolidation Loan must consist of at least one eligible loan made through either the Direct Loan or FFEL programs, and may also contain other types of federal student loans. The eligible types of federal student loans made through the Direct Loan and FFEL programs include Direct Subsidized Loans, Direct Unsubsidized Loans, Direct PLUS Loans, Direct Consolidation Loans, FFEL Subsidized Stafford Loans, FFEL Unsubsidized Stafford Loans, FFEL PLUS Loans, and FFEL Consolidation Loans. The eligible types of federal student loans made outside of the Direct Loan and FFEL programs are Federal Perkins Loans, Guaranteed Student Loans, Federal Insured Student Loans, National Direct Student Loans, National Defense Student Loans, Supplemental Loans for Students (SLS), Auxiliary Loans to Assist Students (ALAS), Health Education Assistance Loans (HEAL), Health Professions Student Loans (HPSL), Loans for Disadvantaged Students (LDS), and Nursing Loans."], "subsections": []}]}, {"section_title": "Amounts That May Be Borrowed", "paragraphs": ["The maximum amounts that a student or a parent may borrow in loans made through the Direct Loan program are determined by the interaction of annual and aggregate borrowing limits and federal need analysis and packaging procedures. Limitations on borrowing vary by loan type, borrower characteristics, program level, and class level. "], "subsections": [{"section_title": "Annual Loan Limits", "paragraphs": ["For undergraduate students, annual loan limits cap both the maximum amount that may be borrowed in Direct Subsidized Loans and the total combined amount that may be borrowed through Direct Subsidized Loans and Direct Unsubsidized Stafford Loans during a single academic year. Annual loan limits for Direct Subsidized Loans vary by undergraduate class level; however, at any particular class level these limits are the same for both undergraduate dependent students and undergraduate independent students. Annual loan limits for the total combined amount of Direct Subsidized Loans and Direct Unsubsidized Loans that may be borrowed by undergraduate students vary by both undergraduate class level and by student dependency status. ", "For graduate and professional students, annual loan limits cap the maximum that may be borrowed in Direct Unsubsidized Loans, irrespective of class level. However, higher exceptional annual loan limits are extended to students enrolled in certain health professions programs. There is no specified limit to the amount that may be borrowed in Direct PLUS Loans by either parent borrowers or by graduate and professional students. ", "The annual loan limits apply to the maximum principal amount that may be borrowed in an academic year. Any loan origination fees that the borrower is required to pay (see the \" Loan Origination Fees \" below) are included in the amount to be borrowed that is subject to these limits. ", "Borrowing limits for a student who is enrolled for less than one year are prorated based on the fraction of the academic year for which the student is enrolled. An academic year is defined in statute as a minimum of 30 weeks of instruction for courses of study measured in credit hours, or 26 weeks for courses of study measured in clock hours and during which a full-time student is expected to complete a minimum of 24 semester or trimester hours, 36 quarter hours, or 900 clock hours."], "subsections": []}, {"section_title": "Aggregate Loan Limits", "paragraphs": ["Aggregate loan limits cap the total cumulative amount of outstanding loans that a student may borrow through certain loan types. One limit applies to the total amount that may be borrowed in Direct Subsidized Loans and another limit applies to the total combined amount that may be borrowed in Direct Subsidized Loans and Direct Unsubsidized Loans. No aggregate limits are placed on Direct PLUS Loan borrowing. The aggregate loan limits apply only to the aggregate outstanding principal balance (OPB) of the loans a student has borrowed. They do not apply to accrued or capitalized interest. Annual and aggregate limits that have applied to loans made through the Direct Loan program since July 1, 2012, are presented in Table 1 .", "A listing of the annual and aggregate loan limits that have applied throughout the history of the Direct Loan program is presented in Appendix C in Table C-1 ."], "subsections": []}, {"section_title": "Limits on Borrowing Determined by Need Analysis and Packaging", "paragraphs": ["The process of awarding one or more forms of federal student aid to a student in accordance with federal student aid need analysis procedures and individual program rules is referred to as packaging . Financial aid administrators at IHEs are afforded a degree of discretion in determining how aid is packaged. The packaging of aid may affect the amounts that may be borrowed by a student or by a parent on behalf of a student through the various types of loans offered through the Direct Loan program. The process for packaging aid provided through the Direct Loan program is briefly described below. The following terms are instrumental in describing this process.", "Cost of A ttendance (COA). This is an institution-determined amount indicative of a student's educational expenses for a period of enrollment (e.g., an academic year) at the IHE. It is determined by the institution a student attends and may include tuition and fees, and allowances for room and board, books, supplies, transportation, loan fees, personal expenses, child or dependent care, etc. For the Direct Loan program, a student's COA represents an absolute limit on the maximum amount of aid he or she may receive during an academic year. Expected F amily C ontribution (EFC). This is the dollar amount a student and the student's family (e.g., parents or spouse) are expected to contribute toward his or her education expenses for a year. A student's EFC is calculated according to procedures specified in law using information supplied by the student on the FAFSA. The formula for calculating a student's EFC takes into account myriad factors including taxed and untaxed income, financial assets, certain benefits (e.g., Social Security, unemployment compensation), family size, and the number of family members to be enrolled in college during an academic year. Estimated F inancial A ssistance (EFA). This is the amount of aid anticipated to be made available to a student from federal, state, institutional, or other sources for a period of enrollment. It includes grant, scholarship, fellowship, loan, and need-based employment assistance. For purposes of need analysis and packaging, two variations of EFA are relevant: (1) EFA not received under HEA, Title IV programs, and (2) EFA from all sources. EFA does not include Iraq and Afghanistan Service Grants; federal veterans' education benefits; or, for purposes of awarding Direct Subsidized Loans, Segal AmeriCorps Education Awards. F inancial N eed. This is the amount determined by subtracting a student's EFC and EFA not received under HEA, Title IV from the student's COA. Unmet F inancial N eed. This is the amount determined by subtracting the sum of a student's EFC and EFA from the student's COA. ", "When packaging Title IV aid, the total amount of need-based aid awarded to a student may not exceed the amount of the student's financial need. A common packaging strategy is to award need-based aid that is not required to be repaid (e.g., Federal Pell Grant, Federal Supplemental Educational Opportunity Grant [FSEOG] and Federal Work-Study [FSW] awards) before awarding loan aid, which must be repaid. With respect to loans made through the Direct Loan program, only Direct Subsidized Loans are need-based; however, Direct Subsidized Loans, Direct Unsubsidized Loans, and Direct PLUS Loans may all be awarded to satisfy a student's unmet financial need. Additionally, once a student's unmet financial need has been satisfied, non-need-based aid, such as Direct Unsubsidized Loans and Direct PLUS Loans, may be awarded to replace some or all of a student's EFC. Overall, when packaging Title IV aid the total amount awarded (including both need-based and non-need-based aid) may not exceed the student's COA, less EFA. Processes for determining the amount of aid that may be awarded through the various types of loans offered through the Direct Loan program are described below."], "subsections": [{"section_title": "Direct Subsidized Loans", "paragraphs": ["Direct Subsidized Loans are need-based. They may be awarded to satisfy a student's unmet financial need. The maximum Direct Subsidized Loan amount a student is eligible to borrow is determined by summing the student's EFC and EFA, and then subtracting that amount from the student's COA for the school attended. As discussed above, Direct Subsidized Loan borrowing is also capped by applicable annual loan limits. The calculation shown in the text box below is used to determine the amount that a student may borrow through a Direct Subsidized Loan."], "subsections": []}, {"section_title": "Direct Unsubsidized Loans", "paragraphs": ["Direct Unsubsidized Loans are non-need-based. Students are eligible to borrow Direct Unsubsidized Loans irrespective of the amount of their EFC, in amounts up to the lesser of (1) the result of subtracting the student's EFA (including, for undergraduate students, any amount borrowed through a Direct Subsidized Loan) from COA, or (2) the result of subtracting the amount borrowed through a Direct Subsidized Loan from the annual Direct Subsidized Loan and Direct Unsubsidized Loan combined borrowing limit applicable to the student's program level and class level. The calculation shown in the text box below is used to determine the amount that a student may borrow through a Direct Unsubsidized Loan."], "subsections": []}, {"section_title": "Direct PLUS Loans", "paragraphs": ["Direct PLUS Loans are non-need-based. Graduate and professional students and the parents of dependent undergraduate students may borrow Direct PLUS Loans irrespective of the student's EFC. The amount that may be borrowed through a Direct PLUS Loan is limited to the result of subtracting the EFA (including any amount borrowed through a Direct Subsidized Loan or a Direct Unsubsidized Loan) of the student on whose behalf the loan will be made from the COA of the institution attended. The calculation shown in the text box below is used to determine the amount that a student or a parent may borrow through a Direct PLUS Loan.", "With regard to parent borrowing, the total Direct PLUS Loan eligibility amount may be borrowed by one parent, or it may be divided among more than one parent (including noncustodial parents) and borrowed in separate amounts by each. "], "subsections": []}]}]}]}, {"section_title": "Interest on Direct Loan Program Loans", "paragraphs": ["Interest is charged on loans made through the Direct Loan program. It constitutes a charge for the use of borrowed money over a specified period of time. In the Direct Loan program, interest is calculated based on rates that are set according to formulas specified in the HEA. Interest accrual is calculated using a simple daily interest formula. The federal government offers several types of interest subsidies that may limit the amount of interest that accrues on the outstanding principal balance of a loan. In certain circumstances, a borrower may be permitted to defer paying some or all of the interest that has accrued on his or her loan(s) until a later point in time. If a borrower does not pay the interest that has accrued, it may, in certain circumstances, be capitalized (i.e., added to the outstanding principal balance of the borrower's loan)."], "subsections": [{"section_title": "Interest Rates", "paragraphs": ["Interest rates on loans made through the Direct Loan program are set according to procedures specified by statute. Since the inception of the Direct Loan program in 1994, a variety of different procedures have been used for setting student loan interest rates. The loans currently being made through the Direct Loan program have fixed interest rates that remain constant from the time a loan is made until it is paid in full. Since July 1, 2013, Direct Subsidized Loans, Direct Unsubsidized Loans, and Direct PLUS Loans, have been made with fixed interest rates that are indexed to the interest rates on 10-year U.S. Treasury notes that are auctioned just prior to the start of the academic year during which the loans are made. Since February 1, 1999, Direct Consolidation Loans have been made with fixed interest rates that are based on the weighted average of the interest rates on the loans that are included in the Direct Consolidation Loan. Previously, other procedures had been used for setting student loan interest rates, and a number of loans that had been made according to these prior procedures remain outstanding."], "subsections": [{"section_title": "Procedures for Setting Student Loan Interest Rates", "paragraphs": ["The various procedures that have been used for setting interest rates on loans made through the Direct Loan program can be broadly categorized as follows: (1) variable interest rates that are indexed to the interest rates on short-term U.S. Treasury securities that are auctioned just prior to the start of the academic year during which the rate will be in effect, (2) fixed interest rates that are set according to the weighted average of the interest rates of the loans included in a Direct Consolidation Loan, (3) fixed interest rates that are specified in statute, and (4) fixed interest rates that are indexed to the interest rates on long-term U.S. Treasury securities that are auctioned just prior to the start of the academic year during which the loans are made. Because loans with interest rates that have been set according to each of these categories still remain outstanding, each is briefly discussed below. Appendix C presents a detailed history of the various procedures that have been used to set the interest rates that apply to Direct Subsidized Loans, Direct Unsubsidized Loans, and Direct PLUS Loans ( Table C-2 ); the procedures that have been used to set the interest rates that apply to Direct Consolidation Loans ( Table C-3 ); and the interest rates that have been in effect on these loans on a year-by-year basis ( Table C-4 )."], "subsections": [{"section_title": "Variable Interest Rates Indexed to Short-Term U.S. Treasury Securities", "paragraphs": ["At the inception of the Direct Loan program in 1994, all loan types were made with variable interest rates that would adjust once per year on July 1. On variable rate loans, the applicable interest rate is determined according to a formula specified in statute. For each 12-month period that extends from July 1 through June 30, the applicable interest rate is indexed to the bond equivalent rate of 91-day U.S. Treasury bills (or other short-term U.S. Treasury securities) auctioned at the final auction held prior to the preceding June 1. An interest rate add-on increases the rate above the rate of the index. Different interest rate add-ons may apply to loans depending on the type of loan (e.g., Direct Subsidized Loan, Direct PLUS Loan), the status of the loan (e.g., in school, grace, repayment), and when the loan was made. An interest rate cap of 8.25% applies to variable rate Direct Subsidized Loans and Direct Unsubsidized Loans and the portion of a variable rate Direct Consolidation Loan attributable to such loans. An interest rate cap of 9.0% applies to variable rate Direct PLUS Loans and the portion of a variable rate Direct Consolidation Loan attributable to a PLUS Loan. Direct Consolidation Loans were made with variable interest rates through January 31, 1999, while all other types of Direct Loan program loans continued to be made with variable interest rates through June 30, 2006."], "subsections": []}, {"section_title": "Fixed Interest Rates on Direct Consolidation Loans", "paragraphs": ["Since February 1, 1999, Direct Consolidation Loans have been made with fixed interest rates that remain in effect for the duration of the loan. The applicable interest rate on a Direct Consolidation Loan is determined by calculating the weighted average of the interest rates in effect on the loans being consolidated, and rounding the result up to the nearest higher one-eighth of 1%. If a borrower obtains a Direct Consolidation Loan to repay one or more loans having a variable interest rate, the weighted average of the interest rates in effect on the loans being consolidated will be used to set the fixed rate that will apply for the duration of the new Direct Consolidation Loan. For Direct Consolidation Loans made during the period from February 1, 1999, through June 30, 2013, the maximum interest rate was capped at 8.25%. There is no maximum interest rate for Direct Consolidation Loans made on or after July 1, 2013."], "subsections": []}, {"section_title": "Fixed Interest Rates Specified in the HEA", "paragraphs": ["During the period from July 1, 2006, through June 30, 2013, all loans made through the Direct Loan program, with the exception of Direct Consolidation Loans, were made with fixed interest rates that were determined by Congress and specified in statute. Different fixed interest rates applied depending on the type of loan (e.g., Direct Subsidized Loan, Direct PLUS Loan), the program level for which it was borrowed (e.g., undergraduate, graduate), and the academic year for which the first disbursement of the loan was made (e.g., AY2007-2008, AY2008-2009). For these loans, the interest rate that was in effect when the loan was made remains in effect for the duration of the loan. "], "subsections": []}, {"section_title": "Fixed Interest Rates Indexed to Long-Term U.S. Treasury Securities", "paragraphs": ["With the exception of Direct Consolidation Loans, all loans made through the Direct Loan program on or after July 1, 2013, have market-indexed fixed interest rates. For these loans, the applicable interest rate is set according to a formula specified in statute and remains in effect for the duration of the loan. For new loans made during each 12-month period that extends from July 1 through June 30, the applicable interest rate is indexed to the bond equivalent rate of 10-year U.S. Treasury notes auctioned at the final auction held prior to the preceding June 1. An interest rate add-on increases the applicable borrower rate above the rate of the index. Different interest rate add-ons apply depending on the type of loan (e.g., Direct Subsidized Loan, Direct PLUS Loan) and the program level for which it was borrowed (e.g., undergraduate, graduate). An interest rate cap of 8.25% applies to Direct Subsidized Loans and to Direct Unsubsidized Loans made to undergraduate students; a cap of 9.5% applies to Direct Unsubsidized Loans made to graduate and professional students; and a cap of 10.5% applies to all Direct PLUS Loans. The interest rates applicable to loans being made through the Direct Loan program in AY2019-2020 are presented below in Table 2 ."], "subsections": []}]}]}, {"section_title": "Interest Accrual", "paragraphs": ["Interest accrual is the process through which interest accumulates over time. In the Direct Loan program, the accrual of interest is calculated using a simple daily interest formula. With this formula, interest accrues only on the outstanding principal balance (OPB) of the loan. This is in contrast to a compound interest formula, in which interest accrues on both the OPB of the loan and any interest that has accrued during a prior period. In a limited set of circumstances, accrued interest that has not been paid by a borrower may be capitalized, or added to the OPB of the loan. This is discussed below in the \" Interest Capitalization \" section.", "According to the simple daily interest formula used in the Direct Loan program, the amount of interest that accrues over a certain period of time is the product of (1) the number of days of interest being calculated (e.g., days since the last payment was made), (2) the OPB of the loan, and (3) an interest rate factor. The interest rate factor is the quotient of the applicable interest rate of the loan divided by the number of days in a year (365.25). An example of the calculation of accrued interest over a 30-day period is provided in the text box below.", "For loans made through the Direct Loan program, interest begins to accrue on the OPB once the first installment of a loan is disbursed. Unless it is subsidized (see \" Subsidized Interest \"), interest accrues during the entirety of the period that a loan is in effect, irrespective of whether the borrower is expected to be making payments on it."], "subsections": []}, {"section_title": "Subsidized Interest", "paragraphs": ["In a limited set of circumstances, the federal government subsidizes some or all of the interest that would otherwise accrue on loans made through the Direct Loan program. During periods when an interest subsidy is provided, borrowers are relieved of the requirement to pay the interest that would accrue. The availability of an interest subsidy depends on factors such as the type of loan borrowed, Direct Subsidized Loan Limitations for Post-July 1, 2013, First-Time Borrowers, eligibility for an authorized deferment, the repayment plan selected, and the borrower's status as a servicemember in the Armed Forces. Interest subsidies that may be available on loans made through the Direct Loan program are described below."], "subsections": [{"section_title": "Interest Subsidy on Direct Subsidized Loans", "paragraphs": ["On Direct Subsidized Loans, and on the subsidized component of Direct Consolidation Loans, interest is subsidized by the government (i.e., interest does not accrue) during in-school periods while a borrower is enrolled in an eligible program on at least a half-time basis, during a six-month grace period, and during periods of authorized deferment. Due to amendments to the HEA made by the Consolidated Appropriations Act, 2012 ( P.L. 112-74 ), interest is not subsidized during the grace period on Direct Subsidized Loans disbursed between July 1, 2012, and June 30, 2014."], "subsections": [{"section_title": "Limit on Direct Subsidized Loan Interest Subsidy if 150% of Published Academic Program Length is Exceeded", "paragraphs": ["For a borrower to whom the Direct Subsidized Loan Limitations for Post-July 1, 2013, First-Time Borrowers applies, eligibility both to borrow a Direct Subsidized Loan and to receive the interest subsidy on Direct Subsidized Loans previously obtained is limited to a period that may not exceed 150% of the published length of the academic program in which the student is enrolled. If a Direct Subsidized Loan borrower subject to this provision remains enrolled beyond the applicable maximum eligibility period, the borrower will lose the interest subsidy and will become responsible for paying the interest that accrues on his or her Direct Subsidized Loans after the date that the maximum eligibility period is exceeded."], "subsections": []}]}, {"section_title": "Interest Rate Reduction for Automatic Debit Repayment", "paragraphs": ["The HEA authorizes the Secretary of Education (the Secretary) to offer borrowers of loans made through the Direct Loan program an interest rate reduction as an incentive for having loan payments automatically debited from a bank account. The Secretary currently offers a 0.25 percentage point interest rate reduction for automatic debit repayment. This option helps ensure that borrowers make their student loan payments on time. The interest rate reduction for automatic debit repayment does not apply during in-school, grace, deferment, or forbearance periods."], "subsections": []}, {"section_title": "Interest Subsidies on Eligible Loans Repaid According to Certain Income-Driven Repayment (IDR) Plans During Negative Amortization", "paragraphs": ["Interest subsidies are provided on certain types of loans repaid according to the Income-Based Repayment (IBR) plans, the Pay As You Earn (PAYE) repayment plan, and the Revised Pay As You Earn (REPAYE) repayment plan during periods when a borrower's loans are in negative amortization. (Details of these income-driven repayment plans are described below in \" Loan Repayment Plans \" section.) A common characteristic of these IDR plans is that an interest subsidy is provided on Direct Subsidized Loans and on the subsidized component of Direct Consolidation Loans for a maximum of the first three consecutive years that the borrower repays according to the applicable IBR plan. In addition, in the REPAYE plan an extended, partial interest subsidy is provided on all eligible loan types. These IDR plan interest subsidies are described in greater detail below."], "subsections": [{"section_title": "Three-Year Interest Subsidy on Direct Subsidized Loans Repaid According to Certain IDR Plans During Negative Amortization", "paragraphs": ["The structure of the IBR, PAYE, and REPAYE plans provide that in certain instances, a borrower's required monthly payment amount may be insufficient to pay all of the interest that has accrued on the borrower's Direct Subsidized Loans, or on the subsidized component of a Direct Consolidation Loan. In such instances, the Secretary does not charge the borrower for the amount of the accrued interest that is in excess of the applicable monthly payment amount (referred to as the remaining accrued interest ) for a period of up to the first three years from the date the borrower began repaying according to the IDR plan. For borrowers who switch repayment plans and repay their loans sequentially according to more than one of the IDR plans under which a subsidized loan interest subsidy is provided, a cumulative three-year limit on receipt of the interest subsidy applies to periods of repayment made under any of the aforementioned IDR plans. Any periods during which the borrower receives an economic hardship deferment and during which an interest subsidy is provided on Direct Subsidized Loans and on the subsidized component of Direct Consolidation Loans are excluded from the three-year eligibility limit."], "subsections": []}, {"section_title": "50% Interest Subsidy on All Eligible Loan Types Repaid According to the REPAYE Plan During Negative Amortization", "paragraphs": ["In addition to the three-year interest subsidy of the remaining accrued interest on Direct Subsidized Loans and the subsidized component of Direct Consolidation Loans described above, the REPAYE plan includes a 50% subsidy of the remaining accrued interest on all loans. Beyond the three-year period for Direct Subsidized Loans and the subsidized component of Direct Consolidation Loans (described above), and during all periods of repayment on other eligible loans, in the instance that a borrower's required monthly payment amount is insufficient to pay all of the interest that has accrued on his or her loans, the Secretary charges the borrower for only 50% of the remaining accrued interest. There is no time limit on receipt of the REPAYE plan 50% interest subsidy."], "subsections": []}]}, {"section_title": "No Accrual of Interest on Loans of Certain Active Duty\u00c2 Servicemembers", "paragraphs": ["For all types of loans made through the Direct Loan program that were first disbursed on or after October 1, 2008, no interest accrues during a period of up to 60 months while the borrower is serving on active duty in the Armed Forces or is performing qualifying National Guard duty in an area of hostilities during a war or national emergency. For Direct Consolidation Loans, the no accrual of interest subsidy applies only to the portion of the loan that was used to repay other loans that were first disbursed on or after October 1, 2008."], "subsections": []}, {"section_title": "SCRA 6% Interest Rate Cap on Loans of Borrowers Who Enter Military Service", "paragraphs": ["The Servicemembers Civil Relief Act (SCRA) provides that for individuals who borrow loans after August 14, 2008, but prior to their entrance into military service, the interest rate on their loans must be capped at a rate of 6% for the duration of their military service. The federal government, as the creditor on loans made through the Direct Loan program, must forgive interest above the 6% rate and may not accelerate repayment of the loans. Loan servicers are required to regularly check with the U.S. Department of Defense Manpower Data Center (DMDC) to determine whether borrowers qualify for the SCRA 6% interest rate cap and to extend the benefit to borrowers. Borrowers also have the option of completing an SCRA Interest Rate Limitation Request and submitting it to their loan servicer to document their eligibility for the 6% interest rate cap."], "subsections": [{"section_title": "SCRA 6% Interest Rate Cap and Direct Consolidation Loans", "paragraphs": ["If a borrower repays one or more loans on which the interest rate has been reduced to 6% under the SCRA with a Direct Consolidation Loan, the 6% interest rate is required to be used as the applicable interest rate on those loans for purposes of determining the weighted average interest rate of the new Direct Consolidation Loan. In such an occurrence, because Direct Consolidation Loans are currently being made with fixed interest rates, the 6% rate would essentially be locked in and would remain in effect beyond the end of the borrower's period of military service."], "subsections": []}]}, {"section_title": "Interest Subsidy on All Loan Types During Cancer Treatment Deferment", "paragraphs": ["A Cancer Treatment Deferment is to be provided during periods while a borrower is receiving treatment for cancer and for the six months thereafter. During periods while a borrower receives this deferment, no interest accrues on his or her qualifying loans. The Cancer Treatment Deferment is available on all types of Direct Loan program loans that are either made on or after September 28, 2018, or that had entered repayment status on or before September 28, 2019. This benefit does not appear to be available for loans that were made prior to September 28, 2019, but had not yet entered repayment prior to that date."], "subsections": []}]}, {"section_title": "Deferred Payment of Accrued Interest", "paragraphs": ["In certain instances, the obligation of a borrower to pay the interest that accrues on the outstanding principal balance of loans made through the Direct Loan program may be deferred. For instance, during in-school, grace, deferment, and forbearance periods, borrowers are not required to make payments of either principal o r the interest that accrues on the OPB. Also, for a borrower whose loans are in repayment status and who is repaying according to an IDR plan, if the amount of his or her required monthly payment is less than the amount of interest that has accrued on the loans, the payment of any accrued interest owed that is in excess of the required monthly payment amount may be deferred. Nonetheless, except to the extent that a borrower is receiving an interest subsidy, interest continues to accrue on his or her loans during periods while repayment of accrued interest is deferred. "], "subsections": [{"section_title": "Negative Amortization", "paragraphs": ["The term negative amortization describes the situation in which the amount of interest that accrues on a loan over a given period of time is greater than the amount of payments that are made on it. In a case of negative amortization, the accumulation of unpaid accrued interest leads to the outstanding balance of principal and interest on the loan increasing over time. The deferred payment of accrued interest during periods of repayment according to the IDR plans (see \" Income-Driven Repayment (IDR) Plans \") may lead to negative amortization."], "subsections": []}]}, {"section_title": "Interest Capitalization", "paragraphs": ["On certain occasions, any interest that has accrued but not been paid by a borrower may be added to the outstanding principal balance of the borrower's loans. This is called interest capitalization. When interest is capitalized, it becomes part of the OPB and interest begins to accrue on that new, larger loan amount. Over time, interest capitalization increases the total amount a borrower is required to repay. Interest is capitalized in the following situations:", "Entering R epayment Status . Any unpaid interest that has accrued on a borrower's loans during the in-school and grace periods is capitalized at the time a borrower's loan enters repayment status. Loan Consolidation. Any interest that has accrued on a borrower's loan and remains unpaid when the borrower includes the loan in a Direct Consolidation Loan is capitalized upon consolidation. Annually, in ICR and Alternative Repayment Plans. Any unpaid interest that has accrued on a borrower's loan while the borrower is repaying according to the income-contingent repayment (ICR) plan or one of the alternative repayment plans is capitalized annually. End of Partial Financial Hardship . Any unpaid interest that has accrued on a borrower's loans during a period when he or she was repaying according to either of the IBR plans or the PAYE repayment plan and had a partial financial hardship is capitalized when the borrower is determined to no longer have a partial financial hardship. Exit from IBR, PAYE, or REPAYE Repayment Plan. Any unpaid interest that has accrued on a borrower's loan during a period when he or she was repaying according to the IBR, PAYE, or REPAYE repayment plans is capitalized at the time the borrower changes to a different repayment plan. End of Deferment or Forbearance. Any unpaid interest that has accrued on a borrower's loan during a period of deferment or forbearance is capitalized at the expiration of the respective period. However, if during the period of deferment or forbearance a borrower was repaying according to either of the IBR plans or the PAYE repayment plan and was experiencing a partial financial hardship, any interest that accrued during the period of deferment or forbearance will not be capitalized so long as the borrower continues to have a partial financial hardship. Default. Any unpaid interest that has accrued on a borrower's loan prior to the borrower defaulting (e.g., during periods of negative amortization, during delinquency) is capitalized at the time of default."], "subsections": [{"section_title": "Limit on Interest Capitalization in the IDR and Alternative Repayment Plans", "paragraphs": ["For borrowers who are repaying their loans according to some of the IDR plans or an alternative repayment plan, the amount of interest that may be capitalized is capped. For borrowers repaying their loans according to the ICR plan, the PAYE repayment plan, or the alternative repayment plans, interest may be capitalized until the outstanding principal balance reaches a maximum of 110% of the amount of the OPB owed at the time the borrower entered repayment. Once the limit is reached, interest will continue to accrue and accumulate, but it will no longer be capitalized as long as the borrower remains in the same repayment plan. "], "subsections": []}]}]}, {"section_title": "Loan Origination Fees", "paragraphs": ["Loan origination fees are charged to borrowers of Direct Subsidized Loans, Direct Unsubsidized Loans, and Direct PLUS Loans. No fees are charged to borrowers of Direct Consolidation Loans. These fees help offset federal loan subsidy costs by passing along some of the costs to borrowers. Loan origination fees are calculated as a proportion of the loan principal borrowed and are deducted proportionately from the proceeds of each loan disbursement to the borrower. ", "The amount to be charged for loan origination fees is specified in statute. For Direct Subsidized Loans and Direct Unsubsidized Loans made on or after July 1, 2010, the HEA specifies a loan origination fee of 1%. (Higher loan origination fees were charged on loans made prior to July 1, 2010.) Since the inception of the Direct Loan program, the HEA has specified a loan origination fee of 4% for Direct PLUS Loans. ", "During periods when a budget sequestration order that applies to direct (or mandatory) spending programs is in effect, such as for the Direct Loan program, special rules apply to loan origination fees. In instances where the first disbursement of a loan is made during a period that is subject to a sequestration order, the loan origination fee is required to be increased by the uniform percentage sequestration amount that is applicable to nondefense, mandatory spending programs. Loan origination fees that apply to loans made during FY2019 and FY2020 (periods of budget sequestration) are presented below in Table 3 . A history of loan origination fees that previously applied to loans made through the Direct Loan program is presented in Appendix C in Table C-5 ."], "subsections": []}, {"section_title": "Loan Repayment", "paragraphs": ["Borrowers are required to make payments on loans made through the Direct Loan program during a repayment period that, depending on the loan type, commences either upon the loan being fully disbursed (Direct PLUS Loans and Direct Consolidation Loans made on or after July 1, 2006) or after a six-month grace period (Direct Subsidized Loans, Direct Unsubsidized Loans, and pre-July 1, 2006, Direct Consolidation Loans). Borrowers are afforded the opportunity to choose from among a selection of numerous loan repayment plan options to repay their loans. The repayment plan selected is a determining factor in the duration of the repayment period. Borrowers may prepay all or any part of a loan made through the Direct Loan program at any time without being subject to a prepayment penalty. "], "subsections": [{"section_title": "Grace Period", "paragraphs": ["A grace period is a six-month period beginning immediately after a borrower of a Direct Subsidized Loan, a Direct Unsubsidized Loan, or a pre-July 1, 2006, Direct Consolidation Loan first ceases to be enrolled in an eligible program on at least a half-time basis. The grace period excludes any period of up to three years during which a borrower who is a member of a reserve component of the Armed Forces is called or ordered to active duty for a period of more than 30 days and thus ceases to be enrolled on at least a half-time basis, as well as any additional period necessary for such a borrower to resume enrollment at the next available regular enrollment period. ", "The grace period is distinct from and not part of the repayment period. A loan on which a grace period is provided does not enter repayment status until the day after the grace period ends. If a borrower desires to enter repayment on loans that have a grace period immediately after completing school or ceasing to be enrolled on at least a half-time basis, he or she may consolidate those loans into a Direct Consolidation Loan during the grace period and enter repayment on the Direct Consolidation Loan upon its disbursement."], "subsections": []}, {"section_title": "Loan Repayment Period", "paragraphs": ["In the Direct Loan program, the repayment period is the period during which borrowers are obliged to repay their loans. The repayment period for Direct Subsidized Loans, Direct Unsubsidized Loans, and pre-July 1, 2006, Direct Consolidation Loan begins the day after the grace period ends. Thus, for these types of loans the loan repayment period begins six months and one day after the borrower first ceases to be enrolled in an eligible program on at least a half-time basis. The repayment period for Direct PLUS Loans and Direct Consolidation Loans made on or after July 1, 2006, begins the day the loan is fully disbursed. (This would be the day of the last disbursement if the loan has multiple disbursements.) For all loan types, the first payment is due no later than 60 days after the start of the repayment period. ", "In general, the repayment period excludes any periods of authorized deferment and forbearance; however, in certain instances of a borrower repaying a loan according to an IDR plan, periods during which the borrower is receiving an economic hardship deferment may be considered as part of the repayment period. In instances where a borrower has entered a period of deferment or forbearance, the next subsequent payment is due no later than 60 days after the end of the deferment or forbearance period."], "subsections": []}, {"section_title": "Loan Repayment Plans", "paragraphs": ["Borrowers may choose from among numerous loan repayment plan options to repay their loans. The available repayment plans fall into five broad categories: standard repayment plans, extended repayment plans, graduated repayment plans, income-driven repayment (IDR) plans, and alternative repayment plans. ", "The particular repayment plans available to any individual borrower may depend on the type(s) of loans borrowed, the date of becoming a new borrower , or the date of entering repayment status. In general, all of a borrower's loans made through the Direct Loan program must be repaid together according to the same repayment plan. However, if a borrower seeking to repay according to one of the IDR plans has some types of loans that may be repaid according to an IDR plan and some that may not, the borrower may repay the eligible loans according to an IDR plan and the ineligible loans according to a non-IDR plan. If a borrower fails to actively select a repayment plan, he or she is placed into the standard repayment plan that is applicable to the loans. ", "In general, a borrower may change from one plan to another eligible plan at any time and may not change to a repayment plan that has a maximum repayment period of fewer than the number of years that the borrower's loans have already been in repayment status. If a borrower changes plans to any of the standard repayment plans, graduated repayment plans, extended repayment plans, or alternative repayment plans, the beginning of the applicable repayment period will be measured from the date that the borrower's loan initially entered repayment status. If a borrower changes to one of the IDR plans, the beginning of the repayment period will be measured from the date the borrower satisfied certain plan-specific criteria, as described below, for the applicable IDR plans. ", "Under the standard repayment plans, graduated repayment plans, extended repayment plans, and most alternative repayment plans, payment amounts may not be less than the amount of accrued interest that is due. Negative amortization is permitted in the IDR plans and as part of one alternative repayment plan option. Also, for loans with variable interest rates (which had been made prior to July 1, 2006), monthly payment amounts or the length of the repayment period may be adjusted under the standard repayment plans, graduate repayment plans, and extended repayment plans to take into account the effects of annual changes in the variable interest rate. ", " Table 4 provides a summary of selected characteristics of the various loan repayment plans that are made generally available to borrowers. Following the table, the various repayment plans are described in detail. "], "subsections": [{"section_title": "Standard Repayment Plans", "paragraphs": ["Standard repayment plans allow borrowers to make predictable, level payments on their loans over a defined period of time. Two standard repayment plans are offered."], "subsections": [{"section_title": "Standard Repayment Plan with a Maximum 10-Year Term", "paragraphs": ["All borrowers of Direct Subsidized Loans, Direct Unsubsidized Loans, and Direct PLUS Loans, and borrowers of Direct Consolidation Loans that entered repayment prior to July 1, 2006, may select a standard repayment plan that has a maximum repayment period of 10 years. According to this plan, borrowers make fixed monthly payments of not less than $50 over a period of 10 years; however, loans with small balances may be repaid in a period that is shorter than 10 years. "], "subsections": []}, {"section_title": "Standard Repayment Plan for Direct Consolidation Loans with 10-Year to 30-Year Terms", "paragraphs": ["Borrowers of Direct Consolidation Loans that were made on or after July 1, 2006, may select a standard repayment plan that has a repayment period of between 10 and 30 years. Under this plan, borrowers make fixed monthly payments of not than less than $50. The duration of the repayment period is based on the combined balances of the Direct Consolidation Loan and all other federal and private education loans owed by the borrower. However, for purposes of determining the repayment period, the combined balance of the other education loans may not be greater than the balance of the Direct Consolidation Loan. Repayment periods for the Standard Repayment Plan for Direct Consolidation Loans are shown in Table 5 . (The repayment periods shown also apply to the Graduated Repayment Plan for Direct Consolidation Loans, which is discussed in a later section.)"], "subsections": []}]}, {"section_title": "Extended Repayment Plans", "paragraphs": ["All borrowers of Direct Subsidized Loans, Direct Unsubsidized Loans, Direct PLUS Loans, and Direct Consolidation Loans may elect to repay according to an extended repayment plan. The extended repayment plans afford borrowers with large total loan balances the opportunity to make lower monthly payments in return for extending the repayment of their loans for a longer duration. By extending the repayment term, interest accrues over a longer period of time; as a consequence, a larger amount of interest is paid under an extended repayment plan than would be paid according to a standard repayment plan with a 10-year term. There are three extended repayment plans. Eligibility to select an extended repayment plan is limited based on when a borrower's loans entered repayment and the total outstanding principal balance owed on loans made through the Direct Loan program."], "subsections": [{"section_title": "Extended Fixed Repayment Plan with a Maximum 25-Year Term", "paragraphs": ["This repayment plan is available to individuals who are new borrowers on or after October 7, 1998; whose loans enter repayment on or after July 1, 2006; and who have an outstanding balance of more than $30,000 on loans made through the Direct Loan program. The Extended Fixed Repayment Plan allows borrowers to make monthly payments in equal amounts over a period of 25 years from the date their loans entered repayment status. This results in monthly payment amounts being lower than they would be under a standard repayment plan with a 10-year term. "], "subsections": []}, {"section_title": "Extended Graduated Repayment Plan with a Maximum 25-Year Term", "paragraphs": ["Like the above plan, this repayment plan is available to individuals who are new borrowers on or after October 7, 1998; whose loans enter repayment on or after July 1, 2006; and who have an outstanding balance of more than $30,000 on loans made through the Direct Loan program. The Extended Graduated Repayment Plan allows borrowers to make monthly payments that are initially low and increase in amount every two years over a repayment period of 25 years from the date the borrower's loans entered repayment status. Under this plan, monthly payment amounts increase from an initial payment amount that must be at least $50 to an amount that may not be greater than three times the initial monthly payment amount."], "subsections": []}, {"section_title": "Extended Repayment Plan with 12-Year to 30-Year Terms (Pre-July 1, 2006)", "paragraphs": ["This extended repayment plan is available to borrowers of loans made through the Direct Loan program who entered repayment prior to July 1, 2006. Under this plan, borrowers make monthly payments in equal amounts over a period that may range from 12 to 30 years from the date their loans entered repayment status. The minimum monthly payment amount is $50, and the duration of the repayment term is dependent upon the outstanding principal balance of the borrower's loans made through the Direct Loan program. The extension of the repayment term results in monthly payment amounts being lower than they would be under a standard repayment plan with a 10-year term. Repayment periods for the extended repayment plan, by loan amount, are shown below in Table 6 . (The repayment periods shown in this table also apply to the graduated repayment plan for borrowers who entered repayment prior to July 1, 2006, which is discussed in the next section.)"], "subsections": []}]}, {"section_title": "Graduated Repayment Plans", "paragraphs": ["Loan repayment according to the graduated repayment plans is structured so that a borrower's monthly payment amount will periodically change over the course of the repayment period. In general, borrowers will be required to make smaller payments at first and larger payments later. Monthly payment amounts may be less than $50; however, in no instance may they be less than the amount of interest that accrues. There are three graduated repayment plans. A borrower's eligibility to select one of the graduated repayment plans depends on loan type and when the borrower's loans entered repayment. "], "subsections": [{"section_title": "Graduated Repayment Plan with a Maximum 10-Year Term", "paragraphs": ["All borrowers of Direct Subsidized Loans, Direct Unsubsidized Loans, and Direct PLUS Loans that entered repayment after July 1, 2006, may select a graduated repayment plan that has a maximum repayment period of 10 years. Under this plan, monthly payment amounts increase incrementally every two years from an initial amount that may be less than $50 to an amount that may not be greater than three times the initial monthly payment amount."], "subsections": []}, {"section_title": "Graduated Repayment Plan for Direct Consolidation Loanswith 10-Year to 30-Year Terms", "paragraphs": ["Borrowers of Direct Consolidation Loans that were made on or after July 1, 2006, may select a graduated repayment plan that has a repayment period of between 10 and 30 years. Under this plan, monthly payment amounts increase incrementally every two years from an initial amount that may be less than $50 to an amount that may not be greater than three times the initial monthly payment amount. The duration of the repayment period is based on the combined balances of the Direct Consolidation Loan and all other federal and private education loans owed by the borrower. However, for purposes of determining the repayment period, the combined balance of the other education loans may not be greater than the balance of the Consolidation Loan. Repayment periods for the Graduated Repayment Plan for Direct Consolidation Loans are shown above in Table 5 ."], "subsections": []}, {"section_title": "Graduated Repayment Plan with 12-Year to 30-Year Terms (Pre-July 1, 2006)", "paragraphs": ["Borrowers of loans made through the Direct Loan program who entered repayment prior to July 1, 2006, may repay their loans according to a graduated repayment plan with a term that can range from 12 to 30 years. Under this plan, monthly payment amounts increase incrementally every two years from an initial amount that may not be less than either $25 or 50% of the amount that would be required under the Standard Repayment Plan with a Maximum 10-Year Term to an amount that may be no more than 150% of the amount that would be required under the Standard Repayment Plan with a Maximum 10-Year Term. The duration of the repayment term is determined based on the total outstanding principal balance of the borrower's loans made through the Direct Loan program. Repayment periods for this graduated repayment plan vary by loan balance, and are shown above in Table 6 ."], "subsections": []}]}, {"section_title": "Income-Driven Repayment (IDR) Plans", "paragraphs": ["Since its establishment, the Direct Loan program has included a requirement that a repayment plan be made available to borrowers (other than to parent borrowers of Direct PLUS Loans) under which monthly payment amounts would vary according to the income of the borrower. For the first 15 years that the Direct Loan program was in operation, an Income-Contingent Repayment (ICR) plan fulfilled this requirement. Over time, additional repayment plans that served this purpose became available. Collectively, these plans have come to be referred to as income-driven repayment (IDR) plans. ", "Several IDR plans are currently available to borrowers: the Income-Contingent Repayment plan, the Income-Based Repayment (IBR) plan (one version of which is available to individuals who qualify as a new borrower on or after July 1, 2014, and another which is available to individuals who do not qualify as a new borrower as of that date), the Pay As You Earn (PAYE) repayment plan, and the Revised Pay As You Earn (REPAYE) repayment plan.", "The IDR plans afford borrowers the opportunity to make monthly payments in amounts that are capped at a specified share or proportion of their discretionary income over a repayment period that may not exceed a specified duration . Discretionary income is defined as the portion of a borrower's adjusted gross income (AGI) that is in excess of a specified multiple of the federal poverty guidelines applicable to the borrower's family size. In general, a borrower's family size includes the borrower, the borrower's spouse, and the borrower's children, and may include other individuals who both live with the borrower and receive more than half of their support from the borrower. The portion of a borrower's income that is below the federal poverty guideline multiple that is applicable to a particular IDR plan may be considered nondiscretionary income, or income that may be needed for purposes of meeting certain basic needs such as food and shelter. Multiples of the federal poverty guidelines that are applicable to the IDR plans are presented below in Table 7 for family sizes of one through eight persons. ", "The various IDR plans are primarily distinguished by (1) the multiple (e.g., 100%, 150%) of the federal poverty guidelines used to define discretionary income, (2) the percentage of a borrower's discretionary income (e.g., 10%, 15%, 20%) that is assessed as being available for purposes of making student loan payments, and (3) the maximum duration of the repayment term (e.g., 20 years, 25 years). The IDR plans also share other common characteristics that include the following: ", "Required certification of income and family size. The processes for determining IDR plan monthly payment amounts take into account a borrower's income and family size. Consequently, on an annual basis borrowers must provide documentation of their income and must certify their family size to become and remain eligible for IDR plan repayment. In addition, borrowers may update their income and family size at any time if either changes. Potential n egative amortization. IDR plan payment amounts are capped at no more than a certain proportion of a borrower's discretionary income. As a result, in some circumstances required payment amounts may be less than the amount of interest that accrues, which may lead to a borrower's loan(s) becoming negatively amortized. Potential availability of l oan forgiveness. All the IDR plans make available the prospect of eventual loan forgiveness if a borrower, after making payments according to one or more of the IDR plans, has been unable to fully repay his or her student loan debt by the end of the maximum repayment term. Payments made on defaulted loans repaid according to the IDR plans do not count toward a borrower's eligibility for loan forgiveness.", "Each of the IDR plans are described in detail below."], "subsections": [{"section_title": "Income-Contingent Repayment (ICR) Plan", "paragraphs": ["The Income-Contingent Repayment plan permits borrowers to make payments on eligible student loans in amounts that are determined according to procedures that take into account a borrower's adjusted gross income and family size. Any loan balance that remains unpaid after 25 years of repayment according to the ICR plan and other qualified plans will be forgiven. Specifications for the ICR plan are established by the Secretary and are codified in regulations. An income-contingent repayment plan has been available to borrowers since the establishment of the Direct Loan program in 1994. ", "Eligibility. The ICR plan is available to all borrowers of Direct Subsidized Loans, Direct Unsubsidized Loans, Direct PLUS Loans made to graduate and professional students, and Direct Consolidation Loans. Direct PLUS Loans made to parent borrowers are not eligible to be repaid according to the ICR plan; however, parent borrowers of Direct PLUS Loans may qualify to repay those loans according to the ICR plan by consolidating them into a Direct Consolidation Loan. There are no specific income restrictions that limit a borrower's eligibility to repay according to the ICR plan.", "Payment Amounts. Under the ICR plan, monthly payment amounts are calculated according to procedures that take into account factors including the outstanding loan balance at the time the borrower's loans enter repayment status, the interest rates applicable to those loans, the amount of any unpaid accrued interest, the borrower's adjusted gross income (AGI) and family size, and an income percentage factor. For a married borrower who files a joint federal tax return with his or her spouse, the AGI for both spouses is used; for a married borrower who files a separate federal tax return, only the AGI of the borrower is used. Consistent with these criteria, monthly payment amounts are the lesser of", "a monthly payment amount calculated according to a 12-year amortization schedule, multiplied by an income percentage factor that corresponds to the borrower's AGI and tax filing status; or one-twelfth of 20% of the amount by which the borrower's AGI exceeds 100% of the federal poverty guideline applicable to the borrower's family size (see Table 7 ). ", "Monthly payment amounts may range from $0 for a borrower with an income at or below 100% of the federal poverty guideline to amounts more than sufficient to repay the borrower's loans in 12 years or less. For a borrower whose calculated monthly payment results in an amount that is greater than $0 but less than $5, a minimum monthly payment amount of $5 is required. Monthly payment amounts are recalculated annually to take into account changes (e.g., borrower AGI, the amount of any unpaid accrued interest) that may have occurred over the past year.", "Joint ICR Plan Repayment for Married Borrowers . Borrowers of loans made through the Direct Loan program who are married to each other may elect to repay their loans jointly. Married borrowers must file a joint federal tax return to qualify for Joint ICR plan repayment. Under this option, the sum of the outstanding loan balances of each borrower, as of the time they elect joint repayment, is used to determine their combined monthly payment amount according to the procedures described above for the ICR plan. Payments made by married borrowers repaying jointly are applied to each borrower's loans in proportion to each borrower's share of the combined outstanding balance.", "Subsidized Interest . No special interest subsidies are made available to borrowers as part of the ICR plan.", "Application of Payments. Payments made by borrowers under the ICR plan are first applied to any outstanding charges or collection costs, then to outstanding interest due on the loan, and then to principal. Under the ICR plan formula, it is possible that a borrower's monthly payment amount may be for less than the amount of interest that has accrued since the last payment. Should this occur, interest will continue to accrue on the outstanding principal balance and unpaid interest that has accumulated will be capitalized into the principal balance of the loan once per year. However, unpaid accrued interest may only be capitalized until the outstanding principal balance reaches 110% of the amount of the original principal balance as of when the borrower's loan(s) entered repayment. Once the OPB has reached 110% of the original principal balance, unpaid accrued interest may continue to accumulate but will no longer be capitalized.", "Failure to Certify Income and Family Size . To qualify and remain eligible to repay according to the ICR plan, borrowers must annually provide certification of their income and family size to ED. Certification of income is normally satisfied by providing the borrower's AGI. However, if the borrower's AGI does not reflect his or her current income, alternative documentation of income may be provided. If the borrower fails to provide certification of income, his or her monthly payment amount will be recalculated to equal the amount the borrower would have paid according to the Standard Repayment Plan with a Maximum 10-Year Term, based on the amount owed at the time he or she first elected to repay according to the ICR plan. The repayment period based on the recalculated payment amount may exceed 10 years. If the borrower fails to certify his or her family size, a family size of one will be assumed and used for the year.", "Maximum Repayment Period and Loan Forgiveness . The ICR plan has a maximum repayment period of 25 years. If a borrower repays according to the ICR plan and obtains an additional loan that is eligible to be repaid according to the plan, a new, separate repayment period will begin for the new loan when it enters repayment. If after 25 years of having repaid a nondefaulted loan or loans according to the ICR plan or certain other repayment plans, or having qualified for and received an economic hardship deferment, a borrower still has an outstanding loan balance, the remaining unpaid balance will be discharged (i.e., forgiven). The maximum 25-year repayment period for the ICR plan, after which loan forgiveness may be granted, includes periods during which the borrower", "made monthly payments (including payments of $0) according to the ICR plan, made monthly payments (including payments of $0) according to an IBR plan while experiencing a partial financial hardship; made monthly payments, either as part of an IBR plan after no longer having a partial financial hardship or after leaving an IBR plan, in amounts calculated according to the Standard Repayment Plan with a Maximum 10-Year Term, based on the outstanding balance as of when the borrower first began repaying according to an IBR plan; made monthly payments (including payments of $0) according to the PAYE repayment plan or the REPAYE repayment plan; made monthly payments according to the REPAYE Alternative Repayment plan prior to changing to an IBR plan; made monthly payments on a Direct Subsidized Loan, a Direct Unsubsidized Loan, or a Direct PLUS Loan according to the Standard Repayment Plan with a Maximum 10-Year Term during the portion of the maximum 10-year repayment period that remains after the borrower ceases to repay according to an IBR plan; made payments on a Direct Consolidation Loan according to the Standard Repayment Plan for Direct Consolidation Loans with 10-Year to 30-Year Terms or the Graduate Repayment Plan for Direct Consolidation Loans with 10-Year to 30-Year Terms during the portion of the maximum 10-year to 30-year repayment period that remains after the borrower ceases to repay according to an IBR plan; made monthly payments according to the Standard Repayment Plan with a Maximum 10-Year Term; made monthly payments during periods after October 1, 2007, according to any repayment plan in amounts not less than the amount required under the Standard Repayment Plan with a Maximum 10-Year Term; only for borrowers who entered repayment prior to October 1, 2007, and only if the applicable repayment term is for not more than 12 years, made payments according to the Standard Repayment Plan for Direct Consolidation Loans with 10-Year to 30-Year Terms, the Extended Repayment Plan for Direct Consolidation Loans with 10-Year to 30-Year Terms, or the Graduated Repayment Plan for Direct Consolidation Loans with 10-Year to 30-Year Terms (see Table 5 ); or received an economic hardship deferment."], "subsections": []}, {"section_title": "Income-Based Repayment (IBR) Plans", "paragraphs": ["The Income-Based Repayment plans permit borrowers to repay eligible student loans according to procedures that limit monthly payment amounts based on criteria that take into account a borrower's adjusted gross income, family size, and monthly payment amount as calculated according to a standard 10-year repayment period, based on the greater of the amount owed at the time the borrower initially entered repayment or the amount owed at the time the borrower elects to repay according to the IBR plan. Any loan balance that remains after the maximum repayment period of the plan will be forgiven. There are two IBR plan versions that function similarly. They are differentiated by (1) the date used to delimit borrower eligibility (July 1, 2014), (2) the percentage of discretionary income used to determine borrower eligibility for the plan and monthly payment amounts (15% or 10%), and (3) the maximum repayment period (25 years or 20 years). The description that follows distinguishes between the two IBR plan versions as applicable.", "The initial version of the IBR plan was established under the College Cost Reduction and Access Act of 2008 (CCRAA; P.L. 110-84 ), and on July 1, 2009, it became available to borrowers of loans made through the Direct Loan program and the FFEL program, irrespective of when an individual had borrowed a loan through either program. (Hereinafter, this version is referred to as the Original IBR p lan .) Amendments to the IBR plan were enacted in 2010 under the SAFRA Act (Title II of the HCERA; P.L. 111-152 ), and a revised version of the IBR plan was made available to individuals who, on or after July 1, 2014, became new borrowers of loans made through the Direct Loan program. (Hereinafter, this version is referred to as the IBR Plan for Post-July 1, 2014, New Borrowers .) ", "Eligibility. With certain exceptions, federal student loans made through both the Direct Loan program and the FFEL program are considered eligible loans for purposes of repayment according to the Original IBR plan, while only loans made through the Direct Loan program are eligible for repayment according to the IBR plan for Post-July 1, 2014, New Borrowers. In both cases, exceptions pertain to loans made to parent borrowers. Direct PLUS Loans and FFEL PLUS Loans that were made to a parent borrower and Direct Consolidation Loans and FFEL Consolidation Loans that that were used to repay either a Direct PLUS Loan or a FFEL PLUS Loan that was made to a parent borrower are ineligible to be repaid according to either of the IBR plans. These loans to parent borrowers are also excluded from being considered when determining a borrower's eligibility for IBR plan repayment. This discussion addresses the IBR plans available through the Direct Loan program.", "Partial Financial Hardship. To be eligible to begin repaying according to an IBR plan, a borrower must be determined to have a partial financial hardship . The criteria for determining whether a borrower has a partial financial hardship take into account the borrower's federal income tax filing status (e.g., single, married filing jointly), AGI, family size, multiples of the federal poverty guidelines applicable to the borrower's family size, and monthly payment amounts as calculated according to a standard 10-year repayment period based on the greater of the amount owed at the time the borrower initially entered repayment or the amount owed at the time the borrower elects to repay according to the IBR plan. ", "If a borrower is single, or is married and files an individual federal tax return, he or she is determined to have a partial financial hardship if the total annual payments for all of the borrower's eligible loans, as calculated according to a standard 10-year repayment period, are greater than the applicable percentage (15% or 10%) of his or her discretionary income. If a borrower is married and files a joint federal tax return, he or she is determined to have a partial financial hardship if the total annual payments for all of the eligible loans of the borrower and, if applicable, the eligible loans of the borrower's spouse, as calculated according to a standard 10-year repayment period, are greater than the applicable percentage of the combined discretionary income of the borrower and the borrower's spouse. Discretionary income is defined as the portion of a borrower's adjusted gross income that is in excess of 150% of the poverty guideline that is applicable to his or her family size. If the total annual payments for all of the borrower's eligible loans, as calculated according to a standard 10-year repayment period, do not exceed 15% or 10% of his or her discretionary income, as applicable, the borrower is no longer considered as having a partial financial hardship.", "Payment Amounts. During periods while a borrower has a partial financial hardship and repays according to an IBR plan, monthly amounts due on his or her loans may range from $0, for a borrower with an AGI that is at or below 150% of the poverty guideline, to a maximum of one-twelfth of the specified percentage factor (15% or 10%) of a borrower's discretionary income. For example, based on the 2019 HHS Poverty Guidelines, 150% of the poverty guideline for a family of one in the 48 contiguous states and the District of Columbia is $18,735. (See Table 7 .) ", "In the Original IBR plan, a single borrower with an adjusted gross income of $40,000 would have a partial financial hardship if his or her annual student loan payments were greater than $3,189.75, or $265.81 per month. ($3,189.75 is 15% of the result of subtracting $18,735 from $40,000.) ", "In the IBR plan for post-July 1, 2014, New Borrowers, a single borrower with an adjusted gross income of $40,000 would have a partial financial hardship if his or her annual student loan payments were greater than $2,126.50, or $177.21 per month. ($2,126.50 is 10% of the result of subtracting $18,735 from $40,000.)", "For a borrower whose calculated monthly payment results in an amount that is greater than or equal to $5 but less than $10, the monthly payment is set at $10. For a borrower whose calculated monthly payment results in an amount that is less than $5, the monthly payment is set at $0. Monthly payment amounts are recalculated annually to take into account changes that may have occurred over the past year.", "If a borrower who is repaying according to an IBR plan no longer demonstrates having a partial financial hardship or no longer desires to make payments based on income, he or she may remain in the IBR plan; however, the borrower's maximum required monthly payment amount will no longer be calculated according the formula described above. Nonetheless, the required payment amount may not exceed the monthly amount due, as calculated according to a standard 10-year repayment period based on the borrower's loan balance at the time he or she elected to begin repaying according to the IBR plan. However, in such a case the duration of the repayment period may exceed 10 years.", "Joint IBR Plan Repayment for Married Borrowers. Since July 1, 2010, the IBR plan has provided for the joint repayment of loans by married borrowers who both have eligible loans and who file a joint federal tax return. Individual payment amounts are proportional to each spouse's share of the couple's combined loan balances and combined AGI. ", "Subsidized Interest . As part of the IBR plans, an interest subsidy is available on subsidized loans during periods of negative amortization for a maximum of the first three years from the start of a borrower's repayment according to an IBR plan. If a borrower's required monthly payment is not sufficient to cover all of the interest that accrues on a Direct Subsidized Loan (or the subsidized component of a Direct Consolidation Loan), the portion of the accrued interest not covered by the borrower's monthly payment is subsidized, or paid by the Secretary. Any periods during which the borrower has received an interest subsidy under either the PAYE plan or the REPAYE plan are applied toward this three-year period. However, any periods during which a borrower has received an interest subsidy while qualifying for an economic hardship deferment (during which an interest subsidy is provided on Direct Subsidized Loans and on the subsidized component of a Direct Consolidation Loan) are excluded from the three-year period.", "Application of Payments. Payments made by borrowers repaying under an IBR plan are first applied to interest due on the loan, then to any fees, and then to principal. If a borrower's required monthly payment is for an amount that is less than the amount of interest that accrues on a loan other than a Direct Subsidized Loan or the subsidized component of a Direct Consolidation Loan, or that accrues on a subsidized loan type after the three-year interest subsidy period described above, the unpaid accrued interest will accumulate, but not be capitalized, so long as the borrower remains in the IBR plan and continues to have a partial financial hardship. If a borrower's required monthly payment is sufficient to pay the accrued interest but is insufficient to repay the amount of principal due, then the payment of any principal due in excess of the monthly payment amount owed will be postponed until the borrower no longer has a partial financial hardship or leaves the IBR plan. Upon a borrower either no longer having a partial financial hardship or electing to no longer repay according to an IBR plan, any accumulated accrued interest that has not been paid will be capitalized.", "If a borrower chooses to leave an IBR plan, he or she must change to the Standard Repayment Plan that is applicable to the loans\u00e2\u0080\u0094either the Standard Repayment Plan with a Maximum 10-Year Term or the Standard Repayment Plan for Direct Consolidation Loans with 10-Year to 30-Year Terms. (The borrower may subsequently change to another repayment plan; however, he or she may not change to a repayment plan\u00e2\u0080\u0094other than a different IDR plan\u00e2\u0080\u0094that has maximum term that is less than the number of years the borrower's loans have already been in repayment. ) The monthly payment amount due on the borrower's loans must be calculated according to the applicable standard repayment plan based on the time remaining in the repayment period under such plan and the outstanding balance owed at the time the borrower ceased repaying according to the IBR plan. A borrower who changes from the IBR plan to a standard repayment plan must make at least one monthly payment according to the standard repayment plan before changing to another repayment plan for which the borrower may be eligible. Borrowers may request a forbearance that permits the making of a smaller payment amount than otherwise would be required for purposes of making that one required monthly payment according to the Standard Repayment Plan.", "Failure to Certify Income and Family Size . To qualify and remain eligible to repay according to the IBR plans, borrowers must annually provide certification of their income and family size to ED. Certification of income is normally satisfied by providing the borrower's AGI. However, if the borrower's AGI does not reflect his or her current income, alternative documentation of income may be provided. If the borrower fails to provide certification of income, any unpaid accrued interest will be capitalized and his or her monthly payment amount will be recalculated to equal the amount the borrower would have paid according to the Standard Repayment Plan with a Maximum 10-Year Term, based on the amount owed at the time he or she first elected to repay according to the IBR plan. The repayment period based on the recalculated payment amount may exceed 10 years. If the borrower fails to certify his or her family size, a family size of one will be assumed and used for the year.", "Maximum Repayment Period and Loan Forgiveness . The maximum repayment period for the Original IBR plan is 25 years, whereas the maximum repayment period for the IBR plan for post-July 1, 2014, New Borrowers is 20 years. If after having repaid according to an IBR plan a borrower obtains additional loans that are eligible to be repaid according to that IBR plan, a new repayment period will begin for the new loans when they enter repayment. A borrower who has participated in one of the IBR plans and has satisfied any combination of the following conditions for the duration of the applicable repayment period becomes eligible to have any balance that remains at the end of the maximum repayment period forgiven:", "made reduced monthly payments (including payments of $0) according to an IBR plan while experiencing a partial financial hardship; made monthly payments in amounts calculated according to the Standard Repayment Plan with a Maximum 10-Year Term after no longer having a partial financial hardship; made monthly payments on Direct Subsidized Loans, Direct Unsubsidized Loans, or Direct PLUS Loans according to the Standard Repayment Plan with a Maximum 10-Year Term, or on Direct Consolidation Loans according to the Standard Repayment Plan for Direct Consolidation Loans with 10-Year to 30-Year Terms, as applicable, after choosing to no longer repay according to an IBR plan; made monthly payments according to any repayment plan in amounts not less than the amount required under the Standard Repayment Plan with a Maximum 10-Year Term; made monthly payments according to the Standard Repayment Plan with a Maximum 10-Year Term based on the amount owed at the time the borrower initially selected an IBR plan; made monthly payments (including payments of $0) according to the ICR plan, the PAYE repayment plan, or the REPAYE repayment plan; made monthly payments according to the REPAYE Alternative Repayment Plan prior to changing to an IDR plan; or received an economic hardship deferment."], "subsections": []}, {"section_title": "Pay As You Earn (PAYE) Repayment Plan", "paragraphs": ["The Pay As You Earn (PAYE) repayment plan is substantially similar to the IBR plan for post-July 1, 2014, New Borrowers (see above). The plan permits borrowers to repay eligible loans according to procedures that limit monthly payment amounts based on criteria that take into account a borrower's AGI, family size, and monthly payment amount as calculated according to a standard 10-year repayment period based on the greater of the amount owed at the time the borrower initially entered repayment or the amount owed at the time he or she elects to repay according to the PAYE plan. For borrowers who repay according to this plan, any loan balance that remains after 20 years of repayment will be forgiven. The plan became available to eligible borrowers on December 21, 2012.", "The PAYE repayment plan was established by the Obama Administration through the rulemaking process under authority provided in the HEA for the Secretary to establish an income-contingent repayment plan. With the establishment of the PAYE repayment plan, a set of benefits substantially similar to those that had been extended to a specific class of borrowers through the enactment of legislation (the IBR Plan for post-July 1, 2014, New Borrowers) was extended to a broader class of borrowers through the rulemaking process. ", "Eligibility. The PAYE repayment plan is available to individuals who are new borrowers on or after October 1, 2007, and have received a disbursement on a Direct Subsidized Loan, a Direct Unsubsidized Loan, or a Direct PLUS Loan to graduate and professional students on or after October 1, 2011, or a Direct Consolidation Loan based on an application received by ED on or after October 1, 2011, and who are identified as having a partial financial hardship. Eligible borrowers may use the plan to repay loans made through the Direct Loan program, with the exceptions of Direct PLUS Loans made to parent borrowers and Direct Consolidation Loans used to repay either Direct PLUS Loans or FFEL PLUS Loans that had been made to parent borrowers. ", "Partial Financial Hardship. A borrower is considered as having a partial financial hardship if the total of his or her annual payments on all eligible loans, as calculated according to a standard 10-year repayment period based on the greater of the amount owed at the time the borrower initially entered repayment or the amount owed at the time he or she elects to repay according to the PAYE plan, is greater than 10% of the amount by which the borrower's AGI exceeds 150% of the poverty line applicable to his or her family size. ", "If a borrower is single, or is married and files an individual federal tax return, he or she is determined to have a partial financial hardship if the total annual payments for all of the borrower's eligible loans, as calculated according to a standard 10-year repayment period, are greater than 10% of his or her discretionary income. If a borrower is married and files a joint federal tax return, he or she is determined to have a partial financial hardship if the total annual payments for all of the borrower's eligible loans and, if applicable, the borrower's spouse's eligible loans, as calculated according to a standard 10-year repayment period, are greater than 10% of the combined discretionary income of the borrower and his or her spouse. If the total annual payments for all of the borrower's eligible loans, as calculated according to a standard 10-year repayment period, do not exceed 10% of his or her discretionary income, the borrower is no longer considered as having a partial financial hardship.", "Payment Amounts. While repaying according to the PAYE repayment plan, monthly amounts due on borrowers' loans may range from $0, for those with incomes at or below 150% of the poverty line, to a maximum of one-twelfth of 10% of any amount by which the borrower's AGI exceeds 150% of the poverty line. If a borrower who is repaying according to the plan no longer demonstrates having a partial financial hardship or no longer desires to make payments based on income, the monthly payment amount will be recalculated. In such a case, the maximum monthly payment amount may not exceed the amount due as calculated according to the Standard Repayment Plan with a Maximum 10-Year Term based on the borrower's loan balance at the time he or she elected to begin repaying according to the PAYE repayment plan. However, the duration of the repayment period may exceed 10 years.", "For a borrower whose calculated monthly payment results in an amount that is greater than or equal to $5 but less than $10, the monthly payment is set at $10. For a borrower whose calculated monthly payment results in an amount that is less than $5, the monthly payment is set at $0. Monthly payment amounts are recalculated annually to take into account changes that may have occurred over the past year.", "Joint PAYE Repayment for Married Borrowers. The PAYE repayment plan provides for the joint repayment of loans by married borrowers who both have eligible loans and who file a joint federal tax return. For married borrowers repaying jointly according to the plan, individual payment amounts are proportional to each spouse's share of the couple's combined loan balances and combined AGI.", "Subsidized Interest . An interest subsidy is available on subsidized loans during periods of negative amortization for a maximum of the first three years from the start of repayment according to the PAYE repayment plan. If a borrower's calculated monthly payment is insufficient to pay all of the interest that accrues on a Direct Subsidized Loan (or the subsidized component of a Direct Consolidation Loan), the portion of the accrued interest that is not covered by his or her monthly payment is subsidized for a period not to exceed three years. Periods during which a borrower is receiving an economic hardship deferment are excluded from the three-year eligibility period. In general, the terms of this interest subsidy for subsidized loans are the same as the terms that apply to the IBR plans (see above).", "Application of Payments. Payments made by borrowers repaying according to the PAYE repayment plan are credited first to interest due on the loan, then to any fees, and then to principal. If a borrower's required monthly payment is for an amount that is less than the amount of interest that accrues, the unpaid accrued interest will accumulate, but not be capitalized, so long as the borrower remains in the plan and continues to have a partial financial hardship. If a borrower's required monthly payment is sufficient to pay the accrued interest but is insufficient to repay the amount of principal due, then the payment of any principal due in excess of the monthly payment amount owed will be postponed until he or she no longer has a partial financial hardship or leaves the plan. ", "If a borrower no longer has a partial financial hardship but remains in the PAYE repayment plan, accumulated accrued interest is capitalized into the principal balance of the loan. In such a case, the amount of accrued interest that may be capitalized is limited to 10% of the outstanding principal balance at the time the borrower began repaying according to the plan. Any accrued interest beyond the 10% limit will remain due but will not be capitalized as long as the borrower remains in the plan. ", "If a borrower chooses to leave the PAYE repayment plan, he or she may change to any other repayment plan for which he or she is eligible, as long as the new repayment plan has a maximum term that is not less than the number of years the borrower's loans have already been in repayment, or is an available IDR plan. Upon a borrower electing to no longer repay according to the PAYE repayment plan, any accumulated accrued interest that has not been paid will be capitalized.", "Failure to Certify Income and Family Size . To qualify and remain eligible to repay according to the PAYE repayment plan, borrowers must annually provide certification of their income and family size. Certification of income is normally satisfied by providing the borrower's AGI. However, if the borrower's AGI does not reflect his or her current income, alternative documentation of income may be provided. If the borrower fails to provide certification of income, any unpaid accrued interest will be capitalized and his or her monthly payment amount will be recalculated to equal the amount the borrower would have paid according to the Standard Repayment Plan with a Maximum 10-Year Term, based on the amount owed at the time he or she first elected to repay according to the plan. The repayment period based on the recalculated payment amount may exceed 10 years. If the borrower fails to certify his or her family size, a family size of one will be assumed and used for the year.", "Maximum Repayment Period and Loan Forgiveness . In the PAYE repayment plan, the maximum repayment period is 20 years. A borrower who at any time participates in the plan becomes eligible to have any balance that remains on his or her eligible loans forgiven if during the 20-year repayment period the borrower meets the loan forgiveness eligibility criteria specified in regulations at 34 C.F.R. Section 685.209(a)(6). (These criteria are substantially similar to the provisions that are applicable to the IBR plan for post-July 1, 2014, New Borrowers, as described above.) If after having repaid according to the PAYE repayment plan a borrower obtains additional loans that are eligible to be repaid according to the plan, a new repayment period will begin for the new loans when they enter repayment."], "subsections": []}, {"section_title": "Revised Pay As You Earn (REPAYE) Repayment Plan", "paragraphs": ["The Revised Pay As You Earn (REPAYE) repayment plan permits borrowers to repay eligible loans made through the Direct Loan program according to procedures that limit monthly payment amounts based on criteria that take into account a borrower's AGI and family size. For borrowers whose student loan debt was obtained exclusively for undergraduate education, the maximum repayment period is 20 years; for borrowers whose student loan debt includes any amounts obtained for graduate education, the maximum repayment period is 25 years. Any loan balance that remains after the maximum repayment period will be forgiven. The REPAYE repayment plan became available to eligible borrowers on December 17, 2015.", "Like the PAYE repayment plan, the REPAYE repayment plan was established by the Obama Administration through the rulemaking process under authority provided in the HEA for the Secretary to establish an income-contingent repayment plan. The REPAY repayment plan has a number of characteristics that are similar to the other IDR plans. It also has an enhanced interest subsidy that is unique to the plan. ", "Eligibility. The REPAYE repayment plan is available to borrowers of loans made through the Direct Loan program except for Direct PLUS Loans made to parent borrowers and Direct Consolidation Loans used to repay either Direct PLUS Loans or FFEL PLUS Loans that had been made to parent borrowers. The plan is available to borrowers irrespective of when an individual became a new borrower. A borrower's eligibility to repay according to the REPAYE repayment plan is not limited based on factors that take into account the relationship between his or her student loan debt and discretionary income (i.e., borrowers need not demonstrate anything akin to having a partial financial hardship to repay according to the REPAYE repayment plan).", "P ayment Amounts. While repaying according to the REPAYE repayment plan, monthly amounts due on borrowers' loans may range from $0, for those with incomes at or below 150% of the poverty line, to a maximum of one-twelfth of 10% of any amount by which a borrower's AGI exceeds 150% of the poverty line. For a borrower whose calculated monthly payment results in an amount that is greater than or equal to $5 but less than $10, the monthly payment is set at $10. For a borrower whose calculated monthly payment results in an amount that is less than $5, the monthly payment is set at $0. Monthly payment amounts are recalculated annually to take into account changes that may have occurred over the past year.", "For purposes of calculating monthly payment amounts under the REPAYE repayment plan, if the borrower is unmarried his or her AGI is used. If the borrower is married, and unless certain exceptions apply, the AGI of both the borrower and his or her spouse is used irrespective of whether the borrower files a joint or separate federal tax return with his or her spouse. If a borrower is married and certifies that he or she is separated from his or her spouse, or is unable to access information on the income of his or her spouse, then the AGI of only the borrower is used.", "Joint REPAYE Repayment for Married Borrowers. The REPAYE repayment plan provides for the joint repayment of loans by married borrowers who both have eligible loans and who file a joint federal tax return. For married borrowers repaying jointly according to an IBR plan, individual payment amounts are proportional to each spouse's share of the couple's combined loan balances and combined AGI.", "Subsidized Interest . Under the REPAYE repayment plan, an interest subsidy is available on both subsidized loans and unsubsidized loans during periods of negative amortization. During the first three years from the start of repayment under the plan, for Direct Subsidized Loans and the subsidized component of Direct Consolidation Loans, if a borrower's calculated monthly payment is not sufficient to pay all of the interest that accrues, 100% of the portion of the accrued interest that is not covered by his or her monthly payment is subsidized. Periods during which a borrower receives an interest subsidy during an economic hardship deferment are excluded from the consecutive three-year period. After the three-year period for subsidized loans, and during all periods for Direct Unsubsidized Loans, Direct PLUS Loans, and the unsubsidized component of Direct Consolidation Loans, 50% of the portion of the accrued interest that is not covered by the borrower's monthly payment is subsidized. ", "Graduate students who are borrowers of Direct PLUS Loans may be able to qualify for the 50% interest subsidy while they are in school in lieu of receiving an in-school deferment while interest accrues at the otherwise applicable interest rate. For Direct PLUS Loans, the repayment period begins the day the loan is fully disbursed. However, borrowers who are enrolled on at least a half-time basis qualify for and typically receive an in-school deferment during which they are not required to make payments, but during which interest accrues. Student borrowers are placed in an in-school deferment upon requesting such a deferment or the Secretary receiving notification from the borrower's school or the National Student Loan Data System (NSLDS) that the student is enrolled on at least a half-time basis. Nonetheless, borrowers who receive an in-school deferment have the option to cancel it. Borrowers whose AGI while in school is low enough that it would result in the calculation of a monthly payment amount according to the REPAYE repayment plan that would be insufficient to pay all of the interest that accrues on their loan may consider choosing to cancel receipt of an in-school deferment in favor of receiving a 50% interest subsidy on the portion of the interest that would not be covered by his or her monthly payment amount.", "Application of Payments. Payments made by borrowers repaying according to the REPAYE repayment plan are credited first to interest due on the loan, then to any fees, and then to principal. If a borrower's required monthly payment is for an amount that is less than the amount of interest that accrues on a loan other than a Direct Subsidized Loan or the subsidized component of a Direct Consolidation Loan, or that accrues on a subsidized loan type after the three-year interest subsidy period described above, the unpaid accrued interest will accumulate, but not be capitalized, so long as the borrower remains in the plan. If a borrower's required monthly payment is sufficient to pay the accrued interest but is insufficient to repay the amount of principal due, then the payment of any principal due in excess of the monthly payment amount owed will be postponed. ", "If a borrower chooses to leave the REPAYE repayment plan, he or she may change to any other repayment plan for which he or she is eligible, as long as the new repayment plan has a maximum term that is not less than the number of years the borrower's loans have already been in repayment, or is an available IDR plan. Upon a borrower electing to no longer repay according to the REPAYE repayment plan, any accumulated accrued interest that has not been paid will be capitalized.", "Failure to Certify Income and Family Size . To qualify and remain eligible to repay according to the REPAYE repayment plan, borrowers must annually provide certification of their income and family size. Certification of income is normally satisfied by providing the borrower's AGI. However, if the borrower's AGI does not reflect his or her current income, alternative documentation of income may be provided. If the borrower fails to provide certification of income, any unpaid accrued interest will be capitalized and he or she will be placed in the REPAYE Alternative Repayment plan. If the borrower fails to certify his or her family size, a family size of one will be assumed and used for the year.", "REPAYE Alternative Repayment Plan. Borrowers repaying according to the REPAYE repayment plan who fail to provide timely certification of their income are subject to being placed into the REPAYE Alternative Repayment plan. Under the REPAYE Alternative Repayment plan, monthly payment amounts are calculated to equal the amount necessary to repay the borrower's loans in full within the earlier of 10 years from placement into the REPAYE Alternative Repayment plan or the ending of the maximum repayment period of 20 years or 25 years, as applicable. Payments made during periods of repayment according to the REPAYE Alternative Repayment plan count as qualifying payments for loan forgiveness under the various IDR plans; however, they do not count as qualifying payments for the Public Service Loan Forgiveness program.", "Maximum Repayment Period and Loan Forgiveness . In the REPAYE repayment plan, the maximum repayment period is 20 years for borrowers whose student loan debt was obtained exclusively for undergraduate education; and 25 years for borrowers whose student loan debt includes any amounts obtained for graduate education. A borrower who at any time participates in the REPAYE repayment plan becomes eligible to have any balance that remains on his or her eligible loans forgiven if for 20 years or 25 years, as applicable, the borrower meets the loan forgiveness eligibility criteria specified in regulations at 34 C.F.R. Section 685.209(c)(5). (These criteria are substantially similar to the provisions that are applicable to the IBR plans, as described above.) If after having repaid according to the REPAYE repayment plan a borrower obtains additional loans that are eligible to be repaid according to the plan, a new repayment period will begin for the new loans when they enter repayment.", "Adjusted Payment Amounts for Borrowers Who Return to the REPAYE Repayment Plan. If a borrower seeks to return to the REPAYE repayment plan after having left and repaid according to any other repayment plan (including the REPAYE Alternative Repayment plan), he or she must provide documentation of income for the entire period that he or she repaid according to another plan. If it is determined that the borrower paid a lesser amount under the other repayment plan (or plans) than he or she would have been required to repay according to the REPAYE repayment plan, upon returning to the REPAYE repayment plan the borrower's monthly payment amounts will be adjusted upward to ensure that the difference between the two amounts will be paid before the end of the maximum repayment period of 20 or 25 years, as applicable."], "subsections": []}]}, {"section_title": "Alternative Repayment Plans", "paragraphs": ["Alternative repayment plans are available in more limited situations, on a case-by-case basis, to borrowers who demonstrate that due to exceptional circumstances they are unable to repay according to other available repayment plans. Loan servicers are provided with discretion in determining what constitutes \"exceptional circumstances\" for purposes of permitting individual borrowers to repay according to any of the alternative repayment plans. If a borrower is permitted to repay according to an alternative repayment plan, he or she is notified in writing of the terms of the plan and may either accept those terms or select one of the other available repayment plans discussed above. Four variations of alternative repayment plans are available: ", "Alternative Fixed Payment Repayment, Alternative Fixed Term Repayment, Alternative Graduated Payment Repayment, and Alternative Negative Amortization Repayment.", "The alternative repayment plans are established in accordance with general guidelines specified in regulations. Details on specific provisions of these plans are communicated to eligible borrowers by loan servicers. A borrower may be provided up to a maximum of 30 years to repay according to an alternative repayment plan, not including periods of deferment and forbearance. There is a minimum monthly payment amount of $5 and payments cannot vary by more than three times the amount of the smallest payment. Under the Alternative Negative Amortization Repayment plan, a borrower may be permitted for one year to make monthly payments of less than the amount of the interest that accrues on the loan. In such a case, any unpaid interest will be capitalized; however, capitalization of unpaid interest may not result in the loan balance exceeding 110% of the original principal amount. If this occurs, any additional interest that accrues must be paid by the borrower. Payments made according to an alternative repayment plan do not count toward the periods of repayment that may qualify a borrower for loan forgiveness under the IDR plans or the PSLF program."], "subsections": []}]}, {"section_title": "Prepayment", "paragraphs": ["The portion of any payment that is in excess of the amount due is considered a prepayment . Borrowers of loans made through the Direct Loan program may prepay all or any part of their loans at any time without penalty. Borrowers may obtain information from their Direct Loan servicer on how to provide prepayment, with instructions regarding the application of overpayments. The procedures for applying prepayments to borrowers' accounts are specified in regulations issued by ED. ", "The procedures that apply for crediting a prepayment to a borrower's loan balance depend on the size of the prepayment amount relative to the borrower's scheduled monthly payment. A borrower with more than one loan who wants a prepayment to be applied to a certain loan or loans (e.g., the loan with the highest interest rate) must specify such when making the prepayment; otherwise, the prepayment will be applied in accordance with HEA regulations and guidelines, which, among other provisions, generally require all of a borrower's loans to be repaid together and under the same repayment plan. ", "In general, if the amount of a prepayment is less than the next scheduled monthly payment amount according to the borrower's repayment plan, the prepayment is applied in the following order: (1) to charges and collection costs, (2) to accrued interest, and then (3) to outstanding principal. However, if the amount of the prepayment is less than the next scheduled monthly payment amount and the borrower is repaying according to the IBR, PAYE, or REPAYE repayment plans and has a scheduled monthly payment of $0.00, the prepayment is applied in the following order: (1) to accrued interest, (2) to collection costs, (3) to late charges, and then (4) to outstanding principal. For example, consider a borrower whose next scheduled monthly payment was $200 in January and who was current on making payments. If at the time of making the January payment the borrower made a payment of $300, this would result in a prepayment of $100. The $100 prepayment would be applied toward reducing the outstanding principal balance on the borrower's loans, because he or she did not have any outstanding charges or accrued interest. The borrower's next scheduled monthly payment of $200 would remain due in February.", "If the amount of the prepayment is equal to or greater than the next scheduled monthly payment amount under the borrower's repayment plan, the prepayment is applied in the same order as described above, and, unless the borrower requests otherwise, the due date of the borrower's next payment is advanced and he or she is notified of the due date for the next payment. For example, consider again a borrower whose next monthly payment was $200 in January and who was current on making payments. If at the time of making the January payment the borrower made a payment of $600, this would result in a prepayment of $400. Because this borrower did not have any outstanding charges or accrued interest, the $400 prepayment would be applied toward the next two payments due (i.e., the February and March payments) and the due date of the borrower's next payment would be advanced to April. If the borrower instead wanted the $400 prepayment to be applied toward reducing the outstanding principal balance and the next scheduled payment to remain due in February, he or she would need to request this at the time of making the prepayment. "], "subsections": []}, {"section_title": "Application of Payments on Delinquent Loans", "paragraphs": ["The loans of borrowers who fall behind on making payments are considered to be delinquent. In general, a federal student loan is considered delinquent when the full payment amount is not satisfied by the payment due date. A borrower may restore a delinquent loan to current status by making payments that are applied to past due amounts. When borrowers make payments on delinquent loans, their payments are generally credited first to the oldest past due amounts owed. ", "An example of how a delinquent loan may be restored to current status is provided by ED in its contracts for its loan servicers. The example considers a borrower whose scheduled monthly payment amount of $225 is due on the 14 th of the month. If as of January 14 th , the borrower had paid only $200 for the January payment, the loan would become delinquent, as $25 would remain unpaid. However, if on February 14 th , the borrower paid $250, $25 would be applied to the past due amount for January and $225 would be applied to the amount due for February. This would restore the borrower's loan to current status."], "subsections": []}]}, {"section_title": "Deferment and Forbearance", "paragraphs": ["Periods of deferment and forbearance provide borrowers with temporary relief from the obligation to make monthly payments that would otherwise be due on their loans. In certain instances, interest subsidies may be provided during periods of deferment; however, interest subsidies are not available during periods of forbearance. In general, periods during which borrowers are in a deferment or forbearance are excluded from the repayment period. However, for borrowers who are repaying according to any of the IDR plans, periods of up to three years while in receipt of an economic hardship deferment are included as part of the repayment period. The various forms of deferment and forbearance that are available to borrowers of loans made through the Direct Loan program are described below."], "subsections": [{"section_title": "Deferments", "paragraphs": ["A deferment is a temporary period during which a borrower's obligation to make regular monthly payments of principal and interest is suspended, and during which an interest subsidy may be provided. Deferments are available during periods while a student is pursuing postsecondary education, participating in a graduate fellowship program or a training program, unemployed or experiencing an economic hardship, performing or has recently completed military service, or receiving treatment for cancer. Deferments are not available to borrowers whose loans are in default status.", "In most instances, a borrower must proactively apply for and request a deferment. To qualify for it, the borrower (or, in certain instances, the individual on whose behalf the loan was made for parent borrowers of Direct PLUS Loans) must satisfy certain eligibility criteria. Several deferment types have no maximum period of eligibility, while other types are initially granted for a limited period of time and may be subsequently renewed up to a maximum period of eligibility for the deferment type. Periods of eligibility for deferments are specific to the borrower, as opposed to the borrower's loans. Thus, for those deferment types that have a maximum period of eligibility, if a borrower exhausts his or her eligibility with one set of loans no eligibility would remain to qualify for the same type of deferment on any other loans for which he or she had not received the deferment.", "Unless an interest subsidy applies to a borrower's loans, interest will continue to accrue during a period of deferment. While in receipt of a deferment, borrowers have the option either to pay the interest as it accrues or pay it at a later time. In most instances, if the interest that accrues during a period of deferment is not paid as it accrues it will be capitalized at the end of the deferment period. However, if a borrower's deferment coincides with the individual having a partial financial hardship while repaying according to either of the IBR plans or the PAYE repayment plan, any interest that has accrued during the deferment will not be capitalized so long as the borrower continues to have a partial financial hardship.", "The following types of deferments are available to borrowers of loans made through the Direct Loan program."], "subsections": [{"section_title": "In-School Deferment", "paragraphs": ["A borrower is eligible to receive an in-school deferment for any period during which he or she is enrolled at an eligible institution on at least a half-time basis, as determined by the institution attended. Graduate student borrowers of Direct PLUS Loans first disbursed on or after July 1, 2008, (which enter repayment upon being fully dispersed) are also eligible to receive an in-school deferment while they are enrolled in school and during the six-month period after ceasing to be enrolled on at least a half-time basis. ", "During an in-school deferment, an interest subsidy is provided on Direct Subsidized Loans and on the subsidized component of Direct Consolidation Loans. There is no maximum period of eligibility for an in-school deferment.", "Eligible borrowers are typically placed in an in-school deferment automatically on the basis of being enrolled in an eligible institution on at least a half-time basis. However, eligible borrowers may also proactively request an in-school deferment. Borrowers who have been automatically placed in an in-school deferment have the option to cancel it. If these borrowers wish to do so, they have the option to pay any principal and interest that had already been deferred or they may let the interest that had accrued on the deferred payments be capitalized upon cancellation of the deferment. "], "subsections": [{"section_title": "In-School Deferment for Parent Borrowers of Direct PLUS Loans", "paragraphs": ["Parent borrowers of Direct PLUS Loans for which the first disbursement was made on or after July 1, 2008, are eligible for a deferment for any period during which the student on whose behalf the loan was made would qualify for an in-school deferment. This deferment is also available during the six-month grace period after the student on whose behalf the loan was made first ceases to be enrolled on at least a half-time basis."], "subsections": []}]}, {"section_title": "Graduate Fellowship Deferment", "paragraphs": ["A borrower may receive a deferment while pursuing a course of study in a graduate fellowship program. Eligibility requirements include that the borrower has earned a bachelor's degree, and that the program operates on a full-time basis, provides financial support for at least six months, and requires the applicant to submit a written statement of objectives and periodic progress reports. There is no maximum period of eligibility for this deferment. It is not available to borrowers who are serving in medical residency or internship programs, except for residency programs in dentistry. ", "During a graduate fellowship deferment, an interest subsidy is provided on Direct Subsidized Loans and on the subsidized component of Direct Consolidation Loans. "], "subsections": []}, {"section_title": "Rehabilitation Training Program Deferment", "paragraphs": ["A borrower may receive a deferment while pursuing a course of study in a rehabilitation training program for individuals with disabilities. For a borrower to be eligible, the rehabilitation training program must be licensed, approved, certified, or recognized by a state agency or the U.S. Department of Veterans Affairs. It also must provide services according to a written, individualized plan that specifies an expected completion date, and must require a substantial commitment by the borrower toward rehabilitation to the extent that it would normally prevent an individual from being employed full-time (i.e., 30 or more hours per week) for at least three months. There is no maximum period of eligibility for this deferment.", "During a rehabilitation training program deferment, an interest subsidy is provided on Direct Subsidized Loans and on the subsidized component of Direct Consolidation Loans. "], "subsections": []}, {"section_title": "Unemployment Deferment", "paragraphs": ["A borrower who is seeking to obtain full-time employment and is either not employed or is employed less than full-time may be granted an unemployment deferment. To be eligible, a borrower must be either receiving unemployment benefits or must document that he or she has registered with a public or private employment agency (if one is available within 50 miles) and is diligently seeking to obtain full-time employment. A borrower may receive the deferment for a maximum cumulative period of three years, which may include one or more episodes of unemployment. He or she is not required to have been employed previously to qualify for it. ", "A borrower may request that an unemployment deferment begin the date that he or she became unemployed or began working less than full-time, but that date may be no earlier than six months prior to requesting the deferment. The deferment may be granted for an initial period of six months and may be extended in six-month increments. ", "During an unemployment deferment, an interest subsidy is provided on Direct Subsidized Loans and on the subsidized component of Direct Consolidation Loans. "], "subsections": []}, {"section_title": "Economic Hardship Deferment", "paragraphs": ["A borrower may qualify for a deferment during periods while he or she is experiencing an economic hardship or is serving as a volunteer in the Peace Corps. To qualify for this deferment on a loan made through the Direct Loan program, a borrower must satisfy at least one of the following criteria: ", "the borrower has been granted an economic hardship deferment under the FFEL program or the Perkins Loan program for the same period of time for which the borrower requests an economic hardship deferment; the borrower is receiving payments under a federal or state public assistance program (e.g., Temporary Assistance for Needy Families (TANF), Supplemental Security Income (SSI), Supplemental Nutrition Assistance Program (SNAP), state general public assistance, other means-tested benefits); the borrower is working full-time and has a monthly income that does not exceed an amount equal to 150% of the poverty line applicable to the borrower's family size, (see Table 7 ) as calculated on a monthly basis; or the borrower is serving as a volunteer in the Peace Corps.", "The deferment may be granted for periods of up to one year at a time, and may be extended up to a cumulative maximum of three years. Periods of up to three years while a borrower qualifies for an economic hardship deferment may be counted as part of the repayment period for each of the IDR plans. During an economic hardship deferment, an interest subsidy is provided on Direct Subsidized Loans and on the subsidized component of Direct Consolidation Loans."], "subsections": []}, {"section_title": "Military Service Deferment", "paragraphs": ["A borrower may qualify for a military service deferment on the basis of serving on active duty or performing qualifying National Guard duty during a war or other military operation or national emergency. The deferment is provided for the entire period of qualifying military service, and for an additional 180 days following the completion of military service for borrowers whose period of qualifying service includes or began after October 1, 2007.", "During a military service deferment, an interest subsidy is provided on Direct Subsidized Loans and on the subsidized component of Direct Consolidation Loans. "], "subsections": []}, {"section_title": "Post-Active Duty Student Deferment", "paragraphs": ["A borrower may qualify for a post-active duty student deferment if he or she is a member of the National Guard or other reserve component of the Armed Forces (or is a member in retired status) and is called or ordered to active duty while he or she is enrolled on at least a half-time basis at an eligible institution, or within six months of being enrolled. To qualify, the borrower must have been required to perform at least 30 consecutive days of active duty service on or after October 1, 2007. The deferment is available for a period of up to the lesser of 13 months following the completion of active duty service or until the borrower re-enrolls in an eligible institution on at least a half-time basis. If a borrower qualifies for both the military service deferment and the post-active duty student deferment, the 180-day post-demobilization period and the 13-month post-active duty service period apply concurrently.", "During a post-active duty student deferment, an interest subsidy is provided on Direct Subsidized Loans and on the subsidized component of Direct Consolidation Loans. "], "subsections": []}, {"section_title": "Cancer Treatment Deferment", "paragraphs": ["A borrower may receive a cancer treatment deferment on eligible loans during periods while he or she is receiving treatment for cancer and for the six months thereafter. To qualify for the deferment, the borrower must submit an application on which a physician who is a Doctor of Medicine (M.D.) or a Doctor of Osteopathy (D.O.) certifies that the borrower is receiving treatment for cancer under the physician's care.", "During periods while a borrower receives a cancer treatment deferment, no interest accrues on the qualifying loans. Qualifying loans include Direct Subsidized Loans, Direct Unsubsidized Loans, Direct PLUS Loans, and Direct Consolidation Loans that were either made on or after September 28, 2018, or had entered repayment status on or before September 28, 2018. Loans made prior to September 28, 2018, but had not yet entered repayment as of that date due to the borrower being enrolled in school on at least a half-time basis or being in the grace period, are not eligible for this deferment. However, as Direct Consolidation Loans made on or after September 28, 2018, are eligible for the deferment, borrowers of ineligible loans may consider including them in a Direct Consolidation Loan for purposes of qualifying for the deferment."], "subsections": []}]}, {"section_title": "Forbearance", "paragraphs": ["Forbearance constitutes permission for a borrower to temporarily cease making monthly student loan payments, to make payments in reduced amounts, or to make payments over an extended period of time. During periods of forbearance, no interest subsidies are provided and borrowers ultimately remain responsible for paying all of the interest that accrues on their loans. Borrowers have the option of either paying the interest as it accrues during forbearance or letting it be capitalized into the principal balance at the end of the forbearance period. In most instances, borrowers must apply for forbearance; and for certain types of it, borrowers must provide supporting documentation to their loan servicer. Forbearance may be granted for an initial period of up to 12 months, and may be renewed upon the borrower's request. Certain types of forbearance are limited to a maximum of 36 months.", "Forbearance may be granted for a number of reasons. General or discretionary forbearance , may be granted at the discretion of the loan servicer to borrowers who are temporarily unable to make scheduled loan payments. Administrative forbearance is granted by the Secretary to borrowers during periods necessary to determine a borrower's eligibility for a number of borrower benefits and for certain other reasons. Certain types of forbearance, referred to as mandatory forbearance , are required to be granted to borrowers who satisfy applicable eligibility criteria. "], "subsections": [{"section_title": "General (Discretionary) Forbearance", "paragraphs": ["A borrower may request a general forbearance on the basis of experiencing a temporary hardship due to financial difficulties, a change in employment, medical expenses, or other reasons. A general forbearance may be granted at the discretion of a borrower's loan servicer for an initial period of up to 12 months and may be extended in increments of 12 months. A borrower's loan servicer may limit the maximum duration of forbearance; however, there is no statutory or regulatory limit."], "subsections": []}, {"section_title": "Administrative Forbearance", "paragraphs": ["Administrative forbearance may be granted during periods necessary to process requests by a borrower for certain benefits or to determine his or her eligibility. It may be granted for up to 60 days for the processing of requests for deferment, forbearance, change of repayment plan, and loan consolidation. (Interest that accrues during administrative forbearance for these purposes is not capitalized.) Administrative forbearance is also granted during periods necessary to determine a borrower's eligibility for a student loan discharge (e.g., death or total and permanent disability, closed school, false certification, unauthorized payment, unpaid refund, bankruptcy, borrower defense to repayment) or for loan forgiveness through the Teacher Loan Forgiveness program. ", "Administrative forbearance is provided to a borrower for up to three years if changes to variable interest rates preclude the borrower's ability to repay his or her loans in 10 years under the standard or graduated repayment plans. It may also be granted for short periods, such as when payments are overdue at the beginning of an authorized period of deferment or forbearance. ", "The Secretary may also authorize administrative forbearance in response to a national military mobilization or a local or national emergency. "], "subsections": []}, {"section_title": "Medical or Dental Internship or Residency Forbearance", "paragraphs": ["A borrower who is a medical or dental intern or resident and does not or no longer qualifies for a deferment may receive mandatory forbearance. To qualify, the borrower must have been accepted into a medical or dental internship or residency program that either leads to a degree or certificate that is awarded by an IHE, a hospital, or a health care facility that offers postgraduate training, or that must be completed before the borrower may begin professional practice or service. This type of forbearance may be granted for an initial period of up to 12 months and may be extended in increments of up to 12 months for the duration of the borrower's internship or residency."], "subsections": []}, {"section_title": "AmeriCorps National Service Forbearance", "paragraphs": ["A borrower who is serving in a national service position for which he or she receives a Segal AmeriCorps Education Award may receive mandatory forbearance. It may be granted for an initial period of up to 12 months and may be extended in increments of up to 12 months for the duration of the borrower's national service.", "Whereas borrowers are normally responsible for paying the interest that accrues during forbearance, the National Service Trust will pay all or a portion of the interest that accrues during forbearance for a borrower who has earned a Segal AmeriCorps Education Award."], "subsections": []}, {"section_title": "Teacher Loan Forgiveness Program Forbearance", "paragraphs": ["A borrower who is serving in a position that would qualify him or her for loan forgiveness under the Teacher Loan Forgiveness Program (described below) may receive mandatory forbearance. To be eligible, the borrower must be serving as a full-time teacher at an elementary school, secondary school, or educational service agency that serves low-income families. The borrower's outstanding loan balance is also considered in determining eligibility. This forbearance may be granted \"only if the Secretary believes, at the time of the borrower's annual request, that the expected forgiveness amount [i.e., up to $5,000 or up to $17,500, as applicable] will satisfy the anticipated remaining outstanding balance on the borrower's loan at the time of the expected forgiveness.\" It may be granted for an initial period of up to 12 months and may be extended in increments of up to 12 months for the duration of the five consecutive years of teaching service required to qualify for loan forgiveness."], "subsections": []}, {"section_title": "Student Loan Debt Burden Forbearance", "paragraphs": ["A borrower may receive mandatory forbearance on the basis of having a federal student loan debt burden that equals or exceeds 20% of his or her monthly total income. To qualify, a borrower must demonstrate that his or her required monthly payments on federal student loans made under Title IV of the HEA (e.g., loans made under the Direct Loan program, the FFEL program, or the Perkins Loan program) equal or exceed 20% of his or her total monthly taxable income. This type of forbearance may be granted for an initial period of 12 months and may be extended in increments of 12 months for a maximum duration of 36 months."], "subsections": []}, {"section_title": "National Guard Duty Forbearance", "paragraphs": ["Mandatory forbearance is available to a borrower who is a member of the National Guard and qualifies for a Post-Active Duty Student Deferment but does not qualify for a Military Service Deferment or other deferment, and is engaged in active state duty service for 30 or more consecutive days. This type of forbearance may be granted for an initial period of up to 12 months and may be extended in increments of up to 12 months for the duration of the borrower's qualifying National Guard service."], "subsections": []}, {"section_title": "Department of Defense Student Loan Repayment Program Forbearance", "paragraphs": ["Mandatory forbearance is available during periods while a borrower is performing service that qualifies him or her for partial repayment under a U.S. Department of Defense student loan repayment program. Interest that accrues during this forbearance is not capitalized at the end of the forbearance period. It may be granted for an initial period of up to 12 months and may be extended in increments of up to 12 months for the duration of the borrower's qualifying service."], "subsections": []}]}]}, {"section_title": "Loan Discharge and Loan Forgiveness", "paragraphs": ["An important benefit to borrowers of federal student loans made through the Direct Loan program is that their obligation to repay these loans may be discharged or forgiven in a variety of circumstances. Several types of loan discharge and loan forgiveness benefits are available. These may be grouped into three broad categories: loan discharge for borrower hardship, loan forgiveness following IDR plan repayment, and loan forgiveness for public service. "], "subsections": [{"section_title": "Loan Discharge for Borrower Hardship", "paragraphs": ["A borrower who experiences certain types of hardship may have his or her loan discharged. Types of hardship discharges available to borrowers of loans made through the Direct Loan program are described below. Administrative forbearance (see above) is granted during the period necessary to determine a borrower's eligibility for these types of discharge."], "subsections": [{"section_title": "Discharge Due to Death", "paragraphs": ["A borrower's obligation to repay a loan is discharged if he or she dies; and in the case of a Direct PLUS Loan made to a parent borrower, the obligation to repay is discharged if the student on whose behalf the loan was made dies. In the case of a Direct Consolidation Loan that repaid either a Direct PLUS Loan or a FFEL PLUS Loan that was borrowed by a parent on behalf of a student, if the student dies a proportionate share of the Direct Consolidation Loan attributable to the applicable Direct PLUS Loan or FFEL PLUS Loan is discharged. In the case of a Joint Direct Consolidation Loan borrowed by two married individuals, upon the death of one spouse a proportionate share of the loan attributable to the individual who died is discharged. "], "subsections": []}, {"section_title": "Total and Permanent Disability Discharge", "paragraphs": ["A borrower's liability to repay a loan is discharged upon the individual being determined to have a total and permanent disability (TPD). A borrower may be determined to be have a total and permanent disability based on any of the following three criteria:", "1. Physician's Certification. Certification by a physician (M.D. or D.O.) licensed to practice in the United States that the borrower is unable to engage in any substantial gainful activity due to a physical or mental impairment that can be expected to result in death, has lasted continuously for at least 60 months, or can be expected to last continuously for at least 60 months. 2. SSA Disability Determination . Documentation from the Social Security Administration (SSA) that the borrower is receiving Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI) benefits and that his or her next scheduled disability review will be within five to seven years from the date of the individual's most recent SSA disability determination. 3. VA Service Connected Disability or Unemployability . Documentation from the Department of Veterans Affairs (VA) that the borrower has a service connected disability (or disabilities) that is 100% disabling or that he or she is totally disabled based on an individual unemployability rating.", "On a periodic basis, ED obtains information from SSA and VA on borrowers who might qualify for a TPD discharge on the basis of the second and third criteria, respectively, and contacts them to inform them of their potential eligibility. A borrower, or his or her authorized representative, may apply for a TPD discharge by submitting an application along with any required documentation of the borrower's disability. A borrower who has been identified as a veteran with a VA service-connected disability or unemployability determination will be granted a TPD discharge without needing to submit an application unless he or she decides to opt out of the process within 60 days of being notified by ED.", "If a borrower's TPD discharge application is approved, he or she will be considered totally and permanently disabled as of the date of the physician's certification, the date that ED received an SSA notice of award for SSDI or SSI benefits or Benefits Planning Query (BPQY), or the effective date of a VA service-connected disability or unemployability determination, as applicable. Upon the determination of a borrower being totally and permanently disabled, his or her obligation to make any further payments on the loans will be discharged and any loan payments that were made after the aforementioned dates will be returned. ", "A TPD discharge approved on the basis of a physician's certification or an SSA disability determination is granted on a conditional basis for a three-year period that begins on the date of discharge. During the three-year period, a borrower who has been granted a TPD discharge according to either of these two criteria is subject to having his or her loans reinstated if the borrower (1) has annual earnings from employment in excess of 100% of the federal poverty guideline for a family of two (see Table 7 ), (2) obtains a new Direct Loan program loan or a TEACH Grant, (3) fails to return any Direct Loan or TEACH Grant disbursements made between the TPD discharge application date and the discharge date, or (4) receives a notice from SSA that he or she is no longer disabled or that his or her next scheduled disability review will be sooner than five to seven years from the date of the borrower's most recent SSA disability determination. After the three-year period, the TPD discharge becomes permanent. A TPD discharge granted on the basis of a VA service connected disability or unemployability is permanent upon being granted and is not subject to a post-discharge monitoring period."], "subsections": []}, {"section_title": "Closed School Discharge", "paragraphs": ["A borrower's liability to repay a loan is discharged if the borrower (or the student on whose behalf a Direct PLUS Loan is made to a parent borrower) does not complete the program of study for which the loan was made because the school he or she attended has closed. In the case of a Direct Consolidation Loan, the portion of the loan attributable to loans borrowed to finance the program of study at the closed school is discharged. ", "With regard to loans made before July 1, 2020, to qualify for a closed school discharge, a borrower generally must submit an application and certify that the school attended closed either while the student was enrolled or within 120 days of the student withdrawing, and the student must not have completed the program of study for which the loan was obtained through a teach-out agreement at another school or by transferring credits earned at the closed school to another school. However, if based on information available to the Secretary, a borrower qualifies for a closed school discharge with respect to a school that closed on or after November 1, 2013, and before July 1, 2020, and the borrower did not subsequently re-enroll in any Title IV-eligible IHE within three years of the school having closed, the Secretary is to discharge the borrower's loan without the borrower needing to submit an application for a discharge.", "For loans made on or after July 1, 2020, to qualify for a closed school discharge, a borrower must submit an application and must certify that the school attended closed either while the student was enrolled or within 180 days of the student withdrawing, that he or she has not completed the program of study for which the loan was obtained through a teach-out agreement at another school or by transferring credits earned at the closed school to another school, and that he or she has not accepted the opportunity to complete the program of study or a comparable program at another school through either a teach-out plan performed by the closing school or a teach-out agreement at another school. Upon being granted a closed school discharge, a borrower is reimbursed for any amounts he or she had already repaid on the loan. If the borrower had previously defaulted on the loan, upon being granted a closed school discharge his or her eligibility to receive additional Title IV federal student aid will be restored and consumer reporting agencies will be instructed to delete any adverse credit history related to the loan. Any discharged loans do not count against the borrower's annual and aggregate loan limits, nor against his or her Subsidized Usage Period applicable under the Direct Subsidized Loan Limitations for Post-July 1, 2013, First-Time Borrowers."], "subsections": []}, {"section_title": "False Certification and Unauthorized Payment Discharges", "paragraphs": ["A borrower's liability to repay a loan is discharged if the eligibility of the borrower (or of the student in the case of a Direct PLUS Loan made to a parent borrower) to receive the proceeds of the loan was falsely certified by the IHE attended, or if the loan proceeds were disbursed without his or her authorization (e.g., unauthorized signature, identity theft). In the case of a Direct Consolidation Loan, a borrower's liability to repay the portion of the loan that is attributable to loans that were falsely certified by the IHE attended, or that were disbursed without his or her authorization, is discharged. Upon being granted a false certification or unauthorized payment discharge, the borrower is reimbursed for any amounts he or she had already repaid on the loan. If the borrower had previously defaulted on the loan, upon being granted a false certification or unauthorized payment discharge his or her eligibility to receive additional Title IV federal student aid will be restored and consumer reporting agencies will be instructed to delete any adverse credit history related to the loan."], "subsections": []}, {"section_title": "Unpaid Refund Discharge", "paragraphs": ["If a borrower is owed a refund by an IHE that has not been paid, his or her liability to repay an amount equal to the unpaid refund and any associated accrued interest and other charges is discharged. An unpaid refund discharge is only available in instances where a borrower is owed a refund by a school that has closed, or by an open IHE that the borrower (or the student on whose behalf a Direct PLUS Loan is made to a parent borrower) is no longer attending."], "subsections": []}, {"section_title": "Borrower Defense to Repayment Discharge", "paragraphs": ["A borrower's liability to repay a loan is discharged in whole or in part, and previous loan payments are refunded, if the borrower (or the student on whose behalf a Direct PLUS Loan was made to a parent borrower) successfully asserts a defense to repayment of the loan. A borrower may assert certain acts or omissions by the IHE for which the loan was borrowed that relates to the making of the loan as a defense to repayment. ", "A borrower may assert a defense to repayment according to procedures specified in regulations that are specific to the period during which his or her loans were made. There are three distinct periods applicable to borrower defense claims. In the case of a Direct Consolidation Loan, the procedures to be used for adjudicating a defense to repayment claim depend on the types of loans that were repaid by it (e.g., loans made through the Direct Loan program, other types of eligible loans) and when it was made.", "For loans disbursed prior to July 1, 2017, a borrower defense to repayment \"refers to any act or omission of the school attended ... that would give rise to a cause of action against the school under applicable state law.\" For loans disbursed on or after July 1, 2017, and before July 1, 2020, a borrower defense to repayment refers to a nondefault, contested judgment against the school; a breach of contract by the school; or a substantial misrepresentation by the school to the borrower that the borrower had relied on to his or her detriment when he or she decided to attend or continue attending the school, or decided to borrow a loan. ", "For loans disbursed on or after July 1, 2020, a borrower defense to repayment refers to a misrepresentation of material fact made by the borrower's school about enrollment or the provision of educational services that the borrower relied upon in deciding to borrow a loan and from which he or she suffered financial harm. For loans disbursed on or after July 1, 2020, a borrower must assert a defense to repayment within three years of ceasing to be enrolled at the IHE.", "In the instance that a borrower had previously defaulted on a loan, upon being granted a defense to repayment discharge the borrower's eligibility to receive additional Title IV federal student aid will be restored and consumer reporting agencies will be instructed to delete any adverse credit history related to the loan."], "subsections": []}, {"section_title": "Bankruptcy Discharge", "paragraphs": ["Section 523(a)(8) of the Bankruptcy Code provides that student loans (e.g., loans made through the Direct Loan program) are presumed to be not dischargeable in bankruptcy proceedings, unless the debtor is able to demonstrate to the court that \"excepting such debt from discharge ... would impose an undue hardship on the debtor and the debtor's dependents.\" In general, to discharge student loan debt in bankruptcy, the debtor must file a separate lawsuit against the holder of the debt and must prove by a preponderance of the evidence that repayment of the debt would impose an undue hardship. If a borrower's liability to repay a loan made through the Direct Loan program is discharged in bankruptcy, the Secretary will cease to require the borrower to make payments on the loan. "], "subsections": []}]}, {"section_title": "Loan Forgiveness Following IDR Plan Repayment", "paragraphs": ["A borrower who has repaid a loan made through the Direct Loan program according to one or more of the Income-Driven Repayment (IDR) plans for the duration of the applicable maximum repayment period (including periods of repayment according to certain other eligible plans and periods while in receipt of an economic hardship deferment) is relieved of the obligation to repay any balance of principal and interest that remains outstanding. The applicable maximum repayment period varies by IDR repayment plan as follows:", "Income-Contingent Repayment Plan: 25 years; Original IBR Plan: 25 years; IBR Plan for Post-July 1, 2014, New Borrowers: 20 years; PAYE Repayment Plan: 20 years; REPAYE Repayment Plan for borrowers with debt only for undergraduate education: 20 years; and REPAYE Repayment Plan for borrowers with any debt for graduate education: 25 years.", "For detailed information on the requirements for a borrower to qualify for loan forgiveness following IDR plan repayment, see the descriptions of the maximum repayment period and loan forgiveness in the prior sections on each of the various IDR plans."], "subsections": []}, {"section_title": "Loan Forgiveness for Public Service", "paragraphs": ["The Direct Loan program makes loan forgiveness benefits available to borrowers who have engaged in certain types of public service for a specified period of time and meet program-specific requirements, as described below. "], "subsections": [{"section_title": "Teacher Loan Forgiveness Program", "paragraphs": ["A borrower who has completed five consecutive complete academic years of teaching service in a low-income school or educational service agency (ESA) may be relieved of the obligation to repay up to $5,000 for service as a highly qualified teacher, or up to $17,500 for service as a highly qualified special education teacher or secondary school teacher of mathematics or science. Teacher Loan Forgiveness benefits are only available to borrowers who had no outstanding balance on any federal student loan made through the Direct Loan program (or the FFEL program) as of the date the borrower first obtained such a loan after October 1, 1998. ", "Student loan debt attributable to Direct Subsidized Loans, Direct Unsubsidized Loans, and Direct Consolidation Loans (to the extent that the Direct Consolidation Loan repaid a Direct Subsidized Loan, a Direct Unsubsidized Loan, a FFEL Subsidized Stafford Loan, or a FFEL Unsubsidized Stafford Loan) may be forgiven. Loans must have been obtained prior to the end of a borrower's fifth year of qualifying service and may not be in default, unless satisfactory repayment arrangements have been made. A borrower may receive Teacher Loan Forgiveness Program Forbearance during the five years of teaching service required to qualify for benefits. ", "A borrower becomes eligible for loan forgiveness benefits upon completion of the fifth year of qualifying service. If a borrower's student loan debt exceeds the amount to be forgiven, unless otherwise requested by the borrower, loan forgiveness benefits are applied first to Direct Unsubsidized Loans, then to Direct Subsidized Loans, then to the unsubsidized component of Direct Consolidation Loans, and finally to the subsidized component of Direct Consolidation Loans. Loan forgiveness benefits may not be provided for the same service used to qualify for benefits under the Public Service Loan Forgiveness (PSLF) program, the Loan Forgiveness for Service in Areas of National Need Program, or a Segal AmeriCorps Education Award."], "subsections": []}, {"section_title": "Public Service Loan Forgiveness (PSLF) Program", "paragraphs": ["A borrower may be relieved of the obligation to repay the balance of principal and interest that remains outstanding on eligible loans upon having made 120 qualifying monthly payments on or after October 1, 2007, concurrent with the borrower being employed full-time by one or more public service organizations or serving full-time in an AmeriCorps or Peace Corps position. To qualify, a borrower must make 120 separate, full, on-time scheduled monthly payments on loans that are not in default. In general, qualifying payments are those made within 15 days of the due date according to certain repayment plans; however, borrowers using Segal AmeriCorps Education Award benefits, Peace Corps transition payments, or certain Department of Defense student loan repayment benefits may make lump sum payments. Qualifying payments include those made according to one or more of the following repayment plans: ", "Income-Contingent Repayment (ICR) plan; Income-Based Repayment (IBR) plans; Pay As You Earn (PAYE) repayment plan; Revised Pay As You Earn (REPAYE) repayment plan; Standard Repayment Plan with a Maximum 10-Year Term; and any other of the loan repayment plans (except for the alternative repayment plans [discussed above]) if the monthly payment amount is not less than what would be paid under the Standard Repayment Plan with a Maximum 10-Year Term.", "A borrower must be employed by or serving full time with a public service organization at the time he or she makes each of the required 120 payments, applies for loan forgiveness benefits, and has forgiveness granted. Public service organizations are federal, state, local, or tribal government agencies, organizations, or entities; tribal colleges and universities; public child or family service agencies; nonprofit entities organized under Section 501(c)(3) of the Internal Revenue Code (IRC) that are tax-exempt under IRS Section 501(a); and certain other private nonprofit entities that are providers of public services. Public service organizations exclude labor unions, political organizations, and religious organizations (except to the extent that activities do not relate to religious instruction, worship services, or proselytizing). Eligible private nonprofit entities include providers of any of the following public services: emergency management, military service, public safety, law enforcement, public interest law services, early childhood education, public service for individuals with disabilities and the elderly, public health, public education, public library services, and school library or other school-based services. Loan forgiveness benefits may not be provided for the same service used to qualify for benefits under the Teacher Loan Forgiveness Program, the Civil Legal Assistance Attorney Loan Repayment Program, or the Loan Forgiveness for Service in Areas of National Need Program."], "subsections": [{"section_title": "Temporary Expanded Public Service Loan Forgiveness (TEPSLF) Program", "paragraphs": ["The TEPSLF program was established in response to concerns that some borrowers were experiencing difficulty in deciphering and complying with the requirements for establishing eligibility for loan forgiveness through the PSLF program. A borrower who would qualify for loan forgiveness under the PSLF program except for the fact that, under certain circumstances, some or all of the required 120 monthly payments were nonqualifying may be relieved of the obligation to repay the balance of principal and interest that remains outstanding upon the borrower otherwise satisfying the requirements of the PSLF program as well as the following criteria:", "All of the borrower's nonqualifying monthly payments must have been made according to any of the Extended Repayment Plans or the Graduated Repayment Plans, but in an amount that was less than what would have been paid under the Standard Repayment Plan with a Maximum 10-Year Term. The amount of both the borrower's most recent monthly payment and the monthly payment made 12 months prior to application for relief through the TEPLSF program must equal or exceed the monthly payment amount that would have been calculated under one of the IDR plans for which the borrower would have otherwise qualified. (An exception to this criterion is provided to a borrower who would otherwise qualify for TEPSLF benefits but over the past five years demonstrates an \"unusual fluctuation of income.\" )", "Only a borrower whose applications for PSLF benefits was denied due to some or all of the required payments not being made according to a qualifying repayment plan may apply for TEPSLF benefits. Benefits are available on a first-come, first-served basis and are subject to the availability of funds. "], "subsections": []}]}]}, {"section_title": "Tax Treatment of Discharged and Forgiven Debt", "paragraphs": ["The IRC provides that, in general, student loan debt (as well as other types of debt) that is discharged, forgiven, or repaid on a borrower's behalf is included as part of the individual's gross income for the purposes of federal income taxation. In certain instances, however, discharged or forgiven student loan debt may be excluded from an individual's gross income and, therefore, exempted from consideration in determining federal income tax liability. If loan discharge or loan forgiveness benefits are not specifically excluded from an individual's gross income, he or she may be responsible for paying any income tax liability associated with the benefits received. In the circumstances described below, discharged or forgiven student loan debt may be excluded from an individual's gross income:", "Discharge Due to Death. Student loan debt that is discharged due to the death of the borrower, or due to the death of the student on whose behalf a Direct PLUS Loan was made to a parent borrower, if the discharge occurs after December 31, 2017, and before January 1, 2026. Total and Permanent Disability Discharge . Student loan debt that is discharged due to the total and permanent disability of the borrower, if the discharge occurs after December 31, 2017, and before January 1, 2026. Closed School Discharge . Student loan debt that is discharged on the basis of the school attended having closed while the student was enrolled or within 120 days of the student withdrawing and the student also having not completed the program of study for which the loan was obtained through a teach-out plan at another school or by transferring credits earned at the closed school to another school. False Certification and Unauthorized Payment Discharges . Student loan debt that is discharged on the basis of the proceeds of the loan having been falsely certified by the IHE the borrower attended or having been disbursed without his or her authorization. Unpaid Refund Discharge . Student loan debt that is discharged on the basis of a school that has closed or that a borrower no longer attends having not refunded amounts owed to the borrower. Bankruptcy Discharge . Student loan debt that is discharged in bankruptcy proceedings. Insolvency. Student loan debt that is discharged while an individual is insolvent. Depending on an individual's unique circumstances, it may be possible for a borrower who receives Loan Forgiveness Following IDR Plan Repayment to be considered insolvent at the time of discharge. Loan Forgiveness for Public Service . Discharged or forgiven student loan debt may be excluded if a loan was made by certain types of lenders (e.g., the federal government), was borrowed to assist an individual in attending a qualified educational institution, and contains terms providing that some or all of the balance will be cancelled for work for a specified amount of time in certain professions or occupations and for any of a broad class of employers (e.g., public service organizations). Student loan debt that is discharged through the Teacher Loan Forgiveness program, the PSLF program, and the TEPSLF program may be excluded."], "subsections": []}]}, {"section_title": "Loan Default, Its Consequences, and Resolution", "paragraphs": ["A loan made through the Direct Loan program is considered to be in default once the borrower has failed to make payments when due or has otherwise not adhered to the terms of the promissory note for 270 days. Defaulting on a federal student loan can result in a number of adverse consequences for the borrower. Upon default, the borrower's obligation to repay the loan is accelerated (i.e., the entire unpaid balance of principal and accrued interest becomes due in full). In addition, upon defaulting a borrower loses eligibility for certain borrower benefits (e.g., deferment, forbearance, loan forgiveness), as well as eligibility to receive additional Title IV federal student aid.", "Defaulting may also result in other adverse effects for the borrower and may present a major obstacle to the borrower's future economic well-being. The Secretary will report defaulted loans to consumer reporting agencies and will take action to collect on them through one or more means. The borrower of a defaulted loan may be assessed a variety of charges for the costs of collecting on it.", "Several options are available to borrowers to bring defaulted loans back into good standing. A borrower may remove a loan from default status by rehabilitating the loan, consolidating the loan into a new Direct Consolidation Loan, or paying off the defaulted loan balance."], "subsections": [{"section_title": "Consequences of Default for Borrowers", "paragraphs": ["A borrower who defaults on a loan made through the Direct Loan program becomes subject to many consequences, which are briefly described below:", " Ineligibility for Federal Student Aid . The borrower becomes ineligible to receive federal student aid made under Title IV of the HEA. A defaulted borrower may regain eligibility by voluntarily making six consecutive, on-time, full monthly payments. A borrower may restore eligibility for Title IV aid though this method only once. Capitalization of Interest. Any unpaid interest that has accrued (e.g., during periods of negative amortization, during delinquency) may be capitalized into the principal balance of the loan. Acceleration. The entire unpaid balance owed on the borrower's loan becomes due in full. Transfer to Private Collection Agencies. Upon default, student loan accounts are initially transferred from the borrower's student loan servicer to the Office of Federal Student Aid's Default Management and Collection System (DMCS), which may then transfer defaulted loans to private collection agencies (PCAs) that are under contract with FSA for collections. A PCA will first contact the borrower before pursuing efforts to collect on the debt. The PCA may offer the borrower the opportunity to rehabilitate the loan or to enter into a voluntary repayment agreement. If the borrower accepts neither offer, or does not honor a voluntary repayment agreement, the PCA may seek to collect on the defaulted loans by means of administrative wage garnishment (AWG). The PCA may also refer defaulted loans to the Treasury Offset Program (TOP) for collection, or may recommend litigation. Assessment of Collection Charges. The borrower may be charged for the costs of collecting on the loan, including loan collection fees, TOP processing fees, court costs, and attorney's fees. Administrative Wage Garnishment . Up to 15% of the borrower's disposable pay may be garnished to repay the defaulted student loan. Disposable pay is defined as that part of a borrower's compensation that remains after deducting amounts required by law to be withheld. Defaulters must be given written notice of the intent to garnish wages; and they have rights to examine the debt record, have a hearing concerning the existence and amount of the debt or repayment terms, and establish a repayment schedule before garnishment begins. Federal Salary Offset. Similar to AWG, up to 15% of the disposable pay (including retirement pay) of a borrower who is a current or former federal employee may be offset to repay a defaulted student loan. Treasury Offset Program. Defaulters become subject to having their federal income tax returns, Social Security benefits, and certain other federal benefits offset through the Treasury Offset Program (TOP) as payment on their student loans. Up to 100% of federal tax refunds may be offset. Social Security benefits may be offset in an amount up to the lesser of 15% of the borrower's monthly benefit amount, or the amount that his or her monthly benefit exceeds $750. Special rules apply with regard to the offset of Social Security Disability Insurance (SSDI) benefits. If a recipient has a disability rating of medical improvement not expected (MINE), the offset of SSDI benefits will be suspended. However, if a recipient's disability benefits are converted to retirement benefits, the offset of Social Security benefits may resume. Civil Lawsuit . Litigation is employed as a last resort to collect on a defaulted loan. If this option is pursued, the U.S. Department of Justice may sue the defaulter, on behalf of the Office of Federal Student Aid, to compel repayment. Reporting to Consumer Reporting Agencies . Information on student loans, including amounts borrowed, amounts owed, and repayment status, is regularly exchanged with consumer reporting agencies. Upon default, information about it will also be shared. Consumer reporting agencies may report information on the status of a borrower's defaulted student loan for seven years from the date of the default."], "subsections": []}, {"section_title": "Resolution of Default", "paragraphs": ["A number of options are available to borrowers to get out of default. As noted above, a borrower may rehabilitate the defaulted loan, obtain a Direct Consolidation Loan and use the proceeds to pay off the defaulted loan, pay the amount owed on the defaulted loan in full, or, in limited circumstances, enter into a compromise agreement. ", "Repaying a defaulted loan in full may be beyond the means of many borrowers. However, options to do so may include obtaining financing from outside the Direct Loan program to pay off the defaulted debt. A compromise agreement or debt settlement may permit a borrower to satisfy the debt by making a lump sum payment in an amount that is less than the full balance due. Compromise agreements and settlements are offered only after other repayment options have been exhausted.", "Loan rehabilitation and loan consolidation are more widely available to and used by borrowers. Each is described below. "], "subsections": [{"section_title": "Loan Rehabilitation", "paragraphs": ["Loan rehabilitation offers borrowers who have defaulted on a student loan an opportunity to have their loan(s) reinstated as active and to have their borrower benefits and privileges restored. A defaulter must contact the PCA to whom the debt has been transferred to request loan rehabilitation. If during a period of 10 consecutive months a borrower voluntarily makes nine reasonable and affordable monthly payments on a defaulted loan within 20 days of the due date, the defaulted loan is rehabilitated. ", "One of two methods may be used to determine what constitutes a reasonable and affordable payment amount for purposes of rehabilitating a defaulted loan. It is initially determined as being an amount equal to the greater of either one-twelfth of 15% of any portion of the borrower's AGI that is in excess of 150% of the poverty line applicable to the borrower's family size (see Table 7 ), or $5. However, a borrower is permitted to object to the initial determination and may instead elect to have the amount calculated according to an alternative formula that is based on an itemized accounting of his or her monthly income and expenses. In either case, the borrower is required to provide documentation of income and, as applicable, expenses for purposes of determining a reasonable and affordable payment amount.", "Only payments that are voluntarily made by a borrower may be counted as among the nine reasonable and affordable payments required for loan rehabilitation. Involuntary payments may continue to be collected (e.g., through administrative wage garnishment or the TOP) while a borrower pursues loan rehabilitation.", "Upon a loan being rehabilitated, the borrower again becomes eligible for full borrower privileges, such as deferments and loan forgiveness, and other means of collecting on the loan while it was in default will cease. The borrower's loan will then be transferred by DMCS to a nondefault loan servicer and he or she will be placed in one of the alternative repayment plans (discussed above) for a period of 90 days. The borrower may then apply for another repayment plan for which he or she is eligible; if the borrower does not apply for a repayment plan, he or she will be placed in a standard repayment plan. Consumer reporting agencies will also be instructed to remove any record of the default from the borrower's credit history; however, records of late or missed payments that led to the loan defaulting will not be removed. ", "A defaulted loan may be rehabilitated only once. Defaulted loans upon which a court judgement has been obtained through a civil lawsuit are not eligible to be rehabilitated. "], "subsections": []}, {"section_title": "Loan Consolidation", "paragraphs": ["A borrower may use the proceeds of a new Direct Consolidation Loan to pay off one or more defaulted loans. To become eligible to do so, a borrower must make what are considered satisfactory repayment arrangements. ", "One approach is for the borrower, prior to consolidation, to make three voluntary, consecutive, on-time, full monthly payments that are considered reasonable and affordable, based on the borrower's total financial circumstances. These payments must be made within 20 days of the due date and may not be involuntary payments (e.g., payments collected through administrative wage garnishment or the TOP). A borrower who chooses this approach may repay the new Direct Consolidation Loan according to any available repayment plan. ", "Another approach is for the borrower to agree to repay the new Direct Consolidation Loan according to one of the IDR plans for which the borrower is eligible. If the borrower obtains a Direct Consolidation Loan for purposes of repaying a Direct PLUS Loan or a FFEL PLUS Loan made to a parent borrower, he or she must repay the new loan according to the Income-Contingent Repayment plan, which is the only IDR plan available to borrowers of parent loans. ", "Several restrictions limit the availability of loan consolidation as an option for borrowers to bring defaulted loans into good standing. If the borrower's loan was subject to AWG, this must first be lifted for the loan to be eligible for consolidation. A loan on which a court judgment has been secured through litigation is not eligible for loan consolidation. If the borrower's defaulted loan is a Direct Consolidation Loan, the borrower must include at least one other eligible loan in the new Direct Consolidation Loan. If the borrower's defaulted loan is a FFEL Consolidation Loan, the borrower may include the loan in a new Direct Consolidation Loan without including any other loans; however, the borrower must repay according to one of the IDR plans.", "If a borrower consolidates a loan out of default, collection fees will be assessed on the outstanding principal and interest of the defaulted loan, and these fees will be included as part of the original principal balance of the new Direct Consolidation Loan. Upon a defaulted loan being repaid by a Direct Consolidation Loan, the borrower regains eligibility for full borrower privileges, such as deferments and loan forgiveness, as well as eligibility for additional federal student aid. However, in contrast to loan rehabilitation, repaying a defaulted loan with a Direct Consolidation Loan will not remove the record of default from the borrower's credit history."], "subsections": []}]}]}, {"section_title": "Loan Counseling and Disclosures", "paragraphs": ["This report seeks to provide a comprehensive overview of the terms and conditions of federal student loans made through the Direct Loan program. These loan terms and conditions are voluminous and complex. For many individuals, the process of borrowing a federal student loan may be among their first experiences with making a major financial transaction; thus, it is imperative for borrowers to understand the terms and conditions of the loans they obtain and their associated rights and responsibilities as borrowers. ", "As part of the process of obtaining a federal student loan, borrowers are required to undergo financial counseling that provides them with information about their loans and the obligations they assume as borrowers. First-time borrowers must be provided with entrance counseling, which provides them with comprehensive information on the loans they are about to obtain. Borrowers who have received an adverse credit determination but have been able to establish eligibility to borrow Direct PLUS Loans must receive PLUS Loan credit counseling. At the time of obtaining a loan, borrowers are required to sign a promissory note, which is a contract that establishes the borrower's legal obligation to repay. The promissory note is accompanied by a rights and responsibilities statement that uses plain language to disclose the terms and conditions of the loan. Prior to a borrower ceasing to be enrolled on at least a half-time basis, he or she must be provided with exit counseling. "], "subsections": [{"section_title": "Entrance Counseling", "paragraphs": ["The institution attended by a first-time borrower of a Direct Subsidized Loan or a Direct Unsubsidized Loan, or by a first-time graduate or professional student borrower of a Direct PLUS Loan is required to ensure that he or she receives entrance counseling prior to the first installment of the loan being disbursed. Entrance counseling may be provided through an in-person counseling session, a written document provided to the borrower, or an online interactive medium. Irrespective of the means through which entrance counseling is provided, the institution must ensure that an individual who has expertise in federal student aid is available shortly after the session to respond to any questions a borrower might have. ", "Entrance counseling is designed to provide a borrower with comprehensive information on both the terms and conditions of the loan and the borrower's rights and responsibilities with regard to the loan. Entrance counseling must satisfy the following requirements:", "explain the master promissory note; emphasize to the borrower the seriousness and importance of the obligation to repay the loan; describe the likely consequences of default, which include adverse credit reports, the collection of delinquent debt, and litigation; emphasize that the borrower is required to repay the loan in full, irrespective of whether he or she completes the program of study on time or at all, is unable to obtain employment, or is dissatisfied with the program; provide the borrower with sample monthly payment amounts based on either a range of amounts that might be borrowed or the average cumulative amount borrowed by other students in the same program; explain potential implications that accepting the loan might have on the borrower's eligibility to receive other forms of student aid; provide information on interest accrual and capitalization; inform the borrower of the option to pay the interest that accrues on Direct Unsubsidized Loans and Direct PLUS Loans while he or she is enrolled in school; explain the meaning of half-time enrollment and the consequences of not maintaining half-time enrollment; explain the importance of informing the school if the borrower chooses to withdraw so that exit counseling can be provided; provide information about, and how the borrower can access, the National Student Loan Data System (NSLDS); provide the name of and contact information for an individual the borrower may ask any questions about the terms and conditions of the loan and the borrower's rights and responsibilities with regard to the loan; explain to post-July 1, 2013, first-time borrowers the Direct Subsidized Loan Limitations for Post-July 1, 2013, First-Time Borrowers provision for Direct Subsidized Loans and its implications; and explain to first-time graduate student borrowers of a Direct PLUS Loan who have previously borrowed a Direct Subsidized Loan or a Direct Unsubsidized Loan the differences between these loan types with regard to interest rates, the accrual of interest, and the start of the repayment period."], "subsections": []}, {"section_title": "PLUS Loan Credit Counseling For Borrowers with Adverse Credit", "paragraphs": ["Any parent borrower or graduate or professional student borrower with an adverse credit determination who becomes eligible to borrow a Direct PLUS Loan, either by obtaining an endorser or by providing documentation of extenuating circumstances, must receive special PLUS Loan credit counseling. The counseling is also available on a voluntary basis to Direct PLUS Loan borrowers who have not received an adverse credit determination. This counseling includes information similar to what is currently provided in PLUS Loan entrance counseling. "], "subsections": []}, {"section_title": "Master Promissory Note and Plain Language Disclosure", "paragraphs": ["The terms and conditions of federal student loans made through the Direct Loan program are specified in a promissory note, which is a contract that establishes the borrower's obligation to repay the loan. A master promissory note (MPN) is a type of promissory note under which loans may be made to a borrower for a single academic year or for multiple academic years. One type of MPN is used for making Direct Subsidized Loans and Direct Unsubsidized Loans and another type of MPN is used for making Direct PLUS Loans. A different type of promissory note is used for making Direct Consolidation Loans. ", "The MPN must be read and signed by a student or parent borrower before loan funds may be disbursed. The IHE a student attends may choose to use a MPN with either a single-year or a multiyear feature. IHEs that use a single-year MPN may only make loans under the MPN for one academic year. IHEs that use the multiyear feature may make one or more loans under the same MPN for up to 10 academic years. ", "IHEs that use a multiyear MPN must confirm a borrower's acceptance of a new loan for each subsequent year by either obtaining a borrower's written confirmation of acceptance (affirmative confirmation) or by not receiving a borrower's notification that he or she is specifically declining the loan in whole or in part (passive confirmation). Under current regulations, IHEs are encouraged, but not required, to obtain affirmative confirmation from the student that he or she accepts the loan before disbursing loan funds.", "Attached to the MPN is a Plain Language Disclosure (PLD) form that explains loan terms and conditions and the borrower's rights and responsibilities in simplified terms. The PLD is provided to borrowers prior to each disbursement of a loan made through the Direct Loan program, regardless of whether an IHE uses a single-year or multiyear MPN."], "subsections": []}, {"section_title": "Exit Counseling", "paragraphs": ["Prior to a student borrower ceasing to be enrolled on at least a half-time basis, the institution a borrower attends must provide him or her with exit counseling. It may be provided through an in-person counseling session, an audiovisual presentation, or an online interactive medium. Irrespective of the means through which exit counseling is provided, the institution must ensure that an individual who has expertise in federal student aid is available shortly after the session to respond to any questions a borrower might have. ", "Exit counseling is designed to provide the borrower with comprehensive information on both the terms and conditions of the loan and the borrower's rights and responsibilities with regard to the obligation to repay the loan. Exit counseling must satisfy the following requirements:", "inform the borrower of the average anticipated monthly payment amount based on either the individual's actual student loan debt or the average cumulative amount borrowed by other students at the same school; provide a review of the repayment plan options available to the borrower, along with a description of the various features of each plan and sample information showing average anticipated monthly payment amounts and differences in interest and total payments under each plan; explain options to prepay a loan, to repay according to a shorter schedule, and to change repayment plans; provide information on loan consolidation and how it affects the length of repayment and total interest paid; how it affects borrower benefits, such as grace periods, loan forgiveness, loan cancellation, and deferment; and options to prepay a loan or change repayment plans; explain how to contact the borrower's loan servicer; explain the master promissory note; emphasize to the borrower the seriousness and importance of the obligation to repay the loan; emphasize that the borrower is required to repay the loan in full, irrespective of whether he or she completes the program of study on time or at all, is unable to obtain employment, or is dissatisfied with the program; describe the likely consequences of default, which include adverse credit reports, the collection of delinquent debt, and litigation; provide a general description of the terms and conditions under which a borrower may receive full or partial discharge or forgiveness of principal and interest, may defer repayment of principal or interest, or may be granted forbearance; and descriptions of federal student assistance programs and other information and ED publications as required by HEA Section 485(d); review information on the availability of the FSA Ombudsman Group; provide information about, and how the borrower can access, the NSLDS; explain to post-July 1, 2013, first-time borrowers the Direct Subsidized Loan Limitations for Post-July 1, 2013, First-Time Borrowers provision for Direct Subsidized Loans and its implications; provide a general description of tax benefits that may be available to borrowers; and require the borrower to provide current and expected future contact information, next of kin, and (if known) expected employer. "], "subsections": []}, {"section_title": "Additional Information on Loan Terms and Conditions", "paragraphs": ["The loan counseling and disclosures described above are designed to ensure that borrowers are provided with information about the terms and conditions of their loans, as required by law. Appendix A presents a list of additional resources that may be accessed by policymakers and others who may be interested in obtaining more detailed information about borrowers' rights, responsibilities, and obligations with regard to Direct Loan program loans. ", "Appendix A. Directory of Resources", "Directory of Resources", "Appendix B. Glossary of Terms", "Appendix C. Historical Tables on Selected Loan Terms and Conditions"], "subsections": []}]}]}}
{"id": "R46269", "title": "FY2019 State Grants Under Title I-A of the Elementary and Secondary Education Act (ESEA)", "released_date": "2020-03-11T00:00:00", "summary": ["The Elementary and Secondary Education Act (ESEA), most recently comprehensively amended by the Every Student Succeeds Act (ESSA; P.L. 114-95 ), is the primary source of federal aid to K-12 education. The Title I-A program is the largest grant program authorized under the ESEA and was funded at $15.9 billion for FY2019. It is designed to provide supplementary educational and related services to low-achieving and other students attending elementary and secondary schools with relatively high concentrations of students from low-income families.", "Under current law, the U.S. Department of Education (ED) determines Title I-A grants to local educational agencies (LEAs) based on four separate funding formulas: Basic Grants, Concentration Grants, Targeted Grants, and Education Finance Incentive Grants (EFIG). The four Title I-A formulas have somewhat distinct allocation patterns, providing varying shares of allocated funds to different types of states. Thus, for some states, certain formulas are more favorable than others.", "This report provides FY2019 state grant amounts under each of the four formulas used to determine Title I-A grants. Overall, California received the largest FY2019 Title I-A grant amount ($2.0 billion, or 12.52% of total Title I-A grants). Vermont received the smallest FY2019 Title I-A grant amount ($36.9 million, or 0.24% of total Title I-A grants)."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["The Elementary and Secondary Education Act (ESEA), most recently comprehensively amended by the Every Student Succeeds Act (ESSA; P.L. 114-95 ), is the primary source of federal aid to elementary and secondary education. Title I-A is the largest program in the ESEA, funded at $15.9 billion for FY2019. Title I-A is designed to provide supplementary educational and related services to low-achieving and other students attending elementary and secondary schools with relatively high concentrations of students from low-income families. The U.S. Department of Education (ED) determines Title I-A grants to local educational agencies (LEAs) based on four separate funding formulas: Basic Grants, Concentration Grants, Targeted Grants, and Education Finance Incentive Grants (EFIG).", "This report provides FY2019 state grant amounts under each of the four formulas used to determine Title I-A grants. For a general overview of the Title I-A formulas, see CRS Report R44164, ESEA Title I-A Formulas: In Brief . For a more detailed discussion of the Title I-A formulas, see CRS Report R44461, Allocation of Funds Under Title I-A of the Elementary and Secondary Education Act ."], "subsections": []}, {"section_title": "Methodology", "paragraphs": ["Under Title I-A, funds are allocated to LEAs via state educational agencies (SEAs) using the four Title I-A formulas. Annual appropriations acts specify portions of each year's Title I-A appropriation to be allocated to LEAs and states under each of the formulas. In FY2019, about 41% of Title I-A appropriations were allocated through the Basic Grants formula, 9% through the Concentration Grants formula, and 25% each through the Targeted Grants and EFIG formulas. Once funds reach LEAs, the amounts allocated under the four formulas are combined and used jointly.", "For each formula, a maximum grant is calculated by multiplying a \"formula child count,\" consisting primarily of estimated numbers of school-age children living in families in poverty, by an \"expenditure factor\" based on state average per pupil expenditures for public elementary and secondary education. In some of the Title I-A formulas, additional factors are multiplied by the formula child count and expenditure factor to determine a maximum grant amount. These maximum grants are then reduced to equal the level of available appropriations for each formula, taking into account a variety of state and LEA minimum grant provisions. In general, LEAs must have a minimum number of formula children and/or a minimum formula child rate to be eligible to receive a grant under a specific Title I-A formula. Some LEAs may qualify for a grant under only one formula, while other LEAs may be eligible to receive grants under multiple formulas.", "Under three of the formulas\u00e2\u0080\u0094Basic, Concentration, and Targeted Grants\u00e2\u0080\u0094grants are initially calculated at the LEA level. State grants are the total of allocations for all LEAs in the state, adjusted for state minimum grant provisions. Under EFIG, grants are first calculated for each state overall and then are subsequently suballocated to LEAs within the state using a different formula. ", "FY2019 grants included in this report were calculated by ED. The percentage share of funds allocated under each of the Title I-A formulas was calculated by CRS for each state by dividing the total grant received by the total amount allocated under each respective formula. "], "subsections": []}, {"section_title": "FY2019 Title I-A Grants", "paragraphs": [" Table 1 provides each state's grant amount and percentage share of funds allocated under each of the Title I-A formulas for FY2019. Total Title I-A grants, calculated by summing the state level grant for each of the four formulas, are also shown in Table 1 .", "Overall, California received the largest total Title I-A grant amount ($2.0 billion) and, as a result, the largest percentage share (12.52%) of Title I-A grants. Vermont received the smallest total Title I-A grant amount ($36.9 million) and, as a result, the smallest percentage share (0.24%) of Title I-A grants.", "In general, grant amounts for states vary among formulas due to the different allocation amounts for the formulas. For example, the Basic Grant formula receives a greater share of overall Title I-A appropriations than the Concentration Grant formula, so states generally receive higher grant amounts under the Basic Grant formula than under the Concentration Grant formula.", "Among states, Title I-A grant amounts and the percentage shares of funds vary due to the different characteristics of each state. For example, Texas has a larger population of children included in the formula calculations than North Carolina and, therefore, is to receive a higher grant amount and larger share of Title I-A funds. ", "Within a state, the percentage share of funds allocated may vary by formula, as certain formulas are more favorable to certain types of states (e.g., EFIG is generally more favorable to states with comparatively equal levels of spending per pupil among their LEAs). If a state's share of a given Title I-A formula exceeds its share of overall Title I-A funds, this is generally an indication that this particular formula is more favorable to the state than formulas for which the state's share of funds is below its overall share of Title I-A funds. For example, Alaska, Arizona, California, Delaware, the District of Columbia, Florida, Georgia, Hawaii, Illinois, Louisiana, Maine, Maryland, Montana, Nevada, New Hampshire, New Mexico, New York, North Dakota, Rhode Island, South Dakota, Texas, Vermont, and Wyoming each received a higher percentage share of Targeted Grants than of overall Title I-A funds, indicating that the Targeted Grant formula is more favorable to them than other Title I-A formulas may be. ", "In states that received a minimum grant under all four formulas (Montana, North Dakota, New Hampshire, South Dakota, Vermont, and Wyoming), the shares under the Targeted Grant and EFIG formulas are greater than under the Basic Grant or Concentration Grant formulas, due to higher state minimums under these formulas. If a state received the minimum grant under a given Title I-A formula, the grant amount is denoted with an asterisk (*) in Table 1 . "], "subsections": []}]}}
{"id": "R46294", "title": "Demographic and Social Characteristics of Persons in Poverty: 2018", "released_date": "2020-03-26T00:00:00", "summary": ["This report provides a snapshot of the characteristics of the poor in the United States in 2018. It shows that people from families whose income falls below the federal poverty thresholds represent a diverse subset of the overall population.", "There were 38.1 million people living below the federal poverty level in 2018, representing 11.8% of the total population. Nearly half (45.3%) of all people in poverty lived in deep poverty (with income below 50% of the poverty threshold). The largest share of people in poverty were non-Hispanic white (41.2%) but the majority were not. Almost all other racial and ethnic groups were over-represented among the poor, relative to their prevalence in the overall population. Similar to the overall population, children who were poor were more racially and ethnically diverse than adults who were poor, especially aged adults. A majority (56.0%) of poor people were women. Children (under age 18) were disproportionately represented among people in poverty, constituting slightly less than one-third (31.1%) of this group. Over two-thirds of poor children (68.1%) lived in families where there was at least one worker, compared with 11.0% who lived in families with at least two workers. Conversely, in the overall population, half of all children lived in families with two workers. Most poor children lived in single parent homes, but nearly one-third (32.2%) lived in married-couple families. Over two-thirds (68.2%) of children in the overall population lived in married-couple families. The majority of people in poverty were working-age adults (age 18-64). While most (77.3%) working-age adults in the overall population were working in 2018, most (63.2%) working-age adults in poverty were not working in 2018. The most common reasons reported for non-work among those in poverty were illness or disability, the need to meet caretaking responsibilities, or being enrolled in school. Although most working-aged adults in poverty were not working, 36.8% were working in 2018; 12.0% were working full-time, full-year. Most working-age adults in poverty lacked a post-secondary educational credential; 78.9% had a high school diploma or less, compared to 56.0% in the overall population. Among people in poverty, 13.5% were aged (age 65 and older); because aged adults make up 16.3% of the overall population, this means they are underrepresented among people in poverty. The vast majority of aged adults in poverty either had, or lived in families that had, income from work or from retirement or other social insurance tied to prior work. Aged adults in poverty are far more likely to live alone than aged adults overall (49.9% compared to 28.0%)."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["Poverty is an ongoing topic of interest for Congress, in various capacities: as a factor to be considered when allocating funding for certain programs, as an eligibility criterion for some low-income assistance programs, and to gauge the well-being of individuals, families, or the economy as a whole. The poverty rate fell to 11.8% in 2018 from 12.3% in 2017. In both years, the poverty rate was lower than the pre-recessionary level of 12.5% in 2007. However, since the end of the Great Recession in 2009, the poverty rate remained elevated for approximately the first four years after the recession's end, and despite reductions in the poverty rate in recent years, it remains higher than its record-low of 11.1% in 1973. Poverty's persistence alongside indicators of economic strength has led policymakers to continually examine the drivers of poverty\u00e2\u0080\u0094both economic and social\u00e2\u0080\u0094and the effectiveness of various policy responses. As the conversations about poverty and public policy continue, it may be useful to consider the question: Who are the people who are poor in the United States?", "This report provides a snapshot of who was poor in 2018 by selected demographic, economic, and social characteristics. The data presented here show that people in poverty are not a monolithic group, but rather a diverse collection of families and individuals at different stages of life, living in different circumstances. Special attention is paid in this report to the role of work in the lives of people who are poor. Income from work, or the lack thereof, is central to the economic fortunes not only of those considered \"working-age,\" but also of children, who are generally dependent on working-age adults, and persons who are aged (age 65 and older), who generally have prior experience in the workforce that shapes their economic well-being after they retire. Attention is also paid to living arrangements. Because poverty is measured at the family level, considerations such as whether someone lives alone, or whom someone lives and potentially shares resources with, influence economic well-being. Other factors that affect family well-being, and that influence individuals' attachment to and success in the labor market, are important for considering individuals' experiences of poverty but are beyond the scope of this report.", "This snapshot looks at the composition of people in poverty\u00e2\u0080\u0094what groups comprise what share of the poverty population\u00e2\u0080\u0094rather than at poverty rates among different groups. This provides a different perspective in viewing poverty. A large population group such as non-Hispanic whites might have relatively low poverty rates, but because of the group's size in the overall population it represents a relatively large share of the poverty population. A small population, such as American Indians and Alaska Natives, might have relatively high poverty rates, but because of the group's size it represents a relatively small share of the poverty population. Both perspectives on poverty are valid and relevant to public policy. Readers interested in an examination of poverty rates for different demographic groups\u00e2\u0080\u0094and trends in poverty over time\u00e2\u0080\u0094should see CRS Report R46000, Poverty in the United States in 2018: In Brief , by Joseph Dalaker. "], "subsections": [{"section_title": "Data Used in this Report", "paragraphs": ["Poverty, in general, is a lack of resources to meet basic needs. This report uses the official measure of poverty used by the U.S. Census Bureau to identify individuals as \"poor.\" However, it is important to note that the Census poverty measure is actually family -based. Whether a person is considered poor depends on his or her money income and the income of any other family members\u00e2\u0080\u0094those related to a family head by birth, marriage, or adoption\u00e2\u0080\u0094with whom the person lives and presumably shares resources. If an individual is living alone or with people who are not relatives, that individual is considered a family of one and only his or her income is counted in determining his or her poverty status. That money income is then compared with a dollar threshold, which is based on that individual's family composition. For example, the poverty threshold for a working-age single person (who does not live in a family) in 2018 was $13,064. A single person with income below that amount is considered poor. The poverty threshold for a family of two adults and two children was $25,465. If the combined income of all family members was below that amount, all people in that family would be considered poor.", "The current official poverty measure has existed for about 50 years and is widely used, but it does have limitations. For example, the official measure looks only at pre-tax money income and does not examine the impact of government taxes and non-cash benefits on family well-being. The official measure also generally does not take the value of assets into account, though a recent change in measurement now considers distributions from retirement savings as income. The official measure is also the same across the country, and does not take into consideration differences in living costs in different geographical areas. Additionally, the measure's current definition of family does not take into account modern resource-sharing arrangements, such as those of cohabiting couples. The Census Bureau now publishes a supplemental poverty measure (SPM) for research purposes that does take into account taxes and transfers, make adjustments for housing costs by geographical area, and use an expanded definition of family."], "subsections": []}]}, {"section_title": "How Many People Were Poor in 2018?", "paragraphs": ["In 2018, an estimated 38.1 million people had pre-tax money income below the poverty threshold. As shown in Figure 1 , people who were poor accounted for 11.8% of the total noninstitutionalized population. ", "The number and percentage of people in poverty reflect those whose family income fell short of the poverty threshold by any dollar amount. Of course, some people are poorer than others. One area of policy focus has been on the very poor: those considered to be in \"deep poverty.\" Deep poverty is usually defined as having income below 50% of the poverty threshold. In 2018, an estimated 17.3 million persons, close to half of all people in poverty (45.3%), were counted as living in deep poverty."], "subsections": []}, {"section_title": "Who Was Poor in 2018? An Overview", "paragraphs": ["The population of people living in poverty comprised individuals of all ages and sexes, and across all racial and ethnic groups. "], "subsections": [{"section_title": "Age", "paragraphs": [" Figure 2 shows the composition of the population living in poverty and the overall population (for context) by age group in 2018. Three categories are presented: children (those under age 18), working-age adults (those ages 18 to 64), and the aged (those age 65 and older).", "As shown in the figure, slightly less than one-third (11.9 million) of all people in poverty were children. Children were over-represented among people in poverty relative to the overall population\u00e2\u0080\u009431.1% compared to 22.6%. People who were working age (18-64) made up the largest share of the population who were poor, but they were under-represented among people in poverty relative to the overall population (55.4% compared to 61.1%). Among persons who were poor, 13.5% were age 65 and older, a smaller representation than their share of the overall population (16.3%)."], "subsections": []}, {"section_title": "Race and Ethnicity", "paragraphs": [" Figure 3 shows the composition of people in the poverty population and the total population (for context) by race and ethnicity for 2018. The racial and ethnic groups presented are ranked by the size of their total population (which is the same in both cases). Non-Hispanic whites were the largest racial/ethnic group overall (60.2% of the total population), and represented the largest racial/ethnic group within the poverty population (41.2%). Hispanics (of any race) were the second largest group (18.5% of the total population) and represented 27.6% of all those who were poor. Non-Hispanic African-Americans were the third largest racial/ethnic group in both the total and poverty populations, representing 12.3% and 21.9%, respectively.", "Note that most minority groups were over-represented in the poverty population relative to their share of the overall population. The over-represented groups were Hispanics, non-Hispanic African-Americans, and non-Hispanic American Indians and Alaska Natives. Under-represented racial/ethnic groups were non-Hispanic whites and Asians.", "The racial and ethnic composition of people in poverty by age group is shaped by the overall demographic trends affecting each age group. As illustrated in Figure 4 , children (under age 18), both poor and overall, are more racially and ethnically diverse than adults, especially the aged (age 65+). However, minorities were over-represented in the poverty population for all age groups in 2018. For instance, Hispanic children (of any race) made up the largest share of poor children (37.4%) whereas non-Hispanic white children made up the largest share (50.0%) of children overall."], "subsections": []}, {"section_title": "Sex", "paragraphs": ["Women slightly outnumber men in the overall population, accounting for 51.0% of the total population in 2018. However, as shown in Figure 5 , women represented an even larger share (56.0%) of the population in poverty. This over-representation may be due, in part, to the fact that women are more likely than men to head single-parent households, a family type that is more likely to be poor. Additionally, men's earnings are higher than women's on average, even accounting for differences in full-time year-round employment status."], "subsections": []}]}, {"section_title": "Poverty Among Children, Working-Age Adults, and Aged Adults", "paragraphs": ["Poverty raises different public policy considerations for children, working-age adults, and aged adults. Children are not expected to support themselves economically\u00e2\u0080\u0094they are dependents of their parents or other adult caretakers who are assumed to fulfill that responsibility. Policies affecting the family income and poverty status of children generally apply to their parents or other adult caretakers. Working-age adults\u00e2\u0080\u0094aside from those who are severely disabled\u00e2\u0080\u0094are expected to work and to support themselves and their children, if they have any. Aged adults may retire from work and draw income from public or private benefits, which are based primarily on their past work. ", "The remainder of this report separately explores poverty among children, working-age adults, and aged adults. Though relevant policy considerations may differ among the three groups, the central role played by work as the primary means of economic support for individuals and families is highlighted. That work could be one's own work, the work of the parents or other family members, or past work providing retirement income. Similarly, because poverty is a family-based measure and the ability to share resources is an important consideration in economic well-being, living arrangements are also explored. "], "subsections": [{"section_title": "Children", "paragraphs": ["As noted earlier, children made up slightly less than one-third of all people in poverty in America in 2018, even though they made up less than a quarter of the total population. Thus, children in America are disproportionately poor. Of the three age groups examined in this report, children had the highest poverty rate in 2018, 16.2%.", "Children rely on their parents or other adult caretakers for their support. That support, even for children who are poor, is likely to come from earnings from the work of their parents or other adult caretakers.", " Figure 6 shows the composition of children who were poor and children in the total population by number of adult workers in the family for 2018. Note that the number of adult workers can exceed two, as it would include all adults in the family (such as siblings older than 18, grandparents, or other relatives over the age of 18). The figure shows that among children in the total population, 93.0% lived in families with at least one adult worker and roughly half (51.4%) lived in families with two or more adult workers.", "Among children who were poor, just over two-thirds lived in families with one or more workers. A majority of children in poor families (57.1%) lived in families with one worker, compared with 11.0% who lived in families with two or more workers. The remaining 31.9% lived in families with no workers.", "The number of potential adult workers in a child's family is affected by the type of family a child lives in. A single parent family might have only one potential adult worker, while a married-couple family has at least two potential adult workers. ", " Figure 7 shows the distribution of children who were poor and children in the total population by family type in 2018. Children living in female-headed families accounted for a majority (57.5%) of all children who were poor, a disproportionate share relative to children in the total population. However, children in married-couple families still accounted for nearly one-third (32.2%) of all children who were poor. ", "Despite a relatively low poverty rate for children in married-couple families in 2018, the large size of this population overall (children in married-couple families accounted for over two-thirds of all children) meant that a substantial number of children who were poor lived in this family type. Married-couple families were the only family type that was significantly under - represented among the population of children in poverty relative to the overall population. ", "Children who are poor are also more likely to live in larger families. Larger families require more income to meet needs, and thus the poverty thresholds for larger families are higher than for small families. However, since most children live in families with earnings, and earnings are not determined by family size\u00e2\u0080\u0094they are determined by what the worker can command in the labor market\u00e2\u0080\u0094larger families are more likely to be poor.", " Figure 8 shows the composition of children who were poor and children in the overall population by number of children in the family in 2018. In that year, 24.7% of all children who were poor were in families with four or more children, which is disproportionately higher than the 14.2% of children in the overall population living in families of that size. In contrast, 46.0% of children who were poor were in families with only one or two children."], "subsections": []}, {"section_title": "Working-Age Adults", "paragraphs": ["The majority of people in poverty in America are working-age adults (18-64 years old). This age group represented 55.4% (21.1 million individuals) of all people in poverty in 2018. Overall, this age group had a poverty rate of 10.7%, a lower rate than that of the overall population.", "Because poverty is a state of low income, and income generally comes from work, it is useful to explore the work status of working-age adults who are poor. In the overall population of working-age adults, the majority (77.3%) worked in 2018. However, among working-age adults who were poor, the majority (63.2%) did not work.", "As shown in Figure 9 , 36.8% of working-age adults who were poor were working in some capacity, either full- or part-time, full- or part-year. However, a relatively small share (12.0%) of working-age adults who were poor worked full-time all year. ", "When working-age adults, both the poor and those in the overall population, were asked why they were not working, a wide range of reasons were given. Of non-working adults who were poor, one-third reported being ill or disabled, one-fourth reported taking care of family members, 18.8% said they were going to school, 11.4% said they were retired, and 6.0% said they could not find a job. For those not working in the overall population, a greater proportion (16.2%) reported being retired and a smaller proportion (27.1%) reported being ill or disabled.", "A large body of research has shown that success in the workforce is related to educational attainment. Credentials indicating higher levels of education tend to be reflected in higher earnings and steadier work. Figure 10 shows both working-age adults who were poor and all working-age adults by educational credential. The largest group (54.7%) of poor working-age adults in 2018 were those who obtained a high school diploma but no post-secondary educational credential. (High school graduates without a post-secondary credential were also the largest group (45.8%) within the total population of working-age adults.) Those lacking a high school diploma accounted for another 24.2% of all poor working-age adults, more than twice the share represented in the overall population (10.2%). The remaining 21.1% of 18 to 64 year olds below poverty had some postsecondary credential; the corresponding figure for all 18 to 64 year olds was 44.0%. ", "It should be noted that the working-age adult group includes young adults, whose education might not be finished.", "Working-age adults represented a diverse group in terms of their family and living arrangements. Figure 11 shows both poor and all working-age adults by their living arrangements. A majority of both groups lived in families, although family living arrangements were more prevalent in the overall population (77.8%) than among the poor (56.4%). (As noted previously, \"family,\" as used by the Census Bureau, includes people related by birth, marriage, or adoption.)", "Working-age adults who did not live in families were disproportionately poor in 2018; 43.6% of all working-age adults in poverty lived outside of a family. Included in this group were those living alone (19.0%) and those living with cohabiting partners (13.0%) or other unrelated adults/roommates (11.7%). However, determination of the poverty status of people living outside of families but with others is not straightforward. The poverty status of individuals with cohabiting partners or who are living with other adults is based on each individual's income; no \"pooling\" of income is assumed in the official poverty measure, including among cohabiting partners who may be sharing resources."], "subsections": []}, {"section_title": "Aged Persons", "paragraphs": ["Of the three age groups discussed in this report, aged adults are the least likely to be living below the poverty line. In 2018, they accounted for 16.3% of the total population, compared with 13.5% of the population in poverty. The poverty rate among aged adults was 9.7% in 2018.", "Aged adults may retire from the workforce with the support of both public and private sector policies, and in 2018, 76.4% of all adults aged 65 and older did not work. However, income derived from work\u00e2\u0080\u0094past work, the earnings of other family members, and the earnings of the minority of aged adults who continue to work\u00e2\u0080\u0094plays a key role in determining the economic well-being of aged adults. ", " Figure 12 explores various forms of work-related income received directly by aged persons or their families, including the following:", "Social Security income is earned through past work, with the initial benefit determined based on past earnings, with the benefit replacing a portion of those earnings. In 2018, Social Security was received by the families of 63.8% of all aged persons who are poor, compared to 85.1% of aged persons in the total population. Aged persons also frequently receive income from pensions and other benefits earned from jobs held during their working careers. These include private pensions or government pensions paid to former public sector employees. Far fewer aged adults in poverty receive these benefits compared to the overall aged population. In 2018, retirement, disability, or survivor pensions were received by the families of 51.6% of all aged persons, compared with 10.4% of the families of aged persons who were poor. Earnings from current work\u00e2\u0080\u0094either by the aged adult member or other family members\u00e2\u0080\u0094are also often received by families with aged persons. In 2018, earnings were received by the families of 41.4% of aged persons. In comparison, 10.5% of families of aged persons who were poor received earnings from work. ", "When considering all of these various forms of work-derived income, most aged adults (97.1%) in the total population lived in families with income derived from work: either past work where Social Security or pension income was earned, or the current work of the aged adult or a family member. This share was smaller among aged persons who were poor, but still, almost three in four (74.2%) lived in families with income derived from work.", " Figure 13 shows aged adults living in poverty by living arrangement, which is, as previously mentioned, an important consideration because of the possibility of resource-sharing. In 2018, roughly half (49.9%) of aged adults who were poor lived alone, which is a significantly higher rate than in the overall population of aged adults (28.0%). Aged adults in poverty were much less likely to be living in families than the overall aged population (43.1% compared to 68.4%)."], "subsections": []}]}, {"section_title": "Conclusion", "paragraphs": ["This report presents basic information about the 38.1 million people in America who had income below the poverty line in 2018. Although it is presumed that they are all subject to income constraints, these data illustrate that they are not a homogenous group. For example, they are children, working-age adults, and aged adults; full-time full-year workers, caretakers for family members, or outside the workforce for other or unknown reasons; and living alone or in families. ", "As this report shows, certain groups are over-represented among those living in poverty relative to the total population. These include, among others, women, minorities, children, and people living outside of families or alone. The report also shows the central role of income from work in determining whether a group is over-represented among those living in poverty. For children, this income is based on the work of their parents or other family members. For working-age adults, it is their own work that generally determines their poverty status. For aged adults, who are often retired from the workforce, it is primarily their past work or the work of those they live with that determines their status. However, sometimes earnings from work are not enough to prevent poverty. Two-thirds of children living in poverty in 2018 were in families with at least one adult earning income during the year. In 2018, more than 7 out of 10 poor aged persons had some form of work-based income.", "The complexity of circumstances that result in individuals experiencing poverty\u00e2\u0080\u0094both individual and systemic\u00e2\u0080\u0094are beyond the scope of this report. However, those circumstances warrant further exploration when considering federal policy interventions designed to reduce the incidence, or ameliorate the effects of, poverty."], "subsections": [{"section_title": "Appendix. Data Tables", "paragraphs": [], "subsections": []}]}]}}
{"id": "R45879", "title": "International Food Assistance: Food for Peace Nonemergency Programs", "released_date": "2019-08-21T00:00:00", "summary": ["The U.S. government provides international food assistance to promote global food security, alleviate hunger, and address food crises among the world's most vulnerable populations. Congress authorizes this assistance through regular agriculture and international affairs legislation, and provides funding through annual appropriations legislation. The primary channel for this assistance is the Food for Peace program (FFP), administered by the U.S. Agency for International Development (USAID). Established in 1954, FFP has historically focused primarily on meeting the emergency food needs of the world's most vulnerable populations; however, it also manages a number of nonemergency programs. These lesser-known programs employ food to foster development aims, such as addressing the root causes of hunger and making communities more resilient to shocks, both natural and human-induced.", "Nonemergency activities, which in FY2019 are funded at a minimum annual level of $365 million, may include in-kind food distributions, educational nutrition programs, training on agricultural markets and farming best practices, and broader community development initiatives, among others. In building resilience in vulnerable communities, the United States, through FFP, seeks to reduce the need for future emergency assistance. Similar to emergency food assistance, nonemergency programs use U.S. in-kind food aid\u00e2\u0080\u0094commodities purchased in the United States and shipped overseas. In recent years, it has also turned to market-based approaches, such as procuring food in the country or region in which it will ultimately be delivered (also referred to as local and regional procurement, or LRP) or distributing vouchers and cash for local food purchase.", "The 115 th Congress enacted both the 2018 farm bill ( P.L. 115-334 ) and Global Food Security Reauthorization Act of 2017 ( P.L. 115-266 ), which authorized all Food for Peace programs through FY2023. In the 116 th Congress, Members may be interested in several policy and structural issues related to nonemergency food assistance as they consider foreign assistance, agriculture, and foreign affairs policies and programs in the course of finalizing annual appropriations legislation. For example,", "The Trump Administration has repeatedly proposed eliminating funding for the entire FFP program, including both emergency and nonemergency programs, from Agriculture appropriations and instead fund food assistance entirely through Department of State, Foreign Operations, and Related Programs appropriations. The Administration asserts that the proposal is part of an effort to \"streamline foreign assistance, prioritize funding, and use funding as effectively and efficiently as possible.\" To date, Congress has not accepted the Administration's proposal and continued to fund the FFP program in Agriculture appropriations, which is currently authorized through FY2023. USAID's internal reform initiative, referred to as Transformation , calls for the merger of the Office of FFP with the Office U.S. Foreign Disaster Assistance (OFDA) into a new entity called the Bureau for Humanitarian Assistance (HA) by the end of 2020. While the agency has indicated that the new HA will administer nonemergency programming, there are few details on how it will do so. FFP programs fall into two distinct committee jurisdictions\u00e2\u0080\u0094Agriculture and Foreign Affairs/Relations\u00e2\u0080\u0094making congressional oversight of programs more challenging. No one committee receives a comprehensive view of all FFP programming, and the committees of jurisdiction sometimes have competing priorities.", "For additional information, see CRS Report R45422, U.S. International Food Assistance: An Overview ."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["For more than 65 years, the U.S. Congress has funded international food assistance through the Food for Peace program (FFP) to alleviate hunger and improve global food security. U.S. food assistance comes in the form of in-kind food commodities purchased in the United States and shipped overseas, and through market-based approaches. Market-based approaches include purchasing food in foreign local and regional markets and then redistributing it, and providing food vouchers and cash transfers that recipients can use to buy food locally. ", "The U.S. Agency for International Development (USAID), the lead development and humanitarian arm of the U.S. government, administers the majority of U.S. international food assistance. Within the agency, the Office of Food for Peace manages the FFP program, which provides both emergency and nonemergency food aid. Nonemergency programming once represented a significant portion of FFP, but this portion has declined (from 83% in FY1959 to 11% in FY2018) as emergency needs have continued to rise and FFP has received emergency funding from additional accounts (see Figure 3 ). The Bureau for Food Security (BFS), within USAID, manages agricultural development and nutrition programs, which support food security goals but are not considered food aid under the umbrella of the Feed the Future Initiative (FTF). The distinctions between FFP nonemergency programs and BFS development programs are found in authorizing legislation, funding flows, and congressional jurisdiction. ", "This report focuses primarily on FFP's nonemergency activities. It explains current programs, legislative history, and funding trends. The report also discusses how FFP nonemergency programs fit within the broader food aid and food security assistance framework, and the future of FFP nonemergency programs in the context of related Trump Administration proposals. Finally, this report explores the challenges Congress faces in conducting oversight of U.S. international food assistance programs, which fall under two separate congressional committee jurisdictions. "], "subsections": []}, {"section_title": "Food for Peace Nonemergency Programming", "paragraphs": ["In FY2018, Food for Peace (both emergency and nonemergency programs) operated in 59 countries and reached more than 76 million recipients. However, FFP had active nonemergency programs in only 15 countries\u00e2\u0080\u0094most of which were in sub-Saharan Africa, with the remaining in Latin America and the Caribbean, and Asia. ", "FFP nonemergency programs seek to aid the poorest of the poor by addressing the root causes of hunger and making vulnerable communities more resilient to shocks, both natural and human-induced. Programs generally last five years and, according to FFP, \"aim to reduce chronic malnutrition among children under five and pregnant or lactating women, increase and diversify household income, provide opportunities for microfinance and savings, and support agricultural programs that build resilience and reduce vulnerability to shocks and stresses.\" Common types of FFP nonemergency activities include in-kind food, cash or voucher distributions, educational programs to encourage dietary diversity and promote consumption of vitamin- and protein-rich foods, farmer training on agricultural value chains and climate-sensitive agriculture, and conflict sensitivity training for local leaders. ", "In building resilience in vulnerable communities, FFP seeks to reduce the need for future emergency assistance and pave the way for communities to pursue longer-term development goals. With few exceptions, nonemergency programs are implemented by nongovernmental organization (NGO) partners. Examples of the range of FFP nonemergency programs include the following: Strengthening Household Ability to Respond to Development Opportunities (SHOUHARDO III ) in Bangladesh began in 2015 to improve \"gender equitable food and nutrition security and resilience of the vulnerable people\" in two of the country's regions. USAID identified four areas of concern on which interventions should focus: gender inequality and women's disempowerment, social accountability, youth, and climate adaptation. CARE, a nonprofit organization that formed in post-World War II to distribute food packages in Europe, implements SHOUARDO III. The program's goal is to reach 384,000 participants through activities that address climate change and disaster resilience training, supplementary food distributions for pregnant and lactating women, youth skills training, the organization of microenterprise groups, and water supply and sanitation activities, among others. SHOUHARDO III is one of the few FFP nonemergency programs that includes a monetization component. In FY2018, SHOUHARDO received more than $18 million in FFP Title II funding. The program is scheduled to run through the end of FY2020. Tuendelee Pamoja II in the Democratic Republic of Congo (DRC) was initiated in 2016 to improve food security and resilience among 214,000 households in selected provinces, with a special focus on women and youth. Food for the Hungry, an international Christian relief, development, and advocacy organization, implements the program. Interventions include the distribution and testing of new varieties of soybeans, beans, and maize; construction of planting terraces to reduce land erosion; training on fishing practices; literacy and numeracy education; and youth training in wood- and metal-working; among others. The program received more than $15 million in FFP Title II funding in FY2018 and is scheduled to run through the end of 2021. Njira Pathways to Sustainable Food Security in Malawi began in 2014 with the aim of improving food security for more than 244,000 vulnerable people in selected districts in Malawi. The programs were designed to address Feed the Future (FTF)-established food security goals for the country and to complement other FTF programs and development goals under USAID/Malawi Mission's Country Development Cooperation Strategy. Project Concern International (PCI), a global development program established in 1961, implements the Njira project; its activities include distributing livestock and offering animal health services to improve livestock production, increasing access to and participation in women's empowerment savings and loan groups, conducting farmer training to combat Fall Armyworm, and distributing food rations to children under five. In FY2018, the Njira project received nearly $2 million in FFP Title II nonemergency funds and nearly $2.5 million in Community Development Funds (CDF). The project is slated to run through late 2019. "], "subsections": [{"section_title": "Food for Peace Nonemergency Programs in the Context of U.S. International Food Assistance", "paragraphs": ["FFP nonemergency programs are largely used to support the transition in food security assistance between short-term emergency food assistance programs and longer-term agricultural development and nutrition assistance programs. They share a close relationship with FFP emergency programs and the BFS-led Feed the Future development programs, but distinct differences exist among these aid channels, which are designed to be complementary and undertaken sequentially (see Figure 1 ) .", "While Food for Peace nonemergency programs address the root causes of food insecurity and seek to build resilience among vulnerable populations, FFP Title II emergency programs seek to distribute immediate, life-saving food and nutrition assistance to populations in crisis. Assistance\u00e2\u0080\u0094primarily through food procured in the United States but also through market-based approaches\u00e2\u0080\u0094is meant for those suffering from hunger or starvation as a result of crises. Programs are short, many running between 12-18 months, and are primarily implemented by the United Nations' World Food Programme. In FY2018, some of FFP's largest Title II emergency responses were staged in South Sudan ($335 million), Yemen ($273 million), and Ethiopia ($198 million).", "As noted, Food for Peace works with the poorest of the poor, focusing on building resilience. Feed the Future works with communities ready for longer-term development and focuses more on agricultural systems strengthening and market development. Catholic Relief Services, for example, currently implements both FFP nonemergency and Feed the Future development programs in Ethiopia. The FFP Ethiopia nonemergency program includes rehabilitating small-scale irrigation systems, conducting assessments on conflict management, and developing \"livelihood pathways\" for beneficiaries. The FTF development program includes financial education and services training, the establishment of marketing groups, and training for local leaders on youth participation in economic and social development. In this case, Food for Peace is supporting resilience strategies and baseline asset-building, while Feed the Future is encouraging more diverse market engagement and economic development.", "The use of Food for Peace nonemergency assistance and Feed the Future development assistance can depend on their different statutory requirements and flexibilities. For example, all FFP nonemergency programs funded with Title II must include in-kind food distributions; FTF programs do not. FFP nonemergency programs have funding flexibility that FTF development programs do not: funding may be reprogrammed from nonemergency to emergency responses if a shock occurs during the course of a nonemergency program. This flexibility exists because Title II funding is authorized for both emergency and nonemergency programing (see the \" Legislation \" section). For example, a five-year FFP nonemergency program in Madagascar shifted some of its funding to emergency programming in 2015, when the southern part of the country was hit with a drought. Once emergency food needs were met in those areas, the program was able to refocus on nonemergency programming.", "In some instances, Food for Peace nonemergency and Feed the Future development programs pursue similar or overlapping programming. Where such overlap occurs, implementing partners often duplicate programs deliberately to smooth the sustainable sequencing of food security programs, from FFP nonemergency to FTF development programming."], "subsections": []}, {"section_title": "Program Coordination Within USAID", "paragraphs": ["As Food for Peace nonemergency programs are meant to bridge the gap between emergency programming and longer-term development programs, FFP seeks to coordinate both within the office and with its BFS counterparts. Within FFP, the office's geographic teams manage nonemergency programs alongside emergency programs, and in many cases the same staff manage both types of programs. For example, an FFP officer managing a nonemergency program in Haiti would also be managing emergency programs in the country. This integration allows the office's geographic staff to leverage resources and approaches between nonemergency and emergency programs.", "FFP officers also work with their Bureau for Food Security counterparts, both in Washington, DC, and in the field. FFP is a part of the Feed the Future target country selection process, and BFS works closely with FFP on its annual country selection process for new countries for FFP nonemergency resources and the subsequent program design for those countries. FFP also uses FTF indicators to measure progress toward programmatic goals in its program evaluations. In the field, BFS and FFP officers collaborate."], "subsections": []}]}, {"section_title": "Legislation", "paragraphs": ["The Food for Peace program was established in 1954 with the passage of the Agricultural Trade Development and Assistance Act of 1954 (P.L. 83-480). Title II of the act authorized the use of surplus agricultural commodities to \"[meet] famine or other urgent relief requirements\" around the world and provided the general authority for FFP development programs. Now referred to as the Food for Peace Act, the program has evolved to reflect changes in domestic farm policy and in response to foreign policy developments. ", "Congress authorizes the majority of international food assistance programs, including the FFP program, in two pieces of legislation: ", "The Farm Bill. Typically renewed every five years, legislation commonly referred to as the farm bill is a multiyear authorization that governs a range of agricultural and food programs. The majority of farm bill-authorized programs are domestic, but Title III includes the Food for Peace Act as Subtitle A. In the most recent farm bill, the Agriculture Improvement Act of 2018 ( P.L. 115-334 ), Congress authorized programs through FY2023. The Global Food Security Act of 2016 (GFSA). Congress enacted the Global Food Security Act of 2016 ( P.L. 114-195 ) to direct the President to coordinate the development of a whole-of-government global food security strategy and to provide food assistance pursuant to the Foreign Assistance Act of 1961 (P.L. 87-195; 22 U.S.C. 2151 et seq.). The GFSA also amended Sections 491 and 492 of the 1961 Act (22 U.S.C. 2292 et seq.) to establish the Emergency Food Security Program (EFSP) under International Disaster Assistance authorities, which FFP uses to provide emergency food assistance primarily through market-based approaches such as local and regional procurement (LRP), vouchers, and cash transfers for food. An extension of GFSA ( P.L. 115-266 ) was enacted in 2018 and authorizes programs through FY2023.", "Food for Peace nonemergency programs, in particular the Title II in-kind commodity purchase and distribution components, have historically received considerable bipartisan support from a broad domestic constituency. This support is a result of the program's link to U.S. farmers and shippers through the farm bill's statutory requirements. While FFP emergency responses make up the majority of the U.S. in-kind programming, the nonemergency food assistance programs share the same domestic connections. In a prepared statement for the House Agriculture Committee in relation to a 2017 hearing on the farm bill, the chairperson of the USA Rice Farmers Board shared the board's support of U.S. international food aid programs, noting that while U.S. Department of Agriculture (USDA) commodity procurement-purchases comprise only between 1% and 2% of total rice exports, \"it is important to the industry that we continue to play a strong role in providing our nation's agricultural bounty to those in need.\" In written testimony for the House Subcommittee on Agriculture Appropriations, the Senior Director of Policy and Advocacy at Mercy Corps stated that \"from our decades of experience working in fragile states, we have found non-emergency FFP programs to be the leading US government tool, for building the resilience of families and communities to food insecurity\u00e2\u0080\u00a6. [W]ith these investments, we can prevent and mitigate food security crises.\" Further, FFP has a close relationship with the U.S. maritime industry as a result of longstanding but evolving requirements that a percentage of FFP commodities be shipped on U.S.-flagged vessels. These agricultural cargo preference requirements can sometimes create tension; the U.S. Maritime Administration asserts that agricultural cargo preference is critical to maintaining U.S. sealift capacity while FFP often expresses concern about how the increased cost of adhering to agricultural cargo preference affects its ability to meet the needs of the world's most food insecure populations. Despite this tension, the maritime industry remains engaged and active in FFP programming and has been a vocal advocate for the commodity-based programs. These historic links to the U.S. agriculture and maritime industries have been a significant factor when Congress considers legislation."], "subsections": []}, {"section_title": "Funding", "paragraphs": ["Consistent with the two authorization vehicles described above, food assistance funds are appropriated through both Agriculture appropriations (for farm bill-authorized programs) and Department of State, Foreign Operations and Related Programs (SFOPS) appropriations (for GFSA-authorized programs). Funds for nonemergency programs come from two accounts:", "The Food for Peace Title II Grants account within the Foreign Agricultural Service in Agriculture appropriations. FFP has received Food for Peace Title II Grants since its establishment. The Development Assistance (DA) account within SFOPS appropriations. FFP receives DA funds\u00e2\u0080\u0094designated as Community Development Funds (CDF)\u00e2\u0080\u0094from BFS to complement its Title II nonemergency resources and improve coordination between FFP and BFS. First legislated in FY2010, Congress intended CDF funds be used to help FFP reduce its reliance on monetization\u00e2\u0080\u0094the practice of partners selling U.S. commodities on local markets and using the proceeds to fund nonemergency programs. The level of CDF that FFP receives from BFS is not required by law; however, Congress has designated funds for CDF in the report accompanying annual appropriations (sometimes referred to as a \"soft earmark\") to which USAID has adhered each fiscal year.", "FFP receives additional funding for emergency food programs through the International Disaster Assistance (IDA) account within SFOPS appropriations. In FY2010, FFP started receiving IDA funds for the Emergency Food Security Program (EFSP) to supplement its Title II emergency funds. ", "In FY2018, Food for Peace received nearly half of its resources through Agriculture appropriations (see Figure 2 ). Of its overall funding, FFP used 11% ($431 million) for nonemergency programs\u00e2\u0080\u0094funded both through Title II and CDF\u00e2\u0080\u0094and 89% ($3.250 billion) for emergency programs. As previously mentioned, this was a marked change from the early years of the FFP program. When the Title II program was established, nonemergency programs constituted 65% of funding. While their share of overall programming rose in the first few years of the program\u00e2\u0080\u0094in 1959, they made up 83% of Title II programming\u00e2\u0080\u0094the share steadily declined in the following decades. By 2007, nonemergency programming accounted for 20% of Title II funds (see Figure 3 ). The following year, Congress established a minimum level (in U.S. dollars) of nonemergency food assistance in the 2008 farm bill ( P.L. 110-246 ). The nonemergency minimum has been maintained in subsequent authorizations but has fallen by $10 million since it was first added to the bill (see Table 1 ). The most recent farm bill ( P.L. 115-334 ), enacted in December 2018, set the minimum level of nonemergency food assistance at $365 million but allowed for Community Development Funds and the Farmer-to-Farmer Program funds to be counted toward the minimum."], "subsections": []}, {"section_title": "Issues for Congress", "paragraphs": ["The 116 th Congress may be interested in a number of issues related to Food for Peace nonemergency programs. Areas of interest may include proposed and ongoing reforms to the FFP program funding and structure that could change both how nonemergency programs fit into the broader landscape of U.S. international food assistance programs, and the means through which the program is funded."], "subsections": [{"section_title": "Proposed Elimination of Title II Funding and Food Aid Reform", "paragraphs": ["Since FY2018, the Trump Administration has proposed eliminating funding for the entire FFP Title II program\u00e2\u0080\u0094both emergency and nonemergency programs\u00e2\u0080\u0094on the basis that doing so would \"streamline foreign assistance, prioritize funding, and use funding as effectively and efficiently as possible.\" In its FY2020 foreign assistance budget request, the Administration referred to providing Title II food aid as \"inefficient.\" Instead of relying on the FFP Title II program, which is funded through Agriculture appropriations, the Administration suggests providing food assistance solely through accounts funded by SFOPS appropriations. The Administration also proposes reducing SFOPS appropriations, indicating a preference for an overall reduction in funding for U.S. foreign assistance, including international food assistance programs.", "The Trump Administration is not the first to suggest significant changes to U.S. international food assistance programs. The Obama Administration also pursued a food aid reform agenda, proposing in its FY2014 budget request to shift all FFP Title II funds into three SFOPS assistance accounts. According to the Obama Administration, the proposed changes would have increased the flexibility, timeliness, and efficiency of U.S. international food assistance and allowed the programs to reach an additional \"4 million more people each year with equivalent funding.\" ", "While to date Congress has not accepted any proposals to defund Title II, there have been efforts on Capitol Hill to change parts of the Title II program. For example, in the 115 th Congress, Senate Foreign Relations Committee Chairperson Bob Corker and House Foreign Affairs Committee Chairperson Edward Royce both introduced versions of the Food for Peace Modernization Act, with bipartisan support ( S. 2551 and H.R. 5276 , respectively). The two bills would have made changes to the Title II program\u00e2\u0080\u0094including eliminating the requirement to purchase all Title II food aid commodities in the United States and removing the monetization requirement\u00e2\u0080\u0094in an effort to reduce cost and gain efficiency. Neither bill received further consideration, but some elements of the proposals were incorporated into the most recent farm bill ( P.L. 115-334 ). ", "In FY2018 and FY2019, Congress did not accept Administration proposals to eliminate Title II funding, and for FY2020, the House-passed Agriculture appropriations include $1.85 billion for Title II. As Congress considers its annual appropriations and future authorization measures, Members may consider how to balance calls for reform with the priorities and vested interests of domestic constituencies, including agricultural interests and development groups, and how the often conflicting viewpoints may affect the effectiveness and efficiency of the Title II nonemergency programs."], "subsections": []}, {"section_title": "Nonemergency Programs in the Context of USAID's Transformation Initiative40", "paragraphs": ["As part of USAID's internal reform initiative, referred to as Transformation , the agency is planning to merge the FFP Office with the Office of U.S. Foreign Disaster Assistance (OFDA) into a new Bureau for Humanitarian Assistance (HA). OFDA is currently responsible for leading the U.S. government response to humanitarian crises overseas. In creating a new HA bureau, USAID would be consolidating its food (currently administered by FFP) and nonfood (currently administered by OFDA) humanitarian responses in an effort to remove potential duplication and present a more unified and coherent U.S. policy on humanitarian assistance on the global stage. In the new HA bureau, FFP and OFDA would no longer remain separate from one another with independent functions; instead, they would be consolidated into one bureau comprising eight offices\u00e2\u0080\u0094three geographically focused (Africa; Asia, Latin America, and Caribbean; and Middle East, North Africa, and Europe) and five technical (covering issues such as award management, program quality, donor coordination, and business operations, among others). (See Appendix B .) ", "The humanitarian community remains engaged with the U.S. government on this proposal and its potential effects on the broader efficiency, effectiveness, and coordination of humanitarian assistance. Some food assistance stakeholders have raised concerns about the dissolution of FFP and its potential impact on Title II programming. According to a USAID congressional notification on the intent to form the HA bureau, Title II nonemergency programming would remain in the new HA bureau, though it is unclear how that arrangement will look in practice. For the moment, USAID is planning to have the new HA geographic offices be responsible for managing both emergency and nonemergency Title II programming; however, a number of details need to be worked out by USAID leadership. These include whether and how nonemergency programs will be incorporated into larger disaster risk reduction efforts, and how the nonemergency programs will fit in with the programs to be managed by the new Bureau for Resilience and Food Security. ", "As part of its Transformation process, USAID has held a number of consultations with Members of Congress. While the structural redesign is underway (HA is currently slated to be operational by the end of 2020, though implementation timelines may change), Congress has opportunities to provide feedback and guidance to the agency as it finalizes office-level details."], "subsections": []}, {"section_title": "Separation of Food for Peace Nonemergency and Feed the Future Development Programs", "paragraphs": ["Some policymakers have questioned why two different offices within USAID are responsible for similar programming, and have suggested either moving FFP's nonemergency portfolio to BFS or vice versa. In either consolidation scenario, the program could potentially benefit from increased coordination. For example, having one office manage all programming and present a unified voice to all stakeholders (including Congress) may reduce communication and coordination challenges. However, USAID could face significant tradeoffs in both consolidation scenarios.", "If FFP's nonemergency portfolio were to move to USAID's Bureau for Food Security, the programs could lose their focus on serving the most vulnerable populations. Unlike Food for Peace, Feed the Future does not focus its programs on the poorest of the poor, does not include in-kind food distributions in its projects, and cannot shift its funding to meet emergency needs should a shock occur. Were FFP nonemergency programming to move to BFS, these unique FFP qualities may be deprioritized in favor of the more traditional development model BFS has pursued with its Feed the Future programs. Additionally, during a disaster FFP often uses its nonemergency programs as a component in the overall emergency response, by either diverting existing resources or injecting new emergency resources to support an early response.", "Conversely, if BFS programming were to move to the Office of Food for Peace, the FTF programs could be deprioritized in favor of emergency programming. As discussed earlier, emergency programs have grown to dwarf nonemergency programming in funding terms (see Figure 3 ). If emergency funding needs continue to rise consistent with their previous trajectory, the demands from the emergency portfolio could outpace and overtake the traditional development assistance, jeopardizing the FTF gains already made and risking future programming."], "subsections": []}, {"section_title": "Use of Community Development Funds (CDF)", "paragraphs": ["Since FY2010, Food for Peace has received Community Development Funds (CDF) from the Development Assistance account in SFOPs appropriations to support its nonemergency programs and reduce reliance on monetization. Over the years, FFP has grown to rely on CDF to pursue the full range of its nonemergency programs. Implementing partners have raised concerns that if the level of CDF funding were to drop, USAID would have to choose between routing CDF funds through BFS to FFP and fully funding BFS-administered programs. If FFP lost its CDF funding, it would likely need to return to using monetization to partially fund its nonemergency programs. To address this potential challenge, Congress could consider changes in legislation, including but not limited to the following:", "Increasing flexibilities in Title II funding , including the authorized level of Section 202(e). An increase in flexibility through Section 202(e) could mimic the programmatic flexibilities FFP has gained through the use of CDF, including interventions that do not rely on in-kind food distributions. Proposed increases in flexibility have been opposed by some FFP stakeholders, in particular U.S. agricultural commodity groups. Designating in law a specific CDF level for FFP \u00e2\u0080\u0094instead of using the \"soft earmark\" in the bill report\u00e2\u0080\u0094thereby guaranteeing a secure line of funding for FFP's nonemergency programs. This approach would likely be supported by the implementing partner community, as it would provide some assurance that the CDF level would remain constant from year to year. However, this approach could negatively affect Feed the Future programming if the overall DA funding were to drop. It also would institutionalize the coordination between FFP and BFS that the sharing of CDF has already propagated."], "subsections": []}, {"section_title": "Congressional Oversight", "paragraphs": ["The various U.S. international food assistance programs fall under two separate congressional committee jurisdictions, which some argue can reduce Congress's ability to pursue comprehensive, integrated oversight of these programs. In the nonemergency context, FFP Title II-funded programs fall under the jurisdiction of the Agriculture Committees and Agriculture Appropriations Subcommittees, but the CDF-funded programming falls under the jurisdiction of the Foreign Affairs and Foreign Relations Committees and SFOPS Appropriations Subcommittees (see Appendix A ). FFP reports on both of these in the International Food Assistance Report (IFAR), the farm bill-mandated annual report to Congress, even though it is not required to include Community Development Funds. This report offers a complete perspective on the FFP nonemergency programs, but it does not contextualize the programs with the entire U.S. international food assistance landscape. The IFAR does not include Emergency Food Security Program or Feed the Future reporting, because both are overseen by the Foreign Affairs/Relations Committees and are subject to different reporting requirements. As such, no single report currently mandated by Congress captures the entirety of international food assistance. ", "The two oversight jurisdictions also present unique challenges to USAID. The two committee groupings often have different (and sometimes competing) priorities, the push and pull of which can sometimes lead USAID and its implementing partners to shoulder a higher administrative burden than other programs that reside in only one jurisdiction. For example, FFP was subject to eight Government Accountability Office (GAO) audits from 2014 to July 2019, covering issues from the monitoring and evaluation of cash-based food assistance programs to how U.S. in-kind commodities are shipped and stored. By comparison, BFS was the primary subject for one GAO audit in that same time-frame."], "subsections": []}]}, {"section_title": "Looking Ahead", "paragraphs": ["With enactment of the 2018 farm bill ( P.L. 115-334 ), Food for Peace Title II nonemergency programs are authorized through FY2023. However, the Administration continues to propose the elimination of the FFP Title II program in its annual budget requests. By moving forward with USAID's Transformation initiative, the Administration is implementing changes to organizational structures through which nonemergency food assistance programs are administered. Congress may consider addressing its priorities for FFP nonemergency programs in annual appropriations legislation, stand-alone bills that address certain components of the program, and Transformation -related consultations.", "Appendix A. U.S. International Food Assistance\u00c2\u00a0Programs", "This graphic illustrates the suite of U.S. international food assistance programs, including their administering agency and congressional jurisdiction. The programs highlighted in this graphic are the nonemergency programs discussed in this report. ", "Appendix B. USAID's Proposed Bureau for Humanitarian Assistance "], "subsections": []}]}}
{"id": "R45804", "title": "Immigration: Alternatives to Detention (ATD) Programs", "released_date": "2019-07-08T00:00:00", "summary": ["Since FY2004, Congress has appropriated funding to the Department of Homeland Security's (DHS's) Immigration and Customs Enforcement (ICE) for an Alternatives to Detention (ATD) program to provide supervised release and enhanced monitoring for a subset of foreign nationals subject to removal whom ICE has released into the United States. These aliens are not statutorily mandated to be in DHS custody, are not considered threats to public safety or national security, and have been released either on bond, their own recognizance, or parole pending a decision on whether they should be removed from the United States.", "Congressional interest in ATD has increased in recent years due to a number of factors. One factor is that ICE does not have the capacity to detain all foreign nationals who are apprehended and subject to removal, a total that reached nearly 400,000 in FY2018. (ICE reported an average daily population of 48,006 aliens in detention for FY2019, through June 22, 2019.) Other factors include recent shifts in the countries of origin of apprehended foreign nationals, increased numbers of migrants who are traveling with family members, the large number of aliens requesting asylum, and the growing backlog of cases in the immigration court system.", "Currently, ICE's Enforcement and Removal Operations (ERO) runs an ATD program called the Intensive Supervision Appearance Program III (ISAP III). On June 22, 2019, program enrollment included more than 100,000 foreign nationals, who are a subgroup of ICE's broader \"non-detained docket\" of approximately 3 million aliens. Those in the non-detained docket include individuals the government has exercised discretion to release\u00e2\u0080\u0094for example, they are not considered a flight risk or there is a humanitarian reason for their release (as well as other reasons). (Others who are not detained include aliens in state or federal law enforcement custody and absconders with a final order of removal.) Individuals in the non-detained docket, and not enrolled in the ISAP III program, receive less-intensive supervision by ICE. Those in ISAP III are provided varying levels of case management through a combination of face-to-face and telephonic meetings, unannounced home visits, scheduled office visits, and court and meeting alerts. Participants may be enrolled in various technology-based monitoring services including telephonic reporting (TR), GPS monitoring (location tracking via ankle bracelets), or a recently introduced smart phone application (SmartLINK) that uses facial recognition to confirm identity as well as location monitoring via GPS.", "From January 2016 to June 2017, ICE also ran a community-based supervision pilot program for families with vulnerabilities not compatible with detention. The Family Case Management Program (FCMP) prioritized enrolling families with young children, pregnant or nursing women, individuals with medical or mental health considerations (including trauma), and victims of domestic violence. The program was designed to increase compliance with immigration obligations through a comprehensive case management strategy run by established community-based organizations. FCMP offered case management that included access to stabilization services (food, clothing, and medical services), obligatory legal orientation programing, and interactive and ongoing compliance monitoring. An ICE review of FCMP in March 2017 showed that the rates of compliance for the program were consistent with other ICE monitoring options. The program was discontinued due to its higher costs as compared to ISAP III. Even with the higher costs, there is considerable congressional interest in the effectiveness of FCMP as a way to maintain supervision for families waiting to proceed through the backlogged immigration court system.", "While DHS upholds that ISAP III is neither a removal program nor an effective substitute for detention, it notes that the program allows ICE to monitor some aliens released into communities more closely while their cases are being resolved. Supporters of ATD programs point to their lower costs compared to detention on a per day rate, and argue that they encourage compliance with court hearings and ICE check-ins. Proponents also mention the impracticalities of detaining the entire non-detained population of roughly 3 million aliens. The primary argument against ATD programs is that they create opportunities for participants to abscond (e.g., evade removal proceedings and/or orders). Other concerns include whether the existence of the programs provides incentives for foreign nationals to migrate to the United States with children to request asylum, in the hope that they will be allowed to reside in the country for several years while their cases proceed through the immigration court system, or that it provides incentives\u00e2\u0080\u0094such as community release\u00e2\u0080\u0094for adults without bona fide family relationships to travel with children and file fraudulent asylum claims or do children harm."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Background", "paragraphs": ["In recent years, the Trump Administration and Congress have grappled with how to address the substantial number of migrants from the Northern Triangle countries of El Salvador, Guatemala, and Honduras arriving to the U.S. Southwest border. Many observers have criticized what they label as \"catch and release,\" a colloquial phrase used to describe the process by which apprehended asylum seekers who lack valid documentation are subsequently released into the U.S. interior while they await their immigration hearings. This occurs because of growing backlogs in the immigration court system leading to wait times for immigration hearings now often lasting two years or more, and a lack of appropriate detention space for families due to the limitations imposed by the Flores Settlement Agreement, which restricts the government's ability to detain alien minors. Such observers argue that many apprehended aliens who are released into the United States do not appear for their immigration hearings and become part of the unlawfully present alien population. ", "In light of these circumstances, Department of Homeland Security (DHS) Alternatives to Detention (ATD) programs are generating increased congressional interest as a way to monitor and supervise foreign nationals who are released while awaiting their immigration hearings. Proponents of ATD programs cite their substantially lower daily costs compared with detention, the high compliance rates of ATD participants with immigration court proceedings, and what they characterize as a more humane approach of not detaining low-flight-risk foreign nationals, many of whom are asylum applicants (particularly family units). Critics contend that ATD programs provide opportunities for participants to abscond (e.g., evade removal proceedings and/or orders) and create incentives for migration by allowing people to live in the United States for extended periods while awaiting the resolution of their case. They also question the effectiveness of these types of monitoring programs as a removal tool (i.e., as a means to remove participants ordered removed from the United States). DHS, for its part, states that nothing compares to detention for ensuring compliance. However, existing capacity to hold aliens is limited.", "Immigration statistics indicate that while the total number of individuals apprehended at the Southwest border has generally declined over the past two decades, the demographic profile of those apprehended has shifted toward a population more likely to be subject to detention. Historically, most unauthorized aliens apprehended at the Southwest border have been adult Mexican males who are considered to be \"economic\" migrants because they are primarily motivated by the opportunity to work in the United States, and who can be more easily repatriated without requiring detention. However, over the past five years, apprehensions of aliens from the Northern Triangle countries\u00e2\u0080\u0094many of whom are reportedly fleeing violence and seeking asylum in the United States\u00e2\u0080\u0094have exceeded those from Mexico. ", "Since 2017, U.S. Customs and Border Protection (CBP) has reported a sharp increase in the number of apprehensions at the Southwest border, especially among members of family units and unaccompanied alien children (UAC). Together, persons in family units and UAC currently make up more than two-thirds of apprehensions. In May 2018, the number of apprehensions by the U.S. Border Patrol plus the number of aliens determined inadmissible by CBP's Office of Field Operations (OFO) totaled 22,000; in April 2019, that number was 100,569, a 357% increase. In contrast, the number of single adults who were apprehended or found inadmissible rose from 24,493 to 43,637, a 46% increase, during the same time period. Foreign nationals from the Northern Triangle are requesting asylum at high rates that are DHS officials say are overwhelming the ability of federal agencies to process their detention, adjudication, and removal. "], "subsections": []}, {"section_title": "Laws Governing Aliens Arriving at the U.S. Border", "paragraphs": ["The U.S. Border Patrol is responsible for immigration enforcement at U.S. borders between ports of entry (POEs). CBP's Office of Field Operations (OFO) handles the same responsibilities at the POEs. Foreign nationals seeking to enter the United States may request admission legally at a POE. In some cases, aliens attempt to enter the United States illegally, typically between POEs on the southern border. If apprehended, they are processed and detained briefly by Border Patrol; placed into removal proceedings; and, depending on the availability of detention space, either transferred to the custody of Immigration and Customs Enforcement (ICE) or released into the United States. ", "Removal proceedings take one of two forms (streamlined or standard) depending on how the alien attempted to enter the United States, his/her country of origin, whether he/she is an unaccompanied child or part of an arriving family unit, and whether he/she requests asylum. If the alien is determined by an immigration officer to be inadmissible to the United States because he/she lacks proper documentation or has committed fraud or willful misrepresentation in order to gain admission, the alien may be subject to a streamlined process known as expedited removal. Expedited removal allows for the alien to be ordered removed from the United States without any further hearings or review. UAC, however, are not subject to expedited removal. Instead, if they are subject to removal, they are placed in standard removal proceedings and transferred to the Department of Health and Human Services' (HHS') Office of Refugee Resettlement (ORR) pending those proceedings.", "Although most aliens arriving in the United States without valid documentation are subject to expedited removal, they may request asylum, a form of relief granted to foreign nationals physically present within the United States or arriving at the U.S. border who meet the definition of a refugee. During CBP's initial screening process, if the alien indicates an intention to apply for asylum or a fear of persecution in his/her home country, the alien is interviewed by an asylum officer from DHS's U.S. Citizenship and Immigration Services (USCIS) to determine whether she/he has a \"credible fear of persecution.\" If the alien establishes a credible fear, she/he is placed into standard removal proceedings under Immigration and Nationality Act (INA) \u00c2\u00a7240 and may pursue an asylum application at a hearing before an immigration judge.", "Those who receive a negative credible fear determination may request that an immigration judge review that finding. If the immigration judge overturns the negative credible fear finding, the alien is placed in standard removal proceedings; otherwise, the alien remains subject to expedited removal and is usually deported.", "Aliens may be detained or granted parole while in standard removal proceedings. During these proceedings, immigration judges within the Department of Justice's (DOJ's) Executive Office for Immigration Review (EOIR) conduct hearings to determine whether a foreign national is subject to removal or eligible for any relief or protection from removal. While immigration judges have the authority to make custody decisions, ICE makes the initial decision whether to detain or release the alien into the United States pending removal proceedings. Most asylum seekers who are members of family units are currently being released into U.S. communities to await their immigration hearings. "], "subsections": []}, {"section_title": "Detention in the Immigration System", "paragraphs": ["The INA authorizes DHS to arrest, detain, remove, or release foreign nationals subject to removal. Enforcement and Removal Operations (ERO) is the office within ICE that is charged with detention and removal of aliens from the United States. Generally, aliens may be detained pending removal proceedings, but detention is discretionary if the alien is not subject to mandatory detention. Detention is mandatory for certain classes of aliens (e.g., those convicted of specified crimes) with no possibility of release except in limited circumstances.", "During the intake process, an ERO officer uses the ICE Risk Classification Assessment (RCA), a software tool that attempts to standardize custody decisions across all ERO offices, to evaluate whether a foreign national should be detained or released on a case-by-case basis. The factors used to make the detention decision include, but are not limited to, criminal history, alleged gang affiliation, previous compliance history, age (must be at least 18), community or family ties, status as a primary caregiver or provider to family members, medical conditions, or other humanitarian conditions. ", "Typically, an alien may be released from ICE custody on an order of recognizance, bond, or parole on humanitarian grounds. For example, aliens initially screened for expedited removal who request asylum are generally subject to mandatory detention pending their credible fear determinations, and, if found to have a credible fear, pending their standard removal proceedings; however, DHS has the discretion to parole the alien into the United States pending those proceedings. ", "Pursuant to a court settlement agreement, alien minors may be detained by ICE for only a limited period, and must be released to an adult sponsor or a non-secure, state licensed child welfare facility pending their removal proceedings. Due to these legal restrictions and a lack of appropriate facilities for family units, DHS typically releases family units with accompanying minors, if they are subject to removal, pending their removal proceedings because there are not enough licensed shelters available to detain the number of family units arriving at the Southwest border. Thus, if family units entering the United States request asylum and receive a positive credible fear determination, they typically will not be detained throughout their removal proceedings. ", "In addition, as noted previously, UAC are generally transferred to the custody of ORR pending the outcome of their removal proceedings. Thus, like family units, UAC typically are released from DHS custody and placed in the non-detained docket during those proceedings. ", "All aliens released from ICE custody into the U.S. interior are assigned to the non-detained docket and must report to ICE at least once a year. ICE's non-detained docket currently has approximately 3 million cases. Some portion of those in the non-detained docket are enrolled in an ATD monitoring program, but all aliens in the non-detained docket are awaiting a decision on whether they should be removed from the United States.", "The number of initial \"book-ins\" to an ICE detention facility (by ICE and CBP combined) has exceeded 300,000 annually in recent years, peaking in 2014 at 425,728, and reaching nearly 400,000 in FY2018. Even though there were nearly 400,000 admissions to detention in FY2018, the number of book-ins does not describe the population of aliens who are in a detention facility on any given day. Instead, the number of aliens in detention on a given day is determined by the number of book-ins, the length of stay in detention, and the number of beds authorized by Congress. In FY2019, the number of detention beds authorized by Congress was set at 45,274, up nearly 5,000 from the previous year, and more than 10,000 greater than FY2016. ICE reported that 54,082 aliens were currently detained on June 22, 2019. "], "subsections": []}, {"section_title": "ICE Caseload Size and ATD Participants", "paragraphs": [" Figure 1 shows the ICE caseload, which consists of all detained and non-detained aliens that ICE must supervise as part of its docket management responsibilities. ", "As mentioned above, non-detained aliens include those released from ICE custody on various types of orders, including orders of recognizance, parole, and bond, and those who were never detained. The ICE non-detained docket also includes aliens in state or federal law enforcement custody and at-large aliens with final orders of removal (e.g., fugitives). Those released from ICE custody are required to report to ERO at least once annually, but the frequency is at the discretion of ERO. The non-detained docket caseload is monitored as aliens move through immigration court proceedings until their cases close. Aliens in ATD have secured a legal means of release (i.e., bond or parole); participating in ATD is a condition of their release.", "As noted, ICE's full non-detained caseload was approximately 3 million foreign nationals on June 22, 2019. On that same date, ICE reported that there were 54,082 detained aliens, less than 2% of the entire ICE caseload. Included in the ICE non-detained caseload are 101,568 aliens, approximately 3% of all cases (See Figure 1 ), enrolled in ISAPIII.", "The goal of the ICE ATD program is to monitor and supervise certain aliens in removal proceedings more frequently relative to those released with annual supervision. Those in ATD are required to report to ERO annually as well, but they are also subject to varying degrees of supervision and monitoring at more frequent intervals on a case-by-case basis (see description of \" Alternatives to Detention (ATD) Programs \"). More broadly, DHS maintains that ATD programs should not be considered removal programs or a substitute for detention. Instead, according to DHS, these programs have enhanced ICE's ability to monitor more intensively a subset of foreign nationals released into communities. "], "subsections": []}, {"section_title": "Alternatives to Detention (ATD) Programs", "paragraphs": [], "subsections": [{"section_title": "Intensive Supervision Appearance Program III (ISAP III)", "paragraphs": ["ICE's Intensive Supervision Appearance Program III (ISAP III) is the third iteration of the ATD program started by the agency in 2004. It is the only ATD program currently operated by ERO. To be eligible for this program, participants must be 18 years of age or older and at some stage of their removal proceedings. The most recent publicly available data show that there were 101,568 active participants enrolled in ISAP III, which is a 283% increase over the 26,625 enrollees in FY2015. ", "Those enrolled in ISAP III are supervised largely by BI, Inc., a private company that provides ICE with case management and technology services in an attempt to ensure non-detained aliens' compliance with release conditions, attendance at court hearings, and removal. ERO ATD officers determine case management and supervision methods on a case-by-case basis. Case management can include a combination of face-to-face and telephonic meetings, unannounced visits to an alien's home, scheduled office visits by the participant with a case manager, and court and meeting alerts. Technology services may include telephonic reporting (TR), GPS monitoring (via ankle bracelets), or a relatively new smartphone application (SmartLINK) that allows enrolled aliens to check in with their case workers using facial recognition software to confirm their identity at the same time that their location is monitored by the GPS capabilities of the smartphone. As of June 22, 2019, approximately 42% of active participants in the ISAP III program used telephonic reporting, 46% used GPS monitoring, and 12% used SmartLINK. ", "According to a 2014 Government Accountability Office (GAO) report, enrollees in ICE ATD programs are closely supervised at the beginning of their participation. If they are compliant with the terms of their plans in the first 30 days, the level of supervision may be lowered. Various compliance benchmarks are tracked in order to make decisions about whether supervision should be reduced or increased. If a final order of removal is issued, supervision usually increases until resolution of the case. ICE typically ends an alien's participation in the program when they are removed, depart voluntarily, or are granted relief from removal through either a temporary or permanent immigration benefit. "], "subsections": [{"section_title": "Who is in the ISAP III program?58", "paragraphs": ["Statistics obtained from ERO show that of the 87,384 enrollees in ISAP III on August 31, 2018, approximately 61% were female and 56% were members of family units (at least one adult with at least one child). Approximately 61% of participants were between the ages of 18 and 34, another 38% were 35-54, and 2% were 55 and older. Seventy-one percent of ISAP III enrollees were from the Northern Triangle countries of Guatemala, Honduras, and El Salvador ( Figure 2 ). Participants from Mexico made up 17% of the total, and the remaining 12% were from all other countries ( Figure 2 ). Ninety percent had no record of a criminal conviction ( Figure 3 ). Although all foreign nationals in ISAP III are in removal proceedings, most (86%) did not yet have a final order of removal on the date that these data were made available. Fourteen percent had a final order of removal; 19% of these aliens had appealed their removal order."], "subsections": []}, {"section_title": "Evaluating ATD", "paragraphs": ["In 2014, GAO evaluated ISAP III's predecessor program, ISAP II, during the FY2011 to FY2013 period. This iteration of the program had two supervision options, \"full service\" and \"technology only,\" thus the results of the GAO evaluation of ISAP II have limited utility for better understanding the effectiveness of ISAP III (which has not been similarly evaluated).", "The GAO evaluation of ISAP II noted that ICE had established two program performance measures to assess the effectiveness of the program: ensuring compliance with court appearance requirements and securing removals from the United States. However, GAO stated that limitations in data collection interfered with its ability to assess overall program performance. ", "GAO found high rates of compliance with court appearances among full service ISAP II enrollees in the FY2011-FY2013 time period: 99% of participants appeared at their court hearings, dropping to 95% if it was their final removal hearing. Similar data was not collected for participants enrolled in the technology-only component, which amounted to 39% of the total participants in 2013. GAO subsequently reported that ICE, through its contractor, began collecting court compliance data for approximately 88% of the total participants, who were managed by either ICE or the contractor. ", "According to ICE officials, as reported by GAO, ICE added a performance measure based on removals in 2011 because \"the court appearance rate had consistently surpassed 99 percent and the program needed to establish another goal to demonstrate improvement over time.\"", "GAO found that ICE met its ISAP II program goal for the number of removals for FY2012 and FY2013. For each of these years, the removal goal was a 3% increase in the number of removals from the previous fiscal year. In FY2012, the removal goal was 2,815, and ICE met it by removing 2,841 program participants from the United States. In FY2013, the removal goal was increased to 2,899, and ICE removed 2,901 program participants from the United States.", "Even though GAO was able to report on ISAP II removal and court compliance performance measures, it determined that data collection limitations hampered its ability to fully evaluate ISAP II's performance. For example, as described above, data collection on court appearance rates was inconsistent and incomplete for over one-third of program participants. ICE's performance measures were based on data collected at the time of an alien's termination from ISAP II, but ICE could not determine whether the alien complied with all of the terms of his/her release while participating in the program or absconded, due to incomplete record keeping and limited resources to maintain contact. GAO concluded that these performance measures and rates provided an incomplete picture of enrollees who were terminated from ISAP II prior to receiving final disposition of immigration proceedings, making it impossible to know how many were removed, departed voluntarily, or absconded."], "subsections": []}]}, {"section_title": "The Family Case Management Program (FCMP)", "paragraphs": ["The Family Case Management Program (FCMP), which operated from January 2016 until June 2017, was an ATD pilot program for families with vulnerabilities not compatible with detention. An ICE review of the program published in March 2017 showed that although the rates of compliance for the FCMP were consistent with other ICE monitoring options, FCMP daily costs per family unit were higher than ISAP III. The program was discontinued. ", "The FCMP prioritized families with young children or pregnant or nursing women, individuals with medical or mental health considerations (including trauma), and victims of domestic violence. The program was designed to increase compliance with immigration obligations through a comprehensive case management strategy supported by established community-based organizations (CBOs). A private contractor, GEO Care, Inc., entered into agreements with local CBOs that provided case management and other services. ", "The program operated as follows. Each family was assigned to a case manager and offered three sets of services. First, participants were offered \"initial stabilization\" services, such as referrals for legal assistance, medical and food assistance, and English language training, based on the premise that stable families are more likely to comply with immigration requirements. Second, participants were required to attend legal orientation programs, which included presentations about immigration proceedings, obligations of participants, and legal representation. These programs were also designed to orient enrollees in understanding basic U.S. laws covering issues such as child supervision, domestic violence, and driving while intoxicated. Third, the program was specifically intended to reinforce information pertinent to aliens' cases through frequent reporting requirements, typically monthly office and home visits with case managers and monthly appointments with ERO. Ongoing relationships with case workers were developed to build trust in the immigration system and set clear expectations of the legal process, as well as to provide planning assistance for the eventuality of return, removal, or an immigration benefit that would offer relief from removal. Individualized and interactive oversight of cases and a flexible monitoring plan (similar to ISAP III) were implemented to provide a range of supervision options\u00e2\u0080\u0094supervision was typically high while families stabilized their situations, and lower (conducted by ERO only) once they were considered stabilized. "], "subsections": [{"section_title": "Who was enrolled in the FCMP?", "paragraphs": ["The program enrolled 952 heads of households with 1,211 children, for a total of 2,163 individuals in five metropolitan areas around the country. ", "According to a 2018 ICE internal close-out report, most of the families in the program (92%) were headed by women; and most of the participants (95%) were from the Northern Triangle countries\u00e2\u0080\u0094El Salvador (44%), Honduras (32%), and Guatemala (19%) ( Figure 4 ). Overall, 55% of the program participants were children under the age of 18; 21% of children were under age 6. Twenty-one percent of program participants were between the ages of 26 and 35, 13% were 18-25, 9% were 36-45, and 2% were 46 or older ( Figure 5 ). All participants enrolled in the FCMP were individually assessed for vulnerabilities and needs. Seventy-three percent had experienced some kind of trauma, 11% were victims of domestic violence, 6% were pregnant, 6% were nursing, and 4% had mental health concerns ( Figure 6 )."], "subsections": []}, {"section_title": "Evaluating FCMP", "paragraphs": ["ICE conducted an evaluation of the FCMP that focused on three metrics: attendance at ERO appointments, attendance at appointments with community-based organizations, and attendance at court hearings. Data on compliance of the relatively small number of families that completed the program prior to its termination reported it to be high across all locations, with 99% attendance at immigration court proceedings and 99% compliance with ICE monitoring requirements. About 4% of program participants absconded during the life of the program. In total, 65 families left the program: 7 were removed from the United States by ICE, 8 left the country on their own, 9 were granted some form of immigration relief, and 41 absconded. The rest of the families remained in the program; however, because of its short duration the ICE evaluation of the FCMP is limited\u00e2\u0080\u0094the majority of the participants were still in immigration proceedings when it was terminated. It is unknown what the program's success rates would have been if participants were allowed to remain in the program through the final outcome of their cases. When ICE discontinued the program in June 2017, the agency stated that rates of compliance for the FCMP were consistent with its other ATD program (i.e., ISAP III).\u00c2\u00a0", "In addition to compliance rates, another important factor in evaluating the program is its cost. The FCMP cost approximately $38.47 per family per day in FY2016, versus approximately $4.40 per person per day for ISAP III. By comparison, family detention costs an estimated $237.60 per day and adult detention in the same cities that the FCMP operated in cost $79.57 on average per day in FY2016. The FCMP is more expensive than ISAP III due to the comprehensive case management and services available to its participants, the more vulnerable family populations targeted, and the smaller caseload per case manager (which allowed for more time with each participant household). For example, FCMP case managers were expected to have a high level of experience, used outreach (not just referrals) to connect participants with community resources, had Spanish language ability or accessed interpretation services, and developed individualized plans for families, including children. The evaluation indicated that FCMP families made use of the services offered to them: the most common referrals made by case workers were for legal services, medical attention, and food aid. ", "The Consolidated Appropriations Act, 2019 ( P.L. 116-6 ) includes $30.5 million to resume the FCMP. The conference report states that the FCMP \"can help improve compliance with immigration court obligations by helping families access community-based support of basic housing, healthcare, legal and educational needs.\" The conference report also directs ICE to prioritize the use of ATD programs, including the FCMP, for families. In addition, the report instructs ICE to brief the relevant committees, within 90 days of the date of enactment, on a plan for a program within the FCMP managed by nonprofit organizations that have experience in connecting families with community-based services. ", "The ICE ERO Detention Management website mentions a new program, Extended Case Management Services (ECMS). It states, \"as instructed by Congress, ICE recently incorporated many of the Family Case Management Program (FCMP) principles into its traditional ATD program. These principles were incorporated into the current ATD ISAP III through a contract modification and are known as Extended Case Management Services (ECMS). These same services are available through the ECMS modification as they were available under FCMP with two distinct differences: ECMS is available in a higher number of locations and available at a fraction of the cost. While ECMS is a new program, ICE continues to identify and enroll eligible participants.\" As of June 22, 2019, ICE reported that 57 family units and 59 adults are enrolled in ECMS."], "subsections": []}]}]}, {"section_title": "Why have alternatives to detention?", "paragraphs": ["Supporters of ATD programs cite several reasons for their use. First, the number of foreign nationals currently being taken into custody far exceeds the capacity of existing detention facilities. As noted above, in FY2018 the number of book-ins to ICE facilities was nearly 400,000. As of July 12, 2018, ICE's detention capacity was approximately 45,700 beds; of these, approximately 2,500 were for family units housed in family residential centers. Second, many foreign nationals who are in removal proceedings are not considered security or public safety threats, nor are they an enforcement priority as outlined in guidance to DHS personnel regarding immigration enforcement. Third, some foreign nationals who are found deportable or inadmissible may not be removed because their countries of citizenship refuse to confirm an individual's identity and nationality, issue travel documents, or otherwise accept their physical return. A U.S. Supreme Court ruling from 2001, Zadvydas v. Davis , limits the federal government's authority to indefinitely detain aliens who have been ordered removed and who have no significant likelihood of removal in the reasonably foreseeable future.", "Those who promote using ATD programs also cite the relatively low cost compared with detention. ICE spent an average of $137 per adult per day in detention nationwide in FY2018. The cost of enrolling foreign nationals in the ISAP III program depends on the method of management, but the average daily cost per participant in FY2018 (through July 2018) was $4.16. GAO utilized two methods of determining the cost of ATD (ISAP II) relative to detention in FY2013 (at that time, the average daily cost of ISAP II was $10.55, while daily detention was an average of $158). First, given the average daily costs of ATD and detention, and the average length of time an alien spent in detention awaiting an immigration judge's final decision, GAO found that the cost of maintaining an enrollee in ISAP II would surpass the costs of detention only if the enrollee were in the program for 1,229 days, which would be 846 days longer than the average number of days a participant typically spent in it. Second, given the average cost of ATD and detention, and the average length of time an alien spent in detention regardless of whether a final decision on her/his case was rendered, GAO determined an individual would have to spend, on average, 435 days in ISAP II before they exceeded the cost of the average length of detention (29 days in FY2013).", "There are also arguments against using ATD programs. Of primary concern is that the programs, in comparison to detention, create opportunities for aliens in removal proceedings to abscond and become part of the unauthorized population who are not allowed to lawfully live or work in the United States. Because immigration judges must prioritize detained cases, ATD enrollees must often wait several years before their cases are heard, during which time they may abscond. They may also fall out of contact with ERO for other reasons. For example, an alien may move within the United States and fail to provide updated contact information to ERO. If they do not receive communication from ICE or the immigration court system, they could miss court dates that have changed in the interim. If they fail to show up for a removal hearing, for example, they can be ordered removed in absentia , which would render them inadmissible for a certain period (at least 5 years if they are an arriving alien, and at least 10 years for all other aliens) and ineligible for certain forms of relief from removal for 10 years.", "Another concern is that asylum-seeking families are often placed into ATD, and this creates incentives for others to travel to the United States with children, request asylum, and receive similar conditions of release into the United States. DHS has expressed concern over adults using children as a \"human shields\" to avoid detention after illegally entering the United States. Those without bona fide family relationships may travel with children and file fraudulent claims or do harm to children. Recent reports of children being \"recycled\"\u00e2\u0080\u0094crossing into the United States with an adult or a family, only to be returned across the border to travel with another migrant\u00e2\u0080\u0094has prompted DHS to take biometric data, such as fingerprints, from children.", "Additional arguments against using ATD programs include that reliable measures of their effectiveness are limited, as discussed above in \" Evaluating ATD \" and \"Evaluating FCMP,\" and for the FCMP pilot, that the feasibility of scaling up a small pilot program to accommodate the large number of families requesting asylum remains an open question. "], "subsections": []}]}}
{"id": "R46326", "title": "Stafford Act Declarations for COVID-19 FAQ", "released_date": "2020-04-22T00:00:00", "summary": ["On March 13, 2020, President Donald J. Trump declared an emergency under Section 501(b) of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (Stafford Act; 42 U.S.C. \u00c2\u00a7\u00c2\u00a75121 et seq.) in response to coronavirus disease 2019 (COVID-19). The declaration authorized assistance to all U.S. states, territories, tribes, and the District of Columbia. Specifically, the Stafford Act emergency declaration authorized one form of Federal Emergency Management Agency (FEMA) assistance: Public Assistance emergency protective measures (as authorized under Stafford Act Section 502). Subsequently, the President approved major disaster declaration requests under the Stafford Act for all 50 states, the District of Columbia, Puerto Rico, the Virgin Islands, Guam, American Samoa, and the Commonwealth of the Northern Mariana Islands (authorized under Stafford Act Section 401).", "This report provides answers to frequently asked questions (FAQs) regarding the Stafford Act disaster declarations made for COVID-19, federally available assistance, and sources of funding. The subjects to be covered include:", "Stafford Act declarations, including legal authorities, limitations on assistance, and other information related to the declaration request process; types of assistance available to state, territorial, and tribal governments, private nonprofit organizations, private entities, and individuals and households pursuant to the Stafford Act emergency and major disaster declarations for COVID-19; the Disaster Relief Fund (DRF), the source used to fund FEMA assistance provided pursuant to Stafford Act emergency and major disaster declarations; and additional references.", "This report also includes the following appendices:", "Appendix A includes Table A-1 , which lists the categories of FEMA assistance authorized pursuant to the major disaster declarations for COVID-19, organized by state and territory. Appendix B provides an example of different states, territories, and tribes that have received presidential emergency declarations under the Stafford Act for the same incident.", "The scope of this report is limited to assistance authorized under the Stafford Act. There are, however, other types of assistance extrinsic to the Stafford Act that are activated by a Stafford declaration. This report does not address these other forms of assistance. The report is not a comprehensive review of all potential forms of federal assistance made available for COVID-19 response and recovery. It does not provide information on the assistance made available pursuant to the President's declaration of emergency under the National Emergencies Act (NEA; 50 U.S.C. \u00c2\u00a7\u00c2\u00a71601 et seq.) or the declaration by the Secretary of Health and Human Services (HHS) of a Public Health Emergency under Section 319 of the Public Health Service Act (PHSA; 42 U.S.C. \u00c2\u00a7247d).", "Information included in this report is current as of April 22, 2020."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["On March 13, 2020, President Donald J. Trump declared an emergency under Section 501(b) of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (Stafford Act; 42 U.S.C. \u00c2\u00a75191(b)) in response to coronavirus disease 2019 (COVID-19). The President's emergency declaration authorized assistance for COVID-19 response efforts for all U.S. states, territories, tribes, and the District of Columbia in accordance with Stafford Act Section 502. The emergency declaration authorized the Federal Emergency Management Agency's (FEMA's) Public Assistance (PA) program, which provides direct and financial assistance for emergency protective measures.", "The President's March 13, 2020 emergency declaration letter to the Acting Secretary of the Department of Homeland Security, the Secretary of the Department of Treasury, the Secretary of the Department of Health and Human Services, and the Administrator of the Federal Emergency Management Agency, stated that the President \"believe[s] that the disaster is of such severity and magnitude nationwide that requests for a declaration of a major disaster ... may be appropriate.\" As of March 20, 2020, the President began approving major disaster declaration requests under the Stafford Act. As of April 22, 2020, the President had approved major disaster declaration requests for all 50 states, the District of Columbia, Puerto Rico, the Virgin Islands, Guam, American Samoa, and the Commonwealth of the Northern Mariana Islands.", "This report provides answers to frequently asked questions (FAQs) regarding:", "Stafford Act declarations, including legal authorities, limitations on assistance, and other information related to the declaration request process; types of assistance available to state, territorial, and tribal governments, private nonprofit organizations, private entities, and individuals and households pursuant to the Stafford Act emergency and major disaster declarations for COVID-19; the Disaster Relief Fund (DRF), the source of funding for the Stafford Act emergency and major disaster declarations; and additional references.", "The scope of this report is limited to assistance authorized under the Stafford Act. There are, however, other types of assistance extrinsic to the Stafford Act that are activated by a Stafford declaration. This report does not address these other forms of assistance."], "subsections": []}, {"section_title": "Stafford Act Declarations", "paragraphs": ["The Stafford Act authorizes the President to issue two types of declarations that could provide federal assistance to states and localities in response to a public health incident, such as an infectious disease outbreak: (1) an \"emergency declaration\" (authorized under Stafford Act Section 501), or (2) a \"major disaster declaration\" (authorized under Stafford Act Section 401). The following questions relate to the Stafford Act declarations for COVID-19. "], "subsections": [{"section_title": "The President declared an emergency for COVID-19. Do states, territories, and tribes still need to request a COVID-19 emergency declaration?", "paragraphs": ["The President's emergency declaration authorized assistance for COVID-19 response efforts for all U.S. states, territories, tribes, and the District of Columbia; specifically, it authorized FEMA Public Assistance (PA) emergency protective measures. Thus, states, territories, and tribes do not need to request separate emergency declarations in addition to the President's emergency declaration. If, however, a state, territory, or tribe needs supplementary federal assistance, the governor or chief executive may request that the declaration be amended to include additional areas or types of assistance. FEMA can approve a request for additional areas or forms of assistance after a presidential emergency declaration. ", "The assistance provided pursuant to an emergency declaration is limited (see Table 1 , which lists the forms of assistance available pursuant to each type of declaration). If a state, territory, or tribe needs assistance that is only available pursuant to a major disaster declaration, they may submit a major disaster declaration request to the President (through FEMA). Although the President can declare an emergency unilaterally in certain circumstances, a major disaster declaration would need to be requested by state, territory, or tribal governments (see \" Why didn't the President declare a national major disaster for COVID-19? \")."], "subsections": []}, {"section_title": "Does the President have the authority to unilaterally declare an emergency under the Stafford Act?", "paragraphs": ["Section 501(b) of the Stafford Act allows the President to unilaterally declare an emergency for certain emergencies involving federal primary responsibility. The President's nationwide emergency declaration for COVID-19 was made under Stafford Act Section 501(b) on the grounds that ", "the entire country is now facing a significant public health emergency ... [and] [o]nly the Federal Government can provide the necessary coordination to address a pandemic of this national size and scope.... It is the preeminent responsibility of the Federal Government to take action to stem a nationwide pandemic that has its origins abroad, which implicates its authority to regulate matters related to interstate matters and foreign commerce and to conduct the foreign relations of the United States. ", "This is the first time a President has unilaterally declared a Stafford Act emergency for a public health incident\u00e2\u0080\u0094specifically, an infectious disease outbreak. Unilateral presidential declarations, however, have been made for incidents on a limited scale."], "subsections": []}, {"section_title": "Is there a cap on the amount of funding FEMA can spend under an emergency declaration?", "paragraphs": ["Although Stafford Act Section 503 sets a statutory \"cap\" of $5 million on spending for a single emergency, there is an exception. The $5 million limit may be exceeded when the President determines that:", "(A) continued emergency assistance is immediately required;", "(B) there is a continuing and immediate risk to lives, property, public health or safety; and", "(C) necessary assistance will not otherwise be provided on a timely basis.", "If the $5 million \"cap\" is exceeded, the President must report to Congress on the \"nature and extent of emergency assistance requirements and shall propose additional legislation if necessary.\"", "Although the President's emergency declaration for COVID-19 covers the entire nation, each disaster-affected state and the District of Columbia, as well as some tribal governments, received a distinct emergency declaration (i.e., 57 separate emergency declarations). Therefore, it appears that each distinct emergency declaration may count as a \"single emergency\" for purposes of Stafford Act Section 503 and that the $5 million \"cap\" is not the nationwide limit on the amount of emergency assistance that FEMA can provide (see Appendix B for an example of a time when different states, territories, and tribes received presidential emergency declarations under the Stafford Act for the same incident). ", "Major disaster declarations do not have a statutory or regulatory spending cap. As of April 22, 2020, all 50 states, the District of Columbia, Puerto Rico, the Virgin Islands, Guam, American Samoa, and the Commonwealth of the Northern Mariana Islands have received major disaster declarations for COVID-19. For more information on the funding available for the emergencies and major disasters declared for COVID-19, see the \" Funding for Stafford Act Declarations \" section."], "subsections": []}, {"section_title": "Is the COVID-19 emergency assistance time limited?", "paragraphs": ["The federal assistance provided must respond to the effects of the incident warranting an emergency or major disaster declaration \"which took place during the incident period or was in anticipation of that incident.\" The emergency and major disaster declarations for COVID-19 currently list the incident period as \"January 20, 2020 and continuing.\" In previous ongoing disasters, the \"continuing\" incident period has changed to a set date marking the end of the emergency or major disaster. In the case of COVID-19, the incident period may vary for each state, territorial, and tribal government as the threat of COVID-19 abates. According to federal regulations, FEMA determines the incident period in the FEMA-State Agreement. In May 2016, the agency released a fact sheet on responding to an infectious disease event, which states, \"[i]n the event of an emergency declaration, FEMA would determine the incident period in coordination with HHS.\" The governor of each declared state or territory, or the chief executive for each declared Indian tribal government, must execute a FEMA-State Agreement in order to receive assistance pursuant to their COVID-19 emergency declaration.", "It is also possible to extend the incident period. Extensions of the incident period, and program extensions and end dates may be announced via news releases on FEMA's website."], "subsections": []}, {"section_title": "Why didn't the President declare a national major disaster for COVID-19?", "paragraphs": ["Stafford Act Section 401 states \"[a]ll requests for a declaration by the President that a major disaster exists shall be made by the Governor of the affected State\" or \"[t]he Chief Executive of an affected Indian tribal government may submit a request for a declaration by the President that a major disaster exists.... \" Although the President is not authorized by the Stafford Act to unilaterally declare a major disaster on behalf of a state, territory, or tribe, the President stated in his emergency declaration letter to the Acting Secretary of the Department of Homeland Security, the Secretary of the Department of Treasury, the Secretary of the Department of Health and Human Services, and the Administrator of the Federal Emergency Management Agency that he \"believe[s] that the disaster is of such severity and magnitude nationwide that requests for a declaration of a major disaster ... may be appropriate.\" ", "As of March 20, 2020, the President began approving major disaster declaration requests under the Stafford Act. As of April 22, 2020, all 50 states, the District of Columbia, Puerto Rico, the Virgin Islands, Guam, American Samoa, and the Commonwealth of the Northern Mariana Islands have received major disaster declarations for COVID-19."], "subsections": []}, {"section_title": "Have states, territories, and tribes ever received a major disaster declaration for an outbreak of an infectious disease, such as COVID-19?", "paragraphs": ["The President started approving major disaster declaration requests for COVID-19 as of March 20, 2020. These declarations are the first major disaster declarations issued under the Stafford Act for an infectious disease outbreak."], "subsections": []}, {"section_title": "Does it take a long time to approve a request for a major disaster declaration?", "paragraphs": ["The State of New York was the first state to receive a major disaster declaration for COVID-19. According to FEMA's \"Daily Operations Briefing for Wednesday, March 18, 2020,\" New York requested a major disaster declaration on March 17, 2020. The President authorized New York's request on March 20, 2020. Other state requests for a major disaster for COVID-19 have also been processed within days of their submission. FEMA lists the approved presidential major disaster declarations for COVID-19 on the agency's \"COVID-19 Disaster Declarations\" and \"Disasters\" webpages. As of April 22, 2020, all 50 states, the District of Columbia, Puerto Rico, the Virgin Islands, Guam, American Samoa, and the Commonwealth of the Northern Mariana Islands have received major disaster declarations for COVID-19."], "subsections": []}]}, {"section_title": "Types of Stafford Act Assistance", "paragraphs": ["Different types of federal assistance are available pursuant to each type of declaration, with emergency declarations providing more limited forms of assistance than major disaster declarations. Federal assistance made available pursuant to Stafford Act declarations is intended to supplement local efforts to respond to and recover from emergencies and major disasters. Federal assistance may support state, territorial, tribal, and local governments, certain nonprofit organizations, and individuals and households. Table 1 lists the forms of assistance available pursuant to each type of declaration. The following questions relate to the federal response efforts for COVID-19, including assistance available to state, territorial, tribal, and local governments, private nonprofit organizations, private entities, and individuals and households."], "subsections": [{"section_title": "What is Emergency Declaration Assistance?", "paragraphs": ["Emergency declarations authorize some forms of Public Assistance (PA) and Individual Assistance (IA) but the assistance is generally more limited than assistance that is made available under a major disaster declaration. Table 1 lists the forms of assistance available pursuant to an emergency declaration.", "Emergency declarations often authorize certain forms of PA, which supplement the ability of a state, territory, or tribe to respond to an incident. Emergency declarations may authorize PA \"emergency work\" undertaken \"to save lives, protect property and public health and safety, and lessen or avert the threat of a catastrophe, including precautionary evacuations,\" per Section 502 of the Stafford Act. FEMA's two categories of PA \"emergency work\" are debris removal (Category A) and emergency protective measures (Category B). Stafford Act emergency declarations for public health incidents have previously authorized emergency protective measures undertaken to reduce an immediate threat to life, public health, or safety, including emergency shelter and medicine, hazard communication, and provision and distribution of necessities. ", "Individual Assistance, which helps individuals and households respond to post-disaster needs, can also be made available through an emergency declaration. One form of IA\u00e2\u0080\u0094the Individuals and Households Program (IHP) (authorized under Stafford Act Section 408) may be authorized pursuant to an emergency declaration. "], "subsections": [{"section_title": "What assistance is available for states, territories, and tribes under the emergency declaration for COVID-19?", "paragraphs": ["The emergency declarations issued for COVID-19 on March 13, 2020 authorized Public Assistance (PA) in accordance with Section 502 of the Stafford Act. Under this declaration, FEMA may reimburse states, tribes, and territories for costs incurred while performing emergency protective measures. ", "Specifically, the COVID-19 emergency declarations authorized PA Category B\u00e2\u0080\u0094Emergency Protective Measures. States, territories, or tribes will be the PA grant Recipients and administer PA awards. State, territorial, and tribal governments that have received emergency or major disaster declarations may apply to FEMA for funds as PA grant Recipients. Local governments and certain nonprofit entities may apply for funds through the PA grant Recipient. ", "Eligible applicants are to be reimbursed for 75% of eligible costs incurred while performing emergency protective measures. FEMA cannot provide financial assistance for activities that are covered by insurance, or any other source, including activities eligible for financial assistance from the Department of Health and Human Services (HHS). For example, PA applicants cannot receive reimbursement for COVID-19 public health surveillance work or other activities already funded by the HHS Public Health Emergency Preparedness Cooperation Agreement Program. ", "Emergency protective measures encompass a wide range of activities. According to a FEMA news release on the COVID-19 emergency declaration , reimbursable activities may include \"activation of State Emergency Operations Centers, National Guard costs, law enforcement and other measures necessary to protect public health and safety.\" On March 19, 2020, FEMA released a non-exclusive list of eligible emergency protective measures that was later supplemented with a non-exclusive list of eligible emergency medical care."], "subsections": []}, {"section_title": "What assistance is available for private nonprofit organizations and businesses under the emergency declaration for COVID-19?", "paragraphs": ["Under the Stafford Act, eligible private nonprofit organizations may receive reimbursement for costs incurred while performing eligible emergency protective measures through the PA program. For-profit entities are not eligible applicants for PA.", "President Trump's emergency declaration for COVID-19 authorized FEMA to reimburse state, territorial, tribal, and local government entities and certain nonprofit organizations (PNPs) for eligible costs incurred while performing emergency protective measures. Under the Stafford Act, certain PNPs may be eligible for PA if they provide \"critical services\" or non-critical, \"essential\" services available to the general public. PNPs providing critical services include educational, utility, irrigation, emergency, medical, rehabilitational, and temporary or permanent custodial care facilities. PNPs providing non-critical but essential services include, but are not limited to, community centers, libraries, homeless shelters, food banks, broadcasting facilities, houses of worship, senior citizen centers, rehabilitation facilities, and shelter workshops. Religiously affiliated PNPs must meet the same eligibility criteria as other PNPs. ", "For-profit entities are not eligible to apply for reimbursement through the PA program. For-profit entities, however, may be eligible for COVID-19 assistance through the Small Business Administration (SBA).", "Eligible PA applicants and PA grant Recipients may also contract for-profit entities to perform emergency work. For example, FEMA specified that eligible governments \"may contract with medical providers, including private for-profit hospitals, to carry out any eligible activity described in the Eligible Emergency Medical Care Activities\u00e2\u0080\u00a6.\" FEMA may then reimburse PA grant Recipients for the federal share of eligible costs incurred during the execution of the work. PA grant Recipients may then reimburse PA Applicants for eligible associated costs."], "subsections": []}, {"section_title": "What assistance is available for individuals under the emergency declaration for COVID-19?", "paragraphs": ["Individual Assistance (IA) was not authorized by the President's initial emergency declaration for COVID-19. However, IA\u00e2\u0080\u0094Crisis Counseling has been authorized for 10 states pursuant to their major disaster declarations for COVID-19 (for more information, see \" What assistance is available to individuals under a major disaster declaration? \"). Table A-1 includes a list of the categories of FEMA assistance\u00e2\u0080\u0094including Crisis Counseling\u00e2\u0080\u0094authorized pursuant to the major disaster declarations for COVID-19, organized by state and territory."], "subsections": []}, {"section_title": "What types of assistance for medical care will FEMA reimburse under the Stafford Act declarations for COVID-19?", "paragraphs": ["As of March 30, 2020, Stafford Act declarations for COVID-19 authorized FEMA to reimburse only state, territorial, tribal, and local governments and eligible nonprofits for the cost of uninsured emergency medical care. No assistance for individuals' medical costs has been authorized.", "All major disaster and emergency declarations issued under the Stafford Act as of March 30, 2020, authorized PA Category B\u00e2\u0080\u0094Emergency Protective Measures, through which FEMA may reimburse eligible state, territorial, tribal, and local governmental entities and eligible private nonprofit entities for the cost of uninsured emergency medical care directly related to COVID-19. Per Stafford Act Section 312, FEMA may not duplicate assistance provided by other entities, including the Department of Health and Human Services (HHS) or private medical insurers.", "FEMA may only reimburse medical care that is required as a result of COVID-19, and that eliminates or lessens immediate threats to life, public health, or safety. Typically, emergency medical care costs are eligible for up to 30 days from the date of an emergency or major disaster declaration. In the case of COVID-19, eligible emergency medical care costs are \"eligible for the duration of the Public Health Emergency, as determined by HHS.\" However, the cost of long-term medical treatment is not eligible for reimbursement through PA, including the costs of medical care for COVID-19 patients admitted to a medical facility on an inpatient basis. Also not eligible are the costs of treatment for COVID-19 patients beyond the duration of the Public Health Emergency, and administrative costs associated with the treatment of COVID-19 patients. ", "The HHS Secretary has invoked several public health emergency authorities for the COVID-19 response. Although FEMA's list of authorized medical care does not specify which public health emergency authority is meant in referring to the duration of eligibility, it probably refers to the declaration authority pursuant to Section 319 of the Public Health Service Act. The \"Section 319\" authority allows the HHS Secretary to carry out a specified set of actions to address public health emergencies, such as expediting or waiving certain administrative requirements that would otherwise apply to federal activities or federally administered grants. The declaration of a Public Health Emergency for COVID-19 was made on January 31, 2020. It is in effect for 90 days, and is expected by many to be renewed and remain in effect for the duration of the response.", " Table 3 includes the types of emergency medical care necessary to saves lives or protect public health and safety that are listed by FEMA as eligible for PA for COVID-19, as of March 31, 2020.", "FEMA may determine that other activities undertaken to reduce the threats to life, public health, or safety by COVID-19 are eligible emergency protective measures. To determine eligibility, FEMA's Regional Administrators may require that local, state, or federal officials certify that the work performed was necessary to cope with such threats. "], "subsections": []}, {"section_title": "What measures must states, tribes, and territories take before FEMA may provide assistance for COVID-19 within their jurisdictions?", "paragraphs": ["According to FEMA, all U.S. states, territories, and the District of Columbia, as well as tribes that have received independent emergency declarations for COVID-19, must execute a FEMA-State/Tribal/Territory Agreement (hereinafter FEMA-State Agreement), as appropriate, and execute an applicable emergency plan in order to receive FEMA assistance. FEMA-State Agreements state the understandings, terms, and commitments under which FEMA disaster assistance is to be provided. FEMA-State Agreements describe the emergency or disaster (incident), the incident period, the type and extent of assistance to be made available, the federal and nonfederal cost share, and other terms and conditions of the declaration and provision of assistance. The state, territory, or tribe with an emergency or major disaster declaration becomes the PA grant Recipient and administers PA awards within its jurisdiction.", "FEMA also requires an Application for Federal Assistance and an update of a Public Assistance Plan before it will provide assistance through the PA program. Recipients may register accounts for all PA Applicants on the PA Grants portal, a FEMA maintained database. Eligible PA Applicants within the jurisdiction may then apply for PA, and awarded projects are tracked in the PA grants database."], "subsections": []}, {"section_title": "Can states/tribes request to receive certain kinds of emergency protective measures?", "paragraphs": ["FEMA has published guidance \"on the types of emergency protective measures that may be eligible under FEMA's Public Assistance Program in accordance with the COVID-19 Emergency Declaration in order to ensure that resource constraints do not inhibit efforts to respond to this unprecedented disaster.\" The list of eligible emergency protective measures is not exhaustive. Moreover, FEMA stated that", "In accordance with section 502 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act, 42 U.S.C. 5121-5207 (the \"Stafford Act\"), eligible emergency protective measures taken to respond to the COVID-19 emergency at the direction or guidance of public health officials may be reimbursed under Category B of FEMA's Public Assistance program. FEMA will not duplicate assistance provided by the U.S. Department of Health and Human Services (HHS), to include the Centers for Disease Control and Prevention (CDC), or other federal agencies.", "FEMA and PA grant Recipients (i.e., the state, territory, or tribe that administers the PA award) both review applications for Public Assistance to determine whether costs, work, and applicants are eligible to receive PA. FEMA may approve or decline requests for assistance (see Table 2 for a list of eligible emergency protective measures for COVID-19). FEMA regulations provide procedures by which an eligible PA Applicant, Subrecipient, or Recipient \"may appeal any determination previously made related to an application for or the provision of Federal assistance.\""], "subsections": []}, {"section_title": "May applicants receive PA for management and disposal of medical waste and human remains?", "paragraphs": ["PA for disposal of medical waste and interment of human remains is included in eligible work authorized for all jurisdictions under PA Category B\u00e2\u0080\u0094Emergency Protective Measures. "], "subsections": []}, {"section_title": "How long does it take to receive emergency assistance?", "paragraphs": ["In the case of COVID-19, FEMA introduced streamlined procedures in an effort to expedite the delivery of PA emergency assistance. According to FEMA, \"[f]unding is immediately available should state, tribal, territorial or local officials request expedited assistance.\" On March 21, 2020, FEMA reported that the agency had obligated over $100 million in 24 hours for awards authorized under the March 13, 2020 emergency declarations for COVID-19 authorized under the Stafford Act. ", "Generally, the time elapsed during delivery of PA emergency assistance will vary by state, incident, applicant, and project. A number of different factors involved in the PA application and reimbursement process affect the delivery of PA. Relevant factors include, but are not limited to, the scope of the project and the time required for the performance of eligible work. ", "FEMA may obligate and disburse funds for small projects (those up to $131,100 in FY2020) upon the approval of a project worksheet, the form FEMA uses to document the details of the Applicant's work and costs claimed. For large projects (those equal to or greater than $131,100 in FY2020), FEMA may obligate funds to the PA grant Recipient upon the approval of a project worksheet. Applicants may request reimbursement for work completed from the PA grant Recipient."], "subsections": []}, {"section_title": "Can declarations be amended to provide additional types of assistance?", "paragraphs": ["After the President declares an emergency or major disaster, the governor or chief executive may request that the declaration be amended to include additional types of assistance. FEMA can approve such a request. It is not uncommon to authorize additional types of assistance subsequent to a presidential declaration.", "If FEMA denies a requested amendment, the governor or chief executive may appeal the decision in writing. The request and its justification must be submitted to the Assistant Administrator for the Disaster Assistance Directorate through the appropriate FEMA Regional Administrator for the FEMA region in which the state, territory, or tribe is located. The appeal is a \"one-time request for reconsideration\"\u00e2\u0080\u0094FEMA's determination on the appeal is final."], "subsections": []}, {"section_title": "Can the federal cost share be adjusted?", "paragraphs": ["The President has the authority to adjust the federal share of Public Assistance programs. The federal cost share may be increased at FEMA's recommendation when requested by a state, territory, or tribe. The federal share is set at 75% for eligible emergency protective measures performed by states pursuant to the Stafford Act declarations for COVID-19 (authorized under Stafford Act Section 502 for the emergency declarations, and Section 403 for the major disaster declarations). ", "A state may also receive a loan or advance to cover the nonfederal share (i.e., the portion of the costs not borne by the federal government) in certain extraordinary situations. Specifically, Stafford Act Section 319 authorizes the President to either lend or advance the nonfederal share to an eligible Applicant or a state. This may be done when\u00e2\u0080\u0094", "(1) the State is unable to assume its financial responsibility under such cost-sharing provisions\u00e2\u0080\u0094", "(A) with respect to concurrent, multiple major disasters in a jurisdiction, or", "(B) after incurring extraordinary costs as a result of a particular disaster; and", "(2) the damages caused by such disasters or disaster are so overwhelming and severe that it is not possible for the applicant or the State to assume immediately their financial responsibility under this chapter.", "Any loan or advance must be repaid with interest. FEMA's regulations, as a condition for making such a loan, require that the state or eligible Applicant not be delinquent in payment of any debts to FEMA. If the governor's request for an advance is denied, the governor may appeal the decision in writing. As with other appeals of federal decisions regarding assistance provided pursuant to a disaster declaration, this is a one-time request for reconsideration.", "Congress has, on occasion, adjusted the federal share through legislation. For example, Section 4501 of the U.S. Troop Readiness, Veterans' Care, Katrina Recovery, and Iraq Accountability Appropriations Act, 2007 ( P.L. 110-28 ) authorized 100% federal share for Public Assistance and Individual Assistance for specific states following Hurricanes Katrina, Wilma, Dennis, and Rita."], "subsections": []}]}, {"section_title": "What is Major Disaster Assistance?", "paragraphs": ["Different types of federal assistance are available pursuant to each type of declaration, with major disaster declarations providing more forms of assistance than emergency declarations. As of April 22, 2020, the President had approved major disaster declaration requests for all 50 states, the District of Columbia, Puerto Rico, the Virgin Islands, Guam, American Samoa, and the Commonwealth of the Northern Mariana Islands for COVID-19. The specific types of assistance that may be available under a major disaster declaration are listed in Table 1 . Additionally, Table 4 lists the categories of assistance and the Stafford Act section under which they are authorized.", "When the President makes a major disaster declaration under the Stafford Act, states, tribes, and local governments, as well as certain private nonprofit organizations, may receive reimbursement through Public Assistance (PA) for \"emergency work\" undertaken to save lives, protect property, public health, and safety, and lessen or avert the threat of a catastrophe, or for \"permanent work\" undertaken to repair, restore, reconstruct, or replace disaster-damaged public and eligible private nonprofit facilities. As noted previously, most assistance under the Stafford Act related to public health incidents has been delivered through PA Category B\u00e2\u0080\u0094Emergency Protective Measures, including emergency shelter and medicine, hazard communication, and provision and distribution of necessities. ", "Individual Assistance (IA) provides aid to affected individuals and households. If a major disaster is declared, the forms of IA that may be authorized include assistance for housing and for other needs assistance through the Individuals and Households Program; crisis counseling; disaster unemployment assistance; disaster legal services; and disaster case management services. ", "Additionally, pursuant to a major disaster declaration the Hazard Mitigation Grant Program (HMGP) may be authorized. The HMGP funds mitigation and resiliency projects, typically across the entire state or territory. State, territorial, tribal, and local governments, as well as certain private nonprofit organizations, may apply for measures that reduce loss of life or property in future disasters or emergencies. As of April 22, 2020, FEMA reported that all requests for Hazard Mitigation Assistance through the Hazard Mitigation Grant Program (HMGP) for COVID-19 are under review."], "subsections": [{"section_title": "What assistance is available for states, territories, and tribes under a major disaster declaration for COVID-19?", "paragraphs": ["Major disaster declarations issued as of April 22, 2020 for COVID-19 have all authorized Public Assistance (PA) Category B\u00e2\u0080\u0094Emergency Protective Measures. Major disaster declarations issued for some states also authorized Individual Assistance through the Crisis Counseling Program. Table A-1 includes a list of the categories of FEMA assistance authorized pursuant to the major disaster declarations for COVID-19, organized by state and territory. Major disaster declarations may authorize Hazard Mitigation Assistance through the Hazard Mitigation Grant Program (HMGP). As of April 22, 2020, FEMA reported that all requests for Hazard Mitigation Assistance through the Hazard Mitigation Grant Program (HMGP) for COVID-19 are under review.", "States, tribes, or territories may request that major disaster declarations be amended to include additional forms of assistance or increase the federal cost-share for PA above 75% (see \" Can declarations be amended to provide additional types of assistance? \" and \" Can the federal cost share be adjusted? \"). "], "subsections": []}, {"section_title": "What assistance is available for private nonprofit organizations and businesses under a major disaster declaration?", "paragraphs": ["Certain private nonprofit organizations may be eligible for reimbursement for work performed for eligible emergency protective measures. Eligible PNPs may apply for PA as Applicants or may be contracted by other primary PA grant Recipients or Applicants to perform eligible work. ", "Businesses are not eligible for assistance authorized under the Stafford Act. ", "PNPs may be eligible for PA if they provide \"critical services\" or non-critical, \"essential\" services available to the general public. PNPs providing critical services include educational, utility, irrigation, emergency, medical, rehabilitational, and temporary or permanent custodial care facilities. PNPs providing non-critical but essential services include, but are not limited to, community centers, libraries, homeless shelters, food banks, broadcasting facilities, houses of worship, senior citizen centers, rehabilitation facilities, facilities that provide health and safety services of a governmental nature, and shelter workshops. Religiously affiliated PNPs are eligible but must meet the same eligibility criteria of other PNPs. ", "For-profit entities are not eligible to apply directly for public assistance as authorized under the Stafford Act. However, eligible PA applicants and PA grant Recipients may contract with for-profit entities to perform emergency work. FEMA may then reimburse PA grant Recipients for the federal share of eligible costs incurred during the execution of the work, and PA grant Recipients may then reimburse PA Applicants for eligible associated costs. For-profit entities may also be eligible for SBA COVID-19 assistance. "], "subsections": []}, {"section_title": "What assistance is available to individuals under a major disaster declaration?", "paragraphs": ["As of April 22, 2020, the FEMA Crisis Counseling Assistance and Training Program (CCP) is the only form of Individual Assistance that has been authorized for some states pursuant to their major disaster declarations for COVID-19. IA-CCP was not authorized for every state that received a major disaster declaration; nor were the territories of the Commonwealth of Puerto Rico, the U.S. Virgin Islands, American Samoa, the Commonwealth of the Northern Mariana Islands, or Guam authorized to receive IA-CCP. Table A-1 includes a list of the categories of FEMA assistance authorized pursuant to the major disaster declarations for COVID-19, organized by state and territory.", "The CCP provides financial assistance to state, territorial, tribal, and local government agencies through a grant or cooperative agreement, which allows them to either provide or contract for crisis counseling services. The crisis counseling services are intended to assist disaster survivors \"to prevent or mitigate adverse psychological effects caused or aggravated by a major disaster.\" FEMA operates the CCP with the Substance Abuse and Mental Health Services Administration (SAMHSA) within the Department of Health and Human Services (HHS).", "An emergency declaration or a major disaster declaration may be amended to allow for additional types of IA to be authorized (see Table 1 for a list of IA programs). The governor may request that the declaration be amended to include additional types of assistance. FEMA can approve a request for additional forms of assistance after a presidential declaration. If a governor of an affected state requested types of IA be authorized in their major disaster declaration request, and those forms of IA were not authorized, the governor may appeal the decision in writing (if a request to amend a declaration to add types of IA is denied, that decision may also be appealed). ", "Although the CCP is the only form of IA authorized to date, individual relief has been provided through other sources. For example, the supplemental appropriations acts for COVID-19 address some of the other unmet needs of individuals (e.g., Section 2102 of the CARES Act ( P.L. 116-136 ) provides pandemic unemployment assistance)."], "subsections": []}, {"section_title": "How do applicants receive funds through the Public Assistance program?", "paragraphs": ["FEMA introduced procedures the agency says are designed to simplify the PA application process for COVID-19 response work.", "State, territories, and tribes that have received emergency declarations or major disaster declarations for COVID-19 are PA grant Recipients, which administer PA awards in their jurisdictions. Prior to receiving funding, PA grant Recipients must execute FEMA-State/Tribal/Territorial Agreements, submit federal grant applications, and update Recipient Public Assistance Administrative Plans (see \" What measures must states, tribes, and territories take before FEMA may provide assistance for COVID-19 within their jurisdictions? \").", "Eligible applicants may apply for funding through the Recipient's PA award. FEMA generally refers to PA Applicants as any entity that is responsible for PA-eligible work. Applicants may be state, tribal, territorial, and local governments, as well as eligible private nonprofits. For example, the Texas Department of State Health Services applied for PA funds for COVID-19 response as a PA Applicant. Those funds were administered by the state of Texas as the PA grant Recipient. As the PA Recipient, the state of Texas also administered funds through its PA award for state and local PA Applicants including the Texas Division of Emergency Management, Harris County, and the Texas Military Department. ", "To receive PA funds, Applicants may submit a request for grant funds, a project worksheet describing the details of the work and costs claimed, and supporting documentation though the PA Grants Portal. FEMA and the PA grant Recipient evaluate these documents for eligibility and reasonableness. Once a project worksheet is approved, Applicants may receive reimbursement for eligible costs incurred while executing eligible emergency protective measures. ", "FEMA's fact sheet on PA Simplified Application procedures for COVID-19 notes that expedited assistance may be available in certain cases. When expedited assistance is approved for large projects (in FY2020, projects over $131,100), FEMA obligates 50% of the total expected costs as soon as the project worksheet is approved, and the PA Applicant may be reimbursed at that time. The remaining federal share may be reimbursed once the Applicant submits documentation of actual costs incurred while performing eligible work. FEMA has provided expedited PA for multiple COVID-19 response efforts. "], "subsections": []}, {"section_title": "How do applicants receive financial or direct assistance through the Individual Assistance program?", "paragraphs": ["The FEMA Crisis Counseling Assistance and Training Program (CCP) is the only form of IA that has been authorized for some states, as of April 22, 2020 (see Table A-1 for the list of states that have been authorized for Crisis Counseling). FEMA operates the CCP with the Substance Abuse and Mental Health Services Administration (SAMHSA) within the Department of Health and Human Services (HHS). Local, state, territorial, or tribal governments may apply for a grant to administer the CCP, or may contract with local mental health service providers. The CCP supports crisis counseling services for disaster survivors, and disaster survivors receive the assistance for free. Generally, the CCP is designed to connect individuals with community resources. CCP services may be advertised to disaster survivors through media outlets, websites, community events, etc.", "If other forms of IA are authorized pursuant to a major disaster declaration for COVID-19, those assistance programs would include different application requirements and processes. For example, if the Individuals and Households Program (IHP) is authorized, applicants in a declared disaster area may register for FEMA IA and Small Business Administration (SBA) disaster loan assistance. Individuals and households can register for assistance online, by telephone, or in-person at a Disaster Recovery Center (DRC). Individuals and households generally have 60 days from the date of a declaration to apply for FEMA IHP assistance."], "subsections": []}]}]}, {"section_title": "Funding for Stafford Act Declarations", "paragraphs": ["The following questions relate to the funding sources for the federal assistance under the Stafford Act that may supplement state, tribal, and local response efforts for COVID-19."], "subsections": [{"section_title": "Where does funding for Stafford Act assistance come from?", "paragraphs": ["Many forms of assistance made available pursuant to a Stafford Act declaration are funded through the Disaster Relief Fund (DRF), which is the primary source of funding for the federal government's domestic general disaster relief programs. ", "The DRF is managed by FEMA, but as a funding structure, it predates both FEMA and the Stafford Act, having first been funded in 1948."], "subsections": []}, {"section_title": "Is there enough funding in the DRF for COVID-19?", "paragraphs": ["As a result of prior-year appropriations to fund long-term recovery work from previous disasters, the DRF had about $42.6 billion in unobligated balances as of the beginning of March 2020. Division B of the CARES Act ( P.L. 116-136 ), included $45 billion more for the DRF. This put the balance of funding in the DRF at its highest level in history.", "DRF resources are available for past, current, and future incidents. However, the majority of its funding is specifically set aside for the costs of major disasters. $41.6 billion of what was in the DRF was specifically for the costs of major disasters, and roughly $600 million was potentially available for emergencies. Of the funding provided in the CARES Act for the DRF, $25 billion was for major disasters and $15 billion was for any Stafford Act costs, including both emergency declarations and major disasters.", "It is not clear what the total draw on the DRF will be, since the pandemic is an evolving situation, there are other federal programs providing resources, and there is no precedent for using the Stafford Act to respond to a public health crisis."], "subsections": []}, {"section_title": "Is DRF funding set aside for COVID-19?", "paragraphs": ["DRF appropriations are not provided for specific emergencies or disasters; there is no COVID-19 account within the DRF.", "The most recent iterations of the appropriations bill text for the DRF indicate the funds are provided for the \"necessary expenses in carrying out the Robert T. Stafford Disaster Relief and Emergency Assistance Act,\" thus covering all past and future disaster and emergency declarations. Previous versions of the appropriations language going back to 1950 also referenced the legislation authorizing general disaster relief rather than targeting specific disasters. On a number of occasions, specific disasters have been mentioned in the appropriation, but funding was not specifically directed to one disaster over others.", "While many disaster supplemental appropriations bills are associated with a specific incident or incidents\u00e2\u0080\u0094such as P.L. 113-2 , \"the Sandy Supplemental\"\u00e2\u0080\u0094the language in such acts does not limit the use of the supplemental appropriations to specific incidents. It provides funding \"for major disasters declared pursuant to the Robert T. Stafford Disaster Relief and Emergency Assistance Act.\" This is also the case with the funding provided in Division B of the CARES Act. The DRF supplemental appropriation itself includes no incident-specific direction, or reference to COVID-19. While one of the general provisions of the law states that the funds provided in the act \"may only be used to prevent, prepare for, and respond to coronavirus,\" the last subsection of that general provision indicates that restriction does not apply to the title that included the DRF appropriation. "], "subsections": []}]}, {"section_title": "References", "paragraphs": ["Additional sources of assistance may be available to support the nation's response to and recovery from the COVID-19 pandemic. CRS has developed products on various topics related to the COVID-19 pandemic, including global issues, public health, economic impacts on individuals, impacts on business and the U.S. economy, executive branch response, congressional response and legislation, and legal analysis. The CRS COVID-19 resources are available at https://www.crs.gov/resources/coronavirus-disease-2019 . Some select products CRS has developed related to the COVID-19 pandemic and Stafford Act assistance programs are included below.", "For more information on the President's declarations under the Stafford Act for COVID-19, see CRS Insight IN11264, Presidential Declarations of Emergency for COVID-19: NEA and Stafford Act , by L. Elaine Halchin and Elizabeth M. Webster; CRS Insight IN11251, The Stafford Act Emergency Declaration for COVID-19 , by Erica A. Lee, Bruce R. Lindsay, and Elizabeth M. Webster; and CRS Insight IN11229, Stafford Act Assistance for Public Health Incidents , by Bruce R. Lindsay and Erica A. Lee. Stafford Act major disaster declarations for COVID-19 will automatically authorize Small Business Administration (SBA) Economic Injury Disaster Loans (EIDL) for businesses in declared counties and contiguous counties. For more information, see CRS Report R46284, COVID-19 Relief Assistance to Small Businesses: Issues and Policy Options , by Robert Jay Dilger, Bruce R. Lindsay, and Sean Lowry For additional information about relief and assistance resources for small businesses, see CRS Insight IN11301, Small Businesses and COVID-19: Relief and Assistance Resources , by Maria Kreiser. For additional information about the actions taken by the U.S. federal government to quell the introduction and spread of COVID-19 in the United States, see CRS Report R46219, Overview of U.S. Domestic Response to Coronavirus Disease 2019 (COVID-19) , coordinated by Sarah A. Lister and Kavya Sekar.", "Appendix A. COVID-19 Approved Major Disaster Declarations and Authorized Assistance", "The following information is current as of April 22, 2020. Public Assistance Category B\u00e2\u0080\u0094Emergency Protective Measures has been authorized for all states and territories. Ten states have been authorized to receive Individual Assistance\u00e2\u0080\u0094Crisis Counseling Assistance and Training Program (CCP) (referred to in Table A-1 as \"Crisis Counseling\").", "Appendix B. Example of Emergency Declarations for the Same Incident", "Stafford Act emergencies have been declared for different states, territories, and tribes for the same incident. For example, the states of Florida, Georgia, South Carolina, and North Carolina, the U.S. Virgin Islands, and the Florida Seminole Tribe of Florida all received emergency declarations for Hurricane Dorian in 2019. The incident period and declaration date for the emergency declarations varied by state, territory, and tribe. This information is captured in Table B-1 ."], "subsections": []}]}}
{"id": "R45944", "title": "Brexit: Status and Outlook", "released_date": "2020-02-13T00:00:00", "summary": ["The United Kingdom (UK) formally withdrew from membership in the European Union (EU) on January 31, 2020. Under the withdrawal agreement negotiated by the two sides, the UK is to continue applying EU rules during a transition period scheduled to run through the end of 2020. During the transition period, the UK and the EU are expected to begin negotiating the terms of their future relationship, including trade and economic relations as well as cooperation on foreign policy, security, and a range of other issues.", "Overview of Developments", "After the 2016 referendum in which 52% of voters in the UK favored leaving the EU, Brexit was originally scheduled to occur in March 2019. In early 2019, Parliament repeatedly rejected the withdrawal agreement negotiated between then-Prime Minister Theresa May's government and the EU. Boris Johnson became prime minister in July 2019, following May's resignation. Given continued deadlock over Brexit in the UK, the EU granted the UK a series of extensions.", "In October 2019, EU and UK negotiators reached a new withdrawal agreement altering the Northern Ireland backstop provision, which was a main sticking point to Parliament passing the original deal. Under the new deal, Northern Ireland (part of the UK) is to maintain regulatory alignment with the EU (essentially creating a customs border in the Irish Sea) to preserve an open border with the Republic of Ireland (an EU member state) while safeguarding the rules of the EU single market. At the end of the transition period, the UK (including Northern Ireland) is expected to leave the EU customs union and pursue an independent national trade policy.", "Prime Minister Johnson encountered difficulties in securing Parliament's approval of the new deal. Seeking to break the deadlock, the UK Parliament agreed to set an early general election for December 12, 2019. Johnson's Conservative Party won a decisive victory in the election, winning 365 out of 650 seats in the UK House of Commons. The result allowed the UK to ratify the new withdrawal agreement and end its EU membership.", "Brexit, Trade, and Economic Impact", "Brexit has considerable implications for the UK's trade arrangements. Outside the EU customs union, the UK would regain an independent national trade policy, a major selling point for many Brexit supporters who advocate negotiating new bilateral trade deals around the world, including with the United States and the EU. The unlikely prospect in which the UK remains a member of the EU single market or customs union would provide more barrier-free access to the EU, but the UK would have to follow most EU rules without having a say in how those rules are made. Analysts predict the disruption resulting from Brexit likely will have at least a short-term negative economic impact on the UK, and many businesses in the UK have been taking steps to mitigate potential economic losses.", "Northern Ireland", "Many observers have expressed concerns that Brexit could destabilize the Northern Ireland peace process, especially if it resulted in a hard border with physical infrastructure and customs checks between Northern Ireland and the Republic of Ireland. Conditions have improved considerably since the 1998 peace accord (known as the Good Friday Agreement or the Belfast Agreement), but many analysts assess that peace and security in Northern Ireland remains fragile. Concerns about a hard border developing have receded in light of Johnson's election victory and Parliament's approval of the renegotiated withdrawal agreement. Still, Brexit has added to divisions within Northern Ireland and continues to pose challenges for Northern Ireland's peace process, economy, and, possibly in the longer term, its constitutional status as part of the UK.", "U.S.-UK Relations and Congressional Interest", "President Trump and Administration officials have expressed support for Brexit. Members of Congress hold mixed views. The UK likely will remain a leading U.S. partner in addressing many foreign policy and security challenges, but Brexit has fueled a debate about whether the UK's global role and influence are likely to be enhanced or diminished. In 2018, the Administration notified Congress of its intention to negotiate a bilateral free trade agreement (FTA) with the UK after Brexit. Congress likely would need to pass implementing legislation before the potential FTA could enter into force. Many in Congress also are concerned about Brexit's possible implications for Northern Ireland's peace process, stability, and economic development."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction and Issues for Congress", "paragraphs": ["The United Kingdom's (UK's) exit from the European Union (EU), commonly termed Brexit , remains the overwhelmingly predominant issue in UK politics. In a national referendum held in June 2016, 52% of UK voters favored leaving the EU. In March 2017, the UK officially notified the EU of its intention to leave the bloc, and the UK and the EU began negotiations on the terms of the UK's withdrawal. Brexit was originally scheduled to occur on March 29, 2019, but the UK Parliament was unable to agree on a way forward due to divisions over what type of Brexit the UK should pursue and challenges related to the future of the border between Northern Ireland (part of the UK) and the Republic of Ireland (an EU member state). In early 2019, Parliament repeatedly rejected the withdrawal agreement negotiated between then-Prime Minister Theresa May's government and the EU, while also indicating opposition to a no-deal scenario, in which the UK would exit the EU without a negotiated withdrawal agreement. Amid this impasse, in April 2019, EU leaders agreed to grant the UK an extension until October 31, 2019. ", "On October 17, 2019, negotiators from the EU and the government of UK Prime Minister Boris Johnson concluded a new withdrawal agreement, but Johnson encountered challenges in securing the UK Parliament's approval of the deal. The EU granted the UK another extension until January 31, 2020, while Parliament set an early general election for December 12, 2019. Johnson's Conservative Party scored a decisive victory in the election, winning 365 out of 650 seats in the UK House of Commons. The result provided Prime Minister Johnson with a mandate to proceed with his preferred plans for Brexit. The UK the EU ratified the withdrawal agreement in January 2020, and the UK withdrew from the EU on January 31, 2020. Brexit remains far from over, however, as the UK and the EU enter a process of determining the character of their future relationship.", "Many Members of Congress have a broad interest in Brexit. Brexit-related developments are likely to have implications for the global economy, U.S.-UK and U.S.-EU political and economic relations, and transatlantic cooperation on foreign policy and security issues. ", "In 2018, the Administration formally notified Congress under Trade Promotion Authority (TPA) of its intent to launch U.S.-UK free trade agreement (FTA) negotiations after the UK leaves the EU, and Congress may consider how Brexit developments affect the prospects for an agreement. Whether a potential final agreement would meet congressional expectations or TPA requirements or be concluded as an executive agreement is unclear.\u00c2\u00a0Congress would likely need to pass legislation to implement the potential FTA before it could enter into force, particularly if it were a comprehensive FTA. U.S. Trade Representative Robert Lighthizer has said that trade negotiations with the UK are a \"priority\" and will start as soon as the UK is in a position to negotiate, but he cautioned that the negotiations may take time.", "Some Members of Congress also have demonstrated an interest in how Brexit might affect Northern Ireland. In April 2019, House Speaker Nancy Pelosi said there would be \"no chance whatsoever\" for a U.S.-UK trade agreement if Brexit were to weaken the Northern Ireland peace process. On October 22, 2019, the House Subcommittee on Europe, Eurasia, Energy, and the Environment held a hearing titled \"Protecting the Good Friday Agreement from Brexit.\" On December 3, 2020, the House passed H.Res. 585 , reaffirming support for the Good Friday Agreement in light of Brexit and asserting that any future U.S.-UK trade agreement and other U.S.-UK bilateral agreements must include conditions to uphold the peace accord. Other Members of Congress, including Senate Finance Committee Chairman Chuck Grassley, have expressed support for the UK and a bilateral trade agreement post-Brexit and have not conditioned such support on protecting Northern Ireland. "], "subsections": []}, {"section_title": "Overview of Developments", "paragraphs": ["The December 2019 election resolved a political deadlock that dominated UK politics for three and a half years. Unable to break the stalemate over Brexit in Parliament, Prime Minister Theresa May resigned as leader of the Conservative Party on June 7, 2019. Boris Johnson became prime minister on July 24, 2019, after winning the resulting Conservative Party leadership contest. Seen as a colorful and polarizing figure who was one of the leading voices in the campaign for the UK to leave the EU, Johnson previously served as UK foreign secretary in the May government from 2016 to 2018 and mayor of London from 2008 to 2016. He inherited a government in which, at the time, the Conservative Party held a one-seat parliamentary majority by virtue of support from the Democratic Unionist Party (DUP), the largest unionist party in Northern Ireland, which strongly supports Northern Ireland's continued integration as part of the UK. ", "After taking office, Prime Minister Johnson announced that he intended to negotiate a new deal with the EU that discarded the contentious Northern Ireland backstop provision that would have kept the UK in the EU customs union until the two sides agreed on their future trade relationship. The backstop was intended to prevent a hard border with customs and security checks on the island of Ireland and to ensure that Brexit would not compromise the rules of the EU single market (see Appendix A , which reviews the backstop and the rejected withdrawal deal). Although Prime Minister Johnson asserted that he did not desire a hard land border, he strongly opposed the backstop arrangement. Like many Members of Parliament both within and outside the Conservative Party, Johnson viewed the backstop as potentially curbing the UK's sovereignty and limiting its ability to conclude free trade deals. Given initial skepticism about the chances for renegotiating the withdrawal agreement with the EU, the Johnson government began to ramp up preparations for a possible no-deal Brexit.", "In September 2019, Parliament passed legislation requiring the government to request a three-month deadline extension (through January 31, 2020) from the EU on October 19, 2019, unless the government had reached an agreement with the EU that Parliament had approved or received Parliament's approval to leave the EU without a withdrawal agreement. The government also lost its parliamentary majority in September 2019, with the defection of one Conservative Member of Parliament (MP) to the Liberal Democrats and the expulsion from the party of 21 Conservative MPs (10 of the 21 were later reinstated) who worked with the opposition parties to limit the government's ability to pursue a no-deal Brexit. Prime Minister Johnson subsequently sought to trigger an early general election, to take place before the October 31 Brexit deadline, but fell short of the needed two-thirds majority in Parliament to support the motion. "], "subsections": [{"section_title": "The New Withdrawal Agreement", "paragraphs": ["On October 17, 2019, the European Council (the leaders of the EU27 countries) endorsed a new withdrawal agreement that negotiators from the European Commission and the UK government had reached earlier that day. The new agreement replicates most of the main elements from the original agreement reached in November 2018 between the EU and the government of then-Prime Minister Theresa May, including guarantees pertaining to citizens' rights, UK financial commitments to the EU, and a transition period lasting through 2020 (see Appendix A ).", "The main difference in the new withdrawal agreement compared to the November 2018 original is in the documents' respective Protocols on Ireland/Northern Ireland (i.e., the backstop). Under the new withdrawal agreement, Northern Ireland would remain legally in the UK customs territory but practically in the EU customs union, which essentially will create a customs border in the Irish Sea. Main elements of the new protocol include the following:", "Northern Ireland remains aligned with EU regulatory rules, thereby creating an all-island regulatory zone on the island of Ireland and eliminating the need for regulatory checks on trade in goods between Northern Ireland and Ireland; any physical checks necessary to ensure customs compliance are to be conducted at ports or points of entry away from the Northern Ireland-Ireland border, with no checks or infrastructure at this border; four years after the arrangement comes into force, the Northern Ireland Executive and Assembly must consent to renew it (this vote presumably would take place in late 2024 after the arrangement takes effect at the end of the transition period in December 2020); at the end of the transition period (the end of 2020), the entire UK, including Northern Ireland, will leave the EU customs union and conduct its own national trade policy.", "The changes were largely based on a proposal sent by Prime Minister Johnson to then-European Commission President Jean-Claude Juncker and facilitated by Johnson's subsequent discussions with Irish Prime Minister Leo Varadkar. Some analysts suggest the changes also resemble in part the \"Northern Ireland-only backstop\" initially proposed by the EU in early 2018. In the original agreement, the backstop provision was ultimately extended to the entire UK after Prime Minister May backed the DUP's adamant rejection of a Northern Ireland-only provision, which the DUP contended would create a regulatory barrier in the Irish Sea between Northern Ireland and the rest of the UK and thus would threaten the UK's constitutional integrity. The DUP also opposes the provisions for Northern Ireland in Johnson's renegotiated withdrawal agreement, especially the customs border in the Irish Sea, for similar reasons."], "subsections": []}, {"section_title": "Extension Through January 2020", "paragraphs": ["Prime Minister Johnson hoped to hold a yes or no vote on the renegotiated withdrawal agreement by the extension deadline of October 19, but Parliament decided to delay the vote until it had passed the legislation necessary for implementing Brexit and giving legal effect to the withdrawal agreement and transition period (the Withdrawal Agreement Bill). ", "Prime Minister Johnson had repeatedly asserted strong opposition to requesting another extension from the EU. As noted above, however, UK law required the government to request another extension from the EU on October 19, 2019, unless the UK and EU had reached a new withdrawal agreement and Parliament had approved that agreement or the UK government received Parliament's approval to leave the EU without a withdrawal agreement. ", "Johnson accordingly sent the EU an unsigned request for an extension through January 2020 with a cover letter from the UK ambassador to the EU stating that the request was made in order to comply with UK law. Johnson also included a personal letter to then-European Council President Donald Tusk reiterating Johnson's view that a further extension would damage UK and EU interests and the UK-EU relationship. The EU granted the request on October 28, 2019 and extended the Brexit deadline until January 31, 2020."], "subsections": []}, {"section_title": "December 2019 Election", "paragraphs": ["On October 29, 2019, Parliament agreed to set an early general election for December 12, 2019. Some commentators argued that since Prime Minister Johnson won the Conservative leadership contest in July 2019, his highest priority had been to spark a general election that returned him as prime minister. Many observers came to view a general election that produced a clear outcome as the best way to break the political deadlock over Brexit and provide a new mandate for the winner to pursue Brexit plans. ", "With Brexit the defining issue of the campaign, the Conservative party won a decisive victory, winning 365 out of 650 seats in the House of Commons, an increase of 47 seats compared to the 2017 election (see Table 1 ). The opposition Labour Party, unable to present a clear alternative vision of Brexit to the electorate, and unable to gain sufficient traction with voters on issues beyond Brexit, suffered a substantial defeat with the loss of 59 seats. The Scottish National Party gained 13 seats to hold 48 of the 59 constituencies in Scotland, likely indicating a resurgence of the pro-independence movement in Scotland, where more than 60% of 2016 referendum voters had supported remaining in the EU. "], "subsections": []}, {"section_title": "Ratification and Withdrawal", "paragraphs": ["The election outcome put the UK on course to withdraw as a member of the EU by the January 31, 2020, deadline. After the election, the UK government introduced a revised Withdrawal Agreement Bill, which became law on January 23, 2020. The UK government subsequently ratified the withdrawal agreement. The European Parliament voted its consent to the agreement on January 29, 2020, and the Council of the EU completed the EU's ratification the following day. On January 31, 2020, the UK concluded its 47-year membership in the EU. ", "With the UK's formal exit, an 11-month transition period began, during which the UK is expected to continue following all EU rules and remain a member of the EU single market and customs union. The withdrawal agreement allows for a one- or two-year extension of the transition period, but Prime Minister Johnson has strongly opposed the idea of an extension and inserted language in the Withdrawal Agreement Bill that the transition period will conclude at the end of 2020 without an extension.", "The UK intends to begin negotiations on an FTA with the EU, with the aim of concluding an agreement by the end of the transition period. Should the transition period end without a UK-EU FTA or other agreement on the future economic relationship, UK-EU trade and economic relations would be governed by World Trade Organization (WTO) rules (see \" Scenarios for UK-EU Trade Relationship Post-Brexit \" below). Such an outcome could resemble many aspects of a no-deal Brexit (see \"No-Deal Brexit\" text box below).", "Beyond trade, negotiations on the future UK-EU relationship are expected to seek a comprehensive partnership covering issues including security, foreign policy, energy, and data sharing. Negotiations are also expected to address the numerous other areas related to the broader economic relationship, such as financial services regulation, environmental and social standards, transportation, and aviation. Officials and analysts have expressed doubts that such comprehensive negotiations can be concluded within 11 months. The two sides could temporarily address some areas, such as road transportation and aviation, through side deals granting interim provisions. ", "The provisions of the revised protocol on Ireland/Northern Ireland are expected to take effect at the end of the transition period. Observers have questioned how exactly the revised protocol will be implemented, including where and how customs checks will take place. Such issues are to be decided by the Joint Committee (of UK and EU officials) during the transition period. Implementation is likely to remain a work in progress. Both parties seek to protect the Good Friday Agreement, while the EU seeks to safeguard its single market and the UK seeks to preserve its constitutional integrity. "], "subsections": []}]}, {"section_title": "Brexit and Trade", "paragraphs": [], "subsections": [{"section_title": "Current UK-EU Trade Relationship", "paragraphs": ["Brexit casts great uncertainty over the future UK-EU trade relationship. In 2018, the UK was the second largest economy of the EU28, comprising 15.2% of the bloc's gross domestic product (GDP); Germany comprised 21.0% of the EU's GDP. The EU as a bloc is the UK's largest trading partner; by country, the United States is its largest (see Figure 1 ). While UK trade with other countries, such as China, has risen in recent years, the EU remains the UK's most consequential trading partner. UK-EU trade is highly integrated through supply chains and trade in services, as well as through foreign affiliate activity of EU and UK multinational companies. Within the EU, the largest goods and services trading partners for the UK are Germany, the Netherlands, France, Ireland, and Spain. (See \" Implications for U.S.-UK Relations \" section for discussion of U.S.-UK trade.)", "As a member of the EU, the UK's trade policy was determined by the EU, which has exclusive competence for trade policy for EU member states. UK-EU trading arrangements largely continue to apply during the transition period. Thus, the UK remains in the EU customs union, which makes trade in goods between the UK and other EU members tariff-free and binds the UK to the EU's common external tariff, which the UK and other EU member states apply to goods imported from outside the customs union. During the transition period, the UK also remains a part of the more than 40 preferential trade agreements that the EU has with about 70 countries. ", "In addition, during the transition period, the UK also remains a part of the EU single market, which provides for the free movement of goods, services, capital, and people. The single market is underpinned by common rules, regulations, and standards that aim to reduce and eliminate nontariff barriers. Such barriers may stem, for instance, from diverging or duplicative production standards, labeling rules, and licensing requirements. Goods move freely in the single market, tariff-free, and generally are not subject to customs procedures. ", "A product imported into the single market currently faces the common external tariff; once inside the single market, the product does not face additional tariffs regardless of its origin if exported to another EU member state. The single market provides businesses inside the EU with the ability to sell goods and services across the EU more freely. The single market is more developed for goods than for services, but it still offers some significant market access for services. For instance, under the single market, banks and other financial services firms that are established and authorized in one EU member state can apply for the right to provide certain defined services throughout the EU or to open branches in other countries with relatively few additional requirements (known as passporting rights ). Among other things, professionals in an EU member state also can move freely to another EU member state, benefitting from mutual recognition of professional qualifications across EU member states. "], "subsections": []}, {"section_title": "Scenarios for UK-EU Trade Relationship Post-Brexit", "paragraphs": ["Following the December 2019 election and the UK's withdrawal from the EU on J anuary 31, 2020, the UK and EU seek to negotiate an FTA to govern their future trade and economic relationship. Whether or not an FTA is concluded, the UK likely will no longer be part of the EU single market and customs union at the end of the ensuing transition period, currently expected to last to the end of 2020. "], "subsections": [{"section_title": "Free Trade Agreement", "paragraphs": ["The political declaration attached to the withdrawal agreement envisions \"an ambitious, broad, deep, and flexible partnership across trade and economic cooperation with a comprehensive and balanced Free Trade Agreement at its core.\" The Johnson government seeks to negotiate a \"best in class\" trade deal with the EU. EU FTAs have varied in their scope of trade liberalization and rules-setting. ", "Draft EU negotiating directives for a trade agreement with the UK include tariff- and quota-free trade on goods and cover a range of sectors, including services trade, digital trade, intellectual property rights (IPR), government procurement, and regulatory cooperation. The EU offer is conditional on commitments to ensure a \"level playing field\" in relation to state aid, labor and environmental protections, and taxation agreements. The UK, however, may seek to diverge from EU rules and regulations, allowing for more flexibility in its trade negotiations with the United States and other countries.", "The Johnson government aims to conclude that deal by the end of the transition period. European Commission President Ursula von der Leyen has said that the timetable was \"extremely challenging\" and negotiators would do their best in the \"very little time\" available. EU officials have warned that such a timetable will constrain the scope of the talks.", "Many analysts are skeptical that an ambitious trade agreement can be negotiated and approved by the EU and UK governments by the end of the transition period. Some past EU trade agreement negotiations have been lengthy. For instance, EU negotiations with Canada and Japan took, respectively, seven and four years. "], "subsections": []}, {"section_title": "Leaving the Customs Union", "paragraphs": ["Advocates of a soft Brexit argued that the UK should maintain close economic and trade ties with the EU by remaining a member of the EU customs union or developing another customs arrangement with the EU. A customs union would afford the UK closer economic ties with the EU but would limit the UK's control over its trade policy. The UK could negotiate with other countries on issues outside of the customs union (e.g., services, government procurement, or IPR), but it would have limited negotiating scope, since alignment with the EU would be a condition of being in the customs union. A customs union also could limit UK trade policy in terms of applying trade remedies or developing country preference programs.", "Under the withdrawal agreement, the UK is expected leave the EU customs union at the end of the transition period, and the result of the December 2019 UK general election and recent UK official statements makes a future customs union arrangement between the UK and the EU unlikely. The Johnson government opposes any form of soft Brexit, given that such models would force the UK to abide by EU rules and regulations and limit the UK's ability to conduct an independent trade policy. If the UK is no longer part of the EU customs union, it would regain control over its national trade policy and be free to negotiate its own free trade agreements with other countries, a key rationale for many Brexit supporters."], "subsections": []}, {"section_title": "World Trade Organization Terms", "paragraphs": ["If the post-Brexit transition period ends without the conclusion of a trade deal or customs union arrangement with the EU, the UK would no longer have preferential access to the EU market and WTO terms would govern the UK-EU trade relationship (see \"United Kingdom, European Union, and the World Trade Organization\" text box). Trade between the UK and the EU would no longer be tariff free, and nontariff barriers such as new customs procedures would arise, adding costs to doing business (see below). "], "subsections": []}]}, {"section_title": "Impact on UK Trade and Economy", "paragraphs": ["The precise impact of Brexit on UK trade with the EU and the UK economy depends to a large degree on the shape of the future UK-EU relationship, and the UK's ability to conclude other new trade deals. In most scenarios, Brexit would raise the costs of UK trade with the EU through higher tariffs and nontariff barriers. Costs may be greater in the short term, until commercial disruptions are smoothed out. Costs may be mitigated to some degree if the two sides reach a free trade agreement, although this may take years. New trade deals signed by the UK with countries outside of the EU could boost economic growth, but they may not be by enough to offset the loss of the UK's membership in the EU single market. Some of the higher costs of commerce may be passed to consumers. ", "As noted earlier, WTO terms would govern UK-EU trade if the transition period ends without a trade deal. EU average most-favored-nation (MFN) tariff rates are low (around 5%) but significantly higher for certain products. Because of the tight linkages in UK-EU trade, higher tariffs would raise the costs of trade not only for final goods but also for intermediate goods traded between UK and EU member states as part of production and supply chains. UK sectors that may be particularly affected by increased tariffs include agriculture and manufacturing sectors (processed food products, apparel, leather products, and motor vehicles). UK importers may face higher costs, as the UK may impose its own MFN-level tariffs on imports from the EU. ", "Should the UK and EU negotiate a preferential trading arrangement, it likely would not lead to an elimination of all tariffs. In addition, exporters on both sides would have to certify the origin of their traded goods in order to satisfy \"rules of origin\" to receive the preferential market access. ", "Brexit makes the UK a \"third country\" from the EU's perspective, and the UK's regulatory frameworks\u00e2\u0080\u0094although currently aligned with those of the EU\u00e2\u0080\u0094will no longer be recognized by the EU after the transition period. The EU will have to make determinations on whether measures of the UK comply with the corresponding EU regulatory framework. Some observers question the extent to which the Johnson government is willing to maintain regulatory alignment with the EU, and this issue is expected to pose a key challenge in negotiations with the EU on future trade relations. ", "New administrative and customs procedures could apply to UK-EU trade. UK trade with the EU could face new licensing requirements, testing requirements, customs controls, and marketing authorizations. For instance, by some estimates, delays caused by customs checks of trucks from the EU could cause a 17-mile queue at the Port of Dover. \u00c2\u00a0Such potential backlogs have raised concerns about spoiling or shortage of foods and medicines and complications for industries that depend on \"just-in-time\" productions such as autos.", "Many businesses in the UK have been preparing for Brexit through such measures as stockpiling inventories, adjusting contract terms, restructuring operations, and shifting assets abroad. Some companies, particularly smaller companies, may not be as equipped as their larger competitors to deal with the transition. UK businesses also remain concerned about the potential effects of a no-deal scenario should the UK and EU fail to reach agreement on a future trade relationship by the end of 2020 without an extension of the transition period. ", "Certain sectors of the UK economy may be particularly affected by Brexit. Examples include", "Autos. The EU is the UK's largest trading partner for motor vehicles, accounting for 43% of UK exports and 83% of UK imports in these products in 2018. The EU also comprises the majority of UK trade in auto component parts and accessories. The UK automobile sector thrives on the sort of \"just-in-time production\" that depends on a free flow of trade in component parts. If a no-deal scenario unfolded at the end of the transition period, UK auto exports to the EU would face a 10% tariff. Autos are a highly regulated industry, and UK and EU exporters would face new checks for safety and quality standards to obtain approval in the other's market. Chemicals. About 60% of UK chemicals exports are to the EU, and about 73% of UK chemicals imports are from the EU. Chemicals trade in the single market is governed by a European Economic Area (EEA) regulatory framework known as REACH (Registration, Evaluation, Authorisation and Restriction of Chemicals Regulation). UK chemicals exports to the EU could face tariffs of up to 6.5% in the absence of a preferential trade arrangement with the EU. Without a deal, UK chemicals registrations under REACH would become void with Brexit and UK companies would have to transfer their registrations to an EEA-based subsidiary or representative to maintain market access. The UK also would need to set up its own regulatory regime for chemicals. Financial S ervices. London is the largest financial center in Europe presently. Financial services and insurance make up about one-third of UK services exports to the EU. The EU has made clear that the UK will no longer be able to benefit from financial passporting after the transition period. Absent alternative arrangements, such as an equivalence decision by the EU, continued trade in financial services may require UK and EU businesses to restructure their operations. Even with a positive determination, the EU could revoke equivalence at any time. U.S. and other banks are concerned about losing the ability to use their UK bases to access EU markets without establishing legally separate subsidiaries. Some financial institutions, such as Goldman Sachs, J.P. Morgan, Morgan Stanley, and Citigroup, have shifted (or plan to shift) some jobs and assets from London to other European cities, such as Amsterdam, Dublin, Frankfurt, and Paris. By one estimate, financial companies have already committed to moving over \u00c2\u00a31 trillion in assets from the UK to other parts of the EU as part of Brexit contingency planning. Business S ervices. The EU is the largest export market for a range of UK business services (legal, accounting, advertising, research and development, architectural, engineering, and other professional and technical services)\u00e2\u0080\u0094accounting for 39% of these exports from the UK. Determinations of professional certification qualifications may need to be made. Data F lows. Cross-border data flows underpin much of UK-EU services trade. Although UK regulatory frameworks are currently aligned with those of the EU on data protection and data flows, after the transition period, the EU will have to make determinations on UK compliance with the EU regulatory frameworks, such regarding whether UK standards for protecting personal data meet EU standards under the EU General Data Protection Regulation. The potential blockage of data transfers could have serious implications for UK companies seeking to transfer personal data out of the EU\u00e2\u0080\u0094including not only technology companies but also health care companies and other service providers."], "subsections": []}, {"section_title": "Global Britain", "paragraphs": ["Since the referendum, the UK government has championed a notion of \"Global Britain,\" previously under the May government and now under the Johnson government. The idea of Global Britain promotes the UK's renewed engagement in a wide range of foreign policy and international issues, with trade a significant aspect of the broader concept; Global Britain envisages, among other things, an outward looking UK strengthening trade linkages around the world. ", "For Brexit supporters, a major rationale was for the UK to regain a fully independent trade policy, which would allow the UK to tailor agreements to its specific interests. At the same time, the UK will have less leverage in trade negotiations compared to when negotiating as a part of the EU, given the UK's economic size relative to the EU bloc. ", "Seeking continuity in its trade ties after Brexit, the UK is acting on a number of fronts. Among other things, the UK is ", "N egotiating its own WTO schedule of commitments on goods, services, and agriculture. A s chedule of commitments refers to the commitments that WTO members make to all other WTO members on the nondiscriminatory market access (i.e., \"most-favored-nation,\" or MFN, access) they will provide for trade in goods, services, agriculture, and government procurement. Although the UK is a WTO member in its own right, it does not have an independent schedule of commitments, as the EU schedule applies to all EU members, including the UK. Outside of the EU, the UK will need to have its own schedule on the market access commitments to other WTO members. In some cases, the UK may be able to replicate the EU schedule; other cases may be more complex. For example, developing the UK's agricultural schedule involves reallocation of EU and UK tariff-rate quotas such as beef, poultry, dairy, cereals, rice, sugar, fruits, and other vegetables. The EU and UK have engaged in bilateral discussions on apportioning the tariff-rate quotas; some WTO members, including the United States, have raised concerns that the UK-EU approach could reduce the level and quality of their access to UK and EU markets. During the transition period, the UK continues to apply to the EU schedule. In other developments, parties to the WTO Government Procurement Agreement (GPA) have agreed to the UK's continued participation in the GPA in principle; the UK has delayed submitting its instrument of accession for the GPA. Working to replicate existing EU deals with non-EU countries. The UK was a part of over 40 trade agreements with around 70 countries by virtue of its membership in the EU. Unless it makes other arrangements, the UK will lose its preferential access to these markets after the transition period. To avoid this outcome, the UK has been working to replicate the EU's trade agreements with other countries. According to the UK government, UK trade with countries with which the UK seeks to conclude continuity agreements accounted for 11.1% of total UK trade in goods and services in 2018. As of December 4, 2019, the UK has signed 20 \"continuity\" deals, accounting for about 8.3% of total UK trade; these deals cover around 50 countries or territories, including Switzerland, Liechtenstein, Iceland, Norway, and South Korea. Negotiating sector-specific regulatory agreements. The UK is negotiating mutual recognition agreements (MRAs) to assure continued acceptance by UK and partner country regulators of each other's product testing and inspections in certain sectors. The UK government has signed MRAs with Australia, New Zealand, and the United States. Discussions between the UK and Japan on an MRA are ongoing. Taking steps to pursue a range of new trade deals once outside of the EU. In addition to the United States, potential countries that the UK has identified as of interest for negotiating new trade deals include Australia, China, India, and New Zealand. A new priority for the UK is signing an FTA with Japan, with whom the EU already has an FTA. Rather than \"rolling over\" the EU-Japan FTA, Japan seeks to negotiate new terms with the UK. Japan is one of the UK's largest investors, with major carmakers such as Nissan, Toyota, and Honda operating auto-manufacturing factories in the UK. "], "subsections": []}]}, {"section_title": "Brexit and Northern Ireland59", "paragraphs": ["In the 2016 Brexit referendum, Northern Ireland voted 56% to 44% against leaving the EU. Brexit poses considerable challenges for Northern Ireland, with potential implications for its peace process, economy, and, in the longer term, constitutional status in the UK. Following Brexit, Northern Ireland is the only part of the UK to share a land border with an EU member state (see Figure 2 ). Preventing a hard border on the island of Ireland (with customs checks and physical infrastructure) was a key goal, and a major stumbling block, in negotiating and finalizing the UK's withdrawal agreement with the EU.", "Northern Ireland's history of political violence complicated arrangements for the post-Brexit border between Northern Ireland and the Republic of Ireland. Roughly 3,500 people died during \"the Troubles,\" Northern Ireland's 30-year sectarian conflict (1969 to 1999) between unionists (Protestants who largely define themselves as British and support remaining part of the UK) and nationalists (Catholics who consider themselves Irish and may desire a united Ireland). At the time of the 1998 peace accord in Northern Ireland (known as the Good Friday Agreement or the Belfast Agreement), the EU membership of both the UK and the Republic of Ireland was regarded as essential to underpinning the political settlement by providing a common European identity for both unionists and nationalists in Northern Ireland. EU law also provided a supporting framework for guaranteeing the human rights, equality, and nondiscrimination provisions of the peace accord.", "Since 1998, as security checkpoints were dismantled in accordance with the peace agreement, and because both the UK and Ireland belonged to the EU's single market and customs union, the circuitous 300-mile land border between Northern Ireland and Ireland effectively disappeared. The border's disappearance served as an important political and psychological symbol on both sides of the sectarian divide and helped produce a dynamic cross-border economy. Many experts deem an open, invisible border as crucial to a still-fragile peace process, in which deep divisions and a lack of trust persist. Some analysts suggest that differences over Brexit also heightened tensions between the unionist and nationalist communities' respective political parties and stymied the reestablishment of the regional (or devolved) government for close to three years following the last legislative assembly elections in March 2017. (For more background, see Appendix B .) "], "subsections": [{"section_title": "Possible Implications of Brexit", "paragraphs": [], "subsections": [{"section_title": "The Irish Border and the Peace Process", "paragraphs": ["Many on both sides of Northern Ireland's sectarian divide expressed deep concern that Brexit could lead to a return of a hard border with the Republic of Ireland and destabilize the peace process. Police officials warned that a hard border post-Brexit could pose considerable security risks. During the Troubles, the border regions were considered \"bandit country,\" with smugglers and gunrunners. Checkpoints were frequently the site of conflict, especially between British soldiers and militant nationalist groups (or republicans ), such as the Irish Republican Army (IRA), that sought to achieve a united Ireland through force. Militant unionist groups (or loyalists ) were also active during the Troubles.", "Security assessments suggested that if border or customs posts were reinstated, violent dissident groups opposed to the peace process would view such infrastructure as targets, endangering the lives of police and customs officers and threatening the security and stability of the border regions. Some experts feared that any such violence could lead to a remilitarization of the border and that the violence could spread beyond the border regions. Many observers note a slight uptick in dissident republican activity over the last year, especially in border regions, as groups such as the New IRA and the Continuity IRA sought to exploit the stalemates over both Northern Ireland's devolved government and Brexit. Violence has been directed in particular at police officers (long regarded by dissident republicans as legitimate targets), and several failed bombings were attempted in border areas (especially Londonderry/Derry, a key flashpoint during the Troubles).", "Many in Northern Ireland and Ireland also were eager to maintain an open border to ensure \"frictionless\" trade, safeguard the north-south economy, and protect community relations. Furthering Northern Ireland's economic development and prosperity is regarded as crucial to helping ensure a lasting peace in Northern Ireland. Establishing customs checkpoints would pose logistical difficulties, and many people in the border communities worried that any hardening of the border could affect daily travel across the border to work, shop, or visit family and friends. Estimates suggest there are roughly 208 public road crossings along the border and nearly 300 crossing points when private roads and other unmarked access points are included. Some roads cross the border multiple times, and the border splits other roads down the center. Only a fraction of crossing points were open during the Troubles, and hour-long delays due to security measures and bureaucratic hurdles were common.", "Since the Brexit referendum in 2016, UK, Irish, and EU leaders asserted repeatedly that they did not want a hard border and worked to prevent such a possibility. In the initial December 2017 UK-EU agreement setting out the main principles for the withdrawal negotiations, the UK pledged to uphold the Good Friday Agreement, avoid a hard border (including customs controls and any physical infrastructure), and protect north-south cooperation on the island of Ireland. Analysts contend, however, that reaching agreement on a mechanism to ensure an open border was complicated by the UK government's pursuit of a largely hard Brexit, which would keep the UK outside of the EU's single market and customs union. As noted previously, the backstop emerged as the primary sticking point in gaining the UK Parliament's approval of former Prime Minister May's draft withdrawal agreement in the first half of 2019. Prime Minister Johnson opposed the backstop but also asserted a desire to avoid a hard border on the island of Ireland.", "Some advocates of a hard Brexit contended that security concerns about the border were exaggerated and that the border issue was being exploited by the EU and those in the UK who would have preferred a soft Brexit, in which the UK remained inside the EU single market and/or customs union. The Good Friday Agreement commits the UK to normalizing security arrangements, including the removal of security installations \"consistent with the level of threat,\" but does not explicitly require an open border. The Irish government and many in Northern Ireland\u00e2\u0080\u0094as well as most UK government officials\u00e2\u0080\u0094argued that an open border had become intrinsic to peace and to ensuring the fulfillment of provisions in the Good Friday Agreement that call for north-south cooperation on cross-border issues (including transport, agriculture, and the environment). Some advocates of a hard Brexit, frustrated by the Irish border question, ruminated on whether the Good Friday Agreement had outlived its usefulness, especially in light of the stalemate in reestablishing Northern Ireland's devolved government. Both the May and Johnson governments continued to assert that the UK remains committed to upholding the 1998 accord.", "In light of Johnson's victory with a decisive Conservative majority in the December 2019 elections and Parliament's subsequent approval of the renegotiated withdrawal agreement, concerns have largely receded about a hard border developing on the island of Ireland. Uncertainty persists about what the overall UK-EU future relationship\u00e2\u0080\u0094including with respect to trade\u00e2\u0080\u0094will look like post-Brexit and whether the two sides can reach an agreement by the end of the transition period. However, unlike with the previous backstop arrangement, the provisions related to the Northern Ireland border are not expected to change pending the outcome of the UK-EU negotiations on its future relationship. A former UK official notes that the Johnson government \"claims they have got rid of the backstop but in fact, have transformed it from a fallback into the definitive future arrangement for Northern Ireland\" that would effectively leave Northern Ireland in the EU's single market and customs union. Prolongation of the post-Brexit arrangements for Northern Ireland will be subject to the consent of the Northern Ireland Assembly in 2024 but is not contingent upon the conclusion of a broader UK-EU agreement by the end of the transition period in December 2020.", "At the same time, many of the details related to how the post-Brexit regulatory and customs arrangements for Northern Ireland will work in practice must still be fleshed out by UK and EU negotiators during the transition period, and Brexit has further exacerbated political and societal divisions in Northern Ireland. As noted previously, the DUP opposed the Northern Ireland provisions in the renegotiated withdrawal agreement because it viewed them as treating Northern Ireland differently from the rest of the UK and undermining the union. In light of the Conservative Party's large majority following the December 2019 elections, however, the DUP lost political influence in the UK Parliament and was unable to block approval of the renegotiated withdrawal agreement.", "Many in the DUP and other unionists feel abandoned by Prime Minister Johnson's renegotiated withdrawal agreement. Amid ongoing demographic, societal, and economic changes in Northern Ireland that predate Brexit, experts note that some in the unionist community perceive a loss in unionist traditions and dominance in Northern Ireland. Some analysts suggest that the new post-Brexit border and customs arrangements for Northern Ireland could enhance this existing sense of unionist disenfranchisement, especially if Northern Ireland is drawn closer to the Republic of Ireland's economic orbit in practice post-Brexit. Such unionist unease in turn could intensify frictions and political instability in Northern Ireland; observers also worry that heightened unionist frustration could prompt a resurgence in loyalist violence post-Brexit.", "Some experts have expressed concerns about the potential for a hard border on the island of Ireland in the longer term should Northern Ireland's Assembly fail to renew the post-Brexit arrangements that would keep Northern Ireland aligned with EU regulatory and customs rules. Although many view this scenario as unlikely given that pro-EU parties hold a majority in the Assembly (and this appears unlikely to change in the near future), in such an event, the UK and the EU would need to agree on a new set of provisions to keep the border open. The DUP also argues that by allowing the Assembly to give consent to the border arrangements for an additional four years through a simple majority, the renegotiated withdrawal agreement undermines the Good Friday Agreement, which requires major Assembly decisions to receive cross-community support (i.e., a majority on each side of the unionist-nationalist divide).", "Some commentators believe the 2019 UK election results\u00e2\u0080\u0094in which the DUP lost two seats in the UK Parliament, unionists no longer hold a majority of Northern Ireland's 18 seats in Parliament, and DUP votes were no longer crucial to Prime Minister Johnson's ability to secure approval of the withdrawal agreement\u00e2\u0080\u0094helped improve the prospects for reestablishing Northern Ireland's devolved government. A functioning devolved government appeared to offer the DUP the best opportunity to ensure it has a voice in implementing the new border and customs arrangements for Northern Ireland and in the upcoming negotiations on the future political and trade relationship between the UK and the EU. On December 16, 2019, the UK and Irish governments launched a new round of talks with the main Northern Ireland political parties aimed at reestablishing the devolved government.", "On January 10, 2020, the DUP and Sinn Fein agreed to a deal to restore the devolved government put forward by the UK and Irish governments. The new Assembly convened the following day. The power-sharing deal addresses a number of key issues, including use of the Irish language, and promises additional UK financial support for Northern Ireland. The deal also calls for Northern Ireland's Executive, led by DUP First Minister Arlene Foster and Sinn Fein Deputy First Minister Michelle O'Neill, to establish a Brexit subcommittee to assess Brexit's implications for Northern Ireland. In addition, it reaffirms the UK government's commitment to including Northern Ireland Executive representatives in upcoming UK-EU Joint Committee meetings that will seek to implement the agreed arrangements for Northern Ireland post-Brexit."], "subsections": []}, {"section_title": "The Economy", "paragraphs": ["Many experts contend that Brexit could have serious negative economic consequences for Northern Ireland. According to a UK parliamentary report, Northern Ireland depends more on the EU market (and especially that of Ireland) for its exports than does the rest of the UK. In 2017, approximately 57% of Northern Ireland's exports went to the EU, including 38% to Ireland, which was Northern Ireland's top single export and import partner. Trade with Ireland is especially important for small- and medium-sized companies in Northern Ireland. Although sales in 2017 to other parts of the UK (\u00c2\u00a311.3 billion) surpassed the value of all Northern Ireland exports (\u00c2\u00a310.1 billion) and were nearly three times the value of exports to Ireland (\u00c2\u00a33.9 billion), small- and medium-sized companies in Northern Ireland were responsible for the vast majority of Northern Ireland exports to Ireland. Large- and medium-sized Northern Ireland firms dominated in sales to the rest of the UK. UK and DUP leaders maintain that given the value of exports, however, the rest of the UK is overall more important economically to Northern Ireland than the EU.", "Significant concerns existed in particular that a no-deal Brexit without a UK-EU withdrawal agreement in place would have jeopardized integrated labor markets and industries that operate on an all-island basis. Northern Ireland's agri-food sector, for example, would have faced serious challenges from a no-deal scenario. Food and live animals make up roughly 32% of Northern Ireland's exports to Ireland; a no-deal Brexit could effectively have ended this trade due to the need for EU sanitary and phytosanitary checks at specified border inspection posts in Ireland, which would significantly extend travel times and increase costs. The Ulster Farmers' Union\u00e2\u0080\u0094an industry association of farmers in Northern Ireland\u00e2\u0080\u0094asserted that a no-deal Brexit would be \"catastrophic\" for Northern Ireland farmers. Many manufacturers in Northern Ireland and Ireland also depend on integrated supply chains north and south of the border; raw materials that go into making products such as milk, cheese, butter, and alcoholic drinks often cross the border between Northern Ireland and Ireland several times for processing and packaging.", "Although many in Northern Ireland are relieved that a no-deal Brexit was averted, the DUP and others in Northern Ireland contend that the renegotiated withdrawal agreement could be detrimental to Northern Ireland's economy. A UK government risk assessment released in October 2019 acknowledged that the lack of clarity about how the customs arrangements for Northern Ireland will operate in practice and possible regulatory divergence between Northern Ireland and the rest of the UK could lead to reduced business investment, consumer spending, and trade in Northern Ireland. The DUP highlights the potential negative profit implications for Northern Ireland businesses engaged in trade with the rest of the UK. Under the deal, Northern Ireland firms that export goods to elsewhere in the UK would be required under EU customs rules to make exit declarations, which would likely increase costs and administrative burdens. Concerns also exist that should the UK and the EU fail to reach agreement on a future new trade relationship by the end of the transition period, there could be significant customs and regulatory divergence between the UK and the EU, which in turn could mean more checks and controls on goods traded between Northern Ireland and the rest of the UK.", "Brexit could have other economic ramifications for Northern Ireland, as well. Some experts argue that access to the EU single market was one reason for Northern Ireland's success in attracting foreign direct investment since the end of the Troubles, and they express concern that Brexit could deter future investment. Post-Brexit, Northern Ireland also stands to lose EU regional funding (roughly $1.3 billion between 2014 and 2020) and agricultural aid (direct EU farm subsidies to Northern Ireland are nearly $375 million annually).", "UK officials maintain that the government is determined to safeguard Northern Ireland's interests and \"make a success of Brexit\" for Northern Ireland. They insist that Brexit offers new economic opportunities for Northern Ireland outside the EU. Supporters of Prime Minister Johnson's renegotiated withdrawal agreement argue that it will help improve Northern Ireland's economic prospects. Northern Ireland will remain part of the UK customs union and thus be able to participate in future UK trade deals but also will retain privileged access to the EU single market, which may make it an even more attractive destination for foreign direct investment."], "subsections": []}, {"section_title": "Constitutional Status and Border Poll Prospects", "paragraphs": ["Brexit has revived questions about Northern Ireland's constitutional status. Sinn Fein\u00e2\u0080\u0094the leading nationalist party in Northern Ireland\u00e2\u0080\u0094argues that \"Brexit changes everything\" and could generate greater support for a united Ireland. Since the 2016 Brexit referendum, Sinn Fein has repeatedly called for a border poll (a referendum on whether Northern Ireland should remain part of the UK or join the Republic of Ireland) in the hopes of realizing its long-term goal of Irish unification. The Good Friday Agreement provides for the possibility of a border poll in Northern Ireland, in line with the consent principle , which stipulates that any change in Northern Ireland's status can come about only with the consent of the majority of its people. The December 2019 election, in which unionist parties lost seats in the UK parliament while nationalist and cross-community parties gained seats, also has prompted increased discussion and scrutiny of Northern Ireland's constitutional status and whether a united Ireland may become a future reality.", "Any decision to hold a border poll in Northern Ireland on its constitutional status rests with the UK Secretary of State for Northern Ireland, who in accordance with the Good Friday Agreement must call a border poll if it \"appears likely\" that \"a majority of those voting would express a wish that Northern Ireland should cease to be part of the United Kingdom and form part of a united Ireland.\" At present, and despite the 2019 election results in Northern Ireland, experts believe the conditions required to hold a border poll on Northern Ireland's constitutional status do not exist. Most opinion polls indicate that a majority of people in Northern Ireland continue to support the region's position as part of the UK. Some analysts attribute the UK parliamentary election results in Northern Ireland to frustration with the DUP and Sinn Fein (which also saw its share of the vote decline amid gains for a more moderate nationalist party and a cross-community party), rather than as an indication of support for a united Ireland.", "At the same time, some surveys suggest that views on Northern Ireland's status may be shifting and that a \"damaging Brexit\" in particular could increase support for a united Ireland. A September 2019 poll found that 46% of those polled in Northern Ireland favored unification with Ireland, versus 45% who preferred remaining part of the UK. Analysts note that Northern Ireland's changing demographics (in which the Catholic, largely Irish-identifying population is growing while the Protestant, British-identifying population is declining)\u00e2\u0080\u0094combined with the post-Brexit arrangements for Northern Ireland that could lead to enhanced economic ties with the Republic of Ireland\u00e2\u0080\u0094could boost support for a united Ireland in the longer term.", "Irish unification also would be subject to Ireland's consent and approval. Some question the current extent of public and political support in the Republic of Ireland for unification, given its potential economic costs and concerns that unification could spark renewed loyalist violence in Northern Ireland. According to Irish Prime Minister Varadkar, a border poll in Northern Ireland in the near future would be divisive and disruptive amid an already contentious Brexit process. In Ireland's February 8, 2020, parliamentary election, however, the nationalist Sinn Fein party (which has a political presence in both Northern Ireland and the Republic of Ireland) secured the largest percentage of the vote for the first time in Ireland's history, surpassing both Varadkar's Fine Gael party and the main opposition party, Fianna Fail. Sinn Fein's election platform included a pledge to begin examining and preparing for Irish unification, but housing, health care, and economic policy issues dominated the Irish election. Sinn Fein appeared to benefit mostly from the Irish electorate's desire for domestic political change rather than from the party's stance on a united Ireland. Nevertheless, some commentators suggest that Sinn Fein's electoral success in the Republic of Ireland could add momentum to calls for a united Ireland."], "subsections": []}]}]}, {"section_title": "Implications for U.S.-UK Relations", "paragraphs": ["Many U.S. officials and Members of Congress view the UK as the United States' closest and most reliable ally. This perception stems from a combination of factors, including a sense of shared history, values, and culture; a large and mutually beneficial economic relationship; and extensive cooperation on foreign policy and security issues. The UK and the United States have a particularly close defense relationship and a unique intelligence-sharing partnership. ", "Since 2016, President Trump has been outspoken in repeatedly expressing his support for Brexit. President Trump counts leading Brexit supporters, including Boris Johnson and Brexit Party leader Nigel Farage, among his personal friends. He publicly criticized Theresa May's handling of Brexit and stated during the most recent Conservative leadership race that Boris Johnson would \"make a great prime minister.\" President Trump repeated his support for Johnson prior to the December 2019 UK election and celebrated Johnson's win, writing on social media that the election outcome would allow the United States and UK to reach a new trade deal.", "Senior Administration officials have reinforced the President's pro-Brexit messages. During an August 2019 visit to London, then-U.S. National Security Adviser John Bolton stated that the Administration would \"enthusiastically\" support a no-deal Brexit; he asserted that a U.S.-UK trade deal could be negotiated quickly and possibly be concluded sector-by-sector to speed up the process. In a September 2019 visit to Ireland, Vice President Mike Pence reiterated the Administration's support for the UK leaving the EU and urged Ireland and the EU to \"work to reach an agreement that respects the United Kingdom's sovereignty.\" Vice President Pence expressed his hope that an agreement would \"also provide for an orderly Brexit.\""], "subsections": [{"section_title": "Foreign Policy and Security Issues", "paragraphs": ["President Trump has expressed a largely positive view of the UK and made his first official state visit there in June 2019 (he also visited in July 2018), but there have been some tensions over substantive policy differences between the UK government and the U.S. Administration and backlash from the UK side over various statements made by the President. Under President Trump and Prime Minister May, the United States and the UK proceeded from relatively compatible starting points and maintained close cooperation on issues such as counterterrorism, combating the Islamic State, and seeking to end the conflict in Syria. ", "In contrast, the UK government has defended both the Joint Comprehensive Plan of Action agreement (known as the Iran nuclear deal) and the Paris Agreement (known as the Paris climate agreement) and disagreed with the Trump Administration's decisions to withdraw the United States from those agreements. Despite the close relationship between President Trump and Prime Minister Johnson, there are no clear indications that a post-Brexit UK might reverse course on contentious areas such as the Iran nuclear deal or climate change to align with the views of the Trump Administration. Additionally, in January 2020, the UK government announced it would allow Chinese telecom equipment company Huawei to build parts of the UK's 5G cellular network, despite U.S. calls to boycott Huawei due to security risks. At the same time, Prime Minister Johnson has expressed support for the Middle East Peace Plan announced by the Trump Administration in January 2020, reversing May's earlier criticism of the Administration's recognition of Jerusalem as Israel's capital. ", "Brexit has forged opposing viewpoints about the potential trajectory of the UK's international influence in the coming years. The Conservative Party-led government has outlined a post-Brexit vision of a Global Britain that benefits from increased economic dynamism; remains heavily engaged internationally in terms of trade, political, and security issues; maintains close foreign and security policy cooperation with both the United States and the EU; and retains \"all the capabilities of a global power.\" Other observers contend that Brexit would reduce the UK's ability to influence world events and that, without the ability to help shape EU foreign policy, the UK will have less influence in the rest of the world. Developments in relation to the UK's global role and influence are likely to have consequences for perceptions of the UK as either an effective or a diminished partner for the United States.", "Parallel debates apply to a consideration of security and defense matters. Analysts believe that close U.S.-UK cooperation will continue for the foreseeable future in areas such as counterterrorism, intelligence, and the future of the NATO, as well as numerous global and regional security challenges. NATO remains the preeminent transatlantic security institution, and in the context of Brexit, UK leaders have emphasized their continued commitment to be a leading country in NATO. Analysts also expect the UK to remain a key U.S. partner in operations to combat the remaining elements of the Islamic State in Iraq and Syria. ", "In 2018, the UK had the world's sixth-largest military expenditure (behind the United States, China, Saudi Arabia, Russia, and India), spending approximately $56.1 billion. The UK is also one of seven NATO countries to meet the alliance's defense spending benchmark of 2% of GDP (according to NATO, the UK's defense spending was 2.14% of GDP in 2018 and was expected to be 2.13% of GDP in 2019). ", "Nevertheless, Brexit has added to questions about the UK's ability to remain a leading military power and an effective U.S. security partner. U.S. officials and other leading experts have expressed concerns about reductions in the size and capabilities of the British military in recent years. Negative economic effects from Brexit could exacerbate concerns about the UK's ability to maintain defense spending, investment, and capabilities. ", "Brexit also could have a substantial impact on U.S. strategic interests in relation to Europe more broadly and with respect to possible implications for future developments in the EU. For example, Brexit could allow the EU to move ahead more easily with developing shared capabilities and undertaking military integration projects under the EU Common Security and Defense Policy (CSDP), efforts that generate a mixture of praise and criticism from the United States. In the past, the UK has irritated some of its EU partners by essentially vetoing initiatives to develop a stronger CSDP, arguing that such efforts duplicate and compete with NATO. With the UK commonly regarded as the strongest U.S. partner in the EU, a partner that commonly shares U.S. views, and an influential voice in initiatives to develop EU foreign and defense policies, analysts have suggested that the UK's withdrawal could increase divergence between the EU and the United States on certain security and defense issues.", "More broadly, U.S. officials have long urged the EU to move beyond what is often perceived as a predominantly inward focus on treaties and institutions, in order to concentrate more effort and resources toward addressing a wide range of shared external challenges. Some observers note that Brexit has pushed Europe back toward another prolonged bout of internal preoccupation, consuming a considerable degree of UK and EU time and personnel resources in the process. "], "subsections": []}, {"section_title": "Trade and Economic Relations and Prospective U.S.-UK FTA", "paragraphs": ["The UK is a major U.S. trade and economic partner (see Figure 3 ). The UK is also a leading source of and destination for foreign direct investment, and affiliate activity is significant. Presently, WTO terms govern U.S.-UK trade, and these terms continue to apply after Brexit unless the two sides secure more preferential access to each other's markets through the conclusion of a bilateral FTA. The UK can negotiate, but not implement, trade agreements with other countries during the transition period.", "In July 2017, the United States and the UK established a bilateral working group to lay the groundwork for a potential future bilateral FTA post-Brexit and to ensure commercial continuity in U.S.-UK ties. The bilateral working group has met regularly to discuss a range of issues, including industrial and agricultural goods, services, investment, digital trade, intellectual property rights, regulatory issues, and small- and medium-sized enterprises. ", "On October 16, 2018, the Trump Administration formally notified Congress under Trade Promotion Authority (TPA) of its intent to enter into negotiations with the UK on a bilateral trade agreement. U.S. Trade Representative Robert Lighthizer has said that trade negotiations with the UK are a \"priority\" and will start as soon as the UK is in a position to negotiate, but he cautioned that the negotiations may take time. Whether the Administration ultimately takes a comprehensive approach to the negotiations, as with the U.S.-Mexico-Canada Trade Agreement, or a more limited approach, as with the U.S.-Japan trade deal, remains to be seen. ", "In the meantime, the United States and the UK have signed MRAs covering telecommunications equipment, electromagnetic compatibility for information and communications technology products, pharmaceutical good manufacturing practice inspections, and marine equipment to ensure continuity of trade in these areas. In addition, the two sides have signed agreements on insurance and derivatives trading and clearing, as well, to ensure regulatory certainty.", "Some analysts question the priority that will be afforded to U.S.-UK trade agreement negotiations, in light of the UK-EU and U.S.-EU trade agreement negotiations. Some analysts also question the sequencing, to the extent that the United States may face difficulty negotiating meaningfully with the UK without knowing what the final UK-EU relationship looks like; others counter that the UK-EU relationship is becoming clearer. Some experts view a U.S.-UK FTA as more feasible than a U.S.-EU FTA, given the U.S.-UK \"special relationship\" and historical similarities in trade approaches. The UK has been a leading voice on trade liberalization in the EU. Others have expressed doubts about the likelihood of a \"quick win\" for either side, particularly as negotiations would need to overcome a number of obstacles and concerns. ", "Many U.S. and UK businesses and other groups see an FTA as an opportunity to enhance market access and align UK regulations more closely with those of the United States than the EU regulatory framework, aspects of which raise concerns for U.S. business interests. Other stakeholder groups oppose what they view as efforts to weaken UK regulations. For instance, some in UK civil society have expressed concerns about the implications of U.S. demands for greater access to the UK market, and potential changes to UK food safety regulations and pharmaceutical drug pricing. Key issues in U.S.-UK FTA negotiations also could include financial services, investment, and e-commerce, which are a prominent part of U.S.-UK trade. To the extent that the UK decides to continue aligning its rules and regulations with the EU, sticking points in past U.S.-EU trade negotiations could resurface in the U.S.-UK context.", "Other complexities for the U.S.-UK trade talks include frictions over tariffs and other policy issues. For instance, the Trump Administration has threatened the UK with tariffs over its plan to apply a new digital services tax and strongly opposes the UK's decision to open its 5G network development to participation by Huawei, a Chinese telecommunications firm. Other issues, such as the U.S. Section 232 national security-based steel and aluminum tariffs and potential auto tariffs, could see pushback from the UK side. ", "Many Members of Congress support a U.S.-UK FTA. However, some Members of Congress have cautioned that they would oppose a trade agreement if Brexit were detrimental to the Northern Ireland peace process, whereas others support a trade agreement without such conditions. Whether a potential final FTA would meet congressional expectations or TPA requirements or be concluded as an executive agreement remains to be seen. Congress may continue to hold consultations with the Administration over the scope of the negotiations and engage in oversight as the negotiations progress."], "subsections": []}]}, {"section_title": "Conclusion", "paragraphs": ["Three and a half years after the Brexit referendum, a decisive victory in the UK's December 2019 general election allowed UK Prime Minister Johnson to proceed with Brexit. The UK withdrew from the EU at the end of January 2020 and began a transition period, scheduled to last until the end of 2020, during which it is expected to focus on negotiations with the EU on an FTA and other elements of the future UK-EU relationship. A significant number of unknowns remain, including how elements of the withdrawal agreement will be implemented, whether the two sides will be able to conclude an agreement on the future relationship during the 11-month transition period, and the effects of ending the transition period without such an agreement. Regardless of the precise turn of events, the aftermath of Brexit is expected to remain a primary focus of UK politics and a leading concern for the EU for the foreseeable future.", "During the 116 th Congress, developments with regard to Brexit and their implications for U.S.-UK and U.S.-EU relations, foreign policy and security cooperation, and the global economy and trade issues may remain of interest to Members of Congress. The topic of a prospective U.S.-UK FTA may be a particular area of congressional interest. Congress also may consider how Brexit could affect Northern Ireland and the Northern Ireland peace process. ", "Appendix A. Review of the Backstop and the Rejected Withdrawal Deal", "Under former United Kingdom (UK) Prime Minister Theresa May, the approach of the UK government to leaving the European Union (EU) was to pursue a relatively hard Brexit , meaning a full departure from the EU single market and customs union, and a full restoration of British sovereignty over lawmaking, including with regard to controlling immigration. The approach called for the UK to subsequently negotiate a free trade agreement with the EU to secure as much access to the EU market as possible. ", "In November 2018, EU and UK negotiators finalized a 585-page draft withdrawal agreement and a 26-page political declaration on the future relationship. The withdrawal agreement contained four main elements to guide the UK's orderly departure from the EU: ", "Guarantees pertaining to the rights of the approximately 3 million EU citizens residing in the UK and the approximately 1 million UK citizens residing in the EU. A commitment by the UK to pay the EU \u00c2\u00a339 billion (approximately $50 billion) to settle outstanding budgetary and financial pledges. A transition period, lasting through 2020, in which the UK would be bound to follow all rules governing the EU single market while the two sides negotiate their future relationship and implement steps needed to effect an orderly separation. A backstop provision, which would keep the UK in the EU customs union until the two sides agreed on their future trade relationship. The backstop was made necessary by the lack of an apparent solution to the Irish border question, with both sides intent on avoiding a hard border with customs checks and physical infrastructure between Northern Ireland and the Republic of Ireland. The provision was intended to protect cross-border trade and preserve the peace process between parties to Northern Ireland's long sectarian conflict. The EU also viewed the backstop as necessary to ensure that Brexit would not violate the rules and structure of the EU single market.", "The nonbinding political declaration on the future UK-EU relationship called for an economic partnership with the EU that features an ambitious free trade area and deep cooperation, but also \"separate markets and distinct legal orders,\" and the development of an independent UK trade policy. ", "The backstop provision became one of the main obstacles to securing Parliament's approval of the withdrawal agreement. Although the former May government contended that it would never be necessary to implement the backstop, critics noted that the UK would be unable to conduct an independent national trade policy, one of the main selling points for Brexit's supporters, as long as the UK remained a member of the EU customs union. (The backstop would have taken effect at the conclusion of the transition period\u00e2\u0080\u0094that is, at the end of 2020\u00e2\u0080\u0094if the two sides had not reached a new trade agreement with more preferable arrangements for resolving the border issue.) ", "Supporters of a hard Brexit, led by a faction of the Conservative Party, objected that the backstop would leave the UK a \"vassal state\" of the EU, bound indefinitely to many EU rules (both sides would have to jointly agree to end the backstop). Many unionists in Northern Ireland strongly opposed the deal because a provision in the backstop would preserve deeper regulatory alignment between Northern Ireland and the EU to avoid a hard border. They argue that it is unacceptable to treat Northern Ireland differently from the rest of the UK and that doing so weakens the UK's constitutional integrity. ", "Advocates of a soft Brexit maintain that permanent membership in the EU single market would be the least damaging outcome in economic terms, and that an assurance of permanent customs union membership would mitigate Brexit-related uncertainties. Many who favor a soft Brexit argued that May's withdrawal agreement prolonged such uncertainties while failing to deliver sufficient benefits. Others in the opposition parties voted against the deal in the hopes that its defeat would lead to an early general election or a second referendum on EU membership. ", "Between January 2019 and March 2019, the House of Commons rejected the withdrawal agreement three times. The House of Commons also held a series of nonbinding \"indicative\" votes to determine where Members stood on options and proposals, including staying in the EU single market and/or customs union, leaving without a deal, cancelling the withdrawal process to avoid \"no deal,\" and holding a public vote to confirm any deal. No proposal received a majority. ", "Appendix B. Northern Ireland: From the Troubles to a Fragile Peace", "Between 1969 and 1999, roughly 3,500 people died as a result of political violence in Northern Ireland. The conflict, often referred to as \"the Troubles,\" has its origins in the 1921 division of Ireland and reflects a struggle between different national, cultural, and religious identities. Protestants in Northern Ireland (48%) largely define themselves as British and support remaining part of the United Kingdom ( unionists ). Catholics in Northern Ireland (45%) consider themselves Irish, and many Catholics desire a united Ireland ( nationalists ). In the past, more militant unionists ( loyalists ) and more militant nationalists ( republicans ) were willing to use violence to achieve their goals.", "The 1998 Peace Agreement", "For years, the British and Irish governments sought to facilitate a negotiated political settlement to the conflict. After many ups and downs, the two governments and the Northern Ireland political parties participating in peace talks announced an agreement on April 10, 1998. The resulting Good Friday Agreement\u00e2\u0080\u0094or Belfast Agreement\u00e2\u0080\u0094is a multi-layered and interlocking document, consisting of a political settlement reached by Northern Ireland's political parties and an international treaty between the UK and Irish governments. ", "At the core of the Good Friday Agreement is the consent principle \u00e2\u0080\u0094that is, a change in Northern Ireland's status as part of the United Kingdom (UK) can come about only with the consent of the majority of Northern Ireland's people (as well as with the consent of a majority in Ireland). Although the agreement acknowledged that a substantial section of the population in Northern Ireland and a majority on the island desired a united Ireland, it recognized that the majority of people in Northern Ireland wished to remain part of the UK. If the preferences of these majorities were to change, the agreement asserted that both the UK and Irish governments would have a binding obligation to bring about the wish of the people; thus, the agreement included provisions for future polls (a border poll ) to be held in Northern Ireland on its constitutional status should events warrant.", "The Good Friday Agreement set out a framework for devolved government\u00e2\u0080\u0094the transfer of specified powers over local governance from London to Belfast\u00e2\u0080\u0094with a Northern Ireland Assembly and Executive Committee in which unionist and nationalist parties would share power. The agreement also contained provisions on the decommissioning (disarmament) of paramilitary weapons, policing, human rights, UK security normalization (demilitarization) in Northern Ireland, and the status of prisoners. Finally, the Good Friday Agreement created several new institutions to promote \"north-south\" cooperation on cross-border issues among leaders on the island of Ireland and \"east-west\" institutions to address regional issues affecting the UK, Ireland, the Channel Islands, and the Isle of Man.", "Despite a much-improved security situation since 1998, full implementation of the Good Friday Agreement has been challenging. For years, instability in Northern Ireland's devolved government was the rule rather than the exception. Decommissioning and police reforms were key sticking points. In 2007, however, the hard-line Democratic Unionist Party (DUP) and Sinn Fein, the political party associated with the Irish Republican Army (IRA), reached a landmark power-sharing deal. Regularly scheduled Assembly elections since the 2007 deal (in 2011 and 2016) produced successive power-sharing governments led by the DUP and Sinn Fein. In 2010, the DUP and Sinn Fein also reached an agreement to resolve the controversial issue of devolving police and justice affairs from London to Belfast.", "Recent Crisis in the Devolved Government and Other Challenges", "Analysts largely view implementation of the most important aspects of the Good Friday Agreement as complete. At the same time, tensions and distrust persist among the unionist and nationalist communities and their respective political parties, and many experts suggest that the peace process remains fragile. The inability of Northern Ireland's political parties to reach an agreement on reestablishing a devolved government for nearly three years following snap 2017 Assembly elections exemplifies the ongoing divisions and frictions in Northern Ireland's politics and society.", "The previous devolved government led by the DUP and Sinn Fein collapsed in January 2017, after 10 months in office. The immediate impetus for the collapse was a renewable energy scandal involving DUP leader and Northern Ireland First Minister Arlene Foster. However, frictions on several other issues\u00e2\u0080\u0094including giving the Irish language the same official status as English, legalizing same-sex marriage, and Brexit\u00e2\u0080\u0094contributed to Sinn Fein's decision to force snap Assembly elections. The DUP and Sinn Fein remain at odds over Brexit; Sinn Fein strongly opposes Brexit, whereas the DUP is the only major Northern Ireland political party to support it. The DUP retained the largest number of Assembly seats in the March 2017 elections, but Sinn Fein reduced the gap with the DUP to one seat in the Assembly and was widely regarded as the biggest winner.", "Negotiations on forming a new devolved government proceeded in fits and starts but repeatedly stalled, primarily over a potential stand-alone Irish Language Act. Some analysts suggest that the DUP's support for the Conservative Party government in the UK Parliament following the June 2017 snap general election further heightened distrust between Sinn Fein and the DUP, hardened the positions of both parties, and made reaching an agreement on a new devolved government more difficult. Others note that Brexit has consumed UK and Northern Ireland politicians' time and attention and largely overshadowed negotiations on a new devolved government.", "In April 2019, journalist Lyra McKee was shot and killed while covering riots in Londonderry (also known as Derry). The New IRA, a dissident republican group opposed to the peace process, claimed responsibility (but also apologized, asserting that it had been aiming to shoot a police officer but hit McKee by accident). McKee's death sparked a significant public outcry and prompted the UK and Irish governments to launch a more intensive effort to revive talks with Northern Ireland's political parties on forming a new devolved government. Negotiations remained largely deadlocked, however, throughout the summer and fall of 2019 amid ongoing uncertainty over Brexit.", "On December 16, 2019, the UK and Irish governments launched a new round of talks with the DUP, Sinn Fein, and Northern Ireland's other main political parties aimed at reestablishing the devolved government. These negotiations followed the UK's December 12, 2019, general election in which Prime Minister Johnson's Conservative Party won a convincing parliamentary majority, negating the influence of the DUP in the UK Parliament and clearing the way for approval of the Brexit withdrawal agreement with the EU. Some analysts suggested the UK election results improved the prospects for restoring Northern Ireland's devolved government. Both the DUP and Sinn Fein saw a decrease in their shares of the vote, while more moderate \"middle ground\" parties saw an increase, in part due to voter dissatisfaction with the impasse in reestablishing the devolved government.", "On January 10, 2020, the DUP and Sinn Fein agreed to a deal to restore devolved government put forward by the UK and Irish governments. The new Assembly convened the following day and elected a new Executive, including the DUP's Arlene Foster as First Minister and Sinn Fein's Michelle O'Neill as Deputy First Minister. The power-sharing deal is wide-ranging and addresses a number of key issues, including use of the Irish language, health and education concerns, increasing the number of police officers, and measures to improve the sustainability and transparency of Northern Ireland's political institutions. Both the UK and Irish governments also promised additional financial support for Northern Ireland as part of the deal.", "Despite the decrease in the levels of violence since the Good Friday Agreement, Northern Ireland continues to grapple with a number of issues in its search for peace and reconciliation. Northern Ireland remains a largely divided society, with Protestant and Catholic communities existing in parallel. Around 100 peace walls or other physical barriers throughout Northern Ireland separate some Protestant and Catholic neighborhoods, and schools and housing estates remain mostly single-identity communities. Sectarian tensions continue to flare periodically on issues such as parading, protests, and the use of flags and emblems. Other prominent challenges include addressing Northern Ireland's legacy of violence (often termed dealing with the past ), curbing remaining paramilitary and dissident activity, and promoting economic development and equality. Experts also contend that Brexit may continue to pose significant concerns for Northern Ireland's still-tenuous peace process and its future political and economic development. "], "subsections": []}]}}
{"id": "R42567", "title": "Coast Guard Cutter Procurement: Background and Issues for Congress", "released_date": "2019-05-22T00:00:00", "summary": ["The Coast Guard's program of record (POR) calls for procuring 8 National Security Cutters (NSCs), 25 Offshore Patrol Cutters (OPCs), and 58 Fast Response Cutters (FRCs) as replacements for 90 aging Coast Guard high-endurance cutters, medium-endurance cutters, and patrol craft. The Coast Guard's proposed FY2020 budget requests a total of $657 million in procurement funding for the NSC, OPC, and FRC programs.", "NSCs are the Coast Guard's largest and most capable general-purpose cutters; they are intended to replace the Coast Guard's 12 aged Hamilton-class high-endurance cutters. NSCs have an estimated average procurement cost of about $670 million per ship. Although the Coast Guard's POR calls for procuring a total of 8 NSCs to replace the 12 Hamilton-class cutters, Congress through FY2019 has funded 11 NSCs, including the 10th and 11th in FY2018. Six NSCs have been commissioned into service. The seventh was delivered to the Coast Guard on September 19, 2018, and the eighth was delivered on April 30, 2019. The ninth through 11th are under construction; the ninth is scheduled for delivery in 2021. The Coast Guard's proposed FY2020 budget requests $60 million in procurement funding for the NSC program; this request does not include funding for a 12th NSC.", "OPCs are to be smaller, less expensive, and in some respects less capable than NSCs; they are intended to replace the Coast Guard's 29 aged medium-endurance cutters. Coast Guard officials describe the OPC program as the service's top acquisition priority. OPCs have an estimated average procurement cost of about $421 million per ship. On September 15, 2016, the Coast Guard awarded a contract with options for building up to nine OPCs to Eastern Shipbuilding Group of Panama City, FL. The first OPC was funded in FY2018 and is to be delivered in 2021. The second OPC and long leadtime materials (LLTM) for the third were funded in FY2019. The Coast Guard's proposed FY2020 budget requests $457 million in procurement funding for the third OPC, LLTM for the fourth and fifth, and other program costs.", "FRCs are considerably smaller and less expensive than OPCs; they are intended to replace the Coast Guard's 49 aging Island-class patrol boats. FRCs have an estimated average procurement cost of about $58 million per boat. A total of 56 have been funded through FY2019, including six in FY2019. Four of the 56 are to be used by the Coast Guard in the Persian Gulf and are not counted against the Coast Guard's 58-ship POR for the program, which relates to domestic operations. Excluding these four OPCs, a total of 52 FRCs for domestic operations have been funded through FY2019. The 32nd FRC was commissioned into service on May 1, 2019. The Coast Guard's proposed FY2020 budget requests $140 million in acquisition funding for the procurement of two more FRCs for domestic operations.", "The NSC, OPC, and FRC programs pose several issues for Congress, including the following:", "whether to provide funding in FY2020 for the procurement of a 12th NSC; whether to fund the procurement in FY2020 of two FRCs, as requested by the Coast Guard, or some higher number, such as four or six; whether to use annual or multiyear contracting for procuring OPCs; the annual procurement rate for the OPC program; the impact of Hurricane Michael on Eastern Shipbuilding of Panama City, FL, the shipyard that is to build the first nine OPCs; and the planned procurement quantities for NSCs, OPCs, and FRCs."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["This report provides background information and potential oversight issues for Congress on the Coast Guard's programs for procuring 8 National Security Cutters (NSCs), 25 Offshore Patrol Cutters (OPCs), and 58 Fast Response Cutters (FRCs). The Coast Guard's proposed FY2020 budget requests a total of $657 million in procurement funding for the NSC, OPC, and FRC programs.", "The issue for Congress is whether to approve, reject, or modify the Coast Guard's funding requests and acquisition strategies for the NSC, OPC, and FRC programs. Congress's decisions on these three programs could substantially affect Coast Guard capabilities and funding requirements, and the U.S. shipbuilding industrial base.", "The NSC, OPC, and FRC programs have been subjects of congressional oversight for several years, and were previously covered in other CRS reports that are now archived. CRS testified on the Coast Guard's cutter acquisition programs most recently on November 29. The Coast Guard's plans for modernizing its fleet of polar icebreakers are covered in a separate CRS report."], "subsections": []}, {"section_title": "Background", "paragraphs": [], "subsections": [{"section_title": "Older Ships to Be Replaced by NSCs, OPCs, and FRCs", "paragraphs": ["The 91 planned NSCs, OPCs, and FRCs are intended to replace 90 older Coast Guard ships\u201412 high-endurance cutters (WHECs), 29 medium-endurance cutters (WMECs), and 49 110-foot patrol craft (WPBs). The Coast Guard's 12 Hamilton (WHEC-715) class high-endurance cutters entered service between 1967 and 1972. The Coast Guard's 29 medium-endurance cutters include 13 Famous (WMEC-901) class ships that entered service between 1983 and 1991, 14 Reliance (WMEC-615) class ships that entered service between 1964 and 1969, and 2 one-of-a-kind cutters that originally entered service with the Navy in 1944 and 1971 and were later transferred to the Coast Guard. The Coast Guard's 49 110-foot Island (WPB-1301) class patrol boats entered service between 1986 and 1992.", "Many of these 90 ships are manpower-intensive and increasingly expensive to maintain, and have features that in some cases are not optimal for performing their assigned missions. Some of them have already been removed from Coast Guard service: eight of the Island-class patrol boats were removed from service in 2007 following an unsuccessful effort to modernize and lengthen them to 123 feet; additional Island-class patrol boats are being decommissioned as new FRCs enter service; the one-of-a-kind medium-endurance cutter that originally entered service with the Navy in 1944 was decommissioned in 2011; and Hamilton-class cutters are being decommissioned as new NSCs enter service. A July 2012 Government Accountability Office (GAO) report discusses the generally poor physical condition and declining operational capacity of the Coast Guard's older high-endurance cutters, medium-endurance cutters, and 110-foot patrol craft."], "subsections": []}, {"section_title": "Missions of NSCs, OPCs, and FRCs", "paragraphs": ["NSCs, OPCs, and FRCs, like the ships they are intended to replace, are to be multimission ships for routinely performing 7 of the Coast Guard's 11 statutory missions, including", "search and rescue (SAR); drug interdiction; migrant interdiction; ports, waterways, and coastal security (PWCS); protection of living marine resources; other/general law enforcement; and defense readiness operations.", "Smaller Coast Guard patrol craft and boats contribute to the performance of some of these seven missions close to shore. NSCs, OPCs, and FRCs perform them both close to shore and in the deepwater environment, which generally refers to waters more than 50 miles from shore."], "subsections": []}, {"section_title": "NSC Program", "paragraphs": ["National Security Cutters ( Figure 1 )\u2014also known as Legend (WMSL-750) class cutters because they are being named for legendary Coast Guard personnel \u2014are the Coast Guard's largest and most capable general-purpose cutters. They are larger and technologically more advanced than Hamilton-class cutters, and are built by Huntington Ingalls Industries' Ingalls Shipbuilding of Pascagoula, MS (HII/Ingalls).", "The Coast Guard's acquisition program of record (POR)\u2014the service's list, established in 2004, of planned procurement quantities for various new types of ships and aircraft\u2014calls for procuring 8 NSCs as replacements for the service's 12 Hamilton-class high-endurance cutters. The Coast Guard's FY2019 budget submission estimated the total acquisition cost of a nine-ship NSC program at $6.030 billion, or an average of about $670 million per ship.", "Although the Coast Guard's POR calls for procuring a total of 8 NSCs to replace the 12 Hamilton-class cutters, Congress through FY2018 has funded 11 NSCs, including the 10 th and 11 th in FY2018. The seventh was delivered to the Coast Guard on September 19, 2018, and the eighth was delivered on April 30, 2019. The ninth through 11th are under construction; the ninth is scheduled for delivery in 2021. The Coast Guard's proposed FY2020 budget requests $60 million in procurement funding for the NSC program; this request does not include funding for a 12 th NSC.", "For additional information on the status and execution of the NSC program from a May 2018 GAO report, see Appendix C ."], "subsections": []}, {"section_title": "OPC Program", "paragraphs": ["Offshore Patrol Cutters ( Figure 2 , Figure 3 , and Figure 4 )\u2014also known as Heritage (WMSM-915) class cutters because they are being named for past cutters that played a significant role in the history of the Coast Guard and the Coast Guard's predecessor organizations \u2014are to be somewhat smaller and less expensive than NSCs, and in some respects less capable than NSCs. In terms of full load displacement, OPCs are to be about 80% as large as NSCs. Coast Guard officials describe the OPC program as the service's top acquisition priority. OPCs are being built by Eastern Shipbuilding Group of Panama City, FL. ", "The Coast Guard's POR calls for procuring 25 OPCs as replacements for the service's 29 medium-endurance cutters. The Coast Guard's FY2019 budget submission estimated the total acquisition cost of the 25 ships at $10.523 billion, or an average of about $421 million per ship. The first OPC was funded in FY2018 and is to be delivered in 2021. The second OPC and long leadtime materials (LLTM) for the third were funded in FY2019. The Coast Guard's proposed FY2020 budget requests $457 million in procurement funding for the third OPC, LLTM for the fourth and fifth, and other program costs.", "The Coast Guard's Request for Proposal (RFP) for the OPC program, released on September 25, 2012, established an affordability requirement for the program of an average unit price of $310 million per ship, or less, in then-year dollars (i.e., dollars that are not adjusted for inflation) for ships 4 through 9 in the program. This figure represents the shipbuilder's portion of the total cost of the ship; it does not include the cost of government-furnished equipment (GFE) on the ship, or other program costs\u2014such as those for program management, system integration, and logistics\u2014that contribute to the above-cited figure of $421 million per ship.", "At least eight shipyards expressed interest in the OPC program. On February 11, 2014, the Coast Guard announced that it had awarded Preliminary and Contract Design (P&CD) contracts to three of those eight firms\u2014Bollinger Shipyards of Lockport, LA; Eastern Shipbuilding Group of Panama City, FL; and General Dynamics' Bath Iron Works (GD/BIW) of Bath, ME. On September 15, 2016, the Coast Guard announced that it had awarded the detail design and construction (DD&C) contract to Eastern Shipbuilding. The contract covers detail design and production of up to 9 OPCs and has a potential value of $2.38 billion if all options are exercised.", "For additional information on the status and execution of the OPC program from a May 2018 GAO report, see Appendix C ."], "subsections": []}, {"section_title": "FRC Program", "paragraphs": ["Fast Response Cutters ( Figure 5 )\u2014also called Sentinel (WPC-1101) class patrol boats because they are being named for enlisted leaders, trailblazers, and heroes of the Coast Guard and its predecessor services of the U.S. Revenue Cutter Service, U.S. Lifesaving Service, and U.S. Lighthouse Service \u2014are considerably smaller and less expensive than OPCs, but are larger than the Coast Guard's older patrol boats. FRCs are built by Bollinger Shipyards of Lockport, LA.", "The Coast Guard's POR calls for procuring 58 FRCs as replacements for the service's 49 Island-class patrol boats. The POR figure of 58 FRCs is for domestic operations. The Coast Guard, however, operates six Island-class patrol boats in the Persian Gulf area as elements of a Bahrain-based Coast Guard unit, called Patrol Forces Southwest Asia (PATFORSWA), which is the Coast Guard's largest unit outside the United States. Providing FRCs as one-for-one replacements for all six of the Island-class patrol boats in PATFORSWA would result in a combined POR+PATFORSWA figure of 64 FRCs.", "The Coast Guard's FY2019 budget submission estimated the total acquisition cost of the 58 cutters at $3.748.1 billion, or an average of about $65 million per cutter. A total of 56 FRCs have been funded through FY2019, including six in FY2019. Four of the 56 (two of the FRCs funded in FY2018 and two of the FRC funded in FY2019) are to be used for replacing PATFORSWA cutters and consequently are not counted against the Coast Guard's 58-ship POR for the program. Excluding these four OPCs, a total of 52 FRCs for domestic operations have been funded through FY2019.", "The 32nd FRC was commissioned into service on May 1, 2019. The Coast Guard's proposed FY2020 budget requests $140 million in acquisition funding for the procurement of two more FRCs for domestic operations.", "For additional information on the status and execution of the FRC program from a May 2018 GAO report, see Appendix C ."], "subsections": []}, {"section_title": "Funding in FY2013-FY2020 Budget Submissions", "paragraphs": [" Table 1 shows annual requested and programmed acquisition funding for the NSC, OPC, and FRC programs in the Coast Guard's FY2013-FY2020 budget submissions. Actual appropriated figures differ from these requested and projected amounts."], "subsections": []}]}, {"section_title": "Issues for Congress", "paragraphs": [], "subsections": [{"section_title": "FY2020 Funding for a 12th NSC", "paragraphs": ["One issue for Congress is whether to whether to provide funding in FY2020 for the procurement of a 12 th NSC. Funding long leadtime materials (LLTM) for a 12 th NSC in FY2020 could require tens of millions of dollars; fully funding the procurement of a 12 th NSC in FY2020 could require upwards of $700 million.", "Supporters of providing funding for a 12 th NSC in FY2020 could argue that a total of 12 NSCs would provide one-for-one replacements for the 12 retiring Hamilton-class cutters; that Coast Guard analyses showing a need for no more than 9 NSCs assumed dual crewing of NSCs\u2014something that has not worked as well as expected; and that the Coast Guard's POR record includes only about 61% as many new cutters as the Coast Guard has calculated would be required to fully perform the Coast Guard's anticipated missions in coming years (see \" Planned NSC, OPC, and FRC Procurement Quantities \" below, as well as Appendix A ).", "Skeptics or opponents of providing funding for a 12 th NSC in FY2019 could argue that the Coast Guard's POR includes only 8 NSCs, that the Coast Guard's fleet mix analyses (see \" Planned NSC, OPC, and FRC Procurement Quantities \" below, as well as Appendix A ) have not shown a potential need for more than 9 NSCs, and that in a situation of finite Coast Guard budgets, providing funding for a 12 th NSC might require reducing funding for other FY2020 Coast Guard programs."], "subsections": []}, {"section_title": "Whether to Procure Two FRCs or a Higher Number in FY2020", "paragraphs": ["Another issue for Congress is whether to fund the procurement in FY2020 of two FRCs, as requested by the Coast Guard, or some higher number, such as four or six. Supporters of funding the procurement of a higher number could argue that FRCs in past years have been procured at annual rates of up to six per year; that procuring them at higher annual rates reduces their unit procurement costs due to improved production economies of scale; and that procuring four or six FRCs in FY2020 would accelerate the replacement of aging and less-capable Island-class patrol boats with new and more capable FRCs.", "Opponents of procuring more than two FRCs in FY2020, while acknowledging these points, could argue that in a situation of finite Coast Guard funding, procuring more than two could require offsetting reductions in funding for other FY2020 Coast Guard programs, producing an uncertain net result on overall Coast Guard capabilities, and that replacing Island-class patrol boats, while desirable, is not so urgent a requirement that the procurement of FRCs needs to be accelerated beyond what the Coast Guard plans under its FY2020 budget submission."], "subsections": []}, {"section_title": "Annual or Multiyear (Block Buy) Contracting for OPCs", "paragraphs": ["Another issue for Congress is whether to acquire OPCs using annual contracting or multiyear contracting. The Coast Guard currently plans to use a contract with options for procuring the first nine OPCs. Although a contract with options may look like a form of multiyear contracting, it operates more like a series of annual contracts. Contracts with options do not achieve the reductions in acquisition costs that are possible with multiyear contracting. Using multiyear contracting involves accepting certain trade-offs.", "One form of multiyear contracting, called block buy contracting, can be used at the start of a shipbuilding program, beginning with the first ship. (Indeed, this was a principal reason why block buy contracting was in effect invented in FY1998, as the contracting method for procuring the Navy's first four Virginia-class attack submarines.) Section 311 of the Frank LoBiondo Coast Guard Authorization Act of 2018 ( S. 140 / P.L. 115-282 of December 4, 2018) provides permanent authority for the Coast Guard to use block buy contracting with economic order quantity (EOQ) purchases (i.e., up-front batch purchases) of components in its major acquisition programs. The authority is now codified at 14 U.S.C. 1137.", "CRS estimates that if the Coast Guard were to use block buy contracting with EOQ purchases of components for acquiring the first several OPCs, and either block buy contracting with EOQ purchases or another form of multiyear contracting known as multiyear procurement (MYP) with EOQ purchases for acquiring the remaining ships in the program, the savings on the total acquisition cost of the 25 OPCs (compared to costs under contracts with options) could amount to roughly $1 billion. CRS also estimates that acquiring the first nine ships in the OPC program under the current contract with options could forego roughly $350 million of the $1 billion in potential savings.", "One potential option for the subcommittee would be to look into the possibility of having the Coast Guard either convert the current OPC contract at an early juncture into a block buy contract with EOQ authority, or, if conversion is not possible, replace the current contract at an early juncture with a block buy contract with EOQ authority. Replacing the current contract with a block buy contract might require recompeting the program, which would require effort on the Coast Guard's part and could create business risk for Eastern Shipbuilding Group, the shipbuilder that holds the current contract. On the other hand, the cost to the Coast Guard of recompeting the program would arguably be small relative to a potential additional savings of perhaps $300 million, and Eastern arguably would have a learning curve advantage in any new competition by virtue of its experience in building the first OPC."], "subsections": []}, {"section_title": "Annual OPC Procurement Rate", "paragraphs": ["The current procurement profile for the OPC, which reaches a maximum projected annual rate of two ships per year, would deliver OPCs many years after the end of the originally planned service lives of the medium-endurance cutters that they are to replace. Coast Guard officials have testified that the service plans to extend the service lives of the medium-endurance cutters until they are replaced by OPCs. There will be maintenance and repair expenses associated with extending the service lives of medium-endurance cutters, and if the Coast Guard does not also make investments to increase the capabilities of these ships, the ships may have less capability in certain regards than OPCs.", "One possible option for addressing this situation would be to increase the maximum annual OPC procurement rate from the currently planned two ships per year to three or four ships per year. Doing this could result in the 25 th OPC being delivered about four years or six years sooner, respectively, than under the currently planned maximum rate. Increasing the OPC procurement rate to three or four ships per year would require a substantial increase to the Coast Guard's Procurement, Construction, and Improvements (PC&I) account, an issue discussed in Appendix B .", "Increasing the maximum procurement rate for the OPC program could, depending on the exact approach taken, reduce OPC unit acquisition costs due to improved production economies of scale. Doubling the rate for producing a given OPC design to four ships per year, for example, could reduce unit procurement costs for that design by as much as 10%, which could result in hundreds of millions of dollars in additional savings in acquisition costs for the program. Increasing the maximum annual procurement rate could also create new opportunities for using competition in the OPC program. Notional alternative approaches for increasing the OPC procurement rate to three or four ships per year include but are not necessarily limited to the following:", "increasing the production rate to three or four ships per year at Eastern Shipbuilding\u2014an option that would depend on Eastern Shipbuilding's production capacity; introducing a second shipyard to build Eastern's design for the OPC; introducing a second shipyard (such as one of the other two OPC program finalists) to build its own design for the OPC\u2014an option that would result in two OPC classes; or building additional NSCs in the place of some of the OPCs\u2014an option that might include descoping equipment on those NSCs where possible to reduce their acquisition cost and make their capabilities more like that of the OPC. Such an approach would be broadly similar to how the Navy is using a descoped version of the San Antonio (LPD-17) class amphibious ship as the basis for its LPD-17 Flight II (LPD-30) class amphibious ships."], "subsections": []}, {"section_title": "Impact of Hurricane Michael on OPC Program at Eastern Shipbuilding", "paragraphs": ["Another potential issue for Congress concerns the impact of Hurricane Michael on Eastern Shipbuilding of Panama City, FL, the shipyard that is to build the first nine OPCs. A May 22, 2019, press report states:", "A Category 5 hurricane that battered Florida's panhandle region last fall, including shipbuilder Eastern Shipbuilding Group, will impact the new medium-endurance cutter ship the company is building for the Coast Guard but at the moment it's unclear what the effects will be on cost and schedule, Coast Guard Commandant Adm. Karl Schultz said on Tuesday [May 21].", "Eastern Shipbuilding's analysis of Hurricane Michael's impact on the Offshore Patrol Cutter (OPC) is due to the Coast Guard by May 31, and from there the service expects to have an understanding on the way forward with the program before the end of June, Schultz said in response to questions from Rep. Garret Graves (R-La.), during a hearing hosted by the House Transportation and Infrastructure Coast Guard and Maritime Transportation Subcommittee. He said Eastern Shipbuilding will provide \"perspectives\" on the cost and schedule and any other impacts.", "\"It's safe to say that we understand the impacts of a Category 5 hurricane on Eastern Shipbuilding Group will have an impact on the OPC program,\" Shultz said. He expects there to be some \"puts and takes\" after Eastern Shipbuilding submits its analysis.", "Rep. Peter DeFazio (D-Ore.), citing a press report earlier in the hearing, said that Sen. Marco Rubio (R-Fla.) has inserted language in a draft disaster assistance bill allowing the Coast Guard and Eastern Shipbuilding to renegotiate the firm fixed-price contract the shipbuilder is working under for the OPC to account for damage to shore side facilities from Hurricane Michael and increased labor costs.", "DeFazio said he is skeptical of the company's claim, noting, \"I'm pretty sure they had insurance,\" and adding that \"I question whether or not this has something to do with their original bid, which some thought was low.\" He also said he has concerns that a former Coast Guard Commandant that works for Eastern Shipbuilding has said he'll have authority to negotiate with his former service.", "Retired Adm. Robert Papp, the 24th commandant of the Coast Guard, runs Eastern Shipbuilding's Washington, D.C., operations.", "Eastern Shipbuilding did not respond to a query from Defense Daily about impacts to the OPC program from Hurricane Michael and any relief it may need from the current contract.", "Schultz said that the OPC contract can't be renegotiated without legislative authorities from Congress. He said the Coast Guard, in response to an \"ask\" from Congress, provided language to help with drafting the proposed legislation related to the OPC in the disaster bill.", "Schultz also said that the Coast Guard is not involved in Eastern Shipbuilding's lobbying efforts with Congress.", "A May 17, 2019, press report stated:", "As the Senate continues to negotiate the particulars of the supplemental disaster relief bill that seems poised to go to a vote next week, a new provision to save something many likely didn't know was at risk has been added.", "A new line in the draft bill will let Eastern Shipbuilding Group renegotiate its contract with the U.S. Coast Guard to build up to 25 new off-shore patrol cutters.", "\"Under the old contract we were prohibited from negotiating for additional money for increased costs,\" said Admiral Bob Papp, President of Washington Operations for Eastern.", "That meant that after Hurricane Michael, they would be unable to negotiate with the Coast Guard to help cover a slew of new costs associated with both the project and the hurricane, such as the damage from the Category 5 storm that needed repairs, the prolonged schedule and the \"skyrocketing\" costs of labor, Papp said. The contract\u2014the largest in the Coast Guard's history at more than $10 billion\u2014didn't account for a natural disaster.", "It was going to be hard, Papp said, for Eastern to complete the project and to \"stay healthy\" without some negotiations. At stake in the community are 900 planned jobs and up to 5,000 indirect jobs officials believe will help jump-start the region's manufacturing economy.", "But an official in Sen. Marco Rubio's office said the latest version of the supplemental disaster relief bill now includes a provision that will allow negotiations.", "Rubio, according to the official, spoke with the President Donald Trump on Air Force One following the president's rally in Panama City Beach last week, helping to secure the language that made it into the bill.", "\"We've waited far too long (for disaster relief), and we're also involved in some Florida-specific issues,\" Rubio said in a recent video. \"For example, the Hurricane had an impact on a very important Coast Guard project that's in Northwest Florida and we want to make sure that project stays on target and continues to feed jobs because Northwest Florida desperately needs those jobs to recover. We're very hopeful. Cautiously optimistic, that next week can be a very good week.\"", "Papp thanked the area's congressional delegation for stepping up to advocate for this project, saying the company is \"honored and delighted\" to receive help.", "A January 28, 2019, press release from Eastern Shipbuilding stated:", "Panama City, FL, Eastern Shipbuilding Group [ESG] reports that steel cutting for the first offshore patrol cutter (OPC), Coast Guard Cutter ARGUS (WMSM-915), commenced on January 7, 2019 at Eastern's facilities. ESG successfully achieved this milestone even with sustaining damage and work interruption due to Hurricane Michael. The cutting of steel will start the fabrication and assembly of the cutter's hull, and ESG is to complete keel laying of ARGUS later this year. Additionally, ESG completed the placement of orders for all long lead time materials for OPC #2, Coast Guard Cutter CHASE (WMSM-916).", "Eastern's President Mr. Joey D'Isernia noted the following: \"Today represents a monumental day and reflects the dedication of our workforce - the ability to overcome and perform even under the most strenuous circumstances and impacts of Hurricane Michael. ESG families have been dramatically impacted by the storm, and we continue to recover and help rebuild our shipyard and community. I cannot overstate enough how appreciative we are of all of our subcontractors and vendors contributions to our families during the recovery as well as the support we have received from our community partners. Hurricane Michael may have left its marks but it only strengthened our resolve to build the most sophisticated, highly capable national assets for the Coast Guard. Today's success is just the beginning of the construction of the OPCs at ESG by our dedicated team of shipbuilders and subcontractors for our customer and partner, the United States Coast Guard. We are excited for what will be a great 2019 for Eastern Shipbuilding Group and Bay County, Florida.\"", "A November 1, 2018, statement from Eastern Shipbuilding states that the firm ", "resumed operations at both of its two main shipbuilding facilities just two weeks after Hurricane Michael devastated Panama City Florida and the surrounding communities\u2026.", "\u2026 the majority of ESG's [Eastern Shipbuilding Group's] workforce has returned to work very quickly despite the damage caused by the storm. \"Our employees are a resourceful and resilient group of individuals with the drive to succeed in the face of adversity. This has certainly been proven by their ability to bounce back over the two weeks following the storm. Our employees have returned to work much faster than anticipated and brought with them an unbreakable spirit, that I believe sets this shipyard and our community apart\" said [Eastern Shipbuilding] President Joey D'Isernia. \"Today, our staffing levels exceed 80% of our pre-Hurricane Michael levels and is rising daily.\"", "Immediately following the storm, ESG set out on an aggressive initiative to locate all of its employees and help get them back on the job as soon as practical after they took necessary time to secure the safety and security of their family and home. Together with its network of friends, partners, and customers in the maritime community, ESG organized daily distribution of meals and goods to employees in need. Additionally, ESG created an interest free deferred payback loan program for those employees in need and has organized Go Fund Me account to help those employees hardest hit by the storm. ESG also knew temporary housing was going to be a necessity in the short term and immediately built a small community located on greenfield space near its facilities for those employees with temporary housing needs.", "ESG has worked closely with its federal, state and commercial partners over the past two weeks to provide updates on the shipyard as well as on projects currently under construction. Power was restored to ESG's Nelson Facility on 10-21-18 and at ESG's Allanton Facility on 10-24-18 and production of vessels under contract is ramping back up. Additionally, all of the ESG personnel currently working on the US Coast Guard's Offshore Patrol Cutter contract have returned to work\u2026.", "\"We are grateful to our partners and the maritime business community as a whole for their support and confidence during the aftermath of this historic storm. Seeing our incredible employees get back to building ships last week was an inspiration,\" said D'Isernia. \"While there is no doubt that the effects of Hurricane Michael will linger with our community for years to come, I can say without reservation that we are open for business and excited about delivering quality vessels to our loyal customers.\"", "An October 22, 2018, press report states the following:", "U.S. Coast Guard officials and Eastern Shipbuilding Group are still assessing the damage caused by deadly category 4 Hurricane Michael to the Panama City, Fla.-based yard contracted to build the new class of Offshore Patrol Cutters.", "On September 28, the Coast Guard awarded Eastern Shipbuilding a contract to build the future USCGC Argus (WMSM-915), the first offshore patrol cutter (OPC). The yard was also set to build a second OPC, the future USCGC Chase (WMSM-916). Eastern Shipbuilding's contract is for nine OPCs, with options for two additional cutters. Ultimately, the Coast Guard plans to buy 25 OPCs.", "However, just as the yard was preparing to build Argus , Hurricane Michael struck the Florida Panhandle near Panama City on October 10. Workers from the shipyard and Coast Guard project managers evacuated and are just now returning to assess damage to the yard facilities, Brian Olexy, communications manager for the Coast Guard's Acquisitions Directorate, told USNI News.", "\"Right now we haven't made any decisions yet on shifts in schedule,\" Olexy said\u2026.", "Since the yard was just the beginning stages of building Argus , Olexy said the hull wasn't damaged. \"No steel had been cut,\" he said.", "Eastern Shipbuilding is still in the process of assessing damage to the yard and trying to reach its workforce. Many employees evacuated the area and have not returned, or are in the area but lost their homes, Eastern Shipbuilding spokesman Justin Smith told USNI News.", "At first, about 200 workers returned to work, but by week's end about 500 were at the yard, Smith said. The company is providing meals, water, and ice for its workforce.", "\"Although we were significantly impacted by this catastrophic weather event, we are making great strides each day thanks to the strength and resiliency of our employees,\" Joey D'Isernia, president of Eastern Shipbuilding, said in a statement."], "subsections": []}, {"section_title": "Planned NSC, OPC, and FRC Procurement Quantities", "paragraphs": ["Another issue for Congress concerns the Coast Guard's planned NSC, OPC, and FRC procurement quantities. The POR's planned force of 91 NSCs, OPCs, and FRCs is about equal in number to the Coast Guard's legacy force of 90 high-endurance cutters, medium-endurance cutters, and 110-foot patrol craft. NSCs, OPCs, and FRCs, moreover, are to be individually more capable than the older ships they are to replace. Even so, Coast Guard studies have concluded that the planned total of 91 NSCs, OPCs, and FRCs would provide 61% of the cutters that would be needed to fully perform the service's statutory missions in coming years, in part because Coast Guard mission demands are expected to be greater in coming years than they were in the past. For further discussion of this issue, about which CRS has testified and reported on since 2005, see Appendix A ."], "subsections": []}]}, {"section_title": "Legislative Activity in 2019", "paragraphs": [], "subsections": [{"section_title": "Summary of Appropriations Action on FY2020 Acquisition Funding Request", "paragraphs": [" Table 2 summarizes appropriations action on the Coast Guard's request for FY2020 acquisition funding for the NSC, OPC, and FRC programs.", "Appendix A. Planned NSC, OPC, and FRC Procurement Quantities", "This appendix provides further discussion on the issue of the Coast Guard's planned NSC, OPC, and FRC procurement quantities.", "Overview", "The Coast Guard's program of record for NSCs, OPCs, and FRCs includes only about 61% as many cutters as the Coast Guard calculated in 2011 would be needed to fully perform its projected future missions. The Coast Guard's planned force levels for NSCs, OPCs, and FRCs have remained unchanged since 2004. In contrast, the Navy since 2004 has adjusted its ship force-level goals eight times in response to changing strategic and budgetary circumstances.", "Although the Coast Guard's strategic situation and resulting mission demands may not have changed as much as the Navy's have since 2004, the Coast Guard's budgetary circumstances may have changed since 2004. The 2004 program of record was heavily conditioned by Coast Guard expectations in 2004 about future funding levels in the PC&I account. Those expectations may now be different, as suggested by the willingness of Coast Guard officials in 2017 to begin regularly mentioning the need for an PC&I funding level of $2 billion per year (see Appendix B ).", "It can also be noted that continuing to, in effect, use the Coast Guard's 2004 expectations of future funding levels for the PC&I account as an implicit constraint on planned force levels for NSCs, OPCs, and FRCs can encourage an artificially narrow view of Congress's options regarding future Coast Guard force levels and associated funding levels, depriving Congress of agency in the exercise of its constitutional power to provide for the common defense and general welfare of the United States, and to set funding levels and determine the composition of federal spending.", "2009 Coast Guard Fleet Mix Analysis", "The Coast Guard estimated in 2009 that with the POR's planned force of 91 NSCs, OPCs, and FRCs, the service would have capability or capacity gaps in 6 of its 11 statutory missions\u2014search and rescue (SAR); defense readiness; counterdrug operations; ports, waterways, and coastal security (PWCS); protection of living marine resources (LMR); and alien migrant interdiction operations (AMIO). The Coast Guard judges that some of these gaps would be \"high risk\" or \"very high risk.\"", "Public discussions of the POR frequently mention the substantial improvement that the POR force would represent over the legacy force. Only rarely, however, have these discussions explicitly acknowledged the extent to which the POR force would nevertheless be smaller in number than the force that would be required, by Coast Guard estimate, to fully perform the Coast Guard's statutory missions in coming years. Discussions that focus on the POR's improvement over the legacy force while omitting mention of the considerably larger number of cutters that would be required, by Coast Guard estimate, to fully perform the Coast Guard's statutory missions in coming years could encourage audiences to conclude, contrary to Coast Guard estimates, that the POR's planned force of 91 cutters would be capable of fully performing the Coast Guard's statutory missions in coming years.", "In a study completed in December 2009 called the Fleet Mix Analysis (FMA) Phase 1, the Coast Guard calculated the size of the force that in its view would be needed to fully perform the service's statutory missions in coming years. The study refers to this larger force as the objective fleet mix. Table A-1 compares planned numbers of NSCs, OPCs, and FRCs in the POR to those in the objective fleet mix.", "As can be seen in Table A-1 , the objective fleet mix includes 66 additional cutters, or about 73% more cutters than in the POR. Stated the other way around, the POR includes about 58% as many cutters as the 2009 FMA Phase I objective fleet mix.", "As intermediate steps between the POR force and the objective fleet mix, FMA Phase 1 calculated three additional forces, called FMA-1, FMA-2, and FMA-3. (The objective fleet mix was then relabeled FMA-4.) Table A-2 compares the POR to FMAs 1 through 4.", "FMA-1 was calculated to address the mission gaps that the Coast Guard judged to be \"very high risk.\" FMA-2 was calculated to address both those gaps and additional gaps that the Coast Guard judged to be \"high risk.\" FMA-3 was calculated to address all those gaps, plus gaps that the Coast Guard judged to be \"medium risk.\" FMA-4\u2014the objective fleet mix\u2014was calculated to address all the foregoing gaps, plus the remaining gaps, which the Coast Guard judge to be \"low risk\" or \"very low risk.\" Table A-3 shows the POR and FMAs 1 through 4 in terms of their mission performance gaps.", " Figure A-1 , taken from FMA Phase 1, depicts the overall mission capability/performance gap situation in graphic form. It appears to be conceptual rather than drawn to precise scale. The black line descending toward 0 by the year 2027 shows the declining capability and performance of the Coast Guard's legacy assets as they gradually age out of the force. The purple line branching up from the black line shows the added capability from ships and aircraft to be procured under the POR, including the 91 planned NSCs, OPCs, and FRCs. The level of capability to be provided when the POR force is fully in place is the green line, labeled \"2005 Mission Needs Statement.\" As can be seen in the graph, this level of capability is substantially below a projection of Coast Guard mission demands made after the terrorist attacks of September 11, 2001 (the red line, labeled \"Post-9/11 CG Mission Demands\"), and even further below a Coast Guard projection of future mission demands (the top dashed line, labeled \"Future Mission Demands\"). The dashed blue lines show future capability levels that would result from reducing planned procurement quantities in the POR or executing the POR over a longer time period than originally planned.", "FMA Phase 1 was a fiscally unconstrained study, meaning that the larger force mixes shown in Table A-2 were calculated primarily on the basis of their capability for performing missions, rather than their potential acquisition or life-cycle operation and support (O&S) costs.", "Although the FMA Phase 1 was completed in December 2009, the figures shown in Table A-2 were generally not included in public discussions of the Coast Guard's future force structure needs until April 2011, when GAO presented them in testimony. GAO again presented them in a July 2011 report.", "The Coast Guard completed a follow-on study, called Fleet Mix Analysis (FMA) Phase 2, in May 2011. Among other things, FMA Phase 2 includes a revised and updated objective fleet mix called the refined objective mix. Table A-4 compares the POR to the objective fleet mix from FMA Phase 1 and the refined objective mix from FMA Phase 2.", "As can be seen in Table A-4 , compared to the objective fleet mix from FMA Phase 1, the refined objective mix from FMA Phase 2 includes 49 OPCs rather than 57. The refined objective mix includes 58 additional cutters, or about 64% more cutters than in the POR. Stated the other way around, the POR includes about 61% as many cutters as the refined objective mix.", "Compared to the POR, the larger force mixes shown in Table A-2 and Table A-4 would be more expensive to procure, operate, and support than the POR force. Using the average NSC, OPC, and FRC procurement cost figures presented earlier (see \" Background \"), procuring the 58 additional cutters in the Refined Objective Mix from FMA Phase 2 might cost an additional $10.7 billion, of which most (about $7.8 billion) would be for the 24 additional FRCs. (The actual cost would depend on numerous factors, such as annual procurement rates.) O&S costs for these 58 additional cutters over their life cycles (including crew costs and periodic ship maintenance costs) would require billions of additional dollars.", "The larger force mixes in the FMA Phase 1 and 2 studies, moreover, include not only increased numbers of cutters, but also increased numbers of Coast Guard aircraft. In the FMA Phase 1 study, for example, the objective fleet mix included 479 aircraft\u201493% more than the 248 aircraft in the POR mix. Stated the other way around, the POR includes about 52% as many aircraft as the objective fleet mix. A decision to procure larger numbers of cutters like those shown in Table A-2 and Table A-4 might thus also imply a decision to procure, operate, and support larger numbers of Coast Guard aircraft, which would require billions of additional dollars. The FMA Phase 1 study estimated the procurement cost of the objective fleet mix of 157 cutters and 479 aircraft at $61 billion to $67 billion in constant FY2009 dollars, or about 66% more than the procurement cost of $37 billion to $40 billion in constant FY2009 dollars estimated for the POR mix of 91 cutters and 248 aircraft. The study estimated the total ownership cost (i.e., procurement plus life-cycle O&S cost) of the objective fleet mix of cutters and aircraft at $201 billion to $208 billion in constant FY2009 dollars, or about 53% more than the total ownership cost of $132 billion to $136 billion in constant FY2009 dollars estimated for POR mix of cutters and aircraft.", "A December 7, 2015, press report states the following:", "The Coast Guard's No. 2 officer said the small size and advanced age of its fleet is limiting the service's ability to carry out crucial missions in the Arctic and drug transit zones or to meet rising calls for presence in the volatile South China Sea.", "\"The lack of surface vessels every day just breaks my heart,\" VADM Charles Michel, the Coast Guard's vice commandant, said Dec. 7.", "Addressing a forum on American Sea Power sponsored by the U.S. Naval Institute at the Newseum, Michel detailed the problems the Coast Guard faces in trying to carry out its missions of national security, law enforcement and maritime safety because of a lack of resources.", "\"That's why you hear me clamoring for recapitalization,\" he said.", "Michel noted that China's coast guard has a lot more ships than the U.S. Coast Guard has, including many that are larger than the biggest U.S. cutter, the 1,800-ton [sic:4,800-ton] National Security Cutter. China is using those white-painted vessels rather than \"gray-hull navy\" ships to enforce its claims to vast areas of the South China Sea, including reefs and shoals claimed by other nations, he said.", "That is a statement that the disputed areas are \"so much our territory, we don't need the navy. That's an absolutely masterful use of the coast guard,\" he said.", "The superior numbers of Chinese coast guard vessels and its plans to build more is something, \"we have to consider when looking at what we can do in the South China Sea,\" Michel said.", "Although they have received requests from the U.S. commanders in the region for U.S. Coast Guard cutters in the South China Sea, \"the commandant had to say 'no'. There's not enough to go around,\" he said.", "Potential oversight questions for Congress include the following:", "Under the POR force mix, how large a performance gap, precisely, would there be in each of the missions shown in Table A-3 ? What impact would these performance gaps have on public safety, national security, and protection of living marine resources? How sensitive are these performance gaps to the way in which the Coast Guard translates its statutory missions into more precise statements of required mission performance? Given the performance gaps shown in Table A-3 , should planned numbers of Coast Guard cutters and aircraft be increased, or should the Coast Guard's statutory missions be reduced, or both? How much larger would the performance gaps in Table A-3 be if planned numbers of Coast Guard cutters and aircraft are reduced below the POR figures? Has the executive branch made sufficiently clear to Congress the difference between the number of ships and aircraft in the POR force and the number that would be needed to fully perform the Coast Guard's statutory missions in coming years? Why has public discussion of the POR focused mostly on the capability improvement it would produce over the legacy force and rarely on the performance gaps it would have in the missions shown in Table A-3 ?", "Appendix B. Funding Levels in PC&I Account", "This appendix provides background information on funding levels in the Coast Guard's Procurement, Construction, and Improvements (PC&I) account.", "Overview", "As shown in Table B-1 , the FY2013 budget submission programmed an average of about $1.5 billion per year in the PC&I account. As also shown in the table, the FY2014-FY2016 budget submissions reduced that figure to between $1 billion and $1.2 billion per year.", "The Coast Guard has testified that funding the PC&I account at a level of about $1 billion to $1.2 billion per year would make it difficult to fund various Coast Guard acquisition projects, including a new polar icebreaker and improvements to Coast Guard shore installations. Coast Guard plans call for procuring OPCs at an eventual rate of two per year. If each OPC costs roughly $400 million, procuring two OPCs per year in an PC&I account of about $1 billion to $1.2 billion per year, as programmed under the FY2014-FY2016 budget submissions, would leave about $200 million to $400 million per year for all other PC&I-funded programs.", "Since 2017, Coast Guard officials have been stating more regularly what they stated only infrequently in earlier years: that executing the Coast Guard's various acquisition programs fully and on a timely basis would require the PC&I account to be funded in coming years at a level of about $2 billion per year. Statements from Coast Guard officials on this issue in past years have sometimes put this figure as high as about $2.5 billion per year.", "Using Past PC&I Funding Levels as a Guide for Future PC&I Funding Levels", "In assessing future funding levels for executive branch agencies, a common practice is to assume or predict that the figure in coming years will likely be close to where it has been in previous years. While this method can be of analytical and planning value, for an agency like the Coast Guard, which goes through periods with less acquisition of major platforms and periods with more acquisition of major platforms, this approach might not always be the best approach, at least for the PC&I account.", "More important, in relation to maintaining Congress's status as a co-equal branch of government, including the preservation and use of congressional powers and prerogatives, an analysis that assumes or predicts that future funding levels will resemble past funding levels can encourage an artificially narrow view of congressional options regarding future funding levels, depriving Congress of agency in the exercise of its constitutional power to set funding levels and determine the composition of federal spending.", "Past Coast Guard Statements About Required PC&I Funding Level", "At an October 4, 2011, hearing on the Coast Guard's major acquisition programs before the Coast Guard and Maritime Transportation subcommittee of the House Transportation and Infrastructure Committee, the following exchange occurred:", "REPRESENATIVE FRANK LOBIONDO: ", "Can you give us your take on what percentage of value must be invested each year to maintain current levels of effort and to allow the Coast Guard to fully carry out its missions?", "ADMIRAL ROBERT J. PAPP, COMMANDANT OF THE COAST GUARD:", "I think I can, Mr. Chairman. Actually, in discussions and looking at our budget\u2014and I'll give you rough numbers here, what we do now is we have to live within the constraints that we've been averaging about $1.4 billion in acquisition money each year.", "If you look at our complete portfolio, the things that we'd like to do, when you look at the shore infrastructure that needs to be taken care of, when you look at renovating our smaller icebreakers and other ships and aircraft that we have, we've done some rough estimates that it would really take close to about $2.5 billion a year, if we were to do all the things that we would like to do to sustain our capital plant.", "So I'm just like any other head of any other agency here, as that the end of the day, we're given a top line and we have to make choices and tradeoffs and basically, my tradeoffs boil down to sustaining frontline operations balancing that, we're trying to recapitalize the Coast Guard and there's where the break is and where we have to define our spending.", "An April 18, 2012, blog entry stated the following:", "If the Coast Guard capital expenditure budget remains unchanged at less than $1.5 billion annually in the coming years, it will result in a service in possession of only 70 percent of the assets it possesses today, said Coast Guard Rear Adm. Mark Butt.", "Butt, who spoke April 17 [2012] at [a] panel [discussion] during the Navy League Sea Air Space conference in National Harbor, Md., echoed Coast Guard Commandant Robert Papp in stating that the service really needs around $2.5 billion annually for procurement.", "At a May 9, 2012, hearing on the Coast Guard's proposed FY2013 budget before the Homeland Security subcommittee of the Senate Appropriations Committee, Admiral Papp testified, \"I've gone on record saying that I think the Coast Guard needs closer to $2 billion dollars a year [in acquisition funding] to recapitalize\u2014[to] do proper recapitalization.\"", "At a May 14, 2013, hearing on the Coast Guard's proposed FY2014 budget before the Homeland Security Subcommittee of the Senate Appropriations Committee, Admiral Papp stated the following regarding the difference between having about $1.0 billion per year rather than about $1.5 billion per year in the PC&I account:", "Well, Madam Chairman, $500 million\u2014a half a billion dollars\u2014is real money for the Coast Guard. So, clearly, we had $1.5 billion in the [FY]13 budget. It doesn't get everything I would like, but it\u2014it gave us a good start, and it sustained a number of projects that are very important to us.", "When we go down to the $1 billion level this year, it gets my highest priorities in there, but we have to either terminate or reduce to minimum order quantities for all the other projects that we have going.", "If we're going to stay with our program of record, things that have been documented that we need for our service, we're going to have to just stretch everything out to the right. And when we do that, you cannot order in economic order quantities. It defers the purchase. Ship builders, aircraft companies\u2014they have to figure in their costs, and it inevitably raises the cost when you're ordering them in smaller quantities and pushing it off to the right.", "Plus, it almost creates a death spiral for the Coast Guard because we are forced to sustain older assets\u2014older ships and older aircraft\u2014which ultimately cost us more money, so it eats into our operating funds, as well, as we try to sustain these older things.", "So, we'll do the best we can within the budget. And the president and the secretary have addressed my highest priorities, and we'll just continue to go on the\u2014on an annual basis seeing what we can wedge into the budget to keep the other projects going.", "At a March 12, 2014, hearing on the Coast Guard's proposed FY2015 budget before the Homeland Security subcommittee of the House Appropriations Committee, Admiral Papp stated the following:", "Well, that's what we've been struggling with, as we deal with the five-year plan, the capital investment plan, is showing how we are able to do that. And it will be a challenge, particularly if it sticks at around $1 billion [per year]. As I've said publicly, and actually, I said we could probably\u2014I've stated publicly before that we could probably construct comfortably at about 1.5 billion [dollars] a year. But if we were to take care of all the Coast Guard's projects that are out there, including shore infrastructure that that fleet that takes care of the Yemen [sic: inland] waters is approaching 50 years of age, as well, but I have no replacement plan in sight for them because we simply can't afford it. Plus, we need at some point to build a polar icebreaker. Darn tough to do all that stuff when you're pushing down closer to 1 billion [dollars per year], instead of 2 billion [dollars per year].", "As I said, we could fit most of that in at about the 1.5 billion [dollars per year] level, but the projections don't call for that. So we are scrubbing the numbers as best we can.", "At a March 24, 2015, hearing on the Coast Guard's proposed FY2016 budget before the Homeland Security subcommittee of the House Appropriations Committee, Admiral Paul Zukunft, Admiral Papp's successor as Commandant of the Coast Guard, stated the following:", "I look back to better years in our acquisition budget when we had a\u2014an acquisition budget of\u2014of $1.5 billion. That allows me to move these programs along at a much more rapid pace and, the quicker I can build these at full-rate production, the less cost it is in the long run as well. But there's an urgent need for me to be able to deliver these platforms in a timely and also in an affordable manner. But to at least have a reliable and a predictable acquisition budget would make our work in the Coast Guard much easier. But when we see variances of\u2014of 30, 40% over a period of three or four years, and not knowing what the Budget Control Act may have in store for us going on, yes, we are treading water now but any further reductions, and now I am\u2014I am beyond asking for help. We are taking on water.", "An April 13, 2017, press report states the following (emphasis added):", "Coast Guard Commandant Adm. Paul Zukunft on Wednesday [April 12] said that for the Coast Guard to sustain its recapitalization plans and operations the service needs a $2 billion annual acquisition budget that grows modestly overtime to keep pace with inflation.", "The Coast Guard needs a \"predictable, reliable\" acquisition budget \"and within that we need 5 percent annual growth to our operations and maintenance (O&M) accounts,\" Zukunft told reporters at a Defense Writers Group breakfast. Inflation will clip 2 to 3 percent from that, but \"at 5 percent or so it puts you on a moderate but positive glide slope so you can execute, so you can build the force,\" he said.", "In an interview published on June 1, 2017, Zukunft said the following (emphasis added):", "We cannot be more relevant than we are now. But what we need is predictable funding. We have been in over 16 continuing resolutions since 2010. I need stable and repeatable funding. An acquisition budget with a floor of $2 billion. Our operating expenses as I said, they've been funded below the Budget Control Act floor for the past five years. I need 5 percent annualized growth over the next five years and beyond to start growing some of this capability back. ", "But more importantly, we [need] more predictable, more reliable funding so we can execute what we need to do to carry out the business of the world's best Coast Guard.", "Appendix C. Additional Information on Status and Execution of NSC, OPC, and FRC Programs from May 2018 GAO Report", "This appendix presents additional information on the status and execution of the NSC, OPC, and FRC programs from a May 2018 GAO report reviewing DHS acquisition programs.", "NSC Program", "Regarding the NSC program, the May 2018 GAO report states the following:", "DHS's Under Secretary for Management (USM) directed the USCG to complete follow-on operational test and evaluation (OT&E) by March 2019. According to USCG officials, the program's OTA began follow-on OT&E in October 2017, which will test unmet key performance parameters (KPP) and address deficiencies found during prior testing. The NSC completed initial operational testing in 2014, but did not fully demonstrate 7 of its 19 KPPs, including those related to unmanned aircraft and cutter-boat deployment in rough seas. According to USCG officials, operators have since demonstrated these KPPs during USCG operations. For example, USCG officials stated that they successfully demonstrated operations of a prototype unmanned aircraft on an NSC. However, the USCG will not evaluate the NSC's unmanned aircraft KPP until the unmanned aircraft undergoes initial OT&E, currently planned for June 2019. In addition, the NSC will be the first USCG asset to undergo cybersecurity testing. However, this test has been delayed over a year with the final cyber test event scheduled for August 2018 because of a change in NSC operational schedules, among other things.", "The DHS USM also directed the USCG to complete a study to determine the root cause of the NSC's propulsion system issues by December 2017; however, as of January 2018, the study was not yet complete. GAO previously reported on these issues\u2014including high engine temperatures, cracked cylinder heads, and overheating generator bearings that were impacting missions\u2014in January 2016....", "The USCG initially planned to implement a crew rotational concept in which crews would rotate while NSCs were underway to achieve a goal of 230 days away from the cutter's homeport. In February 2018, USCG officials told GAO they abandoned the crew rotational concept because the concept did not provide the USCG with the expected return on investment. Instead, USCG officials said a new plan has been implemented that does not rotate crew and is anticipated to increase the days away from home port from the current capability of 185 days to 200 days.", "OPC Program", "Regarding the OPC program, the May 2018 GAO report states the following:", "DHS approved six key performance parameters (KPP) for the OPC related to the ship's operating range and duration, crew size, interoperability and maneuverability, and ability to support operations in moderate to rough seas. The first OPC has not yet been constructed, so the USCG has not yet demonstrated whether it can meet these KPPs. The USCG plans to use engineering reviews, and developmental and operational tests throughout the acquisition to measure the OPC's performance.", "USCG officials told GAO that the program completed an early operational assessment on the basic ship design in August 2017, which entailed a review of the current design plans. The program plans to refine the ship's design as needed based on preliminary test results. However, as of December 2017, USCG officials had not received the results of this assessment.", "The USCG plans to conduct initial operational test and evaluation (OT&E) on the first OPC in fiscal year 2023. However, the test results from initial OT&E will not be available to inform key decisions. For example, the results will not be available to inform the decision to build 2 OPCs per year\u2014which USCG officials said is scheduled to begin in fiscal year 2021. Without test results to inform these key decisions, the USCG must make substantial commitments prior to knowing how well the ship will meet its requirements....", "The USCG is in the process of completing the design of the OPC before starting construction, which is in-line with GAO shipbuilding best practices. In addition, USCG officials stated that the program is using state-of-the-market technology that has been proven on other ships as opposed to state-of-the-art technology, which lowers the risk of the program.", "FRC Program", "Regarding the FRC program, the May 2018 GAO report states the following:", "In February 2017, DHS's Director, Office of Test and Evaluation (DOT&E) assessed the results from the program's July 2016 follow-on operational test and evaluation (OT&E) and determined that", "\u2022 the program met its six key performance parameters, and", "\u2022 the FRC was operationally effective and suitable.", "During follow-on OT&E, the OTA found that several deficiencies from the program's initial OT&E had been corrected. For example, the OTA closed a severe deficiency related to the engines based on modifications to the FRC's main diesel engines. However, five major deficiencies remain. According to USCG officials, the remaining deficiencies are related to ergonomics (e.g., improving the working environment for operators) and issues with stowage space. USCG officials stated that they plan to resolve the remaining deficiencies by fiscal year 2020.", "DOT&E noted that these deficiencies do not prevent mission completion or present a danger to personnel, but recommended that they be resolved as soon as possible. USCG officials indicated that they plan to resolve the remaining deficiencies through engineering or other changes....", "The USCG continues to work with the contractor\u2014Bollinger Shipyards, LLC\u2014to address issues covered by the warranty and acceptance clauses for each ship. For example, 18 engines\u20149 operational engines and 9 spare engines\u2014have been replaced under the program's warranty. According to USCG documentation, 65 percent of the current issues with the engines have been resolved through retrofits; however, additional problems with the engines have been identified since our April 2017 review. For example, issues with water pump shafts are currently being examined through a root cause analysis and will be redesigned and are scheduled to undergo retrofits starting in December 2018. We previously found that the FRC's warranty resulted in improved cost and quality by requiring the shipbuilder to pay for the repair of defects. As of September 2017, USCG officials said the replacements and retrofits completed under the program's warranty allowed the USCG to avoid an estimated $104 million in potential unplanned costs\u2014of which $63 million is related to the engines.", "For a discussion of some considerations relating to warranties in shipbuilding and other acquisition programs, see Appendix D .", "Appendix D. Some Considerations Relating to Warranties in Shipbuilding and Other Acquisition Programs", "This appendix presents some considerations relating to warranties in shipbuilding and other defense acquisition.", "In discussions of Navy and Coast Guard shipbuilding, one question that sometimes arises is whether including a warranty in a shipbuilding contract is preferable to not including one. ", "Including a warranty in a shipbuilding contract (or a contract for building some other kind of military end item), while potentially valuable, might not always be preferable to not including one\u2014it depends on the circumstances of the acquisition, and it is not necessarily a valid criticism of an acquisition program to state that it is using a contract that does not include a warranty (or a weaker form of a warranty rather than a stronger one).", "Including a warranty generally shifts to the contractor the risk of having to pay for fixing problems with earlier work. Although that in itself could be deemed desirable from the government's standpoint, a contractor negotiating a contract that will have a warranty will incorporate that risk into its price, and depending on how much the contractor might charge for doing that, it is possible that the government could wind up paying more in total for acquiring the item (including fixing problems with earlier work on that item) than it would have under a contract without a warranty.", "When a warranty is not included in the contract and the government pays later on to fix problems with earlier work, those payments can be very visible, which can invite critical comments from observers. But that does not mean that including a warranty in the contract somehow frees the government from paying to fix problems with earlier work. In a contract that includes a warranty, the government will indeed pay something to fix problems with earlier work\u2014but it will make the payment in the less-visible (but still very real) form of the up-front charge for including the warranty, and that charge might be more than what it would have cost the government, under a contract without a warranty, to pay later on for fixing those problems.", "From a cost standpoint, including a warranty in the contract might or might not be preferable, depending on the risk that there will be problems with earlier work that need fixing, the potential cost of fixing such problems, and the cost of including the warranty in the contract. The point is that the goal of avoiding highly visible payments for fixing problems with earlier work and the goal of minimizing the cost to the government of fixing problems with earlier work are separate and different goals, and that pursuing the first goal can sometimes work against achieving the second goal.", "The Department of Defense's guide on the use of warranties states the following:", "Federal Acquisition Regulation (FAR) 46.7 states that \"the use of warranties is not mandatory.\" However, if the benefits to be derived from the warranty are commensurate with the cost of the warranty, the CO [contracting officer] should consider placing it in the contract. In determining whether a warranty is appropriate for a specific acquisition, FAR Subpart 46.703 requires the CO to consider the nature and use of the supplies and services, the cost, the administration and enforcement, trade practices, and reduced requirements. The rationale for using a warranty should be documented in the contract file....", "In determining the value of a warranty, a CBA [cost-benefit analysis] is used to measure the life cycle costs of the system with and without the warranty. A CBA is required to determine if the warranty will be cost beneficial. CBA is an economic analysis, which basically compares the Life Cycle Costs (LCC) of the system with and without the warranty to determine if warranty coverage will improve the LCCs. In general, five key factors will drive the results of the CBA: cost of the warranty + cost of warranty administration + compatibility with total program efforts + cost of overlap with Contractor support + intangible savings. Effective warranties integrate reliability, maintainability, supportability, availability, and life-cycle costs. Decision factors that must be evaluated include the state of the weapon system technology, the size of the warranted population, the likelihood that field performance requirements can be achieved, and the warranty period of performance."], "subsections": []}]}]}}
{"id": "R46318", "title": "Federal Data on Hate Crimes in the United States", "released_date": "2020-04-16T00:00:00", "summary": ["A relatively recent series of high-profile crimes where the offenders' actions appeared to be motivated by their bias or animosity towards a particular race, ethnicity, or religion might contribute to a perception that hate crimes are on the rise in the United States. These incidents might also generate interest among policymakers about how the federal government collects data on hate crimes committed in the United States.", "The Federal Bureau of Investigation (FBI) started its Hate Crime Statistics program pursuant to the requirement in the Hate Crime Statistics Act (HSCA, P.L. 101-275 ) that the Department of Justice (DOJ) collect and report data on crimes that \"manifest evidence of prejudice based on race, gender and gender identity, religion, disability, sexual orientation, or ethnicity, including where appropriate the crimes of murder, non-negligent manslaughter; forcible rape; aggravated assault, simple assault, intimidation; arson; and destruction, damage or vandalism of property.\" In addition to the FBI's Hate Crime Statistics program, DOJ also collects data on hate crime victimizations through the Bureau of Justice Statistics' (BJS') National Crime Victimization Survey (NCVS). The NCVS measures self-reported criminal victimizations including those perceived by victims to be motivated by an offender's bias against them for belonging to or being associated with a group largely identified by the characteristics outlined in the HSCA.", "Scholars, advocates, and members of the media have pointed out that there is a significant disparity between the number of hate crimes reported by the FBI each year and the number of hate crime victimizations reported by BJS. This has led some to criticize the hate crime data published by the FBI as an undercount of the number of hate crimes committed in the United States each year. However, this statistics gap can be partially explained by the different measures and methodologies utilized by the FBI and BJS to collect these data. For example, the FBI only reports on crimes that have been reported to the police, while BJS collects reports of criminal victimizations that may or may not meet the statutory definition of a hate crime and may or may not have been reported to the police. There are a number of reasons why some victims do not report their victimization to the police, including fear of reprisal, not wanting the offender to get in trouble, believing that police would not or could not do anything to help, and believing the crime to be a personal issue or too trivial to report.", "There are also several reasons why a hate crime that was reported to the police might not be subsequently reported to the FBI for their Hate Crime Statistics program. Deciding whether a crime meets the statutory definition of a hate crime requires law enforcement agencies to investigate allegations of hate crime motivations before making a final determination. Reporting by law enforcement agencies to the FBI might be hampered by the fact that some law enforcement agencies do not have the training necessary to investigate potential bias-motivated offenses effectively. In addition, differing definitions between the FBI and state statutes as to what constitutes a hate crime generate confusion as to which standard should be used to determine whether a hate crime occurred and should be reported.", "In 2021, the FBI plans to transition to the National Incident Based Reporting System (NIBRS) and will no longer accept non-NIBRS compliant data from law enforcement agencies. Policymakers might have an interest in how NIBRS differs from the FBI's current hate crime reporting program and whether full participation in NIBRS might improve the quality and completeness of federal hate crime data. However, like the FBI's current crime reporting program, participation in the NIBRS program is voluntary, and policymakers might consider steps Congress could take to promote wide-scale adoption of NIBRS."], "reports": {"section_title": "", "paragraphs": ["T he United States has experienced a series of high-profile violent crimes where the offenders' actions appeared to be motivated by their bias or animosity towards a particular race, ethnicity, or religion. For example, shootings at synagogues in Pittsburgh, PA, and Poway, CA; a driver speeding his car into protestors at a \"Unite the Right\" rally in Charlottesville, VA; a shooting at a Walmart in El Paso, TX, where the shooter allegedly said he was targeting \"Mexicans\" and espoused concerns about the \"invasion\" of the United States by immigrants; and reports of hate crimes against Asian-Americans during the Coronavirus pandemic contribute to a perception that hate crimes are on the rise in the United States. The salience of these events and how they are covered in the media might also contribute to the perception that there is a growing number of hate crimes (also known as bias crimes or bias-motivated offenses) being perpetrated in communities across the country. Policymakers might turn to hate crime data collected by the Department of Justice (DOJ) to understand if there has actually been an increase in hate crimes in the United States and, if so, the nature of the increase. Policymakers might also utilize these same data to craft a policy response to hate crimes that is grounded in the data and conduct oversight of the federal government's efforts to combat these crimes. ", "This report begins with an overview of federal sources of data on hate crimes. This includes a brief overview of the Hate Crime Statistics Act (HCSA, P.L. 101-275 ), which requires DOJ to collect and report data on hate crimes, and the two systems DOJ employs to collect these data: the Federal Bureau of Investigation's (FBI's) Hate Crime Statistics Program and the Bureau of Justice Statistics' (BJS') National Crime Victimization Survey (NCVS). The report then discusses two salient issues regarding hate crime statistics: the large difference between the number of hate crimes reported by the FBI and the number of hate crime victimizations reported by BJS, and concerns about law enforcement agencies underreporting hate crimes to the FBI. The report concludes with a discussion of whether the wide-scale adoption of the FBI's National Incident Based Reporting System (NIBRS) might serve as a means of improving federal hate crime data."], "subsections": [{"section_title": "The Hate Crime Statistics Act", "paragraphs": ["The HCSA requires DOJ to collect and report data on crimes that \"manifest evidence of prejudice based on race, gender and gender identity, religion, disability, sexual orientation, or ethnicity, including where appropriate the crimes of murder, non-negligent manslaughter; forcible rape; aggravated assault, simple assault, intimidation; arson; and destruction, damage or vandalism of property.\" Congress required DOJ to collect these data because, at the time, few states collected data on hate crimes and there were no national data. Policymakers believed that national data would reveal the scope of the problem and provide a basis for more effective law enforcement efforts to address hate crimes. ", "Over the years since the HCSA was enacted, Congress has expanded the definition of what constitutes a hate crime for data collection purposes. The act initially required DOJ to collect data on hate crimes based on race, religion, sexual orientation, or ethnicity. In 2009, Congress amended the act to require DOJ to collect data on hate crimes based on the victims' gender or gender identity ( P.L. 111-84 ) or disability ( P.L. 103-322 ). P.L. 111-84 also required DOJ to collect and report data on hate crimes committed by and against juveniles.", "The HCSA initially included a sunset provision that would have ended the requirement for DOJ to collect hate crime data after 1994. However, the Church Arson Prevention Act ( P.L. 104-155 ) removed that provision. "], "subsections": []}, {"section_title": "Federal Hate Crime Data", "paragraphs": ["To meet the requirements of the HCSA and subsequent amendments, DOJ collects and reports data on hate crimes that occur in the United States through two sources: the Hate Crime Statistics program and the NCVS."], "subsections": [{"section_title": "Hate Crime Statistics Program", "paragraphs": ["DOJ fulfills the HCSA's requirement by collecting supplemental data on hate crimes through the FBI's Uniform Crime Reporting (UCR) program. The Hate Crime Statistics Program collects data about hate crime offenders' bias motivations for the set of offenses already reported to the UCR program. Under the Hate Crime Statistics Program, the victim of a hate crime can be an individual, a business, an institution, or society as a whole.", "Hate Crime Statistics Program data is collected and reported to the FBI by law enforcement agencies across the country. Agency participation in the Hate Crime Statistics Program, like the UCR program, is voluntary but most agencies participate. In 2018, more than 16,100 law enforcement agencies in all 50 states and the District of Columbia participated in the Hate Crime Statistics Program. The agencies that participated represented jurisdictions that include nearly 307 million people. For a point of comparison, in 2008 there were a reported 17,985 state and local law enforcement agencies that employed at least one full-time officer or the equivalent in part-time officers.", "The FBI requires law enforcement agencies to use a two-step process for investigating hate crimes before reporting them to the Hate Crime Statistics Program. In the first step, the law enforcement officer that initially responds to a potential hate crime incident is responsible for determining whether there is any indication that the offense was motivated by bias against an individual's perceived membership in one of the groups specified in the HCSA. If there is an indication of a bias motivation, the incident is designated as a suspected bias-motivated crime and forwarded to an investigator. In the second step, the investigator is responsible for reviewing the facts of the incident and making the final determination as to whether the crime meets the HCSA definition of a hate crime. According to the FBI, an agency should only report an incident as a hate crime when a law enforcement investigation reveals sufficient evidence to lead a reasonable and prudent person to conclude that the offender's actions were motivated, in whole or in part, by his or her bias.", "Law enforcement agencies can submit data on single and multiple bias incidents. Single bias incidents are those in which one or more of the offenses committed during an incident are motivated by the same bias. Multiple bias incidents are those in which one or more of the offenses committed during an incident are motivated by two or more biases.", "Annual hate crime data published by the FBI differs from traditional UCR crime data published by the FBI in an important way. For most crimes, the FBI estimates full-year crime data for law enforcement agencies that submit less than 12 months of data to the UCR. In contrast, hate crime data published by the FBI only includes offenses reported by the police; no estimation for missing data is done by the FBI for the Hate Crime Statistics Program. "], "subsections": []}, {"section_title": "National Crime Victimization Survey", "paragraphs": ["BJS has collected data on hate crime victimizations through the NCVS since 2003. The NCVS data is collected through annual interviews with residents of a nationally representative sample of households. All people age 12 or older in the sampled households are interviewed. The NCVS collects self-reported data on non-fatal personal crime victimizations (sexual assault, robbery, aggravated and simple assaults, and personal larceny) and property crime victimizations (burglary, motor vehicle theft, and other thefts) regardless of whether the crimes were reported to the police. ", "The NCVS uses the same HCSA definition of a hate crime as the FBI. The NCVS collects data on crimes that victims perceive to be motivated by an offender's bias against them based on their race, gender and gender identity, religion, disability, sexual orientation, or ethnicity. Hate crime victimizations are counts of \"a single victim or household that experienced a criminal incident believed by the victim to be motivated by hate.\" In the NCVS data, hate crime victimizations for personal crimes are counts of individual victims, while hate crime victimizations for property crimes are counts of victimized households.", "In order for a victimization to be classified as a hate crime in the NCVS, the victim has to report one of three types of evidence of the offender's bias: (1) the offender used hate language, (2) the offender left hate signs or symbols at the scene, or (3) police investigators confirmed that a hate crime occurred. ", " Table 1 compares the methodologies of the UCR Hate Crime Statistics Program and the NCVS."], "subsections": []}]}, {"section_title": "Differences in the Two National Measures of Hate Crimes", "paragraphs": ["A perennial issue that can cause confusion for those unfamiliar with the FBI's and BJS's data collection goals and methodologies is the difference between the number of hate crime incidents reported by the FBI and the number of hate crime victimizations reported by BJS. For example, for 2018 (the most recent data available) the FBI reported that there were approximately 7,100 hate crime incidents that involved approximately 8,800 victims. In comparison, BJS reported that there were an estimated 198,000 hate crime victimizations in 2017. ", "What might explain the difference in the two national measures of hate crimes? The answer lies partially in the fact that the data reported by the FBI and BJS reflect different goals for collecting data on hate crimes. The FBI data only reflect hate crime incidents that are reported to law enforcement, and where law enforcement concludes that a hate crime has occurred and reports it to the FBI's Hate Crime Statistics Program. In contrast, the goal of the NCVS hate crime data collection effort is to estimate the total number of hate crime victimizations that occur each year, including victimizations that are not reported to law enforcement agencies (i.e., a portion of the dark figure of crime). Because the NCVS collects data on reported and unreported hate crime victimizations, its totals will always be larger than the FBI's hate crime data. ", "Another explanation for the difference between the two measures are the different standards needed to be met to be counted as a hate crime in the FBI's Hate Crime Statistics Program and the NCVS. For a hate crime to be counted by the FBI, law enforcement must have sufficient evidence that would lead a reasonable and prudent person to conclude that the offender's actions were motivated, in whole or in part, by his or her bias. In contrast, under the NCVS, an incident is counted as a hate crime if the victim believes that the offense was based on their race, ethnicity, religion, disability, sexual orientation, gender, or gender identity, and the offender used hate language, hate symbols, or a law enforcement investigation concluded that a hate crime had occurred. An independent investigation of the perceived bias is not necessary in every case for the NCVS interviewers to include the offense as a hate crime. ", "The goals and methodologies described above help explain why the NCVS estimates of hate crime victimizations are higher than the number of hate crime incidents reported by the FBI. At the same time, the FBI's Hate Crime Statistics Program collects data on a larger number of victim types and crimes that may be motivated by the offender's bias than the NCVS. For example, the FBI collects data on bias motivated homicides and vandalisms, which are not be captured by the NCVS. Law enforcement agencies can also report data on hate crimes against individuals, businesses, religious institutions, other institutions, and society as a whole to the FBI, whereas the NCVS only collects data on hate crimes against individuals (i.e., personal crimes) and households (i.e., property crimes)."], "subsections": []}, {"section_title": "Are Hate Crimes Underreported to the FBI by Law Enforcement?", "paragraphs": ["A common criticism of the FBI's hate crime data is that a large proportion of participating law enforcement agencies report zero hate crimes in a given year ( zero-reporting agencies ), leading some advocacy groups to accuse the zero-reporting agencies of underreporting hate crimes. The evidence presented to support these accusations are discrepancies between hate crime figures reported by the FBI and the self-reported hate crime figures tabulated by community organizations serving the communities that are often the targets of hate crime (e.g., organizations serving the LGBTQ, Jewish, Muslim, or Arab communities).", "Research suggests that some law enforcement agencies have underreported the number of hate crime incidents to the FBI. In one study, researchers reviewed a sample of assault incident reports from seven local law enforcement agencies across the country that were not classified as hate crimes to see if there was any indication that the offenses had a bias motivation. Incidents where there was a clear indication that bias was a predominant motivating factor in the assault were coded as bias- motivated , and other incidents were coded as ambiguous if there was an indication of bias but also evidence of some other identifiable triggering event or alternative motivation. The study found that for some of the incidents, there was evidence that they were motivated by the alleged perpetrator's bias, but that these misclassification errors were relatively infrequent and varied by law enforcement agency. The estimated proportion of misclassified cases for each agency ranged from zero to 8% of all assault incidents when both bias- motivated and ambiguous incidents were considered and from zero to 3% when only bias- motivated cases were considered. While the proportion of misclassified assault cases for any individual agency is relatively low, if the percentage of misclassified cases reported in this study was generalizable to the universe of all assaults, it would account for thousands of hate crimes that were not reported to the Hate Crime Statistics Program. ", "Another study of the accuracy of hate crime reporting utilized incident-based crime data (see discussion of expanding the National Incident Based Reporting System, below) from four local law enforcement agencies to evaluate whether hate crimes were being misclassified. This study looked at all criminal incidents, not just assaults, reported to the four agencies in 2008 and examined not only whether hate crimes were misclassified as non-bias-motivated offenses, but also whether non-bias-motivated offenses were wrongly classified as hate crimes and how these errors compared to misclassification errors for other non-hate crimes. This study found that undercounting of hate crimes was the most common misclassification error in the records they examined. The researchers noted that \"extending error rates to the population suggest that the estimated number of bias crimes that go unaccounted is noticeable.\"", "Even though the research described above did not focus on local law enforcement agencies who reported zero hate crimes, it is these agencies in particular that critics argue are likely to have underreported hate crimes. As shown in Figure 1 , the vast majority of agencies that participate in the Hate Crime Statistics Program are zero-reporting agencies, leading critics to assume that hate crimes are significantly underreported to the FBI. ", "In order for a law enforcement agency to be considered a \"participant,\" it has to submit data on the number of hate crimes for at least part of the year or a letter signed by the police chief certifying that no hate crimes occurred that year in its jurisdiction. From 1996 to 2017, at least 80% of Hate Crime Statistics Program participating law enforcement agencies in any given year reported zero hate crimes. The proportion of participating law enforcement agencies that were zero-reporting agencies generally increased from 2001 to 2014. There was a slight decrease in this proportion after 2014, but in 2018 nearly 9 out of 10 participating law enforcement agencies reported zero hate crimes. ", "Aside from misclassification errors, there are several reasons that might explain why a law enforcement agency does not report any hate crimes in a given year. The first, and most straightforward, reason is because no hate crimes occurred. Given that law enforcement agency jurisdictions include communities with as little as a few hundred residents, it is not implausible that some residents, especially those that live in very small and homogeneous communities, did not experience any hate crimes. Second, in order for a law enforcement agency to report a hate crime to the FBI, it must be reported to the police. Data from the NCVS indicates that on average, half of hate crime victimizations were not reported to the police from 2013 to 2017. Hate crime victims might choose not to report the incident to the police for a variety of reasons, including ", "fear of retaliation, embarrassment that they were victimized, a belief that the crime was not motivated by the perpetrator's bias, lack of familiarity with a state's hate crime laws, distrust of law enforcement, a belief that law enforcement will not investigate the case, fear of being exposed as a member of the LGBTQ community, or fear of being re-traumatized by the criminal justice system.", "Even when a hate crime is reported to state and local law enforcement, an investigation must be conducted into the perceived bias to determine if the offense was bias-motivated before reporting it to the FBI as a hate crime. This step can be challenging for law enforcement agencies, especially small agencies with relatively few resources. When there is evidence that a hate crime might have occurred, law enforcement agencies have to complete additional investigative steps to determine whether an offense meets the statutory definition of a hate crime, and in some cases law enforcement officers might not be trained sufficiently on recognizing biases in crimes to conduct such investigations. Few states provide mandatory training for law enforcement officers on investigating, identifying, and reporting hate crimes, and in the states that do, there is little oversight to confirm that law enforcement officers are receiving the training and applying it correctly. ", "Ambiguity in the circumstances surrounding hate crimes can also lead to an undercounting. Under the Hate Crime Statistics Program, law enforcement agencies report the number of hate crimes that were \"motivated in whole or in part by bias.\" Law enforcement officers might have difficulty applying this standard in cases where a bias motivation might not be obvious, especially when considering hate crimes that were motivated \"in part\" by an offender's bias. While a cross burning on the front yard of a black family's home is an unambiguous hate crime, in other cases the motivation of the alleged perpetrators might not be so clear. These ambiguous hate crimes can be classified into two categories: response/retaliation events and target-selection events. ", "Response/retaliation events are those where the offense was first triggered by something other than bias, but at some point bias exacerbates the incident into a hate crime. For example, a white motorist and a black motorist get into a dispute because their cars were involved in an accident. However, after a few minutes, the white motorist assaults the black motorist while yelling racial slurs. In this case, the incident was not initiated because of the white motorist's bias against the black motorist, but the white motorist's bias eventually resulted in him assaulting the black motorist. Target-selection events are those where a target of a crime is selected because of the offender's bias against members of the group, but the offender's bias in not obvious. For example, someone might rob men leaving bars that are known to be frequented by same sex couples because the offender believes they will be less likely to report the offense because they might not want to be identified as being a member of the LGBTQ community.", "In addition to issues related to law enforcement officer training on identifying hate crimes for submission to the FBI, differences in how a hate crime is defined under state law and under the HCSA can create its own ambiguities. For example, gender identity is a protected class under the HCSA, but it might not be a recognized bias motivation under a state's laws. As such, if a law enforcement officer is more familiar with the state's hate crime definition, he or she might not identify an offense based on gender-bias as a potential hate crime. As one group of researchers noted:", "Even when potential bias crimes are reported to a participating agency, the agency must then recognize any indications of bias, determine whether the incident is bias motivated, document the motivation, and submit the incident to UCR. Empirical evidence suggests that the processing of bias-crime reporting across participating law enforcement agencies is variable and subject to much error and interpretation by local departments."], "subsections": []}, {"section_title": "Improving Hate Crime Data: Considerations for Policymakers", "paragraphs": ["Congress passed the HCSA with the intent of collecting national data on bias-motivated offenses that could be used to inform federal hate crime policy. While DOJ has taken steps to collect these data, the hate crime data reported by the FBI is incomplete and the NCVS self-reported hate crime victimization data likely includes incidents that would not meet the legal standard needed to be charged as hate crime. Hate crime data \"missing\" from the FBI's Hate Crime Statistics program results from a series of complications associated with collecting these data (e.g., victims might not report the offense to the police, law enforcement agencies might fail to correctly identify potential hate crimes, or law enforcement agencies might not routinely and systematically report hate crime data to the FBI). Policymakers may have an interest in what steps Congress could take to help improve the quality of the FBI's hate crime data. One option on the horizon might be the wide-scale adoption of the National Incident Based Reporting System (NIBRS). ", "The FBI is in the process of phasing out the UCR summary reporting system and having all law enforcement agencies submit data through NIBRS. The FBI reports that it will begin collecting only NIBRS-compliant data from law enforcement agencies starting on January 1, 2021. To support state and local law enforcement agencies' transitions to NIBRS, state and local governments that are not certified as NIBRS compliant have been required since FY2018 to use 3% of their award under the Edward Byrne Memorial Justice Assistance Grant (JAG) program to achieve compliance.", "Compared to the UCR summary reporting system, NIBRS collects more data on a wider variety of offenses. NIBRS asks participating law enforcement agencies to collect and report incident-level data on offenders, victims, the relationship between victims and offenders, and the circumstances surrounding the incident for 52 different offenses. In comparison, the current summary reporting system is largely a tabulation of the number of eight Part I offenses reported to the police.", "As a part of NIBRS, reporting agencies can identify whether an offense was motivated by an offender's bias against the victim for each reported offense. Under the Hate Crime Statistics Program, law enforcement agencies that are not currently submitting NIBRS-compliant data submit a supplemental summary report to the FBI when there is evidence that one or more crimes in their jurisdiction involved a bias motivation. It has been argued that hate crime reporting will increase as more agencies adopt NIBRS because reporting the presence or absence of bias motivations is built into NIBRS. In addition to making it easier for law enforcement agencies to report hate crimes to the FBI, NIBRS provides data on a wider variety of offenses, including those that were motivated by offenders' bias against their victims, and data on the context of hate crimes (e.g., locations where hate crimes occur, the relationship between alleged perpetrators and victims of hate crimes, whether alleged offenders are residents of the community where they committed their offenses, the weapons used in the offenses (if any), and the types and seriousness of injuries sustained by hate crime victims).", "While the FBI might stop accepting crime data from non-NIBRS compliant law enforcement agencies next year, participation in the program is still voluntary. If a law enforcement agency does not believe it is worth the time and effort to adopt NIBRS and the state does not mandate that it participates in the program, there is no federal mandate or incentive for the agency to participate. Therefore, policymakers might have an interest in what steps Congress could take to promote wide-scale adoption of the program. Congress could consider placing a condition on a program such as JAG that would require law enforcement agencies to submit NIBRS data to the FBI or face a penalty under the program. However, the JAG program already provides a financial incentive to participate fully in the FBI's crime reporting program. Half of a state's allocation is based on its proportion of the average number of violent crimes reported in the United States over the past three years, and allocations for local governments are based on their proportion of the average number of violent crimes reported in the state over the past three years. The Bureau of Justice Assistance reports that NIBRS data will be used to calculate JAG awards once NIBRS replaces the summary reporting system. In addition, in order for local governments to be eligible for a direct award under the program, they have to have submitted violent crime data for 3 of the past 10 years. Yet, even with these incentives some law enforcement agencies in the United States do not participate in the UCR because compiling the data can be difficult and time consuming, and many small agencies might not have the resources needed to fully comply with the FBI's data collection and submission requirements. Thus, Congress could also consider authorizing a new grant program that would provide funding to state and local governments to cover expenses related to transitioning to NIBRS, such as purchasing new software and computers, or training officers on how to use NIBRS.", "While NIBRS might provide some administrative efficiency with regard to reporting hate crimes, it does not address some of the other issues law enforcement agencies currently have with reporting hate crimes through the UCR program. Implementing NIBRS does not address hate crime victims being reluctant to report an offense to the police, the need for training for law enforcement officers on how to identify potential hate crimes, or the need to improve law enforcement agencies processes for investigating potential hate crimes, nor will it resolve differences between the HCSA and state hate crime definitions."], "subsections": []}]}}
{"id": "R46359", "title": "COVID-19 and Private Health Insurance Coverage: Frequently Asked Questions", "released_date": "2020-05-15T00:00:00", "summary": ["The Coronavirus Disease 2019 (COVID-19) pandemic is affecting communities around the world and throughout the United States, with case counts growing daily. As private health insurance is the predominant source of health coverage in the United States, there is considerable congressional interest in understanding private health insurance coverage of health benefits related to COVID-19. This report addresses frequently asked questions about private health insurance covered benefits and consumer cost sharing related to COVID-19 testing, treatment, and a potential vaccine. It discusses recent legislation, references existing federal requirements and recent administrative interpretations of them in relation to COVID-19, and notes state and private-sector actions.", "Federal and state health insurance requirements may relate to covered benefits and consumer cost sharing, among many other topics. These requirements can vary by coverage type (i.e., individual coverage, fully insured small- and large-group coverage, and self-insured plans). Covered benefits, consumer costs, and other plan features may vary by plan within each type of coverage, subject to applicable federal and state requirements.", "The following bullets summarize federal requirements related to coverage and cost sharing (which includes deductibles, coinsurance, and copayments) of COVID-19 testing, treatment, and vaccination. Additional details are addressed in the report, including the applicability of the requirements to different types of plans; whether the coverage requirements apply even when furnished by out-of-network providers; whether plans are allowed to impose prior authorization or other medical management techniques; and the applicable dates of any coverage requirements.", "COVID-19 Testing . The Families First Coronavirus Response Act (FFCRA; P.L. 116-127 ), as amended by the Coronavirus Aid, Relief, and Economic Security Act (CARES Act; P.L. 116-136 ), requires most private health insurance plans to cover COVID-19 testing, administration of the test, and related items and services, as defined by the acts. This coverage must be provided without consumer cost sharing. COVID-19 Treatment . There are no federal requirements that specifically require coverage of COVID-19 treatment. However, the existing federal requirement that certain plans cover a set of 10 categories of essential health benefits (EHB) is potentially relevant to coverage of COVID-19 treatment items and services, depending on state and plan variation with regard to implementation of this requirement. Even where treatment items and services are required to be covered as EHB, cost sharing could apply. COVID-19 Vaccine . As of the date of this report, there is no vaccine against COVID-19 approved by the Food and Drug Administration (FDA) for use in the United States, although several candidates are in development. The CARES Act requires most plans to cover a COVID-19 vaccine, when available, without cost sharing, if it is recommended by the Advisory Committee on Immunization Practices (ACIP). Similarly, most plans must cover, without cost sharing, any other COVID-19 preventive services that are recommended for use by the United States Preventive Services Task Force (USPSTF).", "Some states have also announced relevant requirements on the plans they regulate, and some insurers have reported that they will cover certain relevant benefits. Several organizations are tracking these announcements, as noted in this report.", "Congressional Research Service (CRS) experts on other topics related to private health insurance and COVID-19, including types of plans and coverage of benefits not addressed in this report, are listed in the Appendix for the benefit of congressional clients. For information on other COVID-19 issues, congressional clients can access the CRS Coronavirus Disease resources page at https://www.crs.gov/resources/coronavirus-disease-2019 ."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["The Coronavirus Disease 2019 (COVID-19) pandemic is affecting communities around the world and throughout the United States, with case counts growing daily. As private health insurance is the predominant source of health coverage in the United States, there is considerable congressional interest in understanding private health insurance coverage of health benefits related to COVID-19 diagnosis, treatment, and prevention. ", "This report addresses frequently asked questions about covered benefits and consumer cost sharing related to COVID-19 testing, treatment, and a potential vaccine. It discusses recent legislation, references relevant existing federal requirements and recent administrative interpretations of them in relation to COVID-19, and notes state and private-sector actions. It begins with background information on types and regulation of private health insurance plans. ", "The Families First Coronavirus Response Act (FFCRA; P.L. 116-127 ) requires specified types of private health insurance plans to cover COVID-19 testing, administration of the test, and related items and services, without consumer cost sharing. The Coronavirus Aid, Relief, and Economic Security Act (CARES Act; P.L. 116-136 ) further addresses private health insurance coverage of COVID-19 testing, and requires coverage of a potential vaccine and other preventive services without cost sharing, if they are recommended by specified federal entities. There are no federal requirements that specifically require coverage of COVID-19 treatment services. However, one or more existing federal requirements are potentially relevant, as discussed in this report. Some states have also announced requirements related to covered benefits and consumer costs, and some insurers have reported that they will voluntarily cover certain relevant benefits. ", "This report discusses most U.S. private health insurance plans' coverage of health care items and services related to COVID-19, but it generally does not discuss the delivery of those services, insurers' payments to health care providers, or private health insurance coverage of other benefits. The Appendix lists Congressional Research Service (CRS) analysts who can discuss with congressional clients other topics of interest related to private health insurance and COVID-19, including types of plans and coverage of benefits not addressed in this report. Also beyond the scope of this report are public health coverage programs (e.g., Medicare); the domestic and international public health responses to COVID-19; and economic, human services, and other nonhealth issues. For further information on these topics, congressional clients can access the CRS Coronavirus Disease 2019 resources page at https://www.crs.gov/resources/coronavirus-disease-2019 .", "The information in this report is current as of its publication date and may be superseded by subsequent congressional or administrative action. Congressional clients may contact the report author and/or the experts listed in the Appendix for questions about further developments. In addition, Centers for Medicare & Medicaid Services (CMS) guidance related to private health insurance and COVID-19 is compiled on its website. "], "subsections": []}, {"section_title": "Background on Private Health Insurance", "paragraphs": ["The private health insurance market includes both the group market (largely made up of employer-sponsored insurance) and the individual market (which includes plans directly purchased from an insurer). The group market is divided into small- and large-group market segments; a small group is typically defined as a group of up to 50 individuals (e.g., employees), and a large group is typically defined as one with 51 or more individuals. Employers and other group health plan sponsors may purchase coverage from an insurer in the small- and large-group markets (i.e., they may fully insure ). Sponsors may instead finance coverage themselves (i.e., they may self-insure ). The individual and small-group markets include plans sold on and off the individual and small-group health insurance exchanges, respectively.", "Covered benefits, consumer costs, and other plan features may vary by plan, subject to applicable federal and state requirements. The federal government may regulate all the coverage types noted above (i.e., individual coverage, fully insured small- and large-group coverage, and self-insured group plans), and states may regulate all but self-insured group plans. Federal and state requirements may vary by coverage type. ", "This report focuses on private-sector plans explained above. There are some variations of these coverage types, and there are other types of private health coverage arrangements, which may or may not be subject to the requirements discussed in this report, or for which there may be other policy questions related to COVID-19. These other coverage types are out of the scope of this report, but a number of them are identified in the Appendix , along with resources for further information. ", "One coverage variation, grandfathered plans , is included in this report because it is explicitly referenced in legislation relevant to COVID-19 and private health insurance coverage. Grandfathered plans are individual or group plans in which at least one individual was enrolled as of enactment of the Patient Protection and Affordable Care Act (ACA; P.L. 111-148 , as amended), and which continue to meet certain criteria. Plans that maintain their grandfathered status are exempt from some, but not all, federal requirements.", "Another type of coverage, short-term, limited duration insurance (STLDI or STLD plans), is also included in this report, because it is explicitly excluded from a coverage definition cited by relevant legislation. STLDI is coverage, generally sold in the individual market, which meets certain definitional criteria. The statutory definition of \"individual health insurance coverage\" excludes STLDI; thus, STLDI is exempt from complying with all federal health insurance requirements applicable to individual health insurance plans. "], "subsections": []}, {"section_title": "FAQ: COVID-19 Covered Benefits and Cost Sharing", "paragraphs": ["The remainder of this report addresses private health insurance coverage of COVID-19 testing, treatment, and vaccination, when a vaccine becomes available. Where there are federal requirements related to such coverage, it is useful to understand the following: ", "Is the service or item required to be covered? If so, is cost sharing allowed? In general, private health insurance cost sharing includes deductibles, coinsurance, and copayments. Are plans allowed to impose prior authorization or other medical management requirements? For example, some insurers require that they (the insurer) provide prior authorization for routine hospital inpatient care, and/or require that primary care physicians provide approval or referrals for specialty care, as a condition for covering the care. Does the coverage requirement depend on how or where the service or item is furnished (e.g., by an in-network versus out-of-network provider)? Under private insurance, benefit coverage and consumer cost sharing is often contingent upon whether the service or item is furnished by a provider that the insurer has contracted with (i.e., whether that provider is in network for a given plan). In instances where a contract between an insurer and provider does not exist, the provider is considered out of network . When does the coverage requirement go into effect? What types of plans are subject to the coverage requirement?", "To the extent that information is available, these issues are addressed with regard to private health insurance coverage of COVID-19 testing, treatment, and vaccination. Table 1 summarizes key information."], "subsections": [{"section_title": "Are Plans Required to Cover COVID-19 Testing?", "paragraphs": [], "subsections": [{"section_title": "FFCRA and CARES Act", "paragraphs": ["Prior to the enactment of the FFCRA ( P.L. 116-127 ), there were no federal requirements specifically mandating private health insurance coverage of items or services related to COVID-19 testing. ", "Section 6001 of the FFCRA requires most private health insurance plans to cover COVID-19 testing, administration of the test, and related items and services, as defined in the act. Per FFCRA, the coverage must be provided without consumer cost sharing, including deductibles, copayments, or coinsurance. Prior authorization or other medical management requirements are prohibited. ", "The definition of testing that must be covered was expanded by Section 3201 of the CARES Act ( P.L. 116-136 ). In addition, the Department of Labor (DOL), Department of Health and Human Services (HHS), and the Treasury issued an FAQ document on April 11, 2020 (hereinafter, \"Tri-Agency April 11 FAQ\"), on the private health insurance coverage requirements in FFCRA and the CARES Act. Together, the acts and guidance require coverage of certain tests and services, as summarized below.", "Specified COVID-19 diagnostic tests, including both molecular (e.g., polymerase chain reaction, or PCR, tests) and serological tests (i.e., antibody tests), and the administration of such tests are covered. \"Items and services furnished to an individual during [visits, as specified below] that result in an order for or administration of [an applicable COVID-19 test], but only to the extent such items and services relate to the furnishing or administration of such product or to the evaluation of such individual for purposes of determining the need of such individual for such product.\" This definition could encompass additional diagnostic testing associated with the visit. However, it would not encompass treatment for COVID-19-associated illnesses. ", "The coverage requirements apply to the specified items and services when furnished at visits including to health care provider offices, urgent care centers, emergency rooms, and \"nontraditional\" settings, including drive-through testing sites. The requirements apply to both in-person and telehealth visits. ", "FFCRA does not specify whether its coverage requirements apply when the test is furnished by an out-of-network provider. However Section 3202 of the CARES Act addresses insurer payments to in-network and out-of-network providers. In addition, the Tri-Agency April 11 FAQ clarifies that the FFCRA coverage requirements apply both in network and out of network. ", "The coverage requirements in FFCRA apply only to the specified items and services that are furnished during the COVID-19 public health emergency period described in that act, as of the date the FFCRA was enacted (March 18, 2020). ", "These requirements apply to individual health insurance coverage and to small- and large-group plans, whether fully insured or self-insured. This includes grandfathered individual or group plans, which are exempt from certain other federal private health insurance requirements. Per the definition of individual health insurance coverage cited in the act, the requirements do not apply to STLDI. "], "subsections": []}, {"section_title": "State and Private-Sector Actions", "paragraphs": ["In recent weeks, some states have announced coverage requirements, and some insurers have clarified or expanded their policies, regarding coverage of COVID-19 testing, among other services. However, states cannot regulate self-insured plans, and insurer announcements do not necessarily apply to those plans either. FFCRA does apply to self-insured group plans in addition to the other plan types discussed above. ", "To the extent that state requirements about or plans' voluntary coverage of COVID-19 testing did not extend as far as FFCRA and CARES Act requirements, the federal laws supersede them. However, state requirements and plans' voluntary coverage may exceed applicable federal requirements, as long as they do not prevent the implementation of any federal requirements.", "Even though federal law now requires most plans to cover specified COVID-19 testing services without cost sharing, it may be useful for consumers to contact their insurers or plan sponsors to understand their coverage. Subject to applicable federal and state requirements, coverage of the COVID-19 test and related services and items may vary by plan. "], "subsections": []}]}, {"section_title": "Are Plans Required to Cover COVID-19 Treatment?", "paragraphs": [], "subsections": [{"section_title": "Essential Health Benefits Guidance on COVID-19 Coverage", "paragraphs": ["Although FFCRA requires certain plans to cover specified COVID-19 testing services without cost sharing, neither FFCRA nor the CARES Act mandates coverage of COVID-19 treatment services. There is no federal requirement specifically mandating private health insurance coverage of items or services related to COVID-19 treatment. However, one or more existing federal requirements are potentially relevant, subject to state implementation and plan variation.", "There is a federal statutory requirement that certain plans cover a core set of 10 categories of essential health benefits (EHB). However, states, rather than the federal government, generally specify the benefit coverage requirements within those categories. Current regulation allows each state to select an EHB-benchmark plan. The benchmark plan serves as a reference plan on which plans subject to EHB requirements must substantially base their benefits packages. Because states select their own EHB-benchmark plans, there is considerable variation in EHB coverage from state to state.", "On March 5, 2020, and March 12, 2020, CMS issued guidance addressing the potential relevance of EHB requirements to coverage of COVID-19 treatment, among other benefits, subject to variation in states' EHB-benchmark plan designations. According to the March 12 document, \"all 51 EHB-benchmark plans currently provide coverage for the diagnosis and treatment of COVID-19\" (emphasis added), but coverage of specific benefits within the 10 categories of EHB (e.g., hospitalization, laboratory services) may vary by state and by plan. ", "The March 12 document suggests that coverage of medically necessary hospitalizations would include coverage of medically necessary isolation and quarantine during the hospital admission, subject to state and plan variation. Quarantine in other settings, such as at home, is not a medical benefit. The document notes, \"however, other medical benefits that occur in the home that are required by and under the supervision of a medical provider, such as home health care or telemedicine, may be covered as EHB,\" subject to state and plan variation. ", "The March 12 document confirms that \"exact coverage details and cost-sharing amounts for individual services may vary by plan, and some plans may require prior authorization before these services are covered.\" In other words, even where certain treatment items and services are required to be covered as EHB in a state, cost-sharing and medical management requirements could apply, subject to applicable federal and state requirements. In addition, cost sharing and other coverage details may vary for services furnished by out-of-network providers. ", "Individual and fully insured small-group plans are subject to EHB requirements. Large-group plans, self-insured plans, grandfathered plans, and STLDI are not.", "Whether or not certain treatment services are defined as EHB in a state, other state benefit coverage requirements may be relevant to COVID-19 treatment. Plans may also voluntarily cover benefits. See \" State and Private-Sector Actions \" below. "], "subsections": []}, {"section_title": "Certain Federal Requirements Related to Cost Sharing", "paragraphs": ["Other existing federal requirements are also relevant to consumer cost sharing on COVID-19 treatment services, to the extent that such treatments are covered by the consumer's plan, and largely to the extent that they are defined by a state as EHB. ", "For example, plans must comply with annual l imits on consumers' out-of-pocket spending (i.e., cost sharing, including deductibles, coinsurance, and copayments) on in-network coverage of the EHB. If certain treatment services are defined as EHB in a state, and are furnished by an in-network provider, consumers' out-of-pocket costs for the plan year would be limited as discussed below. If certain treatment services are not defined as EHB in a state, and/or are furnished by out-of-network providers, this out-of-pocket maximum would not necessarily apply. ", "In 2020, the out-of-pocket limits cannot exceed $8,150 for self-only coverage and $16,300 for coverage other than self-only. This means that once a consumer has spent up to that amount in cost sharing on applicable in-network benefits, the plan would cover 100% of remaining applicable costs for the plan year. ", "The out-of-pocket maximum applies to individual health insurance coverage and to small- and large-group plans, whether fully insured or self-insured. The requirement does not apply to grandfathered plans or STLDI. "], "subsections": []}, {"section_title": "State and Private-Sector Actions", "paragraphs": ["As stated above, in recent weeks, some states have announced coverage requirements related to COVID-19 testing services and items, and some insurers have clarified or expanded their policies to include relevant coverage. Some of these state and insurer statements also address coverage of treatment services. However, as discussed above, states cannot regulate self-insured plans, and insurer announcements do not necessarily apply to those plans either. ", "Coverage, cost sharing, and the application of medical management techniques (e.g., prior authorization) can vary by plan, subject to applicable federal and state requirements. It may be useful for consumers to contact their insurers or plan sponsors to understand their coverage of services and items related to COVID-19 treatment. "], "subsections": []}]}, {"section_title": "Will Plans Be Required to Cover a COVID-19 Vaccine?", "paragraphs": [], "subsections": [{"section_title": "CARES Act and Existing Preventive Services Coverage Requirements", "paragraphs": ["As of the date of this report, there is no vaccine against COVID-19 approved by the Food and Drug Administration (FDA) for use in the United States, although several candidates are in development. Prior to the enactment of the CARES Act, there were no federal requirements specifically mandating private health insurance coverage of items or services related to a COVID-19 vaccine. ", "However, per an existing federal requirement (\u00c2\u00a72713 of the Public Health Service Act [PHSA]) and its accompanying regulations, most plans must cover specified preventive health services without cost sharing. This includes any preventive service recommended with an A or B rating by the United States Preventive Services Task Force (USPSTF); or any immunization with a recommendation by the Advisory Committee on Immunization Practices (ACIP), adopted by the Centers for Disease Control and Prevention (CDC), for routine use for a given individual. These coverage requirements apply no sooner than one year after a new or revised recommendation is published.", "Requirements of PHSA Section 2713 apply to individual health insurance coverage and to small- and large-group plans, whether fully insured or self-insured. The requirements do not apply to grandfathered plans or to STLDI. By regulation, plans are generally not required to cover preventive services furnished out of network. They are allowed to use \"reasonable medical management\" techniques, within provided guidelines. Cost sharing for office visits associated with a furnished preventive service may or may not be allowed, as specified in regulation.", "Section 3203 of the CARES Act requires specified plans\u00e2\u0080\u0094the same types as those subject to PHSA Section 2713\u00e2\u0080\u0094to cover a COVID-19 vaccine, when available, and potentially other COVID-19 preventive services, if they are recommended by ACIP or USPSTF, respectively. This coverage must be provided without cost sharing. Section 3203 also applies an expedited effective date for the required coverage: 15 business days after an applicable ACIP or USPSTF recommendation is published. Otherwise, requirements of Section 3203 mirror the existing requirements under PHSA Section 2713. The requirement to cover COVID-19 vaccination and other preventive services is not time limited, whereas the FFCRA requirement to cover COVID-19 testing is limited to the duration of a declared COVID-19 public health emergency. See \" Are Plans Required to Cover COVID-19 Testing? \""], "subsections": []}, {"section_title": "State and Private-Sector Actions", "paragraphs": ["Some of the state and insurer announcements about coverage of COVID-19 benefits, discussed earlier in this report, reference coverage of a potential vaccine. However, pending development and approval of the vaccine, and pending the implementation of the CARES Act requirements related to COVID-19 vaccine coverage, it is premature to discuss potential variations in coverage of the vaccine at the state or plan level. It may still be useful for consumers to contact their insurers or plan sponsors to understand their coverage of services and items related to a potential COVID-19 vaccine."], "subsections": [{"section_title": "Appendix. Resources for Questions about Private Health Insurance and COVID-19", "paragraphs": ["This report has focused on coverage of COVID-19 testing, treatment, and vaccination by most types of private health insurance plans. CRS analysts are also available to congressional clients to discuss other topics of interest related to private health insurance and COVID-19, including ", "coverage of COVID-19 benefits by types of private plans not specifically addressed in this report; other issues related to private coverage of COVID-19 benefits; private coverage of certain other benefits of concern during this pandemic, or of services furnished via telehealth; and issues related to private health insurance enrollment and premium payments. ", "The following table lists examples of such topics of interest, any relevant legislative or administrative resources, any relevant CRS resources, and names of appropriate CRS experts for the benefit of congressional clients. Besides the CRS reports listed below that provide background on relevant topics, also see CRS reports on health provisions in recent COVID-19 legislation: ", "CRS Report R46316, Health Care Provisions in the Families First Coronavirus Response Act, P.L. 116-127 , and CRS Report R46334, Selected Health Provisions in Title III of the CARES Act (P.L. 116-136) .", "The information in this report is current as of its publication date and may be superseded by subsequent congressional or administrative action. Congressional clients may contact the report author and/or experts listed below for questions about further developments. In addition, CMS guidance related to private health insurance and COVID-19 is compiled on its website. "], "subsections": []}]}]}]}]}}
{"id": "R45778", "title": "Exceptions to the Budget Control Act\u2019s Discretionary Spending Limits", "released_date": "2019-06-19T00:00:00", "summary": ["The Budget Control Act of 2011 (BCA; P.L. 112-25 ) established statutory limits on discretionary spending for FY2012-FY2021. There are currently separate annual limits for defense discretionary and nondefense discretionary spending.", "The law specifies that spending for certain activities, such as responding to a national emergency or fighting terrorism, will receive special budgetary treatment. This spending is most easily thought of as being exempt from the spending limits. Formally, however, the BCA states that the enactment of such spending allows for a subsequent upward adjustment of the discretionary limits to accommodate the spending. As a result, these types of spending are referred to as \"adjustments.\"", "Two adjustments\u00e2\u0080\u0094for spending designated as emergency or for Overseas Contingency Operations (OCO)\u00e2\u0080\u0094have made up the vast majority of the spending. (These adjustments are uncapped and can be used for broad purposes.) Five other adjustments are capped and can be used for more specific programs or purposes, and two additional adjustments address potential technical issues that can arise in enforcing the spending limits.", "According to information provided by the Office of Management and Budget (the agency responsible for evaluating compliance with the discretionary spending limits), in the seven fiscal years that have concluded since the discretionary spending limits were instituted, approximately $891 billion of spending has occurred under these adjustments. Spending for OCO made up 73% of the total, and spending for emergencies made up 20%.", "In addition to the adjustments specified in the BCA, the 21 st Century Cures Act (Division A of P.L. 114-255 ) provided that a limited amount of appropriations for specified purposes are to be exempt from the discretionary spending limits. As of the date of this report, the Cures Act is unique in providing an exemption of this kind."], "reports": {"section_title": "", "paragraphs": ["T he Budget Control Act of 2011 (BCA; P.L. 112-25 ), which was signed into law on August 2, 2011, includes statutory limits on discretionary spending for FY2012-FY2021, often referred to as \"spending caps.\" There are currently separate annual limits for defense discretionary and nondefense discretionary spending. (The defense category consists only of discretionary spending in budget function 050, \"national defense.\" The nondefense category includes discretionary spending in all other budget functions. ) Each discretionary spending limit is enforced separately through sequestration. ", "Discretionary spending that is provided for certain purposes is effectively exempt from the spending limits. This means that when compliance with the discretionary spending limits is evaluated, these special types of spending are treated differently:", "Adjustments . The law specifies that spending for certain activities, such as responding to a national emergency or fighting terrorism, will receive special budgetary treatment. This spending is most easily thought of as being exempt from, or an exception to, the spending limits. Formally, however, the BCA states that the enactment of such spending allows for a subsequent upward adjustment of the discretionary limits to accommodate the spending. As a result, these types of spending are referred to as \"adjustments.\" (The reference here to \"adjustments to the limits\" should be distinguished from statutory changes that have been enacted since 2011 increasing the spending limits.) These adjustments are not formally made until after the spending legislation has been enacted. Therefore, references to the discretionary spending limits typically refer to the spending limit level before the permitted adjustments have been included. 21 st Century Cures Act spending exempt from the limits . In addition to the adjustments specified in the BCA, the 21 st Century Cures Act (Division A of P.L. 114-255 ), enacted on December 13, 2016, provided that a limited amount of appropriations for specified purposes (at the National Institutes for Health and the Food and Drug Administration and for certain grants to respond to the opioid crisis) are to be subtracted from any cost estimate provided for the purpose of enforcing the discretionary spending limits. As of the date of this report, the Cures Act is unique in providing a statutory exemption of this kind. ", "These adjustments and the Cures Act exemptions complicate conversations and information related to overall discretionary spending amounts. When references are made to total discretionary spending, those figures may include spending that is provided under the adjustments authority as well as the Cures Act exemptions. However, when references are made to the discretionary spending limits, typically they do not include the spending that occurs as part of the adjustments or the Cures Act exemptions. More information is provided below on each adjustment and the Cures Act."], "subsections": [{"section_title": "Spending Not Subject to the Limits, Formally Referred to as Adjustments", "paragraphs": ["While the categories of spending described below are often thought of as being exempt from the spending limits, in fact the enactment of such spending allows for a subsequent upward adjustment of the discretionary limits to accommodate the spending. For this reason, we refer to these categories of spending as \"adjustments.\" Permissible adjustments to the discretionary spending limits are specified in Section 251(b) of the Balanced Budget and Emergency Deficit Control Act of 1985 (Title II of P.L. 99-177 (2)), unless otherwise noted. ", "The Office of Management and Budget (OMB) is responsible for evaluating compliance with the discretionary spending limits. To provide transparency to the process of evaluating such compliance, OMB is required to submit sequestration reports to Congress. In these reports, and in the President's annual budget submission, OMB is required to calculate the permissible adjustments and to specify the discretionary spending limits for the fiscal year and each succeeding year.", "The sections below provide more detailed information on the adjustments. These adjustments vary greatly. Two adjustments\u00e2\u0080\u0094Overseas Contingency Operations (OCO) and emergency spending\u00e2\u0080\u0094have made up the vast majority of the spending. These adjustments are uncapped and can be used for broad purposes. Five other adjustments are capped and can be used for specific programs or purposes. Two additional adjustments address potential technical issues that can arise in enforcing the spending limits."], "subsections": [{"section_title": "Spending Under the BCA Limits and Adjustments, FY2012-FY2018", "paragraphs": ["The most recent adjustment totals provided by OMB can be seen in Figure 1 and are detailed in Table A-1 . Trends in adjustments amounts can be seen in Figure 2 . According to OMB, in the seven fiscal years since the discretionary spending limits were instituted, approximately $891 billion of spending has been provided under these adjustments. (This does not include levels for FY2019, which has not yet concluded.) Spending for OCO totaled approximately $646 billion during the period, making up 73% of the total spending permitted under the adjustments. Spending for OCO ranged from a low of approximately $74 billion (FY2015 and FY2016) to a high of approximately $104 billion (FY2017). Spending provided under the emergency spending designation totaled approximately $178 billion during the period, making up 20% of total spending provided under the adjustments. Most of this amount was provided for a single fiscal year (approximately $110 billion in FY2018). The other seven adjustments made up about 7% of total spending occurring under the adjustments. "], "subsections": []}, {"section_title": "Overseas Contingency Operations/Global War on Terrorism (OCO/GWOT)", "paragraphs": ["Adjustments are made to the spending limits to accommodate enacted spending that has been designated as being for Overseas Contingency Operations/Global War on Terrorism (referred to in this report as OCO). There is no statutory limit on the amount of spending that may be designated for OCO, meaning that Congress and the President can together designate any amount they agree upon. There is no statutory definition of what activities are eligible to be designated for OCO. The only requirements associated with this designation are that (1) the legislation must specify that the spending is for OCO, (2) each account within an appropriations bill that will be for OCO must be designated separately\u00e2\u0080\u0094meaning that an entire bill that includes several separate accounts cannot have a \"blanket\" OCO designation\u00e2\u0080\u0094and (3) the President must also designate the spending as being for an OCO requirement. ", "It is not unusual for Congress to include language stating that spending designated for OCO is available only if the President also designates it as being for OCO. Further, the language typically states that the President designate \"all such amounts\" or none.", "For example, in March 2018, the Consolidated Appropriations Act (CAA) of 2018 ( P.L. 115-141 ) included OCO designations for many accounts. Two such accounts are included below:", "Military Personnel , Army", "For an additional amount for \"Military Personnel, Army\", $2,683,694,000: Provided , That such amount is designated by the Congress for Overseas Contingency Operations/Global War on Terrorism pursuant to section 251(b)(2)(A)(ii) of the Balanced Budget and Emergency Deficit Control Act of 1985.", "Military Personnel, Navy", "For an additional amount for \"Military Personnel, Navy\", $377,857,000: Provided , That such amount is designated by the Congress for Overseas Contingency Operations/Global War on Terrorism pursuant to section 251(b)(2)(A)(ii) of the Balanced Budget and Emergency Deficit Control Act of 1985.", "In addition, Section 6 of the act stated:", "Each amount designated in this Act by the Congress for Overseas Contingency Operations/Global War on Terrorism pursuant to section 251(b)(2)(A)(ii) of the Balanced Budget and Emergency Deficit Control Act of 1985 shall be available (or rescinded, if applicable) only if the President subsequently so designates all such amounts and transmits such designations to the Congress.", "The President then formally designated the spending as being for OCO:", "In accordance with section 6 of the Consolidated Appropriations Act, 2018 (H.R. 1625; the \"Act\"), I hereby designate for Overseas Contingency Operations/Global War on Terrorism all funding (including the rescission of funds) and contributions from foreign governments so designated by the Congress in the Act pursuant to section 251(b)(2)(A) of the Balanced Budget and Emergency Deficit Control Act of 1985, as outlined in the enclosed list of accounts.", "The details of this action are set forth in the enclosed memorandum from the Director of the Office of Management and Budget.", "Not all of OCO spending falls within the statutory definition of defense (050). For example, in FY2017, of the approximate $104 billion of discretionary spending designated as OCO, $21 billion was in the nondefense category. Likewise, while a majority of OCO spending appears in the Department of Defense appropriations bill, it also commonly appears in the Department of State, Foreign Operations, and Related Programs appropriations bill as well as the Department of Homeland Security appropriations bill and the Military Construction, Veterans Affairs, and Related Agencies appropriations bill. "], "subsections": []}, {"section_title": "Emergency Requirements", "paragraphs": ["Adjustments may also be made to the spending limits to accommodate enacted spending that has been designated as being an \"emergency requirement.\" There is no statutory limit on the amount of spending that may be designated for emergencies, meaning that Congress and the President can together designate any amount they agree upon. Likewise, there is no statutory classification of what activities are eligible to be designated as an emergency requirement. The only statutory requirements are that (1) the legislation must specify that the spending is for an emergency requirement, (2) each account within an appropriations bill that will be for \"emergency requirements\" must be designated separately\u00e2\u0080\u0094meaning that an entire bill that includes several separate accounts cannot have a \"blanket\" emergency requirement designation\u00e2\u0080\u0094and (3) the President must also designate the spending as being for an emergency requirement. ", "It is not unusual for Congress to include language stating that the spending designated for emergency is available only if the President also designates it as being for an emergency. Further, the language typically states that the President designate \"all such amounts\" or none.", "For example, in October 2017, the Additional Supplemental Appropriations for Disaster Relief Requirements Act, 2017 ( P.L. 115-72 ), was enacted, which included emergency requirement designations for several accounts. One such account is included below:", "For an additional amount for \"Wildland Fire Management\", $184,500,000, to remain available through September 30, 2021, for urgent wildland fire suppression operations: Provided, That such funds shall be solely available to be transferred to and merged with other appropriations accounts from which funds were previously transferred for wildland fire suppression in fiscal year 2017 to fully repay those amounts: Provided further, That such amount is designated by the Congress as being for an emergency requirement pursuant to section 251(b)(2)(A)(i) of the Balanced Budget and Emergency Deficit Control Act of 1985.", "In addition, Title II of the act states:", "Sec. 304. Each amount designated in this division by the Congress as being for an emergency requirement pursuant to section 251(b)(2)(A)(i) of the Balanced Budget and Emergency Deficit Control Act of 1985 shall be available only if the President subsequently so designates all such amounts and transmits such designations to the Congress.", "After this legislation was enacted, the President formally designated the spending as an emergency requirement.", "In accordance with section 304 of division A of the Additional Supplemental Appropriations for Disaster Relief Requirements Act, 2017 (H.R. 2266; the \"Act\"), I hereby designate as emergency requirements all funding (including the repurposing of funds and cancellation of debt) so designated by the Congress in the Act pursuant to section 251(b)(2)(A) of the Balanced Budget and Emergency Deficit Control Act of 1985, as outlined in the enclosed list of accounts.", "The details of this action are set forth in the enclosed memorandum from the Director of the Office of Management and Budget."], "subsections": []}, {"section_title": "Disaster Relief", "paragraphs": ["Adjustments may also be made to the spending limits to accommodate certain enacted spending that has been designated as being for disaster relief. The BCA defines disaster relief as activities carried out pursuant to a determination under Section 102(2) of the Robert T. Stafford Disaster Relief and Emergency Assistance Act. ", "Adjustment amounts permitted under the disaster relief designation are limited and are calculated pursuant to a statutory formula. Not all spending that is enacted to provide for disaster relief includes this designation. Congress may provide funds for the purpose of disaster relief but allow the spending to count against the discretionary spending limits, or it may designate the spending as an emergency requirement, particularly when the level of disaster relief being provided would exceed the amount permitted under the disaster relief adjustment. For example, the Bipartisan Budget Act of 2018 included appropriations related to Hurricanes Harvey, Irma, and Maria of $23.5 billion for the Federal Emergency Management Agency's Disaster Relief Fund for major disasters declared pursuant to the Stafford Act. However, that spending was designated as an emergency requirement and therefore employed the emergency adjustment described above, as opposed to the disaster relief adjustment, which is capped. ", "The formula used to determine the maximum amount permitted under the disaster relief adjustment was amended by the CAA of 2018, and, as described below, the new formula is to apply to FY2019 and beyond.", "OMB is required by law to include in its Sequestration Update Report a preview estimate of the adjustment for disaster relief for the upcoming fiscal year. For example, OMB included a preview estimate of $7.366 billion as the cap for disaster relief adjustment in its Sequestration Update Report for 2018 (released on August 18, 2017). Subsequently, appropriations were enacted in the CAA of 2018 providing $7.366 billion for FY2018 for the Federal Emergency Management Agency's Disaster Relief Fund in the FY2018 Department of Homeland Security Appropriations Act (division F of the CAA of 2018). "], "subsections": [{"section_title": "Formula Used for FY2012-FY2018", "paragraphs": ["The formula used to calculate the limit for the disaster relief adjustment for FY2018 and earlier required that the annual adjustment for disaster relief not exceed \"the average funding provided for disaster relief over the previous 10 years, excluding the highest and lowest years,\" plus the amount by which appropriations in the previous fiscal year was less than the average funding level, often referred to as carryover. ", "Under this formula, if the carryover from one year was not used in the subsequent year, it could not carry forward for a subsequent year. According to OMB, this \"led to a precipitous decline in the funding ceiling as higher disaster funding years began to fall out of the 10-year average formula.\" According to OMB, the limit for the adjustment fell from a high of $18.43 billion in 2015 to a low of $7.366 billion in 2018."], "subsections": []}, {"section_title": "Formula for FY2019-FY2021", "paragraphs": ["The CAA of 2018 altered the formula for the disaster relief adjustment in ways \"that will ultimately increase the funding ceiling,\" according to OMB. The formula for FY2019 and beyond comprises the total of", "the average funding provided for disaster relief over the previous 10 years, excluding the highest and lowest years; 5% of the total appropriations provided either (1) since FY2012 or (2) in the previous 10 years\u00e2\u0080\u0094whichever is less\u00e2\u0080\u0094subtracting any amount of budget authority that was rescinded in that period with respect to amounts provided for major disasters declared pursuant to the Stafford Act and designated by the Congress and the President as being for emergency requirements (as described above); and the cumulative net total of the unused carryover for FY2018, as well as unused carryover for any subsequent fiscal years.", "OMB has stated that under this formula, the potential adjustment limit for disaster relief for FY2019 would be capped at $14.965 billion."], "subsections": []}]}, {"section_title": "Wildfire Suppression", "paragraphs": ["The CAA of 2018 included a new adjustment that applies to FY2020-FY2027 for wildfire suppression. ", "Adjustments may be made to the spending limits to accommodate enacted spending that provides an amount for wildfire suppression operations in the Wildland Fire Management accounts at the Departments of Agriculture or Interior. The law states that the adjustments may not exceed the amounts shown below for each of FY2020-FY2027. However, the law allows such an adjustment to accommodate \"additional new budget authority\" for wildfire suppression in excess of the average costs for wildfire suppression operations as reported in the President's budget request for FY2015, which is $1.394 billion. Unlike some of the adjustments described above, this adjustment does not require a separate ad ditional designation from the President."], "subsections": []}, {"section_title": "Program Integrity Adjustments", "paragraphs": ["The BCA includes two separate adjustments to accommodate spending related to ensuring that certain program funding is spent appropriately, safeguarding against waste, fraud, and abuse. While these two adjustments are separate under the law, they are often grouped together in budget totals, as in Table A-1 ."], "subsections": [{"section_title": "Continuing Disability Reviews and Redeterminations21", "paragraphs": ["As originally enacted, the BCA permits adjustments to the spending limits to accommodate enacted spending for two types of program integrity activities conducted by the Social Security Administration: (1) continuing disability reviews, which are periodic medical reviews of Social Security disability beneficiaries and Supplemental Security Income (SSI) recipients under the age of 65; and (2) redeterminations, which are periodic financial reviews of SSI recipients. The Bipartisan Budget Act of 2015 ( P.L. 114-74 ) expanded the types of program integrity activities for which the adjustments are permitted. The expanded definition may also accommodate spending for (3) cooperative disability investigation units, which investigate cases of suspected disability fraud; (4) fraud prosecutions by Special Assistant United States Attorneys; and (5) work-related continuing disability reviews, which are periodic earnings reviews of Social Security disability beneficiaries. ", "The adjustments may not exceed the amounts shown below for each of FY2012-FY2021. However, the law allows such an adjustment to accommodate \"additional new budget authority\" for program integrity activities in excess of $273 million. Unlike some of the adjustments described above, this adjustment does not require a separate additional designation from the President.", "As an example, in March 2018, the Consolidated Appropriations Act, 2018 ( P.L. 115-141 ), included related spending for continuing disability reviews, redeterminations, and other specified activities:", "Of the total amount made available under this heading, not more than $1,735,000,000, to remain available through March 31, 2019, is for the costs associated with continuing disability reviews under titles II and XVI of the Social Security Act, including work-related continuing disability reviews to determine whether earnings derived from services demonstrate an individual's ability to engage in substantial gainful activity, for the cost associated with conducting redeterminations of eligibility under title XVI of the Social Security Act, for the cost of co-operative disability investigation units, and for the cost associated with the prosecution of fraud in the programs and operations of the Social Security Administration by Special Assistant United States Attorneys: Provided , That, of such amount, $273,000,000 is provided to meet the terms of section 251(b)(2)(B)(ii)(III) of the Balanced Budget and Emergency Deficit Control Act of 1985, as amended, and $1,462,000,000 is additional new budget authority specified for purposes of section 251(b)(2)(B) of such Act."], "subsections": []}, {"section_title": "Health Care Fraud and Abuse Control", "paragraphs": ["Adjustments are made to the spending limits to accommodate enacted spending that specifies an amount for health care fraud and abuse control, but the adjustment may not exceed an amount specified in statute. ", "The law states that the appropriations act must specify an amount for the health care fraud and abuse control program at the Department of Health and Human Services. The law states further that the adjustments may not exceed the amounts shown below for each of FY2012-FY2021. However, the law allows such an adjustment to accommodate \"additional new budget authority\" for health care fraud and abuse control in excess of $311 million. Unlike some of the adjustments described above, this adjustment does not require a separate additional designation from the President.", "As an example, in March 2018, the Consolidated Appropriations Act, 2018 ( P.L. 115-141 ), included related spending for health care fraud and abuse control:", "In addition to amounts otherwise available for program integrity and program management, $745,000,000, to remain available through September 30, 2019\u00e2\u0080\u00a6. Provided further, That of the amount provided under this heading, $311,000,000 is provided to meet the terms of section 251(b)(2)(C)(ii) of the Balanced Budget and Emergency Deficit Control Act of 1985, as amended, and $434,000,000 is additional new budget authority specified for purposes of section 251(b)(2)(C) of such Act."], "subsections": []}]}, {"section_title": "Reemployment Services and Eligibility Assessments", "paragraphs": ["The Bipartisan Budget Act of 2018 ( P.L. 115-123 ), enacted in February 2018, included a new adjustment for FY2019-FY2021.", "Adjustments may be made to the spending limits to accommodate enacted spending that specifies an amount for grants to states under Section 306 of the Social Security Act (42 U.S.C. \u00c2\u00a7506). The law states further that the adjustments may not exceed the amounts shown below for each of FY2019-FY2021. However, the law allows such an adjustment to accommodate \"additional new budget authority\" for reemployment services and eligibility assessments in excess of $117 million. Unlike some of the adjustments described above, this adjustment does not require a separate additional designation from the President."], "subsections": []}, {"section_title": "Changes in Concepts and Definitions", "paragraphs": ["The BCA provided that adjustments may be made to the spending limits to address changes in concepts and definitions. The law requires that OMB calculate such an adjustment when the President submits the budget request and that such changes may be made only after consultation with the House and Senate Appropriations Committees and the House and Senate Budget Committees. Further, the law states that such consultation with the committees shall include written communication that affords the committees an opportunity to comment before official action is taken. ", "The law states that such changes \"shall equal the baseline levels of new budget authority and outlays using up-to-date concepts and definitions, minus those levels using the concepts and definitions in effect before such changes.\"", "It appears that no adjustments have been made to accommodate changes in concepts and definitions since enactment of the BCA in 2011. However, the discretionary spending limits in effect between 1991 and 2002 similarly permitted adjustments to accommodate changes in concepts and definitions. During that period, such adjustments were made as a result of a reclassification that shifted programs between the mandatory and the discretionary categories. Other adjustments were made for accounting changes made by the Federal Credit Reform Act of 1990 and changes in budgetary treatment and estimating methodologies."], "subsections": []}, {"section_title": "Technical Adjustment (Allowance) for Estimating Differences", "paragraphs": ["It is common for legislation to be enacted each year that permits an adjustment to the discretionary spending limits for that fiscal year in the event that the limits would be breached as a result of estimating differences between the Congressional Budget Office (CBO) and OMB. For example, the Financial Services and General Government appropriations act for FY2018 included this provision:", "If, for fiscal year 2018, new budget authority provided in appropriations Acts exceeds the discretionary spending limit for any category set forth in section 251(c) of the Balanced Budget and Emergency Deficit Control Act of 1985 due to estimating differences with the Congressional Budget Office, an adjustment to the discretionary spending limit in such category for fiscal year 2018 shall be made by the Director of the Office of Management and Budget in the amount of the excess but the total of all such adjustments shall not exceed 0.2 percent of the sum of the adjusted discretionary spending limits for all categories for that fiscal year.", "For that particular fiscal year, OMB had estimating differences with CBO, which OMB stated \"would cause OMB estimates to exceed both caps.\" These estimating differences were $4 million for the defense category and $554 million for the nondefense category. OMB stated that the maximum allowable adjustment for estimating differences for FY2018 was $2.81 billion and that the amount of estimating differences ($558 million) was within the allowable adjustment. OMB adjusted the caps upward by the amounts of the estimating differences noted. "], "subsections": []}]}, {"section_title": "21st Century Cures Act Spending Not Subject to the Limits", "paragraphs": ["Title I in Division A of the 21 st Century Cures Act ( P.L. 114-255 ), enacted in December 2016, authorized appropriations for programs and activities related to health care, research, and opioid abuse. The act also established a distinctive budgetary mechanism related to certain authorizations that is different from the adjustments described above but has a similar effect. Specifically, the act established three accounts: the National Institutes of Health (NIH) Innovation Account, the Food and Drug Administration (FDA) Innovation Account, and the Account for the State Response to the Opioid Crisis. The act then transferred funds from the General Fund of the Treasury to these accounts and authorized those funds to be appropriated for specific dollar amounts in specific fiscal years. Those funds were not to be available for obligation until they were appropriated in appropriations acts each fiscal year.", "The act further stated that when appropriations are enacted for such authorized activities\u00e2\u0080\u0094up to the authorized amount each fiscal year\u00e2\u0080\u0094those appropriations are to be subtracted from any cost estimate provided for the purpose of enforcing the discretionary spending limits. This effectively exempts any spending provided for these activities between FY2017 and FY2026 from the spending caps. ", "Specifically, the bill provides such exceptions for the accounts and amounts shown in below. In each case, the exemptions apply only to the years included in the respective table. "], "subsections": [{"section_title": "Appendix. Discretionary Spending Limits and Adjustments Under the BCA", "paragraphs": [], "subsections": []}]}]}}
{"id": "R46346", "title": "Medicaid Recession-Related FMAP Increases", "released_date": "2020-05-07T00:00:00", "summary": ["Medicaid is jointly financed by the federal government and the states. States incur Medicaid costs by making payments to service providers (e.g., for doctor visits) and performing administrative activities (e.g., making eligibility determinations), and the federal government reimburses states for a share of these costs. The federal government's share of a state's expenditures for most Medicaid services is called the federal medical assistance percentage (FMAP). The FMAP varies by state and is inversely related to each state's per capita income. For FY2020, FMAP rates range from 50% (13 states) to 77% (Mississippi).", "Medicaid is a countercyclical program, which means that the rate of growth for Medicaid enrollment tends to accelerate when the economy weakens and tends to slow when the economy gains strength. During recessions, growth in the unemployment rate results in an increase in the rate of growth for Medicaid enrollment, which increases the rate of growth for Medicaid expenditures at the same time that state revenues decline. Reduced state revenues can make it difficult for states to continue financing their Medicaid program, especially with the recession-related growth in Medicaid enrollment.", "Federal fiscal relief to states is provided during recessions through adjustments to the FMAP rate because this process for getting federal Medicaid funding to states is already in place. Many states have indicated that past FMAP increases allowed the states to prevent further reductions to their Medicaid programs and other portions of their state budgets.", "The federal government provided states with temporary FMAP rate increases to provide states with fiscal relief on two past occasions: in response to the 2001 recession through the Jobs and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA; P.L. 108-27 ) and in response to the Great Recession through the American Recovery and Reinvestment Act of 2009 (ARRA; P.L. 111-5 , as amended by P.L. 111-226 ). The JGTRRA FMAP increase provided a 2.95 percentage point increase to FMAP rates for the last two quarters of FY2003 and the first three quarters of FY2004. The ARRA FMAP increase provided an across-the-board increase, along with an unemployment-related increase for eligible states. The ARRA across-the-board increase was a 6.2 percentage point FMAP increase, starting in the first quarter of FY2009 and lasting through the first quarter of FY2011; the increase phased down to 3.2 and 1.2 percentage points for the second and third quarters of FY2011, respectively.", "Most recently, the Families First Coronavirus Response Act (FFCRA; P.L. 116-127 ) added a temporary Medicaid FMAP increase of 6.2 percentage points beginning January 1, 2020, and continuing through the Coronavirus Disease 2019 (COVID-19) public health emergency period. Although the country had not officially entered into a recession at the time FFCRA was enacted, a recession with significant increases in the unemployment rate was expected in the near term.", "The recession-related FMAP increases have similar components, but there are differences. Similarities of all three of these recession-related FMAP increases include across-the-board FMAP increases; requirements to maintain Medicaid eligibility standards that are no more restrictive than they were prior to the FMAP increases; and requirements to ensure that states do not increase the percentage that local governments contribute to Medicaid expenditures.", "However, there are differences in how the recession-related FMAP increases were determined. For instance, the JGTRRA and ARRA FMAP increases included hold-harmless provisions that kept the states' regular FMAP rates from declining, and these increases excluded certain Medicaid expenditures from the FMAP increases. The ARRA FMAP increase had an unemployment-related increase that the JGTRRA and FFCRA increases did not have. Also, the JGTRRA FMAP increase did not have additional requirements for states, but ARRA and FFCRA have differing sets of additional requirements for states to adhere to in order to qualify for the FMAP increases."], "reports": {"section_title": "", "paragraphs": ["M edicaid is a means-tested entitlement program that finances the delivery of primary and acute medical services, as well as long-term services and supports. Historically, Medicaid eligibility generally has been limited to low-income children, pregnant women, parents of dependent children, the elderly, and individuals with disabilities. Since 2014, however, states have had the option to cover nonelderly adults with income up to 133% of the federal poverty level (FPL) under the Patient Protection and Affordable Care Act (ACA; P.L. 111-148 , as amended) Medicaid expansion.", "Medicaid is jointly financed by the federal government and the states. The federal government's share of most Medicaid expenditures is called the federal medical assistance percentage (FMAP). The remainder is referred to as the state share.", "Medicaid is a countercyclical program, meaning the rate of growth for Medicaid enrollment tends to accelerate when the economy weakens and tends to slow when the economy gains strength. During recessions, the rate of growth for Medicaid enrollment increases, which also increases the rate of growth for Medicaid expenditures at the same time that state revenues are decreasing. ", "The federal government provided states with fiscal relief through temporary FMAP rate increases in response to the 2001 recession (March 2001 through November 2001) and the Great Recession (December 2007 through June 2009). The Families First Coronavirus Response Act (FFCRA; P.L. 116-127 ), enacted on March 18, 2020, recently added a temporary Medicaid FMAP increase, beginning January 1, 2020, and continuing through the Coronavirus Disease 2019 (COVID-19) public health emergency period. ", "This report begins with an overview of the FMAP rate. Then, it discusses the recession-related impact on the Medicaid program based on the experiences of the 2001 recession and the Great Recession. The final section of this report describes the three recession-related FMAP increases and compares them according to their various aspects, such as time periods for the FMAP increases, the amounts of the increases, and the requirements for states to receive the increases. "], "subsections": [{"section_title": "The FMAP Rate", "paragraphs": ["The FMAP rate generally is determined annually and varies by state according to each state's per capita income relative to the U.S. per capita income. The formula provides higher FMAP rates, or federal reimbursement rates, to states with lower per capita incomes, and it provides lower FMAP rates to states with higher per capita incomes.", "FMAP rates have a statutory minimum of 50% and a statutory maximum of 83%. For a state with an FMAP of 60%, the state gets 60 cents back from the federal government for every dollar the state spends on its Medicaid program. In FY2020, FMAP rates range from 50.00% (13 states) to 76.98% (Mississippi).", "The FMAP formula relies on each state's per capita personal income in relation to the U.S. average per capita personal income. The national economy is basically the sum of all state economies. As a result, the national response to an economic change is the sum of the state responses to economic change. If more states (or larger states) were to experience an economic decline, the national economy would reflect this decline to some extent. However, the extent of the total decline would be offset by states with small decreases or even increases (i.e., states with growing economies). The U.S. per capita personal income, because of this balancing of positive and negative, usually has only a small percentage change each year. Because the FMAP formula compares state changes in per capita personal income (which can have large changes each year) with changes in the U.S. per capita personal income, states' FMAP rates often change from year to year. For most of the states experiencing annual FMAP rate changes, the change has been be less than one percentage point\u00e2\u0080\u0094but that can translate to a significant dollar amount.", "The FMAP rate is used to reimburse states for the federal share of most Medicaid expenditures, but exceptions to the regular FMAP rate have been made for certain states (e.g., the District of Columbia and the territories), situations (e.g., during economic downturns), populations (e.g., ACA Medicaid expansion population and certain women with breast or cervical cancer), providers (e.g., Indian Health Service facilities), and services (e.g., family planning and home health services).", "The FMAP is also used to determine the federal share of other federal programs. For instance, it is used to determine the federal share of spending for foster care maintenance, adoption assistance, and guardianship assistance payments authorized by Title IV-E of the Social Security Act. The FMAP rate is also used to determine the relative federal and state shares of the \"mandatory matching funds\" provided by the Child Care Entitlement to States. In addition, it determines the federal share of funding under the Temporary Assistance for Needy Families (TANF) Contingency Funds and the federal share of collections under the Child Support Enforcement program. ", "Separate from the regular FMAP rate, the enhanced FMAP (E-FMAP) rate is provided for services and administration under the State Children's Health Insurance Program (CHIP), subject to the availability of funds from a state's federal allotment for CHIP. The E-FMAP rate is calculated by reducing the state share under the regular FMAP rate by 30%."], "subsections": []}, {"section_title": "Medicaid and Recessions", "paragraphs": ["Medicaid expenditures are influenced by a number of economic, demographic, and programmatic factors. Economic factors include health care prices, unemployment rates, and individuals' wages. Demographic factors include population growth and the age distribution. Programmatic factors include changes to eligibility and benefits or other program changes. Other factors include the number of eligible individuals who enroll and their utilization of covered services.", "Medicaid is a countercyclical program. During recessions, growth in the unemployment rate results in an increase in the rate of growth for Medicaid enrollment, which increases the rate of growth for Medicaid expenditures at the same time that state revenues decline. Reduced state revenues can make it difficult for states to continue financing their Medicaid programs, especially with the recession-related growth in Medicaid enrollment. The effect of recessions on Medicaid enrollment, Medicaid expenditures, and state tax revenues are generally not isolated to the recession period and can continue after the recession has officially ended."], "subsections": [{"section_title": "Growth in Medicaid Enrollment", "paragraphs": ["Individuals and their dependents may become eligible for Medicaid because they experience reductions in their incomes due to reduced hours or job loss. During economic downturns, the number of individuals with reduced hours or job losses increases, and the rate of job losses are considerably higher among low-income workers. This increases the number of individuals eligible for Medicaid. ", "Individuals and their dependents also may lose access to employer-sponsored health insurance. When individuals have reduced hours or experience job loss, they may lose the health insurance coverage they had through their employer for themselves and their dependents. These individuals may be eligible for the Consolidated Omnibus Budget Reconciliation Act (COBRA) continuation coverage, which provides temporary access to a former employer's health insurance. However, employers are not required to pay for the cost of COBRA coverage, which may be more expensive than an individual's prior cost of insurance. ", "Some individuals, or their dependents, might already be Medicaid eligible and have employer-sponsored health insurance. During economic downturns, employers may lower the amount they contribute to the cost of health benefits or decide to no longer provide health insurance coverage to these employees. This increase in the cost of or loss of employer-sponsored health insurance may result in these individuals enrolling for Medicaid coverage.", "As discussed below, there is a relationship between the unemployment rate and Medicaid enrollment. The ACA Medicaid expansion, which was implemented after the last recession, is expected to increase the effects of a recession on Medicaid enrollment."], "subsections": [{"section_title": "Medicaid Enrollment Growth During Recent Recessions", "paragraphs": ["Medicaid enrollment follows economic cycles, with enrollment growth increasing at a faster rate during economic downturns and Medicaid enrollment growth increasing at a slower rate when economic conditions improve. ", "The U.S. Government Accountability Office (GAO) analyzed federal Medicaid enrollment data during the 2001 recession and the Great Recession. GAO found that during the 2001 recession, the national unemployment rate increased from 4.3% to 5.5%, and total Medicaid enrollment increased by approximately 2 million (or 5.6%). GAO also found that during the Great Recession, the national unemployment rate grew from 5.0% to 9.5%, and Medicaid enrollment rose by nearly 4.3 million (or 9.7%)."], "subsections": []}, {"section_title": "Potential Impact of Medicaid Expansion on Enrollment Growth", "paragraphs": ["The ACA Medicaid expansion that went into effect in 2014 is expected to increase the effects of a recession on Medicaid enrollment. As there has not been a recession since states have had the option to implement the Medicaid expansion, there is no experience available to quantify the impact. ", "During the Great Recession, Medicaid eligibility in most states was not available to many of the individuals who lost their jobs. This is because nonelderly adults without dependent children were not eligible for Medicaid. Prior to the Medicaid expansion, Medicaid eligibility for nonelderly adults, in most states, was limited to individuals with disabilities, pregnant women, and parents of poor children. Also, states' Medicaid income eligibility thresholds for parents were significantly lower than the income eligibility level for the Medicaid expansion of up to 133% of FPL.", "As a result of the Medicaid expansion, the percentage of adults eligible for Medicaid during future periods of high unemployment is expected to be larger than in the past. An increase in the rate of enrollment growth for the Medicaid expansion in response to an increase in the unemployment rate would have less of an impact on state budgets than an increase in the rate of enrollment growth for the traditional Medicaid populations because the federal matching rate for the Medicaid expansion is 90%, which is higher than the regular FMAP rate. Although the state share of the Medicaid expansion is 10% of the expenditures, the increase in the enrollment for the Medicaid expansion during economic downturns could contribute to states' budget pressures. "], "subsections": []}]}, {"section_title": "Medicaid Expenditures and State Revenues", "paragraphs": ["Increases in Medicaid enrollment growth during economic downturns generally result in an increased rate of growth for total Medicaid expenditures. As with Medicaid enrollment, when the economic conditions improve, Medicaid expenditure growth tends to slow.", "At the same time that unemployment rate increases during economic downturns cause Medicaid enrollment and expenditures to increase at a faster rate, states general revenues are negatively affected. During the 2001 recession, states experienced a 4.2% decline in state tax revenue from state FY2001 to state FY2002. ", "In the study described in the \" Medicaid Enrollment Growth During Recent Recessions \" section, GAO also looked at the impact of the Great Recession on total state tax revenues. Nationally, GAO found that the Great Recession led to a 10.2% decline in state tax revenues from the fourth quarter of 2007 to the fourth quarter of 2009. The impact of the Great Recession on state tax revenue varied significantly from state to state. Although state tax revenue for most states (44 states and the District of Columbia) decreased, these revenue decreases ranged from 1% in Iowa to 23% in Arizona.", "Medicaid accounts for almost 20% of state general fund expenditures, and it is the second largest category of general fund expenditures for states. The reduction in state tax revenue during economic downturns can make it difficult for states to finance the state share of Medicaid, especially while Medicaid enrollment and expenditures are increasing. Since most states are required to balance their budgets, the reduced state tax revenues and increased Medicaid expenditures, among other budget pressures, may lead states to increase taxes, reduce expenditures\u00e2\u0080\u0094including for the Medicaid program\u00e2\u0080\u0094or both.", "In response to the 2001 recession, 34 states reduced Medicaid expenditures by freezing or reducing provider payments, eliminating coverage for optional services, increasing premiums, and increasing copayments for prescription drugs. As a result of the Great Recession, 31 states froze or reduced Medicaid provider rates or increased Medicaid provider taxes, and other states reduced prescription drug costs and limited or eliminated coverage for optional services, such as mental health or dental care."], "subsections": []}, {"section_title": "After Recessions", "paragraphs": ["The impacts of recessions on Medicaid enrollment, Medicaid expenditures, and state tax revenues have continued even after the recessions have officially ended. For example, the 2001 recession officially ended in November 2001, but state tax revenue continued to decline through the second quarter of 2002, and the national unemployment rate remained above prerecession levels through June 2003. Medicaid enrollment increased at higher than average rates of growth through 2003.", "Although the Great Recession officially ended in June 2009, 25 states continued to experience unemployment rates above 9%, until at least December 2010. Some states were still feeling the effects of the recession in 2011 and 2012. The timing and duration of the continued impact of national recessions on states have varied according to the economic conditions and revenue structures of each state, along with the mix of each state's industries and resources."], "subsections": []}]}, {"section_title": "Recession-Related FMAP Increases", "paragraphs": ["In the past, two laws have provided states with fiscal relief through temporary FMAP rate increases due to recessions: the Jobs and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA; P.L. 108-27 ) and the American Recovery and Reinvestment Act of 2009 (ARRA; P.L. 111-5 , as amended by P.L. 111-226 ). In addition, the Families First Coronavirus Response Act (FFCRA; P.L. 116-127 ) recently provided a temporary FMAP increase during the COVID-19 public health emergency period.", "As noted by GAO, \"the FMAP is a readily available mechanism for providing temporary assistance to states because assistance can be distributed quickly, with states obtaining funds on a quarterly basis through Medicaid's existing payment system.\" The increased FMAP rates help states maintain their Medicaid programs during economic downturns. Also, the increased FMAP rates effectively reduce the state share of Medicaid expenditures for states, allowing states to use the state funding that would have been used for the state share of Medicaid\u00e2\u0080\u0094if there were not a recession-related FMAP rate\u00e2\u0080\u0094for non-Medicaid state budget needs.", "As shown in Table 1 , the recession-related FMAP increases have similar components, but there are differences. All three recession-related FMAP increases had across-the-board increases to the regular FMAP rates as their main component. The JGTRRA across-the-board increase of 2.95 percentage points was lower than the 6.2 percentage point across-the-board increases for ARRA and FFCRA. The ARRA across-the-board increase phased out at the end of the time period for the FMAP increase, but the other two increases do not phase down. In addition, the JGTRRA and ARRA FMAP increases included hold-harmless provisions that kept states' regular FMAP rates from declining, and these increases did not apply to certain Medicaid expenditures that use the regular FMAP rate. The FFCRA FMAP increase, however, does not exclude Medicaid expenditures that use the regular FMAP rate. Also, the ARRA FMAP increase included an unemployment-related additional increase to the FMAP, but the JGTRRA and FFCRA FMAP increases do not. JGTRRA and FFCRA applied the FMAP increases to the territories and provided the territories additional federal Medicaid funding, but ARRA gave the territories a choice of the across-the-board FMAP increase, along with increased funding or a larger increase in funding without an FMAP increase.", "All three of the recession-related FMAP increases have requirements for states in order to qualify for the FMAP increase. For example, all three FMAP increases require states to maintain Medicaid eligibility standards that are no more restrictive than those that were in effect on a certain date. All three also prohibit states from increasing the percentage local governments are required to contribute to the state share of Medicaid. The JGTRRA FMAP increase did not have additional requirements for states, but the ARRA and FFCRA FMAP increases include differing sets of additional requirements for states, which are listed in Table 1 .", "The following sections provide summaries of the recession-related FMAP rate increases from JGTRRA, ARRA, and FFCRA, as well as the time period for the FMAP increases, the amount of the increases, and the requirements for states to receive them."], "subsections": [{"section_title": "JGTRRA FMAP Increase", "paragraphs": ["As part of the state fiscal relief for FY2003 and FY2004 included in JGTRRA, FMAP rates for the 50 states, the District of Columbia, and the territories were held harmless and increased in the last two quarters of FY2003 and the first three quarters of FY2004. This provision was statutorily limited to $10 billion. Table A-1 shows JGTRRA FMAP increases for the 50 states, the District of Columbia, and the territories.", "The FMAP rates were increased by an across-the-board 2.95 percentage points for each state (i.e., the 50 states, the District of Columbia, and the territories). The FMAP increase did not apply to Medicaid disproportionate share hospital (DSH) payments and Medicaid payments that were matched using the E-FMAP (e.g., breast and cervical cancer treatment).", "The hold-harmless provision kept the FMAP rates from declining during that period. Specifically, for FY2003, if a state's FY2002 FMAP rate was higher than the FY2003 rate (without the 2.95 percentage point increase), then the FY2002 rate was substituted for the FY2003 rate for the last two quarters of FY2003. Similarly in FY2004, if a state's FY2003 FMAP rate was higher than the FY2004 rate (without the 2.95 percentage point increase), then the FY2003 rate was substituted for the FY2004 rate for the first three quarters of FY2004. ", "To qualify for the JGTRRA FMAP increase, a state could not have had a Medicaid plan with more restrictive eligibility rules than the plan in effect on September 2, 2003. If a state restored program eligibility to the levels in effect on September 2, 2003, then the state would have qualified for the increased FMAP rate for the entire quarter in which eligibility was reinstated. ", "States also needed to ensure that local governments were not required to contribute a larger percentage of the state's nonfederal Medicaid expenditures than otherwise would have been required on April 1, 2003, for the last two quarters of FY2003 and the first three quarters of FY2004. ", "In addition to the JGTRRA FMAP increase, JGTRRA increased the federal Medicaid funding available for each of the territories by 5.9%.", "The JGTRRA FMAP increase was provided to states in FY2003 and FY2004, well after the recession ended in November 2001. All states received the same FMAP increase, and the increase was not based on need using measures such as unemployment rates or state tax revenues.", "States indicated that the JGTRRA FMAP increase prevented states from making additional cuts to the Medicaid program and other portions of state budgets. Specifically, 36 states said the JGTRRA FMAP increase helped to fund increased Medicaid expenditures, and 31 states said the increase allowed states to minimize or postpone Medicaid cuts or freezes."], "subsections": []}, {"section_title": "ARRA FMAP Increase", "paragraphs": ["ARRA provided an FMAP rate increase to states, which was later extended by P.L. 111-226 . The ARRA FMAP rate increase lasted for nine quarters, starting October 2008 and continuing through December 2010, and totaled an estimated $89 billion. This temporary FMAP rate increase was extended by six months as part of P.L. 111-226 \u00e2\u0080\u0094the extension totaled an estimated $16.1 billion. With the extension, the ARRA FMAP rate increase ran for a total of 11 quarters, from the first quarter of FY2009 through the third quarter of FY2011 (i.e., October 2008 through June 2011), subject to certain requirements. Table B-1 shows the ARRA FMAP increase for the 50 states and the District of Columbia.", "For a \"recession adjustment period\" that began with the first quarter of FY2009 and ran through the third quarter of FY2011 (i.e., October 2008 through June 2011), ARRA held all states harmless from any decline in their regular FMAP rates throughout the period. All states (i.e., the 50 states and the District of Columbia) received an across-the-board increase of 6.2 percentage points to their regular FMAP rates until the last two quarters of the period, at which point the across-the-board percentage point increase phased down to 3.2 and then 1.2 percentage points. ", "Throughout the period, states with unemployment rates that had increased by certain amounts in a quarter received an additional unemployment-related increase. There were three tiers of this unemployment-related increase. See \"ARRA Unemployment-Related FMAP Increase\" for details about the unemployment related increase, including how it was calculated. ", "The ARRA FMAP increase was not available to the territories, but each territory was allowed to make a one-time choice between (1) an FMAP rate increase of 6.2 percentage points along with a 15% increase in its annual capped funding or (2) the regular FMAP rate along with a 30% increase in its capped funding. All territories chose the latter. ", "The full amount of the temporary ARRA FMAP rate increase applied to most Medicaid expenditures, but not to the following Medicaid expenditures: (1) DSH payments, (2) Medicaid payments that were matched using the E-FMAP (e.g., breast and cervical cancer treatment), and (3) most expenditures for individuals who were eligible for Medicaid because of a state expansion of eligibility implemented after July 1, 2008. ", "To receive ARRA FMAP rate increases, states were required to do the following: (1) ensure their Medicaid \"eligibility standards, methodologies, and procedures\" were no more restrictive than those that were in effect on July 1, 2008; (2) comply with requirements for prompt payment of health care providers under Medicaid; (3) not deposit or credit the additional federal funds paid as a result of the increase to any reserve or rainy day fund; (4) ensure that local governments did not pay a larger percentage of the state's nonfederal Medicaid expenditures (or a greater percentage of the nonfederal share of Medicaid DSH payments) than otherwise would have been required on September 30, 2008; and (5) submit a report to the Secretary of the Department of Health and Human Services regarding how the additional federal funds paid as a result of the temporary FMAP increase were expended. P.L. 111-226 added a requirement for the last six months (i.e., January 1, 2011, through June 30, 2011) that states certify that they would request and use the funds.", "FMAP rate increases reduced the amount of state funding required to maintain a given level of Medicaid services. For states that contemplated cuts in order to slow the growth of or reduce Medicaid spending (e.g., by eliminating coverage of certain benefits, freezing or reducing provider reimbursement rates, or increasing cost-sharing or premiums for beneficiaries), increased federal funding enabled them to avoid those cuts. ", "For others, the state savings that resulted from an FMAP rate increase were used for various purposes that were not limited to Medicaid. For example, 36 states reported that they used funds from the ARRA FMAP rate increase to close or reduce their Medicaid budget shortfall, and 44 states used the funds to close or reduce state general fund shortfalls.", "In addition to avoiding cuts to Medicaid, the Congressional Budget Office (CBO) indicated in 2009 that providing additional federal aid to states that were facing fiscal pressures would probably stimulate the economy. However, CBO noted that the effects would vary. Federal aid to states with relatively healthy budgets would have provided little stimulus if the aid were used to build up rainy day funds (a prohibited use of the ARRA FMAP rate increase), rather than to increase spending or reduce taxes. One study found the ARRA FMAP increase \"had an economically large and statistically robust positive effect on employment.\"", "GAO determined that the ARRA FMAP increase was better timed than the JGTRRA FMAP increase because the ARRA FMAP increase began during the recession, when all states were experiencing Medicaid enrollment increases and state tax revenue decreases. GAO also found that the ARRA FMAP increase was better targeted than the JGTRRA FMAP increase because the ARRA increase included unemployment-related adjustments for certain states."], "subsections": []}, {"section_title": "FFCRA FMAP Increase", "paragraphs": ["FFCRA provides an increase to the FMAP rate for all states, the District of Columbia, and the territories of 6.2 percentage points, beginning on the first day of the calendar quarter in which the COVID-19 public health emergency period began (i.e., January 1, 2020) and ending on the last day of the calendar quarter in which the last day of the COVID-19 public health emergency period ends. Table C-1 shows the FY2020 FMAP rates for the states, the District of Columbia, and the territories and those FMAP rates plus 6.2 percentage points.", "To receive this increased FMAP rate, states, the District of Columbia, and the territories are required to (1) ensure that their Medicaid \"eligibility standards, methodologies, and procedures\" are no more restrictive than those that were in effect on January 1, 2020; (2) not impose premiums exceeding the amounts in place as of January 1, 2020; (3) provide continuous coverage of Medicaid enrollees during the COVID-19 public health emergency period; and (4) provide coverage (without the imposition of cost sharing) for testing services and treatments for COVID\u00e2\u0080\u009319 (including vaccines, specialized equipment, and therapies).", "Another condition to receive the FFCRA FMAP increase is that states, the District of Columbia, and the territories cannot require local governments to fund a larger percentage of the state's nonfederal Medicaid expenditures for the Medicaid state plan or Medicaid DSH payments than what was required on March 11, 2020.", "The FFCRA FMAP increase does not apply to most FMAP exceptions, including the FMAP exceptions for the ACA Medicaid expansion, family planning, and home health services. However, the FFCRA FMAP increase does apply to a few FMAP exceptions. For Community First Choice services, the FFCRA FMAP increase is added to the six percentage point FMAP increase under Section 1915(k) of the Social Security Act, if the expenditures otherwise qualify. Also, FMAP exceptions calculated based on the regular FMAP use the regular FMAP plus the FFCRA FMAP increase for the calculation. These FMAP exceptions are for individuals eligible on the basis of breast and cervical cancer, Certified Community Behavioral Health Clinics, and Money Follows the Person.", "In addition to the territories receiving the FFCRA FMAP increase, FFCRA increases the federal Medicaid funding available for each territory in FY2020 and FY2021. The aggregate additional funding for the territories increases from $3.0 billion to $3.1 billion in FY2020 and from $3.1 billion to $3.2 billion in FY2021.", "In the past, GAO developed a prototype formula for temporary FMAP increases. One of the key components of the GAO prototype was making the temporary FMAP increase automatic so the FMAP increase could begin closer to the onset of a national recession. Although the FFCRA does not provide an automatic increase, the FFCRA FMAP increase is starting prior to an expected economic downturn."], "subsections": []}]}, {"section_title": "Conclusion", "paragraphs": ["The FMAP rate has been used as a means to provide fiscal relief to states in response to the 2001 recession, the Great Recession, and current economic conditions due to the COVID-19 public health emergency. These recession-related FMAP increases have been provided at times when states have experienced growth in unemployment rates that results in increases in the rate of growth for Medicaid enrollment, which in turn increases the rate of growth for Medicaid expenditures at the same time that state revenues decline. ", "These recession-related FMAP increases are similar but have some significant differences. All three of these recession-related FMAP increases have across-the-board FMAP increases; requirements to maintain Medicaid eligibility standards that are no more restrictive than they were prior to the FMAP increases; and requirements to ensure that states do not increase the percentage that local governments contribute to Medicaid expenditures. ", "However, the JGTRRA and ARRA FMAP increases included hold-harmless provisions that kept the states' regular FMAP rates from declining, and these increases excluded certain Medicaid expenditures from the FMAP increases. The ARRA FMAP increase had an unemployment-related increase that the JGTRRA and FFCRA increases did not have. Also, the JGTRRA FMAP increase did not have additional requirements for states, but ARRA and FFCRA have differing sets of additional requirements for states to adhere to in order to qualify for the FMAP increases.", "In addition, many states indicated that the JGTRRA and ARRA FMAP increases provided fiscal relief that allowed the states to prevent further reductions to the Medicaid programs and other portions of their state budgets. ", "Appendix A. Jobs and Growth Tax Relief Reconciliation Act of 2003 FMAP Increase", "The Jobs and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA; P.L. 108-27 ) included a provision that increased federal medical assistance percentage (FMAP) rates for the 50 states, the District of Columbia, and the territories during the last two quarters of FY2003 and the first three quarters of FY2004. The FMAP rates were held harmless and increased by an across-the-board 2.95 percentage points for each state (i.e., the 50 states, the District of Columbia, and the territories). The JGTRRA FMAP increases were subject to certain requirements for states. For more detail about the JGTRRA FMAP increase, see \" JGTRRA FMAP Increase .\" Table A-1 shows states' regular FMAP rates and JGTRRA FMAP rates for FY2003 and FY2004.", "Appendix B. American Recovery and Reinvestment Act of 2009 FMAP Increase", "The American Recovery and Reinvestment Act of 2009 (ARRA; P.L. 111-5 ) provided a temporary FMAP rate increase to the 50 states and the District of Columbia that was later extended by P.L. 111-226 . With the extension, the ARRA FMAP increase lasted from the first quarter of FY2009 through the third quarter of FY2011 (i.e., October 2008 through June 2011). ", "ARRA held all states harmless from any decline in their regular FMAP rates throughout the period. Under the ARRA FMAP increases, all states (i.e., the 50 states and the District of Columbia) received an across-the-board increase of 6.2 percentage points to their regular FMAP through the first quarter of FY2011, at which point the across-the-board percentage point increase phased down to 3.2 and then 1.2 percentage points for the second and third quarters of FY2011, respectively.", "Throughout the period, states with unemployment rates that had increased by certain amounts for a quarter received an additional unemployment-related increase. There were three tiers of the unemployment-related increase. See \"ARRA Unemployment-Related Increase\" for details about the unemployment-related increase, including how it was calculated.", "The ARRA FMAP increases were subject to certain requirements for states. For more information about the ARRA FMAP increases and these requirements, see \" ARRA FMAP Increase .\"", " Table B-1 shows the FMAP rate increases under ARRA and extended by P.L. 111-226 for each quarter, from the first quarter of FY2009 through the third quarter of FY2011. Table B-2 provides an example of how the FMAPs under ARRA with the hold-harmless and the unemployment-related increases were calculated for the second quarter of FY2010. ", "Appendix C. Families First Coronavirus Response Act FMAP Increase", "The Families First Coronavirus Response Act (FFCRA; P.L. 116-127 ) provides an increase to the FMAP rate for the 50 states, the District of Columbia, and the territories of 6.2 percentage points, beginning on the first day of calendar quarter in which the public health emergency period began (i.e., January 1, 2020) and ending on the last day of the calendar quarter in which the last day of the public health emergency period ends. See the \" FFCRA FMAP Increase \" section for information about the state requirements for receiving the FFCRA FMAP increase. Table C-1 shows states' FY2020 FMAP rates and those FMAP rates plus the 6.2 percentage points added by FFCRA."], "subsections": []}]}}
{"id": "R45832", "title": "Department of Defense Energy Management: Background and Issues for Congress", "released_date": "2019-07-25T00:00:00", "summary": ["The U.S. Department of Defense (DOD) consumes more energy than any other federal agency\u00e2\u0080\u009477% of the entire federal government's energy consumption. Energy management is integral to DOD operations. From running bases and training facilities to powering jets and ships, DOD relies on energy to maintain readiness and resiliency for mission operations. Energy efficiency\u00e2\u0080\u0094providing the same or an improved level of service with less energy\u00e2\u0080\u0094over time can reduce agency expenses, particularly at an agency like DOD, where energy represents roughly 2% of the department's annual budget.", "Since the 1970s, Congress mandated energy requirements for federal agencies. Legislation required reductions in fossil fuel consumption and increases in renewable energy use and efficiency targets for government fleets and buildings. The National Energy Conservation Policy Act (NECPA, P.L. 95-619 ) requires federal agencies to report annually on energy management activities. The Energy Policy Act of 2005 (EPAct05, P.L. 109-58 ) and the Energy Independence and Security Act of 2007 (EISA, P.L. 110-140 ) amended and addressed additional energy management targets for the federal government. As the largest energy consumer in the federal government, DOD drives total federal energy management goal achievements. The annual National Defense Authorization Act (NDAA) has included provisions related to DOD energy management and authorities. With one exception, the NDAA for FY2018 ( P.L. 115-91 ), each NDAA since 1993 contains a section on \"authorized energy conservation projects.\" Further, NDAAs have contributed to internal DOD energy management protocol. Throughout several administrations, Presidents have issued executive orders to establish energy management guidelines and targets for the federal government. The Trump Administration's Executive Order 13834, \"Efficient Federal Operations\" (E.O. 13834), directs the heads of agencies to maintain annual energy reductions and efficiency measures that reduce costs and meet statutory requirements for renewables, among other things, but does not set specific targets.", "DOD categorizes energy into two types\u00e2\u0080\u0094 installation energy and operational energy . DOD's installation energy (i.e., energy for fixed installations and non-tactical vehicles) is subject to federal energy management requirements. Although DOD energy use has trended downward since the 1970s, DOD has not met all federally mandated targets and reporting on progress has been challenging. DOD's operational energy (e.g., energy required for sustaining military forces and weapons platforms for military operations) is not subject to federal energy management requirements. This represents around 70% of total DOD energy use. Operational energy consists largely of petroleum products purchased on the open market by the Defense Logistics Agency. This leaves DOD and its spending susceptible to oil price volatility.", "Reviewing how these federal energy management goals impact DOD's mission could be an overarching consideration for Congress. Making operational equipment more fuel efficient could increase range and decrease refueling convoys; however, the challenge is maintaining combat readiness and mission operations. Congress may consider legislation addressing operational energy, such as setting a standard fuel efficiency target or a requirement for alternative fuel use. Congress may also consider continuing to leave operational energy efficiency goals to be determined by DOD or each military branch.", "In many cases, federal energy management goals in statute or executive order established targets for FY2015 (e.g., EISA petroleum and alternative fuel consumption targets were due no later than October 1, 2015). Several agencies, including DOD, did not reach the targeted goals. Congress may assess how and whether setting specific targets enhances the agency's mission and reduces costs for DOD. This approach may include addressing target dates or baselines. Congress may consider removing statutory targets altogether, and direct heads of federal agencies to establish protocols that foster efficiency and cost reductions that serve the mission of the agency.", "Managing an organization as large and complex as DOD presents certain challenges. One of the challenges DOD faces in meeting these targets is implementing appropriate financing mechanisms. The Energy Policy Act of 1992 (EPAct92, P.L. 102-486 ) amended NECPA and authorized alternative financing methods for federal energy projects, including energy savings performance contracts (ESPCs) and utility energy service contracts (UESCs). ESPCs have become a preferred means of making energy efficiency improvements because, in part, funds do not have to be directly appropriated (or programmed). With $2.9 billion awarded in FY2017, these contracts can assist with increasing efficiency and meeting renewable energy management goals. Training and guidance for utilizing ESPCs and UESCs is provided to all federal agencies through the Federal Energy Management Program (FEMP). However, challenges remain, particularly in data collection and consistent measurements. One option may be to increase training and awareness of UESCs and ESPCs."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["The federal government is the largest energy consumer in the United States. Within the federal government, the U.S. Department of Defense (DOD) consumes more energy than any other agency. In FY2017, DOD consumed 707.9 trillion British thermal units (Btu) of energy\u00e2\u0080\u0094roughly 16 times that of the second largest consumer in the federal government, the U.S. Postal Service ( Figure 1 ). In FY2017, DOD spent approximately $11.9 billion on energy, roughly 76% of the entire federal government's energy expenditures, and roughly 2% of DOD's FY2017 budget. ", "Energy efficiency\u00e2\u0080\u0094providing the same or an improved level of service with less energy\u00e2\u0080\u0094over time can lead to a reduction in agency expenses. DOD uses energy for a variety of purposes across the various services of the military. For example, DOD's efficient management of energy can also lead to less refueling and fewer fuel convoys. Reducing the frequency and duration of fueling in combat zones could reduce exposure and risk which could save lives.", "This report provides an introduction to federal energy management rules applicable to DOD. The report includes an overview of federal statutes and executive orders that govern DOD energy management, and presents data on the status and trends for DOD energy use. Further, the scope of this report excludes nuclear energy for the propulsion of aircraft carriers, submarines, and energy used for military space operations. The report also references agency level guiding documents that provide the basis for how DOD implements these policies. Finally, this report identifies selected considerations for Congress. "], "subsections": []}, {"section_title": "DOD Energy Management Requirements", "paragraphs": ["Federal energy management requirements include reductions in fossil fuel consumption, increases in renewable energy use, and energy efficiency targets for government fleets and buildings. In addition to the energy management requirements that apply to federal agencies, DOD's energy policy is designed to ensure the readiness of U.S. armed forces through energy security and resilience. DOD, through statute (e.g., 10 U.S.C. \u00c2\u00a72922e), has authority to suspend certain requirements to meet established operational military demands. "], "subsections": [{"section_title": "Legislation", "paragraphs": ["In the 1970s, Congress began mandating energy use reductions for federal agencies, directing agencies to improve the efficiency of buildings and facilities and reduce fossil fuel dependence. Legislation aimed at reducing federal agency energy consumption can be traced back to the Energy Policy and Conservation Act (EPCA, P.L. 94-163 ) as shown in Table 1 . Among other provisions, EPCA directed the President to implement a 10-year plan for energy conservation and efficiency standards for government procurement. In 1977, Congress passed into law an act establishing the Department of Energy ( P.L. 95-91 ). The following year, Congress enacted the National Energy Conservation Policy Act (NECPA, P.L. 95-619 ), which, among other actions, established a program to retrofit federal buildings to improve energy efficiency. ", "The Energy Policy Act of 1992 (EPAct92, P.L. 102-486 ) amended NECPA and authorized alternative financing methods for federal energy projects, including energy savings performance contracts (ESPCs) and utility energy service contracts (UESCs), among other provisions. Since NECPA and EPAct92, two laws contain provisions that set energy management requirements for all federal agencies\u00e2\u0080\u0094the Energy Policy Act of 2005 (EPAct05, P.L. 109-58 ) and the Energy Independence and Security Act of 2007 (EISA, P.L. 110-140 ). EPAct05 and EISA amended and addressed additional energy management targets for the federal government, among other things. ", "Federal agencies report energy consumption annually to the Department of Energy's (DOE) Federal Energy Management Program (FEMP). EISA Section 527 (42 U.S.C. \u00c2\u00a717143), requires federal agencies to report to the Office of Management and Budget (OMB) on the status and implementation of energy efficiency improvements, energy reduction costs, and greenhouse gas (GHG) emissions. Subsequently, EISA Section 528 (42 U.S.C. \u00c2\u00a717144) directs OMB to provide a summary of this information and an evaluation of progress for the federal government to the Committee on Oversight and Government Reform of the House of Representatives and the Committee on Governmental Affairs of the Senate. The Director of OMB compiles the compliance status of the EISA requirements and description of each into an agency scorecard. Appendix B contains a selected compilation of federal energy management requirements for all agencies.", "The annual National Defense Authorization Act (NDAA) has included provisions related to DOD energy management and authorities. For example, Congress, by enacting the Department of Defense Authorization Act for FY1985 ( P.L. 98-525 ), granted the Secretary of Defense waiver authority for the acquisition of petroleum. NDAA for FY2000 Section 803 ( P.L. 106-65 ) amended this waiver authority to extend beyond petroleum to \"a defined fuel source.\" This authority permits the Secretary of Defense to waive any provision that would otherwise prescribe terms and conditions of a defined fuel purchase contract if market conditions have affected or will adversely affect the acquisition of the fuel source; and if the waiver will expedite acquisition for government needs (10 U.S.C. \u00c2\u00a72922e).", "With one exception, the NDAA for FY2018 ( P.L. 115-91 ), every NDAA since 1993 contains a section on \"authorized energy conservation projects.\" For instance, NDAA for FY2007 ( P.L. 109-364 ) added a section regarding renewable energy production or procurement goals to 10 U.S.C. \u00c2\u00a72911. As amended by several NDAAs, this DOD specific goal requires DOD to consume 25% of total facility energy from renewable sources by FY2025 ( Appendix A ).", "Further, NDAAs have contributed to a number of internal DOD energy management protocols. For instance, the NDAA for FY2011 Section 2832 ( P.L. 111-383 ) directs the Secretary of Defense to develop an Energy Performance Master Plan (including metrics for measurement, use of a baseline standard, separate plans for each branch, etc.) to achieve performance goals set by law, executive orders, and DOD policies. The NDAA for FY2015 requires an annual report that certifies whether or not the President's budget is adequate to meet objectives of the Operational Energy Strategy as outlined in 10 U.S.C. 2926.", "NDAAs continue to address energy security and resilience for DOD. In 2018, for example, Congress enacted the NDAA for FY2019 ( P.L. 115-232 ), authorizing appropriations of $193 million for energy resilience and conservation investment programs. Multiple statutes, in addition to those above, establish the legislative authority for DOD energy management. Selected sections of the U.S. Code applicable to DOD energy management are delineated in Appendix A ."], "subsections": []}, {"section_title": "Executive Orders", "paragraphs": ["Over several administrations, Presidents have issued executive orders to establish energy management guidelines and targets for the federal government. Executive orders applied specifically to government vehicles, buildings, and computer equipment. Since 1991, 12 executive orders have been issued on federal energy management ( Appendix C ). Only Executive Order 13834, \"Efficient Federal Operations\" (E.O. 13834), is currently in effect. All the others have been revoked by subsequent orders. ", "On May 17, 2018, President Trump issued E.O. 13834, revoking E.O. 13693 and its specific targets for federal agencies. E.O. 13834 directs the heads of agencies to meet \"statutory requirements in a manner that increases efficiency, optimizes performance, eliminates unnecessary use of resources, and protects the environment,\" but contains no specific targets. The White House Council on Environmental Quality Office of Federal Sustainability issued implementing instructions for E.O. 13834 in April 2019. ", "The Office of Federal Sustainability's website provides resources, guidance documents, and reported energy performance data across federal agencies to support implementation of E.O. 13834. The Office of Federal Sustainability also lists other relevant U.S. code provisions, public laws, and other resources that federal agencies are required to follow."], "subsections": []}, {"section_title": "Agency Policies and Procedures", "paragraphs": ["DOD issues directives, memorandums, manuals, and guidance instructions to military departments and agencies on complying with statues and executive orders. For instance, DOD Instruction (DODI) 4170.11, Installation Energy Management, and DOD Directive (DODD) 4180.01, DOD Energy Policy , provide guidance for energy planning, use, implementation and management. These and other guidance documents outline best practices to meet federal goals within the context of the agency's mission, while giving flexibility to military departments for achieving goals. ", "Military departments within DOD are tasked with following agency policies and procedures to issue internal energy strategies to meet the specific needs of their mission. The Energy Performance Master Plan tasks each military department and defense agency to develop their own master plans toward meeting federal requirements. Military departments can have their own goals and guiding documents within the parameters of statute and executive order (e.g., the Army's Energy Security and Sustainability Strategy or the Secretary of the Navy's Energy Goals). ", "Further, 10 U.S.C. 2925 mandates DOD to submit to Congress two annual reports on the progress of meeting federal and executive energy targets: the Operational Energy Annual Report and the Annual Energy Management and Resilience Report (AEMRR), which includes the Energy Performance Master Plan. These reports compile energy use information from the various DOD departments on their progress toward meeting federal requirements.", "For federal-wide requirements, implementing instructions and guidance documents are often issued by DOE. For instance, EPAct05 has a renewable electricity consumption requirement of 7.5% for the federal government by FY2013. The President, acting through the Secretary of DOE, under Section 203 of EPAct05, is to ensure that the federal government meets the requirement. In order to ensure this, DOE issued guidance to federal agencies on how to meet the requirement. "], "subsections": []}]}, {"section_title": "DOD Energy Status", "paragraphs": ["DOD categorizes energy as either \"installation\" or \"operational.\" Installation energy refers to \"energy needed to power fixed installations and enduring locations as well as non-tactical vehicles (NTVs).\" Installation energy historically represents roughly 30% of DOD total energy and is subject to federal energy efficiency and conservation requirements, as reported to Congress in the AEMRR. In FY2017, DOD spent $3.48 billion on installation energy and NTV fuels. Operational energy (e.g., jet fuel) is \"the energy required for training, moving, and sustaining military forces and weapons platforms for military operations and training\u00e2\u0080\u0094including energy used by tactical power systems and generators at non-enduring locations.\" Federal energy management requirements outlined in Appendix A and Appendix B do not apply to operational energy. However, under 10 U.S.C. 2926, DOD does have an operational energy policy to promote readiness of military missions.", "From FY2003 to FY2017 the federal government reduced total site-delivered energy use by 19.2% compared to the FY2003 baseline in all sectors. During the same time period, DOD reduced site-delivered energy use by 20.9%. While overall, DOD has reduced energy use, its energy use has not necessarily been consistent from one year to the next. For example, during the War in Iraq (FY2003 to FY2004), energy use increased from 895 trillion Btu to 960 trillion Btu, as shown in Figure 2 . "], "subsections": [{"section_title": "Installation Energy", "paragraphs": ["Representing roughly 30% of DOD total energy use, installation energy is subject to federal energy management requirements. Federal energy management requirements include energy efficiency targets for government buildings, renewable energy use goals, and fossil fuel reductions for the NTV fleet. According to the AEMRR FY2017, energy and cost savings compared to an FY2005 baseline resulted in $5.67 billion in total savings through FY2017. The AEMRR also notes that the DOD increased installation energy consumption levels by 0.3% from FY2016 to FY2017."], "subsections": [{"section_title": "Building Efficiency", "paragraphs": ["42 U.S.C. \u00c2\u00a78253(a) requires federal agencies to achieve a 30% reduction from FY2003 levels in energy consumption per gross square foot (GSF) for goal federal buildings by FY2015 ( Appendix B ). Goal buildings are federal buildings subject to federal energy performance requirements. DOD examples of goal buildings include the Army's Holston Ammunition Plant in Tennessee and the Navy's Camp Lemonnier in Djibouti. Excluded facilities are federal buildings not required to meet the federal building energy performance requirement for the fiscal year according to the criteria under Section 543(c)(3) of NECPA. Federal agencies may typically exclude buildings that have a dedicated energy process that overwhelms other building consumption, such as one designed for a national security function or for the storage of historical artifacts. ", "DOD manages nearly 300,000 buildings, most of which are subject to federal energy management. In FY2015, DOD did not meet the 30% reduction target, as DOD reduced building energy intensity by 16.5% relative to FY2003 levels. In FY2017, DOD consumed 91,709 Btu/GSF, a 21.8% decrease from baseline FY2003. ", "Increasing building efficiencies and reducing energy intensity can be supported through alternative funding mechanisms (e.g., ESPCs, UESCs, power purchase agreements). In FY2017, the Army, for example, awarded $289.3 million in ESPC and UESC projects estimated to save 1,132 billion Btu annually. According to the AEMRR FY2017, these projects could avoid costs of $17.2 million annually from the project savings. ", "In addition to the energy efficiency requirement, EISA Section 433 requires federal agencies to reduce fossil fuel consumption in new or majorly renovated buildings ( Table B-1 ) by specified amounts. By FY2020, these buildings are supposed to reduce fossil fuel consumption by 80% relative to a similar building's consumption levels in FY2003. DOE proposed a rulemaking for comment on this legislation on October 15, 2010. However, the rulemaking was not finalized, and no further action has been taken since December 2014 when the comment period closed. DOD has not reported on this requirement. "], "subsections": []}, {"section_title": "Renewables", "paragraphs": ["EPAct05 requires federal agencies to reach 7.5% total renewable electricity consumption by FY2013. According to implementing instructions to comply with EPAct05, agencies must maintain ownership of renewable energy credits (RECs). If DOD sells a REC to meet state requirements, and it is not replaced with another REC, then the renewable electricity DOD produced does not receive credit toward the EPAct05 goal. Within these reporting requirements, in FY2013, DOD reached 5% renewable electricity consumption, and in FY2017, DOD reached nearly 6% of total electricity consumption from renewables. Solar photovoltaic sources contributed to this increase reaching 627,783 megawatt-hours (MWh) up from 396,268 MWh in FY2016. ", "RECs are created when a renewable source of energy generates a megawatt-hour of electricity. Each REC has a unique identification number and provides data (e.g., the resource type, service date, location, etc.) that is traceable and certifiable. RECs can be traded and have monetary value. They are used by utilities to comply with state renewable electricity standards. Thus, RECs can help improve the return on investment for renewable projects. The ownership of these credits is often a contract stipulation associated with the project for the developer. State and/or local renewable requirements play a role in determining the contract stipulations for the credit ownership. ", "In addition to EPAct05 goal of 7.5% renewable electricity by FY2013, DOD in accordance with 10 U.S.C. \u00c2\u00a72911(g) is required to \"produce or procure\" 25% renewable energy (electrical and non-electrical) by FY2025. The purchasing of RECs is not mandatory for DOD to comply with this goal. DOD's 2011 Energy Performance Master Plan set an interim goal of 15% renewable energy consumption by FY2018. Under \u00c2\u00a72911(g), in FY2017 DOD's renewable energy consumption reached approximately 8.7% of total facility energy use. "], "subsections": []}, {"section_title": "Non-Tactical Vehicles Fleet", "paragraphs": ["In FY2017, DOD consumed around 8,764 billion Btu of NTV fuel, roughly 4.3% of DOD installation energy. EISA requires federal vehicle fleets to reduce petroleum consumption from the FY2005 baseline by 20% no later than October 1, 2015 ( Appendix B ). In FY2015, DOD complied with the EISA target with a reduction in NTV fleet petroleum consumption of 27% compared to FY2005 baseline. DOD has continued to reduce installation vehicle fleet petroleum consumption and reached a 34.5% reduction in FY2017. At the branch level, the FY2017 AEMRR states that the Air Force experienced an increase of 9.3% in consumption compared to the FY2005 baseline. Despite this increase, the Air Force, according to the AEMRR, does continue to implement programs to reduce consumption and increase alternative fuel use in research and development. ", "In addition to the petroleum consumption reduction goal, federal agencies under EISA are to increase alternative fuel consumption by 10% compared to a FY2005 baseline no later than October 1, 2015 ( Appendix B ). According to the Office of Federal Sustainability, DOD met the alternative fuel consumption target in FY2015 reaching 10.6% of total fuel consumption. However, in FY2017, DOD's alternative fuel consumption decreased to 9.4% of the total installation fleet fuel consumed. These requirements apply only to installation energy and do not apply to operational energy."], "subsections": []}]}, {"section_title": "Operational Energy", "paragraphs": ["Operational energy constitutes roughly 70% of DOD's total energy use. In FY2017, DOD spent $8.2 billion on operational energy expenditures. The largest portion of this came from jet fuel at nearly 394 trillion Btu or roughly 56% of total DOD energy consumption for FY2017. DOD depends on jet fuel and other petroleum products to perform mission operations. According to DOD's FY2017 Operational Energy Annual Report , from FY2013 to FY2017, total operational energy demand remained relatively stable, around 87 million barrels of fuel per year (roughly 500 trillion Btu), while the price of crude oil fluctuated. The price of oil declined by roughly 60% in 2014, which contributed to a decrease in fuel expenditures from $14.8 billion in FY2013 to $8.2 billion in FY2017, around a 45% reduction. ", "DOD's efficient management of fuel can also lead fewer fuel convoys. Reducing the frequency and duration of fueling in combat zones could reduce exposure and risk which could save lives. According to a 2009 report by the Army Environmental Policy Institute, for every 24 fuel-related convoys in Afghanistan there was roughly one casualty. A challenge is balancing mission operations (i.e., increasing weapons systems and combat performance) while also increasing efficiency."], "subsections": []}]}, {"section_title": "Considerations for Congress", "paragraphs": ["Some questions Congress may be interested in considering include:", "What kind of federal energy efficiency requirements should DOD have for operational energy, if any? To what extent do federal energy management targets need to be updated? What role is there for Congress to clarify or provide oversight on implementing federal energy management goals? How are alternative financing mechanisms supporting DOD's attainment of federal energy management goals? To what extent should Congress support these mechanisms?"], "subsections": [{"section_title": "Operational Energy", "paragraphs": ["As noted, existing statutory energy management goals do not apply to operational energy, but DOD's operational energy policy is mandated by 10 U.S.C. 2926. As part of the operational energy policy, DOD establishes a strategy including plans and performance metrics. Further, DOD is mandated to submit to Congress both a report on the strategy (Operational Energy Strategy) and a report certifying that the proposed Presidential budget supports the implementation of the strategy (Operational Energy Budget Certification Report). ", "Operational energy comprises 70% of energy use within DOD, much of which consists of petroleum-based fuels. Federal energy management goals do not apply to most of DOD's energy use. Congress may consider setting mission priorities for DOD. Congress could also consider mandating whether or not DOD should prioritize energy access over energy conservation, or vice versa. While making operational equipment more fuel efficient could increase range and decrease refueling convoys, the challenge is how to prioritize maintaining combat readiness and mission operations. Congress may consider legislation addressing operational energy, such as setting a standard fuel efficiency target or a requirement for alternative fuel use. ", "Congress may also consider continuing to leave operational energy efficiency goals to be determined by DOD or each military branch. While this option could provide more flexibility, it could also lead to some challenges. For instance, in 2009, Navy Secretary Ray Mabus announced plans for the Navy to consume half of all fuel from alternative sources by 2020 (see textbox on Secretary of the Navy Energy Goals). The announcement also included a 2016 goal to deploy a carrier strike group using alternative fuels (e.g., nuclear power, biofuels) and energy conservation measures, an initiative known as the Great Green Fleet. The Great Green Fleet deployed in 2016 and conducted operations using alternative fuels and energy-efficient technologies and operating procedures.", "Some critics of the Navy energy goals noted that the Navy implemented these energy targets based on limited analysis. For instance, a House Armed Services Committee hearing in March 2012 inquired how the Navy determined the 50% goal for biofuel use, how it was determined that 50% was the amount the Navy should have, whether it could be attained by 2020, and what metrics were used to make this determination. A 2011 study by Logistics Management Institute (LMI) was referenced as a source that outlined the attainability of the goal; however, it had been released two years after the announcement of the energy plan. ", "Supporters of the Navy's energy goals noted the benefits of a more diverse fuel supply and utilizing domestically produced biofuels. DOD is subject to oil price volatility, as such a more diverse fuel supply could potentially reduce dependence on the volatile market (see textbox on Department of Defense Fuel Procurement). According to Assistant Secretary of the Navy, Energy, Installations, and Environment Jackalyne Pfannenstiel's 2012 testimony, \"without more domestically produced fuels, the [Navy] will continue to be subjected to fuel price volatility and be compelled to trade training, facility sustainment, and needed programs to pay for unplanned bills.\" ", "If Congress were to set a target, reporting data and status updates could also be included in legislation to provide increased accountability of these programs. According to a 2016 naval announcement, the alternative fuel used for the Great Green Fleet was cost competitive and was made from 10% beef tallow and 90% marine diesel. "], "subsections": []}, {"section_title": "Adjusting Targets", "paragraphs": ["In many cases, federal energy management goals in statute or executive order established targets for FY2015 (e.g., EISA petroleum and alternative fuel consumption targets were due no later than October 1, 2015). Several agencies, including DOD, did not reach the targeted goals. Congress may consider establishing new targets. Alternatively, Congress may instead remove statutory targets altogether, instead directing heads of federal agencies to establish protocols that foster efficiency and cost reductions that serve the mission of the agency."], "subsections": [{"section_title": "Uniform Federal Energy Targets", "paragraphs": ["If given the flexibility, agencies may opt to set more easily attainable targets based on budget and mission needs, which may not have as much of an impact on total federal energy use. In March 2015, then-Secretary of Energy Ernest Moniz convened a Task Force of members from the private sector, universities, and nonprofit organizations to review various components of E.O. 13693, including target setting. The Task Force argued that setting energy goals across all agencies \"may drive some agencies to over-invest in the targeted area of energy-performance improvement to the detriment of other operational priorities. Conversely, uniform energy goals may understate the potential for cost-effective investments in energy efficiency for other agencies.\" Primary agency concerns may include their potential cost and mission impact. Congress and agencies may have different perspectives regarding these concerns. Successful attainment of established targets have varied from agency to agency. Some agencies may inherently be more energy intensive than others and as such may face challenges financing projects to reach certain targets."], "subsections": []}, {"section_title": "Technology-Forcing Targets", "paragraphs": ["Leaving targets to agencies may provide some flexibility, as not all agencies have the same energy needs. Agencies might choose to set ambitious targets that some may consider too costly and may not be based on consistent data. In some cases, meeting targets could come at a high cost, particularly in the early stages of development. Some may argue that the high cost for early research and development (R&D) may be acceptable, especially if in the long term it drives costs down. If Congress were to direct DOD to set a standard, DOD may set a goal that could require additional R&D to develop equipment that meets the standard, but also does not diminish combat readiness. For instance, a test of the Great Green Fleet in the summer of 2012 reportedly cost the Navy nearly $27 a gallon for 450,000 gallons of biofuel. By 2016, the Navy achieved competitive prices with conventional fuels with a 90% diesel blend with 10% biofuel. The Navy reportedly contracted with a California firm to purchase 77 million gallons of biofuel from beef fat at $2.05, including a 15 cent per gallon subsidy. The 2016 DOE Task Force report also noted the historical role of the federal government as an adopter of new technologies, providing a faster pathway toward commercial viability. While this may not always be the most economic approach, it could provide a greater benefit to a technology's deployment into the commercial market. "], "subsections": []}, {"section_title": "Baseline Modification", "paragraphs": ["Further, Congress may consider readjusting the baselines, as some argue that the baselines may not have been properly informed using consistent data. For instance, according to a 2014 DOE report, \"goals must be based on well-informed estimates of savings potential.\" The 2014 DOE report recommended that several criteria should be taken into consideration when establishing a baseline, such as weather, data quality and availability, consistency of agency mission operations, and varying degrees of savings. The report also noted that perhaps a three-year average should be taken to set a baseline, as this helps reduce abnormal factors experienced in any particular year. If Congress establishes a new baseline, agency reporting data and perceived progress could be affected. For example, the DOE report explains, \"using a more recent baseline year\u00e2\u0080\u0094and setting a lower percent reduction goal\u00e2\u0080\u0094may give the impression that the federal government is not doing enough to reduce energy use, when in fact significant reductions have already been made.\" "], "subsections": []}]}, {"section_title": "Implementing Federal Requirements", "paragraphs": [], "subsections": [{"section_title": "EISA Section 433", "paragraphs": ["In regards to EISA Section 433, federal agencies are mandated to reduce fossil fuel consumption by 80% by FY2020, with an ultimate goal of 100% by FY2030. As noted, the rulemaking for this legislation has not been finalized. Without a finalized rule it is difficult to track and evaluate the progress toward this goal. DOD has not included this metric in annual reports. Congress may consider in its oversight role directing DOE to finalize this rule. Alternatively, Congress may consider updating the legislation, perhaps by either adjusting the targets, or removing the requirement entirely. ", "While tracking energy management compliance may come at a cost (e.g., labor, data collecting, etc.), the data can be used to indicate progress toward greater efficiency and could demonstrate whether or not a program has proven effective and provided cost savings. The 2016 DOE Task Force report notes that one of the major challenges in evaluating the energy efficiency of projects in the federal government is the lack of data concerning, \"building profiles, energy usage, and energy spending over time.\" "], "subsections": []}, {"section_title": "Renewable Energy Credit Ownership", "paragraphs": ["Additionally, Congress may consider clarifying REC ownership in legislation, instead of directing DOE to issue guidance on qualifications to meet federal targets. For instance, DOE's implementation guidance for EPAct05 requires DOD and all federal agencies to retain ownership of RECs to count toward the 7.5% renewable electricity consumption goal. However, 10 U.S.C. \u00c2\u00a72911(g), a 25% renewable energy production goal for DOD, does not make purchasing RECs mandatory. ", "Further, according to a 2016 Government Accountability Office (GAO) report, DOD project documentation of renewable energy goals was not always clear, especially when determining whether or not a project contributed toward a particular goal. If Congress opts to require DOD to maintain ownership of RECs to meet all relevant energy goals, proper data and measurement collection may be a factor to consider. Additionally, if Congress were to require agency ownership of RECs, DOD's progress toward 10 U.S.C. \u00c2\u00a72911(g) may decline. For instance, the 2016 GAO report reviewed documentation of 17 DOD renewable energy projects. All 17 projects contributed to 10 U.S.C. \u00c2\u00a72911(g), but 8 of those projects did not contribute to EPAct05. ", "In practice, military services may not necessarily retain ownership of RECs associated with all projects. Some DOD services may find that relinquishing REC ownership is within the best interest of the service and the particular contract, despite not qualifying for the EPAct05 requirement. The Navy, for instance, has had difficulty meeting renewable energy consumption targets under EPAct05, noting in the FY2017 AEMRR : \"The Navy's performance regarding the renewable electricity goal is a function of the strategic decision to allow other parties to monetize the value of RECs associated with its financed energy projects.\" In certain projects, military services might decide to relinquish REC ownership. In some instances of ESPC/UESC contracts, RECs can be leveraged to finance additional project improvements. "], "subsections": []}]}, {"section_title": "Financing Mechanisms", "paragraphs": ["DOD has steadily decreased its buildings' energy intensity in response to mandated energy reduction goals through investment in energy conservation projects. One of the challenges DOD faces in meeting these targets is implementing appropriate financing mechanisms. ESPCs have become a preferred means of making energy efficiency improvements because, in part, funds do not have to be directly appropriated (or programmed). However, as Energy Savings Contractors (ESCOs) assume a certain risk in guaranteeing savings through ESPCs, the risk is factored into their cost. DOD has been increasing reliance on UESCs and ESPCs. With $2.9 billion awarded in FY2017, these contracts can assist with increasing efficiency and meeting renewable energy management goals without up-front appropriated funds for the investment. Congress may consider options to increase the effectiveness of these mechanisms in attaining federal energy management goals. "], "subsections": [{"section_title": "Training", "paragraphs": ["One option may be to increase training and awareness of UESCs and ESPCs. A Senate Committee on Armed Services report ( S.Rept. 115-125 ) accompanying NDAA FY2018 ( S. 1519 ) directed the Secretary of Defense to assess ESPCs and the potential savings through increased training. DOD disagreed with the need for more training, noting in the AEMRR FY2017, \"the financial risk is too high to implement these training improvements based on assumptions about future savings and therefore [DOD] will not commit limited resources to an assessment that would draw from efforts focused on energy resilience and mission assurance.\" Further, DOD has stated that training improvements do not necessarily guarantee behavioral changes that would contribute to energy and costs savings. ", "It is difficult to determine project savings if data is not being collected appropriately and consistently. Eight reports since 2013 by GAO, DOD Inspector General (DOD IG), and U.S. Army Audit Agency evaluated challenges with DOD utilizing ESPCs. The recommendations highlighted a lack of developed guidance for ESPC training, data management, and contract administration. According to a summary DOD IG report in February 2019, the Assistant Secretary of Defense for Energy, Installation, and Environment, as well as Navy, Air Force, and DLA ESPC program managers, did not collect ESPC project data due to decentralization and not requesting performance and savings data, despite DOD instruction. Five reports noted that base contracting officials were not complying with the measurement and verification requirements under Section 432 of EISA for a number of reasons, including a lack of awareness of the requirements.", "Training and guidance for utilizing ESPCs and UESCs is provided to all federal agencies through FEMP. However, challenges remain. During a December 2018 House Committee on Energy and Commerce, Subcommittee on Energy hearing, Leslie Nicholls, Strategic Director for FEMP, noted that measurement and verification is \"not necessarily consistently applied and utilized throughout the federal government.\" She further noted that FEMP would like to continue training both at the technical level and for contracting officers. As noted in the February 2019 DOD IG report, DOD branches were implementing the IG recommendations regarding ESPC guidance. Congress may consider the value of training and guidance for proper measurement and data verification, and whether better data would demonstrate accurate cost savings of ESPCs and USECs relative to the cost of training.", "Appendix A. Summary of DOD Energy Goals and Contracting Authority in 10 U.S.C. ", "\u00c2\u00a7 2208. Working-capital funds", "(t) Permits up to $1,000,000,000 in Working Capital Fund, Defense for petroleum market volatility. ", "\u00c2\u00a7 2 410q . Multiyear Contracts: Purchase of Electricity from Renewable Energy Sources", "(a) Multiyear Contracts Authorized: Authorizes the use of multiyear contracts for the Secretary of Defense for a period of 10 years from a renewable energy source, as defined in 42 U.S.C. 15852(b)(2).", "(b) Limitations on Contracts for Periods in Excess of Five Years: The Secretary of Defense may enter into a contract over five years on the basis that the contract is cost effective and purchasing electricity from the source would not be economic without a contract for over five years.", "(c) Relationship to Other Multiyear Contracting Authority: this section does not preclude DOD \"from using other multiyear contracting authority of the Department to purchase renewable energy.\"", "\u00c2\u00a7 2911. Energy P olicy of the Department of Defense", "(a) General Energy Policy: directs the Secretary of Defense to \"ensure the readiness of the armed forces for their military missions by pursuing energy security and energy resilience.\" ", "(b) Authorities: permits the Secretary of Defense to establish metrics and standards for measuring energy resilience; authorizes the selection of facility energy projects using renewables, as well as \"giving favorable consideration to projects that provide power directly to a military facility or into the installation electrical distribution network.\"", "(c) Energy Performance Goals: directs the Secretary of Defense to \"submit to congressional defense committees energy performance goals\" for DOD annually.", "(d) Energy Performance Master Plan: directs the Secretary of Defense to develop a plan annually (including metrics for measurement, use of a baseline standard, separate plans for each branch, etc.) to achieve the performance goals set by law, executive orders, and DOD policies.", "(e) Special Considerations: directs the Secretary of Defense to consider a set of specified factors (e.g., energy resilience, economies of scale, conservation measures) when developing the Performance Goals and Master Plan.", "(f) Selection of Energy Conservation Measures: the energy conservation measures are to be limited to ones that \"are readily available; demonstrate an economic return on the investment; are consistent with the energy performance goals and energy performance master plan for the Department; and are supported by the special considerations specified in subsection (c).\"", "(g) Goal Reg arding Use of Renewable Energy t o Meet Facility Energy Needs : \"to produce or procure not less than 25 percent of the total quantity of facility energy it consumes within its facilities during fiscal year 2025 and each fiscal year thereafter from renewable energy sources.\"", "\u00c2\u00a7 2913. Energy Savings Contracts and Activities", "(a) Shared Energy Savings Contracts: directs the Secretary of Defense to develop a simple method to accelerate contracts for shared energy savings services. ", "\u00c2\u00a7\u00c2\u00a72922 -2922h. Energy-Related Procurement : outlines contracting and procurement specifications for various energy types (e.g., natural gas, renewables, fuel derived from coal).", "\u00c2\u00a7 2922e. Acquisition of C ertain F uel S ources: A uthority to W aive C ontract P rocedures; A cquisition by E xchange; S ales A uthority : permits the Secretary of Defense to waive any provision that would otherwise prescribe terms and conditions of a fuel purchase contract if market conditions have affected or will adversely affect the acquisition of the fuel source; and if the waiver will expedite the acquisition for government needs.", "\u00c2\u00a7 2 926 Operational Energy Activities: provides DOD with an operational energy policy; delineates authorities for operational energy procurement; establishes the role for the Assistant Secretary of Defense for Energy, Installations, and Environment (ASD EI&E); requires the ASD EI&E to establish an operational energy strategy and to review and make recommendations to the Secretary of Defense on budgetary operational energy matters, as well as grants access to records and studies on military initiatives related to operational energy.", "Appendix B. Summary of Federal Energy Goals and Contracting Authority in 42 U.S.C.", "\u00c2\u00a7 6374e. Federal Fleet Conservation R equirements : each federal agency is directed to increase alternative fuel use and decrease petroleum fuel consumption for federal fleets, with the goal of achieving a 10% increase in annual alternative fuels and a 20% reduction in annual petroleum consumption as compared to a FY2005 baseline by October 1, 2015.", "\u00c2\u00a7 6834 . Federal Building Energy Efficiency Standards : starting August 2006, if cost-effective over the life cycle, new federal buildings must be designed to achieve energy consumption levels at least 30% below ASHRAE Standard 90.1 (for commercial buildings) or the International Energy Conservation Code (for residential buildings). In addition, starting December 2008, new federal buildings and those undergoing major renovations are to be designed so that fossil fuel consumption is reduced by 80% in 2020 compared to a similar building in FY2003, and 100% by 2030, as specified in Table B-1 .", "\u00c2\u00a7 8253. Energy Management R equirements: directs federal agencies to reduce building energy consumption per square foot by 30% compared to the FY2003 baseline by FY2015. ", "\u00c2\u00a7 8256(c) Utility Incentive Program: authorizes and encourages agency participation in programs (Utility Energy Savings Contracts, or UESCs) to \"increase energy efficiency and for water conservation or the management of electricity demand conducted by gas, water, or electric utilities and generally available to customers of such utilities.\"", "\u00c2\u00a7 8287. Authority to Enter into Contracts: authorizes the head of a federal agency to enter Energy Savings Performance Contracts (ESPCs). Each contract may be for a period not to exceed 25 years. The contract directs the contractor to incur the costs of energy savings measures, in exchange for a share of the savings resulting from the measures taken.", "\u00c2\u00a7 13212. Minimum Federal Fleet Requirement : the total percentage of alternative-fueled or \"low greenhouse gas emitting\" light-duty vehicles acquired by a federal fleet annually are 75% in FY1999 and thereafter.", "\u00c2\u00a7 15852 . Federal Purchase Requirement : the President, acting through the Secretary of Energy, is directed to \"ensure that, to the extent economically feasible and technically practicable, of the total amount of electric energy the Federal Government consumes during any fiscal year\" not less than 7.5% is renewable energy in FY2013 and each fiscal year thereafter.", "\u00c2\u00a7 16122. Federal and State P rocurement of Fuel Cell V ehicles and Hydrogen E nergy S ystems : requires the federal government to adopt fuel cell vehicles and hydrogen energy systems as soon as practicable.", "Appendix C. Executive Orders"], "subsections": []}]}]}]}}
{"id": "R46233", "title": "Dynamic Scoring in the Congressional Budget Process", "released_date": "2020-02-18T00:00:00", "summary": ["When Congress considers legislation, it takes into account the proposal's potential budgetary effects. Although this information may come from numerous sources, Congress generally relies on estimates provided by the Congressional Budget Office (CBO) and the Joint Committee on Taxation (JCT) when determining whether legislation complies with congressional budgetary rules.", "Generally, CBO and JCT estimates include projections of the budgetary effects that would result from proposed policy changes, and incorporate anticipated individual behavioral responses to the policy. The estimates, however, do not typically include the macroeconomic effects of those individual behavioral responses that would alter gross domestic product (GDP).", "In recent decades, however, Congress has sometimes required that JCT and CBO provide estimates that incorporate such macroeconomic effects (effects on overall economic output\u00e2\u0080\u0094GDP). These estimates are often referred to as dynamic estimates or dynamic scores .", "Proponents of dynamic estimates have argued that such estimates provide a more accurate assessment of budgetary impact than conventional scoring, and that they can improve Congress's ability to compare competing policy proposals. Proponents argue that dynamic estimates are important for the sake of consistency, and that by not including dynamic effects, the legislative process is biased against policy proposals designed to encourage productive economic activity. Opponents of dynamic estimates argue that estimates of macroeconomic feedback effects are too uncertain to be relied upon as accurate projections of budgetary outcomes. Opponents of dynamic estimates have stated that, with assumptions about the behavioral responses that determine macroeconomic feedback being so uncertain, there is consistency in assuming, for all legislative proposals, that GDP remains the same, regardless of changes in tax or spending policy.", "Between 1997 and 2018, congressional rules existed that required JCT or CBO to provide dynamic estimates under certain circumstances. These congressional rules and requirements varied, sometimes permitting the creation of dynamic estimates, and sometimes requiring it. During this period, some dynamic estimates provided a range of potential budgetary outcomes, while some included a point estimate . During this period, dynamic estimates were used only for informational purposes, as opposed to being used to determine whether Congress was complying with its budgetary rules. In some cases, published estimates showed wide variation in estimated results depending on the model type and assumptions.", "While committees and Members continue to have the ability to request that CBO or JCT provide dynamic estimates for certain policies or legislative proposals, for the first time in decades there are no explicit congressional rules or requirements that pertain specifically to the preparation or use of such estimates. If Congress were to reinstitute explicit rules related to dynamic estimates, it may choose to consider many facets of such a potential rule, such as whether a threshold should exist for the creation of such estimates (i.e., should such estimates be provided only for \"major legislation\"); whether dynamic estimates should be provided for spending as well as revenue proposals; what types of information should be included in such estimates; whether dynamic estimates should be used only for informational purposes, or also for enforcement purposes; and whether additional resources ought to be provided to CBO and JCT so that they might develop greater capacity for providing dynamic estimates."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["When Congress considers legislation, it takes into account the proposal's potential budgetary effects . This helps Members to weigh the legislation's merits, and to consider whether it complies with the budgetary rules that Congress has created for itself. ", "While information on the potential budgetary effects of legislation may come from numerous sources, the authority to determine whether legislation complies with congressional budgetary rules is given to the House and Senate Budget Committees. In this capacity, the budget committees generally rely on estimates provided by the Congressional Budget Office (CBO) and the Joint Committee on Taxation (JCT).", "As described in the following section, cost estimates provided by CBO and JCT are guided by certain requirements that Congress has articulated in different forms. These requirements are not completely prescriptive, however, and as a result both CBO and JCT adopt practices and conventions that guide the creation of cost estimates. Generally, CBO and JCT estimates include projections of the budgetary effects that would result from a proposed policy and incorporate anticipated individual behavioral responses to the policy. The estimates, however, do not typically include the macroeconomic effects\u00e2\u0080\u0094effects on the overall size of the economy\u00e2\u0080\u0094of those individual behavioral responses. Congress has sometimes required that JCT and CBO provide estimates that incorporate such macroeconomic effects. These estimates are often referred to as dynamic estimates or dynamic scores . ", "This report provides information on the authorities and requirements under which cost estimates are prepared, as well as a summary of the debate surrounding dynamic cost estimates, and previous rules and requirements related to dynamic estimates. Currently, no congressional rules explicitly require dynamic estimates, and Congress may examine what rules changes, if any, are needed in the area of dynamic estimates. This report, therefore, includes information on options for the creation of dynamic scoring rules, and general considerations for Congress related to dynamic estimates."], "subsections": []}, {"section_title": "Authorities and Requirements Under Which Cost Estimates are Prepared", "paragraphs": ["Cost estimates provided by CBO and JCT are guided, in part, by certain requirements that have been articulated by Congress in different forms, as described below."], "subsections": [{"section_title": "The Congressional Budget Act", "paragraphs": ["The Congressional Budget Act (CBA) requires that CBO prepare cost estimates for all bills reported from committee, \"to the extent practicable.\" The CBA also requires that (1) CBO rely on estimates provided by JCT for revenue legislation and (2) CBO include in its estimates \"the costs which would be incurred\" in carrying out the legislation in the fiscal year in which the legislation is to become effective, as well as the four following years, together with \"the basis for such estimate.\" "], "subsections": []}, {"section_title": "The Baseline", "paragraphs": ["When conducting cost estimates, CBO and JCT measure the budgetary effect of a legislative proposal in relation to projections of revenue and spending levels that are assumed to occur under current law, typically referred to as baseline levels. This means that the way a policy is reflected in the baseline will affect how CBO and JCT estimate a related policy. ", "In calculating the baseline, CBO makes its own technical and economic assumptions, but the law generally requires that CBO assume that spending and revenue policies continue or expire based on what is currently slated to occur in statute. For example, CBO's baseline must assume that temporary tax cuts such as those enacted in 2017 actually do expire. The baseline, therefore, shows an increase in the level of revenue expected to be collected after the tax cut provisions expire in law. Therefore, a legislative proposal to continue those tax cut provisions would be scored as increasing the deficit. ", "Although baseline calculations generally require that direct (mandatory) spending program levels reflect what is scheduled to occur in law, important exceptions exist for many direct spending programs. In particular, any program with estimated current year outlays greater than $50 million is assumed to continue to operate under the terms of the law at the time of its expiration. This means that some programs that are slated in law to expire are assumed to continue in the baseline. A legislative proposal that sought to merely continue those expired programs would therefore not be scored as new spending. "], "subsections": []}, {"section_title": "Scorekeeping Guidelines", "paragraphs": ["When creating cost estimates, CBO adheres to scorekeeping guidelines, which are \"specific rules for determining the budgetary effects of legislation.\" These general guidelines are used by the scorekeepers\u00e2\u0080\u0094the House and Senate Budget Committees, CBO, and the Office of Management and Budget (OMB)\u00e2\u0080\u0094to ensure that each group uses consistent and established practices. The 17 scorekeeping guidelines include general principles, such as a requirement that mandatory spending provisions included in appropriations bills be counted against the Appropriations Committee spending allocation, and direction on how asset sales are to be scored. The guidelines have been revised and expanded over the years, and any changes or additions to the scorekeeping guidelines are first approved by each of the scorekeepers."], "subsections": []}, {"section_title": "Chamber Rules and the Budget Resolution", "paragraphs": ["Congress sometimes directs the creation and content of cost estimates through chamber rules and provisions contained in budget resolutions. As described subsequently, House rules have sometimes explicitly required CBO and JCT to include in cost estimates information on a policy proposal's projected macroeconomic feedback effects. Similarly, Congress has also used the budget resolution to provide direction on how a policy ought to be estimated. For example, budget resolutions have included provisions requiring that transfers from the Treasury's general fund to the Highway Trust Fund be counted as new spending. Similarly, budget resolutions have stated that certain policies cannot be counted as offsets, such as Federal Reserve System surpluses transferred to the Treasury's general fund, as well as increases or extensions of Freddie Mac and Fannie Mae guarantee fees. "], "subsections": []}, {"section_title": "The Budget Committees and Tax Committees", "paragraphs": ["Congressional committees may also shape the content or creation of cost estimates. The House and Senate Budget Committees have jurisdiction over CBO, and the CBA specifies that CBO's \"primary duty and function\" is to assist the budget committees. Oversight of CBO, as well as the creation and content of cost estimates is, therefore, under the jurisdiction of the House and Senate Budget Committees, and the budget committees provide related guidance to CBO. For the JCT, the creation and content of its estimates may be shaped by the committee itself, or by guidance or assumptions of the tax committees\u00e2\u0080\u0094the House Committee on Ways and Means and the Senate Committee on Finance. "], "subsections": []}]}, {"section_title": "Overview of Dynamic Estimating", "paragraphs": ["Generally, CBO and JCT estimates include projections of the budgetary effects that would result from proposed policy changes, and incorporate anticipated individual behavioral responses to the policy. The estimates, however, do not typically include the macroeconomic effects of those individual behavioral responses (such as changes in labor supply and the capital stock) that would alter GDP. For example, if an increase in the corporate tax rate caused corporations to use more debt, conventional estimates would take into account the loss of revenue since the returns from debt are taxed more lightly than the returns from equity, and this loss in revenue would offset the revenue gain calculated by multiplying the change in the tax rate by corporate income. The conventional estimate would not, however, take into account the lost revenue from a reduction in income if the rate increase caused a decline in investment, which affects production. These estimates without macroeconomic effects are sometimes imprecisely referred to as \"static,\" but are referred to in this report as conventional estimates because they take into account many behavioral responses. ", "In contrast, a dynamic score aims to account for legislation's macroeconomic effect, by incorporating changes to (1) aggregate demand for goods and services to increase output in an underemployed economy and/or (2) aggregate supply of goods and services ( supply - side effects ) to increase potential output. For example, dynamic scoring can include fiscal stimulus effects that increase aggregate demand. These effects occur when the economy is underemployed (for example, during and after a recession), and increased spending either by the government or from taxpayers after a tax cut can expand the economy through multiplier effects and cause output to move closer to potential output. These effects are referred to subsequently as demand - side effects . Supply-side effects occur if potential output is altered due to changes in investment or savings that increase the capital stock, labor supply, or productivity. The crowding-out (or -in) effect occurs when an increase (or decrease) in the deficit reduces (or increases) funds available for private investment and hence reduces (or increases) the capital stock."], "subsections": [{"section_title": "Increased Interest in Dynamic Estimating", "paragraphs": ["Congressional interest in dynamic estimating has increased in recent decades. This interest may be attributed to the increase in the number of House and Senate rules restricting budgetary legislation. Because bills and resolutions are expected to comply with these congressional rules, estimates of a measure's fiscal impact arguably become more important. Interest in dynamic scoring is also likely related to recent advancements in economic analysis and economic modeling that make estimating macroeconomic feedback effects possible. "], "subsections": []}, {"section_title": "Views on Dynamic Estimating", "paragraphs": ["Both proponents and opponents of dynamic estimating point to accuracy and consistency as their primary objectives. Some have suggested that dynamic scoring is useful, but only under certain circumstances."], "subsections": [{"section_title": "Arguments for Dynamic Estimating", "paragraphs": ["Arguments in favor of dynamic scoring include the view that dynamic scoring provides a more accurate assessment of budgetary impact than conventional scoring, particularly for some types of legislative proposals, and that conventional estimating methods produce a projection that does not reflect the actual expected impact on revenues. Under this argument, dynamic scoring makes use of all available information, and excluding macroeconomic feedback effects \"amounts to throwing away valuable information.\" It has also been argued that including macroeconomic effects can improve Congress's ability to compare competing policy proposals.", "Arguments in favor of dynamic scoring state that these estimates are required for the sake of consistency, especially for large legislative packages that would likely affect the economy. As stated above, a legislative proposal's budgetary impact is measured against a baseline, and that baseline takes into account macroeconomic assumptions. It is, therefore, argued that certain legislative proposals should also take into account economic assumptions. If such legislation were to be enacted into law, CBO would then build that policy into its baseline, and would have to make assumptions about the macroeconomic feedback effects that would be expected to occur under those policies. It is only consistent, the argument goes, to use macroeconomic feedback effects in the initial estimate of the legislation as well. ", "Advocates for dynamic scoring also state that not using a dynamic approach to measure the impact of policy changes biases the legislative process against policy proposals that are designed to encourage productive economic activity. Some have argued that under conventional estimating methods, the impact of a cut in the marginal tax rates, for example, is viewed (through the lens of budgetary outcomes) less favorably than it should be.", "It has also been argued that, methodologically, the production of quality dynamic estimates is now possible due to technical advances in modeling and analysis, and an increase in evidence showing public responses to policy changes. Some have pointed out that both CBO and JCT are capable of producing dynamic estimates, and JCT staff have stated that, with regard to macroeconomic estimates, \"we think we have been producing reasonable results for over a decade (though we welcome comments and discussion).\""], "subsections": []}, {"section_title": "Arguments Against Dynamic Estimating", "paragraphs": ["Likewise, arguments against dynamic estimates also point to concerns about accuracy and consistency. Those who oppose the use of dynamic scoring argue that projected macroeconomic feedback effects are too uncertain to be relied upon as accurate projections of budgetary outcomes. ", "Projecting macroeconomic feedback effects requires economic modeling, and it has been said that \"because reasonable people can disagree about what model, and what parameters of that model, are best, the results from dynamic scoring will always be controversial.\" Previous macroeconomic analyses by CBO and JCT have yielded a range of estimates depending on what type of model is used and the underlying behavioral assumptions in each model.", "With assumptions about the behavioral responses that determine macroeconomic feedback being so uncertain, it has been argued that there is consistency in assuming, for all legislative proposals, that GDP remains the same, regardless of changes in tax or spending policy.", "Arguments against dynamic scoring often point to potential problems with cost estimating in general, but note that under dynamic scoring these vulnerabilities may be exacerbated. For example, as mentioned above, all cost estimates are inherently uncertain. Dynamic estimates are always subject to more uncertainty, even for relatively simple tax changes, because of the uncertainty of taxpayer responses (such as consumer spending and labor supply). In contrast, many conventional estimates (such as the effect of rate changes in the tax code or changes to exemptions and deductions) may be estimated quite precisely because data are readily available on income levels and family characteristics. ", "Similarly, while cost estimates generally might always have the potential to be perceived as subject to manipulation by political forces, it has been argued that this possibility is exacerbated with dynamic scoring, which might damage the budget process's credibility. "], "subsections": []}, {"section_title": "Arguments for Dynamic Estimating Under Certain Circumstances", "paragraphs": ["Some have argued that dynamic estimates would be useful for Congress but only in certain situations. It has been argued that dynamic estimates should be provided by CBO and JCT but only for \"major proposals\" such as those that have a large estimated budgetary impact or those designated as \"major\" by either majority or minority committee and/or chamber leadership. (Recent dynamic scoring rules [discussed below] used a similar threshold.) It has been stated that neither CBO nor JCT have sufficient time or staff to carefully estimate the macroeconomic effects of every proposal for which they must conduct an estimate. (To this end, it has also been argued that dynamic estimates should be conducted only when CBO and JCT have the time and tools necessary to conduct the analysis.) ", "Further, it has been stated that dynamic estimates should be conducted for spending as well as revenue proposals because each have the potential to produce notable macroeconomic effects. (As stated below, in some years dynamic estimates were required only for revenue legislation.) It has also been argued that dynamic estimates should be provided for discretionary spending as well as direct/mandatory spending. As stated below, even when dynamic scoring requirements applied to spending as well as revenue, these rules excluded discretionary spending legislation (i.e., appropriations legislation)."], "subsections": []}]}, {"section_title": "Previous Dynamic Scoring Rules and Requirements", "paragraphs": ["While committees and Members continue to have the ability to request that CBO or JCT provide dynamic estimates for certain policies or legislative proposals, for the first time in decades there are no explicit congressional rules or requirements that pertain specifically to the preparation or use of such estimates. ", "As described below, rules related to dynamic estimates have varied over the years."], "subsections": [{"section_title": "1997-2002", "paragraphs": ["In January 1997, the House first adopted a rule that explicitly mentioned dynamic estimates. It stated that a dynamic estimate provided by JCT could be included in the committee report accompanying \"major tax legislation\" (as designated by the House majority leader), but that the estimate could be used \"for informational purposes only.\" The rule, which was in effect through 2002, defined a dynamic estimate as \"a projection based in any part on assumptions concerning probable effects of macroeconomic feedback\" and required that the estimate include a statement identifying all such assumptions.", "When the new rule was adopted in January 1997, JCT staff hosted a symposium entitled \"Modeling the Macroeconomic Consequences of Tax Policy.\" According to JCT ", "This symposium presented the results of a year-long modeling experiment by economists noted for their work in developing models of the U.S. economy. The purpose of this experiment was to explore the predictions of a variety of models regarding the macroeconomic feedback effects of major changes in the U.S. tax code with a focus on evaluating the feasibility of using these types of results to enhance the U.S. budgeting process."], "subsections": []}, {"section_title": "2003-2014", "paragraphs": ["In January 2003, the House replaced its previous dynamic scoring rule with a more extensive rule, which remained in effect through 2014. Whereas the previous rule had permitted a dynamic estimate to be included in a committee report, the new House rule required it. Further, whereas the previous rule had applied only to bills designated as \"major tax legislation,\" the new rule applied to any bill reported by the House Committee on Ways and Means that proposed to amend the Internal Revenue Code. The new rule also omitted the previous provision that explicitly required the estimate be \"used for informational purposes only.\" ", "The new rule no longer used the term \"dynamic estimate\" but instead used the term \"macroeconomic impact analysis,\" which the rule defined as an estimate provided by JCT \"of the changes in economic output, employment, capital stock, and tax revenues expected to result from enactment of the proposal.\" The estimate was required to identify critical assumptions and the source of data underlying that estimate. ", "Around the time of the rule's adoption in 2003, the JCT released a report providing an overview of the joint committee's efforts to model macroeconomic effects of proposed tax legislation. While varying in length and detail, the macroeconomic analyses provided by JCT during this period (2003-2014) included information on the expected macroeconomic effects (if any) of the proposed legislation, provided general conclusions, and sometimes provided a range of potential budgetary effects using different models and different assumptions within models. The analyses did not include a specific dollar amount or point estimate . These analyses also reported details of the effects on different aspects of the economy (such as labor supply, output, and capital stock). In addition, the estimates often referenced the model(s) used for the analysis. ", "During this time the JCT used four different types of models. Crucially, all of these models incorporated the impact of supply-side effects in their dynamic estimates. Only the MEG and GI model also incorporated demand-side effects (for a brief discussion of these effects, see \" Overview of Dynamic Estimating \"). The models are briefly described below:", "1. MEG: a macroeconomic growth (MEG) model that incorporates aggregate demand effects similar to those in most economic forecasting models and includes labor and savings responses. (This model falls into a class of steady state growth models called Solow models, discussed below.) 2. OLG: an overlapping generations (OLG) life-cycle model that assumes that generations of individuals optimize choices of consumption and leisure over a lifetime and cannot include demand-side effects. 3. GI: a Global Insight (GI) private econometric forecasting model that captures demand-side effects. 4. DSGE: a domestic stochastic general equilibrium (DSGE) model that assumes that individuals optimize over infinite lifetimes and often does not, without modification, capture aggregate demand effects to decrease unemployment. ", "In the past the JCT also had different behavioral responses within models (e.g., a high and low labor supply response in MEG). ", "During this period, the JCT prepared five published macroeconomic estimates of legislative proposals: one (in 2003, for the Jobs and Growth Tax Relief Reconciliation Act, P.L. 108-27 ) that used MEG, GI, and OLG; two that used MEG only (the 2009 economic stimulus legislation and the 2009 Affordable Care Act) and two that used MEG and OLG (a bill extending bonus depreciation in 2014 and the Tax Reform Act of 2014). Several bills were examined but were too small for a macroeconomic analysis. The GI model was dropped after 2003, and the DSGE model was introduced in 2006. That model did not allow unemployment. None of the published analyses of legislation used the DSGE model. The JCT also provided illustrative analysis for different types of proposals on two occasions: to compare individual rate cuts, corporate rate cuts, and increases in the personal exemption in 2005 and to examine a revenue-neutral tax cut that broadened the individual income tax base and lowered the rate in 2006. The first analysis used MEG and the second used the MEG, OLG, and DSGE models. "], "subsections": []}, {"section_title": "2015-2018", "paragraphs": ["During this period, dynamic estimates were required to be conducted for revenue and mandatory spending legislation that met the threshold of \"major legislation\" under both a House rule and budget resolutions. "], "subsections": [{"section_title": "House Rule", "paragraphs": ["In 2015, the House replaced its former rule with House Rule XIII, clause 8. The new rule, which was in effect through 2018, expanded the type of legislation for which dynamic estimates were to be conducted to include not just revenue proposals, but also mandatory spending proposals. This meant that the rule now required dynamic estimates from CBO as well as JCT, but only for \"major legislation,\" which was defined as (1) legislation that would be projected (in a conventional cost estimate) to cause an annual gross budgetary effect of at least 0.25% of projected U.S. GDP, (2) mandatory spending legislation designated as major legislation by the chair of the House Budget Committee, or (3) revenue legislation designated as major legislation by the chair or vice chair of the JCT. Although not explicitly stated in the new rule, the rules change resulted in dynamic estimates, for the first time, including a point estimate (i.e., a specific dollar amount) as opposed to a range of potential budgetary outcomes. ", "Under this rule, the estimates would incorporate the budgetary effects of changes in economic output, employment, capital stock, and other macroeconomic variables resulting from such legislation. The estimate was, to the extent practicable, to include a qualitative assessment of the long-term budgetary effects and macroeconomic variables of such legislation, and to identify critical assumptions and the source of data underlying the estimate. "], "subsections": []}, {"section_title": "Budget Resolutions", "paragraphs": ["During this period, Congress also used the budget resolution to direct CBO and JCT to provide dynamic estimates. The budget resolutions agreed to by both the House and Senate for fiscal years 2016 and 2018 included provisions that required dynamic estimates in both houses for the 114 th and 115 th Congresses.", "The requirements included in these provisions were very similar to the House rule described above. The dynamic estimates were required to be conducted for revenue and mandatory spending legislation that met the threshold of \"major legislation.\" Major legislation was again described as legislation that would be projected (in a conventional cost estimate) to cause an annual gross budgetary effect of at least 0.25% of projected U.S. GDP, but this version of the rule excluded any legislation that met this criterion as a result of a timing shift. To accommodate the Senate's constitutional authority to approve treaties, the rule expanded the definition of major legislation to include any treaty with an impact of at least $15 billion in that fiscal year. And the definition of major legislation also included any mandatory spending legislation designated as major legislation by the chair of the House or Senate Budget Committee, or revenue legislation designated as major legislation by the chair or vice chair of the JCT. ", "As with the House rule, these estimates were required to incorporate the budgetary effects of changes in economic output, employment, capital stock, and other macroeconomic variables resulting from such legislation. The estimate was, to the extent practicable, to include a qualitative assessment of the long-term budgetary effects and macroeconomic variables of such legislation, and to identify critical assumptions and the source of data underlying the estimate. For the Senate provision applying to the 115 th Congress, the estimates were to include the distributional effects across income categories, to the extent practicable.", "Although not explicitly stated in the provisions, the requirements resulted in dynamic estimates, including a point estimate (i.e., a specific dollar amount) as opposed to a range of potential budgetary outcomes. Although the House and Senate Budget Committees might presumably have used such point estimates as the official estimate for the purposes of budget enforcement (under the authority granted by Section 312 of the CBA), the Senate Budget Committee communicated that the dynamic estimates would be used for informational purposes only. "], "subsections": []}, {"section_title": "Estimating Practices", "paragraphs": ["Estimates during the 2015-2018 period included a point estimate that provided a conventional estimate and the macroeconomic effects for a 10-year period. The JCT currently uses the three models previously discussed: MEG, OLG, and DSGE. In the past the JCT also had different behavioral responses within models (e.g., a high and low labor supply response in MEG). In 2014 JCT had only the MEG and OLG models; the first introduction of the DSGE model in a published estimate for legislation was in 2017. Discussions of the DSGE model in 2018 suggested that it now allowed unemployment. CBO has two models that assume full employment. One is a long-term model that CBO refers to as a \"Solow growth model\" and the other is a life cycle model. (The Solow growth model is similar to the long-term growth aspects of MEG and the life cycle model is an OLG model. The similarities reflect the way they incorporate behavioral responses.) The Solow model has stronger and weaker labor supply responses and the OLG model has alternative assumptions about how the model was to be closed and whether local or worldwide interest rates predominated. CBO also has a separate short-term model that can capture fiscal stimulus that reduces unemployment, while JCT combines short-term and long-term effects in its MEG and DSGE models. ", "Beginning in 2003, JCT and CBO presented results from more than one model and with different behavioral assumptions within models. Beginning in 2015, when point estimates were provided, the JCT reported a single estimate that was a weighted average of the various models' point estimates. JCT provided information on the weights used, but did not separately report the different models' point estimates when more than one model was used. Also, in contrast to past informational macroeconomic modeling, there was no reported sensitivity analysis within the models (sensitivity analysis effectively measures how macroeconomic effects may change under different behavioral assumptions, such as how much a change in tax rates affects labor supply). In the four analyses that JCT reported on, in the first two cases (in 2015) only MEG, with the high rather than the low labor response assumption, was used. In the case of the major 2017 tax revision, MEG was weighted at 40%, OLG at 40%, and DSGE at 20%. In the final case, MEG was weighted at 40% and OLG and DSGE were each weighted at 30%. CBO and JCT jointly estimated the effects of some bills associated with repeal of the Affordable Care Act or modification of that act (JCT estimated certain tax provisions and CBO estimated the other provisions). JCT used the MEG model and CBO used its Solow model along with its short-term model, each with a single set of labor supply responses. ", "CBO had been preparing macroeconomic analyses of the President's budget since 2003, reporting the results from multiple models and assumptions. When CBO prepared its standard analysis of the President's budget in 2015 and 2016, the analysis continued to report the results from both models, along with estimates of immigration's effect on productivity, with sensitivity analysis within the models leading to 16 different estimated effects on GDP over 10 years ranging from 0.7% to 2.8%. CBO has not prepared any subsequent macroeconomic analyses of the President's budget."], "subsections": []}]}]}]}, {"section_title": "Considerations for Congress", "paragraphs": ["Currently, no House or Senate rules explicitly require the preparation or use of dynamic estimates, and Congress may choose to examine what rules changes, if any, are needed in the area of dynamic estimates.", "While committees and Members continue to have the ability to request that CBO or JCT provide dynamic estimates for certain policies or legislative proposals, at some point Congress may choose to reinstitute explicit rules related to such dynamic estimates. These requirements could be articulated as formal direction from the committees of jurisdiction or leadership to JCT and CBO. Alternatively, as was done previously, these requirements might be included in chamber rules or in budget resolutions, or might be included in a standing order or in statute.", "If Congress were to reinstitute explicit rules related to dynamic estimates, it may choose to consider many facets of such potential rules:", "Will there be a threshold for the creation of such estimates? Should the proposal also allow the legislation to be designated as \"major\" by either majority or minority committee and/or chamber leadership? Should CBO and JCT provide dynamic estimates only for \"major proposals,\" such as those that have a large estimated budgetary impact? If so, what will be the threshold for major? Past rules have used a measure equal to 0.25% of GDP. Would the effect on GDP be measured by the entire legislation, or would it be triggered by an individual provision or group of provisions (such as revenue raisers or revenue losers in a tax bill) that met the threshold? The latter approach would capture revenue-neutral legislation that nevertheless made significant changes that could affect GDP. Should rules for dynamic estimates apply to spending as well as revenue proposals since both have the potential to cause notable macroeconomic effects? And if the rule applies to spending, will it apply to discretionary spending that varies from the baseline as well as direct/mandatory spending? What information should be included in such estimates? Practices prior to 2015 provided insight into how sensitive the results were to choice of model and parameters. The JCT has also continued to present information on the parameters of its models that lead to behavioral responses. The justification for assigning model weights might also be addressed in more detail. Should dynamic estimates be used only for informational purposes, or also for enforcement purposes? Dynamic estimates allow Congress to weigh the merits of the legislation\u00e2\u0080\u0094should they also be used to determine whether the legislation complies with the budgetary rules that Congress has created for itself? Should additional resources be provided to CBO and JCT so that they might develop greater capacity for providing dynamic estimates?"], "subsections": []}]}}
{"id": "96-708", "title": "Conference Committee and Related Procedures: An Introduction", "released_date": "2019-05-22T00:00:00", "summary": ["The House and Senate must pass the same bill or joint resolution in precisely the same form before it can be presented to the President. Once both houses have passed the same measure, they can resolve their differences over the text of that measure either through an exchange of amendments between the houses or through the creation of a conference committee.", "The House and Senate each have an opportunity to amend the other chamber's amendments to a bill; thus, there can be House amendments to Senate amendments to House amendments to a Senate bill. If either chamber accepts the other's amendments, the legislative process is complete. Alternatively, each house may reach the stage of disagreement at any time by insisting on its own position or by disagreeing to the position of the other chamber. Having decided to disagree, they then typically agree to create a conference committee to propose a single negotiated settlement of all their differences.", "Conference committees are generally free to conduct their negotiations as they choose, but under the formal rules they are expected to address only the matters on which the House and Senate have disagreed. Moreover, they are to propose settlements that represent compromises between the positions of the two houses. When they have completed their work, they submit a conference report and joint explanatory statement, and the House and Senate vote on accepting the report without amendments. Only after the two houses have reached complete agreement on all provisions of a bill can it be sent to the President for his approval or veto."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["This report is a brief summary of House and Senate procedures for reaching agreement on legislation. It discusses the provisions of House Rule XXII and Senate Rule XXVIII as well as other applicable rules, precedents, and practices. The report focuses on the most common and customary procedures. There are many exceptions, complications, and possibilities that are not addressed, and the House and Senate may modify or waive their procedures by unanimous consent or by other means."], "subsections": []}, {"section_title": "Acting on the Same Bill", "paragraphs": ["The House and Senate must pass the same bill or joint resolution, and they must reach full and precise agreement on its text before it is submitted to the President for his approval or veto. The same requirements apply to a concurrent resolution and a joint resolution proposing a constitutional amendment, although neither receives presidential action.", "At some stage of the legislative process, therefore, the House must pass a Senate bill or the Senate must pass a House bill. The simplest way of meeting this requirement is for one house to pass its own bill and send it to the \"other body,\" which then considers and passes it, with or without amendments. Frequently, however, House and Senate committees each develop their own bills on the same subject. In these cases, one house often debates and amends the bill reported by its committee but then amends and passes the corresponding bill that the other chamber has already passed.", "For example, after the House passes a bill, it frequently takes up a bill on the same subject that it has already received from the Senate. The House then amends the Senate bill by striking out the text passed by the Senate (striking out all after the enacting clause) and replacing it with the text of the House bill it has just passed. The House then passes the amended Senate bill. In this way, the House passes two bills with exactly the same text, but the Senate bill is the one likely to become law because both houses now have passed it, although with different provisions. Much the same thing could happen in the Senate. After considering its own bill, the Senate, by unanimous consent, could take up and pass the House bill after amending it with the text of the Senate-passed bill. Because this action would take unanimous consent in the Senate, however, the Senate might choose instead to begin consideration of the similar House bill. The floor manager could offer as the first amendment to the House bill a full-text substitute consisting of the text of the Senate bill.", "This process is usually routine, but it can become more complicated. For instance, the Senate may pass one bill on several related matters before the House passes two bills of its own that address the same subjects. After the House passes its two bills, it may take up the one Senate bill and replace the text of that bill with the texts of both of its own bills. In other instances, the House and Senate may confront political and procedural situations that make it convenient for them to include their versions of legislation on one subject as amendments to some third bill on an unrelated subject that serves as a convenient \"vehicle.\" Such arrangements can be necessary because the House and Senate cannot begin the formal process of resolving their policy differences until these differences are embodied as amendments by one house to the version of the same bill as passed by the other."], "subsections": []}, {"section_title": "Amendments Between the Houses", "paragraphs": ["After one house passes a bill and the other then passes it with amendments, the House and Senate may attempt to resolve the differences between their positions. When confronted with a major bill, the two houses have historically created a conference committee for this purpose. However, a conference may not be necessary if they can reach an agreement through informal negotiations and an exchange of amendments between the houses.", "The amendments of one house to a bill from the other may be amended twice as the bill is sent (\"messaged\") back and forth between the House and Senate. Suppose, for example, that the Senate passes a House bill with amendments. The House can accept (concur in) the Senate amendments, in which case the differences are resolved. Alternatively, the House can amend the Senate amendments (concur in the Senate amendments with amendments). These House amendments are first degree amendments between the houses. The Senate can then accept (concur in) the House amendments to the Senate amendments, which would produce agreement. Or the Senate can concur in the House amendments to the Senate amendments with further Senate amendments, which are amendments in the second degree.", "At this stage, the House can concur in the most recent Senate amendments, but it cannot propose new House amendments to them because they would be third degree amendments, which are not permitted. (Of course, exactly the same process can occur in reverse if the House passes a Senate bill with amendments.) In both chambers, the prohibition on third degree amendments between the houses can be waived. The House might do this by special rule, suspension of the rules, or unanimous consent. In the Senate, unanimous consent is necessary to agree to an amendment in the third degree, unless the House has already waived the rule, in which case further degrees of amendment are permitted in the Senate.", "If the House and Senate adamantly defend their last amendments, they can send the bill back and forth several more times. In the unlikely event that neither house retreats from its last position or is willing to discuss a compromise in conference, the bill ultimately dies. It cannot be shuttled back and forth indefinitely. ", "This process rarely results in stalemate, because the two houses either reach agreement or decide to submit their differences to a conference committee. However, an exchange of amendments sometimes takes the place of a conference. Once the two houses pass their versions of the same bill, the members and staff of the House and Senate committees of jurisdiction often meet informally to compare the two versions and discuss a compromise. If they reach an agreement that other concerned Representatives and Senators also accept, the House can, for example, concur in the Senate amendment with a House amendment that embodies the negotiated agreement. If the Senate then accepts (concurs in) this House amendment, the House and Senate have resolved their differences through the informal equivalent of a conference committee."], "subsections": []}, {"section_title": "Considering Amendments from the Other House", "paragraphs": ["House amendments to a Senate bill (or House amendments to Senate amendments to a House bill) are privileged for floor action by the Senate. This means there is no debate on whether to take up the House amendment. Instead, a Senator, most often the majority leader, typically requests that a House amendment be laid before the Senate. Motions to dispose of the House amendments\u2014such as motions to concur or to concur with amendments\u2014are debatable and, therefore, subject to filibusters. It is possible for the majority leader to move that the Senate concur in the House amendment and then propose motions that preempt all other available motions. This is often referred to as \"filling the tree\" on a motion to concur. If the majority leader can garner the necessary support to end debate on the motion to concur (60 Senators, assuming no vacancies), then both further amendment to the House amendment and extended debate can be avoided. The Senate sometimes arranges to consider a House amendment by unanimous consent.", "Like the Senate, the House sometimes acts on Senate amendments by unanimous consent. Until the House officially disagrees to Senate amendments to a House bill (or Senate amendments to House amendments to a Senate bill), these amendments are usually not privileged for consideration on the House floor. No motion is in order to concur in the Senate amendments, with or without amendments. When there is little or no controversy, the House often accepts or amends the Senate amendments by unanimous consent. Otherwise, the House can usually do so only through a motion to suspend the rules or under a special rule recommended by the Rules Committee and adopted by the House. A motion that is privileged at this stage is a motion to disagree to the Senate amendments and go to conference, but this motion must be made at the direction of the committee that originally reported the bill to the House.", "Both houses cannot consider the same bill at the same time, because the House or Senate can act only if it has the \"papers.\" The papers are comprised of the official copy of the bill as passed by the house in which it originated, the official copies of amendments by either house, and the messages by which each house informs the other of the actions it has taken. After one house acts on a bill or amendments from the other, it returns all the papers with an accompanying message describing its action. Thus, the House and Senate always act in sequence as custody of the papers changes hands."], "subsections": []}, {"section_title": "Going to Conference", "paragraphs": ["Before a conference committee is created to resolve disagreements between the two houses, the House and Senate must each state disagreement over a bill, either by disagreeing to the amendments of the \"other body\" or by insisting on its own amendments. So long as one house concurs in the amendments of the other and proposes its own amendments, there is no formal disagreement. But at any point during an exchange of amendments between the House and Senate, either house can propose that they can go to conference instead.", "The two houses usually decide in one of two ways to establish a conference committee. When the Senate passes a House bill with amendments, for example, it can immediately insist on its amendments and request a conference with the House. The House almost always agrees to the conference, although it need not do so\u2014for example, it could simply agree to the Senate amendments instead. At other times, however, when the Senate passes a House bill with amendments, it may merely send back the bill and the amendments in the hope that the House will accept the Senate's amendments, making a conference unnecessary. If the House does not accept the amendments, it can disagree to them and request a conference. The Senate normally then insists on its amendments and agrees to the conference, after which it informs the House and returns the papers. Of course, the equivalent of either sequence of events may occur after the House passes a Senate bill with amendments.", "Both chambers sometimes agree by unanimous consent to the necessary procedural steps to send a measure to conference. In the House, if there is an objection to the unanimous consent request, then a privileged motion can be made, at the direction of the committee(s) of jurisdiction, to disagree to the Senate amendment (or insist on the House amendment) and request (or agree to) a conference with the Senate.", "If unanimous consent cannot be reached in the Senate, then a motion can be made to authorize a conference committee, which is subject to debate under regular Senate rules. If a cloture motion to end debate is filed on this motion, however, it matures after just two hours of debate. If three-fifths of the Senate agrees to invoke cloture, then the Senate could immediately vote to approve the motion to authorize a conference. No further debate of the motion would be in order."], "subsections": []}, {"section_title": "Appointing and Instructing Conferees", "paragraphs": ["Each house usually appoints its conferees (also known as managers) immediately after deciding to go to conference. The Speaker appoints House conferees. The Senate frequently decides, by unanimous consent, to authorize the presiding officer to appoint \"the managers on the part of the Senate.\" The Senate could also empower the presiding officer to appoint conferees, or appoint conferees directly, through the motion to authorize a conference, discussed above. The chairman and ranking minority member of the committee or subcommittee that reported the bill are almost always conferees. They also play a major part in deciding who else is appointed. The committee or subcommittee leaders usually prepare a list of conferees from their chambers that the Speaker normally accepts and the presiding officer of the Senate always accepts. The party leaders may also become involved in selecting conferees, especially if the bill is particularly important, if it was reported by two or more committees, or if amendments to the bill from the other house touch the jurisdiction of more than one committee.", "Most conferees are members of the committee that reported the bill. In the case of a bill that involves the jurisdiction of more than one committee, members of each committee are often appointed as conferees with authority only to negotiate an agreement with respect to the subjects or provisions of the bill that fall within the jurisdiction of their committees. Thus, some members may be designated as conferees for purposes of the entire bill while others are appointed only to address a specific section or title. Representatives may also be appointed as conferees for limited purposes when the Senate proposes a nongermane amendment that is within the jurisdiction of another House committee. In addition, the Speaker may appoint other Representatives who, for example, offered important floor amendments. The list of conferees generally reflects the party balance in each house.", "The House and Senate do not have to appoint the same number of managers, and they frequently do not. House conferees vote as a delegation, as do Senate conferees, and a majority of each delegation must sign the conference report. Thus, three Representatives have the same voting power in conference as 30 Senators. Each house is likely to appoint a larger number of conferees when the bill involves the jurisdiction of more than one of its standing committees. ", "A Representative or Senator may move to instruct the conferees from his or her chamber immediately after that house agrees to go to conference but just before the conferees are appointed. For example, the House can instruct its managers to insist on the House position on a particular amendment, or the Senate can instruct its managers to recede to the House position on another amendment. However, instructions to conferees are never binding; no point of order lies against a conference report that is inconsistent with House or Senate instructions to its conferees. The House can also instruct its conferees if they do not report within 45 calendar days and 25 legislative days after being appointed (or 36 hours after being appointed during the last six days of a session)."], "subsections": []}, {"section_title": "Conference Rules and Reports", "paragraphs": ["Conference committee meetings are open to the public unless the conferees vote to close them, and the House must vote to authorize its conferees to do so. Both chambers also have guidelines concerning conference meetings, generally encouraging frequent meetings with open discussions, but these guidelines are often waived or in some cases are not procedurally enforceable. ", "Beyond these guidelines, there are virtually no House or Senate rules governing conference meetings. Conferees select their own chairman and usually work without formal rules on quorums, proxies, debate, amendments, and other procedural matters. Conferences are negotiating forums, and the two chambers allow conferees to decide for themselves how best to conduct their negotiations. It is most common that a conference committee holds a single public meeting, sometimes for members to offer opening statements only.", "However, the House and Senate have important, and roughly the same, rules governing what decisions conferees can make. Conference committees are established to resolve disagreements between the House and Senate over their versions of the same bill. Therefore, the authority of conferees is limited to matters in disagreement. As a general rule, they may not change a provision on which both houses agree, nor may they add anything that is not in one version or the other. Furthermore, conferees are to reach agreements within the \"scope\" of the differences between the House and Senate positions. For example, if the House appropriates $10 million for some purpose and the Senate amends the bill by increasing the appropriation to $20 million, the conferees exceed their authority if they agree on a number that is less than $10 million or more than $20 million.", "It is much harder to determine the scope of the differences when they are qualitative, not quantitative. Also, conferees have more latitude under some circumstances than under others. Under a previous practice, when one house would pass a bill and the other would then pass it with a series of separate amendments\u2014each making a change in a different provision of the bill\u2014these amendments were usually numbered, and it was relatively easy for the conferees to determine the scope of the differences over each amendment. This is generally not true, however, under modern practice when the Senate passes a House bill (or the House passes a Senate bill) with an amendment in the nature of a substitute that totally replaces the text of the bill. In this situation, which arises nearly all of the time, there is only one amendment in conference\u2014for example, a Senate substitute for the House version of a bill. The two versions of the bill can take very different approaches to the same subject, making it difficult for the conferees to isolate every point of agreement and disagreement and to identify the scope of each disagreement. Under these circumstances, the conferees may write their own conference substitute, so long as it is a germane modification of the House and Senate versions.", "If a conference agreement exceeds the scope of the differences or deals with a matter that is not in disagreement, the conference report is subject to a point of order when the House or Senate considers it. The House, however, typically protects a conference report against points of order by adopting a resolution reported by the Rules Committee waiving the applicable rules. The Senate, meanwhile, interprets the authority of its conferees generously, especially when they develop a conference substitute. Furthermore, the Senate can waive its rule with a three-fifths vote of Senators duly chosen and sworn (60 Senators if there are no vacancies).", "The authority of Senate conferees is further limited by Senate Rule XLIV, paragraph 8. Under this rule, a Senator can raise a point of order against discretionary and mandatory spending provisions of a conference report if they constitute \"new directed spending provisions,\" or what are sometimes called \"air drops.\" Paragraph 8 defines a \"new directed spending provision\" as follows:", "any item that consists of a specific provision containing a specific level of funding for any specific account, specific program, specific project, or specific activity, when no specific funding was provided for such specific account, specific program, specific project, or specific activity in the measure originally committed to the conferees by either House.", "The Senate can waive these restrictions on the content of conference reports by a three-fifths vote of Senators duly chosen and sworn (60 Senators assuming no vacancies).", "When the conferees reach full agreement, their staffs prepare a conference report that states how they propose to resolve each of the disagreements. Accompanying the report itself is a joint explanatory statement (also known as the statement of managers), which describes the various House and Senate positions and the conferees' recommendations in more detail. A majority of the House managers and a majority of the Senate managers must sign both the conference report and the joint explanatory statement. House rules require that House conferees be given an opportunity to sign the conference agreement at a set time and place. At least one copy of the final conference agreement must be made available for review by House managers with the signature sheets. Each chamber then debates and votes on the conference report in turn."], "subsections": []}, {"section_title": "Floor Action on Conference Reports", "paragraphs": ["At the conclusion of a successful conference, the papers usually change hands. The conferees from the house that requested the conference bring the papers into conference and then turn them over to the conferees from the other house. Thus, the house that agreed to the conference normally acts first on the conference report. However, this is a practice that is not required by House or Senate rules.", "The Senate usually takes up a conference report by unanimous consent, although a Senator can make a nondebatable motion to consider it. The report may be called up at any time after it is filed, but it is not in order to vote on the adoption of a conference report unless it has been available to Members and the general public for at least 48 hours before the vote. (This requirement can be waived by three-fifths of Senators duly chosen and sworn or by joint agreement of the majority and minority leaders in the case of a significant disruption to Senate facilities or to the availability of the internet.) Under Senate rules, a report is considered to be available to the general public if it is posted on a congressional website or on a website controlled by the Library of Congress or the Government Publishing Office.", "When considered on the Senate floor, a conference report is debatable under normal Senate procedures; it is subject to extended debate unless the time for debate is limited by unanimous consent or cloture or if the Senate is considering the report under expedited procedures established by law (such as the procedures for considering budget resolutions and budget reconciliation measures under the Budget Act). Paragraph 8 of Senate Rule XXVIII states that, if time for debating a conference report is limited (presumably by unanimous consent), that time shall be equally divided between the majority and minority parties, not necessarily between proponents and opponents of the report.", "A point of order may be made against a conference report at any time that it is pending on the Senate floor (or after all time for debate has expired or has been yielded back if the report is considered under a time agreement). If a point of order is sustained against a conference report on the grounds that conferees exceeded their authority, either by violating the \"scope\" rule (Rule XXVIII) or the prohibition against \"new directed spending provisions\" (paragraph 8 of Rule XLIV), then there is a special procedure to strike out the offending portion(s) of the conference recommendation and continue consideration of the rest of the proposed compromise.", "Under the procedure, a Senator can make a point of order against one or more provisions of a conference report. If the point of order is not waived (see below), the presiding officer rules whether or not the provision is in violation of the rule. If a point of order is raised against more than one provision, the presiding officer may make separate decisions regarding each provision. After all points of order raised under this procedure are disposed of, the Senate proceeds to consider a motion to send to the House, in place of the original conference agreement, a proposal consisting of the text of the conference agreement minus the provisions that were ruled out of order and stricken. Amendments to this motion are not in order, and debate is limited only if it had been limited on the conference report. In short, the terms for consideration of the motion to send to the House the proposal without the offending provisions are the same as those that would have applied to the conference report itself.", "If the Senate agrees to the motion, the altered conference recommendation is returned to the House in the form of an amendment between the houses. The House then has an opportunity to act on the amendment under the regular House procedures for considering Senate amendments discussed in earlier sections of this report.", "Senate rules also create a mechanism for waiving these restrictions on conference reports. Senators can move to waive points of order against one or several provisions, or they can make one motion to waive all possible points of order under either Rule XXVIII or Rule XLIV, paragraph 8. If the motion to waive garners the necessary support, the Senate is effectively agreeing to keep the matter that is potentially in violation of the rule in the conference report. ", "In the House, the conference report cannot be considered unless it has been available in the Congressional Record or on the House document repository website for 72 hours. Copies of the report and the statement must also be available to Representatives for at least two hours before they consider it. These availability requirements are sometimes waived by a rule reported by the Rules Committee, and they do not apply during the last six days of a session. Typically, the House calls up a conference report under the terms of a special rule that protects the report against one or more points of order if the Rules Committee reports and the House adopts a resolution waiving the applicable rules.", "The House debates a conference report under the one-hour rule, with control of the hour equally divided between the two parties. However, if both floor managers support the report, a Representative opposed to it may claim one-third of the time for debate. At the end of the first hour, the House normally votes to order the previous question, which precludes additional debate. If Representatives could make points of order against a report, sometimes the House first considers and agrees to a resolution, recommended by its Rules Committee, that protects the report by waiving the points of order.", "Conference reports are not amendable. Each report is a compromise proposal for resolving a series of disagreements; the House prevails on some questions, the Senate on others. If the House and Senate were free to amend the report, they might never reach agreement. At the end of debate, therefore, each house votes on whether to agree to the report as a whole. However, the house that considers the report first also has the option of recommitting it to conference. But when one chamber acts on the report, it automatically discharges its conferees. As a result, the other house cannot vote to recommit, because the conference committee has been disbanded.", "If the House and Senate agree to the conference report, the bill is enrolled (printed on parchment in its final form) and presented to the President for his approval or disapproval."], "subsections": []}, {"section_title": "Additional Resources", "paragraphs": ["The report is based upon the original author's interpretation of the rules and published precedents of the two houses and an analysis of the application of these rules and precedents in recent practice (see \"Acknowledgements\"). Readers may wish to study the provisions of House and Senate rules and examine the applicable precedents\u2014especially in the sections on \"Senate Bills,\" \"Amendments Between the Houses,\" and \"Conferences Between the Houses\"\u2014in House Practice: A Guide to the Rules, Precedents and Procedures of the House and the corresponding sections on \"Amendments Between Houses\" and \"Conferences and Conference Reports\" in Riddick's Senate Procedure (Senate Document No. 101-28). There is also more detailed information on this subject in CRS Report 98-696, Resolving Legislative Differences in Congress: Conference Committees and Amendments Between the Houses , and CRS Report R41003, Amendments Between the Houses: Procedural Options and Effects ."], "subsections": []}]}}
{"id": "R45990", "title": "Social Security: Demographic Trends and the Funding Shortfall", "released_date": "2019-11-04T00:00:00", "summary": ["The Social Security program pays monthly benefits to retired or disabled workers and their families and to the family members of deceased workers. Social Security, or Old-Age, Survivors, and Disability Insurance (OAS DI), is intended to operate primarily as a pay-as-you-go system, where program revenues cover program costs. The OASDI program's revenues and costs are largely determined by economic and demographic factors. The Social Security program is experiencing rising costs and relatively stable income, a trend that is projected to continue for several decades. Although economic and program-specific factors affect the balance between program revenues and costs, research has shown demographic factors to be one of the leading contributors to the increasing imbalance between costs and revenues.", "The U.S. population has been experiencing a shift in age structure toward older ages and an increase in the median age, termed demographic aging . Two demographic effects have contributed to this aging over time: decreasing fertility and increasing longevity. While aging reflects a society's shared advances in medical, social, and economic matters, it strains the very social insurance systems that provide social support to the aging population. The post-World War II baby boom generation's effect on OASDI highlights this point. Baby boomers, the relatively large cohort resulting from higher fertility rates from 1946 through 1964, have started to exit the paid labor force and collect Social Security benefits. They are being replaced in the workforce by relatively smaller cohorts resulting from lower fertility rates in subsequent generations. Program costs are also rising as an increasing number of retirees collects benefits for longer time periods. According to the Board of Trustees of the OASDI Trust Funds, costs are expected to rise throughout the 75-year projection period, 2019-2093.", "The Social Security population's changing age distribution is creating a situation in which fewer workers in covered employment are supporting a growing number of people collecting benefits. This relationship is temporarily sustainable, as the OASDI program can draw upon the $2.89 trillion in asset reserves held in the trust funds to augment annual program revenues and fulfill all scheduled benefit payments. However, the OASDI program's ability to pay 100% of scheduled benefits becomes unsustainable when these asset reserves are depleted.", "The Board of Trustees, which oversees the OASDI Trust Funds, projects the funds' assets to be depleted in 2035 due in part to the cumulative strain placed upon the system by an older age distribution. After this, the OASDI program would operate as a strict pay-as-you-go system that can only pay out in benefits what it receives in revenue. Under current laws and projections, the trustees estimate sufficient revenues to be able to pay about 80% of scheduled benefits after asset reserves are depleted. The Social Security program's ability to cover 100% of scheduled benefits depends upon a combination of increased revenues and decreased benefits.", "One set of policy options to address the funding shortfall includes increasing the full retirement age (the age at which a beneficiary is entitled to full benefits) or the earliest eligibility age (the age at which a beneficiary is first entitled to benefits). This set of policy options uses a demographic solution for a largely demographic issue: the projected imbalance between program costs and income.", "Measures that include increasing the retirement ages are estimated to improve the program's long-range financial status but not to prevent trust funds depletion by themselves. Although these adjustments help to reduce rising costs, those costs would still be projected to exceed revenues. This suggests that efforts to avoid depleting the OASDI Trust Funds throughout the trustees' projection period would also be improved by including a revenue-increasing mechanism. In addition, increases in life expectancy are not shared equally within the population; disparities exist when life expectancies are analyzed by sex, race, and income levels. A policy measure that increases Social Security eligibility ages may disproportionally help some beneficiaries and disadvantage others."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["The Social Security program, or Old-Age, Survivors, and Disability Insurance (OASDI), pays monthly benefits to retired or disabled workers and their families and to the family members of deceased workers. The OASDI program's ability to meet scheduled benefit payments rests upon sufficient revenues from payroll taxes, taxation on Social Security benefits, and interest earned on trust funds assets. The year 2020 marks the first since 1982 in which the OASDI program's total cost is projected to be greater than its total income. Because of annual cash surpluses amassed in the Old-Age and Survivors Insurance Trust Fund and the Disability Insurance Trust Fund in the period spanning 1983 through 2019, the OASDI program is able to meet its benefit obligations by drawing on these assets to supplement annual revenues. The Board of Trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds estimates that drawing down the trust funds can augment OASDI program revenues and allow it to pay full benefits until 2035. Should the trust funds be depleted in 2035, as the trustees project, the OASDI program would have tax revenues sufficient to pay about 80% of scheduled benefits.", "The OASDI program, and its financing, are affected by economic, program-specific, and demographic factors. Economic factors include issues such as productivity, price inflation, unemployment, and gross domestic product; program-specific factors include issues such as covered and taxable earnings, revenues from taxation of benefits, and average benefits indexed to growth in average national wages. Demographic factors include fertility, mortality, and immigration. This report focuses on two demographic factors\u00e2\u0080\u0094specifically fertility and mortality\u00e2\u0080\u0094and how they interact to affect the program's ability to pay full scheduled benefits. The trustees' 2019 Annual Report states the following:", "Projected OASDI cost increases more rapidly than projected non-interest income through 2040 primarily because the retirement of the baby-boom generation will increase the number of beneficiaries much faster than the number of covered workers increases, as subsequent lower-birth-rate generations replace the baby-boom generation at working ages. From 2040 to 2051, the cost rate (the ratio of program cost to taxable payroll) generally declines because the aging baby-boom generation is gradually replaced at retirement ages by subsequent lower-birth-rate generations. Thereafter, increases in life expectancy cause OASDI cost to increase generally relative to non-interest income, but more slowly than between 2010 and 2040.", "A remaining demographic factor\u00e2\u0080\u0094immigration\u00e2\u0080\u0094is not examined in this report because the Board of Trustees analysis shows that combined changes in fertility and mortality are the leading causes of financial pressure on the OASDI program. ", "The Social Security population, both covered workers paying into the system and those collecting benefits, is experiencing shifts in age distribution. Decreased fertility rates for generations after the baby boomers (those born between 1946 and 1964) are contributing to an overall older population. In addition, increases in average life expectancy are also contributing to the aging of the U.S. population. The combination of decreasing fertility and longer life expectancies results in higher costs, as presented in Figure 1 , which shows OASDI costs increasing as a percentage of taxable payroll. As costs remain above income, the trust funds' assets are used to fulfill scheduled monthly benefit payments. The Board of Trustees projects this process will continue into 2034, after which the trust funds' assets are exhausted and reserves no longer exist. ", "The OASDI program can pay scheduled benefits while operating with a cash flow deficit (i.e., costs exceed revenues) during periods of positive trust funds balances because assets held in the trust funds can be redeemed to augment continuing income. However, this process cannot last indefinitely. As shown in Figure 1 , a cash flow deficit is projected to persist throughout the 75-year projection period (2019-2093). This report presents data showing that the projected deficits are the result of rising costs associated with demographic changes, outlines how these demographic changes will impact the OASDI program's ability to fulfill benefit payments, and discusses some options policymakers have to address the program's financial shortfall."], "subsections": []}, {"section_title": "The Social Security Population Is Growing Older", "paragraphs": ["Driven by reduced fertility rates and increasing longevity, the Social Security population is aging. In other words, the percentage of the Social Security population at the older end of the age distribution is increasing. This point is underscored by considering three broad age subgroups: (1) those aged 65 and older ; (2) those aged 20 through 64 ; and (3) those under age 20 . Analyzing the population using these broad age groups highlights the concentration of those likely to be retired or close to retirement (i.e., aged 65 and older), those in ages commonly seen as prime working years (i.e., aged 20 through 64), and those generally considered not yet in the paid workforce (i.e., under age 20). ", "Table 1 shows population growth rates for the 70-year period from 1945 to 2015, the first and the most recent years, respectively, for which the trustees publish historical data. It also shows the trustees' projections for growth in the population, and its subgroups, for the ensuing 70-year period of 2015 through 2085. From 1945 through 2015, the Social Security population more than doubled. ", "Table 1 shows that, although the population grew by 120% over this period, growth in major age groups varied. On a percentage-change basis, the largest growth was observed in the 65 and over age group. From 1945 through 2015, this age group grew by 338%, indicating that the number of people in the United States aged 65 and older more than tripled. This demographic trend underscores the degree to which the United States is growing older; in 1945, those 65 and older accounted for 7% of the total population, whereas in 2015, those 65 and older accounted for about 15% of the total population. ", "This trend has implications for the Social Security program's ability to meet all of its projected scheduled benefits as the younger and slower-growing age groups of working age (i.e., those aged 20 to 64) are paying into the system while the older and faster-growing age groups (i.e., those aged 65 and older) are likely to be collecting benefits. The right-hand column in Table 1 shows that the trustees projected future years will continue to see growth in the 65 and older age group outpace that of the overall population. By 2085, the 65 and older age group is projected to make up about 22% of the total population. As this trend persists, which it is projected to do under the trustees' intermediate assumptions, it will cause OASDI program costs to rise more rapidly than revenues, thereby degrading the program's ability to pay full scheduled benefits. ", " Table 1 also shows how the working-age population is projected to be a smaller percentage of the overall population. This is an essential consequence of an aging population. That is, as the percentage of those aged 65 and older is increasing, the percentages in the other age group (i.e., working ages between 20 and 64) are decreasing. This point is reinforced by examining dependency ratios."], "subsections": []}, {"section_title": "Dependency Ratios", "paragraphs": ["The changes in the Social Security population's composition can also be expressed as dependency ratios. Dependency ratios indicate a dependent population's burden on the working-age population. Table 1 shows that in 1945, about 59% of the total population was working age, between the ages of 20 and 64. The next-largest age group was the under 20 age group, which accounted for about 33% of the population. In 1945, the United States could be described as youth dependent because the working-age population was supporting the next-larger, under 20 population. The same could be said for the United States in 2015, when the 20 to 64 age group was about 59% of the total population and those in the under 20 age group accounted for 26% of the total population ( Table 1 ). That is, from 1945 to 2015, the United States became less youth dependent. Over this time period, the percentage of the total population aged 65 and older increased from 7% to 15%, indicating that the United States was becoming more aged dependent . The United States is projected to age from a youth-dependent population to an aged-dependent population, where the working-age population will be supporting the next-larger, 65 and older population. The transition to a more aged-dependent population is important for Social Security purposes because the program's ability to continue to pay beneficiaries relies on taxes paid by current workers. As discussed, the dependency ratios have changed over time and are projected to continue to change. Figure 2 presents a more detailed look at the dependency ratios and shows how they have changed in a historical context and how they are projected to change throughout the trustees' 75-year projection period. "], "subsections": [{"section_title": "Youth Dependency", "paragraphs": [" Figure 2 shows the youth dependency ratio, which is the ratio of the population under 20 to the population aged 20-64. It is an approximate measure of how many young persons are supported by those in working ages. For instance, in 1945 the youth dependency ratio was 56%, suggesting that every 100 people in working ages were supporting 56 youths. From 1945 to 1965, the youth population increased relative to the working-age population, resulting in an increasing youth dependency ratio. As the baby boom generation attained working ages (the oldest of the baby boom generation turned 20 in 1966), the working-age population increased relative to the youth population and this ratio began to decrease. By 1985, when all of the baby boom generation had reached working age (the youngest of the baby boom generation turned 20 in 1984), this ratio had decreased to 51%, a level comparable to that observed prior to the baby boomers (i.e., in 1945 the youth dependency ratio was 56%)."], "subsections": []}, {"section_title": "Aged Dependency", "paragraphs": [" Figure 2 also shows the aged dependency ratio. The aged dependency ratio is the ratio of the population aged 65 and older to the population aged 20-64. Although the age at which a beneficiary can collect Social Security benefits varies by birth year, this ratio is an approximate indicator of the number of people likely to be collecting benefits relative to those still working. For instance, in 1945 the aged dependency ratio was 12%, suggesting that for every 100 working-age people there were 12 people collecting benefits. The increase in this ratio highlights the aging of the population. As shown, this ratio increased from 12% in 1945 to 25% in 2015. That is, the number of people collecting benefits versus the number of people still working doubled over this period. Throughout the trustees' 75-year projection period, this ratio will continue to increase under the intermediate projections, due in large part to the baby boomers' continued retirement from the work force, relative to the numbers in the working-age population. The trustees project the aged dependency ratio to exceed 35% by 2025 and 40% by 2065. This projected tripling of the aged dependency ratio reflects the aged population's faster growth compared with that of the working-age population."], "subsections": []}, {"section_title": "Total Dependency", "paragraphs": ["The total dependency ratio is the ratio of those aged 65 and above and those aged under 20 to those aged 20-64. Thus, the ratio is an approximate measure of the number of people not of working age to the number of working-age people. The beginning of the baby boom generation is indicated by the rising total dependency ratio as shown in Figure 2 . The total dependency ratio remained relatively stable from the mid-1980s to the early 2010s as the baby boomers remained in working ages. The oldest baby boomers reached full retirement age in 2012, making it the first year that a baby boomer could retire with full benefits. Thus, as the baby boom generation began to exit the paid labor force in the 2010s, the ratio can be seen to rise slightly. The ratio is projected to increase as more of that generation enters retirement age. ", "Owing to the sustained decrease in total fertility rates since the 1970s, the aged dependency and total dependency ratios are projected to increase even after the last baby boomers have reached full retirement age in 2031. The demographic trends that created the baby boomers led to an imbalance between the number of people who have or will retire (i.e., present and potential beneficiaries) and the number of people in working ages (i.e., present and potential covered workers). Specifically, as the baby boom generation ages, those aged 65 and older will make up a larger portion of the total population. The transition from a youth-dependent population to an aged-dependent population means the number of beneficiaries will increase faster than the number of covered workers. As a result, the trustees project that OASDI costs will rise relative to revenues. "], "subsections": []}]}, {"section_title": "Decreasing Fertility Rates", "paragraphs": ["The aging of the Social Security population is partially driven by a decline in the total fertility rate after 1965. The total fertility rate (TFR) is the average number of children that would be born to a woman throughout her lifetime if she were to experience, at each age of her life, the birth rate observed in that year. In 1920, the TFR was 3.26 children per woman. By 1940, the TFR was comparatively lower, at a rate of 2.23 children per woman; this was the lowest TFR that had been observed to date. This decrease was reversed within the decade when a period of high fertility created the baby boom generation, those born between 1946 and 1964 ( Appendix A ). This period of high fertility is shown in Figure 3 and is marked on either side by periods of low fertility. In fact, fertility rates after 1964 (i.e., immediately following the baby boomers) decreased to the lowest levels recorded in the United States. Much of what makes the baby boom generation so impactful is that the cohort was both preceded and followed by low fertility rates. Figure 3 shows the historical fertility rates as measured by the National Center for Health Statistics (Centers for Disease Control and Prevention) and the trustees, as well as the trustees' projected fertility rates under their intermediate assumptions.", "The U.S. TFR reached a minimum of 1.77 children per woman in 1975. The TFR has remained at relatively low levels in the years that followed, a trend that is projected to continue. The Board of Trustees projects that the TFR will remain close to 2.0 children per woman throughout the 75-year projection period. "], "subsections": [{"section_title": "Causes for the Decrease in Fertility Rates", "paragraphs": ["Research suggests that there are many contributing factors for the decline in fertility rates. For instance, changes in fertility rates have been closely linked to changes in personal income and changes in the employment rate. This perhaps explains why a decrease in fertility coincided with the 2008-2009 financial crisis, before which the fertility rate was increasing. Additional research reinforces economic and financial uncertainty's effect on fertility and birth rates. Studies have shown that those who worried more frequently about future job prospects were more likely to have doubts about having children and expected to have them later in life. Research has also suggested that a mother's postponement of childbearing increases her children's socioeconomic opportunities. ", "Costs associated with raising children may have effects as well. From 1960 to 2015, the average cost of raising a single child from birth to age 17 for a middle-income, married couple increased 16% in real terms. Over this period, the portions of costs attributable to housing, food, transportation, and clothing have decreased. However, costs associated with healthcare doubled as a percentage of total cost and costs associated with child care and education increased from 2% of total costs to 16%. To the degree parents contribute to the costs of higher education, the increasing trend in child care costs may be understated. ", "The decision to have children later in life is reflected in historical data. Specifically, the decline in fertility among women has not been shared uniformly across age groups. In fact, since the mid-1970s fertility among women aged 30-34 and 34-39 has been increasing ( Figure B-1 ). These data suggest that although the desire to have children remains, the age at which it is done has increased. This postponement of childbearing results in a lower overall fertility rate. "], "subsections": []}]}, {"section_title": "Decreasing Mortality and Longer Life Expectancy", "paragraphs": ["On average, the Social Security population is living longer. This demographic trend is observed in two complementary measures: a decreasing mortality rate and increasing life expectancy. More individuals within the Social Security population are surviving to retirement age, and once in retirement they are collecting benefits for a greater number of years than previous generations of beneficiaries. For instance, in 1945, one year before the baby boom began, a male at birth could expect to live on average for 62.9 years. In 1965, one year after the baby boom ended, a male at birth could expect to live 66.8 years on average, an increase of almost 4 years. During that same period, the average life expectancy for a female at birth increased by 5.4 years. "], "subsections": [{"section_title": "Causes of Death", "paragraphs": ["The trustees cite several developments over the past century that contributed to the lower mortality rates, including ", "access to primary medical care for the general population, discovery and general availability of antibiotics and immunizations, clean water supply and waste removal, and the rapid rate of growth in the general standard of living.", "Changes in the leading causes of death support the effectiveness of the developments cited by the trustees. In 1900, the leading cause of death in the United States was infectious diseases, such as influenza or tuberculosis (see Appendix C ). From 1900 to 1940, the decline in infectious disease as a major cause of death was largely attributed to nutritional improvements and public health measures; the subsequent development of medical treatments further reduced infectious disease as a leading cause of death. As deaths due to infectious diseases declined, deaths due to diseases of old age increased. From 1900 to 1940, diseases associated with old age\u00e2\u0080\u0094cardiovascular disease and cancer\u00e2\u0080\u0094became the two leading causes of death. By 1950, cardiovascular disease alone led to more deaths than the next four leading causes. However, owing to improvements in medical treatments and access to those treatments, the age-adjusted death rate for cardiovascular disease decreased by more than 70% by 2015. In addition, this time period overlaps with the 1965 creation of Medicare, which has provided older Americans with better access to health care."], "subsections": []}, {"section_title": "Decreasing Mortality", "paragraphs": [" Figure 4 shows how the developments cited by the trustees combined to decrease mortality rates in the Social Security population. From 1945 to 2015, the death rate declined from 1,716.6 persons per 100,000 to 815.8 persons per 100,000, an approximate decline of 52%. This trend underscores the aging of the Social Security population, that is, more and more people covered by Social Security are surviving to retirement age. The trustees project this trend of decreasing mortality rates will continue throughout the projection period. Figure 4 shows historical death rates as measured by the National Center for Health Statistics (Centers for Disease Control and Prevention) and the trustees, and the trustees' projected death rates under their intermediate assumptions."], "subsections": []}, {"section_title": "Longer Life Expectancy at Retirement", "paragraphs": ["The decrease in mortality rates from 1945 to 2015 translated into higher average life expectancies for Social Security-covered individuals, both those currently working and those collecting benefits. A main measure of life expectancy is period life expectancy: an individual's expected average remaining life at a selected age, assuming no future changes in death rates.", "In 1945, the period life expectancy at birth was 62.9 years for a male and 68.4 years for a female. This indicates that in 1945, shortly after Social Security began regular monthly payments, the average newborn male was not expected to reach full retirement age and the average female was not expected to live more than a few years beyond full retirement age (in 1945 the full retirement age was 65, see Table 2 ). In 2015, the period life expectancy at birth was 76.2 years for a male and 81.0 years for a female. Thus, males and females born in 2015 can expect at birth to live approximately 13 years longer than those born in 1945. ", "Decreasing age-specific mortality rates at the older ages also translate into longer period life expectancy at age 65, an age commonly associated with retirement. In 1945, shortly after Social Security began regular monthly payments, a 65-year-old female could expect to live another 14.4 years on average and a 65-year-old male could expect to live another 12.6 years. In 2015, those life expectancies were 20.4 years and 17.8 years, respectively. In 2015, more of the population survived to the age at which they were eligible for Social Security benefits than in 1945. In addition, individuals reaching eligibility age in 2015 exhibited longer period life expectancies than in 1945. As shown in Figure 5 , the trustees project this trend to continue throughout the projection period, thereby contributing to the OASDI program's rising costs. "], "subsections": []}]}, {"section_title": "Rising Costs and Program Financial Shortfalls", "paragraphs": ["Population aging has consequences for the Social Security system's financial sustainability. As a result of lower fertility rates and increased life expectancy, in 2035 the Social Security system is projected to experience aged dependency ratios ( Figure 2 ) not observed during the program's history. The aged dependency ratios are projected to trend higher as the baby boom generation retires. In 2018, approximately 10,200 baby boomers per day attained age 65; this figure is expected to reach 11,000 per day by 2029. This demographic trend suggests that the ratio of persons collecting benefits\u00e2\u0080\u0094or soon to be\u00e2\u0080\u0094to those paying into Social Security will increase. The more this ratio increases, the more strain is placed on the OASDI program's financial position."], "subsections": [{"section_title": "An Increasing Number of Beneficiaries per Covered Worker", "paragraphs": ["An alternative measure of OASDI program sustainability is the ratio of beneficiaries per 100 covered workers. For example, a ratio of 30 indicates that for every 30 beneficiaries (i.e., individuals collecting benefits) there are 100 workers in covered employment (i.e., individuals subject to the payroll tax). Increases in this ratio suggest that those in covered employment are supporting an increasing number of people collecting benefits. Figure 6 displays ratios of historical and projected beneficiaries per 100 covered workers.", "The ratio of beneficiaries per 100 covered workers through year 2031 will be largely influenced by the baby boom generation. The oldest of the baby boomers turned 20 in 1966 and started to enter the paid labor force, becoming covered employees. From 1970 to 2008, a period in which most baby boomers were working age, the ratio of beneficiaries per 100 covered workers remained around 30. In this period, the ratio never fell below 27 or rose above 31. ", "From 2009 to 2017, the period in which the oldest of the baby boomers reached full retirement age, the number of beneficiaries per 100 covered workers increased from 31 to 35. The trustees project this ratio to rise steadily, reaching 44 in 2031, the year in which the youngest baby boomers will reach full retirement age. When the youngest baby boomers, those born in 1964, reach 70 years of age in 2035, the ratio of beneficiaries per 100 covered workers is projected to be 46. Previous research suggested that under the current tax rates and benefit schedule, the OASDI program requires a ratio of 35 beneficiaries to 100 covered workers to maintain itself as a pay-as-you-go program."], "subsections": []}, {"section_title": "Rising Costs and the Program's Funding Challenge", "paragraphs": ["The line representing the ratio of beneficiaries per 100 covered workers in Figure 6 corresponds to the OASDI cost as a percentage of taxable payroll line shown in Figure 1 . The trustees state the following: ", "This similarity emphasizes the extent to which the cost rate [annual cost as a percentage of taxable payroll] is determined by the age distribution of the population. The cost rate is essentially the product of the number of beneficiaries and their average benefit, divided by the product of the number of covered workers and their average taxable earnings.", "When these lines are graphed together, this relationship becomes more evident. Figure 7 highlights how the rise in the number of beneficiaries per 100 covered workers closely mirrors that of OASDI annual costs. Both measures remained relatively stable from the 1970s through the 2000s, a period in which a majority of the baby boomers were considered to be of prime working ages. Both measures have increased in the 2010s, and they are projected to continue to do so as the baby boomers transition from prime working ages into retirement.", "The effects of aging on the Social Security program are already evident when considering only the Disability Insurance (DI) program. In a 2014 testimony before Congress, the Chief Actuary stated that the effects of aging had already contributed to rising costs in the DI program. As they entered young adulthood, more baby boomers entered the workforce than received disability benefits. This trend reversed as the baby boomers entered the disability-prone ages of 45 to 64. The trend is projected to continue as baby boomers approach retirement. As explained by the Board of Trustees,", "From 2019 to 2038, the OASI cost rate [annual cost as a percentage of taxable payroll] rises rapidly because the retirement of the baby-boom generation will continue to increase the number of beneficiaries much faster than the number of workers increases, as subsequent lower-birth-rate generations replace the baby-boom generation at working ages. ", " Figure 1 graphs OASDI annual costs along with annual income, expressed as a percentage of taxable payroll. Figure 1 shows that costs are rising while incomes are relatively stable and that costs are projected to exceed income for the duration of the projection period. The persistence of this imbalance will strain the OASDI program's long-range financial position. ", "As a primarily pay-as-you-go program, the OASDI is self-financing. It is funded primarily through a payroll tax on covered earnings up to an annual limit and by federal income taxes paid by some beneficiaries on a portion of their OASDI benefits. In addition, from 1984 through 2009, annual income from tax revenues exceeded annual costs. This resulted in annual cash surpluses that were invested in federal government securities held in the OASDI Trust Funds, where they earned interest, thus providing the system a third income source. ", "A program with contingency reserves may experience periods of cash deficits, in which annual costs are greater than annual income. With sufficient reserves, such a program need not operate as a strict pay-as-you-go program. However, a pay-as-you-go program cannot operate with indefinite annual cash deficits. As shown in Figure 1 , annual costs are projected to exceed annual income throughout the 75-year projection period. Although the OASDI program can draw upon assets in the trust funds to fulfill scheduled payments temporarily, the program cannot do so indefinitely. The trustees project there to be sufficient trust funds reserves to augment tax revenues and pay all scheduled benefits through 2034. The trustees estimate that trust funds reserves will be exhausted sometime in 2035. Once the trust funds are exhausted, the program must operate as a strict pay-as-you-go system, meaning it will only be able to pay out in benefits what it receives in revenues. At the point of OASDI Trust Funds depletion, program revenues will provide the OASDI program funding to pay only 80% of scheduled benefits."], "subsections": []}]}, {"section_title": "Demographically Driven Policy Options to Address the Financial Shortfall", "paragraphs": ["Policy measures seeking to improve trust funds solvency can generally be categorized as reducing benefits or increasing revenues. For illustrative purposes, the trustees estimate changes to the current payroll tax rates and benefit schedule that would maintain trust funds solvency throughout the 75-year projection period. To give a sense of the funding shortfall's magnitude, if measures to maintain trust funds solvency were enacted in 2019, they would require a permanent increase in the payroll tax from its current rate of 12.40% to 15.10%, or a reduction in scheduled benefits of 17% for all current and future beneficiaries, or a combination of both. The increasing costs associated with the OASDI program indicate that more substantial measures are necessary as time elapses. If similar policies were enacted in 2035, the projected year of trust funds depletion, the permanent payroll tax rate needed to restore solvency would increase to 16.05%. Similarly, the necessary permanent reduction of scheduled benefits would increase to 23%. Lawmakers have a wide range of policy options at their disposal to address the projected funding shortfall. This section highlights several policy options that address the funding shortfall's demographic drivers."], "subsections": [{"section_title": "Extend Social Security Benefits for Childcare", "paragraphs": ["As discussed, research suggests that economic and financial uncertainty may be a large driver behind many people's decision to postpone childbearing, thus reducing fertility. Social Security is designed as a social insurance program that protects workers and their families against a loss in earnings due to old age, disability, and death. Understanding the large financial burden that childbearing requires, some proposals argue for Social Security benefits to be extended to cover childcare in times of birth or adoption. While not specifically intended to increase fertility, these proposals recognize the hardships that accompany childbearing and aim to reduce financial pressures around that decision. By seeking to reduce one of the larger impediments to fertility\u00e2\u0080\u0094financial stress\u00e2\u0080\u0094such proposals could result in increased fertility."], "subsections": []}, {"section_title": "Incorporate Childcare in the Social Security Benefit Formula", "paragraphs": ["The Social Security benefit formula is used to compute a worker's Primary Insurance Amount (PIA), which is the worker's basic monthly benefit amount payable at the full retirement age. To compute the PIA, the formula first indexes a worker's lifetime covered earnings to reflect changes in national wage levels, as measured by the Social Security Administration's average wage index (AWI). The indexing process ensures a worker's or family member's benefit will reflect increases in average wage growth observed over the worker's earning history. After indexing, the highest 35 years of earnings are summed, and the total is divided by 420 (the number of months in 35 years) to determine a worker's average indexed monthly earnings (AIME). Brackets of a worker's AIME are replaced at different rates, the sum of which is the PIA. ", "Exiting the paid workforce to have children can impact a worker's future Social Security benefit. For instance, if a worker has fewer than 35 years of covered earnings, years of zero earnings are entered in the calculation. That is, if a worker forgoes covered earnings to have children, the worker's earnings record will reflect no income for that time. Recognizing the benefit formula's adverse effect for years of no earnings due to childcare, some proposals would reduce the number of computation years used in the benefit formula. Such a proposal would allow one parent per household to claim dropout years for years in which that parent had no earnings and provided care for a child under 6 years of age. For example, the benefit formula for a parent with no earnings for two years due to childcare would use the highest 33 years of earnings in the calculation. ", "Childcare credits are another option that would incorporate childcare into the Social Security benefit formula. Proponents of this method argue that childcare is essentially unpaid work and seek to ensure parents with young children are credited for their caregiving. Under such a proposal, wage credits would be set at one-half the average wage index for that year (e.g., one-half of the AWI for 2018 is $25,947). Parents earning less than the childcare credit level would have their earnings records increased to that level. Parents earning more than the childcare credit level would not receive any credit. ", "The effects of policy changes that may result in increased fertility are uncertain. As shown in Figure 3 , the projected fertility rate is expected to be stable around 2 children per woman. Under current law and the trustees' intermediate assumptions, each increase of 0.1 in the fertility rate decreases the projected funding shortfall by about 7.6%. This suggests a 65% increase in childbearing (i.e., to approximately 3.3 children per woman) would be needed, absent other changes, to avoid trust fund depletion. "], "subsections": []}, {"section_title": "Increase the Full Retirement Age", "paragraphs": ["Some policymakers have proposed increasing the eligibility ages to address changing demographics and their effects on the OASDI program's solvency. For instance, a policy measure that increases the full retirement age (FRA) would be categorized as a provision that reduces benefits, as beneficiaries would then collect benefits for a shorter duration of time or accept a higher actuarial reduction in their monthly benefits by claiming at the age they originally intended. ", "Previous Congresses have addressed increasing the FRA. Facing a funding shortfall, Congress gradually raised the FRA, from age 65 to age 67, as part of the Social Security Amendments of 1983 ( P.L. 98-21 ). Increasing the earliest eligibility age (EEA), a benefit-reducing mechanism, was one of many measures included in this legislation that sought to address previous solvency issues. The Social Security Amendments of 1983 also enacted measures that increased revenues, including provisions that increased the payroll tax and made a portion of Social Security benefits themselves subject to taxation. ", " Table 2 shows the gradual increase in the FRA depending on year of birth.", "The Social Security program is once again facing projected long-range funding shortfalls. Similar to 1983, a common proposal is to increase the EEA or to further increase the FRA. On one hand, some argue that the average increases in life expectancies indicate that people work until older ages, and thus collect benefits at an older age. On the other hand, those opposed to raising the FRA argue that increases in average life expectancies are not shared equally among covered workers.", "The SSA's Office of the Chief Actuary (OCACT) publishes estimates for policy provisions that affect claiming ages and are routinely included in legislative proposals. These policy options include provisions that would affect the FRA and provisions that would affect both the FRA and the EEA. Each provision's efficacy can be assessed by its effect on the projected solvency date and its reduction in the long-range actuarial balance , shown for each option in its respective table. For illustrative purposes, a provision that would gradually increase the full retirement age to 68 is estimated to improve the long-range actuarial balance by 16% (compared to current law) and extend solvency to 2035, one year later than under current law.", "OCACT projects none of the numerous policy provisions raising eligibility ages to result in trust funds solvency throughout the projection period or to completely eliminate the long-range funding shortfall. A 2015 CBO report found similar results in its analysis of four policy measures: (1) an increase in the FRA of one year; (2) an increase in the FRA of three years; (3) an increase in the FRA by one month per birth year; and (4) an increase in the FRA and EEA by one month per birth year. CBO's findings largely mirror OCACT's in showing that an increase in either one or both of the FRA and EEA reduces Social Security program costs. However, a policy measure adjusting only the age at which benefits could be claimed would not be sufficient to offset the funding shortfall. This outcome suggests that policy measures only addressing demographic changes via eligibility ages are limited in their ability to resolve the effects of rising OASDI program costs. ", "Research suggests that raising the FRA or EEA would negatively affect certain segments of the population. Although average life expectancy in the United States is increasing, the increases are not equally shared among the population. For instance, women have a longer life expectancy than men and whites have a longer life expectancy than blacks. Life expectancy is also stratified by income level. Numerous studies show that life expectancy is positively related to income and that the gap itself\u00e2\u0080\u0094the difference in life expectancies between high earners and low earners\u00e2\u0080\u0094is also increasing. Social Security benefits are based on the overall population's average life expectancies, suggesting that groups with longer average life expectancies (e.g., higher-income individuals) will collect more lifetime benefits than groups with shorter average life expectancies (e.g., lower-income individuals). Any provision to increase claiming ages may very well exacerbate this difference in lifetime benefits.", "A method of increasing the FRA could be to index the FRA for changes in life expectancies. One possible approach would be to index the FRA to maintain a constant ratio of expected retirement years (i.e., life expectancy at FRA) to potential work years (i.e., FRA less 20 years). Another policy option would be to simply adjust the FRA so as to hold the number of expected retirement years constant based on projected life expectancies. As discussed above, life expectancies across different segments of the population can differ by factors such as gender, race, and income. In pursuing options involving indexing the FRA, policymakers would need to address differences in projected life expectancies. ", "Policy options that would index the FRA can be categorized as cost-reduction measures, because they would decrease total benefits as a means to account for longer life expectancies. Although both options discussed above would reduce the projected funding shortfall, neither would eliminate it completely. Similar to options that may address fertility or a straightforward increase in the FRA, the projected effects of indexing the FRA for changes in life expectancies alone would not eliminate the projected funding shortfall. "], "subsections": []}, {"section_title": "Encourage Delayed Claiming", "paragraphs": ["A range of policy options exists that would address the increases in longevity by encouraging delayed claiming. One such option would be to increase the number of years used in the benefit formula. For instance, under current law, the benefit formula uses a worker's highest 35 years of earnings to compute the primary insurance amount (PIA). Including more years of earnings in the benefit formula (e.g., 40 years) would likely include years of low earnings from the start of a worker's earning history or years of no earnings. Under such a policy, a worker could choose to work for more years (i.e., to replace years of low earnings with years of high earnings) or take advantage of delayed retirement credits to attain a PIA that would have been earned had the benefit formula not changed. That is, to maintain the benefit scheduled under current law a person would need to work longer, delay claiming, or a combination of both.", "Under current law, workers can receive their full PIA once they reach FRA. However, a worker can elect to delay payment of benefits and, in doing so, collect delayed retirement credits. For those born in 1960 and later, a credit is worth 8% of a worker's PIA for each year of delayed claiming. For instance, a worker born in 1960 who reaches FRA at 67 is entitled to 100% of his or her PIA. That same worker could collect 124% of his or her PIA if claiming is delayed three years (at age 70). Any reduction in the benefit formula that would result in a decrease of benefits would then require some use of delayed claiming so as to collect the same PIA as under current law.", "A provision that would incentivize workers to delay claiming, perhaps through an increase in the number of computation years, could have a negative earnings impact on some workers. For instance, such a provision would favor those earning at high levels later in their careers (so as to replace years of low earnings with years of higher earnings). In addition to possibly favoring higher earners, such a provision could adversely affect certain types of labor. That is, such a policy proposal would essentially favor those who could still work. Workers with careers in more arduous work who were unable to continue working beyond the current FRA would receive a lower PIA under such a proposal."], "subsections": []}]}, {"section_title": "Conclusion", "paragraphs": ["On average, increases in life expectancy have allowed current Social Security beneficiaries to collect benefits for a longer period of time. However, the increase in life expectancies, when paired with low fertility rates, will negatively impact the program's long-range financial position and weaken its ability to pay all scheduled benefits as projected under current law. These demographic trends\u00e2\u0080\u0094increasing life expectancy and decreasing fertility\u00e2\u0080\u0094have resulted in an aging Social Security population. As the baby boom generation retires, the ratio of beneficiaries relative to people in covered employment will grow. As this ratio rises, Social Security costs rise as well. The rising ratio of beneficiaries to covered workers can exist so long as trust funds assets remain to supplement the program's annual tax revenues. Rising costs are projected to deplete trust funds reserves in 2035. After such time, Social Security program revenues will no longer be sufficient to pay full benefits. Under current law, the Social Security program's sustainability, and its ability to pay full benefits, is largely a demographic issue. Policy measures aimed at addressing the changing demographics, specifically those increasing retirement ages to reflect increasing life expectancy, improve the program's solvency and long-range financial status. Such policy measures are estimated to reduce program costs. However, the reduction in benefits implied by such measures would not be evenly distributed across all segments of the population. In addition, increasing eligibility ages (i.e., reducing costs) alone is not projected to restore solvency throughout the projection period. Given the magnitude of the OASDI program's projected long-range funding shortfall, policy measures that include both a revenue-increasing and a benefit-reducing mechanism to restore solvency increase the likelihood that full benefits will be maintained.", "Appendix A. The Baby Boomers in the United States", "The first baby boomers were born in 1946; the last baby boomers were born in 1964. The period of 1946-1964 is marked on either side by low birth rates. As a result of the low fertility rates that followed the baby boomers, they are being replaced in the workforce by cohorts resulting from lower fertility rates. ", "The baby boom's births spanned nearly two decades, denoted with I in Figure A-1 . The older baby boomers started to enter the workforce as the youngest were just being born (II in the figure below). Time period III denotes the stage at which all baby boomers are at least 20 years of age, an age commonly associated with working age. In period IV, baby boomers are attaining full retirement age and beginning to exit the workforce. In period V, all baby boomers are eligible for retirement with full benefits. ", "In 1945, a year before the first baby boomer was born, 7.3% of the Social Security population was aged 65 or older. In 2035, after all baby boomers are eligible for Social Security, 20.5% of the population will be aged 65 or older.", "The demographic forces that created an aging population evolved over decades. This is important to policymakers because demographic trends in the Social Security population are contributing to rising costs. These demographic trends result in an imbalance between costs and revenues and are projected to continue beyond the baby-boom generation. This imbalance can also be thought of as a persistent imbalance between those in covered employment and those collecting benefits.", "Appendix B. Birth Rates, by Age Group", "Appendix C. Causes of Death"], "subsections": []}]}}
{"id": "R45877", "title": "Kashmir: Background, Recent Developments, and U.S. Policy", "released_date": "2020-01-13T00:00:00", "summary": ["In early August 2019, the Indian government announced that it would make major changes to the legal status of its Muslim-majority Jammu and Kashmir (J&K) state, specifically by repealing Article 370 of the Indian Constitution and Section 35A of its Annex, which provided the state \"special\" autonomous status, and by bifurcating the state into two successor \"Union Territories\" with more limited indigenous administrative powers. The changes were implemented on November 1, 2019. The former princely region's sovereignty has been unsettled since 1947 and its territory is divided by a military \"Line of Control,\" with Pakistan controlling about one-third and disputing India's claim over most of the remainder as J&K (China also claims some of the region's land). The United Nations considers J&K to be disputed territory, but New Delhi, the status quo party, calls the recent legal changes an internal matter, and it generally opposes third-party involvement in the Kashmir issue. U.S. policy seeks to prevent conflict between India and Pakistan from escalating, and the U.S. Congress supports a U.S.-India strategic partnership that has been underway since 2005, while also maintaining attention on issues of human rights and religious freedom.", "India's August actions sparked international controversy as \"unilateral\" changes of J&K's status that could harm regional stability, eliciting U.S. and international concerns about further escalation between South Asia's two nuclear-armed powers, which nearly came to war after a February 2019 Kashmir crisis. Increased separatist militancy in Kashmir may also undermine ongoing Afghan peace negotiations, which the Pakistani government facilitates. New Delhi's process also raised serious constitutional questions and\u00e2\u0080\u0094given heavy-handed security measures in J&K\u00e2\u0080\u0094elicited more intense criticisms of India on human rights grounds. The United Nations and independent watchdog groups fault New Delhi for excessive use of force and other abuses in J&K (Islamabad also comes under criticism for alleged human rights abuses in Pakistan-held Kashmir). India's secular traditions may suffer as India's Hindu nationalist government\u00e2\u0080\u0094which returned to power in May with a strong mandate\u00e2\u0080\u0094appears to pursue Hindu majoritarian policies at some cost to the country's religious minorities.", "The long-standing U.S. position on Kashmir is that the territory's status should be settled through negotiations between India and Pakistan while taking into consideration the wishes of the Kashmiri people. The Trump Administration has called for peace and respect for human rights in the region, but its criticisms have been relatively muted. With key U.S. diplomatic posts vacant, some observers worry that U.S. government capacity to address South Asian instability is thin, and the U.S. President's July offer to \"mediate\" on Kashmir may have contributed to the timing of New Delhi's moves. The United States seeks to balance pursuit of a broad U.S.-India partnership while upholding human rights protections, as well as maintaining cooperative relations with Pakistan.", "Following India's August 2019 actions, numerous Members of the U.S. Congress went on record in support of Kashmiri human rights. H.Res. 745 , introduced in December and currently with 40 cosponsors, urges the Indian government to end the restrictions on communications and mass detentions in J&K that continue to date. An October hearing on human rights in South Asia held by the House Subcommittee on Asia, the Pacific, and Nonproliferation included extensive discussion of developments in J&K. In November, the Tom Lantos Human Rights Commission held an event entitled \"Jammu and Kashmir in Context.\"", "This report provides background on the Kashmir issue, reviews several key developments in 2019, and closes with a summary of U.S. policy and possible questions for Congress."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Overview", "paragraphs": ["The final status of the former princedom of Kashmir has remained unsettled since 1947. On August 5, 2019, the Indian government announced that it was formally ending the \"special status\" of its Muslim-majority Jammu and Kashmir (J&K) state, the two-thirds of Kashmir under New Delhi's control, specifically by abrogating certain provisions of the Indian Constitution that granted the state autonomy with regard to most internal administrative issues. The legal changes went into effect on November 1, 2019, when New Delhi also bifurcated the state into two \"union territories,\" each with lesser indigenous administrative powers than Indian states. Indian officials explain the moves as matters of internal domestic politics, taken for the purpose of properly integrating J&K and facilitating its economic development. ", "The process by which India's government has undertaken the effort has come under strident criticism for its alleged reliance on repressive force in J&K and for questionable legal and constitutional arguments that are likely to come before India's Supreme Court. Internationally, the move sparked controversy as a \"unilateral\" Indian effort to alter the status of a territory that is considered disputed by neighboring Pakistan and China, as well as by the United Nations. New Delhi's heavy-handed security crackdown in the remote state also raised ongoing human rights concerns. To date, but for a brief January visit by the U.S. Ambassador to India, U.S. government officials and foreign journalists have not been permitted to visit the Kashmir Valley.", "The long-standing U.S. position on Kashmir is that the territory's status should be settled through negotiations between India and Pakistan while taking into consideration the wishes of the Kashmiri people. Since 1972, India's government has generally shunned third-party involvement on Kashmir, while Pakistan's government has continued efforts to internationalize it, especially through U.N. Security Council (UNSC) actions. China, a close ally of Pakistan, is also a minor party to the dispute. There are international concerns about potential for increased civil unrest and violence in the Kashmir Valley, and the cascade effect this could have on regional stability.\u00c2\u00a0To date, the Trump Administration has limited its public statements to calls for maintaining peace and stability, and respecting human rights. The UNSC likewise calls for restraint by all parties; an \"informal\" August 16 UNSC meeting resulted in no ensuing official U.N. statement. Numerous Members of the U.S. Congress have expressed concern about reported human rights abuses in Kashmir and about the potential for further international conflict between India and Pakistan.", "New Delhi's August moves enraged Pakistan's leaders, who openly warned of further escalation between South Asia's two nuclear-armed powers, which nearly came to war after a February 2019 suicide bombing in the Kashmir Valley and retaliatory Indian airstrikes. The actions may also have implications for democracy and human rights in India; many analysts argue these have been undermined both in recent years and through Article 370's repeal. Moreover, Indian Prime Minister Narendra Modi and his Hindu nationalist Bharatiya Janata Party (BJP)\u00e2\u0080\u0094empowered by a strong electoral mandate in May and increasingly pursuing Hindu majoritarian policies\u00e2\u0080\u0094may be undermining the country's secular, pluralist traditions. The United States seeks to balance pursuit of broader U.S.-India partnership while upholding human rights protections and maintaining cooperative relations with Pakistan. "], "subsections": []}, {"section_title": "Recent Developments", "paragraphs": [], "subsections": [{"section_title": "Status and Impact of India's Crackdown", "paragraphs": ["As of early January 2020, five months after the crackdown in J&K began, most internet service and roughly half of mobile phone users in the densely-populated Kashmir Valley remain blocked; and hundreds of Kashmiris remain in detention, including key political figures. According to India's Home Ministry, as of December 3, more than 5,100 people had been taken into \"preventive custody\" in J&K after August 4, of whom 609 remained in \"preventive detention,\" including 218 alleged \"stone-pelters\" who assaulted police in street protests. New Delhi justifies ongoing restrictions as necessary in a fraught security environment. The U.S. government has long acknowledged a general threat; as stated by the lead U.S. diplomat for the region, Principal Deputy Assistant Secretary of State for South and Central Asia Alice Wells, in October, \"There are terrorist groups who operate in Kashmir and who try to take advantage of political and social disaffection.\" ", "In early December, the Indian Home Ministry informed Parliament that incidents of \"terrorist violence\" in J&K during the 115 days following August 5 were down 17% from the 115 days preceding that date, from 106 to 88. However, the Ministry stated that attempts by militants to infiltrate into the Valley across the Line of Control from Pakistan have increased, from 53 attempts in the 88 days preceding August 5 to 84 in the 88 days following (in contrast, in October 2019, Wells stated before a House panel that, \"I think we've observed a decline in infiltrations across the Line of Control\").", "Senior Indian officials say their key goal is to avoid violence and bloodshed, arguing that \"lots of the reports about shortages are fictitious\" and that, \"Some of our detractors are spreading false rumors, including through the U.S. media and it is malicious in nature.\" Indian authorities continue to insist that, with regard to street protests, \"There has been no incident of major violence. Not even a single live bullet has been fired. There has been no loss of life in police action\" (however, at least one teenaged protester's death reportedly was caused by shotgun pellets and a tear gas canister ). They add, however, that \"terrorists and their proxies are trying to create an atmosphere of fear and intimidation in Kashmir.\" Because of this, \"Some remaining restrictions on the communications and preventive detentions remain with a view to maintain public law and order.\"", "A September New York Times report described a \"punishing blockade\" ongoing in the Kashmir Valley, with sporadic protests breaking out, and dozens of demonstrators suffering serious injuries from shotgun pellets and tear gas canisters, leaving Kashmiris \"feeling unsettled, demoralized, and furious.\" An October Press Trust of India report found some signs of normalcy returning, but said government efforts to reopen schools had failed, with parents and students choosing to stay away, main markets remaining shuttered, and mobile phone service remaining suspended in most of the Valley, where there continued to be extremely limited internet service. ", "Since mid-October, the New Delhi and J&K governments have claimed that availability of \"essential supplies,\" including medicines and cooking gas, is being ensured; that all hospitals, medical facilities, schools, banks, and ATMs are functioning normally; that there are no restrictions on movement by auto, rail, or air; and that there are no restrictions on the Indian media or journalists (foreign officials and foreign journalists continue to be denied access). On October 9, curtailment of tourism in the region was withdrawn. On October 14, the government lifted restrictions on post-paid mobile telephone service, while pre-paid service, aka via \"burner phones,\" along with internet and messaging services, remains widely blocked. Public schools have reopened, but parents generally have not wanted their children out in a still-unstable setting. According to Indian authorities, \"terrorists are also preventing the normal functioning of schools.\"", "On November 1, citizens of the former J&K state awoke to a new status as residents of either the Jammu and Kashmir Union Territory (UT) or the Union Territory of Ladakh (the latter populated by less than 300,000 residents; see Figure 1 ). While the J&K UT will be able to elect its own legislature, all administrative districts are now controlled by India's federal government, and J&K no longer has its own constitution or flag. The chief executives of each new UT are lieutenant governors who report directly to India's Home Ministry. More than 100 federal laws are now applicable to J&K, including the Indian Penal Code, and more than 150 laws made by the former state legislature are being repealed, including long-standing prohibitions on leasing land to non-residents. The new J&K assembly will be unable to make any laws on policing or public order, thus ceding all security issues to New Delhi's purview."], "subsections": []}, {"section_title": "The U.S.-India \"2+2\" Summit and Other Recent Developments", "paragraphs": ["On December 18, India's external affairs and defense ministers were in Washington, DC, for the second \"2+2\" summit meeting with their American counterparts, where \"The two sides reaffirmed the growing strategic partnership between the United States and India, which is grounded in democratic values, shared strategic objectives, strong people-to-people ties, and a common commitment to the prosperity of their citizens.\" In the midst of the session, an unnamed senior State Department official met the press and was asked about the situation in J&K. She responded that the key U.S. government concern is \"a return to economic and political normalcy there,\" saying, \"[W]hat has concerned us about the actions in Kashmir are the prolonged detentions of political leaders as well as other residents of the valley, in addition to the restrictions that continue to exist on cell phone coverage and internet.\"", "While visiting Capitol Hill at the time of the summit, Indian External Affairs Minister Subrahmanyam Jaishankar \"abruptly\" withdrew from a scheduled meeting with senior House Members, reportedly because the House delegation was to include Representative Pramila Jayapal, the original sponsor of H.Res. 745 , which urges the Indian government to \"end the restrictions on communications and mass detentions in Jammu and Kashmir as swiftly as possible and preserve religious freedom for all residents\" (see \"The U.S. Congress, Hearings, and Relevant Legislation\" section below). Some observers saw in Jaishankar's action a shortsighted expression of India's considerable sensitivity about the Kashmir issue and a missed opportunity to engage concerned U.S. officials.", "Two months earlier, in October, two notable developments took place in India. Local Block Development Council elections were held in J&K that month. With all major regional parties and the national opposition Congress Party boycotting the polls, Independents overwhelmed the BJP, winning 71% of the total 317 blocks to the BJP's 26%, including 85% in the Kashmir division. The results suggested widespread disenchantment with New Delhi's ruling party in J&K. Also in October, India allowed a delegation of European parliamentarians to visit the Kashmir Valley, the first such travel by foreign officials since July. The composition of the delegation and questions surrounding its funding and official or private status added to international critiques of India's recent Kashmir policies.", "On January 9, New Delhi allowed a U.S. official to visit J&K for the first time since August, when 15 ambassadors, including U.S. Ambassador Ken Juster, were given a two-day \"guided tour\" of the Srinagar area. EU envoys declined to participate, apparently because the visit did not include meetings with detained Kashmiri political leaders. An External Affairs Ministry spokesman said the objective of the visit was for the envoys to view government efforts to \"normalize the situation\" firsthand, but the orchestrated visit attracted criticism from opposition parties and it is unclear if international opprobrium will be reduced as a result.", "On January 10, India's Supreme Court issued a ruling that an open-ended internet shutdown (as exists in parts of J&K) was a violation of free speech and expression granted by the country's constitution, calling indefinite restrictions \"impermissible.\" The court gave J&K authorities a one-week deadline to provide a detailed review all orders related to internet restrictions."], "subsections": []}]}, {"section_title": "Background", "paragraphs": [], "subsections": [{"section_title": "Setting", "paragraphs": ["India's former J&K state was about the size of Utah and encompassed three culturally distinct regions: Kashmir, Jammu, and Ladakh (see Figure 1 ). More than half of the mostly mountainous area's nearly 13 million residents live in the fertile Kashmir Valley, a region slightly larger than Connecticut (7% of the former state's land area was home to 55% of its population). Srinagar, in the Valley, was the state's (and current UT's) summer capital and by far its largest city with some 1.3 million residents. Jammu city, the winter capital, has roughly half that population, and the Jammu district is home to more than 40% of the former state's residents. About a quarter-million people live in remote Ladakh, abutting China. Just under 1% of India's total population lives in the former state of J&K.", "Roughly 80% of Indians are Hindu and about 14% are Muslim. At the time of India's 2011 national census, J&K's population was about 68% Muslim, 28% Hindu, 2% Sikh, and 1% Buddhist. At least 97% of the Kashmir Valley's residents are Muslim; the vast majority of the district's Hindus fled the region after 1989 (see \" Human Rights and India's International Reputation \" below). The Jammu district is about two-thirds Hindu, with the remainder mostly Muslim. Ladakh's population is about evenly split between Buddhists and Muslims. Upon the 1947 partition of British India based on religion, the princely state of J&K's population had unique status: a Muslim majority ruled by a Hindu king. Many historians find pluralist values in pre-1947 Kashmir, with a general tolerance of multiple religions. The state's economy had been agriculture-based; horticulture and floriculture account for the bulk of income. Historically, the region's natural beauty made tourism a major aspect of commerce\u00e2\u0080\u0094this sector was devastated by decades of conflict, but had seemed to be making a comeback in recent years. Kashmir's remoteness has been a major impediment to transportation and communication networks, and thus to overall development. In mid-2019, India's Ambassador to the United States claimed that India's central government has provided about $40 billion to the former J&K state since 2004. "], "subsections": []}, {"section_title": "J&K's Status, Article 370, and India-Pakistan Conflict", "paragraphs": [], "subsections": [{"section_title": "Accession to India", "paragraphs": ["Since Britain's 1947 withdrawal and the partition and independence of India and Pakistan, the final status of the princely state of J&K has remained unsettled, especially because Pakistan rejected the process through which J&K's then-ruler had acceded to India. A dyadic war over Kashmiri sovereignty ended in 1949 with a U.N.-brokered cease-fire that left the two countries separated by a 460-mile-long military \"Line of Control\" (LOC). The Indian-administered side became the state of Jammu and Kashmir. The Pakistani-administered side became Azad [\"Free\"] Jammu and Kashmir (AJK) and the \"Northern Areas,\" later called Gilgit-Baltistan. "], "subsections": []}, {"section_title": "Article 370 and Article 35A of the Indian Constitution, and J&K Integration", "paragraphs": ["In 1949, J&K's interim government and India's Constituent Assembly negotiated \"special status\" for the new state, leading to Article 370 of the Indian Constitution in 1950, the same year the document went into effect. The Article formalized the terms of Jammu and Kashmir's accession to the Indian Union, generally requiring the concurrence of the state government before the central government could make administrative changes beyond the areas of defense, foreign affairs, and communications. A 1954 Presidential Order empowered the state government to regulate the rights of permanent residents, and these became defined in Article 35A of the Constitution's Appendix, which prohibited nonresidents from working, attending college, or owning property in the state, among other provisions. ", "Within a decade of India's independence, however, most national constitutional provisions were extended to the J&K state via Presidential Order with the concurrence of the J&K assembly (and with the Indian Supreme Court's assent). The state assembly arguably had over decades become pliant to New Delhi's influence, and critical observers contend that J&K's special status has long been hollowed out: while Article 370 provided special status constitutionally , the state suffered from inferior status politically through what amounted to \"constitutional abuse.\" Repeal of Article 370 became among the leading policy goals of the BJP and its Hindu nationalist antecedents on the principle of national unity."], "subsections": []}, {"section_title": "Further India-Pakistan Wars", "paragraphs": ["The J&K state's legal integration into India progressed and prospects for a U.N.-recommended plebiscite on its final status correspondingly faded in the 1950s and 1960s. Three more India-Pakistan wars\u00e2\u0080\u0094in 1965, 1971, and 1999; two of which were fought over Kashmir itself\u00e2\u0080\u0094left territorial control largely unchanged, although a brief 1962 India-China war ended with the high-altitude and sparsely populated desert region of Ladakh's Aksai Chin under Chinese control, making China a third, if lesser, party to the Kashmir dispute. ", "In 1965, Pakistan infiltrated troops into Indian-held Kashmir in an apparent effort to incite a local separatist uprising; India responded with a full-scale military operation against Pakistan. A furious, 17-day war caused more than 6,000 battle deaths and ended with Pakistan failing to alter the regional status quo. The 1971 war saw Pakistan lose more than half of its population and much territory when East Pakistan became independent Bangladesh, the mere existence of which undermined Pakistan's professed status as a homeland for the Muslims of Asia's Subcontinent. In summer 1999, one year after India and Pakistan tested nuclear weapons, Pakistani troops again infiltrated J&K state, this time to seize strategic high ground near Kargil. Indian ground and air forces ejected the Pakistanis after three months of combat and 1,000 or more battle deaths. "], "subsections": []}]}, {"section_title": "Third-Party Involvement", "paragraphs": ["In 1947, Pakistan had immediately and formally disputed the accession process by which J&K had joined India at the United Nations. New Delhi also initially welcomed U.N. mediation. Over ensuing decades, the U.N. Security Council issued a total of 18 Resolutions (UNSCRs) relevant to the Kashmir dispute. The third and central one, UNSCR 47 of April 1948, recommended a three-step process for restoring peace and order, and \"to create proper conditions for a free and impartial plebiscite\" in the state, but the conditions were never met and no referendum was held. ", "Sporadic attempts by the United States to intercede in Kashmir have been unsuccessful. A short-lived mediation effort by the United States and Britain included six rounds of talks in 1961 and 1962, but ended when India indicated that it would not relinquish control of the Kashmir Valley. Although President Bill Clinton's personal diplomatic engagement was credited with averting a wider war and potential nuclear exchange in 1999, Kashmir's disputed status went unchanged. After 2001, some analysts argued that resolution of the Kashmir issue would improve the prospects for U.S. success in Afghanistan\u00e2\u0080\u0094a perspective championed by the Pakistani government\u00e2\u0080\u0094yet U.S. Presidents ultimately were dissuaded from making this argument an overt aspect of U.S. policy.", "In more recent decades, India generally has demurred from mediation in Kashmir out of (1) a combination of suspicion about the motives of foreign powers and the international organizations they influence; (2) India's self-image as a regional leader in no need of assistance; and (3) an underlying assumption that mediation tends to empower the weaker and revisionist party (in this case, Pakistan). According to New Delhi, prospects for third-party mediation were fully precluded by the 1972 Shimla Agreement, in which India and Pakistan \"resolved to settle their differences by peaceful means through bilateral negotiations or by any other peaceful means mutually agreed upon between them.\" The 1999 Lahore Declaration reaffirmed the bilateral nature of the issue. "], "subsections": []}, {"section_title": "Separatist Conflict and President's Rule From 2018", "paragraphs": [], "subsections": [{"section_title": "Three Decades of Separatist Conflict", "paragraphs": ["A widespread perception that J&K's 1987 state elections were illicitly manipulated to favor the central government led to pervasive disaffection among residents of the Kashmir Valley and the outbreak of an Islamist-based separatist insurgency in 1989. The decades-long conflict has pitted the Indian government against Kashmiri militants who seek independence or Kashmir's merger with neighboring Pakistan, a country widely believed to have provided arms, training, and safe haven to militants over the decades. Violence peaked in the 1990s and early 2000s, mainly affecting the Valley and the LOC (see Figure 2 ). Lethal exchanges of small arms and mortar fire at the LOC remain common, killing soldiers and civilians alike, despite a formal cease-fire agreement in place since 2003. The Indian government says the conflict has killed at least 42,000 civilians, militants, and security personnel since 1989; independent analyses count 70,000 or more related deaths. India maintains a security presence of at least 500,000 army and paramilitary soldiers in the former J&K state.", "A bilateral India-Pakistan peace plan for Kashmir was nearly finalized in 2007, when Indian and Pakistani negotiators had agreed to make the LOC a \"soft border\" with free movement and trade across it; prospects faded due largely to unrelated Pakistani domestic issues. ", "India has blamed conventionally weaker Pakistan for perpetuating the conflict as part of an effort to \"bleed India with a thousand cuts.\" Pakistan denies materially supporting Kashmiri militants and has sought to highlight Indian human rights abuses in the Kashmir Valley. Separatist militants have commonly targeted civilians, leading India and most Indians (as well as independent analysts) to label them as terrorists and thus decry Pakistan as a \"terrorist-supporting state.\" The U.S. government issues ongoing criticisms of Islamabad for taking insufficient action to neutralize anti-India terrorists groups operating on and from Pakistani soil. ", "Still, many analysts argue that blanket characterizations of the Kashmir conflict as an externally-fomented terrorist effort obscure the legitimate grievances of the indigenous Muslim-majority populace, while (often implicitly) endorsing a \"harsh counterinsurgency strategy\" that, they contend, has only further alienated successive generations in the Valley. For these observers, Kashmir's turmoil is, at its roots, a clash between the Indian government and the Kashmiri people, leading some to decry New Delhi's claims that Pakistan perpetuates the conflict. Today, pro-independence political parties on both sides of the LOC are given little room to operate, and many Kashmiris have become deeply alienated. Critics of the Modi government's Hindu nationalist agenda argue that its policies entail bringing the patriotism of Indian Muslims into question and portraying Pakistan as a relentless threat that manipulates willing Kashmiri separatists, and so is responsible for violence in Kashmir.", "Arguments locating the conflict's cause in the interplay between Kashmir and New Delhi are firmly rejected by Indian officials and many Indian analysts who contend that there is no \"freedom struggle\" in Kashmir, rather a war \"foisted\" on India by a neighbor (Pakistan) that will maintain perpetual animosity toward India. In this view, talking to Pakistan cannot resolve the situation, nor can negotiations with Kashmiri separatist groups and parties, which are seen to represent Pakistan's interests rather than those of the Kashmiri people.", "Even before 2019 indications were mounting that Kashmiri militancy was on the rise for the first time in nearly two decades. Figure 3 shows that, in the first five years after Modi took office, the number of \"terrorist incidents\" and conflict-related deaths was on the rise. Mass street protests in the valley were sparked by the 2016 killing of a young militant commander in a shootout with security forces. Existing data on rates of separatist violence indicate that levels in 2019 decreased over the previous year, perhaps in large part due to the post-July security crackdown. "], "subsections": []}, {"section_title": "2018 J&K Assembly Dissolution and President's Rule", "paragraphs": ["J&K's lack of a state assembly in early 2019 appears to have facilitated New Delhi's constitutional changes. In June 2018, the J&K state government formed in 2015\u00e2\u0080\u0094a coalition of the BJP and the Kashmir-based Peoples Democratic Party\u00e2\u0080\u0094collapsed after the BJP withdrew its support, triggering direct federal control through the center-appointed governor. BJP officials called the coalition untenable due to differences over the use of force to address a deteriorating security situation (the BJP sought greater use of force). In December 2018, J&K came under \"President's Rule\" for the first time since 1996, with the state legislature's power under Parliament's authority."], "subsections": []}]}]}, {"section_title": "Developments in 2019", "paragraphs": [], "subsections": [{"section_title": "The February Pulwama Crisis", "paragraphs": ["On February 14, 2019, an explosives-laden SUV rammed into a convoy carrying paramilitary police in the Kashmir Valley city of Pulwama. At least 40 personnel were killed in the explosion. The suicide attacker was said to be a member of Jaish-e-Mohammad (JeM), a Pakistan-based, U.S.-designated terrorist group that claimed responsibility for the bombing. On February 26, Indian jets reportedly bombed a JeM facility in Balakot, Pakistan, the first such Indian attack on Pakistan proper since 1971 (see Figure 4 ). Pakistan launched its own air strike in response, and aerial combat led to the downing of an Indian jet. When Pakistan repatriated the captured Indian pilot on March 1, 2019, the crisis subsided, but tensions have remained high. The episode fueled new fears of war between South Asia's two nuclear-armed powers and put a damper on prospects for renewed dialogue between New Delhi and Islamabad, or between New Delhi and J&K.", "A White House statement on the day of the Pulwama bombing called on Pakistan to \"end immediately the support and safe haven provided to all terrorist groups operating on its soil\" and indicated that the incident \"only strengthens our resolve\" to bolster U.S.-India counterterrorism cooperation. Numerous Members of Congress expressed condemnation and condolences on social media. However, during the crisis, the Trump Administration was seen by some as unhelpfully absent diplomatically, described by one former senior U.S. official as \"mostly a bystander\" to the most serious South Asia crisis in decades, demonstrating \"a lack of focus\" and diminished capacity due to vacancies in key State Department positions."], "subsections": []}, {"section_title": "President Trump's July \"Mediation\" Offer", "paragraphs": ["In July 2019, while taking questions from the press alongside visiting Pakistani Prime Minister Imran Khan, President Trump claimed that Indian Prime Minister Modi had earlier in the month asked the United States to play a mediator role in the Kashmir dispute. As noted above, such a request would represent a dramatic policy reversal for India. The U.S. President's statement provoked an uproar in India's Parliament, with opposition members staging a walkout and demanding explanation. Quickly following Trump's claim, Indian External Affairs Minister Jaishankar assured parliamentarians that no such request had been made, and he reiterated India's position that \"all outstanding issues with Pakistan are discussed only bilaterally\" and that future engagement with Islamabad \"would require an end to cross border terrorism.\"", "In an apparent effort to reduce confusion, a same-day social media post from the State Department clarified the U.S. position that \"Kashmir is a bilateral issue for both parties to discuss\" and the Trump Administration \"stands ready to assist.\" A release from the Chairman of the House Foreign Affairs Committee, Representative Engel, reiterated support for \"the long-standing U.S. position\" on Kashmir, affirmed that the pace and scope of India-Pakistan dialogue is a bilateral determination, and called on Pakistan to facilitate such dialogue by taking \"concrete and irreversible steps to dismantle the terrorist infrastructure on Pakistan's soil.\" An August 2 meeting of Secretary of State Mike Pompeo and Jaishankar in Thailand saw the Indian official directly convey to his American counterpart that any discussion on Kashmir, \"if at all warranted,\" would be strictly between India and Pakistan.", "President Trump's seemingly warm reception of Pakistan's leader, his desire that Pakistan help the United States \"extricate itself\" from Afghanistan, and recent U.S. support for an International Monetary Fund bailout of Pakistan elicited disquiet among many Indian analysts. They said Washington was again conceptually linking India and Pakistan, \"wooing\" the latter in ways that harm the former's interests. Trump's Kashmir mediation claims were especially jarring for many Indian observers, some of whom began questioning the wisdom of Modi's confidence in the United States as a partner. The episode may have contributed to India's August moves."], "subsections": []}, {"section_title": "August Abrogation of Article 370 and J&K Reorganization", "paragraphs": ["In late July and during the first days of August, India moved an additional 45,000 troops into the Kashmir region in apparent preparation for announcing Article 370's repeal. On August 2, the J&K government of New Delhi-appointed governor Satya Pal Malik issued an unprecedented order cancelling a major annual religious pilgrimage in the state and requiring tourists to leave the region, purportedly due to intelligence inputs of terror threats. The developments reportedly elicited panic among those Kashmiris fearful that their state's constitutional protections would be removed. Two days later, the state's senior political leaders\u00e2\u0080\u0094including former chief ministers Omar Abdullah (2009-2015) and Mehbooba Mufti (2016-2018)\u00e2\u0080\u0094were placed under house arrest, schools were closed, and all telecommunications, including internet and landline telephone service, were curtailed. Internet shutdowns are common in Kashmir\u00e2\u0080\u0094one press report said there had been 52 earlier in 2019 alone\u00e2\u0080\u0094but this appears to have been the first-ever shutdown of landline phones there. Pakistan's government denounced these actions as \"destabilizing.\"", "On August 5, with J&K state in \"lockdown,\" Indian Home Minister Amit Shah introduced in Parliament legislation to abrogate Article 370 and reorganize the J&K state by bifurcating it into two Union Territories, Jammu & Kashmir and Ladakh, with only the former having a legislative assembly. In a floor speech, Shah called Article 370 \"discriminatory on the basis of gender, class, caste, and place or origin,\" and contended that its repeal would spark investment and job creation in J&K. On August 6, after the key legislation had passed both of Parliament's chambers by large majorities and with limited debate, Prime Minister Modi lauded the legislation, declaring, \"J&K is now free from their shackles,\" and predicting that the changes \"will ensure integration and empowerment.\" All of his party's National Democratic Alliance coalition partners supported the legislation, as did many opposition parties (the main opposition Congress Party was opposed). The move also appears to have been popular among the Indian public, possibly in part due to a post-Pulwama, post-election wave of nationalism that has been amplified by the country's mainstream media. Proponents view the move as a long-overdue, \"master stroke\" righting of a historic wrong that left J&K underdeveloped and contributed to conflict there.", "Notwithstanding Indian authorities' claims that J&K's special status hobbled its economic and social development, numerous indicators show that the former state was far from the poorest rankings in this regard. For example, in FY2014-FY2015, J&K's per capita income was about Rs63,000 (roughly $882 in current U.S. dollars), higher than seven other states, and more than double that of Bihar and 50% above Uttar Pradesh. While the state's economy typically grew at the slowest annual rates among all Indian states in the current decade, its FY2017-FY2018 expansion of 6.8% was greater than that of eight states and only moderately lagged the national expansion of 7.2% that year. According to 2011 census data, J&K's literacy rate of nearly 69% ranked it higher than five Indian states, including Andhra Pradesh and Rajasthan. At 73.5 years, J&K ranked 3 rd of 22 states in life expectancy, nearly five years longer than the national average of 68.7. The state also ranked 8 th in poverty rate and 10 th in infant mortality.", "The year 2019 saw negative economic news for India and increasing criticism of the government on these grounds, leading some analysts to suspect that Modi and his lieutenants were eager to play to the BJP's Hindu nationalist base and shift the national conversation. In addition, some analysts allege that President Trump's relevant July comments may have convinced Indian officials that a window of opportunity in Kashmir might soon close, and that they could deprive Pakistan of the \"negotiating ploy\" of seeking U.S. pressure on India as a price for Pakistan's cooperation with Afghanistan."], "subsections": []}]}, {"section_title": "Responses and Concerns", "paragraphs": [], "subsections": [{"section_title": "International Reaction", "paragraphs": [], "subsections": [{"section_title": "The Trump Administration", "paragraphs": ["Indian press reports claimed that External Affairs Minister Jaishankar had \"sensitized\" Secretary of State Pompeo to the coming Kashmir moves at an in-person meeting on August 2 so that Washington would not be taken by surprise. However, a social media post from the State Department's relevant bureau asserted that New Delhi \"did not consult or inform the U.S. government\" before moving to revoke J&K's special status.", "On August 5, a State Department spokeswoman said about developments in Kashmir, \"We are concerned about reports of detentions and urge respect for individual rights and discussion with those in affected communities. We call on all parties to maintain peace and stability along the Line of Control.\" Three days later, she addressed the issue more substantively, saying, ", "We want to maintain peace and stability, and we, of course, support direct dialogue between India and Pakistan on Kashmir and other issues of concern.... [W]henever it comes to any region in the world where there are tensions, we ask for people to observe the rule of law, respect for human rights, respect for international norms. We ask people to maintain peace and security and direct dialogue.", "The spokeswoman also flatly denied any change in U.S. policy. The Chairman of the House Foreign Affairs Committee and Ranking Member of the Senate Foreign Relations Committee also responded in a joint August 7 statement expressing hope that New Delhi would abide by democratic and human rights principles and calling on Islamabad to refrain from retaliating while taking action against terrorism.", "The government's heavy-handed security measures in J&K elicited newly intense criticisms of India on human rights grounds. In late September, Ambassador Wells said,", "The United States is concerned by widespread detentions, including those of politicians and business leaders, and the restrictions on the residents of Jammu and Kashmir.\u00c2\u00a0We look forward to the Indian Government's resumption of political engagement with local leaders and the scheduling of the promised elections at the earliest opportunity.", "During an October 22 House Foreign Affairs subcommittee hearing on human rights in South Asia, Ambassador Wells testified that, \"the Department [of State] has closely monitored the situation\" in Kashmir and, \"We deeply appreciate the concerns expressed by many Members about the situation\" there. She reviewed ongoing concerns about a lack of normalcy in the Valley, especially, citing continued detentions and \"security restrictions,\" including those on communication, and calling on Indian authorities to restore everyday services \"as swiftly as possible.\" Wells also welcomed Pakistani Prime Minister Imran Khan's recent statements abjuring external support for Kashmiri militancy: ", "We believe the foundation for any successful dialogue between India and Pakistan is based on Pakistan taking sustained and irreversible steps against militants and terrorists on its territory.\u00e2\u0080\u00a6 We believe that direct dialogue between India and Pakistan, as outlined in the 1972 Shimla Agreement, holds the most potential for reducing tensions.", "Some Indian observers saw the hearing as a public relations loss for India, with one opining that \"India got a drubbing and Pakistan got away scot-free.\" However, for some analysts, the Trump Administration's broad embrace of Modi and its relatively mild criticisms on Kashmir embolden illiberal forces in India."], "subsections": []}, {"section_title": "The U.S. Congress, Hearings, and Relevant Legislation", "paragraphs": ["In August and September, numerous of Members of Congress went on record in support of Kashmiri human rights. During October travel to India, Senator Chris Van Hollen was denied permission to visit J&K. Days later, Senator Mark Warner, a cochair of the Senate India Caucus, tweeted, \"While I understand India has legitimate security concerns, I am disturbed by its restrictions on communications and movement in Jammu and Kashmir.\"", "In October, the House Foreign Affairs Subcommittee on Asia, the Pacific, and Nonproliferation held a hearing on human rights in South Asia, where discussion was dominated by the Kashmir issue. In attendance was full committee Chairman Representative Engel, who opined that, \"The Trump administration is giving a free pass when countries violate human rights or democratic norms. We saw this sentiment reflected in the State Department's public statements in response to India's revocation of Article 370 of its constitution.\" Then-Subcommittee Chairman Representative Brad Sherman said, \"I regard [Kashmir] as the most dangerous geopolitical flash-point in the world. It is, after all, the only geopolitical flash-point that has involved wars between two nuclear powers.\" Also during the hearing, one Administration witness, Assistant Secretary of State for Democracy, Human Rights, and Labor Robert Destro, affirmed that the situation in Kashmir was \"a humanitarian crisis.\"", "Congress's Tom Lantos Human Rights Commission held a mid-November hearing entitled \"Jammu and Kashmir in Context,\" during which numerous House Members reiterated concerns about reports of ongoing human rights violations in the Kashmir Valley. Among the seven witnesses was U.S. Commission on International Religious Freedom (USCIRF) Commissioner Anurima Bhargava, who discussed restrictions of religious freedom in India, and noted that USCIRF researchers have been barred from visiting India since 2004.", "In S.Rept. 116-126 of September 26, 2019, accompanying the then-pending State and Foreign Operations Appropriations bill for FY2020 ( S. 2583 ), the Senate Appropriations Committee noted with concern the current humanitarian crisis in Kashmir and called on the government of India to (1) fully restore telecommunications and Internet services; (2) lift its lockdown and curfew; and (3) release individuals detained pursuant to the Indian government's revocation of Article 370 of the Indian constitution.", "H.Res. 724 , introduced on November 21, 2019, would condemn \"the human rights violations taking place in Jammu and Kashmir\" and support \"Kashmiri self-determination.\"", "H.Res. 745 , introduced on December 6, 2019, and currently with 40 cosponsors, would recognize the security challenges faced by Indian authorities in Jammu and Kashmir, including from cross-border terrorism; reject arbitrary detention, use of excessive force against civilians, and suppression of peaceful expression of dissent as proportional responses to security challenges; urge the Indian government to ensure that any actions taken in pursuit of legitimate security priorities respect the human rights of all people and adhere to international human rights law; and urge that government to lift remaining restrictions on telecommunications and internet, release all persons \"arbitrarily detained,\" and allow international human rights observers and journalists to access Jammu and Kashmir, among other provisions."], "subsections": []}, {"section_title": "Pakistan", "paragraphs": ["Islamabad issued a \"strong demarche\" in response to New Delhi's moves, deeming them \"illegal actions ... in breach of international law and several UN Security Council resolutions.\" Pakistan downgraded diplomatic ties, halted trade with India, and suspended cross-border transport services. Pakistan's prime minister warned that, \"With an approach of this nature, incidents like Pulwama are bound to happen again\" and he later penned an op-ed in which he warned, \"If the world does nothing to stop the Indian assault on Kashmir and its people, there will be consequences for the whole world as two nuclear-armed states get ever closer to a direct military confrontation.\" Pakistan appeared diplomatically isolated in August, with Turkey being the only country to offer solid and explicit support for Islamabad's position. Pakistan called for a UNSC session and, with China's support, the Council met on August 16 to discuss Kashmir for the first time in more than five decades, albeit in a closed-door session that produced no formal statement. Pakistani officials also suggested that Afghanistan's peace process could be negatively affected.", "Many analysts view Islamabad as having little credibility on Kashmir, given its long history of covertly supporting militant groups there. Pakistan's leadership has limited options to respond to India's actions, and renewed Pakistani support for Kashmiri militancy likely would be costly internationally. Pakistan's ability to alter the status quo through military action has been reduced in recent years, meaning that Islamabad likely must rely primarily on diplomacy. Given also that Pakistan and its primary ally, China, enjoy limited international credibility on human rights issues, Islamabad may stand by and hope that self-inflicted damage caused by New Delhi's own policies in Kashmir and, more recently, on citizenship laws, will harm India's reputation and perhaps undercut its recent diplomatic gains with Arab states such as Saudi Arabia and the UAE. In late 2019, Pakistan accused India of taking escalatory steps in the LOC region, including by deploying medium-range Brahmos cruise missiles there."], "subsections": []}, {"section_title": "China", "paragraphs": ["Pakistan and China have enjoyed an \"all-weather\" friendship for decades. On August 6, China's foreign ministry expressed \"serious concern\" about India's actions in Kashmir, focusing especially on the \"unacceptable\" changed status for Ladakh, parts of which Beijing claims as Chinese territory (Aksai Chin). A Foreign Ministry spokesman called on India to \"stop unilaterally changing the status quo\" and urged India and Pakistan to exercise restraint. China's foreign minister reportedly vowed to \"uphold justice for Pakistan on the international arena,\" and Beijing has supported Pakistan's efforts to bring the Kashmir issue before the U.N. Security Council. One editorial published in China's state-run media warned that India \"will incur risks\" for its \"reckless and arrogant\" actions. "], "subsections": []}, {"section_title": "The United Nations", "paragraphs": ["On August 8, the U.N. Secretary-General called for \"maximum restraint\" and expressed concern that restrictions in place on the Indian side of Kashmir \"could exacerbate the human rights situation in the region.\" He reaffirmed that, \"The position of the United Nations on this region is governed by the Charter ... and applicable Security Council resolutions.\" Beijing's support of Pakistan's request for U.N. involvement led to \"informal and closed-door consultations\" among UNSC members on August 16, a session that included the Russian government. No ensuing statement was issued, but Pakistan's U.N. Ambassador declared that the fact of the meeting itself demonstrated Kashmir's disputed status, while India's Ambassador held to New Delhi's view that Article 370's abrogation was a strictly internal matter. No UNSC member other than China spoke publicly about the August meeting, leading some to conclude the issue was not gaining traction. In mid-December, Beijing reportedly echoed Islamabad's request that the U.N. Security Council hold another closed-door meeting on Kashmir, but no such meeting has taken place.", "In a September speech to the U.N. Human Rights Council, High Commissioner for Human Rights Michelle Bachelet expressed being \"deeply concerned\" about the human rights situation in Kashmir. In October, a spokesman for the Council said, \"We are extremely concerned that the population of Indian-administered Kashmir continues to be deprived of a wide range of human rights and we urge the Indian authorities to unlock the situation and fully restore the rights that are currently being denied.\""], "subsections": []}, {"section_title": "Other Responses", "paragraphs": ["Numerous Members of the European Parliament have expressed human rights concerns and called on New Delhi to \"restore the basic freedoms\" of Kashmiris. During her early November visit to New Delhi, German Chancellor Angela Merkel opined, \"The situation for the people there is currently not sustainable and must improve.\" Later that month, Sweden's foreign minister said, \"We emphasize the importance of human rights\" in Kashmir. The Saudi government agreed in late December to host an Organization of Islamic Cooperation \"special foreign ministers meeting\" on Kashmir sometime in early 2020."], "subsections": []}]}, {"section_title": "Human Rights and India's International Reputation", "paragraphs": [], "subsections": [{"section_title": "Democracy and Other Human Rights Concerns100", "paragraphs": ["New Delhi's August 5 actions appear to have been broadly popular with the Indian public and, as noted above, were supported by most major Indian political parties. Yet the government's process came under criticism from many quarters for a lack of prior consultation and/or debate, and many legal scholars opined that the government had overstepped its constitutional authority, predicting that the Indian Supreme Court would become involved. New Delhi's perceived circumvention of the J&K state administration (by taking action with only the assent of the centrally appointed governor) is at the heart of questions about the constitutionality of the government's moves, which, in the words of one former government interlocutor to the state, represent \"the total undermining of our democracy\" that was \"done by stealth.\" The Modi government's argument appears to be that, since the J&K assembly was dissolved and the state had been under central rule since 2018, the national parliament could exercise the prerogative of the assembly, a position rejected as specious by observers who see the government's actions as a \"constitutional coup.\"", "Many Indian (and international) critics of the government's moves see them not only as undemocratic in process, but also as direct attacks on India's secular identity. From this perspective, the BJP's motive is about advancing the party's \"deeply rooted ideals of Hindu majoritarianism\" and Modi's assumed project \"to reinvent India as an India that is Hindu.\" One month before the government's August 5 bill submission, a senior BJP official said his party is committed to bringing back the estimated 200,000-300,000 Hindus who fled the Kashmir Valley after 1989 (known as Pandits ). This reportedly could include reviving a plan for construction of \"segregated enclaves\" with their own schools, shopping malls, and hospitals, an approach with little or no support from local figures or groups representing the Pandits. Beyond the Pandit-return issue, New Delhi's revocation of the state's restrictions on residency and rhetorical emphasis on bringing investment and economic development to the Kashmir Valley lead some analysts to see \"colonialist\" parallels with Israel's activities in the West Bank.", "Perceived human rights abuses on both sides of the Kashmir LOC, some of them serious, have long been of concern to international governments and organizations. A major and unprecedented 2018 R eport on the Situation on Human Rights in Kashmir from the U.N. Human Rights Commission harshly criticized the New Delhi government for alleged excessive use of force and other human rights abuses in the J&K state. With New Delhi's sweeping security crackdown in Kashmir continuing to date, the Modi government faces renewed criticisms for widely alleged abuses. Indian officials have also come under fire for the use of torture in Kashmir and for acting under broad and vaguely worded laws that facilitate abuses. The Indian government reportedly is in contravention of several of its U.N. commitments, including a 2011 agreement to allow all special rapporteurs to visit India. In spring 2019, after a U.N. Human Right Council's letter to New Delhi asking about steps taken to address abuses alleged in the 2018 report, Indian officials announced they would no longer engage U.N. \"mandate holders.\"", "India appears to be the world leader in internet shutdowns by far, having blocked the network 134 times in 2018, compared to 12 shutdowns by Pakistan, the number two country in this category. Internet blockages are common in Kashmir, but rarely last more than a few days; at more than five months to date, the outage in the Valley is the longest ever. A group of U.N. Special Rapporteurs called the blackout \"a form of collective punishment\" that is \"inconsistent with the fundamental norms of necessity and proportionality.\" Human Rights Watch and Amnesty International both contend that the communications blackout violates international law. As noted above, in early January 2020, India's Supreme Court seemed to agree, ruling that an indefinite suspension is \"impermissible.\" Kashmiris have begun automatically losing their accounts on the popular WhatsApp platform due to 120 days of inactivity and, by mid-December, the internet shutdown had become the longest ever imposed in a democracy, according to Access Now, an advocacy group. Businesses have been especially hard hit: the Kashmir Chamber of Commerce estimated more than Rs178 billion (about $2.5 billion) in losses over four months. "], "subsections": []}, {"section_title": "Potential Damage to India's International Image", "paragraphs": ["Late 2019 saw a spate of commentary in both the Indian and American press about the likelihood that New Delhi's moves on Kashmir, when combined with the national government's broader pursuit of sometimes controversial Hindu nationalist policies, would contribute to a tarnishing of India's reputation as a secular, pluralist democratic society. In December, Parliament passed a Citizenship Amendment Act (CAA) that adds a religious criterion to the country's naturalization process and triggered widespread and sometimes violent public protests. The Modi/BJP expenditure of political capital on social issues is seen by many analysts as likely to both intensify domestic instability and decrease the space in which to reform the economy, a combination that could be harmful to India's international reputation.", "Former Indian National Security Adviser and Foreign Secretary Shivshankar Menon told a public forum in New Delhi that the BJP's 2019 actions in Kashmir and changes to citizenship laws have caused self-inflicted damage to the country's international image. In the words of one scholar who agrees, \"India's moral standing has taken a hit,\" and, \"Even India's partners are questioning its credentials as a multicultural, pluralist society.\" One op-ed published in a major Indian daily warned that \"the sense of creeping Hindu majoritarianism has begun to generate concern among a range of groups from the liberal international media, the U.S. Congress, to the Islamic world.\" The article contended that \"India will need some course-correction in the new year to prevent the crystallization of serious external challenges.\" Another long-time observer argued that New Delhi's claims that \"domestic\" issues should be of no concern to an external audience are not credible: \"It's hard to deny that 2019 was the year when Modi's domestic adventures robbed the bank of goodwill accumulated over time.\u00e2\u0080\u00a6 India's image took a beating this year.\"", "Support for India's rise as a major regional player and U.S. partner has been among the few subjects of bipartisan consensus in Washington, DC, in the 21 st century, and some analysts contend that the New Delhi government may be putting that consensus to the test by \"sliding into majoritarianism and repression.\" These analysts express concern that an existing consensus in favor of robust and largely uncritical support for India may be eroding, with signs that some Democratic lawmakers, in particular, have been angered by India's domestic policies. According to one Indian pundit, \"[E]ven the mere introduction by House Democrats of two House resolutions on Kashmir bears the ominous signs of India increasingly becoming a partisan issue in the American foreign policy consensus.\""], "subsections": []}]}]}, {"section_title": "U.S. Policy and Issues for Congress", "paragraphs": ["A key goal of U.S. policy in South Asia has been to prevent India-Pakistan conflict from escalating to interstate war. This means the United States has sought to avoid actions that overtly favored either party. Over the past decade, however, Washington appears to have grown closer to India while relations with Pakistan appear to continue to be viewed as clouded by mistrust. The Trump Administration \"suspended\" security assistance to Pakistan in 2018 and has significantly reduced nonmilitary aid while simultaneously deepening ties with New Delhi. The Administration views India as a key \"anchor\" of its \"free and open Indo-Pacific\" strategy, which some argue is aimed at China. Yet any U.S. impulse to \"tilt\" toward India is to some extent offset by Islamabad's current, and by most accounts vital, role in facilitating Afghan reconciliation negotiations. President Trump's apparent bonhomie with Pakistan's prime minister and offer to mediate on Kashmir in July was taken by some as a new and potentially unwise strategic shift.", "The U.S. government has maintained a focus on the potential for conflict over Kashmir to destabilize South Asia. At present, the United States has no congressionally-confirmed Assistant Secretary of State leading the Bureau of South and Central Asia and no Ambassador in Pakistan, leading some experts to worry that the Trump Administration's preparedness for India-Pakistan crises remains thin. Developments in August 2019 and after also renewed concerns among some analysts that the Trump Administration's \"hands-off\" posture toward this and other international crises erodes American power and increases the risk of regional turbulence. Some commentary, however, was more approving of U.S. posturing.", "Developments in Kashmir in 2019 raise possible questions for Congress:", "Have India's actions changing the status of its J&K state negatively affect regional stability? If so, what leverage does the United States have and what U.S. policies might best address potential instability? Is there any diplomatic or other role for the U.S. government to play in managing India-Pakistan conflict or facilitating a renewal of their bilateral dialogue? To what extent does increased instability in Kashmir influence dynamics in Afghanistan? Will Islamabad's cooperation with Washington on Afghan reconciliation be reduced? To what extent, if any, are India's democratic/constitutional norms and pluralist traditions at risk in the country's current political climate? Are human rights abuses and threats to religious freedom increasing there? If so, should the U.S. government take any further actions to address such concerns?"], "subsections": []}]}}
{"id": "R44413", "title": "Energy and Water Development Appropriations for Defense Nuclear Nonproliferation: In Brief", "released_date": "2020-03-11T00:00:00", "summary": ["The Department of Energy's (DOE's) nonproliferation and national security programs provide technical capabilities to support U.S. efforts to \"prevent, counter, respond\" to the proliferation of nuclear weapons worldwide, including by both states and non-state actors. These programs are administered by the National Nuclear Security Administration (NNSA), a semi-autonomous agency established within DOE in 2000. NNSA is responsible for maintaining the U.S. nuclear weapons stockpile, providing nuclear fuel to the Navy, nuclear and radiological emergency response, and nonproliferation. NNSA recently reorganized the Office of Defense Nuclear Nonproliferation, which is funded under the Defense Nuclear Nonproliferation (DNN) account.", "This report addresses the programs in the NNSA's DNN account, appropriated by the Energy and Water appropriations bill. The FY2020 Consolidated Appropriations bill ( P.L. 116-94) funded the NNSA DNN accounts at $2.164 billion.", "The FY2021 request for DNN appropriations was $2.031 billion. The proposal would include unobligated prior year balances. The reduction continues an earlier trend to reduce prior-year carryover balances. According to the budget justi fication, the decrease of 6.2% from the FY2020-enacted level is due to \"completion of funding for contractual termination\" of the mixed-oxide fuel (MOX) project at the Savannah River Site."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Budget Structure", "paragraphs": ["The Defense Nuclear Nonproliferation (DNN) programs were reorganized starting with the FY2016 request. There are two main mission areas under the DNN appropriation: the Defense Nuclear Nonproliferation Program and the Nuclear Counterterrorism and Incident Response Program (NCTIR). NCTIR was previously funded under Weapons Activities. According to the FY2016 budget justification, \"These transfers align all NNSA funding to prevent, counter, and respond to nuclear proliferation and terrorism in one appropriation.\" ", "The DNN Program is now divided into six functional areas:", "Materials Management and Minimization (M3) conducts activities to reduce and, where possible, eliminate stockpiles of weapons-useable material around the world. Major activities include conversion of reactors that use highly enriched uranium (useable for weapons) to low enriched uranium, removal and consolidation of nuclear material stockpiles, and disposition of excess nuclear materials. Global Material Security has three major program elements: international nuclear security, radiological security, and nuclear smuggling detection and deterrence. Activities toward achieving those goals include the provision of equipment and training, workshops and exercises, and collaboration with international organizations. Nonproliferation and Arms Control implements programs that aim to strengthen international nuclear safeguards, control the spread of dual-use technologies and expertise, and verify nuclear reductions and compliance with treaties and agreements. This program conducts reviews of nuclear export applications and technology transfer authorizations. National Technical Nuclear Forensics Research and Development (NTNF R&D ) examines and evaluates nuclear materials and devices, nuclear test explosions or radiological dispersals, and post-detonation debris through nuclear forensics development at the national laboratories. The program includes a field response capability to assist the interagency in the event of a nuclear or radiological incident. Defense Nuclear Nonproliferation Research and Development ( DNN R&D ) advances U.S. capabilities to detect and characterize global nuclear security threats such as foreign nuclear material and weapons production, diversion of special nuclear material, and nuclear detonations. The Nonproliferation Construction program consists of the Surplus Plutonium Disposition Project (SPD) and the Mixed-Oxide (MOX) Fuel Fabrication Facility (MFFF), which was to be built in South Carolina to convert surplus weapons plutonium into nuclear reactor fuel. This project was terminated and replaced with a different disposal method (see below). ", "The Nuclear Counterterrorism and Incident Response Program (NCTIR) evaluates nuclear and radiological threats and develops emergency preparedness plans, including organizing scientific teams to provide rapid response to nuclear or radiological incidents or accidents worldwide."], "subsections": []}, {"section_title": "FY2021 Request", "paragraphs": ["The FY2021 request for DNN appropriations totaled $2.031 billion, reflecting a 6.2% decrease from FY2020-enacted levels. The budget justification says that this decrease is mainly due to the \"completion of funding for contractual termination\" of the Mixed Oxide Fuel Fabrication Facility (MOX) project at the Savannah River Site. Funding for that program was decreased by 50% (-$150 million).", "A $42 million, or 9.65%, decrease to the Global Material Security program was due to an increase in FY2020 funds for the Cesium Irradiator Replace Program. ", "The budget proposal requests a $37.2 million, or 10%, increase in funding for the Material Management Minimization program. The increase is mainly in the conversion subprogram, which is working to establish non-HEU based molybdenum-99 production technologies in the United States. ", "The National Technical Nuclear Forensics Research and Development (NTNF R&D) is a new program in FY2021. The budget request says that the program will allow NNSA to \"take on a more active leadership role\" in nuclear forensics. The $40 million in funding for NTNF was moved from the DNN R&D Nuclear Detonation Detection subprogram.", "As in past years, the FY2020 appropriations included a provision prohibiting funds in the Defense Nuclear Nonproliferation account for certain activities and assistance in the Russian Federation. Appropriations bills have prohibited this since FY2015. "], "subsections": [{"section_title": "U.S. Plutonium Disposition", "paragraphs": ["The FY2021 budget justification requests funds related to the U.S. plutonium disposition program in the M3 Material Disposition subprogram and Nonproliferation Construction Surplus Plutonium Disposition subprogram. The United States pledged to dispose of 34 metric tons of U.S. surplus weapons plutonium, which was originally to be converted into fuel for commercial power reactors. The U.S. facility for this purpose was to be the Mixed Oxide Fuel Fabrication Facility (MFFF), which had been under construction at the DOE Savannah River site in South Carolina. The MFFF faced sharply escalating construction and operation cost estimates, and the Obama Administration proposed to terminate it in FY2017. After congressional approval, in 2018 DOE ended MFFF construction and began pursuing a replacement disposal method, Dilute and Dispose (D&D), for this material .", "The D&D method consists of \"blending plutonium with an inert mixture, packaging it for safe storage and transport, and disposing of it in a geologic repository,\" according to the FY2021 request. The Nonproliferation Construction account's proposed decrease of $150 million in FY2021 is due to the final steps in ending construction of the MFFF. In her testimony before the House Appropriations Committee, NNSA Administrator Lisa Gordon-Hagerty said that decrease reflects the completion of the MOX contractual termination settlement. She said that the requested $148.6 million would be used for the Surplus Plutonium Disposition (SPD) project, in support of the D&D method. FY2021 activities would include \"execution of early site preparation and long lead procurements activities, as well as continuing the maturation of the design for all major systems supporting the plutonium processing gloveboxes.\""], "subsections": []}, {"section_title": "", "paragraphs": [], "subsections": []}]}]}}
{"id": "R46271", "title": "Business Tax Provisions Expiring in 2020, 2021, and 2022 (\u201cTax Extenders\u201d)", "released_date": "2020-03-13T00:00:00", "summary": ["Thirteen temporary business tax provisions are scheduled to expire at the end of 2020. Four other temporary business tax provisions are scheduled to expire in 2021 or 2022. In the past, Congress has regularly acted to extend expired or expiring temporary tax provisions. Collectively, these temporary tax provisions are often referred to as \"tax extenders.\"", "This report briefly summarizes and discusses the economic impact of the 17 business-related tax provisions that are scheduled to expire in 2020, 2021, or 2022. The provisions discussed in this report are listed below, grouped by type and scheduled year of expiration.", "The following special business investment (cost recovery) provisions are scheduled to expire in 2020:", "special expensing rules for certain film, television, and live theatrical productions; seven-year recovery period for motorsports entertainment complexes; three-year depreciation for race horses two years or younger; and accelerated depreciation for business property on an Indian reservation.", "The following economic development provisions are scheduled to expire in 2020:", "e mpowerment zone tax incentives; American Samoa economic development credit; and new markets tax credit.", "The following other business-related provisions are scheduled to expire in 2020:", "Indian employment tax credit; mine rescue team training credit; employer tax credit for paid family and medical leave; work opportunity tax credit; look-through treatment of payments between related controlled foreign corporations; and p rovisions modifying excise taxes on wine, beer, and distilled spirits.", "The following provisions are scheduled to expire in 2021 or 2022:", "12.5% increase in low-income housing tax credit (LIHTC) authority; computation of adjusted taxable income without regard to any deduction allowable for depreciation, amortization, or depletion; the rum cover over; and c redit for certain expenditures for maintaining railroad tracks.", "The 13 temporary business-related tax provisions scheduled to expire at the end of 2020 were most recently extended by the Further Consolidated Appropriations Act of 2020 ( P.L. 116-94 ). Of these 13 provisions, 8 had expired in 2017 and were extended retroactively and 5 were scheduled to expire in 2019. Past tax extenders legislation had extended 11 of these 13 provisions. The other two provisions, both of which were scheduled to expire in 2019, were added to the tax code as part of the 2017 tax revision ( P.L. 115-97 ). Four other business-related provisions will expire in 2021 or 2022.", "This report does not include provisions that in the past have been classified as individual or energy-related. See CRS Report R46243, Individual Tax Provisions (\"Tax Extenders\") Expiring in 2020: In Brief , coordinated by Molly F. Sherlock; and CRS Report R44990, Energy Tax Provisions That Expired in 2017 (\"Tax Extenders\") , by Molly F. Sherlock, Donald J. Marples, and Margot L. Crandall-Hollick. For a general overview of tax extenders, see CRS Report R45347, Tax Provisions That Expired in 2017 (\"Tax Extenders\") , by Molly F. Sherlock."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["In the past, Congress has regularly acted to extend expired or expiring temporary tax provisions. Collectively, these temporary tax provisions are often referred to as \"tax extenders.\" This report briefly summarizes and discusses the economic impact of the 17 business-related tax provisions that are scheduled to expire before 2025. ", "There are 13 business-related temporary tax provisions scheduled to expire at the end of 2020. Most of these business-related provisions were included in past extenders legislation. The business tax extenders are diverse in purpose, providing various types of tax relief to businesses in different industries. Most recently, Congress extended expiring provisions in the Taxpayer Certainty and Disaster Tax Relief Act of 2019, enacted as Division Q of the Further Consolidated Appropriations Act, 2020 ( P.L. 116-94 ). This law retroactively extended, through 2020, eight temporary tax provisions that had expired at the end of 2017; it also extended five provisions scheduled to expire in 2019.", "The estimated cost of the 13 temporary business tax provision extensions enacted in the Further Consolidated Appropriations Act, 2020 ( P.L. 116-94 ) is provided in Table 1 . The most costly of these provisions are the employer credit for paid family and medical leave ($2.2 billion), the work opportunity tax credit ($2.0 billion), and the New Markets Tax Credit ($1.5 billion). Note that all three of these provisions were scheduled to expire at the end of 2019, and thus were extended for one year. In contrast, the eight other provisions that had expired at the end of 2017 and were extended through 2020 were effectively extended for three years.", "Four other business-related provisions are scheduled to expire in 2021 or 2022: (1) the 12.5% increase in the annual low-income housing tax credit (LIHTC) authority for four years (2018-2021), enacted as part of the 2018 Consolidated Appropriations Act, with a cost of $2.7 billion; (2) the computation of adjusted taxable income without regard to any deduction allowable for depreciation, amortization, or depletion for purposes of the interest deduction limit, set to expire by the 2017 tax revision (the Tax Cuts and Jobs Act, P.L. 115-97 ), with no separate cost estimate for this feature; (3) the five-year extension of the rum cover over, last extended retroactively for 2017 and forward through 2021 as part of the Bipartisan Budget Act of 2018 ( P.L. 115-123 ), with a cost of $0.6 billion; and (4) the credit for certain expenditures for maintaining railroad tracks, extended through 2022 in the Taxpayer Certainty and Disaster Tax Relief Act of 2019, with a cost of $1.1 billion.", "There are several options for Congress to consider regarding temporary provisions. Provisions that are scheduled to expire or have expired could be extended, and the extension could be short term, long term, or permanent. Alternatively, Congress could allow the provisions to expire and remain expired."], "subsections": []}, {"section_title": "Provisions Expiring in 2020", "paragraphs": ["There are 13 business-related provisions scheduled to expire in 2020. All 13 of these provisions were extended in the Taxpayer Certainty and Disaster Tax Relief Act of 2019, enacted as Division Q of the Further Consolidated Appropriations Act, 2020 ( P.L. 116-94 )."], "subsections": [{"section_title": "Special Business Investment (Cost Recovery) Provisions", "paragraphs": ["The cost of assets that provide services over a period of time, such as machines or buildings, is deducted over a period of years as depreciation. The schedule of depreciation deductions depends on the asset's life and the distribution of deductions over that life. Straight-line depreciation is used for structures, where equal amounts are deducted in each year. For equipment, deductions are accelerated, with larger amounts deducted in earlier years. Equipment is most commonly depreciated over 5 years or 7 years, but some short-lived assets are depreciated over 3 years and some longer-lived assets are depreciated over 10, 15, or 20 years. Nonresidential structures are depreciated over 39 years. Aside from the desire for economic stimulus, traditional economic theories suggest that tax depreciation should match economic (physical) depreciation of assets as closely as possible. ", "The depreciation provisions discussed below all allow earlier deductions for depreciation, which are valuable because of the time value of money. A fixed reduction in tax liability today is worth more than that same fixed reduction in tax liability in the future. Expensing provisions allow a firm to deduct the cost of an asset the year it is placed in service.", "Through 2022, bonus depreciation of 100% allows for full expensing of investments in qualifying equipment and property. It is scheduled to decrease to 80% in 2023, 60% in 2024, 40% in 2025, 20% in 2026, and 0% for property acquired and placed in service in 2027 and thereafter. The presence of bonus depreciation or expensing would make some temporary provisions more important (such as the benefits for motorsports complexes, which would otherwise become ineligible) and some less important (such as shortening lives for racehorses or Indian reservation property, or expensing for films and television, which would have received the benefit regardless). "], "subsections": [{"section_title": "Special Expensing Rules for Certain Film, Television, and Live Theatrical Productions7", "paragraphs": ["Investments in film and television productions are generally recovered using the income forecast method. Under this method, depreciation deductions are based on the pattern of expected earnings. ", "The American Jobs Creation Act of 2004 ( P.L. 108-357 ) included special rules to allow expensing for certain film and television production costs. The provision's main purpose was to discourage \"runaway\" productions, or the production of films and television shows in other countries, where tax and other incentives are often offered. Initially, the provision was set to expire at the end of 2008. However, since 2008, the provision has regularly been extended as part of tax extender legislation\u00e2\u0080\u0094most recently in the Further Consolidated Appropriations Act of 2020 ( P.L. 116-94 ).", "Under the special expensing rules for film, television, and live theatrical productions, taxpayers may elect to deduct immediately up to $15 million of production costs ($20 million for productions produced in certain low-income and distressed communities) in the tax year incurred. Eligible productions are limited to those in which at least 75% of the compensation paid is for services performed in the United States. For productions that started before 2008, the expensing deduction is not allowed if the aggregate production cost exceeds $15 million ($20 million for productions in designated low-income and distressed communities). Qualifying live theatrical productions are those generally performed in venues with an audience capacity of not more than 3,000 (or 6,500 for seasonal productions performed no more than 10 weeks annually). The provisions would cover most theatrical productions (the largest of the Broadway theatres, for example, has a seating capacity of less than 2,000). ", "The ability to expense (deduct immediately) certain film, television, and live theatrical production costs provides a benefit by allowing deductions to be taken earlier, thus deferring tax liability. The magnitude of the benefit depends on the average lag time from production to earning income. For many films, production costs would be deductible in the year the film is released. If the film is released one year after the production costs are incurred, which may be the case for independent and smaller productions, the provision accelerates cost recovery by one year. The benefit conferred by accelerating cost recovery deductions by one year is limited. Taxpayers with limited or no tax liability may derive little or no benefit from the expensing allowance.", "The primary policy objective of providing special tax incentives for film and television producers is to deter productions from moving overseas, lured by lower production costs as well as tax and other subsidies offered by foreign governments. Because live theatre is tied to audience location, runaway productions are not a concern. However, providing expensing for live theatrical production costs could encourage investment in such productions and provide parity with film and television. In evaluating this incentive, one consideration is the economic value of domestic film, television, and theatre production relative to the cost of the targeted tax benefits."], "subsections": []}, {"section_title": "Seven-Year Recovery Period for Motorsports Entertainment Complexes10", "paragraphs": ["An exception from the 39-year depreciation life for nonresidential structures exists for the theme and amusement park industry. Assets in this industry are assigned a recovery period of seven years. Historically, motorsports racing facilities have been included in this industry and also allowed a seven-year recovery period. However, ambiguities in the law led to questions about whether motorsports racing facilities were correctly categorized. When the Treasury reconsidered the appropriateness of this classification in 2004, Congress made the seven-year treatment mandatory through 2007 with the American Jobs Creation Act ( P.L. 108-357 ). Since 2004, the provision has been extended as part of tax extenders legislation\u00e2\u0080\u0094most recently in the Further Consolidated Appropriations Act of 2020 ( P.L. 116-94 ), which extended the provision through December 31, 2020. Without this provision, motorsports racing facilities would be depreciated over the standard 39-year life.", "The tax authorities presumably estimated motorsports racing facilities to have slower depreciation rates than the seven-year life that applies to amusement park facilities. If so, the seven-year-life provision for motorsports racing facilities constitutes a subsidy to the auto racing industry that does not appear to have an obvious justification. Supporters argued that the provision preserves historical treatment and provides a stimulus to business. They also argued that the benefit helps make motorsports facilities more competitive with sports facilities that are often subsidized by state and local governments."], "subsections": []}, {"section_title": "Three-Year Depreciation for Racehorses Two Years or Younger11", "paragraphs": ["Racehorses are tangible property, and taxpayers using racehorses in a trade or business must capitalize the cost of purchasing racehorses. The cost can then be recovered through annual depreciation deductions over time. The cost recovery period for racehorses is seven years, although racehorses that begin training after age two have a three-year recovery period. Under the temporary provision, this three-year recovery period is extended to all racehorses. In particular, all racehorses placed in service after December 31, 2008, have a three-year recovery period as a result of the Food, Conservation, and Energy Act of 2008 ( P.L. 110-246 ), with provisions subsequently extended. This provision was extended through December 31, 2020, by the Further Consolidated Appropriations Act of 2020 ( P.L. 116-94 ). The industry claims that reducing the recovery period to three years more closely aligns the recovery period with the racing life of a horse. The IRS cost recovery period suggests a longer view. Some racehorses continue in productive activity after their racing career through breeding, as well as having a residual value for resale. Taking those uses into account, a Treasury study estimated an overall economic life of nine years.", "This provision does not affect breeders who race their own horses, because they deduct the cost of breeding and thus have no basis (capital investment) in the horses. The provision generally benefits investors who purchase horses."], "subsections": []}, {"section_title": "Accelerated Depreciation for Business Property on an Indian Reservation13", "paragraphs": ["The Omnibus Budget Reconciliation Act of 1993 ( P.L. 103-66 ) contained a provision allowing businesses on Indian reservations to be eligible for accelerated depreciation (through a reduction in the applicable recovery periods) as part of an effort to increase investment in Indian reservations. Since its initial temporary enactment, this provision has regularly been extended as part of tax extenders legislation\u00e2\u0080\u0094most recently in the Further Consolidated Appropriations Act of 2020 ( P.L. 116-94 ), which extended the provision through December 31, 2020. ", "Extending the provision might encourage additional investment on Indian reservations. However, if these provisions' main objective is to improve the economic status of individuals currently living on Indian reservations, it is not clear to what extent this tax subsidy will succeed, because it is not given directly to workers but instead is received by businesses. Capital subsidies may not ultimately benefit workers. It is possible that capital equipment subsidies may encourage more capital-intensive businesses and make workers relatively worse off. In addition, workers would not benefit from higher wages resulting from an employer subsidy if the wage is determined by regulation (the minimum wage) that is set higher than the prevailing market wage. "], "subsections": []}]}, {"section_title": "Economic Development Provisions", "paragraphs": [], "subsections": [{"section_title": "Empowerment Zone Tax Incentives14", "paragraphs": ["Empowerment Zones (EZs) are federally designated geographic areas characterized by high levels of poverty and economic distress, where businesses and local governments may be eligible to receive federal grants and tax incentives. Since 1993, Congress has authorized three rounds of EZs (1993, 1997, and 1999) with the objective of revitalizing selected economically distressed communities. EZs are similar to Enterprise Communities (ECs) and Renewal Communities (RCs), which are also federally designated areas for the purposes of tax benefits and grants.", "A number of studies have evaluated the effectiveness of the EZ, EC, and RC programs. Government Accountability Office and Department of Housing and Urban Development studies have not found links between EZ and EC designation and improvement in community outcomes. Other research has found modest, if any, effects and called into question these programs' cost-effectiveness. This inability to link these programs to improvements in community-level outcomes should not be interpreted as meaning that the EZ, EC, and RC programs did not aid economic development. The main conclusion from these studies is that the EZ, EC, and RC programs have not been shown to have caused a general improvement in the examined localities' economic conditions. One possible cause for this inability to empirically show the program effects on a large geographic area is that the EZ tax incentives are relatively small. Another possibility is that the EZ tax incentives are targeted at business owners and do not provide direct benefits to workers in EZs.", "Six tax incentives are typically related to EZs: (1) local designation of an EZ; (2)\u00c2\u00a0increased exclusion of gain; (3) issuance of qualified, tax-exempt zone academy bonds (QZABs) in EZs; (4) EZ employment credits under the Work Opportunity Tax Credit (WOTC); (5) increased expensing under Internal Revenue Code (IRC) Section 179 for businesses located in EZs; and (6) nonrecognition of gain on rollover of EZ investments. ", "EZs were created by legislation enacted in 1993, and most zones expired at the end of 2009. The provisions were extended in the Protecting Americans from Tax Hikes (PATH) Act of 2015 ( P.L. 114-113 ), which also amended the requirements for tax-exempt enterprise zone facility bonds to treat an employee as a resident of a particular EZ if the employee is a resident of a different EZ, EC, or qualified low-income community. Provisions were extended after 2015, and were last extended through 2020 by the Further Consolidated Appropriations Act of 2020 ( P.L. 116-94 ).", "For more analysis of EZs, see CRS Report R41639, Empowerment Zones, Enterprise Communities, and Renewal Communities: Comparative Overview and Analysis , by Donald J. Marples."], "subsections": []}, {"section_title": "American Samoa Economic Development Credit24", "paragraphs": ["The American Samoa economy is largely dependent on three sectors: public works and government, tuna canning, and the residual private sector (e.g., tourism and other services). ", "The American Samoa economic development credit (EDC) is a credit against U.S. corporate income tax in an amount equal to the sum of certain percentages of a domestic corporation's employee wages, employee fringe benefit expenses, and tangible property depreciation allowances for the taxable year with respect to the active conduct of a trade or business within American Samoa. The credit is available to U.S. corporations that, among other requirements, (1) claimed the now-expired possession tax credit (predecessor to the EDC) with respect to American Samoa for their last taxable year beginning before January 1, 2006; or (2) have qualified production activities income after December 31, 2011, in American Samoa (akin to production activities income eligible for Section 199 tax treatment in the United States). ", "The credit's proponents claim it encourages eligible companies to locate, retain, or expand manufacturing operations in the territory. Media reports suggest the EDC's main beneficiary, thus far, has been StarKist, which has retained its cannery operations in American Samoa. ", "The EDC was first enacted in the Tax Relief and Health Care Act of 2006 ( P.L. 109-432 ). This version of the EDC was only available to corporations that had previously claimed the possession tax credit, and it originally expired at the end of 2007. It has been extended numerous times. The American Tax Relief Act of 2012 ( P.L. 112-240 ) also expanded the EDC's criteria to include corporations that had not previously claimed the possession tax credit. The provision was most recently extended through 2020 by the Further Consolidated Appropriations Act of 2020 ( P.L. 116-94 )."], "subsections": []}, {"section_title": "New Markets Tax Credit27", "paragraphs": ["The New Markets Tax Credit (NMTC) was enacted by the Community Renewal Tax Relief Act of 2000 ( P.L. 106-554 ) to encourage investors to invest in low-income communities (LICs) that traditionally lack access to capital. The NMTC is a competitively awarded tax credit overseen by the Community Development Financial Institutions (CDFI) Fund, organized within the Department of the Treasury. For each NMTC round authorized by Congress, the CDFI Fund ranks all requests for NMTC allocation authority and grants awards to those CDEs that score highest. A CDE is a domestic corporation or partnership that is an intermediary vehicle for the provision of loans, investments, or financial counseling in LICs. All taxable investors, such as banks, venture capital firms, and other private investors, are eligible to receive the NMTC. ", "The NMTC's structure creates incentives for CDEs and private investors to participate in the program. CDEs benefit from the NMTC because they charge fees to their investors for organizing the NMTC application and for structuring the financing for a portfolio of community development projects. The private investors benefit because they receive, each year over seven years, an annual tax credit equal to 5% to 6% of the total amount paid for the stock or capital interest in the CDE that they purchase. Overall, the tax credit amounts to 39% of the cost of the qualified equity investment (less the CDE's fees) as long as the interest in the investment is retained for the entire seven-year period. Thus, even if the community development project funded by the CDE incurs some losses, the value of the tax credit could generate a positive return for the private financers. ", "Opposition to the NMTC is partly based on the belief that corporations and higher-income investors primarily benefit from the provision or that the NMTC leads to an economically inefficient allocation of resources. For instance, while banks and other investors might benefit directly from the credit, a 2009 study found that the NMTC's benefits to selected low-income communities were modest. The study concluded that poverty and unemployment rates fall by statistically significant amounts in tracts that receive NMTC-subsidized investment relative to similar tracts that do not. From a national economic perspective, the NMTC's impact would be greatest in the case where the investment represents net investment in the U.S. economy rather than a shift in investment from one location to another. Another 2009 study found that corporate NMTC investment represented a shift in investment location, but a portion of individual NMTC investment (roughly $641 million in the first four years of the program from 2001 to 2004) represented new investment. ", "The NMTC has been extended as a temporary tax provision since 2008, after its initial authorization expired at the end of 2007. In more recent years, the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 ( P.L. 111-312 ) extended NMTC authorization through 2011 and permitted a maximum annual amount of qualified equity investments of $3.5 billion. Following several other extensions, the Further Consolidated Appropriations Act of 2020 ( P.L. 116-94 ) extended the provision through 2020 with a maximum allocation authority of $5 billion.", "For more information on the NMTC, see CRS Report RL34402, New Markets Tax Credit: An Introduction , by Donald J. Marples and Sean Lowry; and CRS Report R42770, Community Development Financial Institutions (CDFI) Fund: Programs and Policy Issues , by Sean Lowry. "], "subsections": []}]}, {"section_title": "Other Business Provisions", "paragraphs": [], "subsections": [{"section_title": "Indian Employment Tax Credit33", "paragraphs": ["The Indian employment tax credit is an incremental credit claimed by employers for qualified wages and health insurance costs. The credit is designed to encourage hiring of certain individuals\u00e2\u0080\u0094enrolled members of an Indian tribe and their spouses. There are restrictions limiting the benefit to services performed within an Indian reservation for individuals living on or near the reservation. ", "The Indian employment credit is 20% of the excess of qualified wages and health insurance costs paid by an employer over base-year expenses. The credit is allowed for the first $20,000 in qualified wages and health insurance costs. The base year is 1993, such that the incentive is incremental to 1993 wages and health insurance costs (the base year has not been changed since the credit was enacted). The credit is not available for wages paid to an employee whose total wages exceed $30,000, as adjusted for inflation ($50,000 in 2019). The employer must reduce the deduction for wages by the amount of the credit. ", "The Indian employment credit was first enacted in 1993, as part of the Omnibus Reconciliation Act of 1993 ( P.L. 103-66 ). It was initially scheduled to expire at the end of 2003, but has been regularly extended, often retroactively. Past extensions of the Indian employment credit have extended the termination date without updating the base year. Some have proposed updating the base year, in an effort to (1) eliminate the need for taxpayers to maintain tax records dating back to 1993 and (2) restore the credit's incremental design. The most recent extension was through 2020 in the Further Consolidated Appropriations Act of 2020 ( P.L. 116-94 ).", "Extending the Indian employment credit might encourage additional hiring of Indian tribe members and their spouses. Although the Indian employment credit may not increase overall employment on or near Indian reservations, it might increase employment among tribe members."], "subsections": []}, {"section_title": "Mine Rescue Team Training Credit35", "paragraphs": ["Taxpayers that employ miners in underground mines located in the United States may be able to claim a tax credit for mine rescue team training expenses. The credit amount is limited to the lesser of (1) 20% of training program costs per employee (including wages paid to the employee while in training) or (2) $10,000. For a taxpayer to claim the credit for training provided to an employee, the employee must be a full-time miner who is eligible to serve as a mine rescue team member. ", "The mine rescue team training credit was enacted in the Tax Relief and Health Care Act of 2006 ( P.L. 109-432 ). It was initially scheduled to be effective for 2006, 2007, and 2008. It has subsequently been extended as part of tax extenders legislation, most recently through 2020 in the Further Consolidated Appropriations Act of 2020 ( P.L. 116-94 ).", "The mine rescue team training credit was enacted at the end of 2006, following the high-profile mining accident at Sago Mine. There was an uptick in coal mining fatalities in 2006\u00e2\u0080\u009447 fatalities were reported (12 were a result of the Sago Mine disaster). From 2007 through 2019, coal mining fatalities averaged 20 per year. During this period, fatalities were highest in 2010, reflecting the Upper Big Branch Mine disaster, where there were 29 fatalities. In the year with the lowest number of fatalities, 2016, there were 8. In 2019, there were 11 coal mining fatalities. Coal mining fatalities have generally been trending downward over time. In recent years, some of this might be explained by a decline in coal production and the decline in the number of coal miners. The fatality rate, however, has also tended to decline over time. ", "A credit for mine rescue team training can encourage mine operators and employers to invest in additional training. The credit can also reduce the cost of complying with federal regulations regarding mine rescue team training. Federal regulations are the government's primary policy instrument governing coal mine safety, with tax incentives playing a small role. "], "subsections": []}, {"section_title": "Employer Tax Credit for Paid Family and Medical Leave39", "paragraphs": ["The employer credit for paid family and medical leave (PFML) can be claimed by employers providing paid leave (wages) to employees under the Family and Medical Leave Act of 1993 (FMLA; P.L. 103-3 ). The credit can be claimed for wages paid during tax years that begin in 2018, 2019, and 2020.", "The credit amount is equal to up to 25% of PFML wages paid to qualifying employees. The credit can only be claimed for PFML provided to certain employees with incomes below a fixed threshold. For credits claimed in 2019, employee compensation in 2018 cannot have exceeded $72,000. The amount of PFML wages for which the credit is claimed cannot exceed 12 weeks per employee per year. Further, all qualifying employees must be provided at least two weeks of PFML for an employer to be able to claim the credit. Tax credits cannot be claimed for leave paid by state or local governments, or for leave that is required by state or local law. To claim the credit, an employer must have a written family and medical leave policy in effect. The policy cannot exclude certain classifications of employees, such as unionized employees.", "The employer credit for paid family and medical leave was added to the IRC in the 2017 tax revision ( P.L. 115-97 ; commonly referred to as the Tax Cuts and Jobs Act). Initially, the credit was effective for wages paid in 2018 and 2019. The credit was extended for one year, through 2020, by the Further Consolidated Appropriations Act of 2020 ( P.L. 116-94 ). ", "Providing a tax credit for employers that provide PFML should, on the face of it, tend to increase access to this benefit. How effective the credit will be at achieving this goal remains an open question. Employers may provide PFML to qualified employees for a number of reasons; attracting high-quality talent might be one. If most of the credit's beneficiaries are employers that would have provided PFML without the credit, then the credit is not a particularly efficient mechanism for increasing PFML. There is also the possibility that employers choose to substitute credit-eligible PFML for other forms of leave. An employer could reduce the amount of paid sick, personal, or vacation time off, knowing that employees use this time for paid family and medical leave purposes. If other benefits are scaled back in favor of tax-preferred FMLA leave, employees may not be better off.", "For more information, see CRS In Focus IF11141, Employer Tax Credit for Paid Family and Medical Leave , by Molly F. Sherlock."], "subsections": []}, {"section_title": "Work Opportunity Tax Credit42", "paragraphs": ["The work opportunity tax credit (WOTC) is a nonrefundable wage credit intended to increase job opportunities for certain categories of disadvantaged individuals. The WOTC reduces the cost of hiring specified groups of disadvantaged individuals. WOTC-eligible hires include members of families receiving Temporary Assistance to Needy Families (TANF) benefits, certain members of families receiving food stamp benefits, ex-felons, and certain veterans. ", "For most eligible hires that remain on a firm's payroll at least 400 hours, an employer can claim an income tax credit equal to 40% of wages paid during the worker's first year of employment, up to a statutory maximum. For most WOTC-eligible hires, the wage maximum is $6,000, for a maximum credit of $2,400. For eligible veterans, the maximum eligible wage varies between $6,000 and $24,000, depending on the veteran's characteristics and work history. Eligible summer youth hires' maximum wage to which the credit can be applied is $3,000. A credit equal to 25% of a qualified worker's wages is available for eligible hires that remain employed for at least 120 hours, but fewer than 400 hours.", "The WOTC was created as part of the Small Business Job Protection Act of 1996 ( P.L. 104-188 ). The WOTC evolved from an earlier tax credit designed to increase employment among targeted groups, the Targeted Jobs Tax Credit (TJTC), which was available from 1978 through 1994. When first enacted, the WOTC was scheduled to expire on October 1, 1997. Since 1997, the WOTC has been expanded, modified, and regularly extended. In several instances, the WOTC was allowed to lapse before being retroactively reinstated. It was most recently extended through 2020 in the Further Consolidated Appropriations Act of 2020 ( P.L. 116-94 ).", "The WOTC is designed to encourage employers to hire more disadvantaged individuals by compensating for potential higher training costs and possible lower productivity. Because the credit is focused on hiring from targeted groups, and not net job creation, it is not necessarily intended to create new jobs or promote recovery in labor markets. Studies evaluating the credit have examined whether it increases job opportunities for targeted disadvantaged individuals, and whether the WOTC is a cost-effective policy measure for achieving this objective. ", "Early evidence on the WOTC suggested that although the credit did offset part of the cost of recruiting, hiring, and training WOTC-eligible employees, it had a limited effect on companies' hiring decisions. More recent studies have found that the WOTC provided benefits to certain groups: increasing the wage income of disabled veterans and increasing employment among long-term welfare recipients, for example. Researchers have also explored whether the credit causes employers to \"churn\" their workforce to take advantage of the credit, replacing currently credit-ineligible workers with credit-certified workers. Evidence of this behavior has not been found. ", "For more information on the WOTC, see CRS Report R43729, The Work Opportunity Tax Credit , by Benjamin Collins and Sarah A. Donovan."], "subsections": []}, {"section_title": "Look-Through Treatment of Payments Between Related Controlled Foreign Corporations45", "paragraphs": ["The temporary look-through rules were originally enacted in the Tax Increase Prevention and Reconciliation Act of 2005 ( P.L. 109-222 ), for 2006 through 2008, and subsequently extended. These rules effectively allow U.S. corporations to reduce tax paid by allowing them to shift the income of certain foreign subsidiaries in high-tax countries into a lower-taxed foreign subsidiary. ", "Depending on its source, income earned abroad by foreign-incorporated subsidiaries of U.S. parents is taxed at full rates, not taxed at full rates, or not taxed at all. Tax rules require passive income (such as interest income) and certain types of payments that can be easily manipulated to reduce foreign taxes to be taxed at the full rate (21% for a corporate shareholder) if earned by controlled foreign corporations (CFCs). This income is referred to as Subpart F income, reflecting the part of the tax code where treatment is specified. Credits against the U.S. tax imposed are allowed for any foreign taxes paid on this income, and are applied on an overall basis (so that unused foreign taxes in one country can offset taxes paid on income in another country). Other income earned abroad by CFCs is subject to the global intangible low-taxed income (GILTI) provision, which taxes this foreign-source income at half the corporate tax rate (10.5%), after allowing a deduction for a deemed return of 10% on tangible assets. Credits are allowed for 80% of foreign taxes paid. This GILTI rate is scheduled to rise to 13.125% after 2025.", "Thus, some income (Subpart F) is taxed at the full rate, some income (GILTI) is taxed at partial rates, and some income (the deemed return from tangible assets) is not taxed. (For a more extensive discussion of international tax rules, see CRS Report R45186, Issues in International Corporate Taxation: The 2017 Revision (P.L. 115-97) , by Jane G. Gravelle and Donald J. Marples.)", "Unless an exception applies, Subpart F income includes dividends, interest, rent, and royalty payments between related firms. These items of income are subject to Subpart F because affiliated firms can use them to shift income and avoid taxation. For example, without Subpart F a U.S. parent's subsidiary (first-tier subsidiary) in a country without taxes (e.g., the Cayman Islands) could lend money to its own subsidiary (second-tier subsidiary) in a high-tax country. The interest payments would be deductible in the high-tax country, but no tax would be due in the no-tax country. Thus, an essentially paper transaction would shift income out of the high-tax country. A similar effect might occur if an intangible asset were transferred to the no-tax subsidiary, and then licensed in exchange for a royalty payment by the high-tax subsidiary. Subpart F taxes this income at full rates. ", "Methods of avoiding Subpart F taxation were made easier in 1997, when U.S. entity classification rules (to be a corporate or noncorporate entity) were simplified to allow checking a box on a form. These \"check-the-box\" regulations provided a way to avoid treatment of payments as Subpart F income under certain circumstances by allowing firms to elect treatment as an unincorporated entity. They were originally intended to simplify classification issues for domestic firms and the IRS, but their usefulness in international tax planning quickly became evident. The Treasury issued regulations in 1998 to disallow their use to avoid Subpart F, but withdrew them after protests from firms and some Members of Congress.", "In the example above, if the high-tax subsidiary is not a direct subsidiary of the U.S. parent but is a subsidiary of the Cayman Islands subsidiary (i.e., a second-tier subsidiary), the Cayman Islands (first-tier) subsidiary can elect to treat the high-tax subsidiary as if it were a pass-through entity. This treatment would effectively combine the two subsidiaries into a single firm. This outcome can be achieved simply by checking a box, making the high-tax subsidiary a disregarded entity under U.S. law. Because there are no separate firms, no income is recognized by the Cayman Islands firm, although the high-tax subsidiary (second tier) is still a corporation from the point of view of the foreign jurisdiction in which it operates and can deduct interest in the high-tax jurisdiction.", "The look-through rules expand the scope of check-the-box. The rules were originally enacted in the Tax Increase Prevention and Reconciliation Act of 2005 ( P.L. 109-222 ), for 2006 through 2008, and subsequently extended, most recently through 2020 in the Further Consolidated Appropriations Act of 2020 ( P.L. 116-94 ). The check-the-box rules do not work in every circumstance. For example, if the related firms do not have the same first-tier parent, check-the-box does not apply. In some cases, because of foreign countries' rules about corporate and noncorporate forms, the check-the-box regulations' classification of some entities as per se corporations make this planning unavailable. In addition, other undesirable tax consequences (from the firm's point of view) could occur as a side effect of check-the-box. The look-through rule effectively puts this check-the-box type of planning into the tax code, rather than implementing it as a regulation (which could be altered without legislation), but disconnects it from the check-the-box regulations' creation of a disregarded entity. Related firms do not have to have the parent-child relationship; they can be otherwise related as long as they are under common control. ", "The main argument against the look-through rules (and check-the-box as well) is that they undermine Subpart F's purpose, which is to prevent firms from using passive and easily shifted income to avoid taxation. The main argument for the provision is to allow firms the flexibility to redeploy earnings from one location to another without having U.S. tax consequences (foreign tax rules are unchanged). Firms could, for example, accomplish much of the treatment of look-through rules (even in the absence of check-the-box), but that may involve complex planning and inconvenience. An argument can also be made that in some cases (for example, with the payment of interest), the profit shifting is not harming the U.S. Treasury, but rather reducing taxes collected by foreign governments, as income is shifted out of high-tax countries into low-tax ones. Some might view this last argument as a \"beggar-thy-neighbor\" argument because it facilitates U.S. firms in using tax planning to reduce taxes paid to other countries."], "subsections": []}, {"section_title": "Provisions Modifying the Excise Taxes on Wine, Beer, and Distilled Spirits47", "paragraphs": ["The temporary provisions modifying excise taxes on alcoholic beverages were originally enacted through 2019 in the 2017 tax revision (the Tax Cuts and Jobs Act, P.L. 115-97 ). The first provision applies to beer, wine, and distilled spirits broadly. The provisions that apply only to beer, wine, or distilled spirits are discussed separately below. ", "In general, the uniform capitalization (UNICAP) rules require some costs that would otherwise be immediately deductible (such as interest and overhead) to be added to inventory or to the cost of property and deducted in the future when goods are sold or assets depreciated. In the case of interest costs, the rules apply only if the asset is long-lived or has a production period over two years or a production period over one year and a cost of more than $1 million. The production period includes any customary aging period. A temporary modification to the UNICAP rules exempts the aging periods for beer, wine, and distilled spirits from the production period for the UNICAP interest capitalization rules, thus leading to shorter production periods."], "subsections": [{"section_title": "Beer", "paragraphs": ["Absent the temporary excise tax modification provisions, the excise tax rate on beer producers is $18 per barrel (31 gallons), and small brewers that domestically produce no more than 2 million barrels annually are subject to a rate of $7 per barrel on the first 60,000 barrels. The temporary provision reduces the rate for small brewers (producing no more than 2 million barrels) to $3.50 per barrel on the first 60,000 barrels and $16 per barrel on the remaining production. Beer importers and large producers meeting certain requirements may also be eligible for the reduced rate of taxation. For all other producers or importers, the excise tax rates are $16 per barrel on the first 6 million barrels.", "The tax on beer is due when the beer is removed from the brewery for sale. Beer can be transferred between breweries that are commonly owned (and released from customs) without paying the tax (although tax would be paid on the eventual sale). The temporary provision also allows transfer without payment of tax to an unrelated brewer if the transferee accepts responsibility for paying the tax."], "subsections": []}, {"section_title": "Wine", "paragraphs": ["Excise taxes are imposed at different rates on wine, depending on the wine's alcohol content and carbonation levels. Still wines are taxed at $1.07 per wine gallon (w.g.) if they are 14% alcohol or less, $1.57/w.g. if they are 14% to 21% alcohol, and $3.15 per w.g. if they are 21% to 24% alcohol. Naturally sparkling wines are taxed at $3.40 per w.g. and artificially carbonated wines are taxed at $3.30 per w.g. ", "Absent the temporary provisions, up to a $0.90 credit against excise tax liability ($0.056 per w.g. for hard cider) may be available for the first 100,000 w.g. removed by a small domestic winery producing not more than 150,000 w.g. per year. The per wine gallon tax credit rate is phased out on production in excess of 150,000 w.g. for wineries producing not more than 250,000 w.g. per year. This small winery credit does not apply to sparkling wine. ", "The temporary provisions modify the credit for small domestic wineries to allow it to be claimed by domestic and foreign producers, regardless of the gallons of wine produced. The credit is also made available to sparkling wine producers. Also, a $1.00 credit against excise tax liability may be available for the first 30,000 w.g. removed annually by any eligible wine producer or importer. The credit is reduced to $0.90 on the next 100,000 w.g., and $0.535 on the next 620,000 w.g. In contrast to permanent law, this credit is not phased out based on production. For hard cider, the credit rates, above, are adjusted to $0.062 per gallon, $0.056 per gallon, and $0.033 per gallon, respectively.", "Mead is taxed according to wine excise tax rates depending on its alcohol and carbonation content. Naturally sparkling wines are taxed at $3.40 per w.g. and artificially carbonated wines taxed at $3.30 per w.g. Under the temporary provision, mead and certain sparkling wines are to be taxed at the lowest rate applicable to still wine of $1.07 per wine gallon. Mead contains not more than 0.64 grams of carbon dioxide per hundred milliliters of wine, which is derived solely from honey and water, contains no fruit product or fruit flavoring, and contains less than 8.5% alcohol. The sparkling wines eligible to be taxed at the lowest rate contain no more than 0.64 grams of carbon dioxide per hundred milliliters of wine, which are derived primarily from grapes or grape juice concentrate and water, which contain no fruit flavoring other than grape, and which contain less than 8.5% alcohol."], "subsections": []}, {"section_title": "Distilled Sprits", "paragraphs": ["Producers and importers of distilled spirits are taxed at a rate of $13.50 per proof gallon (ppg) of production. Under the temporary provision, the tax rate is lowered to $2.70 ppg on the first 100,000 proof gallons, $13.34 ppg for proof gallons in excess of that amount but below 22,130,000 proof gallons, and $13.50 ppg for amounts thereafter. The provision contains rules to prevent members of the same controlled group from receiving the lower rate on more than 100,000 proof gallons of distilled spirits.", "Distilled spirits are taxed when removed from the distillery, or, in the case of an imported product, from customs custody or bonded premises. Bulk distilled spirits may be transferred in bond between bonded premises without being taxed, but may not be transferred in containers smaller than one gallon. The temporary provision allows transfer of spirits in approved containers other than bulk containers without payment of tax."], "subsections": []}]}]}]}, {"section_title": "Provisions Expiring in 2021, 2022, or 2023", "paragraphs": [], "subsections": [{"section_title": "12.5% Increase in Annual LIHTC Authority48", "paragraphs": ["The low-income housing tax credit (LIHTC) program, which was created by the Tax Reform Act of 1986 ( P.L. 99-514 ), is the federal government's primary policy tool for the development of affordable rental housing. LIHTCs are awarded to developers to offset the cost of constructing rental housing in exchange for agreeing to reserve a fraction of rent-restricted units for lower-income households. Although it is a federal tax incentive, the program is primarily administered by state housing finance agencies (HFAs) that award tax credits to developers. ", "Authority for states to award tax credit is determined according to each state's population. In 2020, the amount of tax credits a state can award is equal to $2.8125 per person, with a minimum small population state authority of $3,217,500. These figures reflect a temporary increase in the amount of credits each state received for 2018-2021 as a result of the 2018 Consolidated Appropriations Act ( P.L. 115-141 ). The increase is equal to 12.5% above what states would have received absent P.L. 115-141 , and is in effect through 2021.", "For more information on the LIHTC, see CRS Report RS22389, An Introduction to the Low-Income Housing Tax Credit , by Mark P. Keightley. "], "subsections": []}, {"section_title": "Computation of Adjusted Taxable Income Without Regard to Any Deduction Allowable for Depreciation, Amortization, or Depletion49", "paragraphs": ["Prior to the 2017 tax revision (the Tax Cuts and Jobs Act, P.L. 115-97 ), the deduction for net interest was limited to 50% of adjusted taxable income (income before taxes; interest deductions; and depreciation, amortization, or depletion deductions) for firms with a debt-equity ratio above 1.5. Interest above the limitation could be carried forward indefinitely. The revision limited deductible interest to 30% of adjusted taxable income for businesses with gross receipts greater than $25 million. The provision also has an exception for floor plan financing for motor vehicles. Businesses providing services as an employee and certain regulated utilities are excepted from this new limit. Also, certain real property and farming businesses can elect out of this limit but must adopt a slower depreciation method for real property or farming assets. The restrictions on interest, called thin capitalization rules , were partially enacted to address concerns about large multinational businesses locating borrowing in the United States to shift profits out of the United States and to foreign, lower-tax, jurisdictions.", "Under prior law and the temporary provisions of the 2017 tax revision, this interest limit applies to earnings (income) before interest, taxes, depreciation, amortization, or depletion (referred to as EBITDA). After 2021, the 2017 tax revision changes the measure of income to earnings (income) before interest and taxes (referred to as EBIT). Because EBIT is after the deduction of depreciation, amortization, and depletion, it results in a smaller base and thus a smaller amount of eligible interest deductions. The temporary broader base (EBITDA), which expires in 2021, allows more interest deductions. The current, more generous rules for measuring the adjusted taxable income base are more beneficial to businesses with depreciable assets, although affected businesses might be able to avoid some of the change in the deduction rules by leasing assets from financial institutions, such as banks, that generally have interest income. ", "This change in base is projected to have a significant revenue consequence: the Joint Committee on Taxation estimated the revenue gain from the provision to increase from $19.2 billion in FY2021 to $30.2 billion in FY2023, when the change is fully in effect, an increase of more than $10 billion. This revenue change suggests the cost of allowing the broader measure of income (EBITDA) through 2021 is around $10 billion annually.", "For additional discussion of the interest limitation, see CRS Report R45186, Issues in International Corporate Taxation: The 2017 Revision (P.L. 115-97) , by Jane G. Gravelle and Donald J. Marples."], "subsections": []}, {"section_title": "The Rum Cover Over51", "paragraphs": ["Under permanent law, the excise tax on rum is $13.50 per proof gallon and is collected on rum produced in or imported into the United States. Under permanent law, $10.50 per proof gallon of imported rum is transferred or \"covered over\" to the Treasuries of Puerto Rico (PR) and the United States Virgin Islands (USVI). Temporary provisions have increased the transfer amount to $13.25. The law does not impose any restrictions on how PR and USVI can use the transferred revenues. Both territories use some portion of the revenue to promote and assist the rum industry.", "The cover-over provisions for rum extend as far back as 1917 for PR and 1954 for USVI. Originally, the full amount of the tax was covered over; however, the Deficit Reduction Act of 1984 ( P.L. 98-369 ) limited the cover over to $10.50 when the federal tax rates were increased to $12.50. The cap was intended to address the question of whether the rebates were proper given the lack of rebates to the states. The Omnibus Budget Reconciliation Act of 1993 (OBRA93; P.L. 103-66 ) temporarily increased the cap to $11.30 for five years, in a law that also reduced another benefit to the possessions (the possessions tax credit). When this increase expired, the cap was increased to $13.25, and it has subsequently been extended, most recently through 2021 by the Bipartisan Budget Act of 2018 ( P.L. 115-123 ). ", "For additional information on the rum cover over see CRS Report R41028, The Rum Excise Tax Cover-Over: Legislative History and Current Issues , by Steven Maguire."], "subsections": []}, {"section_title": "Credit for Certain Expenditures for Maintaining Railroad Tracks52", "paragraphs": ["Qualified railroad track maintenance expenditures paid or incurred in a taxable year by eligible taxpayers qualify for a 50% business tax credit. The credit is limited to $3,500 multiplied by the number of miles of railroad track owned or leased by an eligible taxpayer. Qualified railroad track maintenance expenditures are amounts, which may be either repairs or capitalized costs, spent to maintain railroad track (including roadbed, bridges, and related track structures) owned or leased as of January 1, 2005, by a Class II or Class III (regional or local) railroad. Eligible taxpayers are smaller (Class II or Class III) railroads and any person who transports property using these rail facilities or furnishes property or services to such a person. ", "The taxpayer's basis in railroad track is reduced by the amount of the credit allowed (so that any deduction of cost or depreciation is only on the cost net of the credit). The credit cannot be carried back to years before 2005. The credit is allowed against the alternative minimum tax. The amount eligible is the gross expenditures, not accounting for reductions such as discounts or loan forgiveness.", "The provision was enacted in the American Jobs Creation Act of 2004 ( P.L. 108-357 ) and extended numerous times. The provision relating to discounts was added by the Tax Relief and Health Care Act of 2006 ( P.L. 109-432 ). The credit was allowed against the alternative minimum tax by the Emergency Economic Stabilization Act of 2008 ( P.L. 110-343 ). It was most recently extended through 2022 by the Further Consolidated Appropriations Act of 2020 ( P.L. 116-94 ).", "This provision substantially lowers the cost of track maintenance for the qualifying short-line (regional and local) railroads, with tax credits covering half the costs for those firms and individuals with sufficient tax liability. Class II and III railroads account for 32% of the nation's freight rail miles. These regional railroads are particularly important in providing transportation of agricultural products.", "Although no rationale was provided when the credit was introduced, sponsors of earlier freestanding legislation and industry advocates indicated that the purpose was to encourage the rehabilitation, rather than the abandonment, of short-line railroads. These railroads were spun off in the deregulation of railroads in the early 1980s. Advocates also indicated that this service is threatened by heavier 286,000-pound cars that must be used to connect with longer rail lines. They also suggested that preserving these local lines would reduce local truck traffic. There was also some indication that a tax credit was thought to be more likely to be achieved than grants.", "The arguments stated by industry advocates and sponsors of the legislation are also echoed in assessments by the Federal Railroad Administration (FRA), which indicated the need for rehabilitation and improvement, especially to deal with heavier cars. The FRA also suggested that these firms have limited access to bank loans."], "subsections": []}]}]}}
{"id": "R46231", "title": "Electric Vehicles: A Primer on Technology and Selected Policy Issues", "released_date": "2020-02-14T00:00:00", "summary": ["The market for electrified light-duty vehicles (also called passenger vehicles; including passenger cars, pickup trucks, SUVs, and minivans) has grown since the 1990s. During this decade, the first contemporary hybrid-electric vehicle debuted on the global market, followed by the introduction of other types of electric vehicles (EVs). By 2018, electric vehicles made up 4.2% of the 16.9 million new light-duty vehicles sold in the United States that year. Meanwhile, charging infrastructure grew in response to rising electric vehicle ownership, increasing from 3,394 charging stations in 2011 to 78,301 in 2019. However, many locations have sparse or no public charging infrastructure.", "Electric motors and traction battery packs\u00e2\u0080\u0094most commonly made up of lithium-ion battery cells\u00e2\u0080\u0094set EVs apart from internal combustion engine vehicles (ICEVs). The battery pack provides power to the motor that drives the vehicle. At times, the motor acts as a generator, sending electricity back to the battery. The broad categories of EVs can be identified by whether they have an internal combustion engine (i.e., hybrid vehicles) and whether the battery pack can be charged by external electricity (i.e., plug-in electric vehicles). The numerous vehicle technologies further determine characteristics such as fuel economy rating, driving range, and greenhouse gas emissions. EVs can be separated into three broad categories:", "Hybrid-electric vehicles (HEVs): The internal combustion engine primarily powers the wheels. The battery pack and electric motor provide supplemental power. Plug-in hybrid-electric vehicles (PHEVs): The battery pack can be charged by an external source of electricity. Depending on the model, primary power to the wheels may be supplied by the battery pack and electric motor, the internal combustion engine, or a combination. All-electric vehicles (AEVs; also called battery-electric vehicles or BEVs): The battery pack must be charged via an external source of electricity. The battery pack and electric motor power the wheels.", "Current technology offers three levels of charging for plug-in EVs. Level 1 and Level 2 are currently the most widely accessible with standardized vehicle connectors and charge ports that can be set up for at-home charging. Level 3 (also called DC fast charging) offers the fastest charging rates on the market but is not available for at-home installation due to high voltage. Vehicle connectors and corresponding charge ports for Level 3 are also not standardized, with three different systems currently in use by different vehicle manufacturers. Some research has raised concerns regarding the potential impact of fast charging on battery performance, resulting in technology development aimed at addressing potential capacity loss and decreased charging cycles.", "As an emergent technology area, EVs present a number of issues for consideration. The fuel sources used to generate the electricity to charge PHEVs and AEVs are a major factor in determining EV greenhouse gas emissions relative to ICEVs. Per-mile EV emissions vary geographically and with the time of day and year that charging takes place. Growing demand for lithium-ion batteries also shifts the material requirements of the vehicle market from fuels for combustion to minerals and other materials for battery production. A growing EV market may encourage new strategies around the supply and refining of raw materials, ability to manufacture batteries, and end-of-life management for batteries that are no longer suitable for use in vehicles.", "Support for EV deployment stems from, among other things, federal and state policies establishing manufacturing rebates, tax credits for purchases, funding for research and development, and standards for fuel economy and emissions. These policies include the Plug-In Electric Vehicle Tax Credit, and the coordinated Corporate Average Fuel Economy (CAFE) standards and emissions standards for vehicles. Over time, some federal incentives and grant programs have expired. Several bills pending in the 116 th Congress would extend or repeal tax credits for EVs, establish highway usage fees on alternative fuel vehicles, fund grants for charging infrastructure, or establish a national zero-emissions vehicle standard."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["Electric vehicle (EV) technology has emerged as a potential alternative to the internal combustion engine with an increasing variety and volume of electric vehicles sold since the 1990s. Numerous policies and incentives are in place or have been proposed to encourage the production, purchase, and use of alternative fuel vehicles (including EVs). These proposals have been at times alongside efforts to reduce fuel consumption and subsequent emissions, support U.S. vehicle manufacturing, and address the growing shortfall in the Highway Trust Fund. Since 2010, some incentives and grant programs have expired, and other legislative options have been proposed. Underlying these policies are congressional interests such as reducing reliance on foreign sources of petroleum, encouraging rural development, promoting domestic manufacturing, and addressing environmental concerns.", "The electric car was first created in the early 1800s as a simple electrified buggy. It was considered to be quiet, easy to drive, and did not emit exhaust like its gasoline- and steam-powered counterparts. According to the U.S. Department of Energy (DOE), by the early 1900s, electric cars had enjoyed a brief popularity, accounting for one-third of cars on the road. Within a few decades, however, electric cars were practically obsolete. Electric starters and increasing availability of gasoline fueling stations made gasoline-powered cars as easy to start and drive as electric cars. Neither type of car required the use of a cumbersome hand-crank system, but gasoline-powered cars gained the edge since electricity availability was slow to expand relative to gasoline fueling stations. The Model T, first produced in 1908, came to dominate the market due to its affordability and driving range.", "Growing concerns in the late 20 th century over the environmental impact of fossil fuels and greenhouse gas and other emissions sparked renewed interest in electric vehicles. EVs may support ongoing efforts to address environmental concerns through reducing petroleum consumption in transportation. Support for EV deployment stems from, among other things, federal and state policies establishing manufacturing rebates, tax credits for purchase, funding for research and development, and standards for fuel economy and emissions standards. National standards include Corporate Average Fuel Economy (CAFE) standards promulgated by the U.S. Department of Transportation (DOT) National Highway Traffic Safety Administration (NHTSA) under the authority of the Energy Policy and Conservation Act (EPCA; P.L. 94-163 ; as amended by the Energy Independence and Security Act of 2007 (EISA; P.L. 110-140 )), and the Environmental Protection Agency (EPA) standards for greenhouse gas emissions from motor vehicles as air pollutants under authority of the Clean Air Act (CAA; P.L. 88-206). In 2012, NHTSA and EPA coordinated these standards under a joint rule establishing the National Program; standards applicable to model years 2021-2026 are currently under reconsideration under the proposed Safer Affordable Fuel-Efficient (SAFE) Vehicles Rule.", "In the 1990s, the first contemporary hybrid-electric vehicle (HEV) debuted on the global market, the Toyota Prius, while General Motors released (and terminated) the first contemporary all-electric vehicle (AEV), the EV-1. From 2000 to 2010, a few more electric vehicles emerged, including the first commercially available plug-in hybrid-electric (PHEV), the Chevrolet Volt, the all-electric Nissan Leaf, and Tesla's line of dedicated all-electric vehicles. Many of these EVs were made possible by DOE support for research and development of EV technology, in particular battery technology, as well as DOE-sponsored loans made available to EV automakers and investments in nationwide charging infrastructure. More manufacturers followed, contributing models to a growing electric vehicle market. From 2010 to 2018, EV sales increased from 275,000 to 705,000, making up 4.2% of all new light-duty vehicles sales in 2018 in the United States ( Figure 1 ). Charging infrastructure has also grown in response to rising electric vehicle ownership, increasing from 3,394 non-residential chargers in 2011 to 78,301 in 2019. However, many locations have sparse or no public charging infrastructure.", "This report provides a primer on the expansion of the market for electric passenger, or light-duty, vehicles. This discussion will address some of the factors influencing EV adoption, the broad categories of EVs and related technology, and the current federal policy landscape."], "subsections": []}, {"section_title": "Shift Toward Vehicle Electrification", "paragraphs": ["Most of the more than 92 million new light-duty vehicles sold worldwide in 2018 are conventional vehicles , or those powered by internal combustion engines. Worldwide sales of new plug-in electric vehicles totaled 2.0 million in 2018. In the same year, 16.9 million new light-duty vehicles were sold in the United States, with sales of new plug-in electric vehicles totaling 362,000\u00e2\u0080\u00942.1% of all new vehicle sales. When sales of new hybrid-electric vehicles are included, EV sales totaled 705,000, making up 4.2% of all new light-duty vehicle sales in 2018.", "One factor shaping interest in vehicle electrification is its potential to reduce the transportation sector's overall emissions from greenhouse gases, particulate matter, and other air pollutants by reducing the use of petroleum products; the extent of any such reduction would depend on a number of factors, including the mix of regional electricity generation sources. At 1,866 million metric tons of carbon dioxide equivalent in 2017, transportation sector emissions have increased more than any other sector since 1990 ( Figure 2 ), along with increasing demand for travel. Light-duty vehicles contributed 59% of total transportation emissions, with the remainder coming from trucks and other highway vehicles, aircraft, trains, and ships and boats. Light-duty vehicles also consumed 53% of petroleum-based fuels in the transportation sector in 2017. Other sectors exhibited reductions in carbon dioxide emissions while making improvements in energy efficiency and reducing consumption of coal and petroleum products. In the electricity generation sector, electric power generated is observed to be relatively flat from 2013 to 2017, while emissions decreased and natural gas and renewable energy consumption replaced coal consumption."], "subsections": []}, {"section_title": "What Are Electric Passenger Vehicles?", "paragraphs": ["An electric vehicle (EV) is characterized by its electric motor and traction battery pack, comprising numerous battery cells, most commonly lithium-ion. EV batteries provide power that drives the vehicle and are distinct from the lead-acid batteries that are used in the ignition process of most internal combustion engine vehicles (ICEVs). At times, the motor acts as a generator, sending electricity to the battery, which is later used to power the motor. The broad categories of EVs can be identified by whether they have an internal combustion engine (i.e., hybrids) and whether the battery can be charged by external electricity (i.e., plug-ins). Figure 3 demonstrates the differentiations between the three broad categories of EVs: hybrid-electric vehicles (HEVs), plug-in hybrid-electric vehicles (PHEVs), and all-electric vehicles (AEVs).", "Internal combustion engine vehicles are the most common passenger vehicles on the road. They rely primarily on petroleum-based fuel (typically gasoline), which is injected into a small chamber in the internal combustion engine where a spark ignites the fuel to produce the power that propels the vehicle ( Figure 4 ). The ICEV powertrain can have more than 100 moving parts between the engine, the transmission, and other components. Fuel efficiency in new ICEVs has increased, with some vehicle models achieving a rating of up to 39 miles per gallon (mpg) for model year 2019. Table 1 summarizes various aspects of ICEVs and the different electric vehicle types.", "Of the electric vehicle alternatives, HEVs are most similar to ICEVs, but with higher fuel economy due to a traction battery pack, electric motor, and regenerative braking system. Like ICEVs, HEVs require gasoline to initiate the engine that powers the car, but once running, HEVs supplement that initial power through the electric motor using electricity stored in the battery ( Figure 5 ). The battery is continuously recharged while the car is in use, either by the internal combustion engine or regenerative braking (see shaded box on Features of Electric Vehicles). HEVs cannot run without a petroleum product, but they are generally more fuel efficient than ICEVs, achieving up to a 58 mpg rating.", "PHEVs combine the technology of HEVs with the ability to charge the traction battery pack via an external source of electricity ( Figure 6 ). As a result, PHEVs can be operated without external charging over a driving range similar to HEVs or in electric-only operation over a certain driving range, especially with regular access to charging facilities. To accommodate this electric driving range, PHEVs require more electricity and batteries with greater electricity storage capacity than HEVs\u00e2\u0080\u0094up to 42 kilowatt hours (kWh) for PHEVs versus up to 1.6 kWh for HEVs. In a PHEV, the internal combustion engine and the electric motor may both be enabled to power the wheels directly in a parallel configuration. The internal combustion engine may also be used in a series configuration only to generate electricity to store in the battery, which is then used by the motor to power the wheels (other configurations are also possible). PHEVs offer higher fuel economy than both HEVs and ICEVs, up to 133 miles per gallon of gasoline equivalent (mpge).", "AEVs (also called battery-electric vehicles or BEVs), run entirely on electricity stored in a large traction battery pack ( Figure 7 )\u00e2\u0080\u0094the largest among EVs with a capacity of up to 100 kWh. The battery must be charged via an external source of electricity. Regenerative braking alone is insufficient to generate the quantity of electricity needed to power the motor and all other functionality of a car. AEVs offer the highest fuel economy ratings, up to 136 mpge. AEVs do not use gasoline and have no internal combustion engine. The result is fewer moving and wearing parts in the powertrain and more electronic components. Consequently, a manufacturing shift toward AEVs may disrupt parts manufacturing and maintenance in the automotive industry due to changing demands for parts and differing required skillsets for laborers in the production and maintenance of AEV parts."], "subsections": []}, {"section_title": "How to Charge Plug-In Electric Vehicles", "paragraphs": ["Batteries in plug-in electric vehicles\u00e2\u0080\u0094PHEVs and AEVs\u00e2\u0080\u0094can be charged using a standard residential outlet. Providing a full charge in this manner takes hours due to the low voltage available from a home electrical service. The slow pace of charging is one factor currently affecting consumer acceptance of EVs; most motorists are used to filling up a tank with gas in a matter of minutes.", "Current technology ( Table 2 ) offers three rates of charging, differentiated by the voltage of the electrical current: Level 1 at 120 volts alternating current (AC; see shaded box on Alternating Current Versus Direct Current); Level 2 at 240 volts AC; and Level 3 (also called DC fast charging) at 500 volts direct current (DC). Level 1 and Level 2 are the most widely accessible, with both voltages often available in a standard home. Connectors and charge ports for AC charging use the SAE J1772 standard, a result of the SAE International standards process documenting common engineering practices. Most plug-in electric vehicles come with a Level 1 cordset with a standard three-prong plug on one end and a J1772 connector on the other that plugs into a vehicle's corresponding charge port. Some vehicles come with a Level 2 cordset, which has a plug for a 240-volt outlet, such as that used for a clothes dryer. For drivers charging at home, no additional cost is required if the selected outlet is served by a dedicated circuit.", "Lower voltages mean longer charging times. Level 3 offers the highest voltages and faster charging rates than Level 1 and Level 2. The Level 3 charging unit has a charger that converts AC from the electric grid to DC, enabling direct charging of the battery pack. Ordinarily, EVs use an on-board charger to perform this conversion. As an emergent technology, Level 3 connectors and charge ports are not currently standardized and include CHAdeMO (used by Kia, Mitsubishi, and Nissan); SAE combined charging system (CCS; used by BMW and Chevrolet); and Tesla Supercharger (proprietary to Tesla vehicles). Due to the high voltage, Level 3 is not available for residential installation and is only accessible at charging stations."], "subsections": [{"section_title": "Fast Charging and Battery Performance", "paragraphs": ["Level 3 charging introduces potential challenges to the longevity of batteries in plug-in electric vehicles\u00e2\u0080\u0094PHEVs and AEVs. While the lithium-ion batteries used in PHEVs and AEVs are known to lose charging capacity over time, some studies suggest that fast charging contributes to elevated rates of capacity loss and decreased charging cycles. In 2019, many EVs with fast-charging capabilities are equipped with a variety of systems to address capacity loss, including cooling systems, as well as battery management systems that monitor battery health, track frequency of fast charging, and adjust the charge rate to prevent damage to the battery, potentially addressing some of these concerns. Meanwhile, researchers have continued to probe ways to improve fast charging while mitigating its potential impacts."], "subsections": []}]}, {"section_title": "Considerations", "paragraphs": ["Since the first modern EVs were introduced in the 1990s, use of EV technology and supporting infrastructure has grown. As an emergent technology area, a number of factors remain under consideration."], "subsections": [{"section_title": "Emissions and Electric Vehicle Charging", "paragraphs": ["On average, a fleet of EVs could reduce air emissions compared to a fleet of ICEVs, but the extent of the reduction and any associated benefits depend on a variety of factors, in particular when, where, and how plug-in EVs are driven and charged. These emissions include greenhouse gases and other pollutants that contribute to smog and other air quality problems. Transportation emissions can be divided into upstream emissions and downstream emissions. Upstream emissions are associated with the processes of fuel extraction and production, including the production of gasoline and diesel for combustion in ICEVs, and the generation of electricity for charging plug-in EVs. Downstream emissions are emitted while the car is in use, including those emitted from the tailpipe or from evaporation during fueling. PHEVs operating on electricity and AEVs produce few downstream emissions, but they are not emissions free. Determining the emissions from charging a plug-in EV relative to an ICEV depends largely on the sources of the electricity used to charge the vehicle. Research has also shown that emissions are further impacted by charging and usage patterns as well as the efficiency of an individual vehicle.", "Electricity generation in the United States produced more greenhouse gases and other pollutants than any other sector between 1990 and 2017. Nationally, as fuel sources have changed\u00e2\u0080\u0094decreased use of coal and increased use of natural gas and other lower-emission or renewable sources\u00e2\u0080\u0094and energy efficiency has increased, greenhouse gas emissions from electricity generation have declined by 4.8% since 1990, even as demand for electricity has increased over the same period. However, national averages obscure regional variation in potential emissions from the mix of fuel sources used for electricity generation ( Figure 8 ).", "For plug-in EVs, per-mile emissions attributed to upstream sources vary geographically. An AEV would be expected to produce fewer emissions on average if charged in the state of Washington where 70% of electricity is produced with hydropower than if charged in Hawaii where 69% of electricity is produced with oil. Additionally, sources for electricity may change over time, resulting in changing emissions for PHEVs and AEVs\u00e2\u0080\u0094new and otherwise.", "Emissions attributed to upstream sources also depend on the time of day and year when charging takes place. Typically, electrical power systems leverage different electricity generation units to meet electricity demand, shifting electricity generation sources throughout the day or year as demand changes. An increase in electricity demand from charging EVs may require additional generation which may use sources with greater or fewer emissions."], "subsections": []}, {"section_title": "Battery Materials Management", "paragraphs": ["Batteries are a crucial component of EVs and introduce novel supply chain considerations to the overall vehicle market. As electric vehicles increase in market share, the overall material requirements of the vehicle market shift from fuels for combustion to minerals and other materials for battery production. Using a comparison of the material compositions of an AEV (Chevrolet Bolt) and an ICEV (Volkswagen Golf), UBS estimated increases in global demand for battery materials such as lithium, cobalt, and graphite, for a fleet entirely made up of AEVs with existing battery technology. On the other hand, the lightweight body typically preferred by EV manufacturers is estimated to result in decreased global demand for materials such as iron and steel in favor of aluminum. Potential considerations for electric vehicle batteries include", "supply of minerals and other raw materials and subsequent refining capabilities; ability to manufacture battery cells and assemble into battery packs; and end-of-life management by recycling and disposal of batteries composed of chemicals that may be hazardous to humans and the environment.", "Like any other type of battery, EV batteries' performance will decline through repeated use, but such batteries may be eligible for second and third uses. EV batteries are expected to last at least eight years in a motor vehicle, with most manufacturers offering eight-year or 100,000-mile warranties. When batteries are no longer suitable for use in EVs, they are expected to have approximately 70% capacity. Strategies to extend the useable life of EV batteries include", "reconditioning for continued use in EVs by replacing specific modules experiencing uneven decline in performance; and repurposing for use in stationary energy storage systems.", "Lastly, materials within batteries may be recycled for other uses (including making new batteries). Less than 5% of lithium-ion batteries\u00e2\u0080\u0094the most common type of EV battery\u00e2\u0080\u0094are currently being recycled, due in part to the complex technology of the batteries and cost of such recycling. Growing interest in improving lithium-ion battery recycling, such as DOE's 2019 announcement of the Battery Recycling Prize and investment in the Lithium Battery R&D Recycling Center, may elevate recycling rates."], "subsections": []}]}, {"section_title": "Existing Authorities and Incentives", "paragraphs": ["A range of federal policies affect the purchase and use of EVs. Vehicle manufacturers have used EV sales to help meet the coordinated standards for Corporate Average Fuel Economy (CAFE) set by the National Highway Traffic Safety Administration (NHTSA) and greenhouse gas emissions under the Clean Air Act (CAA) set by the EPA. Future regulatory action under the Safe Affordable Fuel-Efficient (SAFE) Vehicles Rule may result in changes to these standards for automakers to take into account. A number of other programs, such as the Clean Cities Program, have promoted research and development of batteries and energy storage, charging infrastructure, and other vehicle technologies, exemptions, and deployment. For a fuller list of these programs see CRS Report R42566, Alternative Fuel and Advanced Vehicle Technology Incentives: A Summary of Federal Programs , by Lynn J. Cunningham et al."], "subsections": [{"section_title": "Selected Incentive Programs", "paragraphs": ["Certain federal programs active during the 116 th Congress aim to promote the production and purchase of EVs through service and tax credit incentives.", "Corporate Average Fuel Economy (CAFE) Program Alternative Fuel Vehicle Credits. Establishes a credit system for automakers for selling alternative fuel vehicles. The program promotes the production and sale of alternative fuel vehicles and provides flexibility for automakers to comply with fuel economy standards. Credits are unlimited for dedicated vehicles (e.g., AEVs) and were phased out after model year 2019 for dual-fueled vehicles (e.g., PHEVs). Proposed regulatory action in 2018 may result in changes to this program for model years 2021 and beyond.", "High Occupancy Vehicle (HOV) Lane Exemption. The statute governing HOV lanes allows states to establish programs to exempt certain alternative fuel vehicles (including PHEVs and AEVs) from HOV lane requirements. The exemption expires September 30, 2025. States were also able establish programs to allow other low-emissions and energy-efficient vehicles to pay a toll to access HOV lanes, but this authority expired September 30, 2019.", "National Alternative Fuels Corridor. Directs the Department of Transportation to designate strategic locations along major highways for developing plug-in electric vehicle charging and hydrogen, propane, and natural gas fueling. Infrastructure is to be deployed by the end of 2020.", "Plug-In Electric Vehicle Tax Credit. Provides a federal income tax credit of up to $7,500 per vehicle for buyers of qualifying plug-in electric vehicles\u00e2\u0080\u0094including PHEVs and AEVs. The credit begins to phase out after an automaker has sold 200,000 qualifying vehicles; currently, Tesla and General Motors have reached this threshold. The tax credit helps offset the cost of electric vehicles, which are on average more expensive than ICEVs."], "subsections": []}]}, {"section_title": "Selected Proposed Federal Legislation", "paragraphs": ["Several bills pending in the 116 th Congress would affect existing policy and incentives, and some bills would establish new programs or policies. The following bills were selected to demonstrate a few facets of the current discussion over the future of federal policy on the deployment of vehicle electrification. Other bills have been introduced in the 116 th Congress that would establish rebate programs for electric charging infrastructure, expand the Plug-In Electric Vehicle Tax Credit to include previously-owned vehicles, and reinstate the tax credit for the cost of alternative fuel refueling property."], "subsections": [{"section_title": "Renew or Repeal the Plug-In Electric Vehicle Tax Credit", "paragraphs": ["Driving America Forward Act ( H.R. 2256 / S. 1094 ) . Would expand the tax credit for plug-in electric vehicles, which would allow the buyers of 600,000 total vehicles per automaker (currently capped at 200,000) to be eligible for a credit of up to $7,000 (currently $7,500) before the credit is phased out. This bill was referred to committee in both chambers.", "Electric Credit Access Ready at Sale (Electric CARS) Act of 2019 ( H.R. 2042 / S. 993 ) . Would extend the tax credit for plug-in electric vehicles through December 31, 2029, and repeal the cap for automakers (currently set at 200,000). This bill was referred to committee in both chambers.", "Fairness for Every Driver Act ( H.R. 1027 / S. 343 ). Would repeal the tax credit for plug-in electric vehicles (currently capped at 200,000 per automaker for up to $7,500 per vehicle) and impose an annual fee on alternative fuel vehicles (i.e., vehicles with electric motors that draw significant power from a source not subject to certain fuel taxes) to be transferred to the Highway Trust Fund. This bill was referred to committee in both chambers."], "subsections": []}, {"section_title": "Establish New Programs or Policies", "paragraphs": ["American Cars, American Jobs Act of 2019 ( H.R. 2510 / S. 683 ). Would establish a voluntary program at NHTSA to encourage the purchase or lease of new automobiles made in the United States. The program would provide $3,500 vouchers to purchasers of new passenger vehicles (of any type) produced domestically and $4,500 vouchers to purchasers or lessees of new qualified plug-in electric drive vehicles. The vehicles must be assembled in the United States and contain at least 45% U.S. or Canadian parts. This bill was referred to committee in both chambers.", "Clean Corridors Act of 2019 ( H.R. 2616 / S. 674 ). Would establish a grant program for state, tribal, or local government authorities to install electric vehicle charging and hydrogen fueling infrastructure along the National Highway System. This bill was referred to committee in both chambers.", "Leading Infrastructure for Tomorrow's America Act ( H.R. 2741 ). Would direct the Department of Energy to develop model building codes for integrating electric vehicle charging infrastructure and direct states to authorize utilities to recover from ratepayers expenditures from the deployment of electric vehicle charging equipment, in addition to other policies promoting the deployment of electric vehicle charging infrastructure. This bill was referred to committee in the House.", "Vehicle Innovation Act of 2019 ( H.R. 2170 / S. 1085 ). Would authorize appropriations through FY2024 to the Department of Energy for research, development, engineering, demonstration, and commercial application of vehicles and related technologies, including vehicle electrification. This bill was referred to committee in the House, and placed on the Senate Legislative Calendar under General Orders (Calendar No. 186).", "Zero-Emissions Vehicles Act of 2019 ( H.R. 2764 / S. 1487 ). Would amend CAA to create a national zero-emissions vehicle standard for automakers whereby zero-emissions vehicles (e.g., all-electric vehicles, hydrogen fuel cell vehicles) are required to comprise 50% of new car sales by 2030 and 100% by 2040. Referred to committee in both chambers."], "subsections": []}]}]}}
{"id": "R46257", "title": "Senate Floor Privileges: History and Current Practice", "released_date": "2020-03-05T00:00:00", "summary": ["Senate Standing Rule XXIII, Privilege of the Floor, designates those afforded access to the Senate floor while the Senate is in session. In addition to sitting Senators, the rule lists several eligible positions, including certain current and former congressional, executive, and judicial officials; state and territorial governors; the mayor of the District of Columbia; members of foreign national legislatures; the nation's highest ranking military leaders; and, under specified circumstances, congressional staff members assisting Senators on the floor.", "Over its history, the Senate has amended the floor privilege rule to add or clarify positional categories. The Senate has also agreed to a number of resolutions and unanimous consent (UC) agreements that affect the interpretation of the rule. The Senate, by resolution or UC, frequently provides temporary floor access to non-designated individuals. Less commonly, it has agreed to temporarily restrict access to the Senate floor. Such restrictions have occurred in advance of the Senate's move to its current chamber in 1859 and during the impeachment trials of Presidents Andrew Johnson (1868), Bill Clinton (1999), and Donald Trump (2020). In 2007, the Senate amended Rule XXIII to exclude lobbyists from the floor, even if these individuals would otherwise be granted floor privileges under the rule.", "Rule XXIII permits certain staff members of individual Senators and Senate committees and joint committees to have access to the floor \"when in the discharge of their official duties.\" Staff access is further regulated by policies outlined in a recurring UC agreement approved at the start of each Congress, as well as those policies established by the Senate Rules and Administration Committee. For instance, each Senator is limited to two staff members on the floor at the same time. The Office of the Sergeant at Arms (SAA) enforces Senate Rule XXIII, as well as any associated resolutions or UC agreements, regarding floor access.", "This report analyzes the evolution of the floor privileges rule over time. Notable changes to the rule or its interpretation are provided, such as the first time a female staff member accessed the Senate floor (1946); when the Senate agreed to resolutions to accommodate staff with disabilities (e.g., allow the use of a service dog in the chamber, 1997); and when it permitted Senators, accompanied by their infant children, to vote on the Senate floor (2018).", "The report also addresses how staff members are granted floor privileges and how that access is limited by Rule XXIII and its associated regulations. Access via the SAA's web portal, TranSAAct, is discussed, as well as the use of unanimous consent requests to afford access to individuals not listed in TranSAAct or to enable more than two staff members from the same Senate office on the floor at one time."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["Senate Rule XXIII lists, by position category, individuals who, other than Senators, shall be permitted floor privileges in the Senate chamber when the Senate is in session. As President of the Senate, the Vice President is afforded floor privileges, even when not expected to perform formal or ceremonial duties. Additional categories include former Senators and other high-level officials and certain staff members conducting Senate business in the chamber. However, as amended in 2007, the rule excludes individuals who would otherwise be allowed if they are registered lobbyists or acting as an agent of a foreign principal.", "Over its history, the Senate has amended its floor privileges rule to add or modify the list of those granted access. The Senate has also agreed to resolutions and unanimous consent (UC) agreements that have further clarified the rule, established procedures regarding staff access, or allowed individuals not designated in the rule onto the floor.", "This report discusses the current positional categories listed in Rule XXIII, as well as the history of Senate floor privileges, beginning with the first identified Senate resolution regulating non-Senator access to the chamber in 1798. Additionally, relevant standing orders and biennial UC agreements are discussed in the report's \"evolution of the rule\" section.", "The final section of the report offers guidance in obtaining temporary staff access under the Sergeant at Arms's floor pass system or by unanimous consent. This report will be updated as necessary."], "subsections": []}, {"section_title": "Current Senate Rule XXIII", "paragraphs": [], "subsections": [{"section_title": "Positions Granted Floor Privileges", "paragraphs": ["Rule XXIII designates the individuals who are granted floor privileges in the Senate chamber. This list contains many of the same categories that were in place during the late 19 th century, as well as official positions that were established at a later time: the mayor of Washington, DC; the Joint Chiefs of Staff, and members of the European Parliament.", "Rule XXIII, Privilege of the Floor, clauses 1 and 2, states:", "1. Other than the Vice President and Senators, no person shall be admitted to the floor of the Senate while in session, except as follows:", "The President of the United States and his private secretary.", "The President elect and Vice President elect of the United States.", "Ex-Presidents and ex-Vice Presidents of the United States.", "Judges of the Supreme Court.", "Ex-Senators and Senators elect, except as provided in paragraph 2.", "The officers and employees of the Senate in the discharge of their official duties.", "Ex-Secretaries and ex-Sergeants at Arms of the Senate, except as provided in paragraph 2.", "Members of the House of Representatives and Members elect.", "Ex-Speakers of the House of Representatives, except as provided in paragraph 2.", "The Sergeant at Arms of the House and his chief deputy and the Clerk of the House and his deputy.", "Heads of the Executive Departments.", "Ambassadors and Ministers of the United States.", "Governors of States and Territories.", "Members of the Joint Chiefs of Staff.", "The General Commanding the Army.", "The Senior Admiral of the Navy on the active list.", "Members of National Legislatures of foreign countries and Members of the European Parliament.", "Judges of the Court of Claims.", "The Mayor of the District of Columbia.", "The Librarian of Congress and the Assistant Librarian in charge of the Law Library.", "The Architect of the Capitol.", "The Chaplain of the House of Representatives.", "The Secretary of the Smithsonian Institution.", "The Parliamentarian Emeritus of the Senate. ", "Members of the staffs of committees of the Senate and joint committees of the Congress when in the discharge of their official duties and employees in the office of a Senator when in the discharge of their official duties (but in each case subject to such rules or regulations as may be prescribed by the Committee on Rules and Administration). Senate committee staff members and employees in the office of a Senator must be on the payroll of the Senate and members of joint committee staffs must be on the payroll of the Senate or the House of Representatives.", "2. (a) The floor privilege provided in paragraph 1 shall not apply, when the Senate is in session, to an individual covered by this paragraph who is\u00e2\u0080\u0094", "(1) a registered lobbyist or agent of a foreign principal; or", "(2) in the employ of or represents any party or organization for the purpose of influencing, directly or indirectly, the passage, defeat, or amendment of any Federal legislative proposal.", "(b) The Committee on Rules and Administration may promulgate regulations to allow individuals covered by this paragraph floor privileges for ceremonial functions and events designated by the Majority Leader and the Minority Leader."], "subsections": []}, {"section_title": "Provision Excluding Lobbyists", "paragraphs": ["In 2007, the Senate amended Rule XXIII to exclude from the chamber persons who are otherwise allowed entrance if they are registered as lobbyists, acting as foreign agents, or representing an entity for the \"purpose of influencing, directly or indirectly, the passage, defeat, or amendment of any Federal legislative proposal.\" This exclusion, adding a new subparagraph 2(a), applies when the Senate is in session. More information on the lobbyist exclusion is presented in the evolution of the rule section of this report."], "subsections": []}, {"section_title": "Regulation and Enforcement of the Rule", "paragraphs": ["Senate Rule XXIII, clause 2(b), states that \"it shall be the duty of the Committee on Rules and Administration to make all rules and regulations respecting such parts of the Capitol \u00e2\u0080\u00a6 as are or may be set apart for the use of the Senate and its officers.\" Accordingly, the committee issues a \"Rules for Regulation of the Senate Wing,\" which is printed in the Senate Manual . ", "Rule I of the document specifies that the Senate Sergeant at Arms, under the direction of the presiding officer, enforces the rules associated with the Senate chamber. This officer supervises the Senate floor at all times and ensures that designated subordinates are in performance of their chamber-related duties. In addition, the Sergeant at Arms \"shall see that the messengers assigned to the doors upon the Senate floor are at their posts and that the floor, cloakrooms, and lobby are cleared at least five minutes before the opening of daily sessions of all persons not entitled to remain there.\""], "subsections": []}, {"section_title": "Exceptions to the Rule", "paragraphs": ["Pursuant to clause 2(b) of Rule XXIII, the Committee on Rules and Administration may promulgate regulations to allow individuals covered under clause 2(a) floor access \"for ceremonial functions and events designated by the Majority Leader and the Minority Leader.\" Thus, on certain occasions, such as opening day of a Congress, former Senators and other individuals may be invited into the chamber, even if they would otherwise be prevented by the ban on registered lobbyists.", "Temporary floor access may also be granted by unanimous consent. For instance, in 1929, unanimous consent enabled a Senator-elect to have his physician accompany him into the Senate chamber. Unanimous consent is often used to grant temporary access to House officials, such as the House Parliamentarian, or Senate interns or fellows who are not on the Senate payroll."], "subsections": []}]}, {"section_title": "Evolution of Rule", "paragraphs": [], "subsections": [{"section_title": "1789-1977", "paragraphs": ["In the earliest years of Congress, 1789-1795, the Senate closed its chamber to the public and the press. In 1795, the Senate, then meeting in the temporary capitol in Philadelphia, installed a public gallery but apparently had no official rules regarding floor access for non-Senators. "], "subsections": [{"section_title": "First Identified Senate Policy Regulating Floor Privileges (1798)", "paragraphs": ["The first identified policy concerning floor access was established in 1798. The Senate resolved, \"That no motion shall be deemed in order to admit any person, or persons, whatever, within the doors of the Senate chamber, to present any petition, memorial, or address, or to hear any such read.\" The Senate continued to follow this policy after it moved to the north wing of the Capitol Building in 1800. In 1806, the policy was codified in the first major revision of the standing rules, and it remained in the rules until the general revision of 1877.", "In the 1820 revision of the rules, the Senate established an additional rule regarding floor access. Standing Rule 38 then stated, \"When acting on confidential or executive business, the Senate shall be cleared of all persons, except the Secretary, the Sergeant-at-Arms, and Door-Keeper, or, in his absence, the assistant door-keeper.\"", "On the opening day of the 24 th Congress (1835-1837), the Senate agreed to a resolution, dated December 7, 1835, that set aside the circular gallery for the \"accommodation of ladies and the gentlemen accompanying them\" and provided, \"The reporters shall be removed from the east gallery, and placed on the floor of the Senate, under the direction of the Secretary.\" Furthermore, the resolution listed positional categories, in addition to reporters, that were allowed access to the floor. It stated, \"No person, except members of the House of Representatives, their Clerk, Heads of Departments, Treasurer, Comptrollers, Register, Auditors, Postmaster General, President's Secretary, Chaplains to Congress, Judges of the United States, foreign Ministers and their Secretaries, officers who by name have received or shall hereafter receive the thanks of Congress for their gallantry and good conduct displayed in the service of their country, the Commissioners of the Navy Board, Governor for the time being of any State or Territory of the Union, such gentlemen as have been heads of Departments, or members of either branch of the Legislature, and, at the discretion of the President of the Senate, persons who belong to such Legislatures of foreign Governments as are in amity with the United States, shall be admitted on the floor of the Senate.\"", "By resolution, in 1854, the Senate amended its floor privilege rule (then Senate Rule 48). While the updated rule did not grant floor access to reporters, who at the time observed the chamber's proceedings from a reporters' gallery, it did expand the list of other categories admitted. The new list formed the basis for the current Rule XXIII. It included government officials serving in the District of Columbia, state judges and legislators, and individuals who had previously served in positions with floor privileges. ", "The resolution also provided regulations relating to chamber access. No person\u00e2\u0080\u0094excepting Senators, Senate officers, and House Members\u00e2\u0080\u0094would be allowed entrance to the chamber via its side doors, and \"no person except members of the Senate\" would be \"allowed within the bar of the Senate, or to occupy the seat of any senator.\" Prior to entry, all persons \"claiming admission on the floor of the Senate\" were to \"enter their names, together with the official position in right of which they claim admission, in a book to be provided and kept at the main entrance to the Senate chamber.\" This policy, requiring a record of individuals accessing the floor while the Senate is in session, remains in effect today.", "Notwithstanding the policy established in 1854, Senators could, by resolution, obtain temporary floor access for individuals not otherwise permitted. For instance, in 1855, the Senate considered by unanimous consent and agreed to the following resolution: \" Resolved , That the officers and soldiers of the war of eighteen hundred and twelve, now holding a convention in this city, be invited to occupy seats upon the floor of the Senate, without the bar, during the sitting of such convention.\"", "As the Senate prepared to move into its new (and current) chamber in the Capitol's north extension, it agreed to a resolution that temporarily restricted access to the Senate floor. The resolution of December 23, 1858, stated that \"until the Senate otherwise order [ sic ], no person except senators, the officers of the Senate, and members of the House of Representatives, be admitted to the floor of the Senate while in session.\"", "Following the Senate's transition to the new chamber in January 1859, the Senate amended Rule 48 to state, \"No person shall be admitted to the floor of the Senate, while in session, except as follows, viz: The officers of the Senate, members of the House of Representatives and their Clerk, the President of the United States and his private secretary, the heads of departments, foreign ministers, ex-Presidents and ex-Vice-Presidents of the United States, ex-senators, senators elect, and judges of the Supreme Court.\" However, the Senate could, by motions and resolutions, grant temporary access to individuals for particular reasons. For instance, to address structural problems associated with the new chamber, the Senate agreed to a motion submitted on December 14, 1859: \" Ordered , That the assistant engineer in charge of heating and ventilating have the privilege of the floor of the Senate, so far as in the opinion of the presiding officer his duties make it necessary.\"", "In 1862, the Senate amended Rule 48 to add \"governors of States and Territories.\" In the next general revision of the Senate rules, agreed to on March 25, 1868, the Senate re-numbered the floor privilege rule as Rule 47 and approved a minor amendment: The phrase foreign ministers became \"ministers of the United States and foreign ministers.\" "], "subsections": []}, {"section_title": "President Johnson Impeachment Trial (1868)", "paragraphs": ["The Senate adopted its 1868 rules shortly after the House approved articles of impeachment against President Andrew Johnson on March 2 and 3. Following the commencement of the Senate trial on March 5, the Senate voted to restrict, during the impeachment proceedings, \"that portion of the Capitol set apart for the use of the Senate and its officers\" to those \"who now have the privilege of the floor, and clerks of the standing committees of the Senate\" and gallery spectators in possession of tickets issued by the Sergeant at Arms.", "Three weeks into the impeachment trial, the Senate rejected a resolution providing an exception to the floor privilege rule. By a vote of 19 yeas to 20 nays, the Senate refused \"to admit the agent of the Associated Press on the floor of the Senate during the trial of the impeachment.\""], "subsections": []}, {"section_title": "First Regular Senate Staff Members Given Floor Privileges Under Standing Rules (1872)", "paragraphs": ["In 1872, the Senate included regular Senate employees, in addition to Senate officers, to the list of positional categories afforded floor privileges under a standing rule. On motion, the Senate amended Rule 47 to add the following: \"General of the Army, Admiral of the Navy, members of the national legislatures of foreign countries, private secretaries of Senators duly appointed in writing, and the Librarian of Congress.\" By including the phrase duly appointed in writing , the Senate ensured that employee admission would be limited to officially recognized staff members.", "The Senate codified the \"private secretaries\" position in the next general revision of Senate rules in 1877. Re-numbered Rule 60, the floor privileges rule stated :", "No person shall be admitted to the floor of the Senate while in session, except as follows:", "The officers of the Senate.", "Members of the House of Representatives and their Clerk.", "The President of the United States and his Private Secretary.", "The heads of Departments.", "Ministers of the United States.", "Foreign ministers.", "Ex-Presidents and Ex-Vice Presidents of the United States.", "Ex-Senators and Senators-elect.", "Judges of the Supreme Court. ", "Governors of States and Territories.", "General of the Army.", "Admiral of the Navy.", "Members of national legislatures of foreign countries.", "Private secretaries of Senators, duly appointed in writing, and the Librarian of Congress."], "subsections": []}, {"section_title": "George Bancroft: Only Individual Identified by Name Afforded Floor Privileges Under the Standing Rules (1879-1891)", "paragraphs": ["In 1879, for the first (and only) identified time, the Senate amended its standing rules to grant permanent floor privileges to a named individual: George Bancroft, the former Secretary of the Navy, renowned historian, and author of the acclaimed multi-volume History of the United States . The Senate resolved \"that the Hon. George Bancroft be admitted to the privileges of the floor of the Senate.\" (Following Bancroft's death in 1891, newspapers reported that this privilege had been extended as a means to honor this \"most illustrious man of letters.\" )", "In 1884, the next general revision of Senate rules re-codified the rules using Roman numerals and titles to distinguish each rule. The re-numbered Rule XXXIII, Privilege of the Floor, specified the Honorable George Bancroft as an individual allowed admittance; retained the positional categories listed in the 1877 rule; and added the House Sergeant at Arms, the Assistant Librarian in charge of the Law Library, judges of the Court of Claims, and the Architect of the Capitol extension. It also contained a second clause that further regulated the admittance of non-officer Senate employees:", "No person shall be admitted to the floor as private secretary of a Senator until the Senator appointing him shall certify in writing to the Sergeant-at-Arms that he is actually employed for the performance of the duties of such secretary and is engaged in the performance of the same.", "Shortly after the 1884 revision, the Senate agreed to resolutions adding the Secretary of the Smithsonian, the commissioner of Agriculture, and the commissioners of the District of Columbia and changing the Architect of the Capitol extensions to the Architect of the Capitol. In 1888, the Senate added ex-Speakers of the House, and in 1889, it added the President-elect and Vice President-elect.", "The floor privilege rule was further amended in 1891 following the death of Bancroft, as well as the deaths of the general of the Army and the admiral of the Navy. The amendment struck the Bancroft reference and broadened the Army and Navy categories to the \"General Commanding the Army\" and the \"senior admiral of the Navy on the active list.\" It also incorporated the former clause 2, regulating the admission of Senate employees, into clause 1. The revised Senate-employee provision stated, \"Clerks to Senate committees and clerks to Senators when in the actual discharge of their official duties. Clerks to Senators to be admitted to the floor must be regularly appointed and borne upon the rolls of the Secretary of the Senate as such.\" According to the Senator offering the amendment, the change regarding Senate clerks defined \"a little more clearly who shall be entitled to admission as such.\" ", "After 1891, there were a few additions to the positions given floor privileges: ex-Secretaries of the Senate (1895), House Members-elect (1895), ex-Sergeants at Arms of the Senate (1896), Chaplain of the House (1971), and Parliamentarian Emeritus of the Senate (1975). The rules recodification of 1979 provided floor privileges to offices created in 1947 (the Joint Chiefs of Staff), 1975 (mayor of the District of Columbia), and 1979 (members of the European Parliament). "], "subsections": []}, {"section_title": "First Female Staff Member Granted Floor Privileges (1946)", "paragraphs": ["The 1891 amendment to Senate rules replaced the term secretary with clerk in reference to Senate staff working for individual Senators or Senate committees. It also removed the gendered pronoun him from the provision regulating who may obtain floor access. Thus, there were no restrictions under Senate rules that prevented female staff members from entering the Senate chamber while the Senate was in session. However, as noted by the author Lewis Gould, until 1946, \"informal tradition dictated that only male secretaries could come to the Senate floor to consult with their bosses,\" even though the Senate employed about two dozen women clerks at the end of World War II, and five women had previously served as Senators.", "The first female staff member reportedly granted floor privileges, Frances Dustin, had served as a secretary to Senator Ralph Owen Brewster for 20 years prior to her admission to the floor, which, not coincidently, occurred three days after the Senate failed to achieve the two-thirds vote necessary to approve an Equal Rights Amendment (S.J.Res. 61, 79 th Congress). Initially, Senator Brewster considered submitting a resolution providing women staffers with floor access. Once he learned that the rules did not prevent female clerks on the Senate floor, however, he instead sought a clarification from the presiding officer. Addressing the chair, he said, \"Apropos of our extended discussion last week regarding equal rights \u00e2\u0080\u00a6 I should like to have a ruling \u00e2\u0080\u00a6 as to whether, under the rules, female clerks may be allowed the privileges of the floor.\" The Senator serving as President pro tempore read the floor privilege rule out loud, then stated, \"The Chair believes, and the Parliamentarian concurs in the opinion, that a woman clerk to any Senator or to any committee has the same rights as a man clerk, as if she were a man clerk. Therefore, under that ruling, the Chair holds that they are entitled to the floor.\"", "According to Newsweek , the ruling provided the \"cue\" for Dustin's \"historic entrance\" into the chamber. Dustin, \"very gratified,\" conferred with Senator Brewster for about 10 minutes, then exited the floor, vowing that women would not \"abuse the privilege.\" The President pro tempore later confirmed that this was \"the first time in 160 years that a woman has had the privilege of the floor of the Senate as clerk to a Senator.\""], "subsections": []}]}, {"section_title": "1978-Present", "paragraphs": [], "subsections": [{"section_title": "Recurring Unanimous Consent Agreement: Two Staff Members per Senator on Floor at One Time with Pre-Notification of Journal Clerk (1978)", "paragraphs": ["Until 1978, Senators generally enabled eligible staff members to access the floor via unanimous consent (UC) requests. According to then Majority Leader Robert C. Byrd, under this practice, Senators would \"have to stand up on the floor, get the attention of the Chair, and obtain unanimous consent all the time.\" In order to \"do away with all the jumping up and down\" of Senators seeking recognition, the majority leader supported a procedure, proposed by Senator Warren Magnuson, that would allow Senators to pre-notify the Journal clerk regarding staff admissions.", "On September 30, Majority Leader Byrd requested \"unanimous consent that for the remainder of this session, Senators may enter at the desk with the Journal clerk, the names of whatever people they wish to have on the floor, indicating the legislative subject matter which they want to have attended on the floor by their people, and the date and time; and that, subject to conditions in the rear of the chamber, those staff members be allowed on the floor for the specified dates and times and purposes, with the understanding that the Sergeant at Arms be required to implement this order in a reasonable way that will not allow overcrowding in the rear of the chamber. This would mean that the Sergeant at Arms might have to ask some of the staff people to rotate, so that we would not have too many in here.\" Senator Ted Stevens indicated his support for the UC agreement provided that Senators \"must specify the bill and the date on which the staff member would be admitted in this fashion\" and that no Senator \"would be permitted to have more than two staff members on the floor at any one time.\" Majority Leader Byrd accepted the modification and received unanimous consent to put the procedure into practice.", "The following January, the majority leader established, by unanimous consent, a Senate policy providing \"for the duration of the 96 th Congress, Senators be allowed to leave at the desk with the Journal clerk a list of no more than two staff members who will be granted the privilege of the floor during the consideration of specific matter noted on the list, and that the Sergeant at Arms be instructed to rotate such staff members as space allows.\" At the start of subsequent Congresses, the majority leader has made nearly identical UC requests, re-establishing the pre-notification procedure while not codifying it in the Senate's standing rules. The former Senate Parliamentarian, Floyd Riddick, however, noted in Riddick's Senate Procedure: Precedents and Practices that Senators continue to use UC requests to obtain floor privileges for individuals otherwise not eligible or to enable more than two staff members to access the floor at one time."], "subsections": []}, {"section_title": "Rules Revisions of 1979 and 1980", "paragraphs": ["In 1979, the Senate agreed to S.Res. 274 (96 th Congress) \"to revise and modernize the Standing Rules of the Senate.\" The Privilege of the Floor rule, then still Rule XXXIII, remained the same with the exception of two additional position categories: the Joint Chiefs of Staff and the mayor of the District of Columbia (replacing the D.C. commissioner category, established in 1884). The following year, S.Res. 389 recodified and consolidated Senate rules, leading to a general renumbering, as well as minor revisions. The Privilege of the Floor rule became Rule XXIII and now included the position members of the European Parliament in the \"Members of National Legislatures of foreign countries\" provision. Thus, 1980 marked the last year a new position category was added to the Privilege of the Floor rule."], "subsections": []}, {"section_title": "Standing Order: Disability Accommodations for Staff (1997)", "paragraphs": ["In 1997, the Senate agreed to a standing order that allows individuals with disabilities using guide dogs, wheelchairs, or other accommodations to access the Senate floor. Earlier that year, Senator Ron Wyden had requested unanimous consent to enable a legislative fellow, accompanied by a service dog, onto the floor. The UC request was objected to on the Senate floor. The following day, Majority Leader Trent Lott proposed a policy, by UC, that did receive Senate approval: \" Ordered , That an individual with a disability who has, or is granted, the privilege of the Senate floor may bring those supporting services (including service dogs, wheelchairs, and interpreters) on the Senate floor which the Sergeant at Arms determines are necessary and appropriate to assist the disabled individual in discharging the official duties of his or her position until the Rules and Administration Committee has the opportunity to consider properly the matter.\" The Senate then agreed to Senator Wyden's second UC request to allow his energy-policy fellow and her guide dog into the chamber. ", "Senator Wyden subsequently sponsored S.Res. 110 (105 th Congress) \"to permit an individual with a disability with access to the Senate floor to bring necessary supporting aids and services.\" The resolution, based on the majority leader's UC agreement, resolved: ", "That an individual with a disability who has or is granted the privilege of the Senate floor under rule XXIII of the Standing Rules of the Senate may bring necessary supporting aids and services (including service dogs, wheelchairs, and interpreters) on the Senate floor, unless the Senate Sergeant at Arms determines that the use of such supporting aids and services would place a significant difficulty or expense on the operations of the Senate in accordance with paragraph 2 of rule 4 of the Rules for Regulation of the Senate Wing of the United States Capitol.", "In debate, Senator Wyden clarified that the resolution's \"undue burden language is intended to apply only in very unusual circumstances, such as where significant architectural modifications might be necessary.\" The resolution had several additional proponents, including the chair of the Senate Committee on Rules and Administration, John Warner, who stated, \"By adopting this resolution, the Senate hopes to be a model for the country in its treatment of individuals with disabilities.\" The staff disability accommodation policy continues to apply as one of the Senate's non-statutory standing orders, which operate as standing rules of the Senate.", "Also in 1997, the Senate agreed to another resolution relating to disability that applied only in that Congress. This resolution concerned a Senator, a wounded veteran, who needed assistance traveling to and from his seat in the Senate chamber. S.Res. 8 resolved: ", "That an employee in the office of Senator Max Cleland, to be designated from time to time by Senator Cleland, shall have the privilege of the Senate floor during any period when Senator Cleland is in the Senate chamber during the 105 th Congress."], "subsections": []}, {"section_title": "President Clinton Impeachment Trial (1999)", "paragraphs": ["On January 6, 1999, the day before the Senate commenced the impeachment trial of President Clinton, Majority Leader Lott requested unanimous consent to implement policies regarding \"Senate access during impeachment proceedings.\" The UC agreement required that individuals eligible for floor access under Rule XXIII enter the chamber through the Republican and Democratic cloakrooms only and that \"such access will be limited to the number of vacant seats available on the Senate floor based on protocol considerations enforced by the Secretaries for the Majority and Minority and the Sergeant at Arms.\" ", "Access to the floor would be limited \"to those having official impeachment proceedings duties\" using the following \"guidelines\":", "(not more than) three assistants to the majority leader; (not more than) three assistants to the minority leader; (not more than) two assistants to the majority whip; (not more than) two assistants to the minority whip; Secretary of the Senate (or designee); Sergeant at Arms (or designee); Secretary for the Majority (or designee); Secretary for the Minority (or designee); the Senate Legal Counsel, Deputy Legal Counsel, and Counsel for the Secretary and Sergeant at Arms (as needed); Cloakroom staff (as needed), \"under supervision of secretaries for the majority or minority, as appropriate\"; the Secretary of the Senate's legislative staff (as needed), \"under supervision of the Secretary\"; and Doorkeepers (as needed), \"under the supervision of the Sergeant at Arms.\"", "The UC agreement stipulated that \"committee and Member staff will not be permitted on the Senate floor other than as noted above; and that, accordingly, all messages to Members will be processed in the regular manner through the party cloakrooms or the reception room message desk.\" Further, \"the Sergeant at Arms shall enforce the above provisions and take such other actions as necessary to fulfill his responsibilities.\"", "In addition to the Rule XXIII position categories, the UC agreement also ordered that \"the following shall be admitted to the floor of the Senate while the Senate is sitting for impeachment proceedings\": ", "(not more than) two assistants to the Chief Justice; assistants to the House managers; and, counsel and assistants to counsel for the President of the United States."], "subsections": []}, {"section_title": "Exclusion of Lobbyists (2007)", "paragraphs": ["In 2007, Congress enacted the Honest Leadership and Open Government Act ( P.L. 110-81 ). Among its provisions, the act eliminated Senate \"floor privileges for former Members, Senate officers, and Speakers of the House who are registered lobbyists or seek financial gain.\" As amended by P.L. 110-81 , Rule XXIII now contains two clauses following the list of positional categories. Clause 2(a) excludes lobbyists from the chamber with exceptions allowed, during certain events, as outlined by clause 2(b). (Clause 3 concerns access to other Senate privileges, including athletic and parking facilities.) Clause 2 states:", "(a) The floor privilege provided in paragraph 1 shall not apply, when the Senate is in session, to an individual covered by this paragraph who is\u00e2\u0080\u0094", "(1) a registered lobbyist or agent of a foreign principal; ", "or", "(2) in the employ of or represents any party or organization for the purpose of influencing, directly or indirectly, the passage, defeat, or amendment of any Federal legislative proposal.", "(b) The Committee on Rules and Administration may promulgate regulations to allow individuals covered by this paragraph floor privileges for ceremonial functions and events designated by the Majority Leader and the Minority Leader."], "subsections": []}, {"section_title": "Infants on Floor During Votes (2018)", "paragraphs": ["In 2018, the Senate agreed to S.Res. 463 (115 th Congress), \"authorizing a Senator to bring a young son or daughter of the Senator onto the floor of the Senate during votes.\" The resolution created a new Senate standing order:", "Notwithstanding rule XXIII of the Standing Rules of the Senate, a Senator who has a son or daughter (as defined in section 101 of the Family and Medical Leave Act of 1993 ( 29 U.S.C. 2611 )) under 1 year of age may bring the son or daughter onto the floor of the Senate during votes.", "The resolution addressed a concern conveyed by a Senator anticipating the birth of her baby daughter. Senate Rule XXIII does not grant children access to the floor while the Senate is in session, and it is not in order, as noted in Senate precedents, for the Senate to record the votes of Members who are not present. Thus, Senators might be prevented from voting if they also need to care for their infant children. Under the new policy, on April 19, 2018, the day after the Senate agreed to S.Res. 463 , Senator Tammy Duckworth voted in the chamber while accompanied by her newborn daughter."], "subsections": []}, {"section_title": "President Trump Impeachment Trial (2020)", "paragraphs": ["On January 15, 2020, one day prior to the commencement of the President Trump impeachment trial, the Senate agreed to a unanimous consent request by Majority Leader Mitch McConnell that included \"allocations and provisions\" regarding \"access to the Senate wing, the Senate floor, and the Senate Chamber Galleries during all of the proceedings involving the exhibition of consideration of the Articles of Impeachment\" against the President. The UC agreement's section on Senate floor access contained three paragraphs. Paragraph (1) provided general policies related to entrance to the chamber and floor seating, and paragraphs (2) and (3) regulated floor access for specified trial assistants.", "Paragraph (2) stated:", "Limited staff access.\u00e2\u0080\u0094Officers and employees of the Senate, including members of the staffs of committees of the Senate or joint committees of the Congress and employees in the office of a Senator, shall not have privileges under rule XXIII of the Standing Rules of the Senate to access the floor of the Senate, except as needed for official impeachment proceeding duties in accordance with the following:", "(A) The Majority Leader and the Minority Leader shall each be limited to not more than 4 assistants.", "(B) The Secretary of the Senate and the Assistant Secretary of the Senate shall each have access, and the legislative staff of the Secretary of the Senate shall be permitted as needed under the supervision of the Secretary of the Senate.", "(C) The Sergeant at Arms and Doorkeeper of the Senate and the Deputy Sergeant at Arms and Doorkeeper shall each have access, and doorkeepers shall be permitted as needed under the supervision of the Sergeant at Arms and Doorkeeper of the Senate.", "(D) The Secretary for the Majority, the Secretary for the Minority, the Assistant Secretary for the Majority, and the Assistant Secretary for the Minority shall each have access, and cloakroom employees shall be permitted as needed under the supervision of the Secretary for the Majority or the Secretary for the Minority, as appropriate.", "(E) The Senate Legal Counsel and the Deputy Senate Legal Counsel shall have access on an as-needed basis.", "(F) The Parliamentarian of the Senate and assistants to the Parliamentarian of the Senate shall have access on an as-needed basis.", "(G) Counsel for the Secretary of the Senate and the Sergeant at Arms and Doorkeeper of the Senate shall have access on an as-needed basis.", "(H) The minimum number of Senate pages necessary to carry out their duties, as determined by the Secretary for the Majority and the Secretary for the Minority, shall have access.", "Paragraph (3) stated: ", "Other individuals with Senate floor access.\u00e2\u0080\u0094The following individuals shall have privileges of access to the floor of the Senate:", "(A) Not more than 3 assistants to the Chief Justice of the United States.", "(B) Assistants to the managers of the impeachment of the House of Representatives.", "(C) Counsel and assistants to counsel for the President of the United States."], "subsections": []}]}]}, {"section_title": "Obtaining Staff Floor Privileges", "paragraphs": ["The Sergeant at Arms enforces the rules and regulations governing the Senate chamber. Accordingly, the Office of the Sergeant at Arms (SAA), including its Doorkeepers, supervises and restricts staff access to the floor. The SAA ensures that non-chamber staff members will not access the floor during a Senate session unless they are on the Journal clerk's pre-notification list or are allowed under the terms of a unanimous consent request. The SAA also ensures that, barring a UC request, no more than two staff members from the same Senator's office will be on the floor at the same time, as mandated in the recurring UC agreements agreed to at the start of each Congress."], "subsections": [{"section_title": "Access Under the Pre-Notification Floor Pass Procedure", "paragraphs": ["As approved by the Committee on Rules and Administration, the \"Regulations Controlling the Admission of Employees and Senate Committees to the Senate Floor\" are meant to \"permit closer supervision over employees admitted to the Senate Floor\" without depriving any employees the privilege of the floor if they are \"entitled thereto under Rule XXIII.\" In view of these regulations, the Senate Doorkeepers provide Senate staff members with the following instructions regarding floor access."], "subsections": [{"section_title": "Pre-Notification via the Senate Sergeant at Arms's TranSAAct System", "paragraphs": ["Senate office managers and other staff are issued credentials that allow them to submit, using the SAA TranSAAct web portal, a list of staff members to be granted Senate floor privileges. The submitted staff members should be eligible for floor access pursuant to clause 1 of Rule XXIII. That is, they must be Senate committee staff members or working in the office of a Senator and on the payroll of the Senate or joint committee staff members and on the payroll of the Senate or the House of Representatives. Should the Senate or joint committee office experience any personnel changes affecting its list of eligible individuals, the credentialed staff member should submit those changes to the SAA via TranSAAct.", "While Senate offices may pre-submit the names of multiple staff members, the number of staff members from the same office allowed on the floor at one time is limited. The SAA restricts access to those individuals who are in temporary possession of floor passes provided by the Credentials Desk."], "subsections": []}, {"section_title": "Floor Pass Allotment", "paragraphs": ["Every committee of the Senate, as well as joint committees, are allotted six cards (floor passes) to be used when the committee has jurisdiction over pending legislation. Four cards may be used as needed without a time limit. Two cards are given with a 15-minute time limit, allowing staff members to perform brief official duties, such as assisting with poster boards and other visual displays.", "Each Senator and the Vice President is allotted two cards. The Senate cards are issued to regular full-time Senate staff members working in a Senator's office. They are to be used while the staff member is performing official duties relating to a particular bill or matter under consideration. One card is not time limited, while the other card has a 15-minute limit. The time-limited cards allow staff members to speak briefly to a Senator or transport materials to the floor."], "subsections": []}, {"section_title": "Obtaining Floor Passes", "paragraphs": ["During a Senate session and 30 minutes prior, an eligible staff member may sign in and obtain a pass at the Credentials Desk, located between the Senate Reception Room and the Senate chamber. The desk attendant checks the staff member's official Senate ID badge and verifies that the staff member's name has been pre-submitted via the TranSAAct system. (Unlisted staff members are advised to contact their offices and request to be added to the database.) The desk attendant also notes in the daily roster\u00e2\u0080\u0094now an electronic database\u00e2\u0080\u0094the staff member's name, office, and official business to be performed and the card number issued to the employee.", "Following the sign-in procedures, staff members granted floor access are to display both their Senate ID badges and the floor passes to the Doorkeeper at the entrance of the chamber. When their duties are completed, they are to exit the chamber and return the floor passes to the attendant at the Credentials Desk."], "subsections": []}, {"section_title": "Limitations on Use of Floor Passes", "paragraphs": ["If a Senator's office allotment has been met, any additional employees seeking floor access are to wait in the Senate lobby until one of the office employees returns from the floor. According to the Senate Doorkeepers' \"Guidelines Regarding Floor Privileges,\" the Sergeant at Arms may also \"rotate staff on and off the floor to eliminate congestion.\" Additionally, the SAA may restrict access due to restrictions imposed under the terms of a UC agreement or a Senate resolution. (See, for example, the Clinton impeachment UC agreement.) Staff members who wish to observe, but not assist in, Senate proceedings are advised to do so from the Senate galleries.", "Staff members are to remain on the floor \"only as long as necessary for the transaction\" of the staff members' official business. During the time spent on the floor, they \"shall in no way encroach upon the areas and privileges reserved for Senators only.\" Most floor passes permit staff members to use one designated door to access the chamber. However, each committee is given two full-floor passes, one for a majority staff member and one for a minority staff member, allowing those in possession to enter and exit the chamber throughout the day and through any door. At the start of roll-call votes, the Sergeant at Arms closes the floor for entry, except for those staff members granted access via unanimous consent or committee staff members \"associated with the issue involved.\""], "subsections": []}]}, {"section_title": "Access by Unanimous Consent", "paragraphs": [], "subsections": [{"section_title": "Reasons for UC Requests", "paragraphs": ["In addition to the pre-notification procedures outlined above, Senators may use UC requests to provide access to staff members. UC requests may be used when an eligible staff member is needed on the floor but is not currently in the TranSAAct database. Additionally, Senators may seek UC approval to enable floor access for more than two staff members at one time or to provide access to an assistant who is not on the Senate payroll, such as a legislative fellow or intern. Senators may also obtain UC agreements to provide temporary floor privileges to other individuals."], "subsections": []}, {"section_title": "Language Used in UC Requests", "paragraphs": ["Floor-privilege UC agreements usually include a time limitation, such as for the duration of the day, session, or Congress. If the Senator is requesting the assistance of more than two staff members, the UC request will likely include the reason why the maximum number should be temporarily increased.", "The following are examples of UC request language that might be used to enable individuals to access the floor aside from the pre-notification floor pass procedure."], "subsections": [{"section_title": "Allowing Assistants Not on the Senate Payroll", "paragraphs": ["Senator: Mr. [or Madam] President, I ask unanimous consent that my defense fellow, [named individual], be given floor privileges for the remainder of the first session of the 116 th Congress."], "subsections": []}, {"section_title": "Allowing More Than Two Staff Members on the Floor at One Time", "paragraphs": ["Senator: Mr. [or Madam] President, as manager of the pending bill, I require the assistance of more than two staff members on the floor today. I ask unanimous consent that the following staff members, [named individuals], be afforded the privilege of the floor during debate and all votes on the [named bill]."], "subsections": []}]}]}]}]}}
{"id": "R46251", "title": "Committee Jurisdiction and Referral in the House", "released_date": "2020-03-04T00:00:00", "summary": ["When legislation is introduced in the House or received from the Senate, it is referred to one or more committees primarily on the basis of the jurisdictional statements contained in clause 1 of House Rule X. These statements define the policy subjects on which each standing committee may exercise jurisdiction on behalf of the chamber. The statements themselves tend to address broad policy areas rather than specific departments, agencies, or programs of the federal government. Because comm ittee jurisdiction often is expressed in general policy terms, it is possible for more than one committee to claim jurisdiction over different aspects of a broad subject that may encompass a myriad of specific programs and activities.", "When referring a measure to more than one committee (a \"multiple referral\"), the Speaker is directed by clause 2 of House Rule XII to identify a \"primary\" committee of referral, which is the panel understood to exercise jurisdiction over the main subject of the measure. Rule XII further provides the Speaker with the authority to refer legislation to more than one committee either at the point of introduction (an \"initial additional referral\"), or after another committee has reported (a \"sequential referral\"). The Speaker may also divide a measure into its component parts and refer individual pieces to different House panels (a \"split referral\"), but split referrals are rare in current practice.", "The Speaker is empowered to place time limits on any referral and always does so in the case of a sequential referral. The Speaker also \"may make such other [referral] provision as may be considered appropriate.\" House rules vest these powers of referral in the Speaker; in practice, the House Parliamentarian makes day-to-day referral decisions acting as the Speaker's nonpartisan and disinterested agent.", "Although clause 1 of Rule X is the main determinant of House committee jurisdiction, other factors may also influence how legislation is referred, including precedents established by past referrals; agreements between committees outlining their jurisdictional boundaries on new, evolving, or contested policy subjects; and statutes that identify how particular kinds of matters will be referred.", "The jurisdictions of subcommittees are not explicitly stated in House rules. The jurisdiction of a subcommittee is generally determined by the full committee that created it. If a subcommittee's jurisdiction is not explicitly defined by its parent committee, measures are generally referred to subcommittee or retained by the full committee at the discretion of its chair.", "A distinction can be made between legislative and oversight jurisdiction. Legislative jurisdiction describes the authority of a committee to receive and report measures to the House. Oversight jurisdiction refers to a committee's ability to review matters within its purview, for instance by conducting hearings and investigations. Legislative jurisdiction is defined in clause 1 of Rule X, while clause 2 of the same rule directs all standing committees to \"review and study on a continuing basis the application, administration, execution, and effectiveness of laws and programs addressing subjects within its [legislative] jurisdiction.\""], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Jurisdiction of House Committees", "paragraphs": ["When legislation is introduced in the House or received from the Senate, it is referred to one or more committees primarily on the basis of the jurisdictional statements contained in clause 1 of House Rule X. These statements define the policy subjects on which each standing committee may exercise jurisdiction on behalf of the chamber. The statements themselves tend to address broad policy areas and not specific departments, agencies, or programs of the federal government. Many federal departments and agencies handle a wide variety of policy areas that do not fit neatly within the subject matter jurisdiction of one or another standing committee. Because committee jurisdiction often is expressed in general policy terms, it is possible for more than one committee to claim jurisdiction over different aspects of a broad subject that may encompass a myriad of specific programs and activities. Additional guidance and context to the referral of measures addressing particular policy areas can be found in notes and annotations written by the House Parliamentarian located below the jurisdictional statements of each standing committee in the House Manual .", "Take the subject of roads for example. When it comes to the design and planning of road construction or maintenance, the House Transportation and Infrastructure Committee exercises jurisdiction on the basis of its responsibility defined in clause 1(r)(11) of Rule X for the \"Construction or maintenance of roads or post roads (other than appropriations therefor).\" However, as suggested by the parenthetical in this jurisdictional statement, the amount of money made available for road construction or maintenance through the annual appropriations process is a matter within the domain of the House Committee on Appropriations, which has jurisdiction over the \"Appropriation of the revenue for the support of the Government.\"", "Furthermore, in addition to federal spending that occurs through the annual appropriations process, funding for the construction and maintenance of the nation's roadways may also be drawn from the Highway Trust Fund, which accrues revenue mainly from the collection of federal gasoline taxes. The use of general revenues to fund a particular federal activity\u00e2\u0080\u0094in this case, highways\u00e2\u0080\u0094is by precedent considered a matter of revenue collection and within the purview of the House Committee on Ways and Means, which has jurisdiction over \"Revenue measures generally.\" Additional committees as well may exercise jurisdiction over aspects of the nation's roadways, depending on how subjects within their jurisdictions are connected to issues involving roads."], "subsections": []}, {"section_title": "Referral of Legislation in the House", "paragraphs": ["When a Member introduces a bill or resolution, or when legislation from the Senate is received in the House, clause 2 of House Rule XII directs the Speaker to refer the measure to committee ", "in such manner as to ensure to the maximum extent feasible that each committee that has jurisdiction under clause 1 of Rule X over the subject matter of a provision thereof may consider such provision and report to the House thereon.", "Multiple referral\u00e2\u0080\u0094referring a measure to more than one committee\u00e2\u0080\u0094is common in the House as a result of the standing rules governing jurisdiction (Rule X) and the referral of legislation to committee (Rule XII). When language in a measure is within a committee's jurisdiction, it will trigger (\"to the maximum extent feasible\") a referral of the measure to that committee. In practice, the entire bill is sent to each committee of referral with the expectation that each committee will act only on matters that fall within its jurisdiction. Committees often monitor their own legislative actions and those of their counterparts for any jurisdictional issues that may arise when a committee reports its recommended changes to the House.", "When legislation is multiply referred, the Speaker identifies a \"primary\" committee of referral, which is the panel understood to exercise jurisdiction over the main subject of the measure. House Rule XII further provides the Speaker with the authority to refer legislation to more than one committee either at the point of introduction (an \"initial additional referral\"), or after another committee has filed its report (a \"sequential referral\"). The Speaker may also divide a measure into its component parts and refer individual pieces to different House panels (a \"split referral\"), but split referrals are rare in current practice.", "The Speaker is empowered to place time limits on any referral and always does so in the case of a sequential referral. In most cases, once the primary committee has reported to the House, the Speaker will set a deadline for additional committees of referral to report or be automatically discharged from further consideration. Although the Speaker has the authority to do so, rarely are time limits established on deliberations of a primary committee, or extended beyond the deadline imposed by a sequential referral. Due to their presumed expertise on matters within their jurisdiction, committees of primary or sole referral generally enjoy deference from the House on whether or not to report legislation to the full chamber.", "With House approval, the Speaker may appoint Members from relevant committees of jurisdiction to a special, select, or ad hoc committee in order to receive and review specific matters and report to the House its findings or recommendations. Rule XII further indicates that the Speaker \"may make such other [referral] provision as may be considered appropriate.\" House rules vest these powers of referral in the Speaker; in practice, the House Parliamentarian makes day-to-day referral decisions acting as the Speaker's nonpartisan and disinterested agent.", "Worth noting is that House rules and procedures for referring legislation have changed in recent decades. For instance, prior to January 3, 1975, House rules provided no formal mechanism for a measure to be referred to two or more committees with a jurisdictional claim to the measure's subject matter. The ability of the Speaker to refer legislation to more than one committee was first established in House rules through the adoption of H.Res. 988 (93 th Congress), the Committee Reform Amendments of 1974, which became effective at the start of the 94 th Congress (1975-1976). Furthermore, at the outset of the 98 th Congress (1983-1984), Speaker O'Neill announced a policy of identifying a \"primary\" committee of jurisdiction when legislation was multiply referred, and beginning in the 104 th Congress (1995-1996) the designation of a primary committee of referral by the Speaker has been a requirement of House rules."], "subsections": []}, {"section_title": "Additional Factors Affecting Jurisdiction and Referral", "paragraphs": ["Clause 1 of House Rule X is the main determinant of House committee jurisdiction, but other factors may also influence how legislation is referred. For instance, some committees have crafted written memoranda between them memorializing their common understanding of the jurisdictional boundaries guiding the referral of measures on topics that are jurisdictionally ambiguous, or over which multiple committees make a claim. Such memoranda cannot override the explicit jurisdictional statements of Rule X, but they can be viewed as explanations of the committees' common understanding of these statements. In some cases, committees have published these memoranda in the Congressional Record .", "The act of referring measures to committees also can serve as a determinant of House committee jurisdiction. According to Hinds' Precedents of the U.S. House of Representatives , when the House refers \"a bill or resolution to any committee ... jurisdiction is thereby conferred.\" Consequently, once a measure has been referred to a committee, precedent is established for future referrals to that committee of measures of the same type. This is true even in the case of an erroneous reference to committee. If the error is not corrected, jurisdiction is conferred on the committee by the referral. If a measure is enacted into law, amendments to the law are presumed to be within the originating committee's jurisdiction.", "The referral of certain kinds of measures may also be defined in statute. The House rulebook contains 35 different sets of statutory legislative procedures (also called \"expedited\" or \"fast-track\" procedures) that apply only to a narrow class of items described in the statute itself. Some statutory procedures contain \"automatic referral\" provisions specifying the committee(s) to which a particular item would be referred if one were introduced or received by the House. For instance, if the Defense Base Closure Commission reports to Congress a recommendation to relocate or close U.S. military bases, the Defense Base Closure and Realignment Act of 1990 ( P.L. 101-510 ) allows for expedited consideration of a House or Senate joint resolution disapproving the commission's recommendation. If such a joint resolution were introduced in the House, Section 2908(b) of that act indicates that it \"shall be referred to the Committee on Armed Services.\""], "subsections": []}, {"section_title": "Jurisdiction and Referral to House Subcommittees", "paragraphs": ["The jurisdictions of subcommittees are not explicitly stated in House rules. The jurisdiction of a subcommittee is generally determined by the full committee that created it. In many cases, the full committee will establish the jurisdictions of its subcommittees in the rules that committees are required to adopt during the first few months of a new Congress. If a subcommittee's jurisdiction is not defined by its parent committee, measures are generally referred to subcommittee or retained by the full committee at the discretion of its chair. Some committees rely more heavily on their subcommittees to process legislation and make recommendations than do other committees."], "subsections": []}, {"section_title": "Legislative and Oversight Jurisdiction", "paragraphs": ["An important distinction can be drawn between legislative and oversight jurisdiction. Legislative jurisdiction describes the authority of a committee to receive and report measures to the House. Oversight jurisdiction refers to a committee's ability to review matters within its purview, for instance by conducting hearings and investigations. Legislative jurisdiction is defined in clause 1 of Rule X, while clause 2 of the same rule directs all standing committees to \"review and study on a continuing basis the application, administration, execution, and effectiveness of laws and programs addressing subjects within its [legislative] jurisdiction.\" Several committees are given additional oversight duties in clause 3 of Rule X, and the fourth clause of that rule specifies additional functions committees are expected to fulfill. Clause 4(f) of Rule X, for instance, instructs each standing committee to submit to the Budget Committee its \"views and estimates\" on policy proposals contained in the President's budget submission to Congress that fall within its jurisdiction.", "Some committees interpret their oversight responsibilities more broadly than others do, which can lead to jurisdictional disputes over which committee is best equipped to conduct hearings, investigations, or other oversight activities. Many policy areas are complex and multidimensional, and considering how subject matter responsibilities are allocated broadly across committees, more than one committee may be involved in overseeing specific aspects of a general subject. Similar to the example of roads explained above in which a number of committees can play a role based on their subject matter (legislative) jurisdictions, oversight of a given area might also be shared by committees exercising different Rule X responsibilities."], "subsections": []}]}}
{"id": "R45782", "title": "Location of Medication-Assisted Treatment for Opioid Addiction: In Brief", "released_date": "2019-06-24T00:00:00", "summary": ["The substantial burden of opioid abuse related to the current opioid epidemic in the United States has resulted in a disparity between the need for substance abuse treatment and the current capacity. Methadone and buprenorphine are two medications used in medication-assisted treatment (MAT) for opioid use disorder (OUD). Methadone and buprenorphine are both opioids; their use to treat opioid use disorders is often called opioid agonist treatment or therapy (OAT) or opioid agonist MAT . As controlled substances, methadone and buprenorphine are subject to additional regulations. Methadone may be used to treat opioid addiction within federally certified opioid treatment programs (OTP)\u00e2\u0080\u0094often referred to as methadone clinics. Buprenorphine may be used to treat opioid use disorder in two settings: (1) within an OTP and (2) outside an OTP pursuant to a Drug Addiction Treatment Act (DATA) waiver.", "The federal government has taken steps to increase the availability of MAT in response to the escalation of opioid overdoses and deaths in recent years. Policy efforts to address the opioid epidemic have corresponded with increased treatment availability, yet access to substance abuse treatment has not kept pace with the increasing rates of opioid addiction in the United States. Geographic information is important in accurately evaluating treatment capacity. Treatment location may be especially relevant to understanding the discrepancy between need and capacity. The current report identifies the geographic location of MAT providers using methadone and buprenorphine (opioid agonist treatment) in the United States. The analysis uses Substance Abuse and Mental Health Services Administration (SAMHSA) data to identify the number and location of (1) federally certified opioid treatment programs and (2) practitioners with DATA waivers. The geographic location of OTPs and DATA-waived practitioners are displayed in several national and regional maps.", "Identifying the location of OAT providers may have utility in increasing accessibility to treatment. However, simply increasing capacity for treatment may not effectively increase availability (or decrease opioid-related overdoses) if treatment providers are not located in areas of need. The current analysis does not evaluate need\u00e2\u0080\u0094by locating opioid-related overdose hospital admissions and deaths for instance. It does, however, provide an initial step in assessing how treatment providers are dispersed geographically. Other factors, such as substance use treatment financing, stigma, and waiting periods for services may also affect OAT availability. Practitioners are subject to state laws and regulations regarding prescribing privileges which affect their eligibility for DATA waivers and, in turn, the availability of treatment. Congress may incorporate geographic factors in strategies designed to increase capacity and availability of treatment."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["The substantial burden of opioid abuse related to the current opioid epidemic in the United States has resulted in a disparity between the need for substance abuse treatment and the current capacity of the health care delivery system to meet that need. In 2017, over 47,600 people died of opioid-related drug overdoses in the United States. In that same year, an estimated 11.4 million people aged 12 and older misused opioids, including 11.1 million misusers of prescription pain relievers and 886,000 heroin users. The majority of individuals in need of treatment do not receive it. In 2016, one-fifth (21.1%) of those with any opioid use disorder (OUD) received specialty substance abuse treatment, including 37.5% of those with heroin use disorder and 17.5% of those with prescription pain reliever use disorders."], "subsections": []}, {"section_title": "Opioid Agonist Medication-Assisted Treatment", "paragraphs": ["Medication-assisted treatment (MAT) is the combined use of medication and other services to treat addiction. MAT is widely accepted as the most effective treatment for opioid use disorder. Three medications are currently used in MAT for opioid addiction: methadone, buprenorphine, and naltrexone (naloxone, a medication used to reverse opioid overdose, is not used to treat opioid use disorders). Methadone and buprenorphine are both opioids; their use to treat opioid use disorders is often called opioid agonist treatment (OAT), opioid agonist MAT , opioid substitution therapy , or opioid replacement therapy . Methadone or buprenorphine may be used both in the short term to mitigate the immediate withdrawal symptoms associated with discontinuing use of the opioid of abuse and over extended periods to maintain abstinence and prevent relapse. Descriptions of medication-assisted treatments for opioid use disorder and commonly used acronyms are included in the textbox below. ", "As controlled substances, methadone and buprenorphine are regulated under the Controlled Substances Act (CSA; 21 U.S.C. \u00c2\u00a7\u00c2\u00a7801 et seq.). Under the CSA, methadone may be used to treat opioid addiction within an inpatient setting, such as a hospital, or in a federally certified opioid treatment program (OTP). Federally certified OTPs\u00e2\u0080\u0094often referred to as methadone clinics\u00e2\u0080\u0094offer opioid medications, counseling, and other services for individuals addicted to heroin or other opioids. With few exceptions, the use of methadone to treat opioid addiction is limited to OTPs. Treatment within an OTP may be in an inpatient or outpatient capacity, though typically it occurs on an outpatient basis. There are no federal limits on the number of patients that can be treated at an OTP. However, in 2016 HHS determined\u00e2\u0080\u0094through SAMHSA survey data\u00e2\u0080\u0094that an OTP could manage, on average, 262 to 334 patients at any given time. For more information on federal regulations regarding opioid treatments, see CRS In Focus IF10219, Opioid Treatment Programs and Related Federal Regulations , by Johnathan H. Duff. ", "Buprenorphine may be used to treat opioid use disorder in two settings: (1) within an OTP and (2) outside an OTP pursuant to a waiver. A physician or other practitioner (e.g., physician assistant or nurse practitioner) may obtain a waiver to administer, dispense, or prescribe buprenorphine outside an OTP. This is commonly known as a DATA waiver, drawing its name from the law that established the waiver authority: the Drug Addiction Treatment Act of 2000 (DATA 2000). To qualify for a waiver, a practitioner must notify the Health and Human Services (HHS) Secretary of the intent to use buprenorphine to treat opioid use disorders and must certify that he or she ", "is a qualifying practitioner; can refer patients for appropriate counseling and other services; and will comply with statutory limits on the number of patients that may be treated at one time. ", "The patient limit is 30 individuals during the first year and may increase to 100 after one year or immediately if the practitioner holds additional credentialing or operates in a qualified practice setting. The patient limit may increase to 275 after one year under certain conditions specified in regulation. Practitioners are subject to state laws and regulations regarding prescribing privileges and therefore may not be eligible in all states. Similar to methadone treatment, MAT with buprenorphine typically takes place in an outpatient setting. For a more detailed account of the federal regulations related to buprenorphine, see CRS Report R45279, Buprenorphine and the Opioid Crisis: A Primer for Congress , by Johnathan H. Duff."], "subsections": []}, {"section_title": "Policy Considerations", "paragraphs": ["The federal government has taken steps to increase the availability of opioid agonist MAT in response to the escalation of opioid overdoses and deaths in recent years. Both Congress and the Administration have implemented policies intended to increase access to methadone and buprenorphine, such as changes to the DATA waivers. The Comprehensive Addiction and Recovery Act of 2016 (CARA; P.L. 114-198 ), for instance, provided qualifying nurse practitioners and physician assistants temporary eligibility to obtain DATA waivers. The SUPPORT for Patients and Communities Act ( P.L. 115-271 ), enacted in 2018, made the authority for qualifying nurse practitioners and physician assistants to obtain DATA waivers permanent and expanded the definition of \"qualifying other practitioners\" to include other midlevel providers such as clinical nurse specialists, certified registered nurse anesthetists, and certified nurse midwives. The law also authorized programs to establish additional comprehensive opioid recovery centers that offer a \"full continuum of treatment services\" including all FDA-approved medications used in MAT as well as \"regional centers of excellence in substance use disorder education\" that would aim to improve health professional training in substance abuse treatment. ", "Policy efforts to address the opioid epidemic have corresponded with increased MAT availability. The percentage of substance abuse treatment facilities providing buprenorphine treatment increased from 14% in 2007 to 29% of all facilities in 2017. Additionally, the number of DATA-waived physicians with a 30-patient limit increased nine-fold from 2003 to 2012\u00e2\u0080\u0094from 1,800 physicians to 16,095. Physicians with a 100-patient limit tripled in the latter half of that span\u00e2\u0080\u0094from 1,937 in 2007 to 6,103 in 2012. ", "Despite this increase, access to substance abuse treatment has not kept pace with the mounting rates of opioid addiction in the United States. Additionally, while the capability to treat patients with buprenorphine has expanded through an increase in DATA waivers, practitioners with these waivers are not treating to capacity. A 2018 study by SAMHSA leadership found that the number of patients being treated by DATA-waived providers included in their study was substantially lower than the authorized waiver patient limit. The percentage of clinicians prescribing buprenorphine at or near the patient limit in the month prior to the study was 13.1%. "], "subsections": []}, {"section_title": "Geographical Analysis", "paragraphs": ["Geography is essential to accurately evaluating opioid agonist MAT capacity. Treatment location may be especially relevant to understanding any discrepancy between need and capacity: where services are located may be more important than how many patients a practitioner is allowed to treat. According to the 2018 study on DATA-waived clinicians, the top reason practitioners cited for not prescribing buprenorphine was lack of patient demand. This suggests a discrepancy between OAT practitioners and patients in need. DATA-waived practitioners may not be in the areas with the most need for treatment, for instance. Other barriers may also exist that prevent patients from accessing services. Factors affecting the treatment gap may include health insurance coverage, reimbursement for treatment services, transportation, stigma, awareness of treatment options and availability, and motivation for recovery, among others.", "The current report identifies the geographic location of opioid agonist treatment providers in the United States. The analysis uses SAMHSA data to identify the number and location of (1) federally certified opioid treatment programs and (2) practitioners with DATA waivers. Data are displayed nationally as well as by county. ", "The location of opioid agonist MAT providers does not necessarily equate to availability of treatment. Other aforementioned factors, such as treatment costs, demand for services, wait times, and awareness of options also affect treatment availability. The current report does not attempt to evaluate the availability, accessibility, or total capacity for treatment of any area. It also does not assess need for treatment services\u00e2\u0080\u0094an essential factor in classifying discrepancies between demand for treatment and capacity of services. "], "subsections": [{"section_title": "Methodology", "paragraphs": ["The Substance Abuse and Mental Health Services Administration, a branch of HHS which oversees the certification of opioid treatment programs and the buprenorphine waiver program, provides the number and location of OTPs and daily updates on the number and location of DATA-waived practitioners. Using these data, CRS plotted 99% of OTP locations (1,652 OTPs) and 99% of publicly-available DATA-waived practitioner locations (40,016 practitioners) using the geospatial software ArcGIS. As of June 1, 2019, the number of federally certified OTPs in the United States was 1,674. The total number of DATA-waived providers with a 30-patient limit exceeded 50,000 and those with a 100-patient limit exceeded 12,000. The number of practitioners with a 275-patient limit totaled over 4,800. This provides the capacity for at least 4 million patients to be treated with buprenorphine through DATA-waived providers.", "CRS generated a series of maps to depict the distribution of DATA-waived providers and neighboring OTPs in 2018. There are two maps at the national level in Figure 1 and Figure 2 , and two for the Northeast and parts of the Midwest in Figure 3 . The latter maps shade in each county based on the number of DATA-waived providers in that county and demarcate each OTP with a purple dot. The shading of each county was determined using Jenks natural breaks optimization, a statistical method used to create \"fair\" categories. As a result, each level of shading does not follow a consistent range. The smallest shading category (1-32 DATA-waived practitioners in a county) is much smaller in range than the largest (446-871 DATA-waived practitioners in a county) on account of this method. ", "The Northeast region of the United States is displayed in a separate map for greater visibility of the high number of OTPs within a relatively small geographic area. (Other areas experiencing highly clustered OTPs, such as California and Florida, are more easily discerned on the national map and are therefore not displayed in additional maps.) Parts of the Midwest are displayed in a regional map for greater visibility of areas disproportionately affected by the opioid crisis. These maps present location of OAT providers only. Geography is one indication of adequacy of treatment capacity but other factors\u00e2\u0080\u0094such as population density and the size of the affected populations in the area\u00e2\u0080\u0094are also relevant. This analysis only examines the geographic location of OAT providers. "], "subsections": []}, {"section_title": "Results", "paragraphs": ["Results depicted in Figure 1 , Figure 2 , and Figure 3 show that opioid agonist medication-assisted treatment services are not evenly distributed across the country. The maps in Figure 2 and Figure 3 depict the location of federally certified OTPs and the number of DATA-waived practitioners in each county. Results from this analysis indicated that:", "1,217 counties (39% of counties nationally)\u00e2\u0080\u0094populated by an estimated 17.5 million people (of 321 million nationally, or 5.5% of the population)\u00e2\u0080\u0094had no DATA-waived practitioners. Nearly 2,500 counties (80% nationally), populated by an estimated 77.5 million people (24% of the population), had no OTPs and 1,202 counties (38%), populated by 16.8 million people (5.2%), had neither an OTP nor a DATA-waived practitioner. Of the over 1,200 counties with no OAT providers, nearly half (45%) are classified as rural according to the U.S. Census. These counties are primarily located in the Midwest and South; Texas (13% of counties with no OTPs or DATA-waived practitioners), Georgia (6%), Kansas (6%), Nebraska (5%), Iowa (5%), and Missouri (5%) have the highest percentages of counties with no OTPs or DATA-waived providers. Twenty-five counties with no OTPs or DATA-waived practitioners had more than 50,000 residents. ", "It is important to consider that county size and population are not necessarily indicators of substance abuse treatment need. Counties are also not equivalent in geographic area, shape, and popula tion size and therefore comparisons on treatment availability strictly across the county level may not be appropriate. Additionally, the absence of OAT providers does not necessarily equate to lack of access (adjacent counties may offer treatment for instance and patients may travel for inpatient treatment). Similarly, the presence of providers does not necessarily equate to treatment availability, particularly within counties that encompass large geographic areas. "], "subsections": []}, {"section_title": "Policy Implications", "paragraphs": ["Federal lawmakers have sought to increase the capacity for opioid use disorder treatment with MAT to address the ongoing opioid epidemic. Thus far in the 116 th Congress, policymakers have introduced nearly a dozen bills explicitly pertaining to opioid use disorder treatment expansion. For example, one bill would remove some requirements for health providers to receive DATA waivers to administer buprenorphine, with the intention that more practitioners would then pursue these waivers. ", "Identifying the location of OAT providers may be essential to increasing accessibility to treatment. Simply increasing capacity for treatment may not effectively increase availability (or decrease opioid-related overdoses) if treatment providers are not located in areas of need. While the current analysis does not evaluate need\u00e2\u0080\u0094by locating opioid-related overdose hospital admissions and deaths for instance\u00e2\u0080\u0094it does provide an initial step in assessing how treatment providers are dispersed geographically. Other factors, such as substance use treatment financing, may also affect OAT availability. Practitioners are also subject to state laws and regulations regarding prescribing privileges which affect the eligibility of providers for DATA waivers and, in turn, the availability of treatment. ", "Congress may consider incorporating geographic factors in strategies designed to increase capacity and availability of treatment. For instance, policymakers may acknowledge the dispersion of treatment providers within small geographic units and the proximity of OTPs to DATA-waived practitioners when drafting legislation. Rural areas may not have the same volume of need for substance use disorder treatment as urban areas, yet they may possess additional barriers to care that make accessibility to treatment challenging. For example, patients traveling long distances to receive daily methadone at an OTP may face obstacles related to transportation or infrastructure that make continuity of treatment difficult. Additionally, DATA-waived providers alone may not have the resources to provide complementary services such as counseling and behavioral therapies, or housing and vocational services. ", "Some individual states have sought to address geographical obstacles to care through treatment and policy strategies. Vermont, for example, operates a \"hub-and-spoke\" system, in which patients seeking treatment for OUD establish care at an OTP (the \"hub\") where they receive more intensive services, often during their initial entry to treatment when such concentration of services is more necessary. Once patients are stabilized, they transition to a DATA-waived provider in their community for maintenance treatment with buprenorphine (the \"spoke\"), and other services. If patients relapse, they may return to the OTP until they are ready to transition back to outpatient buprenorphine, and the cycle continues. Throughout their treatment, patients are followed by the same care management team who assist them in finding and accessing appropriate services. Vermont officials sought to ensure OTPs were distributed throughout the state (see Figure 3 ). A part of Vermont's hub and spoke strategy has been to divide resources geographically throughout the state to reduce the number of areas without treatment. Other states, such as New Jersey and Washington, addressed geographic barriers by operating mobile methadone units, known as \"methadone vans,\" which travelled from OTPs to provide daily methadone medication to rural and other hard-to-reach patients. Other states have offered similar mobile services with buprenorphine. ", "Increasing the quantity of treatment providers may only be effective in addressing the opioid epidemic if access to treatment is also addressed. Both examples provided above, for instance, seek to not only expand treatment capacity, but also enhance accessibility by attending to location of services in relation to the patient population. Geography alone is not the only barrier; stigma, financing, and patient willingness may also influence the amount and utilization of services. Congress may explore additional solutions, such as the use of telemedicine services where possible. Nevertheless, identifying the location of providers may be an important step for policymakers seeking to increase availability of treatment for opioid use disorder."], "subsections": []}]}]}}
{"id": "R46214", "title": "Federal Spending on Benefits and Services for People with Low Income: FY2008-FY2018 Update", "released_date": "2020-02-05T00:00:00", "summary": ["The Congressional Research Service (CRS) regularly receives requests about federal benefits and services targeted to low-income populations. This report is the latest update in a series of CRS reports that attempt to identify and provide information about federal spending targeted to this population. The report series does not discuss social insurance programs such as Social Security, Medicare, or Unemployment Insurance, but includes only programs with an explicit focus on low-income people or communities. Tax provisions, other than the refundable portion of two tax credits, are excluded. Past reports in this series include the following:", "CRS Report R44574, Federal Benefits and Services for People with Low Income: Overview of Spending Trends, FY2008-FY2015 , and CRS Report R43863, Federal Benefits and Services for People with Low Income: Programs and Spending, FY2008-FY2013 .", "This current report is intended to provide a brief update of federal spending during FY2008-FY2018 for programs or activities identified in past reports. This report has not been updated to include information on new programs or activities; it simply provides information on the programs or activities that had previously been identified. Over the course of the 11-year period examined, federal spending on people with low income increased by 64% in nominal terms, peaking at nearly $918 billion in FY2018. Increases in recent years were largely driven by spending on health care.", "Key findings include the following:", "No single label best describes all programs with a low-income focus, and no single trait characterizes those who benefit. Programs are highly diverse in their purpose, design, and target population. Readers should use caution in making generalizations about the programs described in this report. Total federal spending on low-income programs in nominal terms rose sharply between FY2008 and FY2009 as the Great Recession took hold. Spending stabilized in FY2011, but it has increased at a fairly steady pace since FY2012 largely due to increases in health care spending. The peak spending year in this window was FY2018, when federal spending on low-income populations totaled $918 billion. This represents a nominal increase of 64% from FY2008. Health care is the single largest category of low-income spending and tends to drive overall trends. In each year, spending on health care has accounted for roughly half of all spending; since FY2015, it has accounted for just over half of all spending. The single largest program within the health category is Medicaid. After health care, cash aid and food assistance are the next largest categories, with food assistance seeing a 59% nominal increase over the 11-year period. Other categories (in descending size based on FY2018 spending) are housing and development, education, social services, employment and training, and energy assistance. Most low-income spending is classified in budgetary terms as mandatory (or direct ), which means the amount spent is a function of eligibility and payment rules established in authorizing laws. The amount spent for the remaining discretionary programs is controlled through the annual appropriations process. In some cases, programs receive both mandatory and discretionary funding. In FY2018, 81% of low-income spending was mandatory-only, 15% was discretionary-only, and 4% was spent on programs receiving both mandatory and discretionary funding. Four programs accounted for 68% of low-income spending in FY2018 and ten programs made up 82%. Medicaid alone represented 48% of the total. In addition to Medicaid, the top four include the Supplemental Nutrition Assistance Program (SNAP), the refundable portion of the Earned Income Tax Credit (EITC), and Supplemental Security Income (SSI)."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["The Congressional Research Service (CRS) regularly receives requests about spending on programs and activities that target low-income individuals and families for benefits and services. CRS has produced a series of reports that identify these programs and provides their spending amounts and recent spending trends. This current report provides an interim update of the federal spending for programs and activities identified in CRS Report R44574, Federal Benefits and Services for People with Low Income: Overview of Spending Trends, FY2008-FY2015 , extending the spending analysis through FY2018, the most recent year for which federal spending data were available as of January 2020.", "In FY2018, the federal government spent $917.8 billion on benefits and services for people with low income. This was an increase of 2.2% compared to FY2017, which was less than the rate of economic growth (5.4%) and nearly equal to the rate of inflation (2.3%) during FY2018.", "While the programs in this report share the common feature of an explicit low-income focus, the individual programs are highly diverse in their purpose, design, and target population. They were established at different times, in response to different policy challenges. In terms of target population, the largest portion of low-income assistance goes to families with children with working parents and the disabled (see CRS In Focus IF10355, Need-Tested Benefit Receipt by Families and Individuals )."], "subsections": []}, {"section_title": "Trends in Federal Spending on Benefits and Services for People with Low Income", "paragraphs": [" Figure 1 shows the trend in federal spending in nominal terms on benefits and services for people with low income for FY2008 through FY2018. The early portion, FY2008 through FY2011, represents a period of time where spending increased because of automatic or legislated responses to the recession of 2007 through 2009. The largest low-income assistance programs are entitlements, and their spending increased automatically as more people became eligible for their benefits as incomes fell due to the recession. Additionally, Congress and the President responded to the recession with time-limited expansions or funding increases in some of these programs in the American Recovery and Reinvestment Act of 2009 (ARRA, P.L. 111-5 ). Total spending on these programs increased by 36% over this period. ", "Federal spending on benefits and services for low-income people stabilized in FY2011 and FY2012 as ARRA expired and other spending increases associated with the recession abated. However, from FY2012 through FY2018, spending for these programs increased at a steady pace, stemming from increases in spending on health care for low-income people."], "subsections": []}, {"section_title": "Federal Spending on Benefits and Services for Low-Income People by Category", "paragraphs": ["CRS's series of reports on benefits and services for low-income people divides spending for the programs into eight categories: ", "health care, cash aid, food aid, education, housing and development, social services, employment and training, and energy assistance. ", " Table 1 shows federal spending for the programs by category for FY2008 through FY2018. The categories are sorted by the amount of their spending in FY2018, with the largest (health care) first and the smallest (energy aid) last. Health care represents more than half of total spending for the programs in FY2018 and more than three times the amount of the next largest category, cash aid. The two smallest categories are employment and training programs (exclusive of education spending) and energy assistance.", " Figure 2 breaks out total federal spending on benefits and services for people with low income into two groups: health programs and all other programs. As shown in the figure, the increase in nominal spending in the earlier portion of the period (affected by recession-related spending) stemmed from increases in both health and other program spending. However, since FY2012 the increase is attributable to higher spending on health care. Spending on all other programs (collectively) has decreased each year since FY2016. Much of the increase in health spending is from the Medicaid program, and since FY2014 reflects increases in spending due to the Patient Protection and Affordable Care Act's (ACA, P.L. 111-148 as amended) Medicaid expansion. "], "subsections": []}, {"section_title": "Mandatory and Discretionary Spending", "paragraphs": ["The largest programs providing benefits and services to low-income people are mandatory spending programs. These are programs where spending is controlled by the terms of their authorizing laws\u00e2\u0080\u0094such as entitlements either to individuals or states\u00e2\u0080\u0094rather than the annual appropriation process. Discretionary spending is generally determined through annual appropriations.", " Figure 3 shows federal spending in FY2018 on benefits and services for people with low income by category and budget classification (mandatory, discretionary, or some programs have spending classified as both). The largest categories (health, cash aid, and food aid) are dominated by mandatory spending. Housing is almost entirely discretionary spending, determined through annual appropriations. Education is split between discretionary spending and the Pell Grant program, which has both mandatory and discretionary components. Social services and employment and training have a mix of mandatory spending (much of it coming from the broad-based Temporary Assistance for Needy Families (TANF) block grant) and discretionary funding. Energy assistance is entirely discretionary.", "Of the $917.8 billion spent by the federal government on benefits and services for people with low income in FY2018, $741.2 billion (81%) was spent on programs or activities receiving only mandatory funding and $139.7 billion (15%) was spent on programs or activities receiving only discretionary funding. The remaining $37.0 billion of spending occurred in programs receiving both mandatory and discretionary funding. Health care is a major source of mandatory spending: 94% of all health care spending discussed in this report was mandatory spending in FY2018."], "subsections": []}, {"section_title": "Federal Spending on Benefits and Services for Low-Income People by Program", "paragraphs": [" Table 2 shows spending for federal benefits and services to low-income persons by program for FY2008 to FY2018. The programs were classified into the eight categories of spending noted above, and are ranked within each category by FY2018 spending. Note that in many categories, spending is dominated by a few large programs. For example, in FY2018, Medicaid accounted for 85% of health care spending, Supplemental Security Income and two refundable tax credits for low-income workers (the Earned Income Tax Credit and the refundable portion of the Child Tax Credit) accounted for 93% of all cash aid, Supplemental Nutrition Assistance Program (SNAP) accounted for 67% of all food aid, and Pell Grants plus aid to school districts with large shares of disadvantaged children accounted for 81% of all education aid.", "Most programs had spending that was classified in a single category. The exceptions are the broad-purpose TANF block grant and SNAP. TANF is best known as a program that provides cash assistance to needy families with children. TANF accounted for $5.2 billion in federal spending on cash aid in FY2018, making it the fourth-largest cash program and representative of 4% of cash spending. In contrast, TANF spending on social services made it the second-largest social services program (behind only Head Start), and its employment and training expenditures made it the largest employment and training program. SNAP spending was divided into its food assistance and its employment and training components. SNAP was the largest food assistance program ($63 billion in food assistance in FY2018), but it also contributed $441 million in employment and training expenditures in FY2018."], "subsections": []}]}}
{"id": "R46147", "title": "The Cable Franchising Authority of State and Local Governments and the Communications Act", "released_date": "2020-01-03T00:00:00", "summary": ["Companies that provide cable television service (cable operators) are subject to regulation at the federal, state, and local levels. Under the Communications Act of 1934, the Federal Communications Commission (FCC or Commission) exercises regulatory authority over various operational aspects of cable service. At the same time, a cable operator must obtain a franchise from the state or local franchising authority for the area in which it wishes to provide cable service. The franchising authority often negotiates various obligations as a condition of granting the franchise.", "Under the Cable Communications Policy Act of 1984 (Cable Act), cable operators must obtain franchises from state or local franchising authorities, and these authorities may continue to condition franchises on various requirements. Nevertheless, the Cable Act subjects franchising authorities to important limitations. For instance, the Cable Act prohibits franchising authorities from charging franchise fees greater than 5% of a cable operator's gross annual revenue and from \"unreasonably\" refusing to award a franchise.", "In a series of orders since 2007, the FCC has interpreted the Cable Act to authorize an expanding series of restrictions on the powers of state and local franchising authorities to regulate cable operators. In particular, these orders clarify (1) when practices or policies by a franchising authority amount to an unreasonable refusal to award a franchise; (2) the types of expenditures that count toward the 5% franchise fee cap; and (3) the extent to which franchising authorities may regulate non-cable services provided by cable operators. Franchising authorities, in turn, have successfully challenged some of the FCC's administrative actions in federal court. The U.S. Court of Appeals for the Sixth Circuit upheld many rules in the FCC's orders, but it also vacated some of the FCC's rules in the 2017 decision in Montgomery County v. FCC . In response to the Montgomery County decision, the FCC adopted a new order on August 1, 2019, which clarifies its interpretations of the Cable Act. Among other things, the order reiterates the FCC's position that in-kind (i.e., non-monetary) expenses, even if related to cable service, may count toward the 5% franchise fee cap and preempts any attempt by state and local governments to regulate non-cable services provided by cable operators. Some localities have criticized the order for hampering their ability to control public rights-of-way and for reducing their ability to ensure availability of public, educational, and government (PEG) programming in their communities. Several cities have filed legal challenges to the order, which will likely involve many complex issues of statutory interpretation and administrative law, along with constitutional questions regarding the FCC's ability to impose its deregulatory policy on states.", "This report first outlines the FCC's role in regulating cable operators and franchising authorities, beginning with the Commission's approach under the Communications Act through the passage of the Cable Act and its amendments. The report then turns to a discussion of recurring legal issues over the FCC's power over franchising authorities. The report concludes with a discussion of possible legal issues that may arise in current legal challenges to FCC regulations and offers considerations for Congress."], "reports": {"section_title": "", "paragraphs": ["C ompanies that provide cable television service (cable operators) are subject to regulation at the federal, state, and local levels. Under the Communications Act of 1934 (Communications Act), as amended, the Federal Communications Commission (FCC or Commission) exercises regulatory authority over various operational aspects of cable service\u00e2\u0080\u0094such as technical standards governing signal quality, ownership restrictions, and requirements for carrying local broadcast stations. At the same time, a cable operator must obtain a \"franchise\" from the relevant state or local franchising authorities for the region in which it seeks to provide cable services. Franchising authorities often require cable operators to meet certain requirements, provide certain services, and pay fees as a condition of their franchise. As a result, the franchising process is an important component of cable regulation.", "In the early history of cable regulation, the FCC did not interfere with franchising authority operations, opting instead for a system of \"deliberately structured dualism.\" The Cable Communications Policy Act of 1984 (Cable Act) codified this dualist structure by adding Title VI to the Communications Act. Title VI requires cable operators to obtain franchises from state or local franchising authorities and permits these authorities to continue to condition the award of franchises on an operator's agreement to satisfy various requirements. However, Title VI also subjects franchising authorities to a number of important statutory limitations. For instance, franchising authorities may not charge franchise fees greater than 5% of a cable operator's gross annual revenue and may not \"unreasonably refuse\" to award a franchise.", "As explained below, the FCC issued a series of orders restricting the requirements and costs that franchising authorities may impose on cable operators. The FCC issued its first such order in 2007 (First Order) after gathering evidence suggesting that some franchising authorities were imposing burdensome requirements on new entrants to the cable market. The First Order clarified when practices by franchising authorities, such as failing to make a final decision on franchise applications within time frames specified in the order, amount to an \"unreasonabl[e] refus[al]\" to award a franchise in violation of the Cable Act. The First Order also provided guidance on which costs count toward the 5% franchise fee cap, and it maintained that franchising authorities could not refuse to grant a franchise based on issues related to non-cable services or facilities. The U.S. Court of Appeals for the Sixth Circuit (Sixth Circuit) upheld the First Order in its 2008 decision in Alliance for Community Media v. FCC .", "Shortly after issuing the First Order, the FCC adopted another order (Second Order), extending the First Order's rulings to incumbent cable operators as well as new entrants. In a later order responding to petitions for reconsideration (Reconsideration Order), the FCC affirmed the Second Order's findings and further clarified that \"in-kind\" (i.e., noncash) payments exacted by franchising authorities, even if related to the provision of cable service, generally count toward the maximum 5% franchise fee. In 2017, the Sixth Circuit reviewed aspects of the Second Order and Reconsideration Order in its decision in Montgomery County v. FCC , upholding some rules and vacating others. In response, the FCC adopted a new order on August 1, 2019 (Third Order). The Third Order seeks to address the defects identified by the Sixth Circuit by clarifying the Commission's reasoning for counting cable-related, in-kind payments toward the 5% franchise fee cap and for applying the First Order's rulings to incumbent cable operators. The Third Order also explicitly asserts the Cable Act's preemption of state and local laws to the extent they impose fees or other requirements on cable operators who provide non-cable service, such as broadband internet, over public rights-of-way. Some municipalities have criticized this order for, among other things, hampering their ability to control public rights-of-way and reducing their ability to ensure the availability of public, educational, and government (PEG) programming in their communities. Several cities have filed legal challenges to the order that are currently before the Sixth Circuit.", "As an aid to understanding the complex and evolving nature of the law in this area, this report provides a basic overview of the federal legal framework governing the cable franchising process. The report begins with a historical overview of the law's evolution, from the Communications Act through the Cable Act and its later amendments, to the FCC's various orders interpreting the act. Next, the report details several key issues that have arisen from the FCC's orders, specifically (1) the circumstances under which a franchising authority might be found to have unreasonably refused to award a franchise; (2) the types of expenditures that count toward the 5% cap on franchise fees; and (3) the extent to which Title VI allows franchising authorities to regulate \"mixed-use\" networks, that is, networks through which a cable operator provides cable service and another service such as telephone or broadband internet. The report concludes with a discussion of other legal issues that may arise from pending challenges to the FCC's Third Order and offers some considerations for Congress. A summary of federal restrictions on local authority to regulate cable operators and a glossary of some terms used frequently in this report are found in the Appendix ."], "subsections": [{"section_title": "Historical Evolution of the Federal Legal Framework for Cable Regulation", "paragraphs": [], "subsections": [{"section_title": "Regulation of Cable Services Prior to 1984", "paragraphs": ["The FCC's earliest attempts to regulate cable television relied on authority granted by the Communications Act, a legal framework that predated cable television's existence. The Communications Act brought all wire and radio communications under a unified federal regulatory scheme. The act also created the FCC to oversee the regulatory programs prescribed by the Communications Act. Title II of the act gave the FCC authority over \"common carriers,\" which principally were telephone service providers. Title III governed the activities of radio transmission providers.", "The FCC's Title III jurisdiction encompasses broadcast television transmitted via radio signals. For the first half of the 20 th Century, when virtually all commercial television broadcast in this manner, Title III thus gave the FCC regulatory authority over this industry. In the late 1940s and early 1950s, however, municipalities with poor broadcast reception began experimenting with precursors to modern cable systems. These areas erected large \"community antennas\" to pick up broadcast television signals, and the antenna operators routed the signals to residential customers by wire, or \"cable.\" Through the 1950s, the FCC declined to regulate these systems, initially known as \"Community Antenna Television\" systems and later simply as \"cable television.\" The FCC reasoned that cable television was neither a common carrier service subject to Title II regulation nor a broadcasting service subject to Title III regulation.", "The FCC changed course in a 1966 order in which it first asserted jurisdiction over cable television. The Commission acknowledged that it lacked express statutory authority to regulate cable systems. Even so, the agency concluded that it had jurisdiction because of cable television's \"uniquely close relationship\" to the FCC's then-existing regulatory scheme. The Supreme Court affirmed the FCC's authority to regulate cable television in a 1968 decision, relying on the FCC's argument that regulatory authority over cable television was necessary for the FCC's performance of its statutory responsibility to \"provid[e] a widely dispersed radio and television service, with a fair, efficient and equitable distribution of service among the several States and communities.\" Following this reasoning, the Court construed the Communications Act as enabling the FCC to regulate what was \"reasonably ancillary\" to its responsibilities for regulating broadcast television under Title III.", "The FCC thereafter maintained regulatory authority over operational aspects of cable television, such as technical standards and signal carriage requirements. However, state and local \"franchising authorities\" continued to regulate cable operators through the negotiation and grant of franchises. The Commission recognized that cable television regulation ha d an inherent ly local character, insofar as local regulators were better situated to manage rights-of- way and to determine how to divide large urban areas into smaller service areas . As part of the ir franchising process, f ranchising authorities often imposed fees and other conditions on cable operators in exchange for allowing them to use public rights-of- way to construct their cable systems. Federal courts at the time tolerated this local regulation, noting that because cable systems significantly affect public rights-of-way, \"government must have some authority . . . to see to it that optimum use is made of the cable medium in the public interest.\""], "subsections": []}, {"section_title": "The Cable Act and Its Amendments", "paragraphs": ["The Cable Communications Policy Act of 1984 (Cable Act) was the first federal statutory scheme to regulate expressly cable television. The act's purposes, as defined by Congress, included \"assur[ing] that cable systems are responsive to the needs and interests of the local community,\" providing the \"widest possible diversity of information sources,\" promoting competition, and minimizing unnecessary regulation in the cable industry. The House Energy and Commerce Committee report accompanying the legislation explained that the act was intended to preserve the \"critical role\" of municipal governments in the franchising process, while still making that power subject to some \"uniform federal standards.\"", "To these ends, the Cable Act added Title VI to the Communications Act to govern cable systems. Specifically, Section 621of Title VI preserved the franchising authorities' power to award franchises and required cable operators to secure franchises as a precondition to providing services. Title VI also permits franchising authorities to require that cable operators designate \"channel capacity\" for PEG use or provide \"institutional networks\" (\"I-Nets\"). But the power of franchising authorities is limited to regulating \"the services, facilities, and equipment provided by a cable operator,\" such as by prohibiting franchising authorities from regulating \"video programming or other information services.\"", "Section 622 of Title VI allows franchising authorities to charge fees to cable operators as a condition of granting the franchise, but it caps those fees at 5% of the operator's gross annual revenue from providing cable services. Section 622 defines \"franchise fee\" to include \"any tax, fee, or assessment of any kind imposed by a franchising authority . . . on a cable operator or a cable subscriber, or both, solely because of their status as such[.]\" Franchise fees do not include taxes or fees of \"general applicability,\" capital costs incurred by the cable operator for PEG access facilities (PEG capital costs exemption), and any \"requirements or charges incidental to the awarding or enforcing of the franchise\" (incidental costs exemption).", "Congress amended Title VI in the Cable Television Consumer Protection and Competition Act of 1992, with a stated goal of increasing competition in the cable market. Specifically, Congress amended Section 621 to prohibit the grant of exclusive franchises and to prevent franchising authorities from \"unreasonably refus[ing] to award an additional competitive franchise.\" Congress also granted potential cable operators the right to sue a franchising authority for refusing to award a franchise.", "Congress amended the Cable Act again in 1996 to further promote competition in the cable television marketplace by enabling telecommunications providers regulated under Title II of the Communications Act (i.e., telephone companies) to offer video programming services. Congress repealed a provision banning telecommunications providers from offering video programming to customers in their service area and added a provision governing the operation of \"open video systems,\" a proposed competitor to cable systems. These amendments also added provisions barring franchising authorities from conditioning the grant of a franchise on a cable operator's provision of telecommunications services or otherwise requiring cable operators to obtain a franchise to operate a telecommunications service."], "subsections": []}, {"section_title": "FCC Orders", "paragraphs": ["In the decades following the passage of the Cable Act and its amendments, many phone companies upgraded their networks to enter the cable market. To streamline the process for these new entrants, the FCC issued orders interpreting the franchising provisions of Title VI. The four orders discussed in this section\u00e2\u0080\u0094the First, Second, Reconsideration, and Third Orders\u00e2\u0080\u0094each address a range of topics and in some cases retread topics covered by an earlier order. Table 1 summarizes the orders.", "In 2007, after gathering evidence suggesting that some local and municipal governments were imposing burdensome demands on new entrants, the FCC adopted the First Order. The Commission observed that the franchising process had prevented or delayed the entry of telephone companies into the cable market. The First Order thus sought to reduce entry barriers by clarifying when Title VI prohibits franchising authorities from imposing certain franchise conditions on new entrants. The FCC gave examples of practices by franchising authorities that constitute an \"unreasonable refusal\" to award a franchise, such as", "1. a delay in making a final decision on franchise applications beyond the time frames set forth in the order; 2. requiring cable operators to \"build out\" their cable systems to provide service to certain areas or customers as a condition of granting the franchise; 3. imposing PEG and I-Net Requirements beyond those imposed on incumbents; and 4. requiring that new cable operators agree to franchise terms that are substantially similar to those agreed to by incumbent cable operators (called \"level-playing-field requirements\").", "The First Order further clarified when certain costs counted toward the 5% franchise fee cap and maintained that franchising authorities could not refuse to grant a franchise based on issues related to non-cable services or facilities. Several franchising authorities and their representative organizations challenged the legality of the Order in the Sixth Circuit. But the Sixth Circuit denied those challenges in Alliance for Community Media v. FCC , upholding both the FCC's authority to issue rules construing Title VI and the specific rules in the First Order itself.", "Although the First Order applied only to new entrants to the cable market, the FCC shortly thereafter adopted the Second Order, extending many of the First Order's rulings to incumbent cable television service providers. Following the release of the Second Order, the Commission received three petitions for reconsideration, to which it responded in the Reconsideration Order in 2015. In the Reconsideration Order, the FCC affirmed its conclusions from the Second Order applying its earlier rulings to incumbent cable operators. The Reconsideration Order also clarified that \"in-kind\" (i.e., noncash) payments exacted by franchising authorities, even if unrelated to the provision of cable service, may count toward the maximum 5% franchise fee allowable under Section 622. In 2017, in Montgomery County v. FCC , the Sixth Circuit vacated the FCC's determinations in the Second Order and Reconsideration Order on both issues. Following the ruling in Montgomery County, the Commission started a new round of rulemaking and, on August 1, 2019, adopted another order, the Third Order, addressing the issues raised by the Sixth Circuit. In the Third Order, the FCC clarified its basis for counting in-kind payments toward the 5% franchise fee cap, provided additional reasoning for applying the First Order's rulings to incumbent cable operators, and preempted state and local regulation inconsistent with Title VI. While prior orders applied only to local franchising authorities, the Third Order extended the Commission's rules in all three orders to state-level franchising authorities, concluding that there was \"no statutory basis for distinguishing between state- and local-level franchising actions.\" This report addresses issues raised in these various orders in greater detail below. "], "subsections": []}]}, {"section_title": "Key Legal Issues in Cable Franchising", "paragraphs": ["As the foregoing discussion reflects, the FCC's post-2007 orders have focused on several key issues within Title VI's framework. Most notably, the Commission has addressed (1) when certain franchise requirements amount to an \"unreasonable refusal\" to award the franchise under Section 621; (2) the types of costs that are subject to the 5% franchise fee cap under Section 622; and (3) the extent to which franchising authorities may regulate \"mixed-use\" networks operated by cable operators. This section first reviews the relevant statutory provisions from which each of these three issues arise and then discusses the FCC's interpretations of those provisions."], "subsections": [{"section_title": "Unreasonable Refusal to Award a Franchise", "paragraphs": ["Title VI prohibits franchising authorities from \"unreasonably refus[ing]\" to grant a franchise to a cable operator. In the First Order, the FCC identified specific types of franchising conditions or practices that violate the unreasonable refusal standard, such as failing to process an application within certain time periods. The Sixth Circuit reviewed and upheld the First Order's interpretation of this standard, which remains in effect."], "subsections": [{"section_title": "Statutory Provisions Governing the \"Unreasonable Refusal\" Standard", "paragraphs": ["Title VI allows franchising authorities to condition a franchise on the cable operator performing or meeting certain requirements. Sections 621(a)(4)(B) and 621(b)(3)(D) explicitly allow franchising authorities to require cable operators to provide PEG channel \"capacity, facilities, or financial support\" and to provide I-Net \"services or facilities.\" Section 621(a)(1), however, imposes a significant limitation on franchising authorities' ability to impose such conditions. Under that provision, franchising authorities may not \"grant an exclusive franchise\" or \"unreasonably refuse to award an additional competitive franchise.\""], "subsections": []}, {"section_title": "FCC Interpretations of the \"Unreasonable Refusal\" Standard", "paragraphs": ["In the First Order, the FCC clarified when certain practices or requirements amount to an unreasonable refusal of a new franchise under Section 621(a)(1) of Title VI. The FCC gave four specific examples of unreasonable refusals: (1) delaying a final decision on franchise applications; (2) requiring cable operators to \"build out\" their cable systems to provide service to certain areas or customers as a condition of granting the franchise; (3) imposing PEG and I-Net requirements that are duplicative of, or are more burdensome than, those imposed on incumbents; and (4) requiring that new cable operators agree to franchise terms that are substantially similar to those agreed to by incumbent cable operators (the \"level-playing-field requirements\").", "As for delays in acting on a franchise application, the FCC stated that a franchising authority unreasonably refuses a franchise when it subjects applicants to protracted negotiations, mandatory waiting periods, or simply a slow-moving franchising process. To prevent such delays, the FCC set decision deadlines of 90 days for applications by entities with existing access to rights-of-way and six months for applications by entities without such access. Once these time periods expire, franchise applications are deemed granted until the franchising authority takes final action on the application.", "As for build-out requirements, the FCC stated that requiring new franchise applicants to build out their cable systems to cover certain areas may constitute an unreasonable refusal of a franchise. The Commission explained that what constitutes an \"unreasonable\" build-out requirement may vary depending on the applicant's existing facilities or market penetration, but it clarified that certain build-out requirements are per se unreasonable refusals under Section 621.", "The FCC also determined that certain PEG and I-Net terms and conditions constitute an unreasonable refusal. Specifically, the Commission determined that PEG and I-Net requirements that are \"completely duplicative\" (i.e., a requirement for capacity or facilities that would not provide \"additional capability or functionality, beyond that provided by existing I-Net facilities\") are unreasonable unless redundancy serves a public safety purpose. The FCC also viewed PEG requirements as unreasonable when such requirements exceeded those placed on incumbent cable operators.", "Lastly, the FCC determined that level-playing-field requirements in local laws or franchise agreements amount to an unreasonable refusal of a franchise. The Commission explained that such requirements are unreasonable because new cable entrants are in a \"fundamentally different situation\" from incumbent operators. The FCC therefore concluded that these mandates \"unreasonably impede competitive entry\" into the cable market and are unreasonable refusals.", "As discussed above, several franchising authorities and their representative organizations unsuccessfully challenged the FCC's interpretation of the unreasonable refusal standard in Alliance for Community Media v. FCC , in which the Sixth Circuit upheld the First Order in its entirety. Applying the framework set forth in Chevron USA , Inc. v. Natural Resources Defense Council, Inc. \u00e2\u0080\u0094which guides courts when reviewing agency regulations that interpret the agency's governing statute\u00e2\u0080\u0094the court reasoned that the phrase \"unreasonably refuse\" is inherently ambiguous because the word \"unreasonably\" is subject to multiple interpretations. The court then held that the First Order's interpretation of this phrase was entitled to deference because it was reasonable and not unambiguously foreclosed by Title VI.", "As a result, the First Order's rules on what constitutes an unreasonable refusal remain binding on franchising authorities. Accordingly, if a franchising authority denies a cable operator's franchise request for a reason the FCC's has deemed unreasonable\u00e2\u0080\u0094such as the cable operator's refusal to accept build-out or level-playing-field requirements\u00e2\u0080\u0094the cable operator may sue the franchising authority for \"appropriate relief\" as determined by the court. Alternatively, if the franchising authority fails to make a final decision within the allotted time, the franchise will be deemed granted until the franchising authority makes a final decision."], "subsections": []}]}, {"section_title": "Franchise Fees", "paragraphs": ["Title VI limits franchising authorities to charging cable operators \"franchise fees\" of up to 5% of the cable operator's revenue, subject to specific exceptions. However, the types of obligations limited by the 5% cap have been a point of contention. The FCC, in its various orders, has clarified the scope of the exceptions to the 5% cap (in particular, the PEG capital costs and incidental costs exemptions); it has further explained that, unless they fall under one of the express exceptions, non-monetary (or \"in-kind\") contributions are subject to the 5% cap even if they are related to the provision of cable service. Litigation over the Commission's current interpretations of what constitutes a \"franchise fee\" is ongoing."], "subsections": [{"section_title": "Statutory Provisions Governing Franchise Fees", "paragraphs": ["Section 622 allows franchising authorities to charge franchise fees to cable providers, but it subjects such fees to a cap. For any \"twelve-month period,\" franchise fees may not exceed 5% of the cable operator's gross annual revenues derived \"from the operation of the cable system to provide cable service.\" Section 622 broadly defines \"franchise fees\" to include \"any tax, fee, or assessment of any kind imposed by a franchising authority or other governmental entity on a cable operator or cable subscriber, or both, solely because of their status as such.\" However, Section 622 exempts certain costs from this definition, including", "1. \"any tax, fee, or assessment of general applicability\"; 2. \"capital costs which are required by the franchise to be incurred by the cable operator for public, educational, or governmental access facilities\" (PEG capital costs exemption) ; and 3. \"requirements or charges incidental to the awarding or enforcing of the franchise, including payments for bonds, security funds, letters of credit, insurance, indemnification, penalties, or liquidated damages\" (incidental costs exemption)."], "subsections": []}, {"section_title": "FCC Interpretations of the Statutory Franchise Fee Provisions", "paragraphs": ["The FCC has provided guidance on the types of expenses subject to the 5% cap. In particular, it has clarified (1) when non-monetary (or \"in-kind\") contributions must be included in the calculation of franchise fees subject to the 5% cap; (2) the scope of the PEG capital costs exemption; and (3) the scope of the incidental costs exemption."], "subsections": [{"section_title": "In-Kind Contributions", "paragraphs": ["The FCC has elaborated on the types of in-kind contributions that are subject to the 5% cap. In the First Order, the Commission maintained that in-kind fees unrelated to provision of cable service\u00e2\u0080\u0094such as requests that the cable operator provide traffic light control systems\u00e2\u0080\u0094are subject to the 5% cap because they are not specifically exempt from the \"franchise fee\" definition. In the Reconsideration Order, the agency further clarified that the First Order's conclusions were not limited to in-kind exactions unrelated to cable service and that cable-related in-kind contributions (such as providing free or discounted cable services to the franchising authority) could also count toward the 5% cap. The Sixth Circuit vacated this conclusion, however, in Montgomery County v. FCC . The Sixth Circuit recognized that Section 622's definition of \"franchise fee\" is broad enough to encompass \"noncash exactions.\" But the court explained that just because the term \"can include noncash exactions, of course, does not mean that it necessarily does include every one of them.\" The court faulted the FCC for giving \"scarcely any explanation at all\" for its decision to expand its interpretation of \"franchise fee\" to include cable-related exactions, and held that this defect rendered the Commission's interpretation \"arbitrary and capricious\" in violation of the Administrative Procedure Act (APA).", "Following the Sixth Circuit's decision in Montgomery County , the Commission issued the Third Order, in which it detailed its reasons for including cable-related in-kind contributions in the 5% cap. The FCC first explained that, as recognized by the court in Montgomery County , the definition of \"franchise fee\" is broad enough to encompass in-kind contributions as well as monetary fees. The Commission also acknowledged the Sixth Circuit's observation that just because the definition is broad enough to include in-kind fees \"does not mean that it necessarily does include everyone one of them.\" Nevertheless, the FCC maintained that cable-related in-kind contributions should be included in the fee calculation because there is nothing in the definition that \"limits in-kind contributions included in the franchise fee.\" The Commission further reasoned that Section 622's specific exceptions do not categorically exclude such expenses, as there is no \"general exemption for cable-related, in-kind contributions.\" Along with its construction of Section 622, the FCC rejected arguments that \"other Title VI provisions should be read to exclude costs that are clearly included by the franchise fee definition,\" such as the provision that allows franchising authorities to require that cable operators designate channel capacity for PEG use. According to the Commission, \"the fact that the Act authorizes [franchising authorities] to impose such obligations does not mean that the value of these obligations should be excluded from the five percent cap on franchise fees.\"", "While the Third Order concluded that cable-related, in-kind contributions are not categorically exempt from the 5% cap, it recognized that certain types of cable-related in-kind contributions might be excluded. For instance, the FCC concluded that franchise terms requiring a cable operator to build out its system to cover certain localities or to meet certain customer service obligations are not franchise fees. The Commission reasoned that these requirements are \"simply part of the provision of cable service\" and are not, consequently, a \"tax, fee, or assessment.\" Furthermore, the FCC noted that the PEG capital costs exemption, which exempts costs associated with the construction of public, educational, or governmental access facilities, covers certain cable-related, in-kind expenses, and, as discussed below, the PEG capital costs exemption provides guidance on the types of costs to which it applies. On the other hand, the agency also identified specific cable-related, in-kind expenses that are subject to the 5% cap, such as franchise terms requiring cable operators to provide free or discounted cable service to public buildings or requiring operators to construct or maintain I-Nets.", "Lastly, the Third Order concluded that, for purposes of the 5% cap, cable-related in-kind services should be measured by their \"fair market value\" rather than the cost of providing the services. The FCC reasoned that fair market value is \"easy to ascertain\" and \"reflects the fact that, if a franchising authority did not require an in-kind assessment as part of its franchise, it would have no choice but to pay the market rate for services it needs from the cable operator or another provider.\"", "In sum, despite the setback for the Commission in Montgomery County , the FCC has maintained its position that in-kind contributions\u00e2\u0080\u0094even if related to cable service\u00e2\u0080\u0094are not categorically exempt from the 5% cap. The issue is not settled, however. As discussed later, the Third Order is being challenged in court, and it remains to be seen whether the FCC's position will ultimately be upheld."], "subsections": []}, {"section_title": "PEG Capital Costs Exemption", "paragraphs": ["The FCC's interpretation of the PEG capital costs exemption has evolved. In the First Order, the Commission interpreted this exemption as applying to the costs \"incurred in or associated with\" constructing the facilities used to provide PEG access. However, the FCC broadened its interpretation in the Third Order. In the Third Order, the Commission conceded that its earlier statements were \"overly narrow\" because the plain meaning of the term \"capital costs\" can include equipment costs as well as construction costs. Consistent with this analysis, the FCC concluded that the term \"capital costs\" is not limited to construction-related costs, but can also include equipment purchased for the use of PEG access facilities, \"such as a van or a camera.\" The Third Order noted that capital costs \"are distinct from operating costs\"\u00e2\u0080\u0094that is, the \"costs incurred in using\" PEG access facilities\u00e2\u0080\u0094and that operating costs are not exempt from inclusion in the franchise fee calculation.", "While the Third Order provided additional clarification on the PEG capital costs exemption, it left at least one issue unresolved. Specifically, the FCC determined there was an insufficient record before it to conclude whether \"the costs associated with the provision of PEG channel capacity\" fall within the exclusion. Consequently, it deferred consideration of this issue and stated that, in the meantime, channel capacity cost \"should not be offset against the franchise fee cap.\"", "Ultimately, the scope of the PEG capital costs exemption remains in flux. The FCC's Third Order is being challenged in court, and it is possible the agency's interpretation of the PEG capital costs exemption could be vacated. Even if the Third Order is upheld, it left unresolved whether the costs of providing PEG channel capacity fall under the capital costs exclusion; thus, while franchise authorities are not required to offset such costs against the 5% cap in the interim, it is unclear whether these costs will count toward the franchise fee cap in the long run."], "subsections": []}, {"section_title": "Incidental Costs Exemption", "paragraphs": ["While the FCC has articulated its position on in-kind contributions and the PEG capital costs exemption over the course of several orders, the Commission largely addressed its interpretation of the \"incidental costs\" exemption in the First Order. There, the FCC read the exemption narrowly to include only those expenses specifically listed in Section 622(g)(2)(D)\u00e2\u0080\u0094namely, \"bonds, security funds, letters of credit, insurance, indemnification, penalties, or liquidated damages.\" The Commission explained that it did not interpret unlisted costs\u00e2\u0080\u0094including, among other things, attorney fees, consultant fees, and in-kind payments\u00e2\u0080\u0094to be \"incidental\" costs, based on the text of the exemption and the legislative history of Section 622. The FCC noted, however, that certain \"minor expenses\" beyond those listed in the statute may be included as \"incidental costs,\" such as application or processing fees that are not unreasonably high relative to the cost of processing the application.", "In Alliance for Community Media v. FCC , the Sixth Circuit denied petitions challenging the First Order's interpretation of the \"incidental costs\" exemption. Petitioners argued that the plain meaning of the phrase \"incidental to\" meant that the fee had to be \"related to the awarding or enforcing of the franchise.\" According to petitioners, the FCC's per se listing of non-incidental fees\u00e2\u0080\u0094such as attorney and consultants' fees\u00e2\u0080\u0094contradicted this plain meaning. The court, however, upheld the FCC's interpretation. The court reasoned that the phrase \"incidental to\" lent itself to multiple interpretations, including both the FCC's and the petitioners' readings. Consequently, it concluded under Chevron that the \"FCC's rules regarding fees\" qualified as \"reasonable constructions\" of Sections 622(b) and 622(g)(2)(D) that are entitled to deference.", "In sum, unlike in-kind contributions and the PEG capital costs exemption, the FCC's interpretation of the incidental costs exemption is not subject to any ongoing legal challenge. Consequently, with the exception of the \"minor expenses\" mentioned in the First Order, only those expenses listed in Section 622(g)(2)(D) (bonds, security funds, etc.) are exempt from the 5% cap under the incidental costs exemption."], "subsections": []}]}]}, {"section_title": "Franchising Authority over Mixed-Use Networks", "paragraphs": ["A continuing area of disagreement between the FCC and franchising authorities has been the extent to which franchising authorities can regulate non- cable services that a cable operator provides over the same network used for its cable service (e.g., a \"mixed-use network\"). From the First Order onward, the Commission has maintained that, based on its interpretation of various Title VI provisions, franchising authorities may not regulate the non-cable services aspects of mixed-use networks. While the First Order applied this rule only to new entrants to the cable market, the Second Order extended it to incumbent cable operators. The Sixth Circuit upheld this rule as applied to new entrants into the cable market, but vacated the FCC's application of it to incumbent cable operators. The Commission sought to cure this defect in the Third Order, and it further clarified that any efforts by state and local governments to regulate non-cable services provided by cable operators, even if done outside the cable franchising process and relying on the state's inherent police powers, are preempted by Title VI. However, given the ongoing legal challenge to the Third Order, this issue, too, remains unsettled."], "subsections": [{"section_title": "Statutory Provisions Governing Mixed-Use Networks", "paragraphs": ["Several Title VI provisions arguably prohibit franchising authorities from regulating non-cable services (such as telephone or broadband internet access service) provided over mixed-use networks, or networks over which an operator provides both cable and non-cable services. Section 602's definition of \"cable system\" explicitly excludes the \"facility of a common carrier\" except \"to the extent such facility is used in the transmission of video programming directly to subscribers.\" Further, with respect to broadband internet access service, Section 624(b)(1) states that franchising authorities \"may not . . . establish requirements for video programming or other information services.\" Lastly, Section 624(a) states that \"[a] franchising authority may not regulate the services, facilities, and equipment provided by a cable operator except to the extent consistent with [Title VI].\""], "subsections": []}, {"section_title": "FCC Interpretations of Statutory Provisions Governing Mixed-Use Networks", "paragraphs": ["Beginning with the First Order, the FCC has relied on these statutory provisions to clarify the bounds of franchising authority jurisdiction over mixed-use networks. The Commission asserted that a franchising authority's \"jurisdiction applies only to the provision of cable services over cable systems.\" To support its view, the FCC cited Section 602's definition of \"cable system,\" which explicitly excludes common carrier facilities except to the extent they are \"used in the transmission of video programming directly to subscribers.\" The Commission did not address whether video services provided over the internet might are \"cable services.\"", "The First Order applied only to new entrants to the cable market. However, in the Second Order, the FCC determined that the First Order's conclusions regarding mixed-use networks should apply to incumbent providers because those conclusions \"depended upon [the Commission's] statutory interpretation of Section 602, which does not distinguish between incumbent providers and new entrants.\" The FCC reaffirmed this position in the Reconsideration Order, stating that franchising authorities \"cannot . . . regulate non-cable services provided by an incumbent.\"", "In Montgomery County v. FCC , however, the Sixth Circuit vacated the FCC's extension of its mixed-use network rule to incumbent cable providers on the ground that this interpretation was arbitrary and capricious. The court explained that the Commission could not simply rely on the reasoning in its First Order because Section 602 did not support an extension of the mixed-use rule to incumbent cable providers. The court observed that the FCC correctly applied its mixed-use rule to new entrants\u00e2\u0080\u0094who were generally common carriers\u00e2\u0080\u0094because Section 602's definition of \"cable system\" expressly excludes common carrier facilities. But most incumbents, by contrast, are not common carriers. Consequently, because the Commission did not identify any other \"valid basis\u00e2\u0080\u0094statutory or otherwise\u00e2\u0080\u0094\" for its extension of its mixed-use rule to non-common carrier cable providers, the court vacated that decision as arbitrary and capricious.", "Responding to Montgomery County , the FCC's Third Order provides additional support for extending the mixed-use rule to incumbent cable operators. The Order first reiterates that Section 602's definition of \"cable system\" provides the basis for barring franchising authorities from regulating incumbent cable operators when acting as common carriers, because the definition explicitly excludes common carrier facilities except to the extent they are \"used in the transmission of video programming directly to subscribers.\" Similarly, the Commission concluded that franchising authorities cannot regulate non -common carriers to the extent they provide other services along with cable, in particular, broadband internet access. The Third Order supports that conclusion by reference to Section 624(b)(1)'s command that franchising authorities may not \"establish requirements for video programming or other information services .\" While \"information services\" is not defined in Title VI, the FCC concluded that, based on Title VI's legislative history, the term should have the same meaning it has in Title I of the Communications Act. The Commission has interpreted \"information service\" under Title I of the Communications Act to include broadband internet access service, and the D.C. Circuit has upheld that interpretation. The Third Order also notes that \"it would conflict with Congress's goals in the Act\" to treat cable operators that are not common carriers differently from those that are common carriers, as allowing franchising authorities to regulate non-common carrier operators more strictly \"could place them at a competitive disadvantage.\"", "Beyond clarifying that franchising authorities cannot use their Title VI authority to regulate the non-cable aspects of a mixed-use cable system, the Third Order also explicitly preempts state and local laws that \"impose[] fees or restrictions\" on cable operators for the \"provision of non-cable services in connection with access to [public] rights-of-way, except as expressly authorized in [Title VI].\" Prior to the Third Order's issuance, for example, the Oregon Supreme Court in City of Eugene v. Comcast upheld the City of Eugene's imposition of a 7% fee on the revenue a cable operator generated from its provision of broadband internet services. Rather than impose the fee as part of the cable franchising process, the city cited as its authority an ordinance imposing a \"license-fee\" requirement on the delivery of \"telecommunications services\" over the city's public rights-of-way. The court held that Title VI did not prohibit the city from imposing the fee, as it was not a \"franchise fee\" subject to the 5% cap because the ordinance applied to both cable operators and non-cable operators. Thus, the court reasoned, the city did not require Comcast to pay the fee \"solely because of\" its status as a cable operator and the franchise fee definition was not met. In the aftermath of the Oregon Supreme Court's decision, other state and local governments relied on sources of authority outside of Title VI, such as their police power under state law, to regulate the non-cable aspects of mixed-use networks.", "The Third Order rejects City of Eugene 's reading of Title VI. The FCC reasoned that Title VI establishes the \"basic terms of a bargain\" by which a cable operator may \"access and operate facilities in the local rights-of-way, and in exchange, a franchising authority may impose fees and other requirements as set forth and circumscribed in the Act.\" Although Congress was \"well aware\" that cable systems would carry non-cable services as well as cable, it nevertheless \"sharply circumscribed\" the authority of state and local governments to \"regulate the terms of this exchange.\" Consequently, the Commission concluded, the Third Order \"expressly preempt[s] any state or local requirement, whether or not imposed by a franchising authority, that would impose obligations on franchised cable operators beyond what Title VI allows.\" The Third Order also concluded that the FCC has authority to preempt such laws because, among other things, Section 636(c) of Title VI expressly preempts any state or local law\" that is \"inconsistent with this chapter.\" Thus, in the FCC's view, wherever such express preemption provisions are present, the \"Commission has [been] delegated authority to identify the scope of the subject matter expressly preempted.\"", "In sum, while franchising authorities may not use the cable franchising process to regulate non-cable services provided over mixed-use networks by new entrants to the cable market, the FCC's extension of this rule to incumbents has not yet been upheld in court. Furthermore, the Third Order's broad preemption of any state and local law regulating cable operators' use of public rights-of-way beyond what Title VI allows raises even more uncertainty. As discussed further below, the Third Order's preemption raises difficult questions about the extent to which the Commission may rely on Title VI to preempt not only state and local cable franchising requirements but also generally applicable state regulations and ordinances that regulate non-cable services provided by cable operators."], "subsections": []}]}]}, {"section_title": "Legal Challenges", "paragraphs": ["Several cities, franchising authorities, and advocacy organizations have filed petitions for review of the Third Order in various courts of appeals, and these petitions have been consolidated and transferred to the Sixth Circuit. In their petitions, the petitioners generally allege that the Third Order violates the Communications Act and the U.S. Constitution and is arbitrary and capricious under the APA. The same parties filed a motion with the FCC to stay the Third Order, which the Commission recently denied.", "While the petitions challenging the order state their legal theories in general terms, this case will likely raise complex issues of statutory interpretation, as well as administrative and constitutional law. For instance, petitioners could argue, as commenters did during the rulemaking process for the Third Order, that the text and structure of Title VI contradicts the FCC's broad interpretation that a franchise fee should include most cable-related, in-kind expenses. Pointing to provisions such as Section 611(b), which authorizes franchising authorities to impose PEG and I-Net requirements without any reference to the franchise fee provision, some commenters argued that Title VI treats the cost of complying with franchise requirements as distinct from the franchise fee.", "A reviewing court would likely apply the Chevron framework to resolve such statutory arguments. While it is difficult to predict how a reviewing court would decide any given issue, the Sixth Circuit's decision in Montgomery County indicates that the court might uphold the Third Order's legal interpretation of the franchise fee provision under the Chevron doctrine. Specifically, as discussed above, the Sixth Circuit held that Section 622's definition of franchise fee is broad enough to include \"noncash exactions.\" Given this decision, the Sixth Circuit could potentially hold that the franchise fee definition is broad enough to accommodate the FCC's interpretation and that the FCC's interpretation is reasonable and entitled to deference.", "Even were the Sixth Circuit to reach that conclusion, however, that is not the end of the analysis. As the Sixth Circuit's decision in Montgomery County also demonstrates, the FCC's rulings may be vacated regardless of whether the Commission's statutory interpretation enjoys Chevron deference if the court concludes that the FCC's interpretation is arbitrary and capricious under the APA. A federal agency's determination is arbitrary and capricious if the agency \"has relied on factors which Congress has not intended it to consider, entirely failed to consider an important aspect of the problem, offered an explanation for its decision that runs counter to the evidence before the agency, or is so implausible that it could not be ascribed to a difference in view or the product of agency expertise.\" In Montgomery County , the Sixth Circuit held that the FCC had acted arbitrarily and capriciously by failing to give \"scarcely any explanation at all\" for expanding its franchise fee interpretation to cable-related in-kind expenses and for failing to identify a statutory basis for extending its mixed-use rule to incumbents. While the Commission took pains to address these concerns in the Third Order, it remains to be seen whether a court would find those efforts sufficient or accept other arguments as to why the FCCs interpretations should be held arbitrary and capricious. For instance, those challenging the Third Order might argue that the Commission failed to address evidence that \"runs counter\" to its rules or failed to consider important counterarguments. One such area of focus for petitioners in their motion to stay the Third Order was the FCC's alleged failure to address potential public safety effects of the Third Order's treatment of cable-related in-kind contributions.", "In addition, the Third Order's assertion of preemption may come under scrutiny from state or local challengers who seek to regulate mixed-use networks. A recent D.C. Circuit decision struck down the FCC's attempt to preempt \"any state or local requirements that are inconsistent with [the FCC's] deregulatory approach\" to broadband internet regulation. Additionally, in a recent opinion concurring in the U.S. Supreme Court's denial of a petition for certiorari in a case involving a state's effort to regulate Voice over Internet Protocol service, Justice Thomas, joined by Justice Gorsuch, voiced concerns about allowing the FCC's deregulatory policy to preempt state regulatory efforts. Both the D.C. Circuit and Justices Thomas and Gorsuch expressed skepticism that the FCC has statutory authority to preempt state and local regulation in areas where the FCC itself has no statutory authority to regulate. Cities and local franchising authorities may seize on the reasoning in these opinions to argue that Title VI's preemption provision cannot extend to non-cable services that fall outside Title VI's purview.", "Lastly, along with statutory interpretation and administrative law issues, challengers to the Third Order may assert constitutional arguments. As mentioned, the Third Order prevents state and local governments from relying on state law to regulate non-cable services provided by cable operators. However, some commenters have argued that the Third Order violates the anti-commandeering doctrine, a constitutional rule that prohibits the federal government from compelling states to administer federal regulations. The Supreme Court recently clarified the anti-commandeering doctrine in Murphy v. NCAA . In Murphy , the Court struck down the Professional and Amateur Sports Protection Act of 1992, which prohibited states from legalizing sports gambling. Justice Alito, writing for the Court, reasoned that the anti-commandeering doctrine prohibits Congress from \"issu[ing] direct orders to state legislatures,\" compelling them to either enact certain legislation or to restrict them from enacting certain legislation. The Court explained that the anti-commandeering doctrine promotes accountability, because, when states regulate at Congress's command, \"responsibility is blurred.\" Justice Alito further explained that the doctrine \"prevents Congress from shifting the costs of regulation to the States.\" The Court contrasted unlawful commandeering with permissible \"cooperative federalism\" regimes. Under such regimes, Congress allows, but does not require, states to implement a regulatory program according to federal standards, and a federal body implements the program when a state refrains from doing so.", "According to some commenters, the FCC's Third Order violates the anti-commandeering doctrine because it \"effectively command[s] local government[s] to grant right-of-way access on the terms the Commission, not local government or the states set.\" Further, some commenters, including the National Association of Telecommunications Officers and Advisors and National League of Cities, argue that the Third Order would violate the accountability and cost-shifting principles animating the anti-commandeering doctrine, as explained in Murphy . According to these commenters, the FCC's \"mixed-use rule unquestionably blurs responsibility\" because residents unhappy with cable operators' use of the right-of-way for non-cable purposes would \"blame their local elected officials,\" and the mixed-use rule would shift cost to local governments by \"usurp[ing]\" the \"compensation local governments may be entitled to for use of the [rights-of-way] for non-cable services.\" Ultimately, this issue may turn on whether Title VI, as interpreted by the FCC's rules, is a permissible \"cooperative federalism\" program under Murphy . In its Third Order, the Commission argued Title VI was such a program because it \"simply establishes limitations on the scope of [states' authorities to \"award franchises\" to cable operators] when and if exercised.\" The FCC further maintained that, rather than \"requir[ing] that state or local governments take or decline any particular action,\" its rules were \"simply requiring that, should state and local governments decide to open their rights-of-way to providers of interstate communication services within the Commission's jurisdiction, they do so in accordance with federal standards.\" It remains to be seen, however, how broadly lower courts will apply Murphy 's cooperative federalism distinction."], "subsections": []}, {"section_title": "Considerations for Congress", "paragraphs": ["Beyond the various legal arguments discussed above, there are notable disagreements over the practical impact of the FCC's rules. On the one hand, localities and their representative organizations have claimed that the Commission's Third Order will \"gut[] local budgets\" and that, by subjecting in-kind franchise requirements such as PEG and I-Net requirements to the 5% cap, it will force franchising authorities to \"choose between local PEG access and I-Nets, and the important other public services supported by franchise fees.\" Similarly, the two FCC commissioners who dissented from the Third Order\u00e2\u0080\u0094Jessica Rosenworcel and Geoffrey Starks\u00e2\u0080\u0094maintained in their dissents that the Third Order was part of a broader trend at the Commission of \"cutting local authorities out of the picture\" and that it would, among other things, diminish the \"value of local public rights-of-way.\" In response, the FCC's chairman, Ajit Pai, and other Commissioners in the majority contended that the rule would benefit consumers because the costs imposed by franchising authorities through in-kind contributions and fees get \"passed on to consumers\" and discourage the deployment of new services like \"faster home broadband or better Wi-Fi or Internet of Things networks.\"", "Given the competing arguments relating to the FCC's interpretation of Title VI's scope, Congress may be interested in addressing the issues raised by the Third Order. For instance, Congress might address the extent to which Section 622's definition of \"franchise fee\" includes cable-related, in-kind expenses such as PEG and I-Net services. It might also address whether Title VI preempts state and local governments from relying on their police powers or other authorities under state law to regulate non-cable services provided by cable operators. However, Congress also might consider federalism issues implicated by any attempt to prohibit state and local authorities from regulating such services. As discussed in the previous section, the anti-commandeering principle prohibits direct orders to states that command or prohibit them from enacting certain laws, but permits lawful \"cooperative federalism\" regimes where Congress gives states a choice of either refraining from regulating a particular area or regulating according to federal standards. Thus, Congress may avoid anti-commandeering issues by setting federal standards for regulation of ancillary non-cable services rather than prohibiting states from regulating these services."], "subsections": [{"section_title": "Appendix. Supplemental Information", "paragraphs": ["Federal Standards and Restrictions on Franchising Authority Power", "The following table summarizes functions and areas traditionally regulated by franchising authorities that are subject to federal standards or federal restrictions. This table is not a summary of all federal requirements and regulations cable operators face under the act, only those that implicate the powers of franchising authorities.", "Glossary", "Build-Out Requirement: A requirement placed on a cable operator to provide cable service to particular areas or residential customers.", "Cable Operator: From the Cable Act, 47 U.S.C. \u00c2\u00a7 522, \"[a]ny person or group of persons (A) who provides cable service over a cable system and directly or through one or more affiliates owns a significant interest in such cable system, or (B) who otherwise controls or is responsible for, through any arrangement, the management and operation of such a cable system.\"", "Cable Service: One-way transmission of video programming to customers, and any customer interaction required for the selection or use of such video programming.", "Cable System: A facility designed to provide video programming to multiple subscribers within a community, with limited exceptions. See note 39 , supra , for the precise exceptions.", "Common Carrier: A person or entity who provides interstate telecommunications service.", "Franchise: A right to operate a cable system in a given area.", "Franchise Fee: From the Cable Act, 47 U.S.C. \u00c2\u00a7 542, \"any tax, fee, or assessment of any kind imposed by a franchising authority or other governmental entity on a cable operator or cable subscriber, or both, solely because of their status as such,\" with several exceptions. See the \" Franchise Fees \" section, supra , for a discussion of some of these exceptions.", "Franchising Authority: A state or local governmental body responsible for awarding franchises.", "I-Net: Abbreviation for \"institutional network\"; a communication network constructed or operated by a cable operator for use exclusively by institutional (non-residential) customers.", "In-Kind : Non-monetary.", "Mixed-Use Network: A communication network over which a person or entity provides both cable service and other service(s), such as telecommunications service.", "PEG: Abbreviation for \"Public, Educational, or Governmental.\" See note 41 , supra , for more discussion of this term.", "Telecommunications : From the Communications Act, 47 U.S.C. \u00c2\u00a7 153, \"the transmission, between or among points specified by the user, of information of the user's choosing, without change in the form or content of the information as sent and received.\"", "Telecommunications Service: The offering of telecommunications directly to the public for a fee.", "Title VI: The collected provisions of the Cable Act, as amended."], "subsections": []}]}]}}
{"id": "R46012", "title": "Immigration: Recent Apprehension Trends at the U.S. Southwest Border", "released_date": "2019-11-19T00:00:00", "summary": ["Unauthorized migration across the U.S. Southwest border poses considerable challenges to federal agencies that apprehend and process unauthorized migrants (aliens) due to changing characteristics and motivations of migrants in the past few years. Unauthorized migration flows are reflected by the number of migrants apprehended by the Department of Homeland Security's (DHS's) Customs and Border Protection (CBP). In FY2000, total annual apprehensions at the border were at an all-time high of 1.64 million, before gradually declining to 303,916 in FY2017, a 45-year low. Apprehensions then increased to 396,579 in FY2018 and 851,508 in FY2019, the highest level since FY2007.", "More notably, the character of unauthorized migrants has changed during the past decade. Historically, unauthorized migrant flows involved predominantly single adult Mexicans, traveling without families, whose primary motivation was U.S. employment. As recently as FY2011, Mexican nationals made up 86% of all apprehensions, and relatively few requested asylum. In FY2019, however, \"Northern Triangle\" migrants from El Salvador, Guatemala, and Honduras comprised 81% of all apprehensions that year. Economic migrants exclusively seeking employment no longer dominate the unauthorized migrant flow, which is now driven to a greater extent by asylum seekers and those escaping violence and domestic insecurity, or those with motivations involving a mixture of protection and economic opportunity.", "CBP classifies apprehended unauthorized migrants into single adults, family units (at least one parent/guardian and at least one child), and unaccompanied alien children (UAC). In 2012, single adults made up 90% of apprehended migrants at the Southwest border. In FY2019, however, persons in family units and UAC together accounted for 65% of all apprehended migrants that year. In FY2019, CBP apprehended a record 473,682 persons in family units, exceeding all apprehensions of family unit members from FY2012-FY2018 combined. Mothers headed almost half of all family units apprehended in FY2019. In addition, apprehended persons in family units shifted from mostly Mexican nationals (80%) in FY2012 to mostly Salvadoran, Guatemalan, and Honduran nationals (91%) in FY2019. Similar changes occurred in the origin countries of unaccompanied alien children, whose total apprehensions also reached a record (76,020) in FY2019.", "The changing character of the migrant flow has led to logistical and resource challenges for federal agencies, particularly CBP. These include a general capacity shortfall in CBP holding facilities, the lack of appropriate facilities to detain families in Immigration Customs and Enforcement (ICE) detention centers, the reassignment of some CBP personnel who monitor the border to process and respond to migrants in holding facilities, and rapidly expanding immigration court backlogs that delay expeditious proceedings. The changing underlying motivations and border migration strategies of recent migrants also makes apprehension data less useful than in the past for measuring border enforcement. Because many unauthorized migrants now actively seek out U.S. Border Patrol agents in order to request asylum, increases or decreases in apprehension numbers may not reflect the effectiveness of border enforcement strategies.", "In response, the Trump Administration has changed existing policies for apprehended migrants, including implementing the Migrant Protection Protocols (MPP), also known as the \"remain in Mexico\" immigration policy, which allow DHS to return migrants seeking U.S. admission to the contiguous country from which they arrived on land, pending removal proceedings.", "Options for Congress could include legislative responses to the series of policies that the Administration has developed to address the changing flow of migrants at the Southwest border. Some proposals may consider changes to the appropriations of agencies charged with processing unauthorized migrants to reshape the system from one that was designed to apprehend and return single unauthorized adults from Mexico with no claims for protection, to one that can more quickly adjudicate those seeking humanitarian protection. Other options may include greater supervision of unauthorized migrants who are released into the United States, and mandating the collection and publication of more-detailed and timely data from CBP to more completely assess the flow of unauthorized migrants, including those in the MPP program, and their impact on border enforcement and the immigration court system."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["Over the past two years, increasing migration across the Southwest border of the United States has posed considerable challenges to U.S. federal agencies charged with apprehending and processing unauthorized migrants. From FY2000 to FY2017, unauthorized migration flows\u00e2\u0080\u0094measured in this report by the number of migrants apprehended by the Department of Homeland Security's (DHS's) Customs and Border Protection (CBP)\u00e2\u0080\u0094had been generally declining. Apprehensions statistics historically have been used as a rough measure of trends in unauthorized migration flows, as well as a rough indicator of border enforcement (see \" Interpreting Apprehensions Data \" below). After reaching an all-time peak of 1,643,679 in FY2000, apprehensions fell to a 45-year low of 303,916 in FY2017. In FY2018 apprehensions increased to 396,579, and in FY2019 they more than doubled to 851,508. ", "The Administration and some Members of Congress have characterized the recent increases as a border security and humanitarian crisis. For example, then-CBP Commissioner Kevin McAleenan, in testimony to the Senate Judiciary Committee on March 6, 2019, stated ", "I have heard a number of commentators observe that even with these alarming levels of migration, the numbers are lower than the historical peaks, and as a result, they suggest what we are seeing at the border today is not a crisis. ", "I fundamentally disagree. From the experience of our agents and officers on the ground, it is indeed both a border security\u00e2\u0080\u0094and a humanitarian\u00e2\u0080\u0094crisis.", "What many looking at total numbers fail to understand is the difference in what is happening now in terms of who is crossing, the risks that they are facing, and the consequences for our system. ", "The difference McAleenan cited refers to the characteristics of apprehended migrants at the Southwest border\u00e2\u0080\u0094their origin countries, demographic characteristics, and migratory motivations\u00e2\u0080\u0094all of which have changed considerably during the past decade. In prior decades, unauthorized migrant flows involved predominantly adult male Mexicans, whose primary motivation was U.S. employment. If apprehended, they were typically processed through expedited removal and quickly repatriated. Relatively few migrants applied for humanitarian immigration relief such as asylum. ", "Mexican migrants now make up a minority of total apprehensions. Sizable numbers of migrants from the \"Northern Triangle\"\u00e2\u0080\u0094the Central American countries of El Salvador, Guatemala, and Honduras\u00e2\u0080\u0094now make up the largest group. Smaller numbers of migrants are also arriving at the Southwest border from South America (e.g., Venezuela, Peru), the Caribbean (e.g., Cuba), Africa (e.g., Cameroon, Uganda), Central Asia (e.g., Uzbekistan), and South Asia (e.g., India, Bangladesh), among other regions. Instead of being dominated by adult males, migrant flows over the course of this decade have been increasingly characterized by migrants traveling as families (family units) and unaccompanied alien children (UAC). ", "While a sizeable proportion of unauthorized migrants seek U.S. employment, a growing proportion of arriving migrants are seeking asylum and protection from violence. Studies of recent migration trends cite persistent poverty, inequality, demographic pressure related to high population growth, vulnerability to natural disasters, high crime rates, poor security conditions, and the lack of a strong state presence as factors that \"push\" migrants to make the risky and often dangerous journey from the Northern Triangle. \"Pull\" factors include the increasing use of U.S. asylum policy that, until recently, allowed most asylum seekers to remain in the United States while they awaited a decision on their cases. Lengthy court backlogs allow migrants admitted to the United States the opportunity to reunite with family members and acquire work authorization, typically six months after U.S. admission. Motivations for leaving Northern Triangle countries and choosing the United States are often a mixture of these push and pull factors, which can be interconnected, especially for families and unaccompanied children. ", "Some observers argue that the recent migrant flows represent a failure of the rule of law. They question the legitimacy of asylum claims being made by recent unauthorized migrants and contend that many are abusing U.S. immigration laws bestowing humanitarian relief in order to gain entry into, or permission to remain in, the United States. Other observers characterize the recent migrant flows as a legitimate international humanitarian crisis resulting from violent and lawless circumstances in migrants' countries of origin. These observers contend that the \"crisis\" at the border reflects the inability of U.S. federal agencies to adequately process arriving migrants and adjudicate their claims for immigration relief. ", "The changing character of the migrant flow has reportedly produced a number of logistical and resource challenges for federal agencies. These include a general capacity shortfall in CBP holding facilities, lack of appropriate facilities to detain families in ICE detention centers, reassignment of CBP personnel from port of entry duty to responding to migrants in processing facilities, and lengthy immigration court backlogs that delay expeditious proceedings. During migration peaks, these resource constraints\u00e2\u0080\u0094coupled with legal restrictions on the length of time that some migrants may be held \u00e2\u0080\u0094have forced DHS to release migrants who have entered the United States unlawfully, particularly those in family units, rather than detaining or removing them. ", "In response to the large increase in arrivals of migrants without proper entry documents, the Trump Administration has initiated changes to existing policy for apprehended migrants, largely designed to discourage these unauthorized migration flows. In January 2019, the Administration implemented the Migrant Protection Protocols (MPP), also known as the \"remain in Mexico\" immigration policy, which allow DHS to return applicants for admission to the United States to the contiguous country from which they arrived (on land) pending removal proceedings. The MPP sends migrants back to Mexico to await their court proceedings for the duration of their case. This program requires the coordination and assistance of the government of Mexico, a country facing its own high levels of unauthorized migration on its southern border. The program is currently operating in six border locations.", "Understanding changing migration patterns over the past decade may help inform Congress as it considers immigration-related legislation. This report discusses recent migrant apprehension trends at the Southwest border. It describes how unauthorized migration to the United States has changed in terms of the absolute numbers of migrants as well as their origin countries, demographic composition, and primary migratory motivations. The report concludes with a brief discussion of related policy implications. "], "subsections": []}, {"section_title": "Changing Migration and Apprehension Trends", "paragraphs": ["The Trump Administration's and Congress's responses to the changing characteristics of unauthorized migrants at the Southwest border occur within the context of border security debates. Border security has been an ongoing subject of congressional interest since the 1970s, when unauthorized immigration to the United States first registered as a serious national challenge, and it has received increased attention since the terrorist attacks of 2001. Current debates center on how best to secure the Southwest border, including how and where to place barriers and other tactical infrastructure to impede unauthorized migration as well as the deployment of U.S. Border Patrol agents to prevent unlawful entries of migrants and contraband. Securing the border while facilitating legitimate trade and travel to and from the United States is CBP's primary mission; major shifts in CBP activities can strain resources and disrupt operations. ", "According to U.S. immigration law, foreign nationals who arrive in the United States without valid entry documentation may pursue asylum and related protections if they demonstrate a credible fear of persecution or torture in their country of origin. These migrants, along with others either apprehended or refused admission at a port of entry, appear in the statistics kept by CBP (see \"Interpreting Apprehensions Data\" below). ", "While CBP's responsibilities include monitoring the Southwest and Northern land borders, as well as the Atlantic and Pacific coasts, the Southwest border with Mexico commands most of the agency's resources because of its attendant risks. The Southwest border runs for nearly 2,000 miles along the four Southwestern states of California, Arizona, New Mexico, and Texas. It is not only the locus of most unauthorized migration to the United States but also that of illicit drugs, counterfeit products, dangerous agricultural products, and trafficked children. Much of this activity occurs at U.S. ports of entry at the Southwest border, where CBP officers inspect all individuals and vehicles that seek to enter the United States. "], "subsections": [{"section_title": "Interpreting Apprehensions Data", "paragraphs": ["CBP's two components that monitor the Southwest border at and between ports of entry\u00e2\u0080\u0094the U.S. Border Patrol (USBP) and the Office of Field Operations (OFO)\u00e2\u0080\u0094collect statistics on individuals who have crossed the border illegally and those who are denied entry. Between ports of entry, USBP agents are responsible for apprehending individuals not lawfully present in the United States. OFO officers are responsible for inspections at U.S. ports of entry and collect data on noncitizens who are denied entry to the United States at ports of entry. Migrants typically are denied entry because they are not in possession of a valid entry document or are determined \"inadmissible\" on one of several grounds, such as having a criminal record, being a potential public safety threat, or being a public health threat. Inadmissible migrants made up 27%, 24%, and 13% of all migrants arriving at ports of entries along the Southwest border in FY2017, FY2018, and FY2019, respectively. While the number of inadmissible migrants grew slightly from FY2018 to FY2019, their percentage share of all CBP encounters diminished compared to apprehensions, as absolute numbers of apprehensions more than doubled during that period. ( Table 1 ). Both inadmissible and apprehended migrants can be placed in the MPP program.", "Apprehensions statistics historically have been used as a rough measure of trends in unauthorized migration flows. The utility of these statistics for measuring border enforcement effectiveness, on the other hand, has long been considered of limited usefulness because of the unknown relationship between apprehensions and successful unlawful entries, among other reasons. Apprehensions data, by definition, do not include illegal border crossers who evade USBP agents. They also do not account for the number of potential migrants who are discouraged from attempting U.S. entry because of enforcement measures. Consequently, it is generally unclear if an increase in apprehensions results from more attempts by migrants to enter the country illegally or from a higher apprehension rate of those attempting to enter the United States illegally\u00e2\u0080\u0094or both. ", "However, these statistics are arguably now less relevant than in previous years as a metric of border security efforts. In the past several years, an indeterminate but sizable share of migrants who cross between U.S. ports of entry have actively sought out U.S. Border Patrol agents in order to \"turn themselves in\" to request asylum. In prior years, such migrants typically would have attempted to evade USBP agents. As such, CBP's classification of these migrants as apprehensions may overstate the degree to which the agency's resources, personnel, and strategies prevent migrants from crossing the border illegally and entering the United States."], "subsections": []}, {"section_title": "Total Apprehensions", "paragraphs": ["The number of total apprehensions has long been used as a basic measure of migration pressure and border enforcement. Total annual apprehensions at the Southwest border averaged 687,639 during the 1970s; 999,476 during the 1980s; 1,266,556 during the 1990s; and 1,020,143 during the 2000s; but then declined to 427,766 during the 2010s. Annual apprehensions reached a 45-year low in FY2017 (303,916). In FY2018, total apprehensions increased to 396,579; and in FY2019, they more than doubled to 851,508, the highest level since FY2007 (see Figure 1 ). While high relative to annual apprehensions during the past decade, the FY2019 level is lower than annual apprehension levels for 25 of the past 45 years. Thus, recent changes in the character of the migrant flows during the past decade occurred within the context of historically low numbers of apprehensions since FY2000.", "Apprehensions at the Southwest border initially peaked at 1.62 million in 1986, the same year that Congress enacted the Immigration Reform and Control Act (IRCA), which gave lawful permanent resident status to roughly 2.7 million unauthorized aliens residing in the United States. After declining substantially for a few years, apprehensions rose again, climbing from 0.85 million in FY1989 to an all-time high of 1.64 million in FY2000. Apprehensions generally fell after that (with the exception of FY2004-FY2006), reaching a then-low point of 327,577 in FY2011. Since that year, apprehensions have fluctuated, as noted above. "], "subsections": []}, {"section_title": "Apprehensions by Country of Origin", "paragraphs": ["The national origins of apprehended migrants have shifted considerably during the past two decades (see Figure 2 ). In FY2000, for example, almost all of the 1.6 million aliens apprehended at the Southwest border (98%) were Mexican nationals, and relatively few requested asylum. As recently as FY2011, Mexican nationals made up 86% of all 327,577 Southwest border apprehensions in that year. ", "That share has declined, however, and for most years after FY2013, Mexicans accounted for less than half of total apprehensions on the Southwest border. In FY2019, \"other-than-Mexicans\" comprised 81% of all 851,508 apprehensions. From FY2012 to FY2019, the number of Mexican nationals apprehended dropped by 37%, from 262,341 to 166,458, while the number of migrants apprehended from all other countries increased six-fold, from 94,532 to 685,050."], "subsections": []}, {"section_title": "Apprehensions by Demographic Category", "paragraphs": ["CBP classifies apprehended unauthorized migrants into three demographic categories: single adults, family units (at least one parent/guardian and at least one child), and unaccompanied alien children (UAC). Of the three categories, apprehensions of persons in family units have increased the most in absolute terms since FY2012, the first year for which publicly available CBP data differentiated among the three demographic categories (see Figure 3 ). ", "In FY2012, 321,276 single adults made up 90% of the 356,873 arriving migrants apprehended at the Southwest border, while members of family units numbered 11,116, and UAC accounted for 24,481. By FY2019, however, apprehensions of persons in family units numbered 473,682, more than all family unit apprehensions from FY2012 to FY2018 combined. Together in FY2019, those persons in family units as well as UAC (76,020 apprehensions) accounted for 65% of all apprehensions while the remaining 35% (301,806) were single adults, of whom 84% were men. Approximately 48% of family units apprehended in FY2019 were headed by mothers, 44% were headed by fathers, and about 8% were headed by two parents."], "subsections": []}, {"section_title": "Apprehensions of Family Units by Country of Origin", "paragraphs": ["As the number of apprehensions of individuals in family units has increased in recent years, their national origins have shifted from mostly Mexican, (comprising 80% of all 11,116 family unit apprehensions in FY2012), to mostly Salvadoran, Guatemalan, and Honduran, who together made up 91% of all 457,871 such apprehensions in FY2019 (see Figure 4 ). Apprehensions of individuals in family units from El Salvador increased from 636 (6%) of all such apprehensions in FY2012 to 27,114 (35%) of all 77,674 of such apprehensions in FY2016 before declining to 54,915 (12%) in FY2019. Over the same period, the share of family unit apprehensions from Honduras (513) and Guatemala (340) each grew from less than 5% of the total in FY2012 to 188,416 and 185,233, respectively, about 39% each of the total in FY2019. By comparison, the 6,004 apprehensions of Mexicans in family units made up 1% of the total in FY2019.", "Notably, the percentage of persons in family units from \"all other countries,\" has been relatively low over the same period. In absolute numbers, this category registered less than 4,000 apprehensions in all years prior to FY2019, but rose to 37,132 family unit apprehensions in FY2019 (7% of the total, the same share as in FY2012). "], "subsections": []}, {"section_title": "Apprehensions of Unaccompanied Alien Children", "paragraphs": ["Over the past decade, the number of unaccompanied alien children apprehended at the Southwest border has increased considerably (see Figure 5 ). From FY2011 to FY2014, UAC apprehensions increased each year, and more than quadrupled from 16,067 in FY2011 to 68,541 in FY2014. From FY2014 to FY2018, UAC apprehensions fluctuated, declining to 39,970 in FY2015; increasing to 59,692 in FY2016; declining again to 41,435 in FY2017; and increasing again to 50,036 in FY2018. In FY2019, UAC apprehensions reached 76,020, a level that exceeds the previous peak in FY2014. In FY2019, approximately 30% of apprehended UAC were girls. ", "In the past decade, the country-of-origin composition of apprehended UAC, like that of family units, has shifted from mostly Mexican to mostly Salvadoran, Guatemalan, and Honduran. For example, in FY2009 Mexican UAC (16,114) made up 82% of all 19,668 UAC apprehensions in that year, while Salvadoran (1,221), Guatemalan (1,115), and Honduran (968) UAC made up 6%, 6%, and 5%, respectively, of the total. In contrast, by FY2019 Mexican UAC (10,487) made up 14% of all 76,020 UAC apprehensions in that year, while Salvadoran (12,021), Guatemalan (30,329), and Honduran (20,398) UAC made up 16%, 40%, and 27%, respectively, of the total. ", "Current statute treats children from contiguous countries (Mexico and Canada) differently than children from non-contiguous countries. While UAC from Mexico can be repatriated promptly through a process known as voluntary departure , UAC from all other countries are placed in formal removal proceedings. The latter are then referred to the Department of Health and Human Services' (HHS') Office of Refugee Resettlement (ORR), where they are initially sheltered and subsequently placed with family members or sponsors while they await their immigration hearing. Hence, the shift in the country-of-origin composition of the apprehended UAC population has had considerable impact on agencies charged with the processing and care of these children."], "subsections": []}, {"section_title": "Total Apprehensions by Month in FY2019", "paragraphs": ["Over the past two decades, apprehensions have followed a pattern consistent with a seasonal migration cycle. In this cycle, peak numbers of apprehensions occur in the spring months (March\u00e2\u0080\u0093June), followed by progressively lower numbers in the hotter summer months (July\u00e2\u0080\u0093September), lower-than-average numbers through the fall months (October\u00e2\u0080\u0093December), and even lower numbers in January, before rising again through the spring months when the pattern begins to repeat. ", "During FY2019, the monthly pattern in total apprehensions at the Southwestern border was similar to the trends during the past two decades (see Figure 6 ). From the peak in May through September of FY2019, apprehensions declined nearly 70%, from approximately 133,000 to just over 40,000. ", "These data suggest that the declines in monthly apprehensions from May to September of FY2019 stemmed primarily from declining numbers of family unit apprehensions. The number of persons in family units apprehended on a monthly basis dropped from 84,490 in May to 15,824 in September (an 81% decrease). For UAC, apprehensions declined by 72%, from 11,475 in May to 3,165 in September. Apprehensions of single adults saw a smaller decline (42%) over this period, from 36,894 in May to 21,518 in September. ", "These patterns suggest that declining apprehensions in recent months may have resulted not only from the immigration enforcement policies of the Trump Administration but also from decades-long seasonal migration patterns, among other factors."], "subsections": []}]}, {"section_title": "Policy Implications", "paragraphs": ["This report has described the following major shifts in the composition and character of migrant flows to the Southwest border that have unfolded in less than a decade:", "In the past two years, the number of total apprehensions has increased substantially, a reverse of the general trend of declining and relatively low apprehension levels seen since FY2001. The unauthorized migrant flow apprehended at the Southwest border no longer consists primarily of individuals from Mexico, a country with whom the United States shares a border and close economic and historical ties. It now originates largely from El Salvador, Guatemala, and Honduras. Also, growing numbers of unauthorized migrants are originating from Africa, Asia, and the Caribbean. The unauthorized migrant flow is no longer dominated by economic migrants exclusively seeking employment. It is now driven to a larger extent than in past years by asylum seekers and others with similar motivations, such as escaping violence and domestic insecurity, who may also be interested in working in the United States. Such migrants often seek out U.S. Border Patrol agents at the border when crossing illegally between U.S. ports of entry rather than attempting to elude them. The unauthorized migrant flow no longer consists primarily of single adult migrants but rather of families and children traveling without their parents.", "Although not previously discussed, changing migration strategies are also altering how federal agencies respond to migrant flows. For example, migrants have been increasingly traveling in large groups, reportedly to protect themselves from harm. In addition, more migrants are arriving at remote CBP outposts along the Southwest border, sometimes overwhelming the relatively few CBP personnel who staff them.", "These changing patterns at the Southwest border have considerable policy implications. In comparison with apprehended single adult economic migrants from Mexico, more-recently apprehended migrants require lengthier processing and create a call for greater resources and personnel of more federal agencies. When migrants originate from countries other than the contiguous countries of Mexico and Canada, their removals involve longer processing time, higher transportation costs, and more involved inter-agency coordination. If arriving migrants are unaccompanied alien children from noncontiguous countries, they are protected from immediate removal by statutes that require them to be put into formal immigration removal proceedings and they are referred to the care and custody of ORR. If migrants seek asylum, they generally require a credible fear hearing. They may be detained in DHS facilities for varying periods and must be processed by DOJ's Executive Office for Immigration Review (EOIR). ", "CBP, among all federal agencies, is arguably the most affected by the break with historical migration patterns. The pressures of large groups of migrants arriving together and the greater vulnerabilities of new arrivals are reportedly testing CBP's border infrastructure, agency personnel, and long-standing policies. When unauthorized migrant flows consist largely of families and children, who often arrive in large groups or at remote U.S. border locations, CBP has adjusted its operations and allocated resources and personnel to accommodate more vulnerable migrants. Some studies also suggest that smuggling guides sometimes direct migrants to cross in specific locations to outmaneuver USBP agents and infrastructure and avoid detection. Moreover, anecdotal evidence suggests migrant arrival strategies can be based upon perceptions of differences in border enforcement policies and practices among and within the nine CBP Southwest border sectors. If enforcement policies vary by sector, CBP can expect migration patterns to shift to sectors that migrants perceive as offering them the greatest chance of acquiring the immigration relief they seek.", "The Trump Administration has changed immigration enforcement policies and practices at the border in an attempt to reduce unauthorized migration and discourage fraudulent or frivolous claims for humanitarian immigration relief. President Trump, DHS, DOD, and DOJ have acted together with a series of policy changes that make it more difficult for migrants to be awarded asylum. For example, see the following:", "In November 2018, the President issued a proclamation to suspend immediately the entry into the United States of aliens who cross the Southwest border between ports of entry. This proclamation has been challenged in court and a preliminary injunction was issued by a federal district court. As noted above, DHS implemented the Migrant Protection Protocols (MPP) in January 2019, and for the past several years CBP has also used the practice of \"metering\" migrants. Both of these policies require migrants to wait on the Mexican side of the border. Since April 2018, National Guard personnel have supported DHS at the border, while active duty personnel began providing support in October 2018. In February 2019, President Trump proclaimed a national emergency pursuant to the National Emergencies Act in order to fund a physical barrier at the Southwest border with Mexico using $6.1 billion in funds from the Department of Defense (DOD). In September 2019, the Secretary of Defense deferred funding for military construction projects in order to redirect funds to border barrier projects using his authority under the emergency statute 10 U.S.C., Section 2808. In July 2019, DHS and DOJ jointly issued an interim final rule (IFR) that makes aliens ineligible for asylum in the United States if they arrive at the Southwest border without first seeking protection from persecution in other countries through which they transit. In addition, the United States is working with Mexico to decrease Central American migrant flows and with Central American governments to promote economic prosperity, improve security, and strengthen regional governance.", "The changing character of recent migrant flows at the Southwest border also may suggest that apprehensions may be less useful than in the past for measuring border enforcement. Because many apprehended migrants now actively seek out U.S. Border Patrol agents in order to request asylum, increases or decreases in apprehension numbers may not reflect the effectiveness of border enforcement strategies. Rather, an increase in apprehensions combined with the changing characteristics of recently apprehended migrants may increasingly portend greater resource needs for federal agencies because the administrative requirements for asylum claims are more resource-intensive than those for unauthorized migrants who do not request asylum and are quickly repatriated through expedited removal. The challenge of deterring unauthorized migrants from entering the United States has been complicated and overshadowed by the challenge of processing, in a fair and timely manner, relatively greater numbers of migrants seeking asylum. ", "Recent migration research suggests that forced migration from civil conflict, violence, weather events, and climate change is playing a more prominent role in worldwide migratory patterns. To some extent, patterns described in this report are consistent with that trend. Declining birth rates in parts of Latin America and improving employment prospects in Mexico over the past decade have reduced the relative proportion of single adult migrants whose primary motivation is U.S. employment. In contrast, relatively high levels of violence and lack of public security, among other factors, have increased the relative proportion of Central American and Mexican families and children whose primary migratory motivation is humanitarian relief. ", "Options for Congress could include legislative responses to the series of policies that the Administration has developed to address the changing flow of migrants at the Southwest border. Some proposals may consider changes to the appropriations of agencies charged with processing unauthorized migrants to reshape the system from one that was designed to apprehend and return single unauthorized adults from Mexico with no claims for protection, to one that can more quickly adjudicate those seeking humanitarian protection. Other options may include greater supervision of unauthorized migrants who are released into the United States, and mandating the collection and publication of more-detailed and timely data from DHS to more completely assess the flow of unauthorized migrants, including those in the MPP program, and their impact on border enforcement and the immigration court system."], "subsections": []}]}}
{"id": "R46258", "title": "Latin America and the Caribbean: U.S. Policy and Issues in the 116th Congress", "released_date": "2020-03-10T00:00:00", "summary": ["The United States maintains strong linkages with neighboring Latin America and the Caribbean based on geographic proximity and diverse U.S. interests, including economic, political, and security concerns. The United States is a major trading partner and source of foreign investment for many countries in the region, with free-trade agreements enhancing economic linkages with 11 countries. The region is a large source of U.S. immigration, both legal and illegal; proximity and economic and security conditions are major factors driving migration. Curbing the flow of illicit drugs has been a key component of U.S. relations with the region for more than four decades and currently involves close security cooperation with Mexico, Central America, and the Caribbean. U.S. support for democracy and human rights in the region has been long-standing, with particular current focus on Cuba, Nicaragua, and Venezuela.", "Under the Trump Administration, U.S. relations with Latin America and the Caribbean have moved toward a more confrontational approach from one of engagement and partnership during past Administrations. Since FY2018, the Administration's proposed foreign aid budgets for the region would have cut assistance levels significantly\u00e2\u0080\u0094the FY2021 request would cut aid to the region by 18%. (A large increase for Venezuela masks significantly larger cuts for many countries and programs.) To deter increased unauthorized migration from Central America, the Administration has used a variety of immigration policy tools (including Migrant Protection Protocols and \"safe third country\" agreements), as well as aid cuts and threats of increased U.S. tariffs and taxes on remittances. Other Administration actions on immigration include efforts to end the deportation relief program known as Deferred Action for Childhood Arrivals (DACA) and Temporary Protected Status (TPS) designations for Nicaragua, Haiti, El Salvador, and Honduras. Among trade issues, President Trump strongly criticized and repeatedly threatened to withdraw from the North American Free Trade Agreement (NAFTA), which led to the new United States-Mexico-Canada Agreement (USMCA) negotiated in 2018. The Trump Administration also did not follow the policy of engagement with Cuba advanced by the Obama Administration and imposed new sanctions.", "Congressional Action in the 116 th Congress . Congress traditionally has played an active role in policy toward Latin America and the Caribbean in terms of both legislation and oversight. The 116 th Congress did not implement the Trump Administration's downsized foreign aid budget requests for the region for FY2019 ( P.L. 116-6 ) and FY2020 ( P.L. 116-94 ), instead providing aid amounts roughly similar to those provided in recent years.", "Congress approved the Venezuela Emergency Relief, Democracy Assistance, and Development Act of 2019 in December 2019 (included in Division J of P.L. 116-94 ), which, among its provisions, codifies several types of sanctions imposed on Venezuela and authorizes humanitarian assistance to Venezuelans and support for international election observation and democratic civil society. In January 2020, Congress completed action on implementing legislation ( P.L. 116-113 ) for the USMCA, but before final agreement, the trade agreement was amended to address congressional concerns regarding provisions on labor, the environment, dispute settlement procedures, and intellectual property rights. The FY2020 National Defense Authorization Act ( P.L. 116-92 ), approved in December 2019, includes provisions on Venezuela and Guatemala and reporting requirements on Brazil, Honduras, Central America, and Mexico.", "Either or both houses approved several bills and resolutions on a range of issues and countries: H.R. 133 , which would promote economic cooperation and exchanges with Mexico; H.R. 2615 , which would authorize assistance to Central America's Northern Triangle countries to address the root causes of migration; S.Res. 35 and S.Res. 447 on the political situation in Bolivia; H.Res. 441 and S.Res. 277 , commemorating the 25 th anniversary of the 1994 bombing of the Argentine-Israeli Mutual Association in Buenos Aires; and H.Res. 754 , expressing continued U.S. support for the people of Nicaragua and pressure on the government of Daniel Ortega. To date, congressional committees have held 20 oversight hearings on the region in the 116 th Congress (see Appendix )."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Regional Political and Economic Environment", "paragraphs": ["With 33 countries\u00e2\u0080\u0094ranging from the Caribbean nation of St. Kitts and Nevis, one of the world's smallest states, to the South American giant of Brazil, the world's fifth-largest country\u00e2\u0080\u0094the Latin American and Caribbean region has made significant advances over the past four decades in terms of both political and economic development. (See Figure 1 and Table 2 for a map and basic facts on the region's countries.) Significant challenges remain, however, and some countries have experienced setbacks, most prominently Venezuela (which has descended into dictatorship). In the early 1980s, authoritarian regimes governed 16 Latin American and Caribbean countries, both on the left and the right. Today, three countries in the region\u00e2\u0080\u0094Cuba, Nicaragua, and Venezuela\u00e2\u0080\u0094are ruled by authoritarian governments. ", "Most governments in the region today are elected democracies. Although free and fair elections have become the norm, recent elections in several countries have been controversial and contested. In 2019, Argentina, Dominica, El Salvador, Panama, and Uruguay held successful free and fair elections. Guatemala held two presidential election rounds in June and August 2019 that international observers judged to be successful, but the elections suffered because several popular candidates were disqualified from the race on dubious grounds. In Bolivia, severe irregularities in the conduct of the country's October 2019 presidential elections ignited protests and violence that led to the resignation of incumbent President Evo Morales, who was seeking a fourth term; new elections under an interim president are now scheduled for May 2020. Most recently, Guyana held elections on March 2, 2020, which were marred by allegations of fraud; final results are on hold pending court action regarding the final verification of some votes. Six other Caribbean countries are scheduled to hold elections in 2020 (see text box \" 2020 Elections \").", "Despite significant improvements in political rights and civil liberties since the 1980s, many countries in the region still face considerable challenges. In a number of countries, weaknesses remain in the state's ability to deliver public services, ensure accountability and transparency, advance the rule of law, and ensure citizen safety and security. There are numerous examples of elected presidents who have left office early amid severe social turmoil and economic crises, the presidents' own autocratic actions contributing to their ouster, or high-profile corruption. In addition to Morales's resignation in 2019, corruption scandals either caused or contributed to several presidents' resignations or removals of several president\u00e2\u0080\u0094Guatemala in 2015, Brazil in 2016, and Peru in 2018. ", "Although the threat of direct military rule has dissipated, civilian governments in several countries have turned to their militaries or retired officers for support or during crises, raising concerns among some observers. Most recently, in El Salvador on February 9, 2020, President Nayib Bukele used the military in an effort to intimidate the country's legislature into approving an anti-crime bill; the action elicited strong criticism in El Salvador and abroad, with concerns centered on the politicization of the military and the separation of powers.", "The quality of democracy has eroded in several countries over the past several years. The Economist Intelligence Unit's (EIU's) 2019 democracy index shows a steady regional decline in democratic practices in Latin America since 2017. Several years ago only Cuba was viewed as an authoritarian regime, but Venezuela joined its ranks in 2017 as President Nicol\u00c3\u00a1s Maduro's government violently repressed the political opposition. Nicaragua turned to authoritarian practices in 2018 under long-time President Daniel Ortega, as the government violently repressed protests. The continued regional downward trend in 2019 stemmed from Bolivia's post-election crisis and to a lesser extent by setbacks in the following other countries: Guatemala, where the government ousted the anti-corruption body known as the International Commission against Impunity in Guatemala; Haiti, which experienced widespread anti-government protests against corruption and deteriorating economic conditions; and Guyana, with the delay of elections following a no-confidence vote by the legislature. ", "Public satisfaction with how democracy is operating has declined along with the quality of democracy in the region. According to the 2018/2019 AmericasBarometer public opinion survey, the percentage of individuals satisfied with how democracy was working in their countries averaged 39.6% among 18 countries in the region, the lowest level of satisfaction since the poll began in 2004. Given these trends, the eruption of social protests in many countries around the region in 2019 is unsurprising, but in each country a unique set of circumstances has sparked the protests. In addition to the protests in Bolivia and Haiti cited above, protests broke out in Ecuador over fuel price increases, in Chile over pent-up frustration over social inequities, and in Colombia over opposition to a range of government policies and proposals, from tax reform to education to peace accord implementation. ", "Although each country is unique, several broad political and economic factors appear to be driving the decline in satisfaction with democracy in the region. Political factors include an increase in authoritarian practices, weak democratic institutions and politicized judicial systems, corruption, high levels of crime and violence, and organized crime that can infiltrate or influence state institutions. Economic factors include declining or stagnant regional economic growth rates over the past several years, high levels of income inequality in many Latin American countries, increased poverty, and the inadequacy of social safety net programs or advancement opportunities, along with increased pressure on the region's previously expanding middle class. ", "Beginning around 2015, the global decline in commodity prices significantly affected the region, as did China's economic slowdown and its reduced appetite for imports from the region in 2015 and 2016 (see Table 1 ). According to the International Monetary Fund (IMF), the region experienced an economic contraction of 0.6% in 2016, dragged down by recessions in Argentina and Brazil, as well as by Venezuela's severe economic deterioration as oil prices fell. Since then, the region has registered only marginal growth rates, including an estimated growth rate of 0.2% in 2019. Regional growth in 2019 was suppressed by the collapse of much of the Venezuelan economy, which contracted 35%, and by continued recession in Argentina, which suffered an economic contraction of 3.1%.", "The current IMF 2020 outlook is for regional growth to reach 1.6%, led by recovery in Brazil and spurred by growth forecasts of 3% or higher for Chile, Colombia, and Peru. The economic fallout from the current coronavirus disease (COVID-19) outbreak, which already is having repercussions around the world, could jeopardize this forecast. Even before the onset of the coronavirus, recession was forecasted to continue in several countries, including Argentina and Venezuela, with contractions of 1.3% and 10% respectively. The risk of social unrest similar to that experienced in 2019 could also constrain growth in some countries.", "Despite some easing of income inequality in the region from 2002 to 2014, reductions in income inequality have slowed since 2015; Latin America remains the most unequal region in the world in terms of income inequality, according to the United Nations (U.N.) Economic Commission for Latin America and the Caribbean. The level of poverty in the region also has increased over the past five years. In 2014, 27.8% of the region's population lived in poverty; that figure increased to 30.8% by 2019."], "subsections": []}, {"section_title": "U.S. Policy Toward Latin America and the Caribbean", "paragraphs": ["U.S. interests in Latin America and the Caribbean are diverse and include economic, political, security, and humanitarian concerns. Geographic proximity has ensured strong economic linkages between the United States and the region, with the United States being a major trading partner and source of foreign investment for many Latin American and Caribbean countries. Free-trade agreements (FTAs) have augmented U.S. economic relations with 11 countries in the region. The Western Hemisphere is a large source of U.S. immigration, both legal and illegal; geographic proximity and economic and security conditions are major factors driving migration trends. ", "Curbing the flow of illicit drugs from Latin America and the Caribbean has been a key component of U.S. relations with the region and a major interest of Congress for more than four decades. The flow of illicit drugs, including heroin, methamphetamine, and fentanyl from Mexico and cocaine from Colombia, poses risks to U.S. public health and safety; and the trafficking of such drugs has contributed to violent crime and gang activities in the United States. Since 2000, Colombia has received U.S. counternarcotics support through Plan Colombia and its successor programs. In addition, for over a decade, the United States sought to forge close partnerships with other countries to combat drug trafficking and related violence and advance citizen security. These efforts include the M\u00c3\u00a9rida Initiative begun in 2007 to support Mexico, the Central America Regional Security Initiative (CARSI) begun in 2008, and the Caribbean Basin Security Initiative (CBSI) begun in 2009. ", "Another long-standing component of U.S. policy has been support for strengthened democratic governance and the rule of law. As described in the previous section, although many countries in the region have made enormous strides in terms of democratic political development, several face considerable challenges. U.S. policy efforts have long supported democracy promotion efforts, including support for strengthening civil society and promoting the rule of law and human rights."], "subsections": [{"section_title": "Trump Administration Policy", "paragraphs": ["In its policy toward Latin America and the Caribbean, the Trump Administration has retained many of the same priorities and programs of past Administrations, but it has also diverged considerably. The Administration has generally adopted a more confrontational approach, especially regarding efforts to curb irregular immigration from the region. In 2018, the State Department set forth a framework for U.S. policy toward the region focused on three pillars for engagement: (1) economic growth and prosperity, (2) security, and (3) democratic governance. The framework reflects continuity with long-standing U.S. policy priorities for the region but at times appears to be at odds with the Administration's actions, which sometimes have been accompanied by antagonistic statements on immigration, trade, and foreign aid. Meanwhile, according to Gallup and Pew Research Center polls, negative views of U.S. leadership in the region have increased markedly during the Trump Administration (see text box \" Latin America and the Caribbean: Views of U.S. Leadership \").", "Foreign Aid. The Administration's proposed foreign aid budgets for FY2018 and FY2019 would have cut assistance to the region by more than a third, and the FY2020 budget request would have cut funding to the region by about 30% compared to that appropriated in FY2019. Congress did not implement those budget requests and instead provided significantly more for assistance to the region in appropriations measures. In 2019, however, the Trump Administration withheld some assistance to Central America to compel its governments to curb the flow of migrants to the United States. (See \" U.S. Foreign Aid \" section.)", "Trade. In 2017, President Trump ordered U.S. withdrawal from the proposed Trans-Pacific Partnership (TPP) FTA that had been negotiated by 12 Asia-Pacific countries in 2015. The TPP would have increased U.S. economic linkages with Latin American countries that were parties to the agreement\u00e2\u0080\u0094Chile, Mexico, and Peru. President Trump strongly criticized the North American Free Trade Agreement (NAFTA) with Mexico and Canada, repeatedly warned that the United States might withdraw from the agreement, and initiated renegotiations in 2017. The three countries agreed in September 2018 to a new United States-Mexico-Canada Agreement (USMCA), which retained many NAFTA provisions but also included some modernizing updates and changes, such as provisions on digital trade and the dairy and auto industries. (See \" Trade Policy \" section.)", "Mexico , Central America, and Migration Issues . Relations with Mexico have been tested by inflammatory anti-immigrant rhetoric, immigration actions, and changes in U.S. border and asylum polices that have shifted the burden of interdicting migrants and offering asylum to Mexico. In September 2017, the Administration announced that it would end the Deferred Action for Childhood Arrivals (DACA) program; begun in 2012 by the Obama Administration, the program provides relief from deportation for several hundred thousand immigrants who arrived in the United States as children. The future of the initiative remains uncertain given challenges in federal court. In December 2018, Mexico's president agreed to allow the United States to return certain non-Mexican migrants to Mexico (pursuant to Migrant Protection Protocols or MPP) while awaiting U.S. immigration court decisions. In May 2019, President Trump threatened to impose new tariffs on motor vehicles from Mexico if the government did not increase actions to deter U.S.-bound migrants from Central America; Mexico ultimately agreed in June 2019 to increase its enforcement actions and to allow more U.S.-bound asylum seekers to await their U.S. immigration proceedings in Mexico. Despite tensions, U.S.-Mexico bilateral relations remain friendly, with continued strong energy and economic ties, including the USMCA, and close security cooperation related to drug interdiction. (See \" Mexico \" section.)", "Other Administration actions on immigration have caused concern in the region. In 2017 and 2018, the Administration announced plans to terminate Temporary Protected Status (TPS) designations for Nicaragua, Haiti, El Salvador, and Honduras, but federal court challenges have put the terminations on hold. (See \" Migration Issues \" section.)", "Unauthorized migration from Central America's Northern Triangle countries\u00e2\u0080\u0094El Salvador, Guatemala, and Honduras\u00e2\u0080\u0094has increased in recent years, fueled by difficult socioeconomic and security conditions and poor governance. To deter such migration, the Trump Administration implemented a \"zero tolerance\" policy toward illegal border crossings in 2018 and applied restrictions on access to asylum at the U.S. border. The Administration also has used aid cuts of previously appropriated assistance for FY2017 and FY2018 and threats of increased U.S. tariffs and taxes on remittances to compel Central American countries and Mexico to curb unauthorized migration to the United States. In 2019, the Administration negotiated \"safe third country\" agreements with each of the Northern Triangle countries to permit the United States to transfer asylum applicants from third countries to the Northern Triangle countries. (See \" Central America's Northern Triangle \" section.)", "Venezuela , Cuba , and Nicaragua . In November 2018, then-National Security Adviser John Bolton made a speech in Miami, FL, on the Administration's policies in Latin America that warned about \"the destructive forces of oppression, socialism, and totalitarianism\" in the region. Reminiscent of Cold War political rhetoric, Bolton referred to Cuba, Nicaragua, and Venezuela as the \"troika of tyranny\" in the hemisphere that has \"finally met its match.\" He referred to the three countries as \"the cause of immense human suffering, the impetus of enormous regional instability, and the genesis of a sordid cradle of communism in the Western Hemisphere.\"", "As the situation in Venezuela has deteriorated under the Maduro government, the Trump Administration has imposed targeted and broader financial sanctions, including sanctions against the state oil company, the country's main source of income. In January 2019, the Administration recognized the head of Venezuela's National Assembly, Juan Guaid\u00c3\u00b3, as interim president. In September 2019, the United States joined 11 other Western Hemisphere countries to invoke the Rio Treaty to facilitate a regional response to the Venezuelan crisis. The Administration also is providing humanitarian and development assistance for Venezuelans who have fled to other countries, especially Colombia, as well as for Venezuelans inside Venezuela. (See \" Venezuela \" section.)", "With regard to Cuba, the Trump Administration has not continued the policy of engagement advanced during the Obama Administration and has imposed a series of economic sanctions on Cuba for its poor human rights record and support for the Maduro government. Economic sanctions have included restrictions on travel and remittances, efforts to disrupt oil flows from Venezuela, and authorization (pursuant to Title III of the LIBERTAD Act, P.L. 104-114 ) of the right to file lawsuits against those trafficking in confiscated property in Cuba. In 2017, the State Department cut the staff of the U.S. Embassy in Havana by about two-thirds in response to unexplained injuries of U.S. diplomatic staff. (See \" Cuba \" section.)", "Since political unrest began to grow in Nicaragua in 2018, the Trump Administration has employed targeted sanctions against several individuals close to President Ortega due to their alleged ties to human rights abuses or significant corruption. (See \" Nicaragua \" section.)"], "subsections": []}, {"section_title": "Congress and Policy Toward the Region", "paragraphs": ["Congress traditionally has played an active role in policy toward Latin America and the Caribbean in terms of both legislation and oversight. Given the region's geographic proximity to the United States, U.S. foreign policy toward the region and domestic policy often overlap, particularly in areas of immigration and trade.", "The 116 th Congress completed action on FY2019 foreign aid appropriations in February 2019 when it enacted the Consolidated Appropriations Act, 2019 ( P.L. 116-6 ). Amounts appropriated for key U.S. initiatives and countries in Latin America and the Caribbean exceeded the Administration's request by almost $600 million. Congress completed action on FY2020 foreign aid appropriations in December 2019 when it enacted the Further Consolidated Appropriations Act, 2020 ( P.L. 116-94 ), with amounts for key countries and regional programs once again significantly exceeding the Administration's request. Congress recently has begun consideration of the Administration's FY2021 foreign aid request. ", "In January 2020, Congress completed action on implementing legislation for the USMCA ( P.L. 116-113 ). The agreement retains many of NAFTA's provisions and includes new provisions on the auto and dairy industries and some modernizing features. Before U.S. implementing legislation received final congressional approval in January 2020, the trade agreement was amended to address concerns of Congress regarding provisions related to labor (including enforcement), the environment, dispute settlement procedures, and intellectual property rights (IPR).", "On Venezuela, Congress has supported the Administration's efforts to sanction the Maduro government for its antidemocratic actions and to provide humanitarian assistance to Venezuelan migrants throughout the region. In December 2019, Congress enacted the Venezuela Emergency Relief, Democracy Assistance, and Development Act of 2019, or the VERDAD Act of 2019, in Division J of P.L. 116-94 . The measure incorporates provisions from S. 1025 , as reported by the Senate Foreign Relations Committee in June 2019, and some language or provisions from three bills on Venezuela passed by the House in March 2019: H.R. 854 , to authorize humanitarian assistance to the Venezuelan people; H.R. 920 , to restrict the export of defense articles and crime control materials; and H.R. 1477 , to require a threat assessment and strategy to counter Russian influence in Venezuela. In other legislative action, the House approved H.R. 549 in July 2019, which would provide TPS to Venezuelans in the United States. ", "Congress included several provisions related to Latin America in the National Defense Authorization Act for Fiscal Year 2020 (FY2020 NDAA; P.L. 116-92 ), signed into law in December 2019. Among the provisions are the following:", "Venezuela. Section 890 prohibits the Department of Defense (DOD) from entering into a contract for the procurement of goods or services with any person that has business operations with the Maduro regime in Venezuela. Western Hemisphere Resources. Section 1265 provides that the Secretary of Defense shall seek to enter into a contract with an independent nongovernmental institute that has recognized credentials and expertise in national security and military affairs to conduct an accounting and an assessment of the sufficiency of resources available to the U.S. Southern Command, the U.S. Northern Command, the Department of State, and the U.S. Agency for International Development (USAID) to carry out their respective missions in the Western Hemisphere. Among other matters, the assessment is required to include \"a list of investments, programs, or partnerships in the Western Hemisphere by China, Iran, Russia, or other adversarial groups or countries that threaten the national security of the United States.\" A report on the assessment is due to Congress within one year, in unclassified form, but may include a classified annex. Brazil. Section 1266 requires the Secretary of Defense, in coordination with the Secretary of State, to submit a report to Congress regarding the human rights climate in Brazil and U.S.-Brazilian security cooperation. Guatemala. Section 1267 requires the Secretary of Defense to certify, prior to the transfer of any vehicles to the Guatemalan government, that the government has made a credible commitment to use such equipment only as intended. Honduras. Section 1268 requires the Secretary of Defense to enter into an agreement with an independent institution to conduct an analysis of the human rights situation in Honduras. Central America and Mexico. Section 5522 requires the Director of National Intelligence, in collaboration with other agencies, to submit within 90 days a comprehensive assessment of drug trafficking, human trafficking, and human smuggling activities in Central America and Mexico; the report may be in classified form, but if so, it shall contain an unclassified summary. ", "Other bills and resolutions have passed either or both houses:", "Mexico. In January 2019, the House approved H.R. 133 , which would promote U.S.-Mexican economic partnership and cooperation, including a strategy to prioritize and expand educational and professional exchange programs with Mexico. The Senate approved the bill, amended, in January 2020, which included a new provision that would promote positive cross-border relations as a priority for advancing U.S. foreign policy and programs. Central America. The House approved H.R. 2615 , the United States-Northern Triangle Engagement Act, in July 2019, which would authorize foreign assistance to El Salvador, Guatemala, and Honduras to address the root causes of migration. The bill would also require the State Department to devise strategies to foster economic development, combat corruption, strengthen democracy and the rule of law, and improve security conditions in the region. Bolivia. The Senate approved S.Res. 35 in April 2019, expressing support for democratic principles in Bolivia and throughout Latin America. In January 2020, the Senate approved S.Res. 447 , expressing concerns about election irregularities and violence in Bolivia and supporting the convening of new elections. Argentina. Both houses approved resolutions, H.Res. 441 in July 2019 and S.Res. 277 in October 2019, commemorating the 25 th anniversary of the 1994 bombing of the Argentine-Israeli Mutual Association in Buenos Aires. ", "Congressional committees have held almost 20 oversight hearings on the region, including on Venezuela, Central America (including the impact of U.S. aid cuts), relations with Colombia, human rights in Cuba, China's engagement in Latin America, environmental concerns in the Brazilian Amazon, repression in Nicaragua, and security cooperation with Mexico (see Appendix ). "], "subsections": []}]}, {"section_title": "Regional U.S. Policy Issues", "paragraphs": [], "subsections": [{"section_title": "U.S. Foreign Aid", "paragraphs": ["The United States provides foreign assistance to Latin American and Caribbean nations to support development and other U.S. objectives. U.S. policymakers have emphasized different strategic interests in the region at different times, from combating Soviet influence during the Cold War to promoting democracy and open markets, as well as countering illicit narcotics, since the 1990s. Over the past three years, the Trump Administration has sought to refocus U.S. assistance efforts in the region to address U.S. domestic concerns, such as irregular migration and transnational crime.", "The Trump Administration has also sought to cut U.S. assistance to Latin America and the Caribbean. In 2019, for example, the Administration withheld an estimated $405 million that Congress had appropriated for Central America in FY2018 and reprogrammed the funds to address other foreign policy priorities inside and outside the Western Hemisphere. (See \" Central America's Northern Triangle ,\" below.) ", "The Administration has proposed additional foreign assistance cuts in each of its annual budget proposals. For FY2020, the Administration requested approximately $1.2 billion to be provided to the region through foreign assistance accounts managed by the State Department and USAID, which is about $503 million (30%) less than the region received in FY2019 (see Table 3 ). The request would have cut funding for nearly every type of assistance provided to the region and would have reduced aid for most Latin American and Caribbean countries. The Administration's FY2020 budget proposal also would have eliminated the Inter-American Foundation, an independent U.S. foreign assistance agency that promotes grassroots development in the region. For FY2021, the Administration requested $1.4 billion for the region, which is about 18% less than Congress appropriated for FY2019, and again proposed eliminating the Inter-American Foundation.", "Congressional Action: After a partial government shutdown and a short-term continuing resolution ( P.L. 116-5 ), the 116 th Congress completed action on FY2019 foreign aid appropriations in February 2019. The Consolidated Appropriations Act, 2019 ( P.L. 116-6 ) included an estimated $1.69 billion of foreign assistance for Latin America and the Caribbean. That amount was slightly more than the $1.67 billion appropriated for the region in FY2018 and nearly $600 million more than the Trump Administration requested for the region.", "Although the House passed an FY2020 foreign aid appropriations bill in June 2019 ( H.R. 2740 , H.Rept. 116-78 ), and the Senate Appropriations Committee reported its bill in September 2019 ( S. 2583 , S.Rept. 116-126 ), neither measure was enacted before the start of FY2020. Instead, Congress passed two continuing resolutions ( P.L. 116-59 and P.L. 116-69 ), which funded foreign aid programs in Latin America and the Caribbean at the FY2019 level between October 1, 2019, and December 20, 2019, when President Trump signed into law the Further Consolidated Appropriations Act, 2020 ( P.L. 116-94 ). The act and the accompanying explanatory statement do not specify appropriations levels for every Latin American and Caribbean nation. Nevertheless, the amounts designated for key U.S. initiatives in Central America, Colombia, and Mexico significantly exceed the Administration's request. The act provides", "\"not less than\" $519.9 million to continue implementation of the U.S. Strategy for Engagement in Central America, which is about $75 million more than the Administration requested but $8 million less than Congress appropriated for the initiative in FY2019. \"not less than\" $448.3 million to support the peace process and security and development efforts in Colombia, which is about $104 million more than the Administration requested and $27 million more than Congress appropriated for Colombia in FY2019. $157.9 million to support security and rule-of-law efforts in Mexico, which is $79 million more than the Administration requested but about $5 million less than Congress appropriated for Mexico in FY2019.", "The act also provides $37.5 million for the Inter-American Foundation to continue its grassroots development programs throughout the region. Resolutions have been introduced in both houses (H.Res. 649 and S.Res. 297 ) to commend the Inter-American Foundation on its 50 th anniversary, recognize its contributions to development and to advancing U.S. national interests, and pledge continued support for the agency's work.", "For additional information, see CRS Report R45547, U.S. Foreign Assistance to Latin America and the Caribbean: FY2019 Appropriations , by Peter J. Meyer and Edward Y. Gracia. "], "subsections": []}, {"section_title": "Drug Trafficking and Criminal Gangs", "paragraphs": ["Latin America and the Caribbean feature prominently in U.S. counternarcotics policy due to the region's role as a source and transit zone for several illicit drugs destined for U.S. markets\u00e2\u0080\u0094cocaine, marijuana, methamphetamine, and opiates (plant-based and synthetic). Heroin abuse and synthetic opioid-related deaths in the United States have reached epidemic levels, raising questions about how to address foreign sources of opioids\u00e2\u0080\u0094particularly Mexico, which has experienced an uptick in opium poppy cultivation and the production of heroin and fentanyl (a synthetic opioid). According to the State Department, over 90% of heroin seized and sampled in the United States comes from Mexico and increasingly has included fentanyl. Policymakers also are concerned that methamphetamine and cocaine overdoses in the United States are on an upward trajectory. Rising cocaine usage occurred as coca cultivation and cocaine production in Colombia, which supplies roughly 89% of cocaine in the United States, reached record levels in 2017 before leveling off in 2018.", "Whereas Mexico, Colombia, Peru, and most other source and transit countries in the region work closely with the United States to combat drug production and interdict illicit flows, the Venezuelan government does not. Public corruption in Venezuela also has made it easier for drug trafficking organizations to smuggle illicit drugs.", "Contemporary drug trafficking and transnational crime syndicates have contributed to degradations in citizen security and economic development in some countries, often resulting in high levels of violence and homicide. Despite efforts to combat the drug trade, many Latin American governments, particularly in Mexico and Central America\u00e2\u0080\u0094a region through which roughly 93% of cocaine from South America transited in 2018\u00e2\u0080\u0094continue to suffer from weak criminal justice systems and overwhelmed law enforcement agencies. Government corruption, including high-level cooperation with criminal organizations, further frustrates efforts to interdict drugs, investigate and prosecute traffickers, and recover illicit proceeds. At the same time, a widespread perception\u00e2\u0080\u0094particularly among Latin American observers\u00e2\u0080\u0094is that U.S. demand for illicit drugs is largely to blame for the region's ongoing crime and violence problems.", "Criminal gangs with origins in southern California, principally the Mara Salvatrucha (MS-13) and the \"18 th Street\" gang, continue to undermine citizen security and subvert government authority in Central America. Gang-related violence has been particularly acute in El Salvador, Honduras, and urban areas in Guatemala, contributing to some of the highest homicide rates in the world. Although some gangs engage in local drug distribution, gangs generally do not have a role in transnational drug trafficking. Gangs have been involved in a range of other criminal activities, including extortion, money laundering, and weapons smuggling, and gang-related violence has fueled unauthorized migration to the United States.", "U.S. Policy. For more than 40 years, U.S. policy toward the region has focused on countering drug trafficking and reducing drug production in Latin America and the Caribbean. The largest support program, Plan Colombia, provided more than $10 billion to help Colombia combat both drug trafficking and rebel groups financed by the drug trade from FY2000 to FY2016. After Colombia signed a historic peace accord with the country's largest leftist guerrilla group, the Revolutionary Armed Forces of Colombia (FARC), the United States provided assistance to help implement the agreement. U.S. officials concerned about rising cocaine production have praised Colombian President Ivan Duque's willingness to restart aerial fumigation of coca crops and significantly scale up manual eradication.", "U.S. support to combat drug trafficking and reduce crime also has included a series of partnerships with other countries in the region: the M\u00c3\u00a9rida Initiative, which has led to improved bilateral security cooperation with Mexico; the Central America Regional Security Initiative (CARSI); and the Caribbean Basin Security Initiative (CBSI). During the Obama Administration, those initiatives combined U.S. antidrug and rule-of-law assistance with economic development and violence prevention programs intended to improve citizen security in the region.", "The Trump Administration's approach to Latin America and the Caribbean has focused heavily on U.S. security objectives. All of the aforementioned assistance programs have continued, but they place greater emphasis on combating drug trafficking, gangs, and other criminal groups than during the Obama Administration. The Trump Administration also has sought to reduce funding for each of the U.S. security assistance programs and has reprogrammed, withheld, or not yet obligated significant portions of assistance to Central America due to concerns that those governments have not adequately curbed unauthorized migration. President Trump has welcomed Mexico's assistance on migration enforcement, but the Administration noted in an FY2020 presidential determination issued in August 2019 that \"without further progress over [this year], he could determine that Mexico has 'failed demonstrably' to meet its international drug control commitments.\" Such a determination could trigger U.S. foreign assistance cuts to Mexico.", "President Trump also has prioritized combating gangs, namely the MS-13, which the Department of Justice (DOJ) has named a top priority for U.S. law enforcement agencies. U.S. agencies, in cooperation with vetted units in Central America funded through CARSI, have brought criminal charges against thousands of MS-13 members in the United States. U.S. assistance that supports vetted units working with the U.S. Department of Homeland Security (DHS) and DOJ have been exempt from recent aid reductions for Central America.", "Congressional Action: The 116 th Congress has held hearings on opioids, which included consideration of heroin and fentanyl production in Mexico; corruption in the Americas; the importance of U.S. assistance to Central America (including CARSI); and relations with Colombia, Mexico, and Central America, including antidrug cooperation. Compared to FY2018, the Consolidated Appropriations Act, 2019 ( P.L. 116-6 ) provided increased FY2019 resources for Colombia and Mexico, slightly less funding for CARSI, and stable funding for the CBSI. P.L. 116-6 provided $1.5 million to support the creation of a Western Hemisphere Drug Policy Commission to assess U.S. policy and make recommendations on how it might be improved. The Further Consolidated Appropriations Act, 2020 ( P.L. 116-94 ) provides more security and rule of law funding for Colombia and Mexico than the estimated FY2019 appropriations level, less funding for CARSI, and slightly more funding for the CBSI. The FY2020 NDAA ( P.L. 116-92 ) requires the Director of National Intelligence, in collaboration with other agencies, to submit within 90 days of enactment an assessment of drug trafficking, human trafficking, and human smuggling activities and how those activities influence migration in Mexico and the Northern Triangle. The FY2020 NDAA also establishes a Commission on Combating Synthetic Opioid Trafficking to report on, among other things, the scale of opioids coming from Mexico.", "For additional information, see CRS In Focus IF10578, Mexico: Evolution of the M\u00c3\u00a9rida Initiative, 2007-2020 , by Clare Ribando Seelke; CRS In Focus IF10578, Mexico: Evolution of the M\u00c3\u00a9rida Initiative, 2007-2020 , by Clare Ribando Seelke; CRS In Focus IF10400, Transnational Crime Issues: Heroin Production, Fentanyl Trafficking, and U.S.-Mexico Security Cooperation , by Clare Ribando Seelke and Liana W. Rosen; CRS Report R44812, U.S. Strategy for Engagement in Central America: Policy Issues for Congress , by Peter J. Meyer; CRS Report R43813, Colombia: Background and U.S. Relations , by June S. Beittel; and CRS In Focus IF10789, Caribbean Basin Security Initiative , by Mark P. Sullivan."], "subsections": []}, {"section_title": "Trade Policy", "paragraphs": ["The Latin American and Caribbean region is one of the fastest-growing regional trading partners for the United States. Economic relations between the United States and most of its trading partners in the region remain strong, despite challenges, such as President Trump's past threats to withdraw from NAFTA, tariff policy, diplomatic tensions, and high levels of violence in some countries in the region. The United States accounts for roughly 33% of the Latin American and Caribbean region's merchandise imports and 44% of its merchandise exports. Most of this trade is with Mexico, which accounted for 77% of U.S. imports from the region and 61% of U.S. exports to the region in 2019. In 2019, total U.S. merchandise exports to Latin America and the Caribbean were valued at $418.9 billion, down from $429.7 billion in 2018. U.S. merchandise imports were valued at $467.0 billion in 2019 (see Table 4 ).", "The United States strengthened economic ties with Latin America and the Caribbean over the past 24 years through the negotiation and implementation of FTAs. Starting with NAFTA in 1994, which will be replaced by the USMCA when it enters into force, the United States currently has six FTAs in force involving 11 Latin American countries: Mexico, Chile, Colombia, Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, Nicaragua, Panama, and Peru. NAFTA was significant because it was the first U.S. FTA with a country in the Latin American and Caribbean region, and it established new rules and disciplines that influenced future trade agreements on issues important to the United States, such as IPR protection, services trade, agriculture, dispute settlement, investment, labor, and the environment.", "In addition to FTAs, the United States has extended unilateral trade preferences to some countries in the region through several trade preference programs. The Caribbean Basin Economic Recovery Act (no expiration), for example, provides limited duty-free entry of select Caribbean products as a core element of the U.S. foreign economic policy response to uncertain economic and political conditions in the region. Several preference programs for Haiti, which expire in 2025, provide generous and flexible unilateral preferences to the country's apparel sector. Two other preference programs include the Caribbean Basin Trade Partnership Act (CBTPA), which expires in September 2020, and the Generalized System of Preferences (GSP), which expires in December 2020. The CBTPA extends preferences on apparel products to eligible Caribbean countries similar to those given to Mexico under NAFTA. The GSP provides duty-free tariff treatment to certain products imported from 120 designated developing countries throughout the world, including Argentina, Brazil, Ecuador, and other Latin American and Caribbean countries. ", "In the 15 to 20 years after NAFTA, some of the largest economies in South America, such as Argentina, Brazil, and Venezuela, resisted the idea of forming comprehensive FTAs with the United States. That opposition may be changing. In September 2019, President Trump noted preliminary talks with Brazil for a trade agreement, and Brazilian officials recently stated that the country was ready for a trade deal similar to USMCA. Numerous other bilateral and plurilateral trade agreements throughout the Western Hemisphere do not include the United States. For example, the Pacific Alliance, a trade arrangement composed of Mexico, Peru, Colombia, and Chile, is reportedly moving forward on a possible trade arrangement with Mercosur, composed of Brazil, Argentina, Uruguay, and Paraguay. On June 28, 2019, the European Union (EU) and Mercosur reached a political agreement to negotiate an ambitious and comprehensive trade agreement.", "President Trump has made NAFTA renegotiation and modernization a priority of his Administration's trade policy. Early in his Administration, he viewed FTAs as detrimental to U.S. workers and industries, stating that NAFTA was \"the worst trade deal\" and repeatedly warning that the United States may withdraw from the agreement. The United States, Canada, and Mexico subsequently renegotiated NAFTA and concluded negotiations for USMCA on September 30, 2018. Mexico was the first country to ratify the agreement in June 2019 and the first country to approve the amended USMCA on December 12, 2019. The original text of USMCA was amended to address congressional concerns on labor, environment, IPR, and dispute settlement provisions. On January 16, 2020, Congress approved the agreement, and many expect Canada's parliament to ratify it in early 2020. The USMCA retains NAFTA's market opening provisions and most other provisions. The agreement makes notable changes to labor and environment provisions, market access provisions for autos and agriculture products, and rules, such as investment, government procurement, IPR, and dispute settlement; it adds new provisions on digital trade, state-owned enterprises, and currency misalignment. All parties must ratify the agreement and have laws and regulations in place to meet their USMCA commitments before the agreement can enter into force. ", "In 2018, President Trump issued two proclamations imposing tariffs on U.S. imports of certain steel and aluminum products using presidential powers granted under Section 232 of the Trade Expansion Act of 1962. In doing so, the Administration added new challenges to U.S. trade relations with the region. The proclamations outlined the President's decisions to impose tariffs of 25% on steel and 10% on aluminum imports, with some flexibility on the application of tariffs by country. In May 2018, President Trump proclaimed Argentina and Brazil permanently exempt from the steel tariffs in exchange for quota agreements, but he threatened to impose tariffs again in December 2019. The United States imposed tariffs on steel and aluminum imports from Mexico on May 31, 2018, and Mexico subsequently imposed retaliatory tariffs on 71 U.S. products, covering an estimated $3.7 billion worth of trade. By May 2019, President Trump had exempted Mexico from steel and aluminum tariffs, and Mexico agreed to terminate its retaliatory tariffs. ", "President Trump's January 2017 withdrawal from the proposed TPP, an FTA that included Mexico, Peru, and Chile as signatories, signified another change to U.S. trade policy. In March 2018, all TPP parties signed the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP or TPP-11), which essentially brought a modified TPP into effect. The TPP-11 has entered into force among seven countries\u00e2\u0080\u0094Canada, Australia, Japan, Mexico, New Zealand, Singapore, and Vietnam. Chile and Peru expect to ratify the agreement eventually. Colombia has expressed plans to request entry into the agreement after it enters into force among all partners. Some observers contend that U.S. withdrawal from the proposed TPP could damage U.S. competitiveness and economic leadership in the region, whereas others see the withdrawal as a way to prevent lower-cost imports and potential job losses.", "Congressional Action: The 116 th Congress, in both its legislative and oversight capacities, has faced numerous trade policy issues related to NAFTA's renegotiation and the USMCA. The U.S. House of Representatives approved USMCA implementing legislation, H.R. 5430 , on December 19, 2019, by a vote of 385-41, and the Senate approved it on January 16, 2020, by a vote of 89-10; it was signed into law ( P.L. 116-113 ) on January 29, 2020. Lawmakers took an interest as to whether the Administration followed U.S. trade negotiating objectives and procedures as required by Trade Promotion Authority (Bipartisan Congressional Trade Priorities and Accountability Act of 2015, or TPA; P.L. 114-26 ). Some Members also considered issues surrounding the labor and environment provisions' enforceability, access to medicine, and economic effects. Other Members showed interest in how the USMCA may affect U.S. industries, especially the auto industry, as well as the overall effects on the U.S. and Mexican economies, North American supply chains, and trade relations with the Latin American and Caribbean region. ", "Among other trade issues, legislation was introduced ( H.R. 991 and S. 2473 ) that would extend CBTPA benefits through September 2030. Regarding the Section 232 investigations on aluminum and steel imports, the impact of tariffs and retaliatory tariffs from Mexico on U.S. producers, domestic U.S. industries, and consumers raised numerous issues for Congress. Energy reform in Mexico, and the implications for U.S. trade and investment in energy, may continue to be of interest to Congress. Policymakers also may consider how U.S. trade policy is perceived by the region and whether it may affect multilateral trade issues and cooperation on matters regarding security and migration. Another issue relates to U.S. market share. If Mexico, Chile, Colombia, Peru, and Mercosur countries continue trade and investment liberalization efforts with other countries without the United States, doing so may open the door to more intra-trade and investment among certain Latin American and Caribbean countries, or possibly China and other Asian countries, which may affect U.S. exports.", "For additional information, see CRS In Focus IF10997, U.S.-Mexico-Canada (USMCA) Trade Agreement , by M. Angeles Villarreal and Ian F. Fergusson; CRS Report R44981, NAFTA and the United States-Mexico-Canada Agreement (USMCA) , by M. Angeles Villarreal and Ian F. Fergusson; CRS In Focus IF10038, Trade Promotion Authority (TPA) , by Ian F. Fergusson; CRS Report RL32934, U.S.-Mexico Economic Relations: Trends, Issues, and Implications , by M. Angeles Villarreal; and CRS Report R45249, Section 232 Investigations: Overview and Issues for Congress , coordinated by Rachel F. Fefer and Vivian C. Jones."], "subsections": []}, {"section_title": "Migration Issues", "paragraphs": ["Latin America's status as a leading source of both legal and unauthorized migration to the United States means that U.S. immigration policies significantly affect countries in the region and U.S. relations with their governments. Latin Americans comprise the vast majority of unauthorized migrants who have received relief from removal (deportation) through the TPS program and the DACA initiative; they also comprise a large percentage of recent asylum seekers. As a result, several U.S. immigration policy changes have concerned countries in the region. These include the following Trump Administration actions: ending TPS designations for Haiti, El Salvador, Nicaragua, and Honduras; rescinding DACA; and restricting access to asylum in the United States. In January 2019, the Administration launched the Migrant Protection Protocols (MPP), a program to require many migrants and asylum seekers processed at the Mexico-U.S. border to be returned to Mexico to await their immigration proceedings; the program is currently facing legal challenges but remains in place. Under a practice known as \"metering,\" migrants may now be required to wait in Mexico until there is capacity to process them at a port of entry. The Administration also signed what it termed \"asylum cooperative agreements\"\u00e2\u0080\u0094also referred to as \"safe third country\" agreements\u00e2\u0080\u0094with Guatemala, El Salvador, and Honduras to allow the United States to transfer certain migrants who arrive to a U.S. border seeking asylum protection to apply for asylum in one of those countries.", "The factors that have driven legal and unauthorized U.S.-bound migration from Latin America are multifaceted, and some have changed over time. They include poverty and unemployment, political and economic instability, crime and violence, natural disasters, as well as relatively close proximity to the United States, familial ties in the United States, and relatively attractive U.S. economic conditions. As an example, Venezuela, a historically stable country with limited emigration to the United States, recently has become the top country of origin among those who seek U.S. asylum due to Venezuela's ongoing crisis. ", "Migrant apprehensions at the southwest border had been steadily declining, reaching a 50-year low in 2017, but they began to rise in mid-2017. By FY2019, DHS apprehended 977,509 migrants, roughly 456,400 more than in FY2018. Unaccompanied children and families from the Northern Triangle, many of whom were seeking asylum, made up a majority of those apprehensions. (See \" Central America's Northern Triangle \" below.) During the first three months of FY2020, total apprehensions declined compared to FY2019, but apprehensions of Mexican adults surged. ", "The Trump Administration's rhetoric and policies have tested U.S. relations with Mexico and the Northern Triangle countries. Mexico's President Andr\u00c3\u00a9s Manuel L\u00c3\u00b3pez Obrador agreed to shelter migrants affected by the MPP program and then, to avoid U.S. tariffs, allow the MPP to be expanded in Mexico and increase Mexico's immigration enforcement efforts, particularly on its southern border with Guatemala. DHS is now reportedly considering sending Mexican asylum seekers to Guatemala, despite Mexico's opposition to the policy. Amidst U.S. foreign aid cuts and tariff threats (in the case of Guatemala), the Northern Triangle countries signed \"safe third country\" agreements despite serious concerns about conditions in the three countries; DHS began implementing the agreement with Guatemala in November 2019, but the agreements with Honduras and El Salvador have not yet been implemented. Mexico and the Northern Triangle countries, which received some 91% of the 267,258 individuals removed from the United States in FY2019, have expressed concerns that removals could overwhelm their capacity to receive and reintegrate migrants. Central American countries also are concerned about the potential for increased removals of those with criminal records to exacerbate their security problems. ", "Congressional Action: The 116 th Congress has provided foreign assistance to help address some of the factors fueling migration from Central America and support Mexico's migration management efforts in FY2019 ( P.L. 116-6 ) and FY2020 ( P.L. 116-94 ). In July 2019, the House passed H.R. 2615 , the United States-Northern Triangle Enhanced Engagement Act, which would require a report on the main drivers of migration from Central America. ", "The 116 th Congress has also acted on bills that could affect significant numbers of individuals from Latin America and the Caribbean living in the United States. For example in June 2019, the House passed H.R. 6 , the American Dream and Promise Act of 2019, which would establish a process for certain unauthorized immigrants who entered the United States as children, such as DACA recipients, and for certain TPS recipients to obtain lawful permanent resident (LPR) status. In July 2019, the House passed H.R. 549 , the Venezuela TPS Act of 2019, which would provide TPS designation for Venezuela. In December 2019, the House passed H.R. 5038 , the Farm Workforce Modernization Act of 2019, which would create a new temporary immigration status (certified agricultural worker (CAW) status) for certain unauthorized and other agricultural workers and would establish a process for CAWs to become LPRs.", "For more information, see CRS Legal Sidebar LSB10402, Safe Third Country Agreements with Northern Triangle Countries: Background and Legal Issues , by Ben Harrington; CRS In Focus IF11151, Central American Migration: Root Causes and U.S. Policy , by Peter J. Meyer and Maureen Taft-Morales; CRS In Focus IF10215, Mexico's Immigration Control Efforts , by Clare Ribando Seelke; CRS Report R45266, The Trump Administration's \"Zero Tolerance\" Immigration Enforcement Policy , by William A. Kandel; CRS Report R45995, Unauthorized Childhood Arrivals, DACA, and Related Legislation , by Andorra Bruno; CRS Report RS20844, Temporary Protected Status: Overview and Current Issues , by Jill H. Wilson; CRS In Focus IF11363, Processing Aliens at the U.S.-Mexico Border: Recent Policy Changes , by Hillel R. Smith, Ben Harrington, and Audrey Singer; and CRS Report R46012, Immigration: Recent Apprehension Trends at the U.S. Southwest Border , by Audrey Singer and William A. Kandel."], "subsections": []}]}, {"section_title": "Selected Country and Subregional Issues", "paragraphs": [], "subsections": [{"section_title": "The Caribbean", "paragraphs": [], "subsections": [{"section_title": "Caribbean Regional Issues", "paragraphs": ["The Caribbean is a diverse region of 16 independent countries and 18 overseas territories, including some of the hemisphere's richest and poorest nations. Among the region's independent countries are 13 island nations stretching from the Bahamas in the north to Trinidad and Tobago in the south; Belize, which is geographically located in Central America; and Guyana and Suriname, located on the north-central coast of South America (see Figure 2 ).", "Pursuant to the United States-Caribbean Strategic Enhancement Act of 2016 ( P.L. 114-291 ), the State Department submitted a multiyear strategy for the Caribbean in 2017. The strategy established a framework to strengthen U.S.-Caribbean relations in six priority areas or pillars: (1) security, with the objectives of countering transnational crime and terrorist organizations and advancing citizen security; (2) diplomacy, with the goal of increasing institutionalized engagement to forge greater cooperation at the Organization of American States (OAS) and the U.N.; (3) prosperity, including the promotion of sustainable economic growth and private sector-led investment and development; (4) energy, with the goals of increasing U.S. exports of natural gas and the use of U.S. renewable energy technologies; (5) education, focusing on increased exchanges for students, teachers, and other professionals; and (6) health, including a focus on long-standing efforts to fight infectious diseases such as HIV/AIDS. ", "In July 2019, the State Department issued a report to Congress on the implementation of its multiyear strategy. The report maintained that limited budgets and human resources have constrained opportunities for deepening relations, but funding for the strategy's security pillar has supported meaningful engagement and produced tangible results for regional and U.S. security interests.", "Because of their geographic location, many Caribbean nations are vulnerable to use as transit countries for illicit drugs from South America destined for the U.S. and European markets. Many Caribbean countries also have suffered high rates of violent crime, including murder, often associated with drug trafficking activities. In response, the United States launched the Caribbean Basin Security Initiative (CBSI) in 2009, a regional U.S. foreign assistance program seeking to reduce drug trafficking in the region and advance public safety and security. The program dovetails with the first pillar of the State Department's Caribbean multiyear strategy for U.S. engagement. From FY2010 through FY2020, Congress appropriated almost $677 million for the CBSI. These funds benefitted 13 Caribbean countries. The program has targeted assistance in five areas: (1) maritime and aerial security cooperation, (2) law enforcement capacity building, (3) border/port security and firearms interdiction, (4) justice sector reform, and (5) crime prevention and at-risk youth. ", "Many Caribbean nations depend on energy imports and, over the past decade, have participated in Venezuela's PetroCaribe program, which supplies Venezuelan oil under preferential financing terms. The United States launched the Caribbean Energy Security Initiative (CESI) in 2014, with the goals of promoting a cleaner and more sustainable energy future in the Caribbean. The CESI includes a variety of initiatives to boost energy security and sustainable economic growth by attracting investment in a range of energy technologies through a focus on improved governance, increased access to finance, and enhanced coordination among energy donors, governments, and stakeholders.", "Many Caribbean countries are susceptible to extreme weather events such as tropical storms and hurricanes, which can significantly affect their economies and infrastructure. Recent scientific studies suggest that climate change may be increasing the intensity of such events. In September 2019, Hurricane Dorian caused widespread damage to the northwestern Bahamian islands of Grand Bahama and Abaco, with 70 confirmed deaths and many missing. The United States responded with nearly $34 million in humanitarian assistance, including almost $25 million provided through USAID. Prior to the hurricane, the State Department had launched a U.S.-Caribbean Resilience Partnership in April 2019, with the goal of increasing regional disaster response capacity and promoting resilience to natural disasters. In December 2019, USAID announced it was providing $10 million to improve local resilience to disasters in the Caribbean.", "Congressional Action: The 116 th Congress has continued to appropriate funds for Caribbean regional programs. Over the past two fiscal years, Congress has funded the CBSI at levels significantly higher than requested by the Trump Administration. For FY2019, Congress appropriated $58 million for the CBSI ($36.2 million was requested), in the Consolidated Appropriations Act, 2019 ( P.L. 116-6 ). For FY2020, the Trump Administration requested $40.2 million for the CBSI, about a 30% drop from FY2019 appropriations. Ultimately, Congress appropriated not less than $60 million for the CBSI for FY2020 in the Further Consolidated Appropriations Act, 2020 ( P.L. 116-94 ). For FY2021, the Administration is requesting $32 million for the CBSI, a cut of almost 47% from that appropriated for FY2020. ", "Congress has also continued to provide funding for the CESI, appropriating $2 million in FY2019 ( P.L. 116-6 ) and $3 million in FY2020 ( P.L. 116-94 ). Regarding U.S. support for natural disasters, the report to the Department of State, Foreign Operations, and Related Programs appropriations bill, 2020\u00e2\u0080\u0094 H.Rept. 116-78 to H.R. 2839 \u00e2\u0080\u0094directed that bilateral economic assistance be made available to strengthen resilience to emergencies and disasters in the Caribbean. ", "For additional information, see CRS In Focus IF10789, Caribbean Basin Security Initiative , by Mark P. Sullivan; CRS In Focus IF10666, The Bahamas: An Overview , by Mark P. Sullivan; CRS Insight IN11171, Bahamas: Response to Hurricane Dorian , by Rhoda Margesson and Mark P. Sullivan; CRS In Focus IF10407, Dominican Republic , by Clare Ribando Seelke; CRS In Focus IF11381, Guyana: An Overview , by Mark P. Sullivan; CRS In Focus IF10912, Jamaica , by Mark P. Sullivan; and CRS In Focus IF10914, Trinidad and Tobago , by Mark P. Sullivan. "], "subsections": []}, {"section_title": "Cuba", "paragraphs": ["Political and economic developments in Cuba, a one-party authoritarian state with a poor human rights record, have been the subject of intense congressional concern since the Cuban revolution in 1959. Current Cuban President Miguel D\u00c3\u00adaz-Canel succeeded Ra\u00c3\u00bal Castro in April 2018, but Castro is expected to head Cuba's Communist Party until 2021. In February 2019, almost 87% of Cubans approved a new constitution in a national referendum. The changes include the addition of an appointed prime minister to oversee government operations, limits on the president's tenure (two five-year terms) and age (60, beginning first term), and market-oriented economic reforms, including the right to private property and the promotion of foreign investment. The new constitution, however, ensures the state sector's dominance over the economy and the Communist Party's predominant role.", "The Cuban economy has registered minimal growth in recent years; the EIU estimates that the economy grew 0.5% in 2019 but will contract 0.7% in 2020. For more than a decade, Cuba has implemented gradual market-oriented economic policy changes but has not taken enough action to foster sustainable economic growth. The economy also has been hard-hit by the reimposition of, and increase in, U.S. economic sanctions in 2019 that impede international financial transactions with Cuba, as well as by Venezuela's economic crisis that has limited Venezuela's support to Cuba. Cuban officials reported that 4.3 million tourists visited Cuba in 2019, down from 4.7 million in 2018; the decline in tourism has hurt Cuba's nascent private sector.", "Since the early 1960s, the centerpiece of U.S. policy toward Cuba has consisted of economic sanctions aimed at isolating the Cuban government. Congress has played an active role in shaping policy toward Cuba, including the enactment of legislation strengthening, and at times easing, U.S. sanctions. In 2014, the Obama Administration initiated a policy shift moving away from sanctions toward a policy of engagement. This shift included restoring diplomatic relations (July 2015), rescinding Cuba's designation as a state sponsor of international terrorism (May 2015), and increasing travel, commerce, and the flow of information to Cuba implemented through regulatory changes (2015-2016).", "President Trump unveiled a new policy toward Cuba in 2017, introducing new sanctions and rolling back some of the Obama Administration's efforts to normalize relations. By 2019, the Trump Administration had largely abandoned the previous Administration's policy of engagement by significantly increasing economic sanctions to pressure the Cuban government on its human rights record and its military and intelligence support of the Nicol\u00c3\u00a1s Maduro regime in Venezuela. The Administration has taken actions to allow lawsuits against those trafficking in property confiscated by the Cuban government, provided for in the 1996 LIBERTAD Act ( P.L. 104-114 ), and tighten restrictions on travel to Cuba, including terminating cruise ship travel from the United States and U.S. flights to and from Cuban cities other than Havana.", "Congressional Action: The 116 th Congress has continued to fund democracy assistance for Cuban human rights and democracy activists and U.S.-government sponsored broadcasting to Cuba. For FY2019, Congress appropriated $20 million for democracy programs and $29.1 million for Cuba broadcasting ( P.L. 116-6 , H.Rept. 116-9 ). For FY2020, Congress appropriated $20 million for democracy programs and $20.973 million for Cuba broadcasting ( P.L. 116-94 , H.R. 1865 , Division G). The measure also includes several reporting requirements on Cuba set forth in H.Rept. 116-78 and S.Rept. 116-126 . Congress is now considering the Administration's FY2021 request of $10 million for Cuba democracy programs (a 50% decline from that appropriated in FY2020) and $12.973 for Cuba broadcasting (a 38% decline from that appropriated in FY2020).", "Much of the debate over Cuba in Congress throughout the past 20 years has focused on U.S. sanctions. Several bills introduced in the 116 th Congress would ease or lift U.S. sanctions: H.R. 213 (baseball); S. 428 (trade); H.R. 1898 / S. 1447 (financing for U.S. agricultural exports); H.R. 2404 (overall embargo); and H.R. 3960 / S. 2303 (travel). H.R. 4884 would direct the Administration to reinstate the Cuban Family Reunification Parole Program, which has been in limbo since 2017. Several resolutions would express concerns regarding Cuba's foreign medical missions ( S.Res. 14 / H.Res. 136 ); U.S. fugitives from justice in Cuba (H.Res. 92/ S.Res. 232 ); religious and political freedom in Cuba ( S.Res. 215 ); and the release of human rights activist Jos\u00c3\u00a9 Daniel Ferrer and other members of the pro-democracy Patriotic Union of Cuba ( S.Res. 454 and H.Res. 774 ). In September 2019, the House Subcommittee on the Western Hemisphere, Civilian Security, and Trade (House Western Hemisphere Subcommittee) held a hearing on the human rights situation in Cuba (see Appendix ).", "For additional information, see CRS In Focus IF10045, Cuba: U.S. Policy Overview , by Mark P. Sullivan; and CRS Report R45657, Cuba: U.S. Policy in the 116th Congress , by Mark P. Sullivan."], "subsections": []}, {"section_title": "Haiti", "paragraphs": ["During the administration of President Jovenel Mo\u00c3\u00afse, who began a five-year term in February 2017, Haiti has been experiencing growing political and social unrest, high inflation, and resurgent gang violence. The Haitian judiciary is conducting investigations into Mo\u00c3\u00afse's possible involvement in money laundering, irregular loan arrangements, and embezzlement; the president denies these allegations. ", "In mid-2018, Mo\u00c3\u00afse decided to end oil subsidies, which, coupled with deteriorating economic conditions, sparked massive protests. Government instability has heightened since May 2019, when the Superior Court of Auditors delivered a report to the Haitian Senate alleging Mo\u00c3\u00afse had embezzled millions of dollars. Mass demonstrations have continued, calling for an end to corruption, the provision of government services, and Mo\u00c3\u00afse's resignation. Mo\u00c3\u00afse has said it would be irresponsible of him to resign, and that he will not do so. He has called repeatedly for dialogue with the opposition.", "Haiti's elected officials have exacerbated the ongoing instability by not forming a government. The president, who is elected directly by popular elections, is head of state and appoints the prime minister, chosen from the majority party in the National Assembly. The prime minister serves as head of government. The first two prime ministers under Mo\u00c3\u00afse resigned. The Haitian legislature did not confirm the president's subsequent two nominees for prime minister. Some legislators actively prevented a vote by absenting themselves to prevent a quorum being met or by other, sometimes violent, tactics. Nevertheless, a legislative motion to impeach the president did not pass. Because the legislature also did not pass an elections law, parliamentary elections scheduled for October 2019 have been postponed indefinitely.", "Mo\u00c3\u00afse is now ruling by decree. As of January 13, 2020, the terms of the entire lower Chamber of Deputies and two-thirds of the Senate expired, as did the terms of all local government posts, without newly elected officials to take their place. Currently, there is no functioning legislature. When the legislature's terms expired in January 2015 because the government had not held elections, then-President Michel Martelly ruled by decree for over a year, outside of constitutional norms. On March 2, 2020, President Mo\u00c3\u00afse appointed a new prime minister, Joseph Jouthe, by decree.", "Since January 2020, the U.N., the OAS, and the Vatican have been facilitating a dialogue among the government, opposition, civil society, and private sector to establish a functioning government, develop a plan for reform, create a constitutional revision process, and set an electoral calendar. The Trump Administration supports the efforts to break the political impasse, but states that \"while constitutional reforms are necessary and welcome, they must not become a pretext to delay elections.\"", "Haiti has received high levels of U.S. assistance for many years given its proximity to the United States and its status as the poorest country in the hemisphere. In recent years, it was the second-largest recipient of U.S. aid in the region, after Colombia. Since a peak in 2010, the year a massive earthquake hit the country, aid to Haiti has been declining steadily. Since 2014, a prolonged drought and a hurricane have severely affected Haiti's food supply. Haiti continues to struggle against a cholera epidemic inadvertently introduced by U.N. peacekeepers in 2010.", "The U.N. has had a continuous presence in Haiti since 2004, recently shifting from peacekeeping missions to a political office, and authorized its Integrated Office in Haiti for an initial one-year period beginning in October 2019. The office's mandate is to protect and promote human rights and to advise the government of Haiti on strengthening political stability and good governance through support for an inclusive inter-Haitian national dialogue. ", "With the support of U.N. forces and U.S. and other international assistance, the Haitian National Police (HNP) force has become increasingly professional and has taken on responsibility for domestic security. New police commissariats have given more Haitians access to security services, but with 14,000-15,000 officers, the HNP remains below international standards for the size of the country's population. It is also underfunded. According to the U.N., the HNP has committed human rights abuses, including extrajudicial killings. ", "Congressional Action : The Trump Administration's FY2020 request for aid for Haiti totaled $145.5 million, a 25% reduction from the estimated $193.8 million provided to Haiti in FY2019. The Further Consolidated Appropriations Act, 2020 ( P.L. 116-94 ) contains several provisions related to Haiti, including that aid may be provided to Haiti only through the regular notification procedures. Under the act, Economic Support Fund assistance for Haiti may not be made available for assistance to the Haitian central government unless the Secretary of State certifies and reports to the Committees on Appropriations that the government is taking effective steps to strengthen the rule of law, combat corruption, increase government revenues, and resolve commercial disputes. The act provides budget authority for $51 million in Development Assistance, including $8.5 million for reforestation; it also provides $10 million in International Narcotics Control and Law Enforcement funds for prison assistance, prioritizing improvements to meet basic sanitation, medical, nutritional, and safety needs at Haiti's National Penitentiary. The measure also prohibits the provision of appropriated funds for assistance to Haiti's armed forces. The House Western Hemisphere Subcommittee held a hearing on U.S. policy toward Haiti in December 2019 (see Appendix ).", "Congress has begun consideration of the Administration's FY2021 foreign aid request for Haiti. The Administration requested $128.2 million, almost a 34% cut from the amount appropriated by Congress in FY2019.", "For background, see CRS Report R45034, Haiti's Political and Economic Conditions , by Maureen Taft-Morales. "], "subsections": []}]}, {"section_title": "Mexico and Central America", "paragraphs": [], "subsections": [{"section_title": "Mexico", "paragraphs": ["Mexico and the United States share a nearly 2,000-mile border and strong cultural, familial, and historical ties. Economically, the United States and Mexico have grown interdependent since NAFTA entered into force in 1994. The countries have also forged close security ties, as security conditions in Mexico affect U.S. national security and U.S. citizens living in or traveling to Mexico, particularly along the U.S.-Mexican border. ", "On December 1, 2018, Andr\u00c3\u00a9s Manuel L\u00c3\u00b3pez Obrador, the populist leader of the National Regeneration Movement (MORENA) party, which he created in 2014, took office for a six-year term. L\u00c3\u00b3pez Obrador won 53% of the July 2018 vote, marking a shift away from Mexico's traditional parties, the Institutional Revolutionary Party (PRI) and the National Action Party (PAN). Elected on an anti-corruption platform, L\u00c3\u00b3pez Obrador is the first Mexican president in over two decades to enjoy majorities in both chambers of Congress. In addition to combating corruption, he pledged to build infrastructure in southern Mexico, revive the poor-performing state oil company, address citizen security through social programs, and adopt a foreign policy based on the principle of nonintervention. Given fiscal constraints, observers question whether his goals are attainable.", "Thirteen months into his term, President L\u00c3\u00b3pez Obrador enjoys high approval ratings (60% in January 2020), even though Mexico experienced record homicides and 0% economic growth in 2019. Mexicans have praised L\u00c3\u00b3pez Obrador's backing of new social programs, minimum wage increases, and willingness to tackle problems, such as oil theft by criminal groups. His decision to cut his own salary and public sector salaries generally has prompted resignations among experienced bureaucrats but has been popular with his constituency. Critics also have expressed concerns that L\u00c3\u00b3pez Obrador has centralized power and weakened institutions, relied too much on his own counsel, and dismissed journalists, regulatory agencies, and others critical of his policies. ", "Despite some predictions to the contrary, U.S.-Mexico relations under the L\u00c3\u00b3pez Obrador government have thus far remained friendly. Tensions have emerged over several key issues, including trade disputes and tariffs, immigration and border security issues, U.S. citizens killed in Mexico (including the November 2019 massacre of an extended family of U.S.-Mexican citizens), and Mexico's decision to remain neutral regarding the crisis in Venezuela. The Mexican government has condemned anti-immigrant rhetoric and actions in the United States, including the August 2019 mass shooting in El Paso, TX, that resulted in the deaths of at least seven Mexican citizens. Security cooperation under the M\u00c3\u00a9rida Initiative has continued, including efforts to address the production and trafficking of opioids and methamphetamine, but the Trump Administration has pushed Mexico to improve its antidrug efforts and security policies. During L\u00c3\u00b3pez Obrador's administration, the Mexican government has accommodated most of the Trump Administration's border and asylum policy changes that have shifted the burden of interdicting migrants and offering asylum to Mexico. After enacting labor reforms and raising wages, the L\u00c3\u00b3pez Obrador administration achieved a significant foreign policy goal: U.S. congressional approval of implementing legislation for the proposed USMCA to replace NAFTA. (See \" Trade Policy ,\" above.)", "Congressional Action: The 116 th Congress closely followed the Trump Administration's efforts to renegotiate NAFTA and recommended modifications to the proposed USMCA (on labor, the environment, and dispute settlement, among other topics) that led to the three countries signing an amendment to the agreement on December 10, 2019. The House approved the implementing legislation for the proposed USMCA in December 2019, and the Senate followed suit in January 16, 2020 ( P.L. 116-113 ). Both houses have taken action on H.R. 133 , the United States-Mexico Economic Partnership Act ( H.R. 133 ), which directs the Secretary of State to enhance economic cooperation and educational and professional exchanges with Mexico; the House approved the measure in January 2019, and the Senate approved an amended version in January 2020. The FY2020 NDAA ( P.L. 116-92 ) requires a classified assessment of drug trafficking, human trafficking, and alien smuggling in Mexico.", "Regarding foreign aid, in FY2019, Congress provided some $162 million for Mexico in P.L. 116-6 , with much of that designated for the M\u00c3\u00a9rida Initiative. Those increased resources aimed to help address the flow of U.S.-bound opioids. For FY2020\u00e2\u0080\u0094total aid amounts are not yet available\u00e2\u0080\u0094Congress provided $150 million for accounts that fund the M\u00c3\u00a9rida Initiative in P.L. 116-94 (roughly $73 million above the Administration's budget request). For FY2021, the Administration has requested $63.8 million for Mexico, a decline of almost 61% compared to that provided in FY2019. In the wake of recent high profile massacres in Mexico, congressional concerns about the efficacy of U.S.-Mexican security cooperation and calls for oversight have increased as Congress begins consideration of the FY2021 foreign aid request. ", "For additional information, see CRS Report R42917, Mexico: Background and U.S. Relations , by Clare Ribando Seelke; CRS Report RL32934, U.S.-Mexico Economic Relations: Trends, Issues, and Implications , by M. Angeles Villarreal; CRS In Focus IF10997, U.S.-Mexico-Canada (USMCA) Trade Agreement , by M. Angeles Villarreal and Ian F. Fergusson; CRS In Focus IF10578, Mexico: Evolution of the M\u00c3\u00a9rida Initiative, 2007-2020 , by Clare Ribando Seelke; CRS Report R41576, Mexico: Organized Crime and Drug Trafficking Organizations , by June S. Beittel; CRS In Focus IF10215, Mexico's Immigration Control Efforts , by Clare Ribando Seelke; and CRS In Focus IF10400, Transnational Crime Issues: Heroin Production, Fentanyl Trafficking, and U.S.-Mexico Security Cooperation , by Clare Ribando Seelke and Liana W. Rosen."], "subsections": []}, {"section_title": "Central America's Northern Triangle", "paragraphs": ["The Northern Triangle region of Central America (see Figure 3 ) has received renewed attention from U.S. policymakers in recent years, as it has become a major transit corridor for illicit drugs and has surpassed Mexico as the largest source of irregular migration to the United States. In FY2019, U.S. authorities apprehended nearly 608,000 unauthorized migrants from El Salvador, Guatemala, and Honduras at the southwest border; 81% of those apprehended were families or unaccompanied minors, many of whom were seeking asylum. These narcotics and migrant flows are the latest symptoms of deep-rooted challenges in the region, including widespread insecurity, fragile political and judicial systems, and high levels of poverty and unemployment. ", "The Obama Administration determined it was in the national security interests of the United States to work with Central American nations to improve security, strengthen governance, and promote prosperity in the region. Accordingly, the Obama Administration launched a new, whole-of-government U.S. Strategy for Engagement in Central America and requested a significant increase in foreign assistance for the region to support the strategy's implementation. Congress appropriated more than $2 billion of aid for Central America between FY2016 and FY2018, allocating most of the funds to El Salvador, Guatemala, and Honduras. Congress required a portion of the aid to be withheld, however, until the Northern Triangle governments took steps to improve border security, combat corruption, protect human rights, and address other congressional concerns.", "The Trump Administration initially maintained the U.S. Strategy for Engagement in Central America, but suspended most aid for the Northern Triangle in March 2019 due to the continued northward flow of migrants and asylum seekers from the region. The aid suspension forced U.S. agencies to begin closing down projects and canceling planned activities. Although Administration officials acknowledged that U.S. foreign aid programs had been \"producing the results [they] were intended to produce\" with regard to security, governance, and economic development, they argued that, \"the only metric that matters is the question of what the migration situation looks like on the southern border.\" Over the course of 2019, the Trump Administration reprogrammed approximately $405 million of aid appropriated for the Northern Triangle to other foreign policy priorities while negotiating a series of \"safe third country\" agreements (also known as asylum cooperative agreements) with El Salvador, Guatemala, and Honduras. Under the agreement with Guatemala, the United States has begun sending some individuals to Guatemala to apply for protection there rather than in the United States; similar agreements with El Salvador and Honduras are awaiting implementation. The Trump Administration has released some previously suspended assistance, primarily for programs to counter transnational crime and improve border security, as the new agreements have gone into effect.", "For FY2021, the Administration maintains that it is requesting almost $377 million for Central America if countries in the region continue to take action to stem unauthorized migration. The Administration's Congressional Budget Justification, however, does not specify request amounts for the three Northern Triangle countries or the foreign affairs accounts from which the assistance would come.", "Congressional Action: The 116 th Congress has demonstrated continued support for the U.S. Strategy for Engagement in Central America but has reduced annual funding for the initiative. The Consolidated Appropriations Act, 2019 ( P.L. 116-6 ) provided an estimated $527.6 million for the Central America strategy, which is about $92 million more than the Trump Administration requested. The Further Consolidated Appropriations Act, 2020 ( P.L. 116-94 ) provides $519.9 million for the initiative, which is about $75 million more than the Trump Administration requested. Both appropriations measures maintained conditions on U.S. assistance to the central governments of the Northern Triangle. ", "Congress has also sought to improve the effectiveness of the Central America strategy. The Senate Foreign Relations Committee, House Foreign Affairs Committee, and House Western Hemisphere Subcommittee each held oversight hearings to assess U.S. policy and foreign assistance in Central America (see Appendix ). The United States-Northern Triangle Enhanced Engagement Act ( H.R. 2615 ), passed by the House in July 2019, would require the State Department, in coordination with other agencies, to develop five-year strategies to support inclusive economic growth, combat corruption, strengthen democratic institutions, and improve security conditions in the Northern Triangle. The measure would also authorize $577 million for the Central America strategy in FY2020, including \"not less than\" $490 million for the Northern Triangle. Other measures introduced in the 116 th Congress that would authorize certain types of assistance and guide U.S. policy in the region include the Central America Reform and Enforcement Act ( S. 1445 ), the Northern Triangle and Border Stabilization Act ( H.R. 3524 ), and the Central American Women and Children Protection Act of 2019 ( H.R. 2836 / S. 1781 ).", "Congress has continued to express concerns about corruption and human rights abuses in the region. P.L. 116-94 provides $45 million for offices of attorneys general and other entities and activities to combat corruption and impunity in Central America. Congress allocated $3.5 million of those funds to the OAS-backed Mission to Support the Fight against Corruption and Impunity in Honduras (MACCIH); Honduran President Juan Orlando Hern\u00c3\u00a1ndez allowed the MACCIH's mandate to expire in January 2020, ignoring repeated calls for the mission's renewal from Members of Congress and the Trump Administration. P.L. 116-94 also includes $20 million for combating sexual and gender-based violence in the region, as well as a total of $3 million for the offices of the U.N. High Commissioner for Human Rights in Guatemala and Honduras and El Salvador's National Commission for the Search of Persons Disappeared in the Context of the Armed Conflict. ", "Several other legislative measures also include provisions intended to address corruption and human rights abuses in the Northern Triangle. The FY2020 NDAA ( P.L. 116-92 ) requires DOD to certify, prior to the transfer of any vehicles to the Guatemalan government, that the government has made a credible commitment to use such equipment only as intended. The act also requires DOD to enter into an agreement with an independent institution to conduct an analysis of the human rights situation in Honduras. Other measures introduced in the 116 th Congress addressing corruption and human rights include the Guatemala Rule of Law Accountability Act ( H.R. 1630 / S. 716 ) and the Berta Caceres Human Rights in Honduras Act ( H.R. 1945 ).", "For additional information, see CRS Report R44812, U.S. Strategy for Engagement in Central America: Policy Issues for Congress , by Peter J. Meyer; CRS In Focus IF10371, U.S. Strategy for Engagement in Central America: An Overview , by Peter J. Meyer; CRS In Focus IF11151, Central American Migration: Root Causes and U.S. Policy , by Peter J. Meyer and Maureen Taft-Morales; CRS Report R43616, El Salvador: Background and U.S. Relations , by Clare Ribando Seelke; CRS Report R42580, Guatemala: Political and Socioeconomic Conditions and U.S. Relations , by Maureen Taft-Morales; CRS Report RL34027, Honduras: Background and U.S. Relations , by Peter J. Meyer; and CRS Insight IN11211, Corruption in Honduras: End of the Mission to Support the Fight Against Corruption and Impunity in Honduras (MACCIH) , by Peter J. Meyer."], "subsections": []}, {"section_title": "Nicaragua", "paragraphs": ["President Daniel Ortega, aged 74 in early 2020, has been suppressing popular unrest in Nicaragua in a manner reminiscent of Anastasio Somoza, the dictator he helped overthrow in 1979 as a leader of the leftist Sandinista National Liberation Front (FSLN). Ortega served as president from 1985 to 1990, during which time the United States backed right-wing insurgents known as contras in an attempt to overthrow the Sandinista government. In the early 1990s, Nicaragua began to establish democratic governance. Democratic space has narrowed as the FSLN and Ortega have consolidated control over the country's institutions, including while Ortega served as an opposition leader in the legislature from 1990 until 2006. Ortega reclaimed the presidency in 2007 and has served as president for the past 13 years. Until recently, for many Nicaraguans, Ortega's populist social welfare programs that improved their standard of living outweighed his authoritarian tendencies and self-enrichment. Similarly, for many in the international community, the relative stability in Nicaragua outweighed Ortega's antidemocratic actions.", "Ortega's long-term strategy to retain control of the government began to unravel in 2018 when his proposal to reduce social security benefits triggered protests led by a wide range of Nicaraguans. The government's repressive response led to an estimated 325-600 extrajudicial killings, torture, political imprisonment, suppression of the press, and thousands of citizens going into exile. The government says it was defending itself from coup attempts. The crisis also undermined economic growth in the hemisphere's second poorest country. The Nicaraguan economy contracted by 5.1% in 2019, and some economists estimate the economy will contract a further 1.5% in 2020.", "The international community has sought to hold the Ortega government accountable for human rights abuses and facilitate the reestablishment of democracy in Nicaragua. In July 2018, an Inter-American Commission on Human Rights team concluded that the Nicaraguan security forces' actions could be considered crimes against humanity. The OAS High Level Commission on Nicaragua concluded in November 2019 that the government's actions \"make the democratic functioning of the country impossible,\" in violation of Nicaragua's obligations under Article 1 of the Inter-American Democratic Charter. The Nicaragua Human Rights and Anticorruption Act of 2018 ( P.L. 115-335 ), effectively blocks access to new multilateral lending to Nicaragua. The Trump Administration has imposed sanctions against 16 high-level officials, including Vice President Rosario Murillo. On March 5, 2020, the Trump Administration imposed sanctions against the Nicaraguan National Police for its role in serious human rights abuses. Dialogue between the government and the opposition collapsed in 2019 and has not resumed. ", "Congressional Action: The 116 th Congress remains concerned about the erosion of democracy and human rights abuses in Nicaragua. The Further Consolidated Appropriations Act, 2020 ( P.L. 116-94 ) appropriates $10 million for foreign assistance programs to promote democracy and the rule of law in Nicaragua. For FY2021, the Administration has requested $10 million for democracy and civil society programs in Nicaragua. ", "In December 2019, the House Foreign Affairs Committee ordered H.Res. 754 to be reported favorably by unanimous consent to the full House, and the full House approved the measure on March 9, 2020. The resolution expresses the sense of the House of Representatives that the United States should continue to support the people of Nicaragua in their peaceful efforts to promote democracy and human rights and to use the tools under U.S. law to increase political and financial pressure on the Ortega government. In June 2019, the House Western Hemisphere Subcommittee held a hearing on the Nicaraguan government's repression of dissent (see Appendix )."], "subsections": []}]}, {"section_title": "South America", "paragraphs": [], "subsections": [{"section_title": "Argentina", "paragraphs": ["Current President Alberto Fern\u00c3\u00a1ndez of the center-left Peronist Frente de Todos (FdT, Front for All) ticket won the October 2019 presidential election and was inaugurated to a four-year term in December 2019. He defeated incumbent President Mauricio Macri of the center-right Juntos por el Cambio (JC, Together for Change) coalition by a solid margin of 48.1% to 40.4% but by significantly less than the 15 to 20 percentage points predicted by polls. The election also returned to government former leftist Peronist President Cristina Fern\u00c3\u00a1ndez de Kirchner (2007-2015), who ran on the FdT ticket as vice president.", "Argentina's economic decline in 2018 and 2019, with high inflation and increasing poverty, was the major factor in Macri's electoral defeat. Macri had ushered in economic policy changes in 2016-2017 that lifted currency controls, reduced or eliminated agricultural export taxes, and reduced electricity, water, and heating subsidies. In 2018, as the economy faced pressure from a severe drought and large budget deficits, the IMF supported the government with a $57 billion program. Macri's economic reforms and IMF support were not enough to stem Argentina's economic decline, and the government reimposed currency controls and took other measures to stabilize the economy. ", "President Fern\u00c3\u00a1ndez faces an economy in crisis, with a recession that is expected to extend into 2020, high poverty, and a high level of unsustainable public debt requiring restructuring. He has pledged to restructure Argentina's debt by the end of March 2020, and he has opened talks with bondholders and other creditors, including the IMF. Fern\u00c3\u00a1ndez also has rolled out several measures, including a food program and price controls on basic goods, aimed at helping low-income Argentines cope with inflation and increased poverty.", "U.S. relations with Argentina were strong under the Macri government, marked by increasing engagement on a range of bilateral, regional, and global issues. After Argentina's 2019 presidential race, Secretary of State Mike Pompeo said that the United States looked forward to working with the Fern\u00c3\u00a1ndez administration to promote regional security, prosperity, and the rule of law. One point of contention in relations could be Argentina's stance on Venezuela. Under Macri, Argentina was strongly critical of the antidemocratic actions of the Maduro regime. The country joined with other regional countries in 2017 to form the Lima Group seeking a democratic resolution, and in 2019, recognized the head of Venezuela's National Assembly, Juan Guaid\u00c3\u00b3, as the country's interim president. In contrast, the Fern\u00c3\u00a1ndez government does not recognize Guaid\u00c3\u00b3 as Venezuela's interim president, although it criticized Maduro's January 2020 actions preventing Guaid\u00c3\u00b3 from being elected to a second term as head of the legislature. ", "Congressional Action: Argentina has not traditionally received much U.S. foreign aid because of its relatively high per capita income level, but for each of FY2018-FY2020, Congress has appropriated $2.5 million in International Narcotics Control and Law Enforcement assistance to support Argentina's counterterrorism, counternarcotics, and law enforcement capabilities. ", "Congress has expressed concern over the years about progress in bringing to justice those responsible for the July 1994 bombing of the Argentine-Israeli Mutual Association (AMIA) in Buenos Aires that killed 85 people. Both Iran and Hezbollah (the radical Lebanon-based Islamic group) allegedly are linked to the attack, as well as to the 1992 bombing of the Israeli Embassy in Buenos Aires that killed 29 people. As the 25 th anniversary of the AMIA bombing approached in July 2019, the House approved H.Res. 441, reiterating condemnation of the attack and expressing strong support for accountability; the Senate followed suit in October 2019 when it approved S.Res. 277 .", "For additional information, see CRS In Focus IF10932, Argentina: An Overview , by Mark P. Sullivan; CRS In Focus IF10991, Argentina's Economic Crisis , by Rebecca M. Nelson; and CRS Insight IN11184, Argentina's 2019 Elections , by Mark P. Sullivan and Angel Carrasquillo Benoit."], "subsections": []}, {"section_title": "Bolivia", "paragraphs": ["Bolivia experienced relative stability and prosperity from 2006 to 2019, but as governance standards weakened, relations with the United States deteriorated under populist President Evo Morales. Morales was the country's first indigenous president and leader of the Movement Toward Socialism (MAS) party. On November 10, 2019, President Morales resigned and sought protection abroad (first in Mexico and then in Argentina) after weeks of protests alleging fraud in the October 20, 2019, election in which he had sought a fourth term. After three individuals in line to succeed Morales also resigned, opposition Senator Jeanine A\u00c3\u00b1ez, formerly second vice president of the senate, declared herself senate president and then interim president on November 12. Bolivia's constitutional court recognized her succession. In late November, the MAS-led Congress unanimously approved an electoral law to annul the October elections and select a new electoral tribunal. On January 3, 2020, the reconstituted tribunal scheduled new presidential and legislative elections for May 3, 2020. A second-round presidential contest would likely occur, if needed, on June 14.", "The situation in Bolivia remains volatile. On January 24, 2020, Interim President A\u00c3\u00b1ez announced her intention to run in the May presidential election, abandoning her earlier pledge to preside over a caretaker government focused on convening credible elections. Even before she announced her candidacy, observers had criticized A\u00c3\u00b1ez for exceeding her mandate by reversing several MAS foreign policy positions and bringing charges of sedition against Morales and other former MAS officials. ", "The Trump Administration has sought to bolster ties with the A\u00c3\u00b1ez government while expressing support for \"free, fair, transparent, and inclusive elections.\" U.S. officials have praised the A\u00c3\u00b1ez government for expelling Cuban officials and recognizing Venezuela's Guaid\u00c3\u00b3 government. In January 2020, President Trump waived restrictions on U.S. assistance to Bolivia, and a multiagency team traveled to the country to assess what type of election support U.S. agencies might offer the interim government. ", "Congressional Action: Members of the 116 th Congress have expressed concerns about the situation in Bolivia. S.Res. 35 , approved in April 2019, expressed concern over Morales's efforts to circumvent term limits in Bolivia and called on his government to allow electoral bodies to administer the October 2019 elections in accordance with international norms. Although some Members condemned the ouster of Morales as a \"coup,\" most have focused on ensuring a democratic transition. In January 2020, the Senate agreed by unanimous consent to S.Res. 447 , expressing concerns about election irregularities and violence in Bolivia, urging the Bolivian government to protect human rights and promptly convene new elections, and encouraging the U.S. State Department and the OAS to help ensure the integrity of the electoral process. ", "For more information, see CRS Insight IN11198, Bolivia Postpones May Elections Amidst COVID-19 Outbreak , by Clare Ribando Seelke; and CRS In Focus IF11325, Bolivia: An Overview , by Clare Ribando Seelke."], "subsections": []}, {"section_title": "Brazil", "paragraphs": ["Occupying almost half of South America, Brazil is the fifth-largest and the fifth-most populous country in the world. Given its size and tremendous natural resources, Brazil has long had the potential to become a world power. Its rise to prominence has been hindered, however, by uneven economic performance and political instability. After experiencing a period of strong economic growth and increased international influence during the first decade of the 21 st century, Brazil has struggled with a series of domestic crises in recent years. The economy fell into its worst recession on record in 2014; the recovery since 2017 has been slow, with annual economic growth averaging 1% and the unemployment rate stuck above 11%. The political environment has also deteriorated as a sprawling corruption investigation underway since 2014 has implicated politicians from across the political spectrum. Those combined crises contributed to the controversial impeachment and removal from office of President Dilma Rousseff (2011-2016) and discredited much of the country's political class, paving the way for right-wing populist Jair Bolsonaro to win the presidency in October 2018. ", "Since taking office in January 2019, President Bolsonaro has maintained his political base's support by taking socially conservative stands on cultural issues and proposing hardline security policies to reduce crime and violence. He has also begun enacting economic and regulatory reforms favored by international investors and Brazilian businesses. His confrontational approach to governance has alienated many potential allies, however, hindering the enactment of his policy agenda. Many Brazilians and international observers are concerned that Bolsonaro's environmental policies are contributing to increased deforestation in the Brazilian Amazon, and that his frequent verbal attacks against the press, nongovernmental organizations (NGOs), and other government branches are weakening democracy.", "The Bolsonaro administration's foreign policy has focused on forging closer ties to the United States. Brazil has partially abandoned its traditional commitment to autonomy in foreign affairs as Bolsonaro has supported the Trump Administration on a variety of issues, including the crisis in Venezuela, the U.S. trade embargo against Cuba, and the U.S. killing of Iranian military commander Qasem Soleimani. On other issues, such as commercial ties with China, Bolsonaro has adopted a more pragmatic approach intended to ensure continued access to major export markets. In 2019, President Trump designated Brazil as a major non-NATO ally for the purposes of the Arms Export Control Act (22 U.S.C. 2751 et seq.), offering Brazil privileged access to the U.S. defense industry and increased joint military exchanges, exercises, and training. President Trump also signed several agreements with President Bolsonaro intended to strengthen bilateral commercial ties. Some Brazilian analysts have questioned the benefits of partnership with the United States due to the Trump Administration's decision to maintain import restrictions on Brazilian beef until February 2020, and the Administration's threats to impose tariffs on other key Brazilian products, such as steel.", "Congressional Action: The 116 th Congress has continued long-standing U.S. support for environmental conservation efforts in Brazil. In September 2019, the House Western Hemisphere Subcommittee held an oversight hearing on preserving the Amazon rainforest that focused on the surge of fires and deforestation in the region (see Appendix ). Some Members of Congress also have introduced legislative proposals to address the situation. A Senate resolution ( S.Res. 337 ) would express concern about fires and illegal deforestation in the Amazon, call on the Brazilian government to strengthen environmental enforcement, and support continued U.S. assistance to the Brazilian government and NGOs. The Act for the Amazon Act ( H.R. 4263 ) would take a more punitive approach. The act would ban the importation of certain fossil fuels and agricultural products from Brazil, prohibit certain types of military-to-military engagement and security assistance to Brazil, and forbid U.S. agencies from entering into free trade negotiations with Brazil. Congress ultimately appropriated $15 million for foreign assistance programs in the Brazilian Amazon, including $5 million to address fires in the region, in the Further Consolidated Appropriations Act, 2020 ( P.L. 116-94 ). That amount is $4 million more than Congress appropriated for environmental programs in the Brazilian Amazon in the Consolidated Appropriations Act, 2019 ( P.L. 116-6 ).", "Congress has also expressed concerns about the state of democracy and human rights in Brazil. A provision of the FY2020 NDAA ( P.L. 116-92 ) directs the Secretary of Defense, in coordination with the Secretary of State, to submit a report to Congress regarding the human rights climate in Brazil and U.S.-Brazilian security cooperation. Some Members have also called for changes to U.S. policy. A resolution introduced in September 2019 expressing profound concerns about threats to human rights, the rule of law, democracy, and the environment in Brazil (H.Res. 594) would call for the United States to rescind Brazil's designation as a major non-NATO ally and suspend assistance to Brazilian security forces, among other actions.", "For additional information, see CRS Report R46236, Brazil: Background and U.S. Relations , by Peter J. Meyer; and CRS In Focus IF11306, Fire and Deforestation in the Brazilian Amazon , by Pervaze A. Sheikh et al. "], "subsections": []}, {"section_title": "Colombia", "paragraphs": ["Colombia is a key U.S. ally in Latin America. Because of the country's prominence in illegal drug production, the United States and Colombia have forged a close relationship over the past two decades to respond to mutual challenges. Focused initially on counternarcotics, and later on counterterrorism, a program called Plan Colombia laid the foundation for a security partnership between the two countries. Plan Colombia and its successor strategies ultimately became the basis for a 17-year U.S.-Colombian bilateral effort. President Juan Manuel Santos (2010-2018) made concluding a peace accord with the FARC\u00e2\u0080\u0094the country's largest leftist guerrilla organization\u00e2\u0080\u0094his government's primary focus. Following four years of formal peace negotiations, Colombia's Congress ratified the FARC-government peace accord in November 2016. During a U.N.-monitored demobilization effort in 2017, approximately 13,200 FARC (armed combatants and militia members) disarmed, demobilized, and began the process of reintegration.", "Iv\u00c3\u00a1n Duque, a former senator from the conservative Democratic Center party, who won the 2018 presidential election, was inaugurated to a four-year presidential term in August 2018. Duque campaigned as a critic of the peace accord. His approval ratings slipped early in his presidency, and his government faced weeks of protests and strikes in late 2019 focused on several administration policies, including what many Colombians view as a halting approach to peace accord implementation. Colombia continues to face major challenges, including a sharp increase of coca cultivation and cocaine production, vulnerability to a mass migration of Venezuelans fleeing the authoritarian government of Maduro, a spike in attacks on human rights defenders and social activists, and financial and other challenges enacting the ambitious peace accord commitments while controlling crime and violence by armed groups seeking to replace the FARC. President Duque has not succeeded in building a legislative coalition with other parties to implement major legislative reforms.", "In August 2019, a FARC splinter faction, which included the former lead FARC negotiator of the peace accord, announced its return to arms. In response, neighboring Venezuela appears to be sheltering and perhaps collaborating with FARC dissidents and guerrilla fighters of the National Liberation Army (ELN)\u00e2\u0080\u0094formerly Colombia's second largest insurgency, now its largest. The ELN is also a U.S.-designated foreign terrorist organization. Some 3,000 former FARC fighters are estimated to have returned to armed struggle, and some have indicated they will cooperate with the ELN. The majority of demobilized FARC members remain committed to the peace process, despite numerous risks; the U.N. Verification Mission in Colombia reported in December 2019 that 77 demobilized FARC members were killed in 2019, with 173 in total killed since 2016. ", "In 2017, Colombia cultivated a record 209,000 hectares of coca, amounting to a potential 921 metric tons of pure cocaine. In 2018, drug yields declined marginally, according to U.S. estimates, although the U.N. estimates for cocaine production were considerably higher. In meetings between President Duque and Secretary of State Pompeo in 2019, the governments reaffirmed a March 2018 commitment to work together to lower coca crop expansion and cocaine production by 50% by 2023. The U.S. government depends on the Colombian government to interdict much of the cocaine leaving the country, as it is mainly destined for the United States. President Duque campaigned on returning to forced aerial eradication (or spraying of coca crops) with the herbicide glyphosate. This strategy has been a central\u00e2\u0080\u0094albeit controversial\u00e2\u0080\u0094feature of U.S.-Colombian counterdrug cooperation for more than two decades. In late December 2019, President Duque announced that spraying was likely to restart in early 2020. Several analysts maintain that forced manual and aerial eradication of coca have not been successful strategies in Colombia, and they consider voluntary eradication and alternative development programs made viable by a gradually more present central government in rural communities as critical to consolidating peace.", "The United States remains Colombia's top trading partner. Colombia's economy, which grew 2.6% in 2018, is estimated to have grown by 3.1% in 2019, with foreign direct investment on the rise. Projections are that Colombia's growth rate will remain at 3% and above over the next few years, which makes it one of the strongest major economies in the region.", "Congressional Action: At the close of 2019, 1.6 million Venezuelans were residing in Colombia. This number could grow in 2020 to more than 3 million migrants depending how the political crisis in neighboring Venezuela unfolds. Since FY2017, the State Department has allocated more than $400 million to support countries receiving Venezuelan migrants, with over half\u00e2\u0080\u0094almost $215 million in U.S. humanitarian and development assistance\u00e2\u0080\u0094for Colombia, as the most severely affected country. (See \" Venezuela ,\" below.)", "Congress appropriated more than $10 billion for Plan Colombia and its follow-on programs between FY2000 and FY2016, about 20% of which was funded through DOD. Subsequently, Congress provided $1.2 billion annually in additional assistance for Colombia from FY2017 through FY2019, including assistance funded through DOD. For FY2020, Congress provided $448 million in the Further Consolidated Appropriations Act, 2020 ( P.L. 116-94 ) for State Department and USAID-funded programs in Colombia. For FY2021, the Administration has requested $412.9 million for Colombia, about a 2% decline from that appropriated in FY2019. ", "For additional information, see CRS Report R43813, Colombia: Background and U.S. Relations , by June S. Beittel; CRS Report R44779, Colombia's Changing Approach to Drug Policy , by June S. Beittel and Liana W. Rosen; CRS Report RL34470, The U.S.-Colombia Free Trade Agreement: Background and Issues , by M. Angeles Villarreal and Edward Y. Gracia; and CRS Report R42982, Colombia's Peace Process Through 2016 , by June S. Beittel."], "subsections": []}, {"section_title": "Venezuela", "paragraphs": ["Venezuela remains in a deep crisis under the authoritarian rule of Nicol\u00c3\u00a1s Maduro of the United Socialist Party of Venezuela. Maduro, narrowly elected in 2013 after the death of Hugo Ch\u00c3\u00a1vez (president, 1999-2013), began a second term on January 10, 2019, that most Venezuelans and much of the international community consider illegitimate. Since January 2019, Juan Guaid\u00c3\u00b3, president of Venezuela's democratically elected, opposition-controlled National Assembly, has sought to form a transition government to serve until internationally observed elections can be held. The United States and 57 other countries recognize Guaid\u00c3\u00b3 as interim president, but he has been unable to wrest Maduro from power, and he has faced increased danger since returning home from a January-February 2020 international tour, which included a meeting with President Trump. Some observers believe that National Assembly elections due this year might start an electoral path out of the current stalemate. Maduro has used repression to quash dissent; rewarded allies with income earned from illegal gold mining, drug trafficking, and other illicit activities; relied on support from Russia to avoid U.S. sanctions; and had his supporters use violence to prevent the National Assembly from convening.", "Venezuela's economy has collapsed. The country is plagued by hyperinflation, severe shortages of food and medicine, and electricity blackouts that have worsened an already dire humanitarian crisis. In April 2019, U.N. officials estimated that some 90% of Venezuelans are living in poverty. Many observers cite economic mismanagement and corruption as the key factors responsible for the economic crisis, but also acknowledge that economic sanctions have contributed to Venezuela's economic decline. U.N. agencies estimate that 4.8 million Venezuelans had fled the country as of December 2019, primarily to Latin American and Caribbean countries.", "U.S. Policy. As the situation in Venezuela has deteriorated under Maduro, the Trump Administration has imposed targeted sanctions on Venezuelan officials responsible for antidemocratic actions, human rights violations, and corruption, as well as increasingly strong financial sanctions against the Maduro government and the state oil company, its main source of income. ", "Since recognizing Guaid\u00c3\u00b3 as interim president in January 2019, the Administration has increased sanctions on the Maduro government and encouraged other countries to do so. The EU, Canada, and 11 Western Hemisphere countries who are states parties to the Inter-American Treaty of Reciprocal Assistance (Rio Treaty) have imposed targeted sanctions and travel bans on Maduro officials, but not broad economic sanctions as the United States has done. Those countries similarly oppose military intervention in Venezuela, a policy option that the Trump Administration reportedly considered early in 2019 but has not raised since. ", "In January 2020, the Administration issued a statement backing a political solution that leads to the convening of free and fair presidential and parliamentary elections this year. International efforts to broker a political solution have not produced results. Although the U.S. statement encourages a focus on convening elections (as did the 2019 Norway-led talks between the Guaid\u00c3\u00b3 and Maduro teams), it also says that those elections should be overseen by a \"negotiated transitional government,\" a requirement that Maduro may not accept. Some observers maintain that any negotiations between Maduro and Guaid\u00c3\u00b3 would need the backing of the United States and Russia in order to succeed.", "Since FY2017, the Administration has provided $472 million in humanitarian and development assistance, including $56 million for humanitarian relief activities in Venezuela, and the remainder to support regional countries sheltering most of the 4.8 million Venezuelans who have fled the crisis. The U.S. military has twice deployed a naval ship hospital to the region. In October 2019, the Administration signed an agreement with the Guaid\u00c3\u00b3 government to provide $100 million in development assistance, including direct support for the interim government.", "Congressional Action: Congress has supported the Administration's efforts to restore democracy in Venezuela and provide humanitarian assistance to Venezuelans, although some Members have expressed concerns about the humanitarian effects of sanctions and about potential unauthorized use of the U.S. military in Venezuela. In February 2019, Congress enacted the Consolidated Appropriations Act, 2019 ( P.L. 116-6 ), which provided $17.5 million for democracy programs in Venezuela. ", "In December 2019, Congress enacted the Further Consolidated Appropriations Act, 2020 ( P.L. 116-94 ), which provided $30 million for democracy and human rights programs in Venezuela. The measure also incorporates provisions from S. 1025 , the VERDAD Act, authorizing $400 million in FY2020 humanitarian aid to Venezuela, codifying several types of sanctions on the Maduro government, and authorizing $17.5 million to support elections and a democratic transition in Venezuela. P.L. 116-94 also incorporates languages from several House-approved bills including H.R. 920 , restricting the export of defense articles to Venezuela; and H.R. 1477 , requiring a strategy to counter Russian influence in Venezuela. ", "Congress has begun consideration of the Administration's $205 million FY2021 foreign aid request for Venezuela, an 811% increase over that appropriated in FY2019. According to the Administration, the assistance would provide support to democratic institutions following a potential political transition and would address the urgent health needs of the Venezuelan people.", "In July 2019, the House passed H.R. 549 , which would designate Venezuela for TPS. In December 2019, Congress enacted the FY2020 NDAA ( P.L. 116-92 ), which prohibits federal contracting with persons who do business with the Maduro government. House and Senate committees have held hearings on the situation in Venezuela and U.S. policy (see Appendix ).", "For additional information, see CRS In Focus IF10230, Venezuela: Political Crisis and U.S. Policy , by Clare Ribando Seelke; CRS In Focus IF10715, Venezuela: Overview of U.S. Sanctions , by Mark P. Sullivan; CRS Report R44841, Venezuela: Background and U.S. Relations , coordinated by Clare Ribando Seelke; CRS In Focus IF11216, Venezuela: International Efforts to Resolve the Political Crisis , by Clare Ribando Seelke; and CRS In Focus IF11029, The Venezuela Regional Migration Crisis , by Rhoda Margesson and Clare Ribando Seelke."], "subsections": []}]}]}, {"section_title": "Outlook", "paragraphs": ["Congress has begun to consider the Trump Administration's FY2021 $1.4 billion foreign aid budget request for the region. The 18% cut in overall funding compared to FY2019 foreign aid levels masks large cuts, ranging from 30-60%, for some countries and programs. In particular, the Trump Administration's linkage of aid to Central America to reductions in unauthorized migration from the region could be an area of contention with Congress as could the Administration's large increase in assistance to support a democratic transition in Venezuela that has yet to happen. On trade issues, the 116 th Congress may consider whether to extend a tariff preference program for certain Caribbean countries, the CBTPA\u00e2\u0080\u0094which expires in September 2020\u00e2\u0080\u0094and the broader GSP for developing countries worldwide, which expires in December 2020.", "Looking ahead through 2020, the Latin America and Caribbean region faces significant challenges\u00e2\u0080\u0094most prominently, Venezuela's ongoing political impasse and economic and humanitarian crisis, which has resulted in some 4 million Venezuelan refugees and migrants in the region. Upcoming elections in Bolivia in May 2020 are expected to be an important test of the country's political system in the aftermath of President Morales's resignation following protests ignited by widespread electoral fraud in October 2019. Social protests racked many Latin American countries in late 2019, and such unrest could continue in 2020 given that many of the underlying conditions still exist. These challenges and the appropriate U.S. policy responses may remain oversight issues for Congress. Other areas of congressional oversight and interest may include the ongoing difficult political situations in Haiti and Nicaragua, efforts to stem drug trafficking from South America, appropriate strategies to curb the flow of migrants from Central America, and U.S. policy toward Cuba. "], "subsections": [{"section_title": "Appendix. Hearings in the 116th Congress", "paragraphs": [], "subsections": []}]}]}}
{"id": "R46307", "title": "State Broadband Initiatives: Selected State and Local Approaches as Potential Models for Federal Initiatives to Address the Digital Divide", "released_date": "2020-04-06T00:00:00", "summary": ["Access to high-speed internet, known as broadband, is becoming increasingly essential to daily life as more applications and activities move online. This has become particularly apparent during the coronavirus (COVID-19) pandemic, as employers in some sectors transitioned their workers from on-site work to telework and schools migrated their students from classrooms to distance learning. These shifts may seem clear-cut, but many areas of the United States\u00e2\u0080\u0094particularly rural areas\u00e2\u0080\u0094have either limited or no access to broadband infrastructure. Additionally there are citizens in areas with high broadband penetration who are unable to access it due to socioeconomic factors. The gap between those who have access to broadband and those who do not is referred to as the digital divide.", "While there is broadband penetration in many areas of the United States, 21.3 million Americans lack access to a connection that enables a download rate of at least 25 megabits per second (Mbps) and an upload rate of 3 Mbps, according to the Federal Communications Commission's (FCC's) 2019 Broadband Deployment Report . Federal agencies such as the FCC, the National Telecommunications and Information Administration (NTIA, in the Department of Commerce), and the Rural Utilities Service (RUS, in the U.S. Department of Agriculture) have directed resources to help bridge the digital divide\u00e2\u0080\u0094chiefly for broadband infrastructure buildout. While broadband infrastructure addresses a large component of the digital divide by increasing availability, there are additional geographic, social, and economic factors that affect broadband adoption, even where it is available. Major examples of such factors include the cost of internet service and devices and digital literacy skills.", "To further assist in closing the digital divide, states have been developing their own broadband programs and initiatives. Although many state broadband initiatives focus on building out broadband infrastructure, states have also been considering other factors. As each state approaches broadband access and deployment differently, this report analyzes selected state-level and local initiatives that have tried different approaches\u00e2\u0080\u0094approaches that may serve as models for future federal broadband initiatives. These include initiatives that address broadband mapping, broadband feasibility, digital equity and digital inclusion, gigabit broadband initiatives, and the homework gap.", "Among the options Congress may consider are", "holding hearings with state officials involved in state broadband initiatives to hear their stories, successes, and lessons learned; developing pilot broadband initiatives to evaluate the feasibility of different approaches; providing additional funding and oversight for state initiatives to help improve their sustainability; and finding ways to address duplicative funding while not unintentionally exacerbating the exclusion of unserved and underserved communities.", "Whether Congress decides to enact new broadband funding or initiatives remains to be seen; however, there appears to be an opportunity for states to share lessons learned from their approaches to closing the digital divide. Numerous bills addressing aspects of the digital divide other than broadband infrastructure have been introduced in the 116 th Congress, including the Homework Gap Trust Fund Act ( S. 3362 ) introduced on February 27, 2020, and the Closing the Homework Gap Through Mobile Hotspots Act ( H.R. 5243 ), introduced on November 21, 2019. Bills addressing the coordination of federal agencies and tracking of federal funding for broadband include Broadband Interagency Coordination Act of 2019 ( H.R. 4283 ) introduced on September 11, 2019, and the Advancing Critical Connectivity Expands Service, Small Business Resources, Opportunities, Access, and Data Based on Assessed Need and Demand Act ( H.R. 1328 ), passed by the House on May 8, 2019."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["The digital divide \u00e2\u0080\u0094a gap between those who use or have access to telecommunications and information technologies and those who do not\u00e2\u0080\u0094affects every region of the United States. Since the internet became publicly available in the 1990s, an increasing amount of information that individuals access for work, school, and entertainment is digital and hosted online. Members of Congress have expressed continuing interest in ensuring that their constituents have access to broadband internet, and in the 116 th Congress, they have introduced legislation (see the Appendix to this report) and held hearings on opportunities to expand broadband deployment and close the digital divide. Although Congress has provided federal funding for multiple broadband infrastructure initiatives, the gap between those who can access broadband and those who do not still persists.", "Ensuring access to broadband is not the only barrier to closing the digital divide. Other challenges include increasing the adoption of broadband (where it is available) and training for digital literacy. According to the National Digital Inclusion Alliance:", "We do need to address the lack of broadband infrastructure in rural areas. It is a serious problem. But, it is just one barrier to individuals and communities being able to fully participate in society today. The other common barriers, no matter where one lives, are the costs of internet service and devices, plus digital literacy skills. Simplistically equating \"the digital divide\" with just one of these barriers increases the division in our country.", "Broadband infrastructure initiatives funded under the American Recovery and Reinvestment Act of 2009 (ARRA, P.L. 111-5 ) have concluded, but the Federal Communications Commission (FCC) and Rural Utilities Service (RUS, within the U.S. Department of Agriculture) continue to have active programs that provide federal funding for broadband. There are few current federal funding initiatives to address other aspects of the digital divide, however, such as digital literacy and digital inclusion and the homework gap.", "States are playing a crucial role in efforts to expand broadband access, encouraging broadband investment, and helping to bring more of their residents online. Each state approaches broadband access and deployment differently, and state efforts may provide models for any future federal initiatives. This report analyzes selected state-level and local initiatives that have used different approaches. It does not attempt to include broadband initiatives from all 50 states. Rather, it highlights selected examples to illustrate programs that could serve as templates for potential federal initiatives."], "subsections": []}, {"section_title": "Broadband Technologies", "paragraphs": ["The term broadband commonly refers to high-speed internet access that is faster than dial-up access and is immediately accessible. In 2015, the FCC defined broadband as 25/3 megabits per second (Mbps), i.e., 25 Mbps (download rate) and 3 Mbps (upload rate). About 21.3 million Americans currently lack access to broadband at those speeds.", "Broadband includes several high-speed transmission technologies, such as:", "digital subscriber line (DSL); cable modem; fiber; wireless; satellite; and broadband over powerlines (BPL)."], "subsections": []}, {"section_title": "The Digital Divide", "paragraphs": ["The term digital divide refers to a gap between those who use or have access to telecommunications and information technologies and those who do not. Many areas of the United States\u00e2\u0080\u0094particularly rural areas\u00e2\u0080\u0094have either limited or no access to broadband infrastructure. Several factors contribute to the digital divide, including terrain, population density, demography, and market factors. Additionally, there are citizens in areas with high broadband penetration who are unable to access it due to socioeconomic factors. ", "Ensuring access to broadband is not the only barrier to closing the digital divide. Other challenges include increasing the adoption of broadband (where it is available) and training for digital literacy. Although strides have been made in the deployment of broadband, the digital divide persists\u00e2\u0080\u0094prompting a variety of federal broadband initiatives to address barriers and push communities across the digital divide. "], "subsections": []}, {"section_title": "Federal Broadband Programs and Initiatives", "paragraphs": [], "subsections": [{"section_title": "Federal Communications Commission", "paragraphs": ["The FCC has several broadband programs aimed at bridging the digital divide and expanding universal service principles. "], "subsections": [{"section_title": "Universal Service Fund", "paragraphs": ["The concept of universal service\u00e2\u0080\u0094the principle that all Americans should have access to communications services at reasonable rates\u00e2\u0080\u0094underpins a category of FCC programs that aim to bring broadband and voice services to parts of the country that may otherwise have difficulty getting connected. The universal service concept was conceived in the Communications Act of 1934 to apply to voice telephone service, but in more recent years it has expanded to include high-speed internet. The Universal Service Fund encompasses four programs:", "The High Cost/Connect America Fund provides support for high-cost (typically rural) areas. The Low Income (Lifeline) program provides support to help eligible low-income consumers gain access to and remain on a broadband network. The Schools and Libraries (E-rate) program provides support for eligible elementary and secondary schools and classrooms, as well as libraries, for internet access, internal connections, and telecommunications services. The Rural Health Care program provides support to eligible rural health care providers for telecommunications and broadband services .", "Although the Universal Service Fund programs are federal programs, their funding is not appropriated by Congress. Rather, it comes from mandatory contributions by interstate telecommunications providers, in amounts based on their end-user interstate and international revenues. The telecommunications providers may, but are not required to, pass these charges directly to their subscribers, typically in the form of a fee\u00e2\u0080\u0094for example, on a wireless phone bill. "], "subsections": []}, {"section_title": "Rural Digital Opportunity Fund", "paragraphs": ["On January 30, 2020, the FCC adopted the Rural Digital Opportunity Fund, which directs $20.4 billion over 10 years to fund the deployment of high-speed broadband networks in rural America through a two-phase reverse auction (i.e., the lowest bidder wins). ", "Phase I of the Rural Digital Opportunity Fund is scheduled to begin in October 2020 and is to target census blocks that are wholly unserved with fixed broadband at speeds of at least 25/3 Mbps. This phase is to provide up to $16 billion in overall funding to census blocks to solicit bids for fixed broadband buildout where existing data shows there is no such service available. Phase II of the program is to make at least $4.4 billion available to target partially served areas, i.e., census blocks where only some locations lack access to 25/3 Mbps broadband, as well as census blocks that do not receive bids in the first phase."], "subsections": []}, {"section_title": "5G Fund for Rural America", "paragraphs": ["In December 2019, the FCC announced the proposed 5G Fund for Rural America. The proposed fund would make up to $9 billion available to carriers to deploy advanced 5G (fifth generation) mobile wireless services in rural America. Similar to the Rural Digital Opportunity Fund, monies from the 5G Fund would be allocated through a reverse auction and would target areas that are remote or challenging to reach. ", "The 5G Fund would replace the planned Mobility Fund Phase II, which has come under some scrutiny. In August 2018, the FCC published initial eligibility maps for Mobility Fund Phase II, which were to be used in allocating up to $4.53 billion for rural wireless broadband expansion in areas lacking 4G service. In December 2018, the FCC announced it would launch an investigation into whether one or more major carriers violated the Mobility Fund reverse auction's mapping rules and submitted incorrect coverage maps. In a report released on December 4, 2019, the FCC found that the 4G Long Term Evolution (LTE) coverage data submitted by providers is not sufficiently reliable for the purpose of moving forward with Mobility Fund Phase II; it terminated that fund and replaced it with the 5G Fund. Proposed details of the 5G Fund are still forthcoming from the FCC."], "subsections": []}]}, {"section_title": "Rural Utilities Service", "paragraphs": ["The Rural Utilities Service (RUS), in the U.S. Department of Agriculture (USDA), has multiple broadband connectivity programs:", "The Rural Broadband Access Loan and Loan Guarantee program funds the costs of construction, improvement, or acquisition of facilities and equipment needed to provide service in eligible rural areas. The Community Connect Grants program funds broadband deployment to rural communities where it is not yet economically viable for private sector providers to deliver service. The Telecommunications Infrastructure Loans and Loan Guarantees program funds the construction, maintenance, improvement, and expansion of telephone service and broadband in extremely rural areas with a population of 5,000 or less. The Distance Learning and Telemedicine program principally funds end-user equipment to help rural communities use telecommunications to link teachers and medical service providers in one area to students and patients in another. The ReConnect program furnishes loans and grants to provide funds for the costs of construction, improvement, or acquisition of facilities and equipment needed to provide broadband service in eligible rural areas.", "Congress authorizes RUS programs and provides funding for them in annual appropriations bills. Eligibility requirements vary by program. For example, the Community Connect program defines an eligible area as a rural area that lacks any existing broadband speed of at least 10 Mbps download and 1 Mbps upload, which was the FCC's broadband speed benchmark previous to 25/3 Mbps. Community Connect grant funds may be used to build, acquire, or lease facilities, spectrum, land, or buildings used to deploy broadband for residential and business customers, as well as critical community facilities (e.g., public schools, fire stations, or public libraries). The Telecommunications Infrastructure Loans and Loan Guarantees program defines an eligible area as a rural area or town with a population of 5,000 or fewer without telecommunications facilities. Funds from this program can be used to finance broadband-capable telecommunications services. ", "The RUS also managed the Broadband Initiatives Program (BIP) under the American Recovery and Reinvestment Act of 2009 ( P.L. 111-5 ). Approximately $2.5 billion was allocated as loan, grant, and loan/grant combinations to deploy infrastructure in rural areas, with an emphasis on infrastructure projects to provide service directly to end users. The RUS required all BIP projects to be completed by June 2015."], "subsections": []}, {"section_title": "National Telecommunications and Information Administration", "paragraphs": [], "subsections": [{"section_title": "American Recovery and Reinvestment Act of 2009", "paragraphs": ["Funded by the American Recovery and Reinvestment Act of 2009 ( P.L. 111-5 ), the Broadband Technology Opportunities Program (BTOP) was an approximately $4 billion grant program administered by NTIA to help bridge the digital divide. Projects funded by BTOP deployed broadband infrastructure, enhanced and expanded computer centers, and encouraged the sustainable adoption of broadband. The BTOP program no longer has funding available; out of 233 funded projects, two remain active."], "subsections": []}, {"section_title": "BroadbandUSA", "paragraphs": ["As the BTOP program came to a close in 2015, NTIA launched BroadbandUSA to respond to demand from communities seeking to ensure that their citizens have the broadband capacity they need to attract employers, create jobs, improve healthcare, advance development, and increase public safety. Although BroadbandUSA does not provide funding, it provides broadband technical assistance to communities, as well as a funding program guide, broadband resources\u00e2\u0080\u0094such as information on permitting and monthly Practical Broadband Conversations webinars\u00e2\u0080\u0094and a National Broadband Availability Map. Funding for BroadbandUSA is appropriated annually. "], "subsections": []}]}]}, {"section_title": "Selected State and Local Broadband Initiatives: Common Approaches and Prototypes", "paragraphs": ["Increasingly, state governments have taken action to ensure that all residents, regardless of where they live or socioeconomic factors that may inhibit adoption, have access to broadband. While many state broadband initiatives focus on broadband infrastructure deployment, some address other aspects, such as adoption, mapping, feasibility, digital equity and digital inclusion, gigabit broadband initiatives, and the homework gap. This section describes selected state and local broadband initiatives, using the selected programs as examples to illustrate common approaches. The states and programs described are not intended to be a comprehensive list."], "subsections": [{"section_title": "Broadband Infrastructure Deployment", "paragraphs": ["Broadband infrastructure deployment programs, targeting areas that do not currently have broadband service, are the most common type of state broadband initiative. State broadband infrastructure projects typically allow applicants to apply grant funds toward building infrastructure assets, such as conduits, fiber-optic cable, and wireless towers. State programs also typically require that applicants provide last-mile broadband access to households that are unserved. Some state programs stipulate speed requirements\u00e2\u0080\u0094usually, but not always, 25/3 Mbps in alignment with the FCC definition of broadband. "], "subsections": [{"section_title": "Example: New York", "paragraphs": ["In 2015, New York Governor Andrew M. Cuomo established the $500 million New York Broadband Program. The program provides state grant funding through a reverse auction\u00e2\u0080\u0094similar to the method the FCC plans to use for the Rural Digital Opportunity Fund. The program's intent is to support projects that deliver high-speed internet access to unserved and underserved areas of New York State at speeds of 100 Mbps in most areas and 25 Mbps in the most remote areas. Nearly 90% of this program's funding has been awarded to projects that will address unserved areas of the state, connecting these locations for the first time. \u00c2\u00a0"], "subsections": []}]}, {"section_title": "Public-Private Partnerships for Broadband Buildout", "paragraphs": ["Building out broadband infrastructure in some areas of the United States may prove challenging for broadband providers, due to aspects such as terrain, cost, or lack of density, which have a negative impact on return on investment. This may leave some communities with limited or, in some cases, no options to subscribe to broadband. In such areas, some states have sought out alternatives, such as entering into public-private partnerships, to help expand broadband to their communities. ", "According to the North Carolina Broadband Infrastructure Office, \"a partnership means that the county or municipality builds community support, identifies its needs, and offers its resources to the broadband provider to make broadband deployment more financially attractive to the provider. In return, the broadband provider brings its technical expertise, innovation, equipment, and capital investment into under- or unserved areas in the community. In the end, both partners share the risks and costs of broadband deployment.\" The North Carolina Broadband Infrastructure Office offers several examples of potential public-private partnerships:", "For example, a city or county may offer a cost-sharing opportunity to broadband providers, in which the municipality contributes an agreed upon portion of the costs of broadband expansion to an under- or unserved region. A community anchor tenant, such as a school system, community college, hospital or a public safety system, might offer a stable starting point for the network and a gathering place for residents seeking wireless broadband access before the network is built or expanded.... [T]he town, city or county can choose to lease rights of way at no or reduced cost for the installation of broadband infrastructure. Further, the municipality can make its vertical assets\u00e2\u0080\u0094tall buildings, water towers, etc.\u00e2\u0080\u0094available to broadband providers at no or reduced charges, for the installation of fixed wireless internet equipment. The municipality has several policies available that can encourage forming public-private partnerships, and expand broadband access."], "subsections": [{"section_title": "Example: New Mexico", "paragraphs": ["In February 2020, the New Mexico Department of Information Technology announced a new public-private partnership aimed at building out broadband in the southeastern portion of the state. The partnership, between ExxonMobil, the state of New Mexico, and Plateau Communications, is to develop a $5 million fiber network offering advanced broadband to businesses along a 107-mile route, with completion scheduled for August 2020."], "subsections": []}]}, {"section_title": "Leveraging Existing Infrastructure Assets", "paragraphs": ["It can be difficult to build out new broadband infrastructure in certain areas\u00e2\u0080\u0094especially in suburban or rural areas\u00e2\u0080\u0094due to terrain or other hindrances, such as limited or prohibited access to land that is publicly or privately owned. One option to address this challenge could be to leverage existing infrastructure via a rights-of-way or permitting process. A rights-of-way grant is an authorization to use a specific piece of public land for a specific project, such as electric transmission lines, communication sites, roads, trails, fiber optic lines, canals, flumes, pipelines, or reservoirs. Federal assets such as tower facilities, buildings, and land can also be made available via permits that allow their use in deploying broadband infrastructure to lower the cost of broadband buildouts and encourage private-sector companies to expand broadband infrastructure. Through the American Broadband Initiative\u00e2\u0080\u0094a comprehensive effort to stimulate increased private sector investment in broadband \u00e2\u0080\u0094the NTIA has been working with other federal agencies, such as the Department of the Interior and the Department of Homeland Security, to streamline the federal permitting process and make it easier for network builders to access federal assets and rights-of-way."], "subsections": [{"section_title": "Example: Arizona", "paragraphs": ["Arizona's Smart Highway Corridor Program intends to leverage the highway system as a route for broadband infrastructure. On January 13, 2020, Arizona Governor Doug Ducey announced nearly $50 million in funding to enable the Arizona Department of Transportation to install more than 500 miles of broadband conduit and fiber optic cable along designated highway segments in rural areas of the state. The new corridors will enable future broadband capacity in Arizona's rural and tribal areas."], "subsections": []}]}, {"section_title": "Broadband Adoption", "paragraphs": ["While broadband accessibility across the United States\u00e2\u0080\u0094especially in rural areas\u00e2\u0080\u0094has been a continuing challenge, another challenge facing communities is that of barriers to broadband adoption, even where service is available. Broadband adoption can be defined as residential subscribership to high-speed internet access. Barriers that may prevent consumers and businesses from adopting broadband include the affordability of broadband subscriptions, a lack of awareness of the benefits broadband can bring, age, unfamiliarity with digital devices and digital skills, and a lack of training in how to use such devices and the services they enable."], "subsections": [{"section_title": "Example: California", "paragraphs": ["California's Broadband Adoption Fund is a $20 million program created in 2017 through Assembly Bill 1665. The Fund's purpose is to assist communities with limited broadband adoption by providing grants to increase publicly available or after-school broadband access and digital inclusion, such as grants for digital literacy training programs and public education. The California Public Utilities Commission gives preference to programs and projects in communities with demonstrated low broadband access, including low-income communities, senior citizen communities, and communities facing socioeconomic barriers to broadband adoption."], "subsections": []}]}, {"section_title": "Broadband Mapping", "paragraphs": ["Pinpointing where broadband is and is not available in the United States has been an ongoing challenge. Current data on national broadband availability is provided by private telecommunications providers, collected by the FCC, and displayed on the FCC's Fixed Broadband Deployment Map. Difficulty in accurately mapping broadband availability has been attributed to a number of factors, including the adequacy of census block data, the lack of independent data validation outside the FCC, and the absence of a challenge process for consumers and others who believe that the Fixed Broadband Deployment Map may overstate availability in their area. ", "In early 2019, it came to the FCC's attention that inaccuracies in the Fixed Broadband Deployment Map's data may cause broadband deployment to be overstated. The Fixed Broadband Deployment Map may indicate that areas have access to broadband when in reality, they do not. Inaccurate data on broadband deployment could lead to overbuilding in areas that currently have broadband, while leaving other areas underserved or unserved. The FCC has taken steps to address broadband mapping issues in the forthcoming Digital Opportunity Data Collection, but it may be several years before a more accurate and granular national broadband map is realized. In the interim, states have been developing their own broadband maps to determine the actuality of broadband availability in their communities. "], "subsections": [{"section_title": "Example: Georgia", "paragraphs": ["In 2018, the Georgia legislature passed the Achieving Connectivity Everywhere (ACE) Act, which seeks to obtain an accurate representation of where broadband connectivity is lacking within the state. To achieve this, the Georgia Broadband Deployment Initiative developed a database of all premises located within three targeted pilot counties: Elbert, Lumpkin, and Tift. Information was obtained from county and municipal officials to identify which premises were commercial, single-family, or multi-dwelling units. Next, the State of Georgia developed specific agreements to obtain data on locations that receive\u00c2\u00a0service from the seven companies providing broadband\u00c2\u00a0in the pilot counties. Georgia's pilot program differs from the FCC's approach because it surveys whether individual locations have access to broadband rather than collecting data only by census block. The three-county pilot showed that the FCC maps misidentified about half of the locations without broadband. A statewide map for Georgia is expected to be completed in June 2020."], "subsections": []}]}, {"section_title": "Broadband Feasibility", "paragraphs": ["One of the first steps in laying the foundation for broadband access may be to determine broadband needs that are unique to a state or community. This analysis can lead to a long-term vision and goals, help with the maximization of resources, and lay a framework for a state or community feasibility study. A feasibility study can aid the state or community in determining how best to invest in broadband, evaluating ways to deploy new broadband networks, and defining the pros and cons of a proposed approach. Questions that may be considered include", "What problem or problems are you are trying to solve? Are you trying to bring broadband to parts of your community that are unserved, underserved, or both? Do you have a digital equity and utilization problem? Are consumers in your community dissatisfied with their current internet provider? \u00c2\u00a0"], "subsections": [{"section_title": "Example: Vermont", "paragraphs": ["In Vermont, the Department of Public Service's Broadband Innovation Grant program is designed to help communities conduct feasibility studies and create business plans related to the deployment of broadband in rural, unserved, and underserved areas within the state. The Vermont state legislature approved $700,000 in grant funding to the Department in Act 79 ( H.R. 513 ) of 2019. The program awards up to $60,000 per grant to eligible grantees, which include -profit organizations, for-profit businesses, cooperatives, distribution utilities,\u00c2\u00a0communications union districts, and other government entities. Grantees are to deliver a feasibility study that proposes new broadband systems with minimum speeds of 25/3 Mbps in unserved or underserved areas. If a study indicates that a project could become cash-flow positive within three years, the Department is to request an actionable business plan from the grantee. Studies are to conclude within six months of receipt of the award and findings are to be reported to the Commissioner of Public Service."], "subsections": []}]}, {"section_title": "Digital Equity and Digital Inclusion", "paragraphs": ["According to the National Digital Inclusion Alliance (NDIA), a nonprofit community engagement organization, digital equity is a condition in which all individuals and communities have the information technology capacity needed for full participation in society, democracy, and the economy. Steps taken to achieve this are known as digital inclusion, which NDIA defines as including access to affordable, robust broadband internet service; internet-enabled devices that meet the needs of the user; digital literacy training; quality technical support; and applications and online content designed to enable and encourage self-sufficiency, participation, and collaboration. Digital equity issues vary by region, and, as a result, so too does the work that state and local governments are doing to address them."], "subsections": [{"section_title": "Example: Michigan", "paragraphs": ["The Detroit Department of Innovation and Technology, a department within the City of Detroit government, envisions making its efforts a national model for digital inclusion. According to Joshua Edmonds, Detroit Director of Digital Inclusion", "The recipe for successful digital inclusion in every city boils down to four things: partnerships, funding, engaged residents, and political will. I believe Detroit has every one of those points in excess. I'm excited to build relationships and do something bold.", "The Director of Digital Inclusion is to work with the Detroit Department of Innovation and Technology to develop a citywide strategy to expand computer and internet access to Detroiters who lack it, as well as develop methods to track and evaluate progress. The Director is to also work with the city's Office of Development and Grants to identify possible funding. ", "According to the City of Detroit, action items include a three-pronged approach to bring change to the city by providing internet access, devices, and digital skills to residents (see Table 1 ). "], "subsections": []}]}, {"section_title": "Gigabit Broadband Initiatives", "paragraphs": ["The FCC's definition of broadband is 25/3 Mbps, which is sufficient for activities such as telecommuting and streaming high definition video. However, higher speeds\u00e2\u0080\u0094such as gigabit speeds\u00e2\u0080\u0094may allow for multiple devices to simultaneously access data-intensive online content through a single network access point. A gigabit connection transmits data at one billion bits per second, which translates to lower latency (i.e., less lag time) when streaming video, video gaming, or using immersive media such as virtual reality. "], "subsections": [{"section_title": "Example: North Dakota", "paragraphs": ["The state of North Dakota is using a state-run network to provide gigabit access. According to North Dakota Governor Doug Burgum's office, in July 2019, North Dakota became the first state in the nation to deliver one-gigabit service to all K-12 schools within the state. This was the result of an effort announced in March 2018 by the governor for a 100-gigabit upgrade to STAGEnet, which is the state government's closed broadband network. This upgrade allowed for one-gigabit connectivity to all K-12 schools, higher education institutions, and government agencies state-wide. The upgrade was completed in collaboration with the North Dakota Information Technology Department (ITD) and Dakota Carrier Network's 14 owner companies."], "subsections": []}]}, {"section_title": "Homework Gap", "paragraphs": ["Many schools assign students homework online; however, some students have a difficult time completing these assignments because of lack of access to broadband at home. The cost of broadband service and gaps in its availability create obstacles in urban areas and rural communities alike. As K-12 officials in many state close schools and shift classes and assignments online due to the spread of the new coronavirus (COVID-19) , they confront the reality that some students do not have reliable access to the internet at home\u00e2\u0080\u0094particularly those who are from lower-income households. ", "FCC Commissioner Jessica Rosenworcel stated", "I have heard from students in Texas who do homework at fast food restaurants with fries\u00e2\u0080\u0094just to get a free Wi-Fi signal. I have heard from students in Pennsylvania who make elaborate plans every day to head to the homes of friends and relatives just to be able to get online. I have heard from high school football players in rural New Mexico who linger in the school parking lot after games with devices in the pitch-black dark because it is the only place they can get a reliable connection. These kids have grit. But it shouldn't be this hard. Because today no child can be left offline\u00e2\u0080\u0094developing digital skills is flat-out essential for education and participation in the modern economy."], "subsections": [{"section_title": "Example: North Carolina", "paragraphs": ["To help address the homework gap, Caldwell County, NC, has piloted the first program in Western North Carolina to place Wi-Fi access on school buses. The Caldwell Education Foundation, along with Google, spearheaded and funded the program. In addition to Wi-Fi on buses, Chromebooks are available free of charge for any students to use while riding. The school bus initiative allows students in rural areas with long travel times to and from school to do online homework and computer exercises while commuting. Additionally, there are plans to park the Wi-Fi-equipped school buses in key areas, when they are not transporting students, to create Wi-Fi hot spots to enable local resident access to the internet."], "subsections": []}]}]}, {"section_title": "Options for Congress", "paragraphs": ["Should Congress choose to consider state broadband initiatives, a variety of potential options would be available."], "subsections": [{"section_title": "Hold Hearings on State Broadband Initiatives", "paragraphs": ["Congress has implemented multiple broadband programs at the federal level to help expand broadband access, but state broadband initiatives could provide templates for any future federal broadband programs. Congress may choose to expand aspects of current federal broadband initiatives to incorporate themes states have addressed, or Congress may choose to develop new broadband initiatives. As there is no single broadband initiative that solves the digital divide issue, Congress may hold hearings on state initiatives\u00e2\u0080\u0094to examine their successes and challenges and to consider possible approaches to adopt at the federal level. Additionally, Congress may consider enabling a universal method for states and localities to share ideas with Congress or federal agencies."], "subsections": []}, {"section_title": "Establish Pilot Federal Broadband Initiatives", "paragraphs": ["As state experiences demonstrate, broadband needs can vary, and so can initiatives to address them. Congress may seek to develop one or more pilot broadband initiatives to test the feasibility of different approaches before developing and funding a nationwide program. These pilot initiatives might tie funding to specific goals\u00e2\u0080\u0094such as adoption or digital inclusion\u00e2\u0080\u0094in contrast to federal programs that currently mostly fund broadband deployment."], "subsections": []}, {"section_title": "Increase the Sustainability of State Broadband Initiatives", "paragraphs": ["Congress may consider providing federal funding and resources for broadband initiatives directly to the states. An infusion of federal funding and resources directed toward state initiatives could result in the expansion and sustainability of state efforts. Attaching federal funding to state broadband initiatives, as well as conducting federal oversight, could aid states in maximizing their potential. As expressed by the Director of Digital Inclusion for the City of Detroit:", "These are examples of how local leadership has called on industry to fill in where the federal government is silent. In Detroit, we have developed public-private partnerships without any government funding, but it's an unsustainable model. We need federal resources to continue our work. If we were to receive additional funding, we could do more robust outreach, and incentivize more localized funding from philanthropic organizations."], "subsections": []}, {"section_title": "Address Duplicative Funding", "paragraphs": ["Although continuing funding from some source would be necessary to build out broadband infrastructure and implement broadband initiatives, concerns have been expressed that some areas may receive duplicative funding from multiple broadband programs\u00e2\u0080\u0094potentially resulting in overbuild in some areas while other areas remain unserved. This challenge is highlighted by the implementation of the FCC's Rural Digital Opportunity Fund (RDOF), when the Commission sought to exclude from RDOF any area that the Commission \"know[s] to be awarded funding through the U.S. Department of Agriculture's ReConnect Program or other similar federal or\u00c2\u00a0state broadband subsidy programs, or those subject to enforceable broadband deployment obligations.\" As stated by Harold Feld, Senior Vice President at Public Knowledge", "Read broadly, this surprise last-minute change impacts almost every state in the Union. Nearly every state either has its own broadband subsidy program, receives funds under the Department of Agriculture ReConnect program, or receives other federal funding for broadband. Even read narrowly, this would appear to cut off millions of unconnected rural Americans from a program designed explicitly to help them. According to a Pew Report published in December 2019, 35 states have funds that directly subsidize broadband. Numerous other states have funds that might qualify as a 'subsidy' or 'enforceable broadband deployment obligations,' depending on how the FCC Order defines these terms.", "Another aspect of the debate regarding duplication of funds and potential overbuild is targeting funding to areas that are truly unserved by broadband, versus directing funds to areas already served by an existing provider. FCC Commissioner Michael O'Rielly stated", "I have been closely following all federal broadband funding programs, including the ReConnect's grant and loan disbursements, to ensure that funds are distributed as efficiently as possible and directed foremost to those communities lacking any broadband service, rather than those areas already served by an existing provider. To that end, I have voiced concerns to the Rural Utilities Service (RUS) over the use of scarce ReConnect Program funding to overbuild existing networks, whether built through private investment or via government subsidies. Rather than targeting scarce federal dollars to the truly unserved, the new 90 percent [unserved] threshold will likely lead to subsidized overbuilding and leave the most remote areas without service.", "There is a risk that provisions in federal broadband programs that seek to address duplication may unintentionally exclude unserved or underserved communities. In considering policies for future broadband programs, Congress may consider possible conflicts between ensuring that funding is not duplicated and avoiding the exclusion of areas that remain unserved."], "subsections": []}]}, {"section_title": "Concluding Observations", "paragraphs": ["States have been attempting to bridge the digital divide through their own broadband initiatives. While the majority of federal funding addresses network deployment, state broadband initiatives may demonstrate that other approaches can be complementary. Whether Congress decides to enact new broadband funding or initiatives remains to be seen; however, there appears to be an opportunity for states to share lessons learned from their approaches with Congress and/or federal agencies. Leveraging the wide variety of state policies and initiatives as potential models for federal broadband initiatives could have the potential to help close the digital divide."], "subsections": [{"section_title": "Appendix. Legislation in the 116th Congress", "paragraphs": ["Aside from annual appropriations legislation, the following are selected bills introduced in the 116 th Congress relating to the state broadband issues discussed in this report.", "H.R. 1328 (Tonko), introduced on February 25, 2019, as the Advancing Critical Connectivity Expands Service, Small Business Resources, Opportunities, Access, and Data Based on Assessed Need and Demand Act (ACCESS BROADBAND Act), would establish the Office of Internet Connectivity and Growth within NTIA at the Department of Commerce. The Office would provide outreach to communities seeking improved broadband connectivity and digital inclusion; track federal broadband dollars; and facilitate streamlined and standardized applications for federal broadband programs. Referred to the Committee on Energy and Commerce. Passed by the House on May 8, 2019.", "H.R. 1508 (Blumenauer), introduced on March 5, 2019, as the Move America Act of 2019, would amend the Internal Revenue Code of 1986 to provide for bonds and credits to finance infrastructure, including rural broadband service infrastructure. Referred to the Committee on Ways and Means.", "H.R. 1586 (Butterfield), introduced on March 7, 2019, as the Building Resources Into Digital Growth and Education Act of 2019 (BRIDGE Act of 2019), would establish a digital network technology program within NTIA which would award grants, cooperative agreements, and contracts to eligible institutions to assist such institutions in acquiring, and augmenting use by such institutions of, broadband internet access service to improve the quality and delivery of educational services provided by such institutions. Referred to the Referred to the Subcommittee on Communications and Technology.", "H.R. 1693 (Luj\u00c3\u00a1n), introduced on March 12, 2019, would require the FCC to make the provision of Wi-Fi access on school buses eligible for E-rate support. Referred to the Subcommittee on Communications and Technology.", "H.R. 2601 (Peterson), introduced on May 8, 2019, as the Office of Rural Telecommunications Act, would direct the FCC to establish the Office of Rural Telecommunications, which would coordinate with RUS, NTIA, and other federal broadband programs. Referred to the Subcommittee on Communications and Technology.", "H.R. 2661 (Tipton), introduced on May 10, 2019, as the Reprioritizing Unserved Rural Areas and Locations for Broadband Act of 2019 (RURAL Broadband Act of 2019), would amend the Rural Electrification Act of 1936 to restrict the use of RUS grants or loans to deploy broadband infrastructure that would overbuild or otherwise duplicate existing broadband networks. Referred to the Subcommittee on Commodity Exchanges, Energy, and Credit.", "H.R. 2921 (Kilmer), introduced on May 22, 2019, as the Broadband for All Act, would amend the Internal Revenue Code of 1986 to provide a tax credit to consumers to reimburse a portion of the cost of broadband infrastructure serving limited-broadband districts. Referred to the Committee on Ways and Means.", "H.R. 4127 (Luj\u00c3\u00a1n), introduced on July 30, 2019, as the Broadband Infrastructure Finance and Innovation Act of 2019, would establish a broadband infrastructure finance and innovation program to make available loans, loan guarantees, and lines of credit for the construction and deployment of broadband infrastructure. Referred to the Subcommittee on Communications and Technology.", "H.R. 4283 (Pence), introduced on September 11, 2019, as the Broadband Interagency Coordination Act of 2019, would require federal agencies with jurisdiction over broadband deployment to enter into an interagency agreement related to certain types of funding for broadband deployment. Referred to the Subcommittee on Commodity Exchanges, Energy, and Credit.", "H.R. 5243 (Meng), introduced on November 21, 2019, as the Closing the Homework Gap Through Mobile Hotspots Act, would establish a mobile hotspot grant program to provide grants to eligible institutions. A grant provided to an eligible institution would be used to provide a hotspot device to an enrolled student, or the family or guardian of an enrolled student, which would be portable and not contain a data limitation. Referred to the Subcommittee on Communications and Technology.\u00c2\u00a0", "S. 146 (Hoeven), introduced on January 16, 2019, as the Move America Act of 2019, would amend the Internal Revenue Code of 1986 to provide for bonds and credits to finance infrastructure, including rural broadband service infrastructure. Referred to the Committee on Finance.", "S. 454 (Cramer), introduced on February 12, 2019, as the Office of Rural Broadband Act, would establish an Office of Rural Broadband within the FCC that would coordinate with RUS, NTIA, and other FCC broadband-related activities. Referred to the Committee on Commerce, Science, and Transportation.", "S. 738 (Udall), introduced on March 12, 2019, would require the FCC to make the provision of Wi-Fi access on school buses eligible for E-rate support. Referred to the Committee on Commerce, Science, and Transportation.", "S. 1046 (Cortez Masto), introduced on April 4, 2019, as the Advancing Critical Connectivity Expands Service, Small Business Resources, Opportunities, Access, and Data Based on Assessed Need and Demand (ACCESS BROADBAND Act), would establish the Office of Internet Connectivity and Growth within NTIA at the Department of Commerce. The Office would provide outreach to communities seeking improved broadband connectivity and digital inclusion, track federal broadband dollars, and facilitate streamlined and standardized applications for federal broadband programs. Referred to the Committee on Commerce, Science, and Transportation.", "S. 1167 (Murray), introduced April 11, 2019, as the Digital Equity Act of 2019, would establish an NTIA state-based and competitive grant programs to support national digital inclusion, digital equity, and broadband adoption programs. Referred to the Committee on Commerce, Science, and Transportation.", "S. 1294 (Wicker), introduced on May 2, 2019, as the Broadband Interagency Coordination Act of 2019, would require federal agencies with jurisdiction over broadband deployment to enter into an interagency agreement related to certain types of funding for broadband deployment. Placed on Senate Legislative Calendar under General Orders.", "S. 2018 (Collins), introduced on June 27, 2019, as the American Broadband Buildout Act of 2019, would provide federal matching funding for state-level broadband programs. Referred to the Committee on Commerce, Science, and Transportation.", "S. 2344 (Peters), introduced on July 30, 2019, as the Broadband Infrastructure Finance and Innovation Act of 2019, would establish a broadband infrastructure finance and innovation program to make available loans, loan guarantees, and lines of credit for the construction and deployment of broadband infrastructure. Referred to the Committee on Commerce, Science, and Transportation.", "S. 2385 (Wyden), introduced on July 31, 2019, as the Broadband Internet for Small Ports Act, would amend the Rural Electrification Act of 1936 to improve access to broadband telecommunications services in rural areas, including by encouraging the provision of broadband loans and grants. Referred to the Committee on Agriculture, Nutrition, and Forestry.", "S. 3094 (Merkley), introduced on December 18, 2019, as the Community Broadband Mapping Act, would authorize the Rural Utilities Service to make grants to government or telecommunications entities that serve a rural area (with less than 25,000 population) to foster data collection about where broadband infrastructure is located and which homes have non-satellite broadband service. Referred to the Committee on Agriculture, Nutrition, and Forestry.", "S. 3362 (Van Hollen), introduced on February 27, 2020, as the Homework Gap Trust Fund Act, would establish the Homework Gap Trust Fund, administered by the Federal Communications Commission (FCC), to provide funding for measures to close the digital divide and promote digital equality with respect to school-aged children. Referred to the Committee on Commerce, Science, and Transportation."], "subsections": []}]}]}}
{"id": "R45884", "title": "Supreme Court October Term 2018: A Review of Selected Major Rulings", "released_date": "2019-08-23T00:00:00", "summary": ["The Supreme Court term that began on October 1, 2018, was a term of transition, with the Court issuing a number of rulings that, at times, suggested but did not fully adopt broader transformations in its jurisprudence. The term followed the retirement of Justice Kennedy, who was a critical vote on the Court for much of his 30-year tenure and who had been widely viewed as the Court's median or \"swing\" Justice. As a result, the question looming over the October 2018 Term was how the replacement of Justice Kennedy with Justice Kavanaugh would alter the Court's jurisprudence going forward.", "Notwithstanding the alteration in the Court's makeup, observers have generally agreed that the October 2018 Term largely did not produce broad changes to the Court's jurisprudence. Although a number of cases presented the Court with the opportunity to rethink various areas of law, the Court largely declined those invitations. In other cases, a majority of the Justices did not resolve potentially far-reaching questions, resulting in the Court either issuing more narrow rulings or simply not issuing an opinion in a given case. Nonetheless, much of the low-key nature of the October 2018 Term was a product of the Court's decisions to not hear certain matters. And for a number of closely watched cases that it did agree to hear, the Court opted to schedule arguments for the next term.", "While the Supreme Court's latest term generally did not result in wholesale changes to the law, its rulings were nonetheless important, in large part, because they provide insight into how the Court may function following Justice Kennedy's retirement. For the fourth straight year at the Court, the number of opinions decided by a bare majority increased, with 29% of the Court's decisions being issued by a five-Justice majority. While a number of decisions saw the Court divided along what are perceived to be the typical ideological lines, the bulk of the Court's closely divided cases involved heterodox lineups in which Justices with divergent judicial philosophies joined to form a majority in a given case. Collectively, the voting patterns of the October 2018 Term have led some commentators to suggest that the Court has transformed from an institution that was largely defined by the vote of Justice Kennedy to one in which multiple Justices are now perceived to be the Court's swing votes.", "Beyond the general dynamics of the October 2018 Term, the Court issued a number of opinions of importance for Congress. Of particular note are five opinions from the October Term 2018: (1)\u00c2 Kisor v. Wilkie , which considered the continued viability of the Auer-Seminole Rock doctrine governing judicial deference to an agency's interpretation of its own ambiguous regulation; (2) Department of Commerce v. New York , a challenge to the addition of a citizenship question to the 2020 census questionnaire; (3) Rucho v. Common Cause , which considered whether federal courts have jurisdiction to adjudicate claims of excessive partisanship in drawing electoral districts;\u00c2 (4)\u00c2 American Legion v. American Humanist Association , a challenge to the constitutionality of a state's display of a Latin cross as a World War I memorial; and (5) Gundy v. United States , which considered the scope of the long-dormant nondelegation doctrine."], "reports": {"section_title": "", "paragraphs": ["T he Supreme Court term that began on October 1, 2018, was a term of transition, with the Court issuing a number of rulings that, at times, signaled but did not fully adopt broader transformations in its jurisprudence. The term followed the retirement of Justice Kennedy, who was a critical vote on the Court for much of his 30-year tenure and who had been widely viewed as the Court's median or \"swing\" Justice. In nine out of the last 12 terms of the Roberts Court, he voted for the winning side in a case more often than any of his colleagues. Justice Brett Kavanaugh replaced Justice Kennedy one week into the October 2018 Term. The Court's newest member had served on the U.S. Court of Appeals for the District of Columbia (D.C. Circuit) for over a decade before his elevation to the Supreme Court. Empirical evidence suggests the Court can change with the retirement and replacement of one its members. As a result, the question looming over the October 2018 Term was how Justice Kennedy's departure and Justice Kavanaugh's arrival would alter the Court's jurisprudence going forward. Indeed, one member of the Court, Justice Ruth Bader Ginsburg, predicted Justice Kennedy's retirement to be \"the event of greatest consequence for the current Term, and perhaps for many Terms ahead.\" ", "Notwithstanding the alteration in the Court's makeup, observers have generally agreed that the October 2018 Term largely did not produce broad changes to the Court's jurisprudence. Although a number of cases presented the Court with the opportunity to rethink various areas of law, the Court largely declined those invitations. For instance, the Court in Gamble v. United States opted not to overrule a 170-year old doctrine concerning the reach of the Double Jeopardy Clause of the Fifth Amendment. In other cases, a majority of the Justices did not resolve potentially far-reaching questions, resulting in the Court either issuing more narrow rulings or simply not issuing an opinion in a given case. Nonetheless, much of the low-key nature of the October 2018 Term was a product of the Court's decisions to not hear certain matters. For instance, save for a three-page, per curiam opinion upholding an Indiana law regulating the disposal of fetal remains, the Court refrained from hearing cases touching on the subject of abortion during the October 2018 Term. The Court also declined to review cases addressing a number of other high-profile matters, including a challenge to the federal ban on bumpstocks, a dispute over whether business owners can decline on religious grounds to provide services for same-sex weddings, a case concerning President Trump's authority to impose tariffs on imported steel, and a challenge to the continued detainment of enemy combatants at Guantanamo Bay. And for a number of closely watched cases it did agree to hear, the Court opted to schedule arguments for the October 2019 Term, including several cases concerning whether federal law prohibits employers from discriminating on the basis of sexual orientation or gender identity and the lawfulness of the Department of Homeland Security's decision to wind down the Deferred Action for Childhood Arrivals (DACA) policy.", "While the Supreme Court's latest term generally did not result in wholesale changes to the law, its rulings were nonetheless important, in large part, because they may provide insight into how the Court will function following Justice Kennedy's retirement. For the fourth straight year at the Court, the number of opinions decided by a bare majority increased, with 29% of the Court's decisions being issued by a five-Justice majority. ", "Some of these decisions saw the Court divided along what are perceived to be the typical ideological lines, with Justices appointed by Republican presidents on one side and those appointed by Democrats on the other. These 5-4 splits occurred in several appeals concerning the death penalty and in three cases where the Court expressly or implicitly overturned several of the Court's previous precedents regarding sovereign immunity, property rights, and redistricting. ", "Nonetheless, such divisions proved to be the exception rather than the rule in closely divided cases during the last term. Of the 21 cases decided by a single vote, seven cases saw 5-4 splits between what have been viewed to be the conservative and liberal voting blocs on the Court. Instead, the October 2018 Term witnessed a number of heterodox lineups at the Court. For instance, Justice Kavanaugh joined the perceived liberal wing of the Court in a major antitrust dispute, and Justice Gorsuch voted with that same voting bloc in several cases involving Indian and criminal law. Justice Breyer joined the more conservative wing of the Court in the term's biggest Fourth Amendment case. And, as discussed in more detail below, in cases concerning the inclusion of a citizenship question on the 2020 Census questionnaire and judicial deference afforded to interpretations of agency regulations, the Chief Justice voted with the perceived liberal voting bloc. Underscoring the new dynamics of the Roberts Court, three Justices with fairly distinct judicial approaches voted most frequently with the majority of the Court last term: Justice Kavanaugh (voting with the majority 88% of the time), Chief Justice Roberts (85%), and Justice Kagan (83%). Collectively, the voting patterns of the October 2018 Term have led some legal commentators to suggest that the Court has transformed from an institution that was largely defined by the vote of Justice Kennedy to one in which multiple Justices are now the Court's swing votes.", "Beyond the general dynamics of October 2018 Term, the Court issued a number of opinions of particular importance for Congress. While a full discussion of every ruling from the last Supreme Court term is beyond the scope of this report, Table 1 and Table 2 provide brief summaries of the Court's written opinions issued during the October 2018 Term. The bulk of this report highlights five notable opinions from the October Term 2018 that could affect the work of Congress: (1) Kisor v. Wilkie , which considered the continued viability of the Auer-Seminole Rock doctrine governing judicial deference to an agency's interpretation of its own ambiguous regulation; (2) Department of Commerce v. New York , a challenge to the addition of a citizenship question to the 2020 census questionnaire; (3) Rucho v. Common Cause , which considered whether federal courts have jurisdiction to adjudicate claims of excessive partisanship in drawing electoral districts; (4) American Legion v. American Humanist Association , a challenge to the constitutionality of a state's display of a Latin cross as a World War I memorial; and (5) Gundy v. United States , which considered the scope of the long-dormant nondelegation doctrine. "], "subsections": [{"section_title": "Administrative Law", "paragraphs": [], "subsections": [{"section_title": "Deference and Agency Regulations: Kisor v. Wilkie37", "paragraphs": ["In Kisor v. Wilkie , the Supreme Court considered whether to overrule the Auer doctrine (also known as the Seminole Rock doctrine), which generally instructs courts to defer to agencies' reasonable constructions of ambiguous regulatory language. In a 5-4 decision, the Supreme Court upheld the deference doctrine on stare decisis grounds. However, while the Court in Kisor declined to overrule Auer , it emphasized that the doctrine applies only in limited circumstances. These limitations on the doctrine's scope could bear consequences for future courts' review of agency action and affect the manner in which agencies approach their decisionmaking.", "Background: The Supreme Court has established several doctrines that guide judicial review of agency action. Perhaps the most well known is the Chevron doctrine, which generally instructs courts to defer to an agency's reasonable interpretation of an ambiguous statute that it administers. Auer deference, which takes its name from the Supreme Court's 1997 decision in Auer v. Robbins , has roots in the Court's 1945 decision in Bowles v. Seminole Rock & Sand Co. Auer generally instructs courts to defer to an agency's interpretation of ambiguous regulatory language \" unless ,\" as the Court framed the test in Seminole Rock , that interpretation \"is plainly erroneous or inconsistent with the regulation.\" While Chevron deference applies to agency interpretations of statutes that are contained in agency statements that have the force of law (e.g., regulations promulgated following notice-and-comment rulemaking procedures), Auer deference has been applied to a range of nonbinding agency memoranda and other materials that construe ambiguous regulatory language. While the doctrine has long-standing roots, in the wake of Auer , several Members of the Court began to criticize the doctrine on policy, statutory, and constitutional grounds.", "The Kisor case arose after the Department of Veterans Affairs (VA) denied James L. Kisor's request for retroactive disability compensation benefits. The agency determined that records he supplied were not \" relevant \" within the meaning of the governing regulation . On appeal, the Federal Circuit held that the term \"relevant\" as used in that regulation was ambiguous and, applying Auer deference to the VA's interpretation, affirmed the agency's decision. The Supreme Court granted the petitioner's request for review to consider whether to overturn Auer . ", "Supreme Court's Decision: While the Supreme Court unanimously agreed to vacate the Federal Circuit's decision, the Justices fractured on whether to overrule Auer , with a bare majority voting to uphold it. Writing on behalf of five Members of the Court, Justice Kagan\u00e2\u0080\u0094joined by Chief Justice Roberts and Justices Breyer, Ginsburg, and Sotomayor\u00e2\u0080\u0094grounded the decision to uphold Auer on stare decisis principles. The doctrine of stare decisis typically leads the Court to follow rules set forth in prior decisions unless there is a \" special justification \" or \" strong grounds \" for overruling that precedent. Justice Kagan concluded that the petitioner's arguments did not justify abandoning Auer deference in light of the extensive body of precedent, going back at least to Seminole Rock , which supported the continued use of a doctrine that \"pervades the whole corpus of administrative law.\" The Kisor majority also expressed concern that abandonment of Auer deference could result in litigants revisiting any of the myriad cases that applied the doctrine. And, the Court continued, \" particularly ' special justification [ s], ' \" which had not been offered by the petitioner, were necessary to overturn Auer , given that Congress has left the doctrine undisturbed for so long, despite the Court's repeated assertions that the doctrine rests on a presumption \"that Congress intended for courts to defer to agencies when they interpret their own ambiguous rules.\" ", "Although the Court did not overrule Auer , it took \"the opportunity to restate, and somewhat expand on , \" the doctrine's limitations. In so doing, the Court formulated a multistep process for determining whether Auer deference should be afforded to an agency's interpretation of a regulation. First, a reviewing court may defer under Auer only after determining that the regulation is \"genuinely ambiguous,\" a conclusion the court may reach only after \" exhaust [ing] all the ' traditional tools ' of construction .\" Second, even if ambiguity exists, Auer will not apply unless the court determines that the agency's interpretation is \" reasonable \"\u00e2\u0080\u0094that is, the interpretation \"must come within the zone of ambiguity\" that the court uncovered in its interpretation of the regulation. And third, even if a court determines that the agency has reasonably interpreted a genuinely ambiguous regulation, it must still independently assess \" whether the character and context of the agency interpretation entitles it to controlling weight .\" Though the Court cautioned that this examination is unable to be reduced \"to any exhaustive test,\" the Court indicated that Auer deference shall not extend to interpretations that (1) are not the official or authoritative position of the agency; (2) do not somehow \"implicate [ the agency ' s ] substantive expertise \"; or (3) do not represent the agency ' s \" fair and considered judgment .\" The Court remanded the case to the Federal Circuit after concluding that the court of appeals did not adequately assess whether the regulation at issue was ambiguous, nor \"whether the [VA's] interpretation is of the sort that Congress would want to receive deference.\" ", "Two portions of Justice Kagan's opinion defended Auer on grounds other than stare decisis principles but did not gain the support of a majority of the Court. Joined by Justices Breyer, Ginsburg, and Sotomayor, Justice Kagan argued that Auer deference follows from \"a presumption that Congress would generally want [agencies] to play the primary role in resolving regulatory ambiguities.\" Justice Kagan wrote that this presumption was justified on several grounds, including agencies' significant substantive expertise, the relative political accountability of agencies subordinate to the President, and the view that the agency responsible for issuing a regulation is often best situated to determine the meaning of that regulation. The four Justices also disagreed with the petitioner's s tatutory, policy, and constitutional arguments for overrulin g Auer .", "Concurring Opinions: Justice Gorsuch authored an opinion in which he disagreed with the majority's refusal to overrule Auer . Justice Gorsuch agreed with the petitioner that Auer violates the Constitution, arguing that the doctrine runs afoul of the separation of powers by demanding that courts accede to the legal judgments of the executive branch and placing \"the powers of making, enforcing, and interpreting laws . . . in the same hands.\" He also agreed with the petitioner that Auer violates the judicial review and rulemaking provisions of the Administrative Procedure Act (APA). Instead of affording deference under Auer , Justice Gorsuch argued that judges should employ the so-called \" Skidmore doctrine \" when attempting to discern the meaning of an agency regulation. Under that doctrine\u00e2\u0080\u0094named after the Court's 1944 decision in Skidmore v. Swift & Co. \u00e2\u0080\u0094courts independently interpret the text of a regulation, but may accord nonbinding weight to an administrative interpretation, consistent with \"the thoroughness evident in its consideration, the validity of its reasoning, its consistency with earlier and later pronouncements, and all those factors which give it power to persuade.\" ", "The Chief Justice, who provided the crucial fifth vote to uphold Auer , authored a partial concurrence contending that the \"distance\" between the controlling portion of Justice Kagan's opinion and the position put forth by Justice Gorsuch \"is not as great as it may initially appear.\" He noted that the limitations on Auer deference announced by the Kisor majority\u00e2\u0080\u0094that an interpretation must, among other things, be based on the agency's \"authoritative, expertise-based, and fair and considered judgment\"\u00e2\u0080\u0094were not so different from those factors that Justice Gorsuch believed may persuade a court to follow an interpretation under Skidmore . And, perhaps anticipating a future legal challenge to the continuing viability of the Chevron doctrine, the Chief Justice also wrote that the Auer and Chevron doctrines are analytically distinct, maintaining that the Court's refusal to overrule Auer had no bearing on the distinct issues associated with Chevron . ", "Implications for Congress: While the Court did not overrule the Auer doctrine in Kisor , the framework it elucidated for assessing whether deference is appropriate may provide further guidance and, perhaps, constrain lower courts deciding whether to defer to an agency's regulatory interpretation. Legal commentators have drawn various conclusions about Kisor 's potential impact, but it ultimately remains to be seen whether courts will be more hesitant to conclude that deference is warranted after Kisor , and whether the Kisor Court's elaborations on the limits on Auer deference will inform agency decisionmaking. In any event, the Court in Kisor made clear that Auer deference is not constitutionally required , and Congress may opt to memorialize, abrogate, or modify application of the doctrine by statute. For example, Congress could amend the judicial review provision of the APA to explicitly provide that judicial review of agency interpretations of regulations shall be accorded no deference (i.e., shall be reviewed \"de novo\") or instead be subject to some other standard . More narrowly, Congress could also provide in particular statutes governing specific agency actions whether Auer deference or some other standard of judicial review should be applied to regulatory interpretations."], "subsections": []}]}, {"section_title": "Election Law", "paragraphs": [], "subsections": [{"section_title": "Census: Department of Commerce v. New York89", "paragraphs": ["On the last day that the Supreme Court sat for the October 2018 Term, the Court issued its decision in Department of Commerce v. New York \u00e2\u0080\u0094a case involving the legal challenges to the decision by the Secretary of the Department of Commerce, Wilbur Ross, to add a citizenship question to the 2020 census questionnaire. The Court's opinion resolved important questions of constitutional, statutory, and administrative law. The Court concluded that adding a citizenship question to the 2020 census questionnaire did not violate the Enumeration Clause of the U.S. Constitution or the Census Act. But the Court also\u00e2\u0080\u0094at least temporarily\u00e2\u0080\u0094prohibited the Department of Commerce from adding the citizenship question to the 2020 census questionnaire because it determined that Secretary Ross had violated the APA by failing to disclose his actual reason for doing so.", "Background : Article I, \u00c2\u00a7\u00c2\u00a02 of the U.S. Constitution, as amended by the Fourteenth Amendment, requires Congress to take an \"actual Enumeration\" of \"the whole Number of\u00c2\u00a0. . . persons\" in each State \"every\u00c2\u00a0. . . Term of ten Years, in such Manner as [Congress] shall by Law direct.\" Through the Census Act, Congress delegated this responsibility to the Secretary of Commerce. That law requires the Secretary of Commerce to \"take a decennial census of population\" and grants the Secretary discretion to do so \"in such form and content as he may determine\" and to \"obtain such other census information as necessary.\"", "The Census Act places limits on how the Secretary of Commerce may conduct the census. Though the Secretary is authorized to \"determine the inquires\" and to \"prepare questionnaires\" for obtaining demographic or other information, Section 6(c) of the Census Act instructs the Secretary to first attempt to obtain such information from federal, state, or local government administrative sources \"[t]o the maximum extent possible\" and \"consistent with the kind, timeliness, quality and scope\" of the information needed. Moreover, to facilitate congressional oversight, Section 141(f) of the act directs the Secretary to \"submit [reports] to the [appropriate] committees of Congress\" (1) identifying the \"subjects proposed to be included\" and \"types of information to be compiled\"; (2) describing \"the questions proposed to be included in [the] census\"; and (3) if \"new circumstances exist,\" modifying the prior two reports.", "On March 26, 2018, Secretary Ross issued a memorandum stating that the Census Bureau would add a citizenship question to the 2020 decennial census questionnaire. Secretary Ross stated that he made this decision because the Department of Justice (DOJ) had asked that the citizenship question be added to the 2020 census to obtain citizenship data that would be used for enforcement of Section 2 of the Voting Rights Act (VRA). In the memorandum, Secretary Ross explained that he had considered four options in deciding how to respond to DOJ's request: (A) not adding the citizenship question; (B) adding the citizenship question; (C) relying solely on administrative records to obtain citizenship data; and (D) relying on both administrative records and a citizenship question to obtain citizenship data. ", "While the Census Bureau concluded that Option C would produce the most accurate citizenship information because noncitizens and Hispanics would be less likely to respond to a census questionnaire including a citizenship question, Secretary Ross chose option D. He stated that reliance on administrative records alone was \"a potentially appealing solution,\" but noted that it would provide \"an incomplete picture\" because the Census Bureau did not have a complete set of administrative records for the entire population. In response to concerns that \"reinstatement of the citizenship question . . . would depress response rate[s]\" among Hispanics and noncitizens, Secretary Ross stated the Department of Commerce had \"not [been] able to determine definitively how inclusion of a citizenship question\u00c2\u00a0. . . will impact responsiveness\" and determined that, in any event, \"the value of more complete and accurate data\u00c2\u00a0derived from surveying the entire population outweighs such concerns.\"", "Secretary Ross's decision was challenged in federal district courts in California, Maryland, and New York. Two of these courts concluded that the addition of a citizenship question violated the Enumeration Clause of the U.S. Constitution because \"its inclusion would materially harm the accuracy of the census without advancing any legitimate governmental interest.\" Two courts also determined that Secretary Ross violated Sections 6(c) and 141(f) of the Census Act. As to Section 6, those courts found that administrative records alone would produce more accurate citizenship data than when used in combination with a citizenship question, and therefore the addition of a citizenship question would violate Section 6(c)'s directive to rely on administrative records \"[t]o the maximum extent possible.\" The same two courts also determined that Secretary Ross violated Section 141(f) because he had not included citizenship as a \"subject\" in the first report that he submitted to Congress. Finally, all three district courts held that Secretary Ross had violated the APA\u00e2\u0080\u0094the law requiring that agency action be based on \"'reasoned decisionmaking.'\" In particular, these courts concluded that Secretary Ross's decision was\u00e2\u0080\u0094among other things\u00e2\u0080\u0094contrary to the evidence before him. They also determined that the Secretary's decision was unlawful because his sole stated reason for adding the citizenship question\u00e2\u0080\u0094providing DOJ with citizenship data for VRA enforcement\u00e2\u0080\u0094was pretextual.", "Supreme Court ' s Decision : Chief Justice Roberts wrote the opinion for the Court in Department of Commerce v. New York . Though this opinion garnered a majority for each issue addressed, the Justices comprising the majority for each issue varied. ", "On the merits, Chief Justice Roberts\u00e2\u0080\u0094joined by Justices Thomas, Alito, Gorsuch, and Kavanaugh\u00e2\u0080\u0094concluded that adding a citizenship question to the census did not violate the Enumeration Clause. Noting that the Court's \"interpretation of the Constitution is guided by Government practice that 'has been open, widespread, and unchallenged since the early days of the Republic,'\" the Court observed that \"demographic questions have been asked in every census since 1790\" and that \"questions about citizenship in particular have been asked for nearly as long.\" Relying on this \"early understanding\" and \"long practice,\" the Court determined that the Enumeration Clause does not prohibit inquiring about citizenship on the census questionnaire.", "These same Justices also determined that Secretary Ross's decision was supported by the evidence before him and therefore did not violate the APA on that ground. The Court ruled that the Secretary's decision to rely on both administrative records and a citizenship question to obtain citizenship data for DOJ was a reasonable exercise of his discretion in light of the available evidence. While the Census Bureau had found that administrative records alone would produce the most accurate citizenship data, it acknowledged that each option \"entailed tradeoffs between accuracy and completeness,\" and that it \"was not able to 'quantify the relative magnitude of the errors\" in each of Options C and D. The Court concluded that where the \"choice [is] between reasonable policy alternatives in the face of uncertainty,\" the Secretary has discretion to choose.", "The Court also determined that the Secretary reasonably weighed the costs and benefits of reinstating the citizenship question, particularly \"the risk that inquiring about citizenship would depress census response rates\u00c2\u00a0. . . among noncitizen households.\" The Court observed that the Secretary had explained why the \"risk[s] w[ere] difficult to assess,\" concluding that he had reasonably \"[w]eigh[ed] that uncertainty against the value of obtaining more complete and accurate citizenship data\" through a citizenship question. In the end, and \"in light of the long history of the citizenship question on the census,\" the Court was unwilling to second-guess the Secretary's conclusion as \"the evidence before [him] hardly led ineluctably to just one reasonable course of action.\"", "The same Justices also ruled that the Secretary's decision did not violate the Census Act. The Court first determined, \"for essentially the same reasons\" underlying its ruling that Secretary Ross's decision was supported by the evidence, that Secretary Ross reasonably concluded that relying solely on administrative records to obtain citizenship data \"would not . . . provide the more complete and accurate data that DOJ sought.\" Thus, because administrative records alone would not supply the \"kind,\" \"quality,\" and \"scope\" of \"'statistics required,'\" the Court held that Secretary Ross had complied with Section 6(c)'s requirement to rely \"[t]o the maximum extent possible\" on administrative records. The Court also determined that the Secretary complied with Section 141(f) of the Census Act. Though Secretary Ross had not included \"citizenship\" as a \"subject\" in his initial report to Congress, the Court determined that by listing \"citizenship\" as a \"question\" in the second report, the Secretary had adequately \"informed Congress that he proposed to modify the original list of subjects\" from his initial report.", "Finally, the Chief Justice\u00e2\u0080\u0094joined by Justices Ginsburg, Breyer, Sotomayor, and Kagan\u00e2\u0080\u0094held that the Secretary's decision violated the APA because his sole stated reason for adding the citizenship question to the census questionnaire was not the real reason for his decision. The Court began by reaffirming the \"settled proposition[]\" that \"in order to permit meaningful judicial review, an agency must 'disclose the basis' of its action.\" Moreover, while acknowledging that courts normally accept an agency's stated reason for its action, the Court recognized that courts may review evidence outside the agency record to probe the justifications of an agency's decision when there is a strong showing of bad faith or improper behavior.", "After concluding that it could review the extra-record evidence on which the district court had relied, the Court conducted its own review of the evidence regarding Secretary Ross's reason for adding the citizenship question to the census. It began by noting that while the Secretary had \"tak[en] steps to reinstate a citizenship question about a week into his tenure,\" there was \"no hint that he was considering VRA enforcement\" at that time. In addition, the Court observed that the Department of Commerce had itself gone \"to great lengths to elicit the request from DOJ (or any other willing agency)\" to add the citizenship question. In the end, \"viewing the evidence as a whole,\" the Court concluded that \"the decision to reinstate a citizenship question [could not] be adequately explained in terms of DOJ's request for improved citizenship data to better enforce the VRA.\" Given this \"disconnect between the decision made and the explanation given,\" the Court held that the Secretary's decision violated the APA. However, the Court was clear that it was \"not hold[ing] that the [Secretary's] decision . . . was substantively invalid,\" but was only requiring the Secretary to disclose the reason for that decision. And to give Secretary Ross that opportunity, the Court directed the district court to remand the case back to the Department of Commerce.", "Concurring and Dissenting Opinions : Every Justice (other than Chief Justice Roberts) dissented from some portion of the Court's opinion. Among the most notable dissents were those of Justice Thomas and Justice Breyer. Justice Thomas\u00e2\u0080\u0094joined by Justices Gorsuch and Kavanaugh\u00e2\u0080\u0094dissented from the Court's holding that Secretary Ross's decision was based on a pretextual rationale. Justice Thomas began by criticizing the majority for relying on evidence outside the administrative record. Under the APA, Justice Thomas explained, judicial review of an agency decision is generally based on \"'the agency's contemporaneous explanation'\" for its decision, and courts normally may not invalidate the agency's action even if it \"ha[d] other, unstated reasons for the decision.\" Justice Thomas acknowledged that review of extra-record materials may be permissible upon a showing of bad faith, but he disagreed with the Court's assessment that this case met that standard. Even if review of extra-record materials were appropriate, Justice Thomas concluded that none of the evidence established that Secretary Ross's stated basis for his decision \"did not factor at all into [his] decision.\" In his view, the evidence showed \"at most, that leadership at both the Department of Commerce and DOJ believed it important\u00e2\u0080\u0094for a variety of reasons\u00e2\u0080\u0094to include a citizenship question on the census.\" Finally, Justice Thomas criticized the Court's decision as being the \"the first time the Court has ever invalidated an agency action as 'pretextual,'\" contending that the Court had \"depart[ed] from traditional principles of administrative law.\"", "Justice Breyer\u00e2\u0080\u0094joined by Justices Ginsburg, Sotomayor, and Kagan\u00e2\u0080\u0094dissented from the Court's conclusion that Secretary Ross's decision was supported by the evidence before the agency. Justice Breyer contended that Secretary Ross inaccurately stated that he was \"'not able to determine definitively how inclusion of a citizenship question on the decennial census will impact responsiveness.'\" Specifically, the dissent observed that the experts within the Census Bureau itself had found that \"adding the question would produce a less accurate count because noncitizens and Hispanics would be less likely to respond to the questionnaire,\" finding there was \"nothing significant\" in the record \"to the contrary.\" Moreover, Justice Breyer criticized Secretary Ross's conclusion that the addition of the citizenship question would produce more complete and accurate data. According to Justice Breyer, the administrative record showed that inclusion of the citizenship question would, for a large segment of the population, \"be no improvement over using administrative records alone,\" and for 35 million people, it \"would be no better, and in some respects would be worse, than using [only] statistical modeling.\" On these grounds, four Justices concluded that Secretary Ross's decision was arbitrary and capricious.", "Implications for Congress : The Supreme Court's decision in Department of Commerce is significant, both for its immediate impact on the 2020 census and for how it may affect administrative law more broadly. The Court's decision barred the Trump Administration from adding the citizenship question to the 2020 census without disclosing the Secretary's actual reason for doing so. Though the Trump Administration initially sought to cure the legal error identified by Court's opinion, it ultimately abandoned these efforts and confirmed that a citizenship question will not be on the 2020 census questionnaire. Nonetheless, because the Court did not deem the addition of a citizenship question \"substantively\" unlawful, it is possible that the Department of Commerce could add a citizenship question to a future census questionnaire, as long as the Secretary of Commerce discloses the actual reasons for doing so. Notably, the Trump Administration recently issued an executive order related to the collection of citizenship data, which, among other things, instructs the Secretary of Commerce to \"consider initiating any administrative process necessary to include a citizenship question on the 2030 decennial census.\"", "Separately, the Supreme Court's decision could lay the groundwork for pretext-based challenges to agency decisions. The Court's opinion recognized that while \"a court is ordinarily limited to evaluating the agency's contemporaneous explanation in light of the existing administrative record,\" it may inquire further into the motive underlying an agency's action where there is \"a 'strong showing of bad faith or improper behavior.'\" Though this rule preexisted the Court's decision in Department of Commerce , some plaintiffs could view that decision as signaling a greater receptiveness by the Court to such challenges. This was the view taken by Justice Thomas, who asserted in his dissenting opinion that the Court's decision \"opened a Pandora's box of pretext-based challenges\" to agency action because \"[v]irtually every significant agency action is vulnerable to the kinds of allegations the Court credit[ed]\" in its opinion. Some commentators have echoed Justice Thomas's prediction. Perhaps responding to Justice Thomas's concerns, the Court's opinion emphasized that judicial inquiry into an agency's stated reason for its decision should be \"rare,\" explaining that this case involved \"unusual circumstances\" and was not \"a typical case.\" This limiting language could discourage potential litigants from raising pretext-based challenges to agency action."], "subsections": []}, {"section_title": "Redistricting: Rucho v. Common Cause and Lamone v. Benisek172", "paragraphs": ["Partisan gerrymandering, \"the drawing of legislative district lines to subordinate adherents of one political party and entrench a rival party in power,\" is an issue that has vexed the federal courts for more than three decades. On June 27, 2019, by a 5-to-4 vote, the Supreme Court ruled that claims of unconstitutional partisan gerrymandering are not subject to federal court review because they present nonjusticiable political questions, thereby removing the issue from federal courts' purview. In Rucho v. Common Cause and Lamone v. Benisek (hereinafter Rucho ), the Court viewed the Elections Clause of the Constitution as solely assigning disputes about partisan gerrymandering to the state legislatures, subject to a check by the U.S. Congress. Moreover, in contrast to one-person, one-vote and racial gerrymandering claims, the Court determined that no test exists for adjudicating partisan gerrymandering claims that is both judicially discernible and manageable. However, the Court suggested that Congress, as well as state legislatures, could play a role in regulating partisan gerrymandering going forward.", "Background: Prior to the 1960s, the Supreme Court had determined that challenges to redistricting plans presented nonjusticiable political questions that were most appropriately addressed by the political branches of government, not the judiciary. In 1962, however, in the landmark ruling of Baker v. Carr , the Court held that a constitutional challenge to a redistricting plan is justiciable, identifying factors for determining when a case presents a nonjusticiable political question, including \"a lack of [a] judicially discoverable and manageable standard[] for resolving it.\" Since then, while invalidating redistricting maps on equal protection grounds for other reasons\u00e2\u0080\u0094based on inequality of population among districts or one-person, one-vote and as racial gerrymanders\u00e2\u0080\u0094the Court has not nullified a map because of partisan gerrymandering.", "In part, the Court has been reluctant to invalidate redistricting maps as impermissibly partisan because redistricting has traditionally been viewed as an inherently political process. Moreover, critics of federal court adjudication of partisan gerrymandering claims have argued that such lawsuits would open the floodgates of litigation and that it would be judicially difficult to police because it is unclear how much partisanship in redistricting is too much. On the other hand, critics of this view have argued that extreme partisan gerrymandering is \"incompatible with democratic principles\" by entrenching an unaccountable political class in power with the aid of modern redistricting software\u00e2\u0080\u0094using \"pinpoint precision\" to maximize partisanship\u00e2\u0080\u0094thereby necessitating some role by the unelected judiciary.", "In earlier cases presenting a claim of unconstitutional partisan gerrymandering, the Court left open the possibility that such claims could be judicially reviewable, but did not ascertain a discernible and manageable standard for adjudicating such claims. In those rulings, Justice Kennedy cast the deciding vote, leaving open the possibility that claims could be held justiciable in some future case, under a yet-to-be-determined standard. Last year, the Supreme Court considered claims of partisan gerrymandering raising nearly identical questions to those in Rucho , but ultimately issued narrow rulings on procedural grounds specific to those cases. Rucho marked the first opinion on partisan gerrymandering since Justice Kennedy left the Court.", "Prior to the Supreme Court's consideration, three-judge federal district courts in North Carolina and Maryland invalidated congressional districts as unconstitutional partisan gerrymanders under standards they viewed to be judicially discernible and manageable. In the North Carolina case, the court determined that a redistricting map violates the Equal Protection Clause as an unconstitutional partisan gerrymander when (1) the map drawer's predominant intent was to entrench a specific political party's power; (2) the resulting dilution of voting power by the disfavored party was likely to persist in later elections; and (3) the discriminatory effects were not attributable to other legitimate interests. Further, the court determined that a partisan gerrymandered map may violate provisions in Article I requiring \"the People\" to select their representatives and limiting the states to determining only \"neutral provisions\" regarding the \"Times, Places, and Manner of holding Elections.\" Both courts concluded that a redistricting map violates the First Amendment if the challengers demonstrate that (1) the map drawers specifically intended to disadvantage voters based on their party affiliation and voting history; (2)\u00c2\u00a0the map burdened voters' representational and associational rights; and (3) the map drawers' intent to burden certain voters caused the \"adverse impact.\" Under a provision of federal law providing for direct appeals to the Supreme Court in cases challenging the constitutionality of redistricting maps, North Carolina legislators and Maryland officials appealed to the Supreme Court.", "Supreme Court's Decision: In Rucho , the Supreme Court held that, based on the political question doctrine, federal courts lack jurisdiction to resolve claims of unconstitutional partisan gerrymandering, vacating and remanding the North Carolina and Maryland lower court rulings with instructions to dismiss for lack of jurisdiction. In an opinion written by Chief Justice Roberts, the Court began by addressing the Framers' views on gerrymandering. According to the majority opinion, at the time of the Constitution's drafting and ratification, the Framers were well familiar with the controversies surrounding the practice of partisan gerrymandering. \"At no point\" during the Framers' debates, the Court observed, \"was there a suggestion that the federal courts had a role to play.\" Instead, the Chief Justice viewed the Elections Clause as a purposeful assignment of disputes over partisan gerrymandering to the state legislatures, subject to a check by the U.S. Congress. In this vein, the Court noted that Congress has in fact exercised its power under the Elections Clause to address partisan gerrymandering on several occasions, such as by enacting laws to require single-member and compact districts.", "Nonetheless, the Court acknowledged that there are two areas relating to redistricting where the Court has a unique role in policing the states\u00e2\u0080\u0094claims relating to (1) inequality of population among districts or \"one-person, one-vote\" and (2) racial gerrymandering. However, the Court distinguished those claims from claims of unconstitutional partisan gerrymandering, reasoning that while judicially discernible and manageable standards exist for adjudicating claims relating to one-person, one-vote and racial gerrymandering, partisan gerrymandering cases \"have proved far more difficult to adjudicate.\" This difficulty stems from the fact, the Court explained, that while it is illegal for a redistricting map to violate the one-person, one-vote principle or to engage in racial discrimination, at least some degree of partisan influence in the redistricting process is inevitable and, as the Court has recognized, permissible. Hence, according to the Court, the challenge has been to identify a standard for determining how much partisan gerrymandering is \"too much.\"", "The Chief Justice's opinion focused on three concerns regarding what he viewed as the central argument for federal adjudication of partisan gerrymandering claims: \"an instinct\" that if a political party garners a certain share of a statewide vote, as a matter of fairness, courts need to ensure that the party also holds a proportional number of seats in the legislature. First, the Court stated that this expectation \"is based on a norm that does not exist in our electoral system.\" For example, noting her extensive experience in state and local politics, the Court quoted Justice O'Connor's 1986 concurrence that maintained that \"[t]he opportunity to control the drawing of electoral boundaries through the legislative process of apportionment is a critical and traditional part of politics in the United States.\" Furthermore, the Rucho Court observed that the nation's long history of states electing their congressional representatives through \"general ticket\" or at-large elections typically resulted in single-party congressional delegations. As a result, the Chief Justice explained, for an extended period of American history, a party could achieve nearly half of the statewide vote, but not hold a single seat in the House of Representatives, suggesting that proportional representation was not a value protected by the Constitution. Second, even if proportional representation were a constitutional right, determining how much representation political parties \"deserve,\" based on each party's share of the vote, would require courts to allocate political power, a power to which courts are, in the view of the majority, not \"equipped\" to exercise. For the Court, resolving questions of fairness presents \"basic questions that are political, not legal.\" Third, even if a court could establish a standard of fairness, the Court determined that there is no discernible and manageable standard for identifying when the amount of political gerrymandering in a redistricting map meets the threshold of unconstitutionality.", "In so concluding, the Supreme Court rejected the tests that the district courts adopted in ascertaining unconstitutional partisan gerrymandering in North Carolina and Maryland. As to the North Carolina case, the Court criticized the \"predominant intent\" prong of the test adopted by the district court in holding the map in violation of the Equal Protection Clause. As the Chief Justice explained, although this inquiry is proper in the context of racial gerrymandering claims because drawing district lines based predominantly on race is inherently suspect, it does not apply in the context of partisan gerrymandering where some degree of political influence is permissible. Moreover, responding to the aspect of the test requiring challengers to demonstrate that partisan vote dilution \"is likely to persist,\" the Court concluded that it would require courts to \"forecast with unspecified certainty whether a prospective winner will have a margin of victory sufficient to permit him to ignore the supporters of his defeated opponent.\" That is, according to the Court, judges under this test would \"not only have to pick the winner\u00e2\u0080\u0094they have to beat the point spread.\" The Court also disapproved of the test the district courts adopted in both the North Carolina and Maryland cases in holding that the maps violated the First Amendment's guarantee of freedom to associate. As a threshold matter, the Court determined that the subject redistricting plans do not facially restrict speech, association, or any other First Amendment guarantees, as voters in diluted districts remain free to associate and speak on political matters. More directly, the Court concluded that under the premise that partisan gerrymandering constitutes retaliation because of an individual's political views, \"any level of partisanship in districting would constitute an infringement of their First Amendment rights.\" As a consequence, the Court viewed the First Amendment standard as failing to provide a manageable approach for determining when partisan activity has gone too far. In addition, the Court rejected North Carolina's reliance on Article I of the Constitution as the basis to invalidate a redistricting map, concluding that the text of the Constitution provided no enforceable limit for considering partisan gerrymandering claims.", "Nonetheless, Chief Justice Roberts acknowledged that excessive partisan gerrymandering \"reasonably seem[s] unjust,\" stressing that the ruling \"does not condone\" the practice. However, he maintained that the Court cannot address the problem simply \"because it must,\" viewing any solutions to extreme partisan gerrymandering to lie with Congress and the states, not the courts. Characterizing the dissent and the challengers' request that the Court ascertain a standard for adjudication as seeking \"an unprecedented expansion of judicial power,\" the Chief Justice cautioned that such an \"intervention would be unlimited in scope and duration .\u00c2\u00a0.\u00c2\u00a0. recur[ring] over and over again around the country with each new round of redistricting.\" Instead, he observed that many states have constitutional provisions and laws providing standards for state courts to address excessive partisan gerrymandering, which have been invoked with successful results. Furthermore, citing examples of past and pending federal legislation, the Court reiterated that \"the Framers gave Congress the power to do something about partisan gerrymandering in the Elections Clause.\"", "Dissenting Opinion: Justice Kagan wrote a dissent on behalf of four Justices arguing that the Court has the power to establish a standard for adjudicating unconstitutionally excessive partisan gerrymandering and that its \"abdication\" in Rucho \"may irreparably damage our system of government.\" According to the dissent, the standards proposed by the challengers and the lower courts are not \"unsupported and out-of-date musings about the unpredictability of the American voter,\" but instead are \"evidence-based, data-based, statistics-based.\" Moreover, responding to the Court's suggestion that Congress and the states have the power to ameliorate excessive partisan gerrymandering, the dissent maintained that the prospects for legislative reform are poor because the legislators who currently hold power as a result of partisan gerrymandering are unlikely to promote change. Instead, for the dissent, the solution to what they viewed as a crisis of the political process is a means to challenge extreme partisan gerrymandering outside of that process, through the unelected federal judiciary.", "Implications for Congress: As a result of Rucho , federal courts lack subject-matter jurisdiction to resolve claims of unconstitutional partisan gerrymandering. However, Rucho suggests that Congress and the states may have the power to address extreme partisan gerrymandering should they so choose. For example, as observed by the Court, several bills that take various approaches to address partisan gerrymandering have been introduced in the 116th Congress. For example, H.R. 1 , the For the People Act of 2019, which passed the House of Representatives on March 8, 2019, would eliminate legislatures from the redistricting process and require each state to establish a nonpartisan, independent congressional redistricting commission, in accordance with certain criteria. H.R. 44 , the Coretta Scott King Mid-Decade Redistricting Prohibition Act of 2019, would prohibit states from carrying out more than one congressional redistricting following a decennial census and apportionment, unless a state is ordered by a court to do so in order to comply with the Constitution or to enforce the Voting Rights Act of 1965. (At least one scholar has argued that limiting redistricting to once per decade renders it \"less likely that redistricting will occur under conditions favoring partisan gerrymandering.\") H.R. 131 , the Redistricting Transparency Act of 2019, would, based on the view that public oversight of redistricting may lessen partisan influence in the process, require state congressional redistricting entities to establish and maintain a public internet site and conduct redistricting under procedures that provide opportunities for public participation. Notably, the Court in Rucho specifically stated that it expressed \"no view\" on any pending proposals, but observed \"that the avenue for reform established by the Framers, and used by Congress in the past, remains open.\"", "With regard to the states, Rucho does not preclude state courts from considering such claims under applicable state constitutional provisions. For example, in 2015, the Florida Supreme Court invalidated a Florida congressional redistricting map as violating a state constitutional provision addressing partisan gerrymandering. Similarly, in 2018, the Pennsylvania Supreme Court struck down the state's congressional redistricting map under a Pennsylvania constitutional provision. Looking ahead, as a result of Rucho , such state remedies, coupled with any congressional action, will likely be the primary means for regulating excessive partisan influence in the redistricting process."], "subsections": []}]}, {"section_title": "First Amendment", "paragraphs": [], "subsections": [{"section_title": "Religious Displays: American Legion v. American Humanist Association242", "paragraphs": ["In American Legion v. American Humanist Association , the Supreme Court held that the Bladensburg Peace Cross, a public World War I memorial in the form of a Latin cross, did not violate the First Amendment's Establishment Clause. A divided Court also limited the applicability of Lemon v. Kurtzman , a long-standing\u00e2\u0080\u0094but often-questioned \u00e2\u0080\u0094precedent that had previously supplied the primary standard for evaluating Establishment Clause claims. However, the separate opinions from the Court gave rise to a number of significant questions. In particular, there was no single majority opinion agreeing on what test should apply in future Establishment Clause claims. Further, the Court left open the possibility that the Lemon test, and the specific considerations it suggests courts should take into account, may continue to govern certain types of Establishment Clause challenges.", "Background: The First Amendment's Establishment Clause provides that the government \"shall make no law respecting an establishment of religion.\" The Court has long interpreted this requirement to require the government to be \"neutral\" toward religion\u00e2\u0080\u0094but over the years, the Supreme Court has employed a variety of different inquiries to determine whether challenged government practices are sufficiently neutral. In Lemon , decided in 1971, the Court synthesized its prior Establishment Clause decisions into a three-part test, saying that to be considered constitutional, government action (1) \"must have a secular legislative purpose\"; (2) must have a \"principal or primary effect . . . that neither advances nor inhibits religion\"; and (3) \"must not foster an excessive government entanglement with religion.\"", "However, the Court has not always applied the Lemon test to analyze Establishment Clause challenges. For instance, in cases evaluating the constitutionality of government-sponsored prayer before legislative sessions, the Court has asked whether the disputed prayer practice \"is supported by this country's history and tradition.\" The Court has also adopted variations on Lemon , most notably using an \"endorsement\" test that asks \"whether the challenged governmental practice either has the purpose or effect of 'endorsing' religion.\" Thus, in 2018, Justice Thomas said that the Court's \"Establishment Clause jurisprudence is in disarray.\" Justice Thomas and other Justices have argued that the Court should abandon Lemon and instead adopt a single approach to interpreting the Clause\u00e2\u0080\u0094one that can be applied consistently.", "The Court's divergent approaches to evaluating Establishment Clause claims were apparent in two cases, issued on the same day in 2005, that involved government-sponsored displays containing religious symbols. In the first case, McCreary County v. ACLU , the Court applied the Lemon test and held that Ten Commandments displays in two Kentucky courthouses likely violated the Establishment Clause. In the second, Van Orden v. Perry , a plurality of the Court argued that like legislative prayers, religious displays should be evaluated primarily by reference to \"our Nation's history.\" Justice Breyer concurred in the Court's judgment in Van Orden , providing the fifth vote to uphold a Ten Commandments display on the grounds of the Texas State Capitol. Justice Breyer stated that that while he believed the particular monument did \" satisfy [the] Court ' s more formal Establishment Clause tests, \" including Lemon , his view of the case was also driven by a number of other factors, including the monument ' s history and physical setting. In particular, he emphasized that the monument had gone legally unchallenged for 40 years . Under the circumstances, Justice Breyer argued that removing or altering the monument would likely be \"divisive\" in a way that the monument itself was not, exhibiting \"a hostility toward religion that has no place in our Establishment Clause traditions.\"", "The plaintiffs in American Legion argued that Maryland violated the Establishment Clause by maintaining a war memorial known as the Bladensburg Peace Cross. The monument is a 32-foot Latin cross that sits on a large base containing a plaque with the names of 49 Prince George's County soldiers who died in World War I. The Fourth Circuit had agreed with the challengers and held that after looking to the Lemon test and giving \"due consideration\" to the \"factors\" set forth in Justice Breyer's Van Orden concurrence, the memorial violated the First Amendment.", "Supreme Court's Decision: The Supreme Court reversed the Fourth Circuit's decision. But while seven Justices ultimately approved of the Peace Cross, they did so in six different opinions, reflecting disagreement about how, exactly, to resolve the case. Justice Alito wrote the opinion for the American Legion Court, although certain portions of that opinion represented only a plurality. Writing for five members of the Court, Justice Alito's majority opinion relied on some of the factors highlighted by Justice Breyer's concurring opinion in Van Orden \u00e2\u0080\u0094namely, the fact that this particular monument had \"stood undisturbed for nearly a century\" and had \"acquired historical importance\" to the community. The Court acknowledged that the cross is a Christian symbol, but viewed the symbol as taking on \"an added secular meaning when used in World War I memorials.\" Under these circumstances, the Court concluded that requiring the state to \"destroy[] or defac[e]\" the Peace Cross \"would not be neutral\" with respect to religion \"and would not further the ideals of respect and tolerance embodied in the First Amendment.\"", "Concurring and Dissenting Opinions: A different majority of Justices voted to limit the applicability of the Lemon test\u00e2\u0080\u0094although no five Justices agreed just how far to limit Lemon . Justice Alito, writing for a four-Justice plurality, suggested that \"longstanding monuments, symbols, and practices\" should not be evaluated under Lemon , but should instead be considered constitutional so long as they \"follow in\" a historical \"tradition\" of religious accommodation. Justices Thomas and Gorsuch wrote separate concurrences disapproving of Lemon more generally. Justice Thomas argued that the Court should \"overrule the Lemon test in all contexts\" and instead analyze Establishment Clause claims by reference to historical forms of \"coercion.\" Justice Gorsuch viewed Lemon as a \"misadventure,\" expressing concerns about that test and suggesting instead that the Court should look to historical practice and traditions in Establishment Clause challenges. Therefore, it appears that Lemon will no longer be used to assess the constitutionality of \"longstanding monuments, symbols, and practices.\"", "Justice Ginsburg dissented, joined by Justice Sotomayor. She stressed the cross's religious nature, observing that it has become a marker for Christian soldiers' graves \"precisely because\" the cross symbolizes \"sectarian beliefs.\" Her analysis did not expressly invoke the three-part Lemon test, but applied the \"endorsement\" test developed from Lemon , asking whether the display conveyed \"a message that religion or a particular religious belief is favored or preferred.\" Looking to the memorial's nature and history, Justice Ginsburg believed that the Peace Cross did convey a message of endorsement. Ultimately, she concluded that by maintaining the monument, the state impermissibly \"elevate[d] Christianity over other faiths, and religion over nonreligion.\"", "Implications for Congress: While American Legion was ostensibly concerned with the constitutionality of a single monument, the Court's decision raises a number of questions regarding future interpretations of the Establishment Clause. First, while the plurality opinion said that \"monuments, symbols, and practices with a longstanding history\" should now be evaluated by reference to historical practices rather than the Lemon test, it is not clear what qualifies as a long-standing symbol or practice. Further, it is unclear whether the historical practice test will apply outside of the context of challenges to monuments or legislative prayer . Indeed, two of the Justices who joined the plurality opinion\u00e2\u0080\u0094Justices Breyer and Kavanaugh\u00e2\u0080\u0094wrote separate opinions suggesting that other factors in addition to historical practice may be relevant to evaluating Establishment Clause challenges. More broadly, however, regardless of the particular test employed, the opinions in American Legion suggest that the Roberts Court may be adopting a view of the Establishment Clause that is more accommodating of government sponsorship of religious displays and practices\u00e2\u0080\u0094even where those practices are aligned with a particular religion. Given that a majority of Justices agreed in American Legion that at least with respect to government use of religious symbols, \"[t]he passage of time gives rise to a strong presumption of constitutionality,\" it seems likely that courts will view Establishment Clause challenges to long-standing monuments with significant skepticism moving forward."], "subsections": []}]}, {"section_title": "Separation of Powers", "paragraphs": [], "subsections": [{"section_title": "Nondelegation Doctrine: Gundy v. United States289", "paragraphs": ["In affirming the petitioner's conviction for violating the Sex Offender Registration and Notification Act (SORNA), a divided Supreme Court in Gundy v. United States upheld the constitutionality of Congress's delegated authority to the U.S. Attorney General to apply registration requirements to offenders convicted prior to SORNA's enactment. In a plurality opinion written on behalf of four Justices, Justice Kagan concluded that SORNA's delegation \"easily passes constitutional muster\" and was \"distinctively small-bore\" when compared to the other broad delegations the Court has upheld since 1935. Justice Gorsuch's dissent, joined by Chief Justice Roberts and Justice Thomas, highlighted an emerging split on the Court's approach in reviewing authority Congress delegates to another branch of government. Providing the fifth vote to affirm Gundy's conviction, Justice Alito concurred in the judgment only, declining to join Justice Kagan's opinion and indicating his willingness to rethink the Court's approach to the nondelegation doctrine, which seeks to bar Congress from delegating its legislative powers to other branches of government. After Gundy , whether the Court revives the long-dormant nondelegation doctrine likely depends on Justice Kavanaugh's views on the doctrine. (Justice Kavanaugh, who was not confirmed to the Court at the time of oral arguments, took no part in the Gundy decision. )", "Background: Article I, Section 1 of the Constitution provides that \"[a]ll legislative Powers herein granted\" will be vested in the United States Congress. The Supreme Court has held that the \"text in [Article I's Vesting Clause] permits no delegation of those powers.\" The nondelegation doctrine, as crafted by the courts, exists mainly to prevent Congress from ceding its legislative power to other entities and, in so doing, maintain the separation of powers among the three branches of government. At the same time, the Court has recognized that the nondelegation doctrine does not require complete separation of the three branches of government, permitting Congress to delegate certain powers to implement and enforce the law. To determine whether a delegation of authority is constitutional, the Court has required that Congress lay out an \"intelligible principle\" to guide the delegee's discretion and constrain its authority. Under the lenient \"intelligible principle\" standard that has its origins in the 1928 decision J.W. Hampton, Jr., & Co. v. United States , the Court has relied on the nondelegation doctrine twice, in 1935, to invalidate two provisions in the National Industrial Recovery Act delegating authority to the President, rejecting every nondelegation challenge thereafter.", "Gundy , the latest nondelegation challenge at the Supreme Court, centered on the application of registration requirements under SORNA to pre-act offenders. Enacted as Title I of the Adam Walsh Child Protection and Safety Act of 2006, SORNA's stated purpose is \"to protect the public from sex offenders and offenders against children\" by establishing a comprehensive national registration system of offenders. To this end, SORNA requires convicted sex offenders to register in each state where the offender resides, is employed, or is a student. Section 20913(d) of SORNA authorizes the Attorney General to \"specify the applicability\" of the registration requirements \"to sex offenders convicted before the enactment\" of the act and to \"prescribe rules for the registration of any such sex offenders\" and for other offenders unable to comply with the initial registration requirements. As decided by the Court in Reynolds v. United States , the law's registration requirements did not apply to pre-SORNA offenders until the Attorney General so specified. Accordingly, in a series of interim and final rules and guidance documents issued between 2007 and 2011, the Attorney General specified that SORNA's requirements apply to all sex offenders, including sex offenders convicted before the statute's enactment.", "Before the enactment of SORNA, petitioner Herman Gundy was convicted of a sex offense in Maryland. After serving his sentence, Gundy traveled from Maryland to New York. Subsequently, he was arrested and convicted for failing to register as a sex offender in New York under SORNA. In his petition to the Supreme Court, Gundy argued, among other things, that SORNA's grant of \"undirected discretion\" to the Attorney General to decide whether to apply the statute to pre-SORNA offenders is an unconstitutional delegation of legislative power to the executive branch.", "Supreme Court's Decision: In Gundy, Justice Kagan announced the judgment of the Court, affirming the lower court, and authored a plurality opinion joined by Justices Ginsburg, Breyer, and Sotomayor that followed the modern approach toward the nondelegation doctrine, rejecting Gundy's argument that Congress unconstitutionally delegated \"quintessentially legislative powers\" to the Attorney General to decide whether to apply the statute to pre-SORNA offenders. Relying on Reynolds , Justice Kagan read SORNA as requiring the Attorney General to \"apply SORNA's registration requirements as soon as feasible to offenders convicted before the statute's enactment.\" Based on this interpretation, the plurality decided that Congress did not violate the nondelegation doctrine based on the Court's \"long established law\" in upholding broad delegations. The plurality explained that under the intelligible principle standard, so long as Congress has made clear the \"general policy\" and boundaries of the delegation, such broad delegations are permissible. Compared to very broad delegations upheld in the past (e.g., delegations to agencies to regulate in the \"public's interest\"), the plurality concluded that the Attorney General's \"temporary authority\" to delay the application of SORNA's registration requirements to pre-act offenders due to feasibility concerns \"falls well within constitutional bounds.\"", "Dissenting and Concurring Opinions: In contrast, in his dissent, Justice Gorsuch, joined by Chief Justice Roberts and Justice Thomas, viewed the plain text of the delegation as providing the Attorney General limitless and \"vast\" discretion and \"free rein\" to impose (or not) selected registration requirements on pre-act offenders. In concluding the delegation to be unconstitutional, Justice Gorsuch distinguished his analysis from the plurality and the Court's precedents by focusing on the separation-of-powers principles that underpin the nondelegation doctrine. In the dissent's view, the nondelegation doctrine used to serve a vital role in maintaining the separation of powers among the branches of government by assuring that elected Members of Congress fulfill their constitutional lawmaking duties. Justice Gorsuch warned that delegating Congress's constitutional legislative duties to the executive branch bypasses the bicameral legislative process, resulting in laws that fail to protect minority interests or provide political accountability or fair notice. Consequently, the dissent faulted the \"evolving intelligible principle\" standard and increasingly broad delegations as pushing the nondelegation doctrine further from its separation-of-powers roots. Arguing for a more robust review of congressional delegations, Justice Gorsuch outlined several \"guiding principles.\" According to the dissent, Congress could permissibly delegate (1) authority to another branch of government to \"fill up the details\" of Congress's policies regulating private conduct; (2)\u00c2\u00a0fact-finding to the executive branch as a condition to applying legislative policy; or (3) nonlegislative responsibilities that are within the scope of another branch of government's vested powers (e.g., assign foreign affairs powers that are constitutionally vested in the President).", "Applying these \"traditional\" separation-of-powers tests in lieu of the plurality's \"intelligible principle\" approach, Justice Gorsuch concluded that SORNA's delegation was an unconstitutional breach of the separation between the legislative and executive branches. He argued that SORNA lacked a \"single policy decision concerning pre-Act offenders\" and delegated more than the power to fill the details to the Attorney General. The dissent disputed the plurality's comparison of SORNA's delegation to other broad delegations that the Court has upheld, reasoning that \"there isn't . . . a single other case where we have upheld executive authority over matters like these on the ground they constitute mere 'details.'\" Further, he asserted that the delegation is neither conditional legislation subject to executive fact-finding nor a delegation of powers vested in the executive branch because determining the rights and duties of citizens is \"quintessentially legislative power.\" In \"a future case with a full panel,\" Justice Gorsuch hoped that the Court would recognize that \"while Congress can enlist considerable assistance from the executive branch in filling up details and finding facts, it may never hand off to the nation's chief prosecutor the power to write his own criminal code. That 'is delegation running riot.'\"", "Although Justice Alito voiced \"support [for the] effort\" of the dissent in rethinking the Court's approach to the nondelegation doctrine, he opted to not join that effort without the support of the majority of the Court. As a result, Justice Alito concurred in the judgment of the Court in affirming the petitioner's conviction. In his brief, five-sentence concurring opinion, Justice Alito viewed a \"discernable standard [in SORNA's delegation] that is adequate under the approach this Court has taken for many years.\"", "Implications for Congress: The divided opinions in Gundy signal a potential shift in the Court's approach in nondelegation challenges and potential resurrection of the nondelegation doctrine. With three Justices and the Chief Justice in Gundy willing to reconsider or redefine the Court's \"intelligible principle\" standard, Justice Kavanaugh, who did not participate in Gundy , appears likely to be the critical vote to break the tie in a future case considering a revitalization of the nondelegation principle.", "If the Court were to replace the modern intelligible principle approach, new challenges may arise in determining when Congress crosses the nondelegation line. A more restrictive nondelegation standard could invite constitutional challenges to many other statutory provisions that delegate broad authority and discretion to the executive branch to issue and enforce regulations. The significance of these challenges was the subject of a debate between the Gundy plurality and dissent. Justice Kagan cautioned that striking down SORNA's delegation as unconstitutional would make most of Congress's delegations to the executive branch unconstitutional because Congress relies on broad delegations to executive agencies to implement its policies. However, Justice Gorsuch countered that \"respecting the separation of powers\" does not prohibit Congress from authorizing the executive branch to fill in details, find facts that trigger applicable statutory requirements, or exercise nonlegislative powers.", "A future case may provide the Court with the opportunity to provide guidance to the courts and Congress on how precise Congress must be in its delegation and how best to draw the line between permissible and impermissible delegations. For now, however, the current intelligible principle standard in use since 1935 survives while the nondelegation doctrine continues to remain \"moribund.\""], "subsections": []}]}]}}
{"id": "R46302", "title": "Tracking China\u2019s Global Economic Activities: Data Challenges and Issues for Congress ", "released_date": "2020-04-02T00:00:00", "summary": ["The People's Republic of China (PRC or China) has significantly increased its overseas investments since launching its \"Go Global Strategy\" in 1999 in an effort to support the overseas expansion of Chinese firms and make them more globally competitive. Since then, these firms\u00e2\u0080\u0094many of which are closely tied to the Chinese government\u00e2\u0080\u0094have acquired foreign assets and capabilities and pledged billions of dollars to develop infrastructure abroad. As a result, many in Congress and the Trump Administration are focusing on the critical implications of China's growing global economic reach for U.S. economic and geopolitical strategic interests.", "Some analysts see these Chinese activities as primarily commercial in nature. Others contend that the surge in global economic activity is also part of a concerted effort by China's leaders to bolster China's position as a global power and ensure support for their foreign policy objectives. There is also growing concern about the terms of China's economic engagement, particularly over the ways that Chinese lending may be creating unsustainable debt burdens for some countries and over how much of China's lending is tied to commercial projects and Chinese state firms that benefit from the investment.", "A major challenge to understanding the implications of China's growing global economic reach is the critical gap in the availability and accuracy of data and information. Most notable is the fact that no comprehensive, standardized, or authoritative data\u00e2\u0080\u0094from either the Chinese government or international organizations\u00e2\u0080\u0094are available on Chinese overseas economic activities. Given the complexity and multifaceted nature of the projects in which Chinese entities are involved, attempts to assess the size and scope of these projects are rough estimates, at best, and should be regarded as such. Figures cited in news articles, think-tank reports, and academic studies may not be entirely accurate and should be interpreted with caution. For instance, many publicly and privately available unofficial \"trackers\"\u00e2\u0080\u0094from which these data are often sourced\u00e2\u0080\u0094are based on initial public announcements of Chinese overseas projects, which may differ significantly from actual capital flows because such projects may evolve or may never come to fruition.", "In the absence of accurate and sufficient data, Members of Congress may seek ways to improve their own understanding by supporting U.S. and international efforts to better track, analyze, and publicize actual Chinese investment, construction, assistance, and lending activities. Congress, for example, may direct agencies within the executive branch to develop a whole-of-government approach to better assess the global economic activities of U.S., Chinese, and other major actors. Additionally, Congress could require these agencies to study the adequacy of data and information recording, collection, disclosure, reporting, and analysis at the U.S. and international levels. Better information could facilitate clearer, deeper, and better informed assessment of such activities and their (1) impact on U.S. interests and (2) ramifications for the norms and rules of the global economic system\u00e2\u0080\u0094a system whose chief architect and dominant player to date largely has been the United States."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Background", "paragraphs": ["The People's Republic of China (PRC or China) has significantly increased its overseas investments since launching its \"Go Global Strategy\" in 1999 in an effort to make Chinese firms more globally competitive and advance domestic economic development ( Figure 1 ). Since then, Chinese firms have acquired foreign assets and pledged billions of dollars to develop infrastructure abroad. China's push overseas has been particularly visible in the Indo-Pacific region, a major focus of China's effort to increase global trade connectivity through the \"Belt and Road Initiative\" (BRI, initially known as \"One Belt, One Road\"), which launched in 2013. However, China's overseas, global economic activities include the purchase, financing, development, and operation of assets and infrastructure across Africa, Asia, Europe, Latin America and the Caribbean, North America, and Oceania. ", "Links to Select Databases on China's Foreign Direct Investment (FDI)", "Many in Congress and the Trump Administration are focusing attention on possible critical implications of China's growing global economic reach for U.S. economic and geopolitical strategic interests. Some analysts view China's activities as largely commercial in nature, following the path that some Western multinational firms forged in the 1980s and 1990s in expanding and integrating into global markets. Others contend that China's activities are ultimately in support of alleged efforts by Beijing to challenge and undermine U.S. global influence.", "This report does not provide figures or estimates of China's global economic activities. Nor is it an in-depth analysis of recent trends and developments. Rather, it provides an overview of select issues and challenges encountered when compiling, interpreting, and analyzing statistics on Chinese investment, construction, financing, and development assistance around the world."], "subsections": []}, {"section_title": "Framing the Debate on China's Global Reach", "paragraphs": ["Economic- and resource-related imperatives play an important role in China's expanding global economic footprint. Analysts see strong domestic economic development as a primary objective for China's leaders for a number of reasons, including those leaders' desire to raise the living standards of the population, dampen social disaffection about economic and other inequities, and sustain regime legitimacy. In addition, China's rapid economic growth has created a domestic appetite for greater resources and technology, as well as for creating markets for Chinese goods\u00e2\u0080\u0094all of which have served as powerful drivers of China's integration into the global economy and enthusiasm for international trade and investment agreements. For example, as China's energy demands have continued to rise, the Chinese government has sought bilateral agreements, oil and gas contracts, scientific and technological cooperation, and de-facto multilateral security arrangements with energy-rich countries, both in its periphery and around the world. Moreover, China's recent relative economic slowdown (in the aftermath of the government-financed boom of the post-global recession years) has created excess capacity and the need to find overseas markets and employment opportunities for its infrastructure and construction sectors. In pursuing commercial opportunities abroad, Chinese firms\u00e2\u0080\u0094many of them state owned\u00e2\u0080\u0094have become global leaders in these sectors (e.g., transport infrastructure, such as ports and high-speed rail).", "Some observers contend that these investment and construction trends may reflect an attempt by China to bolster its position as a global power, gain control of vital sea-lanes and energy-supply routes, secure key supply chains, aggregate control over communications infrastructure and standards, and build up geo-economic leverage to ensure support for its foreign policy objectives. In particular, some U.S. officials have expressed concerns that China's growing international economic engagement goes hand-in-hand with expanding political influence. The seemingly\u00e2\u0080\u0094though debatable\u00e2\u0080\u0094\"no strings attached\" nature and looser terms of Beijing's overseas loans and investments may be attractive to foreign governments wanting swifter, more \"efficient,\" and relatively less intrusive solutions to their development problems than those offered by bilateral and international financial institutions, such as the International Monetary Fund (IMF), World Bank, and Asian Development Bank (ADB). Unlike these institutions, many of the Chinese financial institutions and enterprises involved in China's overseas investment, lending and construction are owned or subsidized by the government. As such, they are not accountable to shareholders, do not generally impose safeguards or international standards related to transparency, human rights, and environmental protection, and can afford short-term losses in pursuit of longer-term, strategic goals.", "Although some analysts and policymakers suggest that Chinese officials and state-owned enterprises (SOEs) appear more comfortable working with undemocratic or authoritarian governments, China's outreach also has extended to the United States, key U.S. allies and partners, and regions where U.S. economic linkages and diplomatic sway have been, until recently, predominant. These developments have led some observers to conclude that Beijing intends to challenge\u00e2\u0080\u0094or is already challenging\u00e2\u0080\u0094U.S. global leadership directly. As a result, some Members of Congress and Administration officials are focusing attention on the critical implications that China's increasing international economic engagements could have for U.S. economic and strategic interests.", "Some observers have sought to compare China's activities to those of the United States. In contrast to China's, however, U.S. global economic engagements have tended to be more diverse and not government-directed or -funded. They have been driven primarily by the U.S. private sector, whose global presence is long-standing and comprehensive."], "subsections": []}, {"section_title": "Data Limitations", "paragraphs": ["A major challenge when researching global investment and construction projects and related loans is the accuracy of the data. While this challenge is not unique to projects involving Chinese players, it is exacerbated by the nature of many Chinese projects and loans, whose terms are not always publicly available or transparent. No comprehensive, standardized, or authoritative data are available on all Chinese overseas economic activities\u00e2\u0080\u0094from either the Chinese government or international organizations. A number of think tanks and private research firms have developed datasets to track investment, loans, and grants by Chinese-owned firms and institutions using commercial databases, news reports, and official government sources, when available ( Appendix A ). These datasets often record the value of projects, loans, and grants when they are publicly announced (e.g., at press conferences). However, many publicly announced projects are never formalized, and if they are, project and loan details may change, and projects may not always come to fruition for various reasons (e.g., changing economic and political conditions, or concerns about sovereignty, debt structure, or environmental impact).", "Despite these limitations, figures derived from such \"data trackers\" often drive the policy debate. Because U.S. policymakers may rely on them to assess the overall scope and magnitude of Chinese activities, it is important to recognize the problems with the data and the limitations of existing databases. While they might be valuable and informative, they may also provide vastly different figures that are not necessarily comparable. For example, for 2015\u00e2\u0080\u0094the most recent year for which complete annual data are available from all major sources\u00e2\u0080\u0094figures on China's investment flows into the United States vary from $2.6 billion (which only includes nonfinancial gross foreign direct investment (FDI) flows and is reported by MOFCOM ) to $16.4 billion (which includes gross announced transaction flows of $100 million or more and is tracked by AEI/Heritage ) ( Figure 2 ). Similarly, China's total outward investment flows for the same year range from $117.9 billion (AEI/Heritage) to $174.4 billion (OECD ) ( Figure 3 and Table 1 ). Comparability issues also arise when trying to differentiate loan, investment, and construction projects that overlap, since datasets only capture a certain type of activity. Various datasets' categorizations may not cover the full range of activity that is taking place.", "China's official foreign direct investment (FDI) statistics are compiled by two government agencies according to different criteria. The Ministry of Commerce of the People's Republic of China (MOFCOM)'s data are based on officially approved investments by nonfinancial institutions\u00e2\u0080\u0094that is, information recorded during the approval process rather than through surveys or questionnaires as in the United States (see textbox below). They are generally separated out by country and industry. The State Administration of Foreign Exchange of the People's Republic of China (SAFE), on the other hand, reports Balance of Payments (BoP) data at the aggregate level. SAFE, in theory, follows IMF guidelines. While both agencies are supposed to reconcile their figures in their annual revisions, discrepancies in the total amounts reported are common and significant.", "Much of China's official outbound FDI also has traditionally been registered in Hong Kong, the former British colony that has been a Special Administrative Region of the PRC since 1997, or in tax havens such as the Cayman Islands or British Virgin Islands. Chinese firms, in particular, are known to use holding companies and offshore vehicles to structure their investments. \"Round-tripping\" (the practice of firms routing themselves funds through localities that offer beneficial tax policies or special incentives), \"trans-shipping\" (the practice of firms routing funds through countries that offer favorable tax policies to later reinvest these funds in third countries), and indirect holdings all make it difficult to track and disaggregate investments accurately. Chinese domestic investors have also been known to rely on these schemes to take advantage of favorable conditions granted only to foreign investors. As the Economist Intelligence Unit notes, \"Chinese statistics record approved projects rather than actual money transfers,\" and \"[c]ompanies often list the initial port of call of their capital, rather than its final destination, thus falsely inflating the importance of stop-over locations.\"", "In addition to data reliability and comparability issues, it is not always possible to determine if an asset or project is wholly or partially owned, financed, built, or operated by a Chinese entity. Thus, the lack of consistent, disaggregated, and detailed information limits the proper assessment of the size, scope, and implications of these activities. Moreover, because major projects generally involve several phases and a sometimes-evolving cast of stakeholders, it is not always possible to distinguish between the phases of acquisition or construction and those of operations\u00e2\u0080\u0094as they are often blended in terms of time and firms involved.", "Many of the overseas infrastructure projects in which Chinese entities are involved\u00e2\u0080\u0094particularly ports\u00e2\u0080\u0094also present distinct challenges not always encountered in the analysis of traditional foreign direct investments (e.g., multinational corporations building a new factory or acquiring an existing domestic firm). In the case of infrastructure, to attract foreign investment and transfer risks to the private sector, it is common for host countries to offer long-term concessions or leases\u00e2\u0080\u0094for both construction and operation. These typically allow the grantee firm the right to use land and facilities (e.g., ports and highways) for a defined period in exchange for providing services. Because these lands and facilities tend to be owned by the host government, the investments can come in the form of use-rights through leases or joint ventures. These challenges, together with the opacity of China's terms and conditions, can limit the ability to assess accurately the extent of Chinese involvement.", "Data availability limitations also may arise since China often finances infrastructure development through its export credit agencies and development banks. China is not a member of the Organization for Economic Cooperation and Development (OECD) or part of its Arrangement on Officially Supported Export Credits, which includes rules on transparency procedures for government-backed export credit financing. The United States, China, and other countries have been working to develop a new set of international rules, but progress reportedly has been limited.", "Finally, some of China's global economic activities are portrayed inaccurately as \"foreign aid\" or \"development assistance.\" While certain aspects may resemble assistance in the conventional sense, they generally do not meet the OECD standards of \"official development assistance\" (ODA). The terms of China's \"ODA-like\" loans are less concessional than those of other major actors such as the United States and Japan, have large commercial elements with economic benefits accruing to Chinese actors, and are rarely government-to-government. Details on specific Chinese deals and overall flows are opaque because the PRC government rarely releases data on any of its lending activities abroad or those of its state firms and entities. China also is not part of the OECD's Development Assistance Committee, which \"monitors development finance flows, reviews and provides guidance on development co-operation policies, promotes sharing of good practices,\" and helps set ODA standards."], "subsections": []}, {"section_title": "Issues and Options for Congress", "paragraphs": ["Data limitations and lack of transparency, combined with the number of unknown variables that drive China's foreign economic policy decision-making processes, can affect how Members of Congress perceive and address the challenges that China's overseas economic activities pose to U.S. and global interests. These limitations also complicate efforts to compare accurately the extent to which China's global economic reach differs from that of the United States. Little consensus exists within the United States and the international community on China's ultimate foreign economic policy goals or what motivates and informs its economic activities abroad\u00e2\u0080\u0094either in general or with regard to specific regions or countries. Debate is ongoing over whether China's global economic engagements have a pragmatic, overarching strategy, or are a series of marginally-related tactical moves to achieve specific economic and political goals. Similarly, some analysts argue that Beijing, through its global economic activities, is trying to supplant the United States as a global power, while others maintain that it is focused mainly on fostering its own national economic development. ", "In the absence of sufficient transparency in China's international economic activities, Members of Congress may seek to support current and new U.S. efforts to better track, analyze, and publicize actual Chinese investment, construction, assistance, and lending activities. Better data and information on China's activities may help U.S. policymakers assess the scope and address key questions over China's international engagements and growing economic role, including:", "How could the United States more accurately assess and respond to increasing competition by China for leverage and influence, both in countries where the United States is seeking to expand its economic and political ties, as well as in those with strong existing U.S. relationships? To what extent are the terms of China's global investments and economic assistance less restrictive than U.S. activities and how does this affect U.S. efforts to promote good governance around the world? What commercial advantages does China's arguably unique approach to global economic engagement provide its companies, how does this affect the ability of U.S. companies to compete for international business, and what policies and agreements should the United States put in place to mitigate these effects? How can the United States expose where China is in violation of the rules and norms of global institutions\u00e2\u0080\u0094particularly where it has or is seeking leadership positions\u00e2\u0080\u0094and use this knowledge to require China to adhere to international norms and condition its investments and assistance on widely accepted best practices? What are the implications for the United States and international financial institutions (IFIs) that often promote good governance when China competes directly as an international lender and may offer less encumbered \"assistance\" in ways that directly undermine U.S. and IFI values and principles? How should the IFIs and the United States respond to this challenge, particularly when China is seeking influence and leadership in both current IFIs and these alternative paths? Should China's leadership role be challenged if it is found to be undermining the goals and principles of the organizations it leads or seeks to lead, including with respect to transparency commitments? How do differences in approach and scale of U.S. and Chinese global economic activities affect global perceptions of U.S. engagement around the world?", "U.S. policymakers could seek to improve their own knowledge base in ways that may enable them to advance U.S. foreign economic interests more effectively, while at the same time encouraging more transparency by China. This could include:", "Collecting, maintaining, and publicizing\u00e2\u0080\u0094to the extent that is possible\u00e2\u0080\u0094a more accurate calculus of actual Chinese economic activities, particularly by tracking investment and assistance that is delivered, as opposed to that which is merely announced (e.g., either unilaterally or by encouraging or requiring greater disclosure through the international financial institutions and WTO). Directing agencies within the executive branch to develop a whole-of-government approach and guidance to better assess the global investment, construction, and lending activities of U.S., Chinese, and other major actors. As part of this effort, the U.S. government could harmonize U.S. programs for gathering information and streamline data centralization. In addition, it could study the adequacy of data and information recording, collection, disclosure, reporting, and analysis at the U.S. and international levels and recommend necessary improvements. Establishing a U.S. statistical office or program tasked with collecting current information on international capital flows and other information related to international investment, public procurement, and export and investment promotion, financing, and insurance by U.S., Chinese, and other major economic actors. Conducting oversight and examining more closely data collection and transparency commitments in various institutions, including the Organization for Economic Co-operation and Development (OECD), International Monetary Fund (IMF), the World Bank, and United Nations Conference on Trade and Development (UNCTAD) on investment, loans, and government procurement to determine if these mechanisms are sufficient and/or are being adhered to. Determining whether the World Trade Organization (WTO) should play a greater role to enhance transparency and set standards for dissemination of investment data through future reforms to key agreements or new agreements on investment. Examining the activities of international and regional organizations to determine if they are sufficient to address emerging data requirements or whether a major U.S. and/or internationally-coordinated effort is required. Supporting U.S. and international efforts to provide training courses, workshops, and technical assistance programs for countries to implement international statistical guidelines and improve comparable data compilation and dissemination practices. Holding hearings on Chinese overseas lending and investment practices.", "The United States could consider a combination of pressure and collaboration to strengthen its economic engagement efforts and encourage China to adopt international best practices. While the success of past efforts has arguably been limited, the United States could continue to:", "Work with other countries and international economic institutions to improve the collection and accuracy of data, address data deficiencies, and harmonize data reporting requirements by China and other major economies. Encourage China to participate more vigorously in adopting or developing rules on export credit financing and related areas, while urging China to sign on to public-private sector good governance initiatives and agreements. Coordinate efforts with other countries to set terms for data transparency and best practices for China to participate in multilateral and country-level donor foreign assistance dialogues and related efforts to prioritize key development goals and coordinate aid efforts in order to create synergies, avoid duplication and tied aid, and maximize each donor's strengths. Offer to work collaboratively with China\u00e2\u0080\u0094either bilaterally or through multilateral fora\u00e2\u0080\u0094to more clearly differentiate its official grant-based aid from its subsidization of trade and commerce credit; monitor the effectiveness of its aid strategies; harmonize aid reporting with other donor governments; and develop best practices in support of transparency and accountability.", "Appendix A. Databases and Resources", "Appendix B. China's FDI in the United States"], "subsections": []}]}}
{"id": "R46237", "title": "The 2020 Census: Frequently Asked Questions", "released_date": "2020-02-21T00:00:00", "summary": ["April 1, 2020, will mark the official date of the 24 th U.S. decennial census. Mandated by the Constitution and federal law, the census is considered a cornerstone of the nation's representative democracy. Nevertheless, an enumeration that is complete and accurate is difficult to achieve. Among other challenges, the census is often misunderstood, mischaracterized, feared, or avoided. This report addresses common questions concerning the 2020 census. The report is intended to provide information about the census, including clarifying various aspects of the census process. Among the topics covered are", "the origin and purpose of the census; the dates of key census activities; what the Census Bureau has done to promote the enumeration and gain cooperation with it, such as background research on hard-to-count groups and areas, and outreach to them and the broader public through a $500 million communications strategy that includes paid advertising; what basic data the census will collect, largely about how many people live in each household; each person's sex, age, birthdate, race, Hispanic or non-Hispanic ethnicity, and relationship to the person filling out the census form; and whether the housing unit is owned or rented; what information, the Census Bureau has explained, the census never collects, including Social Security numbers, bank or credit card account information, money, or anything on behalf of a political party; why people who consider themselves to be of Middle Eastern or North African race or ethnicity will not be able to report themselves as such on the census questionnaire; clarification that the census will not include a citizenship, nationality, immigration, or other related question; how the Census Bureau will collect detailed socioeconomic and housing data separately from the census; clarification that people have several different options for answering the census\u00e2\u0080\u0094online, on paper, or by telephone\u00e2\u0080\u0094even though online responses are officially most encouraged; language support for the census, including online questionnaires in English and 12 non-English languages, Census Questionnaire Assistance by telephone in the same languages and through a telecommunications device for the deaf, and language guides in 59 non-English languages that will be available in video, standard and large print, braille, and American Sign Language; legal requirement to answer the census and possible $5,000 penalty for nonresponse or false answers; clarification that people must respond to the 2020 census even if they participated in the 2018 or 2019 census tests; the process for updating the Master Address File, the basis for contacting the population about the start of the census and following up with nonrespondents; how and when people can become employed as temporary 2020 census workers, what the requirements are for being hired, and what this work can offer to employees; how the public can identify census workers to be sure that they are legitimate; and legal and cybersecurity protections for confidential census information."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "1. What is a \"census\"?", "paragraphs": ["A census, as distinguished from a survey, is intended to be a complete count of the population. A scientifically designed and conducted survey covers a sample of the population, and the results are generalizable to the whole population. "], "subsections": []}, {"section_title": "2. Why is a census necessary?", "paragraphs": ["The U.S. decennial census is, foremost, a constitutional requirement. The Enumeration Clause of the Constitution (Article I, Section 2, clause 3, as modified by Section 2 of the Fourteenth Amendment) mandates \"counting the whole number of persons in each State\" every 10 years in order to apportion seats in the House of Representatives. The first census occurred in 1790; 2020 marks the 24 th time the national count has taken place.", "The modern census is important for more than House apportionment. Decennial census data are used for within-state redistricting\u00e2\u0080\u0094the redrawing of legislative districts. Decennial census and related data are used in certain formulas that determine states' and localities' annual allocations of federal funds, estimated by the Census Bureau as of FY2015 at $689.3 billion and by an academic researcher as of FY2017 at $1.5 trillion. The decennial counts also are the foundation for estimates of current population size between censuses and projections of future size. Businesses, nonprofit organizations, researchers, and all levels of government are steady consumers of decennial and related data collected by the Census Bureau."], "subsections": []}, {"section_title": "3. When will the census happen?", "paragraphs": ["April 1, 2020, is the official Census Day. The count starts before, and census activities continue beyond, April 1, however. On January 21, 2020, the Census Bureau began the enumeration by counting the population in remote Toksook Bay, Alaska. The bureau is to start making in-person visits to nonrespondents in May 2020. By law, the bureau must provide the official numbers for House apportionment to the President no later than December 31, 2020. Also by law, states that requested 2020 population counts for, as examples, American Indian areas, counties, cities, towns, census tracts, census block groups, census blocks, and \"state-specified congressional, legislative, and voting districts,\" must receive the data no later than March 31, 2021. The final design of the file containing these data remains to be specified, but the file will include data on \"voting age, race, ethnicity, occupancy status, and (new for the 2020 Census) group quarters.\" The rollout of other census products is scheduled to continue until 2023."], "subsections": []}, {"section_title": "4. What has the Census Bureau done to promote awareness of the census and build support for it?", "paragraphs": [], "subsections": [{"section_title": "The Census Barriers, Attitudes, and Motivators Study", "paragraphs": ["The Census Bureau has researched ways to engage the people who likely will be hardest to count in 2020. For example, the Census Barriers, Attitudes, and Motivators Study (CBAMS), also called the \"2020 Census Planning Survey,\" was conducted from February 20 through April 17, 2018, with a nationwide sample of 50,000 households. It covered, according to the bureau, \"a range of topics related to census participation and completion.\" Respondents could complete the survey in English or Spanish, online or by mail. \"Approximately 17,500 people responded to the survey, which was then weighted to be representative of all householders in the United States ages 18 and older.\" The bureau focused on differences in responses \"across race, age, gender, education, and country of birth.\" Qualitative information gathered from 42 focus groups in 14 locations nationwide from March 14, 2018, through April 19, 2018, supplemented the survey results. The bureau reported that the use of focus groups was \"designed to help the research team understand the attitudes of small demographic groups or groups that were otherwise difficult to reach with the survey.\" The \"chief barrier\" to 2020 census participation identified in the survey and the focus groups was \"a lack of understanding of the purpose and process of the census.\" The focus groups showed this lack to be \"associated with several negative attitudes toward the census, including apathy, privacy concerns, fear of repercussions, and general distrust of government.\" The survey results indicated that \"certain demographic characteristics, including low levels of education, being young, and being of racial or ethnic minority groups,\" were related to \"low levels of intent\" to respond to the 2020 census. The survey and the qualitative findings, however, \"revealed common motivators\" for answering the census. Despite \"important differences\" among demographic groups, \"funding for public services\u00e2\u0080\u0094such as hospitals, schools, and roads\u00e2\u0080\u0094is a key motivator across groups.\" The bureau observed that respondents resembling the people in the focus groups, especially, might understand \"the importance and purpose of the census if they make the connection between completing a census form and the possibility of an increase in funding or support\" for their communities."], "subsections": []}, {"section_title": "Communications Strategy", "paragraphs": ["The bureau used information such as gained from CBAMS to inform its $500 million communications strategy, developed by the bureau and its communications contractor, VMLY&R."], "subsections": [{"section_title": "Advertising", "paragraphs": ["As the bureau has explained, VMLY&R includes \"multicultural advertising agencies, seasoned in reaching diverse audiences.\" An advertising campaign \"in English and 12 other languages\" will be part of the communications strategy. The languages are Arabic, Chinese (Mandarin and Cantonese), French, Haitian Creole, Japanese, Korean, Polish, Portuguese, Russian, Spanish, Tagalog, and Vietnamese. As discussed under question 11, below, online questionnaires are to be available in the same languages. The bureau's schedule calls for paid advertising to begin running in January 2020, \"across multiple platforms, including print and digital outlets, television and radio, billboards,\" and ads \"at transit stations, grocery stores, and movie theaters.\" The two largest shares of the total paid media campaign budget are 39.0% for television and 29.1% for digital media. The campaign is expected to reach \"99% of all households\" nationwide, \"particularly in multicultural and hard-to-count populations.\""], "subsections": []}, {"section_title": "The Partnership Program", "paragraphs": ["Another part of the communications strategy is the partnership program, which, in the bureau's explanation, \"integrates two essential programs.\" The Community Partnership Engagement Program \"employs the strengths of tribal, state, and local governments, as well as community-based organizations, faith-based organizations, schools, media, businesses, social services, ethnic organizations, and others.\" Much of the community partnership work is being \"conducted by partnership specialists who are employed in the field leading up to and during\" the census. The National Partnership Program \"builds and strengthens relationships with businesses, industries and organizations with national reach.\" The two programs \"are intended to be complementary\" and draw on \"the expertise of various Census Bureau employees to help maximize\" census participation.", "The community partnership effort has, among other goals, the formation of Complete Count Committees (CCCs) in all 50 states, tribal areas, the District of Columbia, Puerto Rico, and cities with at least 200,000 residents. A CCC, according to the Census Bureau, comprises \"a broad spectrum of government and community leaders from education, business, healthcare,\" and other organizations. CCC members are to develop census awareness and encourage cooperation with the census \"based upon their knowledge of the local community.\" Still being formed, CCCs are \"identifying budget resources and establishing local work plans\" for implementation in 2020. The bureau has compiled and posted on its website a guide for those interested in forming CCCs and an alphabetized list of existing committees, with any available contact information.", "An additional component of the partnership program is Statistics in Schools, which, in general, promotes statistical literacy for students from kindergarten through high school and, specifically, explains to students why the census is important. One goal is for students to bring this message home. A related goal is to make school-age children and the adults in their households aware of the need to count all children in a household, being sure not to miss any babies or other children under age five. They sometimes can be erroneously omitted from the list of household residents, as has happened in past censuses."], "subsections": []}]}, {"section_title": "The Response Outreach Area Mapper", "paragraphs": ["The Census Bureau has developed an application, the Response Outreach Area Mapper (ROAM), to facilitate identifying hard-to-count areas and provide socioeconomic and demographic profiles of these areas using American Community Survey (ACS) estimates. ROAM has helped the bureau, in its words, \"create a tailored communications and partnership campaign\" and inform \"outreach activities and hiring practices across the country,\" in order to hire \"an adequate number of staff and staff with the necessary language skills for a given area.\" One advantage of ROAM for census partners is that they can use it to identify specific areas most needing their attention."], "subsections": []}]}, {"section_title": "5. How and when will people know that the census is underway?", "paragraphs": ["As the Census Bureau has explained, it will let most people know by mail. In March 2020, about 95% of U.S. households are to receive mailed \"invitations\" from the bureau to answer the census online. A household that does not respond is to receive reminders in the mail, then, in April, a paper questionnaire to complete. Almost 5% of households\u00e2\u0080\u0094including those who receive their mail at post office boxes and those recently displaced by natural disasters\u00e2\u0080\u0094are to have an invitation delivered by census workers. Not quite 1% of households are to be enumerated in person during the initial phase of the census. These households are in remote areas, like parts of Alaska and northern Maine and certain American Indian areas that have asked to be counted in person."], "subsections": []}, {"section_title": "6. What questions will the census ask?", "paragraphs": ["The census form asks for the following basic information: the number of people living or staying in the respondent's home as of April 1, 2020; whether any additional people living or staying in the home were not counted; whether anyone in the home usually lives or stays somewhere else; whether the home is owned, with or without a mortgage, or rented; the respondent's telephone number (in case the Census Bureau needs to contact the person to clarify any responses); the name of each person in the household and the person's relationship to the respondent; each person's sex; the person's age and birthdate; whether the person is \"of Hispanic, Latino, or Spanish origin\"; and the person's race. The bureau has emphasized that the census never asks a person for his or her Social Security number or bank or credit card account information, for any \"money or donations,\" or for \"anything on behalf of a political party.\" A form purporting to be a census form that requests such information is not from the Census Bureau and is not legitimate."], "subsections": []}, {"section_title": "7. Some people expected the census form to include a Middle Eastern or North African (MENA) racial or ethnic category. Why\u00c2 doesn't it?", "paragraphs": ["The Census Bureau announced on January 26, 2018, that the form would not have a separate MENA category. A study the bureau released in 2017 noted that the \"inclusion of a MENA category\" in the 2015 National Content Test helped MENA respondents \"more accurately report their MENA identities\" and characterized the use of this category as \"optimal.\" Later feedback, however, reportedly indicated the opinion of \"a large segment\" of the MENA population \"that MENA should be treated as a category not for race but ethnicity,\" which \"the bureau so far has not specifically tested.\" People of MENA background may continue to report themselves as \"White.\" Two examples of \"White\" shown on the census form are Lebanese and Egyptian, both in the MENA category. The current Office of Management and Budget standards for federal reporting of race and ethnicity, which apply to the Census Bureau, designate \"White\" as \"A person having origins in any of the original peoples of Europe, the Middle East, or North Africa.\""], "subsections": []}, {"section_title": "8. The census form does not have a question about citizenship, despite the widespread public perception that it might. What happened?", "paragraphs": ["The 2020 census will collect only the basic data described under question 6, above. It will not ask people for detailed social, demographic, economic, or housing information, including about their legal, immigration, or citizenship status. A citizenship question was proposed, challenged, and ultimately not retained on the census form.", "Secretary of Commerce Wilbur Ross announced on March 26, 2018, that the 2020 census form would include the current American Community Survey question on citizenship. The question is, as it has been in the ACS since before 2010, \"Is this person a citizen of the United States?\" A checkbox appears beside each of the following possible answers: \"Yes, born in the United States\"; \"Yes, born in Puerto Rico, Guam, the U.S. Virgin Islands, or Northern Marianas\"; \"Yes, born abroad of U.S. citizen parent or parents\"; \"Yes, U.S. citizen by naturalization\u00e2\u0080\u0094Print year of naturalization\"; and \"No, not a U.S. citizen.\"", "The Department of Justice maintained that the census, not a survey like the ACS, was \"the most appropriate vehicle for collecting\" citizenship data \"critical to the Department's enforcement of Section 2 of the Voting Rights Act\" and its \"protections against racial discrimination in voting.\"", "Opponents of the citizenship question expressed concern that it might depress immigrants' census response rates or cause them to falsify data, especially if their status in the United States, or that of their friends or families, was illegal. Census Bureau fieldworkers in 2017 noted heightened anxiety about data confidentiality among certain foreign-born respondents and reluctance to answer questions, particularly about citizenship status. Six former bureau directors signed a January 26, 2018, letter to Secretary Ross, opposing the late-date introduction of a citizenship question that, at the time, had not been tested for the 2020 census.", "Multiple lawsuits were filed to block the question. Judge Jesse Furman, U.S. District Court for the Southern District of New York, ruled on July 26, 2018, that a consolidated suit by the State of New York and others could proceed. The U.S. Supreme Court heard the case as Department of Commerce et al. v. New York et al. on April 23, 2019. The Court's decision, written by Chief Justice John Roberts and issued on June 27, 2019, found that the addition of a citizenship question did not violate the Enumeration Clause of the Constitution or the Census Act (Title 13, U.S. Code , Census ), but the Court held that Secretary Ross's decision violated the Administrative Procedure Act because his sole stated reason for adding the citizenship question was not the real reason for his decision. On July 11, 2019, the President issued an executive order stating that the ruling had \"made it impossible, as a practical matter, to include a citizenship question on the 2020 decennial census questionnaire.\" The order, instead, directed \"all executive departments and agencies\" to give the department \"the maximum assistance permissible, consistent with law, in determining the number of citizens and non-citizens in the country, including by providing any access\" requested by the department to relevant administrative records. This action, the order continued, \"will ensure that the Department will have access to all available records in time for use in conjunction with the census.\" On September 13, 2019, the organization LUPE and others filed a suit in the U.S. District Court for the District of Maryland against the Commerce Secretary, the Director of the Census Bureau, the Commerce Department, and the Census Bureau, seeking to block implementation of the executive order. The outcome of the suit remains to be determined."], "subsections": []}, {"section_title": "9. Where are all the detailed socioeconomic and housing questions that some people say the census asks?", "paragraphs": ["The American Community Survey is occasionally confused with the decennial census. In past decades, through the 2000 census, the census consisted of a short form, with questions that applied to all U.S. residents, and a long form, which included the short form questions plus many more questions covering social, demographic, economic, and housing topics. The long form went to a representative sample of all U.S. residents, a 17% sample in 2000, and the results could be generalized to the whole resident population. The bureau discontinued the long form after 2000 and launched its replacement, the ACS, in 2005 and 2006. The bureau considers the ACS a part of the decennial census program but conducts it separately from the census. Although the census is administered once a decade, the ACS goes to a small sample of the population every month and, as did the long form, collects myriad data. ACS results are aggregated over time to produce one-year and five-year estimates. For the most populous areas, those with at least 65,000 people, sample data collected over just 12 months can be generalized to an area's whole population. For less populous areas, down to below 20,000 people, data have to be collected over five years to generate representative samples. All areas, however, receive new sets of estimates (either one-year or five-year estimates) every year."], "subsections": []}, {"section_title": "10. What options will people have for responding?", "paragraphs": ["In 2020, for the first time, people will be able to answer the census online. Some people have heard or assumed that because they can answer online, they must answer online or the census will miss them. This concern is based on inaccurate perceptions. The bureau is emphasizing online responses because they can be quick and easy and because they can help control the cost of the census. Anyone who lacks internet access or simply prefers not to respond online, however, can fill out a paper questionnaire. People also will be able to submit their census answers by telephone, by calling Census Questionnaire Assistance centers."], "subsections": []}, {"section_title": "11. How can people answer the census if they are not proficient in English or need language support?", "paragraphs": ["The Census Bureau will make the 2020 census questionnaire available online in 12 non-English languages: Arabic, Chinese (Mandarin and Cantonese), French, Haitian Creole, Japanese, Korean, Polish, Portuguese, Russian, Spanish, Tagalog, and Vietnamese. The bureau will provide Census Questionnaire Assistance in the same languages and through a telecommunications device for the deaf. In addition, the bureau will make field enumeration materials available in Spanish and will provide bilingual (English and Spanish) paper questionnaires and related mailings. It also will provide language guides, language glossaries, and language identification cards in 59 non-English languages. The language guides will be available in video and print, including large print, and braille, as well as American Sign Language."], "subsections": []}, {"section_title": "12. Can people ignore the census or refuse to answer it if they\u00c2 wish?", "paragraphs": ["Refusing or willfully neglecting to answer the census is illegal. Title 13, U.S. Code , Section 141, \"Population and other census information,\" specifies that a decennial census is to be conducted. Section 221, \"Refusal or neglect to answer questions; false answers,\" states, in full", "(a) Whoever, being over eighteen years of age, refuses or willfully neglects, when requested by the Secretary, or by any other authorized officer or employee of the Department of Commerce or bureau or agency thereof acting under the instructions of the Secretary or authorized officer, to answer, to the best of his knowledge, any of the questions on any schedule submitted to him in connection with any census or survey provided for by subchapters I, II, IV, and V of chapter 5 of this title, applying to himself or to the family to which he belongs or is related, or to the farm or farms of which he or his family is the occupant, shall be fined not more than $100.", "(b) Whoever, when answering questions described in subsection (a) of this section, and under the conditions or circumstances described in such subsection, willfully gives any answer that is false, shall be fined not more than $500.", "(c) Not withstanding any other provision of this title, no person shall be compelled to disclose information relative to his religious beliefs or to membership in a religious body.", "Title 18, U.S. Code , Crimes and Criminal Procedure , Sections 3559 \"Sentencing Classification of Offenses,\" and 3571, \"Sentence of Fine,\" effectively update the penalties for certain broad classes of offenses, without any specific mention of the census. Under this title and these sections, the possible penalty for the type of offense constituted by refusing or willfully neglecting to answer the census (13 U.S.C. 221(a)) is a fine of not more than $5,000. The possible penalty for providing any false census answer (13 U.S.C. 221(b)) is also $5,000."], "subsections": []}, {"section_title": "13. Some people say that they filled out a census form in 2018 or 2019. Do they still have to answer the 2020 census?", "paragraphs": ["Yes. The Census Bureau did conduct limited 2020 census tests in 2018 and 2019. The 2018 test was the so-called dress rehearsal for the 2020 census, which the bureau described as \"the last operational field test\" before the actual census. The test was designed to \"assess the readiness and integration of planned\" 2020 \"operations, procedures, systems and field infrastructure.\" It began in 2017 with address canvassing (explained under question 14. How will the Census Bureau know where people live so that it can contact them in 2020? , below) in Bluefield-Beckley-Oak Hill, West Virginia; Pierce County, Washington; and Providence County, Rhode Island. The enumeration phase of the test occurred in 2018 in Providence County only. As the bureau marked the \"successful completion\" of the test, a bureau official noted that work would continue through 2019 \"to refine and scale\" census systems \"to ensure the best possible performance\" in 2020. In 2019, the bureau selected a nationally representative sample of about 480,000 housing unit addresses to test how a proposed citizenship question might affect census response rates. The test did not involve nonresponse follow-up in the field. Although respondents' cooperation with these tests was helpful to the Census Bureau, the tests were not the actual decennial census. The 2020 census, the complete count of the U.S. resident population, is to occur only in 2020. Even if a person participated in a census test, the person still is obligated to answer the 2020 census questions and can be part of the census count only by doing so."], "subsections": []}, {"section_title": "14. How will the Census Bureau know where people live so that it can contact them in 2020?", "paragraphs": ["Even though people will be able to answer the census online, an accurate Master Address File, with the addresses, geocodes, and other attributes of living quarters, will be, as in past decades, the foundation for contacting the public and conducting a good census. It will enable the bureau to notify the public about the census and, as necessary, send census forms and enumerators to nonresponding households. For the 2010 census, the bureau hired about 150,000 \"address canvassers\" to walk 11 million census blocks, updating addresses and maps as they went. In preparation for 2020, the bureau created Block Assessment, Research, and Classification Application software to compare satellite images of the United States at successive times. Using this software, the bureau could identify new housing developments, changes in existing houses, and other houses that were built after 2010. The bureau could compare, too, \"the number of housing units in current imagery with the number of addresses on file for each block.\" Satellite imagery enabled the bureau to verify 65% of addresses without going into the field, leaving 35% for field verification. The bureau recruited and trained about 32,000 temporary workers to verify more than 50,000 addresses nationwide, covering about 1.1 million census blocks. On August 12, 2019, the bureau announced the start of this work, the first major field operation of the 2020 census. The operation ended on October 11, 2019."], "subsections": []}, {"section_title": "15. What other census jobs are still available?", "paragraphs": ["The bureau expects to hire up to 500,000 temporary census field workers. Enumerators for the nonresponse follow-up operation, beginning in May 2020 and continuing through early July, are the main example. They will go door-to-door, collecting data from households that have not yet answered the census online, by mail, or by phone. Additionally, in certain remote areas, such as northern Maine and Alaska, visits from census-takers may be the only way for residents to report their census data."], "subsections": []}, {"section_title": "16. Who can apply for these jobs, and when?", "paragraphs": ["According to a bureau official, \"Recent high school graduates, veterans, retirees, military spouses, seasonal workers,\" and people who are bilingual are \"highly encouraged to apply.\" Others are welcome, too. \"It's important we hire people in every community in order to have a complete and accurate census,\" the official said. People are encouraged to apply now to be considered for positions in the spring of 2020. Recruitment has begun; paid training is to occur in March and April."], "subsections": []}, {"section_title": "17. What are the requirements for temporary census workers?", "paragraphs": ["To qualify for temporary census employment, a person must be at least age 18, generally must be a U.S. citizen, must be proficient in English, must have a valid email address, and must complete an application that includes the applicant's Social Security number and answers to a set of assessment questions. For some positions, the applicant has to fill out a background questionnaire. Applicants must be fingerprinted, and their fingerprint images will go to the FBI to be processed and checked for criminal records, although a criminal record will not invariably disqualify an applicant."], "subsections": []}, {"section_title": "18. What are the benefits of being a temporary census worker?", "paragraphs": ["Pay rates, which will vary according to where census jobs are located, will range from $13.50 to $30.00 an hour. Workers will receive paid training. They will be paid weekly, and their hours of work will be flexible. Veterans may be eligible for veterans' preference in hiring, and census employment has no upper age limit."], "subsections": []}, {"section_title": "19. How can the public know that authorized census workers, not impostors or criminals, are in their neighborhoods and knocking on their doors?", "paragraphs": ["Every census field worker should have an identification badge (ID) that shows the worker's photograph, an expiration date for the ID, and a U.S. Department of Commerce watermark. Every respondent can check this identification and, if unsure about its authenticity, contact a regional census center to talk to a bureau representative."], "subsections": []}, {"section_title": "20. The census form asks people to report sensitive personal information. How can they be sure that the confidentiality of these data will be protected?", "paragraphs": ["Legal protections for census data exist, and the Census Bureau also continues working to address cybersecurity vulnerabilities that have been, or are being, identified."], "subsections": [{"section_title": "Legal Protections", "paragraphs": ["Title 13, U.S. Code , both requires respondents to provide their data and provides for maintaining the confidentiality of data on individuals.", "Title 13, Section 9, \"Information as confidential; exception,\" states, in part", "(a) Neither the Secretary, nor any other officer of employee of the Department of Commerce or bureau or agency thereof, or local government census liaison, may, except as provided in section 8 or 16 or chapter 10 of this title or section 210 of the Departments of Commerce, Justice, and State, the Judiciary, and Related Agencies Appropriations Act, 1998 or section 2(f) of the Census of Agriculture Act of 1997\u00e2\u0080\u0094", "(1) use the information furnished under the provisions of this title for any purpose other than the statistical purposes for which it is supplied; or", "(2) make any publication whereby the data furnished by any particular establishment or individual under this title can be identified; or", "(3) permit anyone other than the sworn officers and employees of the Department or bureau or agency thereof to examine the individual reports.", "No department, bureau, agency, officer, or employee of the Government, except the Secretary in carrying out the purposes of this title, shall require, for any reason, copies of census reports which have been retained by any such establishment or individual. Copies of census reports which have been so retained shall be immune from legal process, and shall not, without the consent of the individual or establishment concerned, be admitted as evidence or used for any purpose in any action, suit, or other judicial or administrative proceeding.", "Title 13, Section 214, \"Wrongful Disclosure of Information,\" states, in full", "Whoever, being or having been an employee or staff member referred to in subchapter II of chapter 1 of this title, having taken and subscribed to the oath of office, or having sworn to observe the limitations imposed by section 9 of this title, or whoever, being or having been a census liaison within the meaning of section 16 of this title, publishes or communicates any information, the disclosure of which is prohibited under the provisions of section 9 of this title, and which comes into his possession by reason of his being employed (or otherwise providing services) under the provisions of this title, shall be fined not more than $5,000 or imprisoned not more than 5 years, or both.", "Under Title 18, Sections 3559 and 3571, the possible penalty for disclosing \"any information, the disclosure of which is prohibited\" (13 U.S.C. 214) is a substantially increased fine of not more than $250,000 or imprisonment of less than five years, or both."], "subsections": []}, {"section_title": "Cybersecurity", "paragraphs": ["The Census Bureau's operational plan has acknowledged the risk that \"cybersecurity incidents,\" including data breaches and denial-of-service attacks, could affect its information technology (IT) systems, such as the online census questionnaires, \"mobile devices used for fieldwork, and data processing and storage systems.\" Under the plan, \"IT security controls will be put in place to protect the confidentiality, integrity, and availability of the IT systems and data,\" with the goal of preventing any such incidents from negatively affecting census operations.", "At a July 24, 2019, congressional hearing, Census Bureau Director Steven Dillingham summarized the bureau's cybersecurity efforts for the 2020 census. He stated, in part", "A key feature of the security is encryption of data at every stage\u00e2\u0080\u0094in transit over the internet, at rest within our systems, and on the enumeration devices. Also, enumeration devices are secured with multiple credentials, and if a device is lost, it will be remotely disabled and have all its contents wiped.", "Our cybersecurity program is designed to adapt and respond to a changing threat landscape. We incorporate protections in our technology, have processes to continuously monitor systems, and have a team ready to respond immediately to any potential threat.", "The Census Bureau works with the Department of Homeland Security, the federal intelligence community, and industry experts to share threat intelligence, giving us the most visibility possible to enable immediate action to protect data. With this cooperation, we identify threats early so that we may proactively respond and improve security.", "Our developers and security engineers work together to integrate security into systems design and development. Our systems are independently assessed for cybersecurity before deployment, and ongoing testing of cybersecurity capabilities is conducted throughout the time systems are operational.", "Security staff monitor our systems for cybersecurity vulnerabilities with industry-leading tools. We continuously test for more than 100,000 known vulnerabilities, with thousands of new potential vulnerabilities added to the list on a regular basis. If a vulnerability is identified, or security enhancement required, the security team will act quickly to ensure the most effective security posture.", "At the same hearing, the Government Accountability Office (GAO) noted delays or gaps in the bureau's progress toward cybersecurity for 2020:", "The Bureau has established a risk management framework that requires it to conduct a full security assessment for nearly all the systems expected to be used for the 2020 Census and, if deficiencies are identified, to determine the corrective actions needed to remediate those deficiencies. As of the end of May 2019, the Bureau had over 330 corrective actions from its security assessments that needed to be addressed, including 217 that were considered \"high-risk\" or \"very high-risk.\" However, of these 217 corrective actions, the Bureau identified 104 as being delayed. Further, 74 of the 104 were delayed by 60 or more days. According to the Bureau, these corrective actions were delayed due to technical challenges or resource constraints. GAO recently recommended that the Bureau take steps to ensure that identified corrective actions for cybersecurity weaknesses are implemented within prescribed time frames.", "GAO commended the bureau for working with the Department of Homeland Security (DHS) \"to support\" its \"cybersecurity efforts.\" During the past two years,", "as a result of these activities, the Bureau has received 42 recommendations from DHS to improve its cybersecurity posture. GAO recently recommended that the Bureau implement a formal process for tracking and executing appropriate corrective actions to remediate cybersecurity findings identified by DHS. Implementing the recommendation would help better ensure that DHS's efforts result in improvements to the Bureau's cybersecurity posture.", "The GAO testimony also called attention to a Commerce Department Office of Inspector General (IG) report identifying challenges in the bureau's \"cloud based systems\" supporting the census. The bureau \"agreed with all eight\" of the IG's recommendations concerning these systems and \"identified actions taken to address them.\"", "In addition, recognizing that \"many of the same digital and social channels\" being used to promote the census can work against it as well, the bureau established a \"trust and safety team\" to combat \"the spread of misinformation (incorrect information spread unintentionally) and disinformation (incorrect information spread intentionally).\" According to the bureau, the team comprises \"more than a dozen communications and social media experts under the executive leadership of career senior officials.\" It is coordinating the bureau's \"efforts with external technology and social media platforms, partner and stakeholder organizations, and cybersecurity officials.\" Drawing on \"best practices from the public and private sectors,\" the team is monitoring \"all available channels and open platforms for misinformation and disinformation about the census.\" The bureau also has launched a \"Fighting 2020 Census Rumors\" page on its website and has asked members of the public to email [email address scrubbed] if they see any \"resources,\" social media postings, or websites that they think contain incorrect information about the census.", "Noteworthy in this context is a December 19, 2019, press report of an announcement by the social media company Facebook that, starting in 2020, it \"will remove posts, photos,\" and other contents \"that mislead people\" about the census, \"aiming to prevent malicious actors from interfering\" with the process. \"Under the new rules, Facebook will ban posts from misrepresenting when and how the census occurs, who can participate and what happens to the personal information people submit to the government, company executives said.\" According to the article, \"Facebook and other tech giants, including Google and Twitter, have huddled with government officials in recent months to prevent census disinformation.\" Other companies \"have unveiled their own defensive measures: Google in December said it prohibited ads and YouTube videos that aim to misinform about the 2020 count. Twitter's rules, meanwhile, prohibit 'misleading information about how to participate in an election or other civic event',\" which presumably could include the census."], "subsections": []}]}]}}
{"id": "R46323", "title": "Reauthorization of Federal Highway Programs", "released_date": "2020-04-22T00:00:00", "summary": ["Federal highway construction and safety programs are currently authorized through September 30, 2020, under the five-year Fixing America's Surface Transportation Act (FAST Act; P.L. 114-94 ). For the 1,027,849-mile system of federal-aid highways, the FAST Act provided an average of $45 billion annually. Although there are exceptions, federally funded projects are generally limited to this system that includes roughly 25% of all U.S. public road mileage. Of these funds, nearly 93% are distributed to the states via formula. The states have nearly complete control over the use of these funds, within the limits of federal planning, eligibility, and oversight rules. Money is not provided up front. A state is reimbursed after work is started, costs are incurred, and the state submits a voucher to the Federal Highway Administration (FHWA). The highway program focuses on highway construction and planning, and does not support operations or routine maintenance. The federal share of project costs is generally 80%, but 90% for Interstate System projects.", "Nearly all highway funding comes from the Highway Trust Fund (HTF). The excise taxes on gasoline and diesel, which are the main support of the HTF, are fixed in terms of cents per gallon (18.3 cents for gasoline and 24.3 cents for diesel), and do not adjust for inflation or change with fuel prices. The rates were last raised in 1993. These taxes no longer raise enough money to support the programs Congress has authorized. Congressional Budget Office (CBO) projections estimate that the HTF shortfall for a five-year reauthorization bill, FY2021-FY2025, will be $68.8 billion, of which the highway portion will be $46.5 billion.", "The funding shortfall is a major issue framing the reauthorization debate. The FAST Act transferred $70 billion in general Treasury funds to the HTF, $51.9 billion of which were for highways. Congress could deal with the shortfall that is projected to persist over the coming years in three ways: again transfer money from the Treasury general fund; cut spending by roughly 25%; and raise revenue dedicated to the HTF. Widely discussed revenue options include increasing the rates of existing gasoline, diesel, and truck taxes or imposing new charges such as a vehicle miles traveled (VMT) charge.", "Other issues likely to be considered by Congress include the following:", "Whether any additional federal spending for highways should be distributed by formula, giving the states greater control, or through discretionary programs that distribute funds based on Administration or congressional priorities. Whether to retain the current highway funding formula, which links states' annual apportionments to their funding shares in past years, or to introduce such formula factors as each state's lane miles, population growth, or VMT. Whether to create stand-alone programs to address issues such as bridge conditions or climate change mitigation and adaptation. Whether the stand-alone National Highway Freight Program, a formula program that has been highly popular with the states, should be funded at a higher level relative to the other formula programs. Whether the Emergency Relief program should be expanded to cover a wider range of resilience needs. Whether states should be permitted to place tolls on free Interstate Highway lanes, and whether to regulate the use of tolls.", "The Senate Environment and Public Works Committee (EPW) reported the America ' s Transportation Infrastructure Act of 2019 (ATIA; S. 2302 ) on August 1, 2019 . The bill includes the highway elements of surface transport ation reauthorization under EPW' s jurisdiction. It is the only active FAST Act reauthorization bill to date."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["Federal aid to highways is provided through highway programs administered by the Federal Highway Administration (FHWA). These programs and activities are authorized as part of multiyear surface transportation reauthorization acts. The Fixing America's Surface Transportation Act (FAST Act; P.L. 114-94 ) authorized federal highway spending from FY2016 through September 30, 2020. This report examines the major highway issues Congress will likely consider during reauthorization."], "subsections": []}, {"section_title": "Background", "paragraphs": ["There are over 4 million miles of public roads in the United States, of which roughly 25% are eligible for federal aid. These eligible roads, designated federal-aid highways, include all of the nation's major roads. Federal highway funds generally cannot be spent on local roads, neighborhood streets, or minor rural collectors.", "The federal government provides funds to the states and territories for the building and improvement of eligible roads under the Federal-Aid Highway Program. The major characteristics of this program have been constant since the early 1920s. Most funds are apportioned to the states by formulas established in law. State departments of transportation largely determine which projects are funded, award the contracts, and oversee project development and construction. The states are required to pay 20% of the cost of non-Interstate System road projects and 10% for Interstate System projects. Federal assistance is focused on construction, and may not be used to fund operating costs or routine maintenance activities.", "The five-year FAST Act authorized a total of $225 billion for highways from FY2016 to FY2020. It provided for modest annual increases in federal highway spending over that period ( Figure 1 )."], "subsections": [{"section_title": "Apportioned (Formula) and Allocated (Discretionary) Programs", "paragraphs": ["Apportionment is the distribution of funds among the states by statutory formula. Under the FAST Act, roughly 93% of federal highway funds were apportioned to the states ( Figure 2 ). The remaining sums were allocated for roads on federally owned lands or Indian reservations, for discretionary highway grants awarded by the U.S. Department of Transportation (DOT), and for FHWA administrative expenses.", "Historically, many discretionary programs were established by Congress to target specific policy objectives, such as promoting bridge construction. However, from the late 1990s until 2011, nearly all competitive grant program funds were earmarked, that is, directed to projects specified by Congress in authorization or appropriations acts. Earmarks have not been permitted since 2011. "], "subsections": [{"section_title": "Formulas and Apportionments", "paragraphs": ["The apportioned programs within the Federal-Aid Highway Program include five \"core\" programs plus the Metropolitan Planning Program. The core programs are the National Highway Performance Program (NHPP), the Surface Transportation Block Grant Program (STBG), the Highway Safety Improvement Program (HSIP), the Congestion Mitigation and Air Quality Improvement Program (CMAQ), and the National Highway Freight Program (NHFP). The FAST Act does not use separate formulas to determine each state's apportionments under each core program. Instead, all the formula programs under the FAST Act are funded from a single annual authorization. From this amount, every state receives a single gross apportionment that is calculated based on the state's share of the FY2015 apportionments. Each state is then guaranteed that its apportionment represents at least a return of 95 cents for every dollar the state contributed to the highway account of the Highway Trust Fund (HTF), the mechanism through which formula funding is distributed to the states. Each state's total apportionment is then divided among the five formula programs and the Metropolitan Planning Program according to statute. Figure 3 charts the nationwide outcome of the distribution among the programs. "], "subsections": []}]}]}, {"section_title": "Selected Highway Reauthorization Issues", "paragraphs": [], "subsections": [{"section_title": "Funding", "paragraphs": ["The FAST Act provided an annual average of $45 billion for highways, about 10% more (unadjusted for inflation) than the annual average under the previous authorization bill, the two-year Moving Ahead for Progress in the 21 st Century Act (MAP-21; P.L. 112-141 ).The America's Transportation Infrastructure Act of 2019 ( S. 2302 ), reported by the Senate Environment and Public Works Committee on August 1, 2019, would provide a roughly 27% increase above the FAST Act authorizations. ", "With the United States building few entirely new highways, the condition of existing highway infrastructure is a key issue in determining funding needs. FHWA's most recent biennial Conditions and Performance (C&P) report, drawing on FY2014 data, showed a mixed picture of the federal-aid system: the share of vehicle miles traveled (VMT) on pavements with good ride quality rose from 44.2% in 2004 to 47.0% in 2014, but the share of VMT on pavements with poor ride quality also increased, from 15.1% to 17.3%, over that period. The Interstate Highways were the road category in the best condition.", "Based on FY2014 data, the C&P report found that annual spending, $105.4 billion on all public roads from all sources of government, was more than sufficient to sustain the system condition and performance at the current level through 2034. Given the subsequent spending increases under the FAST Act, highway and bridge conditions may be better today than reflected in the FY2014 data. ", "The C&P report also estimated the cost of completing all proposed work on federal-aid highways for which the benefits are expected to exceed the costs. The report found that annual spending by all levels of government would need to be roughly 30% higher than the 2014 level through 2034 if all such improvements were to be funded."], "subsections": []}, {"section_title": "Highway Trust Fund Issues", "paragraphs": ["Rather than appropriating funds annually, Congress has funded federal-aid highway programs through the HTF. The HTF is able to receive revenue from dedicated taxes and spend it on highways and public transportation prior to an appropriation; a mechanism called the obligation limit, included in the authorization act and appropriations acts, caps the amount of highway funding FHWA can promise the states in any year. About 85%-90% of the tax revenues that flow into the HTF are from an 18.3 cents-per-gallon tax on gasoline and a 24.3 cents-per-gallon tax on diesel fuel, with the remainder coming mainly from taxes on sales of trucks and truck tires as well as a heavy vehicle use tax.", "The HTF has two separate accounts, one for highway programs and the other for public transportation. The highway account, which funds the Federal-Aid Highway Program, much of the budget of the National Highway Traffic Safety Administration, and the entire budget of the Federal Motor Carrier Safety Administration, receives 15.4 cents per gallon from the gasoline tax and 21.4 cents per gallon from the diesel fuel tax, as well as all of the revenue from the taxes imposed on trucks and truck use. The reliance of the HTF on the gasoline and diesel taxes has become problematic because tax receipts do not increase with inflation in highway construction costs or with the price of fuel. The rates have not been increased since 1993. In 2018 a gasoline tax of approximately 45 cents per gallon would have been needed to equal the purchasing power of the 18.3-cents-per-gallon gasoline tax in 1998.", "In addition, sluggish growth in vehicle travel and improved vehicle efficiency have depressed the growth of gallons consumed, further constraining revenues. Since 2008, Congress has transferred nearly $144 billion to the HTF ($114.7 billion to the highway account alone) from the Treasury general fund and other sources in order to fill the gap between the tax revenue flowing into the fund and the outlays Congress has authorized. Despite these transfers, without a reduction in the size of the surface transportation programs, an increase in revenues, or further general fund transfers, the highway account balance in the HTF is projected to be close to zero in the first month of FY2022. At that point, FHWA would likely have to delay payments to state departments of transportation for completed work.", "The closures and stay-at-home orders implemented in response to the COVID-19 pandemic may make the HTF's funding shortfall more severe. As many employers closed or shifted to telework and fewer Americans drove to work, gasoline tax revenues will likely fall below projections. If states continue road projects as planned, the highway account balance could approach zero sooner than previously expected unless Congress provides additional funds.", "The Congressional Budget Office (CBO) projects that HTF highway account outlays (spending) will continue to outpace revenues through F2026 ( Figure 4 ) under current law. This projection, made prior to the COVID-19-related shutdowns, estimates that in funding a five five-year reauthorization beginning in FY2021 Congress faces a projected highway account shortfall of $46.5 billion. This is the amount of additional revenue Congress would need to provide to the HTF, whether from increased taxes, transfers from the general fund, or other sources, in order to avoid reducing the scope of the highway program. These are the amounts that the Senate Finance Committee and the House Ways and Means Committee would have to deal with if Congress decides to fund reauthorization at current levels plus expected inflation. CBO's March 2020 projection did not consider the impact of COVID-19 on HTF revenues and spending. ", "Consequently, a major reauthorization issue is assuring that the HTF has sufficient resources over the life of the act to pay for the authorizations Congress provides. The options include the following: "], "subsections": [{"section_title": "Continue Transfers from the General Fund", "paragraphs": ["Since 2008 Congress has had a de facto policy of dealing with the HTF shortfall via transfers, mostly from the Treasury general fund, weakening the long-standing link between highway user revenues and the construction and maintenance of highways. Congress could continue this policy in a reauthorization act or make the policy permanent. In the recent past, a rule of the House of Representatives has required Congress to identify \"offsets\" in the form of other revenues or spending reductions equal to the amounts transferred from the general fund to the HTF. This requirement has not been a House rule since January 2019."], "subsections": []}, {"section_title": "Reduce Spending from the HTF", "paragraphs": ["Congress could reduce spending on the Federal-Aid Highway Program. To bring outlays into line with anticipated revenues, the needed reduction would be roughly 25%. Rather than reducing highway outlays, Congress could eliminate the HTF's mass transit account and use all HTF revenues for highway purposes only, leaving public transportation to be funded entirely from the general fund. However, even if all HTF revenues were dedicated to highways, the HTF is projected to face annual shortfalls beginning in FY2024. According to CBO, annual HTF revenue is projected to be almost $20 billion less than the cost of maintaining the present level of highway spending, adjusted for inflation, in FY2026, even if no HTF money goes to public transportation.", "Congress could make a major reduction in federal funding by devolving responsibility for highways to the states and reducing federal motor fuel and truck taxes accordingly. States could then raise their own highway revenues or reduce spending as they see fit. The challenge of making these adjustments would vary greatly from state to state. Devolution would have significant federal front-end costs, as the federal government would remain obligated to reimburse the states for highway projects committed to in previous years."], "subsections": []}, {"section_title": "Increase Tax Revenue Dedicated to the HTF", "paragraphs": ["Although there is a wide variety of revenue sources that could be used to provide revenues to the HTF, the four that have received significant interest in Congress in recent years are: raising the gasoline and diesel tax rates; imposing a vehicle miles traveled (VMT) charge; imposing a carbon tax; and taxing electric vehicles.", "The gasoline and diesel taxes could be raised enough to make up for loss of purchasing power and then be adjusted annually for inflation and fuel efficiency. Based upon the current level of fuel consumption, an initial increase of fuel taxes in the range of 10 cents to 15 cents per gallon would be required to fund highway and public transportation programs at their current levels, adjusted for anticipated inflation. Electric vehicles (EVs), which currently do not contribute to the HTF, could be charged for road use. Finding an efficient way for the federal government to tax EVs presents a challenge, as it does not collect information about their ownership or use. Some recent proposals would use the personal income tax to reach EV owners, rather than taxing the vehicles based on use. Approximately 1.5 million EVs are currently in use, according to the Edison Electric Institute, so an annual fee approximating the roughly $80 in federal fuel taxes paid for the average passenger vehicle each year would raise comparatively little revenue over the life of a five-year reauthorization act. Charging vehicle owners for each mile of travel has been discussed for many years as an alternative to the motor fuel taxes. However, a VMT charge would have relatively high collection and enforcement costs (estimates range from 5% to 13% of collections) and the administrative challenge of collecting the charge from roughly 268 million vehicles. Setting and adjusting VMT rates would likely be as controversial as increasing motor fuel taxes. Imposing a VMT on heavy trucks only, as has been done in Germany, might be less onerous to implement because it would involve a much smaller number of collection points. A truck-only VMT concept has already run into stiff opposition from trucking interests. A national VMT on heavy trucks could also face tax administrative issues. The payments to Toll Collect, the contractor that collects Germany's truck VMT charge, are estimated to be as high as 13% of annual revenues. A carbon tax could be assessed on emissions of carbon dioxide and other greenhouse gases, with a share of the revenue dedicated to federal transportation programs. In December 2019, CBO estimated that a carbon tax of $25 per metric ton would increase federal revenues by $1.1 trillion between 2019 and 2028.The effect on the HTF would depend on the design of the tax and how much of the revenue would be reserved for the HTF."], "subsections": []}, {"section_title": "Tolling", "paragraphs": ["Federal law permits the vast majority of roads in the United States to be converted to toll roads. However, the law bans the tolling of existing Interstate System highway lane capacity. For an existing road or bridge to be converted to a toll facility, it must be reconstructed or replaced. FHWA does not regulate toll rates, but it does enforce statutory limitations on the use of toll revenues. In general, these limitations require that a toll facility's revenues be spent on the toll facility.", "All revenue from tolls flows to the state or local agencies or private entities that operate tolled facilities; the federal government does not collect any revenue from tolls. While tolls may be an effective way of financing specific facilities\u00e2\u0080\u0094especially major roads, bridges, or tunnels that are located such that the tolls are difficult to evade\u00e2\u0080\u0094they may not be cost-effective in areas with low population densities. However, a major expansion of tolling might reduce the need for federal expenditures on roads.", "Within the context of surface transportation reauthorization, there are several approaches to tolling that Congress could consider: ", "allowing states to toll existing Interstate Highway lane capacity under certain circumstances, such as following major capacity expansion; permitting or prohibiting toll schedules that favor in-state vehicles or that toll only trucks; regulating rate setting under certain or all conditions; and expanding or restricting states' ability to use toll revenue to substitute for the non-federal share of federal-aid highway projects."], "subsections": []}]}, {"section_title": "State Versus Congressional Discretion", "paragraphs": ["A perennial question in highway reauthorization is how much of the funding should be distributed by formula to the states and how much should be distributed at the discretion of DOT. Prior to the ban on congressional earmarking in FY2011 virtually all of the discretionary program funding was earmarked by Congress. This, in effect, meant that the project spending decisions for the discretionary funds were under the direct control of Members of Congress. Under the earmarking ban, discretionary program project awards are selected by DOT under criteria set in the legislative language establishing the program. Although this congressional influence over project selection is not as direct as earmarking, Congress exercises more control over the use of discretionary funds than over the core program formula funds, which are under the control of the states.", "In reauthorization, Congress could increase the share of highway funding that is distributed by formula, diminishing the role of discretionary programs, or expand discretionary programs rather than formula funding. Recent surface transportation bills have reduced the number of discretionary programs, but Congress could choose to create new ones to address specific issues, for example, bridge conditions."], "subsections": [{"section_title": "Maintenance of Effort", "paragraphs": ["Studies have indicated that large increases in federal highway spending can lead to a substitution of federal funds for state spending on highways. The American Recovery and Reinvestment Act of 2009 (ARRA; P.L. 111-5 ), the stimulus bill enacted in the midst of the 2007-2009 financial crisis, contained a \"maintenance of effort\" provision requiring the governor of a state receiving stimulus funds to certify that the state would maintain its spending for specific purposes, including transportation infrastructure, in return for greater federal funding. A maintenance of effort requirement could be included in FAST Act reauthorization, especially if the bill provides a large increase in highway funding. However, declines in states' revenue resulting from employer closures due to the COVID-19 pandemic could make it more challenging for states to maintain spending levels. "], "subsections": []}]}, {"section_title": "Formula Distribution/State Equity Issues", "paragraphs": ["Because the formula distributions in both the FAST Act and MAP-21 were based on the apportionment of the federal-aid highway formula programs to the states in the last year of the previous authorization bill, the relative distribution of funds among the states is basically the same as it was in 2009. It has not been adjusted for population growth, internal migration, highway and bridge infrastructure growth, or traffic growth.", "Defining the formula in this way carries over the \"equity\" adjustments made in the Safe, Accountable, Flexible, Efficient Transportation Equity Act\u00e2\u0080\u0094A Legacy for Users (SAFETEA; P.L. 109-59 ), enacted in 2005. These adjustments ensured that each state received formula funds equal to at least a specified percentage of the amount of motor fuel taxes its drivers paid into the highway account of the HTF. By effectively carrying over the equity redistribution, the current funding formula minimizes debates over the fairness of the distribution to individual states.", "In reauthorization, Congress could continue to retain a formula based on the previous distribution, or could replace it with a new formula paradigm that might incorporate factors intended to achieve specific policy goals. In the past, funding for individual highway programs was apportioned to the states using such formula factors as the ratio of federal-aid highway lane miles or vehicle miles traveled to the national total."], "subsections": []}, {"section_title": "Highway Bridge Improvement", "paragraphs": ["The FAST Act did not authorize a stand-alone highway bridge program. Instead, bridge improvements under the Fast Act are funded primarily via the NHPP and STBG based on states' priorities. As of December 31, 2018, of the 616,096 bridges in the U.S. National Bridge Inventory, 47,045 (7.6%) were in poor condition. This number has been declining for many years, but there is still a significant backlog of bridges awaiting major repairs or replacement. Should Congress wish to accelerate the reduction in the number of bridges in poor condition through the reauthorization process it could create a stand-alone bridge program. If this were a formula program, the states would select the projects; if it were a discretionary program, project choices would likely be made by DOT.", "Another highway bridge issue is how much federal bridge spending should be dedicated to bridges off the federal-aid highway network. Many of these are rural county-owned bridges. Under the FAST Act, each state must devote at least 15% of the amounts it received under the Highway Bridge Program in FY2009 to bridges. This amount is taken from the state's STBG funds. If it wishes to give priority to repairing rural bridges, Congress could raise the states' minimum spending level or could dedicate a specific amount to rural bridge projects.", "Current law penalizes states whose structurally deficient bridge deck area on the National Highway System, a network of 220,169 road-miles, exceeds 10% of its total National Highway System bridge deck area for three years in a row. In such a case, the state must devote NHPP funds equal to 50% of the state's FY2009 Highway Bridge Program apportionment to improve bridge conditions until the deck area of structurally deficient bridges falls to 10% or below. Congress could increase the penalty to encourage more spending of NHPP funds on bridges or eliminate the penalty and leave the bridge spending of NHPP funds entirely up to the states.", "When state officials determine that a bridge is unsafe, they are to close it to traffic immediately. The actual closing of a bridge is usually done by the state, but in some states closures are under the authority of county commissioners. The recent failure of local officials in Mississippi to close unsafe bridges until the state was threatened with the withholding of federal funds suggests that unsafe bridge closures do not always happen immediately. Congress may wish to consider the safety of bridges not directly under the control of the states in reauthorization."], "subsections": []}, {"section_title": "Freight Issues", "paragraphs": ["The FAST Act created two new programs to facilitate highway freight movement. The National Highway Freight Program (NHFP) is a formula program that provided up to $1.5 billion annually to the states for highway components designated as being especially important to freight movement. Having a separate freight formula program helps states concentrate funding for projects on freight routes. ", "The FAST Act also created a discretionary grant program, the Nationally Significant Freight and Highway Projects Program, now called Infrastructure for Rebuilding America (INFRA), with funding of $1 billion in FY2020. INFRA discretionary grants are mostly for relatively large projects to enhance freight movement. They may be applied for by virtually any government entity. The program has received applications for far more funding than has been authorized. Despite the program's popularity, DOT has been criticized for a lack of transparency in the selection process and for selecting projects that do not have the highest cost/benefit ratios.", "Given the popularity of these programs, the likely reauthorization issues are the funding levels, eligibility changes, and, in the case of INFRA, oversight of the project selection process. If Congress wishes to allocate additional funding to improve freight movement, it would need to determine the share that would be distributed under the NHFP formula for spending at the discretion of the states versus the funding dedicated to INFRA and administered by DOT. Although the National Freight Network is vast, the worst congestion on freight routes occurs in a limited number of locations, mostly around Interstate Highway junctions in major urban areas. "], "subsections": []}, {"section_title": "Climate Change and Adaptation", "paragraphs": ["Highway transportation is a major source of atmospheric carbon dioxide (CO 2 ), the main human-related greenhouse gas (GHG) contributing to climate change. Highway infrastructure will also bear the effects of climate change, such as extreme heat, sea level rise, and stronger storms. Highway policy responses to climate change can involve mitigation provisions that aim to reduce GHG emissions or adaptation provisions that aim to make the highway infrastructure more resilient to a changing climate.", "The federal-aid highway program already includes some programs that can be seen as being mitigation programs. The Congestion Mitigation and Air Quality Improvement program (CMAQ), for example, although not designed to address climate change, typically funds projects that reduce pollutant emissions from cars and trucks that also co-emit CO 2 . Other surface transportation programs that may contribute indirectly to the reduction of GHG emissions include the Transportation Alternatives program, which funds bicycle and pedestrian infrastructure, as well as core formula program eligibility and funding transfer provisions that allow highway funds to support mass transit. Congress may wish to consider mitigation options that encourage or support activities such as ride sharing, truck stop electrification, alternative fuel fueling stations, the use of hybrid electric and electric vehicles, and congestion relief policies.", "Adaptation is action to reduce the vulnerabilities and increase the resilience of the transportation system to the effects of climate change. Adaptation options for highways and bridges include structural and nature-based engineering and policy-based activities. For example, highway bridges can be engineered structurally to withstand the threats of stronger winds, higher storm surges, and increased flooding.", "Although currently there is no dedicated highway funding for adaptation projects, federal-aid highway funds can be used to assess the potential impacts of climate change and to apply adaptation strategies. Congress could add programs or program provisions to encourage or pay for adaptation and resiliency measures. The federal matching share could be increased for protective features and disaster relief definitions could be expanded to include resiliency measures."], "subsections": []}, {"section_title": "Emergency Relief Program", "paragraphs": ["The Emergency Relief program provides federal assistance to state departments of transportation for emergency repairs and restoration of federal-aid highway facilities following a natural disaster or catastrophic failure. Congress has long authorized $100 million per year to be spent from the HTF for Emergency Relief, but spending exceeds this amount virtually every year. Additional funding is provided via appropriations on a \"such sums as needed\" basis, usually following major disasters. These additional funds both pay for both quick release funds dispersed immediately following a disaster that are in excess of the annual $100 million authorization and pay for permanent repairs for damage from both recent disasters and the repair backlog from previous disasters. This situation raises two policy questions: whether to raise the annual authorization to reduce the reliance on supplemental disaster appropriations and how to resolve the repair backlog. ", "States seeking Emergency Relief funds now must consider resilience to climate change in designing and constructing highway and bridge repairs. Resilience is broadly defined 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.\" Using risk-based analyses, this approach is designed to reduce the potential for future losses. However, states may be tempted to use Emergency Relief funding, which requires no state match, to make improvements that might otherwise have been made with federal formula funds or state funds. ", "Emergency Relief is a basically a reactive program, and is not designed to fund resilience measures in advance of disasters. Congress could consider expanding the scope of the program to allow for the funding of resilience measures to some undamaged facilities that are at high risk, or could establish a separate resilience program while leaving Emergency Relief to retain its focus on disaster response and repair. "], "subsections": []}, {"section_title": "Federal Lands and Tribal Transportation Programs", "paragraphs": ["Congress has established three separate programs to fund highways on federal and tribal lands. Their total funding under the FAST Act has averaged about $1.1 billion per year. ", "The Federal Lands Transportation Program's average annual authorization is $355 million under the FAST Act. Most of this amount is for the National Park Service, the Fish and Wildlife Service, and the Forest Service. ", "The Federal Lands Access Program supports projects that are on, adjacent to, or provide access to federal lands. Funding is allocated among the states by a formula. ", "The Tribal Transportation Program distributes funds among tribes, mainly under a statutory formula based on road mileage, tribal population, and relative need. ", "In addition, the FAST Act established the Nationally Significant Federal Lands and Tribal Projects Program to support large projects on federal and tribal lands. Projects must have an estimated cost of at least $25 million, with priority given to projects costing over $50 million. The program is authorized at $100 million annually, but requires an appropriation to make funds available. It has received appropriations of $300 million for FY2018, $25 million for FY2019, and $70 million for FY2020. ", "Funding for all of these programs is likely to be an issue in reauthorization. The National Park Service, for example, has a considerable backlog of road repairs, but repairs to the agency-owned Memorial Bridge in Washington, DC, which cost 80% of the Park Service's average annual allocation under the FAST Act, made it difficult for the Park Service to address other repair needs. In addition, some states and Indian tribes have called for revising the formulas used to allocate Federal Lands Access Program and Tribal Transportation Program funds. "], "subsections": []}, {"section_title": "TIFIA", "paragraphs": ["Although the majority of highway funds are awarded as grants, the federal government also supports highway infrastructure financing under the Transportation Infrastructure Finance and Innovation Act (TIFIA).", "The TIFIA program provides secured loans, loan guarantees, and lines of credit for major surface transportation projects. Loans must be repaid with a dedicated revenue stream; for highway projects this is typically a toll. TIFIA is funded at $300 million for FY2020. Assuming an average subsidy cost of 7%, this funding may allow lending of roughly $4.3 billion in the year. States may use their funds from two formula programs, NHPP and STBG, to pay the administrative and subsidy costs of the program. Additionally, the FAST Act allows project sponsors to use discretionary INFRA grants to pay these costs, although this has not occurred.", "The main issue in reauthorization is the funding level. Despite the program's popularity, DOT calculated that it had $1.65 billion unobligated budget authority at September 30, 2018. Congress could encourage greater use of TIFIA funds by increasing the federal project share allowable, broadening eligibility, and accelerating the processing of applications. Should Congress wish to increase the availability of TIFIA financing without increasing the program authorization, it could also change the subsidy calculation. A less conservative calculation by DOT and the Office of Management and Budget (OMB) could allow DOT to lend a greater amount with the same amount of budget authority, although this would increase the level of risk to the federal government. Congress could also lower TIFIA funding to eliminate the unobligated balances.", "TIFIA is one means of financing projects without relying on pay-as-you-go funding, thereby accelerating construction. Other financing proposals, such as creation of a National Infrastructure Bank and expanded funding of state infrastructure banks, might also be considered in reauthorization. In the past, such proposals have faltered, in part due to their apparent duplication of intent with the TIFIA program. "], "subsections": []}, {"section_title": "Accelerating Project Delivery", "paragraphs": ["The length of time between project inception and completion has long been a concern of Congress. The many reasons for delays include difficulty in achieving agreement on the commitment of funds, public opposition, litigation, public comment requirements, contractor and materials delays, and the environmental review process. The FAST Act included 18 provisions intended to accelerate project delivery, mainly directing changes in how the environmental review process is implemented. In highway reauthorization, Congress may want to require studies evaluating the impacts of the FAST Act changes and FHWA's implementation actions."], "subsections": []}, {"section_title": "Highway Data Issues", "paragraphs": ["A number of highway data and study issues have emerged recently that could be considered in reauthorization.", "FHWA's Highway Statistics series is designed to provide a broad range of annual statistical tables and charts on the extent, condition, funding, and other attributes of U.S. highways. However, in recent years some of the tables have not been produced, while others are produced years after the fiscal year they describe, lessening their value to policymakers. Congress could request an explanation from FHWA or request the Government Accountability Office to review the FHWA's data collection and publication procedures. FHWA is dependent on the states for much of the underlying data.", "The recently released 23 rd edition of the biennial Status of the Nation's Highways, Bridges, and Transit: Conditions and Performance; Report to Congress was released two years late and based on FY2014 data. The report contains the most comprehensive information about the condition of U.S. highway and mass transit infrastructure conditions, along with estimates of the future funding needed to maintain or improve the conditions and transportation system performance. The most recent report does not reflect the increased funding authorized in the FAST Act or recent transportation appropriations bills, so it is difficult to judge the impact of these spending increases. Congress could consider requiring a study of why DOT relies on five-year-old data to prepare the report. ", "FHWA formerly produced Highway Cost Allocation Studies (HCASs) to estimate the cost, in terms of wear and tear, imposed by different types of vehicles (including trucks categorized by weight) using U.S. highways. In these studies, highway taxes per mile paid into the HTF by different types of vehicles were compared to the cost per mile of pavement, bridge, and other highway-related damage caused by each vehicle type. The last FHWA Highway Cost Allocation Study was the 2000 supplement to the 1997 study. Without a congressional directive and funding to complete a new study, the FHWA has chosen not to conduct one. Congress could consider funding and requesting a new study, which might be helpful in judging whether the current rates of highway-related taxes paid by various users adequately reflect the damage their vehicles cause to highway infrastructure. ", "Because freight infrastructure decisions are often made at the state or local level, it would be helpful for transportation planners to know the characteristics of the trucks traveling particular highway segments. DOT's Bureau of Transportation Statistics and the Census Bureau conduct a survey of shippers every five years that provides information on shipments leaving factories, warehouses, and ports. However, the sample size is not sufficient to provide reliable data for any specific urban area, and the survey is too infrequent to identify recent trends. The survey was designed more to provide a national picture of freight transport than to meet local or regional needs. A policy question for Congress is whether the federal government should be responsible for providing more robust and tim ely freight data for state and local transportation planners."], "subsections": []}, {"section_title": "Highway Safety", "paragraphs": ["Measures to improve the safety of roadway infrastructure are funded primarily through the FHWA Highway Safety Improvement Program (HSIP). Measures related to vehicles and to driver behavior are handled by the National Highway Traffic Safety Administration (NHTSA) and, in the case of commercial vehicles and drivers, the Federal Motor Carrier Safety Administration (FMCSA). ", "HSIP is the largest safety program up for reauthorization. HSIP primarily funds infrastructure improvements, such as rumble strips, roadway striping, intersection redesign, and safety-related technologies. HSIP is one of the few highway programs that allows for spending on any public road, not just federal-aid highways. Reauthorization issues include funding amounts and eligibility changes.", "Driver behavior is the primary factor in the vast majority of fatal crashes. However, driver behavior is generally a state matter and not under federal control. When Congress wishes to change driver behavior, it typically does so by providing grants to states or by withholding grants if states fail to implement federal policies. For example, states that fail to establish 21 as the minimum age to purchase alcoholic beverages can be subject to funding reductions. A review of the effectiveness of such penalties could be part of the reauthorization process. Past issues in driver behavior that could emerge in reauthorization include restrictions on federal funding of automated devices to enforce speed limits, motorcycle helmet laws, and state measures concerning impaired driving.", "NHTSA also establishes minimum standards for passenger vehicles. The time it takes NHTSA to update these standards has been an issue. NHTSA also tests vehicles for compliance with safety standards, rates the crashworthiness of vehicles, and monitors consumer complaints about vehicles for evidence of safety defects that may necessitate a vehicle recall. A study of the effectiveness of NHTSA's early warning reporting (EWR) system could be of interest to Congress.", "Unlike the behavior of ordinary drivers whose behavior is regulated by the state and local governments, the behavior of commercial drivers who engage in interstate commerce is a federal matter under the auspices of FMCSA. Issues that could be considered in reauthorization include the regulation of hours of service for commercial drivers and the related mandate for use of electronic logging devices, the roadside safety examination of intercity buses, specific driver health requirements, and possible modification of age restrictions on commercial drivers."], "subsections": []}]}]}}
{"id": "R46272", "title": "Trade-Related Agencies: FY2020 Appropriations, Commerce, Justice, Science, and Related Agencies (CJS)", "released_date": "2020-03-13T00:00:00", "summary": ["This report provides an overview of the Fiscal Year (FY) 2020 budget request and appropriations for the International Trade Administration (ITA), the U.S. International Trade Commission (USITC), and the Office of the United States Trade Representative (USTR). These three trade-related agencies are funded through the annual Commerce, Justice, Science, and Related Agencies (CJS) appropriations. This report also provides a review of these trade agencies' programs.", "The Administration's FY2020 Budget Request The President submitted his budget request to Congress on March 11, 2019. For FY2020, the Administration requested a total of $620.2 million for the three CJS trade-related agencies. The request was $26.8 million less (a 4.1% decrease) than the FY2019 appropriated amount. The request included the following for the three agencies.", "ITA : $460.1 million, 4.9% less than the FY2019 amount. USITC : $91.1 million, 4.1% less than the FY2019 amount. USTR : $69.0 million, 1.5% more than the FY2019 amount.", "Congressional Actions The House Committee on Appropriations reported its FY2020 CJS appropriations proposal, H.R. 3055 , in early June 2019 and passed the measure on June 25, 2019 by a 227-194 vote. The House-passed bill included a total of $694.0 million for the three CJS trade agencies, which was $47.0 million (or 7.3%) more than the FY2019-enacted amount, and $73.8 million (11.9%) more than the Administration's request. The House proposal included the following for the three agencies.", "ITA : $521.0 million, 7.6% more than the FY2019 amount, and 13.2% more than the Administration's request. USITC : $101.0 million, 6.3% more than the FY2019 amount, and 10.9% more than the Administration's request. USTR : $72.0 million, 5.9% more than the FY2019 amount, and 4.3% more than the Administration's request.", "The Senate Committee on Appropriations reported a CJS bill, S. 2584 , on September 26, 2019. In late October, the Senate took up the House-adopted CJS proposal, H.R. 3055 , and passed it with amendments, by a vote of 84-9 on October 31, 2019. The Senate-passed version included a total of\u00c2 $678.7 million for the three CJS trade agencies, which was $31.7 million (4.9%) more than the FY2019-enacted amount, $58.5 million (9.4%) more than the Administration's request, and overall $15.3 million less than the House-adopted bill. The Senate-passed version included the following for the three trade agencies.", "ITA : $510.3 million, 5.4% more than the FY2019 amount, and 10.9% more than the Administration's request. USITC : $99.4 million, 4.6% more than the FY2019 amount, and 9.1% more than the President's budget request. USTR : $69.0 million, 1.5% more than more than the FY2019 amount, and equal to the Administration's request.", "On December 20, 2019, the President signed the Consolidated Appropriations Act, 2020 ( P.L. 116-93 ), approving FY2020 annual appropriations for the three CJS trade agencies. The act included the Senate's proposed funding levels for these agencies. The act provided $678.7 million for the three trade-related agencies, which was $31.7 million (4.9%) more than FY2019, and $58.5 million (9.4%) more than the Administration's request. The act provided the following for the three trade-related agencies.", "ITA : $510.3 million, 5.4% more than the FY2019 amount, and 10.9% more than the Administration's request. USITC : $99.4 million, 4.6% more than the FY2019 amount, and 9.1% more than the Administration's request. USTR : $69.0 million, 1.5% more than more than the FY2019 amount, and equal in total to the Administration's request."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Overview", "paragraphs": ["The International Trade Administration (ITA), the U.S. International Trade Commission (USITC), and the Office of the United States Trade Representative (USTR) are funded through the annual Commerce, Justice, Science, and Related Agencies (CJS) appropriations. This report provides an overview of these agencies' programs and a comparison of the FY2020 CJS proposals with the previous year's enacted legislation. ", "For FY2019, the Consolidated Appropriations Act, 2019 ( P.L. 116-6 ), provided a total of $647.0 million in funding for the three CJS trade-related agencies. The FY2019 act provided $484.0 million in direct appropriations for ITA, $95.0 million for USITC, and a total of $68.0 million for USTR. The FY2019 appropriations for the three CJS trade-related agencies was a 0.2% decrease (-$1.3 million) from FY2018 appropriations ($648.3 million). ", "For FY2020, the Consolidated Appropriations Act, 2020 ( P.L. 116-93 ), provided $678.7 million for the three trade-related agencies, which was $31.7 million (4.9%) more than the FY2019 amount, and $58.5 million (9.4%) more than the Administration's request.", "See the Appendix for enacted budget authority for the trade-related agencies for FY2009-FY2020.", "In the FY2020 budget cycle, the House and Senate each passed different versions of their CJS proposals under the same bill number, H.R. 3055 . In this report, the House and Senate versions of H.R. 3055 refer to the CJS provisions passed on June 25, 2019 (House) and October 31, 2019 (Senate). The CJS provisions were later struck from H.R. 3055 , and a continuing resolution was inserted in their place. The CJS provisions were then inserted into a new measure, H.R. 1158 , which passed both chambers and was signed into law as the Consolidated Appropriations Act, 2020 ( P.L. 116-93 )."], "subsections": []}, {"section_title": "FY2020 Appropriations", "paragraphs": ["The President submitted his FY2020 budget request to Congress on March 11, 2019. The agencies released their congressional budget justification documents in the weeks afterward. In the President's FY2020 budget, the Administration requested a total of $620.2 million for the three CJS trade-related agencies. This request was $26.8 million less (-4.1%) than the FY2019 enacted level. ", "The House Committee on Appropriations reported its FY2020 CJS appropriations proposal, H.R. 3055 , in early June 2019 and passed the measure on June 25, 2019 by a 227-194 vote. The House-passed bill included a total of $694.0 million for the three CJS trade-related agencies. This proposal was $47.0 million more (7.3%) than the FY2019 enacted funding, and $73.8 million more (11.9%) than the Administration's request. The House-passed bill included $521.0 million for ITA, $101.0 million for USITC, and a total of $72.0 million for USTR.", "The Senate Committee on Appropriations reported its CJS bill, S. 2584 , on September 26, 2019. In late October, the Senate took up the House-adopted proposal, H.R. 3055 , and passed it with amendments by a vote of 84-9. The Senate-passed version of H.R. 3055 included a total of\u00c2\u00a0$678.7 million for the three CJS trade-related agencies, which was $31.7 million more (4.9%) than the FY2019-enacted amount and $58.5 million more (9.4%) than the Administration's request. The Senate-passed version included $510.3 million for ITA, $99.4 million for USITC, and a total of $69.0 million for USTR. The Senate's proposed funding levels were enacted in the Consolidated Appropriations Act, 2020 ( P.L. 116-93 ). ", "The President signed the Consolidated Appropriations Act, 2020 ( P.L. 116-93 ), on December 20, 2019, approving FY2020 annual appropriations for the three CJS trade agencies. The act provided $678.7 million for these agencies, which was $31.7 million more (4.9%) than the FY2019 amount, and $58.5 million more (9.4%) than the Administration's request. (For a full summary, see Table 1 ) "], "subsections": [{"section_title": "International Trade Administration (ITA)10", "paragraphs": ["The International Trade Administration is a bureau within the Department of Commerce. ITA's mission is to improve U.S. prosperity by strengthening the competitiveness of U.S. industry, promoting trade and investment, and ensuring compliance with trade laws and agreements. ITA provides export promotion services; works to enforce and ensure compliance with trade laws and agreements; administers trade remedies such as antidumping and countervailing duties; and provides analytical support for ongoing trade negotiations.", "ITA went through a major organizational change in October 2013 in which it consolidated four organizational units into three more functionally aligned units: (1) Global Markets, (2) Enforcement and Compliance, and (3) Industry and Analysis. ITA also has a fourth organizational unit, the Executive and Administrative Directorate, which is responsible for providing policy leadership, information technology support, and administration services for all of ITA. ( Table 2 outlines ITA FY2020 budget proposals by unit, and Table A-1 shows budget amounts for ITA by unit between FY2009 and FY2019.)", "For FY2020, the Administration requested $460.1 million for ITA in direct appropriations, with an additional $11.0 million to be collected in user fees, for a total of $471.1 million in authorized spending. With respect to direct appropriations, this request was $23.9 million less (-4.9%) than the FY2019 enacted funding level.", "The House-passed H.R. 3055 included $521.0 million in direct appropriations for ITA, with an additional $11.0 million to be collected from user fees, for a total of $532.0 million in authorized spending. With respect to direct appropriations, this proposal was $37.0 million more (7.6%) than the FY2019 enacted funding level and $60.9 million more (13.2%) than the Administration's request. ", "The Senate-passed version proposed $510.3 million in direct appropriations for ITA with an additional $11.0 million to be collected from user fees, for a total of $521.3 in authorized spending. With respect to direct appropriations, this proposal was $26.3 million more (5.4%) than the FY2019 funding, and $50.2 million more (10.9%) than the Administration's request.", "The Consolidated Appropriations Act, 2020 ( P.L. 116-93 ), adopted the Senate-proposed funding level of $510.3 for ITA's top-level funding ( Table 1 )."], "subsections": [{"section_title": "Global Markets Unit", "paragraphs": ["ITA's Global Markets (GM) unit is a combination of the United States and Foreign Commercial Service (US&FCS) program that provides export promotion services to U.S. businesses and the SelectUSA program that works to attract foreign investment into the United States. Through US&FCS, GM aims to promote U.S. exports by helping U.S. exporters research foreign markets and identify opportunities abroad. GM's country and regional experts\u00e2\u0080\u0095in domestic and overseas offices\u00e2\u0080\u0094advise U.S. companies on market access, local standards, and regulations. The unit also helps to make connections through business-to-business trade shows, fairs, and missions. GM is designed to advance U.S. commercial interests by engaging with foreign governments and U.S. businesses, identifying and resolving market barriers, and leading efforts that advocate for U.S. firms with foreign governments. Through its SelectUSA program, the GM unit promotes the United States as a destination for foreign investment. (For more on SelectUSA, see section \" SelectUSA Program \" below.)", "For FY2020, the Administration proposed reducing funding for the Global Markets unit. The Administration requested $278.0 million for Global Markets, an amount $42.0 million less (-13.1%) than the FY2019-enacted amount ( Table 2 ). The Administration proposed rescaling the Global Markets unit by \"reducing personnel worldwide and closing overseas and domestic offices\u00e2\u0080\u00a6 ITA estimated the need to close 32 offices overseas, 18 offices domestically, and reduce personnel [by 114 positions]\" in an effort \"to reduce fixed operational expenses. \"", "In the reports accompanying the committee-reported bills, the House and Senate Committees did not adopt the Administration's proposed cuts to Global Markets, and instead recommended boosting funding for the Global Markets unit.", "For FY2020, the House Appropriations Committee recommended $338.6 million for Global Markets, an amount $18.6 million more (5.8%) than the FY2019 enacted funding level and $60.7 million more (21.8%) than the Administration's request.", "The Senate Committee on Appropriations recommended $335.3 for Global Markets, which was $15.3 million more (4.8%) than the FY2019 enacted amount, and $57.3 million more (20.6%) than the Administration's request. The report to accompany the Senate committee-reported CJS appropriations bill included language directing ITA to spend \"no less than $130 million on employee compensation [for Global Markets];\" and noted that, \"at this funding level, the Committee will not approve any request to close foreign or domestic offices.\"", "As outlined in the explanatory statement accompanying the act, the Consolidated Appropriations Act, 2020, provided \"no less than $333,000,000 for Global Markets.\""], "subsections": []}, {"section_title": "Enforcement and Compliance", "paragraphs": ["The mission of ITA's Enforcement and Compliance unit is to enforce U.S. trade laws and ensure compliance with negotiated international trade agreements. The Enforcement and Compliance unit is responsible for enforcing U.S. antidumping and countervailing duty (AD/CVD) laws; overseeing a variety of programs and policies regarding the enforcement and administration of U.S. trade remedy laws; assisting U.S. industry and businesses with unfair trade matters; and administering the Foreign Trade Zone program and other U.S. import programs.", "For FY2020, the Administration proposed $93.8 million for Enforcement and Compliance. This request was $5.3 million more (6.0%) than the FY2019 budget authority ( Table 2 ). According to ITA's congressional budget submission, some of the Administration's objectives for the proposed increase for Enforcement and Compliance were:", "to address increasing caseloads of AD/CVD investigations; to provide technical assistance on Section 232 exclusion requests; and to establish a dedicated team to investigate allegations of circumvention and duty evasion by foreign exporters and their U.S. importers.", "For FY2020, the House-passed version of H.R. 3055 included $94.8 million for Enforcement and Compliance, which was $6.3 million more (7.2%) than the FY2019 budget authority, and $1.0 million more (1.1%) than the Administration's request ( Table 2 ).", "In the Senate, language in the report accompanying the Senate committee-reported bill recommended \"$1,000,000 above the fiscal year 2019 enacted level [$88.5 million] for the Office of Enforcement and Compliance to establish a dedicated anti-circumvention and duty evasion enforcement unit.\"", "The explanatory statement accompanying the Consolidated Appropriations Act, 2020, did not provide specific funding levels. The statement outlined that:", "The agreement does not assume House levels for Industry and Analysis, Enforcement and Compliance, and Executive Direction and Administration. However, ITA is directed to take steps to fill important vacancies across the agency in support of trade promotion, facilitation, and enforcement, as well as additional staff to support the Committee on Foreign Investment in the United States and the new Anti-Circumvention and Evasion Unit."], "subsections": []}, {"section_title": "Industry and Analysis", "paragraphs": ["ITA's Industry and Analysis unit brings together ITA's industry, trade, and economic experts to advance the competitiveness of U.S. industries through the development and execution of international trade and investment policies, export promotion strategies, and investment promotion. It develops economic and international policy analysis to improve market access for U.S. businesses, and designs and implements trade and investment promotion programs. The unit serves as the primary liaison between U.S. industries and the federal government on trade and investment promotion. It administers programs that support small and medium-sized enterprises, such as the Market Development Cooperator Program.", "For FY2020, the Administration proposed increasing funding for the Industry and Analysis unit. The Administration requested $62.6 million for Industry and Analysis. This request was $10.0 million more (19.1%) than the FY2019 budget authority ( Table 2 ). According to ITA's budget justification, some of the Administration's objectives for the proposed increase were:", "to meet the expected increase in cases related to foreign investment in the United States and to implement the Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA); to develop staff with economic modeling skills and sectoral expertise; to manage the trade processes related to the tariffs imposed under certain U.S. trade law (Sections 301, 201, 232 ); and to provide analysis relevant to ongoing and future trade negotiations and the resolutions of trade barriers.", "For FY2020, the House-passed bill included $62.6 million for Industry and Analysis, which was $10.0 million (19.1%) more than the FY2019 budget authority and equal to the Administration's request ( Table 2 ).", "In the Senate, a specific funding level was not provided for Industry and Analysis. Language in the report accompanying the Senate committee-reported CJS bill did recommend \"provid[ing] the requested program changes for Industry and Analysis to implement \u00e2\u0080\u00a6 [FIRRMA] ( P.L. 116-115 \u00e2\u0080\u0093232) and for increased analytical capabilities.\"", "The explanatory statement accompanying the Consolidated Appropriations Act, 2020, did not provide specific funding levels. The statement outlined that:", "The agreement does not assume House levels for Industry and Analysis, Enforcement and Compliance, and Executive Direction and Administration. However, ITA is directed to take steps to fill important vacancies across the agency in support of trade promotion, facilitation, and enforcement, as well as additional staff to support the Committee on Foreign Investment in the United States and the new Anti-Circumvention and Evasion Unit."], "subsections": []}]}, {"section_title": "U.S. International Trade Commission (USITC or the Commission)", "paragraphs": ["USITC is an independent, quasi-judicial agency responsible for conducting trade-related investigations and providing independent technical advice on U.S. international trade policy to Congress, the President, and USTR. The Commission (1) investigates and determines whether imports injure a domestic industry or violate U.S. intellectual property rights; (2) provides independent tariff, trade, and competitiveness-related analysis to the President, Congress, and USTR; and (3) maintains the U.S. tariff schedule. USITC also serves as a federal resource for trade data and other trade policy information. It makes most of its information and analyses available to the public to promote understanding of competitiveness, international trade issues, and the role that international trade plays in the U.S. economy.", "USITC's annual budget request to Congress is subject to two types of submission: (1) the President's budget request for the Commission, included in the President's annual budget; and (2) the Commission's independent budget request. USITC has the authority to submit its budget directly to Congress without revision by the President, pursuant to Section 175 of the Trade Act of 1974.", "The President's FY2020 budget requested $91.1 million in funding for USITC. This request was $3.9 million less (-4.1%) than FY2019-enacted appropriation ( Table 1 ). While the President requested a decrease in funding for USITC, the Commission's independent budget submission requested $101.0 million, which was $6.0 million more (6.3%) than FY2019 funding and $9.9 million more (10.9%) than the President's budget request.", "The House-passed H.R. 3055 included $101.0 million for USITC. This represented $6.0 million more (6.3%) than FY2019 funding and $9.9 million more (10.9%) than the President's budget request.", "The Senate-passed version of H.R. 3055 included $99.4 million for USITC. This proposal was $4.4 million more (4.6%) than the FY2019 funding, and $8.3 million more (9.1%) than the President's budget request.", "The Consolidated Appropriations Act, 2020 ( P.L. 116-93 ) enacted the Senate's funding level of $99.4 million for USITC ( Table 1 )."], "subsections": []}, {"section_title": "Office of the U.S. Trade Representative (USTR)", "paragraphs": ["USTR has primary responsibility for developing and coordinating U.S. international trade and direct investment policies, as the head of the interagency trade policy coordinating process. Located in the Executive Office of the President, USTR is the President's principal advisor on trade policy and the President's chief negotiator for international trade agreements, including commodity and direct investment negotiations. USTR negotiates directly with foreign governments to create trade agreements and resolve disputes, and participates in global trade policy organizations such as the World Trade Organization. It also meets with business groups, policymakers, and public interest groups on trade policy issues. ", "In addition to direct appropriations for USTR, supplementary funding for the agency is available through the congressionally established Trade Enforcement Trust Fund. For more detail on the trust fund, see section \" Trade Enforcement Trust Fund (TETF) \" below.", "For FY2020, the Administration requested a total of $69.0 million for USTR, including $59.0 million for salaries and expenses and $10.0 million to be derived from the TETF for certain trade enforcement activities ( Table 3 ). This request was $1.0 million more (1.5%) than the FY2019 enacted funding level. ", "The House-passed version of H.R. 3055 recommended a total of $72.0 total for USTR, including $57.0 million for salaries and $15.0 million to be derived from the TETF for certain trade enforcement activities ( Table 3 ). The House proposal for USTR was $4.0 million more (5.9%) than the FY2019 enacted funding and $3.0 million more (4.3%) than the request.", "The Senate-passed version recommended a total of $69.0 million for USTR, including $54.0 million for salaries and expenses and $15.0 million to be derived from the TETF. The proposed amount was $1.0 million more (1.5%) than the FY2019 funding amount. While the Senate-passed total funding amount for USTR was equal to the Administration's request, it included a different distribution of funds between USTR's salaries and expenses account and funds to be derived from the TETF (see Table 3 ).", "The Consolidated Appropriations Act, 2020 ( P.L. 116-93 ) enacted the Senate's funding levels of $69.0 million for USTR, including $54.0 million for salaries and expenses and $15.0 million to be derived from the TETF ( Table 3 ). "], "subsections": []}, {"section_title": "Selected Trade-Related Programs and Activities", "paragraphs": ["Over the past decade, Congress has provided funding for specific trade-related programs or activities within broader agency budgets. The following programs are highlighted in this report, due to ongoing congressional interest: (1) ITA's China trade enforcement and compliance activities; (2) ITA's investment promotion activities in its SelectUSA Program; (3) the Survey of International Air Travelers (SIAT) within ITA; and (4) the Trade Enforcement Trust Fund, which funds certain activities of USTR."], "subsections": [{"section_title": "China Trade Enforcement and Compliance Activities, ITA", "paragraphs": ["Since 2004, Congress has dedicated some of ITA's funding to AD/CVD enforcement and compliance activities with respect to China and other nonmarket economies. ITA's Office of China Compliance was established by the Consolidated Appropriations Act of 2004 ( P.L. 108-199 ). Its primary role has been to enforce U.S. AD/CVD laws and to develop and implement other policies and programs aimed at countering unfair foreign trade practices in China. ITA's China Countervailing Duty Group was established by the Consolidated Appropriations Act, 2010 ( P.L. 111-117 ) to accommodate the workload that resulted from the application of countervailing duty law to imports from nonmarket economy countries.", "The Office of China Compliance is within the Enforcement and Compliance unit at ITA. ITA's FY2020 budget justification did not provide a breakdown of funding for its China AD/CVD activities.", "In agreement with both the House and Senate-passed proposals, the Consolidated Appropriations Act, 2020 ( P.L. 116-93 ) provided $16.4 million for China antidumping and countervailing duty enforcement and compliance activities in FY2020, an amount equal to the FY2019-enacted funding."], "subsections": []}, {"section_title": "SelectUSA Program, ITA", "paragraphs": ["SelectUSA was established by executive order in 2011 as a Commerce Department program to (1) promote the United States as an investment market and (2) address investor climate concerns that could impede investment in the United States. SelectUSA coordinates investment-related resources across more than 20 federal agencies; serves as an information resource for international investors; and advocates for U.S. cities, states, and regions as investment destinations. SelectUSA currently is part of ITA's Global Markets unit.", "ITA's FY2020 budget justification did not provide a breakdown for requested funding for SelectUSA.", "The House-passed H.R. 3055 also did not include a breakdown for specific funding for SelectUSA, within ITA's Global Markets unit.", "The Senate-passed H.R. 3055 included up to $10.0 million for SelectUSA for FY2020.", "The Consolidated Appropriations Act, 2020 ( P.L. 116-93 ) adopted the Senate funding level."], "subsections": []}, {"section_title": "Survey of International Air Travelers (SIAT), ITA", "paragraphs": ["ITA's Survey of International Air Travelers (SIAT) gathers statistics about air passenger travelers in the United States. Federal agencies use these statistics for a variety of purposes, such as to estimate the contribution of international travel to the economy, develop public policy on the travel industry, and forecast staffing needs at consulates and ports of entry. ", "SIAT is within the Industry and Analysis unit at ITA. The Administration proposed an increase of $3.0 million to support SIAT in FY2020, within the Industry and Analysis' funding.", "The House and Senate both recommended $3.0 million to support SIAT in FY2020, within the ITA budget.", "The Consolidated Appropriations Act, 2020, did not provide a specific funding amount for SIAT."], "subsections": []}, {"section_title": "Trade Enforcement Trust Fund (TETF), USTR", "paragraphs": ["In order to provide additional funding for USTR's trade enforcement activities, Congress established the Trade Enforcement Trust Fund (TETF) in 2016. In Section 611 of the Trade Facilitation and Trade Enforcement Act of 2015 ( P.L. 114-125 ), Congress set up the trust fund and outlined authorized uses of the funds. According to Section 611(d), USTR can use funds from the TETF to (1) monitor and enforce trade agreements and World Trade Organization (WTO) commitments; (2) support trade capacity-building assistance to help partner countries meet their free-trade agreement obligations and commitments; and (3) investigate petitions concerning unfair trade practices under Section 301 of the Trade Act of 1974. USTR can also transfer funds to select federal agencies for trade enforcement activities authorized in Section 611(d) of the Trade Facilitation and Trade Enforcement Act of 2015.", "For FY2020, the Administration requested $10.0 million to be derived from the TETF. This request was $5.0 million less than the FY2019-enacted amount. (See Table 3 ).", "Both the House- and Senate-passed versions of H.R. 3055 included $15.0 million to be derived from the TETF, for trade enforcement activities authorized by the Trade Facilitation and Trade Enforcement Act of 2015. The recommendations were equal to the FY2019 enacted funding level, and were $5.0 million more than the Administration's request. (See Table 3 .) The House and Senate Appropriation committees also directed USTR to provide more detailed reporting on how funds from the Trust Fund are used.", "The Consolidated Appropriations Act, 2020 ( P.L. 116-93 ) provided $15.0 million to be derived from the TETF, for trade enforcement activities authorized by the Trade Facilitation and Trade Enforcement Act of 2015. The funding level was equal to the FY2019 enacted funding level, and was $5.0 million more than the Administration's request."], "subsections": [{"section_title": "Appendix. Budget Authority Tables", "paragraphs": [], "subsections": []}]}]}]}]}}
{"id": "R46180", "title": "Federal Crop Insurance: Record Prevent Plant (PPL) Acres and Payments in 2019", "released_date": "2020-01-15T00:00:00", "summary": ["U.S. agricultural production got off to a late start in 2019 due to prolonged cool, wet springtime conditions throughout the major growing regions, particularly in states across the northern plains and eastern Corn Belt. Saturated soils prevented many farmers from planting their intended crops\u00e2\u0080\u0094such acres are referred to as \"prevent plant (PPL)\" acres. As of November 1, 2019, the U.S. Department of Agriculture (USDA) reported that farmers were unable to plant a record 19.6 million acres in 2019\u00e2\u0080\u0094including 11.4 million acres of corn and 4.5 million acres of soybeans. The previous record for total PPL acres was set in 2011, when USDA reported 10.2 million acres of PPL.", "USDA's Risk Management Agency (RMA) reported on November 15, 2019, that 2019 PPL indemnity payments were over $4.2 billion, with $2.6 billion (60.6%) for corn PPL acres and $1.1 billion (25%) for soybean PPL acres. The 2019 average national PPL payment rate for all crops was $224.04 per acre. Payment rates varied by crop and ranged from a low of $50 per acre for millet to a high of $1,432 per acre for dark air cured tobacco.", "The unusually wet spring conditions that produced the record PPL acres in 2019 were heavily concentrated in Corn Belt states but were also reported in significant numbers in Arkansas, Texas, Mississippi, Louisiana, North Carolina, Tennessee, New York, and Oklahoma. However, South Dakota's 3.9 million acres of PPL were more than double second-place Ohio's 1.4 million of PPL acres. South Dakota's PPL acres accounted for over 20% of the national total in 2019, while its PPL indemnity payments of over $925 million accounted for 21.9% of national PPL indemnity payments. During the previous 19-year period from 2000 to 2018, national PPL averaged 4.1 million acres annually with average indemnities of $680 million per year. Of these national totals, South Dakota accounted for an average of 10% of PPL acres (406 million acres) and 11.2% of PPL indemnities ($76.4 million).", "Farmers that were unable to plant a crop during the spring of 2019 due to natural causes were potentially eligible for multiple payments under federal farm programs. First, federal crop insurance provides PPL coverage under a standard policy that covers pre-planting cost and potential revenue loss. Second, the FY2019 supplemental authorized disaster assistance payments for PPL (referred to as \"top up\") in addition to crop insurance indemnities. Third, the Administration's 2019 MFP payments, although based on planted acres, also included payments for eligible cover crops planted on PPL acres.", "In addition to the unplanted acres, a sizeable portion of the U.S. corn and soybean crops was planted later than usual. Such late planting meant that initial crop development would be behind normal across much of the major growing regions and that eventual yields would depend on beneficial weather extending late into the fall to achieve full crop maturity. Widespread wet conditions continued into the fall, especially in the northern plains and western Corn Belt. Ultimately, much of the corn crop was harvested under wet conditions with high moisture content that required drying. Due to the high costs of propane for drying, many farmers chose to leave their corn in the field until more beneficial market conditions emerged. As of December 16, 2019, USDA estimated that 8% (or 7.2 million acres) of the U.S. corn crop had yet to be harvested, adding further to the uncertainty of yields and harvested acreage for the 2019 corn crop.", "Saturated soil conditions heading into the winter months suggests a continuation of wet conditions into the 2020 planting season and the potential for a repeat of planting difficulties in the year ahead. Should wet conditions persist in 2020 and create a situation where farmers are again confronted with delayed or prevented planting, many producers may also bump up against a limit on the continued use of crop insurance PPL. Another looming concern for market watchers and policymakers is that, should wet conditions persist in 2020, they could signal the potential for continued dependence on federal programs to sustain farm incomes in 2020."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["This report analyzes the effects of historic wet conditions during the 2019 growing season on major U.S. field crops, primarily corn and soybeans. These effects include record acres prevented from being planted, widespread delays in planting and harvesting of the corn and soybean crops, large crop insurance indemnity payments due to prevented plantings and weather-related yield losses, and additional ad hoc payments announced for producers experiencing both trade damage and losses from prevented planting. ", "This report focuses on corn and soybeans\u00e2\u0080\u0094the two largest commercial crops grown in the United States in terms of number of producers, cultivated area, volume produced, and value of production. Together, they account for 54% of land planted to major field crops since 2010. They are critical inputs for several sectors, including the livestock, biofuels, food processing, and export sectors. As a result, any delay or reduction from expected output for either of these crops can have important implications for market prices and the broader U.S. farm economy.", "The U.S. Department of Agriculture (USDA) forecasted an increased role of federal support for farm incomes in 2019\u00e2\u0080\u0094including $22.4 billion in direct support payments and $10.3 billion in federal crop insurance indemnity payments. Together, the forecast of USDA farm support plus crop insurance indemnities of $32.7 billion represents a 35.3% share of U.S. net farm income $92.5 billion. Since 2010, the federal crop insurance program has emerged as the largest component of the farm safety net in terms of taxpayer outlays, averaging $7.8 billion annually in premium subsidies. While USDA implements the federal crop insurance program, Congress is responsible for authorizing and funding it. The federal crop insurance program is permanently authorized by the Federal Crop Insurance Act of 1980 ( P.L. 96-365 ), as amended (7 U.S.C. \u00c2\u00a71501 et seq. ) and receives mandatory funding. Each of the past three farm bills\u00e2\u0080\u0094P.L. 10-246 (2008), P.L. 113-79 (2014), and P.L. 115-334 (2018)\u00e2\u0080\u0094has included a separate title to modify crop insurance program provisions. "], "subsections": []}, {"section_title": "Wet Spring Affects Corn and Soybean Planting", "paragraphs": ["U.S. agricultural production got off to a late start in 2019 due to prolonged cool, wet springtime conditions throughout the major growing regions, particularly in states across the northern plains and eastern Corn Belt. Saturated soils prevented many farmers from planting their intended crops (see text box below). Such acres are referred to as \"prevent plant\" (PPL) acres. ", "In addition to the unplanted acres, sizeable portions of the U.S. corn and soybean crops were planted later than usual, especially in Illinois, Michigan, Missouri, Ohio, Wisconsin, and North and South Dakota. Traditionally, 96% of the U.S. corn crop is planted by June 2, but in 2019 by that date 67% of the crop had been planted ( Figure 1 ). Similarly, the U.S. soybean crop was planted with substantial delays. By June 16, 77% of the U.S. soybean crop was planted, whereas an average of 93% of the crop has been planted by that date during the previous five years ( Figure 2 )."], "subsections": [{"section_title": "Planting Delays Complicate Producer Choices", "paragraphs": ["Widespread planting delays for corn and soybeans pushed both crops' growing cycle into hotter, drier periods of the summer than usual. In addition, maximizing yield potential will likely depend on beneficial weather extending into the fall to achieve full crop maturity. This would potentially make crop growth vulnerable to an early freeze in the fall that would terminate further yield growth. ", "Also, planting delays increase the complexity of producer decisionmaking. When the planting occurs after a crop insurance policy's \"final planting date\" (FPD), the \"late planting period\" clause in the policy comes into play, and insurance coverage starts to decline with each successive day of delay ( Figure 3 ). ", "Insured acres planted on or before the FPD receive the full yield or revenue coverage that was purchased. However, if the crop is planted after the FPD, insurance coverage is reduced by 1% per day throughout the late-planting period (which begins the day after the FPD and extends for 25 days for both corn and soybeans). During the late-planting period, producers must decide whether to opt for a PPL indemnity payment or try to plant the crop under reduced insurance coverage with a heightened risk of reduced yields.", "Despite the risks associated with this choice, large portions of both the corn and soybean crops were planted after the FPD ( Figure 1 and Figure 2 ). The choice of planting versus not planting was complicated in 2019 by Secretary of Agriculture Perdue's announcement on May 23 that only producers with planted acres would be eligible for \"trade damage\" assistance payments in 2019 under the Market Facilitation Program (MFP). The Secretary's announcement, which came in the middle of the planting period, could have encouraged greater planting than would have otherwise occurred as farmers sought to ensure eligibility for the 2019 MFP payment.", "During 2018, U.S. soybean and corn producers had received MFP payments based on their farms' harvested output, including $1.65 per bushel for soybean and $0.01 per bushel for corn. For 2019, the Secretary of Agriculture was offering higher payment rates of $2.05 per bushel for soybeans and $0.14 for corn. However, the MFP payment formula would use planted acres\u00e2\u0080\u0094not harvested production\u00e2\u0080\u0094and combine the commodity-specific payment rates of major program crops (referred to as \"non-specialty crops\") at the county level (weighted by historical county planted acres and yields) to derive a single county-level MFP payment rate. The potential for 2019 MFP payments could have provided sufficient incentive for some producers to plant their corn and soybean crops under conditions they would not have otherwise (e.g., to plant their crops in wet fields where potential yield-reducing problems associated with seed germination and soil compaction are increased). If such planting did occur, it likely prevented even larger PPL acres from being reported.", "Additionally, overarching uncertainty remained in 2019 associated with the then-ongoing trade dispute between the United States and China. The dispute had reduced U.S. agricultural exports in 2018 and dampened prospects for both commodity prices and export volumes in 2019. These factors further complicated producers' evaluations of market payoffs under different planting and crop insurance choices."], "subsections": []}, {"section_title": "Record PPL Acres in 2019", "paragraphs": ["The two principal sources for data on PPL acres within USDA\u00e2\u0080\u0094the Farm Service Agency (FSA) and the Risk Management Agency (RMA)\u00e2\u0080\u0094provide similar but not identical estimates of PPL ( Figure 4 ). FSA oversees the implementation of USDA's farm revenue-support and disaster assistance programs. All producers that participate in these farm programs are required to report their acreage and yields to FSA in an annual acreage report that details crop production activity by specific field. ", "RMA oversees the implementation of USDA's crop insurance programs. All participating producers provide detailed information on insured crops and land to RMA. Farmers report the same number of acres to RMA and FSA. However, not all farms participate in USDA farm programs or buy federal crop insurance. As a result, differences in reported acres planted, harvested, and prevented from being planted occur between the two sources.", "As of November 1, 2019, U.S. farmers reported to FSA that, of the cropland that they intended to plant this past spring, they were unable to plant 19.6 million acres due primarily to prolonged wet conditions that prevented field work. In contrast, RMA reported a record 18.8 million of PPL acres. The previous record for total PPL acres was set in 2011, when RMA reported 10.2 million acres and FSA reported 9.6 million of PPL."], "subsections": [{"section_title": "PPL Comparison by Crop: Corn and Soybeans Dominate", "paragraphs": ["In 2019, FSA reported 19.6 million PPL acres, including 11.4 million acres of corn and 4.5 million acres of soybeans\u00e2\u0080\u0094both crops established new records for PPL acres by substantial margins. The previous record PPL for corn was 2.8 million acres in 2013, and for soybeans it was 2.1 million acres in 2015. By way of comparison, in 2019 RMA's PPL acres included slightly more soybean (5.3 versus 4.5 million) and wheat (2.4 versus 2.2 million) acres and less corn (9.5 versus 11.4 million) acres. For both datasets (FSA and RMA), corn, soybeans, and wheat accounted for over 90% of PPL acres (92.3% for FSA, 91.5% for RMA).", "RMA reported 2019 PPL indemnity payments of over $4.2 billion, with $2.6 billion (60.6%) for corn PPL acres and $1.1 billion (25%) for soybean PPL acres ( Table 1 ). The 2019 average national PPL payment rate for all crops was $224.04 per acre. Payment rates vary by crop and ranged from a low of $50 per acre for millet to a high of $1,432 per acre for dark air cured tobacco.", "Some economists have suggested that the large discrepancy in corn PPL acres between the two data sources (1.9 million acres) could be the result of acres originally intended to be planted to soybeans being claimed as corn PPL acres to obtain the higher PPL indemnity for corn available under federal crop insurance. In their analysis of historical PPL indemnity rates, the PPL payment rate was almost always higher for corn than soybeans. In 2019, corn's average PPL payment rate of $270.13 per acre was about $70 per acre (34.7%) higher than soybean's average PPL payment rate ( Table 1 ). Thus, producers had an incentive to claim PPL for corn to the maximum extent possible, whether corn or soybeans was the intended crop.", "A breakout of PPL acres by state and by major commodity is available in the Appendix to this report ( Table A-1 )."], "subsections": []}, {"section_title": "PPL Comparison by State: South Dakota Stands Out", "paragraphs": ["The unusually wet spring conditions that produced the record PPL acres in 2019 were heavily concentrated in Corn Belt states but were also reported in significant amounts in Arkansas, Texas, Mississippi, Louisiana, North Carolina, Tennessee, New York, and Oklahoma ( Table 2 ). However, the 3.9 million acres of PPL reported in South Dakota (primarily the eastern portion of the state) were more than double second-place Ohio, where 1.4 million PPL acres were reported. South Dakota's PPL acres accounted for over 20% of the national total in 2019, while its PPL indemnity payments of over $925 million accounted for 21.9% of national PPL indemnity payments."], "subsections": []}]}, {"section_title": "PPL Acres Eligible for Multiple Payments", "paragraphs": ["Farmers who were unable to plant a crop during the spring of 2019 due to natural causes were eventually eligible for multiple payments under federal farm programs. First, federal crop insurance provides PPL coverage under a standard policy that covers pre-planting cost and potential revenue loss. Second, the FY2019 supplemental authorized disaster assistance payments for PPL (referred to as \"top up\") in addition to crop insurance indemnities. Third, the Administration's 2019 MFP payments were based on planted acres. However, payments were also included for eligible cover crops planted on PPL acres."], "subsections": [{"section_title": "Crop Insurance PPL Indemnity Payments", "paragraphs": ["If producers are prevented from planting an insured crop because of an insured peril (described below), then the PPL provisions of a standard crop insurance policy compensate the affected producers for pre-planting costs incurred in preparation for planting their insured crops. ", "Crop insurance PPL coverage is available for any farm-based COMBO policy. COMBO policies include individual yield or revenue insurance policies:", "Revenue protection (RP) insures a producer-selected coverage level of the farm's historical yield times the higher of the projected price or the harvest price. RP with the harvest price exclusion insures a producer-selected coverage level of the farm's historical yield times the projected price. Yield protection insures for a producer-selected coverage level of the farm's historical yield. ", "Area-based revenue and yield policies\u00e2\u0080\u0094such as Area Risk Protection and Area Yield Protection\u00e2\u0080\u0094that rely on county yields and revenues to trigger indemnity payments are not eligible for PPL indemnities."], "subsections": [{"section_title": "Calculating the PPL Indemnity", "paragraphs": ["As described in the section \" Planting Delays Complicate Producer Choices ,\" policyholders who are prevented from planting acres until after the FPD may choose not to plant the crop and instead receive a PPL indemnity, calculated as a percentage of the original insurance guarantee (e.g., 55% for corn and 60% for soybean). For example, suppose that a corn producer with an insurable yield of 200 bushels per acre has purchased RP at an 80% coverage level with an RMA projected price of $4.00 per bushel. For this policy: ", "The RP coverage guarantee is 200 x $4.00 x 80% = $640 per acre; The PPL indemnity is 55% x $640 = $352 per acre.", "Alternately, consider a hypothetical soybean producer with an average production history yield of 50 bushels per acre, an RMA projected price of $9.54 per bushel, and an RP policy with an 80% coverage level. For this policy: ", "The RP coverage guarantee is 50 x $9.54 x 80% = $381.60 per acre; The PPL indemnity is 60% x $381.60 = $228.96 per acre."], "subsections": []}]}, {"section_title": "FY2019 Supplemental Top Up Payments for PPL Losses", "paragraphs": ["On June 3, 2019, Congress passed a FY2019 supplemental appropriations bill ( P.L. 116-20 ) that, among other assistance, authorized $3 billion in additional funds for disasters that impacted farmers and ranchers. The disaster funding is administered through multiple USDA programs and provides financial assistance to producers with production losses on both insured and non-insured crops. All of the agriculture funds are designated as emergency spending. ", "The supplemental funding covers several types of agricultural losses from 2018 and 2019, including losses for crops prevented from being planted in 2019. In particular, producers who claimed PPL losses in 2019 are eligible for a top up of 10%-15% of their PPL indemnity. The PPL top up is 15% for producers with standard RP policies that include the harvest price option as a default and 10% for producers who opted out of the harvest price option and selected the RP with harvest price exclusion policy. For 2019, 91% of corn and soybean insured acres were covered by RP with harvest price option. Under the corn and soybean examples introduced earlier, the supplemental top up would be calculated as:", "For a corn RP policy: 15% x $352 = $52.80 per acre; For a soybean RP policy: 15% x $$228.96 = $34.34 per acre."], "subsections": [{"section_title": "Requirements Associated with the Top Up Payments", "paragraphs": ["The FY2019 supplemental program limits payments to up to 90% of losses, including payments from crop insurance and the non-insured disaster assistance program (NAP) but excluding MFP payments. For producers who did not purchase crop insurance or NAP in advance of the natural disasters, payments are limited to 70% of losses. In addition, all recipients of any FY2019 supplemental disaster payments (including the PPL top up) are required to purchase crop insurance or NAP for the next two crop years."], "subsections": []}]}, {"section_title": "MFP Payments for PPL Cover Crops", "paragraphs": ["Under USDA's 2019 MFP program, eligibility for payments\u00e2\u0080\u0094which range from $15 to $150 per acre\u00e2\u0080\u0094is restricted to planted acres, thus excluding any PPL acres. However, on June 10, 2019, Secretary Perdue announced that USDA was exploring \"legal flexibilities\" to provide a minimal per acre MFP payment to farmers who opted for a PPL indemnity but also planted an MFP-eligible cover crop (such as barley, oats, or rye) with the potential to be harvested and for subsequent use of those cover crops for forage. On July 29, 2019, USDA announced a 2019 MFP payment rate of $15 per acre for PPL losses claimed on non-specialty crop acres followed by a USDA-approved cover crop."], "subsections": []}, {"section_title": "Combined PPL Payments from Multiple Programs", "paragraphs": ["In summary, a producer can combine payments from multiple programs without having planted the intended cash crop. While it is not likely to cover all losses incurred, the combination can result in a higher payment in 2019 than was possible in previous years. Based on the above example, a corn farmer with a standard RP policy and an 80% coverage level could receive combined PPL payments of $419.80 per acre, including the PPL indemnity ($352), the supplemental top up payment ($52.80), and the MFP payment for an eligible cover crop planted on PPL acres ($15). By comparison, the original RP policy with 80% coverage would have guaranteed a maximum revenue of $640 per acre had the insured crop been planted. On such an RP policy, a yield loss of nearly 66% would be necessary to generate an indemnity payment that would match the federal payout under the suite of multiple programs available to PPL acres in 2019.", "Similarly, the hypothetical soybean producer with a standard RP policy and an 80% coverage level could receive combined PPL payments of $278.30 per acre, including the PPL indemnity ($228.96), the supplemental top up payment ($34.34), and the MFP payment for an eligible cover crop planted on PPL acres ($15). ", "However, the second and third payment programs\u00e2\u0080\u0094the top up and the extended MFP payment on eligible cover crops\u00e2\u0080\u0094were not known until later in the growing season (June 3 for the top up and July 29 for the extended MFP payment) after most late planting versus PPL decisions had been made. Some preliminary research suggests that some farmers that might have been better off choosing PPL with top up and extended MFP on cover crops but instead elected to plant corn or soybeans. This choice may have been driven in part by then-relatively high futures market prices and the prospect of qualifying for the 2019 MFP payment, which required planting an eligible crop as announced by Secretary Perdue on May 23."], "subsections": []}]}]}, {"section_title": "Late Harvest Suggests Additional Crop Losses", "paragraphs": ["In addition to the PPL acres, large portions of the corn and soybean crops were planted two to four weeks later than usual ( Figure 1 and Figure 2 ). Such late planting meant that initial crop development would be behind normal across much of the major growing regions and that eventual yields would depend on beneficial weather extending late into the fall to achieve full crop maturity. The late planting also rendered crop growth vulnerable to an early freeze in the fall. Widespread wet conditions continued into the fall, especially in the northern plains and western Corn Belt. North Dakota recorded the wettest September on record in 2019, while Iowa recorded the wettest October. ", "Ultimately, much of the corn crop was harvested under wet conditions with high moisture content that required drying. An early cold spell in the Upper Midwest had already heightened the demand for propane that, in addition to serving as the primary energy source for drying corn, is used to heat hog barns and for other farm operations. This resulted in limited supplies and higher prices for propane. Many farmers chose to leave their corn in the field until more beneficial market conditions emerged. As of December 16, 2019\u00e2\u0080\u0094the date of USDA's final weekly Crop Progress report for 2019\u00e2\u0080\u0094an estimated 8% (or 7.2 million acres) of the U.S. corn crop had yet to be harvested, adding further to the uncertainty of yields and harvested acreage for the 2019 corn crop ( Table 3 )."], "subsections": []}, {"section_title": "Implications for Congress", "paragraphs": ["Saturated soil conditions heading into the winter months suggest a continuation of wet conditions into the 2020 planting season and the potential for a repeat of planting difficulties in the months ahead. These unusual conditions have come in the midst of a continued trade dispute between the United States and China that has dampened demand for U.S. agricultural products from one of the United States' principal foreign markets and has compelled the Administration to undertake large ad hoc \"trade aid\" payments to producers of selected commodities.", "The record PPL acreage has resulted in record crop insurance PPL indemnity payments under the PPL provisions of standard federal crop insurance policies in 2019. Should wet conditions persist into 2020 and create a situation where farmers are again confronted with delayed or prevented planting, some producers may also bump up against a limit on the continued use of PPL. Under RMA rules, PPL can be taken only for crops planted on an insured unit in one of the four preceding crop years. Thus, four consecutive years of PPL would result in ineligibility for the affected cropland. Furthermore, while crop insurance indemnities can help to offset some of the financial loss associated with prevented planting or poor harvests, they are not designed to cover all of the associated losses. ", "Another concern for producers is the timing and clarity (or lack thereof) with respect to USDA announcements about new payment programs that are linked to producer production choices. In general, to avoid adversely influencing producer behavior\u00e2\u0080\u0094a precept of most farm policies\u00e2\u0080\u0094such announcements should be made either well in advance of the spring planting period or well after production decisions have been made. ", "A final looming concern for market watchers and policymakers is the increased role of USDA payments to support farm incomes in 2019. USDA forecasts $22.4 billion in direct support payments to the U.S. agricultural sector in 2019, including $14.3 billion in direct payments made under trade aid programs as well as over $8 billion in payments from other farm programs. In addition, USDA forecasts $10.3 billion in federal crop insurance indemnity payments. Together, forecasts of USDA farm support plus crop insurance indemnities combine for $32.7 billion in payments that represent a 35.3% share of USDA's November forecast of 2019 net farm income of $92.5 billion.", "Without this federal support, net farm income would be lower, primarily due to continued weak prices for most major crops. Should these conditions persist into 2020, they would signal the potential for continued dependence on federal programs to sustain farm incomes in 2020."], "subsections": [{"section_title": "Appendix. Supplementary Table", "paragraphs": [], "subsections": []}]}]}}
{"id": "RL30378", "title": "African American Members of the U.S. Congress: 1870-2019", "released_date": "2020-01-22T00:00:00", "summary": ["In total, 162 African Americans have served in Congress. This total includes", "152 African Americans (146 Representatives and 6 Delegates) elected only to the House of Representatives; 9 African Americans elected or appointed only to the Senate; and 1 African American who has served in both chambers.", "The first African American Members, Senator Hiram Revels of Mississippi and Representative Joseph Rainey of South Carolina, both took the oath of office in 1870. These first two Members were among the 22 African American Members (2 in the Senate, 20 in the House) who began their service in the period of time after the Civil War but prior to the start of the 20 th century. After these first 22, the presence of African Americans in the membership of Congress was not continuous, and there were subsequent periods in both chambers with no African American Members.", "Most recently, the 116 th Congress began with the highest number of African American Members ever at the start of a Congress: 57 (52 Representatives, 2 Delegates, and 3 Senators).", "Other information in this report includes the following:", "Numbers of African Americans who have served in Congress by party and type of service; Numbers of African Americans who have served in each Congress since 1870; Numbers of African Americans who have served in the House and Senate by state, district, or territory; Means of entry to Congress, including regular elections, special elections, and appointments; Brief background and selected data on the Congressional Black Caucus (CBC); Lists of selected \"firsts\" for African Americans in Congress; Lists of the African Americans who have served in leadership; Records for length of service in the House and Senate; and Lists of the African American women in the 116 th Congress."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["The 116 th Congress began with 57 African American Members, the highest number ever at the beginning of a Congress. After the death of an African American House Member in October 2019, the current 56 African American Members represent the following proportions of the entire Congress, and of the House and Senate separately:", "10.1% of voting Members in the Congress (54 of 535, does not include the Delegates and Resident Commissioner); 10.4% of total Members in the Congress (56 of 541, includes the Delegates and Resident Commissioner); 11.7% of voting Members in the House (51 of 435, does not include the Delegates and Resident Commissioner); 12.0% of total Members in the House (53 of 441, includes the Delegates and Resident Commissioner); and 3.0% of total Members in the Senate (3 of 100).", " Table 1 provides more detail on these African American Members across the 116 th Congress.", "In addition to data for the 116 th Congress, this report provides historical information. The report also includes an appendix with an alphabetical listing of African American Members, selected biographical information, and committee assignments during their tenure in Congress."], "subsections": [{"section_title": "Source Note", "paragraphs": ["Inclusion in this report, and related data, is based on entry in Black Americans in Congress, 1870-2007 , the Black Americans in Congress, 1870-2019 e-book, and the accompanying website maintained by the House Office of the Historian and Office of Art and Archives ( http://history.house.gov/Exhibitions-and-Publications/BAIC/Black-Americans-in-Congress/ ) . According to that office, the website ", "is based on the 2008 print edition but updated to reflect the entry of new African Americans into Congress. In 2018, at the direction of the Committee on House Administration, the Historian's Office revised and updated the contextual essays of the 2008 print edition in order to prepare the 2019 e-book edition of Black Americans in Congress. ", "This report does not include additional Members who might identify as African American, or as having African ancestry, but are not included in these sources.", "Additional historical information, including committee assignments, leadership positions, and dates of service, is based on Biographical Directory of the American Congress ( http://bioguide.congress.gov ), various editions of the Congressional Directory , and a broad range of Congressional Quarterly Inc. and Leadership Directories Inc. publications. "], "subsections": []}]}, {"section_title": "Brief Overview of Studies on African Americans in\u00c2 Congress", "paragraphs": ["Numerous studies of Congress have examined the role and impact of African Americans in Congress. Many of these studies relate to larger questions about the nature of representation or about Congress as an institution. ", "Central to these studies have been questions about the following:", "Descriptive representation (i.e., representation by those who share demographic characteristics with their constituents) and substantive representation (i.e., representation of policy preferences and a linkage to policy outcomes) in the representation of minority electoral and policy interests, as well as any linkage or trade-offs between the two. While the former concentrates on election outcomes (e.g., percentages of congressional seats), the latter focuses on behaviors and actions once an elected official is in office. The Voting Rights Act of 1965, impact of majority-minority districts in representing minority interests in a district, and influence of majority-minority districts on electoral and policy preferences in surrounding districts. These studies have also examined recent court rulings. The relationship of minority Members of Congress with their constituents, including any impact on turnout, electoral competitiveness or strategies, hiring of minority staff, communication styles, constituency services, and voter satisfaction and engagement. Legislative activities and influence, including work in committees, floor speeches, bill introduction and passage, cosponsorship, coalition formation, career progression and seniority, and relations with congressional leadership. Roll-call voting behavior, including voting cohesion compared to party or state delegations. Positions on various domestic or international issues."], "subsections": []}, {"section_title": "African Americans in Congress Since 1870: Totals and in Each Congress", "paragraphs": ["The first African American to serve in the Senate, Hiram Revels of Mississippi, was sworn in on February 23, 1870. The first African American to serve in the House, Joseph Rainey of South Carolina, was sworn in on December 12, 1870. ", "Both chambers subsequently had periods without any African American Members. The longest period for the House stretched from the 57 th Congress (1901-1903) until the beginning of the 71 st Congress (1929-1931), or 28 years. The longest period for the Senate stretched from the beginning of the 47 th Congress (1881-1883) until the beginning of the 90 th Congress (1967-1968), or 86 years. ", "African American membership in the House first reached 10 Members during the 91 st Congress (1969-1970), and voting membership first exceeded 5% during the 100 th Congress (1987-1988). Another large increase occurred during the 103 rd Congress (1993-1994), which was the first Congress after the redistricting that followed the 1990 U.S. Census. ", "The 116 th Congress began with the highest number of African American Members ever for the start of a Congress: 57 (52 Representatives, 2 Delegates, and 3 Senators). ", " Table 2 provides a summary of the 162 African Americans who have served in the House, Senate, and both chambers. Of these 162 Members, 22 began their service after the Civil War but prior to the start of the 20 th century (2 in the Senate, 20 in the House)."], "subsections": []}, {"section_title": "How African Americans Enter Congress: Regular Elections, Special Elections, and Appointments", "paragraphs": ["Article I, Section 2 of the U.S. Constitution requires that all Members of the House of Representatives must be \"chosen every second Year by the People of the several States.\" ", "Therefore, all 153 of the African Americans who have served in the House entered office through election, even those who entered after a seat became open during a Congress. ", "By contrast, the Seventeenth Amendment to the Constitution, which was ratified in 1913, gives state legislatures the option to empower governors to fill congressional Senate vacancies by temporary appointment. The Seventeenth Amendment also provides for direct elections of Senators by the \"people\" of a state. Previously, Senators were elected by legislative selection rather than through the direct elections by which Representatives to Congress were elected.", "Of the 10 African Americans who have served in the Senate,", "two were elected prior to the ratification of the Seventeenth Amendment to the Constitution; four initially entered Senate service by winning a regular election; one initially entered Senate service by winning a special election and was subsequently reelected; and three were appointed. Of these three, one was a candidate for reelection and served in more than one Congress."], "subsections": []}, {"section_title": "The Congressional Black Caucus (CBC): A\u00c2 Congressional Member Organization", "paragraphs": ["In 1971, the 13 African Americans then serving in the House established the Congressional Black Caucus. ", "In the 116 th Congress, the CBC is one of more than 270 registered congressional member organizations (CMOs) in the House. House CMOs are required to register with the Committee on House Administration. CMOs do not receive separate funding, and they have not since a change in the Rules of the House adopted for the 104 th Congress. Members may use their Members' Representational Allowance (MRA) to support staff, including shared staff, assigned to CMO duties. Members, rather than the CMO, remain the employing authority, and the CMO is not an independent entity. The committee's Members' Congressional Handbook lists a number of additional regulations related to the staffing and funding of CMOs. ", "CMOs are not required to register in the Senate. As in the House, informal congressional groups or organizations do not receive separate funding. ", "The CBC CMO is distinct from the Congressional Black Caucus Foundation, which was established in 1976 and is a \u00c2\u00a7501(c)(3) nonprofit organization."], "subsections": []}, {"section_title": "African American Firsts in Congress", "paragraphs": [], "subsections": []}, {"section_title": "African Americans Who Have Served in Party Leadership Positions18", "paragraphs": ["A number of African Americans in Congress, listed in Table 5 , have held positions in their party's leadership. All of these party leadership positions have been in the House. The first African American Member to be elected to any party leadership position was Shirley Chisholm (D-NY), who served as House Democratic Caucus Secretary in the 95 th and 96 th Congresses (1977-1980)."], "subsections": []}, {"section_title": "African Americans and Leadership of Congressional Committees", "paragraphs": ["As chair of the Senate Select Committee on the Levees of the Mississippi River (45 th Congress), Blanche K. Bruce was the first African American to chair any congressional committee. As chair of the House Committee on Expenditures in the Executive Departments (81 st Congress), William L. Dawson was the first African American to chair a House committee. In total, ", "23 African Americans have chaired a House committee; 1 African American has chaired a Senate committee; and 2 African American Representatives have chaired a joint committee.", "These chairmanships include standing, special, and select committees. Some African Americans have chaired multiple committees in the House.", "In the 116 th Congress, four African American Representatives currently chair four different House standing committees."], "subsections": []}, {"section_title": "Length of Service Records", "paragraphs": [], "subsections": []}, {"section_title": "African American Women in Congress", "paragraphs": ["A total of 47 African American women have served in Congress. Of these, 25 serve in the 116 th Congress (including 2 Delegates), a record number. The previous record was 22 (including 2 Delegates), which was reached at the end of the 115 th Congress. The African American women Members of the 116 th Congress are listed in Table 7 .", "African American women comprise", "25 of the 131 women currently serving in the 116 th Congress (19.1%) and 25 of the 57 African Americans currently serving in the 116 th Congress (43.9%)."], "subsections": []}, {"section_title": "Alphabetical Listing, Including Dates of Service and Committee Assignments23", "paragraphs": ["ADAMS, ALMA S. Democrat; North Carolina, 12 th District. Elected to the 113 th Congress to fill the vacancy caused by the resignation of Melvin L. Watt, and also elected to the 114 th -116 th Congresses (served Nov. 4, 2014-present).", "Committee assignments:", "H. Agriculture (114 th -116 th Congresses) H. Education and the Workforce/Education and Labor (114 th -116 th Congresses) H. Small Business (114 th -115 th Congresses) H. Financial Services (116 th Congress)", "ALLRED, COLIN . Democrat; Texas, 32 nd District. Elected to the 116 th Congress (served Jan. 3, 2019-present).", "Committee assignments:", "H. Foreign Affairs (116 th Congress) H. Transportation and Infrastructure (116 th Congress) H. Veterans' Affairs (116 th Congress) ", "BALLANCE, FRANK W., Jr. Democrat; North Carolina, 1 st District. Elected to the 108 th Congress (served Jan. 7, 2003, until his resignation June 11, 2004).", "Committee assignments:", "H. Agriculture (108 th Congress) H. Small Business (108 th Congress)", "BASS, KAREN. Democrat; California, 33 rd (112 th Congress) and 37 th District (113 th Congress- present). Elected to the 112 th -116 th Congresses (served Jan. 3, 2011-present). Chair of the Congressional Black Caucus, 116 th Congress.", "Committee assignments:", "H. Budget (112 th Congress) H. Foreign Affairs (112 th -116 th Congresses) H. Judiciary (113 th -116 th Congresses)", "BEATTY, JOYCE. Democrat; Ohio, 3 rd District. Elected to the 113 th -116 th Congresses (served Jan. 3, 2013-present).", "Committee assignments:", "H. Financial Services (113 th -116 th Congresses)", "BISHOP, SANFORD DIXON, Jr. Democrat; Georgia, 2 nd District. Elected to the 103 rd -116 th Congresses (served Jan. 5, 1993-present).", "Committee assignments:", "H. Agriculture (103 rd -107 th Congresses) H. Post Office and Civil Service (103 rd Congress) H. Veterans' Affairs (103 rd -104 th Congresses) H. Select Intelligence (105 th -107 th Congresses) H. Appropriations (108 th -116 th Congresses) ", "BLACKWELL, LUCIEN EDWARD. Democrat; Pennsylvania, 2 nd District. Elected to the 102 nd Congress to fill the vacancy caused by the resignation of William Gray, and also elected to the 103 rd Congress (served Nov. 11, 1991-Jan. 3, 1995).", "Committee assignments:", "H. Merchant Marine and Fisheries (102 nd Congress) H. Public Works and Transportation (102 nd -103 rd Congresses) H. Budget (103 rd Congress)", "BLUNT ROCHESTER, LISA. Democrat; Delaware, At-Large. Elected to the 115 th -116 th Congresses (served Jan. 3, 2017-present).", "Committee assignments:", "H. Agriculture (115 th Congress) H. Education and the Workforce (115 th Congress) H. Energy and Commerce (116 th Congress)", "BOOKER, CORY ANTHONY. Democrat; New Jersey. Senator. Elected to the Senate in 2013 to fill the vacancy caused by the death of Frank Lautenberg and subsequently elected to a full term in 2014 (served October 31, 2013-present).", "Committee assignments:", "S. Commerce, Science and Transportation (113 th -114 th Congress) S. Environment and Public Works (113 th -116 th Congresses) S. Homeland Security and Government Affairs (114 th Congress) S. Foreign Relations (115 th -116 th Congresses) S. Small Business and Entrepreneurship (113 th -116 th Congresses) S. Judiciary (115 th -116 th Congresses)", "BROOKE, EDWARD WILLIAM, III. Republican; Massachusetts. Senator. Elected in 1966 (served Jan. 3, 1967-Jan. 3, 1979).", "Committee assignments:", "S. Aeronautical and Space Sciences (90 th Congress) S. Banking and Currency (90 th -95 th Congresses; ranking member, 95 th Congress) S. Government Operations (90 th Congress) S. Armed Services (91 st Congress) S. Select Education Opportunity (91 st -92 nd Congresses) S. Appropriations (92 nd -95 th Congresses) S. Banking, Housing and Urban Affairs (92 nd -95 th Congresses) S. Special Aging (92 nd -95 th Congresses) S. Select Standards and Conduct (93 rd -94 th Congresses) Jt. Bicentennial Arrangements (94 th Congress; vice-chair) Jt. Defense Production (94 th -95 th Congresses)", "BROWN, ANTHONY GREGORY. Democrat; Maryland, 4 th District. Elected to the 115 th -116 th Congresses (served Jan. 3, 2017-present).", "Committee assignments:", "H. Armed Services (115 th -116 th Congresses) H. Ethics (115 th -116 th Congresses) H. Natural Resources (115 th -116 th Congresses) H. Transportation and Infrastructure (116 th Congress)", "BROWN, CORRINE. Democrat; Florida, 3 rd District (103 rd -112 th Congresses), 5 th District (113 th -114 th Congress). Elected to the 103 rd -114 th Congresses (served Jan. 3, 1993-Jan. 3, 2017).", "Committee assignments:", "H. Government Operations (103 rd Congress) H. Public Works and Transportation (103 rd Congress) H. Transportation and Infrastructure (104 th -114 th Congresses) H. Veterans' Affairs (103 rd -114 th Congresses; ranking member, 114 th Congress)", "BRUCE, BLANCHE KELSO. Republican; Mississippi, Senator. Elected in 1874 (served March 4, 1875-March 3, 1881).", "Committee assignments:", "S. Manufactures (44 th Congress) S. Pensions (44 th -45 th Congresses) S. Education and Labor (44 th -46 th Congresses) S. Select Levees of the Mississippi River (chair, 45 th -46 th Congresses) S. Select To Investigate the Freedman's Savings and Trust Company (chair, 46 th Congress)", "BURKE, YVONNE BRATHWAITE. Democrat; California, 28 th (94 th -95 th Congresses) and 37 th (93 rd Congress) Districts. Elected to the 93 rd -95 th Congresses (served Jan. 3, 1973-Jan. 3, 1979). First female chair of the Congressional Black Caucus, 94 th -95 th Congresses.", "Committee assignments:", "H. Public Works (93 rd Congress) H. Interior and Insular Affairs (93 rd Congress) H. Appropriations (94 th -95 th Congresses) H. Select Committee on the House Beauty Shop (chair, 94 th -95 th Congresses)", "BURRIS, ROLAND. Democrat; Illinois. Senator. Appointed to the Senate in December 2008 to fill vacancy caused by the resignation of Barack Obama, but was not seated until Jan. 12, 2009 (served Jan. 12, 2009-Nov. 29, 2010).", "Committee assignments:", "S. Armed Services (111 th Congress) S. Homeland Security and Governmental Affairs (111 th Congress) S. Veteran's Affairs (111 th Congress)", "BUTTERFIELD, GEORGE KENNETH, Jr. (G.K.). Democrat; North Carolina, 1 st District. Elected to the 108 th Congress to fill the vacancy caused by the resignation of Frank Ballance, and also elected to the 109 th -116 th Congresses (served July 20, 2004-present). Chair of the Congressional Black Caucus, 114 th Congress.", "Committee assignments:", "H. Small Business (108 th Congress) H. Agriculture (108 th -109 th Congresses) H. Armed Services (109 th Congress) H. Energy and Commerce (110 th -116 th Congresses) H. Standards of Official Conduct (111 th Congress) H. House Administration (116 th Congress)", "CAIN, RICHARD HARVEY. Republican; South Carolina, At-Large. Elected to the 43 rd and 45 th Congresses (served March 4, 1873-March 3, 1875; March 4, 1877-March 3, 1879).", "Committee assignments:", "H. Agriculture (43 rd Congress) H. Private Land Claims (45 th Congress)", "CARSON, ANDR\u00c3\u0089. Democrat; Indiana, 7 th District. Elected to the 110 th Congress to fill the vacancy caused by the death of his grandmother Julia Carson, and also elected to the 111 th -116 th Congresses (served March 11, 2008-present).", "Committee assignments:", "H. Financial Services (110 th -112 th Congresses) H. Armed Services (113 th Congress) H. Transportation and Infrastructure (113 th -116 th Congresses) H. Permanent Select Intelligence (114 th -116 th Congresses)", "CARSON, JULIA. Democrat; Indiana, 10 th District (105 th -107 th Congresses) and 7 th District (108 th -110 th Congresses). Elected to the 105 th -110 th Congresses (served Jan. 3, 1997, until her death Dec. 15, 2007).", "Committee assignments:", "H. Banking and Financial Services/Financial Services (105 th -110 th Congresses) H. Veterans' Affairs (105 th -107 th Congresses) H. Transportation and Infrastructure (108 th -110 th Congresses)", "CHEATHAM, HENRY PLUMMER. Republican; North Carolina, 2 nd District. Elected to the 51 st and 52 nd Congresses (served March 4, 1889-March 3, 1893).", "Committee assignments:", "H. Expenditures on Public Buildings (51 st -52 nd Congresses) H. Education (51 st -52 nd Congresses) H. Agriculture (52 nd Congresses)", "CHISHOLM, SHIRLEY ANITA. Democrat; New York, 12 th District. Elected to the 91 st -97 th Congresses (served Jan. 3, 1969-Jan. 3, 1983).", "Committee assignments:", "H. Veterans' Affairs (91 st -92 nd Congresses) H. Education and Labor (92 nd -94 th Congresses) H. Rules (95 th -97 th Congresses)", "CHRISTENSEN, DONNA. Democrat; Delegate from the Virgin Islands. Elected to the 105 th -113 th Congresses (served Jan. 3, 1997-Jan. 3, 2015).", "Committee assignments:", "H. Resources/Natural Resources (105 th -112 th Congresses) H. Small Business (105 th -109 th Congresses) H. Homeland Security (108 th -110 th Congresses; 112 th Congress) H. Energy and Commerce (111 th -113 th Congresses)", "CHRISTIAN-CHRISTENSEN, DONNA and CHRISTIAN-GREEN, DONNA . See CHRISTENSEN, DONNA .", "CLARKE, HANSEN. Democrat; Michigan, 13 th District. Elected to the 112 th Congress (served Jan. 3, 2011-Jan. 3, 2013).", "Committee assignments:", "H. Homeland Security (112 th Congress) H. Science, Space and Technology (112 th Congress)", "CLARKE, YVETTE. Democrat; New York, 11 th District (110 th -112 th Congresses) and 9 th District (113 th Congress-present). Elected to the 110 th -116 th Congresses (served Jan. 3, 2007-present).", "Committee assignments:", "H. Education and Labor (110 th -111 th Congresses) H. Homeland Security (110 th -113 th , 116 th Congresses) H. Small Business (110 th -114 th Congresses) H. Ethics (113 th -115 th Congresses) H. Energy and Commerce (114 th -116 th Congresses)", "CLAY, WILLIAM LACY, Jr. Democrat; Missouri, 1 st District. Elected to the 107 th -116 th Congresses (served Jan. 3, 2001-present).", "Committee assignments:", "H. Financial Services (107 th -116 th Congresses) H. Government Reform/H. Oversight and Government Reform (107 th -116 th Congresses) H. Natural Resources (115 th -116 th Congresses)", "CLAY, WILLIAM LACY, Sr. Democrat; Missouri, 1 st District. Elected to the 91 st -106 th Congresses (served Jan. 3, 1969-Jan. 3, 2001).", "Committee assignments:", "H. Education and Labor (91 st -106 th Congresses) H. Post Office and Civil Service (93 rd -103 rd Congresses; chair 102 nd -103 rd Congresses) H. Select to Study the Committee System (96 th Congress) H. House Administration (99 th -103 rd Congresses) Jt. Library (101 st Congress)", "CLAYTON, EVA. Democrat; North Carolina, 1 st District. Elected to the 102 nd Congress Nov. 3, 1992, to fill vacancy caused by death of Walter Jones; simultaneously elected to the 103 rd Congress; reelected to the 104 th -107 th Congresses (served Nov. 5, 1992-Jan. 3, 2003).", "Committee assignments:", "H. Agriculture (103 rd -107 th Congresses) H. Small Business (103 rd -104 th Congresses) H. Budget (105 th -107 th Congresses)", "CLEAVER, EMANUEL, II. Democrat; Missouri, 5 th District. Elected to the 109 th -116 th Congresses (served Jan. 4, 2005-present). Chair of the Congressional Black Caucus, 112 th Congress.", "Committee assignments:", "H. Financial Services (109 th -116 th Congresses) H. Select Energy Independence and Global Warming (110 th -111 th Congresses) H. Homeland Security (111 th and 116 th Congresses) H. Select Committee on the Modernization of Congress (116 th Congress)", "CLYBURN, JAMES ENOS. Democrat; South Carolina, 6 th District. Elected to the 103 rd -116 th Congresses (served Jan. 5, 1993-present). Chair of the Congressional Black Caucus, 106 th Congress.", "Committee assignments:", "H. Public Works and Transportation/Transportation and Infrastructure (103 rd -105 th Congresses) H. Veterans' Affairs (103 rd -105 th Congresses) H. Small Business (104 th Congress) H. Appropriations (106 th -109 th Congresses)", "COLLINS, BARBARA-ROSE. Democrat; Michigan, 13 th District (102 nd Congress) and 15 th District (103 rd -104 th Congresses). Elected to the 102 nd -104 th Congresses (served Jan. 3, 1991-Jan. 3, 1997).", "Committee assignments:", "H. Public Works and Transportation (102 nd -103 rd Congresses) H. Science, Space and Technology (102 nd Congress) H. Government Operations (103 rd Congress) H. Post Office and Civil Service (103 rd Congress) H. Government Reform and Oversight (104 th Congress) H. Transportation and Infrastructure (104 th Congress) H. Select Children, Youth, and Families (102 nd Congress)", "COLLINS, CARDISS. Democrat; Illinois, 7 th District. Elected to the 93 rd Congress in a June 5, 1973, special election to fill vacancy caused by death of husband George W. Collins; reelected to the 94 th -104 th Congresses (served June 7, 1973-Jan. 3, 1997). Chair of the Congressional Black Caucus, 96 th Congress.", "Committee assignments:", "H. Government Operations/Government Reform and Oversight (93 rd -104 th Congresses) H. International Relations/Foreign Affairs (94 th -96 th Congresses) H. District of Columbia (95 th Congress) H. Select Committee on Narcotics Abuse and Control (96 th -102 nd Congresses) H. Energy and Commerce/Commerce (97 th -104 th Congresses)", "COLLINS, GEORGE WASHINGTON. Democrat; Illinois, 6 th District. Elected to the 91 st Congress to fill vacancy caused by death of Daniel J. Ronan; simultaneously elected to the 92 nd Congress; reelected to the 93 rd Congress (served Nov. 3, 1970, until his death Dec. 18, 1972, before the seating of the 93 rd Congress).", "Committee assignments:", "H. Government Operations (91 st -92 nd Congresses) H. Public Works (92 nd Congress)", "CONYERS, JOHN, Jr. Democrat; Michigan, 1 st District (89 th -102 nd Congresses); 14 th District (103 rd -112 th Congresses); 13 th District (113 th -115 th Congresses). Elected to the 89 th -115 th Congresses (served Jan. 3, 1965, until his resignation Dec. 5, 2017).", "Committee assignments: ", "H. Judiciary (89 th -115 th Congresses; chair, 110 th -111 th Congresses; ranking member, 104 th -109 th , 112 th -115 th Congresses) H. Government Operations (92 nd -103 rd Congresses; chair, 101 st -103 rd Congresses) H. Small Business (100 th -103 rd Congresses)", "COWAN, WILLIAM (MO). Democrat; Massachusetts. Senator. Appointed to the Senate in 2013 to fill the vacancy caused by the resignation of John F. Kerry (served Feb. 1, 2013- July 15, 2013).", "Committee assignments:", "S. Agriculture, Nutrition and Forestry (113 th Congress) S. Commerce, Science and Transportation (113 th Congress) S. Small Business and Entrepreneurship (113 th Congress)", "CROCKETT, GEORGE WILLIAM, Jr. Democrat; Michigan, 13 th District. Elected to the 96 th Congress to fill vacancy caused by the resignation of Charles C. Diggs Jr.; simultaneously elected to the 97 th Congress; reelected to the 98 th -101 st Congresses (served Nov. 4, 1980-Jan. 3, 1991).", "Committee assignments:", "H. Foreign Affairs (96 th -101 st Congresses) H. Judiciary (97 th -101 st Congresses) H. Small Business (97 th Congress) H. Select Aging (97 th -101 st Congresses)", "CUMMINGS, ELIJAH EUGENE. Democrat; Maryland, 7 th District. Elected to the 104 th Congress to fill vacancy caused by the resignation of Kweisi Mfume; reelected to the 105 th -116 th Congresses (served April 16, 1996, until his death, October 17, 2019). Chair of the Congressional Black Caucus, 108 th Congress.", "Committee assignments:", "H. Government Oversight and Government Reform/Government Reform/Oversight and Reform (104 th -115 th Congresses; ranking member, 112 th -115 th Congresses; chair, 116 th Congress) H. Transportation and Infrastructure (110 th -116 th Congresses) H. Armed Services (110 th Congress) Jt. Economic Committee (109 th -114 th Congresses) Select Terrorist Attack in Benghazi (114 th Congress; ranking member)", "DAVIS, ARTUR. Democrat; Alabama, 7 th District. Elected to the 108 th -111 th Congresses (served Jan. 7, 2003-Jan. 2, 2011).", "Committee assignments:", "H. Budget (108 th -109 th Congresses) H. Financial Services (108 th -109 th Congresses) H. Judiciary (110 th Congress) H. Ways and Means (110 th -111 th Congresses)", "DAVIS, DANNY K. Democrat; Illinois, 7 th District. Elected to the 105 th -116 th Congresses (served Jan. 7, 1997-present).", "Committee assignments:", "H. Small Business (105 th -109 th Congresses) H. Government Oversight and Government Reform/Government Reform (105 th -113 th Congresses) H. Education and the Workforce/Education and Labor (108 th -110 th Congresses) H. Ways and Means (111 th , 113 th -116 th Congresses) H. Homeland Security (112 th Congress)", "DAWSON, WILLIAM LEVI. Democrat; Illinois, 1 st District. Elected to the 78 th -91 st Congresses (served Jan. 3, 1943, until his death Nov. 9, 1970).", "Committee assignments:", "H. Expenditures in the Executive Departments (78 th -82 nd Congresses; chair, 81 st -82 nd Congresses) H. Government Operations (83 rd -91 st Congresses; ranking member, 83 rd Congress; chair, 84 th -91 st Congresses) H. Coinage, Weights, and Measures (78 th -79 th Congresses) H. Invalid Pensions (78 th -79 th Congresses) H. Insular Affairs (78 th -79 th Congresses) H. Irrigation and Reclamation (78 th -79 th Congresses) H. Interior and Insular Affairs (82 nd Congress) H. District of Columbia (84 th -91 st Congresses) ", "DE LARGE, ROBERT CARLOS. Republican; South Carolina, 2 nd District. Elected to the 42 nd Congress (served March 4, 1871, until Jan. 24, 1873, when his seat was declared vacant after his election was successfully contested by former Rep. Christopher Bowen).", "Committee assignments:", "H. Manufactures (42 nd Congress)", "DELGADO, ANTONIO . Democrat; New York, 19 th District. Elected to the 116 th Congress (served Jan. 3, 2019-present).", "Committee assignments:", "H. Agriculture (116 th Congress) H. Small Business (116 th Congress) H. Transportation and Infrastructure (116 th Congress)", "DELLUMS, RONALD V. Democrat; California, 7 th District (92 nd -93 rd Congresses); 8 th District (94 th -102 nd Congresses); 9 th District (103 rd -105 th Congresses). Elected to the 92 nd -105 th Congresses (served Jan. 3, 1971, until his resignation Feb. 6, 1998). Chair of the Congressional Black Caucus, 101 st Congress.", "Committee assignments:", "H. District of Columbia (96 th -103 rd Congresses; chair, 96 th -102 nd Congresses) H. Foreign Affairs (92 nd Congress) H. Armed Services (93 rd -103 rd Congresses; chair, 103 rd Congress) H. National Security (104 th -105 th Congresses; ranking member, 104 th -105 th Congresses) H. Post Office and Civil Service (97 th -98 th Congresses) H. Select Intelligence (94 th -102 nd Congresses)", "DEMINGS, VAL BUTLER . Democrat; Florida, 10 th District. Elected to the 115 th -116 th Congresses (served Jan. 3, 2017-present). ", "Committee assignments:", "H. Homeland Security (115 th Congress) H. Government Reform (115 th Congress) H. Judiciary (115 th -116 th Congresses) H. Permanent Select Intelligence (116 th Congress) ", "DE PRIEST, OSCAR STANTON. Republican; Illinois, 1 st District. Elected to the 71 st -73 rd Congresses (served March 4, 1929-March 3, 1935).", "Committee assignments:", "H. Enrolled Bills (71 st -73 rd Congresses) H. Invalid Pensions (71 st -73 rd Congresses) H. Indian Affairs (71 st -73 rd Congresses) H. Post Office and Post Roads (73 rd Congress)", "DIGGS, CHARLES COLES, Jr. Democrat; Michigan, 13 th District. Elected to the 84 th -96 th Congresses (served Jan. 3, 1955, until his resignation on June 3, 1980). First Chair of the Congressional Black Caucus, 92 nd Congress.", "Committee assignments:", "H. Interior and Insular Affairs (84 th -85 th Congresses) H. Veterans' Affairs (84 th -85 th Congresses) H. Foreign Affairs (86 th -93 rd Congresses) H. District of Columbia (88 th -96 th Congresses; chair, 93 rd -95 th Congresses)", "DIXON, JULIAN CAREY. Democrat; California, 28 th District (96 th -102 nd Congresses); 32 nd District (103 rd -106 th Congresses). Elected to 96 th -107 th Congresses, but died before the commencement of the 107 th Congress (served Jan. 3, 1979, until his death on Dec. 8, 2000). Chair of the Congressional Black Caucus, 98 th Congress.", "Committee assignments:", "H. Appropriations (96 th -106 th Congresses) H. Standards of Official Conduct (98 th -101 st Congresses; chair, 99 th -101 st Congresses) H. Select Intelligence (103 rd -106 th Congresses; ranking member, 106 th Congress)", "DYMALLY, MERVYN MALCOLM. Democrat; California, 31 st District. Elected to the 97 th -102 nd Congresses (served Jan. 3, 1981-Jan. 3, 1993). Chair of the Congressional Black Caucus, 100 th Congress.", "Committee assignments:", "H. District of Columbia (97 th -102 nd Congresses) H. Foreign Affairs (97 th -102 nd Congresses) H. Science and Technology (97 th -98 th Congresses) H. Post Office and Civil Service (98 th -102 nd Congresses) H. Education and Labor (99 th Congress)", "EDWARDS, DONNA. Democrat; Maryland, 4 th District. Elected to the 110 th Congress in a June 17, 2008, special election to fill vacancy caused by the resignation of Albert Wynn; reelected to the 111 th -114 th Congresses (served June 19, 2008-Jan. 3, 2017).", "Committee assignments:", "H. Science and Technology/Science, Space and Technology (110 th -114 th Congresses) H. Transportation and Infrastructure (110 th -114 th Congresses) H. Ethics (112 th Congress)", "ELLIOTT, ROBERT BROWN. Republican; South Carolina, 3 rd District. Elected to the 42 nd -43 rd Congresses (served March 4, 1871, until his resignation on Nov. 1, 1874).", "Committee assignments:", "H. Education and Labor (42 nd -43 rd Congresses) H. Militia (43 rd Congress)", "ELLISON, KEITH. Democrat; Minnesota, 5 th District. Elected to the 110 th -115 th Congresses (served Jan. 4, 2007-Jan. 3, 2019).", "Committee assignments:", "H. Financial Services (110 th -115 th Congresses) H. Judiciary (110 th Congress) H. Foreign Affairs (111 th Congress)", "ESPY, ALPHONSO MICHAEL (MIKE). Democrat; Mississippi, 2 nd District. Elected to the 100 th -103 rd Congresses (served Jan. 6, 1987, until his resignation on Jan. 25, 1993).", "Committee assignments:", "H. Agriculture (100 th -102 nd Congresses) H. Budget (101 st -102 nd Congresses) H. Select Hunger (101 st -102 nd Congresses) Jt. Deficit Reduction (100 th Congress)", "EVANS, DWIGHT. Democrat; Pennsylvania, 2 nd District. Elected to the 114 th Congress to fill vacancy caused by the resignation of Chaka Fattah; also elected to the 115 th -116 th Congresses (served Nov. 8, 2016-present).", "Committee assignments:", "H. Agriculture (115 th Congress) H. Small Business (115 th -116 th Congresses) H. Ways and Means (116 th Congress)", "EVANS, MELVIN HERBERT. Republican; Delegate from the U.S. Virgin Islands. Elected to the 96 th Congress (served Jan. 3, 1979-Jan. 3, 1981).", "Committee assignments:", "H. Armed Services (96 th Congress) H. Interior and Insular Affairs (96 th Congress) H. Merchant Marine and Fisheries (96 th Congress)", "FATTAH, CHAKA. Democrat. Pennsylvania, 2 nd District. Elected to the 104 th -114 th Congresses (served Jan. 3, 1995, until his resignation June 23, 2016).", "Committee assignments:", "H. Government Reform and Oversight/Government Reform (104 th -106 th Congresses) H. Education and the Workforce/Economic and Education (104 th -106 th Congresses) H. Small Business (104 th Congress) H. Standards of Official Conduct (105 th -106 th Congresses) H. Administration (106 th -107 th Congresses) Jt. Printing (106 th -107 th Congresses) Appropriations (107 th -114 th Congresses)", "FAUNTROY, WALTER EDWARD. Democrat; Delegate from the District of Columbia. Elected to the 92 nd Congress in a special election after the District of Columbia was authorized to elect a delegate; reelected to the 93 rd -101 st Congresses (served April 19, 1971-Jan. 3, 1991). Chair of the Congressional Black Caucus, 97 th Congress.", "Committee assignments:", "H. District of Columbia (92 nd -101 st Congresses) H. Banking and Currency/Banking, Finance, and Urban Affairs (93 rd -101 st Congresses) H. Select Assassinations (94 th -95 th Congresses) H. Select Narcotics Abuse and Control (98 th -101 st Congresses)", "FIELDS, CLEO. Democrat; Louisiana, 4 th District. Elected to the 103 rd -104 th Congresses (served Jan. 5, 1993-Jan. 3, 1997).", "Committee assignments:", "H. Banking, Finance and Urban Affairs/Banking and Financial Services (103 rd -104 th Congresses) H. Small Business (103 rd -104 th Congresses)", "FLAKE, FLOYD HAROLD. Democrat; New York, 6 th District. Elected to the 100 th -105 th Congresses (served Jan. 6, 1987, until his resignation on Nov. 15, 1997).", "Committee assignments:", "H. Banking, Finance and Urban Affairs/Banking and Financial Services (100 th -105 th Congresses) H. Small Business (100 th -105 th Congresses) H. Government Operations (103 rd Congress) H. Select Children, Youth and Families (100 th Congress) H. Select Hunger (100 th -102 nd Congresses)", "FORD, HAROLD EUGENE, S r . Democrat; Tennessee, 8 th District (94 th -97 th Congresses); 9 th District (98 th -104 th Congresses). Elected to the 94 th -104 th Congresses (served Jan. 3, 1975-Jan. 3, 1997).", "Committee assignments:", "H. Veterans' Affairs (94 th Congress) H. Banking, Currency, and Housing (94 th Congress) H. Ways and Means (94 th -104 th Congresses) H. Select Aging (94 th -102 nd Congresses) H. Select Assassinations (94 th -95 th Congresses)", "FORD, HAROLD EUGENE, Jr. Democrat; Tennessee, 9 th District. Elected to the 105 th -109 th Congresses (served Jan. 7, 1997-Jan. 3, 2007).", "Committee assignments:", "H. Education and the Workforce (105 th -107 th Congresses) H. Government Reform and Oversight/Government Reform (105 th -106 th Congresses) H. Financial Services (107 th -109 th Congresses) H. Budget (108 th -109 th Congresses)", "FRANKS, GARY. Republican; Connecticut, 5 th District. Elected to the 102 nd -104 th Congresses (served Jan. 3, 1991-Jan. 3, 1997).", "Committee assignments:", "H. Armed Services (102 nd Congress) H. Small Business (102 nd Congress) H. Select Aging (102 nd Congress) H. Energy and Commerce (103 rd Congress) H. Commerce (104 th Congress)", "FRAZER, VICTOR O. Independent; Delegate from the U.S. Virgin Islands. Elected to the 104 th Congress (served Jan. 3, 1995-Jan. 3, 1997).", "Committee assignments:", "H. International Relations (104 th Congress)", "FUDGE, MARCIA F. Democrat; Ohio, 11 th District. Elected to the 110 th Congress in a Nov. 4, 2008, special election to fill vacancy caused by death of Stephanie Tubbs Jones; reelected to the 111 th -116 th Congresses (served Nov. 19, 2008-present). Chair of the Congressional Black Caucus, 113 th Congress. ", "Committee assignments:", "H. Education and Labor/Education and the Workforce (111 th Congress; 113 th -116 th Congresses) H. Science and Technology/Science, Space and Technology (111 th -112 th Congresses) H. Agriculture (112 th -116 th Congresses) H. House Administration (116 th Congress)", "GRAY, WILLIAM HERBERT III. Democrat; Pennsylvania, 2 nd District. Elected to the 96 th -102 nd Congresses (served Jan. 3, 1979, until his resignation on Sept. 11, 1991).", "Committee assignments:", "H. Budget (96 th , 98 th -100 th Congresses; chair, 99 th -100 th Congresses) H. District of Columbia (96 th -102 nd Congresses) H. Foreign Affairs (96 th Congress) H. Appropriations (97 th -102 nd Congresses) H. House Administration (102 nd Congress) Jt. Deficit Reduction (100 th Congress)", "GREEN, AL. Democrat; Texas, 9 th District. Elected to the 109 th -116 th Congresses (served Jan. 4, 2005-present).", "Committee assignments:", "H. Financial Services (109 th -116 th Congresses) H. Science (109 th Congress) H. Homeland Security (110 th -111 th , 116 th Congresses) H. Foreign Affairs (111 th Congress)", "HALL, KATIE BEATRICE. Democrat; Indiana, 1 st District. Elected to the 97 th Congress in a Nov. 2, 1982, special election to fill vacancy caused by death of Adam Benjamin Jr.; reelected to the 98 th Congress (served Nov. 29, 1982-Jan. 3, 1985).", "Committee assignments:", "H. Post Office and Civil Service (98 th Congress) H. Public Works and Transportation (98 th Congress)", "HARALSON, JEREMIAH. Republican; Alabama, 1 st District. Elected to the 44 th Congress. (served March 4, 1875-March 3, 1877)", "Committee assignments:", "H. Public Expenditures (44 th Congress)", "HARRIS, KAMALA DEVI. Democrat; California, Senator. Elected in 2016 (served Jan. 3, 2017-present).", "Committee assignments:", "S. Budget (115 th -116 th Congresses) S. Environment and Public Works (115 th Congress) S. Homeland Security (115 th -116 th Congresses) S. Judiciary (115 th -116 th Congresses) S. Select Intelligence (115 th -116 th Congresses)", "HASTINGS, ALCEE LAMAR. Democrat; Florida, 20 th District. Elected to the 103 rd -116 th Congresses (served Jan. 5, 1993-present).", "Committee assignments:", "H. Foreign Affairs/International Relations (103 rd -107 th Congresses) H. Merchant Marine and Fisheries (103 rd Congress) H. Post Office and Civil Service (103 rd Congress) H. Science (104 th -105 th Congresses) H. Select Intelligence (106 th -111 th Congresses) H. Rules (107 th -116 th Congresses) H. Standards of Official Conduct (110 th Congress)", "HAWKINS, AUGUSTUS FREEMAN (GUS). Democrat; California, 21 st District (88 th -93 rd Congresses); 29 th (94 th -101 st Congresses). Elected to the 88 th -101 st Congresses (served from Jan. 3, 1963-Jan. 3, 1991).", "Committee assignments:", "H. Education and Labor (88 th -101 st Congresses; chair, 98 th -101 st Congresses) H. House Administration (91 st -98 th Congresses; chair, 97 th -98 th Congresses) Jt. Printing (95 th -98 th Congresses; chair, 96 th and 98 th Congresses) Jt. Library (97 th -98 th Congresses; chair, 97 th Congress) Jt. Economic (97 th -101 st Congresses)", "HAYES, CHARLES ARTHUR. Democrat; Illinois, 1 st District. Elected to the 98 th Congress in a Aug. 23, 1983, special election to fill vacancy caused by the resignation of Harold Washington; reelected to the 99 th -102 nd Congresses (served Aug. 23, 1983-Jan. 3, 1993).", "Committee assignments:", "H. Education and Labor (98 th -102 nd Congresses) H. Small Business (98 th -101 st Congresses) H. Post Office and Civil Service (101 st -102 nd Congresses)", "HAYES, JAHANA. \u00c2\u00a0 Democrat; Connecticut, 5 th \u00c2\u00a0District. Elected to the 116 th \u00c2\u00a0Congress (served Jan. 3, 2019-present).", "Committee assignments:", "H. Agriculture (116 th \u00c2\u00a0Congress) H. Education and Labor (116 th \u00c2\u00a0 Congress)", "HILLIARD, EARL FREDERICK. Democrat; Alabama, 7 th District. Elected to the 103 rd -107 th Congresses (served Jan. 5, 1993-Jan. 3, 2003).", "Committee assignments:", "H. Agriculture (103 rd -107 th Congresses) H. Small Business (103 rd -104 th Congresses) H. International Relations (105 th -107 th Congresses)", "HORSFORD, STEVEN. Democrat; Nevada, 4 th District. Elected to the 113 th and 116 th Congresses (served Jan. 3, 2013-Jan. 3, 2015; Jan. 3, 2019-present).", "Committee assignments:", "H. Homeland Security (113 th Congress) H. Natural Resources (113 th , 116 th Congresses) H. Oversight and Government Reform (113 th Congress) H. Budget (116 th Congress) H. Ways and Means (116 th Congress)", "HURD, WILLIAM BALLARD. Republican; Texas, 23 rd District. Elected to the 114 th -116 th Congresses (served Jan. 3, 2015-present).", "Committee assignments:", "H. Homeland Security (114 th -115 th Congresses) H. Oversight and Government Reform (114 th -115 th Congresses) H. Small Business (114 th Congress) H. Permanent Select Intelligence (115 th -116 th Congresses) H. Appropriations (116 th Congress)", "HYMAN, JOHN ADAMS. Republican; North Carolina, 2 nd District. Elected to the 44 th Congress (served March 4, 1875-March 3, 1977).", "Committee assignments:", "H. Manufactures (44 th Congress)", "JACKSON, JESSE L., Jr. Democrat; Illinois, 2 nd District. Elected to the 104 th Congress in a special election to fill the vacancy caused by the resignation of Mel Reynolds; reelected to the 105 th -113 th Congress, but declined to serve in the 113 th Congress (served Dec. 14, 1995, until his resignation Nov. 21, 2012).", "Committee assignments:", "H. Banking and Financial Services (104 th -105 th Congresses) H. Small Business (104 th -105 th Congresses) H. Appropriations (106 th -112 th Congresses)", "JACKSON LEE, SHEILA. Democrat; Texas, 18 th District. Elected to the 104 th -116 th Congresses (served Jan. 3, 1995-present).", "Committee assignments:", "H. Judiciary (104 th -116 th Congresses) H. Science (104 th -109 th Congresses) H. Homeland Security (108 th -116 th Congresses) H. Foreign Affairs (110 th -111 th Congresses) H. Budget (116 th Congress)", "JEFFERSON, WILLIAM JENNINGS. Democrat; Louisiana, 2 nd District. Elected to the 102 nd -110 th Congresses (served Jan. 3, 1991-Jan. 3, 2009).", "Committee assignments:", "H. Education and Labor (102 nd Congress) H. Merchant Marine and Fisheries (102 nd Congress) H. District of Columbia (103 rd Congress) H. Ways and Means (103 rd , 105 th -109 th Congresses) H. National Security (104 th Congress) H. House Oversight (104 th Congress) H. Budget (109 th Congress) H. Small Business (110 th Congress) Jt. Printing (104 th Congress)", "JEFFRIES, HAKEEM. Democrat; New York, 8 th District. Elected to the 113 th -116 th Congresses (served Jan. 3, 2013-present).", "Committee assignments:", "H. Budget (113 th -116 th Congresses) H. Education and the Workforce (114 th Congress) H. Judiciary (113 th -116 th Congresses)", "JOHNSON, EDDIE BERNICE. Democrat; Texas, 30 th District. Elected to the 103 rd -116 th Congresses (served Jan. 3, 1993-present). Chair of the Congressional Black Caucus, 107 th Congress.", "Committee assignments:", "H. Public Works and Transportation (103 rd Congress) H. Science, Space, and Technology/Science and Technology (103 rd -116 th Congresses; ranking member, 112 th -115 th Congresses; chair, 116 th Congress) H. Transportation and Infrastructure (104 th -116 th Congresses)", "JOHNSON, HENRY C. (HANK), Jr. Democrat; Georgia, 4 th District. Elected to the 110 th -116 th Congresses (served Jan. 4, 2007-present).", "Committee assignments:", "H. Armed Services (110 th -114 th Congresses) H. Judiciary (110 th -116 th Congresses) H. Small Business (110 th Congress) H. Transportation and Infrastructure (115 th -116 th Congresses)", "JONES, BRENDA. Democrat; Michigan, 13 th District. Elected to the 115 th Congress in a Nov. 6, 2018 special election to fill vacancy caused by resignation of John Conyers (served Nov. 29, 2018-Jan. 3, 2019).", "No committee assignments listed.", "JONES, STEPHANIE TUBBS. Democrat; Ohio, 11 th District. Elected to the 106 th -110 th Congresses (served Jan. 3, 1999, until her death on August 20, 2008).", "Committee assignments:", "H. Banking and Financial Services (106 th Congress) H. Financial Services (107 th Congress) H. Small Business (106 th -107 th Congresses) H. Standards of Official Conduct (107 th -110 th Congresses; chair, 110 th Congress) H. Ways and Means (108 th -110 th Congresses)", "JORDAN, BARBARA C. Democrat; Texas, 18 th District. Elected to the 93 rd -95 th Congresses (served Jan. 3, 1973-Jan. 3, 1979).", "Committee assignments:", "H. Judiciary (93 rd -95 th Congresses) H. Government Operations (94 th -95 th Congresses)", "KELLY, ROBIN. Democrat; Illinois, 2 nd District. Elected to the 113 th Congress in an April 9, 2013, special election to vacancy caused by resignation of Jesse Jackson Jr.; reelected to the 114 th -116 th Congresses (served April 11, 2013-present).", "Committee assignments:", "H. Oversight and Government Reform/Oversight and Reform (113 th -116 th Congresses) H. Science, Space, and Technology (113 th Congress) H. Foreign Affairs (114 th -115 th Congresses) H. Energy and Commerce (116 th Congress)", "KILPATRICK, CAROLYN CHEEKS. Democrat; Michigan, 15 th District (105 th -107 th Congresses) and 13 th District (108 th -111 th Congresses). Elected to the 105 th -111 th Congresses (served Jan. 3, 1997-Jan. 3, 2011). Chair of the Congressional Black Caucus, 110 th Congress.", "Committee assignments:", "H. Banking and Financial Services (105 th Congress) H. House Oversight (105 th Congress) Jt. Library (105 th Congress) H. Appropriations (106 th -111 th Congresses)", "LANGSTON, JOHN MERCER. Republican; Virginia, 4 th District. Elected to the 51 st Congress (served from September 23, 1890-March 3, 1891, after he successfully contested the election of Edward Venable).", "Committee assignments:", "H. Education (51 st Congress)", "LAWRENCE, BRENDA L. Democrat; Michigan, 14 th District. Elected to the 114 th -116 th Congress (served Jan. 3, 2015-present).", "Committee assignments:", "H. Oversight and Government Reform/Oversight and Reform (114 th -116 th Congresses) H. Small Business (114 th Congress) H. Transportation and Infrastructure (115 th Congress) H. Appropriations (116 th Congress)", "LAWSON, ALFRED, Jr. Democrat; Florida, 3 rd District. Elected to the 115 th -116 th Congresses (served Jan. 3, 2017-present). ", "Committee assignments:", "H. Agriculture (115 th -116 th Congresses) H. Small Business (115 th Congress) H. Financial Services (116 th Congress)", "LEE, BARBARA. Democrat; California, 9 th District (105 th -112 th Congresses); 13 th District (113 th -116 th Congresses). Elected to the 105 th Congress in an April 7, 1998, special election to fill vacancy caused by resignation of Ronald Dellums; reelected to the 106 th -116 th Congresses (served April 20, 1998-present). Chair of the Congressional Black Caucus, 111 th Congress.", "Committee assignments:", "H. Banking and Financial Services (105 th -106 th Congresses) H. Financial Services (107 th -109 th Congresses) H. Science (105 th Congress) H. International Relations/Foreign Affairs (107 th -111 th Congresses) H. Appropriations (110 th -116 th Congresses) H. Budget (113 th -116 th Congresses)", "LELAND, GEORGE THOMAS (Mickey). Democrat; Texas, 18 th District. Elected to the 96 th -101 st Congresses (served Jan. 3, 1979, until his death Aug. 7, 1989). Chair of the Congressional Black Caucus, 99 th Congress.", "Committee assignments:", "H. District of Columbia (96 th -99 th Congresses) H. Interstate and Foreign Commerce (96 th -101 st Congresses) H. Post Office and Civil Service (96 th -101 st Congresses) H. Select Hunger (98 th -101 st Congress; chair, 98 th -101 st Congresses) H. Select Children, Youth, and Families (98 th Congress)", "LEWIS, JOHN R. Democrat; Georgia, 5 th District. Elected to the 100 th -116 th Congresses (served Jan. 6, 1987-present).", "Committee assignments:", "H. Public Works and Transportation (100 th -102 nd Congresses) H. Interior and Insular Affairs (100 th -102 nd Congresses) H. Select Aging (101 st -102 nd Congresses) H. District of Columbia (103 rd Congress) H. Ways and Means (103 rd -116 th Congresses) H. Budget (108 th Congress) Jt. Taxation (115 th Congress)", "LONG, JEFFERSON FRANKLIN. Republican; Georgia, 4 th District. Elected to the 41 st Congress after the House declared that Rep. Samuel Gove was not entitled to the seat (served Jan. 16, 1871-March 3, 1871).", "No committee assignments listed.", "LOVE, MIA B. Republican; Utah, 4 th District. Elected to the 114 th -115 th Congresses (served Jan. 3, 2015-Jan. 3, 2019).", "Committee assignment:", "H. Financial Services (114 th -115 th Congresses)", "LYNCH, JOHN ROY. Republican; Mississippi, 6 th District. Elected to the 43 rd , 44 th , and 47 th Congresses (served March 4, 1873-March 3, 1877 and April 29, 1882-March 3, 1883 after he successfully contested the election of James Chalmers).", "Committee assignments:", "H. Mines and Mining (43 rd -44 th Congresses) H. Militia (47 th Congress) H. Education and Labor (47 th Congress)", "MAJETTE, DENISE L. Democrat; Georgia, 4 th District. Elected to the 108 th Congress (served Jan. 3, 2003-Jan. 3, 2005).", "Committee assignments:", "H. Budget (108 th Congress) H. Education and the Workforce (108 th Congress) H. Small Business (108 th Congress)", "MCBATH, LUCY. \u00c2\u00a0 Democrat; Georgia, 6 th \u00c2\u00a0 District. Elected to the 116 th \u00c2\u00a0Congress (served Jan. 3, 2019-present).", "Committee assignments:", "H. Judiciary (116 th \u00c2\u00a0 Congress) H. Education and Labor (116 th \u00c2\u00a0Congress)", "MCEACHIN, ASTON DONALD. Democrat; Virginia, 4 th District. Elected to the 115 th -116 th Congresses (served Jan. 3, 2017-present). ", "Committee assignments:", "H. Armed Services (115 th Congress) H. Natural Resources (115 th -116 th Congresses) H. Energy and Commerce (116 th Congress) H. Select Committee on the Climate Crisis (116 th Congress)", "MCKINNEY, CYNTHIA. Democrat; Georgia, 11 th District (103 rd -104 th Congresses) and 4 th District (105 th -107 th Congress and 109 th Congress). Elected to the 103 rd -107 th Congresses and to the 109 th Congress (served Jan. 3, 1993-Jan. 3, 2003; Jan. 3, 2005-Jan. 3, 2007).", "Committee assignments:", "H. Agriculture (103 rd -104 th Congresses) H. Banking and Finance (104 th -105 th Congresses) H. Foreign Affairs/International Relations (103 rd -107 th Congresses) H. Armed Services/National Security (105 th -107 th Congresses; 109 th Congress) H. Budget (109 th Congress)", "MEEK, CARRIE. Democrat; Florida, 17 th District. Elected to the 103 rd -107 th Congresses (served Jan. 3, 1993-Jan. 3, 2003).", "Committee assignments:", "H. Appropriations (103 rd Congress; 105 th -107 th Congresses) H. Budget (104 th Congress) H. Government Reform and Oversight (104 th Congress)", "MEEK, KENDRICK B. Democrat; Florida, 17 th District. Elected to the 108 th -111 th Congresses (served from Jan. 7, 2003-Jan. 3, 2011).", "Committee assignments:", "H. Armed Services (108 th -111 th Congresses) H. Homeland Security (108 th -109 th Congresses) H. Ways and Means (110 th -111 th Congresses)", "MEEKS, GREGORY W. Democrat; New York, 5 th District. Elected to the 105 th Congress in a Feb. 3, 1998, special election to fill vacancy caused by the resignation of Floyd Flake; reelected to 106 th -116 th Congresses (served Feb. 3, 1998-present).", "Committee assignments:", "H. Banking and Financial Services/Financial Services (105 th -116 th Congresses) H. International Relations/Foreign Affairs (106 th -116 th Congresses)", "METCALFE, RALPH HAROLD. Democrat; Illinois, 1 st District. Elected to the 92 nd -95 th Congresses (served Jan. 3, 1971, until his death October 10, 1978).", "Committee assignments:", "H. Interstate and Foreign Commerce (92 nd -95 th Congresses) H. Merchant Marine and Fisheries (92 nd -95 th Congresses) H. Post Office and Civil Service (95 th Congress)", "MFUME, KWEISI. Democrat; Maryland, 7 th District. Elected to the 100 th -104 th Congresses (served Jan. 6, 1987, until his resignation on Feb. 16, 1996). Chair of the Congressional Black Caucus, 103 rd Congress.", "Committee assignments:", "H. Banking, Finance, and Urban Affairs/Banking and Financial Services (100 th -104 th Congresses) H. Small Business (100 th -104 th Congresses) H. Education and Labor (101 st Congress) H. Select Narcotics Abuse and Control (101 st -102 nd Congresses) Jt. Economic (102 nd -104 th Congresses) H. Standards of Official Conduct (103 rd Congress) H. Select Hunger (100 th Congress)", "MILLENDER-McDONALD, JUANITA. Democrat; California, 37 th District. Elected to the 104 th Congress in a March 26, 1996, special election to fill vacancy caused by resignation of Walter Tucker; reelected to the 105 th -110 th Congresses (served April 16, 1996, until her death April 22, 2007).", "Committee assignments:", "H. Small Business (104 th -110 th Congresses) H. Transportation and Infrastructure (104 th -110 th Congresses) H. Administration (108 th -110 th Congresses; ranking member, 109 th Congress; chair, 110 th Congress) Jt. Library (108 th -110 th Congresses) Jt. Printing (109 th -110 th Congresses)", "MILLER, THOMAS EZEKIEL. Republican; South Carolina, 7 th District. Elected to the 51 st Congress (served Sept. 24, 1890-March 3, 1891, after successfully contesting the election of William Elliott).", "Committee assignments:", "H. Library of Congress (51 st Congress)", "MITCHELL, ARTHUR WERGS. Democrat; Illinois, 1 st District. Elected to the 74 th -77 th Congresses (served Jan. 3, 1935-Jan. 3, 1943).", "Committee assignments:", "H. Post Office and Post Roads (74 th -77 th Congresses)", "MITCHELL, PARREN JAMES. Democrat; Maryland, 7 th District. Elected to the 92 nd -99 th Congresses (served Jan. 3, 1971-Jan. 3, 1987). Chair of the Congressional Black Caucus, 95 th Congress.", "Committee assignments:", "H. Banking and Currency/Banking, Finance and Urban Affairs (92 nd -99 th Congresses) H. Select Small Business (92 nd -93 rd Congresses) H. Small Business (94 th , 96 th -99 th Congresses; chair, 97 th -99 th Congresses) H. Budget (93 rd -95 th Congresses) Jt. Defense Production (94 th -95 th Congresses) Jt. Economic (95 th -99 th Congresses; vice chair, 95 th Congress)", "MOORE, GWENDOLYNNE (GWEN). Democrat; Wisconsin, 4 th District. Elected to the 109 th - 116 th Congresses (served Jan. 3, 2005-present).", "Committee assignments:", "H. Financial Services (109 th -115 th Congresses) H. Small Business (109 th -111 th Congresses) H. Budget (110 th -114 th Congresses) H. Ways and Means (116 th Congress)", "MOSELEY-BRAUN, CAROL. Democrat; Illinois, Senator. Elected in 1992 (served Jan. 3, 1993-Jan. 3, 1999). ", "Committee assignments:", "S. Banking, Housing, and Urban Affairs (103 rd -105 th Congresses) S. Judiciary (103 rd Congress) S. Small Business (103 rd Congress) S. Finance (104 th -105 th Congresses) S. Special Aging (104 th -105 th Congresses)", "MURRAY, GEORGE WASHINGTON. Republican; South Carolina, 1 st District. Elected to the 53 rd -54 th Congresses (served March 4, 1893-March 3, 1895, and June 4, 1896-March 3, 1897, after successfully contesting the election).", "Committee assignments:", "H. Education (53 rd -54 th Congresses) H. Expenditures in the Department of the Treasury (54 th Congress)", "NASH, CHARLES EDMUND. Republican; Louisiana, 6 th District. Elected to the 44 th Congress (served March 4, 1875-March 3, 1877).", "Committee assignments:", "H. Education and Labor (44 th Congress)", "NEGUSE, JOE. Democrat; Colorado, 2 nd District. Elected to the 116 th Congress (served Jan. 3, 2019-present).", "Committee assignments:", "H. Judiciary (116 th Congress) H. Natural Resources (116 th Congress) H. Select Committee on the Climate Crisis (116 th Congress)", "NIX, ROBERT NELSON CORNELIUS, Sr. Democrat; Pennsylvania, 4 th District (85 th -87 th Congresses); 2 nd District (88 th -95 th Congresses). Elected to the 85 th -95 th Congresses (served June 4, 1958-Jan. 3, 1979).", "Committee assignments:", "H. Merchant Marine and Fisheries (85 th -86 th Congresses) H. Foreign Affairs (87 th -93 rd Congresses) H. International Relations (94 th -95 th Congresses) H. Veterans' Affairs (85 th -86 th Congresses) H. Post Office and Civil Service (88 th -95 th Congresses; chair, 95 th Congress) H. Select Standards and Conduct (89 th Congress) H. Crime (91 st Congress)", "NORTON, ELEANOR HOLMES. Democrat; Delegate from the District of Columbia. Elected to the 102 nd -116 th Congresses (served Jan. 3, 1991-present).", "Committee assignments:", "H. District of Columbia (102 nd -103 rd Congresses) H. Post Office and Civil Service (102 nd -103 rd Congresses) H. Public Works and Transportation/Transportation and Infrastructure (102 nd -116 th Congresses) Jt. Committee on the Organization of Congress (103 rd Congress) H. Small Business (104 th Congress) H. Oversight and Government Reform/Government Reform/Oversight and Reform (104 th -116 th Congresses) H. Homeland Security (108 th -111 th Congresses)", "OBAMA, BARACK. Democrat; Illinois. Senator. Elected in 2004 (served Jan. 4, 2005, until his resignation Nov. 16, 2008, after being elected President of the United States).", "Committee assignments:", "S. Environment and Public Works (109 th -110 th Congresses) S. Foreign Relations (109 th -110 th Congresses) S. Veterans' Affairs (109 th -110 th Congresses) S. Health, Education, Labor and Pensions (110 th Congress) S. Homeland Security and Governmental Affairs (110 th Congress)", "O'HARA, JAMES EDWARD. Republican; North Carolina, 2 nd District. Elected to the 48 th -49 th Congresses (served March 4, 1883-March 3, 1887).", "Committee assignments:", "H. Mines and Mining (48 th Congress) H. Expenditures on Public Buildings (49 th Congress) H. Invalid Pensions (49 th Congress)", "OMAR, ILHAN. \u00c2\u00a0 Democrat; Minnesota, 5 th \u00c2\u00a0District. Elected to the 116 th \u00c2\u00a0 Congress (served Jan. 3, 2019-present).", "Committee assignments:", "H. Budget (116 th \u00c2\u00a0Congress) H. Foreign Affairs (116 th \u00c2\u00a0Congress) H. Education and Labor (116 th \u00c2\u00a0Congress)", "OWENS, MAJOR ROBERT ODELL. Democrat; New York, 11 th District. Elected to the 98 th -110 th Congresses (served Jan. 3, 1983-Jan. 3, 2007).", "Committee assignments:", "H. Education and Labor/Economic and Educational Opportunities/Education and the Workforce (98 th -109 th Congresses) H. Government Operations/Reform and Oversight (98 th -109 th Congresses)", "PAYNE, DONALD MILFORD, Sr. Democrat; New Jersey, 10 th District. Elected to the 101 st -112 th Congresses (served Jan. 3, 1989, until his death March 6, 2012). Chair of the Congressional Black Caucus, 104 th Congress.", "Committee assignments:", "H. Education and Labor/Economic and Educational Opportunities/Education and the Workforce (101 st -112 th Congresses) H. Foreign Affairs/International Relations (101 st -112 th Congress) H. Government Operations (101 st -103 rd Congresses)", "PAYNE, DONALD MILFORD, Jr. Democrat; New Jersey, 10 th District. Elected to the 112 th Congress Nov. 6, 2012, to fill vacancy caused by death of his father Donald Payne Sr.; simultaneously elected to the 113 th Congress; reelected to the 114 th -116 th Congresses (served Nov. 6, 2012-present).", "Committee assignments:", "H. Homeland Security (113 th -116 th Congresses) H. Small Business (113 th -114 th Congresses) H. Transportation and Infrastructure (115 th -116 th Congresses)", "PLASKETT, STACEY E. Democrat; Delegate from the U.S. Virgin Islands. Elected to the 114 th - 116 th Congresses (served Jan. 3, 2015-present).", "Committee assignments:", "H. Agriculture (114 th -116 th Congresses) H. Oversight and Government Reform/Oversight and Reform (114 th -116 th Congresses) H. Transportation and Infrastructure (116 th Congress)", "POWELL, ADAM CLAYTON, Jr. Democrat; New York, 22 nd District (79 th -82 nd Congresses); 16 th District (83 rd -87 th Congresses); 18 th District (88 th -89 th and 91 st Congresses). Elected to the 79 th -90 th Congress, but was not seated in the 90 th Congress; and to the 91 st Congress (served Jan. 3, 1945-Jan. 3, 1967, and Jan. 3, 1969-Jan. 3, 1971).", "Committee assignments:", "H. Indian Affairs (79 th Congress) H. Invalid Pensions (79 th Congress) H. Labor/Education and Labor (79 th -89 th and 91 st Congresses; chair, 87 th -89 th Congresses) H. Interior and Insular Affairs (84 th -86 th Congresses)", "PRESSLEY, AYANNA. \u00c2\u00a0 Democrat; Massachusetts, 7 th \u00c2\u00a0 District. Elected to the 116 th \u00c2\u00a0Congress (served Jan. 3, 2019-present).", "Committee assignments:", "H. Oversight and Reform (116 th \u00c2\u00a0Congress) H. Financial Services (116 th \u00c2\u00a0 Congress)", "RAINEY, JOSEPH HAYNE. Republican; South Carolina, 1 st District. Elected to the 41 st Congress after the seat declared vacant, and to the 42 nd -45 th Congresses (served Dec. 12, 1870- March 3, 1879).", "Committee assignments:", "H. Freedmen's Affairs (41 st -42 nd Congresses) H. Indian Affairs (43 rd Congress) H. Invalid Pensions (44 th -45 th Congresses) H. Select Celebration of Proposed National Census of 1875 (43 rd Congress)", "RANGEL, CHARLES B. Democrat; New York, 18 th District (92 nd Congress); 19 th District (93 rd -97 th Congresses); 16 th District (98 th -102 nd Congresses); 15 th District (103 rd -112 th Congresses); 13 th District (113 th -114 th Congresses). Elected to the 92 nd -114 th Congresses (served Jan. 3, 1971-Jan. 3, 2017). Chair of the Congressional Black Caucus, 94 th Congress.", "Committee assignments:", "H. Public Works (92 nd Congress) H. Science and Astronautics (92 nd Congress) H. Judiciary (92 nd -93 rd Congresses) H. District of Columbia (93 rd Congress) H. Ways and Means (94 th -114 th Congresses; committee chair, 110 th -111 th Congresses; ranking Member, 105 th -109 th Congresses) H. Select Crime (92 nd -93 rd Congresses) H. Select Narcotics Abuse and Control (94 th -102 nd Congresses; chair, 98 th -102 nd Congresses) Jt. Taxation (104 th -105 th , 108 th , 111 th , and 114 th Congresses; chair, 111 th Congress)", "RANSIER, ALONZO JACOB. Republican; South Carolina, 2 nd District. Elected to the 43 rd Congress (served March 3, 1873-March 3, 1875).", "Committee assignments:", "H. Manufactures (43 rd Congress)", "RAPIER, JAMES THOMAS. Republican; Alabama, 2 nd District. Elected to the 43 rd Congress (served March 4, 1873-March 3, 1875).", "Committee assignments:", "H. Education and Labor (43 rd Congress)", "REVELS, HIRAM RHODES. Republican; Mississippi, Senator. Elected in 1870 (served Feb. 23, 1870-March 3, 1871).", "Committee assignments:", "S. Education and Labor (41 st Congress) S. District of Columbia (41 st Congress)", "REYNOLDS, MEL . Democrat; Illinois, 2 nd District. Elected to the 103 rd -104 th Congresses (served Jan. 5, 1993, until his resignation October 1, 1995).", "Committee assignments:", "H. Ways and Means (103 rd Congress) H. Economic and Education Opportunities (104 th Congress)", "RICHARDSON, LAURA. Democrat, California, 37 th District. Elected to the 110 th Congress in an August 21, 2007, special election to fill vacancy caused by death of Juanita Millender-McDonald; reelected to the 111 th -112 th Congresses (served Sept. 4, 2007, to Jan. 3, 2013).", "Committee assignments:", "H. Science and Technology (110 th Congress) H. Transportation and Infrastructure (110 th -112 th Congresses) H. Homeland Security (111 th -112 th Congresses)", "RICHMOND, CEDRIC. Democrat; Louisiana, 2 nd District. Elected to the 112 th -116 th Congresses (served Jan. 3, 2011-present). Chair of the Congressional Black Caucus, 115 th Congress.", "Committee assignments:", "H. Judiciary (113 th -116 th Congresses) H. Homeland Security (112 th -116 th Congresses) H. Small Business (112 th Congress)", "RUSH, BOBBY L. Democrat; Illinois, 1 st District. Elected to the 103 rd -116 th Congresses (served Jan. 4, 1993-present).", "Committee assignments:", "H. Banking, Finance and Urban Affairs (103 rd Congress) H. Government Operations (103 rd Congress) H. Science, Space and Technology (103 rd Congress) H. Commerce/Energy and Commerce (104 th -116 th Congresses)", "SAVAGE, GUS. Democrat; Illinois. 2 nd District. Elected to the 97 th -102 nd Congresses (served Jan. 3, 1981-Jan. 3, 1993).", "Committee assignments:", "H. Post Office and Civil Service (97 th Congress) H. Public Works and Transportation (97 th -102 nd Congresses) H. Small Business (97 th -102 nd Congresses)", "SCOTT, DAVID. Democrat; Georgia, 13 th District. Elected to the 108 th -116 th Congresses (served Jan. 7, 2003-present).", "Committee assignments:", "H. Agriculture (108 th -116 th Congresses) H. Financial Services (108 th -116 th Congresses) H. Foreign Affairs (111 th Congress)", "SCOTT, ROBERT C . \"Bobby\" . Democrat; Virginia, 3 rd District. Elected to the 103 rd -116 th Congresses (served Jan. 4, 1993-present).", "Committee assignments:", "H. Education and Labor/Economic and Educational Opportunities/Education and the Workforce (103 rd -107 th , 109 th -116 th Congresses; chair, 116 th Congress) H. Judiciary (103 rd -113 th Congresses) H. Science, Space, and Technology (103 rd Congress) H. Select U.S. National Security and Military/Commercial Concerns with the People's Republic of China (106 th Congress) H. Budget (108 th , 110 th , 116 th Congresses) H. Standards of Official Conduct (110 th Congress) Jt. Select Solvency of Multiemployer Pension Plans (115 th Congress)", "SCOTT, TIM. Republican; South Carolina, 1 st District, Senator. Elected to the 112 th Congress (served in House Jan. 3, 2011, until his resignation Jan. 2, 2013). Appointed to the Senate in January 2013 to fill the vacancy caused by the resignation of Jim DeMint; reelected to the remainder of the term in 2014 and to a full term in 2016 (served in Senate Jan. 3, 2013-present).", "Committee assignments:", "H. Rules (112 th Congress) S. Armed Services (115 th Congress) S. Banking, Housing and Urban Affairs (114 th -116 th Congresses) S. Commerce, Science and Transportation (113 th Congress) S. Energy and Natural Resources (113 th Congress) S. Finance (114 th -116 th Congresses) S. Health, Education, Labor and Pensions (113 th -116 th Congresses) S. Small Business and Entrepreneurship (113 th -116 th Congresses) S. Special Aging (113 th -116 th Congresses)", "SEWELL, TERRYCINA (\"TERRI\"). Democrat; Alabama, 7 th District. Elected to the 112 th - 116 th Congresses (served Jan. 3, 2011-present). ", "Committee assignments:", "H. Agriculture (112 th Congress) H. Science, Space and Technology (112 th Congress) H. Financial Services (113 th -114 th Congresses) H. Intelligence (113 th -116 th Congresses) H. Ways and Means (115 th -116 th Congresses)", "SMALLS, ROBERT. Republican; South Carolina, 7 th District. Elected to the 44 th -45 th and 47 th -49 th Congresses (served March 4, 1875-March 3, 1879; July 19, 1992-March 3, 1883, after he successfully contested the reelection of George Tillman, and March 18, 1884-March 3, 1887, after he was elected to fill the vacancy caused by the death of Edmund Mackey).", "Committee assignments:", "H. Agriculture (44 th , 47 th Congresses) H. Militia (45 th Congress) H. Manufactures (48 th Congress) H. War Claims (49 th Congress)", "STEWART, BENNETT MCVEY. Democrat; Illinois, 1 st District. Elected to the 96 th Congress. (served Jan. 3, 1979-Jan. 3, 1981)", "Committee assignments:", "H. Appropriations (96 th Congress)", "STOKES, LOUIS. Democrat; Ohio, 21 st District (91 st -102 nd Congresses); 11 th District (103 rd -105 th Congresses). Elected to the 91 st -105 th Congresses (served Jan. 3, 1969 to Jan. 3, 1999). Chair of the Congressional Black Caucus, 93 rd Congress.", "Committee assignments:", "H. Education and Labor (91 st Congress) H. Internal Security (91 st Congress) H. Appropriations (92 nd -105 th Congress) H. Budget (95 th -96 th Congresses) H. Standards of Official Conduct (96 th -98 th and 102 nd Congresses; chair, 97 th -98 th and 102 nd Congresses) H. Select Assassinations (94 th -95 th Congresses; chair, 95 th Congress) H. Select Intelligence (98 th -100 th Congresses) H. Select to Investigate Arms Transactions to Iran (100 th Congress)", "THOMPSON, BENNIE. Democrat; Mississippi, 2 nd District. Elected to the 103 rd Congress in an April 13, 1993, special election to fill the vacancy caused by the resignation of Mike Espy; reelected to the 104 th -116 th Congresses (served April 13, 1993-present).", "Committee assignments:", "H. Agriculture (103 rd -108 th Congresses) H. Merchant Marine and Fisheries (103 rd Congress) H. Small Business (103 rd -104 th Congresses) H. Budget (105 th -107 th Congresses) H. Homeland Security (108 th -116 th Congresses; chair 110 th -111 th Congresses; ranking Member, 112 th -115 th Congresses; chair, 116 th Congress)", "TOWNS, EDOLPHUS. Democrat; New York, 11 th District (98 th -102 nd Congresses); 10 th District (103 rd -112 th Congresses). Elected to the 98 th -112 th Congresses (served Jan. 3, 1983-Jan. 23, 2013). Chair of the Congressional Black Caucus, 102 nd Congress.", "Committee assignments:", "H. Government Operations/Government Reform and Oversight/Oversight and Government Reform (98 th -112 th Congresses; chair, 111 th Congress) H. Public Works and Transportation (98 th -104 th Congresses) H. Energy and Commerce/Commerce (101 st -110 th and 112 th Congresses) H. Select Narcotics Abuse and Control (98 th -102 nd Congresses)", "TUCKER, WALTER R., III. Democrat; California, 37 th District. Elected to the 103 rd -104 th Congresses (served Jan. 5, 1993, until his resignation on December 15, 1995).", "Committee assignments:", "H. Public Works and Transportation/Transportation and Infrastructure (103 rd - 104 th Congresses) H. Small Business (103 rd -104 th Congresses)", "TURNER, BENJAMIN STERLING. Republican; Alabama, 1 st District. Elected to the 42 nd Congress (served March 4, 1871-March 3, 1873).", "Committee assignments:", "H. Invalid Pensions (42 nd Congress)", "UNDERWOOD, LAUREN. \u00c2\u00a0 Democrat; Illinois, 14 th \u00c2\u00a0District. Elected to the 116 th \u00c2\u00a0 Congress (served Jan. 3, 2019-present).", "Committee assignments:", "H. Homeland Security (116 th \u00c2\u00a0Congress) H. Veterans' Affairs (116 th \u00c2\u00a0Congress) H. Education and Labor (116 th \u00c2\u00a0 Congress)", "VEASEY, MARC. Democrat; Texas, 33 rd District. Elected to 113 th -116 th Congresses (served Jan. 3, 2015-present).", "Committee assignments:", "H. Armed Services (113 th -115 th Congresses) H. Science, Space and Technology (113 th -115 th Congresses) H. Energy and Commerce (116 th Congress) H. Small Business (116 th Congress)", "WALDON, ALTON R., Jr. Democrat; New York, 6 th District. Elected to the 99 th Congress in a June 10, 1986, special election to fill the vacancy caused by the death of Joseph P. Addabbo (served July 29, 1986-Jan. 3, 1987).", "Committee assignments:", "H. Education and Labor (99 th Congress)", "WALLS, JOSIAH THOMAS. Republican; Florida, At-Large (42 nd and 43 rd Congresses); 2 nd District (44 th Congress). Elected to the 42 nd -44 th Congresses (served March 4, 1871-Jan. 29, 1873, when his election was successfully contested; March 4, 1873-March 3, 1875; and March 4, 1875-April 19, 1876, when his election was successfully contested).", "Committee assignments:", "H. Militia (42 nd -43 rd Congresses) H. Mileage (44 th Congress)", "WASHINGTON, CRAIG ANTHONY. Democrat; Texas, 18 th District. Elected to the 101 st Congress in a Dec. 9, 1989, special election to fill the vacancy caused by the death of Mickey Leland; reelected to the 102 nd -103 rd Congresses (served Dec. 9, 1989-Jan. 3, 1995).", "Committee assignments:", "H. Education and Labor (101 st -102 nd Congresses) H. Judiciary (101 st -103 rd Congresses) H. Energy and Commerce (103 rd Congress) H. Government Operations (103 rd Congress) H. Select Committee on Narcotics Abuse and Control (102 nd Congress)", "WASHINGTON, HAROLD. Democrat; Illinois, 1 st District. Elected to the 97 th -98 th Congresses (served Jan. 3, 1981, until his resignation April 29, 1983).", "Committee assignments:", "H. Government Operations (97 th Congress) H. Education and Labor (97 th -98 th Congresses) H. Judiciary (97 th -98 th Congresses)", "WATERS, MAXINE. Democrat; California, 29 th District (102 nd Congress), 35 th District (103 rd - 112 th Congresses), and 43 rd District (113 th Congress-present). Elected to the 102 nd -116 th Congresses (served Jan. 3, 1991-present). Chair, Congressional Black Caucus, 105 th Congress.", "Committee assignments:", "H. Banking, Finance, and Urban Affairs/Banking and Financial Services/Financial Services (102 nd -116 th Congresses; ranking member, 113 th -115 th Congresses; chair, 116 th Congress) H. Veterans' Affairs (102 nd -104 th Congresses) H. Small Business (103 rd -104 th Congresses) H. Judiciary (105 th -112 th Congresses)", "WATSON, DIANE. Democrat; California, 32 nd District (107 th Congress) and 33 rd District (108 th - 111 th Congresses). Elected to the 107 th Congress in a June 5, 2001, special election to fill vacancy caused by death of Julian Dixon; reelected to the 108 th -111 th Congresses (served June 7, 2001-Jan. 3, 2011).", "Committee assignments:", "H. Government Reform/Oversight and Government Reform (107 th -111 th Congresses) H. International Relations/Foreign Affairs (107 th -111 th Congresses)", "WATSON COLEMAN, BONNIE. Democrat; New Jersey, 12 th District. Elected to the 114 th -116 th Congresses (served Jan. 3, 2015-present).", "Committee assignments:", "H. Homeland Security (114 th -116 th Congresses) H. Oversight and Government Reform (114 th -115 th Congresses) H. Appropriations (116 th Congress)", "WATT, MELVIN L. Democrat; North Carolina, 12 th District. Elected to the 103 rd -113 th Congresses (served Jan. 5, 1993, until his resignation Jan. 6, 2014). Chair of the Congressional Black Caucus, 109 th Congress.", "Committee assignments:", "H. Banking, Finance, and Urban Affairs/Banking and Financial Services/ Financial Services (103 rd -113 th Congresses) H. Post Office and Civil Service (103 rd Congress) H. Judiciary (103 rd -113 th Congresses) Jt. Economic (107 th -108 th Congresses)", "WATTS, JULIUS CAESAR, Jr . (J.C.) Republican; Oklahoma, 4 th District. Elected to the 104 th -107 th Congresses (served Jan. 3, 1995-Jan. 3, 2003).", "Committee assignments:", "H. Banking and Financial Services (104 th Congress) H. National Security (104 th -105 th Congress) H. Transportation and Infrastructure (105 th -106 th Congresses) H. Armed Services (106 th -107 th Congresses)", "WEST, ALLEN Republican; Florida, 22 nd District. Elected to the 112 th Congress (served Jan, 3, 2011-Jan. 3, 2013).", "Committee assignments:", "H. Armed Services (112 th Congress) H. Small Business (112 th Congress)", "WHEAT, ALAN DUPREE. Democrat; Missouri, 5 th District. Elected to the 98 th -103 rd Congresses (served Jan. 3, 1983-Jan. 3, 1995).", "Committee assignments:", "H. District of Columbia (98 th -103 rd Congresses) H. Rules (98 th -103 rd Congresses) H. Select Children, Youth, and Families (98 th -102 nd Congresses) H. Select Hunger (101 st -102 nd Congresses)", "WHITE, GEORGE HENRY. Republican; North Carolina, 2 nd District. Elected to the 55 th -56 th Congresses (served March 4, 1897-March 3, 1901).", "Committee assignments:", "H. Agriculture (55 th Congress) H. District of Columbia (55 th -56 th Congresses)", "WILSON, FREDERICA. Democrat; Florida, 17 th District (112 th Congress), 24 th District (113 th Congress-present). Elected to the 112 th -116 th Congresses (served Jan. 3, 2011-present).", "Committee assignments:", "H. Foreign Affairs (112 th Congress) H. Science, Space and Technology (112 th -113 th Congresses) H. Education and the Workforce (114 th -116 th Congresses) H. Transportation and Infrastructure (115 th -116 th Congresses)", "WYNN, ALBERT RUSSELL. Democrat; Maryland, 4 th District. Elected to the 103 rd -110 th Congresses (served Jan. 5, 1993-May 31, 2008).", "Committee assignments:", "H. Banking, Finance, and Urban Affairs/Banking and Financial Services (103 rd -104 th Congresses) H. Foreign Affairs/International Relations (103 rd -104 th Congresses) H. Post Office and Civil Service (103 rd Congress) H. Commerce/Energy and Commerce (105 th -110 th Congresses)", "YOUNG, ANDREW JACKSON, Jr. Democrat; Georgia, 5 th District. Elected to the 93 rd -95 th Congresses (served Jan. 3, 1973, until his resignation on Jan. 29, 1977).", "Committee assignments:", "H. Banking, Currency and Housing (93 rd Congress) H. Rules (94 th Congress)"], "subsections": []}]}}
{"id": "R46208", "title": "Digital Assets and SEC Regulation", "released_date": "2020-01-30T00:00:00", "summary": ["In recent years, financial innovation in capital markets has fostered a new asset class\u00e2\u0080\u0094digital assets\u00e2\u0080\u0094and introduced new forms of fundraising and trading. Digital assets , which include crypto - assets , cryptocurrencies , or digital tokens , among others, are digital representations of value made possible by cryptography and distributed ledger technology. Regardless of the terms used to describe these assets, depending on their characteristics, some digital assets are subject to securities laws and regulations.", "Securities regulation generally applies to all securities, whether they are digital or traditional. The Securities and Exchange Commission (SEC) is the primary regulator overseeing securities offerings, sales, and investment activities. The SEC's mission is to protect investors; maintain fair, orderly, and efficient markets; and facilitate capital formation. The existing securities regulatory regime generally aligns with this mission, and the SEC's digital asset regulation generally follows the same regime. The SEC has used existing authorities to evaluate new product approval, provide individual regulatory relief, and solicit public input for policy solutions more tailored to digital assets.", "Digital assets have a growing presence in the financial services industry. Their increasing use in capital markets raises policy questions regarding whether changes to existing laws and regulations are warranted and, if so, when such changes should happen, what form they should take, and which agencies should take the lead. The current innovative environment is not the regulatory regime's first encounter with changing technology since its inception in the 1930s. Some technological advancements led to regulatory changes, whereas others were dealt with through the existing regime.", "The general consensus is that regulatory oversight should be balanced with the need to foster financial innovation, but securities regulation's basic objectives should apply. In addition, some believe that certain digital asset activities that may appear similar to traditional activities nonetheless require adjusted regulatory approaches to account for particular operating models that may amplify risks differently. In general, policymakers contending with major financial innovations have historically focused on addressing risk concerns while tailoring a regulatory framework that was flexible enough to accommodate evolving technology. Current developments that raise policy issues include the following:", "Initial coin offerings (ICOs) . ICOs as a digital asset fundraising method can be offered in many forms using existing public and private securities offerings channels. Although ICOs may be useful fundraising tools, they raise regulatory oversight and investor protection concerns.", "Digital asset \"exchanges . \" Some industry observers perceive digital asset trading platforms as functional equivalents to the SEC-regulated securities exchanges in buying and selling digital assets. But these platforms are not subject to the same level of regulation, suggesting that they may be less transparent and more susceptible to manipulation and fraud.", "Digital asset custody . Custodians provide safekeeping of financial assets and are important building blocks for the financial services industry. Digital assets present custody-related compliance challenges because custodians face difficulties in recording ownership, recovering lost assets, and providing audits, among other considerations. The SEC is aware of the challenges and is engaging stakeholders to discuss potential issues and solutions.", "Digital asset exchange-traded funds (ETFs) . ETFs are pooled investment vehicles that gather and invest money from a variety of investors. ETF shares can trade on securities exchanges like a stock. Currently, digital assets themselves are generally not sold on SEC-regulated national exchanges. However, if portfolios of digital assets were made available as ETFs, they may be sold on national exchanges. The SEC has not yet approved any digital asset ETFs because of market manipulation and fraud concerns.", "Stablecoins in securities markets . Stablecoins are a type of digital asset designed to maintain a stable value by linking its value to another asset or a basket of assets. Issues concerning stablecoins include market integrity, investor protection, payments, financial stability, and illicit activity prevention. Three legislative proposals relating to securities regulation were discussed at a House Committee on Financial Services hearing: the first proposal ( H.R. 5197 ) would subject stablecoins to securities regulation; the second draft proposal would limit public company executives' access to stablecoins; and the third proposal ( H.R. 4813 ) would prevent \"Big Tech\" firms from offering financial services or issuing digital assets."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "What Are Digital Assets?", "paragraphs": ["Digital assets are assets issued and transferred using distributed ledger or blockchain technology. They are often referred to as crypto-asset , digital token , or cryptocurrenc y , among other terminology. Digital assets can be securities, currencies, or commodities. Although market participants use different terms to describe them, financial regulators have stated that\u00e2\u0080\u0094regardless of what they are called\u00e2\u0080\u0094financial activities, services, and market participants must adhere to applicable laws and regulations. In the case of digital assets, depending on their characteristics, this can include securities laws and regulations. One key difference between digital and traditional assets is an asset's ownership and exchanges of ownership. Whereas traditional assets are generally recorded in private ledgers maintained by central intermediaries, digital assets' ownership and exchange are generally recorded on a decentralized digital ledger."], "subsections": [{"section_title": "Digital Assets as Securities", "paragraphs": ["The Securities and Exchange Commission (SEC) is the primary regulator overseeing securities offers, sales, and investment activities, including those involving digital assets. However, not all digital assets are securities. In general, a security is \"the investment of money in a common enterprise with a reasonable expectation of profits to be derived from the efforts of others.\" When a digital asset meets the criteria defining a security, it would be subject to securities regulation. For example, most of the initial coin offerings (ICOs) are securities, but Bitcoin is not a security, mainly because it does not have a central third-party common enterprise. ", "Market intermediaries (e.g., investment advisers, trading platforms, and custodians) involved with digital asset investment, trading, and safekeeping could also be subject to relevant securities regulation. Securities regulations could apply if the intermediaries are directly engaged in the security-based digital asset transactions or if they use digital assets (including non-security-based digital assets) to facilitate securities transactions. ", "This report focuses on digital assets and activities that are subject to securities regulation. It discusses the objectives and policy rationale of securities laws and regulations; SEC initiatives to address specific regulatory challenges arising from certain unique digital asset features that raise questions concerning the adequacy of the existing regulatory framework; and policy issues for congressional and industry consideration in five selected areas: initial coin offerings, stablecoins, digital asset exchange-traded funds, digital asset custody, and digital asset trading."], "subsections": []}]}, {"section_title": "Securities Regulation Background", "paragraphs": ["Securities regulation generally applies to all securities and related intermediaries, whether they are digital or traditional. This section broadly discusses the objectives and policy rationale behind securities laws and regulations. ", "Congress established the SEC and the main framework for capital markets and securities regulation to restore market confidence after the stock market crash of 1929. The regulatory framework's key objectives are to promote disclosure of important market-related information, maintain fair dealing, and protect against fraud. As a result, the existing securities regulatory regime focuses on disclosure-based rules, an antifraud regime, and rules governing securities market participants (e.g., exchanges, broker-dealers, and investment advisors). The SEC's mission is to protect investors; maintain fair, orderly, and efficient markets; and facilitate capital formation.", "For example, one of the cornerstones of securities regulation\u00e2\u0080\u0094the Securities Act of 1933\u00e2\u0080\u0094is often referred to as the \"truth in securities\" law. As the phrase suggests, disclosures allow investors to make informed judgments about whether to purchase specific securities by ensuring they receive financial and other significant information on securities offered for sale. The SEC does not make investment recommendations. The disclosure-based regulatory philosophy is consistent with Supreme Court Justice Louis Brandeis's famous dictum that \"sunlight is said to be the best of disinfectants; electric light the most efficient policeman.\"", "The current developments in digital asset trading and fundraising are not the first time securities regulators have had to accommodate new technology. Capital markets infrastructure has experienced continuous innovation since the securities regulatory framework was first formed in the 1930s. For example, securities trading platforms experienced a major revolution in the late 1960s and early 1970s, when trading processes shifted from paper and pen-based manual settlements in isolated markets to electronic platforms, which incorporate new data-processing and communications technologies that link all markets together. Congress responded to these advancements by amending Section 11A of the Securities Exchange Act to establish a national market system. The congressional objectives were to encourage efficient, competitive, fair, and orderly markets that are in the public interest and protect investors. "], "subsections": []}, {"section_title": "The SEC's Current Regulatory Approach", "paragraphs": ["Although digital assets as a capital market innovation evolved quickly, the SEC to date has not been active in promulgating new digital-asset-specific rules. One rationale for this approach is that, because it is uncertain how the characteristics and use of digital assets will evolve, highly prescriptive regulations could become obsolete, and potentially inefficient. ", "The SEC's current regulatory framework that governs traditional and digital securities include the Securities Act of 1933, the Securities Exchange Act of 1934, the Investment Company Act of 1940, and the Investment Advisers Act of 1940. It has also used existing tools and a number of initiatives besides rulemaking to address specific regulatory issues arising from certain unique digital asset features. The SEC's approaches include the following: ", "Innovation office . The SEC created the Strategic Hub for Innovation and Financial Technology (FinHub) in 2018 to engage in financial technology ( fintech ), consolidate and clarify communications, and inform policy research. In 2019, FinHub conducted outreach meetings in multiple cities and published a framework for analyzing whether a digital asset is a security. Enforcement . The SEC has brought enforcement actions against securities token issuers and digital asset traders and asset managers, among others. The SEC established a new Cyber Unit and increased its monitoring of and enforcement actions against illicit cyber-based transactions. No-action letter s . The SEC uses no-action letters to provide relief for digital-asset-related businesses and to signal its regulatory intentions to capital markets. For example, the SEC issued a no-action letter to TurnKey Jet, a business-travel startup, stating that its issued tokens are not securities. This was the SEC's first no-action letter for an ICO. The letter triggered a wave of industry discussions and could set a precedent for future digital asset activities. Solicitation for public input . The SEC released a letter to the industry in March 2019 to solicit public input regarding digital asset custody. The comments may help the SEC understand the challenges the industry faces and assess investor-protection risks. New product approval . The SEC could approve or reject new digital asset products. For example, the SEC has reviewed Bitcoin ETF proposals in recent years and has consistently rejected such proposals as of 2019."], "subsections": []}, {"section_title": "Issues Raised by Digital Assets in the Securities Regulation Context", "paragraphs": ["Digital assets and their use in capital markets are a growing presence in the financial services industry's development. They raise policy questions, including whether new digital-asset-related practices have outgrown or are sufficiently overseen by the existing regulatory system; how the regulatory frameworks can achieve a level playing field where the same businesses and risks could be subject to the same regulation; and how to protect investors without hindering innovation.", "A fundamental understanding of innovative trends and the appropriate timing of the related policy actions are also important for digital asset regulation. In analyzing technological changes, some commentators suggest that society tends to overestimate a technology's effects in the short run and underestimate its effects in the long run. This illustrates the delicate balance between social pressure for change and the appropriate timing for policy responses in the face of innovation. ", "This section explains key examples of digital asset developments and use cases, focusing on policy issues and legislative proposals in the securities regulation context. The most salient digital asset-related policy issues include regulatory oversight and investor protection.", "Regulatory O versight . Digital asset issuers and investors face a steep learning curve in comprehending the regulatory landscape and determining how or if securities laws apply to them. It may not always be clear whether a digital asset is a security subject to SEC regulation. Multiple agencies apply different regulatory approaches to digital assets at the federal and state levels. For example, for certain digital assets, the SEC treats them as \"securities,\" the Commodity Futures Trading Commission treats them as \"commodities,\" and the Internal Revenue Service treats them as \"property.\" State regulators oversee digital assets through state money transfer laws, and the Treasury Department's Financial Crimes Enforcement Network monitors digital assets for anti-money laundering purposes. ", "Investor Protection. Digital asset investors\u00e2\u0080\u0094which may include less-sophisticated retail investors, who may not be positioned to comprehend or tolerate high risks\u00e2\u0080\u0094may be especially vulnerable to new types of fraud and manipulation, leading to questions about investor protection. First, there appears to be high levels of scams and business failures. A 2018 study from Satis Group, a digital asset advisory firm, found that 81% of ICOs were scams and another 11% failed for operational reasons. Second, many digital asset companies offering securities do not comply with SEC registration and disclosure obligations, potentially affecting investors' ability to understand their risk exposures. Third, the high volatility of digital assets' valuations can potentially result in large gains and losses, the risk of which may not be well understood by less-sophisticated investors. Lastly, digital assets operate outside the traditional financial system and thus may not offer common types of transaction protectio ns. For example, banks may have the option to halt or reverse suspicious transactions and associate transactions with the users' identities, but a digital asset transaction is generally irreversible through such intermediaries."], "subsections": [{"section_title": "Initial Coin Offerings", "paragraphs": ["Businesses raise funding from capital markets through securities offerings, such as stocks, bonds, and digital assets. ICOs are a new fundraising mechanism in which projects sell their digital tokens in exchange for fiat currency (e.g., dollars) or cryptocurrency (e.g., Bitcoin). A typical ICO transaction involves the issuer selling new digital \"coins\" or \"crypto tokens\" to individual or institutional investors. Investors pay for these tokens with either cryptocurrencies or traditional currencies. ICOs are often compared with initial public offerings (IPOs) of the traditional financial world because both are methods by which companies acquire funding. The main difference is that ICO investors receive digital assets in the form of virtual tokens or the promise of future tokens, unlike IPO investors who receive an equity stake representing company ownership. These coins or tokens are new digital currencies each company creates and sells to the public. Coin purchasers could redeem the coins for goods or services from crypto enterprises or hold them as investments hoping the coins would increase in value. Although every crypto enterprise is different, they generally make transfers without an intermediary or any geographic limitation. ", "Industry practitioners are increasingly using the term security token offering s (STOs) to describe ICOs. This change of terminology reflects the industry's acceptance that many ICOs are securities offerings and thus subject to securities laws and regulations. Securities laws require all securities offers and sales to either be registered under their provisions (as a public offering) or qualify for an exemption from registration (as a private offering). ICOs can take many forms. They can be listed on national exchanges as public offerings or be issued pursuant to the private securities offering exemptions. Operational and regulatory conditions\u00e2\u0080\u0094including investor access, maximum offering amounts, and filing requirements\u00e2\u0080\u0094differ depending on the type of offering an ICO selects. Table 1 illustrates examples of ICO fundraising options. ICOs could potentially use all the existing securities offering venues. They have already reportedly been issued under several of the private exemptions (e.g., Regulation D, Regulation Crowdfunding, and Regulation A). Although public offering ICOs are possible, as of year-end 2019, no ICOs have yet issued under this method. The previously discussed policy issues relating to regulatory oversight and investor protection also apply to ICOs."], "subsections": []}, {"section_title": "Digital Asset \"Exchanges\"", "paragraphs": ["About 300 platforms are offering digital asset trading and referring to themselves as \"exchanges,\" as of December 2019. A platform that offers trading in digital asset securities and operates as an \"exchange\" (as defined in the federal securities laws) must register with the SEC as a national securities exchange or obtain exemption. However, many such platforms are registered as money-transmission services (MTSs) instead of SEC-regulated national securities exchanges. MTSs are money transfer or payment operations that are mainly subject to state, rather than federal, regulations. Because MTS regulations were not designed with digital asset trading activities in mind, some argue that they are insufficient in regulating the transfer of digital assets. In addition, these services raise investor-protection concerns because they are not subject to the more rigorous oversight as national securities exchanges. The SEC issued a statement in 2018 clarifying that the online platforms for buying and selling digital assets that qualify as securities could be unlawful. ", "These digital asset trading platforms face problems with fraud and manipulation. Some think applying SEC regulation would help, but others are concerned that regulation could stifle financial innovation. "], "subsections": [{"section_title": "Digital Asset \"Exchanges\" Versus National Securities Exchanges", "paragraphs": ["Although current technological advancements may seem to have blurred the terminology used, certain platforms trading digital assets that are securities appear to behave as functional equivalents to national securities exchanges. For example, these platforms bring together buyers and sellers, execute trades, and display prices. However, there are differences, such as the blockchain-enabled trading platforms operating without a central database and the fact that not all digital assets trading on platforms are securities. ", "The general consensus among domestic and international securities regulators regarding digital assets is that regulatory oversight should be balanced with the need to foster financial innovation. However, if digital asset trading platforms are buying and selling securities and fall within the SEC's regulatory regime, then securities regulation's basic objectives should arguably continue to apply. In addition, some international authorities believe that, although digital asset trading platforms may face issues similar to traditional exchanges, regulatory approaches may still need to be adjusted to account for particular operating models that may amplify risks differently. In general, policymakers contending with major financial innovations have historically focused on addressing risk concerns while tailoring their regulatory framework flexibly to accommodate evolving technology.", "The differences between digital asset \"exchanges\" and the SEC regulated national securities exchanges could include transparency, fairness, and efficiency. These are principles guiding the national securities exchange regulation, yet they are perceived as lacking for digital asset \"exchanges.\" ", "Many digital asset \"exchanges\" are reportedly exaggerating their volumes on a routine basis to attract more participation. Investors are perceived to have no idea whether the trading volume and prices reflect real activities or market manipulation. To take the more frequently studied digital asset Bitcoin for example, one study shows that 95% of Bitcoin's trading volume displayed on digital asset price and volume aggregator CoinMarketCap.com is either fake or non-economic in nature. Another widely cited academic study illustrates the scale of potential damage that digital asset market manipulations could create, underlining the investor-protection concerns in the digital asset space. The study argues that a single market manipulator likely fueled half of Bitcoin's 2017 price surge that pushed its price close to $20,000. The activities were reportedly carried out through the largest digital asset \"exchange\" at that time, Bitfinex, and used a stablecoin called Tether to boost the demand for Bitcoin. For this alleged manipulation, Bitfinex and Tether faced a class complaint seeking a total of $1.4 trillion in damages. Although Bitfinex and Tether rebutted the study, calling it \"bogus,\" they are currently under investigation by federal and state regulators. ", "Given the scale of such issues, some have questioned whether digital asset trading warrants more regulatory safeguards that protect investors and promote more efficient market operations. It is difficult to predict the extent to which an SEC-regulated digital asset national exchange would have mitigated the market manipulations, or if the SEC's regulatory framework is the best fit for addressing all the digital-asset-trading-related policy concerns. Still, digital asset \"exchanges\" under the current operating environment appear vulnerable to misconduct. The Bitcoin price manipulation study's author, a finance professor with a background in forensics, said that \"years from now, people will be surprised to learn investors handed over billions to people they didn't know and who faced little oversight.\" "], "subsections": []}, {"section_title": "Current State of Play", "paragraphs": ["The SEC took its first enforcement action against an unregistered digital asset \"exchange\" in 2018. The SEC stated that the platform \"had both the user interface and underlying functionality of\u00c2\u00a0an online national securities exchange and was required to register with the SEC or qualify for an exemption,\"\u00c2\u00a0but was perceived to have failed to do so.", "Some of the largest digital asset \"exchanges\" have developed a system to rate digital assets based on the probability that they could be defined as securities. These \"exchanges\" reportedly hope that by so doing they could exclude securities-based digital assets from their unregistered trading platforms, thus circumventing SEC securities regulation. This action is part of the digital asset industry's self-regulation discussion that is gaining momentum. For example, an international law firm's 2018 survey showed that the vast majority of the respondents thought the industry should formalize self-regulation and subject that self-regulation to regulatory oversight.", "Many digital asset trading platforms also reportedly sought to obtain exemptions from the SEC to operate as alternative trading systems (ATS). ATSs are \"dark pools\" that do not publicly display the size and price of their orders. ATSs face fewer regulatory requirements than national exchanges, but they must register as broker-dealers and meet certain SEC and Financial Industry Regulatory Authority (FINRA) compliance and filing requirements, such as custody, books and records, and regulatory examinations. However, any ATS that transacts more than 5% of the trading volume of any security, which also trade on the national securities exchange system, could face stricter \"order display\" and \"first access\" rules that effectively integrate that ATS in part into the national market system. ", "A number of the largest digital asset \"exchanges\" (e.g., Coinbase, Gemini, Bitstamp, and ItBit) have obtained state-level regulatory licenses (BitLicense) from New York State's Department of Financial Services. The license requirements include certain investor protection, market fraud and manipulation prevention, and illicit activity prevention measures."], "subsections": []}]}, {"section_title": "Digital Asset Custody", "paragraphs": ["Custodians provide safekeeping of financial assets. They are financial institutions that do not have legal ownership of assets but are tasked with holding and securing assets, among other administrative functions. The SEC's custody rules impose requirements designed to protect client assets from the possibility of being lost or misappropriated. Custodians are important building blocks for the financial services industry. The custody industry for traditional assets is large and concentrated. In the past 90 years, financial custody has evolved from a system of self-custody to one in which major custodians provide asset custody for client accounts. Today, four banks (BNY Mellon, J.P. Morgan, State Street, and Citigroup) service around $114 trillion of global assets under custody. ", "Digital-asset custody has recently attracted regulatory attention because the SEC custody rules could pose unique challenges for custodians of digital assets. The custody rules were developed for traditional assets, which are easier than digital assets to secure and produce tangible tracks of physical existence or records. Digital assets generally lack physical existence or records produced by intermediaries, as seen in traditional assets such as gold or bank accounts. Common practice in the digital asset industry so far focuses on safeguarding private keys, unique numbers assigned mathematically to digital asset transactions to confirm asset ownership. This practice raises the question of how possession or control of a digital asset should be defined for regulatory purposes. The challenges include but are not limited to, for example, that a digital asset could have multiple private keys or that a single private key does not exist. As such, some believe the digital asset custody definition should go beyond the verification of the keys to incorporate holistic custody views. ", "Regulators are currently evaluating whether custody requirements should be adjusted to account for digital assets' unique operational characteristics. The SEC released a letter to the industry in March 2019 to solicit public input regarding digital asset custody. The SEC summarized a number of policy issues, including the use of distributed ledger technology (DLT) to record ownership, the use of public and private cryptographic key pairings to transfer digital assets, the ability to restore or recover digital assets once lost, the generally anonymous nature of DLT transactions, and the challenges posed to auditors in examining DLT and digital assets. ", "On July 8, 2019, the SEC and FINRA, a self-regulatory organization, issued a\u00c2\u00a0joint statement to outline considerations for digital asset securities custody. They acknowledged the challenges of applying custody requirements to digital assets and stated that there are initiatives underway to solicit input from market participants that could help develop new ways to establish \"possession or control\" for digital asset securities. "], "subsections": []}, {"section_title": "Digital Asset Exchange-Traded Funds", "paragraphs": ["ETFs are pooled investment vehicles that gather and invest money from a variety of investors. ETFs combine features of both mutual funds and stocks and can trade on national exchanges. Some industry practitioners hope that the ETF structure could incorporate digital assets. Individual investors typically buy digital assets, for example, Bitcoins, from other owners or through digital asset trading platforms and other intermediaries. Individual investors currently cannot directly purchase digital assets (e.g., Bitcoins) from the SEC-regulated national securities exchanges. Some have proposed allowing retail investors to buy or sell digital assets on regulated exchanges through the exchange-traded fund (ETF) structure\u00e2\u0080\u0094where, instead of directly trading digital assets, the investors would buy or sell publicly traded ETF shares with values linked to underlying digital assets. This section discusses potential Bitcoin ETFs' policy implications for the digital asset industry. "], "subsections": [{"section_title": "Bitcoin ETF Proposals", "paragraphs": ["As mentioned previously, some digital assets are securities subject to securities laws and regulations. But digital assets could also be structured as securities products, even if the underlying assets are not securities. The proposed Bitcoin ETFs are the most prominent example. Although Bitcoin is not a security, Bitcoin ETFs would be securities products with value linked to the underlying Bitcoins and are subject to securities regulation, including the Investment Company Act of 1940 and Investment Advisers Act of 1940. The digital asset industry has submitted many Bitcoin ETF proposals with the hope of gaining access to more retail investors, but, as of the end of 2019, the SEC has not approved a Bitcoin ETF. ", "The SEC repeatedly stated in its rejections that Bitcoin ETF proposals did not meet standards governing national securities exchanges. Specifically, the SEC stated that the proposals have not met the requirements in Section 6(b)(5) of the Exchange Act that order national exchanges to be \"designed to prevent fraudulent and manipulative acts and practices.\"", "The agency articulated its rationale in a 2018 staff letter that listed challenges related to a Bitcoin ETF. In addition to market manipulation concerns, major Bitcoin ETF challenges included valuation and pricing, custody, and liquidity. For example, all ETFs must frequently value their portfolio assets. The valuation process determines what investors should pay for the ETF shares and how the ETFs perform. Some worry that the Bitcoin ETFs would not be able to obtain the information necessary to adequately value the digital assets given the high volatility and fragmentation of the markets. ", "Bitcoin ETFs also have supporters. One institutional investor argues that ETFs provide a familiar and convenient way for investors to invest in digital assets, enabling them to participate in digital asset trading and partake in the potential financial gains brought by technological advancements, despite the potential trade-offs with respect to investor protection. In a public statement about a dissenting vote on a disapproved Bitcoin ETF proposal, SEC Commissioner Hester Peirce stated that certain Bitcoin ETF proposals do satisfy the Section 6(b)(5) statutory requirements and that the disapproval may dampen innovation and inhibit institutionalization."], "subsections": []}]}, {"section_title": "Stablecoins in Securities Markets", "paragraphs": ["Stablecoins are a type of digital asset designed to maintain a stable value by linking its value to another asset or a basket of assets, typically collateralized by fiat currencies or facilitated by algorithms. The best-known example of a proposed stablecoin is Facebook's Libra proposal (see discussion below). Since it was first announced in mid-2019, Libra has generated many policy concerns, inspired new considerations for comparable use cases from the private and public sectors, and fueled discussions of other global stablecoins.", "A stablecoin arrangement's individual components are complex, leading to many crosscutting policy discussions. The Financial Stability Board, an international financial authority, characterizes a stablecoin's components as the following:", "Entities/structures involved in issuing stablecoins; entities/structures that manage assets linked to the coins; infrastructure for transferring coins; market participants/structures facing users (e.g., platforms/exchanges, wallet providers) and the governance structure for the arrangement, including the role and responsibilities of a possible governance body and the underlying stabilisation mechanism used for the stablecoin.", "Stablecoin-related policy concerns vary; they include, market integrity, investor protection, financial stability, monetary policy, payments, and illicit activity prevention. Some of these concerns are outside of the scope of this report, which focuses on securities regulation. In addition to securities regulators, other regulatory authorities\u00e2\u0080\u0094central banks, payment system regulators, and financial crime enforcement entities\u00e2\u0080\u0094have been involved in stablecoin monitoring and oversight."], "subsections": [{"section_title": "Facebook's Libra Proposal", "paragraphs": ["Facebook's planned stablecoin Libra attracted congressional attention after it was announced on June 18, 2019. At related congressional hearings, Facebook received multiple questions regarding whether Libra is an ETF and how it should be regulated. These questions arose because to create the stablecoin, Libra would be backed by reserve assets, including bank deposits and short-term government securities. New Libra tokens could only be created or destroyed by authorized sellers. Some industry practitioners argue that Libra's proposed operational structure is similar to the creation and redemption process used by ETFs. Facebook acknowledged at the House hearing that Libra uses operational mechanisms that are similar to ETFs, but stated its view that it is still a payment tool and not an investment vehicle.", "If deemed an ETF, Libra must comply with the SEC's regulatory regime governing securities, investment advisors, and investment companies. SEC approval would be required to launch the project. The SEC is reportedly evaluating whether Libra's structure makes it an ETF."], "subsections": []}, {"section_title": "Stablecoin-Related Legislative Proposals", "paragraphs": ["The House Financial Services committee discussed three stablecoin-related securities proposals at an October 2019 House Committee on Financial Services hearing. ", "The Managed Stablecoins are Securities Act of 2019 ( H.R. 5197 ) proposes to subject stablecoins to securities regulation by amending the statutory definition of the term security to include a new category of securities called \"managed stablecoins.\" The bill would define a managed stablecoin as a digital asset that has either (1) a market value that is determined, in whole or significant part, by reference to the value of a pool or basket of assets that are held, designated, or managed by one or more persons; or (2) holders that are entitled to obtain payment which is determined, in whole or in significant part, on the basis of the value of a pool or basket of assets held, designated, or managed by one or more persons. Because managed stablecoin issuers are generally perceived as not acknowledging their stablecoins as securities, this bill would remove regulatory uncertainty by stating that a managed stablecoin is a security and therefore subject to securities regulation. The second legislative proposal would limit public company executives' ability to own managed stablecoins. This draft proposal incorporates the same \"managed stablecoins\" definition, but would take a slightly different approach by delisting a public company if its directors and executives either (1) received compensation in managed stablecoin; (2) bought or sold a managed stablecoin; or (3) were affiliated with a person who bought or sold a managed stablecoin after the date of the security's registration. Lastly, the Keep Big Tech Out of Finance Act ( H.R. 4813 ) would prevent large technology firms like Facebook from offering certain financial services or issuing digital assets. "], "subsections": []}]}]}]}}
{"id": "R46356", "title": "COVID 19: Consumer Loan Forbearance and Other Relief Options ", "released_date": "2020-05-14T00:00:00", "summary": ["A growing number of reported Coronavirus Disease 2019 (COVID-19) cases have been identified in the United States, significantly impacting many communities. This situation is evolving rapidly, and the economic impact has been large due to illnesses, quarantines, social distancing, local stay-at-home orders, and other business disruptions. Consequently, many Americans will lose income and face financial hardship due to the COVID-19 pandemic.", "Many consumers may have trouble paying their loan obligations, such as mortgages, student loans, auto loans, and credit cards. Due to increasing hardship, l oan forbearance has become a common form of consumer relief during the COVID-19 pandemic. Loan forbearance plans are agreements that allow borrowers to reduce or suspend payments for a short period of time, providing extended time for consumers to become current on their payments and repay the amounts owed. These plans do not forgive unpaid loan payments and tend to be appropriate for borrowers experiencing temporary hardship. Loan forbearance may become a less viable option to deal with the financial ramifications of COVID-19 if the pandemic causes prolonged disruptions, such as persistent elevated levels of unemployment or permanent business closures.", "A consumer's ability to get a forbearance and under what terms may be significantly influenced by what type of institution owns the loan. These various institutions\u00e2\u0080\u0094including banks and credit unions, private nonbank financial institutions, government-sponsored enterprises (GSEs), and the federal government\u00e2\u0080\u0094are subject to different laws, regulations, and business considerations.", "In response to the COVID-19 pandemic, the President signed the Coronavirus Aid, Relief, and Economic Security Act (CARES Act; P.L. 116-136 ) on March 27, 2020. The act establishes consumer rights to be granted forbearance for federally insured mortgages (Section 4022) and federal student loans (Section 3513). The law also protects the credit histories of consumers with forbearance agreements (Section 4021).", "The CARES Act establishes consumer rights to be granted forbearance for many types of mortgages and federal student loans, but the act does not grant consumers these rights for other types of consumer loan obligations, such as auto loans, credit cards, private student loans, and bank-owned mortgages. In these cases, financial institutions have discretion about when and how to offer loan forbearance or other relief options to consumers. Therefore, a consumer's ability to access these options may vary.", "In addition to legislative responses, financial regulatory agencies have responded to the COVID-19 pandemic using existing authorities to encourage loan forbearance and other financial relief options for impacted consumers. Many financial regulatory agencies have updated their guidance to help financial firms support consumer needs during this time. Regulatory guidance does not force financial institutions to take any particular action for consumers (such as offering loan forbearance), but it can encourage them to offer various forms of support. In recent weeks, many banks and credit unions have announced measures to offer various forms of assistance to affected consumers .", "The economic effects of the COVID-19 pandemic impact the financial system in important ways. Large numbers of missed consumer loan payments can have significant negative consequences for financial institutions. Because of the potential strain on the financial system, it might be challenging for institutions to provide consumer relief, and financial relief efforts may be insufficient to provide widespread assistance to impacted consumers without direct government intervention.", "Many consumers having trouble paying their loans may not realize that the CARES Act gives consumers a right to be granted loan forbearance in certain circumstances, and that their financial institutions can provide loan forbearance, access to credit, or other assistance. If consumers are not aware of these existing relief options, it is possible that relief might not reach the most in need. In addition, increasing fraud schemes relating to COVID-19 seem to be occurring, which can drive consumer confusion. Both government agencies and financial institutions can play an important role in communicating with financially impacted consumers."], "reports": {"section_title": "", "paragraphs": ["A growing number of reported Coronavirus Disease 2019 (COVID-19) cases have been identified in the United States, significantly impacting many communities. As this situation rapidly evolves, the economic impact due to illnesses, quarantines, social distancing, local stay-at-home orders, and other business disruptions will be large. Consequently, many Americans will lose income and face financial hardship due to the impact of the COVID-19 pandemic. ", "In response, four pieces of COVID-19-related legislation have been enacted\u00e2\u0080\u0094most relevant for this report is the Coronavirus Aid, Relief, and Economic Security Act (CARES Act; P.L. 116-136 ) enacted on March 27, 2020. The act establishes consumer rights to be granted forbearance for many types of mortgages (Section 4022) and for most federal student loans (Section 3513). The law also protects the credit histories of consumers with forbearance agreements (Section 4021). In addition, financial regulatory agencies have updated their guidance to provide clarity to financial institutions responding to these events.", "For loan obligations where the CARES Act does not guarantee a right to loan forbearance, such as auto loans, credit cards, private student loans, and bank-owned mortgages, a consumer's ability to access this option may vary. Reports suggest that many consumers have requested payment relief for these types of loans not covered by the CARES Act. Different financial institutions may be subject to different laws and incentives to handle consumer relief requests. For this reason, an individual consumer may find a range of responses from different financial institutions when requesting relief options.", "This report focuses on policy responses relating to the financial services industry for consumers who may have trouble paying their loan obligations, such as mortgages, student loans, auto loans, and credit cards. First, it provides an overview of loan forbearance and other possible relief options for consumers. Then, the report discusses relevant CARES Act provisions and federal financial regulatory responses. Lastly, the report describes the impact this pandemic and the proceeding policy responses have had on financial institutions and consumers.", "Ov erview of Loan Forbearance and O ther Relief Options for Consumers ", "During previous natural disasters, government shutdowns, or other similarly destabilizing events, the financial industry has provided financial assistance to some affected consumers, particularly those having temporary difficulties repaying their mortgages, credit cards, or other loans. For example, financial institutions have agreed to defer payments, limit late or other fees, and extend credit to ease consumer financial struggles. In response to the coronavirus pandemic, many banks have recently announced measures to offer various forms of assistance to affected consumers. However, the COVID-19 pandemic is more widespread than previous events, affecting consumers across the country; therefore, financial industry responses may differ from the past.", "This section begins with a discussion of loan forbearance, a common form of consumer relief. It then describes other types of assistance that financial institutions could provide to impacted consumers. ", "Loan Forbearance", "Loan forbearance plans are agreements allowing borrowers to reduce or suspend payments for a short period of time, providing extended time for consumers to become current on their payments and repay the amounts owed. These plans do not forgive unpaid loan payments. Loan forbearance plans between consumers and financial institutions usually include a repayment plan, which is an agreement allowing a defaulted borrower to repay the amount in arrears and become current on the loan according to an agreed upon schedule. Repayment plans take many shapes. For example, these plans may include a requirement that all suspended payments are to be due at the end of the loan forbearance period; the past due amount is to be added to the regular payment amount over the year after loan forbearance ends; or payments are to be added to the end of the loan's term. Interest or fees may or may not accrue during the loan forbearance period.", "As loan forbearance and repayment plans are generally offered to consumers experiencing a temporary hardship, they have become a common form of consumer relief during the COVID-19 pandemic. During this pandemic, many businesses might be closed either by mandate (e.g., restaurants, concerts, or sporting event venues) or facing significant revenue declines due to social distancing efforts (e.g., more space between people at open stores or restaurants) or changes in consumer behavior (e.g., airlines, hotels, and the travel industry). Many of these disruptions may be temporary, lasting only for the duration of the pandemic. Many financial institutions offer loan forbearance plans as an option for consumers who have experienced job loss or temporary income loss but may be able to continue to repay their credit obligations after the disruption ends. In addition, financial institutions may see loan forbearance plans as a good option for consumers at this time because these plans often do not involve renegotiating contracts. Loan forbearance may be a less viable option to deal with the financial ramifications of the pandemic if it causes prolonged disruptions, such as persistent elevated levels of unemployment or permanent business closures.", "Other Relief Options Available to Consumers", "Loss mitigation (or workout options) refers to a menu of possible options financial institutions may offer to help a distressed borrower become and stay current with loan payments and avoid default. Loan forbearance is one type of loss mitigation. Loan modifications are another type of loss mitigation that renegotiates the contract with concessions to the borrower. These concessions can take the form of principal balance reductions, interest rate reductions, term to maturity extensions, or some combination of such options. ", "Financial institutions or loan servicers generally weigh the costs and benefits of the various loss mitigation options and offer borrowers the least costly option from a business perspective. Loan forbearance can be the least costly option when the duration of consumer hardship is temporary and short, and the lender can be paid back quickly. Loan modifications may also be beneficial to the lender under circumstances when the costs to modify and retain the loan are lower than the costs of default. If a borrower's circumstances, such as becoming disabled or long-term unemployed, make it difficult for servicers to offer a workout option, the lender may find options such as debt collection, auto repossession, foreclosure, or wage garnishment a less costly way to resolve the default. Finally, various contractual arrangements that loan servicers are obligated to follow may dictate servicer actions from the time the loan became distressed until resolution. These arrangements may limit servicers' authorities and options.", "Financial institutions can provide other types of relief to consumers, such as agreeing to limit late or other fees and offering new credit or loan products. For example, a consumer can refinance out of a distressed mortgage into a new mortgage contract, potentially pulling equity out of their home to repay arrears and accumulated penalties. Generally financial institutions would choose to extend new credit only if they determine that the borrower is in a good position to pay the loan back in the future. During the COVID-19 pandemic, some banks have decided to limit new credit to consumers due to increased economic risk.", "Loss mitigation procedures provided by financial institutions or loan servicers are regulated in order to help protect consumers. For example, during the 2008 financial crisis, many consumers had trouble paying their mortgages due to unemployment and decreasing house prices. When mortgage delinquency and foreclosure rates rose, federal regulators identified pervasive documentation issues at many mortgage servicers, which became an issue when a large number of consumers defaulted. In response, the Consumer Financial Protection Bureau (CFPB), using its authority under the Real Estate Settlement Procedures Act (RESPA; P.L. 93-533 , implemented by Regulation X), issued the RESPA Mortgage Servicing Rule in January 2013. Among other things, the rule created an obligation for mortgage servicers to establish consistent policies and procedures to contact delinquent borrowers, provide information about mortgage loss mitigation options, and evaluate borrower applications for loss mitigation in a timely manner."], "subsections": [{"section_title": "Coronavirus Aid, Relief, and Economic Security Act (CARES Act; P.L. 116-136)", "paragraphs": ["This section of the report discusses various relief provisions of the CARES Act for borrowers and consumer lenders. Table 1 presents a summary of CARES Act provisions that pertain to loan forbearance by consumer credit type. In addition, other provisions of the CARES Act, which help financial institutions cope financially when experiencing increased loan losses, will be discussed. Lastly, this section discusses legislative policy issues relating to consumers missing loan payments."], "subsections": [{"section_title": "Mortgage Forbearance", "paragraphs": ["The CARES Act includes some measures to provide temporary forbearance relief for certain affected mortgage borrowers\u00e2\u0080\u0094those with \"federally backed\" mortgages. Section 4022 allows borrowers with federally backed mortgages to request forbearance from their mortgage servicers (the entities that collect payments and manage the mortgage on behalf of the lender/investor) due to a financial hardship caused directly or indirectly by COVID-19. The borrower must attest to such hardship, but no additional documentation is required. Servicers must grant forbearance for up to 180 days and must extend the forbearance up to an additional 180 days at the borrower's request. Either period can be shortened at the borrower's request. The servicer may not charge fees, penalties, or interest beyond what would have accrued if the borrower had made payments as scheduled.", "The CARES Act mortgage provisions potentially raise the question of what happens after the forbearance period. The act does not address how repayment should occur. Servicers are to negotiate repayment terms with borrowers, subject to existing requirements or any additional guidance provided by the entity backing the mortgage."], "subsections": []}, {"section_title": "Federal Student Loan Forbearance18", "paragraphs": ["Federal loans to support students' postsecondary educational pursuits are currently available under the William D. Ford Federal Direct Loan (Direct Loan) program and the Federal Perkins Loan program. Loans were previously available through the Federal Family Education Loan (FFEL) program, and some of those loans remain outstanding.", "Due to the current economic situation, many consumers may have trouble repaying their federal student loans. In response, Section 3513 of the CARES Act suspends all payments due and interest accrual for all loans made under the Direct Loan program and for FFEL program loans held by the Department of Education through September 30, 2020. A suspended payment is to be treated as if it were a regularly scheduled payment made by a borrower for the purpose of reporting information about the loan to a consumer reporting agency and toward specified loan forgiveness (e.g., public service loan forgiveness) or loan rehabilitation programs. In addition, involuntary collections on defaulted loans are suspended through September 30, 2020."], "subsections": []}, {"section_title": "Consumer Credit Reporting", "paragraphs": ["Consumers can harm their credit scores when they miss consumer loan payments, and lower credit scores can impact their access to credit in the future. Section 4021 of the CARES Act requires financial institutions to report to the credit bureaus that consumers are current on their credit obligations if they enter into an agreement to defer, forbear, modify, make partial payments, or get any other assistance on their loan payments from a financial institution and fulfil those requirements. The covered period for this section starts on January 31, 2020, and extends to the later of 120 days after enactment or 120 days after the national emergency declared by the President on March 13, 2020, terminates. Before this law was enacted, lenders could choose whether to report loans in forbearance as paid on time; with this law, these options are no longer voluntary for the lender.", "Some affected consumers may still experience harm to their credit record because the CARES Act does not give consumers a right to be granted forbearance for many types of consumer loans (such as auto loans, credit cards, and mortgages and student loans not covered by the CARES Act; see Table 1 ). Although many financial institutions have announced efforts to provide assistance to affected consumers, lenders have discretion whether to enter into an assistance agreement with an individual consumer. Therefore, the ability of consumers to protect their credit scores could vary."], "subsections": []}, {"section_title": "Bank and Credit Union Loan Loss Related Provisions", "paragraphs": ["Other provisions in the CARES Act are intended to reduce or remove potential disincentives related to accounting and capital requirements that banks may face when deciding whether to grant a forbearance for non-federally backed loans. When the inflow of payments on loans unexpectedly decreases, as happens when unanticipated forbearances are granted, banks must account for this by writing down the value of the loans. The lost value must be reflected with a reduction in income or value of the bank's capital, which can be thought of as the bank's net worth. Banks face a number of requirements to hold minimum levels of capital; if the value were reduced, the bank eventually would fail to comply with those requirements. Thus, these accounting and capital requirements may make a bank hesitant to grant a forbearance (if it judges that the borrower will ultimately be able to make payment) or cause a bank to put off accounting for realized losses at a later date. Sections 4012, 4013, and 4014 of the CARES Act may mitigate these concerns.", "Certain small banks can elect to be subject to a single, relatively simple\u00e2\u0080\u0094but relatively high\u00e2\u0080\u0094capital rule called the Community Bank Leverage Ratio (CBLR). Bank regulators are authorized to set the CBLR between 8% and 10%. Prior to the enactment of the CARES Act, it was set at 9%. Section 4012 directs regulators to lower it to 8% and give banks that fall below that level a reasonable grace period to come back into compliance with the CBLR. As a result, qualifying banks are to be able to write down the value of more loans before they reach the minimum CBLR level. This relief expires the earlier of (1) the date the public health emergency ends or (2) the end of 2020.", "When a lender grants a loan forbearance, it may be required to record it as troubled debt restructuring (TDR) in its accounting. Generally Accepted Accounting Principles (GAAP) require the lender to reflect in its financial records any potential loss as a result of a TDR. Section 4013 requires federal bank and credit union regulators to allow lenders to determine if they should suspend the GAAP requirements for recognizing any potential COVID-19-related losses from a TDR related to a loan modification. This relief expires the earlier of (1) 60 days after the public health emergency declaration is lifted or (2) the end of 2020.", "Another feature of bank and credit union accounting is determining the amount of credit loss reserves , which help mitigate the income overstatement on loans and other assets by adjusting for expected future losses on related loans and other assets. In response to banks' financial challenges during and after the 2007-2009 financial crisis, the Financial Accounting Standards Board promulgated a new credit loss standard\u00e2\u0080\u0094Current Expected Credit Loss (CECL)\u00e2\u0080\u0094in June 2016. CECL requires earlier recognition of losses than the current methodology. All public companies were required to issue financial statements that incorporated CECLs for reporting periods, beginning on December 15, 2019. Section 4014 gives banks and credit unions the option to temporarily delay CECL implementation until the earlier of (1) the date the public health emergency ends or (2) the end of 2020."], "subsections": []}, {"section_title": "Policy Issues", "paragraphs": ["Some consumer advocates argue that during the COVID-19 pandemic, Congress could do more to help consumers experiencing financial hardship. Some consumers may not receive loan forbearance for credit obligations outside of those with rights under the CARES Act. In addition, consumers may continue to incur bank fees and face issues relating to debt collection and negative credit reporting. For this reason, other legislative proposals would prevent creditors and debt collectors from collecting on delinquent loans, charging fees and interest, or reporting negative information to the credit bureaus during the coronavirus pandemic period. Some financial institutions would likely incur significant costs under these proposals. Some proponents of these proposals argue that the federal government may consider compensating financial institutions for these losses in order to implement these policies. On the other hand, other types of government policies outside of the financial industry, such as unemployment insurance or small business aid to keep people employed, can also target impacted Americans. "], "subsections": []}]}, {"section_title": "Non-Legislative Federal COVID-19 Responses", "paragraphs": ["In addition to legislative responses, financial regulatory agencies have taken other steps to respond to the COVID-19 pandemic by encouraging loan forbearance and other financial relief options for impacted consumers. On March 9, 2020, federal and state financial regulators coordinated a guidance statement to the financial industry, encouraging it to help meet the needs of consumers affected by the virus outbreak. The regulators stated that \"financial institutions should work constructively with borrowers and other consumers in affected communities,\" as long as they employ \"prudent efforts that are consistent with safe and sound lending practices.\" This statement was similar to financial regulators' past statements during disruptive events, such as natural disasters and government shutdowns.", "Beyond this statement, financial regulatory agencies have used existing authorities to issue new COVID-19 guidance to help financial firms support consumer needs during this time. Regulatory guidance does not force a financial institution to take any particular action for consumers (such as offering loan forbearance), but it can increase the incentives or reduce the disincentives of taking such actions."], "subsections": [{"section_title": "Consumer Regulatory Guidance", "paragraphs": ["When processing these loan forbearance or other consumer relief requests, financial institutions must ensure that they are acting fairly and complying with the law. For mortgage loan forbearance requests, financial institutions must comply with RESPA mortgage servicing standards. In addition, for all consumer loan forbearance or relief requests, financial institutions must also ensure that they are complying with fair lending laws. The main federal consumer financial regulator in the United States is the CFPB, which implements and enforces federal consumer financial law while ensuring that consumers can access financial products and services.", "In response to the COVID-19 pandemic, the CFPB issued new guidance about complying with legal requirements during this period of increased loan forbearance requests. The CFPB released additional guidance on regulatory compliance with Regulation X during the mortgage loan transfer process. In addition, the CFPB announced a new joint initiative with the Federal Housing Finance Agency (FHFA) to share mortgage servicing information to protect borrowers. The FHFA is to share information with the CFPB about forbearances, modifications, and other loss mitigation initiatives undertaken by Fannie Mae and Freddie Mac. In combination with CFPB consumer complaints, these data would help the CFPB monitor whether mortgage servicers are complying with the law when they offer these relief options to impacted customers. In addition to mortgage servicing guidance, federal and state financial regulatory agencies also instructed financial institutions that for all consumer credit products, \"when working with borrowers, lenders and servicers should adhere to consumer protection requirements, including fair lending laws, to provide the opportunity for all borrowers to benefit from these arrangements.\" ", "The CFPB has also issued guidance to temporarily reduce regulatory burden by delaying industry reporting requirements for mandatory data collections and providing flexibility on timing requirements. The agency also stated that while continuing to do its supervisory work, it would work with affected financial institutions in scheduling examinations and other supervisory activities to minimize disruption and burden as a result of operational challenges due to the pandemic. These efforts to reduce regulatory burden aim to allow financial institutions more bandwidth to work with impacted consumers and provide them with financial relief during the pandemic.", "Financial institutions can also provide other types of relief to consumers, such as offering new credit or loan products, so a consumer can pay their loan payments, medical bills, or other expenses to maintain their standard of living during the pandemic period. For this reason, financial regulators have encouraged financial institutions to provide small-dollar loans to affected consumers. However, financial institutions generally would choose to extend new credit only if they were to determine that the borrower is in a good position to pay the loan back in the future, and there may be a significant amount of uncertainty in making such a determination during this pandemic. Therefore, it is unclear whether this guidance will encourage financial institutions to provide small-dollar loans to many consumers."], "subsections": []}, {"section_title": "Financial Institution Regulatory Guidance", "paragraphs": ["A variety of financial institutions make different types of credit available to consumers. In particular, bank and mortgage institutions are subject to various regulatory controls to ensure they are operating in a safe and sound manner while complying with relevant laws. In response to COVID-19, regulators have issued guidance to signal to financial institutions that it is acceptable to take certain actions that may temporarily weaken their financial positions without facing regulatory actions. "], "subsections": [{"section_title": "Guidance for Depository Institutions", "paragraphs": ["The banking regulators\u00e2\u0080\u0094the Federal Reserve, Federal Deposit Insurance Corporation (FDIC), the Office of the Comptroller of the Currency (OCC), and the National Credit Union Administration (NCUA)\u00e2\u0080\u0094have worked together to issue guidance and updates to the financial institutions they regulate about how those institutions should work with customers who are negatively impacted by COVID-19. ", "Regulators' efforts to deal with the potential effects of COVID-19 began in early March with attempts to ensure that depository institutions were adequately planning for potential risks. On March 6, 2020, the Federal Financial Institutions Examination Council (FFIEC) updated its influenza pandemic guidance to minimize the potentially adverse effects of COVID-19. The guidance identifies business continuity plans as key tools to address pandemics and provides a comprehensive framework to ensure the continuation of critical operations. Since then, regulators have built on this guidance to encourage financial institutions to take actions to continue to serve customers financially affected by the virus. On March 13, 2020, the Federal Reserve, the OCC, and the FDIC issued guidance identifying ways to assist customers, including waiving fees, offering repayment accommodations, extending payment due dates, increasing credit card limits, and increasing ATM withdrawal limits. Repayment accommodations include allowing borrowers to defer or skip payments or extending payment due dates to help consumers avoid delinquencies, which is a form of forbearance. ", "Regulators can also use incentives to encourage financial institutions to work with consumers and offer repayment accommodations. Recent regulatory guidance signaled to financial institutions that certain activities with consumers would be eligible to earn credit toward their performance assessments under the Community Reinvestment Act (CRA; 12 U.S.C. \u00c2\u00a72901), which encourages banks to extend credit to the communities from which they accept deposits by considering this factor in applications to bank regulators to expand operations, such as through mergers and acquisitions. On March 19, 2020, banking regulators issued a new statement encouraging depository institutions to continue working with affected customers and communities\u00e2\u0080\u0094particularly those that are low- and moderate-income\u00e2\u0080\u0094by providing favorable CRA consideration for activities including \"offering payment accommodations, such as allowing borrowers to defer or skip payments or extending the payment due date, which would avoid delinquencies and negative credit bureau reporting, caused by COVID-19-related issues.\""], "subsections": []}, {"section_title": "Guidance for the Housing Finance System", "paragraphs": ["The many federal agencies involved in housing finance have taken actions to encourage or authorize financial institutions to offer forbearance to mortgage borrowers affected by COVID-19."], "subsections": [{"section_title": "Government-Sponsored Enterprises", "paragraphs": ["Fannie Mae and Freddie Mac, commonly referred to as government-sponsored enterprises (GSEs), provide liquidity to the housing finance market by purchasing mortgages from lenders and subsequently guaranteeing the default risk linked to their issuances of mortgage-backed securities (MBS, a process known as securitization). In 2008, Fannie Mae and Freddie Mac were placed under conservatorship by their primary regulator, FHFA. The FHFA also regulates the Federal Home Loan Bank (FHLB) system, which is also a GSE, and comprises 11 regional banks that provide wholesale funding to its members\u00e2\u0080\u0094mortgage lenders, such as banks, credit unions, and insurance companies.", "On March 18, 2020, Fannie Mae issued guidance signaling to Fannie Mae single-family mortgages borrowers affected by COVID-19 that they could request mortgage assistance by contacting their mortgage servicer\u00e2\u0080\u0094this guidance was updated with the enactment of the CARES Act and includes forbearance for up to 12 months with no late fees. Similarly, Freddie Mac issued guidance to provide mortgage relief options in line with the CARES Act that include loan modifications and mortgage forbearance for up to 12 months."], "subsections": []}, {"section_title": "Federal Housing Agencies", "paragraphs": ["The Federal Housing Administration (FHA) \u00e2\u0080\u0094an agency within the Department of Housing and Urban Development (HUD)\u00e2\u0080\u0094as well as the Department of Veterans Affairs (VA) and the Department of Agriculture (USDA), each have loan programs that insure or guarantee loans for certain mortgages. Ginnie Mae is a federal government agency that issues MBS linked to mortgages whose default risks are guaranteed by the FHA, VA, and USDA. Ginnie Mae guarantees its MBS investors timely principal and interest payments.", "On April 1, 2020, HUD instructed mortgage servicers for mortgages with FHA insurance to extend deferred or reduced mortgage payment options (forbearance) for up to six months. In addition, they must provide an additional six months of forbearance if requested by the borrower. This mandate implements provisions contained in the CARES Act. On April 8, 2020, the VA issued a circular that similarly aligns with CARES Act provisions. Through its home loan program, the VA stated that borrowers may request forbearance from their servicer on VA-guaranteed loans or VA-held loans, including Native American Direct Loans or Vendee loans, if they are facing financial hardship from COVID-19. "], "subsections": []}, {"section_title": "Mortgage Servicers", "paragraphs": ["After the passage of the CARES Act, the federal banking agencies and state bank regulators issued a joint statement encouraging mortgage servicers to continue to work with homeowners affected by COVID-19. Much of this guidance aligns with the CARES Act provisions for federally backed mortgages, but many banks issue mortgages that are not federally backed; therefore, they are not required to offer mortgage forbearance. This guidance, while not binding, encourages financial institutions to consider ways to work with consumers through short-term forbearance programs similar to the ones established in the CARES Act. "], "subsections": []}]}]}, {"section_title": "Policy Issues", "paragraphs": ["Some observers argue that the federal financial regulators could do more to promote fair access to consumer relief options during the COVID-19 pandemic. Although recent guidance from financial regulators mentioned fair lending concerns, some commentators argue that to ensure fair treatment when consumers apply for loan relief options or become delinquent, additional more detailed guidance to financial institutions about how to comply with consumer protection and fair lending laws during the COVID-19 pandemic would be helpful. In addition, with its data partnership with FHFA, some argue that the CFPB could compile and make public information on how many consumers are accessing relief options and how the frequency of use varies based on type of financial institution. These types of data could help policymakers determine whether relief requests are allocated appropriately or whether additional measures should be considered to help those in need."], "subsections": []}]}, {"section_title": "Forbearance Implications for the Financial System", "paragraphs": ["The large economic impact of the COVID-19 pandemic affects the financial system in many important ways. For example, if many consumers were to miss loan payments, this would have negative consequences on banks and other financial institutions. These institutions have worked to comply with the CARES Act and relevant regulatory guidance during the COVID-19 pandemic period to provide loan forbearance and other flexibilities to distressed consumers. However, the potential strain on the financial system might make it challenging for institutions to provide this support, and these efforts may be insufficient to provide widespread assistance without direct government intervention.", "This section of the report describes which types of financial institutions hold different types of consumer loans and how the CARES Act or different financial regulatory regimes may impact consumer's access to loan forbearance. It also discusses how private sector institutions may be significantly impacted by missed consumer loan payments and the economic impact of the COVID-19 pandemic. "], "subsections": [{"section_title": "Consumer Loans Owners", "paragraphs": ["A consumer's ability to get a forbearance and under what terms may be significantly influenced by what type of institution owns the loan. These various institutions\u00e2\u0080\u0094including banks and credit unions, private nonbank financial institutions, GSEs, and the federal government\u00e2\u0080\u0094are subject to different laws, regulations, and business considerations. In addition, different types of loans\u00e2\u0080\u0094such as mortgages, student loans, and other consumer debt\u00e2\u0080\u0094are subject to different regulations and legal mandates related to forbearance."], "subsections": [{"section_title": "Mortgages72", "paragraphs": ["Of the $11.2 trillion dollars of mortgages outstanding on one-to-four-family homes at the end of 2019, 63% of mortgage loans in the United States were held or insured by the federal government and therefore covered by the CARES Act's consumer right to be granted loan forbearance, as shown in Figure 1 . Most of these \"federally backed\" mortgages were held by GSEs or in mortgage pools backed by GSEs or other agencies (such as Fannie Mae, Freddie Mac, and Ginnie Mae). Banks held almost $2.7 trillion in mortgage loans, nearly 24% of the total, and credit unions held over $572 billion, making up 5%. The remaining 8% are mostly held by a variety of nonbank financial institutions, such private issuers of MBS, real estate investment trusts, nonbank lenders, and insurance companies. Mortgage servicers can be banks and nonbanks."], "subsections": []}, {"section_title": "Nonmortgage Consumer Loans", "paragraphs": ["In contrast, most nonmortgage consumer loans are not covered by the CARES Act. At the end of 2019, the amount of consumer loans outstanding was nearly $4.2 trillion dollars. Over $1.6 trillion (39% of the total) were student loans; about $1.2 trillion (29%) were auto loans; nearly $1.1 trillion (26%) were credit card debt; and $258 billion (6%) were other consumer installment loans. As shown in Figure 2 , four types of institutions hold the vast majority of this debt: (1) banks\u00e2\u0080\u0094about $1.8 trillion, or 42% of the total; (2) the federal government\u00e2\u0080\u0094more than $1.3 trillion, or 31%; (3) finance companies\u00e2\u0080\u0094$537 billion, or 13%; and (4) credit unions\u00e2\u0080\u0094$482 billion, or 12%. Analysis of other data sources indicate all, or nearly all, of the $1.3 trillion of consumer debt held by the federal government is student loan debt.", "Federal student loans are generally eligible for CARES Act loan forbearance relief. For other types of nonmortgage credit\u00e2\u0080\u0094such as auto loans, credit cards, and private student loan\u00e2\u0080\u0094banks, credit unions, and finance companies are large players. In these markets, the CARES Act does not guarantee a right to loan forbearance; therefore, financial institutions are to have discretion about whether to offer consumers various loss mitigation options based on what is most profitable for the institution. Although banks and credit unions are regulated to ensure they are operating in a safe and sound manner, nonbank finance companies generally are not subject to this type of regulation. In addition, all institutions must comply with fair lending and other consumer laws when offering loss mitigation options, but supervision and enforcement of these laws may vary based on the institutions' regulatory regime. For these reasons, different financial institutions may respond to consumers' requests for relief options in varying ways. In addition, the financial impact of missed consumer loan payments may vary by institution. "], "subsections": []}]}, {"section_title": "Potential Impacts on Banks and Mortgage Servicers", "paragraphs": ["Many financial institutions may be impacted by missed consumer loan payments due to the COVID-19 pandemic. Two industries that will be significantly impacted are banks and mortgage servicers."], "subsections": [{"section_title": "Potential Impacts on Banks", "paragraphs": ["A bank's main business is to make loans and buy securities using funding it raises by taking deposits. A bank earns money largely through borrowers making payments on their loans and securities issuers making payments on securities, along with charging fees for certain services. In addition to accepting deposits, a bank also raises funds by issuing debt (such as bonds) and capital (such as stock). Unlike deposits and debt that place specific payment obligations on a bank, payments on capital can generally be reduced, delayed, or cancelled, and the value of capital can be written down. Thus, if incoming payments unexpectedly stop, capital allows a bank to withstand losses to a point. However, if a bank exhausts its capital reserves, it could face financial distress and potentially fail. ", "A significant portion of a typical bank's assets consists of loans to households, which consumers use to purchase houses, cars, and other consumer goods. Thus, when consumers unexpectedly stop making payments on their loans, such as during a loan forbearance, this can cause banks to incur losses. Current data on U.S. bank balance sheets suggest that as a whole, the banking industry is comparatively well positioned to withstand losses on household debt due to low exposure to mortgage loans and high capital buffers relative to historic norms. Yet, individual banks differ across the business models they choose to deploy, and some banks specialize in a particular loan type, such as mortgage or consumer loans. CRS analysis suggests that some banks have a high exposure to consumer loans; therefore, if consumers miss loan payments, these banks could be especially vulnerable. These high-exposure banks tend to be smaller than an average bank. These financial considerations could also limit banks' abilities to provide relief options to consumers during the COVID-19 pandemic. "], "subsections": []}, {"section_title": "Potential Impacts on Mortgage Servicers", "paragraphs": ["After a mortgage has been originated, a mortgage servicer carries out various administrative tasks, including collecting payments from borrowers and remitting the principal and interest to the owner (e.g., lender, investor); processing the loan title once paid in full; and administering loss mitigation (e.g., forbearance plans or foreclosure resolution on behalf of the lender) when payments are not made. ", "Mortgage servicers are often required to advance payments to securities holders, even if borrowers do not make payments on time. Because of this obligation, there are rising concerns about the impact of a large volume of forbearances on mortgage servicer liquidity. Some of the federal housing agencies have taken steps to address potential liquidity issues. The FHFA and Ginnie Mae have recently announced a number of measures to facilitate liquidity by making it easier for mortgage lenders and servicers to receive various forms of short-term cash advances.", "GSE Servicers : On March 23, 2020, the FHFA announced that it would allow flexibility in some of the appraisal and employment verification requirements for new mortgages purchased by Fannie Mae and Freddie Mac until May 17, 2020. The FHFA announced on April 21, 2020, that Freddie Mac and Fannie Mae would limit the obligation of mortgage servicers to advance payments to the GSEs for loans that are in forbearance to four months of payments, allowing servicers to forgo remitting payments after that time frame. Similarly, the FHFA announced on April 22 that the GSEs would be allowed to purchase qualified loans in forbearance to facilitate market lending.", "Ginnie Mae Servicers : Approved financial institutions that service mortgages underlying Ginnie Mae MBS are among the servicers that are required to remit timely payments to investors, even when monthly payments are not received from borrowers. As consumers are allowed to defer payments and others involuntarily miss payments due to financial hardship, Ginnie Mae servicers\u00e2\u0080\u0094particularly nondepository servicers\u00e2\u0080\u0094could face significant liquidity shortages. On March 27, 2020, Ginnie Mae announced a last resort financing option, the Pass-Through Assistance Program, to allow servicers facing shortfalls to request a cash advance to meet the scheduled payments to investors. These measures apply to single-family mortgages. Ginnie Mae also announced that similar programs are expected for reverse mortgages and multifamily mortgages in the near term."], "subsections": []}]}]}, {"section_title": "Consumer Awareness and Education Issues", "paragraphs": ["Most households rely on credit to finance some expenses because they do not have enough assets saved to pay for them . Some consumers may not be aware of their right to loan forbearance for certain loan obligations or other relief options their financial institution is offering, so these efforts might not reach the most in need. In addition, an increase in COVID-19 pandemic-related scams might further confuse or harm consumers."], "subsections": [{"section_title": "Consumer Awareness of Their Relief Options", "paragraphs": ["Communication and financial education may play an important role in consumers receiving forbearances or other assistance. Many consumers may not realize that the CARES Act gives consumers a right to loan forbearance in certain circumstances, and that their financial institutions can provide loan forbearance, access to credit, or other assistance. ", "Both government agencies and financial institutions can play an important role communicating with impacted consumers. The CFPB has published resources for consumers financially affected by the COVID-19 pandemic, including those having trouble paying their bills or experiencing loss of income. Fannie Mae and Freddie Mac have created a new portal for consumers to find out whether these GSEs own the consumer's mortgage loan and whether consumers are thus eligible for loan forbearance and other relief options. Many financial institutions also have conducted outreach to consumers to let them know about their possible options. ", "Some observers argue that the federal government agencies could do more to ensure appropriate communication with consumers during the COVID-19 pandemic. For example, a recent HUD study from their Office of Inspector General (OIG) found that CARES Act loan forbearance information to consumers from FHA mortgage servicers was often incomplete, inconsistent, outdated, and unclear. Some argue that more guidance to financial institutions about how to comply with relevant consumer protection laws and to share best practices during the coronavirus pandemic may be helpful. In addition, the federal regulatory agencies could also prioritize supervisory exams around COVID-19 pandemic communication efforts to better ensure appropriate conduct."], "subsections": []}, {"section_title": "Consumer Scams", "paragraphs": ["Since February 2020, concerns about financial fraud scams related to the COVID-19 pandemic have increased. Driven by fear and confusion about the COVID-19 pandemic, as well as an increased dependence on internet and phone-based communication while \"social distancing,\" more fraud schemes seem to be appearing. On February 10, 2020, the Federal Trade Commission (FTC) published a warning about rising COVID-19 pandemic scams, and it has since then published additional consumer resources. In addition, on March 26, 2020, a bipartisan group of 34 Senators sent a letter to the FTC urging it to inform and assist senior citizens affected by COVID-19-related fraud.", "Some of these consumer scams focus on consumer financial products or services. On March 16, 2020, Ranking Member Patrick McHenry and other members of the House Financial Services Committee sent a letter to CFPB Director Kathleen Kraninger expressing their concerns about the increasing number of elder financial fraud cases due to misinformation related to the COVID-19 pandemic, and they requested an update to applicable guidance for financial institutions. Since this letter, the CFPB has published COVID-19 pandemic scam resources for consumers on its website."], "subsections": []}]}, {"section_title": "Conclusion", "paragraphs": ["During the COVID-19 pandemic, Congress and various financial regulators have taken significant actions to require, incentivize, and encourage lenders to grant loan forbearances and other types of relief to financially impacted consumers. However, despite these major actions, the impact of these efforts on consumers and financial firms is still unclear due to uncertainty about the pandemic's persistence. If the economic ramifications of the COVID-19 pandemic causes prolonged disruptions, such as persistent elevated levels of unemployment or permanent business closures, loan forbearance may become a less viable option. In this scenario, Congress may choose to consider additional types of assistance to consumers and financial institutions. "], "subsections": []}]}}
{"id": "R45988", "title": "U.S. Natural Gas: Becoming Dominant", "released_date": "2019-10-30T00:00:00", "summary": ["In the beginning of the 21 st century, natural gas prices were increasing and the United States was viewed as a growing natural gas importer. Multiple liquefied natural gas (LNG) import terminals were built while existing ones were recommissioned and expanded. However, the market conditions also drove domestic producers to innovate. As average U.S. prices peaked in 2008, domestic shale gas production was brought to market. Improvements in technologies such as hydraulic fracturing and horizontal drilling made the development of unconventional natural gas resources such as shale and other lower-permeability rock formations economically possible. Improved efficiency has lowered production costs, making shale gas production competitive at almost any price. The large amount of natural gas brought to market enabled large-scale exports from the United States. Of today's total global trade in natural gas, some 35% takes the form of LNG.", "As U.S. natural gas production increased and prices fell, U.S. consumption of natural gas grew. The rise in consumption did not keep pace with production, so companies turned to greater exports of natural gas, first by pipeline to Mexico and then as LNG to other parts of the world. The United States started exporting LNG from the lower-48 states in February 2016. The entrance of the United States as an exporter of LNG has caused significant changes to LNG markets. The U.S. natural gas market is one of the few that does not link the price of natural gas to oil, and this has carried in to LNG contracts. Some buyers view U.S. LNG exports as a hedge against oil prices. U.S. exporters do not require destination clauses, although where U.S. LNG exports end up must be reported to the U.S. Department of Energy. The relatively low price of U.S. natural gas has also helped consumers in other regions negotiate better prices for imports from non-U.S. sources.", "The United States is poised to rise in the export rankings and may have the most LNG export capacity, worldwide, within the next five years. According to projections by the U.S. Energy Information Administration (EIA), U.S. natural gas production, consumption, and exports will continue to grow for decades to come, while U.S. prices are projected to stay relatively low. One aspect of EIA projections is a status quo assumption when it comes to technology, laws and regulations, and markets among other things. As the advent of shale gas has shown, changes to the industry happen and may happen in significant ways and quickly.", "Natural gas has been and continues to be a topic of interest for Congress. One hundred bills have been introduced in the 116 th Congress related to different aspects of natural gas. Natural gas may play a bigger or smaller role in the U.S. economy depending, in part, upon congressional actions. Nevertheless, natural gas is an integral part of the U.S. and global energy mix. Knowing the major natural gas producing and exporting nations and how natural gas is transported for export are essential to understanding the sector and how U.S. natural gas fits into the global market."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction: U.S. Natural Gas Sets a High Mark", "paragraphs": ["In 2019, the United States stands atop the international natural gas world. The United States is the largest producer of natural gas (NG) ( Figure 11 ), is the largest consumer of natural gas, has the most natural gas storage capacity, and has the biggest and most expansive pipeline network. Production from shale formations ( Figure 7 ) has transformed the United States from a growing importer of natural gas to an increasing exporter ( Figure 12 ), with some of the lowest prices in the world ( Figure 10 ). The United States is the 4 th largest exporter of natural gas ( Figure 17 ), but its capacity by pipeline and by ship is growing. How the United States transformed its natural gas sector is a story of market competition, technological innovation, and other factors. As natural gas has played a bigger role in the U.S. economy, congressional interest in it has grown, as measured by the number of bills introduced ( Figure 19 )."], "subsections": []}, {"section_title": "1998\u00e2\u0080\u00932008: Prices Spark Innovation", "paragraphs": ["In 1998, the United States was the 2 nd largest national producer of natural gas behind Russia ( Figure 11 ), and the largest consumer. U.S. consumption outpaced production that year by more than 1,400 billion cubic feet (BCF) or 7% of consumption, and the United States was viewed as a growing importer of natural gas. Natural gas comprised 24% of the U.S. energy mix in 1998, and that figure remained unchanged in 2008. Canada supplied about 97% of U.S. imports in 1998. Between 1998 and 2008, the difference between U.S. production and consumption averaged 1,764 BCF annually. In 1998, U.S. natural gas consumption was mainly in the industrial sector, but by 2008 natural gas used to generate electricity equaled its use in the industrial sector. During this same time period, average annual U.S. natural gas prices quadrupled, reaching a peak in June, 2008.", "From 1998 to 2008, the United States added to its LNG import capacity by expanding existing facilities and constructing new import terminals. Import capacity in 2008 was almost 4,800 BCF, with an additional 2,000 BCF added later. There were also more than 20 additional import projects at various stages of development, most of which were never built because the market did not need additional import capacity as the United States moved toward being an exporter."], "subsections": []}, {"section_title": "Shale Gas: Technological Breakthroughs", "paragraphs": ["In the mid-2000s, as LNG import terminals were capturing headlines in the U.S. effort to meet growing demand, some small and mid-size production companies were trying to figure out how to produce the massive resources of natural gas that were trapped in shale formations. Multi-stage hydraulic fracturing and improved directional drilling capability were the keys to unlocking these resources.", "During this time, there were wide swings in U.S. daily natural gas prices as market conditions changed, sometimes quickly. Nevertheless, prices trended upward until the loss of economic activity from the Great Recession decreased demand. As prices rose, interest in developing shale gas grew.", "Shale gas started to come to market near the end of 2008 concurrent with the start of the Great Recession. The increased supply of natural gas, together with reduced demand, caused prices globally to plummet ( Figure 10 ). New production in the northeast, especially in Pennsylvania, began to grow rapidly. The percentage of U.S. natural gas production from shale also started to rise."], "subsections": []}, {"section_title": "2008\u00e2\u0080\u00932018: Growing Importer to Net Exporter", "paragraphs": ["Between 2008 and 2018, U.S. production and consumption of natural gas rose, 51% and 28%, respectively, while domestic prices fell about 65%. Despite the fall in prices, U.S. production continued to increase almost every year between 2008 and 2018. The cost of producing shale gas fell as the industry innovated to remain competitive. In 2011, U.S. production started to outpace consumption and the interest in exporting U.S. natural gas took hold. During this period, natural gas became more incorporated in the nation's energy mix, especially in the electrical sector.", "As U.S. prices fell, the world took note. In 2010, Cheniere Energy became the first U.S. company to apply for a permit to export U.S. natural gas from the lower-48 states from its Sabine Pass facility (which was originally an import terminal), transporting it as LNG. Liquefaction facilities like Sabine Pass liquefy natural gas\u00e2\u0080\u0094convert it to LNG\u00e2\u0080\u0094and store it in liquid state so that it can be shipped globally in specialized tankers. Liquefaction of natural gas is achieved by cooling the gas to -260\" F. At this temperature, the natural gas becomes a liquid and occupies only 1/600 th of its gaseous volume making it economical to send by ship.", "U.S. companies were looking to exports of natural gas for additional demand and a way to access higher world prices. As the global economy improved, natural gas prices outside the United States began to climb, which increased the number of companies looking to export U.S. natural gas.", "By the end of 2009, the United States surpassed Russia as the world's largest producer of natural gas. Global production of natural gas rose 28% between 2008 and 2018. U.S. production outpaced other producers and its share of the global natural gas market rose from 18% to 22%, while Russia's fell from 20% to 17%."], "subsections": [{"section_title": "U.S. Exports on the World Stage", "paragraphs": ["The United States did not begin exporting LNG from the lower-48 states until February 2016. However, export of natural gas by pipeline, mainly to Mexico, more than doubled during the 2008 and 2018 timeframe. Mexico imported two-thirds of U.S. pipeline exports and about half of all U.S. gas exports in 2018.", "U.S. LNG export capacity is on the rise, with six different facilities in operation in 2019 with a capacity of approximately 2,700 billion cubic feet per year or 7.32 BCF per day. The United States is the world's 4 th largest exporter of natural gas overall, and the 6 th largest LNG exporter ( Figure 17 ). With another 3,000 BCF per year under construction, the United States is poised to rise in the export rankings and may have the most capacity, worldwide, within the next five years.", "Regionally, Asian countries have imported the most LNG from the United States (44%). Within Asia, the nations of South Korea, Japan, China, and India are the biggest consumers. However, in the first half of 2019, China's imports of U.S. LNG declined by 83% over the same time period in 2018, in part because of the trade dispute between the countries. Thirty-six countries have imported U.S. LNG since 2016. Almost half the gas has gone to countries with which the United States has a free trade agreement, a stipulation for an expedited Department of Energy permit. Both South Korea and Mexico, the two largest overall importers of U.S. LNG exports, have free trade agreements with the United States."], "subsections": []}]}, {"section_title": "Conclusion: Growth of Natural Gas Continues", "paragraphs": ["Between 2016 and the first half of 2019, U.S. LNG exports have grown by 489%. On a monthly basis, LNG exports were largest in May 2019 and are expected to continue to grow as additional port facilities become operational. Meanwhile, there has been no corresponding rise in U.S. natural gas prices due to increased exports.", "Since February 2016, there has been about, on average, a $1.74 price differential between U.S. spot prices and U.S. LNG export prices. In addition to the price of U.S. spot natural gas, the current price at which natural gas can be bought or sold, importers take into account the cost of liquefying the natural gas, transporting it, regasifying it, and moving it to consumers. Natural gas is expensive to liquefy and transport and requires sophisticated technology.", "Even though the United States is the largest producer of natural gas in the world, it is not the largest exporter. Russia, mainly through its pipeline exports to Europe, remains the largest overall exporter of natural gas. Qatar was the largest exporter of LNG in 2018, but Australia is projected to surpass it in 2019.", "Whereas the United States was the target market for LNG exporters in 2008, it is now a net exporter of natural gas and has seen its imports diminish by 27% since 2008. Industry analysts expect U.S. exports to rise significantly over the next few years. LNG now accounts for 35% of global natural gas trade.", "Energy issues have been a perennial topic of interest to Congress. Natural gas, especially since the advent of shale gas, has grown in importance and congressional interest. Exports of natural gas by pipeline and particularly LNG by ship have added to the significance of natural gas' interest to Congress. In the 116 th Congress, 100 bills have been introduced covering a wide variety natural gas related topics, from production, exports, infrastructure, the environment, and employment, among other things."], "subsections": []}]}}
{"id": "R46342", "title": "COVID-19: Role of the International Financial Institutions", "released_date": "2020-05-04T00:00:00", "summary": ["The international financial institutions (IFIs), including the International Monetary Fund (IMF), the World Bank, and regional and specialized multilateral development banks, are mobilizing unprecedented levels of financial resources to support countries responding to the health and economic consequences of the COVID-19 pandemic.", "More than half of the IMF's membership has requested IMF support, and the IMF has announced it is ready to tap its total lending capacity, about $1 trillion, to support governments responding to COVID-19. The World Bank has committed to mobilizing $160 billion over the next 15 months, and other multilateral development banks have committed to providing $80 billion during that time period. At the urging of the IMF and the World Bank, the G-20 countries in coordination with private creditors have agreed to suspend debt payments for low-income countries through the end of 2020.", "Policymakers are discussing a number of policy actions to further bolster the IFI response to the COVID-19 pandemic. Examples include changing IFI policies to allow more flexibility in providing financial assistance, pursuing policies at the IMF to increase member states' foreign reserves, and providing debt relief to low-income countries.", "Congressional Role", "Congress exercises oversight of U.S. participation of the IFIs and authorizes and appropriates U.S. financial contributions to the IFIs.", "In response to the overwhelming demand for IFI resources, in March 2020 Congress accelerated authorizations that were under consideration in the FY2021 budget request to increase funding for the IMF, two World Bank lending facilities, and two African Development Bank lending facilities ( P.L. 116-136 ). Some of the policy actions under discussion to bolster the IFI response to the COVID-19 pandemic, such as IMF gold sales, IMF policies to bolster foreign reserves, and additional debt relief for low-income countries, would require congressional legislation. Some Members of Congress may seek to shape or exercise broader oversight of U.S. policy towards IFI policy changes as well as new IFI programs that could exceed $1 trillion."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["The COVID-19 pandemic is a complex and devastating shock to the global economy. The virus has spread to around the world and combatting the pandemic has shut down large portions of the economy. The pandemic has roiled stock markets, upended oil and other commodity markets, created mass unemployment, disrupted trade, resulted in shortages of food and medical supplies, and threatened the solvency of businesses and governments around the world. The World Food Program warns that the number of people suffering acute hunger could almost double by the end of the year without swift international action. In April 2020, the International Monetary Fund (IMF) cautioned that COVID-19 will likely be the worst recession since the Great Depression, far worse than the recession following the global financial crisis of 2008-2009.", "Governments have undertaken extraordinary fiscal and monetary measures to combat the crisis. However, low- and middle-income countries that are constrained by limited financial resources and weak health systems are particularly vulnerable. In April 2020, the IMF forecast that developing and emerging-market countries could contract by at least 1% in 2020; six months earlier the projection was 4.5% growth ( Figure 1 ). Additionally, the COVID-19 pandemic has triggered capital flight from emerging markets on an unprecedented scale, exacerbating the fiscal challenges facing these governments ( Figure 1 ). ", "Many developing countries are turning to the international financial institutions (IFIs), including the IMF, the World Bank, and the regional multilateral development banks (MDBs), for financial support, and the IFIs are working quickly to mobilize their existing financial resources. The IMF has pledged to use its current $1 trillion lending capacity if necessary, and the MDBs have pledged to mobilize $240 billion over the next 15 months.", "In March 2020, Congress accelerated authorizations under consideration in the FY2021 budget request to increase funding to the IMF, two World Bank lending facilities, and two African Development Bank lending facilities ( P.L. 116-136 ). Multilateral discussions are underway to increase further the IFI's ability to support countries responding to the pandemic. Further congressional action would be required to implement some of the proposals under consideration. ", "The IMF and the World Bank have called for a debt standstill for low-income countries, during which those countries could suspend debt service payments and instead devote their funds to the exigencies of the pandemic. On April 15, 2020, the G-20 donor countries in conjunction with the private sector agreed to a debt standstill through the end of 2020. Some policy experts and policymakers in developing countries are calling for additional debt relief given the severity of the crisis for low-income countries. No legislation is required to implement the April 15 agreement, but congressional action would be required for any permanent U.S. debt relief or contributions to finance debt relief provided by the World Bank or other MDBs."], "subsections": []}, {"section_title": "Mobilization of IFI Resources", "paragraphs": [], "subsections": [{"section_title": "International Monetary Fund7", "paragraphs": ["Created in the aftermath of World War II, the IMF's fundamental mission is to promote international monetary stability. To advance this goal, one of the key functions of the IMF is providing emergency loans to countries facing economic crises. The COVID-19 pandemic has resulted in an unprecedented demand for IMF financial assistance. Previously, the highest number of IMF programs approved in a single year was 34 (in 1994), and on average the IMF has approved 18 programs a year ( Figure 2 ). Today, more than 100 of the IMF's 189 member countries have requested IMF programs. IMF Managing Director Kristalina Georgieva has stated that the IMF stands ready to deploy the entirety of its current lending capacity\u00e2\u0080\u0094approximately $1 trillion\u00e2\u0080\u0094in response to the pandemic and resulting economic crises. Edwin Truman at the Peterson Institute for International Economics estimates the IMF's maximum lending capacity is currently around $787 billion, and that more IMF resources will be needed. The levels of IMF financial assistance under discussion would be unprecedented; previously, the highest cumulative IMF program funding approved in a single year was about $165 billion (in nominal terms), extended in 2010 during the height of the Eurozone crisis ( Figure 2 ). ", "The IMF has several financing options for deploying resources in response to the COVID-19 pandemic. The IMF can provide rapid one-off assistance to countries responding to a health disaster, grant debt relief for the poorest and most vulnerable countries to help address public health disasters, increase the size of current IMF loans, and approve new IMF loans. The IMF has also been working to increase its flexibility in responding to the crisis. For example, the IMF Executive Board has adopted proposals to accelerate Board consideration of member financing requests for emergency financing and doubled (to about $100 billion) access to IMF emergency assistance.", "Most IMF loans are generally conditioned on economic reforms, including austerity measures (government spending cuts and tax increases) and structural reforms (measures that increase the competitiveness of the economy). Some policy experts have raised questions about whether conditionality should be applied to governments seeking assistance for addressing economic crises caused not by irresponsible economic policies but from exogenous shocks prompted by the pandemic. Further, some argue that structural reforms may provide benefits in the longer-term, and austerity measures may exacerbate economic crises in the short-term. Additionally, negotiations over conditionality and good governance safeguards take time, raising questions about how quickly IMF funds can and should be disbursed to affected countries.", "The IMF has already approved several COVID-related programs, including for Bolivia, Chad, the Democratic Republic of Congo, Kyrgyz Republic, Nigeria, Niger, Rwanda, Madagascar, Mozambique, Pakistan, and Togo, among others. Usually, governments do not disclose their requests for an IMF program until the deal is finalized, due to concerns about further undermining investor confidence. Iran and Venezuela, whose access to capital markets is already restricted by U.S. sanctions, have publicized their requests, which are controversial for U.S. policymakers (see text box ). Sudan, whose transitional government is seeking improved relations with the international community, is also seeking emergency support from the IFIs, as the pandemic threatens to exacerbate a pre-existing economic and humanitarian crisis. The country is not able to access most IFI financing mechanisms because of large arrears to the institutions, however. While many in Congress and the Administration have expressed support for Sudan's new government, U.S. Executive Directors at the IFIs would be required to vote against new financing as a result of Sudan's designation under the former regime as a State Sponsor of Terrorism (SST). ", "Additionally, in April 2020, the IMF Executive Board approved debt service relief to 25 of the IMF's low-income member countries, and later expanded this debt service relief to reach 29 countries. The IMF was able to tap its Catastrophe Containment and Relief Trust (CCRT), revamped to address the COVID-19 pandemic, to provide these countries with grants to cover their debt payments to the IMF for six months. The CCRT can currently provide $500 million in grants to low-income countries and is funded by donor countries, including the UK, Japan, Germany, the Netherlands, Singapore, and China. The IMF is seeking to increase this fund by $1.4 billion to provide additional debt service relief. The IMF is also looking to triple the size of its Poverty Reduction and Growth Trust Fund (PRGT) to $17 billion. It has $11.7 billion in commitments from Japan, France, the United Kingdom, Canada, and Australia. ", "Also in April 2020, the IMF Executive Board approved the creation of a new Short-term Liquidity Line. It is a revolving and renewable backstop for member countries with very strong economic policies in need of short-term and moderate financial support, and intends to support a country's liquidity buffers. Some policy experts have questioned its utility, arguing its scope may be too small, it continues to carry the stigma of borrowing from the IMF, and it is unlikely to be processed fast enough be effective."], "subsections": []}, {"section_title": "World Bank25", "paragraphs": ["The World Bank, which finances economic development projects in middle- and low-income countries, among other activities, is mobilizing its resources to support developing countries during the COVID-19 pandemic. At the end of April 2020, the World Bank had approved, or was in the process of approving, 94 COVID-19 projects, totaling $9 billion, in 78 countries. Examples of approved projects include $47 million for the Democratic Republic of Congo to support containment strategies, train medical staff, and provide equipment for diagnostic testing to ensure rapid case detection; $11.3 million for Tajikistan to expand intensive care capacity; $20 million for Haiti to support diagnostic testing, rapid response teams, and outbreak containment; and $1 billion for India to support screening, contract tracing, and laboratory diagnostics, procure personal protective equipment, and set up new isolation wards, among other projects. ", "Over the next 15 months, the World Bank Group estimates it could deploy as much as $160 billion to respond to the COVID-19 pandemic, more than double the amount it committed in FY2019 ( Figure 3 ).", "From official World Bank statements, it is unclear whether the $160 billion commitment is additional financing, an acceleration of its normal lending, or a combination. It is also unclear to what extent the funds will be concessional financing (grants and low-cost loans) for the world's poorest countries or nonconcessional financing (market-rate loans) for middle income countries. According to the World Bank, the $160 billion commitment is to include:", "$50 billion in net transfers to low-income countries\u00e2\u0080\u0094those that are eligible for the World Bank's International Development Association (IDA) concessional lending and grant facility; $8 billion in financial support provided through the World Bank's private-sector lending facility, the International Finance Corporation (IFC), for private companies and their employees hurt by the economic downturn caused by the spread of COVID-19; and a new $6.5 billion facility to support private sector investors and lenders in tackling the COVID-19 pandemic, administered by the World Bank's Multilateral Investment Guarantee Agency\u00c2\u00a0(MIGA). ", "On April 17, 2020, the World Bank announced its plans to establish a new multi-donor trust fund to help countries prepare for disease outbreaks, the Health Emergency Preparedness and Response Multi-Donor Fund (HEPRF). The new fund is to complement, and augment, the $160 billion of financing provided by the World Bank. Japan was the first country to pledge to be a founding donor to the new trust fund, which will aim to spur critical health security investments in the context of the current pandemic as well as in the future. For example, the fund is to provide incentives to IDA-eligible countries to increase investments in health emergency preparedness and enable low-income countries to quickly and effectively respond to major disease outbreaks at an early stage. "], "subsections": []}, {"section_title": "Specialized Multilateral Development Banks", "paragraphs": ["In addition to the World Bank, which has a near-global membership and operates in many sectors in developing countries worldwide, a number of smaller and more specialized MDBs are also mobilizing resources in response to the COVID-19 pandemic. The United States helped create and belongs to four MDBs focused on promoting economic development in specific regions: the Asian Development Bank, the African Development Bank, the Inter-American Development Bank, and the European Bank for Reconstruction and Development. Together with the World Bank, these organizations are the five major MDBs. ", "There are also smaller MDBs, however. The United States also belongs to the International Fund for Agricultural Development, which works to address poverty and hunger in rural areas of developing countries, but it does not belong to two MDBs recently created and led by emerging markets. These include the Asian Infrastructure Investment Bank, spearheaded by China, and the New Development Bank created by the BRICS countries (Brazil, Russia, India, China, and South Africa). Nor does the United States belong to the European Investment Bank, the lending arm of the European Union, or the Islamic Development Bank, led by Saudi Arabia and created in the 1970s.", "Specialized MDBs are launching a robust response to the crisis, including reprogramming existing projects, establishing and funding with existing resources lending facilities dedicated to the COVID-19 response, and streamlining approval procedures. According to the President of the World Bank, other multilateral development banks have committed roughly $80 billion over the next 15 months to respond to COVID-19. It is not entirely clear which other MDBs are included in this total, or the amounts committed by each MDB. Estimates based on MDB press releases are provided in Figure 4 . Together with the World Bank's commitment of $160 billion, $240 billion in financing is to be made available to developing countries from the MDBs during this time period. Details of on specific MDB responses measures are provided in the Appendix ( Table A-1 )."], "subsections": []}]}, {"section_title": "Debt Service Relief for Low-income Countries", "paragraphs": ["The path to the suspension of debt payments for IDA countries took some time to gain momentum. Most donors prefer to coordinate debt relief efforts so the resources made available from debt relief can be used to benefit the developing country rather than be used to repay other creditors. Debt relief by donor governments has traditionally been organized by the Paris Club, an informal group of creditor countries, including the United States, whose origins can be traced back to the 1950s. The Paris Club does not include China, which has in recent years emerged as a major creditor to developing countries and whose lending terms are opaque. China has resisted international efforts to increase debt transparency through the IMF and the World Bank, and has been reluctant to set a precedent for widespread debt forgiveness. At their first emergency teleconference summit on March 26, the G-20 leaders stopped short of providing the requested debt relief, but pledged to \"continue to address risks of debt vulnerabilities in low-income countries due to the pandemic.\" ", "Negotiations continued and on April 15, 2020, the G-20 finance ministers announced the Debt Service Suspension Initiative (DSSI), a temporary suspension of debt payments until the end of the year for the world's poorest countries (those eligible for IDA assistance). The Institute of International Finance (IIF), a group that represents about 450 banks, hedge funds, and other global financial funds, concurrently announced that private creditors will join the debt relief effort on a voluntary basis. This debt standstill potentially frees up more than $20 billion for these countries to spend on improving their health systems and fighting the pandemic, including $12 billion in payments to official creditors (governments) and $8 billion in payments to private creditors. The standstill is to run from May 1, 2020 through December 31, 2020. Repayment schedules are to be net present value neutral, meaning that no debt is actually written off, but rather rescheduled to be paid later. ", "The G-20 decided that the DSSI would apply to the 76 countries designated by the World Bank as eligible for IDA assistance, as well as Angola, which is not eligible for IDA assistance but is designated by the United Nations as one of the world's least developed countries (LDC). According to estimates by IIF, total external debt in DSSI countries exceeds $750 billion. This number may actually be much higher, however, since China and many other creditors do not publicly disclose the scale and scope of their external lending.", "Debt owed to the United States by DSSI countries is approximately $7.7 billion ( Figure 5 ). Since the current proposal only provides debt rescheduling and not debt cancellation, it does not require U.S. legislation. Some advocates, however, are calling for debt forgiveness, which has been provided in the past. In this case, authorizations and appropriations would be necessary. The procedure for budgeting and accounting for any U.S. debt relief is based on the method used to value U.S. loans and guarantees provided in the Federal Credit Reform Act of 1990. Since passage of the act, U.S. government agencies are required to value U.S. loans, such as bilateral debt owed to the United States, on a net present value basis rather than at their face value, and an appropriation by Congress of the estimated amount of debt relief is required in advance of any debt relief taking place. Prior to the passage of the act, neither budget authority nor appropriations were required for official debt relief. Bilateral debt (and other federal commitments) were accounted for on a cash-flow basis, which credits income as it is received and expenses as they are paid. "], "subsections": []}, {"section_title": "Proposals for Additional Actions", "paragraphs": ["For FY2021, the Administration had requested authorizations to increase funding for several IFIs. In March 2020, Congress enacted these authorizations in the Coronavirus Aid, Relief, and Economic Security Act (CARES Act, P.L. 116-136 ). The authorizations include:", "$38 billion for a supplemental fund at the IMF (the New Arrangements to Borrow, or NAB); $3 billion for the nineteenth replenishment of World Bank's IDA resources; $7.3 billion for the seventh capital increase at the African Development Bank; and $513.9 million for the fifteenth replenishment of resources at the African Development Bank's concessional lending facility, the African Development Fund.", "Given the size and scope of the financing needs faced by developing and emerging economies, policy experts and policymakers considering several unusual policy options to further bolster the IFI response. These options, including stretching MDB lending using current resources, IMF gold sales, IMF policies to bolster global liquidity, and further multilateral debt relief, are discussed in greater detail below, as well as any legislation that would be required for U.S. participation in such efforts."], "subsections": [{"section_title": "Stretch MDB Lending using Existing Resources", "paragraphs": ["Some analysts argue that the MDBs have the financial capacity to lend substantially larger amounts than they have already committed. Traditionally, the MDBs have been exceedingly conservative in their approach to capital adequacy. Christopher Humphrey of the London-based Overseas Development Institute (ODI) points out that the five main MDBs (AfDB, ADB, IDB, EBRD, and IBRD [World Bank]) carry an equity-to-loan ratio of between 20% and 60%, compared to 10 to 15% for commercial banks. According to these calculations, the major MDBs can expand lending by at least $750 billion (160% above current levels), while maintaining an AAA rating, or as much as $1.3 trillion (nearly triple current levels) if they are willing to risk a rating downgrade to AA+.", "A key reason for these potentially higher lending levels, is that when MDBs calculate their capital adequacy, they do not include \"callable capital\" that member countries have committed to the institutions. The capital that the United States and other shareholders contribute to the MDBs usually comes in two forms: (1) \"paid-in capital,\" which requires the transfer of funds to the MDBs; and (2) \"callable capital,\" which are funds that shareholders agree to provide, but only when necessary to avoid a default on a borrowing by the MDB itself. (A member country defaulting on a World Bank loan would not cause the Bank to draw on its callable capital.) No MDB has ever had to draw on its callable capital. ", "When MDBs calculate their capital adequacy, they include only paid-in capital and accumulated reserves. By contrast, the major rating agencies include callable capital when calculating potential MDB lending headroom and have noted that the MDBs could lend higher amounts without threatening their rating. According to Humphrey, \"[callable] capital is considered financially sound by the ratings agencies, but is effectively ignored by the MDBs.\" While the U.S. government provides oversight of MDB operational decisions, no congressional legislation would be needed for the MDBs to change their capital adequacy rules."], "subsections": []}, {"section_title": "IMF Gold Sales", "paragraphs": ["Advocates have also proposed that the IMF sell a portion of its gold reserves to finance debt relief for the poorest countries. According to Oxfam's Nadia Daar, \"With gold prices hitting a seven-year high, the IMF should use the windfall profits from gold sales for debt cancellation to avert catastrophic loss of life in developing countries.\" ", "The IMF holds 90.5 million ounces of gold in reserves, valued at around $153 billion at current market prices. The IMF's total gold holdings are valued on its balance sheet at about $4.9 billion (SDR 3.2 billion) on the basis of historical cost. The IMF acquired virtually all of this gold through four types of transactions. In 1978, IMF members adopted an amendment to the Articles of Agreement allowing each country to determine its own exchange rate system. The amendment officially severed the link between currency and gold. IMF member countries were prohibited from defining the value of their currency in terms of gold and the IMF was prohibited from lending gold or defining its assets in terms of gold. Countries could use any exchange rate system (other than using gold as a base) for defining the value of their currencies. Since the 1978 amendment, the use of gold in the IMF's operations has been severely limited. ", "In recent decades, IMF members have supported the limited sale of IMF gold holdings. As with other major IMF policy decisions, gold sales require an 85% majority vote of the total voting power. U.S. voting power at the IMF is 16.51% and thus U.S. support is required for IMF gold sales. In 2000, IMF gold sales were used to fund debt relief for several of the poorest developing countries. In September 2009, the IMF's Executive Board approved the total sale of 403.3 metric tons of gold as a key step in strengthening the IMF's finances. A portion of the profits from gold sales in 2009 and 2010 were used to support concessional lending to low-income countries. ", "Under U.S. law, congressional authorization is required for the United States to support IMF gold sales. In 1999, Congress enacted legislation in the FY2000 Consolidated Appropriations Act ( P.L. 106-113 ) that authorized the United States to vote at the IMF in favor of a limited sale of IMF gold to fund the IMF's participation in poor country debt cancellation. The legislation required the explicit consent of Congress before the executive branch could support any future gold sales. All subsequent gold sales have been explicitly authorized by Congress."], "subsections": []}, {"section_title": "IMF Policies to Augment Foreign Reserves", "paragraphs": ["As part of the U.S. response to COVID-19, the U.S. Federal Reserve (Fed) has taken steps to ensure that major central banks have uninterrupted access to U.S. dollars. First, the Fed established emergency swap lines, or temporary reciprocal currency arrangements, with major central banks and lowered the interest rate it charges on the swap lines. Swap lines allow foreign central banks to temporarily exchange their currency for dollars with the Fed. Second, the Fed created a foreign central bank (FIMA) repurchase (repo) facility. The facility, which also charges interest, allows a broader range of emerging market central banks to temporarily exchange their U.S. Treasury securities for U.S. dollars. ", "While these Fed efforts have been critical, access to their facilities has been relatively limited to advanced economies and some emerging market countries. Less-developed economies and most low-income countries are unable to access Fed facilities, and their limited foreign exchange reserves are rapidly depleting. One option widely discussed is providing a global allocation of IMF special drawing rights (SDRs). The First Amendment to the IMF Articles of Agreement, which went into effect in 1969, authorized the IMF to create a new international reserve asset that could be used to supplement its member country's foreign exchange reserves. ", "This asset, known as SDRs, is neither a currency nor a claim on the IMF. Rather, it is a potential claim on the freely usable currencies of IMF members. SDRs may be exchanged for hard convertible currency among IMF member nations. IMF rules govern how a country may exercise its claim and convert its share of SDRs into another country's hard currency. SDRs are created by fiat, and are not \"paid for\" by any foreign contributions or backed by any national currency. IMF member countries are allocated a number of SDRs based on their IMF quota.", "In light of the COVID-19 pandemic, some policy advocates have proposed an SDR increase of at least $500 billion to provide additional resources to the least developed countries to help them cope with sharp capital outflows and current low commodity prices. For example, on April 21, 2020, Representative Jesus Garcia along with several colleagues introduced the Robust International Response to Pandemic Act ( H.R. 6581 ) that would, among other things, instruct the U.S. Treasury to support an allocation of $3 trillion SDRs. ", "Support for a new SDR creation is not universal. The foremost policy concern with a new SDR increase is their relative inefficiency. Since SDRs are allocated based on IMF quota holdings, the majority of them would be allocated to advanced economies, which are unlikely to ever use their SDRs. These countries could buy and sell SDRs among themselves in order to get useable foreign exchange, but they can do this already\u00e2\u0080\u0094and much more easily\u00e2\u0080\u0094through central bank swaps and other such mechanisms. An additional concern for many U.S. policymakers is that all IMF members, including countries under U.S. sanctions such as Iran and Venezuela, would be included in a general SDR allocation. Reportedly, opposition to providing SDRs to certain countries was a key factor in the U.S. Treasury opposing a broad SDR allocation when it was discussed during the spring 2020 IMF-World Bank annual meetings, even as the it supported a number of other IMF policy responses.", "U.S. support would be required for an SDR allocation of any size. Article XXVIII of the Fund's Articles of Agreement indicates that the creation and allocation of SDRs requires support from at least 85% of the total voting power of the IMF's membership. Due to the size of U.S. voting power at the IMF (16.41%), the United States has veto power over SDR allocations. ", "Additionally, if the size of the SDR increase is equal to or larger than the U.S. share of total IMF quota, congressional support is also required. The Special Drawing Rights Act of 1968 ( P.L. 90-349 ) gave the Executive Branch authority to vote for the First Amendment to the IMF's Articles of Agreement creating the SDR, and set forth the guidelines for U.S. participation in the SDR Department. However, the Act also says that if the U.S. share of a new allocation of SDRs is less than the size of the U.S. quota, the United States can support an SDR allocation as long as the Department of the Treasury consults with leaders of the House and Senate authorizing committees at least 90 days in prior to the vote. U.S. quota is currently about $113.3 billion. Since the U.S. share of IMF quota is currently 17.45%, the Administration could support a SDR allocation of less than about $649 billion without legislation as long as the consultation requirements are met."], "subsections": []}, {"section_title": "Additional Debt Relief", "paragraphs": ["As noted above, calls are mounting for the G-20 DSSI to go further. Former Nigerian finance minister Ngozi Okonjo-Iweala, one of the four special envoys of the African Union soliciting G-20 support for Africa in dealing with COVID-19, is calling for the debt service relief period to be extended to two years. The DSSI does not lower the debt for many low-income countries, and many analysts suggest that, during the debt service payment freeze, official and private sector creditors should work with low-income countries to restructure debts. The United Nations Conference on Trade and Development (UNCTAD) is calling for around $1 trillion in debts owed by developing countries to be canceled. ", "Debt restructuring, which could entail some combination of lengthening maturities, lowering interest rates, and writing-off principle, would lower the debt burden facing developing countries. However, debt restructurings are complex and can take years to negotiate. Divisions between western creditor governments and China over debt relief further complicate negotiations. Many developing countries, including low-income and middle-income countries, faced with a severe economic contraction and pressing health needs, may be forced into default before restructurings can be completed. Low-income and middle-income countries, faced with a severe economic contraction and pressing health needs, may be forced into default before restructurings could be completed. Many African countries reportedly are already requesting debt relief from China in exchange for collateral, including in some cases strategic state assets. ", "Additionally, the DSSI does not address the $12 billion in payments due by low-income countries to multilateral lenders, including the IMF and the World Bank, through the end of the year. The handling of these debts is reportedly still under discussion. For much of their history, the IFIs have served as lenders of last resort to countries suffering from financial crisis. Thus, the IFIs argued that since they provided assistance to countries unable to borrow from anyone else, they should receive preferred creditor status. This means that the World Bank and the IMF would be paid first in the event that borrowers ran into financial difficulties, and that debts owed to them would not be reduced under any circumstances. However, there have been some occasions in the recent past when IMF and MDB debts were reduced. In 2005 for the Multilateral Debt Relief Initiative (MDRI) led by the G-8, the MDBs received new money from creditor nations to offset their debt reductions while the IMF absorbed the cost of debt relief using internal resources and the proceeds of gold sales. As discussed earlier in this report, if the international community agrees to seek a new multilateral debt relief agreement, congressional action would likely be required. "], "subsections": []}]}, {"section_title": "Policy Questions for Congress", "paragraphs": ["The IFIs are mobilizing resources on an unprecedented scale to respond to the COVID-19 pandemic and ensuing economic crisis. To respond to what the IMF is projecting as the largest economic downturn since the Great Depression, multilateral efforts for debt relief are also underway. Some policy experts and policymakers are calling for additional policies to bolster the IFI response, as well as for further multilateral coordination on debt relief for low-income countries. ", "The role of the IFIs in responding to the COVID-19 pandemic raises a number of potential policy questions for Congress. These include the following.", "Do the IFIs have sufficient resources to respond to the COVID-19 pandemic? Does the United States support mobilization of additional resources, and if so, through what mechanisms? Developing countries face a variety of financing needs, including funding the immediate public health response, broad budgetary support, and liquidity support. How should the IFIs prioritize their financial assistance? How should IFI assistance be allocated across countries? How might coordination and coherence of COVID-19 responses among IFIs and donor governments be handled? Many IFIs are focused on the rapid disbursement of financial assistance. What is the trade-off between streamlining approval processes and maintaining due diligence to protect IFI resources? Is there oversight of how the resources from debt relief are used? Do the IFIs have sufficient staffing to process high volumes of financial assistance? China has emerged as a major creditor in recent years, but the terms of its lending are opaque. Do the IFIs have sufficient access to the information needed to assess the financing needs of developing countries and emerging markets? Would any IFI assistance be used to pay off China debt in certain countries? While the current focus is on getting resources quickly to the poor and least developed countries, the IMF is drawing attention to large project increases in debt/GDP ratios for many countries. What is the Administration's position on a new round of multilateral debt forgiveness? How is the Administration engaging on developing-country debt with official institutions and the private sector? What is the Administration's plan for debt relief negotiations with creditor governments outside of the Paris Club group of creditors? What is the appropriate balance between IFI financing and debt relief in the COVID-19 response? In what context is one policy more useful? How might the disbursement of IFI financial assistance be impacted by an inability to reach multilateral agreement on debt relief? Developing and emerging economies are facing immediate financing needs to grapple with the spread of COVID-19, and economic recovery from the pandemic may take years. How should the IFIs assess the capacity of countries to repay IFI loans given the short-, medium-, and long-term impacts of the COVID-19 pandemic?"], "subsections": [{"section_title": "Appendix.", "paragraphs": [], "subsections": []}]}]}}
{"id": "R46217", "title": "Indo-Pacific Strategies of U.S. Allies and Partners: Issues for Congress", "released_date": "2020-01-30T00:00:00", "summary": ["China's growing confidence in asserting itself regionally and internationally, combined with longstanding concerns about whether the United States has the capacity or commitment to remain the region's dominant actor, is leading U.S. allies and partners to adjust their strategic posture. This report seeks to outline some of these changes and to outline the perspectives of Indo-Pacific nations seeking to navigate a changing geopolitical environment, including by recasting their conception of the region to draw in new potential counterweights to China such as India, prioritizing new defense acquisitions to bolster indigenous security capacities, and seeking out new, networked security partnerships.", "Several Indo-Pacific nations over the past decade have substantially increased defense spending to prepare for new challenges; in some cases they have also sought more extensive roles in shaping the regional security architecture. Some are seeking to develop new intra-Asian security partnerships and strengthen existing strategic relationships. Japan, Australia, and India are among the most active in these regards.", "The Trump Administration similarly has articulated strategic objectives in an expansive region from East Asia to South Asia and the Indian Ocean, and has increased defense spending. Some actions taken by President Trump, however\u00e2\u0080\u0094including his questioning of alliance relationships, his opposition to multilateral trade agreements, and possibly his moves to retreat from U.S. security commitments elsewhere in the world\u00e2\u0080\u0094have, in the view of many, sent conflicting signals to and undermined confidence in U.S. alliances and partnerships in the Indo-Pacific region. Many observers have pointed to the value of U.S. allies and partners in protecting U.S. security and values and questioned the economic elements of the Administration's Indo-Pacific strategy, arguing that the Administration has not come forward with an adequate replacement to fill the gap in U.S. engagement that was opened when President Trump withdrew from the proposed Trans-Pacific Partnership (TPP) trade agreement.", "Developing a better understanding of how the United States' Indo-Pacific allies and partners are positioning themselves to adapt to this evolving strategic landscape can inform Congress's oversight of U.S. policies and approaches to the region. It can also aid Congress as it makes funding decisions for U.S. armed forces and foreign assistance or considers strategic aspects of potential trade agreements or other economic initiatives in the region. Within this context Congress may consider a number of questions.", "What are U.S. allies and partners' perceptions of U.S. power and commitment to the Indo-Pacific? How are these perceptions changing? If these perceptions are negative, how are they affecting U.S. interests and what should be done to change them? How are Indo-Pacific countries responding to China's growing economic influence and military power? What impact has President Trump had on the United States' relationship with key allies and partners in the Indo-Pacific and what effect, if any, has this had on U.S. interests? How have regional states responded to the Trump Administration's Free and Open Indo-Pacific strategy? Is the strategy calibrated to gain regional support to achieve U.S. interests? Is it well understood in the region, and is its implementation sufficient to convince the region of U.S. commitment? If not, what should change, and in what ways? Do new security partnerships in Asia raise policy questions or opportunities in areas such as new arms sales, training, or exercises?", "This report will compare various nations' approaches to bolstering their collective security through increased defense spending and evolving security networks and strategic linkages, and identify options for the United States, and for Congress specifically in light of answers to the above questions."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["Many Indo-Pacific nations have responded to China's growing willingness to exert its influence in the region and globally \u00e2\u0080\u0094as well as to the perception that the United States' commitment to the region may be weakening. In part those actions have fostered developing new strategies to strengthen their geopolitical position independent of the United States. Regional states have been concerned about numerous Chinese actions, including its extensive military modernization, its more assertive pursuit of maritime territorial claims and efforts to control international or disputed waters, placement of military assets on artificial islands it has created in the South China Sea, efforts to suppress international criticism or pushback through coercive diplomatic or economic measures, and its expanding global presence, including its military base at Djibouti. ", "Economic dynamics may also be playing a role in governments' policymaking, as economic interdependence between China and virtually all its neighbors remains very strong, and the Belt and Road Initiative (BRI) may further deepen trade and investment links between China and regional states. That increased economic interdependence, coupled with China's increasing assertiveness and willingness to use economic levers for political reasons, may be heightening Indo-Pacific nations' strategic mistrust of Beijing. Other shifts affecting the geostrategic balance in the region include the rise of North Korea as a nuclear power, Japan's nascent reacquisition of power projection capabilities, and the introduction of new military technologies (e.g., drones, anti-ship missiles) that appear to challenge traditional elements of military power, which could potentially erode U.S. (and other large military powers') traditional military advantages. ", "Indo-Pacific nations recently appear to be accelerating the adoption of hedging strategies, at least in part because of the Trump Administration's perceived retreat from the United States' traditional role as guarantor of the liberal international order. Understanding these strategies may be important for Congress as it addresses U.S. diplomatic, security, and economic interests in the region and exerts oversight over the Trump Administration's policies towards U.S. allies and partners.", "The Trump Administration has sent conflicting signals about its posture in Asia. The Administration's 2018 National Defense Strategy emphasizes the need to \"Strengthen Alliances and Attract New Partners.\" In addressing the need to \"expand Indo-Pacific alliances and partnerships\" the document states, \"We will strengthen our alliances and partnerships in the Indo-Pacific to a networked security architecture capable of deterring aggression, maintaining stability, and ensuring free access to common domains \u00e2\u0080\u00a6 to preserve the free and open international system.\" Similarly, the Department of Defense Indo-Pacific Strategy Report: Preparedness, Partnerships, and Promoting a Networked Region of June 2019 calls for a \"more robust constellation of allies and partners.\" In an address to the U.S. Naval Academy in August 2019, Secretary of Defense Mark Esper described the Indo-Pacific as \"our priority theater\" and stated ", "\u00e2\u0080\u00a6 allies and partners want us to lead \u00e2\u0080\u00a6 but to do that we must also be present in the region.\u00e2\u0080\u00a6 Not everywhere, but we have to be in the key locations. This means looking at how we expand our basing locations, investing more time and resources into certain regions we haven't been to in the past.", "Counter to these statements' emphasis on allies and partners, however, the Trump Administration has appeared to some less-engaged on regional issues, sending lower-level officials to key regional summits, withdrawing from the proposed Trans-Pacific Partnership (TPP) trade agreement, and canceling joint exercises with South Korea. In addition, President Trump has openly questioned the value many of the United States' alliance relationships, particularly with Japan and South Korea. As a result, some observers note that U.S. allies and partners also may be increasingly concerned over aligning too closely with the United States at a time when the United States' commitment to the region is questioned, even as many in the region hope that the United States continues to play a dominant or balancing role in Asia. For many in Asia, the strategic picture has been complicated further by the Trump Administration's trade policies, which are sometimes perceived as asking partners to choose between the United States and China\u00e2\u0080\u0094both critical trade and investment relationships that have been crucial to their economic successes over the past few decades.", "In response to these developments, some allies and partners are expanding their defense budgets, embarking on major arms purchases, and looking to create new defense and security networks to strengthen their collective ability to maintain their independence from Chinese influence. Within this evolving context, regional states are adjusting their strategic calculations. A number of trends appear to be emerging across the Indo-Pacific:", "Several regional states have sought to develop new intra-Asian security partnerships to augment and broaden existing relationships. Japan, Australia, and India are among the most active in this regard; Numerous Asian states have adopted an \"Indo-Pacific\" conception of the region, strategically linking the Indian and Pacific Ocean regions. However, the concept remains vague and not all states agree on what it means; Many regional states have increased defense spending, although spending as a percentage of GDP has been relatively steady, and some have adopted more outward-looking defense strategies.", "Congress has sought to address questions about whether these developments present the United States with challenges and/or opportunities to promote U.S. interests in the Indo-Pacific, and to assess the efficacy of the Trump Administration's strategy towards the region. Some Members of Congress have also sought to demonstrate Congress's commitment to maintaining and expanding both alliance and other relationships in the Indo-Pacific.", "In December 2018, for instance, the 115 th Congress passed, and President Trump signed into law, the Asia Reassurance Initiative Act of 2018 (ARIA; P.L. 115-409 ), which provides a broad statement of U.S. policy for the Indo-Pacific region and establishes a set of reporting requirements for the executive branch regarding U.S. policy in the region. ARIA emphasizes the need to \"expand security and defense cooperation with allies and partners\" and to \"sustain a strong military presence in the Indo-Pacific region.\" It states that \"Without strong leadership from the United States, the international system, fundamentally rooted in the rule of law, may wither.... It is imperative that the United States continue to play a leading role in the Indo-Pacific.\"", "In addition to numerous pieces of legislation aimed at addressing challenges associated with China, the 116 th Congress has also introduced numerous pieces of legislation that seek to emphasize U.S. commitment to the region, including to U.S alliances and partnerships, and to guide U.S. policy. Relevant legislation includes:", "S. 2547 \u00e2\u0080\u0094Indo-Pacific Cooperation Act of 2019; S.Res. 183 \u00e2\u0080\u0094Reaffirming the vital role of the United States-Japan alliance in promoting peace, stability, and prosperity in the Indo-Pacific region and beyond, and for other purposes; H.Res. 349\u00e2\u0080\u0094Reaffirming the vital role of the United States-Japan alliance in promoting peace, stability, and prosperity in the Indo-Pacific region and beyond; S.Res. 67 \u00e2\u0080\u0094Expressing the sense of the Senate on the importance and vitality of the United States alliances with Japan and the Republic of Korea, and our trilateral cooperation in the pursuit of shared interests; H.Res. 127\u00e2\u0080\u0094Expressing the sense of the House of Representatives on the importance and vitality of the United States alliances with Japan and the Republic of Korea, and our trilateral cooperation in the pursuit of shared interests; S. 985 \u00e2\u0080\u0094Allied Burden Sharing Report Act of 2019; H.R. 2047 \u00e2\u0080\u0094Allied Burden Sharing Report Act of 2019; and H.R. 2123 \u00e2\u0080\u0094United States-India Enhanced Cooperation Act of 2019."], "subsections": []}, {"section_title": "Japan", "paragraphs": [], "subsections": [{"section_title": "Indo-Pacific Vision and Strategic Context", "paragraphs": ["Since Prime Minister Shinzo Abe delivered a speech before the Indian Parliament in 2007 during his first term, Japan has been at the forefront of promoting the concept of the Indian Ocean and Pacific Ocean regions as a single strategic space. Japan is driven, among other things, by its fear of China's increasing power and influence in the region. Although Sino-Japanese relations have stabilized in 2018 and 2019 following several years of heightened tensions, Tokyo's security concerns about China's intentions have been exacerbated by a territorial dispute over a set of islands in the East China Sea (known as the Senkakus in Japan and the Diaoyutai in China), where China has sought over the past decade to press its claims through a growing civilian and maritime law enforcement presence. Abe is reportedly anxious to establish a regional order that is not defined by China's economic, geographic, and strategic dominance, and has sought new partners who can offer a counterweight to China's clout. Expanding the region to include the South Asian subcontinent\u00e2\u0080\u0094some claim that Abe himself coined the concept of the \"Indo-Pacific\"\u00e2\u0080\u0094broadens the strategic landscape. ", "Japan's insecurity is heightened by perceptions that the United States may be a waning power in the region. Japan wants the United States to remain a dominant presence, and the Trump Administration's Free and Open Indo-Pacific formulation asserts that the United States must demonstrate leadership and stay engaged. ", "Japan's Free and Open Indo-Pacific strategy differs from the U.S. formulation in some ways, particularly in how the region is defined geographically. Tokyo has a broader view of the Indo-Pacific, encompassing not just the Indian Ocean but extending to the east coast of Africa while the U.S. concept does not. Japan and India are working together to develop an Asia Africa Growth Corridor (AAGC), which seeks to coordinate their efforts with other countries to develop regional economic linkages, connectivity, and networks between Asia and Africa. (The AAGC is also a component of the India Japan Joint Vision 2025 for the Indo-Pacific Region, a joint statement signed by the leaders of Japan and India in 2018 to deepen defense cooperation and to facilitate the sale of defense equipment from Japan to India. ) Because of constitutional limitations on Japan's military, Tokyo's Indo-Pacific focus is on infrastructure improvement, trade and investment, and governance programs, another key difference from the Trump Administration's Indo-Pacific strategy, which includes significant military and security elements.", "Despite legal limitations, the Abe government is seeking to increase its security cooperation as part of its Indo-Pacific strategy. In December 2018, Japan released a pair of documents that are intended to guide its national defense efforts, including the defense budget, over the next decade\u00e2\u0080\u0094the National Defense Pro gram Guidelines for FY2019 and B eyond and the Medium Term Defense Program ( FY2019 - FY2023 ) . With concerns over China and North Korea at their heart, the guidelines layout a continued dual strategy of strengthening Japan's own defense program while also strengthening security cooperation with the United States and other countries. ", "The 2019 National Defense Program Guidelines show stark shifts in content from previous iterations. Importantly, the document emphasizes Japan's own defense efforts independent of the security cooperation with the United States, stating upfront that as a matter of national sovereignty \"Japan's defense capability is the ultimate guarantor of its security and the clear representation of the unwavering will and ability of Japan as a peace-loving nation.\" The document calls for enhancing Japan's capabilities in traditional security domains (land, air, and sea), such as with increasing the use of unmanned vehicles and operationally flexible Short Take-Off and Vertical Landing (STOVL) fighter aircraft. It also highlights the importance of \"new domains\" such as cyber, space, and the electromagnetic spectrum. Overall, Japan aims for efforts with the United States to remain on a similar trajectory as the past, but it places more emphasis on cooperation with Australia and India, and less with South Korea. "], "subsections": []}, {"section_title": "Relations with the United States", "paragraphs": ["Japanese leaders\u00e2\u0080\u0094particularly Prime Minister Shinzo Abe\u00e2\u0080\u0094have deepened defense cooperation with the United States for the past two decades as part of their efforts to ensure China does not become a regional hegemon. Among Abe's efforts to strengthen the alliance are updating the bilateral defense guidelines, re-interpreting a constitutional clause to allow for collective self-defense activities, pushing legislation through the Japanese parliament to allow for broader engagement with the United States, and pressing for the construction of a controversial U.S. Marine air base in Okinawa. ", "Japan continues to put its alliance with the United States at the center of its security strategy, despite some significant differences with U.S. foreign policy under the Trump Administration that could threaten Tokyo's desire to keep the United States engaged in the region. Many in Japan are anxious that President Trump's approach to dealing with North Korea may marginalize Tokyo's primary concerns with North Korea's short and medium-range missile capabilities and the fate of several Japanese nationals abducted by North Korean agents in the 1970s and 1980s. Japan has also expressed disappointment with the U.S. decision to withdraw from the Paris Climate Accord. Japan was also dismayed at the U.S. decision to withdraw from the TPP in 2017. Japan views the multilateral trade agreement as a fundamental element of its Indo-Pacific strategy, and led the effort to salvage the agreement, now known as the TPP-11 (or as the Comprehensive and Progressive Agreement for the Trans-Pacific Partnership, or CPTPP). The pact entered into force at the end of 2018. ", "Although Japan reached a limited trade agreement with the United States in 2019, it received no assurance that the Trump Administration will not impose tariffs on its auto industry. In 2020 Japan is due to re-negotiate its burden sharing arrangement that offsets the cost of stationing U.S. military forces on its territory and anticipates that the Trump Administration will demand a significant increase in Japan's contribution. "], "subsections": []}, {"section_title": "Defense Spending", "paragraphs": ["Japan's supplementary 2019 Medium Term Defense Program lays out a detailed picture of intended activities. The Program projects a five-year expenditure plan that would cost \u00c2\u00a527,470 billion (about US$250 billion ), although it also suggests the annual defense budget target would be \u00c2\u00a525,500 billion, or US$232 billion. ", "The 2019 Medium Term Defense Program indicates that the majority of the increased budget will be spent on more up-to-date weapons technology, such as the continued replacement of old F-15 jets with F-35As and the introduction of STOVL F-35s. Another major expense is plans to procure a new type of destroyer and to retrofit one of their current destroyer-class vessels (Izumo-class helicopter carrier) with capabilities to accommodate the STOVL aircraft. Further, the program calls for the procurement of a variety of missiles and missile-defense systems. In this area Japan has already agreed to expand its Aegis ballistic missile defense systems at a reported cost of $2.15 billion , announced plans to build new medium- and long-range cruise missiles , and agreed to a much smaller purchase joint strike missiles that will give it land-attack capabilities from the air for the first time. These advanced systems enhance Self Defense Forces (SDF, Japan's name for its military) capabilities and underscore Japan's commitment to shoulder more of its security needs instead of relying on U.S. protection. The Program calls for \"reorganization of the major SDF units,\" and personnel levels are expected to increase by about three percent since the 2000s. "], "subsections": []}, {"section_title": "Emerging Strategic Relationships", "paragraphs": ["Japan's defense relationships with countries other than the United States are less developed but Japan is actively working to expand its security partnerships beyond the United States. Some analysts suggest these efforts reflect concern about the durability of the U.S. alliance and a general need to diversify security partners. "], "subsections": [{"section_title": "Australia", "paragraphs": ["Ties with Australia have become increasingly institutionalized and regular. Australia is Japan's top energy supplier, and a series of economic and security pacts have been signed under Abe, including a $40 billion gas project, Japan's biggest ever foreign investment. In 2007, the two nations reached agreement on a Joint Declaration on Security Cooperation , and in 2017, Tokyo and Canberra signed an updated acquisition and cross-servicing agreement (ACSA). ", "As another U.S. treaty ally, Australia uses similar practices and equipment, which may make cooperation with Japan more accessible. Although Japan had some difficult World War II history with Australia , Abe himself has made efforts to overcome this potential obstacle to closer defense ties. In 2014, during the first address to the Australian parliament by a Japanese Prime Minister, Abe explicitly referenced \"the evils and horrors of history\" and expressed his \"most sincere condolences towards the many souls who lost their lives. \" In 2018, Abe visited Darwin, the first time a Japanese leader visited the city since Imperial Japanese forces bombed it during World War II. In 2018, Japan and Australia \"reiterated their determination to work proactively together and with the United States and other partners to maintain and promote a free, open, stable and prosperous Indo-Pacific founded on the rules-based international order. \" Despite advancements, Canberra and Tokyo do have some differences; for example they have struggled to conclude a visiting forces agreement over a variety of concerns, including Japan's adherence to the death penalty, which could mean that an Australian soldier convicted of a heinous crime could face a death sentence, which contravenes Australia's legal system."], "subsections": []}, {"section_title": "India and the \"Quad\"", "paragraphs": ["The concept of the Free and Open Indo-Pacific is particularly appealing to Japan because of its strong relationships with India and Australia, and Abe has pursued cooperation with these maritime democracies and the United States as part of the \"quad\" grouping. During Abe's first stint as Prime Minister in 2006-2007, he pursued tighter relations with India, both bilaterally and as part of his \"security diamond\" concept. Under Abe and Prime Minister Narendra Modi, interest in developing stronger ties intensified, and the two countries have developed more bilateral dialogues at all levels of government, supported each other on areas of mutual concern, and bolstered educational and cultural exchanges.", "Analysts point to mutual respect for democratic institutions, as well as shared strategic and economic interests, that have allowed the relationship to flourish. Japan and India\u00e2\u0080\u0094both of which have long-standing territorial disputes with China\u00e2\u0080\u0094have sought to increase their bilateral cooperation in apparent response to alarms raised by China's actions over the past decade perceived as too assertive or even aggressive. Japanese companies have made major investments in India in recent years, most notably with the $100 billion Delhi-Mumbai Industrial Corridor project, and Japanese investment already plays a central role in providing regional alternatives to China's BRI. In October 2018 Prime Ministers Abe and Modi reaffirmed their commitment to bilateral economic and defense cooperation at the 13 th annual India Japan Summit. Japan and India have expanded joint military exercises to include army and air force units in addition to the annual Malabar naval exercise. ", "Many analysts see engaging India in a broader security framework as the primary challenge to establishing a quadrilateral arrangement. The United States has treaty alliances with both Japan and Australia, and Japan and Australia have also developed a sophisticated security partnership in the past decade. India, however, appears to have been more reluctant to sign on to international commitments from its legacy as a \"non-aligned movement\" state and is more reluctant to antagonize Beijing. "], "subsections": []}, {"section_title": "The Association of Southeast Asian Nations (ASEAN)", "paragraphs": ["Japan has maintained a consistent level of economic and diplomatic engagement with ASEAN countries for several decades. Although more limited, Japan also has expanded the security dimension of its relationships with several Southeast Asian countries under Abe's stewardship. Maritime security has been a particular focus with Vietnam, the Philippines, and Malaysia. Japan has participated in a multitude of regional fora that address maritime issues and has deployed its Coast Guard to work with ASEAN countries. Japan promotes cooperation and provides resources to address anti-piracy, counter-terrorism, cyber security, and humanitarian assistance and disaster response in Southeast Asia. "], "subsections": []}, {"section_title": "The North Atlantic Treaty Organization (NATO)", "paragraphs": ["Japan also has sought to deepen ties with the North Atlantic Treaty Organization (NATO). Japan is considered NATO's longest standing partner outside of Europe, and recently has participated in exercises in the Baltic Sea with the Standing NATO Maritime Group One . With an emphasis on maritime security, Japan participates in the Partnership Interoperability Platform (which seeks to develop better connectivity b etween NATO and partner forces) , provides financial support for efforts to stabilize Afghanistan, and takes part in assorted other NATO capacity building programs . "], "subsections": []}]}]}, {"section_title": "India", "paragraphs": [], "subsections": [{"section_title": "Indo-Pacific Vision and Strategic Context", "paragraphs": ["New Delhi broadly endorses the Free and Open Indo-Pacific strategy pursued by Washington, and India benefits from the higher visibility this strategy provides for India's global role and for its immediate region. Despite its interest in working more closely with the United States, India has not fully relinquished the \"nonalignment\" posture it maintained for most of the Cold War (more recently pursuing \"strategic autonomy\" or a \"pragmatic and outcome-oriented foreign policy\" ). It continues to favor multilateralism and to seek a measure of balance in its relations with the United States and neighboring China. New Delhi sees China as a more economically and militarily powerful rival, and is concerned about China's growing presence and influence in South Asia and the Indian Ocean region. Thus, Prime Minister Modi has articulated a vision of a free, open, and inclusive Indo-Pacific, and India has engaged Russia, Japan, Australia, and other Indo-Pacific countries as potential balancers of China's influence while remaining wary of joining any nascent security architectures that could antagonize Beijing. While India endorses the United States' Free and Open Indo-Pacific strategy, its own approach differs in significant ways.", "[I]t gives equal emphasis to the term\u00c2\u00a0'inclusive' in the pursuit of progress and prosperity, including all nations in this geography and\u00c2\u00a0\"others beyond who have a stake in it\"; it does not see the region as a strategy or as a club of limited members; it does not consider such a geographical definition as directed against any country; nor as a grouping that seeks to dominate.", "Some observers have described India's foreign policy under Modi as having new dynamism as India seeks to transform its Look East policy into an Act East policy. The inaugural Singapore-India-Thailand Maritime Exercise (SITMEX) was held in the Andaman Sea in September 2019 and has been viewed by observers as \"a tangible demonstration of intra-Asian security networking.\" By some accounts, India is poorly suited to serve as the western anchor of the Free and Open Indo-Pacific, given its apparent intention to maintain strategic autonomy, and its alleged lack of will and/or capacity to effectively counterbalance China. Moreover, many in India consider a Free and Open Indo-Pacific conception that terminates at India's western coast (as the Trump Administration's conception appears to do) to be \"a decidedly U.S.-centric, non-Indian perspective\" that omits a huge swath of India's strategic vista to the west."], "subsections": []}, {"section_title": "Relations with the United States", "paragraphs": ["Most analysts consider that the Modi/BJP victory in spring 2019 parliamentary elections has empowered the Indian leader domestically and on the global stage. Given Modi's reputation for a \"muscular\" foreign policy, this could lead to a greater willingness to resist Chinese assertiveness and move closer to the United States while not abandoning multilateral approaches. Yet challenges with the United States loom: many Indian strategic thinkers say their country's national interests are served by continued engagement with Russia and Iran, and thus contend there will be limits to New Delhi's willingness to abide \"America's short-term impulses.\" While New Delhi generally welcomes the U.S. Free and Open Indo-Pacific strategy, Indian leaders continue to demur from confronting China in most instances."], "subsections": []}, {"section_title": "Defense Spending", "paragraphs": ["Since 2009, India's budget has grown at an average annual rate of 9%. However, as a percentage of the country's GDP, defense expenditures have decreased. More than half (51%) of India's 2019-2020 defense budget is allocated for salaries and pensions, including 70% for the Indian Army. While military modernization efforts continue, they are not taking place at the rate called for by many Indian defense analysts. Much of the country's defense equipment falls into the \"vintage\" category, including more than two-thirds of the Army's wares. Over the past decade capital outlays (which include procurement funds) have declined as a proportion of the total defense budget. This decline has contributed to a slowing of naval and air force acquisitions, in particular, and a continued heavy reliance on defense imports (about 60% of India's total defense equipment is imported, the bulk from Russia). Stalled reforms in the defense sector have delayed modernization efforts, which some analysts say are already hampered by ad hoc decision making and a lack of strategic direction. In the words of one senior observer, \"In fact, it is India's dependence on arms imports\u00e2\u0080\u0094and their corrupting role\u00e2\u0080\u0094that are at the root of the Indian armed forces' equipment shortages and the erosion in the combat capabilities.\" New Delhi seeks to diversify its defense suppliers, recently making more purchases from Israel and the United States, among others."], "subsections": []}, {"section_title": "Emerging Strategic Relationships", "paragraphs": ["India is pursuing bilateral relations with Japan and Australia in a manner largely consistent with the strategic objectives of the Trump Administration's Free and Open Indo-Pacific strategy, while India's bilateral relations with China, Russia and Iran could present challenges for that strategy. Despite India's interest in engaging with other regional powers in the Indo-Pacific, the 2019 Modi/BJP election win is expected to see a continuation of New Delhi's multilateralist approach to international politics in Asia, continuing to pursue stable relations with all powers, including China and Russia. India is a full member of the Shanghai Cooperation Organization (SCO), a regional grouping that also includes China, Russia, Pakistan and several Central Asian nations, and conducts regular trilateral summits with China and Russia. It has been resistant to outright confrontation with Beijing, even as it resists Chinese \"assertiveness\" in South Asia."], "subsections": [{"section_title": "Japan and Australia", "paragraphs": ["India's deepening \"strategic partnership\" with Japan is a major aspect of New Delhi's broader \"Act East\" policy and is a key axis in the greater Indo-Pacific strategies broadly pursued by all three governments now participating in a newly established U.S.-Japan-India Trilateral Dialogue. U.S., Indian, and Japanese naval vessels held unprecedented combined naval exercises in the Bay of Bengal in 2007, and trilateral exercises focused on maritime security continue. India-Australia defense engagement is underpinned by the 2006 Memorandum on Defence Cooperation and the 2009 Joint Declaration on Security Cooperation. India and Australia also develop their maritime cooperation through the AUSINDEX biennial naval exercise."], "subsections": []}, {"section_title": "China", "paragraphs": ["India's relations with China have been fraught for decades, with signs of increasing enmity in recent years. Areas of contention include major border and territorial disputes, China's role as Pakistan's primary international benefactor, the presence in India of the Dalai Lama and a self-described Tibetan \"government,\" and China's growing influence in the Indian Ocean region, which Indians can view as an encroachment in their neighborhood. New Delhi is ever watchful for signs that Beijing seeks to \"contain\" Indian influence both regionally and globally. China's BRI\u00e2\u0080\u0094with \"flagship\" projects in Pakistan\u00e2\u0080\u0094is taken by many in India as an expression of Beijing's hegemonic intentions. Despite these multiple areas of friction in the relationship, China is India's largest trade partner, and New Delhi's leaders are wary of antagonizing their more powerful neighbor and emphasize an \"inclusive\" vision for the Indo-Pacific region. There is cooperation on some issues, including on global trade and climate change. A mid-2018 summit meeting in Wuhan, China, was seen as a mutual effort to reset ties and \"manage differences through dialogue;\" this \"Wuhan spirit\" was carried into a subsequent informal summits, the most recent held in Chennai, India, in October 2019."], "subsections": []}, {"section_title": "Russia", "paragraphs": ["India maintained close ties with Russia throughout much of the Cold War, and it continues to rely on Russia for the bulk of its defense imports, as well as significant amounts of oil and natural gas. With the 2017 enactment of the Countering America's Adversaries Through Sanctions Act (CAATSA, P.L. 115-44 ), India's continued major arms purchases from Russia\u00e2\u0080\u0094most prominently a multi-billion-dollar deal to purchase the Russian-made S-400 air defense system\u00e2\u0080\u0094could trigger U.S. sanctions. "], "subsections": []}, {"section_title": "Iran", "paragraphs": ["India has also had historically friendly relations with Iran, a country that lately has supplied about 10-12% of India's energy imports. It also opposes Tehran's acquisition of nuclear weapons and supports the Joint Comprehensive Plan of Action. Historically averse to unilateral (non-UN) sanctions, New Delhi until recently enjoyed an exemption from U.S. efforts targeting Iran's energy sector. In April 2019, the Trump Administration announced an end to such exemptions, and India is reported to have fully ceased importation of Iranian oil in early May, while informing Washington that the move \"comes at a cost.\" New Delhi considers its $500 million investment in Iran's Chabahar port crucial to India's future trade and transit with Central Asia (the project is exempt from U.S. sanctions )."], "subsections": []}]}]}, {"section_title": "Australia", "paragraphs": [], "subsections": [{"section_title": "Indo-Pacific Vision and Strategic Context", "paragraphs": ["Australia is responding to increasing geopolitical uncertainty and the rise of China in the Indo-Pacific region by maintaining a strong alliance relationship with the United States, increasing defense spending, purchasing key combat systems from a variety of suppliers, and seeking to develop strategic partnerships with Japan, India and others. ", "Australia, situated between the Indian and Pacific Oceans, increasingly thinks of itself as deeply embedded in the Indo-Pacific region. This is evident in the emphasis on the Indo-Pacific concept in the Australian Government's 2017 Foreign Policy White Paper. While Australia's focus early in its history was on its place within the British Empire and the \"tyranny of distance\" that placed it on the periphery of the world for much of its history, it now finds itself situated in a region that has accounted for the majority of global economic growth over the past two decades. Leading Australian strategic thinkers view the Indo-Pacific as a largely maritime, strategic, and geo-economic system \"defined by multi-polarity and connectivity \u00e2\u0080\u00a6 in a globalized world.\" While Australia shares the values of the Free and Open Indo-Pacific concept, and many in Australia are concerned with China's growing influence in Australia, the South Pacific and the Indian Ocean, it is Australia's geography, as well as its broader interests, that are at the core of its Indo-Pacific strategy. ", "Australian Minister for Defence Linda Reynolds stated:", "Australia's Indo\u00e2\u0080\u0093Pacific vision reflects our national character and also our very unique sensibilities.\u00c2\u00a0We want a region that is open and inclusive; respectful of sovereignty; where disputes are resolved peacefully; and without force or coercion. We want a region where open markets facilitate the free flow of trade, of capital and of ideas and on where economic and security ties are being continually strengthened. We want an Indo-Pacific that has ASEAN at its heart and is underpinned by the rule of law with the rights of all states being protected. Australia's vision is also one that includes a fully-engaged United States.", "Popular Australian attitudes towards China have changed in recent years. Australian perceptions of China have been shaped, to a large extent, by the economic opportunity that China represents. Revelations regarding China's attempts to influence Australia's domestic politics, universities, and media, have negatively influenced Australians' perceptions of China and the Australian government is undertaking a number of measures to counter China's growing influence in the country. On June 28, 2018, the Australian parliament passed new espionage, foreign interference and foreign influence laws \"creating new espionage offences, introducing tougher penalties on spies and establishing a register of foreign political agents.\" In August 2018, Australia blocked Chinese telecommunications firm Huawei from involvement in Australia's 5-G mobile network. ", "Canberra also has been focused on Chinese political engagement, investment, and influence operations globally, particularly in the Pacific Islands, a region Australia considers strategically important to its own national interest. In responding to reports of China's reported efforts to establish a military presence in Vanuatu, former Australian Prime Minister Malcolm Turnbull stated, \"We would view with great concern the establishment of any foreign military bases in those Pacific island countries.\" Australia has also been concerned about the impact of Chinese development aid to Pacific island states, which, as tracked by the Australian Lowy Institute Mapping Foreign Assistance in the Pacific project, increased significantly from 2006 to 2016, with cumulative aid commitments totaling $1.78 billion over that period. It has responded with a significant policy pivot to step up its own focus on the South Pacific. This is demonstrated by a number of recent actions, including Prime Minister Morrison's visit to Vanuatu and Fiji, increased aid from Australia to Pacific island states, and Australia, Papua New Guinea and the United States' joint development of the Lombrum naval facility on Manus Island in Papua New Guinea. The Pacific Islands receive 31% of Australia's foreign assistance budget of $3.1 billion. Australia, New Zealand, and the United States held an inaugural Pacific Security Cooperation Dialogue in June 2018 \"to discuss a wide range of security issues and identify areas to strengthen cooperation with Pacific Island countries on common regional challenges.\" ", "Responding to China's growing influence is a key driver of Canberra's Indo-Pacific strategy, and Australia has taken a number of steps to develop its economic engagement in the Pacific both independently and in coordination with the U.S. and Japan. Australia, Japan and the United States have shared understandings of the need for developing sustainable and economical alternatives to China's Belt and Road geo-economic strategy even as the three nations have somewhat different perspectives on the Free and Open Indo-Pacific concept. By some estimates, there is a need for $26 trillion in infrastructure development in Asia through 2030. Australia's 2017 Department of Foreign Affairs and Trade (DFAT) white paper pointed out that:", "Even as growth binds the economies of the Indo-Pacific, trade and investment and infrastructure development are being used as instruments to build strategic influence, as well as to bring commercial advantage. In the past, the pursuit of closer economic relations between countries often diluted strategic rivalries. This geo-economic competition could instead accentuate tension.", "Export Finance Australia provides loans, guarantees, bonds, and insurance options to \"enable SMEs, corporates and governments to take on export-related opportunities, and support infrastructure development in the Pacific region and beyond.\" In February 2018, the Overseas Private Investment Corporation and Australia's Department of Foreign Affairs and Trade signed a bilateral Memorandum of Understanding on joint infrastructure investment in the Pacific. In November 2018, the United States, Australia and Japan moved forward with their coordinated effort to address regional infrastructure needs.", "Australia's Department of Foreign Affairs and Trade (DFAT) and Export Finance and Insurance Corporation (Efic), the Japan Bank for International Cooperation (JBIC), and the U.S. Overseas Private Investment Corporation (OPIC) signed a Trilateral Memorandum of Understanding (MOU) to operationalize the Trilateral Partnership for Infrastructure Investment in the Indo-Pacific.\u00e2\u0080\u00a6 Through the MOU, we intend to work together to mobilize and support the deployment of private sector investment capital to deliver major new infrastructure projects, enhance digital connectivity and energy infrastructure, and achieve mutual development goals in the Indo-Pacific.", "This effort has been described as \"an obvious reaction to China's regional ambitions.\" Australia also supports the Pacific Islands Forum, a multilateral organization aimed at enhancing cooperation among Pacific governments."], "subsections": []}, {"section_title": "Relations with the United States", "paragraphs": ["A traditional cornerstone of Australia's strategic outlook is the view that the United States is Australia's most im portant strategic partner and a key source of stability in the Asia-Pacific region. The ongoing strength of the bilateral defense relationship with the U.S., as well as growing multilateral connections, was demonstrated through the July 2019 Talisman Sabre military exercise that included 34,000 personnel from the U.S. and Australia as well as embedded troops from Canada, Japan, New Zealand and the United Kingdom and observers from India and South Korea. In 2018, however, heightened concern emerged in Australia about its relationship with the United States under President Trump's leadership. At the same time, Australians' support for the Australia-New Zealand United States (ANZUS) Alliance remains high. A 2019 Lowy Institute poll found that 73% of Australians feel that the alliance with the U.S. \"is a natural extension of our shared values and ideals.\" One recent study conducted at the United States Studies Centre at the University of Sydney is concerned that the United States \"no longer enjoys military primacy in the Indo-Pacific and its capacity to uphold a favourable balance of power is increasingly uncertain.\" It recommends that, \"A strategy of collective defence is fast becoming necessary as a way of offsetting shortfalls in America's regional military power and holding the line against rising Chinese strength.\" ", "The 2019 Australia-U.S. Ministerial (AUSMIN) consultations \"emphasized the need for an increasingly networked structure of alliances and partnerships to maintain an Indo-Pacific that is secure, open, inclusive and rules-based.\" It also \"welcomed a major milestone in the Force Posture Initiatives, as the rotational deployment of U.S. Marines in Darwin has reached 2,500 personnel in 2019. The principals emphasized the value of Marine Rotational Force \u00e2\u0080\u0093 Darwin (MRF-D) in strengthening the alliance, and in deepening engagement with regional partners.\" MRF-D was a key project of the Obama Administration's \"rebalance to Asia\" strategy. Following the 2019 AUSMIN meeting, Australian Prime Minister Scott Morrison announced on August 21 that Australia would join the U.S.-led effort to protect shipping in the Strait of Hormuz. "], "subsections": []}, {"section_title": "Defense Spending", "paragraphs": ["Australia's budget for 2019-20 focused on building defense by ", "\u00e2\u0080\u00a6 enhancing our regional security, building defence capability and supporting Australia's sovereign defence industry.\u00e2\u0080\u00a6 The Budget maintains the Government's commitment to grow the Defence budget to two per cent of GDP by 2020\u00e2\u0080\u009321. The Government will allocate Defence [A]$38.7 billion in 2019-20.", "Over the decade to 2028 the Australian government is investing more than A$200 billion in defense capabilities . (1A $ =0.69US $ ) This investment includes a number of key weapons systems including the F-35 Joint Strike Fighter, P-8A Poseidon maritime surveillance aircraft, and upgrades to the EA-18G Growler electronic attack aircraft and E-7A Wedgetail battle space management aircraft. The Royal Australian Air Force took delivery of 2 F-35A Joint Strike fighters in December 2018. These are the first of a total of 72 F-35A aircraft ordered by Australia. Australia has also moved to acquire nine British BAE Systems designed Hunter class frigates valued at A$35 billion. The purchase of the Hunter class frigates is expected to improve interoperability between the Australian and British navies while enhancing British ties to a Five Power Defence Arrangement (FPDA) partner. Australia will also purchase 12 Shortfin Barracuda submarines designed by DCNS of France for A$50 billion. Australi a is also acquiring 211 Combat R econnaissance Vehicles and unmanned maritime patrol aircraft including the Triton."], "subsections": []}, {"section_title": "Emerging Strategic Relationships", "paragraphs": ["Shifts in the geostrategic dynamics of Asia are leading Australia to hedge, increasingly by partnering with other Asian states, against the relative decline of U.S. engagement in the region. Australian efforts to develop broader security cooperation relationships can be seen in the AUSINDEX exercise between Australia and India, through the Pacific Endeavor naval deployment, which visited India, Indonesia, Malaysia, Singapore, Sri Lanka, Thailand and Vietnam, and through the inclusion of Japan in the U.S.-Australia Talisman Sabre exercise for the first time in 2019. Increasing numbers of high level visits and joint military exercises between Australia and India point to common concerns \"about a rising China and its strategic consequences on the Indo-Pacific strategic order.\" Such developments also mark change in the regional security architecture which has been grounded in the post-war San Francisco \"hub-and-spoke\" system of U.S. alliances. This shift towards security networks in which middle powers in Asia increasingly rely on each other could build on and complement these states' ties with the United States. In its white paper outlining its strategy for pursuing deeper partnerships in the Indo-Pacific, the government noted,", "The Indo\u00e2\u0080\u0093Pacific democracies of Japan, Indonesia, India and the Republic of Korea are of first order importance to Australia, both as major bilateral partners in their own right and as countries that will influence the shape of the regional order. We are pursuing new economic and security cooperation and people-to-people links to strengthen these relationships. Australia will also work within smaller groupings of these countries, reflecting our shared interests in a region based on the principles ... Australia remains strongly committed to our trilateral dialogues with the United States and Japan and, separately, with India and Japan. Australia is open to working with our Indo\u00e2\u0080\u0093Pacific partners in other plurilateral arrangements.", "Another recent example of Australia's efforts to develop new economic and security cooperation with regional states includes Australia's developing relationship with Vietnam. Bilateral trade between Australia and Vietnam grew by 19.4% in 2018 to $7.72 billion. Australia and Vietnam officially upgraded their relationship to a \"Strategic Partnership\" during a visit to Australia by Vietnamese Prime Minister Nguyen Xuan Phuc in March 2018 and Australian naval ships visited Cam Ranh Bay in May 2019 as part of increasing naval cooperation between the two nations. This was followed by a visit by Australian Prime Minister Scott Morrison to Vietnam in August 2019. During the official visit, Morrison and Prime Minister Nguyen Xuan Phuc reportedly discussed rising tensions in the South China Sea. At their joint news conference, Phuc stated, \"We are deeply concerned about the recent complicated developments in the East Sea (South China Sea) and agree to cooperate in maintaining peace, stability, security, safety and freedom of navigation and overflight.\""], "subsections": []}]}, {"section_title": "European Countries", "paragraphs": ["In recent years, some European countries, particularly France and the United Kingdom (UK), have deepened their strategic posture in the Indo-Pacific. Although both countries remain relatively modest powers in the region, a growing French and British presence can support U.S. interests. Through their strategic relations, arms sales, and military-to-military relationships, France and the UK have the ability to strengthen the defense capabilities of regional states and help shape the regional balance of power. In recent years, France and the UK are networking with like-minded Indo-Pacific nations to bolster regional stability and help preserve the norms of the international system. These efforts reinforce the United States' goal of maintaining regional stability by strengthening a collective deterrent to challenges to international security norms. Such challenges include China's construction and militarization of several artificial islands in the South China Sea, its increasingly aggressive behavior in asserting its maritime claims, and the extension of PLA Navy patrols into the Indian Ocean. Additionally, some European countries have dispatched naval vessels to the East China Sea to help enforce United Nations Security Council resolutions against North Korea, providing opportunities for cooperation with the United States and other U.S. partners on other issues, such as the South China Sea. "], "subsections": [{"section_title": "France", "paragraphs": ["France has extensive interests in the Indo-Pacific region. These include 1.6 million French citizens living in French Indo-Pacific territories and an extensive exclusive economic zone (EEZ) of 9 million square kilometers derived from those territories. France has regional military installations in its territories as well as in Djibouti and the UAE and reportedly sends its warships into the South China Sea. In total, about 7,000 French military personnel are deployed to five military commands in the region. France is part of the FRANZ Arrangement with Australia and New Zealand and is a member of the Quadrilateral Defense Coordination Group with Australia, New Zealand, and the United States.", "The French Territory of New Caledonia, which voted to remain part of France in a November 4, 2018, referendum, has a population of approximately 270,000 and 25% of the world's nickel reserves. In the lead-up to the referendum, French President Emmanuel Macron stated \"in this part of the globe China is building its hegemony \u00e2\u0080\u00a6 we have to work with China \u00e2\u0080\u00a6 but if don't organize ourselves, it will soon be a hegemony which will reduce our liberties, our opportunities which we will suffer.\" Macron reportedly is planning to organize a meeting of Pacific island nations in 2020.", "Although France and the United Kingdom continue to be the European countries with the most far-reaching presence in the Indo-Pacific, some analysts point to several factors that might limit the French government's ability to realize its growing ambitions in the region. These include a crowded strategic environment in which other countries are increasingly vying for regional influence; a domestic climate of weak economic growth and budgetary pressures on defense forces that are carrying out prolonged military operations in Africa and the Middle East, as well as counter-terrorism operations in mainland France; and a continued desire to maintain sound economic and diplomatic relations with China."], "subsections": [{"section_title": "Emerging Strategic Relationships", "paragraphs": ["France has long been engaged in the Indo-Pacific region, but its defense activities have deepened in recent years. It is maintaining existing ties with its territories in the South Pacific and the Indian Ocean while developing strategic relations with key regional states including India, Australia, Japan, and Vietnam. ", "A number of factors are contributing to France's growing ambitions in the region, including concerns about China's growing influence. The French government's July 2019 defense strategy for the Indo-Pacific identifies the following strategic dynamics characterizing the current geopolitical landscape in the region:", "The Structuring effect of the China-U.S. competition, which causes new alignments and indirect consequences;The decline of multilateralism, which results from diverging interests, challenge to its principles and promotion of alternative frameworks;The shrinking of the geostrategic space and the spillover effects of local crises to the whole region.", "In response to these dynamics, the French government aims to reaffirm its strategic autonomy, the importance of its alliances, and its commitment to multilateralism. The government's stated strategic priorities in the region are:", "Defend and ensure the integrity of [France's] sovereignty, the protection of [French] nationals, territories and EEZ;Contribute to the security of regional environments through military and security cooperation;Maintain free and open access to the commons, in cooperation with partners, in a context of global strategic competition and challenging military environments;Assist in maintaining strategic stability and balances through a comprehensive and multilateral action."], "subsections": [{"section_title": "India", "paragraphs": ["France and India expanded their strategic partnership during Macron's March 2018 visit to India. India and France have agreed to hold biannual summits, signed an Agreement Regarding the Provision of Reciprocal Logistics Support, and \"agreed to deepen and strengthen the bilateral ties based on shared principles and values of democracy, freedom, rule of law and respect for human rights.\" Among other agreements, the two governments issued a Joint Strategic Vision of India-France Cooperation in the Indian Ocean Region which states, \"France and India have shared concerns with regard to the emerging challenges in the Indian Ocean Region.\" India signed a deal with France to purchase 36 Dassault Rafale multi-role fighter aircraft in 2016 for an estimated $8.7 billion. France and India also hold the annual Varuna naval exercise."], "subsections": []}, {"section_title": "Australia", "paragraphs": ["France is also developing its bilateral strategic and defense relationships with Australia, Japan, and Vietnam. While visiting Australia in May 2018, Macron stated that he wanted to create a \"strong Indo-Pacific axis to build on our economic interests as well as our security interests.\" Several agreements were signed during Macron's visit to Australia, and Australia and France agreed to work together on cyberterrorism and defense. French company DCNS was previously awarded an estimated $36.3 billion contract to build 12 submarines for Australia. Australia and France held their inaugural Defense Ministers meeting in September 2018. "], "subsections": []}, {"section_title": "Other", "paragraphs": ["French President Macron and Japanese Prime Minister Abe agreed to increase their cooperation to promote stability in the Indo-Pacific during Abe's visit to France in October 2018. France and its former colony Vietnam signed a Defense Cooperation Pact in 2009, and upgraded relations to a Strategic Partnership in 2013. A detachment of French aircraft visited Vietnam in August 2018 after taking part in exercise Pitch Black in Australia. "], "subsections": []}]}]}, {"section_title": "The United Kingdom", "paragraphs": ["The UK also appears to be shifting its external focus to place relatively more emphasis on the Indo-Pacific. The UK's pending withdrawal from the European Union (\"Brexit\") may drive it to seek expanded trade relations in the Indo-Pacific region. Speaking to the Shangri La Dialogue in Singapore in 2018, then-UK Secretary of State for Defence Gavin Williamson stated:", "Standing united with allies is the most effective way to counter the intensifying threats we face from countries that don't respect international rules. Together with our friends and partners we will work on a more strategic and multinational approach to the Indian Ocean region\u00e2\u0080\u0094focusing on security, stability and environmental sustainability to protect our shared prosperity.", "In 2018, three Royal Navy ships were deployed to the Indo-Pacific region and in April 2018, the UK opened a new naval support facility in Bahrain that will likely be capable of supporting the new aircraft carriers HMS Queen Elizabeth and HMS Prince of Wales . It is reported that HMS Queen Elizabeth could be deployed to the Pacific soon after entering active service in 2020. In August 2018, the HMS Albion sailed near the disputed Paracel Islands\u00e2\u0080\u0094waters that China considers its territorial seas but which are also claimed by others in a sovereignty dispute. A Royal Navy spokesman stated that \"HMS Albion exercised her rights for freedom of navigation in full compliance with international law and norms.\" China strongly protested the operation, describing it as a provocation. "], "subsections": [{"section_title": "Emerging Strategic Partnerships", "paragraphs": ["The UK has Commonwealth ties to numerous states across the Indo-Pacific littoral. UK forces participate in annual exercises of the Five Power Defence Arrangement (FPDA), a regional security group of Australia, Malaysia, New Zealand, Singapore, and the UK that was established in 1971. The UK also has a battalion of Gurkha infantry based in Brunei. The UK opened new High Commissions in Vanuatu, Tonga, and Samoa in 2019, and signed a new Defence Cooperation Memorandum of Understanding with Singapore on the sideline of the 2018 Shangri-La Dialogue. In December 2018, then-Defence Secretary Gavin Williamson generated headlines with an interview in which he stated the UK would seek new military bases in Southeast Asia; observers speculated that Brunei and Singapore would be the most likely locations. In 2013, Australia and the UK signed a new Defence and Security Cooperation Treaty that provides an enhanced framework for bilateral defense cooperation. The treaty builds on longstanding defense cooperation through the FPDA and intelligence cooperation through the Five Eyes group that also includes Canada, New Zealand, and the United States. Australia has also signed an agreement with UK defense contractor BAE Systems to purchase nine new Type 26 frigates in a deal worth an estimated $25 billion. ", "In August 2017, the UK and Japan agreed on a Joint Declaration on Security Cooperation pledging to enhance the two countries' global security partnership. The two nations also hold regular Foreign and Defense Ministerial Meetings. Then-British Foreign Secretary Jeremy Hunt met with Japanese Foreign Minister Taro Kono in Tokyo in September 2018 and Kono welcomed the further presence of the UK in the Indo-Pacific region. In September 2018, the HMS Argyll and Japan's largest warship, the Kaga helicopter carrier, held exercises in the Indian Ocean and in October 2018, the UK and Japan held a joint army exercise in central Japan. ", "Alongside indications of the UK's increasing focus on the region, observers also note that resource constraints and competing priorities could limit the degree to which the UK reengages with the Indo-Pacific. Bilateral cooperation, such as the participation of UK forces in France's 2018 Jeanne d'Arc naval operation in the Asia-Pacific, could potentially develop into a platform whereby other European countries might become more engaged. At the same time, regional states may view a more engaged Europe as a potential alternative to the U.S. as they hedge against a rising China and feel uncertainty U.S. leadership in the region."], "subsections": []}]}]}, {"section_title": "ASEAN and Member States", "paragraphs": ["The 10 members of the Association of Southeast Asian Nations (ASEAN), Southeast Asia's primary multilateral grouping, see a range of challenges resulting from the region's evolving strategic dynamics. Many Southeast Asian observers are unsettled by the prospect of extended strategic and economic rivalry between the United States in China, and the effect it would have on stability and economic growth in the region. New formulations of an Indo-Pacific region have raised concern for some in ASEAN, as they could lead to new diplomatic and security architectures that may weaken ASEAN's role in regional discussions or may not include all ASEAN's members. ", "ASEAN as a grouping is constrained by its members' widely diverging views of their strategic and economic interests, and by the group's commitment to decision-making via consensus. However, ASEAN's individual members have responded to new regional dynamics in various ways. Many have expanded defense spending to deepen their own capabilities and hedge against uncertainties including those caused by China's rise. Some, particularly Indonesia, have rhetorically adopted Indo-Pacific visions of the region, but these have not markedly changed substantive strategic postures. ", "In July 2019, ASEAN's leaders agreed to a five-page statement called the ASEAN Outlook on the Indo-Pacific. Some observers noted that ASEAN's statement was likely driven by other \"Indo-Pacific\" plans from the United States, Japan, and India, and by the group's desire not to be sidelined in the development of new ideas of Asian regionalism. ", "ASEAN has long seen itself at the center of Asia's multilateral diplomacy\u00e2\u0080\u0094a concept the group's members refer to as \"ASEAN centrality.\" Founded in part as a forum for dialogue that would prevent intra-regional conflict and help protect member states from great power influence, it has not traditionally taken a major security role, but rather has seen itself as a diplomatic hub that convenes other powers to discuss security and economic issues. Over the past few decades, East Asia's regional institutions have almost all centered around ASEAN as a \"neutral\" convening power. ", "U.S. Administration officials have sought to reassure ASEAN of its continued importance in the Indo-Pacific formulation. \"ASEAN is literally at the center of the Indo-Pacific,\" Secretary of State Mike Pompeo said in July 2018, \"and it plays a central role in the Indo-Pacific vision that America is presenting.\"", "The Indo-Pacific Outlook statement sought to define a role for ASEAN in shaping Indo-Pacific diplomatic, security, and economic arrangements. It welcomed the linkage of the Asia-Pacific and Indian Ocean regions, and stated that \"it is in the interest of ASEAN to lead the shaping of their economic and security architecture\u00e2\u0080\u00a6. This outlook is not aimed at creating new mechanisms or replacing existing ones; rather it is an outlook intended to enhance ASEAN's community building process and to strengthen and give new momentum for existing ASEAN-led mechanisms.\" The statement did envision a role for ASEAN to \"develop, where appropriate, cooperation with other regional and sub-regional mechanisms in the Asia-Pacific and Indian Ocean regions on specific areas of common interests.\"", "The statement listed four areas of cooperation for the nations of the Indo-Pacific: maritime cooperation; efforts to improve connectivity; efforts to meet the 2030 U.N. Agenda for Sustainable Development; and economic cooperation in areas such as trade facilitation, the digital economy, small and medium sized enterprises, and addressing climate change and disaster risk reduction and management.", "ASEAN convenes and administratively supports a number of regional forums that include other governments, including the United States, such as the 27-member ASEAN Regional Forum (ARF), the 16 member East Asia Summit (EAS), numerous \"ASEAN+1\" dialogues between the group and its partners, as well as several other multilateral groupings. While many of the region's pressing security challenges, such as North Korea's nuclear proliferation, China-Taiwan tensions, or India-Pakistan rivalries, do not directly involve ASEAN's members, they argue that their ability to convene other powers in diplomacy is a core ASEAN role.", "That said, ASEAN has moved into a more active security role in recent years. The ASEAN Defense Ministers Meeting-Plus (ADMM+) is a regional security forum that includes ASEAN's 10 members and the eight ASEAN partners\u00e2\u0080\u0094the United States, China, Japan, South Korea, Australia, New Zealand, India, and Russia. With U.S. backing, it has become more active in recent years, hosting multilateral dialogues and exercises in areas such as humanitarian assistance/disaster relief and maritime rescue. In 2018, ASEAN conducted a multilateral naval exercise with China, and in September 2019, it did so with the United States\u00e2\u0080\u0094moves that analysts called a strong signal of the group's desire to avoid working too closely to one military or the other.", "ASEAN's members have long sought to navigate changes in the regional security environment in ways that protect their own individual and collective interests, while avoiding being either dominated by external powers or drawn into external conflicts. In recent years, many observers believe China has sought to drive wedges between ASEAN's members based on their diverse interests\u00e2\u0080\u0094particularly the extensive investment by Chinese firms in smaller countries such as Cambodia and Laos\u00e2\u0080\u0094and has had some success due to the group's insistence in governing by consensus. Since 2013, ASEAN has been engaged in negotiations with China to develop a Code of Conduct for parties in the South China Sea, but it has generally rejected suggestions such as Beijing's proposal that parties pledge not to conduct military exercises with \"outside\" countries."], "subsections": [{"section_title": "Indonesia", "paragraphs": ["Indonesia is a strong proponent of Indo-Pacific conceptions of the region, considering itself to be at the geographic midpoint linking the Pacific and Indian Ocean regions. Most observers saw the ASEAN Outlook on the Indo-Pacific statement as an initiative driven most strongly by Indonesia. However, Indonesia's role as a founder and leader of the Non-Aligned Movement continues to shape its foreign policy, and Jakarta has been hestitant to deepen security partnerships too far with either the United States or China. That reluctance makes Indonesia a relatively passive actor in the broad Indo-Pacific security architecture.", "U.S.-Indonesia security cooperation has deepened over the past decade as the Indonesian government sought to expand the country's external defense capabilities, with the two militaries conducting more than 240 military engagements annually, including efforts to intensify maritime security cooperation and combat terrorism. In 2015, President Joko Widodo's government announced plans to increase military spending to 1.5% of GDP from recent levels below 1%, focusing particularly on maritime capabilities, although spending has not increased at such a pace. Indonesia, however, is increasingly involved in rising South China Sea tensions. ", "Indonesia has long had a delicate relationship with China, marked by deep economic interdependence (China is a major consumer of Indonesian natural resources) but considerable strategic mistrust. Periodic violence directed at the Indonesian-Chinese community throughout Indonesian history casts further complications on Jakarta-Beijing relations. A 2018 Pew survey found that 53% of Indonesians had a positive view of China, down from 66% in 2014 and 73% in 2005. (The same poll, conducted in spring 2018, found that 42% of respondents had a positive view of the United States, a number that has dropped from 63% in 2009, and also that 22% of Indonesians believe it would be better for the world if China was the world's leading power, while 43% said it would be better if the United States occupied that role.)"], "subsections": []}, {"section_title": "Singapore", "paragraphs": ["Singapore is one of the United States' closest security partners in Southeast Asia. Its security posture is guided by its desire to serve as a useful balancer and intermediary between major powers in the region, and its efforts to avoid and hedge against anything that would force it to \"choose\" between the United States and China.", "In recent years Singapore has been an enthusiastic participant in new defense partnerships, but it has also been relatively skeptical, at least rhetorically, of the Trump Administration's Free and Open Indo-Pacific concept. While it has urged continued U.S. engagement in Asia, it has also been careful to warn that anti-China rhetoric or efforts to \"contain\" China's rise would be counterproductive. In a May 2019 speech in Washington DC, Singapore Foreign Minister Vivian Balakrishnan said \"viewing China purely as an adversary to be contained will not work in the long term, given the entire spectrum of issues that will require cooperation between the U.S. and China.\" ", "In 2019, Singapore was reportedly the last nation to agree to ASEAN's Indo-Pacific Outlook statement, viewing it as an unproductive move that did not address broader security issues but which would inevitably raise tensions with China, and prospectively the United States. In questions about Singapore's view of the Trump Administration's FOIP concept, Singapore Foreign Minister Vivian Balakrishnan said in May 2018: \"Frankly right now, the so-called free and open Indo-Pacific has not yet fleshed out sufficient level of resolution to answer these questions that I've posed.... We never sign on to anything unless we know exactly what it means.\" ", "That said, Singapore has worked to develop new security arrangements. Singapore maintains a close security partnership with Australia: The two nations signed an agreement in 2016 under which Singapore would fund an expansion of military training facilities in Australia and would gain expanded training access in Australia, as well as enhanced intelligence sharing in areas such as counter-terrorism. In September 2019, Singapore held the first trilateral naval exercise with India and Thailand in the Andaman Sea, and agreed in November 2019 to make this an annual exercise. Singapore is also negotiating with India on an agreement that could allow the Singapore armed forces to use Indian facilities for live-fire drills\u00e2\u0080\u0094an important consideration for Singapore, given its small size.", "Singapore retains strong security ties with the United States, formalized in the 2005 \"Strategic Framework Agreement.\" The agreement builds on the U.S. strategy of \"places-not-bases\"\u00e2\u0080\u0094a concept that aims to provide the U.S. military with access to foreign facilities on a largely rotational basis, thereby avoiding sensitive sovereignty issues. The agreement allows the United States to operate resupply vessels from Singapore and to use a naval base, a ship repair facility, and an airfield on the island-state. The U.S. Navy also maintains a logistical command unit\u00e2\u0080\u0094Commander, Logistics Group Western Pacific\u00e2\u0080\u0094in Singapore that serves to coordinate warship deployment and logistics in the region. ", "Singapore is a substantial market for U.S. military goods, and the United States has authorized the export of over $37.6 billion in defense articles to Singapore since 2014. In particular Singapore has purchased aircraft, parts and components, and military electronics, and has indicated interest in procuring four F-35 jets. Over 1,000 Singapore military personnel are assigned to U.S. military bases, where they participate in training, exercises, and professional military education. Singapore has operated advanced fighter jet detachments for training in the continental United States for the past 26 years.", "Singapore adheres to a one-China policy, but has an extensive relationship with Taiwan, including a security agreement under which Singapore troops train in Taiwan\u00e2\u0080\u0094an agreement that Beijing has occasionally asked it to terminate. Generally, Singapore has managed to avoid damaging its strong relations with Beijing. Of late, Singapore has worked to smooth its ties with China\u00e2\u0080\u0094perhaps at least partly as a hedge against possible U.S. disengagement from the region. That being said, Singapore has judiciously pushed back against Chinese behavior it sees as problematic; in 2016, Singapore supported an international tribunal's ruling against China's assertions of sovereignty over extensive waters in the South China Sea. "], "subsections": []}, {"section_title": "Vietnam", "paragraphs": ["Since the establishment of diplomatic relations between the United States and the Socialist Republic of Vietnam in 1995, the two countries' often overlapping strategic and economic interests have led them to incrementally expand relations across a wide spectrum of issues. For the first decade and a half of this period, cooperation between the two countries' militaries was embryonic, largely due to Vietnam's reluctance to advance relations more rapidly. By the late 2000s, however, China's actions in the South China Sea appear to have caused the Vietnamese government to take a number of steps to increase their freedom of action. First, Vietnam began trying to increase its defense capabilities, particularly in the maritime sphere. In the words of two analysts, these efforts \"for the first time\" have given Vietnam \"the ability to project power and defend maritime interests.\" From 2009 to 2019, Vietnam increased its military budget by over 80% in dollar terms, to around $5.3 billion. In 2009, Vietnam signed contracts to purchase billions of dollars of new military equipment from Russia, its main weapons supplier, including six Kilo-class submarines. It has also begun engaging in more maritime military diplomacy with its neighbors, and for the first time has begun dispatching peacekeepers to United Nations missions.", "Second, as Vietnamese leaders perceived the strategic environment as continuing to deteriorate against them during the current decade, they deepened their cooperation with potential balancers such as the United States, Japan, and India. With the United States, Vietnam is one of the recipient countries in the Defense Department's $425 million, five-year Southeast Asia Maritime Security Initiative, first authorized in the FY2016 National Defense Authorization Act ( P.L. 114-92 ). In December 2013, the United States announced it would provide Vietnam with $18 million in military assistance, including new coast guard patrol boats, to enhance Vietnam's maritime security capacity, assistance that the Trump Administration has expanded. The United States also has transferred to Vietnam a decommissioned U.S. Coast Guard Hamilton-class cutter, under the Excess Defense Articles program. The cutter is Vietnam's largest coast guard ship. The United States in recent years also has provided Vietnam with Scan Eagle Unmanned Aerial Vehicles (UAVs) and T-6 trainer aircraft. In a largely symbolic move, in March 2018, the USS Carl Vinson conducted a four-day visit to Da Nang, the first U.S. aircraft carrier to visit Vietnam since the Vietnam War.", "Vietnam's willingness to openly cooperate with the United States' Indo-Pacific strategy is limited by a number of factors, however. Since the late 1980s, Vietnam's leaders explicitly have pursued what they describe as an \"omnidirectional\" foreign policy by cultivating as many ties with other countries as possible, without becoming overly dependent on any one country or group of countries. Some have referred to this approach as a \"clumping bamboo\" strategy, behaving like bamboo that will easily fall when standing alone but will remain standing strong when growing in clumps. In practice, this has meant Vietnam often pairs its outreach to the United States and other powers like Japan and India with similar initiatives with China. Despite increased rivalry with Beijing, Vietnam regards its relationship with China as its most important bilateral relationship, and Hanoi usually does not undertake large-scale diplomatic or military moves without first calculating Beijing's likely reaction. The two countries have Communist Party-led political systems, providing a party-to-party channel for conducting relations, and contributing to often similar official world-views. China also is Vietnam's largest bilateral trading partner.", "One corollary to Vietnam's omnidirectional approach is its official \"Three Nos\" defense policy: no military alliances, no aligning with one country against another, and no foreign military bases on Vietnamese soil to carry out activities against other countries. This approach, which barring a major shock likely will continue into the medium term, is likely to limit Vietnam's willingness to explicitly become a full partner in many of the elements of the Trump Administration's Indo-Pacific strategy, particularly if they are presented as explicitly aimed against China. ", "That said, Vietnam has demonstrated in the past that it is willing to stretch the limits of its \"Three Nos\" policy. This has been particularly true in areas of defense cooperation such as military training and arms sales that can be undertaken quietly and/or portrayed as not aimed at one specific country. Many Vietnam watchers therefore expect that in the absence of a major shock\u00e2\u0080\u0094such as a U.S.-Vietnam trade war or open Sino-Vietnam military conflict\u00e2\u0080\u0094Vietnam will continue its approach of quietly and incrementally expanding its cooperation with the United States and its partners. "], "subsections": []}]}, {"section_title": "Questions for Congress", "paragraphs": ["Based on the above, it appears that a key development in the strategic landscape of the Indo-Pacific is that U.S. allies and partners are developing closer strategic relations across the region as a way of hedging against the rise of China and the potential that the United States will either be less willing or less able to be strategically engaged. Given this, a key question for Congress is how the United States should respond to this emerging dynamic. Do these emerging intra-Asian strategic relationships support U.S. strategic objectives across the Indo-Pacific and if so, to what extent, and in what ways, should to the United States support them? ", "Some analysts question whether the Trump Administration's skepticism of allies is affecting, or may affect, U.S. ability to work with Japan, South Korea, and Australia in developing new security arrangements. In particular, Trump Administration requests for large increases in allies' monetary contributions to basing cost has raised significant concerns about what future alliance arrangements may look like. Similarly, some question whether the Administration's lack of interest in multilateral trade agreements such as the TPP may affect perceptions of regional allies and partners about broader U.S. commitment to the region. These raise questions Congress may consider, including: What are the United States' key interests in the region and have they changed over time? What role does cooperation with U.S. allies play in ensuring U.S. interests are promoted as the region's new security architecture develops? What is the proper mix of diplomatic, economic, defense, foreign assistance, and soft power that should be used in such an effort? ", "Some political developments in the region may also play a role in how Congress addresses these questions. In the Philippines and Thailand, both U.S. treaty allies, political developments have led to what many observers describe as a decline in democratic institutions. In India, a partner and important participant in Indo-Pacific arrangements, many are concerned about increasing intolerance and human rights abused against religious minorities. These developments raise questions such as: What role should Congress play in helping the Trump Administration, and future administrations, articulate U.S. strategy to the region and to what extent should American values, as well as U.S. interests, inform such an approach? ", "Congress has consistently played an important role in guiding and helping set U.S. policy in Asia. As noted above, the Asia Reassurance Initiative Act of 2018 (ARIA; P.L. 115-409 ), states: \"Without strong leadership from the United States, the international system, fundamentally rooted in the rule of law, may wither.... It is imperative that the United States continue to play a leading role in the Indo-Pacific.\" Congress may assess how growing military spending and new security arrangements affect that goal."], "subsections": []}]}}
{"id": "R45764", "title": "Maintaining Electric Reliability with Wind and Solar Sources: Background and Issues for Congress", "released_date": "2019-06-10T00:00:00", "summary": ["The share of wind and solar power in the U.S. electricity mix grew from 1% in 2008 to 8% in 2018. Wind and solar are variable renewable energy (VRE) sources. Unlike conventional sources, weather variability creates uncertainty about the availability of VRE sources. This uncertainty could potentially result in a lack of reliability.", "Some Members of Congress have expressed concerns about the reliability of the electric power system given recent growth in generation from wind and solar sources and projections that growth will continue. According to official metrics, electric reliability was generally stable or improving over the 2013-2017 period. In other words, generation from wind and solar sources does not appear to be causing electric reliability issues at the national level over this period. Questions remain, however, about maintaining reliability if generation from wind and solar should increase above current projections, as some Members of Congress have supported. Entities in the electric power sector and their regulators are evaluating changes to their approaches to reliability to prepare for this possibility. Congress might seek clarification on whether new or modified approaches are required.", "Under the current regulatory framework, the federal government oversees reliability for the generation and transmission systems of the electric power sector. These components comprise the bulk power system and include large-scale wind and solar sources. The Energy Policy Act of 2005 (EPACT05; P.L. 109-58 ) authorized the Federal Energy Regulatory Commission (FERC) and the North American Electric Reliability Corporation (NERC) to develop and enforce mandatory reliability standards for the bulk power system. Small-scale wind and solar sources, such as rooftop solar photovoltaic (PV) panels, are connected to the distribution system which is localized and under state jurisdiction. Federal mandatory reliability standards do not apply to the distribution system.", "The colloquial definition of reliability is \"having power when it is needed,\" but regulators and operators of power system components require a more precise statement of objectives and metrics. FERC and NERC have developed numerous technical standards to address reliability. These standards apply over the range of timescales over which reliability is measured, from milliseconds to years. FERC has approved approximately 100 reliability standards to date, and new standards are developed as needed to respond to changing conditions, including increasing generation from wind and solar sources. Multiple entities spanning multiple jurisdictions work together to maintain electric reliability.", "For economic reasons, wind and solar sources tend to be utilized to the maximum extent possible. When their availability changes, which can happen quickly, other sources must quickly respond to maintain reliability. Typically, other sources respond by increasing or decreasing their output, an operation known as balancing. Multiple types of electricity sources are used to balance wind and solar, including some fossil fuel-fired generators, some nuclear generators, other wind and solar sources (provided sufficient transmission availability), energy storage, and demand response. Each of these has benefits and limitations. Some sources and system operations that currently support balancing have received federal financial support in the past, such as tax credits, grants to states or other entities, and Department of Energy research programs. Congress might consider continuing or expanding such support, if lawmakers believed current activities affecting reliability were insufficient.", "Beyond developing and enforcing reliability standards, other federal government activities affect electric reliability. For example, FERC's regulation of interstate electricity transmission can be a key determinant of how effectively different electricity sources can meet demand. FERC's regulation of the wholesale electricity markets that operate in some regions of the country may also affect reliability, because market rules can influence which individual generators are used for system balancing. Market prices directly affect project revenues, influencing the kinds of sources that are developed. Additionally, some projects and programs Congress funds support reliability by enabling technology development and providing financial support for projects that support reliability."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["Economic factors, new technologies, environmental concerns and associated regulatory policies, and other developments are changing the energy sources used to generate electricity in the United States. One notable change is increased generation from variable renewable energy (VRE) sources such as wind and solar. According to the U.S. Energy Information Administration (EIA), combined generation from wind and solar sources increased from 1% of total electricity generation in 2008 to 9% of total electricity generation in 2018. These sources have weather-dependent availability, meaning that changing weather patterns can change available electricity supply from those sources. In contrast, conventional sources for electricity generation, such as coal, natural gas, or nuclear energy, are usually available under normal weather conditions. Power system operators have adjusted existing reliability standards and planning practices to accommodate weather-dependent wind and solar sources. Further adjustments are being discussed as generation from wind and solar sources continue to grow. ", "Congress required the setting and enforcement of electric reliability standards in the Energy Policy Act of 2005 (EPACT05; P.L. 109-58 ). These standards are developed by the North American Electric Reliability Corporation (NERC) and approved by the Federal Energy Regulatory Commission (FERC) in the United States. These mandatory standards apply to the bulk power system, which is comprised mostly of large-scale generators and electricity transmission systems. Small-scale generators (e.g., rooftop solar electricity generation), publicly owned utilities, and local electricity distribution systems are generally under the jurisdiction of state public utility regulatory commissions (PUCs).", "To date, generation from wind and solar sources does not appear to be causing electric reliability issues at the national level. NERC's 2018 annual report on reliability showed that, of the 13 metrics it uses to assess reliability, 9 were stable or improving over the 2013-2017 period and 4 showed trends that were, at least partly, inconclusive. Of the four metrics with inconclusive trends, three improved over this period for a subset of bulk power system components. Data from NERC also indicate that reliability performance is currently stable in regions such as the Midwest and California where the shares of generation from wind and solar sources are above the national average. Questions remain about how higher levels of generation from wind and solar sources might impact electric reliability moving forward. ", "This report provides background on reliability planning in the United States with an emphasis on the effects of daily and seasonal variability in wind and solar sources on the bulk power system. Members of Congress might consider how reliability could be impacted if generation from wind and solar sources increases, as many analysts expect. Other reliability concerns, such as cyber and physical security, small-scale generators, and local distribution networks, may be of interest to Congress but are not discussed at length in this report."], "subsections": []}, {"section_title": "Electric Power Sector Overview", "paragraphs": ["As shown in Figure 1 the electric power sector consists primarily of three systems. The generation system consists of power plants that generate electricity. The transmission system consists of high voltage transmission lines that move power across long distances. The distribution systems make final delivery of electricity to homes and businesses. This report will refer to the combined generation and transmission systems as the bulk power system, following the definition Congress established in EPACT05: ", "The term \"bulk-power system\" means\u00e2\u0080\u0094(a) facilities and control systems necessary for operating an interconnected electric energy transmission network (or any portion thereof); and", "(b) electric energy from generation facilities needed to maintain transmission system reliability.", "The term does not include facilities used in the local distribution of electric energy.", "Notably, the discussion in this report generally excludes distributed energy resources such as rooftop solar electricity generation. These resources might pose separate reliability challenges that Congress might choose to consider.", "Ownership structures for bulk power system components vary across the country. In some regions, shown in Figure 2 , competitive markets exist for wholesale electric power, and regional transmission organizations (RTOs) and independent system operators (ISOs) manage the generation and transmission components of the power system. In RTO regions, electricity generators compete to sell power to distribution utilities. The RTO manages an auction process to select the sources for generation that distribution utilities resell to end-use customers. The RTO is also responsible for managing the transmission system and overseeing reliability within its boundaries. In RTO regions, market signals primarily determine investment decisions. Some RTOs operate separate auction processes specifically for essential reliability services. According to FERC, two-thirds of U.S. electricity demand comes from RTO regions. ", "In non-RTO regions, vertically integrated electric utilities are largely responsible for power generation, transmission, and distribution of electricity to end-use customers. These utilities are regulated as natural monopolies and, unlike utilities in RTO regions, do not face competition for generation and transmission services. These utilities may also take responsibility for some aspects of reliability as discussed in the Appendix . State regulators generally oversee these utility operations and are responsible for authorizing new investments, including those related to reliability. ", "Even in RTO regions, municipal utilities and rural electric cooperatives may own generation and transmission system components and oversee their operation. These systems and operation are generally outside of federal and state regulatory jurisdiction."], "subsections": []}, {"section_title": "What Is Electric Reliability?", "paragraphs": ["A colloquial definition of electric reliability is \"having power when it is needed.\" Operators of bulk power system components, though, require specific and highly technical definitions for reliability. For purposes of regulation, these definitions are provided in the form of NERC reliability standards. NERC develops individual standards for each set of power system components, which may include separate standards covering different reliability timescales for each set of components. As NERC defines \"reliability standard,\" it", "includes requirements for the operation of existing Bulk-Power System facilities, including cybersecurity protection, and the design of planned additions or modifications to such facilities to the extent necessary to provide for Reliable Operation of the Bulk-Power System, but the term does not include any requirement to enlarge such facilities or to construct new transmission capacity or generation capacity.", "When all bulk power system components meet reliability standards, NERC expects the vast majority of individuals to have the full amount of electricity they desire. NERC reliability standards do not apply to local electricity distribution system components and operations (see discussion in text box, \"Distribution System Reliability\"), so localized outages could still occur when reliability standards are met. An analysis found that from 2008 to 2014, upwards of 90% of power outages originated in local distribution systems. This measure includes major events (e.g., hurricanes), but may not capture the full scope or severity of large-scale outages.", "NERC's reliability standards are meant to ensure an Adequate Level of Reliability (ALR) for the bulk power system during normal operating conditions and following localized disturbances such as lightning strikes. For economic reasons, some risk of occasional power loss is accepted in reliability planning. A common goal is to limit outages to no more than 1 day every 10 years under normal operating conditions. ", "Achieving ALR is not the same goal as preventing all brownouts and blackouts. Bulk power system outages could still occur when reliability standards are fully met. These outages might follow a major event such as a hurricane affecting large areas of the bulk power system. ", "Generally, factors that increase uncertainty reduce reliability, and factors that reduce uncertainty increase reliability. Wind and solar are types of variable renewable energy sources of electricity, and weather is a key source of uncertainty for forecasts of generation from these sources. In contrast, conventional sources such as coal and nuclear have long-lasting, on-site fuel supplies that reduce the uncertainty about their availability. This difference has raised questions about how to integrate large amounts of VRE sources into the existing bulk power system, since it was not originally designed to accommodate large amounts of weather-dependent sources of electricity. ", " Figure 3 shows typical patterns for electricity generation for wind and solar sources in the United States. Wind generation tends to peak overnight and during winter months. Solar generation, on the other hand, tends to be highest during the middle of the day and during the summer. Though these typical patterns are well established for most of the United States, actual generation from wind and solar sources at any particular moment will depend upon specific weather conditions."], "subsections": []}, {"section_title": "Changing Electricity Generation Profile", "paragraphs": ["The electric power sector is increasing its use of sources associated with more uncertainty in availability. According to the U.S. Energy Information Administration, combined generation from wind and utility-scale solar sources increased from 1% of total electricity generation in 2008 to 8% of total electricity generation in 2018. Of the generation in 2018 from wind and utility-scale solar sources, 80% came from wind. Conventional sources such as coal, natural gas, and nuclear comprised a large majority of generation over this time period. The annual share of generation from different sources from 2008 to 2018 in shown in Figure 4 .", "National-level data are not indicative of how generation from wind and solar sources varies across the country. Similarly, annual data do not show how electricity generation varies throughout the day or during different seasons. For example, during brief periods in some regions, wind and solar sources have provided a majority of the energy for electricity generation. Some examples are ", "Generation from wind sources supplied 56% of electricity demand in ERCOT, the RTO covering most of Texas, at 3:10 am on January 19, 2019. Generation from solar sources supplied 59% of electricity demand in CAISO, the RTO covering most of California, at 2:45 pm on March 16, 2019. Generation from wind supplied 67.3% of electricity demand in SPP, the RTO covering many central states, at 1:25 am on April 27, 2019.", "These events all set records for maximum share of generation from renewable sources, and the bulk power system maintained reliability during them. Some advocates for increased use of wind and solar sources have pointed to events like these as evidence that VRE sources can be used to an even greater degree without impacting reliability. ", "Extrapolating these events to scenarios of correspondingly high national levels of generation from wind and solar sources, however, is complicated by several factors. First, these events were all short lived, typically five minutes or less. Further, these events all occurred when electricity demand was relatively low, namely weekend days during cool months. During times of the year when electricity demand is high, such as the summer cooling season, the share of electricity generation from renewable sources is lower. For example, SPP has reported that during its peak demand hours in 2016, wind supplied 11% of generation while conventional sources such as coal (47%) and natural gas (33%) supplied the majority of electricity. The seasonality of VRE availability also likely contributed to these record-setting events, especially for wind, which tends to have maximum generation during winter and spring months. "], "subsections": []}, {"section_title": "Balancing Variable Renewable Energy", "paragraphs": ["Electricity is essentially generated as a just-in-time commodity, due to limited energy storage capacities. If electricity supply and demand differ by too much, system components could be damaged, leading to system instability or potential failure. The operations that keep electricity supply and demand within acceptable levels are known as balancing.", "Balancing involves increasing or decreasing output from generators according to system conditions over timescales of minutes to hours, and it is a critical aspect of maintaining reliability. Balancing authorities, discussed in the Appendix , issue orders to generators to change their output as needed to maintain reliability. Balancing authorities can be utilities, or RTOs can act as balancing authorities in the regions where they exist. The rules for selecting which generators must increase or decrease output typically reflect an approach known as security-constrained economic dispatch (SCED). Under SCED, system operators ensure that electricity is produced at the lowest overall cost while respecting any transmission or operational constraints. When generation from a low-cost source would jeopardize reliability, a higher-cost source is used. In other words, SCED has two goals: affordability and reliability.", "SCED favors sources with low operating costs, and wind and solar sources do not have to pay for fuel. As a result, wind and solar sources typically generate the maximum amount of electricity they can at any moment. Balancing typically involves quickly increasing or decreasing output from other sources in response to variable output from wind and solar sources. The capability to quickly change output is known as ramping, and electricity sources differ in their ramping capability. ", "System operators use a variety of electricity sources to balance generation from wind and solar sources. Some may be more commonly used in certain regions of the country, depending on local factors. Each has different benefits and limitations, some of which are summarized below. ", "Reciprocating internal combustion engines (RICE) have seen an increase in installed capacity since 2000, partly in response to higher levels of generation from wind and solar sources. These sources have high ramping capabilities and use mature technologies. They usually use natural gas or fuel oil as fuel, so they have associated fuel costs and environmental impacts. Steam turbines, usually fueled by coal or nuclear energy , have historically been operated at steady, high output levels, barring maintenance needs, because that is the most efficient and lowest cost operational mode for them. These sources are capable of ramping to some extent. This operational mode may provide revenue for certain sources located in regions of the country with low wholesale electricity prices. It might also result in higher costs for electricity from these sources, compared to when they are not ramped. Wind and solar sources located in one area can balance wind and solar sources in other areas, since it is rare to have cloudy skies or calm winds over broad regions of the country simultaneously. This could have the benefit of using sources with zero fuel costs and zero emissions for balancing; however, existing electricity transmission system constraints limit the extent to which this is possible. Energy storage can be used for balancing because it stores electricity during periods of high supply and then provides electricity when supply is low. Many experts also see storage as a way to address the daily variability shown in Figure 3 and thereby expand the utilization of installed wind and solar sources. Many energy storage types are expensive and not currently deployed in large amounts. Energy storage can be co-located with wind or solar generators, or it can be located at other sites in the power system or the distribution system. Demand response, sometimes called demand-side management, involves adjusting electricity demand in response to available supply. This is counter to how the power system has historically been operated, but has become more commonly used. Demand response includes programs in which electricity consumers voluntarily reduce their usage in exchange for financial compensation. Demand response can be a low-cost balancing option because it does not require electricity generation; however, it comes at a social cost because consumers do not use electricity at their preferred time.The electric power sector is working to improve the use of weather and power forecasting in system balancing. For example, MISO changed its wholesale electricity market rules in 2011 to create a Dispatchable Intermittent Resources program. This program allows wind sources to make use of their own generation forecasts and offer generation at five-minute intervals. Previously, offers had to be made on an hourly basis. This was creating inefficiencies in using wind sources since their output can vary over the course of an hour. Improved forecasting could result in increased use of low-cost wind and solar sources, but forecasting methodologies are still being optimized for this purpose.", "The above considerations apply to bulk power system balancing today. Technological or policy developments could alter how system balancing is conducted in the future. Additionally, if wind and solar sources provided even larger shares of overall generation, new benefits or limitations for each balancing source type could emerge."], "subsections": []}, {"section_title": "Federal Government Activities Affecting Reliability and Balancing", "paragraphs": ["Work at the federal level to address reliability needs associated with increased use of wind and solar sources has been underway for some time. For example, NERC created a task force in December 2007 to study the integration of VRE and identify gaps in reliability standards.", "The federal government undertakes actions in addition to the development and enforcement of reliability standards that affect electric reliability. FERC regulates interstate electricity transmission, which can be a key determinant of what sources are available to balance wind and solar. FERC also regulates wholesale electricity markets in most regions of the country. Market rules, including how SCED is implemented, can influence which individual generators are used for system balancing. Market prices can directly affect project revenues and influence investment decisions. Additionally, Congress funds projects and programs that support technology development and deployment, including for sources and operations that improve reliability.", "Some examples demonstrate the breadth of federal activities related to reliability. ", "In EPACT05, Congress created Section 219 of the Federal Power Act that directs FERC to establish financial incentives for certain electricity transmission investments. FERC's resulting rule became effective in 2006 and includes provisions allowing higher rates of return, accelerated depreciation, and full cost recovery, all for investments and activities that FERC approves on a case-by-case basis. Transmission investment has increased since the passage of EPACT05, although there may be many factors driving this investment. On March 21, 2019, FERC opened an inquiry on potential changes to its transmission incentive policy. In 2011, FERC issued a rule, Order No. 1000, revising requirements related to new transmission projects. Among other revisions, Order No. 1000 increased the weight given to achieving public policy requirements when FERC considers approval of transmission projects. An example of a public policy requirement might be a state requirement that a specified share of electricity sales come from renewable sources, a policy commonly known as a renewable portfolio standard. New transmission capacity is often needed to access and balance wind and solar sources. Several FERC orders demonstrate how market rules are changing in response to increased need for balancing and ramping. Order No. 745 allows demand response to earn compensation from wholesale electricity markets for providing energy services to balance the power system in day-ahead and real-time markets. Order No. 841 allows energy storage systems to earn compensation from wholesale electricity markets for providing any energy, capacity, and essential reliability services they are capable of providing. Implementation of Order No. 841 might lead to greater deployment of energy storage which could improve balancing. Various grant programs administered by the Department of Energy (DOE) have supported the development of new technologies that can balance wind and solar sources or support reliability in other ways. These include research and development into electricity generators; wind forecast models and methodology; power electronics for solar sources; and standards for interconnection into the bulk power system. DOE's Office of Energy Efficiency and Renewable Energy (EERE) has funded research meant to improve short-term weather forecasting specifically related to wind power forecasts in two Wind Forecast Improvement Projects. DOE reports that advances made during this research include improved observations of meteorological data and improved methodologies for using those data in wind forecasts. "], "subsections": []}, {"section_title": "Potential Issues for Congress", "paragraphs": ["Congress has held hearings related to the changes in the electricity generation profile of the country, and some Members raised concerns about reliability during these hearings. Members may continue to examine reliability issues moving forward, in light of projections that wind and solar will become an increasingly larger share of electricity generation. For example, EIA's projection of existing law and regulations shows wind and solar sources contributing 23% of electricity generation in 2050. Members may also choose to include reliability as part of any debate about policies to increase the generation from wind and solar sources. ", "Preparing for higher levels of generation from wind and solar might require new approaches to maintaining electric reliability. The existing regulatory framework can accommodate some changes since FERC and NERC have authority to initiate development of new reliability standards. For example, NERC has raised the issue of whether it should develop new reliability metrics in light of the increasing use of VRE for electricity generation.", "In addition to its capacity supply assessment, NERC's Reliability Assessment Subcommittee should lead the electric industry in developing a common approach and identify metrics to assess energy adequacy. As identified in this assessment, the changing resource mix can alter the energy and availability characteristics of the generation fleet. Additional analysis is needed to determine energy sufficiency, particularly during off-peak periods and where energy-limited resources are most prominent. ", "Congress could choose to provide guidance for FERC and NERC activities in this area. ", "Congress could also assess whether the existing regulatory framework is sufficient to maintain reliability if generation from wind and solar sources increase above current projections. One area of discussion is the siting and approval of transmission projects, particularly those that might result in enhanced availability of wind and solar sources for system balancing. Currently, the siting of electricity transmission facilities is largely left to the states. Section 1221 of EPACT05 directs FERC to issue permits for the construction or modification of transmission facilities in certain circumstances in areas designated by the Secretary of Energy as \"National Interest Electric Transmission Corridors.\" This authority was to be exercised only if the relevant state agency lacks the authority to permit the transmission facilities or has \"withheld approval for more than one year.\" Shortly after passage of EPACT05, DOE set out to designate the National Interest Electric Transmission Corridors and FERC set up a framework for permitting transmission facilities on those corridors. However, federal courts vacated both agencies' actions, and neither agency has taken any significant action pursuant to their Section 1221 authority since that time.", "As noted above, most power outages occur on local electricity distribution systems, and these are regulated by state or local governments. Congress could consider expanding federal activities affecting distribution system reliability. This might involve studies of the factors (e.g., weather, aging infrastructure, VRE) that result in power outages. Such activities might also include federal financial support for projects or practices that improve reliability of distribution systems or encouraging new operational regimes such as independent distribution system operators (see earlier discussion of this issue in text box, \"Distribution System Reliability\"). ", "Congress might also consider acting on the emerging and related issue of electric resilience. Some support for an enhanced federal role in electricity system resilience exists. For example, the National Academy recommends ", "Congress and the Department of Energy leadership should sustain and expand the substantive areas of research, development, and demonstration that are now being undertaken by the Department of Energy's Office of Electricity Delivery and Energy Reliability and Office of Energy Efficiency and Renewable Energy, with respect to grid modernization and systems integration, with the explicit intention of improving the resilience of the U.S. power grid.", "Many sources currently used to balance wind and solar have received federal financial support in the past, such as tax credits, grants to states or other entities, and DOE research programs. Congress might consider continuing or expanding this type of support if current activities affecting reliability were deemed insufficient."], "subsections": [{"section_title": "Appendix. Key Reliability Concepts for Policymakers", "paragraphs": ["Electric reliability encompasses short-term and long-term aspects as shown in Figure A-1 . System operators and reliability planners, governed by reliability standards from the North American Electric Reliability Corporation (NERC), have different practices in place to address reliability over these various timescales. ", "Reliability over Different Timescales", "At the smallest timescales, typically seconds or less, are factors such as frequency control, voltage support, and ramping capability. These are often automatic responses of power system components. NERC refers to these factors as Essential Reliability Services (ERS), and they are sometimes called ancillary services. Historically, many ERS were provided as a natural consequence of the physical operational characteristics of steam turbines. Wind and solar generators do not inherently provide ERS in the same way. They require additional electrical components to do so, and these are being more commonly deployed. In some cases, FERC has mandated the use of technologies that allow wind and solar to provide ERS. ", "Balancing, described in the main body of this report, typically occurs over minutes to hours. Unlike ERS, balancing typically requires action by a system operator. ", "Long-term aspects of reliability relate to planning for energy and transmission needs over months to years. This is sometimes referred to as resource adequacy. Policy goals, such as preferences for certain electricity sources over others, tend to influence long-term reliability planning more than shorter-term reliability aspects. ", "Planning for resource adequacy involves forecasts of electricity supply and demand. For variable renewable energy (VRE) like wind and solar sources, these forecasts require assumptions about wind and solar availability. Reliability planners commonly use planning reserve margins to assess whether planned generation and transmission capacity will be sufficient to supply electricity demand. A planning reserve margin is the difference between expected peak demand and available generating capacity at the peak period in each forecast year. It is often expressed as a percentage where the difference is normalized by the peak demand value. According to NERC, reserve margins \"in the range of 10-18 percent\" are typically sufficient for ensuring reliability, although \"by itself the expected Planning Reserve Margin cannot communicate how reliable a system is.\" Reserve margins are calculated months or years ahead as part of assessments of whether and where reliability concerns might exist. High planning reserve margins may indicate a likelihood that reliability will be maintained, but, especially when variable sources are present, they might not be predictive. That is, a high planning reserve margin does not guarantee reliability and a low planning reserve margin does not guarantee power disruptions.", "At the national level, NERC annually assesses resource adequacy over a 10-year forecasting window. NERC uses historic VRE generation data in its assessment and has noted \"methods for determining the on-peak availability of wind and solar are improving with growing performance data.\" In its 2018 Long-Term Reliability Assessment, NERC recommended enhancing its reliability assessment process to account for events, like those noted in the \" Changing Electricity Generation Profile \" section above, during which VRE sources provided large shares of generation during off-peak periods.", "Solar eclipses, though rare events, provide opportunities to test the ability of grid operators to reliably operate the grid when solar sources are unavailable. The August 21, 2017, solar eclipse that affected many parts of the United States was one such opportunity. According to NERC, no reliability issues developed during the event, in part because of the measures implemented in advance by the electric industry. ", "Electric Reliability Regulatory Framework", "Current electric reliability planning is a coordinated process involving multiple entities and spanning multiple jurisdictions. These reliability planning organizations share responsibility for, among other responsibilities, ensuring electricity from wind and solar sources are reliably integrated into the power system. Table A-1 summarizes these entities and their responsibilities. ", "In the Energy Policy Act of 2005 (EPACT05; P.L. 109-58 ), Congress gave FERC responsibility for reliability of the grid through the setting and enforcement of electric reliability standards. These standards are developed by NERC and approved by FERC in the United States. NERC has set over 100 reliability standards that cover all timescales of reliability planning. ", "Congress gave NERC authority to enforce reliability standards in EPACT05. Per statute, NERC has delegated this authority to the Regional Entities shown in Figure A-2 . The jurisdiction for enforcing compliance with reliability standards includes \"all users, owners and operators of the bulk-power system\" within the contiguous United States.", "Separate from the tasks of setting and enforcing reliability standards is the task of reliably operating the power system in real time. Per NERC's reliability standards, balancing authorities carry most of the responsibility for matching generation levels with electricity demand. Balancing authorities can have different geographic footprints. RTOs act as balancing authorities and they may have a footprint spanning multiple states. Other balancing authorities might have a footprint spanning an area within a single state. Another class of entities with operational responsibilities are reliability coordinators. A reliability coordinator may operate over larger geographic areas than balancing authorities and can overrule real-time decisions by balancing authorities to preserve the larger scale power system reliability. RTOs typically also act as reliability coordinators. NERC has certified 66 balancing authorities and 11 reliability coordinators in the United States."], "subsections": []}]}]}}
{"id": "R46061", "title": "Voluntary Testimony by Executive Branch Officials: An Introduction", "released_date": "2019-11-27T00:00:00", "summary": ["Executive branch officials testify regularly before congressional committees on both legislative and oversight matters. Most committee requests for testimony are accepted, and the officials appear voluntarily without the need to issue subpoenas or use the other tools available to Congress to compel appearance.", "Congress's authority under the Constitution to legislate and investigate, along with its practices in exercising these powers, provide strong incentives for the executive branch to work voluntarily with Congress. Congress's control over appropriations and the organization and operations of the executive branch may encourage agency leaders to accommodate its requests rather than risk adverse actions toward their agencies. In addition, there are incentives for the executive branch to work with Congress in order to increase the likelihood of success for the Administration's policy agenda and to manage investigations with the potential to damage the Administration's public standing.", "These incentives are often sufficient to ensure that the executive branch is responsive to requests from the legislative branch. Many of these interactions are routine, and both Congress and the executive branch have developed formal procedures to promote appropriate engagement. This is particularly apparent in the procedures developed by the Office of Management and Budget in Circular A-11 and Circular A-19 to coordinate and control agency statements to Congress on the budget and pending legislation.", "There are situations, however, in which the incentives for compliance have been less effective in securing voluntary testimony. While each circumstance is unique, there are three identifiable areas in which executive branch officials may be more likely to conclude that the drawbacks of disclosure to Congress outweigh the incentives discussed in this report: national security and intelligence matters, ongoing law enforcement actions, and executive branch deliberations. Understanding the general incentives that support voluntary testimony, the practices that have developed around its delivery, and when executive branch officials are more likely to object to appearing before Congress may potentially help Congress navigate difficult cases."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["In recent presidential Administrations, there have been several high-profile disputes between Congress and the White House regarding access to executive branch officials. This has included attempts by Congress to enforce subpoenas issued to Harriet Miers, White House Counsel to President George W. Bush; Eric Holder, Attorney General to President Barack Obama; and Wilbur Ross and William Barr, Secretary of Commerce and Attorney General to President Donald Trump, respectively. ", "Such disagreements can draw significant attention, but they are relatively uncommon. Most interactions between Congress and the executive branch are voluntary. There is a regular flow of communication between the branches. Principals and staff frequently interact with their counterparts. They share data; discuss operations, policy, and projects; and share subject matter expertise. Understanding why voluntary cooperation is a common practice is crucial to understanding Congress's relationship with the executive branch and may help clarify the cases in which the executive branch chooses not to cooperate with Congress.", "This report focuses on one facet of inter-branch interaction: testimony before congressional committees. The report outlines the origins of voluntary testimony by the executive branch, identifies some notable incentives for voluntary participation, and covers some key dimensions of the practice of voluntary participation. ", "Two important caveats limit the scope of this report. First, by design, this report does not engage directly with those occasions when the executive branch refuses to comply with congressional requests and subpoenas. Second, it should also be noted that all responses are not created equal. The mere fact of voluntary compliance does not ensure that the testimony offered will be candid, complete, or correct. This report does not speak to that potential issue."], "subsections": []}, {"section_title": "Background", "paragraphs": ["Agency leaders, program managers, and subject matter experts routinely testify before congressional committees and subcommittees. In addition to participating in oversight and budget hearings by providing testimony and responding to questions on agency operations, agency officials frequently appear at informational hearings and when committees are considering possible legislative actions.", "The practice of voluntary compliance with congressional requests was established from the first investigation of the executive branch by Congress. That investigation focused on a failed 1791 military campaign against Native American tribes in the Northwest Territory by General Arthur St. Clair. President George Washington and his cabinet faced the novel question of how to respond to a request for information from Congress. Aware that their decision was likely to establish precedent, they decided, in the words of Secretary of State Thomas Jefferson, that the executive branch should \"communicate such papers as the public good would permit & ought to refuse those the disclosure of which would injure the public.\" Washington's cabinet reviewed the matter and decided that the executive branch should comply fully with Congress's request. The Administration then provided Congress with documents and officials offered testimony for the investigation.", "While President Washington determined that it was appropriate for executive branch activities to remain secret when disclosure would \"injure the public\" (thus providing the earliest articulation of the concept of executive privilege in American government), he also concluded that compliance with congressional requests should be the default. Despite changes in the operations of the presidency and Congress, and broader public access to the hearings themselves over television and the internet, this default compliance rule of thumb has generally held over time and across subsequent Administrations."], "subsections": []}, {"section_title": "Incentives for Voluntary Participation in Congressional Hearings", "paragraphs": ["There are a number of reasons that Administrations acquiesce to requests from Congress. Some of the most broadly applicable incentives are outlined below."], "subsections": [{"section_title": "The Power of the Purse", "paragraphs": ["Control over the appropriations of departments and agencies is arguably one of Congress's most effective tools to ensure that those departments and agencies are responsive to requests for testimony. Because the budget process occurs annually, agency leaders are continually dependent upon Congress for funding and understand that a poor working relationship with Congress may adversely affect their appropriation.", "Adverse budget actions for uncooperative agencies have occurred in the past. One of the best examples of such an action occurred during the 97 th Congress. As part of the deliberations over the FY1982 budget, the director of the Office of Policy Development in the Executive Office of the President, Martin Anderson, refused to appear before the House Appropriations Subcommittee on Treasury, Postal Service and General Government. Anderson argued that he could not appear because he was a senior adviser to the President and it would undermine his ability to provide candid advice to the President.", "The subcommittee disagreed and noted that prior directors of the same office had appeared without incident. The House Appropriations Committee then zeroed out the budget for the office and stated that \"until the legal basis for refusing to appear is presented, [the subcommittee] has no choice but to deny the budget request for this Office.\" While further discussion and negotiations with Senate appropriators led to a partial restoration, the appropriation was still reduced from the requested $2.9 million to $2.5 million.", "In a more recent example, as part of the FY2005 appropriations process, the House Committee on Appropriations directed the U.S. Coast Guard to submit quarterly reports to the committee on the maintenance of its legacy vessels and aircraft. By the next year, the committee was dissatisfied with the agency's responses and said the following in its report on the agency's FY2006 appropriation:", "The Committee is extremely frustrated in the Coast Guard's apparent disregard for Congressional direction and has reduced funding for headquarters directorates by $5,000,000 accordingly\u00e2\u0080\u00a6. The Committee cannot adequately oversee Coast Guard programs when the agency fails to answer basic questions or fails to provide timely and complete information.", "In this case, the concerns raised by Congress extended to all of the agency's reporting to Congress, both oral and written, but illustrates the potential budget ramifications for agencies that fail to meet Congress's reporting expectations."], "subsections": []}, {"section_title": "Congressional Control Over Agency Operations", "paragraphs": ["Congress's legislative power extends beyond appropriations into the organization, operations, and jurisdiction of executive branch agencies. Congress may specify in statute the duties, reporting requirements, and independence of executive branch agencies, among other powers. Furthermore, some researchers have observed that Congress often closely monitors how agencies execute the laws it passes. Congress has developed a variety of tools to control how agencies operate, such as the Administrative Procedure Act. In addition, the regular engagement of Congress in how agencies conduct business may encourage those agencies to work with committees or risk statutory changes that impact their jurisdiction and the rules under which they operate.", "The organization of the executive branch and the network of statutes, guidelines, and practices that govern agency operations is complex and evolving. In this context, voluntary cooperation with congressional stakeholders can affect congressional decisions on organization and operations. For instance, one reason for Congress's decision to pass the Homeland Security Act of 2002 and create the Department of Homeland Security was to address a concern about access to officials.", "After the September 11 attacks, President George W. Bush created the Office of Homeland Security within the Executive Office of the President and appointed Tom Ridge to lead it. In March 2002, the Senate Committee on Appropriations invited Ridge to testify about the office's activities, but Ridge declined to appear on the grounds that he was a close adviser to the President. Given the control Ridge exercised over a large portion of the national security bureaucracy, the committee disagreed with Ridge's position, and the two sides eventually agreed that Ridge would provide an \"informal briefing\" to the Committee. Through the ensuing establishment of the Department of Homeland Security, Congress asserted its authority to oversee executive branch activity and limited the possibility that Ridge and his successors could attempt to assert privilege as presidential advisers in order to resist congressional requests. "], "subsections": []}, {"section_title": "Navigating Congress's Power to Investigate", "paragraphs": ["In addition to the legislative power, the courts have established that Congress has broad authority to investigate the activities of the executive branch. While Administrations have sometimes resisted cooperation with specific investigations, they have generally accepted this oversight role of Congress, and a large body of practices and expectations have developed. The acceptance of Congress's authority is such that Presidents have repeatedly allowed personal advisers to testify when credible allegations of malfeasance arise in the Executive Office of the President, despite claiming broad immunity for those advisers in other circumstances.", "Presidents have often followed this practice, even on matters of great political controversy, in order to better manage the visibility and impact when Congress conducts investigations. One of the better studied examples of this strategy is the Reagan Administration's management of the Iran-Contra affair. This incident arose following a decision by Congress to legally bar the government from providing support to the Contras, an insurgent group acting against the government of Nicaragua. Previously, the Central Intelligence Agency (CIA) had, with congressional approval, provided support to the Contras.", "Despite the congressional ban, the Reagan Administration and the CIA continued to provide support to the Contras and funded that aid with the proceeds of undisclosed CIA arms sales to the government of Iran. Early in the congressional investigation into these activities, a number of Reagan Administration officials were later shown to have lied to or misled congressional investigators. Ultimately, however, with the political fallout from the investigation growing, President Reagan directed the executive branch to cooperate fully with Congress, including an explicit decision not to attempt to assert executive privilege, even regarding direct communications between Reagan and his senior advisors. "], "subsections": []}, {"section_title": "Achieving the Administration's Agenda", "paragraphs": ["An Administration might also determine that it will benefit politically from building a constructive relationship with Congress. Given the broad control Congress exercises over lawmaking and the government, a good working relationship may better position an Administration to implement its agenda, while a poor relationship may make Congress more likely to oppose its policies and restrict its operations. ", "For President Jimmy Carter, a constructive working relationship with Congress was an explicit campaign promise. In his memoirs, the former President discussed this strategy and why he believed it facilitated his agenda. As President-elect, Carter began lobbying for the authority to reorganize the executive branch\u00e2\u0080\u0094another campaign commitment. While Congress ultimately passed the Reorganization Act of 1977, Carter initially faced resistance from the House Committee on Government Operations Chairman Jack Brooks. He summarized the experience as follows:", "I learned one lasting lesson from this hair-raising experience: it was better to have Jack Brooks on my side than against me. I found him to be an excellent legislator, and went out of my way to work closely with him in the future. We soon became good friends and allies. I consulted with him on all my subsequent reorganization bills; largely because of his support, ten of eleven bills submitted passed Congress."], "subsections": []}]}, {"section_title": "Voluntary Testimony in Practice", "paragraphs": ["Committees can request that executive branch officials appear before them to discuss any matter within the jurisdiction of the committee. Any executive branch official, including the President, may testify before Congress under most circumstances. In practice, invitations are usually formal and may lead to negotiations on the logistics, format, and scope of the testimony. Committees have some discretion to define how they will receive testimony and accept or reject accommodations sought by the executive branch. The remainder of this report highlights a few important facets of current practice for each branch."], "subsections": [{"section_title": "Budget Testimony", "paragraphs": ["As part of the annual appropriations process, agency leaders are expected to appear before appropriations subcommittees to justify their agencies' budget requests. This means that the heads of Cabinet departments and other agencies are likely to testify before Congress at least once per year. The statutory process for submission of the executive branch's budget request, as established by Congress, makes the President the primary actor in the executive branch budget process and gives the President significant control over the final executive branch budget request submitted to Congress each year.", "Using this statutory authority, the Office of Management and Budget (OMB) has established procedures for agency communications with Congress on the budget that are included in OMB Circular A-11 . These guidelines provide for the confidentiality of budget deliberations within the executive branch and require that agencies submit testimony to OMB for review in advance of budget hearings. Outside those limitations, when communicating with Congress, the guidance states that agencies are to \"give frank and complete answers to all questions.\" As discussed earlier, agencies may face repercussions if a committee decides they have not been sufficiently forthright."], "subsections": []}, {"section_title": "Legislation and OMB", "paragraphs": ["OMB also has a formal procedure for monitoring and clearing other communications to Congress from executive branch agencies. This guidance is outlined in OMB Circular A-19 . All legislative proposals originating within agencies subject to Circular A-19 , as well as other communications to Congress on pending legislation and formal Statements of Administration Policy, are first submitted to OMB for clearance. ", "In a February 2017 memorandum, OMB Director Mick Mulvaney described the goals for the clearance process as follows:", "\"agencies' legislative communications with Congress are consistent with the President's policies and objectives;\" and \"the Administration 'speaks with one voice' regarding legislation.\""], "subsections": []}, {"section_title": "The Confirmation Process", "paragraphs": ["The Senate may also use the confirmation process to attempt to ensure future access to agency leaders. As a general matter, the Senate may choose to reject a nominee if the body believes that he or she would not cooperate with Congress after being confirmed. It has become common practice to address this issue directly during confirmation hearings. Frequently, a Senator has asked the nominee appearing before the committee to agree to respond to future congressional requests if they are confirmed. While these commitments may not be binding on these officials, this process allows the Senate to explicitly establish expectations and put the nominee on the record consenting to this condition.", "This January 2017 confirmation hearing exchange between Department of Energy Secretary-designee Rick Perry and Senate Committee on Energy and National Resources Chairman Lisa Murkowski is an example of this practice:", "The CHAIRMAN. You may go ahead and be seated. Before you begin your statement, I am going to ask you three questions addressed to each nominee before this committee. The first is will you be available to appear before this committee and other congressional committees to represent departmental positions and respond to issues of concern to the Congress? ", "Mr. PERRY. I will, Senator."], "subsections": []}, {"section_title": "Areas of Potential Friction", "paragraphs": ["While this report is focused on the avenues of formal communication between the branches in hearings, there are circumstances in which the executive branch is less likely to provide public testimony to Congress. While each situation is unique, there are at least three types of information that are more likely to cause such tension: national security and intelligence matters, law enforcement investigations, and executive branch deliberations. In all of these areas, Administrations have sometimes refused to appear before committees or sought to limit public testimony. ", "The legal and prudential reasons for limiting disclosure of information in each of these areas may, depending on the circumstances, have particular merit. From the perspective of an executive branch official, the costs of voluntary compliance may outweigh the benefits in some cases, and they may decline to testify. ", "Congress is under no obligation to accept such conclusions and may seek to compel those officials to testify. However, committees may choose to take these concerns into account. For instance, a committee may agree to limit the scope of a request, allow a witness to decline to testify on specific matters, or conduct a closed door session. ", "This occurred, for example, during former special counsel Robert Mueller's testimony before the House Committee on the Judiciary and the House Permanent Select Committee on Intelligence. Over the course of his testimony on July 24, 2019, both committees allowed Mueller to decline to answer specific questions for all three of the above reasons. In this case, the committees accepted the limits put forward by Mueller, and they were able to hold the hearings."], "subsections": []}]}]}}
{"id": "R45962", "title": "Broadband Data and Mapping: Background and Issues for the 116th Congress", "released_date": "2019-10-16T00:00:00", "summary": ["Access to high-speed internet, also known as broadband, is increasingly important in the 21 st century, as more and more aspects of everyday life, such as job applications and homework assignments, become digital. Some areas of the United States\u00e2\u0080\u0094particularly rural areas\u00e2\u0080\u0094have limited or no access to broadband due to market, geographic, or demographic factors. The gap between those who have access to broadband and those who do not is referred to as the digital divide.", "The Federal Communications Commission (FCC), National Telecommunications and Information Administration (NTIA), and Rural Utilities Service (RUS) have developed maps to help guide resources toward closing the digital divide. Since 2018, the FCC has had the responsibility for developing a comprehensive map of broadband access in the United States. However, the data available to determine where to invest resources may be incomplete or inaccurate. For example, the FCC's current methodology considers a census block served if at least one home or business in that census block has broadband access. In addition, the data is self-reported by broadband service providers and not independently verified outside the FCC.", "On August 1, 2019, the FCC adopted a Report and Order introducing a new process, called the Digital Opportunity Data Collection (DODC), for collecting fixed broadband data. The new process would require broadband service providers to provide geospatial broadband coverage maps\u00e2\u0080\u0094which provide greater granularity than census blocks\u00e2\u0080\u0094indicating where fixed broadband service is actually made available. The new process would also implement a crowdsourcing mechanism for public feedback, as individual consumers will likely know whether they have access to broadband. The FCC also adopted a Second Further Notice of Proposed Rulemaking (FNPRM) , seeking comment on issues including the need for additional granularity and the potential sunset of the current data collection process upon complete implementation of the DODC.", "As the FCC implements the DODC process, Congress has a wide variety of options for oversight and legislation. For example, Congress may continue to consider issues such as the optimal level of data granularity, the process for independent validation, and costs and burdens of broadband data collection on both consumers and broadband service providers. Congress could consider providing federal funding for a broadband mapping pilot to thoroughly assess these factors and assist in determining how to strike the desired balance, as well as exploring what funding levels for ongoing broadband map maintenance would be sustainable and where the necessary funding would come from.", "Congress may debate whether to leave factors within the proposed DODC, such as the current delegation of broadband data collection authority to the Universal Service Administrative Company, to the discretion of the FCC, or Congress may wish to enact legislation to keep broadband data collection efforts under the purview of the FCC. To assist with future federal action, Congress may take into consideration successful state broadband mapping efforts, which could provide additional insight into models that could be replicated on a national scale.", "Congress may continue to debate potential short-term and long-term broadband mapping solutions, including whether federal funding for rural broadband expansion should be withheld until mapping issues are resolved. In conjunction, Congress may also contemplate whether to provide oversight over federal agency broadband activities or enact legislation regarding interagency coordination efforts on broadband deployment to reduce the potential for duplicative funding. Another consideration for Congress may be whether the FCC's Fixed Broadband Deployment Map could be updated more frequently so that data reflects continuing network changes and, if so, whether that would impose a significant burden on broadband service providers.", "Bills addressing many of these broadband mapping issues have been introduced in the 116 th Congress, including the Save the Internet Act of 2019 ( H.R. 1644 ), passed by the House on April 10, 2019, and the ACCESS Broadband Act ( H.R. 1328 ), passed by the House on May 8, 2019."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["Mapping broadband availability, which means graphically displaying where broadband is and is not available on a map, is complex and depends on data\u00e2\u0080\u0094with the accuracy of the map depending on the accuracy of the data used to compose the map. Congress has an interest in accurate broadband mapping data, because accurate data can help ensure that federal broadband programs target areas of the country that are most in need of assistance. The Telecommunications Act of 1996 ( P.L. 104-104 ) requires the Federal Communications Commission (FCC) to determine annually whether broadband is being deployed to all Americans on a timely basis, and the FCC relies on broadband mapping data to make this determination. Additionally, the FCC uses broadband mapping data to direct billions of dollars per year to deploy broadband in unserved or underserved areas. Congress has also taken an interest in broadband mapping due to concerns from constituents that certain areas, especially rural areas, remain underserved or unserved.", "Pinpointing where broadband is and is not available in the United States has been an ongoing challenge. Current data on broadband availability is provided by private telecommunications providers, collected by the FCC, and displayed on the FCC's Fixed Broadband Deployment Map. Difficulty in accurately mapping broadband availability has been attributed to a number of factors, including the adequacy of census block data, the lack of independent data validation outside the FCC, and the absence of a challenge process for consumers and other entities that believe the Fixed Broadband Deployment Map may overstate availability in their area. In early 2019, it came to the FCC's attention that inaccuracies in the Fixed Broadband Deployment Map's broadband data may cause broadband deployment to be overstated. The Fixed Broadband Deployment Map may indicate that areas have access to broadband when in reality, they do not. Inaccurate data on broadband deployment could lead to overbuilding in areas that currently have broadband while leaving other areas underserved or unserved. ", "In the 116 th Congress, numerous pieces of legislation on improving broadband mapping efforts have been introduced, and multiple hearings have been held on the issue. In August 2019, the FCC adopted a Report and Order to establish a new Digital Opportunity Data Collection (DODC). The goal of this effort is to make the Fixed Broadband Deployment Map more accurate and reliable by\u00e2\u0080\u0094among other things\u00e2\u0080\u0094incorporating public feedback and obtaining additional granularity of data. Options for Congress in this area could include oversight of the FCC effort and additional legislative action to improve the accuracy of broadband mapping."], "subsections": []}, {"section_title": "Broadband Defined", "paragraphs": ["The term broadband commonly refers to high-speed internet access that is faster than dial-up access and is immediately accessible. Broadband includes several high-speed transmission technologies, such as:", "digital subscriber line (DSL), cable modem, fiber, wireless, satellite, and broadband over power lines (BPL).", "The internet became publicly available in the 1990s and has evolved since that time as information has continually become digital (e.g., job applications and government forms have moved online). However, not all Americans currently have equal access to broadband. ", "As methods to reach the internet have evolved, so have speeds, with the FCC's current broadband benchmark speed set at 25 megabits per second (Mbps) download and 3 Mbps upload (25/3). Table 1 shows how the FCC's broadband definition has changed from 1996 to its current definition, which was adopted in 2015. "], "subsections": []}, {"section_title": "The Urban/Rural Digital Divide", "paragraphs": ["The term digital divide refers to a gap between those Americans who use or have access to telecommunications and information technologies and those who do not. While urban areas likely see speeds close to 25/3, broadband speeds in rural areas often do not approach that speed\u00e2\u0080\u0094with some areas having no access to broadband. Several factors contribute to geographic disparity, including terrain, population density, demography, and other market factors. These factors discourage build-out to areas that are not as densely populated, because they typically result in a lower return on investment for broadband providers. Although strides have been made in the deployment of broadband to rural areas, the urban/rural digital divide persists. In a survey conducted by the Pew Research Center in 2018, adults who live in rural areas were more likely to say that getting access to high-speed internet is a major problem in their local communities. The primary goal of broadband mapping is to identify areas without access to broadband so that policymakers can make informed decisions on policies to address the urban/rural digital divide."], "subsections": []}, {"section_title": "Federal Agency Roles in Broadband Mapping", "paragraphs": ["The major federal agencies involved in broadband mapping are the National Telecommunications and Information Administration (NTIA) in the Department of Commerce, the FCC, and the Department of Agriculture (USDA). "], "subsections": [{"section_title": "National Telecommunications and Information Administration", "paragraphs": ["The Broadband Data Improvement Act ( P.L. 110-385 ), enacted on October 10, 2008, directed the Department of Commerce to establish a state broadband data and development grant program. One of the purposes of the program was to assist states in gathering data twice a year on the availability, speed, and location of broadband service as well as on the broadband services used by community institutions, such as schools, libraries, and hospitals. This data was used to establish the National Broadband Map, the first public, searchable, nationwide map of broadband availability, which was launched in 2011. ", "This program, known as the State Broadband Initiative (SBI), was administered by NTIA, an agency in the Department of Commerce, and funded under the American Recovery and Reinvestment Act of 2009 ( P.L. 111-5 ). Through the SBI program, NTIA awarded a total of $293 million to 56 grantees\u00e2\u0080\u0094one from each of the 50 states, five territories, and the District of Columbia. The grantees were required to use the funds to promote broadband adoption and access tailored to their local needs and collect broadband-related data and provide it to NTIA. In 2015, the SBI program ended, collecting its last data as of June 30, 2014. The National Broadband Map was decommissioned on December 21, 2018, due to the age of the data. Mapping responsibility shifted to the FCC.", "In the Consolidated Appropriations Act of 2018 ( P.L. 115-141 ), Congress provided $7.5 million to NTIA to develop a National Broadband Availability Map. Specifically, Congress directed NTIA to acquire and display available third-party data sets to augment data from the FCC, other federal government agencies, state governments, and the private sector. The stated objective of this funding was \"to help identify regions with insufficient service, especially in rural areas.\" ", "In response, NTIA announced in February 2019 it had partnered with eight states\u00e2\u0080\u0094California, Maine, Massachusetts, Minnesota, North Carolina, Tennessee, Utah, and West Virginia\u00e2\u0080\u0094for a pilot to improve the FCC's Fixed Broadband Deployment Map. The first phase of NTIA's new National Broadband Availability Map was published in October 2019. It is available only to state and federal partners due to the inclusion of nonpublic data, which may be business sensitive or have other restrictions that prevent public disclosure. The conference report on the Consolidated Appropriations Act of 2019 ( P.L. 116-6 ) directed an additional $7.5 million to NTIA to continue this mapping effort. "], "subsections": []}, {"section_title": "Federal Communications Commission", "paragraphs": ["In 2000, the FCC established the Form 477 Data Program to collect from providers \"data regarding broadband services, local telephone service competition, and mobile telephony services on a single form and in a standardized manner.\" In 2013, an FCC Report and Order on Form 477 expanded the scope of the data collection program just as NTIA's National Broadband Map was nearing its end. Among the notable changes to the FCC program were:", "the collection of fixed broadband data by census block and of mobile broadband and mobile voice data by network coverage area; a requirement for providers of broadband services to provide maximum advertised speeds in each census block for fixed broadband and the minimum advertised speed in each coverage area for mobile broadband; provisions for providers to file all data in a single, uniform format instead of different formats across states; and the elimination of the use of speed tiers for broadband subscription data. ", "The FCC collects data on both fixed and mobile broadband availability through Form 477. It does not combine the two sets of data into a single map; rather, it uses the fixed data to create the Fixed Deployment Broadband Map, and it uses the mobile broadband data to determine which areas are eligible for the Mobility Fund Phase II program (see \" Eligibility for Federal Assistance \" below)."], "subsections": [{"section_title": "Form 477 Fixed Broadband Data Methodology", "paragraphs": ["Every six months, all facilities-based providers of fixed broadband are required to submit a list of all census blocks where they provide, or could provide, fixed broadband service to at least one location. For each census block, the provider is required to submit data specifying the last-mile technology used; whether the provider can or does offer consumer, mass market, or residential service; the maximum advertised download and upload speeds for consumer service; and whether the service is also available for business, enterprise, or government customers.", "In 2017, the FCC acknowledged some shortcomings of this methodology:", "Facilities-based providers of fixed broadband must provide in their Form 477 submissions a list of all census blocks where they make broadband connections available to end-user premises, along with the last-mile technology or technologies used. These deployment data represent the areas where a provider does, or could, without an extraordinary commitment of resources, provide service. Thus, the meaning of \"availability\" in each listed census block can be multifaceted, even within the data of a single filer. In a particular listed block, the provider may have subscribers or it may not. At the same time, the provider may be able to take on additional subscribers or it may not. The various combinations have varying implications that make it difficult to understand availability. Specifically, if a block was listed by a provider, it is impossible to tell whether residents of that block seeking service could turn to that provider for service or whether the provider would be unable or unwilling to take on additional subscribers. This may limit the value of these data to inform our policymaking and as a tool for consumers and businesses to determine the universe of potential broadband service providers at their location."], "subsections": []}, {"section_title": "Form 477 Mobile Broadband Data Methodology", "paragraphs": ["The collection of accurate and reliable mobile broadband data is particularly challenging, because a user's mobile wireless experience varies and is affected by factors such as terrain, user location, weather, network congestion, and the type of connected service. Under Form 477 filing rules, facilities-based providers of mobile broadband service are required to submit and certify, for each technology and frequency band employed, polygons in shapefiles that digitally represent the geographic areas in which a customer could expect to receive at least the minimum speed the provider advertises for that area. Additionally, mobile broadband providers must report the census tracts in which their service is advertised and available to potential customers."], "subsections": []}, {"section_title": "Digital Opportunity Data Collection", "paragraphs": ["In August 2019, the FCC adopted a Report and Order introducing the DODC. The DODC is intended to address some of the issues that currently lead to inaccurate broadband mapping data by collecting coverage polygons from broadband service providers, incorporating public input, and revising Form 477. Specifically, the DODC would:", "require all fixed providers to submit broadband coverage polygons depicting areas where they actually have broadband-capable networks and make fixed broadband service available to end-user locations; reflect the maximum download and upload speeds actually made available in each area, technology used, and differentiation between types of customer (e.g., residential, business, or a combination); incorporate public feedback on fixed broadband coverage; and require Universal Service Administrative Company (USAC) verification of broadband data.", "In conjunction, the FCC is seeking stakeholder comment on using the DODC exclusively for its broadband mapping and discontinuing use of Form 477."], "subsections": [{"section_title": "DODC for Fixed Providers", "paragraphs": ["The new data collection obligations will initially be limited to fixed broadband providers. For purposes of the DODC, service is considered to be available in an area if the broadband service provider has an active broadband connection or if it could provide such a connection within 10 business days of a customer request, without an extraordinary commitment of resources, and without construction charges or fees exceeding an ordinary service activation fee. "], "subsections": []}, {"section_title": "DODC for Mobile Providers", "paragraphs": ["The FCC is currently seeking comment on how best to incorporate mobile broadband data into the DODC. The August 2019 Report and Order proposes revising the existing Form 477 data process for mobile providers by: ", "transitioning the collection of mobile broadband-capable network deployment data to a USAC-administered portal created for fixed data; maintaining the commission's current Form 477 data collection for mobile broadband and voice data in the interim; and reducing the burden on service providers required to submit the form. ", "These changes suggest that the FCC may be planning to add mobile broadband data to the Fixed Broadband Deployment Map."], "subsections": []}]}]}, {"section_title": "Department of Agriculture", "paragraphs": ["USDA's Rural Utilities Service (RUS) oversees federal programs that fund the deployment of broadband infrastructure. To help determine where to direct federal resources, USDA also maps broadband availability. However, USDA maps are used differently than the FCC's Fixed Broadband Deployment Map. While the FCC's map is used to determine where broadband is and is not, USDA uses its maps to provide a resource for visualizing existing or proposed broadband service areas. For example, the USDA's Broadband Program Mapping Tool is used by:", "existing borrowers or those interested in applying for funding under the Infrastructure Loan Program, Broadband Loan and Loan Guarantee Program, or Community Connect Grant Program, enabling them to draw existing or proposed service area maps; RUS to post Public Notices of proposed funded service areas for received loan applications, as well as by existing service providers to submit information on their service offerings; other entities that wish to upload an authenticated map of existing broadband services.", "USDA's other mapping tool is part of the ReConnect Program, which was established under the Consolidated Appropriations Act, 2018 ( P.L. 115-141 ), and is administered by RUS. For ReConnect, RUS established an eligibility area map and application mapping tool designed to assist in the determination of service area eligibility across the United States by displaying four categories of data: the FCC's Connect America Fund winners, nonrural areas, pending applications, and protected broadband borrower service areas."], "subsections": []}]}, {"section_title": "Why Broadband Mapping Accuracy Matters", "paragraphs": ["Accurate broadband data and mapping helps policymakers to make informed decisions about where federal funding should be directed, such as with the FCC's upcoming Rural Digital Opportunity Fund, and enables federal agencies to fulfill certain statutory requirements, such as the FCC's annual \"reasonable and timely deployment\" determination."], "subsections": [{"section_title": "Eligibility for Federal Assistance", "paragraphs": ["Accurate maps are important in federal funding decisions designed to target areas where broadband is needed the most. Without accurate data, maps may not be reliable indicators of need, and federal assistance may be provided to areas that already have adequate broadband services. This may result in overbuild in some areas and neglect of other areas, further widening the disparities between areas that are served and those that are not. In December 2018, FCC Commissioner Jessica Rosenworcel stated:", "Getting [the broadband map] right matters because we cannot manage what we do not measure. If we don't have proper maps, we will not be able to target policy solutions effectively. The FCC distributes billions of dollars each year to help accelerate the build-out of broadband so we can connect all our communities. It's irresponsible for the agency to do so without having a truly accurate picture of where those resources should go. ", "A recent example of how inaccurate data has affected eligibility for federal assistance occurred in the FCC's Mobility Fund II program. In August 2018, the FCC published initial eligibility maps for Mobility Fund II, which were to be used in allocating up to $4.53 billion in support for rural wireless broadband expansion. In December 2018, the FCC announced it would launch an investigation into whether one or more major carriers violated the Mobility Fund reverse auction's mapping rules and submitted incorrect coverage maps. Until this investigation concludes, the FCC will not distribute the $4.53 billion. This incident drew congressional attention, including a letter to the FCC from a bipartisan group of 30 Senators, who wrote:", "As you know, many of us have expressed concern about the accuracy of the Federal Communications Commission's map of eligible areas for Mobility Fund Phase II Support (MFII). This map is intended to reflect areas that lack unsubsidized mobile 4G LTE service, but it unfortunately falls short of an accurate depiction of areas in need of universal service support.", "Another example is the FCC's recent announcement of the Rural Digital Opportunity Fund, which would distribute $20.4 billion over 10 years to expand broadband in rural areas. Though this initiative aims to help close the urban/rural digital divide, without accurate broadband mapping, it will be difficult to determine which areas are in most need of funds. FCC Chairman Ajit Pai stated:", "One important reason I'm so pleased that we are moving forward with this item is that we'll be putting the new maps to work right away. The Rural Digital Opportunity Fund Notice of Proposed Rulemaking that we adopted earlier today specifically proposes to use the new map to direct more than $4 billion in Phase II funding to deploy high-speed broadband networks to serve Americans living in areas of the country that Form 477's census-block level reporting deems served, but where some residents are actually not served."], "subsections": []}, {"section_title": "Reasonable and Timely Deployment Determination", "paragraphs": ["The Telecommunications Act of 1996 ( P.L. 104-104 ) requires the FCC to \"initiate a notice of inquiry concerning the availability of advanced telecommunications capability to all Americans.\" In conducting this inquiry, the FCC must \"determine whether advanced telecommunications capability is being deployed to all Americans in a reasonable and timely fashion.\" If that determination is negative, the commission \"shall take immediate action to accelerate deployment of such capability by removing barriers to infrastructure investment and by promoting competition in the telecommunications market.\"", "Using data from Form 477, the FCC develops an annual Broadband Deployment Report, also referred to as the Section 706 Report, in which the FCC evaluates the availability of fixed and mobile broadband services. In its 2019 analysis, the FCC made a Section 706 finding that advanced telecommunications capability is being deployed to all Americans in a reasonable and timely fashion. This finding was supported by Chairman Pai, Commissioner Michael O'Reilly, and Commissioner Brendan Carr, with Commissioners Jessica Rosenworcel and Geoffrey Starks dissenting. The 2019 report makes frequent references to broadband mapping and concerns about data quality."], "subsections": []}]}, {"section_title": "Broadband Mapping Challenges and Criticisms", "paragraphs": ["Difficulty in mapping broadband availability has been attributed to a number of factors, including lack of data granularity, overstated availability, lack of independent data validation, and the difficulty in keeping up with real-time deployments. "], "subsections": [{"section_title": "Adequacy of Census Block Data", "paragraphs": ["The FCC requires each broadband service provider to submit information on the services it offers at the census block level. Census blocks are the smallest unit of geography defined by the Census Bureau and are \"statistical areas bounded by visible features, such as streets, roads, streams, and railroad tracks, and by nonvisible boundaries, such as selected property lines and city, township, school district, and county limits and short line-of-sight extensions and roads.\" Census blocks vary in size and population, and their geographical area can be especially large in rural areas. ", "For the purposes of Form 477, the FCC considers a census block served if even one house or business in the block is served. Since census blocks in rural areas can be large, this may provide a misleading impression. For example, if fiber is connected to a home in one part of a census block, it may not be connected to another home in the same census block that is a mile down the road. ", "With the use of census blocks, areas within a large block that might otherwise be eligible for federal assistance may not be considered eligible. The Utah Governor's Office of Economic Development told the NTIA:", "Basing data collection, planning efforts, and funding decisions on census blocks is problematic, particularly in blocks which are large, remote, and include terrain that makes it difficult to install infrastructure. For example, in Utah, the largest populated census block is 947 square miles. Under the current Form 477 submission process, any census block that is partially covered would be ineligible for all federal broadband programs, even if only a small percentage of households or census block area is covered."], "subsections": []}, {"section_title": "Overstated Availability", "paragraphs": ["Although staff examine FCC Form 477 data for quality and consistency, the FCC acknowledges that the data may understate or overstate deployment of services to the extent that broadband providers misreport or fail to report. For example, after the FCC released a draft annual Broadband Deployment Report in February 2019, it was discovered that a relatively new company, Barrier Communications Corporation, had apparently submitted data claiming presence in every single census block in Connecticut, the District of Columbia, Maryland, New Jersey, New York, Pennsylvania, Rhode Island, and Virginia\u00e2\u0080\u0094which collectively contain nearly 62 million people. A subsequent correction of this data resulted in the FCC issuing a revised Broadband Deployment Report.", "In April 2019, Microsoft asserted that the percentage of Americans without broadband access is much higher than the figures reported by the FCC. Microsoft claimed that although the FCC indicates that 24.7 million people do not have broadband available, Microsoft's own data indicates that 162.8 million people do not use the internet at broadband speeds of 25 Mbps or more. Microsoft released a map showing differences between the FCC's claimed broadband access and actual usage of broadband. NCTA\u00e2\u0080\u0094The Internet and Television Association criticized this analysis, however, saying that it \"conflates availability and usage\" and, as a result, draws \"a number of unsupportable conclusions.\""], "subsections": []}, {"section_title": "Lack of Validation and Challenge Process", "paragraphs": ["Broadband service providers self-report information on Form 477. Although the FCC reviews the data, it is not verified independently outside of the agency. There is also no challenge process in place if a consumer, provider, or other entity identifies any of the data as potentially inaccurate. ", "Stakeholders who testified at an April 2019 hearing before the Senate Committee on Commerce, Science, and Transportation asserted that a challenge process is needed, citing the problems with the FCC's mobility fund auction and how it was difficult for wireless carriers to challenge mobile broadband availability data that the FCC had intended to use as a basis for awarding funding."], "subsections": []}, {"section_title": "Real-Time Deployments", "paragraphs": ["The FCC currently updates the Fixed Broadband Deployment Map every six months, but the map reflects data that is a year or more behind the current date. For example, as of October 2019, the Map reflects June 2018 data. ", "The telecommunications industry is fluid. Broadband service providers are constantly changing, building new networks, or revising older networks. Once implemented, the FCC's new DODC will require broadband service providers to submit updates within six months of completing new broadband deployments, making changes to (including upgrading or discontinuing) existing offerings, or acquiring new or selling existing broadband-capable network facilities that affect the data submitted on their DODC filings. This may help produce maps that are more up to date. "], "subsections": []}]}, {"section_title": "Policy Issues for Congress", "paragraphs": ["As Congress considers broadband mapping, it may consider ways to address the challenges of data granularity and lack of validation, the frequent differences between advertised and actual broadband speeds, the balance between short-term and long-term solutions, ways to improve interagency coordination, and state efforts that might be models for future federal action. Some of these issues are address by legislation already introduced in the 116 th Congress (see Appendix A )."], "subsections": [{"section_title": "Granularity", "paragraphs": ["How much more granular maps need to be to serve policymakers remains an open question. Increasing the granularity of data costs money, and costs may not be shared equally among stakeholders. Some stakeholders have expressed concern that requiring additional granularity might place a larger burden on smaller broadband service providers. As stated by WTA\u00e2\u0080\u0094Advocates for Rural Broadband:", "The Commission's decision to use polygon shapefile reporting, and potentially create a location fabric, is a vast improvement over the current Form 477 regime that has overstated the amount of locations served. However, as the Commission is well aware, small providers have limited staff and resources such that new reporting requirements should be carefully balanced so as to provide necessary information without becoming overly burdensome.", "USTelecom has proposed a methodology to the FCC to provide additional granularity called the Broadband Serviceable Location Fabric (BSLF). The methodology contains:", "multiple sources of address, building, and parcel data to develop and validate a comprehensive database of all broadband serviceable locations in the two pilot states; a vendor to conform address formats, remove duplicates, and assign a unique latitude and longitude to the actual building where broadband service is most likely to be installed using a georeferencing tool; a mediated crowdsourcing platform that will enable consumers to submit information to improve the accuracy of the database; and customer address lists provided by participating companies to augment the validation process that will be automatically indexed to the final database to facilitate accurate broadband availability reporting. Different methods for reporting service availability will be tested.", "To test this methodology, USTelecom launched a Broadband Mapping Initiative Pilot in Virginia and Missouri. The results were released to the public in August 2019 and revealed that in Virginia and Missouri combined, over 450,000 homes and business are counted as served under the FCC's Form 477 process but are not receiving service from participating providers. Further, USTelecom stated that the pilot demonstrates it is now possible to identify and precisely locate virtually every structure in a geographic area that is capable of receiving broadband service.", "On one hand, USTelecom's initiative might yield better data; on the other hand, the cost of collecting that data would be higher than current methods. USTelecom's proposal estimates that the cost to implement the initial nationwide BSLF would be between $8.5 million and $11 million and, because the BSLF would be a living database, keeping it updated would cost approximately $3 million to $4 million per year. If Congress were to contemplate an initiative of this type, it might wish to consider whether funding at such levels for ongoing broadband map maintenance is sustainable and where the necessary funding would come from."], "subsections": []}, {"section_title": "Lack of Validation", "paragraphs": ["When broadband service providers submit Form 477, the FCC reviews the data, but there is no validation process outside of the agency to verify that the data is accurate. Having no validation process can be problematic, as there may be instances in which submitted data may be erroneous. In conjunction, there is also no present process in place for the public, providers, or other entities to challenge the data if they believe it to be incorrect. ", "To improve accuracy, the FCC and other stakeholders have cited crowdsourcing as one method to get \"boots-on-the-ground\" information into the Fixed Broadband Deployment Map. For example, NCTA has proposed that after the FCC publishes maps based on the new FCC reporting regime, consumers and other stakeholders could submit evidence demonstrating potential inaccuracies.", "In its August 2019 Report and Order , the FCC directed USAC, under the oversight of the Commission's Office of Economics and Analytics, to create an online portal for local, state, and tribal governmental entities\u00e2\u0080\u0094as well as members of the public\u00e2\u0080\u0094to review and dispute coverage under the new DODC. However, NCTA raised a concern with delegating the responsibility to USAC:", "The delegation of such broad authority to USAC is unusual and raises many questions. NCTA suggests that a more traditional approach, i.e., delegating authority to the relevant Commission bureaus and offices, which would then direct USAC to take action where needed, is the better approach in this case.", "One option for Congress might be to enact legislation either confirming the delegation to the USAC or directing the FCC to conduct this activity in-house. Alternatively, Congress might choose to leave that decision to the FCC while focusing congressional oversight on how the USAC handles the DODC to determine whether the effort is being handled judiciously."], "subsections": []}, {"section_title": "Actual versus Advertised Speeds", "paragraphs": ["The FCC currently requires broadband service providers to submit maximum advertised upload and download speeds. However, in some cases these speeds can vary greatly from speeds the customer is actually receiving. For example, the FCC has identified Iowa as the only Midwestern state with virtually complete access to high-speed internet, with every county covered by download speeds of 25 Mbps. Speed tests conducted by the Open Technology Institute\u00e2\u0080\u0094a technology program of the New America Foundation that formulates policy and regulatory reforms\u00e2\u0080\u0094claims that internet users in Iowa actually experience download speeds of 25 Mbps only 22% of the time. ", "Rather than the previous requirement of maximum advertised speeds, the FCC's August 2019 adopted Report and Order now requires broadband service providers to provide the maximum upload and download speeds actually made available in each area. This will provide greater insight into what speeds consumers are actually receiving, but relying on available maximum upload and download speeds may still not reflect the actual user experience due to network congestion or weather. Collecting information on actual speeds would provide additional insight into the broadband experience of actual consumers, but this might impose a burden on broadband service providers. One option for Congress might be to mandate a pilot project to assess the feasibility of download and upload speed collection that accurately reflects the consumer experience as well as the burden on providers. Alternatively, Congress might choose to leave this issue to the FCC's discretion."], "subsections": []}, {"section_title": "Short-Term versus Long-Term Solutions", "paragraphs": ["Should the FCC should adopt a short-term solution to fix mapping issues quickly, but perhaps not thoroughly? Or should it adopt a longer-term solution that might delay the distribution of funds of other initiatives but might ultimately achieve a more accurate result?", "NCTA's proposed solution of using shapefiles\u00e2\u0080\u0094instead of census blocks and similar to what is currently used for mobile broadband reporting through Form 477\u00e2\u0080\u0094for fixed broadband data collection has been criticized as being overly vague, but NCTA believes its proposal offers the fastest solution: ", "[For this reason], we agree with the FCC and members of Congress that the current broadband map must be meaningfully improved. We also believe that a pragmatic approach can yield significant improvements in the shortest timeframe. That is why NCTA has proposed a solution that can be implemented nationwide very quickly, without any need for a pilot, and would result in the granular data needed to more accurately identify areas that currently are not served by a fixed broadband provider.", "USTelecom disputes NCTA's approach, stating:", "We agree with NCTA that shapefiles are one of several reasonable methods for broadband providers to report their service data. The difference is that NCTA wants the FCC to stop at shapefiles and not create the BSLF, but shapefiles alone do not produce the detailed data the Commission needs to responsibly close the digital divide. ", "The DODC will include the collection of polygons, but the FCC's Second Notice of Proposed Rulemaking seeks comment on ways that location-specific data could be overlaid onto the polygon-based data to precisely identify the homes and small businesses that have and do not have broadband access. A consideration for Congress is whether the need for more granular and accurate data justifies withholding federal broadband funding until better data are available or whether the goal of closing the urban/rural digital divide is so pressing that funding should proceed based on the data currently available."], "subsections": []}, {"section_title": "Frequent Updates", "paragraphs": ["The FCC collects data from broadband service providers every six months through Form 477 and updates the Fixed Broadband Deployment Map twice a year. However, the Fixed Broadband Deployment Map's data lags approximately a year and a half behind. For example, as of October 2019, the Fixed Broadband Deployment Map contains data with the latest public release as of June 2018. A consideration for Congress may be whether the Fixed Broadband Deployment Map could be updated more frequently (e.g., data could be collected every month) to reflect continuing network changes and, if so, whether that would impose a significant burden on broadband service providers."], "subsections": []}, {"section_title": "Agency Roles and Interagency Coordination", "paragraphs": ["The involvement of multiple agencies\u00e2\u0080\u0094NTIA, FCC, and USDA\u00e2\u0080\u0094in broadband mapping and the provision of broadband subsidies and technical assistance may present challenges for interagency coordination and communication. For example, without interagency coordination, there is a potential for federal broadband funding efforts to be duplicative. The 116 th Congress is considering additional legislation regarding interagency coordination (see Appendix B ).", "Interagency coordination was also a major focus of the February 2019 USDA American Broadband Milestones Initiatives Report . As an example, the report discusses how NTIA is working on creating a \"one-stop shop\" for broadband permitting and deployment.", "Finally, the conference agreement for the 2019 Consolidated Appropriation ( P.L. 116-6 ) has language regarding interagency coordination:", "To ensure these investments are maximized, the conference agreement reminds the Department to avoid efforts that could duplicate existing networks built by private investment or those built leveraging and utilizing other federal programs and directs the Secretary of Agriculture to coordinate with the Federal Communications Commission (FCC) and the National Telecommunications Information Administration (NTIA) to ensure wherever possible that broadband loans and grants issued under the broadband programs are targeted to areas that are currently unserved."], "subsections": []}, {"section_title": "State Broadband Efforts", "paragraphs": ["Some state broadband offices have undertaken broadband mapping efforts, which could serve as models for federal efforts. For example:", "Kansas' new map published in July 2019 shows service availability at the street level for broadband across the state; North Carolina's broadband map has a new user-reporting tool that allows residents to provide feedback and identify pockets of unserved and underserved areas; and Wyoming's interactive map shows the results of internet-speed tests and broadband availability across the state. The map displays a color-coded dot for every speed test that has been completed in the state, creating a visual demonstration of served and unserved areas, along with quality of service at those locations."], "subsections": []}]}, {"section_title": "Concluding Observations", "paragraphs": ["Broadband mapping has garnered congressional interest since the creation of the SBI under the Broadband Data Improvement Act ( P.L. 110-385 ) and introduction of the NTIA's National Broadband Map. Mapping efforts have continually improved since that time, but congressional interest in mapping accuracy has been heightened due to recent challenges that have resulted in potential overstatement of broadband availability. ", "The FCC's DODC, which will take effect once specifications for the coverage polygons are defined through the FCC's comment-and-reply process, is a first step in obtaining more granular and accurate broadband mapping data. As the new collection effort unfolds, Congress may take an interest in monitoring whether the effort seems sufficient to alleviate the current broadband mapping issues, whether to wait on distribution of federal funding until the map is determined accurate, or whether additional legislative action should be taken. ", "Appendix A. Broadband Mapping Legislation in the 116 th Congress", "H.R. 1644 (Doyle), introduced on March 8, 2019, as the Save the Internet Act of 2019, includes provisions that would require the Government Accountability Office to prepare reports on broadband internet access service competition, ways to improve broadband infrastructure in rural areas, challenges to accurate broadband mapping, and the benefits of standalone broadband. It would require the FCC to engage with tribal communities to address broadband needs, delay release of its 706 Report until broadband data inaccuracies are corrected, and submit to Congress a report containing a plan for how the FCC will evaluate and address problems with Form 477 broadband data. Passed by the House on April 10, 2019. Placed on the Senate Legislative Calendar under General Orders on April 29, 2019.", "H.R. 2643 (Latta), introduced on May 9, 2019, as the Broadband MAPS Act of 2019, would direct the FCC to establish a challenge process to verify fixed and mobile broadband service coverage data. Referred to the Committee on Energy and Commerce.", "H.R. 2741 (Pallone), introduced on May 15, 2019, as the LIFT America Act, would provide $40 billion to the FCC to establish a reverse auction (nationally and by states) that would fund broadband infrastructure deployment in unserved and underserved areas (Title I, Subtitle A). Section 11001 of the bill would direct how existing broadband data/mapping should be used and challenged. Referred to the Committee on Natural Resources, Subcommittee for Indigenous Peoples of the United States.", "H.R. 3055 (Serrano), introduced June 3, 2019, as the Commerce, Justice, Science, Agriculture, Rural Development, Food and Drug Administration, Interior, Environment, Military Construction, Veterans Affairs, Transportation, and Housing and Urban Development Appropriations Act, 2020. As passed by the House, includes broadband mapping-related provisions. One provision would prevent NTIA from using funding to update broadband maps using only Form 477 data, and the other would provide $1 million in broadband mapping funding to NTIA. Placed on Senate Legislative Calendar under General Orders. Calendar No. 141.", "H.R. 3162 (McMorris Rodgers), introduced June 6, 2019, as the Broadband Data Improvement Act of 2019, would require the FCC to establish a reporting requirement under which each provider submits accurate and granular information regarding the geographic availability of broadband internet access and to establish a framework for an ongoing challenge process through which a provider or a member of the public may submit information challenging the accuracy of the information reflected on the National Broadband Map. Referred to the Committee on Energy and Commerce.", "H.R. 4024 (Finkenauer), introduced on July 25, 2019, as the Broadband Transparency and Accountability Act of 2019, would direct the FCC to require an entity to report data that reflects the average speed and characteristics of broadband service. It would also require the FCC to establish a process to use data that is reported by consumers, businesses, and state and local governments to verify the data used in the Broadband Map. Referred to the Committee on Energy and Commerce.", "H.R. 4128 (Luj\u00c3\u00a1n), introduced on July 30, 2019, as the Map Improvement Act of 2019, would direct the FCC to establish a standardized methodology for collecting and mapping accurate fixed broadband internet service and mobile broadband internet service coverage data. It would also establish an Office of Broadband Data Collection and Mapping within the FCC. Referred to the Committee on Energy and Commerce.", "H.R. 4227 (McEachin), introduced on September 6, 2019, as the Mapping Accuracy Promotes Services Act, would prohibit the submission to the Federal Communications Commission of broadband internet access service coverage information or data for the purposes of compiling an inaccurate broadband coverage map. Referred to the House Committee on Energy and Commerce.", "H.R. 4229 (Loebsack), introduced on September 6, 2019, as the Broadband Deployment Accuracy and Technological Availability Act, would require the FCC to issue rules relating to the collection of data with respect to the availability of broadband services. Referred to the House Committee on Energy and Commerce.", "S. 842 (Klobuchar), introduced on March 14, 2019, as the Improving Broadband Mapping Act of 2019, would require the FCC to establish a process to use coverage data reported by consumers and state, local, and tribal government entities to verify coverage data reported by wireless carriers. Additionally, it would direct the FCC to consider other measures, including, but not limited to, an evidence-based challenge process, to help in verifying coverage data reported by providers of both fixed and mobile broadband services. Referred to the Committee on Commerce, Science, and Transportation.", "S. 1485 (Manchin), introduced on May 15, 2019, as the Map Improvement Act of 2019, would require the FCC, in coordination with NTIA, to establish a standardized methodology for collecting and mapping accurate fixed and mobile broadband coverage data. It would establish an Office of Broadband Data Collection and Mapping at the FCC to serve as the central point of collection, aggregation, and validation of data. It would establish a technical assistance grant program at NTIA to support state and local entities in broadband mapping and assessing broadband adoption and pricing within their communities. Referred to the Committee on Commerce, Science, and Transportation.", "S. 1522 (Capito), introduced on May 16, 2019, as the Broadband Data Improvement Act of 2019, would direct the FCC to establish rules that require providers to submit more accurate and granular broadband data; a three-pronged data validation process involving public feedback, third-party commercial datasets, and an on-the-ground field validation process; and a periodic challenge process. It would require the National Broadband Map to be used by federal agencies to identify areas that remain unserved and track where awarded funds have actually resulted in broadband buildout. Referred to the Committee on Commerce, Science, and Transportation.", "S. 1822 (Wicker), introduced on June 12, 2019, as the Broadband Deployment Accuracy and Technological Availability Act, would require the FCC to issue rules to collect more granular broadband coverage data, including a decision on whether to collect verified information from others, such as state, local, and t ribal governmental entities that are primarily responsible for mapping or tracking broadband internet access service coverage for their respective jurisdictions. Referred to the Committee on Commerce, Science, and Transportation.", "S. 2275 (Bennet), introduced on July 25, 2019, as the Broadband Transparency and Accountability Act of 2019, would direct the FCC to require an entity to report data that reflects the average speed and characteristics of broadband service. It would also require the FCC to establish a process to use data that is reported by consumers, businesses, and state and local governments to verify the data used in the Broadband Map. Referred to the Committee on Commerce, Science, and Transportation.", "Appendix B. Broadband Interagency Coordination Legislation in the 116 th Congress", "H.R. 292 (Curtis), introduced on January 8, 2019, as the Rural Broadband Permitting Efficiency Act of 2019, would coordinate federal broadband permitting to encourage expansion of broadband service to rural and tribal communities. Referred to the Subcommittee on Conservation and Forestry.", "H.R. 1328 (Tonko), introduced on February 25, 2019, as the ACCESS Broadband Act, would establish the Office of Internet Connectivity and Growth within NTIA. The office would provide outreach to communities seeking improved broadband connectivity and digital inclusion, track federal broadband dollars, and facilitate streamlined and standardized applications for federal broadband programs. Passed by the House on May 8, 2019. ", "H.R. 2601 (Peterson), introduced on May 8, 2019, as the Office of Rural Telecommunications Act, would direct the FCC to establish the Office of Rural Telecommunications, which would coordinate with RUS within the USDA, NTIA, and other federal broadband programs. Referred to the House Committee on Energy and Commerce.", "H.R. 3278 (Loebsack), introduced on June 13, 2019, as the Connect America Act of 2019, would provide for the establishment of a program to expand access to broadband and coordinate with other federal programs that expand access to broadband, such as the Connect America Fund or the Broadband e-Connectivity Pilot Program, to ensure the efficient use of program funds. Referred to the House Committee on Energy and Commerce.", "H.R. 3676 (Khanna), introduced on July 10, 2019, as the Measuring Economic Impact of Broadband Act of 2019, would direct the Secretary of Commerce to conduct an assessment and analysis of the effects of broadband deployment and adoption on the economy, including consultation with the heads of agencies and offices of the federal government as the Secretary considers appropriate. Referred to the House Committee on Energy and Commerce.", "H.R. 4283 (Pence), introduced on September 11, 2019, as the Broadband Interagency Coordination Act of 2019, would require federal agencies with jurisdiction over broadband deployment to enter into an interagency agreement related to certain types of funding for broadband deployment. Referred to the Committee on Energy and Commerce and the Committee on Agriculture.", "S. 454 (Cramer), introduced on February 12, 2019, as the Office of Rural Broadband Act, would establish an Office of Rural Broadband within the FCC that would coordinate with RUS/USDA, NTIA, and other FCC broadband-related activities. Referred to the Committee on Commerce, Science, and Transportation.", "S. 1046 (Cortez Masto), introduced on April 4, 2019, as the ACCESS Broadband Act, would establish the Office of Internet Connectivity and Growth within NTIA. The office would provide outreach to communities seeking improved broadband connectivity and digital inclusion, track federal broadband dollars, and facilitate streamlined and standardized applications for federal broadband programs. Referred to the Committee on Commerce, Science, and Transportation.", "S. 1289 (Klobuchar), introduced on May 2, 2019, as the Measuring Economic Impact of Broadband Act of 2019, would direct the Secretary of Commerce to conduct an assessment and analysis of the effects of broadband deployment and adoption on the economy, including consultation with the heads of agencies and offices of the federal government as the Secretary considers appropriate. Referred to the House Committee on Energy and Commerce.", "S. 1294 (Wicker), introduced on May 2, 2019, as the Broadband Interagency Coordination Act of 2019, would require federal agencies with jurisdiction over broadband deployment (FCC, USDA, NTIA) to enter into an interagency agreement related to certain types of funding for broadband deployment. Referred to the Committee on Commerce, Science, and Transportation."], "subsections": []}]}}
{"id": "R45908", "title": "Legal Authority to Repurpose Funds for Border Barrier Construction", "released_date": "2019-12-30T00:00:00", "summary": ["President Trump has prioritized the construction of border barriers along the U.S.-Mexico border. Over the course of negotiations for FY2019 appropriations, the Administration asked Congress to appropriate $5.7 billion to the Department of Homeland Security (DHS) for that purpose. When Congress appropriated $1.375 billion to DHS for border fencing, the President announced that his Administration would fund the construction of border barriers by repurposing funds appropriated to the Department of Defense (DOD) and transferring funds from the Department of the Treasury. The Administration asserted that these funding transfers were authorized by a combination of the following federal laws:", "National Emergenc ies Act (NEA) . The NEA establishes a framework for the President to declare national emergencies. The NEA does not itself appropriate or authorize the transfer of funds, but the declaration of a national emergency triggers other statutory provisions that allow certain executive departments to repurpose existing appropriations. 10 U.S.C. \u00c2\u00a7 2808 . Section 2808 becomes available upon the President's declaration of a national emergency under the NEA. This provision authorizes the Secretary of Defense to use unobligated military construction funds for the construction of otherwise unauthorized military construction projects. Section s 8005 and 9002 of the 2019 D OD Appropriations Act . Sections 8005 and 9002 of the 2019 DOD Appropriations Act authorize the transfer of up to $6 billion appropriated in that act for \"military functions\" arising from \"unforeseen military requirements.\" Funds may be transferred under these authorities only for \"unforeseen military requirements\" where the item for which funds will be transferred \"has [not] been denied by the Congress.\" 10 U.S.C. \u00c2\u00a7\u00c2 284 . The 2019 DOD Appropriations Act also appropriated funds to a Drug Interdiction Account. Pursuant to 10 U.S.C. \u00c2\u00a7\u00c2 284, money in this fund may be spent by DOD in support of other agencies' counterdrug activities, including by constructing \"roads and fencing . . . to block drug smuggling corridors across international borders of the United States.\" The Trump Administration proposed to use Sections 8005 and 9002 of the 2019 DOD Appropriations Act to transfer additional funds into the Drug Interdiction Account, which would then be used to construct border barriers. 31 U.S.C. \u00c2\u00a7 9705 . This provision establishes a Treasury Forfeiture Fund (TFF) in the Department of the Treasury and authorizes the Secretary of the Treasury to make payments from unobligated sums in the TFF to federal, state, and local law enforcement agencies for various law enforcement purposes.", "Several plaintiffs filed lawsuits in federal courts in California, the District of Columbia, and Texas to prevent the Administration from using these authorities to repurpose appropriations for border barrier construction, arguing that none of the Administration's funding initiatives were authorized by Congress. Some plaintiffs also argued that the construction of border barriers was subject to the environmental assessment requirements of the National Environmental Policy Act (NEPA).", "Though a federal court in California initially entered an injunction prohibiting the Trump Administration from using the funds to initiate construction of border fencing, the U.S. Supreme Court ultimately stayed that injunction. The California federal district court's injunction would have prohibited the Administration from using Sections 8005 and 9002 to transfer funds for border barrier construction. The court did not rule on the lawfulness of the Administration's other proposed funding sources, though it did determine that waivers issued by DHS under Section 102 of the Illegal Immigration Reform and Immigrant Responsibility Act rendered NEPA inapplicable to the proposed border projects. But following the Supreme Court's stay of the district court's injunction, DOD was able to use funds transferred under Sections 8005 and 9002 for barrier construction purposes while litigation in the case continues. A second federal district court in Texas has enjoined the use of Section 2808 for border barrier construction purposes. A third lawsuit challenging the Trump Administration's funding initiatives is ongoing in the District of Columbia, though that court has not ruled on the merits.", "Meanwhile, both houses of Congress have continued to move through the annual appropriations process. Although the House of Representatives initially passed a version of the DOD Appropriations Act for FY2020 that would have expressly prohibited the use of funds for the construction of border barriers, these limitations were not included as part of the Consolidated Appropriations Act, 2020 (which included DOD appropriations and $1.375 billion for construction of a barrier system along the southwest border), or the FY2020 National Defense Authorization Act as they were passed by both chambers of Congress and signed into law."], "reports": {"section_title": "", "paragraphs": ["P resident Trump has long advocated for the construction of additional fencing, walls, and other barriers along the U.S.-Mexico border to deter unlawful border crossings. Less than a week after taking office, the President issued an executive order directing the Secretary of Homeland Security to \"take all appropriate steps to immediately plan, design, and construct a physical wall along the southern border.\" This policy has engendered a robust debate in the public sphere, and a conflict has also made its way to federal court, with various plaintiffs challenging the lawfulness of the Trump Administration's initiatives to pay for the construction of border barriers by reprogramming funds from existing appropriations. At their core, these lawsuits concern whether the Administration's funding initiatives exceed existing statutory authorization and conflict with Congress's constitutionally conferred power over federal funds. ", "Article I of the Constitution provides that \"[n]o money shall be drawn from the Treasury but in Consequence of Appropriations made by Law.\" As Justice Joseph Story noted in his Commentaries on the Constitution , the appropriations power was given to Congress to guard against arbitrary and unchecked expenditures by the executive branch and to \"secure regularity, punctuality, and fidelity, in the disbursement of the public money.\" \"In arbitrary governments,\" he expounded, \"the prince levies what money he pleases from his subjects, disposes of it, as he thinks proper, and is beyond responsibility or reproof.\" To avoid giving the President such \"unbounded power over the public purse of the nation,\" the Framers designated Congress \"the guardian of [the national] treasure\"\u00e2\u0080\u0094giving to it \"the power to decide, how and when any money should be applied[.]\" This \"power to control, and direct the appropriations,\" Justice Story explained, serves as \"a most useful and salutary check upon profusion and extravagance, as well as upon corrupt influence and public speculation.\" Justice Story's sentiments echoed those of James Madison, who in The Federalist No. 58 described the legislature's \"power over the purse\" as \"the most complete and effectual weapon with which any constitution can arm the immediate representatives of the people, for obtaining a redress of every grievance, and for carrying into effect every just and salutary measure.\"", "The Trump Administration's early efforts to secure funding for border barriers focused on negotiating with Congress to secure appropriations specifically designated for that task. In his FY2018 budget proposal, President Trump requested that Congress appropriate $1.57 billion for border barrier construction. Similarly, President Trump's FY2019 budget request sought $1.6 billion \"to construct approximately 65 miles of border wall in south Texas.\"", "Congress did not appropriate the amounts requested for either fiscal year. For FY2018, Congress appropriated $1.375 billion for new or repaired fencing and other forms of barriers along the U.S.-Mexico border, as well as $196 million for border monitoring technology. As FY2019 began, Congress and the President negotiated, inter alia , the amount of funding to provide the Department of Homeland Security (DHS) for border barrier construction for FY2019. Ultimately, Congress and the President did not agree on funding levels, leading to a 35-day lapse of appropriations for DHS and other portions of the federal government. During the partial government shutdown, President Trump increased his request for border barrier funding from $1.6 billion to $5.7 billion. Congress did not grant this request. Instead, in the Consolidated Appropriations Act, 2019 (CAA 2019), Congress appropriated $1.375 billion\u00e2\u0080\u0094$4.325 billion less than was ultimately requested\u00e2\u0080\u0094for \"the construction of primary pedestrian fencing\u00c2\u00a0. . . in the Rio Grande Valley Sector.\"", "President Trump signed the CAA 2019 on February 15, 2019, that same day announcing that his Administration would \"take Executive action\" to \"secure additional resources\" to construct barriers along the southern border. In particular, President Trump announced that his Administration had identified \"up to $8.1 billion\" from three additional funding sources \"to build the border wall.\" It remains to be seen whether the Administration will identify further funding sources from the FY2020 budget cycle.", "Several plaintiffs filed lawsuits in federal courts in California, the District of Columbia, and Texas to prevent the Trump Administration from taking this action. These plaintiffs assert that the Administration's funding initiatives are not authorized under existing law and thus violate the constitutional and statutory provisions requiring that federal money be spent only for the purposes, and in the amounts, specified by Congress. In May 2019, a federal district court in California concluded that one of the Administration's funding initiatives was unlawful and prohibited the Administration from using that authority to repurpose funds for border barrier construction. Though the U.S. Court of Appeals for the Ninth Circuit denied the Administration's request to stay the injunction, the Supreme Court granted that request, thus allowing the Administration to begin contracting for construction of border barriers while litigation in the case continues. A second federal district court in Texas has separately enjoined the use of military construction funds for border barrier construction. Meanwhile, the federal district court in the District of Columbia ruled that the plaintiff in that case\u00e2\u0080\u0094the U.S. House of Representatives\u00e2\u0080\u0094did not have standing to sue and dismissed the suit. The U.S. House of Representatives has appealed the decision.", "According to DHS's U.S. Customs and Border Protection (CBP), there had been roughly 654 miles of primary barriers deployed along the U.S.-Mexico border as of January 2017. In May 2019, CBP declared that \"approximately 205 miles of new and updated border barriers\" had been funded (though not necessarily constructed) \"through the traditional appropriations process and via Treasury Forfeiture Funding\" since January 2017. In addition to this mileage, CBP described DOD as funding in FY2019 \"up to approximately 131 miles of new border barriers in place of dilapidated or outdated designs, in addition to road construction and lighting installation.\" In total, CBP stated that some 336 total miles of barriers (including both replacement barriers and barriers deployed in new locations) would be deployed using funds from FY2017 through FY2019.", "This report addresses the litigation surrounding the Trump Administration's initiatives to repurpose existing appropriations for the construction of border barriers along the U.S.-Mexico border. It begins by providing an overview of the authorities cited by the Trump Administration to obtain border barrier funding and the steps the Administration has taken to utilize those authorities. It then discusses DHS's existing authority to construct border barriers and the various authorities on which the Trump Administration has relied to secure additional border barrier funding. Finally, this report discusses the ongoing litigation regarding the Administration's funding initiatives, with a focus on the parties' arguments and judicial decisions."], "subsections": [{"section_title": "Legal Authorities Cited by the Trump Administration", "paragraphs": ["The Trump Administration has cited several statutory authorities as giving it both the power and the necessary funds to construct additional border barriers. Some of these authorities belong to DHS, the agency with primary responsibility for securing the U.S. borders. Other authorities permit the Department of Defense (DOD) or the Department of the Treasury to transfer funds for specified military, law enforcement, or other emergency purposes. These authorities are described in more detail below.", "First , Section 102 of the Illegal Immigration Reform and Immigrant Responsibility Act (IIRIRA) as amended generally authorizes DHS to construct barriers and roads along the international borders in order to deter illegal crossings at locations of high illegal entry, and further directs the agency to construct fencing along no less than 700 miles of the U.S.-Mexico border. This law also authorizes the Secretary of Homeland Security to waive \"all legal requirements\u00c2\u00a0. . . necessary to ensure expeditious construction of . . . [the] barriers.\" Second , the Secretary of Defense is authorized by 10 U.S.C. \u00c2\u00a7\u00c2\u00a02808 to \"undertake military construction projects . . . not otherwise authorized by law that are necessary to support such use of the armed forces.\" President Trump stated that he would invoke his authority under this provision to repurpose $3.6 billion allocated to \"military construction projects\" for border barrier construction. This authority becomes available upon a \"declaration by the President of a national emergency\" as authorized by the National Emergencies Act (NEA). Third , DOD has authority under 10 U.S.C. \u00c2\u00a7\u00c2\u00a0284 (\"Section 284\") to support other departments' or agencies' counterdrug activities, including through the construction of fencing to block drug smuggling corridors. President Trump proposed to direct the DOD to use its authority under Section 284 to support DHS's \"counterdrug activities\" through the construction of fencing across drug trafficking corridors at the southern border. These support activities would be funded by $2.5 billion in DOD's Drug Interdiction and Counter-Drug Activities Account (Drug Interdiction Account), which would be transferred to that account using the transfer authority in Sections 8005 and 9002 of the 2019 DOD Appropriations Act. These authorities authorize the transfer of up to $6 billion of DOD funds for \"unforeseen military requirements\" but only \"where the item for which funds are requested has been denied by Congress.\" Fourth , the Treasury Forfeiture Fund contains funds that are confiscated by, or forfeited to, the federal government pursuant to laws enforced or administered by certain law enforcement agencies, and unobligated money in this fund may be used for obligation or expenditure in connection with \"law enforcement activities of any Federal agency.\" The President proposed to withdraw $601 million in unobligated funds from the Treasury Forfeiture Fund ( TFF) to pay for border barrier construction. ", "The Trump Administration has taken steps to make these funds available to construct border barriers along the U.S.-Mexico border. On February 15, the President declared a national emergency under the NEA, and has subsequently vetoed two congressional resolutions disapproving that declaration (which Congress did not override). On September 3, 2019, the Secretary of Defense directed the Acting Secretary of the Army to \"expeditiously undertake\" 11 border barrier military construction projects pursuant to Section 2808.", "In addition, on February 25, DHS requested that DOD use its authority under 10 U.S.C. \u00c2\u00a7\u00c2\u00a0284 to assist in constructing border barriers. DOD granted this request on March 25 and invoked the transfer authority in Section 8005 of the FY2019 DOD Appropriations Act to move $1 billion of Army personnel funds into DOD's Drug Interdiction Account for DOD to help DHS construct border barriers. A few months later, DOD again invoked Section 8005 (along with the related transfer authority in Section 9002 of the FY2019 DOD Appropriations Act) to transfer another $1.5 billion of personnel, procurement, and overseas contingency operation funds into the Drug Interdiction Account for use in constructing border barriers. The Trump Administration proposed to construct \"approximately 131 miles of new border barriers . . . in addition to road construction and lighting installation\" with these funds.", "For each of the proposed projects, the Acting Secretary of Homeland Security utilized IIRIRA \u00c2\u00a7\u00c2\u00a0102's waiver authority to waive the application of several federal environmental, conservation, and historic preservation statutes, including the National Environmental Policy Act (NEPA), the Endangered Species Act, the Safe Drinking Water Act, and the Antiquities Act, to the \"fence[s], roads, and lighting\" that DOD will be \"assist[ing]\" in \"constructing\" under Section 284."], "subsections": [{"section_title": "Department of Homeland Security Authority", "paragraphs": ["DHS's authority to construct barriers along the southern border derives from IIRIRA \u00c2\u00a7\u00c2\u00a0102, as amended. This law provides that \"[t]he Secretary of Homeland Security shall take such actions as may be necessary to install additional physical barriers and roads . . . in the vicinity of the United States border to deter illegal crossings in areas of high illegal entry into the United States.\" IIRIRA \u00c2\u00a7\u00c2\u00a0102 directs that \"the Secretary of Homeland Security shall construct reinforced fencing along not less than 700 miles of the southwest border,\" while also \"identify[ing] the 370 miles\u00c2\u00a0. . . along the southwest border where fencing would be most practical and effective in deterring smugglers and aliens attempting to gain illegal entry into the United States.\" Finally, IIRIRA \u00c2\u00a7\u00c2\u00a0102 gives the Secretary of Homeland Security flexibility on where to construct barriers, allowing the Secretary to decline to build a border barrier in a particular location if \"[the Secretary] determines that the use or placement of such resources is not the most appropriate means to achieve and maintain operational control over the international border.\u00c2\u00a0.\u00c2\u00a0.\u00c2\u00a0.\"", "To expedite the construction of border barriers, IIRIRA \u00c2\u00a7\u00c2\u00a0102 authorizes the Secretary of Homeland Security to, \"in [the] Secretary's sole discretion,\" \"waive all legal requirements\" that the Secretary \"determines necessary to ensure expeditious construction of the barriers and roads under this section.\" And to limit potential legal challenges to this waiver authority, IIRIRA \u00c2\u00a7\u00c2\u00a0102 cabins the jurisdiction of federal district courts to claims \"alleging a violation of the Constitution\" and forecloses appellate review of district court decisions, except by seeking discretionary review in the U.S. Supreme Court.", "IIRIRA \u00c2\u00a7\u00c2\u00a0102's waiver authority has been challenged on constitutional grounds in cases involving waivers of NEPA and other federal environmental statutes. Those challenging the waiver authority have contended that it violates the nondelegation doctrine, the Presentment Clause, and the Take Care Clause. Courts, however, have uniformly rejected these challenges and concluded that \"a valid waiver of the\u00c2\u00a0. . . laws under [IIRIRA \u00c2\u00a7\u00c2\u00a0102] is an affirmative defense\" to all claims arising from the waived laws."], "subsections": []}, {"section_title": "The National Emergencies Act and Military Construction Funds", "paragraphs": ["The President invoked 10 U.S.C. \u00c2\u00a7\u00c2\u00a02808 and announced that his Administration would seek to reallocate $3.6 billion from DOD's military construction budget for border barrier construction. The authority to take this action hinges on the President declaring a national emergency under the NEA, which President Trump did on February 15. On September 3, 2019, DOD identified 127 military construction projects that it would delay or suspend in order to reallocate $3.6 billion toward 11 barrier construction projects using this authority. The NEA provides general requirements governing the declaration of a national emergency, while Section 2808 contains additional requirements for its exercise."], "subsections": [{"section_title": "The National Emergencies Act", "paragraphs": ["The Supreme Court has explained that the President's authority \"must stem either from an act of Congress or from the Constitution itself.\" Because Article II of the Constitution does not grant the Executive general emergency powers, the President generally must rely on Congress for such authority. Congress has historically given the President robust powers to act in times of crisis. By 1973, Congress had enacted more than 470 statutes granting the President special authorities upon the declaration of a \"national emergency,\" but these statutes imposed no limitations on either the President's discretion to declare an emergency or the duration of such an emergency. The Senate Special Committee on National Emergencies and Delegated Emergency Powers (previously named the Senate Special Committee on the Termination of the National Emergency) (\"Special Committee\") was apparently concerned that four presidentially declared national emergencies remained extant in the mid-1970s, the earliest dating to 1933.", "In 1973, the Special Committee concluded that the President's crisis powers \"confer[red] enough authority to rule the country without reference to normal constitutional process,\" and so Congress enacted the NEA in 1976 to pare back the President's emergency authorities. ", "The NEA does not define \"national emergency.\" Rather, the NEA established a framework to provide enhanced congressional oversight and prevent emergency declarations from continuing in perpetuity. To accomplish these goals, the NEA terminated all then-existing presidentially declared emergencies. The NEA also established procedures for future declarations of national emergencies, requiring the President to", "specify which statutory emergency authorities he intends to invoke upon a declaration of a national emergency (unlike the pre-NEA regime, under which the declaration of an emergency operated as an invocation of all of the President's emergency authorities); publish the proclamation of a national emergency in the Federal Register and transmit it to Congress; maintain records and transmit to Congress all rules and regulations promulgated to carry out such authorities; and provide an accounting of expenditures directly attributable to the exercise of such authorities for every six-month period following the declaration.", "The NEA further provides that a national emergency will end (1) automatically after one year unless the President publishes a notice of renewal in the Federal Register , (2) upon a presidential declaration ending the national emergency, or (3) if Congress enacts a joint resolution terminating the emergency (which would likely require the votes of two-thirds majorities in each house of Congress to override a presidential veto). While the NEA directs each house of Congress to meet every six months to consider whether to end a national emergency by joint resolution, Congress has never met to consider such a vote under that deadline prior to this year. The statute does not appear to prevent Congress from considering a resolution to terminate a national emergency at any time before or after a six-month interval.", "Although a purpose of the NEA was to end perpetual states of emergency, the law does grant the President authority to renew an emergency declaration. As a result, there are currently 34 national emergency declarations in effect, some of which have been renewed for decades. ", "The declaration of a national emergency under the NEA enables the President to invoke a wide array of emergency authorities conferred by statute. The most often invoked is the International Emergency Economic Powers Act (IEEPA), which gives the President broad authority to impose sanctions on foreign countries and entities. Besides Section 2808, another authority that could provide for the reprogramming of funds for construction purposes is 33 U.S.C. \u00c2\u00a7 2293, which, in the event of a national emergency or declaration of war, authorizes the Secretary of the Army to end or defer Army Corps of Engineers civil works projects that are \"not essential to the national defense.\" The Secretary of the Army can then use the funds otherwise allocated to those projects for \"authorized civil works, military construction, and civil defense projects that are essential to the national defense.\" No President has ever invoked this authority, but it could potentially be used in connection with President Trump's declaration of a national emergency at the southern border. "], "subsections": []}, {"section_title": "Military Construction Funds", "paragraphs": ["A declaration of a national emergency triggers Section 2808, which provides emergency authority for unauthorized military construction in the event of a declaration of war or national emergency. President Trump invoked this statutory authority to reallocate $3.6 billion from DOD military construction funds to border barrier construction, stating in his emergency declaration that \"this emergency requires use of the Armed Forces and . . . that the construction authority provided in section 2808 of title 10, United States Code, is invoked and made available, according to its terms, to the Secretary of Defense and, at the discretion of the Secretary of Defense, to the Secretaries of the military departments.\" The President did not describe in his proclamation the tasks the Armed Forces would undertake with respect to the emergency at the southern border. ", "Originally enacted in 1982, Section 2808 provides that upon the President's declaration of a national emergency \"that requires use of the armed forces,\" the Secretary of Defense may \"without regard to any other provision of law . . . undertake military construction projects . . . not otherwise authorized by law that are necessary to support such use of the armed forces.\" The term \"military construction project\" is defined to include \"military construction work,\" and \"military construction\" is, in turn, defined to \"include any construction, development, conversion, or extension of any kind carried out with respect to a military installation . . . or any acquisition of land or construction of a defense access road.\" The term \"military installation\" means a \"base, camp, post, station, yard, center, or other activity under the jurisdiction of the Secretary of a military department.\" Finally, Section 2808 limits the funds available for emergency military construction to \"the total amount of funds that have been appropriated for military construction\" but which have not been obligated.", "Section 2808's legislative history provides limited guidance on the types of emergencies and military construction projects envisioned. A House Armed Services Committee report accompanying the original 1982 legislation indicated that while \"[i]t is impossible to provide in advance for all conceivable emergency situations,\" Section 2808 was intended to address contingencies \"ranging from relocation of forces to meet geographical threats to continuity of efforts after a direct attack on the United States during which the Congress may be unable to convene.\" With certain limited exceptions, prior Presidents have generally invoked this authority for construction at military bases in foreign countries."], "subsections": []}]}, {"section_title": "Department of Defense Authorities", "paragraphs": ["To obtain additional funds to construct border barriers, the Trump Administration has invoked DOD's authority under 10 U.S.C. \u00c2\u00a7\u00c2\u00a0284 to support DHS in constructing border fencing. This support would be funded by money transferred to DOD's Drug Interdiction Account pursuant to Sections 8005 and 9002 of the 2019 DOD Appropriations Act. These authorities are not contingent on the declaration of a national emergency."], "subsections": [{"section_title": "Section 284", "paragraphs": ["In general, U.S. military involvement in civilian law enforcement is permitted only when specifically authorized by Congress. For example, the Secretary of Defense can \"make available any equipment\u00c2\u00a0. . . base facility, or research facility\" to any \"civilian law enforcement official\u00c2\u00a0. . . for law enforcement purposes.\" Section 284 is another of these authorities. It authorizes the Secretary of Defense to \"provide support for the counterdrug activities or activities to counter transnational organized crime of any other department or agency of the Federal Government or of any State, local, tribal, or foreign law enforcement agency.\" ", "DOD may provide support under Section 284 only after it has been \"requested\" by the appropriate official from the governmental agency or department, and then only for \"the purposes set forth\" in Section 284. Those purposes include \"the maintenance and repair\" of certain equipment, the \"training of law enforcement personnel\" related to \"[c]ounterdrug or counter-transnational organized crime,\" and \"[a]erial and ground reconnaissance.\" Section 284 also authorizes DOD to provide support for the \"[c]onstruction of roads and fences and installation of lighting to block drug smuggling corridors across international boundaries of the United States.\" And to ensure that DOD can provide this support expeditiously, support under Section 284 is generally not subject to the requirements that govern DOD's other authority to support civil law enforcement agencies. ", "Section 284 also provides for congressional oversight of DOD's support activities. At least 15 days prior to providing support to another agency under Section 284, the Secretary of Defense must submit \"a description of any small scale construction project for which support is provided\" to the appropriate congressional committees. \"Small scale construction project\" is, in turn, defined to encompass projects that cost no more than $750,000. Section 284 does not include a reporting requirement for any projects exceeding $750,000.", "Historically, DOD's activities under Section 284 have been funded by the \"Drug Interdiction and Counter-Drug Activities\" line item in its annual appropriations bill. For FY2019 Congress appropriated $1,034,625,000 to this line item, with $517,171,000 of that amount being allocated for \"counter-narcotics support.\""], "subsections": []}, {"section_title": "Sections 8005 and 9002 of the 2019 DOD Appropriations Act", "paragraphs": ["On February 25, 2019, DHS submitted a request to DOD to provide assistance pursuant to Section 284 in constructing border barriers in three locations along the U.S.-Mexico border, and DOD then approved the use of funds from the Drug Interdiction Account for these projects. However, much of the FY2019 funds appropriated for \"counter-narcotics support\" had been obligated by the time DOD made its request. As a result, DOD sought to use its authority under Section 8005 of the 2019 DOD Appropriations Act to transfer other funds into the Drug Interdiction Account.", "Section 8005 authorizes the Secretary of Defense\u00e2\u0080\u0094\"[u]pon a determination by the Secretary of Defense that such action is necessary in the national interest\" and with \"approval of the Office of Management and Budget\"\u00e2\u0080\u0094to \"transfer not to exceed [$4 billion] of working capital funds of the [DOD] or funds made available in [the 2019 DOD Appropriations Act] for military functions (except military construction).\" Section 8005 further provides that funds may be transferred only \"for higher priority items, based on unforeseen military requirements, than those for which originally appropriated,\" and may not be transferred \"where the item for which funds are requested has been denied by Congress.\" Finally, Section 8005 requires the Secretary of Defense to \"notify the Congress promptly of all transfers made pursuant to this authority.\"", "This transfer authority, in its current form, originated with the FY1974 DOD Appropriations Act. The 1974 act appears to be the first instance when Congress expressly prohibited the transfer of DOD funds for purposes for which Congress had denied funding. The House committee report for this legislation explained that this language was added \"to tighten congressional control of the reprogramming process.\" Before that time, DOD had \"on\u00c2\u00a0.\u00c2\u00a0.\u00c2\u00a0. occasion[]\" reprogrammed funds \"which ha[d] been specifically deleted in the legislative process\" after obtaining the consent of the authorizing and appropriations committees in the House and Senate. The House committee report explained that this practice \"place[d] committees in the position of undoing the work of the Congress.\" Characterizing this practice as \"untenable,\" the House report declared that \"henceforth no such requests will be entertained.\"", "Invoking Section 8005's transfer authority, DOD in February 2019 authorized the transfer of an initial $1 billion of Army personnel funds to the Drug Interdiction Account. And on May 9, DOD authorized the transfer of an additional $1.5 billion to that fund using Sections 8005 and 9002 of the 2019 DOD Appropriations Act. Section 9002 authorizes the Secretary of Defense to \"transfer up to [$2 billion] between the appropriations or funds made available to [DOD] in this title.\" This authority is \"in addition to any other transfer authority available to [DOD]\"\u00e2\u0080\u0094including Section 8005\u00e2\u0080\u0094and is also \"subject to the same terms and conditions as the authority provided in section 8005.\" The Acting Secretary of Defense informed Congress of these transfers."], "subsections": []}]}, {"section_title": "Treasury Forfeiture Fund", "paragraphs": ["In various federal statutes, Congress has authorized the confiscation, or forfeiture to the federal government, of any property used to facilitate a crime as well as the profits and proceeds of such crimes. None of these statutes is contingent on the declaration of a national emergency. Congress established the TFF to hold proceeds of property forfeited under most laws enforced or administered by a law enforcement organization within the Department of the Treasury or by the Coast Guard. Funds in the TFF may be used by the Secretary of the Treasury for a variety of law enforcement purposes. Some of these purposes are mandatory, such as making \"equitable sharing payments\" to other federal, state, and local law enforcement agencies that participate in the seizure or forfeiture of property. Others, such as awards for information leading to forfeited property covered by the TFF, are subject to the discretion of the Secretary of the Treasury. ", "At the end of each fiscal year, the Secretary of the Treasury must reserve a sufficient amount in the TFF to cover mandatory and discretionary expenditures. Unobligated balances in the fund over the reserved amount may be used \"for obligation or expenditure in connection with the law enforcement activities of any Federal agency or of a Department of the Treasury law enforcement organization.\" This unobligated amount is known as \"Strategic Support.\" ", "At the end of 2018, DHS requested $681 million of Strategic Support from the TFF for \"border security.\" In response to that request, the Secretary of the Treasury transferred roughly $601 million to CBP for \"border barrier construction.\""], "subsections": []}]}, {"section_title": "The Border Barrier Litigation", "paragraphs": ["Following the Trump Administration's announcement of its initiatives to fund border barrier construction, citizens groups, states, and the U.S. House of Representatives filed lawsuits in federal district courts in California, the District of Columbia, and Texas. The plaintiffs in these lawsuits have argued that the Trump Administration's funding initiatives are not authorized by (or are inconsistent with) the relevant statutory authorities. As a result, they have also contended that the Administration's funding initiatives violate constitutional separation of powers principles and the Appropriations Clause's directive that money may be withdrawn from the Treasury only \"in Consequence of Appropriations made by Law.\" Finally, some plaintiffs have asserted that IIRIRA \u00c2\u00a7\u00c2\u00a0102 does not empower DHS to waive the requirements of NEPA for the border barrier projects being constructed with DOD's assistance because IIRIRA \u00c2\u00a7\u00c2\u00a0102's waiver authority extends only to projects undertaken by DHS.", "After bringing suit, certain plaintiffs filed motions for a preliminary injunction, asking the courts to prohibit DOD from implementing its funding initiatives while the litigation was ongoing. On May 24, 2019, a judge on the U.S. District Court for the Northern District of California issued decisions in the two cases pending in that court\u00e2\u0080\u0094 Sierra Club v. Trump and California v. Trump \u00e2\u0080\u0094resolving one of the issues presented by the plaintiffs' motion: whether Sections 8005 and 9002 of the 2019 DOD Appropriations Act authorized the transfer of funds for border barrier construction. ", "The district court determined that it did not for two reasons. It first concluded that this would violate Section 8005's prohibition on transferring funds where \"the item for which funds [were] requested ha[d] been denied by Congress.\" The court also ruled that the Administration's proposed use of Section 8005 was unlawful because DOD's purported need for additional border barrier funding was not an \"unforeseen military requirement,\" as required by Section 8005. Based on this ruling, the court in Sierra Club issued a preliminary injunction barring the Administration from using Section 8005 to transfer funds for border barrier construction while litigation proceeded. The court declined to also issue a preliminary injunction in the California case because (with the Sierra Club injunction in place) the plaintiffs in California could not establish that they would be irreparably harmed by the denial of an injunction.", "Because the plaintiffs' lawsuit preceded DOD's May 9 decision to transfer $1.5 billion to the Drug Interdiction Account, the preliminary injunction applied only to the initial, February 25 transfer of $1 billion to fund projects in New Mexico and Arizona. But in a later decision, the district court applied the reasoning from its initial ruling to conclude that the $1.5 billion transfer, like the first, was not authorized by Section 8005 or Section 9002. The court then issued an order permanently prohibiting the Administration from using either of these provisions to transfer any of the $2.5 billion for border barrier construction.", "The Trump Administration appealed the district court's permanent injunction to the U.S. Court of Appeals for the Ninth Circuit and asked that court to stay the injunction pending appeal. The Ninth Circuit denied that request, agreeing with the district court that Section 8005 does not authorize the transfer of funds for border barrier construction. However, the Supreme Court subsequently issued an order staying the injunction during the pendency of the litigation. As a result of the Supreme Court's order, the Trump Administration may use Section 8005 to transfer funds for border barrier construction. The district court subsequently issued a permanent injunction against the use of military construction funds as well, but stayed the injunction pending appeal.", "The Texas lawsuit, El Paso County v. Trump , also resulted in a permanent injunction against the Trump Administration's funding scheme for border barrier construction using Section 2808. The district court determined that the use of those provisions to fund border barriers clashed with the Consolidated Appropriations Act, 2019 (CAA 2019), provision that prohibits the use of appropriated funds \"to increase . . . funding for a program, project, or activity as proposed in the President's budget request for a fiscal year\" unless it is made pursuant to the reprogramming or transfer provisions of an appropriations Act.", "This section discusses the various arguments raised in these lawsuits regarding the lawfulness of the Trump Administration's initiatives for funding border barrier construction. It also discusses the judicial decisions that have resolved, or otherwise opined on, the lawfulness of the Administration's funding initiatives. The federal court in the District of Columbia presiding over the U.S. House of Representatives' case dismissed that suit for lack of standing, and that decision is currently being appealed. "], "subsections": [{"section_title": "Legal Arguments and Judicial Decisions Regarding the Trump Administration's Efforts to Fund Additional Barrier Deployments", "paragraphs": [], "subsections": [{"section_title": "Section 8005", "paragraphs": [], "subsections": [{"section_title": "The Northern District of California's Sierra Club Decision166", "paragraphs": ["As discussed earlier, Section 8005 authorizes the transfer of funds for \"military functions,\" but provides that funds may be transferred only \"for higher priority items, based on unforeseen military requirements, than those for which originally appropriated.\" Further, funds may not be transferred \"where the item for which funds are requested has been denied by Congress.\" The district court in Sierra Club v. Trump concluded that Section 8005 does not authorize the transfer of funds for the construction of border barriers because the transfer was for an \"item\" for which funds had been denied by Congress and, in any event, because the asserted need for the construction of border barriers was not \"unforeseen.\"", "The district court first addressed whether the proposed transfer was for an \"item\" for which Congress had denied funds. In its briefs, the Trump Administration had argued that the relevant \"item for which funds [were] requested\" was DOD's assistance to DHS under 10\u00c2\u00a0U.S.C. \u00c2\u00a7\u00c2\u00a0284 for \"counterdrug activities,\" not (as the plaintiffs urged) the construction of border barriers generally. Thus, the Administration urged, because Congress had not \"denied\" a request for appropriations for DOD \"counterdrug\" assistance under Section 284, transferring funds for that purpose was not prohibited by Section 8005.", "The district court rejected that argument, concluding instead that the historical context leading up to the transfer\u00e2\u0080\u0094including the previous disagreement between the Administration and Congress on the appropriate funding for border barriers that led to an extended lapse in appropriations\u00e2\u0080\u0094showed that the \"item for which funds [were] requested\" was the construction of border barriers generally, regardless of which agency would undertake construction or the statutory authority on which it might rely. \"[T]he reality is that Congress was presented with\u00e2\u0080\u0094and declined to grant\u00e2\u0080\u0094a $5.7 billion request for border barrier construction,\" the court explained. Thus, \"[b]order barrier construction, expressly, is the item [the Administration] now seek[s] to fund via the Section 8005 transfer, and Congress denied the requested funds for that item.\"", "The court also relied on portions of Section 8005's legislative history to support this conclusion. In particular, the court cited portions of a House report from 1973, which explained that Congress originally adopted the \"denied by Congress\" language to \"'tighten congressional control of the reprogramming process''' and to \"'prevent the funding for programs which have been considered by Congress and for which funding has been denied.'\" In the court's view, an interpretation of Section 8005 that would allow the Administration to transfer money for border barrier construction, despite Congress's refusal to appropriate the amount of money requested for that purpose, would undermine Section 8005's objective.", "The court also determined that Section 8005's transfer authority was unavailable because the Administration's proposed border barrier construction was not an \" unforeseen military requirement[].\" The Administration had argued that the proposed border barrier construction (i.e., the \"military requirement\") was \"unforeseen\" because the need for DOD to provide support to DHS through Section 284 was not known until DHS had requested that assistance\u00e2\u0080\u0094which occurred after the President's budget request and after Congress had passed the DOD appropriations bill with less funding for barrier construction than the Administration had requested.", "The district court rejected this interpretation of Section 8005. On this theory, the court explained, \" every request for Section 284 support\" would be unforeseen because the need to rely on that particular statutory authority would only ever arise when another agency requests DOD's assistance under that provision. The district court also asserted that \"[the Administration's] argument that the need for the requested border barrier construction funding was 'unforeseen' cannot logically be squared with the Administration's multiple requests for funding\" for a border wall.", "Finally, the court invoked the canon of constitutional avoidance to support its reading of Section 8005. Under this rule of statutory interpretation, when there are two possible interpretations of a statute, one of which would raise serious constitutional concerns, courts should adopt the interpretation that avoids the constitutional difficulties. According to the district court, the Administration's interpretation of Section 8005 would \"pose serious problems under the Constitution's separation of powers principles\" because it would allow the executive branch to \"render meaningless Congress's constitutionally-mandated power\" to control federal expenditures by \"ceding essentially boundless appropriations judgment\" to the executive branch. Avoiding these potential pitfalls was, in the court's view, another reason to reject the Administration's broader interpretation of Section 8005.", "On these grounds, the court decided that the plaintiffs would likely succeed on their claim that the Administration could not lawfully use Section 8005 to transfer funds for border barrier construction. Thus, after finding the remaining preliminary injunction requirements satisfied, the court entered an order temporarily prohibiting the Administration from using the $1 billion of funds transferred under Section 8005 to construct the specified border barriers in New Mexico and Arizona.", "After issuing this decision, the parties submitted additional briefing on the lawfulness of the Administration's May 9 decision to use Sections 8005 and 9002 to transfer another $1.5 billion to the Drug Interdiction Account for the construction of border barriers in four additional locations in California and Arizona. On June 28, the district court issued a decision adopting the same reasoning as its earlier opinion. And having found both of the Administration's proposed uses of Section 8005's transfer authority unlawful, the court entered an injunction permanently prohibiting the Administration \"from taking any action to construct a border barrier\" using Section 8005."], "subsections": []}, {"section_title": "The Ninth Circuit's Sierra Club Decision", "paragraphs": ["The Trump Administration appealed the district court's permanent injunction to the U.S. Court of Appeals for the Ninth Circuit and asked that court to stay the injunction pending appeal.", "On July 3, a divided panel of the Ninth Circuit denied the Administration's request for a stay, concluding that the Administration had not shown a likelihood of success on the merits. In reaching that conclusion, the Ninth Circuit first agreed with the district court that the construction of a border barrier was not an \" unforeseen military requirement,\" as required by Section 8005. Like the district court, the Ninth Circuit declared that the relevant \"requirement\" was the construction of border barriers\u00e2\u0080\u0094not, as the Administration contended, the need for DHS to request support from DOD under Section 284. The Ninth Circuit also concluded that Congress had \"denied\" funds for construction of the border barrier. The Administration had argued to that court that the \"item for which funds [were] requested\" referred to \"'a particular budget item' for section 8005 purposes\"\u00e2\u0080\u0094which Congress had not denied\u00e2\u0080\u0094and did not encompass other requests for DHS funding for border barriers. The court of appeals rejected this reading, concluding that the \"item for which funds [were] requested\" was \"a wall along the southern border,\" and that Congress had denied the Administration's request to fund that \"item.\" \"In sum,\" the court reasoned, \"Congress considered the 'item' at issue here\u00e2\u0080\u0094a physical barrier along the entire southern border\"\u00e2\u0080\u0094and it \"decided in a transparent process subject to great public scrutiny to appropriate less than the total amount the President had sought for that item. To call that anything but a 'denial' is not credible.\"", "However, as discussed in more detail below, the Supreme Court ultimately stayed the district court's injunction. The Court's stay order did not rule on the merits of Section 8005 or any of the other statutory authorities on which the Administration has relied to secure additional border barrier funding. Instead, the Court stayed the injunction because it concluded that \"the Government had made a sufficient showing at this stage that the plaintiffs have no cause of action to obtain review of the Acting [Secretary of Defense's] compliance with Section 8005.\""], "subsections": []}]}, {"section_title": "Section 284", "paragraphs": ["The plaintiffs in Sierra Club and California also argued that even if Section 8005 authorized the transfer of funds to the Drug Interdiction Account, Section 284 does not empower DOD to assist another agency in constructing border barriers. The plaintiffs in these cases raised several points to support this conclusion.", "First , they observed that Section 284 requires DOD to provide to Congress \"a description of the small scale construction project for which support is provided,\" and defines \"small scale construction\" to mean \"construction at a cost not to exceed $75,000 for any project.\" That Section 284 requires DOD to report to Congress on \"small scale construction projects\" and not larger projects, the plaintiffs argued, suggests that Section 284 should not be read to authorize assistance with larger-scale projects. \"Congress would not have required a description of 'any small scale construction' projects if it was, at the same time, authorizing massive, multibillion-dollar expenditures under this provision,\" the plaintiffs argued. But even if Section 284 could be read otherwise, the plaintiffs contended that it should not be read broadly here given \"the more specific and recent judgment by Congress\" to appropriate only $1.375 billion for DHS border barrier construction. If there is a \"specific policy embodied in a later statute,\" they argued, that later statute \"should control judicial construction of the earlier broad statute, even though [the latter statute] has not been expressly amended.\"", "Second , the plaintiffs argued that Section 284 does not authorize DOD's proposed border barrier projects because the portion of Section 284 relied on by DOD applies solely to \"block[ing] drug smuggling corridors.\" By contrast, the plaintiffs argued that DOD intended to use \"Section 284\u00c2\u00a0.\u00c2\u00a0.\u00c2\u00a0. as a tool to create a contiguous border wall, not to address specific corridors.\"", "Third , the plaintiffs pointed to a neighboring statutory provision requiring an agency receiving DOD support \"to reimburse [DOD] for that support,\" though DOD may waive this requirement if its support (1) \"is provided in the normal course of military training or operation,\" or (2) \"results in a benefit\u00c2\u00a0.\u00c2\u00a0.\u00c2\u00a0. that is substantially equivalent to that which would otherwise obtain from military operations or training.\" The plaintiffs argued that DOD has breached this requirement\u00e2\u0080\u0094thus rendering Section 284 unavailable\u00e2\u0080\u0094because DHS had \"requested support on a 'non-reimbursable basis,'\" but neither of the two exceptions to the reimbursement requirement was met.", "Finally , the plaintiffs argued that DOD's reliance on Section 284 \"violates the core principle that executive branch agencies may not mix and match funds from different accounts to exceed the funding limits Congress imposed.\" In particular, the plaintiffs noted the general rule of appropriations law that \"specific appropriations preclude the use of general ones even when the two appropriations come from different accounts.\" Here, the plaintiffs contended, \"Congress ha[d] allocated a specific amount of funding\" for border barrier construction, precluding \"the government [from] cobbl[ing] together other, more general sources of money to increase funding levels for that same goal.\"", "The Administration responded that the plaintiffs in Sierra Club and California had misconstrued Section 284. The Administration first argued that Section 284 contemplates that DOD may assist with projects other than \"small scale construction,\" as certain provisions in Section 284 \"refer to\u00e2\u0080\u0094but are not limited to\u00e2\u0080\u0094'small scale' or 'minor' construction.\" As to the reimbursement requirement, the Administration asserted that Section 284 itself makes the reimbursement requirement inapplicable to DOD's counterdrug activities, providing that \"[t]he authority provided in this [S]ection [284] for the support of counterdrug activities\u00c2\u00a0.\u00c2\u00a0.\u00c2\u00a0. by [DOD] is\u00c2\u00a0.\u00c2\u00a0.\u00c2\u00a0. not subject to the other requirements of this chapter.\" Next, the Administration contended that its proposed border barrier projects satisfied Section 284's \"drug smuggling corridor\" requirement, as the proposed project areas were \"known to have high rates of drug smuggling between the ports of entry.\" Finally, the Administration rejected as \"without merit\" the plaintiffs' argument that its use of Section 284 violated the principle that agencies \"must use the [most] specific appropriation to the exclusion of [a] general appropriation.\" This principle, the Administration contended, applies only when both sources of funding belong to a single agency, not where the appropriations at issue are to different agencies\u00e2\u0080\u0094that is, Section 8005 and Section 284 to DOD and $1.375 billion to DHS in its appropriations bill.", "However, the district court in Sierra Club and California ultimately did not resolve this issue because it concluded that Section 8005 does not authorize the transfer of funds to be used by DOD under its Section 284 authority. And, with no district court ruling to review, the Ninth Circuit in Sierra Club also did not address this authority.", "The district court in El Paso County agreed with the plaintiffs on the basis that Congress's appropriation of funds for border barrier construction is a specific statute that should be given precedence over more general statutes. The court stated that \"[a]n appropriation for a specific purpose is exclusive of other appropriations in general terms which might be applicable in the absence of the specific appropriation.\" Moreover, the court held the use of Section 284 funds for border barrier construction was precluded by Section 739 of the CAA 2019, which prohibits the use of appropriated funds to increase funding for a program, project, or activity proposed in the President's budget request beyond what Congress had provided except through reprogramming or transfer actions pursuant to an appropriations act. Because the President had requested $5.7 billion for FY2019 \"for construction of a steel barrier for the Southwest border\" but Congress had appropriated $1.375 billion to be made on \"construction . . . in the Rio Grande Valley Sector\" alone, the court found that the use of Section 284 funds for the border project amounted to an unlawful increase in funding for that activity using appropriated funds. The court noted that Section 284 is not an appropriations statute and its use was thus not eligible for the exception in Section 739 of the CAA 2019 for reprogramming provisions. Nevertheless, because of the Supreme Court's stay of the injunction issued in the Sierra Club case, the court in El Paso declined to enjoin the use of Section 284."], "subsections": []}, {"section_title": "Department of Homeland Security Waiver Authority", "paragraphs": ["The plaintiffs in Sierra Club and California also argued that the Administration's proposed construction of a border barrier was subject to the environmental assessment requirements of NEPA, and that DHS's waiver authority under IIRIRA \u00c2\u00a7\u00c2\u00a0102 is ineffective to waive NEPA's application for projects funded and undertaken by any other department or agency. The plaintiffs noted that IIRIRA \u00c2\u00a7\u00c2\u00a0102's waiver authority may be used only for the \"construction of the barriers and roads under this section .\" Because the Administration was relying on DOD authority and appropriations (i.e., Section 284 and the Drug Interdiction Account) to construct the border barriers, the plaintiffs contended that those projects did not meet the statutory requirement and thus were not covered by an IIRIRA \u00c2\u00a7\u00c2\u00a0102 waiver. By contrast, the Administration argued that by requiring DHS to take \"such actions as may be necessary\" to construct additional border barriers, IIRIRA \u00c2\u00a7\u00c2\u00a0102 authorized DHS to request DOD's assistance, and thus the waiver authority applied.", "Ruling for the Administration, the district court in Sierra Club and California held that IIRIRA \u00c2\u00a7\u00c2\u00a0102's waiver authority extends to border projects undertaken by another agency on behalf of DHS, and thus DHS's waivers rendered NEPA inapplicable to the challenged border barrier projects. \"DOD's authority under Section 284 is derivative,\" the court explained, as it may invoke \"its authority [under Section 284] only in response to a request from [another] agency.\" \"Plaintiffs' argument would require the court to conclude that even though it is undisputed that DHS could waive NEPA's requirements if it were paying for the projects out of its own budget, that waiver is inoperative when DOD provides support in response to a request from DHS.\" The court rejected this approach because it found it \"unlikely that Congress intended to impose different NEPA requirements on DOD when it acts in support of DHS's IIRIRA \u00c2\u00a7\u00c2\u00a0102 authority in response to a direct request under Section 284 than would apply to DHS itself.\" The court thus ruled that DHS's waivers applied to the challenged border projects\u00e2\u0080\u0094and all parties agreed that \"the waivers, if applicable, would be dispositive of the NEPA claims.\""], "subsections": []}, {"section_title": "Treasury Forfeiture Fund", "paragraphs": ["The state plaintiffs in California v. Trump also argued that the Administration's allocation of $601 million from the TFF was not authorized by 31 U.S.C. \u00c2\u00a7\u00c2\u00a09705, specifically because the construction of border barriers is not an expenditure for \"law enforcement activities.\" In response, the Administration argued that the allocation of payments from the TFF is not reviewable, citing Supreme Court and Ninth Circuit decisions establishing that an agency's determination of how to allocate funds from a lump-sum appropriation is committed to the agency's discretion.", "The district court determined that, while the statute provided some discretion for the Secretary of the Treasury to decide what payments should be made from the TFF, the statute provided a \"comprehensive list of payments for which TFF\" payments must be made. There were therefore sufficient standards for determining whether the Administration had transferred funds in a \"statutorily impermissible manner.\"", "Despite finding that the use of the TFF was reviewable, the district court declined to address the merits of the state plaintiffs' arguments because the plaintiffs did not meet the other requirements for a preliminary injunction. Specifically, a preliminary injunction requires the court to find that the moving party will suffer irreparable injury if the injunction is not issued. But the TFF statute requires equitable sharing payments for the current and next fiscal years to be reserved before any unobligated balances were available for Strategic Support expenditures. Because the Secretary of the Treasury had reserved such amounts before the requested transfer to DHS, there was no justification for the \"extraordinary\" remedy of a preliminary injunction against the TFF transfer.", "Subsequently, on August 2, the parties in California stipulated to the voluntary dismissal of the plaintiffs' TFF claim. According to the parties, this dismissal was based on representations by the Administration that (1) its proposed use of $601 million from the TFF would not cause state and local law enforcement agencies to lose any funds they would otherwise receive from the TFF, and (2) \"funds from the TFF will not be used to fund or support the construction of border barriers in any areas other than within the Rio Grande Valley and/or Laredo Sectors\"\u00e2\u0080\u0094that is, areas within Texas. The plaintiffs in Sierra Club have not dismissed their TFF claim."], "subsections": []}, {"section_title": "Reprogramming of Funds During National Emergency", "paragraphs": ["Two types of challenges have arisen to the reprogramming of military construction funds for use in border barrier construction. The first challenges the declaration of the national emergency itself, while the second challenges the invocation of authority pursuant to Section 2808."], "subsections": [{"section_title": "The El Paso County Challenge to the President's Declaration of a National Emergency", "paragraphs": ["Though the plaintiffs in Sierra Club and California did not challenge the lawfulness of President Trump's declaration of a national emergency under the NEA, the plaintiffs in El Paso County v. Trump did. They have charged that the President's declaration of a national emergency to make use of military construction funds for border barrier construction is unlawful because the situation at the border does not constitute an emergency within the meaning of the NEA. They argue that \"emergency\" in the NEA must be construed in accordance with its ordinary meaning\u00e2\u0080\u0094\"an unforeseen combination of circumstances requiring immediate action\"\u00e2\u0080\u0094or the NEA is an unconstitutional violation of the nondelegation doctrine. Under the nondelegation doctrine, they argue, Congress cannot delegate legislative authority to the executive branch without providing an intelligible principle to guide implementation of a law. Plaintiffs assert that an interpretation of the NEA that leaves unfettered discretion to the President to decide what constitutes a national emergency would be an unconstitutional delegation of congressional authority.", "The government responded with its own interpretation of the NEA, one that views Congress's failure to provide a definition for \"national emergency\" as an indication that Congress intended to avoid constricting presidential power. The government also cites historical examples to demonstrate that national emergency declarations need not address circumstances that are unforeseen. Moreover, it argues that courts have uniformly concluded that presidential declarations of national emergencies present a nonjusticiable political question.", "The Supreme Court set forth the factors courts must consider in determining whether a matter raises nonjusticiable political questions in Baker v. Carr . These factors are", "a textually demonstrable constitutional commitment of the issue to a coordinate political department; a lack of judicially discoverable and manageable standards for resolving it; the impossibility of deciding without an initial policy determination of a kind clearly for nonjudicial discretion; the impossibility of a court's undertaking independent resolution without expressing lack of the respect due coordinate branches of government; an unusual need for unquestioning adherence to a political decision already made; or the potentiality of embarrassment from multifarious pronouncements by various departments on one question.", "The Administration argues that the President's national emergency declaration fulfills \"most, if not all of these factors.\" First, the executive branch claims that Congress intentionally chose to leave the determination of a national emergency to the President with oversight by Congress, without setting forth criteria from which a court could judge the President's action. Second, the Administration contends that how to combat illegal immigration is quintessentially \"the sort of policy determination of a kind clearly for nonjudicial discretion.\" Third, it argues that the policy questions regarding the exclusion of aliens are entrusted to the political branches.", "The district court did not address the constitutionality of the NEA or the proclamation, but entered summary judgment in favor of the plaintiffs on the basis that the Administration's funding plan for the border, in the court's view, violates the CAA 2019, in particular Section 739."], "subsections": []}, {"section_title": "The Challenge to the Use of Section 2808 Considered in Sierra Club", "paragraphs": ["The Sierra Club plaintiffs did not challenge the lawfulness of President Trump's declaration of a national emergency under the NEA, but they did argue that the Administration's plan to reallocate $3.6 billion in military construction funds was unlawful because 10 U.S.C. \u00c2\u00a7\u00c2\u00a02808 does not authorize the construction of border barriers. Though the district court declined to grant a preliminary injunction because the plaintiffs had not demonstrated irreparable harm from the Administration's as-yet undetermined plans to divert the funds, the court did express doubt that the definition of \"military construction\" in Section 2808 encompassed border barriers.", "As noted previously, Section 2808 permits reprogramming of funds for \"military construction\" necessary to support the use of the Armed Forces in a national emergency. Military construction is defined to \"include any construction, development, conversion, or extension of any kind carried out with respect to a military installation,\" which means a \"base, camp, post, station, yard, center, or other activity \" under the jurisdiction of the Secretary of a military department. The Administration relied on the term \"other activity\" and the nonexhaustive word \"includes\" in the definitions related to \"military construction\" to argue that Congress had meant the term \"military construction\" in Section 2808 to be construed broadly. In other words, the government interpreted the definition of military construction to include any sort of construction related to a military installation. This would include any \"other activity under the jurisdiction of the Secretary of a military department,\" which could conceivably include border barriers constructed by DOD.", "The court in Sierra Club rejected that view, explaining that \"the critical language of Section 2801(a) is not the word 'includes,' it is the condition 'with respect to a military installation.'\" Further, the court rebuffed the Administration's reliance on the term \"other activity.\" That language, the court explained, is not unbounded but should be interpreted in context of the words that immediately precede it\u00e2\u0080\u0094\"a base, camp, post, station, yard, [and] center.\" Applying the rule of statutory interpretation that \"a word is known by the company it keeps,\" the court concluded that \"other activity\" refers to similar discrete and traditional military locations. The court did \"not readily see how the U.S.-Mexico border could fit this bill.\"", "The court likewise employed the rule of interpretation that \"[w]here general words follow specific words in a statutory enumeration, the general words are construed to embrace only objects similar in nature to those objects enumerated by the preceding specific words.\" The court explained that if Congress \"had\u00c2\u00a0. . . intended for 'other activity' .\u00c2\u00a0.\u00c2\u00a0. to be so broad as to transform literally any activity conducted by a Secretary of a military department into a 'military installation,' there would have been no reason to include a list of specific, discrete military locations.\"", "Thus, viewing the term \"in context and with an eye toward the overall statutory scheme,\" the court could not conclude that \"Congress ever contemplated that 'other activity' has such an unbounded reading that it would authorize Defendants to invoke Section 2808 to build a barrier on the southern border.\" However, because the issue was not yet ripe for decision, the district court did not enjoin the use of military construction funds for border barrier construction. And because the district court did not rule on this issue the Ninth Circuit did not address it either.", "On December 11, 2019, however, the district court determined that the government's formulation of plans to allocate the military construction funds for 11 border barrier projects made the issue ripe for decision in both the California and Sierra Club cases. Although the court declined to take on the question of whether an emergency requiring the use of troops in fact exists, it found the question of whether the specific projects are \"military construction projects\" that are \"necessary to support such use of the armed forces\" to be suitable for adjudication.", "With respect to the first issue, the court reaffirmed its earlier assessment based on the statutory definitions that such projects have insufficient connection with any military installation to be permissible military construction projects, notwithstanding the government's argument that its taking of administrative jurisdiction over the land for them and assigning it to Fort Bliss in Texas created such a connection. The court was", "not persuaded that Congress intended \"military construction\" to have no stronger connection to a military installation than Defendants' own administrative convenience. If this were true, Defendants could redirect billions of dollars from projects to which Congress appropriated funds to projects of Defendants' own choosing, all without congressional approval (and in fact directly contrary to Congress' decision not to fund these projects). Elevating form over substance in this way risks \"the Executive [] aggrandizing its power at the expense of [Congress].\"", "Addressing the government's contention that \"installation\" was meant to be read broadly in the emergency context, the court pointed out that the aim of the NEA was to narrow executive emergency power, and that \"Section 2808 has rarely been used, and never to fund projects for which Congress withheld appropriations.\" The court therefore found that the border barrier construction projects, with the exception of two projects on the Barry M. Goldwater range, are not \"'carried out with respect to a military installation' within the meaning of Section 2808.\"", "The court next addressed whether the 11 barrier projects are \"necessary to support the use of the armed forces,\" and found the government's arguments unconvincing. In the government's view, these projects will support the armed forces because they \"allow DoD to provide support to DHS more efficiently and effectively,\" and could \"ultimately reduce the demand for DoD support at the southern border over time.\" The court rejoined:", "Defendants do not explain how the projects are necessary to support the use of the armed forces while simultaneously obviating the need for those forces. This appears to defy the purpose of Section 2808, which specifically refers to construction that is necessary to support the use of the armed forces, not to construction that the armed forces will not use once constructed. Again, Defendants' argument proves too much. Under their theory, any construction could be converted into military construction\u00e2\u0080\u0094and funded through Section 2808\u00e2\u0080\u0094simply by sending armed forces temporarily to provide logistical support to a civilian agency during construction.", "The court concluded that there was \"simply nothing in the record . . . indicating that the eleven border barrier projects\u00e2\u0080\u0094however helpful\u00e2\u0080\u0094are necessary to support the use of the armed forces.\" The court entered a permanent injunction against the 11 proposed border construction projects, but stayed the injunction pending appeal. The government has appealed.", "The district court in El Paso County rejected the use of Section 2808 for border barrier construction not because of the definitions at issue, but because the court concluded the provision is not an appropriations measure and therefore cannot be used to circumvent Section 739 of the CAA 2019, for the same reasons that the judge rejected the use of Section 284."], "subsections": []}]}]}, {"section_title": "Procedural Barriers to Lawsuits Challenging Border Barrier Funding", "paragraphs": ["Aside from the merits of the Trump Administration's funding initiatives, the various legal challenges brought by states, private individuals, and the House of Representatives also involve two threshold requirements that must be satisfied by any party seeking to maintain a lawsuit in federal court. A plaintiff must first show that he has suffered a \"concrete\" and \"particularized\" injury that was caused by the challenged government action\u00e2\u0080\u0094the so-called \"standing\" requirement. A plaintiff must also have a legal right (i.e., a \"cause of action\") to enforce whatever provision of federal law is at issue, and he must also fall within the \"zone of interests\" meant to be protected by that law.", "These procedural requirements have presented obstacles to those opposing the Trump Administration's funding initiatives. In U.S. House of Representatives v. Mnuchin , the U.S. District Court for the District of Columbia held that the House of Representatives lacked standing to challenge the Trump Administration's actions. And though the district court in Sierra Club and California (and the Ninth Circuit in Sierra Club ) concluded that the plaintiffs in those cases\u00e2\u0080\u0094nonprofit organizations and state plaintiffs\u00e2\u0080\u0094satisfied these procedural requirements, the Supreme Court ultimately stayed the district court's injunction because \"the Government ha[d] made a sufficient showing at this stage that the plaintiffs have no cause of action to obtain review of the Acting [Secretary of Defense's] compliance with Section 8005.\"", "In staying the permanent injunction in the Sierra Club litigation, the Supreme Court cleared the way for the Trump Administration to use funds transferred under Section 8005 to construct border barriers while the Ninth Circuit considers the Administration's appeal of the permanent injunction. However, the Court's order did not address the merits of Section 8005 or any of the other statutory authorities at issue in that litigation."], "subsections": [{"section_title": "Standing", "paragraphs": ["Article III of the U.S. Constitution \"limits federal courts' jurisdiction to certain 'Cases' and 'Controversies.'\" This limitation has been interpreted to require that every person or entity bringing a claim in federal court must establish \"standing\" to sue\u00e2\u0080\u0094that is, establish that he has suffered an injury that (1) is \"concrete, particularized, and actual or imminent\"; (2) \"fairly traceable to the challenged action\"; and (3) would be \"redressable by a favorable ruling.\" The Supreme Court has explained that this standing requirement \"is built on separation-of-powers principles\" and \"serves to prevent the judicial process from being used to usurp the powers of the political branches.\" Separation-of-powers concerns are heightened where a court is being asked to deem the actions of one of the other two branches of government unconstitutional, and especially so when a suit involves a dispute between the other two branches of the federal government.", "The plaintiffs challenging the Trump Administration's funding initiatives argued that they satisfied Article III's standing requirement. In Sierra Club and California , the Trump Administration conceded that constructing border barriers would cause a sufficient injury for Article III purposes, but it argued that this injury did not confer standing to challenge the Administration's use of Section 8005 to transfer funds. Rejecting that argument, the district court in Sierra Club and California held that the plaintiffs had established an \"actual or imminent\" injury that was \"fairly traceable\" to the Trump Administration's proposed transfer of money. The court explained that the supposedly distinct actions of (1) transferring funds and (2) using those transferred funds to construct border barriers were both part of a single objective\u00e2\u0080\u0094the construction of border barriers. And because a sufficiently concrete injury followed from the attainment of that objective, the plaintiffs had standing to challenge government action that was part of the chain of events leading to the injury. Similarly, in El Paso County , the court held that the plaintiffs' reputational and economic injuries resulting directly from the border barrier construction were sufficient for Article III purposes. ", "By contrast, the federal district court presiding over the U.S. House of Representatives' lawsuit held that the House of Representatives lacks standing because the House's asserted injury\u00e2\u0080\u0094\"an institutional injury to [Congress's] Appropriations power\" \u00e2\u0080\u0094was not the kind of injury that supports Article III standing. The district court relied on the Supreme Court's decision in Raines v. Byrd , which held that Members of Congress lacked standing to challenge the constitutionality of the Line Item Veto Act. While Article III requires a \"particularized\" injury\u00e2\u0080\u0094that is, an injury that \"affect[s] the plaintiff in a personal .\u00c2\u00a0.\u00c2\u00a0. way\" \u00e2\u0080\u0094the Court in Raines determined that the Members of Congress had asserted \"a type of institutional injury (the diminution of legislative power)\" that did not belong to the Members individually. As a result, those Members were unable to show \"a sufficient[ly] 'personal stake' in th[e] dispute.\" Similarly, the district court in Mnuchin noted that the appropriations power is held by Congress as a whole , not by each chamber of Congress separately. Moreover, as had the Court in Raines , the Mnuchin court supported its conclusion by noting the absence of historical examples of federal courts being asked to adjudicate lawsuits \"brought on the basis of claimed injury of official authority or power.\"", "The U.S. House of Representatives appealed the district court's decision to the D.C. Circuit, but the court of appeals has not yet issued a decision."], "subsections": []}, {"section_title": "Cause of Action and Zone of Interests", "paragraphs": ["Even if a plaintiff establishes standing, the party must also be able to identify a source of law that authorizes the party to sue\u00e2\u0080\u0094also known as a \"cause of action.\" In some instances, Congress has included a cause of action within a federal law to enable those injured by a violation of that law to obtain judicial relief. Separately, the Administrative Procedure Act contains a more general cause of action, authorizing \"person[s] suffering legal wrong because of agency action\" to challenge that action in federal court. Finally, even absent a statutory cause of action, a plaintiff may still be authorized to sue based on \"[t]he power of federal courts of equity to enjoin unlawful executive action.\" Moreover, in order to show that a particular cause of action applies to him, a plaintiff must (generally) show that \"[t]he interest he asserts [is] 'arguably within the zone of interests to be protected or regulated by the statute' that he says was violated.\" This \"zone of interests\" requirement \"applies to all statutorily created causes of action,\" and its purpose is to \"foreclose[] suit .\u00c2\u00a0.\u00c2\u00a0. when a plaintiff's 'interests are so marginally related to or inconsistent with the purposes implicit within the statute that it cannot reasonably be assumed that Congress intended to permit the suit.'\"", "Before concluding that the Trump Administration cannot use Section 8005 to transfer funds for border barrier construction, the district court in Sierra Club and California (and the Ninth Circuit on appeal in Sierra Club ) concluded that the plaintiffs in these cases had satisfied these threshold procedural requirements. The court ruled that the plaintiffs' ability to bring their suits was based on the federal courts' equitable power to enjoin unlawful executive action. In so doing, the district court also determined that the \"zone of interests\" requirement does not apply to claims resting on an equitable (as opposed to a statutory) cause of action. Reviewing the district court's ruling in Sierra Club , the Ninth Circuit agreed that the plaintiffs had an equitable cause of action to challenge the lawfulness of executive action, and determined that they also had a cause of action under the Administrative Procedure Act. The Ninth Circuit expressed \"doubt[s]\" that the zone-of-interests test applied to equity-based claims, but determined that the plaintiffs satisfied any zone-of-interest requirement that might apply to either of these causes of action."], "subsections": []}, {"section_title": "The Supreme Court's Order", "paragraphs": ["Though the district court and the Ninth Circuit concluded that the plaintiffs in Sierra Club and California were proper parties to challenge the Trump Administration's intended use of Section 8005, the Supreme Court issued an order staying the district court's injunction.", "After the Ninth Circuit declined to stay the district court's permanent injunction, the Trump Administration asked the Supreme Court to do so, and on July 26, 2019, the Supreme Court issued an order staying the permanent injunction. Chief Justice Roberts and Justices Thomas, Alito, Gorsuch, and Kavanaugh voted to grant the stay in full, while Justice Breyer indicated that he would have granted the stay in part. The Court's order stated that \"[a]mong the reasons\" for staying the injunction, \"the Government ha[d] made a sufficient showing at this stage that the plaintiffs have no cause of action to obtain review of the Acting [Secretary of Defense's] compliance with Section 8005.\" The Court's order further stated that the stay would continue \"pending disposition of the [Administration's] appeal in the [Ninth Circuit] and disposition of the Government's petition for a writ of certiorari,\" and will \"terminate automatically\" upon the Court's denial of a petition for certiorari submitted by the Administration.", "Justices Ginsburg, Sotomayor, and Kagan voted to deny the request for a stay. Justice Breyer explained that he would have \"grant[ed] the Government's application to stay the injunction only to the extent that the injunction prevents the Government from finalizing the contracts [for border barrier construction] or taking other preparatory administrative action,\" but would have left the injunction \"in place insofar as it precludes the Government from disbursing funds or beginning construction.\" Justice Breyer explained that granting a stay of the injunction in full would irreparably harm the plaintiffs, while denying a stay of the injunction would irreparably harm the government because all funds not obligated by the end of the fiscal year would become unavailable. According to Justice Breyer, staying the injunction to allow the Trump Administration to \"finaliz[e] contracts or tak[e] other preparatory administration action\" for constructing border barriers would \"avoid harm to both the Government and [the plaintiffs] while allowing the litigation to proceed.\"", "By staying the district court's permanent injunction, the Supreme Court enabled the Trump Administration to use funds transferred under Section 8005 to construct border barriers, at least during the pendency of the litigation in the Sierra Club and California cases. However, the Court's order did not address the merits of Section 8005 or any of the other statutory authorities at issue in that litigation. Moreover, the Court's order makes clear that it applies only at \"this stage\" of the litigation and therefore is not binding on the Ninth Circuit as it considers the Administration's appeal of the permanent injunction. As a result, the Court's order does not prevent the Ninth Circuit in Sierra Club \u00e2\u0080\u0094which is currently considering the Trump Administration's appeal from the permanent injunction\u00e2\u0080\u0094from concluding that the Sierra Club plaintiffs have a cause of action to enforce Section 8005. Nor does it prevent the district court in Sierra Club and California from ruling on the other funding authorities (including Section 284) and, perhaps, enjoining the Trump Administration from using those authorities to construct border barriers."], "subsections": []}]}]}, {"section_title": "Considerations for Congress", "paragraphs": [], "subsections": [{"section_title": "Subsequent Legislation", "paragraphs": ["The Supreme Court has said that the Appropriation Clause's \"fundamental and comprehensive purpose .\u00c2\u00a0.\u00c2\u00a0. is to assure that public funds will be spent according to the letter of the difficult judgments reached by Congress as to the common good and not according to the individual favor of Government agents or the individual pleas of litigants.\" Consequently, Congress has the power, subject to presidential veto, to enact legislation either appropriating more funds for border barrier construction, to limit the extent that the Administration's proposed funding sources may be used for border barrier construction, or to prohibit the Administration from obtaining additional funding through existing mechanisms.", "As part of the FY2020 appropriations process, the 116th Congress had considered provisions limiting the expenditure of annually appropriated funds for border barrier construction, though none have yet been enacted. For example, Section 8127 of Division C of H.R. 2740 , the DOD Appropriations Act for FY2020, as passed by the House on June 19, 2019, would generally have provided that \"None of the funds appropriated or otherwise made available by this Act or any prior Department of Defense appropriations Acts may be used to construct a wall, fence, border barriers, or border security infrastructure along the southern land border of the United States.\" If this provision had been enacted it would likely have rendered the litigation over the Northern District of California's injunction moot, as the use of FY2019 funds for the purposes sought by the Administration would be expressly prohibited. Separately, the House-passed H.R. 2740 would also have limited the general transfer authority under either Sections 8005 or 9002 from being used to transfer funds into or out of the DOD Drug Interdiction Account, and the bill would reduce the overall amount of general transfer authority available under Section 8005 from $4 billion to $1 billion. The initial House-passed National Defense Authorization Act for FY2020 included similar limitations. None of these limitations were included as part of the enacted Consolidated Appropriations Act, 2020, or the enacted FY2020 National Defense Authorization Act.", "In February 2019, the Administration requested $5 billion in border barrier funding for FY2020 to support the construction of approximately 206 miles of border barrier system. The House Appropriations Committee responded to this by recommending no funding for border barriers in H.R. 3931 \u00e2\u0080\u0094its FY2020 DHS Appropriations bill. In addition, the House Appropriations Committee-reported bill would have restricted the ability to transfer or reprogram funds for border barrier construction. That bill stated in Section 227 that, aside from appropriations provided for such purpose in the last three fiscal years, \"no Federal funds may be used for the construction of physical barriers along the southern land border of the United States during fiscal year 2020.\" Furthermore, Section 536 of that bill proposed to rescind $601 million from funding appropriated for border barriers in FY2019 \u00e2\u0080\u0094thus reducing the FY2019 funding available by the amount pledged from the Treasury Forfeiture Fund. On September 26, 2019, the Senate Appropriations Committee reported its annual appropriations act for DHS for FY2020, which would have provided $5 billion for additional new miles of pedestrian fencing. As part of the Consolidated Appropriations Act, 2020, Congress provided $1.375 billion for \"construction of barrier system along the southwest border.\""], "subsections": []}, {"section_title": "Comptroller General Opinion", "paragraphs": ["Committees and Members of Congress have also requested legal opinions from the Comptroller General of the United States, head of the Government Accountability Office (GAO), regarding questions of appropriations law and executive agencies' compliance with such laws. Though GAO's decisions are not binding on federal courts, those decisions are sometimes given consideration by reviewing courts because of GAO's expertise in appropriations law and its role as the \"auditing agent of Congress.\"", "On September 5, 2019, in response to such a request from Senate Appropriations Committee Vice Chairman Leahy, Subcommittee on Defense Vice Chairman Durbin, and Subcommittee on Military Construction, Veterans Affairs, and Related Agencies Ranking Member Schatz, the Comptroller General issued a legal opinion concluding that the Administration's use of Section 8005 of the 2019 DOD Appropriations Act and 10 U.S.C. \u00c2\u00a7\u00c2\u00a0284 to fund border barrier construction is lawful. Like the Northern District of California and the Ninth Circuit decisions, GAO's analysis of the transfer authority focused primarily on (1) whether the use of the funds for border barrier construction was an unforeseen military requirement, and (2) whether Congress had denied funds for the item to which funds were being transferred.", "GAO agreed with the Administration's argument that the relevant \"military requirement\" for purposes of Section 8005 was the construction of border barriers by DOD pursuant to its Section 284 authority, not the construction of border barriers generally. According to GAO, this military requirement was \"unforeseen\" because it was not until DHS requested assistance from DOD to construct border barriers\u00e2\u0080\u0094well after the President's budget requests\u00e2\u0080\u0094that the need for DOD assistance became known. Consequently, GAO concluded that DHS's request for assistance constituted an unforeseen military requirement that made available the transfer authority under Section 8005.", "GAO next addressed whether the construction of border fencing had been \"denied by the Congress.\" GAO began by noting that this language was not defined by Section 8005 or elsewhere in the FY2019 DOD Appropriations Act. Relying on the \"ordinary meaning\" of the term \"deny\" as well as previous decisions by the Comptroller General, GAO concluded that a denial of funds for purposes of Section 8005 required that Congress \"actively refuse\" funds for an item, rather than merely fail to appropriate the full amount requested for that item. Applying this standard, GAO asserted that it could not identify any statutory provision that prohibited DOD from using funds to build border barriers pursuant to its Section 284 authority. Accordingly, GAO agreed with the Administration that Congress had not denied funds for that purpose, within the meaning of Section 8005."], "subsections": []}]}]}}
{"id": "R45996", "title": "Precision-Guided Munitions: Background and Issues for Congress", "released_date": "2020-04-15T00:00:00", "summary": ["Over the years, the U.S. military has become reliant on precision-guided munitions (PGMs) to execute military operations. PGMs are used in ground, air, and naval operations. Defined by the Department of Defense (DOD) as \"[a] guided weapon intended to destroy a point target and minimize collateral damage,\" PGMs can include air- and ship-launched missiles, multiple launched rockets, and guided bombs. These munitions typically use radio signals from the global positioning system (GPS), laser guidance, and inertial navigation systems (INS)\u00e2\u0080\u0094using gyroscopes\u00e2\u0080\u0094to improve a weapon's accuracy to reportedly less than 3 meters (approximately 10 feet).", "Precision munitions were introduced to military operations during World War II; however, they first demonstrated their utility operationally during the Vietnam War and gained prominence in Operation Desert Storm in 1991. Since the 1990s, due in part to their ability to minimize collateral damage, PGMs have become critical components in U.S. operations, particularly in Afghanistan, Iraq, and Syria. The proliferation of anti-access/area denial (A2/AD) systems is likely to increase the operational utility of PGMs. In particular, peer competitors like China and Russia have developed sophisticated air defenses and anti-ship missiles that increase the risk to U.S. forces entering and operating in these regions. Using advanced guidance systems, PGMs can be launched at long ranges to attack an enemy without risking U.S. forces. As a result, DOD has argued it requires longer range munitions to meet these new threats.", "The Air Force, Army, Navy, and Marine Corps all use PGMs. In FY2021, the Department of Defense (DOD) requested approximately $4.1 billion for more than 41,337 weapons in 15 munitions programs. DOD projects requesting approximately $3.3 billion for 20,456 weapons in FY2022, $3.9 billion for 23,306 weapons in FY2023, $3.9 billion for 18,376 weapons in FY2024, and $3.6 billion for 16,325 weapons in FY2025. Previously DOD obligated $1.96 billion for 13,985 weapons in FY2015, $2.98 billion for 35,067 weapons in FY2016, $3.63 billion for 44,446 weapons in FY2017, $5.05 billion for 68,988 weapons in FY2018, and $4.3 billion in FY2019 for 60,62 munitions. In FY2020, Congress authorized $5.30 billion for 56,067 weapons.", "Current PGM programs can be categorized as air-launched, ground-launched, or naval-launched.", "Air-Launched: Paveway Laser Guided Bomb, Joint Direct Attack Munition (JDAM), Small Diameter Bomb, Small Diameter Bomb II, Hellfire Missile, Joint Air-to-Ground Missile, Joint Air-to-Surface Strike Missile (JASSM), Long Range Anti-Ship Missile (LRASM), and Advanced Anti-Radiation Guided Missile. Ground - Launched: Guided Multiple Launch Rocket System (GMLRS), Army Tactical Missile System (ATACMS), and Precision Strike Missile (PrSM); Naval PGMs: Tomahawk Cruise Missile, Standard Missile-6 (SM-6), and Naval Strike Missile.", "Congress may consider several issues regarding PGMs, including", "planned procurement quantities and stockpile assessments, defense industrial base production capacity, development timelines, supply chain security, affordability and cost-effectiveness, and emerging factors that may affect PGM programs."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["This report focuses on selected precision-guided munitions (PGMs) fielded by the Air Force, Army, Navy, and Marine Corps. Over the years, the U.S. military has relied on PGMs to execute ground, air, and naval military operations. PGMs have become ubiquitous in U.S. military operations; funding for these weapons has increased dramatically from FY1998 to the present as depicted in. In FY2021, the Department of Defense (DOD) requested approximately $4.1 billion for more than 41,337 weapons in 15 munitions programs. DOD projects requesting approximately $3.3 billion for 20,456 weapons in FY2022, $3.9 billion for 23,306 weapons in FY2023, $3.9 billion for 18,376 weapons in FY2024, and $3.6 billion for 16,325 weapons in FY2025.", "Congress, through the defense authorization and appropriations bills, has historically exercised its role in the decision to approve, reject, or modify DOD's proposals for PGMs. In addition, these programs pose a number of potential oversight issues for Congress. Congress's decisions on these issues could affect future U.S. military capabilities and funding requirements. Potential issues for Congress include", "planned procurement quantities and stockpile assessments, defense industrial base production capacity, development timelines, supply chain security, affordability and cost-effectiveness, and emerging factors that may affect PGM programs."], "subsections": []}, {"section_title": "Background", "paragraphs": ["DOD defines a PGM as \"[a] guided weapon intended to destroy a point target and minimize collateral damage.\" In addition to these virtues, PGMs also offer other advantages over unguided weapons, namely range and the reduction in numbers of combat sorties required to deliver the desired effects on the battle field. The main disadvantage of these weapons is cost; particularly long range missiles. PGMs include air- and ship-launched missiles, multiple launched rockets, and guided bombs. Current munitions typically use a combination of radio signals from the global positioning system (GPS), laser guidance, and inertial navigation systems (INS)\u00e2\u0080\u0094using gyroscopes\u00e2\u0080\u0094to improve a weapon's accuracy to reportedly less than 3 meters (approximately 10 feet). PGMs have transformed attack operations from the air; instead of using hundreds of bomber sorties to attack a single target, a single sortie from a PGM-carrying platform can attack multiple targets while minimizing collateral damage.", "Guided munitions were first developed in the 1940s, when the U.S. Army Air Corps tested radio guidance to glide bombs onto a target. Prior to precision guidance, bomber missions reported an accuracy of 1,200 feet; 16% of munitions dropped by crews landed within 1,000 feet of their intended target. According to defense analyst Barry Watts, guidance systems showed promise in improving weapon accuracy; however, these systems were not fully fielded during the Second World War. This can partly be attributed to technological challenges in developing guidance systems, as well as relatively large unit costs per munition used. Guidance systems during this era used television signals, and required a chase aircraft to provide command and control for the weapon to strike its target.", "DOD continued to develop PGMs through the 1950s and 1960s, where they gained prominence during the Vietnam War with the introduction of the laser-guided bomb. Laser-guided bombs became a preferred munition for bombing operations; an Air Force study in 1973 found that the U.S. military used more than 10,500 laser-guided bombs the previous year, with 5,107 weapons achieving a direct hit and another 4,000 achieving a circular error probable of 25 feet. During the 1970s and 1980s, all of the military services developed guided missiles capable of attacking fixed and moving targets. Laser-guided bombs gained prominence during Operation Desert Storm in 1991. Although PGMs represented only 6% of the total munitions used during the campaign, they struck a number of critical targets, reduced the number of combat sorties required, and limited collateral damage to civilian structures.", "Operations over the past decade in Afghanistan, Iraq, and Syria have demonstrated DOD's increasing reliance on PGMs and how important they have become for modern military operations. The Air Force reports that nearly 139,000 weapons have been used in combat operations in the Middle East since 2014. Counter-Islamic State (IS) operations in Iraq and Syria have used numerous weapons: in 2015, coalition air forces used more than 28,000 weapons; in 2016, the campaign used an additional 30,700 weapons; and in 2017 (the height of operations), the campaign used 39,500 weapons (see Figure 2 for a graphical representation of operational usage compared to DOD procurement). Nearly all of the weapons employed were PGMs, particularly Joint Direct Attack Munitions (JDAMs) and Hellfire Missiles.", "In addition to PGM use in current operations, the proliferation of anti-access/area denial (A2/AD) systems is likely to increase the operational utility of PGMs. Anti-access systems can be defined as capabilities \"associated with denying access to major fixed-point targets, especially large forward bases.\" Area denial systems can be defined as capabilities \"that threaten mobile targets over an area of operations, principally maritime forces, to include those beyond the littorals.\" Peer competitors like China and Russia have developed sophisticated air defenses, such as the S-300PMU (SA-20) and S-400 (SA-21), the HQ-9 surface-to-air missile (China), the DF-21D and DF-26 anti-ship ballistic missiles (China), and the 3M-54 Kaliber anti-ship cruise missile (Russia). Figure 3 illustrates ranges of potential A2/AD systems. These systems outrange U.S. weapons systems at what experts assess as unacceptable risk\u00e2\u0080\u0094some of these weapons have reported ranges in excess of 1,000 nautical miles. As a result, U.S. ships and aircraft would need to engage targets at long ranges in order to not put themselves in danger. For instance, naval ships could be threatened at ranges of 809 nautical miles from bases that field DF-21D anti-ship ballistic missiles. ", "The effectiveness of these missiles is often debated, as is the amount of risk an anti-ship ballistic missile presents to naval forces. Some analysts argue that in a combat situation, aircraft carriers would not enter these weapons' engagement zones because of the threat. Others argue that while there is some risk posed to naval forces, aircraft carriers and major surface combatants would nonetheless be able to operate effectively. Similarly, an S-400 (SA-21) presents risks to aircraft at ranges of up to 215 nautical miles. Many weapons in the U.S. inventory have relatively short ranges. Figure 4 illustrates the impact that A2/AD systems have on potential military operations. Some analysts argue that U.S. forces would substantially increase their operational risk at ranges in excess of 500 nautical miles (NM). "], "subsections": [{"section_title": "Air-Launched Precision-Guided Munitions", "paragraphs": [], "subsections": [{"section_title": "Paveway Laser-Guided Bombs", "paragraphs": ["The Paveway is a family of guidance kits that attach to unguided bombs. The assembly includes a guidance seeker on the nose of the bomb, which looks for a laser to mark a target, and a tail kit to guide the bomb onto the target. The Paveway series was originally developed during the Vietnam War to enable tactical aircraft\u00e2\u0080\u0094like the F-4 Phantom and the A-6 Intruder\u00e2\u0080\u0094to deliver precise munitions onto a target. Paveway has received several upgrades, with the development of Paveway III (in the 1990s), which improves low-altitude guidance, and Paveway IV (in the late 1990s), which adds satellite guidance to improve accuracy. The U.S. military predominately uses Paveway II (see Figure 5 and Figure 6 ) and Paveway III kits; Paveway IV is used exclusively by foreign militaries.", "According to IHS Janes, Raytheon has produced more than 350,000 Paveway kits, with Lockheed Martin producing an additional 200,000 kits. Funding for Paveway procurement appears in the Air Force's General Purpose Bomb line item; however, the Air Force does not report procurement quantities in its budget justification documentation. DOD has exported Paveway II kits to more than 30 countries, and exported Paveway III kits to at least 9 countries. Paveway IV is used by the United Kingdom, the Philippines, Saudi Arabia, and Qatar."], "subsections": []}, {"section_title": "Joint Direct Attack Munition (JDAM)", "paragraphs": ["JDAM modifies unguided bombs\u00e2\u0080\u0094such as the 500-pound Mk-82, the 1,000-pound Mk-83, and the 2,000-pound Mk-84\u00e2\u0080\u0094with GPS guidance. (For a fully assembled JDAM, see Figure 7 ; for a JDAM tail kit, see Figure 8 .) When a JDAM kit is attached, the weapon is designated as GBU-31/32/38 depending on the weight of the bomb. These weapons have a reported range of 13 nautical miles. The Air Force and Navy began studying how to deliver such weapons in a program known as the Advanced Bomb Family during the 1980s. The first JDAMs were delivered in 1997, and underwent operational testing between 1998 and 1999. JDAM kits are reported to have an accuracy to within 3 meters (approximately 10 feet). The first operational use of a JDAM was during Operation Allied Freedom in Kosovo by a B-2 Spirit bomber. Since their development, JDAMs have been integrated with all U.S. fixed-wing strike platforms. ", "JDAMs have received several upgrades since their introduction into service. One of the major developments has been developing a laser guidance system in addition to receiving GPS guidance. Adding laser guidance enables JDAMs to strike both moving and fixed targets. In February 2020, Boeing announced its intention to develop a \"powered\" JDAM to provide a low-cost alternative to cruise missiles. According to Air Force Magazine, this new JDAM would use a 500-pound bomb, and would be the size of a 2,000-pound bomb. Boeing has not stated a unit cost for this new development.", "DOD has procured more than 371,000 JDAM kits since 1998, and it plans to procure an additional 75,000 between FY2020 and FY2024. According to IHS Janes, the Air Force originally projected procuring 270,000 JDAM kits. Production peaked at 30,000 kits prior to 2007 before declining until 2015. Increased operational use in Iraq and Syria, in particular, resulted in a reduction in JDAM stockpiles, leading to increased procurement from FY2016 through FY2020. Table 1 outlines the FY2020 request, along with the programmed force between FY2021 through FY2024. The DOD projects to reduce JDAM procurement in the future years defense program (FYDP); the current programmed force for FY2021 reduces procurement from more than 40,000 tailkits in FY2020 to approximately 10,000 tailkits in FY2021 and ends the FYDP with approxmately 3,700 tailkits in FY2024. In addition to U.S. military use, JDAMs have been exported to 26 countries, including Australia, Bahrain, Denmark, Finland, Israel, Italy, Japan, Kuwait, Pakistan, Saudi Arabia, Singapore, South Korea, Taiwan, Turkey, and the United Arab Emirates. "], "subsections": []}, {"section_title": "Small Diameter Bomb (SDB) and Small Diameter Bomb II", "paragraphs": ["The Small Diameter Bomb, designated as GBU-39 ( Figure 9 ), is a 250-pound guided bomb. The SDB can use both GPS and laser guidance, enabling it to strike both fixed and moving targets. In 1997, responding to improvements in accuracy due to GPS, the Air Force stated a need to develop a smaller bomb to reduce collateral damage. The SDB reached initial operating capability in 2006. According to the Air Force, the SDB has a range of approximately 40 nautical miles. The SDB was specifically designed around space constraints in both the F-22 Raptor and F-35 Lightning II aircraft to enable these fighter aircraft to carry SDBs internally, while protecting their low observable signature. ", "The Air Force developed a second small diameter bomb, the GBU-53 laser-guided smaller diameter bomb, or SDB II (see Figure 10 ). The added laser guidance enables the SDB II to strike both fixed and moving targets. SDB II uses Link 16 and ultra-high frequency datalinks, along with infrared guidance, to provide course corrections. Development for the SDB II began in 2005, and the Air Force declared initial operating capability in 2019. The U.S. exports SDB II to Australia and South Korea as of 2019.", "The Air Force procures SDBs as of 2019. From FY2005 through FY2019, the Air Force purchased more than 28,000 SDBs for more than $1.7 billion. Both the Air Force and the Navy requested more than 7,000 SDBs in FY2020 (the second-largest procurement on the line) for $275 million, and plan to procure an additional 8,400 SDBs from FY2021 through FY2024. In addition both services are procuring SDB IIs. Procurement of the SDB II began in FY2018 with 80 bombs, increasing to 1,200 bombs in FY2019. DOD requested 1,900 bombs in FY2020 for approximately $331 million, and it plans to purchase more than 10,500 SDB IIs from FY2021 through FY2024 for $1.6 billion (see Table 2 )."], "subsections": []}, {"section_title": "AGM-114 Hellfire Missile", "paragraphs": ["In the early 1970s, the Army developed a requirement for an anti-tank missile, which resulted in the AGM-114 Hellfire (see Figure 11 ). The first Hellfire was introduced into service in 1982 on the Army's AH-64 Apache, using laser guidance to target tanks, bunkers, and structures. Hellfire missiles have a maximum effective range of 4.3 nautical miles. By the mid-1980s, the Marine Corps had introduced Hellfire missiles to its attack helicopter fleet. Hellfire missiles have received continual upgrades over the past decades, including integrating infrared sensors, warheads to target small boats, and integration with the Apache's Longbow radar. During the late 1990s and early 2000s, Hellfire missiles were introduced to the MQ-1 Predator, and later to the MQ-9 Reaper, enabling unmanned aerial vehicles to provide a strike capability. ", "Hellfire missiles have become a preferred munition for operations in the Middle East, particularly with increased utilization of unmanned aircraft like MQ-1s and MQ-9s. Hellfire missiles have been exported to a number of countries, including Australia, Bahrain, Egypt, India, Iraq, South Korea, Kuwait, Qatar, Saudi Arabia, Taiwan, Turkey, United Arab Emirates, and the United Kingdom.", "The Army and the Marine Corps identified the need to replace the Hellfire missile. During the mid-2000s, the two services started a new development project called the Joint Air-to-Ground Missile (JAGM), which entered testing in 2012. Both services plan to replace the Hellfire with the JAGM; however, it is unclear when they plan to make the transition.", "All three military departments procure Hellfire missiles. From 1998 through 2018, DOD procured more than 71,500 missiles at a cost of $7.2 billion. Congress appropriated nearly $484 million for approximately 6,000 missiles in FY2019. For FY2020, DOD requested approximately $730 million for 9,000 Hellfire missiles, and it plans to purchase 13,100 missiles at a cost of $1.2 billion between FY2021 and FY2024 ( Table 3 ). In its FY2020 recent budget request, DOD states that it is requesting to procure the maximum production of Hellfire missiles."], "subsections": []}, {"section_title": "AGM-169 Joint Air-to-Ground Missile (JAGM)", "paragraphs": ["The Joint Air-to-Ground Missile is designed to replace the Hellfire, TOW, and Maverick missiles. JAGM uses a new warhead/seeker paired with an existing AGM-114R rocket motor\u00e2\u0080\u0094which is the latest model\u00e2\u0080\u0094to provide improved target acquisition and discrimination (see Figure 12 ). The JAGM has a maximum effective range of 8.6 nautical miles when launched from a helicopter and 15.1 nautical miles when launched from fixed-wing aircraft. ", "JAGM underwent testing starting in 2010, and the missile entered initial operating capability in 2019, having been successfully integrated on the AH-64E Apache and AH-1Z Super Cobra attack helicopters. JAGM is expected to be integrated on other platforms as well, including the FA-18E/F Super Hornet, MQ-1C Grey Eagle, MH-60M Defensive Air Penetrator, MH-60S Seahawk, F-35 Lightning II, and P-8 Poseidon. In addition, the Air Force has begun procuring JAGMs but has not announced publicly what platforms will employ the missile.", "JAGM entered low-rate initial production in FY2017. All three services are procuring JAGM, though the Air Force is requesting only 60 missiles in FY2020, with no projections of additional procurement. DOD requested more than $339 million and 1,000 missiles for FY2020, and it projects procuring approximately 4,600 additional missiles through FY2024 for about $1.5 billion (see Table 4 )."], "subsections": []}, {"section_title": "AGM-158A/B Joint Air-to-Surface Strike Missile (JASSM) and AGM-158C Long-Range Anti-Ship Missile (LRASM)", "paragraphs": ["The Joint Air-to-Surface Strike Missile was conceived in the mid-1990s as a stealthy cruise missile designed to strike targets in heavily defended airspace. The JASSM is a 14-foot-long, 2,250-pound missile that can be carried internally on B-1B Lancer and B-52 Stratofortress aircraft and carried externally on a number of tactical fighters, including the F-16 Falcon, F-15E Strike Eagle, F/A-18 Hornet, F/A-18E/F Super Hornet, and F-35 Lightning II (see Figure 13 ). The AGM-158A JASSM has a stated range of more than 200 nautical miles. Initial operating capability was declared in 2005 (see Figure 14 ). AGM-158As have been exported to Australia, Finland, and Poland. ", "In 2004, the Air Force decided that it required additional range on the JASSM and developed an extended range version, the AGM-158B JASSM-ER. The JASSM-ER uses the same body as the previous version with an improved infrared seeker, a two-way datalink, and enhanced anti-jam GPS receiver. The range of the JASSM-ER increased from more than 200 nautical miles to 500 nautical miles. This munition reached initial operating capability in 2014 on the B-1B Lancer. It reached full operating capability in 2018 with integration onto the F-15E Strike Eagle, and it is in full-rate production. The Air Force originally planned to procure 2,866 JASSMs and JASSM-ERs, but it has since changed the requirement to 7,200 missiles; as of 2019 the Air Force has procured more than 4,000 JASSMs. Japan has expressed interest in procuring JASSM-ERs, and Poland was approved to receive 70 missiles in 2016. The Air Force announced plans in September 2019 to increase JASSM production to a maximum rate of 550 missiles per year. The Service intends to grow the total JASSM inventory to approximately 10,000 missiles. In February 2020, the Air Force announced an $818 million contract to produce the latest version of the JASSM-Extreme Range Missile. According to Inside Defense, this new contract will produce 790 JASSM-ER missiles over two production lots. The new production contract includes 40 JASSM missiles to support foreign military sales; however, it is unclear which country will receive these missiles.", "The Long Range Anti-Ship Missile (LRASM) was conceived by the Defense Advanced Research Projects Agency (DARPA) as a concept to use a JASSM body to replace the AGM-88 Harpoon. Flight testing for LRASM began in 2012 on board a B-1B, and the missile was tested on an F/A-18E/F Super Hornet. LRASM uses a combination of passive radio-frequency sensors, and electro-optical/infrared seekers for terminal guidance. Japan has expressed interest in procuring the LRASM. In September 2019, the Air Force announced its intent to procure up to 410 LRASM missiles, changing its plan from an original estimate of 110 missiles.", "The JASSM-ER and the LRASM are produced in the same facility. According to budget documents, DOD states that JASSM and LRASM procurement in FY2020 is at maximum production rate. The Air Force and Navy are procuring JASSM-ER and LRASM as of 2019. In FY2020, DOD requested to procure 430 JASSM-ER missiles and an additional 48 LRASMs (see Table 5 ). In September 2019, the Air Force announced plans to increased JASSM production to 500 missiles per year, with additional capacity to up produce 96 LRASMs. DOD projects reduced procurement quantities of JASSM-ER, while maintaining procurement quantities of LRASM through FY2024. "], "subsections": []}, {"section_title": "AGM-88E Advanced Anti-Radiation Guided Missile (AARGM)", "paragraphs": ["The Advanced Anti-Radiation Guided Missile is designed to target enemy integrated air defenses, specifically guidance radars (see Figure 15 ). AARGM was conceived in 2001 to replace the High-Speed Anti-Radiation Missile (HARM). DOD identified several deficiencies in the HARM that limited its operational effectiveness during Operation Iraqi Freedom. Thus, AARGM incorporated a new solid-propellant rocket motor that improved its range over the HARM, along with new guidance and seeker systems\u00e2\u0080\u0094using GPS inertial navigation for guidance and millimeter wave and W-band (higher than 40 GHz) sensors. ", "AARGM entered operational testing in 2010 and initial operational capability in 2012. AARGM has been integrated on the F/A-18C/D Hornet, F/A-18E/F Super Hornet, E/A-18G Growler, F-16C/D Falcon, and the F-35 Lightning II.", "Both the Navy and the Air Force have procured the AARGM or its predecessor the HARM; however, neither service is procuring additional missiles as of FY2020. The Navy, however, has requested $183 million of procurement appropriations to modify its current stockpile of AARGMs. The Air Force has not requested appropriations to modify its stockpile of HARMs since FY2016. Table 6 describes the total DOD request for AARGM. AARGM has been exported to a number of countries, including Australia, Italy, Finland, Germany, and Poland."], "subsections": []}]}, {"section_title": "Ground-Launched Guided Munitions", "paragraphs": [], "subsections": [{"section_title": "Guided Multiple Launch Rocket System (GMLRS)", "paragraphs": ["GMLRS (see Figure 16 ) is a GPS-guided 227-millimeter rocket that was jointly developed by the United States, France, Germany, Italy, and the United Kingdom. Development began in 1999, and the U.S. military began procuring GMLRS in FY2003. GMLRS is capable of being launched from the M270 multiple launch rocket system (MLRS) and the M142 High Mobility Artillery Rocket System (HIMARS). GMLRS has a 200-pound unitary warhead and a maximum range of 70 kilometers.", "Both the Army and the Marine Corps have procured GMLRS. Since 1998, DOD has spent nearly $5.4 billion to procure more than 42,000 rockets. DOD has requested more than $1.2 billion for approximately 9,900 rockets in FY2020, and it plans to spend an additional $4.3 billion for nearly 29,000 GMLRS between FY2021 and FY2024. In addition, GMLRS is being exported: Bahrain, United Arab Emirates, Poland, and Romania are procuring GMLRS, as are the development partners (France, Germany, Italy, and the United Kingdom). See Table 7 for an overview of the current DOD request for GMLRS."], "subsections": []}, {"section_title": "Army Tactical Missile System (ATACMS)", "paragraphs": ["ATACMS (see Figure 17 ) is a 610-millimeter rocket that can be launched from either the M270 MLRS (two rockets) or the M142 HIMARS (a single rocket). This rocket was originally developed in the 1980s and was later updated to provide GPS guidance. ATAMCS underwent a second upgrade in 1991, which allowed ATACMS warheads to seek and attack armored targets. Other upgrades have improved target discrimination and new penetrating warheads for hardened targets. In 2016, then-Secretary of Defense Ash Carter announced that the Strategic Capabilities Office had developed a new seeker that allowed the ATACMS rocket to target ships. The Army has stated that it intends to retire the ATACMS and replace it with the new Precision Strike Missile.", "The Army is procuring ATACMS in FY2020, though this procurement will curtail as the Precision Strike Missile enters service. DOD requested to procure 240 missiles for $340 million in FY2020; it plans to procure 492 missiles for $611 million between FY2021 and FY2024. Table 8 provides an overview of the most recent request for ATACMS. Five hundred and six ATACMS have been exported to a number of countries, including the United Arab Emirates and Romania. "], "subsections": []}, {"section_title": "Precision Strike Missile (PrSM)", "paragraphs": ["The PrSM is a new development program intended to replace ATACMS. PrSM is designed to be launched from the M270 and the M142 HIMARS multiple rocket launcher system. The Army states that PrSM is designed to launch two missiles in a launcher pod compared to ATACMS single missile, has a range in excess of 400 kilometers, and has an anti-jam GPS antenna. PrSM is in development and is planned to enter early operational service in FY2023. The Army has not stated when it intends to begin testing the PrSM. The Army states that although this missile might be sold to foreign militaries in the future, there are no purchase commitments from foreign governments as of 2019. The Army tested the PrSM at White Sands, NM, in its first flight test in December 2019. In its second test in March 2019, the Army successfully tested the PrSMs short-range capabilities."], "subsections": []}]}, {"section_title": "Naval Precision-Guided Munitions", "paragraphs": [], "subsections": [{"section_title": "Tomahawk Cruise Missile", "paragraphs": ["The Tomahawk cruise missile was originally developed during the early- to mid-1970s. It was designed to be launched by submarines and from surface combatants. Designed to fly at 570 miles per hour (Mach 0.74, or 74% of the speed of sound) for up to 870 nautical miles, the Tomahawk has received a number of upgrades since it entered service. The Tomahawk Block IV is the current cruise missile in production and comes in two versions\u00e2\u0080\u0094one for surface ships and another for submarines (see Figure 19 ). Upgrades have included improvements to GPS guidance, satellite datalink communications, and propulsion. The first operational use of the Tomahawk was during Operation Desert Storm, where the Navy launched 290 missiles from 12 submarines. Since then, IHS Janes reports that the Navy has used more than 1,600 missiles in Iraq, Bosnia, Serbia, Afghanistan, and Syria. The United Kingdom is the only export customer of the Tomahawk Block IV.", "From FY1998 through FY2018, the Navy spent $5.87 billion on 4,984 Tomahawk cruise missiles. The Navy has requested nearly $387 million for 90 missiles in FY2020, and it projects to procure an additional 90 missiles for nearly $374 million in FY2021, with no plans to procure additional missiles in FY2022-FY2024. The Navy projects requesting $819 million for additional procurement appropriations. (See Table 10 for the most recent Tomahawk request.)"], "subsections": []}, {"section_title": "Standard Missile-6 (SM-6)", "paragraphs": ["The Standard Missile-6 was originally designed in 2004 as an anti-aircraft missile, derived from the Navy's SM-2 Block IV (see Figure 20 ). Since its development, the SM-6 has been integrated into the Navy's Naval Integrated Fires-Counter Air (NIF-CA) program to strike enemy surface ships. The missile was designed to receive targeting information from AEGIS radars and has been upgraded to receive target information from the E-2D Advanced Hawkeye. In addition to anti-air and anti-surface missions, the SM-6 is also capable of performing anti-ballistic missile missions. SM-6 entered low-rate initial production in FY2009 and full rate production in FY2013.", "The SM-6 is funded under the Navy's procurement line item 2234 Standard Missile. According to the latest Selected Acquisition Reports, DOD increased the requirement for SM-6 missiles from 1,800 to 2,331. DOD requested $488 million for 125 missiles in FY2020; it is projected that DOD will procure an additional 615 missiles between FY2021 and FY2024 at a cost of nearly $2.9 billion. Table 11 provides an overview of the current DOD request for SM-6 missiles."], "subsections": []}, {"section_title": "Naval Strike Missile (NSM)", "paragraphs": ["The Naval Strike Missile was originally developed by the Norwegian company Kongsberg as a replacement for the Penguin anti-ship missile (see Figure 21 and Figure 22 ). This missile is an anti-ship, low-observable cruise missile capable of flying close the surface of the ocean to avoid radar detection. IHS Janes states that \"[t]he\u00c2\u00a0 NSM \u00c2\u00a0airframe materials and\u00c2\u00a0missile\u00c2\u00a0shape are intended to minimise its infrared (IR) and radar signatures and radar cross section.\" The NSM is designed to fly multiple flight profiles\u00e2\u0080\u0094different altitudes and speeds\u00e2\u0080\u0094with effective ranges of between 100 and 300 nautical miles at a cruise speed of up to 0.9 Mach. The Navy has integrated the NSM on its Littoral Combat Ship, which deployed into the Pacific region in September 2019.", "The Navy began procuring the NSM in FY2019 under the Littoral Combat Ship Over-the-Horizon Missile procurement line (see Table 12 ). The Navy has requested $38 million for 18 missiles, and it plans to spend approximately $166 million for an additional 83 missile through FY2024. According to its budget justification, the Navy does not have a specific requirement for the number of missiles it plans to procure."], "subsections": []}]}]}, {"section_title": "Potential Issues for Congress", "paragraphs": ["Planned procurement quantities and stockpile assessment. One potential issue for Congress is whether DOD's desired quantities of standoff munitions are appropriate. Current operations have demonstrated a large demand for all types of PGMs. A potential high-intensity conflict would potentially require large stockpiles of all types of weapons. Several of these types of munitions\u00e2\u0080\u0094particularly JASSM, LRASM, and AARGM\u00e2\u0080\u0094are being procured in relatively small quantities, given their potential use rates in a high-intensity conflict scenario, along with the time it would take for replacement spent munitions once initial inventories are exhausted. A related issue is whether DOD has adequately assessed the sufficiency of existing and planned PGM stockpiles, particularly in light of recent use rates for such weapons. Congress has from time to time required DOD to assess munitions requirements, as well as to report on combatant command munitions requirements. More recently, Congress required DOD to provide an annual report on the munitions inventory, along with an unconstrained assessment of munitions requirements. Defense industrial base production capacity. Another potential issue for Congress concerns the defense industrial base's capacity for building PGMs, particularly for meeting increased demands for such weapons during an extended-duration, high-intensity conflict. The question is part of a larger issue of whether various parts of the U.S. defense industrial base are adequate, in an era of renewed great power competition, to meet potential wartime mobilization demands. Supply chain security. Another potential issue for Congress concerns supply chain security, meaning whether U.S. PGMs incorporate components, materials, or software of foreign origin. Supply chain security could affect wartime reliability of these weapons as well as the ability of the U.S. industrial base to build replacement PGMs in a timely manner during an extended-duration, high-intensity conflict. Development timelines. Congress may be concerned about the development timeline of PGMs compared with development timelines of adversary A2/AD capabilities. China and Russia have developed sophisticated systems over the past 10 years, while DOD has developed relatively few systems. Some analysts argue that these systems can exceed DOD munitions capabilities (such as range and speed). Can and, if so, should DOD develop new systems and at a pace that can match or exceed that of Chinese or Russian weapons systems? Affordability and cost-effectiveness. Congress may also be concerned about the affordability of DOD's plans for procuring various PGMs in large numbers, and the cost-effectiveness of PGMs relative to other potential means of accomplishing certain DOD missions, particularly in a context of finite DOD resources and competing DOD program priorities. Another aspect of cost-effectiveness concerns the cost of the weapon compared to the cost of a target. For instance, in 2017 a U.S. ally used a $3 million Patriot missile to engage a $300 quadcopter drone. Emerging factors that may affect PGM programs. Another potential issue for Congress is how DOD's programs for developing and procuring PGMs might be affected by emerging factors such as the U.S. withdrawal from the Intermediate Nuclear Force (INF) treaty; new U.S. military operational concepts for countering Chinese A2/AD forces in the Indo-Pacific region, such as the Army's new Multi-Domain Operations (MDO) operational concept and the Marine Corps' new Expeditionary Advanced Base Operations (EABO) concept, both of which possibly feature the potential use of such weapons from island locations in the Pacific as a way of countering China's A2/AD forces; and emerging technologies such as hypersonics and artificial intelligence (AI).", "Appendix A. Prior Year Procurement by Service", "Appendix B. Prior Year Procurement by Program"], "subsections": []}]}}
{"id": "R46077", "title": "Potential Effect of FCC Rules on State and Local Video Franchising Authorities", "released_date": "2020-01-09T00:00:00", "summary": ["Local and state governments have traditionally played an important role in regulating cable television operators, within limits established by federal law. In a series of rulings since 2007, the Federal Communications Commission (FCC) has further limited the ability of local governments (known as local franchise authorities ) to regulate and collect fees from cable television companies and traditional telephone companies (known as telcos ) offering video services.", "In August 2019, in response to a ruling by a federal court of appeals, the FCC tightened restrictions on municipalities' and\u00e2\u0080\u0094for the first time\u00e2\u0080\u0094on states' ability to regulate video service providers. The Communications Act of 1934, as amended, still allows local governments to require video service operators to provide public, educational, and government (PEG) channels to their subscribers. The FCC's August 2019 order, however, sets new limits on local governments' ability to collect fees from operators to support the channels. In addition, the FCC ruled that local franchise authorities could not regulate nonvideo services offered by incumbent cable operators, such as broadband internet service, business data services, and Voice over Internet Protocol (VoIP) services. In October 2019, also for the first time, the FCC concluded that a video streaming service was providing \"effective competition\" to certain local cable systems, thereby preempting the affected municipalities' ability to regulate local rates for basic cable service.", "These rulings have caused controversy. The FCC has asserted that they fulfill a statutory mandate to promote private-sector investment in advanced telecommunications and information services and to limit government regulation when competition exists. State and local governments, however, have objected that the regulatory changes deprive them of revenue and make it harder for them to ensure that video providers meet local needs.", "Against this backdrop of federal government actions limiting cable service regulation at the local level, consumer behavior continues to change. Specifically, an increasing number of consumers are substituting streaming services for video services provided by cable companies and telcos. As a result, the amount of revenue state and local governments receive from cable and telco providers subject to franchise fees is declining, which also reduces the amount cable providers can be required to spend to support PEG channels. In response, some municipalities and states have attempted to impose fees on online video services, such as Netflix and Hulu. Courts have not yet ruled on the legality of such fees.", "These regulatory developments and industry trends raise several potential issues for Congress. First, Congress could consider whether the FCC's interpretation of the Communications Act with respect to local regulation of video service providers is consistent with Congress's policy goals. Specifically, Congress could explore the extent, if any, to which, if any, it encourages or permits state and local regulations designed to promote the availability of PEG programming as well as subsidized voice, data, and video services for municipal institutions.", "Second, Congress could evaluate whether to create regulatory parity with respect to local regulation of cable and telcos' nonvideo services. While states and municipalities may regulate both video and voice services of telcos, they may only regulate video services of cable operators. Congress could address regulatory parity by either deregulating traditional telcos' nonvideo services or regulating cable operators' nonvideo services.", "Third, as the FCC and local governments include online video streaming services in their definitions of video providers for the purposes of evaluating competition and/or imposing franchise fees, Congress could clarify whether these actions achieve its stated policy goals. Finally, given the FCC's actions to reduce local government rate regulation of cable services and the State of Maine's legislation to enable video subscribers to seek alternatives to bundled programming, Members of Congress could reconsider past proposed statutory changes to require video programming distributors to offer individual channels to consumers. Alternatively, Congress could clarify that states and local governments lack authority to enact such laws."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Overview", "paragraphs": ["Local governments have traditionally played an important role in regulating cable television systems. Operators required municipal permission to place their cables above or beneath streets and other publicly owned land and to mount the cables on telephone/and or utility poles. Cities negotiated with cable operators over the services their systems would provide, including channels dedicated to public, educational, or government programming (PEG), and the payment of franchise fees. In exchange, the cable operators often received de facto exclusive local franchises to offer video distribution services. That changed in 1984, when Congress required local governments to allow competition. In the mid-2000s, as telephone companies (known as \" telcos \") sought to obtain their own video services franchises, state governments got involved to streamline the franchising process, in several instances preempting municipalities' authority. The states applied these laws to incumbent cable operators as well as to new entrants, to ensure legal parity.", "As technological developments and changes in business strategies and consumer behavior have reshaped the telecommunications industry, the Federal Communications Commission (FCC) has taken several steps to limit local regulatory authority over cable and telco video service providers. Many of these regulatory changes have caused controversy. Some local governments assert that, among other things, the FCC's actions will limit their ability to protect the public interest and deprive them of revenue.", "This report examines the evolving relationship between federal, state, and local regulators and identifies related policy issues that may be of interest to Congress."], "subsections": []}, {"section_title": "Regulation of Video Services", "paragraphs": ["Cable television began operating in the 1940s as a means to receive broadcast signals in areas with trees or mountains that interfered with over-the-air signal transmission. Initially, municipalities, rather than states, made most decisions related to awarding cable franchises. As cable television developed, some states began to regulate the terms included in a cable franchise, or required state review or approval of a franchise agreement. The term local franchising authorities (LFAs) refers to municipal and/or state government entities that offer and negotiate video franchises. Today, agreements between LFAs and video service providers typically include provisions concerning the availability of channels for PEG programming; the amount of money due to the LFA in franchise fees, including in-kind contributions; and the rates charged to subscribers."], "subsections": [{"section_title": "Developments Prior to 1984", "paragraphs": ["The Communications Act of 1934 (referred to in this report as the Communications Act) created the FCC, but did not specifically set forth the FCC's authority to regulate cable. However, the U.S. Supreme Court found in 1968 that the agency's authority was sufficiently broad to do so. The FCC issued comprehensive regulations governing cable systems and cable franchising authorities in 1972. The FCC's rules directed cable operators to offer PEG services and LFAs to cap franchise fees."], "subsections": [{"section_title": "Franchise Agreement Terms and Conditions", "paragraphs": ["In the early days of cable television, a municipal government seeking to bring cable to its residents would, through a request for proposals, spell out the requirements that a cable operator would have to meet to win the franchise. Cable companies would bid against one another for the chance to wire the municipality. Renewal of an existing franchise might entail additional requirements. "], "subsections": [{"section_title": "PEGs", "paragraphs": ["In 1972, the FCC directed cable operators to dedicate one channel for public access, one channel for educational use, and one channel for local government use by a certain date, and to add channel capacity if necessary to meet the requirement. Two years later, however, the commission reconsidered its stance, stating, ", "Demands are being made not only for excessive amounts of free equipment but also free programming and engineering personnel to man the equipment. Cable subscribers are being asked to subsidize the local school system, government, and access groups. This was not our intent and may, in fact, hamper our efforts at fostering cable technology on a nationwide scale. Too often these extra equipment and personnel demands become franchise bargaining chips rather than serious community access efforts. We are very hopeful that our access experiment will work.... We do not think, however, that simply putting more demands on the cable operator will make public access a success. Access will only work, we suspect, when the rest of the community assumes its responsibility to use the opportunity it has been provided.", "Although the U.S. Supreme Court later struck down the FCC's rules requiring cable operators to set aside channels for PEGs, PEG access requirements became commonplace in local franchise agreements by the early 1980s. Congress encouraged this development. According to a 1984 report from the House Committee on Energy and Commerce", "Public access channels are often the video equivalent of the speaker's soapbox or the electronic parallel to the printed leaflet. They provide groups and individuals who generally have not had access to the electronic media with the opportunity to become sources of information in the electronic marketplace of ideas. PEG channels also contribute to an informed citizenry by bringing local schools into the home, and by showing the public local government at work. "], "subsections": []}, {"section_title": "Franchise Fees", "paragraphs": ["In addition to requiring cable system owners to obtain a franchise before operating, municipalities also required cable system owners to pay a franchise fee . In its 1972 Cable Order, the FCC stated,", "[M]any local authorities appear to have extracted high franchise fees more for revenue-raising than for regulatory purposes. Most fees are about five or six percent, but some have been known to run as high as 36 percent. The ultimate effect of any revenue-raising fee is to levy an indirect and regressive tax on cable subscribers. Second, and of great importance to the Commission, high local franchise fees may burden cable television to the extent that it will be unable to carry out its part in our national communications policy.... We are seeking to strike a balance that permits the achievement of federal goals and at the same time allows adequate revenues to defray the costs of local regulation.", "To accomplish this balance, the FCC capped the franchise fees at 3%-5% of a cable operator's revenues from subscribers. For fees greater than 3% of an operator's subscriber revenues, the FCC required a franchising authority to submit a showing that the specified fee was \"appropriate in light of the planned local regulatory program.\""], "subsections": []}, {"section_title": "Rates Charged to Subscribers", "paragraphs": ["When cable television first developed as essentially an antenna service to improve over-the-air broadcast television signal reception in rural and suburban areas, many municipalities regulated the rates charged to subscribers. The municipalities viewed rate regulation, tied to the systems' use of public streets, as a means of preventing cable operators from charging unreasonably high rates for what they viewed as an essential service. ", "In the 1972 Cable Order, the FCC required franchising authorities to specify or approve initial rates for cable television services regularly furnished to all subscribers and to institute a program for the review and, as necessary, adjustment of rates. In 1976, the FCC repealed those rules and instead made LFA regulation of rates for cable television services optional. In 1974, the FCC preempted LFAs from regulating rates for other so-called \"specialized services,\" including \"advertising, pay services, digital services, [and] alarm systems.\" "], "subsections": []}]}]}, {"section_title": "Federal Regulatory Actions", "paragraphs": [], "subsections": [{"section_title": "1984 Cable Act", "paragraphs": ["In the Cable Communications Policy Act of 1984 ( P.L. 98-549 , referred to in this report as the 1984 Cable Act), Congress added Title VI to the Communications Act to give the FCC explicit authority to regulate cable television. The 1984 Cable Act established the local franchising process as the primary means of cable television regulation. The act did not diminish state and local authority to regulate matters of public health, safety, and welfare; system construction; and consumer protection for cable subscribers.", "Congress enacted the 1984 Cable Act the same year that American Telephone and Telegraph Company (AT&T), which had an effective monopoly over most telecommunications services, spun off its regional operating companies as part of the settlement of a federal antitrust suit. The 1984 Cable Act generally prohibited telcos from providing video services in the same regions where they provided voice services. This prohibition prevented the former AT&T companies from competing with cable operators in communities where they controlled the local telephone system. "], "subsections": [{"section_title": "Franchise Fees and PEGs", "paragraphs": ["The 1984 Cable Act confirmed the power of state and municipal governments to include requirements for PEGs, facilities and equipment, and certain aspects of program content within franchise agreements. It delineated federal limits on franchise fees, and restricted the FCC's power to regulate the amount of franchise fees or the use of funds derived from those fees. ", "The law permits franchising authorities to charge franchise fees, but limits such fees to no more than 5% of the cable operators' gross revenues from \"cable services.\" For the purposes of calculating gross revenues, the FCC included revenues from advertising and home shopping commissions, in addition to revenues from video service subscriptions. Subsequently, as described in \" FCC Actions Affecting State and Local Video Service Franchising Terms and Conditions ,\" defining the costs that are subject to the 5% statutory limit on franchise fees became a point of repeated controversy.", "The 1984 Cable Act allows local franchising authorities to enforce any PEG access requirements in a franchise agreement. Such terms and conditions can include providing video production facilities and equipment, paying capital costs related to PEG facilities beyond the 5% franchise fee cap, and paying costs associated with support of PEG channel use. In addition, the 1984 Cable Act permitted LFAs to require cable operators to designate channels for PEGs on institutional networks (I-Nets) provided for public buildings and other nonresidential subscribers. "], "subsections": []}, {"section_title": "Rate Regulation", "paragraphs": ["Section 623 of the 1984 Cable Act (47 U.S.C. \u00c2\u00a7543) prohibits federal, state, or local franchising authorities from regulating the rates of cable operators that are \"subject to effective competition,\" as defined by the FCC. The 1984 Cable Act directs the FCC to review its standards for determining effective competition periodically, taking into account developments in technology. "], "subsections": []}]}, {"section_title": "Redefining Effective Competition", "paragraphs": ["In 1985, the FCC determined that cable systems generally were subject to \"effective competition\" if they operated in an areas where three or more broadcast television signals were either \"significantly viewed\" by residents or transmitted with acceptable signal quality (as defined by the FCC) to the cable systems' franchise areas. In accordance with the timetable set by the 1984 Cable Act, the \"effective competition\" rule became effective on December 29, 1986. This rule effectively deregulated cable prices in most communities. ", "In 1991, the FCC adopted a new definition of \"effective competition.\" The FCC deemed effective competition to exist if either:", "1. six unduplicated broadcast signals were available to the cable operator's franchise area via over-the-air reception, or 2. another multichannel video service, such as a satellite service, was available to at least 50% of homes to which cable services were available (homes passed), and was subscribed to by 10% of the cable operator's homes passed. ", "Under this more restrictive definition, most systems were still subject to effective competition and therefore not subject to rate regulation. "], "subsections": []}, {"section_title": "1992 Cable Act", "paragraphs": ["In the Cable Television Consumer Protection and Competition Act of 1992 ( P.L. 102-385 , referred to here as the 1992 Cable Act), Congress stated the policy goal of relying on market forces, to the maximum extent feasible, to promote the availability of a diversity of views and information through cable television and other video distribution media. Congress emphasized the importance of protecting consumer interests where cable systems are not subject to effective competition, and of ensuring that cable operators do not have undue market power vis-\u00c3\u00a0-vis video programmers and consumers. "], "subsections": [{"section_title": "New Entrants in Video Programming Distribution Markets", "paragraphs": ["The 1992 Cable Act revised Section 621(a)(1) of the Communications Act to codify restraints on local franchise authorities' licensing activities. While local authorities retained the power to grant cable franchises, the law provided that \"a franchising authority may not grant an exclusive franchise and may not unreasonably refuse to award an additional competitive franchise.\" Congress gave potential entrants a judicial remedy by enabling them to commence an action in a federal or state court within 120 days after a local authority refused to grant them a franchise. "], "subsections": []}, {"section_title": "Rate Regulation", "paragraphs": ["In addition, Congress made it easier for local authorities to regulate cable rates by adopting a more restrictive definition of \"effective competition\" than the FCC's. Pursuant to these changes, local authorities may not regulate cable rates if at least one of the following four conditions is met:", "1. fewer than 30% of the households in the franchise area subscribe to a particular cable service; 2. within the franchise area, a. at least two unaffiliated multichannel video programming distributors (MVPDs) each offer comparable video programming to at least 50% of the households in the franchise area, and b. at least 15% of households subscribe to an MVPD other than the largest one; 3. an MVPD owned by the franchising authority offers video programming to at least 50% of the households in the franchise area; or 4. a telephone company offering local voice services (known as a \"local exchange carrier\" [LEC]) or its affiliate, \"(or any multichannel video programming distributor using the facility of such carrier or its affiliate)\" carries comparable video programming services directly to subscribers by any means (other than direct-to-home satellite services) in the franchise area of an unaffiliated cable operator that is providing video service in that franchise area.", "Congress directed the FCC to publish a survey of cable rates annually."], "subsections": []}]}, {"section_title": "1996 Telecommunications Act", "paragraphs": ["Even as the 1992 Cable Act took effect, a combination of technological, economic, and legal factors was enabling the convergence of the previously separate telephone, cable, and satellite broadcasting industries. Digital technology, particularly the ability to compress digital signals, enabled both direct broadcast satellite (DBS) services and cable operators to offer dozens of channels. In 1993, the telephone company Bell Atlantic successfully challenged, on First Amendment grounds, the 1984 ban on cross-ownership of telephone and cable companies in the same local market. In the meantime, several cable operators sought to gain economies of scale by consolidating local systems into regional systems. ", "In the Telecommunications Act of 1996 ( P.L. 104-104 ), Congress permitted LECs to offer video services and cable operators to offer voice services. Because laws and regulations pertaining to cable systems were quite different from those pertaining to LECs, the prospect of greater competition between those two types of providers led Congress to revisit video market regulation. Moreover, Section 601 rescinded the 1982 consent decree that required the breakup of AT&T, thereby allowing LECs to consolidate further by subsequently merging with long-distance service providers and each other.", "The act stipulated that cable operators do not need to obtain approval of local authorities that regulate their video services in order to offer \"telecommunications services,\" such as voice services. The Senate Commerce Committee noted that these changes did not affect existing federal or state authority with respect to telecommunications services. It stated that the committee intended that local governments, when exercising their authority to manage their public rights of way, regulate telecommunications services provided by cable companies in a nondiscriminatory and competitively neutral manner. ", "Congress used the term \"open video systems\" (OVS) in the 1996 Telecommunications Act (\u00c2\u00a7653) to describe LECs that soughtto compete with cable operators. The act explicitly exempted OVS service from franchise fees and other 1992 Cable Act requirements, including the requirement to obtain a local franchise. In 1999, the U.S. Court of Appeals for the Fifth Circuit interpreted the provision to mean that, while the federal government could no longer require OVS operators to obtain a local franchise, state and local authorities could nevertheless do so. "], "subsections": []}]}]}, {"section_title": "State vs. Local Franchising of Video Services", "paragraphs": ["In 2003, several telephone companies, most notably Southwestern Bell Company (now AT&T) and Verizon, began constructing fiber networks designed to bring consumers advanced digital services, including video. AT&T and Verizon branded these services as \"U-Verse\" and \"FiOS,\" respectively. Neither company launched video services under the OVS rules, claiming that federal requirements and potential local franchise requirements were too costly. ", "In 2006, a federal district court in California dismissed AT&T's claims that municipalities were violating federal law by attempting to exercise franchise authority over the company's video services. The court declined, however, to rule on whether video delivered over internet protocol, the technology used by LECs, met the federal definition of a cable service. Two bills introduced that year in the 109 th Congress, H.R. 5252 and S. 2686 , would have declared that video service enabled via internet protocol is subject only to federal regulation. Congress did not vote on either bill. "], "subsections": [{"section_title": "State-Level Franchising Authority", "paragraphs": ["As the LECs sought to enter the video distribution market, they pursued statewide reforms to speed their entry, rather than seeking franchises in individual municipalities. The LECs' competitors, the incumbent cable operators, contended that state-level franchising would present new entrants with fewer obligations than cable companies had faced when they entered the market, specifically the obligation to build networks serving all parts of a community. ", "In 2005, Texas became the first of several states to replace local franchising with a state-level regime for video service providers, with the express purpose of facilitating entry by new competitors. As Table 1 illustrates, many other states have since either replaced municipal franchising with state-level franchising or offered providers a choice."], "subsections": []}]}, {"section_title": "FCC Actions Affecting State and Local Video Service Franchising Terms and Conditions", "paragraphs": ["Since 2007, the FCC has repeatedly revisited the authority of states and LFAs to franchise and regulate video service providers. This process culminated in two orders issued in 2019. One (the \"2019 LFA 3 rd R&O\") sharply limits state and local authority over products offered by video service providers other than video programming. The other order (the \"2019 Effective Competition Order\") determined that AT&T's streaming service, AT&T TV NOW, meets the LEC test component of Congress's effective local competition definition and therefore provides effective competition to a local cable operator. "], "subsections": [{"section_title": "2007 Order Addressing Local Franchising of New Entrants", "paragraphs": ["In 2007, the FCC found that the local franchising process constituted an unreasonable barrier to new entrants in the marketplace for video services and to their deployment of high-speed internet service. The FCC adopted rules and guidance covering cities and counties that grant cable franchises. However, the agency stated that it lacked sufficient information regarding whether to apply the rules and guidance to state governments that either issued franchises at the statewide level or had enacted laws governing specific aspects of the franchising process. Consequently, the FCC stated that while it would preempt local laws, it would not preempt state laws covering video franchises."], "subsections": [{"section_title": "Franchise Fee Cap", "paragraphs": [], "subsections": [{"section_title": "In-Kind Contributions Unrelated to Cable Services Included in Cap", "paragraphs": ["The FCC determined that unless certain specified costs, fees, and other compensation required by LFAs are counted toward the statutory 5% cap on franchise fees, an LFA's demand for such fees represents an unreasonable refusal to award a competitive franchise to a new entrant. In addition, the FCC found that some LFAs had required new entrants to make \"in-kind\" payments or contributions that are unrelated to the provision of cable services. The FCC stated that any requests by LFAs for in-kind contributions that are unrelated to the provision of cable services by a new competitive entrant are subject to the statutory 5% franchise fee cap."], "subsections": []}, {"section_title": "Payments Made to Support PEG Operations Included in Cap", "paragraphs": ["The FCC contended that disputes between LFAs and new entrants over LFA-mandated contributions in support of PEG services and equipment could lead to unreasonable refusals by LFAs to award competitive franchises. It determined that costs related to supporting the use of PEG access facilities, including but not limited to salaries and training, are subject to the 5% cap, but that capital costs \"incurred in or associated with the construction of PEG access facilities\" are excluded from the cap. "], "subsections": []}]}, {"section_title": "Treatment of Nonvideo Services by LFAs", "paragraphs": ["The FCC stated that the LFAs' jurisdiction over LECs and other new entrants applies only to the provision of video services. Specifically, it stated that an LFA cannot use its video franchising authority to attempt to regulate a LEC's entire network beyond the provision of video services."], "subsections": []}, {"section_title": "Additional Findings Regarding \"Unreasonable\" LFA Actions", "paragraphs": ["In addition, the FCC found that the following LFA actions constitute an unreasonable refusal to award video franchises to new entrants:", "1. failure to issue a decision on a competitive application within the time frames specified in the FCC's order; 2. refusal to grant a competitive franchise because of an applicant's unwillingness to agree to \"unreasonable\" build-out requirements; and 3. denying an application based upon a new entrant's refusal to undertake certain obligations relating to PEGs and I-Nets. "], "subsections": []}, {"section_title": "Court Ruling", "paragraphs": ["In 2008, the U.S. Court of Appeals for the Sixth Circuit upheld the FCC's rules."], "subsections": []}]}, {"section_title": "2007 and 2015 Orders Addressing Local Franchising of Incumbent Cable Operators", "paragraphs": ["In November 2007, the FCC issued a Second Report and Order that extended the application of several of these rules to local procedures to renew incumbent cable operators' franchises. Specifically, the FCC determined that the rules addressing LFAs' franchise fees, PEG and institutional network obligations, and non-cable-related services and facilities should apply to incumbent operators. It concluded, however, that FCC rules setting time limits on LFAs' franchising decisions and limiting LFA build-out requirements should not apply to incumbent cable operators. ", "Several LFAs petitioned the FCC to reconsider and clarify its Second Report and Order. In 2015, the FCC issued an Order on Reconsideration in which it set forth additional details about its rules with the stated purposes of promoting competition in video services and accelerating broadband deployment. Following the 2015 Order on Reconsideration, the following policies were in place."], "subsections": [{"section_title": "City and County LFAs Only", "paragraphs": ["The FCC clarified that its rules and regulations on franchising applied to city and county LFAs only, not to state-level laws or decisions. The FCC stated that it lacked sufficient information about the state-level franchising process, and suggested that if parties wished the agency to revisit this issue in the future, they should provide evidence that doing so would achieve Congress's policy goals. "], "subsections": []}, {"section_title": "Franchise Fee Cap", "paragraphs": [], "subsections": [{"section_title": "In-Kind Contributions Unrelated to Cable Services Included in Cap", "paragraphs": ["The FCC included in-kind contributions from incumbent cable operators that were unrelated to the provision of video services within the statutory 5% franchise fee cap. Likewise, the FCC found that payments made by cable operators to support PEG access facilities are subject to the 5% cap, unless they fall under the FCC's definition of \"capital costs\" associated with the construction of PEG facilities. The FCC made in-kind contributions related to cable services subject to the cap on franchise fees for new entrants as well as for cable incumbents."], "subsections": []}]}, {"section_title": "Treatment of Nonvideo Services by LFAs", "paragraphs": ["The FCC determined that LFAs' jurisdiction to regulate incumbent cable operators' services is limited to video services, and does not include voice or data services."], "subsections": []}, {"section_title": "Findings Applicable to New Entrants, but Not Incumbents", "paragraphs": ["In addition, the FCC found the following LFA actions do not per se constitute an unreasonable refusal to award video franchises to cable incumbents, although they did for new entrants:", "1. denying an application based upon an incumbent's refusal to undertake certain obligations relating to PEGs and institutional networks; 2. failure to issue a decision on a competitive application within the time frames specified in the FCC's order; and 3. refusal to grant a competitive franchise because of an applicant's unwillingness to agree to unreasonable build-out requirements. "], "subsections": []}, {"section_title": "Court Ruling", "paragraphs": ["In 2017, the U.S. Court of Appeals for the Sixth Circuit addressed challenges by LFAs to the 2007 Second Report and Order and the 2015 Order on Reconsideration. The court found that the FCC had made sufficiently clear that its rules only apply to city and county LFAs and did not bind state franchising authorities.", "It determined that the FCC had correctly concluded that noncash contributions could be included in its interpretation of \"franchise fee\" subject to the 5% limit. However, the court held that the FCC had neither explained why the statutory text allowed inclusion of in-kind cable-related contributions within the 5% cap nor defined what \"in-kind\" meant. It found that the FCC offered no basis for barring local franchising authorities from regulating the provision of \"non-telecommunications\" services by incumbent cable providers. It directed the FCC to set forth a valid statutory basis, \"if there is one,\" for applying its rule to the franchising of cable incumbents. The court used the term \"non-telecommunications\" service rather than \"non-video\" or \"non-cable\" service, differing from the distinctions the FCC made with respect to LFAs' authority. "], "subsections": []}]}, {"section_title": "2019 FCC Rulemaking", "paragraphs": ["The FCC responded to the court's directives in 2018, and once again proposed rules governing the franchising of cable incumbents. On August 1, 2019, the FCC adopted its Third Report and Order (R&O). The FCC stated that its rules would ensure a more level playing field between new entrants and incumbent cable operators and accelerate deployment of \"advanced telecommunications capability\" by preempting local regulations that \"impose an undue economic burden\" on video service providers. ", "The FCC stated that the franchise fees rulings are prospective. That is, video operators may count only ongoing and future in-kind contributions toward the 5% franchise fee cap after September 26, 2019, the effective date of its rules. To the extent franchise agreements conflict with the FCC's rules, the agency encourages the parties to negotiate franchise modifications within a \"reasonable timeframe,\" which it states should be120 days in most cases. Under the new regulations:", "The FCC oversees state franchising authorities for the first time. Cable-related in-kind contributions from both new entrants and incumbent cable operators are \"franchise fees\" subject to the 5% cap, with limited exceptions. Such contributions include any nonmonetary contributions related to the provision of video services by incumbent cable operators and LECs as a condition or requirement of a local franchise agreement. Examples include free and discounted cable video service to public buildings; costs in support of PEG access facilities other than capital costs; and costs associated with the construction, maintenance, and service of an I-Net. For purposes of calculating contributions toward the 5% franchise fee cap, video providers and LFAs must attach a fair market value to cable-related in-kind contributions, but the FCC declined to provide guidance on how to calculate fair market value. The definition of PEG \"capital costs\" subject to the 5% cap includes equipment purchases and construction costs, but does not include the cost of installing the facilities that LFAs use to deliver PEG services from locations where the programming is produced to the cable headend. Requirements that cable operators build out their systems within the franchise area and the cost of providing channel capacity for PEG channels may not be included under the 5% cap. Franchise authorities may not regulate nonvideo services offered over cable systems by incumbent cable operators. The services covered by this prohibition include broadband internet service, business data services, and Voice over Internet Protocol (VoIP) services. \"[S]tates, localities, and cable franchising authorities are preempted from charging franchised cable operators more than five percent of their gross revenue from cable [video] services.\" Thus, LFAs may not include nonvideo service revenues when calculating the 5% cap. ", "The communities of Los Angeles, CA, Portland, OR, and Eugene, OR, have filed a petition with the U.S. Court of Appeals for the Ninth Circuit challenging the FCC's rules. The Ninth Circuit has consolidated the various appellate court challenges, and in November 2019, granted an FCC motion to transfer the now-consolidated petition to the U.S. Court of Appeals, Sixth Circuit."], "subsections": []}]}, {"section_title": "Potential Impact of FCC Rules", "paragraphs": [" Table 1 , as well as the following two tables, illustrate how the FCC's rules could potentially affect the franchising process in several states. The FCC's decision to extend its franchising rule to state governments for the first time will subject each of the states listed in the first three columns of Table 1 (i.e., those that issue franchises at the state-level in all or some circumstances) to the FCC's rules. Moreover, the FCC's rules will cover states that oversee municipal franchises via either statute or state-level agencies. Thus, the FCC's franchising rules will affect more video service providers, viewers, and municipal governments than ever before. "], "subsections": [{"section_title": "Trade-Offs Between In-Kind Cable-Related Contributions and General Funds", "paragraphs": ["Because the FCC is including cable-related in-kind contributions in its definition of franchise fees subject to the 5% cap, some states and municipalities may need to make a trade-off. ", "Specifically, as Table 2 illustrates, several states require or allow LFAs to require video service providers to offer free and/or discounted video service to public buildings, support of PEG services (other than capital costs), and support of I-Nets. Affected states and municipalities may need to reevaluate the trade-off between in-kind cable-related contributions and general fund revenues. Note that Ohio and Wisconsin prohibit both PEG and I-Net contribution requirements, while Idaho prohibits I-Net contribution requirements."], "subsections": []}, {"section_title": "Evaluation of Provider Revenues Subject to Franchise Fee Cap", "paragraphs": [], "subsections": [{"section_title": "Video-Related Revenues", "paragraphs": ["As Table 3 illustrates, some states define \"gross revenues\" more narrowly than the FCC, excluding, for example , revenues from advertising and home shopping commissions. In those states, as well as others in which municipal LFAs define gross revenues more narrowly than the FCC, PEGs may be able to continue to receive cable-related, in-kind contributions without reducing the monetary contributions they receive, while remaining within the 5% cap. As described in \" Franchise Fees and PEGs ,\" the FCC has included revenues from advertising and home shopping commissions, in addition to revenues from video service subscriptions, in its definition of \"gross revenues.\" LFAs that use similar definitions of \"gross revenues,\" including those subject to state regulation, may already charge the maximum amount of franchise fees permitted by the FCC. Others, however, exclude these sources, and may therefore have more flexibility when evaluating whether or not to continue their cable-related in-kind contributions. ", "Moreover, some states specifically exclude other items when calculating providers' revenue bases that are subject to the franchise fees. Several exclude government fees and/or taxes passed on to subscribers, while Missouri excludes fees and contributions for I-Nets and PEG support from its calculation. The FCC has not specifically addressed whether franchise authorities may include these items in their revenue base calculation. Thus, these states may also have more flexibility when evaluating whether to change video franchises' terms and conditions."], "subsections": []}, {"section_title": "Nonvideo Revenues", "paragraphs": ["Many states already exclude nonvideo revenues from the calculation of provider revenues subject to the franchise fee cap. New York, however, describes the gross revenues of a video provider subject to the franchising fees as including, among other things, \"carrier service revenue.\" This section of the New York statute does not define \"carrier service revenue.\" A current dispute between New York City and Charter Communications (d/b/a Spectrum) for service within Brooklyn concerns whether \"carrier service revenue\" received from \"additional provided services\" may be subject to franchise fees. The FCC's new rules may affect the outcome of this dispute.", "Moreover, in July 2019, the New York State Public Service Commission approved a settlement of a complaint that Charter has failed to comply with a requirement in its franchise agreement to expand high-speed service. Under the settlement, Charter may continue operating within the state, if it expands its high-speed internet service infrastructure to 145,000 residents in Upstate New York and invests $12 million in providing high-speed internet services to other areas of the state. If Charter contends that the FCC's rules preempt these provisions, it could seek to renegotiate the settlement.", "The FCC cited a decision by the Supreme Court of Oregon in City of Eugene v. Comcast as an example of states and localities asserting authority to impose fees and requirements beyond their authority. In the decision, the court upheld a local government's 7% license fee on revenue from broadband services provided over a franchised cable system. Thus, while states and municipalities may regulate both video and voice services of telcos, they may only regulate video services of cable operators. "], "subsections": []}, {"section_title": "Outlook for State and Municipal Franchise Fees", "paragraphs": ["If a state or municipality may charge franchise fees to cable operators and telcos only with respect to video services, the total amount of fees received is likely to decrease over time. As Figure 1 indicates, the total number of U.S. households subscribing to cable and telco video services has declined over the past 10 years. In 2010, about 70.8 million households subscribed to either a cable operator or a telco, compared with about 60.1 million households in 2019. In place of cable, more households have elected to rely on video provided over broadband connections or broadcast transmission. ", "For cable operators in particular, this substitution of alternative sources of programming has led to the pursuit of revenue from nonvideo services, such as voice and high-speed data. In 2010, video services represented about 63% of total cable industry revenue, whereas in 2019 video represented 46% of total industry revenue ( Figure 2 ). Pursuant to the FCC's proposed rules, these other sources of revenue are not subject to LFAs' jurisdiction. In addition, the U.S. Court of Appeals for the Eighth Circuit held that a cable operator's voice services are not a telecommunications service, and therefore not subject to state regulation. In October 2019, the U.S. Supreme Court denied the Minnesota Public Utility Commission's petition hear the case.", "In Missouri, the City of Creve Coeur and other municipalities filed a class action lawsuit against satellite operators DIRECTV, DISH Network, as well as online streaming services Netflix Inc., and Hulu LLC, claiming that the companies must pay a percentage of gross receipts from video services to the municipalities where they do business, pursuant to Missouri's Video Services Providers Act. The state law allows Missouri's political subdivisions to collect up to 5% of gross receipts from providers of video programming and requires providers to register before providing service in the state, according to court documents. The municipalities claim the defendants have not paid the required amounts.", "Other localities may follow suit. A bill before the Illinois General Assembly would impose a 5% tax (rather than a \"franchise fee\") on the video service revenues of direct broadcast satellite operators and online video services for the right to provide services to Illinois residents. Similarly, a bill before the Massachusetts House of Representatives would impose a 5% fee on revenues earned by streaming video services. Massachusetts would split the money collected from the fees between the state's general fund (20%), municipalities (40%), and PEG programmers (40%). If receipts from cable franchise fees continue to erode, more states and municipalities may respond by seeking alternative revenue sources. "], "subsections": []}]}, {"section_title": "Preemption of Rate Regulation", "paragraphs": ["In 2014, Congress enacted the Satellite Television Extension and Localism Act Reauthorization Act (STELA Reauthorization Act; P.L. 113-200 ). Section 111 of the act directed the FCC to develop a streamlined process for the filing of \"effective competition\" petitions by small cable operators within 180 days of the law's enactment. A cable company filing such a petition bears the burden of proof to demonstrate that it faces effective competition for its video services.", "The FCC responded in 2015 by adopting a rebuttable presumption that cable operators are subject to effective competition. As a result, the FCC prohibited franchising authorities from regulating basic cable rates unless they can demonstrate that the cable system is not subject to effective competition. The FCC stated that the change in its effective competition definition was justified by the fact that direct broadcast satellite service was available as an alternative video services provider throughout the United States. ", "Later in 2015, the FCC found that LFAs in two states, Massachusetts and Hawaii, demonstrated that cable systems in their geographic areas were not subject to effective competition, and permitted them to continue to regulate the rates of the basic tiers of cable services. However, in September 2018, Charter Communications (Charter), a cable provider, asked the FCC to find that AT&T's DIRECTV NOW, a streaming service that AT&T has since rebranded as AT&T TV NOW, provides effective competition to cable systems in Kauai, HI, and 32 Massachusetts communities. In October 2019, the FCC agreed and issued an order granting Charter's petition, finding for the first time that an online streaming service affiliated with a LEC meets the LEC test in Congress's definition of effective competition. ", "The FCC found that ", "[AT&T TV NOW] need not itself be a LEC and AT&T need not offer telephone exchange service in the franchise areas.... There is no requirement ... that a LEC provide telephone exchange service in the same communities as the competing video programming service. ", "Thus, if even AT&T TV NOW's subscribers rely on internet service from Charter to receive AT&T TV NOW's programming, the FCC considers AT&T TV NOW to be a competitor to Charter with respect to the distribution of video programming. According to the FCC, ", "Congress adopted the LEC test because LECs and their affiliates \"are uniquely well-funded and well-established entities that would provide durable competition to cable,\" and not because [Congress was] focused on facilities-based competition.", "Meanwhile, some localities have enacted legislation with the goal of reducing prices consumers pay for video services. A 2019 Maine law would require video service providers to offer networks and programs on an a la carte basis instead of offering subscribers only bundles of channels. Several cable operators, broadcasters, and content providers have sued to overturn the law. In January 2020, a federal judge blocked the implementation of the law as the parties prepare for trial."], "subsections": []}]}, {"section_title": "Considerations for Congress", "paragraphs": ["These regulatory developments and industry trends raise several potential issues for Congress to consider.", "First, Congress could consider whether the FCC's interpretation of the Communications Act is consistent with the policy goals set forth in Section 601 of the Communications Act (47 U.S.C. \u00c2\u00a7521) and Section 706 of the Telecommunications Act. Specifically, Congress could explore the extent, if any, to which state and local regulations designed to promote the availability of PEG programming and I-Nets. ", "Second, Congress could evaluate whether to create regulatory parity with respect to local regulation of nonvideo services of cable and telcos. While states and municipalities may regulate both video and voice services of telcos, they may only regulate video services of cable operators. Congress could address regulatory parity by either deregulating traditional telcos' nonvideo services or regulating cable operators' nonvideo services.", "Third, as the FCC and local governments include online video providers in their definitions of video providers for the purposes of evaluating competition and/or imposing franchise fees, Congress could clarify whether these actions achieve its stated policy goals. For example, if, in contrast to the FCC's interpretation of the LEC test for effective competition, Congress intends to include only facilities-based video services in its definition of video service competition, it could delineate the definition in communications laws. Likewise, as online video services become more prevalent and states and municipalities target them for franchise fees, Congress could specify the authority, if any, to regulate them.", "Finally, while the FCC has determined that competition among video programming distribution services has eliminated the need for rate regulation of the basic tier of cable services, Maine enacted a law to enable consumers to pay only for video programming they choose, in lieu of bundles of channels. In the past, some Members of Congress have proposed statutory changes to require video programming distributors to offer individual channels to consumers in addition to bundles of channels, and Congress could consider revisiting this issue, or alternatively clarifying that states and local governments lack authority to enact such laws."], "subsections": []}]}}
{"id": "R46332", "title": "Fintech: Overview of Innovative Financial Technology and Selected Policy Issues", "released_date": "2020-04-28T00:00:00", "summary": ["Advances in technology allow for innovation in the ways businesses and individuals perform financial activities. The development of financial technology\u00e2\u0080\u0094commonly referred to as finte c h \u00e2\u0080\u0094is the subject of great interest for the public and policymakers. Fintech innovations could potentially improve the efficiency of the financial system and financial outcomes for businesses and consumers. However, the new technology could pose certain risks, potentially leading to unanticipated financial losses or other harmful outcomes. Policymakers designed many of the financial laws and regulations intended to foster innovation and mitigate risks before the most recent technological changes. This raises questions concerning whether the existing legal and regulatory frameworks, when applied to fintech, effectively protect against harm without unduly hindering beneficial technologies' development.", "The underlying, cross-cutting technologies that enable much of fintech are subject to such policy trade-offs. The increased availability and use of the internet and mobile devices could offer greater convenience and access to financial services, but raises questions over how geography-based regulations and disclosure requirements can and should be applied. Rapid growth in the generation, storage, and analysis of data\u00e2\u0080\u0094and the subsequent use of Big Data and alternative data\u00e2\u0080\u0094could allow for more accurate risk assessment, but raises concerns over privacy and whether individuals' data will be used fairly. Automated decisionmaking (and the related technologies of machine learning and artificial intelligence) could result in faster and more accurate assessments, but could behave in unintended or unanticipated ways that cause market instability or discriminatory outcomes. Increased adoption of cloud computing allows specialized companies to handle technology-related functions for financial institutions, including providing cybersecurity measures, but this may concentrate financial cyber risks at a relatively small number of nonfinancial companies who may not be entirely comfortable with their regulatory obligations as financial institution service providers. Concerns over cyber risks and whether adherence to cybersecurity regulations ensure appropriate safeguards against those risks permeate all fintech developments.", "Fintech deployment in specific financial industries also raises policy questions. The growth of nonbank, internet lenders could expand access to credit, but industry observers debate the degree to which the existing state-by-state regulatory regime is overly burdensome or provides important consumer protections. As banks have increasingly come to rely on third-party service providers to meet their technological needs, observers have debated the degree to which the regulations applicable to those relationships are unnecessarily onerous or ensure important safeguards and cybersecurity. New consumer point-of-sale systems and real-time-payments systems are being developed and increasingly used, and while these systems are potentially more convenient and efficient, there are concerns about the market power of the companies providing the services and the effects on people with limited access to these systems. Meanwhile, cryptocurrencies allow individuals to make payments entirely outside traditional financial systems, which may increase privacy and efficiency but creates concerns over money laundering and consumer protection. Fintech is providing new avenues to raise capital\u00e2\u0080\u0094including through crowdfunding and initial coin offerings\u00e2\u0080\u0094and changing the way companies trade securities and manage investments and may increase the ability to raise funds but present investor protection challenges. Under statute passed by Congress, insurance is primarily regulated at the state level where agencies are considering the implications to efficiency and risk that fintech poses in that industry, including peer-to-peer insurance and insurance on demand. Finally, firms across industries are using fintech to help them comply with regulations and manage risk, which raises questions about what role finetch should play in these systems.", "Regulators and policymakers have undertaken a number of initiatives to integrate fintech in existing frameworks more smoothly. They have made efforts to increase communication between fintech firms and regulators to help firms better understand how regulators view a developing technology, and certain regulators have established offices within their organizations to conduct outreach. In another approach, some regulators have announced research collaborations with fintech firms to improve their understanding of new products and technologies. If policymakers determine that particular regulations are unnecessarily burdensome or otherwise ill-suited to a particular technology, they might tailor the regulations, or exempt companies or products that meet certain criteria from such regulations. In some cases, regulators can do so under existing authority, but others might require congressional action."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Finance, Technology, and Recent Innovation", "paragraphs": ["Finance and technological development have been inextricably linked throughout history. (Possibly, quite literally. The technology of writing in early civilization may have developed to record payments and debts. ) As a result, the term fintech is used to refer to a broad set of technologies being deployed across a variety of financial industries and activities. Although there is no consensus on which technologies qualify as new or innovative enough to be fintech, it is generally understood to mean recent innovations to the way a financial activity is performed that are made possible by rapid advances in digital information technology. Underlying, cross-cutting technological advancements that enable fintech include increasingly widespread, easy access to the internet and mobile technology; increased data generation and availability and use of Big Data and alternative data; increased use of cloud computing services; the development of algorithmic decisionmaking (and the related technological evolutions toward machine learning and artificial intelligence); and the coevolution of cyber threats and cybersecurity. ", "The complementary use of these technologies to deliver financial services could potentially create benefits. Many technologies aim to create efficiencies in financing, which reduce costs for financial service providers. Certain cost savings may be passed along to consumers through reduced prices. With lower prices, some customers that previously found services too expensive could enter the market. In addition, some individuals and businesses that previously could not access financial services because of price or lack of available financial information could gain access at lower prices or through increased data availability and improved data analysis. Fintech also may allow businesses to reach new customers that were previously restricted by geographic remoteness or unfamiliarity with products and services. Increased accessibility may be especially beneficial to traditionally underserved groups, such as low-income, minority, and rural populations.", "However, fintech may also generate risks and result in undesirable outcomes. Predicting how an innovation with only a brief history of use will perform involves uncertainty, particularly without the experience of having gone through a recession. Thus, technologies may not ultimately allocate funds, assess risks, or otherwise function as efficiently and accurately as intended; they may instead generate unexpected losses. Some technologies aim to eliminate or replace a middle man, but in certain cases the middle man may in fact be useful or even necessary. For example, an experienced financial institution or professional may be able to explain and advise consumers on financial products and their risks. In addition, new fintech startups may be inexperienced in complying with consumer-protection laws. These characteristics may increase the likelihood that consumers using financial technology engage in a financial activity and take on risks that they do not fully understand and which unduly expose them to losses. Furthermore, some studies suggest that fintech's use can result in disparate impact on protected groups, and that the increasing use of high-speed internet and mobile devices in finance may be leaving behind groups that cannot afford those services and devices. ", "As financial activity increasingly uses digital technology, sensitive data are generated. On the one hand, data can be used to assess risks and ensure customers receive the best products and services. On the other hand, data can be stolen and used inappropriately, and there are concerns over privacy. This raises questions over data ownership and control\u00e2\u0080\u0094including consumers' rights and companies' responsibilities in accessing and using data\u00e2\u0080\u0094and whether companies that use and collect data face appropriate cybersecurity requirements.", "Given that fintech may produce both positive and negative outcomes, Congress and other policymakers may consider whether existing laws and regulations appropriately foster the development and implementation of potentially beneficial technologies while adequately mitigating the risks those technologies may present. This report examines (1) underlying technological developments that are being used in financial services, (2) selected examples of financial activities affected by innovative technology, and (3) some approaches regulators have used to integrate new technologies or technology companies into the existing regulatory framework. Policy issues that may be of interest to Congress are examined throughout the report. Additional CRS products and resources also are identified throughout the report and in the Appendix . For a detailed examination of how fintech is regulated, see CRS Report R46333, Fintech: Overview of Financial Regulators and Recent Policy Approaches , by Andrew P. Scott."], "subsections": []}, {"section_title": "Selected Underlying Technological Developments", "paragraphs": ["Fintech is generally enabled by advances in general-use technologies that are used to perform financial activities. This section examines certain of these underlying technologies, including their potential benefits and risks, and identifies policy issues related to their use in finance that Congress is considering or may choose to consider."], "subsections": [{"section_title": "Proliferation of Internet Access and Mobile Technology6", "paragraphs": ["The proliferation of online financial services has a number of broad implications. One consideration is that online companies can often quickly grow to significant size shortly after entering a financial market. This could enable the rapid growth of small fintech startups, possibly through capturing market share from incumbent financial firms. Adopting information technology, however, may require significant investment, which could advantage existing firms if they have increased access to capital. Larger technology firms\u00e2\u0080\u0094including Amazon, Apple, Facebook, and Google\u00e2\u0080\u0094have started financial services operations, and thus may become competitors to or partners with traditional financial institutions. Some industry experts predict that platforms offering the ability to engage with different financial institutions from a single channel will likely become the dominant model for delivering financial services. These developments may raise concerns that offering finance through digital channels could drive industry concentration. ", "Another consideration in this area involves consumer disclosures for financial products. In the past, voluntary or mandatory disclosures were designed to be delivered through paper. As firms move more of their processes online, they have begun to update these disclosures with electronic formats in mind. Consumers may interact differently with mobile or online disclosures than paper disclosures. Accordingly, firms may need to design online disclosures differently than paper disclosures to communicate the same level of information to consumers. "], "subsections": [{"section_title": "Possible Issues for Congress", "paragraphs": ["The internet raises questions over what role geography-based financial regulations should play in the future. Many financial regulations are applied to companies and activities based on geographic considerations, as most areas of finance are subject to a dual federal-state regulatory system. For example, nonbank lenders and money transmitters are primarily regulated at the state level in each state in which they operate and are subject to those states' consumer-protection laws. Fintech proponents argue the internet facilitates the provision of products and services on a national scale, and 50 separate state regulatory regimes are inefficient when applied to internet-based businesses that are not constrained by geography. However, state regulators and consumer advocates assert state regulators' experience and local connection are best situated to regulate nonbank fintech companies. An Office of the Comptroller of the Currency (OCC) initiative to accept applications for special-purpose bank charters that would allow certain fintechs to enter the national bank regulator regime, and subsequent lawsuits filed by state regulators to block such charters, exemplify this policy debate. Another example is the debate over how a bank's geographic assessment area should be defined for the purposes of the Community Reinvestment Act ( P.L. 95-128 )\u00e2\u0080\u0094a law designed to encourage banks to meet the credit needs of the communities in which they operate\u00e2\u0080\u0094when so many services are delivered over the internet instead of at a physical branch location.", "Another area in which the internet raises concerns is how effective disclosure requirements are if they are sent electronically and read on a screen, when many disclosure forms may have been designed to be delivered and read on paper. Thus, although electronic disclosures can eliminate costs of printing and physically delivering disclosures, they may hinder customers' ability to read and understand them. Currently, financial regulatory agencies are responsible for implementing consumer-disclosure laws. Often, these agencies create either mandatory or safe harbor form designs that firms use to comply with these laws. Some financial regulatory agencies are either required or choose to test new consumer disclosures themselves before implementing a new disclosure requirement on the entities they regulate. In the past, when most consumer credit origination occurred in person, this testing generally focused on paper delivery. As firms move more of their origination processes online, financial regulatory agencies might consider updating their consumer testing research with this format in mind."], "subsections": []}]}, {"section_title": "Big Data16", "paragraphs": ["Today, companies can easily collect, cheaply store, and quickly process data, regardless of its size, frequency, type, or location. Big Data commonly refers to the vast amounts and types of data an information technology (IT) system may handle. Big Data data sets share characteristics that require different hardware and software in IT systems to store, manage, and analyze those data. The four characteristics of Big Data are volume, velocity, variety, and variability. Volume refers to a data set's extensive size. Velocity refers to the rate of flow for the data coming into, being processed by, and exiting the IT system. Variety refers to the differing types of data in a data set, such as information entered by a company analyst, images, data from a partner database, and data scraped from a website. Variety can also refer to different types of devices and subsystems in an IT system handling the data. Variability refers to the recognition that Big Data data sets can change with regard to the first three attributes. A data set may grow or shrink in volume, data may flow at different velocities, and a data set may include a different variety of data from one point in time to another. Changes in data variability drive IT systems to have a scalable architecture in order to manage the data sets.", "Big Data is used to generate insights, support decisionmaking, and enable automation. Big Data allows extensive and complex information to be analyzed with new methods (e.g., cloud computing resources, which are discussed in more detail below), leading users to understand and use the data in novel ways. Loan underwriting (evaluating the likelihood that a loan applicant will make timely repayment) is an example from the financial services industry. Loan underwriting has relied on an in-person process, using only a few data sources that might have been months or years old. Big Data enables underwriting to be performed online using a greater variety of more current data sources, potentially allowing for greater speed, accuracy, and confidence in loan decisions, but raises concerns over privacy and questions over what information is appropriate to collect and use.", "In recent years, new technologies have led to the development of new products in the financial services sector. For example, as account information has become electronic, some products allow consumers to combine accounts with several financial services providers on a single software platform, sometimes in combination with financial advisory services. The underlying technology providers for these platforms are sometimes known as data aggregators, which refers to companies that compile information from multiple sources into a standardized, summarized form. One technology commonly used to collect account data is web scraping , a technique that scans websites and extracts data from them, and in general can be performed without a direct relationship with the website or financial firm maintaining the data. As an alternative to web scraping, the financial institution managing the account may provide customer account information through a structured data feed or application program interface (API). Advantages and disadvantages exist when accessing alternative data by API rather than web scraping. For example, in certain circumstances web scraping may be an easier way for companies to gather data because it does not rely on bilateral company agreements, but some industry observers assert that APIs are more secure in terms of cybersecurity and fraud risks. Using API banking standards to facilitate data sharing between financial firms is sometimes called open banking . New financial products that take advantage of data aggregation and open banking could provide benefits to consumers by enabling them to manage personal finances, automate or set goals for saving, receive personalized product recommendations, apply for loans, and perform other tasks. However, increasing access to these data may pose data security and privacy risks to consumers."], "subsections": [{"section_title": "Possible Issues for Congress", "paragraphs": ["Questions exist about how current laws and regulations should apply to Big Data. Typically, these questions relate to concerns about privacy and cybersecurity. One area of debate is whether data security standards should be prescriptive and government defined or flexible and outcome based. Some argue that a prescriptive approach can be inflexible and harm innovation, but others argue that an outcome-based approach might lead to institutions having to comply with a wide range of data standards. In addition, questions exist about whether relevant data security laws continue to cover all sensitive individual financial information, or whether the scope of these laws should be expanded."], "subsections": []}]}, {"section_title": "Alternative Data26", "paragraphs": ["Alternative data generally refers to types of data that are not traditionally used by the national consumer reporting agencies to calculate a credit score. It can include both financial and nonfinancial data. New technology makes it more feasible for financial institutions to gather alternative data from a variety of sources. ", "For example, the Consumer Financial Protection Bureau (CFPB) included the following list of alternative data in a 2017 Request for Information:", "Data showing trends or patterns in traditional loan repayment data.", "Payment data relating to non-loan products requiring regular (typically monthly) payments, such as telecommunications, rent, insurance, or utilities.", "Checking account transaction and cashflow data and information about a consumer's assets, which could include the regularity of a consumer's cash inflows and outflows, or information about prior income or expense shocks.", "Data that some consider to be related to a consumer's stability, which might include information about the frequency of changes in residences, employment, phone numbers or email addresses.", "Data about a consumer's educational or occupational attainment, including information about schools attended, degrees obtained, and job positions held.", "Behavioral data about consumers, such as how consumers interact with a web interface or answer specific questions, or data about how they shop, browse, use devices, or move about their daily lives.", "Data about consumers' friends and associates, including data about connections on social media.", "Alternative data could potentially be used to expand access to credit for consumers, such as currently credit invisible or unscorable consumers, but also could create risks related to data security or consumer-protection violations. Financial institutions can mitigate some of these risks through data encryption and other robust data governance practices. Moreover, some prospective borrowers may be unaware that alternative data has been used in credit decisions, raising privacy and consumer-protection concerns. Additionally, alternative data may pose fair lending risks if alternative data elements are correlated with prohibited classes, such as race or ethnicity. ", "Alternative data could potentially increase accuracy, visibility, and scorability in credit reporting by including additional information beyond that which is traditionally used. The ability to calculate scores for previously credit invisible or nonscoreable consumers could allow lenders to better determine their creditworthiness. Arguably, using alternative data would potentially increase access to\u00e2\u0080\u0094and lower the cost of\u00e2\u0080\u0094credit for some credit invisible or unscorable individuals by enabling lenders to find new creditworthy consumers. However, alternative data could potentially harm some consumers' existing credit scores if it includes negative or derogatory information."], "subsections": [{"section_title": "Possible Issues for Congress", "paragraphs": ["The main statute regulating the credit reporting industry is the Fair Credit Reporting Act (FCRA; P.L. 91-508), enacted in 1970. The FCRA requires \"that consumer reporting agencies adopt reasonable procedures for meeting the needs of commerce for consumer credit ... in a manner which is fair and equitable to the consumer, with regard to the confidentiality, accuracy, relevancy, and proper utilization of such information.\" Using alternative data for credit reporting raises FCRA compliance questions. For example, alternative data providers outside of the traditional consumer credit industry may find FCRA data-furnishing requirements burdensome. Some alternative data may have accuracy issues, and managing consumer disputes requires time and resources. These regulations may discourage some organizations from furnishing alternative data, even if the data could potentially help some consumers become scorable or increase their credit scores. In addition, consumers may not know what specific information alternative credit scoring systems use and how to improve the credit scores produced by these models.", "The CFPB and federal banking regulators have been monitoring alternative data developments in recent years, and in December 2019 they released a policy statement on the appropriate use of alternative data in the underwriting process. The release followed a February 2017 CFPB request for information from the public about the use of alternative data and modeling techniques in the credit process. Information from this request led the CFPB to outline principles for consumer-authorized financial data sharing and aggregation in October 2017. These nine principles include, among other things, consumer access and usability, consumer control and informed consent, and data security and accuracy. In addition, the CFPB issued its first (and, to date, only) no-a ction letter in 2017 to the Upstart Network, a company that uses alternative data, such as education and employment history, to make credit and pricing decisions. In 2018, the Treasury Department released a report about regulatory recommendations, with a chapter on consumer financial data, including data sharing, aggregation, and other technology issues."], "subsections": []}]}, {"section_title": "Automated Decisionmaking and Artificial Intelligence45", "paragraphs": ["Performing financial activities often involves making decisions about how to allocate resources (e.g., whether a particular borrower should be given a loan or whether shares of a particular stock should be purchased at the current price) based upon analysis of information (e.g., whether the borrower has successfully paid back loans in the past or how much profit the stock-issuing company made last year). Historically, these complex tasks could only be performed by a human. More recently, technological advances have enabled computers to perform these tasks. This development creates potential benefits and risks, and has a number of financial regulatory implications.", "Financial firms have used algorithms\u00e2\u0080\u0094precoded sets of instructions and calculations executed automatically\u00e2\u0080\u0094to enable computers to make decisions for a number of years, notably in the lending and investment management industries. Such automation may produce benefits if algorithmic analysis\u00e2\u0080\u0094perhaps using Big Data and alternative data, discussed previously\u00e2\u0080\u0094is better able to assess risks, predict outcomes, and allocate capital across the financial system than traditional human assessments. Eliminating inefficiencies through such automation could reduce the prices and increase the availability of and access to financial services, including for consumers, small businesses, and the underserved. ", "Automation can also create certain concerns, particularly if automated programs may not perform as intended, possibly resulting in market instability or discrimination against protected groups. Algorithms can fail to perform as expected for reasons such as programmer error or unforeseen conditions, potentially producing unexpected losses. Because algorithms can execute actions so quickly and at large scale, those losses can be quite large. An illustrative event is the Flash Crash of May 6, 2010, in which the Dow Jones Industrial Average fell by roughly 1,000 points (and then rebounded) in intraday trading. The event was caused in part by an automated futures selling program that made sales more quickly than anticipated, resulting in tremendous market volatility. ", "In addition, automated decisions may result in adverse impacts on certain protected groups in a discriminatory way. In lending, for example, these discriminatory outcomes may include higher rates of denial for minority loan applicants than for white applicants with similar incomes and financial histories. Such discrimination can occur for a number of reasons, even if algorithm developers did not intend to discriminate. For example, the data set used to train the lending program is likely historical data of past loan recipients, and minorities may be underrepresented in that sample. By using these data to learn, the algorithm may similarly make fewer loans to underrepresented groups."], "subsections": [{"section_title": "Possible Issues for Congress", "paragraphs": ["Programs enabled with artificial intelligence or machine-learning capabilities (i.e., automated programs that are able to change themselves with little or no human input) raise a number of policy concerns. The programs' complexity and the lack of human input needed to change their decisionmaking processes can make it exceedingly difficult for human programmers to predict what these programs will do and explain why they did it. Under these circumstances, the ability of regulators or other outside parties to understand what a program did, and why, may be limited or nonexistent. This poses a significant challenge for companies using AI programs to ensure they will produce outcomes that comply with applicable laws and regulations, and for regulators to effectively carry out their oversight duties. In order to address this black box problem, some observers assert that regulators should set standards for how AI programs are developed, tested, and monitored. If Congress decided such standards were necessary, it could encourage or direct financial regulatory agencies to develop them. In addition, it could direct the agencies to implement rules regarding the development and use of AI programs."], "subsections": []}]}, {"section_title": "Cloud Computing52", "paragraphs": ["Some have jokingly referred to cloud computing as \"someone else's computer.\" Although this is a facetious characterization, it succinctly describes the technology's core tenet. Cloud computing users transfer their information from a resource (e.g., hard drives, servers, and networks) that they own to one that they lease. Cloud computing alleviates users from having to buy, develop, and maintain technical resources and recruit and retain the staff to manage those resources. Instead, cloud computing users pay providers who specialize in building and managing such resource infrastructures.", "Cloud and high-performance computing architectures are better suited to processing Big Data than desktop computing. For many, this makes Big Data and cloud computing inextricably linked, and many commenters may refer to them interchangeably. Although this may be common practice, it is not technically accurate. Cloud computing refers to the computing resource (e.g., servers, applications, and service), whereas Big Data refers to the data a computing resource may use.", "Cloud computing is used extensively by financial institutions, including banks, insurers, and securities firms. Most financial firms store and process large amounts of data related to customer accounts and transactions. Typically, they also provide internet-based access to accounts and services through websites and mobile device apps and attract customers with these services. Meeting these business needs requires significant IT infrastructures and capabilities. For some financial companies, it may be less costly to pay a cloud service provider than to do everything in-house. ", "Cloud computing introduces certain information security considerations and risks. Because data are not physically under the user's direct control (i.e., the data are no longer on a local, owned or controlled data server), the risk that access to those data may spread beyond intended users may be higher. Cloud providers counter that although they have physical access to the data, they do not necessarily have logical access to the data, nor do they own the data. In other words, they argue that although the data are hosted on their servers, they are encrypted or otherwise segmented from the provider's ability to access them. ", "Another related potential risk is commonly referred to as the insider threat \u00e2\u0080\u0094the risk that a trusted insider may purposely harm an employer or clients. Although users may limit unauthorized access to their data through encryption, an insider may be able to manipulate the encrypted files in such a manner that the information is kept confidential, but is no longer available. Users would then depend on the provider to restore a functioning backup of the data to resume data access. Or, the provider may offer encryption and key-management services to the user. In doing so, providers keep the data in their servers confidential between clients, but in a way that continues to afford that provider access to the user's data through encryption and decryption protocol maintenance. ", "It should be noted that financial institutions that keep IT operations in-house also face the insider threat. However, migrating to cloud computing adds the cloud service provider's employees to the set of people that could pose an insider threat. In addition, a portion of the risk shifts from being internally managed by the financial institution to being externally managed by the cloud service provider. How well a financial institution manages these changing risk exposures depends on the quality of its policies, programs, and relationship with its cloud provider."], "subsections": [{"section_title": "Possible Issues for Congress", "paragraphs": ["Policymakers may examine whether the existing regulatory framework and rules appropriately balance the goals of guarding against the risks cloud computing presents to individual financial institutions and systemic stability, while not hindering beneficial innovations. Firms face operational risk (including legal and compliance risks) whether they operate and maintain IT in-house or outsource to a cloud provider. Arguably, the risk of system disruptions and failures can be reduced by using a cloud provider with technical specialization in operating, maintaining, and protecting IT systems. Nevertheless, the nature of operational risk exposure changes when an institution adopts cloud computing.", "This dynamic potentially raises friction between banks, cloud providers, and regulators regarding how banks' relationships with cloud providers should be regulated. The Bank Services Company Act (BSCA; P.L. 87-856) requires regulators to subject activities performed by bank service providers to the same regulatory requirements as if they were performed by the bank itself. This could place substantial regulatory burden on banks and cloud services providers that see potential benefit to working together. ", "The BSCA gives bank regulators supervisory authority over service providers. Exercising this authority over cloud service providers, however, may raise challenges. At least initially, bank regulators may be unfamiliar with the cloud service industry, and cloud service providers may not be familiar with what is expected during bank-like examinations. The Federal Reserve's April 2019 examination of Amazon Websites Services (AWS; a cloud provider with bank clients) anecdotally illustrates the frictions in this area. Reportedly, AWS was wary of the process, and when examiners asked for additional documents and information, \"the company balked, demanding to first see details about how its [AWS's] data would be stored and used, and who would have access and for how long.\" ", "The cloud computing industry could pose risk to broader financial system stability in addition to risk at individual financial firms. Cloud computing resources are pooled, meaning cloud service providers build their resources to service many users simultaneously. This means many financial institutions could be using the same cloud provider, and are likely doing so because the cloud computing industry is highly concentrated at a small number of large providers (as discussed in more detail in the next section). Before cloud computing was available, successful cyberattacks or other technological disruptions would occur in individual institutions' systems. With cloud computing, an incident at one of the main cloud service providers could affect several firms simultaneously, thus affecting large portions of the entire financial system. Large, systemically important banks are reportedly moving significant portions of their operations onto cloud services, which could exacerbate the effects of a disruption at a cloud service provider. Certain financial regulators have mandates to ensure financial stability, so policymakers may choose to consider whether their authorities to regulate cloud service providers are appropriately calibrated."], "subsections": []}]}, {"section_title": "Data Security63", "paragraphs": ["Cybersecurity is a major concern of financial institutions and federal regulators. In many ways, it is an important extension of physical security. For example, banks are concerned about both physical and electronic theft of money and other assets, and they do not want their businesses shut down by weather events or denial-of-service attacks. Maintaining the confidentiality, security, and integrity of physical records and electronic data held by banks is critical to sustaining the level of trust that allows businesses and consumers to rely on the banking industry to supply services on which they depend.", "Enormous amounts of data about individuals' personal and financial information are now generated and stored across numerous financial institutions. This could create additional opportunities for criminals to commit fraud and theft at a scale not previously possible. Instead of stealing credit cards one wallet at a time, someone hacking into a payment system can steal thousands of credit cards at once, and the internet allows stolen credit cards to be sold and used many times. For example, the 2013 Target data breach compromised approximately 70 million credit cards. Whereas a traditional criminal method might involve stealing tax refund checks from individual mail boxes, the IRS announced in May 2015 that its computer system was hacked, allowing unknown persons to file up to 15,000 fraudulent tax returns worth up to $50 million total. The Equifax breach that occurred between May and July 2017 potentially jeopardized almost 148 million U.S. consumers' identifying information."], "subsections": [{"section_title": "Possible Issues for Congress", "paragraphs": ["To mitigate cybersecurity risks, financial institutions are subject to an array of laws and regulations. The basic authority that federal regulators use to establish cybersecurity standards emanates from the organic legislation that established the agencies and delineated the scope of their authority and functions. In addition, certain state and federal laws\u00e2\u0080\u0094including the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank; P.L. 111-203 ), the Gramm-Leach-Bliley Act of 1999 (GLBA; P.L. 106-102 ), and the Sarbanes-Oxley Act of 2002 ( P.L. 107-204 )\u00e2\u0080\u0094have provisions related to the cybersecurity of financial services that are often performed by banks. In addition, regulators issue guidance in a variety of forms designed to help banks evaluate their risks and comply with cybersecurity regulations.", "The existing framework was implemented before certain developments in financial technology, and risks related to cybersecurity arguably have increased with digitization's proliferation in finance. Successful hacks of financial institutions, such as those mentioned above, highlight the importance of financial services cybersecurity oversight. The framework governing financial services cybersecurity reflects a complex and sometimes overlapping array of state and federal laws, regulators, regulations, and guidance. However, whether this framework is effective and efficient, resulting in adequate protection against cyberattacks without imposing undue cost burdens on banks, is an open question. ", "Concerns about data security aside, generating and analyzing data also raises privacy concerns. Individuals' transactions are increasingly recorded and analyzed by financial institutions. Debates over how financial institutions should be allowed to use or share consumer data between institutions remain unresolved.", "For more information on these issues, see CRS Report R44429, Financial Services and Cybersecurity: The Federal Role , by N. Eric Weiss and M. Maureen Murphy; CRS In Focus IF10559, Cybersecurity: An Introduction , by Chris Jaikaran; and CRS Report R45631, Data Protection Law: An Overview , by Stephen P. Mulligan, Wilson C. Freeman, and Chris D. Linebaugh."], "subsections": []}]}]}, {"section_title": "Selected Technological Innovations in Finance", "paragraphs": ["When innovative financial technology is developed for a specific financial market, activity, or product, it might raise questions over the degree to which existing applicable laws and regulations foster the potential benefits and protects against potential risks. This section examines certain fintech innovations, including their potential benefits and risks, and identifies related policy issues that Congress is considering or may choose to consider. "], "subsections": [{"section_title": "Lending71", "paragraphs": ["Traditionally, consumer and small business lenders worked in person with prospective borrowers applying for a new loan. These lenders employed human underwriters to assess prospective borrowers' creditworthiness, determining whether the lender would extend credit to an applicant and under what terms. The underwriting process can be relatively laborious, time consuming, and costly. Dating back to at least 1989, with the debut of a general-purpose credit score called FICO, automation has increasingly become a part of the underwriting process. In general, automation in underwriting relies on algorithms\u00e2\u0080\u0094precoded sets of instructions and calculations executed by a computer\u00e2\u0080\u0094to determine whether to extend credit to an applicant and under what terms. In contrast, human underwriting relies on a person to use knowledge, experience, and judgement (perhaps informed by a numerical credit score) to make assessments.", "More recently, with the proliferation of internet access and data availability, some new lenders\u00e2\u0080\u0094often referred to as marketplace lenders or fintech lenders \u00e2\u0080\u0094rely entirely or almost entirely on online platforms and algorithmic underwriting. In addition, the abundance of alternative data about prospective borrowers now available to lenders\u00e2\u0080\u0094either publicly accessible or accessed with the borrower's permission\u00e2\u0080\u0094means lenders can incorporate additional information beyond traditional data provided in credit reports and credit scores into assessments of whether a particular borrower is a credit risk. Potentially, more data about a borrower could allow a lender to accurately assess\u00e2\u0080\u0094and thus extend credit to\u00e2\u0080\u0094prospective borrowers for whom traditional information is lacking (e.g., people with thin credit histories) or insufficient to make a determination about creditworthiness (e.g., small businesses). However, such practices raise questions about what kind of data should be accessible and used in credit decisions and whether its use could result in disparate impacts or other consumer-protection violations. Although fintech lending remains a small part of the consumer lending market, it has been growing quickly in recent years. According to the GAO, \"in 2017, personal loans provided by these lenders totaled about $17.7 billion, up from about $2.5 billion in 2013.\" "], "subsections": [{"section_title": "Possible Issues for Congress", "paragraphs": ["A general issue underlying many of the policy questions involving fintech in lending is whether the current regulatory framework appropriately fosters these technologies' potential benefits while mitigating the risks they may present. Some commentators argue that current regulation is unnecessarily burdensome or inefficient. Often these criticisms are based largely or in part on the argument that the state-by-state regulatory framework facing nonbank lenders is ill-suited to an internet-based (and hence borderless) industry. Opponents of this view assert that state-level licensing and consumer-protection laws, including usury laws (laws that target lending at unreasonably high interest rates), are important safeguards that should not be circumvented. ", "Additional policy questions arise in cases where banks and nonbanks have partnered with each other to issue loans, such as in an arrangement depicted in Figure 1 . Fintech companies and banks enter into a variety of such arrangements in which one or the other may build the online, algorithmic platform; do the underwriting on the loan; secure the funding to make the loan; originate it; and hold it on its own balance sheet or sell it to investors. These arrangements generally require a bank to closely examine its compliance obligations related to vendor relationship requirements, discussed in more detail in this report's \" Banks and Third-Party Vendor Relationships \" section. In addition, certain arrangements have raised legal questions concerning federal preemption of state usury laws\u00e2\u0080\u0094specifically, whether federal laws that allow banks to export their home states' maximum interest rates apply to loans that are originated by banks but later purchased by nonbank entities. Whether applicable laws and regulations governing these arrangements are appropriately calibrated to ensure availability of needed and beneficial credit or expose consumers to potential harm through the preemption of important consumer protections is a matter of debate.", "Another area of debate is how consumers will be affected by fintech in lending. Fintech lending proponents argue that, because financial technologies increasingly use quantitative analysis of new data sources, the technologies may expand credit availability to individuals and small businesses in a fair, safe, and less costly way. Thus, these proponents argue that overly burdensome regulation of these technologies could cut off a beneficial credit source to individuals who may have previously lacked sufficient credit access. However, some consumer advocates argue that inexperienced fintech lenders with a relative lack of federal regulatory supervision could inadvertently violate consumer-protection regulations. For example, these lenders may make loan decisions that unintentionally have a disparate impact on protected groups, violating fair lending laws. Also, when lenders deny a loan application they generally must send a notice to the applicant explaining the reason for the denial, called an adverse action notice . Some commentators question how well lenders will understand and thus be able to explain the reasons for an adverse action resulting from a decision made by algorithm.", "For more detailed examination of these topics, see CRS Report R44614, Marketplace Lending: Fintech in Consumer and Small-Business Lending , by David W. Perkins; and CRS Report R45726, Federal Preemption in the Dual Banking System: An Overview and Issues for the 116th Congress , by Jay B. Sykes."], "subsections": []}]}, {"section_title": "Banks and Third-Party Vendor Relationships87", "paragraphs": ["As more banking transactions are delivered through digital channels, insured depository institutions (i.e., banks and credit unions) that lack the in-house expertise to set up and maintain these technologies are increasingly relying on third-party vendors, specifically technology service providers (TSPs), to provide software and technical support. In light of banks' growing reliance on TSPs, regulators are scrutinizing how banks manage their operational risks , the risks of loss related to failed internal controls, people, and systems, or from external events. Rising operational risks\u00e2\u0080\u0094specifically cyber risks (e.g., data breaches, insufficient customer data backups, and operating system hijackings)\u00e2\u0080\u0094have compelled regulators to scrutinize banks' security programs aimed at mitigating operational risk. Regulators require an institution that chooses to use a TSP to ensure that the TSP performs in a safe and sound manner, and activities performed by a TSP for a bank must meet the same regulatory requirements as if they were performed by the bank itself.", "The Bank Service Company Act (BSCA; P.L. 87-856) and the Gramm-Leach-Bliley Act (GLBA; P.L. 106-102 ) give insured depository institution regulators a broad set of authorities to supervise TSPs that have contractual relationships with banks. The BSCA directs the federal depository institution regulators to treat all activities performed by contract as if they were performed by the bank and grants them the authority to examine and regulate third-party vendors that provide services to banks, including check and deposit sorting and posting, statement preparation, notices, bookkeeping, and accounting. Section 501 of GLBA requires federal agencies to establish appropriate standards for financial institutions to ensure the security and confidentiality of customer information. Hence, the prudential depository regulators issued interagency guidelines in 2001 that require banks to establish information security programs. Among other things, banks must regularly assess the risks to consumer information (in paper, electronic, or other form) and implement appropriate policies, procedures, testing, and training to mitigate risks that could cause substantial harm and inconvenience to customers. The guidance requires banks to provide continuous oversight of third-party vendors such as TSPs to ensure that they maintain appropriate security measures. The regulators periodically update and have since released additional guidance pertaining to third-party vendors. "], "subsections": [{"section_title": "Possible Issues for Congress", "paragraphs": ["Regulation aimed at banks' relationships with third-party vendors such as TSPs has benefits in mitigating operational risks but imposes costs on banks that want to utilize available technologies. Banks, particularly community banks and small credit unions, may find it difficult to comply with regulator standards applicable to third-party vendors. For example, certain institutions may lack sufficient expertise to conduct appropriate diligence when selecting TSPs or to structure contracts that adequately protect against the risks TSPs may present. Some banks may also lack the resources to monitor whether the TSPs are adhering to GLBA and other regulatory or contract requirements. In addition, regulatory compliance costs are sometimes cited as a factor in banking industry consolidation, because compliance costs may be subject to economies of scale that incentivize small banks to merge with larger banks or other small banks to combine their resources to meet their compliance obligations.", "For more detailed examination of this issue, see CRS In Focus IF10935, Technology Service Providers for Banks , by Darryl E. Getter. "], "subsections": []}]}, {"section_title": "Consumer Electronic Payments92", "paragraphs": ["Consumers have several options to make electronic, noncash transactions, as shown in Figure 2 . For instance, consumers can make purchases by swiping, inserting, or tapping a card to a payment terminal; they can store their preferred payment information in a digital wallet; or they can use an app to scan a barcode on a mobile phone that links to a payment of their choice. Merchants also enjoy electronic payments innovations that allow them to accept a range of payment types while limiting the need to manage cash.", "Despite the technology surrounding noncash payments, electronic payment networks eventually run through the banking system. Accessing these systems typically involves paying fees, which may be burdensome on certain groups. For instance, while most Americans have a bank account, a 2017 survey found that almost a third of those who left the banking system did so because of fees associated with their account. While some services, such as prepaid cards, allow individuals to make electronic payments without bank accounts, these options also often involve fees. As a result, cash payments may be the most affordable payment option for certain groups."], "subsections": [{"section_title": "Possible Issues for Congress", "paragraphs": ["If electronic payment methods significantly displace cash as a commonly accepted form of payment, that evolution could have both positive and negative outcomes. Proponents of reducing cash use argue that doing so will generate important benefits, such as reducing the costs associated with producing, transporting, and protecting cash. Conversely, opponents of reducing cash usage and acceptance argue that doing so would further marginalize people with limited access to the financial system. Although consumers tend to prefer using debit cards and credit cards, cash maintains an important role in retail payments and person-to-person (P2P) transfers, especially for smaller transactions and lower-income households.", "Electronic payments and cash displacement have various implications for the security and privacy of consumers and merchants. For example, not having cash on store premises can reduce the risk of theft while increasing fees paid to payment card processors. Similarly, consumers may be denied services if they only use cash, but if they transition to electronic payments, the privacy offered by cash transactions' anonymous nature is eroded. Further, as more transactions occur over electronic payment systems, the data processed in these transactions are exposed to cybersecurity attacks. Policymakers may examine whether they should encourage or discourage an evolution away from cash based on their assessments of such a change's benefits and costs.", "For more information on this topic, see CRS Report R45716, The Potential Decline of Cash Usage and Related Implications , by David W. Perkins."], "subsections": []}]}, {"section_title": "Real-Time Payments97", "paragraphs": ["There are several steps in the process of completing a payment, involving multiple systems run by various actors. End user payment services accessed by consumers and retailers are only run by the private sector. On the other hand, bank-to-bank payment messaging, clearing, and settlement can currently be executed through systems run privately or by the Federal Reserve. The processing of these bank-to-bank electronic payments currently results in payment settlement occurring hours later or on the next business day after a payment is initiated. However, advances in technology have made systems featuring real-time payments (RTP)\u00e2\u0080\u0094payments that settle almost instantaneously\u00e2\u0080\u0094possible. ", "The Federal Reserve plans to introduce an RTP system called FedNow in 2023 or 2024. FedNow would be \"a new interbank 24x7x365 real-time gross settlement service with integrated clearing functionality to support faster payments in the United States\" that \"would process individual payments within seconds ... (and) would incorporate clearing functionality with messages containing information required to complete end-to-end payments, such as account information for the sender and receiver, in addition to interbank settlement information.\" FedNow is to be available to all financial institutions with a reserve account at the Federal Reserve. It will require banks using FedNow to make funds transferred over it available to their customers immediately after being notified of settlement.", "Several private-sector initiatives are also underway to implement faster payments, some of which would make funds available to the recipient in real time (with deferred settlement) and some of which would provide real-time settlement. Notably, the Clearing House introduced its RTP network (with real-time settlement), which is jointly owned by its members (a consortium of large banks), in November 2017; according to the Clearing House, it currently \"reaches 50% of U.S. transaction accounts, and is on track to reach nearly all U.S. accounts in the next several years.\" "], "subsections": [{"section_title": "Possible Issues for Congress", "paragraphs": ["According to Federal Reserve Chair Jerome Powell, \"the United States is far behind other countries in terms of having real-time payments available to the general public.\" ", "Businesses and consumers would benefit from the ability to receive funds more quickly, particularly as a greater share of payments are made online or using mobile technology. A faster payment system may provide certain other benefits for low-income or liquidity-constrained consumers (colloquially, those living \"paycheck to paycheck\") who may more often need access to their funds quickly. In particular, many lower-income consumers say that they use alternative financial services, such as check cashing services and payday loans, because they need immediate access to funds. Faster payments may also help some consumers avoid checking account overdraft fees. Note, however, that some payments that households make would also be cleared faster\u00e2\u0080\u0094debiting their accounts more quickly\u00e2\u0080\u0094than they are in the current system, which could be harmful to some households. ", "The main policy issue regarding the Federal Reserve and RTP is whether Federal Reserve entry in this market is desirable. Some stakeholders question whether the Federal Reserve can justify creating a RTP system in the presence of competing private systems. They fear that FedNow will hold back or crowd out private-sector initiatives already underway and could be a duplicative use of resources. The Treasury Department supports Federal Reserve involvement on the grounds that it will help private-sector initiatives at the retail level. Others, including many small banks , fear that aspects of payment and settlement systems exhibit some features of a natural monopoly (because of network effects), and, in the absence of FedNow, private-sector solutions could result in monopoly profits or anticompetitive behavior, to the detriment of financial institutions accessing RTPs and their customers (merchants and consumers). From a societal perspective, it is unclear whether it is optimal to have a single provider or multiple providers in the case of a natural monopoly, particularly when one of those competitors is governmental. Multiple providers could spur competition that might drive down user costs, but more resources are likely to be spent on duplicative infrastructure. ", "RTP competition between the Federal Reserve and the private sector also has mixed implications for other policy goals, including innovation, ubiquity, interoperability, equity, and security.", "For more information on this topic, see CRS Report R45927, U.S. Payment System Policy Issues: Faster Payments and Innovation , by Cheryl R. Cooper, Marc Labonte, and David W. Perkins. "], "subsections": []}]}, {"section_title": "Cryptocurrency114", "paragraphs": ["Cryptocurrencies are digital money in electronic payment systems that generally do not require government backing or the involvement of an intermediary, such as a bank. Instead, system users validate payments using public ledgers that are protected from invalid changes by certain cryptographic protocols. In these systems, individuals establish an account identified by a string of numbers and characters (often called an address or public key ) that is paired with a password or private key known only to the account holder. A transaction occurs when two parties agree to transfer digital currency (perhaps in payment for a good or service) from one account to another. The buying party will unlock the currency used as payment with her private key, allowing some amount to be transferred from her account to the seller's. The seller then locks the currency in her account using her own private key. From the perspective of the individuals using the system, the mechanics are similar to authorizing payment on any website that requires an individual to enter a username and password. In addition, companies offer applications or interfaces that users can download onto a device to make transacting in cryptocurrencies more user-friendly. Individuals can purchase cryptocurrencies on exchanges for traditional government-issued money like the U.S. dollar (see Figure 3 ) or other cryptocurrencies, or they can earn them by doing work for the cryptocurrency platform.", "Many digital currency platforms use blockchain technology to validate changes to the ledgers. In a blockchain-enabled system, payments are validated on a public or distributed ledger by a decentralized network of system users and cryptographic protocols. In these systems, parties that otherwise do not know each other can exchange something of value (i.e., a digital currency) because they trust the platform and its protocols to prevent invalid changes to the ledger. ", "Cryptocurrency advocates assert that a decentralized payment system operated through the internet could be faster and less costly than traditional payment systems and existing infrastructures. Whether such efficiencies can or will be achieved remains an open question. However, the potential for increased payment efficiency from these systems is promising enough that certain central banks have investigated the possibility of issuing government-backed, electronic-only currencies\u00e2\u0080\u0094called central bank digital currencies (CBDCs)\u00e2\u0080\u0094in such a way that the benefits of certain alternative payment systems could be realized with appropriately mitigated risk. How CBDCs would be created and function are still matters of speculation at this time, and the possibility of their introduction raises questions about central banks' appropriate role in the financial system and the economy."], "subsections": [{"section_title": "Possible Issues for Congress", "paragraphs": ["Whether cryptocurrencies are appropriately regulated is an open question. Cryptocurrency proponents argue that regulation should not stifle the development of a potentially beneficial payment system, while opponents argue that regulation should protect against criminals using cryptocurrency to evade or hide their activities from authorities, or consumers potentially suffering losses from an untested technology. For anti-money laundering purposes, cryptocurrency regulation occurs at the exchanges that allow people to buy and sell cryptocurrencies either for government-backed fiat currencies or other cryptocurrencies. Generally, these exchanges must register as money transmitters at the state level and must report to the U.S. Treasury's Financial Crimes Enforcement Network as money services businesses at the federal level, and are subject to the applicable anti-money laundering requirements those types of companies face. However, cryptocurrency critics warn that their pseudonymous, decentralized nature nevertheless provides a new avenue for criminals to launder money, evade taxes, or sidestep financial sanctions. ", "Consumer groups and other commentators are also concerned that digital currency users are inadequately protected against unfair, deceptive, and abusive acts and practices. The way cryptocurrencies are sold, exchanged, or marketed can subject cryptocurrency exchanges or other cryptocurrency-related businesses to generally applicable consumer-protection laws, and certain state laws and regulations are being applied to cryptocurrency-related businesses. However, other laws and regulations aimed at protecting consumers engaged in electronic financial transactions may not apply. For example, the Electronic Fund Transfer Act of 1978 (EFTA; P.L. 95-630 ) requires traditional financial institutions engaging in electronic fund transfers to make certain disclosures about fees, correct errors when identified by the consumer, and limit consumer liability in the event of unauthorized transfers. Because no bank or other centralized financial institution is involved in digital currency transactions, EFTA generally has not been applied to these transactions.", "Finally, some central bankers and other experts and observers have speculated that widespread cryptocurrency adoption could affect the ability of the Federal Reserve and other central banks to implement and transmit monetary policy, if one or more additional currencies that were not subject to government supply controls were also prevalent and viable payment options.", "For more information on these issues, see CRS Report R45427, Cryptocurrency: The Economics of Money and Selected Policy Issues , by David W. Perkins; CRS Report R45116, Blockchain: Background and Policy Issues , by Chris Jaikaran; and CRS Report R45664, Virtual Currencies and Money Laundering: Legal Background, Enforcement Actions, and Legislative Proposals , by Jay B. Sykes and Nicole Vanatko. "], "subsections": []}]}, {"section_title": "Capital Formation: Crowdfunding and ICOs125", "paragraphs": ["Financial innovation in capital markets has generated new forms of fundraising for firms, including crowdfunding and initial coin offerings . Crowdfunding involves raising funds by soliciting investment or contributions from a large number of individuals, generally through the internet. Initial coin offerings (ICO) raise funds by selling digital coins or tokens\u00e2\u0080\u0094generally created and transferred using blockchain technology\u00e2\u0080\u0094to investors; the coins or tokens allow investors to access, make purchases from, or otherwise participate in the issuing company's platform, software, or other project. In cases where crowdfunding and ICOs meet the legal definition of a securities offering, they are subject to securities law and regulation by the Securities and Exchange Commission (SEC). ", "Four kinds of crowdfunding exist: (1) donation crowdfunding, where contributors give money to a fundraising campaign and receive in return, at most, an acknowledgment; (2) reward crowdfunding, where contributors give to a campaign and receive in return a product or a service; (3) peer-to-peer lending crowdfunding, where investors offer a loan to a campaign and receive in return their capital plus interest; and (4) equity crowdfunding, where investors buy stakes in a company and receive in return company stocks. Donation and reward crowdfunding are relatively lightly regulated because contributors are in effect giving without expectation of gaining anything of monetary value in return or preordering a product, respectively. Equity crowdfunding may meet the criteria of a securities offering, and in such cases it is subject to SEC regulation, as are certain peer-to-peer lending arrangements in which a security is issued. ", "ICOs are a relatively new approach to raising capital. A typical ICO transaction involves the issuer selling new digital coins or tokens\u00e2\u0080\u0094also referred to as digital assets or, in cases in which they qualify as securities, digital asset securities \u00e2\u0080\u0094to individual or institutional investors. Investors can often pay in traditional fiat currencies (e.g., U.S. dollars) or cryptocurrencies (e.g., Bitcoin, Ethereum) pursuant to the terms of each individual ICO. ICOs are often compared with the traditional financial world's initial public offerings (IPOs) because both are methods companies use to acquire funding. The main difference is that IPO investors receive an equity stake representing company ownership, rather than a digital asset. Coin or token purchasers can generally redeem the coins for goods or services from the issuing enterprise, or hold them as investments in the hope that their value will increase if the company is successful. Although every ICO is different, issuers are generally able to make transfers without an intermediary or any geographic limitation."], "subsections": [{"section_title": "Possible Issues for Congress", "paragraphs": ["Policymakers are now considering whether these new innovations fit well within the existing regulatory framework, or whether the framework should be adapted to address the risks and benefits that they pose. In general, policymakers and regulators have attempted to provide regulatory clarity and investor protection without hindering financial innovation and technological advancements.", "Currently, equity crowdfunding debates typically involve questions over how broadly crowdfunding exemptions from certain SEC registration requirements should be applied. Generally, public equity offerings, such as stock issuances, involve a number of costs, including paying an investment bank to price the stock and find investors. In addition, the offering must be registered with the SEC and the company must disclose certain information to investors. Crowdfunding may be less costly than traditional public offerings in certain respects and thus might present a new avenue for small businesses without the resources or expertise to complete a traditional IPO to raise funds. ", "In 2012, Title III of the Jumpstart Our Business Startups Act (JOBS Act; P.L. 112-106 ) created an exemption from registration for internet-based securities that made offerings of up to $1 million (inflation-adjusted) over a 12-month period. Certain companies that are still relatively small by some measures may nevertheless not qualify for the exemption, and certain of those companies may find the costs of raising funds through an equity issuance prohibitively high. Title III includes certain investor protection provisions, including limitations on investors' investment amounts and issuer disclosure requirements. However, exempting an issuer from registration may weaken investor protections. Thus, what the appropriate criteria should be to allow an equity crowdfunding issuer to forego registration requirements is a matter of debate.", "Regarding ICOs, issuers and investors face varying degrees of uncertainty when determining how or if securities laws and regulations apply to them. It may not always be clear whether a digital asset is a security subject to SEC regulation. Meanwhile, ICO and digital asset investors\u00e2\u0080\u0094which may include less-sophisticated retail investors, who may not be positioned to comprehend or tolerate high risks\u00e2\u0080\u0094may be especially vulnerable to new types of fraud and manipulation, leading to questions about whether investor protections in this area are adequate. There appear to be high levels of ICO scams and business failures. For example, one 2018 study from the ICO advisory firm Satis Group found that 81% of ICOs are scams and another 11% fail for operational reasons. Digital assets may be an attractive method for scammers since transactions in digital assets do not have the same protections as traditional transactions. For example, banks can delay, halt, or reverse suspicious transactions and link transactions with user identity, while many digital asset transactions are generally irreversible. ", "The SEC has taken initiatives to address some of these issues. In September 2017, the SEC established a new Cyber Unit and increased its monitoring of and enforcement actions against entities engaged in digital asset transactions. Since that time, the SEC has increased the frequency of enforcement actions against issuers\u00e2\u0080\u0094the end recipients of ICO funding\u00e2\u0080\u0094as well as market intermediaries (i.e., broker-dealers and investment managers). In addition to the enforcement activities against entities for noncompliance with securities regulations, the SEC has obtained court orders to halt allegedly fraudulent ICOs.", "For more information on these issues, see CRS Report R46208, Digital Assets and SEC Regulation , by Eva Su; CRS Report R45221, Capital Markets, Securities Offerings, and Related Policy Issues , by Eva Su; and CRS Report R45301, Securities Regulation and Initial Coin Offerings: A Legal Primer , by Jay B. Sykes."], "subsections": []}]}, {"section_title": "High-Frequency Securities and Derivatives Trading153", "paragraphs": ["Although, there is no universal legal or regulatory definition of high-frequency trading (HFT), the term generally refers to a subset of algorithmic trading in financial instruments, such as equity securities, derivatives, and cryptocurrencies, that is conducted by supercomputers executing trades within microseconds or milliseconds. It has grown substantially over the past 15 years and currently accounts for roughly 50% to 60% of the trading volume in domestic equity markets. Depending on trading strategy and market conditions, evidence suggests that HFT in some cases can have either certain positive effects on market quality (e.g., increased liquidity, smaller spreads, decreased short-term volatility, and improved price discovery) or certain negative effects (e.g., decreased liquidity, higher volatility, and higher transaction costs for certain investors).", "Generally, traders who employ HFT strategies are attempting to earn a small profit per trade on a huge number of trades. This is achieved through automated trading by computers programmed to execute certain kind of trades in response to specific market data and involves rapid order placement. Broadly speaking, these strategies can be categorized as passive or aggressive strategies. Passive strategies include arbitrage trading \u00e2\u0080\u0094attempts to profit from price differentials for the same stocks or their derivatives traded on different trading venues; and passive market making , in which profits are generated by spreads between the difference or the spread between the prices at which securities are bought and sold. Aggressive strategies include those known as order anticipation or momentum ignition strategies. ", "Regulators have been scrutinizing HFT practices for years. The SEC oversees HFT and other trading in the securities markets and the more limited securities-related derivatives markets that it regulates. The CFTC oversees any HFT, along with other types of trading, in the derivatives markets it regulates. These markets include futures, swaps, and options on commodities and most financial instruments or indices, such as interest rates. "], "subsections": [{"section_title": "Possible Issues for Congress", "paragraphs": ["HFT's supporters argue that by quickly executing many trades, often in response to a perceived price inefficiency, HFT improves market quality in a number of ways. Surveys of empirical research suggest that in both equity and foreign exchange markets, HFT appears to have narrowed bid-ask spreads, bolstered market liquidity, reduced some measures of price volatility, and improved the price discovery process. Some commentators argue that HFT is just the latest technological innovation in a financial activity that has a long history of coevolution with technology, and that market participants and regulators are well practiced at incorporating such innovations.", "Some studies suggest, however, that aggressive HFT strategies should be a matter of public policy concern. Such strategies arguably share similarities to practices such as front-running (when an entity conducts a securities trade while knowing of a future transaction that will have an effect on the price of the securities being traded) and spoofing (offering to buy or sell securities with an intent to cancel the bid or offer before execution), both of which can be illegal. In addition, regulators have expressed concerns over whether certain aggressive HFT strategies may be associated with increased market fragility and volatility, such as that demonstrated in the Flash Crash of May 6, 2010, in which the Dow Jones Industrial Average (DJIA) fell by roughly 1,000 points (and then rebounded) in intraday trading. ", "Arguably the most ambitious market surveillance project in SEC history, the ongoing implementation of Consolidated Audit Trail (CAT) is a direct response to the perceived dearth of market data available during the regulatory analysis of the Flash Crash's causes and the role HFT traders played during that event. First approved by the SEC in 2012, CAT is planned as a single data repository that will consolidate trade orders, trade quotes (the most recent prices at which a trade on a particular stock was executed), and general trade data across domestic equities and options markets. According to then-SEC Chair Mary Jo White, by virtue of CAT \"[R]egulators will have more timely access to a comprehensive set of trading data, enabling us to more efficiently and effectively conduct research, reconstruct market events, monitor market behavior, and identify and investigate misconduct.\" The system, which has raised some cybersecurity concerns, has also earned prospective praise as a tool that will make HFT more transparent, broadening what the SEC will be able to see as it surveils such trades. CAT phase-in began in late 2019, and it is projected to be fully operational in 2022.", "Policymakers have taken a number of other actions in recent years to address concerns related to HFT. Whether these strike the appropriate balance between fostering HFT's potential benefits while appropriately mitigating risks associated with it is an open question. For example, the SEC and CFTC have either approved or not opposed requests by several securities exchanges (including the NYSE American, the IEX, and the gold and silver futures markets at ICE Futures U.S.) to adopt trading delay mechanisms aimed at removing HFT traders' speed advantages. ", "For more information on these issues, see CRS Report R44443, High Frequency Trading: Overview of Recent Developments , by Rena S. Miller and Gary Shorter; and CRS Report R43608, High-Frequency Trading: Background, Concerns, and Regulatory Developments , by Gary Shorter and Rena S. Miller. "], "subsections": []}]}, {"section_title": "Asset Management167", "paragraphs": ["Asset management companies pool money from various individual or institutional investor clients and invest the funds on their behalf for financial returns. The SEC is the asset management industry's primary regulator. The asset management industry is increasingly using fintech to conduct investment research, perform trading, and enhance its client services. A prominent example is the proliferation of robo - advisor services, in which automated programs give investment advice to clients. There is also potential to apply artificial intelligence and machine learning within asset management, both in robo-advisory services and other functions such as risk management, regulatory compliance, and trading and portfolio management. Another notable development in the industry is that some large, prominent technology companies have begun to offer asset management services and partner with incumbent asset managers. ", "The term robo adviser generally refers to an automated digital investment advisory program offering asset management services to clients through online algorithmic-based platforms, such as websites or mobile applications. The main differences between human and robo advisers are the amount of human interaction available to investors and the reliance on algorithmic-based platforms for providing financial advice. The potential benefit of this technology is that robo advisers may be able to serve more customers at lower costs than human advisors, thus potentially enabling more affordable consumer access to investment advisory services. Robo advising is a fast-growing segment of the investment management industry. According to one report, direct-to-consumer robo-advisory platforms reached $257 billion in size at the end of 2018 and are projected to have $1.26 trillion in assets under management by 2023. ", "As mentioned above, big tech firms like Amazon, Facebook, Google, and Apple have started financial services operations as potential competitors and partners to the asset management industry. These types of companies could provide investment management through their widely used platforms, potentially disrupting the asset management industry. The potential of big tech asset management platforms has already been realized in certain overseas markets. For example, Ant Financial, an affiliate of Alibaba Group, now manages the world's largest money market mutual fund of $168 billion as of year-end 2018, with a third of the Chinese population, or 588 million Alipay users, already invested in the fund."], "subsections": [{"section_title": "Possible Issues for Congress", "paragraphs": ["In general, robo advisers present similar policy issues as all asset managers do related to striking the right balance between protecting investors and mitigating risks while allowing for innovation, appropriately informed risk taking, and financial returns. However, robo advising could also present additional policy considerations. Some observers have expressed concerns that robo advisers may cause risks and excess volatility if they result in herding , in which very large numbers of investors are all directed to the same investments at the same time. AI- or machine learning-enabled robo advising could also be subject to policy concerns related to black box algorithm-based decisionmaking, wherein it is not entirely clear how computer programs have assessed risks or arrived at decisions, and so are effectively unexplainable and unauditable. Some observers are also concerned about the assignment of responsibilities when large losses in an AI-recommended investment occur. For example, questions surround how to assign blame if an investment loss occurred through an AI-based system\u00e2\u0080\u0094should the designer of the AI system or the investment manager incorporating its use bare the blame and penalty? If asset management continues to become increasingly automated, policymakers may weigh these risks and concerns against possible benefits, such as reduced cost and increased access. "], "subsections": []}]}, {"section_title": "Insurance178", "paragraphs": ["Fintech's application to insurance offers a similar potential transformation in the insurance industry as in other aspects of financial services. Fintech could affect insurance throughout the business, including insurance products, underwriting, claims, and marketing, and across all lines of insurance (life, health, and property and casualty [P&C]). Potential aspects of insurtech include peer-to-peer insurance, Big Data, artificial intelligence, blockchain, mobile technology, and insurance on demand. Specific examples could include life or health insurers offering discounts for people wearing devices that track activity and fitness; auto insurers offering discounts for cars that include telematics devices tracking drivers' behavior; and insurers scanning social media as an underwriting tool or to detect fraud. In 2017, the fastest-growing P&C insurer by direct premiums written was an auto insurer, Metromile Insurance, offering per-mile insurance with a telematics tracker. In 2018, the fastest-growing P&C insurer was Root Insurance, also a telematics-based auto insurer, and the second-fastest growing was Lemonade Insurance, a homeowners and renters insurer using technology like chatbots and AI to sell and service policies.", "Unlike banks or securities firms, the primary regulators for insurers are the individual states. An insurer is required to obtain a charter or license in every state in which it operates. The states coordinate insurance regulatory policies through the National Association of Insurance Commissioners (NAIC) and have been active in addressing issues raised by technology. In 2017, NAIC created an NAIC Insurance and Technology task force and adopted a model law relating to insurer data security. A U.S. Department of the Treasury report specifically encouraged states to adopt the model law and, as of August 4, 2019, seven states had adopted the model with another state considering adoption. All 50 state insurance regulators have identified a specific point of contact for \"InsurTech, Innovation & Technology\" in order to introduce the regulatory process for new entrants."], "subsections": [{"section_title": "Possible Issues for Congress", "paragraphs": ["The state regulatory system for insurance originated following a Supreme Court decision in 1868, but since a further decision in 1944, its foundation has been statutory, not constitutional. The 1945 McCarran-Ferguson Act generally provides for a state-based system, but Congress can enact laws overriding the states and has done so on a number of occasions. Congress has also conducted oversight on specific aspects of the insurance regulatory system and encouraged the states to act on issues without enacting specific statutes at the federal level. Given the breadth of technology's potential impact on insurance, Congress might question numerous aspects of the states' approach to the new technology, including the impact on consumers and the potential for regulatory arbitrage between the federal regulatory approach for banks and securities firms and the state regulatory approach for insurers."], "subsections": []}]}, {"section_title": "Risk Management and Regtech187", "paragraphs": ["Risk-management and compliance functions in financial firms frequently rely on data analysis to assess the risk of bad outcomes, such as wrongdoing or financial losses. For example, in anti-money laundering compliance, financial firms are required to file suspicious activity reports (SARs) when transactions by a customer appear potentially to be tied to illicit crime, fraud, money laundering, terrorist financing, or other transgressions. In addition, banks may also be subject to requirements involving stress testing, modeling risks, forecasting, and monitoring employees and internal risk (e.g., the probability that a risky trade under consideration could imperil a bank's capital or liquidity positions). Regulators also must monitor for certain risks or unfolding events (e.g., securities markets regulators trying to detect illegal trading practices). Companies are increasingly using innovative technology in these risk management and regulatory compliance activities. Sometimes in the latter case, the technology is referred to as regtech .", "Algorithms are especially well suited to sifting through, analyzing, and identifying patterns in large data sets, and so potentially could be used in these risk assessment and compliance functions. Algorithms' increased sophistication and the development of machine learning and artificial intelligence have fueled strong interest in the financial industry in further using these technologies to automate risk-management and compliance functions. For example, FINRA predicts that such tools will help with anti-money laundering processes; surveilling internal firm employees involved in placing trades on a firm's behalf; broker-dealer trade execution for customers; ensuring customer data privacy and preventing security risks; and centralizing supervisory control systems for additional risk management.", "In large part, the goal of cost savings is driving the development and adoption of automation in compliance. Some financial firms argue that because they are relatively more regulated than firms in other industries, they must deploy automation wherever possible to reduce compliance costs and remain profitable and competitive. Certain industry observers predict that the cost of processes that involve prediction will drop in coming years and the accuracy of automated prediction processes will continue to increase.", "However, exactly how these technologies will develop and be deployed in regulatory compliance, and what outcomes they will produce if deployed, remains to be seen. "], "subsections": [{"section_title": "Possible Issues for Congress", "paragraphs": ["The possibility that automation's ability to identify risks and suspect behaviors may surpass that of humans in certain cases raises questions over the role and power existing human compliance officials should have in deciding whether to take actions against individuals or institutions. While automation could more efficiently collect and act on information, individuals may be uncomfortable that their transactions and private information could be instantly reported to the government or their financial situation affected through a process that involved no human judgement or oversight. For example, should a human have to file a SAR about a customer to the Treasury Department, or should the filing of such reports be completely automated? To take this example a step further, should the decision to close a customer's account be fully automated as well?", "Regtech tools also raise similar privacy and cybersecurity risks as the other technologies discussed in this report. After all, certain regtech programs involve the automated monitoring of individuals' and private companies' financial transactions, flagging some of those transactions as suspicious, and reporting those transactions to government agencies. Policymakers may consider under what circumstances certain regtech processes inappropriately impinge on people's privacy.", "To the extent that certain processes or functions can be automated to achieve greater regulatory efficiency or effectiveness, questions exist concerning whether regulators need to be more active in deploying compliance technologies themselves and allowing the institutions they regulate to do so. For example, the American Bankers Association lists \"regulator buy-in\" as one of the challenges to such adoption."], "subsections": []}]}]}, {"section_title": "Potential Regulatory Approaches192", "paragraphs": ["Given that most of the federal financial regulatory framework was created prior to the development and deployment of many recent technologies, fintech companies often face uncertainty over how\u00e2\u0080\u0094or whether\u00e2\u0080\u0094existing federal laws and regulations may apply to them or their products. Thus, policymakers may consider ways to reduce regulatory uncertainty and integrate fintech into the regulatory framework. This often involves balancing efforts to encourage innovation while protecting consumers and the financial system from excessive risk. Many still-evolving terms are used to describe different programs regulators have implemented or proposed to address fintech uncertainty. Such programs are often informally called sandboxes or greenhouses . Generally, such programs use at least one of a variety of approaches. ", "One such approach involves fostering communication between fintech firms and regulators. Communication can help these firms better understand how regulators view a developing technology and potential regulatory concerns. Communication also helps make regulators aware of new fintech innovations when developing new or interpreting existing regulations. As discussed below, certain regulators have established offices within their organizations to conduct outreach to fintechs\u00e2\u0080\u0094including maintaining outreach websites, participating in fintech conferences, and organizing office hours with fintech firms. In another approach, some regulators have announced research collaborations with fintech firms to improve their understanding of new products and technologies. Such initiatives could include jointly designing a research trial or fintech firms sharing data about their product performance with regulators. ", "Another potential approach policymakers may use if they determine that particular regulations are unnecessarily burdensome or otherwise ill-suited to a particular technology is to exempt companies or products that meet certain criteria from such regulations. Similarly, a regulator could issue a no-a ction letter \u00e2\u0080\u0094an official communication stating a regulator does not expect to take enforcement actions in certain situations. Regulators will often only provide such special regulatory treatment to companies that first demonstrate that consumers will not be exposed to undue harm or meet other conditions, like agreeing to share data with regulators for research purposes. Regulatory uncertainty can be resolved if regulators offer or require certain fintech firms to enter a regulatory regime with well-defined permissions, restrictions, and responsibilities. For example, a regulator could offer or require a specific charter or license for certain firms.", "Financial regulators have begun to implement some of these approaches through a number of rulemakings and by establishing programs and offices and taskforces within agencies. For a detailed examination of these initiatives, see CRS Report R46333, Fintech: Overview of Financial Regulators and Recent Policy Approaches , by Andrew P. Scott."], "subsections": [{"section_title": "Possible Issues for Congress", "paragraphs": ["The regulatory approaches described above could be supported or opposed by various stakeholders depending on how they are designed and implemented and which firms or products are affected. For example, while fintech firms may want to reduce regulatory uncertainty and operate under one set of rules nationally (rather than different rules in each state), they may also oppose new or additional data-reporting requirements. Incumbent financial institutions may argue that regulatory tailoring and exemptions for fintech firms would put incumbents at a competitive disadvantage. State regulators and consumer advocates may oppose any federal charter that would preempt state consumer-protection laws. ", "Congress or financial regulators may consider various regulatory approaches. Policymakers choosing to tailor regulation for fintechs could apply a different regulatory treatment either to companies or to products. If the goal is to provide new, inexperienced firms an opportunity to learn how they and their products would be regulated, institution-based regulation for firms meeting criteria associated with start-up companies may be the better option. But if the goal is to integrate a new technology regardless of the size or sophistication of the firm offering it, the differentiated regulatory treatment could apply to the product rather than the firm. Policymakers could also choose to tailor regulation for fintechs meeting certain objective criteria. Alternatively, regulators could use discretion in determining which fintech companies or products would qualify for such tailoring, potentially based on authorities or directions enacted in legislation. Policymakers may also consider how long to apply a particular regulatory treatment to a fintech company or product. For example, a specific charter could last indefinitely, while an exemption or no-action letter might last for only a finite period.", "For more information on these issues, see CRS Report R46333, Fintech: Overview of Financial Regulators and Recent Policy Approaches , by Andrew P. Scott; and CRS In Focus IF11195, Financial Innovation: Reducing Fintech Regulatory Uncertainty , by David W. Perkins, Cheryl R. Cooper, and Eva Su."], "subsections": [{"section_title": "Appendix. CRS Fintech Products", "paragraphs": ["Cybersecurity", "CRS Report R44429, Financial Services and Cybersecurity: The Federal Role , by N. Eric Weiss and M. Maureen Murphy.", "CRS Report R45631, Data Protection Law: An Overview , by Stephen P. Mulligan, Wilson C. Freeman, and Chris D. Linebaugh. ", "CRS In Focus IF10559, Cybersecurity: An Introduction , by Chris Jaikaran. ", "Lending", "CRS Report R44614, Marketplace Lending: Fintech in Consumer and Small-Business Lending , by David W. Perkins.", "CRS Report R45726, Federal Preemption in the Dual Banking System: An Overview and Issues for the 116th Congress , by Jay B. Sykes. ", "Payments", "CRS Report R45927, U.S. Payment System Policy Issues: Faster Payments and Innovation , by Cheryl R. Cooper, Marc Labonte, and David W. Perkins. ", "CRS Report R45716, The Potential Decline of Cash Usage and Related Implications , by David W. Perkins. ", "Banks and Third-Party Vendor Relationships", "CRS In Focus IF10935, Technology Service Providers for Banks , by Darryl E. Getter.", "Cryptocurrency and Blockchain-Based Payment Systems", "CRS Report R45427, Cryptocurrency: The Economics of Money and Selected Policy Issues , by David W. Perkins.", "CRS Report R45116, Blockchain: Background and Policy Issues , by Chris Jaikaran.", "CRS Report R45664, Virtual Currencies and Money Laundering: Legal Background, Enforcement Actions, and Legislative Proposals , by Jay B. Sykes and Nicole Vanatko. ", "CRS In Focus IF10824, Financial Innovation: \"Cryptocurrencies\" , by David W. Perkins, Financial Innovation: \"Cryptocurrencies\", by David W. Perkins. ", "Digital Assets and Capital Formation", "CRS Report R46208, Digital Assets and SEC Regulation , by Eva Su. ", "CRS Report R45221, Capital Markets, Securities Offerings, and Related Policy Issues , by Eva Su.", "CRS Report R45301, Securities Regulation and Initial Coin Offerings: A Legal Primer , by Jay B. Sykes. ", "CRS In Focus IF11004, Financial Innovation: Digital Assets and Initial Coin Offerings , by Eva Su. ", "High-Frequency Securities and Derivatives Trading", "CRS Report R44443, High Frequency Trading: Overview of Recent Developments , by Rena S. Miller and Gary Shorter. ", "CRS Report R43608, High-Frequency Trading: Background, Concerns, and Regulatory Developments , by Gary Shorter and Rena S. Miller. ", "Regulatory Approaches and Issues for Congress", "CRS Report R46333, Fintech: Overview of Financial Regulators and Recent Policy Approaches , by Andrew P. Scott.", "CRS In Focus IF11195, Financial Innovation: Reducing Fintech Regulatory Uncertainty , by David W. Perkins, Cheryl R. Cooper, and Eva Su."], "subsections": []}]}]}]}}
{"id": "R45844", "title": "FY2019 Disaster Supplemental Appropriations: Overview", "released_date": "2019-07-30T00:00:00", "summary": ["This report provides a legislative history of the Additional Supplemental Appropriations for Disaster Relief Act, 2019 ( P.L. 116-20 ), and provides an overview of some of the issues that often arise with consideration of supplemental disaster assistance appropriations.", "In total, 59 major disasters were declared in calendar year 2018, and 27 major disasters were declared in 2019 up to the date the compromise on the disaster supplemental was announced. In addition to these specifically declared incidents, other situations arose that caused disruption to lives, economic resources, and infrastructure.", "Together, these incidents and ongoing recovery efforts from previous disasters drove a demand for additional federal budgetary resources beyond those provided through regular annual appropriations. This kind of demand is usually reflected in a request by the Administration for supplemental appropriations after the need for funding is recognized. Despite the absence of such a request by the Trump Administration, congressional leadership in both the House and the Senate chose to consider disaster-related supplemental appropriations at the end of the 115 th Congress.", "An initial $7.8 billion proposal that passed the House in the 115 th Congress as part of a consolidated appropriations bill did not advance in the Senate. In the 116 th Congress, H.R. 268 passed the House. This measure included $14.19 billion in disaster relief appropriations, as well as continuing appropriations intended to resolve an ongoing lapse in annual appropriations that had caused a partial government shutdown. The Senate was unable to get cloture on proposed amendments to the measure, and consideration of the bill stalled. After the lapse in appropriations was resolved, Senate Appropriations Chairman Richard Shelby introduced a $13.45 billion supplemental appropriations measure structured as a substitute to H.R. 268 . Again, the Senate could not achieve cloture on the proposal.", "On April 9, House Appropriations Chairwoman Nita Lowey introduced H.R. 2157 , a supplemental appropriations bill, which covered the same disasters addressed in H.R. 268 , as well as additional disasters that had occurred since the earlier measure had been passed by the House. CBO estimated the new bill, as introduced, would provide $17.31 billion in discretionary spending, which grew to $19.26 billion through floor action. The bill passed the House May 10, 2019, by a vote of 257-150.", "A $19.19 billion bipartisan, bicameral agreement on FY2019 disaster funding was negotiated, and offered in the Senate as S.Amdt. 250 to H.R. 2157 on May 23, 2019. The bill, as amended, was passed by the Senate, 85-8. Three attempts to approve the amended bill by unanimous consent were blocked in the House of Representatives while the body was in pro forma session during the Memorial Day recess. The House subsequently considered the amended bill under suspension of the rules on June 3, 2019, and voted 354-58 to approve the measure. The bill was signed into law as P.L. 116-20 on June 6, 2019.", "This report includes a more detailed legislative history and a tabular comparison that shows how the funding in these different approaches evolved. Congressional clients seeking further insight into specific programs and provisions in P.L. 116-20 may consult the analysts and background reports listed in CRS Report R45714, FY2019 Disaster Supplemental Appropriations: CRS Experts . The report also includes a discussion of issues that commonly arise during debate on supplemental appropriations, including", "the relative timeliness of supplemental appropriations; adjustments to spending limits that are often applied to them; offsets for disaster relief and recovery appropriations; the appropriate scope of supplemental appropriations; timelines for obligation of funding; and oversight of supplemental spending.", "This report will not be updated."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["In total, 59 major disasters were declared in calendar year 2018 under the authority of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5121 et seq., henceforth the Stafford Act). As of May 23, 27 major disasters have been declared in calendar year 2019. ", "In addition to these specifically declared disasters, other situations arose that caused disruption to lives, economic resources, and infrastructure. In some of these cases, a Stafford Act declaration may not have been provided or even sought.", "Together, these incidents, and ongoing recovery efforts from previous disasters, drove a demand for additional federal budgetary resources beyond those provided in regular annual appropriations. This demand is usually reflected in one or more requests by the Administration for supplemental appropriations after the incident (or incidents) have occurred and the need for funding is apparent. The Trump Administration did not make a formal request for supplemental appropriations for disaster assistance for FY2019. However, congressional leadership in both the House and Senate chose to initiate consideration of disaster-related supplemental appropriations at the end of the 115 th Congress. Consideration continued into the 116 th Congress, until a $19.19 billion supplemental appropriations measure was enacted in June 2019.", "This report provides a legislative history of the Additional Supplemental Appropriations for Disaster Relief Act, 2019 ( P.L. 116-20 ), and provides an overview of some of the issues that often arise with consideration of supplemental disaster assistance appropriations."], "subsections": []}, {"section_title": "FY2019 Disaster Supplemental Appropriations", "paragraphs": [], "subsections": [{"section_title": "115th Congress", "paragraphs": ["At the beginning of FY2019, several annual appropriations bills remained unresolved. By December 2018, five regular appropriations measures had become law; the activities funded under the remaining seven regular appropriations bills were instead funded under two continuing resolutions (CRs) lasting through December 7, 2018, and December 21, 2018, respectively. Although there had been discussions in some quarters about the need for supplemental appropriations for disaster assistance, no request for such appropriations had been forthcoming from the Administration. The debate on continuing appropriations would provide the first attempted floor vehicle for FY2019 disaster supplemental appropriations.", "In the Senate, a third CR for FY2019, lasting until February 8, 2019 ( H.R. 695 ) was passed by voice vote on December 19, 2018. The House subsequently considered and amended the bill the following day, adding additional funding, including $7.8 billion for disaster assistance. The amended measure passed the House by a vote of 217-185, and was sent back to the Senate for further consideration. On December 21, the Senate agreed to a motion to proceed to the consideration of the House-passed bill by a vote of 48-47, with Vice President Pence casting the tie-breaking vote. In the absence of a 60-vote majority to invoke cloture, H.R. 695 was not considered further, and the House and Senate adjourned later that day. When the second CR, providing funding for the agencies, programs, and activities covered by the remaining seven appropriations bills, expired at midnight on December 21, funding lapsed and a partial government shutdown ensued. The 115 th Congress subsequently adjourned sine die on January 3, 2019, and the 116 th Congress took office the same day."], "subsections": []}, {"section_title": "116th Congress", "paragraphs": ["On January 8, 2019, House Appropriations Committee Chairwoman Nita Lowey introduced H.R. 268 , a measure that would have provided disaster relief supplemental funding and would have temporarily resolved the partial government shutdown by providing for a continuing resolution through February 8. The House took up the bill on January 16, 2019, and after adopting several amendments, passed the bill by a vote of 237-187 that same day. CBO estimated the discretionary spending in the supplemental appropriations proposal for FY2019 as $14.19 billion.", "The Senate proceeded to consideration of the bill on January 22, 2019, by unanimous consent. Amendments were offered by Majority Leader McConnell for Senate Appropriations Committee Chairman Richard Shelby ( S.Amdt. 5 ) and Senate Minority Leader Chuck Schumer ( S.Amdt. 6 ) that same day. On January 24, 2019, separate attempts to invoke cloture on both of these alternatives were unsuccessful. The partial government shutdown was subsequently ended through the enactment of a separate measure ( H.J.Res. 28 , providing for continuing appropriations through February 15). ", "On March 14, the Senate returned to consideration of H.R. 268 . Cloture on the motion to proceed to consideration of the measure was invoked in the Senate, 90-10, on March 26, and the measure was laid before the Senate on March 28. On the same day, Chairman Shelby offered a substitute amendment ( S.Amdt. 201 ), providing $13.45 billion for disaster relief. Attempts to invoke cloture on both S.Amdt. 201 and H.R. 268 on April 1, 2019, were unsuccessful.", "On April 9, 2019, Chairwoman Lowey introduced H.R. 2157 , a supplemental appropriations bill, to provide funding for previous disasters as well as additional disasters that had occurred since the earlier House passage of H.R. 268 . CBO estimated the bill as introduced included $17.31 billion in discretionary spending, a figure which grew to $19.26 billion through floor action. The bill passed the House on May 10, 2019, by a vote of 257-150.", "A bipartisan, bicameral agreement on FY2019 disaster funding was negotiated prior to Senate consideration. After the Senate agreed to proceed to the consideration of H.R. 268 on May 23, Senator McConnell offered S.Amdt. 250 to H.R. 2157 as a substitute on behalf of Senator Shelby. The amendment was agreed to by unanimous consent, and the amended bill was passed, 85-8. Three attempts to approve the amended bill by unanimous consent were blocked in the House of Representatives while the body was in pro forma session during the Memorial Day recess. The House subsequently considered the bill under suspension of the rules on June 3, and voted 354-58 to approve the measure. The bill was signed into law as P.L. 116-20 on June 6, 2019.", "Congressional clients seeking further insight into specific programs and provisions in P.L. 116-20 may consult the analysts and background reports listed in CRS Report R45714, FY2019 Disaster Supplemental Appropriations: CRS Experts ."], "subsections": []}]}, {"section_title": "Evolution of FY2019 Disaster Supplemental Appropriations", "paragraphs": [" Table 1 details the disaster supplemental appropriations proposed by senior party leadership or enacted for FY2019, organized by appropriations subcommittee of jurisdiction. The table only displays amounts for which an appropriations level was specified in bill text. It does not display amounts for which an indefinite or unspecified amount was appropriated. In addition, the table does not display the amount appropriated to Medicaid in P.L. 116-20 , because a portion of that appropriation was unspecified.", "Many appropriations provided in P.L. 116-20 are available until expended, which is not uncommon for disaster assistance. However, a number of supplemental appropriations in the measure have a limited term of availability, including", "Grant funding through the Department of Agriculture in general provisions for several purposes (available through FY2020); National Oceanic and Atmospheric Administration appropriations for \"Operations, Research, and Facilities\" (through FY2020) and \"Procurement, Acquisition and Construction\" (through FY2021); U.S. Coast Guard appropriations for \"Operations and Support\" (through FY2020) and \"Procurement, Construction and Improvements\" (through FY2023); National Park Service \"Historic Preservation Fund\" appropriations (through FY2022); Forest Service \"Wildland Fire Management\" appropriations (through FY2022); Department of Labor Employment and Training Administration \"Training and Employment Services\" appropriations (through FY2020); Department of Health and Human Services appropriations (through FY2021, except for the \"Public Health and Social Services Emergency Fund\" which is available through FY2020); Department of Education \"Hurricane Education Recovery\" appropriations (through FY2020); Military Construction appropriations (through FY2023); and Department of Veterans Affairs \"Medical Facilities\" appropriations (through FY2023). ", "The last line of Table 1 references CBO's total discretionary score of the bill for FY2019, rather than a total of the elements in the table."], "subsections": []}, {"section_title": "Issues in Disaster Relief Appropriations", "paragraphs": ["Since the mid-20 th century, federal law has established a role for the federal government in supporting state and local governments in disaster response and recovery. Congress has the constitutional responsibility to exercise the \"power of the purse\" in making decisions on funding this role in regular annual appropriations, and through supplemental appropriations when necessary. Traditionally, such funding is requested by the Administration. The development of P.L. 116-20 was uncommon, in that the House and Senate developed this measure in the absence of a formal supplemental appropriations request from the Administration for disaster funding. ", "In the process of exercising this constitutional authority, a number of issues frequently reemerge in congressional debate:", "The relative timeliness of supplemental appropriations; The proper scope of a supplemental appropriations measure; How exemptions from discretionary budget limits enable investments in disaster relief, and whether such exemptions are properly structured; Proposals to offset some or all of the proposed disaster relief spending; How quickly relief and recovery funding will be made available; How Congress can ensure that the funding provided is not spent on wasteful or fraudulent endeavors."], "subsections": [{"section_title": "Relative Timeliness of Supplemental Appropriations", "paragraphs": ["Congressional offices often express an interest in the average time it has taken for past supplemental disaster assistance appropriations to be enacted after a significant disaster. This seemingly simple question lacks a meaningful answer for a variety of reasons.", "There are significantly fewer supplemental appropriations measures than declared disasters\u00e2\u0080\u0094disaster response and recovery efforts do not always require federal funding beyond regular annual appropriations. Appropriations for recovery from a disaster may come in multiple appropriations measures over the course of several years. Furthermore, a single supplemental appropriations act may meet response or recovery needs generated by multiple disasters. ", " Table 2 illustrates this situation, showing information on Stafford Act major disaster declarations and public laws with supplemental disaster assistance appropriations, by calendar year. From the beginning of 2011 through 2018, there were 977 declarations under the Stafford Act, including 461 major disasters. Of those major disaster declarations, 76 were associated with 17 catastrophic events. In that same time period, there have been 12 public laws enacted with supplemental appropriations expressly for disaster assistance\u00e2\u0080\u0094four of which were enacted in calendar years 2017 and 2018.", "As Table 2 shows, there are many more disaster declarations than supplemental measures. Given the lack of one-to-one alignment, the time from a single incident to a single supplemental appropriations measure does not provide meaningful data for calculating an average of how long it takes after a specific disaster to get a supplemental appropriations measure enacted. ", "The 2017 hurricane season provides an example of how the comparative rarity of supplemental measures as opposed to disasters complicates calculating the time from a disaster to supplemental appropriations, and can generate meaningless results for developing an average:", "The first of the three supplemental appropriations measures that directly supported response and recovery for Hurricanes Harvey, Irma, and Maria, P.L. 115-56 , included funding for the Disaster Relief Fund (DRF), Small Business Administration disaster loans, and the Department of Housing and Urban Development's (HUD's) Community Development Block Grant Disaster Recovery program (CDBG-DR). This initial measure was enacted on September 8, 2017, 14 days after Harvey made landfall, 2 days after Irma affected Puerto Rico and the U.S. Virgin Islands, and 12 days before Maria struck Puerto Rico. The second, P.L. 115-72 , was enacted on October 26, 2017, seven weeks after the first. The third, P.L. 115-123 , was enacted on February 9, 2018, five months after the initial measure.", "Each of these acts included a different range of programs, with the third addressing the largest range of programs.", "This scenario leaves some questions without definitive answers\u00e2\u0080\u0094such as, which supplemental appropriations bills should be associated with which disasters for calculating the speed of congressional response? It also demonstrates that comparison of these lengths of time has limited meaning in some cases. For example, the shorter time between Hurricane Irma and the supplemental appropriations as opposed to Hurricane Harvey and the supplemental appropriations is happenstance, rather than a meaningful difference in how Congress and the Administration approached the relief process."], "subsections": [{"section_title": "Legislative Factors in the Timing of Supplemental Appropriations", "paragraphs": ["The development and enactment of supplemental appropriations legislation is also affected by the same legislative rhythms that affect the timing of other legislation. Disaster assistance supplemental appropriations may move more quickly at some times than others, given the legislative environment. They may move on their own or they may be included in a variety of legislative vehicles.", "Continuing appropriations measures and consolidated appropriations measures (which include multiple appropriations bills) frequently serve as vehicles for supplemental appropriations toward the end of the fiscal year or soon after. For example, P.L. 114-223 , a continuing resolution for FY2017 in a consolidated appropriations act, included a $500 million supplemental appropriation for HUD's Community Development Block Grant-Disaster Recovery (CDBG-DR) program targeting major disasters declared prior to the enactment of the measure in calendar 2016.", "High-priority authorizing legislation may also prove to be a convenient vehicle. For example, Division I of the FAA Reauthorization Act ( P.L. 115-254 ) included a $1.68 billion supplemental appropriation for CDBG-DR, targeting areas impacted by major disasters declared in calendar 2018.", "An Administration request for supplemental disaster assistance can be an additional factor in the timing of the congressional consideration of supplemental appropriations. In the wake of a significant disaster, individual Members of Congress or state or regional delegations with affected constituencies may put forward supplemental appropriations legislation independent of a request from the Administration. However, unless they are crafted in consultation with majority party leadership, these measures are rarely taken up. The development of a supplemental appropriations measure destined for enactment usually begins with a supplemental appropriations request from the Administration, and a response from the Appropriations Committee or leadership. The request provides a starting point for congressional deliberations, framing the stated needs of the federal government at large for Congress to consider. For disasters that occurred in 2017, a series of three requests came from the Administration, and in each case, a supplemental appropriations measure was initiated and subsequently enacted. In contrast, as was noted above, P.L. 116-20 was enacted without a formal request by the Administration for supplemental disaster assistance appropriations for FY2019. "], "subsections": []}]}, {"section_title": "Adjustments to Spending Limits Under the Budget Control Act for Disaster Relief", "paragraphs": ["The Budget Control Act of 2011 (BCA; P.L. 112-25 ), passed in the first session of the 112 th Congress as part of a deal to raise the debt limit, placed statutory limits on discretionary spending. The BCA also provided exceptions to those limits for a number of purposes. One such exception was a reiteration of a long-standing exception for funding designated as an emergency requirement. "], "subsections": [{"section_title": "Emergencies", "paragraphs": ["The Budget Enforcement Act of 1990 (BEA; Title XIII of P.L. 101-508 ), and its extensions, established statutory limits on discretionary spending between FY1991 and FY2002. The BEA also provided for an adjustment to these discretionary spending limits to accommodate spending that both the President and Congress designated as an emergency requirement. During this period, this adjustment was frequently used to provide funding for disaster response and recovery. However, it was also used for a broad variety of other purposes, some instances of which sparked debate over whether the designated funding was truly for unanticipated \"emergency\" needs, stoking controversy in some quarters over the potential for abuse. "], "subsections": []}, {"section_title": "Disaster Relief", "paragraphs": ["While the BCA included a similar mechanism, it also included a more limited, but specifically defined, adjustment for disaster relief, distinct from emergency funding. The BCA defined \"disaster relief\" as federal government assistance provided pursuant to a major disaster declared under the Stafford Act. Spending limits could be adjusted upward to accommodate funding provided in future spending bills. The allowable adjustment for disaster relief, however, is limited to an amount based on a modified 10-year rolling average of designated major disaster costs. ", "Division O of the Bipartisan Budget Act of 2018 ( P.L. 115-123 ) modified the calculation to incorporate disaster relief appropriations designated as an emergency requirement, which had previously been excluded from the calculation. ", "The allowable adjustment for disaster relief does not act as a limit on federal appropriations for disaster assistance\u00e2\u0080\u0094only on the amount of additional budget authority that can be provided pursuant to that provision. When Congress provides more funding for disaster relief than can be covered by the disaster relief adjustment in a given fiscal year, such as was the case for Hurricane Sandy and the 2017 disasters, the emergency designation may be used for such funding. ", "Congress is not unanimous in its support of the disaster relief designation. On March 28, 2019, Senator Mitt Romney introduced an amendment to the Senate majority leadership's substitute for H.R. 268 . The Romney amendment would have eliminated the adjustment for disaster relief in FY2021. In a press statement from his office, Senator Romney said \"It's time for Congress to start planning ahead for natural disasters by including funding for them in the annual budget process, instead of busting our spending limits and adding to our skyrocketing national debt.\" "], "subsections": []}, {"section_title": "Adjustments and P.L. 116-20", "paragraphs": ["Congress may also choose to provide disaster recovery and relief funding with an emergency designation regardless of the amount of funding provided with a disaster relief designation. For example, all of the funding provided in P.L. 116-20 carried an emergency designation rather than being designated as disaster relief pursuant to the BCA, even though, according to OMB, almost $3 billion of the disaster relief allowable adjustment remained available for use in FY2019 when the bill was enacted."], "subsections": []}]}, {"section_title": "Offsetting Disaster Relief and Recovery", "paragraphs": ["Periodically, Congress has weighed whether some or all of the costs associated with disaster relief and recovery should be offset by cuts to other spending. Historically, this debate has focused on whether disaster relief and recovery funding should be accounted for in the same fashion as other \"on-budget\" discretionary budget authority in general discussions of the budget. Since the passage of the BCA in 2011, the debate has a new aspect, as discretionary spending is constrained by statutory limits. If disaster relief and recovery spending is treated like regular appropriations with respect to the BCA spending caps\u00e2\u0080\u0094not designated as either an emergency or disaster relief, and thus not triggering an upward adjustment of the caps\u00e2\u0080\u0094such spending would potentially require an offset to prevent the cap from being breached and triggering sequestration.", "In most cases between 1990 and 2017, FEMA's DRF generally has been given a priority status for prompt funding in times of need, without offsetting spending reductions. Disaster assistance from other agencies has at times been funded through shifting resources from one program to another through appropriations language, but such activity is relatively rare. The largest single occurrence of this was in the wake of Hurricane Katrina. Nearly four months after $60 billion had been provided to the DRF in the ten days after the storm, P.L. 104-148 rescinded $23.4 billion from the account while simultaneously appropriating a similar amount to other agencies to meet disaster response and recovery needs. ", "On April 4, 2019, during morning business, Senate Budget Committee Chairman Michael Enzi raised the issue of disaster offsets in comments on the Senate floor concerning Senator Romney's amendment to eliminate the disaster relief adjustment:", "I want to applaud my friend from Utah, Senator Romney, for offering an amendment that recognizes the challenge of budgeting for disasters and emergencies. Disaster relief funding must be built into our base budgets, which is why I have incorporated these costs in recent budget resolutions, including the one that passed through our Budget Committee last week.", "While there is no silver bullet to this problem, I am willing and eager to work with any of my colleagues who believe there is a better way to anticipate these costs.", "The Senate Budget Committee recently held a hearing that partially touched on ideas to better budget for disaster funding. One option is to offset emergency spending increases with spending reductions in other areas. Another option could require a dedicated fund for emergencies, similar to how some States budget for these events. I have also considered whether a new actuarially sound insurance program could appropriately assess the risk for such disasters while maintaining affordable premiums. Budgeting for emergencies and disasters is not a precise science, but I believe Congress can do a lot better than just calling an emergency and adding to the debt."], "subsections": [{"section_title": "Recent Consideration of Offsets", "paragraphs": [], "subsections": [{"section_title": "Hurricane Sandy Relief", "paragraphs": ["Beginning in November 2012 there were calls for supplemental appropriations for Hurricane Sandy relief efforts, as well as calls for offsets. On December 7, 2012, the Obama Administration requested $60.4 billion in supplemental appropriations in connection with Hurricane Sandy, including $11.5 billion for the DRF. The preamble to the request specifically opposed offsetting the cost of the legislation, and although amendments to offset the cost of the legislation were considered in the House and Senate, they were not agreed to.", "During Senate debate on a supplemental appropriations bill after Hurricane Sandy, a point of order was raised against the emergency designation for $3.4 billion in Army Corps of Engineers Construction appropriation for disaster mitigation projects. A motion to waive the point of order failed to achieve the necessary majority of three-fifths of all Senators, 57-34, so the point of order was sustained, eliminating the emergency designation for that particular appropriation. This meant that the $3.4 billion for the mitigation projects would count against the discretionary spending limits imposed by the BCA, limiting the amount available for other discretionary appropriations. At the time, some observers critical of the move considered this as setting a precedent by effectively requiring an offset for disaster assistance. Others considered this as including part of the cost of disaster preparedness (as opposed to disaster relief) within the regular discretionary budget."], "subsections": []}, {"section_title": "2017 Disasters", "paragraphs": ["All three of the Trump Administration's disaster supplemental appropriations requests have sought an emergency designation for the funding that would be provided in the legislation. However, unlike the Trump Administration's first two requests for supplemental disaster relief funding, the November 2017 request sought to offset some of the additional spending as well, suggesting $14.8 billion in rescissions and spending cuts and $44.4 billion in potential future savings by extending the nondefense discretionary spending limits for two additional years. Many of the rescissions and spending cuts had previously been proposed in the Administration's FY2018 budget request. No offsets were included in any of the three supplemental appropriations measures enacted after the 2017 disasters."], "subsections": []}]}]}, {"section_title": "The \"Appropriate\" Scope of Supplemental Appropriations", "paragraphs": ["One of the most frequent criticisms of supplemental appropriations measures, especially those containing disaster assistance, is that the measures include \"unrelated\" spending. Any attempt to make a nonpartisan determination regarding what appropriations may be considered \"unrelated\" in a measure that is typically responsive to a range of unmet needs presents significant methodological challenges. ", "Long-standing colloquial naming practices have associated supplemental appropriations legislation with a particular event or problem that has drawn congressional and public attention, but the content of these measures typically goes beyond the message-friendly colloquial name. ", "The scope, purpose, and size of a supplemental appropriations measure can be driven by one or more events, the unfunded needs such events generate, and the associated political support for considering and enacting the legislation. In the case of supplemental appropriations measures for disaster relief and recovery, these drivers often include a series of events over time. For example, in the case of P.L. 116-20 , it also incorporated responses to events occurring as the legislation was being developed and considered."], "subsections": [{"section_title": "Controlling Language and Supplemental Appropriations", "paragraphs": ["At times, \"controlling language\" has been included in supplemental appropriations measures to clarify the intent of specific appropriations, and counter the unrelated spending charge. This language is often included with appropriations for accounts that also have nondisaster-related purposes, in order to link the provided resources to specific activities. ", "P.L. 115-123 , the largest and broadest of the three supplemental appropriations acts signed into law after the 2017 disasters, included a range of forms of controlling language, the most common limiting the availability of funds to \"necessary expenses related to the consequences of Hurricanes Harvey, Irma, and Maria.\" Other controlling language of varying specificity targeted subsets of the disaster-related needs across the United States, including the following:", "Natural disasters Natural disasters occurring in 2017 Damage reduction in flood and storm damage in states with more than one flood-related major disaster in calendar years 2014-2017 Hurricanes Harvey, Irma, Maria, and 2017 wildfires Hurricanes occurring in 2017 Hurricane Harvey Hurricanes Irma and Maria Major disasters Oversight of funds provided in the measure"], "subsections": [{"section_title": "Appropriations Without Controlling Language", "paragraphs": ["Such language generally has not been applied to accounts that have a primary mission of providing disaster assistance, such as the SBA Disaster Loan Program Account and FEMA's Disaster Relief Fund. For example, in P.L. 116-20 , the $1.65 billion supplemental appropriation for the Department of Transportation's Emergency Relief Program under the Federal Highway Administration has no specific controlling language. ", "The absence of such specific controlling language allows agencies greater flexibility to ensure that resources are directed to meet evolving needs on short notice. Appropriations for FEMA's DRF are regularly obligated to relief and recovery efforts from multiple disasters across many fiscal years, regardless of the legislative vehicle that provided them. For example, before passage of P.L. 113-2 \u00e2\u0080\u0094the \"Sandy Supplemental\"\u00e2\u0080\u0094FEMA had already obligated almost $3.4 billion from the DRF for declarations linked to Hurricane Sandy from prior appropriations. Had language been included in those prior appropriations limiting the use of the budget authority provided following past disasters, FEMA's ability to respond would have been more limited. By the end of 2017, almost twice the amount provided for the DRF in P.L. 113-2 had been obligated pursuant to disaster declarations from the storm\u00e2\u0080\u0094aid that might not have been available, had appropriations for the DRF been statutorily limited in their application. "], "subsections": []}]}, {"section_title": "Controlling Language in P.L. 116-20", "paragraphs": ["Almost all of the appropriations provided in P.L. 116-20 include controlling language. The most common references are to Hurricanes Michael and Florence, although many other incident types are cited as well. ", "The controlling language for some of the appropriations in this measure evolved significantly over time since consideration of supplemental appropriations for disaster relief and recovery were first initiated late in the 115 th Congress. For example, as additional disaster needs arose, the appropriation provided for the Office of the Secretary for the U.S. Department of Agriculture that was proposed in Division C of H.R. 695 grew from $1.1 billion to more than $3 billion in P.L. 116-20 . The controlling language changed to broaden the potential application of the assistance as well (additions are shown in bold ): \"for necessary expenses related to losses of crops (including milk, on-farm stored commodities, crops prevented from planting in 2019, and harvested adulterated wine grapes ), trees, bushes, and vines, as a consequence of Hurricanes Michael and Florence, other hurricanes, floods, tornadoes, typhoons, volcanic activity, snowstorms, and wildfires occurring in calendar years 2018 and 2019 under such terms and conditions as determined by the Secretary.\""], "subsections": []}]}, {"section_title": "Timelines for Obligation", "paragraphs": ["Once Congress appropriates funding for disaster relief and recovery costs, the timeline for when that funding is used varies significantly from program to program. Comparison of these timelines in an effort to assess program efficiency requires an understanding of differences in mission and program structure to ensure assessments are made in context.", "For example, within relief provided through the DRF, some costs are borne up front, such as emergency protective measures and much of the individual assistance program, and funding is obligated and expended relatively quickly. Other costs incurred by state and local governments are reimbursed by the federal government after the work is complete\u00e2\u0080\u0094projects to restore major infrastructure often follow this model and can take longer to obligate and expend the appropriated funding (e.g., FEMA's Public Assistance Grant Program). Other redevelopment funds may take time to be obligated as eligible state and local governments must develop a plan and have it approved\u00e2\u0080\u0094this process cannot begin until the funds are provided to the program and official announcements of the grant competition process are made (e.g., HUD's Community Development Block Grant Program).", "Because of these varying and extended timelines, disaster recovery funding is often provided without an expiration date. However, appropriations provided for operational costs, damage to facilities, and specifically targeted grant programs with a limited purpose may be provided with a limited term of availability."], "subsections": []}, {"section_title": "Oversight of Spending", "paragraphs": ["Concerns about waste, fraud, and abuse exist for a variety of federal programs, but supplemental disaster relief often receives special attention due to the fact that it is unusual, highly visible, provided in chaotic situations, and meant to address pressing needs. The 2019 disaster supplemental appropriations include more than $27 million in appropriations specifically for audits and oversight efforts, including $10 million for the Government Accountability Office (GAO), as well as transfers and set-asides of more than $21 million. ", "The federal government has encountered challenges in effectively tracking some federal disaster relief spending. In September 2016, GAO released a report on disaster assistance provided by the federal government over the 10-year period from FY2005 through FY2014. GAO analysts attempted to survey disaster relief provided by 17 federal departments and agencies, and although they were able to identify over $277 billion in obligations for disaster relief provided over that period, obligations were not separately tracked for all disaster-applicable programs and activities. GAO noted in the report that", "At least 5 federal departments and agencies reported that some disaster assistance programs or activities are not separately tracked because spending related to these activities is generally subsumed by a department's general operating budget or mission-related costs. For example, U.S. Coast Guard officials stated that most of the agency's disaster-related costs are associated with maintaining a constant state of readiness to immediately respond to disaster and emergency incidents, which is funded from the U.S. Coast Guard search and rescue appropriation and is not separately tracked. Similarly, the Army has deployed personnel in anticipation of a possible disaster event, even when FEMA has not requested the support. If a disaster does not occur or the activity does not result in a FEMA mission assignment, the Army will not be reimbursed for prepositioning personnel or assets in anticipation of an event and therefore may categorize the expenditure as training in the event of a disaster. Another 4 federal departments and agencies reported that obligations and expenditures specific to disaster assistance activities are not tracked or cannot be reliably estimated because there is no requirement for state or other recipients of the financial support to indicate whether or how much of the funding or assistance is used for disasters.", "Placing consistent reporting requirements on agencies providing assistance through disaster-applicable programs would be one way to obtain a clearer picture of precisely how much the federal government is spending on disaster relief and recovery. Such reporting requirements could include pass-through requirements to state and local governments that receive the funds to provide contract and subcontract data to the providing federal agency. This could help inform budgeting decisions, and determine if a particular program is providing fewer resources than anticipated to its nondisaster missions. On its own, however, such information cannot provide an answer to questions of whether such funds are subject to waste, fraud, or abuse. Answering such questions requires detailed analysis of the individual programs and activities funded, how they complement or duplicate other assistance programs, and whether they are providing the assistance Congress intended.", "On February 2, 2018, OMB issued a memorandum to all federal chief financial officers and budget officers about new Administration guidelines for tracking emergency funding and disaster relief funding. Under these guidelines, agencies will be required to track these resources, starting with the first of the three 2017 disaster supplemental appropriations, by applying a special accounting code to those resources. It remains to be seen if the FY2019 supplemental appropriations will be monitored in a similar fashion."], "subsections": [{"section_title": "Tracking Hurricane Sandy Funding", "paragraphs": ["Prior to 2017, the last time Congress attempted to track the use of a large amount of supplemental appropriations was in the wake of Hurricane Sandy.", "At that time, a provision of P.L. 113-2 specifically authorized the Recovery and Transparency Board (RATB) to \"develop and use information technology resources and oversight mechanisms to detect and remediate waste, fraud, and abuse in the obligation and expenditure of funds\" provided in the act. Pursuant to this authority, the RATB developed a website containing quarterly financial reports, a map of where contracts had been awarded, and other spending summaries under the Disaster Relief Appropriations Act, 2013. The RATB had its mission extended and funded by Congress for FY2015, but its authority lapsed at the end of that year and it shut down. ", "The Department of Housing and Urban Development (HUD) established a Program Management Office (PMO) in February 2013 to monitor funding flows for Hurricane Sandy Recovery. The office coordinated its efforts with the RATB and provided public information on the status of funding as reported by the agencies. As of November 2014, the responsibilities of the HUD Sandy PMO were transferred to FEMA's Office of Federal Disaster Coordination (OFDC). ", "One potential issue is that it is not always straightforward to compare the information provided by different agencies. The conclusions that might be drawn from data gathered by the RATB and the PMO were potentially limited by the fact that the agencies reporting their data did not use a consistent methodology. For example, while some agencies reported specifically on the resources provided by P.L. 113-2 , FEMA provided information on all obligations for Hurricane Sandy response and recovery\u00e2\u0080\u0094those funded by previous appropriations as well as those funded by P.L. 113-2 . This difference meant the FEMA-reported data were not comparable with those of other agencies or departments."], "subsections": []}]}]}]}}
{"id": "R46312", "title": "Forest Carbon Primer", "released_date": "2020-05-05T00:00:00", "summary": ["The global carbon cycle is the process by which the element carbon moves between the air, land, ocean, and Earth's crust. The movement of increasing amounts of carbon into the atmosphere, particularly as greenhouse gases, is the dominant contributor to the observed warming trend in global temperatures. Forests are a significant part of the global carbon cycle, because they contain the largest store of terrestrial (land-based) carbon and continuously transfer carbon between the terrestrial biosphere and the atmosphere. Consequently, forest carbon optimization and management strategies are often included in climate mitigation policy proposals.", "The forest carbon cycle starts with the sequestration and accumulation of atmospheric carbon due to tree growth. The accumulated carbon is stored in five different pools in the forest ecosystem: aboveground biomass (e.g., leaves, trunks, limbs), belowground biomass (e.g., roots), deadwood, litter (e.g., fallen leaves, stems), and soils. As trees or parts of trees die, the carbon cycles through those different pools, from the living biomass pools to the deadwood, litter, and soil pools. The length of time carbon stays in each pool varies considerably, ranging from months (litter) to millennia (soil). The cycle continues as carbon flows out of the forest ecosystem and returns to the atmosphere through several processes, including respiration, combustion, and decomposition. Carbon also leaves the forest ecosystem through timber harvests, by which it enters the product pool . This carbon is stored in harvested wood products (HWPs) while the products are in use but eventually will return to the atmosphere upon the wood products' disposal and eventual decomposition, which could take several decades or more. In total, there are seven pools of forest carbon: five in the forest ecosystem and two in the product pool (HWPs in use and HWPs in disposal sites).", "Carbon is always moving through the pools of forested ecosystems (known as carbon flux ). The size of the various pools and the rate at which carbon moves through them vary considerably over time. The amount of carbon sequestered in a forest relative to the amount of carbon that forest releases into the atmosphere is constantly changing with tree growth, death, and decomposition. If the total amount of carbon released into the atmosphere by a given forest over a given period is greater than the amount of carbon sequestered in that forest, the forest is a net source of carbon emissions. If the forest sequesters more carbon than it releases into the atmosphere, the forest is a net sink of carbon. These forest carbon dynamics are driven in large part by different anthropogenic and ecological disturbances . Anthropogenic disturbances are planned activities, such as timber harvests, whereas ecological disturbances are unplanned, such as weather events (e.g., hurricanes, droughts), insect and disease infestations, and wildfires. Generally, disturbances result in tree mortality, causing the transfer of carbon from the living pools to the deadwood, litter, soil, and product pools, and/or eventually to the atmosphere. If a disturbed site regenerates as forest, the carbon releases caused by the disturbance generally are offset over time. If, however, the site changes to a different land use (e.g., agriculture), the carbon releases may not be offset.", "The U.S. Environmental Protection Agency (EPA) measures forest carbon annually using data collected by the Forest Inventory and Analysis Program in the U.S. Forest Service. According to EPA, U.S. forest carbon stocks contained 58.7 billion metric tons (BMT) of carbon in 2019 across the seven pools, the majority of which was stored in soil (54%). The aboveground biomass pool stored the next-largest portion of forest carbon stocks (26%). The pools' relative size varies considerably across U.S. forests, however. EPA estimates that, for the forest carbon flux, U.S. forests were a net sink of carbon, having sequestered 221 million metric tons (MMT) of carbon in 2018\u00e2\u0080\u0094an offset of approximately 12% of the gross annual greenhouse gas emissions from the United States for the year. The net sink reflects carbon accumulation on existing forestland and carbon accumulation associated with land converted to forestland within the past 20 years. Within the carbon pools, most of the annual flux is associated with aboveground biomass (58%). In general, the annual net flux of carbon into U.S. forests is small relative to the amount of carbon they store (e.g., 221 MMT of carbon is 0.3% of the 58.7 BMT of total carbon stored in U.S. forests in 2019).", "There are three primary strategic approaches for optimizing forest carbon sequestration and storage: (1) maintain and increase the area of forestland, (2) maintain and increase forest carbon stocks, and (3) increase the use of wood products as an alternative to more carbon-intensive materials or as a fuel. In many cases, optimizing carbon sequestration and storage may compete with other forest management objectives and require tradeoffs. As such, the applicability of each approach will vary, depending on existing site characteristics and other objectives. In addition, each of these approaches comes with varying levels of uncertainty related to effectiveness and potential for co-benefits. All of these considerations are in the context of the uncertainty related to the future effects of changing climatic conditions on forests broadly."], "reports": {"section_title": "", "paragraphs": ["T he global carbon cycle is the biogeochemical process by which the element carbon (C) moves in a balanced exchange between the atmosphere (i.e., air), terrestrial biosphere (i.e., land), ocean, and Earth's crust (i.e., rocks, fossil fuel deposits). Within those pools , carbon exists in different inorganic (i.e., nonliving, such as carbon dioxide) and organic (i.e., living, such as plant tissue) forms. When carbon moves out of one pool, it is recycled into one or more of the other pools; this movement is known as a flux . The flux of carbon into the atmosphere, particularly as the greenhouse gas (GHG) carbon dioxide (CO 2 ), is the dominant contributor to the observed warming trend in global temperatures. Consequently, climate mitigation strategies have generally focused on both reducing emissions of GHGs into the atmosphere and removing more carbon out of the atmosphere. ", "Forests are a significant part of the global carbon cycle. The forest carbon cycle consists primarily of the movement of carbon between the atmosphere and the terrestrial biosphere. Trees and other plants convert atmospheric carbon (in the form of CO 2 ) into terrestrial organic carbon, which is stored as biomass (e.g., vegetation). This process of carbon uptake and storage is referred to as sequestration . Trees also release (or emit) carbon back into the atmosphere. Over time, however, forests accumulate significant stores of carbon, both above and below ground. Thus, forest ecosystems uptake, store, cycle, and release carbon. ", "Congressional debates over climate policy have often included ideas for optimizing carbon sequestration in forests as a potential mitigation strategy for global warming. To facilitate those debates, this report addresses basic questions concerning carbon sequestration in forests. The first section describes the carbon cycle in forests, with an overview of where carbon is stored and how carbon moves through the forest ecosystem. The second section provides a snapshot of data on carbon in U.S. forests and an overview of the methodologies used for estimating and reporting those measurements. The third section discusses some of the broad issues and challenges associated with managing forests for carbon optimization. ", " Figure 1 introduces some of the terms and units used for measuring and reporting carbon. In addition, the Appendix contains a more comprehensive glossary of relevant terms used throughout the report. An accompanying report, CRS Report R46313, U.S. Forest Carbon Data: In Brief , provides data on carbon in U.S. forests and will be maintained with annual updates. ", "Figure 1. Carbon Terms and UnitsSource: CRS, adapted from Maria Janowiak et al., Considering Forest and Grassland Carbon in Land Management, U.S. Department of Agriculture (USDA) Forest Service, GTR-WO-95, June 2017, p. 4.Notes: Because much of the data for this report are based on international standards, this report uses the metric system for consistency purposes. Forest carbon stocks are reported as measures of carbon, whereas greenhouse gas emissions and removals (e.g., sequestration) are reported as measures of carbon dioxide or carbon dioxide equivalents (to facilitate comparisons with other greenhouse gases). As a chemical element, the mass of carbon is based on its molecular weight. Carbon dioxide (CO2) is a compound consisting of one part carbon and two parts of the element oxygen (O). The conversion factor between C and CO2 is the ratio of their molecular weights. The molecular weight of carbon is 12 atomic mass units (amu), and the molecular weight of CO2 is 44 amu, which equals a ratio of 3.67. The same method is used to convert measurements of other greenhouse gases to carbon dioxide equivalents (CO2 eq.)."], "subsections": [{"section_title": "The Forest Carbon Cycle", "paragraphs": ["Forests are a significant part of the global carbon cycle, in that they contain the largest store of terrestrial carbon and are continuously cycling carbon between the terrestrial biosphere and the atmosphere. Through photosynthesis, trees use sunlight to sequester carbon from the atmosphere and accumulate organic carbon-based molecules in their plant tissue (i.e., leaves, flowers, stems, and roots) above and below ground. Trees also respire: they use oxygen to break down the molecules they created through photosynthesis, and in the process they emit CO 2 to the atmosphere. The balance between photosynthesis and respiration varies daily and seasonally. ", "Over time, individual trees and forests accrue significant stores of carbon. When trees die, the accumulated carbon is released, some into the soil (where it may be stored for millennia) and the rest into the atmosphere. This release can occur quickly, through combustion in a fire, or slowly, as fallen trees, leaves, and other detritus decompose. Some of the woody biomass from a tree may continue to store carbon for extended periods of time after death, due to long decomposition times or because it was removed (e.g., harvested) from the forest ecosystem and used, for example, in construction or in manufactured products. The carbon in harvested wood products eventually will be released, but the time scale varies considerably. ", "The amount of carbon sequestered in a forest is constantly changing with growth, death, and decomposition of vegetation. If the total amount of carbon released into the atmosphere is greater than the amount of carbon being sequestered in the forest, the forest is a net source of CO 2 emissions. If the forest sequesters more carbon than it releases into the atmosphere, the forest is a net sink of CO 2 . Whether a given forest is a net source or sink, however, depends on the time and spatial scale (e.g., geographic boundaries) considered. Globally, forests are estimated to be a net carbon sink, with regional variations.", "The following sections describe in more detail where carbon is stored and how it moves in a forest ecosystem, as well as how ecological events and anthropogenic (i.e., human-caused) activities and changing land uses can influence the balance and cycle of carbon (e.g., the forest carbon budget). "], "subsections": [{"section_title": "Forest Carbon Pools: Where Carbon Is Stored in a Forest", "paragraphs": ["In a forest ecosystem, carbon is stored both above and below ground and exists in living and nonliving forms. All parts of a tree\u00e2\u0080\u0094the leaves, limbs, stems, and roots\u00e2\u0080\u0094contain carbon. The proportion of carbon in each part varies, depending on the species and the individual specimen's age and growth pattern. ", "The U.S. Environmental Protection Agency (EPA)\u00e2\u0080\u0094consistent with international guidelines for measuring and accounting for carbon\u00e2\u0080\u0094reports forest carbon in seven different pools (see Figure 2 ). Five of these pools are part of the ecosystem pool : ", "Aboveground biomass includes all living biomass above the soil, including stems, stumps, branches, bark, seeds, and foliage. Aboveground biomass also includes living understory plants. Belowground biomass includes all living root biomass of trees or understory plants, for roots thicker than two millimeters in diameter. Deadwood includes all dead woody biomass either standing, down (i.e., lying on the ground), or in the soil. Forest floor litter includes leaves, needles, twigs, and all other dead biomass with a diameter less than 7.5 centimeters, lying on the ground. This includes small-sized dead biomass that is decomposed but has not yet become part of the soil. Soil carbon includes all carbon-based material in soil to a depth of one meter, including small roots. EPA divides this category further into mineral (based on rocks) and organic (based on decomposed organic matter) soils.", "In addition to the ecosystem carbon pools, EPA includes two additional pools in measuring forest carbon, consisting of products made of harvested wood at different stages of use. The carbon in these pools was once forest ecosystem carbon, which was then transported out of the forest ecosystem. These pools are sometimes called the product pool or referred to as harvested wood products (HWP s ) : ", "Harvested wood products in use, or products made from harvested wood (e.g., paper, beams, boards, poles, furniture, etc.) that are currently being used. Wood also may be harvested for energy purposes (e.g., wood chips, wood pellets, firewood, etc.). Harvested wood products in solid waste disposal sites, or harvested wood products that are in a landfill or other waste disposal site, where they may eventually break down and release their stored carbon or remain intact for significant periods of time.", "Carbon is stored within the different forest ecosystem and product pools at different time scales. A tree's life span tree can range from decades to thousands of years. Carbon in leaf litter may be released into the atmosphere or decay into soil within months or years, whereas carbon in bark or wood may remain for decades to centuries after the tree dies. Soil carbon may persist in the pool for years to millennia. Thus, the carbon turnover , or length of time carbon stays in each pool or the forest ecosystem broadly, varies for several reasons, such as the climate, hydrology, nutrient availability, and forest age and type, among others. The amount of carbon stored (e.g., carbon stock ) in the different pools also varies.", "For various research or reporting purposes, the forest carbon pools are sometimes combined in different ways. In particular, the forest ecosystem pools are combined into categories such as aboveground versus belowground, or living and nonliving, or dead pools. This is especially useful when examining how various activities influence the flow of carbon between the ecosystem pools. In addition, some of the pools may be further categorized into smaller pools. For example, the aboveground biomass pool may be further classified into the amount of carbon stored in trees versus understory plants, or the amount of carbon stored in tree components (e.g., leaves, branches, and trunks). As another example, the deadwood pool may be further classified into standing dead and downed dead, in part to reflect the variation and relative importance of each in different forest types. See Table 1 for a crosswalk of terminology and classifications used in this report. However, these categories are not always comprehensive or mutually exclusive."], "subsections": [{"section_title": "Global Forest Area and Carbon Distribution", "paragraphs": ["Because of variations in carbon turnover, climate, hydrology, and nutrient availability (among other factors), carbon sequestration and release vary substantially by forest. The proportion of carbon stored in the various pools varies by forest type (e.g., tree species) and age class. Nonetheless, some broad generalizations are possible because of the relative similarity of forests in specific biomes \u00e2\u0080\u0094tropical, temperate, and boreal forests (see Figure 3 ). ", "Tropical forests represent around half the global forest area and store more than half the global forest carbon. The carbon in tropical forests is relatively evenly distributed between living and dead biomass, though more is contained in living biomass. Boreal forests represent around 29% of global forest area and store about one-third of the global forest carbon. Most of the carbon in boreal forests is in the belowground dead pools, particularly soil. Globally, temperate forests store the least amount of forest carbon and represent the smallest area, although most forests in the United States fall within the temperate zone. (Some of the forests in Alaska are in the boreal zone.) Carbon in temperate forests is also relatively evenly stored between the living and dead pools, but more is contained in the dead pools, also mostly in the soil. Because of where the carbon is stored in the different types of forest biomes, the drivers affecting the carbon balance in tropical, temperate, and boreal forests vary considerably. "], "subsections": []}]}, {"section_title": "Forest Carbon Dynamics: How Carbon Moves Through a Forest", "paragraphs": ["The essence of the forest carbon cycle is the sequestration and accumulation of atmospheric carbon with vegetative growth and the release of carbon back into the atmosphere when the vegetation dies and decomposes or during a wildfire. This section discusses how carbon flows between the atmosphere and the different forest carbon pools (see Figure 4 ) and some of the factors that affect the cycle. ", "Carbon enters the forest ecosystem through photosynthesis and accumulates in living biomass both above and below ground. Carbon leaves the forest ecosystem and returns to the atmosphere through several processes: respiration, combustion, and decomposition. Respiration occurs from living biomass both above and below ground (where it is known as soil respiration ). Combustion (e.g., fire) immediately releases carbon from living and dead pools. Decomposition occurs after the tree dies and slowly releases carbon to both the atmosphere and the soil. Decomposition rates are influenced by several factors (e.g., precipitation, temperature), and trees may remain standing for several years after death before falling to the ground and continuing to decay. ", "In addition, human activities facilitate the flux of carbon out of the forest ecosystem. For example, timber harvests remove carbon from the forest ecosystem (and move it into the product pool). This carbon remains stored in the harvested product while the product is in use, but it will eventually return to the atmosphere in most cases. The delay between harvest and release could be relatively instantaneous if the wood is used for energy, for example, or the delay could be more than a century if the wood is used for construction and then disposed in a landfill, where it could take several decades to even partially decompose. ", "The difference between carbon sequestration and release (e.g., emissions) determines if a forest is a net source of carbon into the atmosphere or a net sink absorbing carbon out of the atmosphere. Forest ecosystems are dynamic, however, and the balance of carbon pools and carbon flow varies over different time and spatial scales. These forest carbon dynamics are driven in large part by disturbances to the forest ecosystem.", "Anthropogenic disturbances are planned activities, such as timber harvests, prescribed wildland fires, or planned land-use conversion. E cological disturbances are unplanned and include weather events (e.g., hurricanes, ice storms, droughts), insect and disease infestations, and naturally occurring wildfires. Ecological disturbances are a natural part of forest ecosystems, though anthropogenic factors may influence their severity and duration. ", "The type, duration, and severity of the disturbance contribute to the extent of its impact on carbon cycling. Most disturbances result in some levels of tree mortality and associated carbon fluxes. Disturbances may have additional impacts if the land cover changes. Post-disturbance, forests will often regenerate with trees (e.g., reforestation ) or other vegetation. In this case, the disturbance influences carbon fluxes and stocks in the short to medium term. If the land changes from forest to grassland, or if the area is intentionally developed for agricultural production or human use (e.g., houses), then the effects on the forest carbon cycle are more permanent (e.g., deforestation ).", "The following sections explore the forest carbon dynamics related to both anthropogenic and ecological disturbances and land-use changes in more detail."], "subsections": [{"section_title": "Disturbances", "paragraphs": ["Generally, disturbances result in tree mortality and thus transfer carbon from the living pools to the dead pools and eventually to the atmosphere. The impacts to the forest carbon budget, however, occur over different temporal and spatial scales.", "For example, the onset of a disturbance's effects may be immediate (e.g., through combustion) or delayed (e.g., through decomposition). Regardless, since there is less living vegetation, the rate of photosynthesis decreases and reduces the amount of carbon sequestered on-site. At the same time, more carbon is released into the atmosphere as the dead vegetation decays. Because of this, many forests may be net sources of carbon emissions in the initial period after a disturbance. Over time, however, the carbon impacts from most disturbances will begin to reverse as the forest regenerates and gradually replaces the carbon stocks (e.g., the amount of carbon in a pool). The lagging recovery and associated increase in carbon uptake and storage are sometimes referred to as legacy effects. Forest carbon stocks in the United States, for example, have been increasing related in part to legacy effects from past disturbances (e.g., harvests). In other words, \"a sizeable portion of today's sequestration is compensating for losses from yesterday's disturbances.\" ", "Forest carbon dynamics are also influenced by disturbances over different spatial scales. Disturbances generally occur at the stand level (i.e., a group of trees) within a forest, but they rarely occur across an entire forest at the same time. For example, a wildfire may result in significant mortality in one stand, moderate mortality in another stand, and no mortality in a third stand, all within the same forest. That same wildfire may not burn across other areas within the same forest at all. This means that at any given time, different stands within a forest may be in various stages of post-disturbance recovery. ", "Because disturbance effects vary both temporally and spatially, they can be in relative balance. This means that forest carbon stocks are generally stable over large areas and over long time scales, assuming the sites are reforested (see Figure 5 ). A shift in the overall pattern of disturbance events, however, could have long-term impacts to forest carbon dynamics. Disturbances are generally increasing in frequency and severity throughout the United States. (with regional variations). For example, a pattern of increasing frequency and severity of disturbances could result in lower sequestration rates and less forest carbon stocks over time. This is in part because disturbance events can interact and compound with each other. For example, drought can make trees more susceptible to insect or disease infestations or to sustaining greater damage during a wildfire. After a wildfire, drought may prevent or delay regeneration. These interactions would then have associated impacts to the forest carbon cycle. ", "In the United States, disturbances account for the loss of about 1% of the carbon stock from the aboveground biomass pool annually. However, timber harvests account for the majority of that change, meaning that some of this \"loss\" enters the product pool. Wildfire, wind or ice storms, bark beetles, drought, and other disturbances account for the remainder of the loss. However, little research exists on the carbon-related impacts of insect and disease infestations generally or on the impacts of specific insects other than bark beetles. In addition, the effects of disturbances on other carbon pools\u00e2\u0080\u0094soil carbon in particular\u00e2\u0080\u0094are not well understood. Thus, the current understanding may not accurately estimate the degree of these impacts.", "The following sections discuss the specific carbon-related effects and issues associated with several types of disturbances, listed in order of decreasing impacts to the forest carbon budget. "], "subsections": [{"section_title": "Timber Harvests", "paragraphs": ["Timber harvests are a planned management activity, and as such they represent an anthropogenic disturbance. Timber harvests result in the direct transfer of carbon from the aboveground, living biomass pool to other pools. Although some carbon remains on-site as deadwood or litter, a portion of the carbon is removed from the forest ecosystem entirely and becomes part of the product pool. Carbon in the product pool eventually will be released, but the lifecycle varies considerably based on end-use and disposal methods. The carbon that remains on-site as deadwood or litter will decompose and eventually be released into the atmosphere (and some may be absorbed into the soil). In addition, timber harvests have the potential to degrade or damage soils, which also could release carbon into the atmosphere. ", "End-uses of harvested wood products include lumber, paper, panels, and wood used for energy purposes. Energy is derived from wood through combustion, so the carbon in that product pool is released almost immediately. In contrast, lumber used for housing construction may remain in use for nearly a century before being discarded. In some areas, wood products are incinerated upon disposal, releasing the stored carbon into the atmosphere. In the United States, however, most wood products are discarded in solid waste disposal sites (e.g., landfills). In those environments, paper products may take several years and wood products may take several decades to decompose and release the stored carbon into the atmosphere. In some cases, products may decompose only partially, so some carbon may persist in discarded wood products indefinitely. The flux of carbon into the product pool does not consider any emissions related to the harvesting process or the transporting of the wood product. "], "subsections": []}, {"section_title": "Wildfires", "paragraphs": ["Although most wildfires are unplanned ecological disturbances, some may occur as a planned forest management activity (e.g., prescribed fire ). Wildfires result in the immediate release of some carbon dioxide\u00e2\u0080\u0094and other GHGs\u00e2\u0080\u0094through combustion. There is also a transfer of carbon from living to dead pools, where carbon continues to be released over time (or some may be absorbed into the soil). The severity of the fire influences the extent of tree mortality and has implications for the timing and type of post-fire recovery. For example, forest regeneration may take longer if the soil damage is severe. More wildfires occur in the eastern United States (including the central states), but the wildfires in the West are larger and burn more acreage. \u00c2\u00a0Although wildfire activity varies widely in scale and severity, wildfires have been increasing in frequency and size, particularly in the western United States. "], "subsections": []}, {"section_title": "Other Disturbances: Insect and Disease Infestations, Wind, Drought", "paragraphs": ["Other ecological disturbances, such as insect and disease infestations, wind events, and droughts, have similar effects on forest carbon dynamics: transferring carbon from the live pools to the dead pools and releasing the carbon into the atmosphere over time. ", "The carbon effects from insect and diseases vary considerably, depending on the type of infestation. Some infestations result in widespread tree mortality, similar to other disturbance events. In cases when the infestation is species- or site-specific, the forest may regenerate with a different species mix, altering the forest composition and carbon storage potential. Other infestations, however, may primarily result in defoliation (e.g., loss of leaves). Defoliation increases the amount of forest litter and reduces the rate of carbon uptake but does not necessarily result in a large loss of forest carbon stocks. Indirectly, defoliation may weaken trees and make them more susceptible to impacts from other disturbances. Little research is available on the carbon-related effects of insect and disease infestations generally or on the impacts of specific insects other than bark beetles, so the current understanding may not accurately estimate the degree of this impact. ", "A hurricane or other wind event may uproot, knock over, or break trees (e.g., windthrow or blowdown) increasing the amount of deadwood and forest litter, which could then hasten the spread of a wildfire. These impacts may occur across individual trees or across significantly larger areas. Ice storms have similar effects. Although the carbon cycling effects of a single event may be significant, there is considerable annual variability and the net effect usually is mitigated over time as the site regenerates. ", "Droughts are prolonged events with direct and indirect effects on forest carbon. Droughts can weaken individual trees, reducing carbon uptake, and can lead to tree mortality. Droughts also can prolong regeneration and/or facilitate the shift to a different species mix. Indirectly, weakened trees may be more susceptible to damage or death from other disturbance events. In this way, droughts can enhance or exacerbate other disturbance events. "], "subsections": []}]}, {"section_title": "Land-Use Change", "paragraphs": ["What happens to a site after a disturbance influences the longer-term effect of that disturbance on the global carbon cycle. Reforestation occurs if the site regenerates with trees (naturally or through manual seeding or planting). In this case, the effects on the carbon cycle would be generally mitigated over time. If the site converts to a different land cover or land use, however, more significant and longer-term impacts to the carbon cycle may occur. Land-use changes may occur with or without a separate precipitating disturbance event or, in the case of planned land-use changes, may be the disturbance event. ", "Deforestation occurs when the site converts to a non-forest use; it generally results in the loss of significant amounts of carbon at one time. In most cases, deforestation means the sudden removal of all aboveground carbon, followed by a more gradual loss of belowground carbon. Deforestation also results in the loss of carbon sequestration potential. Deforestation frequently occurs through deliberate human intervention (e.g., to clear the land for development or agricultural purposes). However, deforestation also may occur without human intervention, most commonly when grasses or shrubs populate a post-fire site and prohibit the succession of tree species. ", "Afforestation is the conversion of non-forestland to forestland. It results in the potential for new or increased ecosystem carbon storage and sequestration. Afforestation may occur through deliberate human intervention (e.g., planting, irrigation, fertilization) or through natural ecological succession, as trees begin to grow or encroach into grasslands and rangelands. Afforestation is most successful on sites that were previously forested. In the United States, for example, afforestation frequently occurs on abandoned cropland that had been forested prior to clearing. ", "Globally, forest area generally has been declining since the 1990s. The rate of decline, however, has slowed in recent years, and there is considerable regional variation. Most of the net loss is occurring in tropical forests, whereas most of the net gains have been in temperate forests. In the United States, for example, forest area had been expanding for several decades and now is remaining steady, with variation at the region and state levels. This trend is generally a result of net afforestation, after accounting for some deforestation (~0.12% per year) and reforestation. In 2018, however, slightly more land converted out of forest use (1.29 million hectares) than converted to forest use (1.27 million hectares) in the United States. In general, most deforestation in the United States is the result of development or conversion to grassland. Conversely, however, more grassland converts to forestland annually and is the largest contributor to afforestation in the United States."], "subsections": []}]}]}, {"section_title": "U.S. Forest Carbon Data", "paragraphs": ["The following sections provide data on the annual amount of carbon stored in U.S. forest pools (e.g., carbon stocks ) and the net amount of carbon that flows in or out of U.S. forests annually (e.g., carbon flux ). First, however, is a brief discussion of the methodology used to estimate and measure forest carbon. The data are primarily derived from EPA's annual Inventory of U.S. Greenhouse Gas Emissions and Sinks ( Inventory ) for 2020. ", "For purposes of this report, the data are intended only to provide context and complement the understanding of carbon dynamics in U.S. forests generally. As such, the data in this report will not be updated in accordance with the publication of the annual Inventory . Rather, an accompanying report, CRS Report R46313, U.S. Forest Carbon Data: In Brief , will be updated to reflect the annual data published in the Inventory and other sources. Because the methodologies used to estimate carbon measurements are constantly being refined, future iterations of the Inventory may result in different stock and flux estimates for the years discussed in this report."], "subsections": [{"section_title": "Forest Carbon Accounting Methods", "paragraphs": ["This section describes the forest carbon accounting methodology specific to EPA's annual Inventory . EPA has been publishing the annual Inventory since the early 1990s. Among other purposes, the Inventory fulfills the reporting commitments required of the United States as a signatory to the United Nations Framework Convention on Climate Change. As such, these methods are in accordance with the standards established by the International Panel on Climate Change (IPCC), which is the United Nations body responsible for assessing the science related to climate change. Federal agencies, including those within the U.S. Department of Agriculture (USDA), contribute data and analysis to the Inventory . Specifically, much of the data on forests and forest carbon is based on methodologies developed and data collected by the Forest Inventory and Analysis (FIA) Program administered by the USDA Forest Service (FS). ", "As the following sections describe, the forest carbon figures reported in the Inventory are derived from estimates of forestland area and carbon stocks. Carbon flux is then measured by comparing changes in forest carbon stocks over time. "], "subsections": [{"section_title": "Estimating Forestland Area", "paragraphs": ["The Inventory measures the net greenhouse gas flux associated with all land uses and types in the United States, in the Land Use, Land-Use Change, and Forestry (LULUCF) sector (see Figure 6 ). In addition to forestland, LULUCF includes the carbon flux associated with existing agricultural lands, grasslands, wetlands, and developed areas (referred to as settlements ). The Inventory also captures the carbon flux associated with changes in land uses, such as grasslands converting to forestland (e.g., afforestation ). These converted lands are reflected in the \"converted\" LULUCF category for 20 years, after which they are counted with the existing LULUCF land-use categories. Forests represent about one-third of the area included in the sector (see Figure 6 ), but they generally contain the most carbon stocks and are responsible for most of the carbon sink associated with the sector. This report focuses only on carbon stocks and fluxes associated with forestland. ", "For the Inventory, forestland includes \"land at least 120 feet wide and at least 1 acre (0.4 hectares) in size with at least 10 percent cover (or equivalent stocking) by live trees including land that formerly had such tree cover and that will be naturally or artificially regenerated.\" This definition does not include forested areas completely surrounded by urban or developed lands, which are classified as settlements . This definition also does not include woodlands, which are included in the grassland category. ", "The Inventory reflects lands that are considered managed, (i.e., direct human intervention has influenced their condition). In contrast, unmanaged land is composed largely of areas inaccessible to society; the carbon associated with those lands is not reflected in the Inventory . For the United States, managed forests are those that are designated for timber harvests and/or with active fire protection, which includes all forestland within the conterminous U.S. and significant portions of forestland in Alaska. As of 2020, the Inventory did not include forestland in Hawaii and the U.S. territories as part of the carbon stock and flux estimates, although Hawaii forestland was included in some estimates of forestland use. Land area estimates are derived from a combination of FIA data and other sources. See Figure 6 and Table 3 .", "The Inventory reports carbon stocks for total managed forest area, but it accounts for carbon flux across two different categories: F orest l and R emaining F orest l and (FRF) and L and C onverted to F orest l and (LCF). FRF captures the carbon flux associated with existing forestland or forests that have been forestland for at least 20 years. LCF captures the carbon flux associated with land that has been converted to forestland within the past 20 years. In other words, this category captures the carbon flows associated with afforestation . Land area data on forestland converted to other uses (e.g., deforestation ), such as grassland, settlements (e.g., development), and agriculture uses, are captured in the respective new land-use category as reported in the LULUCF sector. "], "subsections": []}, {"section_title": "Estimating Forest Carbon Stocks and Fluxes", "paragraphs": ["To generate estimates of the carbon stocks in the Inventory, estimates of forestland area are combined with site-specific estimates of forest carbon. These estimates are based primarily on the data collected through the FS's FIA Program, its continuous census of the U.S. forests. The FIA uses remote sensing data and field data collected from a series of permanently established research sites (called plots), which cover most forested lands of the United States. Field data include a variety of tree measurements, such as height and species. Additional measurements of downed deadwood, litter, and soil variables are taken on a subset of plots. The data are collected through a three-stage, systematic sample, as follows: ", "1. FS uses remotely sensed data to classify land cover as forest or non-forest and chooses a systematic sample of forested plots for field data collection. 2. FS collects field data at one forest plot for every 6,000 acres. The data include forest type, tree species, size, and condition. It also collects site attributes, such as slope and elevation. 3. FS collects a broad suite of forest health data from a subset of Phase 2 plots, such as understory vegetation, deadwood, woody debris, soil attributes, and others. ", "The data are collected through an annualized sampling process in which a representative sample of plots in each state is surveyed at regular intervals, with the goal of each plot being sampled every 5 to 10 years. ", "After field collection, FS applies mathematical conversion factors or models to calculate carbon content for each ecosystem pool. The conversion factors and models generally are species-specific and based on other research or internationally accepted methodologies based on peer-reviewed research. They relate data that are easily collected to data that are difficult (or impossible) to collect in the field. For example, FS calculates aboveground carbon by using species-specific equations that give aboveground carbon estimates from simple field data, such as tree height and diameter. It uses similar principles to derive estimates of carbon in belowground biomass, soils, litter, and deadwood. For the Inventory, the site-specific FIA data are scaled up to derive state and national forest carbon estimates using measures of forestland area. ", "Carbon in the product pool, or in harvested wood products (HWPs), is calculated according to a mathematical model with conversion factors for several variables. These variables include the amount of carbon in various HWPs, the length of time HWPs remain in active use, and how long it takes for HWPs to decompose and release carbon based on the method of disposal. Other variables account for how many HWPs are imported and exported out of the United States annually, with adjustments for the associated carbon estimates. ", "The\u00c2\u00a0 Inventory \u00c2\u00a0reports annual GHG emissions (i.e., sources) and removals (i.e., sinks), expressed in terms of CO 2 equivalents, aggregated to millions of metric tons (MMT CO 2 eq.). CO 2 equivalents convert an amount of another GHG to the amount of CO 2 \u00c2\u00a0that could have a similar impact on global temperature over a specific duration (100 years in the \u00c2\u00a0Inventory ). This common measurement can help to compare the magnitudes of various GHG sources and sinks. See Figure 1 for information on calculating CO 2 equivalents.", "The Inventory measures net flux by comparing the annual difference in forest carbon stocks for existing forestlands as well as carbon sequestered as land converts to forestland. Specifically, net carbon flux is estimated by subtracting carbon stock estimates in consecutive years. Comparing the annual difference in carbon stocks reflects any carbon stock changes associated with disturbances, although it does not attribute any changes to specific disturbance events. The net effect of disturbances are reflected in the different total carbon stocks measures and in how the distribution of carbon between the stocks changes annually. For example, a timber harvest removes carbon from the forest ecosystem and transfers some carbon from the living pools to the dead and product pools. Annual estimates of carbon stock changes would reflect the loss of carbon from the aboveground biomass pool and transfer to the deadwood, litter, and product pools. The Inventory also reports emissions of other GHGs, particularly those associated with wildfires, fertilizer application, and other soil emissions (all accounted for in CO 2 equivalents). "], "subsections": []}]}, {"section_title": "U.S. Forest Carbon Stocks", "paragraphs": ["According to the Inventory , U.S. forests stored 58.7 billion metric tons (BMT) of carbon in 2019 (see Table 3 and Figure 7 for data from 1990, 2000, 2010, and 2019). The majority of forest carbon was stored in the forest ecosystem pools (95%); the remainder was stored in the product pool (e.g., HWP). The largest pool of carbon was forest soils, which contained approximately 54% of total forest carbon in 2019. The next-largest pool was aboveground biomass, which contained approximately 26% of total. Each of the other pools stored less than 6% of the total carbon. ", "Since 1990, U.S. forest carbon stocks have increased 10%. Nearly all forest pools have gained more carbon as of 2019. The exceptions are the litter and soil pools, which each continue to store around the same amount of carbon as they did in previous years. Forest carbon stocks have increased annually, meaning U.S. forests have been a net carbon sink, absorbing more carbon out of the atmosphere than they release (carbon flux data are discussed in the \" Carbon Emissions and Sinks from U.S. Forests \" section below). "], "subsections": [{"section_title": "Regional Variations", "paragraphs": ["About one-third of the United States is forested. These forested areas vary considerably by location, climate, vegetation type, and disturbance histories, among other factors. Because of this variation, U.S. forests contain varying amounts of carbon, stored in varying proportions across the different forest pools. See Figure 8 for an example of how c arbon density , or the amount of carbon within a certain area, varies across the 48 conterminous states. ", "Excluding Alaska, the forests in the Pacific Northwest and Great Lakes regions contain the highest carbon density. The distribution of the carbon across different pools differs between those two regions, however. In the Pacific Northwest and along the West Coast generally, most of the carbon is stored in the living biomass pools; in the Great Lakes region, most of the carbon is stored in the soil. Forests in New England, the Great Plains, and along the Southeastern Coast also store most of their carbon in soil, whereas the forests along the Appalachian Mountains store most of their carbon in live biomass. In some areas of the Rocky Mountains, most of the carbon is stored in live biomass; in other areas of the Rocky Mountains, most of the carbon is stored in the deadwood and litter pools. ", "The carbon balance and dynamics in Alaska are not as comprehensively inventoried as those in other states in the conterminous United States. However, Alaska is estimated to contain significant carbon stocks, with the vast majority in the soil. Alaska includes multiple biomes: temperate forests along the southeast coast, boreal forests in the state's interior, and areas of tundra in the north."], "subsections": []}]}, {"section_title": "Carbon Emissions and Sinks from U.S. Forests", "paragraphs": ["Carbon flux is the annual change in carbon stocks. The flux estimate for any given year (e.g., 2018) is the change between stock estimates for that year (2018) and the following year (2019). Negative values indicate more carbon was sequestered than was released in that year (e.g., net carbon sink); positive values indicate more carbon was released than was sequestered in that year (e.g., net carbon source). ", "According to the Inventory , U.S. forests were a net carbon sink in 2018, having sequestered 774 MMT CO 2 equivalents (or 211 MMT of C) that year (see Table 4 and Figure 9 for flux data from 1990, 2000, 2010, and 2018). This represents an offset of approximately 12% of the gross GHG emissions from the United States in 2018. ", "The net sink reflects carbon accumulation on existing forestland and carbon accumulation associated with land converted to forestland within the past 20 years, though most of the sink is associated with existing forests (86%). Within the carbon pools, most of the flux is associated with aboveground biomass (58%). The carbon flux into the living biomass pools (above and below ground) reflects net carbon accumulation from the atmosphere; the carbon flux into the other pools represents the net of the flux of carbon from the living biomass pools into the dead pools relative to the flux of carbon out of those pools. Although soils store significant amounts of carbon, the carbon accumulates slowly over long periods, so the annual flux is minimal. In some years, soils are a net source of carbon to the atmosphere.", "Overall, the annual net flux of carbon into U.S. forests is small relative to the amount of carbon they store. For example, U.S. forests gained an additional 211 MMT of carbon between 2018 and 2019, but that represents only a 0.3% increase to the total forest carbon stock (58.7 BMT of carbon). In addition, the total stock of carbon stored in forests is equivalent to the sum of several decades of U.S. GHG emissions.", "Over the time series (1990 to 2018), U.S. forests have been a net carbon sink. However, the net amount of carbon sequestered by U.S. forests varies annually, depending in large part on disturbance activity and location in any given year. For example, wildfire activity in Alaska drives a significant portion of the interannual variability. This is due in part to fluctuations in the size of the area affected by wildfire each year and because more of the carbon in Alaska is stored in pools that are likely to be combusted in a fire (e.g., litter) as compared to other states. ", "Although the Inventory reflects the net carbon flux associated with forest disturbances through annual changes in the carbon stock, recent iterations of the Inventory also have included the estimated emissions specifically associated with wildfires. The Inventory reports that wildfires, including prescribed fires, resulted in emissions of 170 MMT CO 2 equivalents in 2017, the most recent year available. Annual forest carbon emissions vary significantly, because wildfire activity varies annually. For example, the Inventory reports that wildfire-related emissions in the previous year (2016) were significantly lower: 51 MMT CO 2 equivalents. "], "subsections": []}]}, {"section_title": "Considerations for Forest Carbon Management", "paragraphs": ["This section discusses policy issues related to managing forest carbon. Forests are generally managed for multiple reasons, often simultaneously. For example, the Forest Service manages the National Forest System under a congressional mandate to provide sustained yields of multiple uses, some of which may compete and require tradeoffs. In many cases, optimizing carbon sequestration and storage could be one of many forest management objectives. ", "There are three primary strategic approaches for optimizing forest carbon sequestration and storage: (1) maintain or increase the area of forestland, (2) maintain or increase forest carbon stocks, and (3) increase the use of wood products. The applicability of each approach will vary depending on existing site characteristics and land management objectives. In addition, each of these approaches comes with varying levels of uncertainty related to effectiveness, potential for co-benefits, and tradeoffs. ", "Maintai n or increase forest land area . This approach involves avoiding and reducing deforestation and maintaining or increasing afforestation. (This approach also could include increasing tree cover in urban areas, although the overall carbon benefits would be uncertain and likely highly variable based on site-specific characteristics.) Increasing forest area could provide a range of co-benefits (e.g., watershed protection, wildlife habitat), but in some cases it also could require substantial resources (e.g., fertilization, irrigation). In addition, increasing forest area could require economic tradeoffs, such as income loss from reduced agricultural production in areas of increased afforestation, for example. Maintain or increase forest carbon stocks . This approach involves managing forests to maximize tree growth potential, rehabilitating degraded forests, or otherwise mitigating potential carbon losses. This could involve activities such as extending the time between timber harvests and/or implementing harvesting methods to increase the protection of remaining trees and soils. This also could include restoring degraded forests whose biomass and soil carbon densities are less than their maximum potential value. Forest restoration could have additional benefits in terms of improving forest resilience to and recovery from ecological disturbances (e.g., mitigating the risk of catastrophic wildfires). These activities all could require substantial resources (e.g., forest thinning, fertilization, irrigation) and economic tradeoffs (e.g., loss of timber-related income). Increase use of wood products . To have net impacts on the carbon balance, this approach requires substituting wood products as an alternative to materials that are more carbon intensive to produce (e.g., steel) or using wood as a substitute for fossil fuel. In some cases, these measures could require significant technological advances. Generally, a full lifecycle accounting of both products likely would be necessary to determine whether the use of wood generates net carbon benefits. Increasing the use of wood products could result in increased economic activity that incentivizes wood product innovation. It also could result in forest management activities that reduce overall carbon storage potential (e.g., increasing, rather than decreasing, harvest cycles). ", "The above strategies share certain implementation issues and challenges. One of the most fundamental challenges is determining whether an activity actually results in a net carbon benefit, which depends largely on the time and spatial scale of analysis. Any approach will encounter issues related to:", "P ermanence . In this context, permanence means the extent the activities are reversible. For example, is there potential for a new landowner to reverse previous management decisions and to nullify or reverse the carbon benefits of these practices? This is especially an issue for private lands, which may change ownership status more frequently than public lands and forests. Ecological factors, such as a site's ability to recover post-disturbance, also may influence permanence. L eakage . The potential for changes in land management in one area to result in offsetting changes in another area is referred to as leakage. For example, the afforestation of cropland in one area may result in the conversion of forestland to cropland in another to make up for the loss of agricultural production. A dditional it y . Additionality is the extent the activity and associated carbon benefit would not have happened anyway. For example, preserving an area to avoid deforestation is not additional if the forestland was not under threat of deforestation. ", "Finally, all of these considerations are in the context of the uncertainty related to the future effects of changing climatic conditions on forests broadly. The general scientific consensus is that, under most climate change scenarios, U.S. forests overall would likely continue to serve as a net carbon sink. However, the strength of that sink would diminish over time and, under some scenarios, could reverse. Regionally, some forests could be net sources of carbon at various times. ", "Part of the uncertainty related to how forests may adapt to climate change is because many of the potential effects are interrelated (particularly in terms of ecological disturbances) and because, in some scenarios, the various effects could amplify or counteract each other. For example, more CO 2 in the atmosphere could increase forest growth but also could result in drought conditions, which would inhibit forest growth. ", "Another source of uncertainty is the maximum extent of U.S. forests. After expanding steadily for several decades, the extent of U.S. forest area may have begun to plateau. If forest area begins to decrease, then a net amount of carbon could be lost and U.S. forests would be expected to sequester less carbon annually. If forest area expands further, however, then U.S. forests might be able to sequester more carbon moving forward. Finally, the carbon flux associated with U.S. forests is small relative to the amount of carbon stored in those forests, though U.S. forests offset 12% of GHG emissions in 2018. If U.S. forests sequester less carbon annually in the future, as predicted by some models, then U.S. forests would offset less GHG emissions and could potentially become a source of GHG emissions. Under such a scenario, even if GHG emissions were to remain constant at today's levels, the amount of atmospheric carbon would still increase. Thus, even minor shifts in carbon flux have the potential to significantly affect the nation's carbon balance and the overall global carbon cycle."], "subsections": [{"section_title": "Appendix. Glossary of Selected Terms", "paragraphs": ["Below is a glossary of selected terms used throughout this report. Most of the definitions are derived from several, interrelated sources, as listed below. Some terms may have a broad definition established through various international standards, which allow for the definition to be narrowed to fit national specifications. In some cases, the definition has been edited for clarity. ", "Food and Agriculture Organization of the United Nations, Global Forest Resources Assessment 2020: Terms and Definitions , Working Paper 188, 2018. International Panel on Climate Change (IPCC, which is the United Nations body for assessing the science related to climate change), IPCC Guidelines for National Greenhouse Gas Inventories , 2006. U.S. Environmental Protection Agency (EPA), EPA Inventory, 2020 , Chapter 6, \"Land Use, Land-Use Change, and Forestry (LULUCF),\" April 13, 2020. Forest Service, The U.S. Forest Carbon Accounting Framework: Stocks and Stock Change, 19902016 , GTR-NRS-154, November 2015."], "subsections": []}]}]}}
{"id": "R46212", "title": "Wage Inequality and the Stagnation of Earnings of Low-Wage Workers: Contributing Factors and Policy Options", "released_date": "2020-02-05T00:00:00", "summary": ["Over the 1979-2018 period, real wages at the 10 th percentile of the hourly wage distribution grew by 1.6%, whereas wages at the 50 th percentile grew by 6.1% and wages at the 90 th percentile grew by 37.6%. These patterns varied by sex, race, and ethnicity. Most of the increase in wage inequality at the bottom of the distribution occurred by 1990 and leveled off by 2000, whereas inequality continued to grow at the top of the distribution after 2000. Lower wages are associated with less education, and the college wage premium (the ratio of earnings of those with a college degree over those with a high school degree) grew steeply until 2000. The labor income share of compensation has declined beginning around 2000. Both the growth in hourly wage inequality and the decline in the labor share of compensation contributed to greater inequality of before-tax income. From 1979 to 2017, the income share of the bottom quintile fell from 5.3% to 3.5%, whereas the share of the top quintile rose from 41.9% to 50.1%.", "Several factors potentially contributed to this change in wage inequality: technological advancement, globalization, wage-setting institutional changes (i.e., the minimum wage, presence of labor unions, and decline in the large firm wage premium), immigration, and declines in job mobility, across jobs in general and geographically.", "A review of the economic research suggests that a major force in causing this growing wage inequality and lower wage growth was skill-based technological change (change increasing the demand for skilled over unskilled workers). Although there is mixed evidence, most studies find a smaller, modest effect of globalization (although trade affects locations and sectors differently). The minimum wage appeared to play a relatively small role. The decline in wages has coincided with the decline in unions, but to some extent, the decline in unions was a consequence of the decline in jobs in heavily unionized sectors due to technological advancement. Given the size of the decline and the union wage premium, as well as tracing some of the decline to technology, unionization appears to be of limited importance. The decline in the wage premium for large firms may also be traced to increased competition from technological advancement and globalization. Evidence also indicates that immigration had little effect on the distribution of wages, but resulted in a slight increase in inequality because immigrants are concentrated at the upper and lower ends of the income distribution. A decline in labor force mobility has occurred in recent years and could have contributed in some way to inequality.", "Because the causes of the wage stagnation and growth inequality appear to be traceable largely to technological change, which is otherwise valued, other policies might be considered to increase the well-being of workers whose wages have stagnated. One policy option is to either increase transfers, including those provided through the tax structure, such as the earned income tax credit. Childless workers, in particular, have small earned income credits. Another option is to increase the federal minimum wage, although states are gradually undertaking these increases. A more far-reaching policy option is a federally guaranteed job. Proposals have also been made to expand wage insurance, which currently is available to only a narrow group of trade-affected workers. Policies to increase skill acquisition, including a greatly expanded apprenticeship program, could be considered, although they would have delayed effects on inequality. A variety of policies have been advanced to strengthen unions. In addition, a number of policies might be considered to increase labor mobility. Finally, a variety of geographically targeted provisions aimed particularly at increasing employment in chronically high unemployment areas could be considered. Transfers, including the earned income credit, have improved the distribution of after-tax income, but some other policies have a less successful track record, and some (such as a guaranteed job) are untried."], "reports": {"section_title": "", "paragraphs": ["T he stagnation of real hourly wages at the lower end of the income distribution, where workers tend to be less educated, has entered into the policy debate over many issues, including trade, immigration, and institutional factors such as the minimum wage. This lack of wage growth has also contributed to an increase in overall income inequality. The first section reviews changes in the distribution of hourly wages (as well as considering the effects of fringe benefits) and overall income. Following that review, the report reviews the evidence on the main factors that might have contributed to this lack of wage growth, including technological advancement, trade, the minimum wage, unions, the large firm wage premium, immigration, and reduced labor mobility. The final section of the report explores policy options that might be considered by Congress."], "subsections": [{"section_title": "A Review of Long-Term Hourly Wage Growth", "paragraphs": ["Over the 1979-2018 period, real wages at the 10 th percentile of the wage distribution grew by only 1.6%, whereas wages at the 50 th percentile grew by 6.1% and wages at the 90 th percentile grew by 37.6%. As shown in Table 1 , these patterns varied by sex, race, and ethnicity.", "From 1979 to 2016, examined by quintiles of wage earners, wages fell by 1.0% for the bottom 20% but rose by 27.4% for the top quintile. Wages rose for the lower-middle quintile by 0.8%, but rose by 3.4% in the middle quintile and by 11.5% in the upper-middle quintile. ", "The wage differentials between the 10 th and the 50 th percentile remained relatively constant after 1990 until the recession in 2009, indicating a stabilization of inequality in the bottom half of the wage distribution; this change was primarily for male workers. For female workers, a more modest growth in the differential in the bottom half occurred, largely in the early 1980s, with little change thereafter. The differential in the upper half (between the 90 th and the 50 th percentile) increased at a more modest pace during the entire period. ", "Wages are associated with educational achievement. College graduates are 15% of the bottom quintile and almost 80% of the top quintile. The highest wages on average are earned by those with advanced degrees, and the lowest by those with less than a high school diploma. In 2016, for workers over 25, those with less than a high school diploma had median weekly earnings of $504. Median weekly earnings were $1,156 for those with a bachelor's degree, $1,380 for a master's degree, $1,745 for a professional degree, and $1,664 for a doctoral degree.", "The wage premium for a college degree (the ratio of average wages for those with a college degree compared to those with a high school diploma) rose from 134% in 1979 to 168% in 2016; the premium for an advanced degree rose from 154% to 213% over that same period. The wage premium for a college degree rose steeply until about 2000 then continued to rise slightly after 2000. Over the 1979-2016 period, the share of workers with a college degree also increased (from 23% to 40%). This increase in the skill premium suggests that the demand for skilled workers rose relative to the supply over this time frame. ", "Using the CPI, real wages of men with a high school diploma or less declined significantly between 1979 and 1999, while women with a high school diploma experienced small, but generally positive, growth during that period.", "In addition to the wage differential growth, labor compensation as a share of income has been falling since 2001, from 64.3% in the first quarter of 2001 to 58% in the fourth quarter of 2015. Labor compensation includes fringe benefits and proprietor's labor income as well as wages. During that same period, employee wages fell from 46.8% to 42.8% of gross domestic income (GDI). While the fringe benefits (supplements) share remained constant as a share of GDI, these benefits rose as a share of employee compensation. In contrast with the increased wage inequality and the increased college wage premium, where effects largely occurred by 2000, the fall in the labor share of income occurred primarily after 2000. Because wages account for a smaller share of the income of higher-income individuals, both the increased wage inequality and the decreased labor income share have led to increased income inequality. From 1979 to 2017, the income share of the bottom quintile fell from 5.3% to 3.5%, whereas the share of the top quintile rose from 41.9% to 50.1%. Income shares also fell for the lower-middle quintile (from 11.7% to 9.0%) and the middle quintile (from 17.2% to 14.7%), and (slightly) for the upper-middle quintile (from 23.8% to 22.7%). ", "Note that labor compensation differs from wages, as it also includes benefits that typically account for about 30% of compensation. This difference also raises the question of whether the wage differentials documented for the period from the end of the 1970s to the mid-1990s were offset or accentuated by changes in nonwage compensation. Available evidence, however, indicates that labor compensation differentials increased more than wage differentials. ", "Some of the decline in the labor compensation share may be due to the growth of entrepreneurial income at the top of the income distribution, which in turn may partly reflect shifting to pass-through business (where wages are not paid to entrepreneurs) from the standard corporate form, due to tax incentives. Thus, this shift may be, in part, a change in the characterization of income rather than a real shift.", "One study has estimated a national distribution of income and how it has changed over time accounting for all national income, including the fringe benefits of workers and those not in the labor force. This study compares the growth in income over two 34-year periods: from 1946 to 1980 and from 1980 to 2014. For the postwar period through 1980, the overall income growth rate and the overall pretax income annual growth rate were 2%, with pretax income of the bottom 50% of adults growing at approximately the 2% growth rate, whereas the top 10% grew at 1.7%. For the period from 1980 through 2014, the overall annual growth rate was lower, at 1.4%, but the annual growth rate of the bottom 50% rounded to zero, whereas the top 10% grew at 2.4%. The study's statistics show that the share of income of the bottom 50% declined from about 20% in 1979 to about 12% today. This study differs from other studies of income distribution that focus on family units; rather, it looks at incomes for all adults separately to focus on individuals. Although this study uses a different approach, it shows a similar pattern to other measures.", "To sum up these trends, lower-income workers experienced a decline in wages relative to the median that mostly occurred in the 1980s, the median wage earners experienced a decline with respect to the top wage earners throughout the period (with both effects causing a rise in the college wage premium from the 1980s to about 2000), and since 2000, the labor share of income has declined. All of these trends resulted in a stagnation of income among less-skilled workers relative to the overall population. "], "subsections": []}, {"section_title": "Factors Potentially Contributing to Wage and Income Inequality", "paragraphs": ["This section discusses the factors potentially contributing to the lack of wage growth at the bottom of the wage distribution: technology, globalization, wage-setting institutions (the minimum wage, the decline in unions, and the decline in the large firm wage premium), immigration, and reduced labor mobility. It also considers the decline in the labor income share that contributed to inequality. "], "subsections": [{"section_title": "Technological Advancement", "paragraphs": ["Many economists see technology and international trade as the major forces affecting labor markets, and a broad conclusion of the evidence on earnings inequality is that the largest immediate contributors included a rising demand for skills along with a slowdown in the growth of the supply of new college graduates. ", "Historically, technological advancement has led to a massive increase in the standard of living but has also caused temporary disruptions, although the groups that are adversely affected have varied. With recent technological advances, those who fail to reap the benefits appeared to be less-skilled workers, based on a number of relationships observed in the economy. ", "First, some effects arose from the displacement of workers in well-paid factory jobs with machinery using advanced technology. One illustration of the potential impact of technology in reducing the demand for manufacturing workers is the development of the mini-mill in steel production. Although the real value of shipments was relatively constant from 1980 through 2002, steel industry employment fell from 400,000 workers to 100,000 workers.", "Second, numerous studies found that the surge in wage inequality that appeared in the 1980s (and had its primary effects on inequality in the lower half of the wage distribution) reflected a rise in the demand for skilled workers that had been ongoing for some time and was perhaps accelerated by the computer revolution. There also appeared to be a relationship between positive wage changes and computer use by workers that suggested a technological cause to the changes in wage patterns. A number of studies showed that the utilization of more-skilled workers was correlated with capital intensity and the implementation of new technology based on both statistical and case studies. Studies showed a diffusion of computer-based processes during this period, which could substitute for routine jobs and is likely more important in clerical and production jobs than in managerial and professional jobs. ", "Third, a finding that points to technology rather than trade as the more important source of increased demand for skilled workers was that wage dispersion occurred within industries rather than between industries. Growing wage differentials within a particular industry suggest a largely technology-driven reason, whereas a differential that arises across workers producing different products may point to a trade-driven effect (e.g., imports being produced with less skilled labor and exports with more). That is, if increased trade led to imported goods with lower prices, wages would decline in that industry relative to other industries, whereas if technology favored more-skilled workers, differentials in wages would occur within all industries. ", "This outstripping of demand for skilled workers (primarily via technological change) relative to supply also reflected a slowdown in the growth of the share of workers with college degrees, because the increase in the college wage premium was largely attributable to younger men. The slowdown could be in part attributed to the end of the growth in college attendance induced by the Vietnam War and in part to the decline in the college wage premium prior to the 1980s. For example, as the war in Vietnam ended in the mid-1970s, the decline in college attendance prior to that period produced ripple effects in the form of a less-educated workforce into the 1980s.", "The pattern of wage changes differed from 1979 to today. In the 1980s, technology and automation changes led to a decline in employment and earnings at the bottom of the skill distribution relative to the top, whereas in the 1990s and later, information technology change did not affect the very lowest-skilled workers performing manual labor but did adversely affect moderately educated workers performing clerical tasks, and benefitted highly educated workers performing abstract tasks. Employment in both the least-skilled and most-skilled occupations grew relative to that in the middle-skilled occupations. Some studies linked this effect to technological advancement in information and communication, which allowed the substitution of machines for many routine tasks carried out by middle-skilled jobs. Technological change shifted from automation affecting manufacturing to the computerization of information affecting nonmanufacturing.", "Despite some evidence of a transitory effect from trade due to China's rapid emergence, the evidence presented in this and the following section suggests that technology is the more important driver of changes in wage differences. Some prominent labor economists appear to hold that view. When queried about the importance of automation versus trade, as reported in the New York Times , Lawrence Katz said, \"Over the long haul, clearly automation's been much more important\u00e2\u0080\u0094it's not even close.\" David Autor, interviewed in the same article, said automation has had a far bigger effect than globalization and stated \"some of it is globalization, but a lot of it is we require many fewer workers to do the same amount or work. Workers are basically supervisors of machines.\"", "This technological advancement in favor of more-skilled workers is projected to continue in the future with increased use of industrial robots and susceptibility of jobs to computerization. Studies suggest that new technology and algorithms for big data will make computers substitutes for nonroutine cognitive tasks and an expanded range of manual tasks, while having less effect on jobs that require creative or social intelligence. ", "A technological explanation for the decline in the labor share of income seems less likely. Even if technology led to more capital investment, such increases would not necessarily lead to a declining share of labor income. The reasons for the decline in the labor share of income are unsettled, although, as noted earlier, a recent study found that most top income is nonwage income, a primary source of which is private business profit, largely due to labor input by entrepreneurs, which could be considered labor income."], "subsections": []}, {"section_title": "Globalization, International Trade, and Import Competition", "paragraphs": ["Economists generally agree that the overall economy gains from international trade, even though (as is the case with technological progress) some groups may be harmed. (Trade in this section refers to international trade, consisting of imports from abroad and exports to other countries; the growth in this trade and other transactions with other countries is often referred to as globalization .) One study put the estimated increase in output from trade at 2% to 8% of gross domestic product (GDP). (Trade includes trade in final goods and services and trade in intermediate goods and services, sometimes referred to as offshoring .) Because trade largely involves a substitution of one type of production for another, there is no a priori expectation of an effect on income distribution. Although some studies have found a role for trade, most have found it a modest force compared to technology. ", "As discussed in the previous section, one characteristic that points to a technology-based rather than a trade-based cause as the more important force is that increased wage differentials appeared within sectors rather than across sectors. If the cause were trade, such differentials would be expected to have appeared between import and export sectors.", "A second characteristic pointing against a trade-based cause as more important than technology is that inequality has increased in both advanced and developing countries. If the cause were trade (receiving imports from countries using low-skilled labor in exchange for exports using high-skilled labor), developing countries would likely be more, not less, equal. That both types of economies are becoming more unequal points to a technology-based explanation. ", "Some studies also tried to directly estimate the effect of trade on the economy by examining how the lack of trade would affect prices and wages. These studies generally found a small effect on prices and income distribution, especially compared with technological change. ", "Instances in which certain workers in local markets are adversely affected by imports may have led to the perception of an important role for trade. Studies have found an effect from China's rapid emergence in the world market, especially after 2000, when China entered the World Trade Organization (WTO); these studies found a decline in manufacturing jobs in areas producing products most competitive with imports, as well as persistent increased unemployment and a small decline in wages. These studies illustrate the adjustment costs of a large trade change on trade-impacted sectors, and especially on lower-wage workers who may find adaptation and mobility more difficult. They characterized the growth in China's imports as a shock and noted that this growth may soon be over, if it is not already, as wages in China have increased substantially. One study cited a loss of 2 million jobs in the United States over the period 1999 to 2011, which indicates an average of 166,000 jobs a year. To put the China effect in perspective, this amount is one-tenth of 1% of the U.S. workforce, and its cumulative effect over a dozen years was 1.4%. Thus, while the China shock as measured by displaced jobs may have been significant relative to other trade shocks, it did not likely have a major effect on the stagnation of wages at the lower end of the wage distribution, which has occurred over the past 40 years and was most pronounced before the increase in China trade began. ", "The China study analysis focused only on effects in areas of high import penetration, but it did not consider overall effects in the economy. It is well known that bilateral trade balances or their effects in local markets cannot be used to infer results about the economy as a whole. An increase in imports leads to increases in output in other sectors of the economy that should be considered. A subsequent study that did so found these local effects were offset by growth in other areas and exports. Thus, trade can alter the compositional mix and location of jobs without necessarily having an effect on long-term inequality. ", "Some research has indicated that globalization might have contributed to the increase in incomes of high-income individuals and their firms, such as high-tech multinational firms (\"superstars\" in their terminology), in part by expanding markets. This phenomenon could contribute to income inequality, but it did not do so by harming the wages of unskilled workers, but rather by increasing wages and profits (income) at the top of the income distribution. ", "As for the decline in the labor share of income, that decline is unlikely to be linked to a traditional argument that the country has moved toward labor-intensive imports because the labor share has also fallen in the nontradeable sector (such as construction, sectors that involve the distribution of goods, and some services). However, the growth of highly successful multinational \"superstar\" firms may have made a contribution because the increased income would be capital income rather than labor income. ", "In general, although estimating the effects of trade is complex, the current empirical evidence does not appear to support trade rather than technology as the more important cause of relative wage stagnation at the lower end of the wage distribution."], "subsections": []}, {"section_title": "Wage-Setting Institutions", "paragraphs": ["Technology, education, and trade explanations of the change in income and wage inequality are based on normal forces of supply and demand. However, economists studying the rise in inequality have also considered the decline of labor institutions that may have protected higher wages at the lower end of the wage distribution. This section considers three aspects of these wage-setting institutions: the minimum wage, union membership (and right-to-work laws), and the change in wage-setting norms (such as the large firm wage premium). "], "subsections": [{"section_title": "The Minimum Wage", "paragraphs": ["The federal minimum wage, currently $7.25 per hour, is not indexed to inflation, and thus the real value has risen and fallen in an irregular pattern over time. For example, the minimum wage in 2015 dollars fell from $9.44 in 1979 to $6.34 in 1989. It has fluctuated since then, and declined from 1997 to 2006 to a lesser degree (from $7.58 to $6.23), and then increased. ", "Some early studies found that the decline in the value of the minimum wage in the 1980s was responsible for the steep decline in relative wages at the bottom of the wage distribution during that time period. Some economists argued that the increase in inequality was an episodic event due to the minimum wage and was not traceable to skill-based technological change. A number of years have passed since these early studies and, while inequality at the bottom has stabilized (although with little real wage growth), the inequality increases have continued. This growth in inequality was primarily in the upper half of the wage distribution at levels where it could not have been due to the minimum wage; the study noting that point found a skill-based rather than minimum wage cause for changes through 2005. A study that extended data through 2012 and accounted for state minimum wages found negligible effects for male inequality between the 10 th and 50 th percentiles, finding a meaningful effect only for women. ", "These findings suggest that the minimum wage may have played a relatively small role in increased inequality. "], "subsections": []}, {"section_title": "The Decline in Unions", "paragraphs": ["Union membership in the private sector, which has been historically associated with a positive union wage premium (higher wage for union members) for blue-collar workers, declined significantly during the period of rising wage inequality. From 1973 to 1993, union membership in the private sector declined from 31% to 13%, and by 2018, it had declined to 6.4%. (Union membership in the public sector has increased slightly over that period, from 28.9% in 1973 to 33.9% in 2018.) ", "There are two major reservations about assigning an important role to union membership in explaining increasing inequality in wages. The first is that during the period of the greatest decline in relative wages in the lower half of the distribution, the effect of unions, as determined by multiplying the differentials in the union wage premiums (increased wages due to union membership) across incomes by the change in union membership, accounted for only a small share of the difference (about 8%); the study reporting this effect also found that most of the change was due to technological change. Other studies indicate that the effect would be largely for men, perhaps up to 20% in that early period (the 1980s); over a longer time period, effects were confined to men and associated with increased inequality in the upper half of the wage distribution but reduced inequality in the bottom half. Another study, however, suggested that the union wage premium might understate the effect of unions to the extent that it establishes norms for nonunion jobs in the area or provides a threat to employers who could potentially lose workers to union jobs, finding that the decline in unions was responsible for one-third to one-fifth of the decline in wage inequality for men from 1979 to 2007, and up to one-fifth for women. This study suggests union effects could be larger than otherwise projected.", "Although some studies find significant effects from union membership in reducing wage differences, as acknowledged by the authors of studies finding a larger union effect, it is difficult to disentangle these effects from the effects of other factors\u00e2\u0080\u0094particularly technological change\u00e2\u0080\u0094that might have independently contributed to both wage inequality and the decline in union coverage. If technological change caused a decline in employment in industries that were typically heavily unionized, then the cause is primarily technological change, not deunionization. In addition, there is some evidence that the union wage premium (i.e., the excess of earnings of unionized versus nonunionized workers) has fallen in the private sector, which could have arisen from reduced firm profits (shared with workers) due to foreign competition or from technological advances.", "One policy tool that potentially affects union density as well the bargaining strength of unions is right-to-work (RTW) laws, which have been adopted in 27 states, predominantly in the southern, western, and midwestern states. Under RTW laws, workers receive the benefits of the union contract, but are not required to pay union dues. Many RTW laws have been in place for a long time, although recently, between 2012 and 2017, five states\u00e2\u0080\u0094Indiana, Michigan, Wisconsin, West Virginia, and Kentucky\u00e2\u0080\u0094adopted these laws. ", "There is an extensive economics literature on RTW laws, although these studies are limited by an inability to control for preexisting antiunion sentiment or other unobserved variables (for example, southern states have historically had lower wages for other reasons and are more likely to have adopted RTW laws). Even so, most studies find relatively small effects on wages. A study that controlled for these potentially unrelated differences across states by examining the change in wages in states that recently adopted RTW laws found results suggesting a negligible effect. Overall, these studies suggest that RTW laws may reduce union membership and bargaining strength, with little effect on wages, particularly nationally. This reduction in wages was presumably spread over the income spectrum so that the effect on rising inequality is limited. Because most RTW laws (20 out of 27) were adopted prior to the increase in wage inequality, these laws would likely have played only a small role, if any, in the increase in inequality that began in the 1980s. "], "subsections": []}, {"section_title": "The Large Firm Wage Premium and Pay for Performance", "paragraphs": ["Another wage-setting feature that appears to be fading is the large firm wage premium. Large firms tend to pay a premium, particularly to their lower-paid workers, compared with smaller firms. Wages paid by a firm with 10,000 employees were estimated to be 47% higher than those of smaller firms in 1980-1984 and 20% higher in 2010-2013, although researchers estimated that about a fourth of the decline was offset by increased fringe benefits. One estimate indicates that the decline in this premium accounted for 20% of the wage inequality from 1989 to 2014 (note, however, that this period postdated the major increase in inequality in the 1980s). ", "One cause for the decreased premium is the decline of internal labor markets (ILMs) in large firms, in which wages are assigned to jobs rather than workers (that is, pay is set for doing a particular job and not for how well that job is done). ILMs were developed to curtail managerial discretion in order to reduce discrimination, favoritism, and nepotism, and were aimed at creating a sense of internal pay equity. ILMs compressed wages horizontally (across workers at similar levels) and vertically between more- and less-skilled workers, largely through raising the wage floor. The objective of ILMs was to ensure worker loyalty, reduce shirking, and discourage unionization. The decline in ILMs responded to a less certain environment where technological advancement, globalization, and deregulation increased competition. Signs of the decline in ILMs include reducing returns to tenure, more external hiring, lower tenure rates, a reduction in firm-sponsored training, and more pay-for-performance. Pay-for-performance has tended to reduce wages at the lower end and increase them at the higher end. ", "Large firms also increased contracting with other firms and individuals to perform tasks (outsourcing), where wages can be dispersed without triggering a perception of wage inequity (this phenomenon is also referred to as the fissured workplace ). Some evidence indicates that outsourced janitors and security guards earn less than internal employees. Highly skilled employees may gain, however, from outsourcing. ", "Other factors include the decline in unionization and a change in the view of the firm as a social institution that has occurred with global competition, technological advancement, and pressures from shareholders. Ultimately, the large firm wage premium, as with the decline in union wage effects, appears to be traced back, in part, to fundamental economic changes, which increased competition through technology and globalization. "], "subsections": []}]}, {"section_title": "Immigration", "paragraphs": ["Another factor sometimes suggested as contributing to slow growth in the wages of less-skilled individuals is immigration. As with trade, the effect of immigration on wages and their dispersion cannot be determined a priori. Although immigrants increase the labor supply, they also increase the demand for goods and services. Immigrants in many cases are not close substitutes for native workers (for example, for jobs that require English language skills). Also, they may provide cost savings to firms that are passed along to consumers in the form of lower prices.", "There is an extensive literature estimating the effect of immigration on the wage structure by comparing wage changes in geographical locations with more immigrants to those with less or comparing occupations with more entry by immigrants to those with less. After a review of the evidence derived from two dozen studies, the National Academy of Sciences concluded in 2017 that the impact of immigration on the wages of native-born workers is small, and the effects are most likely on those who have not completed high school, for whom immigrants with low skills are the closest substitutes. Even in those cases, studies typically found effects on wages of less than 1% due to immigration. That study also indicates that there is little evidence of an effect on employment levels for the native born, although there might be effects for prior immigrants. Some evidence suggests that skilled immigrants have a positive wage effect on some groups of native-born workers, and immigration overall has a positive effect on long-term economic growth.", "One challenge with studies of immigration is controlling for the immigrants' choice of location or occupation (although a variety of methods have been used to do so). The findings cited above are bolstered by the results of the study of a rare natural experiment, the Mariel boatlift in 1980, where immigration occurred due to an external event when Cuban leader Fidel Castro allowed Cubans a temporary freedom to emigrate. A large share of the Cubans came to Miami, increasing the labor force there by about 7%. These immigrants were largely unskilled, with a high school or less education. No statistically significant effect was found on wages and employment of non-Hispanic workers with a high school or less education. The Mariel boatlift, although occurring many years ago, remains relevant because of the large surge of immigrants relative to the size of the labor force and the rare opportunity to examine a natural experiment that automatically controls for immigrants' choices. ", "For income distributions, the foreign born would be included in the overall statistics and could increase inequality if they tended to have lower wages. The share of the workforce that is foreign born has been increasing, from 6.7% in 1980 to 9.2% in 1990, 12.4% in 2000, 16.5% in 2010, and 17.0% in 2016. However, little of the growth appeared in the 10 years between 1980 and 1990, when the increase in the college skill premium occurred. The foreign-born share, after a decline that began around 1910, began to increase about 10 years earlier than the increase in inequality observed from 1980 to the present. However, because immigrants are concentrated in both the upper and lower ends of the skill distribution, including them results in a small contribution to inequality."], "subsections": []}, {"section_title": "Declining Labor Force Mobility", "paragraphs": ["Another factor that may contribute to lower wages is the recently observed decrease in labor force mobility, in which data have shown declining interstate mobility and declining worker job changes. Although there have always been barriers to labor mobility (both social and economic), some decline might be due to an aging workforce or industry diversification (that is, more options for employment with a number of firms as compared to those with a dominant large employer) within a locality, although evidence indicates reduced mobility has also occurred among young workers and across educational types. ", "Some effects of reduced mobility on wages may be associated with increasing employer concentration, which increases the ability of employers to set wages if there are few competing employers, such as in a one-factory town. There is some evidence of increasing employer concentration reducing the share of wages in manufacturing, but the estimated effect appears to be small. Labor mobility is an important guard against the power of employers, and some recent attention has focused on certain practices of firms and governments that limit changing jobs. Effects can arise from noncompete covenants (where employees agree not to join or start a competing firm). Employers justify noncompete contracts to recover the cost of training or protect trade secrets. Noncompete contracts are more likely to be found in high-paying jobs, but some evidence suggests they are also common in low-paying jobs. A related phenomenon is no-poaching contracts that ban other firms from hiring each other's employees; recent publicity and actions of state attorneys general about such practices in a number of large fast-food chain franchises has led to an agreement to end these practices. ", "Other factors that might have contributed to reduced labor mobility are an increase in occupational licensing (although it is more likely to apply to more-educated workers) that increased barriers to entry and increased constraints imposed over time by high housing prices arising from land-use regulation, especially among lower-income workers. Geographic mobility may also be limited by the lack of portability of public benefits across state lines. The growth of health insurance tied to the employer may have also reduced job mobility, although this effect may be reduced due to the availability of subsidized insurance under the Affordable Care Act. Barriers to moving in the state and local public sector may occur due to defined benefit pensions. Subsidies to homeowners (such as itemized tax deductions for mortgage interest and property taxes) may benefit higher and middle incomes, but homeowners are the driving force behind zoning restrictions that make housing more expensive for relocating workers. The 2017 tax revision ( P.L. 115-97 ) has, however, significantly reduced the scope of these tax subsidies by limiting itemized deductions and increasing the standard deduction. These changes are scheduled to expire after 2025. "], "subsections": []}]}, {"section_title": "Policy Options", "paragraphs": ["While some specific changes in policy may be suggested by the review of the causes of wage stagnation, it is not clear that simply reversing the causes would outweigh the benefits society accrues more broadly through technological advance and trade. This section discusses some policy options for those left behind by economic growth that might be considered if there is a desire to increase lower- and middle-income individuals' incomes or reduce inequality. ", "Numerous targeted tools exist that the federal government could use to intervene to affect the income distribution. These policies include direct taxes and transfers that increase after-tax earnings; other policies that might increase pretax wages, such as wage subsidies and the minimum wage; and a variety of policies that might potentially provide more equality, such as education and training programs and relocation assistance. This discussion is intended to provide a review of a broad sweep of proposals. An in-depth analysis of each proposal is beyond the scope of this report. Many of these proposals would involve a cost in lost revenues from transfers, tax subsidies, and incentives, or from additional spending, which should be weighed against alternative uses of resources. Many of the regulatory changes discussed\u00e2\u0080\u0094relating, for example, to unions or to practices affecting labor mobility\u00e2\u0080\u0094are controversial and involve a trade-off between benefits to labor income and efficiency costs of intervening in a market economy. "], "subsections": [{"section_title": "Taxes and Transfers", "paragraphs": ["The discussion in this report is based on pretax income, but government tax and transfer programs have affected the shape of posttax and post-transfer income. Table 2 reports estimates that show that the after-tax distribution is more equal than the pretax distribution and that tax and means-tested transfers played a bigger role in 2016 than in 1979.", "In 2016, taxes and transfers increased the income of the bottom quintile by 70% and increased the income of the second quintile by 6%. The third, fourth, and fifth quintiles had their income decreased via net tax payments by 9%, 16%, and 27%, respectively. These transfers provided the bottom 20% with a larger share of the income total, although some of those benefits were to those on public assistance. ", "An increase in the income share of low-wage workers could be accomplished by a combination of reducing the taxation of lower-income workers, increasing direct transfers, and expanding refundable tax credits (which differ from ordinary transfers by being delivered through the tax system). Lower-income workers may benefit from programs providing general transfers or specific benefits, such as subsidies for food, housing, health insurance, and health care. ", "If using transfers to address increased inequality, one consideration is whether to tie a transfer to wages or to make it a general transfer. For example, proposals for some forms of a universal basic income would provide a grant to everyone to provide a minimum income floor that could support individuals in all circumstances. Unless the plan is phased out with income, it could become quite costly, although it could substitute for targeted transfer programs. It could also be a work disincentive, particularly if phased out. Such a concern was raised in the past about a form of phased-out grant called a negative income tax where experimental studies showed work disincentives.", "An alternative approach is to expand the current earned income tax credit (EITC), a refundable credit based on wages that empirical studies have indicated encourages work. The EITC provides a credit for a percentage of wages up to a maximum where the credit is fixed over an income rate and then phased out. There has been particular interest in the tax treatment of childless workers who are eligible for a very small EITC. For 2018, families without children received an earned income credit of 7.65%, for a maximum credit of $519, which began phasing out below the poverty level. Families with one, two, or three or more children received credits of 34%, 40%, and 45%, respectively, and maximum credits of $3,461, $5,716, and $6,431, respectively. Childless workers can receive the credit only between the ages of 25 and 64, although some of these workers without children are noncustodial parents. ", "Proposals have been made in the past to increase the credit and phaseout for childless workers, along with a variety of proposals to lower the minimum age to 21 or to increase credits in general, including for workers with children. The Economic Mobility Act of 2019 (Representative Richard Neal, H.R. 3300 ), ordered to be reported by the House Ways and Means Committee, would expand the EITC for childless workers for two years. It would double the credit rate to 15.3%, increase the maximum credit to $1,464, and increase the income level at which the credit phases out. It also would reduce the eligible age to 19 for those other than full-time students. Several other proposals have been advanced in the 116 th Congress to expand the earned income credit, including the LIFT the Middle Class Act (Senator Kamala Harris, S. 4 ); the Rise Credit unveiled by Senator Cory Booker; the Cost-of-Living Refund Act of 2019 (Senator Sherrod Brown and Representative Ro Khanna, S. 527 and H.R. 1431 ); and bills to expand the earned income credit and the child credit (Senator Sherrod Brown, with numerous cosponsors, S. 1138 , and Representative Daniel T. Kildee, H.R. 3157 , the latter titled the Working Families Tax Relief Act). ", "Expanding the earned income credit would cost varying amounts depending on the proposal. The current EITC costs about $70 billion a year. The expanded EITC in H.R. 3300 for childless workers (proposed for 2019 and 2020) would cost an average of $9.7 billion a year. (This bill proposes some other minor changes in the EITC that are not included in this estimate.) In 2017, the Tax Policy Center estimated the cost of a variety of EITC proposals, with costs ranging from $0.5 billion per year (to double the credit for childless workers and reduce the age of eligibility to 21) to $21.6 billion for a general increase in credit rates. These changes would involve a modest increase in the credit. Larger increases or expanding overall benefits could cost considerably more. The LIFT the Middle Class Act, which has been proposed previously, has been estimated to cost close to $300 billion a year. The act would allow cash transfers of up to $6,000 for married couples (phased out at $100,000) and half that amount for singles. ", "Earned income credits have the advantage of increasing income while encouraging work, but they reduce revenue and must be paid for by additional taxes or spending cuts, either now or in the future. If the object is to help low-income workers, these other changes should generally fall on higher-income individuals. One proposal that also contains a way to pay for the revision would replace the current EITC with a credit for 100% of the first $10,000 of earnings, paid for with an 11% value-added tax (VAT). "], "subsections": []}, {"section_title": "Employer Wage Subsidies", "paragraphs": ["An alternative to credits to workers is providing employer wage credits. As with the EITC, the credit would be phased out to be targeted to lower-wage workers. Employer wage subsidies as a broad alternative to the EITC have not been adopted in the past and are not among active proposals except for narrowly targeted subsidies. The current general subsidy in place is the work opportunity tax credit (WOTC) for hiring individuals from certain targeted groups who have consistently faced significant employment barriers; it is a small program costing about $1 billion a year. Studies of this program have found a relatively low participation rate, although there is evidence that the credit results in higher wages for eligible employees and has expanded employment opportunities for long-term welfare recipients and disabled veterans. Some reasons for the low participation rate (firms may lack information or interest in a government program, or encounter high transaction costs or difficulties in identifying qualified workers) might not apply to a general wage subsidy, which could be more effective. Also, geographically targeted credits (discussed subsequently) and incremental tax credits (for increased hiring) have been used as a stimulus in past recessions, with mixed evidence on their effectiveness. ", "An employer credit differs from an employee credit because the former cannot be based on family characteristics (including total family income). Also, in cases where the employer is paying the minimum wage and would continue to do so with the employer credit, there is no effect on wages, although the employer may be willing to hire employees who would not be hired without the subsidy. ", "Employer subsidies have been confined to narrowly focused programs that are unlikely to have much effect on the broad issue of wage inequality. There do not appear to be any proposals for a general employer wage credit that would phase out with income. Both existing policies and proposed ones have indicated a preference for the employee-side credit (i.e., the EITC) rather than the employer credit as a generally available benefit for low-income workers, perhaps due to the desire to means test based on family income. "], "subsections": []}, {"section_title": "Increasing the Minimum Wage", "paragraphs": ["An increase in the minimum wage would increase after-tax earnings, as a tax credit for working like the EITC does, but with some important differences. There is no explicit cost to the government (other than slightly higher wages for a small number of government employees); rather, the higher minimum wage benefits lower-wage workers and the cost is spread to other consumers through higher prices and reduced business income. Using a higher minimum wage to provide income to less-skilled workers can also cause unemployment. The trade-off depends on how responsive employer hiring is to increases in the required wage. Unlike the minimum wage, the EITC can also be based on family income and need (although this flexibility in the EITC has resulted in minimal benefits for childless workers). A generally higher minimum wage would provide benefits to teenagers and other younger individuals (such as college students) who may still be receiving support from parents or other family members and may come from higher-income families. ", "A 2019 CBO study estimated the effects of raising the minimum wage to $15, $12, and $10. For the $15 option, the minimum wage would be indexed and exemptions for tipped, teenage, and disabled employees eliminated. While indicating that effects on employment are highly uncertain, CBO's median estimates for 2025 are reduced employment of 1.3 million for the $15 level, 0.3 million for the $12 level, and a negligible effect for the $10 level. Families below the poverty level would have incomes increased (in 2018 dollars) by $7.7 billion (a 5.3% increase in income), $2.3 billion (a 1.6% increase in income), and $0.4 billion (a 0.3% increase in income) respectively. Families with incomes between one and three times the poverty level would have incomes increased by $14.2 billion (a 3.5% increase in income), $2.3 billion (a 0.6% increase in income, and $0.3 billion (a negligible percentage increase in income), respectively. Higher-income families would have income reduced because of increased price levels. CBO's findings that a relatively small number of workers would be unemployed, especially for the smaller increases in the minimum wage, are based on its reading of the literature, although arguments have been made that the employment effects should be lower. Conflicting evidence exists on the minimum wage's effect on employment, with some studies finding no effect and others finding reductions in jobs or hours. If the minimum wage causes enough unemployment or lower hours, raising it has the potential to reduce earnings at the bottom of the income distribution, even though it increases earnings at the bottom of the wage distribution for those who remain employed. ", "Effects found in prior research may be smaller than they were in the past. A number of states and localities have minimum wages higher than the federal minimum wage, and some have been raising them recently. In 2019, 13 states and the District of Columbia raised their minimum wages, with some of these increases stemming from ballot initiatives rather than state legislative actions. In addition, 18 states increased their minimum wages based on the cost of living. In 2020, 14 states increased their minimum wages due to previously approved legislative actions or ballot initiatives and 7 states increased levels based on the cost of living."], "subsections": []}, {"section_title": "A Federal Job Guarantee", "paragraphs": ["Another proposal, which has its roots further back in history, is a guaranteed job at a specified wage. Senator Kirsten Gillibrand has expressed some interest in such a plan. Senator Cory Booker has proposed a pilot program in high-need communities ( S. 2457 ). Senator Bernie Sanders has also proposed a federal job guarantee. ", "A plan called the National Investment Employment Corps, administered by state and local governments with federal grants, would provide universal job coverage for all adult Americans with a minimum annual wage of $24,600 for full-time work and a minimum hourly wage of $11.83, indexed for inflation. The jobs would also include fringe benefits. The proponents contend that this program would set a floor in the labor market similar to a minimum wage and would provide jobs that address community needs, such as infrastructure, education, child and elder care, and other needs. They argue that the proposal would both end involuntary unemployment and eliminate working poverty. Another plan, the Marshall Plan for America, would target those without college degrees and pay $15 an hour, possibly including attendance at training programs. These types of plans are estimated to be costly, with two estimates of the more general plan at $450 billion to $670 billion per year, although some behavioral responses and declines in other transfers might reduce the cost. ", "Aside from how to pay for a potentially large-scale program, many challenges may arise. Because there is cyclical fluctuation in unemployment, the size of the guaranteed job workforce would fluctuate, making a match between workers and needed tasks difficult. Unlike the market economy that determines jobs and products based on consumer demand, the assignment of work and output would have to be determined by fiat. When goods provided by the government are not based on the needs for collective goods or goods with public spillovers (such as a military force or highways), misallocation of resources may be more likely to occur. Some resources would be diverted from the private sector with a higher effective minimum wage through the government job alternative. There are also issues as to whether jobs would be established to match needs in local communities, and there could be considerable challenges with programs in sparsely populated rural areas. There might be a need for background checks and proper job placement because some applicants may not be suitable for certain jobs (such as home health care or child care). There are issues about how to treat workers who violate the terms of employment (such as persistent tardiness). Finally, jobs may need capital inputs (e.g., construction equipment) and supplies, and workers in rural areas may have problems finding transportation. "], "subsections": []}, {"section_title": "Wage Insurance", "paragraphs": ["Wage insurance policies were proposed during the slowing of the economy in 2001 to relieve worker anxiety, counter the drop in earnings (estimated at an average of 16% for manufacturing workers), and encourage rapid reemployment. Wage insurance provides a payment for a period of time for part of lost wages when workers become involuntarily unemployed. Wage insurance was subsequently added to the Trade Adjustment Assistance program that currently applies to workers who are certified as having lost their jobs because of trade. ", "This policy idea was mostly dormant until President Obama proposed wage insurance in his final State of the Union message in 2016. The proposal would apply to those making less than $50,000 and employed for three years: it would replace half of lost wages up to $10,000 for up to two years. CBO estimated a $3 billion annual cost. ", "Canada had a temporary wage insurance pilot program, which was more generous than the Obama proposal, and some states have had wage bonuses for becoming reemployed. Some evidence suggested that subsidized workers reentered the workforce about 4% faster than those not subsidized. Concerns have been raised about eligibility and targeting in order to avoid providing incentives for workers to conduct poorer job searches and attracting workers with less stable work histories and employers that provide less stable unemployment. There is a potential benefit of the employer not being aware of the supplement (which is also the case for the EITC), thus reducing the potential stigma that some evidence suggests makes employers less likely to hire those with hiring vouchers. This lack of knowledge would also make it more difficult for the employer to offer reduced wages to those eligible for the supplement. ", "Wage insurance would not help those permanently at the bottom of the income distribution but would help workers who lost their jobs to technological change or other factors adjust to new employment. "], "subsections": []}, {"section_title": "Enhancing Skill Acquirement", "paragraphs": ["The government (at all levels) has a major role in providing for formal education through public schooling and subsidized state colleges and universities. The federal government provides grants (including means-tested Pell grants for students), student loans, and tax credits (which are of limited benefit to lower-income individuals because they are not fully refundable). Pell grants are available for certificates and occupational degrees, although they may not be available for short-term training because they are prorated for full versus part time and duration. Pell Grants are authorized at $22.5 billion, and tax credits cost $19.1 billion. Career technical and education services at the secondary and postsecondary levels are supported by the Carl D. Perkins Career and Technical Education Act of 2006 ( P.L. 109-270 ), which is funded at slightly over $1 billion. ", "The Workforce Innovation and Opportunity Act (WIOA) provides employment and training for low-income and skills-deficient job seekers and workers laid off from their jobs. The workforce development programs include state formula grant programs of $3.3 billion, the Jobs Corps at $2.0 billion, and some national programs at $0.3 billion. For adult education and literacy, the amount is $0.7 billion. For rehabilitation for individuals with disabilities, $3.7 billion is available, primarily through $3.3 billion in rehabilitation grants to the states. ", "Proposals to increase skill acquisition when young and support lifetime training to respond to changes in labor demands include expanding current higher education grant programs and making the tax credits refundable, or providing free education at community colleges or public universities. Some plans are aimed at improving the effectiveness of community colleges, where too little guidance may cause students to waste time and money, increasing the dropout rate and making the transfer of credits to four-year colleges more difficult. ", "Another option is to expand WIOA programs. The evidence on the predecessor of WIOA, the Workforce Investment Act, indicated that the adult programs (whether they included training or not) were relatively successful in improving labor outcomes (higher wages and jobs), but not for dislocated workers. The Jobs Corp (a residential program for youths) also appeared to be relatively successful, although the Trade Adjustment Assistance program was relatively ineffective. Note that the size of spending in the United States on these programs is small (0.04% of GDP) compared to many other countries, and evidence is limited both due to data challenges and lack of interest by researchers given the program's small size. WIOA spending might be more effective if training were based on sectors and aimed at acquiring skills that could be used by multiple local employers rather than one company ; if it were planned with both labor and management input ; and if funding for labor management workforce intermediaries were provided.", "Apprenticeships are a proposal for those who do not wish to go to college or do not think they would succeed, largely for young entrants to the labor force. Employers may be reluctant to provide these programs because, once trained, apprentices may leave for other jobs. Apprenticeships could be funded through grants or tax credits for employers, or through funding training institutions, such as community colleges. S. 393 (Senator Tim Scott and Senator Cory Booker), introduced in the 115 th Congress and known as the LEAP Act, would have provided a credit for employers participating in qualified apprenticeship programs. The LEAP Act was introduced in the 116 th Congress by Representative Frederica Wilson ( H.R. 1660 ), Representative Rodney Davis ( H.R. 1774 ), and Representative Tom Reed ( H.R. 4238 ). Although grants are more cumbersome to administer, tax credits provide an incentive to classify all new hires as apprenticeships. Grants could be used to target apprenticeships to high-growth industries. Proposals have also been made for a general worker training tax credit for employers that would be allowed for training that led to an industry-recognized certification or training programs authorized under WIOA. President Trump has also proposed an expanded apprenticeship program that would include more industry involvement, although some have argued this proposal would weaken apprenticeships.", "Other options include tax subsidies and matching funds for lifetime training accounts or penalty-free withdrawals from retirement accounts, although most lower- and middle-income individuals usually do not have much in savings, retirement accounts, or, in many cases, pensions. S. 379 and S. 275 (Senator Amy Klobuchar, 116 th Congress) would allow tax-free distributions from tax-advantaged education savings plans to be used for expenses for various training and technical education. Uncertainty about work schedules is a barrier to training, especially for workers in lower-paying service-sector jobs. Senator Warren previously sponsored legislation that, among other things, would have required employers to give two weeks' notice of work schedules. "], "subsections": []}, {"section_title": "Strengthening Unions", "paragraphs": ["It is not clear whether the decline in union membership was a reason for growing income inequality or whether the decline was itself the consequence of other factors, such as technological advancement and greater international competition. In addition, while unions act as a counterweight to the market power of employers and aid in workers sharing firms' extra profits, they can also create economic distortions by setting wages in a way that differs from how they are normally set in markets. ", "There is, however, some evidence that unions increase blue-collar workers' wages, and increasing the size and effectiveness of unions is among proposals that could be considered. A package of these proposals has been advanced, including increasing penalties for employers who violate labor laws, prohibiting the hiring of replacement workers in a strike, establishing a mandatory arbitration process, eliminating right-to-work laws, and giving all public-sector employees the rights to organize and belong to unions. ", "There is not much evidence about how successful these changes would be in increasing union membership. As noted in the discussion of right-to-work laws, there is some evidence that such laws reduce the bargaining strength of unions and lead to reduced wages. ", "Another proposal does not involve government policy but would need to be undertaken by unions and union organizers: to organize multiemployer regional or local unions rather than company-wide unions. Company-wide unions face greater difficulties, as large employers are increasingly dispersed over a broad geographic area. "], "subsections": []}, {"section_title": "Encouraging Labor Mobility", "paragraphs": ["Proposals to address the decline in labor mobility include increasing scrutiny of mergers for harmful labor market effects, banning noncompete agreements for low-wage workers, and banning no-poaching agreements. Some actions have already been taken on no-poaching by the Federal Trade Commission and the Department of Justice, in issuing regulations and pursuing cases under antitrust laws. Senators Cory Booker and Elizabeth Warren have proposed to outlaw no-poaching clauses in franchise agreements ( S. 2215 ). ", "Other actions to encourage mobility include reducing tax subsidies for home ownership, as homeownership is a barrier to mobility itself as well as a driver of zoning restrictions (note that reductions were enacted on a temporary basis in the 2017 tax revision); providing greater enforcement against restrictive zoning that harms minorities; revising antitrust law to address state-sanctioned occupational licensing organizations; harmonizing eligibility rules for federal transfers; providing a tax subsidy for moving (a deduction for moving expenses was temporarily eliminated by the 2017 tax revision); providing cash subsidies to cities or states that relax zoning or make occupational licenses transferable across state lines; and providing penalties (e.g., disallowing the mortgage-interest deduction) in localities that do not permit enough housing construction.", "There are arguments for policies that discourage labor mobility, and land-use restrictions may benefit local residents even if they ultimately harm overall growth. Homeownership has benefits that may offset its negative impact on mobility. Employers also would argue that noncompete and no-poaching clauses are needed to allow a return on the cost of training and to protect trade secrets (although some question how important these concerns are for low-wage employees). "], "subsections": []}, {"section_title": "Geographic Targeting", "paragraphs": ["An alternative to encouraging geographic labor mobility would be policies to increase economic activities in areas (often smaller cities and rural areas, but also larger cities) that face chronic unemployment. Geographically targeted subsidies have existed for many years in the income tax code, beginning with enterprise zones and currently including empowerment zones, the new markets tax credit, and the recently enacted opportunity zones. These programs are aimed at helping workers in distressed areas. These geographically targeted subsidies have generally not been found to be effective in encouraging jobs because they are of small size, they are sometimes limited to local employers, and most have encouraged investment rather than employment (investment in physical capital can take place with little additional employment or even displace labor). ", "Three types of policies directed to high-unemployment areas might be considered: wage subsidies, training funds, and government infrastructure or facilities investment. Of these, location of public activity (e.g., military bases and veteran's facilities) and infrastructure facilities are perhaps most problematic. Infrastructure needs are determined by the population, and federal workers are a small part of the labor force. Imposing geographical restrictions could undermine other objectives as well. Another option is to adopt a guaranteed jobs programs in high-unemployment areas, such as in the pilot proposal advanced by Senator Cory Booker ( S. 2457 ). "], "subsections": []}, {"section_title": "A Note on General Economic Growth", "paragraphs": ["Some propose to benefit low-income individuals by taking actions to generate overall economic growth, which often involves tax subsidies to investment. There are issues with this approach that suggest a consideration of the more targeted proposals. The first is that the past 40 years have shown that some groups can be left behind with economic growth that arises from technological advancement. The second is that it is difficult to formulate policies to stimulate economic growth using common approaches such as lowering marginal tax rates. Evidence suggests that tax cuts may not be particularly successful because supply responses are relatively inelastic. Additionally, a tax cut that is not financed by spending cuts adds to the deficit, which eventually crowds out private investment. "], "subsections": []}]}, {"section_title": "Conclusion", "paragraphs": ["Wages at the bottom and, to a lesser extent, the middle of the wage distribution have grown slowly relative to those at the high end over the past 40 years, and this slow wage growth, along with a decline in the labor share of income, has contributed to a growing inequality of income.", "The evidence on the causes of wage stagnation for lower-wage workers points to technological advancement as the most direct primary cause. Globalization appeared to have smaller effects than technological advancement, although it increased overall income inequality by increasing incomes at the top. The decline in wage-setting institutions had relatively small effects and some of these effects can be traced to an indirect effect of technological change that affected unions and the large firm wage premium. Immigration changes appeared to have little or no effect. A decline in labor mobility appeared to make a small contribution. ", "A variety of policy options have different promises and drawbacks. Perhaps the most successful policies, at least based on experience, are transfer programs, including the earned income credit, which is targeted to low-income wage earners. These programs involve potentially large costs and may require raising taxes on higher-income individuals. There is only limited evidence of the effects of a universal basic income and it would be costly if not phased out. Past evidence on a phased-out program found some negative effects on work effort. Experience with the minimum wage, at least at prior levels, has indicated an ability to transfer income with relatively small effects on unemployment, although the effectiveness of increases in the federal minimum wage is limited by widespread state adoption of higher minimum wage rates. Some policies, such as employer wage subsidies, worker training and employment programs, and geographic incentives, have had a mixed or relatively poor track record. Other proposals have been largely untried (such as a federal job guarantee and wage insurance); a job guarantee could cost several hundred billion dollars a year, according to estimates, and present some potentially problematic effects on the private economy, as well as difficulties in administering the program. Some of the more limited proposals may be successful but have small effects. Policies to benefit lower-income individuals through tax cuts to stimulate economic growth have not appeared to be particularly successful at addressing slow wage growth for low-wage workers. "], "subsections": []}]}}
{"id": "R45976", "title": "Deficit Financing, the Debt, and \u201cModern Monetary Theory\u201d", "released_date": "2019-10-21T00:00:00", "summary": ["Explaining persistently low interest rates despite large deficits and rising debt has been one of the central challenges of macroeconomists since the end of the Great Recession. This dynamic has led to increasing attention to Modern Monetary Theory (MMT), presented as an alternative to the mainstream macroeconomic way of thinking, in some fiscal policy discussions. Such discussions are at times restricted by a difficulty, expressed by policymakers and economists alike, in understanding MMT's core principles and how they inform MMT's views on fiscal policy. MMT suggests that deficit financing can be used without harmful economic effects in circumstances of low inflation rates and low interest rates, conditions that currently exist despite indications that the country is at full employment.", "This report surveys the available MMT literature in order to provide a basic understanding of the differences (or lack thereof) between the defining relationships established in MMT and mainstream economics. It then explores how such distinctions may inform policy prescriptions for addressing short- and long-run economic issues, including approaches to federal deficit outcomes and debt management. Included in this analysis are observations of how policy recommendations from MMT and mainstream economics align with current U.S. economic and governance systems.", "In mainstream macroeconomic models, the asset market is characterized by the sensitivity of investment to interest rates, a determinant of investment returns. Money is typically defined as cash and close substitutes, and used for transactions and held as an asset. In the short run, the capital stock (equipment and other factors of production outside of labor) is assumed to be fixed, and output is dictated by the employment level. Fiscal and monetary policy decisions can be used to expand or contract the short-run economy (with distinct effects for each), and those decisions help to inform growth, the stock of capital and labor, and other decisions in the long run. In general, expansionary fiscal policies, including stimulus policies and other programs that increase net deficits and debt, are thought to be helpful when addressing negative shocks in demand, but they may crowd out private investment and reduce long-term growth if used when the economy is otherwise in balance. Persistent increases in real debt (which occurs when the stock of debt grows more quickly than the economy) are viewed as unsustainable, as they would eventually lead to a lack of real resources to borrow against.", "Though some MMT adherents have disputed the notion that the model can be viewed through the basic macroeconomic framework, efforts to do so reveal a few key distinctions. In the MMT model of short-run behavior, investment decisions are insensitive to interest rates, and are instead a function of current consumption levels. MMT holds a much broader view of money, asserting that monetary value can be created by financial institutions in a way that renders monetary policy ineffective in dealing with short-run economic fluctuations. MMT supporters therefore prefer a larger fiscal policy role in managing business cycles than mainstream economists, generally claiming that fiscal borrowing constraints are less imposing than mainstream economists believe in countries with a sovereign currency, and call for direct money financing of fiscal policy actions by the central bank. The translation of the MMT approach to long-run output is unclear, though a jobs guarantee supported by MMT adherents would likely change the nature of the relationship between employment and output levels.", "Full alignment with the economic and political system supported by MMT would likely involve a dramatic shift in the roles and powers of U.S. fiscal institutions. Adopting an MMT framework would involve much more fiscal policy to account for a reduced monetary policy role. Policymakers would also likely need to execute fiscal policy decisions more quickly than has been done in the past in assuming an increased role in economic management.", "Projections of future debt growth due to spending pressures from social programs have led to a current concern about deficit financing, recognizing the institutional challenges in conducting tax and spending fiscal policy. MMT is largely focused on short-run management of the economy, with tax and spending policies aimed at maintaining a fully employed economy without inflation. The MMT approach appears to implicitly assume that a high level of debt will not be problematic because it can be financed cheaply by maintaining low interest rates. Underlying this policy is the assumption that Congress can act quickly to counteract deficit-driven inflation with tax increases or spending cuts that would allow the economy to maintain low interest rates on public debt."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["Traditional macroeconomic theory addresses two main questions. First, macroeconomic theory and policy seek to mitigate short-term economic fluctuations (or stabilize the economy) that leave productive resources idle for a time. Second, macroeconomists seek to recommend public policies that maximize living standards (economic growth) over the long term, while keeping debt at sustainable levels. The role of monetary policy and the maintenance of a stable price level are embedded in both issues.", "In the past few years, the U.S. economy has experienced persistently low interest rates despite near-full employment and federal deficits and debt significantly above their historical averages. These characteristics have led to debate over the optimal trajectory of long-term federal debt in an economic environment with relatively low borrowing costs. Recently, an economic theory outside of mainstream economic views, called Modern Monetary Theory (MMT) by its proponents, has been receiving attention in the public debate. Interest in this theory may in part reflect concerns about the deficit financing needed for new spending programs in health, education, infrastructure, and other areas. MMT suggests that deficit financing can be used without harmful economic effects in circumstances of low inflation rates and low interest rates, conditions that currently exist despite indications that the country is at full employment.", "This report first explains mainstream macroeconomic theory. It then surveys the available MMT literature to provide a basic understanding of the differences (or lack thereof) between the defining relationships established in MMT and mainstream economics. It next discusses whether MMT can be used to justify deficit financing. Finally, it discusses how existing government institutions may present barriers in adopting the prescriptions of MMT for managing the economy.", "Unlike mainstream macroeconomic theory, where consensus has been reached on how core relationships translate into mathematical equations, there is no comparative mathematical statement of MMT. Some academic economists have translated MMT into a mathematical framework, and the explanation of the differences between mainstream and MMT theory are based on those discussions. Proponents of MMT do not necessarily accept that framework, however. "], "subsections": []}, {"section_title": "Explaining Mainstream Economic Views", "paragraphs": ["Although basic macroeconomic models vary in many ways, any macroeconomic model that allows for fiscal and monetary policy to influence the economy has three relationships in the economy that must be in balance: (1) the asset market where investment equals saving (called the IS curve ), (2) the money relationship where the supply and demand for money must equate (commonly called the LM curve ), and (3) the economy-wide relationship where aggregate demand equals aggregate supply. The first two of these equations compose what is referred to as the IS-LM model . These three relationships, in turn, determine output, prices, and the interest rate in the economy. Macroeconomic models formalize the relationship between economic variables, allowing researchers to quantify the effect of a change in one variable on the rest of the system (also called comparative statics ) and to observe how economic patterns align with model predictions.", "The IS-LM model is characterized by a limited role of expectations of future economic conditions and sticky prices . While there are a number of different macroeconomic models, especially those that add expectations, this section uses the simplified model, which forms the core of forecasting models as well as models used by government agencies in projecting the economy. More sophisticated forecasting models of the economy have many equations that capture variation in types of goods, investments, and assets, but this simplified model can be used to explain the standard model and provide a foundation for interpreting MMT.", "Most academic research is directed toward more complex models (sometimes referred to as modern macroeconomic s ), which are discussed briefly below. The basic IS-LM model is useful for illustrating the differences in MMT and mainstream models. "], "subsections": [{"section_title": "Short Run: The Business Cycle", "paragraphs": ["In mainstream macroeconomic models, the short run is characterized by fixed capital investment, or that the equipment and nonlabor resources available to firms are fixed. Output decisions are therefore a function of productivity, employment, and IS-LM outcomes."], "subsections": [{"section_title": "The Investment-Savings Balance (IS)", "paragraphs": ["The IS curve begins with the recognition that output (or income) is the sum of its components: private consumption, investment, and government spending. For simplicity, this models a closed economy; in an open economy there would be a fourth component, net exports. If consumption and government spending are subtracted from output, the result is saving; thus, this relationship could be restated as savings equals investment. ", "Consumption is a fraction of disposable income, which is income minus taxes. Therefore, consumption rises when disposable income rises (which occurs when income rises and/or taxes fall). While consumption depends on income and taxes, investment depends on the interest rate, rising when interest rates fall and declining when they rise. As a result, there are a series of pairs of income levels and interest rates where this relationship is in balance, and income is higher when interest rates are lower. ", "It is through this relationship that fiscal policy can be used to expand or contract the economy. If government spending is increased, or if taxes are decreased (which increases disposable income and therefore increases consumption), demand increases. The recipients of these increased amounts of income then spend a portion of that income, which leads to successive rounds of spending that are called multipliers . "], "subsections": []}, {"section_title": "Money Supply and Demand (LM)", "paragraphs": ["Another critical relationship is that between money supply and money demand, which must be equal for markets to clear. Money is composed of cash, including checking accounts, and its close substitutes. Holding prices constant for the moment, and with a fixed money supply, there are two uses of money. First, some money is needed to carry out transactions in the economy, and thus more money is demanded as income (output) increases. Second, money is needed as a liquid form of asset holdings, and the higher the interest rate, the less money is held because it earns no interest and is exchanged for other forms of assets that earn interest. Similar to the IS curve, this relationship also creates pairs of interest rates and output levels where money supply and demand balance traces out a curve (the LM curve), this time with income higher as interest rates increase. In this case, however, a fixed amount of money demand occurs when both output and interest rates are high or when both are low. When interest rates are high, less money is desired as an asset and more is freed up to support a higher level of transactions (and therefore income)."], "subsections": []}, {"section_title": "Determination of Output and Interest Rates", "paragraphs": ["Where the IS and LM relationships intersect is where income and interest rates will be determined in the economy, holding prices constant. With significant unemployment, any fiscal or monetary stimulus would be transmitted into output effects, moving the economy closer to the output achieved under full employment. ", "The effects of expansionary fiscal policy in the IS-LM model are shown in Figure 1 . When expansionary fiscal policy\u00e2\u0080\u0094through increased spending, decreased taxes, or some combination of the two\u00e2\u0080\u0094occurs (IS 1 to IS 2 ) and the money supply remains fixed (LM), interest rates (r) will rise (point A to point B). This rise occurs because when more money is needed for transactions, money held as an asset must be reduced and interest rates must be higher. This rise in interest rates offsets some of the effects of increased income by reducing investment. Thus, holding money supply fixed, increases in income (Y) that would have occurred if interest rates were fixed is now reduced as investment decreases.", "The monetary policy implications in an IS-LM model are illustrated in Figure 2 . With expansionary monetary policy (LM 1 to LM 2 ), more money is available to support income and transactions at every interest rate (point A to point B). However, that level of income is inconsistent with the level of income that balances the investment\u00e2\u0080\u0093savings (IS) relationship, and interest rates fall, leading to more investment, with some of the increased money supply used to hold more money as a liquid asset. That is, by interacting with the investment\u00e2\u0080\u0093savings (IS) relationship, output and interest rates fall below the amount implied by the money expansion alone. Output (Y) is higher than it was previously, and interest rates are lower. Thus, a monetary expansion increases output and lowers interest rates. ", "Note that while the basic model uses monetary supply as the primary monetary policy tool, due to difficulties in measuring the money supply, monetary authorities generally target interest rates when making policy choices.", " Figure 3 , Figure 4 , and Figure 5 show the basic ways monetary policy can respond to a fiscal policy shift (in these examples through a contractionary fiscal policy shift) in an IS-LM model.", "Monetary policy may be neutral ( Figure 3 ) with respect to a fiscal contraction (IS 1 to IS 2 ) if there is no change in the money supply, so that some of the output effect is mitigated (point A to point B) relative to an accommodating policy. Monetary policy may be accommodating ( Figure 4 ) if the money supply also contracts (LM 1 to LM 2 ) to keep the interest rate constant, allowing maximum output effects (in this case, reducing output) to occur (point A to point B). Monetary policy may be offsetting ( Figure 5 ) if the money supply expands (LM 1 to LM 2 ) to return output to its original level (point A to point B)."], "subsections": []}, {"section_title": "Demand and Supply (AD-AS)", "paragraphs": ["The LM curve actually has a third variable, the price level. The real money supply depends on the price level; if prices rise and nominal money supply is fixed, the real money supply falls. Thus, there is a third relationship in the system. ", "This relationship requires an equilibrium between aggregate demand and aggregate supply (AD-AS). In the short run, the capital stock is fixed, and the output in the economy depends on hiring unemployed labor. (There is also an underlying labor supply and labor demand relationship.) The effects are captured in the aggregate supply equation. As prices rise, the supply of output increases and the demand decreases. Thus, this relationship shows an equilibrium aggregate price level and output in the economy. ", "As shown in Figure 6 and Figure 7 , the effect of fiscal and monetary policies on output (Y) and the price level (P) is a function of aggregate supply and demand. Either a fiscal or monetary expansion will shift the aggregate demand curve toward more output at every price level. The supply curve is relatively flat when there is significant underemployment in the economy, meaning that output can increase without affecting prices. When the economy is at full employment the supply curve is almost vertical, and a shift in the demand curve will increase prices and not output.", "An increase in the price level will decrease the real money supply. If the initial stimulus were a fiscal stimulus, the real money supply would contract, at full employment, to restore the old output level, but with higher interest rates. In effect, the fiscal stimulus would have substituted consumption or government spending for investment (referred to as crowding out ). If the stimulus were originally a monetary stimulus, the real money supply would shift back to its old position and neither the output nor its composition would change. Continual attempts to provide stimulus at full employment would result in a continually increasing price level and, in the case of a fiscal stimulus, continued crowding out of investment. "], "subsections": []}, {"section_title": "Extensions of the Basic Model: Open Economy", "paragraphs": ["This basic model can be expanded in many ways with increased complication and detail. As suggested above, multiple sectors, multiple types of investments, and other details can be introduced. ", "One important element is to allow for an open economy, with exports and imports, foreign investment in the United States, and U.S. investment in foreign countries. Expanding the model in this way, in its simplest form, requires a new relationship, the balance of payments, which requires equal supply and demand for U.S. dollars. This additional relationship requires a new variable, the exchange rate. It also requires net exports in addition to consumption, investment, and government spending, to be added to the IS equation. ", "An open economy tends to diminish the effect of fiscal stimulus. As interest rates rise in the United States, foreign capital is attracted into the United States. To make those investments, foreigners demand dollars and supply foreign currency. The increased dollar demand increases the price of the dollar in foreign currency, and this higher price makes exports more costly and imports less costly. This results in a decrease in net exports, reducing the increase in output. In the extreme, if international capital were perfectly mobile and the United States were a small country, any effect of a fiscal stimulus would theoretically be completely offset, leading to a substitution of consumption and government spending for net exports. Because capital is not perfectly mobile and the United States is a large country, fiscal policy should still be effective in stimulating or restraining the economy.", "Monetary policy theoretically becomes more powerful in an open economy: as an increase in the money supply causes the interest rate to fall, capital flows out of the country, causing net exports to rise."], "subsections": []}, {"section_title": "Extensions of the Basic Model: Investment and the Accelerator", "paragraphs": ["Another modification to the model is to recognize that investment can respond to expected demand. With this extension, as the economy expands and that expansion is expected to be sustained, firms will increase investment in capital goods (known as the accelerator effect ), thereby increasing their capacity. The rate at which capital accumulates in an expanding economy will therefore reflect the rate at which capital investment increases in response to output and the rate of capital depreciation (or how much capital value is lost in any one period) over time."], "subsections": []}, {"section_title": "Extension of the Model: Consumption and Labor a Function of the Interest Rate, and Rational Expectations", "paragraphs": ["Economists had long been concerned that the IS-LM model does not fully account for expectations of future behavior, and lacked the microeconomic foundations where individuals allocate consumption and leisure over time. One way to incorporate such an idea is to make consumption determined by the interest rate as well as disposable income, reflecting the idea that as the interest rate rises individuals want to save more (and consume less). This effect has also been extended to the allocation of leisure and labor, and is most formally contained in dynamic stochastic general equilibrium (DSGE) models. DSGE models include a demand block, a supply block, and a monetary policy relationship. In general, while modifications could easily allow consumption to depend on interest rates, use of a full-blown DSGE model is more common among academics than among private forecasters or government forecasters. The model has been criticized by a number of mainstream academics. "], "subsections": []}]}, {"section_title": "The Long Run: Economic Growth", "paragraphs": ["Over the long run, economic business cycle models converge into economic growth models. Economic growth in the longer term is assumed to be at full employment, and the economy grows with the labor force, capital accumulation, and technological advances. The long run, unlike the short run (where the economy can gain from reducing unemployment), is characterized by fixed resources and tradeoffs. What is most relevant to fiscal and monetary stimulus is that mainstream economic theory suggests that using fiscal stimulus may be good for growth in the short run, but can be harmful in the long run. If fiscal deficits allow consumption to increase at the expense of investment, as would be the case with running the deficit that causes the debt to grow faster than GDP, the economy will continually experience slower growth as the capital stock fails to grow at a quick enough pace. Excessive monetary stimulus, meanwhile, would lead to price level increases that, if followed persistently would lead to an inflationary spiral. ", "The most common growth model is one that reflects a more or less steady-state growth (although that growth pattern may reflect growth in the labor supply). "], "subsections": []}]}, {"section_title": "Modern Monetary Theory", "paragraphs": ["This section explores MMT's basic macroeconomic principles and distinctive characteristics and discusses how to interpret the model into the more conventional IS-LM framework. Because MMT is an emerging ideology, definitively identifying the research that encapsulates it can be difficult. Publications and other works from both proponents of MMT and mainstream economists used in this report are listed in the references section. Though some MMT proponents have expressed caution in viewing MMT through a traditional macroeconomic framework, this approach is consistent with work found both elsewhere in the MMT literature and in mainstream economic analysis, including research with theoretical elements aligning with some of MMT's central assertions. ", "MMT's theory does not take into account self-imposed constraints (i.e., those other than resource constraints), such as lack of a sovereign currency, or of other institutions, such as independence of the monetary authority (the Federal Reserve in the United States) and the Treasury that allows the creation of money to finance government spending. As will be discussed subsequently, U.S. institutions may limit the application of MMT to the management of the economy. ", "As with all macroeconomics, some of the theory is about description and some about prescription, but MMT varies by including prescriptive points that restrain monetary policy to keep a fixed interest rate (this policy will leave fiscal policy as the only tool to address the business cycle). According to the model, when fiscal stimulus produces no inflation, there are still unused resources in the economy, and when fiscal stimulus leads to inflation, the stimulus will be reduced or reversed, thereby reducing the deficit or converting it to a surplus. "], "subsections": [{"section_title": "The Investment-Savings Balance (IS)", "paragraphs": ["Just as with the basic macroeconomic model, analysis of MMT's macroeconomic principles may begin by accounting for all the choices available with output in a closed economy, which are private consumption, investment, and government spending. In equilibrium (when aggregate expenditures are equal to output), this accounting identity can be reframed to show that the difference between national saving and investment is equal to the difference between government spending and government taxes (or the federal budget deficit), which can also be found in the basic approach. ", "One notable distinction between MMT and the basic macroeconomic structure is that MMT assumes private investment levels are insensitive to changes in the interest rate (or the rate of return that investment would offer), at least when the economy is below capacity. The insensitivity of investment to interest rates means that unlike the basic model, where there are a series of output and interest rate combinations where the investment and savings levels are in balance, with MMT desired investment and savings are equivalent at a single level of output, regardless of the interest rate. This relationship alone (which may be described as having a vertical IS curve) is possible in certain permutations of the basic macroeconomic model. As with the basic approach, consumption may be a positive function of income with the MMT investment and interest rate assumption.", "Fiscal policy may still be used to influence economic outcomes in the short run with an investment\u00e2\u0080\u0093savings relationship consistent with MMT. In the basic model, the effect of expansionary fiscal policy (or an increase in the deficit, or spending more than received in taxes) would, all else equal, increase interest rates, which would thereby reduce private investment and influence present and future saving and consumption patterns. Under the MMT condition, investment levels would be unaffected by the change in interest rates caused by the shift in government activity. Expansionary fiscal policy (as seen in Figure 1 ) would therefore still increase income and output in a given period, with a decrease in government deficits having the opposite effect.", "Even if the IS curve is sensitive to interest rates, the same outcome could be achieved by an accommodating money supply response that keeps the interest rate fixed (which is also a part of the MMT approach, as discussed below), although this outcome would be the result of a policy choice rather than of fundamental economic factors."], "subsections": []}, {"section_title": "Money Supply and Demand (LM)", "paragraphs": ["As with mainstream macroeconomic theory, equilibrium in MMT requires equivalence between money supplied and money demanded. The concept of money, however, is applied differently in MMT than in mainstream macroeconomics, which has ramifications for money's relationship with other economic variables and how it may be managed by monetary and fiscal policy.", "Rather than taking money as the cash and close substitutes created by a central bank, MMT proponents believe that money in a financial system is legitimized as the government accepts it as payment for taxes. In this view, government spending may be thought of as \"creating\" the money that circulates in an economy. At the simplest level, assuming the Federal Reserve and the Treasury are the same entity (ignoring self-imposed constraints), the monetary authority provides the money to finance government spending (i.e., by depositing money in the Treasury checking account) which injects money into the economy which is, in turn, used to pay taxes. In a more complex model where the Federal Reserve supports the aims of the Treasury, the money would be lent to the Treasury, directly or indirectly, and thus some discussions also speak of the government lending money into existence. ", "This distinction in the concept of money alone does not generate differences in the beliefs about the viability of long-term deficit financing (which is discussed further below). MMT proponents assert that the interaction of market operations undertaken by banking institutions and Federal Reserve actions that are designed to meet interest rate targets effectively allow banking institutions to make their own lending choices independent of reserve requirements and other restrictions. In their view, this greatly restricts the ability of the Federal Reserve (or any central bank) to control the supply of money, even if they can influence market interest rates. Assuming the central bank affects interest rates without direct control over the money supply is not necessarily inconsistent with the mainstream macroeconomic approach.", "The LM curve is horizontal because the target is the interest rate, although even if the interest rate changed, it would not affect output ( Figure 8 may be used as a reference). The central bank can set any rate, but could set a low rate, perhaps near or at zero, which would lower the cost of government borrowing (in situations where the central bank cannot directly add funds to the government's checking account). Again, the LM curve is not necessarily horizontal because it is naturally that way (MMT discussions do not present a formalized LM curve), but it is horizontal if a fixed interest rate is targeted. The level of that fixed interest could be chosen at any rate, although many adherents support a zero nominal interest rate. Such an interest rate could be made consistent with a low and stable rate of inflation by changing fiscal policy (e.g., if inflation is increasing, taxes should be increased and spending cut). Setting a determinable price level requires a contractionary fiscal policy when demand exceeds potential output to prevent continuing inflation. ", "MMT's notion that monetary policy can maintain any chosen interest rate over an extended time period is a significant deviation from mainstream monetary theory. That assertion requires the absence of any other significant economic force influencing interest rates, including the effects of expected inflation. The existence and impact of inflation expectations is well documented and supported in the economic literature. If there are such nonmoney influences, the adoption of a chosen interest rate may only be maintained with constant injections of money that cause consequent inflationary pressures. Contractionary fiscal policy may not by itself be able to constrain these pressures. The notion that a sovereign government can generate as much money as it chooses without inducing inflation is another notable deviation of MMT from conventional economic analysis. ", "In examining writings by MMT proponents, it is not always clear whether the reliance on fiscal policy (rather than monetary policy) to address an underemployed economy is descriptive (only fiscal policy works) or prescriptive (only fiscal policy should be used because it is too difficult to undertake monetary policy). Proponents appear to believe that the monetary authorities can influence interest rates, including through the buying and selling of bonds as well as directly setting certain interest rates. It is also not clear whether the vertical IS curve is relevant only in an underemployed economy. If the rule for monetary policy is not prescriptive and investment is always insensitive to interest rates, it is difficult to square the theory with the use of monetary policy in the early 1980s to contract the economy and squeeze out inflation, an event widely accepted by economists and consistent with mainstream theory. "], "subsections": []}, {"section_title": "Determination of Output and Interest Rates", "paragraphs": ["The MMT assumption of investment being insensitive to interest rates means that only fiscal policy can be used to shift an underperforming economy to full output in the short run. Under those assumptions, deficit financing in a recession would be an effective way of closing the corresponding gap in output and income, and the Federal Reserve would be tasked with restraining any subsequent increase in interest rates. This combination has been described as an \"extreme Keynesian\" approach in the mainstream literature. The IS-LM curves generated by MMT assumptions are shown in Figure 8 .", "Because under the MMT model the selection of an interest rate plays no role in investment or consumption decisions, proponents call for an interest rate that is more or less fixed at a lower level than current targets. Providing for a low level of interest would reduce federal borrowing costs, although fixing rates too close to zero raises questions about how the government and other borrowers would convince creditors to lend money when the relative costs of holding more liquid assets are lowered."], "subsections": []}, {"section_title": "Demand and Supply (AD-AS)", "paragraphs": ["With interest rates assumed to be fixed and monetary policy largely taken out of business cycle management, the MMT equilibrium output where aggregate demand meets aggregate supply is a function of total factor productivity (as before, the capital stock is assumed to be fixed), fiscal policy choices, and employment. If fiscal stimulus occurs in an underemployed economy, output will increase. If the economy is at full employment, fiscal stimulus will not increase real output, but rather induce inflation, which is a signal to undertake contractionary fiscal policy. With no investment sensitivity to interest rates, or if the interest rate is fixed by the monetary authorities, a fiscal stimulus at full employment will under the MMT model theoretically lead to an inflationary spiral. This effect means that it would be crucial to be able to exert fiscal discipline if inflation appears. Again, these effects are a function of MMT's IS and LM assumptions and mirror the fiscal policy findings in the \"extreme Keynesian\" mainstream view. ", "Unlike the mainstream model, where an increase in demand at full employment leads to a contraction of the real money supply which chokes off demand (leaving the level of demand fixed but its mix changed), there is no link between the IS-LM curve and AD-AS curve that produces an equilibrium in prices and output. Instead, excess demand produces an increase in the price level that must be met with a contractionary fiscal policy in MMT. (In effect, explicit action must also be taken in the mainstream model where the Federal Reserve is managing business cycles, but the Federal Reserve targets interest rates rather than money aggregates. The Fed must recognize the inflationary pressure and take explicit action to offset it with higher interest rates.) ", "Proponents of MMT also advance a federal job guarantee. A job guarantee is not integral to the MMT theory described above, because such a theory would presumably hold, according to MMT advocates, regardless of the presence of the job guarantee. Nevertheless, it is widely advocated by MMT proponents.", "Although how the jobs guarantee is structured is largely undefined, such a policy would likely reduce the fluctuation in employment levels across business cycles and increase government deficit financing. It would presumably be designed to largely eliminate certain types of unemployment (circumstances where individuals willing to work cannot find a job at a reasonable wage either because of the business cycle or a mismatch of skills and labor demand), although frictional unemployment (where individuals are engaged in job searches) would remain. ", "The specific characteristics and implementation process of any job guarantee would likely play a significant role in determining its ultimate effect on output, employment, and price levels. Because there is cyclical fluctuation in unemployment, the size of the guaranteed job workforce would fluctuate, making a match between workers and needed tasks difficult. Unlike the market economy that determines jobs and products based on consumer demand, the assignment of work and output would have to be determined largely by fiat. When goods provided by the government are not explicitly based on the needs for collective goods or goods with public spillovers (such as a military force or highways), misallocation of resources may be more likely to occur. Some resources would, theoretically, be diverted from the private sector with a higher effective minimum wage through the government job alternative.", "The job market in the United States is not uniform, presenting additional challenges for a proposed job guarantee. For example, there could be considerable difficulties satisfying the guarantee in sparsely populated rural areas, filling jobs requiring background checks, or because some applicants may not be suitable for certain jobs (such as home health care or child care). There are also issues about how to treat workers who violated the terms of employment (such as persistent tardiness). Finally, jobs may need capital inputs (e.g., construction equipment) and supplies, and workers in rural areas may have problems finding transportation."], "subsections": []}, {"section_title": "The Open Economy", "paragraphs": ["With an open economy the IS curve contains an additional element, net exports, which is sensitive to interest rates. Mainstream economic theory postulates that if interest rates rise, capital investment in the United States rises, increasing the demand for dollars, raising the price of the dollar, and decreasing net exports (by both a decrease in exports, which are more costly to foreigners, and an increase in imports). Applied to the MMT model, this would mean that the IS curve would no longer be vertical because investment activity would respond to interest changes. In that case, monetary policy that allowed the interest rate to rise would offset a fiscal stimulus. However, the same output effects of fiscal policy as in the closed economy would occur if the monetary authorities kept the interest rate fixed. ", "An open economy means that some U.S. debt is held by foreigners and adds to concerns that the relatively low interest rates may make the financing of the debt more difficult, since the central bank and the Treasury are independent. The low interest rates would make Treasury debt less attractive to investors. This is important because Treasury must raise funds by selling bonds if tax revenues are insufficient for expenditures, and the Federal Reserve cannot lend directly to the Treasury under current law ."], "subsections": []}]}, {"section_title": "Does MMT Justify Deficit Financing?", "paragraphs": ["Much of the analysis in MMT literature and related research focuses on its application in the short-term, or in managing business cycles. Less discussed is how the MMT model applies to long run economic variables, including growth and debt sustainability. This section discusses MMT's generally short-term view of deficit financing and contrasts it with mainstream economics, which is usually focused on the longer term.", "Mainstream economics does not call for balanced federal budgets, and is broadly supportive of deficit financing in managing sufficiently large economic shocks. It does, however, recognize limits on the amounts that the federal government (or any economic actor) may borrow: constraints determined by the availability and willingness of investors to finance its borrowing needs at normal interest rates. In the mainstream view, this borrowing is constrained by the total amounts available for investment (savings in dollars) at a given point in time and the attractiveness of other borrowing options available on the market. In the long term, this constraint means that the amount of federal debt relative to output cannot rise indefinitely. In a basic macroeconomic model this constraint is violated when the long-term interest rate exceeds the long-term economic growth rate, as the general return on investments generated from expansionary policy will be smaller than the interest payments required to finance that activity.", "MMT proponents have generally called for a more active fiscal policy role in managing negative economic shocks. Moreover, the MMT claim that sovereign governments that issue debt in their own currency (like the United States) cannot be forced to default leads to the general perception that an MMT-driven economic structure would involve larger deficits and higher debt levels than those experienced in an economic structure shaped by mainstream economic thinking. This belief is supported by the call for a central bank that consistently sets interest rates near or at zero, which, all else equal, would support deficit financing at lower economic growth rates rather than with higher interest rates if mainstream economic thinking was applied.", "The notion that a sovereign government cannot be forced to default appears to be a central tenet of MMT because of the view that money creation can substitute for taxes or borrowing to finance government. There have been, however, many instances of sovereign governments defaulting explicitly, or implicitly either by inflating the currency, renegotiating terms, or using other measures to address a difficulty in financing debt. These other options might be considered default by another name. ", "While the United States does not appear to face any current concerns about the ability to sell its debt, were a collapse in the market to occur, it might be impossible or at least extremely costly to undertake the needed measures (higher taxes to stem the inflation appearing with money creation). In meeting its statutory mandate of minimizing long-run federal borrowing costs, Treasury may redeem and reissue debt at levels that far exceed the amounts required strictly from new deficit-financing activity. For example, Treasury issued $11.7 trillion in marketable debt in FY2019, which represented more than 70% of the federal marketable debt portfolio. Any dramatic increase in interest rates accompanying a debt crisis would thus likely generate higher interest rates not only for debt generated by new federal deficits, but also for a significant portion of the existing debt stock that is redeemed and reissued. For example, net interest payments during the Greek debt crisis (described below) increased by amounts equivalent to roughly $200 billion in FY2019 dollars, which would require significant tax rate increases, base broadening, or both if needed to meet a sudden change in interest obligations.", "If the federal debt position were viewed by the market to be unsustainable, it could lead to a collapse in the demand for Treasury securities that would cause a \"debt cycle.\" In this case, an observation by some investors to sell or avoid federal debt issuances before they defaulted would raise federal interest rates, which would require more federal borrowing and could lead to further investor avoidance and interest increases. Beyond the significant effects on the federal borrowing position, such a process could also have ramifications elsewhere in the financial markets, as federal securities are often used as a currency substitute for overnight interbank lending and other activities central to general financial operations.", "MMT proponents also claim that government deficits must be small enough to limit inflation. It is unclear how this claim distinguishes MMT in a practical sense from the mainstream view, as mainstream macroeconomics would also support fiscal or monetary intervention to avoid significant increases in interest rates in response to rising debt. In the mainstream and MMT case, there is concern that by the time actors identify an urgent debt sustainability problem, it may be difficult to address. Such a situation would likely be accompanied by a negative economic shock that would make immediately raising taxes (net of spending) difficult, while increasing the money supply risks entering a debt spiral. In the MMT case, such a concern does not arise because of the assumption that the Federal Reserve could finance spending (an assumption at odds with institutional constraints discussed in the next section).", "Further questions arise when examining the applicability of MMT policies to the United States and other nations that already have relatively high real debt levels. In its most recent long-term budget outlook, the Congressional Budget Office (CBO) estimated that federal debt held by the public would rise from 78% of GDP in FY2019 to 92% of GDP in FY2029 and 144% of GDP in FY2049, well beyond the historical peak. It is possible that a high existing debt stock could practically restrict the availability or effectiveness of MMT-supported fiscal policies in managing business cycles, given the institutional constraints discussed in the next section. However, currently there are no signs that the federal borrowing capacity is near exhaustion in the short term or medium term, as interest rates remain below Fed-targeted levels.", "Recent international experiences speak to the complexity of borrowing capacity. Both Greece and Japan experienced rapid growth in government debt in the past decade. Organisation for Economic Co-operation and Development (OECD) data on general government debt (including municipal government debt) indicate that Greek debt rose from 115% of GDP in 2006 to 189% of GDP in 2017, while Japanese debt rose from 180% of GDP to 234% of GDP over the same time period. A loss in market confidence in Greek debt led to a severe recession there, with GDP contracting by 9 percentage points in 2011, and long-term interest rates reaching 22% in 2012. Japanese borrowing was viewed to be more sustainable despite being higher, with relatively flat GDP levels and long-term interest rates close to zero in recent years. "], "subsections": [{"section_title": "Applying MMT to Federal Institutions", "paragraphs": ["When weighing the merits of structural changes, it may be useful to consider the characteristics of the institutions with power to address business cycles in the current system. Members of the Federal Reserve Board of Governors have typically been chosen without regard to political affiliation. The Federal Reserve's Federal Open Market Committee meets at least every six weeks to adjust open market operations as needed, allowing for a relatively quick and efficient way of implementing monetary policy modifications. Fiscal policy decisions managing business cycles are largely made through enactment of new legislation, and thus may be affected by the legislative calendar and other political considerations. In practice, these factors may make the evidential threshold for a fiscal policy response higher than that for action by the Federal Reserve. The Emergency Economic Stabilization Act of 2008 ( P.L. 110-343 ), for instance, was enacted in part to alleviate effects of the Great Recession in October 2008, 10 months after the start of the recession as identified by the National Bureau of Economic Research. In contrast, the Federal Reserve also undertook significant action in fall 2008, but was also able to begin taking countercyclical actions as early as September 2007.", "One may also wish to be mindful of the current independence of the Treasury and the Federal Reserve. In MMT, these groups are treated as a single entity, which is equivalent to assuming that the Federal Reserve can make funds available to the Treasury to spend as it needs. Present laws prohibit the Federal Reserve from lending or allowing overdrafts to the Treasury, so the Treasury must sell bonds at whatever interest rate prevails when revenues are inadequate to finance spending. The Federal Reserve faces no statutory limits on how much federal debt it may purchase in the secondary market, however, so that it can lend indirectly. The degree of independence between the Federal Reserve and the Treasury has varied over time, however, with periods of relatively high cooperation. ", "Even if the Federal Reserve can lend indirectly to the Treasury, it has different objectives than cheap financing of the debt. The Federal Reserve acts under a statutory mandate of \"maximum employment, stable prices, and moderate long-term interest rates.\" If the Federal Reserve determines, for instance, that such a mandate warrants contractionary policy, it has the authority to enact contractionary policy, even if such actions would negate expansionary fiscal policy efforts. It is possible, therefore, that MMT-supported policies may need the support of both federal policymakers and Federal Reserve actors to take full effect. Economists have justified delegating this authority to the Federal Reserve on the ground that an insulated institution is more likely to choose policies consistent with low inflation. If correct, subordinating the Federal Reserve could result in a choice of policies under the MMT framework that removes this check against high inflation. "], "subsections": []}]}, {"section_title": "References", "paragraphs": ["Barro, Robert J. \"On the Determination of the Public Debt.\" Journal of Political Economy 87, no. 5 (October 1979): 940.", "Bell, Stephanie. The Hierarchy of Money. The Jerome Levy Economics Institute, Working Paper Series 231, April 1998. ", "\u00e2\u0080\u0094\u00e2\u0080\u0094. \"Do Taxes and Bonds Finance Government Spending?,\" Journal of Economic Issues 34, no. 3 (September 2000): 603. ", "Blanchard, Oliver J. Public Debt and Low Interest Rates . National Bureau of Economic Research, NBER Working Paper No. 25621, February 2019.", "Chick, Victoria. The Theory of Monetary Policy , vol. 5 . London: Gray-Mills Publishing Limited, 1973. ", "Chinn, Menzie D. Notes on Modern Monetary Theory for Paleo-Keynesians , Spring 2019, at https://www.ssc.wisc.edu/~mchinn/mmt_add2.pdf .", "Fullwiler, Scott. \"Functional Finance and the Debt Ratio-Part I.\" New Economic Perspectives (blog), December 2012, at http://neweconomicperspectives.org/2012/12/functional-finance-and-the-debt-ratio-part-i.html .", "Lerner, Abba P. \"Functional Finance and the Federal Debt.\" Social Research , no. 1 (February 1943): 38. ", "Palley, Thomas K. Money, F iscal P olicy and I nterest R ates: A C ritique of Modern Monetary Theory . The Hans Boeckler Foundation, IMK Working Paper No. 109, January 2013. ", "Rachel, Lukasz, and Lawrence H. Summers. On Falling Neutral Real Rates, Fiscal Policy, and Secular Stagnation . Brookings Papers on Economic Activity, March 2019, at https://www.brookings.edu/bpea-articles/on-falling-neutral-real-rates-fiscal-policy-and-the-risk-of-secular-stagnation/ .", "Rogoff, Kenneth. \"Modern Monetary Nonsense.\" Project Syndicate, March 2019, at https://www.project-syndicate.org/commentary/federal-reserve-modern-monetary-theory-dangers-by-kenneth-rogoff-2019-03?barrier=accesspaylog .", "Rowe, Nick. \"Reverse-Engineering the MMT Model.\" A Worthwhile Canadian Initiative (blog), 2011, at https://worthwhile.typepad.com/worthwhile_canadian_initi/2011/04/reverse-engineering-the-mmt-model.html .", "Sharpe, Timothy P. \"A Modern Money Perspective on Financial Crowding-Out.\" Review of Political Economy 25 (November 2013): 586. ", "Shiller, Robert. \"Modern Monetary Theory Makes Sense, Up to a Point.\" The New York Times , March 29, 2019, at https://www.nytimes.com/2019/03/29/business/modern-monetary-theory-shiller.html .", "Tcherneva, Pavlina R. \"The Role of Fiscal Policy.\" International Journal of Political Economy 41, no. 2 (Summer 2012): 5. ", "Wray, L. Randall. Modern Monetary Theory: A Primer on Macroeconomics for Sovereign Monetary Systems. 2 nd ed. New York: Palgrave Macmillan, 2015."], "subsections": []}]}}
{"id": "R45983", "title": "Congressional Access to Information in an Impeachment Investigation", "released_date": "2019-10-25T00:00:00", "summary": ["Committee investigations in the House of Representatives can serve several objectives. Most often, an investigation seeks to gather information either to review past legislation or develop future legislation, or to enable a committee to conduct oversight of another branch of government. These inquiries may be called legislative investigations because their legal authority derives implicitly from the House's general legislative power. Much more rarely, a House committee may carry out an investigation to determine whether there are grounds to impeach a federal official\u00e2\u0080\u0094a form of inquiry known as an impeachment investigation.", "While the labels \"legislative investigation\" and \"impeachment investigation\" provide some context to the objective or purpose of a House inquiry, an investigation may not always fall neatly into one of these categories. This ambiguity has been a topic of interest to many during the various ongoing House committee investigations concerning President Trump. On September 24, 2019, Speaker Pelosi announced that these investigations constitute an \"official impeachment inquiry.\" Although these committee investigations into allegations of presidential misconduct are proceeding, in the Speaker's words, under the \"umbrella of [an] impeachment inquiry,\" most appear to blend lawmaking, oversight, and impeachment purposes.", "However an investigation is labeled, because the Constitution provides the House with the \"sole Power of Impeachment,\" implementation of the impeachment power, including any ancillary investigative powers, would appear textually committed to the discretion of the House. Yet the House has not established a single, uniform approach to starting impeachment investigations. The process has instead evolved, generally tracking changes the House has made to its committee structure and the investigative authorities conferred to its committees. Although impeachment investigations have often been authorized by a House resolution, they have also been conducted without an explicit authorization. There are still other examples where the House provided express authorization only after a committee had engaged in a \"preliminary\" impeachment investigation.", "An impeachment investigation may be more likely\u00e2\u0080\u0094relative to a traditional legislative investigation\u00e2\u0080\u0094to obtain certain categories of information, especially from the executive branch. For example, it is possible that the significance of an exercise of the impeachment power, in conjunction with a resulting increase in political and public pressure, may itself affect the Executive's compliance decisions. But an impeachment investigation may also have legal impacts. If, in the face of a dispute with the executive branch over access to information, the House chose to seek judicial enforcement of an investigative demand, there appear to be at least three potential ways in which the impeachment power could, relative to a legislative investigation, provide the House with a stronger legal position. An impeachment investigation may (1) improve the likelihood of a court authorizing committee access to grand jury materials; (2) relieve any possible limitations imposed by the requirement that a committee act with a \"legislative purpose\"; and (3) improve the likelihood that a committee will be able to overcome privilege assertions such as executive privilege. In the past, executive noncompliance with an impeachment investigation has also prompted the investigating committee to recommend to the House an article of impeachment for contempt of Congress.", "That said, a congressional committee engaged in a legislative investigation could arguably obtain much of the same information as it would during an impeachment inquiry, as both legislative and impeachment investigations constitute an exercise of significant constitutional authority. As a result, while an impeachment investigation may very well increase the House's access to information, House committees may have substantial authority to obtain the information they seek even without reliance on the impeachment power."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["Committee investigations in the House of Representatives can serve several objectives. Most often, an investigation seeks to gather information either to review past legislation or develop future legislation, or to enable a committee to conduct oversight of another branch of government. These inquiries may be called legislative investigations because their legal authority derives implicitly from the House's general legislative power. Much more rarely, House committee investigations have been carried out to determine whether there are grounds to impeach a federal official\u00e2\u0080\u0094a form of inquiry known as an impeachment investigation. An impeachment investigation has typically been one of the House's first steps in the exercise of its constitutional impeachment power, and may conclude with the investigating committee recommending articles of impeachment to the full House.", "While the labels \"legislative investigation\" and \"impeachment investigation\" provide some context to the objective or purpose of a House inquiry, investigations may not always fall neatly into one of these categories. To the contrary, distinguishing between legislative and impeachment investigations might sometimes be difficult, especially when an investigation focuses on alleged misconduct by an official subject to impeachment by the House. This ambiguity is reflected in the various ongoing House committee investigations concerning President Trump. On September 24, 2019, Speaker Pelosi announced that these investigations constitute an \"official impeachment inquiry.\" While these committee investigations into allegations of presidential misconduct are proceeding, in the words of the Speaker, under the \"umbrella of [an] impeachment inquiry,\" most appear to blend legislation, oversight, and impeachment purposes.", "However labeled, many of the House investigations have been hindered by refusals to comply with committee subpoenas for documents or testimony. Various legal explanations have been provided for these refusals, including that federal law prohibits the disclosure of grand jury materials to Congress, that the relevant committee subpoenas lack a required legislative purpose, and that the information sought is protected by executive privilege.", "These interbranch disputes over information access have raised interest in whether invocation of the impeachment power will improve the House's ability to acquire withheld information. This report addresses that question, with a focus on presidential impeachment investigations. Specifically, the report considers whether the impeachment power may strengthen the House's investigative authorities in a manner that would improve the chamber's ability to obtain information, especially through the courts. Compared to a typical legislative investigation, an impeachment investigation may be more likely to acquire certain categories of information, including grand jury materials, documents and testimony related to either the President's exercise of his exclusive constitutional powers or his conduct occurring prior to taking office, and communications covered by executive privilege. But Congress's right of access to relevant information in a more typical legislative investigation is also substantial. Thus, partly because the line between legislative and impeachment investigations is sometimes blurred, but primarily because both impeachment and legislative investigations constitute an exercise of significant constitutional power, House committees may have adequate authority and tools to obtain much of the information they seek regardless of whether they are engaged in a legislative investigation or one relying on the impeachment power."], "subsections": []}, {"section_title": "What Is an Impeachment Investigation?", "paragraphs": ["The Constitution provides the House with the \"sole Power of Impeachment,\" but neither that document, federal statutes, nor House Rules define impeachment investigations. Nor have the courts asserted \"any role\" in addressing the impeachment power generally or impeachment investigations specifically. In fact, the Rules of Proceeding and Speech or Debate Clauses of the Constitution, along with political question doctrine, all generally prevent the courts from \"questioning Congress about actions taken in the impeachment process.\" The manner by which the House chooses to implement its impeachment powers appears therefore to be textually and historically committed to the discretion of the House.", "The House, however, has adopted no explicit definition of what constitutes an impeachment investigation. Left with gleaning a definition from the various constitutional provisions governing impeachment and the House's historical practice\u00e2\u0080\u0094which includes 19 impeachments (15 of which were federal judges) arising from over 90 past impeachment investigations \u00e2\u0080\u0094an impeachment investigation may be defined as an investigation carried out to aid the House in its \"constitutional responsibility\" of determining whether \"sufficient grounds\" exist to charge an impeachable official (\"[t]he President, Vice President and all civil Officers of the United States\" ) with an impeachable offense (\"[t]reason, Bribery, or other high Crimes and Misdemeanors\" ).", "Nor has the House established a single, uniform approach to starting impeachment investigations. Instead, the process has evolved, generally along with changes to the House's committee structure and the investigative authorities with which those committees have been vested. Although impeachment investigations have often been authorized by a resolution of the House, there have also been impeachment investigations conducted (and articles of impeachment recommended by the Judiciary Committee and approved by the House) without an explicit authorization. For example, the House explicitly directed the Judiciary Committee to \"investigate fully and completely whether sufficient grounds exist for the House\" to impeach President Clinton, but in the1980s provided no authorization for investigations into allegations of impeachable conduct against Judges Walter Nixon, Alcee Hastings, and Harry E. Claiborne, who were ultimately impeached by the House. There are still other examples in which a resolution of authorization was provided only after a committee had engaged in a \"preliminary\" impeachment investigation. For example, although the House eventually authorized the impeachment investigation of President Nixon, the Judiciary Committee began the \"preliminary phases of an inquiry into possible impeachment\" months earlier.", "The somewhat inconsistent House practice on the use of authorizing resolutions may be due to any number of practical, procedural, or political factors. For example, at least until the second half of the 20th century, an authorizing resolution from the House was often a practical necessity for an effective impeachment investigation. This is because in the period before standing committees existed an investigating committee needed to be created and authorized. Even after standing committees were established, the House typically still needed to provide the committee with both investigative jurisdiction and compulsory investigative tools such as the power to issue a subpoena to force the disclosure of information. Indeed, although the House often adopted resolutions providing individual committees with limited subpoena powers following the Legislative Reorganization Act of 1946, it was not until 1975 that the House granted its committees standing investigative and subpoena powers under House Rules. Even after 1975, there was still practical value in authorizing resolutions, which typically provided the investigating committee with additional investigative tools beyond what the committee may have otherwise possessed, such as the ability to conduct staff depositions or issue written interrogatories. Thus, for a good portion of the House's history, authorizing resolutions were generally needed to give a committee the tools necessary to carry out an effective and expeditious investigation. Use of an authorizing resolution has also provided the House with the opportunity to assert control over the scope, direction, and conduct of a committee's impeachment investigation."], "subsections": [{"section_title": "The House, Its Committees, and the Delegation of Investigative Powers", "paragraphs": ["Along with the practical explanations discussed above, it is also possible that the different approaches to initiating impeachment investigations reflect different conceptions of the House's impeachment power and the derivative authority that may be conferred to its committees to carry out investigations ancillary to that power.", "The nature of this power is perhaps best explored in relation to the House's well-established authority to conduct legislative investigations. These investigations are carried out under the House's implied constitutional authority to investigate in \"aid of the legislative function.\" While there are various \"legislative functions\" that an investigation may fulfill, the prototypical legislative investigation of the executive branch is carried out so that Congress can either inform itself for purposes of lawmaking or conduct oversight of those charged with the \"faithful\" execution of the law. This familiar exercise of investigative power, though not explicitly enumerated in the Constitution, is so essential to the functioning of a legislature as to be implicit in the \"legislative powers\" vested in Congress by Article I, \u00c2\u00a71 of the Constitution. These investigations play a vital role in the constitutional system, as they are intimately and directly tied to Congress's power to legislate. Because \"a legislative body cannot legislate wisely or effectively in the absence of information respecting the conditions which the legislation is intended to affect or change,\" impairment of Congress's authority to gather information leads to the impairment of Congress's core function of legislating.", "The necessity and importance of legislative investigations are also reflected in the statutory requirement that all committees \"exercise continuous watchfulness\" over the executive branch's implementation of law and the directive under House Rule X that standing committees \"review and study on a continuing basis\" the administration of law, the operation of agencies, and \"any conditions or circumstances that may indicate the necessity or desirability of\" new legislation. House Rules further provide that committees have \"general oversight responsibilities\" that are generally to be used \"to assist the House in its\" legislative tasks.", "To carry out these requirements, the House has extensively delegated investigative powers and tools to its committees to aid the chamber in its traditional legislative functions. Under House Rules, a standing House committee may conduct \"such investigations and studies as it considers necessary or appropriate in the exercise of its responsibilities\"; hold hearings; take staff depositions; and \"require, by subpoena \u00e2\u0080\u00a6 the attendance and testimony of such witnesses and the production of such \u00e2\u0080\u00a6 records \u00e2\u0080\u00a6 as it considers necessary.\" But by the terms of the delegation, and because committees are creatures of their parent chamber, use of the provided compulsory investigative tools extends only to \"subjects within the jurisdiction of a committee\" and \"for the purposes of carrying\" out any of its enumerated \"functions and duties.\"", "The precise constitutional source (or sources) for impeachment investigations, and the subsequent delegation of investigatory impeachment authority to House committees, is less clear. It would appear that the legal basis for these investigations could be viewed in various ways\u00e2\u0080\u0094with each interpretation leading to slightly different roles for both the House and any investigating committee. First, impeachment investigations could be seen as another form of the traditional legislative investigation. Rather than assisting the House for the purpose of lawmaking or oversight, the investigation is made to \"aid\" the House in a different \"legislative function\" \u00e2\u0080\u0094impeachment. Under this conception, the House holds one broad-based power of inquiry, and if any distinction between legislative and impeachment investigations exists, it is not one of constitutional source of authority, but one based on purpose.", "If impeachment investigations are an extension of the House's traditional power of inquiry, and therefore derive from the same source as legislative investigations, it would appear that a committee would be free to use its existing investigative authorities, within the jurisdiction delegated to the committee, to assist the House in carrying out the function of impeachment. Under this view, no additional authorization or delegation from the House would be necessary to conduct an impeachment investigation (though it may be desirable if the House wished to either guide the investigation in a specific direction or provide a committee with additional authorities).", "But it could also be argued that impeachment investigations derive their authority not from the general legislative power, but directly and independently from the House's \"sole Power of Impeachment\" in Article I, \u00c2\u00a7 2 of the Constitution. The U.S. Court of Appeals for the District of Columbia Circuit (D.C. Circuit), for example, has suggested in dicta that the Impeachment Clause is the \"express constitutional source\" for the \"investigative authority\" of an \"inquiry into presidential impeachment.\" Although investigations are not explicitly mentioned in Article I, \u00c2\u00a7 2, or any of the other impeachment-related clauses, the power to impeach must by necessity include the power to investigate allegations of impeachable conduct. Under this conception, the authority to investigate for impeachment is either implicit in the impeachment power itself, or \"necessary and proper to carrying into execution\" that power, but in either case is a power that is constitutionally independent of Congress's general power to conduct legislative investigations.", "If impeachment investigations derive their authority not from the general legislative power, but independently from the House's exclusive impeachment power, it has been argued that some form of additional authorization or delegation may then generally be necessary to transfer that power from the House to its committees since current House Rules are \"silent on the issue of impeachment.\" Committees are \"representatives of the parent assembly\" and have only the power to inquire into matters that are within the scope of the authority delegated to them by the House. It is that delegation, whether in the form of a free-standing resolution or under House Rules, that is \"the controlling charter of the committee's powers.\" Thus, under the independent power conception, it could be argued that if a committee is going to exercise impeachment powers provided \"sole[ly]\" to the House, including the \"investigative powers that are ancillary\" to impeachment, it needs to do so with some adequate authorization or delegation from the House\u00e2\u0080\u0094a delegation that the current House Rules have not explicitly made. The argument does not appear to be that the Constitution's impeachment provisions directly require authorization of an impeachment investigation, but rather that as a matter of House Rules and the established relationship between the House and its committees, a House committee can exercise the investigative powers of impeachment only if that authority has been delegated to it by the parent body.", "Whatever the merits of this interpretation, it would appear to be in tension with those House precedents in which impeachment investigations were undertaken without House authorization, and in conflict with the House General Counsel's current litigating position in multiple cases.", "In sum, there is neither a clear definition in law or House Rules of what constitutes an impeachment investigation, nor a clearly established House process for how such an investigation is to be initiated. As a result, it would appear that the House has many choices in how it executes an impeachment investigation. House leadership appears to take the view that a specific authorization of an impeachment inquiry is not constitutionally necessary for committees to engage in an impeachment investigation of the President. On the other hand, some might argue that adopting an authorizing resolution is required or\u00e2\u0080\u0094even if not legally necessary\u00e2\u0080\u0094useful because it provides the House with the opportunity to empower and direct a committee's impeachment investigation, while also providing a clear and forceful imprimatur of the House's support for that inquiry."], "subsections": [{"section_title": "The Question of Authorization in the Current House Impeachment Inquiry", "paragraphs": ["In the House's ongoing investigations of President Trump, no committee has received the type of explicit and direct authorization ultimately provided in the Clinton and Nixon investigations. Nevertheless, even if one were to accept for purposes of argument that authorization is a prerequisite to a committee engaging in an impeachment investigation, it could be argued that the House recently provided this authorization, at least for wielding the powers of impeachment in court. In June, the House adopted H.Res. 430 , which provides that \"in connection with any judicial proceeding \u00e2\u0080\u00a6 the chair of any standing or permanent select committee exercising authority thereunder has any and all necessary authority under Article I of the Constitution.\" The accompanying Rules Committee report cites the Judiciary Committee's investigation into whether to recommend articles of impeachment to the House as an \"example of a Committee being able to use 'all necessary authority under Article I of the Constitution.'\"", "The White House, however, asserts that House committees are not currently engaged in an impeachment investigation absent a formal authorizing resolution from the House. But there would likely be significant challenges to pursuing this argument in litigation, particularly given the courts' historical reluctance to scrutinize the House's implementation of its own internal powers. Indeed, whether a committee is engaged in an impeachment investigation represents the unique convergence of various areas in which courts are generally reluctant to second-guess the position of the House and its committees, including the House's implementation of its \"sole Power of impeachment\"; the House's exclusive authority to set and interpret its own rules; and a committee's role in articulating the purpose of an investigation. According to at least one commentator, it seems likely that to obtain judicial recognition of an impeachment investigation the House need only present enough evidence to \"persuade the court that its current investigation is sufficiently tied to the impeachment process.\"", "While this deferential approach to actions of the House and its committees is not absolute\u00e2\u0080\u0094for example, courts sometimes have exercised their judicial powers to ensure that the committee is acting within the scope of the authority delegated to it by the parent chamber \u00e2\u0080\u0094it may be reinforced in the current situation because the House General Counsel (HGC) has asserted that there is \"no authority for the proposition that the House must vote to authorize the Committee to investigate impeachment.\" The HGC's position is important because it is overseen by the Bipartisan Legal Advocacy Group, which \"articulates the institutional position of the House in all litigation matters.\" The D.C. Circuit has suggested that when the HGC voices an interpretation of internal House matters it must be \"given great weight.\" That said, an explicit authorization from the House could remove any ambiguity as to the appropriate characterization of the committee investigations.", "But in many ways, the current focus on whether the House must authorize an impeachment investigation may lead to the misimpression that an impeachment inquiry is the only means by which Congress may investigate and acquire information concerning allegations of executive branch wrongdoing. A committee can investigate executive branch misconduct in an impeachment investigation, a legislative investigation, or some combination of both. Investigations conducted pursuant to the impeachment power may, as discussed below, provide the House with some access advantages, perhaps most significantly if executive privilege is invoked as a justification to deny congressional access to information. But an executive official, including the President, may also be the subject of a legislative investigation, and Congress's ability to access information from the executive branch in these investigations is oftentimes substantial. Accordingly, the degree to which Congress may obtain information through an impeachment inquiry that it cannot acquire in a traditional legislative investigation may not always be as significant as might first appear.", "Even without invocation of the impeachment power, House committees retain existing authority to investigate allegations of executive branch misconduct, including criminal activity as part of a legislative investigation. Courts have generally recognized that the power to conduct legislative investigations includes the authority to inquire into and investigate the conduct of government officials, especially when a committee is considering possible remedial legislation. As one district court recently stated, even absent any claim that an investigation is being undertaken for purposes of impeachment, committee investigations into misconduct by executive branch officials generally fit \"comfortably within the broad scope of Congress's investigative powers\" so long as the investigation is within the committee's jurisdiction and is carried out for a legislative purpose. Opinions of the Supreme Court reinforce this notion by holding that Congress's implied investigative power, wholly apart from impeachment, \"comprehends probes into departments of the Federal Government to expose corruption, inefficiency or waste,\" and includes the authority to \"inquire into and publicize corruption, maladministration or inefficiency in agencies of the Government.\" Thus, the line between an impeachment investigation and a legislative investigation into official misconduct may not only be significantly blurred, but in some instances, may also be unnecessary to draw given the tools and authority available to committees to conduct legislative investigations into executive branch misconduct. This authority includes not only the use of compulsory investigative tools like the subpoena, but also other forms of legislative leverage generally available to the House, its committees, and even individual Members."], "subsections": []}]}]}, {"section_title": "Impeachment Investigations: Scope of Access to Information", "paragraphs": ["Addressing the scope of the House's access to information during an impeachment inquiry requires some brief comparison of impeachment and legislative investigations. To begin, the two types of investigations have much in common: both represent exercises of the House's constitutional power; both act as essential checks on executive overreach and help ensure preservation of the separation of powers; and both are unique and consequential powers characterized by their mix of judicial, legislative, and political features. In addition, whether engaged in an impeachment or legislative investigation, the tools used to gather information are now mostly the same, especially given recent changes to the House Rules that provide committees with authority to carry out investigations in an increasingly prompt manner and without the full participation of the committee. In any investigation, a committee would likely obtain most information through requests for information, voluntary interviews, hearings, subpoenas for documents or testimony, and depositions.", "But the two investigations arguably contrast in a few notable ways. For example, the frequency with which each is exercised differs greatly. While the House has conducted myriad legislative investigations of the executive branch, there have been comparatively few impeachment investigations of executive branch officials. In addition, the House has previously granted the subject of an impeachment investigation certain procedural rights that are not seen in legislative investigations. For example, during both the Nixon and Clinton impeachment investigations, the House Judiciary Committee adopted resolutions affording the President and his counsel the right to respond to evidence gathered by the committee, raise objections to testimony, and cross-examine witnesses, among others.", "In another distinguishing feature, the Judiciary Committee's power to issue subpoenas in impeachment investigations has previously been altered in an effort to encourage \"a fair, impartial and bipartisan\" investigation. In both the Nixon and Clinton investigations, the power to subpoena was provided to \"the chairman and the ranking minority member acting jointly, or, if either declines to act, by the other acting alone....\" Even so, \"[i]n the event either [the Chair or the Ranking Member] so declines,\" the provisions continued, \"either shall have the right to refer to the committee for decision the question whether such authority shall be so exercised \u00e2\u0080\u00a6\" Thus, in the case that the Chairman and the Ranking Member disagreed on issuing a subpoena, the question would be settled by vote of the Judiciary Committee. The functioning of the provision was described by some Members of the Judiciary Committee as \"practically nullif[ying] any truly independent subpoena power for the ranking minority member \u00e2\u0080\u00a6,\" as the Chairman's position would likely be upheld by the committee.", "Significantly, there may be some ways in which the House's investigative authority is either amplified or broadened during an impeachment investigation. The precise extent of any legal advantage, however, is not entirely clear. While there is a reservoir of historical\u00e2\u0080\u0094and to a much more limited extent judicial\u00e2\u0080\u0094precedents that can be used to analyze the House's authority to obtain information from the executive branch in traditional legislative investigations, the same cannot be said for impeachment investigations. There have been relatively few impeachment investigations of executive branch officials, and none that have been presented to the courts for resolution of constitutional questions of information access. ", "Despite the limited historical precedent, early statements from all three branches support the House's robust and expansive right of access to information pertinent to an impeachment investigation. Since nearly its inception, the House has viewed its impeachment power as including \"the right of inquiry \u00e2\u0080\u00a6 to the fullest and most unlimited extent,\" and \"certainly impl[ying] a right to inspect every paper and transaction in any department.\" Neither the executive nor judicial branches, the House has asserted, can \"seek to impede the House in the exercise of its sole power to impeach.\" And while the Supreme Court has little to no role in reviewing the impeachment power generally, it has compared the House's right to information in an impeachment investigation to that of a court of law, stating that the House may obtain information \"in the same manner and by the use of the same means, that courts of justice can in like cases.\" As one district court has stated about presidential impeachment investigations,", "[I]t should not be forgotten that we deal in a matter of the most critical moment to the Nation, an impeachment investigation involving the President of the United States. It would be difficult to conceive of a more compelling need than that of this country for an unswervingly fair inquiry based on all the pertinent information.", "The executive branch appears to have similarly acknowledged the breadth of impeachment investigations, although usually in the context of denying Congress's right of access in a legislative investigation. In an oft-quoted example, President James K. Polk stated that the authority of the House in an impeachment investigation \"would penetrate into the most secret recesses of the Executive Department\" and would include the authority to \"command the attendance of any and every agent of the Government, and compel them to produce all papers, public or private, official or unofficial, and to testify on oath to all facts within their knowledge.\" \"If the House of Representatives, as the grand inquest of the nation \u00e2\u0080\u00a6 should think proper to institute an inquiry,\" Polk continued, \"every facility in the power of the Executive [would] be afforded to enable them to prosecute the investigation.\"", "The need for the House to obtain access to relevant information in an impeachment investigation may also be underscored by the essential role impeachment plays in ensuring presidential accountability. For instance, given the Department of Justice's (DOJ's) position that a sitting President is not subject to indictment or criminal prosecution while in office, impeachment and removal may be one of the few available mechanisms to hold a President immediately accountable for criminal conduct. Broad access to evidence either supporting or refuting allegations of presidential misconduct could be seen as essential if the House is to exercise its \"right of accusing\" and if the impeachment power is to maintain its envisioned role as an \"essential check\" on the executive branch generally and the President specifically.", "While these statements and principles establish a general proposition that the House enjoys broad access to information in an impeachment investigation, this access may be subject to certain constitutional limitations that generally attach to congressional investigative activity. For example, provisions of the Bill of Rights that have been found to apply in legislative investigations, including the First Amendment, Fourth Amendment, and the Fifth Amendment's privilege against self-incrimination, may also apply in impeachment investigations. Other constitutional principles that may limit committee access to information in legislative investigations, for example considerations arising from the separation of powers such as executive privilege, may prove less of an obstacle and apply with less strength in an impeachment investigation."], "subsections": [{"section_title": "Potential Investigative Advantages of an Impeachment Investigation", "paragraphs": ["When examining the legal implications of impeachment investigations, and especially whether an investigation may strengthen the House's hand in any information access dispute with the executive branch, it may help to think of interbranch investigative conflicts as proceeding in two, sometimes overlapping, phases: a political phase and (in limited situations) a judicial phase. This staged approach offers a useful analytical framework for assessing the impact an impeachment investigation may have on decision making in all three branches of government."], "subsections": [{"section_title": "Impact of the Impeachment Power on the Political Stage of an Investigative Conflict", "paragraphs": ["The first phase of an investigative dispute between Congress and the executive branch is typically political in nature, in that conflicts that may arise are generally steered by political forces, with outcomes dependent upon not only each branch's evaluation of the costs and benefits of a given position, but also each branch's willingness and ability to exert either direct or indirect pressure on the other. This phase is typically characterized by a process of negotiation and accommodation, which\u00e2\u0080\u0094though often guided by legal considerations \u00e2\u0080\u0094is also influenced by the use of various levers of political or institutional influence. For Congress, these levers are manifold, and include, among other tools, threatened and actual restrictions on appropriations, changes to delegated executive branch authority, delay of nominations, and attempted enforcement of subpoenas through mechanisms such as criminal contempt of Congress. For the executive branch, leverage lies mainly in the fact that it possesses the information Congress seeks, and therefore delays or a continuation of the status quo may work in its favor. The vast majority of information access disputes are resolved at this political stage, typically either by the executive branch agreeing to comply with congressional demands, Congress relinquishing its request, Congress agreeing to narrow its inquiry, or through a settlement or information access agreement in which Congress is provided access under certain restrictions.", "Because of the nature of interbranch negotiations, and the paucity of impeachments of executive branch officials, it is difficult to assess the impact an impeachment investigation would have on the political phase of an interbranch dispute. Even so, the significance of a possible exercise of the impeachment power, along with a possible resulting increase in political and public pressure, may itself affect the executive's compliance decisions. During the Nixon impeachment investigation, the House Judiciary Committee noted that \"not one\" subject of the nearly 70 prior impeachment investigations \"challenged the power of the committee conducting the impeachment investigation to compel the production of evidence it deemed necessary.\" President Andrew Johnson, for example, voluntarily provided the Judiciary Committee with sensitive information during that committee's impeachment investigation\u00e2\u0080\u0094including confidential communications with advisers and information related to the use of his pardon and veto power. Presidents Nixon and Clinton also pledged cooperation with House impeachment investigations. But an impeachment investigation is not a panacea for access. Both Nixon and Clinton were later viewed by the Judiciary Committee as withholding relevant evidence. President Nixon ultimately refused to comply with numerous committee subpoenas, and President Clinton was accused of either refusing to comply with requests for written admissions or providing the Committee with false or misleading responses.", "The Judiciary Committee's response to the actions of President Nixon and President Clinton displays another tool of leverage that uniquely attaches to an impeachment investigation: the threat that noncompliance with committee demands for information could rapidly lead to the adoption of an article of impeachment for contempt of Congress. In a legislative investigation, the tools available to a committee to seek enforcement of a demand made to the executive branch are limited. The primary current avenue for forcing compliance with a subpoena appears to be through the judiciary in a civil enforcement action. The Senate Watergate Committee, which was engaged in a legislative investigation, pursued this avenue of enforcement when President Nixon refused to comply with that committee's subpoenas for White House tapes.", "The House Judiciary Committee, on the other hand, chose not to litigate enforcement of its subpoenas during its impeachment investigation of President Nixon, concluding that it would be \"inappropriate to seek the aid of the courts\" because the Framers had made clear\u00e2\u0080\u0094by vesting the impeachment power \"solely\" in the House\u00e2\u0080\u0094that there was not \"any role for the courts in the impeachment process.\" Instead, the Committee obtained portions of the information it needed from other sources (including the Watergate special prosecutor and grand jury) and recommended to the House an article of impeachment based on President Nixon's failure to comply with the Committee's subpoenas. The Judiciary Committee took the same approach during the Clinton impeachment, approving and recommending to the House an article of impeachment based on the President's \"refusing and failing to respond to certain written requests for admission\" and for providing incomplete or \"false and misleading\" information to the Committee. Knowledge that a committee engaged in an impeachment investigation is poised to recommend an independent article of impeachment for failure to comply with a committee subpoena might serve as a tool of leverage during negotiations in the political phase."], "subsections": []}, {"section_title": "Impact of the Impeachment Power at the Judicial Stage of an Investigative Conflict", "paragraphs": ["If there is an impasse at the political phase, either the House, or in very limited circumstances the executive branch, may transition the investigation into the judicial stage by asking the federal judiciary to decide the ongoing disagreement. Because political negotiations tend to continue, resolution of the dispute at this stage may occur either as a result of political accommodations undertaken by political actors, or as a result of the application of legal principles by federal judges. Such cases usually require the courts to consider both the scope of Congress's investigatory power and any legal restrictions or privileges invoked by the executive branch.", "The involvement of the courts in information access disputes between the legislative and executive branches has been historically rare, but appears to have become more common in recent years, at least with respect to disagreements over House subpoenas. The traditional preference for political rather than judicial solutions seems supported by the fact that neither Congress nor the President appears to have turned to the courts to resolve an investigative dispute until the 1970s. But it is not only the political branches that have been wary of judicially declared outcomes. The courts themselves have also generally sought to avoid adjudicating investigative disputes between the executive and legislative branches, instead encouraging settlement of their differences through a political resolution.0F Consistent with that approach, lower federal courts have suggested that judicial intervention in investigative disputes \"should be delayed until all possibilities for settlement have been exhausted.\"", "The courts have never resolved an interbranch subpoena dispute in an impeachment investigation. As noted, there are many reasons for this, including the infrequent occasions in which such disputes arise, the fact that the Speech or Debate clause and the political question doctrine appear constitutionally to prevent judicial review of most aspects of the impeachment power, and because the House itself has suggested that seeking judicial involvement in an impeachment investigation is inappropriate. Moreover, because impeachment is an internal House process, any exercise of the power is typically intertwined with the House's authority to set its own rules, an authority courts are reluctant to disrupt or second-guess. Thus, some evidence suggests that both the House and the courts have viewed judicial involvement in an impeachment inquiry as inappropriate or in excess of the judiciary's power. As such, any discussion of the legal impact an impeachment investigation may have on the judicial stage of an investigation is necessarily speculative.", "If the House were to seek judicial enforcement of a subpoena issued as part of an impeachment investigation, questions surrounding the courts' role may increase the complexity of the case. To be sure, the courts have made clear that, when necessary, they have the authority to adjudicate subpoena enforcement cases. But to the extent a court views an investigative conflict that arises during an impeachment investigation as constituting \"judicial review\" of the impeachment power, it could feel obligated to leave resolution of the dispute to the political branches. During the Nixon impeachment investigation, the House Judiciary Committee noted that its \"determination not to seek to involve the judiciary reflected not only an intent to preserve the constitutional structure, but also the high probability that the courts would decline to rule on the merits of the case because it is nonjusticiable\" under the political question doctrine. Were the court to reach this conclusion it would cut off, at least in an impeachment investigation, one of the House's principal legal mechanisms of enforcing subpoenas issued to the executive branch. In such a scenario, the House might need to find other methods of compelling compliance with its investigative demands, including perhaps through the impeachment power itself. ", "Nevertheless, if the House took a dispute to court, and the court was willing to hear it, there appear to be at least three potential ways in which an impeachment investigation could, relative to a legislative investigation, provide the House with a stronger legal position in any attempt to use the judiciary to obtain information. All three are applicable to the current House investigations into the conduct of President Trump. An impeachment investigation may (1) improve the likelihood of a court authorizing committee access to grand jury materials; (2) relieve any possible limitations imposed by the requirement that a committee act with a \"legislative purpose\"; and (3) improve the likelihood that a committee will be able to overcome claims of executive privilege made in response to congressional demands. However, it is important to note that even in these areas, it is arguable that a congressional committee engaged in a legislative investigation could also obtain much of the same information, as both legislative and impeachment investigations constitute an exercise of significant constitutional authority. As a result, while an impeachment investigation may very well increase the House's access to information, House committees may have substantial authority to obtain a significant amount of information without reliance on the impeachment power."], "subsections": [{"section_title": "Access To Grand Jury Materials", "paragraphs": ["One area of ongoing dispute between the House and the Trump Administration is congressional access to grand jury materials. House investigations have thus far been unsuccessful in obtaining evidence and materials gathered by the grand jury empaneled for use in Special Counsel Robert Mueller's investigation of Russian interference in the 2016 election and possible obstruction of justice by President Trump. DOJ has asserted that the secrecy requirements of Rule 6(e) of the Federal Rules of Criminal Procedure prevent such a disclosure. Past precedents, however, suggest that a court would likely accord a committee engaged in an impeachment investigation access to grand jury materials.", "Rule 6(e) establishes a general requirement of grand jury secrecy. Under the Rule, identified persons (including attorneys for the government and grand jurors) may not disclose \"a matter occurring before the grand jury\" unless the disclosure fits within certain enumerated exceptions, many of which require court approval. Although there is no clear definition of what constitutes a \"matter occurring before the grand jury,\" the rule has generally been interpreted as broadly encompassing anything that might reveal what took place in the grand jury room.", "None of the exceptions in Rule 6(e) explicitly permit disclosure of grand jury material to Congress in the course of an investigation. But courts have previously provided Congress with access to these materials on various grounds. Disclosure has primarily been approved to a committee engaged in an impeachment investigation through the Rule's exception permitting release of protected materials \"preliminary to or in connection with a judicial proceeding.\" In these cases, courts appear to have viewed an impeachment trial in the Senate as a \"judicial proceeding\" and the impeachment investigation in the House as \"preliminary\" to that \"judicial\" trial. As summarized by a federal district court, \"There can be little doubt that an impeachment trial by the Senate is a 'judicial proceeding' in every significant sense and that a House investigation preliminary to impeachment is within the scope of the Rule.\" These conclusions are further informed by two court opinions determining that committee legislative investigations do not meet the requirements of the judicial proceeding exception, including one in which a committee requested grand jury materials to \"fulfill its oversight responsibilities.\" Notably however, the legislative investigations did not involve an individual official's misconduct or raise impeachment issues.", "Grand jury materials were disclosed to Congress during both the Nixon and Clinton impeachment inquiries, though there is ambiguity as to the legal reasoning applied by the courts in authorizing those disclosures. During the Nixon impeachment investigation, the House Judiciary Committee requested access to evidence and materials that had been presented to the court by the grand jury. Judge John Sirica of the U.S. District Court for the District of Columbia concluded that disclosure to the Committee was \"eminently proper, and indeed obligatory,\" but his opinion did not include a detailed discussion of Rule 6(e). Judge Sirica appears to have relied on various factors in reaching his decision, including a belief that courts should \"presumptively favor disclosure to those for whom the matter is a proper concern and whose need is not disputed\"; the fact that the President did not object to the release; and the desire to avoid the \"incredible\" conclusion that \"grand jury matters should lawfully be available to disbarment committees and police disciplinary investigations and yet be unavailable to the House of Representatives in a proceeding of so great import as an impeachment investigation.\" The D.C. Circuit affirmed in Haldeman v. Sirica by expressing \"general agreement\" with Judge Sirica's opinion. But it too identified no single or clear reason for permitting disclosure. Despite neither Judge Sirica's district court opinion nor the D.C. Circuit's opinion in Haldeman making any explicit holding as to impeachment and Rule 6(e)'s judicial proceeding clause, a recent D.C. Circuit decision stated that \"we read Haldeman ... as fitting within the Rule 6 exception for 'judicial proceedings.' Doing so reads the case to cohere, rather than conflict, with the Supreme Court and D.C. Circuit precedents....\"", "The D.C. Circuit also authorized Independent Counsel Ken Starr to provide the Judiciary Committee with grand jury material in connection to the Clinton impeachment. The reasoning of the judicial order, which occurred before the House had formally authorized the impeachment investigation, was perhaps even more opaque than in the earlier cases interpreting Rule 6(e)'s application to the Nixon impeachment investigation. However, the judicial order in the Clinton case appears to have been influenced by now-expired statutory requirements included in the Independent Counsel Statute (Act). Upon a motion from Starr, the Special Division of the D.C. Circuit (responsible for overseeing the jurisdiction of Independent Counsels) authorized Starr to \"deliver to the House of Representatives\" material he found necessary to comply with the Act's explicit requirement that he advise the House of \"any substantial and credible information which such independent counsel receives \u00e2\u0080\u00a6 that may constitute grounds for an impeachment.\" Although not providing any analysis, the D.C. Circuit stated that \"[t]his authorization constitutes an order for purposes of\" the judicial proceeding provision of Rule 6(e).", "While there is precedent supporting the conclusion that a committee engaged in an impeachment investigation can obtain grand jury materials, there are also ways in which a committee engaged in a legislative investigation may be able to obtain that same information. For example, two courts have authorized disclosure of grand jury materials during a legislative investigation based on a determination that Congress has a \"constitutionally independent legal right\" to obtain information in furtherance of \"legitimate legislative activity\" that either overrides Rule 6(e) or requires that the rule be interpreted in a way that does not apply its nondisclosure requirements to legitimate investigative requests of Congress. For example, in In re Grand Jury Investigation of Ven-Fuel , a Florida federal district court held that a congressional subcommittee engaged in \"legitimate legislative activity\" was entitled to grand jury information because it had \"demonstrated [a] constitutionally independent legal right to the documents\" sought. The decision was based on the court's reading of the Speech or Debate Clause, which the court interpreted as providing \"the inherent, implied power to conduct legislative activity\" including investigations, and upon a desire to \"avert and minimize\" constitutional conflict between the branches. While V en - Fuel has been subject to some judicial criticism for its interpretation of the Speech or Debate Clause, the opinion nevertheless supports the proposition that a committee engaged in legitimate legislative investigative activity has a right of access to grand jury material despite Rule 6(e).", "As such, while Congress is most likely to obtain access to grand jury materials as part of an impeachment investigation, there are arguments that a committee can potentially gain access to such material as part of a traditional legislative investigation."], "subsections": []}, {"section_title": "Implications for Legislative Purpose", "paragraphs": ["The Trump Administration has argued that some of the ongoing House investigations, especially those focusing on the President's conduct before taking office, lack a \"legislative purpose\" and therefore exceed the committees' investigative authority. Those arguments have thus far been rejected by the three courts that have reached the merits of the question (two district courts and the D.C. Circuit). Nevertheless, the legislative purpose requirement appears to be substantially limited as a defense to a subpoena in an impeachment investigation.", "As noted, Congress enjoys broad constitutional authority to obtain information relevant to its legislative investigations. But because that authority is derived from the Constitution's delegation of legislative power to Congress, it extends only to those inquiries that can be said to \"aid the legislative function.\" The Supreme Court has generally implemented this constitutional limit on the scope of the investigative power by requiring that committee investigations serve a valid \"legislative purpose.\" The legislative purpose requirement is quite generous, permitting investigations into any topic upon which legislation could be had or over which Congress may properly exercise authority, including investigations undertaken by Congress to inform itself for purposes of lawmaking or possibly to ensure that the executive branch is complying with its obligation to faithfully execute laws passed by Congress.", "In practice, the legislative purpose requirement rarely acts as a significant restriction on legislative investigations, especially those relating to government officials. This is principally because the scope of what constitutes a permissible legislative purpose is broad and because courts have effectively adopted a presumption that committees act with a valid purpose. But the courts have acknowledged at least two general types of investigations in which Congress likely exceeds its authority. First, Congress does not act with a legislative purpose when investigating private conduct that has no nexus to the legislative function. As summarized by the Supreme Court, a committee \"cannot constitutionally inquire 'into the private affairs of individuals who hold no office under the government' when the investigation 'could result in no valid legislation on the subject to which the inquiry referred.'\" Second, the Supreme Court has stated that Congress does not act with a legislative purpose when the subject of an investigation is a function \"exclusively\" committed to another branch of government. As stated in Barenblatt v. United States : \"[l]acking the judicial power given to the Judiciary, [Congress] cannot inquire into matters that are exclusively the concern of the Judiciary. Neither can it supplant the Executive in what exclusively belongs to the Executive.\" The D.C. Circuit recently reaffirmed this restriction, holding that when \"no constitutional statute may be enacted on a subject matter, then that subject is off-limits to congressional investigators.\"", "The legislative purpose requirement would appear to impose few, if any, consequential restrictions on a committee impeachment investigation. But the manner in which the requirement applies to an impeachment inquiry may depend upon whether the source of authority for such an inquiry is thought to derive from the House's general legislative power or from the Constitution's specific provisions concerning impeachment. If an impeachment investigation derives from Article I's vesting of legislative power in the House and Senate, then the legislative purpose requirement would likely apply as it does to other investigations conducted pursuant to that power. The requirement, however, would appear to be easily satisfied in an impeachment investigation because the legislative function and purpose that is being served is clear: the committee is assisting the House in carrying out its impeachment power. If, on the other hand, the authority for an impeachment investigation does not arise from Article I's vesting of \"legislative powers\" in a Congress, but instead derives directly and independently from the House's impeachment power, it need not be exercised in \"aid of the legislative function,\" and, as a result, the legislative purpose restriction would not apply.", "Regardless of how the requirement relates to impeachment, it would appear that the scope of an impeachment investigation is principally governed not by the need for a \"legislative purpose,\" but instead by its relationship to the House's impeachment role. As such, the permissible scope of an impeachment investigation is initially narrow, in that the investigation would presumably need to relate to the House's role in determining whether an impeachable official has committed an impeachable offense. But once an investigation meets that threshold requirement, the scope of the investigation is broad, to potentially include any matter \"reasonably relevant\" to the possible impeachment.", "While the legislative purpose requirement is unlikely to impose any substantial restriction on the scope of an impeachment investigation, both the previously discussed Supreme Court case law and more recent decisions from two federal district courts and the D.C. Circuit suggest that the requirement plays a similarly narrow role in legislative investigations focusing on presidential misconduct. For example, both the D.C. federal district court and the D.C. Circuit recently rejected an attempt by President Trump to block his accounting firm from complying with a House Oversight and Reform Committee subpoena for the President's financial records on the ground that the Committee lacked a legislative purpose. In holding that the Committee had authority to seek the financial documents as part of its ongoing legislative investigation, the district court explicitly noted that \"Congress plainly views itself as having sweeping authority to investigate illegal conduct of a President,\" even \"before initiating impeachment proceedings.\" The court was not willing to adopt an interpretation of legislative purpose in legislative investigations that would \"roll back the tide of history\" regarding congressional investigations of the President.", "The D.C. Circuit affirmed in Trump v. Mazars USA, LLP , holding in a 2-1 decision that the Committee's subpoena was a valid exercise of the Committee's authority to conduct legislative investigations. In doing so, the court made two key holdings as to the proper application of the legislative purpose requirement, both of which support committee authority to investigate presidential misconduct as part of a legislative investigation. First, the court held that the Committee had articulated \"strong evidence\" of its legitimate legislative purpose by asserting that the subpoenaed information was needed to \"review multiple laws and legislative proposals,\" including legislation pending before the House. The fact that one of the Committee's purposes was to investigate potential criminal wrongdoing or misconduct by the President did not undermine the committee's legitimate purposes as \"an interest in past illegality can be wholly consistent with an intent to enact remedial legislation.\" Indeed, a committee's \"interest in alleged misconduct\" can be \"in direct furtherance of its legislative purpose.\" Second, the court held that the subject of the Committee investigation was one \"on which legislation may be had.\" The court evaluated legislation that would require the presidential disclosure of financial information as the appropriate \"category of statutes\" that could result from the committee investigation. Applying separation-of-powers principles to that general class of statute, the court could \"detect no inherent constitutional flaw in laws requiring Presidents to publicly disclose certain financial information.\"", "The dissenting judge in Mazars would have concluded that \"[i]investigations of impeachable offenses simply are not, and never have been, within Congress's legislative power\" because \"impeachment provides the exclusive mechanism for Congress to investigate such conduct.\" In response to this \"novel\" position, the majority opinion engaged in some limited discussion of the relationship between legislative and impeachment investigations. That discussion was characterized by deference to Congress. As the court noted, the Constitution leaves questions of \"whether to commence the impeachment process\" and when to \"move from legislative investigation to impeachment\" to Congress's \"judgment.\" Moreover, Congress, and not the courts, must make the \"quintessentially legislative\" determination of whether misconduct is \"better addressed\" through \"oversight and legislation\" or through the \"grave and weighty process of impeachment.\"", "In sum, the legislative purpose requirement is unlikely to be construed as posing an obstacle to information access in an impeachment investigation. Nor does the requirement appear to serve as a consequential legal limitation on legislative investigations, including those focusing on executive branch misconduct, so long as a committee can articulate a connection to a \"subject on which legislation may be had.\""], "subsections": []}, {"section_title": "Overcoming Claims of Executive Privilege", "paragraphs": ["Executive privilege has been formally asserted as a justification for noncompliance with committee subpoenas in the ongoing House investigations. As discussed, a court may be hesitant to resolve a conflict between a congressional committee and the President over executive privilege\u00e2\u0080\u0094instead preferring that the political branches negotiate a resolution or that Congress enforce its demands by use of its own legislative and impeachment powers. However, if a court were to address a privilege dispute, including one over subpoenaed documents or testimony by executive officials, there are reasons to believe that a committee engaged in an impeachment investigation may be more likely to overcome a presidential assertion of the privilege than a committee engaged in a traditional legislative investigation. Even still, a committee engaged in a legislative investigation, depending on the \"nature and appropriateness\" of the committee's function and its need for the information, may also be able to access certain material covered by the privilege.", "Executive privilege is a term that has been used to describe the President's power to \"resist disclosure of information the confidentiality of which [is] crucial to fulfillment of the unique role and responsibilities of the executive branch of our government.\" However, there is not one, single \"executive privilege.\" Instead, there is a suite of distinct privileges, each of different\u00e2\u0080\u0094though sometimes overlapping\u00e2\u0080\u0094scope. These privileges primarily include the presidential communications privilege, which generally protects communications involving the President or his close advisers that relate to presidential decisions; the deliberative process privilege, which generally protects predecisional and deliberative communications made within the executive branch; and, at least under the executive branch's view, the law enforcement privilege, which arguably protects the contents of open (and sometimes closed) law enforcement files, including evidence gathered in an investigation and communications related to investigative and prosecutorial decisionmaking. ", "In a congressional investigation, the precise privilege asserted in response to a subpoena is an important determination because each component privilege arises from a different source of law, with some components more firmly established in judicial precedent than others. For example, while the Supreme Court has recognized that the presidential communications privilege derives from the Constitution, the deliberative process privilege appears to arise principally from the common law, but, at least in the view of one district court, may have a \"constitutional dimension.\" On the other hand, although the executive branch asserts that the law enforcement privilege derives from both the President's powers under Article II and constitutionally based individual trial and privacy rights, those arguments have not been directly tested in court\u00e2\u0080\u0094at least not in the context of a congressional subpoena where committees have previously objected to that privilege's use.", "What is apparent is that none of the executive privileges, even if found to cover subpoenaed information, necessarily presents an absolute bar to congressional access. As announced by the Supreme Court in United States v. Nixon , when faced with an executive privilege dispute courts must \"resolve [the] competing interests in a manner that preserves the essential functions of each branch.\" When the showing of need is adequate, the privilege is overcome. For example, in Nixon , the Court held that the President's \"generalized interest in confidentiality \u00e2\u0080\u00a6 must yield to the demonstrated, specific need for evidence in a pending criminal trial....\" As such, it would appear that the type of privilege at play, the corresponding executive need for confidentiality, and Congress's interest in obtaining the information all may impact potential judicial outcomes in an executive privilege dispute.", "The Supreme Court has never addressed executive privilege's application in either a legislative or impeachment investigation. In fact, the leading (and arguably only substantive appellate) case addressing any component of executive privilege in the congressional context is the D.C. Circuit's decision in Senate Select Committee v. Nixon . That case involved an effort by the Senate Watergate Committee to enforce a subpoena issued to President Nixon for recordings of specific conversations he had with presidential advisers in the Oval Office, thus squarely implicating the presidential communications privilege. Notably, the subpoena was issued as part of a legislative, rather than impeachment, investigation.", "Although ultimately siding with the President, the D.C. Circuit made clear that a President's assertion of executive privilege could be overcome by a \"strong showing of need by another institution of government \u00e2\u0080\u00a6\" As applied to Congress in the exercise of its investigative powers, this meant that a committee may overcome the President's privilege when it has shown that \"the subpoenaed evidence is demonstrably critical to the responsible fulfillment of the Committee's function.\"", "The Senate Watergate Committee sought to make the required showing by asserting it had a \"critical\" need for the tapes to carry out the two functions that most frequently form the basis of a legislative investigation: oversight and lawmaking. First, pursuant to its oversight function, the Committee argued that access to the tapes was necessary to \"oversee the operations of the executive branch, to investigate instances of possible corruption and malfeasance in office, and to expose the results of its investigations to public view.\" Second, pursuant to its lawmaking function, the Committee argued that \"resolution, on the basis of the subpoenaed tapes, of the conflicts in the testimony before it 'would aid in a determination whether legislative involvement in political campaigns is necessary.'\"", "The circuit court rejected both arguments, holding that the Senate Watergate Committee's need was \"too attenuated and too tangential to its functions to permit a judicial judgment that the President is required to comply with the Committee's subpoenas.\" That holding, however, appears to have been based on a pair of unique facts: copies of the tapes had been provided to the House Judiciary Committee under that Committee's impeachment investigation and the President had publicly released partial transcripts of the subpoenaed conversations. Both of these disclosures significantly impacted the appellate court's assessment of the Senate Watergate Committee's need for the tapes. For example, because the House Judiciary Committee had already obtained the tapes, any further oversight need by the Watergate Committee was \"merely cumulative.\" With regard to the Watergate Committee's lawmaking functions, the D.C. Circuit held that the particular content of the conversations was not essential to future legislation, as \"legislative judgments normally depend more on the predicted consequences of proposed legislative actions ... than on precise reconstruction of past events.\" Any \"specific legislative decisions\" faced by the Committee, the court concluded, could \"responsibly be made\" based on the released transcripts.", "There was some suggestion in Senate Select that the case may have been resolved differently if the committee seeking the tapes had been engaged in an impeachment investigation. This line of reasoning was developed in the decision below, where the district court, after holding that the President was not obligated to comply with the Watergate Committee's subpoena, noted that \"Congressional demands, if they be forthcoming, for tapes in furtherance of the more juridical constitutional process of impeachment would present wholly different considerations.\" On appeal in Senate Select , the D.C. Circuit also drew a somewhat similar comparison between the Senate Watergate Committee's oversight function and the House Judiciary Committee's impeachment function. The court did not, however, make any clear statement as to how it would weigh one relative to the other. Instead it stated that", "we need neither deny that the Congress may have, quite apart from its legislative responsibilities, a general oversight power, nor explore what the lawful reach of that power might be under the Committee's constituent resolution. Since passage of that resolution, the House Committee on the Judiciary has begun an inquiry into presidential impeachment. The investigative authority of the Judiciary Committee with respect to presidential conduct has an express constitutional source.", "The Supreme Court made a similar suggestion nearly a century earlier in Kilbourn v. Thompson , reasoning in dicta that while the House in that case lacked a valid legislative purpose to compel testimony, if an investigatory purpose \"had been avowed to impeach ..., the whole aspect of the case would have been changed.\"", "These general statements suggest that courts may treat impeachment investigations differently from legislative investigations, but they do not elaborate on how or why. Although not directly articulated by the courts, there appears to be a variety of reasons an impeachment investigation might be balanced against an invocation of executive privilege in a manner that is more favorable to congressional access.", "First, it is arguable that the importance of the impeachment function's constitutional role in addressing misconduct by federal officials and preserving the separation of powers requires that impeachment investigations be afforded the utmost deference when weighed against executive branch confidentiality interests. Indeed, there is substantial support for the proposition that executive privilege simply cannot be used to refuse Congress access to relevant information in an impeachment investigation. As previously discussed, Congress has long viewed its power to obtain information in furtherance of its impeachment power to reach \"the fullest and most unlimited extent.\" In its report on the Nixon impeachment investigation, the House Judiciary Committee adopted this argument, concluding that", "[w]hatever the limits of legislative power in other contexts\u00e2\u0080\u0094and whatever need may otherwise exist for preserving the confidentiality of Presidential conversations\u00e2\u0080\u0094in the context of an impeachment proceeding the balance was struck in favor of the power of inquiry when the impeachment provision was written into the Constitution.", "Because the House's need for information in an impeachment investigation has been equated to that of a court in a judicial proceeding, it is possible to analogize the situation to that considered by the Supreme Court in United States v. Nixon , where the Court weighed the privilege in the context of a criminal trial subpoena. It could be argued that as in response to a subpoena in a pending criminal proceeding, a court could similarly view the privilege as insufficient to withstand a subpoena in an impeachment investigation. As articulated by the Judiciary Committee, \"[i]f a generalized Presidential interest in confidentiality cannot prevail over 'the fundamental demand of due process of law in the fair administration of justice,' neither can it be permitted to prevail over the fundamental need to obtain all the relevant facts in the impeachment process.\" This position is buttressed by concerns expressed by all three branches that executive privilege should not be used to hide wrongdoing, which would form the core of any impeachment investigation.", "Second, courts have suggested that the frequency with which disclosure may occur in a particular context is an important factor in any executive privilege balancing. For example in Nixon , the Supreme Court reasoned that \"we cannot conclude that advisers will be moved to temper the candor of their remarks by the infrequent occasions of disclosure because of the possibility that such conversations will be called for in the context of a criminal prosecution.\" Similar reasoning was applied in Dellums v Powell , in which the D.C. Circuit held that an executive privilege claim by former President Nixon was overcome in a civil suit alleging a civil conspiracy among high-level federal officials to deny a group of citizens their constitutional rights. There, the circuit court held that \"the possibility of disclosure\" in such a limited class of cases \"is not unlike the possibility of disclosure in criminal cases\u00e2\u0080\u0094the infrequent occasions of such disclosure militate against any substantial fear that the candor of Presidential advisers will be imperiled.\" This line of reasoning suggests that a court may be more willing to order disclosure to a committee engaged in a historically rare impeachment investigation than it would to a committee in a much more common legislative investigation.", "Finally, the need for specific factual evidence in an impeachment investigation may be greater than in a legislative investigation. In Senate Select , the court suggested that specific information was not always necessary for Congress to carry out its lawmaking tasks. In doing so, the court distinguished the role of a legislative investigation from that of a grand jury investigation:", "There is a clear difference between Congress's legislative tasks and the responsibility of a grand jury, or any institution engaged in like functions. While fact-finding by a legislative committee is undeniably a part of its task, legislative judgments normally depend more on the predicted consequences of proposed legislative actions and their political acceptability, than on precise reconstruction of past events; Congress frequently legislates on the basis of conflicting information provided in its hearings. In contrast, the responsibility of the grand jury turns entirely on its ability to determine whether there is probable cause to believe that certain named individuals did or did not commit specific crimes \u00e2\u0080\u00a6 We see no comparable need in the legislative process, at least not in the circumstances of this case.", "Impeachment investigations (and impeachment decisions), on the other hand, might require a more exacting factual record. A decision to impeach is not a typical generalized legislative determination, but is perhaps more aptly characterized as a specific finding that the evidence suggests wrongdoing adequate to support the impeachment of a federal official.", "Impeachment is assuredly a weighty legislative interest, and long-standing visions of the power suggest that a committee engaged in an impeachment investigation may be more likely to overcome the President's privilege than a committee engaged in a legislative investigation. Nevertheless, it remains the case that in certain circumstances, a committee engaged in a legislative investigation may also obtain information protected by executive privilege. History provides numerous examples of the executive branch voluntarily disclosing information to Congress that it initially identified as protected. Moreover, Senate Select cannot be read as establishing that legislative investigations can never overcome claims of executive privilege. As was stated by the Watergate Committee, \"the court's decision rested, as the court observed, on 'the peculiar circumstances of this case,' and should not necessarily prevent legislative committees in the future from obtaining materials relating to presidential communications.\" Instead, it would appear that a committee engaged in a legislative investigation can itself overcome a claim of executive privilege so long as it can show that \"the subpoenaed evidence is demonstrably critical to the responsible fulfillment of the Committee's function.\""], "subsections": []}]}]}]}, {"section_title": "Conclusion", "paragraphs": ["An impeachment investigation is a substantial exercise of constitutional power vested exclusively in the House of Representatives. Invocation of the power likely strengthens the House's existing investigative authorities in ways that may allow the House (through its committees) to obtain more information from the executive branch than might otherwise be received through more traditional legislative investigations. Even so, reliance on the impeachment power may not always be necessary for Congress to obtain sensitive categories of information, including grand jury materials, evidence of private misconduct, or information protected by executive privilege. Whether investigating to inform itself for purposes of legislating, to conduct oversight of the executive branch, or to determine whether there is adequate reason to impeach a federal official, the House has broad authority to access relevant and needed information."], "subsections": []}]}}
{"id": "R46240", "title": "Introduction to the Federal Budget Process", "released_date": "2020-02-26T00:00:00", "summary": ["Under the U.S. Constitution, Congress exercises the \"power of the purse.\" This power is expressed through the application of several provisions. The power to lay and collect taxes and the power to borrow are among the enumerated powers of Congress under Article I, Section 8. Furthermore, Section 9 of Article I states that funds may be drawn from the Treasury only pursuant to appropriations made by law. The Constitution, however, does not prescribe how these legislative powers are to be exercised, nor does it expressly provide a specific role for the President with regard to budgetary matters. Instead, various statutes, congressional rules, practices, and precedents have been established over time to create a complex system in which multiple decisions and actions occur with varying degrees of coordination. As a consequence, there is no single \"budget process\" through which all budgetary decisions are made, and in any year there may be many budgetary measures necessary to establish or implement different aspects of federal fiscal policy. This report describes the development and operation of the framework for budgetary decisionmaking that occurs today and also includes appendices that provide a glossary of budget-process-related terms and a flowchart of congressional budget process actions.", "Since the early years of the Republic, procedures and practices concerning the consideration, enactment, and execution of budgetary legislation have evolved to meet changing needs and circumstances. Many aspects of the framework for budgetary decisionmaking were established in the early years, including the idea that appropriations be considered separate from general policy legislation. The 19 th century also saw Congress take action in several ways to exercise control over how federal agencies spent money. One approach involved enacting increasingly specific appropriations legislation to direct the use of funds. General restrictions on agency discretion were also imposed by statute. For example, beginning in 1870, antideficiency acts were enacted to prevent agencies from exceeding appropriations made by Congress for any fiscal year or obligating payments in anticipation of future appropriations. In the 20 th century, the Budget and Accounting Act of 1921 created a statutory role for the President by requiring agencies to submit their budget requests to him and, in turn, for him to submit a consolidated request to Congress. Other important changes included the advent of direct (mandatory) spending and the enactment of the Congressional Budget and Impoundment Control Act of 1974, which provided Congress with a vehicle for making decisions about overall fiscal policy and priorities and also established the House and Senate Budget Committees and the Congressional Budget Office. Since 1985, budgetary decisionmaking has also been subject to various budget control statutes designed to restrict congressional budgetary actions or implement particular budgetary outcomes. Altogether, this evolution has resulted in the framework in which budgetary decisionmaking occurs today.", "Many budgetary actions result from permanent or long-term statutes, but the cycle for decisionmaking remains based on a characteristically annual timetable. The President is required to submit a budget request to Congress early in the legislative session. The President's budget is only a request to Congress, but it establishes the President's wishes regarding the direction of national policies and priorities and often influences the direction of congressional revenue and spending decisions.", "Congress can coordinate various budget-related actions (such as consideration of revenue and spending measures) through the adoption of a concurrent resolution on the budget to set aggregate budget policies and functional spending priorities for at least the next five fiscal years. Because a concurrent resolution is not a law\u00e2\u0080\u0094the President cannot sign or veto it\u00e2\u0080\u0094the budget resolution does not have statutory effect, so no money is raised or spent pursuant to it. Revenue and spending levels set in the budget resolution, however, do establish the basis for enforcement of congressional budget policies through points of order. In recent years, the use of a budget resolution has often been supplanted by the use of various deeming provisions that use alternate means to establish the basis for budgetary enforcement actions. Budget policies are subsequently implemented through action on individual revenue and debt limit measures, annual appropriations acts, and direct spending legislation. If Congress agrees to a budget resolution, it may later consider reconciliation legislation pursuant to reconciliation instructions included in the budget resolution. Reconciliation legislation is subject to expedited procedures that can be used to bring existing revenue and direct spending laws into conformity with policies established in the budget resolution.", "Action on annual appropriations measures allows Congress to set the level of discretionary spending annually. Congress passes three main types of appropriations measures: regular appropriations to provide budget authority to fund programs and agency activities for the next fiscal year, s upplemental appropriations to provide additional budget authority during the current fiscal year if the regular appropriation is insufficient or to finance activities not provided for in the regular appropriation, and c ontinuing appropriations (often referred to as continuing resolutions or CRs) to provide interim (or sometimes full-year) funding to agencies for activities or programs not yet covered by a regular appropriation."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": [], "subsections": [{"section_title": "Evolution of the Framework for Budgetary Decisionmaking", "paragraphs": ["Under the U.S. Constitution, Congress exercises the \"power of the purse.\" This power is expressed through the application of several provisions. The power to lay and collect taxes and the power to borrow are among the enumerated powers of Congress under Article I, Section 8. Furthermore, Section 9 of Article I states that funds may be drawn from the Treasury only pursuant to appropriations made by law. By requiring the power of the purse to be exercised through the lawmaking process, the Constitution allows Congress to direct any budgetary actions that may be taken by the President and executive departments. The Constitution, however, does not prescribe how these legislative powers are to be exercised, nor does it expressly provide a specific role for the President with regard to budgetary matters. Instead, various statutes, congressional rules, practices, and precedents have been established over time to create a complex system in which multiple decisions and actions occur with varying degrees of coordination. As a consequence, there is no single \"budget process\" through which all budgetary decisions are made, and in any year there may be many budgetary measures necessary to establish or implement different aspects of federal fiscal policy.", "Under Article I, Section 5, \"Each House may determine the Rules of its Proceedings,\" so it is left to the House and Senate to adapt and develop procedures and practices as needed to facilitate the consideration and enactment of legislation. Congress, however, is a dynamic institution that can, and does, change its rules, practices, and organization in order to achieve changing goals or overcome new obstacles. Since the early years of the Republic, there have been a number of notable milestones in the evolution of procedures and practices concerning the consideration, enactment, and execution of budgetary legislation. These milestones were often the result of congressional efforts to solve problems or promote outcomes and thus help to provide insight into when, how, or why current practices developed.", "Although early Congresses referred legislation to ad hoc committees, within a few years the House began to organize a system of standing committees with fixed jurisdictions and responsibility for different legislative issues. In the House, responsibility for revenue, spending, and debt were assigned to a standing Committee of Ways and Means beginning in the Fourth Congress (1795-1797). In the Senate, a Committee on Finance with jurisdiction over these matters was established as part of a standing committee system during the second session of the 14 th Congress (1815-1817). By creating a system in which legislation was categorized by its content, Congress laid the groundwork for establishing rules and practices to provide for the separate consideration of various budgetary measures. The House later created a separate standing Committee on Appropriations in 1865, and the Senate took similar action in 1867.", "The distinction between appropriations and general policy legislation appears to have been understood and practiced long before it was formally recognized in House or Senate rules, probably derived from earlier British and colonial practices. As congressional practices developed in the early 19 th century, this distinction was reflected in the designation of general appropriations measures as \"supply bills,\" whose purpose was simply to supply funds to carry out government operations already defined in law. This distinction was also reinforced by the way in which they were considered by the House. Supply bills would be initially taken up as a list of objects of expenditure, with blanks rather than dollar amounts for associated expenditures, and the amounts filled in by action on the floor. Such bills were generally considered as little more than a matter of form, without extensive debate except for the purpose of filling in the blanks. The inclusion of substantial new legislative language in supply bills was generally believed to be inappropriate, as it might delay the provision of necessary funds or lead to the enactment of matters that might not otherwise become law.", "According to Hinds' Precedents , the origin of a formal rule mandating the separate consideration of policy legislation and appropriations can be traced to 1835, when the House discussed the increasing problem of delays in enacting appropriations. A significant part of this delay was attributed to the inclusion in such bills of \"debatable matters of another character, new laws which created long debates,\" and a proposal was made to strip appropriation bills of \"everything but were legitimate matters of appropriation, and such as were not \u00e2\u0080\u00a6 made the subject of a separate bill.\" Although the proposal was not adopted at the time, at the beginning of the following Congress (25 th Congress, 1837-1839), language was added to the standing rules of the House that stated:", "No appropriation shall be reported in such general appropriation bill, or be in order as an amendment thereto, for any expenditure not previously authorized by law.", "By formulating the rule as a requirement that appropriations only be to provide funding to carry out activities for which previously enacted legislation had provided the statutory authority for an agency to act, the rule formally limited the scope of purposes for which appropriations could be provided. The House soon after developed a practice of striking provisions containing general legislation from appropriations bills. It was not until 1876, however, that the House adopted language in its rules formally restricting the inclusion of legislative language in appropriations bills. As adopted in 1876, the rule stated:", "No appropriation shall be reported in such general appropriation bills, or be in order as an amendment thereto, for any expenditure not previously authorized by law unless in continuation of appropriations for such public works and objects as are already in progress; nor shall any provision in any such bill or amendment thereto, changing existing law, be in order except such as, being germane to the subject matter of the bill, shall retrench expenditures.", "There were also important principles established in the 19 th century concerning the extent to which the actions of agencies to execute the budget could be directed or limited by Congress. Although the First Congress enacted all appropriations in 1789 in a single act divided into lump sums for broad categories of expenditure, within a few years, Congress began to exercise control over how federal agencies spent money by enacting increasingly more specific appropriations. An additional general statutory restriction on agency actions to allocate how funds were spent was imposed in 1809 by the enactment of the \"purpose statute\" which required that", "sums appropriated by law for each branch of expenditure in the several departments shall be solely applied to the objects for which they are respectively appropriated, and to no other.", "Agencies sometimes took actions that undermined congressional fiscal controls, however. In some instances, they obligated funds in anticipation of appropriations, thereby creating liabilities that Congress would feel compelled to ratify. In others, they would obligate appropriated funds at a rate that was likely to produce a need for additional funds before the end of the fiscal year, giving rise to what were termed \"coercive deficiencies.\" As a result, Congress enacted the first \"antideficiency\" provision in 1870 stating that", "it shall not be lawful for any department of the government to expend in any one fiscal year any sum in excess of appropriations made by Congress for that fiscal year, or to involve the government in any contract for the future payment of money in excess of such appropriations.", "In addition to prohibiting agencies from obligating payments in the absence of appropriations, antideficiency laws also established the requirement that agencies establish plans to apportion available funds over the course of the fiscal year in order to avoid deficiencies.", "Although some Presidents made attempts to coordinate or limit agency budget estimates before they were communicated to Congress, such attempts were intermittent and uneven. This changed with the enactment of the Budget and Accounting Act of 1921. It created a statutory role for the President by requiring agencies to submit their budget requests to him and, in turn, for him to submit a consolidated request to Congress. The President's budget request became the center of a new relationship between the President and federal agencies and, consequently, of the agencies and Congress. The act also established the Bureau of the Budget (now the Office of Management and Budget [OMB]) to assist the President and the General Accounting Office (now the Government Accountability Office [GAO]) to serve as an independent auditor of government budgetary activities.", "Another significant change in federal budgeting in the 20 th century was the advent of direct (or mandatory) spending laws. Although there were 19 th century antecedents in which legislation was enacted to entitle an eligible class of recipients (such as veterans) to certain payments, such spending was not common. Beginning with Social Security in the 1930s, Congress began to enact broad-based spending legislation for which the level of spending was not controlled through the appropriations process. Instead, payments were required to be made to all eligible persons as prescribed in the law. In effect, such programs were designed to establish an expectation of stable payments for a class of individual recipients (even when the class or payments might change over time), rather than have the aggregate level of spending for the program subject to control through annual appropriations decisions. Such programs have grown to comprise the majority of all federal outlays.", "Until the 1970s, congressional consideration of the multiple budgetary measures considered in a given year as a whole lacked any formal coordination. Instead, Congress considered these various budgetary measures separately, sometimes informally comparing them to proposals in the President's budget. That was changed by the Congressional Budget Act of 1974 (CBA). The CBA provides for the adoption of a concurrent resolution on the budget that allows Congress to make decisions about overall fiscal policy and priorities and coordinate and establish guidelines for the consideration of various budget-related measures. Because a concurrent resolution is not a law\u00e2\u0080\u0094the President cannot sign or veto it\u00e2\u0080\u0094the budget resolution does not have statutory effect, so no money is raised or spent pursuant to it. Revenue and spending levels set in the budget resolution, however, do establish the basis for enforcement of congressional budget policies through points of order. The CBA also established the House and Senate Budget Committees as well as CBO to provide Congress with an independent source for budgetary information, particularly estimates concerning the cost of proposed legislation.", "Since 1985, budgetary decisionmaking has also been subject to various budget control statutes designed to restrict congressional budgetary actions or implement particular budgetary outcomes in order to reduce the budget deficit, limit spending, or prevent deficit increases. The mechanisms included in these acts sought to supplement and modify the existing budget process and also added statutory budget controls, in some cases seeking to require future deficit reduction legislation or limit future congressional budgetary actions and in some cases seeking to preserve deficit reduction achieved in accompanying legislation.", "Chief among the laws enacted were the Balanced Budget and Emergency Deficit Control Act of 1985 and the Budget Enforcement Act of 1990. The Balanced Budget and Emergency Deficit Control Act of 1985 did not include legislation that reduced the deficit but instead established a statutory requirement for the gradual reduction and elimination of budget deficits over a six-year period. The act specified annual deficit limits and set forth a specific process for the cancellation of spending by requiring the President to issue an order (termed a sequester order) to enforce the annual deficit limit in the event that compliance was not achieved through legislation. The deficit targets and timetable were modified and extended in the Balanced Budget and Emergency Deficit Control Reaffirmation Act of 1987.", "With the Budget Enforcement Act of 1990, Congress changed the focus of budgetary control. While the 1985 Balanced Budget and Emergency Deficit Control Act had focused on enforcing deficit targets through unspecified future legislation, the Budget Enforcement Act was enacted as part of deficit reduction legislation and focused instead on inhibiting future legislation that would undo the savings. Budgetary enforcement under the Budget Enforcement Act was based on the implementation of pay-as-you-go (PAYGO) procedures to limit any increase in the deficit due to new direct spending or revenue legislation and limit discretionary spending through statutory spending caps. These budget control mechanisms sought to preserve the deficit reduction achieved in the accompanying legislation rather than force subsequent legislation. As originally enacted, these mechanisms were to be in force for a period of five years, but they were modified and extended twice. In 1993, they were extended through 1998 in the Omnibus Budget Reconciliation Act of 1993, and in 1997, they were extended through 2002 in the Budget Enforcement Act of 1997.", "In 2010, Congress reinstated PAYGO in the Statutory Pay-As-You-Go Act of 2010. In 2011, the Budget Control Act (BCA) reestablished statutory limits on discretionary spending, divided into separately enforceable defense and nondefense limits, for FY2012-FY2021. Several measures have subsequently been enacted that changed the spending limits or enforcement procedures included in the BCA. "], "subsections": []}, {"section_title": "Basic Concepts of Federal Budgeting", "paragraphs": ["The federal budget is a compilation of numbers reflecting the receipts, spending, borrowing, and debt of the government. Receipts come largely from various taxes but are also derived from other sources as well (such as leases, licenses, and other fees). Spending involves such concepts as budget authority, obligations, outlays, and offsetting collections. Although the amounts are computed according to previously established rules and conventions, they do not always conform to the way receipts and spending might be accounted for in a different context.", "When Congress appropriates money, it provides budget authority , that is, statutory authority to enter into obligations for which payments will be made by the Treasury. Budget authority may also be provided in legislation that does not go through the annual appropriations process (such as direct spending legislation). The key congressional spending decisions relate to the obligations that agencies are authorized to incur during a fiscal year (amount, purpose, and timing), not to the outlays that result. Obligations occur when agencies enter into contracts, submit purchase orders, employ personnel, and so forth. Outlays occur when obligations are liquidated, primarily through the issuance of checks, electronic fund transfers, or the disbursement of cash.", "The provision of budget authority is the key point at which Congress exercises control over federal spending. Congress generally does not exercise direct control over outlays related to executive or judicial branch spending. The amount of outlays in a given year derive in part from new budget authority enacted in that year but also from \"carryover\" budget authority provided in prior years. ", "The relation of budget authority to outlays varies from program to program and depends on the outlay or \"spendout\" rate, that is, the rate at which budget authority provided by Congress is obligated and payments are disbursed. Various factors can have an impact on the spendout rate for a particular program or activity. In a program with a high spendout rate, most new budget authority is expended during the fiscal year. If the spendout rate is low, however, most of the outlays occur in later years. Spendout rates are generally sensitive to program characteristics and vary over time for certain projects. The outlay levels associated with budget enforcement during the consideration of legislation reflect the projected amount that will be outlayed during the first year that budget authority is available. If actual payments turn out to be higher than the budget estimate, outlays can be above the projected level. The President and Congress can control outlays indirectly by deciding on the amount of budget authority provided by limiting the amount that can actually be obligated (termed an \"obligation limit\") or by limiting the period during which the funds may be obligated.", "The receipts of the federal government may be accounted for in the budget as revenues or as \"offsets\" against outlays. Revenues result from the exercise of the government's sovereign power to tax. In contrast, receipts from businesslike or market transactions, such as Medicare premiums or various fees collected by government agencies, are deducted from outlays. Similarly, income from the sale of certain assets is also treated as an offset to spending. These offsets may be classified as offsetting collections or offsetting receipts. In most cases, offsetting collections may be obligated without further legislative action, while offsetting receipts require an explicit appropriation to be available for obligation. Most such receipts are offsets against the outlays of the appropriation account for the agency that collects the money, but in the case of some activities (such as offshore oil leases), the receipts are offset against the total outlays of the government."], "subsections": []}, {"section_title": "Scope of the Budget", "paragraphs": ["The budget consists of two main groups of funds: federal funds and trust funds . Federal funds\u00e2\u0080\u0094which comprise mainly the general fund\u00e2\u0080\u0094largely derive from the general exercise of the taxing power and general borrowing. For the most part, these funds are not designated in law for any specific program or agency, although there are also special funds that are designated with respect to their source or purpose.", "Trust funds are established under the terms of statutes that specifically designate them as such and are available to fund only specific purposes. For example, the Social Security trust funds (the Old-Age and Survivors Insurance Fund and the Disability Insurance Fund), which are the largest of the trust funds, comprise revenues collected under a Social Security payroll tax and are used to pay for Social Security benefits and related purposes. The unified budget includes both the federal funds and the trust funds. In some circumstances, a trust fund may accumulate more funds in a given time period than are necessary to meet current obligations. Such balances are held in the form of federal debt, so that while a trust fund may be said to have a surplus, by holding it for future use in the form of federal debt, it is effectively borrowed by federal funds and counted as part of federal debt. Thus, a trust fund surplus can offset the overall budget deficit, but because it is included in the federal debt, the annual increase in the debt invariably exceeds the amount of the budget deficit. For the same reason, it is possible for the federal debt to rise even when the federal government has a budget surplus.", "Federal budgeting is mostly calculated based on cash flow so that capital and operating expenses are not segregated in the budget. Hence, expenditures for the operations of government agencies and expenditures for the acquisition of long-life assets (such as buildings, roads, and weapons systems) both appear in the budget in terms of their outlays. Proposals have been made from time to time to divide the budget into separate capital and operating accounts. While these proposals have not been adopted, the budget does provide information showing the investment and operating outlays of the government.", "One portion of the federal budget that is not based on cash flow is the budgeted levels for direct and guaranteed loans by the federal government. The Federal Credit Reform Act of 1990 made fundamental changes in the budgetary treatment of direct loans and guaranteed loans. The reform, which first became effective for FY1992, shifted the accounting basis for federally provided or guaranteed credit from the amount of cash flowing into or out of the Treasury to the estimated subsidy cost of the loans. Credit reform entails complex procedures for estimating these subsidy costs and new accounting mechanisms for recording various loan transactions. The changes have had only a modest impact on budget totals but a substantial impact on budgeting for particular loan programs.", "The budget totals do not include all the financial transactions of the federal government, however. The main exclusions fall into two categories\u00e2\u0080\u0094off-budget entities and government-sponsored enterprises (GSEs). ", "Off-budget entities are excluded by law from the budget totals. The receipts and disbursements of the Social Security trust funds, as well as spending for the Postal Service Fund, are presented separate from the budget totals. Thus, the budget reports two deficit (or surplus) amounts\u00e2\u0080\u0094one excluding the Social Security trust funds and the Postal Service Fund and the other (the unified budget) including these entities. In most cases, the latter is the main focus of discussion in both the President's budget and the congressional budget process.", "The transactions of government-owned corporations (excluding the Postal Service), as well as revolving funds, are included in the budget on a net basis. That is, the amount shown in the budget is the difference between their receipts and outlays, not the total activity of the enterprise or revolving fund. If, for example, a revolving fund has annual income of $150 million and disbursements of $200 million, the budget would report $50 million as net outlays.", "The Federal Reserve System has never been subjected to the appropriations process, and aside from the recording of transfers of Federal Reserve earnings as budget receipts, its financial operations have always been excluded from the federal budget. It is funded by fees and the income generated by securities it owns. Annual appropriations approval of Federal Reserve spending plans is not required, a result of a provision of the Federal Reserve Act, which stipulates that the Federal Reserve Board's assessment \"shall not be construed to be Government funds or appropriated moneys.\" If the Federal Reserve's income exceeds its expenses, its net earnings are transferred to the Treasury and recorded as \"miscellaneous receipts.\"", "GSEs have historically been excluded from the budget because they were deemed to be non-governmental entities. Although they were established by the federal law, the federal government did not own any equity in these enterprises, most of which received their financing from private sources, and their budgets were not reviewed by the President or Congress in the same manner as other programs. Most of these enterprises engaged in credit activities. They borrowed funds in capital markets and lent money to homeowners, farmers, and others. Financial statements of the GSEs were published in the President's budget. Although some GSEs continue to operate on this basis, the economic downturn and credit instability that occurred in 2008 fundamentally changed the status of two GSEs that play a significant role in the home mortgage market: Fannie Mae and Freddie Mac. In September 2008, the Federal Housing Finance Agency placed the two entities in conservatorship, thereby subjecting them to control by the federal government until the conservatorship is brought to an end."], "subsections": []}]}, {"section_title": "Debt Limit Legislation", "paragraphs": ["When the receipts collected by the federal government are not sufficient to cover outlays, it is necessary for the Treasury to finance the shortfall through the sale of various types of debt instruments to the public and federal agencies. Federal borrowing is subject to a statutory limit on public debt (referred to as the debt limit or debt ceiling). When the federal government operates with a budget deficit, or otherwise increases the level of debt necessary (such as to allow federal trust funds to hold surpluses), the response has been for the public debt limit to be increased to meet that need. The frequency of congressional action to raise the debt limit has ranged in the past from several times in one year to once in several years. In recent years, Congress has chosen to suspend the debt limit for a set amount of time instead of raising the debt limit by a fixed dollar amount. When a suspension period ends, the debt limit is reestablished at a dollar level that accommodates the level of federal debt issued during the suspension period.", "Legislation to raise the public debt limit falls under the jurisdiction of the House Ways and Means Committee and the Senate Finance Committee. In some cases, Congress has combined other legislative provisions with changes in the debt limit. For example, the Senate amended a House-passed bill raising the debt limit to add the Balanced Budget and Emergency Deficit Control Act of 1985. The House added debt limit provisions (as well as other matters) to an unrelated Senate-passed measure to create the Budget Control Act of 2011. In addition, debt limit provisions may be included in reconciliation legislation (described in a separate section of this report).", "In the 96 th Congress (1979-1980), the House amended its rules to provide for the automatic engrossment of a measure increasing the debt limit upon final adoption of a budget resolution. The rule (commonly referred to as the Gephardt Rule after Representative Richard Gephardt of Missouri) was intended to facilitate quick action on debt limit increases by deeming such a measure as passed by the House by the same vote as the final adoption of the budget resolution, thereby avoiding the need for a separate vote on the debt limit. The engrossed measure would then be transmitted to the Senate for further action. The rule was repealed in the 107 th Congress, reinstated in the 108 th Congress, repealed again in the 112 th Congress, and reinstated in modified form in the 116 th Congress.", "As currently provided in House Rule XXVIII, the rule provides for a measure to automatically be engrossed and deemed to have been passed by the House by the same vote as the adoption by the House of the concurrent resolution on the budget if the resolution sets forth a level of the public debt that is different from the existing statutory limit. Rather than a specific level of debt, however, this measure would suspend the debt limit through the end of the budget year for the concurrent resolution on the budget (but not through the period covered by any outyears beyond the budget year). As with the earlier version of the rule, the engrossed measure would then be transmitted to the Senate for further action.", "The Senate has no special procedures concerning consideration of debt limit legislation."], "subsections": []}, {"section_title": "Revenue Legislation", "paragraphs": ["Article I, Section 8, of the Constitution gives Congress the power to levy \"taxes, duties, imposts, and excises.\" Section 7 of this article, known as the Origination Clause, requires that all revenue measures originate in the House of Representatives. Legislation concerning taxes and tariffs falls under the jurisdiction of the House Ways and Means Committee and the Senate Finance Committee. Furthermore, House Rule XXI, clause 5, specifically bars the consideration of a tax or tariff measure reported from another committee (or an amendment containing a tax or tariff provision, including a Senate amendment, from being offered to a House measure reported by another committee). Neither the Origination Clause nor House Rule XXI, clause 5, applies to the consideration of legislation concerning receipts or collections, such as user fees, that are levied on a class that benefits from a particular service, program, or activity.", "Most revenues derive from existing provisions of the tax code or Social Security law, which continue in effect from year to year unless changed by Congress and are generally expected to produce increasing amounts of revenue in future years if the economy expands and incomes rise or the workforce grows. Nevertheless, Congress typically makes some changes in the tax laws each year, either to raise or lower revenues or to redistribute the tax burden.", "In enacting revenue legislation, Congress often includes provisions that establish or alter tax expenditures. The term tax expenditures is defined in the 1974 CBA to include revenue forgone due to deductions, exemptions, credits, and other exceptions to the basic tax structure. Tax expenditures are a means by which the federal government uses the tax code to pursue public policy objectives and can be regarded as alternatives to spending policy actions such as grants or loans. The Joint Committee on Taxation estimates the revenue effects of legislation changing tax expenditures, and it also publishes five-year projections of these provisions as an annual committee print.", "Congress may choose to act on revenue legislation pursuant to proposals in the President's budget. An early step in congressional work on revenue legislation is publication by CBO of its own estimates (developed in consultation with the Joint Committee on Taxation) of the revenue impact of the President's budget proposals.", "Revenue totals agreed to in a budget resolution can be used to establish the framework for subsequent action on revenue measures. A budget resolution, however, contains only revenue totals and total recommended changes; it does not allocate these totals among revenue sources, nor does it specify which provisions of the tax code are to be changed.", "The House and Senate may consider revenue measures under their regular legislative procedures, such as the chambers did for the Tax Reform Act of 1986. However, changes in revenue policy may also be made in the context of the reconciliation process (described in a separate section of this report), such as the Economic Growth and Tax Relief Reconciliation Act of 2001, the Jobs and Growth Tax Relief Reconciliation Act of 2003, and the Tax Cuts and Jobs Act of 2015."], "subsections": []}, {"section_title": "Spending Legislation", "paragraphs": ["Congressional budgetary procedures distinguish between two types of spending: discretionary spending (which is controlled through the annual appropriations process) and direct spending (also referred to as mandatory spending, for which the level of funding is controlled outside of the annual appropriations process). Discretionary and direct spending are both included in the President's budget and the congressional budget resolution, and they both provide statutory authority for agencies to enter into obligations for payments from the Treasury. The two forms of spending, however, are distinct in most other respects in terms of both their formulation and consideration. There are some notable exceptions to these distinctions, however, so that some procedures associated with direct spending are applied to particular discretionary spending programs and vice versa.", "Formulation. The basic unit for appropriations legislation is the spending account. In modern practice, regular appropriations legislation is drafted as unnumbered paragraphs that provide a lump-sum amount for each appropriations account. This lump sum provides a definite amount of budget authority that is available to finance activities or programs covered by that account for a certain period of availability for certain purposes consistent with statutory requirements or limitations. In many cases, appropriations for an agency may be provided in relatively few broad accounts, such as for \"salaries and expenses,\" \"operations,\" or \"research.\" Direct spending, on the other hand, characteristically provides budget authority in the form of a requirement to make payments to eligible individual recipients according to a formula that establishes eligibility criteria and a program of benefits. The resulting overall level of outlays would be an aggregation of obligations for these individual benefits. In some cases (termed \"appropriated entitlements\"), appropriations legislation may be used to provide the means of financing, but, in practice, the requirements for funding such programs are determined through their authorizing legislation so that the Appropriations Committees have little or no discretion as to the amounts they provide.", "Committee j urisdiction. The Appropriations Committees have jurisdiction over discretionary spending for federal agencies and programs. In contrast, legislative committees (such as the Senate Committee on Health, Education, Labor and Pensions or the House Agriculture Committee), have jurisdiction over direct spending programs (including those funded in annual appropriations acts) through their jurisdiction over legislation concerning the structure of direct spending programs and their formulas regarding eligibility criteria and program of benefit payments.", "Frequency of d ecision m aking. Discretionary spending is provided in regular appropriations bills that are characteristically considered on an annual schedule. With some exceptions, budget authority provided in these measures is available for obligation only during a single fiscal year. Direct spending programs are typically established in permanent law that continues in effect until such time as it is revised or terminated, although in some cases (such as the Child Health Insurance Program and Temporary Assistance for Needy Families) the program may need periodic reauthorization. The scheduling for consideration of legislation making such changes is determined by congressional leadership through their agenda-setting authority rather than keyed to the beginning of the fiscal year.", "Enforcing s pending l evels in the b udget r esolution. The procedures Congress uses to enforce the policies set forth in the annual budget resolution differ somewhat for discretionary and direct spending programs. For both types of spending, Congress relies on allocations made under Section 302 of the 1974 CBA to ensure that new spending legislation reported by House and Senate committees conforms to parameters established in the budget resolution. Although this procedure is effective in limiting consideration of new legislation\u00e2\u0080\u0094both annual appropriations measures and new entitlement legislation\u00e2\u0080\u0094it is not an effective means for controlling direct spending that results from existing laws. Changes to the level of direct spending requires the enactment of new legislation that would change formulas regarding eligibility criteria and program of benefit payments, either through the regular legislative process or some expedited procedure such as reconciliation (described in a later section of this report).", "Statutory c ontrols. Discretionary spending for FY2012-FY2021 is subject to spending limits set in the Budget Control Act, as revised. These spending limits are divided into separately enforced amounts for defense and nondefense. Direct spending is not capped, but new direct spending (or revenue) legislation is subject to the Statutory Pay-as-You-Go Act of 2010. This act requires that the net effect of direct spending and revenue legislation enacted for a fiscal year not cause the deficit to rise or the surplus to decrease over specified periods of time."], "subsections": []}, {"section_title": "The Budget Cycle", "paragraphs": ["For any given fiscal year, federal budgeting is often viewed as a cyclical activity that begins with the formulation of the President's annual budget request and concludes with the audit and review of expenditures spreading over a multiyear period. The main stages are formulation and submission to Congress of the President's budget; congressional consideration of budgetary measures, including the budget resolution, appropriations legislation, and other measures as necessary to establish statutory spending and revenue requirements; budget execution; and finally audit and review. While the basic steps continue from year to year, particular procedures and timing can vary in accordance with the President or Congress, as well as various other economic and political considerations.", "The budget cycle can be discussed within the context of the calendar year, the congressional session, and the fiscal year. The calendar year and congressional sessions exist largely side by side. Since the Budget and Accounting Act of 1921, the President has been required to submit his budget request for the next fiscal year at the beginning of the calendar year. Furthermore, since the ratification of the Twentieth Amendment to the U.S. Constitution in 1933, congressional sessions have begun on January 3 (unless a law is enacted setting a different day). Together, these two factors mean that the consideration of budgetary matters by Congress for the upcoming fiscal year is generally expected to start near the beginning of the calendar year.", "Since FY1977, the federal fiscal year has been October 1 through September 30, as set by the CBA. Because appropriations legislation typically provides budget authority to be obligated over the course of a single fiscal year, the focus of congressional action in the budget cycle is the consideration and enactment of new annual appropriations legislation before the expiration of prior enacted appropriations (although this process often stretches beyond the beginning of the fiscal year). This focus on the upcoming fiscal year (referred to as the budget year) is reflected in the President's budget proposal and budget resolution as well. Direct spending or revenue legislation, however, may have effective dates that are different from the beginning of the fiscal year.", "In addition, Section 300 of the CBA establishes a timetable with respect to target dates for certain actions in the congressional budget process.", "The budget process, however, is not just about a single fiscal year. While the focus for Congress is legislation pertaining to the upcoming fiscal year, it may also need to address legislation, such as supplemental appropriations for disaster relief, affecting the fiscal year in progress or long-term budget planning. Federal agencies also typically deal with multiple fiscal years at the same time: auditing of completed fiscal years, implementing the budget for the current fiscal year, seeking funds from Congress for the upcoming fiscal year, and planning for fiscal years after that. Taken as a whole then, budgetary activities from planning to execution related to the funding for a fiscal year can actually stretch over an extended period of two-and-a-half calendar years (or longer)."], "subsections": []}, {"section_title": "The Executive Budget Process: Formulation and Content of the President's Budget", "paragraphs": ["The Constitution does not assign a formal role to the President in the federal budget process. It was largely left for agencies to develop and submit their own budget estimates to Congress individually. Although some Presidents made attempts to coordinate or limit agency budget estimates before they were communicated to Congress, such attempts were intermittent and uneven. This was changed by the Budget and Accounting Act of 1921, which created a statutory role for the President in federal budgeting by establishing a framework for a consolidated federal budget proposal to be developed by the President and submitted to Congress prior to the start of each fiscal year. By barring agencies from submitting their budget requests directly to Congress, and making the President responsible for a consolidated budget request, the act altered the institutional responsibilities of the office. The President's budget submission reflects the President's policy priorities and offers a set of recommendations regarding federal programs, projects, and activities funded through appropriations acts as well as any proposed changes to revenue and mandatory spending laws.", "Under current law, the President is required to submit a budget to Congress no later than the first Monday in February prior to the start of the fiscal year, but preparation typically begins at least nine or 10 months prior to that, approximately 18 months before the start of the fiscal year. OMB coordinates the development of the President's budget by issuing various circulars, memoranda, and other guidance documents to the heads of executive agencies. In particular, OMB Circular No. A-11 is issued annually. It is an extensive document that provides agencies with an overview of applicable budgetary laws, policies for the preparation and submission of budgetary estimates, and information on financial management and budget data systems. Circular A-11 also provides agencies with directions for budget execution and guidance regarding agency interaction with Congress and the public.", "When agencies begin work on the budget for a forthcoming fiscal year, Congress has not yet made final determinations for the next year. Consequently, agencies must begin the process of developing their budget estimates with a great deal of uncertainty about future economic conditions, presidential policies, and congressional actions. Agency requests are typically submitted to OMB in late summer or early fall and are reviewed by OMB on behalf of the President. Under the Government Performance and Results Act, agencies are required to link the formulation of their budgets with government performance through strategic plans, annual performance plans, and annual performance reports. OMB notifies agencies of decisions regarding their budget and performance plans through what is known as the \"passback\" and are given an opportunity to make appeals to the OMB director and, in some cases, to the President. Once OMB and the President make final decisions, federal agencies and departments must revise their budget requests and performance plans to conform with these decisions.", "The content of the budget submission is partly determined by law, but Title 31 authorizes the President to set forth the budget \"in such form and detail\" as he may determine. Over the years, there has been an increase in the types of information and explanatory material presented in the budget documents. In most years, the budget is submitted as a multi-volume set consisting of a main document setting forth the President's message to Congress and an analysis and justification of his major proposals. Additional supplementary documents typically provide account and program level details (the \"Budget Appendix\"), historical information (\"Historical Tables\"), and special budgetary analyses (\"Analytical Perspectives\"). The latter volume includes multiyear budget estimates that project spending and revenues where current policies are continued (called the \"current services baseline\") as well as spending and revenues under the President's proposed policy changes, among other things.", "In support of the President's appropriations requests, agencies prepare additional materials, frequently referred to as congressional budget justifications. These materials provide more detail than is contained in the President's budget documents and are used in support of agency testimony during Appropriations subcommittee hearings on the President's budget.", "The President is also required to submit a supplemental summary of the budget, referred to as the Mid-Session Review, before July 16 of each year. The Mid-Session Review is required to include any substantial changes in estimates of expenditures or receipts, as well as any changes or additions to proposals made in the earlier budget submission. The President may also submit other supplemental requests or revisions to Congress at other times during the year."], "subsections": []}, {"section_title": "The Congressional Budget Process", "paragraphs": ["Until the 1970s, congressional consideration of the multiple budgetary measures considered every year lacked any formal coordination. Instead, Congress considered these various spending and revenue measures separately, sometimes informally comparing them to proposals in the President's budget. That was changed by the CBA of 1974. The CBA provides for the adoption of a concurrent resolution on the budget, allowing Congress to make decisions about overall fiscal policy and priorities as well as to coordinate and establish guidelines for the consideration of various budget-related measures. This budget resolution sets aggregate budget policies and functional priorities for the upcoming budget year and for at least four additional fiscal years. In recent practice, budget resolutions have often covered a 10-year period.", "Because a concurrent resolution is not a law, the President cannot sign or veto it, and it does not have statutory effect, so no money can be raised or spent pursuant to it. The main purpose of the budget resolution is to establish the framework within which Congress considers separate revenue, spending, and other budget-related legislation. Revenue and spending amounts set in the budget resolution establish the basis for the enforcement of congressional budget policies through points of order . The budget resolution may also be used to initiate the reconciliation process for conforming existing revenue and direct spending laws to congressional budget policies (described below)."], "subsections": [{"section_title": "The Budget Resolution: Formulation, Content, and Consideration", "paragraphs": ["For each fiscal year covered in a budget resolution, Section 301(a) of the CBA requires that it include budget aggregates and spending levels for each functional category of the budget. The aggregates in the budget resolution include:", "total revenues (and the amount by which the total is to be changed by legislative action); total new budget authority and outlays; the surplus or deficit; and public debt.", "With regard to each of the functional categories, the budget resolution must indicate for each fiscal year the amounts of new budget authority and outlays, and they must add up to the corresponding spending aggregates.", "Because they are considered off-budget, the aggregate amounts in the budget resolution do not reflect the revenues or spending of the Social Security trust funds, although these amounts are set forth separately in the budget resolution for purposes of Senate enforcement procedures. Similarly, the off-budget status of the Postal Service means that only an appropriation to subsidize certain mail costs is included in the budget resolution.", "In addition, the CBA requires that the report accompanying the budget resolution in each chamber include the following information:", "a comparison of total new budget authority, total outlays, total revenues, and the surplus or deficit for each fiscal year set forth in the budget resolution with the amounts requested in the budget submitted by the President; the estimated levels of total new budget authority and total outlays, divided between discretionary and mandatory amounts, for each major functional category; the economic assumptions that underlie the matters set forth in the budget resolution and any alternative assumptions and objectives the Budget Committee considered; information, data, and comparisons indicating the manner in which, and the basis on which, the Budget Committee determined each of the matters set forth in the resolution; the estimated levels of tax expenditures by major items and functional categories for the President's budget and in the budget resolution; and the committee spending allocations (commonly referred to as Section 302(a) allocations after the applicable section of the CBA).", "The budget resolution does not allocate funds among specific programs or accounts, but allocations of total spending in the budget resolution are made to committees with spending jurisdiction under Section 302(a). Major program assumptions underlying the functional amounts are often discussed in the reports accompanying the resolution. While the allocation to a committee is enforceable, these assumptions are not binding. Finally, Section 301(b) identifies certain additional matters that may be included in the budget resolution. Perhaps the most significant optional feature of a budget resolution is reconciliation directives (discussed below).", "The House and Senate Budget Committees are responsible for marking up and reporting the budget resolution. In the course of developing the budget resolution, the Budget Committees hold hearings, receive \"views and estimates\" reports from other committees, and obtain information from CBO. These \"views and estimates\" reports of House and Senate committees provide the Budget Committees with information on the preferences and legislative plans of congressional committees regarding budgetary matters within their jurisdiction.", "The extent to which the Budget Committees (and the House and Senate) consider particular programs when they act on the budget resolution varies from year to year. Specific programmatic funding decisions remain the responsibility of the Appropriations Committees and the committees with direct spending jurisdiction, but there is a strong likelihood that major issues will be discussed in markup, in the Budget Committees' reports, and during floor consideration of the budget resolution. Although any programmatic assumptions generated in this process are not binding on the committees of jurisdiction, they often influence the final outcome.", "Floor consideration of the budget resolution is guided by the statutory provisions in the CBA and by House and Senate rules and practices. In the House, the Rules Committee usually reports a special rule, which, once approved, establishes the terms and conditions under which the budget resolution is considered. This special rule typically specifies which amendments may be considered and the sequence in which they are to be offered and voted on. It has been the practice of the House to allow consideration of a few amendments (as substitutes for the entire resolution) that present broad policy choices. In the Senate, the consideration is less structured, but there are some notable constraints that apply to consideration of budget resolutions that do not apply to the consideration of legislation generally. In particular, Section 305 of the CBA limits debate on the initial consideration of a budget resolution and all amendments, debatable motions, and appeals to not more than 50 hours with the time equally divided between, and controlled by, the majority and the minority. The effect of the limit on debate time is that a cloture process requiring three-fifths support is not necessary to reach a final vote on a budget resolution, so the question can be decided by a simple majority. In addition, all amendments offered must be germane. Although there is a limit on debate time, there is no limit on the number of amendments so that consideration of amendments (as well as other motions and appeals) may continue but without debate (sometimes referred to as a \"vote-a-rama\"). Although no further debate time is available, the Senate has sometimes agreed by unanimous consent to accelerated voting procedures, allowing a nominal amount of time to identify and explain an amendment before voting. The CBA imposes no procedural limit on the duration of a vote-a-rama.", "The CBA provides that a motion to proceed to consideration of a conference report on a budget resolution in the Senate may be made at any time and that all debate on the conference report (and any amendments, debatable motions, or appeals) is limited to 10 hours. As with the limit on debate time for initial consideration, this limit means that in the Senate a cloture process requiring three-fifths support is not necessary to reach a final vote, so the question can be decided by a simple majority. Although the CBA also provides for House consideration of a conference report on a budget resolution, the House routinely considers a conference report under a special rule, usually limiting debate to one hour.", "Achievement of the policies set forth in the annual budget resolution depends on the subsequent legislative actions taken by Congress (and their approval or disapproval by the President), the performance of the economy, and technical considerations. Many of the factors that determine whether budgetary goals will be met are beyond the direct control of Congress. If economic conditions\u00e2\u0080\u0094growth, employment levels, inflation, and so forth\u00e2\u0080\u0094vary significantly from projected levels, so too will actual levels of revenue and spending. Similarly, actual levels of spending or receipts may also differ substantially if the technical factors upon which estimates were based prove faulty, such as the number of participants who become eligible or apply for benefits under a direct spending program."], "subsections": []}, {"section_title": "Deeming Resolutions and Other Alternatives to the Budget Resolution", "paragraphs": ["If the House and Senate do not reach final agreement on a budget resolution it can complicate the budget process. In the absence of a budget resolution, the House and Senate often lack the basis for using points of order to limit the budgetary impact of legislation, and it may also be more difficult to coordinate consideration of the various measures with budgetary impact, both within each chamber and between the chambers, or to assess a measure's relationship to overall budgetary policies and goals. For example, Section 303 of the CBA prohibits consideration of budgetary legislation prior to adoption of the budget resolution. The House is permitted to consider regular appropriations bills after May 15 even if a budget resolution has not been adopted, but without a budget resolution there would be no enforceable upper limit on the overall level of appropriations.", "In the absence of a budget resolution, however, Congress may use alternative means to establish enforceable budget levels. When Congress has been late in reaching final agreement on a budget resolution or has not reached agreement at all, the House and Senate, often acting separately, have used legislative procedures to deal with enforcement issues on an ad hoc basis. These alternatives are typically referred to as \"deeming resolutions,\" because they are deemed to serve in place of an agreement between the two chambers on an annual budget resolution for the purposes of establishing enforceable budget levels for the upcoming fiscal year (or multiple fiscal years). Often, a chamber initiates action on a deeming resolution so that it can subsequently begin consideration of appropriations measures with enforceable limits. Deeming resolutions have varied in terms of the legislative vehicle used to establish them, the timing and duration of their effect, and their content.", "Congress initially used simple resolutions in each chamber as the legislative vehicle for deeming resolutions (which is why they are referred to as resolutions). In the House, deeming resolutions have often been included in the same resolution providing for consideration of the first appropriations measure for the upcoming fiscal year. Deeming resolutions have also been included as provisions in lawmaking vehicles, such as appropriations bills or statutory budget enforcement legislation. For example, the Budget Control Act of 2011 included provisions for the purpose of budget enforcement for FY2012 and FY2013 to apply in the Senate only if Congress did not agree on a budget resolution for either of those years. These provisions allowed the Senate Budget Committee chair to file in the Congressional Record enforceable levels consistent with the statutory spending caps (for discretionary spending) and with baseline projections made by the CBO (for direct spending and revenues). Subsequent measures enacted to modify the spending limits included similar provisions for the House or Senate or both.", "Adopting a deeming resolution does not preclude later action to approve a budget resolution. In some cases when Congress has been late in reaching final agreement on a budget resolution, either or both chambers have chosen to use a deeming resolution in order to allow the appropriations process to move forward in a more timely and coordinated fashion and later superseded it through final adoption of a budget resolution.", "Deeming resolutions have typically included at least two things: (1) language setting forth or referencing specific enforceable budgetary levels (such as an aggregate spending limit or committee spending allocations) and (2) language stipulating that such levels are to be enforceable as if they had been included in a budget resolution. Even so, significant variations exist in their content, with some incorporating (either in their text or by reference) language mirroring everything in a budget resolution adopted in that chamber but not adopted in final form by both."], "subsections": []}, {"section_title": "Budget Enforcement", "paragraphs": ["Regardless of whether Congress establishes budgetary parameters in a budget resolution or some other legislative vehicle, in order for enforcement procedures to work, Congress must be able to relate the budgetary effect of an individual measure to these overall budget parameters to determine whether it would be consistent with those parameters. In order to do so, Congress has sought access to complete and up-to-date budgetary information. A baseline is a projection of federal spending and receipts during the current or future fiscal year under existing law. It provides a benchmark for measuring the impact of proposed changes to existing policies.", "Projections of the impact of proposed or pending legislation, referred to as scoring or scorekeeping , allow Congress to be informed about the budgetary consequences of its actions. When a measure with spending or revenue impact is under consideration, scoring information helps Members determine whether a bill or amendment would violate budgetary rules. Scoring also allows Congress to determine how best to achieve the budgetary goals.", "Section 312(a) of the CBA designates the House and Senate Budget Committees as the principal scorekeepers for Congress. They provide each chamber's presiding officer with the estimates needed to make decisions about points of order enforcing budgetary parameters. The Budget Committees also make periodic summary scorekeeping reports that are placed in the Congressional Record . CBO assists Congress in these activities by preparing cost estimates of legislation, which are included in committee reports, and scoring reports for the Budget Committees. The Joint Committee on Taxation also supports Congress by preparing estimates of the budgetary impact of revenue legislation.", "Although a budget resolution does not become law, Congress has a variety of tools that it may use for enforcing the decisions made in it. The CBA includes several provisions designed to encourage congressional compliance with the budget resolution. The House and Senate have also adopted other limits, as part of their standing rules, as procedural provisions in budget resolutions, or as a part of some other measure to establish other budgetary rules, limits, and requirements. In particular, the overall spending ceiling, revenue floor, and committee allocations of spending determined in a budget resolution are all enforceable by points of order in both the House and the Senate. In addition, Appropriations Committees are required to make subdivisions of their committee allocation, and these too are enforceable by points of order. Legislation breaching other budgetary limits or causing increases in the deficit would also generally be subject to points of order.", "Points of order are effectively prohibitions against certain types of legislation or other congressional actions being taken in the legislative process. Points of order are not self-enforcing, however. A point of order must be raised by a Member on the floor of the chamber before the presiding officer can rule on its application and thus for its enforcement.", "In the Senate, most points of order related to budget enforcement may be waived by a vote of three-fifths of all Senators duly chosen and sworn (60 votes if there are no vacancies). Although the presiding officer may rule on whether the point of order is well taken, in practice Senators will typically make a motion to waive the application of the rule. If the waiver motion fails, the presiding officer will then rule the provision or amendment out of order. As with other provisions of Senate rules, budget enforcement points of order may also be waived by unanimous consent.", "In the House, points of order, including those for budget enforcement, may be waived by the adoption of special rules, although other means (such as unanimous consent or suspension of the rules) may also be used. A waiver may be used to protect a bill, specified provision(s) in a bill, or an amendment from a point of order that could be raised against it. Waivers may be granted for one or more amendments even if they are not granted for the underlying bill. The House may waive the application of one or more specific points of order, or it may include a \"blanket waiver,\" that is, a waiver that would protect a bill, provision, or amendment from any point of order."], "subsections": []}, {"section_title": "The Reconciliation Process", "paragraphs": ["Because a budget resolution is in the form of a concurrent resolution and is not enacted into law, any statutory changes concerning spending or revenues that are necessary to implement changes in budget policies must be enacted in separate legislation. Reconciliation is an optional legislative process that affords Congress an opportunity to use an expedited procedure to accomplish this. As provided in Section 310 of the CBA, reconciliation consists of several stages, beginning with congressional adoption of the budget resolution, that allow Congress to make policy changes within the jurisdiction of specified committees. The reconciliation process allows a certain measure (or measures) to be privileged for consideration and then allows Congress to use an expedited procedure when considering it. These procedures include directing committees to draft legislative language to fit specific desired budgetary outcomes, packaging language from multiple committees into omnibus legislation, limiting amending opportunities, and limiting the duration of debate on the Senate floor.", "If Congress intends to use the reconciliation process, reconciliation instructions to committees must first be included in the budget resolution. This feature alone places perhaps the most significant limitation on the use of reconciliation. A budget resolution can be adopted with a simple majority, but because bicameral agreement on the budget resolution is a necessary first step, the House and Senate must collectively agree on the need for reconciliation. If such an agreement can be achieved, reconciliation instructions can then trigger the second stage of the process by directing specific committees to develop and report legislation that would change laws within their respective jurisdictions related to spending, revenues, or the debt limit.", "If a committee is instructed to submit legislation reducing spending (or the deficit) by a specific amount, that amount is considered a minimum, meaning that a committee may report greater net savings. If a committee is instructed to submit legislation increasing revenues by a specific amount, that amount would also be considered a minimum. If a committee is instructed to decrease revenue, however, that amount would be considered a maximum. Although there is no procedural mechanism to ensure that legislation developed by a committee in response to reconciliation instructions will be in compliance with the instructed levels, if a committee does not report legislation or such legislation is not fully in compliance with the instructions, procedures are available that would allow either chamber to move forward with reconciliation nevertheless. For example, legislative language that falls within the jurisdiction of the noncompliant committee can be added to a reconciliation bill during floor consideration that will bring the bill into compliance. These methods vary by chamber.", "In the development of legislation in response to reconciliation instructions, the policy choices remain the prerogative of the committee. In some instances, reconciliation instructions have included particular policy options or assumptions regarding how an instructed committee might be expected to achieve its reconciliation target, but such language has not been considered binding or enforceable.", "Reconciliation instructions may further direct the committee to report the legislation for consideration in its respective chamber or to submit the legislation to the Budget Committee to be included in an omnibus reconciliation measure. If it will be included in an omnibus measure, the CBA requires that the Budget Committee report such a measure \"without any substantive revision.\"", "Although reconciliation instructions may include target dates for committees to submit their legislative language, there is no requirement that the Budget Committee, in either chamber, report a reconciliation bill by that date. As a consequence, the target date included in reconciliation instructions is not necessarily indicative of a timetable for consideration of reconciliation legislation.", "In the House, floor consideration of reconciliation legislation has historically been governed by special rules reported from the House Rules Committee. These special rules have established the duration of a period of general debate as well as provided for a limited number of amendments (if any) that may be considered before the House votes on final passage.", "In the Senate, reconciliation legislation is eligible to be considered under expedited procedures. The Senate has interpreted the CBA to allow it to take up a reconciliation bill by agreeing to a nondebatable motion to proceed to its consideration. Because it is nondebatable, a majority can vote immediately to take it up so that a cloture process requiring three-fifth support is not necessary to reach a vote on the question of whether to take up a reconciliation bill. For a reconciliation bill, as with a budget resolution, a distinguishing feature is that there are limits on the consideration of the bill as well as any amendments. Section 310 of the CBA limits total debate time on a reconciliation measure including all amendments, motions, or appeals to 20 hours, equally divided and controlled by the majority and minority. As with a budget resolution, because the limit is on debate time (rather than all consideration), after the debate time has expired, Senators may continue to offer amendments (and make other motions or appeals) in a vote-a-rama although no further debate is allowed. Despite this, the limit on debate time has meant that, in practice, it has been unnecessary for a supermajority of the Senate to invoke cloture in order to reach a final vote on a reconciliation bill so that it can be passed by a simple majority.", "Perhaps the best-known limit on the content of reconciliation bills or amendments is the so-called Byrd Rule (Section 313 of the CBA). This rule prohibits including extraneous provisions in the measure or offering them as amendments. In general, this means that it prohibits the inclusion of nonbudgetary provisions in reconciliation legislation or provisions that are otherwise contrary to achieving the purposes established in reconciliation instructions. If a Byrd Rule point of order is sustained on the floor against a provision in the bill as reported by committee, the provision is stricken, but further consideration of the bill may continue. If the point of order is sustained against an amendment, the amendment's further consideration would not be in order. The CBA also places other limits on the content of reconciliation bill amendments. For example, all amendments must be germane to the bill, meaning that amendments generally cannot be used to expand the scope of a reconciliation bill beyond that of the provisions reported from an instructed committee (although a motion to commit or recommit that would bring a committee into compliance with its instructions would not be limited by this rule). Limits on amendments' budgetary impact also exist. Amendments, for example, may not increase the level of spending (or reduce the level of revenues) provided in the bill unless such effects are offset. Together, these rules have the effect of protecting the policy changes proposed by an instructed committee in ways that are not generally available under the Senate's regular procedures. In most cases, points of order related to limiting the content of reconciliation bills may be waived by a vote of three-fifths of all Senators.", "As with all legislation, any differences in the reconciliation legislation passed by the two chambers must be resolved before the bill can be sent to the President for approval or veto. Conference reports on a reconciliation bill, as for other legislation, are privileged for consideration by the Senate so that a majority can quickly vote to take up a conference report without first invoking cloture. The CBA, however, does provide that all debate on the conference report for a reconciliation bill (and any amendments, debatable motions, or appeals) is limited to 10 hours. In the House, the routine practice has been to consider a conference report under a special rule, usually limiting debate to one hour.", "Reconciliation first became a powerful legislative tool because reconciliation directives in a budget resolution could be used as a means to require specific legislative committees to make policy choices that would implement overall budgetary goals. Although there are constraints on the use of reconciliation, especially the need for bicameral agreement to initiate the procedure and points of order that limit the content of reconciliation bills, it has continued to be important because it has evolved to provide Congress with a procedure that has been employed to achieve a variety of budgetary and policy purposes. In particular, the limit on time for floor debate in the Senate has meant that major legislation can be enacted by majority vote without the need for a supermajority to first invoke cloture."], "subsections": []}]}, {"section_title": "The Annual Appropriations Process", "paragraphs": ["Discretionary spending is provided through a characteristically annual process in which Congress enacts regular appropriations measures. As an exercise of their constitutional authority to determine their rules of proceeding, both chambers have adopted rules that facilitate their ability to define and provide for consideration of these measures. One fundamental aspect of this has been to limit appropriations to purposes authorized by law. This requirement allows Congress to distinguish between legislation that addresses only questions of policy and that which addresses questions of funding and to provide for their separate consideration. In common usage, the terms used to describe these types of measures are authorizations and appropriations , respectively.", "An authorization may generally be described as a statutory provision that defines the authority of the government to act. It can establish or continue a federal agency, program, policy, project, or activity. Further, it may establish policies and restrictions and deal with organizational and administrative matters. It may also, explicitly or implicitly, authorize subsequent congressional action to provide appropriations. By itself, however, an authorization of discretionary spending does not provide funding for government activities.", "An appropriation may generally be described as a statutory provision that provides budget authority, thus permitting a federal agency to incur obligations and make payments from the Treasury for specified purposes, usually during a specified period of time.", "The authorizing and appropriating tasks are largely carried out by a division of labor within the committee system and preserved under House and Senate rules. Legislative committees\u00e2\u0080\u0094such as the House Committee on Armed Services and the Senate Committee on Commerce, Science, and Transportation\u00e2\u0080\u0094are responsible for authorizing legislation related to the agencies and programs under their jurisdiction. Most standing committees have authorizing responsibilities. The Appropriations Committees of the House and Senate have jurisdiction over appropriations measures, including annual appropriations bills, supplemental appropriations bills, and continuing resolutions."], "subsections": [{"section_title": "Authorizing Legislation", "paragraphs": ["The primary purpose of authorization statutes or provisions is to provide authority for an agency to administer a program or engage in an activity. These are sometimes referred to as \"organic\" or \"enabling\" authorizations. It is generally understood that such statutory authority to administer a program or engage in an activity also provides an implicit authorization for Congress to appropriate for such program or activity. Appropriations may also be authorized explicitly for definite or indefinite amounts (i.e., \"such sums as may be necessary\"), either through separate legislation or as part of an organic statute (that is, the legislation that establishes the agency mission or programmatic parameters). These are sometimes referred to as \"authorizations of appropriations.\" If such an authorization of appropriations is present, it may have to be renewed annually or periodically, and it may expire even though the underlying authority in an organic statute to administer such a program or engage in such an activity does not. Most federal agencies operate under a patchwork of authorizing statutes that govern various requirements and duties. Furthermore, there is no requirement in either chamber that the structure of authorizations mirror the account structure in appropriations bills. As a consequence, the burden of proving the authorization for funding carried in an appropriations bill falls on the proponents and managers of the bill.", "The rules of the House and Senate establish a general expectation that agencies and programs be authorized in law before an appropriation is made to fund them. An appropriation in the absence of a current authorization, in excess of an authorization ceiling, or for purposes not previously authorized by law is commonly called an \"unauthorized appropriation.\" Conversely, while authorizations can impose a procedural limit on appropriations, Congress is not required to provide appropriations for an authorized discretionary spending program.", "House and Senate rules also preserve the distinction between authorizations and appropriations by prohibiting the inclusion of general legislative language in appropriations measures. The division between an authorization and an appropriation, however, is a procedural construct of House and Senate rules created to apply to congressional consideration. Consequently, the term unauthorized appropriations does not convey a legal meaning with regard to subsequent funding. If unauthorized appropriations or legislation remain in an appropriations measure as enacted, either because no one raised a point of order or the House or Senate waived the rules, the provision will still have the force of law. Unauthorized appropriations, if enacted, are therefore generally available for obligation or expenditure. Similarly, any legislative provisions enacted in an annual appropriations act also generally have the force of law for the duration of that act unless otherwise specified."], "subsections": []}, {"section_title": "Regular Appropriations Legislation", "paragraphs": ["An appropriation is a law passed by Congress that provides federal agencies legal authority to incur obligations and the Treasury Department authority to make payments for designated purposes. The power of appropriation derives from the Constitution, which in Article I, Section 9, provides that \"[n]o money shall be drawn from the Treasury but in consequence of appropriations made by law.\" The power to appropriate is exclusively a legislative power; it functions as a limitation on the executive branch. An agency may not spend more than the amount appropriated to it, and it may use available funds only for the purposes and according to the conditions provided by Congress.", "The Constitution does not require annual appropriations, but since the First Congress the practice has been to make appropriations for a single fiscal year. Appropriations must be used (obligated) in the fiscal year for which they are provided unless the law provides that they shall be available for a longer period of time. All provisions in an appropriations act, such as limitations on the use of funds, expire at the end of the fiscal year unless the language of the act extends their period of effectiveness.", "Congress passes three main types of appropriations measures. Regular appropriations acts provide budget authority to agencies for the next fiscal year. Supplemental appropriations acts provide additional budget authority during the current fiscal year when the regular appropriation is insufficient or to finance activities not provided for in the regular appropriation. Continuing appropriations acts provide interim (or full-year) funding for agencies that have not received a regular appropriation.", "In a typical session, Congress acts on 12 regular appropriations bills. In recent years, Congress has merged two or more of the regular appropriations acts (sometimes termed \"minibus\" or \"omnibus\" appropriations legislation) for a fiscal year at some point during their consideration.", "In current practice, there are both statutory and procedural limits on the level of discretionary spending. A statutory limit on discretionary spending was established under the BCA for each fiscal year from FY2012 through FY2021, divided into separate defense and nondefense categories. A procedural limit on total appropriations can be established under a budget resolution or some alternate measure (see sections on the budget resolution and deeming resolutions in this report). Once the amount is established, it is allocated to the Appropriations Committee in each chamber pursuant to Section 302(a) of the CBA. Section 302(b) further requires the Appropriations Committee in each chamber to subdivide the total allocation among its subcommittees.", "By long-standing custom, appropriations measures originate in the House of Representatives. In the House, appropriations measures are originated by the Appropriations Committee (when it marks up or reports the measure) rather than being introduced by a Member beforehand and referred to the committee. Before the full committee acts on the bill, it is drafted and considered in the relevant Appropriations subcommittee. The House and Senate Appropriations Committees currently have 12 parallel subcommittees. The House subcommittees typically hold extensive hearings on appropriations requests shortly after the President's budget is submitted. In marking up their appropriations bills, the various subcommittees are then guided by the discretionary spending limits and the subdivisions made to them by the full committee under Section 302(b) of the CBA.", "The Senate usually considers appropriations measures after they have been passed by the House. When House action on appropriations bills is delayed, however, the Senate may expedite its actions by considering a Senate-numbered bill up to the stage of final passage. In this scenario, upon receipt of the House-passed bill in the Senate, it is amended with the text that the Senate has already agreed to (as a single amendment) and then passed by the Senate.", "The basic unit of an appropriation bill is an account. A single unnumbered paragraph in an appropriations act comprises one account, and all provisions of that paragraph pertain to that account and to no other unless the text expressly gives them broader scope. Any provision limiting the use of funds enacted in that paragraph is a restriction on that account alone.", "Over the years, appropriations have been consolidated into a relatively small number of accounts. It is not uncommon for a federal agency to have a single account for all its expenses of operation and additional accounts for other purposes such as construction. Accordingly, most appropriation accounts encompass a number of activities or projects. The appropriation sometimes includes directives or provisos that allot specific amounts to particular activities within the account, but the more common practice is to provide detailed information on the amounts intended for each activity in other sources, principally the committee reports accompanying the measures.", "In addition to the substantive limitations (and other provisions) associated with each account, each appropriations act has \"general provisions\" that apply to all of the accounts in a title or in the whole act. These general provisions appear as numbered sections, usually at the end of the title or the act.", "If not otherwise specified, an appropriation is for a single fiscal year so that the funds have to be obligated during the fiscal year for which they are provided and that they lapse if not obligated by the end of that year. Congress can also specify that an appropriation remains available for obligation for another period or even that it remain available until expended (termed \"no-year\" funds)."], "subsections": []}, {"section_title": "Continuing Resolutions", "paragraphs": ["The routine activities of most federal agencies are funded annually by one or more of the regular appropriations acts. When action on the regular appropriations acts is delayed, however, one or more continuing appropriations acts (also referred to as a continuing resolution, or CR) may be used to provide interim budget authority in order to prevent a funding gap or the need for a shutdown of government activities. This may occur if regular annual appropriations acts are not enacted by the beginning of the fiscal year (October 1), or upon the expiration of a prior CR, until action on the regular appropriations acts is completed.", "In providing temporary funding, CRs have typically addressed several issues:", "Coverage. CRs have provided funding for certain activities. In current practice, this is typically specified with reference to the prior fiscal year's appropriations acts.", "Duration. CRs have provided budget authority for a specified duration of time. In some cases this may be as short as a single day, although a CR can provide funding for the remainder of the fiscal year. CRs include language that provides that the CR may be superseded by a regular appropriations act if it is enacted prior to the expiration of the CR.", "Rate. Since CRs typically provide funds for a limited period, they generally provide those funds based on a rate rather than a set amount. This rate can be set at the rate of operations funded in the previous year, it can be the previous rate of operations adjusted by some percentage, or it can be based on some other amount. This is in contrast to regular and supplemental appropriations acts, which generally provide specific amounts for each account. Other factors may also have an impact on interpreting the rate of operations, such as historical spending patterns or provisions commonly included in CRs that would require funds be apportioned at the rate necessary to avoid furloughs or limit funds for programs with high initial rates of operation or complete distribution of appropriations at a set time during a fiscal year (that is, all or most of the funds would be used at a single set time during the fiscal year).", "For mandatory spending that is funded through appropriations acts, CRs normally provide for a rate of funding sufficient to maintain program levels under current law since the levels necessary to meet obligations are independent of prior year actions.", "Funds expended under a CR are considered a portion of the total amount subsequently provided for the entire fiscal year when a regular appropriation bill is later enacted into law.", "Limits on u sage. CRs typically include language carrying forward any terms and conditions on the obligation of such budget authority in the prior fiscal year. CRs have also included language specifying that funding provided in the CR should be implemented so that only the most limited action allowed by law be taken with respect to providing for continuation of projects and activities in order to preserve congressional prerogative to later determine the amount available. Another typical feature of CRs is language to prohibit \"new starts\" in order to limit agencies, particularly the Department of Defense, the authority to make long-term commitments while operating under temporary funding or to prevent agencies from initiating or resuming any project or activity for which appropriations were not available during the prior fiscal year.", "Specific a djustments. The duration and amount of funds in the CR and purposes for which they may be used may be adjusted for specified activities or programs\u00e2\u0080\u0094for example, to provide that funds for a certain program be based on an amount different from the rate for the previous year. These adjustments are commonly termed \"anomalies.\""], "subsections": []}]}, {"section_title": "The Executive Budget Process: Budget Execution", "paragraphs": ["After enactment of a particular appropriation into law, federal agencies must attempt to interpret and apply its terms in order to execute their budgetary responsibilities. Agencies may generally obligate and expend funds subject to any conditions addressed by appropriations statutes guided by three general principles:", "the purpose(s) for which particular funds are appropriated, which may be expressed in statute in more or less detail and, in some cases, with certain restrictions; the time period during which funds are available for obligation and expenditure\u00e2\u0080\u0094sometimes referred to as the period of availability or duration of appropriations; and the amount of appropriated funds that may be obligated and expended.", "Within the contours of these statutory conditions on the availability of funds, agencies may nevertheless exercise some discretion regarding how funds are allocated and the pace at which funds are obligated and spent. "], "subsections": [{"section_title": "The Antideficiency Act and Apportionment", "paragraphs": ["The so-called Antideficiency Act consists of a series of provisions and revisions incorporated into appropriations laws over the years relating to matters such as prohibited activities, the apportionment system, and budgetary reserves. These provisions, now codified in two locations in Title 31 of the United States Code , continue to play a pivotal role in the execution phase of the federal budget process, when the agencies actually spend the funds provided in appropriations laws.", "The origins of the Antideficiency Act date back to 1870, which provided:", "that it shall not be lawful for any department of the government to expend in any one fiscal year any sum in excess of appropriations made by Congress for that fiscal year, or to involve the government in any contract for the future payment of money in excess of such appropriations.", "Later modifications, particularly the Antideficiency Acts of 1905 and 1906, sought to strengthen the prohibitions of the 1870 law by expanding its provisions, adding restrictions on voluntary services for the government, and imposing criminal penalties for violations. These laws also established a new administrative process for budget execution, termed \"apportionment,\" which requires that budget authority provided to federal agencies in appropriations acts be allocated in installments, rather than all at once. By apportioning funds, agencies can prevent operating at a rate that would expend all budget authority before the end of the fiscal year or end the year with substantial amounts unobligated.", "Four main types of prohibitions are contained in the Antideficiency Act, as amended: (1) making expenditures in excess of the appropriation; (2) making expenditures in advance of the appropriation; (3) accepting voluntary service for the United States, except in cases of emergency; and (4) making obligations or expenditures in excess of an apportionment or reapportionment or in excess of the amount permitted by agency regulation.", "One significant impact of the Antideficiency Act has been concern with the potential for a government shutdown as a response to a funding gap. In 1980 and early 1981, then-Attorney General Benjamin Civiletti issued opinions in two letters to the President. The \"Civiletti Letters\" have continued to have effect through guidance provided to federal agencies under various OMB circulars clarifying the limits of federal government activities upon the occurrence of a funding gap.", "The Civiletti Letters state that, in general, the Antideficiency Act requires that if Congress has enacted no appropriation beyond a specified period, the agency may make no contracts and obligate no further funds for activities associated with the lapsed appropriation except as \"authorized by law.\" In addition, because no statute generally permits federal agencies to incur obligations without appropriations for the pay of employees, the Antideficiency Act does not, in general, authorize agencies to employ the services of their employees upon a lapse in appropriations, though it does permit agencies to fulfill certain legal obligations connected with the orderly termination of agency operations.", "The second letter, from January 1981, discusses the more complex issue of interpretation presented with respect to obligational authorities that are \"authorized by law\" but not manifested in appropriations acts. In a few cases, Congress has expressly authorized agencies to incur obligations without regard to available appropriations. More often, it is necessary to inquire under what circumstances statutes that vest particular functions in government agencies imply authority to create obligations for the execution of those functions despite a lack of current appropriations. It is under this guidance that exceptions may be made for activities involving \"the safety of human life or the protection of property.\"", "As a consequence of these guidelines, when a funding gap occurs, executive agencies begin a shutdown of the affected projects and activities, including the furlough of non-excepted personnel."], "subsections": []}, {"section_title": "Reprogramming and Transfers", "paragraphs": ["The language by which funds are provided to federal agencies may vary in the level of discretion agencies have to determine how to spend the funds that have been provided. One type of discretion that commonly occurs is with respect to the purposes for which funds are available when appropriations are provided as a lump sum with little or no specificity in the appropriations statute. Even when the purpose of appropriations has been specified in detail, agencies have some flexibility to determine how they will use their available budgetary resources during the fiscal year. For example, agencies may shift funds from one purpose or object to another through reprogramming and transfers.", "Reprogramming is the shifting of funds within an appropriation account from one object class to another or from one program activity to another. Generally, agencies may make such shifts without additional statutory authority, but often they must provide some form of notification to the appropriations committees, authorizing committees, or both.", "A transfer is the shifting of budget authority from one appropriation account to another. Agencies may transfer budget authority only as specifically authorized by law. In most cases, transfers involve movement of funds within an agency or department, but they may also involve movement of funds between two or more agencies or departments. Transfer authority may be provided either in authorizing statutes or in appropriations acts. In addition, statutory provisions that provide transfer authority will require the agency to notify Congress.", "In general, both transferred and reprogrammed funds are subject to any limitations or conditions that were imposed by the appropriations act that originally made it available. All original restrictions remain in effect on transferred funds regardless of whether the funds in the receiving appropriations account have different restrictions or characteristics than the funds being transferred. In other words, limitations and restrictions follow the funds.", "Additional restrictions may be imposed by statutes to limit transfer or reprogramming authority in certain circumstances or with respect to certain agencies. Such restrictions may be specified in terms of an amount or a percentage. One example of a statutory restriction would be language that places a cap on the amounts that may be transferred. Such caps may be imposed on either the account from which funds are being transferred or the account receiving the transferred funds. These restrictions are commonly referred to as \"not-to-exceed\" limits. "], "subsections": []}, {"section_title": "Impoundment", "paragraphs": ["Although an appropriation limits the amounts that can be spent, it also establishes the expectation that the available funds will be used to carry out authorized activities. Therefore, when an agency declines to use all or part of an appropriation, it deviates from the intentions of Congress. Although Presidents have sometimes asserted that they are not obligated to spend appropriated funds, Supreme Court decisions\u00e2\u0080\u0094especially Train v. City of New York (420 U.S. 35 [1975]) and the Impoundment Control Act of 1974 (ICA) \u00e2\u0080\u0094limit their authority to reduce or withhold agency funding, by action or inaction, that prevents the obligation and expenditure of budget authority. ", "An impoundment is an action or inaction by the President or a federal agency that delays or withholds the obligation or expenditure of budget authority provided in law. The ICA divides impoundments into two categories and establishes distinct procedures for each: A deferral delays the use of funds; a rescission is a presidential request that Congress rescind (cancel) an appropriation or other form of budget authority. Deferral and rescission are exclusive and comprehensive categories. That is, an impoundment is either a rescission or a deferral\u00e2\u0080\u0094it cannot be both or something else.", "As originally enacted, the ICA also created a process through which the President could propose a deferral of budget authority (meaning to delay its availability), and either the House or Senate could prevent the deferral by adopting a resolution disapproving it. The process by which a single chamber could prevent the exercise of authority delegated to the executive branch (known as a \"legislative veto\") was later found unconstitutional, however. Specifically, after the Supreme Court invalidated an unrelated one-house legislative veto in INS v. Chadha , 462 U.S. 919 (1983), the Court of Appeals for the D.C. Circuit applied the reasoning of Chadha to invalidate the deferral provisions in the ICA. This decision in City of New Haven v. United States (809 F.2d 900 [D.C. Cir. 1987]), also struck down the statutory authority of the President to make deferrals for policy reasons as inseverable from the unconstitutional legislative veto. After the court decisions, as well as GAO administrative interpretations of the issue, Congress amended the ICA in 1987 to eliminate the one-house disapproval and specify that deferrals be \"permissible only: (1) to provide for contingencies; (2) to achieve savings made possible by or through changes in requirements for greater efficiency of operations; or (3) as specifically provided by law.\" In addition, deferrals could not be proposed for any period extending beyond the end of the fiscal year for which the proposal was reported.", "Prior to the enactment of the ICA, when the President withheld appropriated funds from obligation, there was no explicit statutory limit on the length of time that funds could be withheld. Under the ICA, however, whenever the President seeks to withhold funds from obligation, he must submit a special rescission message to Congress. The funds can be withheld only for the 45-day period specified in the act after the receipt of the special presidential message. The special presidential message to Congress must specify the amount to be rescinded, the accounts and programs involved, the estimated fiscal and program effects, and the reasons for the rescission. Multiple rescissions can be grouped in a single message. After the message has been received, Congress can choose to consider and pass a rescission bill that includes all, part, or none of the amount proposed by the President. The funds reserved pursuant to a rescission request must be released after the 45-day period unless Congress has completed action on a bill to rescind the budget authority. GAO is granted responsibilities to oversee and enforce executive branch compliance with the act.", "The ICA also created legislative procedures for the House and Senate to facilitate congressional review of presidential rescission requests. These procedures can effectively place a time limit on committee consideration and restrict floor debate in both chambers. The procedures discourage a filibuster in the Senate and eliminate the need for three-fifths support in the Senate to reach a final vote on the bill. These expedited procedures are available only during the 45-day period during which funds are withheld.", "The President can also propose cancellations of budget authority in ways other than the method described in the ICA for requesting rescissions. Funds requested for cancellation, however, may not be withheld from obligation pending congressional action. Although the Trump Administration has submitted rescission requests to Congress, during the two prior presidential Administrations, the President chose not to send rescission proposals pursuant to the ICA. Both President Barack Obama and President George W. Bush proposed cancellations of budget authority, but they chose not to do so by submitting a special message under the terms prescribed by the ICA.", "Conversely, Congress can, and often does, initiate the rescission of funds on its own and may choose to consider legislation rescinding funds using the regular legislative process. Rescissions are regularly included in appropriations bills, for example."], "subsections": []}, {"section_title": "Sequestration", "paragraphs": ["Sequestration was the principal means used to enforce statutory budget enforcement policies in place from 1985 through 2002, and it is the principal means used to enforce the requirements of the Statutory PAYGO Act and the statutory limits on discretionary spending under the BCA. In addition, sequestration is used to achieve a portion of the spending reductions required when deficit reduction legislation tied to the Joint Committee on Deficit Reduction was not enacted as provided by the BCA.", "Sequestration involves the issuance of a presidential order that permanently cancels non-exempt budgetary resources (except for revolving funds, special funds, trust funds, and certain offsetting collections) for the purpose of achieving a required amount of outlay savings to reduce the deficit. Once sequestration is triggered, spending reductions are made automatically.", "A sequestration order by the President is triggered by a report from the OMB director determining that a breach has occurred. To enforce the statutory discretionary spending caps, OMB first provides a preview report at the beginning of the calendar year, including calculations of any necessary adjustments to the existing limits for the upcoming fiscal year. Once discretionary spending is enacted, OMB evaluates that spending relative to the spending limits and determines whether sequestration is required. OMB is required to issue the final report within 15 calendar days after the congressional session adjourns sine die. For discretionary spending that becomes law after the session ends (e.g., the enactment of a supplemental appropriations measure), the OMB evaluation and any sequester order to enforce the limits would occur 15 days after enactment.", "For enforcement of the Statutory PAYGO Act, OMB records the budgetary effects of revenue and direct spending provisions enacted into law, including both costs and savings, on two PAYGO scorecards covering rolling five-year and 10-year periods (i.e., in each new session, the periods covered by the scorecards roll forward one fiscal year). OMB must issue an annual PAYGO report not later than 14 days (excluding weekends and holidays) after Congress adjourns to end a session. Once OMB finalizes the two PAYGO scorecards, it determines whether a violation of the PAYGO requirement has occurred (i.e., if a debit has been recorded for the budget year on either scorecard). If a breach occurs, the President issues a sequestration order that implements largely across-the-board cuts in nonexempt direct spending programs sufficient to remedy the violation.", "Spending for many programs is exempt from sequestration, and reductions in certain programs are limited by statutory provisions.", "Appendix A. Glossary of Budget Process Terms", "302. The section of the Congressional Budget Act of 1974 that pertains to the distribution to House and Senate committees of new budget authority, entitlement authority, and outlays agreed to in a budget resolution. The allocation is usually included in the joint explanatory statement that accompanies the conference report on a budget resolution. Section 302(a) requires the allocation of the total spending in the budget resolution among the committees having jurisdiction over either direct or discretionary spending. When a budget resolution has not been adopted, the House and Senate (separately or jointly) may use some other means to establish committee allocations. Section 302(b) further requires the Appropriations Committee in each chamber to subdivide this total allocation among their subcommittees. Section 302(f) establishes a point of order against the consideration of a bill, amendment thereto, or conference thereon that would breach the appropriate 302(a) (or 302(b)) amount for the committee (or subcommittee).", "Apportionment . The action by which federal agencies, working with the Office of Management and Budget, establish a plan for budget authority made available by spending laws to be obligated over the course of a fiscal year consistent with all legal requirements. Apportionment is required under the Antideficiency Act in order to prevent the premature exhaustion of funds, and for certain kinds of budget authority, to achieve the most effective and economical use of those funds.", "Appropriation. Legislation that provides budget authority to allow federal agencies to incur obligations and to make payments out of the Treasury for specified purposes, usually during a specified period of time. Discretionary appropriations measures are under the jurisdiction of the House and Senate Committees on Appropriations.", "Authorization . A statutory provision that establishes or continues a federal agency, activity, or program. It may also establish policies and restrictions and deal with organizational and administrative matters. Authorizations may implicitly or explicitly authorize congressional action to provide appropriations for an agency, activity, or program. An explicit authorization of appropriations may apply to a single fiscal year, several fiscal years, or an indefinite period of time, and it may be for a specific level of funding or an indefinite amount. An authorization of appropriations does not provide budget authority, however, which must be provided in subsequent appropriations legislation. Furthermore, under House and Senate rules, an authorization is construed as a ceiling on the amounts that may be appropriated but not a minimum.", "Baseline . A projection of the levels of federal spending, revenues, and the resulting budgetary surpluses or deficits for the upcoming and subsequent fiscal years, taking into account laws enacted to date but not assuming any new policies. It provides a benchmark for measuring the budgetary effects of proposed changes in federal revenues or spending, assuming certain economic conditions. Baseline projections are prepared by the Congressional Budget Office.", "Budget a uthority . Authority provided by federal law to enter into financial obligations that will result in immediate or future outlays involving federal government funds. The main forms of budget authority are appropriations, entitlement authority, borrowing authority, and contract authority. It also includes authority to obligate and expend the proceeds of offsetting receipts and collections. Congress may make budget authority available for one year, several years, or an indefinite period, and it may specify definite or indefinite amounts.", "Budget r esolution . A concurrent resolution, provided under the Congressional Budget Act, that allows Congress to make decisions about overall fiscal policy and priorities, as well as coordinate and establish guidelines for the consideration of various budget related measures. Because a concurrent resolution is not a law, it cannot be signed or vetoed by the President. It therefore does not have statutory effect, so no money can be raised or spent pursuant to it. Revenue and spending amounts set in the budget resolution, however, establish the basis for the enforcement of congressional budget policies through points of order.", "Continuing r esolution (CR) . When annual appropriations acts are not enacted by the beginning of the fiscal year (October 1), one or more continuing appropriations acts may be enacted to provide temporary continued funding for covered programs and activities until action on regular appropriations acts is completed. Such funding is provided for a specified period of time, which may be extended through the enactment of subsequent CRs. Rather than providing a specific amount of funding, CRs typically allow agencies to operate at a specified rate. A continuing appropriations act is commonly referred to as a continuing resolution or CR because historically it has been in the form of a joint resolution rather than a bill, but there is no procedural requirement as to its form. In some cases, CRs have provided appropriations for an entire fiscal year.", "Deeming r esolution . An informal term that refers to a resolution or bill passed by one or both houses of Congress that provides an alternate means to establish the basis for budgetary enforcement actions in the absence of a budget resolution.", "Direct s pending . Direct spending is defined in the Balanced Budget and Emergency Deficit Control Act of 1985, as amended, as consisting of entitlement authority (including appropriated entitlements), the Supplemental Nutrition Assistance Program, and any other budget authority (and resulting outlays) provided in laws other than appropriations acts. The term direct spending is often used interchangeably with the terms mandatory or entitlement spending . Examples include Social Security, Medicare, Medicaid, unemployment insurance, and military and federal civilian pensions.", "Discretionary s pending . The Balanced Budget and Emergency Deficit Control Act of 1985, as amended, defines discretionary spending as budget authority provided in annual appropriation acts and the outlays derived from that authority. Discretionary spending encompasses appropriations not mandated by existing law and therefore made available in appropriation acts in such amounts as Congress chooses. Discretionary spending for FY2012-FY2021 is limited by statutory spending limits enacted in the Budget Control Act of 2011, as revised.", "Fiscal y ear . The fiscal year for the federal government begins on October 1 and ends on September 30. The fiscal year is designated by the calendar year in which it ends: For example, FY2020 began on October 1, 2019, and ends on September 30, 2020.", "Functional c ategory. The President's budget and the congressional budget resolution classify federal budgetary activities (including budget authority, outlays, tax expenditures, and credit authority) into functional categories that represent major purposes or national needs being addressed (such as national defense, health, or general science, space, and technology). A functional category may be divided into two or more subfunctions, depending upon its scope or complexity. As a whole, functional categories provide a broad statement of budget priorities and facilitate an understanding of trends in related programs regardless of the agency administering them or type of financial transaction involved. The amounts in particular functional categories in the budget resolution are used as informational guidelines and are not enforced by points of order in the congressional budget process.", "Obligation . A commitment that creates a legal liability of the government to pay for goods and services and results in outlays either immediately or in the future. An agency incurs an obligation, for example, when it places an order, signs a contract, or awards a grant. When a payment is made, it liquidates the obligation. Appropriation laws usually make funds available for obligation for one or more fiscal years, but outlays may actually occur at some later time so that an agency's outlays in a particular year can come from obligations entered into in previous years as well as from its current appropriation.", "Offsetting r eceipts/ c ollections . Funds collected from the public primarily as a result of business-like activities (such as user fees or royalties paid to the government) that are levied on a class directly availing itself of, or directly subject to, a governmental service, program, or activity rather than on the general public. Such receipts and collections are recorded as negative amounts of spending rather than as revenues. In most cases, offsetting receipts require an explicit appropriation, while offsetting collections may be obligated without further legislative action.", "Outlays . The actual amount of payments from the Treasury that result from obligations entered into by executing provisions in appropriations and direct spending legislation that provides budget authority. Outlays consist of payments, usually by check, by electronic fund transfer or cash to liquidate obligations incurred in prior fiscal years as well as in the current fiscal year.", "Pay-as-you-go ( PAYGO ) . A budgetary enforcement mechanism originally set forth in the Budget Enforcement Act of 1990. It generally requires that any projected increase in the deficit due to changes in direct spending or revenues resulting from legislation must be offset by an equivalent amount of direct spending cuts or revenue increases to eliminate the net increase over either a six-year period covering the current fiscal year plus the ensuing five fiscal years or over an 11-year period covering the current fiscal year plus the ensuing 10 fiscal years. The statutory PAYGO mechanism currently in place was established under the Statutory Pay-As-You-Go Act of 2010. In the event that the net impact of changes to direct spending and revenue laws over the course of a session of Congress is projected to increase the deficit in either of these time periods, the President is required to issue a sequester order to eliminate it. In addition, there are currently PAYGO procedures in the House and Senate enforced by points of order on the floor to prevent the consideration of legislation that does not meet the requirement.", "Reconciliation. An expedited procedure, provided under Section 310 of the Congressional Budget Act, for changing existing revenue or direct spending laws to implement budgetary policies established in a budget resolution. Reconciliation must begin with language in a budget resolution instructing specific committees to report legislation adjusting revenues or spending within their respective jurisdictions by specified amounts, usually by a specified deadline. The Budget Act provides for expedited consideration of reconciliation bills in the Senate by limiting debate to 20 hours and limiting the content of amendments.", "Reprogramming. Shifting funds within an appropriation account from one object class to another or from one program activity to another. Generally, agencies may make such shifts without additional statutory authority, but often they must provide some form of notification to the appropriations committees, authorizing committees, or both.", "Rescission. A provision of law that repeals previously enacted budget authority. Under the Impoundment Control Act of 1974, the President may send a message to Congress requesting one or more rescissions and the reasons for doing so. If the President makes such a request, he may withhold the funds from obligation, but if Congress does not pass legislation approving the rescission within 45 days of continuous session after receiving the message, the funds must be made available for obligation. Congress may rescind all, part, or none of an amount proposed by the President and may also initiate rescission of funds not requested in a presidential message.", "Revenues. Funds collected from the public primarily as a result of the federal government's exercise of its sovereign powers. They include individual and corporate income taxes, excise taxes, customs duties, estate and gift taxes, fees and fines, payroll taxes for social insurance programs, and miscellaneous receipts.", "Scorekeeping. The process of both estimating the budgetary effects of pending legislation and comparing those effects to a baseline. The Congressional Budget Office prepares estimates of the budgetary effects of legislation, including both spending and revenue effects. The Budget Committees in the House and Senate act as official scorekeepers by providing the presiding officers in their respective chambers with the estimates needed to make decisions about points of order enforcing budgetary parameters. The Budget Committees also make periodic summary scorekeeping reports that are placed in the Congressional Record .", "Sequestration . A procedure in which the President is required to issue an order canceling budgetary resources\u00e2\u0080\u0094that is, money available for obligation or spending\u00e2\u0080\u0094to enforce a statutory budget requirement. Sequestered funds are no longer available for obligation or expenditure. The statutory PAYGO requirement and the statutory limits on discretionary spending are enforced by sequestration. In addition, the automatic spending reductions required by the Budget Control Act of 2011 are partially achieved through sequestration.", "Transfer. Shifting budget authority between two appropriation accounts. Agencies may transfer budget authority only as specifically authorized by law.", "Appendix B. Congressional Budget Process Actions"], "subsections": []}]}]}}
{"id": "R45798", "title": "Beneficial Ownership Transparency in Corporate Formation, Shell Companies, Real Estate, and Financial Transactions", "released_date": "2019-07-08T00:00:00", "summary": ["Beneficial ownership refers to the natural person or persons who invest in, control, or otherwise reap gains from an asset, such as a bank account, real estate property, company, or trust. In some cases, an asset's beneficial owner may not be listed in public records or disclosed to federal authorities as the legal owner. For some years, the United States has been criticized by international bodies for gaps in the U.S. anti-money laundering system related to a lack of systematic beneficial ownership disclosure. While beneficial ownership information is relevant to several types of assets, attention has focused on the beneficial ownership of companies, and in particular, the use of so-called \"shell companies\" to purchase assets, such as real property, and to store and move money, including through bank accounts and wire transfers. While such companies may be created for a legitimate purpose, there are also concerns that the use of some of these companies can facilitate crimes, such as money laundering. In the United States, corporations and other legal entities such as limited liability companies (LLCs) and partnerships are formed at the state level, not the federal level. Corporation laws vary from state to state, and most or all states do not collect, verify, and update identifying information on beneficial owners.", "The U.S. government has long recognized the ability to create legal entities without accurate beneficial ownership information as a key vulnerability of the U.S. financial system. In 2006, the U.S. Government Accountability Office (GAO) published a report entitled Company Formations: Minimal Ownership Information I s Collected and Available , which described the challenges of collecting beneficial owner data at the state level. The U.S. Department of the Treasury's 2015 National Money Laundering Risk Assessment and its 2018 update identify the misuse of legal entities as a key vulnerability in the banking and securities sectors. The 2018 risk assessment additionally clarified that such vulnerability is further compounded by shell companies' ability to transfer funds to other overseas entities. Such ongoing vulnerabilities have placed the United States under domestic and international pressure, including from the international Financial Action Task Force (FATF), to tighten its anti-money laundering and countering the financing of terrorism (AML/CFT) regime with respect to beneficial ownership disclosure requirements. In its 2016 review of the U.S. government's AML/CFT regime, FATF noted that the \"lack of timely access to \u00e2\u0080\u00a6 beneficial ownership information remains one of the most fundamental gaps in the U.S. context.\" According to FATF, this gap exacerbates U.S. vulnerability to money laundering by preventing law enforcement from efficiently obtaining such information during the course of investigations.", "Recent U.S. regulatory efforts and legislation have focused in particular on beneficial ownership disclosure related to the use of shell companies with hidden owners in the banking and real estate sectors. Recent federal regulatory tools include Treasury's Customer Due Diligence (CDD) rule and use of Geographic Targeting Orders (GTOs). Under the CDD Rule, effective since May 2018, certain U.S. financial institutions must establish and maintain procedures to identify and verify the beneficial owners of legal entities that open new accounts. The regulation covers financial institutions that are required to develop AML programs, including, banks, securities brokers and dealers, mutual funds, futures commission merchants, and commodities brokers. Covered financial institutions must collect identifying information on individuals who own 25% or more of legal entities. Since January 2016, Treasury's Financial Crimes Enforcement Network (FinCEN) has issued GTOs to require certain title insurance companies to collect and report identifying information about the beneficial owners of legal entities that conduct certain types of high-end residential real estate purchases. A number of legislative proposals have been introduced related to beneficial ownership disclosure in the 116 th Congress. Some of these legislative proposals, such as H.R. 2513 and S. 1889 , seek in various ways to impose certain duties on those who form corporations, LLCs, partnerships, or other legal entities to disclose their beneficial owners. These proposals would also mandate that such information be more readily available to authorities (such as federal and state law enforcement and regulatory agencies)."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["Beneficial ownership refers to the natural person or persons who invest in, control, or otherwise reap gains from an asset, such as a bank account, real estate property, company, or trust. In some cases, an asset's beneficial owner may not be listed in public records or disclosed to federal authorities as the legal owner. For some years, the United States has been criticized by international bodies for gaps in the U.S. anti-money laundering (AML) system related to a lack of systematic beneficial ownership disclosure. While beneficial ownership information is relevant to several types of assets, attention has focused on the beneficial ownership of companies, and in particular, the use of so-called \"shell companies\" to anonymously purchase assets, such as real property, and to store and move money, including through bank accounts and wire transfers. While such companies may be created for a legitimate purpose, there are also concerns that the use of some of these companies can facilitate crimes, such as money laundering. Recent U.S. regulatory steps and legislation have particularly focused on beneficial ownership disclosure related to the use of shell companies with hidden owners that conduct financial transactions or purchase assets.", "In the context of AML regimes, law enforcement authorities as well as financial institutions and their regulators may seek beneficial ownership information to identify or verify the natural persons who benefit from or control financial assets held in the name of legal entities, such as corporations and limited liability companies. Drug traffickers, terrorist financiers, tax and sanctions evaders, corrupt government officials, and other criminals have been known to obscure their beneficial ownership of legal entities for money laundering purposes. To do so, they may form nominal legal entities, or \"shell companies,\" which have no physical presence and generate little to no economic activity, but are used to anonymously store and transfer illicit proceeds. By relying on third-party nominees to serve as the legal owners of record for such shell companies, criminals can control and enjoy the benefits of the assets held by such companies while shielding their identities from investigators.", "Although concealing beneficial ownership has long been a central element of many money laundering schemes, many jurisdictions around the world have not established or implemented policy measures that address beneficial ownership disclosure and transparency. According to the Financial Action Task Force (FATF)\u00e2\u0080\u0094an intergovernmental standards-setting body for AML and countering the financing of terrorism (CFT)\u00e2\u0080\u0094financial crime investigations are frequently hampered by the absence of adequate, accurate, and timely information on beneficial ownership. FATF has accordingly identified beneficial ownership transparency as an enduring AML/CFT policy challenge.", "Some U.S. government agencies have also long recognized that the ability to create legal entities without accurate beneficial ownership information is a key vulnerability in the U.S. financial system. Such ongoing vulnerabilities have placed the United States under domestic and international pressure, including from the FATF, to tighten its AML/CFT regime with respect to beneficial ownership disclosure requirements. ", "In recent years, various U.S. regulators have taken actions to address this issue, and congressional interest in this topic has increased. This report first provides selected case studies of high-profile situations where beneficial ownership has been obscured. It then provides an overview of beneficial ownership issues relating to corporate formation and in real estate transactions. Next, it describes the recent history of beneficial ownership policy and legislation. The report then discusses recent U.S. regulatory changes to address aspects of beneficial ownership transparency. Thereafter, the report analyzes selected current policy issues, including sectors not covered by existing Treasury regulations, the status of international efforts to address beneficial ownership, and the evolution of the Global Legal Entity Identifier (LEI) program. Finally, the report analyzes selected legislative proposals in the 116 th Congress. "], "subsections": []}, {"section_title": "Overview", "paragraphs": [], "subsections": [{"section_title": "Beneficial Ownership and U.S. Corporate Formation", "paragraphs": ["While beneficial ownership information is relevant to a variety of assets, recent policy attention has focused on the beneficial ownership of companies, and in particular, the use of shell companies to anonymously purchase assets, such as real property, and to store and move money, including through bank accounts and wire transfers. ", "FATF has estimated that over 30 million \"legal persons\" exist in the United States, and about 2 million new such legal persons are created each year in the states and territories owned by the United States. FATF defines legal persons to include entities such as corporations, limited liability companies (LLCs), various forms of partnerships, foundations, and other entities that can own property and are treated as legal persons. FATF considers trusts, which share some of the same characteristics, to be \"legal arrangements.\" FATF recommends that countries mandate some degree of transparency in identifying beneficial owners, at least for law enforcement and regulatory purposes, for legal persons and legal arrangements. There are a range of legitimate reasons for wanting to create such entities, including diversification of risk with joint owners, tax purposes, limiting liability, and other reasons. However, such legal persons and arrangements can also be used to hide the identities of owners of assets, thereby facilitating money laundering, corruption, and financial crime. For this reason, FATF recommends countries take steps to ensure that accurate and updated information on the identities of beneficial owners be maintained and accessible to authorities.", "In the United States, corporations, LLCs, and partnerships are formed at the state level, not the federal level. Corporation laws vary from state to state, and the \"promoter\" of the corporation can choose in which state to incorporate or in which to form another legal entity, often paying a \"corporate formation agent\" within the state to file the required state-level paperwork. Such corporate formation agents may be attorneys, but are not always required to be attorneys. While state laws vary, most states share some basic requirements for forming a corporation or other entity, including the filing of the entity's articles of incorporation with the secretary of state. These articles often include the corporation's name, the business purpose of the corporation, and the corporation's registered agent and address for the purpose of accepting legal service of process if it is sued. While state requirements vary, most states do not collect, verify, or update identifying information on beneficial owners. Because no federal standards currently exist, a promoter of a corporation can choose to incorporate in a state with fewer disclosure requirements if they wish.", "The FATF evaluation of the United States' AML system found that \"measures to prevent or deter the misuse of legal persons and legal arrangements are generally inadequate\" in the United States. FATF reported there were no mechanisms in place to record or verify beneficial ownership information in the states during corporate formation. They also warned that \"the relative ease with which U.S. corporations can be established, their opaqueness and their perceived global credibility makes them attractive to abuse for money laundering and terrorism financing, domestically as well as internationally.\" In a Senate Judiciary Committee hearing on June 19, 2019, witness Adam Szubin, former Under Secretary for the Treasury's Office of Terrorism and Financial Intelligence, noted in the question-and-answer portion that the position of the United States as a leader in the financial system at times gave additional credibility to shell companies that had been formed in the United States anonymously by international criminals, enabling them to transact business or open bank accounts outside the United States through these companies with less scrutiny than they might otherwise have received."], "subsections": []}, {"section_title": "Beneficial Ownership and U.S. Real Estate", "paragraphs": [], "subsections": [{"section_title": "Overview of Real Estate Transactions", "paragraphs": ["Some argue that land ownership, even more than ownership of other resources, involves both public and private aspects\u00e2\u0080\u0094such as urban planning, resources and environmental planning, and tax consequences. In the United States, however, unlike in many European countries, the federal government has almost no role in the purchase and sale of real estate. Real estate transactions in the United States are largely private contracts, and transfers may or may not be recorded publicly, although many buyers find it advantageous to do so. Most buyers of property finance their purchases with mortgages from banks. Investors or those who do not require such loans may engage in \"all-cash\" purchases, which simply means that no loans are involved and that the purchasers must come up with the necessary funds on their own. According to the National Association of REALTORS\u00c2\u00ae, approximately 23% of residential real estate sales transactions were all-cash in 2017. Data from real estate data firm CoreLogic for 2016, however, put the figure at 46% for New York state, and similarly higher for some additional states.", "In addition to realtors, who may represent buyers or sellers (but are not required to be involved in transactions), escrow agents and title company agents also play a role in real estate transactions in the United States. Escrow agents essentially act as neutral middlemen in real estate sales, temporarily holding funds for either side. In cases where purchases are made in the name of an LLC, for instance, an escrow agent will look at operating agreements of the LLC to identify the person legally authorized to sign documents, but they generally have no specific duties to locate or identify beneficial owners. Usually, escrow agents are not part of title insurance companies or independent title agencies.", "After a buyer and seller agree on a sales price and sign a purchase and sales contract, real estate transactions are transferred to a land title company, most likely the American Land Title Association (ALTA). ALTA represents 6,300 title insurance agents and companies, from small, single-county operators to large national title insurers. Title insurance is a form of insurance that protects the holder from financial loss if there are previously undiscovered defects in a title to a property (such as previously undiscovered fraud or forgery, or various other situations). A typical title insurance company, before providing coverage to the buyer of a property, usually investigates prior sales of the property. This process often starts with examining public records tracing the property's history, its owners, sales, and any partial property rights that may have been given away. This title search investigation also normally includes tax and court records to give title companies an understanding of what they might be able to insure in their policies issued to buyers.", "Title insurers are the only professionals in the real estate community who currently have money laundering requirements, which were imposed through FinCEN's Geographic Targeting Orders (GTOs), as detailed below. As part of this process, when real estate transactions fit the thresholds set in GTOs for certain covered metropolitan areas, title insurance companies work with real estate professionals representing buyers to collect the required beneficial ownership information."], "subsections": []}, {"section_title": "Money Laundering Risks Through Real Estate and Shell Companies", "paragraphs": ["The FATF 2016 evaluation warned that the lack of AML requirements on real estate professionals constituted a significant vulnerability for the United States' AML system. As detailed below, FinCEN exempted the real estate sector from AML requirements pursuant to the USA PATRIOT Act of 2001 ( P.L. 107-56 ).", "In a 2015 study of the New York luxury property market, the New York Times found that LLCs with anonymous owners were being increasingly utilized in the New York luxury property market. The Times reported that in 2003, for example, one-third of the units sold in one high-end Manhattan building\u00e2\u0080\u0094the Time Warner building\u00e2\u0080\u0094were purchased by shell companies. By 2014, however, that figure had risen to over 80%, according to the article. And nationwide, the Times reported, nearly half of residential purchases of over $5 million were made by shell companies rather than named people, according to data from property data provider First American Data Tree studied by the Times . ", "According to FinCEN, in 2017, 30% of all high-end purchases in six geographic areas involved a beneficial owner or purchaser representative who was also the subject of a previous suspicious activity report (SAR). A 2017 study by the U.S. Government Accountability Office (GAO) reviewed available information on the ownership of General Services Administration (GSA) leased space that required higher levels of security as of March 2016, and found that GSA was leasing high-security space from foreign owners in 20 buildings. GAO could not obtain the beneficial owners of 36% of those buildings for high-security facilities leased by the federal government, including by the Federal Bureau of Investigation.", "The Appendix provides an example of how an LLC with hidden owners might be used to purchase real estate in the United States with minimal information as to the natural persons behind the purchase or sale of the property."], "subsections": []}]}]}, {"section_title": "U.S. Policy Responses", "paragraphs": [], "subsections": [{"section_title": "History of U.S. Beneficial Ownership Policy and Legislation", "paragraphs": ["As previously noted, the U.S. government has long recognized the ability to create legal entities without accurate beneficial ownership information as a key vulnerability of the U.S. financial system. In 2006, GAO published a report entitled Company Formations: Minimal Ownership Information Is Collected and Available , which described the challenges of collecting beneficial owner data at the state level. The U.S. Department of the Treasury's 2015 National Money Laundering Risk Assessment and its 2018 update identify the misuse of legal entities as a key vulnerability in the banking and securities sectors. The 2018 risk assessment additionally clarified that such vulnerability is further compounded by shell companies' ability to transfer funds to other overseas entities.", "Such ongoing vulnerabilities have placed the United States under domestic and international pressure, including from FATF, to tighten its AML/CFT regime with respect to beneficial ownership disclosure requirements. In its 2016 review of the U.S. government's AML/CFT regime, FATF noted that the \"lack of timely access to \u00e2\u0080\u00a6 beneficial ownership information remains one of the most fundamental gaps in the U.S. context.\" According to FATF, this gap exacerbates U.S. vulnerability to money laundering by preventing law enforcement from efficiently obtaining such information during the course of investigations. FATF further noted that this gap in the U.S. AML/CFT regime limits U.S. law enforcement's ability to respond to foreign mutual legal assistance requests for beneficial ownership information. By contrast, for instance, the European Union (E.U.), in 2015, enacted the E.U. Fourth Anti-Money Laundering Directive, which required member states to collect and share beneficial ownership information.", "Since at least the 110 th Congress, legislation has been introduced to address long-standing concerns raised by law enforcement, FATF, and other observers over the lack of beneficial ownership disclosure requirements. For example, in the 110 th Congress, Senator Carl Levin introduced S. 2956 , the Incorporation Transparency and Law Enforcement Assistance Act, on May 1, 2008. In his floor statement introducing the bill, Senator Levin noted that the National Association of Secretaries of State (NASS) had requested that he delay introduction of a bill in order for the NASS to first convene a task force in 2007 to examine state company formation practices. ", "In July 2007, the NASS task force issued a proposal. Rather than cure the problem, however, the proposal was full of deficiencies, leading the Treasury Department to state in a letter that the NASS proposal \"falls short\" and \"does not fully address the problem of legal entities masking the identity of criminals.\" \u00e2\u0080\u00a6. That is why we are introducing Federal legislation today. Federal legislation is needed to level the playing field among the States, set minimum standards for obtaining beneficial ownership information, put an end to the practice of States forming millions of legal entities each year without knowing who is behind them, and bring the U.S. into compliance with its international commitments.", "The 115 th Congress considered a number of bills concerning beneficial ownership reporting, including S. 1454 , the True Incorporation Transparency for Law Enforcement (TITLE) Act and the Corporate Transparency Act of 2017 ( H.R. 3089 and S. 1717 ). ", "In the 116 th Congress, the House Committee on Financial Services on June 11, 2019, passed and ordered to be reported to the House an amendment in the nature of a substitute to H.R. 2513 , the \"Corporate Transparency Act of 2019,\" introduced by Representative Maloney. Also, in the Senate, S. 1889 was introduced on June 19, 2019, by Senator Whitehouse with cosponsors, and a discussion draft bill was circulated June 10, 2019, by Senators Warner and Cotton. This report concludes with an analysis of selected introduced legislative proposals in the 116 th Congress."], "subsections": []}, {"section_title": "Current Beneficial Ownership Requirements", "paragraphs": ["Several federal tools are available to address money laundering risks posed by entities that obscure beneficial ownership information, including Treasury's Customer Due Diligence (CDD) rule, use of Geographic Targeting Orders (GTOs), and a provision in Section 311 of the USA PATRIOT Act. Treasury also uses various elements of its economic sanctions programs to address such risks. Finally, with regard to international cooperation, the U.S. government may obtain and share beneficial ownership information with foreign governments in the course of law enforcement investigations (see text box below). In other policy contexts that reach beyond money laundering issues, beneficial ownership has emerged as a concern related to entities' disclosure of U.S. ownership for tax purposes and entities that lease high-security government office spaces. Beneficial ownership issues are also relevant in other areas, such as securities, which are beyond the scope of this report."], "subsections": [{"section_title": "Treasury's Customer Due Diligence (CDD) Rule", "paragraphs": ["Pursuant to its regulatory authority under the Bank Secrecy Act (BSA) \u00e2\u0080\u0094the principal federal AML statute\u00e2\u0080\u0094FinCEN has long administered regulations requiring various types of financial institutions to establish AML programs. The centerpiece of FinCEN's response to concerns about beneficial ownership transparency is its Customer Due Diligence Rule (CDD Rule), which went into effect in May 2018. Under the CDD Rule, certain U.S. financial institutions must establish and maintain procedures to identify and verify the beneficial owners of legal entities that open new accounts. The regulation covers financial institutions that are required to develop AML programs, including banks, securities brokers and dealers, mutual funds, futures commission merchants, and commodities brokers. Under the rule, covered financial institutions must now collect certain identifying information on individuals who own 25% or more of legal entities that open new accounts. The CDD Rule also requires covered financial institutions to develop customer risk profiles and to update customer information on a risk basis for the purposes of ongoing monitoring and suspicious transaction reporting. These requirements make explicit what has been an implicit component of BSA and AML compliance programs."], "subsections": []}, {"section_title": "Geographic Targeting Orders (GTOs)", "paragraphs": ["FinCEN has the authority to impose additional recordkeeping and reporting requirements on domestic financial institutions and nonfinancial businesses in a particular geographic area in order to assist regulators and law enforcement agencies in identifying criminal activity. This authority to impose so-called \"Geographic Targeting Orders\" (GTOs) dates back to 1988. GTOs may remain in effect for a maximum of 180 days unless extended by FinCEN. Section 274 of the Countering America's Adversaries Through Sanctions Act ( P.L. 115-44 ) replaced statutory language referring to coins and currency with \"funds,\" thereby including a broader range of financial services, such as wire transfers. Several bills in the 116 th Congress seek to address the use of GTOs to disclose the beneficial owners of entities involved in the purchase of all-cash real estate transactions (see text box below)."], "subsections": []}, {"section_title": "Special Measures Applied to Jurisdictions, Financial Institutions, Classes of Transactions, or Types of Accounts of Primary Money Laundering Concern", "paragraphs": ["Section 311 of the USA PATRIOT Act ( P.L. 107-56 ) added a new provision to the Bank Secrecy Act at 31 U.S.C. \u00c2\u00a75318A. This provision, popularly referred to as \"Section 311,\" authorizes the Secretary of the Treasury to impose regulatory restrictions, known as \"special measures,\" upon finding that a foreign jurisdiction, a financial institution outside the United States, a class of transactions involving a foreign jurisdiction, or a type of account, is \"of primary money laundering concern.\" ", "The statute outlines five special measures that Treasury may impose to address money laundering concerns. The second special measure authorizes the Secretary to require domestic financial institutions and agencies to take reasonable and practicable steps to collect beneficial ownership information associated with accounts opened or maintained in the United States by a foreign person (other than a foreign entity whose shares are subject to public reporting requirements or are listed and traded on a regulated exchange or trading market), or a representative of such a foreign person, involving a foreign jurisdiction, a financial institution outside the United States, a class of transactions involving a jurisdiction outside the United States, or a type of account \"of primary money laundering concern.\" ", "Based on a review of Federal Register notices, FinCEN has neither proposed nor imposed the special measure involving the collection of beneficial ownership information."], "subsections": []}, {"section_title": "Treasury's Sanctions Programs and the 50% Rule Affecting Entities Owned by Sanctioned Persons", "paragraphs": ["Beneficial ownership information is valuable in the context of economic sanctions administered by the Treasury Department's Office of Foreign Assets Control (OFAC). Under economic sanctions programs, assets of designated persons (i.e., individuals or entities) may be blocked (i.e., frozen), thereby prohibiting transfers, transactions, or dealings of any kind, extending to property and interests in property subject to the jurisdiction of the United States as specified in OFAC's specific regulations. As additional persons, including shell and front companies, are discovered to be associated (i.e., owned or controlled by, or acting or purporting to act for or on behalf of, directly or indirectly) with someone already subject to sanctions, OFAC may choose to designate those additional persons to be subject to sanctions. ", "In addition to persons explicitly identified on OFAC's Specially Designated Nationals (SDN) or Sectoral Sanctions Identification (SSI) lists, sanctions also apply to nonlisted entities that are owned, in part, by blocked persons. Current guidance states that sanctions also extend to entities that are at least 50% owned by sanctioned persons. Compliance with this so-called \"50% Rule\" requires financial institutions and others potentially doing business with designated persons or identified sectoral entities to understand an entity's ownership structure, including its beneficial owners."], "subsections": []}, {"section_title": "Disclosure of \"Substantial\" U.S. Ownership for Tax Purposes", "paragraphs": ["The Foreign Account Tax Compliance Act (FATCA; Subtitle A of Title V of the Hiring Incentives to Restore Employment Act; P.L. 111-147 , as amended) is a key U.S. policy tool to combat tax evasion. Pursuant to FATCA, U.S. taxpayers are required to disclose to the Internal Revenue Service (IRS) financial assets held overseas. In addition, FATCA requires certain foreign financial institutions to disclose information directly to the IRS when its customers are U.S. persons or when U.S. persons hold a \"substantial\" ownership interest\u00e2\u0080\u0094defined to mean ownership, directly or indirectly, of more than 10% of the stock (by vote or value) of a foreign corporation or of the interests (in terms of profits or capital) of a foreign partnership; or, in the case of a trust, the owner of any portion of it or the holder, directly or indirectly, of more than 10% of its beneficial interest. Foreign financial institutions that do not comply with reporting requirements are subject to a 30% withholding tax rate on U.S.-sourced payments. ", "According to FinCEN, some intergovernmental agreements that the United States negotiated with other governments to facilitate the implementation of FATCA \"allow foreign financial institutions to rely on existing AML practices \u00e2\u0080\u00a6 for the purposes of determining whether certain legal entity customers are controlled by U.S. persons.\" The U.S. government committed in many of these agreements to pursue \"equivalent levels of reciprocal automatic information exchange\" on the U.S. financial accounts held by taxpayers of that foreign jurisdiction; there is, however, no reciprocity in FATCA. Various observers have debated whether legal entity ownership disclosure information provided to the IRS could be used by other federal entities for AML purposes."], "subsections": []}, {"section_title": "Disclosure of Beneficial Ownership of Office Space Leased by the Federal\u00c2 Government", "paragraphs": ["Section 2876 of the National Defense Authorization Act for Fiscal Year 2018 (NDAA; 10 U.S.C. 2661 note) requires the Defense Department to identify each beneficial owner of a covered entity proposing to lease accommodation in a building or other improvement that is intended to be used for high-security office space for a military department or defense agency. Prior to the enactment of Section 2876, in January 2017, the GAO reported that the General Services Administration (GSA) did not keep track of beneficial owners, including foreign owners, of high-security office space it leased for tenants that included the Federal Bureau of Investigation (FBI) and the Drug Enforcement Administration (DEA). According to GAO, GSA began in April 2018 to implement a new lease requirement for prospective lease projects that requires offerors to identify and disclose whether the owner of the leased space, including an entity involved in the financing of the property, is a foreign person or a foreign-owned entity. In the 116 th Congress, H.R. 392 , the Secure Government Buildings from Espionage Act of 2019, seeks to expand the scope of the FY2018 NDAA's provisions. "], "subsections": []}]}]}, {"section_title": "Selected Policy Issues", "paragraphs": ["The current policy debate surrounding beneficial ownership disclosure is focused on addressing gaps in the U.S. AML regime and tracking changes made by the international community in its approach to addressing the problem. A key area of congressional activity involves evaluating the risks associated with lack of beneficial ownership information in the corporate formation and real estate sectors. The Treasury's current CDD rule mandates that financial institutions must collect information\u00e2\u0080\u0094for beneficial owners who hold more than 25% of an entity\u00e2\u0080\u0094upon opening an account for the entity. Some legislative proposals would mandate that this type of information be collected when such legal entities are formed, and that the information be reported to FinCEN or another central repository that authorities can access. International developments in beneficial ownership disclosure practices, including trends in the adoption of a program known as the Global Legal Entity Identifier System (LEI), also raise issues for U.S. policy consideration."], "subsections": [{"section_title": "Sectors Not Covered by Treasury's CDD Rule", "paragraphs": ["Even following the CDD rule's implementation, some critics argue that gaps remain in U.S. financial transparency requirements The CDD rule, for example, applies only to individuals who own 25% or more of a legal entity. Critics note that the 25% ownership threshold means that if five or more people share ownership, a legal entity may not name or identify any of them (only one management official). Also, the rule applies to new, but not existing, accounts. FATF, for example, has criticized the United States for lacking beneficial ownership requirements for corporate formation agents and real estate transactions. Neither sector is directly affected by the FinCEN rule, but recent legislation has been introduced to address both areas (see section below titled \" Selected Legislative Proposals in the 116th Congress \"). The following sections discuss potential gaps remaining in U.S. financial transparency requirements after implementation of the CDD rule."], "subsections": [{"section_title": "Company Formation Agent Transparency", "paragraphs": ["Third-party service providers known as \"company formation agents\" often \"play a central role in the creation and ongoing maintenance and support of \u00e2\u0080\u00a6 shell companies.\" While these services are not inherently illegitimate, they can help shield the identities of a company's beneficial owners from law enforcement. According to a 2016 FATF report, formation agents handle approximately half of the roughly 2 million new company formations undertaken annually in the United States. As discussed, the regulation of company formation agents is primarily a matter of state law. Formation agents are not subject to the BSA or federal AML regulations. However, observers have argued that states have not served as effective regulators of the company formation industry. These perceived inadequacies with current oversight of the company formation industry have prompted a number of legislative proposals discussed below."], "subsections": []}, {"section_title": "Status of the GTO Program", "paragraphs": ["A number of policymakers have expressed interest in making FinCEN's GTOs targeting money laundering in high-end real estate permanent or otherwise expanding the scope of the current real estate GTO program. Section 702 of the Defending American Security from Kremlin Aggression Act of 2019 ( S. 482 ) would require the Secretary of the Treasury to prescribe regulations mandating that title insurance companies report on the beneficial owners of entities that engage in certain transactions involving residential real estate. Section 214 of the COUNTER Act of 2019 ( H.R. 2514 ), as amended in a mark-up session of the House Financial Services Committee on May 8, 2019, would require the Secretary of the Treasury to apply the real estate GTOs, which currently cover only residential real estate, to commercial real estate transactions. Section 129 of the Department of the Treasury Appropriations Act, 2019 (Title I of H.R. 264 ) would have required FinCEN to submit a report to Congress on GTOs issued since 2016, but it was not enacted. "], "subsections": []}, {"section_title": "Establishing AML Requirements for Persons Involved in Real Estate Closings and Settlements", "paragraphs": ["Section 352 of the USA PATRIOT Act ( P.L. 107-56 ) requires all financial institutions to establish AML programs. In 2002, however, FinCEN exempted from Section 352 certain financial institutions, including persons involved in real estate closings and settlements, in order to study the impact of AML requirements on the industry. In 2003, FinCEN published an advanced notice of proposed rulemaking (ANPRM) to solicit public comments on how to incorporate persons involved in real estate closings and settlements into the U.S. AML regulatory regime. Although no final rule has been issued, other developments have occurred. In 2017, FinCEN released a public advisory on the money laundering risks in the real estate sector. And in November 2018 a notice in the Federal Register on anticipated regulatory actions contained reference to renewed FinCEN plans to issue an ANPRM to initiate rulemaking that would establish BSA requirements for persons involved in real estate closings and settlements. "], "subsections": []}, {"section_title": "Disclosure of Beneficial Ownership of U.S.-Registered Aircraft", "paragraphs": ["To register an aircraft in the United States with the Federal Aviation Administration (FAA), applicants must certify their U.S. citizenship. Non-U.S. citizens may register aircraft under a trust agreement in which the aircraft's title is transferred to an American trustee (e.g., a U.S. bank). Investigations into the FAA's Civil Aviation Registry have revealed a lack of beneficial ownership transparency among aircraft registered through noncitizen trusts. Reports further indicate that drug traffickers, kleptocrats, and sanctions evaders have been among the operators of aircraft registered with the FAA through noncitizen trusts. Some Members of Congress have sought to address beneficial ownership transparency in the FAA's Civil Aviation Registry through legislation. If enacted, H.R. 393 , the Aircraft Ownership Transparency Act of 2019, would require the FAA to collect identifying information, including nationality, of the beneficial owners of certain entities, including trusts, applying to register aircraft in the United States."], "subsections": []}]}, {"section_title": "Status of International Efforts to Address Beneficial Ownership", "paragraphs": ["U.S. policymakers' interest in addressing beneficial ownership transparency has been elevated by a series of leaks to the media regarding the abuse of shell companies by money launderers, corrupt politicians, and other criminals, as well as sustained multilateral attention to the issue. In late 2018, information from such leaks reportedly contributed to a raid by German authorities on Deutsche Bank, one of the world's largest banks. Other major banks have become enmeshed in money laundering scandals involving the abuse of accounts associated with shell companies, including Danske Bank, Denmark's largest bank. ", "The international community has taken steps to acknowledge and address the issue of a lack of beneficial ownership transparency in the context of anti-money laundering efforts. Some countries, including the United Kingdom, have created a public register that provides the beneficial owners of companies\u00e2\u0080\u0094and more countries have committed or are planning to do so. In April 2018, the European Parliament voted to adopt the European Commission's proposed Fifth Anti-Money Laundering (AML) Directive, which among other measures would require European Union member states to maintain public national-level registers of beneficial ownership information for certain types of legal entities.", "The European Commission has also sought to identify third-country jurisdictions with \"strategic deficiencies\" in their national AML/CFT regimes, which pose \"significant threats\" to the EU's financial system. To this end, the Commission has identified eight criteria or \"building blocks\" for assessing third countries\u00e2\u0080\u0094one of which is the \"availability of accurate and timely information of the beneficial ownership of legal persons and arrangements to competent authorities.\" In February 2019, the Commission released a proposed list of third countries with strategic AML/CFT deficiencies that included four U.S. territories: American Samoa, Guam, Puerto Rico, and the U.S. Virgin Islands. A key criticism of the U.S. territories' AML/CFT regime was the lack of beneficial ownership disclosure requirements. "], "subsections": []}, {"section_title": "Evolution of the Global Legal Entity Identifier (LEI) Program", "paragraphs": ["The origins of the LEI system lay in some of the problems highlighted in the 2008 financial crisis. These included excessive opacity as to credit risks, and to potential losses accrued across various affiliates of large financial conglomerates. For example, when Lehman Brothers failed in 2008, financial regulators and market participants found it difficult to gauge their financial trading counterparties' exposure to Lehman's large number of subsidiaries and legal entities, domestically and overseas. Partly to better track such exposures, the Financial Stability Board (FSB) and G-20 helped to design and create the concept of the LEI system, starting in 2009. ", "LEI is a voluntary international program that assigns each separate \"legal entity\" participating in the program a unique 20-digit identifying number. This number can be used across jurisdictions to identify a legally distinct entity engaged in a financial transaction, including a cross-border financial transaction, making it especially useful in today's globally interconnected financial system. The unique identifying number acts as a reference code\u00e2\u0080\u0094much like a bar code, which can be used globally, across different types of markets and for a wide range of financial purposes. These would include, for example, capital markets and derivatives transactions, commercial lending, and customer ownership, due diligence, and financial transparency purposes; as well as risk management purposes for large conglomerates that may have hundreds or thousands of subsidiaries and affiliates to track. A large international bank, for example, may have an LEI identifying the parent entity plus an LEI for each of its legal entities that buy or sell stocks, bonds, swaps, or engage in other financial market transactions. The LEI was designed to enable risk managers and regulators to identify parties to financial transactions instantly and precisely. ", "Although the origins of the LEI stemmed from concerns over credit risk and safety and soundness that surfaced during the 2008 financial crisis, the LEI may also have benefits for financial transparency. A May 2018 study from the Global Legal Entity Foundation found, based on multiple interviews with financial market companies, that the lack of consistent, reliable automated identifiers was creating a great burden on the financial industry; that most in the industry believed the \"Know Your Customer\" process of onboarding new clients would likely become more automated; and that \"there is clearly an opportunity to align on one identifier to generate efficiencies.\" Similar conclusions were reached in a 2017 study by McKinsey & Co. The current LEI system is aimed more at tracking financial transactions of various affiliates, but creating a unified global identifier could be considered a natural first step toward more easily tracking ownership of affiliates as well.", "Worldwide, more than 700,000 LEIs have been issued to entities in over 180 countries as of November 2017; however, use of the LEI remains largely voluntary as opposed to legally mandatory. In the United States and abroad, some aspects of financial reporting require use of the LEI and these, in substantial part, rely on voluntary implementation. ", "Some have called the lack of broader adoption of a common legal identifier a collective action problem. In a collective action problem, all participants in a system benefit if everyone participates; if only a few participate, those few bear high costs, as early adopters, with little benefit. Collective action problems are classic examples of situations where a government-organized solution may improve outcomes. Similarly, some argue that all parties would benefit if such LEIs were uniformly assigned, but there is no incentive to be a sole or early adopter. Academics have urged regulators to mandate the use of the LEI in regulatory reporting as a means of solving this collective action problem. Treasury's Office of Financial Research noted, \"Universal adoption is necessary to bring efficiencies to reporting entities and useful information to the Financial Stability Oversight Council, its member agencies, and other policymakers.\" "], "subsections": []}]}, {"section_title": "Selected Legislative Proposals in the 116th Congress112", "paragraphs": ["In response to some of the issues discussed above, a number of lawmakers have introduced legislation that would require the collection of beneficial ownership information for both newly formed and existing legal entities. The subsections below discuss two of these proposals in the 116 th Congress. "], "subsections": [{"section_title": "H.R. 2513, Corporate Transparency Act of 2019", "paragraphs": ["In June 2019, the House Committee on Financial Services approved legislation that would require many small corporations and LLCs to report their beneficial owners to the federal government. Under H.R. 2513 , the Corporate Transparency Act of 2019, newly formed corporations and LLCs would be required to report certain identifying information concerning their beneficial owners to FinCEN and annually update that information. The bill would also impose these reporting requirements on existing corporations and LLCs two years after FinCEN adopts final regulations to implement the legislation. Subject to certain exceptions, the bill defines the term beneficial owner to mean natural persons who \"directly or indirectly\"", "exercise \"substantial control\" over a corporation or LLC; own 25% or more of the equity of a corporation or LLC; or receive \"substantial economic benefits\" from a corporation or LLC. ", "H.R. 2513 's reporting requirements are limited to small corporations and LLCs. Specifically, the bill exempts a variety of regulated entities from its reporting requirements, in addition to any company that (1) employs more than 20 full-time employees, (2) files income tax returns reflecting more than $5 million in gross receipts, and (3) has an operating presence at a physical office within the United States. ", "The bill would also authorize FinCEN to promulgate a number of rules. First, H.R. 2513 would allow FinCEN to adopt a rule requiring covered corporations and LLCs to report changes in their beneficial ownership sooner than the annual update required by the legislation itself. Second, the bill would direct the Treasury Secretary to promulgate a rule clarifying the circumstances in which an individual receives \"substantial economic benefits\" from a corporation or LLC for purposes of its definition of beneficial owner . Third, the legislation would require FinCEN to revise the CDD Rule within one year of the bill's enactment in order to bring the rule \"into conformance\" with the bill's requirements and reduce any \"unnecessary\" burdens on financial institutions. ", "Finally, H.R. 2513 would impose civil and criminal penalties on persons who knowingly provide FinCEN with false beneficial ownership information or willfully fail to provide complete or updated information."], "subsections": []}, {"section_title": "S. 1889, True Incorporation Transparency for Law Enforcement (TITLE) Act", "paragraphs": ["In June 2019, Senator Sheldon Whitehouse introduced legislation that would require states receiving funds under the Omnibus Crime Control and Safe Streets Act of 1968 to adopt transparent incorporation systems within three years of the bill's enactment. Specifically, S. 1889 , the True Incorporation Transparency for Law Enforcement (TITLE) Act, would mandate that transparent incorporation systems require newly formed corporations and LLCs to report certain identifying information concerning their beneficial owners to their states of incorporation. Under the bill, a compliant formation system would also require corporations and LLCs to report changes in their beneficial ownership within 60 days. These requirements would apply to existing corporations and LLCs two years after a state's adoption of a compliant formation system. Subject to certain exceptions, S. 1889 defines the term beneficial owner to mean natural persons who \"directly or indirectly\" (1) exercise \"substantial control\" over a corporation or LLC, or (2) have a \"substantial interest\" in or receive \"substantial economic benefits\" from a corporation or LLC. ", "Like H.R. 2513 , S. 1889 's requirements would be limited to small corporations and LLCs. Specifically, S. 1889 would allow states to exempt various regulated entities, in addition to any company that (1) employs more than 20 full-time employees, (2) files income tax returns reflecting more than $5 million in gross receipts, (3) has an operating presence at a physical office within the United States, and (4) has more than 100 shareholders. The bill would also impose civil and criminal penalties on persons who knowingly provide states with false beneficial ownership information or willfully fail to provide complete or updated information. ", "Finally, S. 1889 would amend the BSA to include \"any person engaged in the business of forming corporations or [LLCs]\" in its definition of a regulated \"financial institution,\" and would direct FinCEN to issue a proposed rule requiring such persons to establish AML programs."], "subsections": [{"section_title": "Appendix. Hypothetical Example of Shell Companies Obscuring U.S. Property Sale", "paragraphs": [" Figure A-1 demonstrates hypothetically how hidden foreign or U.S. buyers might purchase real estate in the United States with minimal disclosure of their identities as hidden beneficial owners. First, foreign or U.S. individuals might establish a foreign-incorporated LLC, subject to that foreign jurisdiction's laws, which could present particular challenges to a U.S. law enforcement agency seeking to investigate the purchase. Alternately, foreign or U.S. individuals could create a U.S. LLC incorporated in a U.S. state with only a \"registered agent\" required to be disclosed under various states' laws. ", "A foreign LLC might pay for the property through a wire transfer from a foreign bank account. If the foreign LLC or the U.S. LLC were to open a U.S. bank account to pay for the purchase, then, if this were a new account opened since May 2018, the U.S.-regulated bank would look for beneficial owners owning more than 25% of the LLC, and keep records of that information. Currently, however, that information would not be reported to FinCEN automatically, and law enforcement would most likely require a subpoena to procure that information from the bank's records.", "To create additional layers that could obscure the actual buyers of the property, the LLC, whether U.S. or foreign, could route the payment to the title company, which handles the real estate closing, through a law firm. Payments and wire transfers routed through law firms present an extra layer of information a prosecutor or law enforcement agent must go through to try to obtain details of individuals who own the LLC and are purchasing a property. Often the U.S. attorney-client privilege can make it more difficult to exercise this subpoena authority, without at least the possibility that a legal challenge may arise.", "Finally, the payment is routed to the title company, which processes the property sale and distributes payment, normally to the seller's account. If the seller obscures his or her identity through an LLC as well, natural persons involved on both sides of the transfer may be hidden."], "subsections": []}]}]}]}}
{"id": "R45926", "title": "The Endangered Species Act and Climate Change: Selected Legal Issues", "released_date": "2019-09-20T00:00:00", "summary": ["For more than a decade, federal agencies have grappled with how to address climate change effects when implementing the Endangered Species Act of 1973 (ESA). The ESA aims to protect threatened and endangered fish, wildlife, and plants from extinction. As set forth by Congress, one of the main purposes of the ESA is to \"provide a means whereby the ecosystems upon which endangered species and threatened species depend may be conserved.\"", "The U.S. Fish and Wildlife Service (FWS) and the National Marine Fisheries Service (NMFS) (collectively, the Services) have acknowledged that the changing climate may threaten the survival of and habitat for some species. As noted by courts and legal scholars, the ESA does not expressly require the Services to consider the effect of climate change in their ESA decisions. However, the ESA and its implementing regulations (1) direct the Services to consider \"natural or manmade factors affecting [a species'] continued existence\" when determining whether a species should be protected under the ESA; and (2) require the Services to analyze cumulative effects on a species' survival when analyzing whether federal actions jeopardize a species protected under the Act. The courts and the Services have interpreted these provisions as requiring the Services to consider climate change effects in the ESA decisionmaking process. Various lawsuits have challenged the Services' interpretation of complex scientific data or models that predict short- and long-term effects from a changing global climate on specific species and their habitats.", "Legal challenges have influenced how the Services implement the ESA when climate change affects species and their habitats. Lawsuits typically focus on two main issues: (1) when the Services should list, delist, or reclassify a species as threatened or endangered because of climate change effects; and (2) whether the Services can or should regulate activities that affect the climate to protect species and their habitat. Judicial review has helped to ensure that the Services consider projected climate change effects on species in their ESA decisions. However, the courts have not required the Services to curb activities that may contribute to climate change to protect threatened or endangered species.", "Stakeholders disagree on whether the ESA should play a role in addressing climate change, with some arguing that the ESA is not equipped to mitigate climate change effects. Other stakeholders believe that the Services can and should wield the ESA to protect further species threatened by climate change by curbing activities contributing to climate change. From the Services' viewpoint, the best available scientific and commercial data have been insufficient to determine whether greenhouse gas emissions from a proposed activity cause detrimental effects on a species or its habitat. In light of the judicial deference afforded to the Services, the courts have not expanded the ESA as a tool to protect listed species by regulating activities that contribute to climate change.", "This report analyzes the courts' role in shaping how the Services have factored climate change effects into ESA decisions and recent 2019 regulatory developments that aim to clarify how the Services consider and address climate change in their ESA decisions. In August 2019, the Services finalized revisions to the ESA implementing regulations, aiming to increase transparency and effectiveness of the ESA while easing regulatory burdens. Among those changes, the Services clarified their existing policies and practices for factoring climate change effects into their ESA decisions. As legislative proposals to revise the ESA continue to develop, legal battles over the how the Services interpret climate change effects in their ESA decisions will likely continue."], "reports": {"section_title": "", "paragraphs": ["F or more than a decade, federal agencies have grappled with how to address climate change effects when implementing the Endangered Species Act of 1973 (ESA, or the Act). The ESA aims to protect threatened and endangered fish, wildlife, and plants from extinction. As set forth by Congress, one of the main purposes of the ESA is to \"provide a means whereby the ecosystems upon which endangered species and threatened species depend may be conserved.\" To conserve threatened and endangered species, the Act seeks to identify threatened or endangered species, facilitate recovery and conservation of these species, and minimize the effect of federal and private actions on these species and their habitats. The Supreme Court has stated that \"[t]he plain intent of Congress in enacting this statute was to reverse the trend toward species extinction, whatever the cost.\"", "To achieve that purpose, Congress declared that \"all Federal departments and agencies shall seek to conserve endangered species and threatened species and shall utilize their authorities\" to further the ESA purposes. Under the ESA, two federal agencies\u00e2\u0080\u0094the U.S. Fish and Wildlife Service (FWS) within the Department of the Interior and the National Marine Fisheries Service (NMFS) within the Department of Commerce (collectively, the Services)\u00e2\u0080\u0094are primarily responsible for implementing the ESA. According to the Services, over 1,500 species of plants and animals receive some type of protection under the ESA. Since the early 21st century, some Members of Congress have urged the Services to factor in climate change effects when implementing the ESA.", "The Services, along with scholars and scientists, have acknowledged that the changing climate may threaten the survival of and habitat for some species. As noted by courts and legal scholars, the ESA does not expressly require the Services to consider the effect of climate change in their ESA decisions. However, the ESA and its implementing regulations (1) direct the Services to consider \"natural or manmade factors affecting [a species'] continued existence\" when determining whether a species should be protected under the ESA; and (2) require the Services to analyze cumulative effects on a species' survival when analyzing whether federal actions jeopardize a species protected under the Act. The courts and the Services have interpreted these provisions as requiring the Services to consider climate change effects into the ESA decisionmaking process. ", "Various lawsuits have challenged the Services' interpretation of complex scientific data or models that predict short- and long-term effects from a changing global climate on specific species and their habitats. These lawsuits typically focus on two main issues: (1) when the Services should list, delist, or reclassify a species as threatened or endangered because of climate change effects; and (2) whether the Services can or should regulate activities that affect the climate to protect the species. Judicial review has helped to ensure that the Services consider projected climate change effects on species in their ESA decisions, but the courts have not required the Services to curb activities that may contribute to climate change to protect threatened or endangered species.", "This report analyzes the courts' role in shaping how the Services have factored climate change effects into ESA decisions and recent regulatory developments that seek to clarify how the Services consider and address climate change in their ESA decisions. "], "subsections": [{"section_title": "Judicial Review Under the ESA", "paragraphs": ["In general, stakeholders challenge the Services' ESA actions or inactions under the Administrative Procedure Act (APA). The APA authorizes reviewing courts to \"hold unlawful and set aside agency actions, findings, and conclusions found to be arbitrary, capricious, [or] an abuse of discretion.\" Under the arbitrary and capricious standard, courts must determine whether the agency \"examine[d] the relevant data and articulate[d] a satisfactory explanation for its action, including a 'rational connection between the facts found and the choice made,'\" but the standard prohibits courts from \"substitut[ing] its judgment for that of the agency.\" Under this deferential standard, courts have generally deferred to the Services' decisions related to climate change. However, courts have not deferred to the Services when the court concludes that the record does not support the Services' decision or the Services failed to consider climate change adequately. ", "The sections below offer selected examples, drawn from various court decisions, legal documents, and regulatory developments, to illustrate the range of issues that the Services and the courts have addressed related to the ESA and climate change. Each section of the report reviews the applicable legal framework and discusses the relevant regulatory revisions finalized by the Trump Administration in August 2019. This report does not aim to provide a comprehensive or representative preview of all the judicial decisions that have addressed this area."], "subsections": []}, {"section_title": "Listing Decisions Under the ESA", "paragraphs": ["Many legal challenges involving the ESA and climate change have centered on whether to list a species as endangered or threatened under the ESA. To trigger protections and prohibitions under the ESA, the Services must first list a species as threatened or endangered. Under ESA Section 4, the Services list a species as endangered or threatened based on assessments of the risk of their extinction. The Act defines an \"endangered species\" as a species \"in danger of extinction throughout all or a significant portion of its range.\" A \"threatened species\" is a species \"likely to become endangered within the foreseeable future in all or a significant portion of its range.\" For listing decisions, the ESA requires the Services to determine whether the species \"is a threatened or endangered species because of any of the following factors:", "(A) the present or threatened destruction, modification, or curtailment of its habitat or range;", "(B) overutilization for commercial, recreational, scientific, or educational purposes;", "(C) disease or predation;", "(D) the inadequacy of existing regulatory mechanisms; or", "(E) other natural or manmade factors affecting its continued existence.\"", "When listing a species, the Services must make their decision \"solely on the basis of the best scientific and commercial data available . . . after conducting a review of the status of the species,\" taking into account any state's or foreign nation's actions to protect such species. ", "Courts have consistently held that the Services must consider climate change as a factor in their listing decisions if it may affect the survival of the species. However, stakeholders have disputed the extent to which climate change affects species and the science underpinning listing decisions. Some stakeholders have sought through petitions and legal challenges to compel the Services to list species whose survival has been or may be threatened by climate change effects. Other stakeholders have challenged the listing of species or petitioned the Service to delist a species, questioning whether model-based climate predictions constitute the \"best scientific and commercial data available\" on which to base ESA listing decisions. ", "Scientific uncertainty and undefined terms in the ESA have opened the door to litigation challenging the Services' interpretation of ambiguous terms and their assessment of the climate science that supports their listing decisions. Courts often uphold the Services' interpretation of ambiguous terms because judicial review of agency decisions is narrow and highly deferential; the court will not set aside an ESA listing decision so long as it is rational and reasonably based on supporting evidence. However, courts have faulted the Services for inadequately considering climate change effects or relying on the scientific uncertainty of climate modeling to deny a petition to list a species. The two sections below discuss various court decisions that have reviewed how the Services (1) interpret the undefined \"foreseeable future\" in their listing decisions, and (2) address the scientific uncertainty of climate change effects."], "subsections": [{"section_title": "Foreseeability of Climate Change Effects in Listing Decisions", "paragraphs": ["Legal challenges to Services' decisions to list or not to list a species as threatened highlight the difficulty in predicting whether a species is likely to be endangered \"within the foreseeable future\" because of climate change effects. Neither the ESA nor the implementing regulations define the term foreseeable future . Under their interpretation of the term, the Services determine foreseeability on a case-by-case basis for listing decisions, and the foreseeable future time frame can vary considerably based on the species and its habitat. For species affected by climate change, the Services' decisions on foreseeability of a species' survival often depend on their assessment of predictive modeling of climate threats to a species and its habitat. How a Service defines a species' foreseeable future could affect its ESA listing decision. For example, a species is less likely to be listed for protection under the ESA if the Services adopt a shorter time frame for the foreseeable future, thereby limiting their consideration of longer-term projections of climate change effects on a species and its habitat.", "The legal challenges to FWS's listing of the polar bear ( Ursus maritimus ) illustrate how courts have applied this narrow and deferential standard of review and interpreted the ESA standards for the best available data in the climate change context. In 2013, in Safari Club International v. Salazar (In re Polar Bear Endangered Species Act Listing and Section 4(d) Rule Litigation) (hereinafter In re Polar Bear ), the U.S. Court of Appeals for the District of Columbia Circuit (D.C. Circuit) upheld FWS's listing of polar bears as a threatened species under the ESA based in part on projected climate change effects to the species and its habitat. FWS based its decision on three main conclusions: (1) that the polar bear is dependent on sea ice for its survival; (2) that sea ice is declining; and (3) that climate change will likely continue to reduce the extent and quality of arctic sea ice gravely enough to endanger the polar bear population. ", "The D.C. Circuit held that the challenges to FWS's scientific assessment and conclusions \"'amount to nothing more than competing views about policy and science,' on which we defer to the agency.\" The court also rejected arguments that climate science was too uncertain to support listing the polar bear as a species that is likely to become endangered in the \"foreseeable future,\" defined by FWS in this case as 45 years in the future. The court concluded that FWS's reliance on climate projections was \"justifiable[,] clearly articulated[,] . . . sufficient to support their definition of foreseeability.\" The Supreme Court declined to review the case.", "In 2016, the U.S. Court of Appeals for the Ninth Circuit (Ninth Circuit) similarly deferred to the NMFS's foreseeable future analysis in upholding the listing of two populations of Arctic bearded seals\u00c2\u00a0( Erignathus barbatus nauticus ) in Alaska Oil & Gas Association v. Pritzker . NMFS listed the seals as threatened in 2012 based on climate change models that predicted that sea ice the seals depend on for birthing and mating would mostly disappear by 2095. In rejecting the plaintiffs' claim that the models used in the listing decision could not reliably predict climate change effects on the seals beyond 2050, the Ninth Circuit concluded that NMFS may base its listing decision on such models and long-term projections because the record included a reasonable explanation for its decision. The court explained that the ", "ESA does not require NMFS to base its decision on ironclad evidence when it determines that a species is likely to become endangered in the foreseeable future; it simply requires the agency to consider the best and most reliable scientific and commercial data and to identify the limits of that data when making a listing determination.", "Soon after the bearded seal decision, the Ninth Circuit reversed an Alaska federal district court's decision to vacate NMFS's decision to list the Arctic subspecies of the ringed seal ( Phoca hispida hispida ) as threatened under the ESA. Bound by the precedent set in Pritzker , the Ninth Circuit concluded that the district court erred when it required more \"definitive quantitative data about the Arctic ringed seal population and an extinction threshold\" to list the species as threatened under the ESA. The court determined that NMFS's reliance on climate change models that project until 2100 was not arbitrary or capricious because NMFS \"provided a reasonable and scientifically supported methodology for addressing volatility in its long-term climate projections, and it represented fairly the shortcomings of those projections\u00e2\u0080\u0094that is all the ESA requires.\" ", "Courts have also deferred to NMFS's decisions not to list species when it reasonably demonstrated that long-term predictive climate models were unreliable to support a listing decision. For example, a federal district court in California upheld NMFS's decision not to list the ribbon seal ( Histriophoca fasciata ) as threatened or endangered despite a \"likely\" population decline related to sea ice loss and ocean acidification. The court held that NMFS reasonably relied on a 40-year time horizon, from 2010 to 2050, to project negative effects from climate change on the sea ice habitat because it determined the models beyond 2050 were unreliable. The court deferred to NMFS's expertise in upholding NMFS's determination that, based on this time frame, the ribbon seal was not likely to become endangered or in danger of extinction in the foreseeable future because the seal is resilient and adaptable to climate change effects on its habitat. The court concluded that NMFS did not err when it determined that climate models after 2050 were \"unreliable\" and \"too divergent\" to use in assessing future threats to the ribbon seal. NMFS determined that the climate models were \"too heavily dependent\" on estimated greenhouse gas (GHG) emissions from different types of future regulatory controls.", "These foreseeability cases highlight the courts' willingness to defer to the Services' interpretation of climate modeling data and the foreseeability of climate change effects if the record for the listing decision includes a reasonable explanation for their decision that acknowledges limits or uncertainty in the data. As such, the Services continue to evaluate the foreseeability on a case-by-case basis."], "subsections": [{"section_title": "Defining \"Foreseeable Future\" in ESA Regulations", "paragraphs": ["In August 2019, the Services finalized revisions to the ESA regulations to define the \"foreseeable future\" as extending \"only so far into the future as the Services can reasonably determine that both the future threats and the species' responses to those threats are likely.\" Prior to this final rule, neither the ESA nor the implementing regulations defined the term foreseeable future . In the final rule, the Services emphasized that it would continue to evaluate the range of uncertainty and probabilities associated with the best available science and projected data on climate change effects to individual species and their habitat.", "It is unclear whether these changes will (1) affect how the Services evaluate long-term projections of climate change effects on species, or (2) promote greater uniformity and consistency within and between FWS and NMFS in their listing evaluations. Some stakeholders noted that the final rule merely codified the Services' existing practice in determining the foreseeable future for species. Other stakeholders expressed concerns that this definition of foreseeable future would limit consideration of long-term projected threats from climate change. In their lawsuit challenging the final rule, plaintiffs claim that demanding that both threats and responses to threats be \"likely\" in the foreseeable future imposes an \"increased certainty requirement\" that will deny protection under the ESA for species from the future effects of climate change. "], "subsections": []}]}, {"section_title": "Scientific Uncertainty in Listing Decisions", "paragraphs": ["The legal challenges to the Services' foreseeable future determinations highlight how scientific uncertainty plays a large role in evaluating climate change effects. Similar to the foreseeability cases, courts have faulted the Services for claiming scientific uncertainty without adequate explanation when declining to list a species. This section discusses some examples where stakeholders have challenged FWS's approach to scientific uncertainty in its decisions to not list a species or delist a species under the ESA. ", "To delist a species under the ESA, the Services must determine that none of the five factors considered in listing the species (i.e., destruction or modification of its habitat or range; overutilization for commercial, recreational, scientific, or educational purposes; disease or predation; inadequate existing regulatory protections; and other factors affecting its continued existence) threatens or endangers the species. Delisting determinations must be made \"solely on the basis of the best available scientific and commercial information regarding a species' status, without reference to possible economic or other impacts of such determination.\" ", "Similar to judicial review of listing decisions discussed above, courts have generally deferred to FWS's decisions regarding scientific uncertainty of climate data unless FWS fails to justify why such uncertainty supports its listing decision. For example, in 2011, the Ninth Circuit in Greater Yellowstone Coalition Inc. v. Servheen vacated and remanded FWS's delisting of the Yellowstone grizzly bear\u00c2\u00a0( Ursus arctos horribilis ) as a threatened species, partly because FWS failed to justify why declines in whitebark pine\u00e2\u0080\u0094a primary source of food for grizzlies\u00e2\u0080\u0094due to climate change were not likely to threaten the Yellowstone grizzly bear population. While acknowledging that courts generally defer to the Services' expertise, the Ninth Circuit refused to defer to FWS's \"arbitrary\" and unsupported claims of scientific uncertainty regarding the effect that declining food supplies resulting from climate change may have on grizzly bears. Relying on evidence that climate change reduced available whitebark pine seeds, increased grizzly bear mortality, and decreased grizzly bear reproduction, the court concluded that overall declines in the grizzly bear's food source from climate change effects in the Yellowstone region would logically have a \"negative effect on its grizzly bear population.\" ", "In 2018, the Ninth Circuit similarly rejected FWS's decision not to list the Upper Missouri River Valley distinct population segment of Arctic grayling ( Thymallus arcticus ) as endangered or threatened. In Center for Biological Diversity v. Zinke , the court held that FWS acted arbitrarily and capriciously when it failed to explain why the uncertainty of climate change effects on the Arctic grayling supported not listing it. The court faulted FWS for (1) refusing to make any projections with respect to the synergistic effects of climate change \"simply because of uncertainty,\" and (2) disregarding the additive effects of climate change in considering the effects of low stream flows and high water temperatures on the species. ", "Other courts have similarly faulted FWS for requiring a greater level of scientific certainty or evidence than the ESA requires with respect to climate change effects on a species in its listing determination. In Defenders of Wildlife v. Jewell , a federal district court in Montana held that FWS's 2014 decision to withdraw the proposed listing of the North American wolverine ( Gulo gulo luscus ) as threatened was arbitrary and capricious. In reversing its position on the proposed listing, FWS attempted to discredit certain scientific studies on climate change effects that it had relied on previously to propose listing the wolverine as a threatened species. FWS claimed that FWS needed greater certainty and refinement in the climate change data before listing the wolverine. The court concluded that FWS \"cannot demand a greater level of scientific certainty than has been achieved in the field to date\u00e2\u0080\u0094the 'best scientific data available' . . . standard does not require that the [FWS] act only when it can justify its decision with absolute confidence, and 'the ESA accepts agency decisions in the face of uncertainty.'\" After the court decision, in 2016, FWS reopened the public comment period on its previous proposal to list the wolverine as threatened under the ESA. FWS has not made a final listing determination after closing the comment period. ", "Relatedly, courts have faulted FWS for requiring more evidence of climate change effects to delist a species than what is required under the ESA. In 2019, a federal district court in Texas held that FWS had acted arbitrarily and capriciously when it denied a petition to delist the Bone Cave harvestman spider ( Texella reyesi ) as an endangered species. In American Stewards of Liberty v. Department of the Interior , the court concluded that FWS did not deny the petition based on the best available data but instead based its denial on the absence of \"admittedly unavailable\" evidence of climate change effects on the species and its habitat. The court did not defer to FWS's conclusion that delisting of the spider was not warranted because the petition failed, in part, to include a \"trend analysis to indicate that this species can withstand the threats associated with development or climate change over the long term.\" In its decision denying the petition to delist, FWS claimed that the petitioners did not present enough data to determine if the spider's population will continue to decline from such threats. The court held that FWS \"committed clear error\" by requiring the petition to present \"conclusive evidence about the harvestman's population trends\u00e2\u0080\u0094more evidence than the Service admits is available or attainable.\" The court concluded that the petition met the threshold for a finding that delisting may be warranted and remanded to FWS for further consideration. To date, FWS has not issued a new finding regarding the delisting petition.", "Although it is not possible to have complete certainty of future climate change effects, these court decisions illustrate that the Services cannot rely solely on scientific uncertainty to make listing or delisting decisions without adequate justification. In the 2019 revised ESA regulations, the Services noted that \"the requirement to use the 'best available' data means that we cannot insist that information must be free from all uncertainty, and further agree that the Act's protections should not be withheld until a species' status has declined to the point that the future risk of extinction is certain.\""], "subsections": []}]}, {"section_title": "Designating Critical Habitat", "paragraphs": ["The Services have also considered climate change effects in designating critical habitat. When listing a species as threatened or endangered, the ESA requires the Services to \"designate any habitat of such species which is then considered to be critical habitat.\" As a threshold matter, as made clear by the Supreme Court's 2018 decision in Weyerhauser Co. v. FWS , an area must be \"habitat\" for a species for the Services to consider whether it is \"critical habitat.\" Under the ESA, the Services may designate two types of habitat as critical habitat: (1) specific areas within the geographical area occupied by the species, which contain the \"physical or biological features essential to the conservation of the species\" and may require special management protections (occupied habitat); and (2) areas outside the geographical areas occupied by the species if the Secretary determines that such unoccupied areas are \"essential for the conservation of the species\" (unoccupied habitat). Once an area is designated as critical habitat, federal agencies may not (unless exempted) authorize, fund, or carry out actions that are likely to \"result in the destruction or adverse modification\" of critical habitat. ", "The Services face unique challenges when designating critical habitat based on modeled habitat shifts for species affected by climate change. The legal challenges to FWS's designation of the polar bear's critical habitat show how a court deferred to the FWS's interpretation of climate change data and models to determine whether unoccupied areas are \"essential for the conservation of the species.\" ", "In a 2016 decision, Alaska Oil & Gas Association v. Jewell , the Ninth Circuit upheld FWS's designation of 187,000 square miles as critical habitat for the polar bear. FWS based its critical habitat designation in part on long-term projections of habitat destruction from climate change. FWS designated three areas on Alaska's coast and in its waters that contain elements essential to the polar bear: a sea ice habitat, a terrestrial denning habitat, and a barrier island habitat. For two of the designated areas, the district court concluded that FWS failed to provide evidence that the two areas included all of the elements required for the survival of the polar bear. The district court asked FWS to establish that polar bears currently use those two areas as habitat.", "The Ninth Circuit disagreed with the lower court's narrow interpretation of the ESA critical habitat requirements. The court rejected the lower court's finding that the ESA required FWS to limit the critical habitat designation to specific areas that are currently used by polar bears, explaining that \"[n]o such limitation to existing use appears in the ESA, and such a narrow construction of critical habitat runs directly counter to the Act's conservation purposes. The Act is concerned with protecting the future of the species, not merely the preservation of existing bears. And it requires use of the best available technology, not perfection.\" The court concluded that FWS properly relied on climate science and sea ice data in designating habitat that has the elements required to sustain and preserve the polar bear population.", "Similar to cases regarding foreseeability and scientific uncertainty, the court appeared to defer to FWS's reasoned consideration of climate change effects based on evidence in the record."], "subsections": [{"section_title": "Revised ESA Critical Habitat Regulations", "paragraphs": ["The 2019 final rule clarified when the Secretary may designate unoccupied areas as critical habitat. Under the ESA, unoccupied areas must be essential to the conservation of the species to be critical habitat. Under the revised regulations, to determine if an unoccupied area is essential, the Services must find that the occupied habitat of the species at the time of listing is inadequate to ensure the conservation of the species. The Services must also determine that there is a \"reasonable certainty\" that the area will (1) contribute to the conservation of the species, and (2) contains one or more of those physical or biological features essential to the conservation of the species. The final rule explains that this revision \"better reflects the need for high confidence that an area designated as unoccupied critical habitat will actually contribute to the conservation of the species.\" ", "How the revised regulations will affect the designation of unoccupied critical habitat will likely depend on the threshold the Services set for \"reasonable certainty\" that the unoccupied habitat will contribute to the conservation of the species. Some stakeholders are concerned that these changes to the critical habitat regulations may limit the Services' ability to protect species that move because of climate-change-related habitat loss. In the litigation challenging the 2019 final rules, the plaintiffs argue that, by imposing an \"elevated certainty requirement\" on the Services' determination of what areas are \"essential,\" the new rules would preclude the Services from designating currently unoccupied areas to which species may need to move because of climate change as critical habitat. In contrast, other stakeholders see the regulatory changes as complying with the Supreme Court's decision in Weyerhauser Co. v. FWS that an area must be \"habitat\" before the Services may consider whether it is \"critical habitat.\" These stakeholders assert that reasonable certainty that an area has at least one of the essential features necessary to conserve the species ensures that the area is habitat for the species. In addition, landowners claim that these changes remove potential regulatory burdens that critical habitat designations cause, such as requirements that, when issuing permits that may adversely affect critical habitat, federal agencies consult with stakeholders."], "subsections": []}]}, {"section_title": "Protecting Endangered or Threatened Species", "paragraphs": ["If FWS or NMFS bases its listing decision on climate change effects, FWS or NMFS must also determine whether federal actions that contribute to climate change jeopardize the species under ESA Section 7 or whether an entity that may contribute to climate change is \"taking\" the species in violation of ESA Section 9. The Services may tailor the Section 9 \"take\" prohibitions for species listed as threatened under the ESA by using Section 4(d) rules. This section reviews how the Services address climate change effects when protecting listed species under ESA Sections 4(d), 7, and 9."], "subsections": [{"section_title": "Prohibiting \"Take\" Under Sections 9 and 4(d)", "paragraphs": ["ESA Section 9 prohibitions on \"taking\" a listed species differ for threatened and endangered species. ESA Section 9(a)(1) prohibits the unauthorized \"take\" of an endangered species. Take is defined as an act \"to harass, harm, pursue, hunt, shoot, wound, kill, trap, capture, or collect or to attempt to engage in any such conduct.\" In contrast, the ESA does not prohibit the taking of a threatened species unless FWS or NMFS decides to extend the Section 9 take prohibitions to the threatened species through a Section 4(d) rule. For threatened species, ESA Section 4(d) requires FWS or NMFS to issue regulations it \"deems necessary and advisable to provide for the conservation of such species.\" In 1978, FWS issued a \"blanket 4(d) rule\" that extends most of the Section 9 take prohibitions to all threatened species listed by FWS, unless it adopts a specific rule for a particular species. As discussed below, the 2019 revisions to the ESA regulations rescinded FWS's blanket 4(d) rule for newly listed or reclassified species, aligning it with NMFS's practice of issuing species-specific 4(d) rules for threatened species."], "subsections": []}, {"section_title": "Climate Change and Section 4(d) Rules for Threatened Species", "paragraphs": ["A frequent debate among legal scholars and stakeholders is whether the take prohibitions should extend to GHG-emitting activities that contribute to climate change. Stakeholders seeking greater protection for species argue that sources of GHG emissions cause an unlawful \"take\" under ESA Section 9 because GHG emissions contribute to climate change, which harms the species. However, the Services and critics of this approach assert that the Section 9 take prohibitions can apply only if GHG-emitting activity directly and intentionally takes the species or negatively affects its habitat. ", "In the litigation challenging the polar bear's 4(d) rule, the federal court's decision highlighted the challenges in applying the take prohibitions to GHG-emitting activities. Plaintiffs challenged FWS's 4(d) rule that specified prohibitions necessary to conserve the threatened polar bear species. The rule, among other things, did not prohibit activities outside the species' current range that may incidentally affect polar bears, such as GHG-emitting activities that may contribute to the loss of sea ice habitat. Plaintiffs claimed that the rule was arbitrary and capricious and violated the ESA by failing to address threats to the polar bear from GHG emissions and the loss of potential sea ice habitat outside the polar bears' range. ", "In rejecting this argument, the court concluded FWS had a rational basis not to extend the ESA's take prohibitions because there was insufficient evidence to suggest that regulating offsite GHG-producing activities would produce direct conservation benefits to the polar bear. FWS explained that the best available science and climate modeling could not identify an individual GHG emission source as the cause of a specific adverse effect on the polar bear or its habitat. The court acknowledged that it cannot \"decide based upon its own independent assessment\" \"whether the ESA is an effective or appropriate tool to address the threat of climate change . . . . The answer to that question will ultimately be grounded in science and policy determinations that are beyond the purview of this Court.\"", "Based on this judicial opinion, it seems unlikely that the Services will use Section 4(d) rules to prohibit GHG-emitting activities without further advances in science that can establish a causal connection between the individual GHG emission source and the specific adverse effect on the species or its habitat."], "subsections": [{"section_title": "Rescinding FWS's Blanket 4(d) Rule", "paragraphs": ["In 2019, FWS rescinded the \"blanket 4(d) rule\" for newly listed or reclassified threatened species, and will now adopt species-specific 4(d) rules. Because the rescission applies prospectively, the blanket 4(d) rule continues to prohibit the take of threatened species covered by the blanket 4(d) rule that FWS listed prior to the effective date of the rescission. This species-specific approach aligns with NMFS's practice of establishing specific 4(d) rules for each threatened species.", "How the rescission of FWS's blanket 4(d) rule may affect the protection of species threatened by climate change effects depends on its implementation. While some stakeholders are concerned that the rescission will \"weaken\" protections for threatened species because of delays in issuing species-specific 4(d) rules, it may have little effect on whether GHG-emitting activities are prohibited. FWS has not adopted a 4(d) rule that prohibited GHG-emitting activities that could affect threatened species and their habitats, prohibiting only actions that directly and intentionally take threatened species. For threatened species affected by climate change, legal scholars argue that such \"limited\" 4(d) rules have \"no real effect on the activities that are causing climate change, the acknowledged primary factor contributing to [the] species' decline.\""], "subsections": []}]}, {"section_title": "Section 7 Consultation", "paragraphs": ["Some stakeholders and legal scholars view the ESA Section 7 consultation requirement as a potentially powerful tool to limit GHG-emitting activities that may further jeopardize threatened or endangered species that were listed, at least in part, because of climate change effects. In practice, the Services and the courts have acknowledged that climate change should be considered during the consultation process. However, the courts have not required the Services to curb activities that may contribute to climate change to protect threatened or endangered species.", "In general, ESA Section 7 requires federal agencies to \"insure that any action authorized, funded, or carried out by such agency . . . is not likely to jeopardize the continued existence of any endangered species or threatened species or result in the destruction or adverse modification of [the critical] habitat of such species.\" A federal agency planning any action must consult with NMFS or FWS if the federal agency determines that its action \"may\" jeopardize a listed species or adversely affect its habitat. The ESA and its implementing regulations specify the types of consultation (e.g., informal versus formal consultation), when each type of consultation is required, and the procedures the agency proposing the action and the Services must follow.", "After the consultation with an agency, the Services must issue a biological opinion (BiOp) based on \"the best scientific and commercial data available\" that determines whether the proposed action is likely to jeopardize the ESA-listed species or adversely modify critical habitat. If the Services determine that an agency action would likely jeopardize the listed species or its critical habitat, the agency must terminate the action, implement a Service-proposed alternative action, or seek an exemption. If the agency action is not likely to jeopardize the continued existence of the species but is nonetheless likely to result in some \"incidental take\" of the species, the BiOp must set forth an incidental take statement, which specifies the permissible \"amount or extent\" of this effect on the species. ", "Various court decisions have faulted the Services for failing to discuss climate change effects when assessing whether federal action will jeopardize a listed species or adversely modify its habitat. In the 2007 decision, Natural Resources Defense Council v. Kempthorne , a federal district court in California held that FWS acted arbitrarily and capriciously when analyzing potential effects on the threatened delta smelt (Hypomesus transpacificus) from a large water diversion project. The court determined that the \"absence of any discussion in the BiOp of how to deal with any climate change is a failure to analyze a potentially 'important aspect of the problem.'\" In rejecting FWS's claim that the climate change studies did not merit analysis because they were inconclusive, the court concluded that without any meaningful discussion in the BiOp, it was \"impossible\" for the court to determine whether the climate studies were \"rationally discounted because of [their] inconclusive nature, or arbitrarily ignored.\" ", "Similarly, plaintiffs successfully challenged NMFS's BiOp that concluded that changes to a fish hatchery operation were not likely to jeopardize the species or adversely affect critical habitat for the Upper Columbia River spring Chinook salmon ( Oncorynchus tshawytscha ) or steelhead ( Oncorhynchus mykiss ). A federal district court in Washington ruled that NMFS's BiOp was arbitrary and capricious because it failed to analyze adequately climate change effects from the hatchery's modified operations and water use. The court explained that \"[t]he best available science indicates that climate change will affect stream flow and water conditions throughout the Northwest\" and that the lack of a model or study specifically addressing local climate change effects did not permit NMFS to ignore this factor. The court found that NMFS had included \"no discussion whatsoever\" of the potential effects of climate change on the hatchery's future operations and water use, and that it was not sufficient for NMFS to say that the local area at issue was less prone to climate change effects than other areas in the region.", "When the Services have discussed climate change effects from federal actions, some courts have scrutinized the Services' rationale in dismissing such effects when issuing a \"no jeopardy\" BiOp. For example, the Ninth Circuit 2017 majority opinion in Turtle Island Restoration Network v. Department of Commerce examined NMFS's BiOp that concluded that a fishery expansion would neither jeopardize the continued existence of the endangered loggerhead sea turtle ( Caretta caretta ) nor the endangered leatherback sea turtle ( Dermochelys coriacea ). For the loggerhead sea turtles, the court ruled that NMFS had acted arbitrarily and capriciously by failing to incorporate into its jeopardy analysis climate-model data that predicted that the fishery expansion would \"exacerbate\" loggerhead population decline due to climate change. In contrast, for the leatherback sea turtles, the majority upheld NMFS's no-jeopardy conclusion, rejecting the plaintiffs' argument that NMFS erred by limiting the \"temporal scale\" of its analysis to 25 years despite NMFS's determination that rising temperatures from climate change would have effects on leatherback sea turtles over the next century. Because NMFS's BiOp considered and concluded that it could not credibly predict climate change effects on the leatherback turtles, the majority held that NMFS adequately considered the climate change effects in its no-jeopardy conclusion.", "Despite some success challenging BiOps, neither the courts nor the Services have found that climate change effects from a proposed federal action jeopardize the species or adversely modify its habitat. Some stakeholders and legal scholars argue that when a proposed federal action contributes to climate change that may jeopardize the species or adversely modify its habitat, the agency is required to consult with the Services. If the Services determine that such actions jeopardize the species or its habitat, these stakeholders assert that the Services should use Section 7 consultation authority to limit or modify the GHG emissions from the proposed federal action. However, the Department of the Interior issued a Solicitor's Opinion explaining that Section 7 consultation is not required if no causal connection exists among the proposed federal action, a reasonably certain climate change effect, and the listed species. Therefore, without evidence of a causal connection between the proposed action and climate change effects, Section 7 consultation will not be triggered, foreclosing any opportunity for the Services to consider mitigating the climate change effects from such actions. Federal agencies and the Services have continued to use this policy to comply with their Section 7 consultation obligations."], "subsections": [{"section_title": "Revising Section 7 Consultation Regulations", "paragraphs": ["The 2019 ESA regulation revisions codified the Services' existing Section 7 climate change policy. Existing ESA Section 7 regulations require the federal agency proposing the action and the Services to evaluate the status of the listed species or critical habitat, the \"effects of the action,\" and cumulative effects. Prior to the 2019 revisions, ESA regulations defined \"effects of the action\" to include both direct and indirect effects of a proposed federal action on the species or critical habitat. The 2019 ESA rule revised the definition of \"effects of the action\" to include all consequences to listed species or critical habitat that are caused by the proposed action. The definition specified that a consequence is \"caused by the proposed action if it would not occur but for the proposed action and it is reasonably certain to occur.\" The Services provided a two-part test to identify a consequence: (1) whether the effect or activity would not occur but for the action and (2) whether the effect or activity is reasonably certain to result from the action. The preamble explains that \"if the agency fails to take the proposed action, and the activity would still occur, there is not 'but for' causation.\" ", "Some stakeholders support the revisions to the Section 7 consultation requirements, asserting that the changes will \"help decrease the resources needed for federal agencies and applicants to describe the effects of their actions to listed species or critical habitat when engaged in section 7 consultation.\" Other stakeholders contend that the proposed changes will \"unreasonably narrow\" and \"bar\" Section 7 consultation when climate change effects do not affect immediately the geographic area of the project. "], "subsections": []}]}]}, {"section_title": "Potential Implications", "paragraphs": ["When the ESA was enacted in 1973, Congress did not consider climate change as a significant factor in conserving endangered species. Although the Services and the courts have acknowledged that actions taken under the ESA must consider climate change effects on species and their habitats, the debate continues on whether the ESA can adequately protect and conserve species threatened by climate change effects. Stakeholders disagree on what role the ESA should play in addressing climate change, with some arguing that the ESA is not equipped to mitigate climate change effects. Other stakeholders believe that the Services can and should wield the ESA to protect species threatened by climate change and to curb activities contributing to climate change. ", "Generally, legal scholars agree that litigation has influenced how the Services factor climate change effects into ESA decisions. Legal challenges have helped to ensure that the Services consider projected climate change effects on species in their ESA decisions. In light of the judicial deference afforded to the Services, the courts have not expanded the ESA as a tool to protect listed species by regulating activities that contribute to climate change. From the Services' viewpoint, the best available scientific and commercial data have been insufficient to determine that GHG emissions from a proposed activity cause detrimental effects on the species or its habitat. However, as climate modeling and technology advance, the Services may be able to predict the causes and effects from climate change on species with greater scientific certainty and data. ", "Members of Congress may be interested in the implications of revising the ESA to clarify its treatment of climate change effects. Legislation could clarify whether ESA Section 9 prohibitions or Section 7 consultation requirements apply to indirect harms that contribute to climate changes that may affect a species' survival, or how the Services should address scientific uncertainty associated with projected climate change effects when making listing determinations. As legislative proposals continue to develop, legal battles over the how the Services interpret climate change effects in their ESA decisions will likely continue."], "subsections": []}]}}
{"id": "R46195", "title": "Gulf of Mexico Energy Security Act (GOMESA): Background, Status, and Issues", "released_date": "2020-01-31T00:00:00", "summary": ["Almost all U.S. offshore oil and gas production occurs in the Gulf of Mexico. Federal oil and gas leasing in the Gulf is governed primarily by two laws\u00e2\u0080\u0094the Outer Continental Shelf Lands Act (OCSLA; 43 U.S.C. \u00c2\u00a7\u00c2\u00a71331-1356b), which broadly controls oil and gas leasing throughout the U.S. outer continental shelf (OCS); and the Gulf of Mexico Energy Security Act of 2006 (GOMESA; 43 U.S.C. \u00c2\u00a71331 note), whose provisions relate specifically to leasing in the Gulf region. GOMESA imposes an oil and gas leasing moratorium through June 30, 2022, in most of the Eastern Gulf (off the Florida coast) and a small part of the Central Gulf. The law also establishes a framework for sharing revenues from certain qualified oil and gas leases in other parts of the Gulf with the \"Gulf producing states\" of Alabama, Louisiana, Mississippi, and Texas, as well as with a nationwide outdoor recreation program\u00e2\u0080\u0094the state assistance program establis hed by the Land and Water Conservation Fund Act (LWCF; 54 U.S.C. \u00c2\u00a7\u00c2\u00a7200301 et seq.). The 116 th Congress is considering changes to GOMESA, as statutory provisions related to both the moratorium and revenue sharing enter a period of transition.", "GOMESA Moratorium", "GOMESA's leasing moratorium is scheduled to expire in June 2022, and the Department of the Interior's (DOI's) Bureau of Ocean Energy Management (BOEM) has begun to plan for offshore leasing in the moratorium area after the expiration. Some Members of Congress seek to forestall new lease sales in the area by extending the moratorium; others support allowing it to expire on the scheduled date. On September 11, 2019, the House passed H.R. 205 , which would make the GOMESA moratorium permanent. Some other 116 th Congress bills (e.g., H.R. 286 , H.R. 291 , H.R. 341 , H.R. 2352 , H.R. 3585 , and S. 13 ) also would extend the moratorium or make it permanent. By contrast, H.R. 4294 would mandate lease sales in the area directly following the expiration.", "Absent congressional action, the executive branch is to decide whether to offer new oil and gas leases in the GOMESA moratorium area after June 2022. The Trump Administration has indicated interest in pursuing oil and gas leasing in that area after the expiration and has included two lease sales in a preliminary draft of its offshore leasing program for 2019-2024. In addition to economic, budgetary, and environmental considerations in extending or ending the moratorium, a particular issue is potential conflict related to the Department of Defense's (DOD's) intensive use of the area for military testing and training. DOD generally has supported the moratorium and has indicated that, from a defense standpoint, stipulations and restrictions on oil and gas activities would be necessary if the area were to be opened to leasing in 2022.", "GOMESA Revenue Sharing", "A second revenue-sharing phase (referred to as \"Phase II\") has begun under GOMESA. Compared with GOMESA's first decade (FY2007-FY2016), Phase II requires revenues to be shared from an expanded set of leases. Revenues continue to be shared at a rate of 37.5% with the Gulf producing states and their coastal political subdivisions, and at a rate of 12.5% with the LWCF state assistance program. The remaining 50% of qualified revenues are deposited in the General Fund of the U.S. Treasury as miscellaneous receipts. Revenue sharing from the added Phase II areas is capped annually at $500 million for most years through FY2055 for the four states and LWCF combined.", "Stakeholders have debated whether the Phase II revenue-sharing provisions should remain in place or whether different proportions should be shared with coastal states, used for broader federal programs, or deposited as miscellaneous receipts to the U.S. Treasury. Some Members of Congress seek to increase revenues shared with the Gulf Coast states, for example, by raising or eliminating GOMESA's revenue-sharing cap, increasing the state-shared percentage, or both. In the 115 th Congress, P.L. 115-97 increased the revenue-sharing cap to $650 million for FY2020 and FY2021. Several bills in the 116 th Congress (e.g., H.R. 3814 , H.R. 4294 , and S. 2418 ) would eliminate the cap and raise the state share of qualified revenues to 50%. S. 13 would add Florida as a revenue-sharing state. Other bills have proposed new uses of Gulf oil and gas revenues for other federal programs and purposes outside of revenue sharing; and some stakeholders have proposed to end GOMESA state revenue sharing altogether. Also at issue are questions about the overall adequacy of revenue amounts to fulfill existing and proposed purposes, including considerations about the optimal extent of federal offshore oil and gas leasing in the Gulf and how various policy choices would affect revenue amounts."], "reports": {"section_title": "", "paragraphs": ["T he Gulf of Mexico Energy Security Act of 2006 (GOMESA) altered federal offshore oil and gas leasing policy in the U.S. Gulf of Mexico. The law imposed an oil and gas leasing moratorium through June 30, 2022, throughout most of the Eastern Gulf of Mexico (off the Florida coast) and a small part of the Central Gulf. In other parts of the Gulf of Mexico, the law established a framework for sharing revenues from certain qualified oil and gas leases with the \"Gulf producing states\" of Alabama, Louisiana, Mississippi, and Texas, as well as with a nationwide outdoor recreation program\u00e2\u0080\u0094the Land and Water Conservation Fund's (LWCF's) state assistance program. ", "Several aspects of GOMESA have generated interest in the 116 th Congress. As the 2022 expiration date for the leasing moratorium in the Eastern Gulf approaches, the Department of the Interior's (DOI's) Bureau of Ocean Energy Management (BOEM) has begun to plan for offshore leasing in this area following the moratorium's expiration. BOEM's draft proposed five-year oil and gas leasing program for 2019-2024 would schedule new lease sales in the expired moratorium area starting in 2023. Some Members of Congress seek to forestall new lease sales by extending the moratorium beyond 2022; others support allowing it to expire on the currently scheduled date. On September 11, 2019, the House passed H.R. 205 , which would make the GOMESA moratorium permanent. Congress is weighing the potential for development of hydrocarbon resources in the Eastern Gulf against competing uses of the area for military testing and training, commercial fishing, and recreation. The debate encompasses questions of regional economic livelihoods and national energy and military security, as well as environmental concerns centered on the threat of oil spills and the potential contributions to climate change of oil and gas development.", "GOMESA's revenue-sharing provisions also have generated debate and interest in the 116 th Congress. The law entered a second revenue-sharing phase in FY2017\u00e2\u0080\u0094often referred to as GOMESA's \"Phase II\"\u00e2\u0080\u0094in which qualified leasing revenues from an expanded geographic area are shared with the states and with the LWCF. Phase II has resulted in higher revenue shares than in the law's first decade (FY2007-FY2016). Revenue sharing from the added Phase II areas is capped for most years at $500 million annually for the Gulf producing states and the LWCF combined, and some Members of Congress seek to raise or eliminate this cap. In the 115 th Congress, P.L. 115-97 increased the cap to $650 million for FY2020 and FY2021. In addition to changing the cap, some Members have advocated to increase the percentage of revenues shared with the Gulf Coast states and to increase the set of qualified leases from which revenues can be shared, as well as to add an additional state (Florida) to the revenue-sharing arrangement. Other bills have proposed new uses of Gulf oil and gas revenues for various federal programs and purposes outside of revenue sharing, and some stakeholders have proposed to end GOMESA state revenue sharing altogether. Debate has centered on the extent to which these revenues should be shared with coastal states versus used for broader federal purposes, such as deficit reduction or nationwide federal conservation programs. Some Members of Congress and other stakeholders have made the case that the coastal states should receive a higher revenue share, given costs incurred by these states and localities to support extraction activities. These stakeholders have compared GOMESA revenue sharing with the onshore federal revenue-sharing program, where states receive a higher share of the federal leasing revenues than is provided under the GOMESA framework. Other Members of Congress, as well as the Obama and Trump Administrations at times, have contended that revenues generated in federal waters belong to all Americans, and revenue distribution should reflect broader national needs. ", "This report provides brief background on Gulf of Mexico oil and gas development, discusses key provisions of GOMESA, and explores issues related to the Eastern Gulf moratorium and Gulf state revenue sharing. The report discusses various legislative options and proposals for amending GOMESA, as well as scenarios for future leasing if the law continues unchanged."], "subsections": [{"section_title": "Background", "paragraphs": ["The Gulf of Mexico has the most mature oil and gas development infrastructure on the U.S. outer continental shelf (OCS), and almost all U.S. offshore oil and gas production (approximately 98%) takes place in this region. Additionally, the Gulf contains the highest levels of undiscovered, technically recoverable oil and gas resources of any U.S. OCS region, according to BOEM. The Office of Natural Resources Revenue (ONRR) estimated federal revenues from offshore oil and gas leases in the Gulf at $5.51 billion for FY2019, out of a total of $5.57 billion for all OCS areas ( Table 1 ). From FY2009 to FY2018, annual revenues from federal leases in the Gulf ranged from a high of $8.74 billion in FY2013 (out of $9.07 billion total OCS oil and gas revenues for that year) to a low of $2.76 billion in FY2016 (out of $2.79 billion total OCS oil and gas revenues for that year). Changing prices for oil and gas are the most significant factors in these revenue swings.", "BOEM divides the Gulf into three planning areas: Eastern, Central, and Western. Most of the oil and gas development has taken place in the Central and Western Gulf planning areas. This is due to stronger oil and gas resources in those areas (as compared with the Eastern Gulf) and to leasing restrictions in the Eastern Gulf imposed by statutes and executive orders before GOMESA's enactment."], "subsections": [{"section_title": "Eastern Gulf Leasing Prohibitions Prior to GOMESA", "paragraphs": ["Congressional leasing restrictions in some parts of the Eastern Gulf date from the 1980s. Prompted by concerns of some coastal states, fishing groups, and environmentalists, Congress mandated a series of leasing moratoria in certain parts of the OCS, which grew to include the Eastern Gulf of Mexico. The FY1984 Interior Appropriations Act prohibited leasing in any Eastern Gulf areas within 30 nautical miles of the baseline of the territorial sea and in other specified Eastern Gulf blocks. From FY1989 through FY2008, the annual Interior appropriations laws consistently included moratoria in the portion of the Eastern Gulf south of 26\u00c2\u00b0 N latitude and east of 86\u00c2\u00b0 W longitude. ", "Separately, President George H. W. Bush issued a presidential directive in 1990 ordering DOI not to conduct offshore leasing or preleasing activity in multiple parts of the OCS\u00e2\u0080\u0094including portions of the Eastern Gulf\u00e2\u0080\u0094until after 2000. In 1998, President Bill Clinton used his authority under Section 12(a) of the Outer Continental Shelf Lands Act (OCSLA) to extend the presidential offshore leasing prohibitions until 2012. President Clinton's order expanded the portion of the Eastern Gulf withdrawn from leasing consideration. The withdrawals designated during the Clinton Administration lasted until President George W. Bush modified them in 2008 to open multiple withdrawn areas to leasing. By that time, GOMESA had been enacted, so President Bush's action did not open the Eastern Gulf moratorium area to leasing."], "subsections": []}, {"section_title": "Distribution of Gulf Revenues Prior to GOMESA", "paragraphs": ["Before GOMESA's enactment, federal revenues from oil and gas leasing in most parts of the Gulf were not shared with coastal states. The exception was revenue from leases in certain nearshore federal waters: under Section 8(g) of the OCSLA (as amended), states receive 27% of all OCS receipts from leases lying wholly or partly within three nautical miles of state waters. Gulf Coast states argued for a greater share of the OCS revenues based on the significant effects of oil and gas development on their coastal infrastructures and environments. The states compared the offshore revenue framework to that for onshore public domain leases. Under the Mineral Leasing Act of 1920, which governs onshore oil and gas development, states generally receive 50% of all rents, bonuses, and royalties collected throughout the state, less administrative costs."], "subsections": []}]}, {"section_title": "GOMESA's Provisions", "paragraphs": ["GOMESA was signed into law on December 20, 2006. Sections 101 and 102 of the law contain a short title and definitions. Section 103 directs that two areas in the Central and Eastern Gulf be offered for oil and gas leasing shortly after enactment. These mandated lease sales took place in 2007-2009, and this provision of GOMESA has not been a focus of current congressional interest. Current interest has focused on Section 104 of the law, which imposes a moratorium on oil and gas leasing in certain parts of the Gulf, and Section 105, which contains provisions for revenue sharing from qualified leases with four states and their coastal political subdivisions, as well as with the LWCF's state assistance program."], "subsections": [{"section_title": "Section 104: Eastern Gulf Moratorium", "paragraphs": ["Section 104 of GOMESA states that, from the date of the law's enactment through June 30, 2022, the Secretary of the Interior is prohibited from offering certain areas, primarily in the Eastern Gulf, for \"leasing, preleasing, or any related activity.\" The moratorium encompasses (1)\u00c2\u00a0areas east of a designated Milit ary Mission Line , defined in the law as the north-south line at 86\u00c2\u00b041\u00ca\u00b9\u00c2\u00a0W longitude; (2) all parts of the Eastern Gulf planning area that lie within 125 miles of the Florida coast; and (3) certain portions of the Central Gulf planning area, including any parts within 100 miles of the Florida coast, as well as other specified areas. The resulting total moratorium formed by these overlapping areas is shown in gray in Figure 1 . Section 104 also allows for holders of existing oil and gas leases in some parts of the moratorium area to exchange the leases for a bonus or royalty credit to be used in the Gulf of Mexico.", "Section 104 prohibits not only lease sales in the moratorium area but also \"preleasing\" and other related activities. BOEM has clarified that such preleasing and related activities are not interpreted to include geological and geophysical (G&G) activities\u00e2\u0080\u0094such as seismic surveys\u00e2\u0080\u0094undertaken to locate resources with the potential to produce commercial quantities of oil and gas. BOEM interprets GOMESA to allow these G&G surveys in the moratorium area.", "The moratorium imposed by Section 104 expires on June 30, 2022. The 116 th Congress is debating whether to allow the moratorium to expire as scheduled or to amend GOMESA (or enact other legislation) to potentially further restrict federal oil and gas activity in this area. The following sections discuss scenarios for future leasing in the area under current provisions, legislative proposals to provide for other outcomes, and selected issues for Congress related to the moratorium provisions."], "subsections": [{"section_title": "Scenario Under Current Statutory Framework", "paragraphs": ["Absent further action by Congress, after June 30, 2022, the executive branch could potentially offer new oil and gas leases in the expired moratorium area. Under the OCSLA, the Secretary of the Interior could decide to include or exclude the area in future five-year offshore oil and gas leasing programs, based on specified criteria. The OCSLA also gives the President discretion to withdraw the area, temporarily or indefinitely, from leasing consideration, which would render it unavailable for inclusion in a DOI leasing program.", "The Trump Administration has indicated interest in pursuing oil and gas leasing in the GOMESA moratorium area after the moratorium's expiration. BOEM's initial draft of a five-year oil and gas leasing program for 2019-2024 (referred to as the \"draft proposed program\" or DPP) includes two lease sales in the moratorium area, one in 2023 and one in 2024. The DPP proposes to offer all available tracts in the former moratorium area after the expiration. BOEM also indicated that it would analyze two secondary options that would exclude some portions of the moratorium area from the lease sales ( Figure 2 ). ", "First, BOEM is analyzing a potential \"coastal buffer\" off Florida\u00e2\u0080\u0094at distances of 50, 75, 100, or 125 miles\u00e2\u0080\u0094to accommodate military activities and nearshore use. Second, BOEM is separately analyzing a potential 15-mile leasing buffer offshore of Baldwin County, AL, to minimize visual and other impacts to onshore coastal areas. The next draft of the 2019-2024 program is expected to reflect the results of BOEM's analysis. Under the planning process for the program, which is governed by requirements of both the OCSLA and the National Environmental Policy Act, sales listed in the DPP could be retained, modified, or removed in subsequent drafts of the program.", "In deciding whether to include the sales (either in their current form or with modifications) in the final leasing program, the Secretary of the Interior must weigh economic, social, and environmental criteria. Among the factors the Secretary must consider under the OCSLA are coastal state governors' views on leasing off their coasts. Recent governors of Florida, the state most closely adjacent to the moratorium area, generally have expressed opposition to leasing in this area. Governors of other Gulf Coast states\u00e2\u0080\u0094Alabama, Louisiana, Mississippi, and Texas\u00e2\u0080\u0094generally have expressed support for oil and gas leasing in the Eastern Gulf.", "The Secretary also must consider the views of other affected federal agencies. One key agency\u00e2\u0080\u0094DOD\u00e2\u0080\u0094historically has opposed new leasing in the area, due to DOD's use of this part of the Gulf as a military testing and training ground (see \" Military Readiness \"). Both DOD and the Gulf producing states, along with some Members of Congress and many other stakeholders, submitted public comments on the 2019-2024 DPP. These comments are to be taken into account in the second draft of the program. Another round of public comment is expected to be solicited before the program could be finalized. ", "The oil and gas industry has indicated interest in leasing in the moratorium area. Some industry representatives have stated that the Eastern Gulf represents a more attractive leasing prospect than other OCS areas currently unavailable for leasing (e.g., the Pacific and Atlantic regions) because data on the Eastern Gulf are better developed than for these other areas, and nearby infrastructure is already in place to facilitate exploration and development. Industry representatives have expressed particular interest in the deepwater Norphlet play, which spans parts of the Eastern and Central Gulf. "], "subsections": []}, {"section_title": "Legislative Proposals", "paragraphs": ["A number of legislative proposals in the 116 th Congress have sought to extend GOMESA's moratorium or permanently prohibit leasing in the moratorium area. By contrast, other legislation would mandate lease sales in the area directly following the moratorium's current expiration date. Table 2 summarizes provisions of relevant 116 th Congress bills. Two of these bills, H.R. 4294 and S. 13 , include provisions affecting GOMESA revenue sharing, discussed further in Table 5 .", "One proposal related to the moratorium has passed the House of Representatives in the 116 th Congress: H.R. 205 , the Protecting and Securing Florida's Coastline Act of 2019. The bill would amend GOMESA\u00e2\u0080\u0089to extend the Eastern Gulf moratorium indefinitely, thus precluding future oil and gas leasing in the area. In its report on the bill, the House Natural Resources Committee stated that a continued moratorium is necessary because leasing in the Eastern Gulf would compromise military readiness and \"pose existential threats to Florida's tourism, fishing, and recreation economy, which rely on clean water and healthy beaches.\" In dissenting views, some committee members contended that oil and gas leasing in the area could successfully coexist with fishing, tourism, and military operations, and pointed to the role of Gulf oil and gas revenues in funding environmental restoration activities and land protection.", "Bills in earlier Congresses sought other types of outcomes related to the GOMESA moratorium. For example, some legislation would have enabled leasing in portions of the moratorium area before the 2022 expiration date, effectively shrinking the moratorium area. Other legislation would have prohibited some activities in the moratorium area that are not currently restricted by GOMESA, such as seismic surveys or research on potential areas for offshore drilling. These proposals have not been included to date in 116 th Congress legislation."], "subsections": []}, {"section_title": "Selected Issues", "paragraphs": [], "subsections": [{"section_title": "Economic and Budgetary Considerations", "paragraphs": ["An extension of GOMESA's leasing prohibitions could result in a loss to the government of future federal revenues (to the extent that leasing and commercial production would otherwise take place when the moratorium expires). Also, some oil and gas industry advocates have contended that future development in the Eastern Gulf could contribute billions of dollars annually to the nation's gross domestic product, mainly through contributions to Gulf state economies, which they contend would be lost were the moratorium to continue. By contrast, some in the commercial fishing, tourism, and recreation sectors have focused on potential economic costs to these sectors if oil and gas development takes place off the coast of Florida, with particular emphasis on potential financial losses if a major oil spill were to occur. They point to estimates showing significant costs to these industries from the 2010 Deepwater Horizon oil spill. Other stakeholders express concern that any oil and gas activities in these areas would contribute to greenhouse gas emissions and human-induced climate change, with accompanying direct and indirect costs.", "The Congressional Budget Office (CBO) has estimated certain budgetary effects of a moratorium extension in relation to budget projections under existing law. CBO has estimated that bills to extend the moratorium would reduce offsetting receipts and thus increase direct federal spending. As a result, such bills may be subject to certain budget points of order unless offset or waived. For example, for the version of H.R. 205 reported by the House Committee on Natural Resources, CBO estimated that the bill's extension of GOMESA's moratorium would increase direct spending by $400 million over 10 years."], "subsections": []}, {"section_title": "Military Readiness", "paragraphs": ["The extent to which the GOMESA moratorium is needed for U.S. military readiness also has been at issue. The area east of the Military Mission Line in the Eastern Gulf provides about 101,000 square miles of surface area and overlying air space, which is the largest overwater DOD test and training area in the continental United States. DOD historically has expressed a need for an oil and gas leasing moratorium in this area. For instance, in 2006, DOD stated that its testing and training activities in the Eastern Gulf were \"intensifying\" and required\u00e2\u0080\u0089\"large, cleared safety footprints free of any structures on or near the water surface.\" In 2017, DOD wrote that the agency \"cannot overstate the vital importance of maintaining this moratorium.... Emerging technologies such as hypersonics, autonomous systems, and advanced sub-surface systems will require enlarged testing and training footprints, and increased DoD reliance on the Gulf of Mexico Energy Security Act's moratorium beyond 2022.\" More recently, in a 2018 report to Congress on preserving military readiness in the Eastern Gulf, DOD wrote:", "No other area in the world provides the U.S. military with ready access to a highly instrumented, network-connected, surrogate environment for military operations in the Northern Arabian Gulf and Indo-Pacific Theater. If oil and gas development were to extend east over the [Military Mission Line], without sufficient surface limiting stipulations and/or oil and gas activity restrictions mutually agreed by the DoD and Department of Interior (DoI), military flexibility in the region would be lost and test activities severely affected.", "Some Members of Congress and other stakeholders have interpreted the wording of the 2018 report\u00e2\u0080\u0094particularly its phrase \"without sufficient surface limiting stipulations and/or oil and gas activity restrictions\"\u00e2\u0080\u0094as signaling a greater DOD openness to oil and gas activities in the moratorium area than had been expressed in some earlier DOD communications. The phrasing might be read to suggest that military readiness and oil and gas development could be mutually accommodated, given appropriate stipulations and restrictions. Oil and gas leases awarded in the Central and Western Gulf often contain stipulations related to military activities, such as those requiring the lessee to assume risks of damage from military activities, to control electromagnetic emissions in defense warning areas, to consult with military commanders before entering some areas, and/or to evacuate areas as needed for military purposes. BOEM also typically reserves the right to temporarily suspend a lease in the interest of national security. ", "The 2018 report does not clarify what types of lease stipulations and restrictions might be necessary to accommodate the more intensive testing and training activities in the Eastern Gulf. The report states that some military activities in this area may be incompatible with the presence of fixed or mobile oil platforms. The report expresses concerns that increased vessel traffic and underwater noise could jeopardize some military activities. It also discusses concerns about potential foreign observation of DOD activities, if foreign entities are allowed to control offshore assets or otherwise conduct business near military ranges in the Eastern Gulf. If these military concerns were to lead to more stringent restrictions on oil and gas operations than are mandated in other parts of the Gulf, a question would be how such restrictions might affect industry interest in bidding on leases in the Eastern Gulf. In its cost estimate for H.R. 205 , CBO identified defense-related constraints (and the potential incompatibility of some development with Florida's Coastal Management Program) as factors that could reduce the value of Eastern Gulf leases to industry bidders. However, some industry representatives have expressed consistent interest in leasing in the area and have contended that economic returns on leases in this area would be substantial, despite potential restrictions related to military activities. "], "subsections": []}]}]}, {"section_title": "Section 105: Revenue Sharing", "paragraphs": ["Section 105 of GOMESA provides for federal revenues from certain qualified leases in the Gulf of Mexico to be shared under specified terms with four Gulf producing states\u00e2\u0080\u0094Alabama, Louisiana, Mississippi, and Texas\u00e2\u0080\u0094and their \"coastal political subdivisions\" or CPSs (e.g., coastal counties or parishes), as well as with the LWCF state assistance program. Specifically, each year the Secretary of the Treasury is to deposit 50% of qualified revenues in a special account (the remaining 50% are deposited in the General Fund of the U.S. Treasury as miscellaneous receipts). From this special account, the Secretary disburses 75% of funds to the Gulf producing states and their CPSs, and 25% to the LWCF state assistance program. Accordingly, of the total qualified revenues in a given year, the states and CPSs receive 37.5% (i.e., 75% of the 50% in the special account), and the LWCF receives 12.5% (25% of the 50%). ", "The law's definition of \"qualified\" OCS revenues differs for the first decade after GOMESA's enactment (FY2007-FY2016) versus for subsequent years. For FY2007-FY2016 (often referred to as GOMESA's Phase I), the law defines qualified OCS revenues to include all bonus bids, rents, royalties, and other sums due and payable to the United States from leases in the Eastern Gulf and the Central Gulf's 181 South Area entered into on or after the date of GOMESA's 2006 enactment. These are the relatively small areas shown as areas A and B in Figure 1 . For FY2017 and beyond (Phase II), the geographic area of qualified revenues expands. In addition to revenues from post-2006 leases in the Phase I areas, the qualified revenues in Phase II include those from post-2006 leases in the Central Gulf's portion of the 181 Area, shown as area\u00c2\u00a0C in Figure 1 . The Phase II qualified revenues also include the \"2002-2007 planning area\"\u00e2\u0080\u0094the large area shown in yellow in Figure 1 , encompassing most of the Western and Central Gulf, where the bulk of production takes place. Accordingly, revenues qualified for sharing in Phase II are likely to be notably higher than in Phase I ( Table 3 ). ", "For the added Phase II areas, Section 105 stipulates that the total amount of qualified revenues made available each year to the states and their CPSs and the LWCF (collectively) shall not exceed $500 million for each of FY2016-FY2055. A later law, P.L. 115-97 , raised the cap to $650 million for two of these years, FY2020 and FY2021. Given the percentage distributions specified in the law for each recipient, the amounts that can be shared with states and their CPSs from the added Phase II areas are capped at $375.0 million in most years (and $487.5 million in FY2020 and FY2021). The amounts that can be shared with the LWCF are capped at $125.0 million in most years (and $162.5 million in FY2020 and FY2021). ", "Phase II began with FY2017 revenues, but GOMESA specifies that revenues shall be shared with recipients in the fiscal year immediately following the fiscal year in which they are received. Thus, in terms of payments, the first fiscal year reflecting Phase II revenue sharing was FY2018. The shared revenues rose notably in that year compared with previous years. Table 3 shows GOMESA revenue distributions since the law's enactment, with the transition from Phase I distributions to Phase II distributions occurring between FY2017 and FY2018. ", "GOMESA directs the Secretary of the Interior to establish a formula to allocate each year's qualified state revenues among the four Gulf producing states and their CPSs. The allocations to each state primarily depend on its distance from leased tracts, with states closer to the leased tracts receiving a higher share. The law additionally provides that each state must receive an annual minimum of at least 10% of the total amount available to all the Gulf producing states for that year. Further, GOMESA directs that the Secretary shall pay 20% of the allocable share of each Gulf producing state to the state's CPSs. See the box below for additional details on the state allocations.", "GOMESA authorizes the states and CPSs to use revenues for the following purposes: ", "Projects and activities for the purposes of coastal protection, including conservation, coastal restoration, hurricane protection, and infrastructure directly affected by coastal wetland losses. Mitigation of damage to fish, wildlife, or natural resources. Implementation of a federally approved marine, coastal, or comprehensive conservation management plan. Mitigation of the impact of OCS activities through the funding of onshore infrastructure projects. Planning assistance and the administrative costs of complying with GOMESA. (No more than 3% of a state or CPS's revenues may be used for this purpose.)", "The following sections discuss the scenario for GOMESA revenue sharing under the law's current provisions, summarize legislative proposals for changes, and explore selected issues."], "subsections": [{"section_title": "Scenario Under Current Statutory Framework", "paragraphs": ["Under GOMESA, revenue sharing with the states and LWCF continues indefinitely, and the annual cap on shared revenues from the Phase II areas continues through FY2055. After that year, all qualified Gulf revenues would be shared under the current formula\u00e2\u0080\u009437.5% to states and their CPSs and 12.5% to the LWCF\u00e2\u0080\u0094regardless of whether the shared amount from the Phase II areas exceeds $500 million.", "DOI, in its annual budget justifications, develops five-year projections of qualified GOMESA revenues. Table 4 shows DOI projections for FY2020-FY2024 shared revenues (which are half of all qualified revenues), by revenue collection year. The revenues collected in a given year would be shared with the states and LWCF in the following fiscal year. In general, the DOI projections for a given year have not always been consistent over time. Changing oil prices have been a major factor in revised projections.", "Under the current scenario, the majority of the moratorium area\u00e2\u0080\u0094the portion shown in gray in Figure 1 \u00e2\u0080\u0094does not qualify for revenue sharing, even after the moratorium ends in June 2022. Instead, any revenues from oil and gas leasing and development in this area after the moratorium expires would go entirely to the Treasury. Also, GOMESA does not provide for revenue sharing with Florida, although some of the qualified revenue-sharing areas\u00e2\u0080\u0094such as portions of the 181 Area\u00e2\u0080\u0094are closer to Florida than to the other Gulf producing states."], "subsections": []}, {"section_title": "Legislative Proposals", "paragraphs": ["In the 116 th Congress, several bills would amend GOMESA to increase the portion of qualified revenues shared with the Gulf producing states by raising the states' percentage share, eliminating the revenue-sharing cap, or both. Some legislation also would expand the purposes for which states may use the GOMESA revenues, modify the uses of the LWCF share, or add Florida to the revenue-sharing arrangement. Table 5 describes selected relevant bills and their provisions. None of the bills has been reported from committee in the 116 th Congress.", "In contrast with bills that would increase the state revenue share, some legislative proposals in earlier Congresses would have ended state revenue sharing under GOMESA. For example, in the 114 th Congress, would have amended GOMESA to provide that 87.5% of qualified revenues under the law would be deposited in the Treasury's General Fund, while 12.5% would continue to be provided for LWCF financial assistance to states. This proposal is similar to some legislative proposals in DOI budget requests under the Obama and Trump Administrations (see \" Determining the Appropriate State Share \")."], "subsections": []}, {"section_title": "Selected Issues", "paragraphs": [], "subsections": [{"section_title": "Determining the Appropriate State Share", "paragraphs": ["Members of Congress differ in their views on the extent to which Gulf Coast states should share in revenues derived from oil and gas leasing in federal areas of the Gulf. State officials from the Gulf producing states and some Members of Congress have expressed that the Gulf producing states should receive a higher share than is currently provided under GOMESA, given the costs they incur to support offshore extraction activities. These stakeholders have argued that the revenues are needed to mitigate environmental impacts and to maintain the necessary support structure for the offshore oil and gas industry. For example, at a 2018 hearing of the House Committee on Natural Resources, former Senator Mary Landrieu stated: \"It is important to note that revenue sharing was established \u00e2\u0080\u00a6 to recognize the contributions that states and localities make to facilitate the extraction and production of these resources, including the provision of infrastructure to enable the federal activity: transportation, hospitals, schools and other necessary governmental services.\" Advocates have emphasized that Gulf Coast areas, especially coastal wetlands, face significant environmental challenges, owing in part to hydrocarbon development (among other activities). These advocates have contended that additional federal revenues are critical to address environmental challenges and economic impacts of wetland loss. Advocates point to a disparity between the 37.5% state share provided under GOMESA and the 50% share of revenues that most states receive from onshore public domain leases under the Mineral Leasing Act. They contend that a comparable state revenue share under GOMESA would significantly contribute to coastal wetland restoration, given GOMESA's requirement that the Gulf producing states use the funding to address coastal protection, damage mitigation, and restoration (and given comparable requirements under some state laws).", "By contrast, some other Members of Congress, as well as the Obama and Trump Administrations at times, have contended that GOMESA revenue sharing with the states should be reduced or eliminated to facilitate use of these revenues for broader national purposes. They have argued that, since the OCS is a federal resource, the benefits from offshore revenues should accrue to the nation as a whole, rather than to specific coastal states. Under the Obama Administration, DOI budget requests for FY2016 and FY2017 recommended that Congress repeal GOMESA state revenue-sharing payments and direct a portion of the savings to programs that provide \"broad \u00e2\u0080\u00a6 benefits to the Nation,\" such as a proposed new Coastal Climate Resilience Program \"to provide resources for at-risk coastal States, local governments, and their communities to prepare for and adapt to climate change.\" Legislation in the 114 th Congress ( S. 2089 ; see \" Legislative Proposals \") would have amended GOMESA to eliminate the state revenue sharing and provide for the state share to go to the Treasury's General Fund. For FY2018, the Trump Administration proposed that Congress repeal GOMESA's state revenue-sharing provisions, in order to \"ensure [that] the sale of public resources from Federal waters owned by all Americans, benefit all Americans.\" The Trump Administration has not included similar proposals in subsequent budget requests, and no legislation to reduce or eliminate GOMESA state revenue sharing has been introduced to date in the 116 th Congress. "], "subsections": []}, {"section_title": "Set of Leases Qualified for Revenue Sharing", "paragraphs": ["Although Phase II of GOMESA considerably expanded the set of leases contributing to revenue sharing, some Gulf leases still do not qualify, because the law applies only to leases that were entered into on or after the date of GOMESA's enactment (December 20, 2006). It appears from 2019 leasing data maintained by BOEM that approximately 61% of the more than 2,500 active leases in the Gulf of Mexico were entered into on or after the enactment date, and thus would qualify for revenue sharing under GOMESA's current terms. However, the majority of these newer leases are not producing oil and gas; and leases awarded before GOMESA's enactment\u00e2\u0080\u0094which do not qualify\u00e2\u0080\u0094continue to contribute a substantial portion of production royalties. For this reason, the percentage of Gulf revenues subject to GOMESA sharing is much smaller than the percentage of Gulf leases subject to GOMESA sharing. For example, of federal offshore revenues disbursed in FY2019 (the high majority of which come from the Gulf), GOMESA-qualified revenues\u00e2\u0080\u0094including those distributed to states and their CPSs, the LWCF state grant program, and the Treasury combined\u00e2\u0080\u0094constituted 18% of the total. The percentage of total revenues that qualify for sharing under GOMESA might be expected to increase over time, to the extent that older leases gradually terminate and current and future leases begin producing. ", "Some Members of Congress have proposed that GOMESA's terms be altered to include an expanded set of leases in the qualified sharing group. For instance, in the 116 th Congress, S. 2418 would amend GOMESA to define the qualified leases as those entered into on or after October 1, 2000, rather than after GOMESA's 2006 enactment. According to BOEM data as of November 2019, this would more than double the number of producing leases eligible for GOMESA revenue sharing (although the addition in total leases would be relatively small). The result could be a higher revenue share with the states and their CPSs and the LWCF state grant program. Some other Members do not favor this type of change because it could reduce the portion of offshore revenues going to the Treasury for other federal purposes. "], "subsections": []}, {"section_title": "Revenue Amounts and Adequacy for Legislative Purposes", "paragraphs": ["Offshore oil and gas revenues support a variety of federal and state activities, through amounts deposited annually in the LWCF and the Historic Preservation Fund (HPF) and through revenues shared with states under revenue-sharing laws. Revenue totals have fluctuated from year to year ( Table 1 ), raising questions about whether future revenues will be adequate to support these various activities and whether new legislation for offshore revenue distribution would strain available amounts. For example, some Members of Congress have considered whether raising GOMESA's state revenue share would result in insufficient funds to meet statutory requirements for deposits to the LWCF and HPF. Alternatively, some Members have questioned whether proposals to use offshore revenues for new conservation programs would reduce state sharing under GOMESA and jeopardize programs supported by the state-shared funds.", "Thus far, in each year since GOMESA's enactment, OCS revenues have been sufficient to provide for all distributions under current law. If bills in Table 5 were enacted to raise the GOMESA state revenue share to 50% and eliminate the revenue-sharing cap for states, it appears that, based on DOI projections for FY2020-FY2024, OCS revenues remaining after state sharing would still be more than sufficient to meet statutory requirements for deposits to the LWCF and HPF in these years. Various economic factors or policy decisions could affect these DOI projections, and under some theoretical scenarios, enactment of bills to increase the state share could affect the sufficiency of revenues to cover other legislative requirements. ", "Similarly, under some scenarios, legislative proposals to fund new conservation programs with offshore revenues could affect amounts shared with the states under GOMESA. Whether this would occur would depend partly on the terms of the legislative proposals. For example, S. 500 and H.R. 1225 in the 116 th Congress would establish a new deferred maintenance fund for specified federal lands supported partly by offshore energy revenues. These proposals address the issue of revenue availability by specifying that the new deferred maintenance fund would draw only from miscellaneous receipts deposited to the Treasury after other dispositions are made under federal law. That is, if revenues were insufficient to provide for the funding amounts specified under these bills along with the other distributions required in law, it appears that the requirements of current laws (including GOMESA) would be prioritized. ", "Also relevant are proposals by some Members of Congress and other stakeholders to significantly curtail or end OCS oil and gas leasing, in response to climate change concerns. Depending on the extent to which offshore production decreased, such policy changes could result in an insufficiency of revenues to meet all statutory requirements, especially over the long term as production from existing leases diminished. Some supporters of reducing or eliminating federal offshore oil and gas leasing have suggested that other revenue sources, such as from an expansion of renewable energy leasing on federal lands, should be found for desired federal programs. Some opponents of curtailing offshore oil and gas leasing have pointed to the revenue implications as an argument against such actions. "], "subsections": []}, {"section_title": "Budgetary Considerations", "paragraphs": ["Bills that would increase the state share of GOMESA revenues\u00e2\u0080\u0094by giving the states a higher revenue percentage, eliminating revenue-sharing caps, or both\u00e2\u0080\u0094have been identified by CBO as increasing direct spending. For example, in cost estimates for 115 th Congress legislation\u00e2\u0080\u0094which would have made similar state-sharing changes to those proposed in H.R. 3814 , H.R. 4294 , and S. 2418 ( Table 5 )\u00e2\u0080\u0094CBO estimated that these changes would increase direct spending of OCS receipts by $2.1 billion over a 10-year period. As a result, such legislation may be subject to certain budget points of order unless offset or waived. As of January 2020, CBO has not released cost estimates for the 116 th Congress bills discussed in Table 5 (none of which has been reported from committee), and it is unclear how CBO would estimate costs associated with those bills or whether some provisions in those bills might be estimated to offset costs of other provisions. For example, H.R. 4294 contains provisions to repeal presidential withdrawals of offshore areas from leasing consideration and to facilitate offshore wind leasing in U.S. territories, among others. CBO scored similar provisions in 115 th Congress bills as increasing offsetting receipts (and thus partly offsetting bill costs)."], "subsections": []}, {"section_title": "Florida and Revenue Sharing", "paragraphs": ["Under GOMESA's current provisions, Florida is not among the Gulf producing states eligible for revenue sharing. Some proposals, including S. 13 in the 116 th Congress, would add Florida to the group of states receiving a revenue share. Because the high majority of Gulf leasing takes place in the Western and Central Gulf planning areas, which do not abut Florida, Florida's share of GOMESA revenues if S. 13 were enacted would likely be lower than those of the other Gulf Coast states, especially Louisiana and Texas. Nonetheless, since GOMESA provides that every Gulf producing state must receive at least 10% of the annual state revenue share, adding Florida to the Gulf producing states would provide at least that portion of GOMESA revenues for Florida and would correspondingly reduce the total available to the other Gulf producing states. ", "Some Florida stakeholders have opposed legislation to add Florida to GOMESA revenue sharing on the basis that doing so could incentivize eventual oil and gas development off Florida. Others support a continued moratorium off Florida and support giving Florida a revenue share from leasing elsewhere in the Gulf. These stakeholders contend that Florida bears risks from oil and gas leasing elsewhere in the Gulf (particularly related to potential oil spills) and so should also see benefits. This position is captured in S. 13 , which would extend the GOMESA moratorium through 2027 and add Florida as a revenue-sharing state. Still others support adding Florida as a revenue-sharing state as part of a broader change to allow leasing and revenue sharing in areas offshore of Florida. Supporters of this approach, including some from the current Gulf producing states, may contend that an increase in the number of states that share GOMESA revenues should be accompanied by a growth in the area qualified for revenue sharing to reduce the likelihood of a smaller share for the original four states. "], "subsections": []}]}]}]}, {"section_title": "Conclusion", "paragraphs": ["The current period is one of transition for the oil and gas leasing framework established by GOMESA for the Gulf of Mexico. First, the Eastern Gulf leasing moratorium is set to expire in 2022, and BOEM is proposing offshore lease sales for the moratorium area starting in 2023. Second, the Gulf leases subject to revenue sharing expanded substantially starting in FY2017, and DOI projects revenues from these areas will approach or reach GOMESA's revenue-sharing cap in FY2024. Congress is considering whether GOMESA's current provisions will best meet federal priorities going forward, or whether changes are needed to achieve various (and sometimes conflicting) national goals. ", "Regarding the moratorium provisions, a key question is whether decisions about leasing in the Eastern Gulf should be legislatively mandated or left to the executive branch to control. Absent any legislative intervention, after June 2022, the President and the Secretary of the Interior are to decide whether, where, and under what terms to lease tracts in the former moratorium area, following the statutory provisions of the OCSLA. Some Members of Congress seek to amend GOMESA\u00e2\u0080\u0094either to extend the moratorium or to mandate lease sales in the area\u00e2\u0080\u0094rather than deferring to the OCSLA's authorities for executive branch decisionmaking. At stake are questions of regional and national economic priorities, environmental priorities, energy security, and military security.", "With respect to Gulf oil and gas revenues, GOMESA's current revenue-sharing provisions take into account multiple priorities: mitigating the impacts of human activities and natural processes on the Gulf Coast (through state revenue shares directed to this purpose); supporting conservation and outdoor recreation nationwide (through the LWCF state assistance program); and contributing to the Treasury. For the most part, legislative proposals to change the terms of GOMESA revenue distribution have supported some or all of these priorities but have sought to change the balance of revenues devoted to each purpose. Also at issue are proposals to use the revenues for new (typically conservation-related) purposes outside the GOMESA framework, as well as proposals to substantially reduce or eliminate Gulf oil and gas production\u00e2\u0080\u0094with corresponding revenue implications\u00e2\u0080\u0094in the context of addressing climate change. The 116 th Congress is debating such questions as it considers multiple measures to amend GOMESA. "], "subsections": []}]}}
{"id": "R46329", "title": "Treasury and Federal Reserve Financial Assistance in Title IV of the CARES Act (P.L. 116-136)", "released_date": "2020-04-28T00:00:00", "summary": ["The Coronavirus Aid, Relief, and Economic Security Act (CARES Act; H.R. 748 ) was signed into law as P.L. 116-136 on March 27, 2020, to assist those affected by the economic impact of Coronavirus Disease 2019 (COVID-19). This assistance is targeted to consumers, businesses, and the financial services sector. A key part of this assistance is provided to eligible businesses, states, and municipalities in Division A, Title IV of the CARES Act.", "Title IV allocates $500 billion to the Treasury Department (through the Exchange Stabilization Fund) to make loans and guarantees for three specified industries\u00e2\u0080\u0094passenger airlines, cargo airlines, and businesses critical to national security\u00e2\u0080\u0094and to support Federal Reserve lending facilities. Some have characterized this as a \"bailout\" of private industry; others assert it is necessary to avoid employment losses and maintain economic stability. Of the $500 billion, Treasury can make up to $25 billion available to passenger airlines, up to $4 billion to cargo airlines, and up to $17 billion to businesses critical to maintaining national security. Treasury can make the remainder\u00e2\u0080\u0094up to $454 billion, plus whatever is not used to assist the specified industries\u00e2\u0080\u0094available to the Federal Reserve. The authority to enter into new transactions terminates on December 31, 2020. Recipients are legally required to repay assistance with interest, although the ultimate subsidy involved will not be known until terms, such as interest rates and fees, have been decided and it becomes clear to what extent firms are able to repay.", "Title IV also provides up to $32 billion to continue payment of employee wages, salaries, and benefits at airline-related industries. The Treasury Secretary has discretion to determine what compensation to seek for this assistance and has reportedly chosen not to seek compensation from smaller recipients. According to Treasury, 93 air carriers had received $12.4 billion under the Payroll Support Program as of April 25, 2020.", "Most funding under Title IV has been used to backstop a series of Federal Reserve emergency programs created in response to COVID-19. These programs assist affected businesses or markets by making loans or purchasing assets. To date, the Fed has created programs to support markets for commercial paper, corporate bonds, municipal bonds, and asset-backed securities, as well as a loan program to help businesses with under 10,000 employees or under $2.5 billion in revenues maintain employment. To date, $215 billion of CARES Act funding has been made available by the Treasury to reimburse the Federal Reserve for potential losses on any transactions in these programs.", "This assistance carries a number of terms and conditions. All funding faces certain conditions, such as limiting eligibility to U.S. businesses, as defined by the act, and following rules to avoid conflicts of interest. Firms receiving loans, loan guarantees, or grants directly from Treasury must maintain at least 90% of March 24, 2020, employment levels; face controls placed on share buybacks, dividends, and executive salaries; and must provide Treasury specific compensation (e.g., warrants or equity). In addition, Title IV establishes a special inspector general and a Congressional Oversight Commission to oversee the operations carried out under the title. Finally, the key agencies involved in providing this assistance (i.e., the Federal Reserve and Treasury) and the Government Accountability Office must make available to the public and Congress a series of reports on operations under Title IV of the act."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction1", "paragraphs": ["Economic conditions have deteriorated rapidly as the spread of Coronavirus Disease 2019 (COVID-19) has led policymakers to limit or close public institutions and business operations, increasing financial hardship for many Americans due to layoffs or time off work. Financial institutions, their regulators, and other government agencies have responded by working with consumers to allow those affected by COVID-19 to temporarily alleviate their financial obligations. As losses continue to mount on businesses from lower consumer demand and rising unemployment, Congress has stepped in with legislation aimed at mitigating the economic impact of COVID-19. ", "On March 27, 2020, the President signed the Coronavirus Aid, Relief, and Economic Security Act (CARES Act; H.R. 748 ) into law as P.L. 116-136 . The CARES Act is a wide-ranging act to provide relief to consumers, small businesses, and certain industries amid the economic fallout of COVID-19. The law contains two divisions. Division A contains six titles aimed at making funds available to different entities through various programs, including rebate checks to taxpayers; loans to small businesses for payroll; protections for consumers with outstanding payments (e.g., mortgages, student loans, and rental and healthcare payments); loans and loan guarantees and other investments to help the financial industry and other selected industries; and other public funds for federal, state, local, and tribal government programs aimed at managing the disaster recovery from the national health crisis. Division B provides FY2020 supplemental appropriations for federal agencies to respond to COVID-19. (Hereinafter, title and section references in this report refer to Division A, unless otherwise specified.)", "Title IV of the CARES Act contains numerous provisions aimed broadly at stabilizing the economy and helping affected households and businesses. It has received considerable attention for containing funding for industry and financial services. Specifically, Section 4003 directs the Department of the Treasury (Treasury) and the Federal Reserve (Fed) to make up to $500 billion available to support various businesses in the aviation sector, as well as the financial system. Some have characterized this as a \"bailout\" of private industry; others assert it is necessary to avoid employment losses and maintain economic stability\u00e2\u0080\u0094the two views are not necessarily mutually exclusive. ", "Title IV also permits federal guarantees for uninsured bank deposits and money market funds, which are beyond the scope of this report. In addition to the financial assistance provided in Title IV, the CARES Act provides financial assistance to small businesses in Title I (including the Payroll Protection Program) and assistance to states and municipalities in Title V. See CRS Report R46284, COVID-19 Relief Assistance to Small Businesses: Issues and Policy Options , by Robert Jay Dilger, Bruce R. Lindsay, and Sean Lowry for information specifically about assistance targeting small businesses found in Title I of the CARES Act.", "This report provides an overview of Section 4003 and related provisions and explains the terms and conditions associated with the assistance. The report's Appendix compares these provisions to the 2008 Troubled Asset Relief Program (TARP)."], "subsections": []}, {"section_title": "Financial Assistance in Division A, Title IV7", "paragraphs": ["This report is about the Title IV provisions specifically designed to provide funding for eligible businesses, states, and municipalities, as defined by the act. In particular, Section 4027 appropriates $500 billion to the Exchange Stabilization Fund (ESF) for use by the Treasury Secretary, and Section 4003 allows Treasury to use the $500 billion to support eligible businesses, states, and municipalities that have suffered losses due to COVID-19. As discussed in the next section, Section 4003 allocates up to $46 billion for Treasury to directly provide loans and loan guarantees as follows: (1) not more than $25 billion for passenger air carriers (and certain related businesses), (2) not more than $4 billion for cargo air carriers, and (3) not more than $17 billion for businesses critical to maintaining national security. Treasury may make funds from the remaining $454 billion, plus any unpledged funding from the $46 billion, available to support Fed facilities to provide liquidity to the financial system through lending to eligible businesses, states, and municipalities (described in the \" Federal Reserve Emergency Facilities Backed by the CARES Act \" section, below). ", "Section 4029 terminates this authority on December 31, 2020, and allows outstanding loans and guarantees to be modified, restructured, or otherwise amended, subject to a restriction: the duration of assistance to the passenger air industry cannot be extended beyond five years from the initial origination date. ", "Section 4003 requires recipients to repay this assistance with interest, fees, and in some cases, compensation in the form of warrants, equity, or senior debt. Under the Federal Credit Reform Act (FCRA; P.L. 101-508 ), the Office of Management and Budget and the Congressional Budget Office are to estimate the subsidy associated with this assistance based on the difference between the present discounted value of both the assistance and income received by Treasury from principal and interest payments (along with other forms of compensation). The ultimate size of this subsidy will not be known until terms, such as interest rates and fees, have been decided and it becomes clear to what extent firms are able to repay. By contrast, Sections 4112, 4113, and 4120 provide up to $32 billion in grants to continue payment of employee wages, salaries, and benefits at airline-related industries. The Treasury Secretary has discretion whether to seek compensation for these grants.", "Treasury has broad discretion to decide how much of each part of the funding to make available to the specified industries or the Fed, in what form, and for what purpose. These funds are made available with certain terms and conditions, however (as discussed in the \" Terms and Conditions \" section, below). For example, Section 4004 sets executive compensation limits on certain companies receiving assistance; Section 4019 restricts eligible recipients of assistance to avoid conflicts of interest; Sections 4114 and 4116 limit recipient firms from taking certain actions; and Sections 4025 and 4115 prohibit conditioning assistance on entering into collective bargaining negotiations. ", "Additionally, several provisions provide enhanced oversight for the Title IV funding programs. Sections 4018 and 4020 establish a Special Inspector General and a Congressional Oversight Commission to monitor activities made pursuant to provisions in Title IV, and Section 4026 requires reports from the key agencies\u00e2\u0080\u0094namely Treasury and the Fed\u00e2\u0080\u0094on their Title IV activities.", "The next two sections will focus on the financial assistance provisions granted to specified industries and for Fed programs."], "subsections": [{"section_title": "Loans, Loan Guarantees, and Other Support for Selected Industries13", "paragraphs": ["Congress chose to make direct Treasury support available to three specific industries (passenger and cargo airline industries, as well as certain national security businesses) that it deemed particularly in need of support. This assistance was unlikely to meet certain statutory requirements for a Fed program (i.e., that Fed assistance be broadly based and not for the purpose of avoiding bankruptcy), and it comes with more terms and conditions than assistance for recipients of Fed programs supported by the CARES Act. The Title IV support for these industries comes in three main forms: loans and loan guarantees, tax holidays for certain excise taxes, and payroll grants for air carrier workers."], "subsections": [{"section_title": "Loans and Loan Guarantees", "paragraphs": ["Section 4003 makes up to $46 billion available for federal loans and loan guarantees directly from Treasury to the aviation sector and to businesses critical to maintaining national security:", "not more than $25 billion for passenger air carriers, eligible businesses certified to perform inspection, repair, replace, or overhaul services, and ticket agents; not more than $4 billion for cargo air carriers; and not more than $17 billion for \"businesses critical to maintaining national security\"\u00e2\u0080\u0094a term that the act does not further define. On April 10, 2020, the Treasury Secretary released information on which types of firms would be eligible under this definition. ", "The Treasury Secretary is required under Section 4006 to coordinate with the Transportation Secretary to make these loans. Other terms and conditions applying to this assistance are discussed in \" Terms and Conditions ,\" below."], "subsections": []}, {"section_title": "Suspension of Aviation Excise Taxes", "paragraphs": ["Section 4007 institutes a tax holiday under which no excise taxes will be imposed for the transportation of persons, the transportation of property (cargo), and aviation fuel after the date of enactment through calendar year 2020. These include a variety of taxes on airline passenger ticket sales, segment fees, air cargo fees, and aviation fuel taxes paid by both commercial and general aviation aircraft. They have been the primary revenue sources for the federal Airport and Airways Trust Fund."], "subsections": []}, {"section_title": "Air Carrier Worker Support", "paragraphs": ["Section 4120 appropriates $32 billion to assist aviation workers. From this amount, Section 4112 allows the Treasury Secretary to provide", "up to $25 billion for passenger air carriers, up to $4 billion for cargo air carriers, and up to $3 billion for contractors who provide ground services\u00e2\u0080\u0094such as catering services or on-airport functions\u00e2\u0080\u0094directly to air carriers. ", "All such assistance must be used exclusively for continuing the payment of employee wages, salaries, and benefits. Section 4117 gives the Treasury Secretary discretion to determine what compensation to seek for this assistance. Treasury announced it would not seek compensation from recipients receiving less than a minimum amount under the program. The Treasury Secretary is required to coordinate with the Transportation Secretary in implementing the relief for aviation workers. ", "Section 4113 indicates that eligible airlines or contractors would receive an amount equal to their 2019 second- and third-quarter (from April 1, 2019, through September 30, 2019) salaries and benefits. The law required the Treasury Secretary to publish streamlined and expedited procedures no later than 5 days from the enactment date and to make initial payments within 10 days from enactment to air carriers and contractors whose requests for such assistance are approved. If it were determined that the aggregate amount of eligible financial assistance exceeds the amount available, the Treasury Secretary would provide the available aid on a pro rata basis.", "On April 20, 2020, Treasury announced that airlines representing 95% of U.S. capacity were participating in the Payroll Support Program. On April 25, 2020, Treasury announced that 93 air carriers had received $12.4 billion to date."], "subsections": []}]}, {"section_title": "CARES Act Funding Available to the Federal Reserve23", "paragraphs": ["The Federal Reserve, as the nation's central bank, was created as a \"lender of last resort\" to the banking system when private sources of liquidity become unavailable. This role is minimal in normal conditions but has been important in periods of financial instability, such as the 2007-2009 financial crisis. Less frequently throughout its history, the Fed has also provided liquidity to firms that were not banks. In the financial crisis, the Fed created a series of temporary facilities to lend to or purchase securities of nonbank financial firms and markets under emergency authority found in Section 13(3) of the Federal Reserve Act (12 U.S.C. \u00c2\u00a7343). It has begun to do so again in response to COVID-19, even before enactment of the CARES Act.", "Although the CARES Act does not preclude the Fed from independently responding to COVID-19 using its own funds, it is left to the Treasury Secretary to decide whether and how much of the CARES Act funds to provide to the Fed and on what general terms. After deducting assistance provided to the three specified industries, the remainder of the $500 billion\u00e2\u0080\u0094at least $454 billion\u00e2\u0080\u0094is available for Treasury to make loans, loan guarantees, or investments in programs or facilities established by the Fed to \"provid(e) liquidity to the financial system that supports lending to eligible businesses, states, or municipalities.\" As noted in the \" Financial Assistance in Division A, Title IV \" section, eligible businesses and states are defined by the act. The Fed's facilities may make loans, purchase newly issued obligations (e.g., debt securities) directly from issuers in primary markets, or purchase seasoned obligations from investors in secondary markets. ", "The act provides Treasury and the Fed broad discretion on how to structure these programs or facilities. (Terms and conditions applying to this assistance are discussed in the section titled \" Terms and Conditions .\") Theoretically, the transactions could be structured in many different ways. In practice, Treasury has used CARES Act funding to make equity investments in Fed facilities, presumably as a backstop to cover any future losses, as described below."], "subsections": [{"section_title": "Federal Reserve Emergency Facilities Backed by the CARES Act", "paragraphs": ["Before enactment of P.L. 116-136 , Treasury had already made equity investments through the ESF in Fed emergency programs created in response to COVID-19. Because the CARES Act appropriated $500 billion to the ESF, these Fed programs are now, in effect, backed by CARES Act funding. The programs are the following:", "Commercial Paper Funding Facility (CPFF). The CPFF purchases newly-issued commercial paper from all types of U.S. issuers who cannot find private sector buyers. Commercial paper is short-term debt issued by financial firms (including banks), nonfinancial firms, and \"asset backed\" pass-through entities that purchase loans. Money Market Fund Liquidity Facility (MMLF ). The MMLF makes nonrecourse loans to financial institutions to purchase assets that money market funds are selling to meet redemptions. This reduces the probability of runs on money market funds caused by a fund's inability to liquidate assets. Primary Market Corporate Credit Facility (PMCCF ) and Secondary Market Corporate Credit Facility (SMCCF) . The Fed created two new facilities to support corporate bond markets\u00e2\u0080\u0094the PMCCF to purchase newly-issued corporate debt from issuers and the SMCCF to purchase existing corporate debt or corporate debt exchange-traded funds on secondary markets. The issuer must have material operations in the United States and cannot receive direct federal financial assistance related to COVID-19. Term Asset-Backed Securities Loan Facility (TALF). The TALF makes nonrecourse, three-year loans to private investors to purchase newly-issued, highly-rated asset-backed securities (ABS) backed by various nonmortgage loans. Eligible ABS include those backed by certain auto loans, student loans, credit card receivables, equipment loans, floorplan loans, insurance premium finance loans, small business loans guaranteed by the Small Business Administration (SBA), or servicing advance receivables. Main Street Lending Program (MSLP). The MSLP buys loans from depository institutions that are four-year loans to businesses with up to 10,000 employees or up to $2.5 billion in revenues. The loans to businesses would defer principal and interest repayment for one year, and the businesses would have to make a \"reasonable effort\" to retain employees. This program may be particularly attractive to businesses too large to qualify for SBA assistance. Municipal Liquidity Facility (MLF). The MLF purchases shorter-term state and municipal debt in response to higher yields and reduced liquidity in that market. The facility purchases only debt of states, larger counties (with at least 500,000 residents), and larger cities (with at least 250,000 residents).", "Some programs were announced with an overall size limit (see Table 1 ). During the 2008 financial crisis, however, actual activity typically did not match the announced size. These facilities extend the Fed's traditional \"lender of last resort\" role for banks to be the \"buyer of last resort\" for broad segments of financial markets that have become illiquid due to COVID-19 and \"lender of last resort\" for nonfinancial firms. To extend its traditional role, the Fed has used its Section 13(3) emergency lending authority. The Fed also used this authority to assist nonbank financial firms and markets in the 2008 financial crisis. The 2020 facilities go beyond the scope of the 2008 facilities by purchasing loans of nonfinancial businesses and debt of states and municipalities. In some programs, the Fed purchases securities in affected markets directly. In other programs, the Fed makes loans to financial institutions or investors to intervene in affected markets; these loans are typically made on attractive terms to incentivize activity, including by shifting the credit risk to the Fed.", "By law, the Fed must structure these facilities to avoid expected losses, and the facilities charge users interest and/or fees as compensation. To that end, Treasury has pledged ESF funds for each of these facilities to protect the Fed from future losses\u00e2\u0080\u0094although these losses would still be borne by the federal government. The Treasury Secretary approved each facility.", "The loans and asset purchases of the facilities are funded by the Fed using its resources but are backed by the ESF in the event of losses. The MSLP and the MLF were created after the CARES Act's enactment; the other facilities predate the CARES Act. When the CARES Act directed $500 billion to the ESF, all of these programs, in effect, became backed by the CARES Act. ", " Table 1 summarizes how much CARES Act funding has been pledged to each facility. In total, $215 billion has been pledged to date. ", "There has been talk of how the Fed can \"leverage\" the CARES Act funding of $454 billion (or more) into greater amounts of assistance by combining it with the Fed's funds. Although the use of this term is more colloquial than technical from a financial perspective, Table 1 illustrates how this is accomplished. For example, the MLF is planned to purchase up to $500 billion of assets using $35 billion of CARES Act funding."], "subsections": []}, {"section_title": "Tracking CARES Act Funding for Federal Reserve Programs", "paragraphs": ["As required by law, the Fed has issued reports to Congress describing the purpose and details of each facility. Total loans or asset purchases through the facilities are published weekly as part of the Fed's balance sheet. The Fed also announced that it would publicly report on transactions under CARES Act 13(3) facilities at least every 30 days. Details of the report are to include, \"names and details of participants in each facility; amounts borrowed and interest rate charged; and overall costs, revenues, and fees for each facility.\" In the past, the Fed has provided details on emergency facilities' activities in quarterly reports. "], "subsections": []}, {"section_title": "Assistance to States and Municipalities and Medium-Sized Businesses", "paragraphs": ["The act envisions the Fed using CARES Act funding to help two broad groups that had not been the targets of Fed emergency lending programs up to that point: (1) states (as defined by the act) and municipalities; and (2) medium-sized businesses , defined as those with between 500-10,000 employees, including nonfinancial businesses. The Fed has not lent to or purchased the securities of nonfinancial businesses and states and municipalities since the 1930s. \"Medium-sized\" businesses may be too small to issue publicly-traded debt securities that the Fed is purchasing through the PMCCF and SMCCF and too large to qualify for SBA assistance provided by the CARES Act. The act encourages, but does not require, the Fed to work with the Treasury Secretary to create programs assisting these two groups and does not limit Fed assistance to these two groups only. ", "In particular, Section 4003 presents a detailed proposal for assisting businesses with 500-10,000 employees. This proposal is not required by the act, but the Treasury Secretary \"shall endeavor to seek the implementation of\" a Fed facility that provides financing to banks and other lenders to make direct loans to U.S. \"eligible businesses\" (as defined) and nonprofits at an interest rate not higher than 2% and with no principal or interest due for six months to retain their workforces. There are a series of restrictions on the borrower.", "The intended recipient (businesses with up to 10,000 employees) and purpose (to maintain employment) of the proposed facility are similar to the Fed's MSLP (described above), which was formally announced on April 9, 2020, but was publicly discussed before enactment of the CARES Act. However, the terms differ. Section 4003 states that the medium-sized business proposal outlined does not preclude the Fed establishing the MSLP."], "subsections": []}]}, {"section_title": "Terms and Conditions41", "paragraphs": ["Section 4003 sets forth a number of terms and conditions for the assistance provided. Some of these provisions apply broadly to both assistance extended to the Fed and the specified industries, and others apply only to specified industries. Table 2 compares and contrasts the various terms and conditions for each of these programs. In addition, there are oversight and reporting requirements associated with the assistance, which are detailed in the section titled \" Oversight Provisions .\""], "subsections": [{"section_title": "Loan and Loan Guarantee Terms and Conditions for Specified Industries", "paragraphs": ["In an effort to ensure assistance is used to maintain employment levels and the ongoing viability of the recipient, Section 4003 loans and loan guarantees must satisfy several terms and conditions. To approve the loans, the Treasury Secretary must determine that other credit is not reasonably available to the applicant at the time of the transaction. The intended obligation must be prudently incurred by the borrower, and the loan must be sufficiently secured or made at a rate that reflects the risk of the loan or loan guarantee\u00e2\u0080\u0094to the extent practicable\u00e2\u0080\u0094and not less than an interest rate based on market conditions for comparable obligations prevalent prior to the outbreak of COVID-19. The duration of the loan must be as short as practicable\u00e2\u0080\u0094not to exceed five years. Further, Treasury may not issue a loan or loan guarantee unless it receives warrants, senior debt, or equity in the borrower.", "Additional terms and conditions apply to the loan or loan guarantee recipient. The agreement must provide that neither the borrower nor any affiliate may engage in stock buybacks, unless contractually obligated to do so, or pay dividends until 12 months after the date the loan is no longer outstanding. Until September 30, 2020, the borrower must maintain its employment levels as of March 24, 2020, to the extent practicable, and may not reduce its employment levels by more than 10% from the levels on that date. The borrower must certify that it is a U.S.-domiciled business with significant operations in and a majority of its employees based in the United States. The borrower must have incurred or must expect to incur covered losses such that the continued operations of the business are or would be jeopardized, as determined by the Treasury Secretary. ", "Section 4004 states that Treasury may enter into an agreement to make a loan only if the borrower agrees to specified limitations on the compensation and severance pay of executives and employees whose total compensation exceeded $425,000 in calendar year 2019. Total compensation, as defined in the act, is capped at the individual's 2019 compensation level, or if compensation exceeds $3 million, it is also capped at $3 million plus 50% of the 2019 compensation level above $3 million. Further, severance pay for those individuals is capped at twice the individual's 2019 compensation level.", "Section 4005 establishes an air carrier's service obligation. It requires an air carrier receiving financial assistance under the act to maintain scheduled air transportation service, as the Transportation Secretary deems necessary, to ensure services to any point served by that air carrier before March 1, 2020, taking into consideration the air transportation needs of small and remote communities and the needs of healthcare and pharmaceutical supply chains. Such authority and any requirements issued shall terminate on March 1, 2022. ", "Section 4019 establishes that certain entities are ineligible to participate in Section 4003 transactions. An ineligible entity is a covered individual who owns a controlling interest in that entity (defined as \"not less than 20 percent, by vote or value, of the outstanding amount of any class of equity interest in an entity\"). Covered individuals are the President, the Vice President, an executive department head, a Member of Congress, or the spouse, child, or spouse of a child of any of those individuals.", "Section 4115 protects collective bargaining agreements for a period lasting from the time financial assistance is issued and ending on September 30, 2020. ", "Terms and Conditions for Air Carrier Worker Support", "To be eligible for grants to cover employee salaries under Section 4113, an air carrier or contractor must agree to", "refrain from conducting involuntary furloughs or reducing pay rates and benefits until September 30, 2020; refrain from stock buybacks and dividends through September 30, 2021; comply with CARES Act provisions to protect collective bargaining agreements regarding pay or other terms of employment for a period lasting from the time financial assistance is issued and ending on September 30, 2020; and comply with limits on compensation of highly-paid employees, similar to those described above for airline loans, for a two-year period from March 24, 2020, to March 24, 2022. ", "Additionally, the Transportation Secretary is authorized to require, to the extent practicable, that an air carrier receiving this support continue services to any point served by that carrier before March 1, 2020, considering factors similar to those described above for airline loans under Section 4005.", "To compensate the government for this assistance, Section 4117 provides that the Treasury Secretary may receive warrants, options, stock, and other financial instruments from recipients, as determined appropriate by the Secretary. (See the \" Air Carrier Worker Support \" section for more on Treasury's determination for receiving compensation.)"], "subsections": []}, {"section_title": "Terms and Conditions and Restrictions for the Federal Reserve Facilities", "paragraphs": ["Some, but fewer, of the terms and conditions and restrictions placed on the industry assistance also apply to the Fed. Fed assistance may go only to U.S. businesses (as defined), and the conflict of interest and reporting requirements also apply to the Fed. Restrictions on executive compensation and capital distributions (stock buybacks and dividends) do not apply to Fed programs unless the Fed is providing direct loans to recipients; in the case of the Fed programs, the Treasury Secretary may waive these requirements \"to protect the interests of the Federal Government.\" Likewise, requirements to provide the government with warrants or other forms of compensation do not apply to the Fed programs. As shown in Table 2 , fewer restrictions may have been placed on Fed programs than on the assistance to the three specified industries. Fewer restrictions may have been placed on Fed programs because of the Fed's independence from Congress and the Administration, and because most of the Fed programs are not intended to prevent recipients' imminent failure. ", "In addition to the conditions and restrictions in the CARES Act, the Fed typically has extended assistance to nonbank entities under its emergency authority found in Section 13(3) of the Federal Reserve Act. This authority places a number of restrictions on the Fed's activities, many of which were added or augmented by the Dodd-Frank Act ( P.L. 111-203 ). For example, actions taken under Section 13(3) must be broadly based and \"for the purpose of providing liquidity to the financial system, and not to aid a failing financial company.\" Actions must also provide security (e.g., collateral) that is sufficient to protect the taxpayer and is based on sound risk management practices. Unlike financial firms, some entities impacted by COVID-19 may not have securities that can be posted as collateral. The CARES Act only states that \"any applicable requirements under section 13(3) ... shall apply\" to Fed programs created under the act. Nevertheless, after the enactment of the CARES Act, the Fed created the MSLP and MLF under Section 13(3)."], "subsections": []}]}, {"section_title": "Oversight Provisions48", "paragraphs": ["To provide oversight of Title IV, the CARES Act created a special inspector general, Congressional Oversight Commission, and various reporting requirements."], "subsections": [{"section_title": "Special Inspector General for Pandemic Recovery49", "paragraphs": ["Section 4018 establishes a Special Inspector General for Pandemic Recovery (SIGPR) within Treasury. The SIGPR is nominated by the President with the advice and consent of the Senate and may be removed from office in the manner prescribed in Section 3(b) of the Inspector General Act of 1978. The SIGPR is tasked with conducting audits and investigations of Treasury's activities pursuant to the CARES Act, including collecting and summarizing the following information regarding loans provided by Treasury:", "\"A description of the categories of the loans guarantees, and other investments made by the Secretary\"; \"A listing of eligible businesses receiving loan, loan guarantees, and other investments\" by category; An explanation and justification for each loan or loan guarantee; Biographical information about each person hired to manage or service the loans, loan guarantees, and other investments; and Financial information, including the total amount of each loan, loan guarantee, and other investment and the repayment status and any gains or losses.", "The SIGPR is empowered to hire staff, enter into contracts, and broadly exercise the same authority and status as inspectors general under the Inspector General Act of 1978. The SIGPR is required to report to the appropriate committees of Congress within 60 days of Senate confirmation, and quarterly thereafter, on the activities of the office over the preceding three months, including detailed information on Treasury loan programs. The SIGPR position terminates five years after the enactment of the CARES Act (i.e., March 27, 2025).", "From the $500 billion appropriated in Title IV, Section 4018 directs that $25 million shall be made available to the SIGPR as a nonexpiring appropriation."], "subsections": []}, {"section_title": "Congressional Oversight Commission54", "paragraphs": ["Section 4020 establishes a five-member Congressional Oversight Commission in the legislative branch. The commission is directed to oversee implementation of Subtitle A of Title IV by the federal government and to issue regular reports to Congress. ", "The commission is directed to report to Congress \"not later than 30 days after the first exercise by the Secretary and the Board of Governors of the Federal Reserve System of the authority under this subtitle and every 30 days thereafter.\" Such reports must include", "(i) The use by the Secretary and the Board of Governors of the Federal Reserve System of authority under this subtitle, including with respect to the use of contracting authority and administration of the provisions of this subtitle.", "(ii) The impact of loans, loan guarantees, and investments made under this subtitle on the financial well-being of the people of the United States and the United States economy, financial markets, and financial institutions.", "(iii) The extent to which the information made available on transactions under this subtitle has contributed to market transparency.", "(iv) The effectiveness of loans, loan guarantees, and investments made under this subtitle of minimizing long-term costs to the taxpayers and maximizing the benefits for taxpayers.", "The commission is authorized to hold hearings and gather evidence, obtain data and other information from federal agencies upon request, hire staff, obtain the services of outside experts and consultants, request the detail of federal employees, and enter into contracts to discharge its duties.", "Members of the commission are to be appointed by the Speaker of the House, the Senate majority leader, the House minority leader, and the Senate minority leader. Appointed commissioners who are not federal employees are to be paid \"at a rate equal to the daily equivalent of the annual rate of basic pay for level I of the Executive Schedule for each day (including travel time) during which such member is engaged in the actual performance of duties vested in the Oversight Commission\" and reimbursed for travel expenses. For FY2020, Level I of the Executive Schedule is $219,200 annually.", "Funding for the commission's expenses is to be derived in equal amounts from the contingency fund of the Senate and an \"applicable\" account of the House. The Treasury Secretary and the Federal Reserve Board of Governors are instructed to \"promptly\" transfer funds to such accounts for the reimbursement of commission expenses."], "subsections": []}, {"section_title": "Schedule for Reports, Disclosures, and Testimony", "paragraphs": ["In addition to the establishment of the SIGPR and the Congressional Oversight Commission, Title IV requires the Treasury Secretary and the Fed Chair to issue reports, make disclosures, and provide testimony before congressional committees for a number of specified purposes. Collectively, these provisions require disclosure to Congress and the public of financial and other details on each transaction under Section 4003(b). These requirements are detailed in Table 3 ."], "subsections": [{"section_title": "Appendix. Comparisons to the Troubled Asset Relief Program (TARP)58", "paragraphs": ["Over a decade ago, in the financial crisis and recession of 2007-2009, businesses and individuals in the United States and across the globe faced financial uncertainty unparalleled for a generation. Although the cause of the financial uncertainty differed greatly between the current circumstances as a consequence of Coronavirus Disease 2019 (COVID-19) and the financial crisis of 2007-2009, in each instance Congress has chosen to proactively assist in economic recovery. ", "As the financial crisis reached near panic proportions in fall 2008, Congress created the $700 billion Troubled Asset Relief Program (TARP) through the enactment in October 2008 of the Emergency Economic Stabilization Act (EESA; P.L. 110-343 ). Subsequently, Congress passed the $787 billion American Recovery and Reinvestment Act of 2009 (ARRA; P.L. 111-5 ), which provided relief to certain parts of the economy. The CARES Act combines elements of both aforementioned acts. Title IV of the CARES Act, with its assistance for firms and support of Federal Reserve financial sector facilities, more closely resembles TARP; a summary of aspects of TARP that parallel Title IV will be the focus of this appendix.", "For a broader overview of the financial sector and industry assistance during the 2007-2009 financial crisis, please see CRS Report R43413, Costs of Government Interventions in Response to the Financial Crisis: A Retrospective , by Baird Webel and Marc Labonte. For a comparison of TARP and Title IV of the CARES Act, see Table A-1 .", "Implementation", "The EESA authorized the Treasury Secretary to either purchase or insure up to $700 billion in troubled assets owned by financial firms. The general concept was that by removing such assets from the financial system, confidence in counterparties would be restored, and the system could resume functioning. This authority granted in the EESA was broad. In particular, the definitions of both troubled assets and financial institutions allowed the Secretary wide latitude in deciding what assets might be purchased or guaranteed and what might qualify as a financial institution. In practice, most TARP funding was not used to purchase troubled assets, instead being dedicated to capital injections for financial institutions, loans to the auto industry, and assistance for homeowners at risk of foreclosure. In a limited number of cases, TARP and Federal Reserve funds were used together. The EESA was later amended to reduce the authorized amount to $475 billion, when it became clear that the amount used would not exceed this amount.", "Equity Compensation for Treasury", "Equity warrants in return for government assistance were specifically provided for in the TARP statute. The warrants were expected to provide a positive financial upside to the taxpayer if the private companies' fortunes improved as a result of the government assistance. Although resulting in positive returns for the government, the amount recouped through warrants ($9.58 billion) was less than through interest and dividends ($24.38 billion). The act did not specifically call for the government to receive large holdings of common stock. In several cases, however, the government ended up with large, sometimes controlling, equity positions in private companies. The government generally exercised little of the ownership control inherent in these large stakes. Common equity in companies was typically accepted in return for TARP assistance in order to strengthen the companies' capital positions. Such equity also provided a financial upside to the taxpayers when firms recovered, but it also had a potential downside when firms did not recover strongly. ", "Termination Date", "The EESA granted the purchase authority for a maximum of two years from the date of enactment, meaning it expired on October 3, 2010. Commitments made under this authorization, however, could continue after this date, with no limit on how long assets purchased under TARP could be held by the government. At present, there continues to be funding disbursed under the housing assistance program and a small amount ($0.04 billion) of bank capital assistance outstanding.", "Limits on Compensation and Labor Reduction", "The EESA included limits on executive bonuses and golden parachutes and provided for possible compensation clawbacks. The EESA was later amended by ARRA to expand these limits and add additional corporate governance reforms, thus placing additional restrictions on participating banks in existing Capital Purchase Program contracts. The act amending the EESA also allowed for early repayment and withdrawal from the program without financial penalty. With the advent of more stringent requirements for TARP recipients, many banks began to repay, or attempt to repay, TARP funds. There was no employee retention requirement with TARP. ", "Congressional Oversight", "The EESA included a number of oversight mechanisms and reporting requirements. Similar to the CARES Act, it created a TARP Congressional Oversight Panel. The TARP Oversight Panel was a five-member, independent entity established in the legislative branch, appointed by congressional leadership, and directed to submit regular reports to Congress. In exercising its duties, the TARP Congressional Oversight Panel issued 30 reports and held 26 hearings between December 2008 and March 2011, according to its final report. The panel employed a total of 46 staff, utilized 3 detailees, and expended approximately $10.7 million through April 3, 2011. The five-member panel was appointed by the House and Senate leadership. ", "The EESA also required the Treasury Secretary to provide periodic updates to Congress, with both monthly overall reports and individual reports detailing \"all transactions\" made under TARP. The Comptroller General was specifically tasked with oversight responsibilities and regular audits, with the Secretary directed to provide appropriate facilities, funding, and access to records to facilitate this oversight. ", "Special Inspector General ", "The EESA created the Special Inspector General for TARP (SIGTARP) position with an initial $50 million in funding, which has been continued in annual appropriations since. The SIGTARP was provided similar powers and authorities as other inspectors general to conduct audits and investigations of TARP and issue quarterly reports until all assets held or insured by Treasury under TARP were disposed of. The SIGTARP issued its first report in 2010, with its latest report covering the last quarter of 2019. Congress appropriated $22 million in the Consolidated Appropriations Act, 2020 ( P.L. 116-93 ) for the SIGTARP position in FY2020. ", "Conflicts of Interest", "The EESA required the Secretary to issue regulations or guidelines to \"address, manage or prohibit\" conflicts of interest arising in TARP, including the purchase and management of assets and the selection of asset managers and post-employment restrictions.", "Minimizing Costs to Taxpayers", "The EESA directed the Secretary to minimize the negative impact on taxpayers, including both direct and long-term costs and benefits. Market mechanism and private sector participation in operating the program were encouraged. The terms and conditions of Treasury asset purchases were to be designed to provide recompense to the taxpayer, including participation in the equity appreciation of a firm following Treasury asset purchases."], "subsections": []}]}]}]}]}}
{"id": "R46129", "title": "The Presidential Records Act: An Overview", "released_date": "2019-12-17T00:00:00", "summary": ["Presidential records provide Congress, members of the public, and researchers with documentation, context, and explanations for presidential actions. The Presidential Records Act (PRA; 44 U.S.C. \u00c2\u00a7\u00c2\u00a72201-2207) set forth requirements regarding the maintenance, access, and preservation of presidential and vice presidential information during and after a presidency.", "This report describes the institutions involved in presidential recordkeeping, explains what is and is not considered a presidential record, and identifies recordkeeping responsibilities and access policies during and after a presidency. The report concludes with information and policy options for congressional oversight and enforcement of the PRA with respect to electronic records provisions under the Presidential and Federal Records Act Amendments of 2014.", "Prior to the PRA, records were considered the President's private property. Now, the PRA states that presidential records are the property of the United States. Under the PRA, the President may request advice and assistance from the National Archives and Records Administration (NARA) regarding records management practices, and the Archivist of the United States (the head of NARA) plays an important role in the maintenance and access of a former President's records.", "The PRA does not establish automatic access to an incumbent President's records, which may be protected by executive privilege on a case-by-case basis. However, the PRA does statutorily narrow an incumbent President's ability to restrict records access as the Administration draws to a close. As the length of time between the conclusion of a presidency and the present day increases, presidential records become more accessible.", "Access to a former President's records is governed in terms of time passed since the conclusion of the presidency:", "Less than five years out, no public access is granted due to the Archivist's processing of the records. Between five and 12 years out, the Archivist determines PRA restrictions with the former President in accordance with Title 44, Section 2204, of the U.S. Code . After 12 years, these PRA restrictions no longer apply.", "Certain federal officials may access a former President's records within the 12-year time frame by gaining \"special access\" to presidential records. The PRA permits either house of Congress, committees, or subcommittees requesting information for chamber or committee business to be granted special access to the former President's records. In practice, observers have questioned what constitutes a House or Senate request for presidential records and who needs to make the request to qualify under the PRA. This statutory ambiguity may impact the ability of minority party members and general committee members to gain access to presidential records.", "As a result of the Presidential and Federal Records Act Amendments of 2014, presidential records are assessed for preservation not by the media used to store the information but rather by the content of the information itself. Questions regarding the volume and completeness of records may be suitable for congressional consideration. Any delay in NARA's processing of records will directly impact timely access to those records and the ability of NARA to comply with the PRA's statutory directive to make records available as rapidly and completely as possible."], "reports": {"section_title": "", "paragraphs": ["F ollowing his resignation as President, Richard Nixon wanted to destroy recordings created in the White House that, among other things, documented actions he and others took in response to investigations connected to a burglary in the Watergate building and his reelection campaign. Under policy at the time, presidential materials were considered the President's private property. In response, Congress passed a number of laws to preserve the integrity of documents and other information related to Nixon's presidency and made those laws applicable to all future presidencies.", "Enacted in 1978, the Presidential Records Act (PRA; 44 U.S.C. \u00c2\u00a7\u00c2\u00a72201-2207) established public ownership of records created by Presidents and their staff in the course of discharging their official duties. The PRA additionally established procedures for congressional and public access to presidential and vice presidential information and the preservation and public availability of such records at the conclusion of a presidency.", "This report provides context on the institutions involved in presidential recordkeeping, explains what is and is not considered to be a presidential record, and identifies recordkeeping responsibilities and access policies during and after a presidency. The report concludes with information and policy options for congressional oversight and enforcement of the PRA with respect to electronic records provisions under the Presidential and Federal Records Act Amendments of 2014.", "While the PRA provides similar provisions for records created by the Vice President, this report focuses on presidential records. Also, information on the Federal Records Act (FRA), more broadly, is available in CRS Reports CRS Report R43072, Common Questions About Federal Records and Related Agency Requirements , by Meghan M. Stuessy and CRS In Focus IF11119, Federal Records: Types and Treatments , by Meghan M. Stuessy."], "subsections": [{"section_title": "The Institutions", "paragraphs": ["The PRA governs the records of the President, Vice President, and certain components of the Executive Office of the President (EOP). The PRA specifies roles and responsibilities for the management and enforcement of presidential records policy to the President, the National Archives and Records Administration (NARA), and the Department of Justice (DOJ).", "The PRA requires the President to take \"all such steps as may be necessary to assure that the activities, deliberations, decisions, and policies that reflect the performance of the President's constitutional, statutory, or other official or ceremonial duties are adequately documented.\" The President is further directed to implement records management controls to accomplish these ends and may consult NARA and DOJ on how to best comply with the statute.", "NARA preserves selected government records, oversees recordkeeping throughout the government, and makes government records publicly available pursuant to the PRA and other authorities. NARA provides advice and assistance to the White House on records management practices upon request, throughout a presidential transition and a presidency, and to former Presidents. The PRA details which presidential records and materials NARA is to assume responsibility for at the conclusion of a President's Administration. The PRA requires the head of NARA, the Archivist of the United States, to consult with Congress and particular congressional committees on requests for the disposal of such records deemed to be of special congressional interest.", "DOJ provides guidance to the executive branch on how to comply with the legal requirements of government information policy, of which records maintenance policy, including presidential records, is a part. Additionally, the Archivist and the Attorney General jointly investigate the unlawful removal or destruction of government and presidential records."], "subsections": []}, {"section_title": "Defining Presidential Records", "paragraphs": ["The PRA defines presidential records as", "documentary materials, or any reasonably segregable portion thereof, created or received by the President, the President's immediate staff, or a unit or individual of the Executive Office of the President whose function is to advise or assist the President, in the course of conducting activities which relate to or have an effect upon the carrying out of the constitutional, statutory, or other official or ceremonial duties of the President. Such term\u00e2\u0080\u0094", "(A) includes any documentary materials relating to the political activities of the President or members of the President's staff, but only if such activities relate to or have a direct effect upon the carrying out of constitutional, statutory, or other official or ceremonial duties of the President.", "This definition of presidential records is distinct from federal records and excludes a President's personal records. Unlike federal records, which may be considered temporary or permanent records depending on their content, all presidential records are considered permanent records due to their permanent value and, as a result, should be maintained in perpetuity by the federal government, subject to some limitations described below. A President's personal records\u00e2\u0080\u0094identified in the PRA as documents \"of a purely private or nonpublic character\"\u00e2\u0080\u0094are excluded from preservation requirements.", "As a result of the Presidential and Federal Records Act Amendments of 2014, all government records (both presidential and federal) are assessed for preservation not by the media used to store the information but rather by the content of the information itself. In the PRA's case, documentary materials , of which presidential records are a part, includes \"all books, correspondence, memoranda, documents, papers, pamphlets, works of art, models, pictures, photographs, plats, maps, films, and motion pictures, including, but not limited to, audio and visual records, or other electronic or mechanical recordations, whether in analog, digital, or any other form.\" If the content of any documentary material meets the criteria of a presidential record, the information must be preserved according to the PRA regardless of the information's format.", "Presidential records are additionally protected and restricted from public consumption for a set period of time. Because of these additional restrictions on presidential records versus federal records, it is important to identify which organizations within the EOP create presidential records instead of federal records. Additionally, the time during a President's life in which the documents are created may help differentiate between personal, private records and presidential records."], "subsections": [{"section_title": "Creators of Presidential Records", "paragraphs": ["As defined in statute, the President and the President's immediate staff create presidential records. However, certain EOP components create presidential records, while others create federal records. The difference in statutory application between these components may have implications for access to their records. According to NARA, EOP components considered to \"solely advise and assist the President\" and therefore create presidential records include:", "The White House Office, The Office of the Vice President, The Office of Policy Development, The Council of Economic Advisors, The National Security Council, The President's Foreign Intelligence Advisory Board, The President's Intelligence Oversight Board, The National Economic Council, and The Office of Administration.", "Conversely, NARA has identified EOP components that create federal records and not presidential records as follows:", "The Office of Management and Budget, The Office of the United States Trade Representative, The Council on Environmental Quality, The Office of Science and Technology Policy, and The Office of National Drug Control Policy."], "subsections": []}, {"section_title": "Presidential versus Personal Records", "paragraphs": ["The PRA distinguishes between a President's personal records and presidential records. Personal records of a purely private or nonpublic character include such things as diaries or journals but also include (1) materials relating exclusively to the President's own election and to the election of a particular individual or individuals to federal, state, or local office that \"have no relation to or direct effect upon the carrying out of constitutional, statutory, or other official or ceremonial duties of the President;\" and (2) materials relating to private political associations. Because personal records are not presidential records, they are not subject to the same materials retention or access requirements."], "subsections": [{"section_title": "Presidential Transition Materials", "paragraphs": ["Records created by the President-elect and his transition team prior to inauguration are considered personal records. However, NARA notes, \"To the extent that these records are received and used after the inauguration by the incoming Presidential Administration, they may become Presidential or Federal records. Former Presidents have traditionally donated these personal transition records to [NARA] for deposit in their Presidential Library.\"", "During the 2016 election cycle, NARA issued additional guidance relating to President-elect transition team materials where it specified how the PRA would govern such materials. As the statute makes clear, materials relating to the President's own election (e.g., campaign materials) are not considered presidential records. Similarly, transition team materials are considered personal and private, not presidential records. In instances where the transition team receives briefing materials from a federal agency, however, the briefing materials are considered federal records of the briefing agency and maintained accordingly."], "subsections": []}]}, {"section_title": "Who Decides If Information Is a Presidential Record?", "paragraphs": ["While statute allows for materials relating to campaign events and private political associations to be considered personal records so long as the materials have no relation to or direct effect upon the carrying out of the President's various duties, critically, the President has a high degree of discretion over what materials are to be preserved under the PRA.", "NARA does not have direct oversight authority over the White House records program as it does over federal agencies' records programs. Instead, NARA \"provides advice and assistance to the White House on records management practices upon request,\" which would appear to give the President discretion over which materials might be included under the PRA. As noted previously, whether these records are classified as presidential or personal records affects public and congressional access to such materials. For example, the PRA does not provide an access mechanism for personal records.", "In the event of potentially unlawful removal or destruction of government records, Title 44, Section 3106, of the U.S. Code requires the head of a federal agency to notify the Archivist, who initiates action with the Attorney General for the possible recovery of such records. The Archivist is not authorized to independently investigate removal or recover records."], "subsections": []}]}, {"section_title": "Custody and Control of Presidential Records", "paragraphs": ["Policies concerning the custody of presidential materials informs the way such information is controlled, accessed, and released during and after a President's time in office. Prior to the PRA's enactment, presidential papers were traditionally the private property of the President, who would then donate the materials to institutions for public consumption. The PRA fundamentally changed the status of presidential records as publicly owned materials.", "The PRA is explicit: \"The United States shall reserve and retain complete ownership, possession, and control of Presidential records; and such records shall be administered in accordance with the provisions of this chapter.\" In passing the PRA, Congress required that \"public access to the materials would be consistent under standards fixed in law.\" The PRA provides records maintenance requirements and permissions depending on whether a presidency is in progress or has concluded."], "subsections": [{"section_title": "During a Presidency", "paragraphs": ["During a presidency, the incumbent President is exclusively responsible for custody, control, and access to presidential records, and the Archivist may maintain and preserve the records on behalf of the President. While the PRA establishes the President's responsibility, NARA notes that the agency is available for the President to consult with regarding records management practices upon request, although the PRA does not require such a consultation."], "subsections": [{"section_title": "Disposal of Presidential Records", "paragraphs": ["An incumbent President also has authority under the PRA to seek the disposal of records, which routinely occurs with temporary records under the Federal Records Act. All presidential records are initially considered permanent records, but the PRA provides a process for the incumbent President to seek a change in the disposal schedule of the President's own records by obtaining the Archivist's written approval.", "Additionally, such presidential records may be disposed of if the President submits copies of the intended disposal schedule to (a) the Senate Committee on Rules and Administration and the Senate Committee on Homeland Security and Governmental Affairs, and (b) the House Committee on Oversight and Government Reform (now the House Committee on Oversight and Reform) and the House Committee on Government Operations (now the House Subcommittee on Government Operations) at least 60 calendar days before the proposed disposal date. ", "If the Archivist considers the identified records in the President's proposed disposal schedule to be of special interest to Congress or that consultation with Congress is necessary to assess the disposal request, the Archivist shall request the advice of the listed committees."], "subsections": []}]}, {"section_title": "After a Presidency", "paragraphs": ["After a presidency, the responsibility for the custody, control, preservation of, and access to presidential records shifts to the Archivist. Additionally, statute requires the Archivist to make the former President's records publicly available as rapidly and as completely as possible. ", "The PRA does not provide the former President with a process for disposing of presidential records after leaving office. In contrast to the disposal request process for incumbent Presidents, the Archivist may dispose of a former President's presidential records if they are deemed by the Archivist to have insufficient value to warrant their continued preservation. The Archivist must publish a notice in the Federal Register at least 60 days in advance of the proposed disposal date."], "subsections": [{"section_title": "Designating a Presidential Library", "paragraphs": ["Because the United States owns all presidential records, a former President must seek the Archivist's permission to display presidential records in a different facility, such as a presidential library. The Archivist is directed to deposit all of the former President's records in a presidential archival depository or another federal archival facility and is authorized to designate, after consultation with the former President, a director of the chosen facility who is responsible for the care and preservation of the records. Presidential libraries are not constructed using federal funds but are operated and maintained by NARA through its budget."], "subsections": []}]}, {"section_title": "Restricted Access to Presidential Records", "paragraphs": ["The PRA does not establish automatic access for an incumbent President's records, which may be protected by executive privilege on a case-by-case basis. However, the PRA does statutorily narrow an outgoing President's ability to restrict records access. As the length of time between the conclusion of a presidency and the present day increases, presidential records become more accessible. ", "Access to a former President's records is governed in terms of time passed since the conclusion of the presidency: ", "Less than five years out, no public access is granted due to the Archivist's processing of the records. Between five and 12 years out, the Archivist determines PRA restrictions in accordance with Title 44, Section 2204, of the U.S. Code with the former President. After 12 years, these PRA restrictions no longer apply. ", "The Freedom of Information Act (FOIA; 5 U.S.C. \u00c2\u00a7552) governs the public release of government information, including presidential records. Throughout these time periods, FOIA exemptions (for example, information that is prohibited from disclosure by another federal law) may additionally restrict records access. However, records created by a former President are not subject to FOIA's (b)(5) deliberative process exemption (which incorporates the deliberative process, executive, and attorney-client privileges, among others).", "The PRA (44 U.S.C. \u00c2\u00a72204) permits the outgoing President to restrict access to six categories of presidential records for specified durations of time, not to exceed 12 years. The records categories for which a former President can restrict access include:", "1. Records described in an executive order as in the interest of national defense or foreign policy or are otherwise classified documents, 2. Records relating to appointments to federal office, 3. Records specifically exempted from disclosure by statute, 4. Records that contain trade secrets and commercial or financial information, 5. Records of confidential communications requesting or submitting advice between the President and the President's advisers or between such advisers, and 6. Records of personnel and medical files whose disclosure would constitute an invasion of personal privacy. ", "After the expiration of the 12-year period, under Executive Order 13489, incumbent and former Presidents must be notified of the Archivist's intent to disclose materials at least 30 days in advance of the release of the records. Prior to this release, incumbent and former Presidents may assert a claim of executive privilege over certain presidential records, thereby limiting public access. If an incumbent President invokes a claim of executive privilege over the release of a former President's records, the Attorney General and the Counsel to the President shall review and decide whether the invocation of executive privilege is justified. ", "Similarly, if a former President invokes a claim of executive privilege, the current Archivist, Attorney General, and Counsel to the President are to confer and determine whether to honor the former President's claim of executive privilege. The incumbent President may extend the time period to withhold the records and is to provide a reason for the extension. "], "subsections": [{"section_title": "Exceptions to Restricted Access of a Former President's Records", "paragraphs": ["Certain federal officials may access a former President's records within the 12-year time frame by gaining \"special access\" to presidential records. Per the PRA:", "[S]ubject to any rights, defenses, or privileges which the United States or any agency or person may invoke, Presidential records shall be made available\u00e2\u0080\u0094", "(A) pursuant to subpoena or other judicial process issued by a court of competent jurisdiction for the purposes of any civil or criminal investigation or proceeding;", "(B) to an incumbent President if such records contain information that is needed for the conduct of current business of the incumbent President's office and that is not otherwise available; and", "(C) to either House of Congress, or, to the extent of matter within its jurisdiction, to any committee or subcommittee thereof if such records contain information that is needed for the conduct of its business and that is not otherwise available.", "Observers have questioned what constitutes a House or Senate request for presidential records and who needs to make the request for the records for it to qualify under Section 2205(C). However, NARA explains that its \"longstanding and consistent practice has been to respond only to requests from the Chair of Congressional Committees, regardless of which political party is in power.\" This practice as a result of statutory ambiguity may impact the ability of minority party members or general committee members to gain access to presidential records."], "subsections": []}]}]}, {"section_title": "Issues for Congress: Enforcement of the PRA", "paragraphs": ["The PRA's effectiveness relies on its ability to be enforced, both in terms of accessing presidential records for oversight purposes through the mechanisms described in statute and in terms of maintaining the records themselves so that they may be accessed. In light of the Presidential and Federal Records Act Amendments of 2014 requirement to collect presidential records regardless of their media but based on their content, questions regarding the volume and the meaning of an electronic record's completeness are creating policy implications that may be suitable for congressional consideration. These matters may be of particular interest to Congress as it carries out its oversight activities and ensures that emerging formats of presidential records are effectively collected and controlled. "], "subsections": [{"section_title": "Volume of Electronic Presidential Records", "paragraphs": ["The volume of presidential records has increased exponentially in the digital age, as indicated by reporting on the amount of such records at the conclusion of a presidency. According to NARA's 2009 Report on Alternative Models for Presidential Libraries , the Clinton Administration provided NARA 20 million presidential record emails at the conclusion of the President's eight-year tenure. The George W. Bush Administration provided 150 million email records after its eight-year tenure\u00e2\u0080\u0094more than seven times the number of emails provided by the previous Administration. To date, the Barack Obama Presidential Library estimates that NARA has received 300 million emails, doubling the amount from the previous Administration.", "\"Huge volumes of electronic information\" are a \"major challenge\" in record management, according to the Government Accountability Office (GAO), and \"electronic information is increasingly being created in volumes that pose a significant technical challenge to our ability to organize it and make it accessible.\" ", "NARA's ability to process the volume of presidential records is closely linked to information access issues. In its FY2020 congressional budget justification, NARA noted it has \"a significant backlog of unanswered [FOIA] requests at Presidential Libraries covered\" by the PRA in part because of the volume of records and the information restriction process:", "NARA must review all Presidential papers page-by-page, to identify and redact national security and other restricted information, which means it will take decades to make all of the records available to the public. Processing records in response to FOIA requests is even more time-consuming than processing the same number of pages in a systematic, archival fashion and does not produce discrete records collections that would be meaningful to the general public.", "Because of this increased volume, NARA's ability to keep pace with the explosion of records will be dependent on NARA's staffing, funding, and training levels. Any delay in NARA's processing of records may impact the ability of interested parties to access materials in a timely fashion, and NARA's ability to comply with the PRA's statutory directive to make records available as rapidly and completely as possible."], "subsections": []}, {"section_title": "Completeness of Electronic Presidential Records", "paragraphs": ["The increasing use of electronic records also requires the institutions involved in presidential records oversight to ensure the record information's authenticity and completeness. The EOP and NARA need to ensure that record materials are appropriately protected from corruption or destruction, but these protections take on a different meaning in a digital, instead of analog, environment.", "Given the increase in presidential records, Congress may consider whether or not the presidential records institutions are able to consistently meet NARA directives, bearing in mind that while NARA supervises agency implementation of the FRA, NARA provides advice and assistance to the White House on records management practices upon request . NARA has provided guidance on including metadata elements in the collection of federal records under the FRA that the EOP may adopt as well. However, data on implementation is self-reported by agencies, and similar information is not required to be provided for presidential records on a routine basis.", "Last updated in 2005, NARA's guidance on identifying and maintaining trustworthy websites says that such records have the following characteristics:", "reliability: content is trusted as a full and accurate representation of transactions, activities, or facts; authenticity: proven to be what it purports to be; integrity: complete and unaltered; and usability: can be located, retrieved, presented, and interpreted.", "NARA's guidance suggests that agencies \"maintain the content, context, and sometimes the structure of\" their websites to ensure that their records are trustworthy.", "One instructive example is NARA's attempts to archive underlying documents and web materials on whitehouse.gov. While collecting records material appears to be a straightforward task, policy decisions such as when and what to collect impact the material's context (i.e., the circumstances that situate the material and give it meaning), usability, and completeness. Some accompanying digital information, such as who accessed the information or reviewed the document, may not be available without holistic preservation.", "For example, NARA acknowledges that it does not archive the user interface of the White House website, but it has attempted to \"freeze\" an approximation of the website as it appeared at the conclusion of a presidency and not at various points during an Administration. Further, NARA notes, \"These 'frozen in time' sites are representations of the original websites and approximate the interface and functionality for easy access by the public. These websites are no longer updated so links to external websites and some internal pages will not work.\" Such decisions may have implications on the type of information available to future researchers, federal agencies, and Congress."], "subsections": []}]}]}}
{"id": "R46234", "title": "School Meals and Other Child Nutrition Programs: Background and Funding", "released_date": "2020-02-13T00:00:00", "summary": ["The federal government has a long history of investing in programs for feeding children, starting with federal aid for school lunch programs in the 1930s. Today, federal child nutrition programs support food served to children in schools and a variety of other institutional settings. Administered by the U.S. Department of Agriculture's (USDA's) Food and Nutrition Service (FNS), child nutrition programs include the National School Lunch Program (NSLP), School Breakfast Program (SBP), Child and Adult Care Food Program (CACFP), Summer Food Service Program (SFSP), Fresh Fruit and Vegetable Program (FFVP), and Special Milk Program (SMP).", "The child nutrition programs vary in terms of size and target populations. The largest programs are NSLP and SBP (the \"school meals programs\"), which subsidize meals for nearly 30 million children in approximately 94,300 elementary and secondary schools nationwide. The other child nutrition programs serve fewer children. CACFP supports meals served to children in child care, day care, and afterschool settings; SFSP provides funding for summer meals; FFVP sponsors fruit and vegetable snacks in elementary schools; and SMP subsidizes milk in schools and institutions that do not participate in other child nutrition programs. In general, the largest subsidies are provided for free or reduced-price meals and snacks served to children in low-income households.", "Federal spending on child nutrition programs and activities totaled approximately $23 billion in FY2019, the majority of which was mandatory spending. Most child nutrition programs are considered \"appropriated entitlements,\" meaning that their authorizing statutes establish a legal obligation to make payments, but that obligation is fulfilled through funding that is provided in annual appropriations acts. Most of the funding is provided in the form of per-meal cash reimbursements that states distribute to schools and institutions. A smaller amount of federal funding is provided in the form of federally purchased commodity foods and cash for states' administrative expenses.", "The child nutrition programs are primarily governed by two statutes: the Richard B. Russell National School Lunch Act and the Child Nutrition Act of 1966 as amended. These laws were most recently reauthorized by the Healthy, Hunger-Free Kids Act of 2010 (HHFKA, P.L. 111-296 ), which made several changes to the child nutrition programs. For example, the act created the Community Eligibility Provision, an option for eligible schools to provide free meals to all students. It also required USDA to update nutrition standards in the school meals programs and CACFP within a certain timeframe.", "Certain provisions of the HHFKA expired at the end of FY2015. However, these expirations have had a minimal impact on program operations, which continue with annual appropriations. The 114 th Congress began but did not complete a reauthorization of child nutrition programs. In the 115 th Congress, there was no significant reauthorization activity. As of the date of this report, leadership on both committees of jurisdiction (the Senate Agriculture, Nutrition, and Forestry Committee and the House Committee on Education and Labor) have announced plans to work on reauthorization in the 116 th Congress. Selected legislative issues are discussed in CRS Report R45486, Child Nutrition Programs: Current Issues ."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Background", "paragraphs": ["The child nutrition programs (listed in Table 1 ) support meals and snacks served to children in schools, child care, summer programs, and other institutional settings in all 50 states, the District of Columbia, and the U.S. territories. The programs are administered by the U.S. Department of Agriculture's (USDA's) Food and Nutrition Service (FNS), which provides federal aid to state agencies (often state departments of education) for distribution to school districts and other participating institutions. In general, the largest subsidies are provided for free and reduced-price meals served to eligible children.", "The institutional nature of child nutrition programs distinguishes them from other federal nutrition assistance programs, such as the Supplemental Nutrition Assistance Program (SNAP) and the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC), which provide benefits directly to households. WIC is typically reauthorized with the child nutrition programs but is not considered a child nutrition program and is not discussed in this report.", "The federal child nutrition programs date back to the National School Lunch Act of 1946, which created NSLP. The act formalized federal support for school lunches following early federal aid beginning in the 1930s. Other child nutrition programs were added in the decades to follow as policymakers expanded feeding programs beyond the school setting. The Child Nutrition Act of 1966 formalized SMP and created SBP as a pilot program. Soon after, a program for child care and summer meals was piloted in 1968 and separated into the Child Care Food Program (now CACFP) and SFSP in 1975. More recently, FFVP was piloted in 2002 and expanded to all states in 2008. (See the Appendix for a brief legislative history of child nutrition programs.)", "Historically, the child nutrition programs have been aimed at both improving children's nutrition and supporting U.S. agriculture, with the dual missions \"to safeguard the health and well-being of the Nation's children and to encourage the domestic consumption of nutritious agricultural commodities and other food.\"", "The child nutrition programs are currently authorized under the Richard B. Russell National School Lunch Act (NSLA) and the Child Nutrition Act of 1966. Section 32 of the Act of August 24, 1935, also provides a portion of child nutrition funding. Congressional jurisdiction over the underlying three laws has typically been exercised by the Senate Agriculture, Nutrition, and Forestry Committee, the House Education and Labor Committee, and, to a limited extent (relating to Section 32), the House Agriculture Committee.", "Congress periodically amends the child nutrition programs' authorizing laws and reauthorizes expiring authorities. The child nutrition programs were most recently reauthorized by the Healthy, Hunger-Free Kids Act of 2010 (HHFKA, P.L. 111-296 ). Some of the authorities created or extended in the HHFKA expired on September 30, 2015; however, these expirations have had a minimal impact on program operations. The 114 th Congress began but did not complete a 2016 child nutrition reauthorization, and there was no significant reauthorization activity in the 115 th Congress. In the 116 th Congress, leadership on the committees of jurisdiction have announced plans to work on child nutrition reauthorization.", "This report starts with an overview of child nutrition programs' funding and then provides detail on each program, including a discussion of how the programs are administered at the federal, state, and local levels; eligibility rules for institutions and participants; nutritional and other program requirements; and recent policy changes."], "subsections": []}, {"section_title": "Child Nutrition Funding", "paragraphs": [], "subsections": [{"section_title": "Federal Funding", "paragraphs": ["Most funding for child nutrition programs is considered mandatory spending. However, unlike some mandatory programs, child nutrition programs require an appropriation of funding. This is because the programs' authorizing laws include benefit and eligibility criteria that create the requirement for a certain level of spending, but the statute does not provide the funding directly. Such programs are sometimes referred to as \"appropriated entitlements\" or \"appropriated mandatories.\" If the necessary funds are not appropriated, entitled recipients (e.g., states, institutions, and participants) may have legal recourse.", "The benefit and eligibility criteria that governs much of the appropriated mandatory spending for child nutrition programs is open-ended. Because there is no specified limit on the number of beneficiaries or the total amount of benefits that will be paid, spending will fluctuate based on the number of meals and snacks served in the programs, as well as statutorily set, annually adjusted per-meal reimbursement rates. Congress typically considers USDA's forecast for program needs in its appropriations decisions.", "Appropriated mandatory funding in child nutrition programs is generally for per-meal cash reimbursements, commodity assistance, and administrative funds. The programs also have a smaller amount of discretionary funding (provided in annual appropriations acts) and mandatory funding directly provided in the authorizing law (not provided in annual appropriations acts). These funding streams are discussed in further detail below.", "Child nutrition appropriations totaled $23.6 billion in FY2020 ( P.L. 116-94 ). Close to $13.5 billion of these funds were transferred to the child nutrition programs from Section 32 of the Act of August 24, 1935.", " Table 2 lists FY2020 child nutrition funding by program and activity. Child nutrition appropriations may not match expenditures because most child nutrition funds carry over (they are available for two fiscal years) and because spending fluctuates with the number of meals served."], "subsections": [{"section_title": "Per-Meal Cash Reimbursements", "paragraphs": ["The majority of federal funding in child nutrition programs (including in NSLP, SBP, CACFP, SFSP, and SMP) takes the form of per-meal cash reimbursements. These rates are specified in the programs' authorizing laws with an annual inflation adjustment. Although all (including full-price) meals/snacks served by participating providers are subsidized, those served for free or at a reduced price to lower-income children earn higher rates. Meals must meet federal nutritional requirements in order for the school or institution to receive reimbursement.", "Reimbursement rates differ by program based on different criteria. For example, in SBP, schools in high-poverty areas receive an extra 36 cents per meal. Differences in reimbursement rates are highlighted within the subsequent discussions of each program.", "In general, FNS distributes per-meal reimbursements to state agencies, which distribute them to participating schools and institutions. Schools and institutions must record daily counts of meals in each category and report monthly counts to the state agency in order to receive reimbursement. Once they receive federal funds, participating institutions are allowed to spend these funds on most aspects of their food service operations.", " Table 3 provides an example of the per-lunch reimbursement rate for schools and the per-child benefit in NSLP. Reimbursement rates for each child nutrition program are listed in the sections to follow."], "subsections": []}, {"section_title": "Commodity Assistance", "paragraphs": ["Federal support for child nutrition programs is also provided in the form of USDA-purchased commodity foods (\"USDA Foods\") and some cash in lieu of commodities. USDA Foods are foods purchased by USDA for distribution to federal nutrition assistance programs, including child nutrition programs.", "States, schools, and other institutions are entitled to a certain amount of commodity assistance under the law, referred to as \"entitlement commodity\" assistance. In NSLP and CACFP, statute provides a per-meal commodity reimbursement (an inflation-adjusted rate of 23.75 cents per meal in school year 2019-2020). (Note: Commodity assistance is not a formal part of SBP funding; however, commodities distributed through NSLP may be used for school breakfasts.) A smaller amount of commodity assistance is also provided to certain types of institutions participating in SFSP.", "Schools and institutions use entitlement commodity funds to select commodities from a USDA Foods catalog. USDA then purchases the commodities and works with a state distribution agency to distribute the foods to schools. Schools/institutions and state agencies can elect to receive a certain amount of commodity assistance in the form of cash, as the majority of CACFP centers do.", "According to statute, entitlement commodity assistance must equal at least 12% of the total funding provided for lunch reimbursements and child nutrition commodities. Child nutrition entitlement commodity expenditures totaled nearly $1.5 billion in FY2019. Most of this assistance was for NSLP.", "The child nutrition programs can also receive \"bonus commodities,\" which are commodities that are purchased at USDA's discretion throughout the year to support the agricultural economy using separate budget authority. In recent years, there have been few bonus commodities distributed to the child nutrition programs; however, there was an uptick in FY2019."], "subsections": []}, {"section_title": "Administrative Funds", "paragraphs": ["State agencies receive federal funds for expenses related to the administration of child nutrition programs. According to statute, federal funding for states' administrative expenses must equal at least 1.5% of federal expenditures on NSLP, SBP, CACFP, and SMP in the second preceding fiscal year. The majority of these funds are allocated to states based on their share of spending on the four programs. Any remaining funds are allocated by the Secretary of Agriculture on a discretionary basis; per program regulations, states receive additional amounts for CACFP, commodity distribution, and administrative reviews of schools/institutions. Once states receive administrative funds, they can apportion them among child nutrition programs and activities as they see fit.", "In addition, states receive separate administrative payments through SFSP that equal at least 2.5% of their summer meal aid. States may also retain a portion of FFVP aid for their administrative expenses.", "At the local level, schools and institutions may use per-meal reimbursements to cover their administrative costs. In CACFP, institutions that oversee day care homes receive separate monthly payments for administrative expenses based on the number of day care homes under their jurisdiction."], "subsections": []}, {"section_title": "Other Federal Funding", "paragraphs": ["A few child nutrition programs and activities have mandatory funding provided directly in the authorizing law. For example, FFVP receives mandatory funding from Section 32 and the Farm to School Grant Program receives mandatory funding under the NSLA.", "There are also a few child nutrition activities that are funded on a discretionary basis, including the Summer EBT demonstration, the Team Nutrition initiative, and school meals equipment grants."], "subsections": []}]}, {"section_title": "Nonfederal Funding", "paragraphs": ["Federal subsidies do not necessarily cover the full cost of meals and snacks prepared by schools and institutions. Child nutrition programs may also receive funds from participants, states, school districts, local governments, and other entities. NSLP is the only child nutrition program with a cost sharing requirement for states, which amounts to a contribution of roughly $200 million from all states combined annually. Some states provide additional funding for NSLP and other child nutrition programs beyond the required amount, including some states that provide their own per-meal reimbursements.", "An FNS study of the school meals programs in school year 2014-2015 found that 63% of school food service revenues came from federal funds, 30% came from student payments for paid and reduced-price meals and other school foods, and 6% came from state and local funds."], "subsections": []}]}, {"section_title": "National School Lunch Program (NSLP) and School Breakfast Program (SBP)", "paragraphs": ["The National School Lunch Program (NSLP) and School Breakfast Program (SBP) (the \"school meals programs\") provide federal support for meals served in approximately 94,300 public and private elementary and secondary schools nationwide in FY2019. They also support meals in a smaller number of residential child care institutions. Schools receive federal aid in the form of cash reimbursements for every meal they serve that meets federal nutritional requirements (limited to one breakfast and lunch per child daily). The largest subsidies are provided for free and reduced-price meals served to eligible students based on income eligibility and categorical eligibility rules. Schools also receive a certain amount of commodity assistance per lunch served (discussed previously). Schools participating in NSLP have the option of providing afterschool snacks through the program, and schools participating in NSLP or SBP have the option of providing summer meals and snacks through the Seamless Summer Option (discussed in the \" After-School Meals and Snacks \" and \" Seamless Summer Option \" sections).", "Schools are not required by federal law to participate in NSLP or SBP; however, some states require schools to have a school lunch and/or breakfast program, and some states require schools to do so through NSLP and/or SBP. Some states also provide state funding for the school meals programs. Approximately 91% of public schools participate in NSLP. Schools that do not participate in the federal school meals programs may still operate locally funded meal programs.", "The Healthy, Hunger-Free Kids Act of 2010 (HHFKA; P.L. 111-296 ) made several changes to the school meals programs. Among those changes was a requirement that USDA update the nutrition standards for school meals and create new nutritional requirements for foods sold in NSLP and SBP schools within a certain timeframe. The law also created the Community Eligibility Provision, through which eligible schools can provide free meals to all students. These changes are discussed further within this section.", "NSLP and SBP are two separate programs, and schools can choose to operate one and not the other. The programs are discussed together in this report because they share many of the same requirements. Differences between the programs are noted where applicable.", " Figure 1 displays average daily participation in NSLP and SBP in participating schools. Participation in SBP tends to be lower for several reasons, including the traditionally required early arrival by students in order to receive a meal before school starts."], "subsections": [{"section_title": "Administration", "paragraphs": ["Locally, the school meals programs are usually administered by school districts. Statute and regulations designate \"school food authorities\" as the local authorities in charge of operating the school meal programs; typically, these are food service departments within school districts. Local educational agencies\u00e2\u0080\u0094the broader school district or school board\u00e2\u0080\u0094also play a role in administering the school meal programs. This report sometimes uses the term \"school district\" to refer to the local administrative body of the school meals programs.", "In general, school food authorities handle food service and accounting responsibilities, such as food preparation and tracking meals for reimbursement, while local educational agencies handle administrative duties, such as processing applications and certifying children for free and reduced-price school meals.", "At the state level, the school meals programs are most often administered by state departments of education. State administrative agencies are responsible for distributing federal reimbursements to school food authorities and overseeing school districts' administration of the school meal programs, including by conducting administrative reviews of school districts.", "At the federal level, FNS provides ongoing guidance and technical assistance to state agencies and school food authorities through seven regional offices. FNS also provides oversight of state agencies, including by conducting management evaluations.", " Figure 2 depicts the federal, state, and local roles in administering the school meals programs."], "subsections": []}, {"section_title": "Eligibility and Reimbursement", "paragraphs": ["The school meals programs do not exclusively serve low-income children. Any student in an NSLP or SBP participating school may purchase a school meal; however, children must meet program eligibility rules in order to receive a free or reduced-price meal.", "In most schools (excluding schools that participate in the Community Eligibility Provision or other special options), children are certified for free or reduced-price school meals through one of two pathways: (1) income eligibility for free and reduced-price meals (information typically collected via household application) and (2) categorical eligibility for free meals (information collected via household application or direct certification). Each year, schools must verify a sample of household applications for accuracy. The pathways through which children are certified for free or reduced-price school meals are shown in Figure 3 .", "If children are certified for free meals, the school food authority (through the state agency) receives the free meal reimbursement for those meals. If children are certified for reduced-price meals, the school food authority receives a slightly lower reimbursement. School food authorities also receive a much smaller paid-rate reimbursement for meals served to children who pay for \"full price\" meals. School food authorities must follow federal guidelines in setting the price of paid meals.", "Certain schools follow different eligibility and reimbursement procedures because they participate in the Community Eligibility Provision (CEP) or other special options (discussed below in the \" Special Options \" section)."], "subsections": [{"section_title": "Income Eligibility", "paragraphs": ["Children are eligible for free or reduced-price meals if their household's income falls within the following ranges:", "Free meals: household income at or below 130% of the federal poverty guidelines. Reduced-price meals (charges of no more than 40 cents per lunch and 30 cents per breakfast): household income above 130% and less than or equal to 185% of the federal poverty guidelines.", "These thresholds are based on the annual federal poverty guidelines established by the U.S. Department of Health and Human Services, and are updated annually for inflation. FNS publishes the corresponding income limits by household size for free and reduced-price meals in the Federal Register on an annual basis. Table 4 provides an example of the income limits for free and reduced-price meals in school year 2019-2020 for a household of four.", "To become income eligible for school meals, a parent or guardian must complete a paper or online application that includes the income of each household member, the household size, and other information. Households only need to fill out one application if they have multiple children in the same school district. School district officials then determine if children in the household are eligible for free meals, reduced-price meals, or neither."], "subsections": []}, {"section_title": "Categorical Eligibility", "paragraphs": ["As an alternative to income eligibility, children can become eligible for free school meals if they fall into a certain category (\"categorical eligibility\"). Per statute, children are automatically eligible for free lunches and breakfasts (without consideration of household income) if they are", "in a household receiving benefits through the following programs: SNAP (Supplemental Nutrition Assistance Program); FDPIR (Food Distribution Program on Indian Reservations, a program that operates in lieu of SNAP on some Indian reservations); or TANF (Temporary Assistance for Needy Families); enrolled in Head Start; in foster care; a migrant; a runaway; or homeless.", "Categorical eligibility for free meals may be determined via a household application (households provide a case number on the application) or through direct certification (discussed in the next section). As of school year 2014-2015, the vast majority of categorically eligible children were certified for free meals through direct certification.", "Categorical eligibility for free school meals with SNAP and TANF began in the 1980s (then, the Food Stamp and Aid to Families with Dependent Children programs, respectively). Categorical eligibility enabled schools to make use of other programs' more in-depth certification processes and reduced the number of applications that families had to fill out. Other programs and categories were added over time."], "subsections": [{"section_title": "Direct Certification", "paragraphs": ["Direct certification is a process through which state agencies and school districts automatically certify children for free meals based on documentation of the child's status in a program or category without the need for a household application. States are required to conduct direct certification for SNAP and have the option of conducting direct certification for the other programs and categories that convey categorical eligibility.", "For SNAP and other federal programs, the direct certification process typically involves state agencies (e.g., state SNAP and state educational agencies) cross-checking program rolls. A list of matched children is sent to the school district, which certifies children for free meals without the need for a household application. For foster, homeless, migrant, and runaway children, direct certification typically involves school district communication with a local or state official who can provide documentation of the child's status in one of these categories.", "The 2004 child nutrition reauthorization act ( P.L. 108-265 ) required states to conduct direct certification with SNAP, with nationwide implementation taking effect in school year 2008-2009. As of school year 2016-2017, USDA reported that 92% of children in SNAP households were directly certified for free school meals.", "The HHFKA made further policy changes to expand direct certification. One of those changes was the initiation of a demonstration project to test direct certification with Medicaid (see text box). The law also funded performance incentive grants for high-performing states and authorized corrective action plans for low-performing states in direct certification activities. "], "subsections": []}]}, {"section_title": "Verification of Eligibility", "paragraphs": ["Each fall, districts are required to verify a sample of approved household applications on file, with a focus on applications close to the eligibility threshold (\"error-prone\" applications). School districts may also conduct verification of questionable applications. Verification is not required for children who are directly certified for free or reduced-price meals. (Note that districts participating in \" Provisions 1, 2, and 3 \" must meet verification requirements for the years in which they administer household applications.)", "Many districts employ \"direct verification\" (matching data from other low-income programs) to conduct their verification activities, but if data cannot be verified in this way, schools must contact households to verify the information provided on the application. A child's eligibility status may stay the same or change (e.g., from free meals to reduced-price meals or loss of eligibility) as a result of verification of household income, or if the household does not respond to verification outreach (in which case eligibility would be lost, though that decision can be appealed)."], "subsections": []}, {"section_title": "Reimbursement", "paragraphs": ["School food authorities must keep track of the daily number of meals they serve in each category (free, reduced-price, and paid) that meet federal nutrition requirements. School food authorities then submit claims for reimbursement to the state agency, which submits the claims to FNS. Approved reimbursements are distributed to school food authorities by the state agency, usually on a monthly basis. Per statute, reimbursement rates are adjusted for inflation annually. Table 5 shows NSLP and SBP reimbursement rates in school year 2019-2020. (Note that school food authorities also receive a per-lunch commodity reimbursement, discussed previously.)", "The law provides a higher reimbursement for meals meeting certain criteria. For example, school food authorities that are compliant with the updated federal nutrition standards for school meals receive an additional 7 cents per lunch. School food authorities also receive an additional 2 cents per lunch if they serve 60% or more of their lunches at a free or reduced price. For breakfasts, school food authorities receive higher reimbursements if they serve 40% or more lunches at a free or reduced price (referred to as \"severe need\" schools).", "Once school food authorities receive the cash reimbursements, they can be used to support almost any aspect of the school food service operation. However, federal cash reimbursements must go into a nonprofit school food service account that is subject to federal regulations. Payments for non-program foods (e.g., vending machine sales) must also accrue to the nonprofit school food service account.", "FNS periodically studies the costs of producing a reimbursable meal. In April 2019, FNS released a School Nutrition and Meal Cost Study , which found that the average reported cost of producing a reimbursable lunch was $3.81 in school year 2014-2015 (reported costs were defined as those charged to the school food service account). This exceeded the average federal cash reimbursement ($3.32) for lunches in school year 2014-2015. When unreported costs were included (costs outside of the food service account; for example, labor costs associated with processing applications), the cost of producing the average reimbursable lunch was $6.02. As noted previously, children's payments and state and local funds may also cover meal costs."], "subsections": []}]}, {"section_title": "Special Options", "paragraphs": [], "subsections": [{"section_title": "Community Eligibility Provision (CEP)", "paragraphs": ["The HHFKA authorized the Community Eligibility Provision (CEP), an option that allows eligible schools, groups of schools, and school districts to offer free meals to all enrolled students. To participate in CEP, the school(s) must have an identified student percentage (ISP) of at least 40%. The ISP is the percentage of students in the school(s) who are certified for free meals without a household application (i.e., who are directly certified for free meals through SNAP or another program/category). In addition, the school(s) must operate both NSLP and SBP in order to participate in CEP, and they must opt-in to CEP.", "Based on the statutory parameters, FNS piloted CEP in various states over three school years, and expanded the option nationwide in school year 2014-2015. Eligible schools, groups of schools, and entire school districts may participate; if participation is as a group, the ISP is calculated on a group basis. Local educational agencies have until June 30 of each year to notify USDA of the schools in their jurisdiction that will participate in CEP. According to a database maintained by the Food Research and Action Center, nearly 28,500 schools participated in CEP in school year 2018-2019, up from 18,220 schools in school year 2015-2016.", "Though CEP schools serve free meals to all students, they are not reimbursed at the free rate for every meal served. Instead, the law provides a funding formula: the ISP is multiplied by a factor of 1.6 to estimate the proportion of students who would be eligible for free or reduced-price meals had they been certified via application. The result is the percentage of meals served that will be reimbursed at the free-meal rate, with the remainder reimbursed at the much lower paid-meal rate. For example, if a CEP school has an ISP of 40%, then 64% of its meals served would be reimbursed at the free-meal rate and 36% would be reimbursed at the paid-meal rate. Schools that identify 62.5% or more students as eligible for free meals receive the free-meal reimbursement for all meals served (62.5% multiplied by 1.6 equals 100%). Figure 4 provides a visual representation of the CEP eligibility criteria and reimbursement formula.", "CEP participating schools must recalculate their ISP at least once every four years, but they can choose to do so more frequently if desired. While eligibility determinations occur every four years, schools can drop out of CEP at any time.", "CEP is intended to reduce paperwork for families and schools and enable schools to provide more free meals. However, the option may or may not be financially beneficial for schools depending on their proportion of identified students."], "subsections": []}, {"section_title": "Provisions 1, 2, and 3", "paragraphs": ["Schools, groups of schools, and school districts can also use Provisions 1, 2, and 3 to establish alternative certification and reimbursement procedures. These options are intended to reduce paperwork for school administrators and families. The options predate CEP, and unlike CEP, they still require some household applications. A school's decision to participate in a special option may depend on financial considerations.", "Provision 1 allows schools with high proportions (80% or more) of students eligible for free and reduced-price meals to make free meal eligibility determinations that remain in effect for two school years. This reduces the number of applications they have to process (though they still have to process reduced-price meal applications annually).", "Provision 2 and Provision 3 are open to all schools. Similar to CEP, schools, groups of schools, or school districts must agree to provide free meals (lunches or lunches/breakfasts) to all students in order to participate in Provision 2 or Provision 3. Under Provision 2, schools are reimbursed over a four-year period using the proportion of meals served at a free/reduced-price/paid rate during the first year. Eligibility determinations in the first year are based on direct certification and household applications (a difference from CEP). Under Provision 3, schools are similarly required to make eligibility determinations in the first year of a four-year period. However, in this case, schools receive the same level of federal assistance over the next three years, which is adjusted for enrollment and inflation (there are no separate payments for free/reduced-price/paid meals)."], "subsections": []}]}, {"section_title": "Nutrition Standards and Food Service", "paragraphs": [], "subsections": [{"section_title": "Nutrition Standards for School Meals", "paragraphs": ["Nutritional requirements for school meals have changed throughout the history of the school meal programs. The most recent child nutrition reauthorization, the HHFKA in 2010, required USDA to update the nutrition standards for school meals within 18 months of the law's enactment based on recommendations from the Food and Nutrition Board at the National Academies of Sciences, Engineering, and Medicine. The law also provided a \"performance-based\" bonus reimbursement of 6 cents per lunch (adjusted annually for inflation) for schools certified as compliant with the updated standards (the rate was 7 cents in school year 2019-2020).", "USDA published the updated nutrition standards for school meals in 2012. They were based on the 2010 Dietary Guidelines for Americans (per an existing statutory requirement) as well as the recommendations from the National Academies of Sciences, Engineering, and Medicine. The standards required increased servings of fruits, vegetables, whole grains, and meats/meat alternates in lunches and breakfasts. They also restricted milk to unflavored low-fat (1%) and flavored and unflavored fat-free varieties, set limits on calories and sodium in school meals, and prohibited trans fats in school meals, among other changes. Separate from the final rule, USDA also implemented a requirement in the HHFKA that schools make water available to children during meal service in the cafeteria.", "The revised nutrition standards largely took effect in school year 2012-2013 for lunches and in school year 2013-2014 for breakfasts. A few requirements phased in over multiple school years. Some schools experienced difficulty implementing the new standards, and subsequent changes to the whole grain, sodium, and milk requirements were made through appropriations acts and USDA rulemaking. For school year 2019-2020 and onwards, schools are operating under the regulations as amended by a final rule published by FNS on December 12, 2018, which allows flavored 1% milk, requires at least 50% of grains offered weekly in school meals to be whole grain-rich, and delays the implementation of stricter sodium limits for school meals. Table 6 provides an overview of the nutrition standards for school lunches as of September 2019.", "States and school districts are allowed to implement additional nutritional requirements for school meals, as long as they meet the federal standards."], "subsections": []}, {"section_title": "Nutrition Standards for Competitive Foods", "paragraphs": ["The HHFKA also required USDA to develop nutrition standards for other foods sold in NSLP- and SBP-participating schools on campus during the school day. These foods are known as \"competitive foods\" (i.e., foods sold in competition with school meals). Competitive foods include foods and drinks sold in vending machines, a la carte lines, snack bars and concession stands, and school fundraisers. These foods do not receive a federal reimbursement. The HHFKA required USDA to publish proposed nutrition standards for competitive foods within one year of the law's enactment and align the standards with the most recent Dietary Guidelines for Americans.", "Relying on recommendations made by the National Academies of Sciences, Engineering, and Medicine, FNS promulgated a proposed rule in April 2013 and then an interim final rule in June 2013, which went into effect in school year 2014-2015. The interim final rule created nutrition standards for all non-meal foods and beverages that are sold during the school day (defined as midnight until 30 minutes after dismissal). The final rule, published in July 2016, maintained the interim final rules with minor changes. Under the final standards, competitive foods must have certain primary ingredients, meet whole-grain requirements, and comply with calorie, sugar, sodium, and fat limits, among other criteria. Schools are also limited to a list of zero- and low-calorie beverages they may sell (with larger portion sizes and caffeine allowed in high schools).", "Fundraisers held outside of the school day and fundraisers in which the food sold is clearly not intended for consumption on campus during the school day are not subject to the competitive food nutrition standards. In addition, the law and the final rule provided states with discretion to exempt infrequent fundraisers selling foods or beverages that do not meet the nutrition standards.", "The rule did not limit foods brought from home\u00e2\u0080\u0094only foods sold at school during the school day. The federal standards are minimum standards, and states and school districts are permitted to issue more stringent policies. Many districts already had local competitive food standards in place prior to the HHFKA because of the 2004 child nutrition reauthorization law ( P.L. 108-265 ), which required local educational agencies to implement local school wellness policies that included nutritional guidelines for foods sold in schools (local school wellness policies are discussed in the \" Other Child Nutrition Activities \" section)."], "subsections": []}, {"section_title": "Local School Wellness Policies", "paragraphs": ["Local educational agencies participating in the school meals programs are required to have a local school wellness policy, which sets nutrition and health-related goals and guidelines for schools within the jurisdiction. Local school wellness policies must include goals related to nutrition and physical activity, nutrition standards for school foods that meet or exceed federal nutrition standards (discussed previously), and an implementation plan, among other content. Local educational agencies must provide opportunities for input from parents, students, school nutrition professionals, physical education teachers, school health professionals, school administrators, and the general public in developing and updating local school wellness policies."], "subsections": []}, {"section_title": "Other Food Service Topics", "paragraphs": ["This section discusses food procurement and service topics specific to the school meals programs. Other food service topics relevant to child nutrition programs more broadly, including NSLP and SBP (e.g., the farm to school initiative), are discussed in the \" Other Child Nutrition Activities \" section."], "subsections": [{"section_title": "Food Procurement and Preparation", "paragraphs": ["The majority of foods used in the school meal programs are purchased by school food authorities using federal cash reimbursements or other school district funds. School food authorities also receive USDA Foods (as discussed previously). School food authorities must comply with federal procurement rules when purchasing foods for the school meals programs. In addition, there is a \"Buy American\" requirement in statute that requires schools participating in the school meal programs to purchase domestic commodities and products \"to the maximum extent practicable.\" Purchases may include local foods, as long as they comply with federal, state, and local procurement regulations.", "Many school food authorities purchase and prepare their own meals, either at a centralized district kitchen or onsite at individual schools. Alternatively, school food authorities may contract with a private food service management company to contract out procurement and/or meal preparation. The contracted company must comply with all school meal regulations and the school food authority must retain general control over the operation of the school meals programs, including financial oversight and compliance with nutrition standards."], "subsections": []}, {"section_title": "Food Safety", "paragraphs": ["Foods served in any child nutrition program must comply with state or local health, safety, and sanitation standards for food storage, preparation, and service. Schools participating in the school meals programs must obtain food safety inspections by a state or local government agency at least twice a year. There are also food safety inspections for USDA Foods. School food authorities may allow children to place leftover whole food or beverage items on a \"share table\" in schools operating NSLP and other child nutrition programs, as long as such sharing complies with food safety standards."], "subsections": []}, {"section_title": "Meal Time and Setting", "paragraphs": ["In general, lunches and breakfasts are intended to be consumed onsite during the school day. Surveys have found that schools typically provide roughly 20 minutes for breakfast and 25-30 minutes for lunch.", "Under SBP, students were traditionally required to arrive early for breakfast and eat it in the cafeteria. However, in recent years, schools and states have increasingly adopted alternative models of breakfast service such as breakfast in the classroom, grab-and-go carts, and breakfast during morning breaks. Anti-hunger advocacy groups have encouraged the adoption of new models of breakfast service as a way to increase SBP participation. According to a 2018 survey by the School Nutrition Association (SNA), a member and advocacy organization, more than half of surveyed school districts offered both a traditional cafeteria line and alternative modes of breakfast service, while 43% of schools offered a cafeteria line only. Common alternatives were grab-and-go stations (particularly in middle and high schools) and breakfast in the classroom (particularly in elementary schools)."], "subsections": []}]}]}]}, {"section_title": "Child and Adult Care Food Program (CACFP)", "paragraphs": ["CACFP provides federal reimbursements for meals and snacks served in nearly 156,500 child care centers, day care homes, and adult day care centers nationwide in FY2019 (see Table 7 for participation by type of institution). In these settings, reimbursements are limited to meals and snacks served to children ages 12 and under, children of any age with disabilities, and chronically disabled and elderly adults. CACFP also supports free meals and snacks for children ages 18 and under in emergency shelters and afterschool programs in low-income areas (discussed in the \" After-School Meals and Snacks \" section).", "In general, CACFP provides cash reimbursements for up to two meals and one snack or one meal and two snacks per participant daily (a meal may be a breakfast, lunch, or supper). A smaller share of federal aid takes the form of commodity assistance or cash in lieu of commodities and funds for administrative costs (discussed previously). The eligibility and funding rules of CACFP differ for centers (facilities or institutions) and day care homes (private homes). Day care homes must be overseen by sponsoring organizations, which handle the financial and administrative functions of the program for a number of local providers. Centers have the option of operating independently or under a sponsor.", "Both centers and day care homes must comply with government-established standards for other child care programs and meet federal CACFP nutrition standards."], "subsections": [{"section_title": "Administration", "paragraphs": ["At the local level, sponsor organizations administer CACFP for all participating day care homes and centers that elect to have a sponsor. Sponsors are responsible for conducting audits of providers, distributing federal reimbursements, and in some instances, preparing and distributing meals. They can be public or nonprofit institutions or, in some cases, for-profit institutions. Centers that choose to handle their own administrative responsibilities are referred to as independent centers.", "Unlike centers, day care homes are required to have a sponsor organization. Sponsors receive monthly federal administrative payments based on the number of homes for which they are responsible (sponsors, on average, have more than 100 day care homes under their supervision). They may also receive a portion of the per-meal reimbursement if they have an agreement with the day care home to prepare meals. If a center opts to have a sponsor, the sponsor may retain a portion of the per-meal reimbursements for its administrative expenses.", "In CACFP, the state administering agency is typically the state department of education or department of health and/or human services. The state agency distributes federal funds and conducts reviews of CACFP sponsor organizations and independent centers.", "Similar to the school meals programs, FNS provides oversight of state agencies and issues guidance and regulations to states and providers."], "subsections": []}, {"section_title": "Eligibility and Reimbursement", "paragraphs": [], "subsections": [{"section_title": "CACFP Centers", "paragraphs": ["The following institutions are eligible to participate as centers in CACFP:", "public or private nonprofit (tax exempt) organizations providing nonresidential child care or adult day care (including school food authorities and Head Start centers), private for-profit organizations providing nonresidential child care or adult day care that enroll a certain proportion of low-income participants, and emergency shelters for homeless families.", "Adult day care centers and outside school hour centers fall under the first two categories, but they are subject to specific federal regulations.", "Income eligibility rules for CACFP centers are the same as the school meals programs: participants in households at or below 130% of the poverty line qualify for free meals and snacks and those between 130% and 185% of the poverty line qualify for reduced-price meals and snacks (a charge of no more than 40 cents for a lunch or supper, 30 cents for a breakfast, and 15 cents for a snack). CACFP centers also use similar categorical eligibility criteria, including participation in Head Start, foster child status, and household participation in SNAP, FDPIR, or TANF assistance. Adults are categorically eligible if they participate in SNAP, FDPIR, Supplemental Security Income (SSI), or Medicaid. Eligibility is determined through paper applications or, in some states, direct certification-like processes.", "For CACFP centers, the reimbursement rates for breakfasts and lunches/suppers are the same as the SBP breakfast reimbursement rate and NSLP lunch reimbursement rate, respectively. The largest subsidies are provided for free and reduced-price meals and snacks, while paid meals receive a lower reimbursement. Unlike the school meals programs, CACFP allows centers certain flexibilities for tracking meal counts and submitting claims for reimbursement.", "Compared to school meals, CACFP centers are also less likely to collect meal payments from participants and more likely to incorporate meal costs into tuition. Centers are not required to adjust tuition and fees to account for CACFP funding. Centers are also allowed to charge families separately for meals and snacks, as long as there are no charges for children who qualify for free meals and limited charges for those who qualify for reduced-price meals."], "subsections": []}, {"section_title": "CACFP Day Care Homes", "paragraphs": ["Day care homes are private homes that provide nonresidential child care services. In general, any day care home that meets local, state, or federal child care standards may participate in CACFP.", "Unlike centers, day care homes generally do not make eligibility determinations and receive the same reimbursement rate for every meal served. Day care homes located in a low-income area or with a low-income provider receive a higher, Tier I reimbursement rate (shown in Table 8 ). To receive the Tier I rate, the home must be located in an area in which at least 50% of children are eligible for free or reduced-price meals or be operated by a provider whose household income level meets the free or reduced-price income standards. Day care homes that do not qualify for Tier I rates receive Tier II (lower) rates. However, Tier II providers may seek the higher Tier I subsidies for individual low-income children for whom household income information is collected and verified.", "Like centers, day care homes may incorporate meal costs into tuition. Unlike centers, federal rules prohibit any separate meal charges."], "subsections": []}]}, {"section_title": "Nutrition Standards and Food Service", "paragraphs": [], "subsections": [{"section_title": "Nutrition Standards", "paragraphs": ["In addition to nutrition standards for school foods, the HHFKA required the Secretary of Agriculture to update CACFP's meal patterns. USDA's final rule, effective October 1, 2017, revised the meal patterns for meals and snacks served in centers and day care homes. It also aligned nutrition standards for meals served to preschool-aged children through NSLP and SBP.", "For infants (under 12 months of age), the new meal patterns eliminated juice, encouraged breastfeeding, and set guidelines for the introduction of solid foods, among other changes. For children ages one and older and adult participants, the new meal patterns increased whole grains, fruits, and vegetables, limited milk to unflavored 1% and unflavored or flavored fat-free varieties, limited sugar in cereals and yogurts, and prohibited deep-fried foods. They also required that potable water be available to children throughout the day. Subsequent rulemaking by USDA allowed flavored 1% milk to be served to children ages six and older in CACFP in school year 2018-2019 and forward."], "subsections": []}, {"section_title": "Procurement and Meal Service", "paragraphs": ["CACFP institutions may purchase their own foods and prepare their own meals, or they may contract with a school or a food service management company that prepares meals for them. In either case, institutions must comply with federal, state, and local procurement regulations. As noted previously, CACFP institutions also receive a certain amount of USDA Foods.", "Meals must comply with state or local health, safety, and sanitation requirements for storing, preparing, and serving food, and institutions must acquire annual food safety inspections. Family-style meal service is encouraged in CACFP."], "subsections": []}]}]}, {"section_title": "Summer Meals", "paragraphs": ["The Summer Food Service Program (SFSP) and the Seamless Summer Option provide federal reimbursements for summer meals. SFSP is open to school food authorities, local public agencies, and private nonprofit organizations, while the Seamless Summer Option is specifically for school food authorities, allowing them to continue operating under certain NSLP/SBP requirements into the summer. Both programs require children to consume meals onsite (known as the \"congregate feeding\" requirement). In recent years, the federal government has tested alternatives to congregate feeding through the Summer Electronic Benefits Transfer for Children (Summer EBT) demonstration in select states."], "subsections": [{"section_title": "Summer Food Service Program (SFSP)", "paragraphs": ["The Summer Food Service Program (SFSP) provides federal aid to school food authorities and other local public and nonprofit organizations that serve meals and snacks to children during the summer months. Federal aid is provided in the form of per-meal cash reimbursements and a smaller amount of commodity foods and administrative funds (discussed previously). The program serves roughly 2.7 million children annually at nearly 46,600 meal sites.", "Similar to CACFP, SFSP is administered at the local level by sponsor organizations that operate the program at one or more meal sites (the physical location where food is served and eaten). All SFSP meal sites are required to have a sponsor. Sponsors may operate meal sites at a variety of locations, including schools, recreation centers, parks, churches, and public libraries.", "Unlike the other child nutrition programs, SFSP participation is generally limited (with the exception of camps) to meal sites that serve children from \"areas in which poor economic conditions exist\"\u00e2\u0080\u0094defined as areas or sites in which at least 50% of children are eligible for free and reduced-price school meals (discussed further below)."], "subsections": [{"section_title": "Administration", "paragraphs": ["The following public and private nonprofit institutions are eligible to participate in SFSP as sponsors:", "nonprofit organizations, school food authorities, state and local governments (including tribal governments), public or nonprofit summer camps (overnight and day camps), and public or nonprofit colleges and universities participating in the National Youth Sports Program.", "Eligible sponsors must also provide year-round services to the community, with limited exceptions. According to statute, when selecting sponsors, states must give priority to school food authorities, public and nonprofit organizations that have demonstrated successful program performance in a prior year, new public sponsors, and new nonprofit sponsors (in that order). States must also prioritize sponsors located in rural areas.", "Sponsors are responsible for selecting meal sites, distributing meals to sites, and monitoring sites. Officials at meal sites are responsible for distributing meals to children, monitoring the food service, and keeping track of meals served for reimbursement. At times, a sponsor may also be a site (for example, camps are both sponsors and meal sites).", "An FNS analysis of a nationally representative sample of SFSP sponsors and meal sites in summer 2015 found that the majority of sponsors were school food authorities and nonprofit organizations, and common meal sites included schools, recreation centers, and parks/playgrounds.", "State administering agencies (often state departments of education) approve sponsors, distribute federal funds, and conduct reviews of sponsors and sites. State agencies receive SFSP funds for administrative costs in addition to general child nutrition program administrative funds (discussed previously in the \" Administrative Funds \" section).", "FNS distributes funds and commodities to state agencies, oversees states' implementation of SFSP, and provides guidance and technical assistance to states and participating institutions."], "subsections": []}, {"section_title": "Eligibility and Reimbursement", "paragraphs": ["According to statute, all sponsors except camps must \"conduct a regularly scheduled food service for children from areas in which poor economic conditions exist.\" SFSP regulations establish different eligibility rules for different types of meal sites.", "Open sites are meal sites that are open to all children in the community. In order to participate in SFSP, open sites must be located in an area in which at least 50% of the children would be eligible for free or reduced-price school meals as demonstrated through school data, Census data, or other approved data sources. Meals must be served free to all children at these sites, and the sponsor of the site receives reimbursement for every meal served (up to two meals or one meal and one snack per child daily).", "Closed enrolled sites are meal sites (other than camps) that only serve enrolled children. In order for the site to participate in SFSP, at least 50% of the enrolled children must qualify for free or reduced-price school meals based on the submission of a household application or other documentation. Like open sites, meals are served free to all children and the sponsor receives reimbursement for every meal served (up to two meals or one meal and one snack per child daily).", "Camps include residential and day camps that provide organized programs for enrolled children. Unlike open and closed enrolled sites, camps do not have to demonstrate that a certain percentage of children meet the free and reduced-price eligibility standards in order to participate in SFSP. Instead, eligibility works like NSLP and SBP: camps make eligibility determinations using similar income and categorical eligibility criteria for free and reduced-price meals. However, unlike the school meals programs, camps receive the same reimbursement rate for free and reduced-price meals. Camps may receive reimbursement for up to three meals or two meals and one snack per eligible child daily. Camps are not required to serve meals for free to all children, and there is no paid reimbursement provided for full-price meals.", "National Youth Sports Program (NYSP) sites , run by the National Collegiate Athletic Association, are enrolled sites; however, like open sites, they qualify for SFSP based on area eligibility data showing that at least half of the children in the area would qualify for free or reduced-price school meals. Sponsors of NYSP sites serve meals free to all enrolled children and receive reimbursement for all meals served (up to two meals or one meal and one snack per child daily).", "Migrant sites must demonstrate that they predominantly serve migrant children as certified by a migrant organization or a sponsor. They follow the same eligibility and reimbursement rules as open sites, except that they may receive reimbursement for up to three meals or two meals and one snack per child daily.", "According to the FNS study of SFSP sites, in summer 2015 the majority (59%) of sites were open sites, 29% were closed enrolled sites, 9% were camps, and 4% were another type of site.", "The SFSP reimbursement rate (the total rate displayed in Table 9 ) is composed of two parts: an operating cost (food, storage, labor) reimbursement and an administrative cost (planning, organizing, and managing) reimbursement. While operating and administrative rates are calculated separately, once sponsors receive the funds they can use them for any allowable program cost. Higher administrative reimbursements are provided for sponsors of rural meal sites and \"self-preparation\" sites (meal sites in which a sponsor rather than vendor prepares food)."], "subsections": []}, {"section_title": "Nutrition Standards", "paragraphs": ["Meals and snacks served through SFSP must meet federal nutrition standards. In contrast to the child nutrition programs discussed thus far, SFSP's nutrition standards are not required to align with the Dietary Guidelines for Americans, but are \"prescribed by the Secretary on the basis of tested nutritional research.\" Program regulations outline the nutrition standards for breakfasts, lunches/suppers, and snacks. The standards prescribe minimum servings of fruits and vegetables, meats/meat alternatives, breads/bread alternatives, and milk. Unlike school meals and CACFP, there are no limits on calories, saturated and trans fats, and milk varieties in SFSP. Participating school food authorities may choose instead to use the NSLP and/or SBP nutrition standards for SFSP."], "subsections": []}, {"section_title": "Procurement and Meal Service", "paragraphs": ["As noted, children are required to consume meals onsite in SFSP. There are also requirements around the timing of meals in SFSP: there must be at least three hours between meal or snack services and four hours between lunch and dinner if there is no snack served. Like the other child nutrition programs, SFSP sponsors must comply with local or state health and sanitation requirements."], "subsections": []}]}, {"section_title": "Seamless Summer Option", "paragraphs": ["School food authorities may participate in SFSP, or they can choose to offer summer meals through the Seamless Summer Option. The Seamless Summer Option allows school food authorities to continue operating under certain NSLP/SBP requirements into the summer. For example, it allows them to use the school meals programs' nutrition standards, administrative review process, and reimbursement rates (see Table 5 for NSLP/SBP reimbursement rates). Other requirements are the same as SFSP, including site eligibility rules. School food authorities are the only eligible sponsor in the Seamless Summer Option, but they can operate the program at a variety of meal sites (e.g., parks, recreation centers, libraries).", "The school lunch and breakfast reimbursement rates used in the Seamless Summer Option are slightly lower than SFSP's reimbursement rates. However, school food authorities participating in the Seamless Summer Option also receive the NSLP commodity reimbursement (discussed in the \" Commodity Assistance \" section). School food authorities may also have a reduced administrative burden under the Seamless Summer Option."], "subsections": []}, {"section_title": "Summer EBT and Other Demonstration Projects", "paragraphs": ["Beginning in summer 2011 and each summer since (as of the date of this report), USDA has operated Summer Electronic Benefit Transfer for Children (Summer EBT) demonstration projects in a limited number of states and Indian Tribal Organizations. The project provides electronic food benefits to households with children eligible for free or reduced-price school meals. Depending on the site and year, either $30 or $60 per month is provided on an EBT card. States and jurisdictions may apply to administer the project through SNAP or WIC. Participants in jurisdictions providing benefits through SNAP can redeem benefits for SNAP-eligible foods at any SNAP-authorized retailer, while participants in the WIC EBT jurisdictions are limited to a smaller set of eligible foods at WIC-authorized retailers.", "Summer meal demonstration projects were first authorized and funded by the FY2010 appropriations law ( P.L. 111-80 ). Although a number of approaches were tested, findings from Summer EBT were among the most promising, showing significant impacts on reducing food insecurity and improving nutrient intake.", "Summer EBT grantees in prior years include Connecticut, the Cherokee and Chickasaw nations, Delaware, Michigan, Missouri, Nevada, Oregon, Tennessee, Texas, Virginia, and Washington. In October 2018, FNS announced a new strategy for determining grant recipients in FY2019 that prioritized states that had not participated before, statewide projects, and projects that could operate in the summers of 2019 through 2021.", "Other summer demonstrations projects have included food backpacks, food boxes, and meal delivery for children in rural areas. In addition, since summer 2015 there has been a demonstration project to provide exemptions from the congregate feeding requirement to SFSP and Seamless Summer Option outdoor meal sites experiencing excessive heat."], "subsections": []}]}, {"section_title": "Special Milk Program (SMP)", "paragraphs": ["The Special Milk Program (SMP) subsidized milk in approximately 3,000 schools, child care institutions, summer camps, and other institutions in FY2019. Generally, schools and other participating institutions may not participate in another child nutrition meal service program along with SMP. However, schools may administer SMP for pre-kindergartners and kindergartners who are in part-day sessions and do not have access to the school meals programs.", "In SMP, participating institutions provide milk to children for free and/or at a subsidized paid price. Institutions are reimbursed differently based on whether they decide to provide milk for free to all children, sell milk to all children, or combine these options (providing free milk to eligible children and selling milk to other children) (see Table 10 ). If institutions choose the combined option, they must establish eligibility rules for free milk.", "USDA updated the nutritional requirements for milk served in SMP alongside changes to the CACFP nutrition standards. The final rule, which took effect on October 1, 2017, required unflavored whole milk for one-year-olds, unflavored low-fat (1%) or unflavored fat-free milk for children ages 2-5, and unflavored low-fat (1%) or flavored/unflavored fat-free milk for children ages six and older. The regulations also allowed for reimbursement of non-dairy milk substitutes in cases of medical or special dietary needs. In 2017, USDA changed the milk requirements for six-year-olds in SMP alongside corresponding changes to milk in school meals programs and CACFP. The change allowed the option of flavored low fat (1%) milk for children ages six and older in SMP for school year 2018-2019 forward."], "subsections": []}, {"section_title": "After-School Meals and Snacks", "paragraphs": ["CACFP and NSLP both provide federal support for snacks and meals served during after-school programs. The CACFP At-Risk Afterschool component provides reimbursement for up to one snack and one meal (usually supper) per child daily, whereas the NSLP Afterschool Snack option provides reimbursement for snacks only. Reimbursement rates for CACFP At-Risk Afterschool meals/snacks and NSLP afterschool snacks are the same as CACFP reimbursement rates (listed in Table 8 )."], "subsections": [{"section_title": "CACFP At-Risk Afterschool Meals and Snacks", "paragraphs": ["The CACFP At-Risk Afterschool component was authorized as a demonstration project in 1994 ( P.L. 103-448 ), expanded over time, and made available to all states by the HHFKA. The institutional eligibility rules are the same for At-Risk Afterschool providers as CACFP centers (see the \" CACFP Centers \" section); additionally, CACFP At-Risk Afterschool providers must be located in areas where at least 50% of children in the community are eligible for free or reduced-price school meals. The afterschool program must have \"an educational or enrichment purpose.\"", "Participating institutions receive reimbursement for up to one snack and one meal (e.g., supper) per child daily, and meals and snacks are provided for free to all children. Meals and snacks must meet federal nutrition standards. Institutions may operate the At-Risk Afterschool program in the after-school hours and on weekends, holidays, and breaks during the school year.", "Unlike the traditional CACFP, which is only available to children ages 12 and under, the At-Risk Afterschool component allows participation through age 18. In FY2019, the CACFP At-Risk Afterschool component served a daily average of 2.2 million children."], "subsections": []}, {"section_title": "NSLP Afterschool Snacks", "paragraphs": ["The NSLP Afterschool Snack option was authorized in the 1998 child nutrition reauthorization act ( P.L. 105-336 ). It allows NSLP-participating schools to receive federal reimbursement for one snack per child daily in eligible afterschool programs during the school year. According to USDA guidance, eligible afterschool programs must provide \"organized, regularly scheduled activities in a structured and supervised environment,\" including an educational or enrichment activity.", "Schools that choose to operate the NSLP Afterschool Snack component may do so in one of two ways: (1) like the CACFP At-Risk Afterschool component, if at least 50% of children are eligible for free and reduced-price meals, the schools may provide free snacks to all children, or (2) if this criterion is not met, the schools may offer free, reduced-price, or full price snacks, based on household income eligibility (like the school meals programs). The vast majority of snacks provided through this program represent the first option. Snacks served through the NSLP Afterschool Snack component must comply with federal nutrition standards.", "In FY2019, the NSLP Afterschool Snack component served a daily average of 1.2 million children."], "subsections": []}]}, {"section_title": "Fresh Fruit and Vegetable Program (FFVP)", "paragraphs": ["The Fresh Fruit and Vegetable Program (FFVP) provides formula grants to states to fund fresh fruit and vegetable snacks in selected elementary schools. Under a statutory formula, about half the funding is distributed equally to each state and the remainder is allocated by state population. States must prioritize funding for schools with high proportions of students who are eligible for free or reduced-price meals. Schools must participate in NSLP in order to receive a FFVP grant. States set annual per-student grant amounts (between $50 and $75). Schools may provide fresh fruit and vegetable snacks to students at any time of day outside of the breakfast or lunch service. Schools offer snacks to all children in attendance (regardless of family income).", "As noted previously, FFVP's funding structure differs from the other child nutrition programs. FFVP is funded by a mandatory transfer of funds from Section 32. The authorizing law provided $150 million for school year 2011-2012, which is adjusted annually for inflation. In FY2019, FNS allocated approximately $171.5 million in FFVP funds to states.", "FFVP has been amended over time by both farm bills and child nutrition reauthorization bills. FFVP was created by the 2002 farm bill ( P.L. 107-171 ) as a pilot project. The 2004 child nutrition reauthorization act ( P.L. 108-265 ) made the program permanent and provided funding for a limited number of states and Indian reservations. The 2008 farm bill ( P.L. 110-246 ) expanded FFVP's mandatory funding through Section 32 and enabled all states to participate in the program. The 2014 farm bill ( P.L. 113-79 ) essentially made no changes to FFVP but provided $5 million for a demonstration project to test offering frozen, canned, and dried fruits and vegetables in the program. Four states (Alaska, Delaware, Kansas, and Maine) participated in the pilot in school year 2014-2015 and an evaluation was published in 2017."], "subsections": []}, {"section_title": "Other Child Nutrition Activities", "paragraphs": ["Federal child nutrition laws authorize and child nutrition funding supports several additional initiatives and activities, such as studies and evaluations, training and technical assistance, technology improvements, and food safety initiatives. Selected initiatives and activities are discussed below."], "subsections": [{"section_title": "Farm to School Program", "paragraphs": ["The farm to school program, which includes the Farm to School Grant Program, was authorized by the HHFKA. It expanded upon FNS's existing farm to school efforts, defined broadly as \"efforts that bring regionally and locally produced foods into school cafeterias,\" with a focus on enhancing child nutrition. The goals of these efforts include increasing fruit and vegetable consumption among students, supporting local farmers and rural communities, and providing nutrition and agriculture education. One component of the farm to school program is farm to school grants, which have annual mandatory funding of $5 million. The grants are awarded by FNS on a competitive basis to schools, nonprofit entities, and agricultural producers/processors for the purpose of establishing programs that improve schools' access to locally produced foods. They may be used for training, supporting operations, planning, purchasing equipment, developing school gardens, nutrition education, developing partnerships, and other activities."], "subsections": []}, {"section_title": "Institute of Child Nutrition", "paragraphs": ["The Institute of Child Nutrition provides technical assistance, instruction, and materials for nutrition and food service professionals and other local administrators of child nutrition programs on a variety of topics. The institute receives $5 million a year in mandatory funding appropriated in statute. The institute is currently located at the University of Mississippi."], "subsections": []}, {"section_title": "Team Nutrition", "paragraphs": ["The Team Nutrition initiative supports federally and state-developed nutrition education and promotion initiatives. This includes grants for state agencies to develop programs to improve school meal quality, such as by training school nutrition professionals. From 2004 to 2018, Team Nutrition also included the HealthierUS Schools Challenge, which was a voluntary certification initiative designed to recognize schools that create a healthy school environment through the promotion of nutrition and physical activity."], "subsections": []}]}, {"section_title": "Further Information", "paragraphs": ["CRS reports:", "CRS In Focus IF10266, An Introduction to Child Nutrition Reauthorization CRS Report R45486, Child Nutrition Programs: Current Issues CRS Report R42353, Domestic Food Assistance: Summary of Programs CRS Report R41354, Child Nutrition and WIC Reauthorization: P.L. 111-296 (summarizes the Healthy, Hunger-Free Kids Act of 2010) CRS Report R44373, Tracking Child Nutrition Reauthorization in the 114th Congress: An Overview CRS Report R45743, USDA Domestic Food Assistance Programs: FY2019 Appropriations CRS Report RL34081, Farm and Food Support Under USDA's Section 32 Program CRS Report RL33299, Child Nutrition and WIC Legislation in the 108th and 109th Congresses (summarizes the Child Nutrition and WIC Reauthorization Act of 2004)", "Other resources:", "USDA FNS website, https://www.fns.usda.gov/ USDA FNS Healthy, Hunger-Free Kids Act page, http://www.fns.usda.gov/school-meals/healthy-hunger-free-kids-act The FNS page of the Federal Register , https://www.federalregister.gov/agencies/food-and-nutrition-service USDA FNS Congressional Budget Justifications, https://www.obpa.usda.gov/explan_notes.html"], "subsections": [{"section_title": "Appendix. A Brief History of Federal Child Nutrition Programs", "paragraphs": ["The Emergence of School Lunches and the National School Lunch Program", "When the first federal aid for school lunches was provided in the 1930s, local school lunch programs were already operational in many cities and localities across the U.S. Many of these early lunch programs were started by charitable women's organizations at the turn of the century in an effort to feed hungry children. Over time, they transitioned to school boards and school districts. These programs received a combination of private, local, and state funding.", "The federal government became involved in school lunch programs during the Great Depression both as a way to feed hungry children and support the farm economy. Initially, federal aid was provided in the form of cafeteria equipment and labor. In 1932, the Reconstruction Finance Corporation began providing loans to states and school districts to cover the cost of cafeteria space and equipment for school lunch programs. In 1935, the Works Progress Administration, a New Deal agency, began sponsoring women's employment in school lunchrooms. Federal food support for school lunches began that same year, when Section 32 of the Act of August 24, 1935 (P.L. 74-320) was enacted. The act provided 30% of customs receipts to USDA to purchase surplus commodities from farmers impacted by the depression. These commodities were donated through various outlets for domestic consumption, including school lunch programs.", "With commodity aid came the first federal regulations for school lunch programs. USDA required recipient organizations, through their agreements with state agencies, to operate school lunch programs on a nonprofit basis, maintain any existing local funding for school lunches, keep records of foods received, serve meals free to poor children, and ensure that such children would not be identified to their peers, among other requirements.", "The availability of federal aid contributed to a rapid increase in the number of school lunch programs. However, in 1943, federal commodity aid declined as Section 32 surplus commodities were diverted to feed U.S. armed forces in World War II. In addition, federal support for lunchroom labor disappeared with the elimination of the Works Progress Administration. In the midst of declining aid, Congress provided the first cash assistance\u00e2\u0080\u0094$50 million in Section 32 funds\u00e2\u0080\u0094for \"a school milk and lunch program\" in the 1944 Department of Agriculture Appropriation Act (P.L. 78-129). The introduction of cash assistance marked a shift in the lunch program. For the first time, schools could purchase their own foods in addition to receiving federally purchased commodities.", "Annual appropriations acts continued cash support for school lunches until 1946, when the National School Lunch Act (P.L. 79-396) was enacted. Signed into law on June 4, 1946, by President Truman, the National School Lunch Act permanently authorized appropriations of \"such sums as may be necessary\" for the National School Lunch Program. (The act would later be renamed the \"Richard B. Russell National School Lunch Act,\" recognizing Senator Russell's role in the passage of the legislation and his earlier support for the school lunch program within New Deal programs and during his tenure as the Chairman of the Agriculture Appropriations subcommittee. ) The law required participating schools to serve lunches for free or at a reduced price to students who were deemed by local school authorities as unable to pay the full cost of a lunch. Funds were to be distributed to states based on the number of school-aged children in the state and the state's need, as measured by per-capita income, and states were to match federal funds dollar-for-dollar. States were to distribute funding on a monthly basis to schools based on the number of meals served that met \"minimum nutritional requirements prescribed by the Secretary on the basis of tested, nutritional research\" (P.L. 79-396). Cash assistance could not be used for cafeteria equipment, and separate funds were authorized for this purpose ($10 million annually); however, Congress subsequently prohibited appropriations for equipment assistance from FY1948 to FY1967.", "NSLP remained relatively unchanged from 1946 to 1960. However, during this timeframe, concerns emerged over the funding formula. One concern was that the formula prioritized funding for schools with large numbers of school-aged children rather than actual participants in the program. There was also concern that schools with high proportions of needy children received the same amount of aid as those with wealthier families, even though they had to serve a larger number of meals for free or at a reduced-price. In 1962, P.L. 87-823 changed the funding formula to be based on the number of school lunches served in the state in the preceding school year instead of the number of school-aged children. The law also authorized additional \"special assistance\" for state-selected schools in poor economic areas (however, special assistance was not funded until 1966).", "Other notable changes to NSLP occurred in the 1970s. In 1970, P.L. 91-248 extended special assistance to all schools participating in NSLP. The law also reduced the state matching requirement and established the first national eligibility guidelines for free and reduced-price meals at 100% of the federal poverty level (later in the decade increased to 125% for free lunches and 195% for reduced-price lunches). In 1971, another significant change occurred with the enactment of P.L. 92-153, which guaranteed states a certain level of federal cash assistance by specifying average per-meal reimbursement rates for free, reduced-price, and paid lunches.", "The Addition of Other Child Nutrition Programs", "In the 1960s, federal child nutrition efforts expanded beyond school lunches. On October 11, 1966, the Child Nutrition Act of 1966 (P.L. 89-642) was enacted. It formally authorized the Special Milk Program (SMP) and authorized the School Breakfast Program (SBP) as a pilot program. The SMP was based on predecessor USDA school milk programs that had operated since the 1940s. SBP was a newer concept that USDA had piloted in the 1965-1966 school year. In a House Agriculture Committee hearing on the Child Nutrition Act, then-Secretary of Agriculture Orville L. Freeman testified that", "These proposals will permit us to begin a comprehensive effort to broaden child nutrition programs in this country. They are based on what we have learned in 20 years of administration of the National School Lunch Act, and they reflect a careful assessment of gaps which now exist in the nutritional needs of children in this country.", "The SMP provided reimbursements for milk in schools, nonprofit child care centers, summer camps, and other nonprofit institutions. At the time, schools and institutions could participate in both SMP and NSLP. Meanwhile, SBP was authorized for two fiscal years and required states to prioritize funds for \"schools drawing attendance from areas in which poor economic conditions exist and to those schools to which a substantial proportion of the children enrolled must travel long distances daily\" (P.L. 89-642). (Congress later expanded priority to include \"schools in which there is a special need for improving the nutrition and dietary practices of children of working mothers and children from low-income families\" (P.L. 92-32).) The Child Nutrition Act of 1966 also gave the Secretary the authority to provide higher reimbursements to schools with \"severe need.\" Like NSLP, the law specified that breakfasts \"meet minimum nutritional requirements prescribed by the Secretary on the basis of tested nutritional research,\" and be served for free or at a reduced price to children unable to pay the full price of a meal, as determined by local school authorities (P.L. 89-642).", "In 1968, child nutrition efforts were further expanded with the authorization of the Special Food Service Program for Children (SFSPC), a pilot program to fund meals in summer and child care settings (P.L. 90-302). SFSPC provided the first federal assistance for summer meals for children and the first dedicated assistance for meals served in child care settings. Similar to SBP, SFSPC was targeted to areas with poor economic conditions and a high number of working mothers.", "In 1975, the program was split into the separate Child Care Food Program (CCFP) and the Summer Food Service Program (SFSP) ( P.L. 94-105 ). CCFP was open to public and nonprofit institutions that met child care licensing or other official child care standards, while SFSP retained a focus on institutions in low-income areas. Meals were provided for free to all children at SFSP sites, whereas CCFP conducted free and reduced-price eligibility determinations like NSLP.", "Recent History (1980 to 2010)", "The longstanding growth of child nutrition programs was contrasted with budget cuts in the early 1980s, which were part of larger efforts to reduce federal domestic spending. The Omnibus Reconciliation Act of 1980 ( P.L. 96-499 ) reduced FY1981 funding for child nutrition programs by approximately $400 million (9%) of the child nutrition budget. The law achieved savings by lowering reimbursement rates in the programs and eliminating commodity assistance for breakfast, among other changes. Larger spending cuts followed with the Omnibus Reconciliation Act of 1981, which made changes that collectively cut $1.4 billion (25%) of the child nutrition budget (Title VIII of P.L. 97-35 ). Many of the policy changes made by the law remain in place today. For example, the law restricted eligibility from 195% of poverty to 185% of poverty for reduced-price meals and set eligibility at 130% for free meals in the NSLP, SBP, and CCFP. It also raised allowable charges for reduced-price lunches from 20 cents to 40 cents and for reduced-price breakfasts from 10 cents to 30 cents. In a major change to SMP, the law excluded schools/institutions that participated in another child nutrition meals program from participating in SMP\u00e2\u0080\u0094cutting SMP's budget by 77 percent. In CCFP, the law restricted participation from children ages 18 and under to children ages 12 and under, and reduced the maximum number of reimbursable meals from three meals and two snacks per child daily to two meals and one snack per child daily. The law also eliminated equipment assistance for school meals.", "Child nutrition programs were subsequently excluded from budget deficit reduction measures in the late 1980s and 1990s, and new policies led to the expansion of the programs during this timeframe. For example, amendments to the programs in these years authorized start-up grants for school breakfast programs, expanded CCFP to adult day care centers (and renamed the Child and Adult Care Food Program, or CACFP), and provided new funding for afterschool snacks through NSLP and CACFP. But what had potentially the longest-term impact on expansion was a policy change intended to reduce paperwork in the school meals programs: automatic (categorical) eligibility for free meals for children in food stamp (now SNAP) and Aid to Families with Dependent Children (now TANF) households, which was enacted in 1986\u00e2\u0080\u0094and direct certification of such children for free meals without household applications, which was enacted in 1989.", "Other policies in the late 1980s and 1990s focused on improving program integrity. The 1989 child nutrition reauthorization ( P.L. 101-147 ) required USDA to create a standardized process through which states would review school food authorities' administration of NSLP and SBP (known as administrative reviews). In CACFP, following USDA Office of the Inspector General (OIG) audits in the 1990s that found instances of abuse and mismanagement, the Agricultural Risk Protection Act of 2000 ( P.L. 106-224 ) made a number of changes aimed at improving program integrity in CACFP. The act required CACFP sponsors to conduct more frequent and unannounced site visits of sponsored centers and homes, restricted nonprofit institutions' eligibility to those with tax-exempt status, and excluded institutions deemed ineligible to participate in any other public program based on violations of program requirements. Other legislation was aimed at improving program integrity in the school meals programs.", "Program integrity continued to be a focus in the 2004 child nutrition reauthorization ( P.L. 108-265 ), which made changes to school food authorities' verification of household applications for free and reduced-price meals. Specifically, the law set a sample size of applications that schools must review, established a focus on \"error-prone\" applications (applications near the income eligibility thresholds), and authorized direct (automatic) household application verification processes. In addition, the law required states to conduct additional administrative reviews of school food authorities with a high level of administrative error or risk of error. ", "The 2004 child nutrition reauthorization also continued the expansion of free school meals to new categories of children. Specifically, the law extended categorical eligibility and direct certification for free school meals to homeless children, migrant children, and children served under the Runaway and Homeless Youth Act. ", "The most recent child nutrition reauthorization as of the date of this report was the Healthy, Hunger-Free Kids Act of 2010 (HHFKA; P.L. 111-296 ). The HHFKA continued the expansion of school meals in a few ways. It made foster children categorically eligible for free school meals, and allowed direct certification of such children. It also included a pilot project for direct certification (but not categorical eligibility) of children in Medicaid households for free and reduced-price meals based on an income test. In addition, the HHFKA created the Community Eligibility Provision (CEP), through which eligible schools can provide free meals to all students.", "As discussed in this report, the HHFKA also made changes to nutritional requirements in the school meals programs and CACFP. Specifically, the law required USDA to update the nutrition standards for school meals within a certain timeframe and align the standards with the Dietary Guidelines for Americans (per an existing statutory requirement). The law also required USDA to issue new nutrition standards regulating all foods sold on school campuses during the school day (\"competitive foods\"). (Previous standards applied only to competitive foods sold during meal service.) In addition, the HHFKA required USDA to update the nutrition standards for CACFP meals and snacks within a certain timeframe and align them with the Dietary Guidelines for Americans. USDA and Congress have made subsequent changes to the nutrition standards for school meals and CACFP meals and snacks, and the standards remain a source of debate in the programs."], "subsections": []}]}]}}
{"id": "R46176", "title": "H.R. 4674, the College Affordability Act: Proposed Reauthorization of the Higher Education Act, Summary of Major Provisions", "released_date": "2020-01-07T00:00:00", "summary": ["The Higher Education Act of 1965 (HEA; P.L. 89-329, as amended) authorizes programs and activities to provide support to individuals who are pursuing a postsecondary education and to institutions of higher education (IHEs). During the 116 th Congress, the House Committee on Education and Labor marked up and ordered to be reported the College Affordability Act ( H.R. 4674 ), which would provide for the comprehensive reauthorization of most HEA programs.", "This report organizes the changes proposed by H.R. 4674 into seven themes:", "Expanding the availability of financial aid to postsecondary students . This would primarily be accomplished by increasing funding available through grant programs and by expanding student aid eligibility criteria. This includes increasing the total maximum Pell Grant award and expanding Pell Grant eligibility to new subsets of students, increasing funding for existing student aid programs, creating a new Direct Perkins Loans program, and modifying the need assessment and Free Application for Federal Student Aid filing process.", "I nstitutin g borrower-focused student loan reforms . This set of proposed changes aims to ease a borrower's student loan burden. It includes amending loan terms and conditions to be more generous once an individual has entered repayment on his or her loan, modifying and making efforts to streamline student loan administrative procedures, and expanding the availability of student loan refinancing options.", "Modifying educational, financial, and other institutional accountability requirements for receipt of federal funds. With respect to requirements IHEs must meet to participate in the Title IV federal student aid programs, these proposed changes include revising accreditation requirements, adjusting current participation metrics, and creating new participation metrics. They also include addressing regulatory requirements of Title IX of the Education Amendments of 1972, which prohibits discrimination on the basis of sex in educational programs or activities receiving federal funds.", "Revising public accountability, transparency, and consumer information requirements . This would primarily be accomplished by providing consumers with additional and more nuanced information to make more informed college-going and student loan borrowing decisions. Proposed changes include repealing the student unit record system ban and requiring annual student loan counseling.", "Expanding academic and personal supports to specific student populations. Proposed changes include creating several new programs and reauthorizing and increasing the authorization of appropriations for several existing programs, such as TRIO and Child Care Access Means Parents in School.", "Increasing financial support to IHEs , focusing on minority-serving institutions. These proposals involve reauthorizing and increasing the authorization of appropriations for numerous institutional support programs.", "Creating new grant programs for states and IHEs to reduce students' postsecondary costs . This would be accomplished by authorizing grants to support a federal-state partnership to provide tuition-free community college."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction and Legislative Context", "paragraphs": ["The Higher Education Act of 1965 (HEA; P.L. 89-329, as amended) authorizes programs and activities to provide support to individuals who are pursuing postsecondary education and to institutions of higher education (IHEs). The HEA was last comprehensively reauthorized by the Higher Education Opportunity Act of 2008 (HEOA; P.L. 110-315 ). The HEOA extended the authorization of appropriation of funds for most HEA programs through FY2014, while the General Education Provisions Act (GEPA) provided an extension of that authority for an additional year (through FY2015). Many HEA programs have continued beyond FY2015 with funding provided under a variety of appropriations measures and continuing resolutions.", "During the 116 th Congress, the House Committee on Education and Labor marked up and ordered to be reported the College Affordability Act (CAA; H.R. 4674 ). The bill would provide for the comprehensive reauthorization of most HEA programs, create a number of new postsecondary education programs, and address certain issues related to higher education but separate from the HEA. In general, for programs with discretionary funding H.R. 4674 would authorize the appropriation of funds in specific, as opposed to indefinite, amounts for each year in which funding would be authorized to be provided. ", "The Congressional Budget Office (CBO) estimates that the enactment of H.R. 4674 would increase mandatory spending outlays by approximately $161 billion in the 5-year period from FY2020 to FY2024 and by about $332 billion in the 10-year period from FY2020 to FY2029 period. In the 10-year estimate, about half the mandatory spending increase would result from changes to the federal student loans programs and about a quarter of the increase would result from changes to the Pell Grant program. CBO further estimates that the enactment of H.R. 4674 would increase discretionary spending outlays by about $149 billion in the 5-year period from FY2020 to FY2024. This largely reflects the extension of periods of authorized appropriations for existing programs. CBO did not make a 10-year estimate for discretionary spending.", "This report focuses on the key themes in H.R. 4674 and describes major changes proposed in the bill that are representative of those themes. It aims to provide a general understanding of the primary proposals of H.R. 4674 . The report does not aim to provide a comprehensive analysis of the bill nor of technical changes that would be made by it."], "subsections": []}, {"section_title": "Key Themes in H.R. 4674, as Ordered Reported with Amendments", "paragraphs": ["H.R. 4674 , as ordered to be reported on October 31, 2019, would provide for the comprehensive reauthorization of the HEA, amending numerous programs and activities that make up a large portion of the federal effort to support postsecondary education. Taken collectively, the changes that would be made by H.R. 4674 reflect several key themes: (1) expanding the availability of financial aid to postsecondary students; (2) implementing borrower-focused student loan reforms; (3) modifying institutional accountability requirements for receipt of federal funds; (4) revising public accountability, transparency, and consumer information requirements; (5) expanding student services for specific populations; (6) expanding federal assistance to provide support to IHEs; and (7) creating new grant programs for states and institutions to reduce students' postsecondary costs. Each of these themes is discussed in the text that follows."], "subsections": []}, {"section_title": "Expanding the Availability of Financial Aid to Postsecondary Students", "paragraphs": ["Title IV of the HEA authorizes a group of federal student aid programs that provide aid to eligible individual students through grant and loan programs and work-study assistance. H.R. 4674 would expand aid availability in a number of ways, with considerable emphasis placed on increasing funding made available through grant programs. Some provisions in H.R. 4674 would increase aid availability by expanding eligibility. "], "subsections": [{"section_title": "Expansion of Pell Grants", "paragraphs": ["HEA Title IV, Part A authorizes Pell Grants\u00e2\u0080\u0094financial need-based grants that are available to eligible undergraduate students. Student Pell Grant eligibility is determined on a sliding scale, based on a student's expected family contribution (EFC). The Pell Grant program is the largest grant program authorized in Title IV in terms of both the number of grants (about 7.1 million in award year [AY] 2017-2018) and the total awards (about $28.7 billion in AY2017-2018). The Pell Grant program is often referred to as a\u00c2\u00a0quasi-entitlement\u00c2\u00a0program, through which all eligible applicants receive grants.", "Generally, the maximum Pell Grant a full-time, full-academic-year student can receive is the difference between the total maximum Pell Grant ($6,345 in AY2020-2021) and the student's EFC. A full-time, full-academic-year student who has an EFC of zero would be eligible for the total maximum grant. For a student who enrolls on a less-than-full-time basis, his or her maximum scheduled award is ratably reduced. To receive a Pell Grant, a student must be enrolled in an eligible program at an eligible IHE.", "H.R. 4674 would increase the total maximum Pell Grant and would expand the population of eligible students and the types of eligible educational programs. The bill would also permanently authorize discretionary appropriations for the Pell Grant program."], "subsections": [{"section_title": "Increase of Total Maximum Pell Grant", "paragraphs": ["The total maximum Pell Grant is the sum of a mandatory add-on award amount and a discretionary award amount. The mandatory add-on award is an amount established by the HEA and funded by a permanent, indefinite mandatory appropriation. The discretionary award amount is specified in annual appropriations laws. ", "Under current law, in the upcoming award year (AY2020-2021) the total maximum Pell Grant will be $6,345. H.R. 4674 would, on the whole, increase the mandatory add-on award levels in AY2021-2022 and in each award year thereafter. For AY2021-2022, the mandatory add-on award would be $1,685, an increase of $625 from $1,060 in AY2020-2021; thus, the total maximum grant amount would be $6,970 assuming the discretionary award level were the same as provided under current law in AY2020-2021. H.R. 4674 would further increase the total maximum grant by the rate of inflation in each year following AY2021-2022, assuming the discretionary award levels were not lower than the preceeding year. The increased award amounts would be funded by corresponding increases in mandatory appropriations.", "There are two primary effects of an increase to the total maximum Pell Grant: ", "1. Currently eligible students would be eligible for a larger Pell Grant. Most full-time, full-year recipients would be eligible for a Pell Grant that is up to $625 higher in AY2021-2022 compared to AY2020-2021. Students who are not full-time, full-year would qualify for smaller increases. 2. A portion of students whose EFCs would have been too high to qualify for a Pell Grant may become newly Pell-eligible. "], "subsections": []}, {"section_title": "Pell Eligibility Expansions", "paragraphs": ["H.R. 4674 would expand the availability of Pell Grants in several other ways, including the following:", "Increase of period of eligibility (lifetime eligibility limit). Under current law, eligible students may receive Pell Grants for up to 12 full-time semesters (or the equivalent). H.R. 4674 would increase this limit to 14 full-time semesters (or the equivalent). Pell Grants to incarcerated students. H.R. 4674 would eliminate the provision in current law that prohibits persons incarcerated in federal and state facilities from receiving a Pell Grant, creating Pell eligibility for incarcerated and civilly committed persons. H.R. 4674 would restrict such persons from receiving Pell Grants while attending proprietary IHEs. Pell Grants to graduate students. Under current law, Pell Grants are limited to undergraduate students and students in some postbaccalaureate teacher education programs. H.R. 4674 would, in some cases, permit graduate students who received Pell Grants as undergraduates and have not exhausted their lifetime Pell Grant eligibility to receive Pell Grants at public and nonprofit IHEs."], "subsections": []}, {"section_title": "Job Training Pell Grants", "paragraphs": ["Under current law, Pell Grants are typically limited to programs of at least 600 clock hours, 16 semester or trimester hours, or 24 quarter hours offered over a minimum of at least 15 weeks. H.R. 4674 would create a new category of \"Job Training Federal Pell Grants\" that could be applied to shorter programs of between 150 and 600 hours and between 8 and 15 weeks. To qualify for the new grants, a training program would need to meet the following criteria:", "Demonstrate alignment with \"high-skill, high-wage, or in-demand\" sectors or occupations, and meet the hiring requirements of employers in those sectors or occupations. Prepare students to pursue related certificate or degree programs at an IHE by providing academic credit toward a certificate or degree program. Be provided by a public or private nonprofit IHE that is an eligible provider under the Workforce Innovation and Opportunity Act (WIOA) and that fulfills additional institutional eligibility requirements related to Secretarial approval, gainful employment, accreditation, and reporting.", "In many cases, the shorter term nature of the job training programs may result in a Pell Grant that is for a lesser amount than the total maximum award for a full-year, full-time student. For example, assuming a total maximum Pell Grant of $6,195 (maximum award for the current 2019-2020 award year), a student with a zero EFC pursuing a 150 clock hour program over 8 weeks would qualify for a Pell Grant of no more than $1,035, or approximately 17% of the total maximum Pell Grant award, depending on the cost of the program."], "subsections": []}]}, {"section_title": "Creation of Direct Perkins Loan Program", "paragraphs": ["HEA, Title IV, Part E establishes the operation of the Federal Perkins Loan program. Authorization to make new Perkins Loans to students expired on September 30, 2017. Borrowers of loans previously made through the Perkins Loan program remain responsible for making payments on those loans.", "H.R. 4674 would authorize a new Direct Perkins Loan program, which, although it would share a name and have some similarities with the curtailed Perkins Loan program (which was administered by IHEs as a campus-based program), would be significantly different. The newly created program would be a direct loan program , under which the federal government lends directly to students using federal capital and is responsible for loan servicing and collections work (which is performed primarily by contractors). ", "Under the Direct Perkins Loan program, loans with many of the same terms and conditions as Direct Unsubsidized Loans would be made available to students, with award priority given to students demonstrating exceptional financial need. Undergraduate students would be eligible to borrow up to $5,500 annually and $27,500 in the aggregate; graduate and professional students would be eligible to borrow up to $8,000 annually and $60,000 in the aggregate through the Direct Perkins Loan Program. Annual and aggregate Direct Perkins Loan limits would be independent of annual and aggregate limits under the Direct Loan program, but aggregate limits would include loans previously made to students under the curtailed Perkins Loan program. Interest rates on Direct Perkins Loans would be fixed at 5% per year.", "In general, annual authority to make Direct Perkins Loans to students would be allocated to IHEs via a formula that would consider unmet student need and Pell Grant funds awarded at the IHE. However, H.R. 4674 would authorize a base guarantee for loan authority, equal to the average of an IHE's total principal amount of loans made in academic years 2012-2013 through 2016-2017 under the previously authorized Perkins Loan program.", "H.R. 4674 would provide mandatory appropriations for the program, not to exceed $2.4 billion in \"annual loan authority\" for AY2021-2022 and for each succeeding fiscal year."], "subsections": []}, {"section_title": "Modifications to Campus-Based Grant Programs", "paragraphs": ["The HEA authorizes two campus-based grant programs that provide federal funds to IHEs that administer the programs and provide institutional funds to match a portion of the federal funds they receive. The institutions then distribute these funds to students using some discretion but operating within statutorily specified parameters.", "H.R. 4674 would make substantial but similar changes to the formulas that are used to distribute federal funds under each of the two campus-based grant programs and would increase the authorized appropriations level for each program."], "subsections": [{"section_title": "Federal Supplemental Educational Opportunity Grant (FSEOG) Program", "paragraphs": ["HEA, Title IV, Part A authorizes the FSEOG program, which provides funds to IHEs for grants to undergraduate students who demonstrate exceptional financial need. Most IHEs are required to provide matching funds so that the federal share of FSEOG is no more than 75%. In FY2019, FSEOG appropriations totaled $840 million.", "Under current law, FSEOG funds are distributed to IHEs using a formula that first distributes funds on the basis of what the IHEs received in past years (their base guarantee ), with the strongest base protection provided for schools that have participated in the program since at least FY1999. The remaining funds are distributed on the basis of the IHEs' proportional shares of eligible undergraduate student need (their fair share ). ", "Beginning in FY2021, H.R. 4674 would replace the existing formula with a modified version of the fair share formula that considers unmet student need and Pell Grant funds awarded at the IHE. In FY2021, IHEs would receive the higher of their grant under the new formula or 90% of their FY2020 grant. The percentage would decline in subsequent years, and in FY2026 FSEOG allotments for all IHEs would be based entirely on the new formula. H.R. 4674 would also establish new institutional eligibility criteria that would take into account the proportion of Pell Grant recipients enrolled at an IHE. ", "H.R. 4674 would increase the authorization of discretionary appropriations to $1.15 billion in FY2021. The authorization level would then increase by $150 million per year until reaching $1.75 billion in FY2025. The authorization level would remain at the FY2025 level for each succeeding fiscal year. "], "subsections": [{"section_title": "Emergency Grant Program", "paragraphs": ["H.R. 4674 would create an emergency grant program for FSEOG-participating IHEs. The program would be funded through a $12.5 million set-aside from the FSEOG appropriation for FY2021 through FY2026. Most participating IHEs would be required to provide a 50% match to participate in the program. Priority would be given to IHEs at which at least 30% of enrolled students are Pell Grant-eligible. To participate in the program, each IHE would be required, among other things, to provide assurance that emergency grant funds would be used to address \"financial challenges that would directly impact the ability of an eligible student to continue and complete [his or her] course of study.\" "], "subsections": []}]}, {"section_title": "Federal Work-Study (FWS) Programs", "paragraphs": ["HEA, Title IV, Part C of the HEA authorizes the FWS programs, which provide grants to IHEs to support part-time employment for qualified undergraduate, graduate, and professional students. FWS employment may consist of work at the IHE a student attends; a private nonprofit organization; a federal, state, or local public agency; or a private for-profit organization. In FY2019, FWS appropriations were $1.13 billion.", "Under current law, FWS funds are distributed to IHEs using a formula similar to the current-law FSEOG formula, allocating funds on the basis of the base guarantee and fair share factors. Under H.R. 4674 , the FWS formula would be the same as the FSEOG formula. Funds would be distributed based on a modified version of the fair share formula that considers unmet student need and Pell Grant funds awarded at the IHE. In FY2021, IHEs would receive the higher of their grant under the new formula or 90% of their FY2020 grant. The percentage would decline in subsequent years, and in FY2026 FWS allotments for all IHEs would be based entirely on the new formula.", "H.R. 4674 would also establish new institutional eligibility criteria that would take into account the proportion of an IHE's undergraduate student population that are Pell Grant recipients and the proportion of an IHE's graduate population who have a zero EFC. ", "H.R. 4674 would increase the authorization of discretionary appropriations to $1.5 billion in FY2021. The authorization level would increase by $250 million per year until reaching $2.5 billion in FY2025. The appropriation level would remain at the FY2025 level for each succeeding fiscal year."], "subsections": [{"section_title": "Grants for Improved Institutions", "paragraphs": ["H.R. 4674 would reserve a portion of the FWS appropriation for a new grant program for \"improved institutions\" on the basis of the share and performance of Pell Grant recipients at the institutions. The amount reserved for this program would be the lesser of (1) 20% of the FWS appropriation in excess of $700 million or (2) $150 million. These provisions would take effect two years after enactment of H.R. 4674 ."], "subsections": []}]}]}, {"section_title": "Modifications to Need Assessment and the Free Application for Federal Student Aid (FAFSA) Process", "paragraphs": ["Individual eligibility for many student aid programs is contingent on student need. A key factor in determining need is assessing and establishing the ability of a student's family to pay postsecondary education costs. HEA, Title IV, Part F establishes a series of formulas that calculate a student's expected family contribution (EFC). The EFC formulas consider financial and personal characteristics of a student's family that are reported on the FAFSA. Students with lower EFCs typically qualify for more need-based aid, and students with a zero EFC qualify for the maximum amount of need-based aid. ", "H.R. 4674 would make changes to the HEA that could reduce EFC levels and correspondingly increase aid eligibility, particularly for lower-income students. Some provisions in the bill would reduce the amount of information that some students would have to provide when completing the FAFSA. Specific changes include the following:", "Expansion of automatic zero EFC. Under current law, some FAFSA applicants may qualify for an automatic zero EFC if they report an adjusted gross income (AGI) level below $26,000 and meet other criteria. H.R. 4674 would increase the AGI threshold to $37,000, newly extend automatic zero eligibility to independent students without dependents, and expand the automatic zero EFC to any applicant who received a qualified means-tested benefit in the 24 months prior to application. Creation of FAFSA pathways. H.R. 4674 would create a system of three pathways in which the amount of financial information a FAFSA filer would be required to provide would be based on the filer's income and the complexity of his or her tax return. Applicants who received a means-tested benefit in the previous 24 months would not be required to provide any additional financial information beyond benefit receipt. One-time FAFSA option. Under current law, students must file a FAFSA each year that they seek aid. H.R. 4674 would create an option for students who are Pell-eligible in their first year of postsecondary education to decline to file the FAFSA in succeeding years and have their first year's EFC apply. The one-time FAFSA option would apply to the period required for the completion of a student's first undergraduate baccalaureate course of study. Streamline d procedures for foster care and homeless youth. Under current law, foster care youth and homeless youth qualify as independent students and do not have to report parental income on the FAFSA. H.R. 4674 would expand and streamline the procedures by which qualified youth can establish and verify their status."], "subsections": []}, {"section_title": "Expansion of Federal Student Aid to Certain Noncitizen Students", "paragraphs": ["Under current law, federal student aid is limited to U.S. citizens, lawful permanent residents, and certain eligible noncitizens. Unauthorized immigrants are not eligible for federal student aid.", "H.R. 4674 would extend eligibility for HEA Title IV student aid to unauthorized individuals who entered the United States when they were younger than age 16 and either earned a high school diploma (or equivalent) or served in the uniformed services for at least four years. The bill would also extend eligibility to individuals who have temporary protected status and to certain unauthorized individuals who have a son or daughter who is a United States citizen or lawful permanent resident."], "subsections": []}]}, {"section_title": "Instituting Borrower-Focused Student Loan Reforms", "paragraphs": ["Title IV of the HEA specifies provisions for the operation of three federal student loan programs: the William D. Ford Federal Direct Loan (Direct Loan) program, the Federal Family Education Loan (FFEL) program, and the Federal Perkins Loan program. Currently, however, new loans are authorized to be made only through the Direct Loan program. The authority to make new loans through the FFEL program expired June 30, 2010, and the authority to make new loans through the Federal Perkins Loan program expired September 30, 2017. While H.R. 4674 would make a variety of student loan reforms that apply to both the FFEL and Direct Loan programs, the discussion herein will focus on the Direct Loan program, as it is the primary federal student loan program currently in operation, is the only program currently making new loans to students and their families, and would be the primary student loan program in operation under the HEA as amended by the CAA. ", "The Direct Loan program is authorized under HEA, Title IV, Part D, and is the largest federal program that makes available financial assistance to support students' postsecondary educational pursuits. The Direct Loan program is a federal credit program for which permanent indefinite mandatory appropriations are provided for loan subsidy costs, and annual discretionary appropriations are provided for administrative costs. Direct Loans are made to students and their families using funds borrowed by the Department of Education (ED) from the U.S. Treasury. The IHE a student attends originates and disburses Direct Loans, while federal contractors hired by ED perform loan servicing and collection functions. ", "Several types of loans are made available through the program: Direct Subsidized Loans to undergraduate students, Direct Unsubsidized Loans to undergraduate students and graduate students, Direct PLUS Loans to graduate and professional students and the parents of undergraduate dependent students, and Direct Consolidation Loans, which enable individuals who have previously borrowed federal student loans to combine them into a single new loan. Loan terms and conditions (e.g., interest rates, borrowing limits) are specified in statute and may vary depending on the type of loan borrowed. ", "ED estimates that in FY2020, 15.9 million new loans totaling $100.2 billion will be made through the Direct Loan program. In addition, ED estimates that 755,000 Direct Consolidation Loans totaling $46.4 billion will be made to existing borrowers of federal student loans. As of the end of the third quarter of FY2019, $1.2 trillion in principal and interest on Direct Loan program loans, borrowed by or on behalf of 34.3 million individuals, remained outstanding.", "H.R. 4674 would make a variety of borrower-focused reforms to the Direct Loan program. In general, many of these reforms are aimed at easing a borrower's student loan burden by amending loan terms and conditions (including loan repayment and forgiveness options) to be more generous once an individual has entered repayment on his or her loan, modifying and streamlining student loan administrative procedures, and expanding the availability of student loan refinancing options."], "subsections": [{"section_title": "Provision of More Generous Loan Repayment Terms and Conditions", "paragraphs": ["Currently, upon entering repayment on a Direct Loan a number of terms and conditions are available to borrowers. Many of these are intended to help borrowers manage their student loan debt, but some could be detrimental in some circumstances. H.R. 4674 would make a variety of changes aimed at making student loan repayment easier and more affordable for borrowers."], "subsections": [{"section_title": "Elimination of Loan Origination Fees", "paragraphs": ["Currently, loan origination fees are charged to borrowers of Direct Subsidized Loans, Direct Unsubsidized Loans, and Direct PLUS Loans. These fees help offset federal loan subsidy costs by passing along some of the costs to borrowers. Loan origination fees are calculated as a proportion of the loan principal borrowed and are deducted proportionately from the proceeds of each loan disbursement to the borrower. Loan origination fees for Direct Subsidized Loans and Direct Unsubsidized Loans made on or after July 1, 2010, equal 1%. Loan origination fees for Direct PLUS Loans equal 4%.", "H.R. 4674 would eliminate loan origination fees."], "subsections": []}, {"section_title": "Streamlining Loan Repayment Plans", "paragraphs": ["Borrowers may currently choose from among numerous loan repayment plan options, which include five broad categories: standard repayment plans, extended repayment plans, graduated repayment plans, income-driven repayment (IDR) plans, and alternative repayment plans. Several repayment plan variations exist within each of these broad categories. ", "Under the IDR plans, in general, borrowers make monthly payments equal to one-twelfth of 10% or 15% (depending on the specific plan) of their adjusted gross income (AGI) that exceeds 150% of the federal poverty guideline applicable to their family size. Basing monthly payments on only the portion of a borrower's AGI that is above 150% of the federal poverty guidelines essentially serves as an income protection for borrowers. Under some of the IDR plans, borrowers' monthly payments are capped at the monthly amount they would have paid according to a standard 10-year repayment period, regardless of whether the calculated monthly payment based on their income would have been greater. Borrowers who make payments according to these plans may have any remaining loan balance forgiven after 20 or 25 years (depending on the specific plan) of repayment. The particular repayment plans available to an individual borrower may depend on the type of loan borrowed, the date of becoming a new borrower, or the date of entering repayment status. In general, negative amortization is permitted in the IDR plans but not other plans. ", "H.R. 4674 would establish two new loan repayment plans\u00e2\u0080\u0094a fixed repayment plan and an income-based repayment (IBR) plan. Borrowers of Direct Loans made on or after July 1, 2021, would be required to repay their loans according to only these plans, and certain borrowers of Direct Loans made on or before June 30, 2021, would be permitted to repay according to these plans. The fixed repayment plan proposed under H.R. 4674 would be similar to some of the standard plans currently offered in the Direct Loan program (e.g., providing for fixed monthly payments with loan repayment periods equaling 10 to 25 years, depending on the loan balance). Compared to existing IDR plans, the proposed IBR plan would take a more generous approach toward protecting income from consideration when establishing monthly loan payments for many, but not all, borrowers. Under the proposed IBR plan, a borrower's monthly payments would equal one-twelfth of 10% of the amount (if any) of their adjusted gross (AGI) that exceeds a statutorily specified income protection that is indexed to the federal poverty guidelines. For borrowers with AGIs of $80,000 or less (or $160,000 or less for married borrowers), the income protection would equal 250% of the federal poverty guidelines applicable to the borrower's family size. For borrowers with AGIs that exceed $80,000 (or $160,000 for married borrowers), the income protection would decrease as his or her AGI increases and would be phased out entirely when the borrower's AGI equals or exceeds $105,000 (or $210,000 for married borrowers). For example, a single borrower with an AGI of $79,000 would pay 10% of his or her AGI that exceeds 250% of the federal poverty guidelines, whereas a single borrower with an AGI of $81,000 would pay 10% of his or her AGI that exceeds 240% of the federal poverty guidelines. No monthly payment cap would be available under the proposed IBR plan. Under this IBR plan, negative amortization would be permitted and borrowers who make payments for 20 years would be eligible to have any balance that remains forgiven. "], "subsections": []}, {"section_title": "Reducing Interest Accrual and Capitalization", "paragraphs": ["Under a limited set of circumstances, the federal government subsidizes (i.e., a borrower is relieved from paying) some or all of the interest that would otherwise accrue on loans made through the Direct Loan program. In general, interest subsidies are largely available for need-based Direct Subsidized Loans (and for the subsidized component of Direct Consolidation Loans), which are currently only being made to undergraduate students. Periods in which interest is subsidized on these loans include in-school periods while a borrower is enrolled in an eligible program on at least a half-time basis, during a six-month grace period following enrollment on at least a half-time basis, and during periods of authorized deferment.", "For borrowers who may be having trouble making monthly loan payments, periods of deferment and forbearance offer temporary relief from the obligation to make such payments. In general, any interest that accrues during a period of deferment or forbearance is later capitalized (i.e., becomes part of the outstanding principal balance of the loan), which increases the total amount a borrower is required to repay on his or her loan. ", "H.R. 4674 would make Direct Subsidized Loans available to graduate and professional students enrolled at public and private, nonprofit IHEs for any period of instruction beginning on or after July 1, 2021. The interest rate on Direct Subsidized Loans to graduate students would be the same as the interest rate on Direct Unsubsidized Loans for graduate and professional students. The bill would also amend the HEA to provide that interest that accrues on any type of Direct Loan during most periods of deferment or forbearance shall not be capitalized. That is, the interest would accrue and borrowers would be required pay it, but the accrued unpaid interest would not be added to the principal balance of a loan."], "subsections": []}, {"section_title": "Expansion of Loan Discharge and Loan Forgiveness Benefits", "paragraphs": ["The HEA currently makes various loan discharge or forgiveness options available to borrowers under a variety of circumstances. In general, loan discharge is provided in cases of borrower hardship, while loan forgiveness is provided for public service or following IDR plan repayment for an extended time period. H.R. 4674 would expand borrower eligibility for various loan discharge and loan forgiveness options, two of which are described below."], "subsections": [{"section_title": "Borrower Defense to Repayment", "paragraphs": ["Among other discharge provisions, the HEA provides that ED shall specify in regulations the \"acts or omissions\" of an IHE a borrower may assert as a borrower defense to repayment (BDR). Regulations that are currently in effect specify the standards and procedures for determining whether a borrower is eligible for a BDR discharge, and newly promulgated regulations scheduled to become effective July 1, 2020, amend those standards and procedures for loans disbursed on or after July 1, 2020. Both those regulations currently in effect and those effective July 1, 2020, provide that a borrower may have his or her loan discharged in whole or in part, depending on the circumstances. The regulations that are effective July 1, 2020, are viewed by some as being less beneficial to borrowers than current regulations.", "H.R. 4674 would amend the HEA to more explicitly define the standards under which a borrower would be determined eligible for a BDR discharge; some, but not all, of the BDR standards applicable to loans made prior to July 1, 2020, would be applicable to Direct Loans. It would also specify that in general, BDR discharge-eligible borrowers would be entitled to have the full balance of their loan discharged, but that ED may provide partial discharge in certain circumstances. Finally, H.R. 4674 would require ED to establish procedures for the fair and timely resolution of BDR claims and would specify elements to be included in such processes, some of which are currently available to pre-July 1, 2020, borrowers, but not to post-July 1, 2020, borrowers."], "subsections": []}, {"section_title": "Public Service Loan Forgiveness", "paragraphs": ["Among other loan forgiveness provisions, the Public Service Loan Forgiveness (PSLF) program provides Direct Loan borrowers who, on or after October 1, 2007, are employed full-time in certain public service jobs for 10 years while making 120 qualifying monthly payments on their Direct Loans with the opportunity to have any remaining balance of the principal and interest on their loans forgiven.", "H.R. 4674 would", "expand PSLF eligibility to new types of employees; specify that otherwise qualifying payments made on loans prior to consolidation into a Direct Consolidation Loan and payments made on federal loans refinanced under a newly created Refinanced Direct Loan program (discussed later in this report) would count towards the required 120 qualifying payments; and require ED to develop tools aimed at enabling borrowers to more easily determine whether they qualify for PSLF."], "subsections": []}]}]}, {"section_title": "Modification to Student Loan Administrative Processes", "paragraphs": ["To administer the Direct Loan program, ED has developed a variety of processes and procedures that in many instances are carried out by ED-contracted loan servicers and collection agencies. These administrative functions often focus on ensuring that borrowers qualify for and receive Direct Loan terms, conditions, and benefits (e.g., repayment under an IDR plan, loan discharge following total and permanent disability).", "H.R. 4674 would make a variety of changes aimed at streamlining or enhancing administrative processes for borrowers. Currently, borrowers must actively enroll in or apply for certain loan benefits, such as an IDR plan, or must apply for and provide income documentation to qualify for total and permanent disability discharge. H.R. 4674 would authorize ED to automatically take steps to make such loan benefits available to borrowers, without action from the borrower. For example, the bill would authorize ED to place certain borrowers who are at least 120 days delinquent on their loans, or who are rehabilitating their loan out of default, into the newly created IBR plan and to obtain such income and family size information as is reasonably necessary to calculate such borrowers' monthly payments under the plan. H.R. 4674 would also require ED to establish procedures to automatically recertify and recalculate a borrower's monthly repayments under the IDR plan in which he or she is enrolled, and procedures to automatically monitor a borrower's income for purposes of qualifying for a permanent and total disability loan discharge. Finally, H.R. 4674 would require ED to develop a manual of standardized administrative procedures and policies to be used by ED-contracted loan servicers and collection agencies."], "subsections": []}, {"section_title": "Expansion of Loan Refinancing", "paragraphs": ["Currently, Direct Consolidation Loans allow individuals who have borrowed at least one loan through either the Direct Loan or FFEL program to refinance their eligible federal student loan debt by borrowing a new loan and using the proceeds to pay off their existing federal student loan obligations. Direct Consolidation Loans have fixed interest rates that are determined by calculating the weighted average of the interest rates on the loans that are consolidated, rounded up to the next higher one-eighth of a percentage point. Upon an individual obtaining a Direct Consolidation Loan, a new repayment period begins, which may be for a longer term than applied to the loans originally borrowed. Private education loans are not eligible to be refinanced into a Direct Consolidation Loan.", "H.R. 4674 would require ED to establish two new loan refinancing options. One option would permit qualified borrowers to refinance Direct Loan and FFEL program loans into a refinanced Direct Loan. In general, refinanced Direct Loans would have the same terms and conditions as the original loans that were refinanced; however, the refinanced Direct Loans would have a fixed interest rate pegged to specified Direct Loan program interest rates that are in effect for new loans made during the period from July 1, 2019, through June 30, 2020. Such an option could be viewed as more favorable for borrowers who have existing loans with higher interest rates. The interest rates that would be applicable to refinanced Direct Loans are as follows:", "where the loan being refinanced is a FFEL or Direct Loan program Subsidized Loan or Unsubsidized Loan issued to an undergraduate student, 4.53%; where the loan being refinanced is a FFEL or Direct Loan program Subsidized Loan or Unsubsidized Loan issued to a graduate or professional student, 6.08%; where the loan being refinanced is a FFEL or Direct Loan program PLUS Loan issued to a graduate/professional student or a parent of a dependent undergraduate student, 7.08%; and where the loan being refinanced is a FFEL or Direct Loan program Consolidation Loan, the weighted average of the lesser of (1) the interest rates described above, as would be applicable to the original loans ( component loans ) discharged due to consolidation or (2) the original interest rate of the component loan.", "Obtaining a refinanced Direct Loan would not result in the start of a new repayment period. ", "The second option would permit qualified borrowers to refinance private education loans into a Federal Direct Refinanced Private Loan. In general, a Federal Direct Refinanced Private Loan would have the same terms and conditions as a Federal Direct Unsubsidized Loan; however, certain student loan forgiveness benefits available for Direct Loan borrowers (e.g., PSLF) would not be included. Federal Direct Refinanced Private Loans would have a fixed interest rate pegged to specified Direct Loan program interest rates that are in effect for new loans made during the period from July 1, 2019, through June 30, 2020. The interest rates that would be applicable to Federal Direct Refinanced Private Loans are as follows:", "where the loan being refinanced was borrowed for undergraduate study, 4.53%; where the loan being refinanced was borrowed for graduate or professional study, 6.08%; and where the loan being refinanced was for both undergraduate study and graduate or professional study, 7.08%.", "A Federal Direct Refinanced Private Loan would not count against a borrower's annual or aggregate Direct Loan limits."], "subsections": []}]}, {"section_title": "Modifying Institutional Accountability Requirements for Receipt of Federal Funds", "paragraphs": ["Currently, the HEA provides for institutional accountability measures through many of its provisions. Some measures address educational accountability, which relates to institutions providing a quality education (e.g., accreditation requirements). Other measures address fiscal accountability, which relates to institutional financial health and whether institutions are good stewards of federal student aid funds. In addition, some laws outside of the HEA seek to hold institutions accountable in other areas. These include, but are not limited to, Title IX of the Education Amendments of 1972 (Title IX), which conditions receipt of federal funds on an institution (or other entity) ensuring it does not discriminate on the basis of sex in educational programs or activities. ", "H.R. 4674 would address educational and fiscal accountability requirements, as well as Title IX requirements. The changes discussed below, along with other provisions of H.R. 4674 , signal a congressional interest in strengthening accountability requirements across all types of IHEs and their educational programs, in general, while focusing on greater accountability in the Title IV programs, and for proprietary IHEs in particular."], "subsections": [{"section_title": "Educational Accountability", "paragraphs": ["Educational accountability relates to attempts to ensure IHEs are providing a quality educational program, and it may be assessed in a variety of ways. H.R. 4674 would address educational accountability in several ways, which largely relate to the Title IV student aid programs."], "subsections": [{"section_title": "Accreditation", "paragraphs": ["To participate in the Title IV student aid programs, IHEs must be accredited by an agency that is recognized by ED as a reliable authority regarding the quality of education offered at the IHE. The HEA currently specifies the recognition criteria to be used by ED. ", "In accordance with statute, an accreditation agency's institutional quality evaluation standards must assess, among other items, \"student achievement in relation to [an] institution's mission.\" Such evaluation standards may\u00e2\u0080\u0094but are not required to\u00e2\u0080\u0094include, as applicable, course completion, passage of state licensing exams, and job placement rates. While accrediting agencies' evaluation standards are guided, in part, by such federal requirements, specific standards are adopted by individual agencies and vary among them. Accreditation agencies may also have varying procedures as well. For instance, agencies may have varying definitions for actions taken against IHEs (e.g., warning, probation) and differing policies regarding the information they publicly disclose about the IHEs they accredit.", "H.R. 4674 would partially standardize practices among agencies and bring additional transparency to accrediting agency and ED practices in this realm. The bill would newly require accrediting agencies to evaluate specified student educational outcomes (i.e., completion, progress toward completion, and workforce participation), but would permit agencies to establish different measures of such outcomes for different institutions. For example, an agency would be required to evaluate an IHE's \"workforce participation\" outcomes, but could measure an IHE's performance under that outcome by measuring rates of licensure or job placement. H.R. 4674 would also require ED to establish standardized definitions for the various actions accrediting agencies may take and for public notice and disclosure requirements with respect to the actions taken. Finally, the bill would make some changes to the processes ED uses to recognize accrediting agencies, including adding a requirement to make accrediting agencies' applications for recognition publicly available, and requirements to submit to Congress information relating to ED's accrediting agency recognition decisions."], "subsections": []}, {"section_title": "Establishment and Revision of Accountability Metrics", "paragraphs": ["H.R. 4674 would establish new Title IV institutional participation accountability metrics. One would measure on-time repayment rates\u00e2\u0080\u0094 the extent to which students who borrowed Title IV loans to attend an IHE are able to make payments on their loans in a timely manner (i.e., the percentage of borrowers who have paid at least 90% of their monthly payments during a three-year period). Another would measure instructional spending\u00e2\u0080\u0094 an IHE's instructional expenditures relative to revenues derived from tuition and fees (i.e., determining if instructional expenditures equal at least one-third of the amount of revenue derived from tuition and fees for each of the three most recent institutional fiscal years). It appears that a presumption behind these measures would be that if an IHE is of sufficient quality, then individuals who borrow to attend it should be able to earn adequate wages to make timely payments on their loans and that the IHE would be spending a reasonable amount of tuition and fees revenues on instruction rather than other items, such as marketing.", "Under the bill, the current institutional cohort default rate (CDR) metric, which is applicable to IHEs participating in federal student loan programs and measures the number of an IHE's federal student loan recipients who enter repayment and subsequently default within a certain period of time, would be phased out. Under current law, an IHE is subject to loss of Direct Loan program eligibility if its CDR is 40% or greater for one year, and is subject to loss of Direct Loan program and Pell Grant program eligibility if its CDR is 30% or greater for three consecutive years.", "The CDR metric would be replaced with a new adjusted cohort default rate , which would be similar to the current CDR metric, but would also take into account the relative risk an IHE may pose to students and taxpayers by multiplying the CDR by the percentage of students enrolled at the IHE who borrowed Title IV loans. IHEs would be subject to loss of Title IV eligibility if they met one of three separate thresholds: (1) an adjusted CDR that is greater than 20% for each of the three most recent years, (2) an adjusted CDR that is greater than 15% for each of the six most recent fiscal years, or (3) an adjusted CDR that is greater than 10% for each of the eight most recent fiscal years. This structure would penalize IHEs with adjusted CDRs that remain consistently too high over long periods. Finally, H.R. 4674 would specify that borrowers in forbearance for three or more years would be considered in default for purposes of calculating the adjusted CDR. The bill would additionally require ED to establish metrics that would assess the extent to which certain types of sub-baccalaureate educational programs at public and nonprofit IHEs and most educational programs (including degree programs) at proprietary IHEs prepare students for gainful employment in a recognized occupation. In creating the metrics, ED would be required to establish a debt-to-earnings rate meeting specified general criteria to measure gainful employment program enrollees' educational debt relative to their earnings."], "subsections": []}]}, {"section_title": "Fiscal Accountability", "paragraphs": ["Fiscal accountability requirements relate to institutional financial health and whether IHEs are good stewards of federal student aid funds. H.R. 4674 would make several changes to current fiscal accountability requirements.", "IHEs are required to be financially responsible to participate in the Title IV programs. IHEs that fail to meet certain financial responsibility standards may continue to participate in the Title IV programs only if they meet additional requirements, including posting a letter of credit (a financial guarantee) to ED.", "H.R. 4674 would revise the conditions under which IHEs are considered financially responsible. It would expand on the instances in which an IHE may be required to post a letter of credit to ED for continued participation in the Title IV programs. The bill would specify that ED may not consider a private nonprofit or proprietary IHE financially responsible if it is required to submit a teach-out plan to its accreditor or is subject to a specified amount of pending or approved borrower defense to repayment claims. Additional circumstances under which ED would be prohibited from considering a proprietary IHE financially responsible would also be stipulated. ", "H.R. 4674 would additionally specify the circumstances under which ED would be required to redetermine whether an IHE is financially responsible. Such circumstances would apply to both private nonprofit and proprietary IHEs. They would include instances in which an IHE is required to pay a material debt or liability arising from a judicial, administrative, or judicial proceeding and in which an IHE is involved in a lawsuit for financial relief related to the making of Direct Loans.", "H.R. 4674 would also specify circumstances under which ED would be permitted to redetermine whether an IHE is financially responsible, which would be applicable to all types of institutions, including public IHEs. Such circumstances would include a determination that ED will be likely to receive a significant number of borrower defense to repayment claims, a citation by a state authorizing agency for failure to meet state requirements, and high annual dropout rates. ", "H.R. 4674 would amend the 90/10 Rule, under which proprietary IHEs currently must derive at least 10% of their revenues from non-Title IV sources or lose Title IV eligibility after failure to do so for two consecutive years. The bill would specify that proprietary IHEs must derive at least 15% of their revenues from sources other than federal education assistance funds, which would include, but not be limited to, Title IV funds and Post-9/11 GI Bill funds. It would further establish that failure to meet the requirement in a single year would result in an automatic loss of Title IV eligibility. ", "In addition, the bill would limit marketing, recruitment, advertising, and lobbying expenditures for IHEs that are determined to have spent less than an amount equal to one-third of their tuition and fees revenues on instruction. IHEs that do not limit such spending for two consecutive fiscal years would lose Title IV eligibility."], "subsections": []}, {"section_title": "Title IX of the Education Amendments of 1972", "paragraphs": ["Title IX prohibits discrimination on the basis of sex in education programs and activities receiving federal financial assistance. On November 29, 2018, ED proposed to amend the regulations that implement Title IX to clarify and modify requirements of elementary, secondary, and postsecondary schools regarding incident response, remedies, and other issues. H.R. 4674 would prohibit ED from implementing or enforcing the proposed Title IX regulations, or proposing or issuing regulations that are substantially similar to the November 2018 proposed regulations."], "subsections": []}]}, {"section_title": "Revising Public Accountability, Transparency, and Consumer Information Requirements", "paragraphs": ["The HEA establishes a set of measures related to public accountability, transparency, and consumer information. In general, these provisions are intended to provide information to consumers to enable them to make informed college-going and financial decisions. Currently, the HEA addresses issues related to college affordability and the collection and dissemination of consumer information to students and the public by requiring ED, among other things, to administer the College Navigator website, through which certain consumer information about IHEs is made publicly available, and by requiring IHEs to make Net Price Calculators, a primary consumer information tool authorized under the HEA, available on their websites. Net Price Calculators allow prospective students to obtain individual estimates of the net price of an IHE, taking into account the financial aid they might be likely to receive. ", "The HEA currently prohibits the creation of a new postsecondary student unit record system (SURS), which could be used to track individual students' financing of their schooling, participation in and completion of academic programs, and post-program outcomes over time. The SURS ban was established in the interest of protecting student privacy and limits the granularity and quality of data available on the outcomes of IHEs' students. ", "In addition, the HEA currently requires that certain Direct Loan borrowers undergo loan entrance counseling prior to loan disbursement, and that certain borrowers undergo exit counseling after dropping below half-time enrollment. Both of these requirements are intended to help ensure that borrowers are aware of their loan terms and conditions and of the potential consequences of borrowing a student loan. ", "H.R. 4674 would amend the HEA to take a more expansive approach to public accountability, transparency, and consumer information requirements. Many of these changes represent congressional interest in providing consumers with additional and more-nuanced information, potentially helping them make more-informed college-going and student loan borrowing decisions.", "Perhaps most notably, H.R. 4674 would repeal the current prohibition on the creation of a new SURS and require ED to develop a postsecondary student-level data system to use in evaluating a variety of metrics such as student enrollment, progression, completion, and post-collegiate outcomes (e.g., earnings, employment rates, and loan repayment rates). Summary aggregate information from this system would be made publicly available. H.R. 4674 would also amend provisions relating to Net Price Calculators by requiring IHEs to provide more-detailed information regarding their costs of attendance and estimated aid that may be available to individual students.", "The bill would make changes to the information IHEs are required to provide to individuals before and after receipt of federal student aid. For instance, H.R. 4674 would require ED to develop a standardized financial aid offer letter to be used by IHEs, which would enable students to compare financial aid offers from multiple IHEs. It would also require all borrowers to receive counseling in each year that they receive a Title IV student loan to assist them in understanding the terms and conditions of the loan and the potential consequences of accepting such aid."], "subsections": []}, {"section_title": "Expanding Student Services for Specific Populations", "paragraphs": ["In addition to federal student aid, which provides direct financial assistance to individual students that can be applied toward their cost of attendance, the HEA provides additional academic and personal supports to certain student populations. These supports are typically administered through grants to IHEs or other qualified entities. H.R. 4674 would create a number of new programs to support students, and would extend a number of existing programs."], "subsections": [{"section_title": "Creation of New Programs", "paragraphs": ["H.R. 4674 would create the following programs:", "Student Success Fund . This would be a new program of grants to states or Indian tribes to carry out plans \"to implement promising and evidence-based institutional reforms and innovative practices to improve student outcomes\" including transfer and completion. States and some tribes would be required to match a portion of the federal grant, with the nonfederal amount increasing to 100% of the federal amount by the ninth year. H.R. 4674 would authorize $500 million in mandatory appropriations per year for FY2021 and each succeeding fiscal year. Pell Bonus Program . This would be a new grant program providing support to qualified public and nonprofit IHEs with qualified shares of Pell Grant recipients. IHEs could use the funds for \"financial aid and student support services.\" Funds would be allotted to institutions based on their relative share of bachelor's degrees awarded to all Pell Grant recipients. H.R. 4674 would authorize mandatory appropriations of $500 million per year for FY2021 and each succeeding fiscal year. Remedial Education Grants . This would make funds available to IHEs or applicable partnerships to \"improve remedial education in higher education.\" Grantees would employ models specified in the legislation and be evaluated on the basis of their programs' effectiveness in increasing course and degree completion. H.R. 4674 would authorize $162.5 million in discretionary appropriations per year for FY2021 through FY2026. Grants for Improving Access to and Success in Higher Education for Foster Youth and Homeless Youth . This would be a new formula grant program to states to (1) develop a statewide initiative to support foster and homeless youth transitioning into postsecondary education and (2) offer subgrants to public and private nonprofit IHEs to improve postsecondary persistence and completion by such students. H.R. 4674 would authorize discretionary appropriations of $150 million for FY2021 and authorize an inflation-adjusted amount for each year through FY2026. Jumpstart to College . This would be a new grant program providing funds to states and public and private nonprofit IHEs to establish and support early college or dual and concurrent enrollment programs. H.R. 4674 would authorize $250 million in discretionary appropriations per year for FY2021 through FY2026."], "subsections": []}, {"section_title": "Extensions of Existing Programs", "paragraphs": ["H.R. 4674 would extend the authorization of a number of existing student support programs. In most, but not all, cases the authorization of appropriations in H.R. 4674 would be above the current law levels. ", "In terms of the authorized funding level, one of the most substantial extensions is to the TRIO programs, a group of programs that provide grants to IHEs and other organizations to furnish academic support services to disadvantaged students. H.R. 4674 would authorize discretionary appropriations of $1.12 billion for FY2021 and the authorization level would be adjusted for inflation in each of the five succeeding fiscal years. In FY2019, TRIO appropriations were $1.06 billion.", "In terms of increases to authorization levels relative to the most recent funding level, one of the largest increases would be to the Child Care Access Means Parents in School (CCAMPIS) program, which provides grants to IHEs to promote the participation of low-income parents in postsecondary education through the availability of child care services. H.R. 4674 would authorize $200 million per year for FY2021 and each of the five succeeding fiscal years. In FY2019, appropriations for this program were $50 million."], "subsections": []}]}, {"section_title": "Expanding Federal Assistance to Support to IHEs", "paragraphs": ["The HEA authorizes programs intended to provide grants and other financial support to IHEs that serve high concentrations of minority and/or needy students to help strengthen the IHEs' academic, administrative, and financial capabilities. Typically, these institutions are called minority serving institutions (MSIs). Among the MSI programs, the HEA authorizes separate grant programs for distinct types of MSIs, including the following:", "American Indian Tribally Controlled Colleges and Universities, Alaska Native and Native-Hawaiian-serving Institutions, Predominantly Black Institutions, Native American-serving, Nontribal Institutions, Predominantly Black Institutions, Asian American and Native American Pacific Islander-serving Institutions, Historically Black Colleges and Universities, and Hispanic Serving Institutions. ", "Many of these MSI programs have been funded through annual discretionary and mandatory appropriations. As of when H.R. 4674 was ordered to be reported, mandatory appropriations, authorized under HEA Section 371, for several of these programs had expired at the end of FY2019. In FY2019, these mandatory appropriations totaled $239 million. H.R. 4674 would permanently authorize mandatory appropriations under HEA Section 371 at a total of $300 million annually. It would also extend and increase the authorization of discretionary appropriations for each of the MSI programs through FY2026. ", "In addition, H.R. 4674 would reauthorize discretionary and mandatory appropriations for several MSI programs that have not received appropriations in several years, such as the Endowment Challenge Grant program, and would create several new grant programs to support MSIs, each supported with discretionary appropriations. H.R. 4674 would also amend and reauthorize through FY2026 a statute outside of the HEA\u00e2\u0080\u0094the Tribally Controlled Colleges and Universities Assistance Act of 1978\u00e2\u0080\u0094which authorizes discretionary appropriations for grants to Tribally Controlled Colleges and Universities."], "subsections": []}, {"section_title": "Creating New Grants to States and Institutions to Reduce Students' Postsecondary Costs (America's College Promise)", "paragraphs": ["H.R. 4674 would create a new HEA, Title IV, Part J. The programs authorized in this part would provide grants to states, Indian tribes, and IHEs, with the primary focus of eliminating or reducing tuition and fees at community colleges and other postsecondary institutions. "], "subsections": [{"section_title": "Grants to Support Tuition-Free Community College", "paragraphs": ["H.R. 4674 would authorize new grants to states to support community colleges in waiving tuition and fees for eligible students. Qualified Indian tribes would also be eligible.", "The program would define an eligible student as a student who attends a community college on a not less than half-time basis, either qualifies for in-state resident community college tuition or would qualify for in-state community college tuition but for his or her immigration status, and meets certain other criteria. A student would not need to meet financial criteria to qualify as an eligible student."], "subsections": [{"section_title": "Funding, Allotments, and Nonfederal Share", "paragraphs": ["H.R. 4674 would provide permanent mandatory appropriations beginning in FY2021. The funding level would incrementally increase from $1,569,700,000 in FY2021 to $16,296,080,000 in FY2030. Mandatory appropriations would be provided at the FY2030 level in succeeding years.", "Funds would be allocated to states via a formula. The bill would direct ED to develop a formula based on each participating state's share of eligible students and other factors. Each participating state would be eligible to receive, on a per eligible student basis, an amount equal to at least 75% of the national average resident community college tuition and fees. States would be required to provide, on a per eligible student basis, a nonfederal share equal to 25% of the national average resident community college tuition and fees. "], "subsections": []}, {"section_title": "Requirements for Participating States", "paragraphs": ["As a condition of receiving a grant under this program, a state would be required to waive tuition and fees for eligible students attending community colleges within the state. An eligible student would be allowed to use other financial aid for which he or she qualifies, such as Pell Grants, for other components of the cost of attendance, such as housing and transportation. ", "To prevent state and local disinvestment in community colleges, H.R. 4674 would require that funds under this grant supplement and not supplant other federal, state, and local funds. The program would include maintenance of effort requirements that would require participating states to provide financial support equal to or greater than the average amount provided in the three preceding years for public higher education; operational expenses for public, four-year colleges; and need-based financial aid."], "subsections": []}]}, {"section_title": "Grants for Historically Black Colleges and Universities, Tribally Controlled Colleges and Universities, and Minority-Serving Institutions to Reduce or Waive Tuition", "paragraphs": ["H.R. 4674 would create three new programs that would provide grants to each of (1) Historically Black Colleges and Universities (HBCUs), (2) Tribally Controlled Colleges and Universities (TCCUs), and (3) Minority-Serving Institutions (MSIs) to \"waive or significantly reduce tuition and fees for eligible students \u00e2\u0080\u00a6 for not more than the first 60 credits an eligible student enrolls at the participating institution.\" Grants would be available to four-year institutions of each type and would not require a nonfederal match.", "An institution's grant would equal the actual cost of tuition and fees at the institution (not to exceed the national average tuition and fees at a public four-year IHE), multiplied by the number of eligible students enrolled at the institution. Eligible institutions would be HBCUs, TCCUs, and MSIs that have a student body of at least 35% low-income students and meet other criteria related to student services and supports. Eligible students would include new enrollees or transfers from a community college.", "H.R. 4674 would provide permanent mandatory funding beginning in FY2021. The funding level would incrementally increase from $63,250,000 in FY2021 to $1,626,040,000 in FY2030. Mandatory appropriations would be provided at the FY2030 level in succeeding years. "], "subsections": []}, {"section_title": "Additional Grants", "paragraphs": ["H.R. 4674 would authorize discretionary appropriations for such sums as necessary in FY2021 and each succeeding fiscal year to support additional new grant programs. First, the bill would create a new series of formula grants to states to provide grants to individual students with unmet financial need. These grants would initially be available to Pell Grant recipients at public IHEs. Once all eligible Pell Grant recipients received grants, the aid would be extended to other students at public IHEs. ED would also be authorized, under certain circumstances, to carry out a similar grant program for students at private nonprofit IHEs. ", "The bill would authorize another grant program for states to award grants to participating four-year IHEs to waive resident tuition and fees in cases where all eligible students have received the above grants for unmet need.", "Both sets of programs would generally have a federal share of 75% and a nonfederal share of 25%."], "subsections": []}]}]}}
{"id": "R46132", "title": "U.S. Farm Income Outlook: November 2019 Forecast ", "released_date": "2019-12-18T00:00:00", "summary": ["This report uses the U.S. Department of Agriculture's (USDA's) farm income projections (as of November 27, 2019) and agricultural trade outlook update (as of November 25, 2019) to describe the U.S. farm economic outlook for 2019. According to USDA's Economic Research Service (ERS), national net farm income\u00e2\u0080\u0094a key indicator of U.S. farm well-being\u00e2\u0080\u0094is forecast at $92.5 billion in 2019, up $8.5 billion (+10.2%) from last year. The forecast rise in 2019 net farm income is largely the result of a 64.0% increase in government payments to the agricultural sector, with a projected total value of $22.4\u00c2 billion (highest since 2005).", "USDA's forecast of outlays for farm support for 2019 includes $14.3 billion in direct payments made under trade assistance programs intended to help offset foreign trade retaliation against U.S. agricultural products, as well as over $8 billion in payments from other farm programs, including the Wildfire and Hurricane Indemnity Program (WHIP). Without this federal support, net farm income would be lower, primarily due to continued weak prices for most major crops. Commodity prices are under pressure from large carry-in stocks from a record soybean and near-record corn harvest in 2018, and diminished export prospects due to the ongoing trade dispute with China. Should these conditions persist into 2020, they would signal the potential for continued dependence on federal programs to sustain farm incomes in 2020.", "Since 2008, U.S. agricultural exports have accounted for a 20% share of U.S. farm and manufactured or processed agricultural sales. In 2018, total agricultural exports were estimated at $143.4 billion (the second-highest export value on record). However, strong competition from major foreign competitors and the ongoing U.S.-China trade dispute are expected to shift trade patterns and lower U.S. agricultural export prospects significantly (-5.5%) to a projected $135.5 billion in 2019.", "Farm asset value in 2019 is projected up from 2018 at $3.1 trillion (+2.3%). Farm asset values reflect farm investors' and lenders' expectations about long-term profitability of farm sector investments. U.S. farmland values are projected to rise 2.1% in 2019, slightly higher than the 1.6% in 2018 but below the 3.0% of 2017. Because they comprise 83% of the U.S. farm sector's asset base, change in farmland values is a critical barometer of the farm sector's financial performance. However, another critical measure of the farm sector's well-being is aggregate farm debt, which is projected to be at a record $415.5 billion in 2019\u00e2\u0080\u0094up 3.5% from 2018. Both the debt-to-asset and the debt-to-equity ratios have risen for seven consecutive years, suggesting a weakening of the U.S. farm sector's financial situation.", "At the farm household level, average farm household incomes have been well above average U.S. household incomes since the late 1990s. However, this advantage derives primarily from off-farm income as a share of farm household total income. Since 2014, over half of U.S. farm operations have had negative income from their agricultural operations. Furthermore, the farm household income advantage over the average U.S. household has narrowed in recent years. In 2014, the average farm household income (including off-farm income sources) was about 77% higher than the average U.S. household income. In 2018 (the last year with comparable data), that advantage was expected to decline to 25%."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["The U.S. farm sector is vast and varied. It encompasses production activities related to traditional field crops (such as corn, soybeans, wheat, and cotton) and livestock and poultry products (including meat, dairy, and eggs), as well as fruits, tree nuts, and vegetables. In addition, U.S. agricultural output includes greenhouse and nursery products, forest products, custom work, machine hire, and other farm-related activities. The intensity and economic importance of each of these activities, as well as their underlying market structure and production processes, vary regionally based on the agro-climatic setting, market conditions, and other factors. As a result, farm income and rural economic conditions may vary substantially across the United States. ", "Annual U.S. net farm income is the single most watched indicator of farm sector well-being, as it captures and reflects the entirety of economic activity across the range of production processes, input expenses, and marketing conditions that have prevailed during a specific time period. When national net farm income is reported together with a measure of the national farm debt-to-asset ratio, the two summary statistics provide a quick and widely referenced indicator of the economic well-being of the national farm economy."], "subsections": []}, {"section_title": "USDA's November 2019 Farm Income Forecast", "paragraphs": ["In the third of three official U.S. farm income outlook releases scheduled for 2019 (see shaded box below), ERS projects that U.S. net farm income will rise 10.2% in 2019 to $92.5 billion, up $8.5 billion from last year. Net cash income (calculated on a cash-flow basis) is also projected higher in 2019 (+15.0%) at $119.0 billion. The November forecast of $92.5 billion is 6.3% above the 10-year average of $87.0 billion but is well below 2013's record high of $123.7 billion. ", "The November 2019 net farm income forecast represents an increase from both USDA's preliminary March 2019 forecast of $69.4 billion, and the August 2019 forecast of $88.0 billion ( Table A-1 ). The initial March forecast did not anticipate the second round of MFP payments (valued at up to $14.5 billion). The increase in government support in 2019, projected at $22.4 billion and up 64.0% from 2018, is the principal driver behind the rise in net farm income\u00e2\u0080\u0094both year-to-year and from the previous two forecasts. Support from traditional farm programs is expected to be bolstered by large direct government payments in response to trade retaliation under the trade war with China. Direct government payments of $22.4 billion in 2019, if realized, would represent 24.2% of net farm income\u00e2\u0080\u0094the largest share since a 27.6% share in 2006."], "subsections": [{"section_title": "Highlights", "paragraphs": ["For historical perspective, both net cash income and net farm income achieved record highs in 2013 but fell to recent lows in 2016 ( Figure 1 ) before trending higher in each of the past three years (2017, 2018, and 2019). When adjusted for inflation and represented in 2019 dollars ( Figure 2 ), the net farm income for 2019 is projected to be on par with the average of $86.8 billion for net farm income since 1940. Global demand for U.S. agricultural exports ( Figure 18 ) is projected at $134.5 billion in 2019, down from 2018 (-6.2%), due largely to a decline in sales to China. Farm asset values and debt levels are projected to reach record levels in 2019\u00e2\u0080\u0094asset values at $3.1 trillion (+2.1%) and farm debt at $415.5 billion (+3.4%)\u00e2\u0080\u0094pushing the projected debt-to-asset ratio up to 13.5%, the highest level since 2003 ( Figure 23 ). For 2019, USDA forecasts that prices for most major commodities\u00e2\u0080\u0094barley, soybeans, sorghum, oats, rice, hogs, and milk\u00e2\u0080\u0094will be up slightly from 2018, while cotton, wheat, choice steers, broilers, and eggs are expected to be lower ( Table A-4 ). However, these projections are subject to substantial uncertainty associated with international commodity markets."], "subsections": []}, {"section_title": "Three Major Factors Dominate the 2019 Farm Income Outlook", "paragraphs": ["Abundant domestic and international supplies of grains and oilseeds contributed to a fifth straight year of relatively weak commodity prices in 2019 ( Figure A-1 through Figure A-4 , and Table A-4 ). Furthermore, prospects for market conditions heading into 2020 remain uncertain. Three major factors have dominated U.S. agricultural markets during 2019, and have contributed to uncertainty over both supply and demand prospects, as well as market prices, heading into 2020.", "First, large domestic supplies of corn, soybeans, wheat, and cotton were carried over into 2019 ( Figure 3 ). Large corn and soybean stocks have kept pressure on commodity prices throughout the grain and feed complex in 2019.", "Second, adverse weather conditions during the spring planting and fall harvesting periods have contributed to market uncertainty regarding the size of the 2019 corn and soybean crops.", "Third, the U.S.-China trade dispute has led to declines in U.S. exports to China\u00e2\u0080\u0094a major market for U.S. agricultural products\u00e2\u0080\u0094and added to market uncertainty. In particular, the United States lost its dominant role in the world's preeminent market for soybeans\u00e2\u0080\u0094China. It is unclear how soon, if at all, the United States may resolve its trade dispute with China or how international demand may evolve heading into 2020."], "subsections": [{"section_title": "Large Corn and Soybean Stocks Continue to Dominate Commodity Markets", "paragraphs": ["Corn and soybeans are the two largest U.S. commercial crops in terms of both value and acreage. For the past several years, U.S. corn and soybean crops have experienced strong growth in both productivity and output, thus helping to build stockpiles at the end of the marketing year. ", "In 2018, U.S. farmers produced a record U.S. soybean harvest of 4.5 billion bushels and record ending stocks (913 million bushels or a 23.0% stocks-to-use ratio) that year ( Figure 3 ). The record soybean harvest in 2018, combined with the sudden loss of the Chinese soybean market (as discussed in the \" Agricultural Trade Outlook \" section of this report), kept downward pressure on U.S. soybean prices. A smaller crop and lower stocks are projected for 2019; however, the reduction in volume of U.S. soybean exports to China has prevented a major price recovery.", "Similarly, several consecutive years of bumper U.S. corn crops have built domestic corn supplies. U.S. corn ending stocks in 2019 are projected to approach or surpass 2 billion bushels for the fourth consecutive year. U.S. wheat and cotton supplies are also projected to remain high relative to use, thus keeping downward pressure on farm prices."], "subsections": []}, {"section_title": "Poor Weather for Planting, Harvesting U.S. Corn and Soybean Crops", "paragraphs": ["U.S. agricultural production activity got off to a late start in 2019 due to prolonged cool, wet conditions throughout the major growing regions, particularly in states across the eastern Corn Belt and the Dakotas. This resulted in record large \"prevented plant\" acres (reported at 19.6 million acres by the Farm Service Agency) and delays in the planting of the corn and soybean crops, especially in Illinois, Michigan, Ohio, Wisconsin, and North and South Dakota. ", "Traditionally, 96% of the U.S. corn crop is planted by June 2, but in 2019 67% of the crop had been planted by that date. Similarly, the U.S. soybean crop was planted with substantial delays. By June 16, 77% of the U.S. soybean crop was planted, whereas an average of 93% of the crop has been planted by that date during the past five years. These planting delays have significant implications for crop development because they push both crops' growing cycle into hotter, drier periods of the summer than usual and increase the risk of plant growth being shut off by an early freeze, thus preventing the plants from achieving their maximum yield potential.", "Then, in the fall, early bouts of cold, wet conditions delayed corn and soybean harvests in the Western Corn Belt and produced high-moisture crops, requiring costly drying prior to storage. Many farmers left crops in the field unharvested due to wet fields or the lack of access to sufficient propane to dry wet crops. As of December 2, 2019, nearly 11% of the corn crop remained unharvested."], "subsections": []}, {"section_title": "Diminished Trade Prospects Contribute to Market Uncertainty", "paragraphs": ["The United States is traditionally one of the world's leading exporters of corn, soybeans, and soybean products\u00e2\u0080\u0094vegetable oil and meal. During the recent five-year period from marketing year 2013/2014 to 2017/2018, the United States exported 49% of its soybean production and 15% of its corn crop. Thus, the export outlook for both of these crops is critical to farm sector profitability and regional economic activity across large swaths of the United States as well as in international markets. However, the tariff-related trade dispute between the United States and China (as well as several other major trading partners) has resulted in lower purchases of U.S. agricultural products by China in calendar years 2018 and 2019, and has cast uncertainty over the outlook for the U.S. agricultural sector, including the corn and soybean markets."], "subsections": []}]}, {"section_title": "Livestock Outlook for 2019 and 2020", "paragraphs": ["Because the livestock sectors (particularly dairy and cattle, but hogs and poultry to a lesser degree) have longer biological lags and often require large capital investments up front, they are slower to adjust to changing market conditions than is the crop sector. As a result, USDA projects livestock and dairy production and prices an extra year into the future (compared with the crop sector) through 2020, and market participants consider this expanded outlook when deciding their market interactions\u00e2\u0080\u0094buy, sell, invest, etc. "], "subsections": [{"section_title": "Background on the U.S. Cattle-Beef Sector", "paragraphs": ["During the 2007-2014 period, high feed and forage prices plus widespread drought in the Southern Plains\u00e2\u0080\u0094the largest U.S. cattle production region\u00e2\u0080\u0094resulted in an 8% contraction of the U.S. cattle inventory. Reduced beef supplies led to higher producer and consumer prices and record profitability among cow-calf producers in 2014. This was coupled with then-improved forage conditions, all of which helped to trigger the slow rebuilding phase in the cattle cycle that started in 2014 ( Figure 4 ). ", "The expansion continued through 2018, despite weakening profitability, primarily due to the lag in the biological response to the strong market price signals of late 2014. The cattle expansion appears to have levelled off in 2019, with the estimated cattle and calf population unchanged from a year earlier at 103 million. Another factor working against continued expansion in cattle numbers is that producers are now producing more beef with fewer cattle as a result of heavier weights for marketed cattle."], "subsections": []}, {"section_title": "Robust Production Growth Projected Across the Livestock Sector", "paragraphs": ["Similar to the cattle sector, U.S. hog and poultry flocks have been growing in recent years and are expected to continue to expand in 2019. For 2019, USDA projects production of beef (+0.6%), pork (+5.0%), broilers (+2.7%), and eggs (+2.5%) to expand robustly heading into 2020. This growth in protein production is expected to be followed by continued positive growth rates in 2020: beef (+1.9%), pork (+3.8%), broilers (+1.8%), and eggs (+0.8%). A key uncertainty for the meat-producing sector is whether demand will expand rapidly enough to absorb the continued growth in output or whether surplus production will begin to pressure prices lower. USDA projects that combined domestic and export demand for 2019 will continue to grow for red meat (+6.2%)\u00e2\u0080\u0094driven primarily by demand for pork products\u00e2\u0080\u0094but flatten for poultry (+0.0%)."], "subsections": []}, {"section_title": "Livestock-Price-to-Feed-Cost Ratios Signal Profitability Outlook", "paragraphs": ["The changing conditions for the U.S. livestock sector may be tracked by the evolution of the ratios of livestock output prices to feed costs ( Figure 5 ). A higher ratio suggests greater profitability for producers. The cattle-, hog-, and broiler-to-feed margins have all exhibited significant volatility during the 2017-2019 period. The hog, broiler, and cattle feed ratios have trended downward during 2018 and 2019, suggesting eroding profitability. The milk-to-feed price ratio has trended upward from mid-2018 into 2019. While this result varies widely across the United States, many small or marginally profitable cattle, hog, broiler, and milk producers face continued financial difficulties. ", "Continued production growth of between 1% and 4% for red meat and poultry suggests that prices are vulnerable to weakness in demand. However, USDA projects that the price outlook for cattle, hogs, and poultry is expected to turn upward in 2020 ( Table A-4 ). Similarly, U.S. milk production is projected to continue growing in 2019 (+0.5%) and 2020 (+1.7%). Despite this growth, USDA projects U.S. milk prices up in both 2019 (+14.4%) and 2020 (1.3%). "], "subsections": []}]}, {"section_title": "Gross Cash Income Highlights", "paragraphs": ["Projected farm-sector revenue sources in 2019 include crop revenues (46% of sector revenues), livestock receipts (41%), government payments (5%), and other farm-related income (8%), including crop insurance indemnities, machine hire, and custom work. Total farm sector gross cash income for 2019 is projected to be up (+3.9%) to $431.0 billion, driven by increases in both direct government payments (+64.0%) and other farm-related income (+18.1%). Cash receipts from crop receipts (+1.0%) and livestock product (+0.1%) are up (+0.6%) in the aggregate ( Figure 6 ). "], "subsections": [{"section_title": "Crop Receipts", "paragraphs": ["Total crop sales peaked in 2012 at $231.6 billion when a nationwide drought pushed commodity prices to record or near-record levels. In 2019, crop sales are projected at $197.4 billion, up 1.0% from 2018 ( Figure 7 ). Projections for 2019 and percentage changes from 2018 include ", "Feed crops\u00e2\u0080\u0094corn, barley, oats, sorghum, and hay: $59.6 billion (+4.5%); Oil crops\u00e2\u0080\u0094soybeans, peanuts, and other oilseeds: $37.6 billion (-5.2%); Fruits and nuts: $29.4 billion (+1.3%); Vegetables and melons: $20.4 billion (+10.0%); Food grains\u00e2\u0080\u0094wheat and rice: $11.3 billion (-7.2%); Cotton: $7.4 billion (-8.5%); and Other crops including tobacco, sugar, greenhouse, and nursery: $31.3 billion (+3.4%)."], "subsections": []}, {"section_title": "Livestock Receipts", "paragraphs": ["The livestock sector includes cattle, hogs, sheep, poultry and eggs, dairy, and other minor activities. Cash receipts for the livestock sector grew steadily from 2009 to 2014, when it peaked at a record $212.3 billion. However, the sector turned downward in 2015 (-10.7%) and again in 2016 (-14.1%), driven largely by projected year-over-year price declines across major livestock categories ( Table A-4 and Figure 9 ). ", "In 2017, livestock sector cash receipts recovered with year-to-year growth of 8.1% to $175.6 billion. In 2018, cash receipts increased slightly (+0.6%). In 2019, cash receipts are projected up slightly (+0.1%) for the sector at $176.8 billion as increased hog and dairy sales offset declines in poultry and cattle. Projections for 2019 (and percentage changes from 2018) include", "Cattle and calf sales: $66.5 billion (-0.9%); Poultry and egg sales: $40.0 billion (-13.6%); Dairy sales: valued at $39.9 billion (+13.2%); Hog sales: $23.5 billion (+11.2%); and Miscellaneous livestock: valued at $7.0 billion (+2.1%)."], "subsections": []}, {"section_title": "Government Payments", "paragraphs": ["Historically, government payments have included ", "Direct payments (decoupled payments based on historical planted acres), Price-contingent payments (program outlays linked to market conditions), Conservation payments (including the Conservation Reserve Program and other environmental-based outlays), Ad hoc and emergency disaster assistance payments (including emergency supplemental crop and livestock disaster payments and market loss assistance payments for relief of low commodity prices), and Other miscellaneous outlays (including market facilitation payments, cotton ginning cost-share, biomass crop assistance program, peanut quota buyout, milk income loss, tobacco transition, and other miscellaneous payments).", "Projected government payments of $22.4 billion in 2019 would be up 64.0% from 2018 and would be the largest taxpayer transfer to the agriculture sector (in absolute dollars) since 2005 ( Figure 11 and Table A-1 ). The projected surge in federal subsidies is driven by large \"trade-damage\" payments made under the MFP initiated by USDA in response to the U.S.-China trade dispute. MFP payments (reported to be $14.3 billion) in 2019 include outlays from the 2018 MFP program that were not received by producers until 2019, as well as expected payments under the first and second tranches of the 2019 MFP program. ", "USDA ad hoc disaster assistance is projected higher year-over-year at $1.7 billion (+90.7%). Most of the $1.7 billion comes from a new, temporary program, the Wildfire and Hurricane Indemnity Program Plus (WHIP+) enacted through the Disaster Relief Act of 2019 ( P.L. 116-20 ). Payments under the Agricultural Risk Coverage and Price Loss Coverage programs are projected lower (-19.0%) in 2019 at a combined $2.6 billion compared with an estimated $3.2 billion in 2018 (see \"Price Contingent\" in Figure 11 ). ", "Conservation programs include all conservation programs operated by USDA's Farm Service Agency and the Natural Resources Conservation Service that provide direct payments to producers. Estimated conservation payments of $3.5 billion are forecast for 2019, down (-11.3%) from $4.0 billion in 2018.", "Total government payments of $22.4 billion represents a 5% share of projected gross cash income of $425.3 billion in 2019 ( Figure 6 ). In contrast, government payments are expected to represent 24% of the projected net farm income of $92.5 billion. If realized, this would be the largest share since 2006 ( Figure 12 ). The government share of net farm income reached a peak of 65.2% in 1984 during the height of the farm crisis of the 1980s. The importance of government payments as a percentage of net farm income varies nationally by crop and livestock sector and by region."], "subsections": []}, {"section_title": "Dairy Margin Coverage Program Outlook", "paragraphs": ["The 2018 farm bill ( P.L. 115-334 ) made several changes to the previous Margin Protection Program (MPP), including a new name\u00e2\u0080\u0094the Dairy Margin Coverage (DMC) program\u00e2\u0080\u0094and expanded margin coverage choices from the original range of $4.00-$8.00 per hundredweight (cwt.). Under the 2018 farm bill, milk producers have the option of covering the milk-to-feed margin up to a threshold of $9.50/cwt. on the first 5 million pounds of milk coverage. ", "The DMC margin differs from the USDA-reported milk-to-feed ratio (shown in Figure 5 ), but reflects the same market forces. As of October 2019, the formula-based milk-to-feed margin used to determine government payments had risen to $10.88/cwt., above the newly instituted $9.50/cwt. payment threshold ( Figure 13 ), thus decreasing the likelihood that DMC payments might be available in the second half of 2019. In total, the DMC program is expected to make $214 million in payments in 2019, down from $250 million under the previous MPP in 2018."], "subsections": []}]}, {"section_title": "Production Expenses", "paragraphs": ["Total production expenses for 2019 for the U.S. agricultural sector are projected to be up slightly (+0.2%) from 2018 in nominal dollars at $344.6 billion ( Figure 14 ). Production expenses peaked in both nominal and inflation-adjusted dollars in 2014, then declined for five consecutive years in inflation-adjusted dollars. However, in nominal dollars production expenses are projected to turn upward in 2019. ", "Production expenses affect crop and livestock farms differently. The principal expenses for livestock farms are feed costs, purchases of feeder animals and poultry, and hired labor. Feed costs, labor expenses, and property taxes are all projected up in 2019 ( Figure 15 ). In contrast, fuel, seed, pesticides, interest, and fertilizer costs\u00e2\u0080\u0094all major crop production expenses\u00e2\u0080\u0094are projected lower. ", "But how have production expenses moved relative to revenues? A comparison of the indexes of prices paid (an indicator of expenses) versus prices received (an indicator of revenues) reveals that the prices received index generally declined from 2014 through 2016, rebounded in 2017, then declined again in 2019 ( Figure 16 ). Farm input prices (as reflected by the prices paid index) showed a similar pattern but with a smaller decline from their 2014 peak and have climbed steadily since mid-2016, suggesting that farm sector profit margins have been squeezed since 2016."], "subsections": [{"section_title": "Cash Rental Rates", "paragraphs": ["Renting or leasing land is a way for young or beginning farmers to enter agriculture without incurring debt associated with land purchases. It is also a means for existing farm operations to adjust production more quickly in response to changing market and production conditions while avoiding risks associated with land ownership. The share of rented farmland varies widely by region and production activity. However, for some farms it constitutes an important component of farm operating expenses. Since 2002, about 39% of agricultural land used in U.S. farming operations has been rented. ", "The majority of rented land in farms is rented from nonoperating landlords. Nationally in 2017, 29% of all land in farms was rented from someone other than a farm operator. Some farmland is rented from other farm operations\u00e2\u0080\u0094nationally about 8% of all land in farms in 2017 (the most recent year for which data are available)\u00e2\u0080\u0094and thus constitutes a source of income for some operator landlords. Total net rent to nonoperator landlords is projected to be down (-1.2%) to $12.7 billion in 2019.", "Average cash rental rates for 2019 were up (+1.4%) year-over-year ($140 per acre versus $138 in 2018). Farm rental rates are generally set during the preceding fall or in early spring prior to field work. National average rental rates dipped in 2016, but continue to reflect the high crop prices and large net returns of the preceding several years, especially the 2011-2014 period ( Figure 17 ). The national rental rate for cropland peaked at $144 per acre in 2015. "], "subsections": []}]}]}, {"section_title": "Agricultural Trade Outlook", "paragraphs": ["U.S. agricultural exports have been a major contributor to farm income, especially since 2005. As a result, the financial success of the U.S. agricultural sector is strongly linked to international demand for U.S. products. Because of this strong linkage, the downturn in U.S. agricultural exports that started in 2015 ( Figure 18 ) deepened the downturn in farm income that ran from 2013 through 2016 ( Figure 1 ). Since 2018, the U.S. agricultural sector's trade outlook has been vulnerable to several international trade disputes, particularly the ongoing dispute between the United States and China. A return to market-based farm income growth for the U.S. agricultural sector would likely need improved international trade prospects."], "subsections": [{"section_title": "Key U.S. Agricultural Trade Highlights", "paragraphs": ["USDA projects U.S. agricultural exports at $135.5 billion in FY2019, down (-5.5%) from $143.4 billion in FY2018. Export data include processed and unprocessed agricultural products. This aggregate downturn masks larger country-level changes that have occurred as a result of ongoing trade disputes (discussed below). In FY2019, U.S. agricultural imports are projected up at $113.0 billion (+2.7%), and the resultant agricultural trade surplus of $7.0 billion would be the lowest since 2006.", "A substantial portion of the surge in U.S. agricultural exports that occurred between 2010 and 2014 was due to higher-priced grain and feed shipments, including record oilseed exports to China and growing animal product exports to East Asia. As commodity prices have leveled off, so too have export values (see the commodity price indexes in Figure A-1 and Figure A-2 ). In FY2017, the top three markets for U.S. agricultural exports were China, Canada, and Mexico, in that order. Together, these three countries accounted for 47% of total U.S. agricultural exports during the five-year period FY2013-FY2017 ( Figure 19 ). However, in FY2019 the combined share of U.S. exports taken by China, Canada, and Mexico is projected down to 40% largely due to lower exports to China. The ordering of the top markets in 2019 is projected to be Canada, Mexico, the European Union (EU), Japan, and China, as China is projected to decline as a destination for U.S. agricultural exports. From FY2013 through FY2017, China imported an average of $26.4 billion of U.S. agricultural products. However, USDA reported that China's imports of U.S. agricultural products declined to $20.5 billion in FY2018, and are projected to decline further to $13.6 billion in FY2019 as a result of the U.S.-China trade dispute. The fourth- and fifth-largest U.S. export markets have traditionally been the EU and Japan, which accounted for a combined 17% of U.S. agricultural exports during the FY2014 to FY2018 period. These two markets have shown limited growth in recent years when compared with the rest of the world. However, their combined share is projected to grow slightly to 18% in FY2019 ( Figure 19 ). The \"Rest of World\" (ROW) component of U.S. agricultural trade\u00e2\u0080\u0094South and Central America, the Middle East, Africa, and Southeast Asia\u00e2\u0080\u0094has shown strong import growth in recent years. ROW is expected to account for 42% of U.S. agricultural exports in FY2019. ROW import growth is being driven in part by both population and GDP growth but also from shifting trade patterns as some U.S. products previously targeting China have been diverted to new ROW markets. Over the past four decades, U.S. agricultural exports have experienced fairly steady growth in shipments of high-value products\u00e2\u0080\u0094including horticultural products, livestock, poultry, and dairy. High-valued exports are forecast at $100.1 billion for a 73.8% share of U.S. agricultural exports in FY2019 ( Figure 20 ). In contrast, bulk commodity shipments (primarily wheat, rice, feed grains, soybeans, cotton, and unmanufactured tobacco) are forecast at a record low 26.2% share of total U.S. agricultural exports in FY2019 at $35.5 billion. This compares with an average share of over 60% during the 1970s and into the 1980s. As grain and oilseed prices decline, so will the bulk value share of U.S. exports."], "subsections": []}]}, {"section_title": "Farm Asset Values and Debt", "paragraphs": ["The U.S. farm income and asset-value situation and outlook suggest a slowly eroding financial situation heading into 2019 for the agriculture sector as a whole. Considerable uncertainty clouds the economic outlook for the sector, reflecting the downward outlook for prices and market conditions, an increasing dependency on international markets to absorb domestic surpluses, and an increasing dependency on federal support to offset lost trade opportunities due to ongoing trade disputes.", "Farm asset values\u00e2\u0080\u0094which reflect farm investors' and lenders' expectations about long-term profitability of farm sector investments\u00e2\u0080\u0094are projected to be up 2.3% in 2019 to a nominal $3.1 trillion ( Table A-3 ). In inflation-adjusted terms (using 2018 dollars), farm asset values peaked in 2014 ( Figure 21 ). Nominally higher farm asset values are expected in 2019 due to increases in both real estate values (+2.1%) and nonreal-estate values (+3.4%). Real estate is projected to account for 83% of total farm sector asset value. Crop land values are closely linked to commodity prices. The leveling off of crop land values since 2015 reflects stagnant commodity prices ( Figure 22 ).", " Total farm debt is forecast to rise to a record $415.5 billion in 2019 (+3.4%) ( Table A-3 ). Farm equity\u00e2\u0080\u0094or net worth, defined as asset value minus debt\u00e2\u0080\u0094is projected to be up slightly (+2.2%) at $2.7 trillion in 2019 ( Table A-3 ). The farm debt-to-asset ratio is forecast up in 2019 at 13.4%, the highest level since 2003 but still relatively low by historical standards ( Figure 23 ). If realized, this would be the seventh consecutive year of increase in the debt-to-asset ratio."], "subsections": []}, {"section_title": "Average Farm Household Income", "paragraphs": ["A farm can have both an on-farm and an off-farm component to its income statement and balance sheet of assets and debt. Thus, the well-being of farm operator households is not equivalent to the financial performance of the farm sector or of farm businesses because of the inclusion of nonfarm investments, jobs, and other links to the nonfarm economy. ", "Average farm household income (sum of on- and off-farm income) is projected at $120,082 in 2019 ( Table A-2 ), up 7.0% from 2018 but 10.5% below the record of $134,165 in 2014. About 20% ($24,106) of total farm household income in 2019 is projected to be from farm production activities, and the remaining 80% ($95,976) is earned off the farm (including financial investments). The share of farm income derived from off-farm sources had increased steadily for decades but peaked at about 95% in 2000 ( Figure 24 ). Since 2014, over half of U.S. farm operations have had negative income from their agricultural operations. "], "subsections": [{"section_title": "Total vs. Farm Household Average Income", "paragraphs": ["Since the late 1990s, farm household incomes have surged ahead of average U.S. household incomes ( Figure 25 ). In 2018 (the last year for which comparable data were available), the average farm household income of $112,211 was about 25% higher than the average U.S. household income of $90,021 ( Table A-2 )."], "subsections": [{"section_title": "Appendix. Supporting Charts and Tables", "paragraphs": [" Figure A-1 to Figure A-4 present USDA data on monthly farm prices received for several major farm commodities\u00e2\u0080\u0094corn, soybeans, wheat, upland cotton, rice, milk, cattle, hogs, and chickens. The data are presented in an indexed format where monthly price data for year 2010 = 100 to facilitate comparisons.", "USDA Farm Income Data Tables", " Table A-1 to Table A-3 present aggregate farm income variables that summarize the financial situation of U.S. agriculture. In addition, Table A-4 presents the annual average farm price received for several major commodities, including the USDA forecast for the 2019-2020 marketing year."], "subsections": []}]}]}]}}
{"id": "R45995", "title": "Unauthorized Childhood Arrivals, DACA, and Related Legislation ", "released_date": "2019-11-06T00:00:00", "summary": ["On June 4, 2019, the House passed the American Dream and Promise Act of 2019 ( H.R. 6 ) on a vote of 237 to 187. Title I of the bill, the Dream Act of 2019, would establish a process for certain unauthorized immigrants who entered the United States as children (known as unauthorized childhood arrivals) to obtain lawful permanent immigration status. This vote on H.R. 6 was the latest in a line of House and Senate floor votes on legislation to grant some type of immigration relief to unauthorized childhood arrivals.", "As commonly used, the term \"unauthorized childhood arrivals\" encompasses both individuals who entered the United States unlawfully, and individuals who entered legally but then lost legal status by violating the terms of a temporary visa. There is no single set of requirements that defines an unauthorized childhood arrival. Individual bills include their own criteria.", "Legislation on unauthorized childhood arrivals dates to 2001. The earliest bills, which received Senate committee action in the 107 th and 108 th Congresses, only addressed unauthorized childhood arrivals. More recent proposals receiving legislative action have combined provisions on unauthorized childhood arrivals with other immigration provisions\u00e2\u0080\u0094in some cases, these have been major bills to reform the immigration system, such as Senate-passed S. 744 in the 113 th Congress. None of these bills have been enacted into law.", "Most measures on unauthorized childhood arrivals that have seen legislative action have proposed mechanisms for eligible individuals to become lawful permanent residents (LPRs), typically through a two-stage process. Criteria to obtain a conditional or temporary status (stage 1) commonly include continuous presence in the United States for a minimum number of years prior to the date of the bill's enactment, initial entry into the United States as a minor, and satisfaction of specified educational requirements. Criteria to become a full-fledged LPR (stage 2) typically include satisfaction of additional educational requirements or service in the Armed Forces, or, in some cases, employment. Proposals to grant legal immigration status to unauthorized childhood arrivals also require applicants to clear criminal and security-related ineligibility criteria.", "In June 2012, following unsuccessful efforts in the 111 th Congress to enact legislation to grant LPR status to unauthorized childhood arrivals, the Department of Homeland Security (DHS) announced the Deferred Action for Childhood Arrivals (DACA) initiative. Under this initiative, eligible unauthorized childhood arrivals could receive renewable two-year protection from removal and work authorization. The eligibility criteria for an initial grant of DACA were broadly similar to those in earlier bills on unauthorized childhood arrivals and included continuous residence in the Unite d States since June 2007 , initial U.S. entry before age 16 , and satisfaction of educational requirements or service in the Armed Forces.", "In September 2017, Attorney General Jeff Sessions announced that DACA was being terminated. Due to court rulings to date, however, past recipients continue to be able to request DACA. The U.S. Supreme Court is scheduled to hear arguments on the DACA rescission on November 12, 2019.", "According to USCIS data, there were approximately 669,080 active DACA recipients as of April 30, 2019, and the total number of individuals who had ever been granted DACA was 822,063 as of July 31, 2019. These DACA recipient numbers can be compared to estimates of the DACA-eligible population. The Migration Policy Institute has estimated that as of 2018, 1,302,000 individuals met the original DACA eligibility requirements and an additional 356,000 met the age, residence, and immigration status criteria but not the educational requirements.", "It remains to be seen whether H.R. 6 , as passed by the House, or another measure to grant legal status to unauthorized childhood arrivals will be enacted into law."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["On June 4, 2019, the House passed the American Dream and Promise Act of 2019 ( H.R. 6 ) on a vote of 237 to 187. Title I of the bill, the Dream Act of 2019, would establish a process for certain unauthorized immigrants who entered the United States as children (known as unauthorized childhood arrivals) to obtain lawful permanent immigration status. This vote on H.R. 6 was one of several House and Senate floor votes since 2018\u00e2\u0080\u0094and the only successful one\u00e2\u0080\u0094on legislation to grant some type of immigration relief to unauthorized childhood arrivals. ", "As commonly used, the term \"unauthorized childhood arrivals\" encompasses both individuals who entered the United States unlawfully and individuals who entered legally but then lost legal status, by, for example, overstaying an authorized temporary period of stay. There is no single set of requirements that defines an unauthorized childhood arrival. Individual bills include their own criteria. ", "This report considers House and Senate measures on unauthorized childhood arrivals that have seen legislative action since 2001, focusing in particular on legislation considered in the 115 th and 116 th Congresses. It also discusses the related Deferred Action for Childhood Arrivals (DACA) initiative and DACA-related data. The material is presented chronologically to trace the development of legislative proposals on unauthorized childhood arrivals and highlight the interplay between legislative action on these measures and developments related to the DACA initiative."], "subsections": []}, {"section_title": "Original Dream Acts in the 107th and 108th Congresses", "paragraphs": ["Legislation on unauthorized childhood arrivals dates to 2001. That year, the Development, Relief, and Education for Alien Minors (DREAM) Act ( S. 1291 ) was introduced in the 107 th Congress to provide a pathway to lawful permanent resident (LPR) status for eligible individuals. LPRs can live and work in the United States permanently and can become U.S. citizens through the naturalization provisions in the Immigration and Nationality Act (INA). In most cases, LPRs must reside in the United States for five years before they can naturalize.", "S. 1291 sought to provide immigration relief to unauthorized childhood arrivals who, like the larger unauthorized population, were typically unable to work legally and were subject to removal from the United States. Many policymakers viewed this subset of the unauthorized population more sympathetically than unauthorized immigrants on the whole because unauthorized childhood arrivals had arrived in the United States as children and were thus not generally seen as being responsible for their unlawful status.", "Although not all subsequent bills to grant LPR status to unauthorized childhood arrivals were entitled the \"DREAM Act\" and no subsequent bill included exactly the same provisions as S. 1291 , such legislation came to be known generally as the \"Dream Act\" and its intended beneficiaries as \"Dreamers.\"", "In general, the potential beneficiaries of such bills did not have an avenue under the INA to become LPRs. The most common way for a foreign national to adjust status (become an LPR while in the United States) is through INA provisions that require the individual to be eligible for an immigrant visa and to have such a visa immediately available to him or her through the permanent immigration system. Individuals are most often eligible for immigrant visas based on a qualifying family relationship (to a U.S. citizen or LPR) or an employment tie. Among the other criteria to adjust status under these provisions, the individual must have been \"inspected and admitted or paroled into the United States\"; thus, individuals who entered the United States unlawfully are not eligible. In addition, with limited exceptions, an individual is not eligible for adjustment of status if he or she falls in a disqualified category, such as someone who engaged in unauthorized employment or \"who has failed (other than through no fault of his own or for technical reasons) to maintain continuously a lawful status since entry into the United States.\"", "S. 1291 in the 107 th Congress and a subsequent DREAM Act bill ( S. 1545 ) introduced in the 108 th Congress were reported by the Senate Judiciary Committee. Neither bill saw further action."], "subsections": [{"section_title": "Framework for Subsequent Proposals", "paragraphs": ["S. 1545 , as reported in the 108 th Congress, contained the basic features of many later proposals to provide LPR status to unauthorized childhood arrivals. It applied to foreign nationals who were \"inadmissible or deportable from the United States\"\u00e2\u0080\u0094this is how the bill described its target unauthorized population. The grounds of inadmissibility in the INA are the grounds on which a foreign national can be denied admission to the United States. The grounds of deportability are the grounds on which a foreign national can be removed from the United States.", "S. 1545 , as reported, proposed a two-stage process for eligible individuals to become LPRs. Criteria to obtain conditional status (stage 1) included continuous presence in the United States for five years prior to the date of the bill's enactment, initial entry into the United States before age 16, and satisfaction of specified educational requirements. Criteria to become a full-fledged LPR (stage 2) included completion of at least two years in a bachelor's or higher degree program or in the Armed Forces, subject to a hardship exception. At either stage, an applicant could have been disqualified if he or she was inadmissible to or deportable from the United States under specified grounds in the INA.", "S. 1545 would have granted qualifying childhood arrivals conditional LPR status. Describing that status, Department of Homeland Security (DHS) regulations state, \"Unless otherwise specified, the rights, privileges, responsibilities and duties which apply to all other lawful permanent residents apply equally to conditional permanent residents, including but not limited to the right to apply for naturalization (if otherwise eligible).\" Regarding naturalization, S. 1545 provided that the time spent in conditional LPR status would have counted toward the LPR residence requirement for naturalization. At the same time, it stated that an individual could only apply to naturalize once the conditional basis of his or her status were removed (and he or she was a full-fledged LPR).", "Other provisions in S. 1545 addressed eligibility for higher education benefits. The bill provided that individuals obtaining LPR status under its terms would only be eligible for certain forms of federal student aid under Title IV of the Higher Education Act of 1965, namely federal student loans, federal Work-Study programs, and services. Unlike LPRs generally, they would seemingly not have been eligible for grant aid (e.g., federal Pell Grants). At the same time, S. 1545 proposed to eliminate a provision enacted in 1996 as part of the Illegal Immigration Reform and Immigrant Responsibility Act (IIRIRA) that restricts the ability of states to provide higher education benefits to certain unauthorized immigrants. Section 505 of IIRIRA reads:", "an alien who is not lawfully present in the United States shall not be eligible on the basis of residence within a State (or a political subdivision) for any postsecondary education benefit unless a citizen or national of the United States is eligible for such a benefit (in no less an amount, duration, and scope) without regard to whether the citizen or national is such a resident."], "subsections": []}]}, {"section_title": "Legislative Activity in the 109th through the 111th\u00c2 Congresses", "paragraphs": ["Beginning in the 109 th Congress, proposals on unauthorized childhood arrivals\u00e2\u0080\u0094which had received action in earlier Congresses as stand-alone bills\u00e2\u0080\u0094were incorporated into larger measures. In the 109 th through the 111 th Congresses, several measures to grant LPR status to unauthorized childhood arrivals were considered on the Senate and the House floors."], "subsections": [{"section_title": "109th Congress", "paragraphs": ["In the 109 th Congress, the Senate passed a major immigration reform bill, the Comprehensive Immigration Reform Act of 2006 ( S. 2611 ), with a DREAM Act subtitle. The Senate vote was 62 to 36. The House did not consider the bill.", "The DREAM Act provisions in Senate-passed S. 2611 were similar to those in stand-alone S. 1545 , as reported in the 108 th Congress. Like the earlier bill, S. 2611 would have established a mechanism for an eligible unauthorized childhood arrival to become a conditional LPR and then, after meeting additional requirements, have the conditional basis of his or her status removed and become a full-fledged LPR. Applicants also would have had to clear inadmissibility and deportability criteria similar to those under S. 1545 . These DREAM Act provisions were separate from other legalization provisions in S. 2611 , and applicants under the DREAM Act provisions would not have been subject to the same requirements as applicants under the general legalization provisions. This more generous treatment of unauthorized childhood arrivals reflected a widely held belief that they were different and less responsible for their unlawful status than other unauthorized immigrants.", "Although the DREAM Act provisions in Senate-passed S. 2611 and S. 1545 , as reported, were similar, there were some differences. For example, under S. 1545 , as noted, the noneducational route through which a conditional LPR could become a full-fledged LPR required service in the Armed Forces. The comparable route under Senate-passed S. 2611 encompassed service in the broader uniformed services. "], "subsections": []}, {"section_title": "110th Congress", "paragraphs": ["In the 110 th Congress, there was an unsuccessful vote in the Senate to invoke cloture on a bill to provide for comprehensive immigration reform ( S. 1639 ) that included a DREAM Act subtitle among other legalization provisions. The vote was 46 to 53. ", "S. 1639 differed from earlier bills on unauthorized childhood arrivals in notable ways. For example, unlike S. 2611 , the immigration reform bill passed by the Senate in the 109 th Congress, S. 1639 's DREAM Act provisions were tied to other legalization provisions in the bill. Under S. 1639 , the first step to LPR status for an unauthorized childhood arrival was the same as for any unauthorized immigrant: to obtain temporary legal status under a new \"Z\" nonimmigrant category. Among the eligibility requirements for Z status were continuous presence in the United States since a specified date and clearance of inadmissibility and ineligibility criteria that were stricter than under S. 2611 . Other requirements for obtaining Z status under S. 1639 included submission of biometric data for security and law enforcement background checks and satisfaction of any applicable federal tax liabilities. ", "Z nonimmigrant status would have been granted for an initial period of four years and could have been extended in four-year increments. Applicants for extensions would have had to satisfy, among other criteria, escalating requirements concerning knowledge of the English language and U.S. civics, unless they qualified for an exception. These requirements were based on the English and civics requirements for naturalization.", "S. 1639 would have established different pathways to LPR status for Z nonimmigrants. A DREAM Act pathway to LPR status, which would have been quicker than the standard pathway provided in the bill, would have been available to Z nonimmigrants who met an additional set of requirements. These included being under age 30 on the date of enactment, being under age 16 at the time of initial U.S. entry, and having completed at least two years in either a bachelor's or higher degree program or the uniformed services. The \"under age 30\" requirement was new; earlier bills receiving action did not include maximum age provisions. S. 1639 would have deemed individuals obtaining LPR status under its DREAM Act pathway to meet the LPR residence requirement for naturalization eight years after the date of enactment. ", "S. 1639 also addressed eligibility for higher education benefits. As under the earlier bills discussed above, individuals obtaining LPR status under S. 1639 's DREAM Act pathway would have been eligible for federal student loans, federal Work-Study programs, and services, but seemingly not grant aid. Unlike these other bills, S. 1639 would not have fully repealed the IIRIRA Section 505 restriction on state provision of post-secondary educational benefits, but would have rendered it ineffective for Z nonimmigrants.", "Other legislation on unauthorized childhood arrivals considered in the 110 th Congress included another major immigration reform bill ( S. 1348 ). The Senate voted against invoking cloture on both S. 1348 and a substitute amendment to the bill. These votes occurred prior to the introduction of S. 1639 . ", "After the unsuccessful cloture vote on S. 1639 , the Senate considered a stand-alone DREAM Act bill ( S. 2205 ). It did not invoke cloture on the motion to proceed to the bill, by a vote of 52 to 44. This vote on S. 2205 brought to the fore competing views among supporters of providing LPR status to unauthorized childhood arrivals about the relationship between that issue and other components of immigration reform. Some supporters pressed for passage of the stand-alone bill arguing that the situation of unauthorized childhood arrivals was urgent. Another view held, however, that enacting a pathway to LPR status for unauthorized childhood arrivals in a narrow bill would hurt the prospects of achieving broader reform (including more controversial proposals for the legalization of other unauthorized immigrants)."], "subsections": []}, {"section_title": "111th Congress", "paragraphs": ["In the 111 th Congress, the House approved a DREAM Act amendment to an unrelated bill, the Removal Clarification Act of 2010 ( H.R. 5281 ) on a vote of 216 to 198. The Senate rejected a motion to invoke cloture on a motion to agree to the House-passed DREAM Act amendment to H.R. 5281 , by a vote of 55 to 41.", "This House-passed version of the DREAM Act would have established a three-stage process for individuals who were inadmissible or deportable from the United States to obtain LPR status. In stage 1, as in many previous bills, a successful applicant would have been granted conditional status. This proposal, however, would have granted conditional status in the form of conditional nonimmigrant status, which is not an existing status under immigration law. An individual would have applied in stage 2 to have his or her conditional nonimmigrant status extended, and in stage 3 to be granted LPR status. Under this DREAM Act amendment, an individual who became an LPR could naturalize after three years in LPR status. ", "The DREAM Act amendment to H.R. 5281 included eligibility requirements concerning continuous presence, age at entry, and educational attainment, as well as inadmissibility and ineligibility criteria. It also included some of the same types of requirements as S. 1639 in the 110 th Congress\u00e2\u0080\u0094pertaining to maximum age, submission of biometric data, satisfaction of any applicable federal tax liability, and knowledge of English and U.S. civics\u00e2\u0080\u0094although the specific requirements were not necessarily the same, and did not necessarily apply at the same stage of the legalization process, in the two measures. Unlike earlier bills receiving action, the House-passed amendment would have established \"surcharges\" on applications for conditional status. While S. 1639 would have imposed penalty fees on applications for Z status, that bill would have made these fees inapplicable or refundable in the case of applicants who met its DREAM Act criteria.", "Like the DREAM Act provisions in S. 1639 and earlier bills receiving action, the House-passed DREAM Act amendment would have made individuals who obtained conditional nonimmigrant or LPR status under its terms eligible for federal student aid in the form of federal student loans, federal Work-Study programs, and services, but seemingly not grant aid. Unlike earlier bills receiving action, the House-passed measure contained no IIRIRA Section 505 repeal language. "], "subsections": []}]}, {"section_title": "Establishment of DACA", "paragraphs": ["On June 15, 2012, DHS issued a memorandum announcing the DACA initiative. The memorandum stated that certain individuals who were brought to the United States as children and met other criteria would be considered for deferred action for two years, subject to renewal. DHS has described deferred action as \"a use of prosecutorial discretion to defer removal action against an individual for a certain period of time.\"", "In remarks delivered that same day, President Barack Obama called on Congress to pass DREAM Act legislation, citing in particular the House-passed bill in the 111 th Congress. He indicated that \"in the absence of any immigration action from Congress to fix our broken immigration system,\" his Administration had tried \"to focus our immigration enforcement resources in the right places.\" He portrayed the DACA initiative as an extension of those efforts, stating that \"[e]ffective immediately, the Department of Homeland Security is taking steps to lift the shadow of deportation from these young people.\" President Obama made clear that DACA relief was not a permanent solution. Instead, he characterized it as \"a temporary stopgap measure.\"", "The eligibility criteria for an initial two-year grant of DACA were broadly similar to those in earlie r DREAM Act bills. DHS's U.S. Citizenship a nd Immigration Services (USCIS), which administers DACA, published the eligibility criteria for an i ni tial DACA grant and a renewal on its website . The criteria for an initial DACA grant were (1) under age 31 on June 15, 2012; (2) under age 16 at time of entry into the United States; (3 ) continuous ly resident in the Unite d States since June 15, 20 07 ; (4 ) physically present in United S tates on June 15, 2012, and at the time of requesting DACA ; (5) no t in lawful status on June 15, 2012; (6) in school, graduated from high school or obtained general education development certificate, or honorably d ischarged from the Armed Forces; and (7 ) not convicted of a felony, a significant misdemeanor, or three or more misdemeanors, and not otherwise a threat to national se curity or public safety . In addition, with specified exceptions, an individual had to be a t least age 15 to request DACA.", "Individuals granted deferred action could receive employment authorization. According to USCIS, \" Under existing regulations, an individual whose case has been deferred is eligible to receive employment authorization for the period of deferred action, prov ided he or she can demonstrate ' an ec onomic necessity for employment ' . \" To request DACA from USCIS, an applicant had to submit Form I-821D, \" Consideration of Deferre d Action for Childhood Arrivals \" ; an application for employment authorization (Form I-765) and a related worksheet (Form I-765WS) ; and required fees.", "Currently, as discussed later in this report, individuals who have never been granted DACA cannot submit initial requests. Individuals who have been granted DACA in the past, however, continue to be able to submit requests. To be considered for a two-year renewal, a DACA recipient must satisfy the following criteria: (1) did not depart from the United States on or after August 15, 2012, without first obtaining permission to travel, (2) has continuously resided in the United States since submitting his or her latest approved DACA request, and (3) has not been convicted of a felony, a significant misdemeanor, or three or more misdemeanors, and is not a threat to national security or public safety. To request a renewal of DACA, an individual must submit the same forms and fees as for an initial request. As of the date of this report, these fees total $495."], "subsections": []}, {"section_title": "Legislative Activity in the 113th Congresses", "paragraphs": ["The next significant legislative developments related to unauthorized childhood arrivals occurred in the 113 th Congress when the Senate approved a major immigration reform bill with DREAM Act provisions. The bill, the Border Security, Economic Opportunity, and Immigration Modernization Act ( S. 744 ), was passed on a 68-32 vote. The House did not consider S. 744 .", "S. 744 proposed to establish a general legalization program for individuals in the United States who were not in nonimmigrant status or other specified lawful status and a special DREAM Act pathway to LPR status for certain aliens who had entered the country as children. Under S. 744 , unauthorized childhood arrivals, like other unauthorized immigrants, would first have applied for a newly created status\u00e2\u0080\u0094registered provisional immigrant (RPI) status. The requirements for RPI status included continuous presence in the United States since a specified date, satisfaction of any applicable federal tax liability, and submission of biometric and biographic data for national security and law enforcement clearances. RPI status would have been granted for an initial period of six years and could have been extended in six-year increments. Applicants for RPI status would have been subject to specified inadmissibility and ineligibility criteria.", "Under S. 744 , DHS could have adopted streamlined RPI procedures for DACA recipients. It could have granted RPI status to a DACA recipient upon completion of renewed national security and law enforcement clearances unless the agency determined that the individual had engaged in conduct making him or her ineligible for RPI status.", "S. 744 would have established a special DREAM Act pathway to LPR status for RPIs who had been in RPI status for at least five years, had initially entered the United States when they were under age 16, and, subject to a hardship exception, had completed either two years of higher education or four years of service in the uniformed services. Such individuals also would have had to submit biometric and biographic data for national security and law enforcement background checks and would have had to meet the English language and civics requirements for naturalization, unless exempted. S. 744 would have authorized DHS to adopt streamlined procedures for DACA recipients to obtain LPR status.", "With respect to naturalization, an alien granted LPR status under the DREAM Act provisions in S. 744 would have been considered to be an LPR (and therefore accumulating time toward the residency requirement for naturalization) during the period in RPI status. In most cases, however, an alien could not have applied for naturalization while in RPI status.", "S. 744 would have placed restrictions on federal student aid under Title IV of the Higher Education Act for RPIs who had entered the United States before age 16. This group would only have been eligible for federal student loans, federal Work-Study programs, and services. In addition, the bill would have repealed Section 505 of IIRIRA, which, as discussed, restricts the provision of postsecondary educational benefits for aliens who are not lawfully present. "], "subsections": []}, {"section_title": "DACA Since 2017", "paragraphs": ["On September 5, 2017, Attorney General Jeff Sessions announced that DACA was being terminated. A related memorandum released by DHS the same day rescinded the 2012 memorandum that established the initiative. As part of the rescission, DHS had planned to \"execute a wind-down\" of DACA, under which no new initial DACA requests would have been accepted after September 5, 2017, and no new renewal requests would have been accepted after October 5, 2017. This wind-down did not proceed as planned, however, because DACA recipients and others filed federal lawsuits challenging the legality of the rescission. Under rulings in these cases, to date, individuals who have been granted DACA in the past continue to be able to submit DACA requests. Individuals who have never been granted DACA cannot submit new initial requests. The U.S. Supreme Court is scheduled to hear arguments on the DACA rescission on November 12, 2019.", "Individuals who have been granted DACA in the past and whose DACA grants have expired or been terminated are still able to apply for a renewal. As of August 1, 2019, USCIS has reinstated its past DACA \"late renewal policy,\" under which an individual whose previous DACA grant expired more than one year ago or whose previous DACA grant was terminated must submit an initial DACA request rather than a renewal request.", "According to USCIS data on the DACA population, there were approximately 689,000 active DACA recipients as of September 4, 2017, and approximately 669,080 active DACA recipients as of April 30, 2019. Regarding the latter group, about 80% were born in Mexico, 53% were female, and the median age was 25.", "In notes accompanying the September 4, 2017, data tables, USCIS indicated that the total number of individuals who had ever been granted DACA as of that date was approximately 800,000. This number excluded individuals whose initial grants of DACA were later terminated. Of those 800,000 individuals, USCIS reported that about 40,000 had become LPRs and about 70,000 had either failed to apply to renew their DACA grants or had their renewal applications denied. As of July 31, 2019, according to USCIS data, the total number of individuals who had ever been granted DACA was 822,063. This number excluded individuals whose initial grants of DACA were later terminated. Of those 822,063 individuals, 73,043 had become LPRs and 4,448 had become citizens. ", "These data on DACA recipients can be compared with estimates of the DACA-eligible population. According to an analysis by the Migration Policy Institute (MPI), an estimated 1,307,000 unauthorized individuals were immediately eligible for DACA in 2016 based on the eligibility requirements for an initial DACA grant that MPI was able to model. In addition, an estimated 398,000 met the age, residence, and immigration status criteria but not the educational requirements. ", "MPI updated its estimates of the DACA-eligible population as of 2018 based on the original DACA eligibility requirements and subject to the same model limitations as the 2016 estimates. It estimated that, as of 2018, 1,302,000 individuals met the DACA eligibility requirements and an additional 356,000 met the age, residence, and immigration status criteria but not the educational requirements. "], "subsections": []}, {"section_title": "Legislative Activity in the 115th and 116th Congresses", "paragraphs": ["In the fall of 2017, following the DACA rescission announcement, President Donald Trump and several Members of Congress discussed a possible deal on unauthorized childhood arrivals. Initially, these talks focused on a package combining provisions to \"enshrine the protections of DACA into law\" with border security provisions. Other immigration issues were subsequently introduced into the discussion, and in January 2018 the White House released its \"Framework on Immigration Reform & Border Security.\" This proposal called for legal status for DACA-eligible individuals as well as enhancements to border security and interior immigration enforcement and changes to the permanent immigration system. In the 115 th and 116 th Congresses, the Senate and the House have considered measures containing provisions to grant legal status to DACA recipients and unauthorized childhood arrivals along with other immigration provisions. "], "subsections": [{"section_title": "115th Congress", "paragraphs": ["In 2018, both the Senate and the House considered immigration legislation that contained language on unauthorized childhood arrivals. A greater number of proposals to provide immigration relief to this population received floor consideration in the 115 th Congress than in any prior Congress. Neither chamber passed any of these measures."], "subsections": [{"section_title": "Senate Amendments to H.R. 2579", "paragraphs": ["In February 2018, the Senate considered three immigration proposals with language on unauthorized childhood arrivals as floor amendments to an unrelated bill, the Broader Options for Americans Act ( H.R. 2579 ). The Senate rejected motions to invoke cloture on all three amendments."], "subsections": [{"section_title": "S.Amdt. 1955", "paragraphs": ["The Senate considered provisions on unauthorized childhood arrivals as Subtitle A of S.Amdt. 1955 , the Uniting and Securing America (USA) Act of 2018. Subtitle A was substantively identical to Title I of two bills with the same USA Act name, as introduced in the 115 th Congress\u00e2\u0080\u0094 S. 2367 and H.R. 4796 .", "S.Amdt. 1955 would have established a mechanism for certain childhood arrivals who were inadmissible to or deportable from the United States or were in temporary protected status (TPS) to become LPRs\u00e2\u0080\u0094in most cases through a two-stage process. Applicants would have been considered for conditional LPR status in stage 1. To receive such status, an applicant would have had to meet requirements including continuous presence in the United States since December 31, 2013; initial U.S. entry before age 18; no inadmissibility under specified grounds in the INA and no other specified ineligibilities; and either college admission, acquisition of a high school diploma or comparable credential, or enrollment in secondary school or a comparable educational program. S.Amdt. 1955 would have directed DHS to grant conditional LPR status to a DACA recipient unless the individual had subsequently engaged in conduct that would make him or her ineligible for DACA. Applicants also would have had to submit biometric and biographic data for security and law enforcement background checks. Conditional LPR status would have been valid for eight years.", "In stage 2, a conditional LPR would have had to meet a second set of requirements to have the conditional basis of his or her status removed and become a full-fledged LPR. Among these requirements were achievement of one of the following, subject to a hardship exception: (1) attainment of a college degree, completion of at least two years in a bachelor's or higher degree program, or completion of at least two years in a postsecondary vocational program, (2) service in the uniformed services for the obligatory period, or (3) employment for at least three years and at least 80% of the time the alien had valid employment authorization. The other stage 2 requirements included submission of biometric and biographic data for security and law enforcement background checks, continued clearance of the inadmissibility and ineligibility criteria for conditional LPR status, and, unless subject to an exception due to a disability, satisfaction of the English language and U.S. civics requirements for naturalization.", "Under S.Amdt. 1955 , a conditional LPR could have applied to have the condition on his or her status removed at any time after meeting the stage 2 requirements. The time spent in conditional status would have counted as time in LPR status for purposes of naturalization, but the individual could not have applied for naturalization while in conditional status. In addition, the bill would have provided that an applicant meeting all the stage 1 and stage 2 requirements at the time of submitting his or her initial application would have been granted full-fledged LPR status directly (without first being granted conditional status). Earlier bills receiving floor action did not include such a provision.", "Regarding postsecondary education, S.Amdt. 1955 would have repealed Section 505 of IIRIRA. The measure did not include any language concerning federal student aid.", "On February 15, 2018, the Senate voted (52 to 47) not to invoke cloture on S.Amdt. 1955 ."], "subsections": []}, {"section_title": "S.Amdt. 1958", "paragraphs": ["S.Amdt. 1958 , the Immigration Security and Opportunity Act, would have established a two-stage pathway to LPR status for certain childhood arrivals who were inadmissible to or deportable from the United States. It incorporated some eligibility requirements for applicants at both stages that were not included in S.Amdt. 1955 . Under S.Amdt. 1958 , to obtain conditional LPR status in stage 1 an individual would have had to either be a DACA recipient or meet a set of requirements. For a DACA recipient to qualify, he or she could not have engaged in any conduct since being granted DACA that would have made the individual ineligible for DACA protection. ", "Requirements applicable to a non-DACA recipient included continuous presence in the United States since June 15, 2012; initial U.S. entry before age 18; no inadmissibility under specified grounds in the INA and no other specified ineligibilities; and either satisfaction of educational requirements like those under S.Amdt. 1955 , or enlistment or service in the Armed Forces. In addition, a non-DACA recipient would have had to meet a maximum age requirement\u00e2\u0080\u0094having a birthdate after June 15, 1974\u00e2\u0080\u0094and to have satisfied any applicable federal tax liability. ", "All stage 1 applicants also would have had to submit biometric and biographic data for security and law enforcement background checks. Conditional LPR status under S.Amdt. 1958 would have been valid for seven years.", "To have the conditional basis of his or her status removed and become a full-fledged LPR, a conditional LPR would have had to meet a second set of requirements. These stage 2 requirements included satisfaction of one of the following: (1) acquisition of a college degree or completion of at least two years in a program for a bachelor's or higher degree, (2) service in the uniformed services for at least two years, or (3) employment for at least three years and at least 75% of the time the alien had valid employment authorization. Other requirements included submission of biometric and biographic data for security and law enforcement background checks, continued clearance of the inadmissibility and ineligibility criteria for conditional LPR status, satisfaction of the English language and civics requirements for naturalization, and satisfaction of any applicable federal tax liability. ", "Under S.Amdt. 1958 , the time spent in conditional status would have counted as time in LPR status for purposes of naturalization. In general, however, beneficiaries could not have been naturalized until 12 years after they had received conditional status. This period could have been reduced by up to two years for DACA recipients. ", "S.Amdt. 1958 also would have limited the ability of the parents of its beneficiaries to obtain LPR status in the United States. Earlier measures receiving legislative action did not include such restrictions. S.Amdt. 1958 would have prevented a parent from obtaining LPR status based on an immigrant petition filed by a child who had received conditional permanent resident status under the bill if the parent had assisted in the child's unlawful entry into the United States. The amendment did not include any language on federal student aid or Section 505 of IIRIRA.", "On February 15, 2018, the Senate voted (54 to 45) not to invoke cloture on S.Amdt. 1958 ."], "subsections": []}, {"section_title": "S.Amdt. 1959", "paragraphs": ["Provisions on unauthorized childhood arrivals comprised Title III of S.Amdt. 1959 , the SECURE and SUCCEED Act. Title III, named the SUCCEED Act, was broadly similar to a Senate bill of the same name ( S. 1852 ), as introduced in the 115 th Congress, despite differences between the two measures.", "S.Amdt. 1959 would have established a three-stage process for unauthorized childhood arrivals to obtain LPR status. Applicants who met an initial set of requirements would have been granted conditional temporary resident status (rather than conditional LPR status, as under the other two Senate amendments). These requirements, which incorporated some of the initial criteria for DACA, included continuous presence in the United States since June 15, 2012; initial U.S. entry before age 16; a birthdate after June 15, 1981; not being in lawful status on June 15, 2012; no inadmissibility or deportability under specified grounds in the INA and no other specified ineligibilities; and educational or military requirements based on the applicant's age on the date of enactment. Those under age 18 would have had to be in school. Those age 18 and older would have had to have earned a high school diploma or comparable credential, been admitted to college, or served or enlisted in the Armed Forces.", "As under one or both of the other amendments discussed, all stage 1 applicants would also have needed to submit biometric and biographic data for security and law enforcement background checks and to satisfy any applicable federal tax liability. In addition, S.Amdt. 1959 included some requirements to obtain conditional status that were not found in the other amendments. Among them, an applicant age 18 or older would have had to acknowledge being notified that if he or she violated a term of conditional temporary resident status, he or she would be ineligible for any immigration relief or benefits, with limited exceptions. Conditional temporary resident status would have been valid for an initial period of seven years or until the alien turned age 18, if longer.", "Under S.Amdt. 1959 , an alien's initial period of conditional temporary residence would have been extended for five years if the alien met additional requirements. These included satisfying one of the following: (1) college graduation or college attendance for at least eight semesters, (2) service in the Armed Forces for at least three years, or (3) a combination of college attendance, military service, and/or employment, as specified, for at least four years.", "After seven years in conditional temporary resident status, an alien could have applied for LPR status subject to another set of requirements. These requirements included continued compliance with the requirements for conditional temporary resident status, submission of biometric and biographic data for security and law enforcement background checks, satisfaction of the English language and civics requirements for naturalization (unless exempt due to a disability), and payment of any applicable federal tax liability.", "Like S.Amdt. 1958 , S.Amdt. 1959 would have placed limitations on the ability of its beneficiaries to naturalize and the ability of the family members of its beneficiaries to obtain lawful immigration status under existing law. The provisions in S.Amdt. 1959 , however, were more restrictive than those in S.Amdt. 1958 . An individual would have had to wait at least seven years after being granted LPR status to apply for naturalization. S.Amdt. 1959 would also have provided that a parent or other family member of an alien granted conditional temporary resident status or LPR status could not have gained any status under the immigration laws based on a parental or other family relationship. The amendment did not include any language on federal student aid or Section 505 of IIRIRA.", "On February 15, 2018, the Senate voted (39 to 60) not to invoke cloture on S.Amdt. 1959 . "], "subsections": []}]}, {"section_title": "House Bills", "paragraphs": ["In June 2018, the House considered two major immigration reform bills with provisions on unauthorized childhood arrivals. Notably, unlike the Senate amendments discussed above and the bills considered in prior Congresses, these bills would not have established new mechanisms for unauthorized childhood arrivals to apply for LPR status on their own behalf. One bill ( H.R. 4760 ), which would have applied only to DACA recipients, would have provided eligible individuals with a renewable temporary status. The other ( H.R. 6136 ) would have enabled eligible individuals to adjust to LPR status in the United States if they were otherwise eligible for immigrant visas. Neither bill passed."], "subsections": [{"section_title": "H.R. 4760", "paragraphs": ["The Securing America's Future Act of 2018 ( H.R. 4760 ) would have established a process for certain unauthorized childhood arrivals to obtain a new temporary immigration status\u00e2\u0080\u0094contingent nonimmigrant (CNI) status. To be eligible for CNI status, individuals would have had to have on the bill's date of enactment valid work authorization that was issued pursuant to the DACA initiative (thus, they would have needed to be current DACA recipients). ", "Among the other eligibility criteria for CNI status, individuals would have had to be enrolled in and attending an educational institution full-time, or to have earned a high school diploma, General Educational Development certificate, or high school equivalency certificate. Applicants for CNI status also would have had to submit biometric and biographic data for security and law enforcement checks and clear specified INA inadmissibility and deportability criteria and other specified ineligibilities. The latter ineligibilities were stricter than those under the Senate amendments considered in the 115 th Congress and earlier bills on unauthorized childhood arrivals. Applicants also would have had to pay a border security fee. ", "CNI status would have been granted for a period of three years and could have been extended in three-year increments. Contingent nonimmigrants would have been eligible for employment authorization and could have traveled outside the United States and been permitted to return. H.R. 4760 would not have provided a pathway to LPR status. ", "On June 21, 2018, the House voted (193 to 231) not to pass H.R. 4760 ."], "subsections": []}, {"section_title": "H.R. 6136", "paragraphs": ["Like H.R. 4760 , the related Border Security and Immigration Reform Act of 2018 ( H.R. 6136 ) would have established a process for certain unauthorized childhood arrivals to obtain CNI status. This bill included many of the same eligibility and ineligibility criteria for CNI status as H.R. 4760 , but it would not have been as restrictive. For example, it would not have been limited to individuals who had DACA. Among other, specific differences between the criteria in the two bills, H.R. 4760 would have required applicants for CNI status to be under age 31 on June 15, 2012, which is a requirement for DACA, and also to be under age 31 at the time of filing the CNI application. H.R. 6136 would have required applicants to meet the former age requirement but not the latter. ", "Under H.R. 6136 , CNI status would have been granted for a period of six years and could have been extended in six-year increments. Contingent nonimmigrants would have been eligible for employment authorization and could have traveled outside the United States and been permitted to return. ", "In a key difference from H.R. 4760 , H.R. 6136 would have created a means for CNIs who met certain criteria to become LPRs through the INA adjustment of status provisions. As mentioned in the earlier discussion of the original Dream Act proposals, foreign nationals in the United States who have immigrant visas immediately available to them (based, for example, on an immigrant visa petition filed by a qualified family member) and meet other criteria can become LPRs without having to leave the country. However, in order to adjust to LPR status through these provisions, individuals (except for certain battered immigrants) must have been \"inspected and admitted or paroled into the United States.\" They also must be admissible to the United States for permanent residence under the grounds enumerated in the INA. In addition, with limited exceptions, these adjustment of status provisions are inapplicable to an individual who has engaged in unauthorized employment or \"who has failed (other than through no fault of his own or for technical reasons) to maintain continuously a lawful status since entry into the United States.\"", "H.R. 6136 would have provided that in applying the INA adjustment provisions to a CNI who has been in that status for five years, the CNI would have been considered to be inspected and admitted into the United States. It also would have provided that in making determinations about the CNI's admissibility to the United States, specified grounds of inadmissibility, including grounds related to unlawful presence and lack of proper documentation, would not have applied. The bill, however, did not explicitly address other disqualifications under the adjustment of status provisions, such as for unauthorized employment. The limited permanent immigration relief offered by H.R. 6136 can be seen as occupying a middle ground between H.R. 4760 's renewable temporary status and the special pathways to permanent resident status proposed under the Senate amendments. ", "On June 27, 2018, the House voted (121 to 301) not to pass H.R. 6136 ."], "subsections": []}]}]}, {"section_title": "116th Congress", "paragraphs": ["As of the date of this report, legislative activity in the 116 th Congress on unauthorized childhood arrivals has occurred in the House in connection with the American Dream and Promise Act of 2019 ( H.R. 6 ). This bill contains a Title I (Dream Act) on unauthorized childhood arrivals and a Title II (American Promise Act) on nationals of certain countries designated for TPS or deferred enforced departure (DED). Unlike other bills on unauthorized childhood arrivals that have seen floor action in recent Congresses H.R. 6 does not address an array of immigration issues. The House passed H.R. 6 on June 4, 2019, by a vote of 237 to 187.", "The Dream Act title of H.R. 6 would establish a mechanism for certain childhood arrivals who are inadmissible or deportable from the United States or who have TPS or are covered by a grant of DED to become LPRs\u00e2\u0080\u0094in most cases through a two-stage process. ", "To obtain conditional LPR status in stage 1, an individual would need to meet a set of requirements, including continuous presence in the United States for at least four years since the date of enactment, initial U.S. entry before age 18, no inadmissibility under specified grounds in the INA and no other specified ineligibilities, and satisfaction of educational requirements. These educational requirements could be satisfied in various ways, including, as in some earlier bills, by attainment of a high school diploma or comparable credential or by enrollment in secondary school or a program to obtain a high school diploma or comparable credential. They also could be satisfied by obtaining a credential from a career and technical education school that provides education at the secondary level. DACA recipients who meet the requirements for a DACA renewal, as in effect in January 2017, would be subject to streamlined application procedures to be established by DHS. All applicants would need to submit biometric and biographic data for security and law enforcement background checks. Conditional LPR status would be valid for 10 years.", "In stage 2, a conditional LPR would have to meet a second set of requirements to have the conditional basis of his or her status removed and become a full-fledged LPR. Among these requirements are achievement of one of the following, subject to a hardship exception: (1) attainment of a college degree, completion of at least two years in a program for a bachelor's or higher degree, or acquisition of a recognized postsecondary credential from an area career and technical education school; (2) service in the uniformed services for at least two years; or (3) earned income for at least three years and at least 75% of the time the alien had valid employment authorization. The other stage 2 requirements include submission of biometric and biographic data for security and law enforcement background checks, continued clearance of the inadmissibility and ineligibility criteria for conditional LPR status, and satisfaction of the English language and U.S. civics requirements for naturalization, subject to an exception due to disability.", "Under H.R. 6 , a conditional LPR could apply to have the condition on his or her status removed at any time after meeting the stage 2 requirements. The time spent in conditional status would count as time in LPR status for purposes of naturalization, but the individual could not apply for naturalization while in conditional status. In addition, like S.Amdt. 1955 in the 115 th Congress, the bill would provide that an applicant meeting all the stage 1 and stage 2 requirements at the time of submitting his or her initial application would be granted full-fledged LPR status directly (without first being granted conditional status). ", "Regarding postsecondary education, H.R. 6 would not place any restrictions on its beneficiaries' eligibility for federal student aid and would not repeal Section 505 of IIRIRA."], "subsections": []}]}, {"section_title": "Conclusion", "paragraphs": ["The Trump Administration's efforts to end the DACA program have focused renewed attention on the issue of unauthorized childhood arrivals. Passage of H.R. 6 in the House in the 116 th Congress can be seen as a result of this renewed attention. This bill is the latest of several measures to grant LPR status to unauthorized childhood arrivals, and the first in more than five years, to have passed one chamber. The question remains, however, if this bill or another measure to grant legal status to DACA recipients or unauthorized childhood arrivals will be enacted into law."], "subsections": []}]}}
{"id": "R46333", "title": "Fintech: Overview of Financial Regulators and Recent Policy Approaches", "released_date": "2020-04-28T00:00:00", "summary": ["New technologies in the financial services sector can create challenges for the various federal agencies responsible for financial regulation in the United States. As these regulators address the potential benefits and risks of innovation, policymakers have demonstrated significant interest in understanding the types of technologies that may benefit consumers and financial markets while identifying the risks that new financial services may present. As Congress considers the potential tradeoffs of financial technology or fintech , it can be useful to understand how the financial system regulators are approaching these issues.", "The financial system regulators can be grouped into three general categories: (1) depository institution regulators, (2) consumer protection agencies, and (3) securities regulators. Each type of regulator has the authority to write rules, publish guidance, supervise institutions, and enforce compliance with the laws they implement. Further, there are similarities and differences among each regulator's mandate, which shed light on the approaches the regulators tend to take when considering new fintech.", "The banking regulators generally are responsible for banks and credit unions, particularly focusing on the safety and soundness of these institutions. They have limited authority to write rules for, supervise the operations of, or enforce actions against firms outside their jurisdiction. Some banking regulators are responsible for granting licenses, or charters, to financial institutions so they can operate as banks and credit unions. Fintech firms typically are not licensed banks or credit unions; however, banks and credit unions often form partnerships with fintech firms, and banking regulators have legal authority to examine these types of relationships. This third-party partnership supervision allows the regulators to supervise depository institutions' interactions with new fintech firms. Banks and credit unions also have an important role in the payments system. Banking regulators have used some of their rulemaking authorities to influence technological advances in the payments system as consumers continue to shift toward electronic payment tools, such as debit and credit cards.", "The consumer protection agencies generally are responsible for protecting consumers from unfair and deceptive business activities while maintaining a fair, competitive marketplace. Similar to banking regulators, consumer protection agencies have rulemaking, supervision, and enforcement authorities to implement and ensure industry compliance with consumer protection and competition laws, but consumer protection agencies have broader jurisdiction than banking regulators. For example, often they can directly regulate fintech companies and use their enforcement authorities to interact with fintech. In addition, they have promulgated rules pertaining to aspects of fintech. Consumer protection agencies generally balance the potential benefits of new technologies that could improve consumer outcomes with the potential risks to consumers posed by new, untested products entering the marketplace. This mandate allows consumer protection agencies to take enforcement actions to protect consumers and create safeguards from enforcement actions to protect companies offering financial services that benefit consumers or the market.", "Securities regulators generally are concerned with protecting investors, maintaining fair and efficient markets, and facilitating capital formation. These regulators generally have limited concern for safety and soundness of the firms in their jurisdiction, focusing on disclosure requirements and contracts to promote investor protection and efficiency in the marketplace. Similar to the other regulators, they promulgate and enforce rules, but their mandate positions them somewhat differently than banking regulators and consumer protection agencies with respect to fintech. Securities regulators may endeavor to determine whether a new type of fintech product from a company counts as a security and how fintech is changing the way securities are offered. To this end, securities regulators tend to rely on their enforcement authority to ensure that new technologies do not violate securities laws."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["Swiping a card to pay for something seems routine today; however, at one point in recent history, a piece of plastic with a magnetic strip capable of electronically communicating payment information between the banks of a consumer and a merchant was completely unprecedented. Financial technology, or fintech , refers to the broad subset of financial innovations that apply new technologies to a financial service or product. Although the term was coined only recently, it likely would have been applied to a broad set of innovations, such as the advent of automated teller machines, or ATMs, in the 1960s and mobile payments in the 2000s. There is no singular definition of fintech, often making policy discussions around this topic complicated. Further, U.S. financial system regulation is fragmented across many regulators by industry, business practice, and geographical jurisdiction, so regulating fintech is multifaceted. ", "Each financial regulator has a different mandate, creating gaps and overlaps among their jurisdictions. Regulators have used various policy tools to approach the new technologies in a manner consistent with their mandate, which impacts both institutions under their direct jurisdiction and new firms that do not cleanly fit under one regulator's jurisdiction. ", "Recent congressional interest in fintech has led to several hearings, the creation of fintech task forces, and legislation pertaining to one or multiple financial system regulators. This report examines activities and proposals initiated after the enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank; P.L. 111-203 ) that are relevant to fintech. These can include fintech actions as defined by a regulator or actions pertaining to areas of financial services that intersect with technology but may not be explicitly considered fintech. ", "Financial regulators generally fall into three groups, which are responsible for (1) depository institutions, (2) consumer protection, and (3) securities. Their approaches may include the following:", "writing new rules or amending existing ones; issuing guidance to clarify the applications of the rules to new types of business lines; creating new types of charters for institutions; using supervisory authorities to examine partnerships between regulated and unregulated entities; issuing enforcement actions to companies that violate regulations or laws; or establishing new offices and staffing experts to serve as outreach points-of-contact for relevant industry concerns. ", " Table 1 summarizes the federal regulators discussed in this report, including their scope, and relevant authorities. The depository institution regulators discussed in this report include the Federal Reserve, the Office of the Comptroller of the Currency (OCC), the Federal Deposit Insurance Corporation (FDIC), and the National Credit Union Administration (NCUA)\u00e2\u0080\u0094these are referred to as banking regulators. The consumer protection agencies include the Consumer Financial Protection Bureau (CFPB) and the Federal Trade Commission (FTC). The securities regulators include the Securities and Exchange Commission (SEC) and the Commodity Futures Trade Commission (CFTC). More information on the mandates and relevant authorities of these regulators can be found in Appendix A ."], "subsections": []}, {"section_title": "Banking Regulators: Approach to Fintech", "paragraphs": ["The banking regulators\u00e2\u0080\u0094the Federal Reserve, FDIC, OCC, and NCUA\u00e2\u0080\u0094face particular fintech-related challenges regarding how to ensure banks and credit unions can efficiently and safely interact with nonbank fintech companies. Sometimes fintech companies partner with and offer services to banks or credit unions. Other times, they seek to compete with banks by offering bank or bank-like services directly to customers. In some circumstances, banks themselves can develop their own fintech.", "Given their broad responsibilities, banking regulators can engage with and respond to fintech in numerous ways, including by", "amending rules and issuing guidance to clarify how rules apply to new products; supervising the relationship banks form with fintech companies; granting banking licenses to fintech companies; and conducting outreach with new types of firms to facilitate communication between industry and regulators.", "Examples of these regulatory actions are discussed in more detail below. Each of the agencies has slightly different regulatory scope, so the efforts described in the sections below reflect each regulator's interest in balancing the risks and benefits of financial technologies. "], "subsections": [{"section_title": "Partnerships with Technology Service Providers", "paragraphs": ["In general, banking regulators have not been active in issuing fintech-specific rules in the last 10 years. Instead, regulators have focused more heavily on issuing guidance on how new products and new relationships fit into the current regulatory framework. Relationships between banks and technology service providers (TSPs)\u00e2\u0080\u0094third-party partnerships\u00e2\u0080\u0094are particularly relevant because many TSPs are fintech companies. Banking regulators use their authority to examine the operations of these third-party partnerships as a critical tool to supervise the interactions between banks and nonbank technology firms. Further, third-party supervision demonstrates how regulators have used and applied the existing framework to fintech activities. "], "subsections": [{"section_title": "Updated Guidance on Bank Partnerships with Technology Service Providers", "paragraphs": ["From a banking regulator's standpoint, an institution can be a bank, a nonbank, or a nonbank that partners with a bank. Bank regulators have jurisdiction over banks and their partnerships with nonbanks. Some insured depository institutions opt to partner with TSPs to receive software and technical support. Often, banks will use TSPs to support critical business needs, such as core processing, loan servicing, accounting, or data management\u00e2\u0080\u0094areas where fintech companies have become active market participants. As banks increasingly rely on TSP partnerships, regulators are becoming increasingly interested in how banks manage the risks associated with these partnerships. ", "Banking regulators require a financial institution that chooses to partner with a TSP to ensure that the activities performed by the TSP for the institution meet the same regulatory requirements as if they were performed by the bank itself. Banking regulators' broad set of authorities to supervise TSPs are provided by the Bank Service Company Act (BSCA; P.L.87-856). Specifically, the BSCA provides banking regulators with authority to examine and regulate third-party vendors that provide services to banks. ", "The banking regulators periodically issue and update guidance pertaining to third-party vendors. They issued interagency guidelines in 2001 that, among other things, require banks to provide continuous oversight of third-party vendors such as TSPs to ensure they maintain appropriate security measures. In 2017, the FDIC's Office of Inspector General issued an evaluation of TSP contracts, noting that many of the sampled institutional relationships did not adequately address the risks associated with TSP partnerships. In 2019, the FDIC issued a financial institution letter on TSP contracts, outlining the statutory obligations of firms pursuant to the BSCA and the Gramm-Leach-Bliley Act ( P.L. 106-102 ) and encouraging financial institutions to ensure service provider contracts adequately address business continuity and incident response risks."], "subsections": []}]}, {"section_title": "Brokered Deposits with Technology-Based Tools", "paragraphs": ["Rulemaking with a specific focus on fintech companies is relatively infrequent, but banking regulators occasionally issue rules or proposed rules that have some tangential impact on fintech companies, such as a recently proposed FDIC rule on brokered deposits. This proposed rule is another example of how regulators have used an existing regulatory framework to potentially accommodate fintech developments. "], "subsections": [{"section_title": "FDIC Proposed Rulemaking on Brokered Deposits", "paragraphs": ["Generally, banks hold two types of deposits: core deposits and brokered deposits. Core deposits are funds individuals or companies directly place in checking and savings accounts, whereas brokered deposits are funds that a third-party broker places in a bank on behalf of a client, typically to maximize interest earned and possibly to ensure that the accounts are covered by the FDIC's $250,000 insurance limit. Brokered deposits are considered less stable than core deposits, as the former is typically moved around frequently depending on market conditions. If a bank is not considered well-capitalized by its regulator, the regulator can prohibit the bank from accepting brokered deposits. ", "Consumers increasingly use nonbank technology-based tools, such as mobile phones and fintech apps, to move money between accounts. Under certain circumstances, rules against accepting brokered deposits could apply to money transfers using nonbank technologies. The FDIC, responding to concerns that regulators have applied the rules too broadly, published a notice of proposed rulemaking in December 2019 that would allow deposits to enter the banking system through new technological channels without being subject to brokered deposit rules."], "subsections": []}]}, {"section_title": "Regulatory Sandboxes", "paragraphs": ["Regulators occasionally create programs through which firms can experiment with new products in a way that allows industry and regulators to better understand how new technologies can impact consumers and the market. These programs are sometimes referred to as sandboxes or greenhouses . As a state-level example, Arizona created such a program in March 2018. At the federal level, these programs are being discussed but have not fully taken shape. Among the banking regulators, the OCC has proposed a regulatory sandbox program, discussed below. "], "subsections": [{"section_title": "OCC Proposed Innovation Pilot Program", "paragraphs": ["In April 2019, the OCC proposed a voluntary Innovation Pilot Program to support the testing of innovative products, services, and processes that could significantly benefit consumers, businesses, and communities, including those that could promote financial inclusion\u00e2\u0080\u0094the OCC is considering public comments on the program as of the date of this report. This proposed program is similar to the concept of a regulatory sandbox or greenhouse, which is discussed in the \" Sandboxes and No-Action Letters to Promote Innovation \" section, below. Some key characteristics and considerations of the proposed program include the following:", "The pilot would be open to banks, their subsidiaries, and federal branches and agencies, including those partnering with third parties to offer innovative products, services, or processes. It would also be open to banks working together, such as in a consortium or utility. The OCC is considering a suite of regulatory tools during the pilot to communicate with banks, including interpretive letters, supervisory feedback, and technical assistance from OCC subject-matter experts\u00e2\u0080\u0094the tools would not include statutory or regulatory waivers. The OCC may address the legal permissibility of a product or service that a bank proposes to test as part of the program. The OCC would expect banks to address risks to consumers and would not permit into the program proposals that have potentially predatory, unfair, or deceptive features. "], "subsections": []}]}, {"section_title": "Bank Charters for Fintech Companies", "paragraphs": ["One foundational way banking regulators can regulate institutions not traditionally covered by banking regulations, such as fintech companies, is to grant a banking license to a new type of firm. By doing this, the institution becomes covered by the regulatory framework that applies to other depository institutions, and the regulator can apply a similar supervisory framework to the new institution's operations. The OCC and FDIC recently have taken measures to consider charters for nonbank companies. The OCC's efforts are specifically targeted to fintech companies, and the FDIC's efforts could affect a fintech company's opportunity to become a chartered bank."], "subsections": [{"section_title": "OCC Special Purpose National Bank Charters for Fintech Companies", "paragraphs": ["Many nonbank financial companies are licensed at the state level. Thus, a fintech company wanting to do business across the United States would need to obtain 50 different state licenses and meet a complex set of 50 state regulations and standards in order to do so. In response to concerns about this complexity, the OCC requested comments in 2016 on a proposal to offer national bank charters to fintech companies. In 2018, it announced that it would begin offering charters to fintech companies. ", "The OCC's charter initiative has been controversial. State regulators and consumer advocates have argued that granting such charters would inappropriately allow federal preemption of important state-level consumer protections, and that the OCC does not have the authority to grant bank charters to these types of companies. State regulators have filed lawsuits, and the matter is the subject of ongoing legal proceedings. "], "subsections": []}, {"section_title": "Industrial Loan Company Charters and the FDIC24", "paragraphs": ["In addition to traditional bank charters, several states offer a type of bank charter for industrial loan companies (ILCs). Recently, fintech firms have begun to explore these types of charters. ILCs chartered in some states are allowed to accept certain types of deposits if the FDIC has approved the ILC for deposit insurance. Given this condition, the FDIC is considering whether or not to grant deposit insurance to fintech firms; doing so would allow ILCs to operate, under certain state charters, what would be in effect full-service, FDIC-insured banks. Several technology-focused companies have applied to establish new ILCs.", "ILCs are regulated in two unique ways, which make them both attractive and controversial to certain fintech companies seeking to have deposit-taking bank operations:", "ILCs can be owned by a nonfinancial parent company, creating an avenue for commercial firms, such as fintech companies, to own a bank. Critics of ILCs argue this runs counter to the long-standing U.S. policy of separating banking and commerce. In some circumstances, these parent companies are not considered a bank-holding company; therefore a fintech company owning a bank as a nonfinancial parent company might not be subject to supervision by the Federal Reserve, pursuant to the Bank Holding Company Act of 1956 (BHCA; P.L. 84-511). Critics argue this would result in under regulation of an ILC parent company. ", "In response to concerns over ILCs, the FDIC and Congress have in the past implemented moratoriums on approving FDIC-insurance for new ILCs. No new ILC charters have been granted since the end of the most recent moratorium in 2013, prompting ILC proponents to argue an unofficial moratorium is in effect without regulatory or statutory basis. By applying to establish new ILCs, technology companies have renewed public interest in ILCs in general. If the FDIC generally begins granting deposit insurance to ILCs, this could create a path for nontraditional banking companies beyond fintechs to offer bank services. "], "subsections": [{"section_title": "FDIC Notice of Proposed Rulemaking on Parent Companies of Industrial Banks and Industrial Loan Companies", "paragraphs": ["The BHCA establishes the terms and conditions under which a company can own a bank in the United States and grants the Federal Reserve the authority to regulate these holding companies. In 1987, Congress enacted the Competitive Equality Banking Act of 1987 (CEBA; P.L. 100-86 ) to provide exemptions to permit certain financial and commercial companies to own and control industrial banks without becoming a bank-holding company under the BHCA. In granting deposit insurance for any insured depository institution, including industrial banks, the FDIC must assess the safety and soundness of the proposed institution and the risk posed to the Deposit Insurance Fund. Recent deposit insurance filings involving industrial banks have proposed ownership and control structures that would not be subject to federal consolidated supervision. To codify and enhance the FDIC's supervisory process with respect to these institutions, the FDIC issued a notice of proposed rulemaking on March 31, 2020, which would require certain conditions and commitments for agency approval of applications that would result in an insured industrial bank or ILC becoming a subsidiary of a company that is not subject to supervision by the Federal Reserve. The proposed rule would also require that the parent company and industrial bank or ILC enter into one or more agreements with the FDIC. "], "subsections": []}]}]}, {"section_title": "Consumer Protection and Payments Innovation", "paragraphs": ["Many regulators have expressed interest in developing programs that facilitate innovation. Innovation can lead to new types of products for consumers, such as mobile payments, but it can also create obstacles for consumers to manage. Banking regulators and other financial system regulators, such as the Consumer Financial Protection Bureau (CFPB) (see \" Consumer Protection Agencies: Approach to Fintech \"), implement and promulgate rules pertaining to the payments system. (See Appendix B for these rules and other regulatory interests in payments innovation.) The payments system provides a few examples where new technologies create the potential for both benefits and risks to consumers."], "subsections": [{"section_title": "Federal Reserve FedNow Service", "paragraphs": ["The Federal Reserve's proposed FedNow Service payments initiative is one example of a regulator facilitating a new product for consumers. The Federal Reserve operates or regulates important elements of the payments and settlement system, including retail payment networks such as the FedACH network, multilateral settlement services such as the National Settlement Service, and real-time gross settlement systems such as Fedwire Funds Service. Recently, the Federal Reserve announced plans to develop the FedNow Service: a real-time payments and settlement system for peer-to-peer and business-to-consumer payments. ", "The FedNow Service is expected to impact consumers as they continue to conduct commerce using electronic payments, mobile phones, and apps. Transacting in this way can lead to better outcomes for consumer budgeting, as transactions are settled in real time, but it also may impact a consumer's ability to resolve errors, as instantaneous payments are harder to stop or return. Given the importance of safety in the payments system, the Federal Reserve and a private organization called the Clearing House have both established real-time payments to create competition in the market for payments and settlement services, with the idea that competition will increase market discipline and enhance resiliency in the system. The Federal Reserve anticipates the FedNow Service will be available in 2023 or 2024. "], "subsections": []}]}, {"section_title": "Outreach Offices for Stakeholders", "paragraphs": ["Each depository regulator has put together a working group or formal office to understand how new technologies may affect institutions under their jurisdictions and to establish a point of contact for industry. A summary of these efforts is presented below. Table B-1 in Appendix B provides a synopsis of the offices established by each financial regulator discussed in this report, and Appendix C summarizes other efforts, such as research programs, notable fintech conferences, and working groups."], "subsections": [{"section_title": "Federal Reserve Innovation Program", "paragraphs": ["In December 2019, the Federal Reserve established a series of programs to support financial innovation in the financial services marketplace. Part of this effort includes offering \"office hours\" to supervised financial institutions and nonbank fintech firms looking for information about financial innovation. These office hours are held at the various Federal Reserve Banks. The Federal Reserve also established a new website, which contains information about related supervisory information, regulatory guidance, staff speeches, publications, research, and events. The Reserve Banks have created working groups to address fintech issues, which are summarized in Appendix C ."], "subsections": []}, {"section_title": "OCC Office of Innovation", "paragraphs": ["In 2015, the OCC began developing a \"Responsible Innovation\" framework to address issues of financial services innovations. This framework is summarized in Table C-1 of Appendix C . As part of the framework, the OCC created a group to meet with banks, fintech companies, consumer groups, regulators, and other stakeholders to discuss various issues, concerns, and areas of interest relevant to fintech. In 2017, the OCC formally established the Office of Innovation to implement its Responsible Innovation framework and provide a central point of contact for requests and information related to innovation."], "subsections": []}, {"section_title": "FDIC Tech Lab", "paragraphs": ["The FDIC recently has taken steps to establish fintech-specific programs. It created its own version of an office of innovation, the FDIC Tech Lab, or \"FDiTech,\" in October 2018. The FDIC Tech Lab is intended to promote, coordinate, and understand the role of new innovations among technology firms, financial institutions, and other regulators. The Tech Lab's stated goals are to engage with financial and technology companies to identify opportunities to improve the safety and soundness of insured depository institutions, promote competition, increase economic inclusion, support risk management, and facilitate efficient resolution of failed institutions."], "subsections": []}]}]}, {"section_title": "Consumer Protection Agencies: Approach to Fintech", "paragraphs": ["The mandate for the consumer protection agencies\u00e2\u0080\u0094CFPB and FTC\u00e2\u0080\u0094is largely to ensure that consumers are unharmed by the practices of businesses under their jurisdiction while maintaining a competitive marketplace. Within the context of fintech, there are tradeoffs between these objectives. For instance, encouraging firms to offer new kinds of consumer-friendly financial services can help create a competitive market, but the new products also can create the potential for unforeseen risks to consumers. ", "Similar to the banking regulators, the CFPB and FTC issue and promulgate regulations on issues pertinent to fintech, such as payments and data security, and both agencies have created outreach offices. The consumer protection agencies, however, tend to use enforcement actions as tools to manage the effects of fintech on the financial system to a greater extent than banking regulators. This partly is because the consumer protection agencies are responsible for implementing and enforcing consumer protection laws for many nonbank financial companies\u00e2\u0080\u0094unlike the banking regulators, which generally do not have enforcement authorities for nonbank financial companies.", "The consumer protection agencies use enforcement actions to balance their mandates with respect to fintechs in two additional ways: ", "protect consumers by levying enforcement actions against firms that violate consumer protection laws, and promote market competition and facilitate innovations that benefit consumers by creating safe harbors for firms from enforcement actions in order to encourage firms to develop new technologies and solve challenges facing consumers.", "Whereas the CFPB has a broad range of regulatory authorities relevant to fintech, the FTC is somewhat limited to enforcement actions for many fintech activities, as it has some investigative authority but no supervisory authorities. Examples of these approaches are explored in more detail below."], "subsections": [{"section_title": "Enforcement Actions to Ensure Consumer Protection", "paragraphs": ["One way consumer protection agencies implement their legal authorities is through enforcement actions: agencies can take a number of actions to levy penalties against or stop firms that violate law or regulation. The FTC's enforcement actions include a number of orders that pertain to fintech firms."], "subsections": [{"section_title": "FTC Fintech Enforcement Actions", "paragraphs": ["The FTC enforces federal consumer protection laws that prevent fraud, deception, and unfair business practices, as well as federal antitrust laws that prohibit anticompetitive mergers and other business practices that could lead to higher prices, fewer choices, or less innovation. Companies that violate laws under FTC jurisdiction are liable for civil penalties for each violation. Over the past decade, the FTC has brought over 20 cases against telecommunications firms, money service businesses, prepaid card companies, and technology firms, among others, with operations relevant to fintech and in violation of FTC competition and fairness rules. Table 2 describes the outcomes of selected recent FTC fintech-related enforcement actions."], "subsections": []}]}, {"section_title": "Sandboxes and No-Action Letters to Promote Innovation", "paragraphs": ["Consumer protection agencies occasionally create policies or programs that temporarily shield firms from enforcement actions if they meet certain conditions. In the past few years, the CFPB has built upon its No-Action Letter (NAL) policy, which provides some assurances that if a company offers a product or service in a specific way, the agency will withhold enforcement actions for that particular activity. With respect to fintech, the CFPB has identified the NAL policy as a way to encourage firms to produce products and disclosures that may benefit consumers. Consumer protection agencies also promote innovation through programs such as sandboxes or greenhouses, which can allow firms to trial new ideas and products while being subject to a subset of the existing regulatory framework or while being granted safe harbor from certain enforcement actions (see \" Regulatory Sandboxes \"). "], "subsections": [{"section_title": "CFPB No-Action Letter Policy", "paragraphs": ["In 2016, the CFPB introduced its NAL policy to withhold enforcement actions against qualifying consumer-friendly innovations and to help inform the CFPB on new products and services being offered. Although the CFPB anticipated limited participation in this original NAL policy, it announced its first NAL in 2017 to a company that used alternative data and machine learning in making credit underwriting and pricing decisions. To encourage more robust participation, the CFPB revised its NAL policy in 2019, amending the application and review process and reportedly strengthening its commitment to provide safe harbor to qualifying firms. "], "subsections": []}, {"section_title": "CFPB Compliance Assistance and Revised Trial Disclosure Sandbox Policies", "paragraphs": ["The CFPB created sandbox programs to encourage certain firms to test consumer financial services by granting the firms temporary safeguards from liability and enforcement actions. In addition to creating the NAL policy, the CFPB created the Compliance Assistance Sandbox (CAS) policy to enable some firms to test certain innovative products by providing the firms with temporary safe harbor from liability under certain statutes. The CFPB expects participation in the CAS policy to be time-limited, typically two years, with extensions available in specific circumstances. In addition, Dodd-Frank allows the CFPB to provide trials for companies to test new types of disclosures\u00e2\u0080\u0094with safeguards from certain liabilities and on a basis that is limited in time and scope\u00e2\u0080\u0094to make them more effective for consumers. The CFPB first released a Trial Disclosure Policy (TDP) in 2013 and updated it in 2019 to encourage more robust participation."], "subsections": []}]}, {"section_title": "Outreach, Coordination, and Research Programs", "paragraphs": ["Similar to the banking regulators, the CFPB has an office that serves as a point of contact for industry and other stakeholders. The CFPB also created a network to facilitate policy coordination pertaining to fintech among the federal and state financial regulators. The FTC, to support its investigation authorities, has done research and outreach to try to better understand the ways fintech may impact consumer protection and market competition. These programs are briefly explained below, and additional information regarding these programs can be found in Appendix C . "], "subsections": [{"section_title": "CFPB Office of Innovation", "paragraphs": ["In 2012, the CFPB created Project Catalyst to encourage \"consumer-friendly innovation and entrepreneurship in markets for consumer financial products and services\" by communicating and engaging with industry innovators. Through Project Catalyst, the CFPB studied issues surrounding access to credit, safeguarding financial records, cash flow management, student loan refinancing, mortgage servicing platforms, credit reporting, and peer-to-peer money transfers. The CFPB also held office hours, provided technical assistance, and offered an earlier version of the above-mentioned TDP and NAL policy programs\u00e2\u0080\u0094before the new Office of Innovation was created\u00e2\u0080\u0094designed to encourage firms to produce consumer-friendly innovations by safeguarding those products from CFPB enforcement actions. ", "In 2018, the CFPB rebranded Project Catalyst, introducing a suite of policies and programs to centralize policies pertaining to consumer-focused innovation through a newly established Office of Innovation. The office provides a single point of contact for firms looking to participate in the revised NAL policy and sandbox policy programs, explained above. "], "subsections": []}, {"section_title": "CFPB American Consumer Financial Innovation Network", "paragraphs": ["In September 2019, the CFPB launched the American Consumer Financial Innovation Network (ACFIN) of state regulators. The CFPB created ACFIN to enhance coordination among federal and state regulators and to facilitate financial innovation as regulators develop new regulations and apply existing ones. The network is open to all state and federal financial regulators, as well as state attorneys general. "], "subsections": []}, {"section_title": "FTC Investigation of Fintech Issues", "paragraphs": ["The FTC develops policy and research tools through hearings, reports, workshops, and conferences to support its investigation authorities. Since 2012, the FTC has hosted numerous events and developed several reports on mobile payments, big data, marketplace lending, cryptocurrency scams, and small business financing. For example, the FTC has hosted several forums on fintech issues, including one on marketplace lending in June 2016, crowdfunding and peer-to-peer payments in October 2016, and artificial intelligence and blockchain technology in March 2017. In 2018, the FTC hosted an event on cryptocurrency scams for consumer groups, law enforcement, researchers, and the private sector as part of its consumer protection work."], "subsections": []}]}]}, {"section_title": "Securities Regulators: Approach to Fintech60", "paragraphs": ["The securities regulators\u00e2\u0080\u0094the SEC and the CFTC\u00e2\u0080\u0094are focused on any securities-related activities, including those of fintech companies. Examples would include a fintech company raising capital by issuing equity through an initial coin offering or a firm creating a new technology for derivatives contracts. Given their mandate, the securities regulators have used a range of regulatory tools, largely focused on clarifying whether and how the existing regulatory framework applies to new types of technologies, including the following:", "writing rules and guidance to clarify how existing rules apply to new types of approaches to securities; issuing enforcement actions against any fintech firms that may violate the securities laws under their jurisdiction; and setting up fintech outreach offices to serve as points of contact for stakeholders. ", "Examples of these regulatory approaches are provided below."], "subsections": [{"section_title": "Application of Existing Securities Rules to Fintech", "paragraphs": ["The SEC recently published guidance and rules on new capital-raising measures known as Initial Coin Offerings (ICOs) and crowdfunding, as well as on issues regarding automated investment advice (\"robo advisors\"). Both the SEC and CFTC have used their broad enforcement authorities to issue enforcement actions against digital asset practices that violated rules under their respective jurisdictions. Further, the SEC used its NAL policy (similar to that used by the CFPB, discussed above) to provide safe harbor to digital asset related companies. These initiatives are summarized below. "], "subsections": [{"section_title": "SEC Guidance for Initial Coin Offerings", "paragraphs": ["Firms that issue cryptocurrencies may consider an ICO to raise capital by issuing digital assets to investors. In 2019, the SEC published a framework to build on 2018 guidance for companies to understand whether their ICOs qualify as securities and are subject to SEC regulation. The process of issuing an ICO is similar to a public companies' Initial Public Offering\u00e2\u0080\u0094a well- regulated and commonplace way to raise capital in equity markets for newly public companies\u00e2\u0080\u0094in that both aim to raise funding, but confusion may exist among investors and industry over whether digital assets are treated the same way under SEC regulation. "], "subsections": []}, {"section_title": "SEC Crowdfunding Final Rule", "paragraphs": ["The Jumpstart Our Business Startups Act (JOBS Act; P.L. 112-106 ) contains provisions that establish a regulatory structure for startups and small businesses to raise capital through issuing securities using internet-based crowdfunding. Effective May 2016, the SEC adopted a rule to implement these provisions, thereby governing the offer and sale of such securities and providing a framework for regulating certain registered funding portals and other intermediaries."], "subsections": []}, {"section_title": "SEC Guidance for Automated Investment Advice", "paragraphs": ["The SEC has issued guidance for robo advisors, which provide automated investment advice. The staff guidance serves to inform registered and other investment advisers on how to comply with the relevant securities statutes. Compliance requires firms or sole practitioners compensated for advising others about securities investments to register with the SEC and conform to regulations designed to protect investors."], "subsections": []}, {"section_title": "SEC and CFTC Digital Asset Enforcement Actions and No-Action Letters", "paragraphs": ["The SEC has broad enforcement authorities, granting it the ability to suspend business practices through injunctions and to bring administrative proceedings, such as cease and desist orders. The SEC manages a robust enforcement action program across several industries and has issued 48 such actions against digital asset-related companies since 2013. Similarly, the CFTC issues enforcement actions to enforce derivatives laws; since 2018, it has issued more than 20 enforcement actions against firms related to Bitcoin and other cryptocurrency fraud schemes.", "In addition to its enforcement authority, the SEC grants NALs in some instances to provide relief from the SEC taking an enforcement action against a company. The SEC provided three such letters to digital asset companies in 2019."], "subsections": []}]}, {"section_title": "Outreach Offices for Stakeholders", "paragraphs": [], "subsections": [{"section_title": "SEC Strategic Hub for Innovation and Financial Technology", "paragraphs": ["In 2018, the SEC created the Strategic Hub for Innovation and Financial Technology (FinHub) to serve as a resource for public engagement on fintech issues, such as distributed ledger technology, digital assets, automated investment advice, digital marketplace financing, and artificial intelligence/machine learning. FinHub, developed from numerous SEC internal working groups, also is designed to make the SEC's fintech work more accessible to industry and serve as a platform to inform the SEC's understanding of new financial technologies. "], "subsections": []}, {"section_title": "LabCFTC", "paragraphs": ["LabCFTC is the focal point of the CFTC's efforts around financial innovation and is designed to make the CFTC more accessible to innovators. LabCFTC also serves as a platform to inform the CFTC's understanding of new technologies, providing information for CFTC staff that may influence policy development. LabCFTC seeks to promote responsible innovation to improve the quality, resiliency, and competitiveness of markets. It also aims to accelerate CFTC engagement with new technologies that may enable the CFTC to carry out its mission responsibilities more effectively and efficiently. There are two main components to LabCFTC: (1) GuidePoint, which creates a dedicated point of contact for stakeholders, and (2) CFTC 2.0, which serves as a beta testing environment for new technologies. ", "Appendix A. Summary of Financial Regulator Mandates", "Banking Regulators", "Banks and credit unions serve a vital role in the economy. Thus, they are subject to a strong regulatory framework that requires institutions operate in a safe and sound manner. Depository institutions are routinely examined to ensure their business lines are healthy and to make sure they comply with various laws. These regulators also write and provide guidance on rules for depository institutions to implement their legal authorities over certain business practices.", "Although the mandates and authorities for each agency are a bit different, the agencies all serve as primary federal regulators for some kind of depository institution. The type of depository institution depends on whether a bank is chartered at the federal or state level and whether it is a member of the Federal Reserve System. (See Table A-1 .) ", "Federal Reserve System", "The Federal Reserve Act of 1913 (P.L. 63-43) established the Federal Reserve as the central bank of the United States, comprising the Board of Governors and 12 Federal Reserve Banks. The Board generally sets policy, which is carried out by the Reserve Banks. In addition to its responsibility as the central bank to set monetary policy, the Federal Reserve is also responsible for supervising and regulating state banks that are members of the system and all bank-holding companies. The Federal Reserve also has an important role in operating the payments and settlement system.", " Table B-2 summarizes the Federal Reserve's notable recent activities in the payments system.", "Office of the Comptroller of the Currency", "The Office of the Comptroller of the Currency (OCC) was established in 1863 as a bureau of the U.S. Department of the Treasury. The OCC is the primary federal regulator for nearly 1,200 national banks, federal savings associations, and federal branches and agencies of foreign banks operating in the United States. The OCC grants national bank charters, which allow the charter holder to legally operate as a bank. ", "Federal Deposit Insurance Corporation", "The Federal Deposit Insurance Corporation (FDIC), established by the Banking Act of 1933 (P.L. 73-66) and largely shaped into its modern form by the Federal Deposit Insurance Act of 1950 (P.L. 81-797), insures the deposits of banks and serves as the primary federal regulator for state-chartered banks and thrifts that are not members of the Federal Reserve. The FDIC manages the Deposit Insurance Fund, which provides the funds necessary to insure deposits and to resolve failed banks. The FDIC provides deposit insurance for deposits at all U.S. banks, both national and state, but most of the banks the FDIC supervises are smaller institutions, known as community banks. ", "National Credit Union Administration ", "In 1970, Congress amended the Federal Credit Union Act to establish the National Credit Union Administration (NCUA) as the regulator for the federal credit union system (P.L. 91-206). The NCUA supervises and insures deposit shares at federal credit unions and is responsible for resolving failing institutions. ", "Consumer Protection Agencies", "Consumer protection laws and regulations are mainly within the jurisdiction of two agencies. The Consumer Financial Protection Bureau (CFPB) regulates certain financial firms for unfair, deceptive, and abusive acts and practices, as well as for compliance with several consumer protection laws. In addition, many firms\u00e2\u0080\u0094both financial and nonfinancial\u00e2\u0080\u0094are subject to oversight by the Federal Trade Commission (FTC), which regulates firms for competition and fairness. ", "Consumer Financial Protection Bureau", "The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank; P.L. 111-203 ) established the CFPB to implement and enforce federal consumer financial law while ensuring that markets for consumer financial services and products are fair, transparent, and competitive. Dodd-Frank consolidated the consumer protection authorities promulgated by other agencies and provided CFPB new powers to issue rules declaring certain acts or practices associated with consumer financial products and services to be unlawful because they are unfair, deceptive, or abusive.", "The CFPB generally has regulatory authority over providers of an array of consumer financial products and services, including deposit taking, mortgages, credit cards and other extensions of credit, loan servicing, collection of consumer reporting data, and debt collection associated with consumer financial products. The scope of its supervisory and enforcement authority varies depending on an institution's size and whether it holds a bank charter. ", "Federal Trade Commission", "Congress passed the Federal Trade Commission Act in 1914 to create the FTC and give it legal authority to protect consumers and promote competition. Specifically, the FTC looks to prevent unfair or deceptive acts or practices and to seek monetary redress or other relief for conduct deemed injurious to consumers. Generally, the FTC has broad investigation, rulemaking, and enforcement authorities that enable it to accomplish its mission. ", "Securities Regulators", "Many companies issue stocks and bonds, trade derivatives, and offer other products collectively called securities. Securities are generally regulated by the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). (The CFTC has specific responsibility for derivatives markets.) The securities regulators promulgate rules and provide oversight over the institutions in their jurisdiction. They also conduct enforcement actions to investigate and prosecute violations of relevant regulations.", "Securities and Exchange Commission", "Congress passed the Securities Exchange Act of 1934 (P.L. 73-291) to establish the SEC and restore confidence in the securities markets after the stock market crash of 1929. The SEC is an independent agency that has broad authority over much of the securities industry in order to protect investors, promote fair and efficient markets, and facilitate capital formation.", "Commodity Futures Trading Commission", "The CFTC was created in 1974 by the Commodity Futures Trading Commission Act ( P.L. 93-463 ) to address the expansion of commodities beyond agriculture. Prior to this law, commodities generally were regulated at the Commodity Exchange Authority, a former agency within the U.S. Department of Agriculture. The CFTC regulates the U.S. derivatives markets, including futures, options, and swaps, and implements the Commodity Exchange Act (CEA; P.L. 74-675). Similar to the SEC, the CFTC has rulemaking and enforcement authorities for a range of issues, but the CFTC's authorities focus on derivatives markets derived from the CEA.", "Appendix B. Financial Innovation Offices", "Appendix C. Select Regulatory Fintech Initiatives", "Federal Reserve System Innovation Programs"], "subsections": []}]}, {"section_title": "OCC Responsible Innovation Framework", "paragraphs": ["The OCC's Office of Innovation implements its Responsible Innovation framework in a number of ways that are described and summarized in Table C-1 . For instance, the agency established an outreach and technical assistance program to establish a dialogue with banks, fintech companies, consumer groups, trade associations, and regulators. It engages in outreach through a variety of channels. Over the past two years, for example, the Office of Innovation hosted office hours in five different cities for over 125 stakeholders, approximately 250 additional meetings and calls with stakeholders, and over 100 conferences and other events. The office provides technical assistance to help banks and fintech companies understand OCC expectations, relevant laws, regulations, and guidance, such as the agency's third-party risk management guidance. The Office of Innovation also conducts research and develops content, including white papers, webinars, and collaborations with other OCC business units to deliver in-house training, including on payment technologies.", "The Office of Innovation convenes representatives from various OCC business units to develop a coordinated strategy on particular topics, and it forms working groups to consider particular issues to coordinate and facilitate discussion between stakeholders and the OCC. It also endeavors to reduce regulatory uncertainty and inconsistency, provides assistance to agencies interested in establishing innovation offices, and helps the OCC share information and communicate with other U.S. agencies on emerging trends and ways to improve its innovation initiatives. ", "The OCC participates in various regulatory forums, such as the Financial Stability Board's Financial Innovation Network, and it serves as co-chair of the Task Force on Financial Technology, established by the Basel Committee on Banking Supervision (BCBS). Furthermore, the OCC collaborates on cybersecurity issues domestically and internationally through the Federal Financial Institutions Examination Council, the Financial and Banking Information Infrastructure Committee, and the BCBS.", "Consumer Financial Protection Bureau Financial Innovation Programs", "The CFPB's recent efforts pertaining directly to fintech are summarized in Table C-2 below.", "Financial Crimes Enforcement Network ", "The Financial Crimes Enforcement Network (FinCEN) is a bureau of the U.S. Department of the Treasury charged with administering U.S. anti-money laundering (AML) and combating the financing of terrorism (CFT) laws, most notably the Bank Secrecy Act (BSA; P.L. 91-508). In 2018, FinCEN, along with the Federal Reserve, the FDIC, the NCUA, and the OCC, announced an effort to encourage banks and credit unions to take innovative approaches to combating money laundering, terrorist financing, and other illicit financial threats by enhancing the effectiveness and efficiency of BSA/AML compliance programs.", "FinCEN Innovation Initiative. FinCEN launched an Innovation Initiative to address the challenges and opportunities of BSA and AML-related innovation in the financial services sector. FinCEN's Innovation Initiative includes the FinCEN Innovation Hours Program and regulatory relief programs to facilitate innovation around AML/CFT compliance. Additionally, FinCEN suggested that it will consider incorporating testing programs, similar to sandboxes, and \"Tech Sprints\" to facilitate the development of innovative solutions to AML/CFT challenges.", "Innovation Hours Program. The Innovation Hours Program is the most recent addition to the FinCEN Innovation Initiative. FinCEN intends to host financial institutions, technology providers, and other firms involved in financial services to discuss their interests in innovation around AML/CFT compliance.", "Appendix D. Payments Regulation and Programs", "Consumers generally have shifted toward electronic payments such as debit and credit cards. Since 2001, the Federal Reserve has been studying consumer trends in payment activities on a triennial basis. In 2019, the CFPB issued a rule to grant protections to prepaid cards in a similar fashion to debit and credit cards\u00e2\u0080\u0094this reflects the shift in consumer preference toward electronic payments. However, regulatory actions around electronic payments may create adverse conditions for some consumers who rely on cash. Balancing the interests of a faster, efficient payment system with one that works for different types of consumers is a challenge currently facing the Federal Reserve and CFPB. Table B-1 shows a number of these rules, which can impact fintech companies that offer services or support payments operations through partnerships at banks.", "As the Federal Reserve contemplates the design of its proposed faster payments system, it has numerous long-standing payments groups working on fintech and related issues. Many of these groups focus on the payments market. An overview of the Federal Reserve's payments groups is provided in Table B-2 to show the scope of work of the agency and its Reserve Banks.", "Appendix E. CRS Fintech Products", "Cybersecurity", "CRS Report R44429, Financial Services and Cybersecurity: The Federal Role , by M. Maureen Murphy and Andrew P. Scott ", "CRS Report R45631, Data Protection Law: An Overview , by Stephen P. Mulligan, Wilson C. Freeman, and Chris D. Linebaugh. ", "CRS In Focus IF10559, Cybersecurity: An Introduction , by Chris Jaikaran. ", "Lending", "CRS Report R44614, Marketplace Lending: Fintech in Consumer and Small-Business Lending , by David W. Perkins.", "CRS Report R45726, Federal Preemption in the Dual Banking System: An Overview and Issues for the 116th Congress , by Jay B. Sykes. ", "Payments", "CRS Report R45927, U.S. Payment System Policy Issues: Faster Payments and Innovation , by Cheryl R. Cooper, Marc Labonte, and David W. Perkins.", "CRS Report R45716, The Potential Decline of Cash Usage and Related Implications , by David W. Perkins. ", "Banks and Third-Party Vendor Relationships", "CRS In Focus IF10935, Technology Service Providers for Banks , by Darryl E. Getter.", "Cryptocurrency and Blockchain-Based Payment Systems", "CRS Report R45427, Cryptocurrency: The Economics of Money and Selected Policy Issues , by David W. Perkins.", "CRS Report R45116, Blockchain: Background and Policy Issues , by Chris Jaikaran.", "CRS Report R45664, Virtual Currencies and Money Laundering: Legal Background, Enforcement Actions, and Legislative Proposals , by Jay B. Sykes and Nicole Vanatko. ", "CRS In Focus IF10824, Financial Innovation: \"Cryptocurrencies\" , by David W. Perkins. ", "Digital Assets and Capital Formation", "CRS Report R46208, Digital Assets and SEC Regulation , by Eva Su. ", "CRS Report R45221, Capital Markets, Securities Offerings, and Related Policy Issues , by Eva Su.", "CRS Report R45301, Securities Regulation and Initial Coin Offerings: A Legal Primer , by Jay B. Sykes. ", "CRS In Focus IF11004, Financial Innovation: Digital Assets and Initial Coin Offerings , by Eva Su. ", "High-Frequency Securities and Derivatives Trading", "CRS Report R44443, High Frequency Trading: Overview of Recent Developments , by Rena S. Miller and Gary Shorter. ", "CRS Report R43608, High-Frequency Trading: Background, Concerns, and Regulatory Developments , by Gary Shorter and Rena S. Miller. ", "Regulatory Approaches and Issues for Congress", "CRS In Focus IF11195, Financial Innovation: Reducing Fintech Regulatory Uncertainty , by David W. Perkins, Cheryl R. Cooper, and Eva Su.", "CRS Report R46332, Fintech: Overview of Innovative Financial Technology and Selected Policy Issues , coordinated by David W. Perkins. "], "subsections": []}]}]}}
{"id": "R41219", "title": "The New START Treaty: Central Limits and Key Provisions", "released_date": "2019-05-30T00:00:00", "summary": ["The United States and Russia signed the New START Treaty on April 8, 2010. After more than 20 hearings, the U.S. Senate gave its advice and consent to ratification on December 22, 2010, by a vote of 71-26. Both houses of the Russian parliament\u2014the Duma and Federation Council\u2014approved the treaty in late January 2011 and it entered into force on February 5, 2011. Both parties met the treaty's requirement to complete the reductions by February 5, 2018. The treaty is due to expire in February 2021, unless both parties agree to extend it for no more than five years.", "New START provides the parties with 7 years to reduce their forces, and will remain in force for a total of 10 years. It limits each side to no more than 800 deployed and nondeployed land-based intercontinental ballistic missile (ICBM) and submarine-launched ballistic missile (SLBM) launchers and deployed and nondeployed heavy bombers equipped to carry nuclear armaments. Within that total, each side can retain no more than 700 deployed ICBMs, deployed SLBMs, and deployed heavy bombers equipped to carry nuclear armaments. The treaty also limits each side to no more than 1,550 deployed warheads; those are the actual number of warheads on deployed ICBMs and SLBMs, and one warhead for each deployed heavy bomber.", "New START contains detailed definitions and counting rules that will help the parties calculate the number of warheads that count under the treaty limits. Moreover, the delivery vehicles and their warheads will count under the treaty limits until they are converted or eliminated according to the provisions described in the treaty's Protocol. These provisions are far less demanding than those in the original START Treaty and will provide the United States and Russia with far more flexibility in determining how to reduce their forces to meet the treaty limits.", "The monitoring and verification regime in the New START Treaty is less costly and complex than the regime in START. Like START, though, it contains detailed definitions of items limited by the treaty; provisions governing the use of national technical means (NTM) to gather data on each side's forces and activities; an extensive database that identifies the numbers, types, and locations of items limited by the treaty; provisions requiring notifications about items limited by the treaty; and inspections allowing the parties to confirm information shared during data exchanges.", "New START does not limit current or planned U.S. missile defense programs. It does ban the conversion of ICBM and SLBM launchers to launchers for missile defense interceptors, but the United States never intended to pursue such conversions when deploying missile defense interceptors. Under New START, the United States can deploy conventional warheads on its ballistic missiles, but these will count under the treaty limit on nuclear warheads. The United States may deploy a small number of these systems during the time that New START is in force.", "The Obama Administration and outside analysts argued that New START strengthens strategic stability and enhances U.S. national security. Critics, however, questioned whether the treaty serves U.S. national security interests, as Russia was likely to reduce its forces with or without an arms control agreement and because the United States and Russia no longer need arms control treaties to manage their relationship. Secretary of State-designate Tillerson offered support for the treaty during his confirmation hearings, noting that he supports \"the long-standing bipartisan policy of engaging with Russia and other nuclear arms states to verifiably reduce nuclear stockpiles\" and that it is important for the United States \"to stay engaged with Russia [and] hold them accountable to commitments made under the New START.\" The 2018 Nuclear Posture Review confirmed that the United States would continue to implement the treaty, at least through 2021. The Administration has not yet determined whether it will request or support an extension of the treaty through 2026."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["The United States and Russia signed a new strategic arms reduction treaty\u2014known as New START\u2014on April 8, 2010. This treaty replaced the 1991 Strategic Arms Reductions Treaty (START), which expired, after 15 years of implementation, on December 5, 2009. The U.S. Senate provided its advice and consent to ratification of New START on December 22, 2010, by a vote of 71-26. The Russian parliament, with both the Duma and Federation Council voting, did so on January 25 and January 26, 2011. The treaty entered into force on February 5, 2011, after Secretary of State Clinton and Foreign Minister Lavrov exchanged the instruments of ratification. New START superseded the 2002 Strategic Offensive Reductions Treaty (known as the Moscow Treaty), which then lapsed in 2012. New START provided the parties with 7 years to reduce their forces, and it will remain in force for a total of 10 years, unless the parties agree to extend it for no more than five additional years. Both parties completed their required reductions by February 5, 2018. ", "With the reductions now complete, questions about whether the two nations will extend the treaty have begun to dominate public discussions. The Obama Administration briefly considered pursuing an extension of New START before it left office in 2016, but did not raise the issue with Russia. Press reports indicate that the President Trump rejected a proposal from Russian President Putin to extend the treaty during their first phone call in February 2017. The Presidents reportedly discussed the treaty during their summit in Helsinki in July 2018, with President Putin presenting President Trump with a document suggesting that they extend the treaty after resolving \"existing problems related to the Treaty implementation,\" but the two reportedly did not reach an agreement on the issue. The Administration's Nuclear Posture Review (NPR), completed in February 2018, confirmed that the United States would continue to implement the treaty, at least through 2021, but was silent on the prospects for extension through 2026. Trump Administration officials have indicated that they are reviewing the treaty and assessing whether it continues to serve U.S. national security interests before deciding whether the United States would propose or accept a five-year extension. They noted, in testimony before the Senate Foreign Relations Committee in May 2019, that an interagency review was continuing, but they refused to elaborate on the substance of that review or speculate on the implications of a decision to allow New START to lapse in 2021.", "During this hearing, Under Secretary of State Andrea Thompson and Deputy Under Secretary of Defense David Trachtenberg emphasized that the New START Treaty might not be sufficient to address emerging threats to U.S. national security. They noted that Russia was developing new kinds of strategic offensive arms that would not count under the treaty, that Russia was expanding its stockpile of shorter-range nonstrategic nuclear weapons that were outside the scope of the treaty, and that China was modernizing and expanding its nuclear arsenal but was not a part of the treaty at all. These comments were consistent with press reports indicating that President Trump would like to pursue a new arms control agreement that captured all types of nuclear weapons and included China's forces under the limits. The witnesses were unable, however, to articulate a reason for why China would be willing to participate in such negotiations when its nuclear arsenal of around 300 warheads was far smaller than the arsenals of several thousand warheads held by the United States and Russia. Instead, when asked, Under Secretary Thompson provided a rationale for why the United States would want China to participate in the talks, noting that China wants \"to be a responsible player on the world stage. They want to be part of this great power competition. And with that comes responsibilities.\"", "Some U.S. officials, including General John Hyten, the commander of U.S. Strategic Command (STRATCOM), have noted that New START serves U.S. national security interests because its monitoring regime provides transparency and visibility existing into Russian nuclear forces and because its limits provide predictability about the future size and structure of those forces. However, in testimony before the Senate Armed Services Committee in February 2019, General Hyten also expressed concern about new kinds of nuclear forces that Russia may develop in the coming years. He noted that these weapons could eventually pose a threat to the United States and said he thought the United States and Russia should expand New START so they would count them under the treaty limits. ", "As is noted below, Article V, paragraph 2 of the treaty provides a mechanism for the parties to address concerns about the emergence of new kinds of strategic offensive arms. It states that the parties should raise their concerns about such weapons in the Bilateral Consultative Commission (BCC) established by the treaty, and seek to reach a resolution there. In May 2019, Undersecretary of State Andrea Thompson stated that the United States had begun to have discussions with Russia about these systems at the technical expert level, but she did not specify whether these discussions were occurring in the BCC. Russian officials have stated that some of its new systems should not count under New START because they do not meet the treaty's definition of deployed missile launchers or heavy bombers. ", "Nevertheless, the public debate about the possible extension of New START has begun to incorporate views about how to address these weapons. For example, some experts believe the United States and Russia should extend the treaty before 2021, then use the time during the extension to discuss how to include these new systems under the treaty limits. Some, however, have suggested the opposite, arguing that the United States should not agree to extend New START unless Russia agrees, before the extension takes effect, to count its new systems under the treaty limits. Others believe that the United States should agree to extend New START only if Russia agrees, before the extension takes effect, to use the time during the extension to negotiate a new treaty that not only captures the new kinds of weapons, but also imposes limits on Russia's nonstrategic nuclear forces.", "Russian officials have also questioned whether the United States and Russia are in a position to extend New START before it expires in 2021. At a conference in Washington in March 2019, Anatoly Antonov, Russia's ambassador to the United States, noted that Russia is not interested in expanding New START so that it would count new kinds of strategic systems and that Russia would be unwilling to discuss an extension of New START until the United States addresses Russia's concerns with U.S. implementation of the treaty's conversion and elimination procedures. Moreover, he noted that, if the two sides negotiated a new treaty to capture the systems of concern to the United States, Russia would insist on addressing U.S. systems\u2014like ballistic missile defenses and strategic conventional weapons\u2014that are of concern to Russia."], "subsections": []}, {"section_title": "Background", "paragraphs": ["President Obama and and Russia's President Medvedev outlined their goals for the negotiations on a new START Treaty in early April 2009. In a joint statement issued after they met in London, they indicated that the subject of the new agreement \"will be the reduction and limitation of strategic offensive arms.\" This statement indicated that the new treaty would not address missile defenses, nonstrategic nuclear weapons, or nondeployed stockpiles of nuclear weapons. The Presidents also agreed that they would seek to reduce their forces to levels below those in the 2002 Moscow Treaty, and that the new agreement would \"mutually enhance the security of the Parties and predictability and stability in strategic offensive forces, and will include effective verification measures drawn from the experience of the Parties in implementing the START Treaty.\"", "The Presidents further refined their goals for New START, and gave the first indications of the range they were considering for the limits in the treaty, in a Joint Understanding signed at their summit meeting in Moscow in July 2009. They agreed that the new treaty would restrict each party to between 500 and 1,100 strategic delivery vehicles and between 1,500 and 1,675 associated warheads. They also agreed that the new treaty would contain \"provisions on definitions, data exchanges, notifications, eliminations, inspections and verification procedures, as well as confidence building and transparency measures, as adapted, simplified, and made less costly, as appropriate, in comparison to the START Treaty.\"", "The New START Treaty follows many of the same conventions as the 1991 START Treaty. It contains detailed definitions and counting rules that the parties use to identify the forces limited by the treaty. It also mandates that the parties maintain an extensive database that describes the locations, numbers, and technical characteristics of weapons limited by the treaty. It allows the parties to use several types of exhibitions and on-site inspections to confirm information in the database and to monitor forces and activities limited by the treaty. ", "But the new treaty is not simply an extension of START. The United States and Soviet Union negotiated the original START Treaty during the 1980s, during the latter years of the Cold War, when the two nations were still adversaries and each was still wary of the capabilities and intentions of the other. Many of the provisions in the original treaty reflect the uncertainty and suspicion that were evident at that time. The New START Treaty is a product of a different era and a different relationship between the United States and Russia. In some ways, its goals remain the same\u2014the parties still sought provisions that would allow for predictability and transparency in their current forces and future intentions. But, the United States and Russia have streamlined and simplified the central limits and the monitoring and verification provisions. The new treaty does not contain layers of limits and sublimits; each side can determine its own mix of land-based intercontinental ballistic missiles (ICBMs), submarine-launched ballistic missiles (SLBMs), and heavy bombers. Moreover, in the current environment, the parties were far less concerned with choking off avenues for potential evasion schemes than they were with fostering continued cooperation and openness between the two sides."], "subsections": []}, {"section_title": "Central Limits and Key Provisions", "paragraphs": [], "subsections": [{"section_title": "Central Limits", "paragraphs": [], "subsections": [{"section_title": "Limits on Delivery Vehicles", "paragraphs": ["The New START Treaty contains three central limits on U.S. and Russian strategic offensive nuclear forces; these are displayed in Table 1 , below. First, it limits each side to no more than 800 deployed and nondeployed ICBM and SLBM launchers and deployed and nondeployed heavy bombers equipped to carry nuclear armaments. Second, within that total, it limits each side to no more than 700 deployed ICBMs, deployed SLBMs, and deployed heavy bombers equipped to carry nuclear armaments. Third, the treaty limits each side to no more than 1,550 deployed warheads. Deployed warheads include the actual number of warheads carried by deployed ICBMs and SLBMs, and one warhead for each deployed heavy bomber equipped for nuclear armaments. Table 1 compares these limits to those in the 1991 START Treaty and the 2002 Moscow Treaty.", "According to New START's Protocol a deployed ICBM launcher is \"an ICBM launcher that contains an ICBM and is not an ICBM test launcher, an ICBM training launcher, or an ICBM launcher located at a space launch facility.\" A deployed SLBM launcher is a launcher installed on an operational submarine that contains an SLBM and is not intended for testing or training. A deployed mobile launcher of ICBMs is one that contains an ICBM and is not a mobile test launcher or a mobile launcher of ICBMs located at a space launch facility. These deployed launchers can be based only at ICBM bases. A deployed ICBM or SLBM is one that is contained in a deployed launcher. Nondeployed launchers are, therefore, those that are used for testing or training, those that are located at space launch facilities, or those that are located at deployment areas or on submarines but do not contain a deployed ICBM or SLBM.", "The New START Treaty does not limit the number of nondeployed ICBMs or nondeployed SLBMs. It does, however, state that these missiles must be located at facilities that are known to be within the infrastructure that supports and maintains ICBMs and SLBMs. These include \"submarine bases, ICBM or SLBM loading facilities, maintenance facilities, repair facilities for ICBMs or SLBMs, storage facilities for ICBMs or SLBMs, conversion or elimination facilities for ICBMs or SLBMs, test ranges, space launch facilities, and production facilities.\" Nondeployed ICBMs and SLBMs may also be in transit between these facilities, although Article IV of the treaty indicates that this time in transit should be \"no more than 30 days.\" ", "The parties share information on the locations of these missiles in the database they maintain under the treaty and notify each other when they move these systems. These provisions are designed to allow each side to keep track of the numbers and locations of nondeployed missiles and to deter efforts to stockpile hidden, uncounted missiles. A party would be in violation of the treaty if one of its nondeployed missiles were spotted at a facility not included on the list, or if one were found at a location different from the one listed for that missile in the database.", "According to the Protocol to New START, a deployed heavy bomber is one that is equipped for nuclear armaments but is not a \"test heavy bomber or a heavy bomber located at a repair facility or at a production facility.\" Moreover, a heavy bomber is equipped for nuclear armaments if it is \"equipped for long-range nuclear ALCMs, nuclear air-to-surface missiles, or nuclear bombs.\" All deployed heavy bombers must be located at air bases, which are defined as facilities \"at which deployed heavy bombers are based and their operation is supported.\" If an air base cannot support the operations of heavy bombers, then the treaty does not consider it to be available for the basing of heavy bombers, even though they may land at such bases under some circumstances. Test heavy bombers can be based only at heavy bomber flight test centers and nondeployed heavy bombers other than test heavy bombers can be located only at repair facilities or production facilities for heavy bombers. Each party may have no more than 10 test heavy bombers.", "Heavy bombers that are not equipped for long range nuclear ALCMs, nuclear air-to-surface missiles, or nuclear bombs will not count under the treaty limits. However, the treaty does specify that, \"within the same type, a heavy bomber equipped for nuclear armaments shall be distinguishable from a heavy bomber equipped for non-nuclear armaments.\" Moreover, if a party does convert some bombers within a given type so that they are no longer equipped to carry nuclear weapons, it cannot base the nuclear and nonnuclear bombers at the same air base, unless otherwise agreed by the parties. ", "Hence, the United States could reduce the number of bombers that count under the treaty limits by altering some of its B-52 bombers so that they no longer carry nuclear weapons and by basing them at a separate base from those that still carry nuclear weapons. In addition, if the United States converted all of the bombers of a given type, so that none of them could carry nuclear armaments, then none of the bombers of that type would count under the New START treaty. This provision allows the United States to remove its B-1 bombers from treaty accountability. They no longer carry nuclear weapons, but they still counted under the old START Treaty and were never altered so that they could not carry nuclear weapons. The conversion rules that would affect the B-1 bombers are described below."], "subsections": []}, {"section_title": "Limits on Warheads", "paragraphs": [" Table 1 summarizes the warheads limits in START, the Moscow Treaty, and the New START Treaty. Two factors stand out in this comparison. First, the original START Treaty contained several sublimits on warheads attributed to different types of strategic weapons, in part because the United States wanted the treaty to impose specific limits on elements of the Soviet force that were deemed to be \"destabilizing.\" Therefore, START sought to limit the Soviet force of heavy ICBMs by cutting in half the number of warheads deployed on these missiles, and to limit future Soviet deployments of mobile ICBMs. The Moscow Treaty and New START, in contrast, contain only a single limit on the aggregate number of deployed warheads. They provide each nation with the freedom to mix their forces as they see fit. This change reflects, in part, a lesser concern with Cold War models of strategic and crisis stability. It also derives from the U.S. desire to maintain flexibility in determining the structure of its own nuclear forces.", " Table 1 also highlights how the planned numbers of warheads in the U.S. and Russian strategic forces have declined in the years since the end of the Cold War. Before START entered into force in 1991, each side had more than 10,000 warheads on its strategic offensive delivery vehicles. If the parties implement the New START Treaty, that number will have declined by more than 80%. However, although all three treaties limit warheads, each uses different definitions and counting rules to determine how many warheads each side has deployed on its strategic forces.", "Under START, the United States and Russia did not actually count deployed warheads. Instead, each party counted the launchers\u2014ICBM silos, SLBM launch tubes, and heavy bombers\u2014deployed by the other side. Under the terms of the treaty, they then assumed that each operational launcher contained an operational missile, and each operational missile carried an \"attributed\" number of warheads. The number of warheads attributed to each missile or bomber was the same for all missiles and bombers of that type. It did not recognize different loadings on individual delivery vehicles. This number was listed in an agreed database that the parties maintained during the life of the treaty. The parties then multiplied these warhead numbers by the number of deployed ballistic missiles and heavy bombers to determine the number of warheads that counted under the treaty's limits.", "In most cases, the number of warheads attributed to each type of ICBM and SLBM was equal to the maximum number that missile had been tested with. START did, however, permit the parties to reduce the number of warheads attributed to some of their ballistic missiles through a process known as \"downloading.\" When downloading missiles, a nation could remove a specified number of reentry vehicles from all the ICBMs at an ICBM base or from all the SLBMs in submarines at bases adjacent to a specified ocean. They could then reduce the number of warheads attributed to those missiles in the database, and therefore, the number that counted under the treaty limits.", "Unlike ballistic missiles, bombers counted as far fewer than the number of warheads they could carry. Bombers that were not equipped to carry long-range nuclear-armed cruise missiles counted as one warhead, even though they could carry 16 or more bombs and short-range missiles. U.S. bombers that were equipped to carry long-range nuclear-armed cruise missiles counted as 10 warheads, even though they could carry up to 20 cruise missiles. Soviet bombers that were equipped to carry long-range nuclear-armed cruise missiles counted as 8 warheads, even though they could carry up to 16 cruise missiles. These numbers were then multiplied by the numbers of deployed heavy bombers in each category to determine the number of warheads that would count under the treaty limits.", "In contrast with START, the Moscow Treaty did not contain any definitions or counting rules to calculate the number of warheads that counted under the treaty limit. Its text indicated that it limited deployed strategic warheads, but the United States and Russia could each determine its own definition of this term. The United States counted \"operationally deployed\" strategic nuclear warheads and included both warheads on deployed ballistic missiles and bomber weapons stored near deployed bombers at their bases. Russia, in contrast, did not count any bomber weapons under its total, as these weapons were not actually deployed on any bombers. Moreover, because the Moscow Treaty did not contain any sublimits on warheads deployed on different categories of delivery vehicles, the two parties only had to calculate an aggregate total for their deployed warheads. In addition, while they exchanged data under START on the numbers of accountable launchers and warheads every six months, they only had to report the number of warheads they counted under the Moscow Treaty once, on December 31, 2012, at the end of the treaty's implementation period.", "Like START, the New START Treaty contains definitions and counting rules that will help the parties calculate the number of warheads that count under the treaty limits. For ballistic missiles, these rules follow the precedent set in the Moscow Treaty and count only the actual number of warheads on deployed delivery vehicles. For bombers, however, these rules follow the precedent set in START and attribute a fixed number of warheads to each heavy bomber.", "Article III of the New START Treaty states that \"for ICBMs and SLBMs, the number of warheads shall be the number of reentry vehicles emplaced on deployed ICBMs and on deployed SLBMs.\" Missiles will not count as if they carried the maximum number of warheads tested on that type of missile. Each missile will have its own warhead number and that number can change during the life of the treaty. The parties will not, however, visit each missile to count and calculate the total number of warheads in the force. The New START database will list total number of warheads deployed on all deployed launchers. The parties will then have the opportunity, 10 times each year, to inspect one missile or three bombers selected at random. At the start of these inspections, before the inspecting party chooses a missile or bomber to view, the inspected party will provide a list of the number of warheads on each missile or bomber at the inspected base. The inspecting party will then choose a missile at random, and confirm that the number listed in the database is accurate. This is designed to deter the deployment of extra warheads by creating the possibility that a missile with extra warheads might be chosen for an inspection.", "As was the case under START, this inspection process does not provide the parties with the means to visually inspect and count all the deployed warheads carried on deployed missiles. Under START, this number was calculated by counting launchers and multiplying by an attributed number of warheads. Under New START, as was the case in the Moscow Treaty, each side simply declares its number of total deployed warheads and includes that number in the treaty database. Unlike the Moscow Treaty, however, the parties will provide and update these numbers every six months during the life of the treaty, rather than just once at the end of the treaty.", "Under the New START Treaty, each deployed heavy bomber equipped with nuclear armaments counts as one nuclear warhead. This is true whether the bomber is equipped to carry cruise missiles or gravity bombs. Neither the United States nor Russia deploys nuclear weapons on their bombers on a day-to-day basis. Because the treaty is supposed to count, and reduce, actual warheads carried by deployed delivery vehicles, the bomber weapons that are not deployed on a day-to-day basis are excluded. In addition, because the parties will use on-site inspections to confirm the actual number of deployed warheads on deployed delivery vehicles, and the bombers will have no warheads on them during inspections, the parties needed to come up with an arbitrary number to assign to the bombers. That number is one."], "subsections": []}]}, {"section_title": "Conversion and Elimination", "paragraphs": ["According to New START, ICBM launchers, SLBM launchers, and heavy bombers equipped to carry nuclear armaments shall continue to count under the treaty limits until they are converted or eliminated according to the provisions described in the treaty's Protocol. These provisions are far less demanding than those in the original START Treaty and will provide the United States and Russia with far more flexibility in determining how to reduce their forces to meet the treaty limits."], "subsections": [{"section_title": "ICBM Launchers", "paragraphs": ["Under START, ICBM launchers were \"destroyed by excavation to a depth of no less than eight meters, or by explosion to a depth of no less than six meters.\" If missiles were removed from silos, and the silos were not eliminated in this fashion, then the silos still counted as if they held a deployed missile and as if the deployed missile carried the attributed number of warheads.", "New START lists three ways in which the parties may eliminate ICBM silo launchers. It states that silo launchers \"shall be destroyed by excavating them to a depth of no less than eight meters or by explosion to a depth of no less than six meters.\" It also indicates that the silos can be \"completely filled with debris resulting from demolition of infrastructure, and with earth or gravel.\" Finally, it indicates the party carrying out the elimination can develop other procedures to eliminate its silos. It may have to demonstrate this elimination alternative to the other party, but that party cannot dispute or deny the use of that method.", "Hence, instead of blowing up the silos or digging them out of the ground, the parties to the treaty might choose to disable the silo using measures it identifies itself, so that it can no longer launch a missile. This could be far less costly and destructive than the procedures mandated under START, and would help both nations eliminate some silos that have stood empty for years while continuing to count under the old START Treaty. For the United States, this would include the 50 silos that held Peacekeeper missiles until 2005 and the 50 silos that held Minuteman III missiles until 2008. The United States has never destroyed these silos, so they continued to count under START. It can now disable theses silos and remove them from its tally of launchers under the New START Treaty. According to the recent reports, the Air Force Global Strike Command began preparations to eliminate these silos in March 2011, and plans to fill them with gravel. It expects to complete this process by 2017."], "subsections": []}, {"section_title": "Mobile ICBM launchers", "paragraphs": ["Under START, the elimination process for launchers for road-mobile ICBMs required that \"the erector-launcher mechanism and leveling supports shall be removed from the launcher chassis\" and that \"the framework of the erector-launcher mechanism on which the ICBM is mounted and erected shall be cut at locations that are not assembly joints into two pieces of approximately equal size.\" It also required that the missile launch support equipment be removed from the launcher chassis, and that the \"mountings of the erector-launcher mechanism and of the launcher leveling supports shall be cut off the launcher chassis\" and cut into two pieces of approximately equal size. START also required that 0.78 meters of the launcher chassis be cut off and cut into two parts, so that the chassis would be too short to support mobile ICBMs.", "Under New START, the elimination process for launchers for road mobile ICBMs is far more simple and far less destructive. As was the case under START, the elimination \"shall be carried out by cutting the erector-launcher mechanism, leveling supports, and mountings of the erector-launcher mechanism from the launcher chassis and by removing the missile launch support equipment ... from the launcher chassis.\" But neither the framework nor the chassis itself have to be cut into pieces. If the chassis is going to be used \"at a declared facility for purposes not inconsistent with the Treaty\" the surfaces of the vehicle that will be visible to national technical means of verification must be painted a different color or pattern than those surfaces on a deployed mobile ICBM launcher."], "subsections": []}, {"section_title": "SLBM Launchers", "paragraphs": ["Under START, the SLBM launch tubes were considered to be eliminated when the entire missile section was removed from the submarine; or when \"the missile launch tubes, and all elements of their reinforcement, including hull liners and segments of circular structural members between the missile launch tubes, as well as the entire portion of the pressure hull, the entire portion of the outer hull, and the entire portion of the superstructure through which all the missile launch tubes pass and that contain all the missile launch-tube penetrations\" were removed from the submarine. The missile launch tubes then had to \"be cut into two pieces of approximately equal size.\"", "Under New START, SLBM launch tubes can be eliminated \"by removing all missile launch tube hatches, their associated superstructure fairings, and, if applicable, gas generators.\" In other words, the missile section of the submarine and the individual launch tubes can remain in place in the submarine, and cease to count under the treaty limits, if they are altered so that they can no longer launch ballistic missiles. Moreover, according to the Ninth Agreed Statement in the New START Protocol, SLBM launch tubes that have been converted in accordance with this procedure and are \"incapable of launching SLBMs may simultaneously be located on a ballistic missile submarine\" with launch tubes that are still capable of launching SLBMs. After a party completes this type of conversion, it \"shall conduct a one-time exhibition of a converted launcher and an SLBM launcher that has not been converted\" to demonstrate, to the other party, \"the distinguishing features of a converted launcher and an SLBM launcher that has not been converted.\" The United States plans to use this procedure to reduce the number of launch tubes on each SSBN from 24 to 20. According to recent reports, it will begin this process in 2015, so that it will have no more than 240 operational launchers for SLBMs by the treaty deadline of February 2018.", "Under START, the United States had to essentially destroy an entire submarine to remove its launch tubes from accountability under the treaty limits. With these provisions in New START, the United States cannot only convert ballistic missile submarines to other uses without destroying their missile tubes and missile compartments; it can also reduce the number of accountable deployed SLBM launchers on ballistic missile submarines that continue to carry nuclear-armed SLBMs. These provisions will provide the United States a great deal of flexibility when it determines the structure of its nuclear forces under New START. ", "During the past decade, the United States converted four of its Trident ballistic missile submarines so that they no longer carry ballistic missiles but now carry conventional cruise missiles and other types of weapons. These are now known as SSGNs. Because the United States did not remove the missile compartment from these submarines, they continued to count as if they carried 24 Trident missiles, with 8 warheads per missile, under the old START Treaty. These submarines will not count under the New START Treaty. ", "In the Second Agreed Statement in the New START Protocol, the United States has agreed that, \"no later than three years after entry into force of the Treaty, the United States of America shall conduct an initial one-time exhibition of each of these four SSGNs. The purpose of such exhibitions shall be to confirm that the launchers on such submarines are incapable of launching SLBMs.\" Moreover, if an SSGN is located at an SSBN base when a Russian inspection team visits that base, the inspection team will have the right to inspect the SSGN again to confirm that the launchers have not been converted back to carry SLBMs. Russia can conduct six of these re-inspections during the life of the treaty, but no more than two inspections of any one of the SSGNs."], "subsections": []}, {"section_title": "Heavy Bombers", "paragraphs": ["Under START, heavy bombers were eliminated by having the tail section cut off of the fuselage at a location that obviously was not an assembly joint; having the wings separated from the fuselage at any location by any method; and having the remainder of the fuselage cut into two pieces, with the cut occurring in the area where the wings were attached to the fuselage, but at a location obviously not an assembly joint. ", "START also allowed the parties to remove heavy bombers from treaty accountability by converting them to heavy bombers that were not equipped to carry nuclear armaments. According to the elimination and conversion Protocol in START, this could be done by modifying all weapons bays and by removing or modifying the external attachment joints for either long-range nuclear ALCMs or other nuclear armaments that the bombers were equipped to carry. ", "The elimination procedure for heavy bombers has also been simplified under New START. To eliminate bombers, the parties must cut \"a wing or tail section from the fuselage at locations obviously not assembly joints,\" or cut \"the fuselage into two parts at a location obviously not an assembly joint.\" It no longer has to remove the wings from the fuselage. In addition, to convert a bomber counted under the treaty to a heavy bomber no longer equipped to carry nuclear armaments, the parties can either modify the weapons bays and external attachments for pylons so that they cannot carry nuclear armaments, or modify all internal and external launcher assemblies so that they cannot carry nuclear armaments, or develop any other procedure to carry out the conversion. As was the case with the conversion and elimination of missile launchers, the party may have to demonstrate its conversion procedure, but the other party does not have the right to object or reject the procedure.", "The United States no longer equips its B-1 bombers with nuclear weapons, and has no plans to do so in the future. It has not, however, converted these bombers to nonnuclear heavy bombers using the procedures outlined in START. As a result, they continued to count as one delivery vehicle and one warhead under the counting rules in START. The United States does not, however, want to count these bombers under the New START Treaty. As a result, in the First Agreed Statement, the United States and Russia agreed, during the first year that the treaty is in force, the United States will conduct a \"one-time exhibition\" to demonstrate to Russia that these bombers are no longer equipped to carry nuclear weapons. The bombers that no longer carry nuclear weapons will have a \"distinguishing feature\" that will be recorded in the treaty database and will be evident on all B-1 bombers that are no longer equipped to carry nuclear weapons. After all the B-1 bombers have been converted in this manner, they will no longer count against the limits in the New START Treaty."], "subsections": []}]}, {"section_title": "Mobile ICBMs", "paragraphs": [], "subsections": [{"section_title": "Mobile ICBMs in START", "paragraphs": ["Mobile ICBMs became an issue in the original START negotiations in the mid-1980s, as the Soviet Union began to deploy a single-warhead road-mobile ICBM, the SS-25, and a 10-warhead rail-mobile ICBM, the SS-24. The United States initially proposed that START ban mobile ICBMs because the United States would not be able to locate or target these systems during a conflict. Some also questioned whether the United States would be able to monitor Soviet mobile ICBM deployments well enough to count the missiles and verify Soviet compliance with the limits in START. Some also argued that the Soviet Union might be able to stockpile hidden missiles and launchers, and to reload mobile ICBM launchers during a conflict because the United States could not target and destroy them.", "The Soviet Union refused to ban mobile ICBMs. As a result, START limited the United States and Soviet Union to 1,100 warheads on mobile ICBMs. The treaty also limited the numbers of nondeployed missiles and nondeployed launchers for mobile ICBMs. Each side could retain 250 missiles and 110 launchers for mobile ICBMs, with no more than 125 missiles and 18 launchers for rail mobile ICBMs. This did not eliminate the risk of \"breakout,\" which refers to the rapid addition of stored missiles to the deployed force, but it did limit the magnitude of the breakout potential and the number of missiles that the Soviet Union could \"reload\" on deployed launchers during a conflict.", "START also contained a number of complementary, and sometimes overlapping, monitoring mechanisms that were designed to help the parties keep track of the numbers and locations of permitted missiles. Each side could monitor the final assembly facility for the missiles to count them as they entered the force. The parties also agreed to record the serial numbers, referred to in the treaty as \"unique identifiers,\" for the mobile ICBMs, and to list these numbers in the treaty's database. These numbers were used to help track and identify permitted missiles because the parties could check the serial numbers during on-site inspections to confirm that the missiles they encountered were those that they expected to see at the facility during the inspection. The parties also had to provide notifications when mobile ICBMs moved between permitted facilities and when mobile ICBMs moved out of their main operating bases for an exercise. These notifications were designed to complicate efforts to move extra, hidden missiles into the deployed force. Finally, missiles and launchers removed from the force had to be eliminated according to specific procedures outlined in the treaty. This not only helped the parties keep an accurate count of the deployed missiles, but served as a further deterrent to efforts to hide extra missiles outside the treaty regime."], "subsections": []}, {"section_title": "Mobile ICBMs in New START", "paragraphs": ["The New START Treaty contains many limits and restrictions that will affect Russia's force of mobile ICBMs, but it does not single them out with many of the additional constraints that were contained in START. Russia pressed for an easing of the restrictions on mobile ICBMs in New START, in part because these restrictions were one sided and only affected Russian forces. But Russian officials also noted, and the United States agreed, that mobile ICBMs could enhance the survivability of Russia's nuclear forces, and therefore strengthen strategic stability under the new treaty.", "The United States was also willing to relax the restrictions on mobile ICBMs because it is far less concerned about Russia's ability to break out of the treaty limits than it was in the 1980s. After 15 years of START implementation, the United States has far more confidence in its knowledge of the number of deployed and nondeployed Russian mobile ICBMs, as it kept count of these missiles as they entered and left the Russian force during START. There is also far less concern about Russia stockpiling extra missiles while New START is in force. During the 1980s, the Soviet Union produced dozens of new missiles each year; Russia now adds fewer than 10 missiles to its force each year. Some estimates indicate that, with this level of production, Russia will find it difficult to retain the 700 deployed missiles permitted by the treaty. In such a circumstance, it would have neither the need nor the ability to stockpile and hide extra missiles. Moreover, where the United States was once concerned about Russia's ability to reload its mobile launchers with spare missiles, after launching the first missiles during a conflict, this scenario no longer seems credible. It would mean that Russia maintained the ability to send extra missiles and the equipment needed to load them on launchers out on patrol with its deployed systems and that it could load these missiles quickly, in the field, in the midst of a nuclear war, with U.S. weapons falling all around. Yet, Russia has not practiced or exercised this capability and it is hard to imagine that it would try it, for the first time, in the midst of a nuclear war. ", "The New START Treaty does not contain a sublimit on mobile ICBMs or their warheads. It also does not contain any limits on the number of nondeployed mobile ICBMs or the number of nondeployed mobile ICBM launchers. These launchers and warheads will, however, count under the aggregate limits set by the treaty, including the limit of 800 deployed and nondeployed launchers. As a result, the United States will still need to count the number of mobile ICBMs in Russia's force.", "New START will not permit perimeter and portal monitoring at missile assembly facilities. The parties must, however, provide notification at least 48 hours before the time when solid-fuel ICBMs and solid-fuel SLBMs leave the production facilities. Moreover, the parties will continue to list the serial numbers, or unique identifiers, for mobile ICBMs in the shared database.", "New START limits the locations of mobile ICBMs and their launchers, both to help the United States keep track of the missiles covered by the treaty and to deter Russian efforts to hide extra missiles away from the deployed force. Deployed mobile ICBMs and their launchers must be located only at ICBM bases. All nondeployed launchers for mobile ICBMs must be located at \"production facilities, ICBM loading facilities, repair facilities, storage facilities, conversion or elimination facilities, training facilities, test ranges, and space launch facilities.\" The locations of nondeployed mobile ICBMs are also limited to loading facilities, maintenance facilities, repair facilities, storage facilities, conversion or elimination facilities test ranges, space launch facilities, and production facilities. Some of these facilities may be at bases for operational mobile ICBMs, but, in that case, the nondeployed missiles must remain in the designated facility and cannot be located in deployment areas. ", "Moreover, when deployed or nondeployed missiles or launchers move from one facility to another, the parties will have to update the database so each facility contains a complete list of each item located at that facility, and of the unique identifier associated with each item. Then, according to the Protocol to the Treaty, \"inspectors shall have the right to read the unique identifiers on all designated deployed ICBMs or designated deployed SLBMs, non-deployed ICBMs, non-deployed SLBMs, and designated heavy bombers that are located at the inspection site.\" Hence, the parties will have the opportunity to confirm that items located at the facilities are supposed to be there.", "This is designed not only to increase transparency and understanding while the treaty is in force, but also to discourage efforts to hide extra missiles and break out of the treaty limits. The treaty does not limit the number of nondeployed missiles, but it does provide the United States with continuous information about their locations and the opportunity, during on-site inspections, to confirm that these missiles are not mixed into the deployed force. Moreover, the number of nondeployed launchers for these missiles is limited, under the 800 limit on deployed and nondeployed launchers. So, even if Russia did accumulate a stock of nondeployed missiles, the number that it could add to its force in a relatively short amount of time would be limited.", "Some have questioned whether Russia might use these stored mobile ICBMs to break out of the treaty by deploying them on mobile launchers that are not limited by the treaty. Specifically, they have questioned whether the New START Treaty would count rail-mobile ICBMs, and, if not, whether Russia could develop and deploy enough of these launchers to gain a military advantage over the United States. This concern derives from the definition of mobile launcher in the paragraph 45 of the Protocol to the Treaty, which indicates that a mobile launcher is \"an erector-launcher mechanism for launching ICBMs and the self-propelled device on which it is mounted [emphasis added].\" This definition clearly captures road-mobile launchers, such as those that Russia uses for its SS-25 and SS-27 missiles, because the transporters for these missiles are self-propelled. But a rail car that carried an erector-launcher for an ICBM would not be self-propelled; it would be propelled by the train's locomotive.", "Others, however, point to several provisions in the treaty that indicate that rail-mobile launchers of ICBMs would count under the treaty limits. First, they note that the treaty limits all deployed and nondeployed ICBM launchers. It defines ICBM launcher, in paragraph 28 of the Protocol to the Treaty, as \"a device intended or used to contain, prepare for launch, and launch an ICBM.\" Any erector-launcher for ICBMs would be covered by this definition, regardless of whether it was deployed on a fixed site, on a road-mobile transporter, or on a railcar.", "Moreover, the article-by-article analysis of the treaty specifically states that \"all of the defined terms are used in at least one place elsewhere in the Treaty documents.\" Article III, paragraph 8 of the treaty lists the current types of weapons deployed by each side and notes that these all count against the limits. It does not list any missiles deployed on rail-mobile launchers, and, therefore, the Protocol does not define rail-mobile launchers, because Russia no longer deploys any missiles on rail-mobile launchers. It had deployed SS-24 missiles on such launchers during the 1980s and 1990s, but these were all retired in the past decade, and the last operating base for these missiles and railcars was closed in 2007. ", "The treaty would not prohibit Russia from deploying these types of systems again in the future. Article V specifically states that \"modernization and replacement of strategic offensive arms may be carried out.\" However, the second paragraph of this article indicates that, \"when a party believes a new kind of strategic offensive arms is emerging, that party shall have the right to raise the question of such a strategic offensive arm for consideration in the Bilateral Consultative Commission.\" Section 6 of the Protocol to the Treaty, which describes the Bilateral Consultative Commission, states that this body should \"resolve questions related to the applicability of provisions of the treaty to a new kind of strategic offensive arm.\" In addition, Article XV of the treaty states that \"if it becomes necessary to make changes in the Protocol ... that do not affect the substantive rights or obligations under this Treaty,\" the parties can use the BCC to reach agreement on these changes without amending the treaty. Hence, if Russia were to deploy ICBMs on rail-mobile launchers, the parties could modify the definition to \"mobile launcher\" to confirm that these weapons count under the treaty limits. ", "New START does not define rail-mobile launchers for ICBMs because neither the United States nor Russia currently deploys these systems and the treaty does not specifically prohibit their deployment in the future. If, however, either party installs an erector-launcher for an ICBM on a rail car, that launcher would count under the treaty limits, and the new type of strategic arm, represented by the launcher on a railcar, would be covered by the limits in the treaty. The parties would then use the BCC to determine which of the monitoring provisions and elimination and conversion rules applied to that type of weapons system."], "subsections": []}]}, {"section_title": "Monitoring and Verification29", "paragraphs": ["The original START Treaty included a comprehensive and overlapping set of provisions that was designed to allow the United States and Soviet Union to collect a wide range of data on their forces and activities and to determine whether the forces and activities were consistent with the limits in the treaty. While each party would collect most of this information with its own satellites and remote sensing equipment\u2014known as national technical means of verification (NTM)\u2014the treaty also called for the extensive exchange of data detailing the numbers and locations of affected weapons, numerous types of on-site inspections, notifications, exhibitions, and continuous monitoring at assembly facilities for mobile ICBMs. Further, in START, the parties agreed that they would not encrypt or otherwise deny access to the telemetry generated during missile flight tests, so that the other side could record these data and use them in evaluating the capabilities of missile systems.", "The New START Treaty contains a monitoring and verification regime that resembles the regime in START, in that its text contains detailed definitions of items limited by the treaty, provisions governing the use of NTM to gather data on each side's forces and activities, an extensive database that identifies the numbers, types, and locations of items limited by the treaty, provisions requiring notifications about items limited by the treaty, and inspections allowing the parties to confirm information shared during data exchanges. At the same time, the verification regime has been streamlined to make it less costly and complex than the regime in START. It also has been adjusted to reflect the limits in New START and the current circumstances in the relationship between the United States and Russia. In particular, it focuses on maintaining transparency, cooperation, and openness, as well as on deterring and detecting potential violations.", "Under New START, the United States and Russia continue to rely on their NTM to collect information about the numbers and locations of their strategic forces. They may also broadcast and exchange telemetry\u2014the data generated during missile flight tests\u2014up to five times each year. They do not need these data to monitor compliance with any particular limits in New START, but the telemetry exchange will provide some transparency into the capabilities of their systems. The parties also exchange a vast amount of data about their forces, specifying not only their distinguishing characteristics, but also their precise locations. They will notify each other, and update the database, whenever they move forces between declared facilities. The treaty also requires the parties to display their forces, and allows each side to participate in exhibitions, to confirm information listed in the database.", "New START permits the parties to conduct up to 18 short-notice on-site inspections each year. These inspections began in early April 2011, 60 days after the treaty entered into force. These inspections can occur at facilities that house both deployed and nondeployed launchers and missiles. The treaty divides these into Type One inspections and Type Two inspections. Each side can conduct up to 10 Type One inspections and up to 8 Type Two inspections. Moreover, during each Type One inspection, the parties will be able to perform two different types of inspection activities\u2014these are essentially equivalent to the data update inspections and reentry vehicle inspections in the original START Treaty. As a result, the 18 short-notice inspections permitted under New START are essentially equivalent to the 28 short-notice inspections permitted under START."], "subsections": [{"section_title": "Type One Inspections", "paragraphs": ["Type One inspections are those that occur at ICBM bases, submarine bases, and air bases that house deployed or nondeployed launchers, missiles, and bombers. The parties use these inspections \"to confirm the accuracy of declared data on the numbers and types of deployed and non-deployed strategic offensive arms subject to this treaty. During Type One inspections, the parties may also confirm that the number of warheads located on deployed ICBMs and deployed SLBMs and the number of nuclear armaments located on deployed heavy bombers\" are consistent with the numbers declared deployed on those specific launchers.", "The inspections used to confirm the number of deployed warheads in New START will be distinctly different from the inspections in START because the counting rules for ballistic missiles have changed. Under START, the treaty database listed the number of warheads attributed to a type of missile, and each missile of that type counted as the same number of warheads. The parties then inspected the missiles to confirm that the number of warheads on a particular missile did not exceed the number attributed to that type of missile. The database in New START will list the aggregate number of warheads deployed on all the missiles at a given base, but before beginning a Type One inspection, the team will receive a briefing on the actual number of warheads deployed on each missile at the base. During the inspections, the parties will have the right to designate one ICBM or one SLBM for inspection, and, when inspecting that missile, the parties will be able to count the actual number of reentry vehicles deployed on the missile to confirm that it equals the number provided for that particular missile prior to the inspection. The inspected party can cover the reentry vehicles to protect information not related to the number of warheads, but the party must use covers that allow the inspectors to identify the actual number of warheads on the missile.", "Because these inspections are random, and occur on short notice, they provide the parties with a chance to detect an effort by the other party to deploy a missile with more than its listed number of warheads. As a result, the inspections may deter efforts to conceal extra warheads on the deployed force. These inspections, by allowing the parties to count the actual number of deployed warheads, provide added transparency. "], "subsections": []}, {"section_title": "Type Two Inspections", "paragraphs": ["Type Two inspections occur at facilities that house nondeployed or converted launchers and missiles. These include \"ICBM loading facilities; SLBM loading facilities; storage facilities for ICBMs, SLBMs, and mobile launchers of ICBMs; repair facilities for ICBMs, SLBMs, and mobile launchers of ICBMs; test ranges; and training facilities.\" The parties will perform these inspections \"to confirm the accuracy of declared technical characteristics and declared data, specified for such facilities, on the number and types of non-deployed ICBMs and non-deployed SLBMs, first stages of ICBMs and SLBMs, and nondeployed launchers of ICBMs.\" In addition, they can conduct these inspections at formerly declared facilities, \"to confirm that such facilities are not being used for purposes inconsistent with this Treaty.\" They can also use Type II inspections to confirm that solid-fueled ICBMs, solid-fueled SLBMs, or mobile launchers of ICBMs have been eliminated according to treaty procedures."], "subsections": []}]}, {"section_title": "Ballistic Missile Defense", "paragraphs": ["Presidents Obama and Medvedev had agreed, when they met in April 2009, that the two nations would address Russia's concerns with U.S. missile defense programs in a separate forum from the negotiations on a New START Treaty. However, during their meeting in Moscow in July 2010, Presidents Obama and Medvedev agreed that the treaty would contain a \"provision on the interrelationship of strategic offensive arms and strategic defensive arms.\" This statement, which appears in the preamble to New START, states that the parties recognize \"the existence of the interrelationship between strategic offensive arms and strategic defensive arms, that this interrelationship will become more important as strategic nuclear arms are reduced, and that current strategic defensive arms do not undermine the viability and effectiveness of the strategic offensive arms of the parties.\"", "Russia and the United States each issued unilateral statements when they signed New START that clarified their positions on the relationship between New START and missile defenses. Russia stated that ", "the Treaty can operate and be viable only if the United States of America refrains from developing its missile defense capabilities quantitatively or qualitatively. Consequently, the exceptional circumstances referred to in Article 14 of the Treaty include increasing the capabilities of the United States of America's missile defense system in such a way that threatens the potential of the strategic nuclear forces of the Russian Federation. ", "In its statement, the United States stated that its ", "missile defense systems are not intended to affect the strategic balance with Russia. The United States missile defense systems would be employed to defend the United States against limited missile launches, and to defend its deployed forces, allies and partners against regional threats. The United States intends to continue improving and deploying its missile defense systems in order to defend itself against limited attack and as part of our collaborative approach to strengthening stability in key regions.", "These statements do not impose any obligations on either the United States or Russia. As Senator Lugar indicated before New START was signed, these statements are, \"in essence editorial opinions.\" Under Secretary of State Ellen Tauscher also stated that \"Russia's unilateral statement on missile defenses is not an integral part of the New START Treaty. It's not legally-binding. It won't constrain U.S. missile defense programs.\" These statements also do not provide Russia with \"veto power\" over U.S. missile defense systems. Although Russia has said it may withdraw from the treaty if the U.S. missile defenses threaten \"the potential of the strategic nuclear forces of the Russian Federation,\" the United States has no obligation to consult with Russia to confirm that its planned defenses do not cross this threshold. It may develop and deploy whatever defenses it chooses; Russia can then determine, for itself, whether those defenses affect its strategic nuclear forces and whether it thinks the threat to those forces justifies withdrawal from the treaty.", "Article V, paragraph 3 of New START also mentions ballistic missile defense interceptors. It states that the parties cannot convert ICBM launchers and SLBM launchers to launchers for missile defense interceptors and that they cannot convert launchers of missile defense interceptors to launchers for ICBMs and SLBMs. At the same time, the treaty makes it clear that the five ICBM silos at Vandenberg Air Force Base that have already been converted to carry missile defense interceptors are not affected by this prohibition. It states that \"this provision shall not apply to ICBM launchers that were converted prior to signature of this Treaty for placement of missile defense interceptors therein.\"", "This provision is designed to address Russian concerns about the U.S. ability to \"break out\" of the treaty by placing ICBMs in silos that had held missile defense interceptors or by converting ICBM silos to missile interceptor silos then quickly reversing that conversion to add offensive missiles to its forces with little warning. Russia began to express this concern after the United States converted the five ICBM silos at Vandenberg for missile defense interceptors. It initially sought to reverse this conversion, or at least to count the silos under the New START limits. The United States refused, but, in exchange for Russia accepting that the five converted silos would not count under New START, the United States agreed that it would not convert additional silos.", "The provision will also protect U.S. missile defense interceptors from the START inspection regime. If the parties were permitted to convert missile defense silos to ICBM silos, they would also have been able to visit and inspect those silos to confirm that they did not hold missiles limited by the treaty. The ban on such conversions means that this type of inspection is not only unnecessary, but also not permitted.", "The Obama Administration has stated on many occasions that the New START Treaty does not contain any provisions that limit the numbers or capabilities of current or planned U.S. ballistic missile defense systems. The ban on launcher conversion does not alter this conclusion because the United States has no plans to use any additional ICBM launchers or any SLBM launchers to hold missile defense interceptors. It is constructing new launchers for its missile defense systems. Some have questioned, however, whether the ban on silo conversion may limit missile defenses in the future, particularly if the United States wanted to respond to an emerging missile threat by quickly expanding its numbers of missile defense interceptors.", "General Jim Jones, President Obama's National Security Adviser during the negotiations, stated that this provision is a \"limit in theory, but not in reality.\" It is not just that the United States has no plans to convert ICBM silos to missile defense interceptor silos, it is that it would be quicker and less expensive for the United States to build new silos for missile defense interceptors than to remove the ICBMs and all their equipment, reconfigure the silo, and install all the equipment for the missile defense interceptors. Moreover, given that the missile defense interceptor launched from the central United States, where U.S. ICBM silos are located, would drop debris on U.S. territory, the United States might prefer to locate its missile defense interceptors in new launchers near the U.S. coast.", "General Patrick O'Reilly, then the Director of the Missile Defense Agency, also stated that his agency \"never had a plan to convert additional ICBM silos at Vandenberg and intends to hedge against increased BMDS [ballistic missile defense system] requirements by completing construction of Missile Field 2 at Fort Greely. Moreover, we determined that if more interceptors were to be added at Vandenberg AFB, it would be less expensive to build a new GBI [ground-based interceptor] missile field (which is not prohibited by the treaty).\" He went on to note that \"some time ago we examined the concept of launching missile defense interceptors from submarines and found it an unattractive and extremely expensive option.\" Putting missile defense interceptors in SLBM launchers would undermine the primary mission of the submarine, which is designed to patrol deeply and quietly to remain invulnerable to attack, by requiring it to remain in one place near the surface while it sought to track and engage attacking missiles."], "subsections": []}, {"section_title": "Conventional Long-Range Strike", "paragraphs": ["During their summit meeting in July 2009, Presidents Obama and Medvedev agreed that the New START Treaty would contain \"a provision on the impact of intercontinental ballistic missiles and submarine-launched ballistic missiles in a non-nuclear configuration on strategic stability.\" This statement, which is in the preamble to the treaty, simply states that the parties are \"mindful of the impact of conventionally armed ICBMs and SLBMs on strategic stability.\"", "During the negotiations on New START, Russia voiced concerns about U.S. plans to deploy conventional warheads on ballistic missiles that now carry nuclear warheads. Russian officials have argued that these weapons could upset stability for several reasons. First, even if Russia were not the target of an attack with these missiles, it might not know whether the missile carried a nuclear warhead or a conventional warhead, or whether it was headed toward a target in Russia. Moreover, ballistic missiles armed with conventional warheads could destroy significant targets in Russia and, therefore, they might provide the United States with the ability to attack such targets, with little warning, without resorting to nuclear weapons. Finally, some argued that the United States might replace the conventional warheads with nuclear warheads to exceed the limits in a treaty. ", "Russia initially sought to include a provision in New START that would ban the deployment of conventional warheads on strategic ballistic missiles. The United States rejected this proposal. It was considering this capability as a way to attack targets around the world promptly, and did not envision using these weapons against Russia. As a result, as the White House noted in its Fact Sheet on New START, \"the Treaty does not contain any constraints on ... current or planned United States long-range conventional strike capabilities.\" However, if the United States deployed conventional warheads on missiles that are covered by the limits in START, the warheads on these missiles would count under the treaty limit on deployed warheads. Because the United States expected to deploy very small numbers of these systems, this trade-off would not have a significant effect on U.S. nuclear capabilities. ", "Moreover, if the United States deployed conventional warheads on new types of long-range strike systems, these systems would not necessarily count under or be affected by the limits in New START. The United States would likely consider these to be a \"new type of strategic offensive arms.\" Under Article V, paragraph 2, Russia would have the right to raise its concerns about these weapons within the Bilateral Consultative Commission (BCC), but the United States would not have to accept Russia's interpretation or accede to any requests to count the systems under the treaty. The same procedures would apply if Russia were to develop new types of strategic offensive arms\u2014with either nuclear or conventional warheads. The United States could raise its concerns with these weapons in the BCC, but Russia would not have to accept a U.S. request to count these weapons under the treaty."], "subsections": []}]}, {"section_title": "U.S. and Russian Forces Under New START", "paragraphs": [], "subsections": [{"section_title": "U.S. Forces", "paragraphs": ["According to the 2010 Nuclear Posture Review (NPR), which was released by DOD on April 6, 2010, the United States planned to maintain a triad of ICBMs, SLBMs, and heavy bombers under New START. The 2010 NPR did not specify how many ICBMs would remain in the force, but indicated that each would be deployed with only one warhead. It also indicated that the United States would, initially at least, retain 14 Trident submarines. It might, however, reduce its fleet to 12 submarines after 2015. The NPR did not indicate whether the Trident submarines would continue to be deployed with 24 missiles on each submarine, or if the Navy would eliminate some of the launchers on operational submarines in accordance with the treaty's Ninth Agreed Statement. Finally, the NPR indicated that the United States would convert some of its 76 dual-capable B-52 bombers to a conventional-only role.", "The Obama Administration clarified its plans for U.S. forces under New START in the 1251 plan that it submitted to the Senate with the treaty documents on May 13, 2010. This plan indicated that the United States would eliminate at least 30 deployed ICBMs, retaining a force of up to 420 deployed launchers under the treaty limits. It would also retain 14 Trident submarines, but each submarine would contain only 20 launchers, and two of the submarines would be in overhaul at any time, so only 240 launchers would count under the limit on deployed launchers. In addition, the report indicated that the United States would retain up to 60 deployed bombers equipped for nuclear weapons, including all 18 B-2 bombers in the current force.", "This force would have included up to 720 deployed ICBMs, SLBMs, and heavy bombers, a number that exceeds the 700 deployed missiles and bombers permitted by the treaty. In a hearing before the Senate Armed Services Committee on June 17, 2010, Secretary of Defense Gates and Admiral Mullen, then Chairman of the Joint Chiefs of Staff, acknowledged that the United States would have to make a small number of further reductions, or convert a small number of additional systems to nondeployed status, to meet the treaty limits. However, they noted that because the United States would have seven years to reduce its forces to these limits, they saw no reason to identify a final force structure at that point. Secretary Gates noted that DOD was considering a number of options for the final force structure, and would make a decision on this force structure after considering the international security environment and Russia's force structure in the treaty's later years.", "The Obama Pentagon released its plans for the New START force structure in April 8, 2014. As was indicated in May 2010, this force will include 14 submarines with 20 launchers on each submarine. Because two submarines will be in overhaul at any time, these submarines will count as carrying 240 deployed launchers within a total of 280 deployed and nondeployed launchers. The force also calls for a reduction in the number of deployed ICBMs from 450 to 400, with the retention of all 50 empty launchers, for a total force of 450 deployed and nondeployed ICBM launchers. The Air Force will also count 4 ICBM test launchers as nondeployed launchers within the total. Finally, New START force will include 60 deployed bombers and 6 nondeployed bombers.", "Even before it determined the final force structure, the Pentagon had requested funding to pursue activities that would enable these reductions, regardless of the specific force structure decisions. For example, in the FY2014 budget, the Pentagon requested funding for an environmental assessment (EA) that would be needed before it could eliminate ICBM silos. Several Members of Congress objected to this study, arguing that it would allow the Administration to eliminate an ICBM squadron regardless of whether this turned out to be the preferred option for force reductions. Several Members strongly supported the retention of all 450 ICBM silos, even if a portion of them were nondeployed, with the missiles removed to meet the New START limit of 700 deployed launchers. ", "The Pentagon responded to this criticism by noting that the EA would not predetermine the outcome of the force structure decision. However, if it were not initiated by the end of 2013, it would not be completed in time to support reductions by 2018, if the Pentagon chose to pursue those reductions. In other words, even if the study were completed, the ICBM silos could remain in the force, but if the study was not begun in time, the ICBM silos could not be eliminated, even if that proved to be the preferred force structure option. In response to these concerns, Congress included a provision in the National Defense Authorization Act for 2014 ( H.R. 3304 , \u00a71056) that limited the Pentagon's ability to reduce U.S. forces under New START. Specifically, the legislation states that \"the Secretary of Defense may only use funds authorized to be appropriated by this Act or otherwise made available for fiscal year 2014 to carry out activities to prepare for such reductions.\" Further, the legislation states that only 50% of the funds authorized for the EA can be obligated or expended until the Secretary of Defense submits the required plan that describes preferred force structure option under New START. The Pentagon has now submitted the plan, but it is unclear whether the EA will proceed.", " Table 2 , below, contains an estimated force structure of the United States prior to New START's entry into force; the force structure as of February 5, 2018 (when the reductions were required to meet the treaty limits); and the New START force outlined by the Administration in April 2014. As these data demonstrate, the United States reached the reduced force level required by the treaty. Within these limits, the United States retains a triad of ICBMs, SLBMs, and heavy bombers. It has reduced the number of deployed nuclear-armed B-52 bombers by converting many to conventional missions. It has reduced the number of launchers on its Trident submarines and retains 400 Minuteman III missiles. An additional 54 Minuteman III launchers do not hold ICBMs and therefore do not count under the 700 limit for deployed launchers. As noted below, when two additional Trident submarines return to the fleet, the United States will have the treaty-permitted 700 deployed launchers and it will adjust the number of warheads on deployed SLBMs to meet the treaty limit of 1,550 warheads.", "The United States did not have to destroy many ICBM or SLBM launchers to reach the limits in New START. The treaty includes provisions that allowed the United States to exempt many of its existing nondeployed launchers, including 94 B-1 bombers, and 4 ballistic missile submarines that have been converted to carry cruise missiles, from treaty limits. Moreover, as it reduced its deployed forces, the United States did not have to destroy either ICBM or SLBM launchers; it could deactivate them so that they could no longer launch ballistic missiles. Instead of eliminating missiles and launchers, the United States reached the limits in New START by deploying its missiles with far fewer than the maximum number of warheads that each could be equipped to carry. The Air Force has completed the deactivation of 50 Minuteman III missiles that will be removed from the force under New START, and the Navy has completed the elimination of four launch tubes on all 14 of its Trident submarines."], "subsections": []}, {"section_title": "Russian Forces", "paragraphs": ["On February 5, 2018, when the treaty reductions were complete, Russia announced that it had reduced its forces to 1,444 warheads on 527 deployed ICBMs, SLBMs, and heavy bombers, within a total of 779 deployed and nondeployed launchers.", "During the implementation of New START, the number of warheads deployed on Russian missiles and bombers climbed above the New START limits, leading some to express concerns about Russia's intention to comply with the treaty. Others noted that this was a reflection of Russia's modernization program, as it deployed new multiple-warhead ballistic missiles in place of older single-warhead missiles, and waited until late in the implementation process to eliminate older multiple-warhead land-based missile. Russia also retired many of its older ballistic missile submarines, replacing them with several new Borey-class submarines; three of these have entered the force, and three more are under construction. This submarine is deployed with the new Bulava missile. The missile failed many of its early flight tests, and continues to experience some failed tests, although it has had more several successful tests since late 2010. ", " Table 3 , below, presents estimates of Russia's force structure in 2010, before New START entered into force, and potential forces that it might deploy under the New START Treaty. It does not contain an estimate of the current force structure, as the New START data only include aggregate totals across the force and provides no information about the current structure of this force. This table assumes that, under New START, Russia's new RS-24 missile would carry four warheads. However, according to accounts in the Russian press this missile will carry \"no fewer than 4\" warheads. If each of these missiles were to carry 6-7 warheads, Russia could retain the 1,550 warheads permitted by the treaty. Russia has announced plans to deploy a new heavy, liquid-fueled multiple-warhead missile to replace the SS-18, although this missile is not likely to enter the force until at least 2020. ", " Table 3 indicates that Russia may deploy fewer than the permitted number of deployed and nondeployed launchers under New START. This is evident in the data provided by the Russian Ministry of Foreign Affairs on February 5, 2018. Because it still had significant numbers of warheads on older missiles that it eliminated late in the implementation process, it was able to reach the New START limits. But, as is discussed below, observers disagree about whether Russia can remain at the New START limits through 2021."], "subsections": []}]}, {"section_title": "Ratification", "paragraphs": [], "subsections": [{"section_title": "U.S. Ratification Process", "paragraphs": ["The Obama Administration submitted the New START Treaty to the Senate on May 13, 2010. The treaty package included the treaty text, the Protocol, the Annexes, the Article-by-Article analysis prepared by the Administration, and the 1251 report on future plans and budgets for U.S. nuclear weapons required by Congress. It also included the text of the unilateral statements made by the United States and Russia when they signed the treaty. The Senate offered its advice and consent to the ratification of the treaty by voting on a Resolution of Ratification. The treaty's approval requires a vote of two-thirds of the Senate, or 67 Senators.", "The Senate Foreign Relations Committee held 12 hearings on the treaty. These began in April 2009, with testimony from former Secretaries of Defense William Perry and James Schlesinger. In total, the committee received testimony from more than 20 witnesses from both inside and outside the Obama Administration. It received testimony from current senior officials from the State Department, the Defense Department, and the Department of Energy, and from several former officials from past Administrations. The committee completed its hearing process in mid-July, after receiving a National Intelligence Estimate on the future of Russian forces and a report on the verifiability of the treaty.", "The Senate Armed Services Committee held a total of eight hearings and briefings on the treaty. The Armed Services Committee heard testimony from Secretary of State Clinton, Secretary of Defense Gates, Secretary of Energy Chu, and Admiral Mullen on June 17, 2010. It also received testimony and briefings from other Administration officials and from experts from outside the government. The Intelligence Committee also held a closed hearing to discuss U.S. monitoring capabilities and the verifiability of the treaty.", "The Senate Foreign Relations Committee held a business meeting to mark up the Resolution of Ratification for New START on September 16, 2010. The committee began its consideration with a draft proposed by Senator Lugar, then addressed a number of amendments proposed by members of the committee. Both the Lugar draft and many of the proposed amendments addressed the members' concerns with U.S. missile defense programs, U.S. conventional prompt global strike capabilities, monitoring and verification, and Russian nonstrategic nuclear weapons. Most of these amendments were defeated, although the committee did modify and incorporate some into the resolution.", "The Senate Foreign Relations Committee approved the Resolution of Ratification by a vote of 14-4, and sent the resolution to the full Senate. The Senate did not address the treaty before the November elections. The Administration pressed the Senate to debate the treaty during the lame-duck session of Congress in December 2010. Many Senators supported this goal. Some, however, suggested that the Senate would not have time to debate the treaty during the lame-duck session, and indicated that they preferred the Senate wait until 2011 to debate the treaty. ", "The Senate began the debate on New START on December 16, 2010. During the debate, some Senators proposed amendments to the treaty, both to strike language related to ballistic missile defenses and to add language related to nonstrategic nuclear weapons. The treaty's supporters argued that these amendments would \"kill\" the treaty because they would require Russian approval and could lead to the reopening of negotiations on a wide range of issues addressed in the treaty. The Senate rejected these amendments, but it did accept amendments to the Resolution of Ratification that underlined the U.S. commitment to modernizing its nuclear weapons infrastructure and its commitment to deploying ballistic missile defenses. In addition, President Obama sent a letter to the Senators confirming his view that the New START Treaty places \"no limitations on the development or deployment of our missile defense programs,\" highlighting his commitment to proceed with the deployment of all four phases of the missile defense system planned for Europe, and noting that the continued development and deployment of U.S. missile defenses would not threaten the strategic balance with Russia and would not \"constitute the basis for questioning the effectiveness and viability of the New START Treaty.\"", "The Senate gave its advice and consent to ratification of New START on December 22, 2010, approving the Resolution of Ratification by a vote of 71-26. President Obama signed the instruments of ratification in early February 2011."], "subsections": []}, {"section_title": "Russian Ratification Process", "paragraphs": ["Russia's President Medvedev submitted the New START Treaty to the Russian Parliament on May 28, 2010. Both houses of the Russian Parliament, the Duma and the Federation Council, will vote on the treaty, with a majority vote required to approve the law on ratification. Russia's president said he hoped that the two sides could \"synchronize\" their ratification, voting on the treaty at about the same time. This would avoid the circumstances that existed on the second START Treaty in the late 1990s, when the U.S. Senate gave its consent to ratification of START II in January 1996, but by the time the Russian Parliament voted in 2000, the parties had negotiated a Protocol to the Treaty that also required ratification. The Senate never voted on the new version of the treaty, and START II never entered into force. Most experts agreed that President Medvedev should be able to win approval for the treaty in the Russian Parliament with little difficulty.", "The Foreign Affairs Committee of the Russian Duma had initially supported the treaty. However, in early November 2010, Konstantin Kosachev, the head of the committee, indicated that the committee would reconsider the treaty. He indicated that this was in response to both the delay in the U.S. Senate's consideration of the treaty and the conditions and understandings that the Senate Foreign Relations Committee included in the U.S. Resolution of Ratification. Nevertheless, after the Senate voted on the treaty on December 22, members of the Duma called for the prompt ratification of New START. Reports indicated they received the documents from the Senate on December 23, and they held their first vote on the Draft Law on Ratification by Friday, December 24. The Duma then crafted amendments and declarations to the Federal Law on Ratification, and, after two more votes, approved the treaty by a vote of 350-96 (with one abstention) on January 25, 2011. ", "The upper chamber of Russia's parliament, the Federation Council, also voted on the ratification of the treaty. Sergei Mironov, the Speaker of the Federation Council, indicated that the vote would take place after the vote in the Duma. This occurred on January 26, 2011, when the Federation Council unanimously approved the ratification of the treaty. President Medvedev signed the instruments of ratification on January 28, 2011. Russia's Federal Law on Ratification contains a number of declarations and understandings that highlight the Duma and Federation Council's concerns with the New START Treaty. These do not alter the text of the treaty and, therefore, did not require U.S. consent or agreement. Many of the provisions in the law call on Russia's leadership to pursue funding for the modernization and sustainment of Russia's strategic nuclear forces. They also reiterate Russia's view that the preamble to the treaty, and its reference to the relationship between offensive and defense forces, is an integral part of the treaty. The law does not indicate that this language imposes any restrictions on the United States. It does, however, reiterate that Russia has a right to withdraw from the treaty, and could do so if the United States deploys defenses that undermine Russia's strategic deterrent. In addition, the law indicates that new kinds of strategic offensive weapons, such as the potential U.S. conventional prompt global strike weapons, should count under the treaty limits. The law indicates that the parties should meet in the BCC and agree on how to count these systems before either party deploys the system. This differs from the U.S. interpretation because the United States has indicated that it could deploy such systems before completing the discussions in the BCC. These differing interpretations did not delay the entry into force of the treaty, but could raise questions in the future, if the United States deploys a PGS system that it does not consider to count under the treaty limits."], "subsections": []}, {"section_title": "Entry into Force and Implementation", "paragraphs": ["Secretary Clinton and Foreign Minister Lavrov exchanged the instruments of ratification for the New START Treaty on February 5, 2011. This act brought the treaty into force and started the clock on early activities outlined in the treaty. For example, the United States and Russia conducted their initial data exchange, 45 days after the treaty entered into force, on March 22, 2011, within 45 days of entry into force. They also had the right to begin on-site inspection activities in early April, 60 days after the treaty entered into force. Reports indicate that this process began in the United States with the display of a B-1 bomber and in Russia with the display of Russia's new RS-24 missile."], "subsections": [{"section_title": "Consultations", "paragraphs": ["The United States and Russia also met in Geneva, from March 28 through April 8, 2011, in the first meeting of the treaty's Bilateral Consultative Commission. The representatives issued two joint statements at the conclusion of the meeting that addressed procedures that would be used during the on-site inspection process. The parties met for the second session of the BCC from October 19 to November 2, 2011.", "The third meeting of the BCC occurred in late January 2012. During that meeting, the parties signed several statements on the sharing telemetry on missile test launches. They agreed that they would exchange telemetric data on one ICBM or SLBM launch that had occurred between February 5, 2011, when the treaty entered into force, and the end of 2011. They also agreed on when they would begin and end the sharing of telemetric data during the flight test of an ICBM or SLBM. They also agreed on the procedures they would use when demonstrating the recording media and playback equipment used when providing telemetric information.", "The BCC met for a fourth time in September 2012. During this meeting, the two sides agreed on the use of tamper detection equipment during on-site inspections. The BCC met again in February 2013. At this meeting, the two sides signed an agreement indicating that they would exchange telemetry on the launch of ICBM or one SLBM during the time between January 1 and December 31, 2012. The BCC met again in January 2014, with the two sides, again, agreeing that they would exchange telemetric information on the launch of one ICBM or SLBM from 2013. They also agreed to use an additional measuring device during reentry vehicle inspections at SSBN bases. In October 2016, the parties met in the 12 th session of the BCC; the State Department did not provide any public details about the substance of the meeting. The 13 th session of the BCC met from late March to mid-April 2017; the State Department, again, did not offer any details about the substance of the meeting.", "According to a State Department Fact Sheet released at the conclusion of the reduction period, on February 5, 2018, the two sides conducted a total of \"14 meetings of the Treaty's Bilateral Consultative Commission (twice each Treaty year) to discuss issues related to implementation, with no interruption to the Parties' work during global crises causing friction elsewhere in the bilateral relationship.\" Two sessions also occurred in 2018."], "subsections": []}, {"section_title": "Reductions", "paragraphs": ["In a data exchange released in February 2011, with numbers drawn from the treaty's initial data exchange, the U.S. State Department noted that the United States had 1,800 warheads on 882 deployed ICBMs, deployed SLBMs, and deployed heavy bombers. These deployed forces were within a total of 1,124 deployed and nondeployed launchers of ICBMs and SLBMs, and deployed in nondeployed heavy bombers. By September 2011, the United States had reduced these numbers to 1,790 warheads on 882 deployed ICBMs, deployed SLBMs, and deployed heavy bombers. The total number of deployed and nondeployed launchers had declined to 1,043. The reduction in 81 nondeployed launchers likely reflects the conversion or elimination of some of the \"phantom\" launchers that remained in the U.S. force but no longer carried nuclear warheads. In the most recent exchange, with data current as of April 1, 2014, the United States indicated that it had 778 deployed ICBMs, deployed SLBMs, and deployed heavy bombers, within a total of 952 deployed and nondeployed launchers. It also indicated that these deployed forces carry a total of 1,585 warheads. ", "In data released on January 1, 2015, from the exchange that occurred on September 1, 2014, the United States had 794 deployed ICBMs, deployed SLBMs, and deployed heavy bombers, within a total of 912 deployed and nondeployed launchers. It also indicated that these deployed forces carry a total of 1,642 warheads. The increase in deployed forces reported in this exchange likely reflected the return to service of one SSBN, after it completed its overhaul process. The numbers declined again, by the time of the October 2015 exchange, both because another SSBN has begun its overhaul and because the U.S. Air Force has completed the \"de-MIRVing\" of the ICBM force. Each Minuteman III missile now carries a single warhead.", "In addition, in September 2015, the Air Force announced that it had begun to convert a portion of the B-52H bomber force from nuclear to conventional-only capability, thus removing 30 operational bombers from accountability under New START. While the Air Force has not provided any public statements about the changes made to the B-52 bombers, these changes are likely consistent with the objective of rendering the bombers unable to carry or launch nuclear-armed cruise missiles.", "According to the State Department, as of September 1, 2016, the United States had a force of 1,367 warheads on 681 deployed ICBMs, deployed SLBMs, and deployed heavy bombers, within a total of 848 deployed and nondeployed launchers. This included 416 deployed ICBM launchers, with a total of 454 deployed and nondeployed ICBM launchers; 209 deployed SLBM launchers within a total of 320 deployed and nondeployed launchers; 10 deployed B-2 bombers, within a total of 20 deployed and nondeployed B-2 bombers; and 46 deployed B-52 bombers, within a total of 54 deployed and nondeployed B-52 bombers. These data show that the United States has continued to convert B-52 bombers from nuclear to conventional-only capability; to remove ICBMs from operational launchers, on the path to 400 deployed ICBM launchers; and to reduce the number of launchers from 24 to 20 on each ballistic missile submarine. The data released in April 2017, from the March 1, 2017, data exchange, show that the United States counted 1,411 warheads on 673 deployed launchers, within a total of 820 deployed and nondeployed launchers. The increase in warheads possibly reflects the return to service of ballistic missile submarines, following the elimination of the four excess launchers. ", "The data exchange from September 2017, which shows the U.S. aggregate numbers of warheads and launchers, indicates that United States has met the New START limits. It now has 1,393 warheads on 660 deployed launchers, within a total of 800 deployed and nondeployed launchers.", "Some analysts questioned whether the U.S. reductions through September 2016, which placed the United States below the New START limits of 1,550 warheads on 700 deployed launchers, indicated that the Obama Administration had decided to reduce U.S. nuclear forces, unilaterally, to levels below the New START limits. However, these reductions were temporary, and the number of deployed launchers and warheads has now risen and should reach the levels permitted by the treaty when implementation is complete in 2018. For example, while the United States was reducing the number of launch tubes on deployed submarines, it removed them from deployment and removed the missiles from the launchers. These launchers and warheads did not count in the deployed force. Because each submarine now counts as 20 launchers, the September 2017 total of 660 deployed launchers can be read to indicate that two submarines, with 40 launchers, were still in nondeployed status at the time. ", "The data exchanges from 2018 and 2019 show that the United States continues to have fewer than the permitted number of deployed missiles and warheads, as it continues to remove systems from deployment for short periods of time. In September 2018, it reported that it had 1,398 warheads deployed on 659 deployed ICBMs, deployed SLBMs, and deployed heavy bombers, within a total of 800 deployed and nondeployed launchers for missiles and bombers. On March 1, 2019, it reported that it had 1,365 warheads deployed on 656 deployed ICBMs, deployed SLBMs, and deployed heavy bombers, within a total of 800 deployed and nondeployed launchers for missiles and bombers.", "The State Department fact sheets also include the summary of Russia's force data. In February 2011, Russia reported that it had 1,537 warheads on 521 deployed ICBMs, deployed SLBMs, and deployed heavy bombers. Russia also reported a total of 865 deployed and nondeployed delivery vehicles. At the time of this report, analysts expressed surprise that Russian forces were already below the treaty limits in New START when the treaty entered into force. Some argued that this indicated the United States did not have to sign the treaty to bring about reductions in Russian forces, and that the treaty represented unilateral concessions by the United States. Others noted that the number of deployed warheads possibly reflected the ongoing retirement of older Russian missiles and could change in the future as Russia deployed new, multiple-warhead land-based missiles. In September 2011, in the second treaty data exchange, Russia reported that it had 1,566 deployed warheads on 516 deployed ICBMs, deployed SLBMs, and deployed heavy bombers. Hence, although the number of deployed delivery vehicles declined, the number of warheads increased by a small amount, and then exceeded the treaty limit of 1,550 warheads. Because the data provide no details of the force composition, this increase could have either been due to the deployment of the new MIRVed RS-24 missiles, which carry more warheads than the single-warhead SS-25 missile they replace, or due to variations in the numbers of warheads carried on deployed SLBMs. The number of deployed and nondeployed delivery vehicles had increased slightly, to 871. This could reflect the retirement of some of Russia's older missiles, which would move their delivery vehicles from the deployed to nondeployed column in the data.", "In the data exchange from April 1, 2014, Russia reported that it had 498 deployed ICBMs, deployed SLBMs, and deployed heavy bombers, within a total of 906 deployed and nondeployed launchers. It also indicated that these deployed forces carry a total of 1,512 warheads. In the data exchanged in September 2014, and released in January 2015, Russia reported a force of 528 deployed ICBMs, deployed SLBMs, and deployed heavy bombers, within a total of 911 deployed and nondeployed launchers. It also indicated that these deployed forces carried a total of 1,643 warheads. Within these totals, Russia continued to deploy some new ICBMs and SLBMs while retiring older systems. However, as all categories had increased since the last data exchange, new deployments seemed to be outpacing retirements. This continued over the past year, as, in March 2016\u2014when Russia reported that it had 1,735 warheads on 521 deployed ICBMs, deployed SLBMs, and deployed heavy bombers, within a total of 856 deployed and nondeployed launchers. The pattern shifted a little in September 2016\u2014when Russia reported that it had 1,796 warheads on 508 deployed ICBMs, deployed SLBMs, and deployed heavy bombers, within a total of 847 deployed and nondeployed launchers\u2014as the number of warheads continues to rise while the number of deployed and nondeployed launchers has declined. ", "The data exchanged in March 2017 show that Russia had begun to reduce the number of deployed warheads while increasing the number of deployed launchers\u2014at that point it counted 1,765 warheads on 523 deployed launchers, within a total of 816 deployed and nondeployed launchers. The September 2017 data reinforce this trend. Russia reported a force 1,561 warheads, only 11 over the limit of 1,550 deployed warheads, on 503 deployed launchers. Hence, Russia appeared to be reducing older systems with larger numbers of warheads, while still deploying new missiles with fewer warheads, as it headed toward the New START limits by February 2018. On February 5, 2018, Russia reported that it had met the New START limits, with 1,444 warheads on 527 deployed ICBMs, SLBMs, and heavy bombers, within a total of 779 deployed and nondeployed launchers.", "The data exchanges from 2018 and 2019 show that the Russia continues to comply with the New START limits. In September 2018, it reported that it had 1,420 warheads deployed on 517 deployed ICBMs, deployed SLBMs, and deployed heavy bombers, within a total of 775 deployed and nondeployed launchers for missiles and bombers. On March 1, 2019, it reported that it had 1,461 warheads deployed on 524 deployed ICBMs, deployed SLBMs, and deployed heavy bombers, within a total of 760 deployed and nondeployed launchers for missiles and bombers.", "Some analysts questioned whether the increase in Russian warheads reported in March 2016 and September 2016 indicated that Russia would eventually withdraw from New START without reducing to its limit of 1,550 deployed warheads. Others, however, noted that Russia did not need to meet the limits until February 2018, so the warhead levels in 2016 should not be of concern. They also noted that Russia continues to deploy new systems, like a third new submarine and new multiple-warhead land-based missiles, at a faster pace than it has retired older systems. Hence, as Russia retired older multiple-warhead missiles before the deadline, it succeeded in reducing its forces below the limit of 1,550 warheads.", "Some have also suggested that Russia's continuing deployment of new missiles systems, and its plans for modernization through the next 5-10 years, indicate that Russia may be prepared to exceed the limits under New START, either before or shortly after the treaty's 2021 expiration. They have suggested that the United States respond to Russia's plans with its own plans to modernize and expand its nuclear forces. Others, however, while agreeing with assessments of Russia's ability to expand its nuclear forces, argue that the United States should respond by pressing Russia to extend New START through 2026 so that limits on Russian forces remain in place."], "subsections": []}, {"section_title": "Monitoring, Verification, and Compliance", "paragraphs": ["The United States has not raised any questions, in public, about Russia's compliance with the New START Treaty. In the January 2016 version of the Annual Report on Implementation of the New START Treaty, the State Department reported that \"the United States certifies the Russian Federation to be in compliance with the terms of the New START Treaty.\" The report indicated that the United States \"has raised implementation-related questions with the Russian Federation through diplomatic channels and in the context of the Bilateral Consultative Commission (BCC).\" ", "Russia has also raised questions about U.S. implementation during BCC sessions. In its statement released on February 5, 2018, the Russian Ministry of Foreign Affairs indicated that it had concerns with the conversion procedures the United States had used to eliminate some missile launchers and B-52 bombers from its force structure. It noted that Russia could not verify that the conversions had been done in a way that permanently \"rules out the use of Trident II submarine-launched ballistic submarines and nuclear weapons of heavy bombers.\" The Protocol to New START states the parties must demonstrate their elimination procedures if there is a question about whether the method meets the treaty terms, but it does not allow for the other party to object and require changes in the procedures. As a result, although the United States has insisted that its procedures are sufficient, Russia continues to question this conclusion. Russian officials have indicated that the United States should address Russia's concerns with these procedures before the two parties agree to extend New START before it expires in 2021.", "In a joint briefing provided by the United States and Russia in October 2011, the parties that, in the first six months of treaty implementation, they had exchanged almost 1,500 notifications and had conducted demonstrations of telemetric information playback equipment. By the end of the first year of implementation, on February 5, 2012, the parties had exchanged over 1,800 notifications. They had also conducted three required exhibitions, with Russia exhibiting the RS-24 missile and its launcher, and the United States exhibiting the B-1 and B-2 bombers. During the year, both parties had also conducted all 18 of the permitted inspections at facilities in the other nation. These inspections occurred at ICBM, SLBM, and heavy bomber bases; storage facilities; conversion and elimination facilities; and test ranges. In late November 2012, the State Department reported that the United States and Russia had each, as of November 26, conducted 15 of the 18 permitted inspections under the treaty. Both nations also completed their full complement of 18 inspections before the end of the second year of implementation, in February 2013. ", "According to the State Department, the United States and Russia have both completed all 18 of their permitted Type 1 and Type 2 inspections during each of the eight full years of treaty implementation. They continued to conduct these inspections in spite of growing tensions after Russia's annexation of Crimea and aggression against Ukraine in early 2014. According to the State Department, the two sides also exchanged 17,516 notifications by early April 2019. These notifications report on the location, movement, and disposition of strategic offensive arms. They have also \"completed 14 exhibitions to demonstrate distinguishing features and technical characteristics of new types of strategic offensive arms or demonstrate the results of a conversion of a strategic offensive arm subject to New START.\" These monitoring activities will continue through 2021, or 2026 if New START is extended. "], "subsections": []}]}]}, {"section_title": "Issues for Congress", "paragraphs": [], "subsections": [{"section_title": "New START and Strategic Stability", "paragraphs": ["When the Obama Administration released the 2010 Nuclear Posture Review, it indicated that the United States would retain a triad of ICBMs, SLBMs, and heavy bombers under the New START Treaty. The NPR indicates that this force structure supports strategic stability because it allows the United States to maintain an \"assured second-strike capability\" with warheads on survivable ballistic missile submarines and allows the United States to retain \"sufficient force structure in each leg to ... hedge effectively ... if necessary due to unexpected technological problems or operational vulnerabilities.\" The Trump Administration, in the 2018 NPR, also reaffirmed the support for the nuclear triad. Although it offered a more detailed rationale for the maintenance of a triad, the underlying themes of strengthening deterrence and supporting stability were part of the discussion.", "Obama Administration officials also indicated that New START promoted strategic stability by \"discounting\" the weapons on heavy bombers. As President Reagan argued during his commencement address at Eureka College in 1982, ballistic missiles are the \"most destabilizing nuclear systems.\" As a result, in his START proposals, President Reagan sought deep reductions in ballistic missile warheads, but lesser reductions in the weapons on heavy bombers. The counting rules in New START reflect this logic. Because bomber weapons would take hours or days to reach their targets, and because they could be recalled after they were launched, they pose less of a threat to strategic stability than do ballistic missiles. As a result, some argue that, even if the United States and Russia retain hundreds of bomber weapons that do not count against the treaty limits, the reductions required in ballistic missile warheads will enhance strategic stability.", "Some have also noted that New START may strengthen strategic stability from the Russian perspective by removing the specific limits and restrictions on mobile ICBMs. Russia does not deploy many submarines at sea, and, therefore, lacks an assured second-strike capability on that leg of its triad. Instead, it has sought to improve the survivability of its forces by deploying ICBMs on mobile launchers. Under START, the United States sought to restrict these systems because it feared it would not be able to count them in peacetime and target them in wartime. In the current environment, concerns about wartime targeting played less of a role in the negotiations. Consequently, instead of limiting their numbers and restricting their operations, New START seeks to provide transparency and openness, so the United States can be confident in its ability to count these weapons in peacetime even though it might not be able to attack them during a conflict.", "Critics of the New START Treaty have questioned whether it serves U.S. security interests even if it did promote strategic stability. Some argued, during the negotiations, that the United States did not need to negotiate a new treaty to maintain its own triad, as this was possible with or without arms control. They also argued that the United States did not need to reduce its forces to bring about reductions in Russia's forces, as Russia would reduce its forces over the next decade as it retired aging systems, even in the absence of a new arms control agreement. Moreover, they questioned whether arms control should even be a part of the U.S.-Russian relationship, as arms control is a symbol of a Cold War, antagonistic relationship between the two nations. They believe that the United States and Russia should not measure their relationship with each other using Cold War-era measures like strategic stability and survivable warheads.", "This last argument has faded as the U.S.-Russian relationship has changed over the past decade. Few now argue that arms control is irrelevant in the absence of an antagonistic relationship. Instead, they dispute the value of arms control precisely because the major-power rivalry has returned and the United States and Russia now have a more antagonistic relationship. They note that this change has occurred in spite of the presence of New START, and, therefore, is evidence of the failure of arms control to either support or strengthen strategic stability. Moreover, they note that New START did not include any limits on Russian shorter-range nonstrategic nuclear weapons, and, therefore, failed to capture the full scope of threats that Russia presents to the United States and its allies."], "subsections": []}, {"section_title": "Monitoring and Verification in New START", "paragraphs": ["Monitoring and verification were among the central concerns addressed in the Senate committees during their review of the New START Treaty. The cooperative monitoring measures in the treaty received special scrutiny, as many observers of the arms control process specifically measured the value of the monitoring and verification regime in the original START Treaty by its widespread use of notifications, on-site inspections, and other cooperative measures. ", "Some critics of New START questioned whether the monitoring provisions in the new treaty were sufficient to provide the United States with enough information to either confirm Russian compliance with the treaty or to detect efforts to violate its terms. They pointed to differences between the verification regime in the original START Treaty and those in New START to argue that the new verification regime is less robust than the old regime. They noted that the United States would no longer maintain a monitoring presence outside the Votkinsk facility where Russia assembles its mobile ICBMs, which, they argued, could weaken the U.S. ability to count these missiles as they entered Russia's forces. They also noted that the United States and Russia would no longer exchange telemetry data on all their ballistic missile flight tests, which, over time, could lessen the U.S. ability to understand and evaluate the capabilities of Russian ballistic missiles.", "The Obama Administration and others who supported the new treaty argued that the verification regime in New START would be more than sufficient to provide the United States with confidence in Russia's compliance with the treaty. They acknowledged that the regime is different from the regime in the original START Treaty, but noted that this was, in part, due to improvements in the relationship between Russia and the United States and differences between the limits and restrictions in the two treaties. They argued that the monitoring regime in New START was streamlined, both to reduce its costs and to ease the disruptions caused by monitoring for U.S. and Russian military forces. They also noted that it relied on as much or more cooperation between the two parties, which would continue to build confidence and reduce suspicions. ", "Moreover, many in the Obama Administration noted that the United States had not had any opportunity to monitor Russian forces on Russian territory since the original treaty expired in December 2009. They argued that continuing delays in Senate consideration of New START could further reduce U.S. and Russian confidence in their knowledge of each other's forces, leading to worst-case assessments and possible instabilities. They further reminded those who contend that the verification regime in New START is less robust than the regime in old START that the absence of a treaty would have meant the absence of any monitoring and verification regime. The United States did not have the option of returning the regime of the original START Treaty; nor should it have wanted to do so since the new treaty has different limits and restrictions than the old treaty. Many U.S. officials, including Admiral Mullen and General Chilton, included their concerns about the absence of monitoring in their appeals for the prompt ratification of the New START Treaty.", "Questions about the monitoring and verification regime in New START go beyond concerns about the specific monitoring mechanisms and the U.S. ability to confirm Russian compliance with individual limits in the treaty. Most experts agree that neither party can be absolutely certain that the other is in perfect compliance with all the limits and restrictions in the treaty. This is due, in some cases, to ambiguities in the treaty language and varying interpretations of the treaty requirements. It is also due to the fact that both sides may have gaps in their knowledge about the details of the other side's forces and activities. These uncertainties do not, by themselves, indicate that the parties should not ratify and implement the treaty. The broader question often asked by experts on treaty monitoring and verification is whether the parties, in general, and the United States, in particular, will have high confidence in Russia's compliance with the treaty, and, in those cases when compliance concerns may come up, whether the United States will be able to detect evidence of potential violations that might undermine U.S. security with enough warning to respond and adjust U.S. forces to offset those security concerns.", "The Obama Administration indicated, in documents submitted to the Senate in July 2010, that the New START Treaty met this standard. The Administration concluded that the benefits to Russia of cheating would be minimal, as the United States, by maintaining a triad of ICBMs, SLBMs, and bombers, would be able to respond to any attempt to shift the strategic balance by adding significant numbers of warheads to its own forces. Moreover, if Russia were to cheat to any significant degree, it would undermine its relationship with the United States and interfere with any possible future arms control agreements. Therefore, in a letter sent to the Senate Foreign Relations Committee in September 2010, Secretary of Defense Gates concluded that Russia would not be able to achieve \"militarily significant cheating\" under the New START Treaty.", "A review of the verification regime in New START, and summary of some of the differences between the verification regime in the original START Treaty and the regime in New START can be found in CRS Report R41201, Monitoring and Verification in Arms Control ."], "subsections": []}, {"section_title": "New START and Ballistic Missile Defenses", "paragraphs": ["As was noted above, during the debate over New START the Obama Administration testified repeatedly that the New START Treaty imposes no limits on current or planned ballistic missile defense programs in the United States. Some critics have claimed, however, that the United States might impose those limits itself, to ensure that Russia does not withdraw from New START, as it said it might do in the unilateral statement it released when it signed the treaty.", "Officials from the Obama Administration argued that this concern was unfounded. They noted that the Soviet Union issued a similar statement when it signed the original START Treaty, threatening to withdraw if the United States withdrew from the 1972 Anti-ballistic Missile (ABM Treaty). Yet, when the United States withdrew from the ABM Treaty in 2002, Russia not only did not withdraw from START, it continued to participate in negotiations on the 2002 Strategic Offensive Reductions Treaty. Moreover, in the 1990s, when the United States might have altered its missile defense plans in response to the Soviet letter, the United States actually expanded its missile defense activities and increased spending on missile defense programs. As a result, there is little reason, based on historical data, to expect the United States to restrain its missile defense programs. Moreover, officials from the Obama Administration have highlighted that the Ballistic Missile Defense Review, the Nuclear Posture Review, and the 2011 budget all offer strong support for continuing U.S. missile defense programs.", "Some critics have also claimed that Russia might seek, and the United States might agree to, new limits on U.S. missile defense capabilities in the Bilateral Consultative Commission established by the treaty. According to the Protocol to New START, this commission is designed \"to promote the implementation of the provisions of the Treaty.\" The Protocol indicates that the United States and Russia will meet in the commission to \"resolve questions relating to compliance with the obligations assumed by the Parties,\" agree on \"additional measures as may be necessary to improve the viability and effectiveness of the Treaty,\" and \"discuss other issues raised by either Party.\" Some have claimed that because this agenda is somewhat open-ended, Russia may raise its concerns about U.S. missile defenses in the commission and propose limits on those systems. ", "The Obama Administration insisted that the parties could not, and would not use the BCC to negotiate new limits on ballistic missile defenses or any other elements of the U.S. strategic arsenal. In a fact sheet that accompanies the treaty, the State Department has indicated that the parties would use the BCC \"to reach agreement on changes in the Protocol to the Treaty, including its Annexes, that do not affect substantive rights or obligations. The BCC may in no way make changes that would affect the substantive rights and obligations contained in the New START Treaty.\" The parties may use the BCC to \"agree upon such additional measures as may be necessary to improve the viability and effectiveness of the Treaty\" but these measures would address concerns that came up while implementing the existing limits and restrictions in the treaty. They would not be able to impose new limits or restrictions without amending the treaty, and any amendment to the treaty would be subject to the same ratification process as the treaty itself. The Senate would have to offer its advice and consent.", "Although the Obama Administration pursued discussions with Russia on missile defense issues for several years, it never accepted any limitations on U.S. missile defense programs and insisted, repeatedly, that U.S. missile defense programs were not designed or capable of undermining Russia's ballistic missile defenses. Russia, however, continued to question U.S. intentions and press for limits on ballistic missile defenses. It has insisted that any negotiations on further reductions in nuclear weapons include discussions about limits on ballistic missile defenses.", "Congress remains concerned about the possibility that the United States might accept limits on missile defenses in exchange for limits on offensive nuclear forces. Senator Barrasso raised this issue in a hearing before the Senate Foreign Relations Committee on September 18, 2018. He asked officials from the State Department and Defense Department to assure him that \"in any arms control discussions with Russia for which you're responsible that the United States will not agree to limiting our own missile defense programs.\" Both Under Secretary of State Andrea Thompson and Under Secretary of Defense David Trachtenberg provided those assurances."], "subsections": []}, {"section_title": "Modernization", "paragraphs": ["The New START Treaty does not limit or restrict the ability of the United States or Russia to modernize strategic offensive nuclear forces. It specifically states, in Article V, paragraph 1, that, \"Subject to the provisions of this Treaty, modernization and replacement of strategic offensive arms may be carried out.\" Both nations are currently modernizing their forces and replacing aging missiles, submarines, and bombers.", "Moreover, while some Members of the Senate insisted that the Obama Administration commit to modernizing the U.S. nuclear arsenal before voting in support of the treaty, many have also indicated that their continuing support for the modernization programs is linked to ongoing implementation of New START. Several Senators emphasized this linkage during a hearing in the Senate Foreign Relations Committee in September 2018. Senator Menendez noted that \"bipartisan support for nuclear modernization is tied to maintaining an arms-control process that controls and seeks to reduce Russian nuclear forces.\" Senator Corker pointed out that, when the Senate gave its consent to the ratification of New START, \"there was no doubt\" about the \"tie between the two.\" He stated that \"the essence of this is that the modernization piece, and the reduction in warheads piece go hand in hand.\""], "subsections": [{"section_title": "U.S. Modernization", "paragraphs": ["The United States is currently recapitalizing all three legs of its nuclear triad, with replacements planned for its bombers, air-delivered cruise missiles, land-based ballistic missiles, and ballistic missile submarines over the next 20 years. It is also pursuing life extension programs for many of the warheads in the U.S. stockpile, to ensure that the weapons remain safe, secure, and effective. The Obama Administration outlined much of this modernization program in a report, known as the 1251 Report, mandated by Congress in the FY2010 Defense Authorization Act ( P.L. 111-84 , \u00a71251). This provision required the Administration to submit a report to Congress when it submitted the New START Treaty to the Senate that described how it planned to \"enhance the safety, security, and reliability of the nuclear weapons stockpile of the United States; modernize the nuclear weapons complex; and maintain the delivery platforms for nuclear weapons.\" In this 1251 report, the Administration stated that the United States planned to spend $180 billion over the next 10 years to meet these objectives, with $80 billion allocated to the U.S. nuclear weapons complex and nuclear warheads and $100 billion allocated to the Navy and Air Force for the maintenance and modernization of their delivery systems. The program has expanded over the years, and, although cost estimates vary, the Congressional Budget Office has estimated that the United States is likely to spend around $350 billion over 10 years and $1.2 trillion over 30 years to modernize its nuclear arsenal. In the 2018 Nuclear Posture Review, the Trump Administration reaffirmed its support for the continuing modernization of the U.S. nuclear triad, advocating for the completion of all the programs initiated under the Obama Administration, while adding two new systems to the plan.", "During the debate over New START's ratification, some Members of Congress and analysts outside government questioned whether the Obama Administration was sufficiently committed to modernizing and maintaining its strategic nuclear forces, nuclear weapons complex, and nuclear warheads. Some also questioned whether the funding in the program would be sufficient to maintain and sustain the U.S. nuclear arsenal. Some argued that the totals did not add enough above the previously planned program to go far in expanding the U.S. capability to maintain and modernize its forces. Others questioned whether the Administration would sustain its commitment for more than a year or two, particularly in an era of tight defense budgets. These concerns grew as the fiscal constraints imposed through the Budget Control Act in 2011 reduced the resources available for modernization in the nuclear enterprise and have led to delays in some programs.", "Others, however, argued that the Administration's budget for the nuclear weapons complex in FY2011 and the added funding outlined in the 1251 report demonstrated a strong commitment to recapitalizing the U.S. nuclear weapons complex, maintaining nuclear warheads, and maintaining and modernizing the delivery vehicles. The Administration added nearly 10%, or over $700 million, to the DOE budget for nuclear weapons in FY2011. Ambassador Linton Brooks, who had served as the Director of the National Nuclear Security Administration during the Bush Administration, indicated that he would have \"killed\" for a budget of that magnitude when he was managing the nuclear weapons complex for DOE. While the 2011 Budget Control Act required some delays in planned spending on nuclear weapons modernization, the Obama and Trump Administrations' budget proposals have continued to show increases above the levels expected before the ratification of New START."], "subsections": []}, {"section_title": "Russian Modernization", "paragraphs": ["Russia is also deploying new missiles, submarines, and bombers to replace aging systems within the limits of New START. At the same time, it may be developing new types of strategic offensive arms that might not be captured by the limits in the treaty. In his annual address on March 1, 2018, Russian President Putin announced that Russia was developing several new nuclear delivery vehicles that could evade or penetrate U.S. ballistic missile defenses. One of the new weapons mentioned in the speech, the large, multiple-warhead ICBM known as the Sarmat, would by most estimates clearly count under the New START Treaty. ", "However, other systems\u2014including a long-range nuclear-powered cruise missile, a long-range nuclear-armed underwater drone, and an air-delivered hypersonic cruise missile\u2014may not be covered by the treaty's definitions of existing types of strategic offensive systems. As was noted above, the treaty addresses the possible emergence of new types of strategic offensive arms in paragraph 2 of Article V, where it states that the parties should raise their concerns about such weapons in the BCC. It does not, however, indicate how the parties will resolve such questions or whether they must agree before a weapon is included or excluded from the treaty limits. According to Under Secretary of State Thompson, in September 2018, the United States had not yet questioned Russia about these systems. However, these weapons would only raise concerns under New START if they were deployed before the treaty expired. Many analysts doubt that this will happen since most of the weapons mentioned in the speech seem to be in the early stages of development. "], "subsections": []}]}, {"section_title": "Nonstrategic Nuclear Weapons", "paragraphs": ["Presidents Obama and Medvedev agreed, in April 2009, when they initiated the negotiations on the New START Treaty, that this agreement would address only strategic nuclear forces, the long-range weapons that each side could use to reach the territory of the other side. It would not seek to limit or restrict the shorter-range nonstrategic nuclear weapons in either side's arsenal. This agreement derived not only from the fact that the existing START Treaty, and nearly all past bilateral arms control treaties, had addressed only strategic nuclear weapons, but also from the fact that many of the issues that would need to be addressed in a treaty that limited nonstrategic nuclear weapons would likely prove too complex to resolve in the near term, when both sides sought to replace the existing START Treaty.", "There was widespread agreement in Congress, in the Obama Administration, and within the arms control community, that the United States and Russia should seek to negotiate a treaty that increases transparency and possibly imposes limits on nonstrategic strategic nuclear weapons. However, there is also widespread agreement that negotiating such a treaty would prove extremely difficult, as Russia maintains a far larger stock of these weapons than the United States, in part to compensate for perceived weaknesses in its conventional forces, and because U.S. nonstrategic nuclear weapons are a part of the U.S. commitment to NATO, and the United States believes that any changes in their deployment should be addressed by the alliance before they are addressed in an arms control negotiation.", "Some analysts and Senators questioned whether the United States should agree to further reductions in its strategic nuclear weapons in the absence of any limits on Russian nonstrategic nuclear weapons. They noted that Russia retains more than 2,000 operational nonstrategic nuclear weapons while the United States has around 200 in Europe, and that the value of these weapons could grow as the numbers of U.S. and Russian strategic nuclear weapons decline. They also noted that these weapons could seem particularly threatening to some of the new NATO states that are located near the periphery of Russia. Others however, argued that Russian nonstrategic nuclear weapons do not pose a threat to the United States or NATO, as Russia has indicated that these weapons would only be used in response to an attack on Russian territory. So, these analysts noted, as long as NATO does not initiate such an attack, NATO members would not be threatened by these weapons. Moreover, as Senator Lugar noted in his response to former Massachusetts Governor Mitt Romney's critique of New START, most of Russia's nonstrategic nuclear weapons do not pose a missile threat to Europe. Senator Lugar stated that \"most of Russia's tactical nuclear weapons either have very short ranges, are used for homeland air defense, are devoted to the Chinese border, or are in storage.\"", "Many of the experts who testified in support of the New START Treaty agreed that the United States and Russia should pursue negotiations on a treaty on nonstrategic nuclear weapons. However, most agreed that Russia would be unwilling to participate in such discussions, and the United States and Russia would be unlikely to find common ground on such an agreement, unless both sides ratified and implemented the New START Treaty first. For example, in testimony before the Senate Foreign Relations Committee on April 29, 2010, former Secretaries of Defense James Schlesinger and William Perry both indicated that nonstrategic nuclear weapons should be an issue for the next treaty, and that the United States should ratify New START as a step on the path to get to reduction in nonstrategic nuclear weapons.", "The Trump Administration, in the Nuclear Posture Review released on February 2, 2018, also expressed concerns about Russia's stockpile of nonstrategic nuclear weapons. While it did not advocate for the negotiation of a treaty specifically limiting these weapons, it did indicate that Russia would have to address these concerns before the United States would be willing to negotiate further reductions in strategic nuclear weapons."], "subsections": []}, {"section_title": "New START and the U.S. Nuclear Nonproliferation Agenda", "paragraphs": ["The Obama Administration argued that U.S.-Russian cooperation on arms control, in general, and the New START Treaty, specifically, could help move forward the U.S. and international nuclear nonproliferation agenda. No one has argued that the treaty will convince nations who are seeking their own nuclear weapon that they should follow the U.S. and Russian lead and reduce those weapons or roll back those programs. However, some have argued that U.S.-Russian cooperation on arms control could strengthen the U.S.-Russian cooperation on a broader array of issues and that, \"cooperation is a prerequisite for moving forward with tough, internationally binding sanctions on Iran.\"", "Moreover, some have noted that U.S.-Russian cooperation on arms control would also demonstrate that these nations are living up to their obligations under the Nuclear Nonproliferation Treaty (NPT). Most nations that are parties to the NPT believe that reductions in the number of deployed nuclear weapons are a clear indicator of U.S. and Russian compliance with their obligations under Article VI of the NPT. During the preparatory committee meetings (PrepComs) leading up to the 2010 Review Conference of the NPT, many of the participants called on the United States and Russia to complete negotiations on a New START Treaty. While the completion of this treaty may not assure the United States of widespread agreement on U.S. goals and priorities at the NPT review conference, many argue that the absence of an agreement would have certainly complicated U.S. efforts and reduced the chances for a successful conference. ", "In contrast, some have argued that the New START Treaty will do little to advance U.S. nonproliferation goals. They noted that the parties at the NPT review conference may express their approval of the New START, but their positions on substantive issues would reflect their own national security interests and goals. Moreover, some critics argue that New START might undermine U.S. nonproliferation goals by calling into question U.S. security commitments and the continuing salience of U.S. nuclear weapons.", "The State Department, in its press releasing announcing that the United States had met its obligation to reduce to the New START limits, noted that \"the United States continues to demonstrate its commitment to fulfilling its arms control obligations, including under the Treaty on the Non-Proliferation of Nuclear Weapons\" through its adherence to the New START limits."], "subsections": []}, {"section_title": "Arms Control after New START", "paragraphs": [], "subsections": [{"section_title": "Prospects for Further Reductions", "paragraphs": ["In 2010, when it signed the New START Treaty, the Obama Administration indicated that it hoped this would be the first step in a renewed arms control process with Russia. In his statement on April 8, 2010, President Obama indicated that \"this treaty will set the stage for further cuts. And going forward, we hope to pursue discussions with Russia on reducing both our strategic and tactical weapons, including nondeployed weapons.\" In his State of the Union Address on February 12, 2013, the President stated that, as a part of the \"effort to prevent the spread of the world's most dangerous weapons,\" the United States would \"engage Russia to seek further reductions in our nuclear arsenals.\" Then, on June 19, 2013, in a speech in Berlin, President Obama stated that, after a comprehensive review, he had \"determined that we can ensure the security of America and our allies, and maintain a strong and credible strategic deterrent, while reducing our deployed strategic nuclear weapons by up to one-third.\" He stated that he intended \"to seek negotiated cuts with Russia to move beyond Cold War nuclear postures.\"", "Many analysts outside government supported the idea of further reductions beyond New START. They had hoped New START would cut more deeply into U.S. and Russian forces, reducing them to perhaps 1,000 warheads on each side. Others focused their concern on the absence of limits on nonstrategic nuclear weapons and nondeployed nuclear warheads. They expected a second treaty to address some of these concerns. Some have suggested that the two sides pursue a single, comprehensive treaty that would limit strategic, nonstrategic, and nondeployed warheads. This is similar to the approach that the Obama Administration appeared willing to pursue in 2013. Others suggested that the United States and Russia accelerate their reductions under New START, amend the treaty to reduce the numbers of permitted weapons, or agree informally to reduce their forces below New START levels. They argued that these steps, if the nations took them together, could enhance stability and reduce nuclear dangers, without waiting for the completion a new, lengthy treaty negotiation process. Some have also suggested that the United States and Russia work to increase transparency on their nonstrategic nuclear weapons, even if they are not yet ready to agree to limits or reductions in these systems.", "Others, however, disputed the notion that New START should be the first step in an ongoing process of further reductions in nuclear weapons. While some were willing to support the modest reductions of New START, they would not have supported a treaty that imposed deeper reductions on deployed nuclear weapons or limits on nondeployed nuclear weapons. They also objected to the broader arms control agenda that President Obama had outlined in his speech in Prague on April 5, 2009, including his call for the ratification of the Comprehensive Test Ban Treaty and his vision of a world free of nuclear weapons. Hence, some who concluded that the New START Treaty would not harm U.S. security by itself objected to its ratification because they believed its defeat would close the door on the rest of the President's arms control agenda.", "The prospects of additional reductions below the New START levels were further dimmed by the fact that Russia has been uninterested in negotiating another treaty. Shortly after New START entered into force, Russian Foreign Minister Sergei Lavrov stated that Russia would not want to pursue further negotiations until New START had been implemented. Russian officials have stated, repeatedly, that a treaty mandating further reductions would not only have to include limits on U.S. ballistic missile defenses and nonnuclear strategic strike systems, but would also have to limit the forces of the other major nuclear powers. ", "Most experts agree that a new treaty that addressed each of these issues raised by both parties would likely be extremely difficult to complete. Russia has been unwilling to negotiate reductions in its nonstrategic nuclear weapons, and neither side may be willing to adopt the amount of transparency necessary to negotiate verifiable limits on nondeployed warheads in storage. The United States has firmly rejected Russia's proposals for limits on ballistic missile defense and is unwilling to include conventional-armed cruise missiles or other long-range missiles in nuclear arms control negotiations. Moreover, Britain, France, and China\u2014the other declared nuclear weapons states under the NPT\u2014have not shown any willingness to participate in the U.S.-Russian arms control process.", "Prospects for the negotiation of a follow-on treaty dimmed further in 2014, following Russia's annexation of Crimea and incursion into Ukraine. In addition, in July 2014, the Obama Administration\u2014in its Annual Report on Adherence to and Compliance with Arms Control, Nonproliferation, and Disarmament Agreements and Commitments\u2014stated that the United States \"has determined that the Russian Federation is in violation of its obligations under the [1987] Intermediate Range Nuclear Forces (INF) Treaty not to possess, produce, or flight-test a ground-launched cruise missile (GLCM) with a range capability of 500 km to 5,500 km, or to possess or produce launchers of such missiles.\" While Russia appeared to be complying with New START, most agreed that further negotiations would be unwise; some also suggested that the United States suspend its implementation of New START until Russia returned to compliance with the INF Treaty. Others, however, have argued that the United States should continue to implement New START, as the limits on the size of Russia's strategic forces and the transparency provided by its verification regime continue to serve U.S. national security interests."], "subsections": []}, {"section_title": "Prospects for New START Extension", "paragraphs": ["Absent an agreement between the United States and Russia to extend New START for a period of no more than five years, the treaty will lapse in 2021. As was noted above, President Trump and President Putin reportedly discussed the treaty during their summit in Helsinki in July 2018, with President Putin presenting President Trump with a document suggesting that they extend the treaty after resolving \"existing problems related to the Treaty implementation,\" but the two did not reach an agreement on the issue. In the 2018 Nuclear Posture Review, the Trump Administration noted that the United States had met the treaty's central limits, and that it would \"continue to implement the New START Treaty and verify Russian compliance.\" It did not, however, indicate whether it might seek an extension of the treaty and made it clear that it was unlikely to negotiate a new treaty before New START's expiration in 2021. It noted that the United States is committed to \"arms control efforts that advance U.S., allied, and partner security; are verifiable and enforceable; and include partners that comply responsibly with their obligations.\" But it also noted that Russian actions, including its noncompliance with the INF Treaty and other arms control agreements, and its actions in Crimea and Ukraine made further progress difficult.", "The Trump Administration is reportedly conducting an interagency review of New START to determine whether it continues to serve U.S. national security interests, and that this review will inform the U.S. approach to the treaty's extension. Among the issues that might be under consideration are whether the United States should be willing to extend New START following Russia's violation of the INF Treaty, whether the limits in the treaty continue to serve U.S. national security interests, whether the insights and data that the monitoring regime provides about Russian nuclear forces remain of value for U.S. national security, and whether an extension of the treaty should be linked to Russia's development of new kinds of strategic offensive arms.", "Administration officials addressed this review during testimony before the Senate Foreign Relations Committee on September 18, 2018. Both Under Secretary of State Andrea Thompson and Deputy Under Secretary of Defense David Trachtenberg emphasized how Russia's violation of the INF Treaty and its more general approach to arms control undermined U.S. confidence in the arms control process. Under Secretary Thomson noted that \"the value of any arms control agreement is derived from our treaty partners maintaining compliance with their obligations and avoiding actions that result in mistrust and the potential for miscalculation.\" She also said that Russia's noncompliance \"has created a trust deficit that leads the United States to question Russia's commitment to arms control as a way to manage and stabilize our strategic relationship and promote greater transparency and predictability.\" Deputy Under Secretary Trachtenberg also emphasized that \"arms control with Russia is troubled because the Russian Federation apparently believes it need only abide by the agreements that suit it. As a result, the credibility of all international agreements with Russia is at risk.\" He went on to state that \"It is that overall kind of behavior that I think from a national security perspective we at least need to consider.\"", "Several Senators questioned whether the Administration's review would include a broader assessment of whether the provisions in New START contributed to U.S. national security. They focused on both the benefits of the limits on U.S. and Russian nuclear forces and the value of the transparency provided by the monitoring and verification regime. Deputy Under Secretary Trachtenberg acknowledged that \"the verification and monitoring and on-site inspection provisions provide a level of openness and transparency that is useful and beneficial not just to the United States but to our allies as well.\" But he reiterated that \"any decision on extending the treaty will, and should be, based on a realistic assessment of whether the New START treaty remains in our national security interests in light of overall Russian arms control behavior.\"", "Senators held a similar conversation with Under Secretary Thompson and Deputy Under Secretary Trachtenberg during a hearing before the Senate Foreign Relations Committee on May 15, 2019. While the two witnesses repeated many of the same concerns about Russian compliance with its arms control obligations and the need for an atmosphere of trust between the treaty parties, they also addressed concerns about Russia's development of new kinds of strategic offensive arms that would fall outside the New START limits, Russia's nonstrategic nuclear weapons that are not covered by the Treaty, and China's nuclear modernization programs. They were unwilling to offer insights into the progress of the review\u2014Under Secretary Thompson refused to speculate about possible changes in Russian forces if the treaty were to expire, and Deputy Under Secretary Trachtenberg declined to offer insights into how the United States might alter its nuclear forces or how it might recover the data and information provided by New START's verification regime if the treaty were to expire.", "Analysts outside government have offered several reasons why the United States should support the extension of New START. They note that extension would not only maintain limits on the number of deployed strategic nuclear weapons in Russia, but would also retain the predictability offered by the treaty's limits, maintain the monitoring and verification regime that provides the United States with insights into Russian nuclear forces and nuclear modernization programs, and avoid misperceptions that could upset strategic stability, exacerbate a crisis, or lead to a costly arms race. They also note that such an extension would provide the United States and Russia with an additional five years to resume negotiations and possibly reach new agreements on further reductions or transparency measures. ", "Others, however, believe the United States and Russia should allow the New START Treaty to lapse, both to relieve the United States of its obligations and because they believe that Russia's interest in retaining limits on U.S. forces would provide the United States with leverage when negotiating a treaty to replace New START. Some also argue that the treaty better serves Russian than U.S. interests because, as was noted above, Russia is pursuing the development of weapons that may not be captured by the treaty limits.", "Some have questioned whether the treaty's extension will eventually constrain the ongoing U.S. nuclear modernization program. While the United States plans to recapitalize all three legs of its nuclear triad, each program is sized to fit within the limits of New START. But, with growing concerns about the challenges the United States might face from Russia and China, along with growing concerns about the scope of their nuclear modernization programs, the United States might eventually seek to expand its forces beyond the limits in New START. The 2018 Nuclear Posture Review hints at this possibility by noting that the plan for rebuilding the sea-based leg of the nuclear triad will include at least 12 Columbia-class submarines, thus leaving open the possibility of a larger program.", "Nevertheless, based on the pace of modernization, New START may not interfere with the U.S. modernization program, even if the treaty were extended for five years. Most of the new U.S. systems are not scheduled to enter the force until the late 2020s, after New START's 2026 expiration. Moreover, the new systems are to replace existing, older systems, which would keep the U.S. force within the New START limits for many years. Any expansion beyond those limits would not occur until later in the 2030s. On the other hand, if New START were to expire in 2021, the United States might feel compelled to both accelerate and expand its modernization programs if Russia were to expand its nuclear programs when released from the constraints of the treaty.", "President Trump's National Security Advisor, Ambassador John Bolton, addressed the question of New START extension in a press conference following his meeting with President Putin's National Security Advisor, Nikolai Patrushev, in August 2018. He noted that, instead of simply extending New START, the United States and Russia could either renegotiate the treaty or replace it with something more like the 2002 Moscow Treaty signed during the George W. Bush Administration. President Trump has also proposed that the United States and Russia replace New START with a new, broader treaty that would capture all types of nuclear weapons and include China's forces under the limits.", "Those who favor renegotiating New START believe it would provide the United States with the opportunity to press Russia to include limits on its new types of long-range nuclear delivery systems and to accept limits on shorter-range, nonstrategic delivery vehicles. But this approach envisions a more complicated treaty and could take years to complete the negotiations. A return to the Moscow Treaty envisions a more simple approach. The Moscow Treaty did not contain any detailed definitions or restrictions on deployed forces, and, instead, included a simple pledge by each side to reduce the number of deployed warheads within a 10-year period. Bolton both supported this approach and participated in the negotiations when he served as an Under Secretary of State in the Bush Administration.", "These options, however, may not provide a capable or timely response to the impending expiration of New START. As noted above, Russia has been unwilling to accept limits on its nonstrategic nuclear delivery vehicles in the past, and any attempt to convince them to do so in the future may require the United States to agree to the elimination of its nuclear weapons deployed in Europe. Moreover, while limits on nonstrategic nuclear weapons have long been a U.S. priority for the next arms control agreement, Russia has stated that the next agreement should include limits on U.S. ballistic missile defense programs, limits on nonnuclear strategic-range delivery systems (specifically, U.S. sea-launched cruise missiles), and limits on other nations' (specifically British and French) nuclear forces. Because neither side is likely to accept the demands of the other, an effort to renegotiate or replace New START would almost certainly fail to produce a new treaty before its 2021 expiration or a replacement treaty after its expiration.", "Russia has not rejected U.S. proposals to address its new kinds of long-range delivery systems, but it has refused to count them under New START. Instead, it has suggested that the two sides discuss these weapons in a separate forum that addresses concerns about strategic stability. It has indicated that this forum could meet in the years after the parties extend New START. Russia has not yet produced any of these weapons, and may produce only a small number between 2021 and 2026. So, even if these weapons were not captured by New START, such discussions could occur before the weapons posed a significant threat to the United States or its allies. ", "The Trump Administration has not offered any details about how China could participate in the arms control process. Specifically, it has not indicated whether it would seek limits in a new treaty closer to the size of the Chinese arsenal, or whether it would invite China to expand its forces to levels closer to the New START limits of 1,550 warheads on 700 deployed missiles and bombers. While China has not offered any details about the size of is nuclear force, the 2019 version of the Pentagon's Annual Report to Congress on Military and Security Developments Involving the People's Republic of China notes that China's force missiles with a range greater than 5,500 kilometers (the range of missiles that count under New START) \"currently consists of approximately 90 ICBMs\" deployed on land and 48 missiles deployed four ballistic missile submarines. The Pentagon report does not include an estimate of the number of warheads carried by these missiles. Unclassified estimates, however, indicate that the submarine-launched ballistic missiles and most of the land-based missiles carry a single warhead, while some of the land-band based missiles may carry three warheads per missile. As a result, the Chinese missiles that would count under New START likely carry around 130 warheads. This is within a total estimated arsenal of around 280 nuclear warheads.", "China, in the past, has firmly rejected suggestions that it join in the nuclear arms control process. Chinese officials have noted that they deploy far fewer nuclear forces than the United States and Russia, that they do not engage in arms races with other nations, and that they support eventual nuclear disarmament. A spokesman for the Chinese Foreign Ministry reiterated its objections in May 2019, after the Trump Administration suggested that China join the arms control process. According to press reports, Geng Shuang said that the country's nuclear forces were at the \"lowest level\" of its national security needs, and that they could not be compared to the United States and Russia. He noted that \"China believes that countries with the largest nuclear arsenals have a special responsibility when it comes to nuclear disarmament and should continue to further reduce nuclear weapons in a verifiable and irreversible manner, creating conditions for other countries to participate.\"", "A return to the 2002 Moscow Treaty raises different issues. Ambassador Bolton and others who support this approach to arms control note that this treaty provided the United States with the maximum amount of flexibility in sizing and structuring its nuclear forces. The limits in the treaty were consistent with the force levels the United States had already decided to pursue, and did not require that the United States match its force levels to those acceptable to Russia. It also was set to expire, on December 31, 2012, at the same time as both sides were required to reach the limits in the treaty, thereby imposing no real restrictions on U.S. force levels over the course of its implementation. Moreover, the treaty contained no specific definitions of forces covered by the limits, so each side could count and declare its force levels according to its own interpretation of the limits. ", "But the absence of agreed definitions and counting rules, along with the absence of any specific provisions that would allow each side to monitor the other's forces, meant that neither side could verify that the other was complying with the limits in the treaty. While this issue was mitigated because the 1994 START Treaty, with its complex verification regime, remained in force through December 2009 and was soon after replaced by New START, such a solution would not be possible if a treaty of this type were to replace New START after its expiration. The monitoring regime under New START would also expire, leaving the United States and Russia with no data exchanges, declarations, or inspections that provide transparency into each other's forces and operations."], "subsections": []}]}]}]}}
{"id": "R46238", "title": "The Freedom of Information Act (FOIA): A Legal Overview", "released_date": "2020-02-24T00:00:00", "summary": ["Originally enacted in 1966, the Freedom of Information Act (FOIA) establishes a three-part system that requires federal agencies to disclose a large swath of government information to the public. First, FOIA directs agencies to publish substantive and procedural rules, along with certain other important government materials, in the Federal Register. Second, on a proactive basis, agencies must electronically disclose a separate set of information that consists of, among other things, final adjudicative opinions and certain \"frequently requested\" records. And lastly, FOIA requires agencies to disclose all covered records not made available pursuant to the aforementioned affirmative disclosure provisions to individuals, corporations, and others upon request.", "While FOIA's main purpose is to inform the public of the operations of the federal government, the act's drafters also sought to protect certain private and governmental interests from the law's disclosure obligations. FOIA, therefore, contains nine enumerated exemptions from disclosure that permit\u00e2\u0080\u0094but they do not require\u00e2\u0080\u0094agencies to withhold a range of information, including certain classified national security matters, confidential financial information, law enforcement records, and a variety of materials and types of information exempted by other statutes. And FOIA contains three \"exclusions\" that authorize agencies to treat certain law enforcement records as if they do not fall within FOIA's coverage.", "FOIA also authorizes requesters to seek judicial review of an agency's decision to withhold records. Federal district courts may \"enjoin [an] agency from withholding agency records\" and \"order the production of any agency records improperly withheld.\" Judicial decisions\u00e2\u0080\u0094including Supreme Court decisions\u00e2\u0080\u0094have often informed or provided the impetus for congressional amendments to FOIA.", "Although Congress is not subject to FOIA, the act may inform communications between the legislative branch and FOIA-covered entities. Under 5 U.S.C. \u00c2\u00a7 552(d), an agency may not \"withhold information from Congress\" on the basis that such information is covered by a FOIA exemption (although the provision does not dictate whether another source of law, such as executive privilege, may shield information from disclosure). The executive branch has interpreted this provision to apply to each house of Congress and congressional committees, but generally not to individual Members, whose requests for information are generally treated as subject to the same FOIA rules as requests from the public. This interpretation is not uniformly shared, with at least one federal appellate court interpreting \u00c2\u00a7 552(d) as applying to individual Members acting in their official capacities. In addition, although Congress is under no obligation to disclose its materials pursuant to FOIA, whether a congressional document possessed by an agency is subject to FOIA depends on whether Congress clearly expressed its intention to retain control over the specific document.", "Lastly, although FOIA is the primary statutory mechanism by which the public may gain access to federal government records and information, other laws\u00e2\u0080\u0094specifically the Federal Advisory Committee Act, Government in the Sunshine Act, and Privacy Act\u00e2\u0080\u0094also set forth rights and limitations on the public's access to government information or activities."], "reports": {"section_title": "", "paragraphs": ["T he Freedom of Information Act (FOIA) confers on the public a right to access federal agency information. Before FOIA's enactment, the Administrative Procedure Act (APA) had required agencies to make certain government information available to the public. But the exceptions to disclosure in the APA's public information section had, in the estimation of FOIA's drafters, \"become the major statutory excuse for withholding Government records from public view.\" The exceptions were broad, authorizing agencies, for example, to withhold information if doing so was \"in the public interest\" or\u00e2\u0080\u0094for \"matters of official record\"\u00e2\u0080\u0094when information was \"held co nfidential for good cause found.\" In addition, the APA's public information section lacked a provision authorizing a person to seek judicial review of an agency's decision to withhold information.", "To rectify the APA's perceived failure to provide the public with adequate access to government information, Congress enacted FOIA in 1966 as an amendment to the APA. In FOIA, Congress sought to establish a statutory scheme that embodied \"a broad philosophy of 'freedom of information'\" and ensured \"the availability of Government information necessary to an informed electorate.\" To effectuate Congress's desire for robust public access to agency information, FOIA establishes a three-part system of disclosure by which agencies must disclose a large swath of records and information. First, FOIA directs agencies to publish \"substantive rules of general applicability,\" procedural rules, and specified other important government materials in the Federal Register. Second, on a proactive basis, agencies must electronically disclose a separate set of agency information including, among other things, final adjudicative opinions and certain \"frequently requested\" records. And third, FOIA's request-driven system of disclosure requires that, \"[e]xcept with respect to the records made available under\" the statute's proactive disclosure provisions, agencies disclose covered records to individuals, corporations, and others upon request. FOIA's tripartite system of disclosure aims to open up a vast array of federal agency information and records to private individuals, researchers, journalists, corporations, and other parties. In addition, disclosure under FOIA may bring information to Congress's attention that may inform its oversight of FOIA-covered agencies. As one court has remarked, \"FOIA is the legislative embodiment of Justice Brandeis's famous adage\" that \"[s]unlight is . . . the best of disinfectants.\"", "While FOIA's main purpose is to inform the public of the operations of the federal government, the act's drafters sought to protect certain private and governmental interests from the new law's disclosure obligations. FOIA thus contains nine exemptions from disclosure that authorize, but do not require, agencies to withhold information or records that are otherwise subject to release or availability under the statute. Most of FOIA's nine enumerated exemptions are designed to protect against fairly general harms that may arise from disclosure, while others concern very specific types of information, and one incorporates numerous exemptions contained in other federal statutes. And along with its nine exemptions, FOIA contains three records \"exclusions\" that cover certain \"especially sensitive law enforcement records.\" If records protected by an exclusion are subject to a FOIA request, an agency may \"treat the records as not subject to the requirements of\" FOIA. ", "Lastly, the statute authorizes requesters to challenge in federal court an agency's decision to withhold requested records. Federal district courts may \"enjoin [an] agency from withholding\u00c2\u00a0agency\u00c2\u00a0records\"\u00c2\u00a0and \"order\u00c2\u00a0the production of any\u00c2\u00a0agency\u00c2\u00a0records\u00c2\u00a0improperly withheld.\" ", "This report provides an overview of FOIA. First, the report examines key terms that dictate the scope of agencies' disclosure obligations under FOIA. The report then provides an overview of FOIA's three disclosure requirements. Following that discussion, the report reviews each of FOIA's nine exemptions and, in a later section, its three records exclusions. After an overview of selected issues concerning judicial review of agency decisions to withhold information under FOIA, this report discusses two topics of potential interest to Congress: FOIA's \"special access\" provision\u00e2\u0080\u0094which provides that FOIA does not authorize agencies \"to withhold information from Congress\" \u00e2\u0080\u0094and the status of congressional records under FOIA. Lastly, this report discusses three other laws that, like FOIA, govern the availability of specific types of government information and constitute significant elements of the federal government's open government and information legal regimes: the Federal Advisory Committee Act (FACA); Government in the Sunshine Act (Sunshine Act); and Privacy Act."], "subsections": [{"section_title": "Key Terms", "paragraphs": ["FOIA generally requires each federal \"agency\" to make \"agency records\" available to the public and specifically to \"any person\" who requests them. FOIA does not, however, require every federal entity to disclose government information to the public, nor must an agency disclose every piece of information that may be located within a covered entity. And not all persons have a right to receive records under the act. Three key statutory terms inform FOIA's general scope: (1)\u00c2\u00a0\"agency\"; (2) \"agency records\"; and (3) \"any person.\" The meaning of each of these terms determines which entities must comply with FOIA, what materials must be disclosed under the act, and to whom FOIA grants the right to request and receive records. "], "subsections": [{"section_title": "\"Agency\"", "paragraphs": ["FOIA requires \"agencies\" to disclose a broad array of information to the public. The APA's general definition section in 5 U.S.C. \u00c2\u00a7 551 defines \"agency\" as \"each authority of the Government of the United States, whether or not it is within or subject to review by another agency.\" FOIA embraces this general definition and provides that, for the act's purposes, the term \"includes any executive department, military department, Government corporation, Government controlled corporation, or other establishment in the executive branch of the Government (including the Executive Office of the President), or any independent regulatory agency.\" While this definition includes a large swath of the federal government, it does not encompass the entire federal establishment. For example, FOIA does not apply to Congress, the federal courts, or territorial governments. ", "Although FOIA's definition of \"agency\" includes the Executive Office of the President (EOP), courts have determined that several entities within the EOP are nevertheless not subject to the act. In Kissinger v. Reporters Committee for Freedom of the Press , the Supreme Court held that transcripts of Henry Kissinger's telephone conversations from his time as Assistant to the President for National Security Affairs were not subject to disclosure under FOIA. The Court explained that the term \"agency\" as used in FOIA does not apply to \"the President's immediate personal staff or units in the Executive Office whose sole function is to advise and assist the President .\" Courts have determined that several EOP entities are not FOIA \"agencies\" by virtue of their solely advisory or operational functions, including the Council of Economic Advisers, Office of Administration, and National Security Council. On the other hand, courts have held that entities within the EOP that \"wield[] substantial authority independently of the President,\" such as the Office of Management and Budget, are agencies under FOIA. "], "subsections": []}, {"section_title": "\"Agency Records\"", "paragraphs": ["Just as only \"agencies\" are subject to FOIA's disclosure requirements, only \"agency records\" need be disclosed under the act. FOIA, however, does not define \"agency records.\" Without a statutory definition, the Supreme Court, in Department of Justice (DOJ) v. Tax Analysts , held that materials qualify as agency records if an agency (1) created or obtained the materials and (2) was \"in control of the requested materials at the time the FOIA request [was] made.\" An agency comes in control of materials if, per Tax Analysts , \"the materials have come into the agency's possession in the legitimate conduct of its official duties.\" ", "As the two-part test makes clear, a record may be subject to disclosure even when an agency did not create the record, as long as the agency obtained and controlled the record when it was requested. To determine whether an agency exercises \"control\" of a record, the D.C. Circuit developed the \" Burka test,\" which considers", "1. the intent of the document's creator to retain or relinquish control over the records; 2. the ability of the agency to use and dispose of the record as it sees fit; 3. the extent to which agency personnel have read or relied upon the document; and 4. the degree to which the document was integrated into the agency's record system or files.", "That said, an agency's mere ability to obtain materials, if not exercised, does not establish that such materials are agency records. And FOIA does not require an agency to create agency records in response to a FOIA request, only to disclose records it has already received or created and that are already under its control.", "Because FOIA only applies to \"agency records,\" it does not obligate agencies to disclose publicly the \"personal records\" of agency employees. As the Supreme Court in Tax Analysts explained, \"the term 'agency records' is not so broad as to include personal materials in an employee's possession, even though the materials may be physically located at the agency.\" The U.S. Court of Appeals for the District of Columbia Circuit (D.C. Circuit) has employed \"a totality of the circumstances test\" to assess whether material constitutes an \"agency record\" subject to FOIA or a \"personal record\" excluded from the statute's coverage. This \"test focuses on a variety of factors surrounding the creation, possession, control, and use of the document by an agency.\" In applying the totality of the circumstances test in Consumer Federation of America v. Department of Agriculture (USDA) , the D.C. Circuit held that electronic calendars of several USDA officials qualified as \"agency records\" under FOIA. The calendars \"were created by agency employees and were located within the [officials'] agency,\" updated and accessed daily, and maintained on the agency's computer system. The court determined, however, that the \"creation, possession, and control\" factors were \"not dispositive in determining whether the calendars [were] 'agency records'\" in the case. Instead, the court held that the officials' use of the calendars was the \"decisive factor.\" Specifically, the court found it significant that the calendars were used to schedule agency operations and were distributed to other agency staff and top officials. But the court determined that the electronic calendar of a separate USDA official was not an agency record subject to disclosure under FOIA because the official only shared the calendar with his secretaries and, therefore, no one else within the agency depended on his calendar to conduct agency business. ", "Although FOIA does not require the disclosure of personal materials, issues may arise when agency personnel use nonofficial electronic accounts to communicate. In Competitive Enterprise Institute v. Office of Science & Technology Policy (OSTP) , the requester sought \"all policy/OSTP-related email[s]\" contained within the private email account of the director of OSTP. A private entity maintained an account that the director used for work-related purposes. OSTP denied the request, asserting that the private entity (the director's former employer) controlled the account and that the agency, therefore, could not search it. The district court dismissed the suit in favor of the agency. However, the D.C. Circuit reversed, explaining that \"records do not lose their agency character just because the official who possesses them takes them out the door or because he is the head of the agency.\" Instead, the court wrote, \"[i]f the agency head controls what would otherwise be an agency record, then it is still an agency record and still must be searched or produced.\" The D.C. Circuit's decision in Competitive Enterprise Institute , therefore, stands for the proposition that agency records are subject to FOIA even if contained in nongovernmental electronic accounts."], "subsections": []}, {"section_title": "\"Any Person\"", "paragraphs": ["Lastly, FOIA directs agencies to disclose nonexempt agency records to \"any person\" upon request. A \"person\" is defined as \"an individual, partnership, corporation, association, or public or private organization other than an agency.\" Courts have therefore held that, along with individuals, organizational entities such as corporations, as well as state and foreign governments, have access rights under FOIA. That said, federal agencies have no right to records under FOIA.", "Access to records under FOIA does not hinge on whether an individual is an American citizen; noncitizens are also entitled to records under the act. Further, the Supreme Court has explained that the requester's identity generally does not factor into whether records are subject to disclosure, nor is a requester generally required to supply a reason to an agency for his or her request."], "subsections": []}]}, {"section_title": "Access to Government Information under FOIA", "paragraphs": ["FOIA sets forth a three-part system for disclosing government information. The first two disclosure schemes require agencies to affirmatively disclose specific categories of information to the public, either through publication in the Federal Register or electronic disclosure. The third disclosure provision requires that, \"[e]xcept with respect to the records made available\" pursuant to FOIA's affirmative disclosure requirements, agencies disclose covered records after receiving a request from \"any person.\" "], "subsections": [{"section_title": "Affirmative Disclosure", "paragraphs": ["While FOIA may be known predominately for its request-driven system of disclosure, the statute also contains affirmative disclosure provisions that require federal agencies to proactively disseminate to the public certain agency records. FOIA imposes two affirmative (also known as mandatory or proactive ) disclosure obligations. Under the first requirement\u00e2\u0080\u0094codified in subsection (a)(1) of \u00c2\u00a7\u00c2\u00a0552\u00e2\u0080\u0094agencies must publish certain important government materials\u00e2\u0080\u0094including \"substantive rules of general applicability\" and \"rules of procedure\"\u00e2\u0080\u0094in the Federal Register. The second affirmative disclosure requirement\u00e2\u0080\u0094codified in subsection (a)(2) of \u00c2\u00a7 552\u00e2\u0080\u0094requires agencies to provide electronic access to a separate set of agency materials that consists of, among other things, final agency adjudicative opinions and certain \"frequently requested\" records. "], "subsections": [{"section_title": "Publication in the Federal Register", "paragraphs": ["Under \u00c2\u00a7 552(a)(1), agencies must publish certain information \"in the Federal Register for the guidance of the public.\" The provision seeks \"to enable the public 'readily to gain access to the information necessary to deal effectively and upon equal footing with the Federal agencies.'\" It instructs agencies to publish the following: ", "1. descriptions of agency organization and information regarding how, where, and from whom \"the public may obtain information, make submittals or requests, or obtain decisions\"; 2. information on how agency \"functions are channeled and determined, including the nature and requirements of all formal and informal procedures available\"; 3. (3) procedural rules, descriptions of available agency forms \"or the places at which forms may be obtained, and instructions as to the scope and contents of all papers, reports, or examinations\"; 4. (4) \"substantive rules of general applicability adopted as authorized by law,\" as well as agency \"statements of general policy or interpretations of general applicability\"; and 5. (5) every \"amendment, revision, or repeal of the foregoing.\"", "FOIA imposes a penalty for an agency's failure to publish the above information, providing that no person shall \"in any manner be required to resort to, or be adversely affected by, a matter required to be published in the Federal Register and not so published.\" In other words, an agency may not enforce any material against an affected party that the agency did not publish in the Federal Register as required under subsection (a)(1), unless the affected party received \"actual and timely notice of the terms thereof.\" ", "Courts have held that FOIA authorizes judicial review of an agency's withholding of (a)(1) materials. However, available remedies in such cases may be limited. In Kennecott Utah Copper Corporation v. Department of the Interior (DOI) , the D.C. Circuit held that FOIA does not authorize reviewing courts, as a remedy, to order an agency to publish materials in the Federal Register. The court explained that FOIA's judicial review provision \"allows district courts to order 'the production of any agency records improperly withheld from the complainant ,' not agency records withheld from the public .\" Whereas, as explained by the court, \"[p]roviding documents to the individual fully relieves whatever informational injury may have been suffered by that particular complainant,\" requiring \"publication goes well beyond that need.\" The court explained that the penalty in subsection (a)(1), which provides that materials required to be published in the Federal Register that an agency has not so published generally are unenforceable, is \"an alternative means for encouraging agencies to fulfill their obligation to publish materials in the Federal Register\" and \"gives agencies a powerful incentive to publish any [(a)(1) materials] they expect to enforce.\""], "subsections": []}, {"section_title": "Electronic Disclosure", "paragraphs": ["FOIA's second affirmative disclosure provision does not require disclosure in a particular publication, as does subsection (a)(1). Instead, subsection (a)(2) of \u00c2\u00a7 552 (often referred to as the \"reading-room provision\") directs agencies to \"make available for public inspection in an electronic format\" certain information, unless the information is \"promptly published and copies [are] offered for sale.\" The following information must be electronically disclosed under FOIA's second affirmative disclosure provision: ", "1. (1) \"final opinions . . ., as well as orders, made in the adjudication of cases\"; 2. (2) policy statements and interpretations not appearing in the Federal Register; 3. (3) \"administrative staff manuals and instructions to staff that affect a member of the public\"; 4. (4) copies of records that had been released in response to a FOIA request and that (a) \"the agency determines have become or are likely to become the subject of subsequent requests for substantially the same records\" due to the nature of the records' subject or (b) \"have been requested 3 or more times\"; and 5. (5) indexes of such previously released records.", "The 1966 House report underlying FOIA explained that this provision was intended to open up to the public the \"thousands of orders, opinions, statements, and instructions issued by hundreds of agencies,\" information that the report described as constituting \"the bureaucracy['s] . . . own form of case law.\" In that vein, the Supreme Court has explained that FOIA's second affirmative disclosure provision \"represents a strong congressional aversion to 'secret [agency] law.'\" Materials subject to subsection (a)(2) are now generally made accessible on agency websites.", "In addition to public dissemination of the above materials, subsection (a)(2) requires that agencies \"maintain and make available for public inspection in an electronic format\" indexes of (a)(2) material. And an agency may not rely on, use, or cite as precedent a \"final order, opinion, statement of policy, interpretation, or staff manual or instruction that affects a member of the public\" unless the agency has (1) indexed the material and published or made it available, or (2) given the affected party \"actual and timely notice of the terms\" of such material.", "As with (a)(1) materials, FOIA authorizes judicial review of challenges to the availability of materials subject to disclosure under subsection (a)(2). Courts do not appear to agree, however, whether they have authority under FOIA to order agencies to make (a)(2) records available in agency reading rooms, or whether their authority under the statute is limited to ordering the production of records to individual complainants."], "subsections": []}]}, {"section_title": "Request-Driven Disclosure", "paragraphs": ["Under the two affirmative disclosure provisions discussed above, agencies must proactively disclose specific types of information. By contrast, under FOIA's third system of disclosure, agencies disclose covered records not \"made available under\" the affirmative disclosure provisions on a case-by-case basis after receiving a request. As discussed below, FOIA imposes certain procedural requirements on requesters and agencies in making and responding to requests for records. And, also as discussed below, the act allows requesters to internally appeal agency decisions to withhold records, a process requesters generally must take advantage of prior to seeking review in federal court.", "Section 552(a)(3)(A) of title 5 of the U.S. Code governs the production of records requested under FOIA. Under that section, \"each agency . . . shall make . . . records promptly available to any person\" after receiving a FOIA request. An agency must respond to a request that satisfies two requirements. First, a request must \"reasonably describe[]\" the records sought. The House committee report underlying the 1974 amendments to FOIA states that a \"'description' of a requested document would be sufficient if it enabled a professional employee of the agency who was familiar with the subject area of the request to locate the record with a reasonable amount of effort.\" Second, a FOIA request must comply with the agency's \"published rules stating the time, place, fees (if any), and procedures to be followed.\" ", "If a requester submits a valid request, an agency must execute an \"adequate\" or \"reasonable\" search. This standard requires that an agency conduct a search that is \"reasonably calculated to uncover all relevant documents.\" The D.C. Circuit has explained that \"[t]he issue is not whether any further documents might conceivably exist but rather whether the government's search for responsive documents was adequate.\" FOIA also states that agencies must \"make reasonable efforts to search for . . . records in electronic form or format,\" unless doing so \"would significantly interfere with the operation of the agency's automated information system.\" DOJ guidance provides that this latter requirement \"promotes electronic database searches and encourages agencies to expend new efforts in order to comply with the electronic search requirements of particular FOIA requests.\"", "To facilitate its disclosure mandate, FOIA requires agencies to respond within certain timeframes and authorizes administrative review of unfavorable agency decisions. Once it receives a valid FOIA request, an agency has twenty business days to \"determine . . . whether to comply with [the] request\" and \"shall immediately notify the\" requester of its \"determination and the reasons therefor,\" as well as of the requester's right to appeal an \"adverse determination\" within the agency. In \"unusual circumstances\"\u00e2\u0080\u0094as defined by the statute\u00e2\u0080\u0094an agency may extend the twenty-day period by ten additional days. In Citizens for Responsibility & Ethics in Washington v. Federal Election Commission , the D.C. Circuit, in an opinion authored by then-Judge Brett Kavanaugh, held that to make a proper \"determination,\" an \"agency must at least indicate within the relevant time period the scope of the documents it will produce and the exemptions it will claim with respect to any withheld documents.\" The court explained that an agency need not produce requested records when it makes its initial determination, determining that it may fulfill its responsibility under \u00c2\u00a7 552(a)(3)(A) to \"make . . . records promptly available\" after it indicates the scope of the records it will disclose and the exemptions it will invoke.", "A requester who receives an adverse determination may appeal the determination within the agency. Upon receiving an administrative appeal, an agency has twenty business days to make a determination, although, as in the context of initial determinations, it may extend this timeline by ten days for unusual circumstances. If the agency\u00e2\u0080\u0094in whole or in part\u00e2\u0080\u0094upholds its adverse determination, it must inform the requester of FOIA's provisions governing judicial review of agency withholding decisions. Judicial review can proceed if the requester remains dissatisfied.", "Before challenging an agency's nondisclosure decision in federal court, a requester typically must exhaust any remedies that an agency affords the requester. Plaintiffs will fail to exhaust administrative remedies if they did not submit a valid FOIA request to the agency or did not internally appeal the agency's adverse decision. However, if the agency does not adhere to the response timeframes FOIA imposes on agencies, a requester \"shall be deemed to have exhausted his administrative remedies.\" If this occurs, the requester is viewed as having constructively exhausted administrative remedies and may seek review in federal court. However, if an agency belatedly responds to a request before the requester files suit, the requester must still internally appeal the agency's adverse determination before seeking recourse in the federal courts."], "subsections": []}]}, {"section_title": "Exemptions", "paragraphs": ["As explained above, FOIA establishes a statutory right of public access to a wide array of government information. However, FOIA's drafters also desired to protect certain private and governmental interests from the law's broad disclosure mandate. FOIA reflects this desire by exempting a variety of records and information from mandatory disclosure pursuant to nine enumerated exemptions. Information protected by FOIA's exemptions ranges from certain classified national security information to geological information pertaining to wells. Together, the statute's policy of otherwise maximum disclosure and its exemptions seek to strike a \"balance between the right of the public to know and the need of the Government to keep information in confidence to the extent necessary without permitting indiscriminate secrecy.\" ", "FOIA's exemptions are codified at 5 U.S.C. \u00c2\u00a7 552(b). Table 1 lists each exemption. All nine exemptions are explained more fully below.", "Despite the scope afforded to agencies to withhold certain records by FOIA's exemptions, the statute is fundamentally a disclosure statute. In that vein, the Supreme Court has directed that FOIA's exemptions should \"be narrowly construed.\" The statute reflects FOIA's presumption in favor of disclosure by explicitly requiring that agencies \"take reasonable steps necessary to segregate and release nonexempt information\" and disclose \"[a]ny reasonably segregable portion of a record\" that has been requested \"after deletion of the portions which are exempt.\" More fundamentally, FOIA's exemptions do not impose mandatory withholding obligations on agencies, and pursuant to the 2016 amendments to FOIA, an agency may not withhold government information protected by an exemption unless it \"reasonably foresees that disclosure would harm an interest protected by an exemption,\" or if disclosing the information is legally prohibited. Such limitations on the potential breadth of FOIA's exemptions may aid in the implementation of the statute's prodisclosure mandate.", "The Supreme Court has instructed that, due to the \"exclusivity\" of FOIA's exemptions, the act does not authorize an agency to withhold a covered record or information that is not protected by an applicable exemption. And in American Immigration Lawyers Association v. Executive Office for Immigration Review , the D.C. Circuit held that, when disclosing a record under FOIA, an agency may not redact information from that record on the basis that the information is \"non-responsive,\" but instead is limited by FOIA's nine exemptions in the types of information it may redact. The court explained that, although an agency may apply a FOIA exemption to withhold matter from a record, \"once an agency identifies a record it deems responsive to a FOIA request, the statute compels disclosure of the responsive record . . . as a unit.\" Thus, per the court, although \"the focus of the FOIA is information, not documents\" when the agency is deciding whether to exempt matter from a record, \"outside of that context, FOIA calls for disclosure of a responsive record, not disclosure of responsive information within a record.\"", "An agency may be prohibited by another source of law from disclosing material that is exempt under FOIA. For example, under FOIA's Exemption 3, certain statutes that prohibit or place limits on agencies' disclosure of information may serve as bases under FOIA for withholding covered information. An agency's disclosure of information protected by an Exemption 3 withholding statute, therefore, could, depending on the statute's terms, violate that particular statute. As another example, although FOIA's Exemption 4 authorizes an agency to withhold certain confidential \"commercial or financial information\" and trade secrets, the Trade Secrets Act (TSA) imposes criminal penalties for disclosing certain confidential materials if disclosure is not \"authorized by law.\" Thus, while Exemption 4 grants agencies discretion to withhold information covered by both the exemption and the TSA, the TSA would prohibit the unauthorized disclosure of the information. Ultimately, however, if records within FOIA's coverage are not exempt under FOIA or prohibited from being disclosed by another law, an agency must disclose such records upon request. ", "Under certain circumstances, an agency may be held to have waived its ability to apply an exemption to a requested record due to its prior disclosure of information. For example, the D.C. Circuit has \"held . . . that the government cannot rely on an otherwise valid exemption claim to justify withholding information that has been 'officially acknowledged' or is in the 'public domain.'\" Courts often have held that an agency's prior disclosure of information to Congress has not foreclosed application of an exemption in response to a subsequent FOIA request. However, whether an agency has waived an exemption is necessarily dependent on \"the specific nature and circumstances of the prior disclosure.\" "], "subsections": [{"section_title": "Exemption 1: National Defense or Foreign Policy", "paragraphs": ["The first FOIA exemption authorizes agencies to withhold certain matters that pertain to \"national defense or foreign policy.\" Specifically, Exemption 1 allows an agency to withhold information that is \"(A) specifically authorized under criteria established by an Executive\u00c2\u00a0order\u00c2\u00a0to be kept secret in the interest of national defense or foreign policy and (B) [which is] in fact properly classified pursuant to such Executive\u00c2\u00a0order.\" This exemption reflects Congress's interest in maintaining the confidentiality of information implicating national defense and security. However, as the text makes clear, not all national-security-related information may be withheld under Exemption 1. Instead, only those national defense or foreign policy matters that have been properly classified through an applicable executive order are covered.", "At present, Executive Order 13526 primarily governs the classification of national security information by the executive branch. The executive order prescribes the procedures for classifying national security information and lists the categories of information to which the order applies, which include \"military plans, weapons systems, or operations\"; \"scientific, technological, or economic matters relating to the national security\"; and \"United States Government programs for safeguarding nuclear materials or facilities.\" Information that an agency seeks to withhold from disclosure under Exemption 1 must satisfy the substantive and procedural requirements contained in Executive Order 13526."], "subsections": []}, {"section_title": "Exemption 2: Internal Personnel Rules and Practices", "paragraphs": ["FOIA's second exemption applies to records that are comparatively more \"routine\" and generally prone to less public interest than the national-security-related matters agencies may withhold under Exemption 1. Exemption 2 authorizes agencies to exempt from disclosure information that is \"related solely to the internal personnel rules and practices of an agency.\" The Supreme Court has held that \"personnel rules and practices\" under Exemption 2 are those that address \"employee relations or human resources.\" This exemption covers rules and practices pertaining to \"hiring and firing, work rules and discipline, [and] compensation and benefits.\" To fall under Exemption 2, information must pertain \"exclusively or only\" to personnel rules and practices, and, as the Supreme Court has explained, an \"agency must typically keep [such] records to itself for its own use.\" ", "For years, many courts interpreted this provision to cover not only the employee relations and humans resources information described above, but also records that were predominantly internal and whose release would \"significantly risk[] circumvention of agency regulations or statutes.\" But in Milner v. Department of the Navy , the Supreme Court held that this broad view of Exemption 2 contravened the ordinary meaning of \"personnel rules and practices\"\u00e2\u0080\u0094which the Court read as applying only to employee relations and human resources records \u00e2\u0080\u0094and impermissibly incorporated an extrastatutory \"circumvention requirement\" into the exemption. After Milner , agencies wishing to withhold information that would have previously qualified as High 2 information must locate possible alternatives to Exemption 2 in other FOIA exemptions."], "subsections": []}, {"section_title": "Exemption 3: Matters Exempted by Other Statutes", "paragraphs": ["With the exceptions of Exemptions 8 and 9, exemptions for information on a particularly specific subject or issue tend to be governed by FOIA's third exemption. Exemption 3 generally allows agencies to withhold information if it is \"specifically exempted from disclosure by\" a non-FOIA statute. In other words, disclosure under Exemption 3 is determined not by the category of information at issue, but rather by the information's protection by another statute. Congress has enacted a variety of statutes that prohibit or place limitations on the disclosure of information by the government. These statutory confidentiality requirements cover a wide range of information, including such diverse categories as information pertaining to visa determinations, drug pricing data, patent applications, and tax returns, to name but a few. ", "Congress, however, did not intend for Exemption 3 to apply to every statute that authorizes or requires the withholding of information. Congress limited the exemption's coverage to two particular categories of statutes \"to assure,\" as the D.C. Circuit has written, \"that basic policy decisions on governmental secrecy be made by the Legislative rather than the Executive branch.\" The first category of laws that Exemption 3 covers are statutes that direct agencies to withhold information \"from the public in such a manner as to leave no discretion on the issue.\" The second embraces statutes that \"establish[] particular criteria for withholding or refer[] to particular types of matters to be withheld.\" In American Jewish Congress v. Kreps , the D.C. Circuit explained that the first category \"embraces only those statutes incorporating a congressional mandate of confidentiality that, however general, is absolute and without exception.\" The second category, however, \"does leave room for administrative discretion\"; statutes embraced by that category cabin or direct an agency's discretion by specific standards or criteria. A record must fall within the terms of a statute embraced by either category to fall under Exemption 3.", "Exemption 3 limits the universe of statutes subject to its coverage in one additional way. Any statute enacted after the date of the OPEN FOIA Act of 2009 must \"specifically cite[] to\" the exemption to qualify as an Exemption 3 withholding statute. Courts, accordingly, have held that statutes enacted after October 28, 2009, that fail to cite to Exemption 3 do not qualify as an exemption statute under FOIA, even if they would otherwise fall within the first two categories described above."], "subsections": []}, {"section_title": "Exemption 4: Trade Secrets and Commercial or Financial Information", "paragraphs": ["Third parties regularly submit an enormous amount of sensitive proprietary information to the federal government, including in such varied situations as military and other government contracts; settlement negotiations with agencies; and applications for drug approvals by the Food and Drug Administration. FOIA's Exemption 4 authorizes agencies to exempt from disclosure many types of sensitive information that individuals and entities from outside the federal government transmit to the government. Specifically, the exemption protects (1) \"trade secrets\" and (2) \"commercial or financial information obtained from a\u00c2\u00a0person\u00c2\u00a0. . . [that is] privileged or confidential.\" ", "The D.C. Circuit defines a \"trade secret\" for purposes of Exemption 4 as any ", "secret, commercially valuable plan, formula, process, or device that is used for the making, preparing, compounding, or processing of trade commodities and that can be said to be the end product of either innovation or substantial effort.", "Courts have interpreted the exemption to embrace a broad range of information, allowing, for example, agencies to exempt as trade secrets \"documents contain[ing] information consisting of drug product manufacturing information, including manufacturing processes or drug chemical composition and specifications,\" as well as \"information regarding the quantities of menthol contained in cigarettes by brand and by quantity in each brand and subbrand.\" ", "Most Exemption 4 litigation, however, does not concern trade secrets, but rather information potentially exempt under the \"commercial or financial information\" prong of Exemption 4. Under that prong, materials may be withheld under FOIA if they (1) constitute \"commercial or financial information,\" (2) have been supplied to an agency by a \"person,\" and (3) are \"privileged or confidential.\" While each element of the prong must be satisfied for information other than a trade secret to qualify as exempt, a particularly significant question courts face in Exemption 4 litigation is whether commercial or financial information is \"confidential\" within the meaning of Exemption 4. ", "Prior to 2019, the leading test for determining the meaning of \"confidential\" under the exemption was developed by the D.C. Circuit in National Parks & Conservation Association v. Morton . Under the National Parks test, commercial or financial information was deemed confidential \"if disclosure of the information [was] likely . . . (1) to impair the Government's ability to obtain necessary information in the future; or (2) to cause substantial harm to the competitive position of the person from whom the information was obtained.\" Under National Parks , therefore, the courts looked to the effect of disclosing commercial or financial information on the federal government or submitter of information.", "But in Food Marketing Institute (FMI) v. Argus Leader Media , the Supreme Court rejected the D.C. Circuit's test and instead held that \"[a]t least where commercial or financial information is both [1] customarily and actually treated as private by its owner and [2] provided to the government under an assurance of privacy, the information is 'confidential' within the meaning of Exemption 4.\" This definition is broader than the National Parks test and permits agencies to withhold a larger category of information from FOIA's disclosure mandate. But the Supreme Court did not define the precise boundaries of its new test in FMI ; although the Court determined that \"[a]t least the first condition\" must be present for information to qualify as confidential, it did not decide whether the government must always provide assurances that information will be kept private in order for information to fall within Exemption 4's coverage."], "subsections": []}, {"section_title": "Exemption 5: Inter- or Intra-Agency Memoranda or Letters", "paragraphs": ["Exemption 5 applies to \"inter-agency or intra-agency memorandums or letters that would not be available by law to a party other than an agency in litigation with the agency.\" The 1966 House report accompanying the FOIA legislation indicates that the exemption was drafted with the intention of ensuring the \"full and frank exchange of opinions\" within the executive branch and based on the proposition that requiring an agency to release information prior to finalizing an action or decision will hinder its ability to effectively function. To fall within Exemption 5's coverage, a document must both (1) qualify as an \"inter-agency or intra-agency\" document and (2) \"fall within the ambit of a privilege against discovery under judicial standards that would govern litigation against the agency that holds it.\" ", "Material is \"inter-agency or intra agency\" if it originates from an \"agency,\" as that term is defined by FOIA. Some courts have also recognized what is known as the \"consultant corollary,\" under which Exemption 5 protects certain materials that have been supplied to an agency by external consultants. Nonetheless, Exemption 5 does not protect all such communications. In DOI v. Klamath Water Users Protective Association , for example, the Supreme Court held that information submitted to DOI by certain American Indian tribes concerning the allocation of water rights did not constitute \"intra-agency\" records because the tribes had \"communicate[d] with the [agency] with their own, albeit entirely legitimate, interests in mind\" and sought \"a Government benefit at the expense of other applicants.\"", "An inter- or -intra-agency document will only qualify as exempt if, in the context of pretrial discovery, it would not \"be routinely or normally disclosed upon a showing of relevance\" in litigation against the agency. Accordingly, agency materials that would be routinely or normally disclosed in such contexts are not covered by the exemption. That a record must be disclosed in discovery upon a sufficient showing of need does not remove the record from Exemption 5's protection, as records subject to disclosure in such circumstances \"are . . . not 'routinely' or 'normally' available to parties in litigation.\"", "The Court has explained that Exemption 5 \"incorporates the privileges which the Government enjoys under the relevant statutory and case law in the pretrial discovery context.\" The exemption has been construed to embrace privileges mentioned in FOIA's legislative history, but privileges not mentioned may also be incorporated. However, a privilege not expressly listed in the legislative history and considered \"novel\" or having \"less than universal acceptance\" would be less likely to fall within Exemption 5's scope.", "Both the Supreme Court and lower federal courts have identified several privileges that Exemption 5 embraces and that may, therefore, serve as bases for withholding agency documents, including the privileges discussed below.", "D eliberative P rocess P rivilege . The deliberative process privilege is recognized as a component of the more general \"executive privilege.\" The Supreme Court has explained that the deliberative process privilege applies to agency \"advisory opinions, recommendations and deliberations comprising part of a process by which governmental decisions and policies\u00c2\u00a0are formulated.\" The privilege protects agency records that are \"predecisional\" (i.e., they predate an agency decision) and \"deliberative\" (i.e., they reflect \"the give-and-take of the consultative process\"). Factual material is generally not protected by the exemption. Notably, the FOIA Improvement Act of 2016 amended Exemption 5 to exclude application of the privilege to documents that were \"created 25 years or more before the date on which [they] were requested.\"", "P residential C ommunications P rivilege . The presidential communications privilege is also a component of executive privilege and has been recognized as applicable in the Exemption 5 context. The Supreme Court has held that the privilege protects from mandatory disclosure \"communications in performance of [a President's] responsibilities, of his office, and made in the process of shaping policies and making decisions.\" The D.C. Circuit has held that the privilege also protects \"communications authored or received in response to . . . solicitation[s] by\" senior White House advisers \"in the course of gathering information and preparing recommendations on official matters for presentation to the President,\" as well as records \"authored or solicited and received\u00c2\u00a0by . . . members of an immediate White House adviser's staff who have broad and significant responsibility for investigating and formulating the advice to be given to the President on a particular matter.\" Unlike the deliberative process privilege, the presidential communications privilege \"applies to documents in their entirety, and covers final and post-decisional materials as well as pre-deliberative ones.\" ", "A ttorney- C lient P rivilege . Exemption 5 also incorporates the attorney-client privilege. The attorney-client privilege generally protects \"communication[s] made between privileged persons in confidence for the purpose of obtaining or providing legal assistance for the client.\" Exemption 5 incorporates the privilege as it exists for government attorneys, where, as explained by the D.C. Circuit, \"the 'client' may be the agency and the attorney may be an agency lawyer.\" The privilege does not cover information \"adopted as, or incorporated by reference into, an agency's policy.\"", "A ttorney W ork - P roduct P rivilege . In the context of Exemption 5, the attorney work-product privilege embraces \"materials prepared in anticipation of litigation\" by an agency. The privilege serves to protect and maintain an effective adversarial litigation system. While records must have been prepared in anticipation of litigation to be protected by the exemption, in Federal Trade Commission v. Grolier , the Supreme Court held that materials may be withheld under Exemption 5 even if the litigation for which the materials were prepared has since ended. The Court's decision was based on its interpretation of Rule 26 of the Federal Rules of Civil Procedure, which is the source of the work-product doctrine for pretrial discovery in federal civil litigation. It was also based on the fact that, generally, federal judicial decisions regarding \"Rule 26[] had determined that work-product materials retained their immunity from discovery after termination of the litigation for which the documents were prepared, without regard to whether other related litigation is pending or is contemplated.\" The court explained that, because \"Exemption 5 incorporates the privileges which the Government enjoys under the relevant statutory and case law in the pretrial discovery context,\" materials protected by the work-product privilege were not \"'routinely' available in subsequent litigation.\"", "Other Privilege s . The Supreme Court and lower courts have determined that other privileges are embraced by Exemption 5. For example, in United States v. Weber Aircraft Corp. , the Supreme Court held that the privilege protecting \"[c]onfidential statements made to air crash safety inspectors,\" known as the Machin privilege, was incorporated by the exemption. The Court has also held that Exemption 5 applies to \"confidential commercial information, at least to the extent that this information is generated by the Government itself in the process leading up to awarding a contract.\""], "subsections": []}, {"section_title": "Exemption 6: Personnel, Medical, and Similar Files", "paragraphs": ["Exemption 6 exempts from disclosure \"personnel and medical files and similar files the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.\" Federal agencies maintain a large amount of information about individuals, such as health and medical records, criminal records, home addresses, social security numbers, and a variety of other types of personal information. Exemption 6 helps shield \"individuals from the injury and embarrassment\" that may stem from the disclosure of personal information maintained by the government. The exemption applies to citizens and noncitizens alike, but courts have not extended its protections to corporations.", "As an initial manner, an agency may only withhold information for impermissibly invading an individual's privacy if it is a personnel, medical, or \"similar\" file. FOIA does not contain a definition of these terms, but, as some courts have explained, personnel and medical files \"generally contain a variety of information about a person, such as place of birth, date of birth, date of marriage, employment history, and comparable data.\" And the Supreme Court has held that the term \"similar files\" broadly embraces any \"information which applies to a particular individual.\" Courts have identified a variety of information types that qualify as \"files\" under Exemption 6, including, for example, the names and addresses of federal annuitants; individuals' citizenship information; information associated with asylum requests; and \"information regarding marital status, legitimacy of children, identity of fathers of children, medical condition, welfare payments, alcoholic consumption, family fights, [and] reputation.\" ", "Information is not exempt from disclosure under FOIA, however, merely because it qualifies as a personnel, medical, or similar file. Such files must still be disclosed upon request unless release \"would constitute a clearly unwarranted invasion of personal privacy.\" To determine whether disclosure would rise to such a level, agencies and courts balance the privacy interest associated with the requested information against \"the public interest in disclosure.\" Courts typically require that an agency assert a privacy interest that is \"substantial\" (or more than \" de minimis \") to justify withholding the information. And the Supreme Court has held that \"the only relevant public interest in disclosure . . . is the extent to which disclosure would serve the core purpose of FOIA, which is contributing significantly to public understanding of the operations or activities of the government.\" If the asserted privacy interest outweighs the public interest in disclosure, the information is exempt. "], "subsections": []}, {"section_title": "Exemption 7: Law Enforcement Records or Information", "paragraphs": ["FOIA's seventh exemption applies to \"records or information compiled for law enforcement purposes,\" but only where disclosure of such agency records \"would\" or \"could reasonably be expected to\" result in certain harms specified by the exemption (and discussed below). As the Supreme Court has explained, Exemption 7 stemmed from Congress's belief \"that law enforcement agencies had legitimate needs to keep certain records confidential, lest the agencies be hindered in their investigations or placed at a disadvantage when it came time to present their cases.\" ", "To qualify as exempt under Exemption 7, a record must have been \"compiled\" for law enforcement purposes. This criterion may be satisfied even if the record was not originally compiled for law enforcement purposes, as the Supreme Court has held that this exemption also applies if material was subsequently gathered for law enforcement purposes, prior to the agency's response to the FOIA request. Further, the Court has held that material that was originally compiled \"for law enforcement purposes continues to meet the threshold requirements of Exemption 7 where [it] is reproduced or summarized in a new document prepared for a non-law-enforcement purpose.\" As explained by the D.C. Circuit, \"the term 'compiled' in Exemption 7 requires that a document be created, gathered, or used by an agency for law enforcement purposes at some time before the agency invokes the exemption.\"", "Courts have applied Exemption 7 to records compiled for criminal, civil, and administrative enforcement, as well as to materials associated with agencies' national and homeland security functions. Further, the exemption not only applies to agencies that primarily engage in law enforcement, but also to agencies that possess both administrative and law enforcement responsibilities (\"mixed-function agencies\"). Although, on judicial review, an agency must establish that materials withheld under Exemption 7 are compiled for purposes of law enforcement to properly invoke the exemption, agencies whose primary function is criminal law enforcement are often subject to comparatively relaxed standards of proof on this question than are mixed-function agencies.", "Exemption 7 only applies to certain statutorily specified types of law enforcement records. Therefore, establishing that material has been compiled for law enforcement purposes is insufficient to exempt it from disclosure under FOIA; even if a withheld record was compiled for such purposes, it may only be exempted from disclosure if disclosure may or will lead to one of the harms identified in subexemptions (A) through (F). ", "Exemption 7(A) authorizes the withholding of law enforcement records where disclosure \"could reasonably be expected to interfere with enforcement proceedings.\" Courts have held that Exemption 7(A) applies in the context of a \"pending or prospective\" enforcement proceeding and where disclosure \"could reasonably be expected to cause some articulable harm\" to those proceedings, such as by obstructing an agency's investigation or placing an agency \"at a disadvantage when it came time to present [its] case[].\" However, courts have established limits to Exemption 7(A)'s application. For example, many courts have held that agencies must satisfy a high burden in proving that harm will occur from \"the release of information that the targets of the investigation already possess . \"", "Exemption 7(B) applies where disclosure \"would deprive a person of a right to a fair trial or an impartial adjudication.\" The D.C. Circuit has explained \"that a trial or adjudication [must be] pending or truly imminent\" in order to trigger Exemption 7(B), and \"that it [must be] more probable than not that disclosure . . . would seriously interfere with the fairness of those proceedings.\" And the D.C. Circuit has held that, as to disclosure's effect on the fairness of proceedings, courts must examine \"the significance of any alleged unfairness in light of its effect . . . on the proceedings as a whole,\" and not simply whether disclosure would bestow \"a slight advantage . . . on a party in a single phase of a case.\"", "Exemption 7(C) authorizes the withholding of records where disclosure \"could reasonably be expected to constitute an unwarranted invasion of personal privacy.\" Like Exemption 6, Exemption 7(C) was designed to protect personal privacy interests. However, as the Supreme Court has explained, the latter exemption provides more protection for materials under its coverage than does the former. Exemption 6 only applies to disclosures that \" would constitute a clearly unwarranted invasion of personal privacy.\" Exemption 7(C), however, is more encompassing: it does not include the word \"clearly,\" and it protects against disclosures that merely \"could reasonably be expected to\" effect an unwarranted intrusion into personal privacy. Despite these differences, however, both exemptions are guided by many of the same privacy principles discussed above in relation to Exemption 6. For example, courts determining the availability of Exemption 7(C) often engage in the same type of case-by-case balancing of the private interests at stake and the public interest in disclosure as they do in the Exemption 6 context.", "Exemption 7(D) applies to disclosures which \"could reasonably be expected to disclose the identity of a confidential source,\" as well as to \"information furnished by a confidential source\" where \"records or information [were] compiled by criminal law enforcement authority in the course of a criminal investigation or by an agency conducting a lawful national security intelligence investigation.\" A source is \"confidential\" if the government expressly pledges to keep information supplied by the source in confidence or if \"such an assurance could be reasonably inferred\" from the circumstances. According to the Supreme Court's decision in DOJ v. Landano , \"[a] source should be deemed confidential if the source furnished information with the understanding that the [agency] would not divulge the communication except to the extent [it] thought necessary for law enforcement purposes.\" While the Court in Landano rejected the government's argument that confidentiality is generally presumed simply because a source has worked with the FBI during a criminal investigation, it did hold that such a presumption may exist where \"circumstances such as the nature of the crime investigated and the witness' relation to it support an inference of confidentiality.\"", "Exemption 7(E) provides that records may be withheld where disclosure \"would disclose techniques and procedures for law enforcement investigations or prosecutions, or would disclose guidelines for law enforcement investigations or prosecutions if such disclosure could reasonably be expected to risk circumvention of the law.\" As can be seen from the text, this subexemption applies to two different types of investigation and prosecution materials: \"techniques and procedures\" and \"guidelines.\" Courts are split as to whether the exemption applies to the disclosure of both types of materials or only to the \"guidelines\" described in the subexemption's second clause.", "Exemption 7(F) authorizes withholding where disclosure \"could reasonably be expected to endanger the life or physical safety of any individual.\" Prior to 1986, this subexemption only protected against disclosures that could endanger law enforcement personnel. However, the 1986 amendments to FOIA expanded Exemption 7(F)'s coverage by substituting \"any individual\" for \"law enforcement personnel.\" "], "subsections": []}, {"section_title": "Exemption 8: Financial Institution Reports", "paragraphs": ["Exemption 8 protects matters \"contained in or related to examination, operating, or condition reports prepared by, on behalf of, or for the use of an agency responsible for the regulation or supervision of financial institutions.\" The Senate report underlying the original law explains that, by limiting the availability of the covered financial reports to the agencies tasked with overseeing financial institutions, the exemption was intended to protect such institutions' security. Courts have also opined that Exemption 8 was intended \"to safeguard the relationship between the banks and their supervising agencies.\" "], "subsections": []}, {"section_title": "Exemption 9: Geological and Geophysical Information and Data Concerning Wells", "paragraphs": ["Exemption 9 exempts from disclosure \"geological and geophysical information and data, including maps, concerning wells.\" Courts have not had many opportunities to interpret this exemption, as agencies do not often invoke it."], "subsections": []}]}, {"section_title": "Exclusions", "paragraphs": ["In addition to its nine exemptions, FOIA also contains three records exclusions. FOIA's exclusions allow an agency, in response to a request for certain law enforcement records, to \"treat the records as not subject to the requirements of\" FOIA. As the Attorney General ' s Memorandum on the 1 9 86 Amendments to the Freedom of Information Act explains, when an agency receives a request for records that fall within the coverage of an exclusion, the agency is authorized to withhold the records and \"respond to the request as if the excluded records d[o] not exist.\" FOIA's exclusions, in other words, allow agencies to \"withhold documents without comment.\" Conversely, when an agency invokes a FOIA exemption in response to a request for records, it is required to \"reveal the fact of and grounds for any withholdings\" to the requester. FOIA's exclusions, therefore, are designed to allow agencies to better avoid disclosure of the narrow categories of records to which they apply. Each of FOIA's three exclusions is codified at 5 U.S.C. \u00c2\u00a7 552(c). ", "Exclusion (c)(1). The first exclusion covers records protected by Exemption 7(A) (i.e., records whose disclosure \"could reasonably be expected to interfere with enforcement proceedings\"), but only if ", "the relevant law enforcement proceeding or investigation concerns a \"possible\" criminal violation; and the agency has \"reason to believe\" both that the pendency of the proceeding or investigation is unknown to the subject of the proceeding or investigation, and revealing the records' existence \"could reasonably be expected to interfere with enforcement proceedings.\" ", "The exclusion was intended to prevent an agency from \"tipping off\" an individual about the existence of an investigation of which he or she is a subject by stating, in response to a FOIA request, that requested records are exempt from disclosure under Exemption 7(A). While agencies can rely on this exclusion to prevent such an outcome, by its terms, Exclusion (c)(1) is only available to an agency while the conditions described in its text continue. Accordingly, once the investigation becomes public, this exclusion no longer applies.", "Exclusion (c)(2). The second exclusion applies to records that are \"maintained by a criminal law enforcement agency under an informant's name or personal identifier.\" When a third party requests such records \"according to the informant's name or personal identifier,\" Exclusion (c)(2)\u00c2\u00a0authorizes the agency to \"treat the records as not subject to the requirements of\" FOIA. The Attorney General's memorandum on the 1986 amendments to FOIA describes FOIA's second exclusion as contemplating \"the situation in which a sophisticated requester could try to ferret out an informant in his organization by forcing a law enforcement agency\" to invoke FOIA's exemption for records relating to a confidential source (Exemption 7(D)), an action that would likely corroborate the requester's suspicion that the individual subject to the request is a confidential informant. The memorandum cites as an example the situation in which a criminal organization that suspects one of its members is a criminal informant either requires that the suspected informant request law enforcement records about himself or herself, or else compels the individual to submit a privacy waiver to allow a member of the organization to make such a request. Exclusion (c)(2) authorizes law enforcement agencies to protect against the disclosure of the identities of their confidential informants in such situations. However, like Exclusion (c)(1), an agency's ability to use the second exclusion is subject to an important limitation: an agency may not use the second exclusion if \"the informant's status as an informant has been officially confirmed.\"", "Exclusion (c)(3). FOIA's third exclusion protects a subset of FBI records concerning \"foreign intelligence,\" \"counterintelligence,\" or \"international terrorism.\" The FBI may treat such records as excluded from FOIA if \"the existence of the records is classified information as provided in\" Exemption 1. Exclusion (c)(3) seeks to prevent the harm that may occur from an agency's publicly claiming the protection of Exemption 1 in response to a request and, therefore, admitting that such sensitive records do indeed exist. Like the other exclusions, however, the third exclusion's protective ambit is limited\u00e2\u0080\u0094an agency may only use Exclusion (c)(3) for such time \"as the existence of [such] records remains classified information.\""], "subsections": []}, {"section_title": "FOIA-Related Litigation: Selected Issues", "paragraphs": ["FOIA not only established a statutory right of access to agency records, but also provided a means for requesters to enforce that right through judicial review of agency decisions to withhold records. Conversely, parties may initiate legal actions to prevent agencies from disclosing information requested under FOIA in certain situations. These aspects of FOIA and FOIA-related litigation\u00e2\u0080\u0094judicial review of agencies' withholding decisions and so-called reverse-FOIA litigation\u00e2\u0080\u0094are discussed below."], "subsections": [{"section_title": "Judicial Review of Agency Withholding Decisions", "paragraphs": ["Under 5 U.S.C. \u00c2\u00a7 552(a)(4)(B), federal district courts have \"jurisdiction to enjoin [an] agency from withholding agency records and to order the production of any agency records improperly withheld from the complainant.\" The Supreme Court, accordingly, has explained that a court has jurisdiction under \u00c2\u00a7 552(a)(4)(B) if it can be shown \"that an agency has (1) improperly; (2)\u00c2\u00a0withheld; (3) agency records.\" In DOJ v. Tax Analysts , the Court held that, because FOIA's exemptions are \"exclusive,\" agency records are \"improperly\" withheld when an agency refuses to disclose requested records that are not protected by an applicable exemption. Yet the Court has also held that an agency's decision to withhold a record is not \"improper\" if a court order prohibits the agency from disclosing the record. Further, in Kissinger v. Reporters Committee for Freedom of the Press , the Court held that records are not \"withheld\" under \u00c2\u00a7\u00c2\u00a0552(a)(4)(B) if, before a request was filed, the records were \"removed\u00c2\u00a0from the possession of the agency.\" The Court did not answer whether an agency \"withholds\" a record when it \"purposefully route[s] a document out of agency possession in order to circumvent a FOIA request.\" However, as one court has explained, \"an agency's FOIA obligations might extend to documents that are not in the agency's immediate custody or control . . . when there is evidence to suggest that the requested records are outside of the agency's control precisely because the agency has attempted to shield its records from search or disclosure under the FOIA.\" ", "An improper withholding is not limited to those situations in which an agency explicitly rejects a FOIA request or fails to respond to a request. For example, an inadequate search for responsive records is also an improper withholding. (The requirement that an agency conduct an adequate search is discussed above. )", "FOIA instructs courts to review appeals from agency withholding decisions \"de novo.\" Under this standard of review, a court accords no deference to the agency's decision below. That said, courts will sometimes defer to an agency's judgment in some aspects of FOIA litigation. For example, courts in FOIA disputes generally accord \"some measure of deference to the executive in cases implicating national security.\" The scope and standard of review in FOIA cases may differ in other instances, as well. For instance, while judicial review of an agency's decision regarding fee waivers is de novo, FOIA states that review \"shall be limited to the record before the agency.\"", "The agency has the burden of proving that it properly withheld information under a FOIA exemption. Agencies defending withholding decisions in federal court often supply what is known as a \" Vaughn Index\" to aid in justifying their decisions. In FOIA lawsuits, the plaintiff generally does not know with any specificity the contents of the requested records, which the D.C. Circuit has declared can \"seriously distort[] the traditional adversary nature of our legal system's form of dispute resolution.\" A Vaughn Index, which is akin to a privilege log, is a response to this informational asymmetry. The D.C. Circuit has held that a proper Vaughn Index \"provide[s] a relatively detailed justification [for withholdings], specifically identifying the reasons why a particular exemption is relevant and correlating those claims with the particular part of a withheld document to which they apply.\" Agencies can also justify nondisclosure decisions through the submission of affidavits of agency officials that, per the D.C. Circuit, \"describe the justifications for nondisclosure with reasonably specific detail, demonstrate that the information withheld logically falls within the claimed exemption, and are not controverted by either contrary evidence in the record nor by evidence of agency bad faith.\"", "FOIA also authorizes courts to review records in camera (i.e., privately and outside of the plaintiffs' view) to determine whether the records have been appropriately withheld. Courts often conduct in camera inspection of withheld information when an agency has not \"provide[d] a sufficiently detailed explanation to enable the . . . court to make a de novo determination of the agency's claims of exemption.\" Courts retain discretion whether to conduct in camera review, but generally only do so in \"exceptional\" cases. In certain situations, courts may authorize agencies to submit in camera agency affidavits; however, as opposed to in camera inspection of withheld records, \"use of in camera affidavits has generally been disfavored.\" "], "subsections": []}, {"section_title": "Reverse-FOIA Litigation", "paragraphs": ["While requesters may seek judicial review of an agency's decision to withhold information under FOIA, in some circumstances parties may pursue judicial action to prevent an agency's disclosure of information in response to a FOIA request. These actions are often called reverse-FOIA lawsuits. An entity ordinarily institutes a reverse-FOIA action to prevent an agency from disclosing sensitive information, often concerning commercial or financial matters, that the entity had previously submitted to the agency. In Chrysler Corporation v. Brown , the Supreme Court held that neither the FOIA statute nor the TSA authorizes a private right of action to enjoin an agency from disclosing information in violation of the TSA. However, the Court held that judicial review of such actions is available under the APA. In reverse-FOIA suits, courts generally review an agency's decision to disclose information under \u00c2\u00a7 706(2)(A) of the APA, which provides that courts are to \"hold unlawful and set aside agency action, findings, and conclusions\" that are \"arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.\" The burden of proof in a reverse-FOIA action is on the plaintiff. ", "Under Executive Order 12600, an agency is required, in certain circumstances, to provide notice to those who submitted \"records containing confidential commercial information\" if the agency has concluded that the records may need to be disclosed in response to a FOIA request. Agency procedures generally must allow applicable submitters to object to disclosure and provide that the agency, in the event it disagrees with the submitter's objection, supply the submitter with the reasons for its disagreement. The executive order defines \"confidential commercial information\" as information submitted to an agency \"that arguably contain[s] material exempt from release under Exemption 4 . . . because disclosure could reasonably be expected to cause substantial competitive harm.\" Notably, the Supreme Court abrogated the \"substantial competitive harm\" test for Exemption 4 in FMI v. Argus Leader Media . In response, DOJ has advised agencies to use the broader definition of \"confidential\" declared in FMI in their predisclosure notification procedures."], "subsections": []}]}, {"section_title": "Selected Issues of Potential Interest for Congress", "paragraphs": ["While Congress is not subject to FOIA, the act raises questions of particular relevance to the legislative branch. For example, per the act, an agency may not \"withhold information from Congress\" on the basis that such information is exempt under FOIA. There are different views, however, about what \"Congress\" means in this instance\u00e2\u0080\u0094in particular, whether this withholding prohibition applies to requests from individual Members of Congress, or whether the provision is limited to access requests from each house of Congress or congressional committees. In addition, although Congress is under no obligation to disclose its own materials under FOIA, whether a congressional document possessed by an agency is subject to FOIA depends on whether or not Congress clearly expressed its determination to retain control over the document.", "Although this section only discusses the two topics just mentioned, FOIA implicates congressional interests in many other ways. For example, Congress has often expressed its interest in the frequency with which agencies use exemptions to withhold information from requesters, as well as the general backlog of FOIA requests. Further, FOIA evidences Congress's general interest in executive branch transparency, and Congress has amended FOIA several times since its 1965 enactment, often due or in response to judicial interpretations of the act or agencies' administration thereof."], "subsections": [{"section_title": "Congressional Access to Agency Information: FOIA's \"Special Access\" Provision", "paragraphs": ["FOIA's \"special access\" provision\u00e2\u0080\u0094codified at 5 U.S.C. \u00c2\u00a7 552(d)\u00e2\u0080\u0094states that FOIA \"is not authority to withhold information from Congress.\" The Senate report underlying the original act explained that this provision is intended to clarify \"that, because [FOIA] only refers to the public's right to know, it cannot . . . be backhandedly construed as authorizing the withholding of information from the Congress, the collective representative of the public.\" While this provision undoubtedly prohibits agencies from withholding information from Congress based on a FOIA exemption, there is some dispute over whether subsection (d) affords individual Members of Congress access to otherwise exempt records under FOIA, or, on the other hand, whether the provision is limited to access requests from the broader arms of Congress (i.e., either house of Congress and congressional committees).", "The Department of Justice has long maintained that the special access provision does not generally apply to records requests from individual Members of Congress, meaning that agencies generally can invoke relevant exemptions to withhold materials in response to individual Member requests. DOJ distinguishes between requests for information from (1) \"a House of Congress as a whole (including through its committee structure)\" and (2) individual Members. In DOJ's view, requests from the former benefit from subsection (d)'s withholding prohibition; however, requests from the latter generally do not, no matter\u00e2\u0080\u0094as DOJ has explained\u00e2\u0080\u0094if the individual Member is \"clearly acting in a completely official capacity\" in making the request. Under DOJ's interpretation, a request by an individual Member in his or her official capacity is only covered by the special access provision if the request is from the chair of a committee or subcommittee or authorized by a committee or subcommittee. That said, individual Members of Congress can submit FOIA requests to the same extent as other persons.", "But DOJ's interpretation of the special access provision has been criticized by some as too narrow. This criticism finds support in language from the D.C. Circuit's decision in Murphy v. Department of the Army , which interpreted the special access provision as applying to individual Members acting in their official capacities . The court held that the Army had not waived Exemption 5 protection for an internal agency memorandum by sharing it with an individual Member of Congress. The court based its holding on an interpretation of the special access provision, concluding that agencies will not waive the exemption in such circumstances \"to the extent that Congress has reserved to itself in section 552([d]) the right to receive information not available to the general public.\" In responding to the requester's argument that the special access provision was limited to Congress as a whole (and not its component parts\u00e2\u0080\u0094including individual Members), the court wrote", "All Members have a constitutionally recognized status entitling them to share in general congressional powers and responsibilities, many of them requiring access to executive information. It would be an inappropriate intrusion into the legislative sphere for the courts to decide without congressional direction that, for example, only the chairman of a committee shall be regarded as the official voice of the Congress for purposes of receiving such information, as distinguished from its ranking minority member, other committee members, or other members of the Congress. Each of them participates in the law-making process; each has a voice and a vote in that process; and each is entitled to request such information from the executive agencies as will enable him to carry out the responsibilities of a legislator.", "Instead, the court opined that the special access rule applies when a Member's request is made in his or her official\u00e2\u0080\u0094as opposed to \"purely private or personal\"\u00e2\u0080\u0094capacity. Members of Congress from both major political parties have cited Murphy in support of individual Members' right to access information from the executive branch. ", "DOJ's more narrow interpretation, discussed above, was a reaction to Murphy 's reading of FOIA's application to Members, which it views as being inconsistent with the act's text and legislative history. DOJ has argued, for example, that interpreting \"Congress\" to include individual Members conflicts with Article I, \u00c2\u00a7 1 of the Constitution, which provides that Congress \"consist[s] of a Senate and a House of Representatives,\" but does not mention the individuals who serve in those chambers. DOJ also asserts its position finds support in the 1966 House report for FOIA. In discussing the special access provision, the report states that \"Members of Congress have all of the rights of access guaranteed to ' any person ' by [FOIA], and the Congress has additional rights of access to all Government information which it deems necessary to carry out its functions.\" DOJ has also maintained that the D.C. Circuit's discussion of FOIA's application to individual Members \"was not indispensable to the [ Murphy ] decision\" and therefore does not constitute a binding rule. But while the D.C. Circuit has not had opportunity to revisit Murphy on the question of FOIA's application to agency communications with individual Members, later appellate panel and lower court decisions within the circuit have appeared to treat Murphy 's interpretation as controlling."], "subsections": []}, {"section_title": "Congressional Records", "paragraphs": ["As discussed above, FOIA requires federal agencies to disclose \"agency records\" after receiving a valid request. But Congress is not an \"agency\" under FOIA. Congress, accordingly, is not obligated to respond to FOIA requests for documents in its possession. But Congress's exemption from FOIA extends beyond requests directed specifically at it. Crucially, the D.C. Circuit has held that a document that an agency obtains from Congress or creates in response to a congressional request qualifies as a congressional record exempt from FOIA if \"Congress manifested a clear intent to control the document.\" ", "Congress is not required to provide \"contemporaneous instructions when forwarding\" documents to agencies to manifest its intent to control a document. In American Civil Liberties Union v. Central Intelligence Agency (CIA) , the D.C. Circuit determined that a confidential report authored by the Senate Select Committee on Intelligence was a congressional record and, therefore, not subject to FOIA. The case concerned the committee's evaluation of a CIA program on detention and interrogation. In 2014, the committee completed a final report based on its review. Although the committee did not publicly release the final report, it distributed copies to the President and other executive branch officials. In 2009, before beginning its review, the committee's chair and vice chair sent a letter to the CIA memorializing an agreement concerning the committee's examination of CIA documents at a secure electronic CIA reading room. The letter provided the following conditions:", "Any documents generated on the network drive referenced in paragraph 5, as well as any other notes, documents, draft and final recommendations, reports or other materials generated by Committee staff or Members, are the property of the Committee and will be kept at the Reading Room solely for secure safekeeping and ease of reference. These documents remain congressional records in their entirety and disposition and control over these records, even after the completion of the Committee's review, lies exclusively with the Committee. As such, these records are not CIA records under [FOIA] or any other law . . . . If the CIA receives any request or demand for access to these records from outside the CIA under [FOIA] or any other authority, the CIA will immediately notify the Committee and will respond to the request or demand based upon the understanding that these are congressional, not CIA, records.", "The D.C. Circuit reasoned that these conditions made \"it plain that the Senate Committee intended to control any and all of its work product, including the [resulting 2014 final report], emanating from its oversight investigation of the CIA.\" The committee's subsequent transmission of the report to executive branch officials, with the instruction to the CIA and other agencies to use the report \"as broadly as appropriate\" both to ensure that the practices the report criticized were never repeated and to help in the development of CIA programs and executive branch guidelines, did not erase \"the Senate Committee's clear intent to maintain control of the\" final report.", "Whether Congress's manifestation of intent to control extends to a particular record depends on the language used in Congress's directive to the agency. In United We Stand America v. Internal Revenue Service (IRS) , the D.C. Circuit held that a letter sent from the chief of staff of the Joint Committee on Taxation to the IRS requesting information in connection with a committee investigation did not fully protect the IRS's response. The request stated ", "This document is a Congressional record and is entrusted to the [IRS] for your use only. This document may not be disclosed without the prior approval of the Joint Committee.", "The IRS transmitted documents in response to the committee's request (of which the agency retained a copy). In litigation arising from a FOIA request for the committee's request and the agency's response thereto, the court held that, although the language from the committee's request quoted above\u00e2\u0080\u0094which referred to \"[t]his document\"\u00e2\u0080\u0094conveyed a sufficient manifestation of intent to control the committee's request, that manifestation of intent did not extend to the IRS's response, save for \"those portions of the IRS response that would effectively disclose th[e] [committee's] request.\" As the court explained, \"[if] the Joint Committee intended to keep confidential not just 'this document' but also the IRS response, it could have done so by referring to 'this document and all IRS documents created in response to it.'\" Accordingly, the court of appeals remanded the case to the district court to conclude whether information in the response that would reveal the committee's request could be redacted and to direct the agency to \"release any segregable portions that are not otherwise protected by one of FOIA's nine exemptions.\" ", "The D.C. Circuit has articulated other principles helpful for determining whether Congress has manifested sufficient intent to control a particular record. For example, courts have found that \"post-hoc objections\" to disclosure raised by Congress \"long after the . . . record[s'] creation\" and \"in response to the FOIA litigation\" do not convey sufficient manifestations of intent to control. Nor are proper manifestations of intent contained in expressions that are \"too general and sweeping.\" In Paisley v. CIA , for example, the court acknowledged that letters sent by the Senate Select Committee on Intelligence to the CIA \"indicate[d] the Committee's desire to prevent release without its approval of any documents generated by the Committee or by an intelligence agency in response to a Committee inquiry.\" However, the court held that the letters did not alone manifest sufficient congressional intent to control the documents at issue because \"there [was] no discussion of any particular documents or of any particular criteria by which to evaluate and limit the breadth of [the Committee's] interdiction.\"", "Whether Congress has sufficiently manifested intent to control a document ultimately depends on the circumstances underlying each case. For example, in United We Stand (discussed above), the D.C. Circuit specifically underscored that the manifestation of intent to control at issue in that case was contained \"in a letter written by the Joint Committee's chief of staff as part of an investigation authorized by the chairman, vice-chairman, and ranking members of the Joint Committee,\" as well as that an IRS document that the committee relied on \"expressly recognize[d] the confidentiality of Joint Committee requests.\" On the other hand, in American Oversight, Inc. v. Department of Health & Human Services , the U.S. District Court for the District of Columbia did not explicitly emphasize the level of formality of the congressional manifestation of assent in reaching its decision that the materials at issue were not agency records subject to disclosure under FOIA. Instead, the court relied on its reading of language contained in email messages between staff of the House Committee on Ways and Means and executive branch personnel addressing \"health care reform\" to find that Congress had manifested its intent to retain control over the messages. "], "subsections": []}]}, {"section_title": "Related Open Government and Information Laws: FACA, the Sunshine Act, and the Privacy Act", "paragraphs": ["FOIA is the primary statutory mechanism by which the public may gain access to federal government records and information. But other laws\u00e2\u0080\u0094specifically FACA, the Sunshine Act, and the Privacy Act\u00e2\u0080\u0094also set forth rights and limitations on the public's access to government information or activities. FACA governs the establishment and operation of certain advisory committees created to supply advice and recommendations to federal agencies or the President. Among other things, the statute generally mandates the public availability of an advisory committee's \"records, reports, transcripts, minutes, appendixes, working papers, drafts, studies, agenda, or other documents,\" and members of the public are authorized under FACA to attend and participate in advisory committee meetings. The availability of an advisory committee's papers is subject to FOIA's exemptions.", "Another general open government statute, the Sunshine Act, imposes transparency obligations on the meetings of certain multimember boards and commissions. The statute requires that covered agencies allow the public to attend their meetings and have access to relevant information. Meetings and information required to be disclosed under the act are subject to ten exemptions that resemble FOIA's.", "Lastly, the Privacy Act governs the \"collection, maintenance, use and dissemination\" of agency records that contain individually identifiable information about U.S. citizens and lawful permanent residents. The act forbids the disclosure of covered records without the written consent or request of the individual identified by the record, subject to twelve exceptions. One Privacy Act exception covers records for which disclosure is \"required\" by FOIA. Under this exception, an agency record subject to the Privacy Act that is not protected by any of FOIA's exemptions\u00e2\u0080\u0094and which therefore must be disclosed under FOIA upon request\u00e2\u0080\u0094is not prohibited from being disclosed by the Privacy Act. The Privacy Act also permits individuals to request access to records that pertain to them and to seek the amendment of such records, subject to exemptions. "], "subsections": []}]}}
{"id": "R46241", "title": "U.S.-EU Trade Agreement Negotiations: Trade in Food and Agricultural Products", "released_date": "2020-02-27T00:00:00", "summary": ["The Office of the U.S. Trade Representative (USTR) officially notified the Congress of the Trump Administration's plans to enter into formal trade negotiations with the European Union (EU) in October 2018. In January 2019, USTR announced its negotiating objectives for a U.S.-EU trade agreement, which included agricultural policies\u00e2\u0080\u0094both market access and non-tariff measures. However, the EU's negotiating mandate, released in April 2019, stated that the trade talks would exclude agricultural products.", "U.S.-EU27 Agricultural Trade, 1990-201 9", "Improving market access remains important to U.S. agricultural exporters, especially given the sizable and growing U.S. trade deficit with the EU in agricultural products (see figure). Some market access challenges stem in part from commercial and cultural practices that are often enshrined in EU laws and regulations and vary from those of the United States. For food and agricultural products, such differences are focused within certain non-tariff barriers to agricultural trade involving Sanitary and Phytosanitary (SPS) measures and Technical Barriers to Trade (TBTs), as well as Geographical Indications (GIs).", "SPS and TBT measures refer broadly to laws, regulations, standards, and procedures that governments employ as \"necessary to protect human, animal or plant life or health\" from the risks associated with the spread of pests and diseases, or from additives, toxins, or contaminants in food, beverages, or feedstuffs. SPS and TBT barriers have been central to some longstanding U.S.-EU trade disputes, including those involving EU prohibitions on hormones in meat production and pathogen reduction treatments in poultry processing, and EU restrictions on the use of biotechnology in agricultural production. As these types of practices are commonplace in the United States, this tends to restrict U.S. agricultural exports to the EU.", "GI protections refer to naming schemes that govern product labeling within the EU and within some countries that have a formal trade agreement with the EU. These protections tend to restrict U.S. exports to the EU and to other countries where such protections have been put in place.", "Plans for U.S.-EU trade negotiations come amid heightened U.S.-EU trade frictions. In March 2018, President Trump announced tariffs on steel and aluminum imports on most U.S. trading partners after a Section 232 investigation determined that these imports threaten U.S. national security. Effective June 2018, the EU began applying retaliatory tariffs of 25% on imports of selected U.S. agricultural and non-agricultural products. In October 2019, the United States imposed additional tariffs on imports of selected EU agricultural and non-agricultural products, as authorized by World Trade Organization (WTO) dispute settlement procedures in response to the longstanding Boeing-Airbus subsidy dispute.", "Public statements by U.S. and EU officials in January 2020, however, signaled that the U.S.-EU trade talks might include SPS and regulatory barriers to agricultural trade. Statements by U.S. Department of Agriculture (USDA) officials cited in the press call for certain SPS issues as well as GIs to be addressed in the trade talks. However, other press reports of statements by EU officials have downplayed the extent that specific non-tariff barriers would be part of the talks. More formal discussions are expected in the spring of 2020.", "Previous trade talks with the EU, as part of the Transatlantic Trade and Investment Partnership (T-TIP) negotiations during the Obama Administration, stalled in 2016 after 15 rounds. During those negotiations, certain regulatory and administrative differences between the United States and the EU on issues of food safety, public health, and product naming schemes for some types of food and agricultural products were areas of contention."], "reports": {"section_title": "", "paragraphs": ["I n October 2018, the Office of the U.S. Trade Representative (USTR) officially notified the Congress, under Trade Promotion Authority (TPA), of the Trump Administration's plans to enter into formal trade negotiations with the European Union (EU). This action followed a July 2018 U.S.-EU Joint Statement by President Trump and then-European Commission (EC) President Juncker announcing that they would work toward a trade agreement to reduce tariffs and other trade barriers, address unfair trading practices, and increase U.S. exports of soybeans and certain other products. Previously, in 2016, U.S.-EU negotiations as part of the Transatlantic Trade and Investment Partnership (T-TIP) stalled after 15 rounds under the Obama Administration. ", "The outlook for new U.S.-EU talks remains uncertain. There continues to be disagreement about the scope of the negotiations, particularly the EU's intent to exclude agriculture from the talks on the basis that it \"is a sensitivity for the EU side.\" EU sensitivities stem in part from commercial and cultural practices that are often embodied in EU laws and regulations and vary from those of the United States. For food and agricultural products, such differences include regulatory and administrative differences between the United States and the EU on issues related to food safety and public health\u00e2\u0080\u0094or Sanitary and Phytosanitary (SPS) measures, and Technical Barriers to Trade (TBTs). Other differences include product naming schemes for some types of food and agricultural products subject to protections involving Geographical Indications (GIs). Addressing food and agricultural issues in the negotiations remains important to U.S. exporters given the sizable and growing U.S. trade deficit with the EU in agricultural products.", "Renewed trade talks also come amid heightened U.S.-EU trade frictions. In March 2018, President Trump announced 25% steel and 10% aluminum tariffs on most U.S. trading partners, including the EU, after a Section 232 investigation determined that these imports threaten U.S. national security. In response, the EU began applying retaliatory tariffs of 25% on certain U.S. exports to the EU. Additionally, as part of the Boeing-Airbus subsidy dispute, in October 2019 the United States began imposing additional, World Trade Organization (WTO)-sanctioned tariffs on $7.5 billion worth of certain U.S. imports from the EU. ", "This report provides an overview of U.S.-EU trade in agriculture and background information on selected U.S.-EU agricultural trade issues concerning a potential trade liberalization agreement between the United States and the EU. Following a review of U.S.-EU agricultural trade trends, this report describes recent agricultural trade trends and tariff actions affecting certain U.S.-EU traded food and agricultural goods. It then describes potential issues in U.S.-EU trade agreement negotiations involving food and agricultural trade. Figure 1 shows a timeline of selected events.", "Figure 1. Selected Timeline of Events Related to U.S.-EU Agricultural TradeSource: CRS. Actions related to the U.S.-EU Trade Agreement negotiations are shown in red.Note: USTR = U.S. Trade Representative (USTR). WTO = World Trade Organization. EU27 includes the current 27 EU member states, excluding the United Kingdom (UK). EU28 includes the UK."], "subsections": [{"section_title": "Trade Data and Statistics", "paragraphs": ["Following are trade data and statistics for the current 27 EU member states (EU27). Unless otherwise noted, these figures exclude the United Kingdom (UK), which formally exited the EU in January 2020. Moving forward, U.S. trade negotiations with the EU are expected to exclude the UK, which may enter into trade discussions with the United States separately. ", "Trade data presented here are compiled from U.S. Department of Agriculture (USDA) trade statistics for \"Agricultural and Related Products.\" As defined by USDA, this product grouping includes agricultural products (including bulk and intermediate products and also consumer-oriented products) and agricultural-related products (including fish and shellfish products, distilled spirits, forest products, and ethanol and biodiesel blends). Additional information on the various data sources is discussed in the t ext box .", "The United States and the EU are the world's largest trade and investment partners. While food and agricultural trade between the United States and the EU27 accounts for less than 1% of the value of overall trade in total goods and services ( Figure 2 ), the EU27 remains a leading market for U.S. agricultural exports. It accounted for about 8% of the value of all U.S. exports and ranked as the fifth-largest market for U.S. food and farm exports in 2019\u00e2\u0080\u0094after Canada, Mexico, China, and Japan. Data depicted in Figure 2 do not reflect trade in fish and seafood, distilled spirits, and bioenergy products.", "During the past two decades, growth in U.S. agricultural exports to the EU has not kept pace with growth in trade to other U.S. markets. U.S. agricultural imports from the EU27 currently exceed U.S. exports to the EU27. In 2019, U.S. exports of agricultural and related products to the EU27 totaled $12.4 billion, while U.S. imports of agricultural and related products from the EU27 totaled $29.7 billion, resulting in a U.S. trade deficit of approximately $17.3 billion. This reverses the U.S. agricultural trade surpluses with the EU27 during the early 1990s ( Figure 3 ). Leading U.S. agricultural exports to the EU27 were corn and soybeans, tree nuts, distilled spirits, fish products, wine and beer, planting seeds, and processed foods. Leading U.S. imports from the EU27 were wine and spirits, beer, drinking waters, olive oil, cheese, and processed foods. ", "While data shown in the graphic reflect total trade in \"Agricultural and Related Products,\" including agricultural products, fish and shellfish products, distilled spirits, and other agricultural related products, the trade picture may vary by product category (as shown in Table 1 ). Trade data presented here do not include the UK, which is a major importer of U.S. agricultural products. In 2019, U.S. agricultural and related product exports to the UK totaled $2.8 billion, which roughly equaled the value of imports from the UK ( Figure 4 )."], "subsections": []}, {"section_title": "U.S.-EU Tariff Retaliation", "paragraphs": ["The U.S.-EU trade negotiations come amid heightened U.S.-EU trade frictions. In March 2018, President Trump announced 25% steel and 10% aluminum tariffs on most U.S. trading partners after a Section 232 investigation determined that these imports threaten to impair U.S. national security. The EU was not among the trading partners with whom the Trump Administration negotiated permanent exemptions from tariffs or alternative quota arrangements, and U.S. tariffs on U.S. imports from the EU went into effect in June 2018. The EU views the U.S. national security justification as groundless and the U.S. tariffs to be inconsistent with WTO rules. The EU has challenged the U.S. actions at the WTO.", "Effective June 2018, the EU began applying retaliatory tariffs of 25% on imports of U.S. whiskies, corn, rice, kidney beans, preserved and mixed vegetables, orange juice, cranberry juice, peanut butter, and tobacco products, along with selected non-agricultural products ( Figure 5 ). This action includes the EU27 countries and the UK (EU28), as U.S. exports to the UK remain subject to the additional tariffs. The value of U.S. agricultural exports to the EU28 targeted by these additional tariffs is estimated to have been approximately $1.2 billion in 2018, or nearly 9% of total U.S. agricultural exports to the EU28 (excluding nonagricultural products) ( Table 2 ). Some analysts estimate that U.S. agricultural exports subject to tariff retaliation in 2018-2019 experienced a 33% decline in the EU28 market. ", "In October 2019, U.S.-EU trade tensions escalated further when the United States imposed additional tariffs on $7.5 billion worth of certain U.S. imports from the EU, or about 1.5% of all U.S. imports from the EU28 in 2018 (including the UK and nonagricultural products). This action, authorized by WTO dispute settlement procedures, followed a USTR investigation initiated in April 2019 under Section 301 of the Trade Act of 1974. The USTR determined that the EU had denied U.S. rights under WTO agreements. Specifically, USTR concluded that the EU and certain member states (including the UK) had not complied with a WTO Dispute Settlement Body ruling recommending the withdrawal of WTO-inconsistent EU subsidies to Airbus for the manufacture of large civil aircraft.", "The list of products subject to additional tariffs stemming from the Airbus subsidy dispute targets mainly the EU member states responsible for the illegal subsidies. It includes agricultural products such as spirits and wine, cheese and dairy products, meat products, fish and seafood, fresh and prepared fruit products, coffee, and bakery goods. Agricultural imports account for about 56% of the total value of EU28 products subject to these additional tariffs. As of February 2020, tariff increases are limited to 25% on agricultural products, and they target primarily France, Germany, UK, and Spain ( Figure 6 ). By agricultural product category, whiskies, liqueurs, and wine (mainly from UK and France) account for approximately 38%, and other food and agricultural products (mainly from Spain and France) account for 19% ( Table 3 ). In December 2019, USTR began a review to determine if the list of imports subject to additional tariffs should be revised or tariff rates increased. In February 2020, USTR made some changes to the list of products affected by Section 301 tariffs. In terms of U.S. agricultural imports from the EU, the only change will be the removal of prune juice from the list, which will not be subject to additional 25% tariffs effective March 5, 2020.", "U.S.-EU trade negotiations could be affected further if the EU retaliates and imposes tariffs on U.S. exports, in response to either these U.S. actions or an upcoming WTO decision in the parallel EU dispute case against the United States. Later this year a WTO arbitrator is expected to authorize the EU to seek remedies in the form of tariffs on U.S. exports to the EU, after the WTO determined in early 2019 that the United States had also failed to abide by WTO subsidies rules in supporting Boeing."], "subsections": []}, {"section_title": "Selected U.S.-EU Agricultural Trade Issues", "paragraphs": ["In January 2019, USTR announced its negotiating objectives for a U.S.-EU trade agreement, following a public comment period and a hearing involving several leading U.S. agricultural trade associations. These objectives include agricultural policies\u00e2\u0080\u0094both market access and non-tariff measures such as tariff rate quotas (TRQ) administration and other regulatory issues. Among regulatory issues, key U.S. objectives include harmonizing regulatory processes and standards to facilitate trade, including SPS standards, and establishing specific commitments for trade in products developed through agricultural biotechnologies. The U.S. objectives also include addressing GIs by protecting generic terms for common use. U.S. agricultural interests generally support including agriculture in a U.S.-EU trade agreement. The stated overarching goal for the U.S. side is addressing the U.S. trade deficit in agricultural products with the European Union.", "Early on, the EU indicated that it was planning for a more limited negotiation that does not include agricultural products and policies. The EU negotiating mandate, dated April 2019, states that a key EU goal is \"a trade agreement limited to the elimination of tariffs for industrial goods only, excluding agricultural products.\" Several Members of Congress opposed the EU's decision to exclude agricultural policies in its negotiating mandate. A letter to USTR from a bipartisan group of 114 House members states that \"an agreement with the EU that does not address trade in agriculture would be, in our eyes, unacceptable.\" Senate Finance Committee Chairman Chuck Grassley reiterated, \"Bipartisan members of the Senate and House \u00e2\u0080\u00a6 have voiced their objections to a deal without agriculture, making it unlikely that such a deal would pass Congress.\" ", "Then, in January 2020, public statements by U.S. and EU officials signaled the possibility that the U.S.-EU trade talks might include negotiation on SPS and regulatory barriers to agricultural trade. It is not clear, however, that both sides agree on which specific types of non-tariff trade barriers might actually be part of the U.S.-EU trade talks. As reported in the press, statements by some USDA officials have suggested that selected SPS barriers as well as GIs would need to be addressed by the trade talks. Meanwhile, other press reports indicate that some EU officials have downplayed the extent that certain non-tariff barriers\u00e2\u0080\u0094such as biotechnology product permits, approval of certain pathogen rinses for poultry, regulations on pesticides, or food standards\u00e2\u0080\u0094would be part of the talks; instead, regulatory barriers might be lowered for certain \"non-controversial\" foods. The United States continues to push for additional concessions from the EU. More formal discussions are expected in the spring of 2020\u00e2\u0080\u0094in an effort to ease trade tensions regarding the imposition of retaliatory tariffs.", "The EU has taken certain measures to avoid escalating agricultural trade tensions with the United States. For example, it has expanded the U.S.-specific quota for EU imports of hormone-free beef, increased imports of U.S. soybeans as a source of biofuels, approved a number of long-pending genetically engineered products for food and feed uses, and proposed to lift a ban on certain pest-resistant American grapes in EU wine production, and other trade-related measures.", "In a separate but indirectly related action, in August 2019, USTR asked the U.S. International Trade Commission (USITC) to conduct an investigation examining SPS barriers related to pesticide maximum residue levels (MRLs) across all U.S. markets, including Europe.", "Previously, during T-TIP negotiations, both market access and non-tariff barriers were part of the U.S. negotiating objectives. At that time, non-tariff barriers to agricultural trade\u00e2\u0080\u0094including SPS and TBT measures, and GIs\u00e2\u0080\u0094were among the agricultural issues actively debated. In addition, regulatory coherence and cooperation was part of USTR's stated objectives. Some of the same issues that proved to be challenging during the T-TIP talks may continue to challenge negotiators. Various studies at the time reported that removing tariff and non-tariff barriers in U.S.-EU trade would result in economic benefits to the U.S. and EU agricultural sectors. Another study by the European Parliament acknowledged that gains from tariff cuts would be limited unless regulatory and administrative barriers were also addressed. "], "subsections": [{"section_title": "Market Access", "paragraphs": ["Market access issues are not slated to be discussed in the U.S.-EU trade talks. However, these issues remain important for U.S. agricultural exporters. This is especially true regarding the EU's use of restrictive tariff rate quotas (TRQs) on certain agricultural products. TRQs allow imports of fixed quantities of a product at a lower tariff. Once the quota is filled, a higher tariff is applied on additional imports. The EU allocates TRQs to importers using licenses issued by the member states' national authorities. Only companies established in the EU may apply for import licenses. For exports under a U.S.-specific TRQ, a certificate of origin must be supplied. The EU applies TRQs on many types of beef and poultry products, sheep and goat meat, dairy products, cereals, rice, sugar, and fruit and vegetables. Some products are heavily protected by both TRQs and non-tariff SPS measures. ", "Import tariffs for agricultural products into Europe tends to be relatively high compared to tariffs for similar products into the United Sates. The WTO reports that the simple average most-favored-nation (MFN) tariff applied to agricultural products entering the United States is about 5%, compared to an average tariff of about 13% for products entering the EU. Including all products imported under an applied tariff or a TRQ, USDA reports that the calculated average rate across all U.S. agricultural imports is roughly 12%, well below the EU's average of 30%. By commodity group, EU tariffs average more than 40% for imported meat products, grains, and grain products and average at or above 20% for most fruit and vegetable products. For some products, EU tariffs are even greater, averaging more than 80% for imported dairy products, more that 50% for sugar cane and sweeteners, and nearly 350% for sugar beets. The EU has concluded preferential trade agreements with more than 35 non-EU countries and continues to negotiate agreements with several others. This preferential access provides U.S. export competitors an advantage over U.S. agricultural exporters, particularly in countries where the United States does not have a preferential agreement in place.", "Previously, during the T-TIP negotiations, Senate leadership sent a letter to USTR reiterating that a final agreement would need to include \"a strong framework for agriculture,\" including \"tariff elimination on all products\u00e2\u0080\u0094including beef, pork, poultry, rice, and fruits and vegetables\" and that \"liberalization in all sectors of agriculture\" was a priority, if the agreement were to obtain the support of Congress. The letter also addressed the importance of \"longstanding regulatory barriers,\" including the EU's import approval process of U.S. biotechnology products and GI protections promoted by the EU."], "subsections": []}, {"section_title": "Non-Tariff Barriers to Trade", "paragraphs": ["High tariff barriers are further exacerbated by additional non-tariff barriers that may limit U.S. agricultural exports, including SPS measures, and other types of non-tariff barriers. Non -t ariff m easures (NTMs) generally refer to policy measures other than tariffs that may have a negative economic effect on international trade. NTMs include both technical and nontechnical measures. Technical measures include both SPS and TBTs and pre-shipment formalities and related requirements that are intended to govern public health and food safety. Nontechnical measures include quotas, price control measures, rules of origin requirements, and government procurement restrictions. ", "Non-tariff barriers affect agricultural trade in various ways, including delays in reviews of biotech products (creating barriers to U.S. exports of grain and oilseed products), prohibitions on growth hormones in beef production and certain antimicrobial and pathogen reduction treatments (creating barriers to U.S. meat and poultry exports), and burdensome and complex certification requirements (creating barriers to U.S. processed foods, animal products, and dairy products). Extensive EU regulations and difficulty finding up-to-date information are among the primary concerns of U.S. businesses, particularly for makers of processed foods. U.S. businesses report a lack of a science-based focus in establishing SPS measures, difficulty meeting food safety standards and obtaining product certification, differences across countries in food labeling requirements, and stringent testing requirements that are often applied inconsistently across EU member nations.", "Non-tariff barriers to agricultural trade\u00e2\u0080\u0094including SPS and TBT measures, and GIs\u00e2\u0080\u0094were among the agricultural issues actively debated in the T-TIP negotiation. Previous negotiations were complicated by longstanding trade disputes between the United States and EU involving food safety and product standards that are often embodied in laws and regulations in the United States and EU, as well as separate requirements that may be in force within individual EU member states. For example, the EU restricts some types of genetically engineered (GE) seed varieties and also prohibits the use of hormones in meat production and certain pathogen reduction treatments in poultry production. As these types of practices are commonplace in the United States, this tends to restrict U.S. agricultural exports to the EU. Other EU regulations and standards involve pesticide residues on foods, drug residues in animal production, and certain animal welfare requirements that may vary from those in the United States. The United States has also opposed the EU's GI protections that govern product labeling on products within the EU and within some countries that have a formal trade agreement with the EU. Such GI protections also tend to restrict U.S. agricultural exports to the EU and to some other countries where such protections have been put in place. ", "As part of a trade negotiation, non-tariff barriers tend to be broadly grouped along with other issues related to regulatory coherence. The U.S. Chamber of Commerce defines regulatory coherence as \"good regulatory practices, transparency, and stakeholder engagement in a domestic regulatory process\" and regulatory cooperation as \"the process of interaction between U.S. and EU regulators, founded on the benefits regulators can achieve through closer partnership and greater regulatory interoperability.\" Related terminology may refer interchangeably to regulatory convergence, cooperation, and/or harmonization. Trade negotiations involving regulatory and intellectual property rights issues have focused, in part, on the goals of ensuring greater transparency, harmonization, and coherence to improve cooperation and streamline the regulatory approval process among the trading partners. ", "Previous USDA estimates calculated the ad valorem equivalent effects of EU non-tariff barriers to U.S. agricultural exports, which were estimated to range from 23% to 102% for some more heavily protected products, including meat products, fruits and vegetables, and some crops. ", "In general, SPS and related regulatory issues tend to be addressed in free trade agreements (FTAs) within an agreement's agriculture chapter or chapter on regulatory coherence, while GIs tend to be addressed along with other types of intellectual property rights (IPR) issues, in an FTA's IPR chapter. The following section provides additional background on SPS and TBT measures, as well as GI protections. "], "subsections": [{"section_title": "SPS/TBT Issues", "paragraphs": ["SPS measures are laws, regulations, standards, and procedures that governments employ as \"necessary to protect human, animal or plant life or health\" from the risks associated with the spread of pests, diseases, or disease-carrying and causing organisms, or from additives, toxins, or contaminants in food, beverages, or feedstuffs. Examples include product standards, requirements for products to be produced in disease-free areas, quarantine and inspection procedures, sampling and testing requirements, residue limits for pesticides and drugs in foods, and limits on food additives. TBT measures cover both food and non-food traded products. TBTs in agriculture include SPS measures, but also include other types of measures related to health and quality standards, testing, registration, and certification requirements, as well as packaging and labeling regulations. Both SPS and TBT measures regarding food safety and related public health protection are addressed in various multilateral trade agreements and are regularly notified to and debated within both the SPS Agreement and TBT Agreement within the WTO. ", "In general, under the SPS and TBT agreements, WTO members agree to apply such measures, based on scientific evidence and information, only to the extent necessary to protect human, animal, or plant life and health and to not arbitrarily or unjustifiably discriminate between WTO members where identical standards prevail. Member countries are also encouraged to observe established and recognized international standards. Improper use of SPS and TBT measures can create substantial barriers to trade when they are disguised protectionist barriers, are not supported by scientific evidence, or are otherwise unwarranted. Bilateral and regional FTAs between the United States and other countries regularly address SPS and TBT matters. Provisions in most U.S. FTAs have generally reaffirmed rights and obligations of both parties under the WTO SPS and TBT agreements. Some FTAs have established standing bilateral committees to enhance understanding of each other's measures and to consult regularly on related matters. Other FTAs have included side letters or agreements for the parties to continue to cooperate on scientific and technical issues, which in some cases may be related to certain specific market access concerns. Most FTAs have not addressed specific non-tariff trade concerns directly."], "subsections": [{"section_title": "Differences in U.S. and EU Laws and Regulations", "paragraphs": ["Regulatory differences between the United States and EU have contributed to trade disputes regarding SPS and TBT rules between the two trading blocs. The United States has several formal WTO trade disputes regarding SPS and TBT measures with the EU. These include concerns regarding the EU's prohibitions on the use of growth-promoting hormones (and ractopamine ) in meat production, the EU's restrictions on chemical treatments (\"pathogen reduction treatments\" or \"PRTs\") on U.S. poultry, and the EU's approval process of biotechnology products. Other SPS concerns have involved regulations related to bovine spongiform encephalopathy (BSE, commonly known as mad cow disease) and regulations involving plant processing, chemical residues, endocrine-disrupting chemicals, antibiotics, and animal welfare.", "There are major differences in how the United States and the EU regulate food safety and related public health protection, including various administrative and technical review differences, which in turn influences how each applies various SPS and TBT measures. Such differences have often been central to SPS and TBT disputes, including those involving the use of hormones in meat production and pathogen reduction treatments in poultry processing. Other disputes invoking the SPS and TBT agreements between the U.S. and EU have included beef and poultry products, eggs, frozen bovine semen, milk products, animal byproducts, seafood, pesticide and animal drug residues, seeds, wheat, wine and spirits, and food packaging requirements.", "Differences are also evident in how the United States and EU regard biotechnology in agricultural production. In general, EU officials have been cautious in allowing genetically engineered crops\u00e2\u0080\u0094commonly referred to in Europe as genetically modified organisms (or GMOs)\u00e2\u0080\u0094to enter the EU market. As such, any GE-derived food and feed must be labeled accordingly. The EU's regulatory framework regarding biotechnology is generally regarded as one of the most stringent systems worldwide. During the T-TIP negotiations, U.S. agricultural and food groups actively called for changes to the EU's approach for approving and labeling biotechnology products.", "The EU has reported concerns about perceived U.S. SPS barriers to EU exports of sheep and goat meat, egg products, beef, certain dairy products, live bivalve mollusks, apples, and pears, along with difficulties protecting its own GIs on certain food and drinks. Other EU concerns have involved the use of \"Buy American\" restrictions in the United States governing public procurement. During the T-TIP negotiations, some expressed concern that including \"Buy American\" provisions could affect local food procurement, including restricting bidding contract preferences contained in U.S. and EU farm-to-school programs.", "The EU's application of the so-called precautionary principle remains central to the EU's risk management policy regarding food safety and animal and plant health and is often cited as the rationale behind the EU's more risk-averse approach. The precautionary principle was reportedly referenced as part of the 1992 Treaty on European Union that further integrated the EU, and its use was further outlined in a 2000 communication and then formally established in EU food legislation in 2002 (Regulation EC No 178/2002). The EU's 2000 communication further outlines guidelines for implementation, the basis for invoking the principle, and the general standards of application. Regarding international trade, under EU law, the precautionary principle provides for \"rapid response\" to address \"possible danger to human, animal, or plant health, or to protect the environment\" and can be used to \"stop distribution or order withdrawal from the market of products likely to be hazardous.\" Although the principle may not be used as a pretext for protectionist measures, many countries have challenged some EU actions that invoke the precautionary principle as \"protectionist.\" The EU, however, continues to invoke the precautionary principle to justify its policies regarding various regulatory issues and generally rejects arguments, on the grounds of risk management, that the lack of clear evidence of harm is not evidence of the absence of harm.", "No universally agreed-upon definition of the precautionary principle exists, and many differently worded or conflicting definitions can be found in international law. However, within the context of the WTO and the SPS agreement, the precautionary principle (or precautionary approach) allows a country to set higher standards and methods of inspecting products. It also allows countries to take \"protective action\"\u00e2\u0080\u0094including restricting trade of products or processes\u00e2\u0080\u0094if they believe that scientific evidence is inconclusive regarding their potential impacts on human health and the environment (provided the action is consistent and not arbitrary). The WTO has generally acknowledged that the need to take precautionary actions in the face of scientific uncertainty has long been widely accepted, particularly in the fields of food safety and plant and animal health protection. Examples might include a sudden outbreak of an animal disease that is suspected of being linked to imports, which may require a country to impose certain trade restrictions while the outbreak is assessed.", "Application of the precautionary principle by some countries remains an ongoing source of contention in international trade, particularly for the United States, and is often cited as a reason why some countries may restrict imports of some food products and processes. "], "subsections": []}, {"section_title": "Addressing SPS and TBT Measures in FTA Negotiations", "paragraphs": ["In the lead up to the previous T-TIP and Trans-Pacific Partnership (TPP) negotiations, there were active efforts to \"go beyond\" the rules, rights, and obligations in the WTO SPS Agreement and TBT Agreement, as well as commitments in existing U.S. FTAs. These efforts were referred to as \"WTO-Plus\" rules or, alternatively, as \"SPS-Plus\" and \"TBT-Plus\" rules. Related efforts called for improvements in regulatory cooperation and coherence, along with enhanced partnerships and interactions among regulators in each country.", "Modernizing the rules governing the application of SPS and TBT measures in U.S.-EU trade by incorporating \"SPS-Plus\" and \"TBT-Plus\" rules as part of a trade agreement could represent a positive step for U.S. food and agricultural exporters. Changes regarding SPS and TBT measures agreed to in the U.S.-Mexico-Canada Agreement (USMCA) and the U.S.-China Phase One Trade Agreement incorporated policy changes regarding SPS and TBT measures consistent with previous \"SPS-Plus\" and \"TBT-Plus\" efforts. According to USITC, USMCA \"goes further in requiring transparency and encouraging harmonization or equivalence of SPS measures\" and incorporates all of the proposed enhanced TPP disciplines \"in the areas of equivalence, science and risk analysis, transparency, and cooperative technical consultations.\" Some industry representatives claim that USMCA \"goes beyond TPP in establishing deadlines for 'import checks,' by requiring importing parties to inform exporters or importers within five days of shipments being denied entry.\" Both agreements contain language that directly relates to the use of biotechnology.", "Alternative efforts to modify the EU's application of the precautionary principle could present more of a challenge for U.S. agricultural producers and exporters. Previously, during the T-TIP negotiations, some in the U.S. agriculture and food industry urged U.S. negotiators to address the EU's use and application of the precautionary principle. Many U.S. agricultural and food organizations contended that the EU's application of the precautionary principle undermines sound science and innovation and results in \"unjustifiable restrictions\" on U.S. exports, allowing the EU \"to put in place restrictions on products or processes when they believe that scientific evidence on their potential impact on human health or the environment is inconclusive.\" Some asserted that application of the principle results in a bias against new technologies, such as biotechnology and nanotechnology. As a result, these groups said that \"science-based decision making and not the precautionary principle must be the defining principle in setting up mechanisms and systems\" to address SPS concerns. The U.S. Chamber of Commerce supported a \"science-based approach to risk management, where risk is assessed based on scientifically sound and technically rigorous standards\" and opposed \"the domestic and international adoption of the precautionary principle as a basis for regulatory decision making.\" Many in Congress also called for \"effective rules and enforceable rules to strengthen the role of science\" to resolve international trade differences. ", "More recently, the EU's SPS were among the issues that raised the most concerns during a WTO review of the EU's trade policies. Among the cited concerns were certain SPS measures that were viewed to be not based on science or on international standards, and that were also deemed to not allow for adequate opportunity to take into account for the views of third countries. "], "subsections": []}, {"section_title": "Efforts to Resolve SPS and TBT Measures Outside FTA Negotiations", "paragraphs": ["Outside of the FTA negotiation process, various U.S. federal agencies regularly address trade concerns involving SPS and TBT measures as part of their day-to-day oversight and regulatory responsibilities. For example, USDA's Animal and Plant Health Inspection Service (APHIS) administers various regulatory and control programs pertaining to animal and plant health and quarantine, humane treatment of animals, and the control and eradication of pests and diseases. APHIS also oversees SPS certification requirements for imported and exported agricultural goods. This work is ongoing. ", "The United States also maintains ongoing interagency processes and mechanisms to identify, review, analyze, and address foreign government standards-related measures that may be barriers to trade. These activities are coordinated through the USTR-led Trade Policy Staff Committee, which is composed of representatives from several federal agencies, including USDA, the Department of Commerce, and the State Department. USTR also chairs an interagency group (i.e., both USDA and non-USDA agencies with SPS and TBT responsibilities) that reviews SPS and TBT measures that are notified to the WTO, as required under the SPS and TBT agreements. These agency officials also work with their international counterparts on concerns involving SPS and TBT measures. USTR tracks issues related to such measures as part of its annual reports. "], "subsections": []}]}, {"section_title": "Geographical Indications", "paragraphs": ["GIs are geographical names that act to protect the quality and reputation of a distinctive product originating in a certain region. The term GI is most often applied to wines, spirits, and agricultural products. GIs allow some food producers to differentiate their products in the marketplace. GIs may also be eligible for relief from acts of infringement or unfair competition. While GIs may protect consumers from deceptive or misleading labels, they can also impair trade when names that are considered common or generic in one market are protected in another. Examples of registered or established GIs include Parmigiano Reggiano cheese and Prosciutto di Parma ham from the Parma region of Italy, Toscano olive oil from the Tuscany region of Italy, Roquefort cheese from France, Champagne from the region of the same name in France, Irish whiskey, Darjeeling tea, Florida oranges, Idaho potatoes, Vidalia onions, Washington State apples, and Napa Valley wines. ", "GIs are an example of IPR, along with patents, copyrights, trademarks, and trade secrets. The use of GIs has become a contentious international trade issue, particularly for U.S. wine, cheese, and sausage makers. In general, some consider GIs to be protected intellectual property, while others consider them to be generic or semi-generic terms. GIs are included among other IPR issues in the current U.S. trade agenda. GIs were an active area of debate during the T-TIP negotiations. Laws and regulations governing GIs differ markedly between the United States and EU, which further complicates this issue. ", "GIs are protected by the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), which sets binding minimum standards for intellectual property protection that are enforceable by the WTO's dispute settlement procedure. Under TRIPS, WTO members must recognize and protect GIs as intellectual property. Both the United States and the EU are signatories of TRIPS and therefore subject to its rights and obligations. Accordingly, under TRIPS, the United States and EU have committed to providing a minimum standard of protection for GIs (i.e., protecting GI products to avoid misleading the public and prevent unfair competition) and an \"enhanced level of protection\" to wines and spirits that carry a GI, subject to certain exceptions. TRIPS builds on treaties administered by the World Intellectual Property Organization, a specialized agency in the United Nations with the mission to \"lead the development of a balanced and effective international intellectual property (IP) system.\" It also oversees the \"International Register of Appellations of Origin\" established in the Lisbon Agreement for the Protection of Appellations of Origin and their International Registration. The agreement's multilateral register covers food products and beverages and related products, as well as non-food products. ", "The EU's GI program remains a contentious issue for some U.S. producer groups, particularly among wine, cheese, and sausage makers. Some have long expressed their concerns about EU protections for GIs, which they claim are being misused to create market and trade barriers. Much of this debate involves certain terms used by cheesemakers, such as parmesan, asiago, and feta cheese, which the U.S. cheese sectors consider to be generic terms. For example, feta cheese produced in the United States may not be exported for sale in the EU, since only feta produced in countries or regions currently holding GI registrations may be sold commercially. A 2019 study commissioned by the U.S. dairy industry forecasts declining U.S. cheese exports due to expanding restrictions on parmesan, asiago, and feta cheese. Another study concluded that up to $15 million in cheese trade might need to be relabeled due to the restriction on certain GI terms, while other traded foods, such as oilseeds and vinegars, would experience little impact. ", "Some U.S. industry groups, however, are trying to institute protections for U.S. products\u00e2\u0080\u0094similar to those in the EU GI system\u00e2\u0080\u0094to promote certain distinctive American agricultural products. The American Origin Products Association represents certain U.S. potato, maple syrup, ginseng, coffee, and chile pepper producers and certain U.S. winemakers, among other regional producer groups. It seeks to work with federal authorities to create \"a list of qualified U.S. distinctive product names, which correspond to the GI definition.\" "], "subsections": [{"section_title": "Differences in U.S. and EU Laws and Regulations", "paragraphs": ["Laws and regulations governing GIs differ markedly between the United States and EU. In the United States, GIs generally fall under the common law right of possession or \"first in time, first in right\" as trademarks or collective or certification marks under the purview of the existing trademark regime, administered by the U.S. Patent and Trademark Office (PTO) and protected under the U.S. Trademark Act. Trademarks are distinctive signs that companies use to identify themselves and their products or services to consumers and can take the form of a name, word, phrase, logo, symbol, design, image, or a combination of these elements. Trademarks do not refer to generic terms, nor do they refer exclusively to geographical terms. Trademarks may refer to geographical names to indicate the specific qualities of goods either as certification marks or as collective marks. PTO does not have a special database register for GIs in the United States. PTO's trademark register, the U.S. Trademark Electronic Search System, contains GIs registered as trademarks, certification marks, and collective marks. USTR says that EU farm products hold nearly 12,000 trademarks. These register entries are not designated with any special field (such as \"geographical indications\") and cannot be readily compiled into a complete list of registered GIs. In the United States, the Alcohol and Tobacco Tax and Trade Bureau (TTB) also plays a role overseeing the labeling of wine, malt beverages, beer, and distilled spirits. ", "In the EU, a series of regulations governing GIs was initiated in the early 1990s covering agricultural and food products, wine, and spirits. Legislation adopted in 1992 covering agricultural products (not including wines and spirits) was replaced by changes enacted in 2006 following a WTO panel ruling that found some aspects of the EU's scheme inconsistent with WTO rules. The new rules came into force in January 2013. The EU laws and regulations provide product registration markers for the different quality schemes. The EU regulations establish provisions regarding products from a defined geographical area given linkages between the characteristics of products and their geographical origin. The EU defines a GI as \"a distinctive sign used to identify a product as originating in the territory of a particular country, region or locality where its quality, reputation or other characteristic is linked to its geographical origin.\" ", "EU registered products often fall under GI protections in certain third-country markets, and some EU GIs have been trademarked in some non-EU countries. This has become a concern for U.S. agricultural exporters following a series of trade agreements the EU has concluded with Canada, Japan, South Korea, South Africa, and other countries that in many cases are also trading partners of the United States. For example, Canada has agreed to recognize a list of 143 EU GIs in Canada, and Japan has agreed to recognize more than 200 EU GIs in Japan. These GI protections could limit U.S. sales of certain products to these countries. The EU is in the process of negotiating FTAs with several other U.S. trading partners, including Mexico, Australia, New Zealand, and the Mercosur states (Argentina, Brazil, Paraguay, and Uruguay). Each of these efforts includes a selected list of GIs that would become protected under an FTA between these countries and the European Union. In December 2019, the EU also entered into an agreement with China regarding GIs that would protect a reported 100 EU GIs in China. As of January 2020, 3,316 product names are registered and protected in the EU for foods, wine, and spirits originating in both EU member states and other countries. "], "subsections": []}, {"section_title": "Addressing GI Barriers in FTA Negotiations", "paragraphs": ["GIs continue to be actively debated as part of the official U.S. trade agenda, involving concerns about their possible improper use as well as the lack of transparency and due process under some country GI systems. USTR is working \"to advance U.S. market access interests in foreign markets and to ensure that GI-related trade initiatives of the EU, its Member States, like-minded countries, and international organizations, do not undercut such market access,\" and states that the EU's GI agenda \"significantly undermines the scope of trademarks and other [IPR] held by U.S. producers and imposes barriers on market access for American-made goods that rely on the use of common names.\" Statements by USDA officials in early 2020 have signaled that this issue could resurface as part of the U.S.-EU trade talks. ", "Previously, during T-TIP negotiations, U.S. officials indicated that the United States would likely not agree to EU demands to reserve certain food names for EU producers and have expressed concerns about the EU's system of protections for GIs. At the time, U.S. trade policy objectives regarding the EU's GI protections was to ensure that they \"do not undercut U.S. industries' market access\" and to defend the use of certain \"common food names.\" In general, the United States is seeking protection for current U.S. owners of trademarks that overlap with EU-protected GIs, the ability to use U.S. trademarked names in third countries, and the ability to use U.S. trademarked names in the EU.", "In recent developments, according to USITC, USMCA \"increases the transparency of applications, approvals, and cancellations\" regarding GIs and \"provides guidelines for determining whether a term is customary in common use.\" In addition, a side letter between the United States and Mexico commits Mexico to not restrict market access for a list of more than 30 cheeses. USITC says this could \"help prevent future losses of U.S. market access for cheeses with common names\" such as \"blue\" or \"Swiss\" cheese. The final U.S.-China Phase One Trade Agreement also addresses longstanding concerns regarding IPR, including GIs, building on previous commitments regarding IPR and GIs. The agreement is expected to require that China ensure that it will \"not undermine market access for U.S. exports to China of goods\" and will apply relevant factors when providing certain GI protections, as well as provide the United States with \"necessary opportunities to raise disagreement\" regarding GIs. GI provisions in these two recent U.S. FTAs, however, could prove to be incompatible with other EU agreements regarding GIs with these countries. For Mexico and Canada, these include GI protections that are likely to be part of the EU-Mexico Global Agreement, as well as existing GI protections in the EU-Canada Comprehensive Economic and Trade Agreement. For China, these include GI protections agreed to in the 2019 EU-China agreement protecting certain EU GIs in China. "], "subsections": []}]}]}]}, {"section_title": "Next Steps", "paragraphs": ["The U.S.-EU Trade Agreement negotiations present Congress with the challenge of determining to what extent food and agriculture issues will be addressed in the trade talks, if at all. Although market access and tariff reductions may be off the table, addressing regulatory restrictions and other non-tariff barriers to U.S. agricultural trade are considered important for many U.S. producers. Some press reports indicate that certain non-tariff barriers and regulatory cooperation could become part of the new trade talks, while other press reports raise questions about the EU's willingness to address specific types of non-tariff barriers as part of the negotiation. Even if regulatory coherence and cooperation become part of the U.S.-EU trade talks, their resolution in a manner that benefits U.S. agricultural exporters is far from assured. Instead, some of the same non-tariff and regulatory barriers to U.S. trade that proved to be challenging during the T-TIP negotiation could prove to be equally intractable today.", "The UK's exit from the EU could also complicate future trade negotiations. The UK is a close ally of the United States and has been one of its strongest advocates among the EU bloc. In general, the regulatory framework and actions taken by the UK's Food Standards Agency are more aligned with those in the United States. Now that the UK is no longer part of the EU, the EU trade gains for U.S. agriculture could be reduced while its agricultural trade deficit may become more pronounced, given a more favorable trade situation with the UK."], "subsections": []}]}}
{"id": "R43341", "title": "National Institutes of Health (NIH) Funding: FY1995-FY2021", "released_date": "2020-05-12T00:00:00", "summary": ["This report details the National Institutes of Health (NIH) budget and appropriations process with a focus on FY2020 and FY2021, and on coronavirus supplemental funding for NIH. The report also provides an overview of funding trends in regular appropriations to the agency from FY1995 to FY2021. Appendix A includes funding tables by account and program-specific funding levels for FY2020 and FY2021.", "The NIH is the primary federal agency charged with conducting and supporting medical, health, and behavioral research, and it is made up of 27 Institutes and Centers and the Office of the Director (OD). About 80% of the NIH budget funds extramural research through grants, contracts, and other awards. About 10% of NIH funding goes to intramural researchers at NIH-operated facilities. Almost all of NIH's funding is provided in the annual Departments of Labor, Health and Human Services, and Education, and Related Agencies Appropriations Act. NIH also receives smaller amounts of funding from Interior/Environmental appropriations and a mandatory budget authority for type 1 diabetes research.", "NIH has an FY2020 program level of $41.685 billion and has received emergency supplemental appropriations in three coronavirus supplemental appropriations acts, totaling over $3.59 billion\u00e2\u0080\u0094an 8.6% funding increase over regular enacted FY2020 appropriations. The administration's FY2021 budget request, as amended by a March 2020 letter, proposes an FY2021 program level of $39.133 billion\u00e2\u0080\u0094a 6.1% decrease from the FY2020 program level (regular appropriations).", "NIH has seen periods of high and low funding growth during the period covered by this report, as illustrated in Figure 1 . Between FY1994 and FY1998, funding for NIH grew from $11.0 billion to $13.7 billion (nominal dollars). Over the next five years, Congress and the President doubled the NIH budget to $27.2 billion in FY2003. In each of FY1999 through FY2003, NIH received annual funding increases of 14% to 16%. From FY2003 to FY2015, NIH funding increased more gradually in nominal dollars. In some years (FY2006, FY2011, and FY2013), funding for the agency decreased in nominal dollars. From FY2016 through FY2020, NIH has seen funding increases of over 5% each year. The largest increase was from FY2017 to FY2018, where the program level increased by $3.0 billion (+8.7%), making this the largest single-year nominal dollar increase since FY2003.", "When looking at NIH funding adjusted for inflation (in projected constant FY2021 dollars using the Biomedical Research and Development Price Index; BRDPI), the purchasing power of NIH funding peaked in FY2003\u00e2\u0080\u0094the last year of the five-year doubling period\u00e2\u0080\u0094and then declined fairly steadily for more than a decade until back-to-back funding increases were provided in each of FY2016 through FY2020. The FY2021 budget request would provide a program level that is 13.0% below the peak FY2003 program level."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "NIH Funding: FY1995-FY2021", "paragraphs": ["This report provides a historical overview of federal funding provided to the National Institutes of Health (NIH) between FY1995 and FY2021. It also provides a brief explanation of the discretionary spending funding sources for NIH associated with the annual appropriations process (via the Labor, HHS, and Education and Interior/Environment Appropriations Acts) and the mandatory funding for special program on type 1 diabetes research. ", "NIH is the primary federal agency for medical, health, and behavioral research. It is the largest of the eight health-related agencies that make up the Public Health Service (PHS) within the Department of Health and Human Services (HHS). NIH consists of the Office of the Director (OD) and 27 Institutes and Centers (ICs) that focus on aspects of health, human development, and biomedical science. The OD sets overall policy for NIH and coordinates the programs and activities of all NIH components, particularly in areas of research that involve multiple institutes. ", "NIH activities cover a wide range of basic, clinical, and translational research, focused on particular diseases, areas of human health and development, or more fundamental aspects of biology and behavior. Its mission also includes research training and health information collection and dissemination. More than 80% of the NIH budget funds extramural research (i.e., external) through grants, contracts, and other awards. This funding supports research performed by more than 300,000 individuals who work at over 2,500 hospitals, medical schools, universities, and other research institutions around the country. About 10% of the agency's budget supports intramural research (i.e., internal) conducted by nearly 6,000 NIH physicians and scientists, most of whom are located on the NIH campus in Bethesda, Maryland. "], "subsections": [{"section_title": "Funding Sources", "paragraphs": ["Funding for NIH comes primarily from annual Labor, HHS, and Education (LHHS) Appropriations Acts, with an additional smaller amount for the Superfund Research Program from the Interior/Environment Appropriations Act. Those two bills provide NIH discretionary budget authority.", "Through LHHS appropriations, some funding is also transferred to NIH pursuant to the PHS Evaluation Set-Aside or the \"PHS Evaluation Tap\" transfer authority. Authorized by Section 241 of the Public Health Service Act, the evaluation tap allows the Secretary of HHS, with the approval of appropriators, to redistribute a portion of eligible PHS agency appropriations across HHS for program evaluation and implementation purposes. The PHSA section limits the set-aside to not less than 0.2% and not more than 1% of eligible program appropriations. However, LHHS Appropriations Acts have commonly established a higher maximum percentage for the set-aside and have distributed specific amounts of \"tap\" funding to selected HHS programs. Since FY2010, and including in FY2020, this higher maximum set-aside level has been 2.5% of eligible appropriations. Readers should note that totals in this report and NIH source documents include amounts \"transferred in\" pursuant to PHS tap but do not include any amounts \"transferred out\" under this same authority.", "NIH also receives funding through LHHS appropriations, subject to different budget enforcement rules than the rest of the NIH funding in the act\u00e2\u0080\u0094appropriations to the NIH Innovation Account created by The 21 st Century Cures Act (\"the Cures Act,\" P.L. 114-255 ) to fund programs authorized by the act. For appropriated amounts to the account\u00e2\u0080\u0094up the limit authorized for each fiscal year\u00e2\u0080\u0094the amounts are subtracted from any cost estimate for enforcing discretionary spending limits (i.e., the budget caps). In effect, appropriations to the NIH Innovation Account as authorized by the Cures Act are not subject to discretionary spending limits. The NIH Director may transfer these amounts from the NIH Innovation Account to other NIH accounts, but only for the purposes specified in the Cures Act. If the NIH Director determines that the funds for any of the four Innovation Projects are not necessary, the amounts may be transferred back to the NIH Innovation Account. All amounts authorized by the Cures Act have been fully appropriated to the Innovation Account from FY2017 to FY2020, including $492 million for FY2020. For FY2021, $404 million is authorized to be appropriated. ", "In addition, NIH has received mandatory funding of $150 million annually that is provided in Public Health Service Act (PHSA) Section 330B, for a special program on type 1 diabetes research, most recently extended through FY2020 by the CARES Act ( P.L. 116-136 ), with additional partial-year FY2021 funding of $25,068,493 for October 1, 2020, through November 30, 2020.", "The total funding available for NIH activities, taking account of add-ons and PHS tap transfers, is referred to as the NIH \"program level.\""], "subsections": []}, {"section_title": "FY2020-Enacted Funding", "paragraphs": ["The enacted FY2020 NIH program level is made up of the following: ", "$40.228 billion in discretionary LHHS appropriations, including the $492 million authorized for the Cures Act Innovation Account; $1.231 billion pursuant to the PHS program evaluation transfer and a $225 million transfer from the HHS non-recurring expenses fund (NEF); $81 million for the Superfund research program in Interior/Environment appropriations; and $150 million in annual funding for the mandatory type 1 diabetes research program. ", "Accounting for transfers and other adjustments, cited FY2021 budget documents from the Administration show the NIH FY2020 program level as $41.685 billion. "], "subsections": []}, {"section_title": "Coronavirus Supplemental Appropriations", "paragraphs": ["NIH has also received emergency supplemental appropriations to several IC accounts as provided by the first and third, coronavirus supplemental appropriations acts, shown in Table 1 , totaling $1.8 billion. In addition to these appropriations, the fourth coronavirus supplemental required that a total of not less than $1.8 billion of $25 billion appropriated to the Public Health and Social Services Emergency Fund be transferred to two NIH institutes and the Office of the Director. When accounting for these transfers, total funding directed to the NIH would come to not less than $3.6 billion across the three acts\u00e2\u0080\u0094an 8.6% funding increase over regular enacted FY2020 appropriations. ", "These acts also include various other transfer authorities that would allow for additional transfers to and from NIH accounts (explained in the table notes).", "By convention, CRS does not add amounts provided as an emergency requirement to the NIH program levels in the remainder of this report. The FY2020 regular and emergency appropriations amounts are presented separately. "], "subsections": []}, {"section_title": "FY2021 Budget and Appropriations", "paragraphs": ["President Trump's FY2021 initial budget request (February 10, 2020) proposed that NIH be provided with a total program level of $38.694 billion, a decrease of $2.99 billion (-7.2%) from FY2020-enacted levels. The proposed FY2020 program level would have been made up of", "$37.630 billion in LHHS appropriations, including the $404 million for the Cures Act Innovation Account (the full amount authorized for FY2021); $741 million in transfers to NIH pursuant to the PHS Evaluation Tap authority; $74 million for the Superfund Research Program in Interior/Environment appropriations; and $150 million in proposed annual funding for the mandatory type 1 diabetes program.", "Under the request, all existing IC accounts would receive a decrease compared to FY2020-enacted levels (see Appendix A ). The Building and Facilities account would receive an increase in LHHS budget authority, from $200 million in FY2020 to $300 million in FY2021.", "Subsequently, on March 17, 2020, the Office of Management and Budget submitted an amendment to President Trump's original request that would increase funding for the National Institute of Allergy and Infectious Disease (NIAID) by $440 million relative to the original request. The purpose of this additional requested funding was \"to ensure [NIAID] has the resources beginning October 1, 2020, to continue critical basic and applied research on coronaviruses and other infectious diseases.\" This amendment to the original proposal, if enacted, would result in NIAID receiving an increase of $9.3 million above the FY2020 level. Taking into account this amendment, as of the date of this report, the FY2021 budget request would provide NIH with a total program level of $39.133 billion, a decrease of $2.55 billion (-6.1%) from FY2020-enacted levels, with a total of $38.811 billion by provided by LHHS appropriations.", "In addition, the FY2021 budget request proposes consolidating the Agency for Healthcare Research and Quality (AHRQ) into NIH, forming a 28 th IC\u00e2\u0080\u0094the National Institute for Research on Safety and Quality (NIRSQ). The creation of a new NIH institute would require amendments to the PHSA, especially Section 401(d), which specifies that \"[i]n the National Institutes of Health, the number of national research institutes and national centers may not exceed a total of 27.\" Under the FY2021 request, NISRQ would receive a total appropriation of $355.112 million, including $256.66 million in discretionary LHHS budget authority and $98.452 million in mandatory appropriations from the Patient-Centered Outcomes Research Trust Fund (PCORTF) in Social Security Act Section 1181. Congress did not adopt the Administration's similar proposals to consolidate AHRQ into NIH as NIRSQ in FY2018 through FY2020.", "The budget request proposes select specified FY2021 funding levels for programs and activities within and across the NIH accounts based on the Administration's research priorities, as summarized in Table A-3 . If adopted, these funding levels would likely be specified in report and/or explanatory statement language accompanying LHHS appropriations bills. For the most part, Congress does not specify NIH funding for particular diseases or areas of research, instead allowing the ICs to award funding within their mission areas. Funding awards are generally made on a competitive basis through various funding mechanisms intended to balance scientific opportunity with health priorities. "], "subsections": []}, {"section_title": "Trends", "paragraphs": [" Table 2 outlines NIH program level funding over the previous 25 years; Figure 1 illustrates funding trends in both current (also called nominal dollars) and projected constant (i.e., inflation-adjusted) FY2021 dollars (funding shown is total budget authority). ", "NIH has seen periods of high and low funding growth. Between FY1994 and FY1998, funding for NIH grew from $11.0 billion to $13.7 billion (nominal dollars). Over the next five years, Congress and the President doubled the NIH budget to $27.2 billion in FY2003. In each of FY1999 through FY2003, NIH received annual funding increases of 14% to 16%. From FY2003 to FY2015, NIH funding increased more gradually in nominal dollars. In some years, (FY2006, FY2011, and FY2013) funding for the agency decreased in nominal dollars. From FY2016 through FY2020, NIH has seen funding increases of over 5% each year. The largest increase was from FY2017 to FY2018, where the program level increased by $3.0 billion (+8.7%), making this the largest single-year nominal dollar increase since FY2003.", "The lower half of Figure 1 shows NIH funding adjusted for inflation (in projected constant FY2021 dollars) using the Biomedical Research and Development Price Index (BRDPI). It shows that the purchasing power of NIH funding peaked in FY2003 (the last year of the five-year doubling period) and then declined fairly steadily for more than a decade until back-to-back funding increases were provided in each of FY2016 through FY2020. The FY2021 budget request would provide a program level that is 13.0% below the peak FY2003 program level. ", "Appendix A. NIH Funding Details", "Program-Specific Funding ", "In recent years, Congress and the President have increasingly specified funding levels for programs or research areas within NIH accounts throughout the budget and appropriations process. Congress uses language in reports and explanatory statements accompanying appropriations bills to designate funding for specified purposes. The Administration requests NIH program-specific funding, as outlined in the HHS and NIH budget request documents. For the most part, Congress does not specify NIH funding for particular diseases or areas of research, instead allowing the ICs to award funding within their mission areas. Funding is generally awarded on a competitive basis through various funding mechanisms intended to balance scientific opportunity with health priorities. ", "In FY2020, Congress used explanatory statement language to specify a certain amount of IC funding for designated purposes, as summarized in Table A-2 . Sometimes the language specifies that \"no less than\" a certain amount can be designated for a certain purpose; in other cases, language \"provides\" or \"recommends\" that an amount be spent on a certain purpose. For FY2020, while the House report ( H.Rept. 116-62 ) also included funding levels for some of the below programs, the amounts in the explanatory statement supersede those. Both the explanatory statement and the House report include many additional statements directing the agency to prioritize certain programs or areas of research, as well as expressing the opinion or concerns of Congress regarding NIH; these broad statements are not summarized here.", "Appendix B. Acronyms and Abbreviations"], "subsections": []}]}]}}
{"id": "R46353", "title": "COVID-19: Overview of FY2020 LHHS Supplemental Appropriations", "released_date": "2020-05-11T00:00:00", "summary": ["The legislative response to the global pandemic of Coronavirus Disease 2019 (COVID-19) has included the enactment of laws to provide authorities and supplemental funding to prevent, prepare for, and respond to the pandemic. This report focuses on supplemental FY2020 discretionary appropriations provided to programs and activities traditionally funded by the Departments of Labor, Health and Human Services, and Education, and Related Agencies (LHHS) appropriations bill.", "As of the date of this report, LHHS supplemental appropriations for COVID-19 response have been provided in four separate supplemental appropriations measures:", "Title III, Division A, of the Coronavirus Preparedness and Response Supplemental Appropriations Act, 2020 ( P.L. 116-123 ), enacted on March 6, 2020, provided approximately $6.4 billion in supplemental LHHS funds. Title V, Division A, of the Families First Coronavirus Response Act (FFCRA, P.L. 116-127 ), enacted on March 18, 2020, provided $1.25 billion in supplemental LHHS funds. Title VIII, Division B, of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act, P.L. 116-136 ), enacted on March 27, 2020, provided $172.1 billion in supplemental LHHS funds. Title I, Division B, of the Paycheck Protection Program and Health Care Enhancement Act (PPPHCEA, P.L. 116-139 ), enacted on April 24, 2020, provided $100 billion in supplemental LHHS funds.", "In total, LHHS has received roughly $280 billion in supplemental discretionary appropriations from these COVID-19 response measures. These supplemental funds are in addition to roughly $195 billion in regular FY2020 LHHS discretionary appropriations provided in Division A of P.L. 116-94 , the FY2020 omnibus appropriations act containing full-year LHHS appropriations that was enacted on December 20, 2019. Unlike the annual discretionary appropriations, however, these additional funds were designated as an \"emergency requirement\" and thus were effectively exempted from otherwise applicable budget enforcement requirements (such as the statutory discretionary spending limits). Overall, the COVID-19 supplemental funds have increased FY2020 LHHS discretionary appropriations by approximately 143%.", "The Department of Health and Human Services (HHS) received funding in all four COVID-19 supplemental appropriations acts, whereas the Department of Labor (DOL), Department of Education (ED), and entities funded under the \"Related Agencies\" heading received funding in the third supplemental only. In total, HHS received $248 billion, or 89% of all COVID-19 LHHS supplemental appropriations. ED received the second-largest share at $31 billion, or 11%. DOL and the Related Agencies received approximately 0.1% and 0.2% of the LHHS COVID-19 supplemental funds, respectively."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["The global pandemic of Coronavirus Disease 2019 (COVID-19) is affecting communities around the world and throughout the United States, with case counts growing daily. Containment and mitigation efforts by federal, state, and local governments have been undertaken to flatten the curve \u00e2\u0080\u0094that is, to curb widespread transmission that could overwhelm the nation's health care system. Federal response efforts have included the enactment of laws to provide authorities and supplemental funding to prevent, prepare for, and respond to the pandemic. This report focuses on supplemental FY2020 discretionary appropriations provided to programs and activities traditionally funded by the Departments of Labor, Health and Human Services, and Education, and Related Agencies (LHHS) appropriations bill.", "As of the date of this report, LHHS supplemental appropriations for COVID-19 response have been provided in four separate supplemental appropriations measures:", "Title III, Division A, of the Coronavirus Preparedness and Response Supplemental Appropriations Act, 2020 ( P.L. 116-123 ), enacted on March 6, 2020. Title V, Division A, of the Families First Coronavirus Response Act (FFCRA, P.L. 116-127 ), enacted on March 18, 2020. Title VIII, Division B, of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act, P.L. 116-136 ), enacted on March 27, 2020. Title I, Division B, of the Paycheck Protection Program and Health Care Enhancement Act (PPPHCEA, P.L. 116-139 ), enacted on April 24, 2020.", "In total, LHHS has received roughly $280 billion in supplemental discretionary appropriations from these COVID-19 response measures. These funds are in addition to roughly $195 billion in regular FY2020 LHHS discretionary appropriations provided in Division A of P.L. 116-94 , the FY2020 LHHS omnibus appropriations act that was enacted on December 20, 2019. Unlike the annual discretionary appropriations, however, these additional funds were designated as an \"emergency requirement\" and thus were effectively exempted from otherwise applicable budget enforcement requirements (such as the statutory discretionary spending limits). Overall, the COVID-19 supplemental funds have increased FY2020 LHHS discretionary appropriations by approximately 143%."], "subsections": []}, {"section_title": "Legislative History", "paragraphs": ["The relevant legislative history of each of the four enacted laws containing LHHS supplemental appropriations is detailed below. "], "subsections": [{"section_title": "P.L. 116-123 (H.R. 6074), Coronavirus Preparedness and Response Supplemental Appropriations Act, 2020", "paragraphs": ["In the weeks leading up to the supplemental appropriations action in Congress, Alex Azar, the Secretary of the U.S. Department of Health and Human Services (HHS), took administrative steps to allocate existing funding to COVID-19 response efforts. These included issuing a determination on January 25, 2020, allowing the allotment of $105 million from the Infectious Diseases Rapid Response Reserve Fund (IDRRRF). He also reportedly informed Congress on February 2 that he would potentially exercise his authority to transfer $136 million in existing funds within HHS to increase the budgetary resources of several operating divisions and offices that were tasked with COVID-19 response. In response, the Chair of the House Appropriations Committee, Representative Nita Lowey, and the Chair of the LHHS Subcommittee, Representative Rosa DeLauro, sent the Secretary a letter expressing concern that budgetary resources available to HHS at that time would not be sufficient. ", "On February 24, 2020, the Trump Administration sent Congress a request for supplemental appropriations of $1.25 billion for the Public Health and Social Services Emergency Fund (PHSSEF) at HHS. The request letter included a number of other proposals, largely but not exclusively related to re-purposing existing funds toward response efforts. All told, the Administration estimated needing to allocate approximately $2.5 billion toward COVID-19 response efforts. (For the most part, amounts for other LHHS aspects of the request generally were unspecified in the publicly released request letter.) ", "Several days after the Administration's request, the Chair of the House Appropriations Committee introduced H.R. 6074 on March 4, 2020. The measure passed the House that same day by a vote of 415-2, passed the Senate on March 5 by a vote of 96-1, and was signed into law ( P.L. 116-123 ) on March 6. ", "According to the Congressional Budget Office (CBO), P.L. 116-123 provided a total of $7.8 billion in supplemental appropriations in Division A, of which roughly $6.4 billion (about 83%) was for LHHS accounts and activities. (Division B contained authorization provisions related to certain LHHS programs and activities\u00e2\u0080\u0094providing the HHS Secretary authority to temporarily waive or modify the application of certain Medicare requirements with respect to telehealth services. The mandatory spending budgetary effects of these provisions are outside the scope of this report.) "], "subsections": []}, {"section_title": "P.L. 116-127 (H.R. 6201), Families First Coronavirus Response Act (FFCRA)", "paragraphs": ["A second COVID-19 response measure was developed by Congress and the Administration soon after the first was enacted. Initially, H.R. 6201 was introduced by the Chair of the House Appropriations Committee on March 11, 2020. The House amended and passed the measure by a vote of 363-40 on March 14, but further alterations to the final legislative package were negotiated over the next two days. On March 16, the House (by unanimous consent) considered and agreed to a resolution ( H.Res. 904 ) that directed the Clerk to make changes to the legislation when preparing the final, official version of the House-passed bill ( engrossment ). The engrossed version was sent to the Senate and ultimately passed without amendment by a vote of 90-8 on March 18. The President signed the bill into law ( P.L. 116-127 ) the same day.", "Division A of P.L. 116-127 was estimated by CBO to provide a total of $2.5 billion in supplemental appropriations, of which $1.25 billion (approximately 51%) was for LHHS accounts and activities. (Other divisions of the act contained authorization provisions that in some cases relate to LHHS programs and activities\u00e2\u0080\u0094for instance, provisions providing a 6.2% increase to the federal matching assistance percentage for Medicaid and certain other programs. The mandatory spending budgetary effects of such provisions are outside scope of this report.) "], "subsections": []}, {"section_title": "P.L. 116-136 (H.R. 748), Coronavirus Aid, Relief, and Economic Security Act (CARES Act)", "paragraphs": ["On March 17, 2020, the Administration released a second request for FY2020 supplemental appropriations of $45.8 billion for COVID-19 response, of which $11.1 billion was for LHHS accounts and activities. ", "Over the next several days, Congress and the Administration negotiated the scope and scale of this legislative response, which was expected to involve authorities and additional funding for numerous programs across the federal government. The legislative vehicle that was ultimately chosen for this package was H.R. 748 , an unrelated measure that had been passed previously by the House. Prior to when a deal was reached between Congress and the Administration, the Senate voted on March 22 (47-47) and March 23 (49-46) not to invoke cloture on the motion to proceed to H.R. 748 . The measure was ultimately laid before the Senate by unanimous consent and passed with a substitute amendment by a vote of 96-0 on March 25. The House subsequently took up the Senate amendment on March 27, and agreed to it by a voice vote. The bill was signed into law ( P.L. 116-136 ) by the President that same day.", "According to CBO, P.L. 116-136 provided about $330 billion in supplemental appropriations in Division B, of which $172.1 billion (approximately 57%) was for LHHS accounts and activities. (Division A contained authorization provisions that in some cases relate to LHHS programs and activities\u00e2\u0080\u0094for instance, $1.320 billion in mandatory funds for the HRSA health centers program. The mandatory spending budgetary effects of such provisions are outside the scope of this report.)"], "subsections": []}, {"section_title": "P.L. 116-139 (H.R. 266), Paycheck Protection Program and Health Care Enhancement Act (PPPHCEA)", "paragraphs": ["About three weeks after the enactment of the CARES Act, Congress and the President came to an agreement that, among other provisions, provided additional supplemental appropriations to HHS for the Provider Relief Fund and to support COVID-19 testing. The legislative vehicle that was used for the agreement was H.R. 266 , an unrelated appropriations bill that had been passed previously by the House. On April 21, 2020, the measure was laid before the Senate by unanimous consent and passed with a substitute amendment by voice vote. The House adopted the Senate version of the proposal on April 23 by a vote of 388-5. The President signed the bill into law ( P.L. 116-139 ) the following day.", "According to CBO, P.L. 116-139 provided $162.1 billion in supplemental appropriations in Division B, of which $100 billion (approximately 62%) was for LHHS. (Division A contained no provisions related to LHHS programs and activities. The mandatory spending budgetary effects of the authorization provisions in Division A are outside the scope of this report.) "], "subsections": []}]}, {"section_title": "Funding Overview", "paragraphs": ["As previously mentioned, LHHS has received in total roughly $280 billion in supplemental discretionary appropriations from the COVID-19 response measures ( Table 1 ). HHS received funding in all four supplemental appropriations acts, whereas the Department of Labor (DOL), the Department of Education (ED), and entities funded under the Related Agencies (RA) heading received funding in the third supplemental only. ", "HHS received the vast majority of all LHHS COVID-19 supplemental funds\u00e2\u0080\u0094$248 billion, or 89%. ED received the second-largest share\u00e2\u0080\u0094$31 billion, or 11%. DOL and RA received approximately 0.1% and 0.2%, respectively.", "The remainder of this report provides highlights for HHS, DOL, ED, and RA, and includes a detailed table ( Table 2 ) organized by department or agency and by account, program, or activity. "], "subsections": [{"section_title": "Department of Labor", "paragraphs": ["The majority of DOL funds ($345 million) in the third measure are for dislocated worker assistance through activities authorized by the Workforce Innovation and Opportunity Act (WIOA). Specifically, the DOL funds are for the WIOA National Reserve, which provides National Dislocated Worker Grants (NDWGs) to states and localities to assist with worker dislocation resulting from natural disasters and mass layoffs. These funds are generally expected to address workforce-related effects of the COVID-19 pandemic."], "subsections": []}, {"section_title": "Department of Health and Human Services", "paragraphs": ["The majority of HHS funds (93%) in the supplemental appropriations measures have been appropriated to the Public Health and Social Services Emergency Fund (PHSSEF). The PHSSEF account is used by the HHS Secretary for one-time or short-term funding, such as emergency supplemental appropriations, and for some ongoing public health preparedness activities in the Office of the HHS Assistant Secretary for Preparedness and Response (ASPR). ", "Accounts at the Centers for Disease Control and Prevention (CDC) received approximately 3% of the supplemental HHS appropriations provided in the COVID-19 response measures. Accounts at the Administration for Children and Families (ACF) received a similar amount. Remaining funds were provided in smaller amounts to the National Institutes of Health (NIH), the Administration for Community Living (ACL), the Substance Abuse and Mental Health Services Administration (SAMHSA), and the Centers for Medicare and Medicaid Services (CMS). ", "While amounts shown in Table 2 are displayed as appropriated, readers should note that the first, third, and fourth COVID-19 supplemental appropriations acts authorized HHS to transfer funds made available in these acts, provided the transfers are made to prevent, prepare for, and respond to the pandemic. (This broad authority giving HHS discretion over certain transfers is in addition to provisions in these three measures that direct HHS to make specific transfers.) The first measure broadly allowed for HHS to transfer funds among accounts at CDC, NIH, and PHSSEF. The third measure allowed for transfers among amounts at CDC, PHSSEF, ACF, ACL, and NIH. The fourth measure allowed for transfers among accounts at CDC, NIH, PHSSEF, and the Food and Drug Administration, but limited the amounts available for such transfers (e.g., it excluded from this authority $75 billion provided to the PHSSEF for the \"Provider Relief Fund\"). The acts require HHS to notify the House and the Senate appropriations committees 10 days in advance of such transfers."], "subsections": [{"section_title": "PHSSEF", "paragraphs": ["The PHSSEF received about $232 billion in funding across the four measures. This accounts for 83% of all LHHS funds provided in the acts (and 93% of the HHS funds in the LHHS titles of the bills). These PHSSEF funds may support various activities, including health care surge capacity and the development and purchase of medical countermeasures, including vaccines. In general, PHSSEF supplemental funding has been provided for four main sets of activities. ", "Medical Countermeasures and Surge Capacity: The first and third measures each provided funding to support the development, and in some cases federal purchase, of COVID-19 medical countermeasures, such as diagnostic tests, treatments, vaccines, and medical supplies, as well as for healthcare workforce and other surge capacity activities. In total, approximately $30.4 billion has been provided for these activities. Note that the bills also specify that some of these funds are to be transferred elsewhere (e.g., to other federal agencies for the care of persons under federal quarantine) or reserved for specific purposes or activities (e.g., deposits to the Strategic National Stockpile). These activities may be carried out by various ASPR components, especially the Biomedical Advanced Research and Development Authority (BARDA) for countermeasure development and procurement. ", "COVID-19 Testing for the Uninsured : The second supplemental measure included $1 billion to provide reimbursements for COVID-19 testing and related services for persons who are uninsured. In addition, the fourth measure specified that up to $1 billion out of the amounts appropriated for broader COVID-19 testing purposes (discussed below) may be used to cover the costs of testing for the uninsured. Both measures provide for these payments to be made according to the National Disaster Medical System (NDMS) definitive care reimbursement mechanism. However, the program is administered by HRSA. ", "Provider Relief Fund: The third and fourth supplemental measures each provided funding for a \"Provider Relief Fund\" to assist health care providers and facilities affected by the COVID-19 pandemic. These funds are intended to reimburse eligible health care providers for health care-related expenses or lost revenues that are attributable to COVID-19. The measures define eligible providers broadly as any that provide \"diagnoses, testing, or care for individuals with possible or actual cases of COVID-19.\" In total, $175 billion has been appropriated for the Provider Relief Fund.", "COVID-19 Testing , Surveillance, and Contact Tracing : The fourth supplemental measure provided $25 billion to augment national capacity for COVID-19 containment, including expanded testing capacity, and workforce and technical capacity for disease surveillance and contact tracing. The bill directed HHS to reserve some of these funds for specific purposes (e.g., not less than $11 billion is for states, localities, territories, tribes, tribal organizations, urban Indian health organizations, or health service providers to tribes). In addition, the bill specified that certain funds are to be transferred to other agencies and accounts (e.g., $600 million is to be transferred to the FDA for diagnostic, serological, antigen, and other tests).", "In addition to the activities specified above, PHSSEF appropriations in the first, third, and fourth supplemental measures called for some portion of the funds to be transferred to other agencies or accounts for particular activities. For instance, some PHSSEF funds are required to be transferred to the HRSA for health centers, rural health, the Ryan White HIV/AIDS program, and health care systems. "], "subsections": []}, {"section_title": "Other HHS Funding", "paragraphs": ["Further public health-related funding for preparedness and response was appropriated to the CDC ($6.5 billion) and NIH ($1.8 billion) in the first and third supplemental measures. In addition, the fourth supplemental explicitly directed certain PHSSEF appropriations to be transferred to CDC and NIH for COVID-19 response activities. When accounting for these transfers, total funding directed to the CDC would come to not less than $7.5 billion and total funding directed to NIH would come to not less than $3.6 billion. The CDC funding was intended, among other things, to support grants, or cooperative agreements with grants to states, localities, tribes and other entities, for public health activities (e.g., surveillance, infection control, diagnostics, laboratory support, and epidemiology), as well as for global disease detection and modernization of public health data collection. The funds may also be used to support public outreach campaigns, and provide guidance to physicians, health care workers, and others. Most of the NIH funding was provided to several institutes to support basic scientific research as well as research on potential vaccines, therapeutics, and diagnostics related to COVID-19.", "ACL received a total of $1.2 billion in the second and third response measures. The majority of this funding ($750 million) was spread across a variety of activities that the agency undertakes to help provide meals to low-income seniors.", "SAMHSA received $425 million in the third measure, with $250 million for Certified Community Behavioral Health Clinics, $50 million for suicide prevention programs, and not less than $15 million for Indian Tribes. The measure specified that not less than $100 million be made available as emergency response grants for state governments for crisis intervention services, mental health and substance use disorder treatment, and recovery supports for individuals affected by the pandemic. ", "CMS received $200 million in the third measure. At least half of this appropriation was to be spent on additional infection control surveys for federally certified facilities with populations vulnerable to severe illness from COVID-19. ", "ACF received $6.3 billion in the third measure. These funds were directed to a number of human services programs. For instance, the Child Care and Development Block Grant received $3.5 billion to provide continued assistance to child care providers in the event of decreased enrollment or program closures. These funds may also be used to support child care facilities that are open and operating, including those providing care for the children of essential workers. Several other ACF programs received funding, including the Community Services Block Grant ($1 billion), Head Start ($750 million), and the Low Income Home Energy Assistance Program ($225 million). "], "subsections": []}]}, {"section_title": "Department of Education", "paragraphs": ["Almost all of the $30.925 billion in supplemental ED appropriations provided in the third measure are for the Education Stabilization Fund (ESF). The ESF is composed of three emergency relief funds: (1) a Governor's Emergency Education Relief (GEER) Fund (\u00c2\u00a718002), (2) an Elementary and Secondary School Emergency Relief Fund (ESSERF; \u00c2\u00a718003), and (3) a Higher Education Emergency Relief (HEER) Fund (\u00c2\u00a718004). The third measure provided a total of $30.750 billion for the ESF and specified that these funds are to remain available through September 30, 2021. ", "The GEER Fund may be used to provide emergency support through grants to local educational agencies (LEAs) that the state educational agency (SEA) or governor determines to have been the most significantly impacted by COVID-19. Emergency support may also be provided through grants to institutions of higher education (IHEs) serving students within the state that the governor determines to have been the most significantly impacted by COVID-19. A governor may also choose to provide emergency support to any other IHE, LEA, or education-related entity within the state that he or she deems \"essential for carrying out emergency educational services\" to students for a broad array of purposes ranging from any activity authorized under various federal education laws to the provision of child care and early childhood education, social and emotional support, and the protection of education-related jobs.", "Funds from the ESSERF are to be awarded to states based on their relative shares of grants awarded under Title I-A of the Elementary and Secondary Education Act (ESEA), as amended. SEAs are required to provide at least 90% of the funds to LEAs to be used for myriad purposes such as any activity authorized under various federal education laws (e.g., ESEA), coordination of preparedness and response to the COVID-19 pandemic, technology acquisition, mental health, and activities related to summer learning. Funds retained by the SEA must be used for emergency needs, as determined by the SEA, to address issues in response to the COVID-19 pandemic and for administration.", "The HEER Fund is to distribute funds to IHEs to address needs directly related to the COVID-19 pandemic, including, but not limited to, transitioning courses to distance education and grant aid to students for their educational costs such as food, housing, course materials, health care, and child care."], "subsections": []}, {"section_title": "Related Agencies", "paragraphs": ["The Social Security Administration (SSA) received the largest amount ($300 million) among the related agencies. These funds were provided to the SSA Limitation on Administrative Expenses account to support the salaries and benefits of all SSA employees affected as a result of office closures. The funds are also to be used for costs associated with telework, phone, and communication services for employees; for overtime costs and supplies; and for processing disability and retirement benefit workloads and backlogs."], "subsections": []}, {"section_title": "Detailed LHHS Programs and Activities Supplemental Amounts", "paragraphs": [" Table 2 displays funding directed to LHHS programs and activities, as enacted, across the four COVID-19 supplemental appropriations acts. It is organized by department or agency and by account, program, or activity. The table also indicates a number of cases in which appropriations language reserved funds within a particular account for specific programs or activities, or directed that funds be transferred to other accounts. It makes note of instances in which these reservations are for not less than (NLT) or not more than (NMT) a certain dollar amount. In cases where the bill text calls for transfers, funds are shown in the account to which they were appropriated, not in the account to which they are to be transferred."], "subsections": []}]}]}}
{"id": "R46291", "title": "The Employment-Based Immigration Backlog", "released_date": "2020-03-26T00:00:00", "summary": ["Currently in the United States, almost 1 million lawfully present foreign workers and their family members have been approved for, and are waiting to receive, lawful permanent resident (LPR) status (a green card ). This employment-based backlog is projected to double by FY2030. It exists because the number of foreign workers whom U.S. employers sponsor for green cards each year exceeds the annual statutory green card allocation. In addition to this numerical limit, a statutory 7% per-country ceiling prevents the monopolization of employment-based green cards by a few countries.", "For nationals from large migrant-sending countries\u00e2\u0080\u0094India and China\u00e2\u0080\u0094the numerical limit and per-country ceiling have created inordinately long waits for employment-based green cards. New prospective immigrants entering the backlog (beneficiaries) outnumber available green cards by more than two to one. Many Indian nationals will have to wait decades to receive a green card. The backlog can impose significant hardship on these prospective immigrants, many of whom already reside in the United States. It can also disadvantage U.S. employers, relative to other countries' employers, for attracting highly trained workers.", "Solutions for addressing the employment-based backlog have been introduced in Congress. In July 2019, the House passed H.R. 1044 , the Fairness for High-Skilled Immigrants Act. Currently under consideration by the Senate ( S. 386 , as amended), the bill would eliminate the 7% per-country ceiling. Supporters of the bill argue it would ultimately treat all prospective immigrants more equitably regardless of origin country. Opponents contend it would allow nationals from a few countries, and their U.S. employers, to dominate most employment-based immigration. They argue that S. 386 ignores the fundamental issue of too few employment-based green cards for an economy that has doubled in size since Congress established the current limits in 1990.", "This report describes the results of a CRS analysis that projects the 10-year impact of eliminating the 7% per-country ceiling on the first three employment-based immigration categories: EB1, EB2, and EB3. It models outcomes under current law and under the provisions of S. 386 , as amended. The bill would phase out the per-country ceiling over three years and reserve green cards for certain foreign workers, but it would not increase the current limit of 120,120 green cards for the three employment-based immigration categories.", "The analysis projects similar outcomes for all three employment-based categories: Indian, and to a lesser extent Chinese, nationals in the backlog would experience shorter wait times under S. 386 compared with current law. The bill would eliminate current EB1, EB2, and EB3 backlogs in 3, 17, and 7 years, respectively, with modest differences by country of origin. Subsequently, new prospective immigrants would receive green cards on a first-come, first-served basis with equal wait times within each category, regardless of origin country. By FY2030, EB1, EB2, and EB3 petition holders could expect to wait 7, 37, and 11 years, respectively. Maintaining the 7% per-country ceiling, by contrast would substantially increase the already long wait times for Indian and Chinese nationals, but it would continue to allow those from elsewhere to receive green cards relatively quickly.", "S. 386 would not reduce future backlogs compared to current law. Given current trends, the analysis projects that by FY2030, the EB1 backlog would grow from an estimated 119,732 individuals to an estimated 268,246 individuals; the EB2 backlog would grow from 627,448 to 1,471,360 individuals; and the EB3 backlog, from 168,317 to 456,190 individuals. The total backlog for all three categories would increase from an estimated 915,497 individuals currently to an estimated 2,195,795 individuals by FY2030. These outcomes would occur whether or not S. 386 is enacted, because the bill maintains the current limit on number of green cards issued.", "Some legislative options include one or more of the following: maintaining current law, removing the per-country ceiling, increasing the number of employment-based green cards, and reducing the number of workers entering the employment-based immigration pipeline. Broadly restructuring the entire employment-based immigration system could involve merit-based or place-based approaches."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["The United States currently has a population of almost 1 million lawfully present foreign workers and accompanying family members who have been approved for, but have not yet received, a green card or lawful permanent resident (LPR) status. This queue of prospective immigrants\u00e2\u0080\u0094the employment-based backlog \u00e2\u0080\u0094is dominated by Indian nationals. It has been growing for decades and is projected to double in less than 10 years. ", "The employment-based immigrant backlog exists because the annual number of foreign workers whom U.S. employers hire and then sponsor to enter the employment-based immigration pipeline has regularly exceeded the annual statutory allocation of green cards. The Immigration and Nationality Act (INA) that governs U.S. immigration policy limits the total annual number of employment-based green cards to 140,000 individuals. This worldwide limit is split among five employment-based categories\u00e2\u0080\u0094the first three of which each receive 40,040 green cards, and the other two receive 9,940 each. (See Appendix A for more detailed category information.)", "Apart from these numerical limits, the INA also imposes a 7% per-country cap or ceiling that applies to each of the five categories. The 7% ceiling is not an allocation to individual countries but an upper limit established to prevent the monopolization of employment-based green cards by a small number of countries. This percentage limit is breached frequently for the countries that send the largest number of prospective employment-based immigrants, due to reallocations from other categories and countries.", "For nationals from most immigrant-sending countries, the employment-based backlog does not pose a major obstacle to obtaining a green card. Current wait times to receive a green card for those individuals are relatively short, often under a year. This is particularly the case for nationals from countries that send relatively few employment-based immigrants to the United States. ", "However, for nationals from India, and to a lesser extent China and the Philippines\u00e2\u0080\u0094three countries that send large numbers of foreign workers to the United States\u00e2\u0080\u0094the combination of the numerical limits and the 7% per-country ceiling has created inordinately long waits to receive employment-based green cards and exacerbated the backlog. New prospective immigrants currently entering the backlog (beneficiaries) are double the available number of green cards. Many Indian nationals can expect to wait decades to receive a green card. For some, the waits will exceed their lifetimes.", "For these prospective immigrants, many of whom already reside in the United States, the backlog can impose significant hardships. Prospective employment-based immigrants who lack LPR status cannot switch jobs, potentially subjecting them to exploitative work conditions. While waiting in the United States, backlogged workers often develop community ties, purchase homes and have children. Yet with a petition pending approval and no green card, they cannot easily travel overseas to see their families, and their spouses may have difficulty obtaining legal permission to work. Any noncitizen children who reach age 21 before their parents acquire a green card risk aging out of legal status. In effect, a large part of these prospective immigrants' lives and those of their family members are on hold. If a prospective immigrant in the backlog dies while waiting for a green card, the individual's spouse and family lose their place in the queue, and in some cases their legal status to reside in the United States. ", "For some U.S. employers, the backlog can act as a competitive disadvantage for attracting highly trained workers relative to other countries with more accessible systems for acquiring permanent residence. U.S. universities educate a sizable number of foreign-born graduates in science, technology, engineering, and mathematics, among other fields, many of whom may be desirable candidates to U.S. employers. In the face of the substantial wait times for LPR status, however, growing numbers of such workers are reportedly migrating to countries other than the United States for education, employment, or both. ", "In recent years, some Members of Congress have proposed solutions for addressing the employment-based backlog, ranging from changing the existing system's numerical limits to restructuring the entire employment-based immigration system. The latter approach is widely viewed as legislatively and politically formidable. On the other hand, legislative proposals to alter the numerical limits\u00e2\u0080\u0094and to remove the per-country ceiling in particular\u00e2\u0080\u0094for employment-based immigrants have been introduced more regularly.", "One proposal currently under consideration in the Senate following its passage in the House is the Fairness for High-Skilled Immigrants Act ( H.R. 1044 ; S. 386 , as amended), which would eliminate the 7% per-country ceiling for employment-based immigration, among other provisions. Supporters of the bill assert that it would improve the current employment-based immigration system, initially by granting more green cards to Indian nationals who generally have longer wait times under the current system compared with nationals from other countries. Ultimately, the bill would convert the per-country system into what some consider a more equitable first- come, first served system. Supporters of this approach argue that the existing 7% per-country ceiling unfairly discriminates against foreign workers on the basis of their country of origin. They contend that the current backlog incentivizes some employers to hire and exploit Indian foreign workers, knowing that these workers will be unable to leave their jobs for many years without losing their place in the queue.", "Those opposed to removing the per-country ceiling maintain that it fulfills its original purpose of preventing a few countries from dominating employment-based immigration. They contend that removing the ceiling merely shuffles the deck by changing who receives employment-based green cards, benefiting Indian and Chinese nationals at the expense of immigrants from all other countries. Because Indian employment-based immigrants are employed largely in the information technology sector, such a change may benefit that sector at the expense of other industrial sectors that are also critical to the United States. Opponents argue that legislative proposals such as S. 386 do not address the more fundamental issue of too few employment-based green cards for an economy that has doubled in size since the law establishing their current statutory limits was passed in 1990.", "If the 7% per-country ceiling were eliminated, some observers expect that Indian and Chinese nationals would initially receive most or all employment-based green cards for some years at the expense of nationals from all other countries. Once current backlogs were eliminated, however, country of origin would no longer directly affect the allocation of employment-based green cards, an outcome that some consider more equitable to Indian and Chinese prospective immigrants, and that others consider disadvantageous to prospective immigrants from all other countries. ", "This report analyzes how removing the per-country ceiling would impact the employment-based immigrant backlog over the next decade, using the provisions of S. 386 , as amended, as a case study. While certain provisions analyzed are specific to only this bill, the broader objective of eliminating the per-country ceiling has appeared in numerous legislative proposals in past Congresses. The report reviews the employment-based immigration system, discusses the key provisions of S. 386 affecting the backlog, and presents results from a Congressional Research Service (CRS) analysis that projects, under current conditions, how the backlog would change over the decade following enactment. The report ends with concluding observations and some potential legislative options."], "subsections": []}, {"section_title": "Overview of the Permanent Employment-Based Immigration System", "paragraphs": ["Each year, the United States grants LPR status to roughly 1 million foreign nationals, which allows them to live and work permanently in this country. The provisions that mandate LPR eligibility criteria\u00e2\u0080\u0094the pathways by which foreign nationals may acquire LPR status\u00e2\u0080\u0094and their annual numerical limits are established in the INA, found in Title 8 of the U.S. Code. ", "Among those granted LPR status are employment-based immigrants who serve the national interest by providing needed skills to the U.S. labor force. The INA specifies five preference categories of employment-based immigrants: ", "1. persons of extraordinary ability; 2. professionals with advanced degrees; 3. skilled and unskilled \"shortage\" workers for in-demand occupations (e.g., nursing); 4. assorted categories of \"special immigrants\"; and 5. immigrant investors (see Appendix A for more detail). ", "Each category has specific eligibility criteria, numerical limits, and, in some cases, application processes. The INA allocates 140,000 green cards annually for employment-based LPRs. In FY2018, employment-based LPRs accounted for about 13% of the almost 1.1 million LPRs admitted. The INA further limits each immigrant-sending country to an annual maximum of 7% of all employment-based LPR admissions, known as the 7% per-country ceiling. The ceiling serves as an upper limit for all countries, not a quota set aside for individual countries. As noted earlier, this percentage limit is breached frequently for the highest immigrant-sending countries, due to reallocations from other categories and countries.", "The INA also contains provisions that allow countries to exceed the numerical limits set for each preference category and the per-country ceiling. First, unused green cards for each of the preference categories can roll down to be utilized in the next preference category. Second, in any given quarter, if the number of available green cards exceeds the number of applicants, the per-country ceiling does not apply for the remainder of green cards for that quarter. Third, any unused family-based preference immigrant green cards can be used for employment-based green cards in the next fiscal year. ", "Such provisions regularly permit individuals from certain countries to receive far more employment-based green cards than the limits would imply. For example, the numerical limit for each of the first three employment-based categories is 40,040, which combined with the 7% per-country ceiling, would limit the annual number of green cards issued to Indian nationals to 2,803 per category. However, in FY2019, Indian nationals received 9,008 category 1 (EB1), 2,908 category 2 (EB2), and 5,083 category 3 (EB3) green cards. ", "Among prospective immigrants, the INA distinguishes between principal prospective immigrants (principal beneficiaries), who meet the qualifications of the employment-based preference category, and derivative prospective immigrants (derivative beneficiaries), who include the principals' spouses and minor children. Derivatives appear on the same petition as principals and are entitled to the same status and order of consideration as long as they are accompanying or following to join principal immigrants. Both principals and derivatives count against the annual numerical limits, and currently less than half of employment-based green cards issued in any given year go to the principals.", "While some prospective employment-based immigrants can self-petition, most require U.S. employers to petition on their behalf. How prospective immigrants apply for employment-based LPR status depends on where they reside. If they live abroad, they may apply as new immigrant arrivals. If they reside in the United States, they may apply to adjust st atus from a temporary (nonimmigrant) status (e.g., H-1B skilled temporary worker, F-1 student) to LPR status. ", "Employment-based immigration involves multiple steps and federal agencies. The Department of Labor (DOL) must initially provide labor certification for most preference category 2 and 3 immigrants. U.S. Citizenship and Immigration Services (USCIS) within the Department of Homeland Security (DHS) processes and adjudicates petitions for employment-based immigrants. USCIS assigns to each principal beneficiary and any derivative beneficiaries a priority date (the earlier of the labor certification or immigrant petition filing date), representing the prospective immigrant's place in the backlog. USCIS sends processed and approved immigrant petitions to the Department of State's (DOS's) National Visa Center , which allocates visa numbers or immigrant slots according to the INA's numerical limits and per-country ceilings. Individuals must wait for their priority date to become current before they can continue the process to receive a green card."], "subsections": []}, {"section_title": "Key Provisions of S. 386", "paragraphs": ["The discussion below of S. 386 , as amended, and the subsequent analysis are focused solely on the first three employment-based immigrant preference categories. These categories account for 120,120 or 86% of the 140,000 total employment-based green cards available annually. The EB4 category, which comprises special immigrants, and the EB5 category, which comprises immigrant investors, are statutorily included within the employment-based immigration system. Those categories, however, represent distinct types of immigrants that fall outside of S. 386 's provisions, as well as much of the debate over the per-country ceiling. ", "The Fairness for High-Skilled Immigrants Act (currently S. 386 , as amended) has been introduced in Congress in different versions since 2011. In the 116 th Congress, the bill was introduced in the House as H.R. 1044 by Representative Zoe Lofgren in February 2019 and was passed by the House on July 10, 2019, by a vote of 365 to 65. The bill was introduced in the Senate as S. 386 by Senator Mike Lee in February 2019. There have been negotiated proposed amendments since then, and the bill's provisions may change further.", "In its current proposed form, S. 386 contains the following provisions found in prior versions of the Fairness for High-Skilled Immigrants Act:", "1. Eliminating the per-country ceiling for employment-based immigrants; 2. Raising the per-country ceiling for family-based preference category immigrants from 7% to 15%; and 3. Allowing a three-year transition period for phasing out the employment-based per-country ceiling. ", "Eliminating the per-country ceiling for employment-based immigrants would convert the current system into a first-come, first-served system, with the earliest approved petitions receiving green cards before those filed subsequently, regardless of country of origin. ", "S. 386 , as amended, also contains the following additional provisions intended to address issues and concerns raised by stakeholders:", "1. A Hold Harmless provision that would ensure no person with a petition approved before enactment would have to wait longer for their visa as the result of the bill's passage; 2. Allocating up to 5.75% of the 40,040 EB2 and EB3 categories (2,302 per category) for derivative and principal immigrants applying from overseas, who otherwise would wait in the backlog much longer once the per-country ceiling was removed, either to reunite with their principal immigrant parents/spouses or to be employed in the United States; and 3. Within the EB3 category, allocating up to 4,400 of the 40,040 slots for Schedule A occupations (professional nurses and physical therapists). It would also allocate slots for these immigrants' accompanying family members."], "subsections": []}, {"section_title": "Analysis of the Employment-Based Backlog", "paragraphs": ["The following analysis projects what the employment-based backlog would look like in 10 years under current law and compares that outcome with the projected outcome if S. 386 were passed. As noted above, the analysis is limited to the EB1, EB2, and EB3 categories, which together account for 120,120 (86%) of the 140,000 employment-based green cards permitted annually under the INA. "], "subsections": [{"section_title": "Analytical Approach", "paragraphs": ["The projection of the impact of S. 386 assumes the bill is passed in FY2020, and its provisions take effect in FY2021. As such, the analysis begins with the FY2020 employment-based backlog for the EB1, EB2, and EB3 categories and projects how the bill's provisions alter these backlogs over the 10 years from FY2021 through FY2030. For each category, the analysis estimates the number of new prospective immigrants whose petitions would be approved each year (thereby added to the backlog), as well as the number of backlogged approved petition holders who would receive a green card each year (thereby removed from the backlog). Within each category, the analysis projects the resulting backlog for India, China, the Philippines (for EB3 only), and all other countries or the \"rest of the world\" (RoW). ", "Projected annual additions to the employment-based backlog in the analysis are based on FY2018 USCIS data on approved employment-based immigrant petitions. The analysis holds that number constant through the 10-year period examined. ", "Projected annual reductions to the employment-based backlog are based on green card issuances to approved petitioners and their derivatives. Because S. 386 does not increase the INA's annual worldwide limit of 140,000 green cards issued each year, annual green card issuances in the EB1, EB2, and EB3 categories sum to 40,040 under both scenarios. Projected issuances are based on current DOS data on the number of individuals, by country, who receive EB1, EB2, and EB3 green cards. ", "Under S. 386 , issuances occur from overseas petitioners (the 5.75% set-aside), Schedule A petitioners (nursing and physical therapy occupations), and the remaining individuals with approved petitions according to their priority date or place in the queue. In the analysis, the Hold Harmless provisions alter issuances for FY2021 only, and the three-year Transition Year provisions impact issuances for FY2022 and FY2023. The 5.75% set-aside expires in nine years (FY2029), and the Schedule A set-aside expires in six years (FY2026). (For more detailed methodology information, see Appendix B .)", "As such, the analysis that follows is an arithmetic exercise beginning with the current EB1, EB2, and EB3 approved petition backlogs, each broken out for India, China, the Philippines (only for EB3), and RoW. For each subsequent year, new petition approvals for prospective employment-based immigrants increase the backlog, and green card issuances to those individuals and their family members reduce the backlog. Because the INA treats derivative immigrants and principal immigrants equally for reaching the annual worldwide limit and maintaining the per-country ceiling, the analysis necessarily includes dependent family members of principal immigrants. Each year's ending backlog balance equals the following year's starting balance. The following sections describe the results of the analysis. "], "subsections": []}, {"section_title": "First Employment-Based Category (EB1)", "paragraphs": [" Table 1 presents the projected change in the current EB1 backlog after 10 years, as well as current and projected green card wait times. All figures are estimates. Status quo projections are compared to those that model the impact of S. 386 . All figures are estimates.", "In both scenarios, total annual EB1 green cards issued and total new beneficiaries entering the EB1 queue are assumed to remain the same\u00e2\u0080\u0094a conservative assumption (see Figure 1 , below). Since the number of new beneficiaries exceeds the number of green cards issued each year, the total backlog under both scenarios is projected to more than double from 119,732 in FY2020 to 268,246 in FY2030. S. 386 would alter how the backlog grows by country of origin over this period. For Indian nationals, the backlog would increase by only 21% under the bill's provisions, instead of 118% under current law. Chinese nationals would experience a 115% backlog increase, instead of a 215% increase. Nationals from all other countries would bear the impact of these reductions. Their backlog would increase by more than five times over this period, from 21,425 to 125,852.", "Projected years to receive a green card for those waiting in the EB1 backlog reflect these shifts. Currently, backlogged EB1 Indian nationals can expect to wait up to eight years before receiving a green card. This also means that the current queue of 73,482 Indian nationals would require eight years to disappear. Under S. 386 , this time would decrease to three years, and the number of years required to eliminate the backlog for Chinese nationals would decrease from five to three years. The backlog for RoW nationals would benefit from the Hold Harmless provisions in S. 386 and thus would disappear after one year under both scenarios. In FY2030, however, RoW nationals would experience projected wait times of seven years for a green card under S. 386 , instead of one year under current law. In contrast, by FY2030, projected wait times for Indian and Chinese nationals would decline from 18 and 15 years, respectively, under current law, to seven years for each group. ", "Although rates of backlog increase and wait times diverge among country-of-origin groups, the common theme illustrated in Table 1 is the sizeable increase in the number of foreign workers and their dependents, largely residing in the United States, who would wait extended periods to obtain LPR status. Under this projection, the annual number of foreign workers sponsored for EB1 petitions continues to exceed (by an amount fixed at the FY2018 level) the number of statutorily mandated EB1 green cards. ", " Table 1 shows all EB1 foreign nationals in FY2030 facing the same seven-year wait to receive a green card. This demonstrates how eliminating the per-country ceiling under the provisions of S. 386 would convert the current employment-based system from one constrained by country-of-origin limits into one that functions on a first-come, first-served basis."], "subsections": []}, {"section_title": "Second Employment-Based Category (EB2)", "paragraphs": [" Table 2 presents projected changes to the current EB2 backlog after 10 years, as well as current and projected wait times for a green card. All figures are estimates. Projections are conducted for the status quo under current law and for if the current version of S. 386 were enacted. All figures are estimates.", "Outcomes for the EB2 petition backlog would diverge considerably from those of the projected EB1 backlog because of the sizable difference between the current EB1 and EB2 backlogs. At 627,448 petitions, the current EB2 backlog is more than five times the size of the EB1 backlog (119,732 petitions) and is dominated overwhelmingly (91%) by Indian nationals. Chinese nationals make up the remaining 9% of the EB2 backlog. No EB2 backlog currently exists for nationals from any other country.", "Total annual new beneficiaries entering the EB2 backlog and total EB2 green cards issued each year are the same under both scenarios. Since new entering beneficiaries always exceed green cards issued, the total backlog under either scenario is projected to more than double from 627,448 in FY2020 to 1,471,360 in FY2030. As with EB1 petitions, S. 386 would alter how the backlog grows by country of origin over this period. For Indian nationals, the backlog would increase by a smaller percentage\u00e2\u0080\u009477% under the bill's provisions compared with 123% under current law. Chinese nationals, in contrast, would see their backlog increase by a greater percentage under the bill's provisions\u00e2\u0080\u0094217% versus 194% under current law. Nationals from all other countries, however, would experience the most notable difference in FY2030. Instead of a relatively small backlog of 30,051 that would disappear after a year under current law, RoW nationals would face a backlog nine times its current size (278,333). ", "The differential outcomes that S. 386 provides to Indian and Chinese nationals is also seen in the number of years they would have to wait for a green card by FY2030. Table 2 shows that under either scenario, green card wait times would increase for all groups in FY2030 compared to FY2020. Under current law, and owing to a limited number of green card issuances, the current backlog of 568,414 Indian nationals would require an estimated 195 years to disappear. By FY2030, this estimated wait time would more than double. Under S. 386 , the estimated wait time for newly approved EB2 petition holders would shrink to 17 years, and in FY2030, the wait time would be 37 years, the same as for all other foreign nationals.", "The significant drop in FY2030 green card wait times for Indian and Chinese nationals under S. 386 would come at the expense of nationals from all other countries. RoW nationals would see their EB2 backlog and wait times increase substantially. Currently, no backlog exists for persons with approved EB2 petitions from RoW countries. Under the current system, EB2 petition approval for anyone from other than India or China generally leads to a green card with no wait time. By removing the per-country ceiling, however, S. 386 would create a new RoW backlog by FY2030 that would be nine times its projected size under current conditions"], "subsections": []}, {"section_title": "Third Employment-Based Category (EB3)", "paragraphs": [" Table 3 presents projected changes to the current EB3 backlog and green card wait times for both current law and following the potential enactment of S. 386 . All figures are estimates. The EB3 analysis also includes projections for Filipino nationals, who represent relatively large numbers of foreign-trained nurses. As with the EB1 and EB2 categories, Indian nationals dominate the backlog, with 81% (137,161) of the total queue of 168,317 approved petitions. Chinese nationals represent 12% and Filipino nationals the remaining 7%. No backlog currently exists for nationals from all other countries.", "The annual number of new beneficiaries entering the EB3 backlog and total EB3 green cards issued are the same each year under both scenarios, increasing almost all backlogs between FY2020 and FY2030. As with EB1 and EB2 petitions, S. 386 would alter how the backlog grows by country of origin over this period. For Indian nationals, the backlog is projected to decline by 8% under the bill's provisions compared with a 79% increase under current law. Chinese nationals, in contrast, would see almost no change in their backlog under the bill's provisions compared to current law. Filipino nationals would see a 25% increase in their relatively small backlog. RoW nationals would experience the most notable difference in FY2030, with the backlog increasing to roughly double the size under S. 386 (251,171) compared to the projected backlog under current law (136,783).", "Projected years to receive a green card for those waiting in the EB3 queue reflect these changes in backlog size. Currently, new Indian beneficiaries entering the EB3 backlog can expect to wait 27 years before receiving a green card. Under S. 386 , this wait time would shorten to seven years, and the wait time for Chinese nationals would increase from five to seven years. For Filipino and RoW nationals, FY2020 wait times would not change. By FY2030, however, wait times under S. 386 would equalize the substantial differences in green card wait times under current law, with RoW nationals waiting an estimated 11 years to receive a green card."], "subsections": []}]}, {"section_title": "Concluding Observations", "paragraphs": ["This analysis projects the impact of eliminating the 7% per-country ceiling on the first three employment-based immigration categories over a 10-year period. It models outcomes under current law, as well as under the provisions of S. 386 , as amended. The bill would phase out the per-country ceiling over three years and reserve green cards for certain foreign workers, among other provisions. S. 386 would not increase the total number of employment-based green cards, which equals 120,120 for the first three employment-based categories under current law.", "The analyses of the EB1, EB2, and EB3 categories all project similar outcomes: Indian nationals, and to a lesser extent Chinese nationals, who are currently in the employment-based backlog would benefit from shorter waiting times under S. 386 compared with current law. The bill would eliminate all current EB1, EB2, and EB3 backlogs in 3, 17, and 7 years, respectively, with some modest differences by country of origin. Once current backlogs are eliminated under the Hold Harmless provision of S. 386 , persons with approved employment-based petitions would receive green cards on a first-come, first-served basis, with equal wait times within each category, regardless of country of origin. In FY2030, foreign nationals with approved EB1, EB2, and EB3 petitions could expect to wait 7, 37, and 11 years, respectively, regardless of country of origin. By contrast, maintaining the 7% per-country ceiling would, over 10 years, substantially increase the long wait times to receive a green card for Indian and Chinese nationals, but it would also continue to allow nationals from all other countries to receive their green cards relatively quickly.", "S. 386 would not alter the growth of future backlogs compared to current law. This analysis projects that, by FY2030, the EB1 backlog would grow from an estimated 119,732 individuals to an estimated 268,246 individuals; the EB2 backlog, from 627,448 individuals to 1,471,360 individuals; and the EB3 backlog, from 168,317 individuals to 456,190 individuals. In sum, the total backlog for all three employment-based categories would increase from an estimated 915,497 individuals currently to an estimated 2,195,795 by FY2030. If the current number of new beneficiaries each year continues, these outcomes would occur whether or not S. 386 is enacted, as the bill contains no provisions to change the number of green cards issued.", "As noted throughout this report, all figures from this analysis are estimates. They are based largely on the assumption that current immigration flows\u00e2\u0080\u0094of newly approved employment-based immigrant petitions added to the backlog and of employment-based green card issuances by country of origin re moved from the backlog\u00e2\u0080\u0094remain constant over 10 years. As such, results from the analysis are subject to change, depending on how numbers of future petition approvals and green card issuances deviate from current levels. ", "In one respect, the analysis yields conservative estimates\u00e2\u0080\u0094it assumes that the number of new beneficiaries entering the employment-based immigration system will remain at their FY2018 levels. USCIS data for the past decade, however, show a consistent upward trend in the number of approved I-140 employment-based immigrant petitions ( Figure 1 ). Regarding green card issuances, the analysis is not subject to future variation because under current law or the provisions of S. 386 , the number of employment-based green cards issued each year remains fixed by statute. In FY2018, the former exceeded 262,000, while the latter remained at 120,120.", "The number of employment-based immigrants who are sponsored by U.S. employers and who enter the immigration pipeline with the aspiration of acquiring U.S. lawful permanent residence far exceeds the number of LPR slots available to them. Removing the 7% per-country ceiling would initially reduce wait times considerably for Indian and Chinese nationals in the years following enactment of S. 386 , but it would do so at the expense of nationals from all other countries, as well as of the enterprises in which the latter are employed. In a decade, wait times would equalize among all nationals within each category, regardless of country of origin. This outcome may appear more equitable to some because prospective immigrants from all countries would have to wait the same period to receive a green card. However, it may appear less equitable to others because it would make backlog-related waiting times apply to nationals from all countries rather than just nationals from a few prominent immigrant-sending countries. S. 386 would not address the imbalance between the number of foreign nationals who enter the employment-based pipeline and the number who emerge with LPR status."], "subsections": []}, {"section_title": "Legislative Options", "paragraphs": ["Four options Congress could consider related to the current employment-based immigration backlog include maintaining current law by leaving the 7% per-country cap as is; removing the 7% per-country cap for employment-based immigrants as is proposed under S. 386 ; increasing the number of employment-based LPRs permitted under the current system; or reducing the number of prospective immigrants entering the employment-based pipeline. These options are not necessarily mutually exclusive and could be considered in combination with others. Some Members of Congress have also introduced legislation that would offer more substantial structural changes to the employment-based system.", "Maintain C urrent L aw . Supporters of the per-country ceiling cite the current law's original purpose of this provision: to prevent nationals from a few countries from monopolizing the limited number of employment-based green cards. This 7% threshold allows prospective immigrants from other countries to acquire LPR status in a relatively short time, diversifying the skilled pool of workers from which U.S. employers may draw. To the extent that prospective immigrants from high immigrant-sending countries such as India and China concentrate in particular industrial sectors, the per-country ceiling imposes constraints on some industries and allows others to access that worker pool. Because Indian nationals, in particular, have entered the employment-based backlog in relatively large numbers over the past two decades, they experience the most pronounced impact of the per-country ceiling. Some Indian nationals currently wait for decades to receive green cards\u00e2\u0080\u0094and in the case of new EB2 petition holders, centuries. Some Indian nationals consider this provision of the law discriminatory and unfair.", "Remove A nnual P er- C ountry C eiling for E mployment- B ased I mmigrants . Supporters of removing the per-country ceiling emphasize the inordinately long wait times which, as shown above, require Indian nationals who enter the employment-based backlog to wait an estimated 8, 195, and 27 years, respectively, for green cards in the EB1, EB2, and EB3 categories. This analysis estimates that, holding current conditions constant, these wait times could increase to 18, 436, and 48 years, respectively, by FY2030. Long wait times call into question the legitimate functioning of the employment-based pathway to lawful permanent residence when large numbers of current and prospective backlogged workers remain in temporary status most, if not all, of their working lives. Opponents of removing the per-country ceiling maintain that it currently functions as intended. They point to the concentration of Indian and Chinese nationals in the U.S. information technology sector and argue that prospective employment-based immigrants from other countries benefit far more segments of the U.S. economy. ", "Increase N umber of E mployment- B ased LPR s under C urrent S ystem. The number of green cards for employment-based immigrants could be increased by altering current numerical limits for specific categories or the total worldwide limit. Some have proposed exempting accompanying family members to achieve this goal. Other proposals would increase employment-based immigrants in exchange for reducing the number of other immigrant types, such as family-based preference or diversity immigrants. Such legislation would alleviate current and future employment-based backlogs more expediently than under the current system. Supporters of expanding the number of green cards point out that the current limit of 140,000 for all five employment-based preference categories (120,120 for the first three) was established 30 years ago when the U.S. economy was half its current size. They contend that the larger U.S. economy and the shifting economic importance of technological innovation reinforces the need to find the \"best and brightest\" workers, including from overseas, who can contribute to U.S. economic growth. Opponents of increasing the number of employment-based green cards point to the lack of evidence indicating labor shortages in technology sectors. They contend that the green card backlog harms U.S. workers by forcing them to compete in some industries with foreign workers who may accept more onerous working conditions and lower wages in exchange for LPR status. Some also argue that current immigration levels are too high. Legislation increasing the number of green cards may face resistance from the Trump Administration and some Members of Congress who oppose increasing immigration levels.", "Reduce N umber of P rospective I mmigrants E ntering E mployment- B ased P ipeline . A primary pathway to acquire an employment-based green card is by working in the United States on an H-1B visa for specialty occupation workers, getting sponsored for a green card by a U.S. employer, and then adjusting status when a green card becomes available. When first established in 1990, the H-1B program was limited to 65,000 visas per year. Current limits have since been expanded by excluding H-1B visa renewals and H-1B visa holders employed by nonprofit organizations and institutions of higher education, as well as 20,000 aliens holding a master's or higher degree (from a U.S. institution of higher education). In FY2019, for example, 188,123 individuals received or renewed an H-1B visa, far more than the original 65,000 annual limit. Although some other nonimmigrant visas allow foreign nationals to work in the United States, the INA permits only H-1B and L visa holders to be \"intending immigrants\" who can then renew their status indefinitely while waiting to adjust to LPR status. Eliminating this \"dual intent\" classification or otherwise reducing the number of prospective immigrants entering the employment-based backlog would reduce the growth of the backlog and shorten wait times. Arguments against reducing skilled migration emphasize the impacts on economic growth in certain industrial sectors.", "Reform S tructure of E mployment- B ased I mmigration S ystem. Some recent legislative proposals have taken broader approaches toward restructuring the employment-based immigration system. The Trump Administration and some Members of Congress have proposed changing the current system from one that relies on employer sponsorship to a merit-based system that would rank and admit potential immigrants based on labor market attributes and expected contributions to the U.S. economy. Other Members of Congress have introduced proposals establishing place-based immigration systems that would let each state determine the number and type of temporary workers it needs. All of these approaches exceed the scope of the more narrow discussion of the numerical and per-country limits addressed in this analysis.", "Appendix A. Employment-Based Preference Categories", "Within permanent employment-based immigration, the Immigration and Nationality Act (INA) outlines five distinct employment-based preference categories. Each of the five categories is constrained by its own eligibility requirements and numerical limit ( Table A-1 ).", "Appendix B. Methodological Notes", "The results presented in this report are based on an arithmetic projection of the employment-based backlog under current law and under the provisions of S. 386 , as amended. Each element of the projection is described below.", "Current Backlog Balance . The current backlog balance consists of individuals who possess approved employment-based petitions and who are waiting for a statutorily limited green card. For this analysis, CRS obtained unpublished data from U.S. Citizenship and Immigration Services (USCIS) indicating, for each of the countries within the three employment-based categories analyzed herein, the number of people with approved I-140 petitions. The USCIS data are further broken down by year of priority date, indicating the numerical order in which approved petitions in the backlog are to receive green cards.", "New Petition Approvals . To estimate newly approved petitions of prospective employment-based immigrants, the analysis relies on unpublished USCIS figures of EB1, EB2, and EB3 petitions approved in FY2018. The figures are further divided by country, for India and China only. These figures include only principal immigrants and do not account for derivative immigrant family members who accompany or follow to join the principal immigrants and who are included within the same statutory numerical limits. Derivative immigrants are estimated by multiplying the number of principal immigrants by the average derivative-to-principal immigrant ratios ( derivative multipliers ).", "Hold Harmless Issuances . As noted above, S. 386 contains a provision ensuring that no one holding an approved petition waits additional time in the backlog as the result of the bill's passage. This provision applies to EB1, EB2, and EB3 categories. To approximate the Hold Harmless provision's impact, this analysis assumes that requirements for this provision would be met with one year's worth of issuances under current law, or current issuances, as recorded by the most recent FY2019 U.S. Department of State (DOS) annual visa report. ", "Overseas Petitioner Issuances . As noted above, S. 386 contains a provision that would reserve up to 5.75% (2,302) of the 40,040 EB2 and EB3 green cards for foreign nationals petitioning from overseas. Most prospective employment-based immigrants in the backlog already reside in the United States. When notified by DOS that a visa number is available for them, they can apply with USCIS to adjust status from a nonimmigrant status (e.g., possessing an H-1B visa) to LPR status. However, some backlogged prospective immigrants reside abroad in their home countries. Employers seeking to hire these individuals face a competitive disadvantage because they are not already employing them. Individuals based overseas who face long wait times are likely to advance their careers elsewhere rather than wait abroad for years to receive an employment-based green card in the United States. This analysis assumes that green cards reserved under this provision would be used mostly by RoW country nationals who currently face no wait times. ", "Schedule A Issuances . S. 386 contains a provision that would reserve up to 4,400 green cards for Schedule A occupations (professional nurses and physical therapists). Under the most recent version of the bill, this set-aside would last for six years following enactment. The set-aside includes 4,400 principal immigrants, as well as their family members, effectively doubling the provision's impact. To estimate the number of family members, the analysis assumes that Schedule A principal immigrants brought with them an average of 1.06 derivative immigrants. As such, the total set-aside under this provision is 4,400 principal immigrants plus 4,664 derivative immigrants, for a total set-aside of 9,064 immigrants. Because of the Hold Harmless provisions, Schedule A issuances are projected to start in Year 2 of the analysis (FY2022). Issuances are distributed between nationals from the Philippines, which send the majority of foreign-trained immigrant nurses to the United States, and nationals from all other countries.", "Transition Year Issuance s. S. 386 contains provisions that would allow a transition from the current 7% per-country ceiling to its elimination in the first three years following enactment. The transition would affect issuances in the first three years following enactment.", "Because all of the issuance provisions described above overlap during the first few years, this analysis gives precedence to the Hold Harmless, Overseas Petition, and Schedule A issuances over the Transition Year issuances. Consequently the 40,040 green cards allocated by S. 386 to the EB1, EB2, and EB3 categories according to Table B-1 are first reduced by the Overseas Petition and Schedule A issuances before being allocated according to the Transition Year provisions. In addition, Year 1 (FY2021) Transition Year issuance limits are preempted by the higher priority Hold Harmless issuances for that year .", "Backlog Reduction Methodology . Backlogged employment-based petition holders are issued green cards in the analysis according to the year in which they entered the backlog. Although the issuance limits described above quantify the number of issuances for each country in each of the three employment-based preference categories, the elimination of the current existing backlog is based on how many backlogged petitions can be processed within annual green card limits and on which country's nationals have the oldest petitions. ", "In FY2018, USCIS approved 22,799 EB1, 66,904 EB2, and 34,964 EB3 petitions, per the November 2019 report cited above. Factoring in family members using the derivative multipliers for each EB category described above\u00e2\u0080\u00941.48 for EB1, 1.00 for EB2, and 1.06 for EB3\u00e2\u0080\u0094yields an estimated 56,542 new additions to the EB1 backlog, 133,808 new additions to the EB2 backlog, and 72,026 new additions to the EB3 backlog. Given that 40,040 statutorily mandated green cards can reduce these backlogs each year, the net result is an estimated increase in the EB1, EB2, and EB3 backlogs each year by 16,502, 93,768, and 31,986 petitions, respectively (i.e., approved principal immigrant green card petitions, increased by their dependents and reduced by green card issuances).", "As a result, the estimated total EB1 backlog at the start of FY2020 of 119,732 ( Table 1 ) increases by a projected 148,518 individuals over nine years (16,502 x 9), resulting in an estimated EB1 backlog at the start of FY2030 of 268,260. The estimated total EB2 backlog at the start of FY2020 of 627,448 ( Table 2 ) increases by a projected 843,912 individuals over nine years (93,768 x 9), resulting in an estimated EB2 backlog at the start of FY2030 of 1,471,360. The estimated total EB3 backlog at the start of FY2020 of 168,317 ( Table 3 ) increases by a projected 287,874 individuals over nine years (31,986 x 9), resulting in an estimated EB3 backlog at the start of FY2030 of 456,191.", "These totals are further broken down in the analysis by the provisions of S. 386 that allocate the 40,040 annual green card issuances according to the provisions described above. Those provisions alter the number of green cards that nationals from individual countries would otherwise receive under current law. The overall projected impact on the total backlog remains the same whether or not S. 386 is enacted."], "subsections": []}]}}
{"id": "R46296", "title": "Trade Remedies: Antidumping", "released_date": "2020-03-31T00:00:00", "summary": ["The U.S. Constitution grants to Congress the power to regulate trade with foreign nations and levy tariffs. Since 1922, U.S. law and foreign policy have favored applying tariffs and duties equally to all trading partners. This principle, known as most-favored-nation (MFN) treatment, has been central to the rules-based global trading system since 1947.", "One of the most frequently invoked exceptions to MFN treatment are three \"trade remedy\" laws. These laws are enforced primarily through administrative investigations of two U.S. government agencies: the International Trade Administration of the Department of Commerce (ITA) and the U.S. International Trade Commission (USITC). Trade remedy laws enable the United States to impose additional duties aimed at specific producers or countries to remedy unfair trade practices and to help domestic industries adjust to sudden surges of fairly traded goods. The three types of laws traditionally classified as \"trade remedies\" are:", "Antidumping (AD) laws provide relief to domestic industries that have been, or are threatened with, material injury caused by imported goods sold in the U.S. market at prices that are shown to be less than fair market value. The relief provided is an additional import duty placed on the dumped imports based upon calculations made by the ITA. Antidumping orders are the most frequently used and the most controversial trade remedy.", "Countervailing duty (CVD) laws give a similar kind of relief to domestic industries that have been, or are threatened with, material injury caused by imported goods that have been found to have received WTO-inconsistent government subsidies, and can therefore be sold at lower prices than similar goods produced in the United States. The relief provided is an additional import duty placed on the subsidized imports.", "Safeguard (also referred to as escape clause) laws give domestic industries relief from surges of imported goods that are fairly traded if serious injury is found or is threatened to the domestic industry. The most frequently applied safeguard law, Section 201 of the Trade Act of 1974, is designed to give domestic industry the opportunity to adjust to the new competition and remain competitive. The relief provided is generally an additional temporary import duty, a temporary import quota, or a combination of both. Safeguard laws also require presidential action in order for relief to be put into effect.", "Economists have generally seen antidumping laws and policies as economically inefficient. Some, however, have acknowledged the role that these economically inefficient policies have played in making trade liberalization more politically feasible by providing protection for industries that might otherwise oppose such measures. In recent years, U.S. exports have increasingly become a target of AD measures by several major emerging economies, including India and China. Antidumping laws and policies have also been at the center of dozens of trade disputes between the United States and its trading partners in the WTO. Reports issued by the WTO's Appellate Body (AB) on the subject have been one of the primary targets of the U.S. Trade Representative's criticisms of the AB mechanism in the broader WTO dispute settlement system. If Congress wishes to maintain a functional dispute settlement system at the WTO it may consider either directing the President to seek amendments to underlying WTO agreements such that U.S. practices are internationally compliant or direct the ITA to bring its AD policies into conformity with the AB's interpretation of the WTO's Antidumping Agreement."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["In general, the rules of the World Trade Organization (WTO), of which the United States is a member, require each member to apply tariffs and duties equally to all other members. This principle, known as unconditional most-favored-nation (MFN) treatment, has been central to the rules-based global trading system since 1947 and part of U.S. law and foreign policy since 1922. ", "The WTO agreements allow exceptions to this treatment in certain circumstances, including to remedy unfair trade practices and to help domestic industries adjust to sudden surges of fairly traded goods. The three most frequently applied U.S. trade remedy laws permit the imposition of antidumping duties, countervailing duties, and safeguards. These laws are enforced through administrative investigations and actions of two U.S. government agencies: the International Trade Administration of the Department of Commerce (ITA) and the U.S. International Trade Commission (USITC).", "The most commonly used of these remedies are antidumping (AD) laws. AD laws provide relief to domestic industries that have been, or are threatened with, material injury caused by imports sold in the U.S. market at prices that are shown to be less than fair value. The relief provided is an additional import duty, calculated by the ITA and placed on the dumped imports. Antidumping orders are the most frequently used and the most controversial trade remedy. "], "subsections": []}, {"section_title": "Background", "paragraphs": [], "subsections": [{"section_title": "Dumping Defined", "paragraphs": ["In general, dumping occurs when manufacturers export goods for less than they sell similar goods in their domestic market. The controlling international agreement in the World Trade Organization (WTO) \u00e2\u0080\u0093 the Antidumping Agreement (ADA) \u00e2\u0080\u0093 defines dumping as the introduction of a product \"into the commerce of another country at less than its normal value, if the export price of the product exported from one country to another is less than the comparable price, in the ordinary course of trade, for the like product when destined for consumption in the exporting country.\" U.S. law similarly defines dumping as the \"sale or likely sale of goods [in the United States] at less than fair value,\" with the fair value defined as \"the price at which the foreign like product is first sold \u00e2\u0080\u00a6 for consumption in the exporting country.\" Simply put, dumping is the sale of goods abroad for less than the price the goods would have commanded in the home market. "], "subsections": []}, {"section_title": "The Origins of Dumping and Antidumping", "paragraphs": ["Economists have long written about the practice of selling exports for a lower price than in the home market. In 1776, Adam Smith noted the practice by manufacturers to export some of their surplus goods for sale at a loss for the purpose of \"[doubling] the price of their goods in the home market.\" Several years later, Alexander Hamilton expressed concern with the practice and its potential to stymie the development of domestic industry. However, such mentions were sporadic and generally isolated to economic treatises. ", "As more countries industrialized in the late-nineteenth century, exporting goods for a price below the price that could be commanded in the domestic market (whether at a loss or not) became an economic strategy used to maintain domestic prices while establishing footholds in foreign markets. The expansion of these practices resulted in more sustained scholarly and political attention\u00e2\u0080\u0094not all negative. In 1880, for example, the U.S. Secretary of State encouraged cotton manufacturers to \"sacrifice profits for a time, if necessary, to secure trade-standing in \u00e2\u0080\u00a6 several markets.\" Twenty-five years later, the U.S. Department of Commerce and Labor was still dispensing similar advice to manufacturers. ", "Because of this strategic deployment of dumping, and the reemergence of state-directed trade policies at the turn of the twentieth century, politicians and the public (if not always the economists) began to argue that the practice was unfair. Accusations of using foreign markets as \"dumping-grounds\" became frequent and the term \"dumping\" to describe the practice of selling surplus goods abroad at a lower price began to be used more frequently. British industrialists protested dumping from German and French manufacturers, while Canadian millers grumbled about the dumping of American steel. While accusations of dumping were common, the actual prevalence of the practice is hard to calculate, in part because there was no administrative apparatus to investigate such complaints. Nevertheless, experts generally agree that there was, in fact, at least a modest increase in the practice.", "There were several possible causes for whatever dumping existed at the time. First, higher tariffs in general encouraged the practice. As a leading scholar of antidumping has argued, \"These tariffs provided national firms the opportunity to price monopolistically at home and at the same time protected them from reimports of goods they sold competitively abroad.\" Other observers have noted that dumping was, in some respects, a natural development of trade in industrially advanced countries as large manufacturers attempted to offset changes in domestic demand by selling large surpluses abroad.", "During the first decades of the twentieth century, countries began to take action to prevent dumping or, at least, protect their domestic industries from dumping. In 1904, Canada enacted the world's first modern antidumping (AD) law. By 1921, Australia, New Zealand, South Africa, France, Japan, the United States, and Britain had proposed or enacted AD statutes or other legislation giving administrative officials discretion to alter tariffs in response to influxes of goods at abnormally low prices. Many of the statutes, including the American, were modeled on the Canadian law. The Economic and Financial Section of the League of Nations Secretariat (the precursor to the United Nations) also commissioned studies on the issue to survey AD legislation and see if there was a need for international regulation.", "U.S. AD law had precursors in late-nineteenth-century antitrust legislation. Some early observers argued that dumping was a strategy used to injure or hinder development and maintain monopolistic dominance over foreign countries. In 1916, Congress passed the Antidumping Act, which imposed criminal and civil penalties on any person importing and selling articles in the United States \"at a price substantially less than the actual market value or wholesale price of such articles\" so long as they had the intent of injuring or preventing the establishment of an industry in the United States. The law was rarely applied, in part because it was difficult to prove such an intent.", "U.S. antidumping law took its modern form with the passage of the Antidumping Act of 1921, which adopted a more globally common administrative (rather than judicial) procedure that enabled the imposition of additional duties on imports rather than civil or criminal penalties (as the antitrust branch of legislation had). ", "The Antidumping Act of 1921 became the textual basis for Article VI of the General Agreement on Tariffs and Trade (GATT) in 1947, the multilateral trade agreement that established the post-World War II rules-based trading system and which was later incorporated into the World Trade Organization (WTO) agreements. As such, the U.S. model of antidumping has become the global standard.", "Since 1921, Congress has amended and adjusted U.S. antidumping law many times, but has maintained the basic administrative framework and Article VI was clarified and amended by the ADA as part of the establishment of the WTO in 1995. "], "subsections": []}]}, {"section_title": "Present Day Antidumping Laws and Investigations", "paragraphs": [], "subsections": [{"section_title": "U.S. Statutes", "paragraphs": ["Statutory authority for AD investigations and remedial actions is found in Subtitle B of Title VII of the Tariff Act of 1930, as amended (codified, as amended, at 19 U.S.C. \u00c2\u00a7\u00c2\u00a71673 et seq .). The law requires the imposition of an antidumping duty if (1) the International Trade Administration of the Department of Commerce (ITA) determines that imported merchandise is being, or likely to be, sold in the United States at less than fair value; and (2) the U.S. International Trade Commission (USITC) determines that an industry in the United States is materially injured or is threatened with material injury, or that the establishment of an industry is materially retarded, by reason of imports of that merchandise. The statute requires that the AD duty equal the amount by which the normal value (a calculation of the fair value) of the merchandise exceeds the export price of the merchandise."], "subsections": []}, {"section_title": "U.S. International Obligations", "paragraphs": ["The United States is a party to several international agreements that govern the use of AD laws, including Article VI of the General Agreement on Tariffs and Trade (GATT), which was incorporated into the agreements establishing the WTO, and the WTO's Antidumping Agreement (ADA). Both of these agreements were based upon U.S. AD law and practice and the United States was a proponent of both agreements. ", "All WTO members are subject to the terms of Article VI of the GATT and the Antidumping Agreement. Article VI of GATT allows the imposition of antidumping duties in cases where dumping \"causes or threatens material injury to an established industry in the territory of a contracting party or materially retards the establishment of a domestic industry.\" The ADA elaborates on the basic principles established in Article VI of the GATT by providing more detail on several issues, including how WTO members may determine whether dumping is occurring, how they determine whether there has been an injury to a domestic industry, what kinds of evidence can be used, and other issues. WTO members whose antidumping laws or practices violate the terms of the ADA may be subject to WTO dispute settlement proceedings."], "subsections": []}, {"section_title": "Antidumping Investigations and Measures42", "paragraphs": [], "subsections": [{"section_title": "Initiation", "paragraphs": ["The ITA initiates antidumping investigations either on its own initiative or in response to a petition filed by a representative of a domestic industry with the USITC and the ITA. If the ITA receives a petition, it must normally initiate an investigation within 20 days after it receives a petition and determines that the petition contains the necessary elements for imposing a duty."], "subsections": []}, {"section_title": "Preliminary Determinations", "paragraphs": ["The USITC begins the investigation. The central question of its investigation is whether there is a reasonable indication of an injury or likely injury to a domestic industry. If the USITC's preliminary determination is negative or the USITC determines that imports of the subject merchandise are negligible, then proceedings end. In most circumstances, the USITC must make a preliminary determination no later than 45 days after the start of the investigation.", "If the USITC's preliminary determination is affirmative, then the ITA begins its preliminary investigation to determine whether dumping exists. The ITA must make its determination within 140 days, or within 190 days at the petitioner's request or if the case is extraordinarily complicated. ", "If the ITA's preliminary determination is affirmative, then ITA also estimates a weighted-average dumping margin for each exporter or producer individually investigated and an \"all-others rate\" for all other exporters. The ITA publishes its preliminary results in the Federal Register and orders U.S. Customs and Border Protection (CBP) to delay the final computation of all duties on imports of the targeted merchandise (\"suspend liquidation\") until the case is resolved and to require the posting of cash deposits, bonds, or other appropriate securities to cover the duties (plus the estimated dumping margin) for each subsequent entry into the U.S. market. ", "If the ITA's determination is negative, the ITA continues the investigation to the final stage (without ordering a suspension of liquidation) and the USITC continues its investigation as well. Because this is a preliminary determination, agencies may not have obtained all possible evidence, and this allows interested parties a final opportunity to put information and evidence before the two bodies. "], "subsections": []}, {"section_title": "Final Determinations", "paragraphs": ["Generally, the ITA must make its final determination within 75 days of the preliminary determination. Before issuing a final determination, the ITA must hold a hearing upon request of any party to the proceeding. If the ITA's final determination is negative, the proceedings end, and any suspension of liquidation is terminated, bonds and other securities are released, and deposits are refunded. If the ITA's final determination is affirmative, it orders the suspension of liquidation if it has not already done so. The ITA will publish the order in the Federal Register and direct CBP to continue or resume (if provisional measures expired) suspension of liquidation and collection of cash deposits at the rate determined in the ITA's final determination."], "subsections": []}, {"section_title": "Critical Circumstances", "paragraphs": ["Congress enacted the critical circumstances provision in order \"to provide prompt relief to domestic industries suffering from large volumes, or a surge over a short period, of imports and to deter exporters whose merchandise is subject to an investigation from circumventing the intent of the law by increasing their exports to the United States during the period between initiation of an investigation and a preliminary determination by the [ITA].\"", "If a petitioner alleges that critical circumstances exist in an antidumping case (which would impose additional retroactive AD duties that one would not normally obtain), then the ITA determines whether: ", "(1)(a) there is a reasonable basis to suspect that there is a history of dumping (combined with material injury due to the imports), or (b) that the importer knew or should have known that the exporter was selling the merchandise at less than fair value, and also knew that there was likely to be material injury due to the sales; and (2) whether massive imports of the merchandise have occurred over a relatively short period. ", "If the ITA makes an affirmative critical circumstances finding, it extends the suspension of liquidation of any unliquidated entries of merchandise (entries for which estimated AD duties have not been paid) into the United States retroactively to 90 days before the suspension of liquidation was first ordered or the date on which notice of the determination to initiate the investigation is published in the Federal Register, whichever is later.", "Whether or not the ITA's initial critical circumstances determination is affirmative, if its final determination on subsidies or dumping is affirmative, the ITA must also include a final determination on critical circumstances. If the final determination on critical circumstances is affirmative, retroactive duties, if not yet ordered, are ordered on unliquidated entries at this time. If the critical circumstances determination is negative, all retroactive suspension of liquidation is terminated, and bonds, securities, or cash deposits related to the retroactive action are released.", "If the ITA makes an affirmative determination of critical circumstances, the USITC's final determination must include a finding as to whether the subject imports are likely to undermine seriously the remedial effect of the AD order. If both the USITC and the ITA make affirmative critical circumstances determinations, any AD duty order applies to the goods for which the retroactive suspension of liquidation was ordered. If the final critical circumstances determination of either agency is negative, any retroactive suspension of liquidation is terminated, bonds and securities are released, and any cash deposits are refunded."], "subsections": []}, {"section_title": "Termination of Investigation and Suspension Agreements", "paragraphs": ["The ITA or the USITC may terminate an investigation if the petitioner withdraws the petition or of its own accord if the ITA self-initiated the investigation. Additionally, the ITA may, in certain circumstances, suspend an antidumping investigation in favor of an agreement with foreign exporters (known as \"suspension agreements\") that either eliminates the sales of less than fair value or the injurious effect. One example of such an agreement is the recent suspension agreement between the various Mexican growers associations and the United States with respect to fresh tomatoes. The United States agreed to suspend its antidumping investigation in exchange for a promise by various Mexican growers associations accounting for substantially all imports of fresh tomatoes from Mexico not to sell fresh tomatoes in the United States at a price less than an established reference price."], "subsections": []}, {"section_title": "Administrative and Sunset Reviews", "paragraphs": [], "subsections": [{"section_title": "Periodic Review", "paragraphs": ["Each year, during the anniversary month of the publication of a final AD order, any interested party may request an administrative review of the order. The ITA may also self-initiate a review. During the review process, the ITA recalculates the dumping margin and may adjust the amount of AD duties on the subject merchandise. Suspension agreements are also monitored for compliance and reviewed in a similar fashion. The ITA must make a preliminary determination within 245 days after the last day of the anniversary month of the order or suspension agreement under review, and must make a final determination within 120 days after the publication date of a preliminary determination. New exporters, who were not part of the original review, may also request an expedited review."], "subsections": []}, {"section_title": "Changed Circumstances Review", "paragraphs": ["An interested party may also request a \"changed circumstances\" review from the ITA or the USITC at any time. Under current regulations, upon receipt of such a request, the ITA must determine within 45 days whether to conduct the review. If the ITA decides that there is good cause to conduct the review, the results must be issued within 270 days of initiation, or within 45 days of initiation if all interested parties agree to the outcome of the review."], "subsections": []}, {"section_title": "Sunset Reviews", "paragraphs": ["Sunset reviews must be conducted on each AD order no later than once every five years after its publication. In such a review, the ITA determines whether dumping would likely continue or resume if an order were to be revoked or a suspension agreement terminated, and the USITC conducts a similar review to determine whether injury to the domestic industry would be likely to continue or resume. If both determinations are affirmative, the duty or suspension agreement remains in place. If either determination is negative, the order is revoked, or the suspension agreement is terminated. "], "subsections": []}]}]}]}, {"section_title": "Trends", "paragraphs": [], "subsections": [{"section_title": "Historical Trends (1947-1995)", "paragraphs": ["During the first two decades of the GATT, countries infrequently imposed antidumping measures. Only four parties\u00e2\u0080\u0094the United States, the European Union (EU), Canada, and Australia\u00e2\u0080\u0094made use of the practice, and even that was infrequent. Scholars have given several non-exclusive explanations for the relative dearth of antidumping measures in this period in both the international and U.S. contexts. ", "In the international context, ambiguity within Article VI of the GATT may have discouraged GATT members from making use of the antidumping provisions. Specifically, Article VI does not specify a methodology for deciding whether a product is dumped nor does it set out procedures for AD investigations. Additionally, tariff rates among GATT members were still relatively high, which may have dampened the need for industries to petition for protection through antidumping measures. ", "Likewise, in the United States, the Antidumping Act of 1921 was enacted during a period when tariff rates were relatively high, which may have limited the usefulness of AD duties as a form of protection. Administrative exigencies may have also been a factor. For example, one historian has noted that the Carter Administration shifted responsibility for making the less than fair value determination from the Treasury Department to the Department of Commerce because the \"perceived indifference of Treasury to the plight of petitioning firms\" may have led to fewer findings of dumping and thus fewer measures.", "Finally, countries, particularly those who were not GATT signatories, had higher average tariff rates and were able to impose other non-tariff barriers to trade to reduce importation of allegedly dumped products, which made resorting to AD measures unnecessary. Over the subsequent decades, dozens of developing countries entered the rules-based trading order, which restricted the use of many non-tariff barriers to trade and encouraged the reduction of tariffs. The reduction of tariffs may have led to an increase in the use of AD measures as an alternative form of protection. "], "subsections": []}, {"section_title": "Global Antidumping Trends, 1995-2018", "paragraphs": [], "subsections": [{"section_title": "The Growth of Antidumping Investigations and Measures", "paragraphs": ["AD investigations and actions were uncommon in the decades following the establishment of the GATT. Before the 1990s, the United States, the European Union, Canada, and Australia were responsible for more than 95% of AD actions. Many developing countries did not even have AD laws and procedures. Beginning in the 1990s, however, the number of countries with AD laws multiplied; approximately half of all AD laws in effect today were implemented after 1990. ", "With the increase in the number of countries with AD laws, the major users of AD measures have changed dramatically. In 1994, for instance, India had zero AD measures in force. Twenty-five years later, in 2019, India had 275 AD measures in force, ranking second behind the United States. Between 2008 and 2018, India ranked first in terms of the number of AD measures imposed per year, followed by the United States, Brazil, China, and Argentina. Of the top five users of AD measures prior to 1995, only the United States remains in that top five (see Table 2 ). However, if adjusted for per-dollar imports, both the United States and the EU are relatively light users of AD measures.", "As more countries have begun to use AD measures, the total number of AD measures in force has increased by more than 600%, jumping from 264 measures in force in 1994 to 1,860 in 2018."], "subsections": []}, {"section_title": "Current Users and Targets of Antidumping Investigations and Measures", "paragraphs": ["Many of the largest users of AD investigations and measures are also among the top targets of AD investigations and measures. China, the United States, and India, are among the top users of AD investigations and measures and are, likewise, the top targets of AD investigations and measures. AD measures are imposed primarily on heavy industrial products from the base-metal and chemical industries. Figure 4 ."], "subsections": []}, {"section_title": "The Cause of the Growth in Antidumping Investigations and Measures", "paragraphs": ["The adoption of AD laws and the imposition of measures generally occur following moments of increased market integration and trade liberalization, which may explain their expanded use. In effect, AD measures blunt the impact of new imports. For example, many developing countries reduced their tariffs significantly following the Uruguay Round of trade negotiations, which created the WTO. With significantly lower tariffs and fewer other means available to restrict trade, developing countries (like their developed counterparts before them) may have turned to AD laws and AD measures as a preferred means of protecting select domestic industries during their adjustment to the lower average tariff rate. For example, since their entry into the WTO, India, Brazil, China, and Argentina have collectively reduced their tariffs by an average of 63% from a 17.6% applied weighted mean for all products to 6.5%. In that same time, those four countries increased their use of AD measures dramatically. In 1995, those countries had 13 measures in force. By 2018, they had a total of 646 measures in force, an increase of more than 4,800%. Figure 5 .", "As for AD measures being used rather than some other trade remedy, at least one scholar has argued that AD measures are the most attractive alternative legal form of contingent protection. In general, AD measures are easier to impose."], "subsections": []}]}, {"section_title": "U.S. Antidumping Trends, 1995-2018", "paragraphs": [], "subsections": [{"section_title": "The United States and Antidumping Investigations and Measures", "paragraphs": ["As of February 2020, the United States has 384 AD orders in place affecting imports from 53 countries. The oldest order, which places AD duties on pressure sensitive tape from Italy, has been in place continually since 1977. Seventy-five of the orders have been in place since before the turn of the millennium. The United States is alone among the original four users of AD measures (U.S., EU, Canada, and Australia) in significantly increasing its use of AD measures over the past two decades. The U.S. currently has the highest number of AD measures in force in its history. In comparison, the other three original users have kept the number of measures in force at or below levels reached around the millennium. "], "subsections": []}, {"section_title": "The United States as the Target of Antidumping Investigations and Measures", "paragraphs": ["The United States has been a frequent target of AD investigations initiated by other countries. Between 1995 and 2017, the United States was the target of 296 investigations, 181 (61%) of which led to the imposition of AD measures. The largest user of AD measures against the United States is China (37), with India (30), Brazil (24), Mexico (23), and Canada (12) rounding out the rest of the top five. The reasons for the targeting of the United States are uncertain. They may, however, relate to the use of AD measures as a form of protection during a period of trade liberalization or be viewed as retaliation for the United States' heavy use of AD measures against these countries."], "subsections": []}]}]}, {"section_title": "Issues for Congress", "paragraphs": [], "subsections": [{"section_title": "The Economics of Antidumping", "paragraphs": ["Some argue that antidumping measures constitute \"the first and best line of defense for the U.S. economy against companies and countries that resort to predatory and mercantilist tactics to make trade gains.\" Most empirical research, however, has found such predatory pricing is rare. ", "Furthermore, most academic analysts are highly critical of U.S. AD law and practice. Economic analysts in particular note that AD policy is trade distorting. For example, AD duties deflect trade, by causing exporters to seek out markets where their goods are not subject to AD duties. As one pair of economists noted, the suspension agreement on fresh tomatoes from Mexico caused Mexico to make more tomato paste to ship to the United States and to ship more fresh tomatoes to Canada, which in turn shipped more fresh tomatoes to the United States. Many scholars also conclude that AD duties depress consumer activity by raising costs for consumers and propping up unproductive businesses. ", "According to one survey, AD policies globally affect somewhere between 3% and 8% of a country's total imports, making them one of the most costly commercial policies. There is also a general consensus that AD duties, when analyzed economically without consideration of their political benefits for encouraging trade liberalization, depress overall trade.", "Congress has generally been supportive of AD duties, and reform efforts have been limited despite the generally negative view of the practice held by many economists. Phillip Swagel, the now-director of the Congressional Budget Office and former Assistant Secretary of the Treasury for Economic Policy, recently referred to antidumping as the \"third rail of trade policy,\" arguing that \"few politicians of either party [are] willing to point out its broadly negative impact.\" While many argue that AD laws are economically inefficient if evaluated on their face, some of those critics have conceded \"that even if AD is the largest and most frequently used contingent trade remedy (and the most costly single commercial policy), AD may nevertheless be a desirable policy as it serves an important role in promoting overall trade liberalization by acting as a pressure release valve.\" ", "As Congress considers its overall goals with respect to trade policy, it might weigh dumping's economic costs against its potential role in supporting trade liberalization. Congress could, for example, encourage (in committee hearings) or direct (through legislation) Commerce to change the de minimis thresholds for finding that dumping has taken place or that the dumped goods have caused an injury. Such changes could reduce or encourage the use of the policy. "], "subsections": []}, {"section_title": "Antidumping, Zeroing, and the WTO Appellate Body", "paragraphs": ["During the negotiations over the establishment of the WTO, the United States persistently advocated for the establishment of robust dispute settlement provisions and Congress required the President to ensure that dispute resolution provisions were included in the final agreement. As a result, the agreements establishing the WTO included the Dispute Settlement Understanding (DSU), which provides for an enforceable means by which members can resolve disputes over WTO commitments and obligations. ", "In recent years, however, several administrations have been critical of the WTO's dispute settlement system in general and with the role of the Appellate Body (AB) in particular. In December, the AB ceased to function as the United States continued to block the appointment of new AB members to replace those whose terms had expired. U.S. AD policies have been at the center of that dispute and Congress might consider reevaluating those policies or renegotiating the agreement underlying the WTO DSU and ADA if it wishes to maintain a functional dispute settlement system at the WTO.", "The United States has generally been successful in DSU proceedings with the exception of one area\u00e2\u0080\u0094trade remedies. Indeed, trade remedy cases in general make up the largest portion of the WTO's dispute settlement docket, with AD being the most frequently disputed policy. Time and time again dispute settlement (DS) Panels and the AB have found U.S. AD policy to conflict with its international commitments. The United States is not alone. Other WTO members have also been unsuccessful in defending challenges to their implementation of the ADA.", "The AD policy that has been at the center of many (although not all) of these disputes is a calculation method referred to as \"zeroing.\" In general, when calculating the dumping margin to determine whether the imposition of antidumping measures on exporters of a product is justified, the ITA will usually average together numerous comparisons between sales in the United States (the export prices) and sales in the home market (the normal value). The ITA will aggregate hundreds or even thousands of individual transactions together in this process. The amount by which the normal value exceeds the export price of a given product is the dumping margin. However, if the export price exceeds the normal value (that is, if the price in the United States is greater than the domestic price) and thus produces a negative result, the United States, in certain circumstances, will adjust the negative values to zero. As an economist at the Department of Justice put it, \"The use of 'zeroing' will almost always increase the level of any antidumping duty, and will sometimes create a duty where none would have been imposed, had the methodology not been used.\"", "Consider the following simplified example: the average home market price and export price for a product for the entire month were both $100. As such, the dumping margin and weighted average dumping margin when averaged without zeroing were both zero because the transaction on September 7, for example, was offset by the transaction on September 25. However, when zeroing is applied, the September 25 transaction is set to zero. When this is applied across all values, the aggregate dumping margin is $55 leading to a weighted average dumping margin of 7.85%. One pair of economists determined in 2010 that if the United States were to stop zeroing, \"then perhaps as much as half of all U.S. AD measures would be removed and the duties in the other cases would fall significantly.\"", "The U.S. Trade Representative (USTR) asserts that this method allows the United States to \"focus on those transactions in which dumping occurs.\" Under the relevant WTO agreements, the USTR argues, \"Members may calculate a margin of dumping on a transaction-by-transaction basis, and, thus, collect duties only on dumped imports, while collecting no duties on non-dumped imports. There is no requirement to offset dumped transactions with transactions in which dumping did not occur.\" The U.S. Trade Representative has asserted that this is a common-sense method of calculating the extent of dumping that is injuring a domestic industry\" and that the elimination of zeroing \"artificially reduces the margin of dumping,\"", "Opponents of zeroing argue that its effect is to artificially increase dumping margins and increase the likelihood that AD measures will be imposed. Specific concerns include that \"zeroing makes it extremely difficult for a firm to avoid dumping\" because the reasons for price variation, such as seasonality, exchange rates, and variations in shipping costs, are not taken into account. As a result, products subject to greater price variation will be more frequently subject to AD duties. As the United States is the only country to actively zero, it seems unlikely that zeroing is strictly necessary to ensure that AD policy is effective at preventing dumping. One economist estimated in 2008 that \"zeroing could add perhaps 3-4 % to the typical U.S. antidumping duty with a cost to the U.S. of around $150 million per year when all existing U.S. antidumping orders were determined by zeroing.\"", "Since 1995, more than 30 Panel and Appellate Body (AB) decisions have found the use of zeroing in specific AD investigations to be inconsistent with the ADA; the AB has held more than a dozen times that zeroing in one form or another cannot be used. In all but two cases involving zeroing, the United States has been the respondent. In two early cases, the EU was the respondent, but it changed its practices after the AB found its implementation of the practice to be inconsistent with the terms of the ADA. ", "The United States has been a respondent in more than 150 disputes before the WTO. Fifty-six of those involved the ADA and many of those cases involved zeroing. In all the finalized cases, the United States lost or settled. Indeed, CRS analysis has found that nearly half of all cases where the WTO found a U.S. practice to not be in compliance with WTO obligations involved dumping.", "Much of the U.S. criticism levied at the WTO's AB over the past decade, some have argued, has been primarily the result of cases involving U.S. implementation of the ADA. In a recent report listing U.S. concerns about the AB, the USTR identified six areas of \"Appellate Body errors in interpreting WTO agreements\" that it argues have \"raised substantive concerns and undermine the WTO.\" Five of the six concerned trade remedies, including dumping. Indeed, \"dump\" was the most common trade-related verb in the report. With respect to zeroing, the USTR argues, \"The Appellate Body's invention of a prohibition on the use of \"zeroing\" to determine dumping margins has diminished the ability of WTO members to address dumped imports that cause or threaten injury to a domestic industry.\"", "The WTO AB's approach to trade remedies in general, and antidumping in particular, have been central in USTR's critique of the AB and thus has likely played a significant role in its decision to block appointments to the AB. However, WTO DSB debates are not over. The USTR has approvingly cited a recent DSB decision that upheld the use of zeroing in certain limited circumstances.", "As Congress considers the future U.S. relationship with the WTO and the multilateral rules-based trading order, it might address the role that antidumping has played in straining that relationship. For example, Trade Promotion Authority (TPA) expires in 2021. Should Congress decide to reauthorize TPA, it may choose to direct the President to seek revisions to the WTO's DSU of the ADA to address some of these issues. Alternatively, Congress could encourage or direct Commerce to address some of the WTO members' and Appellate Body's concerns. For example, the EU and Canada once employed zeroing in antidumping investigations, but no longer do so."], "subsections": []}]}]}}
{"id": "R45897", "title": "The U.S. Land-Grant University System: An Overview", "released_date": "2019-08-29T00:00:00", "summary": ["With the passage of the first Morrill Act in 1862, the United States began a then-novel policy of providing federal support for post-secondary education, focused on agriculture and the mechanical arts. The national system of land-grant colleges and universities that has developed since then is recognized for its breadth, reach, and excellence in teaching, research, and extension. Land-grant institutions are located in every U.S. state and many territories. These institutions educate the next generation of farmers, ranchers, and citizens, and form the backbone of a national network of agricultural extension and experiment stations.", "The land-grant university system has continued to evolve through federal legislation. The federal government provides funds, often with state matching requirements, to execute the system's three-fold mission of agricultural teaching, research, and extension. The U.S. Department of Agriculture's (USDA) National Institute of Food and Agriculture (NIFA) distributes these funds to the states as capacity grants, on a formula basis as determined by statute, or to participating institutions on a competitive basis. The Morrill Acts of 1862 (12 Stat. 503) and 1890 (26 Stat. 417), and the Equity in Educational Land-Grant Status Act of 1994 ( P.L. 103-382 \u00c2\u00a7531-535), established the three institutional categories of the land-grant system, now known as the 1862, 1890, and 1994 Institutions. The 1862 Institutions are the first land-grant institutions; 1890 Institutions are historically black colleges and universities (HBCUs); and 1994 Institutions are tribal colleges and universities (TCUs). Later legislation also recognized additional institutional categories, including non-land-grant colleges of agriculture (NLGCAs) and Hispanic-serving agricultural colleges and universities (HSACUs), for specific programs.", "The Hatch Act of 1887 (24 Stat. 440), Evans-Allen Act of 1977 ( P.L. 95-113 \u00c2\u00a71445), and provisions of the Agricultural Research, Extension, and Education Reform Act of 1998 (AREERA, P.L. 105-185 ) provide the framework for funding research at land-grant institutions. State Agricultural Experiment Stations (SAES) associated with 1862 Institutions receive federal research capacity funds with a one-to-one non-federal matching requirement. The 1890 Institutions also receive federal research capacity funds with this matching requirement, yet USDA can waive up to 50% of their matching requirement. The 1994 Institutions can receive federal research funds through competitive grants programs. They may also use interest distributions from the Native American Institutions Endowment Fund, allocated on a formula basis, at their discretion.", "The land-grant university system operates the U.S. Cooperative Extension Service (CES) in partnership with federal, state, and local governments. The CES provides non-formal education to agricultural producers and communities through its network of offices located in most of the more than 3,000 U.S. counties and territories. The Smith-Lever Act of 1914 (38 Stat. 372), National Agricultural Research, Education, and Teaching Policy Act of 1977 (NARETPA, P.L. 95-113 \u00c2\u00a71444-1445), and AREERA extension provisions guide agricultural extension funding in the land-grant university system. The 1862 and 1890 Institutions receive federal capacity funds, according to separate formulas with non-federal matching requirements. USDA may waive up to 50% of the matching requirement for 1890 Institutions. The 1994 Institutions may receive federal extension funding through competitive grants.", "Looking forward, the scheduled fall 2019 relocation of NIFA from its current location in Washington, D.C.; the decades-long shifting balance of public and private investment in agricultural research; disparities in state matching funds among the different classes of land-grant institutions; and the funding of TCU land-grant institutions may invite congressional engagement."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["On July 2, 1862, with the passage of the first Morrill Act (12 Stat. 503; 7 U.S.C. 301 et seq.), the United States began a then novel policy of providing federal support for post-secondary education, specifically for agriculture and the mechanical arts. The national system of land-grant colleges and universities that has developed since then is recognized for its breadth, reach, and excellence in teaching, research, and extension. Located in every state, Washington, D.C., and many insular areas , these institutions educate the next generation of farmers, ranchers, and citizens, and form the backbone of a national network of agricultural extension and experiment stations. ", "Later federal legislation expanded the scope and reach of the 1862 Morrill Act. Beyond providing initial resources for establishment of the land-grant institutions, the federal government contributes funds annually through a variety of capacity and competitive grants administered by the U.S. Department of Agriculture's (USDA) National Institute of Food and Agriculture (NIFA). Capacity grants, also known as formula funds, are allocated to states based on statutory formulas. Competitive grants are awarded to specific projects selected through peer-review processes. In many cases, the states and territorial governments complement federal appropriations through matching funds. Legislation has also expanded the land-grant system to include historically black colleges and universities (HBCUs) and tribal colleges and universities (TCUs). Additional institutional categories are recognized for specific programs. These categories include non-land-grant colleges of agriculture (NLGCAs), Hispanic-serving agricultural colleges and universities (HSACUs), and cooperating forestry schools.", "Looking forward, the scheduled fall 2019 relocation of NIFA from its current location in Washington, D.C.; the shifting balance of public and private investment in agricultural research; disparities in state matching funds among the different classes of land-grant institutions; and the funding of TCU land-grant institutions may invite congressional engagement.", "While state and local governments have roles in the U.S. land-grant university system, this report focuses on federal laws, appropriations, and other matters."], "subsections": []}, {"section_title": "Overview: History, Institutions, and Mission", "paragraphs": [], "subsections": [{"section_title": "History", "paragraphs": ["Post-secondary education in the American colonies was available to a limited segment of society and focused on a few subject areas. Colonial colleges established in association with Christian denominations enrolled predominantly white men in classical and professional disciplines. New colleges created following independence of the United States from Great Britain broadened enrollment and fields of study. However, lack of reliable funding meant that many closed. ", "In the early- to mid-19 th century, demand grew for post-secondary education in agricultural and technical disciplines, as did interest in educating the populace more broadly. Johnathan Baldwin Turner, a professor at Illinois College, championed a more accessible \"industrial education.\" His \"Plan for a State University for the Industrial Classes,\" presented at an academic conference\u00c2\u00a0in 1850, contained many elements of the yet-to-be established land-grant university system. ", "In 1857, Representative Justin Smith Morrill of Vermont introduced a bill to establish colleges of agriculture through grants of land to the states. The bill proposed giving federal land, or rights to such land, to the states for the purpose of establishing these colleges. The federal government was already giving land to states to encourage the development of railroads, for example through the Land Grant Act of 1850 (9 Stat. 466). However, granting land to states to establish institutions of higher education was a novel prospect. Congress passed Morrill's bill in 1859 by a slim margin, largely along a North-South divide, and it could not overcome a Presidential veto by James Buchanan. Morrill, who had never attended college himself, presented the bill once again in 1862. The political landscape had changed by then, with onset of the Civil War and accompanying absence of Members of Congress from the southern states. Further, the second introduction of the bill expanded proposed areas of study at the colleges to include military strategy in addition to agricultural and mechanical arts. This bill passed overwhelmingly, and President Abraham Lincoln signed it on July 2, 1862. This first Morrill Act, described in greater detail below, marked the beginning of the U.S. land-grant university system. Notably, Lincoln signed the Morrill Act just seven weeks after signing legislation to establish USDA (12 Stat. 387, enacted May 15, 1862).", "Between 1872 and 1890, then Senator Morrill introduced twelve bills focused on strengthening the early land-grant university system. Congress passed the last of those bills, and President Benjamin Harrison signed into law the Morrill Act of 1890 (26 Stat. 417). This second Morrill Act provided funding for the land-grant university system and prohibited racial discrimination in admissions policies. It led to the establishment of a group of historically black colleges and universities (HBCUs) known as the 1890 Institutions.", "The land-grant university system further expanded in 1994 with the addition of a group of tribal colleges and universities (TCUs) now identified as the 1994 Institutions. Senator Jeff Bingaman of New Mexico introduced the Equity in Educational Land-Grant Status Act in 1993. This act became Sections 531-335 of the Elementary and Secondary Education Act reauthorization ( P.L. 103-382 ), and President William J. Clinton signed it into law on October 20, 1994. "], "subsections": []}, {"section_title": "What Is a Land-Grant College or University?", "paragraphs": ["Land-grant institutions are colleges and universities designated to receive benefits of the Morrill Acts of 1862 and 1890. These acts promoted establishment of institutions of higher learning focused on the agricultural and mechanical arts, without excluding other scientific and classical studies. Land-grant institutions now address many academic fields in addition to those of their foundational colleges of agriculture. There is at least one land-grant institution in each U.S. state, the District of Columbia, the Federated States of Micronesia, and many U.S. territories (see Figure 1 for a map). In 2017, 1.7 million students were enrolled across 109 land-grant colleges and universities, with a portion of those enrolled in those institutions' colleges of agriculture. The federal government provides annual appropriations to U.S. states and territories, often with matching requirements, for use in the land-grant university system."], "subsections": []}, {"section_title": "Types of Land-Grant Institutions", "paragraphs": ["There are three categories of land-grant institution, named for the year in which legislation established them: 1862, 1890, and 1994. The \" Foundational Legislation \" section of this report discusses relevant establishment legislation for these institutions in detail. Most generally, 1862 Institutions are the original land-grant colleges and universities established through the Morrill Act of 1862, as amended. There are fifty-seven 1862 Institutions, located in each state, U.S. territory, and in the District of Columbia. The 1890 Institutions are HBCUs established as land-grant institutions as a result of the Morrill Act of 1890, as amended. There are nineteen 1890 Institutions, primarily in the southeastern states. The 1994 Institutions are TCUs recognized through the Equity in Educational Land-Grant Status Act of 1994, as amended. Congress has defined thirty-six 1994 Institutions through statute. ", "The federal government recognizes additional categories of institutions that are not land-grant institutions, and yet support the mission of the land-grant university system (as discussed below). Cooperating forestry schools, HSACUs, and NLGCAs are eligible for federal funding through specific programs. "], "subsections": []}, {"section_title": "Three Pillars: Teaching, Research, and Extension", "paragraphs": ["Federal legislation has given rise to the three functional pillars of land-grant institutions. First among them is the teaching function established through the Morrill Acts of 1862 and 1890. Later legislation added research and extension, establishing the roles of land-grant institutions in producing original agricultural research and in bringing that research to the non-university public through agricultural extension. "], "subsections": []}]}, {"section_title": "Foundational Legislation", "paragraphs": ["The U.S. land-grant university system has evolved over the past 150 years. Multiple pieces of legislation have added to its original mission, expanded its reach, and adjusted its funding structure. This section identifies enacted legislation that is among the most significant for land-grant universities (see Table 1 for a summary of select statutes). Details regarding federal funding and state matching requirements are discussed in the section following this legislative overview (\" Funding \"). Funding discussed in this report is discretionary unless otherwise stated. "], "subsections": [{"section_title": "Teaching", "paragraphs": ["The Morrill Act of 1862 (12 Stat. 503; 7 U.S.C. 301 et seq.) was officially titled, \"An Act Donating Public Lands to the Several States and Territories which may provide Colleges for the Benefit of Agriculture and the Mechanic Arts\" (see legislative excerpt in the text box below). It designated that each state would receive 30,000 acres of federal land for each member of the Senate and House of Representatives it had in Congress at the time. In cases in which insufficient public land was available, states would instead receive land scrip , or certificates of entitlement to such public lands. Money from the sale of this land or land scrip was to be used to support at least one college with the primary purpose of teaching agriculture and the mechanical arts, to \"promote the liberal and practical education of the industrial classes in the several pursuits and professions in life.\" The act prohibited states from using the funds for constructing or maintaining buildings. ", "The Morrill Act of 1890 (26 Stat. 417; 7 U.S.C. 321 et seq.) responded to the need to finance the institutions established through the first Morrill Act. Today, the second Morrill Act is most recognized for its role in the establishment of HBCU land-grant institutions. It provided each state and territory with annual appropriations for the endowment and maintenance of the land-grant colleges. This money was to be used for instruction in specific academic disciplines, and for facilities for such instruction. The second Morrill Act prohibited racial discrimination in admission policies of institutions receiving these funds ( 7 U.S.C. 323 ) . However, it permitted states and territories to meet this requirement by establishing separate institutions \"of like character\" for white and non-white students. In such cases, annual appropriations would be divided \"equitably\" between the two institutions in a manner proposed by the state or territory and reported to the Secretary of the Interior. This condition ultimately resulted in the establishment of 19 federally recognized 1890 Institutions, primarily in the southeastern states. ", "Just over 100 years after the Morrill Act of 1890 facilitated the addition of HBCUs, the Equity in Educational Land-Grant Status Act of 1994 ( P.L. 103-382 \u00c2\u00a7531-535; 7 U.S.C. 301 note) added TCUs to the land-grant university system. This act originally designated twenty-nine 1994 Institutions, considered to be land-grant institutions established in accordance with the Morrill Act of 1862 except for the manner in which they would be funded. In lieu of land or land scrip, annual appropriations would endow and maintain them. The Native American Institutions Endowment Fund was created in the U.S. Treasury, and interest payments are distributed annually on a formula basis. Institutions may use these endowment payments at their discretion. The 1994 Institutions are eligible for some, but not all, research and extension funds that are available to 1862 Institutions established through the first Morrill Act. There are currently 36 TCUs designated as 1994 Institutions. "], "subsections": []}, {"section_title": "Research", "paragraphs": ["Agricultural research in the land-grant university system impacts daily life. Among diverse areas of investigation, researchers at land-grant institutions explore best practices for livestock, fish, and plant breeding; analyze agricultural value chains; examine interactions among soil health, agricultural productivity, and water quality; and look for new and safer pesticides to protect crop production, human health, and the environment. Discoveries achieved through this research at land-grant institutions have improved the lives of producers and consumers in diverse ways. ", "The Hatch Act of 1887 (24 Stat. 440; 7 U.S.C. 361a et seq.) instituted the research function of land-grant universities. It provided for establishment of \"a department to be known and designated as an 'agricultural experiment station ... '\" under the direction of each land-grant institution established under the first Morrill Act. They would aid \" ... in acquiring and diffusing among the people of the United States useful and practical information on subjects connected with agriculture and to promote scientific investigation and experiment respecting the principles and applications of agricultural science ... \" The Hatch Act provided for appropriations to support original agricultural research at these stations, distributed to the states based on a formula in the law. Federal funds distributed in this manner are referred to as capacity grants or formula funds. The Hatch Act ultimately led to development of State Agricultural Experiment Stations (SAES) in each U.S. state, insular area, and the District of Columbia. In the modern day, not all of these stations are physical places, and may be represented instead through individual or groups of researchers at 1862 Institutions, or at associated agricultural or research sites within the state. ", "The 1890 Institutions are not eligible for Hatch Act appropriations. In 1977, the Evans-Allen Act ( P.L. 95-113 \u00c2\u00a71445; 7 U.S.C. 3222 ) gave 1890 Institutions access to agricultural research capacity grants. The Evans-Allen Act is Section 1445 in the National Agricultural Research, Extension, and Teaching Policy Act of 1977 (NARETPA) ( P.L. 95-113 \u00c2\u00a71440-1445; 7 U.S.C. 3222). Evans-Allen funds are appropriated and then distributed according to a statutory formula, in a manner similar to Hatch Act appropriations. ", "The 1994 Institutions are not eligible for research capacity grants under the Hatch or Evans-Allen Acts. However, Section 251 of the Agricultural Research, Extension, and Education Reform Act (AREERA) of 1998 ( P.L. 105-185 ) gave these institutions access to separate competitive agricultural research funding. AREERA amended the Equity in Educational Land-Grant Status Act of 1994 to authorize USDA to award research grants to 1994 Institutions on a competitive basis. This provision requires that the 1994 Institution applying for these funds certify that the proposed research will be conducted in partnership with the USDA Agricultural Research Service (ARS), an 1862 or 1890 Institution, or a cooperating forestry school. Congress has provided appropriations for this competitive grants program. However, lack of predictable annual research funding on a formula basis has raised concerns that 1994 Institutions cannot build their institutional agricultural research capabilities, as 1862 and 1890 Institutions have done. For more, see \" Funding of 1994 Institutions .\"", "By the mid-20 th century, forestry science capacity was increasingly seen as falling behind national needs. The McIntire-Stennis Cooperative Forestry Act of 1962 (P.L. 87-788; 16 U.S.C. 582a-1 et seq.) authorized forestry research funds. This act encourages coordination of forestry research efforts among state colleges and universities and the federal government. These funds are apportioned to the states in amounts determined by the Secretary of Agriculture in consultation with an advisory council. These apportionments were originally available only to 1862 Institutions, their affiliated SAESs, or public colleges or universities offering graduate training in forestry. The 1890 Institutions were made eligible in Section 7412 of the Food, Conservation, and Energy Act of 2008, also known as the 2008 farm bill ( P.L. 110-246 ). The 1994 Institutions were made eligible in Section 7604 of the 2018 farm bill (Agriculture Improvement Act of 2018, P.L. 115-334 ).", "Additional federal legislation has authorized a variety of competitive research grants, and is addressed in \" Funding .\""], "subsections": []}, {"section_title": "Extension", "paragraphs": ["Agricultural extension brings agricultural research findings to the people who can put them into practice. Since passage of the Smith-Lever Act in 1914, the United States has developed an expansive Cooperative Extension System operated through the land-grant university system in partnership with federal, state, and local governments. Partners include NIFA, cooperative extension services at land-grant colleges and universities, and cooperative extension service offices in nearly each of the country's approximately 3,000 counties and its territories. Extension agents based at field offices and land-grant institutions work with local agricultural producers and community members to demonstrate or put into practice knowledge gained through agricultural research. Agriculture faculty at land-grant institutions may have appointments that are fully teaching, research, or extension, or some combination of the three. The extension function adds non-formal education to the land-grant mission.", "The Smith-Lever Act of 1914 (38 Stat. 372; 7 U.S.C. 341 et seq.) responded to interest in ensuring that agricultural research findings would make their way to producers and improve agricultural practices. This act provided for capacity funds \u00e2\u0080\u0093 annual appropriations, distributed to the states on a formula basis \u00e2\u0080\u0093 for cooperative extension. It led to establishment of the cooperative extension service associated with 1862 Institutions. The Smith-Lever Act, as amended, also contains competitive funding provisions.", "Smith-Lever capacity funds are not available to 1890 Institutions. The 1890 Institutions gained access to extension appropriations, distributed on a formula basis, in 1977 through the Section 1444 of NARETPA ( P.L. 95-113 \u00c2\u00a71444; 7 U.S.C. 3221 ). Thus NARETPA provided 1890 Institutions access to appropriations for both agricultural research (via Section 1445, or the Evans-Allen Act) and extension (via Section 1444). ", "The 1994 Institutions gained access to federal extension funding in 1998. Section 201 of AREERA ( 7 U.S.C. 343 (b)(3)) amended the Smith-Lever Act to authorize appropriations for USDA to distribute to 1994 Institutions on a competitive basis, with such funds to be administered in cooperation with an 1862 or 1890 Institution. Thus AREERA provided 1994 Institutions access to both competitive research (Section 251) and extension (Section 201) appropriations."], "subsections": []}, {"section_title": "Land-Grant Institutions in the District of Columbia and Insular Areas", "paragraphs": ["In addition to expanding the mission of the land-grant system, legislation also increased its geographical expanse. Beginning in 1908, modern U.S. territories began to participate in the land-grant system. Today, land-grant institutions are located in the District of Columbia and the insular areas of American Samoa, Guam, the Federated States of Micronesia, the Northern Mariana Islands, Puerto Rico, and the U.S. Virgin Islands.", "Whereas at the time of the Morrill Act in 1862, the United States had vast tracts of federal lands available for sale to endow new colleges and universities, this was not the case in the 20 th century. Land-grant institutions newly recognized in this time period were appropriated funds for their endowment and maintenance, in lieu of land or land scrip. Although classified as 1862 Institutions, their funding details vary according to specific legislation.", "The University of Puerto Rico, Mayaguez was established as a land-grant institution in 1908 after the benefits of the first and second Morrill Acts were extended to Puerto Rico. The University of the District of Columbia, at the time known as Federal City College, received land-grant status in 1968 through amendment (P.L. 90-354) of Title I of the District of Columbia Public Education Act of 1966 (P.L. 89-791). Colleges in the U.S. Virgin Islands and Guam became land-grant institutions through Section 506 of the Educational Amendments of 1972 (P.L. 92-318). Institutions in American Samoa and what is now the Federated States of Micronesia received similar recognition through the Educational Amendments of 1980 ( P.L. 96-374 \u00c2\u00a71361). A college in the Northern Mariana Islands was added in 1986 ( P.L. 99-396 \u00c2\u00a79)."], "subsections": []}, {"section_title": "Designation of New Land-Grant Institutions", "paragraphs": ["Section 7111 of the 2018 farm bill prohibits designation of any new land-grant institution that would be eligible to receive capacity grants for agricultural research, extension, and related programs (e.g., Hatch Act, Smith-Lever Act, and McIntire-Stennis Act). This change does not affect the eligibility of 1994 Institutions certified in the future to receive McIntire-Stennis funds. Congress made this change with the primary intention of avoiding the duplication of administrative costs that would accompany any division of an existing land-grant institution into more than one entity."], "subsections": []}, {"section_title": "Other Institutions", "paragraphs": ["Certain public colleges and universities that are not 1862, 1890, or 1994 Institutions can participate in elements of the land-grant university system through specific grants programs administered by USDA."], "subsections": [{"section_title": "Non-Land-Grant Colleges of Agriculture (NLGCAs)", "paragraphs": ["The classification of non-land-grant college of agriculture (NLGCA) was defined in the 2008 farm bill ( P.L. 110-246 , \u00c2\u00a77101; 7 U.S.C. 3103(14) ), and this definition was revised in Section 7102 of the 2018 farm bill. Public colleges and universities are eligible to apply to USDA for NLGCA certification if they are not 1862, 1890, or 1994 Institutions and they offer bachelors, masters or doctoral degrees in food, agriculture, or natural resources in specified agriculturally relevant areas. As of July 2019, more than 40 certified NLGCAs are located in 23 states. The NLGCAs meet eligibility requirements for the Capacity Building Grants for Non-Land-Grant Colleges of Agriculture program administered by NIFA. This competitively funded program for NLGCAs was first authorized by the Agricultural Act of 2014 ( P.L. 113-79 ), also known as the 2014 farm bill, and was reauthorized in the 2018 farm bill. Private colleges and universities remain ineligible."], "subsections": []}, {"section_title": "Hispanic-Serving Agricultural Colleges and Universities (HSACUs)", "paragraphs": ["Section 7101 of the 2008 farm bill (7 U.S.C. 3103(10)) defined a group of Hispanic-serving agricultural colleges and universities (HSACUs) which could benefit from integrated research, education, and extension competitive grants offered through USDA. Certified HSACU institutions must demonstrate that 25% of full-time enrollment is Hispanic, that the institution offers accredited agriculture-related degree programs, and that Hispanic students received at least 15% of degrees awarded in agricultural programs over the most recent two-year period. The definition further clarifies that an HSACU cannot also be an 1862 Institution. As of 2019, USDA has certified more than 150 HSACUs.", "Section 7129 of the 2008 farm bill called for establishment of a Hispanic-Serving Agricultural Colleges and Universities Fund in the U.S. Treasury (7 U.S.C. 3243). It authorized annual appropriations for FY2008 and each fiscal year thereafter, and distribution of appropriations and income from the fund to HSACUs on a formula basis. Congress has not appropriated funds for the HSACU Fund since its establishment in 2008, and thus distributions have not been made. Section 7129 of the 2008 farm bill also authorized appropriations for annual payments to HSACU institutions; competitively distributed institutional capacity-building grants; and competitive research and extension grants programs specific to HSACU. These programs have not received appropriations."], "subsections": []}, {"section_title": "Cooperating Forestry Schools", "paragraphs": ["Cooperating forestry schools (defined at 7 U.S.C. 3103(5)) are those institutions that are eligible to receive funds under the McIntire-Stennis Act. These include 1862, 1890 and 1994 Institutions in addition to non-land-grant \"State-supported colleges and universities offering graduate training in the sciences basic to forestry and having a forestry school.\" States must certify the institutions that are eligible for assistance, and determine the proportionate amounts of assistance to be extended to them if there is more than one cooperating forestry school within a state. Originally, an institution could not be certified as both a cooperating forestry school and an NLGCA. Section 7102 of the 2018 farm bill removed this restriction."], "subsections": []}]}]}, {"section_title": "Funding", "paragraphs": ["The USDA National Institute of Food and Agriculture (NIFA) administers federal capacity and competitive grants to partner institutions for research, education, and extension activities (see Table 2 for NIFA discretionary appropriation details). ", "C a pacity grants are recurring federal appropriations allocated to states based on legislative formulas. States are generally required to contribute matching funds, and specific project decisions are made locally. Competitive grants are awarded to specific projects selected through peer-review processes, without consideration of the state of the sponsoring institution. Researchers and institutions must apply for these funds. "], "subsections": [{"section_title": "Capacity Grants, also known as Formula Funds", "paragraphs": ["Federal legislation, as discussed earlier, provides capacity grants to land-grant institutions for research, education, and extension (see Table 1 ). NIFA administers these grants in collaboration with states, colleges, and universities. Land-grant colleges, universities, and associated state institutions use these funds to conduct research and extension in support of state agriculture, food, and forestry systems, as well as issues of socioeconomic welfare in communities and families in rural and urban areas. The Hatch Act, Smith-Lever Act, Evans-Allen Act, and McIntire-Stennis Act are the largest sources of capacity funds."], "subsections": [{"section_title": "Hatch Act: Research Funding for 1862 Institutions", "paragraphs": ["Funding for agricultural research under the Hatch Act of 1887 as amended is allocated to the SAES and associated agriculture colleges of the 50 states, the District of Columbia, and the insular areas. Eligible state institutions must submit a Plan of Work to NIFA for approval before these funds are distributed. The Hatch Act identifies the distribution of federal payments to states for FY1955 as a fixed base, and any sums appropriated in excess of the 1955 level are to be distributed in the following manner:", "3% to the USDA for administration of the Hatch Act; 20% equally to each state; 26% to each state in amounts proportionate to the relative rural population of each state to the total rural population of all states; 26% to each state in amounts proportionate to the relative farm population of each state to the total farm population of all states; and 25% to the Hatch Multistate Research Fund for multi-disciplinary, multi-institutional research activities to solve problems concerning more than one state.", "Federal funds provided under the Hatch Act to state institutions must be matched with non-federal funding on a dollar-for-dollar basis. Section 7213 of the 2002 farm bill (Farm Security and Rural Investment Act, P.L. 107-171 ) and Section 7404 of the 2008 farm bill amended the Hatch Act such that the insular areas and the District of Columbia, respectively, are required to provide matching funds of an amount equal to not less than 50% of the Hatch Act funds they receive. These amendments also provided that the Secretary of Agriculture may waive the matching requirement of an insular area or the District of Columbia for any fiscal year if the Secretary determines that its government is unlikely to meet the matching requirement for that fiscal year. ", "Other provisions of interest within the Hatch Act include:", "Multistate research. In accordance with provisions of AREERA, at least 25% of available Hatch Act funds must be used to support multi-state research. Integrated activities. States must also expend 25% or twice the level spent in FY1997 (whichever is less) on activities that integrate cooperative research and extension. Carryover. Section 7(c) permits SAES to carry over unexpended funds for use during the following fiscal year. If those funds that have been carried over are not spent by the end of the second year, they are deducted from the following year's allotment. "], "subsections": []}, {"section_title": "Evans-Allen Act: Research Funding for 1890 Institutions", "paragraphs": ["The Evans-Allen Act provides capacity funding for food and agricultural research at 1890 Institutions in a manner similar to the distribution of Hatch Act funds to 1862 Institutions. As with Hatch Act fund recipients, Evans-Allen recipients are required to submit a Plan of Work to NIFA for approval before the funds are distributed. Section 1445(a)(2) of NARETPA (7 U.S.C. 3222(a)(2)), as amended by Section 7122 of the 2008 farm bill, requires that Evans-Allen appropriations shall not be less than 30% of the annual Hatch Act appropriations. However, Evans-Allen appropriations have not met this threshold. They equaled approximately 22% of Hatch Act appropriations in FY2019 (see Table 2 ).", "Three percent of Evans-Allen funds are reserved for NIFA administrative, technical, and other services. The balance of the funds is distributed as follows: ", "20% equally to each state; 40% in an amount proportionate to the rural population of the state in which the eligible institution is located to the total rural population of all states in which eligible institutions are located; and 40% in an amount proportionate to the farm population of the state in which the eligible institution is located to the total farm population of all the states in which eligible institutions are located. ", "Section 1449(c) of NARETPA as amended (7 U.S.C. 3222d) requires that federal funds for research and for extension at 1890 Institutions be matched by the state from non-federal sources on a dollar-for-dollar basis. The Secretary may waive the matching funds requirement above the 50% level for an eligible institution if the Secretary determines that the state will be unlikely to satisfy the matching requirement for a given fiscal year. This waiver, while allowing institutions to receive federal funding, has raised questions about overall funding equities. For additional details see \" Disparity in State Matching Funds .\""], "subsections": []}, {"section_title": "McIntire-Stennis Act: Forestry Research Funding", "paragraphs": ["The McIntire-Stennis Cooperative Forestry Act of 1962 as amended authorizes research appropriations for certified cooperating forestry schools, including 1862 Institutions. The 1890 Institutions were made eligible for McIntire-Stennis funding through Section 7412 of the 2008 farm bill. The 1994 Institutions that offer associate or baccalaureate degrees in forestry were made eligible in Section 7604 of the 2018 farm bill. ", "Unlike the statutorily designated formulas under the Hatch and Smith-Lever Acts, funding apportionments under the McIntire-Stennis Act are made by the Secretary of Agriculture in consultation with a 16-member council (fulfilled through the Forestry Research Advisory Council of the USDA Forest Service), which includes representatives of relevant forestry research institutions. Three statutorily defined factors are considered in making apportionments (16 U.S.C. 582a-4): ", "1. total non-federal expenditures for forestry research by state-certified institutions; 2. total state acreage in non-federal commercial forest land; and 3. volume of timber from growing stock cut annually in the state. ", "The federal apportionment also requires a dollar-for-dollar match of non-federal funds that, unlike Hatch and Evans-Allen, cannot be waived."], "subsections": []}, {"section_title": "Smith-Lever Act: Extension Funding for 1862 Institutions", "paragraphs": ["The Smith-Lever Act of 1914 (38 Stat. 372) as amended authorizes the Cooperative Extension System and provides capacity grants to 1862 Institutions for their cooperative extension education activities. Capacity grants are distributed according to Smith-Lever sections 3(b) and 3(c) (7 U.S.C. 343(b) and 7 U.S.C. 343(c)). Smith-Lever capacity grants provide about 65% of total federal funding for extension activities. Competitive funding provisions within the Smith-Lever Act, including section 3(d) (7 U.S.C. 343(d)) and specific provisions within section 3(b), are addressed in the \" Competitive Smith-Lever Provisions for Extension at 1862, 1890, and 1994 Institutions \" section of this report. ", "States can use Smith-Lever 3(b) and 3(c) capacity grants for locally determined projects as well as for high priority regional and national concerns. Eligible state institutions must submit a Plan of Work to NIFA for approval before these funds are distributed. Smith-Lever 3(b) capacity funds are distributed based on the FY1962 distribution of cooperative extension funds. For Smith-Lever 3(c) funds, 4% are reserved for NIFA administrative, technical, and other services, and the balance is distributed to the states in the following proportions:", "20% equally to each state; 40% in amounts proportionate to the relative rural population of each state to the total rural population of all states; and 40% in amounts proportionate to the relative farm population of each state to the total farm population of all states.", "Federal funds provided under the Smith-Lever Act to state institutions must be matched with non-federal funds on a dollar-for-dollar basis. Matching requirements for the District of Columbia and the insular areas are subject to matching requirements of at least 50% of the Smith-Lever funds they receive. Further, the Secretary of Agriculture may waive the matching requirement for the District of Columbia or an insular area for any fiscal year if the Secretary determines that it is unlikely to meet the matching requirement for that fiscal year.", "Smith-Lever requires states to expend 25% of federal Smith-Lever 3(b) and 3(c) capacity grants, or twice the level spent in FY1997 (whichever is less), on cooperative extension activities in which two or more states cooperate to address issues facing more than one state. They must expend the same percentage or amount on activities that integrate cooperative research and extension.", "Institutions receiving Smith-Lever capacity grants can carry over unexpended funds from one fiscal year to the next. "], "subsections": []}, {"section_title": "NARETPA Section 1444: Extension Funding for 1890 Institutions", "paragraphs": ["Section 1444 of NARETPA (7 U.S.C. 321-329) provides capacity grants for extension education programs at 1890 Institutions in a manner similar to Smith-Lever Act funding for 1862 Institutions. Section 7121 of the 2008 farm bill amended Section 1444(a)(2) of NARETPA so that an amount equal to at least 20% of the total annual appropriation under the Smith-Lever Act sections 3(b) and 3(c) shall be allocated to 1890 Institutions for their extension activities. However, 1890 Institution extension appropriations have not met this threshold. They equaled approximately 15% of Smith-Lever appropriations in FY2019 (see Table 2 ).", "Funds are distributed according to the same formula used for Evans-Allen 1890 Institution research funds, except that 4%, rather than 3%, of total funds are reserved to NIFA for administrative, technical, and other services. State matching requirements for 1890 Institution extension funds are the same as described for 1890 Institution research funds (see \" Evans-Allen Act: Research Funding for 1890 Institutions \" and \" Disparity in State Matching Funds \" for additional details). ", "Before the 2018 farm bill, 1890 Institutions could carry over no more than 20% of their extension appropriations from one fiscal year into the next. The 1862 Institutions have no such limitation. Section 7114 of the 2018 farm bill (7 U.S.C. 3221(a)) allows 1890 Institutions to carry over up to 100% of their extension appropriations. This change may allow 1890 Institutions greater flexibility to plan long-term projects."], "subsections": []}, {"section_title": "Native American Institutions Endowment Fund: Capacity Funding for 1994 Institutions", "paragraphs": ["Section 533(c) of the Equity in Educational Land-Grant Status Act of 1994 (7 U.S.C. 301 note) requires annual distributions of interest on the Native American Institutions Endowment Fund. The 1994 Institutions receive payments, based on a statutorily established formula, from the interest earned on the endowment corpus. No withdrawals are made from the corpus of the endowment. There is no matching requirement, and endowment funds do not expire. The institutional recipients may use funds at their discretion, for the support and maintenance of the colleges for the benefit of the agricultural and mechanical arts. In FY2019, the endowment fund produced about $4.6 million in interest. ", "Four percent of the available funds are reserved to NIFA for administrative services. The balance of the interest income is distributed to the 1994 Institutions according to the following formula: ", "40% in equal shares to the 1994 Institutions and 60% to be distributed among the 1994 institutions based on the \"Indian student count\" for each institution for the fiscal year."], "subsections": []}, {"section_title": "Hispanic-Serving Agricultural Colleges and Universities Fund: Research, Education, and Extension Funding for HSACUs", "paragraphs": ["Section 1455 of NARETPA as amended requires annual distributions of interest on the HSACU Fund. No interest has accrued to date, as Congress has not provided appropriations for the HSACU Fund. Four percent of available funds are to be reserved to NIFA for administrative services. The balance of the interest income is to be distributed to the HSACUs according to the following formula (7 U.S.C. 3243): ", "40% in equal shares to the HSACUs and 60% to be distributed among the HSACUs on a pro rata basis based on the Hispanic enrollment count of each institution."], "subsections": []}]}, {"section_title": "Competitive Grants", "paragraphs": ["Many provisions in various laws authorize competitive grants for agriculture and forestry research, education, and extension. The following highlights some major provisions relevant to the land-grant university system, as well as two new programs authorized in the 2018 farm bill."], "subsections": [{"section_title": "Agriculture and Food Research Initiative (AFRI)", "paragraphs": ["The Agriculture and Food Research Initiative (AFRI) (7 U.S.C. 3157) is USDA's largest competitive grants program for agricultural science research. The 2008 farm bill established AFRI, and subsequent farm bills reauthorized it. AFRI is authorized to be appropriated $700 million annually, from FY2008 to FY2023. Its appropriation has grown from $202 million in FY2009 ( P.L. 111-8 ) to $415 million for FY2019 ( P.L. 116-6 ). See Table 2 for appropriation levels in recent years.", "AFRI funds are not reserved specifically for land-grant institutions. Eligible recipients of AFRI awards include State Agricultural Experiment Stations (SAES); colleges and universities; university research foundations; other research institutions and organizations; federal agencies; national laboratories; private organizations or corporations; individuals; or any combination of the aforementioned entities.", "AFRI grants support research, education, and extension activities in six priority areas identified in the farm bill: ", "plant health and production and plant products (27% of estimated AFRI funds); animal health and production and animal products (22%); food safety, nutrition, and health (15%); bioenergy, natural resources, and environment (12%); agriculture systems and technology (13%); and agriculture economics and rural communities (12%)."], "subsections": []}, {"section_title": "Competitive Smith-Lever Provisions for Extension at 1862, 1890, and 1994 Institutions", "paragraphs": ["Section 201 of AREERA amended the Smith-Lever Act to authorize agricultural extension appropriations for 1994 Institutions, awarded on a competitive basis. This is included as a separate competitive funding provision within Smith-Lever section 3(b) (7 U.S.C. 343(c)). A 1994 Institution may administer such funds in cooperation with an 1862 or 1890 Institution. NIFA awards these funds through the Tribal Colleges Extension Program (TCEP).", "In addition, Smith-Lever 3(d) funds, originally distributed via formula and reserved for 1862 Institutions, address special programs or concerns of regional or national importance. Smith-Lever 3(d) funds support the (1) Farm Safety and Youth Safety Education Program, (2) Children, Youth, and Families at Risk, (3) Federally-Recognized Tribes Extension Program, and (4) New Technology for Agricultural Extension Program. Section 7403 of the 2008 farm bill extended eligibility for Smith-Lever 3(d) funds to 1890 Institutions and required that all 3(d) funding be awarded on a competitive basis. Section 7609 of the 2018 farm bill authorized 1994 Institutions to compete for and receive funds for two of the four 3(d) programs: Children, Youth, and Families at Risk funding, and the Federally-Recognized Tribes Extension Program."], "subsections": []}, {"section_title": "Competitive Research Grants for 1994 Institutions", "paragraphs": ["In 1998 Congress, through passage of AREERA, amended the Equity in Educational Land-Grant Status Act of 1994 to authorize a competitive research grants program for 1994 Institutions, and to authorize appropriations for the program. Later farm bills amended some of the original provisions. As amended, the program allows scientists at 1994 Institutions to participate in agricultural research activities that address tribal, national, and multi-state priorities. The 1994 Institutions may conduct this work in cooperation with the Agricultural Research Service, an 1862 or 1890 Institution, an NLGCA, or a cooperating forestry school. NIFA administers the Tribal Colleges Research Grants Program (TCRGP)."], "subsections": []}, {"section_title": "New Competitive Grants for 1890 Institutions in the 2018 Farm Bill", "paragraphs": ["Section 7117 of the 2018 farm bill authorizes grants for students enrolled in 1890 Institutions who intend to pursue careers in the food and agricultural sciences. It makes $40 million of mandatory funding from the Commodity Credit Corporation available until expended. In addition, it authorizes $10 million in annual discretionary funding.", "Section 7213 calls for USDA to recognize at least three centers of excellence at 1890 Institutions. Each center of excellence should focus on research and extension activities in at least one of six specified areas: student success and workforce development; nutrition, health, wellness, and quality of life; farming systems, rural prosperity, and economic sustainability; global food security and defense; natural resources, energy and the environment; and emerging technologies. It authorizes annual appropriations of $10 million. "], "subsections": []}]}]}, {"section_title": "Issues for Congress", "paragraphs": [], "subsections": [{"section_title": "2019 Relocation of NIFA", "paragraphs": ["NIFA is USDA's extramural research agency, meaning that it funds research conducted at other institutions. It provides scientific leadership and administers federal grant programs for the land-grant university system. Since its creation in 2008, staff entirely based in Washington, D.C. have carried out NIFA program coordination and planning. Its predecessor agency, the Cooperative State Research, Education, and Extension Service (CSREES), was also located entirely in Washington, D.C. ", "In August, 2018, the Secretary of Agriculture announced the intention to relocate the majority of NIFA and employees out of the National Capital Region. A cost-benefit analysis released on June 13, 2019, indicated that 294 of 315 NIFA positions would be required to relocate. While the cost-benefit analysis references 315 NIFA positions, NIFA has 412 permanent full-time positions. Staffing of 315 at the time of the cost-benefit analysis indicates an initial vacancy rate of 24.6%, before relocation plans were developed. ", "Concurrent with the release of the cost-benefit analysis, the Secretary announced that NIFA would be moved to the Kansas City Region. USDA has reported that 73 NIFA employees accepted relocation by the July 15 decision deadline. These data suggest that NIFA may start its work in Kansas City with 75% or more of positions located there empty or filled by recent hires. Reduced staffing levels have the potential to affect NIFA's ability to manage the congressionally mandated programs that fund the land-grant university system. For more information, see CRS In Focus IF11166, Proposed Relocation/Realignment of USDA's ERS and NIFA , by Tadlock Cowan."], "subsections": []}, {"section_title": "Shifting Balance of Public versus Private Research Funding", "paragraphs": ["Public investment in agricultural research in the United States has declined in inflation-adjusted dollars since 2008, while private funding has steadily increased. The share of food and agriculture research funded by the public sector decreased from around 50% between 1970 and 2008 to less than 25% in 2013. Figure 2 provides an overview, prepared by the USDA Economic Research Service, of agricultural research funding in 2013 from federal, state, and non-governmental sources. Many factors have influenced this shift in funding sources. These include expansion of markets and increasing globalization of trade; laws and legal decisions since the 1970s that paved the way for intellectual property rights for biological innovations and commercial products derived from federally sponsored research; technical advances in biotechnology innovation that have increased potential profitability of agricultural research; and declining state investment in agricultural research since the 1990s.", "A 2012 report by President's Council of Advisors on Science and Technology (PCAST) states that private industry has an important role in agricultural research, and that public funding is essential to meeting agricultural research challenges. In May, 2019, the Association of Public and Land-Grant Universities and the Charles Valentine Riley Memorial Foundation called for increased public funding of agricultural research, in part to ensure that the United States remains globally competitive in agricultural technology and productivity.", "Whereas public funding pursues public goods, with the exception of some private foundations, private funding is typically oriented to generating profit. Thus the shift from predominantly public funding of agricultural research to more private funding has the potential to shape agricultural research towards crops, livestock, and technologies with the greatest profit potential and away from smaller crops or technologies that may not prove to be as profitable. Increasing federal appropriations for agricultural research or requiring increases in state matching funds may bolster basic research and research on agricultural products and activities that are important to some agricultural constituencies, yet currently have limited economic incentives."], "subsections": []}, {"section_title": "Disparity in State Matching Funds", "paragraphs": ["Federal research and extension capacity grants to the land-grant system generally require one-to-one non-federal matching funds. All states meet the matching requirements for their 1862 Institutions, which are predominantly white. In contrast, ten of the nineteen 1890 Institutions, which are predominantly black, received a full match from their states in FY2016. Those 1890 Institutions that do not meet the 100% matching funds requirement must apply to USDA for a waiver or forfeit their federal capacity funding. While receiving a waiver allows an 1890 Institution to receive its allocation of federal funding, such a waiver reduces the total public support for the institution, from the combination of federal and state funding, compared with what it would receive if a complete match was provided. This opens a disparity between 1890 and 1862 Institutions. If states had contributed 100% matching funds, overall state contributions for research and extension at 1890 Institutions would have been $17.8 million higher in FY2015, and in $18.5 million higher in FY2016 than actual matching contributions.. ", "In 1977 when Congress, through NARETPA, originally created the Evans-Allen research and NARETPA Section 1445 extension capacity funding for 1890 Institutions, it did not require state matching funds. Through AREERA in 1998, Congress instituted an initial 30% state matching requirement for FY2000 that increased to 50% by FY2002. At that time, Congress gave USDA the ability to waive the state matching requirement for FY2000, but not thereafter. The 2002 farm bill ( P.L. 107-171 ) increased the matching requirement over time until it reached 100% in FY2007. The 2002 farm bill reintroduced the ability for USDA to issue waivers, above the 50% level, if a state was unlikely meet the matching requirement. ", "Eliminating the opportunity to apply for a waiver may result in some states increasing their matching funds to ensure that their 1890 Institutions qualify for federal funding. However, this change may result in other institutions becoming ineligible to receive any federal funds if their states do not increase their matching contributions. Another option that may incentivize increased non-federal matching is to increase the waiver threshold above 50%.", "Section 7116 of the 2018 farm bill (7 U.S.C. 3221(a)) addresses concerns about disparities in state matching funds through a transparency requirement. It requires that USDA report annually \"the allocations made to, and matching funds received by, 1890 Institutions and 1862 Institutions ... for each of the agricultural research, extension, education, and related programs ... \" under the relevant statutes (Smith-Lever 3(b) and 3(c), Hatch, and Sections 1444 and 1445 of NARETPA). Supporters of the 1890 Institutions voice hope that the new transparency requirement will encourage states to provide 100% matching funding for those institutions."], "subsections": []}, {"section_title": "Funding of 1994 Institutions", "paragraphs": ["The 1994 Institutions, which are all tribal colleges and universities, make up the newest class of land-grant institution. Significant institutional differences among the 1862, 1890, and 1994 Institutions, in terms of numbers of students served, types of degrees awarded, and focal missions, factor into federal funding allocations. While land-grant designation gave 1994 Institutions new access to federal funding, this access is more limited than that of 1862 and 1890 Institutions. Table 3 illustrates differences in federal research funding among land-grant institution types. In FY2018, 1994 Institutions as a group received appropriations equal to about 1.2% of the research funds, through the Tribal College Research Grants Program, as 1862 Institutions received through Hatch Act appropriations. They received about 2% of the extension funds, through the Tribal Colleges Extension Program, as 1862 Institutions received through Smith-Lever capacity grant programs. In comparison, there were 61.5% as many 1994 Institutions as 1862 Institutions in FY2018. The American Indian Higher Education Consortium (AIHEC), a non-profit group representing TCUs, has consistently requested increased appropriations for 1994 Institutions, characterizing the difference in funding between 1994 and 1862 Institutions as an inequity. Others might argue that funding differences are appropriate to the different academic structures and institutional missions of 1994 and 1862 Institutions.", "Section 7120 of the 2018 farm bill included 1994 Institutions in one new avenue for competitive funding. This section, titled \"New Beginning for Tribal Students,\" authorizes USDA to make competitive grants, with a one-to-one matching funds requirement, to land-grant institutions targeting support for tribal students. Institutions may use such funds to support tribal students through recruiting, tuition and related fees, experiential learning, and student services. No state may receive more than $500,000 per year through this program."], "subsections": [{"section_title": "Appendix. List of Land-Grant Institutions by State", "paragraphs": [], "subsections": []}]}]}]}}
{"id": "R46184", "title": "The Gray Wolf Under the Endangered Species Act (ESA): A Case Study in Listing and Delisting Challenges", "released_date": "2020-01-17T00:00:00", "summary": ["Under the Endangered Species Act of 1973 (ESA or the Act; 16 U.S.C. \u00c2\u00a7\u00c2\u00a7 1531-1544), the U.S. Fish and Wildlife Service (FWS) and the National Marine Fisheries Service (NMFS) (together, the Services) determine which species to \"list\" as \"endangered species\" or \"threatened species,\" terms defined in the Act. Species, subspecies, and distinct population segments (DPSs) may all be listed as \"species\" under the Act. Listing a species invokes certain protections under the Act and a requirement that the Services develop a recovery plan to conserve the species. Listed species may be reclassified by the Services from threatened to endangered or vice versa. The Services may also remove a species from the list, often called delisting, if it no longer meets the definition of an endangered or threatened species. The Services list, reclassify, and delist species pursuant to statutory criteria and definitions through the agency rulemaking process. Persons may\u00e2\u0080\u0094and often do\u00e2\u0080\u0094challenge the legality of those final rules through litigation. When such challenges succeed, the court remands the rule to the applicable Service for further proceedings and may vacate the challenged rule.", "The gray wolf ( Canis lupus ) presents a useful example of the legal issues that arise with listing and delisting species as threatened and endangered under the ESA and how FWS has addressed them. FWS first listed the gray wolf as endangered in 1967 under the Endangered Species Preservation Act (ESPA), a predecessor of the ESA. The gray wolf's status and regulation under the ESA and its predecessors have been the subjects of numerous FWS rules and court opinions. FWS's gray wolf rules show how the agency's approach to interpreting and implementing the ESA has evolved and highlight hurdles that may arise with species' status determinations.", "As American pioneers settled the West, hunting and other human-caused mortality, spurred by federal and state bounties, brought the gray wolf to near extinction. By the 1960s, the only population remaining in the lower 48 states was in the northern Minnesota forests. FWS listed the eastern timber wolf ( C. lupus lycaon , a gray wolf subspecies found in Minnesota) as endangered under the ESPA. By 1976, three more gray wolf subspecies\u00e2\u0080\u0094the Mexican wolf ( C. lupus baileyi ), the northern Rocky Mountain wolf ( C. lupus irremotus ), and the Texas wolf ( C. lupus monstrabilis )\u00e2\u0080\u0094were listed as endangered under the ESA. In 1978, FWS combined all gray wolf subspecies listings into one listing for the entire gray wolf species in the lower 48 states except Minnesota, which was listed as endangered, and a separate listing for the gray wolf in Minnesota as threatened. In the next few years, FWS created subspecies recovery plans that outlined management strategies and recovery criteria. In the 1990s, FWS reintroduced gray wolves to the northern Rocky Mountains and the Southwest as experimental populations under the ESA. Protected under the ESA from human-caused mortality, which FWS identified as the greatest threat to the species, gray wolf populations increased. In the 2000s, FWS tried on multiple occasions to reclassify or delist gray wolf DPSs it had determined were no longer in risk of extinction, but courts vacated many of the agency's rules. As of January 2020, the gray wolf is listed as endangered or threatened in the lower 48 states, except for a population in the northern Rocky Mountains.", "FWS's efforts to recover the gray wolf under the ESA exemplify the regulatory and legal challenges that arise when listing and delisting species under the Act. From initial listing to recovery and reintroduction efforts to more recent attempts to delist the gray wolf, FWS has addressed in its regulatory actions such issues as uncertainties in gray wolf taxonomy, ambiguous statutory terms (e.g., \"foreseeable future\" and \"significant portion of its range\"), and the adequacy of state management plans. Stakeholders have questioned FWS's choices in comments to the proposed rules and have challenged many of the agency's gray wolf rules in court. Many of the legal challenges to FWS's delisting rules have succeeded, with courts vacating the rules and remanding them to the agency. The history of FWS's regulation of the gray wolf under the ESA and related litigation serve as a useful case study in how regulatory and legal challenges have shaped FWS's interpretation and application of key terms when listing and delisting species under the Act."], "reports": {"section_title": "", "paragraphs": ["U nder the Endangered Species Act of 1973 (ESA or the Act), the U.S. Fish and Wildlife Service (FWS ) and the National Marine Fisheries Service (together, the Services) determine which species to \"list\" as \"endangered species \" or \"threatened species ,\" terms defined in the Act . Species, subspecies, and distinct population segments (DPSs) may all be listed as \"species\" under the Act. Listing a species invokes certain protections under the Act and a requirement that the Services develop a recovery plan to conserve the species. Listed species may be reclassifie d by the Services from threatened to endangered or vice versa. The Services may also remove a species from the list, often called delisting, if it no longer meets the definition of an endangered or threatened species. The Services list, reclassify, and delist species pursuant t o statutory criteria and definitions through the agency rulemaking process. Persons may\u00e2\u0080\u0094and often do\u00e2\u0080\u0094challenge the legality of those final rules through litigation. When such challenges succeed, the court remands the rule to the applicable Service for further proceedings and may vacate the challenged rule.", "The gray wolf ( Canis lupus ) presents a useful example of the legal issues that arise with listing and delisting species as threatened and endangered under the ESA and how FWS has addressed those issues. T he gray wolf was among the first species identified by federal law as endangered after being nearly hunted to extinction in the lower 48 states . FWS has issued numerous rules in connection with its efforts to recover the gray wolf under the ESA . Many of those rules have been challenged in court, and a number of them have been vacated and remanded to FWS. FWS has addressed issues such as uncertainties in gray wolf taxonomy, ambiguous statutory terms (e.g., \" foreseeable future \" and \"significant portion of its range \" ), and the adequacy of state management plans. This r eport uses FWS's regulation of the gray wolf under the ESA and related litigation as a case study in how legal challenges have shaped FWS's interpretation of ESA provisions when listing and delisting species under the Act. The report begins by laying out general legal principles governing agency rulemaking under the ESA before reviewing the history of FWS's actions to list, recover, and delist the gray wolf and subsequent litigation . The report then uses this regulatory and litigation history to analyze specific issues that arise when listing and delisting species under the Act ."], "subsections": [{"section_title": "Listing and Delisting Species Under the Endangered Species Act", "paragraphs": ["The ESA aims to accomplish its goal of conserving fish, wildlife, and plants species threatened with extinction by \"listing\" species the Services determine to be endangered or threatened. The ESA's provisions and protections generally apply only to these listed species. The Act's legal framework determines when and how species are listed, reclassified, and delisted. The Secretary of the Interior and the Secretary of Commerce (this report refers to \"the Secretary\" to mean either the Secretary of the Interior or the Secretary of Commerce, as applicable) review species' statuses under the Act on their own initiative or in response to petitions. Any person may petition the Secretary to list, reclassify, or delist a species. The ESA prescribes when and how the Secretary is required to respond to such petitions, as shown in Figure 1 . ", "A status review, conducted pursuant to a petition that may be warranted or at the Secretary's initiative, determines whether a species should be or remain listed. Figure 2 depicts the general pathway for a species from status review and listing through post-delisting monitoring and management under the ESA framework. A brief explanation of each stage is provided below Figure 2 .", "Listing . As a threshold matter, the Secretary may list only groups of organisms that qualify as a \"species\" under the ESA, defined to include subspecies and DPSs. Because the term \"species\" under the Act has a distinct legal meaning that may differ from its conventional or taxonomic meaning, this report uses the term \"species\" to refer to species as defined by the Act (i.e., including subspecies and DPSs) and the term \"full species\" when referring to a taxonomic species. For species eligible for listing, the Secretary examines whether the species qualifies as an endangered species or threatened species, as defined by the Act, because of any of the five factors listed in Figure 2 . The ESA requires the Secretary to make this determination \"solely\" based on the \"best scientific and commercial data available.\" Based on this evaluation, the Secretary either lists the species as endangered or threatened, as appropriate, or determines the species is ineligible for listing and, if the Secretary conducted the status review pursuant to a petition to list, denies the petition. The Secretary may also determine that a species qualifies as an endangered or threatened species but that the species cannot be listed at the time due to the Services' priorities and limited resources. In that case, the Secretary may deny a petition as warranted but precluded. The Secretary publishes listing determinations in the Federal Register and the Code of Federal Regulations.", "Listed. Once endangered and threatened species are listed, the ESA directs federal agencies to \"conserve\" them and their ecosystems. As shown in Figure 2 , the Act provides two types of mechanisms to conserve listed species and facilitate their recovery. First, as shown in the Protections box of Figure 2 , it protects the species by prohibiting certain acts with respect to endangered species; similar prohibitions may also be extended to threatened species. The Act further protects listed species by requiring federal agencies to consult with the Services when their actions, or actions they approve or fund, could affect listed species\u00e2\u0080\u0094often called Section 7 consultations. Through this process, federal agencies assess the potential effects of their actions on any endangered or threatened species and evaluate, as necessary, alternatives that would mitigate the impact.", "Second, as shown in the Recovery Tools box in Figure 2 , the ESA provides tools to facilitate the recovery of the species. The Act generally requires the Secretary to develop and implement a recovery plan for each listed species unless such a plan would \"not promote the conservation of the species.\" The recovery plan includes any site-specific management actions needed to conserve the species, objective and measureable criteria that would merit delisting the species if met, and estimates of timelines and costs. In addition to recovery plans, Congress amended the ESA in 1982 to allow the Services to reintroduce experimental populations of listed species, which are regulated as threatened species regardless of the listed species' status. Experimental populations must be \"wholly separate geographically\" from existing natural populations of the species.", "As shown in the Review Status box in Figure 2 , the Secretary must review the status of a listed species every five years \u00e2\u0080\u0094or pursuant to a petition to reclassify or delist the species that may be warranted \u00e2\u0080\u0094to determine whether it still qualifies as an endangered or threatened species. Species are reclassified or delisted based on the same criteria used to list species, as shown in the Status box in Figure 2 . ", "Post- d elisting. Once a species is delisted, the states in which the species resides resume control over management of the recovered species. The Secretary and the states monitor the status of a recovered species for at least five years after delisting. In this period, if the Secretary determines that there is a significant risk to the well-being of the species, the Secretary must exercise emergency powers to restore the Act's protections to the species for 240 days, during which time the Secretary may begin rulemaking proceedings to relist the species."], "subsections": [{"section_title": "Administrative Law and Statutory Interpretation", "paragraphs": ["The Services list, reclassify, and delist species through the rulemaking process. The principles of administrative law and statutory interpretation that generally govern the agency rulemaking process and judicial review underpin the Services' actions under the ESA. Agencies use rules, among other tools, to implement and interpret statutes and promulgate regulations. The Administrative Procedure Act (APA) generally governs agency rulemaking by prescribing procedural requirements for agencies to follow and providing an opportunity for judicial review of final agency actions. The APA requires agencies to publish a proposed rule to provide notice of the agency's proposed action and provide an opportunity for public comment, then to publish a final rule that concisely states the agency's basis and purpose for the rule. The agency's statement must generally address significant comments and explain the agency's rationale for those comments not incorporated into the final rule. Any changes in the final rule must be a \"logical outgrowth\" of the proposed rule to comport with due process.", "Parties affected by an agency rule can generally seek judicial review of the agency's action. To the extent the rule relies on an agency's interpretation of a provision in a statute it administers, the court generally evaluates the agency's interpretation under the Chevron doctrine. Under the Chevron doctrine, the court first determines whether the statutory provision is ambiguous (i.e., if there are multiple permissible meanings) by relying on principles of statutory interpretation. The court may look to the plain meaning of the term in common parlance, the provision's statutory context, how the term is used elsewhere in the statute or other statutes, the statute's purpose and legislative history, and whether a particular interpretation would render a term superfluous, lead to absurd results, or raise constitutional questions. If the court determines that a statutory provision is ambiguous, then it defers to the administering agency's interpretation so long as it is a permissible (i.e., reasonable) interpretation.", "Under the APA, a court must set aside agency rules if it finds the rule is \"arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.\" For example, a court may determine that a rule is arbitrary and capricious because the agency's interpretation of an ambiguous term is not a permissible one. A court may also hold that an agency rule is arbitrary and capricious if it is illogically reasoned, fails to consider an important aspect of the problem, or is unsupported by the administrative record. When a court overturns an agency rule, it generally vacates the rule and remands it to the agency."], "subsections": []}]}, {"section_title": "History of Listing and Delisting the Gray Wolf", "paragraphs": ["The gray wolf has a long history as a listed species under the ESA and its predecessors. As discussed in this section, from the initial listing to the present, nearly every element of the listing and delisting legal framework has been implicated in regulating the gray wolf under the Act. (See \" Listing and Delisting Species Under the Endangered Species Act \" section.) Table 1 includes a timeline of legislative, regulatory, and litigation actions by population, and Table A-1 in the Appendix provides a more detailed version. The substantive issues that have been raised in the various rulemakings and court opinions described in this section are discussed by topic in the \" Challenges When Listing and Delisting Species \" section.", "The gray wolf's traits and history inform much of FWS's analysis of threats to the species and pathways to recovery. Gray wolves are the largest member of the Canidae (i.e., dog) family. They are frequently found in packs and occupy defined territory, but lone gray wolves may leave their packs to join another pack or wander alone. Gray wolves are effective and adaptive predators who generally hunt large prey, such as moose, elk, caribou, bison, and deer; they also have been known to eat smaller prey. Historically, gray wolves ranged throughout most of North America, Europe, and Asia. On the North American continent, gray wolves were once found from Canada and Alaska to northern Mexico except for much of the southeastern United States (where the related but distinct red wolf lived) and parts of southern California. The arrival of European settlers and their expansion into the western frontier led to widespread persecution of wolves as a result of fear, superstition, and perceived and real conflicts between wolves and humans, such as attacks on humans, domestic animals, or livestock. Encouraged by federal, state, and local bounties, settlers poisoned, trapped, and shot wolves until they were eliminated from more than 95% of their historical range. "], "subsections": [{"section_title": "Listing and Recovery Efforts", "paragraphs": ["FWS listed the first gray wolf subspecies, the eastern timber wolf ( C. lupus lycaon ), as endangered in 1967 under the Endangered Species Preservation Act of 1966 (ESPA). After the Endangered Species Conservation Act of 1969 (ESCA) amended the ESPA, FWS listed the northern Rocky Mountain wolf ( C. lupus irremotus ) as endangered in 1973. Under the ESPA and the ESCA, the Services could list only species or subspecies that were endangered worldwide. Enacted in 1973, the ESA allowed the Services to identify a species as endangered or threatened in all or a significant part of its range. After the ESA was enacted, FWS listed two more gray wolf subspecies\u00e2\u0080\u0094the Mexican wolf ( C. lupus baileyi ) and the Texas wolf ( C. lupus monstrabilis )\u00e2\u0080\u0094as endangered in 1976. In 1978, FWS combined these listings into one listing for the gray wolf species as endangered throughout the lower 48 states except Minnesota and a separate listing the gray wolf in Minnesota as threatened. ", "Between 1978 and 1982, FWS created recovery plans for the eastern timber wolf, the northern Rocky Mountain wolf, and the Mexican wolf that outlined management strategies and recovery criteria. It later updated each of those plans. In the 1990s, FWS reintroduced gray wolves into central Idaho and the greater Yellowstone area in the northern Rocky Mountains and the Southwest. FWS designated each population as a nonessential experimental population, meaning FWS determined the population is not essential to the conservation of the species. Protected from human-caused mortality, which FWS identified as the greatest threat to the species, gray wolf populations in the western Great Lakes region, the northern Rocky Mountains, and the Southwest increased and expanded their ranges."], "subsections": []}, {"section_title": "Designating Distinct Population Segments (DPSs)", "paragraphs": ["The term DPS is distinct to the ESA, unlike species and subspecies, which are commonly used taxonomic terms with scientific meanings. Including DPSs in the Act's definition of species has been particularly relevant to gray wolf listing and delisting rules. Because the term DPS is not defined in the ESA, the Services issued a DPS policy (DPS Policy) in 1996 explaining how they would interpret and apply the term. Under the DPS Policy, the Services evaluate the population's discreteness and significance to determine if it qualifies as a DPS and, therefore, a listable species under the Act. "], "subsections": [{"section_title": "Final Rule Designating Eastern, Western, and Southwestern DPSs in 2003", "paragraphs": ["In 2000, FWS proposed to designate four DPSs of gray wolves\u00e2\u0080\u0094the Western Great Lakes DPS, Western DPS, Southwestern DPS, and Northeastern DPS, as shown in Map 2 of Figure 3 \u00e2\u0080\u0094and to delist the gray wolf in any state outside the range of those DPSs. FWS determined that non-DPS states were outside the gray wolf's current range and unlikely to be repopulated by gray wolves, and that wolf restoration to those areas was neither potentially feasible nor necessary for recovery. FWS also proposed to reclassify the gray wolves of the Western Great Lakes DPS, Western DPS, and Northeastern DPS from endangered to threatened. For the Western Great Lakes and Western DPSs, FWS determined that they were not in danger of extinction based on the recovery progress of the western Great Lakes and northern Rocky Mountain gray wolf populations, respectively. FWS determined that these populations were sufficient to ensure the continuing viability of the DPSs as a whole. For the Northeastern DPS, FWS proposed to reclassify it as threatened due to the regulatory flexibility afforded by a threatened status, rather than based on determining that the DPS met the definition of \"threatened species.\" ", "In the 2003 final rule, FWS combined and expanded the Western Great Lakes and Northeastern DPSs to create the Eastern DPS, as shown in Map 3 of Figure 3 , after not finding justification for a separate Northeastern DPS. FWS reclassified the gray wolves of the Eastern DPS and the Western DPS from endangered to threatened. The agency also determined that it could delist only based on a finding of recovery, extinction, or original listing in error. Accordingly, FWS extended the three DPSs to include 12 of the states it had proposed to delist. The agency delisted the gray wolf only in 14 states in the southeastern United States and in portions of Oklahoma and Texas that FWS determined were outside the gray wolf's historical range. ", "District courts in Oregon and Vermont ultimately vacated the 2003 final rule. Those courts held that FWS conflated the statutory terms \"all\" and \"a significant portion\" when analyzing whether the DPSs were endangered or threatened in \"all or a significant portion of [their] range.\" By assessing what constituted \"a significant portion\" of the range based on which areas ensured the continuing viability of the DPS as a whole , FWS rendered the phrase \"a significant portion\" superfluous by ensuring that any DPS endangered or threatened in \"a significant portion\" of its range would also be endangered or threatened in \"all\" of its range. Those courts also concluded that FWS violated the ESA and the DPS Policy by designating DPSs based on geographical rather than biological criteria and by failing to conduct the five-factor analysis for wolves outside the core recovery populations, thus reclassifying species without applying the statutory criteria. The Oregon district court further held that FWS combining the two DPSs and including states in the DPSs beyond the recovered populations' ranges was arbitrary and capricious because the gray wolf's conservation status varied across each DPS. By extending the DPSs to the gray wolf's historical range rather than \"draw[ing] a line around a population whose conservation status differs from other populations within that species,\" the court held that FWS \"invert[ed]\" the DPS's purpose. Finally, the Vermont district court held that FWS violated the APA by combining the Western Great Lakes and Northeastern DPSs into a new Eastern DPS in the 2003 final rule, which did not appear in the proposed rule. The Vermont district court determined that establishing the Eastern DPS was not a \"logical outgrowth\" of the proposed rule and accordingly did not provide the public with adequate notice and opportunity for comment. "], "subsections": []}, {"section_title": "Final Rules Designating and Delisting Western Great Lakes DPS in 2007 and Northern Rocky Mountain DPS in 2008", "paragraphs": ["After the district courts vacated the 2003 final rule, FWS adjusted its approach by individually designating and delisting the Western Great Lakes DPS (as shown in Figure 4 ) in 2007 and the Northern Rocky Mountain DPS (as shown in Figure 5 ) in 2008. For these and later DPS rules, FWS assessed whether each DPS met the DPS Policy's discreteness and significance criteria. FWS determined that gray wolf populations were discrete under the DPS Policy by comparing the distance between areas occupied by gray wolf populations to gray wolf dispersal data, finding that the populations were separated by more than three times the average dispersal distance and that the area in between generally was not suitable habitat for gray wolves. In the new final rules, FWS determined the populations to be significant under the DPS Policy by finding that (1)\u00c2\u00a0the populations occupied an unusual or unique ecological setting for the gray wolf, and (2)\u00c2\u00a0losing these populations would create a significant gap in the gray wolf's range. In subsequent DPS rules, FWS would rely solely on the latter finding. ", "In its 2007 and 2008 rulemakings, FWS also assessed whether each population had met the recovery criteria in its recovery plan and was no longer in danger of extinction at the time or in the foreseeable future. FWS found that both the Western Great Lakes and Northern Rocky Mountain populations had met the objective criteria laid out in the recovery plans. It also determined that the States of Minnesota, Michigan, and Wisconsin in the Western Great Lakes DPS and the States of Montana and Idaho in the Northern Rocky Mountain DPS had adequate wolf management plans in place. However, in the proposed rule for the Northern Rocky Mountain DPS, FWS determined that Wyoming's wolf management plan was inadequate to ensure the continued recovery of the species. Among other concerns, FWS pointed to Wyoming committing to manage only seven breeding packs outside the national parks and to Wyoming designating the gray wolf as a predatory animal in most of the state. FWS stated that delisting was contingent on Wyoming implementing an adequate wolf management plan. Wyoming enacted legislation in February 2007 removing statutory obstacles to the revisions FWS required, and the Wyoming Fish and Game Commission approved the revised plan in November 2007. In the 2008 final rule, FWS determined that Wyoming's plan would adequately ensure the continued recovery of the gray wolf population there.", "Much like the 2003 rule, courts also vacated these final rules. For the 2007 Western Great Lakes DPS final rule, a federal district court in the District of Columbia held that the ESA was ambiguous about whether FWS could designate for delisting purposes a DPS from a listed full species if FWS had never listed the DPS specifically. However, FWS had argued that the ESA was unambiguous and the plain meaning of the text supported its authority to designate and delist a DPS from a listed full species. Because FWS had relied on the ESA's plain language rather than interpreting the text, the court determined there was no FWS interpretation to defer to under the Chevron doctrine. The court vacated the rule and remanded it to FWS to interpret the ambiguous statutory language.", "For the 2008 Northern Rocky Mountain DPS final rule, a federal court in Montana reviewed FWS's rule when it granted a motion to enjoin the rule while litigation proceeded. To issue a preliminary injunction, a court must find, among other things, that the plaintiffs have a likelihood of success on the merits of the case. The court determined the plaintiffs were likely to prevail based on two arguments. First, the court determined that FWS likely had been arbitrary and capricious by inadequately explaining why its final rule ignored the recovery plan criterion of genetic exchange between gray wolves from different recovery areas (i.e., central Idaho, northwestern Montana, and the greater Yellowstone area). Genetic exchange had been included as a recovery criterion in a 1994 environmental impact statement prepared to evaluate the environmental impacts of introducing the experimental gray wolf populations into central Idaho and the greater Yellowstone area. The court held that although FWS did not have to rely on recovery criteria to find that a species had recovered, the agency needed to explain its decision to ignore such criteria adequately. Second, the court determined that FWS was arbitrary and capricious in approving Wyoming's wolf management plan\u00e2\u0080\u0094part of the recovery criteria\u00e2\u0080\u0094because, in the court's view, FWS's reasons for rejecting previous Wyoming plans applied equally to the 2007 one. After issuing the preliminary injunction, the court granted FWS's request to vacate the rule and remand it."], "subsections": []}, {"section_title": "Final Rules Designating and Delisting Western Great Lakes DPS and Northern Rocky Mountain DPS Except Wyoming in 2009", "paragraphs": ["In 2009, FWS again published final rules designating and delisting the Western Great Lakes DPS and the Northern Rocky Mountain DPS, except it did not delist the gray wolf in Wyoming after finding the state's management plan inadequate. FWS issued the final Western Great Lakes DPS rule, which interpreted FWS's authority to designate and delist DPSs from listed species to address the concerns raised by the D.C. district court's 2008 ruling, without issuing a new proposed rule. Parties challenged the latest Western Great Lakes DPS rule for, among other things, violating the APA's notice and comment requirements. Pursuant to a settlement agreement, FWS ultimately withdrew the rule. ", "The Montana district court vacated the 2009 Northern Rocky Mountain DPS rule after concluding that the ESA did not allow FWS to list a partial DPS (i.e., listing the gray wolf only in the Wyoming segment of the DPS). FWS had interpreted the statutory phrase \"significant portion of its range\" in the endangered species and threatened species definitions to allow a species to be listed for only that portion of its range where the Services determine the species is endangered or threatened. The court rejected this interpretation as impermissible under the Act and vacated the rule. It held that the plain language of the ESA precluded listing a smaller classification than a DPS. The court also held that FWS's interpretation rendered superfluous Congress's addition of DPS to the definition of \"species\" and Congress's restriction of DPSs to vertebrate species because under FWS's interpretation, the agency could simply list the full species or subspecies for only the range occupied by the DPS and achieve the same result without the DPS designation and for any species\u00e2\u0080\u0094vertebrate or not. However, an act of Congress in 2011 directed FWS to reinstate the 2009 rule designating and delisting the Northern Rocky Mountain DPS without Wyoming. "], "subsections": []}, {"section_title": "Final Rule Designating and Delisting Western Great Lakes DPS in 2011", "paragraphs": ["FWS published another final rule designating and delisting the Western Great Lakes DPS in 2011. In the proposed rule, FWS also proposed to recognize the eastern timber wolf as a full species ( C. lycaon ) rather than a subspecies of gray wolf ( C. lupus lycaon ) based on developments in taxonomic research. In recognizing the eastern timber wolf as a full species, FWS proposed to delist the gray wolf in all or part of 29 states (outside the Western Great Lakes DPS) where FWS determined that the areas were part of the historical range of the eastern timber wolf or red wolf ( C. rufus ) rather than the gray wolf ( C. lupus ). In the 2011 Western Great Lakes DPS final rule, however, FWS determined that the scientific community had not reached a consensus on whether the eastern timber wolf was a full species. FWS accordingly continued to recognize the eastern timber wolf as a subspecies of gray wolf until the scientific debate was resolved and postponed delisting in the 29 states and partial states. FWS otherwise finalized the rule as proposed, relying on data and analysis similar to what it had used in prior rules designating and delisting the Western Great Lakes DPS. ", "A district court in the District of Columbia vacated the 2011 Western Great Lakes DPS rule in 2014. The court reviewed FWS's interpretation of its statutory authority under the ESA to designate and delist a DPS from a listed full species, which the agency adopted after the 2008 opinion vacating FWS's 2007 Western Great Lakes DPS rule that relied on the plain meaning of the ESA. On appeal, the U.S. Court of Appeals for the District of Columbia Circuit (D.C. Circuit) held in 2017 that FWS could designate and delist DPSs from listed full species but that FWS had failed to do so properly in the 2011 rule. The court concluded that the 2011 Western Great Lakes DPS rule was arbitrary and capricious because FWS had improperly conducted its analysis by failing to consider two factors: (1) the effect of delisting the DPS on the remainder of the species and (2) the loss of the gray wolf's historical range when analyzing threats to the species. "], "subsections": []}, {"section_title": "Final Rule Delisting the Gray Wolf in Wyoming in 2012", "paragraphs": ["After approving its revised state laws and wolf management plan, FWS delisted the gray wolf in Wyoming in 2012. The federal district court in the District of Columbia vacated the rule after finding it was arbitrary and capricious for FWS to rely on nonbinding promises in Wyoming's management plan to determine the state's regulatory mechanisms were adequate. The D.C. Circuit reversed the federal district court, holding that the ESA did not limit FWS to considering only legally binding regulatory mechanisms to determine whether the regulatory mechanisms were adequate to protect the species. The rule delisting the gray wolf in Wyoming was accordingly reinstated. "], "subsections": []}]}, {"section_title": "Proposals to Delist the Gray Wolf Listed Entities", "paragraphs": ["In 2013 and 2019, FWS proposed to delist the gray wolf except for the Mexican wolf subspecies, which FWS listed as endangered in 2015. FWS published the 2013 proposed rule when gray wolves in the Northern Rocky Mountain and Western Great Lakes DPSs were delisted. FWS considered whether the remaining listed entities qualified as \"species\" under the ESA\u00e2\u0080\u0094thus listable under the Act. Finding they did not qualify, FWS evaluated whether the gray wolf or any subspecies or population of gray wolf merited listing as an endangered or threatened species. In its analysis, FWS revisited the gray wolf's taxonomy, determining again that scientific evidence supported recognizing the eastern wolf as a full species ( C. lycaon ) and recognizing the following three gray wolf subspecies: C. lupus nubilus (found in the coastal areas of Alaska and Canada and the Pacific Northwest to the Great Lakes region), C. lupus occidentalis (found in the interior of Canada and the northern Rocky Mountains), and C. lupus baileyi (historically found in the American Southwest and Mexico). Within these species and subspecies, FWS did not identify any listable DPSs, finding that gray wolves sighted in the Pacific Northwest did not qualify as a population and, in any event, were not discrete from the Northern Rocky Mountain DPS population. FWS proposed to list the Mexican wolf as an endangered subspecies and delist the remaining listed gray wolf entities. In 2015, FWS finalized its 2013 proposal to list the Mexican wolf separately but did not finalize the rest of the proposed rule. ", "Before FWS finalized its proposed delisting of the gray wolf entities, as discussed above, the federal courts in the District of Columbia vacated the rule delisting the Western Great Lakes DPS and the gray wolf in Wyoming\u00e2\u0080\u0094the latter was later reinstated through legislation. In 2019, FWS proposed to delist the gray wolf (aside from the Mexican wolf, listed separately) after finding that the Western Great Lakes population had met its recovery criteria and that neither the gray wolf as a species nor any subspecies or any population of gray wolf was endangered or threatened in all or a significant portion of its range in North America. FWS also returned to its position that the scientific community was not yet settled on recognizing the eastern wolf as a full species. FWS had not finalized the 2019 proposal as of this report's publication.", "The gray wolf is accordingly listed as endangered in the lower 48 states, except for the Northern Rocky Mountain DPS, which is delisted; the population in Minnesota, which is listed as threatened; and the Mexican wolf subspecies in New Mexico and Arizona, which is listed separately as endangered. Table 1 summarizes the history of listing, recovery, and delisting by DPS or region (described further in the \" History of Listing and Delisting the Gray Wolf \" section), and Table A-1 in this report's Appendix provides a more detailed timeline."], "subsections": []}]}, {"section_title": "Challenges When Listing and Delisting Species", "paragraphs": ["FWS has encountered a host of legal challenges when listing or delisting the gray wolf. This section reviews by topic the substantive challenges FWS has encountered in rulemaking and litigation. Though specific to the gray wolf, the challenges FWS has faced provide insight into the issues the Services generally encounter with listing and delisting species and how courts may react to the Services' approaches. "], "subsections": [{"section_title": "Identifying the Species", "paragraphs": ["To identify a species as endangered or threatened, the Services must first identify what qualifies as a \"species\" under the Act. When the ESA was enacted in 1973, it defined a species to include \"any subspecies of fish or wildlife or plants and any other group of fish or wildlife of the same species or smaller taxa in common spatial arrangement that interbreed when mature.\" In 1978, Congress amended the ESA to define species to include \"any subspecies of fish or wildlife or plants, and any distinct population segment of any species of vertebrate fish or wildlife which interbreeds when mature.\" Species and subspecies are biological concepts used in taxonomic classification. As such, the Services consult experts in those fields to identify listable species and subspecies based on the best available scientific data. A DPS, however, is a statutory creation, not a biological concept. In 1996, the Services implemented the DPS Policy to outline how they would evaluate DPSs. Under the policy, a population must be discrete from other populations, significant in accordance with principles of conservation biology, and endangered or threatened to be listed as a DPS.", "Applying these criteria in practice has proven difficult. For the gray wolf in particular, FWS has encountered challenges with the wolf's taxonomy and with regulating segments of the wolf population. "], "subsections": [{"section_title": "Taxonomy", "paragraphs": ["Many of FWS's rulemaking preambles detail the difficulties involved in identifying listable entities and analyzing them in light of disagreements over the taxonomic classification of wolf species and subspecies. Under the ESA, FWS must be able to identify a listable entity\u00e2\u0080\u0094a full species, a subspecies, or a DPS\u00e2\u0080\u0094to analyze its status for listing. The entity identified for analysis determines the population(s), historical and current range, and threats that the Services consider. Though FWS's determinations about gray wolf taxonomy generally have not been subject to direct legal challenges, they underpin how FWS conducts the remainder of its analyses to assess the species' status. Changing views and a lack of scientific consensus over the taxonomic classifications for the gray wolf have caused FWS to revise its analyses during or between rulemakings.", "The Services must base decisions about what entity to evaluate on the \"best scientific and commercial data available.\" But scientists do not always agree on their taxonomic conclusions. Taxonomists may classify species based on distinctive physical or behavioral traits, evolutionary pathways, interbreeding capabilities, or genetic composition. Taxonomists may disagree about whether and how to recognize subspecies within a species. Differences in methodology or datasets may also lead to disagreements about the taxonomic level to assign a particular entity. For example, various scientific studies have concluded that the eastern timber wolf is a full species ( C. lycaon ), a subspecies of gray wolf ( C. lupus lycaon ), a hybrid of different wolf species, a wolf-coyote hybrid, or a distinct gray wolf population not rising to the level of a subspecies. Different methodological approaches may also affect how many entities within a species taxonomists recognize as distinct. For example, FWS has observed that scientific studies had recognized as many as 24 subspecies of wolves in North America but that other taxonomists had suggested there were actually 5 or fewer subspecies. From these divergent scientific studies, the Services must determine what classification for an entity the \"best scientific and commercial data available\" support.", "The Services may also conclude that there is no scientific consensus on an entity's taxonomic status that would be defensible based on the data. For example, twice FWS has proposed to recognize the eastern timber wolf as a full species only to conclude later that the scientific community had not reached a consensus on its classification. In each case, FWS reverted to the eastern timber wolf's original classification as a subspecies of gray wolf ( C. lupus lycaon ). It is unclear how FWS would have proceeded if it could not have reverted to a status quo. Any determination on taxonomic classification for listing purposes must be defensible based on the best scientific and commercial data available.", "Classifications may also change over time as scientists reevaluate their conclusions based on additional data or improved methodologies. In its 2013 proposed rule, FWS determined that it would recognize only three gray wolf subspecies out of as many as 24 identified historically\u00e2\u0080\u0094 C. lupus nubilus (coastal wolf), C. lupus occidentalis (interior and mountain wolf), and C. lupus baileyi (Mexican wolf). As described above, FWS has continued to evaluate the taxonomic status of the eastern timber wolf as scientific research and opinion evolves. ", "Changing classifications and disagreements within the scientific community may result in a previously listed entity no longer qualifying as a \"species\" under the ESA or in the Services being unable to identify any listable entity that qualifies as endangered or threatened. Such changes and disagreements can also affect other aspects of the Services' status analysis. For example, which areas FWS recognizes as comprising the gray wolf's current and historical range depends on whether the eastern timber wolf is a subspecies of gray wolf or a separate full species. Any areas solely occupied by the eastern timber wolf would be included in the gray wolf's range only if the eastern timber wolf is a subspecies. When FWS proposed to recognize the eastern timber wolf as a full species in 2011, it also proposed removing certain areas from the gray wolf listing that FWS considered listed in error because it determined that the wolves occupying those areas were eastern timber wolves rather than gray wolves. In addition, the Services use a species' current range to determine the species' status (i.e., whether it is endangered or threatened in \"all or a significant portion of its range \" ) and use the historical range to assess threats against the species' continued existence. Accordingly, changes to how a species is classified and defined can affect the Services' analysis of the species' status."], "subsections": []}, {"section_title": "Defining DPSs", "paragraphs": ["FWS's efforts to designate and delist gray wolf DPSs have given rise to multiple legal challenges and vacated rules. To designate gray wolf DPSs, FWS has applied the DPS Policy. Under the policy, the Services may designate a DPS if it is discrete from the remainder of the species and significant to the species. The Services determine a population is discrete if it is \"markedly separate\" from other populations based on \"physical, physiological, ecological, or behavioral factors\" or international boundaries. The Services determine that a population is significant\u00e2\u0080\u0094biologically and ecologically\u00e2\u0080\u0094based on whether the population persists in an unusual setting for the species, differs markedly from the rest of the species genetically, represents the only naturally occurring population in the wild (i.e., excluding reintroduced populations), or would create a gap in the species range if the population were lost. The Services imposed the significance criteria to ensure they use the DPS designation authority \"sparingly,\" consistent with congressional guidance, to avoid potential abuse, such as listing numerous populations of otherwise abundant species. If the Services determine a population meets the discreteness and significance criteria, they evaluate the DPS's status to determine whether it is endangered or threatened in accordance with the ESA definitions and factors. ", "For the gray wolf, FWS has generally evaluated discreteness by determining the distance between the areas occupied by different populations against average dispersal distances. The agency determined that the distances between the Western Great Lakes, Northern Rocky Mountain, and Mexican wolf populations were all greater than three times the average dispersal distance for a lone wolf, leading FWS to determine that each population is discrete. FWS also has used the Canada-U.S. border to demarcate DPSs based on the different regulatory regimes in the two countries. FWS determined the Western Great Lakes and Northern Rocky Mountain DPSs were significant because losing either population would leave a significant gap in the gray wolf's range. In the 2003 rulemaking, FWS also determined that the Western Great Lakes, Western (later Northern Rocky Mountain), and Mexican wolf populations each displayed distinct morphological traits that could represent different subspecies, presumably meaning they were genetically distinct. In the 2007 rule, FWS also concluded that the Western Great Lakes DPS persisted in a unique environment due to its presence in the Laurentian Mixed Forest Province where the boreal forest transitions to the broadleaf deciduous forest. However, it did not rely on those factors in later rules.", "FWS's determinations that gray wolf populations meet the DPS Policy's discreteness and significance criteria generally have not been the subject of legal challenge. Instead, parties have challenged FWS's determination of DPSs' geographic boundaries. The Oregon district court vacated FWS's rule designating the Western, Eastern, and Southwestern DPSs because it determined that FWS had inappropriately delineated the DPSs. In that 2003 final rule, FWS had combined the proposed Western Great Lakes DPS and Northeastern DPS into the Eastern DPS after it did not obtain sufficient evidence of gray wolves inhabiting the Northeast to designate a DPS. The agency also extended each DPS to include surrounding states such that the historical range of the gray wolf was carved up into DPSs. The court determined that FWS had inverted the DPS Policy's purpose by combining populations with dramatically different statuses into one DPS based on geography. The court held that FWS must delineate DPSs carefully to include only discrete, significant populations that qualify as DPSs and their occupied ranges. ", "The Services' decisions to list a full species rather than a subspecies or DPS may also affect their ability to delist the species. Most of the challenges FWS has encountered with gray wolf DPSs have arisen when the agency has designated DPSs from listed full species for delisting purposes. Plaintiffs have argued that FWS can only designate a DPS to increase protections\u00e2\u0080\u0094either listing a DPS of a species or subspecies that is not listed or reclassifying a DPS to endangered if the species or subspecies is listed as threatened\u00e2\u0080\u0094and therefore can only delist a previously listed DPS. FWS has contended that it has authority to delist a DPS from a listed species or subspecies based on (1) the statutory definition of species including DPSs and (2) its authority to review species' statuses and revise listings pursuant to new determinations or designations. FWS has argued that its interpretation enables the flexibility Congress intended to provide the Services through the DPS category and is consistent with the Act's purposes by allowing the Services to direct resources to conserve those species or populations most in need of assistance. ", "Courts have concluded that the ESA is ambiguous as to whether FWS may designate and delist a DPS from a listed species or subspecies. District courts had initially agreed with plaintiffs that FWS's interpretation was impermissible because DPSs are a \"one-way ratchet\" and FWS may only delist a DPS it had previously listed. But the D.C. Circuit reversed the district court's opinion in 2017, holding that it is reasonable to interpret the ESA as authorizing FWS to revise a full species or subspecies listing by designating and removing a DPS from the listed species. The D.C. Circuit also concluded, however, that FWS had improperly executed designating and delisting the Western Great Lakes DPS in the 2011 rule because the agency must consider the effects of removing the DPS on the status of the listed remnant of the species in its analysis. Thus although this most recent decision determined that FWS has the legal authority to designate and delist DPSs from listed species and subspecies, the agency has yet to do so in practice in a way that survives judicial review. "], "subsections": []}, {"section_title": "Experimental Populations", "paragraphs": ["The ESA allows the Secretary to release specimens of listed species into the wild and designate the population as an \"experimental population\" if it is \"wholly separate geographically\" from existing populations of the species. Experimental populations may be designated as essential or nonessential to the conservation of the species. An experimental population is protected as a threatened species even if the species is listed as endangered, allowing the Services to limit which acts are prohibited with respect to the experimental population. Additionally, federal agencies are not required to enter into Section 7 consultations if their actions are likely to affect only nonessential experimental populations. These more limited protections afforded to experimental populations reduce the regulatory burden on the local community where the specimens are released, which may reduce public opposition to introducing (or reintroducing) the species to the wild in that area. The Services must ensure that the released population is \"wholly separate geographically\" from existing populations to qualify as experimental and be subject to these reduced protections. ", "FWS implemented two rules in 1994 establishing experimental populations of gray wolves in (1)\u00c2\u00a0the greater Yellowstone area and (2) central Idaho and southwestern Montana. FWS evaluated whether these populations would be \"wholly separate geographically\" based on the areas occupied by existing gray wolf populations , not where any individual gray wolves\u00e2\u0080\u0094lone dispersers from the pack\u00e2\u0080\u0094might be found. In the rules, FWS stated that it would treat any individual gray wolves found in the experimental population area as part of that population. Farm bureaus, researchers, and conservation groups challenged this approach. ", "A federal district court in Wyoming vacated the rules on three grounds, all centered on FWS's use of populations rather than individuals to evaluate geographic separation. First, the court held that FWS's interpretation was inconsistent with clear congressional intent by potentially lessening protections for individual members of the species that ventured from protected populations into the experimental population's range. Second, the court held that the rules conflicted with FWS's own regulations, which require that any overlapping experimental and nonexperimental animals all be treated as endangered under the Act. Third, it held that treating all gray wolves in the experimental area as part of the experimental population, including naturally occurring wolves who migrated there, effected a de facto delisting of those wolves contrary to the ESA. ", "On appeal, the U.S. Court of Appeals for the Tenth Circuit (Tenth Circuit) disagreed. It found that Congress left the phrase \"wholly separate geographically from nonexperimental populations\" to the Services to interpret. Reviewing FWS's interpretation, the court observed that FWS's regulations define the term \"population\" as a group \"in common spatial arrangement.\" FWS had relied on this definition to conclude that individual dispersers would never be part of a \"population\" and therefore need not be accounted for when assessing geographic separation of populations . The court held that this interpretation was reasonable and consistent with the Act. It pointed to the use of species, subspecies, and DPSs rather than individuals as evidence that the Act's purpose is to conserve groups of organisms, not individual specimens. Consistent with that approach, the Tenth Circuit found that FWS reasonably determined the gray wolf's current range based on where populations were located rather than where individuals might disperse. Observing that wildlife\u00e2\u0080\u0094particularly wolves\u00e2\u0080\u0094 moves, the court concluded that protecting specimens based on where they are rather than where they came from was a reasonable enforcement approach. ", "The Tenth Circuit also held that the plaintiffs' contrary interpretation would require FWS to ensure that no individual specimens might cross between experimental and nonexperimental populations and would unnecessarily limit FWS's flexibility and discretion. The court determined that such a restrictive interpretation would prevent FWS from making full use of the experimental population tool and could hinder the conservation of the species, undermining the purposes of the Act. Accordingly, the Tenth Circuit reversed the district court's decision, allowing the central Idaho and greater Yellowstone area experimental populations to remain in place. Pursuant to the court's opinion, the Services may rely on areas occupied by populations rather than individuals to determine whether an experimental population would be \"wholly separate geographically\" as the Act required. "], "subsections": []}]}, {"section_title": "Qualifying as Endangered or Threatened", "paragraphs": ["Determining whether a species qualifies as endangered or threatened for purposes of listing or delisting requires the Services to examine whether the species is in danger of extinction (1)\u00c2\u00a0currently or in the foreseeable future, (2) in all or a significant portion of its range, and (3) due to one or more of the five statutory factors categorizing types of threats. Though some commenters have disagreed with FWS's analyses of threats under the five statutory factors, those analyses have not generally been a focal point in gray wolf litigation except for FWS's assessment of state management plans' adequacy under the five statutory factors. "], "subsections": [{"section_title": "\"All or a Significant Portion of Its Range\"", "paragraphs": ["FWS has had difficulty in successfully interpreting \"significant portion of its range\"\u00e2\u0080\u0094particularly the \"significant\" component\u00e2\u0080\u0094in connection with gray wolf rulemakings. Plaintiffs and commenters have repeatedly challenged FWS's interpretation of \"significant portion of its range\" in such rulemakings. Following an adverse court decision, FWS currently treats \"significant portion of its range\" as an independent basis for listing a species, meaning FWS will list the species in all of its range if it finds that the species is endangered or threatened in either (1) all or (2) a significant portion of its range. FWS has successfully defended its interpretation of \"range\" by interpreting the phrase to mean current rather than historical range. But courts have recently rejected FWS's interpretation of which portions are \"significant.\" FWS has not yet issued a revised policy on the meaning of \"significant portion of its range\" or how it interprets \"significant\" in light of the new decisions. "], "subsections": [{"section_title": "Interpreting the Terms \"Significant\" and \"Range\"", "paragraphs": ["In its 2003 rule, plaintiffs challenged FWS's interpretation of \"significant\" using the current \"range\" of the species. FWS had used the gray wolf's current range (i.e., the areas occupied by the Western Great Lakes and Northern Rocky Mountain populations) as the \"significant\" areas when reclassifying the Eastern DPS and Western DPS as threatened. An Oregon district court held that FWS failed to adequately justify why the areas occupied by these populations were the only \"significant\" ones. The court determined that FWS had instead relied on the gray wolf's current range, without considering the areas where the gray wolf \"is no longer viable but once was.\" Based in part on this conclusion, the court vacated the rule and remanded it to FWS. ", "On remand, FWS revisited its interpretation of the terms \"range\" and \"significant\" in its 2007 Western Great Lakes DPS rule: ", "Interpreting \" Range . \" FWS explicitly interpreted \"range\" to refer to the species' current rather than historical range. FWS based its interpretation on the fact that the ESA defines an endangered species or threatened species as one that \" is in danger of extinction\" at the time or in the foreseeable future. FWS determined that while a species may be extinct in its historical range, it could only be in danger of extinction in all or part of its current range. The District of Columbia district court vacated this rule on other grounds, but the D.C. Circuit subsequently upheld FWS's interpretation of range as reasonable. FWS has since clarified that although it evaluates the current rather than historical range for purposes of determining the species' status, it considers the effect of losing the species' historical range when evaluating the statutory factors in listing decisions. Interpreting \" Significant . \" FWS explained in the 2007 rule that it would determine what constituted a \"significant\" part of a species range on a case-by-case basis depending on the biological needs of the species. To conduct this analysis, FWS would consider the ecosystems on which the species depends and the values identified in the Act. Relevant factors might include the quality and quantity of habitat, the historical and current use of the habitat, specific uses for the habitat such as breeding or migration, and the role of that part of the range in maintaining genetic diversity. Though a federal district court in the District of Columbia subsequently vacated this rule, it did so on other grounds without reviewing FWS's interpretation of \"significant.\" The Solicitor's Office of the Department of the Interior issued an opinion soon after the final rule affirming FWS's interpretation and providing a more extensive explanation of the position. FWS relied on this interpretation and the Solicitor's opinion in subsequent gray wolf rulemakings.", "Beginning with its 2011 Western Great Lakes DPS rule, FWS adjusted its explanation of \"significant portion of its range\" to incorporate principles of conservation biology. The agency interpreted the phrase to mean that the area is (1) within the current range of the species and (2)\u00c2\u00a0\"important to the conservation of the species because it contributes meaningfully to the representation, resiliency, or redundancy of the species.\" An area would \"contribute[] meaningfully\" if loss of the area would negatively affect FWS's ability to conserve the species. ", "In 2014, the Services issued a joint policy on their interpretation of \"significant portion of its range\" under the ESA. The policy was generally consistent with FWS's and the Solicitor's past interpretations but contained a revised definition of \"significant\":", "A portion of the range of a species is \"significant\" if the species is not currently endangered or threatened throughout all of its range, but the portion's contribution to the viability of the species is so important that, without the members in that portion, the species would be in danger of extinction, or likely to become so in the foreseeable future, throughout all of its range. ", "District courts later invalidated this definition, concluding that a species could never be listed based on a \"significant portion of its range\" under this interpretation, and prohibited the Services from applying it. These courts maintained that under this definition no species could be endangered or threatened in a significant portion of its range without being endangered or threatened in all its range. The courts reasoned that if a species were endangered or threatened in a \"significant portion\" of its range and would be endangered or threatened in all of its range without that portion, then the species would be listable as endangered or threatened in all its range. In its 2019 proposed rule to delist the remaining gray wolf entities, FWS acknowledged that the policy had been invalidated and addressed the courts' opinions by reviewing the gray wolf's range to identify any portion \"that could be significant under any reasonable definition of 'significant' that relates to the conservation of the gray wolf entity.\" The Services have not yet issued a revised policy interpreting the phrase \"significant portion of its range.\" "], "subsections": []}, {"section_title": "Using \"Significant Portion of Its Range\" for Listing", "paragraphs": ["Plaintiffs have also challenged FWS's interpretation of \"significant portion of its range\" to allow FWS to list a species only in those parts of its range where it is endangered or threatened. In its 2009 rule designating the Northern Rocky Mountain DPS and delisting it except in Wyoming, FWS implicitly interpreted the ESA as allowing the agency to list a species only in that portion of its range where FWS determined the species was endangered or threatened. This interpretation allowed FWS to keep the DPS listed in Wyoming (based on inadequate regulatory mechanisms) but delist it elsewhere. A Montana district court vacated this rule on the grounds that FWS's interpretation was inconsistent with the ESA and its legislative history. The court determined that Congress added the phrase \"significant portion of its range\" to expand the circumstances under which the Services could list a species to address concerns that the ESA's predecessors limited the Services to listing species that were endangered worldwide. The court accordingly concluded that the phrase was added to change \" when a species can be listed,\" not \" what must be listed and protected.\" The court also concluded that FWS's interpretation rendered superfluous DPSs and the vertebrate distinction for DPSs if the agency could limit its listing of a species to the part of its range that was endangered or threatened. The court held that \"significant part of its range\" refers to whether , not where , a species is endangered or threatened. In light of the court's decision, FWS has subsequently interpreted this phrase to constitute an independent basis for listing a species throughout its range."], "subsections": []}]}, {"section_title": "Foreseeable Future", "paragraphs": ["To determine whether a species is threatened, the Services must determine whether it is in danger of extinction in the \"foreseeable future.\" Though FWS's interpretation of this phrase has not been the focus of legal challenges to rules relating to the gray wolf, FWS's interpretation of the term as it applies to the gray wolf has changed over time. Originally, FWS used the term \"foreseeable future\" in its analyses but did not interpret it in general or with respect to the gray wolf specifically. In the 2007 Western Great Lakes DPS rule, however, FWS defined the term \"foreseeable future\" specifically for the gray wolf. The agency determined that 30 years was an appropriate measure of the foreseeable future for the gray wolf because wolves have 3-year generations, so 30 years represented 10 generations of wolves. FWS viewed 10 generations as a reasonable period to reliably predict the effects of threats on the species. ", "FWS changed course again in the 2009 rules designating and delisting the Western Great Lakes DPS and Northern Rocky Mountain DPS. Rather than defining the \"foreseeable future\" for the species as a whole based on its reproductive patterns, FWS announced that it would determine the foreseeable future for each threat it considered based on its ability to project and predict effects of the threats reliably. For example, the agency used 30 years as the timeframe for available habitat and distribution models, but when considering the effect of genetic isolation on the species, it used a model that predicted those effects for the next 100 years. Though FWS's gray wolf rules have not been overturned based on its interpretation of \"foreseeable future,\" its approach is information as interpretations of this term have generated challenges for rules on other species.", "The Services' recent revisions to their ESA regulations codify an interpretation of \"foreseeable future\" much like the one FWS adopted in the 2009 rules. As revised, the Services interpret \"foreseeable future\" to \"extend[] only so far into the future as the Services can reasonably determine that both the future threats and the species responses to those threats are likely.\" The Services intend to evaluate \"foreseeable future\" on a case-by-case basis based on \"considerations such as the species' life-history characteristics, threat-projection timeframes, and environmental variability.\" Consistent with FWS's approach in the more recent gray wolf rules, the Services state that they need not identify the foreseeable future as a specific time period."], "subsections": []}]}, {"section_title": "Recovery and Delisting", "paragraphs": ["The Services delist species using the same process they use to list species: They evaluate whether the species meets the definition of \"endangered species\" or \"threatened species\" due to one or more of the five statutory factors based on the best available scientific and commercial data. However, when delisting a species, the Services also generally evaluate the species' recovery pursuant to any identified objective recovery criteria in recovery plans and assesses the adequacy of state management plans following delisting. FWS has stated that a species need not meet all of the recovery criteria to be delisted. But a Montana district court has required FWS to provide an adequate explanation if it chooses to reject recovery criteria or delist a species that has not met these criteria, because FWS develops the recovery criteria pursuant to the statutory directive to establish \"objective, measurable criteria which, when met , would result in a determination ... that the species be removed from the list.\" State management plans fall under the purview of \"inadequate regulatory mechanisms\" in the five-factor analysis, but the Services give them particular attention in delisting rules because the regulatory mechanisms protecting a species necessarily change when it is delisted and no longer receives federal protection under the ESA. Accordingly, this section focuses specifically on two aspects of recovery and delisting species: (1) how FWS has addressed objective recovery criteria and (2) post-delisting state management plans."], "subsections": [{"section_title": "Objective Recovery Criteria in Recovery Plans", "paragraphs": ["Plaintiffs have challenged how FWS has used recovery plan criteria when assessing the gray wolf's recovery in its delisting rules. The ESA directs the Services to develop and implement recovery plans for the conservation and survival of listed species if such a plan would promote conservation of the species. In any such plan, the Services must include \"objective, measurable criteria\" that, if met, would cause the Services to delist the species. The Act, however, directs the Services to determine whether a species should be reclassified or removed from the list during a status review based on the Section 4(a) and (b) criteria\u00e2\u0080\u0094namely the endangered and threatened species definitions and the five statutory categories of threats as determined using the best available commercial and scientific data\u00e2\u0080\u0094without mentioning recovery plan criteria. Though these two provisions do not inherently conflict, they have generated questions about the role of objective criteria in recovery plans when delisting species.", "Parties have challenged FWS's decision to delist a species when it had not met all of the objective recovery criteria. For example, plaintiffs challenged the 2008 rule to designate and delist the Northern Rocky Mountain DPS based in part on a study finding no evidence of genetic exchange between the greater Yellowstone area population and the other two recovery areas. The 1994 EIS included as a recovery criterion that the northern Rocky Mountain recovery areas have \"[t]hirty or more breeding pairs comprising some 300+ wolves in a metapopulation (a population that exists as partially isolated sets of subpopulations) with genetic exchange between subpopulations .\" The plaintiffs argued\u00e2\u0080\u0094and a Montana district court agreed\u00e2\u0080\u0094that this criterion required evidence of actual DNA exchange, not just the potential for genetic exchange or expectation of such exchange in the future. The court held that although the ESA did not prohibit FWS from finding that a species had recovered without meeting recovery criteria, FWS still needed to justify adequately rejecting its own recovery criteria to avoid violating the APA. ", "FWS addressed these criticisms in its 2009 Northern Rocky Mountain DPS rule in multiple ways. The agency challenged the factual conclusion that genetic exchange had not occurred by questioning the assumptions of the underlying scientific study and identifying new studies showing wolf dispersal and genetic exchange. FWS further explained its interpretation of the recovery criterion, maintaining that the recovery criterion did not require confirmed genetic exchange and that genetic exchange need not result from natural migration and could be human-assisted. Finally, the agency explained why the criterion was not needed to find recovery, reasoning that genetic exchange was not a concern for the populations due to the high level of preexisting genetic diversity. In later rulemakings, FWS has stated that \"recovery may be achieved without all recovery criteria being fully met.\" When there are questions about whether a species FWS seeks to delist has met objective recovery criteria, the agency may use one or more of the following approaches based on past practice: (1) explaining flaws in evidence showing the criteria have not been met; (2) finding additional evidence supporting its position; (3) explaining its understanding of the recovery criteria to explain why they have been met; or (4) explaining why it views the species as having recovered despite not explicitly meeting the objective criteria.", "Finally, parties have challenged the recovery criteria in comments on proposed rules as either excessive or inadequate to determine whether the species had recovered. FWS generally has concluded that its recovery criteria are adequate, and, to date, courts generally have not addressed FWS's technical expertise in selecting the criteria."], "subsections": []}, {"section_title": "State Management Plans", "paragraphs": ["State plans for managing a species post-delisting can enter into the Services' delisting determinations in two ways: (1) the Services examine any state management plans under \"Factor D: The Inadequacy of Existing Regulatory Mechanisms,\" and (2) the Services may require in the recovery plan that they approve certain state management plans before delisting the species. For the gray wolf, the Eastern Timber Wolf Recovery Plan required as part of its recovery criteria that Minnesota, Michigan, and Wisconsin have in place state management plans FWS had approved as providing adequate wolf protection and management. Similarly, the Northern Rocky Mountain Gray Wolf Recovery Plan required in its recovery criteria that Montana, Wyoming, and Idaho have FWS-approved state management plans. To meet this recovery plan requirement, (1) the state must create a management plan that FWS approves, (2) FWS must adequately explain why it approved the plan, and (3) the state must implement the plan. The state or FWS failing to complete any of these steps has delayed FWS delisting gray wolf populations and caused courts to vacate final delisting rules. ", "Formulating an Adequate Management Plan. First, the state must craft a management plan that FWS deems adequate to ensure the continued recovery of the species. In 2003, FWS designated but did not delist the Western DPS because the agency had rejected Wyoming's state management plan as inadequate. Wyoming challenged FWS's decision to not approve its management plan, but a Wyoming district court dismissed the case for failing to tie the decision to any final agency action that could be reviewed. FWS took a different approach in 2009 when it delisted the Northern Rocky Mountain DPS without Wyoming because it determined that the Wyoming plan remained inadequate and could not be approved. But a Montana district court determined that FWS could not delist the DPS only in part, effectively holding that Wyoming must enact an approved state management plan for the entire DPS to be delisted. Congress superseded this decision by enacting legislation in 2011 that directed FWS to reinstate the rule delisting the DPS except for Wyoming.", "Explaining the Agency 's Approval of the Management Plan. Second, FWS must adequately explain why it approved the state plan. In 2008, FWS delisted the Northern Rocky Mountain DPS after Wyoming revised its state management plan between the proposed and final rules. FWS proposed to delist the DPS only if Wyoming modified its plan to provide adequate protection for the species. Wyoming modified its statutes and wolf management plan after the proposed rule was published. In the final rule, FWS determined that the revised plan was adequate to ensure the gray wolf's continued recovery. A Montana district court, however, held that FWS's approval of Wyoming's plan was likely arbitrary and capricious and issued a preliminary injunction staying the delisting rule. The court determined that the plan suffered from the same flaws that FWS had identified in the plan it previously rejected and that FWS had failed to adequately explain why the plan was now sufficient. Several months after issuing the preliminary injunction, the court vacated and remanded the rule at FWS's request.", "Implementing the Management Plan. Finally, the state must enact and otherwise implement, as applicable, the approved management plan to ensure that the protections the Services rely on to delist the species are actually in place. For example, FWS stated in its 2000 proposed rule that it had intended to propose delisting the Western Great Lakes DPS as well as designating it but that the agency could not because the Minnesota legislature had failed to vote on the plan FWS had approved before FWS published its proposed rule. FWS accordingly proposed to designate the DPS but not delist it because the recovery criteria were not met without an approved Minnesota management plan in place. Once Minnesota enacted its plan, FWS moved forward with delisting the DPS (though courts ultimately vacated all the rules that followed). Similarly, FWS found Wyoming's management plan to be inadequate in the 2007 Northern Rocky Mountain DPS proposed rule because state laws and regulations prevented the Wyoming Game and Fish Commission from actually implementing certain components of the plan. Once Wyoming modified its state laws and regulations, FWS approved the plan.", "As the litigation over the FWS's 2012 rule illustrates, although states must enact management plans for the Services to move forward with delisting a species, the regulatory mechanisms need not all be legally binding so long as states assure the Services that adequate protections will be provided in practice. The federal district court for the District of Columbia vacated FWS's 2012 rule delisting the gray wolf in Wyoming because FWS relied on nonbinding promises from Wyoming that it would manage the population above the minimum recovery level. On appeal, the D.C. Circuit reversed the district court and restored the rule delisting the gray wolf in Wyoming, holding that \"regulatory mechanisms\" need not be binding with the force of law for FWS to determine they were adequate to protect the species. ", "The Services' approval of state management plans and the adequacy of their explanations for approving the plans can accordingly play a central role in both finalizing delisting rules and surviving judicial review of those rules. For a particular species and state, the adequacy of the state's regulatory mechanisms and management plan are determined on a case-by-case basis through negotiation between the state and the Services."], "subsections": []}]}]}, {"section_title": "Conclusion", "paragraphs": ["The history of the gray wolf under the ESA illustrates the challenges FWS has faced in conserving the species as the Act intended. In implementing the ESA, the Services must contend with disagreements over how to interpret ambiguous terms, uncertain and ever-changing scientific data, and conflicting views on what it means to conserve species and the role of the states in that effort. These issues can complicate the Services' efforts to conserve endangered and threatened species and delist them, consistent with the Act's purposes. ", "Difficulties that delay delisting species may frustrate certain stakeholders, such as state wildlife agencies that want more flexibility in managing the species or private entities in the species' habitat who must comply with the Act's prohibitions and Section 7 consultation requirements. Other stakeholders such as conservation groups or animal rights activists may raise concerns that species are inadequately regulated to ensure their long-term recovery or continued biodiversity due to uncertainties in the science and ambiguities in the statute. Either set of stakeholders may question whether the Act is effectively promoting the recovery of listed species. ", "In light of the scientific and administrative challenges FWS has encountered with regulating the gray wolf under the Act, Congress could consider amending the Act to address these issues and ensure the Act is implemented in accordance with congressional intent. Such legislation could amend the Act generally or specifically with respect to a particular action, such as the Act directing FWS to reinstate the rule designating and delisting the Northern Rocky Mountain DPS except for Wyoming. Legislative proposals have been introduced in the 116th Congress that would pursue each of these approaches: amending the Act generally or specifically directing FWS to issue new rules or reissue vacated ones regarding the gray wolf. "], "subsections": [{"section_title": "Appendix. Timeline", "paragraphs": [], "subsections": []}]}]}}
{"id": "R45943", "title": "The Farm Bill Energy Title: An Overview and Funding History", "released_date": "2019-10-02T00:00:00", "summary": ["Title IX, the energy title, of the 2018 farm bill (Agriculture Improvement Act of 2018; P.L. 115-334 ) contains authority for the energy programs administered by the U.S. Department of Agriculture (USDA). USDA energy programs incentivize research, development, and adoption of renewable energy projects, including solar, wind, and anaerobic digesters. However, the primary focus of USDA energy programs has been to promote U.S. biofuels production and use\u00e2\u0080\u0094including corn starch-based ethanol (the predominant biofuel produced and consumed in the United States), cellulosic biofuels, and soybean-based biodiesel. The USDA energy programs via the farm bill are separate from the Renewable Fuel Standard (RFS) and tax incentives contained in separate energy and tax legislation.", "Four farm bills have contained an energy title: 2002, 2008, 2014, and 2018. For all four farm bills, the majority of the energy programs expire and lack baseline funding. Many of the energy title programs are authorized to receive both mandatory and discretionary funding. Historically, mandatory funding has been the primary support for these programs, as appropriators have not provided funding for most of the discretionary authorizations. The programs that have received discretionary authorizations under the 2018 farm bill are the Rural Energy for America Program, the Rural Energy Savings Program, and the Sun Grant Program.", "The 2018 farm bill extended most of the energy provisions of the 2014 farm bill with new funding authority. There are two exceptions, as the 2018 farm bill repealed both the Repowering Assistance Program and the Rural Energy Self-Sufficiency Initiative. Additionally, the 2018 farm bill established one new program\u00e2\u0080\u0094the Carbon Utilization and Biogas Education Program.", "The 2018 farm bill contains initiatives that address noncorn feedstocks (e.g., cellulosic feedstocks). The most important programs to this end are the Bioenergy Program for Advanced Biofuels, which pays producers for production of eligible advanced biofuels; the Biorefinery, Renewable Chemical, and Biobased Product Manufacturing Assistance Program (formerly the Biorefinery Assistance Program), which assists in the development of new and emerging technologies for advanced biofuels; and the Renewable Energy for America Program (REAP), which has funded a variety of biofuels-related projects.", "Over the five-year reauthorization period (FY2019-FY2023), the 2018 farm bill contains a total of $375 million in new mandatory funding and authorizes discretionary funding (i.e., subject to annual appropriations) of $1.7 billion for the various farm bill energy programs. This discretionary total includes discretionary authorizations for the Sun Grant Program and the Rural Energy Savings Program. The mandatory funding provided for the energy programs under the 2018 farm bill is approximately 46% less than what was provided in the 2014 farm bill, which had authorized $694 million in mandatory funding over the five-year period of FY2014-FY2018. Conversely, the 2018 farm bill provides discretionary authorizations that are approximately 13% more than what was provided in the 2014 farm bill ($1.5 billion) for the energy programs (although, as noted above, farm bill energy programs generally have not received discretionary appropriations).", "At issue for Congress is oversight of the energy programs and the future of annual funding for these programs. This report provides an overview and funding summary of the various energy titles contained in the farm bills from 2002 to the present, and provides a description of the 2018 farm bill energy programs including their funding levels, program implementation status, and any changes made to the programs by the 2018 farm bill."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Overview and History", "paragraphs": ["Agriculture-based renewable energy can take several forms, including biofuels such as corn-based ethanol or soy-based biodiesel, wind-driven turbines located on farmland or in rural areas, anaerobic digesters that convert animal waste into methane and electric power, or biomass harvested for burning as a processing fuel or to generate heat as part of an industrial activity. ", "Since the late 1970s, U.S. policymakers at both the federal and state levels have adopted a variety of incentives, regulations, and programs to encourage the production and use of agriculture-based renewable energy (mostly biofuels). Over the years, the two most widely used biofuels\u00e2\u0080\u0094ethanol produced primarily from corn starch and biodiesel produced primarily from soybean oil\u00e2\u0080\u0094have received significant federal support in the form of tax incentives, loans and grants, and regulatory programs. Many of these support programs originate in legislation outside of the farm bill. For instance, the Energy Tax Act of 1978 ( P.L. 95-618 ) provided an exemption for ethanol from the excise tax on motor fuels. By executive order the Bioenergy Program was established in 1999 and in FY2001 began making payments from the U.S. Department of Agriculture's (USDA's) Commodity Credit Corporation (CCC) to eligible producers of ethanol and biodiesel based on year-to-year production increases in these fuels. The Biomass Research and Development Act of 2000 ( P.L. 106-224 ) directed USDA and the U.S. Department of Energy (DOE) to cooperate and coordinate research and development activities for biobased industrial products, including biofuels. The 2002 farm bill ( P.L. 107-171 ) authorized several new biofuel programs and added an energy title, Title IX. The 2008 farm bill ( P.L. 110-246 ) subsequently extended and expanded the programs promoting renewable energy, emphasizing particularly those utilizing biomass feedstock. The 2014 farm bill ( P.L. 113-79 ) extended the programs through FY2018. The 2018 farm bill, the Agriculture Improvement Act of 2018 ( P.L. 115-334 ), continues federal support for the programs through FY2023. Motivations cited for these legislative initiatives include energy security concerns, reduction of greenhouse gas emissions from fossil fuel combustion, and raising domestic demand for U.S.-produced farm products.", "Congress has enacted temporary tax incentives for biofuels, specifically tax credits for biodiesel and second generation (formerly cellulosic) biofuel and a tax credit for small producers. Some of these temporary tax incentives have been extended numerous times. Most recently, the Bipartisan Budget Act of 2018 (BBA; P.L. 115-123 ) retroactively extended the tax incentive for biodiesel and renewable diesel of $1.00/gallon through the end of 2017. In addition to these types of tax incentives, the Renewable Fuel Standard (RFS) mandates a minimum level of renewable fuel usage.", "Historically, there has been a revenue cost associated with tax incentives for ethanol and biofuels. The Volumetric Ethanol Excise Tax Credit (VEETC) provided a tax credit of $0.45/gallon before it expired at the end of 2011. From FY1980 through FY2013, excise tax credits and incentives for ethanol reduced federal tax revenue by a cumulative estimated total of $46.9 billion. In FY2011, the fiscal year immediately preceding the VEETC's expiration, its cost was an estimated $6.5 billion. Excise tax incentives for biodiesel producers have reduced federal excise tax revenue by an estimated $17.3 billion between FY2008 and FY2018. In FY2018, excise tax receipts were reduced by $3.4 billion due to biodiesel producer credits (the reduction in FY2018 excise tax receipts is associated with tax credit claims made for biodiesel production in calendar year 2017). ", "Title IX of the 2018 farm bill continues long-standing congressional support for the production of renewable energy from agriculturally sourced materials. This report focuses on those policies contained in the 2018 farm bill that support agriculture-based renewable energy. The introductory sections of this report briefly describe how USDA bioenergy policies evolved and how they fit into the larger context of U.S. biofuels policy. Then, each of the bioenergy provisions of the 2018 farm bill are defined in terms of their function, goals, administration, funding, and implementation status. ", "In an appendix at the end of this report, Table A-1 presents data on 2018 farm bill budgetary authority for energy provisions, while Table A-2 , Table A-3 , and Table A-4 present the original budget authority for Title IX programs under the previous 2014 farm bill, the 2008 farm bill, and the 2002 farm bill, respectively. "], "subsections": [{"section_title": "Non-USDA/Non-Farm Bill Programs and Authorizations", "paragraphs": ["Renewable energy production plays a key role not just in agricultural policy, but also in energy, tax, and environmental policy. As a result, many of the federal programs that support renewable energy production in general, and agriculture-based energy production in particular, are outside the purview of USDA and have origins outside of omnibus farm bill legislation. For example, the three principal federal biofuels policies of the past decade were all established outside of farm bills: ", "The Renewable Fuel Standard (RFS) mandates an increasing volume of biofuels use and has its origins in the Energy Policy Act of 2005 ( P.L. 109-58 ). The RFS was expanded in the Energy Independence and Security Act of 2007 (EISA; P.L. 110-140 ) and divided into four distinct, but nested biofuel categories\u00e2\u0080\u0094total, advanced, cellulosic, and biodiesel\u00e2\u0080\u0094each with its own mandated volume. The VEETC, originally established in the American Jobs Creation Act of 2004 ( P.L. 108-357 ), provided a tax credit that varied in value over the years. It was $0.45 per gallon of pure ethanol blended with gasoline when it expired on December 31, 2011. The ethanol import tariff was intended to offset the ethanol tax incentives and was originally established by the Omnibus Reconciliation Act of 1980 ( P.L. 96-499 ). The ethanol import tariff also expired on December 31, 2011. ", "In addition to the RFS, VEETC, and the ethanol import tariff, several other tax credits that originated outside of farm bills were available for biodiesel production as well as for small producers (less than 60 million gallons per year per plant) of ethanol and biodiesel. A substantial number of federal programs also support renewable energy sources other than biofuels. In addition to federal programs, many states offer additional support to biofuels producers, blenders, and consumers. ", "An awareness of the non-USDA federal programs is important for appreciating the role envisioned for the energy title of both the 2018 farm bill and previous farm bills. The farm bill programs were designed to provide incentives for the research and development of new agriculture-based renewable fuels, especially second-generation biofuels (those based on non-food crop biomass such as cellulose and algae), and to expand their distribution and use. A summary of the evolution of these programs follows. "], "subsections": []}, {"section_title": "2002 Farm Bill\u00e2\u0080\u0094First Energy Title", "paragraphs": ["The 2002 farm bill (Farm Security and Rural Investment Act of 2002; P.L. 107-171 ) was the first omnibus farm bill to explicitly include an energy title (Title IX). The energy title authorized grants, loans, and loan guarantees to foster research on agriculture-based renewable energy, to share development risk and to promote the adoption of renewable energy systems. Since enactment of the 2002 farm bill, interest in renewable energy has grown rapidly, due in large part to periods of steep increases in domestic and international petroleum prices and a dramatic acceleration in domestic biofuels production (primarily corn-based ethanol). "], "subsections": []}, {"section_title": "2008 Farm Bill\u00e2\u0080\u0094Refocus on Non-Corn-Based Biofuels", "paragraphs": ["Annual U.S. ethanol production expanded rapidly between 2002 and 2007, rising from approximately 2 billion gallons to over 6.5 billion gallons during that period. Similarly, corn use for ethanol grew from an 11% share of the U.S. corn crop in 2002 to an estimated 23% share of the 2007 corn crop. During the 2008 farm bill debate, government and industry projections had ethanol's corn-use share rising rapidly, sparking concerns about unintended consequences of the policy-driven expansion of U.S. corn ethanol production. Dedicating an increasing share of the U.S. corn harvest to ethanol production evoked fears of higher prices for all grains and oilseeds that compete for the same land, which could lead to higher livestock feed costs, higher food prices, and lower U.S. agricultural exports. In addition, several environmental concerns emerged regarding water impacts, and the expansion of corn production onto nontraditional lands, including native grass and prairie land, among other things. In response, policymakers sought to refocus biofuels policy initiatives in the 2008 farm bill (the Food, Conservation, and Energy Act of 2008; P.L. 110-246 ) in favor of non-corn starch feedstock, especially cellulosic-based feedstock, by introducing a number of programs aimed at facilitating the production and use of bioenergy from nonfood feedstock. ", "The 2008 farm bill became law six months after the enactment of the EISA. A key component of EISA was a significant expansion of the RFS, which in part mandates the increasing use of \"advanced biofuels\" (i.e., non-corn starch biofuels), whose minimum use was scheduled to increase from zero gallons in 2008 to 21 billion gallons by 2022. The energy provisions of the 2008 farm bill were intended to reinforce EISA's program goals via a further refocusing of federal incentives toward non-corn-based sources of renewable energy. These advanced biofuel goals\u00e2\u0080\u0094in particular for the RFS\u00e2\u0080\u0094have proven difficult to meet."], "subsections": []}, {"section_title": "2014 Farm Bill\u00e2\u0080\u0094Extends Most Programs with New Funding", "paragraphs": ["Funding for the majority of the energy programs from the 2008 farm bill expired at the end of FY2012 and lacked baseline funding going forward. The 2014 farm bill (Agricultural Act of 2014; P.L. 113-79 ) extended most of the renewable energy provisions of the 2008 farm bill and provided new mandatory funding, with some notable exceptions. Again, most of the 2014 farm bill energy programs lacked a mandatory funding baseline going forward beyond FY2018. ", "The 2014 farm bill included some key changes to select programs including Section 9007, the Renewable Energy for America Program (REAP), which precludes the use of REAP funding for any mechanism for dispensing energy at the retail level (e.g., blender pumps). The 2014 farm bill repealed one program and two studies\u00e2\u0080\u0094Section 9011, the Forest Biomass for Energy Program; Section 9013, the Biofuels Infrastructure Study; and Section 9014, the Renewable Fertilizer Study. Additionally, the 2014 farm bill did not address the Rural Energy Self-Sufficiency Initiative of the 2008 farm bill. "], "subsections": []}, {"section_title": "2018 Farm Bill\u00e2\u0080\u0094Less Mandatory Funding", "paragraphs": ["The 2018 farm bill (Agriculture Improvement Act of 2018; P.L. 115-334 ) extends most of the 2014 farm bill energy title programs through FY2023 and provides new mandatory funding. It establishes one new program\u00e2\u0080\u0094the Carbon Utilization and Biogas Education Program. It repeals one program and one initiative\u00e2\u0080\u0094the Repowering Assistance Program and the Rural Energy Self-Sufficiency Initiative.", "A key point of the 2018 farm bill is that it provides less mandatory funding than previous farm bills for energy title programs. For instance, the 2018 farm bill energy title programs mandatory funding level ($375 million) is approximately 46% less than the mandatory funding provided in the 2014 farm bill ($694 million). On the other hand, the total discretionary authorization provided by the 2018 farm bill ($1.7 billion) is approximately 13% more than what was authorized in the 2014 farm bill ($1.5 billion) for the energy programs. However, most energy title programs did not receive discretionary appropriations under previous appropriation acts. ", "The 2018 farm bill energy title programs are described in more detail in the section below entitled \" Major Energy Provisions in the 2018 Farm Bill .\""], "subsections": []}]}, {"section_title": "Funding for Agriculture-Based Energy Programs", "paragraphs": ["In general, two types of funding are authorized by Congress in a farm bill\u00e2\u0080\u0094mandatory and discretionary. Some farm bill programs receiving mandatory funds are automatically funded at levels \"authorized\" in the farm bill unless Congress limits funding to a lower amount through the appropriations or legislative process. For many of these programs, mandatory funding is provided through the borrowing authority of USDA's Commodity Credit Corporation (CCC). The farm bill may also specify some discretionary funding as \"authorized to be appropriated\"\u00e2\u0080\u0094such discretionary funding is actually determined each year through the annual appropriations process and may or may not reflect the funding level suggested in the authorizing legislation. "], "subsections": [{"section_title": "Funding Under the 2002 Farm Bill", "paragraphs": ["The 2002 farm bill ( P.L. 107-171 ) provided mandatory funding of $801 million and identified discretionary authorizations of $294 million for the farm bill energy programs for FY2002-FY2007 ( Table A-4 ). The Section 9010 Continuation of the Bioenergy Program (7 U.S.C. \u00c2\u00a78108)\u00e2\u0080\u0094which was the predecessor to the Bioenergy Program for Advanced Biofuels\u00e2\u0080\u0094received approximately 75% of the mandatory appropriations. The Section 9006 Renewable Energy Systems and Energy Efficiency Improvements program (7 U.S.C. \u00c2\u00a78106)\u00e2\u0080\u0094which became a part of REAP when it was created in the 2008 farm bill\u00e2\u0080\u0094received approximately 15% of the mandatory appropriations. The entirety of the $294 million in discretionary authorizations went to Section 9008 Biomass Research and Development (26 U.S.C. \u00c2\u00a77624). "], "subsections": []}, {"section_title": "Funding Under the 2008 Farm Bill", "paragraphs": ["The 2008 farm bill authorized slightly over $1.0 billion in mandatory funding and nearly $1.5 billion in discretionary appropriations to Title IX energy programs for FY2008-FY2012 ( Table A-3 ). Mandatory authorizations included $320 million for the Biorefinery Assistance Program, $300 million for the Bioenergy Program for Advanced Biofuels, and $255 million for the Rural Energy for America Program (REAP). The Biomass Crop Assistance Program (BCAP) was authorized to receive such sums as necessary (i.e., funding is open-ended and depends on program participation); however, limits were later set on BCAP outlays under the annual appropriations process beginning in FY2010. The $1.5 billion of discretionary funding authorization included $600 million for the Biorefinery Assistance Program, and $100 million for both the Bioenergy Program for Advanced Biofuels and REAP. However, actual discretionary appropriations through FY2012 to all Title IX energy programs were substantially below authorized levels.", "As regards mandatory funding, all of the bioenergy provisions of Title IX\u00e2\u0080\u0094with the exception of Section 9010, the Feedstock Flexibility Program for Bioenergy Producers, which is authorized indefinitely\u00e2\u0080\u0094had mandatory funding only for the life of the 2008 farm bill, FY2008 through FY2012. As a result, all of the bioenergy provisions in Title IX of the 2008 farm bill, with the exception of the Feedstock Flexibility Program for Bioenergy Producers (\u00c2\u00a79010), expired on September 30, 2012."], "subsections": [{"section_title": "Funding Under Continuing Resolutions for FY2013", "paragraphs": ["The 112 th Congress did not complete action on any of the regular FY2013 appropriations bills during 2012. Instead, a continuing resolution (CR) for the first half of FY2013 ( P.L. 112-175 ) was signed into law on September 28, 2012. This was followed by a second CR to provide appropriations for the second half of FY2013 ( P.L. 113-6 ). The Rural Energy for America Program was the sole Title IX bioenergy program that received an appropriation of discretionary funds ($3.4 million) in FY2013."], "subsections": []}, {"section_title": "Funding Under ATRA\u00e2\u0080\u0094The 2008 Farm Bill Extension", "paragraphs": ["Many of the 2008 farm bill programs were extended through September 30, 2013, by Section 701 of the American Taxpayer Relief Act of 2012 (ATRA; P.L. 112-240 ) signed into law by President Obama on January 2, 2013. Under ATRA, discretionary funding was authorized to be appropriated at the rate that programs were funded under the 2008 farm bill. "], "subsections": []}]}, {"section_title": "Funding Under the 2014 Farm Bill", "paragraphs": ["The five-year reauthorization period (FY2014-FY2018) of the 2014 farm bill ( P.L. 113-79 ) contained a total of $694 million in new mandatory funding and authorized $1.5 billion to be appropriated for the various farm bill renewable energy programs ( Table A-2 ). Under the 2014 farm bill, Congress acted through annual appropriations bills to lower the amount of mandatory funding available to four of these programs (i.e., the Biorefinery Assistance Program, the Repowering Assistance Program, the Bioenergy Program for Advanced biofuels, and the Biomass Crop Assistance Program) and did not appropriate discretionary funding for most of these programs. Programs that did receive discretionary funding under the 2014 farm bill include the Rural Energy for America Program and the Rural Energy Savings Program."], "subsections": []}, {"section_title": "Funding Under the 2018 Farm Bill", "paragraphs": ["The 2018 farm bill reauthorizes the energy title programs for a five-year term, FY2019-FY2023. It contains $375 million in new mandatory funding and authorizes to be appropriated $1.7 billion ( Table A-1 ). Of the four farm bills since 2002, the 2018 farm bill gives the least amount of mandatory funding for energy title programs. The amount of discretionary authorization is comparable to what was provided in the 2014 farm bill. In short, under the 2018 farm bill, Congress has reduced the number of energy programs that receive mandatory funding, and reduced the amount of mandatory funding, while keeping both the number of discretionary programs and the discretionary funding similar to levels found in the 2014 farm bill. Further, some programs that received mandatory funding under the 2014 farm bill are now authorized to receive only discretionary funding under the 2018 farm bill (i.e., the Biodiesel Fuel Education Program, the Biomass Research and Development Initiative, and the Biomass Crop Assistance Program). Details of the funding levels provided in the 2018 farm bill\u00e2\u0080\u0094and the 2014, 2008, and 2002 farm bills\u00e2\u0080\u0094are provided in the discussion of individual provisions below and are summarized in the appendix tables."], "subsections": []}]}, {"section_title": "Major Energy Provisions in the 2018 Farm Bill", "paragraphs": ["Like the three preceding farm bills, the 2018 farm bill ( P.L. 115-334 ) contained a distinct energy title (Title IX) that extends many of the previous bioenergy programs. What follows is a summary of the bioenergy-related authorities found in the 2018 farm bill, including (where applicable) a brief description of each program, 2018 farm bill funding levels, and the status of program implementation, including any noteworthy legislative changes. This section provides a description for all sections listed under 7 U.S.C. Ch. 107 Renewable Energy Research and Development, which includes those sections that are under other titles of the 2018 farm bill. "], "subsections": [{"section_title": "7 U.S.C. 8101: Definitions", "paragraphs": ["The 2018 farm bill made three substantive modifications to bioenergy-related definitions as follows (7 U.S.C. \u00c2\u00a78101):", "1. \"biobased product\"\u00e2\u0080\u0094 similar to prior law except it expands the term to include renewable chemicals; 2. \"biorefinery\"\u00e2\u0080\u0094 defined as a facility that converts renewable biomass or an intermediate ingredient or feedstock of renewable biomass into biofuels, renewable chemicals, or biobased products and may produce electricity; and 3. \"renewable energy system \"\u00e2\u0080\u0094 defined as a system that produces useable energy from a renewable source, including the distribution components necessary to move energy produced by the system to the initial point of sale, and other components and ancillary infrastructure such as a storage system, but not any mechanism for dispensing energy at retail (e.g., a blender pump).", "The first two modifications were designed to expand access to federal support for renewable chemicals and intermediate ingredients or feedstocks of renewable biomass, respectively. The last modification was designed to expand access to federal support for ancillary infrastructure (e.g., storage system) associated with a renewable energy system."], "subsections": []}, {"section_title": "7 U.S.C. 8102: Biobased Markets Program", "paragraphs": ["Administered by: Rural Business and Cooperative Service, Rural Development Agency (RD), USDA. ", "Program Overview : The Biobased Markets Program was originally established under the 2002 farm bill as a federal procurement preference program that required federal agencies to purchase biobased products under certain conditions (7 U.S.C. \u00c2\u00a78102). The 2008 farm bill renamed the federal biobased procurements preference program as the Biobased Markets Program. USDA refers to the program as the BioPreferred\u00c2\u00ae Program. The BioPreferred\u00c2\u00ae Program promotes biobased products\u00e2\u0080\u0094those derived from marine and forestry materials\u00e2\u0080\u0094through two initiatives: (1) a mandatory purchasing requirement for federal agencies and their contractors and (2) a voluntary labeling initiative for biobased products. Products that meet the minimum biobased content criteria may display the USDA Certified Biobased Product label. ", "Under the Biobased Markets Program, federal agencies and their contractors are generally required to purchase biobased products from 109 categories of goods\u00e2\u0080\u0094among which are cleaners, carpets, lubricants, office supplies, and paints\u00e2\u0080\u0094when an agency procures $10,000 or more worth of an item within these categories during the course of a fiscal year, or where the quantity of such items or of functionally equivalent items purchased during the preceding fiscal year was $10,000 or more. ", "Changes in 2018 Farm Bill: The 2018 farm bill ( P.L. 115-334 ) extended the Biobased Markets Program through FY2023, while adding some new implementation requirements. It requires the Secretary to update the eligibility criteria for determining which renewable chemicals will qualify for a \"USDA Certified Biobased Product\" label. The farm bill requires the Secretary and the Secretary of Commerce to develop North American Industry Classification System (NAICS) codes for both renewable chemical manufacturers and biobased product manufacturers, and for the Secretary to establish a national registry of testing centers for biobased products. The bill also requires USDA to establish an expedited approval process for products to be determined eligible for the procurement program and to receive a biobased product label. The farm bill prohibits a procuring agency from establishing procurement guidelines for biobased products that are more restrictive than what the Secretary has established.", "Funding: The 2018 farm bill authorized mandatory CCC funding of $3 million for each of FY2019-FY2023 for biobased products testing and labeling. Discretionary funding of $3 million was authorized to be appropriated for each of FY2019-FY2023. However, through FY2019 no discretionary funding has been appropriated for the Biobased Markets Program. "], "subsections": []}, {"section_title": "7 U.S.C. 8103: Biorefinery, Renewable Chemical, and Biobased Product Manufacturing Assistance Program", "paragraphs": ["Administered by: Rural Business and Cooperative Service, Rural Development Agency (RD), USDA in consultation with DOE.", "Program Overview : Originally called the Biorefinery Assistance Program (BAP) as authorized in the 2008 farm bill, this program assists in the development of new and emerging technologies for advanced biofuels, renewable chemicals, and biobased products. Competitive grants and loan guarantees are available for construction and/or retrofitting of demonstration-scale biorefineries to demonstrate the commercial viability of one or more processes for converting renewable biomass to advanced biofuels. Biorefinery grants can provide for up to 30% of total project costs. Each loan guarantee is limited to $250 million or 80% of project cost (7 U.S.C. \u00c2\u00a78103). Mandatory funds are used for the loan guarantee portion of BAP, whereas discretionary appropriations are to be used to fund grants. With no appropriation of discretionary funds for BAP during the life of the 2008 farm bill, Congress permitted USDA to move forward with only the loan guarantee portion of BAP. Rural Development administers the program under 7 C.F.R. \u00c2\u00a74279, Subpart C, and 7 C.F.R. \u00c2\u00a74287, Part D. ", "For loan guarantees, project lenders (not prospective borrowers) must submit the application. Each loan guarantee application undergoes at least three rounds of review, including review by the Rural Development Agency, USDA; the National Renewable Energy Laboratory (NREL), DOE; and the Office of the Chief Economist (OCE), USDA. ", "Changes in 2018 Farm Bill: The 2018 farm bill ( P.L. 115-334 ) extended the program through FY2023. It expanded the definition of eligible technology to include technologies that produce one or more of the following, or a combination thereof: an advanced biofuel, a renewable chemical, or a biobased product.", "Funding: The 2018 farm bill authorized mandatory CCC funding of $50 million for FY2019 and $25 million for FY2020 for the cost of loan guarantees. Discretionary funding of $75 million was authorized to be appropriated for each of FY2019-FY2023. No discretionary funds have been appropriated through FY2019. "], "subsections": []}, {"section_title": "7 U.S.C. 8104: Repowering Assistance Program (RAP) (Repealed)", "paragraphs": ["Administered by: Rural Business and Cooperative Service, RD, USDA.", "Program Overview : The Repowering Assistance Program (RAP) was originally established under the 2008 farm bill to encourage biorefineries to replace fossil fuels with renewable biomass as the feedstock. RAP made payments to eligible biorefineries (i.e., those in existence on the date of enactment of the 2008 farm bill, June 18, 2008) to encourage the use of renewable biomass as a replacement for fossil fuels used to provide heat for processing or power in the operation of these eligible biorefineries. ", "Changes in 2018 Farm Bill: The Repowering Assistance Program was repealed. "], "subsections": []}, {"section_title": "7 U.S.C. 8105: Bioenergy Program for Advanced Biofuels", "paragraphs": ["Administered by: Rural Business and Cooperative Service, RD, USDA.", "Program Overview : Originally created by a 1999 executive order during the Clinton Administration, the bioenergy program provided mandatory CCC incentive payments to biofuels producers based on year-to-year increases in the quantity of biofuel produced. The 2008 farm bill established a new Bioenergy Program for Advanced Biofuels to support and expand production of advanced biofuels\u00e2\u0080\u0094that is, fuel derived from renewable biomass other than corn kernel starch\u00e2\u0080\u0094under which USDA would enter into contracts with advanced biofuel producers to pay them for production of eligible advanced biofuels. The policy goal is to create long-term, sustained increases in advanced biofuels production. Payments are of two types: one based on actual production, and a second based on incremental production increases. Not more than 5% of the funds in any year can go to facilities with total refining capacity exceeding 150 million gallons per year ( 7 C.F.R. Part 4288, Subpart B ).", "Changes in 2018 Farm Bill: The 2018 farm bill ( P.L. 115-334 ) extended the program through FY2023. It modifies the equitable distribution portion of the program by limiting the amount of payments for advanced biofuel produced from a single eligible commodity to not exceed one-third of the total program funding available in a fiscal year.", "Funding: The 2018 farm bill authorized mandatory CCC funding of $7 million for each of FY2019-FY2023. Discretionary funding of $20 million was authorized to be appropriated for each of FY2019-FY2023. However, no discretionary funding has been appropriated for the Bioenergy Program for Advanced Biofuels program through FY2019. "], "subsections": []}, {"section_title": "7 U.S.C. 8106: Biodiesel Fuel Education Program", "paragraphs": ["Administered by: National Institute of Food and Agriculture (NIFA) and Office of Energy Policy and New Uses (OEPNU), OCE, USDA.", "Program Overview : Originally established under the 2002 farm bill, the Biodiesel Fuel Education Program was extended by the 2008, 2014, and 2018 farm bills (7 U.S.C. \u00c2\u00a78106). The Biodiesel Fuel Education Program awards competitive grants to nonprofit organizations that educate governmental and private entities that operate vehicle fleets, and educates the public about the benefits of biodiesel fuel use. The program is implemented by USDA through continuation grants. The final rule for the program was published on September 30, 2003 (68 Fed eral Reg ister 56137).", "Changes in 201 8 Farm Bill : Extended the Biodiesel Fuel Education Program from FY2019 through FY2023 without changes to program implementation other than new funding levels. ", "Funding: The 2018 farm bill provides no mandatory funding for the program. Discretionary funding of $2 million is authorized to be appropriated for each of FY2019-FY2023. However, through FY2019 no discretionary funding has been provided. "], "subsections": []}, {"section_title": "7 U.S.C. 8107: Rural Energy for America Program (REAP)", "paragraphs": ["Administered by: Rural Business and Cooperative Service, Rural Development, USDA.", "Program Overview: The 2008 farm bill combined elements of two existing programs from the 2002 farm bill\u00e2\u0080\u0094the Energy Audit and Renewable Energy Development Program and the Renewable Energy Systems and Energy Efficiency Improvements Program\u00e2\u0080\u0094into a single program renamed the Rural Energy for America Program (REAP) (7\u00c2\u00a0U.S.C. \u00c2\u00a78107). ", "REAP provides various types of financial assistance under a cost-share arrangement for the following purposes: ", "grants, guaranteed loans, and combined grants and guaranteed loans for the development and construction of renewable energy systems (RES) and for energy efficiency improvement (EEI) projects (eligible entities include rural small businesses and agricultural producers); grants for conducting energy audits and for conducting renewable energy development assistance (eligible entities include state, tribe, or local governments; land-grant colleges and universities; rural electric cooperatives; and public power entities); and grants for conducting renewable energy systems (RES) feasibility studies (eligible entities include rural small businesses and agricultural producers).", "The cost share feature of REAP limits the government's contribution to no more than 75% of eligible project costs for RES systems and EEI funding for combined grant and loan guarantees, and to no more than 25% for grants. Under energy audit and renewable energy development assistance grants, a grantee must pay a minimum of 25% of the cost of the energy audit. RES systems include those that generate energy from biomass (but excluding any mechanism for dispensing energy at retail\u00e2\u0080\u0094e.g., a blender pump), anaerobic digesters, geothermal, hydrogen, solar, wind, and hydropower. EEI projects typically involve installing or upgrading equipment to significantly reduce energy use. REAP operates under regulations published under 7 C.F.R. Part 4280, subpart B. ", "Changes in 2018 Farm Bill: The 2018 farm bill extends the program through FY2023. It amends the financial assistance for energy efficiency improvements and renewable energy systems section to include certain limitations for loan guarantees to purchase and install energy-efficient equipment or agricultural production or processing systems. Additionally, it limits funds for loan guarantees for energy-efficient equipment to agricultural producers to not exceed 15% of the annual funding provided to the program.", "Funding: The 2018 farm bill retains mandatory CCC funding of $50 million for FY2014 and each fiscal year thereafter (thus, unlike other farm bill renewable energy programs, REAP's mandatory funding authority does not expire with the 2018 farm bill). Mandatory funds are to remain available until expended. Discretionary funding is authorized to be appropriated at $20 million annually for each of FY2019-FY2023. Discretionary funding of $335,000 was appropriated for FY2019. "], "subsections": []}, {"section_title": "7 U.S.C. 8107a: Rural Energy Savings Program", "paragraphs": ["Administered by: Rural Utilities Service, Rural Development, USDA.", "Program Overview : The Rural Energy Savings Program (7 U.S.C. \u00c2\u00a78107a) provides loans to qualified consumers to implement durable cost-effective energy-efficiency measures. The program was established in the 2014 farm bill. Loans are to be made to eligible entities that agree to use the loan funds to make loans to qualified consumers. Eligible entities include public power districts and public utility districts, among other entities. Loans to eligible entities are offered with no interest. Loan repayment by an eligible entity may not exceed 20 years from the loan's closing date, with an exception for special advances for start-up activities. A qualified consumer is a consumer served by an eligible entity with the ability to repay the loan.", "Changes in 2018 Farm Bill: The 2018 farm bill extends the program through FY2023. It modifies the definition of energy-efficiency measures to include cost-effective on- or off-grid renewable energy or energy storage systems. It amends the program such that the debt incurred by a borrower under this program may not be included when determining the borrower's eligibility for loans under programs authorized by the Rural Electrification Act of 1936. It requires the Secretary to streamline the accounting requirements on borrowers. Loans from eligible entities to qualified consumers may bear interest, not to exceed 5%, and must be used for certain purposes (e.g., to establish a loan loss reserve). Additionally, it requires the Secretary to publish an annual report containing the number of program applications received, the number of loans made to eligible entities, and the recipients of the loans.", "Funding: The 2018 farm bill provides no mandatory funding for the program. Discretionary funding of $75 million is authorized to be appropriated for each of FY2019-FY2023. The program received $10 million in discretionary funding for FY2019. "], "subsections": []}, {"section_title": "7 U.S.C. 8108: Biomass Research and Development Initiative (BRDI)", "paragraphs": ["Administered by: National Institute of Food and Agriculture (NIFA), USDA, and DOE, jointly.", "Program Overview : BRDI\u00e2\u0080\u0094created originally under the Biomass Research and Development Act of 2000 (BRDA; P.L. 106-224 )\u00e2\u0080\u0094seeks to foster significant commercial production of biofuels, biobased energy innovations, development of biobased feedstocks, and biobased products and processes, including cost-competitive cellulosic ethanol. To this end, the program provides competitive funding in the form of grants, contracts, and financial assistance for research, development, and demonstration of technologies and processes. Eligibility is limited to institutions of higher learning, national laboratories, federal or state research agencies, private-sector entities, and nonprofit organizations.", "BRDI provides for coordination of biomass research and development, including life-cycle analysis of biofuels, between USDA and DOE by creating the Biomass Research and Development Board to coordinate government activities in biomass research, and the Biomass Research and Development Technical Advisory Committee to advise on proposal direction and evaluation. The 2008 farm bill moved BRDA in statute to Title IX of the 2008 farm bill and expanded the BRDI technical advisory committee (7 U.S.C. \u00c2\u00a78108).", "Since 2002 USDA and DOE jointly have announced annual solicitations and awards of funding allocations under BRDI. Pursuant to the 2008 farm bill, applicants seeking BRDI funding must propose projects that integrate science and engineering research in the following three technical areas that are critical to the broader success of alternative biofuels production: feedstock development, biofuels and biobased products development, and biofuels development analysis. A minimum of 15% of funding must go to each area. The minimum cost-share requirement for demonstration projects was increased in the 2018 farm bill to 50%, and for research projects to 20%. ", "Changes in 2018 Farm Bill: The 2018 farm bill extends the program through FY2023. It amends the definition of biobased product to include carbon dioxide, and it requires the initiative's technical advisory committee to include an individual with expertise in carbon capture, utilization, and storage. Further, it expands the objectives of the initiative to include the development of high-value biobased products that permanently sequester or utilize carbon dioxide. It also expands the technical areas of the initiative to include the biofuels and biobased products development of technologies that permanently sequester or utilize carbon dioxide.", "Funding: The 2018 farm bill provides no mandatory funding for the program. Discretionary funding of $20 million is authorized to be appropriated for each of FY2019-FY2023. However, no discretionary funding has been appropriated for BRDI through FY2019. "], "subsections": []}, {"section_title": "7 U.S.C. 8109: Rural Energy Self-Sufficiency Initiative (Repealed)", "paragraphs": ["Administered by: Rural Business and Cooperative Service, RD, USDA.", "Program Overview : The 2008 farm bill authorized the Rural Energy Self-Sufficiency Initiative to assist rural communities with community-wide energy systems that reduce conventional energy use and increase the use of energy from renewable sources. Grants were to be made available to assess energy use in a rural community, evaluate ideas for reducing energy use, and develop and install integrated renewable energy systems. Grants were not to exceed 50% of the total cost of the activity (7 U.S.C. \u00c2\u00a78109). No funding was ever appropriated, and regulations were never announced for this program. No provision was included in the 2014 farm bill for the Rural Energy Self-Sufficiency Initiative, with the result that program funding authority expired after FY2013.", "Changes in 2018 Farm Bill: The Rural Energy Self-Sufficiency Initiative was repealed."], "subsections": []}, {"section_title": "7 U.S.C. 8110: Feedstock Flexibility Program (FFP) for\u00c2 Bioenergy\u00c2 Producers", "paragraphs": ["Administered by: Farm Service Agency (FSA), USDA.", "Program Overview : Under the 2008 farm bill, the FFP required that USDA establish and administer a sugar-for-ethanol program using sugar intended for food use but deemed to be in surplus. USDA would subsidize the use of sugar for ethanol production through federal purchases of surplus sugar for resale to ethanol producers. USDA would implement the program only in those years where purchases are determined to be necessary to ensure that the sugar program operates at no cost to the federal government (7 U.S.C. \u00c2\u00a78110).", "The intent of the FFP is to provide the CCC a tool for avoiding sugar forfeitures. Under the sugar program, domestic sugar beet or sugarcane processors may borrow from the CCC, pledging their sugar production as collateral for any such loan, and then satisfy their loans either by repaying the loan on or before loan maturity, or by transferring the title for the collateral to the CCC immediately following loan maturity, also known as ''forfeiture'' of collateral (as specified in 7 C.F.R.\u00c2\u00a0\u00c2\u00a71435). The CCC is required to operate the sugar program, to the maximum extent practicable, at no cost to the federal government, by avoiding forfeitures to CCC. If domestic sugar market conditions are such that market rates are less than forfeiture level (i.e., forfeitures appear likely), current law requires CCC to use FFP to purchase sugar and sell such sugar to bioenergy producers to avoid forfeitures.", "The FFP became effective upon publication of the final rule by USDA in the Federal Register on July 29, 2013. By late July 2013, U.S. sugar prices were below effective federal support levels, compelling USDA to activate FFP on August 15, 2013, and use an estimated $148 million of CCC funds to avoid possible sugar forfeitures. No outlays have been required since 2013.", "Changes in 201 8 Farm Bill : Extended the FFP through FY2023 with no changes to program implementation.", "Funding: The 2018 farm bill extends the mandatory funding authority of such sums as necessary through FY2023. The CBO baseline does not project any outlays for the program. Discretionary funding is not authorized for the program."], "subsections": []}, {"section_title": "7 U.S.C. 8111: Biomass Crop Assistance Program (BCAP)", "paragraphs": ["Administered by: Farm Service Agency (FSA), USDA.", "Program Overview : BCAP provides financial assistance to owners and operators of agricultural land and nonindustrial private forest land who wish to establish, produce, and deliver biomass feedstocks to eligible processing plants. BCAP provides two categories of assistance: ", "1. establishment and annual payments , including a one-time payment of up to 50% of the cost of establishment for perennial crops, and annual payments (i.e., rental rates based on a set of criteria) of up to five years for nonwoody and 15 years for woody perennial biomass crops; and 2. matching payments , at a rate of $1 for each $1 per ton provided, up to $20 per ton, for a period of two years, which may be available to help eligible material owners with collection, harvest, storage, and transportation (CHST) of eligible material for use in a qualified biomass conversion facility. ", "Establishment and annual payments are available to certain producers who enter into contracts with USDA to produce eligible biomass crops on contract acres within designated BCAP project areas. Eligible land for BCAP project area contracts includes agricultural land and nonindustrial private forestland, but does not include federal or state-owned land, or land that is native sod. Lands enrolled in existing land retirement programs for conservation purposes\u00e2\u0080\u0094the Conservation Reserve Program (CRP) or the Agricultural Conservation Easement Program (ACEP)\u00e2\u0080\u0094also become eligible during the fiscal year that their land retirement contract expires. Generally, crops that receive payments under Title I (the commodity title) of the farm bill (e.g., corn, wheat, rice, and soybeans) and noxious weeds or invasive species are not eligible for annual payments.", "Matching payments are available to eligible material owners who deliver eligible material to qualified biomass conversion facilities. Eligible material must be harvested directly from the land and separate from a higher-value product (e.g., Title I crops). Invasive and noxious species are considered eligible material, and land ownership (private, state, federal, etc.) is not a limiting factor to receive matching payments (7 U.S.C. \u00c2\u00a78111). ", "The 2014 farm bill changed enrolled land eligibility by including land under expiring CRP or ACEP easement contracts. It also included residue from crops receiving Title I payments as eligible material, but extended exclusion to any whole grain from a Title I crop, as well as bagasse and algae. One-time establishment payments were limited to no more than 50% of cost of establishment from 75% previously, not to exceed $500 per acre ($750 per acre for socially disadvantaged farmers or ranchers). CHST matching payments may not exceed $20 per dry ton (down from $45 per dry ton) and are available for a two-year period. CHST funding shall be available for technical assistance. Not less than 10% or more than 50% of funding may be used for CHST. Not later than four years after enactment of the 2014 farm bill, USDA is to submit to the House and Senate Agriculture Committees a report on best practices from participants receiving assistance under BCAP.", "Changes in 2018 Farm Bill: The 2018 farm bill extends the program through FY2023. The 2018 farm bill expands the definition for eligible material to include algae. ", "Funding: The 2018 farm bill provides no mandatory funding for the program. Discretionary funding of $25 million is authorized to be appropriated for each of FY2019-FY2023. No discretionary funding was provided for FY2019. "], "subsections": []}, {"section_title": "7 U.S.C. 8112: Forest Biomass for Energy (Repealed)", "paragraphs": ["Administered by: Forest Service, USDA.", "Program Overview : The 2008 farm bill authorized the Forest Biomass for Energy program to function as a research and development program to encourage use of forest biomass for energy. The Forest Service, other federal agencies, state and local governments, Indian tribes, land-grant colleges and universities, and private entities were to be eligible to compete for program funds. Priority was to be given to projects that use low-value forest byproduct biomass for the production of energy; develop processes to integrate bioenergy from forest biomass into existing manufacturing streams; develop new transportation fuels; and improve the growth and yield of trees for renewable energy (7 U.S.C. \u00c2\u00a78112). In the end, the Forest Service never announced any regulations for this program.", "Changes in 201 4 Farm Bill : The Forest Biomass for Energy program was repealed. "], "subsections": []}, {"section_title": "7 U.S.C. 8113: Community Wood Energy and Wood Innovation Program", "paragraphs": ["Administered by: Forest Service, USDA.", "Program Overview : The 2008 farm bill authorized the Community Wood Energy Program to provide matching grants\u00e2\u0080\u0094up to $50,000 and subject to a match of at least 50%\u00e2\u0080\u0094to state and local governments to acquire community wood energy systems for public buildings. Under the 2008 and 2014 farm bills, participants were to implement a community wood energy plan to meet energy needs with reduced carbon intensity through conservation, reduced costs, utilizing low-value wood sources, and increased awareness of energy consumption (7 U.S.C. \u00c2\u00a78113). The 2014 farm bill defined a Biomass Consumer Cooperative and authorized grants of up to $50,000 to be made to establish or expand biomass consumer cooperatives that would provide consumers with services or discounts relating to the purchase of biomass heating systems or products (including their delivery and storage); and required that any biomass consumer cooperative that received a grant match at least the equivalent of 50% of the funds toward the establishment or expansion of a biomass consumer cooperative.", "Changes in the 2018 Farm Bill: The 2018 farm bill extends the program through FY2023. The 2018 farm bill changes the name to the Community Wood Energy and Wood Innovation Program, and modifies the scope of the program and participant requirements. The program provides financial assistance for the installation of community wood energy systems or building an innovative wood product facility. In short, the 2018 farm bill defines a community wood energy system as a system that produces thermal energy or combined thermal energy and electricity, services public facilities owned or operated by state or local governments, and uses woody biomass. The capacity of the community wood energy system shall not exceed 5 megawatts of thermal energy or combined thermal and electric energy. In short, an innovative wood product facility is defined as a manufacturing or processing plant or mill that produces building components that use large panelized wood (including mass timber), wood products from nanotechnology, or other innovative wood products that use low-value, low-quality wood. ", "The 2018 farm bill removes the requirements for participants to implement a community wood energy plan and the requirements for biomass consumer cooperatives. Cost-share grants may cover up to 35% of the capital cost of the system or facility, and, for special circumstances, up to 50%. The Secretary is required to take into account certain selection criteria for awarding grants (e.g., energy efficiency, cost effectiveness, displacement of fossil fuel generation). The Secretary is to give priority to grant applicants that use the most stringent control technology for a wood-fired boiler; would be carried out in a location where markets are needed for low-value, low-quality wood; would be carried out in a location with limited access to natural gas pipelines; would include the use or retrofitting of existing sawmill facilities that meet certain conditions; and would be carried out in a location where the project will aide with forest restoration. A maximum of 25% of the funds for the program for a fiscal year may go toward grants for innovative wood facilities, unless the Secretary has received an insufficient number of community wood energy system proposals.", "Funding: The 2018 farm bill provides no mandatory funding for the program. Discretionary funding of $25 million is authorized to be appropriated for each of FY2019-FY2023. No funds have been appropriated through FY2019."], "subsections": []}, {"section_title": "7 U.S.C. 8114: Sun Grant Program", "paragraphs": ["Administered by: NIFA, USDA. Each regional Sun Grant center manages the programs and activities within its region, although a process based on peer and merit review is used to administer grants.", "Program Overview: Created under the 2008 farm bill, the Sun Grant Initiative (SGI) is a national network of land-grant universities and federally funded laboratories coordinated through regional Sun Grant centers. The centers receive funding to enhance national energy security using biobased energy technologies, to promote diversification and environmental sustainability of agricultural production through biobased energy and product technologies, to promote economic diversification in rural areas through biobased energy and product technologies, and to enhance the efficiency of bioenergy and biomass research and development programs. Competitive grants are available to land-grant schools within each region to be used toward integrated, multistate research, extension, and education programs on technology development and implementation.", "The Sun Grant Program is an offshoot of the Sun Grant Research Initiative Act of 2003 (\u00c2\u00a7778, Consolidated Appropriations Act, 2004; P.L. 108-199 ), which was created subsequent to the 2002 farm bill. The initiative was originally established with five Sun Grant research centers based at land-grant universities, each covering a different region, to enhance coordination and collaboration among USDA, DOE, and land-grant universities in the development, distribution, and implementation of biobased energy technologies. The 2008 farm bill established the Sun Grant Program and added a sixth regional center (7 U.S.C. \u00c2\u00a78114). NIFA administers the program under 7 C.F.R. part 3430. The 2014 farm bill extended the Sun Grant Program with its discretionary funding authority (i.e., subject to appropriations) of $75 million annually through FY2018. It also consolidated and amended the Sun Grant Program to expand input from other appropriate federal agencies and replace authority for gasification research with bioproducts research and makes the program competitive by removing designation of certain universities as regional centers.", "Changes in 201 8 Farm Bill: Extended the Sun Grant Program through FY2023 with no changes to program implementation.", "Funding: The 2018 farm bill provides no mandatory funding for the program. Discretionary funding of $75 million is authorized to be appropriated for each of FY2019-FY2023. The program received $3 million in discretionary funding for FY2019."], "subsections": []}, {"section_title": "7 U.S.C. 8115: Carbon Utilization and Biogas Education Program", "paragraphs": ["Administered by: USDA, in consultation with DOE.", "Program Overview: The 2018 farm bill establishes a carbon utilization and biogas education program. It requires the Secretary to award competitive grants to eligible entities for two purposes: (1) education to the public and biogas producers about the benefits of carbon utilization and sequestration, and (2) education about the opportunities to aggregate multiple sources of organic waste into a single biogas system. ", "Changes in 2018 Farm Bill: The program was established in the 2018 farm bill. ", "Funding: The 2018 farm bill provides no mandatory funding for the program. Discretionary funding of $2 million is authorized to be appropriated for each of FY2019-FY2023. No funds have been appropriated through FY2019."], "subsections": [{"section_title": "Appendix. Supplementary Tables", "paragraphs": [], "subsections": []}]}]}]}}
{"id": "R45870", "title": "Defense Spending Under an Interim Continuing Resolution: In Brief", "released_date": "2019-08-15T00:00:00", "summary": ["This report provides a basic overview of interim continuing resolutions (CRs) and highlights some specific issues pertaining to operations of the Department of Defense (DOD) under a CR.", "DOD has started the fiscal year under a CR for 13 of the past 18 years (FY2002-FY2019) and every year since FY2010 excluding FY2019. The amount of time DOD has operated under CR authorities during the fiscal year has tended to increase in the past 10 years and equates to a total of more than 39 months since 2010.", "As with regular appropriations bills, Congress can draft a CR to provide funding in many ways. Under current practice, a CR is an appropriation that provides either interim or full-year funding by referencing a set of established funding levels for the projects and activities that it funds (or covers ). Such funding may be provided for a period of days, weeks, or months and may be extended through further continuing appropriations until regular appropriations are enacted, or until the fiscal year ends. In recent fiscal years, the referenced funding level on which interim or full-year continuing appropriations has been based was the amount of budget authority that was available under specified appropriations acts from the previous fiscal year.", "CRs may also include provisions that enumerate exceptions to the duration, amount, or purposes for which those funds may be used for certain appropriations accounts or activities. Such provisions are commonly referred to as anomalies . The purpose of anomalies is to preserve Congress's constitutional prerogative to provide appropriations in the manner it sees fit, even in instances when only interim funding is provided.", "The lack of a full-year appropriation and the uncertainty associated with the temporary nature of a CR can create management challenges for federal agencies. DOD faces unique challenges operating under a CR while providing the military forces needed to deter war and defend the country. For example, an interim CR may prohibit an agency from initiating or resuming any project or activity for which funds were not available in the previous fiscal year (i.e., prohibit the use of procurement funds for \"new starts,\" that is, programs for which only R&D funds were appropriated in the previous year). Such limitations in recent CRs have affected a large number of DOD programs. Before the beginning of FY2018, DOD identified approximately 75 weapons programs that would be delayed by the FY2018 CR's prohibition on new starts and nearly 40 programs that would be affected by a restriction on production quantity.", "In addition, Congress may include provisions in interim CRs that place limits on the expenditure of appropriations for programs that spend a relatively high proportion of their funds in the early months of a fiscal year. Also, if a CR provides funds at the rate of the prior year's appropriation, an agency may be provided additional (even unneeded) funds in one account, such as research and development, while leaving another account, such as procurement, underfunded.", "By its very nature, an interim CR limits an agency's ability to take advantage of efficiencies through bulk buys and multi-year contracts. It can foster inefficiencies by requiring short-term contracts that must be reissued once additional funding is provided, requiring additional or repetitive contracting actions. On the other hand, there is little evidence one way or the other as to whether the military effectiveness of U.S. forces has been fundamentally degraded by the limitations imposed by repeated CRs of months-long duration."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Background", "paragraphs": ["Congress uses an annual appropriations process to fund the routine activities of most federal agencies. This process anticipates the enactment of 12 regular appropriations bills to fund these activities before the beginning of the fiscal year. When this process has not been completed before the start of the fiscal year, one or more continuing appropriations acts (commonly known as continuing resolutions or CRs) can be used to provide interim funding pending action on the regular appropriations. ", "DOD has started the fiscal year under a CR for 13 of the past 18 years (FY2002-FY2019) and every year since FY2010 excluding FY2019. DOD has operated under a CR for an average of 119 days per year during the period FY2010-FY2019 compared to an average of 32 days per year during the period FY2002-FY2009 (see Figure 1 ). ", "All told, since 2010, DOD has spent 1,186 days\u00e2\u0080\u0094more than 39 months\u00e2\u0080\u0094operating under a CR, compared to 259 days\u00e2\u0080\u0094less than 9 months\u00e2\u0080\u0094during the 8 years preceding 2010.", "To preserve congressional prerogatives to shape federal spending in the regular appropriations bills, the eventual enactment of which is expected, CRs typically contain limitations intended to allow execution of funds in a manner that provides for continuation of projects and activities with relatively few departures from the way funds were allocated in the previous fiscal year.", "However, DOD funding needs typically change from year to year across the agency's dozens of appropriations accounts for a variety of reasons, including emerging, increasing, or decreasing threats to national security. If accounts\u00e2\u0080\u0094and activities within accounts\u00e2\u0080\u0094are funded by a CR at a lower level than was requested in the pending Administration budget, then DOD cannot obligate funds at the anticipated rate. This can restrict planned personnel actions, maintenance and training activities, and a variety of contracted support actions. Delaying or deferring such actions can also cause a ripple effect, generating personnel shortages, equipment maintenance backlogs, oversubscribed training courses, and a surge in end-of-year contract spending.", "Given the frequency of CRs in recent years, many DOD program managers and senior leaders work well in advance of the outcome of annual decisions on appropriations to minimize contracting actions planned for the first quarter of the coming fiscal year. The Defense Acquisition University, DOD's education service for acquisition program management, advises students that, \"[m]embers of the [Office of the Secretary of Defense], the Services and the acquisition community must consider late enactment to be the norm [emphasis in original] rather than the exception and, therefore, plan their acquisition strategy and obligation plans accordingly.\" ", "In anticipation of such a delay in the availability of full funding for programs, DOD managers can build program schedules in which planned contracting actions are pushed to later in the fiscal year when it is more likely that a full appropriation will have been enacted. Additionally, managers can take steps to defer hiring actions, restrict travel policies, or cancel nonessential education and training events for personnel to keep their spending within the confines of a CR.", "On their face, CRs are disruptive to routine agency operations and many of the procedures used by agencies to deal with limitations imposed by a CR entail costs. However, even though these disruptions have been routine for more than a decade, there has been little systematic analysis of the extent to which theses disruptions have led to measurable and significantly adverse impacts on U.S. military preparedness over the long run."], "subsections": [{"section_title": "Funding Available Under a CR", "paragraphs": ["An interim continuing resolution typically provides that budget authority is available at a certain rate of operations or funding rate for the covered projects and activities and for a specified period of time. The funding rate for a project or activity is based on the total amount of budget authority that would be available annually at the referenced funding level and is prorated based on the fraction of a year for which the interim CR is in effect.", "In recent fiscal years, the referenced funding level has been the amount of budget authority that was available under specified appropriations acts from the previous fiscal year, or that amount modified by some formula. For example, the first CR for FY2018 ( H.R. 601 \\ P.L. 115-56 ) provided, \"... such amounts as may be necessary, at a rate of operations as provided in the applicable appropriations Acts for fiscal year 2017 ... minus 0.6791%\" (Division D, Section 101). ", "While recent CRs typically have provided that the funding rates for certain accounts are to be calculated with reference to the funding rates in the previous year, Congress could establish a CR funding rate on any basis (e.g., the President's pending budget request, the appropriations bill for the pending year as passed by the House or Senate, or the bill for the pending year as reported by a committee of either chamber)."], "subsections": [{"section_title": "Full Text Versus Formulaic CRs", "paragraphs": ["CRs have sometimes provided budget authority for some or all covered activities by incorporating the text of one or more regular appropriations bills for the current fiscal year. When this form of funding is provided in a CR or other type of annual appropriations act, it is often referred to as full text appropriations . ", "When full text appropriations are provided, those covered activities are not funded by a rate for operations, but by the amounts specified in the incorporated text. This full text approach is functionally equivalent to enacting regular appropriations for those activities, regardless of whether that text is enacted as part of a CR. The \"Department of Defense and Full-Year Continuing Appropriations Act, FY2011\" ( P.L. 112-10 ) is one recent example. For DOD, the text of a regular appropriations bill was included as Division A, thus funding those covered activities via full text appropriations. In contrast, Division B of the bill provided funding for the projects and activities that normally would have been funded in the remaining eleven FY2011 regular appropriations according to a formula based on the previous fiscal year's appropriations laws.", "If formulaic interim or full-year continuing appropriations were to be enacted for DOD, the funding levels for both base defense appropriations and Overseas Contingency Operations (OCO) spending could be determined in a variety of ways. A separate formula could be established for defense spending, or the defense and nondefense spending activities could be funded under the same formula. Likewise, the level of OCO spending under a CR could be established by the general formula that applies to covered activities (as discussed above), or by providing an alternative rate or amount for such spending. For example, the first CR for FY2013 ( P.L. 112-175 ) provided the following with regard to OCO funding:", "Whenever an amount designated for Overseas Contingency Operations/Global War on Terrorism pursuant to Section 251(b)(2)(A) of the Balanced Budget and Emergency Deficit Control Act of 1985 (in this section referred to as an \"OCO/GWOT amount\") in an Act described in paragraph (3) or (10) of subsection (a) that would be made available for a project or activity is different from the amount requested in the President's fiscal year 2013 budget request, the project or activity shall be continued at a rate for operations that would be permitted by ... the amount in the President's fiscal year 2013 budget request."], "subsections": []}]}, {"section_title": "Additional Limitations that CRs May Impose", "paragraphs": ["CRs may contain limitations that are generally written to allow execution of funds in a manner that provides for minimal continuation of projects and activities in order to preserve congressional prerogatives prior to the time a full appropriation is enacted. As an example, an interim CR may prohibit an agency from initiating or resuming any project or activity for which funds were not available in the previous fiscal year. Congress has, in practice, included a specific section (usually Section 102) in the CR to expressly prohibit DOD from starting production on a program that was not funded in prior years (i.e., a new start ), and from increasing production rates above levels provided in the prior year. Congress may also limit certain contractual actions such as multiyear procurement contracts. ", "Figure 2. Air Force Appropriations for Combat Rescue Helicopter", "An interim CR that uses the same formula to specify a funding rate for different appropriations accounts may cause problems for programs funded by more than one account, if the ratio of funding between the accounts changes from one year to the next. For example, as the Air Force program to procure a new combat rescue helicopter transitions from development to production between FY2019 and FY2020, the amount requested for R&D dropped by about $200 million while the amount requested for procurement rose by a 12-percent larger amount. Although the total amount requested for the program in FY2020 is thus $25 million higher than the total appropriated in FY2019, a CR that continued the earlier year's funding for the program would problematic: The nearly $200 million in excess R&D money could not be used to offset the more than $200 million shortfall in procurement funding, absent specific legislative relief. This kind of mismatch at the account level between the request and the CR is sometimes referred to as an issue with the color of money ."], "subsections": []}, {"section_title": "Anomalies", "paragraphs": ["Even though CRs typically provide funds at a particular rate, CRs may also include provisions that enumerate exceptions to the duration, amount, or purposes for which those funds may be used for certain appropriations accounts or activities. Such provisions are commonly referred to as anomalies . The purpose of anomalies is to insulate some operations from potential adverse effects of a CR while providing time for Congress and the President to agree on full-year appropriations and avoiding a government shutdown.", "A number of factors could influence the extent to which Congress decides to include such additional authority or flexibility for DOD under a CR. Consideration may be given to the degree to which funding allocations in full-year appropriations differ from what would be provided by the CR. Prior actions concerning flexibility delegated by Congress to DOD may also influence the future decisions of Congress for providing additional authority to DOD under a longer-term CR. In many cases, the degree of a CR's impact can be directly related to the length of time that DOD operates under a CR. While some mitigation measures (anomalies) might not be needed under a short-term CR, longer-term CRs may increase management challenges and risks for DOD. ", "An anomaly might be included to stipulate a set rate of operations for a specific activity, or to extend an expiring authority for the period of the CR. For example, the second CR for FY2017 ( H.R. 2028 \\ P.L. 114-254 ) granted three anomalies for DOD:", "Section 155 funded the Columbia Class Ballistic Missile Submarine Program ( Ohio Replacement) at a specific rate for operations of $773,138,000. Section 156 allowed funding to be made available for multi-year procurement contracts, including advance procurement, for the AH\u00e2\u0080\u009364E Attack Helicopter and the UH\u00e2\u0080\u009360M Black Hawk Helicopter. Section 157 provided funding for the Air Force's KC-46A Tanker, up to the rate for operations necessary to support the production rate specified in the President's FY2017 budget request (allowing procurement of 15 aircraft, rather the FY2016 rate of 12 aircraft). ", "In anticipation of an FY2018 CR, DOD submitted a list of programs that would be affected under a CR to the Office of Management and Budget (OMB). This \"consolidated anomalies list\" included approximately 75 programs that would be delayed by a prohibition on new starts and nearly 40 programs that would be negatively affected by a limitation on production quantity increases. ", "OMB may or may not forward such a list to Congress as a formal request for consideration. Arguably, to the extent that anomalies make a CR more tolerable to an agency, they may reduce the incentive for Congress to reach a budget agreement. According to Mark Cancian, a defense budget analyst at the Center for Strategic and International Studies, \"a CR with too many anomalies starts looking like an appropriations bill and takes the pressure off.\"", "H.R. 601 ( P.L. 115-56 ), the initial FY2018 CR, did not include any anomalies to address the programmatic issues included on the DOD list. H.R. 601 was extended through March 23, 2018, by four measures. The fourth measure ( P.L. 115-123 ) included an anomaly to address concerns raised by the Air Force regarding the effects of the CR on certain FY2018 construction requirements."], "subsections": []}, {"section_title": "How Agencies Implement a CR", "paragraphs": ["After enactment of a CR, OMB provides detailed directions to executive agencies on the availability of funds and how to proceed with budget execution. OMB will typically issue a bulletin that includes an announcement of an automatic apportionment of funds that will be made available for obligation, as a percentage of the annualized amount provided by the CR.", "Funds usually are apportioned either in proportion to the time period of the fiscal year covered by the CR, or according to the historical, seasonal rate of obligations for the period of the year covered by the CR, whichever is lower. A 30-day CR might, therefore, provide 30 days' worth of funding, derived either from a certain annualized amount that is set by formula or from a historical spending pattern. In an interim CR, Congress also may provide authority for OMB to mitigate furloughs of federal employees by apportioning funds for personnel compensation and benefits at a higher rate for operations, albeit with some restrictions. ", "In 2017 testimony before the Senate Subcommittee on Federal Spending Oversight and Emergency Management, Committee on Homeland Security and Governmental Affairs, a senior Government Accountability Office (GAO) analyst remarked that CRs can create budget uncertainty and disruptions, complicating agency operations and causing inefficiencies. Director of Strategic Issues Heather Krause asserted that \"this presents challenges for federal agencies continuing to carry out their missions and plan for the future. Moreover, during a CR, agencies are often required to take the most limited funding actions.\" Krause testified that agency officials report taking a variety of actions to manage inefficiencies resulting from CRs, including shifting contract and grant cycles to later in the fiscal year to avoid repetitive work, and providing guidance on spending rather than allotting specific dollar amounts during CRs, to provide more flexibility and reduce the workload associated with changes in funding levels. ", "When operating under a CR, agencies encounter consequences that can be difficult to quantify, including additional obligatory paperwork, need for additional short-term contracting actions, and other managerial complications as the affected agencies work to implement funding restrictions and other limitations that the CR imposes. For example, the government can normally save money by buying in bulk under annual appropriations lasting a full fiscal year or enter into new contracts (or extend their options on existing agreements) to lock in discounts and exploit the government's purchasing power. These advantages may be lost when operating under a CR."], "subsections": []}]}, {"section_title": "Unique Implementation Challenges Faced by DOD", "paragraphs": ["All federal agencies face management challenges under a CR, but DOD faces unique challenges in providing the military forces needed to deter war and defend the country. In a letter to the leaders of the armed services committees dated September 8, 2017, then-Secretary of Defense James Mattis asserted that \"longer term CRs impact the readiness of our forces and their equipment at a time when security threats are extraordinarily high. The longer the CR, the greater the consequences for our force.\" DOD officials argue that the department depends heavily on stable but flexible funding patterns and new start activities to maintain a modernized force ready to meet future threats. Former Defense Secretary Ashton Carter posited that CRs put commanders in a \"straitjacket\" that limits their ability to adapt, or keep pace with complex national security challenges around the world while responding to rapidly evolving threats like the Islamic State."], "subsections": [{"section_title": "Prohibitions on Certain Contracting Actions", "paragraphs": ["As discussed, a CR typically includes a provision prohibiting DOD from initiating new programs or increasing production quantities beyond the prior year's rate. This can result in delayed development, production, testing, and fielding of DOD weapon systems. An inability to execute funding as planned can induce costly delays and repercussions in the complex schedules of weapons system development programs. Under a CR, DOD's ability to enter into planned long-term contracts is also typically restricted, thus forfeiting the program stability and efficiencies that can be gained by such contracts. Additionally, DOD has testified to Congress that CRs impact trust and confidence with suppliers, which may increase costs, time, and potential risk."], "subsections": []}, {"section_title": "Misalignments in CR-Provided Funding", "paragraphs": ["Because CRs constrain funding by appropriations account rather than by program, DOD may encounter significant issues with programs that draw funds from several accounts. Already mentioned, above, is the color of money issue that can arise when a weapons program transitions from development into production. In such cases, the program could have excess R&D funding (based on the prior year's appropriation) and a shortfall in procurement funds needed to ramp up production.", "A CR also can result in problems specific to the apportionment of funding in the Navy's shipbuilding account, known formally as the Shipbuilding and Conversion, Navy (SCN) appropriation account. SCN appropriations are specifically annotated at the line-item level in the DOD annual appropriations bill. As a consequence, under a CR, SCN funding is managed not at the appropriations account level, but at the line-item level. For the SCN account\u00e2\u0080\u0094uniquely among DOD acquisition accounts\u00e2\u0080\u0094this can lead to misalignments (i.e., excesses and shortfalls) in funding under a CR for SCN-funded programs, compared to the amounts those programs received in the prior year. The shortfalls in particular can lead to program execution challenges under an extended or full-year CR."], "subsections": []}]}, {"section_title": "Assessing the Impact on DOD", "paragraphs": ["Published reports on the effect of CRs on agency operations typically provide anecdotal assertions that such funding measures increase costs and reduce efficiencies. However, these accounts typically do not provide data that would permit a systematic analysis of CR effects. Nor do they address the impact of CR-caused near-term bureaucratic disruption on the combat capability and readiness of U.S. forces over the longer-term.", "One exception to this general rule\u00e2\u0080\u0094discussed below\u00e2\u0080\u0094is a 2019 study by the RAND Corporation of the effect of CRs on a limited number of DOD procurement programs. That analysis, \"did not find strong evidence \u00e2\u0080\u00a6 indicating that CRs are generally associated with delays in procurement awards or increased costs,\" although the authors of the study emphasized that, because of its limited scope, the study, \"does not imply that the widely expressed concerns regarding CR effects are invalid.\" "], "subsections": [{"section_title": "The Navy's $4 Billion Price Tag", "paragraphs": ["One widely publicized estimate of the cost of recent CRs stands apart in the level of detail available on how the figure was calculated. In a December 4, 2017, speech at a defense symposium, Secretary of the Navy Richard Spencer said that CRs had cost the Navy, \"about $4 billion since 2011.\" CRS asked the Navy for the source of the $4 billion figure and for details on how it was calculated. In response, the Navy provided CRS with an information paper that stated the following in part:", "CRs have averaged 106 days per year in the last decade, or 29% of each year. This means over one quarter of every year is lost or has to be renegotiated for over 100,000 DON [Department of the Navy] contracts (conservative estimate) and billions of dollars. Contractors translate this CR uncertainty into the prices they charge the government. ", "\u00e2\u0080\u0093 The cost factors at work here are: price uncertainty caused by the CR and reflected in higher rates charged to the government; government time to perform multiple incremental payments or renegotiate; and contractor time to renegotiate or perform unnecessary rework caused by the CR. These efforts are estimated at approximately 1/7 th of a man-year for all stakeholders or $26K [$26,000] per average contract.", "\u00e2\u0080\u0093 $26K x 100,000 contracts = $2.6B [$2.6 billion] per year. While the estimate for each contract would be different, it can readily be seen that this is a low but reasonable estimate.", "The Navy paper did not provide any justification for the assumptions underpinning that calculation."], "subsections": []}, {"section_title": "RAND Procurement Study", "paragraphs": ["The literature on CR effects includes one relatively rigorous effort to determine whether multi-month CRs are associated with delays and cost increases in DOD procurement programs.", "The study, conducted in 2017 by the RAND Corporation, was sponsored by the office of DOD's senior acquisition official (the then-Under Secretary of Defense for Acquisition, Technology, and Logistics). Summarizing its review of the literature on CR effects, the RAND team said", "Because of a lack of quantitative data, many of the [asserted] consequences \u00e2\u0080\u00a6 would be very difficult to estimate quantitatively or to conclusively demonstrate. All of the research that we reviewed on the consequences of operating under a CR employed qualitative approaches that focused on case studies, assertions, and anecdotal information.", "To see whether CRs systematically are associated with cost increases and delays in DOD procurements, RAND examined 151 procurement awards for relatively high-profile programs during FY2013-FY2015. In each of those years, DOD operated under CRs for several months.", "Comparing procurement awards originally scheduled to occur while the agency was under a CR with those made after a regular appropriations bill had been enacted, the study found no statistically significant difference between the two groups in", "whether an award was delayed; if it was delayed, the length of the delay; or whether the unit cost increased compared with the projected cost.", "RAND also compared the 151 procurement awards made during FY2013-FY2015\u00e2\u0080\u0094years when there were prolonged CRs\u00e2\u0080\u0094with 48 awards made during FY1999, when DOD operated under a CR for only the first 3 weeks of the fiscal year. A comparison of the awards made during the period of \"long-CRs\" (2013-15) with awards made during a period in which there was one relatively short CR (FY1999) showed", "no statistically significant difference in the percentage of awards that were delayed; for cases in which a delay occurred, longer delays in FY2013-FY2015 than in the earlier period; and larger unit-cost increases (relative to original projections) for cases during the FY1999 (i.e., the \"short-CR\" period).", "In sum, RAND concluded, \"we did not find strong evidence \u00e2\u0080\u00a6 that CRs are generally associated with delays in procurement awards or increased costs. On the other hand, given the limitations inherent in our statistical analysis, we cannot use its results to rule out the occurrence of these kinds of negative effects.\""], "subsections": []}, {"section_title": "Issues for Congress", "paragraphs": ["Inasmuch as CRs have become relatively routine, Congress may wish to mandate a broader and more systematic assessment of DOD's use of what the RAND study calls \"levers of management discretion\" to ameliorate their potential adverse impacts. In addition to cataloguing the techniques used and estimating their near-term costs, if any, Congress also may sponsor assessments of the impact of CRs over the longer term.", "After nearly a decade of managerial improvisation to cope with relatively long-term CRs' disruption of normal procedures, Congress may wish to look for evidence that the DOD has suffered adverse systemic impacts\u00e2\u0080\u0094problems that go beyond marginal increases in cost or time to impair DOD's ability to protect the national security."], "subsections": []}]}]}}
{"id": "R45910", "title": "Antitrust and \u201cBig Tech\u201d", "released_date": "2019-09-11T00:00:00", "summary": ["Over the past decade, Google, Amazon, Facebook, and Apple (\"Big Tech\" or the \"Big Four\") have revolutionized the internet economy and affected the daily lives of billions of people worldwide. While these companies are responsible for momentous technological breakthroughs and massive wealth creation, they have also received scrutiny related to their privacy practices, dissemination of harmful content and misinformation, alleged political bias, and\u00e2\u0080\u0094as relevant here\u00e2\u0080\u0094potentially anticompetitive conduct. In June 2019, the Wall Street Journal reported that the Department of Justice (DOJ) and Federal Trade Commission (FTC)\u00e2\u0080\u0094the agencies responsible for enforcing the federal antitrust laws\u00e2\u0080\u0094agreed to divide responsibility over investigations of the Big Four's business practices. Under these agreements, the DOJ reportedly has authority over investigations of Google and Apple, while the FTC will look into Facebook and Amazon.", "The DOJ and FTC investigations into Big Tech will likely involve inquiries into whether the relevant companies have illegally monopolized their respective markets or engaged in anticompetitive mergers or acquisitions. Under Section 2 of the Sherman Act, it is illegal for a company with monopoly power to engage in exclusionary conduct to maintain or enhance that power. And under Section 7 of the Clayton Act, companies may not engage in mergers or acquisitions that \"substantially lessen\" competition.", "The scope of the market in which a defendant-company operates is a key question in both monopolization and merger cases. The Supreme Court has identified certain qualitative factors that courts may consider in defining the scope of relevant antitrust markets. The DOJ and FTC have also adopted a quantitative market-definition inquiry known as the \"hypothetical monopolist\" or \"SSNIP\" test, according to which a relevant antitrust market consists of the smallest grouping of products for which a hypothetical monopolist could profitably impose a 5% price increase. The application of this quantitative inquiry to certain zero-price technology markets may present courts and regulators with important issues of first impression. However, commentators have proposed a variety of methods by which regulators could assess the scope of the markets in which the Big Four operate.", "In addition to demonstrating that a defendant-company possesses monopoly power in a properly defined market, monopolization plaintiffs must show that the defendant engaged in exclusionary conduct to maintain or enhance that power. In investigating allegedly exclusionary behavior by the Big Four, antitrust regulators may be evaluating", "Google Search's alleged discrimination against Google's vertical rivals, certain tying and exclusive-dealing arrangements related to the company's Android mobile operating system, and exclusive and restrictive-dealing arrangements related to the company's ad-brokering platform; Amazon's alleged predatory pricing and discrimination against third-party merchants on its online marketplace; Facebook's allegedly anticompetitive pattern of acquiring promising potential competitors, including its acquisitions of the photo-sharing service Instagram and the messaging service WhatsApp; and Apple's decision to design its mobile-operating system to prevent customers from downloading iPhone apps from any source other than the company's App Store.", "While the antitrust action surrounding Big Tech is currently concentrated in the executive branch and the courts, digital competition issues have also attracted the interest of Congress, which may pursue legislation to address anticompetitive conduct by large technology companies. Specifically, some commentators have proposed that Congress adopt changes to certain elements of antitrust law to promote competition in technology markets, including modifications to predatory-pricing doctrine, exclusionary-design law, and merger review. In contrast, other commentators have advocated sector-specific competition regulation for large technology companies that would include data-portability rules, interoperability standards, nondiscrimination requirements, and separation regimes."], "reports": {"section_title": "", "paragraphs": ["O ver the past decade, Google, Amazon, Facebook, and Apple\u00e2\u0080\u0094collectively known as the \"Big Four\" or \"Big Tech\"\u00e2\u0080\u0094have revolutionized the internet economy and affected the daily lives of billions of people worldwide. Google operates a search engine that processes over 3.5 billion searches a day (Google Search), runs the biggest online video platform (YouTube), licenses the world's most popular mobile operating system (Android), and is the largest seller of online advertising. Amazon is a major online marketplace, retailer, logistics network, cloud-storage host, and television and film producer. Facebook boasts 2.4 billion monthly active users worldwide, meaning more people use the social network than follow any single world religion. Apple popularized the smartphone, making the device so ubiquitous that consumers have grown accustomed to carrying a supercomputer in their pocket. Collectively, the Big Four generated over $690 billion in revenue in 2018\u00e2\u0080\u0094a sum larger than the annual GDPs of most national economies.", "While these companies are responsible for momentous technological breakthroughs and massive wealth creation, they have also received scrutiny related to their privacy practices, dissemination of harmful content and misinformation, alleged political bias, and\u00e2\u0080\u0094as relevant here\u00e2\u0080\u0094potentially anticompetitive conduct. In June 2019, the Wall Street Journal reported that the Department of Justice (DOJ) and Federal Trade Commission (FTC)\u00e2\u0080\u0094the agencies responsible for enforcing the federal antitrust laws\u00e2\u0080\u0094agreed to divide responsibility over investigations of the Big Four's business practices. Under these agreements, the DOJ reportedly has authority over investigations of Google and Apple, while the FTC will look into Facebook and Amazon. The following month, the DOJ announced a potentially broader inquiry into Big Tech. Specifically, the Justice Department's Antitrust Division revealed that it intends to examine possible abuses of market power by unnamed \"market-leading online platforms\" \u00e2\u0080\u0094an announcement that has led some to speculate that a number of the Big Four may face investigations from both agencies despite the previously reported agreements.", "Big Tech's business practices have also attracted congressional interest. In May 2019, the Senate Judiciary Committee held a hearing to investigate privacy and competition issues in the digital advertising industry. And in June and July, the House Judiciary Committee held two separate hearings examining the market power of online platforms.", "This report provides an overview of antitrust issues involving the Big Four. The report begins with a general outline of the aspects of antitrust doctrine that are most likely to play a central role in the DOJ and FTC investigations\u00e2\u0080\u0094specifically, the case law surrounding monopolization and mergers. Next, the report discusses the application of this doctrine to each of the Big Four. Finally, the report concludes by examining policy options related to the promotion of digital competition."], "subsections": [{"section_title": "Legal Background", "paragraphs": [], "subsections": [{"section_title": "General Principles", "paragraphs": ["Contemporary antitrust doctrine reflects a commitment to the promotion of economic competition, which induces businesses to cut costs, improve their productivity, and innovate. These virtues of competition are often illustrated with the stylized hypothetical of a \"perfectly competitive\" market with homogenous products, a large number of well-informed buyers and sellers, low entry barriers, and low transaction costs. In such a market, businesses must price their products at marginal cost to avoid losing their customers to competitors. However, real-world markets almost always deviate from this textbook model of perfect competition. When one or more of the structural conditions identified above is absent, individual firms may have market power \u00e2\u0080\u0094the ability to profitably raise their prices above competitive levels. At the extreme, a market can be monopolized when a single firm possesses significant and durable market power.", "According to standard justifications for antitrust law, the exercise of significant market power harms consumers by requiring them to pay higher prices than they would pay in competitive markets, purchase less desirable substitutes, or go without certain goods and services altogether. Moreover, significant market power harms society as a whole by reducing output and eliminating value that would have been enjoyed in a competitive market. Contemporary antitrust doctrine is focused on preventing these harms by prohibiting exclusionary conduct by dominant firms and anticompetitive mergers and acquisitions. The following subsections discuss these prohibitions in turn."], "subsections": []}, {"section_title": "Section 2 of the Sherman Act: Monopolization", "paragraphs": ["Section 2 of the Sherman Antitrust Act of 1890 makes it unlawful to monopolize, attempt to monopolize, or conspire to monopolize \"any part of the trade or commerce among the several States, or with foreign nations.\" However, the statute itself does not define what it means to \"monopolize\" trade or commerce, leaving the courts to fill out the meaning of that concept through common law decisionmaking. Consistent with this approach, the Supreme Court's interpretation of Section 2 has evolved in response to changes in economic theory and business practice.", "In its monopolization case law, the Court has made clear that the possession of monopoly power and charging of monopoly prices do not by themselves constitute Section 2 violations. Instead, the Court has held that a company engages in monopolization if and only if it (1) possesses monopoly power, and (2) engages in exclusionary conduct to achieve, maintain, or enhance that power."], "subsections": [{"section_title": "Monopoly Power", "paragraphs": ["To prevail in a Section 2 case, plaintiffs must show that a defendant possesses monopoly power. While the Supreme Court has explained that a firm has market power if it can profitably charge supra-competitive prices, the Court has described monopoly power as \"the power to control prices or exclude competition,\" which requires \"something greater\" than market power. Lower federal courts have held that a firm possesses monopoly power if it possesses a high degree of market power.", "A Section 2 plaintiff can establish that a defendant possesses monopoly power in two ways. First, plaintiffs can satisfy this requirement with direct evidence of monopoly power\u00e2\u0080\u0094that is, evidence that the defendant charges prices significantly exceeding competitive levels. However, such evidence is typically difficult to adduce because of complications in determining appropriate measures of a firm's costs, among other things. As a result, plaintiffs generally attempt to establish that a defendant has monopoly power with indirect evidence showing that the defendant (1) possesses a large share of a relevant market, and (2) is protected by entry barriers."], "subsections": [{"section_title": "Market Share", "paragraphs": ["To demonstrate that a defendant possesses a dominant market share, plaintiffs must define the scope of the market in which the defendant operates. Predictably, antitrust plaintiffs typically argue that a defendant operates in a narrow market with few competitors, while defendants ordinarily contend that they operate in a broad market with many rivals. Because the size of the market in which a defendant operates (the denominator in a market-share calculation) is generally harder to determine than its sales or revenue (the numerator in such a calculation), parties in antitrust litigation often vigorously contest the issue of market definition\u00e2\u0080\u0094so much, in fact, that more antitrust cases hinge on that question than on \"any other substantive issue\" in competition law.", "Market Definition: Substitutability and the SSNIP Test . In analyzing market definition, the Supreme Court has explained that a relevant antitrust market consists of the product at issue in a given case and all other products that are \"reasonably interchangeable\" with it. According to the Court, whether one product is \"reasonably interchangeable\" with another product depends on demand substitution\u00e2\u0080\u0094that is, the extent to which an increase in one product's price would cause consumers to purchase the other product instead. The Court has further explained that a variety of \"practical indicia\" are relevant to an assessment of whether goods and services are reasonable substitutes, including", "1. industry or public recognition of separate markets; 2. a product's peculiar characteristics and uses; 3. unique production facilities; 4. distinct customers; 5. distinct prices; 6. sensitivity to price changes; and 7. specialized vendors.", "These criteria are sometimes called the \" Brown Shoe \" factors based on the name of the 1962 decision in which the Court identified them.", "In addition to the Brown Shoe factors, the DOJ and FTC have provided specific market-definition guidance in their Horizontal Merger Guidelines. The 2010 version of the Guidelines endorses the \"hypothetical monopolist\" test for defining markets, which\u00e2\u0080\u0094like the Court's case law\u00e2\u0080\u0094principally focuses on demand substitution. Under this test, a group of products qualifies as a relevant antitrust market if a hypothetical monopolist selling those products would find it profitable to raise their price notwithstanding buyers' incentives to substitute other goods and services in response. Specifically, the test asks whether a hypothetical monopolist would be able to profitably impose a \"small but significant and non-transitory increase in price\" (SSNIP)\u00e2\u0080\u0094generally, a 5% increase. If buyer substitution to other products would make such a price increase unprofitable, then the candidate market must be expanded until a hypothetical monopolist would benefit from such a strategy.", "One popular antitrust treatise illustrates the SSNIP test's application by comparing proposed markets consisting of Ford passenger cars and all passenger cars . Because Ford\u00e2\u0080\u0094which has a \"monopoly\" over the sale of Ford passenger cars\u00e2\u0080\u0094would likely be unable to profitably raise its prices by 5% because of the business it would lose to other car companies, Ford passenger cars are unlikely to qualify as a properly defined antitrust market. However, because a hypothetical firm with a monopoly over passenger cars likely could profit from such a price increase, passenger cars likely qualify as a distinct antitrust market.", "Market Definition and Big Tech: The Challenge of Zero-Price Markets. The SSNIP test's application to certain technology markets raises difficult issues. In a number of technology markets, firms do not charge customers for access to certain services like online search and social networking. The difficulty with applying the SSNIP test to such markets is clear: as one commentator notes, there is \"no sound way\" to analyze a 5% increase in a price of zero because such an increase would result in a price that remains zero . The SSNIP test as traditionally administered is accordingly \"inoperable\" in a number of zero-price technology markets.", "Some courts and commentators have responded to this difficulty in applying the SSNIP test to zero-price markets by concluding that such markets are categorically exempt from antitrust scrutiny. In Kinderstart.com, LLC v. Google, Inc. , for example, a federal district court dismissed allegations that Google monopolized the market for online search on the grounds that Google does not charge customers to use its search engine. Several commentators have echoed the general line of reasoning behind the Kinderstart decision and questioned whether the provision of free services can result in the type of consumer harm that antitrust law is intended to remedy.", "However, others have rejected this argument and maintain that antitrust law has an important role to play in zero-price markets. Some of these commentators have argued that zero-price transactions are not in fact \"free\" to consumers, and that consumers ultimately \"pay\" for putatively \"free\" goods and services with both their attention and personal data. According to this line of argument, many of these consumers may actually be overpaying . That is, some observers have argued that certain \"free\" products and services may have negative equilibrium prices under competitive conditions, meaning that firms in the relevant markets would pay consumers for their attention and the use of their data if faced with sufficiently robust competition.", "Other commentators have argued that firms offering zero-price products and services can compete on a variety of nonprice dimensions such as quality and privacy, and that antitrust law can promote consumer welfare in zero-price markets by ensuring that companies engage in these types of nonprice competition. This argument appears to have persuaded regulators at the DOJ. In a February 2019 speech, Makan Delrahim\u00e2\u0080\u0094the head of the Justice Department's Antitrust Division\u00e2\u0080\u0094contended that antitrust law applies \"in full\" to zero-price markets because firms offering \"free\" products and services compete on a variety of dimensions other than price.", "While many observers accordingly agree that zero-price markets are not categorically immune from antitrust scrutiny, the optimal approach to defining the scope of such markets remains open to debate. Some commentators have argued that regulators should modify the SSNIP test to account for quality-adjusted prices, creating a new methodology called the \"small but significant and non-transitory decrease in quality\" (SSNDQ) test. According to these academics, decreases in the quality of \"free\" services (e.g., a decline in the privacy protections offered by a social network) are tantamount to increases in the quality-adjusted prices of those services. Under the SSNDQ test, then, a firm offering \"free\" goods or services would possess monopoly power if it had the ability to profitably raise its quality-adjusted prices significantly above competitive levels.", "In contrast, other analysts have proposed that courts and regulators evaluate the scope of zero-price markets by engaging in qualitative assessments of the degree to which various digital products and services are \"reasonably interchangeable.\" For example, in a 2019 European Commission report on digital competition, a group of commentators proposed a \"characteristics-based\" approach to market definition for zero-price industries under which regulators would compare the functions of relevant digital services.", "This type of qualitative method for defining relevant product markets has some support in U.S. antitrust doctrine. As discussed, under Brown Shoe 's \"practical indicia\" approach, a product's \"peculiar characteristics and uses\" are relevant factors in determining the appropriate scope of an antitrust market. While lower courts have described such informal methods as \"old school\" in light of the sophisticated econometric evidence typically produced in contemporary antitrust litigation, they have also recognized that Brown Shoe remains good law and have employed its \"practical indicia\" approach despite its somewhat anachronistic status. As a result, regulators may engage in qualitative comparisons of the functions of various digital services in assessing the scope of certain zero-price markets. Regulators could plausibly supplement such inquiries with surveys or other empirical evidence evaluating which products consumers regard as \"reasonably interchangeable\" with the product at issue in a given case.", "Finally, a number of courts employing the Brown Shoe criteria have emphasized \"industry recognition\" of the scope of certain markets. Specifically, these courts have relied on corporate conduct, internal strategy documents, and expert testimony to determine the types of companies that a defendant regards as competitors. Accordingly, courts and regulators may be able to rely on these types of qualitative evidence to determine the scope of certain zero-price digital markets.", "Market Shares: How Much Is Enough? Once a Section 2 plaintiff has defined a relevant antitrust market, it must show that the defendant occupies a dominant share of that market. Courts have recognized that there is no fixed market-share figure that conclusively establishes that a defendant-company has monopoly power. However, the Supreme Court has never held that a party with less than 75% market share has monopoly power.", "Lower court decisions provide a number of other useful data points. In the U.S. Court of Appeals for the Second Circuit's influential decision in United States v. Aluminum Co. of America , Judge Learned Hand reasoned that (1) a 90% market share can be sufficient to establish a prima facie case of monopoly power, (2) a 60% or 64% share is unlikely to be sufficient, and (3) a 33% share is \"certainly\" insufficient. Similarly, the Tenth Circuit has explained that courts generally require a market share between 70% and 80% to establish monopoly power. And the Third Circuit has reasoned that a defendant's market share must be \"significantly larger\" than 55%, while holding that a share between 75% and 80% is \"more than adequate\" to establish a prima facie case of monopoly power."], "subsections": []}, {"section_title": "Entry Barriers", "paragraphs": ["Several courts have held that proof that a defendant occupies a large market share is insufficient on its own to establish that the defendant has monopoly power. Instead, these courts have concluded that a defendant must also be insulated from potential competitors by significant entry barriers to possess the type of durable monopoly power necessary for a Section\u00c2\u00a02 case. Courts and commentators generally use the concept of entry barriers to refer to long-run costs facing new entrants but not incumbent firms, including (1) legal and regulatory requirements, (2) control of an \"essential or superior resource,\" (3) \"entrenched buyer preferences for established brands,\" (4) \"capital market evaluations imposing higher capital costs on new entrants,\" and (5) in certain circumstances, economies of scale.", "The significance of any entry barriers shielding Big Tech companies is a fact-intensive question that will depend on the specific evidence that the DOJ and FTC uncover. However, commentators have identified a number of plausible entry barriers in certain digital markets, including:", "Network Effects . A digital platform benefits from network effects when its value to customers increases as more people use it. A platform exhibits \"direct\" or \"same-side\" network effects when its value to users on one side of the market increases as the number of users on that side of the market increases. Social networks arguably exhibit this category of network effects because their value to users is dependent on the number of other users that they are able to attract. In contrast, a platform exhibits \"indirect\" or \"cross-side\" network effects when its value to users on one side of the market increases as the number of users on the other side of the market increases. Search engines arguably benefit from indirect network effects because they become more valuable to advertisers as they attract additional users who can be targeted with ads. Some courts and commentators have concluded that both categories of network effects represent entry barriers that make it difficult for small firms to meaningfully compete with larger incumbents in certain digital markets. The Advantages of Big Data . A number of commentators have argued that the significant volume of user data generated by certain digital platforms confers important advantages on established companies. According to this theory, large firms with access to significant amounts of data can use that data to improve the quality of their products and services (e.g., by increasing the accuracy of a search engine, improving targeted advertising, or offering targeted discounts)\u00e2\u0080\u0094a process that attracts additional customers, who in turn generate more data. Some commentators have accordingly argued that access to \"big data\" can result in a feedback loop that reinforces the dominance of large firms. Costs of Switching and Multi-Homing . Some commentators have argued that consumers in certain digital markets are unlikely to switch from one platform to another or use multiple platforms simultaneously\u00e2\u0080\u0094a phenomenon that advantages large established companies. These \"lock-in\" effects can have a variety of causes. A digital platform's customers may be dissuaded from switching to another platform by the prospect of losing their photos, contacts, search history, apps, or other personal data. To similar effect, technology companies may \"tie\" various products or services together through contractual requirements or technical impediments that prevent customers from simultaneously using competing products or services. Finally, some consumers may exhibit behavioral biases that render their initial choice of a platform \"sticky,\" making them unlikely to switch platforms even when presented with superior alternatives. All of these factors can create a powerful \"first-mover advantage\" for incumbent firms that deters potential competitors.", "In contrast, others have questioned whether digital markets exhibit significant entry barriers. For example, Google has repeatedly denied the claim that it is insulated from rivals, arguing that consumers incur low costs in switching to alternative search engines because competition is only \"one click away.\" Similarly, other commentators have argued that the history of upstart rivals supplanting once-dominant technology companies suggests that any monopoly power in dynamic technology markets is unlikely to be durable."], "subsections": []}]}, {"section_title": "Exclusionary Conduct", "paragraphs": ["In addition to establishing that a defendant possesses monopoly power, Section 2 plaintiffs must demonstrate that the defendant engaged in exclusionary conduct to achieve, maintain, or enhance that power. While the Supreme Court has developed tests for evaluating whether specific categories of behavior qualify as prohibited exclusionary conduct, it has not endorsed a general standard for distinguishing such conduct from permissible commercial activities. However, courts have made clear that exclusionary conduct must involve harm to the competitive process and not simply harm to a defendant's competitors . The following subsections discuss how courts have evaluated specific categories of behavior under Section 2."], "subsections": [{"section_title": "Predatory Pricing", "paragraphs": ["A monopolist can violate Section 2 by pricing its products below cost to eliminate competitors\u00e2\u0080\u0094a practice commonly known as \"predatory pricing.\" However, because price cutting ordinarily benefits consumers, the Supreme Court has \"carefully limited\" the circumstances in which charging low prices qualifies as impermissible exclusionary conduct. Specifically, under the so-called Brooke Group test, a plaintiff bringing predatory-pricing claims must show that a monopolist (1) priced the relevant product below an appropriate measure of cost, and (2) had a \"dangerous probability\" of recouping its losses by raising prices upon the elimination of its competitors. The Court has defended Brooke Group 's safe harbor for above-cost pricing on the grounds that courts cannot identify anticompetitive above-cost prices without chilling legitimate price competition. Similarly, the Court has explained that a \"dangerous probability\" of recoupment is necessary to state a predatory-pricing claim because without recoupment, low prices enhance consumer welfare.", "Some commentators have suggested that there may be cognizable affirmative defenses to predatory-pricing allegations even when the two Brooke Group requirements are satisfied. Specifically, firms accused of predatory pricing may be able to defend such charges on the grounds that certain below-cost pricing practices are procompetitive. For example, in a DOJ lawsuit targeting collusion in the e-book industry, regulators explained their decision not to pursue predatory-pricing charges against Amazon on the grounds that the company charged below-cost prices for certain categories of e-books because it intended those books to be \"loss leaders.\" Unlike a firm that engages in predatory pricing\u00e2\u0080\u0094which charges below-cost prices for certain products with an eye towards recouping its losses by charging monopoly prices for those products upon the elimination of competitors\u00e2\u0080\u0094a firm that sells a loss-leader charges below-cost prices to induce consumers to purchase other goods or services at above-cost prices. Similarly, some commentators have suggested that below-cost prices that are intended to be promotional in nature or develop the type of user base necessary to realize network effects should not be condemned under Section 2.", "The application of predatory-pricing doctrine to Big Tech markets is discussed in greater detail in \" Amazon \" infra ."], "subsections": []}, {"section_title": "Refusals to Deal and Essential Facilities", "paragraphs": ["Refusals to Deal . The Supreme Court has explained that companies are generally free to choose their business partners and counterparties. However, the Court has held that Section 2 requires monopolists to do business with their rivals in certain limited circumstances. In its key modern refusal-to-deal decision, Aspen Skiing Co. v. Aspen Highlands Skiing Co. , the Court affirmed a jury verdict holding a dominant ski-service operator liable under Section 2 for refusing to do business with a competitor. The defendant in Aspen Skiing \u00e2\u0080\u0094a ski-service operator that owned three of the four mountains in a popular skiing area\u00e2\u0080\u0094terminated a joint venture with the owner of the fourth mountain under which the companies offered a combined four-mountain ski pass. The defendant also refused to sell its daily ski tickets to the competitor to prevent the competitor from creating an alternative ticket package that functionally replicated the previous offering. In affirming the verdict finding the dominant ski operator liable under Section 2, the Court explained that the jury could have reasonably concluded that the defendant elected to forgo short-term benefits from the joint venture and ticket sales to eliminate its rival from the market. According to the Court, this conclusion was reasonable because the defendant had (1) ceased what was presumably a profitable course of dealing, (2) refused to sell its tickets to the competitor at prevailing retail prices, and (3) failed to offer a plausible efficiency-based justification for its conduct.", "However, the Court has subsequently construed Aspen Skiing narrowly. In Verizon Communications, Inc. v. Law Offices of Curtis V. Trinko, LLP , the Court rejected the argument that Section 2 required a monopolist in the market for wholesale local telephone service to offer adequate interconnection services to its downstream rivals in the market for retail phone service. In reaching this conclusion, the Court characterized its previous decision in Aspen Skiing as \"at or near the outer boundary\" of Section 2 liability. The Court then distinguished that case on the grounds that unlike the dominant ski-service operator in Aspen Skiing , the wholesale telephone-service monopolist had not ceased a previous course of dealing with its competitors. The Court also observed that unlike the defendant in Aspen Skiing , the monopolist in Trinko did not refuse to sell its competitors a product that it offered to the public\u00e2\u0080\u0094another factor that can suggest an anticompetitive intent to forgo short-term profits to eliminate rivals. In the absence of these factors, the Court explained, Section 2 did not require the telephone monopolist to do business with its competitors.", "Essential Facilities . A number of lower courts have recognized a subset of cases in which monopolists have a duty to deal with rivals under what has been called the \"essential-facilities\" doctrine. In developing this doctrine, lower courts have relied principally on the Supreme Court's decisions in United States v. Terminal Railroad Association of St. Louis and Otter Tail Power Co. v. United States . In Terminal Railroad Association of St. Louis , the Court held that a consortium of railroads that controlled the facilities necessary to carry traffic across the Mississippi River in St. Louis violated Section 2 by refusing to grant other railroads access to those facilities. Similarly, in Otter Tail Power Co. , the Court held that a vertically integrated power company violated Section 2 by refusing to transmit wholesale power to municipalities seeking to operate their own retail distribution systems.", "According to the leading formulation of the essential-facilities doctrine that has been derived from these decisions, a plaintiff bringing an essential-facilities claim must show that (1) a monopolist controls access to an \"essential\" facility, (2) competitors cannot \"practically or reasonably\" duplicate that facility, (3) the monopolist has denied access to the facility to a competitor, and (4) the monopolist can feasibly share access to the facility.", "In applying this test, courts have held that a facility need not be \"indispensable\" to qualify as \"essential.\" Rather, essential-facilities plaintiffs need only establish that duplication of the facility would be \"economically infeasible,\" and that the denial of its use \"inflicts a severe handicap on potential market entrants.\" However, plaintiffs must show more than mere \"inconvenience\" to prevail on an essential-facilities cause of action, and courts have accordingly rejected Section 2 claims when plaintiffs had reasonable alternatives to the relevant facility. In assessing the third element of the essential-facilities test\u00e2\u0080\u0094which asks whether a dominant firm has denied access to an essential facility\u00e2\u0080\u0094courts have held that although monopolists need not allow competitors \"absolute equality of access,\" an offer to deal with competitors \"only on unreasonable terms and conditions\" may violate Section 2 by amounting to \"a practical refusal to deal.\" Finally, in assessing the \"feasibility\" requirement for essential-facilities claims, several courts have held that the viability of sharing an essential facility must be assessed in the context of a company's \"normal business operations,\" and that monopolists accordingly need not share such facilities if they can identify \"legitimate business reasons\" for refusing access.", "The application of the refusal-to-deal and essential-facilities doctrines to specific Big Tech companies is discussed in greater detail in \" Google Search: Refusals to Deal and Essential Facilities \" and \" Amazon \" infra ."], "subsections": []}, {"section_title": "Tying and Exclusionary Product Design", "paragraphs": ["In certain circumstances, \"tying\" separate products together\u00e2\u0080\u0094that is, selling one product (the \"tying\" product) on the condition that buyers also purchase another product (the \"tied\" product)\u00e2\u0080\u0094can violate Section 2. Firms can tie products together in a variety of ways. In a \"bundled tie,\" a company simultaneously sells two or more products, one of which it does not sell separately. In contrast, \"contractual ties\" often involve a requirement that a buyer purchase different products at different times. And firms engage in \"technological ties\" when they physically integrate different products that are not sold separately or design their products in a way that makes them incompatible with products offered by other firms.", "According to the Supreme Court, certain tying arrangements can harm competition by allowing a firm with monopoly power in the market for the tying product to extend its dominance into the market for the tied product. Some commentators have also argued that tying arrangements can allow a monopolist to maintain its monopoly in the tying-product market by requiring potential rivals to enter both that market and the market for the tied product, which can act as a formidable entry barrier.", "Under contemporary tying doctrine, a plaintiff can establish that a defendant engaged in per se illegal tying if it can demonstrate (1) the existence of two separate products, (2) that the defendant conditioned the sale of one product on the purchase the other product, (3) that the arrangement affects a \"substantial volume\" of interstate commerce, and (4) that the defendant has market power in the market for the tying product. However, plaintiffs can also prevail on tying claims even if they cannot make these showings. When one or more of these conditions is absent, courts evaluate tying claims under a totality-of-the-circumstances approach known as the Rule of Reason. Under this three-step burden-shifting framework, the plaintiff bears the initial burden of establishing that a challenged tying arrangement harms competition. If the plaintiff makes this showing, the burden shifts to the defendant to rebut the plaintiff's case with evidence that the challenged tying arrangement has procompetitive benefits. And if the defendant succeeds in rebutting the plaintiff's prima facie case, the factfinder must weigh the procompetitive benefits of a challenged tying arrangement against its anticompetitive harms.", "In addition to these general principles of tying doctrine, lower courts have developed a separate body of case law concerning technological ties\u00e2\u0080\u0094a category of conduct that is sometimes described as \"exclusionary product design.\" The standard exclusionary-design claim alleges that a monopolist changed a product's design in a way that makes the product difficult or impossible to use with complementary products sold by other firms, thereby extending its dominance into the market for the complementary products in a manner that is broadly similar to the effects of other sorts of tying arrangements. One commentator has described the case law on exclusionary design as \"somewhat tangled,\" but certain broad principles can be distilled from the relevant decisions.", "Generally courts are \"very skeptical\" about exclusionary-design claims out of fear that expansive liability for design decisions will chill innovation. In California Computer Products v. IBM Corp. , for example, the Ninth Circuit rejected claims that a dominant computer manufacturer violated Section 2 by introducing a new line of computers that were integrated with certain \"peripherals\" (e.g., disks and memory devices) and incompatible with peripherals sold by other companies. The court rejected this argument on the grounds that the manufacturer's integration of the peripherals lowered its costs and improved the computers' performance. The Second Circuit adopted a standard that is even more deferential toward exclusionary-design defendants in Berkey Photo, Inc. v. Eastman Kodak Co. , where it held that a dominant camera manufacturer had not violated Section 2 by launching a new camera and film that were incompatible with products sold by a rival. In that decision, the court held that the defendant had not engaged in exclusionary conduct even when faced with conflicting evidence as to whether the new camera was superior to previous versions. In the face of this evidence, the court opted to defer to market forces, explaining that consumers should be left to determine whether they preferred the new product.", "However, the D.C. Circuit's landmark 2001 decision in United States v. Microsoft Corp . marked a departure from previous exclusionary-design cases. In that case, the court evaluated Microsoft's integration of its internet-browser software (Internet Explorer) with its dominant personal-computer operating system (Windows OS). Microsoft had effectuated this integration in three ways: by (1) excluding Internet Explorer programs from Windows OS's \"Add/Remove Programs\" function, (2) programming Windows to sometimes override users' choice to set browsers other than Internet Explorer as their default browsers, and (3) commingling Internet Explorer's code with Windows code so that any attempt to delete Internet Explorer would cripple the operating system. The government alleged that this conduct harmed competition in the market for internet browsers by deterring consumers from using browsers other than Internet Explorer.", "In evaluating Microsoft's product design, the D.C. Circuit employed the Rule of Reason. At the first step of that inquiry, the court concluded that the government had made a prima facie case that each of the challenged practices harmed competition in the market for internet browsers, shifting the burden to Microsoft to identify procompetitive justifications for its actions. The D.C. Circuit proceeded to conclude that Microsoft successfully rebutted the government's case against the second category of challenged conduct\u00e2\u0080\u0094programming Windows to sometimes override default browser choices\u00e2\u0080\u0094because the company proffered valid technical reasons for its programming decisions. However, the court held that because Microsoft failed to establish that the remaining categories of conduct had procompetitive benefits, that conduct violated Section 2.", "In contrast, some post- Microsoft decisions from other federal circuits have been more favorable to exclusionary-design defendants. In Allied Orthopedic Appliances, Inc. v. Tyco Health Care Group LP , the Ninth Circuit eliminated the third step of the Rule-of-Reason test and refused to \"balance\" a challenged design's procompetitive benefits against its anticompetitive harms. Instead, the court rejected exclusionary-design claims on the grounds that it was \"undisputed\" that the new product had improved upon previous versions in certain respects. In such cases, the court explained, a monopolist's design change is \"necessarily tolerated by the antitrust laws\" irrespective of its anticompetitive effects. The lower federal courts are accordingly split on the proper analytical approach to exclusionary-design claims.", "The application of tying and exclusionary-design doctrine to specific Big Tech companies is discussed in greater detail in \" Android: Tying and Exclusive Dealing \" and \" Apple \" infra ."], "subsections": []}, {"section_title": "Exclusive Dealing", "paragraphs": ["In certain circumstances, a monopolist can violate Section 2 by entering into \"exclusive-dealing\" agreements with its customers or suppliers\u00e2\u0080\u0094that is, agreements in which a buyer agrees to purchase certain goods or services only from the monopolist or a seller agrees to sell certain goods and services only to the monopolist for a certain time period. Such agreements can be anticompetitive when they allow a monopolist to harm competition by \"foreclosing\" potential sources of supply or distribution. For example, if a dominant widget manufacturer enters into exclusive-dealing arrangements with a significant number of large widget retailers, other widget manufacturers may be unable to secure an adequate distribution network. However, exclusive-dealing arrangements can also be procompetitive. For example, some exclusive-dealing agreements allow manufacturers to overcome free-rider problems by enabling them to train their distributors without fearing that the distributors will use that training to sell rival products. In other cases, exclusive-dealing arrangements may serve the procompetitive objective of allowing a company to guarantee a secure source of supply or distribution.", "Lower federal courts evaluate exclusive-dealing agreements under the Rule of Reason and accordingly weigh their anticompetitive harms against their procompetitive benefits. In conducting this analysis, courts have required plaintiffs to demonstrate that a challenged exclusivity provision resulted in \"substantial foreclosure\" of supply or distribution. The exclusive-dealing case law does not provide definitive guidance on the degree of foreclosure that qualifies as \"substantial,\" as courts have varied considerably in the degree of foreclosure that they consider unlawful. However, an author of the leading antitrust treatise has argued that single-firm foreclosure of less than 30% is unlikely to harm competition. In addition to requiring that plaintiffs demonstrate substantial foreclosure, courts have evaluated a range of other factors in exclusive-dealing cases, including the duration of specific exclusivity provisions, the strength of the defendant's procompetitive justification for the provisions, whether the defendant has engaged in coercive behavior, and the use of exclusive-dealing agreements by the defendant's competitors.", "The application of exclusive-dealing doctrine to Big Tech markets is discussed in greater detail in \" Android: Tying and Exclusive Dealing \" and \" Google AdSense: Exclusive Dealing \" infra ."], "subsections": []}]}]}, {"section_title": "Section 7 of the Clayton Act: Mergers and Acquisitions", "paragraphs": ["While Section 2 of the Sherman Act is concerned with unilateral exclusionary conduct, Section 7 of the Clayton Antitrust Act of 1914 prohibits mergers and acquisitions that may \"substantially lessen\" competition. Section 7 applies to both \"horizontal\" mergers between competitors in the same market and \"vertical\" mergers between companies at different levels of a distribution chain. In evaluating horizontal mergers, the DOJ and FTC typically evaluate the merged firm's market share and the resulting level of concentration in the relevant market, in addition to any efficiencies that the combined company will likely realize as a result of the proposed merger.", "In contrast, vertical mergers may raise competition concerns when they involve a firm with significant power in one market entering an adjacent market, which may foreclose potential sources of supply or distribution and raise entry barriers by requiring the firm's potential competitors to enter both markets to be competitive. For example, if a dominant widget manufacturer acquires a widget retailer, it may have incentives to discriminate against competing widget retailers by charging them higher prices or refusing to deal with them altogether. As a result of this vertical discrimination, such a merger may force prospective widget retailers to also enter widget manufacturing to be competitive, raising entry barriers in the retail market. Despite these potential concerns with certain vertical mergers, the DOJ and FTC police such mergers far less aggressively than horizontal mergers, largely on the basis of academic work suggesting that vertical integration can result in significant efficiencies and only rarely threatens competition. However, whether the antitrust agencies should scrutinize vertical mergers more closely remains a subject of ongoing debate.", "The DOJ and FTC apply Section 7 by reviewing large proposed mergers before they are finalized, though the agencies also have the authority to unwind consummated mergers. Under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the HSR Act), parties to certain large mergers and acquisitions must report their proposed transactions to the antitrust agencies and wait for approval before closing. If the agencies determine that a proposed merger threatens to \"substantially lessen\" competition, they can sue to block the merger or negotiate conditions with the companies to safeguard competition. Section 7 of the Clayton Act also gives the agencies the authority to challenge previously closed mergers that \"substantially lessen\" competition, though lawsuits to unwind consummated mergers have been \"rare\" since the enactment of the HSR Act.", "The application of Section 7 to Big Tech markets is discussed in greater detail in \" Facebook \" infra ."], "subsections": []}]}, {"section_title": "Antitrust and Big Tech: Possible Cases Against the Big Four", "paragraphs": ["Applying the general legal principles discussed above to specific technology companies is a highly fact-intensive enterprise that will depend on the specific evidence that the DOJ and FTC uncover during their investigations. Moreover, the agencies have yet to publicly release details on the categories of conduct that they are evaluating in the course of their Big Tech inquiries, making it difficult to confidently assess the strength of antitrust cases against the relevant companies. With these caveats in mind, the following subsections discuss certain categories of conduct that the antitrust agencies may be investigating at each of the Big Four."], "subsections": [{"section_title": "Google", "paragraphs": ["Google is no stranger to antitrust scrutiny. The technology giant\u00e2\u0080\u0094which runs Google Search, licenses the Android mobile operating system, and owns a major online ad-brokering platform (AdSense)\u00e2\u0080\u0094has found itself in the crosshairs of competition authorities several times over the past decade. In 2013, the FTC concluded a wide-ranging investigation into the company's business practices, including its alleged discrimination against vertical rivals, copying of content from other websites, restrictions on advertisers' ability to do business with competing search engines, and exclusivity agreements with websites that used AdSense. While agency staff had recommended that the FTC bring a lawsuit challenging some of these activities, the Commission unanimously declined to pursue such an action after Google committed to make certain changes to its business practices.", "In contrast, European antitrust authorities have pursued three separate investigations of Google that have each resulted in large fines. In June 2017, the European Commission (EC) fined Google 2.4 billion euros for antitrust violations related to Google Search's preferential treatment of the company's comparison-shopping service, Google Shopping. The EC later levied an additional 4.3 billion-euro penalty in July 2018 for tying and exclusive-dealing arrangements related to Android. And in March 2019, the EC imposed a further 1.49 billion-euro penalty for exclusive- and restrictive-dealing agreements involving AdSense.", "While the focus of the DOJ's inquiry into Google's conduct remains somewhat obscure, the investigation is likely to implicate some of the same practices that have occupied the attention of European antitrust authorities. The subsections below discuss these issues in turn."], "subsections": [{"section_title": "Google Search: Refusals to Deal and Essential Facilities", "paragraphs": ["Google Search's allegedly preferential treatment of Google content has long been the subject of government investigations and academic discussion. The basic concern of these \"search bias\" allegations is the familiar worry about vertically integrated monopolists harming competition by discriminating against rivals who depend on a monopolized input or distribution channel. According to some critics, Google Search has monopoly power in the market for general-purpose (\"horizontal\") online search\u00e2\u0080\u0094power that Google has used to harm competition in the markets for various forms of specialized (\"vertical\") search by privileging its own vertical properties over those of its downstream competitors.", "The FTC evaluated these \"search bias\" complaints during its 2011-2013 investigation, which examined whether Google unfairly promoted its own vertical properties like Google Maps, Google Local, and Google Trips over competitors like MapQuest, Yelp, and Expedia. Specifically, these complaints alleged that Google Search privileged Google's vertical content by (1) introducing a \"Universal Search\" box that prominently displayed that content above rival websites, and (2) manipulating its search algorithms to demote vertical competitors in its search results. However, the FTC ultimately declined to pursue a lawsuit related to these practices after concluding that Google's \"primary goal\" in privileging its own content was to quickly answer users' search queries and improve the quality of its search results. In contrast, the EC concluded in June 2017 that Google's preferential treatment of Google Shopping violated EU antitrust law by harming competition in the market for comparison-shopping services.", "If the DOJ were to reevaluate Google's alleged search bias, it would face the threshold question of whether Google in fact possesses monopoly power in the market for horizontal search. During the FTC's previous investigation, agency staff concluded that horizontal search \"likely\" constituted a properly defined antitrust market and that Google had monopoly power in that market in light of its 71% market share. More recent estimates place Google's share of the horizontal search-engine market even higher. Moreover, certain academic reports on digital competition suggest that Google Search may be protected by significant entry barriers in the form of high fixed costs and access to the \"big data\" necessary to develop accurate search algorithms.", "However, several commentators have disputed the proposition that Google Search has monopoly power. Some of these observers have argued that the relevant market in an antitrust lawsuit based on Google's alleged \"search bias\" would be larger than the market for horizontal search, because users of horizontal search engines have reasonable alternatives to obtain information on the internet, including websites like Facebook, Twitter, and Amazon. Some skeptics have also argued that even if horizontal search is a properly defined antitrust market, Google's large share of that market does not necessarily give it monopoly power. According to these commentators, the low costs that consumers incur in switching to alternative search engines and the ability of those competing search engines to immediately increase \"output\" cast doubt on the claim that Google has monopoly power.", "If the DOJ could establish that Google has monopoly power, it would then need to show that Google's allegedly preferential treatment of its vertical properties represents an anticompetitive abuse of that power. Such a showing may be difficult under existing monopolization doctrine. In Aspen Skiing , the Supreme Court held that a monopolist's refusal to deal with a competitor can violate Section 2 where the evidence suggests that the refusal was motivated by a desire to sacrifice short-term profits in order to eliminate the competitor from the market. In that case, the Court held that a jury could have reasonably found such a desire because the defendant had terminated what was presumably a profitable course of dealing with its rival and refused to sell its daily ski tickets to the rival at prevailing retail prices. However, in Trinko , the Court narrowly construed Aspen Skiing , describing it as \"at or near the outer boundary\" of Section 2 liability. The Trinko Court proceeded to reject refusal-to-deal claims because the defendant in that case had not ceased a previous course of dealing or refused to sell its competitors a product that it sold to the public.", "The Court's decision in Trinko makes a refusal-to-deal case against Google difficult for several reasons. First, Google did not have previous courses of dealing with the websites that received high placement in its search results before the company implemented its allegedly discriminatory policies. While Google's search algorithm ranked these websites highly before this alleged discrimination, the websites did not pay Google for their high placement. Moreover, even if Google's relationships with these websites qualify as established courses of dealing, it is unlikely that Google's termination of those dealings involved a sacrifice of short-term profits that the company intends to recoup with long-term monopoly prices. Instead, Google's decision to give its own content premium placement likely maximizes the company's short-term profits by generating more user clicks, even if such actions also harm its vertical competitors. As a result, the factors that Trinko appears to have identified as necessary conditions for a refusal-to-deal claim would likely be absent in a case challenging Google's alleged search bias.", "A lawsuit challenging Google's vertical discrimination would also face difficulties under the essential-facilities doctrine. First, it is unclear whether high placement in Google's search results represents an \"essential\" facility. One court has held that a facility can qualify as \"essential\" when the denial of its use \"inflicts a severe handicap on potential market entrants.\" However, plaintiffs must show more than mere \"inconvenience\" in order to prevail on an essential-facilities cause of action, and courts have accordingly rejected Section 2 claims when plaintiffs had reasonable alternatives to the relevant facility. While premium placement in Google's search results was likely an important benefit for some of Google's vertical rivals, it is uncertain whether such placement would qualify as \"essential\" under these standards given the other ways in which vertical search engines can reach potential customers. Moreover, it is unlikely that a plaintiff could demonstrate that Google can \"feasibly\" share this allegedly essential facility. As one commentator has argued, only one website can receive the highest ranking in Google's search results, meaning that Google cannot give top placement to its own vertical properties and their competitors. Finally, Google may be able to identify legitimate business reasons for giving its own content premium placement. After its 2011-2013 investigation of Google's search bias, the FTC declined to pursue a lawsuit on the grounds that the company's use of the \"Universal Search\" box and privileging of its own content were motivated by a desire to quickly answer users' search queries. Google is therefore likely to rely on similar arguments in any actions challenging its search practices."], "subsections": []}, {"section_title": "Android: Tying and Exclusive Dealing", "paragraphs": ["In addition to evaluating Google's alleged search bias, the DOJ may follow the lead of European antitrust authorities in investigating the company's practices involving its Android mobile operating system. In a July 2018 press release announcing a record-setting antitrust fine, the EC concluded that Google occupied a dominant position in three markets related to the Commission's Android investigation. First, the EC concluded that Google occupied a dominant position in the market for \"general licensable smart mobile operating systems\" through Android. Second, the EC determined that Google occupied a dominant position in the market for \"app stores for the Android operating system\" through its app store Google Play. Finally, the EC concluded that Google occupied a dominant position in the market for \"general Internet search\" through Google Search. After identifying these markets in which Google is dominant, the EC determined that Google had abused its monopoly positions by engaging in three separate categories of behavior:", "First , the EC concluded that Google illegally \"tied\" the Google Search app and Google Chrome web browser to the Google Play store. Specifically, the EC determined that Google harmed competition in the online-search market by requiring mobile device manufacturers who pre-install Google Play to also pre-install Google Search and Google Chrome (which uses Google Search as its default search engine). According to the EC, this type of mandated pre-installation can create a \"status quo bias\" that discourages consumers from downloading competing search engines and web browsers. Second , the EC concluded that Google made illegal payments to certain large device manufacturers in exchange for their agreement to exclusively pre-install Google Search on all of their Android devices. Third , the EC concluded that Google illegally obstructed the development and distribution of competing Android operating systems by requiring that device manufacturers who pre-install Google Play and Google Search refrain from selling any devices that ran alternative versions of Android that Google had not approved (\"Android forks\").", "Google is currently appealing the EC's decision.", "Tying. A DOJ lawsuit targeting Google's \"tying\" of Google Search and Google Chrome to Google Play would raise a number of complex issues. First, a court evaluating such a lawsuit would have to determine whether this conduct is per se illegal or instead subject to Rule-of-Reason scrutiny. As discussed, plaintiffs can establish a per se tying violation by demonstrating (1) the existence of two separate products, (2) that the defendant conditioned the sale of one product on the purchase the other product, (3) that the arrangement affects a \"substantial volume\" of interstate commerce, and (4) that the defendant has market power in the market for the tying product. However, courts have applied these requirements narrowly, and the D.C. Circuit held in Microsoft that the unique features of software platforms makes per se liability inappropriate for ties involving such platforms and related products.", "The general trend away from per se tying liability and the D.C. Circuit's Microsoft decision suggest that a court would likely evaluate Google's tying arrangements under the Rule of Reason. As an initial matter, it is unclear whether mandatory pre-installation of the relevant apps represents the type of \"forced sale\" necessary to trigger per se liability under the relevant case law. During its Android enforcement action, the EC contended that mandatory pre-installation had significant effects on consumer behavior by discouraging Android users from downloading alternative search engines and web browsers. However, this allegation is an empirical claim about a relatively novel business practice, and the Supreme Court has explained that per se antitrust liability is appropriate only when courts have sufficient experience with a challenged practice to conclude that it lacks significant redeeming virtues. Limited judicial experience with the effects of mandatory pre-installation (as opposed to conditional sales ) may accordingly counsel against per se liability for Google's Android ties.", "Moreover, this hesitance to extend per se antitrust rules to novel business arrangements caused the D.C. Circuit to conclude in Microsoft that ties involving software-platform products are subject to Rule-of-Reason scrutiny. While Google's Android ties differ from the ties at issue in Microsoft in certain respects, commentators have observed that a tying case against Google would raise issues that are \"very similar\" to those the D.C. Circuit confronted roughly two decades ago. As a result, a court evaluating Google's tying of Google Search and Google Chrome to Google Play may follow the D.C. Circuit and evaluate such conduct under the Rule of Reason.", "In balancing the anticompetitive harms of these ties against their procompetitive benefits under the Rule of Reason, courts will likely focus on the general concern that motivated the EC's enforcement action\u00e2\u0080\u0094namely, the worry that Android users who find Google Search and Google Chrome pre-installed on their devices are unlikely to download and use alternative search engines. The magnitude of this concern is a fact-intensive question that will depend on the specific evidence concerning the effects of pre-installation that the DOJ can uncover.", "If the DOJ produces evidence that Google's tying arrangements harm competition, a Section 2 case will depend on the strength of the company's procompetitive justifications for these practices. During the EC litigation, Google argued that the relevant ties ultimately benefitted consumers because the revenue the company derived from increased use of Google Search by Android users allowed it to license Android to device makers for free. However, the EC rejected this claim and concluded that Google can monetize its investment in Android by other means.", "U.S. regulators and courts have the benefit of additional information on this issue. After the EC's decision, Google announced that instead of offering a suite of apps to device makers for free, it will charge manufacturers licensing fees for Google Play and certain other apps to make up for the revenue it previously earned as a result of the challenged tying arrangements. Some commentators have argued that this development raises questions about whether the EC's decision will ultimately benefit consumers, who may face higher device prices because of the new licensing fees. But the legal relevance of this argument\u00e2\u0080\u0094that a decision attempting to promote competition in one market (online search) will harm consumers in another market (mobile devices)\u00e2\u0080\u0094remains open to debate. In horizontal-restraint and merger cases, some courts have rejected the proposition that competitive harms in one market can be balanced against competitive benefits in another market. However, other courts have taken a different approach, concluding that it is appropriate to consider such cross-market tradeoffs in certain instances, including tying cases. Antitrust commentators also continue to debate whether and in what circumstances courts should balance harms in one market against benefits in another. As a result, it is difficult to predict whether a court would accept the argument that any harm caused by Google's tying arrangements in the market for online search should be balanced against benefits in the market for mobile devices. Antitrust regulators, by contrast, may engage in such balancing in deciding whether to bring a case, whether or not cross-market tradeoffs would be relevant during subsequent litigation.", "Exclusive Dealing. Like a potential tying case, a challenge to Google's exclusivity agreements with device manufacturers would depend on the specific facts the DOJ uncovers during its investigation. In evaluating any payments Google has made to U.S. device makers in exchange for their agreement to pre-install only Google Search, a court would likely assess the impact of pre-installation on consumer behavior, the share of the market \"foreclosed\" by such agreements, the ability of competing search engines to offer such payments, and the strength of Google's procompetitive justifications for the payments.", "Similarly, a court evaluating Google's requirement that device manufacturers who pre-install Google Play and Google Search refrain from selling any devices that run Android forks would apply the Rule of Reason and balance the anticompetitive harms of that restriction against its procompetitive benefits. On the \"harm\" side of the ledger, U.S. regulators might follow the EC in arguing that such a restriction obstructs the development of Android forks, which may serve as important channels for the distribution of search engines and other apps that compete with Google products. In contrast, Google may respond (as it argued in the EC litigation) that this restriction is necessary to prevent a \"fragmentation\" of the Android ecosystem in which consumers would impute the poor technical standards of nonapproved Android forks to Android. However, the EC rejected this argument after concluding that Google failed to produce evidence suggesting that Android forks would suffer from serious technical problems. U.S. antitrust regulators may also be able to rebut this \"fragmentation\" argument by demonstrating that Google could brand Android in a way that would adequately distinguish it from Android forks and thereby achieve the relevant procompetitive benefit by less restrictive means."], "subsections": []}, {"section_title": "Google AdSense: Exclusive Dealing", "paragraphs": ["Finally, the DOJ may be investigating Google's agreements with websites that use its ad-brokering platform AdSense, which connects advertisers with \"publisher\" websites seeking ad revenue. During the FTC's 2011-2013 investigation, agency staff concluded that clauses in these agreements that prohibited or restricted publisher websites from doing business with competing ad-brokering platforms violated Section 2. However, the FTC did not address this issue in announcing its unanimous decision not to charge Google with antitrust violations.", "In contrast, the EC concluded in March 2019 that similar clauses in Google's agreements with publisher websites violated EU antitrust law. In a press release announcing its conclusions, the EC identified three factual findings from its investigation:", "First , the EC found that from 2006-2009, some of Google's agreements with publisher websites contained \"exclusivity\" clauses prohibiting the websites from doing business with competing ad-brokering platforms. Second , the EC found that after 2009, Google began to replace these \"exclusivity\" clauses with \"Premium Placement\" clauses that required publisher websites to reserve the most visited and profitable spaces on their search results pages for ads brokered by AdSense. Third , the EC found that after 2009, some of Google's agreements with publisher websites required the websites to seek Google's written approval before making changes to the way that ads brokered by rival platforms were displayed, allowing Google to control how attractive those ads would be.", "The EC concluded that by engaging in these practices, Google used its dominant position in the market for \"online search advertising intermediation\" to illegally suppress competition. Google is currently appealing the EC's decision.", "The analysis of these sorts of agreements in a U.S. antitrust case would involve the same type of inquiry as an analysis of the Android exclusivity provisions discussed above. That is, in evaluating a challenge to these types of provisions, a court would likely assess the share of the market \"foreclosed\" by such agreements, the duration of the agreements, whether competing ad-brokering platforms enter into these types of contracts with publisher websites, and the strength of Google's procompetitive justifications for the challenged provisions."], "subsections": []}]}, {"section_title": "Amazon", "paragraphs": ["Commentators have identified a variety of competition-related issues surrounding Amazon. However, most of the antitrust discussion involving the e-commerce giant has concerned two general categories of conduct: discrimination against vertical rivals and predatory pricing. In addressing Amazon's alleged vertical discrimination, a number of analysts have focused on the company's dual role as both the operator of Amazon Marketplace\u00e2\u0080\u0094a platform on which merchants can sell their products directly to consumers\u00e2\u0080\u0094and as a merchant that sells its own private-label products on the Marketplace. Some commentators have alleged that Amazon exploits this dual role by implementing policies that privilege its own products over competing products offered by other sellers. According to a 2016 ProPublica investigation, for example, Amazon has designed its Marketplace ranking algorithm\u00e2\u0080\u0094which determines the order in which products appear to consumers\u00e2\u0080\u0094to favor its own products and products sold by companies that buy Amazon's fulfillment services. Similarly, certain merchants have complained that Amazon has revoked their ability to use its Marketplace after deciding to move into the relevant markets with its own private-label products or products it distributes on behalf of other companies.", "Some observers have also raised the possibility that Amazon may engage in predatory pricing by selling certain products at below-cost prices to eliminate rivals. A number of these allegations involve Amazon's 2010 acquisition of Quidsi\u00e2\u0080\u0094the parent company of the online baby-products retailer Diapers.com and several other online-retail subsidiaries. According to some commentators, Amazon aggressively cut its prices for baby products after Quidsi rebuffed its initial offer to purchase the company. When Amazon's below-cost prices began to impede Quidsi's growth, the company ultimately accepted Amazon's subsequent acquisition offer. And after the Quidsi acquisition, Amazon allegedly raised its prices for baby products. Other predatory-pricing allegations leveled against Amazon concern the company's sale of certain e-books. Specifically, some observers have argued that when it entered the e-book market in 2007, Amazon priced some categories of e-books below cost to eliminate potential competitors, ultimately securing 90% of the market by 2009.", "A monopolization case grounded in Amazon's alleged discrimination against third-party merchants would raise several issues. As a threshold matter, regulators bringing such a case would need to show that Amazon possesses monopoly power. While Amazon is significantly larger than its e-commerce rivals, most estimates place its share of the U.S. online retail market at below 50%. However, the company's share of a narrower market for online marketplaces connecting third-party merchants with consumers may be considerably larger. Moreover, reports indicate that Amazon has very large shares of the markets for online sales of certain categories of products, including home-improvement tools, batteries, skin-care products, and (as discussed) e-books.", "If regulators could show that Amazon has monopoly power in a properly defined antitrust market, they would then need to establish that Amazon used that power to harm competition. Such a showing may be difficult under existing refusal-to-deal doctrine for some of the reasons discussed above in connection with Google's alleged search bias. As discussed, in Trinko , the Supreme Court rejected Section 2 claims where it was unable to infer that a monopolist's refusal to deal with a competitor involved a desire to sacrifice short-term profits to eliminate the competitor from the market. Specifically, the Court was unable to discern such an intent because the monopolist in Trinko (unlike its counterpart in Aspen Skiing ) had not terminated a previous course of dealing with the competitor or refused to sell the competitor a product that it offered to the public.", "The Court's reasoning in Trinko suggests that one type of refusal-to-deal claim against Amazon for its alleged vertical discrimination would be unlikely to succeed. If such a claim concerned Amazon's preferential ranking of its own private-label products on its Marketplace, it would be difficult to demonstrate that the challenged practice involves a sacrifice of short-term profits. Rather, just as Google likely maximizes its short-term profits by ranking its own vertical properties above those of competing websites, Amazon likely maximizes its short-term profits by giving its private-label products premium placement. A claim targeting this type of vertical discrimination is also unlikely to be viable under the essential-facilities doctrine, because Amazon cannot feasibly share access to the allegedly \"essential\" facility of top placement in its Marketplace product rankings.", "In contrast, a refusal-to-deal claim premised on Amazon's decision to revoke certain merchants' ability to use its Marketplace altogether may present courts with a closer question. Such an action could involve termination of a previously profitable course of dealing, which can suggest an intent to sacrifice short-term profits in order to eliminate competitors. This conduct may also provide the basis for an essential-facilities claim, as one commentator has argued that Amazon's Marketplace is dominant enough in certain online-retail markets to justify the conclusion that it qualifies as \"essential\" under the case law. While a court's assessment of this argument would depend on a fact-intensive evaluation of the alternatives available to specific categories of third-party sellers, it is conceivable that lack of access to Amazon's Marketplace would inflict a \"severe handicap\" on merchants in at least some online-retail markets. As a result, Amazon's outright termination of profitable relationships with certain third-party merchants may raise harder questions about the application of Section 2 doctrine.", "Amazon may also be vulnerable to predatory-pricing claims. To the extent that commentators have accurately characterized the conduct surrounding the company's acquisition of Quidsi, Amazon may have engaged in below-cost pricing and exhibited a \"dangerous probability\" of recouping its losses by eliminating a key competitor from the market for online sales of certain baby products. However, other predatory-pricing allegations against Amazon may raise more complicated issues. Amazon may be able to defend certain predatory-pricing charges on the grounds that the company intended certain products to be \"loss leaders\" that induced customers to purchase other products at above-cost prices. A court's assessment of this defense would depend on a fact-intensive inquiry into the motivations behind Amazon's pricing of specific products."], "subsections": []}, {"section_title": "Facebook", "paragraphs": ["Most of the antitrust commentary directed toward Facebook has focused on its acquisitions of potential competitors\u00e2\u0080\u0094in particular, its 2012 acquisition of the photo-sharing service Instagram and its 2014 acquisition of the messaging service WhatsApp. In a March 2019 letter to the FTC, the Chairman of the House Antitrust Subcommittee urged the Commission to examine whether these acquisitions\u00e2\u0080\u0094which according to some estimates have resulted in Facebook owning three of the top four and four of the top eight social media applications\u00e2\u0080\u0094violated Section 7 of the Clayton Act. Other legislators and commentators have echoed calls for regulators to unwind these acquisitions.", "The FTC appears to be taking these arguments seriously. In August 2019, the Wall Street Journal reported that Facebook's acquisition practices are a \"central component\" of the agency's investigation of the company. In addition to potentially focusing on the Instagram and WhatsApp deals, the Journal reported that the FTC could also be evaluating Facebook's 2013 acquisition of Onavo Mobile Ltd.\u00e2\u0080\u0094a mobile-analytics company that may have allowed Facebook to identify fast-growing social media companies and purchase them before they became competitive threats. Depending on the evidence that the FTC uncovers, Facebook's general acquisition strategy could plausibly serve as the basis for a Section 2 monopolization case to the extent that it suppressed competition.", "The success of a case to unwind some of Facebook's acquisitions may depend on an assessment of the relevant market in which Facebook competes. Because Facebook does not charge users of its social network, this inquiry would require regulators to confront difficult conceptual issues with defining zero-price markets. If the FTC views \"social networks\" or \"social media platforms\" as the relevant market in an action to unwind Facebook's key acquisitions, the strength of the agency's case would likely depend on the other companies that are included in the relevant market and the appropriate methodology for calculating market shares. Because estimates of Facebook's dominance vary widely based on differences in each of these factors, the company's market share would likely be vigorously litigated in an action to unwind its major acquisitions.", "However, regulators may seek to sidestep this process with direct evidence that the relevant acquisitions harmed competition. As discussed, while antitrust plaintiffs typically rely on indirect market-share evidence to show that a defendant has monopoly power, several courts have held that plaintiffs can also establish monopoly power with direct evidence of supra-competitive prices. One commentator has sketched a general outline of the form such direct evidence might take, arguing that Facebook began to \"degrade\" user privacy only after the disappearance of major rivals. While there is little case law on direct proof of monopoly power, such evidence of quality degradation abruptly following the elimination of key competitors could plausibly serve as the type of \"natural experiment\" that allows regulators to establish that Facebook has monopoly power without defining the precise boundaries of the market in which it operates.", "If the FTC could establish that Facebook's acquisitions had anticompetitive effects either directly or indirectly, a court would then need to weigh those harms against any merger-specific efficiencies that Facebook can identify. In defending an enforcement action, Facebook might argue that its large post-acquisition investments in the relevant companies have improved their performance and accordingly benefited consumers. However, the FTC may be able to rebut such a defense with evidence that these companies could have secured adequate funding through the capital markets or by showing that the anticompetitive harms of the acquisitions outweigh any investment-related benefits."], "subsections": []}, {"section_title": "Apple", "paragraphs": ["Like Google, Apple has faced antitrust claims related to its mobile-device software. Specifically, the iPhone maker has faced separate class-action lawsuits related to its design of the device's operating system, iOS. In these lawsuits, classes of customers who purchased iPhone apps through the company's App Store and app developers claim that Apple has illegally monopolized the market for iPhone apps by designing iOS as a closed system and installing security measures to prevent customers from purchasing apps outside of the App Store. In May 2019, the Supreme Court rejected Apple's contention that App Store customers lacked standing to challenge this conduct, allowing their lawsuit to proceed. While these cases will accordingly continue to work their way through the courts, the DOJ may also be contemplating a similar action challenging Apple's design of iOS.", "The outcome of these exclusionary-design cases against Apple will depend on the specific findings that emerge over the course of litigation. Like the Microsoft case, these lawsuits involve a fact pattern that appears to suggest strong prima facie evidence of anticompetitive harm. If \"iPhone apps\" represent a properly defined antitrust market, Apple's decision to design iOS in a manner that requires users to purchase apps only from the App Store limits competition in that market to one seller/distributor. Section 2 claims challenging this conduct would accordingly depend on Apple's procompetitive justification for its design choices and the proper standard for evaluating that justification. If a court were to follow the D.C. Circuit's approach to these questions, it would balance the anticompetitive harms of Apple's product-design choices against their procompetitive benefits. In contrast, a court following the more deferential standards applied by the Ninth Circuit in Tyco Health Care Group or the Second Circuit in Berkey Photo would likely side with Apple as long as the company could identify a plausible reason to conclude that the challenged design choices represent product improvements. Such a justification may involve claims that the relevant security measures improve iPhone users' overall experience by preventing them from downloading technically unsound apps from non-App Store sources. However, the precise form that this type of argument would take remains to be seen.", "The current circuit split on the appropriate analytical framework for exclusionary-design claims may be a factor that prompts the DOJ to bring its own lawsuit challenging Apple's design of iOS. Both of the pending lawsuits have been brought in the Ninth Circuit, which will presumably follow its defendant-friendly precedent in Tyco Health Care Group . If the DOJ were to pursue litigation against Apple, regulators may accordingly choose to sue in a different circuit with more favorable case law. Although it is still early days, a DOJ lawsuit that further entrenches the circuit split surrounding exclusionary-design analysis may ultimately cause the Supreme Court to step in and clarify the doctrine."], "subsections": []}]}, {"section_title": "Options for Congress", "paragraphs": ["While the antitrust action surrounding the Big Four is currently concentrated in the executive branch and the courts, digital competition issues have also attracted the interest of Congress, which may pursue legislation to address anticompetitive conduct by large technology companies. Such legislation could take two general forms. First, some commentators have proposed that Congress enact certain changes to existing antitrust doctrine to promote digital competition. Second, a number of lawmakers and academics have advocated legislation that would impose sector-specific competition regulation on large technology companies. The subsections below discuss each category of potential legislation in turn."], "subsections": [{"section_title": "Changes to Antitrust Law", "paragraphs": ["A number of commentators have proposed that Congress adopt certain changes to existing antitrust doctrine to promote competition in technology markets. These proposals include:", "Changes to Predatory-Pricing Doctrine . Some observers have proposed changes to predatory-pricing doctrine with an eye toward addressing the pricing practices of dominant technology firms like Amazon. Specifically, one commentator has criticized Brooke Group 's \"recoupment\" requirement on the grounds that it does not adequately deter predatory pricing by dominant online platforms. According to this line of criticism, Brooke Group 's requirement that plaintiffs demonstrate a \"dangerous probability\" of recoupment fails to account for dominant platforms' unique ability to persist in charging below-cost prices for years and employ difficult-to-detect recoupment strategies like price discrimination among different categories of customers. As a result, this commentator has advocated a presumption that below-cost pricing by dominant platforms qualifies as prohibited exclusionary conduct. Other academics have criticized the first Brooke Group requirement, which demands that predatory-pricing plaintiffs show that a monopolist charged below-cost prices. These commentators argue that pricing-cutting can be anticompetitive even when a firm prices its products above cost, especially in cases where a monopolist aggressively cuts prices in order to prevent a new rival from recovering its entry costs or realizing economies of scale. To address this concern, these observers contend that courts should evaluate whether challenged price-cutting strategies exclude potential entrants without screening predation claims with a price-cost test. Congress could accordingly remedy this alleged defect in current predatory-pricing doctrine with legislation eliminating the first Brooke Group requirement. Enhanced Merger Review for Dominant Technology Companies . Some commentators have advocated stricter scrutiny for mergers and acquisitions by dominant technology companies, including a rebuttable presumption that mergers and acquisitions between certain monopolist technology companies and their potential competitors are unlawful. A number of academics have also suggested that because promising technology startups often fall below the minimum-size thresholds that trigger DOJ and FTC review under the HSR Act, Congress should consider lowering or eliminating those thresholds for deals involving dominant technology companies. Enhanced Scrutiny of Product Design Decisions . Finally, some observers have argued that courts should be less deferential toward defendants' justifications of allegedly exclusionary product designs, arguing that product-design decisions are often \"key elements\" of large technology companies' business strategies. Congress could accordingly consider legislation to clarify the appropriate standards for evaluating exclusionary-design claims, perhaps by making clear that such claims are subject to full Rule-of-Reason scrutiny rather than the more permissive tests adopted by certain lower federal courts."], "subsections": []}, {"section_title": "Sector-Specific Regulation", "paragraphs": ["As discussed, academic commentators have argued that certain digital markets possess structural characteristics that advantage large incumbent firms. In some cases, dominant firms in these markets can enhance such entry barriers by making it difficult for consumers to \"multi-home\" or use complementary products offered by competitors, and courts evaluating challenges to these product-design choices hesitate to hold companies liable under existing antitrust doctrine. Moreover, vertically integrated technology monopolists do not face general nondiscrimination rules requiring them to deal evenhandedly with rivals in adjacent markets. Some analysts have accordingly argued that large technology platforms require sector-specific regulations to address these competition concerns. These proposed regulations include \"data mobility\" rules giving consumers greater ability to control their data and move it to competing platforms, \"interoperability\" standards requiring companies to minimize technical impediments to the use of complementary products, and nondiscrimination requirements prohibiting vertically integrated technology monopolists from discriminating against rivals who use their platforms. Congress could legislate such requirements, direct an existing federal agency to develop them through rulemaking, or create a new agency tasked with regulating the technology industry.", "A number of lawmakers and academics have also argued that the infrastructure-like features of certain digital services justify separation regimes prohibiting monopolists that provide those services from entering adjacent markets. Such separation regimes are not without precedent. Historically, Congress and federal regulators have imposed a variety of structural prohibitions limiting the lines of business in which certain categories of firms\u00e2\u0080\u0094including railroads, banks, television networks, and telecommunications companies\u00e2\u0080\u0094can engage. Commentators have justified these separation regimes on the grounds that they eliminate conflicts of interest that lead companies in key infrastructure-like sectors to discriminate against their vertical rivals. While the nondiscrimination requirements discussed above represent one means of addressing this concern, categorical separation rules are an alternative to such requirements that may prove easier to administer.", "In March 2019, Senator Elizabeth Warren proposed one type of separation regime for dominant technology companies, arguing that large \"platform utilities\"\u00e2\u0080\u0094including \"online marketplaces,\" \"exchanges,\" and \"platforms for connecting third parties\"\u00e2\u0080\u0094should be prohibited from owing companies that participate on their platforms. The Chairman of the House Antitrust Subcommittee has also expressed support for similar separation requirements.", "Congress may also be interested in broader separation regimes prohibiting dominant technology platforms from entering other types of markets. Specifically, many lawmakers have expressed concern about Facebook's announcement that it intends to develop a new cryptocurrency. These worries have generated a legislative proposal to prevent any large technology platform from entering the financial industry, with Members on the House Financial Services Committee circulating draft legislation titled the Keep Big Tech Out of Finance Act. This draft bill would prohibit \"large platform utilities\" from (1) affiliating with financial institutions, or (2) establishing, maintaining, or operating digital assets intended to be \"widely used as a medium of exchange, store or value, or any other similar function.\""], "subsections": []}]}]}}
{"id": "R45986", "title": "Federal Role in Responding to Potential Risks of Per- and Polyfluoroalkyl Substances (PFAS)", "released_date": "2019-10-23T00:00:00", "summary": ["Per- and polyfluoroalkyl substances (PFAS) are a group of fluorinated compounds that have been used for various purposes, including numerous commercial, industrial, and U.S. military applications. Some common uses include food packaging, nonstick coatings, and stain-resistance fabrics, and as an ingredient in fire suppressants in Aqueous Film Forming Foam (AFFF) used at U.S. military installations, at civilian airports, and by state and local fire departments, and elsewhere. PFAS persist in the environment and in humans, and studies on several PFAS indicate that exposures above certain levels are associated with various adverse health effects.", "Some PFAS\u00e2\u0080\u0094primarily perfluorooctanoic acid (PFOA) and perfluorooctane sulfonate (PFOS)\u00e2\u0080\u0094have been detected in soil, surface water, groundwater, and drinking water in numerous locations. These detections\u00e2\u0080\u0094associated with releases from federal and industrial facilities, civilian airports, and fire department facilities\u00e2\u0080\u0094have prompted calls for increased federal action and authority to prevent and mitigate releases of and exposures to PFAS.", "Federal actions to address potential risks from PFAS have focused mostly on PFOS and PFOA because of past uses, prevalence in the environment, and availability of health effects research. These actions have been taken primarily under the authorities of the Toxic Substances Control Act (TSCA); the Safe Drinking Water Act (SDWA); and the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) and related Department of Defense (DOD) response authorities. The U.S. Environmental Protection Agency (EPA) has used various authorities to address PFAS in commerce, public water supplies, and in the environment.", "Under TSCA, EPA has taken actions over recent decades to gather and assess existing information on the risks of PFOS, PFOA, and certain other PFAS. The agency has required manufacturers to develop new information to evaluate risks of various PFAS and has issued orders restricting the manufacture, processing, distribution, use, and/or disposal pending the development of new risk information. In addition, EPA worked with U.S. manufacturers as they voluntarily phased out production of PFOS, PFOA, and related substances.", "Under SDWA, EPA is evaluating PFOA and PFOS to determine whether national drinking water regulations are warranted. EPA plans to propose preliminary determinations in 2019. Among other actions, EPA has issued nonenforceable health advisory levels for PFOA and PFOS, intended to be protective over a lifetime of daily exposure, and has used SDWA emergency powers to issue enforcement orders to require responses to drinking water contamination by PFAS.", "DOD and other federal agencies have used CERCLA authorities to respond to releases of various PFAS at federal facilities, although such responses are not statutorily required. DOD administers the vast majority of federal facilities where PFAS has been detected. DOD has been responding to releases of PFOA and PFOS from the use of AFFF at active and decommissioned U.S. military installations under the Defense Environmental Restoration Program. DOD has been phasing out the use of AFFF that contains PFOA or PFOS to reduce the risks of future releases.", "Several federal agencies, including EPA and the Agency for Toxic Substances and Disease Registry, have been evaluating potential health effects that may be associated with exposures to various PFAS. The U.S. Food and Drug Administration and the U.S. Department of Agriculture are addressing risks of PFAS in dairy milk, other foods, and food contact applications.", "Various stakeholders have urged federal agencies to act more quickly and broadly to address potential PFAS risks and to provide assistance to address contamination. In the 116 th Congress, more than 40 bills, including House- and Senate-passed National Defense Authorization Act (NDAA) bills for FY2020 ( H.R. 2500 and S. 1790 ), would address PFAS through various federal agencies and authorities (see Table 2 ). Among other PFAS provisions, H.R. 2500 would establish liability for PFAS response costs though designation of PFAS as hazardous substances, both under CERCLA and through the Clean Water Act, while S. 1790 would expand DOD response requirements to include releases of any pollutant or contaminant. Unlike H.R. 2500 , S. 1790 would amend SDWA to direct EPA to issue drinking water standards for PFAS and for other purposes. Both bills would address PFAS under other statutes and new authorities. Several bills, including H.R. 2500 and S. 1790 , would variously authorize funds to be appropriated to assist communities in addressing contaminated water supplies."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["Per- and polyfluoroalkyl substances (PFAS) are a large, diverse group of fluorinated compounds that have been used in numerous commercial, industrial, and U.S. military applications. Among other uses, PFAS have been used in fire-fighting foams and in the processing and manufacture of many commercial products (e.g., nonstick cookware, stain- and water-resistant fabrics). PFAS are persistent in the environment, and studies of several PFAS suggest that exposures above certain levels may lead to adverse health effects. ", "Detections of PFAS contamination in drinking water and the environment, have increased in recent years with the availability of new analytical methods and increased monitoring. PFAS\u00e2\u0080\u0094primarily perfluorooctanoic acid (PFOA) and perfluorooctane sulfonate (PFOS)\u00e2\u0080\u0094have been detected in soil, surface water, groundwater, and public water supplies in numerous locations. These detections have been associated primarily with releases from manufacturing and processing facilities, and from U.S. military installations and other facilities that use firefighting foams (e.g., civilian airports and fire departments). These detections have prompted calls for increased federal action and authority to prevent and mitigate exposures to PFAS. ", "Federal actions to address potential health and environmental risks of exposure to PFAS have been taken primarily under the authorities of the following federal statutes: ", "Toxic Substances Control Act (TSCA); Safe Drinking Water Act (SDWA); and Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) and related U.S. Department of Defense (DOD) response authorities. ", "The U.S. Environmental Protection Agency (EPA) has used the authorities of these three statutes to take most of its actions to address potential risks of PFAS. DOD and other federal agencies have also used CERCLA authorities to respond to releases of various PFAS at federal facilities. Some federal actions have involved the private sector in complying with reporting and other requirements. Other actions have involved voluntary measures taken by some companies. ", "Although the federal government has taken a range of actions to address PFAS exposure, policymakers and stakeholders have urged federal agencies to act more quickly and broadly. For instance, some are calling for EPA to issue enforceable drinking water standards for some or all PFAS. Others want EPA to designate all PFAS as hazardous substances (and thus establish liability for responsible parties to pay response costs). ", "Multiple bills introduced in the 116 th Congress would require EPA or other agencies to take various actions under existing law or would create new authorities. Some of these bills are incorporated into the House-passed and Senate-passed versions of the National Defense Authorization Act for FY2020 ( H.R. 2500 and S. 1790 ). For example, among other PFAS provisions, H.R. 2500 would establish liability for PFAS response costs through designation of PFAS as hazardous substances under CERCLA and also indirectly through listing PFAS as toxic pollutants under the Clean Water Act, whereas S. 1790 would expand DOD statutory responsibilities for response actions to include releases of any other pollutant or contaminant without establishing enforceable liability under CERCLA for such chemicals. S. 1790 also would direct EPA to issue drinking water standards for PFAS and to take various actions for other purposes. Bills related to the topics covered in this report are noted where relevant in the discussions, and these and other related bills are identified in this report in Table 2 .", "This report focuses on federal authorities under which EPA and other agencies have taken actions to address potential risks of PFAS. It does not discuss other laws under which EPA or other agencies may take additional actions, or actions under state laws. The report begins with a brief discussion of the chemical properties, uses, and varying risks of PFAS, followed by discussions of federal actions, relevant legislation enacted in the 115 th Congress, and relevant legislation in the 116 th Congress."], "subsections": []}, {"section_title": "Properties and Uses of PFAS", "paragraphs": ["PFAS are a large group of synthesized chemical compounds that do not occur naturally. Chemical manufacturers have produced various types of PFAS for a range of commercial, industrial, and U.S. military applications since the 1940s. EPA identifies over 1,200 PFAS manufactured in the United States over time. The specific types and quantities of PFAS produced and used have varied over time and continue to change. ", "PFAS are not a single chemical or a single compound, but refer to a group of compounds that share similar chemical structures. Any compound that has the chemical structure of at least one carbon atom attached to two or more fluorine atoms, or a chain of at least two carbon atoms attached to two or more fluorine atoms, may be considered a PFAS. Individual PFAS vary in terms of the numbers of fluorinated carbon atoms. The extent to which a chain of carbon atoms is fluorinated would determine whether a chemical may be considered a perfluoroalkyl substance or a polyfluoroalkyl substance. Given the possible variations in the length of the carbon chain, number of fluorinated carbon atoms, and other atoms attached to the chain, PFAS potentially could include thousands of chemical compounds if every possible combination were created. ", "Industry and government sources indicate that manufacturers have focused on producing PFAS with longer fluorinated carbon chains, primarily because they reduce the surface tension of liquids and resist heat. Some longer chain PFAS have been used in chemical manufacturing processes to produce fluoropolymers designed for multiple consumer uses, including", "non-stick and heat-resistant coatings for cookware and food packaging, and treatment of clothing, leather, and other materials for soil, stain, and water resistance.", "In some cases, PFAS may be used only as a processing aid to create a fluoropolymer-based product, and in other cases, PFAS may be a constituent in the resulting product. Fluoropolymer-based products may therefore contain varying amounts of PFAS depending on the manufacturing process. Fluoropolymers containing specific types of PFAS may also break down into other PFAS depending on the conditions. ", "Some PFAS have also been used as an ingredient in a variety of products, including ", "fire suppressants in Aqueous Film Forming Foam (AFFF) used by U.S. military installations, other federal agencies, civilian airports, and local fire departments as Class B agents to extinguish petroleum-based liquid fuel fires; and suppressants of oxidizing mist in industrial metal plating operations.", "Such products generally contain relatively small concentrations of PFAS that require further dilution of the product for its intended use. For example, AFFF products that contain PFAS are designed to be diluted with water in their application to form an aqueous film that restricts oxygen to extinguish petroleum-based liquid fuel fires.", "Perfluorooctane sulfonate (PFOS), perfluorooctanoic acid (PFOA), and certain other related perfluoroalkyl substances accounted for most of the historical production of PFAS prior to their phase-out, discussed below in \"Regulation of PFAS in Commerce under TSCA.\" Manufacturers have transitioned away from these longer chain PFAS because of their potential toxicity and environmental persistence. Policymakers and stakeholders have continued to raise questions about the relative toxicity and persistence of shorter chain or less fluorinated PFAS in comparison to longer chain PFAS. Some policymakers and stakeholders have also expressed concern about the continued use and disposal of existing stocks of longer chain PFAS and products containing these chemicals, including the disposal of AFFF stocks by the federal government, civilian airport operators, and local fire departments, as they move to alternative firefighting foams."], "subsections": []}, {"section_title": "Challenges in Assessing Potential Risks", "paragraphs": ["Similar to other commercial chemicals, releases of PFAS may occur in multiple ways that could result in exposures. PFAS may be released from ", "chemical manufacturing or processing operations; intended uses (such as the application of AFFF as a fire extinguishing agent); disposal of products or wastes containing these chemicals; or accidental spills or other unexpected incidents.", "Occupational exposures may occur among workers in facilities that manufacture or process PFAS, among workers that use products containing these chemicals (such as firefighters that use AFFF), or among workers involved in disposal. ", "Exposures among the general public would depend on whether a release may move through the environment in a manner that an individual could come into contact with these chemicals. Exposures may also occur among individuals who use a product containing these chemicals. As with any chemical, potential risks to human health and the environment would depend on the properties of the specific PFAS, the conditions under which exposure may occur, and the characteristics of the exposed individual.", "How PFAS interact in the environment and in humans or animals would vary depending on the structure, toxicity, persistence, and other properties of the individual chemical. The breakdown rate of a particular chemical once released would determine how long it persists before reacting with other chemicals in the environment or in a human or animal that would produce new chemicals with different properties. Although some have characterized PFAS as \"forever chemicals,\" persistence varies among longer chain versus shorter chain PFAS, and among more fluorinated versus less fluorinated PFAS. Toxicity and potential health effects may also vary. Whereas persistence would affect how long the properties of the chemical remain intact, the potential risks associated with exposure would depend on the toxicity of the specific chemical, the exposure pathway and other exposure factors. Given this variability, evaluating the potential risks of all PFAS as a singular category presents scientific (and regulatory) challenges. ", "Similarly, regulating all PFAS as a singular category would present challenges in developing a singular risk-based standard (i.e., a singular concentration level). Because of the diversity of the potential universe of these chemicals, designating all PFAS as a singular category for regulatory or reporting purposes would also present challenges in implementation to identify which chemicals would be subject to applicable requirements.", "Studies of the potential human health and environmental effects of PFAS have focused on PFOA, PFOS, and certain other longer chain perfluoroalkyls because of their more predominant manufacture and use. Fewer studies have examined shorter chain perfluoroalkyls or polyfluoroalkyls. Although scientific understanding of the potential risks of these chemicals has been evolving, uncertainties remain about health effects that may be associated with exposures to various PFAS. Much of the attention among policymakers, stakeholders, and the general public has focused on drinking water sources. Studies of these chemicals have mostly focused on drinking water or contaminated food sources. Less is known about risks that may be associated with other exposure pathways, such as dermal contact or inhalation. ", "The Agency for Toxic Substances and Disease Registry (ATSDR) and EPA have developed guidelines for assessing chemical exposure risks under various agency programs. The National Research Council of the National Academy of Sciences has also established risk assessment guidelines and has examined some of the challenges, such as uncertainty stemming from data quantity and quality. Each of these guidelines outlines factors to evaluate potential risks that may be associated with exposure to a specific chemical, including ", "toxicity and other properties of the chemical; frequency, concentration, and duration of exposure (i.e., the dose); pathway of exposure (e.g., inhalation, ingestion, or skin contact); interaction with other chemicals that may be present in the environment; and age, overall health, and genetic and behavioral characteristics of the exposed individual."], "subsections": []}, {"section_title": "Federal Actions to Address Potential Risks of PFAS", "paragraphs": ["Federal actions to address potential risks from PFAS have primarily been taken under the authorities of TSCA, SDWA, and CERCLA. Most of these actions have focused on PFOS and PFOA, because of predominant past uses, prevalence in the environment stemming from these uses, and the greater availability of scientific research on potential health effects than for other PFAS. Congress has also authorized specific federal actions in separate legislation. See the section on \" Relevant Legislation Enacted in the 115th Congress \" for a list of these laws.", "EPA has taken actions under TSCA over the past few decades to gather and assess existing information on the risks of PFOS, PFOA, and certain other PFAS. Based on the findings, TSCA authorizes EPA to require manufacturers to submit more information if needed to further evaluate potential risks, and the agency has done so. EPA has also required, or worked with, manufacturers to develop new information when existing information on a substance is insufficient to evaluate the risks. If EPA determines that the risks would meet the statutory threshold of \"unreasonable\" under TSCA, TSCA authorizes EPA to establish various regulatory controls if no other statute addresses the risks. EPA has not rendered a finding of unreasonable risk for any PFAS to date.", "Following a series of voluntary industry phase-outs in the United States for the manufacture of PFOS, PFOA, and other related substances, EPA used TSCA authority to promulgate multiple significant new use rules (SNURs) that require manufacturers to notify the agency prior to reintroducing these substances into commerce. TSCA also requires manufacturers to notify EPA of the intent to produce any new PFAS. When information on potential risks is insufficient, EPA has issued orders that restrict the manufacture, processing, distribution, use, disposal or any combination of these activities pending the development of new information on risks. EPA has used information on PFAS gathered under TSCA to inform its actions under SDWA and CERCLA. ", "For over a decade, EPA has been evaluating PFOA and PFOS under SDWA to determine whether an enforceable Maximum Contaminant Level (MCL) for drinking water provided by public water systems may be warranted. EPA has also included four other PFAS among emerging contaminants being evaluated for potential regulation under SDWA. In 2009, EPA issued provisional health advisories for short-term exposures to PFOA and PFOS in drinking water. In 2016, EPA issued additional health advisories for exposures to these chemicals in drinking water over an individual's lifetime. These health advisories are not enforceable standards for public water systems. However, SDWA grants EPA \"emergency powers\" to issue enforceable orders to abate an imminent and substantial endangerment to health from a contaminant in drinking water\u00e2\u0080\u0094whether or not the contaminant is regulated under the act. EPA has issued such orders at certain sites where releases of PFOA or PFOS have threatened drinking water sources.", "EPA and other federal agencies have also responded to releases of PFAS under CERCLA. DOD administers the vast majority of federal facilities where PFAS has been detected. DOD has been responding to releases of PFOA and PFOS from the use of AFFF at active and decommissioned U.S. military installations under the Defense Environmental Restoration Program. DOD has been phasing out the use of AFFF that contains PFOA or PFOS to reduce the risks of future releases. EPA has responded to releases of PFOA and PFOS under the Superfund program at some sites located on non-federal lands, in coordination with the states in which these sites are located. Sites addressed under the Superfund program have varied in terms of manufacturing or uses of PFAS.", "In February 2019, EPA issued a PFAS Action Plan that established an administrative framework for multiple planned actions under TSCA, SDWA, CERCLA, and other related authorities, including ", "determining whether to establish an MCL for PFOA and PFOS; proposing SDWA monitoring for additional PFAS under the fifth Unregulated Contaminant Monitoring Rule (UCMR5); proposing the designation of PFOA and PFOS as hazardous substances under CERCLA (or other related laws that trigger such designation); developing \"groundwater cleanup recommendations\" to guide decisions at Superfund sites and federal facilities under CERCLA (proposed in April 2019); proposing additional SNURs under TSCA for potential new uses; taking enforcement actions \"as appropriate\" under available authorities; and developing toxicity values and other risk assessment tools to inform decisions under multiple statutes.", "The status of federal actions to address potential risks of PFAS under TSCA, SDWA, CERCLA, and other related authorities are discussed in greater detail below."], "subsections": [{"section_title": "Health Effects Studies", "paragraphs": ["EPA and other federal agencies have been evaluating potential human health effects that may be associated with exposures to various PFAS. These agencies have revised some of their findings over time to reflect the developing scientific literature. EPA has gathered information about certain PFAS from manufacturers and others to evaluate whether regulation is warranted under TSCA. EPA has also been evaluating whether regulation is warranted under SDWA, and whether response actions are warranted under CERCLA at sites where certain PFAS have been released into the environment.", "EPA has reported that studies of exposures to PFOA and PFOS in laboratory animals have identified reproductive and developmental, liver and kidney, and immunological effects, and that exposures to both chemicals have caused tumors in laboratory animals. EPA has also referenced human epidemiology studies observing increased cholesterol levels among exposed populations, with more limited findings related to infant birth weights, effects on the immune system, cancer (for PFOA), and thyroid hormone disruption (for PFOS). Although some studies have identified potential cancer risks, EPA has not classified any PFAS as a likely or known human carcinogen. ", "Other federal agencies have also been evaluating the risks of certain PFAS. The Centers for Disease Control and Prevention (CDC) has collected blood serum levels and other biomonitoring data from individuals selected for a long-term study of the prevalence of exposures to a range of chemicals, including several PFAS. The ATSDR, National Institute of Environmental Health Sciences (NIEHS), and the interagency National Toxicology Program (NTP), have also been researching potential health effects that may be associated with exposures to certain PFAS. Although the roles of these agencies are not regulatory, data and findings of these studies may be used to inform regulatory decisions of other federal or state agencies.", "The following sections discuss the CDC biomonitoring program, ATSDR studies of the toxicological properties of certain PFAS, ATSDR site-specific studies, and related joint CDC/ATSDR studies. EPA's actions to evaluate PFAS are discussed in \"Regulation of PFAS in Commerce under TSCA,\" \"Regulation of PFAS and Other Actions under SDWA,\" and \"Environmental Remediation.\""], "subsections": [{"section_title": "CDC Biomonitoring", "paragraphs": ["For two decades, CDC has collected biomonitoring data for multiple environmental chemicals from a group of randomly-selected individuals intended to be representative of the general U.S. population. These data have included blood serum levels for PFOA and PFOS and 14 other PFAS. This effort is part of the National Health and Nutrition Examination Survey (NHANES). The biomonitoring data that CDC has collected generally indicate that blood serum levels for the selected group of perfluoroalkyl substances among participating individuals declined between 1999 and 2016 (the most recent year for which biomonitoring data are available for these specific chemicals). Declining blood serum levels for a particular chemical generally indicate reduced exposures. CDC tracks the biomonitoring data by age group, gender, and race/ethnicity, but not occupation. CDC cautions that \"finding measureable amounts of PFAS in [blood] serum does not imply that the levels of PFAS cause an adverse health effect.\" The likelihood that a specific amount of PFAS in blood serum may be associated with an adverse health effect requires further study. The actual levels of PFAS in blood serum among the broader U.S. population is also uncertain, as the sample size is relatively small."], "subsections": []}, {"section_title": "ATSDR Draft Toxicological Profile", "paragraphs": ["Section 104(i) of CERCLA authorizes ATSDR to prepare toxicological profiles for hazardous substances, pollutants, or contaminants found at contaminated sites that warrant federal attention. Over the last decade, ATSDR has issued three draft Toxicological Profiles for perfluoroalkyls (i.e., perfluoroalkyl substances) to identify potential health effects that may be associated with exposures to certain chemicals within this group of compounds. ATSDR typically issues drafts for public comment prior to finalizing a Toxicological Profile for an individual chemical or a group of chemicals. ATSDR has produced multiple drafts for perfluoroalkyls without issuing a final version so far, reflecting continuing developments in the scientific literature. ATSDR issued its first draft Toxicological Profile for perfluoroalkyls in May 2009, its second draft in August 2015, and its third draft in June 2018.", "For its third draft, ATSDR determined that sufficient scientific information was available to evaluate 14 perfluoroalkyls, including PFOA and PFOS. ATSDR observed that scientific studies of this group of perfluoroalkyls have focused mostly on risks associated with ingestion, and less on inhalation or skin contact (i.e., dermal exposure). ATSDR determined that scientific information was sufficient to establish provisional ingestion Minimal Risk Levels (MRLs) for four of these 14 perfluoroalkyls:", "PFOA, PFOS, perfluorohexane sulfonic acid (PFHxS), and perfluorononanoic acid (PFNA).", "ATSDR proposed the following values for these MRLs in milligrams per kilograms per day (mg/kg/day) to quantify an intermediate exposure level (i.e., daily exposure from 15 to 364 days) for each chemical that accounts for variance in bodyweight among exposed individuals.", "PFOA (3 x 10 -6 mg/kg/day or 0.000003 mg/kg/day) PFOS (2 x 10 -6 mg/kg/day or 0.000002 mg/kg/day) PFHxS (2 x 10 - 5 mg/kg/day or 0.00002 mg/kg/day) PFNA (3 x 10 -6 mg/kg/day or 0.000003 mg/kg/day)", "These values are smaller than in previous draft Toxicological Profiles and are among the smallest MRLs for the body of chemicals that ATSDR has evaluated. Smaller values generally indicate greater toxicity in comparison to chemicals with larger values, given the same exposure. Although the proposed MRLs for the PFAS referenced above are relatively small, the values are based on conservative assumptions and incorporate uncertainty factors. The value of an MRL alone therefore does not necessarily indicate conclusiveness of the level of risk.", "MRLs are estimates of daily human exposure to a chemical that is not expected to present an appreciable risk of adverse non-cancer health effects over a specified route (i.e., pathway) and duration of exposure. MRLs are intended to serve only as screening levels to identify sites that warrant further evaluation to determine whether actions may be needed to mitigate risks. Some stakeholders have characterized the proposed MRLs as recommended standards for regulation or site remediation. However, ATSDR emphasized in its June 2018 draft that \"MRLs are not intended to define clean-up or action levels.\"", "Although some perfluoroalkyls have been detected in ambient air at certain locations, ATSDR noted in its June 2018 draft that scientific information on exposure through inhalation is relatively limited. ATSDR concluded that the data were insufficient to establish provisional MRLs for inhalation exposures for any of these 14 perfluoroalkyls. ", "In its June 2018 draft, ATSDR also noted that findings from epidemiological studies that examined potential associations between serum PFAS levels and the occurrence of adverse health effects were not consistent across studies. ATSDR examined a range of epidemiological studies, including those in which reported serum PFAS levels were hundreds or thousands of times that of the general population. Because the findings of epidemiological studies were inconsistent, ATSDR relied on animal studies to calculate provisional MRLs. "], "subsections": []}, {"section_title": "ATSDR Site-Specific Studies", "paragraphs": ["Under Section 104(i) of CERCLA, ATSDR has also conducted or funded multiple site-specific studies to examine potential health effects where certain PFAS were released into the environment. State health departments performed some of these studies through cooperative agreements with ATSDR. These studies have focused on sites where PFOS, PFOA, and various other PFAS were manufactured, used, or disposed. ATSDR reports that the agency or a state health department has conducted site-specific studies for more than 20 sites across the United States. Some of these sites are federal facilities, such as U.S. military installations, whereas other sites are privately owned."], "subsections": []}, {"section_title": "Joint CDC and ATSDR Studies", "paragraphs": ["In addition to ATSDR site-specific studies under CERCLA, Congress has authorized CDC and ATSDR to conduct joint scientific studies to better understand the potential risks associated with exposure to PFAS. Subject to annual appropriations, Section 316 of the National Defense Authorization Act for Fiscal Year 2018 ( P.L. 115-91 ), as amended, authorizes CDC and ATSDR to conduct a joint study in consultation with DOD on the \"human health implications\" from potential exposure in \"drinking water, ground water, and any other sources of water and relevant exposure pathways.\" Using appropriations made available to CDC and ATSDR for the joint study, the agencies have worked to develop procedures and methods for studying potential health risks at sites with PFAS contamination. In April 2019, ATSDR announced that it would fund epidemiological studies at multiple sites. Section 316 also authorizes CDC and ATSDR to conduct exposure assessments at no fewer than eight current or former U.S. military installations where PFAS contamination has been discovered in drinking water, groundwater, or any other sources of water, and relevant exposure pathways. In February 2019, CDC and ATSDR announced the selection of eight military installations for such exposure assessments. "], "subsections": []}]}, {"section_title": "Regulation of PFAS in Commerce under TSCA", "paragraphs": ["EPA's PFAS Action Plan includes over 1,200 PFAS out of approximately 85,000 chemicals in the inventory. EPA added some of these PFAS to the inventory soon after the original enactment of TSCA in 1976, and added others over time as manufacturers notified the agency of the intent to introduce these PFAS into commerce. EPA reports that over 600 of these PFAS were produced in the United States between 2006 and 2016.", "Using the information gathering authorities of TSCA, EPA has obtained information on the risks of various PFAS to assess if such risks may be unreasonable to warrant regulation under the statute. In 2000, the sole manufacturer of PFOS and related perfluoroalkyl sulfonate chemicals (3M) reported to EPA that information it had obtained on the potential risks of these chemicals justified a voluntary phase-out of their production. The phase-out occurred over several years. In 2006, EPA reached an agreement with a group of manufacturers that produced PFOA and related perfluoroalkyl carboxylate chemicals for the voluntary phase-out of these chemicals over a ten-year period. ", "Subsequent to each phase-out, EPA promulgated \"significant new use rules\" (SNURs) under Section 5(a)(2) of TSCA to require any manufacturer to notify the agency before reintroducing these chemicals into commerce for historical uses. Promulgating SNURs for phased-out uses of existing chemicals is not uncommon. EPA also promulgated SNURs to require notification of entirely new uses of existing PFAS. SNURs give EPA the opportunity to evaluate risks associated with planned uses before they occur.", "Under Section 5(a)(1), EPA has also continued to evaluate the risks of new chemicals, including new PFAS, as manufacturers have notified the agency of their intent to produce new chemicals. For some premanufacture notices, EPA has determined that the submitted information is not sufficient to assess whether risks associated with a new PFAS may be unreasonable. In such instances, EPA has issued orders under Section 5(e) to require the manufacturer to produce new information on the chemical. EPA has also used Section 5(e) orders to place restrictions on a new PFAS until the manufacturer submits the requested information to EPA.", "Section 6 of TSCA authorizes EPA to establish regulatory controls on any stage of the lifecycle of a chemical (i.e., manufacture, processing, distribution, use, and disposal) only if such controls would be necessary to mitigate \"unreasonable risk of injury to health or the environment.\" To date, EPA has not rendered such finding of unreasonable risk for any PFAS to warrant regulatory controls under Section 6. "], "subsections": [{"section_title": "Voluntary Industry Phase-Out", "paragraphs": ["Chemical manufacturers may choose to phase-out the production of a chemical as a business decision. Following negotiations with EPA, 3M\u00e2\u0080\u0094the sole manufacturer of PFOS and related perfluoroalkyl sulfonate chemicals\u00e2\u0080\u0094announced a voluntary phase-out of these chemicals in 2000 based on risk information that it had gathered. Pursuant to Section 8(e) of TSCA, the manufacturer had submitted this information to EPA after it determined that the information met the statutory criteria for reporting. In 2006, EPA initiated the PFOA Stewardship Program with eight major manufacturers to reduce the extent to which PFOA and related perfluoroalkyl carboxylate chemicals enters the environment by 95% below 2010 levels and to completely phase-out the manufacture of these chemicals by 2015. In 2017, EPA announced that all eight manufacturers had met their phaseout goals. "], "subsections": []}, {"section_title": "Information Gathering", "paragraphs": ["To evaluate chemicals for potential regulation, other provisions of Section 8 also authorize EPA to gather existing information from manufacturers, processors, and distributors. For example, EPA has used Section 8(a) to gather information on manufacturing volumes of PFAS above particular thresholds at chemical manufacturing facilities. Under Section 8(d), EPA has required that chemical manufacturers, processors, and distributors submit lists of health and safety studies related to PFAS to the agency.", "If EPA finds that existing information is insufficient to evaluate risks, Section 4 of TSCA authorizes EPA to require manufacturers or processors to test a chemical and submit the findings to the agency. In 2005, EPA determined that existing information on fluoropolymers and other fluorinated compounds that contain PFOA and related chemicals was insufficient to assess potential environmental effects. To obtain new information, EPA entered into Section 4 consent orders with two industry organizations requiring them to test various PFAS-containing resins, dispersions, paper, and textiles for environmental effects. In 2015, EPA concluded that the testing data were sufficient at that time to determine that these uses were unlikely to present unreasonable risks. ", "EPA has promulgated multiple SNURs under Section 5(a)(2) to require notification of various PFAS for significant new uses. EPA promulgated a SNUR in 1987 for any use of hexafluoropropylene oxide other than as an intermediate in the manufacture of fluorinated chemicals in an enclosed process. Between 2002 and 2007, EPA promulgated SNURs that generally designated all uses of PFOS and 270 related perfluoroalkyl sulfonate chemicals as \"significant new uses,\" except certain specialized existing uses. In 2013, EPA promulgated a SNUR that designated uses of PFOA and related perfluoroalkyl carboyxlate chemicals in carpets or carpet treatments as significant new uses requiring notification. In 2015, EPA proposed a SNUR that would designate all uses of PFOA and related perfluoroalkyl carboyxlate chemicals as \"significant new uses.\" EPA's PFAS Action Plan states that it \"plans to follow up on the 2015 SNUR.\" ", "Section 5(a)(1) authorizes the primary information gathering mechanism for new chemicals that have never been manufactured in commerce. Prior to producing a new chemical, a manufacturer must submit a premanufacture notice to EPA. In 1984, EPA determined under Section 5(h)(4) that most polymers entering into commerce do not present unreasonable risks and exempted them from premanufacture notification. This exemption is commonly referred to as the \"polymer exemption.\" In 2010, EPA determined that polymers containing perfluoroalkyl constituents may present unreasonable risk and promulgated a new rule requiring notification prior to their manufacture. This regulatory change became effective in 2012 and is intended to allow EPA to determine whether regulation of such polymers may be warranted. ", "If EPA were to determine that information provided in a premanufacture notice is insufficient to assess risks, Section 5(e) authorizes EPA to issue an order that requires the manufacturer to develop new information on the new chemical. EPA has issued Section 5(e) orders for specific PFAS. For example, EPA issued a Section 5(e) consent order in 2009 for hexafluoropropylene oxide dimer acid and its ammonium salt (i.e., the GenX chemicals). According to its manufacturer, the GenX chemicals are used to make fluoropolymers without the use of PFOA. "], "subsections": []}, {"section_title": "Risk Assessment", "paragraphs": ["EPA has assessed the risks of PFOS, PFOA, and other PFAS on multiple occasions using information that the agency has collected under TSCA. In 2000, EPA's assessment of PFOS consisted of summarizing various animal studies and did not involve a formal determination on whether the risks were considered unreasonable. In 2002, EPA issued a draft assessment for PFOA using a similar approach it took for PFOS. As EPA has gathered more information, the agency has compared the findings of newer studies with those of existing studies to determine if the agency's understanding of the risks of PFAS warranted revision. For instance, EPA submitted an updated draft assessment for PFOA in 2005 to its Science Advisory Board for review. These assessments have informed the agency's subsequent consideration of whether regulation of certain PFAS may be warranted under TSCA."], "subsections": []}, {"section_title": "Regulatory Action", "paragraphs": ["In 2009, EPA announced its intention to consider initiating a Section 6 rulemaking under TSCA to manage risks of long-chain PFAS. EPA noted its intent to develop more detailed assessments to support a finding of unreasonable risk. If EPA were to make such a finding, Section 6 authorizes EPA to promulgate a rule to mitigate the unreasonable risk. In promulgating the rule, EPA may select among several regulatory options, including ", "a prohibition or restriction on the manufacture, processing, distribution of the chemical or a limitation on the amount in which the chemical may be manufactured, processed, or distributed for all or particular uses; a requirement to label the chemical with clear and adequate warnings and instructions with respect to its use, distribution, or disposal; a requirement to track the processes used to manufacture or process the chemical or conduct tests that are reasonable and necessary to assure compliance with the rule; a prohibition or restriction on commercial use or disposal of a chemical; or a requirement for manufacturers and processors of the chemical to notify distributors, those in possession of, or exposed to, the chemical, and the public of the agency's unreasonable risk finding, and to replace or repurchase the chemical if requested. ", "If EPA were to find an \"unreasonable risk,\" Section 9 requires EPA to determine whether other federal authorities may be available to mitigate the risk before establishing regulatory controls. ", "Since its announcement in 2009 to consider a Section 6 rulemaking, EPA has not made an unreasonable risk finding for any PFAS. Additionally, none of the 10 chemicals that EPA prioritized in 2016 for risk evaluation under Section 6 are PFAS. ", "Although EPA has not restricted existing PFAS through Section 6 rulemaking, the agency has issued Section 5(e) orders to restrict the manufacture, processing, distribution, use, and disposal of new PFAS reported to the agency under Section 5(a)(1). These restrictions remain effective until the manufacturer submits the new information requested by EPA. As an example, the Section 5(e) consent order for the two GenX chemicals noted above requires the manufacturer to \"recover and capture (destroy) or recycle [both chemicals] at an overall efficiency of 99% from all effluent process streams and the air emissions (point source and fugitive).\" "], "subsections": []}, {"section_title": "Enforcement", "paragraphs": ["Although EPA has not established Section 6 regulatory controls on any PFAS, the agency has used its enforcement authorities under TSCA to assess fines and penalties for violations of other statutory requirements. Section 15 of TSCA prohibits certain acts such as ", "failure or refusal to comply with any requirement, rule, order, or consent agreement under Title I, or any requirement, rule, or order under Title II; use of a chemical for commercial purposes that violates any requirements established under Sections 5, 6, or 7; failure or refusal to establish or maintain records, submit reports, notices or other information, or permit access to or copying records, as required by TSCA; and failure or refusal to permit entry or inspection under Section 11. ", "Section 16 authorizes civil and criminal penalties for taking actions that are prohibited under Section 15. In 2005, EPA announced a settlement with DuPont for reporting violations under Section 8(e) of TSCA and the Resource Conservation and Recovery Act (RCRA) that involve PFOA. According to EPA, the settlement required DuPont to pay $10.25 million in civil penalties and perform Supplemental Environmental Projects valued at $6.25 million. EPA has continued to take enforcement actions for other violations related to PFAS. For example, EPA sent a Notice of Violation to Chemours in February 2019 for alleged violations of Sections 5 and 8 of TSCA involving GenX chemicals."], "subsections": []}]}, {"section_title": "Regulation of PFAS and Other Actions under SDWA", "paragraphs": ["SDWA authorizes EPA to promulgate national primary drinking water regulations for contaminants in water provided by public water systems. These regulations generally include an enforceable standard (MCL) and associated monitoring, treatment, and reporting requirements. For substances that are not regulated under SDWA, EPA is authorized to issue health advisories that identify non-enforceable levels of contaminants in drinking water that are expected to be protective of sensitive populations. For both regulated and unregulated contaminants, SDWA emergency powers authorize EPA to take actions to abate an imminent and substantial endangerment to public health.", "To date, EPA has not promulgated drinking water regulations for any PFAS but plans to propose preliminary regulatory decisions for PFOA and PFOS in 2019. In 2016, the agency issued non-enforceable Lifetime Health Advisories for PFOS and PFOA. EPA also has used SDWA emergency powers to respond to releases of PFOA and PFOS detected in public water systems at several sites. The following sections further discuss these SDWA authorities and related actions."], "subsections": [{"section_title": "Health Advisories", "paragraphs": ["SDWA authorizes EPA to issue health advisories for contaminants that are not regulated under the act. Health advisories include non-enforceable concentrations for contaminants in drinking water and often include values for different exposure durations (e.g., one day, a lifetime). These non-regulatory levels are intended to help water suppliers and others address contaminants for which EPA has not promulgated drinking water standards. Advisories provide technical guidance on identifying, measuring, and treating such contaminants. In May 2016, EPA established the Lifetime Health Advisory levels for PFOA and PFOS at 70 parts per trillion (ppt), separately or combined. In calculating the health advisory level, EPA applied a relative source contribution of 20% (i.e., an assumption that 20% of PFOS and/or PFOA exposure is attributable to drinking water and 80% is from diet, dust, air or other sources). These levels are intended to protect the most sensitive subpopulations (i.e., nursing infants), with a margin of protection, over a lifetime of daily exposure. Previously in January 2009, EPA issued provisional health advisory levels of 400 ppt for PFOA and 200 ppt for PFOS to address short-term exposures to these substances from drinking water."], "subsections": []}, {"section_title": "National Primary Drinking Water Regulations", "paragraphs": ["For more than a decade, EPA has been assessing whether to promulgate national primary drinking water regulations for PFOA and PFOS. SDWA specifies a multistep process for evaluating contaminants to determine whether a national regulation is warranted. The evaluation process includes identifying contaminants of potential concern, assessing health risks, collecting occurrence data (and developing reliable analytical methods necessary to do so), and making determinations as to whether or not regulatory action is needed for a contaminant. "], "subsections": []}, {"section_title": "Identifying Emerging Contaminants That May Warrant Regulation", "paragraphs": ["Every five years, EPA is required to publish a contaminant candidate list (CCL) that identifies contaminants that are known or anticipated to occur in public water systems and that may require regulation under the act. In 2009, EPA placed PFOA and PFOS on the third such list (CCL 3) for evaluation. In 2016, EPA published the fourth list, CCL 4, which carried over PFOA and PFOS. EPA carried forward these contaminants to continue evaluating health effects, gathering national occurrence data, and developing analytical methods."], "subsections": []}, {"section_title": "Monitoring for Emerging Contaminants in Public Water Systems", "paragraphs": ["SDWA Section 1445 requires EPA to promulgate, every five years, an unregulated contaminant monitoring rule (UCMR) that requires public water systems to test for no more than 30 such contaminants. A representative sample of systems serving 10,000 or fewer people is required to conduct monitoring. ", "In 2012, EPA issued the third UCMR (UCMR 3), under which 4,864 public water systems tested their drinking water for 6 PFAS\u00e2\u0080\u0094including PFOA and PFOS\u00e2\u0080\u0094between January 2013 and December 2015. Overall, 63 of the 4,864 (1.3%) water systems reported at least 1 sample with PFOA and/or PFOS (separately or combined) concentrations exceeding EPA's health advisory level of 70 ppt. EPA estimates that these 63 water systems serve approximately 5.5 million individuals. ", "According to EPA's PFAS Action Plan , the agency intends to propose monitoring requirements for other PFAS in the next UCMR in 2020. As of August 2019, EPA had developed an analytical method to detect 18 PFAS in drinking water supplies. The plan states that the agency would use the monitoring data gathered through UCMR 5 to evaluate the national occurrence of additional PFAS. The agency has been developing analytical methods for monitoring additional PFAS."], "subsections": []}, {"section_title": "Regulatory Determinations", "paragraphs": ["SDWA requires EPA, every five years, to make a regulatory determination (RD)\u00e2\u0080\u0094a determination of whether or not to promulgate a drinking water regulation\u00e2\u0080\u0094for at least five contaminants on the CCL. To determine that a national drinking water regulation is warranted for a contaminant, EPA must find that ", "a contaminant may have an adverse health effect; it is known to occur or there is a substantial likelihood that it will occur in public water systems with a frequency and at levels of public health concern; and in the sole judgment of the EPA Administrator, regulation of the contaminant presents a meaningful opportunity for health risk reduction for persons served by public water systems. ", "To meet the statutory criteria for making an RD, EPA requires a peer-reviewed risk assessment; a widely available analytical method for monitoring; and nationally representative occurrence data.", "During the third RD round in 2014, when EPA published preliminary RDs for contaminants on CCL 3 (which included PFOA and PFOS), UCMR 3 monitoring was underway and national occurrence data for PFOA and PFOS were not available. EPA would not have been able to include any PFAS for the third RD without such data. In 2016, EPA included PFOA and PFOS on the agency's list of unregulated contaminants that met EPA data availability requirements to make RDs. ", "The fourth round of RDs is scheduled for 2021. SDWA does not prevent EPA from making determinations outside of that five-year cycle. According to the Spring 2019 Unified Regulatory Agenda , EPA will propose preliminary RDs for PFOA and PFOS by the end of 2019 and make final determinations by the end of 2020. Several bills in the 116 th Congress would direct EPA to promulgate national primary drinking water regulations and establish an MCL for individual or total PFAS, including Senate-passed S. 1790 , National Defense Authorization Act for FY2020; S. 1507 ; S. 1473 ; H.R. 2377 , H.R. 4033 , and S. 2466 ."], "subsections": []}, {"section_title": "Standard Setting", "paragraphs": ["Once the EPA Administrator makes a determination to regulate a contaminant, SDWA requires EPA to propose a rule within 24 months and promulgate a \"national primary drinking water regulation\" within 18 months after the proposal. When proposing a regulation, EPA must also propose a non-enforceable maximum contaminant level goal (MCLG), at which no known or anticipated adverse health effects are expected to occur and which allows an adequate margin of safety. An MCLG is based solely on health effects data and does not reflect cost or technical feasibility considerations. EPA derives an MCLG based on an estimate of the amount of a contaminant that a person can be exposed to on a daily basis that is not anticipated to cause adverse health effects over a lifetime. This level is further reduced to be protective of sensitive populations.", "Drinking water regulations generally include an MCL\u00e2\u0080\u0094an enforceable limit for a contaminant in public water supplies. SDWA requires EPA to set the MCL as close to the MCLG as feasible. When assessing feasibility, the law directs EPA to consider the best available (and field-demonstrated) treatment technologies, taking cost into consideration. Regulations also include monitoring, treatment, and reporting requirements. EPA has promulgated regulations that cover several similar contaminants and typically establishes an individual MCL for each contaminant covered by the regulation.", "Regulations generally take effect three years after promulgation. EPA may allow up to two additional years if the Administrator determines that more time is needed for public water systems to make capital improvements. States have the same authority for individual water systems. The law directs EPA to review\u00e2\u0080\u0094and if necessary revise\u00e2\u0080\u0094each regulation every six years. A revision may maintain or provide greater health protection, but it may not reduce protection. ", "Several bills in the 116 th Congress would direct EPA to promulgate national primary drinking water regulations and establish an MCL for individual or total PFAS, including Senate-passed S. 1790 , National Defense Authorization Act for FY2020; S. 1507 ; S. 1473 ; H.R. 2377 , and H.R. 4033 . Among other amendments to SDWA, S. 1790 , Title LXVII, Subtitle B and S. 1507 reported, would also establish a standard-setting process specifically for PFAS."], "subsections": []}, {"section_title": "Emergency Powers Orders", "paragraphs": ["SDWA Section 1431 grants EPA \"emergency powers\" to issue orders to abate an imminent and substantial endangerment to public health from \"a contaminant that is present in or is likely to enter a public water system or an underground source of drinking water,\" and if the appropriate state and local authorities have not acted to protect public health. This authority is available to address both regulated and unregulated contaminants. The EPA Administrator \"may take such actions as he may deem necessary\" to protect the health of persons who may be affected. Actions may include requiring persons who caused or contributed to the endangerment to provide alternative water supplies, or to treat contamination. When using this authority, EPA generally coordinates closely with states. ", "EPA reports that it has used its emergency powers under Section 1431 to require responses to PFOA and/or PFOS contamination of drinking water supplies in four cases, three of which involved DOD sites. Required actions included treating drinking water, offering connection to a public water system, or providing bottled water where PFOA or PFOS concentrations were above 70 ppt. ", "SDWA Section 1431 emergency orders can require a person to perform an action to abate an imminent and substantial danger to public health. However, such orders do not establish liability in a manner comparable in scope to CERCLA, nor do such orders create or otherwise trigger liability under CERCLA.", "For additional discussion of drinking water issues related to PFAS, see CRS Report R45793, PFAS and Drinking Water: Selected EPA and Congressional Actions , by Elena H. Humphreys and Mary Tiemann. "], "subsections": []}]}, {"section_title": "Environmental Remediation", "paragraphs": ["As with other chemicals, the federal role under CERCLA in remediating environmental contamination from releases of PFAS has focused on releases from federal facilities, and releases at sites on non-federal lands designated for priority federal attention under the Superfund program in coordination with the states in which the sites are located. The vast majority of PFAS known to be released from federal facilities has occurred from the use of AFFF at U.S. military installations, some of which have involved National Guard facilities. DOD has been responding to these releases under the Defense Environmental Restoration Program, pursuant to CERCLA and to SDWA emergency powers orders at the three U.S. military installations referenced above. The National Aeronautics and Space Administration (NASA) has also responded to releases of PFOA and PFOS from the use of AFFF detected at the Wallops Flight Facility in Virginia. As for other chemicals, the states have generally played a more prominent role under state law in responding to releases of PFAS at sites on non-federal lands that are not designated under the Superfund program. Authorities of CERCLA, and actions related to PFAS under the EPA Superfund program and DOD Defense Environmental Restoration Program, are discussed below."], "subsections": [{"section_title": "CERCLA Response Authority", "paragraphs": ["Section 104 of CERCLA authorizes the President to respond to releases of hazardous substances into the environment, and releases of other pollutants or contaminants that may present an imminent and substantial danger to public health or welfare. Response actions may include \"removal\" actions to address more immediate hazards and stabilize site conditions, and more extensive \"remedial\" actions intended to provide a more permanent solution. This Presidential response authority is delegated by executive order to EPA under the Superfund program for releases at sites on non-federal lands, and to other departments and agencies that administer federal facilities from which a release occurs. EPA is also responsible for designating sites on the National Priorities List (NPL) and for overseeing response actions at federal facilities performed by departments and agencies that administer those facilities.", "The federal response framework involves coordination with the states in which the sites are located, and state cost-shares for the use of Superfund appropriations to pay for remedial actions at sites on non-federal lands. Section 104(c) of CERCLA generally requires states to match 10% of the construction costs of remedial actions, and 100% of the costs of operation and maintenance once a remedial action is in place and operating as intended, with the exception of the treatment of groundwater or surface water for which the federal government may pay 100% of the costs for the first 10 years. More limited \"removal\" actions are not subject to state cost-shares and may be fully federally funded. Response actions for releases from federal facilities are not subject to state cost-shares. The availability of federal funding at Superfund sites or federal facilities is subject to annual appropriations. Section 111 of CERCLA generally restricts the use of Superfund appropriations at federal facilities funded with separate appropriations."], "subsections": []}, {"section_title": "CERCLA Liability", "paragraphs": ["Section 107 of CERCLA establishes liability for response costs, natural resource damages, and the costs of ATSDR public health studies at release sites. Categories of parties who may be held liable for these costs generally include ", "current and former site owners and operators; persons who arranged for the treatment or disposal of a hazardous substance; persons who arranged for the transport of a hazardous substance for treatment or disposal; and persons who transported a hazardous substance for treatment or disposal and selected the receiving site.", "However, the statute exempts various categories of parties, including ", "persons who acquired a site with preexisting contamination in certain circumstances and did not cause or contribute to the contamination; persons who contributed very small quantities or only household wastes to a site; persons who released a hazardous substance in accordance with a federal permit issued under certain other laws (including state permits issued with delegated federal authorities) referred to as \"federally permitted releases;\" and certain other categories of parties.", "Section 107 authorizes actions to recover response costs for which a party is liable. Section 106 also authorizes enforcement orders to require a liable party to perform a response action under federal oversight to avoid the need for federal and state funds upfront. Section 122 authorizes an additional mechanism under which liable parties may enter into negotiated settlements with the federal government to perform or pay for response actions. CERCLA Section 106 orders are similar in principle to SDWA Section 1431 emergency powers orders in terms of requiring a person to perform a specific action to mitigate potential risks. However, SDWA does not establish broader liability comparable to CERCLA and does not include cost-recovery or settlement authorities. CERCLA also is not limited to drinking water exposures and may address additional pathways through which exposures to contamination may occur.", "The scope of liability under CERCLA is more limited than response authority under the statute. Liability only applies to releases of designated hazardous substances, and not to other pollutants or contaminants. EPA has not designated any PFAS as hazardous substances to date. CERCLA authorizes federal actions to respond to releases of PFAS as pollutants or contaminants, but does not establish liability for such releases to compel the party that caused or contributed to a release to pay for or perform response actions.", "The scope of liability under CERCLA for hazardous substances does not include product liability, or liability for personal injury or property damages, both of which vary under state tort law. The Federal Tort Claims Act (FTCA) authorizes tort claims against the United States government for personal injury, death, or property damages that may be caused by negligent or wrongful federal acts or omissions, but authorizes a defense for discretionary functions of federal departments and agencies in carrying out their respective missions."], "subsections": []}, {"section_title": "CERCLA Hazardous Substances", "paragraphs": ["EPA's PFAS Action Plan indicated that the agency is developing a rule to designate PFOA and PFOS as hazardous substances under Section 102 of CERCLA or other related laws that trigger a hazardous substance designation. Section 101(14) of CERCLA defines the term \"hazardous substance\" to include chemicals designated for regulation or enforcement under the following federal statutes:", "hazardous substances designated under Section 311(b)(2)(A) of the Clean Water Act; toxic pollutants designated under Section 307(a) of the Clean Water Act; characteristic or listed hazardous wastes under Section 3001 of the Solid Waste Disposal Act (commonly referred to as the Resource Conservation and Recovery Act or RCRA); hazardous air pollutants designated under Section 112 of the Clean Air Act; and any imminently hazardous chemical substance or mixture for which EPA has taken a civil action in the appropriate U.S. District Court of jurisdiction under Section 7 of TSCA.", "Contaminants for which EPA has promulgated an MCL under SDWA are not included in this definition. The designation of an MCL for any PFAS would therefore not trigger a hazardous substance designation under CERCLA.", "EPA's authority to designate hazardous substances is not restricted to chemicals designated under the laws referenced in Section 101(14) of CERCLA. Section 102(a) also authorizes EPA to promulgate regulations designating other chemicals as a hazardous substance if the chemical may present substantial danger to the public health or welfare or the environment when released into the environment. If PFAS were designated as hazardous substances, releases into the environment would be subject to liability and release reporting requirements under CERCLA to the same extent as other hazardous substances. Section 120 of CERCLA generally applies liability and other requirements of the statute to federal facilities to the same extent as other entities. ", "Multiple bills introduced in the 116 th Congress would require EPA to designate PFAS as hazardous substances under CERCLA, whereas some bills requiring differing designations under other statutes would have the effect of a CERCLA hazardous substance designation. H.R. 535 and S. 638 would require EPA to designate \"all\" PFAS as hazardous substances under Section 102(a) of CERCLA within one year of the date of enactment. Section 330O of House-passed H.R. 2500 includes similar language. Section 330A of House-passed H.R. 2500 , H.R. 3616 , and H.R. 2605 would also have the effect of a CERCLA hazardous substance designation for PFAS. Section 330A of House-passed H.R. 2500 and H.R. 3616 would require EPA to list PFAS as toxic pollutants under Section 307(a)(1) of the Clean Water Act within 30 days of enactment, and would exempt PFAS from the listing criteria of that provision. H.R. 2605 would require EPA to list \"all\" PFAS as hazardous air pollutants under Section 112(b) of the Clean Air Act within 180 days of enactment. As noted above, Section 101(14) of CERCLA defines hazardous substances to include such pollutants designated under the Clean Water Act and Clean Air Act, and certain other statutes. The lists of hazardous substances, toxic pollutants, and hazardous air pollutants are codified in federal regulation. Revisions to these lists have been subject to federal rulemaking procedures.", "If PFAS were designated as hazardous substances, some potentially responsible parties (PRPs) may include the federal government at U.S. military installations and other federal facilities, civilian airport owners and operators, and local fire departments that released PFAS from the use of AFFF. Owners and operators of landfills could be PRPs if PFAS-containing products and wastes migrated into the environment. Chemical manufacturers and processors that release PFAS at sites they own or operate could also be PRPs. CERCLA does not more broadly establish product liability for companies that manufacture or process PFAS. Although CERCLA authorizes some exemptions from liability, these exemptions focus primarily on situations in which the site owner did not cause or contribute to the contamination or the party contributed very small quantities of waste or only household wastes to a site. Fertilizer applications of biosolids (i.e., treated sewage sludge) that may contain PFAS would generally not be subject to CERCLA because of the statutory exclusion of the \"normal application of fertilizer.\"", "Although PFAS are presently not subject to liability under CERCLA, states may establish liability for releases of these chemicals under their own laws. Section 120(a)(4) of CERCLA waives federal sovereign immunity to allow the application of state remediation laws to federal facilities that are not on the NPL. State laws establishing liability for PFAS may be applied to such facilities. Although federal sovereign immunity is not waived at federal facilities on the NPL, Section 121 of CERCLA requires the state in which a site is located to be provided the opportunity for involvement in the selection of remedial actions regardless of whether the site is on the NPL. This provision allows states to oversee remedial actions at federal facilities on the NPL, but not to enforce state law at such facilities."], "subsections": []}, {"section_title": "Superfund Program", "paragraphs": ["Absent a hazardous substance designation, EPA has responded to releases of PFAS under the Superfund program using CERCLA response authorities for pollutants and contaminants at certain sites on non-federal lands, in coordination with the states in which the sites are located. Sites where EPA has been involved under the Superfund program have typically been contaminated not only from PFAS but also releases of designated hazardous substances. For example, EPA added the Saint-Gobain Performance Plastics site in Hoosick Falls, NY to the NPL in August 2017 based on potential risks associated with multiple hazardous substances detected at that site in addition to PFOA.", "Without a hazardous substance designation, EPA's PFAS Action Plan indicated that the agency would continue to consider its use of CERCLA response authorities for pollutants and contaminants to respond to PFAS contamination, or the use of SDWA Section 1431 emergency powers or RCRA Section 7003 enforcement authorities applicable to solid or hazardous wastes. PFAS could be considered a solid waste under RCRA if released in a manner that constituted discarding, pursuant to the definition of \"solid waste\" in RCRA Section 1004(27). Hazardous waste is a subset of solid waste as defined in Section 1004(5) of RCRA. All solid wastes are therefore not necessarily hazardous wastes. EPA has not listed any PFAS as hazardous waste to date. The constituents for characterizing the toxicity of hazardous waste under RCRA also do not include any PFAS.", "On April 25, 2019, EPA proposed interim groundwater cleanup recommendations for PFOA and PFOS at Superfund sites, U.S. military installations, and other federal facilities. The public comment period closed on June 10, 2019. These recommendations would establish screening levels to identify sites for evaluation, and a preliminary remediation goal (PRG) as a starting point to inform site-specific remediation decisions under CERCLA. EPA proposed a concentration of 40 ppt in groundwater as a screening level, and a concentration of 70 ppt as a PRG for groundwater that is a current or potential source of drinking water at sites where no state, tribal, or other applicable, relevant, and appropriate requirement exists. The proposed 70 ppt PRG is the same concentration as the EPA Lifetime Health Advisory for PFOA or PFOS in drinking water. If EPA were to promulgate an MCL under SDWA, the concentration may be applied as a standard for remedial actions under Section 121 of CERCLA to protect current or potential sources of drinking water.", "EPA indicated that its proposed groundwater cleanup recommendations may also be used to evaluate risks at RCRA corrective action sites. However, as noted above, EPA has not listed any PFAS as hazardous waste under RCRA to date."], "subsections": []}, {"section_title": "Defense Environmental Restoration Program", "paragraphs": ["DOD has responded to releases of various PFAS from the use of AFFF at current and former U.S. military installations under the Defense Environmental Restoration Program in conjunction with its delegated CERCLA response authorities. DOD response actions taken under this program are subject to the requirements of CERCLA. These program authorities apply to releases at facilities or sites that are or were owned by, leased to, or otherwise possessed by the federal government, and under the jurisdiction of DOD at the time of the release. DOD is required to respond to releases of hazardous substances at such facilities or sites. DOD may also respond to releases of other pollutant or contaminants, but is not required to do so consistent with CERCLA liability applying only to hazardous substances. Section 319(b) of Senate-passed S. 1790 would amend these program authorities to require DOD to respond to releases of either hazardous substances, pollutants, or contaminants at DOD facilities or sites, but without enforceable liability under CERCLA. Regardless of such statutory obligation, funding for DOD response actions would remain subject to annual appropriations.", "Releases caused by a state National Guard unit operating at a facility or site that DOD owns, leases, or possesses may be eligible for DOD response actions, but the contractual agreement with the state may relieve federal responsibility for actions of a state National Guard unit. National Guard facilities that are state-owned and state-operated have generally been ineligible for funding under the Defense Environmental Restoration Program, consistent with the statutory criteria of eligibility restricted to DOD facilities or sites. House-passed H.R. 2500 and Senate-passed S. 1790 both include provisions that would address the eligibility of DOD funding to respond to releases of PFAS at National Guard facilities.", "DOD actions to respond to PFAS contamination at eligible sites have ranged from providing bottled water or other alternative water supplies to treating contaminated water sources. The availability of funding for response actions under the Defense Environmental Restoration Program is subject to annual appropriations to multiple accounts. Each account funds a different inventory of sites, including Defense Environmental Restoration accounts of the U.S. Air Force, U.S. Army, U.S. Navy, and Defense-wide sites. A fifth Defense Environmental Restoration account funds Formerly Used Defense Sites (FUDS) decommissioned prior to 1986. The Defense Base Closure account funds sites closed under consolidated Base Realignment and Closure (BRAC) rounds in 1988, 1991, 1993, 1995, and 2005. ", "The Explanatory Statement accompanying the Consolidated Appropriations Act, 2017 ( P.L. 115-31 ) \"encouraged\" DOD to establish procedures for prompt and cost-effective remediation of contamination from perfluorinated chemicals (PFCs, i.e., PFAS) released as a result of the use of AFFF at current and former U.S. military installations. The Explanatory Statement also directed DOD to submit a report to Congress assessing the number of current and former installations where AFFF was or is used, and the impact of contamination in drinking water on surrounding communities. The Explanatory Statement further directed DOD to develop plans for \"prompt\" community notification of such contamination and procedures for \"timely\" remediation. DOD issued this report in October 2017 identifying an initial inventory of release sites and stating ", "Addressing elevated levels of PFOS and PFOA from DoD activities is a priority for DoD. The DoD Components have taken action to ensure safe drinking water for people living and working on their military installations and in the surrounding communities. Following the CERCLA process, DoD is addressing its cleanup responsibility and promptly notifying affected communities. DoD is also taking steps to remove and replace AFFF containing PFOS in the supply chain, and is committed to finding a fluorine-free alternative that safeguards its troops and military assets, meets critical mission requirements, and protects human health and the environment.", "In March 2018, DOD issued a presentation on the status of its efforts to respond to releases of PFOA and PFOS. The House Committee on Armed Services directed DOD to provide a status update, in its report accompanying the National Defense Authorization Act for Fiscal Year 2018 ( P.L. 115-91 ). DOD identified 401 U.S. military installations with known or suspected releases of PFOA or PFOS from the use of AFFF. DOD detected PFOA or PFOS in groundwater wells above the EPA Lifetime Health Advisory of 70 ppt at 90 of these installations. DOD identified planned actions at these installations under the CERCLA site response process, subject to annual appropriations and prioritization of funding among eligible sites. DOD has been remediating contamination from hazardous substances and unexploded ordnance under the Defense Environmental Restoration Program for years at many of these same installations. Detections of PFOA or PFOS in groundwater are a more recent development that adds to existing challenges."], "subsections": []}]}, {"section_title": "Disposal", "paragraphs": ["Some stakeholders have expressed concern about the potential for environmental contamination from the disposal of PFAS. As with many other types of wastes, incineration and landfilling have been the two principal methods of disposal available for wastes containing PFAS. Incineration offers the potential to reduce the toxicity and volume of wastes, but generates air emissions and combustion residuals that necessitate disposal. Determining what temperatures are necessary to break down PFAS and ensuring that potential combustion byproducts are acceptable also have been issues for incineration. Wastewater discharges or sludge from industrial facilities and sewage treatment plants may contain PFAS depending on the constituency of the waste source. As industry transitions to shorter chain PFAS, some policymakers and stakeholders have also expressed concern about the disposal of existing stocks of longer chain PFAS and products containing these chemicals. For example, DOD, other federal agencies, civilian airport operators, and local fire departments face disposal needs for existing stocks of AFFF as they transition to alternatives. Waste streams generated from the treatment of PFAS in drinking water, or the remediation of PFAS contamination, also necessitate disposal.", "The disposal of PFAS wastes is regulated under multiple federal and state laws. EPA has not promulgated contaminant-specific standards for the disposal of PFAS to date. The disposal of PFAS wastes has been regulated similarly to other types of wastes for which contaminant-specific standards are not established. Although not presently listed as hazardous wastes, the disposal of PFAS wastes in landfills would generally be subject to RCRA Subtitle D solid waste criteria considering the breadth of the definition of \"solid waste\" in applying to garbage, refuse, sludge from a waste treatment plant, water supply treatment plant, or air pollution control facility, and other discarded material. Incineration facilities are also subject to RCRA for the disposal of combustion residuals, and to hazardous air pollutants standards under the Clean Air Act (CAA). Whereas these CAA standards are not specific to PFAS, some of them apply to related chemicals that may be created during combustion, such as hydrogen fluoride. Although EPA has not established effluent limitations or pretreatment standards for PFAS in wastewater, the Clean Water Act generally requires permits for the discharge of any pollutant into U.S. waters.", "Section 330D of House-passed H.R. 2500 would require DOD to ensure that PFAS is eliminated and not emitted into the air when using incineration to dispose of AFFF or other materials containing these chemicals. This House provision would also require DOD to ensure that applicable CAA requirements are met, the selected incineration facility has not violated the CAA within the past 12 months, and AFFF or other PFAS materials designated for disposal are stored in accordance with RCRA Subtitle C hazardous waste requirements. As a practical matter, DOD would be required to select incinerators designed for hazardous wastes that operate at temperatures sufficient to destroy carbon and fluorine bonds in PFAS. However, Section 330D would not designate PFAS as hazardous waste.", "The PFAS Waste Incineration Ban Act of 2019 ( H.R. 2591 ) would require EPA to promulgate regulations no later than six months after enactment that would prohibit the use of incineration to dispose of AFFF containing PFAS. H.R. 2591 would also require EPA to promulgate regulations no later than one year after enactment to identify other categories of PFAS wastes for which incineration would be prohibited if necessary to protect human health and the environment, and to review and revise these waste categories at least every four years. If incineration were prohibited, landfilling could increase if other disposal methods do not become more widely available.", "For wastewater discharges, Section 330A of House-passed H.R. 2500 would require EPA to list PFAS as toxic pollutants under the Clean Water Act within 30 days of enactment, and to establish effluent limitations and pretreatment standards for PFAS no later than January 1, 2022."], "subsections": []}, {"section_title": "Transition to Fluorine-Free Class B Firefighting Foams", "paragraphs": ["DOD has revised its Military Specification for AFFF as a step in its transition away from the use of Class B firefighting foams containing PFOA and PFOS. Military Specifications provide instructions to U.S. military departments and agencies that establish standards and parameters for specific products that DOD has determined are suitable for procurement to meet U.S. military needs for DOD to carry out its mission. DOD Military Specifications are internal guidelines developed for U.S. military procurement, and are not binding and enforceable regulations. ", "DOD initially issued its Military Specification on AFFF (MIL-F-24385) in 1969, specifying the use of \"fluorocarbon surfactants\" based on their effectiveness in extinguishing petroleum-based liquid fuel fires. DOD subsequently revised MIL-F-24385 for various purposes in the 1970s, 1980s, and 1990s, and on September 7, 2017, under MIL-PRF-24385F to address the amount of PFOA and PFOS and other criteria. DOD guidelines generally require reviews of Military Specifications at least once every five years. The next scheduled review of MIL-PRF-24385F is September 6, 2022. DOD issued a similar version of this Military Specification for the Naval Sea Systems Command on May 7, 2019. Both versions specify AFFF containing fluorocarbon surfactants for use as Class B fire extinguishing agents, but restrict the content of PFOA or PFOS to 800 parts per billion (ppb) or micrograms per liter. Neither version limits the content of other PFAS. Previous versions stated that AFFF must contain \"fluorocarbon surfactants\" but did not restrict the concentration of any PFAS.", "Section 6.6 of both the September 2017 version and the May 2019 version include the following DOD policy statement on the long-term objective to transition to the use of fluorine-free AFFF:", "The DoD's goal is to acquire and use a non-fluorinated AFFF formulation or equivalent firefighting agent to meet the performance requirements for DoD critical firefighting needs. The DoD is funding research to this end, but a viable solution may not be found for several years. In the short term, the DoD intends to acquire and use AFFF with the lowest demonstrable concentrations of two particular PFAS; specifically PFOS and PFOA. The DoD intends to be open and transparent with Congress, the Environmental Protection Agency (EPA), state regulators, and the public at large regarding DoD efforts to address these matters. AFFF manufacturers and vendors are encouraged to determine the levels of PFOS, PFOA, and other PFAS in their products and work to drive these levels toward zero while still meeting all other military specification requirements.", "DOD has funded the research and development of fluorine-free AFFF under its Strategic Environmental Research and Development Program (SERDP) and Environmental Security Technology Certification Program (ESTCP). In June 2018, DOD issued a report examining the status of alternatives to AFFF that contain PFOA and PFOS, and the plans of DOD for the phase-out and disposal of its existing stocks of AFFF that contain these chemicals. The report also discussed projects funded under SERDP and ESTCP. Section 1059 of the National Defense Authorization Act for Fiscal Year 2018 ( P.L. 115-91 ) required DOD to issue this report to the House and Senate Committees on Armed Services. House-passed H.R. 2500 includes multiple provisions related to phasing out the use of AFFF for land-based application at U.S. military installations and replacement with fluorine-free foams. Senate-passed S. 1790 also includes a phase-out provision for land-based application at U.S. military installations.", "The Federal Aviation Administration (FAA) has been using the DOD Military Specification for AFFF as criteria for civilian airport operators to demonstrate compliance with certification requirements for Class B fire extinguishing agents. Section 332 of the FAA Reauthorization Act of 2018 ( P.L. 115-254 ) directed FAA to stop recommending the use of fluorinated AFFF for civilian airport certification, no later than three years from the date of enactment (October 5, 2018). On January 17, 2019, FAA updated its guidelines to reference the September 2017 version of the DOD Military Specification for AFFF that restricted the maximum content of PFOA or PFOS. The FAA noted that it is researching potential alternatives for fluorine-free AFFF to comply with P.L. 115-254 , but observed ", "Currently, fluorine-free foams on the market do not match the performance of their fluorinated counterparts, and they require more agent to extinguish fires quickly. Fluorine-free foams are not able to provide the same level of fire suppression, flexibility, and scope of usage as MIL-PRF-24385 AFFF firefighting foam.", "The statutory deadline under P.L. 115-254 for FAA to allow the use of fluorine-free firefighting foams for civilian airport certification is October 5, 2021."], "subsections": []}, {"section_title": "PFAS in Dairy Milk, Foods, and Food Contact Applications", "paragraphs": ["Federal efforts to address potential health risks of PFAS have also focused on the potential for these chemicals to be present in foods, which may occur through interactions with environmental contamination or food contact applications. The U.S. Food and Drug Administration (FDA) has been evaluating potential exposures to PFAS in dairy milk, dairy products, other foods, and food contact applications, using its authorities under the Federal Food, Drug, and Cosmetic Act (FFDCA). The FDA has not established regulatory standards for specific concentrations of PFAS in milk or other foods to date. Federal safety standards for milk have generally been established in the Pasteurized Milk Ordinance.", "The FDA has examined multiple ways in which PFAS may become present in foods:", "PFAS may be present in dairy milk and dairy products from livestock that consume contaminated water. PFAS similarly may be present in meat from livestock that consume contaminated water. PFAS may be present in food crops if grown in contaminated soils or irrigated with contaminated water sources. PFAS may be present in fish and shellfish from contaminated water bodies. Food contact applications (e.g., cookware, food packaging, and processing) that contain PFAS are another potential source of contamination in foods.", "These situations are not unique to PFAS. They may present potential pathways of human exposure to any contaminant present in the environment that may interact with foods or that may be present in food contact applications. The uptake of PFAS or other chemicals in food would depend on the properties of the specific chemical, the conditions in which interaction with food occurs, and potentially other factors. As with drinking water, potential risks from PFAS or other contaminants in food would depend on the toxicity of the specific chemical, the conditions of exposure, and the characteristics of the exposed individual.", "The FDA has been assessing PFAS in foods from specific sites where PFAS contamination has been detected, certain foods with an increased likelihood of PFAS contamination not associated with specific sites, and foods more generally. The FDA has also regulated the uses of PFAS in food contact applications, and has been reviewing these regulations as more information becomes available. The FDA has generally found no or relatively low concentrations of PFAS in the foods that it has sampled. The FDA concluded that the sampled foods with detectable concentrations of PFAS were low enough not to present a human health concern. Of dairy milk sampled, FDA found elevated levels of certain PFAS in milk produced from livestock that consumed water from a contaminated well at a dairy farm in New Mexico. The FDA reports that the contaminated milk was discarded and did not enter the food supply.", "The U.S. Department of Agriculture (USDA) provided financial assistance to this affected New Mexico dairy farm through the Dairy Indemnity Payment Program (DIPP) for removing the contaminated milk from the commercial market. The USDA Agricultural Research Service (ARS) has also been examining blood and tissue samples from the contaminated livestock. ARS reports that the USDA Food Safety and Inspection Service notified state animal health officials that cattle from the New Mexico dairy farm should not be shipped to a federally inspected establishment and are not eligible to be processed for human food.", "The FDA reports that it conducts a safety assessment when discovering PFAS in foods \"using the best available current science to evaluate whether the levels present a possible human health concern\" considering the quantity of food consumed and the toxicity of the contaminants. The FDA has used EPA's reference dose (RfD) of 0.00002 mg/kg/day for ingestion of PFOA and PFOS as a toxicity value for its food safety assessments. The EPA lifetime health advisories of 70 ppt for PFOA and PFOS in drinking water are derived from this RfD, but are not intended for addressing other exposure scenarios. EPA did not recommend 70 ppt as an acceptable concentration of PFOA or PFOS individually or combined in milk or other foods.", "EPA stated in November 2016 that these health advisories \"only apply to exposure scenarios involving drinking water\" and \"are not appropriate for use in identifying risk levels for ingestion of food sources, including: fish, meat produced from livestock that consumes contaminated water, or crops irrigated with contaminated water.\" In a November 2016 agency memorandum, EPA also clarified these health advisories in relation to food:", "In the development of the health advisories, EPA took into consideration sources of exposure to PFOA and PFOS other than drinking water, including: air, food, dust, and consumer products. Thus, to be protective of exposure, the calculation of the health advisory accounts for the relative exposure to PFOA and PFOS from a variety of sources, including food. Calculation of specific risk levels for foods would require development of entirely different exposure assumptions and is not a part of the HA [health advisory] derivation methodology.", "Multiple bills in the 116 th Congress would address agricultural uses of water contaminated with PFAS, including provisions in the FY2020 NDAA bills. Section 323 of House-passed H.R. 2500 and Section 1073 of Senate-passed S. 1790 would authorize the use of DOD Operation and Maintenance accounts to fund alternative water sources or treat water contaminated with PFOA or PFOS at sites where U.S. military activities caused contamination of a water source used to produce agricultural products for human consumption. These provisions in both bills would authorize such DOD actions in these situations where PFOA or PFOS", "is detected in a water source at a concentration that exceeds EPA's May 2016 lifetime health advisories for PFOA or PFOS, or is equal to or exceeds any future FDA regulatory standard for PFOA or PFOS in raw agricultural commodities and milk associated with a contaminated water source.", "Section 323 of House-passed H.R. 2500 also would authorize alternative water sources or treatment of contaminated water in situations where PFOA of PFOS in raw agricultural commodities and milk exceeds a promulgated enforceable state standard, whereas Section 1073 of Senate-passed S. 1790 does not include such state standards. Section 4 of H.R. 1567 and Section 4 of S. 675 similarly would authorize DOD to provide alternative water sources or treat agricultural water sources contaminated with PFOA or PFOS, but do not include exceedances of state standards for raw agricultural commodities or milk as a threshold for DOD action. Use of the EPA lifetime health advisories for PFOA or PFOS in drinking water as a threshold for taking actions to address contamination of agricultural water sources may also be an issue from a scientific standpoint, as discussed above.", "Other legislation would address PFAS in food contact applications. H.R. 2566 would require EPA to revise the \"Safer Choice Standard\" to provide for a Safer Choice label for pots, pans, and cooking utensils that do not contain PFAS. H.R. 2827 would amend Section 409(h) of FFDCA to deem any PFAS used as a food contact substance as unsafe, beginning on January 1, 2022. Section 330B of House-passed H.R. 2500 would prohibit the DOD Defense Logistics Agency, beginning October 1, 2020, from procuring meals ready-to-eat (MREs) for U.S. military use that are assembled or packaged with any food contact substances that contain PFAS."], "subsections": []}]}, {"section_title": "Relevant Legislation Enacted in the 115th Congress", "paragraphs": ["In the 115 th Congress, multiple bills of broader purposes containing provisions related to PFAS were enacted. Some of these provisions were included in annual defense authorization legislation to authorize the CDC, ATSDR, and DOD to conduct additional health effects studies, and require DOD to submit reports to Congress related to the use of AFFF containing PFAS. Other provisions related to PFAS were included in Federal Aviation Administration (FAA) reauthorization legislation to allow the use of fluorine-free firefighting foams for civilian airport certification, and in a \"farm bill\" to authorize technical assistance for rural water systems.", " Table 1 on the following page identifies each of these laws, the specific provisions related to PFAS, the date of enactment, and a summary of the purpose of each relevant provision. Various appropriations acts have also allocated funding for DOD response actions at current and former U.S. military installations, joint CDC/ATSDR health effects studies, and certain other federal actions not identified in the table below. Multiple bills introduced in the 116 th Congress would also require EPA to take actions related to PFAS under various existing laws or would create new authorities, but none of these bills have been enacted to date."], "subsections": []}, {"section_title": "Relevant Legislation in the 116th Congress", "paragraphs": ["More than 40 bills have been introduced in the 116 th Congress to address PFAS through a broad range of actions and federal agencies, but none of these bills have been enacted to date. Among these bills, the House- and Senate-passed NDAA bills ( S. 1790 and H.R. 2500 ) contain numerous PFAS provisions specific to DOD. For example, some provisions involve the use, phase out, and disposal of AFFF, while others address DOD remediation of PFAS-contaminated drinking water, groundwater, and surface water. Multiple bills would require EPA to take actions related to PFAS under various existing laws or would create new authorities. The apparent intent of many of these bills is to reduce exposures to PFAS in drinking water and prevent or remediate the contamination of environmental media from releases of these substances. Table 2 identifies each of these bills and their status, the specific provisions related to PFAS, and a summary of the purpose of each relevant provision. "], "subsections": []}]}}
{"id": "R45787", "title": "House Rules Changes Affecting Floor Proceedings in the 116th Congress (2019-2020)", "released_date": "2019-06-27T00:00:00", "summary": ["As agreed to in the House, H.Res. 6 , a resolution adopting the rules of the House of Representatives, provided amendments to the rules, as well as separate orders, that affect floor procedure in the 116 th Congress (2019-2010). These amendments changed procedures in the full House and in the Committee of the Whole.", "The rules changes altered when a resolution that would cause a vacancy in the Office of Speaker would qualify as a question of privilege. Under a new provision to clause 2 of Rule IX, resolutions declaring a vacancy of the chair are not privileged unless they are offered by direction of a party caucus or conference.", "H.Re s. 6 established a Consensus Calendar for the consideration of certain broadly supported measures that have not been reported by their committees of primary jurisdiction. One rules change allows the Speaker to schedule consideration of legislation that has been on the Private Calendar for seven days. Another change requires the Speaker to schedule the consideration of a motion to discharge that has garnered the necessary 218 signatures to be placed on the Discharge Calendar (and has been on that calendar for at least seven legislative days). Prior to the rules change, measures on the Private Calendar and motions on the Discharge Calendar were to be considered on specified days of the month.", "The 116 th rules package mandates that certain legislative texts must be available to the public for 72 hours before legislation can be raised on the House floor. The earlier rules provided a three-day layover, not including weekends and holidays, which could provide a review period of fewer or more than 72 hours.", "Rules changes allow the Speaker to postpone votes on amendment votes that occur in the House proper and no longer require a notice that a voting period on the amendment will be reduced to five minutes. In the Committee of the Whole, the chair is afforded greater flexibility to reduce voting periods to two minutes on record votes.", "Several rules changes concerned the five Delegates and the Resident Commissioner of Puerto Rico. Most significantly, H.Res. 6 enables these individuals to vote in the Committee of the Whole. The 116 th rules reinstated the policy from previous Congresses that allowed for voting in the Committee of the Whole but also mandated a revote in the House proper if the initial vote was decided within the margin of votes cast by the Delegates and the Resident Commissioner.", "The 116 th rules package clarified that the provision in Rule XVII that bans hats in the House chamber allows Members to wear \"religious headdress.\" In the 116 th Congress, Members can wear religious head coverings in the chamber at any time.", "Finally, H.Res. 6 included a separate order governing action in the 116 th Congress that clarified procedures concerning measures introduced pursuant to the War Powers Resolution. The separate order stated that motions to discharge such measures from committee would not be subject to a motion to table."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["In January 2019, the House agreed to H.Res. 6 , a resolution adopting the rules of the House of Representatives for the 116 th Congress. This report summarizes amendments to House rules affecting floor proceedings in the 116 th Congress (2019-2020), as provided for in H.Res. 6 . ", "In the 116 th Congress, rules changes affected the consideration of legislation on the floor, voting in the House and the Committee of the Whole, and procedures related to Delegates and the Resident Commissioner of Puerto Rico. H.Res. 6 also clarified that religious headdress may be worn in the House chamber at any time, and it included a separate order specifying that, during the 116 th Congress, the House may not table motions to discharge certain measures related to the War Powers Resolution."], "subsections": []}, {"section_title": "Consideration of Legislation", "paragraphs": [], "subsections": [{"section_title": "\"Question of the Privileges of the House\" Resolution Causing a Vacancy in the Office of the Speaker", "paragraphs": ["H.Res. 6 amended Rule IX to establish that a resolution declaring a vacancy in the Office of the Speaker will not qualify as a question of the privileges of the House unless it is offered by direction of a party caucus or party conference. Prior to this rules change, such a resolution offered by any Member would have qualified as a question of privilege.", "Rule IX concerns resolutions \"raising a question of the privileges of the House.\" Resolutions raising a question of the privileges of the House are those that affect the \"rights of the House collectively, its safety, dignity, and the integrity of proceedings.\" If they are offered from the floor by the majority leader or the minority leader, they have precedence over all other questions except the motion to adjourn. When offered by other Members, they have the same precedence but only at a time scheduled by the Speaker within two legislative days after the proponent announces an intention to offer the resolution."], "subsections": []}, {"section_title": "Consensus Calendar", "paragraphs": ["The Consensus Calendar is an addition to House rules. It is a list of certain measures that have not been reported by their committees of primary jurisdiction yet have at least 290 cosponsors. The new clause 7 of Rule XV states that, except at the start and the end of a Congress, the House must consider a measure on the Consensus Calendar designated by the Speaker each week should one or more be listed and the House is in session. The Consensus Calendar might provide an opportunity to vote on unreported, broadly supported legislation that would not otherwise be chosen by the Speaker for consideration under suspension of the rules or made in order by a resolution from the Rules Committee. ", "In order to be placed on the Consensus Calendar, a non-reported measure must first achieve the 290-cosponsor threshold (two-thirds of the House's full membership). At that time, the measure's sponsor may present a motion to the Clerk to place the measure on the calendar. This motion is submitted in writing directly to the Clerk, as opposed to being offered on the floor. The written motion is then retained in the Clerk's custody and printed in the Congre ssional Record . The rule directs the Clerk to maintain a list of Consensus Calendar motions and make the list publicly available on the Clerk's website.", "Following the presentation of the motion, a measure will be placed on the Consensus Calendar once it has maintained 290 cosponsors for a \"cumulative period of 25 legislative days,\" a period of time that is usually equal to 25 calendar days in which the House is in session. (If the primary committee reports the measure during this period, the motion to place the measure on the Consensus Calendar will be considered withdrawn. ) The measure will remain listed on the calendar even if it falls below the 290-cosponsor threshold until it is considered by the House or is reported by the primary committee of jurisdiction. Thus, a committee may report a bill to prevent it from being placed on the Consensus Calendar or to remove it from the Consensus Calendar.", "The new rule did not create any special procedures for the floor consideration of a measure on the Consensus Calendar. According to the Section-by-Section summary of the rules changes prepared by the Rules Committee, Consensus Calendar measures may be considered \"in any manner otherwise available under the rules,\" which would include suspension of the rules or under the terms of a special rule reported by the Committee on Rules. The Section-by-Section summary also explains that the Speaker will meet the requirement of the rule that a measure on the Consensus Calendar be designated for consideration by making an announcement immediately preceding the consideration of a measure on the floor."], "subsections": []}, {"section_title": "Motions to Discharge", "paragraphs": ["H.Res. 6 amended clause 2 of Rule XV to require the Speaker to schedule consideration of a motion to discharge that has met the signature and layover requirements of Rule XV within two legislative days after a discharge proponent announces his or her intention to offer the motion. In previous Congresses, motions to discharge, which had met the Rule XV requirements, could be offered on the floor on the second and fourth Mondays of the month if the House was in session on those days. ", "The \"discharge rule\" enables an unreported measure that has not been scheduled by leadership for floor consideration to be raised on the floor, provided that a majority of the House membership has signed a discharge petition. Any Member may submit to the Clerk a motion to discharge a committee from the consideration of a public measure that the committee has had before it for 30 legislative days or more. A Member may also submit a motion to discharge the Committee on Rules from the consideration of a special order of business (special rule) it has had before it for seven legislative days or more if the measure the rule makes in order has been in committee for at least 30 legislative days or has been reported. Once a majority of the House membership (218 Members) signs the associated discharge petition, the motion is placed on the Calendar of Motions to Discharge Committees. After the motion has been on the calendar for at least seven legislative days, a Member who has signed the discharge petition may announce to the House an intention to offer the motion.", "As amended, clause 2(c)(1) of Rule XVI now requires the Speaker to schedule motions to discharge the day of the announcement or on one of the next two legislative days. Prior to the change, even after meeting all the other requirements, motions to discharge could be made only on the second and fourth Mondays of a month. If the House was not in session on those days, considerable time could pass between when the other requirements of the rule were met and when proponents could force consideration of their motion."], "subsections": []}, {"section_title": "Private Calendar", "paragraphs": ["The Private Calendar lists private legislation (measures providing benefits to one or more specified individuals or entities) that has been reported out of committee. House Rule XV provides a special procedure for the consideration of private legislation on the calendar, but in recent Congresses, few measures have been called from the Private Calendar. H.Res. 6 . amended clause 5 of Rule XV to allow the Speaker to direct the Clerk to call a private bill on any day the House is in session if the measure has been on the Private Calendar for seven days. Prior to the 116 th Congress, the call of the Private Calendar was limited to the first and third Tuesdays of the month. ", "If measures are listed on the calendar, the Speaker or designee is to direct the Clerk to call them on the first Tuesday of the month in the order they are listed. Under the amended rule, the Speaker may also direct the Clerk to call a specific measure on other days after the requisite seven-day period has passed. In the latter case, the Speaker must announce to the House an intention to call a private measure. The call, if it is to occur, must occur on the second legislative day after the legislative day the Speaker makes the announcement.", "Official Objectors are appointed by each party to examine measures on the Private Calendar. If, at the time a bill is called, two Objectors or two other Members object to the measure, the measure is recommitted to the committee that reported it. According to the Rules Committee's summary of H.Res. 6 , the specific requirement for two days' notice ensures that the \"Official Objectors are able to be on the Floor at the appropriate day and time.\" "], "subsections": []}, {"section_title": "72-Hour Availability", "paragraphs": ["House rules generally afford a time period for Members to review legislative text before considering measures in the chamber. H.Res. 6 . amended Rules XXI, XXII, and XXII to establish, for certain legislative text and committee reports, a 72-hour review period, as opposed to the previous review period, which spanned until the \"third calendar day\" on which the measures' text or committee reports had been available. The rules amendments actually made two changes: they designated the 72-hour period and, for reported measures, enabled the layover period to begin when the \"proposed text of each report\" is made available, in contrast to when the official committee report is available.", "Prior to the changes to the rules, legislative text could meet the three-day layover requirement even if it was not always available for a 72-hour period. For instance, if an unreported bill's text was posted at 9:00 p.m. on a Monday, the bill might have been considered on Wednesday morning, less than 40 hours later. The new 72-hour availability requirement, however, provides an exact time period for layover review before measures may be considered in the House. ", "The requirement applies to proposed text of committee reports and the text of unreported bills and joint resolutions, conference reports, and amendments reported in disagreement from conference committees. The review period begins at the time the text is posted electronically or otherwise made available. Thus, for committee reports, the clock can start with the posting of the report's proposed content, not when the committee has filed and delivered the report to the Clerk, which may occur at a later time. ", "As stated in clause 4 of Rule XIII, the availability requirement excludes supplemental, minority, additional, or dissenting views that may be inserted in a committee report at the request of a committee member. Members are guaranteed two calendar days to submit these optional sections if notice of intent to file supplemental views was given at the time the committee approved the measure or matter. "], "subsections": []}]}, {"section_title": "Voting", "paragraphs": [], "subsections": [{"section_title": "Postponability of Certain Votes (House)", "paragraphs": ["H.Res. 6 amended clause 8 of Rule XX to enable the Speaker to postpone a vote on any amendment considered in the House rather than restricting this action to amendments reported from the Committee of the Whole. Votes on the previous question to end debate on any amendment can now be postponed as well. Prior to the rules change, the rule referred only to amendments reported from the Committee of the Whole. Since 1979, House rules have allowed the Speaker to postpone and cluster votes by electronic device. In addition to amendments, several types of measures\u00e2\u0080\u0094including bills, resolutions, and conference reports\u00e2\u0080\u0094may be subject to a postponed vote. The Speaker's ability to postpone, cluster, and announce upcoming votes provides some degree of certainty to the voting schedule. "], "subsections": []}, {"section_title": "Discretion for Five-Minute Votes (House)", "paragraphs": ["Under clause 2 of Rule XX, the time for electronic voting is no less than 15 minutes in the House. However, clauses 8 and 9 provide the Speaker with the discretion to reduce to five minutes the voting period in the House if the vote occurs following another electronic vote or following a report from the Committee of the Whole. In previous Congresses, clause 9 stated that the reduced-time option could be exercised if \"notice\" was given of possible five-minute voting. ", "According to the amended clause 9(a), the Speaker may reduce the voting period if \"in the discretion of the Speaker Members would be afforded an adequate opportunity to vote,\" while clause 9(b) states, \"To the maximum extent practicable, notice of possible five-minute voting for a given series of votes shall be issued prior to the first electronic vote in the series.\" "], "subsections": []}, {"section_title": "Discretion for Two-Minute Votes (Committee of the Whole)", "paragraphs": ["The 116 th rules package amended clause 6 of Rule XVIII to provide the chair of the Committee of the Whole with more discretion to reduce the time for electronic voting. Under clause 2 of Rule XX, the time for electronic voting is no less than 15 minutes in the Committee of the Whole. However, clause 6 of Rule XVIII allows the chair to reduce the voting period to not less than two minutes if the vote occurs in a series. In previous Congresses, the two-minute vote on any proposed question was to occur immediately following the initial 15-minute vote or after the Committee of the Whole resumes. There could be no intervening business or debate. ", "H.Res. 6 removed references to intervening business or debate. Instead, clause 6 now authorizes a two-minute voting period \"if in the discretion of the chair Members, Delegates, and the Resident Commissioner would be afforded an adequate opportunity to vote.\" "], "subsections": []}]}, {"section_title": "Delegates and the Resident Commissioner", "paragraphs": [], "subsections": [{"section_title": "Admittance to the Hall of the House", "paragraphs": ["H.Res. 6 expanded the number of position categories allowed entrance to the Chamber when the House is in session. Under the amended clause 2 of Rule IV, the list of individuals eligible for floor privileges now explicitly includes Delegates-elect, the Resident Commissioner-elect, and contestants in elections for Delegate and the Resident Commissioner \"during the pendency of their cases on the floor.\" Clause 2 also states that, in addition to governors of the states, governors of the territories shall \"be admitted to the Hall of the House or rooms leading thereto.\""], "subsections": []}, {"section_title": "Notice of Convening", "paragraphs": ["During any recess or adjournment of not more than three days, the Speaker, in consultation with the minority leader, may change the time or the location of the next meeting of Congress if circumstances warrant it. The rule granting the Speaker this authority contains notification requirements. H.Res. 6 added, \"Delegates and the Resident Commissioner\" to the requirements in clause 12 of Rule 1 that \"Members\" be notified of a change in the time of the next meeting. "], "subsections": []}, {"section_title": "Committee of the Whole", "paragraphs": [], "subsections": [{"section_title": "Voting Powers", "paragraphs": ["H.Res. 6 reinstated from previous Congresses the voting rights of the Delegates and the Resident Commissioner in the Committee of the Whole. It also re-instated the rules provision that prevents these votes from influencing the final outcome of questions initially decided in the committee. In the 116 th Congress, recorded votes in the Committee of the Whole, which are decided within the margin of the votes cast by the Delegates and the Resident Commissioner, are to be re-conducted in the House, a forum in which Delegates and the Resident Commissioner do not have voting rights.", "As amended, clause 3(a) of Rule III states that in the Committee of the Whole, the Delegates and the Resident Commissioner \"shall possess the same powers and privileges as Members of the House.\" The term powers and privileges includes the ability to vote.", "In the 103 rd Congress (1993-1994), Delegates and the Resident Commissioner first received the power to vote in the Committee of the Whole. Since then, their voting status has changed with each change in the majority party. Accordingly, they voted during the 103 rd , 110 th (2007-2008), and 111 th (2009-2010) Congresses, when the Democrats held the majority in the House, but not the 104 th -109 th Congresses (1995-2006) and the 112 th -115 th Congresses (2011-2018), when the Republicans held the majority.", "During the Congresses in which the Delegates and the Resident Commissioner voted in the Committee of the Whole, the House adopted the associated marginal vote provision under what is now clause 6 of Rule XVIII. That is, if a question is decided in the Committee of the Whole within the margin of votes cast by the Delegates and the Resident Committee, the committee shall rise. The Speaker shall then put the question to the House. After the House votes, the Committee of the Whole shall resume its sitting. "], "subsections": []}, {"section_title": "Counting for Quorum and Other Procedures", "paragraphs": ["The 116 th Congress rules package enabled Delegates and the Resident Commissioner to be counted when ascertaining the presence of a quorum, as well as toward the requisite number to request a recorded vote, in the Committee of the Whole. In addition, the chair was to consider the Delegates' and Resident Commissioner's opportunity to vote before reducing the minimum time for electronic voting.", "H.Res. 6 amended clause 6 of Rule XVIII to add the phrase Delegates and the Resident Commissioner after the word Members in three places. Consequently, a quorum in the committee became 100 Members, Delegates, and the Resident Commissioner. A request for a recorded vote needs the support of at least 25 Members, Delegates, and the Resident Commissioner. And the chair may reduce the time to vote on any postponed question \"if in the discretion of the Chair Members, Delegates, and the Resident Commissioner would be afforded an adequate opportunity to vote.\""], "subsections": []}]}]}, {"section_title": "Religious Headdress", "paragraphs": ["H.Res. 6 amended clause 5 of Rule XVII to clarify that Members may wear religious headdress in the House chamber. The amendment added the phrase non-religious headdress to clause 5 in order to specify that the hat prohibition did not include religious headwear. Clause 5 now states, \"During the session of the House, a Member, Delegate, or Resident Commissioner may not wear non-religious headdress or a hat.\""], "subsections": []}, {"section_title": "War Powers Resolution", "paragraphs": ["The 116 th Congress rules package included a section on \"separate orders,\" which are provisions that affect House procedures but are not codified in the standing rules of the House. These separate orders have the same force and effect as House rules. Under one such separate order, H.Res. 6 clarifies that the House may not table a motion to discharge a measure introduced pursuant to Section 6 or Section 7 of the War Powers Resolution ( P.L. 93-148 ).", "The War Powers Resolution is an act that governs House consideration of joint resolutions, bills, and concurrent resolutions that are introduced after the U.S. Armed Forces engages \"in hostilities\" without a prior declaration of war. Measures introduced in compliance with the resolution are referred to the House Foreign Affairs Committee. The committee is to report such legislation within a time frame delineated in the resolution. ", "The War Powers Resolution does not provide an automatic discharge process if the committee does not report. Should the measure not be reported, a Member may offer a motion to discharge the committee from further consideration in order to allow it to reach the floor. According to the Rules Committee summary for H.Res. 6 , previous House action on similar procedures \"made it unclear\" if a Member could then offer a motion to table the motion to discharge. The separate order is intended \"to provide certainty for all Members, Delegates, and the Resident Commissioner on this procedure.\""], "subsections": []}]}}
{"id": "R46106", "title": "Misuse of Government Purchase Cards: Background, Legislation, and Analysis", "released_date": "2019-12-06T00:00:00", "summary": ["Following their introduction in the mid-1990s, the usage of government purchase cards expanded at a rapid rate. Spurred by legislative and regulatory reforms designed to increase the use of purchase cards for small acquisitions, the dollar volume of government purchase card transactions grew from $527 million in FY1993 to $19.5 billion in FY2011. While the use of purchase cards was credited with reducing administrative costs during that time, audits of agency purchase card programs found varying degrees of waste, fraud, and abuse. One of the most common risk factors cited by auditors was a weak internal control environment: many agencies failed to implement adequate safeguards against card misuse, even as their purchase card programs grew.", "In response to these findings, Congress passed the Government Charge Card Abuse Prevention Act of 2012 (Charge Card Act; P.L. 112-194 ), which sought to enhance the management and oversight of agency purchase card programs. Drawing on recommendations from the Government Accountability Office (GAO), the Charge Card Act required executive branch agencies to implement a specific set of internal controls, establish penalties for employees who misuse agency purchase cards, and conduct periodic risk assessments and audits of agency purchase card programs.", "This report begins by providing background on the origin and structure of agency purchase card programs. It then discusses identified weaknesses in agency purchase card controls that have contributed to card misuse, and examines provisions of the Charge Card Act that are intended to address those weaknesses. Finally, the report examines implementation of the Charge Card Act and analyzes ongoing risks to agency purchase card programs."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Background", "paragraphs": ["The government's purchase card program has its origins in Executive Order (E.O.) 12352, issued by President Ronald Reagan in 1982. E.O. 12352 directed agencies to develop programs that simplified procedures and reduced the administrative costs of procurement, particularly with regard to \"small\" purchases ($25,000 or less). Several agencies subsequently participated in a pilot program that evaluated the use of a commercial credit card, called a purchase card, as an acquisition tool. At the time, even a routine order for widely available items, such as office supplies, typically required agency program staff to submit a written procurement request to a contracting officer, who reviewed it, obtained the necessary signatures, made the actual purchase, and processed the associated paperwork. To critics, this process was inefficient, especially for small purchases. Not only was it time-consuming for both program and procurement personnel, but it also prevented program offices from quickly filling immediate needs. Under the pilot program, nonprocurement staff used purchase cards to conduct small-dollar transactions directly with local suppliers, thus bypassing procurement officers entirely. A report on the pilot program concluded that purchase cards could reduce administrative costs and improve delivery time, and in 1989 the Office of Management and Budget (OMB) tasked the General Services Administration (GSA) with making purchase cards available government-wide.", "Participation in GSA's purchase card program was not mandatory, and card use did not initially grow as rapidly as some had expected. In 1993, however, a report issued by the National Performance Review (NPR) sparked a number of legislative and regulatory reforms intended to increase purchase card use. The NPR was a Clinton Administration initiative that sought to \"reinvent\" the federal government by making government operations both less expensive and more efficient. One of the NPR's objectives was to identify opportunities to streamline a number of government-wide processes, including procurement. Drawing on input from experts in the public and private sectors, the NPR's initial report recommended expanding the use of purchase cards across the government, a step it said would \"lower costs and reduce bureaucracy in small purchases.\" In a separate report that focused solely on procurement, the NPR estimated that if half of all small acquisitions were made using purchase cards, the government would realize $180 million in savings annually. The report further recommended amending the Federal Acquisition Regulation (FAR)\u00e2\u0080\u0094the government's primary source of procurement guidance\u00e2\u0080\u0094to promote the use of purchase cards for small purchases.", "Building on the NPR's recommendations, Congress passed the Federal Acquisition Streamlining Act (FASA; P.L. 103-355 ) in 1994. FASA introduced several reforms that increased the use of purchase cards. Among these, Title IV of FASA established a simplified acquisition threshold (SAT) of $100,000 (increased to $250,000 in 2017). Purchases at or below the threshold were exempted from the provisions of a number of procurement laws. This reform obviated the need for procurement officials to make small purchases. To further streamline procedures for the smallest acquisitions, Title IV also established a \"micro-purchase\" threshold of $2,500 (which was increased to $3,000 in 2006, and again to $10,000 in 2017). FASA further exempted micro-purchases from sections of the Buy American Act and the Small Business Act, and they could be made without obtaining a competitive bid, if the cost was deemed reasonable by the cardholder.", "At the same time, the Clinton Administration took steps to increase the use of purchase cards. Citing the need to make agency procurement procedures \"more consistent with recommendations of the National Performance Review,\" President Clinton issued Executive Order 12931 on October 13, 1994. E.O. 12931 directed agency heads to (1) expand purchase card use; and (2) delegate the micro-purchasing authority provided in FASA to program offices, which would enable them to make purchases whose value did not exceed the micro-purchase threshold. E.O. 12931 also directed agency heads to streamline procurement policies and practices that were not mandated by statute, and to ensure that their agencies were maximizing their use of the new simplified acquisition procedures. In addition, the FAR was amended in 1994 to designate the purchase card as the \"preferred method\" for making micro-purchases.", "Card use increased sharply as agencies implemented these reforms. The dollar value of goods and services acquired with purchase cards increased from $527.0 million in FY1993 to $19.5 billion in FY2011. During that same time span, the number of cardholders nearly tripled to 278,000, and the number of purchase card transactions increased from 1.5 million to just under 22.8 million in FY2011. The flexibility of the purchase card may have contributed to its growth: it could be used for in-store purchases, which allowed the cardholder to take immediate possession of needed goods, or it could be used to place orders by telephone or over the internet and have goods delivered. According to GSA, the use of purchase cards now saves the government $1.7 billion a year in administrative costs."], "subsections": []}, {"section_title": "Structure", "paragraphs": ["The federal purchase card program is implemented by individual agencies, with the involvement of GSA and OMB. In broad terms, agencies establish and maintain their own programs, but they select pu rchase card services from contracts that GSA negotiates with selected banks, and their programs must conform to the government-wide guidance issued by OMB."], "subsections": [{"section_title": "Agencies", "paragraphs": ["Each agency is responsible for establishing its own purchase card program. The agency, within the framework of OMB guidance, establishes internal rules and regulations for purchase card use and management, decides which of its employees are to receive purchase cards, and handles billing and payment issues for agency purchase card accounts. Two levels of supervision generally exist within an agency's purchase card program. Individual cardholders are assigned to an Approving Official (AO). The AO is considered the \"first line of defense\" against card misuse, and agency policies often require the AO to ensure that all purchases comply with statutes, regulations, and agency policies. To that end, the AO is responsible for authorizing cardholder purchases, either by approving purchases before they are made or by verifying their legitimacy through reviews of cardholder statements and supporting documentation, such as receipts. The AO may also be required to ensure that statements are reconciled and submitted to the billing office in a timely manner.", "Each agency also appoints an Agency Program Coordinator (APC) to serve as the agency's liaison to the bank and to GSA. At some agencies, each major component has an APC, one of whom is chosen to serve as the agency's liaison. The APCs are also usually responsible for agency-wide activities, such as developing internal program guidelines and procedures, sampling cardholder transactions to identify fraudulent or abusive purchases, setting up and deactivating accounts, and ensuring that officials and cardholders receive proper training."], "subsections": []}, {"section_title": "GSA", "paragraphs": ["GSA's primary responsibility is to award and administer contracts with card vendors on behalf of the government. In November 1998, agency purchase card programs began operating under GSA's SmartPay initiative. SmartPay permitted agencies to select a range of credit card products from five banks with which GSA had negotiated contracts. The SmartPay contracts established prices, terms, and conditions for credit card products and services from these five banks. Purchase cards were established as centrally billed accounts under the contracts, which meant that agencies, and not individual cardholders, were billed for purchases. The contracts required agencies to make payment in full at the end of each billing cycle. New purchase card contracts\u00e2\u0080\u0094known collectively as SmartPay2\u00e2\u0080\u0094took effect government-wide in November 2008. In November 2018, all federal agencies began operating under SmartPay3 contracts."], "subsections": []}, {"section_title": "OMB", "paragraphs": ["OMB issues charge card management guidance that all agencies must follow. This guidance, located in Appendix B of OMB Circular A-123, establishes agencies' responsibilities for implementing their purchase, travel, and fleet card programs. Chapter 4 of Appendix B identifies the responsibilities of charge card managers in developing and implementing risk management controls, policies, and practices (often referred to collectively as \"internal controls\") that mitigate the potential for charge card misuse. Agency charge card managers must ensure that", "cardholder statements, supporting documentation, and other data are reviewed to detect delinquency and misuse; key duties are separated, such as making purchases, authorizing purchases, and reviewing and auditing purchase documentation; records are maintained for training, appointment of cardholders and authorizing officials, cardholder purchase limits, and related information; disciplinary actions are initiated when cardholders or other program participants misuse their cards; appropriate training is provided for cardholders, approving officials, and other relevant staff; employees are asked about questionable or suspicious transactions; and charge card statement reconciliation occurs in a timely manner.", "Chapter 4 also identifies administrative and disciplinary actions that may be imposed for charge card misuse, such as deactivation of employee accounts, and it requires managers to refer suspected cases of fraud to the agency's Office of Inspector General or the Department of Justice.", "Circular A-123 provides OMB with oversight tools by requiring agencies to submit to OMB each year a charge card management plan that details their efforts to implement and maintain effective internal controls and minimize the risk of card misuse and payment delinquency. It also requires agencies to report the number of AOs it has appointed, the average number of monthly purchase card transactions each AO reviews, the number of reported cases of misuse, and the number of disciplinary actions taken in response to misuse."], "subsections": []}]}, {"section_title": "Purchase Card Program Weaknesses", "paragraphs": ["Audits of agency purchase card programs conducted by the Government Accountability Office (GAO) and agency inspectors general (IGs) through FY2011 attracted congressional attention with their revelations of abusive purchases made by government employees. Among the many cases of abuse cited by auditors were a Department of Agriculture (USDA) employee who, over a period of six years, used her purchase card to funnel $642,000 to her boyfriend; a Forest Service employee who charged $31,342 to his purchase card for personal items, including Sony PlayStations, cameras, and jewelry; and a Coast Guard cardholder who used his purchase card to buy a beer brewing kit\u00e2\u0080\u0094and then brewed alcohol while on duty. Congress held several hearings to address purchase card misuse and the underlying internal control weaknesses that auditors said allowed it to occur. The following section examines the weaknesses identified in audit reports published between 2002 and 2011, which highlight the issues that led to the passage of the Charge Card Act."], "subsections": [{"section_title": "Ineffective Transaction Review and Approval Processes", "paragraphs": ["One of the primary safeguards against improper use of government purchase cards is the review and approval of cardholder transactions by someone other than the cardholder. As noted, purchase card AOs are usually responsible for reviewing the cardholder's monthly statement. Given that the AO is often the only person other than the cardholder to assess the validity of a purchase before payment is made to the purchase card vendor, the review and approval process is considered one of the most critical components of an agency's purchase card control environment. Steven Kutz, GAO's Managing Director of Forensic Audits and Special Investigations, stated in testimony before the Senate,", "Basic fraud prevention concepts and our previous audits of purchase card programs have shown that opportunities for fraud and abuse arise if cardholders know that their purchases are not being properly reviewed.", "Despite the importance of the AO's role in preventing and detecting improper purchases, some agencies failed to ensure that cardholder statements were carefully reviewed prior to their approval. At the Department of Education, auditors estimated that 37% of monthly cardholder statements they reviewed had not been approved by the AO. GAO also estimated that nearly one of every six purchase card transactions government-wide had not been properly authorized.", "Even when AOs did conduct reviews, they sometimes failed to meet government standards. Agencies are required by OMB to ensure that cardholder statements are compared with supporting documentation, such as invoices and receipts, as part of the review process. This is necessary because purchase card statements are rarely itemized; they usually provide only the store or contractor name and the amount charged. For AOs, receipts and invoices are the principal means of verifying what items were purchased and determining whether those items were for legitimate program purposes. According to GAO, many agencies have not ensured that supporting documentation is available and examined as part of the review and approval process. An audit of the Department of Housing and Urban Development's (HUD's) purchase card program found that the agency did not have adequate documentation for 47% of transactions auditors deemed questionable\u00e2\u0080\u0094purchases from merchants that are not normally expected to do business with HUD\u00e2\u0080\u0094which meant auditors \"were unable to determine what was purchased, for whom, and why.\" Similarly, an audit of the Veterans Health Administration's (VHA's) purchase card program estimated that $313 million of its transactions lacked key supporting documentation.", "One consequence of these weaknesses was that fraudulent and abusive transactions slipped through the review process unnoticed. For instance, GAO found that AOs at agencies across the government approved cardholder statements that included questionable transactions, such as purchases of jewelry, home furnishings, cruise tickets, electronics, and other consumer goods. At the Forest Service, one employee used her purchase card over a period of years to accumulate more than $31,000 in jewelry and electronics. Similarly, HUD cardholders spent $27,000 at department stores like Macy's and J.C. Penney in a single year. In one egregious case, a Federal Aviation Authority (FAA) employee had his statement approved even though it showed he violated agency policy by charging cash advances to his purchase card\u00e2\u0080\u0094while at a casino.", "The lack of adequate oversight is also evident where AOs have approved duplicate transactions\u00e2\u0080\u0094vendors charging the government twice for the same goods or services\u00e2\u0080\u0094and purchases made by someone other than the cardholder. One audit identified an estimated $177,187 in duplicate charges at one agency. An audit at FAA discovered that a cardholder had allowed unauthorized individuals to charge over $160,000 to her purchase card account. When an AO identifies unauthorized and duplicate transactions, the agency should use the process described in the SmartPay master contract to dispute the charges. When AOs fail to identify and dispute fraudulent charges, the government often pays them in full or fails to obtain a refund from the purchase card vendor."], "subsections": []}, {"section_title": "Inconsistent Program Monitoring", "paragraphs": ["GAO further found that many agencies failed to monitor and evaluate the effectiveness of their purchase card controls, a responsibility that is often assigned to the APC. Monitoring and evaluation may include sampling purchase card transactions for potentially improper purchases, ensuring purchase card policies are being properly implemented across the agency or component, and assessing program results. These duties are often unfulfilled. At FAA, for example, an audit found that APCs \"generally were not\" utilizing available reports to detect misuse and fraud, nor was the headquarters APC taking steps to assess the overall program. Similarly, an audit of the Forest Service purchase card program found that the agency's APCs failed to review sampled transactions for erroneous or abusive purchases, as required by USDA regulations."], "subsections": []}, {"section_title": "Lack of Separation of Duties", "paragraphs": ["Agencies are required to ensure that key procurement functions are handled by different individuals. When having goods shipped, for example, the same person should not approve and place the order, or place the order and receive the goods. At many agencies, however, the cardholder may perform two functions that should be separated, which increases the possibility that items may be purchased for personal use, lost, or stolen. In March 2008, GAO estimated that agencies were unable to document separation of duties for one of every three purchase card transactions. Three Navy cardholders ordered and received $500,000 of goods for themselves with their purchase cards before getting caught. In this way, inadequate separation of duties may result in millions of dollars of items that cannot be located. Items that are easily converted to personal use\u00e2\u0080\u0094commonly referred to as \"pilferable property\"\u00e2\u0080\u0094are particularly vulnerable to loss and theft. The Department of Education, for example, could not account for 241 personal computers bought with purchase cards at a cost of $261,500. An audit of the Federal Emergency Management Agency's (FEMA's) spending on items related to hurricane recovery found that $170,000 worth of electronics equipment acquired with purchase cards had not been recorded in FEMA's property records and could not be found."], "subsections": []}, {"section_title": "Inadequate Training", "paragraphs": ["Given the complexities of federal procurement policies and procedures, training on the proper use and management of purchase cards is considered an important component of an agency's internal control environment. Through training, cardholders, approving officials, and program managers learn their roles in ensuring compliance with applicable regulations and statutes, and in reducing the risk of improper card use. To that end, OMB requires all agencies to train everyone who participates in a purchase card program. Cardholder training covers federal procurement laws and regulations, agency policies, and proper card use. Approving officials are required to receive the same training as cardholders, in addition to training in their duties as AOs. Program managers are required to be trained in cardholder and AO responsibilities, as well as management, control, and oversight tools and techniques. In addition, all purchase card program participants are supposed to complete their initial training prior to appointment (e.g., becoming a cardholder, or being designated as an AO or program manager) and receive refresher training at least every three years.", "Agency audits published between 2002 and 2011 revealed a number of agencies had not fully implemented OMB's training requirements. A report by the inspector general at the Department of the Interior (DOI), for example, noted that DOI had not provided any training to its AOs, and concluded that many of those officials were not performing adequate reviews. The AOs themselves reportedly said that they did not know how to conduct a proper review of purchase card transactions, or how and why to review supporting documentation\u00e2\u0080\u0094both subjects that are normally included in AO training.", "Similarly, an audit at FAA concluded that the agency's failure to provide refresher training for cardholders and AOs may have contributed to violations of statutory sourcing requirements. The failure to comply with sourcing statutes, which require agencies to purchase certain goods and services from specified vendor categories, may undermine congressional procurement objectives. The Javits-Wagner-O'Day Act (JWOD), for example, requires the government to buy office supplies and services from nonprofits that employ blind and disabled Americans. Cardholder failure to comply with the provisions of JWOD and other sourcing statutes was widespread enough that GAO estimated that tens of millions of dollars of purchase card transactions may have been conducted with vendors other than the ones Congress intended."], "subsections": []}, {"section_title": "Excessive Number of Cards Issued and High Credit Limits", "paragraphs": ["The number of cardholders grew from under 100,000 in FY1993 to 680,000 in FY2000. After auditors expressed concerns that the government had issued too many credit cards and provided excessive credit limits\u00e2\u0080\u0094factors that raised the risk of card misuse\u00e2\u0080\u0094OMB issued a memorandum in April 2002 that required agencies to examine the number of purchase cards they issued and to consider deactivating all cards that were not a \"demonstrated necessity.\" That same year, provisions in the Bob Stump National Defense Authorization Act for FY2003 ( P.L. 107-314 ) required the Department of Defense (DOD) to establish policies limiting both the number of purchase cards it issued and the credit available to cardholders. These reforms contributed to a net decrease of 392,000 government purchase cards between FY2000 and FY2011.", "Despite this decrease in the total number of purchase card users, audits through FY2011 indicated that a number of agencies, including some with relatively large purchase card programs, did not establish appropriate controls over card issuance and credit limits. A 2006 GAO report on purchase cards at the Department of Homeland Security (DHS), for example, identified 2,468 cardholders\u00e2\u0080\u0094about 20% of all DHS cardholders\u00e2\u0080\u0094who had not made any purchases in over a year. Similarly, a congressionally directed audit of the Veterans Health Administration's (VHA's) $1.4 billion purchase card program found that VHA had issued cards with credit limits up to 11 times greater than the cardholders' historical spending levels, thereby exposing its program to unnecessary risk."], "subsections": []}]}, {"section_title": "Government Charge Card Abuse Prevention Act", "paragraphs": ["In response to these findings\u00e2\u0080\u0094and evidence of similar abuse in agency travel card programs\u00e2\u0080\u0094Congress passed the Government Charge Card Abuse Prevention Act of 2012 (Charge Card Act; P.L. 112-194 ). The Charge Card Act established new internal control and reporting requirements for both purchase cards (\u00c2\u00a72), and travel cards (\u00c2\u00a73 and \u00c2\u00a74). The following paragraphs examine the Charge Card Act's requirements for purchase cards. Given that the Charge Card Act directly amends the U.S. Code, the requirements are identified by their location in code rather than in the act itself."], "subsections": [{"section_title": "Management of Purchase Cards", "paragraphs": ["Statutory purchase card requirements for civilian agencies are located in a different title of the U.S. Code than those for DOD. The Charge Card Act therefore amended Title 41 to codify the civilian agency provisions and Title 10 to codify DOD's provisions. In addition, the Charge Card Act establishes similar, but not identical, requirements for civilian agencies and DOD. "], "subsections": [{"section_title": "Civilian Purchase Card Program Requirements", "paragraphs": ["Section (2)(a)(1) of the Charge Card Act added civilian agency purchase card requirements to Chapter 19, Title 41, of the U.S. Code. The new requirements are found in 41 U.S.C. \u00c2\u00a71909(a) through (e).", "41 U.S.C. \u00c2\u00a71909(a), Required Safeguards and Internal Controls, requires executive agencies to ensure", "1. There is a record of each cardholder that includes the applicable limitations on single transaction and total transactions. 2. Each cardholder is assigned an AO other than the cardholder. 3. Each cardholder and AO are responsible for (a) reconciling the charges appearing on the cardholder's statements with receipts and other supporting documentation; and (b) forwarding a summary report to the certifying official. 4. Any disputed charges or discrepancies between the cardholder's receipts and bank statements are resolved in accordance with the terms of GSA's purchase card contract with the card issuer. 5. Payments on purchase card accounts are made by the prescribed deadlines to avoid interest penalties. 6. Rebates and refunds are reviewed for accuracy and recorded as receipts. 7. Records of each transaction are retained in accordance with record disposition policies. 8. Periodic reviews are performed to determine whether each cardholder needs a purchase card. 9. Appropriate training is provided to each purchase card holder and official responsible for overseeing purchase cards in the agency. 10. The agency has specific policies that establish the number of purchase cards issued by various component organizations and the authorized credit limits for those cards. 11. The agency uses effective systems, techniques, and technologies to identify illegal, improper, or erroneous purchases. 12. The agency invalidates the purchase card of each employee who (a) ceases to be employed by the agency, immediately upon termination, or (b) transfers to another unit of the agency, immediately upon transfer, unless both units are covered by the same purchase card authority. 13. The agency takes steps to recover the cost of any illegal, improper, or erroneous purchases made with a purchase card, including through salary offsets.", "41 U.S.C. \u00c2\u00a71909(b), Guidance, requires the OMB Director to provide guidance on the implementation of the requirements of subsection (a).", "41 U.S.C. \u00c2\u00a71909(c), Penalties and Violations, requires agencies to establish adverse personnel actions or other punishment for cases where a cardholder violates agency purchase card policies or otherwise makes illegal, improper, or erroneous purchases with a card. The prescribed penalties must include dismissal of the employee, as appropriate. In addition, subsection (c) requires the head of each agency with more than $10 million in annual purchase card expenditures to issue a semiannual report on purchase card violations by its employees. The report must be issued jointly with the agency IG and submitted to the OMB Director.", "41 U.S.C. \u00c2\u00a71909(d), Risk Assessment and Audits, requires the IG of each agency to ", "1. Conduct periodic assessments of agency purchase card programs to identify and analyze the risks of misuse and to use these assessments to develop an audit plan. 2. Audit purchase card transactions in order to identify potential misuse, patterns of misuse, and categories of purchases that could be made with another payment method in order to obtain lower prices. 3. Report the audit results to the agency head, along with recommendations for addressing any findings. 4. Report to the OMB Director on the implementation of the IG's recommendations. The OMB Director must compile the IG reports and transmit them to Congress and the Comptroller General.", "41 U.S.C. \u00c2\u00a71909(e), Relationship to Department of Defense Purchase Card Regulations, clarifies that subsections (a) through (d) do not apply to DOD."], "subsections": []}, {"section_title": "DOD Purchase Card Program Requirements", "paragraphs": ["Section 2(a)(2) of the Charge Card Act amended 10 U.S.C. \u00c2\u00a72784(b) to codify new purchase card management requirements for DOD. Only the Charge Card Act requirements are listed below.", "10 U.S.C. \u00c2\u00a72784(b)(2) requires DOD to ensure that each cardholder is assigned an approving official other than the cardholder. 10 U.S.C. \u00c2\u00a72784(b)(11) requires DOD to use effective systems, techniques, and technologies to prevent or identify potential fraudulent transaction. 10 U.S.C. \u00c2\u00a72784(b)(12) requires DOD to invalidate the purchase card of each employee who (a) ceases to be employed by DOD, immediately upon termination, (b) transfers to another unit of DOD, immediately upon transfer, unless both units are covered by the same purchase card authority, or (c) is separated or released from active duty or full-time National Guard duty. 10 U.S.C. \u00c2\u00a72784(b)(13) requires DOD to take steps to recover the cost of any illegal, improper, or erroneous purchases made with a purchase card, including through salary offsets. 10 U.S.C. \u00c2\u00a72784(b)(15) requires DOD to conduct periodic assessments of agency purchase card programs in order identify and analyze the risks of misuse and to report the results to the OMB Director and Congress."], "subsections": []}]}]}, {"section_title": "Implementation of the Charge Card Act", "paragraphs": ["In an effort to assess compliance with the Charge Card Act and other purchase card requirements across the government, GAO reviewed agency policies and data from FY2014 and released its analysis in 2017. More recently, the Council of the Inspectors General on Integrity and Efficiency (CIGIE) launched a coordinated audit of FY2017 purchase card data. The IGs at 20 agencies sampled a total of 1,255 \"high-risk\" transactions\u00e2\u0080\u0094purchases that potentially violated program policies or procedures\u00e2\u0080\u0094from and shared their findings with CIGIE. By July 2018, the IGs had released their own reports and CIGIE had issued a summary and analysis of the findings. According to the CIGIE analysis, while there were few examples of fraud at the 20 agencies that participated in the project, nearly 51% (501) of the purchases sampled failed to comply with at least one purchase card policy. Patterns of noncompliance, with examples and analysis from the GAO report, individual agency audits, and the CIGIE report are discussed below."], "subsections": [{"section_title": "Purchases from Prohibited or Questionable Merchants", "paragraphs": ["Federal statutes and regulations, including agency-specific regulations, may prohibit the purchase of supplies and services from certain merchants or for certain items. USDA's purchase card guidance, for example, prohibits employees from using their purchase cards to obtain cash advances, bail bonds, personal items, or escort services. Agencies are often able to block merchants of certain categories\u00e2\u0080\u0094such as cruise lines or casinos\u00e2\u0080\u0094through the card-issuing bank. Some merchants, while not prohibited, are considered \"questionable\" because the items or services they offer may be allowed by agency policies, only if certain conditions are met. A purchase card may be used at a catering company, for example, but only under certain circumstances. Exceptions may be permitted for transactions with prohibited or questionable merchants under limited circumstances, but they must be justified by the cardholder and approved by the AO.", "The CIGIE analysis found that nearly 8% of high-risk purchases violated agency policies regarding prohibited or questionable merchants. Of those, nearly one-half lacked a written justification and/or authorization from the AO. An IG at one agency found an employee had used his purchase card to lease multiple vehicles at a cost of more than $5,700, and had provided no documentation to support the need and appropriateness of the transaction. In addition, agencies often failed to block merchant categories; one agency permitted transactions at seven types of prohibited businesses. Even when agencies attempted to block certain merchant categories, the technology did not work consistently. The EPA IG found 20 purchase card transactions at merchants who had been blocked by the agency\u00e2\u0080\u0094the cards had not been declined at the point of sale."], "subsections": []}, {"section_title": "Purchases from Nonmandatory Sources", "paragraphs": ["Purchase card holders are required to use mandatory sources to obtain needed supplies, when possible. Cardholders may use other sources only after confirming that the supplies or services they need are not available from a mandatory source. Auditors found, however, that in nearly one out of every five transactions (19.9%), cardholders purchased supplies and services from nonmandatory sources when they could have acquired them from mandatory sources. As a consequence, agencies not only failed to support certain categories of merchants that are mandatory sources, such as people who are blind or severely disabled, but they also may not obtain the best available price and thereby reduce potential cost savings. One cardholder, for example, purchased batteries from a nonmandatory source for $64.49 when they were available from a mandatory source for $11.42\u00e2\u0080\u0094meaning the agency overpaid by 565%. Similarly, a cardholder at USDA purchased a used Global Positioning System (GPS) device from a nonmandatory source when a new model was available from a mandatory source for 15% less.", "Purchases from nonmandatory sources may be authorized if a written justification is provided, but cardholders frequently failed to provide one. Auditors at the Department of the Interior (DOI), for example, determined that cardholders had failed to justify purchases from nonmandatory sources 65% of the time. Overall, the CIGIE reported that cardholders provided no justification for a majority of transactions with nonmandatory sources. Other documentation policies were violated as well. The CIGIE data showed that 36% of nonmandatory purchases lacked a requisition request, 32% lacked evidence of receipt, and 6% had no documentation at all."], "subsections": []}, {"section_title": "Purchases that Included Sales Tax", "paragraphs": ["Generally, federal purchase card transactions are exempt from state and local sales taxes. Cardholders are responsible for ensuring that their transactions do not include sales taxes, and attempting to recover sales taxes if they are paid erroneously. IGs at 20 federal agencies found many instances of purchase card holders paying sales taxes\u00e2\u0080\u0094more than 5% of the high-risk transactions in the CIGIE study included charges for sales taxes. Of the transactions that included sales tax, 58% lacked a written justification for paying the taxes and 20% of the items may not have been needed by the government. In many cases, agencies did not track whether the sales taxes were recovered. The USDA IG investigated seven transactions that included sales taxes, and none of the cardholders provided any documentation as to whether they attempted to recover the tax charges. An audit of NASA's purchase card transactions found that 7% of all high-risk purchases included sales tax, and that there was no evidence that the cardholders had attempted to reclaim those costs. While sales tax on any single transaction may not be considered significant, the cumulative amount in a fiscal year may total in the hundreds of thousands of dollars. The DOI IG obtained actual tax-paid data from the agency's purchase card program and determined that in the first six months of FY2017, DOI paid $338,212 in sales taxes involving 19,716 transactions. The IG for HUD found the agency expended $42,944 in sales tax on purchase card transactions during FY2018."], "subsections": []}, {"section_title": "Purchases that Split Transactions", "paragraphs": ["Each purchase card holder is assigned a dollar amount, or threshold, which may not be exceeded on a single transaction. This threshold is known as the single purchase limit. Cardholders may not split a large purchase into smaller ones in order to circumvent the single purchase limit. Auditors typically flag an account that shows multiple purchases from the same vendor on the same day where the total costs exceed the cardholder's single purchase limit\u00e2\u0080\u0094this pattern is often associated with split transactions. ", "The CIGIE report estimated that 6.6% of all high-risk transactions involved split transactions. The USDA IG, for example, identified a series of transactions on the same day, with the same vendor, for the same product, where the sum of the charges was more than double the cardholder's single purchase limit. Similarly, the NASA IG determined that an employee had tried to circumvent the single transaction limit by making three purchases from the same vendor on the same day. Auditors at the Social Security Administration (SSA) identified split transactions in 6.5% of its sample. The agency suggested that its staff lacked the time to investigate these purchases and determine if they were inappropriate."], "subsections": []}]}, {"section_title": "Implications for Agency Internal Controls", "paragraphs": ["Although the CIGIE initiative did not assess the implementation status of every requirement in the Charge Card Act, the IGs' findings indicated weaknesses remain in many agencies' internal controls. In particular, the audit results showed that AOs did not adequately monitor cardholder purchases; employee training on purchase card policies and procedures is insufficient; and agency policies and procedures have gaps. "], "subsections": [{"section_title": "Lack of Adequate Oversight from AOs", "paragraphs": ["The Charge Card Act required agencies to strengthen AOs' capacity to monitor cardholder activity. AOs play a central role in preventing and detecting purchase card misuse, as they review cardholder statements to verify any suspicious or questionable transactions. In addition, AOs reconcile transaction records with supporting documentation to ensure that all purchases were appropriate. ", "Audit findings highlighted the ongoing need for AOs to carefully review cardholder transactions. Many transactions that violated agency purchase card policies had not been reviewed and approved by an AO. GAO found that 11% of all the transactions it sampled from FY2014 had not been reviewed and approved by an AO. Similarly, the CIGIE report found that 44% of the transactions involving questionable or prohibited sources and 38% of split transactions had not been reviewed by the AO. These charges may have been questioned had the AOs thoroughly reviewed the purchases. ", "In many cases, AOs approved transactions that lacked complete supporting documentation. GAO estimated that 22% of all purchase card transactions in FY2014 lacked complete documentation.", "IGs reported that 59% of the purchases that violated agency policies on the use of mandatory sources lacked written justification, as did 58% of the purchases that violated policies prohibiting the payment of sales taxes. In many cases, AOs approved transactions where there was no documentation that the goods or services had been received. The CIGIE report estimated that of the total number of transactions that violated an agency purchase card policy, 27% were approved without a receipt."], "subsections": []}, {"section_title": "Lack of Proper Training", "paragraphs": ["The Charge Card Act specifies that agencies are to ensure that cardholders and AOs receive appropriate training on their duties. IGs found that at many agencies, purchase card training programs did not cover some policies or refresher training had not occurred within the past three years\u00e2\u0080\u0094conditions which are inconsistent with OMB training requirements. Auditors considered the lack of proper training to be a significant weakness with wide-ranging effects. As the EPA IG's office wrote, \"cardholder noncompliance primarily resulted from ineffective training and/or a lack of monitoring and control activities.\"", "The CIGIE report found, for example, that agency training programs often lacked adequate explanations of the rules governing split transactions, which meant that AOs did not know how to properly identify such purchases and cardholders were unaware that split purchases were violations of policy. The NASA IG recommended that the agency revise its purchase card training program to emphasize minimum documentation requirements, which constituted NASA's largest category of policy violations. Multiple agencies were unable to provide complete training records. The HUD IG found, for example, that the agency had not maintained records of the cardholders and managers who had completed the required training, as did the IG at the Small Business Administration (SBA). "], "subsections": []}, {"section_title": "Lack of Clear and Complete Policies", "paragraphs": ["Agencies develop their own policies to implement government-wide and agency-specific purchase card requirements. The CIGIE report found that agency guidance was often unclear. Consequently, cardholders and managers did not always understand and properly follow purchase card policies. The IG at the Department of State recommended that the agency reissue its purchase card guidance to specify the frequency with which \"refresher training\" must be completed\u00e2\u0080\u0094a policy which was inconsistently represented at different components. The NASA IG linked one particular weakness\u00e2\u0080\u0094the absence of supporting documents for purchase card transactions\u00e2\u0080\u0094to agency guidance, which was unclear about the document requirements for purchases below $500. The EPA IG recommended that the agency revise its guidance on the use of mandatory sources to make it easier to understand. More than 39% of EPA's noncompliant transactions were related to the inappropriate use of nonmandatory sources. ", "In some cases, agency policies did not provide sufficient information about purchase card requirements. GAO found that several agencies did not require someone other than the cardholder to receive purchases. In addition, the CIGIE report found that while split transactions were a common violation, many agencies \"lacked the policies necessary to identify split purchases.\" The USDA IG identified 1,410 transactions in FY2018 where the agency paid sales taxes and could not determine if any efforts had been made to recover those charges. The IG wrote that", "This occurred because USDA does not have a policy requiring cardholders to document reasons for paying or attempting to recover sales tax, such as documenting on the receipt or using the AXOL system to describe the transaction. As a result, cardholders are improperly paying sales tax and not documenting why sales taxes were paid or if recovered, making it difficult for approving officials to determine why State and local sales taxes were paid or if any recovery was attempted.", "Auditors at EPA determined that the agency did not have adequate controls over its purchase card program, in part because the agency lacked a specific policy for the appropriate number of cardholders needed to make purchases at its various components."], "subsections": []}]}, {"section_title": "Concluding Observations", "paragraphs": ["Oversight of agency purchase card programs is limited by the availability of data. While the CIGIE report identified areas where implementation of the Charge Card Act is incomplete, not all agencies had provided data and the data provided did not reflect or represent all of the law's requirements. Moreover, implementation of the Charge Card Act is ongoing and some agencies may have already addressed the weaknesses identified in the CIGIE initiative, which analyzed FY2017 data. ", "Going forward, Congress has the option of requesting a study of the implementation of the Charge Chard Act. If GAO were to examine implementation of the Charge Card Act, it would possibly be able to use more recent data and it could target agencies with the highest risk of card misuse, as determined by dollar volume or history of violations, among other criteria. GAO might be asked to evaluate specific requirements, particularly in areas that were cited by auditors prior to the Charge Card Act. Have agencies implemented policies that require separation of duties? Have agencies established appropriate dollar thresholds for various categories of cardholders? Are agencies invalidating purchase cards when an employee terminates employment or is transferred to another component? The CIGIE report noted another potential weakness\u00e2\u0080\u0094approximately 8.6% of the high-risk transactions sampled involved purchase card activity on closed accounts. The extent of agency compliance with these and other purchase card requirements will not be known without additional, timely information.", "In addition to agency efforts, an evaluation of the effectiveness of SmartPay bank services and tools might be useful. As noted, agencies have reported that merchant block codes do not always prevent transactions from being approved at prohibited merchants. In addition, GAO found that SmartPay banks did not always retain records for the amount of time required by their contracts, in part due to confusion over which records were considered part of the transaction. An evaluation of bank services might identify additional issues that need to be addressed. It also might include a comparison of the technologies different agencies utilize and discuss what benefits they have realized. Given the potential for technology to enhance oversight, reduce administrative burden, and mitigate the risk of improper purchases, an assessment of SmartPay bank services may help agencies identify potentially useful technologies they have not yet incorporated into their charge card programs."], "subsections": []}]}}
{"id": "R46273", "title": "Consideration of Privileged Nominations in the Senate", "released_date": "2020-03-16T00:00:00", "summary": ["Privileged nominations are a subset of presidentially appointed and Senate-confirmed positions that are eligible for consideration under procedures established by S.Res. 116 (112 th Congress, 2011-2012). The vast majority of the 285 nominations designated as privileged are part-time positions to various boards and commissions, though some full-time positions are privileged as well (e.g., chief financial officers and certain assistant secretaries in Cabinet-level agencies). The procedures for privileged nominations may reduce the workload of committees of jurisdiction in processing these appointments for consideration by the Senate.", "The creation of privileged nominations and the special procedures for their consideration were part of a larger effort at reforming the confirmation process in the Senate during the 112 th Congress. At the outset of the 112 th Congress, a bipartisan working group was formed and ultimately produced both S.Res. 116 , \"A resolution to provide for expedited Senate consideration of certain nominations subject to advice and consent,\" and S. 679 , the \"Presidential Appointment Efficiency and Streamlining Act of 2011\" ( P.L. 112-166 ). The list of privileged nominations, first established in 2012, was expanded in 2015 by P.L. 114-1 , the Terrorism Risk Insurance Program Reauthorization Act of 2015, to include 13 members of the Board of Directors for the National Association of Registered Agents and Brokers.", "Unlike a typical nomination, a privileged nomination is not referred to committee unless requested by any Senator. Instead, it is entered into the \"Privileged Nominations\" section of the Senate Executive Calendar . Committees are required to request biographical and financial information from these nominees, typically in the form of committee questionnaires. Upon receipt of the requested information, the committee chair notifies the Executive Clerk in writing. The nomination then remains in the \"Privileged Nominations\" section of the Executive Calendar for 10 days of session before moving to the \"Nominations\" section, where it is eligible to be brought up for consideration on the floor of the Senate. This process allows a nomination to become eligible for floor consideration even though the committee did not hold a formal markup meeting to vote to report it. There are no expedited floor procedures for privileged nominations, and they are brought up and considered under the same procedures as any nomination reported by a committee.", "Any Senator may request on his or her own behalf, or on behalf of any identified Senator, that a privileged nomination be referred to committee. Such a request automatically triggers the referral of a privileged nomination. If a nomination is referred in this way, it must be reported by the committee (or the Senate must discharge the committee of the nomination) before the full Senate can consider it. The vast majority of privileged nominations considered on the Senate floor were not subject to a request for referral to committee. As of the end of 2019, the Senate has considered 467 privileged nominations, and there have been 22 instances of privileged nominations being referred to a committee at the request of a Senator. Such requests for referral are usually initiated by a Member on the committee with jurisdiction over the nomination and oftentimes originate with the committee's chair or ranking member."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "\"Privileged\" Nominations", "paragraphs": ["Every year the Senate routinely considers whether to give its advice and consent to hundreds of nominations submitted by the President. From start to finish, the confirmation process can be a lengthy one, even for relatively noncontroversial nominees. Each nomination is typically referred to one or more committees having subject matter jurisdiction over the position. Committees may bear a significant workload in examining nominees\u00e2\u0080\u0094often including questionnaires, optional public hearings, and individual meetings with Senators\u00e2\u0080\u0094to determine whether to report a nomination to the full Senate. Once a committee has reported a nomination or been discharged from its further consideration, the Senate may take up a nomination for deliberation, though a cloture process may be required to ensure a final vote to confirm. ", "As part of an effort to streamline the nominations process during the 112 th Congress (2011-2012), a standing order of the Senate, S.Res. 116 , created a new designation of certain nominations as \"privileged.\" These so-called privileged nominations are subject to special procedures that may save the time of committees in processing these appointments. In total, there are 285 positions to which nominations are privileged, the majority of which are part-time appointments to oversight boards and advisory commissions, but they also include full-time chief financial officers and certain assistant secretaries to cabinet-level agencies. A full list of privileged nominations, organized by their committees of jurisdiction, can be found in Appendix .", "This report first examines, in detail, the special procedures under which privileged nominations are processed, as well as the action by which a Senator may have a privileged nomination referred to its committee of jurisdiction. It then provides a brief legislative history of S.Res. 116 and subsequent legislation that has created additional privileged nominations. Finally, this report includes data on and a discussion of Senators' requests to refer privileged nominations to committee. Figure A-1 contains an example of the \"Privileged Nominations\" section of the Senate's Executive Calendar . "], "subsections": [{"section_title": "Consideration of Privileged Nominations", "paragraphs": ["The sections below discuss each step of how a privileged nomination might be processed under potentially expedited procedures before consideration by the full Senate. Pursuant to Section 1(d) of S.Res. 116 , any Senator may insist that a privileged nomination be referred to its committee of jurisdiction, making it no longer eligible for procedures under S.Res. 116 . Further discussion of when and why a Senator might make such a request follows after the sections on consideration."], "subsections": [{"section_title": "Receipt in Senate", "paragraphs": ["Unlike a typical nomination\u00e2\u0080\u0094which, when received by the Senate, is usually referred to its committee of jurisdiction\u00e2\u0080\u0094a privileged nomination goes directly to the \"Privileged Nominations\" section of the Executive Calendar . There, the nominee and position to which he or she was nominated is to be recorded, along with the date the nomination was received by the Senate. An example page of the \"Privileged Nominations\" section of the Executive Calendar appears in Figure A-1 .", "The same day a privileged nomination is received in the Senate, the Office of the Executive Clerk sends a notification form to its committee of jurisdiction. This transmittal from the Executive Clerk is not a referral of the nomination to the committee but rather serves to inform the committee it should proceed to request information from the nominee. A column in the Privileged Nominations section of the Executive Calendar entitled \"Information Requested by Committee\" is marked with a \"Yes\" to denote this transaction. "], "subsections": []}, {"section_title": "Information Requested and Received by Committee", "paragraphs": ["Though under the terms of S.Res. 116 , privileged nominations are not referred to their committees of jurisdiction, these committees are still responsible for obtaining certain background information from nominees before they can be considered by the full Senate. Section 1(b) of S.Res. 116 directs that the \"appropriate biographical and financial questionnaires\" be collected by committees of jurisdiction from privileged nominees. This broad requirement gives committees some discretion in determining what information to collect. As a result, committee practices on obtaining information from privileged nominees can vary.", "Once a nominee has responded to a committee's questionnaires, the chair is required to notify the Executive Clerk in writing that the appropriate information has been received. This requirement is fulfilled, in practice, when the committee returns the notification form to the Executive Clerk's office. ", "When a committee has affirmed receipt of the requested information from a nominee, that date is recorded under the \"Requested Information Received\" column in the Privileged Nominations section of the Executive Calendar . Senators have 10 session days from this date (and any time prior to this point, starting from the day the nomination was received in the Senate) to request that the nomination be referred to its committee of jurisdiction. After 10 session days have passed, the nomination is then moved to the \"Nominations\" section of the Executive Calendar and is eligible to be called up for consideration on the Senate floor (after lying over for one day or, by unanimous consent, immediately).", "Privileged nominations that have been considered under these procedures are to appear in the Nominations section of the Executive Calendar with the designation \"Placed on the Calendar pursuant to S.Res. 116 , 112 th Congress\" under the \"Reported By\" column, along with the date it first appeared there."], "subsections": []}, {"section_title": "Final Consideration Under Regular Procedures", "paragraphs": ["Once a privileged nomination has moved to the Nominations section of the Executive Calendar , there is no expedited process under which the Senate can proceed to consider or vote on it. Instead, these nominations are equally eligible for consideration as any other found on the Nominations section of the Executive Calendar . As a result, even privileged nominations that may have moved quickly through the expedited committee process could face lengthy wait periods before being brought up for consideration by the full Senate. Some privileged nominations never receive a vote on the Senate floor and are returned to the President when the Senate adjourns sine die at the end of the first or second session of a Congress or when it recesses for more than 30 days."], "subsections": []}, {"section_title": "Referral of a Privileged Nomination to Committee", "paragraphs": ["As noted earlier, pursuant to Section 1(d) of S.Res. 116 , any Senator may trigger, on his or her own behalf or the behalf of any identified Senator, that a privileged nomination be referred to its committee of jurisdiction for consideration under normal procedures. Any such request compels the referral of the nomination to committee. Senators do not need to obtain recognition on the floor to make such a request, nor are they required to provide a reason for their request. Instead, a form for this purpose is available at the dais on the Senate floor. A Senator's request is then to be reflected in that day's Congressional Record , and the nomination is to be referred to its committee of jurisdiction. Additional data on requests for the referral of a privileged nomination can be found in Table 1 .", "Senators may make such requests for a variety of reasons. Senators may have concerns over the qualifications or fitness of an individual to serve in the position to which he or she was nominated. Referring the nomination to committee ensures that it will need the support of a majority of the committee to be reported to the Senate\u00e2\u0080\u0094a higher threshold than under the procedures of S.Res. 116 , which require only that the committee's chair affirm that the requested biographical and financial information has been received. Alternatively, a Senator may desire more time for individual meetings with Senators or a public hearing where a nominee's credentials can be extolled, perhaps increasing the chances of a favorable floor vote."], "subsections": []}]}]}, {"section_title": "Legislative History on the Creation of Privileged Nominations", "paragraphs": [], "subsections": [{"section_title": "S.Res. 116, 112th Congress", "paragraphs": ["The creation of privileged nominations and the special procedures applied to them were part of a larger effort to reform the confirmation process in the Senate during the 112 th Congress (2011-2012). On January 5, 2011, Majority Leader Harry Reid and Minority Leader Mitch McConnell engaged in a brief colloquy to discuss the pace of processing nominations in the Senate, noting the increasing volume of Senate-confirmed positions and the need for reform. Connecting the oftentimes laborious confirmation process with difficulty in finding capable nominees, Majority Leader Reid said:", "Clearly, all Presidents are entitled to choose well-qualified individuals to serve in their administration. In the vast majority of instances, the individuals nominated by the President are not controversial, but many have faced delays before assuming their positions. These delays mean critical decision-makers are not in place. And, the delays make it harder to find qualified people\u00e2\u0080\u0094many great nominees simply cannot wait around for months as the stress and uncertainty affects their families and careers. We need to do better in the 112 th Congress. ", "The two leaders agreed to form a bipartisan nominations reform working group, consisting of Senators Chuck Schumer and Lamar Alexander, the chair and ranking minority member of the Committee on Rules and Administration; Senators Joe Lieberman and Susan Collins, the chair and ranking minority member of the Committee on Homeland Security and Governmental Affairs; and the floor leaders themselves. By the end of March, members of the group had introduced two measures: S. 679 , the Presidential Appointment Efficiency and Streamlining Act of 2011, and, S.Res. 116 , a resolution to provide for expedited Senate consideration of certain nominations subject to advice and consent.", "S.Res. 116 was submitted on March 30, 2011, by Senator Schumer on behalf of himself and 14 other Senators\u00e2\u0080\u0094including all members of the nominations reform working group\u00e2\u0080\u0094and was referred to the Committee on Rules and Administration. The Rules Committee met on May 11 and ordered the resolution reported favorably by voice vote without amendment.", "The Senate took up S.Res. 116 for consideration on June 29. Three amendments to the resolution were proposed and considered, with a package of negotiated and technical changes\u00e2\u0080\u0094referred to as a \"managers' amendment\"\u00e2\u0080\u0094ultimately being agreed to. ", "The first amendment, proposed by Senator Tom Coburn, contained language requiring reporting requirements on legislation creating new federal programs. The amendment was not agreed to, 63-34, after failing to achieve a two-thirds threshold for adoption, pursuant to an earlier unanimous consent agreement. A second amendment, proposed by Senator Tom Harkin on behalf of Senator Tom Udall, would have amended Senate Rule XXII to establish a majority-vote threshold for invoking cloture on executive branch nominees. This amendment was ruled out of order by the chair. The final amendment, offered by Senator Schumer, included provisions that expanded the positions to be considered as privileged nominations (including several full-time chief financial officers and certain assistant secretaries) and required that future legislation proposing new presidentially appointed positions be accompanied by a justification report. The amendment was adopted by unanimous consent.", "The Senate agreed to S.Res. 116 , as amended, by a vote of 89-8, on June 29, 2011."], "subsections": []}, {"section_title": "Terrorism Risk Insurance Program Reauthorization Act of 2015", "paragraphs": ["H.R. 26 , the Terrorism Risk Insurance Program Reauthorization Act of 2015, during the 114 th Congress (2015-2016), created a new 13-member Board of Directors for the National Association of Registered Agents and Brokers and designated these positions as privileged nominations established by S.Res. 116 (112 th Congress). To date, this legislation marks the first and only expansion of the privileged nominations category. ", "The language establishing these new privileged nominations first appeared in the 113 th Congress (2013-2014) with the introduction of S. 534 , the National Association of Registered Agents and Brokers Reform Act of 2013. The legislative history of S. 534 offers no additional comment on the designating of these 13 positions as privileged nominations. Nonetheless, these positions fit the general profile of the type of nominations for which expedited consideration was designed (e.g., part-time boards and commissions). "], "subsections": []}]}, {"section_title": "Privileged Nominations Referred to Committee", "paragraphs": ["The Senate has considered 467 privileged nominations since S.Res. 116 was agreed to on June 29, 2011. Of those 467, 22 (4.7%) have been referred to committee at the request of a Senator. This rate of referral suggests that Senators are generally deferential to the expedited committee consideration of privileged nominations. Table 1 provides data on these 22 instances of requested referrals. Each entry contains identifying information about the nomination, including the Congress when the nomination was submitted, the name of the nominee, the position to which he or she was nominated, and the final disposition of the nomination by the Senate. Table entries also note the committee of jurisdiction for each nomination and a column indicating whether the Senator requesting referral was a member and/or leader of that committee at the time he or she made the request.", "As previously discussed, under the provisions of S.Res. 116 , any Senator has the right to request that a privileged nomination be referred to its committee of jurisdiction. The vast majority of these requests have been by a Senator on the nomination's committee of jurisdiction. Of the 22 instances where a privileged nomination has been referred, 20 have been made by a Senator from the committee of jurisdiction. Furthermore, 14 of those 20 requests were made by either the chair or ranking member of the committee of jurisdiction. "], "subsections": [{"section_title": "Appendix. Privileged Nominations", "paragraphs": [], "subsections": []}]}]}}
{"id": "R45919", "title": "Ground Electronic Warfare: Background and Issues for Congress", "released_date": "2019-09-17T00:00:00", "summary": ["Ground electronic warfare (EW) is a group of programs directed by the Army and Marine Corp which are designed to effect ground forces use of the electromagnetic spectrum. The U.S. military has several ground EW programs that are used for different missions. These programs can broadly be categorized into counter-improvised explosive device (C-IED) systems, counter-unmanned aerial systems (C-UAS), and communications and radar jammers. Over the past several years, senior leaders in the Army and Marine Corps have testified about the need to improve EW capabilities.", "Role of EW in Ground Operations", "EW is a component of modern warfare, particularly in response to threats posed by potential adversaries such as Russia and China. EW refers to operations that use the electromagnetic spectrum (i.e., the \"airwaves\") to detect, listen to, jam, and deceive (or \"spoof\") enemy radars, radio communication systems, data links, and other electronic systems. EW also refers to operations that defend against enemy attempts to do the same.", "Ground EW programs have gained importance in an era of \"great power competition.\" Countries like Russia and China have developed so-called anti-access/area denial (A2/AD) systems, some of which are designed to prevent U.S. military access to radio and satellite communications, and to deny the use of radars for artillery and air defense operations.", "Ground Forces EW Programs", "This report focuses on three categories of unclassified EW programs in the Army and Marine Corps, along with their respective programs and systems:", "C ounter -IED : the Thor and Duke Version III systems. C ounter -UAS : the Batelle Drone Defender, Blighter Counter-UAS system, the Mobile Expeditionary High Energy Laser, the Marine Air Defense Integrated System (MADIS), and the Compact Laser Weapons System (CLaWS). C ommunications and radar jammers : the EW Tactical Vehicle (EWTV), the EW Planning and Management Tool (EWPMT), the Communication Emitter Sensing and Attacking System II (CESAS II), and the Mobile EW Support System (MEWSS).", "Potential Oversight Issues for Congress", "Congress has continually shown interest in EW, and the decisions it makes regarding EW could affect future military capabilities and funding requirements. In particular, EW programs pose several potential issues for Congress:", "Is DOD's proposed mix of ground EW capabilities and investments appropriate? How do the Army and Marine Corps transition emerging technologies from demonstrations into programs, and are these programs funded adequately? What role might emerging technologies have in shaping current EW plans and programs?"], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["This report focuses on selected ground electronic warfare (EW) systems. The Department of Defense (DOD) FY2020 budget requests funding for a number of ground EW systems associated with the Army and the Marine Corps. ", "Generally, ground EW capabilities seek to use the electromagnetic spectrum to achieve one of three battlefield effects. First, ground EW systems can be used to defeat Improvised Explosive Devices (IED). This was the focus of the U.S. military's ground EW programs for the past decade and a half. A second role for ground EW can be to defeat Unmanned Aerial Systems (UAS). A third role, largely a legacy from the Cold War, can be to jam enemy communications and radars. ", "An overall issue for Congress is whether to approve, reject, or modify DOD's proposals for ground EW programs. These programs also pose a number of potential oversight issues for Congress. Congress's decisions on these issues could affect future U.S. military capabilities and funding requirements. Potential issues for Congress include", "balancing EW programs between counter-improvised explosive device missions and great power competition, potentially standardizing how different services approach EW funding, and the role new technologies may play in EW operations."], "subsections": []}, {"section_title": "Background", "paragraphs": [], "subsections": [{"section_title": "EW Overview2", "paragraphs": ["Electronic warfare (EW)\u00e2\u0080\u0094sometimes also called electromagnetic maneuver warfare (EMW) \u00e2\u0080\u0094is an integral component of modern warfare, particularly in operations against technologically sophisticated potential adversaries such as Russia and China. EW generally refers to operations that use the electromagnetic spectrum (i.e., the \"airwaves\") to detect, listen to, jam, and deceive (or \"spoof\") enemy radars, radio communication systems and data links, and other electronic systems. EW also refers to operations for defending against enemy attempts to do the same. More formally, DOD defines electronic warfare as \"[m]ilitary action involving the use of electromagnetic and directed energy to control the electromagnetic spectrum or to attack the enemy.\"", "As shown in Figure 1 , DOD divides EW into electronic warfare support, electronic protection, and electronic attack. Electronic warfare support , sometimes also referred to as electronic support measures (ESM), involves listening to an adversary's radar and radio transmissions in an attempt to detect, locate, and understand how to avoid, jam, or deceive those systems. Electronic protection involves limiting the electromagnetic signatures of one's own military equipment and hardening one's own military equipment against the effects of enemy EW operations. Electronic attack (EA) involves jamming and deceiving enemy radars and radio communications and data links. ", "Developing ever-better EW systems is a component of the competition in military capabilities between major military powers. Because EW programs tend to be classified and are sometimes related to intelligence systems and capabilities, these systems are not frequently discussed publicly in much detail.", "Ground EW systems provide EW support, electronic protection, and electronic attack. For instance, the Marine Corps' Mobile Electronic Warfare Support System categorizes enemy radio signals. Many of the counter-improvised explosive device countermeasures serve in both a protection and attack role by emitting a signal to jam radio communications to \"attack\" communications while protecting soldiers and marines. Counter-unmanned aerial systems provide a similar function for drones."], "subsections": []}]}, {"section_title": "U.S. Military Ground EW Programs", "paragraphs": [], "subsections": [{"section_title": "Counter-Improvised Explosive Device (C-IED)", "paragraphs": ["In the immediate post-Cold War era, electronic warfare gained prominence as a potential way to mitigate threats from improvised explosive devices (IEDs). During counter-insurgency operations in Iraq and Afghanistan, U.S. and allied ground forces suffered many casualties from IEDs. To detonate IEDs, insurgents learned to use cell phones, small two-way radios, and other basic radio communications to maximize the amount of damage. One C-IED method the DOD developed was for EW systems to jam IED communications radio frequencies to prevent them from detonating. From FY2006 through FY2011, the Joint IED Defeat Organization received $18 billion to develop C-IED technologies, including electronic warfare systems.", "These C-IED techniques included the development of a \"man-portable\" platform (see Figure 2 ), which supports U.S. forces on foot patrol, without the protection of a vehicle. However, due to power constraints, these types of C-IEDs provide jamming in a limited area; the jammers use batteries that are heavy and must be carried. DOD also procured C-IED jamming systems for vehicles, such as the Duke Version 3 system ( Figure 3 ), which can be installed on nearly any vehicle, though typically it is installed on the Humvee or the Mine-Resistant Ambush Protected Vehicle. Although these vehicular-based C-IED jammers are more powerful, because they draw power from the vehicle's engine, they are not able to accompany ground forces into buildings or in constricted areas such as alleyways. Thus ground forces require both systems, for mounted (travelling by vehicle) and dismounted (travelling by foot) operations."], "subsections": []}, {"section_title": "Counter-Unmanned Aerial Systems (C-UAS)", "paragraphs": ["The emergence of unmanned aerial systems (UAS), more commonly called drones, has created unique challenges for U.S. military forces. Both state and nonstate actors have employed drones for intelligence, surveillance, and reconnaissance (ISR) and certain strike capabilities (particularly large UAS platforms such as the MQ-9 Reaper for U.S. allies or the Wing Loong II developed by the People's Republic of China). Most UAS systems use radio frequencies to operate. ", "Adversaries have used UAS to support ground operations in recent years. The Islamic State (IS, also known as Islamic State in Iraq and the Levant (ISIL)) modified commercial drones to perform reconnaissance and drop small explosives, such as hand-grenades and mortars, on unsuspecting personnel. The Russian military demonstrated its ability to pair EW drones with artillery fire, with devastating effects. According to U.S. intelligence sources, Russian forces used a single drone to provide intelligence for an artillery fire mission in July 2014 that resulted in the destruction of two Ukrainian battalions within minutes. Emerging concepts like \"swarming,\" where many small drones work together to accomplish a task, are also being developed. In 2015, IS demonstrated swarming tactics to attack a Russian airbase in Syria\u00e2\u0080\u0094though it is unclear how effective these swarming tactics were against Russian forces.", "As a result, DOD has developed EW techniques to deny potential adversaries the ability to use drone aircraft. These counter-UAS systems are divided into two categories: systems that detect UAS, and systems that interdict UAS systems kinetically or nonkinetically. Some counter-UAS systems are capable of both detection and attack. According to one analyst, as of February 2018 there were 235 counter-UAS products from 155 manufacturers. These counter-UAS products range from hand-held devices that can jam radio and global positioning system (GPS) signals for point defense (see Figure 4 ) to larger, ground-based systems that can defend larger areas (see Figure 5 ). The latest generation of counter-UASs by the Army and Marine Corps are being developed to destroy targets using directed energy such as lasers.", "The Army has recently developed vehicle-mounted lasers capable of engaging UAS. In 2018, the Army tested the Mobile Expeditionary High Energy Laser (MEHEL), a 5 kilowatt (kW) laser, which is placed on a Stryker-armored vehicle (see Figure 6 ). This laser has demonstrated being capable of destroying small drones in flight. The Army is planning to test a more powerful 10kW laser, and anticipates upgrading to a 50 kW laser, capable of destroying rockets, artillery, and mortars, by 2022. The Army plans to translate these technology demonstrators into future air defense systems by the mid-2020s. However, several challenges remain for the Army to field laser technologies. The first challenge is to develop a sufficient energy source that can fit into relatively small spaces. Some of the first lasers required a large power source housed in a semi-truck trailer\u00e2\u0080\u0094a power system too large to be practical for operational forces. The second challenge is providing sufficient power so that a laser beam can travel long distance. Light quickly diffuses in the atmosphere, thereby limiting the range of the system, particularly for lower-powered lasers.", "Similarly to the Army, the Marine Corps is developing its own counter-UAS systems through the ground-based air defense (GBAD) program. In June 2019, the Marine Corps Warfighting Lab announced the first laser-approved operations, named the Compact Laser Weapons System (CLaWS) (see Figure 7 ). According to the Marine Corps, the CLaWS program is a rapid prototyping effort to provide an affordable solution for the C-UAS challenge. The Marine Corps is also procuring the Marine Air Defense Integrated System (MADIS) as part of its GBAD future weapons system. MADIS is a C-UAS system designed to be integrated onto the Joint Tactical Light Vehicle. In the FY2020 budget request, the Marines requested procurement funding to integrate 28 MADIS systems into the service's vehicle fleet."], "subsections": []}, {"section_title": "Communications Jamming", "paragraphs": ["Advances in networking sensors and computing power have made using the electromagnetic spectrum for communications an important task in any military operation. These networks allow a military to develop a comprehensive picture of the battlespace and enable forces to effectively coordinate attacks. Disrupting an enemy's communications systems limits their ability to command forces and maintain battlespace awareness. Both the Army and the Marine Corps have developed several programs to deny potential adversaries access to their communications networks. ", "The Army's primary communications jammer is the EW tactical vehicle (EWTV), a modified mine-resistant ambush protected vehicle that incorporates a variant of the CREW Duke system (see Figure 8 ). According to the Army, the EWTV was \"developed to provide Army EW Teams with the ability to sense and jam enemy communications and networks from an operationally relevant range at the brigade combat team level.\" The Army states that the EWTV is designed to provide electronic attack capabilities for brigade combat teams.", "To manage electronic attack and electronic support capabilities, the Army uses the EW planning and management tool (EWPMT). This system is often installed between the antennae and radio transceiver. The EWPMT allows operators to neutralize and exploit enemy signals through a computer program called Raven Claw. The software gives EW commanders a comprehensive view of the electromagnetic spectrum, allowing them to detect and jam enemy communications systems and radars.", "Marine Corps radio battalions primarily employ the Communication Emitter Sensing and Attack System (CESAS) II to jam communications systems. According to a project officer, the CESAS II \"has the ability to operate in a larger frequency range, covering a much larger portion of the communications spectrum [high frequency, very high frequency, and ultra high frequency].\" CESAS II comes in two variants: a vehicle-transportable version (see Figure 9 ) and a man-portable system. According to Marine Corps Systems Command, CESAS II reduces the weight of the vehicle jammer from 1,300 pounds to 670 pounds; the man-portable version weighs 180 pounds. The Marine Corps declared initial operational capability in July 2016 and plans to declare full operational capability in FY2021.", "The AN/MLQ-36 Mobile Electronic Warfare Support System (MEWSS) is another vehicle the Marine Corps uses to jam communications and other electronic transmissions\u00e2\u0080\u0094such as radar. The Marine Corps fields 12 MEWSSs, which are modified light-armored vehicles procured in 1987. The MEWSS has received a series of upgrades, including a program called the MEWSS Product Improvement Program, which added a 9-meter extendable mast."], "subsections": []}]}, {"section_title": "EW in the Current Strategic Environment", "paragraphs": ["During the Cold War, competition in EW capabilities was an ongoing and significant component of the overall competition in military capabilities between the U.S.-led NATO alliance and the Soviet-led Warsaw Pact alliance. The end of the Cold War and the shift in the early 1990s to the post-Cold War era\u00e2\u0080\u0094a period that featured reduced tensions between major powers and a strong U.S. military emphasis on countering terrorist and insurgent organizations\u00e2\u0080\u0094may have led to a reduced emphasis in U.S. defense plans and programs involving EW related to so-called high-end warfare, meaning high-intensity warfare against technologically sophisticated adversaries.", "The perceived shift in the international security environment from the post-Cold War era to an era of renewed great power competition has led to a renewed focus on EW in U.S. defense planning and programming. In particular, U.S. defense planning has focused on aspects of EW related to high-end warfare, and to concerns among some observers that the United States needs to strengthen its EW capabilities as part of its overall effort to preserve U.S. qualitative military superiority over potential adversaries such as Russia and China. ", "China and Russia have developed sophisticated anti-access/area denial (A2/AD) systems to deny U.S. military forces many advantages; Chinese and Russian EW systems are considered A2/AD systems that deny the U.S military access to their communication and command and control. DOD notes that Russia has emphasized EW in its military modernization effort. Russia reportedly has employed EW as part of its military operations in Ukraine and Syria. DOD similarly states that China recognizes the importance of EW in modern military operations and is developing its EW capabilities as an integral part of its broad-based military modernization effort. China encouraged greater integration between its civil and military technological and industrial bases, which may enable its EW capabilities to benefit from the sophistication of its extensive civilian electronics industry."], "subsections": [{"section_title": "Overview of Russian EW Capabilities and Operations", "paragraphs": ["For more than a decade, the Russian military has focused on modernizing its forces, with a particular emphasis on command, control, communications, and computers (C4) and intelligence, surveillance, and reconnaissance (ISR) systems, of which EW plays an important part. According to military analyst Robert McDermott, the Russian military views electronic warfare as a \"type of armed struggle using electronic means against enemy C4ISR to 'change the quality of information,' or using electronic means against various assets to change the condition of the operational environment.\" McDermott describes a close relationship between Russian signals intelligence forces and EW forces, where several EW units perform signals intelligence (SIGINT) functions\u00e2\u0080\u0094similar to U.S. ground force organizations such as the Marine Corps' Radio Battalions. What distinguishes Russian EW organizations, he claims, is also a close relationship with air defense and artillery.", "According to the Defense Intelligence Agency (DIA), the Russian military first tested its military modernization efforts in the Georgian war in 2008. DIA notes that \"Russian military limitations were fully on display during the August 2008 \"five-day war\" with Georgia. Russian forces prevailed and defeated their relatively weak Georgian opponents, but after-action analysis by the Russian military highlighted many failings.\" Based on this operational experience, Russian forces began instituting what is termed the \"New Look Program.\" According to the DIA,", "[p]artially-manned Soviet-style divisions were reorganized into what were planned to be fully-manned brigades; officer ranks were trimmed from 350,000 billets to initially 150,000, although later the number rose to 220,000; the contract manning effort was reshaped and reinvigorated, with a goal of 425,000 professional enlisted personnel in the force by 2017; the six extant military districts were reshaped initially into four joint strategic commands, which controlled all military assets in their areas in peace and war; and lastly, a massive state armaments program was initiated, allocating 1.1 trillion rubles over 10 years, aiming at fielding a Russian military with 70% new or modernized equipment by 2020.", "Investments in EW, through the New Look Program, have been significant. Since 2008, Russian military forces have continued to transform EW capabilities and organizations.", "There are some clues in the many statements by the defence ministry and senior EW officers that indicate the modernisation of EW is based on examining how such capability has been exploited by the US and NATO in military operations over the past two decades. There also appears to be some influence based on US Prompt Global Strike and developments in US and NATO high-precision weapons that is pushing the defence ministry to plan for countering these. At the outset, despite the opaque nature of the overall aims of the procurement processes, one statement that stands out is from the leadership of KRET, aware of the underlying drivers behind the need for modern EW systems in Russia's military.", "Indeed, by November 2016, the First Deputy General Director of KRET, Vladimir Mikheyev, referred to the \"National Strategic EW System\" as an \"asymmetric response to the network centric system of combat operations\" on the Murmansk -BN as a key part of the subsystem. The Murmansk -BN has a reported range of 5,000 km, is deployed on seven trucks, and monitors activity on airwaves, intercepting enemy signals with a broad jamming capability; it uses 32-metre-high antennas and has been deployed in Crimea. Mikheyev said the creation of the Russian EW strategic system can be called the \"implementation of a network centric defence concept\".", "Additionally, Russian forces have begun introducing EW forces into their main combat arms organizations. Both McDermott and the DIA indicate that each motorized brigade has at least one electronic warfare company\u00e2\u0080\u0094numbering more than 100 personnel\u00e2\u0080\u0094to provide desired tactical effects (as depicted in Figure 11 ). Appendix A provides an overview of the organization and types of equipment these EW companies use."], "subsections": []}, {"section_title": "Overview of Chinese EW Capabilities", "paragraphs": ["China has also seen a similar progression in EW capabilities over the past decade. Most defense analysts focus on Chinese aviation, maritime, and anti-space capabilities; however, the People's Liberation Army (PLA) has developed highly capable systems in the ground domain. China has developed a concept of \"informationized warfare,\" which attempts to gain an advantage in information through robust ISR networks, while attempting to deny adversaries access to information\u00e2\u0080\u0094thus preventing them the ability to command and control forces. To accomplish this goal, the PLA organizes EW functions in a new command called the Strategic Support Force, which includes cyber, psychological, information, and space forces. ", "Most of the focus on Chinese EW operations has been on air, maritime, and the space domains. However, China has developed sophisticated capabilities to counter U.S. forces on the ground as well. According to Jane's Defence Weekly, China has invested substantial resources into science and technology initiatives focused on improving its network and electronic warfare capabilities. These investments include ground-based sensors and jammers, space-based intelligence assets, and a number of airborne jammers. China has also invested in many unmanned systems that can swarm to provide desired effects, including signals intelligence interceptions and electronic attack. "], "subsections": []}]}, {"section_title": "Potential Issues for Congress", "paragraphs": [" Balance of Ground EW Capabilities . A potential oversight issue for Congress is the balance of EW capabilities the Army and Marine Corps are fielding and plan to procure. During the height of the conflicts in Iraq and Afghanistan, EW programming was weighted toward counter-IED programs rather than on countering great power competition. Although U.S. military forces continue to operate in high-threat IED areas\u00e2\u0080\u0094as illustrated by recent casualties in Afghanistan\u00e2\u0080\u0094these programs do not necessarily provide the necessary protection against potential Russian or Chinese weapons systems. Both services have acknowledged that they require new investments to support command and control in an electromagnetically contested environment. Congress may review how both the Marine Corps and Army allocate resources to counter the IED threat, while working to ensure that ground services are prepared to counter emerging threats. Part of the capabilities balance is overlapping programs between the Army and Marine Corps. As both the Army and Marine Corps have EW programs with similar functions. For instance, both services are developing competing C-UAS programs\u00e2\u0080\u0094the Army MEHL and the Marine Corps CLaWS\u00e2\u0080\u0094that appear to have similar capabilities. C-IED programs, on the other hand, are joint programs in which one service develops a solution that other services can procure (thus all DOD services use the same programs which can have efficiencies for sustainment). Congress may examine if it is worthwhile for the Army and Marine Corps to develop competing programs, or if funding competing programs allows technology research and development (R&D) to make greater progress. Funding of Programs . Funding for EW systems can be difficult to track due to the complexity and classification of EW programs. One challenge associated with ground EW funding is that both the Army and the Marine Corps use research and development appropriations to potentially fund procurement activities due to the relatively fast-paced changes to electronic components. A second, but related, challenge is tracking EW programs when they transition from development to procurement. Part of the challenge is that the procurement activities for EW systems can be relatively small compared with larger weapons systems. As a result, DOD procurement activities do not necessarily disclose these components from the larger acquisition, making it difficult to track both a breakout of EW components associated with larger systems (e.g., the M1 Abrams main battle tank) and the total dollar figure associated with EW procurement activities for the Army and Marine Corps. The Marine Corps and the Army use different funding policies to maintain EW programs. Many of the Army's EW capabilities, as either demonstrators or prototypes, receive R&D funding. As a result, funding for these programs is generally seen as inconsistent and lacking plans for sustainment. The Marine Corps' programs, on the other hand, are programs of record, receiving both R&D and procurement funding. By making these systems programs, the Marine Corps seeks to provide predictable funding for systems over long periods of time. However, these systems are developed through the acquisition system and therefore might not be at the forefront of technological advances. Emerging Technologies . Emerging technologies may change how the Army and Marine Corps conduct EW. Some experts argue that advances in electronics are already changing how ground forces perform electronic warfare, particularly with continuously improving active electronically scanned arrays and new software defined radios. Some argue that these advances in electronics, paired with artificial intelligence, could allow for some automated decision making. These algorithms could help manage the electromagnetic spectrum by making spectrum allocation decisions, determine when adversaries are jamming (or denying) a frequency band, and automatically develop a jamming plan to deny adversaries access by looking at trends in their electronic emissions. Artificial intelligence algorithms could also enable EW systems to locate and engage small unmanned aerial systems by using data sources to help identify radar contacts (versus environmental clutter from clouds or animals) and electronic emissions. Neither the Army nor the Marine Corps have publicly stated that they plan to use artificial intelligence for managing electromagnetic spectrum operations or electronic warfare. New materials are changing the size, weight, power, and cooling of electronics components and power supplies. Electronics are smaller and require less power, and therefore smaller batteries. These new electronics emit less heat because of their reduced consumption of energy, requiring less cooling to maintain ideal temperatures, further reducing energy consumption. Battery technology is improving energy density. These designs provide similar electrical power outputs while reducing their size and weight, making it easier to develop man-portable electronics (such as the Thor C-IED system and the CESAS II jammer). Furthermore, advances in electronics allow for new waveforms using advanced electronically scanned array (AESA) antennas and other designs. As new materials emerge, DOD may request additional funding to upgrade EW systems and potentially procure AESA technology to more effectively jam enemy communications and radar systems. Quantum technologies could potentially change electronic warfare. Emerging developments in quantum communications and quantum radars will likely change how the military communicates and observes enemies. Quantum technologies will likely have an impact on EW; however, the exact impact they will have on executing EW operations remains unclear.", "Appendix A. Russian EW Company Equipment"], "subsections": []}]}}
{"id": "R45913", "title": "Electricity Portfolio Standards: Background, Design Elements, and Policy Considerations", "released_date": "2019-09-10T00:00:00", "summary": ["Electricity portfolio standards, such as renewable portfolio standards and clean energy standards, are policies aimed at changing the energy sources used to generate electricity. Supporters identify multiple policy goals, including greenhouse gas reduction, technology inno vation, and job creation. Twenty-nine states, three U.S. territories, and the District of Columbia are currently implementing mandatory portfolio standards. Congress, to date, has not established a national portfolio standard, though bills that would do so have been introduced in every Congress since the 105 th .", "Congressional interest in 2011 and 2012 prompted a variety of analyses about potential impacts of a national portfolio standard. The national electricity generation profile has changed since then in ways that might make previous analyses less relevant to any future policy debate. Between 2012 and 2018, in the U.S. generation from coal fell (from 37% to 27%), generation from natural gas increased (from 30% to 35%), and generation from renewable sources (e.g., hydropower, wind, solar) increased (from 12% to 18%). Many expect these trends to continue, regardless of any new federal policy related to the electric power sector.", "Portfolio standards are generally envisioned as market-based policies in the sense that they use financial incentives rather than prohibitions to achieve policy goals. Several key concepts in portfolio standards are common to other market-based policies. Credits are an accounting mechanism used for compliance and are tracked in electronic databases sometimes called registries. Lawmakers can choose the degree of flexibility around credit use in a portfolio standard, with potential impacts on overall policy costs and benefits. Procedures to monitor, report, and verify credits can help portfolio standards achieve their policy goals and reduce the risk of fraud.", "Other concepts are specific to portfolio standards. Choices about these design elements can strongly influence policy outcomes. Generally, choices that would tend to reduce costs would also tend to result in fewer changes in the electricity generation profile.", "The choice of which energy sources would be eligible for compliance, and therefore would be incentivized by the program, is often central to policy discussions about portfolio standards. Past proposals have included a range of eligible sources, including renewable sources, nuclear, fossil fuel-fired power plants equipped with carbon capture and sequestration technology (CCS), and natural gas combined cycle power plants. Some proposals have included nongenerating sources like energy storage and energy efficiency as well. Other design elements include whether all utilities should have to comply with a portfolio standard or whether some would be exempted; how much generation from eligible sources a portfolio standard is designed to achieve; by when should the desired amount of generation from those sources be achieved; to what share of a utility's electricity sales should a portfolio standard apply; and whether any provisions should be included that delay or halt compliance under certain circumstances (e.g., undesirably high prices).", "If established, a national portfolio standard would likely have economic effects, though estimating these in advance is subject to some uncertainty. Any sources and associated industries excluded from the definition of eligible sources would likely experience negative economic effects. At the same time, industries associated with sources included in the standard would likely experience positive economic effects. The net effect on national economic activity would depend on the design details of any portfolio standard and the ways that consumers might respond to potentially higher electricity prices.", "A national portfolio standard might also have environmental effects compared to a business-as-usual scenario, depending on design choices such as source eligibility and the change from business as usual a portfolio standard is designed to achieve. Potential eligible sources vary in their GHG and air pollutant emissions, as well as other attributes such as water consumption and power density (which can affect land requirements). Implementation could affect environmental outcomes too. For example, deploying small-scale distributed eligible sources might have different effects than deploying large-scale eligible sources.", "Another policy consideration is potential interaction with state energy policies like existing portfolio standards, electricity infrastructure siting, and the use of competitive markets to influence electricity investment decisions. Such interactions may generate debate regarding preemption and highlight potential federalism concerns."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["Legislative proposals have been introduced since the 105 th Congress to create a national electricity portfolio standard that would require electric utilities to procure a certain share of the electricity they sell from specified sources. Twenty-nine states, three U.S. territories, and the District of Columbia are currently implementing mandatory portfolio standards, and an additional eight states and one territory have voluntary versions. ", "Various existing and proposed portfolio standards use a range of terms for similar concepts. A renewable portfolio standard (RPS) typically means a requirement to procure electricity from renewable sources. A clean energy standard (CES) typically means a variant of an RPS that includes some nonrenewable sources, such as nuclear or selected fossil fuels, in the requirement. Some lawmakers and stakeholders use these terms interchangeably, and some use the term CES or \"clean energy\" to refer only to renewable sources. This report uses the more general term \"portfolio standard\" to avoid confusion between RPS and CES. ", "At both the federal and state level, lawmakers express multiple goals for portfolio standards. These include greenhouse gas reduction, technology innovation, and job creation. Policy design choices, as discussed in this report, can influence the extent to which portfolio standards might achieve those or other goals. ", "Other policies could potentially achieve the same goals as portfolio standards. For example, tax incentives or funding for technology research, development, and deployment could promote the use of certain types of electricity generation sources by reducing their costs. This report does not compare portfolio standards with other policy options, nor does it fully examine the costs and benefits of establishing a national portfolio standard compared to business-as-usual trends in the electric power sector. ", "This report provides background on portfolio standards and an overview of policy design elements to inform debate around proposals introduced in the 116 th Congress, building on previous CRS reports addressing this topic. This report also analyzes potential effects of portfolio standard design choices, with an emphasis on economic effects, environmental effects, and potential interactions with state energy policies. Other potential effects that may be of congressional interest, but are outside the scope of this report, include public health, considerations regarding critical minerals used in some energy sources, electric reliability, cybersecurity, and geopolitics."], "subsections": []}, {"section_title": "U.S. Electricity Generation Profile", "paragraphs": ["A number of government agencies, nongovernmental organizations, academic researchers, and private sector entities analyzed potential effects of a national portfolio standard in 2011 and 2012 because of congressional interest at that time. Since 2012, the U.S. electric power sector has seen several changes in its generation profile that were unanticipated in those analyses. These include an increase in generation from sources using natural gas and renewable energy, along with a decrease in coal-fired generation. The current U.S. electricity generation profile and market trends may be important context for any congressional debate about a potential national portfolio standard.", "The U.S. Energy Information Administration (EIA) reports that total electricity generation was 4,047,766 gigawatt-hours (GWh) in 2012 and 4,207,353 GWh in 2018, an increase of 4%. Most of this increase occurred between 2017 and 2018, as shown in Figure 1 . ", "Between 2012 and 2018, the share of electricity generation from different sources has changed. Coal generated 37% of total generation in 2012 and 27% in 2018. Natural gas generated 30% of total generation in 2012 and 35% in 2018. Renewable sources, including hydropower, wind, solar, geothermal, and biomass, generated 12% of total generation in 2012 and 18% in 2018. Many expect these trends to continue. For example, EIA's projection of current laws, regulations, and market trends show coal contributing 17% of total generation in 2050, natural gas contributing 39%, and renewable sources contributing 31%. ", "Electric power sector observers generally agree on the factors causing these trends, although the relative importance of each factor is subject to some debate. The changes from 2012 to 2018 are due to a combination of (1) continued low natural gas prices and low wholesale electricity prices; (2) federal environmental regulations, especially on coal-fired power plants; (3) declining capital costs for wind and solar sources; (4) federal tax incentives for wind and solar sources; (5) state portfolio standards and other policies; (6) changing consumer preferences, especially large corporations' and institutions' commitments to procure more electricity from renewable sources; and (7) natural turnover as generators age.", "Differing perspectives over the relative influence of these factors could affect stakeholder views on the merits of a federal policy to promote greater use of certain energy sources for electricity generation. Some might argue that sources that are now cost competitive (e.g., natural gas, wind) may not require policy support to increase their share of the electricity generation profile. Others may see electricity generation as solely an area for state policy as discussed further in the section \" Interaction with Other State Energy Policies ,\" below. A related consideration may be whether increasing the pace of change in the U.S. electricity portfolio could pose reliability risks."], "subsections": []}, {"section_title": "Key Portfolio Standard Concepts", "paragraphs": ["Key concepts in portfolio standard policymaking may or may not have identical meaning when used in other contexts. For convenience and clarity, this section introduces key concepts used in this report.", "As noted above, lawmakers and observers are not consistent in their use of terms related to portfolio standards. Renewable portfolio standard (RPS) is the most frequently used term to describe a portfolio standard, though renewable energy standard, alternative energy portfolio standard, and others are in use. The term clean energy standard (CES) is frequently used to refer to a variant of RPS in which certain nonrenewable sources are eligible in addition to renewable sources, but some federal legislative proposals have used the term \"clean energy\" to refer only to renewable sources. The Appendix provides more information about previously introduced bills. ", "Banking refers to the extent to which credits issued in the program may be used for compliance after their vintage year (see definition, below). Banking provisions can equivalently be described in terms of expiration. For example, if credits expire after two years, then banking for two years is allowed. A related concept is borrowing which allows credits of future vintage years to be used for compliance. ", "Base quantity of electricity is the sales volume to which the portfolio standard applies. The base quantity could equal total electricity sales, but it need not. Excluding sources from the calculation of the base quantity changes the required amount of generation from eligible sources in absolute terms. The base quantity to which the portfolio standard applies also affects the financial incentive that different sources receive. Even sources deemed ineligible under the portfolio standard could receive some policy support if they were excluded from the base quantity of electricity. This concept is discussed further in the section \" Base Quantity of Electricity .\"", "Carve outs , tiers, multipliers, partial crediting, and usage limits are all policy options for influencing the relative support that different types of eligible sources receive under a portfolio standard. Eligible sources will be available at different costs. Policymakers may want to avoid a situation where compliance is achieved mostly through the use of a single, low-cost source. A carve out is a requirement within the overall policy requirement to achieve a minimum level of compliance by using a certain source. Carve outs have been used, for example, to require use of solar energy even when that was more expensive than other eligible sources. The same goal might be accomplished through use of tiers . Typically, a carve out will apply to a single source type while a tier might apply to multiple source types. A related concept is that of usage limits that set maximum levels for compliance from certain sources. Multipliers are rules under which selected sources receive more than the usual amount of credit for generating electricity, but the credits are completely fungible (see definition, below) with others. Sources that are eligible for multipliers would receive extra policy support, relative to other sources. Multipliers could be used, for example, to encourage demonstration and commercialization of new technologies. P artial crediting would give selected sources less than the usual amount of credit and could be applied to sources lawmakers wanted to give less policy support.", "Clean energy , as used in this report, refers to the set of sources that lawmakers might choose to include in a portfolio standard. These sources could include wind, solar, geothermal, biomass, hydropower, marine energy, nuclear, natural gas combined cycle generators, or fossil fuel-fired generators equipped with carbon capture and sequestration technology (herein, CCS). Lawmakers could also choose to include nongenerating sources such as energy storage or energy efficiency. Other considerations about the choice of eligible sources are discussed in the section \" Source Eligibility .\"", "Covered entities are the entities with a compliance obligation under a portfolio standard. Most portfolio standards being implemented by states or proposed at the federal level have electricity distribution utilities as the covered entities. These utilities may or may not own electricity generators, depending on state and local regulatory regimes. Typically, a utility procures electricity from a number of different generators using a variety of energy sources (its portfolio ). Other considerations about the choice of covered entities are discussed in the section \" Utility Applicability .\"", "Credits are the unit of accounting for portfolio standards and other market-based policies. Electricity cannot easily be traced from its point of generation to its point of consumption, so accounting measures are required to assess compliance with a portfolio standard. In many existing portfolio standards, credits are issued by an administrator to a generator that uses a clean energy source. The number of credits issued is based on actual measured electricity generation (i.e., ex post ). The generator can then sell credits to a utility, and the utility surrenders them to the program administrator to demonstrate compliance. If a generator sells both electricity and associated credits to the same entity, the credit is bundled . If a generator sells electricity and associated credits to different entities, the credit is unbundled . Lawmakers could allow entities other than generators and utilities (e.g., financial institutions) to buy and sell credits, or they could allow only utilities with a compliance obligation to purchase credits. The price that utilities would pay for credits would depend on the portfolio standard stringency, the overall volume of electricity generated by clean energy sources, and other market factors. The sale of credits could create an additional source of revenue for a generator, potentially improving its economic performance relative to a business-as-usual scenario with no portfolio standard. In some cases, the ability to sell credits might be the deciding factor for whether a new generator would be constructed (or, for existing generators, whether a generator would remain operational instead of being retired). In other cases, generators may be profitable without the sale of credits, and the credits might create a windfall profit. The requirement to buy credits would likely increase the overall costs for a utility. Typically, a utility's costs for complying with a portfolio standard would be passed on to its customers. If a utility were unable to fully pass on its compliance costs, it might see reduced profitability.", "Fungibility is the attribute of credits allowing them to be used interchangeably and without penalty. Since many state portfolio standards already exist, federal policymakers would have to decide if these state credits would be fungible with federal credits under a federal portfolio standard. If they were, then current holders of state-issued credits could use them for compliance with a federal portfolio standard or sell them to another entity for that purpose. If they were not, then state-issued credits could potentially lose value, depending on the relative stringency of a national portfolio standard and the state portfolio standard. Some states have implemented cap-and-trade programs in addition to portfolio standards, both of which aim to reduce greenhouse gas emissions from the electricity generation. Like portfolio standards, cap-and-trade uses credits (also called allowances) as an accounting mechanism and for compliance purposes. Under existing state policies and federal proposals, credits under portfolio standards are not fungible with allowances under cap-and-trade programs for greenhouse gases.", "Market-based policies attempt to use financial incentives to achieve policy goals. Many discussions contrast them with command-and-control policies that set specific permissions or prohibitions. Portfolio standards indirectly provide financial incentives because they create demand for generation from certain eligible sources in electricity markets, even if those eligible sources are more expensive than ineligible sources. Some observers argue this mechanism is a disruption of market forces. In comparison, tax credits, grants, and loan guarantees provide direct financial incentives for eligible sources and therefore lower the cost of those sources in the market. Most portfolio standard proposals do not expressly prohibit use of ineligible sources, but they do create a financial disincentive to use them. ", "Monitoring, reporting, and verification (MRV) are three distinct steps that ensure that market-based policies achieve the desired goals. In the case of portfolio standards, MRV practices would measure the amount of electricity generated by eligible sources and verify that each unit of electricity from eligible sources was used only once for the purpose of compliance. Monitoring and reporting electricity generation is commonplace in the industry, at least for large-scale generators connected to the electricity transmission system. Verification for market-based policies is often completed by an independent third party. ", "Qualifying facilities (QFs) are established in the Public Utility Regulatory Policies Act of 1978 ( P.L. 95-617 ; PURPA) as certain small power production facilities and cogeneration facilities that receive special treatment. Utilities must purchase electricity from QFs at a price determined by what the utility would otherwise have to pay for electricity. There is no direct relationship between QFs under PURPA and sources that would be eligible under a portfolio standard, though the term \"qualifying source\" is sometimes used in both contexts. To avoid confusion, this report refers to sources defined as clean energy under a portfolio standard as \"eligible sources.\" ", "Registries , sometimes called tracking systems, are electronic databases used to facilitate credit issuance and transfer. State portfolio standards typically make use of registries in the following way. After an administrator verifies the amount of electricity generated from an eligible source, the administrator creates an appropriate number of credits. These credits are assigned a serial number and placed in the account of the appropriate entity in the registry. If the credit owner agrees to sell the credits to another entity, the owner files the necessary documentation with the administrator, who then authorizes the credits to be transferred to a different account in the registry. A covered entity would demonstrate compliance by transferring the required number of credits from its account to the administrator's account. The administrator would take action to retire the submitted credits to make sure they cannot be used again for compliance. Cybersecurity measures can help prevent theft of portfolio standard credits or other fraudulent activity. Some government agencies currently operate registries that could potentially be used to administer a national portfolio standard, and some private firms operate registries as well. ", "Vintage refers to the time period in which a tradeable credit in a market-based policy is issued. Portfolio standards typically have annual compliance periods, with vintage expressed in years. In policies with shorter or longer compliance periods, the vintage could be associated with a specific month or a series of years. For example, if an eligible source generated electricity in the year 2025, it would receive a vintage 2025 credit. The banking and borrowing rules (see definitions, above) determine the years in which credits of a given vintage may be used for compliance."], "subsections": []}, {"section_title": "Portfolio Standard Design Elements", "paragraphs": ["If Congress chose to establish a national portfolio standard, lawmakers would face choices about the design of the policy. This section discusses some key design elements and potential effects of different choices. Often, design choices reflect a balance between increasing the certainty of achieving policy goals and decreasing the likelihood that consumers will experience undesirable cost increases. Design elements can interact with each other, so the potential effect of a choice about one element may be influenced by choices about others. ", "Not all portfolio standard design choices must be made in legislation. Congress could direct an agency to promulgate regulations that implement a portfolio standard. The previous federal proposals summarized in the Appendix take different approaches. Some proposals made very few design choices and left most decisions to an agency, while others specified most design choices and left few decisions to an agency. Specifying details in legislation could add complexity that potentially impedes the legislative process or creates challenges in policy implementation. On the other hand, specifying details in legislation would give lawmakers greater control over policy design decisions."], "subsections": [{"section_title": "Source Eligibility", "paragraphs": ["Portfolio standards achieve their policy goals by increasing electricity generation from certain eligible energy sources, as defined by lawmakers. The various energy sources used for electricity generation have many different attributes that lawmakers might weigh in determining which sources could be eligible under a national portfolio standard. Recent state policy debates and many current discussions at the federal level have centered around three attributes: carbon intensity, technology maturity, and market competitiveness (i.e., cost). ", "The debate around carbon intensity has focused on whether to include sources with a carbon intensity less than conventional coal-fired generators (i.e., low carbon sources), such as natural gas combined-cycle power plants, or include only those with a carbon intensity of zero (i.e., zero carbon sources). This debate closely relates to the desired environmental outcome of a portfolio standard. All else being equal, a portfolio standard that includes low carbon sources would likely result in higher greenhouse gas emissions from the electric power sector than a portfolio standard under which only zero carbon sources were eligible. Advocates for substantial greenhouse gas reductions disagree about whether all zero carbon sources should be eligible, with nuclear energy and CCS being particularly contentious. Advocates who support nuclear energy and CCS often present cost arguments, while advocates who oppose those sources often present arguments about environmental quality and environmental justice. ", "The debates around technology maturity and market competitiveness both focus on the desired balance between supporting new technologies and supporting existing technologies. These debates closely relate to the desired economic and technological outcomes of a portfolio standard. Many mature technologies are less expensive than new technologies, so including them as eligible sources might achieve the policy goals at a lower overall cost. Mature technologies may be easier to deploy, from an operational point of view, since industry best practices and standards for their use are established. At the same time, a portfolio standard that includes mature technologies might not encourage the desired level of investment in new technologies. A compromise may be the use of carve outs, tiers, multipliers, partial crediting, or usage limits, as described above, to attempt to influence the extent to which covered entities used new or mature technologies for compliance.", "Energy storage and energy efficiency are not electricity sources, in the usual sense, because they do not generate electricity. Their supporters argue their deployment helps achieve similar policy goals as portfolio standards, namely technology innovation, greenhouse gas reduction, and job creation. Portfolio standards could incentivize energy storage and energy efficiency directly, for example, by defining them as eligible sources and providing an accounting methodology for issuing credits to them. Such accounting methodologies may be more complex than those used for electricity generation, especially for energy efficiency since energy savings cannot be directly measured. Alternatively, portfolio standards could indirectly incentivize deployment of energy storage or energy efficiency in the setting of the base quantity, as discussed in the section \" Base Quantity of Electricity .\" If lawmakers wanted to incentivize their deployment, another option could be to establish separate targets for energy storage deployment and energy efficiency alongside a portfolio standard. Some states with portfolio standards have taken that approach, and some previous federal proposals took that approach as well.", "Distributed energy resources (DER) are located near the point of consumption in the electric power sector (e.g., an individual home, commercial facility, or manufacturing plant). Federal portfolio standard proposals to date put a compliance obligation on electric utilities; however, utilities do not always own or operate DER. From the perspective of an electric utility, many DER are like energy efficiency in that they reduce electricity sales. Some, but not all, DER use renewable sources, so lawmakers might consider whether to include these as eligible sources. The electric power industry does not have established methodologies for measuring generation from DER, so these would need to be developed if DER were to receive credits. Alternatively, the setting of base quantities can influence the incentive DERs receive as discussed below.", "Other energy source attributes may be of interest to Congress. These include energy density, which can affect land requirements, and the geographic variability in resource quality. As is also the case for other topics, geographic variability in natural resources can potentially raise concerns about uneven wealth impacts in portfolio standard policymaking. For example, the nation's wind resources most suitable for wind energy development are concentrated in the central United States and offshore of the Northeast and Mid-Atlantic. The nation's largest solar resources are concentrated in the Southwest. If eligible sources under a portfolio standard were all concentrated in one region (or, similarly, if a lack of eligible sources were concentrated in one region), wealth transfer could occur, raising potential concerns over fairness. Relatedly, some regions have developed some resources more than others, for example via implementation of state portfolio standards. Including existing sources, such as those incentivized under state policies, could potentially result in wealth transfer from states that had not previously implemented supportive policies. On the other hand, excluding existing sources could be perceived as penalizing early actors."], "subsections": []}, {"section_title": "Utility Applicability", "paragraphs": ["Most homes, businesses, and other consumers acquire electricity from the electric grid and pay electric utilities to provide that electricity to them. Over 3,200 electric utilities operate in the United States, and they are generally classified by three ownership models. ", "Investor-owned utilities (IOUs) are operated by private companies on a for-profit basis, and they deliver electricity in at least portions of every state except Nebraska. Publicly owned utilities (POUs, sometimes municipal utilities or munis) are owned by local governments and operated on a not-for-profit basis. Electric co-operatives (co-ops, sometimes rural co-ops) are member-owned organizations operated on a not-for-profit basis, typically located in rural areas. ", "State governments allow IOUs to act as monopolies in their service territory, with no competition on electricity distribution, in exchange for accepting electricity rates as determined by state regulators. Similar to IOUs, POUs and co-ops are allowed to operate as monopolies with respect to electricity distribution. Unlike IOUs, they are generally exempt from regulation by state governments regarding electricity rates, investment decisions, and other operations. POUs and co-ops together serve about 27% of Americans.", "Lawmakers would have to decide to which type of utility a national portfolio standard would apply, if they chose to implement such a policy. If one class of utilities, such as co-ops, were excluded, then the overall effect of the policy might be reduced, since the excluded utilities could still procure electricity from ineligible sources above the levels set by the portfolio standard. On the other hand, excluding some utilities based on ownership model might be desirable in order to address concerns about overall compliance costs and cost distribution. POUs and co-ops often serve fewer customers than IOUs, so any fixed administrative costs associated with compliance must be shared by a smaller number of customers, resulting in relatively larger shares of administrative costs. Some state portfolio standards establish different (usually less stringent) targets for POUs and co-ops, while some exclude them altogether.", "Utility size, expressed as annual electricity sales, could be a more precise characteristic than ownership model in addressing concerns about higher administrative costs for smaller utilities, since some IOUs are small and some POUs are large. Figure 2 shows the share of utilities of each ownership model for selected utility size ranges. Table 1 shows the total number of utilities of each ownership model in the selected size ranges.", "Previous legislation has included different utility size thresholds for inclusion. Utilities that did not meet the specified size threshold would not have had a compliance obligation under those proposals. For example, S. 2146 in the 112 th Congress would have initially included utilities with at least 2 million megawatt-hours (MWh) of sales and then phased in smaller utilities of at least 1 million MWh of sales. The provisions of Title I of the Public Utility Regulatory Policies Act of 1978 (PURPA; P.L. 95-617 ) apply to utilities with at least 0.5 million MWh of sales. ", "A potential consideration is the share of total U.S. electricity sales that would be covered by a portfolio standard if utility size thresholds were established. Figure 3 shows the share of total U.S. electricity sales associated with utilities of different sizes, for all ownership models. In 2017, 82% of U.S. electricity sales came from distribution utilities that had annual sales volumes greater than 2 million MWh, 87% came from utilities with sales greater than 1 million MWh, and 92% came from utilities with sales greater than 0.5 million MWh."], "subsections": []}, {"section_title": "Target and Stringency", "paragraphs": ["The target of a portfolio standard refers to \"how much?\" and \"by when?\" A target might be defined for a single year (e.g., 50% of electricity sales in 2050), or it might be phased in over multiple interim periods (e.g., 25% of electricity sales in 2020\u00e2\u0080\u00932029; 40% of electricity sales in 2030\u00e2\u0080\u00932039; 80% of electricity sales in 2040\u00e2\u0080\u00932049). Target phase-in can be implemented in different approaches, as shown in Figure 4 . Each of these approaches has different implications for how individual source types might be affected, though actual outcomes would be influenced by other factors such as future technology costs and electricity demand. Linear phase-in would tend to benefit existing sources and mature technologies with relatively short development timelines, such as wind and solar. These sources could be available to generate electricity and meet near-term compliance obligations. A back-end loaded phase-in might avoid near-term electricity price increases and allow time for commercialization of new technologies, but it might not result in desired environmental results in the near term. A stepped phase-in could balance the advantages and disadvantages of the other two options. It might also lead to uneven investment patterns, with periods of relatively high project development associated with target increases followed by periods of relatively low project development during target plateau periods.", "The stringency of a policy indicates the changes the policy might make in generation profile compared to a business-as-usual scenario. Generally, the stringency of the policy will be positively correlated to the costs and benefits of implementing the policy, so as policy stringency increases, the costs and benefits will also increase. For example, a portfolio standard target of 50% of electricity sales by 2050 would likely cost more to implement than a target of 25% of electricity sales by 2050, all else being equal. Similarly, a portfolio standard target of 30% of electricity sales by 2030 would likely cost more to implement than a target of 30% of electricity sales by 2050. At the same time, the more stringent options (i.e., the higher target percentage or the earlier target date) could result in greater technology innovation and lower greenhouse gas emissions than the less stringent options.", "Another way to describe portfolio standards' stringency is the net change in generation from eligible sources. This approach acknowledges that the national electricity generation profile is currently quite diverse with many types of sources. The net change is the difference between the final requirement of the portfolio standard (i.e., the target) and the share of generation from eligible sources before the policy is implemented. Suppose a portfolio standard required 20% of generation to come from wind and solar sources by 2020. These sources contributed 9% of electricity generation in 2018, so the net change required by such a portfolio standard would be 11%. The different ways to describe portfolio standard stringency could influence public perception of it. In this example, the same target could either be described as 20% or 11%, with potentially different implications for perceived costs and benefits."], "subsections": []}, {"section_title": "Base Quantity of Electricity", "paragraphs": ["For portfolio standards that express compliance obligation as the percentage of electricity sales coming from clean energy sources, the base quantity is the denominator used to calculate the compliance obligation. The base quantity of electricity can determine the amount of generation from eligible sources a portfolio standard requires in absolute terms. It has been described as \"perhaps the most important and least understood concept in the design of a [portfolio standard].\" The base quantity could equal total electricity sales, but it need not. The base quantity could instead be a specified subset of total sales. Some portfolio standard proposals have excluded electricity generated from certain sources in the base quantity calculation (see Appendix ). Under such an approach, a utility with a compliance obligation would be incentivized to procure electricity from sources excluded from the base quantity because doing so would lower the amount of electricity from clean sources it would have to procure.", "To illustrate this point, consider a hypothetical portfolio standard with a 50% clean energy requirement. The compliance obligation for this portfolio standard would be expressed as", "If a utility sold 10 million MWh annually and the base quantity of electricity equaled the total sales, then the utility would have to procure 5 million MWh from clean energy sources.", "If electricity from certain sources were excluded from the base quantity, the required procurement changes. If a utility procured 1 million MWh of the 10 million MWh it sold from sources excluded from the base quantity, then the utility would have to procure 4.5 million MWh from clean energy sources. The portfolio standard, in this case, would incentivize the utility to procure electricity from both kinds of sources, namely those excluded from the base quantity and those defined as clean energy by the policy. ", "The utility's incentive to procure electricity from sources excluded from the base quantity would generally be less than the incentive to procure electricity from clean energy sources, depending upon the cost of different energy sources and the overall portfolio standard stringency. If policymakers wanted to provide some policy support to certain sources, but less support than other sources receive, they might exclude certain sources from the base quantity calculation.", "A related consideration is the treatment of energy efficiency (EE) and DER (including, potentially, customer-sited energy storage). These result in reduced utility sales, so, to some extent, they are inherently included in the base quantity calculation. Utility investments that increased EE or generation from DER could also help the utility achieve compliance with a portfolio standard by reducing the amount of electricity it would have to procure from clean energy sources. For many utilities, reducing sales reduces the company's profitability, but some regulatory models are being developed and implemented in which profitability can be maintained or can increase as use of EE and DER increases."], "subsections": []}, {"section_title": "Cost Containment Mechanisms", "paragraphs": ["Future electricity demand, technology development, and technology costs are all uncertain. Ultimately, these uncertainties result in uncertainties around the cost to consumers of a portfolio standard, which could be an important consideration for lawmakers. To protect consumers from undesirably high electricity costs, portfolio standards can include provisions that reduce stringency in response to high costs. These various provisions are sometimes called safety valves. ", "Safety valves need not be included in legislation, since Congress could amend a law establishing a portfolio standard in response to any concerns that developed. Including safety valves in legislation could, however, promote regulatory certainty for covered entities and consumers, because legislative action to address any concerns that might arise could potentially be a lengthy process. Another option could be for Congress to explicitly authorize an agency to implement safety valves.", "An alternative compliance payment (ACP) allows a utility to pay a fee in lieu of surrendering credits. The degree of cost control it might provide would depend on the level at which an ACP were set. For example, if electricity generation from eligible sources were available at 5 cents per kilowatt-hour (cents/kWh) and an ACP were 10 cents/kWh, utilities would likely procure electricity from the eligible sources instead of paying the ACP. If, however, the ACP were 3 cents/kWh, utilities would likely pay the ACP and procure electricity from ineligible sources. Use of ACP could be unlimited, or it could be limited to a certain share of overall compliance.", "If an ACP were included in a national portfolio standard, lawmakers would also have to decide how any collected revenue would be disbursed. One option would be to use the revenue to further desired policy goals, for example by funding greenhouse gas reduction programs or technology research and development. Another option would be to return the revenue to electricity consumers as a way of further reducing the cost impacts of a portfolio standard. Other options include treating it as general fund revenue, deficit or debt reduction, or other spending.", "Portfolio standards could include provisions to suspend or delay compliance with targets under certain conditions. These conditions could include compliance costs reaching a specified threshold or identification of reliability risks. ", "Some cost containment for portfolio standards comes from the use of tradable credits to demonstrate compliance, especially if a portfolio standard allows unbundled credits. A low cost eligible source might be located outside of a utility's service territory. When utilities can use unbundled credits, they can demonstrate compliance by surrendering credits from this low cost source. The alternative, namely, disallowing tradable credits, could require utilities to procure electricity from high cost sources or could require the development of more sources than would be required to meet electricity demand, resulting in overall higher costs for consumers. One argument against unbundled credits is that they might not address concerns over localized concentrations of co-pollutants from conventional generators, known as hot spots. For example, if a utility procured electricity from an ineligible source that also emitted harmful air pollutants such as particulate matter or nitrogen dioxide, and the utility complied with the portfolio standard with credits associated with eligible sources located outside its service territory, hot spots might not be reduced to the extent they might be if unbundled credits were not allowed.", "Banking or borrowing could also decrease overall compliance costs. For instance, in years when utilities had access to many credits from low cost eligible sources, relative to what were required by the target, utilities might bank credits. If fewer credits were available in future years, relative to what were required by the target, a utility could surrender the banked credits, resulting in lower compliance costs. Banking could reduce a utility's exposure to volatility that can occur in electricity markets. This reduced risk can also reduce overall compliance costs, since a utility would not have to take other actions to reduce its risk exposure. To the extent that banking or borrowing could reduce the net change in generation, it might lead to reduced environmental benefits and reduced incentive for technology innovation. ", "Alternatively, lawmakers could establish mechanisms to increase the stringency of a portfolio standard if certain thresholds were passed. Stringency could be increased by increasing the target to a higher percentage of electricity sales or moving the deadline to achieve the target to an earlier year. The trigger for such an action could be credit price, greenhouse gas emissions levels, technology development, or other thresholds. This might be one way to increase the desired benefits of a portfolio standard in cases where compliance costs were unexpectedly low. It might also create uncertainty for covered entities and potentially result in unintended consequences such as market participants avoiding actions they might otherwise take in order to avoid triggering a change in stringency."], "subsections": []}]}, {"section_title": "Selected Policy Considerations", "paragraphs": ["The previous section discussed some potential effects of different choices about design elements for a portfolio standard. A key theme in discussion of design elements is the balance between achieving policy objectives and minimizing electricity cost increases for consumers, assuming a portfolio standard were implemented. The potential effects discussed in this section might be characterized instead as the potential effect of a portfolio standard compared to business as usual. While the previous section addressed the question \"How can a portfolio standard be designed?,\" this section addresses the question \"What might happen if a portfolio standard were implemented?\" ", "Any projections of the effects of a policy on the U.S. electric power sector are subject to uncertainty around various factors. These include future economic activity, electricity demand, energy costs (e.g., natural gas prices), and technology costs. Some factors may be more strongly influenced by decisions made by foreign governments than by the federal government. For example, international demand for electricity from solar energy could lower the cost to produce solar panels, or countries with large critical mineral resources could impose export bans, increasing the cost in the United States of any technology using those minerals."], "subsections": [{"section_title": "Potential Economic Effects", "paragraphs": ["The overall effect on the American economy of a national portfolio standard would be influenced by multiple factors. Increased electricity costs could reduce economic activity, depending on the price response throughout the economy. Potential price responses are reduced electricity consumption, increased investment in efficiency measures, or reduced spending on other goods or services. Some price responses might have minimal effect on overall economic activity, for example if consumers shifted spending from electricity consumption to energy efficiency improvements.", "Potential economic effects might not be uniformly distributed. There could be regional differences in electricity price changes, given the geographic variability in energy resources. Utilities in regions with relatively less potential to develop eligible sources (i.e., regions in which eligible sources are relatively costlier) might buy credits from eligible generators in other regions. The cost of credits might result in higher electricity prices for customers of the utility buying credits. At the same time, customers of any utilities selling credits might see lower electricity prices. As discussed above, the ability to use unbundled credits for compliance could reduce overall compliance costs relative to the case where only bundled credits were allowed because utilities across the country could take advantage of low cost eligible sources. At the same time, unbundled credits could result in wealth transfer between different regions of the country. Policy design choices might affect any potential wealth transfer. Electricity prices already vary across the country as a result of differences in resource availability, electricity demand, and utility regulatory models. ", "There might also be differences in cost distribution among household income levels. Generally, poorer Americans spend a larger portion of their income on electricity than wealthier Americans, so electricity cost increases could disproportionately affect them. ", "Within the electric power sector, businesses associated with eligible sources might be positively affected while businesses associated with ineligible sources might be negatively affected. The affected businesses might be individual generators and also firms associated with their supply chains. For negatively affected businesses, the potential impacts might include loss of capital investment (sometimes referred to as stranded costs) and reduced employment. Communities surrounding a negatively affected generator might experience negative effects such as loss of tax revenue base and increased demands on social services. For positively affected businesses and communities, the opposite might be true, namely increased capital investment, increased employment, and other positive economic effects. Additionally, American businesses that develop goods or services used to comply with a portfolio standard could potentially expand into international markets, depending on whether eligible sources also experienced demand growth internationally. Depending on policy design details, local electricity market factors, and local energy resources, some existing businesses in the electric power sector could experience negligible effects of a potential national portfolio standard."], "subsections": []}, {"section_title": "Potential Environmental Effects", "paragraphs": ["Proponents of portfolio standards describe multiple environmental benefits, such as reduced greenhouse gas (GHG) emissions (i.e., climate change mitigation) and reduced air pollutants (i.e., improved air quality). The extent to which a portfolio standard might produce potential environmental benefits would depend in part on choices about source eligibility and stringency. Potential eligible sources vary in their GHG and air pollutant emissions, as well as other attributes such as water consumption and power density (which can affect land requirements). Implementation could affect environmental outcomes too. For example, some eligible sources might be deployable in either large-scale or small-scale installations, with differing effects on environmental factors such as land use. Some would argue these potential effects should be compared with potential effects of other energy options. A comprehensive comparison of potential environmental effects of various energy sources is beyond the scope of this report. "], "subsections": []}, {"section_title": "Interaction with State Portfolio Standards", "paragraphs": ["The conditions under which federal law preempts state law can vary, and determination of federal preemption can be complex. Twenty-nine states, three U.S. territories, and the District of Columbia are currently implementing mandatory portfolio standards, and an additional eight states and one territory have voluntary versions. As of September 6, 2019, nine of these have targets of 100%. If Congress implemented a national portfolio standard, it could expressly preempt existing state portfolio standards. If a national portfolio standard were enacted that did not preempt state portfolio standards, utilities in states with existing portfolio standards might have to comply with both simultaneously. In practice, whichever standard had the higher stringency would determine the amount of eligible sources in a utility's portfolio. In this case, the relevant stringency could be either the required percentage of generation from eligible sources or the set of eligible sources itself. For example, some existing state portfolio standards include nuclear energy as an eligible source. If a national portfolio standard did not include nuclear energy, then a utility might be out of compliance with the federal standard even if it were in compliance with the state standard and the state and federal standard required the same amount of electricity from eligible sources. Assuming a generator were eligible for both a state and national program, a utility could procure electricity (or credits) from that generator to demonstrate compliance with both. In other words, the presence of two portfolio standards would not necessarily double the amount of procurement from eligible sources required. A utility covered under two portfolio standards might, however, face increased administrative costs associated with compliance. ", "Although few technical barriers exist to the simultaneous operation of state and federal portfolio standards, other concerns may make this undesirable. Administrative cost burden for covered entities is one such concern. Another might be confusion for eligible sources about whether and how to receive credits for two portfolio standards. If Congress chose to preempt state programs, this could potentially disrupt project finances for recently developed or proposed sources and lead to investment losses in clean energy industries. Congress might also consider exempting utilities facing state portfolio standards of equal or greater stringency than the federal portfolio standards. Congress could also allow credits issued by states to be used for compliance with a federal program. This option would, effectively, allow a utility to use one credit to demonstrate compliance with two portfolio standards, though it could also reduce the policy outcomes relative to a utility having two distinct compliance obligations. An option included in some of the bills listed in the Appendix is to compensate utilities facing a state standard with a specified number of federal credits. Alternatively, Congress could choose not to explicitly address the question, and instead let state governments or judicial review decide whether state programs would be suspended if a national one were implemented."], "subsections": []}, {"section_title": "Interaction with Other State Energy Policies", "paragraphs": ["Under current law, state and local governments have authority for approving electricity generation and transmission assets. Compliance with a national portfolio standard might require new generation and transmission assets, but it is unclear to what extent state approval processes would consider national clean energy policy goals. Some stakeholders have argued that state approval processes for new electricity transmission lines, in particular, create barriers for deployment of certain electricity generation sources, especially wind. To the extent that a national portfolio standard required new transmission capacity, interest might increase in a stronger federal role in approving electricity transmission infrastructure. Congress has considered this in the past. For example, the Energy Policy Act of 2005 ( P.L. 109-58 ) authorized federal approval for some transmission infrastructure under certain conditions, though this authority has never been used. As noted in \" Potential Environmental Effects \" a national portfolio standard might alternatively incentivize distributed energy development or projects in other locations that might not require new transmission capacity.", "Some states have adopted policies to create competition among electricity generators, an effort known as deregulation or restructuring. In these states (and some portions of states), competitive electricity markets create price signals meant to, among other things, drive long-term investment decisions. Congress demonstrated support for restructuring efforts in the Energy Policy Act of 1992 ( P.L. 102-486 ). Portfolio standards require utilities to purchase electricity from sources that might be more expensive than other sources. This creates so-called out-of-market payments, sometimes characterized as subsidies, for eligible sources that could distort the operation of electricity markets. Eligible sources would still compete with each other for market share, creating some competitive pressure on prices among eligible sources."], "subsections": [{"section_title": "Appendix. Legislative Proposals in the 105th-116th Congresses", "paragraphs": ["This section lists previously introduced legislation that would have established national portfolio standards. CRS searched congress.gov using the phrases \"renewable portfolio standard,\" \"clean energy standard,\" \"renewable energy standard,\" \"renewable electricity standard,\" \"renewable energy,\" and \"clean energy,\" in full bill text or bill summaries for all Congresses. The earliest bill identified in this search was introduced in the 105 th Congress. Search results were refined by including only the Subject-Policy Area terms \"Energy\" and \"Environmental Protection.\" Table A-1 provides selected policy design elements of the bills that would have established national portfolio standards that were identified using this search methodology. Bills are listed in order of introduction by Congress, with House bills listed first and Senate bills listed second. This table only provides information related to the bills' portfolio standards. Some of the bills in the table had multiple provisions, including some that might also affect the electric power sector, but those are not described here."], "subsections": []}]}]}]}}
{"id": "R45941", "title": "The Annual Sequester of Mandatory Spending through FY2029", "released_date": "2019-10-04T00:00:00", "summary": ["The Budget Control Act of 2011 (BCA; P.L. 112-25 ) included two parts: discretionary spending caps, plus a \"Joint Committee process\" to achieve an additional $1.2 trillion in budgetary savings over FY2013-FY2021.", "For the initial tranche of savings, the BCA placed statutory limits on discretionary spending for each fiscal year from FY2012 through FY2021. At the time of enactment, the BCA discretionary spending caps were projected to save $917 billion.", "For the second, and larger, tranche of savings, the BCA established a bipartisan, bicameral Joint Select Committee on Deficit Reduction (\"Joint Committee\") to negotiate a broad deficit reduction package to save another $1.5 trillion through FY2021. As a fallback, the BCA provided that automatic spending reductions would be triggered if Congress did not enact at least $1.2 trillion in budget savings by January 15, 2012.", "The deadline was not met, which triggered the BCA's $1.2 trillion in automatic spending reductions. The automatic reductions were designed to achieve $1.2 trillion in budgetary savings by reducing both discretionary and mandatory spending in each year through FY2021.", "The largest share of the $1.2 trillion in additional savings was to be achieved by reducing the discretionary spending caps and the remainder through annual across-the-board cuts (sequestration) in all nonexempt mandatory spending.", "The mandatory spending portion of the automatic reductions (referred to in this report as the \"Joint Committee sequester\") has been fully implemented in each year since FY2013. It has been extended five times and is now, under current law, effective for each fiscal year through FY2029.", "This report explains", "the BCA provisions that established and triggered the Joint Committee sequester, the annual sequester calculations by OMB, the extension and calculation of the Joint Committee sequester through FY2029, the broad scope of the sequester across the federal budget, and sequester exemptions and special rules.", "The appendixes include a table summarizing each sequester since FY2013, a summary of the FY2020 sequester reductions, the text of the FY2020 sequester order, the text of the OMB sequester calculation, a list of mandatory sequester exemptions, and additional CRS resources on sequestration."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": [], "subsections": [{"section_title": "Budget Authority and Budgetary Resources", "paragraphs": ["The Constitution reserves to Congress the power of the purse, exercised through legislation that grants federal agencies legal authority to enter into financial obligations that will result in outlays of federal funds. ", "When Congress enacts authority for agencies to enter into financial obligations for particular purposes, it is called \"budget authority.\" Newly enacted budget authority and unspent balances of prior year budget authority are referred to collectively as \"budgetary resources.\" ", "Budgetary resources include two types of spending. The first, \"discretionary spending,\" refers to budget authority provided in annual appropriations funding bills. Discretionary spending makes up about 30% of federal spending but receives the largest share of budgetary scrutiny, because appropriations bills are subject to congressional decisionmaking each fiscal year. ", "The other 70% of federal spending is called \"mandatory\" or \"direct\" spending, because the budget authority flows directly from multiyear authorizing laws enacted outside the annual appropriations process. Examples of mandatory spending are entitlement programs, supplemental nutrition assistance, and multiyear highway bills enacted by authorizing committees. ", "Sequestration is a budgetary mechanism that requires automatic cancellation of budgetary resources through across-the-board reductions to programs, projects, and activities. Since the creation of the sequester mechanism in the Balanced Budget and Emergency Deficit Control Act of 1985 (BBEDCA), it has been used to enforce a variety of fiscal policy goals. "], "subsections": []}]}, {"section_title": "The BCA and the Joint Committee Sequester", "paragraphs": ["The Budget Control Act of 2011 (BCA) included two parts: discretionary spending caps for an initial tranche of budgetary savings and a \"Joint Committee process\" to achieve broader budgetary savings.", "For the initial tranche of budgetary savings, the BCA placed statutory limits on discretionary spending for each fiscal year from FY2012 through FY2021. At the time of enactment, the BCA discretionary spending caps were projected to save $917 billion over the ensuing decade.", "To accomplish the second, and larger, tranche of savings, the BCA established a bipartisan, bicameral Joint Select Committee on Deficit Reduction (Joint Committee). The committee was to negotiate a deficit reduction package to save another $1.5 trillion through FY2021. As a fallback, the BCA provided that automatic spending reductions would be triggered if Congress did not enact at least $1.2 trillion in budget savings by January 15, 2012. ", "The deadline was not met, and this triggered the BCA's $1.2 trillion in automatic spending reductions. The automatic reductions were designed to achieve $1.2 trillion in budgetary savings by reducing both discretionary and mandatory spending each year through FY2021:", "Most of the $1.2 trillion in additional budgetary savings was to be achieved by reducing the discretionary spending caps. Subsequent legislation has partially or fully rolled back these additional discretionary spending reductions. The remainder of the $1.2 trillion in savings was to be achieved through annual across-the-board cuts (sequestration) in all nonexempt mandatory spending. This portion of the automatic reductions has been fully implemented\u00e2\u0080\u0094and extended for an additional eight years through FY2029 (see below, \"Extension of the Joint Committee Sequester\"). "], "subsections": []}, {"section_title": "Calculating the Joint Committee Sequester", "paragraphs": ["The BCA includes detailed statutory directions for the Office of Management and Budget (OMB) to calculate, and the President to implement, the Joint Committee reductions for each fiscal year through 2021. As summarized below, the calculation of the discretionary cap reductions and the across-the-board cuts in mandatory spending are interdependent even though the discretionary spending caps have been revised by subsequent legislation. OMB must still calculate the annual spending cap reductions\u00e2\u0080\u0094as set forth in the 2011 statute\u00e2\u0080\u0094in order to arrive at the mandatory spending cuts. ", "The Joint Committee reductions are calculated as follows (see Figure 1 ):", "In order to achieve the required $1.2 trillion of deficit reduction, the BCA first subtracts 18% ($216 billion) for debt service savings associated with the required deficit reduction. It then divides the remainder ($984 billion) over the nine years of the BCA to arrive at a required annual reduction of $109.3 billion for each fiscal year from FY2013 through FY2021. The BCA required the annual reduction of $109.3 billion to be split evenly between defense spending and nondefense spending so that each category is reduced by $54.667 billion in each fiscal year through FY2021. The required reductions of $54.667 billion were allocated between discretionary spending and mandatory spending within each category subject to exemptions and special rules for particular programs. The required reductions in discretionary spending were implemented by lowering the BCA discretionary spending limits, although the required cap reductions have been superseded by legislation revising the caps. The required reductions in mandatory spending were achieved through the mandatory sequester\u00e2\u0080\u0094automatic across-the-board cuts in nonexempt mandatory spending. "], "subsections": [{"section_title": "FY2020 Defense Calculations", "paragraphs": ["Step 1 . Under the BCA, total spending in the defense category must be reduced by $54.667 billion, allocated proportionally between discretionary appropriations and mandatory spending. OMB calculates how much of the defense spending base is discretionary versus mandatory. ", "The BCA calculates the discretionary-to-mandatory ratio for the defense category as follows:", "defense discretionary spending is set by the BCA defense spending limit for FY2020, which is $630 billion; and mandatory spending is set by OMB's baseline estimate of (nonexempt) mandatory spending, which is $9.844 billion.", "This calculation results in a ratio of 98.46% for defense discretionary spending and 1.54% for defense mandatory spending.", "Step 2 . To achieve the required overall defense category reduction of $54.667 billion, these percentages result in a defense discretionary reduction of $53.825 billion and a defense mandatory reduction of $842 million. ", "Step 3 . The required defense discretionary reduction lowers the spending cap to the adjusted cap level of $576.175 billion. This cap level is now superseded by the revised level enacted in the Bipartisan Budget Act (BBA) of 2019, which is $666.5 billion.", "Step 4 . The defense mandatory reduction of $842 million is achieved by dividing that amount into the nonexempt mandatory spending base of $9.844 billion. This results in an 8.6% across-the-board cut (sequestration) to be applied to all nonexempt defense budget accounts with mandatory spending. ", "Once this uniform percentage is determined, Section 256(k)(2) of BBEDCA requires that sequestration be applied equally to all programs, projects, and activities (PPAs) within the affected budget accounts. "], "subsections": []}, {"section_title": "FY2020 Nondefense Calculations", "paragraphs": ["The BCA calculations for the nondefense category have more steps than the defense calculations due to special requirements for Medicare and student loans that are explained below. ", "Step 1 . Under the BCA, total spending in the nondefense category must be reduced by $54.667 billion\u00e2\u0080\u0094with reductions in discretionary and mandatory spending. The largest portion of the mandatory sequestration comes from the Medicare program, which is subject to 2% across-the-board cuts. ", "For FY2020, the portion of Medicare subject to the 2% sequester is estimated by OMB to have outlays of $765.495 billion, so a 2% reduction would reduce Medicare outlays by $15.310 billion. This leaves a required non-Medicare reduction of $39.357 billion from the remaining nondefense category. ", "Step 2 . The remaining reduction of $39.357 billion is allocated proportionally between nondefense discretionary appropriations and nondefense (non-Medicare) mandatory spending. ", "The BCA calculates the discretionary-to-mandatory ratio for the nondefense category as follows:", "nondefense discretionary spending is set by the BCA nondefense spending limit for FY2020, which is $578 billion; and nondefense mandatory spending is set by OMB's baseline estimate of (nonexempt, non-Medicare) mandatory spending, which is $75.518 billion.", "This calculation results in a ratio of 88.44% for nondefense discretionary spending and 11.56% for nondefense, non-Medicare nonexempt mandatory spending.", "To achieve the required non-Medicare nondefense reduction of $39.357 billion, these percentages result in a nondefense discretionary reduction of $34.807 billion and a nondefense (non-Medicare) mandatory reduction of $4.550 billion. ", "Step 3 . The nondefense discretionary reduction is implemented by lowering the BCA spending cap by $34.807 billion to the adjusted cap level of $543.193 billion (although this cap level is now superseded by the revised level enacted in the BBA of 2019, which is $621.5 billion).", "Step 4 : Under OMB's calculation, the remaining reduction ($4.550 billion) to direct spending is achieved by applying a 5.9% uniform percentage reduction to non-Medicare nonexempt mandatory spending and increasing student loan fees by the same 5.9%. ", "Once this uniform percentage is determined, Section 256(k)(2) of BBEDCA requires that sequestration be applied equally to all PPAs within the affected budget accounts."], "subsections": []}]}, {"section_title": "Extension of the Joint Committee Sequester", "paragraphs": ["As discussed above, the BCA established statutory limits on discretionary spending for FY2013-FY2021 to achieve about $900 billion in budgetary savings. The BCA triggered an additional tranche of automatic budgetary savings\u00e2\u0080\u0094$1.2 trillion over FY2013-FY2021\u00e2\u0080\u0094when Congress's Joint Committee did not report, and Congress did not enact, at least $1.2 trillion in budget savings by January 15, 2012. ", "The automatic Joint Committee reductions include changes in the discretionary spending limits and sequestration (across-the-board cuts) in mandatory spending.", "The requirement for a Joint Committee (mandatory) sequester in FY2013-FY2021 has been extended on five occasions\u00e2\u0080\u0094to offset increases in discretionary spending and other legislation\u00e2\u0080\u0094and is now required for each fiscal year through FY2029:", "The BBA of 2013 ( H.J.Res. 59 , P.L. 113-67 ) amended BBEDCA to increase the discretionary spending limits for FY2014 and FY2015 and added two years to the Joint Committee mandatory sequester (FY2022 and FY2023). P.L. 113-82 ( S. 25 , an Act relating to cost of living adjustments for military retirees, February 15, 2014) amended BBDECA to add one year to the Joint Committee mandatory sequester (FY2024). The BBA of 2015 ( H.R. 1314 , P.L. 114-74 ) amended BBEDCA to increase the discretionary spending limits for FY2016 and FY2017 and added one year to the Joint Committee mandatory sequester (FY2025). The BBA of 2018 ( H.R. 1892 , P.L. 115-123 ) amended BBEDCA to increase the discretionary spending limits for FY2018 and FY2019 and added two years to the Joint Committee mandatory sequester (FY2026 and FY2027). The BBA of 2019 ( H.R. 3877 , P.L. 116-37 ) amended BBEDCA to increase the discretionary limits for FY2020 and FY2021 and added two years to the Joint Committee mandatory sequester (FY2028 and FY2029). "], "subsections": [{"section_title": "Calculation of the Joint Committee Sequester in the Extension\u00c2 Years", "paragraphs": ["As explained above, the Joint Committee mandatory sequester is calculated based on the statutory requirement to save $109.3 billion in each fiscal year from FY2013 through FY2021, with half of the savings coming from defense and half from nondefense programs. The defense and nondefense reductions of $54.667 billion per year are apportioned between discretionary and mandatory programs according to the formulas explained in the FY2020 illustrations above. ", "After FY2021, there is no statutory requirement to achieve $54.667 billion in budgetary savings in defense and nondefense spending and, consequently, no specific amounts to apportion to mandatory (or discretionary) savings. Therefore, the statutes extending the Joint Committee mandatory sequester have tied the defense and nondefense mandatory savings for FY2022-FY2029 to the uniform percentage reductions to be calculated by OMB for FY2021 in the Report on the Joint Committee Reduction that is to be released concurrent with the President's budget in February 2020.", "This means that for FY2022-FY2029", "the percentage reduction for nonexempt direct spending for the defense category is the same percent as the percentage reduction for the defense category for FY2021, and the percentage reduction for nonexempt direct spending for the nondefense category is the same percent as the percentage reduction for the nondefense category for FY2021."], "subsections": []}]}, {"section_title": "Scope, Exemptions, and Special Rules", "paragraphs": [], "subsections": [{"section_title": "Scope of the Mandatory Sequester", "paragraphs": ["Sequestration is a cancellation of budgetary resources by the President\u00e2\u0080\u0094required by statute\u00e2\u0080\u0094in all nonexempt programs and accounts. While many programs and activities are fully or partially exempted from the mandatory sequester, the mechanism nevertheless has a broad reach. ", "In addition to the sequestration of Medicare payments, the Joint Committee sequester automatically reduces more than 200 budget accounts impacting a broad array of programs, including Affordable Care Act cost-sharing reduction subsidies and risk adjustment; farm price and income supports; compensation and services for crime victims; citizenship and immigration services; agricultural marketing services and conservation programs; animal and plant health inspection; Federal Deposit Insurance Corporation orderly liquidation operations; vocational rehabilitation services; mineral leasing payments; Centers for Medicare and Medicaid Services (CMS) program management; social services block grants; Departments of Justice and the Treasury law enforcement activities; student loan origination fees; highway performance; school construction bonds; spectrum relocation activities; Trade Adjustment Assistance; Consumer Financial Protection Bureau; Drug Enforcement Administration operations; Tennessee Valley Authority; fish and wildlife restoration and conservation; affordable housing; the maternal, infant, and early childhood home visiting program; and Gulf Coast restoration."], "subsections": []}, {"section_title": "Mandatory Sequester Exemptions", "paragraphs": ["Many programs and activities are exempt from sequestration under Section 255 of BBEDCA (2 U.S.C. \u00c2\u00a7905; see Appendix E for a complete list of exemptions). In dollar terms, three-quarters of all mandatory spending is exempt from the mandatory sequester as illustrated in Figure 2 . ", "In addition to program exemptions, several programs are subject to special rules, including a 2% limit on sequestration reductions to Medicare, explained below. "], "subsections": [{"section_title": "2% Sequester Limit for Medicare", "paragraphs": ["Medicare is the federal health insurance program for people who are 65 or older, for younger people with permanent disabilities, and for people of any age with end-stage renal disease. It is the largest mandatory spending program subject to sequestration, although special rules limit the sequestration of Medicare benefit payments to 2% rather than the uniform percentage applied to other nonexempt mandatory spending programs (5.9% in FY2020). ", "Most Medicare spending\u00e2\u0080\u0094$765.5 billion in FY2020\u00e2\u0080\u0094is subject to the 2% sequester including payments to health care providers for hospitalizations, physician services, prescription drugs, skilled nursing facility care, home health visits, and hospice care. ", "Generally, Medicare's provider payment and benefit structure remains unchanged under a mandatory sequestration order, and beneficiaries see few direct impacts. However, the indirect impact on particular health care providers and beneficiaries is more complex\u00e2\u0080\u0094particularly for Medicare Advantage and Part D prescription drug coverage. ", "In \"traditional Medicare,\" the program pays providers on a fee-for-service basis, and the 2% sequester reduction is applied directly to provider payments. Under Medicare Advantage, by contrast, private health plans are paid a per-person (\"capitated\") monthly amount to provide nearly all Medicare-covered benefits to beneficiaries who enroll in their plans. The Joint Committee 2% sequester is applied to Medicare's monthly capitation payment and the Medicare Advantage Organizations (MAOs) administering the plans determine how the reduced capitation payments are to be distributed among medical providers, administrative expenses, risk adjustments, and plan rebates to beneficiaries. ", "Similarly, under Medicare Part D, the optional outpatient prescription drug benefit plans are paid through capitated monthly payments (the \"direct subsidy\") to private plans. The 2% Medicare sequester reduces these monthly direct subsidy amounts. ", "A key consequence of the 2% Medicare sequester limit is that it increases the uniform percentage reduction applied to non-Medicare mandatory programs. For example, in FY2020, if there were no 2% limit on the Medicare sequester, a uniform percentage reduction applied to all nonexempt mandatory spending (including Medicare) would be 3.9% rather than the 5.9% reduction applied in the October 1, 2019, sequester order. ", "Medicare sequester special rules follow:", "Part D low-income subsidies, Part D catastrophic subsidies (reinsurance), and Qualifying Individuals Part B premium assistance are exempted from sequestration. Medicare administrative expenses , if classified as mandatory spending, are subject to the full Joint Committee mandatory sequester (5.9% in FY2020) rather than protected by the 2% limit. Special rules determine whether Health Care Fraud and Abuse Control Program (HCFAC) funds are subject to the 2% limit. After a sequester order is issued, Medicare payments are sequestered beginning on the first day of the following month and remain in effect during the following one-year period, even if there is an intervening sequester order. The total amount sequestered from Medicare depends on actual Medicare spending in a given year rather than an amount based on OMB's estimate. (For example, if actual Medicare outlays exceed the estimated amount included in a sequestration order, the additional outlays would be subject to the sequester.) Medicare sequestration in FY2029 is subject to a special rule\u00e2\u0080\u00944% during the first six months and 0% for the second six months of the order. "], "subsections": []}, {"section_title": "Special Rule for Student Loans27", "paragraphs": ["Sequestration impacts federal student loans differently than it does other programs. For federal student loans, sequestration is applied to student loan origination fees. ", "The origination fee is money the borrower (that is, the student or the student's parents) pays to the federal government to offset the costs of issuing the loan. The fee is calculated as a percentage of the loan's total and is subtracted from the loan amount. Direct Subsidized Loans and Direct Unsubsidized Loans generally have a fee of about 1%, and Direct PLUS loans generally have a fee of about 4%.", "For example, if a student's parents take out a federal PLUS loan of $16,450, with an origination fee of 4.248%, about $15,750 of the loan would go to the school and $700 to the federal government for the origination fee.", "Special sequestration rules (BBEDCA \u00c2\u00a7256 , 2 U.S.C. \u00c2\u00a7906 ) for student loans provide that the federal budgetary savings are achieved by increasing the origination fee\u00e2\u0080\u0094the money going to the federal Treasury\u00e2\u0080\u0094rather than reducing the overall loan amount. ", "For example, for FY2020, the 5.9% uniform sequester percentage is to be applied as an increase to federal student loan origination fees. In the above example, the result would be that the $700 origination fee would be increased by 5.9% or about $41\u00e2\u0080\u0094the effect of which would be to reduce the amount of the loan going to the school. "], "subsections": []}, {"section_title": "Other Special Rules", "paragraphs": ["Community and migrant health centers providing primary care to people who have financial, geographic or other barriers to health care are supported by discretionary and mandatory funding under the Affordable Care Act. In years when mandatory spending is estimated, at the time OMB calculates a sequester, the spending reductions are limited to a 2% sequester. Indian Health Service (IHS) provides health services to 2.6 million American Indians and Alaska Natives. While most IHS funding is provided through discretionary appropriations, IHS receives mandatory appropriations for programs including treatment of diabetes. In years when mandatory spending is estimated at the time OMB calculates a sequester, the spending reductions are limited to a 2% sequester. Administrative expenses : Federal administrative expenses are subject to sequestration\u00e2\u0080\u0094even if they are incurred in connection with a program that is exempt or subject to a special rule. However, this special rule applies only to administrative expenses classified as mandatory spending. Defense unobligated balances: Unobligated balances of budget authority carried over from prior fiscal years in the defense category are subject to the mandatory sequester pursuant to Section 255(e) of BBEDCA. Intragovernmental payments: For intragovernmental payments, sequestration is applied to the paying account. The funds are generally exempt in the receiving account in accordance with Section 255(g)(1)(A) of BBEDCA so that the same dollars are not sequestered twice. Revo lving, trust, and special fund accounts and offsetting collections: Budgetary resources in revolving, trust, and special fund accounts and offsetting collections reduced by a mandatory sequester are not available for obligation during the fiscal year in which the sequestration occurs but are available in subsequent years to the extent otherwise provided. ", "Appendix A. Mandatory Sequester by Fiscal Year", "Appendix B. FY2020 Programmatic Impact of the Joint Committee Sequester", "On March 18, 2019, OMB, as part of its annual budget transmittal to Congress and as required by the BCA, released the OMB Report to Congress on the Joint Committee Reductions for Fiscal Year 2020 . In addition to setting forth the calculations of the upcoming fiscal year's sequester as required by statute, the report includes account-by-account detail of the amount by which each mandatory spending account is required by statute to be reduced at the beginning of the new fiscal year. Specifically, the report identifies", "four mandatory spending accounts to be reduced by the 2% Medicare sequester, six mandatory spending accounts to be reduced by the 8.6% defense sequester, and 208 mandatory spending accounts to be reduced by the 5.9% nondefense sequester. ", "For illustrative purposes, the table below displays the FY2020 mandatory sequester reductions of $20 million or more, with brief descriptions of the programs. For a complete list of mandatory spending accounts subject to sequester for FY2020, see the Appendix of the OMB Report to Congress .", "Appendix C. Sequestration Order for FY2020", "EXECUTIVE ORDERS Sequestration Order for Fiscal Year 2020 Issued on: March 18, 2019", "By the authority vested in me as President by the laws of the United States of America, and in accordance with section 251A of the Balanced Budget and Emergency Deficit Control Act (the \"Act\"), as amended, 2 U.S.C. 901a, I hereby order that, on October 1, 2019, direct spending budgetary resources for fiscal year 2020 in each non-exempt budget account be reduced by the amount calculated by the Office of Management and Budget in its report to the Congress of March 18, 2019.", "All sequestrations shall be made in strict accordance with the requirements of section 251A of the Act and the specifications of the Office of Management and Budget's report of March 18, 2019, prepared pursuant to section 251A(9) of the Act.", "DONALD J. TRUMP", "THE WHITE HOUSE March 18, 2019.", "Appendix D. OMB Description of Sequester Calculations", "Each year through FY2021, concurrent with transmittal of the President's budget, OMB transmits to Congress a report explaining the Joint Committee reductions for the upcoming fiscal year. Relevant portions of the OMB report for FY2020 are included below to illustrate how OMB calculates the mandatory sequester percentages. (The footnotes appearing in this Appendix are from the OMB report.)", "OMB Report to the Congress on the Joint Committee Reductions for Fiscal Year 2020\u00e2\u0080\u0094March 18, 2019", "The Balanced Budget and Emergency Deficit Control Act (BBEDCA) requires the Office of Management and Budget (OMB) to calculate reductions of fiscal year (FY) 2020 budgetary resources and provide them to the Congress with the transmittal of the Budget. This report provides OMB's calculations of the reductions to the discretionary spending limits (\"caps\") specified in section 251(c) of BBEDCA for FY 2020 and a listing of the FY 2020 reductions required through sequestration for each nonexempt budget account with direct spending.", "OMB calculates that the Joint Committee reductions will lower the discretionary cap for the revised security (defense) category by $54 billion and for the revised nonsecurity (nondefense) category by $35 billion. Additionally, the Joint Committee reductions require sequestration reductions to nonexempt direct spending of 2.0 percent to Medicare, 5.9 percent to other nonexempt nondefense mandatory programs, and 8.6 percent to nonexempt defense mandatory programs.", "Calculation of Annual Reduction by Function Group", "Under section 251A of BBEDCA, the failure of the Joint Select Committee on Deficit Reduction to propose, and the Congress to enact, legislation to reduce the deficit by $1.2 trillion triggers automatic reductions in FY 2020 through adjustments in the discretionary spending limits and sequestration of direct spending. As shown in Table D-1 , the total amount of deficit reduction required is specified by formula in section 251A(1), starting with the total reduction of $1.2 trillion required for FY 2013 through FY 2021, deducting a specified 18 percent for debt service savings, and then dividing the result by nine to calculate the annual reduction of $109 billion for each year from FY 2013 to FY 2021. Section 251A(2) requires the annual reduction to be split evenly between budget accounts in function 050 (defense function) and in all other functions (nondefense function), so that each function group will be reduced by $54.667 billion.", "Base for Allocating Reductions and Method of Reduction", "The annual reduction is further allocated between discretionary and direct spending within each of the function groups. Once the reductions are allocated, separate methods are used to implement the reductions for discretionary appropriations and direct spending.", "Discretionary Reductions. The base for allocating reductions to discretionary appropriations is the discretionary spending limit for FY 2020 set forth in section 251(c). The reductions are implemented by lowering the discretionary spending limits for the revised security (defense) category and the revised nonsecurity (nondefense) category.", "Direct Spending Reductions. Pursuant to paragraphs (3) and (4) of section 251A, and consistent with section 6 of the Statutory Pay-As-You-Go Act of 2010, the base for allocating reductions to budget accounts with direct spending is the sum of the direct spending outlays in the budget year and the subsequent year that would result from sequestrable budgetary resources in FY 2020.", "Estimates of sequestrable budgetary resources and outlays for budget accounts with direct spending are equal to the current law baseline amounts contained in the President's FY 2020 Budget, and include direct spending unobligated balances in the defense function and Federal administrative expenses that would otherwise be exempt.", "The majority of estimated direct spending unobligated balances in the defense function are in Department of Defense accounts. The Department of Defense estimates of unobligated balances as of October 1, 2019, are consistent with the estimates in the FY 2020 Budget.", "For purposes of applying the Joint Committee sequestration to direct spending under BBEDCA, \"administrative expenses\" for typical Government programs are defined as the object classes for personnel compensation, travel, transportation, communication, equipment, supplies, materials, and other services. For Government programs engaging in commercial, business-like activities, administrative expenses constitute overhead costs that are necessary to run a business, and not expenses that are directly tied to the production and delivery of goods or services.", "The reductions to direct spending are implemented through sequestration of nonexempt budgetary resources. Pursuant to sections 251A(6), 255, and 256, most direct spending is exempt from sequestration or, in the case of the Medicare program and certain other health programs, is subject to a 2 percent limit on sequestration.", "Defense Function Reduction", "Steps 1 and 2 on Table D-2 show the calculation of the reduction required for discretionary appropriations and direct spending within the defense function. Steps 3 and 4 on Table D-2 reflect the implementation of the reductions calculated in steps 1 and 2 through an adjustment to the discretionary spending limit for the defense category and a sequestration of direct spending in the defense function.", "The calculation of the reduction involves the following steps:", "Step 1 . Pursuant to section 251A(3), the total reduction of $54.667 billion is allocated proportionately between discretionary appropriations and direct spending. The total base is the sum of the FY 2020 discretionary spending limit for the defense category ($630 billion) and OMB's baseline estimates of sequestrable direct spending outlays ($9.844 billion) in the defense function in FY 2020 and FY 2021 from direct spending sequestrable resources in FY 2020. Discretionary appropriations comprise approximately 98 percent of the total base in the defense function.", "Step 2 . Total defense function spending must be reduced by $54.667 billion. As required by section 251A(3)(A), allocating the reduction based on the ratio of the discretionary spending limit to the total base (the sum of the defense discretionary spending limit and sequestrable direct spending) yields a $53.825 billion reduction required to be made to discretionary appropriations. Under section 251A(3)(B), the remaining $0.842 billion is the reduction required for budget accounts with direct spending.", "The implementation of the reductions involves the following steps:", "Step 3 . As required by section 251A(5)(B), the discretionary spending limit for the defense category is lowered by the amount calculated in step 2, which results in a discretionary defense cap for FY 2020 of $576.175 billion.", "Step 4 . As required by section 251A(6), the percentage reduction for nonexempt direct spending is calculated by dividing the direct spending reduction amount ($0.842 billion) by the sequestrable budgetary resources ($9.844 billion) for budget accounts with direct spending, which yields a 8.6 percent sequestration for budget accounts with nonexempt direct spending.", "Nondefense Function Reduction", "Steps 1 and 2 on Table D-3 show the calculation of the reduction required for discretionary appropriations and direct spending within all other functions besides 050 (nondefense function). The calculation is more complicated than the calculation for the defense function due to a two percent limit in the reduction of Medicare non-administrative spending and a special rule for applying the reduction to student loans. Steps 3 and 4 on Table D-3 reflect the implementation of the reductions calculated in steps 1 and 2 through an adjustment to the discretionary spending limit for the nondefense category and a sequestration of direct spending in the nondefense function. ", "The calculation of the reduction involves the following steps:", "Step 1 . Total spending in the nondefense function must be reduced by $54.667 billion. The portion of Medicare subject to the two percent limit is estimated to have combined FY 2020 and FY 2021 outlays of $765.495 billion from FY 2020 budgetary resources, so a two percentage point reduction would reduce outlays by $15.310 billion, leaving a reduction of $39.357 billion to be taken from discretionary appropriations and other direct spending in the nondefense function.", "Step 2 . Pursuant to section 251A(4), the remaining reduction of $39.357 billion is allocated proportionately between discretionary appropriations and other direct spending in the nondefense function. The base ($653.518 billion) is the sum of the FY 2020 discretionary spending limit for the nondefense category ($578.000 billion) and the remaining sequestrable direct spending base ($75.518 billion). The latter amount equals OMB's 2020 Budget baseline estimates of total sequestrable direct spending outlays in the nondefense function in FY 2020 and FY 2021 from direct spending sequestrable resources in FY 2020 ($841.013 billion) minus the portion of Medicare subject to the two percent limit ($765.495 billion). Discretionary appropriations account for 88.44 percent of the remaining base in the nondefense function, and direct spending accounts for 11.56 percent.", "As required by section 251A(4), applying these percentage allocations to the remaining required reduction for programs in the nondefense function yields the reduction for discretionary appropriations ($34.807 billion) and for remaining direct spending ($4.550 billion).", "The implementation of the reductions involves the following steps:", "Step 3 . As required by section 251A(5)(B), the discretionary spending limit for the nondefense category is lowered by the amount calculated in step 2, which results in a discretionary nondefense cap for FY2020 of $543.193 billion.", "Step 4 . The remaining reduction ($4.550 billion) to direct spending is applied as a uniform percentage reduction to the remaining budget accounts with sequestrable direct spending and by increasing student loan fees by the same uniform percentage, as specified in sections 251A(6) and 256(b). Each percentage point increase in the sequestration rate is estimated to result in $0.010 billion of savings in the direct student loan program. Solving simultaneously for the percentage that would achieve the remaining reduction when applied to both the remaining sequestrable direct spending ($75.518 billion) and to student loan fees yields a 5.9 percent reduction. This percentage reduction yields outlay savings of $0.059 billion in the direct student loan program and $4.491 billion from the remaining budget accounts with nonexempt direct spending.", "Appendix E. List of Federal Programs Exempt from the Mandatory Sequester", "Many programs and activities are exempt from the mandatory sequester under Sections 255 and 256(d)(7) of BBEDCA (2 U.S.C. \u00c2\u00a7905). In dollar terms, three-quarters of all mandatory spending is exempt from the mandatory sequester (see Figure 2 ). ", "Exempt manda tory spending programs include", "Social Security benefits and Tier I railroad retirement benefits", "Veterans' compensation, pensions, life insurance", "Net interest (payments on accumulated federal debt)", "Refundable income tax credits", "Nondefense unobligated balances of budget authority carried over from prior fiscal years", "Claims, judgments, and relief acts ", "Exchange Stabilization Fund ", "Federal Deposit Insurance Corporation, Deposit Insurance Fund ", "Federal Home Loan Mortgage Corporation (Freddie Mac)", "Federal Housing Finance Agency, administrative expenses ", "Federal National Mortgage Corporation (Fannie Mae)", "Federal Reserve Bank Reimbursement Fund ", "National Credit Union Administration funds ", "Federal retirement and disability including civil service, military, foreign service, and judicial ", "Low-income programs including ", "Child Care Entitlement to States Child Nutrition Programs (with the exception of Special Milk) Children's Health Insurance Program Family support programs (including Child Support Enforcement) Federal Pell Grants (under Section 1070a of Title 20) Grants to states for Medicaid Medicare Part D low-income subsidies, catastrophic subsidies, and Qualified Individual premiums Payments for foster care and permanency Supplemental Nutrition Assistance Program (formerly \"food stamps\") Supplemental Security Income Temporary Assistance for Needy Families ", "Economic recovery programs including GSE preferred stock purchase agreements, Office of Financial Stability", "Federal-Aid Highways and Safety Programs ", "Unemployment compensation (but federal share of extended benefits is not exempt) ", "Postal Service Fund ", "Salaries of Article III judges", "Certain tribal and Indian trust accounts ", "Universal Service Fund ", "Various prior legal obligations of the government including", "Credit liquidating accounts Federal Crop Insurance Corporation Fund (however, farm price and income supports are not exempt from the Joint Committee sequester) Federal Emergency Management Agency, National Flood Insurance Fund Pension Benefit Guaranty Corporation Fund Terrorism Insurance Program.", "Appendix F. Additional CRS Resources on Sequestration", "CRS Insight IN11148, The Bipartisan Budget Act of 2019: Changes to the BCA and Debt Limit , by Grant A. Driessen and Megan S. Lynch. ", "CRS Report R44874, The Budget Control Act: Frequently Asked Questions , by Grant A. Driessen and Megan S. Lynch. ", "CRS Report R45106, Medicare and Budget Sequestration , by Patricia A. Davis. ", "CRS Report R42050, Budget \"Sequestration\" and Selected Program Exemptions and Special Rules , coordinated by Karen Spar.", "CRS Report R42972, Sequestration as a Budget Enforcement Process: Frequently Asked Questions , by Megan S. Lynch.", "CRS Report R43133, The Impact of Sequestration on Unemployment Insurance Benefits: Frequently Asked Questions , by Katelin P. Isaacs and Julie M. Whittaker. "], "subsections": []}]}]}]}}
{"id": "R46002", "title": "Military Funding for Border Barriers: Catalogue of Interagency Decisionmaking", "released_date": "2020-05-08T00:00:00", "summary": ["The Department of Defense (DOD, or the Department) has contributed $6.1 billion to the construction of new and replacement barriers along the U.S.-Mexico border in support of the Department of Homeland Security (DHS) by invoking a mixture of statutory and nonstatutory authorities. Congressional concerns surrounding the use of these authorities and the further possibility that DOD's actions may jeopardize legislative control of appropriations has generated interest about the decisionmaking process that drove the Department's funding decisions.", "DOD has not generally made internal and interagency communications related to these processes directly available to congressional staff. However, various letters, memoranda, and explanatory declarations from key decisionmakers have been released into the public record (primarily as the result of ongoing litigation) that provide a more complete picture of the issues the Department considered, along with its final determinations on border barrier funding.", "This report provides a chronological summary of internal and interagency communications related to DOD's border wall funding processes since approximately April 2018 as described chiefly through court exhibits and declarations in legal proceedings. Due to the technical difficulty of accessing legal records, CRS has made all relevant open source materials accessible to congressional staff via hyperlinks. A comprehensive set of legal citations has also been provided in the accompanying tables."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Background", "paragraphs": ["In an Executive Order (E.O. 13767) released during President Donald Trump's first week in office, on January 25, 2017, he declared, \"It is the policy of the executive branch to \u00e2\u0080\u00a6 secure the southern border of the United States through the immediate construction of a physical wall on the southern border \u00e2\u0080\u00a6 [and] 'Wall' shall mean a contiguous, physical or other similarly secure, contiguous, and impassable physical barrier.\" The Trump Administration has consistently pursued the deployment of fencing, walls, and other barriers along the U.S.-Mexico border as a high priority.", "On April 4, 2018, the President, citing \"a drastic surge of activity on the southern border,\" directed the Secretary of Defense, the Attorney General, and the Secretary of Homeland Security to coordinate action on securing the U.S. southern border \"to stop the flow of deadly drugs and other contraband, gang members and other criminals, and illegal aliens into this country.\" The President further directed DOD to mobilize the National Guard to support DHS at the border and to develop a plan for tapping additional military resources using executive authorities.", "Later that year, as part of budget negotiations over a FY2019 appropriations package, the Administration submitted a supplemental request of $5.7 billion for \"construction of a steel barrier for the Southwest border.\" The new funding request became the focal point of a partial government shutdown that began on December 22, 2018, and lasted 35 days, the longest on record.", "Unsatisfied with the negotiated agreement\u00e2\u0080\u0094which provided $1.375 billion of the Administration's supplemental $5.7 billion request\u00e2\u0080\u0094President Trump declared a national state of emergency and undertook a series of executive actions that redirected $6.1 billion in DOD funds for border barrier construction using a combination of authorities. The Administration's plans were described in a fact sheet entitled, President Donald J. Trump 's Border Security Victory (hereinafter referred to as the factsheet ), and included", "$2.5 billion in defense funds authorized under (nonemergency authority of) 10 U.S.C. \u00c2\u00a7284\u00e2\u0080\u0094 Support for counterdrug activities and activities to counter transnational organized crime . $3.6 billion in defense funds authorized under (emergency authority of) Title 10 U.S.C. \u00c2\u00a72808\u00e2\u0080\u0094 Construction authority in the event of a declaration of war or national emergency .", "This report is intended to provide a chronological summary of internal and interagency communication related to DOD's execution of President Trump's border wall funding plan. The information provided here has been drawn chiefly from court exhibits and declarations in ongoing legal proceedings. CRS has not independently authenticated the sworn declarations and accompanying documents submitted by litigants as part of legal proceedings."], "subsections": []}, {"section_title": "Summary of 10 U.S.C. \u00c2\u00a7284 Internal and Interagency Correspondence", "paragraphs": ["A declaration in court records describing communications with DOD suggests that DOD anticipated the use of 10 U.S.C. \u00c2\u00a7284 to fund border barrier projects in early 2018 when the Under Secretary of Defense (Comptroller) temporarily froze $947 million in unobligated funds from the defense Drug Interdiction and Counter-Drug Activities account for possible construction of barriers on the Southwest Border. The frozen FY2018 appropriations were released beginning in July 2018, the final quarter of FY2018.", "In April 2018, DOD created a new office within the Department called the b order s ecurity s upport c ell with responsibility for coordinating and managing all border related issues. Assistant Secretary of Defense for Homeland Defense and Global Security, (ASD[HD&GS]) Kenneth Rapuano led the effort.", "In a letter to DOD dated February 25, 2019, following the release of the Administration's factsheet plan, DHS formally requested that the Defense Department support its ability to impede and deny illegal entry and drug smuggling activities along the southwest U.S.-Mexico border by assisting with the construction (or replacement) of fences, roads, and lighting. DHS specifically requested that DOD fund a total of 11 border barrier projects on federal lands. ", "In a written reply dated March 25, 2019, to Acting Secretary of Homeland Security Kirstjen Nielsen, Acting Secretary of Defense Patrick Shanahan affirmed that the U.S. Army Corps of Engineers (USACE) would undertake the planning and construction of approved projects and, upon completion, hand over custody of all new infrastructure to DHS. ", "Between March and April 2019, DOD approved $2.5 billion for seven of the border barrier projects requested by DHS and funded them in two tranches drawn from reprogrammed defense program savings. DOD completed a transfer of $1 billion for three projects (El Paso Sector Project 1 and Yuma Sector Projects 1-2) on March 26, 2019. On May 9, 2019, the Department completed a second transfer of $1.5 billion for four additional projects (El Centro Sector Project 1 and Tucson Sector Projects 1-3). ", "The obligation of these funds was temporarily suspended by court injunctions between May and July 2019 issued in a lawsuit that challenged the legal basis of DOD's reprogramming actions. On July 26, 2019, the U.S. Supreme Court lifted the lower court's injunction, allowing work to once again proceed. Litigation in this case (and related) lawsuits remains ongoing.", "In August 2019, DHS notified DOD that new estimates indicated construction costs would be lower than first projected, resulting in an overall funding surplus. DHS requested the anticipated savings be applied to the execution of three additional projects. DOD approved the request but later terminated the plan after savings proved insufficient.", "On September 30, 2019, DOD announced the transfer of an additional $129 million in expiring FY2019 appropriations drawn from counternarcotics accounts that Military Departments determined were excess to need. The Department also stated USACE would require an additional $90 million in FY2020 funds for the management and oversight of border barrier projects underway. Unlike the Administration's use of the previous $2.5 billion in transfers, which derived largely from defense program savings drawn from non -drug related appropriations, the Administration plans to fund the anticipated costs in FY2020 from appropriations made directly to the counternarcotic account.", "On January 14, 2020, DHS requested DOD provide additional assistance, pursuant to 10 U.S.C. \u00c2\u00a7284, with the construction of 38 new border barrier projects (and project segments) along drug smuggling corridors. On February 13, 2020, DOD approved 31 of these items and reprogrammed $3.8 billion in FY2020 military procurement funds for their execution. All $3.8 billion in reprogrammed funds were drawn from congressional special interest items included in the final FY2020 defense appropriation, P.L. 116-93 ."], "subsections": []}, {"section_title": "Summary of 10 U.S.C. \u00c2\u00a72808 Internal and Interagency Correspondence", "paragraphs": ["Unlike DOD's use of 10 U.S.C. \u00c2\u00a7284 transfer authority, which the Department began executing almost immediately following the release of the President's factsheet , its determination to exercise emergency statute 10 U.S.C. \u00c2\u00a72808 was the result of approximately eight months of additional deliberations. ", "These deliberations included two assessments by the Chairman of the Joint Chiefs of Staff (CJCS) to determine whether the construction of border barriers qualified as a legitimate use under the requirements of 10 U.S.C. \u00c2\u00a72808. The statute specifies that new construction must support the use of armed forces mobilized to address a national emergency declared by the President.", "On February 11, 2019, CJCS provided a preliminary assessment to the Acting Secretary of Defense that broadly assessed the utility of physical barriers on DHS operations, as well as ongoing demand for DOD support. The report acknowledged empirical challenges associated with quantifying the effectiveness of physical barriers on migration flows \"because reliable data is scarce and opinions are divergent,\" but pointed to anecdotal and historical evidence to suggest that barriers might reasonably be expected to reduce the demand for DOD resources over time:", "Although military construction projects along the southern border may not alleviate all DHS requirements for DoD support, the construction of physical barriers should reduce the challenges to CBP and, therefore, can be reasonably expected to reduce DHS requirements for DoD support.", "On February 18, 2019, following the release of the Administration's factsheet plan, DOD requested that DHS provide a prioritized list of projects along with a supplemental analysis explaining how the construction would support military personnel pursuant to 10 U.S.C. \u00c2\u00a72808. DHS responded in March with the detailed information, characterizing the projects as force multipliers for mobilized DOD personnel:", "Because the requested projects will serve as force multiplier, it will also likely reduce DHS's reliance on DoD for force protection, surveillance support, engineering support, air support, logistical support, and strategic communications assistance. In other words, providing border barriers and the accompanies [sic] roads and technology will allow DoD to focus its efforts on a smaller, more focused area.", "In April 2019, having received the list of DHS projects, the Secretary of Defense requested the CJCS conduct a second, more detailed analysis of proposed construction and return with a recommendation on how to proceed. Concurrently, the Secretary directed the Under Secretary of Defense (Comptroller) to begin identifying $3.6 billion in existing military construction projects that might be deferred by use of the emergency authority under the statute. ", "In a memorandum report dated May 2019, CJCS General Joseph Dunford delivered his final assessment to Acting Secretary of Defense Shanahan. The report's methodology was based on the presumption that while any barrier construction along the border could reasonably be expected to create \"ripple effects\" that would support the use of the armed forces, projects more beneficial than others should be prioritized, based on factors identified by DOD. The analysis assessed border barrier projects DHS had requested under 10 U.S.C. \u00c2\u00a72808, as well as those projects not funded by previous transfers under 10 U.S.C. \u00c2\u00a7284. Though the CJCS team considered the type of land associated with each project area (federal or private), it developed a prioritization scheme that was missing key details related to land jurisdiction. As a consequence, the CJCS' final recommendations were later revised and included in an action memorandum to the Secretary of Defense on August 21, 2019. ", "On September 3, 2019, Secretary of Defense Mark Esper, having determined that border barrier construction would serve as a \"force multiplier\" for reducing DHS's demand for DOD personnel and assets, directed the Acting Secretary of the Army to proceed with the construction of 11 DHS border barrier projects, and the deferral of approximately 127 existing military construction projects ($3.6 billion).", "In a public briefing later that day, DOD officials described a plan for deferring in stages, otherwise authorized military construction projects under 10 U.S.C. \u00c2\u00a72808 authority. Those military construction projects located at non-U.S. locations ($1.8 billion) would be deferred first, followed later by projects within the United States. ($1.8 billion). Officials stated", "The intent is prioritizing funds in this manner is to provide time to work with Congress to determine opportunities to restore funds, as well as work with our allies and partners on improving burden sharing for overseas construction projects.", "USACE has noted that the pace for obligating military construction (MILCON) funds for border barrier construction projects will be highly dependent on project location, since land must first be administratively transferred to the Department of the Army before work can proceed. Construction on land that currently falls under the jurisdiction of DOD can be undertaken relatively quickly, since the military effectively manages the parcels. Projects in locations that fall under one or more other federal jurisdictions may be delayed while transfers are negotiated. Projects on private land are expected to take the longest to complete, since the government must first obtain administrative jurisdiction of the land by either purchase or condemnation. ", "On September 18, 2019, Department of the Interior (DOI) issued Public Land Orders that transferred jurisdiction of land required for five of projects for a period of three years to DOD. "], "subsections": []}, {"section_title": "Detailed Chronologies and Selected Documents", "paragraphs": ["This section provides a detailed overview of key documents related to the Administration's use of 10 U.S.C. 284 and 10 U.S.C. 2808 to fund border barriers. The tables that follow each include a summary of source documents, citations, and links that allow readers to access the associated materials directly. (Due to technical considerations, documents are only made available to congressional users.) ", " Table 1 , CRS Document Compilations , contains a collection of reference documents that CRS has compiled for the convenience of users. These include court declarations that do not fit neatly into a chronological framework and documents that describe activities that may be grouped as a single action (e.g., multiple reprogramming actions on the same date for an identical purpose). Where Table 1 documents are cited elsewhere in this report, they are identified by the record's \"Short Title\" shown in the indicated column.", " Table 2 , Chronology of 10 U.S.C. 284 Decisionm aking , and Table 3 , Chronology of 10 U.S.C. 2808 Decisionmaking, summarize actions related to each respective authority. The separate tables reflect the fact that interagency decisionmaking has generally operated along separate tracks; deliberations related to 10 U.S.C. 2808 were kept separate from correspondence related to 10 U.S.C. 284. "], "subsections": []}]}}
{"id": "R45980", "title": "Electricity Storage: Applications, Issues, and Technologies", "released_date": "2019-10-09T00:00:00", "summary": ["Electricity, as it is currently produced, is largely a commodity resource that is interchangeable with electricity from any other source. Since opportunities for the large-scale storage of electricity are few, it is essentially a just-in-time resource, produced as needed to meet the demand of electricity-consuming customers. Climate change mitigation has increased the focus on the use of renewable electricity. While energy storage is seen as an enabling technology with the potential to reduce the intermittency and variability of wind and solar resources, energy storage resources would have to be charged by low- or zero-emission or renewable sources of electricity to ensure a reduction of greenhouse gases.", "Energy storage is being increasingly investigated for its potential to provide significant benefits to the interstate transmission grid, and perhaps to local distribution systems and thus to retail electric customers. The ability to store energy presents an opportunity to add flexibility in how electricity is produced and used, and provides an alternative to address peak loads on the system using renewable electricity stored at low-demand times. In addition to providing power on demand, energy storage technologies have the potential to provide ancillary services to the electricity grid to ensure the reliability and stability of the power system, and better match generation to demand for electricity.", "Hydropower pumped storage (HPS), compressed air energy storage, and cryogenic energy storage are examples of technologies that store potential (or kinetic) energy. These are examples of the mostly large, monolithic systems used for energy storage today do not store electricity directly, but provide a means of producing electricity by use of a stored medium (e.g., water or air). According to the Federal Energy Regulatory Commission (FERC), approximately 24 HPS systems are currently operating with a total installed capacity of over 16.5 Gigawatts. HPS is approximately 94% of existing U.S. energy storage capacity. Since the storage of potential energy systems is well established on the grid, this report focuses on the relatively new use of modular batteries for grid level storage.", "Modular battery technologies generally store electrical energy in chemical media that can be converted to electricity, and consist of standardized individual cells with relatively small power and voltage capacities that are typically aggregated to serve larger power loads. Lead-acid batteries and lithium ion (Li Ion) cells are the most used modular battery technologies for utility scale (i.e., projects of one megawatt or greater in capacity) applications on the electric grid. Li Ion cells are being used for a variety of applications, due largely to their high energy density and ability to undergo a number of full power charging cycles. However, battery technologies, in general, can provide energy for only a few hours, and vary with regard to the time required to recharge battery systems. Procurement of cobalt for Li Ion batteries has also been controversial due to child labor and safety concerns in many Congolese artisanal mines.", "While Li Ion battery systems are currently the most prevalent form of modular storage, and a key technology for electric vehicles, several issues exist with system cost, materials used, and the safety of these systems. Congress may want to direct further research into modular battery system materials and charging technologies to reduce the cost, improve the safety of systems, increase system performance and cycle efficiency, and to assure the sustainable development of modular battery systems. Congress may also want to look at providing guidance for policy regimes or incentives that promote energy storage in a manner that can decrease greenhouse gas emissions.", "FERC acknowledged that existing market rules for traditional resources can create barriers to entry for emerging technologies, and energy storage in particular. FERC designed its Order No. 841 to require \"each regional grid operator to revise its tariff to establish a participation model for electric storage resources that consist of market rules that properly recognize the physical and operational characteristics of electric storage resources.\""], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["As the technological needs of an increasingly mobile society increase, the choices in how and when we use energy are growing. An increase in the power requirements for smaller and smaller devices has resulted in new technologies improving the density of energy storage in these devices. With these improvements has also come a wider array of applications for power storage on the electric grid and in electric vehicles (EVs). Energy storage is being increasingly investigated for its potential to provide significant benefits to the interstate transmission grid, and perhaps to local distribution systems and thus to retail electric customers.", "Interest in reducing greenhouse gas (GHG) emissions in the energy sector to mitigate climate change risks has increased the focus on renewable sources of electricity. While energy storage is seen as an enabling technology with the potential to reduce the intermittency and variability of wind and solar resources, energy storage resources would have to be charged by low or zero emission or renewable sources of electricity to ensure a reduction of greenhouse gases.", "This report will describe technologies for storing electric power, with an emphasis on battery systems, focusing on the readiness of the technologies for various storage applications for electric power services to the electric grid. Congress has held hearings in the 116 th session on a number of topics\u00e2\u0080\u0094including climate change mitigation, electric power system resilience, incorporation of more renewable energy into the grid\u00e2\u0080\u0094all of which have considered the opportunities for increasing energy storage. As of September 2019, more than 40 bills have been introduced in the 116 th session addressing various aspects energy storage technologies and research. ", "Given the many uses for energy storage\u00e2\u0080\u0094both current and projected\u00e2\u0080\u0094this report will discuss some of the main drivers for energy storage. This report will also discuss the challenges for energy storage and potential options for Congress to further explore, if it chooses to advance the technologies to meet societal or other goals. "], "subsections": []}, {"section_title": "Why the Need for Grid Electricity Storage", "paragraphs": ["Electricity, as it is currently produced, is largely a commodity resource that is interchangeable with electricity from any other source. Since opportunities for the large-scale storage of electricity are few, and electricity is transmitted almost instantaneously, it is essentially a just-in-time resource, produced as needed to meet the demand of electricity-consuming customers. The electric power system is largely designed to support electric system reliability, and sized to ensure that electricity generation resources will be available to meet the maximum load demand the system is expected to see. ", "Given that most electric power is produced in bulk, at large power plants located at some distance from where the power is consumed, keeping power generation in balance with demand is an important function of system managers. Regional balancing authorities seek to ensure electricity supply is in balance with the demand for power. The normal frequency of the U.S. grid is 60 Hertz (i.e., cycles per second), and operational issues can arise with even with a small fluctuation of as little as 1% above or below this parameter. If the supply of power is less than demand (causing the frequency of power transmission to decrease) or if the supply of power is greater than demand (causing the frequency of transmitted power to increase), then damage to equipment or system infrastructure can result.", "Some regions of the United States have their maximum demand for electricity in the summer months (driven by air-conditioning loads), and some regions have a maximum demand for electricity in winter months (to meet residential and building heating purposes). Given that this variation in use can lead to some of the larger, less flexible generation resources being underutilized (especially during the night or even seasonally), some observers argue that the electric grid is overbuilt. Additionally, some have suggested that energy storage may be able to help reduce the need for large power generation projects in the future, and provide support for less costly renewable energy systems. ", " Figure 1 is illustrative of the daily cycle of demand for electricity (i.e., the load), and how generation resources may be used to meet that demand. The figure also illustrates how \"frequency regulation,\" a service currently provided by some generators, is used to reconcile the momentary differences caused by the fluctuations between generation and demand. The thicker gray line in the figure shows a smoother system response after damping of the fluctuations (shown by the undulating yellow line) with frequency regulation.", "Peaking generation is power generation normally operated only during the hours of highest daily, weekly, or seasonal loads. Intermediate load generation is normally operated on a daily cycle to serve on-peak loads during the day but not off-peak loads during nights and weekends. Baseload generation serves the minimum level of electric power demand of a utility, region, or utility customer delivered or required over a given period of time at a steady rate. Renewables generation (in this instance) represents variable electric generation primarily from intermittent wind or solar photovoltaic sources whose peak generation does not necessarily coincide with electricity system periods of peak demand.", "Energy storage is one way to decrease the need for power generation on the grid at peak demand periods. But storage is not the only means of meeting these goals. Other means of potentially reducing the generation of electricity from large, central station power plants include:", "End-use efficiency (also called energy conservation) requires the reduction of consumption through improved efficiency. However, upgrading the technologies used by electric power customers to utilize equipment and appliances that are more efficient may be required to achieve end-use efficiency goals. End-user demand reduction (or demand response) is a process by which customers respond to a price signal from a utility or other power provider in return for incentive payments. While most demand response programs are focused on large industrial users with the flexibility to reduce or move consumption to other times of lower demand, commercial, apartment and other residential customers may be signed to aggregation agreements to gain the scale needed for participation in such programs. Distributed generation utilizing renewable sources such as wind, and tidal energy can potentially accomplish similar goals. Smaller gas turbines, if there are no local air quality or other environmental concerns, can also be used to meet peak demand. ", "The capacity for storing large amounts of energy on the electric grid is presently limited. In one study, curtailing excess energy was reportedly seen as a possibly cost-effective alternative to deploying expensive energy storage options (at higher levels of solar photovoltaic (PV) penetration). However, with improvements in energy storage technologies, and regulatory regimes encouraging economic deployment of energy storage, the applications and opportunities to use storage on the grid are growing. "], "subsections": [{"section_title": "Energy Storage and the Arbitrage Opportunity", "paragraphs": ["The ability to store energy presents an opportunity to add flexibility in how electricity is produced and used, and provides an alternative to address peak loads on the system using renewable electricity stored at low-demand times. An arbitrage opportunity also exists under some circumstances to take advantage of power storage in regulatory regimes that attach value to such opportunities. ", "Under such a scenario, electricity can be purchased from the grid and stored during times of lower demand. An energy storage system can be charged at this time so that the stored energy can be used or sold at another time when the price or costs are higher. Alternatively, energy storage can provide the opportunity to store excess energy production that may otherwise be curtailed from renewable sources such as wind or solar PV. However, the number opportunities for the storage system to perform efficiently in an arbitrage role can be limited by the technology. Additionally, opportunities for arbitrage may be limited by the number of storage participants potentially providing the service thus possibly reducing the sell-back price. "], "subsections": []}]}, {"section_title": "Energy Storage and Electricity Storage", "paragraphs": ["Energy storage can take many forms, and can involve the storage of electricity directly or as potential (or kinetic) energy that can be used to generate electricity when it is needed. Electricity can also be stored in the chemical systems of batteries, both in bulk scale and in modular forms as summarized below. Storage systems generally replenish their energy using electricity generated at low-demand (off-peak) times. Storage of energy is measured both in terms of the maximum rated power capacity (for storage charge/discharge) measured in megawatts (MW) or in terms of energy storage capacity over time, measured in megawatt-hours (MWh). ", "Hydropower pumped storage (HPS), compressed air energy storage (CAES), and cryogenic energy storage are examples of technologies that store potential (or kinetic) energy. These examples of the mostly large, monolithic systems used for energy storage today do not store electricity directly, but provide a means of producing electricity by use of a stored medium (e.g., water or air). The gradual release of the stored medium physically turns the shaft of a turbine connected to an electric generator, converting potential energy from the stored medium to electricity. Other opportunities for energy storage from the production of hydrogen gas are being explored, but are not a focus of this report.", "Batteries are chemical systems that produce electricity when the component parts and chemicals combine to create a flow of electrons, thus creating an electrical current. The potential to produce an electrical charge can be stored directly in large chemical systems (e.g. flow batteries) or in modular battery systems composed of smaller cells (such as lead-acid or lithium ion batteries). The smaller cells of modular battery systems do not store large amounts of electricity individually, but can be aggregated in battery systems to provide larger amounts of power. ", "The major potential energy and battery storage technologies for energy storage discussed in this report are summarized below:", "Hydropower pumped storage : Water stored in an upper reservoir is released to a lower reservoir through a turbine to generate electricity. Water is pumped in reverse at times of low demand to store energy. HPS is the most widely-used technology for storing energy on the electric grid.", "Compressed air energy storage : Compressed air is heated and expanded in a turbine to generate electricity. Compressing air causes it to cool, and it is stored in a tank or cavern using off-peak electricity to store energy.", "Liquid air (cryogenic) energy storage : Ambient air cooled to a liquid state is re-gasified and injected into a turbine when used to generate electricity. Ambient air is cooled and compressed to a liquid state to restore the system, and is stored in insulated tanks.", "Flywheels : A cylinder rotating around a core in a vacuum at high speeds stores kinetic energy. Slowing the cylinder releases energy to turn a generator to produce electricity, and speeding up the cylinder stores energy.", "Flow Batteries : Liquid electrolytes with positive and negative charges are stored in large, separate tanks. Electric charge is drawn from the electrolytes by electrodes as they are pumped through a central tank where the liquids are separated by a membrane based on charge, and the spent liquids returned to separate tanks.", "Lead-acid batteries : One of the oldest and most used methods of energy storage uses connected compartments (cells) made of a lead alloy and lead, immersed in a water-sulfuric acid electrolyte, which combine to generate an electric charge.", "Lithium ion (Li Ion) batteries : Movement of lithium ions from the positive electrode (cathode) to the negative electrode (anode) through an electrolyte (commonly a lithium salt solution) creates an electric charge. Li Ion batteries have a cathode made of lithium-cobalt oxide, and an anode made of carbon. When batteries are recharged, the lithium ions move in reverse.", "Nickel Cadmium (NiCad), Nickel-metal Hydride (NiMH), Sodium S ulfur (NaS) , Sodium-Nickel C hloride (NaNiCl 2 ) batteries : Different chemical systems can be used for battery storage. Commonly, the movement of charged particles from cathode to anode through an electrolyte generates an electric current. ", "These technologies are described in more detail in Appendix A of this report."], "subsections": [{"section_title": "Summary of Grid Energy Storage Opportunities", "paragraphs": ["Energy storage can help maintain the balance between supply and demand on an electricity system, and assist with system reliability by providing back-up power (for several hours at a time) during electricity outages. Since the storage of potential energy in larger, monolithic systems (e.g., HPS) is well established on the grid, this report focuses on the relatively new use of modular batteries for grid level storage. Battery storage technologies can also supply energy to the grid, and can also provide many of the ancillary services necessary to ensure the grid's stability. These services are described in more detail in Appendix B of this report. Currently, however, the best value of grid energy storage for energy storage project developers is likely to come from supplying energy to the grid, and additionally providing the ancillary services best-suited to the storage technology, when available (as the storage resource cannot do both simultaneously).", "Once stored energy is sent to the grid, how quickly the energy storage technology can recharge may influence when and how often recharging of the system is accomplished. When recharging, the energy storage system is a load on the grid, and is not a generation resource. The timing of the charging and recharging cycle during a day can affect the value proposition of storage, since it is unlikely that recharging would be scheduled at times of peak demand. The ability of an energy storage system to provide several services to the grid may also bear on the economics of a system.", " Figure 2 presents a current view of the opportunities for energy storage technologies to provide capacity and energy for the grid and various ancillary services. It provides a general summary and comparison of energy storage technologies for applications over various timescales for electric grid services. ", "Larger, more monolithic bulk power energy storage projects (such as HPS or CAES) can supply electric power in a discharge time over tens of hours. ", "Battery systems and flywheel energy storage are sometimes used for uninterruptible power supply (UPS) in backup power applications. UPS applications solely for energy storage typically have enough energy to operate for up to several minutes. UPS systems may also incorporate generation (e.g., diesel generation) which can provide power over an extended period. ", "Energy storage can also provide a power quality service by storing power and quickly discharging energy to smooth out variations in voltage supply or frequency, or service interruptions from a fraction of a second to several minutes, which could negatively affect a customer's manufacturing process or operations.", "Energy storage for transmission and distribution (T&D) systems can support the grid in several ways. For example, a T&D upgrade project can be deferred by using modular storage to provide electric energy to customers until a permanent upgrade can be made. Another example may allow a utility to \"avoid making a potentially unneeded investment in more T&D capacity by using transportable, modular storage to serve peak demand for one or two years until there is more certainty.\" Energy storage can also potentially help to alleviate the bottlenecks of transmission congestion by providing a non-transmission alternative, and thus provide power locally at times of high demand.", "By using energy stored in off-peak hours, customers of utilities can potentially shift their energy use from one time period to another. Alternatively, utilities or energy storage providers can store energy in periods of low demand to serve loads in times of higher demand.", "Supercapacitors may be used in energy storage applications undergoing frequent charge and discharge cycles at high current and a very short duration. Similarly, superconducting magnetic energy storage (SMES) has rapid discharge capabilities that have been implemented in some instances for industrial pulsed-power, and system-stability applications on electric power systems. However, the components for SMES limit its uses, as the cost of high-temperature superconducting wires would make grid-scale SMES systems prohibitively expensive.\"", "SMES has long been pursued as a large-scale technology because it offers instantaneous energy discharge and a theoretically infinite number of recharge cycles. "], "subsections": []}, {"section_title": "Energy Storage Considerations", "paragraphs": ["Matching an energy storage technology to the opportunity is key, and considerations will include:", "The application . For example, ancillary services in electricity markets provide an opportunity for storage by providing \"services necessary to support the transmission of electric power from seller to purchaser, given the obligations of control areas and transmitting utilities within those control areas, to maintain reliable operations of the interconnected transmission system.\" The duration of the application . For example, the duration may be relatively short (e.g., 30 minutes) requiring the quick provision of a large amount of power in applications such as frequency regulation. Alternatively, the duration may be relatively long (perhaps two hours or more) requiring energy to be provided such as for peak load shaving. The rates of charge . Storage resources used to provide power must be recharged. For potential energy resources, the resource used must be restored so it can be used again to provide electric power. "], "subsections": []}]}, {"section_title": "Structure of Modular Batteries", "paragraphs": ["All rechargeable batteries have a similar physical structure that allows for the flow of electricity from an outside source to recharge the chemical system once depleted. As shown in Figure 4 , the cathode is the positive terminal, and the anode is the negative terminal. The anode of a device is the side where current flows in, while the cathode is where current flows out. ", "A conductive electrolyte allows the flow of electrons between the anode and the cathode. When a battery is discharged, electrons are released from the negative end and captured by the positive end. Cells can be built by stacking parallel plates (i.e., prismatic or box-shaped cells) or from single long strips rolled onto themselves into a cylinder or flattened cylinder (i.e., cylindrical or wound cells). They have the same chemistry with the main difference residing in their construction and ability to dissipate internally generated heat. ", "Wound cells, and small cylindrical cells in particular, are cheaper to manufacture than the larger prismatic ones for a given capacity. They also have a higher volumetric energy density, but their round cross-section prevents from packing them together without gaps and this advantage does not extend to the assembled battery. The gaps between the cells can present an advantage for cooling when thermal management is necessary due to very high currents.... Mechanically, cylindrical cells are very robust and very resilient to mechanical damage from shocks and vibrations, which is good in electric vehicles."], "subsections": [{"section_title": "Battery Characteristics", "paragraphs": ["The evaluation of the performance and suitability of modular batteries for an application is typically based on several key characteristics, including:", "Specific Energy \u00e2\u0080\u0094the capacity a battery can hold (defined in terms of Watt-hours per kilogram (Wh/kg)). For example, specific energy can determine the battery weight required to achieve range of a vehicle given its energy consumption.", "Specific Power \u00e2\u0080\u0094the ability to deliver power (defined in terms of Watts per kilogram (W/kg)). For example, specific power can determine the battery weight required to achieve a given performance target for an engine.", "Energy Density \u00e2\u0080\u0094the battery energy per unit volume (defined in terms of Watt-hours per liter (Wh/L).", "The three characteristics listed above are functions of the battery chemistry and its packaging, with the controlling characteristic being dependent on the particular application. ", "For photovoltaic systems, the key technical considerations are that the battery experience a long lifetime under nearly full discharge conditions. Common rechargeable battery applications do not experience both deep cycling and being left at low states of charge for extended periods of time. For example, in batteries for starting cars or other engines, the battery experiences a large, short current drain, but is at full charge for most of its life. Similarly, batteries in uninterruptible power supplies are kept at full charge for most of their life. For batteries in consumer electronics, the weight or size is often the most important consideration."], "subsections": [{"section_title": "Utility-Scale Battery Storage", "paragraphs": ["According to the U.S. Energy Information Administration (EIA), energy storage projects can be used in a variety of electricity production applications.", "Electricity storage can be deployed throughout an electric power system\u00e2\u0080\u0094functioning as generation, transmission, distribution, or end-use assets\u00e2\u0080\u0094an advantage when it comes to providing local solutions to a variety of issues. Sometimes placing the right storage technology at a key location can alleviate a supply shortage situation, relieve congestion, defer transmission additions or substation upgrades, or postpone the need for new capacity.", "Utility scale battery storage consists of projects of one MW or greater in capacity. Utility-scale battery storage operating in the United States has reportedly quadrupled from a total of 214 MW at the end of 2014 to 899 MW (through March 2019). EIA expects U.S. utility-scale battery storage capacity to grow to perhaps 2,500 MW by 2023 \"assuming currently planned additions are completed and no current operating capacity is retired.\" As of March 2019, the two largest U.S. operating utility-scale battery storage projects each provide 40 MW of power capacity, and there were another 16 operating battery storage sites with a power capacity rated at 20 MW or greater. For comparison, there is approximately 16,500 MW of HPS capacity deployed in the United States. "], "subsections": []}, {"section_title": "Balance of Plant Costs", "paragraphs": ["Grid-connected battery storage projects commonly require a power management system to protect the battery and prevent uses that would damage or destroy the system. Of these systems for battery storage, balance of plant (BOP) costs are the most significant. BOP includes basic infrastructure (such as a building foundation and security fencing), and on-site electrical systems comprised of any equipment required to interconnect a battery storage system to the electric utility transmission or distribution grid. ", "A 2018 study by the National Renewable Energy Laboratory (NREL) estimated the costs of Li Ion battery storage systems, both as standalone projects (e.g., with storage connected to the grid only), and projects connected to solar PV projects and the grid. A project capacity of 60 MW was used for the estimates. For standalone systems, a battery price of $209 per kilowatt-hour (KWh) was assumed, with total system costs varying from $380 per kWh (e.g., for a four hour duration system) to $895 per kWh (e.g., for a 0.5-hour duration system). The battery cost in these estimates accounted for 55% of total system cost in the 4-hour system, as compared to 23% in the 0.5-hour system. According to NREL, \"the per-energy-unit battery cost remains constant at $209/kWh, the total battery cost\u00e2\u0080\u0094and the proportion of the cost attributed to the battery\u00e2\u0080\u0094decrease as system duration decreases.\" The report also stated that co-locating the solar PV and storage subsystems produces cost savings by \"reducing costs related to site preparation, land acquisition, permitting, interconnection, installation labor, hardware (via sharing of hardware such as switchgears, transformers, and controls), overhead, and profit.\"", "For comparison, a 2019 report from the Energy Information Administration estimates the overnight capital cost of a new natural gas-fired combined cycle powerplant (with a capacity of 1,100 MW) at approximately $794 per Kwh, and the overnight cost of a new onshore wind powerplant (with a capacity of 100 MW) at $1,624 per Kwh (before application of the investment tax credit). A solar PV powerplant with a capacity of 150 MW had an estimated overnight cost of $1,783 per Kwh. The report also estimated an overnight capital cost for a 30 MW capacity battery storage project at $1,950 per Kwh (but with no specific battery technology or length of storage duration identified). "], "subsections": []}]}]}, {"section_title": "Energy Storage and Grid Resilience", "paragraphs": ["Most power outages occur in electric distribution systems where wind or other weather cause vegetation (e.g., trees and tree limbs or branches) to contact power lines and cause damage to the line or associated equipment. Power outages can also result from equipment failure, vehicle accidents knocking down distribution poles, and even animal incursions into equipment. Outages caused by these factors typically last in the range from minutes to a few hours. Most of the longer-lived power outages (i.e., lasting from hours to days or longer) are due to weather-related events causing extensive damage to power lines and associated equipment. ", "More extreme events (i.e., those affecting a larger part of the electric power grid) can result in a widespread shutdown of generating plants/units and the de-energization of the transmission and distribution system. In 2007, DOE stated that since weather is the primary reason for reliability problems, and conclude that there is a need for resilient systems to ensure that when power outages occur \"they are short-lived and affect the fewest number of customers as possible.\"", "In the wake of recent major weather events in the United States (e.g., Superstorm Sandy), there has been an increased focus by federal and state officials on electric reliability and the need for investments in the grid. A recent study examined the statistical relationship between annual changes reported by U.S. distribution utilities in electricity reliability over a period of 13 years, and a broad set of variables (including various measures of weather and utility characteristics), and concluded that severe weather is causing longer, more severe power outages: ", "We find statistically significant correlations between the average number of power interruptions experienced annually by a customer and a number of explanatory variables including wind speed, precipitation, lightning strikes, and the number of customers per line mile\u00e2\u0080\u00a6. In addition, we find a statistically significant trend in the duration of power interruptions over time\u00e2\u0080\u0094especially when major events are included. This finding suggests that increased severity of major events over time has been the principal contributor to the observed trend.", "FERC recently proposed defining resilience as \"the ability to withstand and reduce the magnitude and/or duration of disruptive events, which includes the capability to anticipate, absorb, adapt to, and/or rapidly recover from such an event.\" ", "Energy storage could conceivably help reduce the impact of power outages in these instances. However, storage would have to be energized and available, which underscores the source of the electricity used to charge the batteries (or other storage media). Wind power is variable, and often the winds are strongest at night, while solar photovoltaic storage only charges in the daytime. The discharge characteristics would also determine the usefulness of battery storage, as power form these sources may only last for several hours. ", "The type of event causing a power outage would also be key, as a severe weather event could stress or potentially take down power lines over a wide, possibly multistate region. Power can only reach electricity customers if the electrical wires (particularly the distribution lines) are still serviceable and connected."], "subsections": []}, {"section_title": "Electric Vehicles and Grid Storage", "paragraphs": ["The plug-in hybrid and battery electric share of the U.S. light vehicle market in 2018 was 2.1%. Nearly all automakers offer electric vehicles for sale: 42 different models were sold in 2018, with Tesla and Toyota recording the largest number of vehicle sales. A recent study from NREL assumed that EVs would be an increasing part of an electrified U.S. transportation sector, estimating that \"electric vehicles would account for up to 76% of vehicle miles traveled in 2050,\" and could result in an increased demand for electricity to charge them. ", "Some utilities have been considering whether EVs will be a longer-term avenue for increasing electricity demand, providing opportunities for vehicle-to-grid (V2G) energy storage and related services. Under V2G, EV batteries could eventually be used as storage of off-peak energy for the grid, and help provide demand response when the vehicles are not in use. A report from the Smart Power Electric Alliance observed that \"utilities do not want to just serve this new load\u00e2\u0080\u0094they want to take advantage of EVs as a distributed energy resource (DER) with the ability to modulate charge (i.e., managed charging), or even dispatch energy back into the grid (i.e., vehicle-to-grid).\"", "However, while the V2G concept has been discussed for well over a decade in the United States, some have expressed doubts about its adoption.", "The idea is attractive because of the growing amount of lithium-ion battery capacity tied up in electric vehicles, and the fact that this capacity is not being used for around 95 percent of the time. Ten new Nissan Leafs can store as much energy as a thousand homes typically consume in an hour.... However, despite numerous pilot studies over the last decade, V2G has yet to become a commercial reality.", "Among the major concerns expressed about V2G is the effect on the vehicle's batteries. V2G allows a utility to draw on energy storage from stationary vehicles, which could increase the stress on the batteries, one of the most expensive parts of the vehicle. As at least one observer has noted, it is unclear who would cover the cost of this usage or battery replacements under a V2G regime, or how vehicle owners might be otherwise compensated for taking part in V2G programs.", "A potential driver for further EV adoption (and perhaps V2G itself) could be GHG reduction in the transportation sector. Electrification of the transportation sector can conceivably reduce GHG emissions\u00e2\u0080\u0094depending on the electricity generation source, among other factors \u00e2\u0080\u0094seen as a contributor to potential climate change. According to projections by the U.S. Energy Information Administration, new sales of battery electric vehicles may increase by a factor of seven by the year 2025, over model year 2018, under a reference case scenario. Other studies project the possibility for an almost complete transition of U.S. automobiles from internal combustion engines to EVs by 2050, should that be a policy goal. The potential for a large scale GHG reduction from such a transition would depend, in part, on the electricity generation sources used across the life cycle of the vehicles assuming that U.S. policy is focused on almost exclusive use of low or zero-carbon fuels and sources. ", "Batteries charged from renewable electricity sources may reduce climate change concerns, and aid renewable energy growth goals. However, fuel cell vehicles could present a competitive or alternative pathway to a potential transportation future dominated by battery-powered EVs. "], "subsections": [{"section_title": "A California Case Study", "paragraphs": ["A team of researchers from Lawrence Berkeley National Laboratory (LBL) examined EV charging in California as a case study. The team suggested that controlling when EV charging happened could help accomplish California's goals for renewable electricity integration less expensively than its 2010 mandate for deploying grid energy storage. ", "The LBL case study discussed California's growing system-wide balancing problems forecast out to 2025, as more renewables (especially solar PV) are deployed. This has been epitomized as the \"California Duck Curve\" issue. By implementing a policy regime to charge EVs in the middle of the day (when renewable solar generation is greatest, instead of the evening or overnight), EVs could use excess renewable electricity available at this time and help balance the grid, thus avoiding the cost of ramping up and down other electric generation. This regime is referred to as V1G, representing the \"one-way\" charging of EVs. According to the LBL researchers, the technology for a one-way charging regime largely exists (i.e., grid to vehicle charging) and could possibly be implemented for about $150 million in California.", "In addition, implementing a regime to also allow a V2G two-way flow of power from EVs could potentially allow the benefits of EV batteries to become even more pronounced. ", "In the V1G only case, down-ramping and up-ramping are both mitigated by more than 2 GW/h by 2025. In the case with a mix of V1G and V2G vehicles, however, substantially larger gains are seen \u00e2\u0080\u00a6 both down-ramping and up-ramping are substantially mitigated, by almost 7GW/h, equivalent to avoiding construction of 35 natural gas 600 MW plants for ramping mitigation. ", "The LBL researchers estimated that such a proposal could save California the equivalent of $12.8 billion to $15.4 billion in stationary storage investment. "], "subsections": []}, {"section_title": "Grid Reuse of EV Batteries", "paragraphs": ["While up to 98% of lead-acid battery component materials may be recycled at the end of a battery's useful life, estimates are that Li Ion battery recycling is less than 5% in the United States. This may become a growing concern as transportation electrification is expected to increase the use of Li Ion battery packs. ", "Finding ways to increase the recycling and reuse of Li Ion battery components would seem to be an option, given the potential cost and difficulty of obtaining the lithium and cobalt used in battery manufacture. However, since it has been estimated that Li Ion battery packs in EVs may retain about 70% of their storage capacity at the end of the battery's service life to a vehicle, the potential for a second use in home energy storage may exist (especially for solar PV storage systems). Therefore, reuse in electric grid applications may present a larger opportunity.", "Reuse can provide the most value in markets where there is demand for batteries for stationary energy-storage applications that require less-frequent battery cycling (for example, 100 to 300 cycles per year). Based on cycling requirements, three applications are most suitable for second-life EV batteries: providing reserve energy capacity to maintain a utility's power reliability at lower cost by displacing more expensive and less efficient assets (for instance, old combined-cycle gas turbines), deferring transmission and distribution investments, and taking advantage of power-arbitrage opportunities by storing renewable power for use during periods of scarcity, thus providing greater grid flexibility and firming to the grid. In 2025, second-life batteries may be 30 to 70 percent less expensive than new ones in these applications, tying up significantly less capital per cycle."], "subsections": []}]}, {"section_title": "FERC Authority to Promote Grid Storage", "paragraphs": ["Under the Federal Power Act (FPA), the Federal Energy Regulatory Commission (FERC) has authority over the sale and transmission of wholesale power, the reliability of the bulk power system, utility mergers and acquisitions, and certain utility corporate transactions. FERC is required by the FPA to ensure that wholesale electric power rates are \"reasonable, nondiscriminatory, and just to the consumer.\" ", "The Energy Policy Act of 1992 ( P.L. 102-486 ; EPACT) opened wholesale electricity markets to competition by allowing wholesale buyers to purchase electricity from any generator, requiring transmission line owners to transport (or \"wheel\") power for other generators and purchasers of wholesale power at \"just and reasonable\" rates. The next step was to ensure that these transactions could take place as efficiently as possible, and momentum for allowing access to the transmission grid for all users was realized with the issuance of FERC Order No. 888 in 1996. FERC oversees the competitive electricity markets served by regional transmission organizations (RTOs) and Independent System Operators (ISOs) established in accord with Order No. 888. The order required electricity transmission owners to allow open, non-discriminatory access to their transmission systems, thus promoting wholesale competition. ", "In 2018, FERC issued its final version of Order No. 841 to remove what it saw as barriers to the participation of electric storage resources in RTO/ISO markets. Each RTO/ISO has until December 3, 2019 to revise and implement the Order No. 841 market rules. ", "Subsequently, in April 2019, FERC issued Order No. 845, which changed \"the definition of \"Generating Facility\" to explicitly include electric storage resources.\" Order No. 845 also changed the interconnection rules to allow \"interconnection customers to request a level of interconnection service that is lower than their generating facility capacity.\" This could potentially allow some electric generators to add storage capacity to their facility (i.e., co-location), and use that storage capacity to send energy to the grid. This may provide an opportunity for renewable generators, in particular, to sell power when the renewable capacity is unavailable."], "subsections": [{"section_title": "Discussion of FERC Order No. 841", "paragraphs": ["In Order No. 841, FERC recognized that HPS has been operating in the competitive electricity markets that it regulates for years. However, FERC also acknowledged that existing market rules for traditional resources can create barriers to entry for emerging technologies. Order No. 841 defined an energy storage resource as \"a resource capable of receiving electric energy from the grid and storing it for later injection of electric energy back to the grid.\" ", "FERC designed Order No. 841 to require \"each regional grid operator to revise its tariff to establish a participation model for electric storage resources that consist of market rules that properly recognize the physical and operational characteristics of electric storage resources.\" ", "The participation model is to:", "ensure that electricity storage resources are eligible to provide all capacity, energy, and ancillary services that they are technically capable of providing in competitive markets; ensure that electricity storage resources can be dispatched, and can set the wholesale market clearing price as both a wholesale seller and wholesale buyer consistent with existing market rules; recognize that markets must account for the physical and operational characteristics of electricity storage resources through bidding parameters or other means; and establish a minimum size requirement for participation in the Regional Transmission Organization/Independent System Operator markets that does not exceed 100 kW.", "Electric storage resources may be a buyer and a seller of electricity from the markets, since they must charge and discharge their resources. FERC requires that the sale of electric energy from the wholesale electricity market to an electric storage resource (that the resource then resells back to those markets) must be at the wholesale locational marginal price (i.e., the market-clearing price for electricity at the location the energy is delivered or received). ", "FERC recognized that various energy storage resources had the potential to provide ancillary services (e.g., battery storage can provide frequency regulation, voltage support, and spinning reserves), and provide energy to serve peak demand loads. FERC also recognized that \"electric storage resources tend to be capable of faster start-up times and higher ramp rates than traditional \u00e2\u0080\u00a6 generators and are therefore able to provide ramping, spinning, and regulating reserve services without already being online and running.\""], "subsections": [{"section_title": "Some RTO/ISO Comments on the Order", "paragraphs": ["The compliance filings submitted by the RTO/ISO stakeholders had various degrees of existing energy storage participation. Several compliance responses are discussed in the following summaries. "], "subsections": [{"section_title": "PJM", "paragraphs": ["The PJM RTO (PJM) submitted its compliance filing to FERC in two submissions. One filing submitted details of PJM's proposed energy storage resource participation model (i.e., the \"Markets and Operations Proposal.\" PJM said that its energy storage resource (ESR) participation model is designed to ensure that \"ESRs are eligible to provide services in a manner consistent with other resources providing that service.\" PJM stated that its capacity, energy and ancillary services markets offer a number of products that participating resources can provide to serve load and to ensure the reliability of the electric grid. However, PJM noted that although ESRs are currently eligible to provide services in each of these markets, the ESR participation model explicitly addresses each available product to ensure that ESRs are eligible to provide all services which they are technically capable of providing. PJM said that its review of its markets and operations indicated that \"certain changes are needed to fully support the ESR participation model required by Order No. 841,\" and include:", "Modal Operation in Energy Markets : PJM proposes to allow ESRs to participate in the Day-ahead and Real-time Energy Markets under three different modes: (1) Continuous Mode; (2) Charge Mode; and (3) Discharge Mode. This feature provides significant flexibility and allows Market Participants of ESRs to best manage a resource's changing and discharging cycles.", "Reserves : PJM proposes to allow ESRs to participate in the Synchronized Reserve market without an energy offer. If an ESR is physically disconnected from the grid and capable of providing energy within ten minutes, then the resource's reserve MWs shall be treated as Non-Synchronized Reserve. An ESR wishing to clear in the Day-Ahead Scheduling Reserve market would require an energy schedule and must inform PJM that it would like to be considered.", "Cost-Based Offers : PJM proposes to continue to apply the same offer development rules applied to all generation resources. PJM proposes to modify the Operating Agreement to clarify that ESR fuel costs include charging costs for later injection to the grid.", "Make-Whole Payments : PJM proposes to allow ESRs to receive make-whole payments when moved off economic dispatch.", "Billing for ESR Charging : PJM proposes to adopt several different categories of ESR charging to account for the resource's behavior and later resale of the charging energy. PJM also proposes to modify the Tariff to exempt \"Direct Charging Energy\" from certain \"load\" charges related to administrative costs, uplift, and meter/scheduling reconciliation.", "PJM was developing a methodology to determine wholesale vs. non-wholesale charges for stored energy, since ESRs can be connected to transmission, distribution, or behind the meter (i.e., storage designed for a specific building or residential use). PJM says that this may be complicated since ESRs that are behind the customer meter (or that otherwise directly serve retail load) may not, in some cases, resell that energy to PJM per its proposed rules. A second response was filed separately by PJM focusing on metering, accounting and market settlement issues (i.e., the \"Energy Storage Resource (ESR) Accounting Proposal\") to address such issues."], "subsections": []}, {"section_title": "NYISO", "paragraphs": ["While noting that it did not have a single participation model as required by FERC Order No. 841, the New York ISO (NYISO) filed its existing plans for electric storage. NYISO stated that while electric storage can currently participate in its energy, ancillary services, and installed capacity markets under various existing participation models, it also recognized that energy storage be a component of a demand side plan in certain demand response programs. Nevertheless, NYISO proposed to establish a participation model with energy storage resources as a subset of generators under its tariffs. Electric storage facilities unable to satisfy a qualification as generators would be able to elect to participate in existing participation models that accommodate their physical and operational characteristics. For example, some storage resources may be able to participate as \"energy limited resources,\" e.g., installed capacity suppliers that are unable to operate continuously on a daily basis but that can provide energy for at least four contiguous hours each day. Alternatively, other energy storage resources may be able to participate as \"limited energy storage resources,\" i.e., generators that are not able to sustain continuous operation at maximum energy withdrawal or maximum energy injection for a minimum period of one hour."], "subsections": []}, {"section_title": "CAISO", "paragraphs": ["The California ISO (CAISO) expressed support for FERC Order No. 841, stating that its rules were already in compliance with Order No. 841, and are not, generally, technology specific. But there were areas on which CAISO requested clarification. These included whether metering would be required for storage resources, and how storage resources should be treated under models of dispatch for energy (i.e., providing spinning reserves) or when acting as a load and consuming energy from the grid."], "subsections": []}]}, {"section_title": "Compliance Deficiency Letters to RTOs/ISOs", "paragraphs": ["FERC was apparently not satisfied with the RTO/ISO compliance filings for Order no. 841. Requests for more information (as filing deficiency letters) were sent to each of the RTOs/ISOs. As one example of the information requested, FERC asked each grid operator to provide details of various aspects of energy storage market participation models, including size requirements, state of charge management, and how storage resources can participate as both buyers and sellers in wholesale market."], "subsections": []}]}]}, {"section_title": "Senate Hearing on Grid Scale Energy Storage", "paragraphs": ["In June 2019, the Senate Energy and Natural Resources Committee held a hearing to examine opportunities for the expanded deployment of grid-scale energy storage in the United States. Among the key statements from witnesses were observations on the developing nature of battery storage systems.", "Among the observations from Dr. George Crabtree, the director of the Joint Center for Energy Storage Research and Argonne National Laboratory was a statement on the readiness of battery technologies for long-term grid support: ", "The present cost of lithium-ion battery packs, about $200/kWh, must fall by a factor of two or more to make storage economically appealing across all its uses in the grid. In addition, we must be able to purpose-design batteries for a diversity of applications in the grid spanning generation, transmission, and distribution. An example is long duration storage, needed to fill in for renewable generation when the wind does not blow or the sun is blocked by clouds for as many as seven days in a row. These long, cloudy, or calm periods are common in weather patterns in the Northeast and Midwest. The present generation of lithium-ion batteries can optimally discharge for about four hours, much too short to span many weather-related generation gaps. New battery materials, concepts, and technology are needed to meet the challenges of long-duration-discharge energy storage.", "Among other observations, the witness from Xcel Energy, Mr. Ben Fowke noted that Xcel Energy's long-term carbon strategy depends on the deployment of advanced clean technologies. He said that grid-scale storage helps with renewable integration, allowing higher renewable energy levels than would otherwise be possible. Storage can also provide other system benefits, including more reliable grid operations, voltage support and frequency control. At the same time, he pointed out that storage today still has limitations. Two significant challenges for storage were described in his testimony: ", "First, storage cannot today solve the problem of the wide seasonal variation in renewable energy generation, which is the chief factor preventing the creation of fully renewable electricity system. Second, while storage can initially help integrate renewables by moving energy from the time it is produced to when it is needed, the value of each additional increment of storage capacity declines as more is added to the system. Finally, although storage can bring multiple services to the grid\u00e2\u0080\u0094power quality and grid support, for example\u00e2\u0080\u0094the value of all of these services are not all additive (or \"stackable\"). As a general rule, these services are not all available at the same time.", "Mr. Fowke also pointed to potential areas for further energy storage research:", "While lithium ion batteries are the dominant technology in the battery storage industry today, a federal research agenda should target those technologies that have the greatest potential to address long-term system needs and reach commercialization. Those technologies include pumped storage, flow batteries, compressed air energy storage, and other forms of mechanical, thermal and ice storage. The federal research agenda should also encourage the development of hydrogen and other power-to-gas technologies that have the potential to link renewables and other sources of clean electricity to the rest of the economy and dramatically increase the amount of energy storage capacity in the nation.", "Among other comments, the witness from the PJM RTO, Mr. Andrew Ott, discussed the readiness of ESRs for grid applications. He also discussed the potential for competition between demand response resources, ESRs, and other generation resources.", "One issue that has garnered attention is how energy storage resources can participate in PJM's capacity market and therefore displace a coal, nuclear or natural gas unit to be available on call to provide energy when needed in system emergencies. Consistent with FERC's requirements, we have indicated that battery storage resources can be deemed capacity resources and be fully paid to the extent to which they have the duration capability to be available on call when needed. We require the same of a coal, natural gas or nuclear unit, and we require the same of pumped storage hydro or a demand response resource. Our approach is consistent with FERC's directive that the markets need not create undue preferences for energy storage resources but instead must be open to their participation consistent with their \"technical capability\" of providing the service in question.", "Today, in PJM and in other areas of the country, battery duration is generally limited\u00e2\u0080\u0094duration could be anything from 15 minutes to one or two hours (typically never longer than four hours) at their rated capacity before they need to be recharged. However, even with these relatively short durations compared to other resource types on the grid today, we don't exclude these batteries from participating in the capacity market. Instead, short-duration batteries are prorated based on their capability (just as we do with renewable resources) to recognize this limited duration. In short, we are treating batteries comparably to any other resource that seeks to serve as a capacity resource. As capacity resources are integral to ensuring reliability and keeping the lights on, we think it is only fair, as well as consistent with the FERC Order, to pay them comparably to what we would pay a cleared nuclear, coal or natural gas resource when they provide a comparable service.", "I would note that the duration requirements for energy storage capacity resources that we submitted to FERC are, in-part, driven by the success that demand response has had in our capacity market. The advent of demand response, in which industrial operations or buildings and other facilities agree to curtail their load during system emergencies, has worked to \"flatten\" our expected load curve when demand response is called upon. In effect, this has transformed our capacity design requirements from serving what used to be a one-hour \"needle\" peak demand into a lower, wider but more sustained multi-hour peak demand."], "subsections": []}, {"section_title": "Key Issues for Congress", "paragraphs": ["As the U.S. electric grid is modernized to incorporate new technologies capable of making the system more efficient and responsive to the needs of the future, energy storage is increasingly seen as a key component in that future. Energy storage systems have the potential to provide many essential services to the electric grid that can potentially benefit electricity customers in a number of ways.", "Interest in reducing GHG emissions in the energy sector to mitigate climate change risks has increased the focus on renewable sources of electricity. While energy storage is seen as an enabling technology with the potential to reduce the intermittency and variability of wind and solar resources (in particular), energy storage resources would have to be charged by low or zero emission or renewable sources of electricity to ensure a reduction of greenhouse gases. Congress may look at providing guidance for regimes or incentives that promote energy storage in a manner that can ensure a decrease in greenhouse gas emissions. ", "Energy storage resources can potentially delay the need or avoid the cost of constructing traditional power plants, depending on how, where used, and what type of storage system is used. For such a scenario, storage resources must be capable of providing the more than four hours of energy often mentioned as available from current battery storage resources. Congress may consider whether further research and development is needed to develop longer duration, higher capacity energy storage resources capable of a higher number of charging/discharging cycles. DOE and the national laboratories may be able to lead cooperative efforts in basic research to address basic science issues. ", "As state governments, local communities, and U.S. businesses aim to increase their intake of renewable electricity, energy storage technologies are seen aiding increased renewable energy deployment and integration. While the cost of battery storage technologies is falling, a potential area for Congress to consider is efforts to reduce the cost of the many different items in balance of plant systems that may represent 20% to over 50% of a battery storage project's overall cost.", "Further electrification of the economy may be required if reducing emissions seen as contributing to climate change is a driver of federal policy. Electrification of the transportation sector may be a key part of such a strategy. Options for charging electric vehicles sometimes discuss V2G as an option or V1G to promote grid efficiency. Congress may want to define goals for battery storage technologies to support such goals, pathways for the infrastructure needs, a regulatory framework, and/or the interoperability of technologies, if transportation electrification is a policy goal.", "Recycling of spent Li Ion batteries and/or their components may be one way to ensure the sustainability of modular batteries systems. Over time however, the efficiency of any such technology for charging and discharging will diminish. Congress may want to investigate ways to promote a more efficient, less resource intensive future for modular battery systems, if electrification of the transportation sector to reduce GHG emissions is a policy goal.", "While Li Ion battery systems are currently the most prevalent form of modular storage, and a key technology for EVs, several issues exist with the procurement of materials for battery components, and the safety of Li Ion battery systems. Congress may want to direct further research into modular battery system materials and charging technologies to reduce the cost, improve the safety of systems, increase system performance and cycle efficiency, and to assure the sustainable development of modular battery systems. "], "subsections": [{"section_title": "Selected Bills in 116th Congress", "paragraphs": ["To-date, over 40 bills have been introduced in the 116 th Congress on various topics concerning energy storage. This section summarizes several bills considered representative of the overall goals and directions of the proposed legislative efforts. "], "subsections": [{"section_title": "In the House", "paragraphs": ["The Advancing Grid Storage Act of 2019 ( H.R. 1743 ), introduced in March 2019, would authorize a research program, loan program, and technical assistance and grant program, among other purposes. DOE would be required to carry out a program for research of energy storage systems, and provide to eligible entities loans for the demonstration of and deployment of energy storage systems. Included in the objectives of the programs improvements to energy storage for microgrids, improved security of emergency response infrastructure, use of energy storage for optimization of transmission and distribution system operation and power quality, and the use of energy storage to meet peak energy demand and make better use of existing grid assets. A public program for technical assistance would be established, and grants would be made available to eligible entities for technical assistance to identify, evaluate, plan, and design energy storage systems. Projects to be prioritized would be those that facilitate the use of renewable energy resources, strengthen reliability and resiliency, improve the feasibility of microgrids in rural areas (including rural areas with relatively high electricity costs), and that minimize environmental impacts and greenhouse gas emissions.", "The Promoting Grid Storage Act of 2019 ( H.R. 2909 ), introduced in May 2019, would authorize an energy storage research program, a demonstration program, and a technical assistance and grant program, among other purposes. DOE would be required to establish a cross-cutting national program within the Department of Energy for the research of energy storage systems, components, and materials. DOE would also be required to establish a technical assistance and grant program to disseminate information and provide technical assistance directly to eligible entities so the eligible entities can identify, evaluate, plan, design, and develop processes to procure energy storage systems. DOE would be authorized to make grants to eligible entities so that the eligible entities may contract to obtain technical assistance to identify, evaluate, plan, design, and develop processes to procure energy storage systems. DOE would also administer a competitive grant program for pilot energy storage systems for eligible entities to improve the security of critical infrastructure and emergency response systems. The goal of these demonstrations would be to improve the reliability of the transmission and distribution system, particularly in rural areas, including high energy cost rural areas; and, to optimize transmission or distribution system operation and power quality to defer or avoid costs of replacing or upgrading electric grid infrastructure, including transformers and substations, among other purposes."], "subsections": []}, {"section_title": "In the Senate", "paragraphs": ["The Better Energy Storage Act ( S. 1602 ), introduced in May 2019, would authorize a research, development, and demonstration (RD&D) program for grid-scale energy storage, among other purposes. The bill would amend the U.S. Energy Storage Competitiveness Act of 2007 (42 U.S.C. 17231) to promote RD&D for grid-scale energy storage. DOE would be required to develop goals priorities, and cost targets for the program, and submit a report on a 10-year strategic plan for the program to the Senate Committee on Energy and Natural Resources, and the House Committee on Science, Space and Technology. The focus of the program would be to develop cost-effective energy storage systems able to provide output for 6 hours, over not less than 8,000 cycles at full output, capable of operating 20 years, and systems capable of storing energy over several months to address seasonal variations in supply and demand. Cost targets for the systems are to updated every five years. Not more than five grid-scale projects would be required to be ready by 2023 for DOE to enter agreements for demonstration.", "The Joint Long-Term Storage Act of 2019 ( S. 2048 ), introduced in June 2019, would authorize a demonstration initiative focused on the development and commercial viability of long-duration energy storage technologies, including a joint program to be established in consultation with the Secretary of Defense, and for other purposes. The Secretary of Energy, acting through the Director of the Advanced Research Projects Agency-Energy, would be required to establish a demonstration initiative composed of demonstration projects focused on the development of long-duration energy storage technologies. Among the goals of the initiative would be to demonstrate how long-duration energy storage could benefit the resilience of the electricity grid, and improve the efficient use of the grid by peak load reduction and avoiding investment in traditional grid infrastructure.", "Appendix A. Energy and Electricity Storage Technologies ", "Storage of Potential Energy ", "The large monolithic systems that are used for energy storage today do not store electricity directly, but provide a means of producing electricity by use of a stored medium (e.g., water or air). The gradual release of the stored medium physically turns the shaft of a turbine connected to an electric generator, converting potential energy from the stored medium to electricity. Several technologies storing potential energy for conversion to electricity are described in the next section. ", "Hydropower Pumped Storage", "The largest current system and use of energy storage on the electric grid is from hydropower pumped storage (HPS) projects. Approximately 94% of U.S. energy storage capacity is from HPS, representing about 23 GigaWatts (GW - a gigawatt equals 1,000 megawatts) as of 2018. The generation of electricity from falling water takes the potential energy of water held behind an impoundment and coverts it to kinetic energy as it moves the blades of a turbine to generate electricity. A typical HPS design is illustrated in Figure A-1 . While traditional hydropower relies solely on favorable topography to allow for the gravity-aided flow of water to generate electricity on demand, HPS systems can be developed where the suitable geographic and ecological conditions exist. HPS systems also consider the time-related value of when electric power is needed on a system.", "Pumped storage projects move water between two reservoirs located at different elevations (i.e., an upper and lower reservoir) to store energy and generate electricity. Generally, when electricity demand is low (e.g., at night), excess electric generation capacity is used to pump water from the lower reservoir to the upper reservoir. When electricity demand is high, the stored water is released from the upper reservoir to the lower reservoir through a turbine to generate electricity.", "Most HPS projects operating today are \"open-loop\" systems, which utilize water from free-flowing sources for the upper or lower reservoir. According to the Federal Energy Regulatory Commission (FERC), approximately 24 HPS systems are currently operating with a total installed capacity of over 16.5 GW. However, FERC states that most of these systems were authorized more than 30 years ago. HPS systems are estimated to have an efficiency of conversion for energy to electricity of between 70% and 75%.", "A newer technology for HPS utilizes water that is not free-flowing (e.g., possibly from groundwater), and is therefore described as a \"closed-loop\" system. FERC states that it has issued three licenses since 2014 for closed-loop HPS with a total capacity of 2.1 GW. One of these projects will have an estimated 400 MW generation capacity and be able to provide an estimated annual energy generation of 1,300 GWh, and may see construction begin in 2020. With closed-loop pumped HPS systems, neither the upper reservoir nor the lower reservoir is located on a dammed stream. ", "To qualify as a closed-loop pumped storage facility for the purpose of the expedited [hydropower] licensing process, a project should cause little or no change in existing surface and groundwater flows and uses and must not adversely affect threatened or endangered species under the Endangered Species Act. The final rule also adds qualifying criteria to ensure that a qualifying pumped storage project utilizes only reservoirs situated at locations other than natural waterways, lakes, wetlands, and other natural surface water features; and relies only on temporary withdrawals from surface waters or groundwater for the sole purposes of initial fill and periodic recharge needed for project operation.", "Compressed Air Energy Storage", "Compressed Air Energy Storage (CAES) facilities use ambient air that is compressed and stored under pressure in an underground cavern. When electricity is required, the pressurized air is heated and expanded in an expansion turbine driving a generator for power production. There are two CAES power plants currently operating in the world. Both plants store air underground in excavated salt caverns. The older plant in Huntorf, Germany has a 290 MW capacity, and was commissioned in 1978. A second plant was commissioned in McIntosh, Alabama in 1991, with a capacity of 110 MW. The Huntorf plant is reported to be capable of delivering power at its rated capacity for up to 4 hours, while the McIntosh plant is reported as able to provide generation at its rated capacity for 26 hours.", "Air heats up when it is compressed for storage. This heat energy is largely lost to the environment in the two CAES plants currently operating, as they use a diabatic process. When the air is decompressed to generate electric power, it loses this thermal energy and cools down. Therefore, the stored high-pressure air must be heated with natural gas before it is returned to the surface and expanded through a turbine that runs a generator. However, new systems may be able to store the thermal energy produced in the compression phase, thus avoiding the use of natural gas and its emissions. Compression and expansion of air introduces energy losses, resulting in a relatively low efficiency of energy to electricity conversion of 42%. ", "CAES plants can use lower cost energy from the grid during off-peak hours for the compression cycle, including renewable electricity from excess wind generation at night that might not otherwise be used. While the McIntosh plant recovers some waste heat to reduce fuel consumption, some new designs for CAES power plants are looking at ways to increase energy conversion efficiency by capturing the waste heat from the compression process and storing it in molten salt for the decompression cycle. Since geological salt formations are rare, the U.S. Department of Energy (DOE) is looking at adapting CAES technology to more common porous and permeable rock formations.", "Underground CAES storage systems are most cost-effective with storage capacities up to 400 MW and discharge times of 8 to 26 hours. Siting such plants involves finding and verifying the air storage integrity of a geologic formation appropriate for CAES in a given utility's service territory.", "Liquid Air (Cryogenic) Energy Storage", "Liquid air or cryogenic is a type of thermal energy storage that uses liquefied air to create an energy storage resource in a manner with characteristics of both HPS and CAES. Electricity, generated at off-peak demand times, can be used to cool air until it liquefies (as mostly liquid nitrogen since air is approximately 78% nitrogen). ", "The process uses currently available equipment and technologies, and proceeds as follows:", "Charging the system\u00e2\u0080\u0094an air liquefier uses electrical energy to draw air from the surrounding environment, clean it, and then cool the air to subzero temperatures until the air liquefies. Seven hundred liters of ambient air become 1 liter of liquid air.", "Storing the energy\u00e2\u0080\u0094the liquid air is stored in an insulated tank at low pressure, which functions as the energy store. These tanks are currently used for bulk storage of liquid nitrogen, oxygen and liquefied natural gas, and have the potential to hold several GWh of stored energy.", "Generating power\u00e2\u0080\u0094when power is required, liquid air is drawn from the tank(s) and superheated to ambient temperature, producing a high-pressure gas that drives a turbine.", "According to one developer of cryogenic technology, the energy storage capacity is determined by the size of the tanks. The tanks can be located anywhere they need to be, unlike HPS which depends on the water resource and geography. Off peak renewable energy can be used to charge the system which, when fully charged, can provide electricity to support a large peak demand load for several hours.", "Storage of excess cold produced during the liquefaction of air can be captured and reused in a later liquefaction cycle. The low boiling point of liquefied air means the efficiency of the system cycle (from liquefaction and storage to power production) can be improved with the capture and storage of heat produced during the liquefaction process that can be used in the expansion process when power is generated.", "Flywheels", "Flywheel energy storage systems are comprised of a rotating cylinder (i.e., the flywheel rotor), balanced in a vacuum over an electricity-producing stator via magnetically levitated bearings. The rotor in many flywheels was often made of steel, but some newer, higher speed flywheels use fiber composite materials able to store more energy per unit of mass. Flywheels store kinetic energy in the cylinder that spins in a nearly frictionless environment. To charge the flywheel, a small electric motor using electricity from an external source brings the cylinder up to an extremely high speed\u00e2\u0080\u0094up to 60,000 rotations per minute. As the rim in the flywheel spins faster, it stores energy kinetically in the rotating mass, with a small amount of power used to maintain the operating speed. When energy is needed, the flywheel is slowed and the kinetic energy is converted back to electrical energy. ", "Flywheels are used in applications where a large amount of power is needed over a short timeframe. While they are generally charged using power from the grid, they can go from a discharged to a fully charged state within a few seconds. According to the Energy Storage Association, flywheels generally require low maintenance. Some flywheel technologies can undergo more than 100,000 full discharge cycles or more without performance impacts.", "Today's flywheel systems are shorter energy duration systems and not generally attractive for large-scale grid support services that require many kWh or MWh of energy storage.\u00e2\u0080\u00a6 They have a very fast response time of four milliseconds or less, can be sized between 100 kW and 1650 kW, and may be used for short durations of up to one hour. They have \u00e2\u0080\u00a6 lifetimes estimated at 20 years.", "Storage of Electricity in Battery Systems", "This section describes several technologies for the storage of electricity in battery systems. These systems can be large, monolithic systems (such as flow batteries) or modular battery systems aggregating the capacity stored in smaller cells to provide larger amounts of power. ", "Flow Battery Systems", "Flow batteries are large battery systems that store an electrical charge in tanks of a liquid electrolyte (e.g., a liquid solution with dissolved chemicals that stores energy). Electric charge is drawn from the electrolyte as it is pumped through electrodes to extract the electrons, and the spent liquid returns to the storage tank. Flow battery technology is scalable. The active chemicals are stored separately until power is needed, thus reducing fire safety concerns. Most flow batteries require the electrolyte to be separated by a membrane, as shown in Figure A-2 . Some newer flow battery technologies use a single flow loop design with no membrane, where \"energy is stored in a plated metal on the surface of titanium electrodes.\" ", "Vanadium and zinc bromine are currently the most-used liquid electrolytes. Vanadium has become a popular electrolyte component because the metal charges and discharges reliably for thousands of cycles. However, one article cited vanadium's increasing price and its toxicity as leading researchers to look at other cheaper and less toxic chemistries (e.g., such as iron or organic compounds) for flow batteries. New electrolyte chemistries are being investigated that are able to maintain a high number of charge cycles, and retain a low viscosity to ease pumping between tanks. ", "Any source of power can be used to charge flow batteries, including renewable electricity from wind and solar sources. Since flow batteries are scalable in size and able to undergo a large number of charging and discharging cycles, they are considered as a potential option to store off-peak electricity generation from renewable sources. ", "Redox Flow Batteries", "Redox batteries are a specific type of flow battery. The name \"redox\" refers to the chemical reduction and oxidation reactions employed in the redox flow battery to store energy in liquid electrolyte solutions which flow through a battery of electrochemical cells during charge and discharge. Redox batteries can be further classified as either aqueous or nonaqueous systems, with aqueous systems using water as the electrolyte solvent. While aqueous flow batteries are generally safer, they do not currently store as much energy per unit of volume as nonaqueous chemistries. Redox flow batteries are said to offer an economical, low vulnerability means of storing electrical energy at scale, with greater flexibility to design a system based on power and energy rating for a given application. Redox flow batteries are suitable for energy storage applications with power ratings ranging from kiloWatts (kW) to the tens of MW over periods from two to 10 hours, and are capable of 10,000 or more charging cycles.", "The redox flow battery concept shown in Figure A-2 produces power by pumping liquid from external tanks into the battery's stack, a central area where the liquids are mixed. When the battery is fully discharged, both tanks hold the same electrolyte solution (which is a mixture of the positively charged ions and negatively charged ions. When power is needed, the two liquids are pumped into the central stack. Inside the stack, positive ions pass through a selective membrane and change into a solid on the stack's negative side thus generating electricity. ", "According to EPRI, vanadium redox flow batteries have an important advantage among flow batteries as the two electrolytes are identical when fully discharged, which simplifies electrolyte management during operation.", "Modular Battery Technologies", "Modular batteries are used in many aspects of everyday life. They generally store electrical energy in chemical form, and consist of standardized individual cells. The individual cells have relatively small power and voltage capacities that can be aggregated to serve larger power loads. Battery energy storage can also provide ancillary services for the electric grid such as frequency regulation, voltage support and spinning reserves. This section of the report focuses on some of the major rechargeable modular battery technologies that currently serve applications from cell phones to electric or hybrid vehicles, and can provide some backup power or services to the electric grid. ", "Modular battery systems may be suited to arbitrage opportunities. Such opportunities may be economically available to storage systems ranging from one to 500 MW, with a discharge duration range of one hour or greater. Some storage projects may be able to cycle their charging and discharging to meet such opportunities perhaps 250 or more times in a year.", "Lithium Ion Batteries", "Lithium ion (Li Ion) represents a family of battery chemistries, each with its own strengths and weaknesses regarding different applications and uses. Li Ion batteries store and release energy through a process called \"intercalation,\" which involves lithium ions entering and exiting microscopic spaces in between the atoms of a battery's two electrodes. The most commonly used type of Li Ion cell has a positive electrode (i.e., the cathode) of made of lithium-cobalt oxide (LiCoO 2 ), and a negative electrode made of carbon. Batteries are charged as ions of lithium move through the electrolyte (typically a lithium salt solution) from the positive to the negative electrode (i.e., the anode), and attach to the carbon. When discharged, lithium ions move back to the positive electrode. ", "Li Ion batteries are used in many applications because lithium is highly reactive and has a high specific energy, which means it can store approximately 150 Wh of electricity in a one kilogram battery. Li Ion batteries hold their charge well over time, losing only about 5% per month, and generally have no memory effect. Li Ion battery packs have electronic circuitry built in to regulate charging and discharging of the batteries to prevent overcharging and excess heating of the batteries, which can potentially result in explosions or fires. However, the components of fuel, oxygen, and an ignition source exist in the battery system providing the prerequisites for combustion.", "Unlike other rechargeable batteries, Li Ion does not require a deep-discharge cycle to maintain the battery's ability to recharge to full capacity. Over time however, that ability to fully recharge weakens. Nevertheless, the Li Ion battery packs used for EV systems may still have as much as 50% to 70% of their original energy storage capacity at the end of their EV service life. This would allow EV Li Ion battery packs to have a second life in a variety of electricity storage uses from residential storage to renewable generation and other back-up power applications. ", "However, Li Ion battery packs can catch fire (due to a flammable liquid electrolyte) if, for example, an electric vehicle car crash punctures the battery pack. The development of a solid-state battery (i.e., a battery with a solid instead of a liquid electrolyte) may make Li Ion batteries safer. It may also remove the issue with dendrite formation, the crystal-like buildup of lithium metal in the electrolyte that can puncture the cathode-anode separator, causing a short circuit that will destroy the battery and can cause a fire.", "The potential uses of Li Ion batteries at end-of-life highlights issues with the materials used in the construction of the battery cells. Cobalt is used in the construction of the cathode of the battery. While cobalt is not on a list of \"conflict materials\" that the federal government regulates from conflict zones, cobalt is mostly mined in the Democratic Republic of Congo (DRC), a recognized conflict zone from which about 70% of the world's cobalt originates. ", "Until recently, as much as 20% of Congolese cobalt was estimated to be produced in unregulated artisanal mines (i.e., informal mines, often small-scale operations in local communities) that reportedly use child laborers in unhealthy conditions. The DRC regulates the large mines responsible for most of the cobalt supply, but unrest and economic conditions has driven people to artisanal mining. Even after a recent collapse of cobalt prices, child labor in Congolese artisanal mines reportedly continues to be a problem. However, a recovery of cobalt use from projected growth in EV adoption could exacerbate the issue. ", "Due largely to concerns about child labor in artisanal mines, companies have been under pressure to document their cobalt supply chain to show where their cobalt is sourced. While some companies are now buying cobalt directly from the regulated mines in the DRC, the mixing of cobalt supplies in the refining process (which was reported as taking place mostly in China) complicates tracking efforts. Other companies are reducing their use of cobalt to \"minimize\" exposure to the issue.", "Since Li Ion battery manufacture utilizes a number of potentially toxic elements if improperly disposed of (i.e., in landfills where groundwater contamination could occur), and have rare earth and other valuable components with potential value, some countries have passed laws to ensure recycling of the batteries. China, where about half the world's EVs are sold, was reportedly implementing rules to make carmakers responsible for expired batteries. The European Union also has regulations for EV battery disposal.", "Recycling of Li Ion batteries may also help to reduce the need for new supplies from mining of cobalt. But the reuse of EV Li Ion batteries was reported to be more attractive than recycling at this time. Projected demand growth for EVs may overtake the immediate benefits of recycling on supply needs.", "Lithium Iron Phosphate", "Lithium Iron Phosphate (LFP) is another Li Ion chemistry for rechargeable battery cathodes. LFP can be used in similar high power applications as lithium-cobalt oxide cells, but LFP's chemistry has a lower specific energy at about 120 Wh/kg (compared to the LiCoO 2 chemistry with a specific energy of about 150 Wh/kg). However, LFP has a longer cycle life than lithium-cobalt oxide, and is reportedly a safer battery chemistry as it is less flammable.", "Nickel Cadmium and Nickel-Metal Hydride Batteries", "Nickel cadmium (NiCad) has been in use as a rechargeable battery since about 1910, and was the mostly widely used chemistry for rechargeable batteries until the commercialization of NiMH. NiCad and nickel-metal hydride (NiMH) were the mainstay of rechargeable battery applications before the widespread adoption of Li Ion batteries just over a decade ago. ", "NiMH began to replace NiCad in applications requiring a higher power density in smaller package applications or where performance was more important, and can store about 70 watt-hours per kilogram. NiMH also does not suffer from a memory effect, thus will not require a full discharge cycle to maintain the ability to fully charge. But NiCad retains a charge longer and performs better than NiMH in cold weather applications, or in off-grid renewable energy storage or telecom operations (e.g., situations where near maintenance-free operation is needed with respect to the electrolyte).", "Lead-Acid Batteries", "One of the oldest and most widely used forms of energy storage is the lead-acid battery. These batteries are a mainstay of gasoline-powered vehicles, providing energy storage for the spark ignition system of internal combustion engines (ICEs). Lead-acid batteries used in passenger cars commonly have six cells, each with an electromotive force of about 2 volts (V). They can be discharged at a high rate but can require more than 14 hours to recharge. The battery cells are constructed in a grid made of a lead alloy that holds an electrolyte solution of water and sulfuric acid. Figure A-3 shows a wet-cell (also called a \"flooded\" battery due to the liquid electrolyte) lead-acid battery design with several cells with the electrodes connected to each cell.", "Wet-cell lead-acid batteries are usually made with vents and removable caps to allow for gases to escape while charging, and refilling with water when too much of the electrolyte has been converted to gas. A lead-acid battery can store perhaps 25 watt-hours of electric power per kilogram. Passenger car batteries are often called \"starter\" batteries as they provide a surge of power during the ignition stage to start the engine, and store power generated by the electrical system to prevent damage to system components. Lead-acid batteries can also be designed as \"deep cycle\" batteries to provide a low, steady level of power for a longer duration than a starting battery. Some applications require \"dual purpose\" batteries with characteristics designed to have a high starting power for cranking engines, but are able to withstand the cycle service demands from multiple accessory loads. Lead-acid batteries can be aggregated for \"back-up\" power applications to supply electrical power to critical systems in the event of a power outage. Batteries used for back-up power can also function as voltage stabilizers that smooth out fluctuations in electrical generation systems. However, a lead-acid battery would require six kilograms to store the same amount of energy that a one kilogram lithium-ion battery could store.", "Batteries designed for industrial uses provide a low, steady power for a longer duration than a typical deep cycle battery. This makes a higher amount of total energy available for a longer period of time. ", "Industrial batteries have the ability to last for years and can be used in stationary applications that provide critical back-up power to systems that need constant power supply. Industrial batteries are often not called upon to deliver power, but when they are, it is required that they deliver an abundance of power that will last long enough for reserve generators to take over. Often times, industrial batteries are configured as systems to accommodate large power demands.", "Lead-acid battery components are often recycled at the end of the battery's useful service life. Even the spent sulfuric acid can be \"neutralized\" or converted to sodium sulfate and reused.", "Advanced Lead-Acid Batteries", "A key problem with lead-acid batteries is the growth of lead sulfate crystals in the electrolyte that eventually limits lead battery performance and is a key cause of battery failure. Researchers at the Argonne National Laboratory announced that they are working with industry to better understand the underlying chemistry of lead-acid batteries to find a solution to sulfation, and resulting dissolution issues (i.e., as the electrolyte loses much of its dissolved sulfuric acid and becomes primarily water). A main goal of the research effort is to unlock \"a significant portion of\u00e2\u0080\u00a6unused potential [in lead-acid batteries that] would result in even better low-cost, recyclable batteries for mobile and stationary market applications.\"", "Since lead-acid batteries do not have as high a fire risk as Li Ion batteries, some researchers are investigating new technologies that may allow for a greater use of lead-acid batteries in electric grid and transportation applications.", "Lead-acid carbon technologies use a fundamentally different approach to lead-acid batteries through the inclusion of carbon, in one form or another, both to improve the power characteristics of the battery and to mitigate the effects of partial states of charge. Certain advanced lead-acid batteries are conventional valve-regulated lead-acid batteries with technologies that address the shortcomings of previous lead-acid products through incremental changes in the technology. Other advanced lead-acid battery systems incorporate solid electrolyte-electrode configurations, while others incorporate capacitor technology as part of anode electrode design.", "Sodium Sulfur Batteries", "Sodium sulfur (NaS) batteries are a liquid metal technology that operates at high temperatures to keep sulfur molten at both the positive and negative electrodes. A solid ceramic separates the electrodes and serves as the electrolyte, allowing only positively charged sodium-ions to pass through during the charging cycle. As the battery is discharged, electrons are stripped from the sodium metal producing free sodium-ions that move to the cathode compartment. One battery set currently available has a one MW capacity providing up to 6 MWh of energy from 20 modules each capable of supplying 50 kW.", "Sodium Nickel Chloride Batteries", "Sodium nickel chloride batteries are another high-temperature battery. When charging a Sodium-nickel-chloride battery at normal operating temperatures, salt (NaCl) and nickel (Ni) are transformed into nickel-chloride (NiCl2) and molten sodium (Na), with the chemical reactions reversed during discharge. The electrodes are separated by a ceramic electrolyte that is conductive for sodium ions but an isolator for electrons. Therefore, the cell reaction can only occur if an external circuit allows electron flow equal to the sodium ion current. Cells are hermetically sealed and packaged into modules of about 20 kWh each. The DOE/EPRI report says that utility systems were beginning to be deployed systems in the size range of 50 kW to 1 MW.", "New Modular Battery Technologies", "According to one observer of the modular battery industry, a new technology for grid scale storage \"will be needed to hit the cost levels for continuous deployment,\" if battery storage deployment is to be sustained beyond 2020. In that timeframe, a potential consolidation of the Li Ion industry was suggested by the observer, which would lead suppliers to potentially focus on new liquid metal technologies to achieve a \"necessary cost-competitive, 20-year life performance.\"", "Research into permeable membranes may result in replacements for brittle ceramic separators in today's NaS batteries. A team from the Massachusetts Institute of Technology (MIT) described how novel mesh membranes could lead to new grid-scale batteries with electrodes made of sodium and nickel chloride. The MIT team projected that the membranes could result in new types of liquid metal batteries, enabling \"inexpensive battery technology\" to make intermittent power sources such as wind and solar capable of delivering reliable baseload electricity.", "Appendix B. Ancillary Services for the Grid ", "Ancillary services are used by grid operators to ensure the reliability and stability of the power system, by helping to match power generation and demand. The Federal Energy Regulatory Commission (FERC) defines ancillary services as:", "Those services necessary to support the transmission of electric power from seller to purchaser, given the obligations of control areas and transmitting utilities within those control areas, to maintain reliable operations of the interconnected transmission system. Ancillary services supplied with generation include load following, reactive power-voltage regulation, system protective services, loss compensation service, system control, load dispatch services, and energy imbalance services.", "According to one source, ancillary services can be put into three main categories. These include:", "Flexibility-related services, which balance supply and demand, are provided by operating reserves, Frequency-related services, which maintain a constant rate of 60 Hertz, and are provided by regulating reserves, and, Voltage-related services, which control stability across the system.", "Flexibility-related ancillary services include:", "Ramping or load following relate to the vital task of bringing online, or taking offline, power plants typically over the course of a few seconds or minutes to several hours to meet changing load or supply conditions. Such activity has long been a part of daily grid operations, particularly to meet expected changes in demand throughout the day. Demand for power commonly fluctuates sub-hourly, hourly, daily and seasonally. Natural gas-fired power plants, for example, have the flexibility to quickly ramp up or down their energy output as system conditions change throughout a given day. Operating reserves are ancillary services that explicitly provide the ability to quickly fill in new energy supply when needed because of unexpected changes in the supply/demand balance, as well as supporting voltage and frequency. Most systems rely on two types of operating reserves: (1) contingency spinning (or synchronous) reserves that usually can respond very quickly, within ten to fifteen minutes, and (2) non-spinning (or supplemental) reserves that typically have response times on the order of ten to 30 minutes or more. A reserve margin is the \"percentage of installed capacity exceeding the expected peak demand during a specified period,\" and varies according to regional regulatory requirements. For instance, a reserve margin of 15% means that an electric system has excess capacity in the amount of 15% of expected peak demand. Spinning reserves are provided by generation units that are actively generating (and whose turbines are \"spinning\") and thus can quickly increase or decrease their output when called upon within the required time. Non-spinning or non-synchronized reserves are provided by generation resources that are not actively generating, but are ready and able to start up quickly and begin providing energy to the grid within a specified timeframe. In some regions, these non-spinning reserves are referred to as fast-start resources.", "Frequency-related services include:", "Regulating reserves are actions that can respond in seconds to grid fluctuations or emergencies to stabilize frequency and to rebalance supply with demand. Technical Considerations:", "Storage System Size Range: 10-100 MW", "Target Discharge Duration Range: 10 minutes-1 hour", "Minimum Cycles/Year: 20-50", "Down regulation can be provided by energy storage resources as they charge and absorb energy from the grid. However, the storage operator must pay for that energy. That is notable\u00e2\u0080\u0094especially for storage with lower efficiency\u00e2\u0080\u0094because the cost for that energy may exceed the value of the regulation service.", "Technical Considerations:", "Storage System Size Range: 10-40 MW.", "Target Discharge Duration Range: 15-60 minutes.", "Minimum Cycles/Year: 250-10,000.", "The rapid-response characteristic (i.e., fast ramp rate) of most storage systems makes it valuable as a regulation resource.", "Voltage-related ancillary services include:", "Voltage control is managed by injecting or absorbing \"reactive power\" at the site of generation, transmission, and distribution to maintain the appropriate level of voltage at a given location. Reactive power (measured in kilovolt-amperes reactive (KVAR)) is an integral part of generating alternating current, along with active (or real) power. Real power is what most would refer to as electricity, measured in kiloWatts (kW). Reactive power must be available locally to transfer active power across the network. In other words, to get and maintain the desired voltage at a given location, a precise amount of reactive power must be present.", "Normally, designated power plants are used to generate reactive power to offset reactance in the grid. Many smaller coal-fired power plants that were transitioned to provide reactive power as they aged, are now being retired. These power plants could potentially be replaced by strategically-placed energy storage within the grid at central locations or taking the distributed approach and placing multiple VAR-support storage systems near large loads.", "Technical Considerations:", "Storage System Size Range: 1-10 mega volt-ampere reactive (MVAR)."], "subsections": []}]}]}]}}
{"id": "R46015", "title": "The POWER Initiative: Energy Transition as Economic Development", "released_date": "2019-11-20T00:00:00", "summary": ["With the decline of the U.S. coal industry, managing the economic effects of energy transition has become a priority for the federal government. The Partnerships for Opportunity and Workforce and Economic Revitalization (POWER) Initiative, and the broader POWER Plus Plan of which it was a part, represent the U.S. government's efforts to ease the economic effects of energy transition in coal industry-dependent communities in the United States, and especially in Appalachia. Launched in 2015 by the Obama Administration as a multi-agency effort utilizing various existing programs, the POWER Plus plan received partial backing through appropriations for Fiscal Year 2016 (FY2016) to the Appalachian Regional Commission, the Economic Development Administration, and for abandoned mine land reclamation.", "While certain proposed provisions of POWER Plus were never enacted or funded, other elements of the POWER Initiative continue under the Trump Administration. Continuing programs include the Assistance to Coal Communities program within the Economic Development Administration, the POWER Initiative under the Appalachian Regional Commission (the only program to retain the original branding), and a funding program for abandoned mine land reclamation. Of these efforts, the Appalachian Regional Commission's POWER Initiative is the largest of the initiative's economic development programs, having funded nearly $150 million in projects (out of over $600 million in proposed projects) since it was first launched in FY2016. The Appalachian Regional Commission's POWER Initiative is regionally targeted to declining coal communities in Appalachia, unlike the Economic Development Administration's Assistance to Coal Communities program, which has a national scope. To date, the initiative has reportedly leveraged approximately $772 million of private investment into the Appalachian regional economy. This report provides background on the origins, development, and activities of the POWER Initiative."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["U.S. Energy Information Administration (EIA) has forecast U.S. coal production to decline through 2050, with the sharpest reduction to occur by the mid-2020s. Consequently, the coal industry's decline has contributed to economic distress in coal-dependent communities, including increased unemployment and poverty rates. ", "In response, the Obama Administration launched the Partnerships for Opportunity and Workforce and Economic Revitalization (POWER) Plus Plan, which addressed the coal sector's decline through funding for (1) economic stabilization, (2) social welfare efforts, and (3) environmental efforts. The economic elements were organized within the POWER Initiative, a multi-agency federal initiative to provide economic development funding and technical assistance to address economic distress caused by the effects of energy transition principally in coal communities. Although the initiative began as a multi-agency effort as part of the POWER Plus Plan, the POWER Initiative currently operates as a funded program administered by the Appalachian Regional Commission (ARC) in its 420-county service area. ", "This report considers the background of the POWER Initiative and the broader effort of which it was originally a part, the POWER Plus Plan. It broadly surveys the state of POWER elements in the current administration, including elements of the initiative in the Economic Development Administration (EDA), the Appalachian Regional Commission (ARC), and funded efforts for abandoned mine land reclamation. The Appalachian Regional Commission's POWER Initiative program is the largest of these, and the only program to retain the POWER Initiative branding. This report considers its scope and activities as well as its funding history. ", "The POWER Initiative is supported by Congress as reflected by consistent annual appropriations. The POWER Initiative may also be of interest to Congress as an economic development program that actively facilitates and eases the repercussions of energy transition in affected communities in Appalachia. More broadly, in light of the projected continued decline of the coal industry, as well as proposals to address greenhouse gas (GHG) emissions from hydrocarbon combustion, congressional interest in programs to address economic dislocations as a result of energy transition is likely to accelerate. "], "subsections": []}, {"section_title": "Background", "paragraphs": ["The POWER Initiative was launched in 2015 as a multi-agency federal effort to provide grant funding and technical assistance to address economic and labor dislocations caused by the effects of energy transition\u00e2\u0080\u0094principally in coal communities around the United States. The POWER Initiative was a precursor to a broader effort known as the POWER Plus Plan (dubbed POWER+ by the Obama Administration). This latter plan was launched using preexisting funds, and was intended to develop an array of grant programs across multiple agencies to facilitate energy transition and ameliorate the negative effects of that transition. Most legislative elements of the POWER+ Plan were carried out under existing authorities rather than new legislation. Certain features continue to be active\u00e2\u0080\u0094particularly elements of the POWER Initiative within the ARC and the EDA."], "subsections": [{"section_title": "The POWER+ Plan", "paragraphs": ["The POWER+ Plan was organized to address three areas of concern: ", "1. economic diversification and adjustment for affected coal communities; 2. social welfare for coal mineworkers and their families, and the accelerated clean-up of hazardous coal abandoned mine lands; and 3. tax incentives to support the technological development and deployment of carbon capture, utilization, and sequestration technologies. ", "The POWER+ Plan was proposed in the FY2016 President's Budget as a multi-agency approach to energy transition. As proposed, the POWER+ Plan involved the participation of the Department of Labor (DOL), the Appalachian Regional Commission (ARC), the Small Business Administration (SBA), the Economic Development Administration (EDA), the Department of Agriculture (USDA), the Environmental Protection Agency (EPA), the Department of the Treasury, the Department of Energy (DOE), the Corporation for National and Community Service, and the Department of the Interior (DOI). The FY2016 President's Budget requested approximately $56 million in POWER+ Plan grant funds: (1) $20 million for the DOL; (2) $25 million for the ARC; (3) $6 million for the EDA; and (4) $5 million for the EPA. In addition, a portion of USDA rural development funds\u00e2\u0080\u0094$12 million in grants and $85 million in loans\u00e2\u0080\u0094were aligned to POWER+ Plan priorities. Also, the plan sought $1 billion for abandoned mine land reclamation and an additional $2 billion for carbon capture and sequestration technology investments."], "subsections": []}, {"section_title": "The POWER Initiative", "paragraphs": ["The Obama Administration described the POWER Initiative as a \"down payment\" on the POWER+ Plan, and focused on the Plan's economic development elements using existing funding sources ( Table 1 ). Those existing funding sources (or \"Targeted Funds\" in Table 1 ) refer to funds that were set aside by the respective federal executive agency in support of the POWER+ Plan in FY2015. These funding amounts are only those funds made available initially, and do not account for additional appropriations or set-asides made available as the program progressed. The EDA was initially designated as the lead agency for the POWER Initiative, with significant funding elements from the ARC, SBA, and DOL. While led by the EDA, POWER Initiative grants were determined by the individual awarding agency. Grants were divided into two funding streams: (1) planning grants; and (2) implementation grants. ", "The POWER Initiative was announced in March 2015, with the first tranche of grants awarded in October 2016. With the exception of certain parts of the POWER Initiative and funding for reclaiming abandoned mine land (AML), broad elements of the POWER+ Plan were not enacted by Congress. Since the end of the Obama Administration, the ARC is the only federal agency with a POWER Initiative-designated program."], "subsections": []}]}, {"section_title": "POWER Elements in the Current Administration", "paragraphs": ["As of November 2019, the POWER Initiative exists solely as a funded program of the ARC, and is no longer a multi-agency initiative. However, certain other elements originally included in the POWER+ Plan and the POWER Initiative continue to receive appropriations and continue to be active, but they are not designated as such by the Trump Administration. ", "These elements are discussed below."], "subsections": [{"section_title": "The EDA Assistance to Coal Communities (ACC) Program", "paragraphs": ["The EDA continues to receive appropriations for its Assistance to Coal Communities (ACC) program. The ACC program was a grant-making element launched as a part of the EDA's role in the POWER Initiative. ", "In FY2019, $30 million was designated for the ACC program as part of appropriations to the EDA. The FY2019 appropriations represent the fifth consecutive fiscal year of funding for the program, and reflect 300% growth from approximately $10 million appropriated in FY2015. However, the Trump Administration's FY2017 Budget sought to eliminate the ACC program; and subsequent Administration Budget requests have proposed eliminating the EDA entirely, including the ACC program. ", "While the ACC is an active outgrowth of the POWER Initiative and POWER+ Plan, it is no longer associated with the POWER Initiative and instead is identified as a separate program drawing on Economic Adjustment Assistance (EAA) funds. Because it draws on EAA funding, ACC investments may only be used for projects located in, or substantially benefiting, a community or region that meets EDA distress criteria. ", "EDA economic distress is defined as", "\"An unemployment rate that is, for the most recent 24-month period for which data are available, at least one percentage point greater than the national average unemployment rate; Per capita income that is, for the most recent period for which data are available, 80 percent or less of the national average per capita income; or A Special Need, as determined by EDA.\" "], "subsections": []}, {"section_title": "Abandoned Mine Land (AML) Reclamation Investments", "paragraphs": ["One of the pillars of the POWER+ Plan was funding for the social welfare of miners and for cleanup and reclamation of former mine and other coal-related \"brownfield\" sites. While certain legislative proposals for these purposes were never enacted, Congress has approved annual funding since FY2016 for economic development grants to states for Abandoned Mine Land reclamation. ", "The FY2016 appropriation of $90 million directed funds to be divided equally among the three Appalachian states with the greatest amount of unfunded AML needs ( P.L. 114-13 ). The $105 million appropriated for FY2017 set aside $75 million to be divided this way, with the balance of that amount being available more broadly to other eligible AML reclamation applicants ( P.L. 115-31 ). FY2018 appropriations of $115 million set aside $75 million for the three states demonstrating the greatest unmet need ( P.L. 115-141 ). ", "For FY2019, the Department of the Interior, Environment, and Related Agencies Appropriations Act, 2019, Division E of the Consolidated Appropriations Act, 2019 ( P.L. 116-6 ), appropriated $115 million, which was subdivided further: $75 million for the three Appalachian states with the greatest amount of unfunded needs; $30 million for the next three Appalachian states with the \"subsequent greatest amount of unfunded needs\"; and $10 million for federally recognized Indian Tribes."], "subsections": []}]}, {"section_title": "The ARC's POWER Initiative", "paragraphs": ["The Appalachian Regional Commission (ARC) is the only federal agency that continues to receive regular appropriated funding for energy transition activities under the POWER Initiative designation. While the POWER Initiative was launched as a multi-agency effort, only the ARC chose to designate its contributions as the POWER Initiative. "], "subsections": [{"section_title": "About the ARC", "paragraphs": ["The ARC was established in 1965 to address economic distress in the Appalachian region (40 U.S.C. \u00c2\u00a714101-14704). The ARC's jurisdiction spans 420 counties in Alabama, Georgia, Kentucky, Ohio, New York, Maryland, Mississippi, North Carolina, Pennsylvania, South Carolina, Tennessee, Virginia, and West Virginia ( Figure 1 ). ", "The ARC is a federal-state partnership, with administrative costs shared equally by the federal government and member states, while economic development activities are federally funded through appropriations. Thirteen state governors and a federal co-chair oversee the ARC. The federal co-chair is appointed by the President with the advice and consent of the Senate. "], "subsections": []}, {"section_title": "Scope and Activities", "paragraphs": ["The ARC's POWER Initiative program prioritizes federal resources to projects and activities in coal communities that exhibit elements that ", "produce multiple economic development outcomes (e.g., promoting regional economic growth; job creation; and/or employment opportunities for displaced workers); are specifically identified under state, local, or regional economic development plans; and have been collaboratively designed by state, local, and regional stakeholders.", "The ARC funds three classes of grants as part of the POWER Initiative: (1) implementation grants, with awards of up to $1.5 million; (2) technical assistance grants, with awards of up to $50,000; and (3) broadband deployment projects, with awards of up to $2.5 million. ", "For FY2019, $45 million in grant funding was made available, of which $15 million was reserved for broadband projects. POWER investments are subject to the ARC's grant match requirements, which are linked to the Commission's economic distress hierarchy.", "Those economic distress designations are, in descending order of distress ", "distressed (80% funding allowance, 20% grant match); at-risk (70%); transitional (50%); competitive (30%); and attainment (0% funding allowance). ", "Special allowances at the discretion of the commission may reduce or discharge matches, and match requirements may be met with other federal funds when allowed. Designations of county-level distress in the ARC's service area are represented in Figure 1 .", "POWER investments are also aligned to the ARC's strategic plan. The current strategic plan, adopted in November 2015, prioritizes five investment goals: ", "1. entrepreneurial and business development; 2. workforce development; 3. infrastructure development; 4. natural and cultural assets; and 5. leadership and community capacity. ", "Given its programmatic breadth, POWER investments may link to any one of these investment goals. POWER investment determinations are made according to annual objectives outlined in the request for proposals, as well as broader investment priorities, which are building a competitive workforce; fostering entrepreneurial activities; developing industry clusters in communities; and responding to substance abuse. ", "The ARC has designated $50 million annually (\"activities in support of the POWER+ Plan\" ) for POWER activities ( Table 4 ). According to the ARC, over $148 million in investments have been made since FY2016 through 185 projects in 312 counties across the ARC's service area, leveraging an estimated $772 million of private investment. Figure 2 is a representation of the ARC's POWER Initiative projects tallied by state."], "subsections": []}, {"section_title": "Funding History", "paragraphs": ["While the POWER Initiative does not receive appropriations separate from that of the ARC as a whole, congressional intent is signaled in House Appropriations Committee reports, which specify amounts to be reserved for the POWER Initiative. In committee report language, it is described as activities \"in support of the POWER+ Plan.\"", " Table 4 shows appropriations set aside for the POWER Initiative from FY2016 to FY2019, and for the ARC as a whole.", "The ARC received approximately $610 million in requests for POWER Initiative grant funding from FY2016 to FY2018 ( Table 5 ). This suggests that there was unmet demand for the POWER Initiative in the Appalachian region alone (the ARC's service area, as depicted in Figure 1 )."], "subsections": []}]}, {"section_title": "Policy Considerations", "paragraphs": ["The Energy Information Administration projects that coal production overall will continue to decline as a consequence of falling market demand. In particular, the EIA forecasts coal to account for 24% of U.S. electric energy generation in 2019 and 2020, down from 28% in 2018. By 2050, coal is projected to decline to 17% of U.S. electricity generation, nuclear is projected to account for 12%, renewables 31%, and natural gas 39%, according to EIA projections. ", "Coal's decline is a function of market forces, particularly its higher cost relative to natural gas and renewable energy options. In the future, under current policies, coal's cost disadvantage is expected to continue, and could be accelerated if policies are adopted to reduce GHG emissions that contribute to climate change. Even with federal incentives to invest in carbon capture, utilization, and storage as a means to mitigate fossil fuel-related emissions, coal may still not be competitive in many situations. As a result of falling demand, noncompetitive coal producers and their communities are expected to face continued economic dislocation. ", "Should it wish to broaden or intensify federal efforts to address energy transition in local communities, Congress may have several options. In the past, Congress has demonstrated bipartisan interest in the federal government providing assistance to populations adversely affected by the ongoing energy transitions. It has done so through its appropriations for the ARC's POWER Initiative, the EDA's ACC program, and the AML investments. In combination with evidence of unmet demand for federal assistance, as measured by unfunded requests to the ARC ( Table 5 ), Congress may consider reviewing the balance among needs, appropriations, and effectiveness of past efforts. ", "Congress could conduct a review of the POWER Initiative and the efficacy of its performance and resources. This potential review suggests some particular considerations:", "Geography : While the ACC is available for the nation as a whole, the ARC's POWER Initiative is restricted to the ARC's service area in the Appalachian region. Congress may consider expanding the POWER Initiative to be available more broadly across the nation, or in a more targeted fashion as demonstrated by the ARC's program. Alternatively, funding could be made available nationwide to any eligible coal community, such as through other federal regional commissions and authorities and/or EDA regions. Funding : Projections of U.S. coal production (cited earlier) suggest that the ongoing transition in U.S. energy systems may lead to further localized economic distress without the development of new regional opportunities. Congress may consider the level of funding for POWER Initiative programs in the context of those economic needs. Funding levels could be tied to the overall scale of the challenge, allocated to areas with the greatest need, and made in consideration of data-driven evaluations of the program effectiveness. In assessing scale, Congress may consider macroeconomic factors as well as social and environmental policy objectives. Energy Type : Congress may also consider expanding the POWER Initiative program beyond the coal industry to other energy industries or regions perceived to be in decline. For example, economic strain and job losses following the closure of other electrical generating units, such as aging nuclear power plants, may signal additional types of displacement. EIA forecasts anticipate a modest decline in nuclear power generation by 2050 as older, less efficient reactors are retired. Nuclear-industry communities may face similar issues of economic distress and labor dislocation. Congress may also consider other public policy goals, such as reducing GHGs, to assist in promoting renewable energy types and carbon capture technologies. ", "Should Congress consider such efforts, the ARC's POWER Initiative program could serve as a potential model to be scaled or replicated as needed. In addition, other models have also been proposed in bills introduced in the 116 th Congress that would assist coal communities in transition. "], "subsections": []}, {"section_title": "Concluding Notes", "paragraphs": ["Although the POWER+ Plan was not enacted in its entirety, some of its legacy programs continue to receive annual appropriations and remain active. The persistence of such programs suggests support among many policymakers for federal efforts to rectify, or at least attenuate, economic distress as a consequence of energy transition. In addition, were Congress to pursue policy efforts reflective of broadening concern for climate issues, a POWER Initiative-type program could be developed to also facilitate energy transition from fossil fuel-based energy sources to a mix of renewables and other alternatives. ", "Although the POWER+ Plan did not continue beyond the Obama administration, several constituent programs have continued to receive congressional backing, and applicant volume\u00e2\u0080\u0094at least in the case of the ARC's POWER Initiative\u00e2\u0080\u0094may suggest further demand for additional federal resources in addressing energy transition issues. More broadly, these mechanisms could also be purposed to facilitate federal resources for other related issues, such as related to ecological/environmental resilience and adaptation. ", "The POWER Initiative, as originally conceived or in its current form as a program of the ARC, has not been subjected to a formal evaluation by the U.S. Government Accountability Office (GAO) or other research organization of its effectiveness as either a mechanism for alleviating community economic distress caused by the declining coal industry, or economic development more broadly. One recent GAO report mentioned the Assistance to Coal Communities program, but did not seek to analyze its activities or efficacy. Similarly, older GAO reports exist that feature the Abandoned Mine Land Reclamation program (prior to its current configuration), and the Appalachian Regional Commission, but may be of limited relevance when evaluating current programming, including more recent activities such as the POWER Initiative. Meanwhile, a number of anecdotal and media reports appear to tout the POWER Initiative's success and viability. The ARC, for its part, reports that the POWER Initiative has \"invested over $190 million in 239 projects touching 326 counties across Appalachia.\" According to the ARC, those investments are \"projected to create or retain more than 23,000 jobs, and leverage more than $811 million in additional private investment.\" ", "In the ARC's 2018 Performance and Accountability Report, the ARC reported that the annual outcome target for \"Students, Workers, and Leaders with Improvements\" in FY2018 was exceeded by 55% \"likely due to\" investments from the POWER Initiative; similarly, the ARC reported the outcome target for \"Communities with Enhanced Capacity\" in FY2018 was exceeded by 125%, \"due in part to priorities established for the POWER Initiative.\" The same report also noted that the ARC launched a new monitoring and evaluation effort on the POWER Initiative in September 2018 encompassing \"approximately 135 POWER grants\" in FY2015-FY2017. The results of that assessment have not yet been released."], "subsections": []}]}}
{"id": "R45196", "title": "Covert Action and Clandestine Activities of the Intelligence Community: Framework for Congressional Oversight In Brief", "released_date": "2019-08-09T00:00:00", "summary": ["Since the mid-1970s, Congress's oversight of the Intelligence Community (IC) has been a fundamental component of ensuring that the IC's seventeen diverse elements are held accountable for the effectiveness of their programs supporting United States national security. This has been especially true for covert action and clandestine intelligence activities because of their significant risk of compromise and potential long-term impact on U.S. foreign relations. Yet, by their very nature, these and other intelligence programs and activities are classified and shielded from the public. Congressional oversight of intelligence, therefore, is unlike its oversight of more transparent government activities with a broad public following. In the case of the Intelligence Community, congressional oversight is one of the few means by which the public can have confidence that intelligence activities are being conducted effectively, legally, and in line with American values.", "Covert action is defined in statute (50 U.S.C. \u00c2\u00a73093(e)) as \"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.\" When informed of covert actions through Presidential findings prior to their execution\u00e2\u0080\u0094as is most often the case\u00e2\u0080\u0094Congress has a number of options: to provide additional unbiased perspective on how these activities can best support U.S. policy objectives; to express reservations about the plan and request changes; or withhold funding. Although Congress does not have the authority to approve or disapprove covert actions, it can have (and has had) influence on the President's decision.", "The term c landestine describes a methodology for a range of activities wherein both the role of the United States and the activity itself are secret. Clandestine activities can involve traditional intelligence or unconventional military assets. Like covert action, their impact can be strategic even though a specific activity may be tactical in scope. Their secret character suggests the potential harm to sources and methods in the event of an unauthorized or unanticipated public disclosure.", "Congressional oversight of covert action can be organized around a framework of five issue areas: (1) the activity's statutory parameters, (2) U.S. national security interests, (3) U.S. foreign policy objectives, (4) funding and implementation, and (5) risk assessment. These categories enable Congress to analyze and assess the specific elements of each activity from a strategic point of view. By extension, Congressional oversight of anticipated clandestine intelligence activities that might also shape the political, economic or military environment abroad can apply the same framework and, as with covert action oversight, address the risk of compromise, unintended consequences, and loss of life.", "This report is accompanied by two related reports: CRS Report R45175, Covert Action and Clandestine Activities of the Intelligence Community: Selected Definitions in Brief , by Michael E. DeVine, and CRS Report R45191, Covert Action and Clandestine Activities of the Intelligence Community: Selected Congressional Notification Requirements in Brief , by Michael E. DeVine."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["The present structure of congressional oversight of the Intelligence Community (IC) largely resulted from investigations by two congressional committees in the 1970s\u00e2\u0080\u0094in the Senate, chaired by Idaho Senator Frank Church, and in the House, chaired by Representative Otis Pike\u00e2\u0080\u0094that suggested a need for permanent committees in each chamber: today's Senate Select Committee on Intelligence (SSCI) and the House Permanent Select Committee on Intelligence (HPSCI). It is important to note, however, that oversight of intelligence is a function of more than just the two congressional intelligence committees. Ten other committees\u00e2\u0080\u0094the Armed Services, Foreign Affairs/Foreign Relations, Homeland Security, Judiciary, and Appropriations committees of both chambers\u00e2\u0080\u0094exercise oversight responsibility to varying degrees over intelligence programs or IC elements that fall under their jurisdiction. ", "The Church and Pike committees' oversight focused primarily on two themes: investigation of past abuses and IC organizational reform. Over the succeeding years those efforts have been both beneficial and occasionally burdensome. In protecting against the IC's abuse of its authorities, Congress has helped ensure intelligence activities were legal, ethical and consistent with American values. Congress's influence in IC organizational reform has resulted in improved performance and accountability. On other occasions, however, congressional oversight has tended toward micromanagement resulting in strains in the relationship with the IC. ", "This report posits a potential framework for congressional oversight of intelligence-related programs and activities using the existing committee structure and notification standards for the most sensitive intelligence activities: covert action and clandestine intelligence collection. The framework may assist Congress in assessing the premises justifying each of these activities, their impact on national security, operational viability, funding requirements, and possible long-term or unintended consequences. ", "Unlike areas with a broad public following, such as health care, veterans' services, and agriculture, intelligence programs and activities are generally classified, receive little public exposure, and have no natural public constituency. Highly classified covert action and clandestine intelligence programs do not often have visibility outside of Congress. Congressional oversight, therefore, provides one of the few meaningful checks on the President's execution of intelligence policy and programs that may have significant bearing on U.S. foreign relations and national security. "], "subsections": []}, {"section_title": "Background", "paragraphs": ["Among the recommendations of the National Commission on Terrorist Attacks upon the United States (the \"9/11 Commission\") were those aimed at strengthening intelligence oversight. Since the Church and Pike committees of the 1970s, Congress occasionally has been able to refine its oversight of the IC. However, it has not been able to sustain its early momentum. As the Final Report of the 9/11 Commission put it, ", "\"...the oversight function of the Congress\u00e2\u0080\u00a6diminished over time. In recent years, traditional review of the administration of programs and implementation of laws has been replaced by 'a focus on personal investigations, possible scandals, and issues designed to generate media attention.' The unglamorous but essential work of oversight has been neglected, and few members past or present believe it is performed well....[T]he executive branch needed help from Congress in addressing the questions of counterterrorism strategy and policy, looking past day-to-day concerns....Congress...often missed the big questions\u00e2\u0080\u0094as did the executive branch.\"", "Since 9/11, the Senate especially has made progress toward following through with organizational reform of the oversight process, following through on several of the 9/11 Commission's recommendations. S.Res. 445 (108 th Congress) amended Senate rules governing intelligence oversight ( S.Res. 400 ) aimed at increasing the authority of the SSCI relative to the standing committees, promoting bipartisanship, and building expertise. However, a number of factors have complicated Congress's efforts to improve oversight. This poses risks to national security when involving the most sensitive aspects of intelligence\u00e2\u0080\u0094covert action and clandestine activities\u00e2\u0080\u0094due to their potential impact on U.S. foreign relations. ", "Moreover, greater integration of military operations and intelligence activities has resulted in some confusion over the proper congressional jurisdiction for exercising oversight on Capitol Hill. Congress has expressed concern that the Department of Defense's (DOD) overuse of terms that are not defined in statute, such as operational preparation of the environment (OPE), to describe operations that may resemble intelligence activities allows DOD to circumvent the more stringent oversight requirements of the congressional intelligence committees. ", "Despite these challenges, congressional oversight remains an important check on policy and decisions of the executive branch, to insure intelligence programs and activities are ethical, legal and properly aligned with U.S. national security and foreign policy objectives. Congressional oversight of covert action can be organized around a framework of five issue areas: (1) the activity's statutory parameters, (2) U.S. national security interests, (3) U.S. foreign policy objectives, (4) funding and implementation, and (5) risk assessment. These categories enable Congress to analyze and assess the specific elements of each activity from a strategic point of view. By extension, Congressional oversight of anticipated clandestine intelligence activities that might also shape the political, economic or military environment abroad can apply the same framework and, as with oversight of covert action, address the risk of compromise, unintended consequences, and loss of life. ", "A conceptual framework for congressional oversight of covert action begins with its statutory definition: Covert action is codified as \"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.\" There are a number of exceptions in the statutory definition of covert action; these include some activities that could use clandestine methodology. Exceptions include activities primarily intended to collect intelligence; traditional counterintelligence activities; traditional military activities, or support to traditional military activities; traditional law enforcement activities, or routine support to law enforcement; and traditional diplomatic activities. How these exceptions are defined and applied to actual practice is not always straightforward and can complicate congressional oversight. For example, Congress has expressed concern that DOD too frequently applies the term traditional military activities to describe operations that in many respects resemble covert action. This is important insofar as it results in different committees being informed of the activity and different standards for the timeliness of notification. ", "Oversight also requires a solid grasp of the U.S. national security interests and foreign policy objectives that each administration details its National Security Strategy, National Defense Strategy, and other strategy and policy documents. Covert action statutorily must support \"identifiable foreign policy interests of the United States.\" Although not required by statute, it would be logical for clandestine intelligence (and military) activities that do not constitute covert action but have in common a high risk of compromise of sources and methods, a high impact on U.S. foreign relations, and a potential for the loss of life also to support identifiable (clearly articulated, documented) foreign policy objectives expressly. Moreover, congressional overseers may wish to identify or have expressly identified for them, the executive branch's assumptions about the international environment since these assumptions influence policy that in turn, influences decisions on covert action and clandestine activities. "], "subsections": []}, {"section_title": "A Framework for Oversight; Lines of Inquiry for Congress", "paragraphs": ["Although Congress has no statutory prerogative to veto covert action when informed through a presidential finding, it can influence conduct of an operation through the exercise of congressional constitutional authority and responsibilities to authorize war, legislate, appropriate funds, and otherwise interact with the executive branch. As former CIA Inspector General L. Britt Snider wrote, ", "If the committees do not support a particular operation or have concerns about aspects of it, an administration would have to think twice about proceeding with it as planned. If it is disclosed or ends in disaster, the administration will want to have had Congress on board. If it is going to last more than a year, the committees' support will be needed for continued funding. The committees are also likely to be better indicators of how the public would react if the program were disclosed than the administration's in-house pundits.", "As congressional oversight committees assess each impending covert action from a strategic point of view, Congress may wish to organize its review using the following five issue areas: ", "1. the activity's statutory parameters; 2. U.S. national security interests; 3. U.S. foreign policy objectives; 4. funding and implementation; and 5. risk of compromise, failure, loss of life, and unintended consequences. ", "By extension, oversight of anticipated clandestine intelligence activities that might also shape the political, economic, or military environment abroad can apply the same framework, and, like oversight of covert action, address the risk of compromise, unintended consequences, and loss of life. "], "subsections": [{"section_title": "Statutory Parameters of the Activity", "paragraphs": ["Section 3093(a)(5) of Title 50, U. S. Code specifies that \"a finding [for a covert action] may not authorize any action that would violate the Constitution or any statute of the United States.\" Congressional oversight, then, ensures a covert action does not violate the law, to include any domestic law enacted to fulfill the terms of a non-self-executing treaty. "], "subsections": [{"section_title": "Questions for Congress", "paragraphs": ["Does the covert action or clandestine intelligence activity violate domestic U.S. law? Does the activity violate any domestic law connected to a non-self-executing treaty? Is the activity likely to violate international law? What are the national security implications of conducting a covert action that may violate international law? Is the risk justified by the operation's importance to U.S. national security? Would Congress likely choose to provide limitations on the covert action through legislation? Does the covert action or clandestine activity, if conducted during hostilities, comply with the laws of armed conflict in accordance with DOD policy? "], "subsections": []}]}, {"section_title": "National Security Interests", "paragraphs": ["Congressional oversight of covert action is generally recognized to be especially important to ensuring proper checks and balances, particularly under circumstances in which it is likely that no one outside of a small number of authorized intelligence professionals will know anything about the covert action or clandestine activity. Yet, the 9/11 Commission observed, ", "Congress had a distinct tendency to push questions of emerging national security threats off its own plate, leaving them for others to consider. Congress asked outside commissions to do the work that arguably was at the heart of its own oversight responsibilities.", "Oversight, in accordance with notification requirements of Title 50, enables Congress to provide a timely check on the development of a covert action or clandestine intelligence activity that might have serious flaws. Maintaining necessarily tight security surrounding planning for intelligence activities may present a challenge, because the few individuals outside the intelligence community with access may offer only limited perspective, overlook essential details, and too easily accept premises that might not bear up against broader scrutiny. "], "subsections": [{"section_title": "Questions for Congress", "paragraphs": ["What are the underlying premises of the threat and the international or regional environment that justify the covert action or clandestine activity? Is there any precedent for the particular covert action outlined in the presidential finding? If so, what were the similarities and differences with the covert action described in the current finding that may give perspective regarding the risk to U.S. personnel, unintended consequences, and implications for U.S. national security? What are the implications of involving third parties or countries in the covert action? Does the covert action or clandestine activity conform to American and democratic values, and promote free and fair elections? What are plausible long-term unintended consequences of the covert action? Do these possible long-term effects challenge the premises for conducting the covert action in the first place? What might be some plausible second/third order effects of not conducting the covert action? "], "subsections": []}]}, {"section_title": "Foreign Policy Objectives", "paragraphs": ["Section 3093(a) of Title 50, U. S. Code specifies \"[T]he President may not authorize the conduct of a covert action by departments, agencies, or entities of the United States Government unless the President determines such an action is necessary to support identifiable foreign policy objectives of the United States and is important to the national security of the United States.\" "], "subsections": [{"section_title": "Questions for Congress", "paragraphs": ["Is the covert action being initiated as an instrument of policy in support of \"identifiable\" foreign policy objectives elaborated in the National Security Strategy? Is covert action a viable means of achieving these objectives? Are there other means by which the United States might achieve the same objectives involving less risk? Is the covert action consistent with American values to the extent that it is something the American people would support (if the activity were known to the public)? "], "subsections": []}]}, {"section_title": "Funding and Implementation", "paragraphs": ["Congress can provide another level of review to ensure important details for successfully implementing the activity are not overlooked. Moreover, Congress's constitutional responsibility for appropriating funds extends to its oversight of sensitive intelligence activities like covert action. As former CIA Director and former Member of Congress Leon Panetta once remarked, \"I do believe in the responsibility of the Congress not only to oversee our operations but to share in the responsibility of making sure that we have the resources and capability to help protect this country.\" "], "subsections": [{"section_title": "Questions for Congress", "paragraphs": ["Is the department or agency named in the presidential finding as the lead agency for the covert action best suited to achieve the objectives? Are the operational elements planned for the covert action comprehensive and developed to achieve tactical success? Is the covert action or clandestine activity sufficiently funded over its projected duration to achieve the objectives? "], "subsections": []}]}, {"section_title": "Risk Assessment", "paragraphs": ["\"The executive branch is chiefly concerned with achieving the objectives of the president, whatever they might be. Because of this, it is sometimes tempted to downplay the risk and accentuate the gain.\" Congress's relative distance from conceiving and planning the activity may enable it to provide more dispassionate risk assessment and more tempered analysis of likely outcomes. "], "subsections": [{"section_title": "Questions for Congress", "paragraphs": ["Does the covert action involve an unacceptable risk of escalating into a broader conflict or war? In the event of an unauthorized or untimely disclosure\u00e2\u0080\u0094or a popular perception of U.S. involvement\u00e2\u0080\u0094what are the risks to U.S. national security, U.S. personnel, or relations with states in the region? What are the consequences of failure of the covert action or clandestine intelligence activity to U.S. lives, U.S. national security, and relations with states in the region? If U.S. Armed Forces are involved, is the covert action or clandestine activity being conducted such that U.S. Armed Forces retain full protection under the terms of the Geneva Conventions? Is it plausible for the U.S. role to remain secret and deniable? Or is there substantial or unacceptable risk of compromising U.S. sponsorship to the detriment of U.S. national security? What risks does the covert action or clandestine activity pose to uninvolved American citizens who might be in the vicinity? "], "subsections": []}]}]}, {"section_title": "An Iterative Process", "paragraphs": ["Statute requires the President update Congress with notifications of changes in conditions from those described in the original notification of a covert action. Congressional oversight consequently extends to periodically reviewing changes in the operational environment on the ground that may suggest a different outcome, a change in strategy, a shift in U.S. interests, or the development of unintended consequences. Along these lines, \u00c2\u00a73093(d)(1) and (2) of Title 50 U. S. Code includes the following provision: ", "The President shall ensure that the congressional intelligence committees, or, if applicable, [the Gang of Eight], are notified in writing of any significant change in a previously approved covert action, or any significant undertaking pursuant to a previously approved finding, in the same manner as findings are reported pursuant to subsection (c).", "In determining whether an activity constitutes a significant undertaking for these purposes, the President shall consider whether the activity-", " involves significant risk of loss of life; requires an expansion of existing authorities, including authorities relating to research, development, or operations; results in the expenditure of significant funds or other resources; requires notification; gives rise to a significant risk of disclosing intelligence sources or methods; or presents a reasonably foreseeable risk of serious damage to the diplomatic relations of the United States if such activity were disclosed without authorization.", "Former CIA Inspector General L. Britt Snider has suggested that Congress, in carrying out its oversight responsibility, might be vulnerable to failure to review the premises and conditions for the covert action that may have changed, perhaps significantly, subsequent to the initial notification. The risk, as articulated by Snider is that \"If members are satisfied with what they hear from administration witnesses [during the initial notification], not only will they acquiesce in the implementation of the operation, they are apt to devote less attention to it down the road.\" To guard against this outcome, this provision of the covert action statute underscores the importance of being alert to the possible tactical, political, and environment changes that warrant continued oversight to ensure the activity continues to be in the U.S. national interest."], "subsections": [{"section_title": "Questions for Congress", "paragraphs": ["Do the original premises or environmental conditions justifying the activity remain valid? Have there been any outcomes to suggest the intelligence activity is achieving its intended result? Does the activity continue to have the funding necessary to be effective? Have there been any changes in conditions on the ground that might influence a significant change in how the activity is executed? Is there an increase in the risk of premature or unauthorized disclosure? Do American citizens face a greater threat of exposure? Does the risk involved remain acceptable? Does the activity still conform to the statutory guidelines on the conduct of covert action or significant clandestine intelligence activities?"], "subsections": []}]}]}}
{"id": "R46216", "title": "The Army\u2019s Modernization Strategy: Congressional Oversight Considerations", "released_date": "2020-02-07T00:00:00", "summary": ["In October 2019, the Army published a new modernization strategy aimed at transforming the Army in order to conduct Multi-Domain Operations (MDO) which are intended to address the current and future actions of near-peer competitors Russia and China. The Army's Modernization Strategy is part of a hierarchy of strategies designed, among other things, to inform the Service's respective modernization plans. These strategies include the National Security Strategy (NSS), the National Defense Strategy (NDS), the National Military Strategy (NMS), and the Army Strategy.", "The Army's Modernization Strategy establishes six material modernization priorities:", "Long Range Precision Fires. Next Generation of Combat Vehicles. Future Vertical Lift. Army Network. Air and Missile Defense. Soldier Lethality.", "Because the Army's Modernization Strategy covers the years from 2020 to 2035, the possibility exists for a variety of Army modernization hearings spanning a number of different Congresses. In this regard a common oversight architecture could potentially provide both an element of continuity and a means by which Congress might evaluate the progress of the Army's modernization efforts. Such a potential architecture might examine:", "Is the Army's Modernization Strategy appropriate given the current and projected national security environment? Is the Army's Modernization Strategy achievable given a number of related concerns? Is the Army's Modernization Strategy affordable given current and predicted future resource considerations?", "For FY2020, funding requested for programs related to the Army's six modernization priorities, $8.9 billion, accounted for less than a quarter (23%) of its overall acquisition budget. The service projected $57.3 billion in research, development, test, and evaluation (RDT&E) and procurement funding for programs related to its six modernization priorities over the Future Years Defense Program (FYDP) from FY2020 through FY2024. This amount, if authorized and appropriated by Congress, would reflect an increase of $33.1 billion from spending projections for the five-year period in the FY2019 budget request. Meanwhile, the Army projected a total of $187.5 billion for its acquisition accounts (in nominal dollars) over this period, including $128.8 billion for procurement and $58.7 billion for RDT&E. Thus, for the FY2020 FYDP, funding for programs related to the Army's six modernization priorities accounts for less than a third (31%) of its overall acquisition budget.", "This report provides a number of possible questions and observations related to a potential Army modernization oversight architecture which could serve to provide both an element of continuity for hearings and a standard by which Congress might evaluate the efficacy of Army Modernization."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Role of Congress", "paragraphs": ["Congress is responsible for funding, establishing rules regulating the Army, and conducting oversight of a number of functions including manning, equipping, training, and readiness. On an annual basis, shortly after the President's Budget Request is transmitted to Congress, congressional defense authorizing committees and subcommittees typically hold three separate oversight hearings focused on (1). the Army's budget request; (2). the Army's posture; and (3). Army modernization. In addition to these three hearings, Congress sometimes conducts additional hearings on a wide variety of topics to include specific weapons systems under development and other Army efforts, programs, or initiatives. The Army's 2019 Modernization Strategy, intended to guide Army modernization efforts through at least 2035, is arguably ambitious and proposes the development of a number of new weapons systems and capabilities that could also have implications for force structure as well. In its oversight role of the Army's modernization process, Congress may consider a common oversight architecture that provides both an element of continuity for hearings and a standard by which Congress might evaluate the efficacy of the Army Modernization Plan."], "subsections": []}, {"section_title": "What is the Purpose of the Army's Modernization Strategy?1", "paragraphs": ["The 2019 Army Modernization Strategy (AMS) aims to transform the Army into a force that can operate in the air, land, maritime, space, and cyberspace domains (i.e. multi-domain), by 2035. The previous 2018 AMS Report to Congress introduced the Army's six materiel modernization priorities (see below). The 2019 AMS expands the Army's approach beyond those six priorities, outlining a more holistic approach to modernization while maintaining the Army's six Materiel Modernization Priorities from the 2018 AMS. Army Modernization involves modernizing 1) how they fight (doctrine, tactics, techniques, and procedures); 2) what they fight with (equipment); and 3) who they are (Army culture and personnel). This report will focus on the \"what they fight with\" component of Army Modernization as well as associated force structure issues."], "subsections": []}, {"section_title": "Multi-Domain Operations (MDO)3", "paragraphs": ["The Army wants to transform itself into a force capable of implementing its new proposed operational concept referred to as Multi-Domain Operations (MDO) described below. "], "subsections": [{"section_title": "MDO Challenges 9", "paragraphs": ["According to the Army, in order to successfully execute MDO, the Army will need to change how it physically postures the force and how it organizes units. In addition, the Army says it will require new authorities and the ability to employ new capabilities and emerging technologies. The Army, in addition to integrating fully with the other Services, will need access to national-level capabilities and require a high level of day-to-day Interagency involvement to successfully prosecute MDO. In this regard, MDO would require not only Department of Defense (DOD) \"buy in\" and resources, but would also need similar support from the other members of the Interagency and Congress as well."], "subsections": []}, {"section_title": "National Security Strategy, National Defense Strategy, National Military Strategy, and the Army Strategy11", "paragraphs": ["The Army's Modernization Strategy is part of a hierarchy of strategies intended, among other things, to inform the Service's respective modernization plans. These strategies include:", " National Security Strategy (NSS): published by the Administration, it is intended to be a comprehensive declaration of global interests, goals, and objectives of the United States relevant to national security. National Defense Strategy (NDS): published by DOD, it establishes objectives for military planning in terms of force structure, force modernization, business processes, infrastructure, and required resources (funding and manpower). National Military Strategy (NMS): published by the Chairman of the Joint Chiefs of Staff (CJCS), it supports the aims of the NSS and implements the NDS. It describes the Armed Forces' plan to achieve military objectives in the near term and provides the vision for ensuring they remain decisive in the future. The NMS is a classified document. The Army Strategy : articulates how the Army achieves its objectives and fulfills its Title 10 duties to organize, train, and equip the Army for sustained ground combat. The Army Strategy provides guidance for budget planning and programming across multiple Future Year Defense Programs (FYDP). ", "All strategies share a common theme, that of \"return to great power competition\" which posits that \"Russia and China are competitors to the United States and both nations are looking to overturn the current rules-based international order.\" This requires the U.S. military to focus its doctrine and resources on countering this perceived threat. In this regard, the aforementioned strategies also re-focus the Service's modernization efforts towards defeating the perceived Chinese and Russian military threat."], "subsections": []}]}, {"section_title": "A Potential Oversight Framework", "paragraphs": ["As previously noted, the possibility exists for a variety of Army Modernization-hearings spanning a number of different Congresses. In this regard, a common oversight architecture could potentially provide both an element of continuity and a means by which Congress might evaluate the progress of the Army's modernization efforts. Such a potential architecture might examine:", "Is the Army's Modernization Strategy appropriate given the current and projected national security environment? Is the Army's Modernization Strategy achievable given a number of related concerns? Is the Army's Modernization Strategy affordable given current and predicted future resource considerations?", "To support this potential oversight architecture, a number of topics for discussion are provided for congressional consideration."], "subsections": [{"section_title": "Is the Army's Modernization Strategy Appropriate?", "paragraphs": [], "subsections": [{"section_title": "Does the Army's Modernization Strategy Support the National Security, National Defense, and National Military Strategies?", "paragraphs": ["The Army contends its modernization strategy addresses the challenges of the future operational environment and directly supports the 2018 National Defense Strategy's (NDS) line of effort, \"Build a More Lethal Force.\" The congressionally established Commission on the National Defense Strategy for the United States (Section 942, P.L. 114-328 ) questions this assertion, noting: ", "We came away troubled by the lack of unity among senior civilian and military leaders in their descriptions of how the objectives described in the NDS are supported by the Department's readiness, force structure, and modernization priorities , as described in the Future Years Defense Program (FYDP) and other documents. (Emphasis added.)", "While the Commission's finding is directed at DOD as a whole, it suggests there are questions concerning how modernization priorities and plans support the National Defense Strategy and, by association, the National Security and Military strategies as well. While the aforementioned strategic documents all feature the central theme of \"return to great power competition\" vis-\u00c3\u00a0-vis Russia and China, it is not readily apparent to many observers how the Army's modernization priorities directly support this goal. In this regard, a more detailed examination of the Army's new Modernization Strategy's alignment with the National Security, National Defense, and National Military Strategies could prove beneficial to policymakers."], "subsections": []}, {"section_title": "Does the Army's Modernization Strategy Address the Military Strategies of Peer Competitors?", "paragraphs": ["While it can be considered essential that the Army's Modernization Strategy aligns with and supports the National Security, National Defense, and National Military strategies of the United States, it can be argued that of equal importance is whether the Army's Modernization Strategy takes into account the military strategies of peer competitors. A May 2019 study offers a summary of Russian and Chinese strategies and suggests a U.S. response: ", "The core of both countries' challenge to the U.S. military lies in what are commonly called anti-access/area denial (A2/AD) systems: in more colloquial terms, a wide variety of missiles, air defenses, and electronic capabilities that could destroy or neutralize U.S. and allied bases, surface vessels, ground forces, satellites, and key logistics nodes within their reach. Both China and Russia have also developed rapidly deployable and fearsomely armed conventional forces that can exploit the openings that their A2/AD systems could create.", "Despite these advances, both China and Russia still know that, for now, they would be defeated if their attacks triggered a full response by the United States. The key for them is to attack and fight in a way that Washington restrains itself enough for them to secure their gains. This means ensuring that the war is fought on limited terms such that the United States will not see fit to bring to bear its full weight. Focused attacks designed to pick off vulnerable members of Washington's alliance network are the ideal offensive strategy in the nuclear age, in which no one can countenance the consequences of total war.", "The most pointed form of such a limited war strategy is the fait accompli. Such an approach involves an attacker seizing territory before the defender and its patron can react sufficiently and then making sure that the counterattack needed to eject it would be so risky, costly, and aggressive that the United States would balk at mounting it\u00e2\u0080\u0094not least because its allies might see it as unjustified and refuse to support it. Such a war plan, if skillfully carried out in the Baltics or Taiwan, could checkmate the United States.", "The U.S. military must shift from one that surges to battlefields well after the enemy has moved to one that can delay, degrade, and ideally deny an adversary's attempt to establish a fait accompli from the very beginning of hostilities and then defeat its invasion. This will require a military that, instead of methodically establishing overwhelming dominance in an active theater before pushing the enemy back, can immediately blunt the enemy's attacks and then defeat its strategy even without such dominance.", "From an operational perspective, new systems developed as part of the Army's Modernization Strategy would potentially need to not only provide a technological improvement over legacy systems but also support the Army's operational concept\u00e2\u0080\u0094in this case Multi Domain Operations (MDO)\u00e2\u0080\u0094intended to counter Russia and China. A detailed examination of how these systems directly counter Russian and Chinese military capabilities and strategies could prove beneficial to policymakers. "], "subsections": []}, {"section_title": "Is the Army's Modernization Strategy Relevant to Other Potential Military Challenges?", "paragraphs": ["In February 2011, then-Secretary of Defense Robert Gates told West Point Cadets;", "We can't know with absolute certainty what the future of warfare will hold, but we do know it will be exceedingly complex, unpredictable, and\u00e2\u0080\u0094as they say in the staff colleges\u00e2\u0080\u0094\"unstructured.\" Just think about the range of security challenges we face right now beyond Iraq and Afghanistan: terrorism and terrorists in search of weapons of mass destruction, Iran, North Korea, military modernization programs in Russia and China, failed and failing states, revolution in the Middle East, cyber, piracy, proliferation, natural and man-made disasters, and more. And I must tell you, when it comes to predicting the nature and location of our next military engagements, since Vietnam, our record has been perfect. We have never once gotten it right, from the Mayaguez to Grenada, Panama, Somalia, the Balkans, Haiti, Kuwait, Iraq, and more\u00e2\u0080\u0094we had no idea a year before any of these missions that we would be so engaged. ", "If former Secretary of Defense Gates' admonition that we have never accurately predicted our next military engagement holds true, it is a distinct possibility that a direct conventional confrontation with Russia or China posited by the National Security Strategy might not come to pass. In the case of China, it has been suggested it is more likely U.S. and Chinese interests will clash in the form of proxy wars and insurgencies as opposed to a great power war. The recent U.S.\u00e2\u0080\u0094Iranian confrontation is an example of such a non-great power military challenge with the potential for a rapid escalation or a protracted proxy war. With this in mind, some may consider any strategy not relevant to other potential military challenges other than great power war to be ill-conceived. To insure the Army's new Modernization Strategy is relevant, an examination of how its applies to potential adversaries other than China and Russia as well as other possible military challenges not related to great power competition could be useful to policymakers. "], "subsections": []}, {"section_title": "Does the Army's Modernization Strategy Complement the Other Service's Modernization Strategies?", "paragraphs": ["According to the Army's Strategy:", "The Army Mission\u00e2\u0080\u0094our purpose\u00e2\u0080\u0094remains constant: To deploy, fight, and win our Nation's wars by providing ready, prompt, and sustained land dominance by Army forces across the full spectrum of conflict as part of the Joint Force.", "As part of this Joint Force, it can be argued the Army's Modernization Strategy should complement the modernization strategies of the other Services and vice versa. In order for the Service's modernization strategies to complement one another, a joint war-fighting concept is essential and, at present, no such a concept is agreed by all Services. According to the Army:", "A Joint war-fighting concept would provide a common framework for experimentation and validation of how the joint force must fight, what capabilities each of the services must have, and how the Joint force should be organized\u00e2\u0080\u0094further allowing civilian leaders to make cross-service resource decisions.", "While the Army favors and is promoting MDO for adoption by the other Services, the Air Force is focusing on Multi Domain Command and Control, the Navy on Distributed Maritime Operations, and the Marine Corps on the Marine Corps Operating Concept. While these operating concepts share some common themes such as great power competition and a need to be able to operate in a variety of domains, they differ in approach but not to an extent where a common joint warfighting concept could not be agreed upon.", "Despite this lack of a common joint warfighting concept, the Army claims its modernization programs are aligned with the other Services. Army leadership has noted that \"the three of us [Army, Air Force, and the Department of the Navy] are completely aligned,\" citing the \"development of a hypersonic weapon as a good example.\" While the Army might be collaborating now more than ever with the Air Force and Navy as it claims, collaborating at the programmatic level does not necessarily constitute a complementary relationship of the Service's modernization strategies. In this regard, Congress might decide to examine the relationship between the Service's modernization strategies to insure they are complementary. "], "subsections": []}]}, {"section_title": "Is the Army's Modernization Strategy Achievable?", "paragraphs": [], "subsections": [{"section_title": "What is the Scope of the Army's Modernization Strategy?", "paragraphs": ["Army officials reportedly have identified 31 modernization initiatives\u00e2\u0080\u0094not all of them programs of record\u00e2\u0080\u0094intended to support the Army's six modernization priorities. The Army notes that \"there are interdependencies among the 31 initiatives which need to fit together in an overall operational architecture.\" Examples of a few of the higher-visibility initiatives grouped by modernization priority include:", "Long Range Precision Fires: Strategic Long Range Cannon (SLRC). Precision Strike Missile (PrSM). Extended Range Cannon Artillery (ERCA). Next Generation Combat Vehicle: (NGCV) : Optionally Manned Fighting Vehicle (OMFV). Robotic Combat Vehicle (RCV): 3 variants. Armored Multi-Purpose Vehicle (AMPV). Mobile Protected Firepower (MPF). Decisive Lethality Platform (DLP). Future Vertical Lift: Future Attack Reconnaissance Aircraft (FARA). Future Attack Unmanned System (FUAS). Future Long Range Assault Aircraft. Air And Missile Defense: Maneuver Short-Range Air defense (M-SHORAD). Indirect Fire Protection Capability (IFPC). Soldier Lethality: Next Generation Squad Weapons \u00e2\u0080\u0093 Automatic Rifle (NGSW-AR). Next Generation Squad Weapons \u00e2\u0080\u0093 Rifle (NGSW-R).", "While some of these initiatives are currently in development and procurement, others are still in the requirements definition and conceptual phase. With so many initiatives and interdependencies, it is reasonable to ask \"can the Army's modernization effort survive the failure of one or more of the 31 initiatives?\" Another potential way of gauging if the Army is \"overreaching\" would be to establish how much modernization is required before the Army considers itself sufficiently modernized to successfully implement MDO as currently envisioned. One question for the Army might be \"What are the Army's absolute \"must-have\" systems or capabilities to ensure the Army can execute MDO at its most basic level?\""], "subsections": []}, {"section_title": "Are the Army's Modernization Priorities Correct?", "paragraphs": ["In March 2019 testimony to the Senate Armed Services Committee, then Secretary of the Army Mark Esper and Chief of Staff of the Army Mark Milley stated:", "To guide Army Futures Command, the Army established a clear set of modernization priorities that emphasize rapid maneuver, overwhelming fires, tactical innovation, and mission command. Our six modernization priorities will not change , and they underscore the Army's commitment to innovate for the future. We have one simple focus\u00e2\u0080\u0094to make Soldiers and units more capable and lethal. Over the last year, we identified $16.1B in legacy equipment programs that we could reinvest towards 31 signature systems that are critical to realizing Multi-Domain Operations and are aligned with these priorities.", "While the Army's prioritization of and commitment to its modernization initiatives can be viewed as essential to both resourcing and executing the Army's Modernization Strategy, some defense experts have questioned the Army's modernization priorities. ", "For example, the Heritage Foundation's August 2019 report \"Rebuilding America's Military Project: The United States Army,\" suggests different modernization priorities: ", "Given the dependence of MDO on fires and the poor state of Army fire systems, the inclusion and first placement of long-range precision fires is logical. Based on the importance of the network to MDO and the current state of Army tactical networks, logically the network should come next in priority. Third, based on the severely limited current capabilities, should come air and missile defense, followed by soldier lethality in fourth. Next-generation combat vehicles are fifth; nothing has come forward to suggest that there is a technological advancement that will make a next-generation of combat vehicles significantly better. Finally, the last priority should be future vertical lift, although a persuasive argument could be made to include sustainment capabilities instead. Nowhere in the MDO concept is a compelling case made for the use of Army aviation, combined with the relative youth of Army aviation fleets.", "Aside from differing opinions from defense officials and scholars, world events might also suggest the need to re-evaluate the Army's modernization priorities. One example is the September 14, 2019 attack against Saudi Arabian oil facilities, believed to have been launched from Iran, which employed a combination of unmanned aerial vehicles (UAVs) and cruise missiles. It has been pointed out U.S. forces are ill-prepared to address this threat although the Army has a variety of programs both underway and proposed to mitigate this vulnerability. If the September 14, 2019 attacks are replicated not only in the region but elsewhere by other actors, it might make a compelling case to reprioritize Army air and missile defense from fifth out of six modernization priorities to a higher level to address an evolving and imminent threat. Apart from the Army's stated modernization priorities, there might also be other technologies or systems that merit inclusion based on changing world events."], "subsections": []}, {"section_title": "How will the Army Manage its Modernization Strategy?", "paragraphs": ["First established in 2018, Army Futures Command (AFC) is intended to:", "Modernize the Army for the future-will integrate the future operational environment, threat, and technologies to develop and deliver future force requirements, designing future force organizations, and delivering materiel capabilities.", "According to the Army's 2019 Modernization Strategy:", "Modernization is a continuous process requiring collaboration across the entire Army, and Army Futures Command brings unity of effort to the Army's modernization approach. AFC, under the strategic direction of Headquarters, Department of the Army (HQDA), develops and delivers future concepts, requirements, and organizational designs based on its assessment of the future operating environment. AFC works closely with the Army's modernization stakeholders to integrate and synchronize these solutions into the operational force.", "While this broad statement provides a basic modernization management concept, it does not address specific authorities and responsibilities for managing Army modernization.", "Many in Congress have expressed concerns with the relationship between AFC and the Assistant Secretary of the Army for Acquisitions, Logistics, and Technology (ASA (ALT)) who has a statutory role in the planning and resourcing of acquisition programs. The Senate Appropriations Committee's report accompanying it's version of the Department of Defense Appropriations Bill, 2020, directs the Army to clearly define modernization responsibilities:", "ARMY ACQUISITION ROLES AND RESPONSIBILITIES", "The Committee has supported efforts by the Army to address modernization shortfalls and deliver critically needed capabilities to the warfighter through establishment of Cross-Functional Teams [CFTs] and ultimately the stand-up of Army Futures Command [AFC]. However, questions remain on the roles and responsibilities of AFC and the Assistant Secretary of the Army (Acquisition, Logistics & Technology) [ASA(ALT)]. As an example, the Committee recently learned of a newly created Science Advisor position within AFC, which seems to be duplicative of the longstanding role of the Deputy Assistant Secretary of the Army for Research and Technology. Additionally, the Committee was concerned to learn that funding decisions on investment accounts, to include science and technology programs, would be directed by AFC rather than ASA(ALT).", "While the Committee supports AFC's role in establishing requirements and synchronizing program development across the Army, it affirms that ASA(ALT) has a statutory role in the planning and resourcing of acquisition programs. The ASA(ALT) should maintain a substantive impact on the Army's long-range investments, not just serve as a final approval authority. Therefore, the Committee directs the Secretary of the Army to provide a report that outlines the roles, responsibilities, and relationships between ASA(ALT) and AFC to the congressional defense committees not later than 90 days after enactment of this act. The report shall include a clear description of the responsibilities of each organization throughout the phases of the planning, programming, budgeting, and execution of resources . (Emphasis added.)", "While the Army has placed significant emphasis on the \"revolutionary\" nature of AFC and its role in modernization, questions may remain about whether AFC will provide a significant level of \"value added\" to Army modernization and not encroach on the statutory responsibilities of the ASA (ALT) as well as other major Army organizations having a role in modernization. "], "subsections": []}, {"section_title": "How Long Will It Take to Fully Implement the Army's Modernization Strategy?", "paragraphs": ["According to the Army's 2019 Modernization Strategy, the Army plans to build a \"MDO ready force by 2035.\" In order for this goal to be achieved, the Army assumes that:", "The Army's budget will remain flat, resulting in reduced spending power over time. Demand for Army forces will remain relatively constant while it executes this strategy. Research and development will mature in time to make significant improvements in Army capabilities by 2035. Adversary modernization programs will stay on their currently estimated trajectories in terms of capability levels and timelines.", "It is not clear if \"MDO ready\" equates to a \"fully modernized\" Army or if a certain undefined level of modernization is sufficient for the Army to successfully execute MDO. Originally, Army officials were hoping to field the M-2 Bradley replacement\u00e2\u0080\u0094the Optionally Manned Fighting Vehicle (OMFV)\u00e2\u0080\u0094by 2026. They also planned to field one brigade's worth of OMFVs per year\u00e2\u0080\u0094meaning that it would have taken until 2046 to field OMFVs to all Armored Brigade Combat Teams (ABCTs). On January 16, 2020, the Army decided to cancel the current OMFV solicitation and revise and re-solicit the OMFV requirements on a competitive basis at an unspecified time in the future. Given this cancellation, it may take longer than 2046 to field all OMFVs unless significant budgetary resources are applied to the program. ", "With the Army's somewhat optimistic assumptions about the budget, demand for forces, mature research and development, and the pace of adversary modernization, as well as the scope and complexity of overall Army Modernization, some policymakers may raise questions about whether a full realization of Army modernization initiatives is possible by 2035. "], "subsections": []}, {"section_title": "What Kind of Force Structure Will Be Required to Support Modernization?", "paragraphs": ["In order to support MDO, Army officials reportedly noted in March 2019 that the Army was preparing to make major force structure changes within the next five years. These force structure changes will also be needed to support Army Modernization as new weapons systems could likely require new units and might also mean that existing units are deactivated or converted to different kinds of units. Potential questions for policymakers include:", "What kinds of new units will be required as a result of Army Modernization? Will existing units be deactivated or converted to support Army Modernization? Will additional endstrength be required to support Army Modernization or will fewer soldiers be needed? Will new Military Operational Specialties (MOSs) be required to support Army Modernization? How will new units be apportioned between the Active and Reserve Components? Where will these new units be stationed in the United States and overseas? Will new training ranges or facilities be required to support Army Modernization?"], "subsections": []}]}, {"section_title": "Is the Army's Modernization Strategy Affordable?", "paragraphs": ["Army officials have said they eliminated, reduced, or consolidated almost 200 legacy weapon systems catalogued in the Future Years Defense Program (FYDP) as part of an effort to shift more than $30 billion to programs related to the \"Big Six\" modernization priorities. The budget review process, known as \"Night Court,\" was initiated by then-Army Secretary Mark Esper.", "Army officials have said additional reviews will yield lower levels of savings. They have also acknowledged uncertainty in budget assumptions, including total projected funding for the service and long-term costs for modernization priorities as they shift from research, development, test, and evaluation (RDT&E) to procurement activities. Army Lieutenant General James Pasquarette, Deputy Chief of Staff of the Army for Programs (G-8), has said:", "Our strategy right now assumes a topline that's fairly flat. I'm not sure that's a good assumption. So, when the budget does go down ... will we have the nerve to make the hard choices to protect future readiness? Often that's the first lever we pull\u00e2\u0080\u0094we try and protect end-strength and current readiness at the cost of future readiness.... We don't really have a clear picture of what those bills are right now [for long-term costs of modernization priorities].... There are unrealized bills out there that we're going to have to figure out how to resource and so, right now, I think they're underestimated. ", "Some policymakers and observers have raised questions about the affordability of the Army's modernization strategy. This section seeks to provide context to this question by detailing the Army's requested funding for programs related to its six modernization priorities for FY2020 and the accompanying FYDP, historical and projected funding for the service's RDT&E and procurement efforts in real terms (i.e., inflation-adjusted dollars), changes in the service's budget allocations over time, and planned funding for the service's major defense acquisition programs."], "subsections": [{"section_title": "Selected Army Modernization Funding in the FY2020 Budget Request", "paragraphs": ["According to information provided by the Army, the service requested $8.9 billion in RDT&E and procurement funding for programs related to its six modernization priorities in FY2020. This amount reflects an increase of $3.9 billion (78%) from the FY2019 enacted amount of $5 billion. See Table 1 for a breakdown of projected funding by priority.", "For FY2020, the Army requested a total of $38.7 billion for its acquisition accounts, including $12.4 billion for RDT&E and $26.3 billion for procurement. Notably, for FY2020, funding requested for programs related to the Army's six modernization priorities, $8.9 billion, accounted for less than a quarter (23%) of its overall acquisition budget request.", "Potential questions for policymakers include:", "How has the Army identified funding to pay for programs related to its six modernization priorities? What officials and organizations have been involved? What is the status of these reviews? How can the Army provide more transparency in identifying sources of funding from these reviews? Why does funding for programs related to the Army's six modernization priorities account for a relatively small share of its overall acquisition budget? Should the Army devote a larger share of its overall acquisition budget to its six modernization priorities? What would be some challenges in doing so? When does the Army expect to fully resource programs related to its modernization priorities? How much of the Army's overall acquisition budget should go toward modernization priorities, current acquisition programs, and legacy programs? Some programs related to the Army's six modernization priorities, such as Future Vertical Lift, saw a higher percentage increase in requested funding for FY2020 than others, such as Air and Missile Defense. Do the percentage increases reflect the level of priority the Army is assigning these individual programs\u00e2\u0080\u0094or rising costs associated with new stages of development? The Army's FY2020 unfunded priorities list included $242.7 million for \"modernization requirements\" and $403.9 million for \"lethality requirements,\" among funding for other requirements. Why was the service unable to fund these requirements in its regular budget request? "], "subsections": []}, {"section_title": "Selected Army Modernization Funding in the Future Years Defense Program (FYDP)", "paragraphs": ["The service projected $57.3 billion in RDT&E and procurement funding for programs related to its six modernization priorities over the FYDP from FY2020 through FY2024. This amount, if authorized and appropriated by Congress, would reflect an increase of $33.1 billion (137%) from projections for the five-year period in the FY2019 budget request. See Table 2 for a breakdown of the projected cost by program.", "For the five-year period through FY2024, the Army projected a total of $187.5 billion for its acquisition accounts (in nominal dollars), including $58.7 billion for RDT&E and $128.8 billion for procurement. Notably, for the FY2020 FYDP, funding for programs related to the Army's six modernization priorities accounts for less than a third (31%) of its overall acquisition budget.", "In addition to the previous list, potential questions for policymakers include:", " How realistic are the Army's assumptions for funding programs related to its six modernization priorities, given uncertainty about their long-term costs and the projected decrease in real terms (i.e., inflation-adjusted dollars) in Army procurement and RTD&E funding over the Future Years Defense Program? Should the level of planned funding change for certain programs to reflect different priorities? What additional tradeoffs or divestments does the Army plan to make to its current acquisition programs or legacy weapon systems in order to fund programs related to its six modernization priorities? What programs may be cut?"], "subsections": []}, {"section_title": "Army RDT&E and Procurement Funding: A Historical Perspective55", "paragraphs": ["Taken together and adjusted for inflation (in constant FY2020 dollars), the Army's acquisition accounts\u00e2\u0080\u0094including RDT&E and procurement\u00e2\u0080\u0094have experienced several buildup and drawdown cycles in past decades, with some of the biggest increases occurring during periods of conflict. See Figure 1 .", "For example, the service's acquisition budget spiked in FY1952 during the Korean War, again in FY1968 during the Vietnam War, and again in FY2008 during the wars in Afghanistan and Iraq. The FY2008 peak was driven in part by the service's procurement of Mine Resistant Ambush Protected (MRAP) vehicles and other programs intended to protect troops in combat zones from roadside bombs.", "In terms of a non-war peak, the Army received a combined total of $48.7 billion (in constant FY2020 dollars) for RDT&E and procurement in FY1985 during the Cold War\u00e2\u0080\u0094an era in which the service's \"Big Five\" acquisition programs entered service, including the UH-60 Black Hawk utility helicopter (1979), M1 Abrams tank (1980), M2 Bradley fighting vehicle (1981), Patriot air defense system (1981), and AH-64 Apache attack helicopter (1986).", "The Army projects combined RDT&E and procurement funding will continue to decline in real dollars. The combined level of funding for these accounts is projected to decline from $38.7 billion in FY2020 to $34.3 billion in FY2024 (in constant FY2020 dollars), a decrease over the FYDP of $4.4 billion (11%). Even so, the FY2024 level would remain higher than the Army's historical average of $32.2 billion (in constant FY2020 dollars) for RDT&E and procurement.", "Potential questions for policymakers include:", "How may the projected decrease in RDT&E and procurement funding in constant FY2020 dollars over the Future Years Defense Program impact the Army's ability to execute its modernization strategy? If the Army's overall acquisition budget is projected to decrease (in real terms), and funding for programs related to its modernization strategy is projected to increase, what kinds of tradeoffs or divestments does the Army plan to make to its current acquisition programs or legacy weapon systems? How much, if any, of the increase in RDT&E and procurement funding in FY2018 went to programs related to the Army's six modernization priorities? To what extent will projected costs for programs related to the Army's six modernization priorities increase as they shift from RDT&E to procurement activities?"], "subsections": []}, {"section_title": "Changes in Army Budget Allocations", "paragraphs": ["The share of funding that the Congress has allocated to Army appropriations accounts has changed over time. Because every dollar spent on military personnel, operation and maintenance, and military construction is a dollar that cannot be spent on RDT&E or procurement, Army budget allocation decisions may impact the service's ability to execute its modernization strategy.", "For example, the Army uses funds from its Operation and Maintenance (O&M) account to pay the salaries and benefits of most of its civilian employees, train soldiers, and purchase goods and services, from fuel and office supplies to health care and family support. (Today, the account also covers most of the service's costs for Overseas Contingency Operations, or OCO. ) In FY1985, during the Reagan-era buildup, O&M accounted for a smaller share of the Army budget (28%) than it does today (41%) and than it has historically (36%). In the same year, procurement accounted for a larger share of the Army budget (26%) than it does today (14%) and than it has historically (16%). See Figure 2 .", "Potential questions for policymakers include:", "What changes in spending on military personnel could impact the Army's ability to execute its modernization strategy, particularly if the service increases end-strength? What changes in spending on operations and maintenance could impact the Army's ability to execute its modernization strategy? What changes in spending on Overseas Contingency Operations (OCO) could impact the Army's ability to execute its modernization strategy? How is the Army reviewing potential ways to control military personnel or operations and maintenance costs to be able to spend more on RDT&E and procurement in support of programs related to its modernization strategy?"], "subsections": []}, {"section_title": "Planned Funding for Current Army Major Defense Acquisition Programs (MDAPs)", "paragraphs": ["Including funding planned for FY2020 and FY2021 as part of the FY2020 President's budget request, the Army has an outstanding balance of $120.6 billion (in then-year dollars) for current major defense acquisition programs. Programs with balances greater than $10 billion include the following:", "CH-47F . The CH-47F Chinook Block II modernization program is intended to increase the carrying capacity of the cargo helicopter in part by upgrading its rotor blades and flight control and drive train components (estimated balance: $25.9 billion); Joint Light Tactical Vehicle (JLTV) . 59 This program is intended to replace a portion of the Humvee fleet with a new light-duty vehicle (estimated balance: $20.8 billion, $3 billion of which is projected to come from services other than the Army); and Armored Multi-Purpose Vehicle (AMPV). 60 This program is intended to replace the M113 armored personnel carrier family of vehicles with a new armored vehicle (estimated balance: $11.7 billion).", "For the cumulative funding status of each of the Army's current major defense acquisition programs as of the FY2020 President's budget re quest, including prior-year amounts and outstanding balances, see Figure 3 .", "For projected funding for each of the Army's current major defense acquisition programs as of the FY2020 President's budget request, see Figure 4 .", "As part of the FY2020 President's budget request, the Army proposed reducing funding for some current modernization programs, including the Joint Light Tactical Vehicle (JLTV) and the Armored Multi-Purpose Vehicle (AMPV), in part to pay for modernization priorities.", "As previously discussed, DOD has not yet designated many of the programs related to the Army's six modernization priorities as major defense acquisition programs (MDAPs). However, DOD appears to have designated as pre-major defense acquisition programs (pre-MDAPs) some programs related to the Army's six modernization priorities, such as Future Vertical Lift. When possible, the Army plans to begin equipping units with technology on a limited basis in coming years in advance of fully equipping units to take advantage of new technologies as soon as practicable. See Table 3 . ", "Potential questions for policymakers include:", "How do programs included in the Army's six modernization priorities relate to current major defense acquisition programs? Should the Army fund certain current major defense acquisition programs, such as Integrated Air and Missile Defense, at higher levels to better conform to programs related to its six modernization priorities? How may resourcing requirements for programs related to the Army's six modernization priorities impact funding for its current major defense acquisition programs?", "Given the rapidly changing and unpredictable security challenges facing the United States and the scope of the Army's modernization program, congressional oversight could be challenged in the future as the Army attempts to develop and field an array technologies and systems. A potential oversight framework which constantly evaluates the relevance, the feasibility, and affordability of the Army's modernization efforts could benefit both congressional oversight and related budgetary activities."], "subsections": []}]}]}]}}
{"id": "R45790", "title": "The Opioid Epidemic: Supply Control and Criminal Justice Policy\u2014Frequently Asked Questions", "released_date": "2019-06-28T00:00:00", "summary": ["Over the last several years, lawmakers in the United States have responded to rising drug overdose deaths, which increased four-fold from 1999 to 2017, with a variety of legislation, hearings, and oversight activities. In 2017, more than 70,000 people died from drug overdoses, and approximately 68% of those deaths involved an opioid.", "Many federal agencies are involved in domestic and foreign efforts to combat opioid abuse and the continuing increase in opioid related overdose deaths. A subset of those agencies confront the supply side (some may also confront the demand side) of the opioid epidemic. The primary federal agency involved in drug enforcement, including prescription opioids diversion control, is the Drug Enforcement Administration (DEA). Other federal agencies that address the illicit opioid supply include, but are not limited to, the Federal Bureau of Investigation, Offices of the U.S. Attorneys, Office of Justice Programs, U.S. Customs and Border Protection, U.S. Department of State, U.S. Postal Inspection Service, and Office of National Drug Control Policy. This report focuses on efforts from these departments and agencies only.", "Lawmakers have addressed opioid abuse as both a public health and a criminal justice issue, and Congress enacted several new laws in the 114 th and 115 th Congresses. These include the Comprehensive Addiction and Recovery Act of 2016 (CARA; P.L. 114-198 ), the 21 st Century Cures Act (Cures Act; P.L. 114-255 ), and most recently the SUPPORT for Patients and Communities Act (SUPPORT Act; P.L. 115-271 ). Congress also provided funds specifically to address the opioid epidemic in FY2017-FY2019 appropriations.", "This report answers common supply and criminal justice-related questions that have arisen as drug overdose deaths in the United States continue to increase. It does not provide a comprehensive overview of opioid abuse as a criminal justice issue. The report is divided into the following sections:", "Overview of the Opioid Epidemic in the United States; Overview of the Opioid Supply; Opioids and Domestic Supply Control Policy; Opioids and Foreign Supply Control Policy; Recent Congressional Action on the Opioid Epidemic; and The Opioid Epidemic and State Criminal Justice Policies."], "reports": {"section_title": "", "paragraphs": ["O ver the last several years, the public and lawmakers in the United States have been alarmed over the increasing number of drug overdose deaths , most of which have involved opioids. Congress has responded to the issue through legislative activity , oversight, and funding, while the Administration has sought to reduce the supply and demand of illicit drugs through enforcement, prevention, and treatment.", "This FAQ report answers questions about the opioid epidemic and federal efforts to control the supply of opioids. It does not provide a comprehensive overview of opioid abuse and the criminal justice response. Instead, it answers common questions that have arisen due to rising drug overdose deaths and the availability of illicit opioids in the United States."], "subsections": [{"section_title": "Overview of the Opioid Epidemic in the United\u00c2 States", "paragraphs": ["This section answers questions on the nature of the opioid epidemic in the United States. The answers provide background on the types of opioids that are being abused, the associated harm to the abusers of these substances, and the extent of the abuse. "], "subsections": [{"section_title": "What is an opioid?", "paragraphs": ["An opioid is a type of drug that, when ingested, binds to opioid receptors in the body\u00e2\u0080\u0094many of which control a person's pain . While opioids are medically used to alleviate pain, some are abused by being used in a way other than prescribed (e.g., in greater quantity) or taken without a doctor's prescription. Many prescription pain medications, such as hydrocodone and fentanyl, are opioids, as are some illicit drugs, such as heroin."], "subsections": []}, {"section_title": "How many Americans abuse opioids?", "paragraphs": ["In its annual National Survey on Drug Use and Health (NSDUH), the Substance Abuse and Mental Health Services Administration (SAMHSA) does not ask questions about \"opioids\" specifically; rather, it asks respondents about their use of heroin and misuse of prescription pain relievers in two separate questions. In 2017, SAMHSA estimated that 11.4 million people misused an opioid at least once in the past year\u00e2\u0080\u0094this includes 11.1 million prescription pain reliever \"misusers\" and 886,000 heroin users.", "In 2017, SAMHSA also estimated that 3.2 million Americans ages 12 and older (1.2% of the population 12 and older) were current \"misusers\" of prescription pain relievers, and approximately 494,000 Americans ages 12 and older (0.2% of the population 12 and older) were current users of heroin. ", "The University of Michigan administers an annual Monitoring the Future Survey , which measures drug use behaviors among 8 th , 10 th , and 12 th graders; college students; and young adults. In 2018, 3.4% of surveyed 12 th graders were current users of \"narcotics other than heroin\", and 0.1% of surveyed 8 th , 10 th , and 12 th graders were current users of heroin."], "subsections": []}, {"section_title": "What is the physical harm associated with opioid abuse?", "paragraphs": ["For chronic and severe pain, opioids can improve the functioning of legitimate pain patients; however, there are short- and long-term physical risks of abusing opioids. For example, nonfatal overdoses have been associated with a number of health issues, including brain injury, pulmonary and respiratory problems, hypothermia, kidney and liver failure, seizures, and others. The most severe physical harm associated with opioid abuse is death due to overdose. Drug overdose deaths have increased four-fold from 16,849 in 1999 to 70,237 in 2017. Of the 70,237 overdose deaths, 47,600 (67.8%) involved opioids. The main driver of drug overdose deaths overall is synthetic opioids. Reports indicate that recent increases in overdose deaths are most likely driven by illicitly manufactured fentanyl.", "Aside from the harm associated with fatal and nonfatal opioid overdoses, addiction is a primary harm associated with opioids. Licit and illicit opioids are highly addictive. Addiction and general misuse of opioids have contributed to a series of public health, welfare, and social problems that have been widely discussed in public forums."], "subsections": []}, {"section_title": "Which states are experiencing a high number and/or rate of overdose deaths?", "paragraphs": ["The numbers and rates of drug overdose deaths vary by state and region of the United States. Table 1 shows the number of deaths and age-adjusted overdose death rates for each state and the national totals for 2017. As illustrated in Figure 1 , the states east of the Mississippi River have comparatively higher rates of drug overdose deaths than states west of the Mississippi River, although New Mexico, Arizona, and Utah all rank in the top half of states for age-adjusted rates of drug overdose deaths.", "The Drug Enforcement Administration (DEA) and the Centers for Disease Control and Prevention (CDC) have indicated that overdose deaths have increased in states also reporting large increases in fentanyl seizures. In addition, there is reportedly a \"strong relationship\" between the number of synthetic opioid deaths and the number of fentanyl reports in the National Forensic Laboratory Information System (NFLIS). The National Institute on Drug Abuse (NIDA) reports that the number of fentanyl-related deaths is likely underestimated because some medical examiners do not test for fentanyl and some death certificates do not list specific drugs."], "subsections": []}]}, {"section_title": "Overview of the Opioid Supply", "paragraphs": ["Heroin, fentanyl, and prescription opioids are significant drug threats in the United States\u00e2\u0080\u0094in 2017, approximately 44% of domestic local law enforcement agencies responding to the National Drug Threat Survey (NDTS) reported heroin as the greatest drug threat in their area. While the percentage of NDTS respondents reporting high availability of controlled prescription drugs (CPDs), which include some opioids, has declined over the last several years (75% of NDTS respondents reported high availability in 2014, compared to 52% in 2017), the reported availability of heroin has increased (30% reported high availability in 2014, compared to 49% in 2017). Further, there has been a rise in the availability of illicit fentanyl\u00e2\u0080\u0094the primary synthetic opioid available in the United States. "], "subsections": [{"section_title": "What is the recent history of the opioid supply in the United\u00c2 States?", "paragraphs": ["While opioids have been available in the United States since the 1800s, the market for these drugs shifted significantly beginning in the 1990s. This section focuses on this latter period (see Figure 2 )."], "subsections": [{"section_title": "Prescription Opioid Supply", "paragraphs": ["In the 1990s, the availability and abuse of prescription opioids, such as hydrocodone and oxycodone, increased as the legitimate production, and the subsequent diversion of some of these drugs, increased sharply. This continued into the early 2000s, as illegitimate prescription opioid users turned to family and friends, \"doctor shopping,\" bad-acting physicians, pill mills, the internet, pharmaceutical theft, and prescription fraud to obtain prescription opioids.", "The federal government has used varied approaches to reduce the unlawful prescription drug supply and prescription drug abuse, including diversion control through grants for state prescription drug monitoring programs ; a crackdown on pill mills; increased regulation of internet pharmacies ; the reformulation of a commonly abused prescription opioid, OxyContin\u00c2\u00ae (oxycodone hydrochloride controlled-release) ; and the rescheduling of hydrocodone.", "Some experts have highlighted a connection between the crackdown on the unlawful supply of prescription drugs and the subsequent rise in the availability and abuse of heroin (discussed in the next section). Heroin is a cheaper alternative to prescription opioids, and may be accessible to some who are seeking an opioid high. Notably, while most users of prescription drugs will not go on to use heroin, accessibility and price are central factors cited by patients with opioid dependence who decide to turn to heroin.", "In October 2018, the Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities Act (SUPPORT Act; P.L. 115-271 ) imposed tighter oversight of opioid production and distribution, required additional reporting and safeguards to address fraud, and limited Medicare coverage of prescription opioids. Also in 2018, the DEA proposed a \"significant\" reduction in opioid manufacturing for 2019. In its final order setting the aggregate production quota for certain controlled substances in 2019, the DEA noted that it \"has observed a decline in the number of prescriptions written for schedule II opioids since 2014 and will continue to set aggregate production quotas to meet the medical needs of the United States while combating the opioid crisis.\""], "subsections": []}, {"section_title": "Heroin Supply", "paragraphs": ["The trajectory of the heroin supply over the last several decades is much different than that of prescription opioids, but their stories are connected. In the late 1990s and early 2000s, white powder heroin produced in South America dominated the market east of the Mississippi River, and black tar and brown powder heroin produced in Mexico dominated the market west of the Mississippi. Most of the heroin found in the United States at that time came from South America, while smaller percentages came from Mexico and Southwest Asia.", "In the 1990s, the purity and price of retail-level heroin varied considerably by region. The average retail-level purity of South American heroin was around 46%, which was considerably higher than that of Mexican, Southeast Asian, or Southwest Asian heroin. Mexican heroin was around 27% pure, while Southeast Asian and Southwest Asian heroin were around 24% and 30% pure, respectively. Retail prices for heroin fell dramatically throughout the 1990s\u00e2\u0080\u0094it was 55% to 65% less expensive in 1999 than in 1989.", "Through 2017, retail-level heroin prices continued to decline (although they increased slightly from 2015 to 2016), while purity, in particular that of Mexican heroin, has increased (although purity also dipped slightly from 2015 to 2016). The availability of Mexican heroin has increased. In 2016, nearly 90% of the heroin seized and tested in the United States was determined to have come from Mexico, while a much smaller portion was from South America. Mexican-sourced heroin dominates the U.S. heroin market, in part, because of its proximity and its established transportation and distribution infrastructure. In addition, increases in Mexican production have ensured a reliable supply of low-cost heroin, even as demand for the drug has increased. Mexican transnational criminal organizations have particularly increased their production of white powder heroin as they have expanded their retail presence into the eastern part of the United States (where the primary form of heroin consumed has been white powder) and they have diversified the heroin sold in western states. Of further concern is the increasing amount of heroin seizures containing fentanyl and/or fentanyl-related substances."], "subsections": []}, {"section_title": "Fentanyl Supply", "paragraphs": ["Exacerbating the current opioid problem is the rise of illicit nonpharmaceutical fentanyl available on the black market. Diverted pharmaceutical fentanyl represents only a small portion of the fentanyl market. Illicit nonpharmaceutical fentanyl largely comes from China, and it is often mixed with or sold as heroin. It is 50 to 100 times more potent than heroin, and over the last several years, reported prices ranged between $30,000 and $38,000 per kilogram. The increased potency of illicit nonpharmaceutical fentanyl compounds, such as \"gray death,\" is even more dangerous. Law enforcement expects that illicit fentanyl distributors will continue to create new fentanyl products to circumvent new U.S., Chinese, and Mexican laws and regulations."], "subsections": []}]}, {"section_title": "Where are illicit opioids produced?", "paragraphs": ["Illicit opioids include those from plant-based and synthetic sources. While some opium poppy crops are legally cultivated to meet global demand for scientific and medicinal purposes, the United Nations (U.N.) estimates that approximately 345,800 hectares of opium poppy crops were illicitly cultivated around the world in 2018\u00e2\u0080\u0094a 16.6% decrease from the estimated 414,500 hectares in 2017. The vast majority of illicit opium poppy is grown in Afghanistan, which cultivated approximately 263,000 hectares in 2018. Most heroin consumed in the United States is derived from illicit opium poppy crops cultivated in Mexico. According to U.S. government estimates, approximately 44,100 hectares of illicit opium poppy was cultivated in Mexico in 2017 (up from 28,000 hectares cultivated in 2015). Illicit cultivation of opium poppy has also been reported in Burma (37,300 hectares in 2018), Laos (5,700 hectares in 2015), and Colombia (282 hectares in 2017). Several dozen other countries have reported comparatively smaller seizures of opium poppy plants and eradication of opium poppy crops.", "Synthetic opioids may enter the illicit drug market through diversion from legitimate pharmaceutical manufacturing operations or through the clandestine production of counterfeit medicines and/or of psychoactive substances intended for recreational consumption. Illicit synthetic opioids consumed in the United States are mostly foreign-sourced. According to the State Department, \"China's large chemical and pharmaceutical industries provide an ideal environment for the illicit production and export of [synthetic drugs].\" The State Department also reports that India's pharmaceutical and chemical industries are particularly susceptible to criminal exploitation; India legally produces opium for pharmaceutical uses and manufactures synthetic opiate pharmaceuticals, in addition to numerous precursor chemicals that could be diverted and used as ingredients in the production of illicit opioids. Clandestine laboratories illicitly producing fentanyl have been discovered in Mexico, Canada, the Dominican Republic, the United States, and other countries. "], "subsections": []}, {"section_title": "How do illicit opioids enter the country?", "paragraphs": [], "subsections": [{"section_title": "Prescription Opioids", "paragraphs": ["The active and inactive ingredients in prescription opioids may come from various countries around the world. Prescription drugs may be manufactured domestically or abroad. Current law and regulations allow for the importation of certain prescription drugs that are manufactured outside the country. Prescription drugs in the United States, regardless of where they were manufactured, flow through a regulated supply chain \u00e2\u0080\u0094involving manufacturers, processers, packagers, importers, and distributors\u00e2\u0080\u0094until they are ultimately dispensed to end users. ", "The majority of misused prescription opioids available in the United States have been prescribed for a legitimate use and then diverted. Counterfeit prescription opioids are also available; in these cases, substances have often been pressed into pills in the United States, or abroad and then transported into the country, and sold. The DEA has indicated that one of the reasons traffickers may be disguising other opioids as CPDs could be that they are attempting to \"gain access to new users.\" "], "subsections": []}, {"section_title": "Heroin58", "paragraphs": ["Mexican transnational criminal organizations (TCOs) are the major suppliers and key producers of most illegal drugs smuggled into the United States, and they have been increasing their share of the U.S. heroin market. The 2018 National Drug Threat Assessment notes that most illicit heroin flows into the United States over the Southwest border. It is primarily moved through legal ports of entry (POEs) in passenger vehicles or tractor trailers where it can be co-mingled with legal goods; a smaller amount of heroin is seized from individuals carrying the drugs on their person or in backpacks. Data from U.S. Customs and Border Protection (CBP) indicate that in FY2018, 5,205 pounds of heroin were seized at POEs, and 568 pounds were seized between POEs."], "subsections": []}, {"section_title": "Illicitly Produced Fentanyl62", "paragraphs": ["The DEA notes that \"[f]entanyl continues to be smuggled into the United States primarily in powder or counterfeit pill form, indicating illicitly produced fentanyl as opposed to pharmaceutical fentanyl from the countries of origin.\" Fentanyl is smuggled into the United States directly from China through the mail, from China through Canada, or across the Southwest border from Mexico. Smaller quantities of fentanyl with relatively high purity (some over 90%) are smuggled from China, and larger quantities of fentanyl with relatively low purity (often less than 10%) are transported from Mexico. The DEA notes that Mexican traffickers often get fentanyl precursor chemicals from China. In addition, these traffickers may receive fentanyl from China, adulterate it, and smuggle it into the United States.", "Data from CBP indicate that in FY2018, 1,785 pounds of fentanyl were seized at POEs, and 388 pounds were seized between POEs. The DEA reports that the San Diego border sector has been the primary entry point for fentanyl coming into the United States across the Southwest border (85% of the fentanyl seized coming across the Southwest border in 2017 flowed through the San Diego sector, and 14% came through the Tucson sector). Most commonly, the fentanyl seized coming through Southwest border POEs was smuggled in personally operated vehicles."], "subsections": []}]}]}, {"section_title": "Opioids and Domestic Supply Control Policy", "paragraphs": [], "subsections": [{"section_title": "How does the federal government counter illicit opioid trafficking in the United States?69", "paragraphs": ["There are a number of federal departments and agencies involved in countering illicit opioid trafficking in the United States."], "subsections": [{"section_title": "Office of National Drug Control Policy (ONDCP)", "paragraphs": ["ONDCP is responsible for creating, implementing, and evaluating U.S. drug control policies to reduce the use, manufacturing, and trafficking of illicit drugs as well as drug-related health consequences, crime, and violence. The ONDCP director is required to develop a National Drug Control Strategy (Strategy) to direct the nation's anti-drug efforts and a National Drug Control Budget (Budget) designed to implement the Strategy. The director also is required to coordinate implementation of the policies, goals, objectives, and priorities established by the Administration by agencies contributing to the Federal Drug Control Program. In addition, ONDCP manages several grant programs, including the High Intensity Drug Trafficking Areas (HIDTA) program. While ONDCP is not focused solely on countering opioid-related threats, it is a major priority of the office."], "subsections": [{"section_title": "HIDTA", "paragraphs": ["The HIDTA program provides assistance to law enforcement agencies\u00e2\u0080\u0094at the federal, state, local, and tribal levels\u00e2\u0080\u0094that are operating in regions of the United States that have been deemed critical drug trafficking areas. There are 29 designated HIDTAs throughout the United States and its territories. The program aims to reduce drug production and trafficking through four means:", "promoting coordination and information sharing between federal, state, local, and tribal law enforcement; bolstering intelligence sharing between federal, state, local, and tribal law enforcement; providing reliable intelligence to law enforcement agencies such that they may be better equipped to design effective enforcement operations and strategies; and promoting coordinated law enforcement strategies that rely upon available resources to reduce illegal drug supplies, not only in a given area but throughout the country.", "HIDTA funds can be used to support the most pressing drug trafficking threats in the region. As such, when heroin trafficking is found to be a top priority in a HIDTA region, funds may be used to support initiatives targeting it. ", "In addition, in 2015 ONDCP launched the Heroin Response Strategy (HRS), \"a multi-HIDTA, cross-disciplinary approach that develops partnerships among public safety and public health agencies at the Federal, state, and local levels to reduce drug overdose fatalities and disrupt trafficking in illicit opioids.\" Within the HRS, a Public Health and Public Safety Network coordinates teams of public health analysts and drug intelligence officers in each state. The HRS not only provides information to these participating entities on drug trafficking and use, but it has \"developed and disseminated prevention activities, including a parent helpline and online materials.\""], "subsections": []}, {"section_title": "Other ONDCP Supply Control Initiatives", "paragraphs": ["ONDCP has been involved in various other counter-trafficking operations since its creation in 1988. Recently, it collaborated with the U.S. Department of Homeland Security's Science and Technology Directorate (as well as CBP and the U.S. Postal Inspection Service) to launch the Opioid Detection Challenge\u00e2\u0080\u0094a $1.55 million global prize competition to seek new solutions to detect opioids in international mail."], "subsections": []}]}, {"section_title": "Department of Justice (DOJ)", "paragraphs": ["DOJ controls the opioid supply through law enforcement; regulation of manufacturers, distributors, and dispensers; and grants to state and local agencies. U.S. efforts to target opioid trafficking have centered on law enforcement initiatives. ", "There are a number of DOJ law enforcement agencies involved in countering opioid trafficking. Within these agencies, there are a range of activities aimed at (or that may be tailored to) curbing opioid trafficking."], "subsections": [{"section_title": "Organized Crime Drug Enforcement Task Force (OCDETF) Program", "paragraphs": ["The OCDETF program targets\u00e2\u0080\u0094with the intent to disrupt and dismantle\u00e2\u0080\u0094major drug trafficking and money laundering organizations. Federal agencies that participate in the OCDETF program include the DEA; Federal Bureau of Investigation (FBI); Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF); U.S. Marshals; Internal Revenue Service (IRS); U.S. Immigration and Customs Enforcement (ICE); U.S. Coast Guard; Offices of the U.S. Attorneys; and the Department of Justice's (DOJ's) Criminal Division. These federal agencies also collaborate with state and local law enforcement on task forces. There are 14 OCDETF strike forces around the country and an OCDETF Fusion Center that gathers and analyzes intelligence and information to support OCDETF operations. The OCDETFs target those organizations that have been identified on the Consolidated Priority Organization Targets (CPOT) List, the \"most wanted\" list for leaders of drug trafficking and money laundering organizations. During FY2018, 52% of active OCDETF investigations involved heroin. According to DOJ, \"OCDETF has adjusted its resources to target these investigations in an attempt to reduce the [heroin] supply.\""], "subsections": []}, {"section_title": "Drug Enforcement Administration (DEA)", "paragraphs": ["The DEA enforces federal controlled substances laws in all states and territories. The agency has developed a 360 Strategy aimed at \"tackling the cycle of violence and addiction generated by the link between drug cartels, violent gangs, and the rising problem of prescription opioid and heroin abuse.\" The 360 Strategy leverages federal, state, and local law enforcement, diversion control, and community outreach organizations to achieve its goals. Additionally, the DEA routinely uses community-based enforcement strategies as well as multijurisdictional task forces to address opioid trafficking.", "The DEA also operates a heroin signature program (HSP) and a heroin domestic monitor program (HDMP) to identify the geographic sources of heroin seized in the United States. The HSP analyzes wholesale-level samples of \"heroin seized at U.S. ports of entry (POEs), all non-POE heroin exhibits weighing more than one kilogram, randomly chosen samples, and special requests for analysis.\" The HDMP samples retail-level heroin seized in selected cities across the country. Chemical analysis of a given heroin sample can identify its \"signature,\" which indicates a particular heroin production process that has been linked to a specific geographic region. In addition, the DEA has started a Fentanyl Signature Profiling Program (FSPP), analyzing samples from fentanyl seizures to help \"identify the international and domestic trafficking networks responsible for many of the drugs fueling the opioid crisis.\""], "subsections": []}, {"section_title": "Federal Bureau of Investigation (FBI)", "paragraphs": ["The FBI investigates opioid trafficking as part of its efforts to counter transnational organized crime and gangs, cybercriminals, fraudsters, and other malicious actors. The FBI participates in investigations that range from targeting drug distribution networks bringing opioids across the Southwest border to prioritizing illicit opioid distributors leveraging the Dark Web to sell their drugs."], "subsections": []}, {"section_title": "Other DOJ Agencies", "paragraphs": ["Other DOJ agencies have key roles in combatting the opioid epidemic. The Offices of the U.S. Attorneys are responsible for the prosecution of federal criminal and civil cases, which include cases against prescribers, pharmaceutical companies, and pharmacies involved in unlawful manufacturing, distribution, and dispensing of opioids as well as illicit opioid traffickers. Other enforcement agencies such as the ATF and U.S. Marshals may also be involved in seizing illicit opioids in the course of carrying out their official duties. The Office of Justice Programs (OJP) administers grant programs to address opioid supply and demand (some of which are discussed below in \" Which DOJ grant programs may be used to address the opioid epidemic? \")."], "subsections": []}]}, {"section_title": "U.S. Department of Homeland Security (DHS)", "paragraphs": [], "subsections": [{"section_title": "U.S. Customs and Border Protection (CBP)", "paragraphs": ["CBP works to counter the trafficking of illicit opioids (among other drugs) along the U.S. borders as well as via mail curriers. To help detect and interdict these substances, CBP employs tools such as nonintrusive inspection equipment (including x-ray and imaging systems), canines, and laboratory testing of suspicious substances. The agency also uses information and screening systems to help detect illicit drugs, targeting precursor chemicals, equipment, and the drugs themselves.", "CBP, through the Office of Field Operations (OFO) and the U.S. Border Patrol, seizes illicit drugs coming into the United States at and between POEs. CBP data indicate that 90% of the heroin seized by CBP in FY2018 was seized by OFO at POEs, and 10% was seized by the Border Patrol between POEs. In addition, these data indicate that 82% of the fentanyl seized in FY2018 was seized by OFO at POEs, and 18% was seized by the Border Patrol between POEs."], "subsections": []}, {"section_title": "U.S. Coast Guard (USCG)", "paragraphs": ["Drug interdiction is part of the Coast Guard's law enforcement mission. The agency is responsible for interdicting noncommercial maritime flows of illegal drugs. Cocaine is the primary illicit drug encountered by the Coast Guard, as it is the most common drug moved via noncommercial vessels. While the Coast Guard encounters other illicit drugs, including opioids, the agency notes that those drugs are more commonly moved on land or in commercial maritime vessels that are regulated by other enforcement agencies. The Coast Guard also participates in multi-agency counterdrug task forces, including OCDETF."], "subsections": []}]}, {"section_title": "U.S. Postal Inspection Service (USPIS)", "paragraphs": ["USPIS is the law enforcement arm of the U.S. Postal Service. It shares responsibility for international mail security with other federal agencies, and as a result of the opioid epidemic, it has dedicated more resources to investigating prohibited substances in the mail. From FY2016 through FY2018, USPIS had a \"1,000% increase in international parcel seizures and a 750% increase in domestic parcel seizures related to opioids.\" In FY2018, USPIS and its law enforcement partners seized over 96,000 pounds of drugs in the mail, including marijuana, methamphetamine, synthetic opioids, and others, but their publicly available data does not describe what portion of these drugs were opioids."], "subsections": []}]}, {"section_title": "What is the DEA's role in preventing the diversion of prescription opioids?", "paragraphs": ["The DEA has a key regulatory function in drug control. While it conducts traditional law enforcement activities such as investigating drug trafficking (including trafficking of heroin and other illicit opioids), it also regulates the flow of controlled substances in the United States. The Controlled Substances Act (CSA) requires the DEA to establish and maintain a closed system of distribution for controlled substances; this involves the regulation of anyone who handles controlled substances, including exporters, importers, manufacturers, distributors, health care professionals, pharmacists, and researchers.", "Unless specifically exempted by the CSA, these individuals must register with the DEA. Registrants must keep records of all transactions involving controlled substances, maintain detailed inventories of the substances in their possession, and periodically file reports with the DEA, as well as ensure that controlled substances are securely stored and safeguarded. The DEA regulates over 1.5 million registrants. ", "The DEA uses its criminal, civil, and administrative authorities to maintain a closed system of distribution and prevent diversion of drugs, such as prescription opioids, from legitimate purposes. Actions include inspections, order form requirements, education, and establishing quotas for Schedule I and II controlled substances. More severe administrative actions include immediate suspension orders and orders to show cause for registrations. As noted previously, in 2018 the DEA significantly lowered the aggregate production quota for opioids in 2019."], "subsections": []}, {"section_title": "Which DOJ grant programs may be used to address the opioid epidemic?", "paragraphs": ["Discussed below are grant programs that have a direct or possible avenue to address the opioid epidemic. This discussion provides examples of such programs, and should not be considered exhaustive. Many DOJ grant programs have broad purpose areas for which funds can be used. While some focus on broad crime reduction strategies that might include efforts to combat drug-related crime, others\u00e2\u0080\u0094including the selected programs\u00e2\u0080\u0094have purpose areas that are more specifically focused on drug threats. Of note, these programs do not solely address illicit drug supply control; some also address demand as well as other criminal justice issues. They are included because they are administered by DOJ agencies."], "subsections": [{"section_title": "Comprehensive Opioid Abuse Grant Program (COAP)", "paragraphs": ["COAP is a recently created DOJ grant program (administered by BJA) for states, units of local government, and Indian tribes (34 U.S.C. 10701 et seq.). This grant program supports projects primarily relating to opioid abuse, including (1) diversion and alternatives to incarceration projects; (2) collaboration between criminal justice, social service, and substance abuse agencies; (3) overdose outreach projects, including law enforcement training related to overdoses; (4) strategies to support those with a history of opioid misuse, including justice-involved individuals; (5) prescription drug monitoring programs; (6) development of interventions based on a public health and public safety understanding of opioid abuse; and (7) planning and implementation of comprehensive strategies in response to the growing opioid epidemic. ", "The Harold Rogers Prescription Drug Monitoring Program (PDMP) was incorporated into COAP. The Harold Rogers PDMP is a competitive grant program that was created to help law enforcement, regulatory entities, and public health officials collect and analyze data on prescriptions for controlled substances. Law enforcement uses of PDMP data include (but are not limited to) investigations of physicians who prescribe controlled substances for drug dealers or abusers, pharmacists who falsify records in order to sell controlled substances, and people who forge prescriptions."], "subsections": []}, {"section_title": "COPS Anti-Heroin Task Force Program", "paragraphs": ["The Community Oriented Policing Services (COPS) Office's Anti-Heroin Task Force (AHTF) Program provides funding assistance on a competitive basis to state law enforcement agencies to investigate illicit activities related to the trafficking or distribution of heroin or diverted prescription opioids. Funds are distributed to states with high rates of primary treatment admissions for heroin and other opioids. Further, the program focuses its funding on state law enforcement agencies with multi-jurisdictional reach and interdisciplinary team structures\u00e2\u0080\u0094such as task forces."], "subsections": []}, {"section_title": "Drug Courts108", "paragraphs": [], "subsections": [{"section_title": "The Drug Court Discretionary Grant Program", "paragraphs": ["The Drug Court Discretionary Grant program (Drug Courts Program) is meant to enhance drug court services, coordination, and substance abuse treatment and recovery support services. It is a BJA-administered, competitive grant program that provides resources to state, local, and tribal courts and governments to enhance drug court programs for nonviolent substance-abusing offenders. Drug courts are designed to help reduce recidivism and substance abuse among participants and increase an offender's likelihood of successful rehabilitation through early, continuous, and intense judicially supervised treatment; mandatory periodic drug testing; community supervision; appropriate sanctions; and other rehabilitation services.", "The Drug Courts Program is not focused on opioid abusers, but drug-involved offenders, including opioids abusers, may be processed through drug courts."], "subsections": []}, {"section_title": "Veterans Treatment Courts", "paragraphs": ["BJA administers the Veterans Treatment Court Program through the Drug Courts Program using funds specifically appropriated for this purpose. 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 the 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."], "subsections": []}, {"section_title": "Juvenile and Family Drug Treatment Courts", "paragraphs": ["The Office of Juvenile Justice and Delinquency Prevention (OJJDP) supports juvenile and family drug court programs through its Drug Treatment Courts Program. This program supports the implementation or enhancement of state, local, and tribal drug court programs that focus on juveniles and parents with substance abuse issues. One of its specific goals is to help those with substance abuse problems related to opioid abuse or co-occurring mental health disorders who are involved with the court system."], "subsections": []}]}, {"section_title": "The Edward Byrne Memorial Justice Assistance Grant (JAG) Program", "paragraphs": ["Administered by BJA, the JAG program provides funding to state, local, and tribal governments for state and local initiatives, technical assistance, training, personnel, equipment, supplies, contractual support, and criminal justice information systems in eight program purpose areas: (1) law enforcement programs; (2) prosecution and court programs; (3) prevention and education programs; (4) corrections and community corrections programs; (5) drug treatment and enforcement programs; (6) planning, evaluation, and technology improvement programs; (7) crime victim and witness programs (other than compensation); and (8) mental health and related law enforcement and corrections programs, including behavioral programs and crisis intervention teams. Given the breadth of the program, funds could be used for opioid abuse programs, but state and local governments that receive JAG funds are not required to use their funding for this purpose."], "subsections": []}, {"section_title": "Justice and Mental Health Collaboration Program (JMHCP)", "paragraphs": ["Also administered by BJA, the JMHCP supports collaborative criminal justice and mental health systems efforts to assist individuals with mental illnesses or co-occurring mental health and substance abuse disorders who come into contact with the justice system. It encourages early intervention for these individuals; supports training for justice and treatment professionals; and facilitates collaborative support services among justice professionals, treatment and related service providers, and governmental partners. Three types of grants are supported under this program: (1) Collaborative County Approaches to Reducing the Prevalence of Individuals with Mental Disorders in Jail, (2) Planning and Implementation, and (3) Expansion. "], "subsections": []}, {"section_title": "Juvenile Justice Program Grants", "paragraphs": [], "subsections": [{"section_title": "Juvenile Justice and Delinquency Prevention Act (JJDPA) Formula Grant Program", "paragraphs": ["The JJDPA authorizes OJJDP to make formula grants to states that can be used to fund the planning, establishment, operation, coordination, and evaluation of projects for the development of more-effective juvenile delinquency programs and improved juvenile justice systems. Funds provided to the state may be used for a wide array of juvenile justice related programs, such as substance abuse prevention and treatment programs. None of the program purpose areas deal specifically with combating opioid abuse, but they are broad enough that the grants made under this program could be used for this purpose. "], "subsections": []}, {"section_title": "JJDPA Title V Incentive Grants Program", "paragraphs": ["The JJDPA authorizes OJJDP to make discretionary grants to the states that are then transmitted to units of local government in order to carry out delinquency prevention programs for juveniles who have come into contact, or are likely to come into contact, with the juvenile justice system. Purpose areas include (but are not limited to) alcohol and substance abuse prevention services, educational programs, and child and adolescent health (as well as mental health) services. None of the program purpose areas deal specifically with combating opioid abuse, but they are broad enough that they could be used for this purpose."], "subsections": []}, {"section_title": "Opioid Affected Youth Initiative", "paragraphs": ["The Opioid Affected Youth Initiative is a competitive grant program administered by OJJDP that funds state, local, and tribal government efforts to \"develop a data-driven coordinated response to identify and address challenges resulting from opioid abuse that are impacting youth and community safety.\" The program supports recipients in implementing strategies and programs to identify areas of concern, collect and interpret data to help develop youth strategies and programming, and implement services to assist children, youth, and families affected by opioid abuse."], "subsections": []}]}, {"section_title": "Residential Substance Abuse Treatment (RSAT) for State Prisoners Program", "paragraphs": ["The RSAT Program is a formula grant program administered by BJA that supports state, local, and tribal governments in developing and implementing substance abuse treatment programs in correctional and detention facilities. Funds may also be used to support reintegration services for offenders as they reenter the community after a period of incarceration. Beginning in FY2018, BJA requires potential grantees to explain \"how funded programs will address the addition of opioid abuse reduction treatment and services.\""], "subsections": []}, {"section_title": "Tribal Resources Grant Program", "paragraphs": ["The COPS Office administers the Tribal Resources Grant Program. It generally supports tribal law enforcement needs, and specifically aims to enhance tribal law enforcement's capacity to engage in anti-opioid activities, among other objectives."], "subsections": []}]}, {"section_title": "Where can DOJ opioid-related grant funding information be found?", "paragraphs": ["For state-specific information on grants and funding from OJP, see the OJP Award Data web page and search by location or by grant solicitation. In FY2018, the Department of Justice released a document entitled, Fact Sheet: Justice Department is Awarding Almost $320 Million to Combat Opioid Crisis , which provides a list of FY2018 grantees."], "subsections": []}]}, {"section_title": "Opioids and Foreign Supply Control Policy", "paragraphs": [], "subsections": [{"section_title": "How does the United States respond to international illicit opioid trafficking?", "paragraphs": ["The United States has taken a multipronged foreign policy approach to addressing foreign flows of illicit opioids destined for the United States. To date, this approach has included multilateral diplomacy, bilateral efforts, and unilateral action. ", "On the multilateral front, the U.S. government, primarily working through the U.S. Department of State, engages international organizations and entities involved in addressing drug control issues, including opioids. This includes diplomatic engagement with United Nations (U.N.) entities such as the Commission on Narcotic Drugs (CND), the primary U.N. counternarcotics policy decisionmaking body; the International Narcotics Control Board (INCB), which monitors how member states implement treaty commitments related to drug control; and the U.N. Office of Drugs and Crime (UNODC), mandated to provide technical cooperation and research and analytical projects that support member states' implementation of counternarcotics policies. The United States also addresses opioid trafficking through the Organization of American States' (OAS') Inter-American Drug Abuse Control Commission (CICAD). Through such organizations, the United States supports efforts to promote cross-border information sharing. ", "One objective of U.S. efforts at the U.N. is to accelerate the rate at which new drugs and related precursor chemicals are incorporated into the U.N. international drug control regime. For example, U.S. diplomats advocated for the international control of two of the key chemical precursors used in the production of fentanyl: N-phenethyl-4-piperidone (NPP) and 4-anilino-N-phenethyl-4-piperidone (ANPP). The CND subsequently added NPP and ANPP to the U.N.'s list of drugs and chemicals under international control, effective October 2017.", "Until recently, the United States had also engaged the Universal Postal Union (UPU) on the issue of opioid trafficking through international mail. Through the UPU, the United States had, for example, supported the exchange of advance electronic data (AED) for international mail items specifically to improve global efforts to detect and interdict synthetic drugs shipped through the mail. In October 2018, however, the Trump Administration announced that it would begin a one-year withdrawal process from the UPU, potentially affecting how the United States and the UPU engage on opioid matters. ", "Bilateral cooperation on opioids has included focused efforts in China, Mexico, and Canada, among other countries. Such engagement has variously taken the form of structured diplomatic dialogues, bilateral law enforcement cooperation, and foreign assistance programming. With respect to China, bilateral cooperation on counternarcotics matters is a top diplomatic priority for the United States.", "As with China, U.S. officials pursue bilateral cooperation with Mexico on counternarcotics matters through meetings, including through the cabinet-level U.S.-Mexico Strategic Dialogue on Disrupting Transnational Criminal Organizations, sub-cabinet level U.S.-Mexico Security Cooperation Group, U.S.-Mexico Bilateral Drug Policy Working Group, and National Fentanyl Conference for Forensic Chemists. Trilaterally, the United States, Mexico, and Canada have met several times through the North American Drug Dialogue to address heroin and fentanyl issues. In addition to structured dialogues, U.S. federal law enforcement agencies also engage regularly with their counterparts on ongoing investigations through their representatives based at U.S. embassies and consulates abroad; formal law enforcement cooperation is also facilitated through mutual legal assistance mechanisms.", "The United States also funds and conducts programming with China and Mexico to address opioids. In China, INL funding supports drug-related information exchanges, training for Chinese counterparts on specialized topics related to synthetic opioids, and efforts to promote effective drug demand reduction. INL also funds a Resident Legal Advisor, a DOJ prosecutor who is based at the U.S. Embassy in Beijing; a key project has been to conduct outreach to Chinese counterparts involved in amending China's legal and regulatory framework to place the entire fentanyl class of substances under drug control. In Mexico, current efforts to address illicit opioids fit within a broader context of longstanding U.S.-Mexico cooperation to disrupt drug production, dismantle drug distribution networks, prosecute drug traffickers, and deny transnational criminal organizations access to illicit revenue. In such efforts, U.S. support has included programming to address illicit opium poppy cultivation and eradication, drug production and trafficking, border security, and criminal justice judicial institution reform. ", "In addition, the U.S. government has taken domestic action to address foreign sources and traffickers of opioids through the U.S. criminal justice system and through the application of financial sanctions against specially designated foreign nationals. Recent DOJ indictments have involved Chinese nationals allegedly involved in fentanyl production. Further targeting one of the Chinese nationals under indictment, Jian Zhang, the U.S. Department of the Treasury designated Zhang, four of his associates, and an entity used as a front for the trafficking of fentanyl and fentanyl analogues for sanction, pursuant to the Foreign Narcotics Kingpin Designation Act (Kingpin Act). The Treasury and DOJ have taken similar action against Mexican individuals and entities involved in trafficking heroin and fentanyl to the United States."], "subsections": []}, {"section_title": "What has Mexico done to interrupt the flow of illicit opioids into the United States?", "paragraphs": ["The government of Mexico cooperates with the United States on counternarcotics matters, including opioid supply reduction. The government eradicates opium poppy; tracks, seizes, and interdicts opioids and precursor chemicals; dismantles clandestine drug laboratories; and carries out operations against transnational organized crime groups engaged in opioid trafficking and other related crimes. The Mexican government also participates in international efforts to control precursor chemicals, including fentanyl precursors NPP and ANPP. ", "In 2018, the government of Mexico increased its budget for public security and justice (including antidrug efforts) by 6.2% as compared to 2017, and formed an Office of National Drug Policy within the Attorney General's Office to coordinate federal drug policy. Inaugurated to a six-year term in December 2018, President Andr\u00c3\u00a9s Manuel L\u00c3\u00b3pez Obrador has continued cooperation on drug control with the United States. Observers maintain that both governments could find a common interest in combating fentanyl smuggling, but predict that the L\u00c3\u00b3pez Obrador government's proposal to regulate opium cultivation for medicinal purposes could cause friction in bilateral relations. ", "The Mexican military leads efforts to eradicate illicit drug crops in Mexico, including a reported 29,692 hectares of opium poppy in 2017. Mexican authorities reportedly seized approximately 766.9 kilograms of opium gum in 2017, up from 235 kilograms in 2016. The United States has provided specialized training and equipment to Mexican authorities that contributed to increased fentanyl seizures in 2017 and 2018. Various Mexican agencies have identified and seized fentanyl and fentanyl-laced counterfeit pills with U.S.-funded nonintrusive inspection equipment and canine teams. In September 2018, Mexican law enforcement discovered a production mill used to produce carfentanil (an analogue 100 times more potent than fentanyl)."], "subsections": []}, {"section_title": "What has China done to interrupt the flow of illicit opioids into the United States?", "paragraphs": ["As discussed, China is a primary source of illicit fentanyl destined for the United States. As of December 1, 2018, China had imposed controls on 170 new psychoactive substances, including 25 fentanyl analogues. It had also imposed controls on two fentanyl precursor chemicals. According to the DEA, U.S. seizure data show that China's implementation of controls on fentanyl analogues has had \"an immediate effect on the availability of these drugs in the United States.\" President Xi Jinping said China was willing to go further and control the entire class of fentanyl substances, a move supported by President Trump.", "In April 2019, three Chinese government agencies jointly announced that effective May 1, 2019, all fentanyl-related substances will be added to China's \"Supplementary List of Controlled Narcotic Drugs and Psychotropic Substances with Non-Medical Use.\" Li Yuejin, Deputy Director of China's National Narcotics Control Commission, outlined a series of follow-on steps that he said China would take. He said China would issue \"guidance on applicable laws for handling criminal cases related to fentanyl substances\" and protocols for filing and prosecuting similar cases. Other actions he said China would take include the following:", "investigating suspected illicit fentanyl manufacturing bases; scrubbing drug-related content from the Internet; \"cut[ting] off online communication and transaction channels for criminals\"; pressuring parcel delivery services to require that senders register their real names; stepping up inspections of international parcels; setting up special teams to conduct criminal investigations focused on manufacturing and trafficking of fentanyl substances and other drugs; strengthening information-sharing and case cooperation with \"relevant countries,\" including the United States, with the goal of dismantling transnational drug smuggling networks; and stepping up development of technology for examining and identifying controlled substances.", "The DEA welcomed the Chinese government's announcement, saying, \"[t]his significant development will eliminate Chinese drug traffickers' ability to alter fentanyl compounds to get around the law.\" ONDCP noted that China's scheduling decision does not cover all the precursor chemicals used to make fentanyl substances, meaning that they might continue to flow to Mexico where traffickers use them to make fentanyl destined for the United States.", "China's postal service, China Post, has an existing agreement with the USPS to provide advanced electronic data (AED) on parcels mailed to the United States. China's government has also cracked down on illicit fentanyl rings in China and assisted DOJ investigations of Chinese nationals suspected of illicit fentanyl manufacturing and distributing."], "subsections": []}]}, {"section_title": "Recent Congressional Action on the Opioid Epidemic", "paragraphs": [], "subsections": [{"section_title": "What federal laws have been enacted recently that address the opioid epidemic?", "paragraphs": ["Congress largely has taken a public health approach (i.e., focusing on prevention and treatment) toward addressing the nation's opioid crisis, but recently enacted laws have addressed supply control and other criminal justice issues as well. Three major laws were enacted in the 114 th and 115 th Congresses that address the opioid epidemic\u00e2\u0080\u0094the Comprehensive Addiction and Recovery Act (CARA, P.L. 114-198 ); the 21 st Century Cures Act (Cures Act; P.L. 114-255 ); and the SUPPORT for Patients and Communities Act (SUPPORT Act; P.L. 115-271 ). CARA focused primarily on opioids but also addressed broader drug abuse issues. The Cures Act authorized state opioid grants (in Division A) and included more general substance abuse provisions (in Division B) as part of a larger effort to address health research and treatment. The SUPPORT Act broadly addressed substance use disorder prevention and treatment as well as diversion control through extensive provisions involving law enforcement, public health, and health care financing and coverage. Further, Congress and the Administration provided funds to specifically address opioid abuse in FY2017-FY2019 appropriations."], "subsections": []}, {"section_title": "How much FY2019 funding has Congress provided DHS, DOJ, and ONDCP to address the opioid epidemic?", "paragraphs": ["Many questions surround the amount of opioid funding appropriated each year. The Consolidated Appropriations Act, 2019 ( P.L. 116-6 ), provided $347.0 million for \"comprehensive opioid abuse reduction activities, including as authorized by CARA, and for \u00e2\u0080\u00a6 programs, which shall address opioid abuse reduction consistent with underlying program authorities\" (which includes many of the programs cited above in \" Which DOJ grant programs may be used to address the opioid epidemic? \"). In FY2019, the DEA received an increase of $77.8 million over FY2018 funding \"to help fight drug trafficking, including heroin and fentanyl.\" The additional DEA funding will also go toward the addition of \"at least four new heroin enforcement teams and DEA 360 Strategy programming.\"", "Other opioid-specific funding in FY2019 DOJ, DHS, and ONDCP appropriations includes ", "$9.0 million for the Opioid-Affected Youth Initiative; $27.0 million for the COPS Program for improving tribal law enforcement, including anti-opioid activities among other purposes (the Tribal Resources Grant Program); $32.0 million for anti-heroin task forces (composed of state law enforcement agencies) in areas with high rates of opioid treatment admissions to be used for counter-opioid drug enforcement; $24.4 million for CBP for laboratory personnel, port of entry technology, canine personnel, and support staff for opioid detection; $44.0 million for Homeland Security Investigations (HSI) for additional personnel (criminal investigators, special agents, intelligence analysts, and support personnel) for domestic and international opioid/fentanyl-related investigations; $8.5 million for DHS research and development related to opioids/fentanyl; and $3.0 million for ONDCP for Section 103 of CARA - Community-based Coalition Enhancement Grants to Address Local Drug Crises."], "subsections": []}, {"section_title": "Is there an estimate for how much DOJ and other departments spend on the opioid epidemic?", "paragraphs": ["It is problematic, for many reasons, to identify and sum opioid funding. The amounts listed in the section above represent instances where Congress provided opioid-specific funding for agencies and programs within DOJ, DHS, and ONDCP only. It does not include funding for some broader drug programs, such as HIDTA, unless there was a specific appropriation for opioid-related activity. Some programs that can be used for opioid-related purposes\u00e2\u0080\u0094such as the JAG program, which is used for wide-ranging criminal justice purpose areas\u00e2\u0080\u0094are not included in the list. For some programs for which Congress specified opioid-related purposes, the amount appropriated for the program is not necessarily, and often is not, entirely for opioid-related issues."], "subsections": []}]}, {"section_title": "The Opioid Epidemic and State Criminal Justice Policies", "paragraphs": [], "subsections": [{"section_title": "How have different states adapted their justice systems to deal with the opioid crisis?", "paragraphs": ["Across the country, states have adapted elements of their criminal justice responses\u00e2\u0080\u0094including police, court, and correctional responses \u00e2\u0080\u0094in a variety of ways due to the opioid epidemic. While this section does not provide a state-by-state analysis, it highlights several examples of how states' justice systems have responded to the opioid crisis. These examples were selected because they are some of the more common state policy approaches to confronting the opioid epidemic.", "Many states are increasing law enforcement officer access to naloxone, an opioid overdose reversal drug, in an effort to reduce the number of overdose deaths. Officers receive training on how to identify an opioid overdose and administer naloxone, and they carry the drug so they can respond immediately and effectively to an overdose. As of November 2018, over 2,400 police departments in 42 states reported that they had officers that carry naloxone \u00e2\u0080\u0094this figure more than doubled over two years. In addition, most states that have expanded access to naloxone have also provided immunity to those who possess, dispense, or administer the drug. Generally, immunity entails legal protections (for civilians) from arrest or prosecution and/or civil lawsuits for those who prescribe or dispense naloxone in good faith.", "State and local law enforcement coordinate special operations and task forces to combat fentanyl and heroin trafficking in their jurisdictions. In addition to participation in federal initiatives, state and local police and district attorneys lead operations to dismantle trafficking networks in areas plagued by high numbers of opioid overdoses. For example, in southeast Massachusetts the Bristol County District Attorney recently announced the conclusion of a year-long investigation of a \"highly organized and complex\" fentanyl network that resulted in 11 arrests. This investigation was led by the Bristol Country District Attorney's office and involved several local police agencies, the Massachusetts State Police, and the U.S. Department of Homeland Security.", "Another criminal justice adaptation is the enactment of what are known as \"Good Samaritan\" laws to encourage individuals to seek medical attention (for themselves or others) related to an overdose without fear of arrest or prosecution. In general, these laws prevent criminal prosecution for illegal possession of a controlled substance under specified circumstances. While the laws vary by state as to what offenses and violations are covered, as of June 2017, 40 states and the District of Columbia have some form of Good Samaritan overdose immunity law.", "Most states have drug diversion or drug court programs for criminal defendants and offenders with substance abuse issues, including opioid abuse. Some states view drug courts as a tool to address rising opioid abuse and have moved to expand drug court options in the wake of the opioid epidemic. Over the last several years, the National Governors Association has sponsored various activities to assist states in combatting the opioid epidemic, including learning labs to develop best practices for dealing with opioid abuse treatment for justice-involved populations\u00e2\u0080\u0094such as the expansion of opioid addiction treatment in drug courts. In November 2017, the President's Commission on Combating Drug Addiction and the Opioid Crisis stated that DOJ should urge states to establish drug courts in every county.", "In recent years, several states have also enacted legislation increasing access to medication-assisted treatment (MAT) for drug-addicted offenders who are incarcerated or have recently been released. In March 2019, SAMHSA released guidance to state governments on increasing the availability of MAT in criminal justice settings."], "subsections": []}]}]}}
{"id": "R45939", "title": "Cockpit Automation, Flight Systems Complexity, and Aircraft Certification: Background and Issues for Congress", "released_date": "2019-10-03T00:00:00", "summary": ["The increasing complexity and automation of flight control systems pose a challenge to federal policy regarding aircraft certification and pilot training. Despite significant commercial aviation safety improvements over the past two decades, flight control automation and aircraft complexity have been cited as contributing factors in a number of major airline accidents, including two high-profile crashes overseas involving the recently introduced Boeing 737 Max variant in 2018 and 2019. These crashes have directed attention to Federal Aviation Administration (FAA) oversight of aircraft type certification and pilot training practices for transport category aircraft, particularly as they pertain to complex automated flight control systems. As aircraft systems have evolved over the past three decades to incorporate new technologies, Congress has mandated FAA to streamline certification processes, with the primary motivation being to facilitate the development of new safety-enhancing technologies.", "Modern commercial aircraft rely on \"fly-by-wire\" flight control technologies, under which pilots' flight control inputs are sent to computers rather than through direct mechanical linkages to flight control systems. The fly-by-wire software contains flight control laws and logic that, in addition to optimizing performance efficiency, protect the aircraft from commanded actions that could put the airplane in an unsafe state. Automated flight control systems have largely been viewed as having a positive effect on safety, and accident rates have improved considerably over the past two decades. However, the increasing complexity of automated flight systems has sometimes caused confusion and uncertainty, contributing to improper pilot actions during critical phases of flight and in some cases leading pilots to unintentionally place an aircraft in an unsafe condition. Besides designing these systems in a manner that minimizes pilot errors and the consequences of those errors, aircraft designers and operators face challenges regarding maintaining piloting skills for flight crews to be able to take over and manually fly the aircraft safely if critical systems fail. They also face challenges regarding documentation and pilot training effectiveness in building accurate mental models of how these complex systems operate. The primary goals of ongoing efforts to address these challenges are to enhance pilot situation awareness when using automation and reduce the likelihood of mode errors and confusion, while at the same time not overburdening pilots with intricate systems knowledge beyond what is necessary.", "In the ongoing investigations of two Boeing 737 Max crashes, Lion Air flight 610 and Ethiopian Airlines flight 302, concerns have been raised about the design of an automated feature called the Maneuvering Characteristics Augmentation System (MCAS) and its reliance on a single angle-of-attack sensor even though the aircraft is equipped with two such sensors. These concerns led to the worldwide grounding of all Boeing 737 Max aircraft until the MCAS safety concerns can be resolved, significantly impacting both U.S. and foreign airlines that operate the aircraft. These recent aviation accidents have prompted reviews of the manner in which modern transport category aircraft are certified by FAA and its foreign counterparts, and in particular, the roles of regulators and manufacturers in the certification process.", "The challenges of certifying increasingly complex aircraft are largely being met by delegating more of FAA's certification functions to aircraft designers and manufacturers. This raises potential conflicts between safety and quality assurance on the one hand and competitive pressures to market and deliver aircraft on the other. Under Organization Designation Authorization (ODA), FAA can designate companies to carry out delegated certification functions on its behalf. Congress has supported the ODA framework and in recent FAA reauthorization legislation ( P.L. 115-254 ) directed FAA to establish performance objectives and metrics for aircraft certification that both streamline the certification process and increase transparency and accountability for both FAA and the aviation industry. However, the Boeing 737 Max grounding has prompted reviews of the certification process to identify potential gaps in oversight. Foreign authorities have also put pressure on FAA to review its certification delegation practices, although similar approaches are used in Europe. The inquiries have led to broader discussions about aircraft certification practices and also about global training, qualification, and currency standards for airline pilots."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Background", "paragraphs": ["The increasing complexity and automation of flight control systems pose a challenge to federal policy regarding aircraft certification and pilot training. Over the past 30 years, pilot confusion in the face of unintended or unanticipated behaviors of cockpit automation has been implicated in a number of accidents and safety incidents. High-profile accidents overseas in 2018 and 2019 led to the grounding of the worldwide fleet of Boeing 737 Max aircraft and prompted investigations and policy inquiries regarding the design and certification of commercial airplanes. These inquiries have focused on three key policy issues:", "1. the adequacy of standards and regulations pertaining to the design of cockpit interfaces between pilots and aircraft systems and to pilot training; 2. appropriate policies, standards, and regulations regarding the safety design of aircraft systems and sensors to ensure adequate fault and error detection, fault tolerance, and redundancy; and 3. the certification process for new aircraft technologies, and the roles of the Federal Aviation Administration (FAA) and other national regulators in certification. ", "Modern jet airliners rely on numerous automated features to assist and alert pilots as well as to prevent aircraft from getting into precarious and potentially dangerous situations. In many cases, pilots' lack of understanding or familiarity with the design and operation of these automated features has led to inappropriate use of automation or inappropriate responses when cockpit automation has gone awry. In other cases, latent flaws and unintended consequences of highly complex automated flight control systems designs have been implicated in commercial airplane accidents. The complexity of these automated systems has also raised questions about the manner in which new aircraft flight control system designs are evaluated and certified.", "Two crashes involving the recently introduced Boeing 737 Max airplane prompted the grounding of the worldwide fleet of that model. The ensuing investigations into the process for certifying the Boeing 737 Max have triggered broader discussions about aircraft certification practices in general and also about global training, qualification, and flight currency standards for pilots flying commercial airplanes. The focus on aviation safety surrounding the Boeing 737 Max grounding has highlighted a number of long-standing challenges associated with systems design, failure and risk analysis, human-interface design of automated cockpits, aircraft-specific pilot training, and oversight of the certification processes under which these challenges are addressed in the design of new aircraft. These subjects are now the focus of a global policy debate. "], "subsections": [{"section_title": "Commercial Airline Safety Record", "paragraphs": ["The two 737 Max crashes notwithstanding, the safety record of commercial airlines operating transport category airplanes is unsurpassed among modern transportation systems. Worldwide, the accident rate among scheduled commercial passenger operations for the 10-year period from 2008 through 2017 was 0.44 accidents per 100,000 flight departures, or roughly one accident in every 227,272 departures. The fatal accident rate was 0.16 per 100,000 departures, or roughly one fatal accident for every 625,000 departures. In Europe, Canada, and the United States, accident rates are even lower. "], "subsections": []}, {"section_title": "1996 White House Commission", "paragraphs": ["The recent safety record of U.S. air carriers demonstrates a marked improvement from the decade of the 1990s, which saw a spate of U.S. air carrier accidents, including several fatal crashes (see Appendix A ). In 1996, the crash of Valujet flight 592 raised congressional concerns over airline safety and FAA oversight of air carriers. In response, the Federal Aviation Reauthorization Act of 1996 ( P.L. 106-264 ) eliminated FAA's role in promoting civil aeronautics and air commerce and mandated safety as its top priority. The legislation also established a framework of legal protections for voluntary safety reporting programs designed to encourage individuals to report safety concerns with protection from retribution. ", "Also in 1996, following the crash of TWA flight 800, a Boeing 747 en route from New York to Paris, President Clinton established the White House Commission on Aviation Safety and Security. The commission was chaired by Vice President Gore and is commonly referred to as the Gore Commission. The commission urged policymakers to make aviation safety, as well as aviation security, a national priority. In particular, it set a goal of \"reducing the rate of accidents by a factor of five within a decade,\" and advocated for \"a re-engineering of the FAA's regulatory and certification programs to achieve that goal.\" The plan included recommendations for", "establishing standards for continuous safety improvement and targeting regulatory resources based on performance against those standards; developing vigorous certification standards, and the development of additional certification tools and processes to encourage the introduction of new technologies; establishing performance-based regulations rather than dictating procedures in order to \"break the regulatory logjam\"; emphasizing human factors and training to \"address issues relating to human interaction with changing technologies\"; developing standard databases of safety information that can be shared openly while protecting trade secrets and protecting industry employees who voluntarily disclose information about safety violations; and developing better quantitative models and analytic techniques to inform management decisionmaking. ", "Of particular note, the Gore Commission emphasized the streamlining of certification processes and regulations to accelerate the adoption of new aircraft technologies in the hope that this would bring operational safety improvements. "], "subsections": []}, {"section_title": "Safety Improvements over the Past Two Decades", "paragraphs": ["Commercial airline safety in the United States improved following the Gore Commission report, despite some major commercial airline accidents in the late 1990s and early 2000s. Fatal accidents involving major U.S. passenger airlines during this period included the June 1, 1999, crash of American Airlines at Little Rock, AR; the Alaska Airlines crash off the coast of California on January 31, 2000; and the crash of American Airlines flight 587 near JFK International Airport in New York on November 12, 2001 . ", "Commercial aviation safety data since 2002 show a marked improvement compared to the 1990s, particularly among major U.S. airlines ( Figure 1 ). In more recent years, attention has shifted to the safety of the regional airlines that operate almost half of all scheduled domestic flights in the United States. In the 2000s, there were six regional airline accidents involving passenger fatalities, resulting in a total of 149 deaths , in addition to several crashes not involving passenger fatalities. Four of the six regional accidents resulting in passenger fatalities during the 2000s were attributed to human factors affecting flight crews, including pilots' failure to adhere to proper procedures, deficiencies in training, and fatigue.", "Following the crash of a regional turboprop near Buffalo, NY, in February 2009 that killed all 45 on board, the Airline Safety and Federal Aviation Administration Extension Act of 2010 ( P.L. 111-216 ) was enacted on August 1, 2010. That legislation mandated revised regulations generally requiring pilots to accumulate 1,500 hours of total flight time before being eligible to be a first officer aboard a commercial airliner in the United States. It also required pilots to accumulate an additional 1,000 hours of flight time in commercial airline operations before becoming a captain and serving as pilot in command. The legislation directed FAA to order improvements to airline training programs, including formal mentoring, leadership, and professional development programs for pilots; institute reforms to flight time and rest rules for pilots; and require that airlines establish formal approaches to safety management. ", "Following the February 2009 crash, more than nine years passed before U.S. air carriers suffered another passenger fatality. On April 17, 2018, a passenger was killed when uncontained engine failure on a Southwest Airlines Boeing 737 damaged the fuselage and broke a cabin window, causing a rapid depressurization of the aircraft cabin. Other incidents resulting in serious passenger injuries aboard U.S. air carrier flights in recent years have most often been linked to inflight turbulence. The small number of domestic air carrier accidents in the United States over the past decade has made it difficult for safety experts to identify meaningful accident trends without examining the safety performance of aviation systems in other countries. Low accident rates have also prompted researchers to look beyond accident data to trends in safety incidents and reported unsafe practices to identify and remediate safety deficiencies. "], "subsections": []}, {"section_title": "Worldwide Aviation Safety Trends", "paragraphs": ["Worldwide aviation safety metrics point to continual improvements in commercial flight safety, corresponding to the trend in the United States. Worldwide, fatal accident rates for commercial airliners have dropped from about 4.2 per million flights in 1977 to less than 0.4 per million flights in 2017. Between 2014 and 2018, the fatal accident rate globally was 0.21 per million flights, but it was considerably lower in North America, Europe, and North Asia ( Table 1 ).", "While airline safety has shown overall improvements over time, safety indicators in certain regions remain a considerable concern to some. In particular, both the International Civil Aviation Organization (ICAO), a United Nations agency, and the International Air Transport Association (IATA), an industry group, have expressed concern about safety in Africa and the Asia-Pacific region. IATA found that, between 2014 and 2018, both the overall accident and the fatal accident rates for airlines in Africa were more than five times the worldwide average at 6.04 accidents and 1.03 fatal accidents per million flights. Between 2014 and 2018, the Asia-Pacific region stood out as having the highest number of airline accidents and the highest number of accident-related fatalities among world regions, accounting for 77 accidents and 748 fatalities over this period. While the region includes countries like Australia and New Zealand that have safety records on par with North America and Europe, it also includes the Philippines, Indonesia, and other countries in Southeast Asia that lag on aviation safety performance. In both Africa and the Asia-Pacific region, lax regulatory oversight and poor flight crew performance have been identified as primary contributors to comparatively high accident rates. ", "Worldwide commercial airline safety has come under scrutiny following two high-profile crashes overseas involving the recently introduced Boeing 737 Max variant in 2018 and 2019. These accidents prompted the grounding of the entire worldwide fleet of 737 Max aircraft. Because FAA has the principal authority for certifying this aircraft, the crashes drew attention to FAA's certification process for that aircraft and raised broader questions about aircraft type certification practices for transport category aircraft. "], "subsections": []}]}, {"section_title": "Aircraft Complexity and Systems Safety", "paragraphs": ["Many aviation safety experts attribute the safety advancements in commercial aviation over the past three decades, at least in part, to improvements in aircraft systems technology and flight deck automation. Paradoxically, these same factors have been implicated as causal or contributing factors in several aviation accidents and incidents. ", "Modern aircraft flight systems incorporate advanced autopilot systems as well as traditional flight controls that interface with computers instead of directly actuating flight control surfaces, such as the rudders, ailerons, and elevators that control an airplane's movement in flight (see Figure 2 ). ", "Flight data computers aboard the aircraft continuously analyze pilot inputs, aircraft states, and environmental factors, like winds, to maneuver the aircraft safely and efficiently. When the autopilot is engaged, flight control computers will command inputs to the flight control surfaces and aircraft engines to achieve the desired inputs in a manner that is optimized for efficiency. When pilots are flying manually, displays such as a flight director provide visual aids to pilots to achieve desired states of flight (e.g., a particular altitude, airspeed, or heading) most efficiently. The flight computers also continuously monitor pilot or autopilot inputs, aircraft states, and environmental states (e.g., winds) to ensure that the airplane continues to fly safely. ", "These systems and displays are designed to enhance safety by improving pilot situation awareness, reducing pilot workload, and monitoring aircraft and aircraft system states to prevent unsafe operations such as flying at too high of a pitch angle or at too steep of a bank. However, the complexity of the modern cockpit can present considerable challenges to pilots, potentially leading to confusion and errors, particularly in high-workload situations. If these errors go undetected or if they are compounded by other mistakes or other situational factors, they can potentially lead to a serious incident or accident under rare and unusual circumstances.", "Worldwide, the most common causes of commercial jet accidents are (1) loss of control in flight and (2) controlled flight into terrain, two categories that often involve incomplete pilot situation awareness, poor judgment, and human errors in interaction with complex aircraft systems. The third most common type of accident, runway excursions (i.e., aircraft running off the end or side of a runway), also typically can be traced back to pilot performance and pilot understanding of aircraft performance, environmental factors, and flight control systems. Pilots require advanced training to understand the various features, modes, capabilities, and limitations of advanced flight control systems under various flight conditions."], "subsections": [{"section_title": "Fly-by-Wire Systems", "paragraphs": ["Airbus was the first manufacturer to incorporate computer interfaces between pilots and flight controls, commonly known as fly-by-wire technology, into commercial transport airplanes with the introduction of the A320, which entered service in 1988. In a fly-by-wire system, various sensors provide data to the flight control computers, which they, in turn, assess and analyze. The computers are linked to actuators, such as servo motors, that operate the flight controls and also to displays that provide pilots with information and alerts about aircraft performance and aircraft system states. Fly-by-wire technology offers a number of advantages over flight control systems operated using direct mechanical linkages between cockpit controls and the aircraft's control surfaces. First, the reduction in the number of mechanical parts and linkages can reduce aircraft weight considerably. Additionally, the systems can incorporate additional redundancies without adding as much weight as would be required with redundant mechanical systems. "], "subsections": [{"section_title": "Redundancy", "paragraphs": ["Redundancy is achieved in a fly-by-wire system through multiple sensors and multiple flight data computers that can cross-check each other. Typically, triple redundancy is built into fly-by-wire flight control systems: three flight control computers continuously monitor pilot inputs and aircraft sensor data and cross-check for any anomalies in information or in computations based on inputs. "], "subsections": []}, {"section_title": "Flight Control Laws", "paragraphs": ["The flight data computers also incorporate what engineers refer to as \"flight control laws,\" logic embedded in the firmware and software that govern flight dynamics. These flight control laws can be designed to simplify the training required for a pilot to transition between different variants of an aircraft model and even different aircraft models. This is achieved by programming the flight control systems of an updated model of aircraft to perform similarly to those of existing aircraft despite differences in weight, power, and other factors that affect the aerodynamic performance. Minimizing handling differences between aircraft and designing cockpits of different models to have a similar look and feel can save airlines considerable time and money in training pilots to fly new aircraft. For this reason, manufacturers often seek to design aircraft to minimize the training requirements to transition to the new aircraft, known in the industry as \"differences training.\" Another often-cited advantage of fly-by-wire system flight control laws is the capability to protect the aircraft from operating outside a defined envelope of parameters (such as limits with respect to pitch, bank, and airspeed) that define the boundaries of safe flight operation. "], "subsections": []}, {"section_title": "Flight Envelope Protection", "paragraphs": ["An airplane's flight envelope refers to its performance limitations and design capabilities with respect to aircraft attitude, airspeed, and aerodynamic loads. In fly-by-wire aircraft, logic is built into the flight control computer systems to inhibit maneuvers that might place the aircraft outside this envelope of safe operational conditions. The flight envelope is multidimensional and is affected by factors such as aircraft weight, center-of-gravity, airspeed, altitude, and winds. It also depends on the aircraft's configuration (e.g., whether it is configured for takeoff, for landing, or for cruise flight, and the position of aircraft flaps and slats). For this reason, the flight envelope protection logic involves continuous monitoring of the state of the aircraft with respect to its flight envelope. ", "Flight control computers continuously receive and analyze data from airspeed sensors that take inputs from pitot tubes and static ports, angle-of-attack indicators that take data from vanes attached to the side of the fuselage, inertial units, gyroscopes, and accelerometers that sense aircraft attitude along all three axes (pitch, roll, and yaw) and acceleration along these axes, and, of course, altimeters and temperature sensors. Sensors also monitor engine thrust, fuel flow, and various other engine performance parameters, as well as aircraft configuration, including the position of various aircraft control surfaces like ailerons, vertical stabilizers, trim tabs, and wing flaps and slats. Every input made by the pilots when the airplane is being flown manually is also captured by sensors linked to the flight control computers. ", "The manner in which the flight control automation responds to information from the various aircraft sensors depends, in part, on the manner in which the aircraft is being flown. If the airplane is being operated on autopilot and with autothrottles engaged, then the computers will largely operate directly to control the airplane to achieve objectives that the pilots have entered on a control panel, including things such as desired altitude, desired heading or course, airspeed, and climb or descent rates. If, on the other hand, pilots are operating the flight controls manually, the computers will provide them with information to guide maneuvers, and the flight envelope protections will override unsafe pilot actions such as commanding too much pitch up or too steep of a bank. ", "Under normal conditions, these flight envelope protections will limit pilots' actions. However, in some situations, the computers may disable some of these protections by switching the flight control systems to what are referred to as alternate or secondary laws, direct laws, and mechanical backup modes. In these alternative states there are fewer flight envelope protections, and the pilots have progressively more direct control over the airplane. Pilot understanding of these various flight envelope protections and, particularly, awareness of how flight control systems behave in the various modes has been a critical safety consideration in the design of fly-by-wire systems and highly automated cockpits. "], "subsections": []}]}, {"section_title": "Impact of Cockpit Automation on Aviation Safety", "paragraphs": ["The implications of modern flight deck automated systems design have been an issue of concern for more than two decades. In 1996, a human factors team convened by FAA released a comprehensive study of interfaces between flight crews and highly automated aircraft systems with a focus on interfaces affecting flight path management. ", "The study was prompted by the April 26, 1994, crash of a China Airlines Airbus A300-600 at Nagoya, Japan, that stalled while attempting to perform a go-around during its landing approach, killing 264 of the 271 occupants. The event was triggered by the inadvertent activation of an autothrottle takeoff/go-around button, located on the throttle lever, during the approach to landing, and the flight crew's apparent lack of understanding as to how to disengage and override the autothrottle. The plane's autothrottle software had not been upgraded to disengage if certain manual inputs, including forward yoke movement, were made. This differed from the behavior of a training simulator that the accident pilot practiced on as well as the Boeing 747 that he had spent most of his career flying. ", "The FAA human factors team found that pilots often lacked adequate understanding of automated systems and were often surprised by the behavior of automated flight control features. Moreover, flight crew situation awareness suffered from a lack of complete understanding of what modes or states automated features were in and the behavior of automated features in these states. It also was affected by poor understanding of current status regarding flight path and aircraft attitude, terrain clearance, and airspeed. The team made recommendations regarding design and certification of automated systems; pilot training; flight crew situation awareness, communication, and coordination; and ways to encourage and measure safety enhancements. ", "The work prompted FAA to revise its certification requirements for flight guidance systems in 2006. Specifically, under 14 C.F.R. \u00c2\u00a725.1329, the design must incorporate quick disengagement controls for the autopilot and autothrust functions, and the effects of disengaging automatic features must be minor. Similarly, sensors or mode selections may not cause anything beyond a minor transient change to the aircraft's flight path under normal conditions. Automated flight guidance systems must also provide protections to avoid unsafe speeds or pitch or bank attitudes, and under no circumstances should the systems be capable of executing maneuvers that would produce hazardous forces or loads on the airplane. The regulations also require that controls be clearly labeled and designed to minimize flight crew errors and confusion. Additionally, flight crews must be alerted when automated flight guidance features disengage, and autopilot systems must not create potential hazards when overridden by manual flight control inputs. ", "Despite the changes made to address human factors issues in flight guidance system design, the interface between pilots and automated flight guidance systems remains at the crux of commercial aviation safety. This issue has been highlighted in several high-profile international aviation accidents that have occurred over the past decade. "], "subsections": [{"section_title": "Air France Flight 447", "paragraphs": ["Air France flight 447, an Airbus A330, crashed in the Atlantic Ocean on June 1, 2009, en route from Rio de Janeiro, Brazil, to Paris, France, killing all 228 on board. After lengthy efforts to locate the wreckage and recover the flight data and cockpit voice recorders, found lying on the ocean floor at a depth of about 13,000 feet, a detailed investigation was launched to determine the circumstances and safety implications of the crash. The investigation, led by the French Bureau d'Enqu\u00c3\u00aates et d'Analyses pour la S\u00c3\u00a9curit\u00c3\u00a9 de l'Aviation Civile (BEA), found that icing on the airplane's pitot tubes resulted in a temporary inconsistency in airspeed measurements that caused the flight computers to disconnect the autopilot and switch the flight control logic into a different mode, known as an alternate law, in which normal protections against aerodynamic stalls and steep banks were disabled. ", "Investigators concluded that the pilots failed to properly assess the situation and instead made inappropriate control inputs that destabilized the airplane, resulting in an aerodynamic stall. The crew failed to detect the stall and consequently did not make control inputs to recover from it. Investigators identified several factors that likely contributed to the flight crew's confusion and lack of appropriate response, including the lack of a clear display in the cockpit indicating airspeed inconsistencies identified by the computers, transient stall warnings that may have been considered spurious, the absence of visual information to confirm an approach-to-stall, possible confusion with an overspeed situation that, like a stall, could be accompanied by airframe buffeting, and difficulty in recognizing the shift to an alternate control law with no angle-of-attack protections. Several aviation experts cautioned that the Air France flight 447 disaster might be a harbinger of the latent dangers of highly complex, highly automated flight control designs. "], "subsections": []}, {"section_title": "Asiana Airlines Flight 214", "paragraphs": ["On July 6, 2013, a Boeing 777 operated by Asiana Airlines descended below the visual approach path and hit a seawall short of the runway at San Francisco International Airport. The impact tore the fuselage in two and ignited a post-crash fire. Three passengers were fatally injured and another 40 passengers, along with 9 crew members, suffered serious injuries. Others suffered less serious injuries. ", "The National Transportation Safety Board (NTSB) determined that the complexities of the airplane's autopilot and autothrottle systems contributed to the accident. The NTSB noted that Boeing documentation describing those systems and the airline's training in the use of those systems were inadequate and increased the likelihood of a mode error , a situation in which the pilots misunderstood the state of the automated system and its operation during the approach. Specifically, the flight crew interacted with the autopilot and throttles in a manner that put the system into a state in which the autothrottle no longer controlled the airplane's airspeed. However, the flight crew apparently failed to understand that this mode or state was contributing to a continual decrease in airspeed that, coupled with too steep an approach, left the airplane flying too low and too slowly. ", "The NTSB made a number of recommendations to improve flight crew understanding of the Boeing 777 autothrottle system and modes. It also called for a broader examination of the functionality of automated flightpath management systems and of the documentation and training guidance on the use of these systems. "], "subsections": []}, {"section_title": "Lion Air Flight 610 and Ethiopian Airlines Flight 302", "paragraphs": ["On October 29, 2018, Lion Air flight 610, a Boeing 737 Max 8 aircraft, crashed into the Java Sea shortly after takeoff from Jakarta, Indonesia, killing all 189 on board. A preliminary report on that crash noted that on the accident flight and on a flight by the same aircraft the previous day, flight data indicated discrepancies between the angle-of-attack sensor on the left side of the aircraft, which had been replaced two days prior to the accident, and the sensor mounted on the right side of the aircraft. Multiple automatic nose-down trim commands occurred during the last six to seven minutes of the accident flight, which the pilots attempted to counteract unsuccessfully by applying nose-up pitch trim commands. At the end of the recorded flight data, the vertical stabilizer had moved to almost the full nose-down position, and the airplane was in a steep dive.", "The second accident occurred on March 10, 2019, when Ethiopian Airlines flight 302 crashed shortly after departure from Addis Ababa, Ethiopia, killing all 157 on board. The preliminary report from that accident reveals several similarities to the Lion Air flight 610 crash. Notably, immediately upon takeoff and for the short duration of the flight, the left angle-of-attack sensor indicated an extremely high pitch (roughly 75 degrees nose up), while the angle-of-attack sensor on the right side appeared to report normal pitch variations of a few degrees consistent with a takeoff climb. Over the next few minutes the aircraft experienced a series of automatic aircraft nose-down trim commands. The flight data from the accident similarly ends with the pitch trim at almost a full nose-down position with the aircraft in a steep descent. "], "subsections": []}]}, {"section_title": "The Boeing 737 Max Grounding", "paragraphs": ["The circumstances of the two Boeing 737 Max crashes led authorities in several countries, including China and the European Union (EU), to ground 737 Max airplanes as the crashes and the aircraft systems involved were investigated. Initially, FAA, Boeing, and U.S. air carriers did not follow suit. One day after the Ethiopian Airlines crash, FAA instead notified international civil aviation authorities that it anticipated mandatory design changes to be instituted no later than April 2019. However, on March 13, 2019, FAA issued an emergency order grounding all 737 Max aircraft. That order remains in place as Boeing seeks to fix identified flight control system issues in ways acceptable to FAA and safety regulators in other countries. ", "The concerns center on how the Boeing 737 Max flight control systems were implemented to counteract high angle-of-attack conditions that could result in unsafe high-pitch situations and potential aerodynamic stalls and the single sensor Boeing relied on to detect these high angle-of-attack conditions. Designers of the Boeing 737 Max took a different approach to designing high angle-of-attack protection systems because the use of larger-diameter engines compared to earlier 737 models necessitated mounting those engines further forward and higher. Under certain conditions, high engine power from these further forward-slung engines could pitch the aircraft up. To address this, Boeing engineered an automated feature, called the Maneuvering Characteristics Augmentation System (MCAS), to counteract such undesirable and potentially unstable pitch up events."], "subsections": [{"section_title": "The Maneuvering Characteristics Augmentation System Design", "paragraphs": ["The MCAS system, as equipped on the two accident airplanes, reportedly receives aircraft angle-of-attack data from only one of the airplane's two angle-of-attack sensors. The sensors are essentially sensitive wind vanes affixed to the side of the fuselage that precisely measure the relative airflow and thereby convey information about the aircraft's pitch angle relative to the airflow around it. On November 7, 2018, following the Lion Air flight 610 crash, FAA issued an emergency directive ordering U.S. operators of Boeing 737 Max airplanes to apply runaway stabilizer procedures, that is, approved pilot actions to address an uncommanded pitch-down event, in situations involving erroneous high angle-of-attack indications that might trigger repeated nose-down trim commands by the MCAS. In December 2018, FAA expanded the scope of the airworthiness directive, ordering the procedural change for all Boeing 737 Max airplanes worldwide.", "The control laws for the MCAS have been described as being separate from and not integrated with the other flight control laws and logic embedded in the 737 Max air data computers. In engineer-speak, the MCAS is characterized as a federated systems architecture, that is one packaged in a self-contained unit that carries out its own unique functions. The MCAS control laws as originally designed only received inputs from a single angle-of-attack sensor located on either the left or right side of the aircraft, although the airplanes were equipped with two such sensors, one on each side. The MCAS was added to the Boeing 737 Max as a means to address longitudinal (pitch) stability requirements. Reportedly, the system is only needed and will only activate in highly unusual circumstances. Under most normal flight conditions, the MCAS should not be needed. However, on both Lion Air flight 610 and Ethiopian Airlines flight 302, it is suspected that the MCAS did engage because it received faulty data from the angle-of-attack sensor falsely indicating that the aircraft was in a nose-high attitude. In response to sensor data indicating a nose-high pitch, the MCAS would actuate a nose-down pitch trim command. Moreover, if the pilots counteracted this nose-down actuation with a nose-up pitch trim, the MCAS would reset after five seconds, then repeat the nose-down pitch command again, and would repeat this cycle for as long as it continued to sense that the aircraft was in a nose-high attitude, even if based on errant sensor data. ", "Much of the engineering work done to address the safety concerns that led to the Boeing 737 Max grounding has focused on fixes to the MCAS system design and control laws. Where the original MCAS design relied on input from a single angle-of-attack sensor, the redesigned system will rely on two. Additionally, the new MCAS system will reportedly perform additional checks for reasonableness of data based on average values and for low-to-high data transitions that might indicate a catastrophic failure of the sensor. Boeing refers to this as a triple-validity check of the angle-of-attack sensor data. All 737 Max aircraft reportedly will also be fitted with angle-of-attack sensor disagree warnings to alert pilots when a sensor might be providing errant data. In addition to the redundancies being built into the MCAS sensor inputs, the MCAS control logic is reportedly being revised to limit the manner in which it applies nose-down stabilizer trim commands. Whereas the original system continued to apply repeated nose-down trim commands even if pilots tried to counteract it, the new system reportedly will not reset after a pilot makes electric pitch trim inputs. Also, the redesigned MCAS will not continue to trim the nose down to values close to the stabilizer trim limits, but instead will leave adequate nose-up pitch trim authority for pilots to work with."], "subsections": []}, {"section_title": "Scrutiny of the Boeing 737 Max Certification Process", "paragraphs": ["The Boeing 737 Max grounding has prompted broader inquiries regarding the entire certification process for that aircraft and the steps being taken to certify Boeing's proposed design changes to sensors and the flight control system. FAA stated that it \"is following a thorough process, not a prescribed timeline, for returning the Boeing 737 Max to passenger service. The FAA will lift the aircraft's prohibition order when we deem it safe to do so.\" FAA has convened a technical advisory board to review Boeing's MCAS software update and systems safety assessment and provide recommendations for steps needed to certify Boeing's changes and return the aircraft to service. Regulators in several other countries are pursuing reviews independently. ", "In April 2019, FAA convened a multinational Joint Authorities Technical Review (JATR) chaired by former NTSB Chairman Christopher Hart to conduct a comprehensive review of the Boeing 737 Max aircraft's automated flight control system certification. The JATR is composed of experts from FAA, the National Aeronautics and Space Administration (NASA), and foreign aviation authorities and was convened to \"evaluate aspects of the 737 Max automated flight control system, including its design and pilots' interaction with the system, to determine its compliance with all applicable regulations and to identify future enhancements that might be needed.\" Representatives from air safety authorities in Canada and the European Union, as well as experts from Australia, Brazil, China, Japan, Indonesia, Singapore, and the United Arab Emirates, are participating on the JATR. The findings of the JATR review may help to develop international consensus regarding pilot interaction with Boeing 737 Max automated flight control systems and associated pilot training. The panel's work is separate from and not a required input to FAA and Boeing's ongoing work to address safety concerns identified by the two accidents and certify the aircraft for a return to service.", "Separately, the Department of Transportation Office of Inspector General announced on March 27, 2019, that it was initiating an audit of FAA's oversight of the Boeing 737 Max certification. The focus of the audit is on FAA's process for certifying the Boeing 737 Max series of aircraft based on a detailed factual history of the activities that culminated in the aircraft's certification. ", "Additionally, the Department of Justice has reportedly launched a criminal probe based on a broad subpoena issued by a Washington, DC, grand jury immediately following the Ethiopian Airlines crash in March 2019. In June 2019, it was reported that the criminal investigation had expanded beyond the Boeing 737 Max to include certification work done on the Boeing 787 \"Dreamliner,\" Boeing's most recent entirely new type design, which first entered commercial service in 2011. The Boeing 787 fleet was grounded by FAA for roughly a three-month period in early 2013, following a number of in-flight fires and electrical problems tied to lithium ion batteries installed on the airplane. This marked the first time an entire fleet of a particular aircraft type was grounded since 1979, when the entire fleet of McDonnell Douglas DC-10s was grounded over a problematic cargo door design. The grounding of the Boeing 787 prompted an NTSB investigation that questioned the certification process for and testing of lithium ion batteries and other emerging technologies, resulting in a series of certification recommendations, including a recommendation that panels of expert consultants be included early in the certification process for new technologies installed on aircraft. ", "In September 2019, NTSB issued a number of safety recommendations to FAA and to Boeing urging action to address design assumptions about pilot response to uncommanded flight control system events like an MCAS activation in the certification process. NTSB urged Boeing to ensure that assessments of the 737 Max consider the effect of all possible cockpit alerts and indications on pilot recognition and response and incorporate these factors into cockpit design changes as well as pilot procedures and training. It similarly urged FAA to change certification standards to ensure that cockpit designs are evaluated to ensure that cockpit warnings and indicators are assessed for pilot recognition and response and this information is incorporated into procedures and training requirements. NTSB also recommended that FAA develop and implement evaluation tools, based on input from industry and human factors experts, to help inform aircraft design certification regarding pilot response to safety-significant failure conditions. "], "subsections": []}]}, {"section_title": "Sensor Data and Flight Control Automation as Factors in\u00c2 Aircraft\u00c2 Mishaps", "paragraphs": ["In many accidents and incidents, including the crash of Air France flight 447 and possibly including the Boeing 737 Max crashes, faulty sensor data set off a chain of subsequent events that ended in tragedy. Faulty sensor data can give automated systems and pilots inaccurate or incomplete information about airspeed, altitude, pitch, bank, and other aircraft parameters that can result in inappropriate flight commands and a loss of situation awareness. Design considerations during aircraft development, including engineering assessments of potential fault conditions, may not adequately take the risk of sensor failures into account. ", "In the Air France flight 447 crash, airspeed data became unreliable after all three pitot tubes that measure air flow iced over, but a simple cross-check of the airplane's groundspeed based on Global Positioning Satellite (GPS) sensor readings coupled with computer models of winds at the airplane's altitude could have served as a means to detect the anomalies in the airspeed data and provide a rough approximation of what the actual airspeed was. ", "Some researchers argue that certain critical systems on aircraft rely on data from too few sensors and fail to adequately aggregate and integrate available sensor data. Advances in sensor fusion, that is, taking and analyzing data from a more robust set of onboard sensors, may offer opportunities to improve sensor fault detection and flight control system recovery techniques."], "subsections": []}, {"section_title": "Implications for Human Factors and Pilot Training", "paragraphs": ["Automation-related aviation accidents such as those involving the 737 Max have brought complex human-systems interaction to the forefront of public policy. As noted, a number of accidents have also involved either failures of automated systems or pilot confusion over the operation of automated features resulting in improper interaction with these systems. ", "Research has shown that piloting skills associated with maneuvering aircraft using manual controls decline as a consequence of flying highly automated aircraft. Studies indicate that pilots often do not understand how automated features operate and the modes and states of automation in the cockpit. Additionally, some research has shown that pilots may overestimate their ability to take over and safely maneuver the aircraft in situations when automation fails, particularly given the likelihood of unanticipated distractions in the cockpit during a system failure. These studies have raised questions about approaches to training pilots on highly automated aircraft. ", "Complicating matters further, automated systems on modern air transport airplanes are highly adaptable. As a consequence, different air carriers and individual pilots use various different automated features and modes to suit their particular operational needs and personal preferences. For example, some pilots might minimize the use of automation to stay more engaged with piloting the aircraft and avoid boredom and complacency, while others might rely more heavily on automation to reduce workload. Experts continue to debate whether greater standardization of operations and training is desirable. ", "In January 2016 a DOT Office of Inspector General audit found that while FAA had established certain requirements governing airline use of flight deck automation, it lacked a process to ensure that airline training and proficiency standards adequately addressed pilot monitoring capabilities. In response, Section 2102 of the FAA Extension, Safety, and Security Act of 2016 ( P.L. 114-190 ) directed FAA to develop a process for verifying that air carrier flight crew training programs incorporate automated systems monitoring and manual flying skills when autopilot or autoflight systems are not engaged. It also required FAA to establish metrics to gauge pilot proficiency, and issue guidance for implementing and overseeing enhanced pilot training. Subsequently, the Air Carrier Training Aviation Rulemaking Committee, established by FAA in response to NTSB recommendations issued in the wake of the Asiana Airlines flight 214 crash, has made a number of recommendations addressing training elements pertaining to pilot monitoring, as well as training and procedures to enhance operational mode awareness and manually recover from unintended autoflight states. FAA is incorporating these recommendations into its guidance for airline training programs and is considering rulemaking to address the design of flight crew interfaces and cockpit alerting systems. "], "subsections": []}, {"section_title": "Implications for Aircraft Type Certification", "paragraphs": ["Aircraft type certification refers to the process of reviewing engineering data and performing inspections and tests to certify compliance with regulatory requirements and minimum standards for aircraft design and airworthiness. In addition to certifying new aircraft types, FAA inspects and tests variants of existing aircraft types to assess whether they can be covered under an existing aircraft type certification or whether the changes in design, power, thrust, or weight are so extensive as to require a new type design. These are primarily responsibilities of the FAA Aircraft Certification Service. This process typically involves extensive examinations, inspections, engineering tests and evaluations, and flight tests in which an aircraft designer or manufacturer must satisfactorily demonstrate that the aircraft and its systems and components meet safety standards and are safe for flight. ", "Type certification is the first step in bringing a new aircraft or new aircraft technologies incorporated into the design of an existing aircraft to market. Once an aircraft design is type certified, a manufacturer must demonstrate that it can reliably reproduce that aircraft type to receive production certification to build deliverable aircraft. Upon final assembly, every completed aircraft must undergo examinations, inspections, and tests before it receives airworthiness certification and can begin routine operations for an airline or other operator (see Figure 3 ). Airworthiness certification has long been a delegated function carried out largely by FAA designees, be they employees of the manufacturer or consultants.", "After an aircraft is delivered, FAA maintains oversight responsibility to identify operational or maintenance difficulties. Under normal circumstances, safety deficiencies involving aircraft in operational use are addressed through the continued airworthiness process. That process involves FAA working with manufacturers and operators to identify safety deficiencies, approve fixes, and issue airworthiness directives ordering operators to address safety concerns through inspections, repairs, and/or replacements of faulty components. For electronic systems this might involve hardware replacements or software or firmware updates. ", "FAA oversees aircraft type certification for aircraft designed in the United States. Other regulatory entities oversee type certification for products designed in other countries. Notably, the European Union Aviation Safety Agency (EASA) oversees the type certification process for aircraft and aircraft products designed in EU member countries and in several other European countries. ", "The FAA's Aircraft Certification Service (AIR), which grants type certification approval, has a staff of about 1,330, mostly engineers and inspectors, who oversee product development phases, the manufacturing processes covered under production certification, and the airworthiness certification of all completed aircraft. FAA's aircraft certification workforce is augmented by FAA designees, employees from aircraft and aircraft component design and manufacturing organizations, and consultants who carry out certain certification functions, such as tests and inspections, on FAA's behalf. Delegation of certification functions to manufacturing employees and engineering consultants is a long-standing practice, but over the last decade FAA has established new regulations governing the manner in which it oversees and interacts with entities to which it has delegated some of these responsibilities (see \" Delegation of FAA Certification Functions \" below). ", "Once a type certificate is issued, it typically remains valid indefinitely. In rare cases a type certificate can be voluntarily surrendered, or it can be suspended or revoked by FAA. As technology advances, type-certified airplane designs are updated and amended or supplemental type certifications may be granted to address modifications of the aircraft. Whether a new type certificate is required or an amended type certificate will suffice is governed by 14 C.F.R \u00c2\u00a721.19, which leaves it up to FAA to determine whether the proposed change \"is so extensive that a substantially complete investigation of compliance with the applicable regulations is required.\" "], "subsections": [{"section_title": "Addressing Pilot Training in the Context of Aircraft Certification", "paragraphs": ["Whereas FAA's Air Certification Service is responsible for aircraft certification, the FAA Flight Standards Service prescribes the standards for aircraft operations and verifies that operators, such as airlines, meet those standards. For each aircraft type design, the Flight Standards Service sets up an aircraft evaluation group to determine required training and operational procedures. ", "Flight standardization boards are the functional elements of aircraft evaluation groups that deal specifically with the training and flight operational procedures of particular aircraft. A flight standardization board has primary responsibility for determining pilot training standards and requirements for a particular aircraft. This includes determinations regarding the requirement for a pilot to obtain an aircraft type rating, and minimum training recommendations and requirements for establishing initial flight crew member competency for the aircraft. ", "For variants of an existing aircraft type, the flight standardization board may develop Master Difference Requirements tables that outline the specific differences among the various aircraft covered by the type certification as well as similar aircraft produced by the manufacturer of that aircraft. These tables form the basis for evaluating an operator's differences training curriculum for pilots who transition from one variant of an aircraft type to another or between aircraft with similar characteristics. The tables specify the training needed to learn and understand the differences between related aircraft types. The FAA operations inspector assigned to a particular airline or operator may then use this, along with more detailed flight standardization board reports, as a guide for review and approval of an operator's proposed training plan. ", "FAA Advisory Circular 120-53B provides guidance to flight standardization boards on evaluating training requirements for newly manufactured or modified aircraft, including differences training requirements for pilots transitioning between similar aircraft or aircraft variants. The guidance sets standards for assessing proposed pilot training programs, delineating training resource and training device needs and available alternatives, and encourages manufacturers to include common characteristics in related aircraft. The advisory circular discusses the need to assure pilot understanding of differences between aircraft variants. It also instructs FAA inspectors how to evaluate each aircraft operator's application of flight standardization board recommendations in its training program, including evaluation of operational differences among aircraft in a mixed fleet and the effects of those differences on training needs."], "subsections": []}, {"section_title": "Potential Controversies Related to the Boeing 737 Flight Standardization Board", "paragraphs": ["On April 16, 2019, the Boeing 737 flight standardization board issued a draft report for public comment. Notably, the draft report documented findings regarding the aircraft's MCAS based on studies and reexaminations of the system following the Boeing 737 Max grounding; prior Boeing 737 flight standardization board reports had not included information on the MCAS system. The master difference requirements updates associated with the introduction of the Boeing 737 Max had specified only computer-based, oral, or written instruction and testing on other new features of the Boeing 737 Max, with no requirement for simulator or in-flight training or testing for Boeing 737 type-rated pilots to qualify to fly the Boeing 737 Max. FAA has required no training of any type pertaining to the MCAS.", "The draft report included language mandating that training on the MCAS system be incorporated into ground training for initial, upgrade, transition, differences, and recurrent training for pilots. It specified that this training must include a description of the MCAS system, its functionality, associated failure conditions, and flight crew alerting. The draft report stated that this training could be provided in the form of aided instruction, such as tutorial computer-based instruction, and that required checking may be accomplished by self-tests administered during this computer-based instruction, or through oral or written exam. The draft report, however, did not call for any flight simulator or in-flight instruction or checking related to the MCAS system. ", "On April 17, 2019, one day after the draft report was released, Canada's Transport Minister, Marc Garneau, said he favored simulator training over computer-based instruction. However, at the present time Canadian transportation authorities have not determined whether they will require simulator training related to the MCAS system for Boeing 737 Max pilots. Nonetheless, media coverage suggested that Garneau's comments signaled a growing rift between the United States and Canada over appropriate steps to address Boeing 737 Max training and operations. It was also reported that Air Canada, the only airline in North America that had a 737 Max simulator on hand, had already incorporated MCAS scenarios into its simulator training, even though such training has not been specifically mandated by Transport Canada.", "Once finalized, the Boeing 737 flight standardization board report will form the primary basis for establishing and approving U.S. air carrier training programs regarding the automated flight control features of the Boeing 737 Max, including transition training between the 737 Max and other 737 variants. Historically, other countries have generally followed FAA guidance in establishing training programs for U.S. manufactured aircraft, but the controversies surrounding the Boeing 737 Max grounding have raised questions as to whether other countries will indeed adopt FAA's training recommendations or whether they will insist on more stringent training requirements. ", "Additional controversy over the Boeing 737 Max flight standardization board emerged following a U.S. Office of Special Counsel finding that numerous FAA safety inspectors, including inspectors assigned to the operational review of the 737 Max, were not sufficiently qualified to carry out those duties and that FAA had provided misleading information regarding FAA inspector qualifications and training in response to congressional inquiries. FAA, however, has reasserted its position that all inspectors who participated in the Boeing 737 Max flight standardization board were fully qualified to do so. "], "subsections": []}]}, {"section_title": "The Role of Industry Consensus Standards", "paragraphs": ["Industry advisory groups and standards organizations play important roles in setting industry norms, best practices, and consensus standards that form the basis for aircraft design and production certification. The development of consensus standards represents a significant facet of industry input into the manner in which aircraft and aircraft systems are designed and the criteria against which they are evaluated for certification purposes. In some cases, consensus standards might be incorporated by reference into regulatory requirements. In other cases they might be referenced as means of compliance with specific FAA regulations. Often they serve as a preferred means of compliance because they have been broadly endorsed by industry experts and represent the approaches that are most often pursued and most familiar to FAA regulators. ", "The International Organization for Standardization (ISO), an independent nongovernmental organization, is responsible for developing internationally accepted standards. ISO Technical Committee (TC) 20 is responsible for establishing international standards for air and space vehicles, including vehicle materials and components, as well as equipment used in servicing and maintaining aircraft and space vehicles. ", "SAE International, initially established as the Society of Automotive Engineers, provides input from U.S. experts to ISO TC 20 technical advisory groups on matters pertaining to aircraft design. Within SAE, the Aerospace Council houses technical committees that address all facets of aircraft and aircraft systems design, including avionics, instruments, and flight controls. SAE Technical Committee S-7 addresses issues related to flight deck design and aircraft handling qualities for transport category aircraft. The work of the committee encompasses flight deck panels, controls, and displays; flight deck safety equipment; and flight control systems and their handling qualities. ", "Given the increased importance of software in the design and operation of modern aircraft, another important industry consensus group is the Forum for Aeronautical Software. The forum was formed under a partnership between RTCA, a nonprofit organization founded in 1935 as the Radio Technical Commission for Aeronautics, and EUROCAE, the European Organization for Civil Aviation Equipment. The forum has developed a number of key guidance documents pertaining to the development of aviation software, including DO-178C, which serves as the primary reference for designing and evaluating software-based flight control and avionics systems. FAA Advisory Circular 20-115D recognizes DO-178C as acceptable guidance for meeting the type certification requirements for software aspects of airborne systems and equipment. Manufacturers can pursue alternative means of compliance to meet type certification requirements, but most follow the DO-178C guidance or parallel documents that are used for certification compliance in Europe. The RTCA/EUROCAE guidance is recognized worldwide as an industry standard for developing and certifying software for airborne systems."], "subsections": []}, {"section_title": "Industry Input into FAA Oversight and Rulemaking", "paragraphs": ["Besides developing industry consensus standards, companies provide direct input to FAA rulemaking by acting in an advisory capacity to FAA advisory and rulemaking committees. Advisory groups are established under the terms of the Federal Advisory Committee Act (FACA), which sets the legal framework for committees, task forces, and working groups to assist executive-branch policymaking. The FAA Aviation Rulemaking Advisory Committee (ARAC) provides FAA with information, advice, and recommendations concerning rulemaking activities. Under the ARAC, FAA has developed numerous taskings related to air carrier operations and aircraft certification procedures since the 1990s.", "The ARAC comprises representatives from aviation associations, aviation industry, public interest and advocacy groups, and foreign civil aviation authorities. Engineers employed by manufacturers, representatives of airlines and other operators, and pilots and mechanics representing various labor organizations participate in the ARAC and its working groups. FAA also convenes a number of rulemaking committees that are exempt from FACA requirements but generally must adhere to Administrative Procedures Act requirements in performing work related to rulemaking. FAA personnel carry out the administrative functions of these committees and the subcommittees and working groups formed under them . "], "subsections": []}]}, {"section_title": "Delegation of FAA Certification Functions", "paragraphs": ["Congress has generally supported increased utilization of FAA's delegation and designation authorities in order to engage design and manufacturing organizations and their employees more directly in the aircraft certification process, often working as proxies for FAA and its aircraft certification inspector workforce. Nonetheless, legislative language in the 2012 FAA reauthorization ( P.L. 112-95 ) and the 2018 FAA reauthorization ( P.L. 115-254 ) has sought reviews of these practices to assess the efficiency and safety implications of these practices. FAA explains that because it does not have the resources to perform all the necessary certification activities and keep up with an expanding aviation industry, it must rely on delegating certain certification functions to qualified individuals and entities. FAA asserts that using designees for routine, well-established certification tasks allows it to focus its limited resources on safety-critical certification issues as well as new and novel technologies. ", "Since the 1920s, federal aviation safety agencies have relied on private individuals to participate in examination, inspection, and testing of aircraft during the product certification process. In the 1940s, programs were established to appoint designees to perform certain product certification approvals. These included designated engineering representatives and designated manufacturing inspection representatives employed by aircraft, aircraft engine, and aircraft component manufacturers. In the 1980s, FAA established a designated airworthiness representative (DAR) program that expanded the role of individuals in performing airworthiness certification functions, and allowed organizations to serve as DARs under a program known as Organizational Designated Airworthiness Representatives (ODARs). These actions were taken under FAA's long-standing authority under 49 U.S.C. \u00c2\u00a744702(d), which allows for the delegation of activities related to aircraft type certification, production certification, and airworthiness certification, including examination, testing, and inspection necessary to issue a certificate, and certificate issuance to a private person. In this context, \"person,\" as defined in 1 U.S.C. \u00c2\u00a71, includes corporations, companies, partnerships, and other business entities in addition to individuals. ", "FAA notes that \"[w]hen acting as a representative of the Administrator, these persons or organizations are required to perform in a manner consistent with the policies, guidelines, and directives of the Administrator. When performing a delegated function, designees are legally distinct from and act independent of the organizations that employ them.\" Under 49 U.S.C. \u00c2\u00a744702(d), FAA has the authority to rescind a delegation issued to a private person at any time for any appropriate reason. Moreover, any person affected by the action of an entity delegated certain FAA certification functions may petition FAA for reconsideration, and FAA may, at its own initiative, consider the actions of a delegated entity at any time. If FAA determines that the delegated entity's actions are unreasonable or unwarranted, it may change, modify, or reverse them. "], "subsections": [{"section_title": "Organization Designation Authorization", "paragraphs": ["FAA formally established the Organization Designation Authorization (ODA) program in 2005. This prompted a significant change in the manner in which FAA delegates its certification functions and the manner in which it oversees aircraft and aircraft systems certification activities. The ODA program serves as a formal framework under which FAA may delegate authority to organizations or companies, including aircraft manufacturers such as Boeing; engine manufacturers such as Pratt and Whitney, General Electric, and Rolls Royce; and avionics and flight control systems suppliers such as Honeywell and Collins Aerospace. "], "subsections": [{"section_title": "Rulemaking Advisory Committee and Delegation of Certification Functions", "paragraphs": ["In the 1990s, the Aircraft Certification Procedures Issues tasking for the Aviation Rulemaking Advisory Committee sought industry input regarding FAA's delegation of aircraft and aircraft system certification activities. In 1998, the Aviation Rulemaking Advisory Committee recommended that FAA establish Organization Designation Authorization (ODA), generally authorizing companies to conduct a broad array of delegated functions on behalf of FAA. The ARAC recommendation, similar to one issued by the Gore Commission two years earlier, was based on a draft developed by the Delegation Systems Working Group, which was chaired by a Boeing employee. "], "subsections": []}, {"section_title": "Evolution of the ODA Program", "paragraphs": ["Over the past 15 years, the ODA program has been expanded. Based on recommendations from the certification process committee and mandates from the 2012 FAA Modernization and Reform Act ( P.L. 112-95 ), FAA adopted several initiatives for improving and expanding the ODA program. In a 2015 statement, the Government Accountability Office (GAO) observed that, while industry stakeholders favored expanding the ODA program, employee unions raised concerns that FAA lacked adequate resources to implement and oversee ODA expansion. However, two years later in March 2017, GAO reported that FAA had carried out its ODA action plan, launched an audit training initiative for personnel supervising ODA inspections, and had expanded delegation under ODA to authorize designees to approve instructions for continued airworthiness, emissions data, and noise certification. According to GAO, FAA, in collaboration with industry, had also developed an ODA scorecard to measure outcomes related to its ODA initiatives, including manufacturer compliance with standards set for delegated activities and FAA oversight. ", "Following oversight hearings during the 115 th Congress, Congress expressed general support for the ODA framework, but included in the FAA Reauthorization Act of 2018 ( P.L. 115-254 ) extensive language directing FAA to further improve the efficiency and effectiveness of the ODA program, expanding upon the reform efforts that were initiated in part by provisions in the 2012 FAA reauthorization act. While policymakers have had a long-standing interest in certification reforms under the ODA framework, following the Boeing 737 Max grounding and crashes, FAA certification oversight and the ODA program specifically have been brought into the public spotlight. In some instances, journalists have characterized the ODA process as a mechanism for aircraft and aircraft component manufacturers to \"self-certify\" that their products meet applicable safety regulations and certification standards, a view that FAA officials say grossly distorts how the program was designed and how it functions in practice. "], "subsections": []}]}, {"section_title": "Aircraft Certification Reforms", "paragraphs": ["In response to the mandates in the 2012 law, P.L. 112-95 , FAA chartered two aviation rulemaking committees, one to address certification processes and the other to examine regulatory consistency. Among the recommendations set forth by the Certification Process Committee was expanding delegation under ODA to include processes for certifying aircraft noise and emissions and for approving instructions regarding continued airworthiness of delivered aircraft. The recommendations also included initiatives to address FAA tracking of certification activities, updating certification regulations, and improving consistency of regulatory interpretations. ", "The 2018 FAA act, P.L. 115-254 , mandated a number of aircraft certification reforms. The law directed FAA to establish an advisory committee, the Safety Oversight and Certification Advisory Committee, to develop policy recommendations for the aircraft certification process and for FAA safety oversight of certification activities. It also directed FAA to establish performance objectives and metrics for aircraft certification that both streamline the certification process and increase transparency and accountability for both FAA and the aviation industry. Among these objectives, the law seeks full utilization of FAA's delegation and designation authorities as well as full implementation of risk management principles and a systems safety approach.", "Following the Boeing 737 Max grounding, however, FAA's delegation and designation authorities in particular have come under scrutiny. Lawmakers have also questioned certain aircraft manufacturing practices and, in particular, have sought to curtail a perceived practice of marketing certain aircraft safety enhancements and features as options available at additional cost. Notably, the Safety is Not for Sale Act of 2019 ( S. 1178 ), introduced by Senator Markey, would require aircraft manufacturers to include certain nonrequired safety-enhancing equipment at no additional charge in the sale of new aircraft to U.S. air carriers. Equipment included under this proposal would include attitude indicators, traffic alerting systems, terrain advisories and warnings, weather advisories, aircraft configuration advisories, supplemental cockpit indicators, enhancements that improve aircraft crashworthiness, monitoring and detection systems, aircraft stability and control enhancements or alerts, and fire extinguishing systems. The legislation also would require FAA to establish performance standards for angle-of-attack indicators, angle-of-attack disagree alerts, and backup fire suppression systems for airliners. "], "subsections": []}, {"section_title": "Interrelationships Between FAA and the Aerospace Industry", "paragraphs": ["The interrelationships between FAA and manufacturers are complex and extend well beyond delegation of certification functions and the ODA program (see Table 2 ). In the case of manufacturers, companies like Boeing exert considerable influence over the development of industry standards as well as influencing regulatory changes through participation in standards organization committees and FAA advisory and rulemaking committees. Additionally, through delegation authority and the ODA program, manufacturers and their employees carry out certain certification functions on behalf of FAA. Through these channels, manufacturers can offer their knowledge and expertise to the safety regulation and certification processes. While FAA retains oversight of all of these activities, the perception of industry \"self-regulation\" may reflect broader concerns about FAA capabilities and resources to conduct adequate oversight of the certification process and related standards development activities and industry practices. "], "subsections": []}]}, {"section_title": "International Coordination on Certification and Training Oversight", "paragraphs": ["Under international air safety agreements and a framework set forth by ICAO, other countries generally accept the airworthiness determinations of and the safety certifications issued by FAA for aircraft, aircraft engines, and other aircraft components designed or manufactured in the United States. These agreements are usually reciprocal: FAA typically accepts similar determinations made by its overseas counterparts for aviation products developed outside the United States. ", "Because Boeing, based in Chicago, and Airbus, based in Toulouse, France, jointly control a large majority of worldwide sales of commercial passenger jets, FAA and the European Union Aviation Safety Agency (EASA) fulfill important roles in certifying passenger airliners operated worldwide. FAA generally accepts EASA certification of commercial aircraft manufactured by Airbus, and, reciprocally, European countries under EASA accept FAA certification of U.S.-manufactured aircraft, such as those built by Boeing. While the two regulatory agencies, like the industry giants that they regulate, generally cooperate on safety matters, they sometimes hold differing views regarding safety design. Following the Boeing 737 Max grounding, some international groups and observers have questioned FAA's certification processes and its extensive use of designees to conduct certification work, although similar programs are in place in Europe. FAA, EASA, and other civil aviation oversight entities have working arrangements with respect to each other's certification and safety oversight activities. For example, FAA might insist on certain additional testing or engineering evaluations to demonstrate safety of a modification to an aircraft design type certified by EASA. In such an instance, FAA would negotiate with EASA and the developer to specify the details of the additional testing and engineering analysis and, if agreed to, may send observers to witness tests and review engineering work.", "The continuing controversy surrounding the Boeing 737 Max is testing these international arrangements. Aviation authorities in other countries might insist on design fixes, inspections and validation tests, and documentation and training different from what FAA agrees to before allowing airlines to resume Boeing 737 Max operations. While the multinational Joint Authorities Technical Review (JATR) was formed to develop international consensus on these matters, differing views among major international aviation safety organizations could have significant implications for how these agencies cooperate moving forward, both on review of the Boeing 737 Max and on future aircraft certification activities. EASA has already insisted on an independent review of proposed design changes to the Boeing 737 Max, and if its conclusions differ significantly from those of FAA, evidence of a schism between key international regulators could create further uncertainty for both aircraft manufacturers and operators. ", "There is less international coordination in regulating pilot qualifications. In the United States, pilots must hold an Airline Transport Pilot (ATP) certification to be hired by an airline. This certification usually requires 1,500 hours of total flight time to attain. In contrast, some foreign airlines hire individuals with little or no experience through ab initio programs that provide training to become an airline pilot. Under these programs, pilots can begin flying as first officers once they receive a commercial pilot certification that can be attained with around 250 hours of total flight time, and it is not unusual for entry-level first officers to have only a few hundred hours of total flight experience. Although the captain of Ethiopian Airlines flight 302 had more than 8,000 hours of total flight experience, the flight's first officer had less than 400. ", "Questions concerning pilot experience have significant implications for how aircraft manufacturers address pilot interface design issues and training requirements for highly automated jet airplanes. If even experienced pilots might struggle to understand information presented to them and maneuver the airplane to expected professional standards when faced with a non-normal condition or emergency situation, pilots with limited experience may lack the training to handle potential failure scenarios. A central consideration in designing cockpits and cockpit procedures is how much detailed systems information pilots should be given to handle possible in-flight failures. On one end of the spectrum, some aircraft designers might argue that pilots can get by mainly with just procedural knowledge of the actions to take when faced with an urgent situation or event. On the other end of the spectrum, some aviation safety experts advocate providing pilots with more thorough knowledge of aircraft systems, particularly critical flight control systems, to help them make better-informed choices when working through a novel event or condition. This debate has important implications for how automated cockpit systems are developed and the training pilots receive. ", "ICAO sets general training and licensing standards for pilots internationally, but it is up to individual countries to set formal requirements for their pilots. The strong demand for airline pilots in countries where air travel is growing rapidly has resulted in some airlines hiring pilots without extensive training and experience to operate revenue passenger flights. In general, international standards for multi-crew and commercial pilot licenses call for a minimum of 240 flight hours of experience, much lower than the 1,500 now required to fly for an airline in the United States. Economic factors make it unlikely that requirements and standards similar to those applicable to U.S. pilots will be implemented worldwide in the near future. While FAA has some limited regulatory authority over airlines that fly into the United States, it does not have minimum pilot experience requirements for foreign flight crews and defers to the country of aircraft registry in these matters. FAA also has limited influence over aircraft-specific training requirements of countries whose airlines purchase airplanes from Boeing and other U.S. manufacturers. Nonetheless, FAA has asserted its position that foreign pilots have become too dependent on cockpit automation. FAA has urged ICAO to address perceived pilot training deficiencies and recommended that ICAO update standards and guidance to include additional training to prepare airline pilots to operate aircraft manually when automated systems fail.", "Appendix A. U.S. Air Carrier Accidents in the 1990s Involving Passenger Fatalities", "During the 1990s there was a spate of U.S. air carrier accidents including several fatal crashes involving passenger flights:", "the February 1, 1991, runway collision between USAir flight 1493, a Boeing 737, and Skywest Airlines flight 5569, a commuter turboprop, at Los Angeles International Airport; the March 3, 1991, crash of United Airlines flight 585, a Boeing 737, on approach to Colorado Springs, CO; the April 5, 1991, crash of an Atlantic Southeast Airlines turboprop on approach to Brunswick, GA; the January 3, 1992, crash of a CommutAir turboprop on approach to Saranac Lake, NY; the March 22, 1992, crash of USAir flight 405, a Fokker F28 jet, taking off from LaGuardia Airport in New York, NY; the June 7, 1992, crash of American Eagle flight 5456, a turboprop on approach to Mayaguez, Puerto Rico; the June 8, 1992, crash of a GP Express turboprop on approach to Anniston, AL; the December 1, 1993, crash of Northwest Airlink flight 5719, a turboprop on approach to Chisolm-Hibbing, MN; the January 7, 1994, crash of United Express flight 6291, a turboprop on approach to Columbus, OH; the July 2, 1994, crash of USAir flight 1016, a McDonnell Douglas DC-9 on approach to Charlotte, NC; the September 8, 1994, crash of USAir flight 427, a Boeing 737 on approach to Pittsburgh, PA; the October 31, 1994, crash of American Eagle flight 4184, an ATR 72 turboprop, near Roselawn, IN; the August 21, 1995, crash of an Atlantic Southeast Airlines turboprop near Carrollton, GA; the December 20, 1995, crash of American Airlines flight 965, a Boeing 757, on descent into Cali, Colombia; the May 11, 1996, crash of ValuJet flight 592, a McDonnell Douglas DC-9, in the Florida Everglades after departing from Miami International Airport; the July 6, 1996, uncontained engine failure aboard Delta Airlines flight 1288, a McDonnell Douglas MD-88, during takeoff at Pensacola, FL; the July 17, 1996, crash of TWA flight 800, a Boeing 747, shortly after departure from John F. Kennedy International Airport in New York, NY; the November 19, 1996 runway collision between United Express flight 5925, a turboprop and a privately owned turboprop at Quincy Regional Airport, IL; the January 9, 1997 crash of Comair flight 3272 near Ida, MI, en route from Cincinnati, OH, to Detroit, MI; and the June 1, 1999, crash of American Airlines flight 1420, a McDonnell Douglas MD-82 landing at Little Rock, AR."], "subsections": []}]}}
{"id": "R45946", "title": "Executive Branch Service and the \u201cRevolving Door\u201d in Cabinet Departments: Background and Issues for Congress", "released_date": "2019-10-07T00:00:00", "summary": ["Individuals may be subject to certain restrictions when leaving the government for private employment or joining the government from the private sector. These restrictions were enacted in response to what is often referred to as the revolving door . Generally, the revolving door is described as the movement of individuals between the public and private sector. Individuals may move because they possess policy and procedural knowledge and have relationships with former colleagues that are useful to prospective employers.", "Laws attempting to restrict the movement of individuals between the government and the private sector have existed since at least the late 1800s. Today's revolving door laws focus on restricting former government employees' representational activities that attempt to influence federal officials with whom they used to work. Found at 18 U.S.C. \u00c2\u00a7207, revolving door laws for executive branch officials include (1) a lifetime ban on \"switching sides\" (e.g., representing a private party on the same \"particular matter\" involving identified parties on which the former executive branch employee had worked while in government); (2) a two-year ban on \"switching sides\" on a broader range of issues; (3) a one-year restriction on assisting others on certain trade and treaty negotiations; (4) a one-year \"cooling off\" period for certain senior officials on lobbying; (5) two-year \"cooling off\" periods for very senior officials from lobbying; and (6) a one-year ban on certain former officials from representing a foreign government or foreign political party. In addition to laws, executive orders have been used to place further restrictions on executive branch officials, including officials entering government. For example, President Trump issued an executive order (E.O. 13770) to lengthen \"cooling off\" periods for certain executive branch appointees both entering and exiting government.", "To date, much of the empirical work concerning the revolving door has focused on former Members of Congress or congressional staff leaving Capitol Hill, especially those who become lobbyists in their postcongressional careers. This report provides some empirical data about a different aspect of the revolving door\u00e2\u0080\u0094the movement into and out of government by executive branch personnel. Using research conducted by the Bush School of Government and Public Service at Texas A&M University's capstone class over the 2017-2018 academic year, this report presents data about the revolving door in the executive branch through the lens of President George W. Bush's and President Barack Obama's Administrations. The analysis includes Cabinet department officials who were listed, for either Administration, in the United States Government Policy and Supporting Positions (the Plum Book ).", "Through an examination of appointees in President Bush's and President Obama's Administrations, several findings emerge. First, approximately 92% of executive branch officials in the examined dataset were never registered lobbyists, while 8% were registered lobbyists at some point before or after their government service. Second, Cabinet departments differed greatly in the number of officials who were registered lobbyists either before or after their federal service. Although every Cabinet department surveyed had some percentage of officials registered as lobbyists either before or after their government service, the percentage of officials included in the dataset who registered as lobbyists before their government service, after their government service, or both ranged from a high of 18% (Department of Commerce) to a low of 1% (Department of Justice).", "Third, the data also show that for lobbyists entering government, the percentage of officials in the dataset who had been lobbyists before government serving in the Bush and Obama Administrations ranged from 10% in the Department of Labor to 61% in the Department of Veterans Affairs. The analogous percentages for government employees in the dataset leaving to become lobbyists ranged from 39% in the Department of Veterans Affairs to 82% in the Department of Transportation.", "Finally, the report identifies several areas for potential congressional consideration. In recent years, several bills have been introduced in Congress to address many of these potential areas. These include options to amend existing \"cooling off\" periods and evaluate the administration and enforcement of revolving door regulations. Alternatively, Congress may choose to maintain current \"cooling off\" periods, administration, and enforcement practices."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["In 1883, following the assassination of President James A. Garfield by disgruntled job seeker Charles Guiteau, the Pendleton Act was signed into law by President Chester A. Arthur to ensure that \"government jobs be awarded on the basis of merit\u00e2\u0080\u00a6.\" The Pendleton Act ended the spoils system to ensure that qualified individuals were hired into federal service and to prevent the President from being \"hounded by job seekers.\" With the advent of the merit system, federal employees found themselves serving longer in government while also being attracted to private-sector jobs related to their federal employment. The movement of employees between the private sector and government is often referred to as the revolving door .", "Generally, the revolving door is described as the movement of individuals between the public and private sector, and vice versa. Individuals may move because they possess policy and procedural knowledge and have relationships with former colleagues that are useful to prospective employers, either in government or in the private sector. Some observers see the revolving door as potentially valuable to both private-sector firms and the government; other observers believe that employees leaving government to join the industries they were regulating, or leaving the private sector to join a relevant government agency, could provide an unfair representational advantage and create the potential for conflicts of interest.", "While Congress has passed laws regulating the revolving door phenomenon in the executive branch, there has to date been little data available about the underlying phenomenon. This report provides data on the movement into and out of government by executive branch personnel in President George W. Bush's and President Barack Obama's Administrations. Using a dataset of executive branch Cabinet department officials compiled by graduate students at the Bush School of Government and Public Service at Texas A&M University in partnership with CRS, this report provides empirical data about the use of the revolving door by a subset of federal officials, with a particular focus on those who were registered lobbyists either before or after their government service.", "This report begins with an overview of existing revolving door laws and regulations that affect executive branch personnel. It next examines the potential advantages and disadvantages of the revolving door phenomenon. Data collected in partnership with the Bush School of Government and Public Service at Texas A&M University are then presented and analyzed. The data provide an empirical picture of the executive branch revolving door as it relates to registered lobbyists. This analysis is followed by a discussion of select issues for potential congressional consideration."], "subsections": []}, {"section_title": "The Revolving Door in the Executive Branch", "paragraphs": ["Revolving door provisions, which can include laws, regulations, and executive orders, are often considered as a subset of conflict-of-interest provisions that govern the interaction of government and nongovernmental individuals. While most historic revolving door provisions generally addressed individuals exiting government for work in the private sector, some have also addressed individuals entering government. Overall, revolving door conflict-of-interest laws have existed since the late 19 th century. The first identified conflict-of-interest provision was enacted in 1872. This provision generally prohibited a federal employee from dealing with matters in which they were involved prior to government service. In 1919, the first restrictions were placed on individuals who had specifically served as procurement officials from leaving government service \"to solicit employment in the presentation or to aid or assist for compensation in the prosecution of claims against the United States arising out of any contracts or agreements for the procurement of supplies \u00e2\u0080\u00a6 which were pending or entered into while the said officer or employee was associated therewith.\" Similarly, the Contract Settlement Act of 1944 (58 Stat. 649) included a provision making it ", "Unlawful for any person employed in any Government agency \u00e2\u0080\u00a6 during the period such person is engaged in such employment or service, to prosecute or to act as counsel attorney or agent for prosecuting, any claim against the United States, or for any such person within two years after the time when such employment or serve has ceased, to prosecute, or to act as counsel, attorney, or agent for prosecuting, any claim against the United States involving any subject matter directly connected with which such person was so employed or performed duty.", "In 1962, portions of the current statutory provision at 18 U.S.C. \u00c2\u00a7207 were enacted as part of a major revision of federal conflict-of-interest laws. Since the 1960s, postemployment restriction laws have been amended several times, including by the Ethics in Government Act of 1978 to add certain one-year \"cooling off\" periods for high-level executive branch personnel and limit executive branch official postemployment advocacy (i.e., lobbying) activities; by the Ethics Reform Act of 1989; and by the Honest Leadership and Open Government Act of 2007, which extended the \"cooling off\" period to two years for \"very senior\" executive branch officials.", "Revolving door provisions, including conflict-of-interest laws and \"cooling off\" periods, were initially designed to protect government interests against former officials using proprietary information on behalf of a private party and current officials against inappropriately dealing with matters on which they were involved prior to government service. Additionally, they attempted to limit the possible influence and allure of potential private arrangements by federal officials when they interact with prospective private clients or would-be future employers while still employed by the government. ", "Historically, the decision to adopt, or amend, revolving door and conflict-of-interest provisions has been balanced against the potential deterrent of restricting the movement of individuals between the public and private sector. For example, in 1977, the Senate Committee on Governmental Affairs reported a bill that would have amended the existing revolving door provisions. As part of its justification for the measure, the committee explained the need to balance the appearance of impropriety against the need to attract skilled government workers. Its report noted the following:", "18 USC \u00c2\u00a7207, like other conflict of interest statutes, seeks to avoid even the appearance of public office being used for personnel or private gain. In striving for public confidence in the integrity of government, it is imperative to remember that what appears to be true is often as important as what is true. Thus government in its dealings must make every reasonable effort to avoid even the appearance of conflict of interest and favoritism.", "But, as with other desirable policies, it can be pressed too far. Conflict of interest standards must be balanced with the government's objective in attracting experienced and qualified persons to public service. Both are important, and a conflicts policy cannot focus on one to the detriment of the other. There can be no doubt that overly stringent restrictions have a decidedly [sic] adverse impact on the government's ability to attract and retain able and experienced persons in federal office.", "The revolving door allows movement in both directions, with individuals both entering and exiting government. Some past researchers have argued that those who enter government with prior industry experience are more supportive of regulated industry than those without industry experience. Similarly, two studies have concluded that the lure of private-sector employment has led regulators to support the regulated industry during their time in government. ", "Whether or not the revolving door on net helps or hinders the functioning of government agencies may depend, however, on the potential benefits of transitioning individuals between government and the private sector versus the potential for conflicts of interest to develop on the part of those individuals. Some studies have identified positive aspects of the revolving door and the relationships developed between regulators and the regulated. Other studies find that government agencies are better run with stable leadership that does not often utilize the revolving door and keeps some distance between the agency and the regulated industry."], "subsections": []}, {"section_title": "Existing Revolving Door Laws and Executive Orders", "paragraphs": ["Current laws and regulations generally govern the movement of federal employees from the government to the private sector and vice versa. These provisions can be divided into three categories: broadly applicable postemployment laws, supplemental regulations, and executive order requirements. Revolving door provisions, however, do not necessarily apply to all instances of an employee leaving government service. Rather, they are specific to covered officials (see below) who leave government and are then involved with an issue they were also involved in while a federal employee. For some circumstances, the Office of Government Ethics (OGE) \"has emphasized that the term [ particular matter ] typically involves a specific proceeding affecting the legal rights of the parties, or an isolatable transaction or related set of transactions between identified parties.\" "], "subsections": [{"section_title": "Postemployment Laws", "paragraphs": ["Initially enacted in 1962, 18 U.S.C. \u00c2\u00a7207 provides a series of postemployment restrictions and was enacted \"to prevent former Government employees from leveraging relationships forged during their Government service to assist others in their dealings with the Government.\" These include", "a lifetime ban on \"switching sides\" on a particular matter involving specific parties on which any executive branch employee had worked personally and substantially while with the government; a two-year ban on \"switching sides\" on a somewhat broader range of matters that were under the employee's official responsibility; a one-year restriction on assisting others on certain trade or treaty negotiations; a one-year \"cooling off\" period for certain \"senior\" officials, barring representational communications before their former departments or agencies; a two-year \"cooling off\" period for \"very senior\" officials, barring representational communications and attempts to influence certain other high-ranking officials in the entire executive branch of government; and a one-year ban on certain officials performing some representational or advisory activities for foreign governments or foreign political parties.", "Current law focuses on postemployment restrictions of former federal employees rather than on individuals entering government. These postemployment laws focus on \"representational\" activities of former federal employees and are \"designed to protect against the improper use of influence and government information by former employees, as well as to limit the potential influence that a prospective employment arrangement may have on current federal officials when dealing with prospective private clients or future employers while still in government service.\" One study found the appeal of postemployment contact with the government to be strong, especially when there is a \"demand for the personnel credentials\" of former officials within an industry, and when former officials can move from a regulatory agency to the regulated industry.", "The revolving door restrictions are in addition to statutes that apply more broadly to all individuals engaged in certain representational activities, regardless of whether they ever worked for the federal government. These restrictions, found primarily in the Foreign Agents Registration Act (FARA) and the Lobbying Disclosure Act (LDA), however, do not prohibit any particular behavior. Rather, they require registration as a foreign agent or lobbyist and the periodic disclosure of information about influence activities."], "subsections": []}, {"section_title": "Supplemental Regulations", "paragraphs": ["Regulations for the implementation of revolving door provisions are issued by OGE. Found at 5 C.F.R. \u00c2\u00a72641, these regulations provide an overview and definitions for current revolving door, postemployment conflict-of-interest restrictions; list prohibitions covered by the regulations and the law; and provide a summary of statutory exceptions and waivers. The OGE regulations pertain only to postemployment restrictions found at 18 U.S.C. \u00c2\u00a7207 and only to executive branch employees. ", "In some cases, agencies have issued additional regulations that supplement OGE's regulations. For example, the Office of Management and Budget (OMB) provides guidance on the application of postemployment restrictions to all government employees, whereas the Federal Housing Finance Agency provides specific additional postemployment restrictions for its employees."], "subsections": []}, {"section_title": "Executive Order Ethics Pledges", "paragraphs": ["In several instances, the President has issued an executive order to influence the interactions and relationships between the public and the executive branch. For example, President John F. Kennedy issued an executive order (E.O. 10939) that included provisions for behavior by government employees. In the years after President Kennedy's Administration, other Presidents also issued ethics executive orders to address postgovernment revolving door restrictions. These executive orders were issued by President Lyndon Johnson, President Richard Nixon, President Ronald Reagan, and President George H. W. Bush. ", "In more recent Administrations, three Presidents have each issued an executive order that included additional revolving door restrictions for certain Administration appointees. They are President Clinton (1993), President Obama (2009), and President Trump (2017). Each of these executive orders contained an ethics pledge that provided additional conflict-of-interest requirements for executive branch personnel leaving the government and for individuals entering government. Each also extended statutory and regulatory revolving door provisions, included additional restrictions on lobbyists entering government and lobbying back government upon departure, and in two instances (Clinton and Trump) contained restrictions on former appointees leaving the government to represent a foreign principal. ", "For a more detailed discussion of executive order ethics pledges, see CRS Report R44974, Ethics Pledges and Other Executive Branch Appointee Restrictions Since 1993: Historical Perspective, Current Practices, and Options for Change , by Jacob R. Straus."], "subsections": []}]}, {"section_title": "Revolving Door: Advantages and Disadvantages", "paragraphs": ["Discussion of whether revolving door restrictions are positive or negative generally focuses on whether former government employees, when they switch jobs, have an inherent or perceived conflict of interest. Though legislation often treats the revolving door as a negative trend, the movement of individuals between the government and private sector may also present multiple potential benefits. One argument in favor of the revolving door, for example, is that the promise of future private-sector employment could potentially improve the quality of candidates applying for government jobs. Further, direct connections with government officials are important, but a close relationship is not necessarily what drives postemployment activities. Although some believe that government employees contemplating a move to the private sector will be friendly to industry interests at the expense of the public interest, two studies have also concluded that regulators instead may engage in more aggressive actions, regardless of their future job prospects. Additionally, the flow of personnel between the public and private sectors may increase the knowledge base of both sectors.", "Critics of the revolving door and the movement of employees between the government and private sector often advocate for longer \"cooling off\" periods and stronger restrictions related to conflicts of interest. Additionally, critics often assert that the revolving door has negative effects for the transparency and efficiency of government. These critics see existing bias between those in government and their connections with lobbying firms and the potential for those connections to be exploited when the individual is employed by the private sector.", "Additional criticism of the revolving door focuses on the worth of a former government employee over time. One study has concluded that a majority of revenue generated by private lobbying firms was directly attributable to employees with previous government experience. Another study found that \"'who you know' rather than 'what you know' drives a good proportion of lobbying revenues.\" "], "subsections": []}, {"section_title": "Research Design and Methodology", "paragraphs": ["In every Administration, executive branch officials arrive from, and depart to, the private sector. The movement between the government and the private sector touches on many industries and professions. When such movement occurs, it is possible that conflicts of interest could arise for current and former government officials. ", "Data on executive branch employees entering and exiting the government have historically been difficult to compile. During the 2017-2018 academic year (September 2017 to May 2018), CRS partnered with graduate students at the Bush School of Government and Public Service at Texas A&M University to collect and analyze data on the revolving door. Data were collected on the subset of former executive branch officials who were listed in the United States Government Policy and Supporting Positions (the Plum Book ). Published every four years, the Plum Book \"lists over 7,000 Federal civil service leadership and support positions \u00e2\u0080\u00a6 that may be subject to noncompetitive appointment, nationwide. Data covers positions such as agency heads and their immediate subordinates, policy executives and advisors, and aides who report to these officials.\" The positions listed in the Plum Book are political appointments, which represent a subset of executive branch employees. Therefore, this report presents data on that subset of individuals who have worked in these executive branch positions. Additionally, since the Plum Book is published only once every four years, it is a \"snapshot\" of a given Administration's appointees and includes only individuals who were serving at the time of publication.", "Four Plum Books were used to build a dataset of political appointees who served in President George W. Bush's and President Barack Obama's Administrations. Overall, 6,665 federal appointees were included spanning the two Administrations. Table 1 reports the number of appointees from each Administration included in this dataset. If an appointee served in more than one Administration, data reported are for the most recent Administration served. Appointees were not included in the dataset twice. Further, if an appointee left the Administration prior to the Plum Book 's publication, then they do not appear in the data.", "Political appointees included in the dataset represented 15 Cabinet departments and were paid at the GS-13 level or higher\u00e2\u0080\u0094a pay rate generally considered to have supervisory authority in the executive branch. Table 2 lists the Cabinet departments included in this study and the number of employees from that Cabinet department included in the dataset.", "For most individuals and industries, data on both pregovernment and postgovernment service is not readily obtainable from public sources. Therefore, this report uses official Lobbying Disclosure Act (LDA) data on registered lobbyists to gain insight into the revolving door phenomenon. Administered by the Clerk of the House of Representatives and the Secretary of the Senate, LDA registration data are required by law to be published online. The LDA database includes all registration and disclosure statements for lobbyists and is searchable by name, lobbying firm, or lobbying client. Since the Plum Book provides the names of former executive branch officials, the LDA database was searched to match pregovernment and postgovernment service of individuals registered as lobbyists. Appointees were classified as lobbyists if they were registered under LDA at any time before or after their government service, regardless of the duration of their registration. These data, which reflect a subset of people who move between employment in the private sector and government in either direction, are the focus of this report's analysis."], "subsections": []}, {"section_title": "Revolving Door Lobbyists in the Executive Branch", "paragraphs": [], "subsections": [{"section_title": "Overall Patterns", "paragraphs": ["Of Bush and Obama Administration executive branch appointees in the dataset, approximately 92% (6,159) were never registered as lobbyists, while 8% (506) were registered either before, after, or both before and after their government service. Of those registered as lobbyists, approximately 36.5% registered before joining the government, 55.1% registered after leaving their executive branch jobs, and 8.3% registered both before and after their federal service. Overall, these numbers generally appear to be in line with other studies of the executive branch, which suggest that most high-level federal appointees were not employed as lobbyists either prior to, or after, their government service.", "Examining the number and percentage of lobbyists in the dataset by Administration ( Table 3 ) shows that the overall levels of registered lobbyists either before or after government service is relatively low in both the Bush Administration and the Obama Administration. The Obama Administration, however, had more of its appointees who were registered lobbyists before their government service than after their government service, while the Bush Administration had more of its appointees who were registered lobbyists after their government service than before their government service.", "As shown in Table 3 , the total number of registered lobbyists in the dataset from the Bush Administration (340) was higher overall than from the Obama Administration (166), although the number of lobbyists serving in either Administration is not particularly large compared to the total number of appointees included in the dataset. During his Administration, President Obama instituted an executive order to restrict the number of lobbyists entering the Administration, a policy that did not exist in the Bush Administration. The number of individuals who were registered lobbyists before serving in President Obama's first term is similar to the first term of the Bush Administration. ", "The number of lobbyists entering government, however, was higher in President Obama's second term than in either the Bush Administration or President Obama's first term. For individuals leaving the Administration, the number of registered lobbyists is lower in the Obama Administration than in the Bush Administration. "], "subsections": []}, {"section_title": "Department Trends", "paragraphs": ["In the dataset, Cabinet departments differed greatly in the number of officials who were registered lobbyists either before or after their federal service. Some departments had few individuals who were registered lobbyists either before or after their time in government, whereas others had more. Figure 1 reports the percentage of registered lobbyists by department in the dataset collected by the Bush School of Government and Public Service and CRS.", "As shown in Figure 1 , the percentage of federal appointees in the dataset who registered as lobbyists before their government service, after their government service, or both ranges from a high of 18% (Department of Commerce) to a low of 1% (Department of Justice). The figures for other agencies ranges between 2% and 17%.", "The overall percentages of Cabinet department officials in the dataset who have ever been registered lobbyists might raise some questions for future research on the connections between government agencies and regulated industries. For example, some agencies appear to have a higher percentage of lobbyists than other agencies. Could a high percentage of lobbyists indicate stronger links to regulated industries? Similarly, how might lobbyists entering government differ in their government-industry connection than lobbyists leaving government? Might maintaining government-industry connections allow for better outreach by government agencies and access to information and resources by interest groups?", "The timing of when lobbyists registered may provide additional insight into how often federal officials in the dataset utilized the revolving door between government and lobbying. Figure 2 shows the percentage of LDA-registered officials at various agencies divided by when they registered\u00e2\u0080\u0094before their service, after their service, or both. ", "As Figure 2 shows, every Cabinet department for which data were gathered had some number of officials listed in the Plum Book who registered as lobbyists either before or after their government service, or both. The number of officials in the dataset identified as registered lobbyists is noted on the left-hand side of Figure 2 next to the name of the federal department at which they worked. As the figure shows, each department had a different mix of the percentage of its officials in the dataset identified as registered lobbyists who registered to lobby before their government service, after their government service, or both. ", "The percentage of the total number of lobbyists who worked at a particular agency who were registered lobbyists before their government service ranged from 10% in the Department of Labor to 61% in the Department of Veterans Affairs. The percentage of the total number of lobbyists who worked at a particular agency who were registered lobbyists after their government service ranged from 39% in the Department of Veterans Affairs to 82% in the Department of Transportation. Additionally, all departments included in the data except the Department of Veterans Affairs had individuals who were registered lobbyists before and after their government service. For the Department of Labor, half of officials who were lobbyists registered both before and after their government service. For other agencies, the percentages ranged from 1% (Department of State) to 19% (Department of Housing and Urban Development)."], "subsections": []}]}, {"section_title": "Conclusions and Selected Considerations for Congress", "paragraphs": ["In every Administration, individuals move between the public and private sectors. In recent years, there has been greater focus on potential additional restrictions that might be placed on individuals entering and exiting government through the introduction of legislation to amend current revolving door restrictions and the issuance of executive orders to temporarily increase the \"cooling off\" period for executive branch appointees. ", "Current law compartmentalizes the revolving door by placing distinctive postemployment restrictions on different types of government employees. For example, restrictions on government officials engaged in contracting do not necessarily apply to nonprocurement or noncontracting employees. Such varying restrictions were enacted because \"the present complexity and size of Executive departments require occasional separate treatment of certain departmental agencies and bureaus. It would be patently unfair in some cases to apply the one year no contact prohibition to certain employees for the purpose of an entire department\u00e2\u0080\u0094when, in reality, the agency in which he worked was separate and distinct from the larger entity.\" "], "subsections": [{"section_title": "Amending \"Cooling Off\" Periods", "paragraphs": ["In past Congresses, legislation has been introduced to lengthen revolving door \"cooling off\" periods. Those measures often propose extending \"cooling off\" periods to as few as two years to instituting a lifetime ban. If enacted, increased restrictions could serve to diminish the interaction between former government officials and government agencies and could reduce the appeal of leaving the government for a private-sector position. Additionally, such additional restrictions might \"eliminate the appearance of favoritism a former official may have in lobbying his or her former office, and \u00e2\u0080\u00a6 prevent a former official from financially benefiting from the use of confidential information obtained while working for the Federal Government.\"", "Conversely, extending the \"cooling off\" period could possibly be seen as an unreasonable restriction on postemployment and \"curtailing an individual's constitutional right of free association.\" Alternatively, Congress could reduce or eliminate the \"cooling off\" period. Having a shorter \"cooling off\" period, or eliminating it altogether, might arguably increase the talent pool available both inside and outside the government.", "Finally, Congress could codify past executive branch ethics pledges that generally placed additional restrictions on executive branch appointees. Codifying ethics pledge provisions would have the effect of making those changes permanent, and not subject to being revoked by a future executive order. This could allow for permanent changes to existing ethics and conflict-of-interest provisions."], "subsections": []}, {"section_title": "Administration of the Revolving Door", "paragraphs": ["Administration and enforcement of revolving door provisions are spread among several entities. For example, each agency is responsible for collecting financial disclosure statements from individual employees and ensuring that they comply with conflict-of-interest provisions, including revolving door restrictions. Potential violations of revolving door laws, however, would likely be prosecuted by the Department of Justice. Congress could amend current law to consolidate the administration and enforcement of conflict of interest and revolving door provisions. Consolidation could provide a single office to help ensure compliance and enforcement of existing laws. Consolidation, however, would potentially add an additional layer to the collection and evaluation documents used to identify potential conflicts-of-interest or revolving door concerns. Since each agency collects financial disclosure forms from its employees, those forms would still need to be transmitted to a central location. Ethics enforcement, including the review of financial disclosure forms for potential conflicts of interest, has historically been conducted at the agency level, as each agency is often in the best position to determine whether a real or perceived conflict exists for its employees."], "subsections": []}, {"section_title": "Maintain Current Revolving Door Standards", "paragraphs": ["Congress might determine that current revolving door laws and regulations are effective or that the potential costs of changes outweigh potential benefits. Instead of amending existing revolving door provisions, Congress could continue to use existing law and regulations to govern the movement of individuals between the federal government and private sector. Changes to the revolving door could be made on an as-needed basis through modifications to executive branch regulations or executive orders."], "subsections": []}]}]}}
{"id": "R45864", "title": "Tax Policy and Disaster Recovery", "released_date": "2020-02-11T00:00:00", "summary": ["The Internal Revenue Code (IRC) contains a number of provisions intended to provide disaster relief. Following certain disasters, Congress has passed legislation with temporary and targeted tax relief policies. At other times, Congress has passed legislation providing tax relief to those affected by all federally declared major disasters (disasters with Stafford Act declarations) occurring during a set time period. In addition, several disaster tax relief provisions are permanent features of the IRC.", "This report discusses the following permanent provisions:", "disaster casualty loss deductions; deferral of gain from involuntary conversions of property destroyed by a disaster; disaster relief for owners of low-income housing tax credit properties; income exclusion for disaster relief payments to individuals; income exclusion for certain insurance living expense payments; and IRS administrative relief in the form of extended deadlines and waiving of certain penalties.", "Congress began enacting tax legislation generally intended to assist victims of specific disasters in 2002 in the wake of the September 11, 2001, terrorist attacks. Laws targeting specific disasters contained provisions that were temporary in nature. Three acts, however\u00e2\u0080\u0094the Heartland Disaster Tax Relief Act of 2008 ( P.L. 110-343 ), the 2017 tax act ( P.L. 115-97 ), and the Taxpayer Certainty and Disaster Tax Relief Act of 2019 ( P.L. 116-94 )\u00e2\u0080\u0094provided more general, but still temporary, relief for any federally declared disaster occurring during designated time periods. The acts providing temporary relief include the following:", "The Job Creation and Worker Assistance Act of 2002 ( P.L. 107-147 ), which provided tax benefits for areas of New York City damaged by the terrorist attacks of September 11, 2001; The Katrina Emergency Tax Relief Act of 2005 (KETRA; P.L. 109-73 ), which provided tax relief to assist the victims of Hurricane Katrina in 2005; The Gulf Opportunity Zone (GO Zone) Act of 2005 ( P.L. 109-135 ), which provided tax relief to those affected by Hurricanes Katrina, Rita, and Wilma in 2005; The Food, Conservation, and Energy Act of 2008 (2008 Farm Bill; P.L. 110-234 ), which provided tax relief intended to assist those affected by severe storms and tornadoes in Kansas in 2007; The Heartland Disaster Tax Relief Act of 2008 ( P.L. 110-343 ), which provided tax relief to assist recovery from both the severe weather that affected the Midwest during summer 2008 and Hurricane Ike (this act also included general disaster tax relief provisions that applied to federally declared disasters occurring before January 1, 2010); The Disaster Tax Relief and Airport and Airway Extension Act of 2017 ( P.L. 115-63 ), which provided tax relief to those affected by Hurricanes Harvey, Irma, and Maria in 2017; The 2017 tax act ( P.L. 115-97 , commonly referred to using the title of the bill as passed in the House, the \"Tax Cuts and Jobs Act\") responded to major disasters occurring in 2016; The Bipartisan Budget Act of 2018 (BBA18; P.L. 115-123 ), which provided relief to those affected by the 2017 California wildfires; and The Taxpayer Certainty and Disaster Tax Relief Act of 2019 (Division Q of the Further Consolidated Appropriations Act, 2020; P.L. 116-94 ), which provided relief for major disasters generally occurring in 2018 and 2019.", "This report provides a basic overview of existing, permanent disaster tax provisions, as well as past, targeted legislative responses to specific disasters. The report also includes a discussion of economic and policy considerations related to providing disaster tax relief to individuals and businesses, and encouraging charitable giving to support disaster relief."], "reports": {"section_title": "", "paragraphs": ["T ax policy is one of several policy tools that can be used for disaster relief. At various points in time, Congress has passed legislation to provide tax relief and to support recovery following disaster incidents. Permanent tax relief provisions may take effect following qualifying disaster events. Targeted, temporary tax relief provisions can be designed to respond to specific disaster events. ", "The Internal Revenue Code (IRC) contains a number of permanent disaster-related tax provisions. These include provisions providing that qualified disaster relief payments and certain insurance payments are excluded from income, and thus not subject to tax. Taxpayers are also able to deduct casualty losses and defer gain on involuntary conversions (an involuntary conversion occurs when property or money is received in payment for destroyed property). The Internal Revenue Service (IRS) can also provide administrative relief to taxpayers affected by disasters by delaying filing and payment deadlines, waiving underpayment of tax penalties, and waiving the 60-day requirement for retirement plan rollovers. For disasters declared after December 20, 2019, the IRS is required to postpone federal tax deadlines for 60 days. The availability of certain tax benefits is triggered by a federal disaster declaration. Before 2017, casualty losses were generally deductible. However, changes made in the 2017 tax revision (commonly referred to as the \"Tax Cuts and Jobs Act\" [TCJA]; P.L. 115-97 ) restrict casualty loss deductions to federally declared disasters.", "Temporary tax-related disaster relief measures were enacted following a number of major disasters that occurred between 2001 and 2019. The following measures addressed specific disasters: ", "The Job Creation and Worker Assistance Act of 2002 (Job Creation Act; P.L. 107-147 ) responded to the terrorist attacks of September 11, 2001. The Katrina Emergency Tax Relief Act of 2005 (KETRA; P.L. 109-73 ) responded to Hurricane Katrina. The Gulf Opportunity Zone Act of 2005 (GO Zone Act; P.L. 109-135 ) responded to Hurricanes Katrina, Rita, and Wilma. The Food, Conservation, and Energy Act of 2008 (2008 Farm Bill; P.L. 110-246 ) responded to severe storms and tornadoes in Kansas in 2007. The Heartland Disaster Tax Relief Act of 2008, enacted as Title VII of Division C of P.L. 110-343 (the Heartland Act), and other provisions in P.L. 110-343 responded to severe Midwest storms in summer 2008 and Hurricane Ike and provided general disaster relief for events occurring before January 1, 2010. The Disaster Tax Relief and Airport and Airway Extension Act of 2017 (Disaster Tax Relief Act of 2017; P.L. 115-63 ) responded to Hurricanes Harvey, Irma, and Maria. The 2017 tax act ( P.L. 115-97 ; commonly referred to using the title of the bill as passed in the House, the \"Tax Cuts and Jobs Act\") responded to disasters occurring in 2016. The Bipartisan Budget Act of 2018 (BBA18; P.L. 115-123 ) responded to the 2017 California wildfires. The Taxpayer Certainty and Disaster Tax Relief Act of 2019 (Division Q of the Further Consolidated Appropriations Act, 2020; P.L. 116-94 ) provided relief for major disasters that generally occurred in 2018 or 2019. ", "This report provides an overview of permanent and temporary disaster tax provisions that have been enacted in response to specific disaster events. The report also summarizes which types of temporary provisions have been used to support different disaster events. Policy considerations related to business, individual, and charitable disaster relief are also addressed."], "subsections": [{"section_title": "Permanent Disaster Tax Relief Provisions", "paragraphs": ["There are several permanent disaster tax relief provisions. In some cases, these provisions apply to any property that is destroyed or damaged due to casualty or theft. In other cases, relief is limited to property lost as a result of federally declared disasters or for disasters for which the IRS undertakes administrative actions. Additionally, as discussed further below, there are instances where these permanent relief provisions have been temporarily enhanced in response to specific disaster events."], "subsections": [{"section_title": "Disaster Casualty Losses", "paragraphs": ["Taxpayers may be able to deduct casualty losses resulting from damage to or destruction of personal property (property not connected to a trade or business). For tax years 2018 through 2025, the casualty loss deduction is limited to losses attributable to federally declared disasters. After 2025, under current law, the deduction is to be available to losses arising from any fire, storm, shipwreck, or other casualty or theft. Casualty losses are an itemized deduction. Each casualty is subject to a $100 floor, meaning that only losses in excess of $100 are deductible for each casualty. Additionally, casualty losses are deductible only to the extent that aggregate losses exceed 10% of the taxpayer's adjusted gross income (AGI). Only casualty losses not compensated for by insurance or otherwise can be deducted."], "subsections": []}, {"section_title": "Involuntary Conversions", "paragraphs": ["An involuntary conversion occurs when property is destroyed, stolen, condemned, or disposed of under threat of condemnation, and the owner of the property receives money or payment for the property, such as an insurance payment. An involuntary conversion can also be viewed as a forced sale of property. The IRC allows taxpayers to defer recognizing a gain on property that is involuntarily converted. The replacement period\u00e2\u0080\u0094the time within which a taxpayer must replace converted property to receive complete deferral\u00e2\u0080\u0094is two years (three years for condemned business property). For a taxpayer's principal residence and its contents, the replacement period for an involuntary conversion stemming from a federally declared disaster is four years.", "Taxpayers whose principal residence or any of its contents are involuntarily converted as a result of a federally declared disaster qualify for additional special rules. First, gain realized from the receipt of insurance proceeds for unscheduled personal property (property in the home that is not listed as being covered under the insurance policy) is not recognized. Second, any other insurance proceeds received for the residence or its contents are treated as a common fund. If the fund is used to purchase property that is similar or related in service or use to the converted residence or its contents, then the owner may elect to recognize gain only to the extent that the common fund exceeds the cost of the replacement property.", "If a taxpayer's business property is involuntarily converted as a result of a federally declared disaster, then the taxpayer is not required to replace it with property that is similar or related in service to the original property in order to avoid having to recognize gain on the conversion, as long as the replacement property is still held for a type of business purpose. "], "subsections": []}, {"section_title": "Disaster Relief for Low-Income Housing Credit", "paragraphs": ["The low-income housing tax credit allows owners of qualified residential rental property to claim a credit over a 10-year period that is based on the costs of constructing, rehabilitating, or acquiring the building attributable to low-income units. Owners may claim a credit based on 130% of the project's costs if the housing is in a low-income or difficult development area. Owners must be allocated this credit by a state. Each state is limited in the amount of credits it may allocate to the greater of $2,000,000 or $1.75 multiplied by the state's population (both figures are adjusted for inflation and are $3,166,875 and $2.75625, respectively, for 2019), with adjustments.", "Owners of low-income housing tax credit (LIHTC) properties are eligible for relief from certain requirements of the program if the property is located in a major disaster area. Specifically, property owners are provided relief from credit recapture, carryover allocation rules, and income certifications for displaced households temporarily housed in an LIHTC unit. Property owners may also qualify for additional credits for rehabilitation expenditures, and, for severely damaged buildings in the first year of the credit period, the allocation of credits may either be treated as having been returned, or the first year of the credit period can be extended. State LIHTC allocating agencies are eligible for relief from compliance monitoring under the same IRS guidance. Additionally, households are eligible to occupy an LIHTC unit without being subject to the program's income limits if their principal residence was located in a major disaster area."], "subsections": []}, {"section_title": "Exclusion for Disaster Assistance Payments to Individuals", "paragraphs": ["Taxpayers can exclude from income qualified disaster relief and disaster mitigation payments. Excludable relief payments include payments for expenses that are not compensated for by insurance (or otherwise compensated). Excludable relief payments can include personal, family, living, or funeral expenses incurred as a result of the disaster; payments for home repairs or to replace damaged and destroyed contents; payments by a transportation provider for injuries or deaths resulting from a disaster; and payments from governments (or similar entities) for general welfare when disaster relief is warranted. Qualified disaster mitigation payments include amounts paid under the Robert T. Stafford Disaster Relief and Emergency Assistance Act or the National Flood Insurance Act (as in effect on April 15, 2005) for hazard mitigation."], "subsections": []}, {"section_title": "Exclusion for Insurance Living Expense Payments", "paragraphs": ["Taxpayers whose principal residence is damaged in a disaster (including a fire, storm, or other casualty) can exclude insurance reimbursements for living expenses while temporarily occupying another residence from income. This exclusion also applies to taxpayers who are denied access to their home by government authorities due to the threat of casualty or disaster."], "subsections": []}, {"section_title": "IRS Administrative Relief", "paragraphs": ["The IRS is authorized to postpone any federal tax deadline, including deadlines for filing returns, paying taxes, or claiming refunds, for up to one year for taxpayers affected by federally declared disasters. The IRS may also postpone certain Individual Retirement Account (IRA) deadlines. Specifically, the IRS can extend the 60-day period for plan participants to deposit rollover retirement plan distributions to another qualified plan or IRA. Additionally, the IRS may extend the time for a qualified plan to make a required minimum distribution.", "The IRS is required to postpone federal tax deadlines for 60 days for disasters declared after December 20, 2019. Taxpayers for whom deadlines are automatically postponed include (1) those whose principal residence is in a disaster area; (2) those whose principal place of business is in a disaster area; (3) individuals who are relief workers assisting in a disaster area; (4) individuals whose tax records are maintained in a disaster area; (5) any individual visiting a disaster area who was killed or injured as a result of the disaster; or (6) spouses filing a joint return with any person described in (1) to (5). The IRS is also authorized to waive underpayment penalties when a casualty, disaster, or other unusual circumstances have made it such that the imposition of a penalty would be against equity and good conscience."], "subsections": []}]}, {"section_title": "Past Temporary Disaster-Relief Provisions", "paragraphs": ["At times, Congress has chosen to use tax policy to provide temporary relief and support following disaster incidents. Temporary and event-specific disaster tax policy has been enacted following many major disaster events in recent years. However, temporary or targeted tax relief has not been enacted following all major disaster events. For example, no temporary or targeted disaster tax relief was enacted in response to Hurricane Irene in 2011 or Hurricane Sandy in 2012.", "The specific tax relief provisions enacted to respond to past disaster events are summarized in Table 3 and Table 4 . The following discussion provides additional information on these provisions. Tax provisions that have been used to respond to disasters most recently are discussed first . "], "subsections": [{"section_title": "Temporary Provisions Enacted to Respond to Recent Disasters", "paragraphs": ["The disaster tax relief packages enacted in 2017 to respond to Hurricanes Harvey, Irma, and Maria; in 2018 to respond to the 2017 California wildfires; and in 2019 to respond to disasters that occurred in 2018 and 2019 contained the same five provisions: (1) an enhanced casualty loss deduction; (2) expanded access to retirement plan funds; (3) increased limits on charitable deductions; (4) employee retention tax credits; and (5) EITC/CTC credit computation look-back rules. Enhanced casualty loss deductions were allowed for losses associated with any federally declared disaster occurring in 2016 and 2017, and access to retirement plan funds was enhanced for 2016 disasters. Certain areas of California that were affected by natural disasters in 2017 and 2018 will receive additional LIHTC allocations in 2020. Additionally, disaster tax relief for 2018 and 2019 disasters will also be available in U.S. possessions. "], "subsections": [{"section_title": "Enhanced Casualty Loss Deduction", "paragraphs": ["An enhanced casualty loss deduction has been made available for losses attributable to certain disasters or for losses occurring during certain periods of time. Most recently, an enhanced casualty loss deduction was provided for 2018 and 2019 disasters in the Taxpayer Certainty and Disaster Tax Relief Act of 2019 (Division Q of P.L. 116-94 ). Before that, an enhanced casualty loss deduction was provided for California wildfires in the Bipartisan Budget Act of 2018 (BBA18; P.L. 115-123 ); any disaster-related casualty loss in calendar years 2016 or 2017 in the 2017 tax act, commonly called the \"Tax Cuts and Jobs Act\" (TCJA; P.L. 115-97 ); and Hurricanes Harvey, Irma, and Maria in the Disaster Tax Relief and Airport and Airway Extension Act of 2017 ( P.L. 115-63 ). The enhancements (1) waive the 10% of AGI floor; (2) increase the $100 floor for each casualty to $500; and (3) allow taxpayers not itemizing deductions to add the deduction to their standard deduction. Generally, casualty loss deductions are claimed in the year of the loss. However, a loss in a federally declared disaster area may be deducted on the prior year's tax return. A similar provision was enacted in response to several previous disasters."], "subsections": []}, {"section_title": "Retirement Plan Distributions", "paragraphs": ["The Disaster Tax Relief Act of 2019, BBA18, TCJA, and the Disaster Tax Relief Act of 2017 all provided tax relief relating to retirement plan distributions. First, each act waived the 10% penalty that would otherwise apply on early withdrawals made from a qualifying retirement plan if the individual's principal place of abode was in the disaster area and the individual sustained an economic loss due to the disaster. The distributions were required to occur within a specified time frame, and the maximum amount that could be withdrawn without penalty was $100,000 or 100% of the present value of the plan participant's benefits (but not less than $10,000). Funds could be recontributed to a qualified plan over a three-year period and receive tax-free rollover treatment. Additionally, with respect to any taxable portion of the distribution, the individual could include one-third of such amount in gross income each year over the course of three tax years rather than including the entire amount on the tax return for the year of distribution.", "The acts increased the amount disaster victims could borrow from their retirement plans without immediate tax consequences. Under current law, the maximum amount that may be borrowed without being treated as a taxable distribution is the lesser of (1) $50,000, reduced by certain outstanding loans, or (2) the greater of $10,000 or 50% of the present value of the employee's vested benefits. For loans made during the applicable period, the acts increased this to the lesser of (1) $100,000, reduced by certain outstanding loans, or (2) the greater of $10,000 or 100% of the present value of the employee's vested benefits, as well as extending certain loan repayment dates by one year. A similar provision was enacted in response to several previous disasters."], "subsections": []}, {"section_title": "Increased Limits on Charitable Deductions", "paragraphs": ["Taxpayers are generally permitted to deduct contributions made to 501(c)(3) charitable organizations, subject to various limitations. Individuals may not claim a charitable deduction that exceeds 50% (temporarily increased to 60% beginning in 2018 through 2025) of their \"contribution base\" (adjusted gross income with certain adjustments), and corporations may not claim a deduction that exceeds 10% of their taxable income with certain adjustments. Any excess contributions may generally be carried forward for five years.", "The Disaster Tax Relief Act of 2019, BBA18, and the Disaster Tax Relief Act of 2017 temporarily suspended the 50% and 10% limitations for qualified contributions made for disaster relief efforts. An additional deduction is allowed for amounts by which the taxpayer's charitable contribution base exceeds the amount of all other allowable charitable contributions in the tax year. For individuals, the deduction could not exceed the amount by which the charitable contribution base exceeded other charitable contributions. For individuals, the earlier acts also suspended the overall limitation on itemized deductions for qualified contributions that was in effect through 2017. A similar provision was enacted in response to several previous disasters."], "subsections": []}, {"section_title": "Employee Retention Credit", "paragraphs": ["The Disaster Tax Relief Act of 2019, BBA18, and the Disaster Tax Relief Act of 2017 provided a temporary retention credit for disaster-damaged businesses that continued to pay wages to their employees who were unable to work after the disaster rendered the business inoperable. Eligible employees were those whose principal place of employment was in the applicable disaster area. The credit equaled 40% of the employee's first $6,000 in wages paid between the date the business became inoperable and the date it resumed significant operations at that location (or the end of the first calendar year, whichever came first). Wages can be those paid even if the employee provides no services for the employer, or for wages paid for services performed at a different location or before significant operations resume. This employee retention may not be for an employee during any period that the employer claims a work opportunity credit for the employee. A similar provision was enacted in response to several previous disasters."], "subsections": []}, {"section_title": "EITC/CTC Credit Computation Look-Back", "paragraphs": ["The Disaster Tax Relief Act of 2019 and BBA18 permitted individuals affected by 2018 and 2019 disasters or California wildfires in 2017 to elect to use their earned income from the previous year for computing the Child Tax Credit (CTC) and the Earned Income Tax Credit (EITC), instead of their disaster-year income, if previous-year income was greater than disaster-year income. The Disaster Tax Relief Act of 2017 also included this provision for those affected by Hurricanes Harvey, Irma, and Maria. This may have benefited taxpayers whose income was reduced in the year of the disaster. Taxpayers generally qualified only if they lived in the disaster zone or lived in the disaster area and the disaster caused them to be displaced from their principal place of abode. A similar provision was enacted in response to several previous disasters."], "subsections": []}, {"section_title": "Low-Income Housing Tax Credit", "paragraphs": ["The Disaster Tax Relief Act of 2019 increased credits available to California in 2020. Specifically, for certain areas of California that were affected by natural disasters in 2017 and 2018, the act increased California's 2020 LIHTC allocation by the lesser of the state's 2020 LIHTC allocations to buildings located in qualified 2017 and 2018 California disaster areas, or 50% of the state's combined 2017 and 2018 total LIHTC allocations.", "In the past, disaster relief legislation has provided additional LIHTC allocations to disaster-affected areas. The GO Zone Act temporarily increased the credits available to Alabama, Louisiana, and Mississippi for use in the GO Zone by up to $18.00 multiplied by the state's population that was located in the GO Zone prior to the date of Hurricane Katrina. It also temporarily treated the disaster zones as difficult development areas and used an alternate test for determining whether certain GO Zone projects qualified as low-income housing. The Heartland Act permitted affected states to allocate additional amounts for use in the disaster area of up to $8.00 multiplied by the state's disaster area population."], "subsections": []}, {"section_title": "Treatment of Certain U.S. Possessions", "paragraphs": ["Puerto Rico, Guam, the U.S. Virgin Islands, American Samoa, and the Commonwealth of the Northern Mariana Islands are U.S. territories. Each has a local tax system with features that help determine the territory's local public finances. Guam, the U.S. Virgin Islands, and the Northern Mariana Islands are mirror code possessions, meaning these territories use the Internal Revenue Code as their territorial tax law. Puerto Rico and American Samoa are non-mirror code possessions. These two possessions have their own tax laws. ", "The Disaster Tax Relief Act of 2019 requires payments from the U.S. Treasury to possessions for the temporary tax relief provided in the bill. Mirror code possessions will receive an amount equal to the loss in revenue by reason of the temporary disaster-related tax relief provided in the legislation. Non-mirror code possessions may receive a similar payment (a payment equal to the amount of temporary disaster tax relief that would have been provided if a mirror code had been in effect) if the possession has an approved plan for prompt distribution of payments . "], "subsections": []}]}, {"section_title": "Temporary Tax Provisions Used to Respond to Disasters Before 2010", "paragraphs": ["Provisions used to respond to 2016, 2017, 2018, and 2019 disasters were also used to respond to some disasters before 2010. Additionally, a number of other temporary tax provisions were used to respond to these pre-2010 disasters. The first time a temporary disaster tax relief package was enacted was in response to the September 11 terrorist attacks. The following sections summarize the various provisions included in temporary disaster tax relief legislation before 2010. "], "subsections": [{"section_title": "Expensing", "paragraphs": ["In general, capital expenditures must be added to a property's basis rather than being expensed (i.e., deducted in the current year). IRC Section 179 provides an exception so that a business may expense the costs of certain property in the year it is placed in service. After 2018, the maximum expensing allowance is $1 million, with an investment limitation of $2.5 million (both amounts are adjusted for inflation). In the past, these thresholds have been lower. For example, in 2007, the maximum expensing allowance under Section 179 was $125,000, and the deduction decreased dollar-for-dollar as the total cost of all property the business placed in service during the year exceeded $500,000. The Heartland Act increased the Section 179 limitations by up to $100,000 and $600,000 for qualified disaster area property for federally declared disasters occurring prior to January 1, 2010. Increased expensing allowances were enacted in response to several disasters before 2007 as well.", "The Heartland Act also added IRC Section 198A, which permitted full expensing (subject to depreciation recapture) of qualified expenditures for the abatement or control of hazardous substances released on account of a federally declared disaster, the removal of debris or the demolition of structures on business-related real property damaged by such a disaster, and the repair of business-related property damaged by such a disaster. This provision applied only to federally declared disasters occurring prior to January 1, 2010."], "subsections": []}, {"section_title": "Net Operating Loss Carryback", "paragraphs": ["Under current law, a business's net operating loss (NOL) can be carried forward indefinitely. Additionally, NOLs are limited to 80% of taxable income. There is no carryback of NOLs. This treatment was enacted in the 2017 tax act ( P.L. 115-97 ). Before 2018, in general, a taxpayer's net operating loss (NOL) could be carried back and deducted in the two tax years before the NOL year, and then carried forward for up to 20 years after the NOL year. Additionally, before 2018, the carryback was extended to three years for individuals who had a loss of property arising from a casualty or theft. A three-year period also applied for small businesses and farmers for NOLs attributable to federally declared disasters.", "The Heartland Act provided for a five-year carryback period for qualified losses from any federally declared disaster occurring prior to January 1, 2010. For such disasters, it also suspended the alternative minimum tax (AMT) provision that generally limits NOL deductions to 90% of alternative minimum taxable income. The corporate AMT was repealed in the 2017 tax act."], "subsections": []}, {"section_title": "Bonus Depreciation", "paragraphs": ["For eligible property acquired and placed in service after September 27, 2017, and before January 1, 2023, businesses may claim a 100% expensing (or bonus depreciation) allowance under Section 168(k). Like expensing limitations, the bonus depreciation allowance has changed over time. The Heartland Act provided a 50% bonus depreciation provision for qualified disaster assistance property from a federally declared disaster occurring prior to January 1, 2010. However, since other legislation provided 50% bonus depreciation during this time period, the provision was probably not meaningful. With 100% bonus depreciation in effect through 2022, providing additional bonus depreciation is not currently a policy option."], "subsections": []}, {"section_title": "Mortgage Revenue Bonds", "paragraphs": ["Mortgage revenue bonds are tax-exempt bonds used to finance below-market-rate mortgages for low- and moderate-income homebuyers. In general, the homebuyers must not have owned a residence for the past three years, and the houses' costs may not exceed 90% of the average purchase price for the area. However, for areas that are low income or in chronic economic distress, the three-year restriction does not apply, and the purchase price limitation is increased to 110%.", "For individuals whose homes were declared unsafe or ordered to be demolished or relocated due to a federally declared disaster occurring prior to January 1, 2010, the Heartland Act waived the three-year restriction and increased the purchase price limitation from 90% to 110%. It also permitted individuals whose homes were damaged by the disaster to treat the amount of owner financing provided for home repair and construction as a qualified rehabilitation loan, limited to $150,000 (the amount is generally limited to $15,000), which had the effect of waiving the three-year requirement for such financing. The GO Zone Act and KETRA contained similar provisions. ", "In the Heartland Act, the maximum amount of bonds each state could issue was $1,000 multiplied by that state's population in the disaster area, and need-based prioritization for state allocations was established. The GO Zone Act also expanded qualified private activity bond issuances for mortgage revenue bonds in disaster areas. The Go Zone Act added $2,500 per person in the federally declared Katrina disaster areas in which the residents qualify for individual and public assistance. The increased capacity added approximately $2.2 billion for Alabama, $7.8 billion for Louisiana, and $4.8 billion for Mississippi in aggregate bonds over the subsequent five years through 2010."], "subsections": []}, {"section_title": "Expensing of Environmental Remediation Costs (\"Brownfields\")", "paragraphs": ["Capital expenditures must generally be added to the property's basis rather than being expensed (i.e., deducted in the current year). IRC Section 198 provided an exception by allowing taxpayers to expense any qualifying environmental remediation costs paid or incurred prior to January 1, 2012, for the abatement or control of hazardous substances at a qualified contaminated site. Unlike the other provisions discussed in this report, Section 198 is not limited to federally declared disasters or specific disasters. The provision was enacted as a temporary one in the Taxpayer Relief Act of 1997 ( P.L. 105-34 ) and was extended a number of times before expiring at the end of 2011.", "The Heartland Act was among those laws that temporarily extended Section 198. The GO Zone Act had also extended the provision, but only for those costs for contaminated sites in the GO Zone, and treated petroleum products as a hazardous substance for the purposes of environmental remediation."], "subsections": []}, {"section_title": "Charitable Contributions of Inventory", "paragraphs": ["Before 2005, donors of food inventory that were not C corporations could only claim a charitable deduction equal to their basis in the inventory (typically, its cost). C corporations were allowed an enhanced deduction, which was the lesser of (1) the basis plus 50% of the property's appreciated value, or (2) two times basis.", "KETRA provided special rules that allowed all donors of wholesome food inventory to benefit from the enhanced deduction and allowed C corporations to claim an enhanced deduction for donations of book inventory to public schools. Neither provision was limited to donations related to the hurricane, but both were originally set to expire on December 31, 2005. The provisions have been extended several times since then, including by the Heartland Act (as part of its tax extenders package, rather than its disaster relief provisions). The enhanced deduction for charitable contributions of food inventory was made permanent in the Protecting Americans from Tax Hikes Act of 2015, enacted as Division Q in the Consolidated Appropriations Act, 2016 ( P.L. 114-113 ). The enhanced deduction for book inventory expired as scheduled at the end of 2011."], "subsections": []}, {"section_title": "Involuntary Conversions", "paragraphs": ["In addition to the general treatment of involuntary conversions (discussed above), the Job Creation Act, KETRA, the 2008 Farm Bill, and the Heartland Act increased the two-year time period to purchase the replacement property to five years for property in the applicable disaster area so long as substantially all of the use of the replacement property occurred in such area."], "subsections": []}, {"section_title": "Discharge of Indebtedness", "paragraphs": ["When all or part of a debt is forgiven, the amount of the cancellation is ordinarily included in the income of the taxpayer receiving the benefit of the discharge. However, there are several exceptions to this general rule. For example, no amount of the discharge is included in income if the cancellation is intended to be a gift or is from the discharge of student loans for the performance of qualifying services. The Mortgage Forgiveness Debt Relief Act of 2007 ( P.L. 110-142 ) temporarily excluded qualified canceled mortgage debt income that is associated with a primary residence from taxation (this provision was extended multiple times, and expired at the end of 2017). There are also certain situations in which the taxpayer may defer taxation, with the possibility of permanent exclusion, on income from the discharge of indebtedness, such as if discharge occurs when the debtor is in Title 11 bankruptcy proceedings or legally insolvent. Both KETRA and the Heartland Act included provisions that allowed victims to exclude nonbusiness debt forgiveness from income in certain conditions.", "Victims of Hurricane Katrina were allowed to exclude nonbusiness debt that was forgiven by a governmental agency or certain financial institutions if the discharge occurred after August 24, 2005, and before January 1, 2007. Individuals were eligible for this benefit if (1) their principal place of abode was in the core disaster area, or (2) it was in the Hurricane Katrina disaster area and they suffered an economic loss due to the hurricane. Individuals with certain tax attributes (such as basis) were required to reduce them by the amount excluded from income, which has the effect of deferring (rather than permanently eliminating) the tax on the cancelled debt.", "For victims with a principal place of abode in a Midwestern disaster area, the Heartland Act provided similar relief. However, if that home was in an area determined by the President to warrant only public assistance, the individual also had to have suffered an economic loss due to the severe weather."], "subsections": []}, {"section_title": "Employer-Provided Housing", "paragraphs": ["Both the GO Zone Act and the Heartland Act excluded the value of certain employer-provided housing, limited to $600 per month, from the employee's income and allowed the employer to claim a credit equal to 30% of that amount. Among other requirements, the employee must have had a principal residence in the applicable disaster area and have performed substantially all employment services for that employer in that area. The employer must have had a trade or business located within the applicable disaster area."], "subsections": []}, {"section_title": "Tax-Exempt Bonds", "paragraphs": ["Both the GO Zone Act and the Heartland Act temporarily allowed affected states to issue tax-exempt bonds to finance (1) qualified activities involving residential rental projects, nonresidential real property, and public utility property located in the disaster area; and (2) below-market rate mortgages for low- and moderate-income homebuyers. Under the GO Zone Act, the maximum amount of bonds that each state could issue was $2,500 multiplied by that state's population located in the GO Zone as determined prior to the date of Hurricane Katrina. Under the Heartland Act, the maximum amount of bonds each state could issue was capped at $1,000 multiplied by that state's population in the disaster area, and the act expressly stated that the bonds would have to be designated by the appropriate state authority on the basis of providing assistance to where it was most needed. The Job Creation Act, meanwhile, allowed New York to issue up to $8 billion (divided equally between the state and New York City) in tax-exempt bonds to finance qualified activities involving residential rental projects, nonresidential real property, and public utility property located in the disaster zone. The Job Creation Act and the GO Zone Act also allowed one additional advance refunding of qualifying bonds that were issued by those states.", "The GO Zone Act, the 2008 Farm Bill, and the Heartland Act allowed operators of low-income residential rental projects financed by IRC Section 142(d) bonds to rely on the representations of displaced individuals regarding their income qualifications so long as the tenancy began within six months of the displacement."], "subsections": []}, {"section_title": "Tax Credit Bonds", "paragraphs": ["Both the GO Zone Act and the Heartland Act permitted affected states to issue tax credit bonds to pay the principal, interest, or premiums on qualified governmental bonds or to make loans to political subdivisions to make such payments. Bondholders may claim a credit based on the product of a credit rate and the bonds' outstanding face amount. The bonds were required to be issued within a certain time period and could not have a maturity date beyond two years, among other requirements. Further, each state was capped in the amount of bonds it could issue\u00e2\u0080\u0094for example, under the Heartland Act, the maximum amount of bonds that could be issued by states with disaster area populations of at least 2 million was $100 million; the cap was $50 million for states with disaster area populations between 1 million and 2 million; and the other states could not issue any bonds. Bonds could not be used for certain activities. "], "subsections": []}, {"section_title": "Housing Exemption", "paragraphs": ["Both KETRA and the Heartland Act provided tax relief to those who provided free housing to those displaced by the storms. Individuals could claim additional personal exemptions of $500 each for up to four displaced people whom they housed for at least 60 consecutive days. These exemptions could be claimed in both the year of the disaster and the next year; however, no person could qualify the taxpayer for the exemption in both years. Among other requirements, the displaced person must have had a principal place of abode in the disaster area; if the home was not in the core disaster area, then the person must have been displaced due to either storm damage to the home or evacuation caused by the storm."], "subsections": []}, {"section_title": "Mileage Rate and Reimbursement", "paragraphs": ["Generally, individuals who use their personal vehicles for charitable purposes may claim a deduction based on the number of miles driven. The amount is set by statute at 14 cents per mile.", "KETRA and the Heartland Act each temporarily increased the charitable mileage rate to 70% of the standard business mileage rate if the vehicle was used for hurricane or Midwest disaster relief. The standard business mileage rate is periodically set by the IRS. In 2019, the standard mileage rate is 56 cents per mile.", "Additionally, both acts provided a temporary exclusion from a charitable volunteer's gross income for any qualifying mileage reimbursements received from the charity for the operating expenses of a volunteer's passenger automobile, when used for disaster relief."], "subsections": []}, {"section_title": "Treasury Authority to Make Adjustments Relating to Status", "paragraphs": ["KETRA, the GO Zone Act, and the Heartland Act all contained similar provisions that authorized the Treasury Secretary to make adjustments in the application of the tax laws for the tax years of the disaster and the immediate subsequent year so that temporary relocations due to the disaster did not cause taxpayers to lose any deduction or credit or to experience a change of filing status."], "subsections": []}, {"section_title": "Education Credits", "paragraphs": ["Individuals with eligible tuition and related expenses may claim certain higher education tax credits. Under the law existing when KETRA, the GO Zone Act, and the Heartland Act were enacted, the Hope credit was 100% of the first $1,000 of eligible expenses plus 50% of the next $1,000 of eligible expenses, both adjusted for inflation. The maximum Lifetime Learning credit is and was 20% of up to $10,000 of eligible expenses. Beginning in 2009, the partially refundable American Opportunity Tax Credit (AOTC) temporarily increased the Hope credit, allowing 100% of eligible expenses up to $2,000 plus 25% of the next $2,000 of eligible expenses. The Protecting Americans from Tax Hikes (PATH) Act (Division Q of P.L. 114-113 ) made the AOTC permanent, effectively eliminating the Hope credit.", "For individuals attending school in the GO Zone for 2005 and 2006, the GO Zone Act allowed certain nontuition expenses (e.g., books, equipment, and room and board) to qualify for the Hope and Lifetime Learning credits; doubled the $1,000 limitations in the Hope credit to $2,000; and increased the 20% limitation in the Lifetime Learning credit to 40%. The Heartland Act provided similar rules for students attending school in a Midwestern disaster area during 2008 or 2009. However, to take advantage of this provision for 2009, taxpayers were required to waive application of the AOTC provisions."], "subsections": []}, {"section_title": "Rehabilitation Credit", "paragraphs": ["Taxpayers may claim a credit equal to 10% of the qualifying expenditures to rehabilitate a qualified building or 20% of such expenditures for a certified historic structure. Both the GO Zone Act and the Heartland Act temporarily increased these percentages to 13% and 26%, respectively, for rehabilitating qualifying buildings and structures damaged by the applicable disasters."], "subsections": []}, {"section_title": "Public Utility Losses", "paragraphs": ["Under IRC Section 172, certain net operating losses, called specified liability losses, may be carried back for 10 years. Under IRC Section 165(i), certain disaster losses may be deducted in the year prior to the disaster. The GO Zone Act treated public utility casualty losses as a Section 172 loss. The GO Zone Act and the 2008 Farm Bill allowed public utility disaster losses to be deducted in the fifth taxable year preceding the disaster."], "subsections": []}, {"section_title": "Gulf Coast Recovery Bonds", "paragraphs": ["The GO Zone included provisions to encourage the Treasury Secretary to designate at least one series of bonds as Gulf Coast Recovery Bonds. The Treasury designated Series I inflation-indexed savings bonds purchased through financial institutions as \"Gulf Coast Recovery Bonds.\""], "subsections": []}, {"section_title": "New Markets Tax Credit", "paragraphs": ["Under the new markets tax credit, taxpayers are allocated a credit for investments made in qualified community development entities. The credit is claimed over a period of seven years and equals the amount of the investment multiplied by a percentage: 5% for the first three years and 6% for the next four years. The credit was capped at $2 billion for 2005 and $3.5 billion for 2006 and 2007. The GO Zone Act increased the cap by $300 million for 2005 and 2006 and by $400 million for 2007, and it allocated these amounts to entities making low-income community investments in the GO Zone."], "subsections": []}, {"section_title": "Small Timber Producers", "paragraphs": ["Under IRC Section 194, taxpayers may expense up to $10,000 of qualifying reforestation expenditures. Under IRC Section 172, the general rule is that taxpayers may carry net operating losses back for two years. The GO Zone Act created two special rules for timber producers with less than 501 acres of timber property: it (1) increased the Section 194 limit by up to $10,000 for expenditures made for qualified timber property in the applicable disaster zones; and (2) increased the Section 172 carry back period to five years for certain losses attributable to timber property in those zones."], "subsections": []}, {"section_title": "Work Opportunity Tax Credit", "paragraphs": ["Generally, businesses that hire individuals from groups with high unemployment rates or special employment needs, such as high-risk youths and veterans, may claim the work opportunity tax credit. The credit may be claimed for the wages of up to $6,000 that were paid during the employee's first year. For an employee who worked at least 400 hours, the credit equals 40% of his or her wages\u00e2\u0080\u0094thus, the maximum credit is $2,400.", "KETRA allowed businesses to claim the work opportunity credit on wages paid to certain employees hired after Hurricane Katrina. Eligible employees were those who had a principal place of abode in the core disaster area and either (1) were hired during the two-year period beginning August 28, 2005, for a position in the area, or (2) were displaced by the hurricane and hired after August 27, 2005, and before January 1, 2006. Congress later extended the WOTC's expiration from August 28, 2007, to August 28, 2009, for firms who hire \"Hurricane Katrina employees\" to work in the core disaster area (see the Tax Extenders and Alternative Minimum Tax Relief Act of 2008 in P.L. 110-343 ). The Job Creation Act provided similar treatment for New York Liberty Zone business employees and certain employees outside the zone."], "subsections": []}, {"section_title": "Leasehold Improvements", "paragraphs": ["For purposes of depreciation, the Job Creation Act generally shortened the recovery period for leasehold improvement property to five years for qualifying property located in the New York disaster zone."], "subsections": []}]}]}, {"section_title": "Economic and Policy Considerations57", "paragraphs": ["Tax policy for disaster relief might be motivated by multiple objectives. One objective could be distributional or relief-oriented. Tax policy could be designed to provide additional resources to businesses or individuals who experienced an uncompensated disaster loss. This relief could be targeted toward the low-income, although there are limitations when using tax policy to address low-income individuals and businesses. ", "Tax policy can also be used to encourage investment in disaster-affected areas. Absent government intervention, some level of private rebuilding will occur. A policy question, however, is whether this private building is sufficient, or if there are other barriers to investment in the disaster-affected region that call for government intervention. When investment subsidies are provided, there is the question of how much new investment is supported relative to how much investment is subsidized that would have occurred absent the subsidy. ", "There are also challenges associated with identifying the disaster area for the purposes of providing tax relief. In some cases, relief has been provided to a certain geographic area. In other cases, relief has been tied to a federal disaster declaration or provided only when individual assistance or individual and public assistance is provided. Narrowly defined geographic areas can limit tax benefits to those most likely to be harmed by the disaster, but can exclude some disaster victims. ", "The following sections discuss considerations by examining instances in which disaster relief was provided through the tax code for businesses and individuals, as well as through tax policy designed to support disaster-related charitable giving. "], "subsections": [{"section_title": "Providing Disaster Tax Relief to Businesses", "paragraphs": ["For businesses, hurricanes like Katrina, Maria, Irma, and Harvey caused unprecedented property and earnings losses. Employee displacement can create labor market challenges that persist over time. Further, longer-term supply chain disruptions can make it difficult for businesses to resume operations after initial clean-up efforts are complete.", "In the past, tax policy has been used to reduce the cost of business investment in cleanup and repairs. Bonus depreciation and enhanced expensing were used to provide disaster tax relief to businesses following several disasters before 2010. However, at present, with bonus depreciation at 100% (100% bonus depreciation is expensing), this policy tool is not readily available. Expensing allowances are higher than they have been historically, but could, if deemed necessary and under certain circumstances, be expanded further to provide additional expensing allowances in disaster areas. For instance, this could be a policy option should bonus depreciation be set at a rate of less than 100%, or eliminated altogether. An expansion to expensing for disaster-relief purposes could be accomplished through raising the expensing limit; expensing is currently allowed for investments up to $1,040,000. ", "Expansions to net operating loss (NOL) carrybacks and lengthening of replacement periods for involuntary conversions have also been used to provide tax relief following past disasters. Under current law, there is no carryback of NOLs. Allowing an NOL carryback for disaster-related losses could provide relief for taxpayers experiencing losses who had positive tax liability in a recent tax year. Expanding the replacement period for involuntary conversions could provide more flexibility to taxpayers looking to rebuild or reestablish businesses in the disaster area. ", "Tax policy can also be used to encourage businesses to provide employment and housing following disaster events. Employee retention credits encourage employers to continue paying employees in circumstances where the disaster affects business operations. Targeted hiring credits, such as the WOTC, can be used to provide an incentive to hire workers who were displaced by a disaster. With respect to housing, tax policy has been used to encourage employers to provide housing to their employees, as well as to support more low-income housing development in disaster-affected areas. ", "Disaster recovery and rebuilding has also been supported following certain disasters by providing targeted tax benefits to disaster-impacted geographic zones. The New York Liberty Zone was established following the September 11 terrorist attacks. The Gulf Opportunity Zone was established following the 2005 Gulf Coast hurricanes. These zones can receive additional allocations of allocated tax credits, such as the NMTC or the LIHTC. Past disaster tax relief has also provided additional allocations of tax-exempt or tax-credit bonds in disaster-affected zones. Some have questioned the effectiveness of tax-exempt private activity bonds as a tool for disaster relief, noting that in the case of the GO Zone, areas with the most damage were less likely to have access to bonds to help finance recovery and rebuilding. Should special bond allocations be deployed in response to future disasters, there may be ways to improve the bond allocation process to better target small businesses or heavily impacted areas.", "Other provisions might be designed to support specific industries or sectors affected by the disaster. For example, tax provisions for small timber producers and public utilities have been included in past disaster tax legislation. Narrowly targeted tax benefits, however, might leave out disaster-affected taxpayers that suffered losses yet have business activities that differ from the sector targeted for relief. ", "One consideration related to tax relief provisions for business is timing. The tax code is not well-suited to provide capital for cleanup, rebuilding, or recovery in the short term. Reduced tax liabilities provide a future financial benefit, but past disaster tax relief has not been designed to provide immediate access to capital that may be needed following a disaster.", "Another consideration related to business disaster tax relief is the potential scope of the benefit. For many business-related provisions, the benefit is limited to businesses with positive taxable income. Accelerated cost recovery, special deductions, and nonrefundable tax credits provide limited benefits to businesses with little profit or no tax liability. Businesses with limited current income or tax liability may, however, benefit from expanded NOL carrybacks.", "One policy question is whether certain disaster-related tax benefits are necessary or effective in achieving intended policy goals, given that much of the tax relief accrues to taxpayers who would have rebuilt without incentives. This critique raises the question of whether disaster-related tax benefits are intended to encourage certain behavior (rebuilding, for example), or primarily provide financial relief for businesses affected by the disaster. "], "subsections": []}, {"section_title": "Providing Disaster Tax Relief to Individuals", "paragraphs": ["Tax provisions might be used to provide financial relief to individuals who have lost property, income, or both following a disaster. To provide relief for taxpayers experiencing a loss of property, Congress has enacted legislation following certain past disasters to expand the deduction for casualty losses (beyond what is available under the permanent provision). Relief has been provided to taxpayers experiencing a loss of income by providing enhanced access to retirement plan funds or by using look-back rules for computing refundable tax credits. Several past disaster relief packages have also included provisions to support providing housing to affected individuals. ", "There are limits to using tax policy to provide disaster relief to low- and moderate-income taxpayers. Many low- and moderate-income individuals have zero individual income tax liability. For these individuals, additional exclusions from income or deductions will provide little or no relief, as there is no tax burden to eliminate. Further, low- and moderate-income individuals may have limited wealth. Tax provisions designed to enhance access to certain forms of savings (e.g., retirement accounts) also provide limited relief to the least well-off. Allowing refundable tax credits\u00e2\u0080\u0094the EITC and CTC\u00e2\u0080\u0094to be computed using the previous year's income is one form of individual disaster tax relief that is targeted at low- and moderate-income taxpayers. ", "Tax policy is generally better suited for providing relief to taxpayers higher in the income distribution. These taxpayers tend to have a positive tax liability that can be offset with various forms of tax reductions. Additionally, taxpayers in higher tax brackets receive a larger tax benefit from additional deductions (a deduction of $100 is worth $35 to someone in the 35% tax bracket, but worth $12 to someone in the 12% tax bracket, for example). Empirical evidence suggests access to savings via retirement account withdrawals helped some taxpayers replace lost income or destroyed assets following Hurricane Katrina. Thus, policies that reduce penalties associated with early withdrawals from retirement accounts or otherwise enhance access to this form of savings is one option for providing relief to taxpayers that have such resources to draw on. ", "There are also timing concerns in using the tax code to provide individuals relief following a disaster. As was noted for businesses, the tax code does not lend itself to providing immediate relief. ", "Another question regarding individual disaster tax relief is whether relief should be contingent on an individual having suffered losses due to a federally declared disaster, as opposed to some other disaster event. Through 2025, the casualty loss deduction is limited to federally declared disasters. However, after 2025, individuals may be able to claim a deduction for casualty losses arising from a fire, storm, shipwreck, or other casualty, regardless of whether the casualty was caused by an event with a federal disaster declaration. Is there something about having one's personal property destroyed in a federally declared disaster that merits special relief, different from what is provided when property is destroyed from a disaster without a federal disaster declaration? As it stands, disaster tax policy is inconsistently applied across different types of disaster events (e.g., federally declared versus non-federally declared disasters; disaster areas receiving or not receiving individual or individual and public assistance). ", "Disaster tax policy can also be designed to prevent taxpayers from facing a tax burden triggered by receipt of disaster relief. The permanent exclusions from income for disaster relief payments and insurance living expense payments clarify that these items are excluded from income for income tax purposes, and thus do not result in additional tax liability. In response to past disasters, temporary provisions have provided that certain forgiven debt would not be treated as income for income tax purposes. "], "subsections": []}, {"section_title": "Charitable Giving to Support Disaster Relief", "paragraphs": ["The charitable sector supports a wide range of activities associated with disaster relief and longer-term recovery. At times, Congress has acted following a disaster to provide additional tax incentives to support charitable disaster-related activities.", "To encourage charitable giving in the wake of a disaster, Congress has, in the past, relaxed certain income limitations associated with the deduction for charitable giving. The amount individuals can deduct for charitable use of a vehicle (the charitable mileage rate) was also temporarily increased in response to certain past disasters. Qualifying mileage reimbursements have also been allowed to be excluded from income. Other tax incentives enacted in response to disasters have encouraged particular types of charitable giving. Provisions designed to encourage charitable contributions of food inventory and books were enacted following Hurricane Katrina. The enhanced deduction for contributions of food inventory was later made permanent, while the enhanced deduction for book inventory expired in 2011. In some instances, Congress has relaxed charitable giving deadlines to allow contributions for disaster relief made early in the year to be deducted on the previous year's tax return. ", "A key question regarding enhanced deductions for charitable giving is how much additional giving results from the policy change. Is it the tax benefits that drive giving, or individuals' desire to aid those affected by the storm? Another question to consider is whether individuals shift their giving to disaster-related causes at the expense of other charitable activities (i.e., does disaster-related giving \"crowd out\" other forms of charitable giving?). When evaluating enhanced charitable giving incentives following a disaster, another question is how much giving is for disaster-related charitable activities, as opposed to other activities or uses. Charitable giving incentives are often applied broadly, and it can be difficult to target them to a particular event or geographic region.", "Another consideration is who benefits from an enhanced charitable giving deduction. On the individual side, the value of the tax benefit of the charitable deduction is highly concentrated among high-income taxpayers."], "subsections": []}]}, {"section_title": "Concluding Remarks", "paragraphs": ["Since 2001, a variety of temporary tax policies have been used to respond to various disaster events. Following some disaster events, tax relief packages providing numerous types of tax relief were passed by Congress and became law. Following other disaster events, no temporary disaster relief was enacted. Certain permanent tax provisions provide tax relief to all affected by qualifying disasters, even in cases where specific or targeted disaster tax relief is not enacted.", "Disasters are inevitable. Each disaster is also unique, with damages affecting individuals, businesses, industries, and other economic sectors differently. This poses a challenge for policymakers in determining what type of disaster relief can provide efficient and effective one-size-fits-all relief. Some disasters may require a targeted and tailored policy response. Some disasters are especially catastrophic events that fundamentally change the economy of the affected region. If disasters cause economic hardships across the region, disaster relief might include broader economic development measures, ones that go beyond compensating individuals or businesses for lost income or property. ", "Disaster tax relief as presently applied combines a base set of permanent disaster tax provisions, with additional provisions or relief provided for certain disaster events, targeted disaster zones, or time periods. Conceptually, this provides policymakers with flexibility regarding relief provided after certain disaster events. A question to consider is whether the current balance of permanent and temporary disaster tax relief provides the desired policy response efficiently and effectively. If temporary tax relief cannot be relied upon to deliver relief that is efficient and effective, one option could be to expand the set of permanent disaster-triggered tax relief provisions. Tax relief that is provided broadly, however, may not be particularly efficient, as it is not designed to provide the specific type of relief needed in the wake of a certain disaster event."], "subsections": []}]}}
{"id": "R46276", "title": "The Hours of Service (HOS) Rule for Commercial Truck Drivers and the Electronic Logging Device (ELD) Mandate", "released_date": "2020-03-18T00:00:00", "summary": ["In response to the COVID-19 outbreak, on March 13, 2020, the Department of Transportation (DOT) issued a national emergency declaration to exempt from the Hours of Service (HOS) rule through April 12, 2020, commercial drivers providing direct assistance in support of relief efforts related to the virus. This includes transport of certain supplies and equipment, as well as personnel. Drivers are still required to have at least 10 consecutive hours off duty (eight hours if transporting passengers) before returning to duty.", "It has been estimated that up to 20% of bus and large truck crashes in the United States involve fatigued drivers. In order to promote safety by reducing the incidence of fatigue among commercial drivers, federal law limits the number of hours a driver can drive through the HOS rule. Currently the HOS rule allows truck drivers to work up to 14 hours a day, during which time they can drive up to 11 hours, followed by at least 10 hours off duty before coming on duty again; also, within the first 8 hours on duty drivers must take a 30-minute break in order to continue driving beyond 8 hours. Bus drivers transporting passengers have slightly different limits. Approximately 3 million drivers are subject to the federal HOS rule.", "For decades, drivers recorded their service hours in paper log books. This method made violations of the HOS rule easy to hide. Since many drivers are paid by the mile, some drivers violated the HOS rule in order to drive longer and make more money. Some drivers said they had to violate the rule to meet the schedules imposed on them by dispatchers. There were concerns about the safety impacts of having drivers become even more fatigued by driving longer than the maximum times allowed by the HOS rule.", "In an effort to improve compliance with the HOS rule, in 2012 Congress mandated that trucks be equipped with electronic logging devices (ELDs), hardware devices that are connected to the truck engine to record driving time and transmit it during roadside inspections. In 2015, the Federal Motor Carrier Safety Administration (FMCSA) finalized regulations to implement that mandate. The mandate took effect in December 2017. FMCSA determined that the mandatory use of ELDs would improve highway safety, and could improve driver health if drivers take advantage of the rest periods mandated under the regulations to get adequate sleep.", "Since the ELD mandate went into effect, certain sectors of the commercial trucking industry have raised concerns about its impact. Since the ELD mandate did not change the HOS rule, but made it harder to evade the HOS limits without being detected, those concerns suggest that some operators may have routinely been out of compliance with the HOS rule. One sector that has been particularly critical of the improved enforcement of the HOS limits is the livestock hauling industry. The industry's business model has evolved to depend on hauling livestock long distances from around the nation to feedlots and slaughterhouses located mostly in the central states, and each stop along the way poses hazards to the livestock. Congress has repeatedly provided temporary waivers from the ELD mandate for livestock haulers, pending proposed revisions of the HOS rule by FMCSA. Currently the agency is prohibited from using federal funding to enforce the HOS rule against livestock haulers until September 30, 2020.", "The use of ELDs may help to quantify a challenge faced by drivers: inroads into their driving time caused by delays in loading and unloading their cargo by shippers and receivers. Drivers are typically paid by the mile, and by one estimate this unpaid \"driver detention time\" costs drivers $1.1 billion to $1.3 billion a year (an average of $1,300 to $1,500 per driver). This detention time is also estimated to increase the risk of crashes due in part to encouraging drivers to speed to make up for mileage that otherwise could not be driven during the allowable work time because of detention time.", "As the ELD mandate has been in effect for two years now, some impacts are starting to come into focus. An array of ELDs are now offered, some at prices below FMCSA's initial estimates. The impact of improved enforcement on industry activity and truck safety is not yet clear. Legislation is being proposed to help address the shortage of parking spots for truck drivers that can make it difficult to find a safe place to stop when they reach their HOS time limit. FMCSA has proposed a set of relatively minor changes to the HOS rule to, in the agency's words, increase safety while providing flexibility to drivers."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["Driving a commercial vehicle is one of the most dangerous occupations in the country. In 2018, 28.3 out of 100,000 full-time equivalent truck transportation workers died on the job, eight times the average rate across all occupations. Commercial truck driving is also dangerous to others; in 2017, 3,920 people not engaged in trucking were killed in crashes involving trucks, in addition to 841 truck occupants. Nor has trucking become safer in recent years: the fatality rate for occupants of large trucks, including both drivers and passengers, rose from 0.17 per 100 million vehicle miles traveled in 2009 to 0.28 in 2017. In that same year, 232 buses were involved in fatal accidents, including 13 intercity buses.", "It has been estimated that up to 20% of crashes involving large truck or buses involve fatigued drivers. Long driving hours, irregular work schedules, and variable sleeping circumstances make driver fatigue a significant concern in the commercial truck and bus industries. Truck and bus drivers are typically driving within a few feet of other drivers whose actions are not entirely predictable, so the commercial drivers need a generally high level of alertness. Automated driver-assistance safety systems (e.g., lane departure warning, automatic emergency braking) are now becoming available for commercial vehicles to help commercial drivers deal with traffic interactions, but such systems are not yet widespread. ", "Congress has legislated limits on the amount of time that commercial drivers are allowed to drive in a day and in a week since 1935. These regulations are known as the HOS rule. An estimated 3.42 million drivers and 540,000 carriers are subject to the HOS rule.", "In 2012, concerned about the impact of fatigue among truck and bus drivers on highway safety, Congress mandated that most commercial drivers of trucks and buses have their hours of service recorded by electronic logging devices (ELDs). This mandate went into effect in December 2017.", "This report reviews the ELD rule and the HOS rule that motivated it. The term \"driver,\" as used in the report, refers to commercial drivers of trucks and buses, unless otherwise indicated."], "subsections": []}, {"section_title": "Understanding Driver Fatigue", "paragraphs": ["The commercial motor vehicle industry operates 24 hours a day, 7 days a week. In addition, there are typically economic incentives for both carriers and individual commercial drivers to have drivers work well beyond a standard 40-hour workweek. As a result, managing fatigue among truck and bus drivers is a challenge.", "Fatigue includes a general lack of alertness and deterioration in mental and physical performance. Fatigue can increase a driver's risk of poor performance or impaired decision-making, leading to a crash or other incident harmful to the driver and to others. Studies have found that aviation, railroad, and public transportation workers face similar risks from fatigue. The National Transportation Safety Board has included managing fatigue among transportation workers on its \"most wanted\" list of safety improvements since 1990.", "A major complication in measuring the extent of fatigue-related crashes, as well as in managing fatigue among drivers, is that there is no convenient marker for measuring fatigue, akin to a blood-alcohol content level for measuring intoxication. In the absence of such a marker, it is difficult to determine the contribution of fatigue to crashes, with the result that the role of fatigue in crashes is likely underestimated. A National Academies of Sciences, Engineering, and Medicine panel concluded that, in spite of a number of studies that have produced various estimates of the proportion of crashes that can be attributed to driver fatigue, there is not enough information to support a reliable estimate.", "In any given case, it may be difficult to determine whether fatigue played a role in a commercial motor vehicle crash incident. The prevailing theory of crash investigators is that a crash is usually the result of a number of factors, not a single factor. In the case of commercial motor vehicle crashes, crash investigators, lacking a biological marker for fatigue that they can measure and typically not trained to recognize evidence of fatigue after the fact, are reluctant to list fatigue as a factor on crash reports, because they may be expected to explain their determination in court.", "While sleep is generally an antidote to fatigue, sleep is not always easy to come by and is not always restorative. Federal regulations can limit the number of hours drivers spend on duty and operating vehicles, but the regulations cannot mandate that those drivers rest when off duty; that is the responsibility of the driver. It is a common experience for a person to feel tired and attempt to fall asleep, and yet to lie awake, impatiently awaiting the onset of sleep. Moreover, medical conditions such as obstructive sleep apnea can result in people getting what appear to be adequate hours of sleep and yet still being subject to fatigue because their sleep is not restorative. Sleep apnea is widespread among commercial truck drivers. ", "Many other factors contribute to the experience of, and severity of, fatigue. A study of fatigue among airline crew members, which is also relevant to drivers, identifies the following factors: ", "the time of day. All else being equal, fatigue is most likely to occur and to be most severe between 2 a.m. and 6 a.m., due to circadian rhythms. the length of time a person has been working without a break. The longer the period, the more likely the worker is to experience fatigue. the length of time a person has been awake is directly related to the likelihood he or she will experience fatigue. the amount of sleep in the previous 24-hour period. The less sleep, the more likely the person is to experience fatigue. the amount of sleep a person has had in the previous several days. Getting insufficient sleep for several days has cumulative effects. variation in individuals' responses to these factors.", "Translated into the nature of a driver's work, these factors appear in such forms as long periods of wakefulness, long driving hours, inadequate sleep, erratic work schedules, disruption of circadian cycles, fatigue from work-related non-driving tasks (such as helping to load and unload the vehicle), difficulties in finding a safe place to rest when it's time to stop, and insufficient time to recover before starting the next work period. Other factors that have been cited as contributing to fatigue include prolonged experience of whole body vibration, noise, carbon monoxide exposure, extreme temperatures, and working in a high-pressure situation with little autonomy and control over one's time.", "Conversely, studies have identified safety practices that may help to offset fatigue-inducing factors associated with commercial driving, such as establishing a strong safety culture within a truck or bus firm, having dispatchers take account of fatigue when setting schedules, and providing assistance with fatiguing behaviors such as loading and unloading the truck."], "subsections": [{"section_title": "Fatigue Models", "paragraphs": ["Directly studying the elements that affect driver fatigue is difficult, because individuals' reports of the quality and duration of their sleep are not very reliable, even in the absence of incentives to slant the reports. Techniques to directly measure sleep quality and duration are invasive and, at the scale needed for reliable studies, expensive. ", "To address these difficulties, one approach taken by fatigue researchers has been to develop biomathematical models to estimate alertness based on sleep-wake schedules and the timing of work schedules. Such models can be used to improve safety and reduce risk of fatigue by comparing different work-shift or work-rest schedules. Such models are of interest to the Department of Defense as well as the Department of Transportation (DOT). Currently, the Federal Aviation Administration uses a biomathematical model as part of its process for evaluating fatigue risk management system applications from airlines.", "While such models can be useful for developing general work-rest schedules, current models do not account for individual differences in response to factors that lead to fatigue. A National Academies of Sciences, Engineering, and Medicine report on fatigue among truck drivers recommends caution in using biomathematical models to deal with irregular work schedules. Also, given the diversity of driver groups, the use of such models and other approaches to address fatigue is inconsistent. Drivers employed by carriers with large fleets of trucks may have more flexibility in scheduling and may also have company-sponsored health and wellness programs. Drivers for small firms and independent owner-operators may not have such resources.", "Lacking a conveniently measurable marker for fatigue, it is difficult for drivers or managers to know in advance the probability that a driver will experience an episode of fatigue. For this reason, attempts to manage fatigue among drivers have focused on limiting the number of hours they can work. Such \"hours of service\" regulations have been in place for many decades, and have changed over time. The regulations typically limit the length of daily and weekly work periods, and include minimum required periods off-duty during which workers may rest. "], "subsections": []}]}, {"section_title": "The Legal Background of the Hours of Service (HOS) Rule", "paragraphs": ["Congress directed that hours of service regulations be established for the interstate trucking industry in the 1935 law that first subjected interstate trucking to federal safety and economic regulation. The HOS regulation is one facet of the safety standards Congress has established for commercial motor vehicle safety. These standards also address vehicle maintenance and operation, requiring that the tasks imposed on drivers do not impair their ability to drive safely, that their physical condition is adequate for them to drive safely, that the operation of their vehicle does not impair their health, and that they not be coerced by others to operate in violation of safety federal standards.", "Commercial long-haul truck and over-the-road bus drivers work face challenging conditions for maintaining health, including long work hours, variable work schedules, long periods of sitting still, and difficulties in getting adequate sound sleep. It is accepted now in the medical community that lack of exercise and insufficient sleep over a period of time has harmful effects on a person's health, including increasing the risk for obesity, diabetes, high blood pressure, and premature death. The International Agency for Research on Cancer has classified night shift work as \"probably carcinogenic to humans\" due to its disruption of circadian rhythms.", "Studies indicate that many commercial drivers sleep less than seven hours per night during a normal work week; in one survey the median was just under seven hours, with a significant number reporting average sleep of less than six hours. That is an improvement from the past. Prior to changes to the HOS rule in 2003, studies had found drivers getting an average of just over five hours of sleep a night. The 2003 changes included an increase in the minimum off-duty time from 8 to 10 consecutive hours. Studies suggest that drivers were getting more sleep after the 2003 HOS changes, an average of 6.28 hours in one study. However, this is still less than the seven to eight hours recommended by experts in the relationship of sleep and health."], "subsections": []}, {"section_title": "HOS Rule and Enforcement", "paragraphs": ["Although these studies suggest that drivers may be getting more sleep as a result of the 2003 HOS changes, fatigue continues to be a significant safety and health issue for drivers. Fatal crashes involving large trucks and buses, after a drop related to reduced activity during the Great Recession of 2008-2009, rose 40% between 2009 and 2017, the most recent year for which statistics are available. ", "The HOS rule was most recently revised in 2011. It applies to drivers in both passenger and freight operations, though the rule for drivers carrying passengers is slightly different from that for drivers carrying freight (see Table 1 ). ", "The extent to which drivers are affected by the rule depends greatly on the nature of their work. The 700,000 registered trucking carriers range from independent owner-operators to corporations with thousands of vehicles and employee-drivers. Drivers' work ranges from carrying passengers to carrying diverse types of freight, including specialized cargoes and hazardous materials that require certification beyond a commercial driver's license. Some drivers are at the wheel all day, while others drive a few hours each day and wait in between routes. Local delivery drivers can sleep in their own beds each night, whereas over-the-road truckers may be away from home for weeks at a time. School bus drivers typically work a few hours in the morning and a few hours in the afternoon with a break in between, and are little affected by the HOS rule, while drivers of transit buses may have their schedules determined as much by collective bargaining agreements as by the HOS rule. ", "The HOS rule is most consequential for long-haul drivers, who may transport several loads during an extended period away from home, during which they may be driving at any hour of the day or night. These drivers represent roughly half of the drivers who are subject to the HOS limits. They are perhaps the most subject to fatigue among the different types of commercial drivers, due to the nature of their work. ", "Because long-haul truck drivers are typically paid by the mile or by the load, and most roads have a maximum speed limit, the simplest way for a driver to increase income is to drive more hours. This is also the simplest way to deal with unexpected delays a driver may encounter. Thus, many drivers have an incentive to violate the HOS rule. In the period prior to the ELD mandate, violations were frequent. For many decades enforcement was based on review of a paper log-book in which each driver recorded hours of service by hand; due to the ease with which the driver could enter false information, the log-book was sometimes derisively referred to as a \"comic book.\" Surveys of commercial drivers found that 40% to 75% admitted to violating the hours of service regulations, depending on the definition of \"violation\" used in the survey.", "Penalties for violating the HOS rule can be imposed by federal, state, and local officials. A driver found to have violated the HOS limits in a roadside inspection can be forbidden to drive (placed \"out of service\") until enough off-duty time has passed to bring the driver back into compliance. Federal, state, and local officials can impose civil and criminal penalties for HOS violations. Additionally, both the driver and the employer's safety scores can be affected. A driver with a poor safety score may experience greater difficulty finding work, and a carrier with a poor safety score may be less attractive to prospective drivers and customers and may be subject to closer attention from the Federal Motor Carrier Safety Administration (FMCSA). ", "Since the HOS rule limits the productivity and flexibility of the industry and the potential income of drivers, changes to the rule are often contentious. For example, one 2011 revision affected the so-called 34-hour restart rule. That provision formerly allowed drivers to resume work within the same week after hitting the 60-hour weekly limit by taking 34 consecutive hours off. The revision required that the 34-hour period would have to encompass two consecutive 1 a.m. to 5 a.m. periods in order to better align the rest period with drivers' circadian rhythms to improve the chances that the drivers got sufficient rest to prevent cumulative fatigue. Practically, it meant that the minimum 34-hour rest period could extend longer, depending on the time of day at which the driver began it. ", "Portions of the industry and some drivers protested that this change limited the flexibility of the timing of the 34-hour rest period. Congress suspended enforcement of that change in 2014, with a provision that the suspension of enforcement would continue unless a new study by FMCSA found that the change provided \"statistically significant improvement in all outcomes related to safety, operator fatigue, driver health and longevity, and work schedules.\" The study, submitted to Congress in March 2017, found that the change did not meet all four of the required areas of improvement. As a result, the previous restart rule is once again in force. "], "subsections": []}, {"section_title": "Fatigue Risk Management Plans and Systems", "paragraphs": ["Fatigue management programs contain policies and procedures for managing and reducing fatigue among employees, and often include goals of promoting both operational safety and employee health. Such programs can be divided into two broad categories: fatigue risk management plans and fatigue risk management systems. Fatigue risk management plans typically include fatigue awareness training for employees as well as a process for reporting instances of fatigued driving (in the commercial motor vehicle industry). FMCSA, in concert with Transport Canada, trucking industry trade associations, and other associations, developed the North American Fatigue Management Program, an online education program for commercial drivers, their employers, and others involved in commercial trucking. It is intended to inform these groups about the causes of driver fatigue, the impact of driver fatigue on increasing the risk of crashes, the long-term consequences of fatigue for driver health, and measures that can be taken to manage driver fatigue.", "Fatigue risk management systems include the elements of a fatigue risk management plan, plus a means for continuously monitoring and measuring individual workers' schedules using both subjective and objective data. A recent report from the National Academies of Sciences Engineering, and Medicine noted that the effectiveness of the program has not been properly assessed, and as for the impact of fatigue management programs in general, ", "A few large truck carriers have derived positive results from their almost 10 years of experience in integrating health and wellness and fatigue management programs, and they have shared those experiences, including the return on their investment in such initiatives. However, most studies of these programs have not sufficiently and reliably validated their efficacy for achieving the goal of reducing crash risk or their scalability. Also, little is known about the use of health and wellness programs by independent owner-operators.", "The report called for evaluation of the North American Fatigue Management Program. FMCSA is collaborating with the National Institute for Occupational Safety and Health on an evaluation of the effectiveness of the program. The results are not expected until 2022 or later."], "subsections": []}, {"section_title": "The Electronic Logging Device (ELD) Rule", "paragraphs": ["The purpose of the congressionally mandated ELD requirement is to promote highway safety by improving compliance with the commercial motor vehicle hours of service rule. An ELD is a piece of hardware that is connected to a vehicle's engine control module, often through the diagnostic port that mechanics use to investigate the engine's condition. The device must automatically record driving time, retain the data for at least seven days, and transmit it so that the driver's compliance with the HOS rule can be determined during a roadside inspection. It is generally regarded as more reliable than paper log books in recording drivers' start and stop times."], "subsections": [{"section_title": "Potential Benefits of the ELD Rule", "paragraphs": [], "subsections": [{"section_title": "Safety Benefits", "paragraphs": ["In issuing its rule implementing the ELD mandate, FMCSA stated that the rule was expected to result in greater adherence to the HOS rule, and thus reduce the amount of driving while fatigued. The end result is expected to be fewer crashes caused by fatigued drivers. Several studies prior to the mandate found that ELDs installed voluntarily by fleet owners had this effect. FMCSA estimated 1,844 crashes would be avoided annually as a result of the mandate, thus avoiding injuries to 562 persons and 26 fatalities. FMCSA estimated that the financial benefit of the reduced number of crashes would be $575 million annually.", "Although data are available on the number of truck crashes in 2017 (before the mandate took effect) and 2018 (after the mandate took effect), real-world truck crash numbers are affected by many variables, including weather and changes in demand for freight carriage by truck. Sufficient time has not yet passed, and sufficient data are not yet available, to assess whether ELDs have reduced the number of crashes as FMCSA had anticipated. ", "A study that looked at roadside inspection reports and crash data from the first nine months of 2018 found that HOS violations had gone down, particularly for owner-operators and very small fleets. (HOS violations by drivers for carriers with larger fleets were already low, in part because many of these carriers had already installed ELDs on their trucks.) The study also found that the average number of crashes per week had gone up slightly after the HOS mandate went into effect compared to 2017. For larger fleets the crash rate went down slightly. The study used freight shipment data and truck registration data to attempt to control for changes in vehicle miles traveled to see whether the increase in crashes was due to increased travel, and concluded that changes in freight shipment activity did not explain the increase in crashes.", "The study also found that the number of unsafe driving violations by individual owner-operators and drivers for very small fleets (two to six trucks) went up significantly after the ELD mandate went into effect, while such violations did not increase among drivers for larger carriers (who were more likely to have been operating with ELDs prior to the mandate).The authors hypothesized that in the period immediately after implementation of ELDs, independent owner-operators and drivers for small fleets had reduced the amount of time they spent driving and on duty, but were driving faster in order to travel the same number of miles and thus avoid a reduction in their incomes. If the results of this study are supported by other studies over time, it may suggest that differences between the drivers employed by large fleets and those who are self-employed or employed by very small fleets\u00e2\u0080\u0094or between the circumstances facing drivers in those two industry groups\u00e2\u0080\u0094lead to a higher propensity for risky behavior among drivers in the latter group. Such a difference would have implications for public safety and enforcement activity."], "subsections": []}, {"section_title": "Operational Benefits", "paragraphs": ["FMCSA estimated that the savings from reduced paperwork would be $2.4 billion annually. This benefit accrues partially to drivers and partially to their employers. For drivers, who are customarily paid by the mile rather than by the hour, the savings come from reducing the amount of time spent filling out paper logs rather than driving. For carriers, the savings come from automating the process of compiling driver records for recordkeeping and reporting. With total costs estimated at $1.8 billion, the estimated administrative benefits ($2.4 billion) combined with the safety benefits ($575 million) provide an estimated net benefit of $1.2 billion annually, according to FMCSA.", "These are estimates, and critics of the mandate, such as the Owner-Operator Independent Drivers Association (OOIDA), have contended that FMCSA has underestimated the costs and overestimated the benefits. OOIDA represents operators who own their trucks and are responsible for the cost of the ELD; many of its members view the ELD as an intrusion into their work life. Conversely, the American Trucking Associations, representing larger carriers, some of which had installed electronic logging devices or similar technology in their fleets years before the mandate to better track their operations, contend that ELDs offer many benefits beyond the ones that FMCSA included in its estimate. ", "Some carriers have responded to stricter enforcement of the HOS rule by using driver relays, in which one driver drives as far as the hours of service limit will allow, then is met by another driver who takes the trailer and continues the delivery. The first driver rests as required, then receives another load from a dispatcher. This method can also offer health and lifestyle benefits to drivers by enabling them to drive outbound one day and back toward their home on the following day, potentially making driving a more appealing job."], "subsections": []}, {"section_title": "Potential Policy/Regulatory Benefits", "paragraphs": ["The Government Accountability Office has noted that the ability of FMCSA and others to evaluate the impact of the commercial motor vehicle HOS regulation and proposed changes to it is limited due to the limited availability of data about driver schedules. The Federal Aviation Administration and the Federal Railroad Administration collect representative schedule data to evaluate the impact of hours of service rules in the aviation and railroad sectors, respectively, but FMCSA does not collect representative data that could be generalized to the trucking industry as a whole for purposes of better analyzing the impacts of the HOS rule. The widespread use of paper records by drivers made the task of collecting such data in representative amounts difficult. ", "The ELD regulation, which requires carriers to collect and store such data in electronic form, aims to simplify the task of collecting representative data on drivers' schedules, and thus could provide the opportunity for FMCSA and other analysts to better evaluate the impact of the HOS rule and proposed changes to the rule. However, there are several obstacles to this use of such data, including a statute limiting DOT's use of this data to enforcement of motor carrier safety, as well as privacy and cost concerns. Given the potential value of the ELD data for regulatory analysis, Congress may examine how these data could be made available for this purpose."], "subsections": []}]}, {"section_title": "Potential Costs of the ELD Rule", "paragraphs": ["The primary direct costs of the ELD mandate are the purchase and maintenance of ELDs. FMCSA estimated this cost at $1 billion annually, an average of around $495 per truck or bus. While prices vary according to features and other factors, there are ELDs now available for less than FMCSA's estimated average cost, potentially reducing the economic impact of the mandate."], "subsections": []}]}, {"section_title": "Issues", "paragraphs": [], "subsections": [{"section_title": "The Impact of Pay by the Mile on Safety", "paragraphs": ["One reason many truck drivers raised concerns about stricter enforcement of the HOS rule is that most interstate truck drivers are paid by the mile. Limiting the number of hours they can drive in a day and a week automatically imposes a ceiling on their earnings. That ceiling also amplifies the economic impact of any delays they may encounter during their workday, such as traffic congestion or time spent waiting for their cargo to be loaded or unloaded. ", "Numerous studies have found a connection between drivers being paid by the mile, limits on driving time, and driver propensity to speed and work longer hours. Speeding is dangerous in two ways: it increases the risk of crashes by reducing a driver's time to react to events, and it increases the severity of crashes. Working longer hours is associated with fatigued driving and a resulting increased crash risk.", "The HOS regulation give drivers some flexibility to deal with delays, as they may have up to 14 duty hours each day, of which up to 11 hours may be spent driving. But that flexibility may not always feel beneficial, as it can allow a driver paid by the mile to be on duty without being paid for up to three hours a day. ", "In 2015, prior to enactment of the Fixing America's Surface Transportation Act ( P.L. 114-94 ), which reauthorized surface transportation programs, including the activities of FMCSA, the Obama Administration proposed to require that commercial drivers subject to the HOS regulations who are paid by the mile be paid for time they spend on duty but not driving. Studies suggest that arrangement leads to drivers reducing their work hours, and thus reduces the risk of fatigued driving. The proposal was not enacted."], "subsections": []}, {"section_title": "Detention Time", "paragraphs": ["The use of ELDs may help to quantify a challenge faced by drivers: inroads into their driving time caused by delays in loading and unloading their cargo by shippers and receivers. By one estimate, unpaid \"driver detention time\" costs drivers who are paid by the mile $1.1 billion to $1.3 billion a year (an average of $1,300 to $1,500 per driver). This detention time is also estimated to increase the risk of crashes, as it uses up a driver's available duty time, pushing their driving time later into their duty period when they are more likely to feel tired, and may lead them to speed to make up for the detention time. This and other studies have found that drivers working for smaller carriers experience longer average detention times than drivers for larger motor carriers."], "subsections": []}, {"section_title": "Shortage of Parking Spots for Truck Drivers", "paragraphs": ["When a truck driver reaches the HOS driving time limit, the driver must stop and rest. It is not always easy to find parking for a large truck. A variety of factors, including weather and traffic, can make it difficult for a truck driver to know in advance the location at which it will become necessary to stop driving and park the vehicle, and a truck parking facility may be full when a driver reaches it. A shortage of truck parking facilities can pose two public safety hazards: a tired driver may continue driving in search of a place to park and thus increase the risk of a crash, and a driver may park in a place that is unsafe for himself or other drivers, such as on the shoulder of a busy road. ", "In 2005 Congress directed DOT to create a pilot program to address the shortage of truck parking on the National Highway System. Following a 2009 incident in which a driver who had stopped to rest at an abandoned gas station often used by truck drivers in need of parking was robbed and murdered in South Carolina, Congress passed Jason's Law, which made safe parking for truck drivers a national priority, required DOT to periodically survey the extent of truck parking facilities, and explicitly made construction of truck parking facilities eligible for federal funding. ", "State transportation agencies and private truck stop operators both supply parking spaces for truck drivers. The most recent survey of parking facilities found that the demand for truck parking exceeded the supply in most parts of the country, with an extreme shortage in the Mid-Atlantic region. A number of factors contribute to this situation, including the disinclination of truck drivers to pay for parking, a prohibition on commercial facilities at Interstate Highway rest areas, the interests of truck stop operators who oppose the provision of free public truck parking, and the relatively high cost of land at Interstate Highway access points."], "subsections": []}, {"section_title": "Lack of Data Regarding Bus Drivers and Crashes", "paragraphs": ["There are relatively few studies of the causes and effects of fatigue to bus drivers, compared to those examining truck drivers. In part this may be due to the relatively safer bus experience; as noted above, the number of people killed in bus crashes each year is a small fraction of the number killed in truck crashes. However, the comparatively low number of fatal bus crashes means that developing a nationally representative sample of bus crashes for analysis would require significant resources over many years. ", "The shortage of information on whether fatigue among bus drivers has different causes and effects than among truck drivers makes it tempting to extrapolate truck driver fatigue research to bus drivers. However, this may not be justified, as the population of bus drivers differ in certain respects from the population of long-distance truck drivers. For example, females represent a larger portion of bus drivers than of long-distance truckers."], "subsections": []}]}, {"section_title": "Proposed Changes to the HOS Rule", "paragraphs": [], "subsections": [{"section_title": "Adjustments Within the General Framework (\"Increased\u00c2 Flexibility\")", "paragraphs": ["On August 22, 2018, FMCSA published an Advance Notice of Proposed Rulemaking (ANPRM) seeking information and public comment about several potential changes in the Hours of Service rule for commercial drivers. The changes were described as providing more flexibility for drivers and carriers.", "The changes FMCSA is considering would mainly address complaints about the enforcement of the HOS rule through electronic logging from sectors of the trucking industry in which drivers' typical work schedules involve short periods of driving and long periods of being on duty but not driving, such as utility services and oilfield operations. ", "The changes being considered are the following:", "Short haul operations . Drivers who operate within a 100 air-mile radius of their normal work reporting location, and whose on-duty time does not exceed 12 hours, are not required to record their driving time and thus are not required to use an ELD. These drivers are assumed to be returning to their homes when off duty. FMCSA is considering expanding this exemption to short-haul drivers who spend up to 14 hours on duty, matching the on-duty period for other truck drivers, but permitting drivers claiming this exemption to continue to operate without recording their driving time. There would thus be no way to enforce the HOS rule with respect to short-haul driver. Adverse driving conditions . Drivers are allowed two extra hours of driving time under adverse conditions, which are defined as \"snow, sleet, fog, other adverse weather conditions, a highway covered with snow or ice, or unusual road and traffic conditions, none of which were apparent on the basis of information known to the person dispatching the run at the time it was begun.\" This exception allows a driver up to 13 hours of driving time, but does not extend the 14-hour on-duty limit. FMCSA is considering adding 2 hours to the 14-hour on-duty period for adverse conditions, thus allowing a maximum of 16 consecutive hours on duty. 30-minute break . FMCSA is seeking information on alternatives to, and the impact of eliminating, the required minimum 30-minute rest break after no more than 8 hours have passed since the driver either (a) came on duty or (b) spent a period of at least 30 minutes in the sleeper berth of a truck. FMCSA added the 30-minute break requirement to the HOS rule in 2011 based on evidence from several studies that for a period after taking a break from driving a driver is less likely to be involved in a crash. Split sleeper berth time . A driver in a truck with a sleeper berth can divide the minimum 10 off-duty hours into 2 separate periods totaling at least 10 hours; one of those periods must include at least 8 hours spent in the sleeper berth. FMCSA initially planned to conduct a pilot program giving drivers more flexibility in the length of the sleeper berth periods, in order to collect data regarding the impact of providing such flexibility on driver rest and alertness. In October 2018, FMCSA announced that it was cancelling the proposed pilot program, saying it already had enough data and research on the topic and wanted to fast-track its proposed changes to the HOS rule. ", "The public comment period on the potential changes closed in October 2019. FMCSA has not indicated when proposed regulations may be published."], "subsections": []}, {"section_title": "ELD Exemption for Livestock Haulers", "paragraphs": ["One of the industry segments that has objected most strenuously to being subjected to more stringent compliance with the HOS rule due to the ELD mandate is livestock hauling. These drivers transport living creatures that require food and water and that are subjected to increased stress and risk of injury by the process of being loaded onto and unloaded from a vehicle as well as by the experience of transport. Also, federal law provides that livestock being transported across state lines can be confined in a vehicle for a maximum of 28 consecutive hours, after which they must be unloaded for feeding, watering, and rest. The law, however, is apparently frequently ignored and not rigorously enforced by the U.S. Department of Agriculture. ", "The livestock hauling industry already had several HOS exemptions prior to the ELD mandate:", "The private transportation of agricultural commodities (including livestock, bees, and horses) to or from a farm or ranch by the owner or operator of the farm or ranch, family members, or employees is exempt from the HOS rule. During agricultural planting and harvesting seasons (as determined by each state), haulers of agricultural commodities, including livestock, bees, and horses, who operate within a 150 air-mile radius of the source of the commodities, are exempted from the HOS rule. This area within which this exemption can be claimed was expanded from a radius of 100 air miles to 150 air miles in 2012, more than doubling the exempted area. HOS regulations do not apply to drivers transporting agricultural commodities (including livestock) who operate completely within a 150 air-mile radius of the source of the commodities. When a driver who is using one of those exemptions drives beyond the 150 air-mile radius, the HOS regulations start to apply and the driver must record driving time and on-duty time. The time spent working and driving within the 150 air-mile radius does not count toward the HOS limits, so a driver could have been driving for several hours before officially recording the first hour of driving time.", "Over the past few decades the declining cost of transportation and other factors have led the livestock industry, particularly the cattle sector, to adopt a business model that emphasizes hauling livestock from around the lower 48 states to feedlots and slaughterhouses concentrated in the center of the country. By making it harder for drivers to evade the HOS limits without detection, the ELD mandate effectively reduces the distance that livestock can be transported within the 28-hour limit set in law before they must be unloaded and fed, watered, and given a chance to rest.", "The livestock hauling industry contends that abiding by the HOS limits may force drivers who reach the driving time limit of 11 hours to either unload the livestock for the period of the off-duty rest time and then reload them, putting them under additional stress and risk of injury, or else leave the livestock on the vehicle during the off-duty period. ", "Data are lacking on whether stricter compliance with the HOS rule increases the cost of shipping livestock and to what extent it reduces the number of crashes involving livestock haulers. Congress has barred FMCSA from using any of its funding to enforce the ELD mandate on livestock haulers through September 30, 2020."], "subsections": []}]}]}}
{"id": "R46111", "title": "Medicaid Eligibility: Older Adults and Individuals with Disabilities", "released_date": "2019-12-09T00:00:00", "summary": ["Medicaid is a joint federal-state program that finances the delivery of primary and acute medical services, as well as long-term services and supports (LTSS), to a diverse low-income population. In general, individuals qualify for Medicaid coverage by meeting the requirements of a specific eligibility pathway. An eligibility pathway is the federal statutory reference that extends Medicaid coverage to certain groups of individuals.", "Each eligibility pathway specifies the group of individuals covered by the pathway (i.e., the categorical criteria). It also specifies the financial requirements applicable to the group (i.e., the financial criteria), including income and, sometimes, resources (i.e., assets). In addition, an eligibility pathway often dictates the services that individuals are entitled to under Medicaid. Some eligibility groups are mandatory, meaning all states with a Medicaid program must cover them; other eligibility groups are optional.", "Older adults and individuals with disabilities are more likely to require LTSS due to chronic disabling conditions or other functional or cognitive impairments (e.g., extended nursing facility care, personal care, and other home and community-based services). Federal policymakers have an interest in understanding Medicaid eligibility pathways for these populations, as Medicaid plays a key role in providing LTSS coverage. Generally, LTSS is not covered by Medicare or major health insurance plans in the private market. In fact, Medicaid is the largest single payer of LTSS in the United States, accounting for 42% of all LTSS expenditures in 2016 (or $154 billion). Individuals eligible for or enrolled in Medicaid who are in need of Medicaid-covered LTSS must demonstrate the need for long-term care by meeting state-based level-of-care criteria. They may also be subject to a separate set of Medicaid financial eligibility rules.", "This report focuses on the ways in which adults aged 65 and older and individuals with disabilities qualify for Medicaid based on their age or disability status; that is, the eligibility pathways where the categorical criteria are being aged, blind, or disabled (referred to as \"ABD\" or \"ABD eligibility\"). Individuals who qualify for Medicaid on the basis of being blind or disabled include adults under the age of 65 as well as children. Generally, ABD populations qualify for Medicaid through an eligibility pathway under one of two broad coverage groups described in this report: Supplemental Security Income (SSI)-Related Pathways and Other ABD Pathways.", "SSI-Related Pathways", "SSI is a federal program that provides cash assistance to aged, blind, or disabled individuals who have limited income and resources. SSI rules form the foundation of Medicaid eligibility criteria for ABD populations. Thus, the relationship between SSI and Medicaid is important to understanding Medicaid eligibility for ABD populations, as states are generally required to provide Medicaid coverage for SSI recipients. The SSI-Related Pathways consist of Medicaid eligibility groups that generally meet the categorical and financial criteria of the SSI program, including", "SSI Recipients, Special Groups of Former SSI Recipients, and Other SSI-Related Groups.", "Other ABD Pathways", "States may extend Medicaid coverage to older adults and individuals with disabilities who have higher levels of income or resources than SSI program rules permit. These optional pathways allow states to offer Medicaid eligibility to individuals receiving LTSS either in an institution or home and community-based setting; working individuals who may need LTSS to support employment; and individuals with high medical expenses who \"spend down\" or deplete their income and resources. These optional eligibility pathways, referred to as Other ABD Pathways, include the following:", "Poverty-Related, Special Income Level, Special Home and Community-Based Services (HCBS) Waiver Group, HCBS State Plan, Katie Beckett, Buy-In, and Medically Needy.", "Topics Covered in This Report", "This report begins with an overview of Medicaid eligibility, followed by a summary of ABD eligibility pathways (i.e., SSI-Related Pathways and Other ABD Pathways). Next, it provides information about the categorical and financial eligibility criteria for each Medicaid ABD eligibility pathway. The Appendix provides tables that include statutory references and certain financial eligibility criteria for each Medicaid ABD eligibility pathway."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["Medicaid is a joint federal-state program that finances the delivery of primary and acute medical services, as well as long-term services and supports (LTSS), to a diverse low-income population. This population includes children, pregnant women, adults, individuals with disabilities, and those aged 65 and older. Medicaid is authorized under Title XIX of the Social Security Act (SSA) and financed by the federal government and the states. Federal Medicaid spending is an entitlement, with total expenditures dependent on state policy decisions and enrollees' use of services.", "Participation in Medicaid is voluntary, though all states, the District of Columbia, and the territories choose to participate. States design and administer their Medicaid programs based on broad federal guidelines. The federal government requires states to cover certain mandatory populations and services but allows states to cover other optional populations and services. In addition, several waiver and demonstration authorities in statute allow states to operate their Medicaid programs outside of certain federal rules. Due to this flexibility, factors such as eligibility, covered benefits, and provider payment rates vary substantially by state. At the federal level, the Centers for Medicare & Medicaid Services (CMS) within the Department of Health and Human Services (HHS) is responsible for administering Medicaid.", "This report focuses on Medicaid eligibility for adults aged 65 and older\u00e2\u0080\u0094referred to as older adults\u00e2\u0080\u0094and adults under the age of 65 and children with disabilities. Specifically, this report examines the statutory provisions that provide Medicaid eligibility for individuals who are considered to be aged, blind, or disabled. These populations are of interest to lawmakers primarily for two reasons: (1) they are more likely to need LTSS, and (2) they account for a large share of Medicaid spending. ", "Older adults and individuals with disabilities are more likely to need LTSS due to physical limitations, cognitive impairment, or chronic disabling health conditions. Those with LTSS needs are a diverse group that range in age from very young children to older adults. Disabilities can be wide ranging, including, for example, physical limitations, visual impairments (i.e., blindness), intellectual or developmental disabilities, cognitive and behavioral health conditions, traumatic brain injuries, and HIV/AIDS. ", "Federal policymakers have an interest in understanding Medicaid eligibility as the program is an important source of coverage for those with long-term care needs. Medicaid provides LTSS coverage (e.g., extended nursing facility care, personal care, and other home and community-based services) that is generally not covered by Medicare or major health insurance plans offered in the private market. As the largest single payer of LTSS in the United States, Medicaid plays a key role in providing LTSS coverage. In 2016, total Medicaid LTSS spending (federal and state combined) was $154 billion, accounting for 42% of all LTSS expenditures nationally. ", "Because many older adults and individuals with disabilities use LTSS, they tend to account for a disproportionate share of Medicaid spending, which has implications for both federal and state budgets. In FY2016, Medicaid provided health care services to about 71 million enrollees, with expenditures of approximately $538 billion (federal and state combined). Although older adults and individuals with disabilities made up only about one-quarter (23%) of all Medicaid enrollees that year, they accounted for more than half (54%) of all benefit spending. Among all Medicaid enrollees, 30% of Medicaid spending in FY2013 was on LTSS, compared with 62% among older adults (i.e., aged) and 36% among individuals with disabilities (i.e., disabled).", "The next section of this report provides an overview of Medicaid eligibility, followed by a summary of eligibility pathways for older adults and individuals with disabilities. The report then describes specific information about each eligibility pathway for older adults and individuals with disabilities. The Appendix includes summary tables with statutory references and general financial eligibility criteria for each of the eligibility pathways described in this report."], "subsections": []}, {"section_title": "Overview of Medicaid Eligibility", "paragraphs": ["Eligibility for Medicaid is determined by both federal and state law, whereby states set individual eligibility criteria within federal minimum standards. This arrangement results in substantial variability in Medicaid eligibility across states. Therefore, the ways that individuals can qualify for Medicaid reflect state policy decisions within broad federal requirements. ", "In general, individuals qualify for Medicaid coverage by meeting the requirements of a specific eligibility pathway (sometimes referred to as an eligibility group) offered by the state. Some eligibility groups are mandatory, meaning all states with a Medicaid program must cover them. Other eligibility groups are optional, meaning states may elect to cover them. Within this framework, states may have some discretion to determine certain eligibility criteria for both mandatory and optional eligibility groups. In addition, states may apply to CMS for a waiver of federal law to expand health coverage beyond the mandatory and optional eligibility groups specified in federal statute."], "subsections": [{"section_title": "Eligibility Pathways", "paragraphs": ["An \"eligibility pathway\" is the federal statutory reference(s) under Title XIX of the SSA that extends Medicaid coverage to one or more groups of individuals. Each eligibility pathway specifies", "the group of individuals covered by the pathway (i.e., the categorical criteria), the financial requirements applicable to the group (i.e., the financial criteria), whether the pathway is mandatory or optional, and the extent of the state's discretion over the pathway's requirements.", "Individuals who have met the categorical and financial requirements of a given eligibility pathway and are in need of Medicaid-covered LTSS must also meet additional requirements. In general, they must demonstrate the need for such care by meeting state-based level-of-care criteria. They may also be subject to a separate set of Medicaid financial eligibility rules to receive LTSS coverage. All Medicaid applicants, regardless of their eligibility pathway, must meet federal and state requirements regarding residency, immigration status, and documentation of U.S. citizenship.", "Not all Medicaid enrollees have access to the same set of services. An applicant's eligibility pathway often dictates the Medicaid services that a program enrollee is entitled to (e.g., women eligible due to their pregnancy status are entitled to Medicaid pregnancy-related services). Most Medicaid beneficiaries receive services in the form of what is sometimes called \"traditional\" Medicaid\u00e2\u0080\u0094an array of required or optional medical assistance items and services listed in statute. However, states may furnish Medicaid in the form of alternative benefit plans (ABPs). In addition, states may also offer LTSS under traditional Medicaid or through a waiver program for individuals who meet state-based level-of-care criteria for services.", "Low-income older adults and individuals with disabilities may qualify for Medicaid through a number of eligibility pathways. In general, Medicaid data report the following broad categorical eligibility groups: children, adults, aged, and disabled. This report focuses on the eligibility of older adults and individuals with disabilities based on their age or disability status; that is, the pathways where the categorical criteria are being aged, blind, or disabled (sometimes referred to as \"ABD\" or \"ABD eligibility\"). ", "Individuals who qualify for Medicaid on the basis of being blind or disabled include adults under the age of 65 as well as children. Most (but not all) ABD pathways recognize blindness as a distinct condition from other disabilities and, as such, provide separate categorical criteria for this condition. However, when reporting data on broad categorical eligibility groups, CMS includes statutorily blind individuals in the \"disabled\" category. ", "Individuals with disabilities may also be eligible for Medicaid under pathways available more broadly to able-bodied children and adults for a number of reasons; for example, because they do not meet the definition of disability under an ABD eligibility pathway, have income or assets above certain limits, do not meet the state-based level-of-care criteria, or have one or more chronic condition(s) but have not developed a chronic-disabling condition. Adults under the age of 65 and children who qualify for Medicaid on the basis of a reason other than being blind or disabled are classified by CMS as \"adults\" and \"children,\" respectively.", "Individuals applying for Medicaid may be eligible for the program through more than one pathway. In this situation, applicants may choose the pathway that would be most beneficial to them\u00e2\u0080\u0094both in terms of how income and sometimes assets are used to determine Medicaid eligibility, and in terms of the available services associated with each eligibility pathway. ", "This report classifies the ABD eligibility pathways for older adults and individuals with disabilities into two broad coverage groups: (1) Supplemental Security Income (SSI)-Related Pathways and (2) Other ABD Pathways (see Table 1 ). The SSI-Related Pathways consist of mandatory and optional eligibility groups that generally meet the requirements of the federal SSI program. These groups include older adults and individuals with disabilities who are SSI eligible, are deemed to be SSI eligible, or would be SSI eligible if not for a certain SSI program rule. ", "The Other ABD Pathways consist of optional eligibility groups that have levels of income or resources above SSI program rules. These groups generally use SSI categorical criteria to define older adults and individuals with disabilities and may use certain SSI financial criteria to determine their financial eligibility for Medicaid. Each of the specific pathways under these broad coverage groups are described in more detail below. Table A-1 in the Appendix lists the statutory references and certain eligibility criteria for each Medicaid ABD eligibility pathway."], "subsections": [{"section_title": "Categorical Eligibility Criteria", "paragraphs": ["Medicaid categorical eligibility criteria are the characteristics that define the population qualifying for Medicaid coverage under a particular eligibility pathway; in other words, the nonfinancial requirements that an individual must meet to be considered eligible under an eligibility group. Medicaid covers several broad coverage groups, including children, pregnant women, adults, individuals with disabilities, and individuals aged 65 and older (i.e., aged). Each of these broad coverage groups includes a number of distinct Medicaid eligibility pathways.", "Historically, Medicaid eligibility was limited to poor families with dependent children who received cash assistance under the former Aid to Families with Dependent Children (AFDC) program, as well as poor aged, blind, or disabled individuals who received cash assistance under the SSI program. Medicaid eligibility rules reflected these historical program linkages\u00e2\u0080\u0094both in terms of the categories of individuals who were served, and because the financial eligibility rules were generally based on the most closely related social program for the group involved (e.g., AFDC program rules for low-income families with dependent children and pregnant women, and SSI program rules for aged, blind, or disabled individuals). Over time, Medicaid eligibility has expanded to allow states to extend coverage to individuals whose eligibility is not based on the receipt of cash assistance, including the most recent addition of the ACA Medicaid expansion population (i.e., individuals under the age of 65 with income up to 133% of the federal poverty level). Moreover, Medicaid's financial eligibility rules have been modified over time for certain groups."], "subsections": []}, {"section_title": "Financial Eligibility Criteria", "paragraphs": ["Medicaid is a means-tested program that is limited to those with financial need. However, the criteria used to determine financial eligibility\u00e2\u0080\u0094income and, sometimes, resource (i.e., asset) tests\u00e2\u0080\u0094vary by eligibility group. These income and resource tests are expressed separately as an income standard and a resource standard . The income standard is expressed as a dollar amount or as a share of the federal poverty level (FPL). The resource standard is expressed as a dollar amount. The ways in which income and resources are counted for the purposes of applying the respective standard are referred to as the income - counting methodology and resource - counting methodology (see text box \"Medicaid Financial Criteria: Terminology\").", "Under the income-counting methodology, certain types of income may be disregarded before comparing a person's (or household's) income against the income standard, enabling individuals with higher amounts of gross income to meet the income standard and qualify for Medicaid. Similarly, certain rules determine how an applicant's resources (i.e., assets) are counted before they are compared to the specified resource standard.", "For most eligibility groups\u00e2\u0080\u0094nonelderly and nondisabled individuals, children under the age of 18, and adults and pregnant women under the age of 65\u00e2\u0080\u0094the financial criteria used to determine Medicaid eligibility are based on Modified Adjusted Gross Income (MAGI) income-counting rules. No resource or asset test is used to determine Medicaid financial eligibility for MAGI-eligible individuals. ", "Although MAGI applies to most Medicaid eligible populations, certain populations (e.g., older adults and individuals with disabilities) are statutorily exempt from MAGI income-counting rules. Instead, Medicaid financial eligibility for MAGI-exempted populations is based on the income-counting rules that match the most closely related social program for the group involved (e.g., SSI program rules for the aged, blind, or disabled eligibility groups). Thus, SSI program rules form the foundation of Medicaid eligibility for older adults and individuals with disabilities under mandatory and optional eligibility pathways and include both an income and a resource or asset test (see the next section for more information on SSI rules).", "However, under optional SSI-Related and Other ABD eligibility pathways, states may modify SSI program rules when determining income- and resource-counting methodologies. For example, some optional eligibility pathways allow states to choose their own income- or resource-counting methodology. Other eligibility pathways allow states to use Section 1902(r)(2) of the SSA, which lets them choose more liberal income- or resource-counting methodologies than those under the SSI program. Thus, for certain optional eligibility pathways, a state can choose to include or disregard certain sources of income or resources, in part or in whole, when determining whether an applicant meets the income or resource standards for that optional eligibility pathway. (See Table A-2 in the Appendix , which lists the financial eligibility criteria\u00e2\u0080\u0094income standard and counting methodologies and resource standard and counting methodologies\u00e2\u0080\u0094for each Medicaid eligibility pathway identified in this report.)", "In addition, state Medicaid programs are required to establish an Asset Verification System (AVS) that meets certain minimum requirements to determine and re-determine Medicaid eligibility for aged, blind, or disabled Medicaid applicants and enrollees. Further discussion of AVS is beyond the scope of this report."], "subsections": []}]}, {"section_title": "Medicaid Eligibility and SSI Program Rules", "paragraphs": ["SSI program rules form the foundation of Medicaid categorical and financial eligibility criteria for older adults and individuals with disabilities. Medicaid generally uses SSI categorical criteria to define the ABD populations. In addition, Medicaid often uses or adapts SSI's financial standards and counting methodologies to specify the financial eligibility requirements applicable to the SSI-Related Pathways and the Other ABD Pathways. Thus, understanding SSI program rules is important to understanding Medicaid eligibility rules for older adults and individuals with disabilities. ", "SSI is a federal assistance program authorized under Title XVI of the SSA that provides monthly cash payments to aged, blind, or disabled individuals who have limited income and resources. SSI is intended to provide a guaranteed minimum income to adults who have difficulty covering their basic living expenses due to age or disability and who have little or no Social Security or other income. It is also designed to supplement the support and maintenance of needy children under the age of 18 who have severe disabilities. Unlike Medicaid, SSI eligibility requirements and benefit levels are based on nationally uniform standards. SSI is administered by the Social Security Administration but is not part of the Old Age, Survivors, and Disability Insurance program, commonly known as Social Security. ", "The following sections provide a brief overview of SSI's categorical and financial eligibility criteria. For more information on these and other SSI criteria, see CRS Report R44948, Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI): Eligibility, Benefits, and Financing . "], "subsections": [{"section_title": "SSI Categorical Eligibility Criteria", "paragraphs": ["To be categorically eligible for SSI, a person must be an \"aged, blind, or disabled individual,\" as defined in Title XVI of the SSA ( Table 2 ). The term \"aged\" refers to individuals aged 65 and older. The term \"blind\" refers to individuals of any age who have central visual acuity of 20/200 or less in the better eye with the use of a correcting lens, or a limitation in the fields of vision so that the widest diameter of the visual field subtends an angle of 20 degrees or less (i.e., tunnel vision). ", "Adults aged 18 and older are considered \"disabled\" if they are unable to engage in any substantial gainful activity (SGA) by reason of any medically determinable physical or mental impairment that can be expected to result in death or that has lasted or can be expected to last for a continuous period of not less than 12 months. The Social Security Administration uses a monthly earnings standard to determine whether an individual's work activity constitutes SGA. The agency adjusts this standard annually to reflect changes in national wage levels. In 2019, the SGA earnings standard is $1,220 per month. (The SGA earnings standard is a proxy measure for total disability; it is not used to determine financial eligibility for SSI.) Adults generally qualify as disabled if they have an impairment (or combination of impairments) of such severity that they are unable to perform any kind of substantial work that exists in the national economy in significant numbers, taking into consideration their age, education, and work experience.", "Children under the age of 18 are considered \"disabled\" if they have a medically determinable physical or mental impairment that (1) results in marked and severe functional limitations and (2) can be expected to result in death or has lasted or can be expected to last for a continuous period of not less than 12 months. Children typically qualify as disabled if they have a severe impairment (or combination of impairments) that limits their ability to engage in age-appropriate childhood activities at home, in childcare, at school, or in the community. In addition, the child's earnings must not exceed the SGA standard.", "The Social Security Administration periodically reevaluates blind or disabled SSI recipients to determine if they continue to meet the applicable definition of blindness or disability. In general, the Social Security Administration schedules continuing disability reviews (CDRs) of blind or disabled SSI recipients at least once every three to seven years, depending on the likelihood of medical improvement. In addition, the agency reevaluates child SSI recipients under the adult definition of disability when they attain age 18."], "subsections": []}, {"section_title": "SSI Financial Eligibility Criteria", "paragraphs": ["To be financially eligible for SSI, a person must have income and resources within certain limits ( Table 2 ). The SSI income standard is equal to the SSI federal benefit rate (FBR), which is the maximum monthly SSI payment available under the program. In 2019, the SSI FBR is $771 per month for an individual and $1,157 per month for a married couple if both members are SSI eligible. Expressed as a share of the federal poverty level (FPL), the SSI FBR in 2019 is about 74% of FPL for an individual and 82% of FPL for a couple. The SSI FBR is adjusted annually for inflation by the same cost-of-living adjustment (COLA) applied to Social Security benefits. The SSI resource standard is $2,000 for an individual and $3,000 for a couple. These amounts are not adjusted for inflation and have remained at their current levels since 1989.", "Under the SSI program, a person's income and resources are counted against the income and resource standards unless they are excluded by federal law or by the Commissioner of Social Security pursuant to discretionary authority provided in statute. The SSI income-counting methodology excludes, among other things, the first $20 per month of any income, as well as the first $65 per month of earned income plus one-half of any earnings above $65. These amounts are not adjusted for inflation and have remained in place since SSI was enacted in 1972. The SSI resource-counting methodology excludes, among other things, a person's primary residence, household goods and personal effects, one automobile used for transportation, and property essential to self-support.", "For an eligible individual without an eligible spouse, the SSI income- and resource-counting methodologies are generally person-based, meaning the program counts the income and resources owned or used by the individual to determine eligibility for SSI and the amount of the payment. In certain situations, however, SSI may count a portion of the income or resources of certain ineligible family members toward the eligible individual's income or resource standard. This process, known as \"deeming,\" applies primarily to eligible children under the age of 18 who live in the same household as their ineligible parent(s) and to eligible married adults who live in the same household as their ineligible spouse. SSI deeming rules are complex and beyond the scope of this report.", "The Social Security Administration calculates a person's countable income and resources (i.e., gross income and resources less applicable exclusions) and then subtracts those amounts from the income and resource standards to determine financial eligibility and the amount of the cash payment (if any). Individuals with countable income and resources at or below the applicable standards are eligible for SSI. The Social Security Administration periodically reevaluates an SSI recipient's financial circumstances (i.e., income, resources, and living arrangements) to determine if the person is still eligible for SSI and receiving the correct payment amount. Automatic redeterminations are scheduled annually or once every six years, depending on the likelihood of change in a recipient's circumstances. "], "subsections": []}]}, {"section_title": "Additional Eligibility Requirements for LTSS Coverage", "paragraphs": ["Medicaid enrollees\u00e2\u0080\u0094including the ABD populations\u00e2\u0080\u0094may have long-term care needs as well. In general, to receive Medicaid LTSS coverage, enrollees must also meet state-based level-of-care eligibility criteria. In other words, they must demonstrate the need for long-term care. In addition, such individuals may be subject to a separate set of Medicaid financial eligibility rules to receive LTSS coverage.", "Level-of-care eligibility criteria for most Medicaid-covered LTSS specify that individuals must require care provided in a nursing facility or other institutional setting. A state's institutional level-of-care criteria, in general, are also applied to Medicaid Home and Community-Based Services (HCBS) eligibility. That is, eligibility for Medicaid LTSS, both institutional care and most HCBS, is tied to needs-based criteria that require an individual to meet an institutional level-of-care need. ", "There is no federal definition for Medicaid institutional level-of-care, and each state defines its level-of-care criteria. To define institutional level-of-care criteria, states may use \"functional\" criteria, such as an individual's ability to perform certain activities of daily living (ADLs). States may also use \"clinical\" level-of-care criteria, such as the diagnosis of an illness, injury, disability or other medical condition; treatment and medications; and cognitive status or behavioral issues, among other criteria. Most states use a combination of functional and clinical criteria in defining the need for LTSS.", "Certain optional ABD eligibility pathways (as described in the section entitled \" Other ABD Pathways \") are available for older adults and individuals with disabilities \u00e2\u0080\u0094Special Income Level, Special Home and Community-Based Waiver Group, Home and Community-Based Services (HCBS) State Plan, and Katie Beckett. These optional eligibility pathways establish eligibility to Medicaid, in general, along with Medicaid-covered LTSS for individuals who receive institutional care, or for those who need the level of care provided in an institution and receive Medicaid-covered HCBS. Medicaid enrollees in other mandatory or optional eligibility pathways may also be eligible to receive LTSS if they meet the level of care criteria.", "Applicants seeking Medicaid-covered LTSS are subject to a separate set of Medicaid financial eligibility rules (e.g., limits on the value of home equity and asset transfer rules). These additional financial rules are in place to ensure that program applicants apply their assets toward the cost of their care and do not divest them to gain eligibility sooner. In addition, Medicaid specifies rules for equitably allocating income and assets to non-Medicaid-covered spouses to determine LTSS coverage eligibility for nursing facility services and some HCBS. Commonly referred to as spousal impoverishment rules , these rules are intended to prevent the impoverishment of the spouse who does not need LTSS.", "Medicaid has another set of rules for the treatment of income after an individual is determined eligible for certain Medicaid-covered LTSS, referred to as Post-Eligibility Treatment of Income (PETI) rules. In general, eligible beneficiaries whose income exceeds specified amounts are required to apply their income toward the cost of their care. Within federal guidelines, a participant may retain a certain amount of income for personal use based on the services he or she receives. This amount varies by care setting (i.e., institutional versus HCBS). These specific financial eligibility rules for Medicaid-covered LTSS are not described in this report; for more information, see CRS Report R43506, Medicaid Financial Eligibility for Long-Term Services and Supports .", "In addition, most states offer Medicaid-covered LTSS under waiver programs that operate outside requirements under the Medicaid State plan. Under SSA Section 1915(c), states can cover HCBS, which includes a wide variety of nonmedical, social, and supportive services that allow individuals who require an institutional level of care to live independently in the community. SSA Section 1915(c) authorizes the HHS Secretary to waive requirements regarding comparability of services and offering services statewide (i.e., referred to as statewideness). In addition, states may waive certain income and resource rules applicable to persons in the community, so that a spouse's or parent's income (and, to some extent, resources) are not considered available to the applicant for the purposes of determining Medicaid financial eligibility. States may use Section 1915(c) concurrently with other waiver authorities. For example, states may combine Section 1915(b) and 1915(c) authorities to offer mandatory managed care for HCBS. States may also limit or cap program enrollment in the waiver. For each Section 1915(c) waiver program, states must identify the Medicaid eligibility groups receiving waiver services from those groups already covered under the Medicaid State plan. In doing so, states may include both mandatory and optional groups.", "To expand LTSS coverage, states may use Section 1115 of the SSA to waive certain state plan requirements. States have used Section 1115 waivers to expand eligibility to groups beyond those the statute allows, to cap program enrollment, and to impose waiting periods prior to enrollment. States have also used Section 1115 waiver programs to modify the income- and resource-counting rules and methodologies for specified groups\u00e2\u0080\u0094for example, to encourage participation in managed LTSS, and to otherwise liberalize or limit income-counting rules for specified subpopulations. Moreover, states have used Section 1115 waiver authority to modify spend-down requirements, and to modify periods of retroactive eligibility and/or periods for eligibility redeterminations, among other eligibility-related purposes. Further discussion of Medicaid eligibility under these waiver programs is beyond the scope of this report."], "subsections": []}]}, {"section_title": "SSI-Related Pathways", "paragraphs": ["SSI-Related Pathways consist of mandatory and optional eligibility groups that meet the general requirements of the SSI program. These groups include aged, blind, or disabled individuals who are SSI eligible, deemed to be SSI eligible, or would be SSI eligible if not for a certain SSI program rule. This report organizes the SSI-Related Pathways into three subgroups, each of which contains multiple eligibility pathways: (1) SSI Recipients, (2) Special Groups of Former SSI Recipients, and (3) Other SSI-Related Groups."], "subsections": [{"section_title": "SSI Recipients", "paragraphs": ["The pathways for SSI Recipients extend Medicaid coverage to individuals who are enrolled in the SSI program and who either receive SSI, are deemed to receive SSI, or receive only state supplementary payments (SSPs, discussed below). States are generally required to provide Medicaid coverage for SSI recipients. However, states may use more restrictive eligibility criteria than those of the SSI program if they were using such criteria in 1972. Individuals in receipt of SSI for a given month are usually eligible for Medicaid for that month. SSI recipients typically become ineligible for Medicaid whenever their cash payments are suspended or terminated. In December 2018, 8.1 million individuals received SSI or federally administered SSP. "], "subsections": [{"section_title": "SSI Recipients in \"1634 States\" or \"SSI Criteria States\"", "paragraphs": ["Unless states elect the option discussed in the next section, they must provide Medicaid coverage for all SSI recipients. Most states that provide Medicaid coverage for all SSI recipients do so automatically. Section 1634 of the SSA allows states to enter into an agreement with the Social Security Administration for the agency to conduct Medicaid eligibility determinations and redeterminations for SSI recipients on the state's behalf. In these states, an SSI application is also an application for Medicaid, and an SSI redetermination is also a redetermination of Medicaid eligibility. States that choose to contract with the Social Security Administration under Section 1634 of the SSA are known as \"1634 states.\" In 2019, 34 states and the District of Columbia provide Medicaid coverage for SSI recipients using this option (see Table 3 ).", "Some states that provide Medicaid coverage for all SSI recipients choose to conduct their own Medicaid eligibility determinations and redeterminations. These states use the same standards and methodologies of the SSI program to determine Medicaid eligibility but require SSI recipients to file a separate Medicaid application with the state or local Medicaid office. States that elect this option are known as \"SSI criteria states.\" In 2019, eight states provide Medicaid coverage for SSI recipients using this option (see Table 3 )."], "subsections": []}, {"section_title": "SSI Recipients and Other ABD Individuals in \"209(b) States\"", "paragraphs": ["Under Section 1902(f) of the SSA, states have the option of applying eligibility criteria that are more restrictive than those of the SSI program in determining Medicaid eligibility for SSI recipients. However, any more restrictive eligibility criteria that are applied to SSI recipients may not be more restrictive than those contained in the state's Medicaid plan that was in effect on January 1, 1972. States that provide Medicaid coverage for only those SSI recipients who meet more restrictive eligibility criteria than SSI criteria are known as \"209(b) states,\" after the section of the Social Security Amendments of 1972 (P.L. 92-603) that established the option. In 2019, eight states provide Medicaid coverage for SSI recipients using this option (see Table 3 ).", "209(b) states apply at least one eligibility criterion that is more restrictive than SSI criteria in determining Medicaid eligibility for SSI recipients, such as a stricter definition of blindness or disability, a lower income or resource standard, a less generous methodology for counting income or resources, or some combination of those factors. For example, New Hampshire imposes a longer duration-of-impairment requirement for individuals with a disability other than blindness (48 months instead of SSI's 12-month standard), and Virginia limits ownership of property contiguous to an individual's home (i.e., land other than the lot occupied by the home) to $5,000. 209(b) states may also use eligibility criteria that are more liberal than those of the SSI program under the authority provided in Section 1902(r)(2) of the SSA; however, they must retain at least one eligibility criterion that is more restrictive than SSI criteria to remain in 209(b) status.", "209(b) states are required to deduct the value of SSI and any optional state supplementary payments (discussed below) from an SSI recipient's income in determining Medicaid eligibility. They must also allow SSI recipients to \"spend down\" or deduct incurred medical expenses from their income to the point where they meet the applicable income standard needed for Medicaid eligibility. Because SSI program rules form the foundation of Medicaid eligibility criteria for the ABD populations, 209(b) states may apply their more restrictive eligibility criteria to most other eligibility pathways for ABD individuals, subject to the same terms and conditions discussed above."], "subsections": []}, {"section_title": "Individuals Eligible for Only Optional SSPs", "paragraphs": ["Some states complement federal SSI payments with optional state supplementary payments (SSPs), which are made solely with state funds. SSPs are intended to help individuals whose basic needs are not fully met by the SSI federal benefit rate (FBR). States may provide SSPs to all SSI recipients, or they may limit payments to certain individuals, such as residents of domiciliary-care facilities or blind individuals. SSP amounts, standards, and methodologies are determined by the states, pursuant to certain federal requirements. States may self-administer their SSP program (i.e., state administered SSP), or they may contract with the Social Security Administration for the agency to administer the program on the state's behalf (i.e., federally administered SSP). In 2019, 44 states and the District of Columbia provide optional SSPs to some or all SSI recipients.", "States have the option to provide Medicaid coverage for individuals who receive only an optional SSP. Individuals receive an optional SSP, but no SSI payment, if their countable income is at least equal to the SSI income standard but less than the state-established income standard used to determine optional SSPs. The \"SSP income standard\" is effectively the combined amount of the SSI FBR and the maximum applicable SSP. For example, in 2019, the SSP income standard for a disabled individual living independently in California is $931.72 per month: the SSI FBR of $771 per month plus the maximum applicable SSP of $160.72 per month. In this case, the disabled individual would receive only an optional SSP if his or her countable income were at least $771 per month but less than $931.12 per month.", "In general, states must apply the same standards and methodologies to individuals under this pathway that they apply to individuals receiving SSI, including any standards or methodologies that are more restrictive than those of the SSI program in the case of 209(b) states. However, 209(b) states and SSI criteria states that self-administer their SSP program may apply a more restrictive income-counting methodology to individuals under this pathway than the one they apply to individuals receiving SSI. According to the Medicaid and CHIP Payment and Access Commission (MACPAC), 43 states and the District of Columbia provide Medicaid for individuals who receive only an optional SSP."], "subsections": []}, {"section_title": "Individuals Receiving Mandatory SSPs", "paragraphs": ["(This pathway is closed to new enrollment and applies to relatively few people.)", "Section 212 of P.L. 93-66 requires nearly all states to maintain the December 1973 income levels of individuals who were transferred from the former federal-state cash assistance programs for the aged, blind, and disabled (hereinafter \"former adult assistance programs\") to the SSI program in January 1974. To receive federal Medicaid funding, states must provide a special payment, known as a mandatory SSP, to individuals who were converted from the former adult assistance programs to the SSI program if the individual's SSI payment plus other income from the current month is less than his or her December 1973 state grant amount plus certain other income. The amount of the mandatory SSP is the difference between the current SSI payment and the individual's December 1973 payment under the former adult assistance program. Section 13(c) of P.L. 93-233 requires states to provide Medicaid coverage for individuals who receive mandatory SSPs. "], "subsections": []}, {"section_title": "Individuals with Earnings Above Certain Limits (1619[a] and 1619[b])", "paragraphs": ["All states (including 209[b] states) are required to provide Medicaid coverage for individuals who are enrolled in the SSI program but have earnings above certain SSI limits. Under Section 1619(a) and 1619(b) of the SSA, individuals who would continue to be eligible to receive SSI if not for their earnings may be deemed to be receiving SSI for Medicaid eligibility purposes if they continue to work and meet certain other requirements. To qualify under the 1619 provisions, individuals must have been eligible for and received SSI for at least one month before the month the 1619 determination is made. (Adults aged 65 and older may qualify for the 1619 provisions, provided they meet the SSI definition of blindness or disability.) Individuals who live in 209(b) states must also have been eligible for Medicaid in the month immediately prior to becoming eligible for 1619 status.", "Section 1619(a) of the SSA provides for the continuation of cash payments for disabled SSI recipients with earnings that would otherwise disqualify them from SSI. Under this provision, disabled individuals who have earnings at or above the substantial gainful activity (SGA) standard ($1,220 per month in 2019) but whose countable income is less than the SSI income standard are eligible to receive special SSI payments in lieu of regular SSI payments. (SSI does not require blind individuals to meet the SGA standard; thus, 1619[a] does not apply to blind SSI recipients.) These 1619(a) payments are calculated in the same manner as regular SSI payments and are payable for as long as an individual performs SGA and meets all other SSI eligibility criteria. In addition to providing special payments, Section 1619(a) requires all states to provide Medicaid coverage for 1619(a) recipients on the same basis as they provide Medicaid coverage for regular SSI recipients. ", "Section 1619(b) of the SSA requires all states to provide Medicaid coverage for blind or disabled individuals who would continue to be eligible for regular SSI payments or 1619(a) payments if not for their earnings. Under this provision, blind or disabled individuals who lose SSI eligibility because their countable income exceeds the SSI income standard (or applicable SSP income standard) due to excess earnings are deemed to be receiving SSI for Medicaid eligibility purposes. To qualify under this pathway, individuals must (1) continue to be blind or disabled, (2) meet all SSI financial eligibility requirements except for earnings, (3) need Medicaid to continue working, and (4) have earnings that are considered insufficient to provide a reasonable equivalent of the benefits that would be provided if they did not have those earnings (i.e., SSI, SSP, Medicaid, and publically funded personal or attendant care).", "The Social Security Administration uses an annual earnings standard to determine when 1619(b) eligibility ends. The agency calculates this standard based on the sum of", "the amount of gross earnings that would reduce the SSI payment (or the combined amount of the SSI payment and the SSP) to zero for an individual living independently with no other income, and the state's average annual per capita Medicaid expenditures for blind or disabled SSI recipients. ", "The standard varies from state to state, depending on the amount of the SSP (if any) and per capita Medicaid expenditures. In 2019, the annual earnings standard for disabled 1619(b) participants ranges from $27,826 in Alabama to $66,452 in Connecticut, with the median being $36,548. If an individual's annual earnings exceed the predetermined standard, then the Social Security Administration will determine his or her eligibility using an individualized standard that takes into account the person's actual Medicaid expenditures, as well as the value of any publicly funded personal or attendant care that the individual receives from a program other than Medicaid."], "subsections": []}]}, {"section_title": "Special Groups of Former SSI Recipients", "paragraphs": ["The pathways for Special Groups of Former SSI Recipients extend Medicaid coverage to special former SSI/SSP recipients who would continue to be eligible for SSI/SSP if not for receipt of certain Social Security benefits. Special former recipients are deemed to be receiving SSI/SSP for Medicaid eligibility purposes; however, unlike 1619 participants, they no longer have a current connection to the SSI program (i.e., they have been formally terminated from the rolls). In determining Medicaid eligibility, most states must disregard the applicable Social Security benefit or increases in that benefit from the special former recipient's countable income. In most instances, 209(b) states have the option to disregard all, some, or none of the applicable Social Security benefit or increases in that benefit from the special former recipient's countable income in determining Medicaid eligibility. However, 209(b) states must provide Medicaid coverage for special former recipients on the same basis as they provide Medicaid coverage for individuals who receive SSI/SSP."], "subsections": [{"section_title": "Recipients of Social Security COLAs After April 1977 (\"Pickle Amendment\")", "paragraphs": ["Section 503 of P.L. 94-566 generally requires states to provide Medicaid coverage for individuals who would continue to be eligible for SSI/SSP if not for increases in their Social Security benefits due to COLAs. Individuals qualify under this pathway it they", "are receiving Social Security benefits, lost SSI/SSP but would still be eligible for those benefits if Social Security COLAs received since losing SSI/SSP were deducted from their income, and were eligible for and receiving SSI/SSP concurrently with Social Security for at least one month after April 1, 1977.", "209(b) states may exclude all, some, or none of the Social Security benefit increases that caused ineligibility for SSI/SSP. This pathway is often known as the \"Pickle Amendment\" after the late Representative J.J. Pickle."], "subsections": []}, {"section_title": "Disabled Widow(er)s Receiving Benefit Increases Under P.L. 98-21 (\"ARF Widow[er]s\")", "paragraphs": ["(This pathway is closed to new enrollment and applies to relatively few people.)", "Social Security provides widow(er)'s benefits starting at age 60, or at age 50 if the individual is disabled and meets certain other criteria. The amount of the aged or disabled widow(er)'s benefit is based on the deceased insured worker's past earnings from covered employment, subject to a permanent reduction for each month of entitlement before the widow(er)'s full retirement age (65-67, depending on year of birth). Under P.L. 98-21 , lawmakers eliminated the additional reduction factor (ARF) for disabled widow(er)s aged 50-59, meaning their reduction penalty for claiming benefits before their full retirement age was capped at the percentage applicable to aged widow(er)s who first claim at age 60.", "All states (including 209[b] states) are required to provide Medicaid coverage for individuals who would continue to be eligible for SSI/SSP if not for increases in their widow(er)'s benefits due to the elimination of the ARF (known as \"ARF Widow[er]s\"). Individuals qualify under this pathway if they", "were entitled to Social Security benefits in December 1983 and received disabled widow(er)'s benefits and SSI/SSP in January 1984, lost SSI/SSP eligibility because of the elimination of the ARF, have been continuously entitled to widow(er)'s benefits since January 1984, filed for Medicaid continuation before July 1, 1988 (or a slightly later date in some cases), and would continue to be eligible for SSI/SSP if the value of the increase in disabled widow(er)'s benefits under P.L. 98-21 and any subsequent COLAs were deducted from their countable income. "], "subsections": []}, {"section_title": "Disabled Adult Children", "paragraphs": ["Disabled adult children of retired, disabled, or deceased insured workers typically qualify for Social Security disabled adult child's (DAC) benefits if they are at least age 18 and became disabled before they attained age 22. States are generally required to provide Medicaid coverage for individuals who lose eligibility for SSI/SSP due to entitlement to or an increase in DAC benefits. Individuals qualify under this pathway if they", "lose eligibility for SSI/SSP due to receipt of DAC benefits on or after July 1, 1987, and would continue to be eligible for SSI/SSP if not for their entitlement to or an increase in DAC benefits.", "209(b) states may exclude all, some, or none of the DAC benefit or increases in that benefit that caused ineligibility for SSI/SSP."], "subsections": []}, {"section_title": "Widow(er)s Not Entitled to Medicare Part A (\"Early Widow[er]s\")", "paragraphs": ["States are generally required to provide Medicaid coverage for individuals aged 50 to 64 who lose eligibility for SSI/SSP due to entitlement to Social Security widow(er)'s benefits but who are not yet entitled to Medicare Part A (Hospital Insurance). Individuals qualify under this pathway if they", "are at least age 50 but have not yet attained age 65, received SSI/SSP in the month before their widow(er)'s benefits began, are not entitled to Medicare Part A, and would continue to be eligible for SSI/SSP if not for their entitlement widow(er)'s benefits. ", "Eligibility for Medicaid under this pathway continues until the individual becomes entitled to Medicare Part A. 209(b) states may exclude all, some, or none of the widow(er)'s benefit that caused ineligibility for SSP/SSI. "], "subsections": []}, {"section_title": "Recipients of a 1972 Social Security COLA", "paragraphs": ["(This pathway is closed to new enrollment and applies to relatively few people.)", "Section 249E of P.L. 92-603 requires states to provide Medicaid coverage for individuals who would be eligible for SSI/SSP in the absence of a Social Security COLA enacted in 1972 under P.L. 92-336. Individuals qualify under this provision if they", "were entitled to Social Security benefits in August 1972, were receiving cash assistance under the former adult assistance programs in August 1972 (or would have been eligible for such assistance in certain instances), and would be eligible for SSI/SSP had the COLA under P.L. 92-336 not been applied to their Social Security benefits."], "subsections": []}]}, {"section_title": "Other SSI-Related Groups", "paragraphs": ["The pathways for Other SSI-Related Groups extend Medicaid coverage to certain individuals who were eligible for Medicaid just prior to SSI's start in 1974, and to aged, blind, or disabled individuals who would be eligible for SSI/SSP today if not for a certain requirement in those programs. Although these groups may have received SSI/SSP in the past, their eligibility for Medicaid under these pathways is not conditional on their prior receipt of such payments."], "subsections": [{"section_title": "Grandfathered 1973 Medicaid Recipients", "paragraphs": ["(These pathways are closed to new enrollment and apply to relatively few people.)", "Sections 230 to 232 of P.L. 93-66 require states to provide Medicaid to three groups that were eligible for Medicaid in December 1973: (1) essential spouses, (2) institutionalized individuals, and (3) blind or disabled individuals.", "Essential spouses are the spouses of cash assistance recipients under the former adult assistance programs whose needs were included in determining the amount of the cash payment to the recipient. Institutionalized individuals are inpatients of medical institutions or residents of intermediate care facilities who received cash assistance under the former adult assistance programs (or who would have been eligible for such assistance if they were not institutionalized). Blind or disabled individuals are individuals who met the state-established criteria for blindness or disability under the state's Medicaid plan in December 1973.", "States must provide Medicaid for these groups if they continue to meet the respective eligibility criteria that were in effect in December 1973, in addition to meeting certain other requirements."], "subsections": []}, {"section_title": "Individuals Eligible For but Not Receiving SSI/SSP", "paragraphs": ["States have the option to provide Medicaid coverage for aged, blind, or disabled individuals who meet the income and resource requirements for SSI/SSP but who do not receive cash payments. Individuals may be eligible for but not receiving SSI/SSP because they have not applied for benefits. According to estimates from HHS' Office of the Assistant Secretary for Planning and Evaluation, about 60% of single adults aged 18 and older who were eligible for SSI in 2015 participated in the program that year. In 209(b) states, eligibility under this pathway is determined before the deduction of any incurred medical expenses recognized under a state plan (i.e., before spend-down)."], "subsections": []}, {"section_title": "Individuals Who Would be Eligible for SSI/SSP if They Were Not Institutionalized", "paragraphs": ["Residents of public institutions are generally ineligible for SSI. However, residents of certain medical institutions are eligible for a reduced SSI payment if more than 50% of the cost of their care is paid for by Medicaid (or in the case of a child under the age of 18, by any combination of Medicaid and private health insurance). The reduced SSI payment, known as a personal needs allowance (PNA), is used to pay for small comfort items not provided by the facility. Capped at $30 per month, or $60 per month for couples in certain situations, the PNA is not indexed to inflation and has remained at its current level since July 1988. Some states supplement the PNA (i.e., provide an SSP) for institutionalized individuals who meet certain requirements. Any countable income reduces the PNA for institutionalized individuals; however, the SSI/SSP income standard is used in determining their eligibility for the SSI program. ", "States have the option to provide Medicaid coverage for institutionalized individuals who are ineligible for SSI/SSP because of the lower income standards used to determine eligibility for the PNA but who would be eligible for SSI/SSP if they were not institutionalized. In other words, states may provide Medicaid to individuals who reside in certain Title XIX-reimbursable institutions who have countable income at or above the PNA standard ($30 for an individual) but within the SSI/SSP income standard ($771 for an individual in 2019)."], "subsections": []}, {"section_title": "Individuals Who Would be Eligible for SSI/SSP if Not for Criteria Prohibited by\u00c2 Medicaid", "paragraphs": ["States are generally required to provide Medicaid coverage for aged, blind, or disabled individuals who would be eligible for SSI/SSP if not for an eligibility requirement used in those programs that is prohibited by Medicaid. For example, Section 4735 of the Balanced Budget Act of 1997 ( P.L. 105-33 ) requires states to exclude from eligibility determinations certain settlement payments made to hemophilia patients who were infected with HIV. However, federal law does not exempt such payments from being counted as income or resources under the SSI program. CMS regulations require states to provide Medicaid coverage for individuals who lost SSI eligibility because they received settlement payments."], "subsections": []}]}]}, {"section_title": "Other ABD Pathways", "paragraphs": ["States may extend Medicaid coverage to older adults and individuals with disabilities who have higher levels of income or resources than those permitted by SSI program rules under optional aged, blind, or disabled (ABD) eligibility pathways. In addition, some optional ABD eligibility pathways allow states to choose their own methodology for counting income and resources; others permit states to use less restrictive income- or resource-counting methodologies compared with SSI rules. As previously mentioned, certain optional eligibility pathways for older adults and individuals with disabilities (e.g., Special Income Level, Special Home and Community-Based Waiver Group, Home and Community-Based Services [HCBS] State Plan, and Katie Beckett) establish eligibility to Medicaid, in general, along with Medicaid-covered LTSS. In addition, Medicaid gives states the option to extend eligibility to individuals who \"spend down\" or deplete their income on medical expenses, including LTSS, to specified levels. Therefore, some individuals with higher levels of income and resources compared with those permitted under SSI rules may be Medicaid-eligible. ", "This section describes the following optional Medicaid eligibility pathways for ABD individuals: (1) Poverty-Related; (2) Special Income Level; (3) Special Home and Community-Based Services Waiver Group; (4) Home and Community-Based Services State Plan Option; (5) Katie Beckett; (6) Buy-In Groups; and (7) Medically Needy."], "subsections": [{"section_title": "Poverty-Related", "paragraphs": ["Enacted under the Omnibus Budget Reconciliation Act of 1986 (OBRA '86; P.L. 99-509 ), the optional Poverty-Related eligibility pathway allows states to cover aged and/or disabled individuals who have incomes that are higher than SSI standards, with family income up to 100% of the federal poverty level (FPL), provided that the state also covers certain eligible pregnant women and children. Aged individuals are defined as being 65 years old and older, and disabled individuals must meet the SSI program's applicable definition of disability. States may employ a reasonable definition of a \"family\" for purposes of the individual's countable income. In general, states must use SSI rules in determining what income is counted or not counted. An individual's resources cannot exceed the SSI resource standard with SSI rules used in determining countable resources. However, states may use Section 1902(r)(2) of the SSA to disregard additional countable income or resources. In 2018, 24 states and the District of Columbia (DC) offered the optional Poverty-Related eligibility pathway. Seventeen states and DC had an income standard that was set at 100% of the FPL under the Poverty-Related pathway; seven maintained a more restrictive income standard than 100% of the FPL. For example, Florida's standard was 88% of the FPL, and Idaho's was 77% of the FPL."], "subsections": []}, {"section_title": "Special Income Level", "paragraphs": ["The optional Special Income Level eligibility pathway allows states to establish a higher income standard for Medicaid coverage of nursing facility services and other institutional services, sometimes referred to as the special income rule , or the \"the 300% rule.\" To be eligible for Medicaid through this pathway, individuals must", "require care provided by a nursing facility or other medical institution for no less than 30 consecutive days, and have an income standard that does not exceed a specified level\u00e2\u0080\u0094no greater than 300% of the SSI FBR (i.e., the maximum SSI payment), which is approximately 222% of the FPL.", "Only the applicant's income (i.e., no income from spouses) is counted, and all income sources are counted in determining eligibility; there are no income disregards or deductions. For individuals seeking eligibility based on being aged 65 and older, or having blindness, or disability, the SSI resource standard and resource-counting methodology are used to determine eligibility. States may also use Section 1902(r)(2) of the SSA to disregard additional income or resources. Under the Special Income Level pathway, eligibility starts on the first of the 30 days that the individual resides in an institution. Thus, Medicaid can cover all of the care an individual receives in a nursing facility. In 2018, 42 states and the District of Columbia used the Special Income Level to enable persons to qualify for Medicaid coverage of institutional care. "], "subsections": []}, {"section_title": "Special Home and Community-Based Services Waiver Group", "paragraphs": ["The Special Home and Community-Based Services (HCBS) Waiver Group eligibility pathway allows states to extend Medicaid eligibility to individuals receiving HCBS under a waiver program who require the level of care provided by a nursing facility or other medical institution. This eligibility pathway is sometimes referred to as the \"217 Group\" in reference to the specific regulatory section for this group, 42 C.F.R. Section 435.217. States use the highest income and resource standard of a separate eligibility group covered by the state plan under which an individual would otherwise qualify if institutionalized. For example, states that offer the Special Income Level pathway described above can extend eligibility to waiver program participants with income up to 300% of the SSI FBR. States must use the income- and resource-counting methodologies used to determine eligibility for this same eligibility group. States may also apply Section 1902(r)(2)'s more liberal income-counting rules to this group."], "subsections": []}, {"section_title": "Home and Community-Based Services State Plan Option", "paragraphs": ["States may establish an independent eligibility pathway into Medicaid through the Home and Community-Based Services (HCBS) State Plan option. This option is made available by extending the required and optional Medicaid state plan services, sometimes referred to as \"traditional\" Medicaid services, to individuals who are also receiving a targeted package of HCBS state plan services. In general, receipt of the Medicaid HCBS State Plan option is conditional on an individual having a need for long-term care (i.e., individuals must meet certain level-of-care criteria). Unlike Section 1915(c) HCBS waiver programs, which require that eligible individuals need the level of care provided in an institution (e.g., hospital or nursing facility), the HCBS state plan option delinks this requirement so that individuals with long-term care needs are not required to meet an institutional level of care need. The HCBS State Plan option was first enacted under the Deficit Reduction Act of 2005 (DRA; P.L. 109-171 ) and amended under the ACA.", "The income standard for the HCBS State Plan option applies to individuals who have income no higher than 150% of the FPL. For individuals who otherwise meet the requirements for an approved waiver program, the income standard can be no higher than 300% of the SSI FBR. States may choose to cover individuals under either or both income standards. Generally, states use SSI income-counting methodologies; however, states have some discretion to apply alternative methodologies, subject to the approval of the Secretary of HHS. There are no resource standards for this eligibility group, with the exception for those individuals who seek to establish eligibility based on an approved waiver program. For these individuals, states must use the same income and resource standards and counting methodologies as applied to those individuals eligible under the applicable waiver program. States may also use Section 1902(r)(2) of the SSA to disregard additional income or resources.", "In 2018, the most recent year for which data are available, 15 states and the District of Columbia offered at least one Section 1915(i) HCBS State Plan option; however, only two states (Indiana and Ohio) used this state plan authority as an independent eligibility pathway to Medicaid. As another option, states may choose to provide HCBS state plan services to those who are eligible for Medicaid under one of the state's existing Medicaid eligibility pathways."], "subsections": []}, {"section_title": "Katie Beckett", "paragraphs": ["Enacted under the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA; P.L. 97-248 ), the Katie Beckett optional pathway provides coverage to severely disabled children whose parents' income is otherwise too high for the child to qualify for Medicaid LTSS at home. Under the Katie Beckett pathway, states may extend Medicaid coverage to disabled children who meet the applicable SSI definition of disability and who are age 18 or younger and live at home. In addition, the state must determine that (1) the child requires the level of care provided in an institution, (2) it is appropriate to provide care outside the facility, and (3) the cost of care at home is no more than institutional care. States electing this option are required to cover all disabled children who meet these criteria.", "States must use SSI income and resources rules to determine eligibility; however, only the child's income and resources, if any, are counted. Parents' income and resources are not counted. A child's income cannot exceed the highest income standard used to determine eligibility for any separate group under which the individual would be eligible if institutionalized. In general, states set income standards up to 300% of the SSI FBR, which is about 222% of the FPL. States may not use Section 1902(r)(2) of the SSA to use more liberal income- or resource-counting methodologies. In 2018, the most recent year for which data are available, 24 states and the District of Columbia offered the Katie Beckett pathway under their Medicaid state plan. "], "subsections": []}, {"section_title": "Buy-In Groups", "paragraphs": ["There are several optional Medicaid Buy-In eligibility pathways for working individuals with disabilities or working families who have a child with a disability. In general, individuals eligible under Buy-In pathways would be eligible for Medicaid except for the fact that their income is higher than the income standard allowed by the SSI program under Section 1619(b) of the SSA, which varies by state. Medicaid Buy-In pathways are designed to allow disabled individuals to work and still retain their Medicaid coverage, or to use their Medicaid coverage to access wraparound services that are not covered under an employer-sponsored plan. States can also impose premiums or other types of cost-sharing requirements on eligible individuals, which can be done on a sliding scale based on income. The extent to which states impose premiums and cost-sharing varies by state. ", "Medicaid Buy-In pathways include the BBA 97 Eligibility Group, the Basic Eligibility Group, and the Medical Improvement Group. There is also a separate Buy-In pathway for disabled children, called the Family Opportunity Act. In 2018, the most recent year for which data are available, 44 states and the District of Columbia chose to offer coverage through at least one Buy-In pathway."], "subsections": [{"section_title": "BBA 97 Eligibility Group", "paragraphs": ["Enacted under Section 4733 of the Balanced Budget Act of 1997 (BBA 97; P.L. 105-33 ), this optional pathway is available to individuals with disabilities who work and have family income below 250% of the FPL, based on the size of the family. Individuals with disabilities must meet the SSI program's applicable definition of disability. Each state determines what constitutes a \"family\" for the purposes of this eligibility group. Family income is determined by applying the SSI income-counting methodology. In addition to the family income requirement, the applicant's unearned income must be less than the SSI income standard. All earned income is disregarded. An individual's countable resources must be less than or equal to the SSI resource standard using the SSI resource-counting methodology. However, states may use Section 1902(r)(2) of the SSA to disregard additional income or resources."], "subsections": []}, {"section_title": "Ticket to Work Basic Eligibility Group", "paragraphs": ["Enacted under Section 201 of the Ticket to Work and Work Incentives Improvement Act of 1999 (TWWIIA; P.L. 106-170 ), this optional pathway is similar to the BBA 97 Eligibility Group but is available to people with higher levels of income (i.e., above 250% of the FPL). There are no federal income or resource standards for the Basic Eligibility Group; rather, states can determine the income and resource standards, including no standards, rather than using the SSI program's requirements. However, if a state chooses to establish an income and/or resource standard, SSI income- and resource-counting methodologies apply. States may use Section 1902(r)(2) of the SSA to disregard additional earned income above the SSI-earned-income disregard, including disregarding all earned income. Individuals with disabilities eligible under this pathway must be aged 16 to 64 and meet the SSI program's applicable definition of disability."], "subsections": []}, {"section_title": "Ticket to Work Medical Improvement Group", "paragraphs": ["The Medical Improvement Group pathway was also enacted under Section 201 of TWWIIA. For states to cover this eligibility group, they must also cover the TWWIIA Basic Eligibility Group. Individuals eligible under the Medical Improvement Group were previously eligible under the Basic Eligibility Group but lost that eligibility because they were determined to have \"medically improved,\" meaning they no longer meet the definition of disability under the SSI or Social Security Disability Insurance (SSDI) programs but continue to have a severe medically determinable impairment. Eligible individuals must be aged 16 to 64, earn at least the federal minimum wage, and work at least 40 hours per month or be engaged in a work effort that meets certain criteria for hours of work, wages, or other measures, as defined by the state and approved by the Secretary of HHS. As with the Basic Eligibility Group, states may determine the income and resource standards, including no standards, for this pathway. Similarly, states may use Section 1902(r)(2) of the SSA to disregard additional earned income above the SSI-earned-income disregard, including disregarding all earned income."], "subsections": []}, {"section_title": "Family Opportunity Act", "paragraphs": ["Established under Section 6061 of the DRA, the Family Opportunity Act (FOA) optional pathway allows families with income up to 300% of the FPL to buy Medicaid coverage for their disabled child aged 18 or younger (states can exceed 300% of the FPL without federal matching funds for such coverage). When determining a child's Medicaid eligibility, states choosing this pathway use the SSI program's applicable definition of disability, as well as SSI's income-counting methodology for a family, based on its size. There is no resource standard or applicable resource-counting methodology. States may use Section 1902(r)(2) of the SSA to disregard additional earned income above the SSI-earned-income disregard. States must require certain parents of eligible children under the FOA optional coverage group to enroll in, and pay premiums for, family coverage through employer-sponsored insurance as a condition of continuing Medicaid eligibility for the child. "], "subsections": []}]}, {"section_title": "Medically Needy", "paragraphs": ["The Medically Needy option is targeted toward individuals with high medical expenses who would otherwise be eligible for Medicaid except that their income exceeds the income standards for other state-covered eligibility pathways. Individuals may qualify in one of two ways: either (1) their income or resources are at or below a state established standard, or (2) they spend down their income to the state-established standard by subtracting incurred medical expenses from their income. For example, if an individual has $1,000 in monthly income and the state's income threshold is $600, then the applicant would be required to incur $400 in out-of-pocket medical expenses during a state-determined budget period before being eligible for Medicaid. Examples of medical expenses that may be deducted from income include Medicare and other health insurance premiums, deductibles and coinsurance charges, and other medical expenses included in the state's Medicaid plan or recognized under state law. For individuals who spend down to Medicaid eligibility, states select a specific time period for determining whether or not the applicant meets the spend-down obligation, often referred to as a \"budget period,\" which generally ranges from one to six months.", "States that choose to offer the Medically Needy option must cover pregnant women and children under the age of 18, and may choose to extend eligibility to the aged, blind, or disabled, among other groups. The Medically Needy option allows aged and disabled individuals who need expensive institutional LTSS to qualify for Medicaid nursing facility services. However, nursing facility services are optional services that states may elect to cover for Medically Needy individuals. ", "Under the Medically Needy option, states establish the income eligibility standard; however, it may be no higher than 133\u00e2\u0085\u0093% of the state's AFDC level in 1996. Typically, the AFDC level is lower than the income standard for SSI benefits. For example, in 2015 the median Medically Needy income standard for an individual was $483 per month, or about 49% of the FPL. States use the SSI income-counting methodology for aged, blind, or disabled individuals. States also set the resource standards within certain federal requirements. For aged, blind, or disabled individuals, the resource standard is generally the same as in the SSI program. In general, states must use SSI's applicable definition of disability when determining eligibility for the disabled eligibility group. In 2018, 32 states and the District of Columbia offered coverage to the Medically Needy."], "subsections": [{"section_title": "Appendix. Medicaid Eligibility Pathways That Cover Older Adults and Individuals with Disabilities", "paragraphs": [" Table A-1 lists selected Medicaid eligibility pathways that cover older adults and individuals with disabilities. These eligibility pathways are organized into two broad coverage groups: (1) SSI-Related Pathways and (2) Other ABD Pathways. The table includes a brief description of each pathway, the age criterion for eligibility, whether the pathway is mandatory or optional, the Social Security Act citation, and any applicable regulatory citations.", " Table A-2 lists the income and resource standards, as well as the counting methodology, that applies to each standard for the selected Medicaid eligibility pathways that cover older adults and individuals with disabilities. In general, standards or limits on the amount of income and resources required for eligibility are expressed in relationship to the federal poverty level (FPL) or the SSI federal benefit rate (FBR). Where applicable, the income standard is presented as a monthly dollar amount for an individual in 2019. For state-specific information on Medicaid eligibility pathways for older adults and individuals with disabilities, see the following resources:", "M. Musumeci, P. Chidambaram, and M. O'Malley Watts, Medicaid Financial Eligibility for Seniors and People with Disabilities: Findings from a 50-State Survey , The Kaiser Family Foundation, June 2019, https://www.kff.org/medicaid/issue-brief/medicaid-financial-eligibility-for-seniors-and-people-with-disabilities-findings-from-a-50-state-survey/ . MACPAC, MACStats: Medicaid and CHIP Data Book , Exhibit 37, pp. 109-111, December 2018, https://www.macpac.gov/wp-content/uploads/2018/12/December-2018-MACStats-Data-Book.pdf ."], "subsections": []}]}]}]}}
{"id": "R45852", "title": "3D Printing: Overview, Impacts, and the Federal Role", "released_date": "2019-08-02T00:00:00", "summary": ["Three-dimensional (3D) printing, also known as additive manufacturing, is a highly flexible manufacturing process that has been used in product development and production for the past 30 years. Greater capabilities, lower prices, and an expanded range of manufacturing materials have vastly expanded adoption of 3D printers over the last decade and a half. The economic and scientific potential of this technology, as well as certain regulatory concerns (such as 3D printing of firearms), have recently increased congressional interest.", "3D printers are used in a variety of industries\u00e2\u0080\u0094such as aerospace, medicine, and education\u00e2\u0080\u0094as well as in nonspecific custom prototyping. Both private industry and the federal government have supported these applications of 3D printing. Support from the federal government has included basic and applied research funding from the National Science Foundation, as well as research and development funding from mission agencies such as the Department of Defense, the National Institutes of Health, and the National Aeronautics and Space Administration. More broadly, federal support for additive manufacturing has been provided through the flagship institute of the Manufacturing USA program, the National Additive Manufacturing Innovation Institute (also known as America Makes). This consortium of industry, university, and government seeks to \"[accelerate] the adoption of additive manufacturing technologies in the United States to increase domestic manufacturing competitiveness.\" In recent years, hundreds of millions of dollars\u00e2\u0080\u0094public and private\u00e2\u0080\u0094have been invested in 3D printing-related companies and 3D printing research and development.", "3D printers span a range of alternative capabilities, print with many different kinds of materials, and are capable of building products at a variety of scales. The price of a 3D printer varies with its capabilities; machines may cost from hundreds of dollars to millions of dollars.", "3D printing uses a fundamentally different process than most methods for traditional manufacturing. Much of modern manufacturing uses subtractive manufacturing processes, beginning with a block of material (e.g., a tube, a bar, or an ingot) and using a variety of tools to remove parts of the initial material to achieve a final design. 3D printers are additive, stacking up and fusing thin layer upon thin layer of a material (or materials) onto a blank platform to achieve a final design. This allows for flexibility and complexity in the manufacturing of 3D-printed items. Four primary properties of 3D printers stem from this unique additive construction method: reduced waste, capacity to create parts with high internal complexity, cost-effectiveness of small production runs, and ease of design modification.", "These four primary properties of 3D printers translate into several distinctive manufacturing impacts: potential reduction in discrete parts per product, potential reduction in manufacturing costs, improved prototyping abilities, potential reduction in part weight or improvement in part strength, potential reduction in inventory, mass customization, potential environmental efficiency, decentralized manufacturing, and low barriers to entry.", "Although these manufacturing impacts are particularly advantageous for some manufacturing activities, most experts say the current state of 3D printing tends to make the technology a poor fit for mass production of simple parts. For this reason, some have estimated that 3D printing may account for 5% to 10% of manufacturing in the long term.", "In general, 3D printing has been widely viewed as a driver for American economic development, national security, and combat readiness. At the same time, some have expressed concerns about potential adverse effects of this technology, such as its potential use in the manufacture of firearms or other contraband material by individual criminals, criminal organizations, or terrorists.", "3D printing technology is expected to mature substantially in the coming decades to allow the use of new materials, faster production speeds, and lower costs. Prices of consumer 3D printers have fallen by about 80% over the past decade and appear poised to continue to fall. Industrial 3D printing is increasingly an essential part of the U.S. manufacturing portfolio, and it appears to be critical to the nation's upcoming advanced manufacturing strategy."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["Three-dimensional (3D) printing is a manufacturing process used to create real-world parts from digital 3D design files. This process is of particular relevance to Congress because of its use in federal programs; economic potential; continued applications in scientific research and development; roles in national security; and potential areas of concern, including weapons development and intellectual property law. This report describes the basic parts common to 3D printers and explains the operation of the technology. It also provides a snapshot of current materials and capabilities, traces the historical development of the technology since 1980, provides information on the federal role in 3D printing, communicates the primary properties of 3D printing with reference to manufacturing, explains secondary manufacturing impacts that stem from these properties, and highlights particular issues relevant to Congress.", "3D printing is sometimes known as additive manufacturing . The term additive refers to the construction of a final part through the addition of consecutive layers of material on a build plate. In contrast, subtractive manufacturing processes carve out a final part from an initial block by removing unwanted material. Computer-controlled additive and subtractive manufacturing originated in the 1980s and 1970s, respectively. Yet, the basic techniques underlying these manufacturing methods\u00e2\u0080\u0094that is, addition or removal of material to create a product\u00e2\u0080\u0094have existed for millennia.", "3D printing is used in a wide variety of applications, including aerospace, medicine, defense, custom manufacturing, prototyping, art, hobbies, and education (see Table 1 ). The prices, capabilities, and dimensions of 3D printers also vary widely. For more information, see \" Current Materials and Capabilities \" section below."], "subsections": []}, {"section_title": "Technical Overview", "paragraphs": ["In general, 3D printers have five common parts: input material, print head, build plate, axes, and 3D design file (see Figure 1 ).", "Input material \u00e2\u0080\u00943D-printed parts begin as input material. This material can be in the form of solid filament, pellets, liquid, or powder.", "Print head \u00e2\u0080\u0094The input material is deposited at the tip of the print head. This process can occur through a variety of methods, including pushing filament or pellets through a metal extruder, using a laser to melt powder, or using a light to solidify liquid.", "Build plate \u00e2\u0080\u0094The build plate is the base (flat surface) upon which the part is constructed. At the beginning of the 3D printing process, the print head is nearly touching the build plate. As more layers are added to the part, the distance between the print head and the build plate increases.", "Axes \u00e2\u0080\u0094The axes move the print head relative to the build plate. This enables the 3D printer to create a particular pattern for each new layer of material. The final part is made up of the patterns in each layer, stacked on top of each other.", "3D design file \u00e2\u0080\u0094The 3D printing process is governed by a digital 3D design file. This file provides instructions to the 3D printer that describe how to move the axes, which in turn move the position of the print head relative to the build plate. The file controls exactly what patterns are produced in each layer; this determines which kind of part is produced by the 3D printer (see Figure 2 )."], "subsections": []}, {"section_title": "Current Materials and Capabilities", "paragraphs": ["The prices and capabilities of 3D printers span a wide range of options. Prices vary from several hundred dollars to millions of dollars. More specifically, 3D printers at the price range of $5,000 and below (known as consumer printers ) often are designed to print plastic parts. Several different plastics are available, each with different capabilities and costs. These materials include tough nylon plastics; flexible, rubber-like plastics; plastics reinforced with carbon fiber; dissolvable plastics; clear plastics; and decorative plastics with the appearance of wood or metal. Some 3D printers in this price range can also print using materials such as ceramic or chocolate.", "Structural metal-infused plastic, as opposed to decorative metal-infused plastic, also can be used in 3D printers at this price range. However, structural metal-infused 3D-printed parts require additional high-temperature post-processing to burn off the plastic. This process leaves an entirely metal product behind. The necessary high temperatures for post-processing can be attained using pottery kilns, sintering machines, or other specialized devices. Commercial services are available that offer high-temperature post-processing of metal-infused 3D-printed parts.", "3D printers at the price range of $5,000 and up (known as industrial printers) are able to use a wider variety of materials in an even greater variety of applications. These 3D printers can create structures that are larger, more detailed, or more reliable than structures created by consumer printers, or they can print in materials that are unavailable at lower price ranges. For example, medical biofabrication printers can print structures made of living cells. Metal 3D printers can create parts out of titanium, steel, and other metals, which may cost less than traditional subtractive machining processes. Large-format plastic 3D printers can create parts that are more than 6 feet tall. Some concrete 3D printers can manufacture the walls of an entire building."], "subsections": []}, {"section_title": "History", "paragraphs": ["The development and growth of 3D printing can be described in three major periods. The period spanning 1980 to 2010 marks the creation of the technology, its industrial use, and the beginning of the consumer 3D printing movement. Between 2010 and 2015, the 3D printing market continued to expand, despite signs of weakening in 2014. Since 2015, prices for consumer 3D printers have fallen, while sales of consumer and industrial 3D printers have continued to rise as the technology has matured."], "subsections": [{"section_title": "Early 3D Printing (1980-2010)", "paragraphs": ["The first major patents for 3D printing methods were filed in the 1980s, creating a nascent 3D printing market for industrial clients. In the 1990s, 3D printers using plastic, metal, paper, ceramic, and wax became available at prices from thousands of dollars to hundreds of thousands of dollars. In the early 2000s, the 3D printer market expanded into specialized industries, including medicine, dentistry, and jewelry. At the same time, new plastic printing materials were developed.", "The first decade of the 21 st century marked the expiration of several key 1980s 3D printing patents. In the same period, consumers gained access to improved web connectivity and user-friendly computer-aided design (CAD) tools. These factors contributed to the birth of the consumer 3D printing movement. Key developments in this movement included the formation of the open-source 3D printer community; the 2007 release of the first website for print-on-demand custom 3D prints (Shapeways); and the 2008 creation of the popular 3D printing file-sharing website Thingiverse. In 2009, MakerBot, one of the first consumer 3D printing companies, released a $750 3D printer that incorporated some of the off-patent technologies from the 1980s."], "subsections": []}, {"section_title": "Expansion of 3D Printing (2010-2015)", "paragraphs": ["The consumer market for 3D printers expanded in the 2010s, fueled in part by the continued expiration of 20 th -century patents. Offerings included branded 3D printers, unbranded kits sold on eBay, and 3D printers funded on crowdfunding sites. Prices of bare-bones consumer 3D printers fell to $500-$600. Higher-end consumer printers gained advanced features that made them easier to use and maintain.", "Innovations in 3D design software and improvements in printer reliability contributed to the spread of consumer and industrial 3D printers in shared makerspaces, commercial establishments, libraries, and universities. 3D file sharing also became widespread, both for paid and free models. One 3D file website, Thingiverse, had more than 2 million active users in 2015. Transmission of 3D design files occurred not only through mainstream file-sharing sites such as Thingiverse, 3DShook, and Cults but also through anonymous channels, including internet torrents (a distributed, hard-to-trace online file-sharing method). At the same time, materials for consumer and industrial 3D printers grew more diverse and were sold by more companies, helping to reduce 3D printing costs.", "Print-on-demand services also expanded in this period, offering a wide variety of materials, including plastics, precious metals, and ceramics. These services allowed consumers to purchase a 3D-printed part made from their own 3D design file but fabricated by a third party. Some of the early print-on-demand services offered the ability to purchase printing services from a peer-to-peer network of individually owned desktop 3D printers.", "The 3D printing industry began to show signs of weakening in 2014 after a period of growth and consolidation. In June 2015, Time magazine reported that the stocks of four leading 3D printing companies had \"lost between 71% and 80% of their market value in the past 17 months.\" Between January and October 2015, the 3D printing company Stratasys laid off 36% of staff in its MakerBot division.", "At the same time, annual grants of 3D printing-related patents more than doubled between 2010 and 2015, from 247 to 545. In 2015, industrial unit sales of 3D printers declined by 2.3% while consumer unit sales increased by 49.4%. Unit sales of both industrial and consumer 3D printers generally have shown sustained upward trends (see Figure 3 and Figure 4 ). Total 3D printing industry revenues increased year-over-year since 1993, with the exception of 2001, 2002, and 2009. On average, 3D printing industry revenues have grown annually over the past 30 years by 26.9%."], "subsections": []}, {"section_title": "Recent 3D Printing History (2015-Present)", "paragraphs": ["The period from 2015 to 2019 has seen renewed 3D printing investment, in terms of both research and development and investment in growing companies. Corporations (such as General Electric, Google Ventures, Alcoa, and Norsk Titanium AS) and federal departments and agencies\u00e2\u0080\u0094such as the Department of Defense (DOD) and the National Institutes of Health (NIH)\u00e2\u0080\u0094have invested a combined total of hundreds of millions of dollars in 3D printing initiatives over this period.", "At the same time, the price of consumer 3D printers has continued to fall. As of July 2019, a basic 3D plastic printer can be purchased online for less than $150. 3D printers in the low hundred-dollar range generally can be used after simple assembly or directly out of the box. The input material for these basic 3D printers is usually a spool of plastic filament, which can be purchased for less than $9 per pound.", "Sales of both industrial and consumer 3D printers have continued to rise. According to one market analysis, 19,285 industrial 3D printers and 591,079 consumer 3D printers were sold in 2018 (see Figure 3 and Figure 4 ). Further, that analysis estimates that a total of more than 140,000 industrial 3D printers and 2 million consumer 3D printers have been sold worldwide. This may be an underestimation of consumer 3D printers, because it does not include those assembled from parts or those purchased as kits.", "3D-print-on-demand services now serve the consumer and industrial markets. These services provide access to industrial-grade 3D printers, allowing users to create high-precision parts out of plastic or other materials. In general, individuals do not have to create their own files for 3D printing; many online databases of 3D design files are available. Users also may join online 3D printing communities, some of which have hundreds of thousands to millions of users.", "The Wohlers Report estimates that annual 3D printing industry revenues reached $9.975 billion globally in 2018. However, 3D printing makes up less than 1% of manufacturing revenues worldwide. Further, analysts predict that most future products will be created through traditional manufacturing methods, even when 3D printing is technologically mature. Some estimates predict that 3D printing will eventually account for 5%-10% of total global manufacturing revenues.", "Several issues may limit the overall effectiveness and utility of current 3D printing technologies, including quality control, cybersecurity, and relative production speed as compared to traditional manufacturing. New evaluation methods, certification programs, cybersecurity advances, and research and development programs may help to address these limiting issues."], "subsections": []}]}, {"section_title": "Federal Role in 3D Printing", "paragraphs": ["Private industry has long been the primary innovator in 3D printing technology, accounting for an estimated 90% of additive manufacturing patents through 2015. DOD's Institute for Defense Analysis (IDA) found that the federal government played a relatively small but instrumental role in the creation of 3D printing technology, providing \"direct funding for developing early phases of the technology and later refinements in two of the four processes.\" According to IDA, ", "[Federal] support of early research ... created the knowledge, technologies, and tools later adopted in the [additive manufacturing] field and applied by inventors to develop foundational AM patents and technologies. The knowledge generated from federally sponsored [research and development] from the early 1970s influenced the patents filed in the 1980s and 1990s and later innovations. Observations from the backwards citations analysis of the foundational patents show that some of the earliest investors in AM were the Department of Defense Office of Naval Research (ONR) and the Defense Advanced Research Projects Agency (DARPA), which provided steady, continual streams of funding for both academic and industry-based researchers. NSF support was also instrumental in the development of early relevant AM research in the 1970s.", "The IDA report further credited federal \"support of knowledge diffusion from the foundational patents to improve the technologies and develop new applications.\"", "The report also noted that the National Science Foundation (NSF) participated in the development of four of six foundational 3D printing processes developed in the 1980s and 1990s. According to the 2015 report, NSF \"provided almost 600 grants for [additive manufacturing] research and other activities over the past 25 years, amounting to more than $200 million (in 2005 dollars) in funding.\" ", "In 2012, President Obama announced the establishment of the National Additive Manufacturing Innovation Institute (NAMII) in Youngstown, OH, as a pilot institute under the National Network of Manufacturing Innovation (NNMI, now referred to as Manufacturing USA). Under NAMII, the Departments of Defense, Energy, and Commerce; the National Science Foundation; the National Aeronautics and Space Administration (NASA); 40 companies; 9 research universities; 5 community colleges; and 11 nonprofit organizations collaborated to share resources, move basic research toward product development, and provide workforce education and training. The National Center for Defense Manufacturing and Machining was selected to manage the NAMII pilot institute through a competitive selection process. In 2013, NAMII was rebranded as America Makes. ", "The Manufacturing USA program's four stated goals are to", "increase the competitiveness of U.S. manufacturing; facilitate the transition of innovative technologies into scalable, cost-effective, and high-performing domestic manufacturing capabilities; accelerate the development of an advanced manufacturing workforce; and support business models that help the Manufacturing USA institutes to become stable and sustainable after the initial federal startup funding period. ", "The Government Accountability Office (GAO) estimates that America Makes was to receive $56 million in federal funding and $85 million in nonfederal funding from August 2012 to August 2019. As of December 2018, America Makes had 225 members. ", "Many national laboratories use 3D printing, including Oak Ridge National Laboratory, Lawrence Livermore National Laboratory, Sandia National Laboratories, Los Alamos National Laboratory, and Fermi National Accelerator Laboratory.", "The U.S. government also purchases 3D-printed products in several capacities; a 2016 report by the General Services Administration (GSA) notes that the Department of Defense purchases an especially wide variety of 3D-printed parts for defensive and medical purposes. The GSA offers a specific procurement subcategory for federal purchases of 3D printing technology.", "The federal government is involved in the creation of 3D printing standards, as well. Among other initiatives, the U.S. Air Force granted a private U.S. company $6 million in 2016 to develop standards for 3D-printed rocket engines. This grant was intended to reduce U.S. reliance on foreign-made launch vehicle components. Similarly, the Federal Aviation Administration (FAA) is working with industry organizations to develop certification methods for 3D-printed parts. The FAA published a road map in September 2018 that \"includes training and education, development of regulatory documents, Research and Development (R&D) plan and interagency communication.\" Further, the National Institute of Standards and Technology and the Food and Drug Administration operate several projects in pursuit of improved process qualification for 3D printing. At the same time, standards have been developed privately by Committee F42, a technical group formed in 2009 by ASTM International and the Society of Manufacturing Engineers. "], "subsections": []}, {"section_title": "Manufacturing Impacts", "paragraphs": ["In some cases, 3D printing offers advantages when compared to traditional methods of manufacturing, such as injection molding, drilling, or welding. These benefits stem from the particular design of the technology (see \" Technical Overview \") and have changed the national security, manufacturing, and economic landscapes. The following list of properties provides an overview of ways in which 3D printing deviates from previously established manufacturing technologies."], "subsections": [{"section_title": "Properties of 3D Printing", "paragraphs": ["Reduced waste \u00e2\u0080\u0094 In general, the additive manufacturing process uses only the approximate amount of material needed to produce a product; subtractive manufacturing processes remove materials to produce a product, which inherently generates waste. Accordingly, less input material may be wasted in additive manufacturing. To the extent that some input material is wasted in 3D printing, that material can sometimes be recycled into new stock for use in making other 3D-printed parts.", "Capacity to create parts with high internal complexity \u00e2\u0080\u0094 3D-printed parts are constructed layer by layer, which means complex internal geometries (such as hidden cavities or small channels) can be constructed easily. ", "Cost-effectiveness of small production runs \u00e2\u0080\u0094 3D printers do not require significant retooling when a new or modified part is manufactured. In contrast, manufacturing technologies such as injection molding or die casting incur significant retooling costs when a part design is modified.", "Ease of design modification \u00e2\u0080\u0094 Digital 3D design files can be easily modified and transmitted. "], "subsections": []}, {"section_title": "Associated Manufacturing Impacts", "paragraphs": ["Potential reduction in discrete parts per product \u00e2\u0080\u0094 The high internal complexity of 3D-printed parts means that several distinct manufacturing processes (e.g., machining and welding) can often be integrated into a single 3D printing operation. This has supported manufacturing of parts that previously would have been impossible or prohibitively expensive. Single-piece construction can also result in parts that have fewer weak spots.", "Potential reduction in manufacturing costs \u00e2\u0080\u0094 3D printing provides an alternative for companies considering investments in machine tools. In some cases, 3D printing may be more cost-effective than traditional options; this is particularly true for short-run, custom, or complex parts. 3D printing may be less cost-effective for parts that would require fewer post-processing steps if manufactured using traditional methods. The smaller size of a 3D printer compared to traditional manufacturing equipment may also reduce required physical plant size and related costs.", "Improved prototyping abilities \u00e2\u0080\u0094 Easy modification of design files, combined with the cost-effectiveness of short runs of parts, supports the ability to rapidly prototype parts using 3D printing. This rapid prototyping ability allows designs to be optimized and adjusted quickly.", "Potential reduction in part weight or improvement in part strength\u00e2\u0080\u0094 The capacity to create complex internal structures using 3D printing has improved manufacturers' ability to create parts that are lighter or stronger. This has shown particular promise in the aerospace and automotive industries.", "Potential reduction in inventory \u00e2\u0080\u0094 Large production runs usually are pursued in traditional manufacturing to minimize fixed costs per part. Often, many of the goods produced must be held in storage as inventory. The ability to create 3D-printed parts on demand may allow manufacturers to reduce their inventory of parts. Low set-up costs associated with additive manufacturing allow for smaller production runs, reducing the amount of capital tied up in inventory as well as overhead costs such as storage and insurance. ", "Mass customization \u00e2\u0080\u0094 3D-printed parts may be individually customized on a large scale. Additive manufacturing allows for the production of unique parts, sometimes modified from a basic design, to suit the needs of individual consumers.", "Potential environmental efficiency \u00e2\u0080\u0094 Reduced waste and the lack of a need for retooling 3D printers supports environmental efficiency in manufacturing. Energy costs also can be reduced by \"re-manufacturing\" parts using 3D printing\u00e2\u0080\u0094that is, creating salable products by reconstructing worn-out areas of old parts, instead of manufacturing parts from entirely new input materials.", "Decentralized manufacturing \u00e2\u0080\u0094 3D printers can be used to develop parts in a decentralized capacity. This may reduce the time required to provide parts to consumers, as well as the cost, energy, and environmental impacts of shipping.", "Low barriers to entry \u00e2\u0080\u0094 The comparatively low cost of 3D printing equipment may lower the barrier to entry to manufacturing. This may cause positive or negative impacts; although productivity in legal industry may increase, 3D printing also may be used to support manufacturing of contraband items, including light weapons or parts of nuclear weapons. Low barriers to entry also may create potential negative impacts for established businesses facing new competitors."], "subsections": []}]}, {"section_title": "Issues for Congress", "paragraphs": ["3D printing is a relatively new approach to manufacturing, and the number of 3D printers in use has expanded greatly over the past 15 years. Some industry leaders and policymakers have expressed optimism about the potential of this technology to address certain manufacturing needs. 3D printing is seen as a tool for enabling cost-effective, customized, local production of parts, and in some cases, it allows for the production of parts that cannot be made using traditional manufacturing processes. 3D printing is also seen as enabling innovation and entrepreneurship by lowering the cost of entry into manufacturing. ", "The federal government has played an important R&D role in the development and improvement of 3D printers. In addition, some agencies\u00e2\u0080\u0094such as DOD, NASA, and NIH\u00e2\u0080\u0094are using 3D printing capabilities to accomplish their missions, such as by making or acquiring parts that are no longer available, custom parts, or prototypes for testing and evaluation. ", "As 3D printing technology matures, Congress may face a variety of related issues. Among these issues are how much funding to provide for R&D on 3D printing technology and materials; how much funding to provide for education and training activities focused on preparing scientists, engineers, technicians, and others for careers related to 3D printing; whether federal acquisition strategies need to be modified to reflect the availability of 3D-printed parts; how to ensure that U.S. regulatory agencies can appropriately address 3D printing processes and products; and whether and how the federal government can facilitate the development of industry standards and systems for testing and certification of 3D printing. ", "One of the federal government's flagship efforts focused on 3D printing is the America Makes manufacturing institute, the first institute established as part of the Manufacturing USA program. America Makes is a public-private partnership that seeks to \"[accelerate] the adoption of additive manufacturing technologies in the United States to increase domestic manufacturing competitiveness.\"", "Some have raised concerns over the long-term sustainability of the Manufacturing USA institutes after their period of initial federal financial assistance, which extends for five to seven years. According to the GAO, the agency sponsors of the institutes\u00e2\u0080\u0094Department of Commerce, Department of Energy, and DOD\u00e2\u0080\u0094\"have taken steps to support their institutes' sustainability planning but have not developed criteria to evaluate whether institutes are on track to sustain their operations beyond the initial period of federal financial assistance.\" Institute representatives have expressed concern that the institutes may seek or accept support from foreign corporations, potentially undermining the competitiveness goals of the institutes. Congress may monitor the progress of the America Makes institute toward sustainability and consider whether the federal government should provide continuing financial support. Current bills in the 116 th Congress related to this issue include H.R. 2397 .", "Some have expressed concern about the potential use of 3D printing in the manufacture of firearms or other contraband material by individual criminals, criminal organizations, terrorists, or others precluded from the possession of such devices. Congress may wish to consider approaches to limiting or preventing such uses of 3D printing. Current bills in the 116 th Congress related to this issue include S. 1831 and H.R. 3265 .", "3D printing may raise intellectual property (IP) issues. For example, the U.S. Army has stated that IP difficulties may impede the fabrication of 3D-printed parts in the field. A 2014 industry survey also indicated that manufacturers consider the \"threat to intellectual property\" to be a major concern created by the proliferation of 3D printing. Congress may explore how IP issues could impede the legitimate use of 3D printing, particularly its use by the federal government, and what options may be available for addressing such barriers. Current bills in the 116 th Congress related to this issue include H.R. 3313 ."], "subsections": []}, {"section_title": "Conclusion", "paragraphs": ["3D printing is an alternative manufacturing process with particular strengths and weaknesses. Although the technology is not suitable for all types of manufacturing, it is used in a wide variety of industries, including aerospace, medicine, and custom manufacturing. 3D printing has remained in wide use by the federal government, as well. The technology is likely to grow in usage as new materials become available, material and machine costs continue to fall, and quality issues are addressed.", "The influences that 3D printing has on the U.S. manufacturing landscape stem from an improved capacity for relatively inexperienced users to create extremely complex parts. This may create regulatory, IP, or safety challenges. At the same time, the manufacturing abilities provided by 3D printers also promote economic development and new avenues of scientific and medical exploration. For these reasons, 3D printing is likely to offer both challenges and opportunities over the coming years."], "subsections": []}]}}
{"id": "R45807", "title": "India\u2019s 2019 National Election and Implications for U.S. Interests", "released_date": "2019-06-28T00:00:00", "summary": ["India, a federal republic and the world's most populous democracy, held elections to seat a new lower house of parliament in April and May of 2019. Estimates suggest that more than two-thirds of the country's nearly 900 million eligible voters participated. The 545-seat Lok Sabha (People's House) is seated every five years, and the results saw a return to power of the Bharatiya Janata Party (BJP) led by Prime Minister Narendra Modi, who was chief minister of the west Indian state of Gujarat from 2001 to 2014. Modi's party won decisively\u00e2\u0080\u0094it now holds 56% of Lok Sabha seats and Modi became the first Indian leader to win consecutive majorities since Indira Gandhi in 1971.", "The United States and India have been pursuing an expansive strategic partnership since 2005. The Trump Administration and many in the U.S. Congress welcomed Modi's return to power for another five-year term. Successive U.S. Presidents have deemed India's growing power and influence a boon to U.S. interests in Asia and globally, not least in the context of balancing against China's increasing assertiveness. India is often called a preeminent actor in the Trump Administration's strategy for a \"free and open Indo-Pacific.\" Yet there are potential stumbling blocks to continued development of the partnership. In 2019, differences over trade have become more prominent, and India's long-standing (and mostly commercial) ties to Russia and Iran may run afoul of U.S. sanctions laws. Additionally, India maintains a wariness of U.S. engagement with Pakistan and intentions in Afghanistan, with Islamabad presently facilitating a U.S.-Taliban dialogue and India counseling against a precipitous U.S. withdrawal from Afghanistan.", "Prime Minister Modi's return to power promises broad continuity, even with some notable changes to the federal cabinet. By many accounts, Modi's record as an economic reformer and liberalizer is mixed, and his reputation as a nationalist \"watchman\" has not always translated into effective foreign policy, according to some analysts. It is unclear if Modi will use his renewed domestic political mandate to pursue more assertiveness internationally, possibly in ways that challenge U.S. preferences. Still, most analysts contend that Modi and the BJP have been and will continue to be more open to aligning with U.S. regional strategy and more energetic in pursuing U.S.-favored economic reforms than would have been any alternative Indian leadership.", "The BJP is a Hindu nationalist party, born in 1980 of a larger social movement, and Narendra Modi is a self-avowed Hindu nationalist (India is roughly 79% Hindu and 14% Muslim). The 2019 Modi-BJP campaign was widely criticized for divisiveness, and nationalist fervor following a February India-Pakistan crisis may have benefitted the BJP at the polls. India's minority communities and the country's civil society are widely reported to be under increasing threats emanating from Hindu majoritarian policies and sentiment. These threats can take violent and repressive forms, at times with the involvement of Indian officials or political figures, as reported by the U.S. State Department and independent human rights watchdogs, and as criticized by some Members of Congress.", "This report reviews the recent Indian election process and results, the country's national political stage, and possible implications for U.S. interests in the areas of bilateral economic and trade relations, defense and security ties, India's other foreign relations, and human rights concerns."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Overview", "paragraphs": ["India is a federal parliamentary republic and the world's most populous democracy, with more than 1.3 billion citizens. In the spring of 2019 the country held elections to seat its 17 th Lok Sabha (House of the People), the 545-seat lower chamber of parliament and locus of Indian political power. Results were announced on May 23, with the incumbent Bharatiya Janata Party (BJP, or Indian Peoples Party) winning a sweeping and repeat victory under Prime Minister Narendra Modi. Having in 2014 become the first party to attain a parliamentary majority (52%) in 30 years, the BJP was able to expand that majority to 56% in 2019, becoming the first party to win consecutive majorities since 1971. The dynastic Indian National Congress (hereinafter, Congress Party)\u00e2\u0080\u0094which had dominated the country's politics from 1947 to 1977 and led a national coalition government from 2004 to 2014\u00e2\u0080\u0094again failed to win the 10% minimum of seats required to officially lead the Lok Sabha opposition. Powerful regional and caste-based parties likewise posed no meaningful obstacles to the latest \"BJP wave.\"", "The Administration of President Donald Trump is seeking to expand upon a \"strategic partnership\" with India formally launched in 2005. Progress is ongoing, most notably in the area of defense and security cooperation. The U.S. Congress has been supportive of efforts to expand and deepen the bilateral partnership, formally designating India as a \"Major Defense Partner\" of the United States in 2016. Areas of engagement are broad and include an array of economic and security initiatives. Recent bilateral frictions have arisen over trade practices, religious freedom, and India's relations with Russia and Iran. ", "A State Department release congratulated Prime Minister Modi and his ruling National Democratic Alliance (NDA) coalition for their \"decisive victory,\" and it applauded the Indian people for turning out in historic numbers and the Indian government for \"exceptional execution of this massive undertaking.\" It went on to declare that", "The United States and India enjoy a strong strategic partnership that stands on a foundation of shared values, extensive people-to-people ties, and a commitment to a secure and prosperous Indo-Pacific region. We look forward to working with the newly elected government on a range of important issues\u00e2\u0080\u00a6. We are confident that the strong and upward trajectory of our partnership will continue.", "The Chairman of the House Foreign Affairs Committee also issued a laudatory statement and, in June, several Members of Congress penned an open letter to President Trump to \"highlight the continuing strategic importance of the U.S.-India relationship.\" Secretary of State Michael Pompeo met with Modi and other top Indian officials in New Delhi in June to express enthusiasm about America's \"natural strategic partner.\" President Trump has yet to visit India, and high-level engagement occurs under the rubric of a \"2+2 Ministerial Dialogue\" inaugurated in September 2018. Nevertheless, many independent observers express concern about emergent frictions and indications that the partnership is becoming dissonant. A recent substantive overview of the relationship concluded that it \"would benefit from some realism about its limitations.\" ", "Officials in governments across the Indo-Pacific region expect the election results to bring general continuity in Indian policies. Given the instability and uncertainty that can accompany coalition governance, many likely regarded Prime Minister Modi's convincing reelection with some relief. Modi's internationalist orientation can be seen in his energetic pursuit of diplomacy with numerous major powers and regional governments. This includes though continued development of the U.S.-India strategic partnership, which is widely seen to be rooted in an array of mutually-held values and increasingly convergent visions for global order, lately conceived by Washington as a \"shared vision for a free, open, and rules-based Indo-Pacific region.\" ", "On the economic front, Modi's reputation as a reformer and liberalizer has met with mixed reviews. Five years in office realized no major land or labor reforms or meaningful efforts to address bad bank debt that were widely anticipated. The BJP leader's assumed electoral vulnerabilities\u00e2\u0080\u0094relatively lackluster economic expansion (averaging below 7% annually), joblessness, rising prices, and a widely panned 2016 \"demonetization\" initiative\u00e2\u0080\u0094did not end up degrading his impressive political support. Most market-oriented analysts are hopeful, but not entirely confident, that a \"Modi 2.0\" government will redouble efforts to implement the kinds of economic reforms sought by the U.S. and other governments and business interests. "], "subsections": []}, {"section_title": "Election and Outcome", "paragraphs": ["India possesses a robust and competitive multiparty democratic system. Yet its politics also are described as \"beset by corruption\" by Freedom House, a think tank that ranks world countries on levels of political and civil liberties. In 2017, India had fallen 10 places on the Economic Intelligence Unit Democracy Index to 42 nd in the world, due in part to \"a rise of vigilantism and violence against minority communities, particularly Muslims, as well as other dissenting voices.\" For 2018, India was ranked 41 st worldwide, but its overall score was unchanged, and it maintained its designation as a \"flawed democracy\" (as did the United States).", "The scale of India's national election presents daunting logistical challenges, and voting was completed in seven phases. As with each iteration, the event was history's largest democratic exercise: About 880 million people\u00e2\u0080\u0094one-ninth of the world's population\u00e2\u0080\u0094were eligible to cast ballots in the country's 29 states and 7 Union Territories, including some 84 million first-time voters. More than 600 million Indians participated, for a turnout rate of 67.4%. More than 8,400 candidates and a record 669 parties vied for the Lok Sabha's 543 elected seats; 36 parties won at least one seat, as did 4 independent candidates.", "In addition to being history's largest democratic undertaking, India's 2019 national election was also history's most expensive: participating parties and candidates spent an estimated $8.7 billion on the campaign, more than double the 2014 spending. The BJP reportedly received nearly three-quarters of all political donations. Such massive outlays raise concerns among many about fairness: there is little transparency in India's campaign finance system, the Modi government had lifted caps on corporate donations, and the Election Commission's oversight is criticized for ineffectiveness.", "In the lead-up to the 2019 voting, analysts debated whether the BJP's 2014 sweep was an anomaly in a decades-long era of coalition politics in New Delhi, or marked the beginning of a new period of single-party domination as was seen under the Congress Party prior to 1989. The BJP's unexpected and even stronger showing in 2019 suggests that India's national political stage has undergone qualitative change back toward a hegemonic national party.", "The BJP won by securing 303 seats with more than 37% of the aggregate vote, significantly exceeding the 272 seats required for majority status, and increasing the party's seat total from 282 in the previous Lok Sabha. Their closest competitors, the Congress Party, took 52 seats with 19.5% of the national vote, a net gain of 8 seats (see Table 1 ). According to Election Commission of India data, the BJP won a majority of votes cast in 10 states, as well as in the Delhi National Capital Territory. It also took 49.6% of the votes cast in Uttar Pradesh (UP), India's most populous state. No other party was able to garner a majority of votes in any single state. While the BJP's core support in India's western and north-central \"Hindi belt\" states remained strong, and the party succeeded in expanding its appeal in the country's east, it was shut out completely in seven states, including the major southern states of Andhra Pradesh and Tamil Nadu, where regional parties prevailed. In a sign of the Congress Party's historic collapse nationally, the party failed to win a single seat in 14 states, and nearly half of the seats the party did win (23) came from India's two southernmost states, Kerala and Tamil Nadu (see Figure 1 , \"Map of Indian States\").", "The newly seated Lok Sabha is, on average, younger, wealthier, and better educated than its predecessor, and the number of female members has increased to 15% (see Text Box ). Upper-caste Hindus and political families continue to enjoy disproportionately high representation, and India's large and relatively marginalized Muslim minority community of about 190 million (about 14% of the total) suffers from a declining voice in Parliament: Muslim representation in the Lok Sabha peaked at 10% in 1980 and lingered at about 6% until dropping to 4% in 2014. A net gain of three Muslim members in 2019 only slightly raised that percentage. India's parliamentarians are also notable for the numbers who face formal criminal allegations. "], "subsections": [{"section_title": "Notable Changes in Union Ministers", "paragraphs": ["The \"Modi 2.0\" cabinet includes some significant changes to the leadership of key Indian ministries. For the first time ever, a career diplomat, Subramanyam Jaishankar, is now External Affairs Minister, replacing BJP stalwart Sushma Swaraj. Jaishankar, until recently Foreign Secretary, is a former ambassador to both the United States and China, and is widely known in Washington as proponent and facilitator of closer U.S.-India ties. Another key new figure in the Modi cabinet is Home Minister Amit Shah, who succeeds senior BJP official Rajnath Singh, himself now holding the Defense Ministry portfolio. Also under new leadership is the Finance Ministry, where former Defense Minister Nirmala Sitharaman has become India's first female finance minister. Additionally, National Security Advisor Ajit Doval, a former intelligence chief in office since 2014 and considered a hardliner on Pakistan, was elevated to cabinet rank in 2019."], "subsections": []}, {"section_title": "Other Parties and Figures", "paragraphs": [], "subsections": [{"section_title": "The Indian National Congress", "paragraphs": ["India's Congress Party had hoped in 2019 to reverse its general decline after 2014. It had led a United Progressive Alliance coalition government under Prime Minister Manmohan Singh from 2004 to 2014. Party president Rahul Gandhi\u00e2\u0080\u0094son of former Prime Minister Rajiv Gandhi and grandson of Indira Gandhi\u00e2\u0080\u0094had entered politics with apparent reluctance, winning the \"family seat\" in Amethi, UP, in 2004. Ten years later, Rahul oversaw Congress's worst electoral performance in history when the party took only 44 Lok Sabha seats, down from 206 previously.", "Gandhi's lackluster reputation took a new shine after the party's unexpectedly strong showing in the 2017 Gujarat state elections, and December 2018 Congress victories in three north-central states were a huge morale boost for the party, heartening potential Congress allies. During the 2019 campaign, Gandhi impressed many observers with what were described as creative policy proposals and a newly assured public speaking style. Still, going into the 2019 campaign, Congress had no significant presence in any of India's six most populous states and had shown an inability to recover in states where it had faltered. The party continued to struggle to both consolidate old alliances and to establish new ones. As put by one official from a BJP-allied regional party, the opposition had \"neither a program, nor a leader, nor a narrative.\" Gandhi suffered an embarrassing upset loss in his family's Amethi district, and the party's 2019 defeat has led to new leadership crises."], "subsections": []}, {"section_title": "Regional and Caste-based Parties", "paragraphs": ["The BJP and Congress are India's only truly national parties\u00e2\u0080\u0094they together won roughly half of all votes cast in 2009 and 2014, and their combined share rose to 57% in 2019 (attributable to a 6-point boost for the BJP). The influence of regional and caste-based parties\u00e2\u0080\u0094although blunted by the BJP's outright majority victories\u00e2\u0080\u0094remains a crucial variable in Indian politics. Such parties now hold about one-third of Lok Sabha seats, but many of the most influential met with significant reversals in 2019. ", "By early 2019, Narendra Modi had become the primary, if not sole target of his many electoral opponents, but no single challenger emerged. Still, the opposition's zeal to dislodge the incumbents had them ready to make unusual alliances, especially in Uttar Pradesh, where the effort failed conclusively. Other powerful regional parties experienced setbacks, most notably West Bengal's Trinamool Congress, led by Chief Minister Mamata Banerjee, which barely survived a surprise BJP surge in the key eastern state, winning 22 of 42 Lok Sabha seats to the BJP's 18 (up from 2 in 2014). Only in Odisha was a major regional party\u00e2\u0080\u0094in this case the Biju Janata Dal of popular Chief Minister Naveen Patnaik\u00e2\u0080\u0094able to withstand the BJP onslaught."], "subsections": []}]}]}, {"section_title": "Implications for U.S. Interests", "paragraphs": ["Because the BJP campaign was run largely on Narendra Modi's personal popularity rather than an explicit policy platform, it is unclear how Modi will use his mandate going forward. Since 2014, the Modi government arguably has realized some foreign policy successes compatible with U.S. interests: sustaining the partnership with the United States, solidifying the partnership with Japan, strengthening ties with Israel while making new outreach to key Persian Gulf states such as Saudi Arabia and the UAE, and articulating a vision for the Indo-Pacific region that tracks well with that of the United States. Modi has successfully projected India as the world's next big economic opportunity after China, but critics argue that he has mostly squandered an opportunity to move India into great power status, with a lack of strategic vision harming India's position vis-\u00c3\u00a0-vis major powers and smaller neighbors, alike. Given India's myriad domestic problems, and still-limited capacity to project power, some American observers are skeptical about its near-term potential to play the role sought for it by the U.S. Congress and successive Administrations.", "The Modi/BJP victory has empowered the Indian leader domestically and this may provide Modi and India new opportunities on the global stage. Given Modi's reputation for favoring a \"muscular\" foreign policy, he may now be more willing to resist Chinese assertiveness and move closer to the United States. Yet troubles with the United States also could loom: Many Indian strategic thinkers say their country's national interests are well served by engaging not just with the United States but also with Russia and Iran, which could limit to New Delhi's willingness to abide what some Indian observers describe as \"America's short-term impulses.\" While New Delhi generally welcomes the U.S. \"free and open Indo-Pacific\" (FOIP) strategy, Indian leaders continue to demur from confronting China. The United States and India also seek to cooperate on energy, climate change, and space issues, and have sometimes clashing views on immigration."], "subsections": [{"section_title": "Bilateral Trade and Economic Relations26", "paragraphs": ["Trade and economic ties, an important and growing part of bilateral relations, have faced recent challenges. Prime Minister Modi's strong electoral mandate suggests India's mixed economic performance did not hurt his standing with the public, and the results may embolden the BJP to press ahead with its reform agenda with greater vigor (see Text Box , below). The Trump Administration takes issue with the U.S. trade deficit with India and \"unfair\" trade practices that restrict U.S. exports to and investment in India. Some U.S. policymakers and businesses have been disappointed that, during Modi's first term, India did not move forward with market-opening reforms as they had hoped, and instead increased tariffs and trade restrictions. For example, recent tariff hikes by New Delhi on cell phones and other products have elevated long-standing U.S. concerns about India's tariff regime, and President Trump has called India the \"tariff king.\" Other U.S. concerns include inadequate intellectual property protection and enforcement, and restrictive new rules on e-commerce and localization of certain financial data flows\u00e2\u0080\u0094which affect major U.S. companies, such as Amazon, Walmart-owned Flipkart, Visa, and MasterCard. The United States and India also often have opposing stances on multilateral trade issues in the World Trade Organization. ", "The outlook for bilateral trade relations is unclear. Both sides have taken decisive actions on simmering issues. President Trump terminated India's eligibility for the Generalized System of Preferences (GSP), effective on June 5, 2019, after determining that \"India has not assured the United States that India will provide equitable and reasonable access to its markets.\" This decision followed a U.S. investigation into India's market access practices and petitions by U.S. dairy and medical technology industries. In 2018, India was the largest beneficiary of GSP, with over one-tenth ($6.3 billion) of U.S. goods imports from India entering duty-free under the program. India, which called the eligibility termination \"unfortunate,\" announced soon after that it would impose higher retaliatory tariffs on 28 U.S. products, including almonds, apples, and walnuts, in response to U.S. Section 232 (national-security-based) steel and aluminum tariffs. During 2018, India repeatedly delayed applying retaliatory tariffs, in hopes of negotiating a resolution of bilateral trade issues. In late June, President Trump called India's 2019 imposition of retaliatory tariffs \"unacceptable\" and said they \"must be withdrawn.\"", "At the June 2019 G-20 Summit, the two sides appeared to strike a more conciliatory tone. President Trump said a \"very big\" trade deal would be coming with India. According to India's foreign secretary, the \"trade ministers of both countries would meet at an early date and would try to sort out these issues.\" Yet lack of progress in recent months reportedly is prompting the Administration to consider launching a Section 301 investigation of India's trade practices\u00e2\u0080\u0094this would make India the focus of the next major, in-depth investigation of unfair trade practices after China. On one hand, Section 301 could be a new way to address long-standing issues of U.S. concern with respect to India. On the other hand, it could raise the risk of protracted bilateral trade tensions and tit-for-tat escalation of tariffs across many economic sectors."], "subsections": []}, {"section_title": "Defense and Security Relations", "paragraphs": ["Continuity in India's leadership may lead to continued rapid development of U.S.-India security cooperation, with U.S. leaders hoping that increased Indian capabilities will provide greater net security regionally and worldwide (in spite of some U.S. concerns about New Delhi's ties with Moscow). President Obama and Congress recognized India as a \"major defense partner\" (MDP) in 2016, a unique designation allowing India to receive license-free access to dual-use American technologies. The MDP designation was created in large part to carry over a presumption of license approvals into the new U.S. administration. It was linked to India's joining the four major multilateral export control regimes to become eligible to receive licensing for the most advanced defense systems the United States exports. In mid-2018, India received Strategic Trade Authorization Tier-1 status, putting it on par with NATO allies, and the two countries concluded a long-sought Communications, Compatibility, and Security Agreement (COMCASA), a military-to-military \"enabling agreement.\" The two governments also seek expanded collaboration via the Defense Technology and Trade Initiative, launched in 2012, which aims to facilitate greater defense trade and technology sharing. India participates in formalized \"quadrilateral consultations\" with the United States, Japan, and Australia while downplaying prospects that the \"Quad\" may become a security-related architecture.", "Defense trade is a leading facet of the bilateral partnership. India is now a major purchaser in the global arms market and a lucrative potential customer for U.S. companies. The two nations have signed defense contracts worth about $15 billion since 2008, up from $500 million in all previous years combined. Washington seeks to identify sales that can proceed under the technology-sharing and co-production model sought by New Delhi while also urging reform in India's defense offsets policy. Since 2002, the United States and India have held a series of increasingly complex combined bilateral exercises involving all military services\u00e2\u0080\u0094India now conducts more exercises and personnel exchanges with the United States than with any other country. A first-ever tri-service exercise is set for later in 2019. Bilateral intelligence and counterterrorism cooperation has accelerated over the past decade. In addition to intelligence sharing, homeland security cooperation has included growing engagement between respective law enforcement agencies, especially in the areas of mutual legal assistance and extradition, and on cyberterrorism and cybersecurity. Terrorist groups operating from Pakistani territory are of special interest. ", "India broadly endorses the FOIP strategy pursued by Washington, and it benefits from the higher visibility this strategy provides for India's global role and for its immediate region. Yet India has not fully relinquished the \"nonalignment\" posture it maintained for most of the Cold War (more recently pursuing \"strategic autonomy\" or a \"pragmatic and outcome-oriented foreign policy\" ). Thus, Modi has articulated a vision of a free, open, and inclusive Indo-Pacific, and India remains wary of joining any nascent or potential security architectures that could antagonize Beijing."], "subsections": []}, {"section_title": "India's Other Foreign Relations", "paragraphs": ["India-China . Modi's win likely means a continuation of New Delhi's multilateralist/multipolar approach to international politics in Asia, as well as efforts to resist Chinese \"assertiveness\" in South Asia. India's relations with China have been fraught for decades, with signs of increasing enmity in recent years. Areas of contention include major border and territorial disputes, China's role as Pakistan's primary international benefactor, the presence in India of the Dalai Lama and a self-described Tibetan \"government,\" and China's growing presence in the Indian Ocean region, which many Indians view as an encroachment in their neighborhood. New Delhi is ever watchful for signs that Beijing seeks to \"contain\" Indian influence both regionally and globally. China's BRI\u00e2\u0080\u0094with \"flagship\" projects in Pakistan\u00e2\u0080\u0094is taken by many in India (and elsewhere) as an expression of Beijing's hegemonic intentions. ", "India-Pakistan . The United States has long sought to assist in reducing India-Pakistan conflict and its impact on developments in Afghanistan. A surge of Indian nationalism grew out of a February 2019 international crisis involving Pakistan. Coming just weeks before voting began in India, the confrontation was widely seen to have boosted Modi's electoral prospects. In contrast to his 2014 inauguration, when Pakistan's then-prime minister was an invited guest, Modi in 2019 omitted Pakistani Prime Minister Imran Khan from swearing-in festivities. It is unclear if the Indian leader will seek to use his political capital to launch a new peace initiative with Islamabad or will continue pursuing punitive policies that aim to isolate Pakistan internationally. Some analysts contend that Modi now has sufficient standing to change tack. Others, however, suggest that his reelection \"will be projected as a vindication of his belligerent policy toward Pakistan.\"", "India-Russia . India maintained close ties with Russia throughout much of the Cold War and continues to rely on Moscow for the bulk of its defense imports. With the 2017 enactment of the Countering America's Adversaries Through Sanctions Act ( CAATSA, P.L. 115-44 ) in U.S. law , India's continued major arms purchases from Russia\u00e2\u0080\u0094most prominently a current multi-billion-dollar deal to purchase the Russian-made S-400 air defense system\u00e2\u0080\u0094could trigger U.S. sanctions. Although Congress subsequently provided for a national security waiver of these sanctions, the Administration has consistently counseled India to cancel the purchase and consider U.S.-supplied alternatives , while New Delhi insists that it will go forward in pursuit of its own national interest , a position possibly hardened with the BJP mandate . ", "India-Iran . India has historically friendly relations with Iran, a country that lately has supplied about 30% of India's energy imports. It also opposes any potential acquisition of nuclear weapons by Iran and supports the Joint Comprehensive Plan of Action. Historically averse to unilateral (non-U.N.) sanctions, New Delhi until recently enjoyed exemption from U.S. efforts targeting Iran's energy sector. In April 2019, the Trump Administration ended such exemptions, and New Delhi has issued conflicting statements about its cessation of Iranian oil purchases while informing Washington that such cessation \"comes at a cost.\" Continued tensions in the Persian Gulf and/or a longer-term boycott of Iranian oil could be disruptive to the Indian economy; Modi's strong mandate could place limits on his willingness to abide such disruption. ", "Other Notable Relations . The Trump Administration's South Asia strategy has included calls for greater Indian involvement in Afghanistan, even as such engagement vexes Pakistan (New Delhi has committed about $3 billion to Afghan reconstruction to date). Islamabad is wary of the Indian presence in Afghanistan and accuses New Delhi of supporting anti-Pakistan groups there, a dynamic that can in turn affect U.S. efforts to sustain Pakistan's help in facilitating Afghanistan reconciliation. Many analysts expect India-Afghanistan ties to grow stronger with Modi's reelection, and New Delhi appears wary of any precipitous U.S. withdrawal from Afghanistan. Meanwhile, India's deepening \"strategic partnership\" with Japan is a major aspect of New Delhi's broader \"Act East\" policy and a key axis in the greater FOIP strategies broadly pursued by all three governments participating in a newly established U.S.-Japan-India Trilateral Dialogue. Prime Minister Modi appears to have a convivial personal relationship with his Japanese counterpart and bilateral ties are seen as likely to strengthen going forward."], "subsections": []}, {"section_title": "Human Rights Issues", "paragraphs": ["While Prime Minister Modi and his party have long sought to emphasize development and good governance, the 2019 election cycle revolved around nationalism and other emotive issues, with many observers arguing that Hindu majoritarianism is a threat both to India's religious minorities and to the country's syncretic traditions. According to the U.S. State Department and independent watchdogs, India is the site of numerous human rights violations, many of them serious and some perpetrated, or at least tolerated, by state actors. Many observers are concerned about the impact of growing religious bigotry and Hindu nationalism on human rights. The BJP is an openly Hindu nationalist party and Prime Minister Modi is a self-avowed Hindu nationalist. In 2005, Modi was denied a U.S. visa over concerns about his role in government during lethal anti-Muslim violence in 2002. Modi hit conciliatory notes in a national address three days after the 2019 election results were announced, vowing to seek the trust of minority groups and to work for the good of all Indians. ", "Human rights nongovernmental organizations and social service groups have seen their Indian operations constrained in recent years, and observers are watching closely for signs that the Modi/BJP mandate will lead to renewed efforts toward Hindu nationalist goals. Some of these\u00e2\u0080\u0094including laws preventing religious conversions and cow slaughter\u00e2\u0080\u0094continue to cause sparks in U.S.-India relations, including explicit BJP criticism of the U.S. government for alleged \"bias\" against Modi. Future moves by the Modi government on other \"Hindutva\" policies could increase national divisions and lead to further international opprobrium."], "subsections": []}]}]}}
{"id": "RL34499", "title": "Youth Transitioning from Foster Care: Background and Federal Programs", "released_date": "2019-05-29T00:00:00", "summary": ["While many young people have access to emotional and financial support systems throughout their early adult years, older youth in foster care and those who are emancipated from care often lack such security. This can be an obstacle for them in developing independent living skills and building supports that might ease their transition to adulthood. Older foster youth who return to their parents or guardians may continue to experience poor family dynamics or lack supports, and studies have shown that recently emancipated foster youth fare poorly relative to their counterparts in the general population on measures such as education and employment.", "The federal government recognizes that older youth in foster care and those who have been emancipated, or aged out, are vulnerable to negative outcomes and may ultimately return to the care of the state as adults through the public welfare, criminal justice, or other systems. The U.S. Department of Health and Human Services (HHS) administers the primary federal programs that are targeted to these youth. These include the federal foster care program and the John H. Chafee Program for Successful Transition to Adulthood program (\"Chafee program\"), both of which are authorized under Title IV-E of the Social Security Act.", "Foster care is a temporary living arrangement intended to ensure a child's safety and well-being until a permanent home can be re-established or newly established. Under the Title IV-E foster care program, a public child welfare agency must work to ensure that each child who enters foster care is safely returned to his/her parents, or, if this is determined not to be possible or appropriate (by a court), to find a new permanent home for the child. Jurisdictions (states, territories, and tribes) may seek reimbursement for youth to remain in care up to age 21. Approximately half of all states extend care to that age. In addition, the foster care program has certain protections for older youth. For example, jurisdictions must annually obtain the credit report of each youth in care who is age 14 and older. They must also assist youth with developing a transition plan that is in place 90 days before aging out. The law requires that a youth's caseworker\u2014and as appropriate, other representative(s) of the youth\u2014assist and support him/her in developing the plan. The law requires that the plan be guided by the youth, and should include specific options on housing, health insurance, education, local opportunities for mentors, and other supports.", "The Chafee program provides supports and services to youth ages 14 to 21 who are or were in foster care (with some exceptions). Youth in states that extend foster care to age 21 can be served under the program until age 23. The program authorizes funds to be used for providing assistance in obtaining a high school diploma, career exploration, training in daily living skills, training in budgeting and financial management skills, and preventive health activities, among other purposes. States must meet certain requirements, including that not more than 30% of Chafee funds are used for room and board expenses. The Chafee Education and Training Voucher (ETV) provides funding for Chafee-eligible youth to attend institutions of higher education. Youth can receive up to $5,000 annually for up to five years (consecutive or nonconsecutive) until they reach age 26. The Chafee law directs HHS to collect outcome and other information for current and former foster youth, and HHS established the National Youth in Transition Database (NYTD) for this purpose.", "Along with the foster care and Chafee programs, other federal programs are intended to help youth currently and formerly in foster care make the transition to adulthood. Federal law authorizes funding for states and local jurisdictions to provide workforce support and housing to older foster youth and youth emancipating from care. Further, beginning on January 1, 2014, eligible young people who were in foster care at age 18 are covered under a mandatory Medicaid pathway until age 26. Youth in foster care or recently emancipated youth are also specifically eligible for certain educational supports."], "reports": {"section_title": "", "paragraphs": ["Y oung people who have spent time in foster care as teenagers often face challenges during the transition to adulthood. Compared to their counterparts in the general population, these youth fare poorly in education, employment, and other outcomes. The federal government recognizes that foster youth may ultimately return to the care of the state as adults through the public welfare, criminal justice, or other systems. In response, federal policy has focused on supporting youth while they are in foster care and in early adulthood. ", "This report provides background to Congress on teens and young adults in and exiting from foster care, and the federal support available to them. It begins with a discussion of the characteristics of youth who have had contact with the child welfare system, including those who entered care and those who exited care via \"emancipation.\" This process means that youth reached the state legal age of adulthood without being reunified with their families or placed in new permanent families. The report then discusses child welfare programs authorized under Title IV-E of the Social Security Act\u2014specifically the Foster Care Maintenance Payments Program (\"foster care program\") and the John H. Chafee Program for Successful Transition to Adulthood (\"Chafee program\")\u2014that are intended to help prepare youth for adulthood. The foster care program provides reimbursement to states for providing foster care, including, at state option, to youth between the ages of 18 and 21. It also includes certain requirements that are intended to support older youth in care. The Chafee program is the primary federal program that funds supportive services for teens and young adults during the transition from foster care. ", "The text box below summarizes recent developments in the Chafee program. Appendix A includes funding data for the Chafee program. Appendix B includes a summary of other federal programs, outside of child welfare law, that address older youth in foster care and those who have aged out. "], "subsections": [{"section_title": "Who Are Older Youth in Foster Care and Youth Aging Out of Care?", "paragraphs": ["Children and adolescents can come to the attention of state child welfare systems due to abuse, neglect, or other reasons such as the death of a parent or child behavioral problems. Some children remain in their own homes and receive family support services, while others are placed in out-of-home settings. Such settings usually include a foster home, the home of a relative, or group care (i.e., non-family settings ranging from those that provide specialized treatment or other services to more general care settings or shelters). A significant number of youth spend at least some time in foster care during their teenage years. They may stay in care beyond age 18, typically up to age 21, if they are in a state that extends foster care. "], "subsections": [{"section_title": "Older Youth in Foster Care", "paragraphs": ["The U.S. Department of Health and Human Services (HHS), which administers child welfare funding, collects data from states on the number and characteristics of children in foster care. On the last day of FY2017, approximately 122,000 youth ages 13 through 20 comprised 27% of the national foster care caseload. Youth ages 13 through 20 made up 28% of the exits from foster care in FY2017. Most of these youth were reunified with their parents or primary caretakers, adopted, or placed with relatives. However, 19,945 youth aged out that year, or were \"emancipated\" because they reached the legal age of adulthood in their states, usually at age 18. "], "subsections": []}, {"section_title": "Former Foster Youth", "paragraphs": ["Youth who spend their teenage years in foster care and those who age out of care face challenges as they move to early adulthood. While in care, they may miss opportunities to develop strong support networks and independent living skills that their counterparts in the general population might more naturally acquire. Even older foster youth who return to their parents or guardians can still face obstacles, such as poor family dynamics or a lack of emotional and financial support, that hinder their ability to achieve their goals as young adults. These difficulties are evidenced by the fact that youth who have spent at least some years in care during adolescence exhibit relatively poor outcomes across a number of domains. Two studies\u2014the Northwest Foster Care Alumni Study and the Midwest Evaluation of the Adult Functioning of Former Foster Youth\u2014have tracked these outcomes."], "subsections": [{"section_title": "Northwest and Midwest Studies", "paragraphs": ["The Northwest Foster Care Alumni Study and the Midwest Evaluation of the Adult Functioning of Former Foster Youth have tracked outcomes for a sample of foster youth across several areas and compared them to those of youth in the general population. The studies indicate that youth who spent time in foster care during their teenage years tended to have difficulty as they entered adulthood and beyond. The Northwest Study was retrospective; it looked at the outcomes of young adults who had been in foster care and found that they were generally more likely to have mental health and financial challenges than their peers. They were just as likely to obtain a high school diploma but were much less likely to obtain a bachelor's degree. The Midwest Evaluation followed youth over time to examine the extent to which outcomes in early adulthood are influenced by the individual characteristics of youth or their out-of-home care histories. The study examined the outcomes of youth who were in foster care at age 17, and tracked them through age 26. Compared to their counterparts in the general population, youth in the Midwest study fared poorly in education, employment, and other outcomes. ", "Despite these findings, many former foster youth have overcome obstacles, such as limited family support and financial resources, and have met their goals. For example, youth in the Northwest study obtained a high school diploma or passed the general education development (GED) test at close to the same rates as 25 to 34 year olds generally (84.5% versus 87.3%). Further, youth in the Midwest Evaluation were just as likely as youth in the general population at age 23 or 24 to report being hopeful about their future."], "subsections": []}, {"section_title": "National Youth in Transition Database (NYTD)", "paragraphs": ["States have reported to HHS since FY2010 on the characteristics and experiences of certain current and former foster youth through the National Youth in Transition Database (NYTD). Among other data, states must report on a cohort of foster youth beginning when they are age 17, and then later at ages 19 and 21. Information is collected on a new group of foster youth at age 17 every three years. While the first cohort of NYTD respondents had some positive outcomes by age 21, about 43% reported experiencing homelessness by that age and over one-quarter had been referred for substance abuse assessments or counseling at some point during their lifetimes. States must also report on the supports that eligible current and former foster youth\u2014generally those ages 14 to 21, and sometimes older\u2014receive to support their transition to adulthood. An analysis of NYTD data for FY2015 found that less than a quarter of youth who received a transition service received services for employment, education, or housing. "], "subsections": []}]}]}, {"section_title": "Overview of Federal Support for Foster Youth", "paragraphs": ["The Children's Bureau at HHS' Administration for Children and Families (ACF) administers programs that are targeted to foster youth and authorized under Title IV-E of the Social Security Act, including the federal foster care program and the Chafee program (which includes the Education and Training Voucher (ETV) program). ", "Under the federal foster care program, states may seek reimbursement for youth to remain in care up to age 18, or up to age 21 at state option. In addition, the program has protections in place to help meet the needs of older youth. Title IV-E entitlement (or mandatory) funding for foster care is authorized on a permanent basis (no year limit) and is provided in annual appropriations acts. Congress typically provides the amount of Title IV-E foster care funding (or \"budget authority\") that the Administration estimates will be necessary for it to provide state or other Title IV-E agencies with the promised level of federal reimbursement for all of their eligible Title IV-E foster care costs under current law.", "Separately, the Chafee program provides funding to states for services and supports to help youth who are or were in foster care make the transition to adulthood. It is available up to age 21 (or age 23 under certain circumstances). The ETV component includes a separate authorization for discretionary funding to support Chafee-eligible youth in attending an institution of higher education for up to five years (consecutive or nonconsecutive) until they reach age 26. Chafee program funding is mandatory and has no year limit. The ETV program is funded through discretionary appropriations, also with no year limit. ", " Figure 1 summarizes the programs and the Title IV-E requirements on older youth in foster care and those leaving foster care. Any state, territory, or tribe seeking federal funding under Title IV-E must have a federally approved Title IV-E plan that meets all the requirements of the law.", "As discussed in Appendix B , other federal programs are intended to help current and former youth in foster care make the transition to adulthood. Federal law authorizes funding for states and local jurisdictions to provide workforce support and housing to this population. States must also provide Medicaid coverage to youth who age out of foster care until they reach age 26. Federal support is available to assist youth in pursuing higher education. "], "subsections": []}, {"section_title": "Extended Foster Care Program", "paragraphs": ["Historically, states have been primarily responsible for providing child welfare services to families and children. When a child is in out-of-home foster care, the state child welfare agency, under the supervision of the court (and in consultation with the parents or primary caretakers in some cases), serves as the parent and makes decisions on the child's behalf to promote his/her safety, permanence, and well-being. In most cases, the state relies on public and private entities to provide these services. The federal government plays a role in shaping state child welfare systems by providing funds, which are linked to certain requirements under Title IV-E of the Social Security Act. Title IV-E requires states to follow certain case planning and management practices for all children in care ( Figure 1 shows these requirements related to youth in foster care). Though not discussed in this report, Title IV-B of the Social Security Act, which authorizes funding for child welfare services, includes provisions on the oversight of children in foster care and support for families more broadly.", "The federal foster care program reimburses states and some territories and tribes (hereinafter, \"states\") for a part of the cost of providing foster care to eligible children and youth who have been removed by the state child welfare agency due to abuse or neglect. The courts have given care and placement responsibility to the state. Under the program, a state may seek partial federal reimbursement to \"cover the cost of (and the cost of providing) food, clothing, shelter, daily supervision, school supplies, a child's personal incidentals, liability insurance with respect to a child, and reasonable travel to the child's home for visitation and reasonable travel for the child to remain in the school in which the child is enrolled at the time of placement.\" ", "Federal reimbursement to states under Title IV-E may be made only on behalf of a child who meets multiple federal eligibility criteria, including those related to the child's removal and the income and assets of the child's family. For the purposes of this report, the most significant eligibility criteria for the federal foster care program are the child's age and placement setting. States may also seek reimbursement on behalf of Title IV-E eligible children for costs related to administration, case planning, training, and data collection. ", "Beginning with FY2020, states can seek federal support for up to 12 months of (1) in-home parent skills-based programs and (2) substance abuse and mental health treatment services for any child a state determines is at \"imminent risk\" of entering foster care, any pregnant or parenting youth in foster care, and the parents or kin caregivers of these children. Also as of FY2020, any state electing to provide these prevention services and programs under its Title IV-E program will be entitled to receive federal funding equal to at least 50% of its cost, as long as the services and programs meet certain evidence-based standards, and the spending is above the state's maintenance of effort (MOE) level."], "subsections": [{"section_title": "Eligibility", "paragraphs": ["Since FY2011, states have had the option to seek reimbursement for the cost of providing foster care to eligible youth until age 19, 20, or 21. These youth must be ", "completing high school or a program leading to an equivalent credential, enrolled in an institution that provides post-secondary or vocational education, participating in a program or activity designed to promote or remove barriers to employment, employed at least 80 hours per month, or exempted by their state from these requirements due to a medical condition as documented and updated in their case plan.", "In program guidance, HHS advised that states can make remaining in care conditional upon whether youth are eligible under only specified eligibility criteria. For example, states could extend care only to those youth enrolled in post-secondary education. Still, the guidance advises that states should \"consider how [they] can provide extended assistance to youth age 18 and older to the broadest population possible consistent with the law to ensure that there are ample supports for older youth.\" In other guidance, HHS has advised that youth can remain in foster care at this older age even if they are married or enlist in the military. ", "As of May 2019, HHS had approved Title IV-E state plans for 28 states, the District of Columbia, and nine tribal nations to extend the maximum age of federally funded foster care (see Figure 2 ). In general, the jurisdictions make foster care available to youth until they reach age 21 (except for Indiana, which extends foster care until age 20) and allow them to remain in care under any of the eligibility conditions specified in law (except for Tennessee, West Virginia, Wisconsin, the Eastern Band of Cherokee, and the Penobscot Indian Nation). A recent survey conducted by Child Trends, a nonprofit research organization, found that youth who are eligible to remain in care typically decide to leave earlier than the maximum age for foster care in their state by one to three years. ", "HHS has advised that young people can leave care and later return before they reach the maximum age of eligibility in the state (with certain requirements pertaining to how long youth can leave for and remain eligible for foster care maintenance payments). In addition, state and tribal child welfare agencies can choose to close the original child abuse and neglect case and reopen the case as a \"voluntary placement agreement\" when the young person turns 18 or if they re-enter foster care between the ages of 18 and 21. In these cases, the income eligibility for Title IV-E would be based on the young adult's income only. HHS has further advised that states can extend care to youth ages 18 to 21 even if they were not in foster care prior to 18, but are not required to do so. "], "subsections": []}, {"section_title": "Eligible Placement Setting", "paragraphs": ["Federal reimbursement of part of the costs of maintaining children in foster care may be sought only for children placed in foster family homes or child care institutions. Title IV-E does not currently include a definition of \"foster family\"; however, as of FY2020 the following definition of \"foster family home\" will go into effect: the home of an individual who is licensed as a foster parent, and who is residing with and providing 24-hour substitute care for not more than six children (with some exceptions) placed in foster care in the individual's licensed home. A \"child care institution\" is defined in law as a private institution, or a public institution that accommodates no more than 25 children, that is approved or licensed by the state. However, if a child in foster care is at least 18 years old, he/she may be placed in a \"setting in which the individual is living independently\" that meets standards established by the HHS Secretary (it does not have to meet state licensing rules). A child care institution may never include \"detention facilities, forestry camps, training schools, or any other facility operated primarily for the detention of children who are determined to be delinquent.\" ", "In program instructions issued by HHS, the department stated that it did not have plans to issue regulations that describe the kinds of living arrangements considered to be independent living settings, how these settings should be supervised, or any other conditions for a young person to live independently. The instructions advised that states have the discretion to develop a range of supervised independent living settings that \"can be reasonably interpreted as consistent with the law, including whether or not such settings need to be licensed and any safety protocols that may be needed.\" States appear to allow youth ages 18 and older to live in a variety of settings. For example, Florida defines an independent living setting as a licensed foster home, licensed group home, college dormitory, shared housing, apartment, or other housing arrangement if the arrangement is approved and is acceptable to the youth, with the first choice being a licensed foster home. "], "subsections": []}, {"section_title": "Case Planning and Review", "paragraphs": ["Federal child welfare provisions under Title IV-B and Title IV-E of the Social Security Act require state child welfare agencies, as a condition of receiving funding under these titles, to provide certain case management services to all children in foster care. These include ", "monthly case worker visits to each child in care; a written case plan for each child in care that documents the child's placement and steps taken to ensure his/her safety and well-being, including by addressing their health and educational needs; and procedures ensuring a case review is conducted at least once every six months by a judge or an administrative review panel, and at least once every 12 months by a judge or administrative body who must consider the child's permanency plan. ", "As part of the annual hearing, the court or administrative body must ensure that the permanency plan addresses whether\u2014and, as applicable, when\u2014the child will be returned to his/her parents, placed for adoption (with a petition for termination of parental rights filed by the Title IV-E agency), referred for legal guardianship, or placed in another planned permanent living arrangement. A court or administrative body may determine that a child's permanency plan is \"another planned permanent living arrangement\" only if the Title IV-E agency documents for the court a compelling reason why every other permanency goal is not in the child's best interest. Further, the court or administrative body conducting the hearings is to consult, in an age-appropriate manner, with the child regarding the proposed permanency plan or transition plan. ", "As shown in Figure 1 , certain other provisions in Title IV-E apply to youth ages 14 and older. For example, the written case plan must include a description of the programs and services that will help the child prepare for a successful transition to adulthood."], "subsections": []}]}, {"section_title": "John H. Chafee Foster Care Program for Successful Transition to Adulthood (Chafee Program)", "paragraphs": ["The John H. Chafee Foster Care Program for Successful Transition to Adulthood, authorized under Section 477 of Title IV-E of the Social Security Act, provides services to older youth in foster care and youth transitioning out of care. This section provides an overview of the program, as well as information about program eligibility, youth participation, program administration, funding, data collection, and training and technical assistance. "], "subsections": [{"section_title": "Legislative History", "paragraphs": ["The Foster Care Independence Act of 1999 ( P.L. 106-169 ) replaced the prior-law Independent Living Program that was established in 1986 ( P.L. 99-272 ). The 1999 law created the John H. Chafee Foster Care Independence program and doubled the annual mandatory funds available to states for independent living services from $70 million to $140 million. It also established new purpose areas, activities to be funded, and related requirements. The program has been amended five times, to (1) add the Education and Training Voucher (ETV) program for funding higher education opportunities ( P.L. 107-133 ), (2) expand eligibility for the Chafee and ETV programs to youth who exit foster care at age 16 or older for adoption or kinship guardianship ( P.L. 110-351 ), (3) ensure that foster youth are informed about designating others to make health care treatment decisions on their behalf ( P.L. 111-148 ), (4) increase funding for the Chafee program and add a purpose area about supporting activities that are developmentally appropriate ( P.L. 113-183 ), and (5) change data collection requirements and multiple purpose areas that address program eligibility ( P.L. 115-123 )."], "subsections": []}, {"section_title": "Purpose Areas", "paragraphs": ["The purposes of the Chafee program are to", "support all youth who have experienced foster care at age 14 or older in their transition to adulthood through transitional services such as assistance in obtaining a high school diploma and post-secondary education, career exploration, vocational training, job placement and retention, training and opportunities to practice daily living skills (such as financial literacy training and driving instruction), substance abuse prevention, and preventive health activities (including smoking avoidance, nutrition education, and pregnancy prevention); help youth who have experienced foster care at age 14 or older achieve meaningful, permanent connections with a caring adult; help youth who have experienced foster care at age 14 or older engage in age- or developmentally appropriate activities, positive youth development, and experiential learning that reflects what their peers in intact families experience; provide financial, housing, counseling, employment, education, and other appropriate support and services to former foster care youth between the ages of 18 and 21 (or up to age 23 in states that have extended foster care to age 21 using federal, state, or other funds, as determined by the HHS Secretary) to complement their own efforts to achieve self-sufficiency and to ensure that program participants recognize and accept their personal responsibility for preparing for and then making the transition from adolescence to adulthood; make education and training vouchers, including postsecondary training and education, available to youth who have aged out of foster care; provide Chafee-funded services to youth who have left foster care for kinship guardianship or adoption after turning 16; and ensure that youth who are likely to remain in foster care until age 18 have regular, ongoing opportunities to engage in age- or developmentally appropriate activities. "], "subsections": []}, {"section_title": "Supports", "paragraphs": ["States may use Chafee funding to provide supports that are described in the purpose areas and other parts of the law. They may dedicate as much as 30% of their program funding toward room and board for youth ages 18 to 21 (or up to age 23 in states that have extended foster care to age 21 using federal, state, or other funds, as determined by the HHS Secretary). Room and board are not defined in statute, but they typically include food and shelter, and may include rental deposits, rent payments, utilities, and the cost of household startup purchases. Chafee funds may not be used to acquire property to provide housing to current or former foster youth. As described in HHS guidance, states may use Chafee funding to establish trust funds for youth eligible under the program. "], "subsections": [{"section_title": "Chafee Education and Training Vouchers", "paragraphs": ["The Chafee program authorizes discretionary funding for the ETV program at $60 million annually, with no end year specified. The program is intended to provide financial support for the cost of attendance to Chafee-eligible youth enrolled at an institution of higher education, as defined by the Higher Education Act of 1965 (HEA), either on a full-time or part-time basis. The law refers to this support as a \"voucher,\" which must not exceed the lesser of $5,000 or the cost of attendance. Youth are eligible to receive ETVs for five years until age 26, regardless of whether they attend in consecutive years or not and are making satisfactory progress toward completion of their program. ", "Funding received through the ETV program does not count toward the student's expected family contribution, which is used by the federal government to determine a student's need for federal financial aid. However, the total amount of education assistance provided under the ETV program and other federal programs may not exceed the total cost of attendance, and students cannot claim the same education expenses under multiple federal programs. The state child welfare agency is to take appropriate steps to prevent duplication of benefits under the Chafee ETV program and other federal programs, and to coordinate the program with other appropriate education and training programs. A current fiscal year's ETV funds may not be used to finance a youth's educational or vocational loans incurred prior to that year."], "subsections": []}]}, {"section_title": "State Plan", "paragraphs": ["To be eligible for Chafee and ETV funds, a state must submit a five-year plan (as part of what is known as the Child and Family Service Plan, or CFSP, and annual updates to that plan via the Annual Progress and Service Report, or APSR) to HHS that describes how it intends to carry out its Chafee-funded program. The plan must be submitted on or before June 30 of the calendar year in which it is to begin. States may make amendments to the plan and notify HHS within 30 days of modifying it. HHS is to make the plans available to the public."], "subsections": []}, {"section_title": "Eligibility", "paragraphs": ["The Chafee program addresses eligibility under the purpose areas and in provisions on the ETV program. The program, including the ETV program, is available to youth", "in foster care between the ages of 14 and 21; who aged out of foster care and are between the ages of 18 and 21 (or up to age 23 in states that extend foster care to age 21); who left foster care at age 16 or older for kinship guardianship or adoption until they reach age 21 (or up to age 23 in states that extend care to age 21); who had been in foster care between the ages of 14 and 21 and left foster care for some other reason besides aging out of foster care, kinship guardianship, or adoption; and who are likely to remain in foster care until age 18 years (see the purpose area about \"regular, ongoing opportunities to engage in age- or developmentally appropriate activities\").", "The Chafee program requires states to ensure that Chafee-funded services serve children of \"various ages\" and in \"various stages of achieving independence\" and use objective criteria for determining eligibility for benefits and services under the program. Former foster youth continue to remain eligible until age 21 (or age 23, if applicable) for services if they move to another state. The state in which the former foster youth resides\u2014whether or not the youth was in foster care in that state\u2014is responsible for providing independent living services to him/her. ", "The number of youth who receive independent living program assistance from Chafee funds and other sources (state, local, and private) is collected by HHS via states through the National Youth in Transition Database (NYTD, discussed further in \" Data Collection \"). In FY2017, approximately 111,700 youth received an independent living service. Separately, states reported to HHS that they provided ETV vouchers to 16,400 youth in FY2008; 16,650 youth in FY2009; 17,400 youth in program year (PY) 2010; 17,100 youth in PY2011; 16,554 youth in PY2012; 16,548 youth in PY2013; 15,514 youth in PY2014, and 14,619 youth in PY2015."], "subsections": [{"section_title": "American Indian Youth", "paragraphs": ["The Chafee program requires a state to certify that each federally recognized Indian tribe in it has been consulted about the state's Chafee-funded programs and that there have been efforts to coordinate the programs with these tribal entities. In addition, the Chafee program specifies that the \"benefits and services under the programs are to be made available to Indian children in the state on the same basis as to other children in the state.\" \"On the same basis\" has been interpreted by HHS to mean that the state will provide program services equitably to children in both state custody and tribal custody."], "subsections": []}, {"section_title": "The Role of Youth Participants", "paragraphs": ["The Chafee program requires states to ensure that youth in Chafee-funded programs participate directly in \"designing their own program activities that prepare them for independent living\" and that they \"accept personal responsibility for living up to their part of the program.\" This language builds on the positive youth development approach to serving young people. Youth advocates that support this approach view youth as assets and promote the idea that they should be engaged in decisions about their lives and communities.", "States have taken various approaches to involving young people in decisions about the services they receive. Most states have also established formal youth advisory boards to provide a forum for youth to become involved in issues facing those in care and aging out of care. Youth-serving organizations for current and former foster youth, such as Foster Club, provide an outlet for young people to become involved in the larger foster care community and advocate for other children in care. States are not required to utilize life skills assessments or personal responsibility contracts with youth to comply with the youth participation requirement, although some states use these tools to assist youth in making the transition to adulthood."], "subsections": []}]}, {"section_title": "Program Administration", "paragraphs": ["States administer their Chafee-funded programs in multiple ways. Some programs are overseen by the state program that addresses older and former foster youth, with an independent living coordinator and other program staff. For example, in Maine the state's independent living coordinator oversees specialized life skills education coordinators assigned to cover all of the state's Department of Health and Human Services district offices. In some states, like California, each county administers its own program with some oversight and support from a statewide program. Other states, including Florida, use contracted service providers to administer their programs. Many jurisdictions have partnered with private organizations to help fund and sometimes administer some aspect of their independent living programs. For example, the Jim Casey Youth Opportunities Initiative has provided funding and technical assistance to multiple cities to provide financial support and training to youth exiting care."], "subsections": [{"section_title": "ETV Program Administration", "paragraphs": ["The state with the placement and responsibility for a youth in foster care is to provide the voucher to that youth. The state must also continue to provide a voucher to any youth who is currently receiving one and moves to another state for the sole purpose of attending an institution of higher education. If a youth moves permanently to another state after leaving care and subsequently enrolls in a qualified institution of higher education, the state where he or she resides would provide the voucher. ", "Generally, states administer their ETV program through their program that addresses older and former foster youth. However, some states administer the ETV program through their financial aid office (e.g., California Student Aid Commission) or at the local level (e.g., Florida, where all child welfare programs are administered through community-based agencies). Some states contract with a nonprofit service provider, such as Foster Care to Success. ", "States and counties may use ETV dollars to fund the vouchers and the costs associated with program administration, including for salaries, expenses, and training of staff. States are not permitted to use Title IV-E foster care or adoption assistance program funds for administering the ETV program. However, they may spend additional funds from state sources or other sources to supplement the ETV program or use ETV funds to expand existing postsecondary funding programs. Several states have scholarship programs, tuition waivers, and grants for current and former foster youth that are funded through other sources. "], "subsections": []}]}, {"section_title": "Funding", "paragraphs": ["Chafee and ETV funds are distributed to each state based on its proportion of the nation's children in foster care. States must provide a 20% match (in-kind or cash) to receive their full federal Chafee and ETV allotment. The Chafee program includes a \"hold harmless\" clause that precludes any state from receiving less than the amount of general independent living funds it received under the former independent living program in FY1998 or $500,000, whichever is greater. There is no hold harmless provision for ETV funds. States may use Chafee and ETV funds to supplement, and not supplant, any other funds that are available for the types of activities authorized under the Chafee program. Territories with an approved Title IV-E plan may also apply for Chafee funding. Currently, Puerto Rico and the U.S. Virgin Islands have approved plans.", "An Indian tribe, tribal organization, or tribal consortium may apply to HHS and receive a direct federal allotment of Chafee and/or ETV funds. To be eligible, a tribal entity must be receiving Title IV-E funds to operate a foster care program under a Title IV-E plan approved by HHS or via a cooperative agreement or contract with the state. Successful tribal applicants receive an allotment amount(s) out of the state's allotment for the program(s) based on the share of all children in foster care in the state under tribal custody. Tribal entities must satisfy the Chafee program requirements established for states, as HHS determines appropriate. ", "Four tribes\u2014the Prairie Band of Potawatomi (Kansas), Santee Sioux Nation (Nebraska), Confederated Tribe of Warm Springs (Oregon), and Port Gamble S'Klallam Tribe (Washington)\u2014receive Chafee and ETV funds. A state must certify that it will negotiate in good faith with any tribal entity that does not receive a direct federal allotment of child welfare funds but would like to enter into an agreement or contract with the state to receive funds for administering, supervising, or overseeing Chafee and ETV programs for eligible Indian children under the tribal entity's authority.", " Appendix B provides the Chafee and ETV allotments for each state, four tribes, Puerto Rico, and the U.S. Virgin Islands in FY2018 and FY2019. Though not shown in the table, Chafee funds are often combined with state, local, and other funding sources. "], "subsections": [{"section_title": "Unused Funds", "paragraphs": ["States and tribes have two fiscal years to spend their Chafee and ETV funds. If a jurisdiction does not apply for all of its allotment, the remaining funds may be redistributed among states that need these funds as determined by HHS. Table A-2 shows the percentage and share of funds returned for both programs from FY2005 through FY2014, as well as a list of jurisdictions that have returned these funds. FY2014 is the most recent year available. ", "HHS was recently given authority to reallocate funds that are not spent within the two-year period to states and tribes that apply for the funding. If funds are reallocated, the statute specifies that the funds should be redistributed among the states and tribes that apply for any unused funds, provided HHS determines the state or tribe would use the funds according to the program purposes. Further, HHS is directed to allocate the funds based on the share of children in foster care among the states and tribes that successfully appl y for the unused funds. Any unspent funds can be made available to the applying states or tribes in the second fiscal year following the two-year period in which funds were originally awarded . Any redistributed funds are considered part of the state 's or tribe's allotment for the fiscal year in which the redistribution is made ."], "subsections": []}]}, {"section_title": "Training and Technical Assistance", "paragraphs": ["Training and technical assistance grants for the Chafee and ETV programs had been awarded competitively every five years, most recently for FY2010 through FY2014. The National Child Welfare Resource Center for Youth Development (NCWRCYD), housed at the University of Oklahoma, provided assistance under the grant. Beginning with FY2015, HHS has operated the Child Welfare Capacity Building Collaborative via a contract with ICF International, a policy management organization, to provide training and technical assistance on a number of child welfare issues, including youth development. "], "subsections": []}, {"section_title": "Data Collection", "paragraphs": ["The Chafee program required that HHS consult with state and local public officials responsible for administering independent living and other child welfare programs, child welfare advocates, Members of Congress, youth service providers, and researchers to", "\"develop outcome measures (including measures of educational attainment, high school diploma, avoidance of dependency, homelessness, non-marital childbirth, incarceration, and high-risk behaviors) that can be used to assess the performance of states in operating independent living programs\"; identify the data needed to track the number and characteristics of children receiving services, the type and quantity of services provided, and state performance on the measures; and develop and implement a plan to collect this information beginning with the second fiscal year after the Chafee law was enacted in 1999. ", "In response to these requirements, HHS created the National Youth in Transition Database (NYTD). The final rule establishing NYTD became effective April 28, 2008, and it required states to report data on youth beginning in FY2011. HHS uses NYTD to engage in two data collection and reporting activities. First, states collect demographic data and information about receipt of services on eligible youth who currently receive independent living services. This includes youth regardless of whether they continue to remain in foster care, were in foster care in another state, or received child welfare services through an Indian tribe or privately operated foster care program. Second, states track information on outcomes of foster youth on or about their 17 th birthday, around their 19 th birthday, and around their 21 st birthday. ", "Consistent with the authorizing statute for the Chafee program, HHS is to penalize any state not meeting the data collection procedures for the NYTD from 1% to 5% of its annual Chafee fund allotment, which includes any allotted or re-allotted funds for the general Chafee program only. The penalty amount is to be withheld from the current fiscal year award of the funds. HHS is to evaluate a state's data file against data compliance standards, provided by statute. However, states have the opportunity to submit corrected data. The text box indicates new information that HHS must report to Congress."], "subsections": []}, {"section_title": "Evaluation of Chafee-Funded Services", "paragraphs": ["The authorizing statute for the Chafee program requires HHS to conduct evaluations of state (or tribal) programs funded by the Chafee program deemed to be \"innovative or of national significance.\" The law reserves 1.5% of total Chafee funding annually for these evaluations, as well as related technical assistance, performance measurement, and data collection. HHS conducted an evaluation of promising independent living programs from approximately 2007 to 2012, and is in the process of identifying new ways of conducting research in this area."], "subsections": [{"section_title": "Multi-Site Evaluation of Foster Youth Programs", "paragraphs": ["For the initial evaluation, HHS contracted with the Urban Institute and its partners to conduct what is known as the Multi-Site Evaluation of Foster Youth Programs. The goal of the evaluation was to determine the effects of programs funded by the Chafee authorizing law in achieving key outcomes related to the transition to adulthood. HHS and the evaluation team initially conducted an assessment to identify state and local programs that could be evaluated rigorously, through random assignment to treatment and control groups, as required under the law. Their work is the first to involve random assignment of programs for this population. ", "The evaluation team examined four programs in California and Massachusetts\u2014an employment services program in Kern County, CA; a one-on-one intensive, individualized life skills program in Massachusetts; and a classroom-based life skills training program and a tutoring/mentoring program, both in Los Angeles County, CA. The evaluation of the Los Angeles and Kern County programs found no statistically significant impacts as a result of the interventions; however, the life skills program in Massachusetts, known as Outreach, showed impacts for some of the education outcomes that were measured. The Outreach program assists youth who enroll voluntarily in preparing to live independently and in having permanent connections to caring adults upon exiting care. ", "Outreach youth were more likely than their counterparts in the control group to report having ever enrolled in college and staying enrolled. Outreach youth were also more likely to experience outcomes that were not a focus of the evaluation: these youth were more likely to remain in foster care and to report receiving more help in some areas of educational assistance, employment assistance, money management, and financial assistance for housing. In short, the Outreach youth may have been less successful on the educational front if they had not stayed in care. Youth in the program reported similar outcomes as the control group for multiple other measures, including in employment, economic well-being, housing, delinquency, and pregnancy."], "subsections": []}, {"section_title": "Emerging Research", "paragraphs": ["HHS has contracted with the Urban Institute and Chapin Hall for additional research on the Chafee program. Citing the lack of experimental research in child welfare, the research team is examining various models in other policy areas that could be used to better understand promising approaches of working with older youth in care and those transitioning from care. Researchers have identified a conceptual framework that takes into account the many individual characteristics and experiences that influence a youth's ability to transition successfully into adulthood. The research team has also classified the various types of programs that foster youth could access to help in the transition, and the extent to which they are ready to be evaluated. In addition, researchers have published a series of briefs that discuss outcomes and programs for youth in foster care in the areas of education, employment, and financial literacy. The briefs discuss that few programs have impacts for foster youth in these areas. The briefs also address issues to consider when designing and evaluating programs for youth in care. ", "Appendix A. Funding for the John H. Chafee Foster Care (Chafee) Program for Successful Transition to Adulthood and Education and Training Voucher (ETV) Program", "Appendix B. Other Federal Support for Older Current and Former Foster Youth", "In addition to the child welfare programs under Title IV-E of the Social Security Act, other federal programs provide assistance to older current and former foster youth. This appendix describes Medicaid pathways for foster youth who emancipated; educational, workforce, and housing supports; and a grant to fund training for child welfare practitioners working with older foster youth and youth emancipating from care.", "Medicaid ", "The Centers for Medicare and Medicaid Services (CMS) at HHS administers Medicaid, a federal-state health program jointly financed by HHS and the states. Medicaid law provides for mandatory and optional pathways for youth who have aged out of foster care. ", "Mandatory Pathway", "As of January 1, 2014, certain former foster youth are eligible for Medicaid under a mandatory pathway created for this population in the Affordable Care Act (ACA, P.L. 111-148 ). Former foster youth are eligible if they", "were \"in foster care under the responsibility of the State\" upon reaching age 18 (or up to age 21 if the state extends federal foster care to that age); were enrolled in Medicaid while in foster care; and are not eligible or enrolled in other mandatory Medicaid coverage groups.", "The ACA specifies that income and assets are not considered when determining eligibility for this group. Nonetheless, foster youth with annual incomes above a certain level may be required to share in the costs of their health care. ", "In addition to the law, CMS has provided additional parameters on the new pathway via a final rule promulgated in November 2016 and policy guidance. The final rule specifies that former foster youth are eligible regardless of whether Title IV-E foster care payments were made on their behalf. States may not provide Medicaid to individuals who left foster care before reaching age 18 via this pathway. Further, states may not provide Medicaid coverage to former foster youth who move from another state; however, states could apply to HHS under a waiver to provide such coverage via the research and demonstration waiver authority for the Medicaid program. ", "The Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities Act ( P.L. 115-271 ) amended the Medicaid statute on the former foster youth pathway. It will permit states, as of January 2023, to use state plan authority for providing coverage to former foster youth who move across state lines. The law directs HHS, within one year of the its enactment, to issue guidance to states on best practices for removing barriers and ensuring timely coverage under this pathway, and on conducting related outreach and raising awareness among eligible youth.", "Consistent with existing regulations, the final rule affirms that states may not terminate Medicaid eligibility for foster youth who reach age 18 without first determining whether they are eligible for other mandatory Medicaid eligibility pathways available to adults (e.g., the coverage pathway for pregnant women). ", "Optional Pathway", "The pathway for former foster youth appears largely to supersede an optional pathway also provided for this population. The 1999 law ( P.L. 106-169 ) that established the Chafee program also created a new optional Medicaid eligibility pathway for \"independent foster care adolescents\"; this pathway is often called the \"Chafee option.\" The law further defined these adolescents as individuals under the age of 21 who were in foster care under the responsibility of the state on their 18 th birthday. The law permits states to restrict eligibility based on the youth's income or resources, and whether or not the youth had received Title IV-E funding.", "As of late 2012, more than half (30) of all states had extended the Chafee option to eligible youth. Of these states, five reported requiring youth to have income less than a certain level of poverty (180% to 400%). Four states permitted youth who were in foster care at age 18 in another state to be eligible under the pathway. States also reported whether the youth is involved in the process for enrolling under the Chafee option. In 15 states, youth are not directly involved in the enrollment process. For example, some states automatically enroll youth. In the other 15 states, youth are involved in enrollment with assistance from their caseworker or they enroll on their own. Most states that have implemented the Chafee option require an annual review to verify that youth continue to be eligible for Medicaid. States generally have a hierarchy to determine under which pathway youth qualify. For example, in most states, youth who qualify for the Chafee option and receive Supplemental Security Income (SSI) would be eligible for Medicaid under the SSI Medicaid pathway. ", "Educational Support", "Federal funding and other supports for current and former foster youth are in place to help these youth aspire to, pay for, and graduate from college. The Higher Education Act (HEA) authorizes financial aid and support programs that target this and other vulnerable populations. ", "Federal Financial Aid", "For purposes of applying for federal financial aid, a student's expected family contribution (EFC) is the amount that can be expected to be contributed by a student and the student's family toward his or her cost of education. Certain groups of students are considered \"independent,\" meaning that only the income and assets of the student are counted. Individuals under age 24 who are or were orphans, in foster care, or wards of the court at age 13 or older are eligible to apply for independent student status. The law does not specify the length of time that the youth must have been in foster care or the reason for exiting as factors for independent student status eligibility. However, the federal financial aid form, known as the Free Application for Federal Student Aid (FAFSA), instructs current and former foster youth that the financial aid administrator at their school may require the student to provide proof that they were in foster care. ", "As required by the FY2014 appropriations law (2014, P.L. 113-76 ), the Department of Education (ED) modified the FAFSA form so that it includes a box for applicants to identify whether they are or were in foster care, and to require ED to provide these applicants with information about federal educational resources that may be available to them. ", "Higher Education Support Programs", "The Higher Education Act provides that youth in foster care, including youth who have left foster care after reaching age 16, and homeless children and youth are eligible for what are collectively called the federal TRIO programs. The programs are known individually as Talent Search, Upward Bound, Student Support Services, Educational Opportunity Centers, and McNair Postbaccalaureate. The TRIO programs are designed to identify potential postsecondary students from disadvantaged backgrounds, prepare these students for higher education, provide certain support services to them while they are in college, and train individuals who provide these services. HEA directs the Department of Education (ED), which administers the programs, to (as appropriate) require applicants seeking TRIO funds to identify and make services available, including mentoring, tutoring, and other services, to these youth. TRIO funds are awarded by ED on a competitive basis. In addition, HEA authorizes services for current and former foster youth (and homeless youth) through TRIO Student Support Services\u2014a program intended to improve the retention and graduation rates of disadvantaged college students\u2014that include temporary housing during breaks in the academic year. In FY2019, Congress appropriated $1.1 billion to TRIO programs.", "Separately, HEA allows additional uses of funds through the Fund for the Improvement of Postsecondary Education (FIPSE) to establish demonstration projects that provide comprehensive support services for students who were in foster care (or homeless) at age 13 or older. FIPSE is a grant program that seeks to support the implementation of innovative educational reform ideas and evaluate how well they work. As specified in the law, the projects can provide housing to the youth when housing at an educational institution is closed or unavailable to other students. Congress appropriated $6 million in FY2018 and $5 million in FY2019 for FIPSE.", "Workforce Support", "Workforce Innovation and Opportunity Act Programs", "The Workforce Innovation and Opportunity Act (WIOA) authorizes job training programs to unemployed and underemployed individuals through the Department of Labor (DOL). Two of these programs\u2014Youth Activities and Job Corps\u2014provide job training and related services to targeted low-income vulnerable populations, including foster youth. The Youth Activities program focuses on preventive strategies to help in-school youth stay in school and receive occupational skills, as well as on providing training and supportive services, such as assistance with child care, for out-of-school youth. Job Corps is an educational and vocational training program that helps students learn a trade, complete their GED, and secure employment. To be eligible, foster youth must meet age and income criteria as defined under the act. Young people currently or formerly in foster care may participate in both programs if they are ages 14 to 24. In FY2018, Congress appropriated $903 million to Youth Activities and $1.7 billion to Job Corps.", "Housing Support", "Family Unification Vouchers Program", "Current and former foster youth may be eligible for housing subsidies provided through programs administered by the Department of Housing and Urban Development's (HUD's) Family Unification Vouchers program (FUP vouchers). The FUP vouchers were initially created in 1990 under P.L. 101-625 for families that qualify for Section 8 tenant-based assistance and for whom the lack of adequate housing is a primary factor in the separation, or threat of imminent separation, of children from their families or in preventing the reunification of the children with their families. Amendments to the program in 2000 under P.L. 106-377 made youth ages 18 to 21 eligible for the vouchers for up to 18 months if they are homeless or are at risk of becoming homeless at age 16 or older. ", "The Housing Opportunity Through Modernization Act ( P.L. 114-201 ), enacted in July 2016, extended the upper age of eligibility for FUP vouchers, from 21 to 24, for youth who emancipated from foster care. It also extended assistance under the program for these youth from 18 to 36 months and allows the voucher assistance to begin 90 days prior to a youth leaving care because they are aging out. It also requires HUD, after consulting with other appropriate federal agencies, to issue guidance to improve coordination between public housing agencies, which administer the vouchers, and child welfare agencies. The guidance must address certain topics, including identifying eligible recipients for FUP vouchers and identifying child welfare resources and supportive families for families and youth (including the Chafee program). As of the date of this report, HUD has not issued such guidance. In correspondence with CRS, HUD explained that it has requested funding for this work, and until those funds can be secured, HUD and HHS staff are studying how youth and families are served by FUP. ", "FUP vouchers were initially awarded from 1992 to 2001. Over that period, approximately 39,000 vouchers were distributed. Each award included five years of funding per voucher and the voucher's use was restricted to voucher-eligible families for those five years. At the end of those five years, public housing authorities (PHAs) were eligible to convert FUP vouchers to regular Section 8 housing vouchers for low-income families. While the five-year use restrictions have expired for all family unification vouchers, some PHAs may have continued to use their original family unification vouchers for FUP-eligible families and some may have chosen to use some regular-purpose vouchers for FUP families (but the extent to which this happened is unknown). Congress appropriated $20 million for new FUP vouchers in each of FY2008 and FY2009; $15 million in FY2010, $10 million in FY2017, and $20 million in FY2018 and FY2019. Congress has specified that amounts made available under Section 8 tenant-based rental assistance and used for the FUP vouchers are to remain available for the program.", "A 2014 report on the FUP program examined the use of FUP vouchers for foster youth. The study was based on a survey of PHAs, a survey of child welfare agencies that partnered with PHAs that served youth, and site visits to four areas that use FUP to serve youth. The survey of PHAs showed that slightly less than half of PHAs operating FUP had awarded vouchers to former foster youth in the 18 months prior to the survey. PHAs reported that youth were able to obtain a lease within the allotted time, and many kept their leases for the full 18-month period they were eligible for the vouchers. In addition, 14% of total FUP program participants qualified because of their foster care status. According to the study, this relatively small share was due to the fact that less than half of PHAs were serving youth, and these PHAs tended to allocate less than one-third of their vouchers to youth, among other findings.", "Other Support", "Older current and former foster youth may be eligible for housing services and related supports through the Runaway and Homeless Youth program, administered by HHS. The program is comprised of three subprograms: the Basic Center program (BCP), which provides short-term housing and counseling to youth up to the age of 18; the Transitional Living program (TLP), which provides longer-term housing and counseling to youth ages 16 through 22; and the Street Outreach program (SOP), which provides outreach and referrals to youth who live on the streets. Youth transitioning out of foster care may also be eligible for select transitional living programs administered by HUD, though the programs do not specifically target these youth. The program was funded at $127 million in FY2019. ", "The Foreclosure Prevention Act of 2008 ( P.L. 110-289 ) was signed into law on July 30, 2008, and enables owners of properties financed in part with Low-Income Housing Tax Credits (LIHTCs) to claim as low-income units those occupied by low-income students who were in foster care. Owners of LIHTC properties are required to maintain a certain percentage of their units for occupancy by low-income households; students (with some exceptions) are not generally considered low-income households for this purpose. The law does not specify the length of time these students must have spent in foster care nor require that youth are eligible only if they emancipated."], "subsections": []}]}]}]}}
{"id": "R46280", "title": "Department of Veterans Affairs\u2019 Potential Role in Addressing the COVID-19 Outbreak", "released_date": "2020-03-20T00:00:00", "summary": ["The Department of Veterans Affairs (VA) provides a range of benefits to eligible veterans and their dependents. The department carries out its programs nationwide through three administrations and the Board of Veterans' Appeals (BVA). The Veterans Health Administration (VHA) is responsible for health care services and medical and prosthetic research programs. The Veterans Benefits Administration (VBA) is responsible for, among other things, providing disability compensation, pensions, and education assistance. The National Cemetery Administration (NCA) is responsible for maintaining national veterans cemeteries; providing grants to states for establishing, expanding, or improving state veterans cemeteries; and providing headstones and markers for the graves of eligible persons, among other things.", "With a vast integrated health care delivery system spread across the United States, VHA is also statutorily required to serve as a contingency backup to the Department of Defense (DOD) medical system during a national security emergency and to provide support to the National Disaster Medical System and the Department of Health and Human Services (HHS), as necessary, in support of national emergencies (also referred to as the \"Fourth Mission\" of the VHA).", "Based on limited information from VA, this report provides an overview of VA's response to the Coronavirus Disease 2019 (COVID-19) pandemic that is affecting communities throughout the United States. It also discusses recent congressional action as it pertains to the veterans' benefits and services, as well as the supplemental appropriations for the department."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["The Department of Veterans Affairs (VA) provides a range of benefits and services to veterans who meet certain eligibility criteria. These benefits and services include, among other things, hospital and medical ca re; disability compensation and pensions; education; vocational rehabilitation and employment services; assistance to homeless veterans; home loan guarantees; administration of life insurance, as well as traumatic injury protection insurance for servicemembers; and death benefits that cover burial expenses.", "The department carries out its programs nationwide through three administrations and the Board of Veterans' Appeals (BVA). The Veterans Health Administration (VHA) is responsible for health care services and medical and prosthetic research programs. The Veterans Benefits Administration (VBA) is responsible for, among other things, providing disability compensation, pensions, and education assistance. The National Cemetery Administration (NCA) is responsible for maintaining national veterans cemeteries; providing grants to states for establishing, expanding, or improving state veterans cemeteries; and providing headstones and markers for the graves of eligible persons, among other things. ", "In addition to providing health care services to veterans and certain eligible dependents, the VHA is statutorily required to serve as a contingency backup to the Department of Defense (DOD) medical system during a national security emergency and to provide support to the National Disaster Medical System and the Department of Health and Human Services (HHS) as necessary in response to national crises. The department is also required to take appropriate actions to ensure VA medical centers are prepared to protect veteran patients and staff during a public health emergency. "], "subsections": []}, {"section_title": "Novel Coronavirus (COVID-19)13", "paragraphs": ["On December 31, 2019, the World Health Organization (WHO) was informed of a cluster of pneumonia cases in Wuhan City, Hubei Province of China. Illnesses have since been linked to a disease caused by a previously unidentified strain of coronavirus, designated Coronavirus Disease 2019, or COVID-19. On January 30, 2020, an Emergency Committee convened by the WHO Director-General declared the COVID-19 outbreak to be a Public Health Emergency of International Concern (PHEIC). On January 31, the Secretary of Health and Human Services (HHS) declared a public health emergency under Section 319 of the Public Health Service Act (42 U.S.C. 247d). On March 11, 2020, the WHO characterized the COVID-19 outbreak as a pandemic. Two days later, on March 13, the President declared the COVID-19 outbreak a national emergency, beginning March 1, 2020. ", "The VHA plays a significant role in the domestic response to a pandemic. It is one of the largest integrated direct health care delivery systems in the nation, caring for more than 7.1 million patients in FY2020 and providing 123.8 million outpatient visits at approximately 1,450 VA sites of care. The VHA employs a workforce of 337,908 full-time equivalent employees (FTEs), largely composed of health care professionals. In addition, the VHA has a statutory mission to contribute to the overall federal emergency response capabilities."], "subsections": [{"section_title": "Scope and Limitations", "paragraphs": ["This report provides an overview of VA's response thus far to this rapidly evolving COVID-19 pandemic. It does not provide an exhaustive description of all of the department's activities, and it is based on very limited publicly available information from VA. It is organized as follows: first, it provides details on VHA's, VBA's, and NCA's response activities; second, it provides details on VA's emergency preparedness (\"Fourth Mission\") activities to provide support to the overall federal emergency response; and lastly, it briefly describes congressional activity as it pertains to VA and veterans. The Appendix provides a summary of VHA's emergency authorities. "], "subsections": []}]}, {"section_title": "Medical Care for Veterans During the COVID-19\u00c2 Outbreak", "paragraphs": ["VHA's provision of medical care to veterans in response to the COVID-19 outbreak includes implementing mitigation strategies at VHA facilities, as well as testing and treating veterans diagnosed with or suspected of having COVID-19. (A general description of medical care to veterans is provided in other CRS reports. )", "In late February 2020, VA provided information to congressional oversight committees on the number of positive and presumptive positive cases of COVID-19. On March 13, 2020, the department began publishing this information publicly on its website, which it updates on a regular basis. The number of positive diagnoses is likely to grow as testing for COVID-19 becomes more widespread.", "VA has reported on the measures it has taken to contain and mitigate further exposure. It has issued guidance for patients, implemented mitigation strategies at VHA facilities, and begun testing patients who present symptoms consistent with COVID-19."], "subsections": [{"section_title": "Guidance for Patients", "paragraphs": ["VA is advising veterans who may be sick or who are exhibiting flu-like symptoms not to come to a VA facility. Instead, patients are advised to call their health care providers, even if they already have a scheduled appointment. Alternatively, patients can send a secure message through the VHA online portal, My HealtheVet, or schedule a telehealth appointment.", "In addition, VA is advising patients to budget additional time for appointments due to enhanced screening measures at VA facilities. These enhanced screening measures, as well as other mitigation strategies at VHA facilities, are described below."], "subsections": []}, {"section_title": "Mitigation at VHA Facilities", "paragraphs": ["On March 10, 2020, VA announced safeguards to protect nursing home residents and spinal cord injury patients. As of that date, no visitors are allowed at either VA nursing homes or spinal cord injury/disorder (SCI/D) centers. The only exception to this policy is if a veteran is in the last stages of life, in which case VA allows visitors in the veteran's room only. VA is not accepting any new admissions to nursing homes and is limiting new admissions to SCI/D centers.", "VA began implementing enhanced screening procedures at all sites of care to screen for respiratory illness and COVID-19 exposure. Enhanced screening procedures are determined at the local level, so they vary at each facility. However, VA has designed standardized screening questions for each facility.", "Each VA medical center is implementing a two-tiered system to mitigate the potential for spread of the virus, creating a zone for active COVID-19 cases and a passive zone for care unrelated to COVID-19. VA has canceled all elective surgeries and limited routine appointments."], "subsections": []}, {"section_title": "COVID-19 Testing and Treatment30", "paragraphs": ["This section describes the current VA policy on testing patients for COVID-19 and treatment following a COVID-19 diagnosis. "], "subsections": [{"section_title": "COVID-19 Diagnostic Testing", "paragraphs": ["On March 13, 2020, the department began publishing the number of positive cases of COVID-19, and the number of tests conducted, on its public website, which it updates on a regular basis. Individual medical centers have discretion on where to send samples for testing. Samples can be tested at the Palo Alto VA Medical Center, state public health labs, or private labs.", "Individual providers decide whether to test for COVID-19 on a patient-by-patient basis. However, VA has advised providers that patients must be exhibiting respiratory symptoms and have another factor, such as recent travel or known exposure to someone who tested positive.", "Generally, diagnostic testing is a covered service under VA's standard medical benefits package, which is available to all veterans enrolled in the VA health care system. Some veterans are required to pay copayments for care that is not related to a service-connected disability. However, routine lab tests are exempt from copayments. VA has not announced whether cost-sharing for the COVID-19 diagnostic test is included under the exemption for routine lab tests. ", "The Families First Coronavirus Response Act ( P.L. 116-127 ), enacted on March 18, 2020, allows VA to waive any copayment or other cost-sharing requirements charged to veterans for COVID-19 testing or medical visits during any period of this public health emergency. VA has not publicly announced whether cost-sharing for the COVID-19 diagnostic test will be waived for all veterans who are subject to cost-sharing. (For a discussion of P.L. 116-127 , see the \" Congressional Response \" section of this report.)"], "subsections": []}, {"section_title": "COVID-19 Treatment", "paragraphs": ["VA has not indicated whether it has developed a treatment plan for patients diagnosed with COVID-19. Treatment depends largely on the severity of symptoms that each patient experiences.", "VA is handling coverage and cost of treatment for COVID-19 as it would for any other treatment for a condition that is not service-connected. Treatment for COVID-19 is a covered benefit under the VA standard medical benefits package. However, some veterans may have to pay copayments for both outpatient and inpatient care. ", "Normal coverage rules apply for veterans who report to urgent care or walk-in clinics. To be eligible, a veteran must be enrolled in the VA health care system and must have received VA care in the past 24 months preceding the episode of urgent or walk-in care. Eligible veterans needing urgent care must obtain care through facilities that are part of VA's contracted network of community providers. These facilities typically post information indicating that they are part of VA's contracted network. If an eligible veteran receives urgent care from a noncontracted provider or receives services that are not covered under the urgent care benefit, the veteran may be required to pay the full cost of such care. Certain veterans are required to pay copayments for care obtained at a VA-contracted urgent care facility or walk-in retail health clinic.", "In addition, normal rules apply for veterans who report to non-VA emergency departments. To be eligible for VA payment or reimbursement, a veteran's non-VA care must meet the following criteria:", "The emergency care or services were provided in a hospital emergency department or a similar facility that provides emergency care to the public. The claim for payment or reimbursement for the initial evaluation and treatment was for a condition of such a nature that a prudent layperson would have reasonably expected that delay in seeking immediate medical attention would have been hazardous to life or health. A VA or other federal facility or provider was not feasibly available and an attempt to use them beforehand would not have been considered reasonable by a prudent layperson. At the time the emergency care or services were furnished, the veteran was enrolled in the VA health care system and had received medical services from the VHA within the 24-month period preceding the furnishing of such emergency treatment. The veteran was financially liable to the provider of emergency treatment for that treatment. The veteran had no coverage under a health plan contract that would fully cancel the medical liability for the emergency treatment. If the condition for which the emergency treatment was furnished was caused by an accident or work-related injury, the veteran is required pursue all claims against a third party for payment of such treatment first."], "subsections": []}]}]}, {"section_title": "Homeless Veterans", "paragraphs": ["Veterans experiencing homelessness live in conditions that could make them particularly vulnerable to COVID-19. Those who are unsheltered lack access to sanitary facilities. For those sleeping in emergency shelters, conditions may be crowded, with short distances between beds, and there may be limited facilities for washing and keeping clean. ", "While VA itself administers programs to assist veterans experiencing homelessness, there are several grants for nonprofit and public entities to provide housing and services to homeless veterans. These include the Homeless Providers Grant and Per Diem program (transitional housing and services), the Supportive Services for Veteran Families (short- to medium-term rental assistance and services), and Contract Residential Services (housing for veterans participating in VA's Health Care for Homeless Veterans program).", "VA released guidance on March 13, 2020, for its grantees that administer programs for veterans who are homeless. The guidance suggests grantees take a number of actions:", "Develop a response plan, or review an existing plan, and coordinate response planning with local entities, including health departments, local VA medical providers, and Continuums of Care. Plans should address staff health, potential staff shortages, and acquisition of food and other supplies, as well as how to assist veteran clients. Prevent infection through methods recommended by the CDC, such as frequent handwashing, wiping down surfaces, and informing clients about prevention techniques. In congregate living facilities, such as those provided through VA's Grant and Per Diem program, keep beds at least three feet apart (preferably six, if space permits), sleep head-to-toe, or place barriers between beds, if possible. Develop questions to ask clients about their health to determine their needs and how best to serve them. For new clients, interviews should occur prior to entry into a facility (such as over the phone), if possible, or in a place separate from other clients. If a client' answers to questions indicate risk of COVID-19, separate them from other program participants (have an isolation area, if possible), clean surfaces, and reach out to medical professionals. If isolation is not practical, reach out to other providers who might be able to isolate."], "subsections": []}, {"section_title": "Veterans Benefits Administration (VBA)", "paragraphs": ["On March 18, 2020, the Veterans Benefits Administration (VBA) announced via Facebook and Twitter that all regional offices will be closed to the public starting March 19. While the regional offices are to remain open to ensure the continuity of benefits, the offices are to no longer accept walk-ins for claims assistance, scheduled appointments, counseling, or other in-person services. VBA is directing veterans who have claims-specific questions or any questions to use the Inquiry Routing & Information System (IRIS) or to call 1-800-827-1000.", "A March 16, 2020, Government Executive news article explained that VBA is facing \"network operationality\" issues after several regional offices told their employees to telework full time. VBA headquarters, in Washington, DC, then rescinded the telework directives due to the information technology issues. VBA is to continue performing tests on the network throughout the week. According to the article, a VA spokesperson said that regional office directors are to make decisions on work flexibility based on \"the circumstances in their communities\" but must discuss all plans with \"central office leadership.\" "], "subsections": [{"section_title": "Educational Assistance", "paragraphs": ["In FY2020, over 900,000 individuals are expected to receive veterans educational assistance from the GI Bills (e.g., the Post-9/11 GI Bill), Veteran Employment Through Technology Education Courses (VET TEC), Veterans Work-Study, Veterans Counseling, and VetSuccess on Campus (VSOC). As a result of COVID-19, some participants' training and education may be disrupted, and some participants may receive a lower level of or no benefits. These concerns may directly affect beneficiaries in several ways, including the following:", "Some students may be required to stop out, discontinue working, or take a leave of absence as a result of their own illness. Some training establishments, educational institutions, and work-study providers may close temporarily or permanently. Some training establishments, educational institutions, and work-study providers may be required to reduce participants' hours, enrollment rate, or rate of pursuit. Some educational institutions may transition some courses to a distance learning format. Some educational institutions may require students living on campus to move off campus. Individuals receiving benefits in foreign countries may encounter any of the above circumstances while residing in a foreign country whose COVID-19 situation may differ from that in the United States, or may stop out, discontinue working, or take a leave of absence and return to the United States.", "A related issue is that, in the past, GI Bill benefits could not be paid for pursuit of online courses that had not been previously approved as online courses. Given this limitation, VA requested that school-certifying officials \"temporarily refrain from making any adjustments to enrollment certifications\" pending subsequent VA guidance and/or legislative action. ", "On March 12, 2020, VA reminded GI Bill participants and school-certifying officials of its ability to continue paying benefits as participants and institutions react to the COVID-19 emergency. In particular, VA may continue to pay GI Bill benefits for up to four weeks following the temporary closure of an educational institution under an established policy based on an executive order of the President, or due to an emergency situation. Other limitations noted in the correspondence would be alleviated by recently passed legislation (see the \" Congressional Response \" section of this report for a discussion of S. 3503 )."], "subsections": []}]}, {"section_title": "National Cemetery Administration (NCA)", "paragraphs": ["The National Cemetery Administration (NCA) has provided limited information for the survivors and dependents of veterans who have passed away and are scheduled to be buried in National Cemetery. As of March 18, 2020, NCA has provided some guidance for both families and funeral directors regarding interments and services for veterans.", "For f amilies and v isitors . VA National Cemeteries remain open to visitors and for interments, but visitors should follow their local communities' restrictions on visitations and travel. For families who prefer to inter now but hold the committal service at a later date, NCA says it will work to accommodate those requests. For families who prefer to have the committal service now, NCA asks them to adhere to CDC recommendations for group gatherings.", "For f uneral d irectors . NCA is asking funeral directors to follow the CDC guidelines and recommendations on group gatherings for families who proceed with full committal services. In addition, NCA informed organizers that it has discouraged all cemetery personnel from handshaking and any unnecessary physical contact with family members and funeral organizers. NCA is to work with the funeral directors and families to accommodate future committal services for those who decide to postpone.", "NCA has set up an \"Alerts\" web page for the public to check cemetery operating status and is directing the public to its Facebook and Twitter pages for the most recent operating information."], "subsections": []}, {"section_title": "Emergency Preparedness (\"Fourth Mission\")", "paragraphs": ["In 1982, the Department of Veterans Affairs (VA)-Department of Defense (DOD) Health Resources Sharing and Emergency Operations Act ( P.L. 97-174 ) was enacted to serve as the primary health care backup to the military health care system during and immediately following an outbreak of war or national emergency. Since then, Congress has provided additional authorities to VA to \"use its vast infrastructure and resources, geographic reach, deployable assets, and health care expertise, to make significant contributions to the Federal emergency response effort in times of emergencies and disasters.\" ", "Among other authorities, VHA may care for nonveterans, as well as veterans not enrolled in the VA health care system. This applies in situations where the President has declared a major disaster or emergency under the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. \u00c2\u00a75121 et seq.) (the Stafford Act), or where the HHS Secretary has declared a disaster or emergency activating the National Disaster Medical System established pursuant to Section 2811(b) of the Public Health Service Act (42 U.S.C. \u00c2\u00a7300hh-11(b)). The President's March 13, 2020, declaration of a national emergency under Section 501(b) of the Stafford Act allows VA to use this authority.", "According to VA, during declared major disasters and emergencies, service-connected veterans receive the highest priority for VA care and services, followed by members of the Armed Forces receiving care under 38 U.S.C. Section 8111A, and then by individuals affected by a disaster or emergency described in 38 U.S.C. Section 1785 (i.e., individuals requiring care during a declared disaster or emergency or during activation of the National Disaster Medical System [NDMS]). In general, care is prioritized based on clinical need\u00e2\u0080\u0094that is, urgent, life-threating medical conditions are treated before routine medical conditions (see the Appendix ). ", "During a disaster or emergency, VA can support HHS by providing resources to civilian health care systems. Furthermore, VA's National Acquisition Center can assist with acquisition and logistical support, such as by providing ventilators, medical equipment and supplies, and pharmaceuticals. Generally, if a state, tribal, or territorial government needs resources, they can request assistance from the federal government through their local HHS Regional Emergency Coordinator (REC). The HHS REC is to then submit a task order to the HHS Secretary's Operations Center (SOC) to be fulfilled by HHS, VA, or another federal agency. VA cannot receive direct requests for assistance from state and local governments. "], "subsections": []}, {"section_title": "Congressional Response", "paragraphs": [], "subsections": [{"section_title": "Funding and Cost-Sharing", "paragraphs": ["On March 14, 2020, the House passed the Families First Coronavirus Response Act ( H.R. 6201 ). The Senate passed the measure on March 18, and the President signed it into law the same day as P.L. 116-127 . The act provides $30 million for VHA's medical services account to fund health services and related items pertaining to COVID-19. In addition, the act provides $30 million for VHA's medical community care account. These funds are available until September 30, 2022. Among other things, the act allows VA to waive any copayment or other cost-sharing requirements for COVID-19 testing or medical visits during any period of this public health emergency. "], "subsections": []}, {"section_title": "Education Assistance", "paragraphs": ["S. 3503 , as passed by the Senate on March 16, 2020, and then passed by the House on March 19, 2020, allows VA to continue to provide GI Bill benefits from March 1, 2020, through December 21, 2020, for courses at educational institutions that are converted from in-residence to distance learning by reason of an emergency or health-related situation. S. 3503 further permits VA to pay the Post-9/11 GI Bill housing allowance as if the courses were not offered through distance learning throughout the same period. With the exception of those covered under this S. 3503 exemption, Post-9/11 GI Bill participants enrolled exclusively in distance education are eligible for no more than one-half the national average of the housing allowance."], "subsections": []}, {"section_title": "Emergency Supplemental Appropriations Request60", "paragraphs": ["On March 17, 2020, the Administration submitted to Congress a supplemental appropriations request. The Administration seeks $16.6 billion for FY2020 for VA's response to the COVID-19 outbreak. This includes $13.1 billion for the medical services account. According to the request, this additional amount would provide funding for \"healthcare treatment costs, testing kits, temporary intensive care unit bed conversion and expansion, and personal protective equipment.\" The request also includes $2.1 billion for the medical community care account to provide three months of health care treatment provided in the community in response to COVID-19. VA assumes that about 20% of care for eligible veterans will be provided in the community, since community care facilities would be at full capacity with nonveteran patients. Furthermore, the request includes $100 million for the medical support and compliance account for the provision of 24-hour emergency management coordination overtime payments; for costs associated with travel and transport of materials; and to enable VHA' s Office of Emergency Management to manage its response to COVID-19. The emergency supplemental appropriations request also includes $175 million for the medical facilities account to upgrade VA medical facilities to respond to the virus. The request also includes $1.2 billion for the information technology systems account to upgrade telehealth and related internet technology to deliver more health care services remotely. "], "subsections": [{"section_title": "Appendix. VHA Emergency Powers", "paragraphs": [], "subsections": []}]}]}]}}
{"id": "R45987", "title": "MHS Genesis: Background and Issues for Congress", "released_date": "2019-10-28T00:00:00", "summary": ["Since 1968, the Department of Defense (DOD) has developed, procured, and sustained a variety of electronic systems to document the health care services delivered to servicemembers, military retirees, and their family members. DOD currently operates a number of legacy electronic health record (EHR) systems. Each system has separate capabilities and functions as a result of new or changing requirements over the past five decades. The primary legacy systems include the Composite Health Care System (CHCS), Armed Forces Health Longitudinal Technology Application (AHLTA), Essentris, and the Corporate Dental System. DOD also still uses paper medical records that are later scanned and digitally archived. Currently, only certain components of DOD's health records are accessible to the Department of Veterans Affairs (VA).", "In the early 1990s, concern grew about deficient interoperability between DOD and VA. This led to recommendations by various commissions on military and veterans health care calling for greater coordination and data sharing efforts between the two departments. Between 1998 and 2008, DOD and VA developed several capabilities to exchange patient health information across each department's EHR systems. However, Congress did not view these systems as an adequately integrated approach. This led to several congressional mandates being issued between 2008 and 2014, including for the development of an interoperable EHR (including a deadline to implement such system), for certain capability requirements, and for the creation of an interagency program office. After several strategy changes to meet Congress's mandates, DOD opted to acquire a commercial-off-the-shelf EHR product to replace its legacy EHR systems. The new system would be called MHS Genesis.", "In July 2015, DOD awarded the MHS Genesis contract to Leidos Partnership for Defense Health (LPDH). The contract includes a potential 10-year ordering period and an initial total award ceiling of $4.3 billion. DOD selected several MTFs in Washington to serve as Initial Operational Capability (IOC) sites and began fielding MHS Genesis in 2017. The designated IOC sites included: Madigan Army Medical Center, Fairchild Air Force Base, Naval Hospital Bremerton, and Naval Health Clinic Oak Harbor. The purpose of fielding MHS Genesis at the IOC sites before full deployment was to observe, evaluate, and document lessons-learned on whether the new EHR was usable, interoperable, secure, and stable.", "During initial deployment, DOD evaluators and IOC site personnel identified numerous functional and technical challenges. In particular, the Defense Department's Director of Operational Testing and Evaluation found that MHS Genesis was \"not yet effective or operationally suitable.\" Technical challenges included cybersecurity vulnerabilities, network latency, and delayed equipment upgrades and operational testing. Functional challenges included lengthy issue resolution processes, inadequate staff training, and capability gaps and limitations. DOD acknowledged these issues, implemented follow-on testing ongoing corrective actions, and revised its training approach for future fielding.", "DOD plans to implement MHS Genesis at all military treatment facilities (MTFs) in 23 waves through 2024. Each wave spans 18 months, with a new wave commencing every three months at designated MTFs. The first deployment wave began in September 2019 at MTFs in California, Oregon, and Idaho.", "As DOD moves to fully implement MHS Genesis, Congress may choose to address various issues including:", "how oversight can be conducted on a program that spans three federal departments; what kind of interdepartmental governance structure is needed to implement the program; and how to ensure fair and open competition in future procurement decisions."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["This report provides background on Department of Defense's legacy Electronic Health Record (EHR) systems, reviews previous EHR modernization efforts, and describes DOD's process to acquire and implement a new EHR system known as MHS Genesis . DOD's new EHR system presents several potential issu es for Congress, including how to conduct oversight on a program that spans three federal departments, how to ensure an adequate governance structure for the program, and how to monitor the program's cost and effectiveness.", "Although this report mentions EHR modernization efforts by the Department of Veterans Affairs (VA) and U.S. Coast Guard (USCG), as well as DOD's Joint Operational Medical Information System (JOMIS); it does not provide an in-depth discussion of these programs.", " Appendix A provides a list of acronyms used throughout this report."], "subsections": []}, {"section_title": "Background", "paragraphs": ["For decades, the Department of Defense (DOD) has developed, procured, and sustained a variety of electronic systems to document the health care services delivered to servicemembers, military retirees, and their family members. DOD currently operates a number of legacy EHR systems and is, at the direction of Congress, in the process of implementing a new EHR called MHS Genesis. DOD's new EHR system is to be integrated with other EHR systems utilized by the VA, USCG, and civilian health care providers. ", "DOD operates a Military Health System (MHS) that delivers to military personnel, retirees, and their families certain health entitlements under chapter 55 of Title 10, U.S. Code. The MHS administers the TRICARE program, which offers health care services worldwide to over 9.5 million beneficiaries in DOD hospitals and clinics \u00e2\u0080\u0093 also known as military treatment facilities (MTFs) \u00e2\u0080\u0093 or through participating civilian health care providers (i.e., TRICARE providers). There are currently 723 MTFs located in the United States and overseas that provide a range of clinical services depending on size, mission, and level of capabilities. ", "Health care services delivered in MTFs or by TRICARE providers are documented in at least one of the following components of the DOD health record:", "service treatment record (STR) \u00e2\u0080\u0093 documentation of all medical and dental care received by a servicemember through their military career; nonservice treatment record (NSTR) \u00e2\u0080\u0093 documentation of all medical and dental care received by a nonservicemember beneficiary (i.e., military retiree, family member); and occupational health civilian employee treatment record (OHTR) \u00e2\u0080\u0093 documentation of all occupational-related care provided by DOD (typically to DOD civilian or contractor employees).", "DOD maintains numerous legacy EHR systems that allow health care providers to input, share, and archive all documentation required to be in a beneficiary's health record. MTF or TRICARE providers can document medical and dental care directly in a DOD legacy EHR system, or can scan and upload paper records. Servicemembers and their families frequently change duty stations; the DOD health record can be accessed at most MTFs. However, sometimes beneficiaries are relocated to an area that lacks access to DOD's legacy EHR systems. In such cases, beneficiaries are required to maintain a paper copy of the health record."], "subsections": [{"section_title": "Brief History of DOD's Electronic Health Record (EHR)", "paragraphs": ["Since 1968, DOD has used various electronic medical information systems that automate and share patient data across its MTFs. Between 1976 and 1984, DOD invested $222 million to \"acquire, implement, and operate various stand-alone and integrated health-care computer systems.\" Over the next three decades, DOD continued to invest and to implement numerous electronic medical information systems to allow health care providers to input and review patient data across all MTFs, regardless of military service or geographic location. In 1998, DOD began to incorporate a series of efforts to increase interoperability with the VA's EHR systems (see Figure 1 )."], "subsections": []}, {"section_title": "DOD Legacy EHR Systems", "paragraphs": ["DOD operates numerous legacy EHR systems as described below. Together, health care data documented and archived in the legacy EHR systems contribute to a beneficiary's overall medical and dental record, also known as the DOD health record. MHS Genesis is intended to replace these legacy systems and produce one comprehensive EHR."], "subsections": [{"section_title": "Composite Health Care System (CHCS)", "paragraphs": ["CHCS is a medical information system that has been in operation since 1993. CHCS primarily functions as the outpatient component of the EHR, with additional capabilities to order, record, and archive data for laboratory, radiology, and pharmacy services. Administrative functions such as patient appointment and scheduling, medical records tracking, and quality assurance checks, were also incorporated into CHCS. In March 1988, DOD awarded Science Applications International Corporation (SAIC) a contract to \"design, develop, deploy, and maintain CHCS.\" SAIC continues to provide ongoing sustainment and technical support for CHCS. The estimated life-cycle cost of CHCS is $2.8 billion. "], "subsections": []}, {"section_title": "Armed Forces Health Longitudinal Technology Application (AHLTA)", "paragraphs": ["After deploying CHCS, DOD identified a need for integrated health care data that could be portable and accessible at any MTF. CHCS was developed as a facility-specific system that archived its data using regional network servers. However, accessing data across each server became a \"time- and resource-intensive activity.\" In 1997, DOD began planning for a new \"comprehensive, lifelong, computer-based health care record for every servicemember and their beneficiaries.\" The program would be known as CHCS II, later renamed the Armed Forces Health Longitudinal Technology Application (AHLTA).", "DOD intended to replace CHCS with AHLTA and initially planned to deploy the new system in 1999. However, the program sustained several delays resulting from \"failure to meet initial performance requirements\" and changes to technical and functional requirements. The implementation plan was later revised to reflect AHTLA deployment from July 2003 to September 2007. In 2010, the Government Accountability Office (GAO) reported that DOD's AHLTA life-cycle cost estimate through 2017 would be $3.8 billion."], "subsections": []}, {"section_title": "Essentris", "paragraphs": ["Essentris is the inpatient component of the current EHR that has been used in certain military hospitals since 1987. As a commercial-off-the-shelf (COTS) product developed by CliniComp International, Inc. (CliniComp), Essentris allows health care providers to document clinical care, procedures, and patient assessments occurring in the inpatient setting, as well as in emergency departments. In 2009, DOD selected CliniComp to deploy Essentris at all military hospitals. This deployment was completed in June 2011. DOD maintains an ongoing contract with CliniComp and LOUi Consulting Group, Inc. to provide sustainment, technical and customer support, training, and ongoing updates for Essentris."], "subsections": []}, {"section_title": "Corporate Dental System (CDS)", "paragraphs": ["CDS, formerly named the Corporate Dental Application, is a web-based application that serves as DOD's current electronic dental record system. CDS allows DOD dental providers to document, review, and archive clinical information. The system also serves several administrative functions, such as tracking dental readiness of servicemembers, patient appointments and scheduling, and data reporting. CDS was initially developed as the Army's alternative dental solution to the AHLTA dental module. In 2000, all Army dental clinics implemented CDS. By 2016, Navy and Air Force dental clinics also transitioned to CDS as their electronic dental record system. In the same year, DOD awarded a four-year, $30 million contract to the Harris Corporation to sustain CDS. "], "subsections": []}, {"section_title": "Paper Medical Records", "paragraphs": ["Paper medical records are another component of the DOD health record. While certain health care data are recorded and archived electronically, some administrative processes and clinical documentation exist only on paper forms. For example, clinical documentation from TRICARE providers, accession medical records, or medical evacuation records are usually in paper form. In such cases, DOD policy requires the scanning and archiving of paper medical records in an electronic repository called the Health Artifact and Image Management Solution (HAIMS). After being digitized, certain paper medical records are submitted to the National Archives and Records Administration while other documents are disposed of locally. ", "Other DOD legacy systems document and archive various administrative and clinical data, such as:", "Referral Management System (RMS). An administrative information system that allows MTF staff to create and track referrals between health care providers. HAIMS. An electronic repository that stores DOD health care data, including digitally transmitted or scanned medical documentation. Data housed in HAIMS is also incorporated into a servicemember's official service treatment record , which is accessible to the VA. Medical Readiness Tracking Systems. Each military department utilizes an electronic information system that documents and tracks certain medical and dental readiness requirements, such as periodic health assessments, immunizations, dental exams, and laboratory tests. Theater Medical Information Program\u00e2\u0080\u0093Joint (TMIP-J). A suite of electronic systems, including modules for health care documentation and review, patient movement, and medical intelligence used in deployed or austere environments. Joint Legacy Viewer (JLV). A web-based, read-only application that allows DOD and VA health care providers to review certain real-time medical data housed in each department's EHR systems. Armed Forces Billing and Collection Utilization Solution (ABACUS). A web-based electronic system that allows MTFs to bill and track debt collection for health care services provided to certain beneficiaries."], "subsections": []}]}]}, {"section_title": "Developing an EHR Modernization Solution", "paragraphs": ["After Operation Desert Storm concluded in 1991, concern about deficient interoperability between DOD and VA health record systems began to grow. A number of committees and commissions issued reports highlighting the need for DOD and VA to standardize record-keeping; to improve health data sharing; and to develop a comprehensive, life-long medical record for servicemembers. Table 1 summarizes their recommendations. ", "Between 1998 and 2009, DOD and VA established various methods to exchange limited patient health information across both departments, including:", "Federal Health Information Exchange (FHIE). Completed in 2004, the FHIE enables monthly data transmissions from DOD to VA comprised of patient demographics, laboratory/radiology results, outpatient pharmacy, allergies, and hospital admission data. Bidirectional Health Information Exchange (BHIE). Completed in 2004, the BHIE enables real-time, two-way data transmissions (DOD-to-VA and VA-to-DOD) comprised of FHIE information, additional patient history and assessments, theater clinical data, and additional inpatient data. Clinical Data Repository/Health Data Repository (CHDR). Completed in 2006, CHDR enables real-time, two-way data transmissions comprised of pharmacy and drug allergy information and a capability to add information to the patient's permanent medical record in the other department's repository. Virtual Lifetime Electronic Record (VLER). Initiated in 2009, the VLER enables real-time, health information exchange between DOD and VA, as well as certain civilian health care providers. ", "While these information exchange systems enable DOD and VA health care providers to view or modify limited health care data, both departments continue to operate separate, disparate health record systems."], "subsections": [{"section_title": "Congress Mandates Interoperability", "paragraphs": ["In 2008, Congress began legislating mandates for DOD and VA to establish fully interoperable EHR systems that would allow for health care data sharing across departments. Section 1635 of the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2008 ( P.L. 110-181 ) directed DOD and VA to jointly: (1) \"develop and implement electronic health record systems or capabilities that allow for full interoperability of personal health care information,\" and (2) \"accelerate the exchange of health care information\" between both departments. Additionally, Congress directed the establishment of an interagency program office (IPO) that would serve as a \"single point of accountability\" for rapid development and implementation of EHR systems or capabilities to exchange health care information.", "The FY2008 NDAA also directed the IPO to implement the following, no later than September 30, 2009:", "\"\u00e2\u0080\u00a6electronic health record systems or capabilities that allow for full interoperability of personal health care information between the Department of Defense and Department of Veterans Affairs, which health records shall comply with applicable interoperability standards, implementation specifications, and certification criteria (including for the reporting quality measures) of the Federal Government.\"", "In the conference report accompanying the Department of Defense Appropriations Act, 2008 ( H.Rept. 110-434 , P.L. 110-116 ), Congress also directed DOD and VA to \"issue a joint report\" by March 3, 2008, that describes the \"actions being taken by each department to achieve an interoperable electronic medical record (EMR).\"", "On April 17, 2008, the IPO was established with temporary staff from DOD and VA. On December 30, 2008, the Deputy Secretary of Defense delegated oversight authority for the IPO to the Under Secretary of Defense for Personnel and Readiness (USD[P&R]). The FY2008 NDAA also directed the Secretary of Defense (SECDEF) to appoint the IPO Director, with concurrence of the Secretary of Veterans Affairs (SECVA); and the SECVA to appoint the IPO Deputy Director, with concurrence of the SECDEF."], "subsections": [{"section_title": "Establishing Interoperability Goals", "paragraphs": ["To meet Congress's mandate on interoperability, the IPO established a mutual definition of interoperability. They posited it as the \"ability of users to equally interpret (understand) unstructured or structured information which is shared (exchanged) between them in electronic form.\" Shortly after, both departments identified and adopted six areas of interoperability capabilities intended to meet the requirements and deadline established by Congress:", "Expand Essentris implementation across DOD. Demonstrate the operation of the Partnership Gateways in support of joint DOD and VA health information sharing. Enhance sharing of DOD-captured social history with VA. Demonstrate an initial capability for DOD to scan medical documents into the DOD EHR and forward those documents electronically to VA. Provide all servicemembers' health assessment data stored in the DOD EHR to the VA in such a fashion that questions are associated with the responses. Provide initial capability to share with the VA electronic access to separation physical exam information captured in the DOD EHR.", "As a result of each department's work on interoperable capabilities, DOD and VA reported to Congress in 2010 that all requirements for \"full\" interoperability were met."], "subsections": []}]}, {"section_title": "The Integrated EHR Initiative", "paragraphs": ["DOD and VA continued to work on integrating their respective EHR systems through individual initiatives, while considering a larger EHR modernization strategy. Three strategy options were considered: ", "1. develop a new, joint EHR; 2. upgrade and adopt an existing legacy system across both departments (i.e., AHLTA or VistA); or 3. pursue separate solutions that would have \"common infrastructure with data interoperability.\" ", "In March 2011, the SECDEF and SECVA agreed to work cooperatively to develop an integrated electronic health record (called the iEHR ) that would eventually replace each department's legacy systems. The IPO was assigned the oversight role for the iEHR initiative, which was then set to begin implementation no later than 2017.", "In February 2013, SECDEF and SECVA announced that they would no longer pursue the iEHR initiative. In making this decision, DOD and VA determined that the initial cost estimates for implementing the iEHR would be \"significant,\" given the \"constrained Federal Budget environment.\" After reevaluating their approach and considering alternatives, both departments decided to pursue other ongoing efforts to \"improve data interoperability\" and to preserve and develop separate EHR systems with a core set of capabilities that would allow for integrated sharing of health care data between DOD, VA, and private sector providers."], "subsections": []}, {"section_title": "Congressional Mandate for an EHR", "paragraphs": ["After DOD and VA announced their change to the iEHR strategy in 2013, Congress expressed its sense that both departments had \"failed to implement a solution that allows for seamless electronic sharing of medical health care data.\" Given some Members' apparent frustration, Congress established a new deadline for both departments to deploy a new EHR solution. Section 713(b) of the NDAA for FY2014 ( P.L. 113-66 ) directed DOD and VA to implement an interoperable EHR with an \"integrated display of data, or a single electronic health record\" by December 31, 2016 (see text box below). ", "The law also required DOD and VA to \"jointly establish an executive committee\" to support development of systems requirements, integration standards, and programmatic assessments to ensure compliance with Congress's direction outlined in Section 713(b). "], "subsections": []}]}, {"section_title": "MHS Genesis", "paragraphs": ["Given Congress's new mandate for both departments to implement an interoperable EHR, DOD conducted a 30-day review of the iEHR program in order to \"determine the best approach\" to meeting the law. While conducting its review, DOD identified two EHR modernization options that would support healthcare data interoperability with the VA: (1) adopt VistA and (2) acquire a commercial EHR system. "], "subsections": [{"section_title": "DOD Acquisition Strategy", "paragraphs": ["On May 21, 2013, the Secretary of Defense issued a memorandum directing the department's pursuit of \"a full and open competition for a core set of capabilities for EHR modernization.\" The directive also delegated certain EHR responsibilities to various DOD leaders. ", "Under Secretary of Defense for Acquisition, Technology, and Logistics (USD[AT&L]), whose office was later reorganized as the Under Secretary of Defense for Acquisition and Sustainment (USD[A&S]). Responsible for exercising milestone decision authority (MDA) and also holds technical and acquisition responsibilities for health records interoperability and related modernization programs; Under Secretary of Defense for Personnel and Readiness (USD[P&R]). Lead coordinator on DOD health care interactions with the VA. Assistant Secretary of Defense for Health Affairs (ASD[HA]). Responsible for functional capabilities of the EHR.", "Given the significant investments required to modernize DOD's EHR, MHS Genesis is a designated Defense B usiness S ystem (DBS). Because it is a DBS, certain decision reviews and milestones are required as part of the overall acquisition process. DBS programs are subject to significant departmental and congressional oversight activities."], "subsections": [{"section_title": "Requirements Development and Solicitation", "paragraphs": ["From June 2013 to June 2014, USD(AT&L) directed the Defense Healthcare Management Systems Modernization Program Management Office (DHMSM PMO) to oversee the EHR requirements development process, draft an acquisition strategy and request for proposal (RFP), and conduct activities required by DOD policy for DBS acquisitions. The ASD(HA) directed the Defense Health Agency (DHA) to establish various working groups to identify and develop the clinical and nonclinical functional requirements for the new EHR. The DHA led each working group, which included representatives from each military service medical department. Keeping in alignment with DOD's guiding principles for EHR modernization (see Figure 2 ), the working groups identified approximately 60 overarching capabilities to be required of a new EHR. An initial draft RFP incorporated functional capability requirements with certain technical requirements for interoperability, information security, and suitability with DOD infrastructure.", "The DHMSM PMO published three draft RFPs between January and June 2014 for interested contractors to review, provide comments, and submit questions for clarification on functional requirements. Additionally, the DHMSM PMO hosted four industry days that allowed interested contractors to \"enhance their understanding of the DHMSM requirement,\" gain insight on DOD's requirements development process, and provide feedback on particular aspects of the draft RFP. These activities also allowed the DHMSM PMO to conduct market research that would inform further revision of MHS Genesis functional requirements or its overall acquisition strategy.", "Between June 2014 and August 2014, DOD leaders certified that certain acquisition milestones had been achieved, allowing DOD to proceed with the solicitation process, including finalizing and approving all user-validated function requirements, approving the overall acquisition strategy, and issuing an authority to proceed . On August 25, 2014, DOD issued its official solicitation for proposals. The solicitation period concluded on October 9, 2014. "], "subsections": []}, {"section_title": "Source Selection Process", "paragraphs": ["The source selection process took place from October 2014 to July 2015. DOD reportedly had received five proposals during the solicitation period. Most of the proposals were from partnered vendors consisting of health information management, electronic medical records, information technology, and program management organizations. These partnerships included:", "Allscripts, Computer Sciences Corporation, and Hewlett-Packard; IBM and Epic Systems; Cerner, Leidos, and Accenture Federal; PricewaterhouseCoopers, General Dynamics, DSS, Inc., MedSphere; and InterSystems.", "Consistent with DOD source selection procedures, DOD experts were assigned to review and apply the evaluation criteria published in the RFP, to each proposal. Figure 3 illustrates a general overview of the evaluation and source selection process."], "subsections": []}]}, {"section_title": "Contract Award", "paragraphs": ["On July 29, 2015, DOD awarded the MHS Genesis contract to Leidos Partnership for Defense Health (LPDH) to replace its legacy EHR systems with a commercial-off-the-shelf (COTS) EHR system. The contract has a potential 10-year ordering period that includes a two-year base period, two three-year optional ordering periods, and an award term period of up to two years. The initial total award ceiling for MHS Genesis was $4.3 billion. ", "On June 15, 2018, DOD approved a contract modification to increase the award ceiling by $1.2 billion. According to the Justification and Approval for Other than Full and Open Competition documentation, the purpose of this increase was to \"support the incorporation of the United States Coast Guard (USCG) into the [DOD] MHS Genesis Electronic Health Record (EHR) implementation\" and \"establish a common standardized EHR baseline with the USCG and the [VA].\" The current award ceiling for MHS Genesis is more than $5.5 billion."], "subsections": [{"section_title": "Leidos Partnership for Defense Health (LPDH)", "paragraphs": ["Leidos leads LPDH with its core partners: Accenture Federal Services, Cerner, and Henry Schein One. The full partnership, through sub-contracts of the core partners, is comprised of over 34 businesses (see Figure 4 ). "], "subsections": []}]}, {"section_title": "Capabilities", "paragraphs": ["According to a redacted version of DOD's contract award documents, LPDH is required to meet the following overarching contract requirements:", "\"unify and increase accessibility of integrated, evidence-based healthcare delivery and decision making\"; \"support the availability of longitudinal medical records for 9.6 million DoD beneficiaries and approximately 153,000+ MHS personnel globally\"; \"enable the application of standardized workflows, integrated healthcare delivery, and data standards for improved and secure electronic exchange of medical and patient data between the DoD and its external partners, including the [VA] and other Federal and private sector healthcare providers\"; and \"leverage data exchange capabilities in alignment with the [IPO] for standards-based health data interoperability and secure information sharing with external partners to include the VA.\"", "Additionally, there are over 95 specific capability requirements across four concepts of operations (i.e., health service delivery, health system support, health readiness, and force health protection) that MHS Genesis must support (see Appendix B )."], "subsections": []}, {"section_title": "Governance", "paragraphs": ["Ultimately, the Secretary of Defense is accountable for MHS Genesis. Various DOD entities, described below, have assigned responsibilities for MHS Genesis oversight, implementation, and sustainment (see Figure 5 ). While each entity has a separate chain of command, DOD chartered numerous governance groups to synchronize efforts across the department, delegate certain decisionmaking authorities, and provide direction on implementation and use of MHS Genesis."], "subsections": [{"section_title": "Program Executive Office, Defense Healthcare Management Systems (PEO DHMS)", "paragraphs": ["PEO DHMS was established in 2013. Its mission is to \"transform the delivery of healthcare and advance data sharing through a modernized electronic health record for service members, veterans, and their families.\" It responsible for implementing MHS Genesis as the assigned acquisition authority and currently reports to the Under Secretary of Defense for Acquisition and Sustainment (USD[A&S]).", "Under the PEO DHMS, three program management offices (PMOs) are tasked with modernizing DOD's EHR system and ensuring health data interoperability with the VA.", "DOD Healthcare Management System Moderniza tion (DHMSM) PMO. \"Oversees the deployment of MHS Genesis and the operations and sustain of the Joint Legacy Viewer.\" DOD/VA Interagency Program Office (IPO). \"Oversees the efforts of the DOD and VA to implement national health data standards for interoperability.\" Joint Operational Medicine Information Systems (JOMIS) PMO. \"Develops, deploys, and sustains MHS Genesis and other integrated operational medicine information systems to deployed forces.\""], "subsections": []}, {"section_title": "Defense Health Agency (DHA)", "paragraphs": ["In 2013, the Secretary of Defense established the DHA to manage the TRICARE program; execute appropriations for the Defense Health Program; coordinate management of certain multi-service health care markets and MTFs in the National Capital Region; exercise management responsibility for shared services, functions, and activities within the Military Health System; and support DOD's medical mission. DHA is a designated Combat Support Agency that is scheduled to soon administer and manage all MTFs. ", "DHA serves as the lead entity for MHS Genesis requirements development, in coordination with the military service medical departments, and currently reports to the ASD(HA)."], "subsections": []}, {"section_title": "Military Service Medical Departments", "paragraphs": ["The military service medical departments are established under each respective military department to organize, train, and equip military medical personnel, maintain medical readiness of the Armed Forces, and administer, manage and provide health care in MTFs. The medical departments are led by a Surgeon General, who also functions as the principal advisor to their respective military service secretary and service chief for all health and medical matters. The three service medical departments are the Army Medical Command (MEDCOM), the Navy Bureau of Medicine and Surgery (BUMED), and the Air Force Medical Service (AFMS). ", "Each service medical department provides subject-matter expertise, functional support, and consultation to the DHMSM PMO."], "subsections": []}, {"section_title": "Senior Stakeholders Group (SSG) and the Configuration Steering Board (CSB)", "paragraphs": ["The SSG and the CSB are DOD-chartered working groups established to provide oversight, recommendations, and \"direction on health-related acquisition programs,\" including those within PEO DHMS. The SSG is chaired by the USD(A&S) and is responsible for receiving updates on DHMS acquisition programs, ensuring adherence to DOD's EHR guiding principles, and providing recommendations and feedback on key EHR and interoperability decisions. The CSB is co-chaired by the USD(A&S) and the USD(P&R) and is specifically responsible for oversight on DHMSM and JOMIS programs. Figure 6 outlines the membership of each group."], "subsections": []}, {"section_title": "Executive Steering Board (ESB)", "paragraphs": ["The ESB, previously named the Functional Champion Leadership Group (FLCG), is a governance body led by the DHA's Chief Health Informatics Officer with representation from each service medical department. The ESB's role is to:", "consider changes to standardized clinical, business, or technical processes; serve as a forum to validate, prioritize, and recommend modifications or new functional requirements for MHS Genesis; and oversee numerous working groups of subject matter experts and end-users. "], "subsections": []}, {"section_title": "Office of the Chief Health Informatics Officer (OCHIO)", "paragraphs": ["The OCHIO represents the \"voice of the customer\" to PEO DHMS. The office solicits input and recommendations from the ESB and coordinates with PEO DHMS to revise or modify MHS Genesis contract requirements. OCHIO is also responsible for \"change management, early adoption activities, standardization of functional workflows, functional collaboration with the [VA], management of configuration changes to MHS Genesis, adjudication of functional trouble tickets, sustainment training, current state workflow assessments, and coordination of DHA policy to support the use of MHS Genesis.\""], "subsections": []}]}, {"section_title": "Deployment", "paragraphs": ["DOD is using a phased implementation strategy to deploy MHS Genesis. Deployment began with its initial operational capability (IOC) sites in 2017. After the IOC sites, MHS Genesis is to be deployed at over 600 medical and dental facilities, grouped geographically into 23 waves (see Appendix F ). DOD anticipates \"full operational capability\" and implementation of MHS Genesis at all MTFs by the end of 2024."], "subsections": [{"section_title": "Pre-Deployment Activities", "paragraphs": ["During the approximately 17 months between the July 2015 contract award date and Congress's December 2016 deadline to implement a new EHR system, DOD conducted certain pre-deployment activities (e.g., systems engineering, systems integration, and testing prior to deploying MHS Genesis). DOD acquisition policies and certain contract requirements mandate these activities. Some of the initial requirements include:", " contractor site visits to \"analyze operations, infrastructure, and detailed information for EHR System design and testing\"; gap analyses between existing site infrastructure, system requirements, and the contractor's system architecture; development of solutions to fill identified infrastructure gaps; testing interoperability with legacy systems; delivering various contractor plans to the government (e.g., integrated master plan, risk management plan, data management plan, disaster recovery plan, and cybersecurity vulnerability management plan); EHR system testing in government approved labs, including those conducted by the contractor, government independent testing and evaluation teams, and operational test agencies; and receiving authorization to proceed (ATP) with limited fielding at the IOC sites and to conduct an Initial Operational Test and Evaluation (IOT&E).", "Concurrently, the DOD Inspector General (DODIG) conducted a performance audit on the DHMSM PMO. The purpose of the audit was to determine if DOD had approved system requirements and if the MHS Genesis acquisition strategy was \"properly approved and documented.\" The audit was conducted from June 2015 through January 2016, with a final report issued on May 31, 2016. Overall, the DODIG found that the MHS Genesis requirements and acquisition strategy were properly approved and documented. However, the report raised concerns about the program's execution schedule (i.e., implementation timeline) not being \"realistic\" to meet Congress's deadline. The DODIG recommended that the PEO DHMS conduct a \"schedule analysis\" to determine if IOC would be achievable by December 2016, and to continue monitoring program risks and report progress to Congress quarterly. In response to the DODIG's recommendation, the PEO DHMS asserted, \"we remain confident we will achieve [IOC] later this year in accordance with the NDAA.\" "], "subsections": []}, {"section_title": "Initial Deployment", "paragraphs": ["As part of the implementation strategy, DOD selected MTFs in the Pacific Northwest as its IOC sites (see Table 2 ). On February 9, 2017, MTFs at Fairchild Air Force Base, Washington, were the first sites to transition to MHS Genesis. ", "The purpose of fielding MHS Genesis at the IOC sites before full deployment was to observe, evaluate, and document lessons-learned on whether the new EHR was usable, interoperable, secure, and stable. DOD used several evaluation methods to measure MHS Genesis success at the IOC sites, including the Health Information Management Systems Society's (HIMSS) Electronic Medical Record Adoption Models (EMRAM) and the DOD IOT&E. The results of these assessments would later inform PEO DHMS in its decision to proceed with further deployments."], "subsections": [{"section_title": "EMRAM Findings", "paragraphs": ["The EMRAM includes two commercially developed assessment tools that health systems and facilities can use to measure adoption of an electronic medical record (EMR) system. The general EMRAM is for inpatient facilities and O-EMRAM is for outpatient facilities. Both tools consist of a self-administered survey, which is then analyzed by HIMSS to produce an EMRAM score. The score, ranging from Stage 0 to Stage 7, describes the level of adoption and utilization of an EMR within a health care organization (see Appendix C ). Generally, Stage 0 indicates minimal or no EMR adoption in a health care facility or clinic, whereas Stage 7 indicates complete EMR adoption, including demonstrated data sharing capabilities and eliminated use of paper charts.", "Prior to the go-live dates at the IOC sites and while using its legacy systems, DOD's average score was 1.59 for the EMRAM and 2.38 for the O-EMRAM. After all IOC sites transitioned to MHS Genesis, DOD reassessed each IOC site and observed increased EMRAM scores (see Figure 7 and Figure 8 ). MTFs at Fairchild Air Force Base received a score of 6.13 on the O-EMRAM, whereas all other IOC sites scored 5.04. In comparison to U.S. civilian hospitals, the IOC sites scored higher than the national average for the EMRAM (2.00) and O-EMRAM (3.00). However, media reports on EMRAM scoring trends at the end of 2017 note that 66.7% of U.S. hospitals participating in the EMRAM reached \"either Stage 5 or Stage 6.\" For the O-EMRAM, most participating outpatient facilities remained at Stage 1."], "subsections": []}, {"section_title": "IOT&E Findings", "paragraphs": ["DOD policy requires DBS programs to undergo an IOT&E to determine program or systems effectiveness and suitability. IOT&E findings provide the USD(A&S) and relevant acquisition or functional leadership with recommendations on whether a program, generally those with total contract values exceeding certain thresholds, should proceed with further implementation. Between September 2017 and December 2017, the Joint Interoperability Test Command (JITC) conducted an IOT&E at each IOC site, with the exception of Madigan Army Medical Center (MAMC). PEO DHMS postponed the MAMC IOT&E to 2018 in order to resolve issues identified at the other IOC sites. ", "While at each site, the JITC conducted initial cybersecurity testing, evaluated interoperability data, observed MTF staff performing day-to-day tasks using MHS Genesis, and administered user surveys on performance and suitability. The Director of Operational Test and Evaluation (DOT&E) reviewed JITC's IOT&E findings and applied them to the following criteria:", "Does MHS Genesis provide the capabilities to manage and document health-related services? Do MHS Genesis interfaces support or enable accomplishment of mission activities and tasks? Does MHS Genesis usability, training, support, and sustainment ensure continuous operations?", "On April 30, 2018, DOT&E issued a partial IOT&E report asserting that MHS Genesis was \"neither operationally effective nor operationally suitable.\" DOT&E found that:", "MHS Genesis is not operationally effective because it does not demonstrate enough workable functionality to manage and document patient care. Users successfully performed only 56 percent of the 197 tasks used as Measures of Performance. MHS Genesis is not operationally suitable because of poor system usability, insufficient training, and inadequate help desk support. Survivability is undetermined because cybersecurity testing is ongoing.", "See Appendix D for IOT&E summary results by measure of effectiveness and measure of performance evaluation.", "Based on these preliminary findings, DOT&E recommended to the USD(A&S) a delay in further deployment of MHS Genesis until a full IOT&E was completed and the DHMSM PMO corrected \"outstanding deficiencies.\" Additional recommendations for the DHMSM PMO included:", "\"Fix all Priority 1 and 2 [incident reports] with particular attention given to those that users identified as potential patient safety concerns, and verify fixes through operational testing. Improve training and system documentation for both users and Adoption Coaches. Increase the number of Adoption Coaches and leave them on site until users are more comfortable with the new processes. Complete cybersecurity operational testing and continue to fix known deficiencies. Work with users to document, reduce, and standardize operational workarounds. Improve interoperability, focusing on interfaces identified as problematic during IOT&E. Monitor reliability and availability throughout the system lifecycle. Work with the Defense Health Agency and DISA to isolate network communications problems and reduce latency. Conduct operational testing at MAMC to evaluate untested functionality and corrective actions taken by the [DHMSM] PMO. Conduct follow-on operational testing at the next fielding site to evaluate revised training and Go-Live process improvements.\"", "On November 30, 2018, DOT&E issued a final IOT&E report, incorporating results from delayed testing at MAMC. DOD has not made the final report publicly available. DOT&E acknowledges ongoing improvements, but maintains that MHS Genesis is \"not yet effective or operationally suitable.\" A summary of the IOT&E released by the department describes several ongoing issue themes previously identified and described in the partial IOT&E report (e.g., continued incident reports, staff training, change management, and workflow adoption). With regard to cybersecurity, DOT&E described MHS Genesis as \"not survivable in a cyber-contested environment.\" In conjunction with the IOT&E, DOD \"successfully executed\" three cyberspace test attacks against MHS Genesis, highlighting potential security gaps and vulnerabilities with the new EHR system. ", "Notwithstanding DOT&E's findings and recommendations, the DOD Chief Information Officer issued a conditional Authorization to Operate , valid for 12 months. Additionally, PEO DHMS concurred with DOT&E's recommendation for a follow-on operational test and evaluation \"at the next fielding to evaluate corrective actions and revised training, to inform future fielding decisions.\""], "subsections": []}]}, {"section_title": "Selected Initial Deployment Issues", "paragraphs": ["Since February 2017, DOD has documented numerous issues requiring mitigation strategies prior to deploying the first wave. Selected issues reported by various DOD entities, LPDH, MHS Genesis users, and media outlets are summarized below. "], "subsections": [{"section_title": "Trouble Ticket Backlog", "paragraphs": ["During the initial deployment, DHMSM PMO established a single process for all IOC sites to identify, document, and report MHS Genesis issues. Users encountering system inconsistencies, technical errors, or clinical inaccuracies must submit a \"trouble ticket\" to a global service center (GSC). Users can also submit recommendations for changes to current workflows or system configurations to the GSC, as well as through their chain of command. The GSC is a contracted service that reviews, sorts, and assigns technical trouble tickets to LDPH or its sub-contractors for resolution. The GSC also assigns trouble tickets relating to functional capabilities, requirements, or workflows to DHMSM PMO or DHA for further review and adjudication.", "In April 2018, PEO DHMS reported that 1,000 of approximately 7,000 total trouble tickets generated by users throughout all IOC sites from January 2018 to that point had been resolved. Of the remaining trouble tickets, DHMSM PMO approved 2,000 for \"work by the Leidos Partnership,\" while 2,500 were in review for further adjudication. CRS is unable to ascertain the status of the remaining 1,500 trouble tickets and the timeline in which they may have been resolved. In December 2018, PEO DHMS estimated that 3,607 open trouble tickets remained for resolution. As of October 14, 2019, PEO DHMS estimated 3,238 open trouble tickets from the IOC sites and 787 open trouble tickets from the first wave sites remained for resolution."], "subsections": []}, {"section_title": "Lengthy Issue Resolution Process", "paragraphs": ["MHS Genesis users at IOC sites described the issue resolution process as lengthy and lacking transparency. User concerns included: (1) tickets submitted to the GSC were resolved in a period of time that was \"not acceptable for all issues\"; (2) the length of time for decisionmakers to determine a solution; and (3) discovering that a solution had been implemented during a periodic system update, rather than being notified by DHMSM PMO, DHA, or LPDH. Unlike DOD's legacy systems, MHS Genesis is to be a standardized EHR platform across all military treatment facilities and is not customizable for each site. Technical or functional changes to MHS Genesis require DHA-led working groups and DHMSM PMO to review and approve such changes before directing LPDH to implement a solution. Changes exceeding the scope of the MHS Genesis contract require additional review, resourcing, and approval by the acquisition authority. "], "subsections": []}, {"section_title": "Inadequate Staff Training", "paragraphs": ["Users reported that initial training provided four months prior to go-live was inadequate and did not allow super users to \"absorb/fully grasp one role before being introduced to the next role.\" Staff members were required to complete computer-based training, followed by instructor-led courses. Course curricula varied by user roles (e.g., clinician, clinical support, administrative staff). Users reported that the LPDH training focused primarily on navigating the various modules and features of MHS Genesis and did not include training on clinical or administrative workflows. For example, primary care clinic nurses were trained on the applicable MHS Genesis modules that would likely be found in the primary care setting. They said they were not trained on accessing other modules that would typically be used outside of the primary care setting, as part of a patient assessment or development of a treatment plan."], "subsections": []}, {"section_title": "Capability Gaps and Limitations", "paragraphs": ["Users reported having little or no ability to track military medical and dental readiness requirements in MHS Genesis. Pre-built reports to monitor certain health care quality and access metrics were available to MTF staff. Users defaulted to developing local, \"home-grown\" work-around tools in Microsoft Office products in order to meet specific DOD and military service requirements for tracking medical and dental readiness. For example, certain dental data documented in MHS Genesis were not available for data-mining or viewing in legacy dental readiness reporting systems. To compensate for this, dental clinic staff at each IOC site transcribed or manually maintained dental readiness reports by reviewing dental data in both Dentrix (MHS Genesis' dental module) and CDS (the legacy dental system). "], "subsections": []}]}, {"section_title": "Future Deployments", "paragraphs": ["In reviewing the experience and challenges documented during MHS Genesis deployment at the IOC sites, DOD noted that they \"captured lessons learned, collaborated with our stakeholders, and optimized the system to enhance user adoption. Specific areas of improvement include network optimization, change management, and training enhancements.\" As such, DOD commenced the first wave of MHS Genesis deployments in September 2019. The deployment began with four MTFs in California and Idaho. Each wave is to last 18 months and is to include three major phases: pre-deployment planning with each MTF (3 months), deployment activities (12 months), and post go-live activities (3 months). As outlined in DOD's deployment schedule (see Appendix F ), a new wave is to begin every three months at designated MTFs through late 2022, with wave 23 scheduled to conclude in 2024."], "subsections": []}]}]}, {"section_title": "Issues for Congress", "paragraphs": [], "subsections": [{"section_title": "Congressional Oversight", "paragraphs": ["Since mid-1980s, Congress has kept abreast of DOD's efforts to implement, sustain, or modernize its EHR systems. Previous congressional oversight activities have primarily focused on (1) understanding DOD's EHR modernization strategy and how the strategy would integrate interoperability and improve coordination with the VA, or (2) describing certain barriers that delayed previous modernization initiatives. ", "Currently, 12 congressional committees may exercise oversight authority of the broader EHR modernization efforts taking place in DOD, VA and USCG. The committees include:", "House Appropriations Committee. House Armed Services Committee. House Committee on Oversight and Reform. House Committee on Transportation and Infrastructure. House Veterans Affairs Committee. Senate Appropriations Committee. Senate Armed Services Committee. Senate Committee on Commerce, Science, and Transportation. Senate Committee on Homeland Security and Governmental Affairs.", "Given the complexity, size, and timeline of DOD's EHR modernization effort, as well as parallel efforts by the USCG and VA, a coordinated oversight strategy may be necessary. Such a strategy could allow Congress to conduct a wide range of oversight activities without creating redundancies for committee staff and executive branch officials and could facilitate information-sharing among congressional stakeholders. ", "Since the initial deployment of MHS Genesis, there have been no congressional oversight hearings held solely on DOD's EHR modernization effort. On June 20, 2018, the House Committee on Veterans' Affairs established the Subcommittee on Technology Modernization. The role of the new subcommittee is to \"focus on conducting oversight of the EHR Modernization program and other major technology projects at the Department of Veterans Affairs.\" Both DOD and VA officials testified before the subcommittee at its June 2019 oversight hearing."], "subsections": []}, {"section_title": "Interagency Governance", "paragraphs": ["In September 2018, then-SECDEF James Mattis and current SECVA Robert Wilkie signed a joint statement (see Appendix G ) that outlined each department's commitment to \"implementing a single, seamlessly integrated [EHR] that will accurately and efficiently share health data \u00e2\u0080\u00a6 and ensure health record interoperability with our networks of supporting community healthcare providers.\" On April 3, 2019, DOD announced plans to re-charter the IPO into the \"Federal Electronic Health Record Modernization (FEHRM)\" program office. The new office would serve as an interagency governance group that provides oversight on DOD and VA's EHR modernization efforts and would have the \"authority to direct each Department to execute joint decisions for technical, programmatic, and functional functions.\" DOD stated that the FEHRM Director and Deputy Director will be appointed positions and will report to both the Deputy SECDEF and Deputy SECVA. ", "While Congress directed the creation of the IPO in 2008, neither DOD nor VA has indicated if additional authorities, funding, or changes to current law are required to sustain the FEHRM program office. Congress may also examine the relationships between existing interagency governance groups (e.g., Joint Executive Committee), PEO DHMS, VA EHR Modernization Office, and the newly established FEHRM program office."], "subsections": []}, {"section_title": "Limited Competition in Future Procurement", "paragraphs": ["Because MHS Genesis is being deployed across all MTFs and all USCG sites, as well as VA sites transitioning to a Cerner-based EHR system, observers have noted that this is the \"largest EHR undertaking in the country.\" Implementing a single EHR platform across three federal departments can produce certain economies of scale and standardization. However, the scale of these efforts can also result in future acquisition challenges particularly with conducting a full and open competition to procuring new requirements, or with follow-on contracts to sustain each EHR system. Congress may seek to understand how DOD and VA exercised their statutory authorities, provided through the Competition in Contracting Act of 1984 ( P.L. 98-369 ), to procure their EHR systems, as well as the possible impact of limited competition in future procurement activities needed to sustain both MHS Genesis and the VA's new EHR system. ", "Generally, all federal departments procuring property, goods, or services are required to employ an acquisition process that allows for full and open competition. This process permits all potential vendors to \"submit sealed bids or competitive proposals on the procurement.\" For MHS Genesis, DOD's initial acquisition process included full and open competition. However, the process was not employed for subsequent requirements that were discovered after the initial award to LPDH. These additional requirements included upgrading DOD network infrastructure; incorporating USCG-specific requirements and clinic sites; and establishing common standards among DOD, VA, and USCG. The estimated value of the additional requirements was over $1.2 billion. DOD exercised its statutory authority to award a sole source contract modification to LPDH, citing that contracting with any other vendor would potentially \"create significant redundancies, inefficiencies, and other issues.\" ", "DOD's acquisition strategy anticipates \"one or more competitive follow-on contracts to sustain the EHR solution, for which the Government owns a perpetual license, at the conclusion of the performance of the basic contract.\" However, Cerner declined DOD's request to enter into negotiations regarding the rights of its intellectual property. If DOD does not retain certain intellectual property rights on MHS Genesis, the Department may be limited in what EHR vendors it can consider when it becomes necessary to solicit for an MHS Genesis sustainment contract. ", "Appendix A. Acronyms", "Appendix B. MHS Genesis Functional Capability Requirements", "Appendix C. Stages of Electronic Medical Record Adoption and Utilization", "Appendix D. IOT&E Summary Results", "Appendix E. Methodology for CRS Focus Groups on MHS Genesis", "Background", "On July 8-13, 2018, analysts from the Congressional Research Service (CRS) participated in a congressional staff delegation visit to various DOD facilities in the Puget Sound area of Washington State. DOD facilities visited were Madigan Army Medical Center, Naval Hospital Bremerton, and the Puyallup Community Medical Home. The purpose of the visit was to:", "review milestones, achievements, and challenges associated with the implementation of MHS Genesis; and understand implementation and continuous improvement processes utilized at initial operational capability sites.", "Methodology", "At each site, CRS conducted numerous focus groups comprised of various MTF staff members. Each focus group was comprised of 5\u00e2\u0080\u009315 staff members selected by the MTF commander or his/her designee. ", "Madigan Army Medical Center", "Focus Group #1: Patient Administration Division, Managed Care and Scheduling, and Patient Satisfaction Department representatives Focus Group #2: Health care providers (e.g., physicians, dentists, psychologists, physicians assistants) Focus Group #3: Nurses", "Naval Hospital Bremerton", "Focus Group #1: Nurses Focus Group #2: Health care providers (e.g., physicians, dentists, psychologists, physicians assistants) Focus Group #3: Enlisted personnel Focus Group #4: Patient Administration, Referral Management, and Patient Relations representatives", "Puyallup Community Medical Home", "Focus Group #1: Health care providers, nurses, health care administrators, enlisted personnel", "Prior to each site visit, CRS provided each MTF with questions for discussion during each focus group. CRS documented the themes and responses to each of the following questions:", "What challenges have you experienced with implementing MHS Genesis? How have you locally mitigated these issues? Are the mitigation processes in place working? Have these challenges impacted force readiness, access to care, quality of care, cost of care, or patient experience?", "Appendix F. MHS Genesis Deployment Schedule", "Appendix G. DOD and VA EHR Joint Commitment Statement", "Background", "On July 8-13, 2018, analysts from the Congressional Research Service (CRS) participated in a congressional staff delegation visit to various DOD facilities in the Puget Sound area of Washington State. DOD facilities visited were Madigan Army Medical Center, Naval Hospital Bremerton, and the Puyallup Community Medical Home. The purpose of the visit was to:", "review milestones, achievements, and challenges associated with the implementation of MHS Genesis; and understand implementation and continuous improvement processes utilized at initial operational capability sites.", "Methodology", "At each site, CRS conducted numerous focus groups comprised of various MTF staff members. Each focus group was comprised of 5\u00e2\u0080\u009315 staff members selected by the MTF commander or his/her designee. ", "Madigan Army Medical Center", "Focus Group #1: Patient Administration Division, Managed Care and Scheduling, and Patient Satisfaction Department representatives Focus Group #2: Health care providers (e.g., physicians, dentists, psychologists, physicians assistants) Focus Group #3: Nurses", "Naval Hospital Bremerton", "Focus Group #1: Nurses Focus Group #2: Health care providers (e.g., physicians, dentists, psychologists, physicians assistants) Focus Group #3: Enlisted personnel Focus Group #4: Patient Administration, Referral Management, and Patient Relations representatives", "Puyallup Community Medical Home", "Focus Group #1: Health care providers, nurses, health care administrators, enlisted personnel", "Prior to each site visit, CRS provided each MTF with questions for discussion during each focus group. CRS documented the themes and responses to each of the following questions:", "What challenges have you experienced with implementing MHS Genesis? How have you locally mitigated these issues? Are the mitigation processes in place working? Have these challenges impacted force readiness, access to care, quality of care, cost of care, or patient experience?"], "subsections": []}]}]}}
{"id": "R45880", "title": "Long-Term Federal Management of Uranium Mill Tailings: Background and Issues for Congress", "released_date": "2019-08-22T00:00:00", "summary": ["In the wake of increasing concerns in the 1970s about human health and environmental risks posed by inactive uranium mill tailings, Congress enacted the Uranium Mill Tailings Radiation Control Act of 1978 (UMTRCA). Uranium milling operations generate uranium concentrate, also known as \"yellowcake\" uranium, and waste material, called tailings , which can harbor and liberate radioactive and non-radioactive constituents.", "Title I of UMTRCA authorized a remedial action program for uranium mill tailings sites that were inactive prior to 1978, which produced uranium concentrate under federal procurement contracts primarily for nuclear weapons and other defense purposes. Title II of UMTRCA authorized the regulation of uranium mills and tailings sites that were operating on or after the law's enactment, which largely produced uranium concentrate for civilian nuclear power plants. UMTRCA does not provide regulatory authority over uranium mining (the physical removal of uranium ore from the earth), waste material produced from uranium mining, or remediation of inactive uranium mine sites. The Department of Energy (DOE) is the federal agency responsible for implementing the remedial action program and administering long-term federal management of the tailings.", "The site remediation costs have exceeded costs originally envisioned by Congress, the agencies, and the licensees due to an evolving understanding of the complexities and risks posed by unintended releases of contaminants from uranium mill tailings. As part of the remediation action, the uranium mill tailings are enclosed in engineered repositories, located at disposal sites, which are designed to prevent unintended release of potentially hazardous constituents for hundreds of years. DOE's authority to perform surface remediation at Title I sites expired on September 30, 1998. Groundwater contamination has compounded the technical complexity and timeline of remedial actions at certain sites. Congress amended UMTRCA in 1988 to authorize DOE to perform groundwater remediation without expiration under the Uranium Mill Tailings Remedial Action Amendments Act (UMTRA).", "UMTRCA requires the transfer of both Title I and Title II disposal sites to long-term federal management. As of FY2019, the Department of Energy, Office of Legacy Management (DOE-LM) administers long-term federal management at 31 Title I sites, excluding the site at Moab, UT. Title II sites are regulated by the U.S. Nuclear Regulatory Commission (NRC) or an NRC agreement state and transferred to DOE-LM for long-term federal management when NRC, or the state, determines that applicable standards have been met. As of FY2019, six of 29 Title II sites have transferred to DOE-LM, and 23 Title II sites remain privately owned under an NRC or an agreement state license. DOE-LM expects to take long-term management responsibilities of the 23 remaining Title II sites by 2048.", "Under UMTRCA, Congress established that the federal government pay for long-term monitoring and maintenance costs at Title I sites, subject to annual appropriations to DOE-LM. For Title II sites, Congress intended that the licensee would pay for any long-term management costs with a one-time long-term surveillance charge (LTSC). In the event that the LTSCs are not sufficient to cover annual monitoring and maintenance costs, DOE-LM would be responsible to carry out long-term management responsibilities, subject to availability of annual appropriations.", "The long-term management efforts to stabilize tailings and monitor groundwater have proven more challenging, and expensive, than originally expected. The federal government will be responsible for long-term management of all UMTRCA sites once transferred to DOE-LM. Potential oversight issues for Congress may include understanding the decommissioning and transfer status of the remaining Title II sites, the adequacy of funding to complete decommissioning at certain sites if the licensee is unable to fulfill its obligations, and the adequacy of LTSCs to meet future management needs."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["Congress passed the Uranium Mill Tailings Radiation Control Act of 1978 (UMTRCA, P.L. 95-604 ) in the wake of environmental and public health concerns about exposures to radiological and non-radiological waste material originating from Cold War\u00e2\u0080\u0093era uranium mill tailing sites. Title I of UMTRCA authorized a remedial action program for uranium mill tailing sites that were inactive prior to the law's enactment in 1978. Under Title I of UMTRCA, the federal government was mostly responsible for financing the remediation and decommissioning of Title I sites, most of which produced uranium for nuclear weapons and other defense purposes. Title II of UMTRCA authorized federal agencies to regulate uranium mill tailings produced at commercially licensed facilities still operating on or after 1978. For Title II sites, Congress intended that commercial uranium mill operators, not the federal government, pay for site decommissioning and tailings stabilization activities. ", "The federal government assumes responsibility for both Title I and Title II uranium mill sites transferred to long-term federal management after site decommissioning has been completed. As of FY2019, the Department of Energy Office of Legacy Management (DOE-LM) administers long-term federal management at 31 Title I sites and six Title II sites. DOE-LM manages surface tailings and groundwater monitoring programs at sites under long-term federal management in an effort to minimize any unintended release of potentially radiological or non-radiological material. Long-term monitoring and maintenance activities may include stabilization of the engineered repository of uranium mill tailings and groundwater remediation or monitoring, if necessary. ", "As of FY2019, 23 Title II sites remain owned by commercial operators, who are permitted to operate under the Nuclear Regulatory Commission (NRC) or an NRC agreement state license. When the Title II site operator has completed all site decommissioning requirements, the license is to be transferred to DOE for long-term federal management.", "This report presents the historical context for the law, the status of implementation since enactment, and selected issues for Congress. UMTRCA does not authorize the regulation of uranium mining\u00e2\u0080\u0094the process of physically removing uranium ore from the earth\u00e2\u0080\u0094or the disposal of waste material produced by uranium mining. The regulation of uranium mining and the remediation of abandoned uranium mines are not discussed in this report. "], "subsections": [{"section_title": "Uranium Mill Tailings", "paragraphs": ["Uranium milling is the process of converting mined uranium ore to uranium concentrate, also known as yellowcake uranium. Milling is common to a number of mineral extraction industries and refers to the physical and chemical processes necessary to concentrate minerals from mined ore. Uranium milling operations use a series of physical (crushing and grinding the mined ore) and chemical processes (acid or alkaline solutions, ion exchange) to concentrate the mineralized uranium ore into yellowcake uranium. Heap leaching, a specific type of uranium milling operation, involves sprinkling sulfuric acid or another solvent directly over the ore in large earthen collection pits. The acidic stream trickles through the ore and dissolves uranium and that stream is collected and processed. Yellowcake uranium produced from the milling process is subsequently converted and enriched for civilian nuclear power production ( Figure 1 ). ", "Tailings are the waste material produced from milling operations. The milling process produces tailings initially as a slurry material, which is disposed of in a settling pond. The slurry tailings material dries, resulting in a sand-like material. Milling operations produce a large quantity of tailings relative to the amount of uranium concentrate produced. NRC estimated that 2.4 pounds of yellowcake uranium oxide is produced from 2,000 pounds of uranium ore.", "Public health and environmental concerns from uranium milling has been associated with various aspects of historical operations and tailings disposal. The U.S. Environmental Protection Agency (EPA) has identified four health exposure routes from uranium mill tailings: ", "1. Increased risk of lung cancer from the diffusion of radon gas indoors if tailings material is used for construction material, 2. Inhalation of radon gas or ingestion of small particles directly emitted from the mill piles into the atmosphere, 3. Exposure to gamma radiation produced by radioactive decay products within the tailings, and 4. Wind and water erosion and mobilization of radioactive and other constituents into surface and groundwater. ", "Physical and geochemical mechanisms can liberate trace metals and radionuclides within the tailings into groundwater or surface water. The hazards associated with the release of various radiological and non-radiological constituents from uranium tailings may persist for hundreds or thousands of years."], "subsections": []}]}, {"section_title": "Brief History of Uranium Milling in the United States", "paragraphs": ["During the 1950s and 1960s, the U.S. Atomic Energy Commission, a predecessor federal agency to DOE and NRC, procured uranium concentrate by funding domestic uranium ore mining exploration and development, entering into private purchasing contracts with domestic milling companies, and purchasing foreign produced uranium concentrate. The majority of domestic uranium concentrate production prior to 1971 primarily supported the development of nuclear weapons and naval reactors. From 1947 to 1971, annual domestic uranium concentrate production ranged from 20 million pounds to 35 million pounds ( Figure 2 ). ", "After 1971, uranium mill operators produced uranium concentrate primarily for the production of civilian nuclear power. The 1970s were a period of growth for the U.S. nuclear power industry, as 59 nuclear reactors were first connected to the electricity grid between 1970 and 1979. NRC estimated in 1978 that over 109 uranium mills would be required by the year 2000 to support the fuel requirements of the growing reactor fleet. However, domestic uranium concentrate production in the United States decreased by roughly 92% from 1978 to 1993 ( Figure 2 ). By 2000, one active U.S. uranium mill, two partially active U.S. uranium mills, and three in-situ recovery (ISR) facilities combined to produce 4 million pounds of uranium concentrate. ", "Continued growth by the domestic civilian nuclear power industry did not materialize as anticipated in 1978. Numerous factors led to decrease of domestic uranium production. In particular, U.S. nuclear power growth was far less than envisioned by Congress and federal agencies in 1978, as U.S. nuclear plant orders virtually halted after that year and dozens of previous orders were canceled. While the number of operational uranium mills was less than originally envisioned, potential risks from the uranium mills that did operate continue to present technical and regulatory challenges. The awareness of the technical and economic challenges posed during the decommissioning and long-term management of uranium mill tailings have increased since 1978. As of the second quarter of 2018, the U.S. uranium concentrate facilities consisted of one uranium mill and six ISR facilities in operation."], "subsections": []}, {"section_title": "Uranium Mill Tailings Radiation Control Act of 1978", "paragraphs": ["The Uranium Mill Tailings Radiation Control Act of 1978 (UMTRCA; P.L. 95-604 ) includes three titles: ", "Title I authorized the remediation of uranium mill tailings inactive prior to the law's enactment in 1978. Title II authorized the regulation of commercial uranium mills operating on or after 1978. Title III directed the NRC to consult with the state of New Mexico to study and designate two mill tailings sites in New Mexico.", "By 1998, DOE completed site decommissioning for all Title I sites, with the exception of the site located at Moab, UT. Legislation to authorize cleanup at Moab was enacted subsequent to UMTRCA. Title I provisions do not authorize remedial actions for sites in operation on or after 1978, which are addressed under Title II. Provisions under Title III have been resolved. "], "subsections": [{"section_title": "Title I\u00e2\u0080\u0094Remedial Action Program for Inactive Uranium Mill Sites", "paragraphs": ["Title I was enacted to address the environmental and public health risks associated with residual radioactive material produced at \"inactive\" uranium mill sites generated in support of the federal uranium procurement program during the mid-1940s through the 1970s. The majority of the uranium concentrate produced during this time period was for the development of nuclear weapons, nuclear fuel production, and other Atomic Energy Commission programs. After the federal procurement contracts ended in the early 1970s, operations at some uranium mills ceased and licenses were terminated with few environmental remediation requirements. ", "Prior to 1978, federal agencies lacked legal authority to regulate uranium mill tailings. In 1966, federal agencies issued a \"Joint Federal Agency Position Regarding Control of Uranium Mill Tailings\" urging planning management and stabilization of the mill tailings as the responsibility of the individual owners. Yet without a legally binding regulatory program, DOE subsequently noted that actions resulting from the Joint Position were \"far from satisfactory.\"", "Multiple communities used uranium mill tailings as construction material for civilian building projects. The characteristically \"sandy\" uranium tailings were attractive to construct roads, sewers, farmlands, foundations in office buildings, schools, homes, and other structures. These sites became known as vicinity properties . In one instance, DOE reported that a uranium mill operator left a front-end loader on site for members of the public to take as much uranium tailings material as they could handle. NRC stated that 270,000 metric tons of uranium tailings at Grand Junction were used for building materials.", "In 1972, growing concerns about environmental and public health risks from uranium mill tailings used as construction material led to Congress appropriating funds for remedial action of contaminated sites near Grand Junction, CO. Section 201 of the 1972 Atomic Energy Commission Appropriation Authorization (P.L. 92-314) \"assumes the compassionate responsibility of the United States to provide to the state of Colorado financial assistance to undertake remedial action to limit the exposure of individuals to radiation emanating from uranium mill tailings which have been used as a construction related material in the area of Grand Junction, Colorado.\" The legislation addressing issues at Grand Junction served as the template for the remedial action program authorized under Title I of UMTRCA."], "subsections": [{"section_title": "Definitions, Scope of Remedial Actions, and Site Inventory", "paragraphs": ["Section 101 of UMTRCA defines key terms and identifies federal agencies authorized to implement UMTRCA. A processing site is defined as \"(A) any site, including the mill, containing residual radioactive materials at which all or substantially all of the uranium was produced for sale to any Federal agency prior to January 1, 1971 under a contract with any Federal agency \u00e2\u0080\u00a6 and (B) any other real property or improvement thereon which (i) is in the vicinity of such site, and (ii) is determined by the Secretary [of Energy], in consultation with the [NRC], to be contaminated with residual radioactive materials derived from such site.\" ", "Vicinity properties are off-site properties where uranium mill tailings were used as construction material prior to the law's enactment. A lesser amount of vicinity properties were adjacent sites contaminated by wind-borne dispersion of mill tailings particles. By 1999, DOE reported that it had remediated 5,300 vicinity properties. DOE's authority to perform surface remedial actions at Title I UMTRCA sites, including vicinity properties, expired on September 30, 1998.", "Residual radioactive material is defined under Section 101 as \"waste (which the Secretary determines to be radioactive) in the form of tailings resulting from the processing of ores for the extraction of uranium and other valuable constituents of the ores; and other waste (which the Secretary determines to be radioactive) at a processing site which relate to such processing, including any residual stock of unprocessed ores or low-grade materials.\" Tailings are defined as \"the remaining portion of a metal-bearing ore after some of all of such metal, such as uranium, has been extracted.\"", "DOE's remedial action efforts aimed to permanently isolate the residual radioactive material from the environment. Residual radioactive material was enclosed in engineered repositories consisting of multiple layers of relatively non-permeable materials and capped with rip-rap. These layers are intended to prevent the release of radon gas, limit downward infiltration and water seepage through the tailings piles, and minimize the erosion of repository by natural wind and water. The repository is designed to stabilize residual radioactive material for at least 200 years and up to 1,000 years.", "A disposal site identifies the location where the engineered tailings repository is sited, which is either at the original processing site or an alternative location. D isposal site is not explicitly defined by statute under Title I. However, EPA regulations define disposal site as \"the region within the smallest perimeter of residual radioactive material (excluding cover materials) following completion of control.\" The distinction between a processing site and disposal site has bearing on long-term federal management obligations.", "Under UMTRCA, DOE is required to consult with the EPA to prioritize which sites pose a potential health hazard. However, DOE is not bound by EPA's site priority evaluation, and nothing in the statute precludes DOE from proceeding with remedial actions on lower priority sites. UMTRCA instructed DOE to consult with NRC to develop site-specific boundaries. Site designations under this section are not subject to judicial review.", "Section 102 lists 22 processing sites originally designated under the Title I. The number of Title I and Title II sites has expanded, and a full inventory of UMTRCA sites is presented in Table A-1 and Table A-2 ."], "subsections": []}, {"section_title": "Cooperative Agreements", "paragraphs": ["Section 103 authorized DOE to enter into cooperative agreements with states or tribes to perform remedial actions at inactive uranium mill tailing sites. Cooperative agreements between DOE-LM and states are subject to NRC concurrence. Under Section 103, any cooperative agreement between DOE and states are conditional on the site owner releasing DOE of liability associated with any issues occurring during remedial actions. Section 103 authorizes DOE, NRC, and EPA access to any site for inspection and enforcement subject to the establishment of a cooperative agreement. Section 105 authorizes cooperative agreements between DOE and Indian tribes in consultation with the Department of the Interior's Bureau of Land Management (BLM), similar to provisions in Section 103, when processing sites are located on Indian lands."], "subsections": []}, {"section_title": "Land Acquisition and Transfer", "paragraphs": ["Generally, DOE remediated the inactive uranium mill tailings and constructed a repository at the original processing site location. However, Congress was aware of instances where inactive uranium mill tailings were located on a floodplain or directly adjacent to a stream or river. In those instances, designing, constructing, and maintaining an engineered repository for the uranium mill tailings located next to a stream may have been technically infeasible.", "UMTRCA authorizes agencies to determine whether an alternative disposal site was necessary to protect human health and the environment. Section 104 authorizes the state, under a cooperative agreement with DOE, to purchase surface and subsurface rights and transport tailings materials to an alternative disposal site. ", "When NRC and DOE determined that an alternative disposal site was necessary, DOE constructed repositories that were separate from the original inactive uranium mill tailings. The management of the original processing site was returned to the state. Section 104 outlines four options for the state to manage the processing site: (1) sell the land, (2) retain the land, (3) donate the land for public or recreational purposes, or (4) transfer the land to the federal government. The state provides appropriate documentation of remedial actions on the processing site to future purchasers. ", "DOE manages Title I disposal sites under a general NRC license. UMTRCA authorized DOE to obtain the surface and subsurface mineral rights for the disposal site. The acquisition of subsurface interests was required conditional to a cooperative agreement. Congress intended to avoid situations where the extraction of underlying minerals by subsurface mineral rights owners could disrupt the stabilized tailings. ", "Under UMTRCA, inactive uranium mill tailings located on federal public lands are transferred to DOE as a public land withdrawal. Section 104(h) authorizes BLM to sell or lease rights to federal lands located within the disposal site boundary. BLM is required to follow all applicable U.S. laws to sell or lease and provide assurances that the stabilized residual radioactive materials will not be disturbed by mineral development activities. Any prospective mineral developer is subject to licensing. If the stabilized site is disturbed, the private operator must perform site remediation at no cost to the federal government.", "Section 106 authorizes the purchase of land to develop a consolidated disposal site. The section discourages use of any National Park System, National Wildlife Refuge System, and National Forest System lands. If land is acquired in a state where uranium milling has not occurred, the acquisition is subject to state concurrence. "], "subsections": []}, {"section_title": "Financial Responsibility", "paragraphs": ["During the debate leading to the enactment of UMTRCA, Congress recognized that no clear entity was responsible for the cleanup of inactive uranium mill tailings among the federal government, states, and private site operators. In 1978, the U.S. General Accounting Office (now the Government Accountability Office, GAO) proposed that the federal government was most responsible to fund a cleanup program, as the majority of the uranium produced for the generation of uranium mill tailings was purchased at that time under federal supply contracts for the Manhattan Engineering District and other defense programs.", "In drafting UMTRCA, Congress decided that the federal government should be responsible for most of the remedial action costs at Title I sites and that the states where the Title I sites are located should share a portion of the costs. Section 107 establishes the financial responsibilities for remedial actions for the federal government and the cooperative states. Under Section 107, the federal government is responsible for 90% of the remediation costs, including costs for land acquisition and cleanup of buildings and structures in the vicinity. Under a cooperative agreement, a state commits the remaining 10% share of the remediation costs. The federal government was responsible for all remedial action costs at processing sites located on Indian lands pursuant to a cooperative agreements under Section 105. "], "subsections": []}, {"section_title": "Development of Remediation Standards", "paragraphs": ["Congress authorized EPA to promulgate health and environmental standards for uranium mill tailing sites. Section 108 directed DOE to perform remedial actions in accordance with general health and environmental standards promulgated by the EPA pursuant to Section 275 of the Atomic Energy Act of 1954 (AEA, P.L. 83-703), amended by Section 206 under UMTRCA. EPA finalized standards for Title I sites, under 40 C.F.R. Part 192, Subparts A, B, C, on January 11, 1995. "], "subsections": []}, {"section_title": "UMTRA Amendments of 1988", "paragraphs": ["DOE identified groundwater contamination at UMTRCA sites during implementation. Groundwater contamination remains an ongoing issue at several sites. In the late 1980s, DOE expressed concern that groundwater contamination issues could not be resolved in a specified period of time. Congress enacted the Uranium Mill Tailings Remedial Action Amendments Act of 1988 (UMTRA, P.L. 100-616 ), which amended Section 112 of UMTRCA to extend indefinitely DOE's authority to perform groundwater remediation. UMTRA provides DOE groundwater remedial authority for Title I sites only. "], "subsections": []}]}, {"section_title": "Title II\u00e2\u0080\u0094Regulation of Uranium Mills, 1978 and After", "paragraphs": ["Title II of UMTRCA amended the AEA to authorize the regulation of licensed commercial uranium mills on or after the enactment of UMTRCA. Title II includes provisions authorizing the mechanism for transfer of land and mill tailings to the federal government; establishing regulatory roles of the states and federal agencies; and authorizing agencies to enter into bonding, surety, or other financial arrangements with a licensee to cover the costs of a federal agency administering long-term federal management. "], "subsections": [{"section_title": "Byproduct Material and Site Transfer", "paragraphs": ["Section 201 amended Subsection 11e of the AEA to include mill tailings under the definition of byproduct material . Under Section 201, byproduct material is defined as \"the tailings or wastes produced by the extraction or concentration of uranium or thorium from any ore processed primarily for its source material content.\"", "Section 202 amended the AEA by adding Section 83 authorizing the federal government to retain the byproduct material where the tailings are disposed of for long-term management. UMTRCA allows for the state, at its discretion, to retain the site under long-term management, but no state has elected to do so. Pursuant to Section 202, any license issued that \"results in the production of any byproduct material\" must comply with NRC decommissioning standards, and byproduct material and the land where it was disposed of must be transferred to long-term federal management. The site is transferred to long-term federal management when NRC, or the state, determines that the site decommissioning has met all applicable requirements.", "Unlike Title I sites, UMTRCA does not authorize DOE to perform remedial actions at Title II sites under long-term federal management. Section 202 authorizes DOE, as the custodial agency, to \"carry out maintenance, monitoring, and emergency measures, but shall take no other action pursuant to such license, rule or order, with respect to such property and materials unless expressly authorized by Congress after the date of the enactment of this Act.\" ", "NRC may exempt the requirement for long-term federal management prior to the termination of the license if long-term federal management is found \"not necessary or desirable to protect the public health, safety, or welfare or to minimize or eliminate danger to life or property.\"", "The process to transfer a Title II site from an NRC license to long-term federal management is described in regulation and guidance. For Title II sites transferring federal public lands to long-term federal management under DOE, \"DOE must apply to BLM for permanent withdrawal of federal land and minerals from BLM's inventory.\" Any transfer of BLM lands is subject to National Environmental Policy Act review. The U.S. Army Corps of Engineers, state governments, and local governments may become involved with the land transfer depending on the location of the site and the land ownership.", "In the majority of UMTRCA public land withdrawals, DOE maintains full regulatory jurisdiction of surface and subsurface interests associated with the disposal site. More recently, there has been interest in alternative uses at federally managed disposal sites. As a result, BLM and DOE have proposed a \"partial-jurisdiction\" regulatory structure at certain sites. The DOE would regulate the mill tailings repository and ensure that statutory maintenance and monitoring requirements are met. BLM would lease surface and subsurface rights for alternative uses of the land (grazing, recreational, etc.) and mineral development (oil and gas, uranium, etc.)."], "subsections": []}, {"section_title": "Federal Regulatory Authority", "paragraphs": ["Section 205 of UMTRCA amended Section 84 of the AEA authorizing NRC as the principle federal regulator of Title II sites through issuance and enforcement of source and byproduct material licenses. Section 205 directs NRC to manage byproduct materials in manner that protects public health and environment from radiological and non-radiological hazards associated with the processing, possession, and transfer of byproduct materials. In establishing license conditions that would achieve protectiveness, Section 205 also allows NRC to consider costs and other factors. NRC and agreement states are also responsible for ensuring that licensees manage byproduct material in a manner that conforms to generally applicable standards promulgated by EPA. ", "Section 206 of UMTRCA amended Section 275 of the AEA authorizing EPA to set generally applicable environmental and health standards. Congress intended standards to be consistent (to the maximum extent practicable) with the standards required under Subtitle C of the Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act of 1976 (RCRA). Congress did not intend EPA standards to be site-specific in order to provide the agencies flexibility to address surface and groundwater issues at a broad range of sites. UMTRCA authorizes EPA to revise these standards periodically. On October 7, 1983, EPA published the final rule for applicable standards for Title II uranium mill tailings sites. ", "The NRC determines whether the licensee has fulfilled all applicable decommissioning standards and license requirements prior to termination of the license and transfer of the site to long-term federal management. The NRC may delegate regulatory authority to an agreement state for issuing and enforcing byproduct material licenses in a manner that conforms to NRC requirements. NRC retains oversight authority over agreement states, and the state ensures that the licensee remains in federal regulatory compliance.", "Four UMTRCA Title II sites are listed on the National Priorities List under the Comprehensive Environmental Response, Compensation, and Liability Act ( P.L. 96-510 ), which authorizes remediation and enforcement actions against the releases of hazardous substances into the environment. At these four sites, NRC, EPA, and the state regulate remediation efforts by operating under a signed memorandum of agreement, which identifies the various agencies' responsibilities. ", "Congress authorized DOE to implement remedial action programs under Title I and designated DOE as the federal agency responsible for long-term federal management of UMTRCA sites. DOE-LM was established in 2003 and manages environmental contamination at sites associated with legacy activities during World War II and the Cold War.", "As of FY2019, DOE-LM manages 19 Title I disposal sites, 12 Title I processing sites, and six of 29 Title II disposal sites. DOE-LM anticipates that it will assume custody of 17 additional Title II disposal sites over the next decade. UMTRCA processing and disposal sites are located in 12 states ( Figure 3 ). Site names and title descriptions are presented in the appendix ( Table A-1 ) ."], "subsections": []}, {"section_title": "State Regulatory Authority", "paragraphs": ["Section 204 of UMTRCA amended Section 274b of the AEA authorizing NRC to enter into agreements with states allowing the states to regulate uranium milling operations through the issuance and enforcement of radioactive material licenses. Such agreement states retain the primary regulatory authority over licenses for radioactive materials on the determination that their regulations are as stringent as those of NRC. The agreement state is responsible for issuing and enforcing the license to ensure that the licensee manages byproduct material in a manner that conforms to federal requirements. Section 204 of UMTRCA includes requirements for procedures for rulemaking, environmental analysis, and judicial review. NRC oversees agreement state programs through inspections, training, and varying degrees of participation in rulemakings or other administrative activities."], "subsections": []}, {"section_title": "Financial Arrangements", "paragraphs": ["Congress intended the NRC to regulate licenses in a manner such that decommissioning requirements would be so stringent as to minimize the need for long-term maintenance and monitoring activities. Section 203 amended Section 161 of the AEA authorizing NRC to enter into short- and long-term bonding, surety, or other financial arrangements with uranium mill licensees. Short-term financial arrangements pay any remaining decommissioning costs if the operator becomes insolvent or otherwise incapable of completing all NRC decommissioning requirements. Long-term financial arrangements pay for the costs for DOE to perform long-term maintenance and monitoring after the license has been transferred to long-term federal management. "], "subsections": []}]}]}, {"section_title": "Status of Implementation", "paragraphs": ["The legislative history suggests that public health and environmental concerns at the time were generally focused on preventing exposure to radiological emissions released into the air, such as radon gas. Many in Congress also expressed concern about potential exposure risks associated with the unrestricted use of radioactive tailings material used as fill material for buildings and other construction projects. Less understood at the time of UMTRCA's original enactment was the dispersion and migration of radiological and non-radiological contaminants in groundwater, which has been an issue at some UMTRCA sites. ", "DOE's surface remedial authority expired in 1998 for Title I sites. DOE continues to administer groundwater remediation and monitoring programs at Title I sites under long-term federal management. The Moab processing site in Utah is the only Title I site that has not transferred to long-term federal management. "], "subsections": [{"section_title": "Disposal Site Tailings Stabilization", "paragraphs": ["Prior to UMTRCA, federal regulatory agencies had little authority to regulate tailings, and methods were not required under federal law to mitigate the erosion of tailings. Inactive uranium mill tailings piles were often susceptible to natural dispersal by wind, water, and human disturbances associated with unintended access to the tailings material. Under Title I of UMTRCA, state and federal agencies designed disposal sites as engineered repositories, which are intended to stabilize inactive uranium mill tailings for hundreds of years. As of 1994, the GAO reported for Title I remedial actions that \"DOE spent $2 billion on surface cleanup activities through fiscal year 1994 and expects to spend about $300 million more through 1998.\" Since 1998, when DOE's surface remedial authority expired, expenditures at Title I sites have been for groundwater remediation, disposal site stabilization, and monitoring activities. ", "For Title II sites, private licensees are required to fund site decommissioning to all applicable requirements. After decommissioning of the site by the licensee, the disposal site is transferred to DOE-LM for long-term federal management. So far, six Title II sites have transferred to DOE-LM, while the decommissioning of the remaining Title II sites remains ongoing. Given the groundwater, stabilization, and erosion management issues experienced at Title I sites, DOE-LM may encounter similar challenges at Title II disposal sites once they are transferred to long-term federal management. ", "The DOE-LM efforts to stabilize Title I and Title II disposal sites present continuing challenges. Natural factors\u00e2\u0080\u0094such as wind erosion, intense rainfall and precipitation, and droughts\u00e2\u0080\u0094can deteriorate the physical integrity of the disposal site and potentially cause the unintended release of contaminants. Vegetation can aid in stabilizing tailings and minimizing erosion. Annual monitoring and maintenance costs may vary from year to year depending on the variability in climatic events. "], "subsections": []}, {"section_title": "Groundwater Contamination and Monitoring", "paragraphs": ["Some uranium mill operations have resulted in groundwater contamination from unlined surface tailings ponds, leach pads, and dissolution of hazardous constituents from water seepage through the tailings piles. Radiological and non-radiological contaminants may migrate if uncontrolled, remain in appreciable quantities, or naturally decrease in the aquifer depending upon site-specific geological characteristics. NRC has characterized groundwater contaminant plumes at some UMTRCA sites as up to three miles long. As such, off-site migration of groundwater contamination has been an issue at some UMTRCA sites. ", "DOE has applied active and passive groundwater remediation strategies at UMTRCA sites. Active groundwater restoration methods\u00e2\u0080\u0094such as pump-and-treat\u00e2\u0080\u0094have been used with varying results. DOE has implemented natural flushing , a passive treatment method, to manage groundwater contamination. Natural flushing relies upon monitoring to characterize the movement rate and distribution of the contaminant plume. DOE-LM often applies institutional controls at UMTRCA sites in conjunction with groundwater remediation programs. Institutional controls\u00e2\u0080\u0094which include providing alternative water sources, site use restrictions, drilling restrictions, fencing, and signs\u00e2\u0080\u0094are intended to minimize risks associated with exposures to impacted groundwater. For example, issues with persistent groundwater contamination at the Riverton, WY, Title I processing site prompted DOE to develop institutional controls at that site to minimize residents' groundwater use. DOE's institutional controls included certain restrictions and notifications for developing new water wells and arranging alternative sources of water within the control boundary.", "DOE-LM administers groundwater monitoring programs at several UMTRCA sites. DOE develops a long-term surveillance plan as part of the NRC general license requirements. Included in the long-term surveillance plan are detailed site-specific groundwater monitoring requirements. Groundwater monitoring requirements include the types of groundwater constituents sampled, the frequency of groundwater sampling, and the location and number of monitoring wells necessary to characterize the groundwater contamination. ", "For Title I sites, the 1988 UMTRA amendment authorized DOE to perform groundwater remediation indefinitely. However, DOE is not authorized to perform groundwater remediation at Title II sites under long-term federal management. At Title II sites under long-term federal management, DOE is authorized to perform maintenance and monitoring and to take emergency measures when necessary to protect public health. In the debate leading to the enactment of UMTRCA, some Members expressed the intent to prevent \"additional and costly remedial action\" unless appropriated by Congress through legislative action. The annual funding needs for UMTRCA sites under long-term federal management are dependent on the degree of site-specific monitoring and maintenance requirements and, for Title I sites, groundwater remediation costs. "], "subsections": []}, {"section_title": "Moab Processing Site, Utah", "paragraphs": ["By the late 1990s, Title I disposal sites were constructed and transferred to long-term federal management, with the exception of the Moab site in Utah. DOE-EM administers the Moab site remediation. The Moab site was originally designated as a Title II site under UMTRCA. The enactment of the Floyd D. Spence National Defense Authorization Act for Fiscal Year 2001 ( P.L. 106-398 ) in October 2000 designated Moab from a Title II site to a Title I site. In designating Moab as a Title I site, Congress terminated the specific license under Title II and transferred the ownership to DOE and the remaining decommissioning costs to the federal government.", "Uranium mill tailings at the Moab site are located on the north bank of the Colorado River. DOE-EM constructed a railway specifically for this project to transport the tailings to a disposal site, Crescent Junction, located approximately 30 miles to the north. DOE transports tailings and performs groundwater remediation at the site. DOE-EM reports that it had transported 59% of the roughly 16 million tons of uranium mill tailings by the end of December 2018.", "DOE-EM anticipates project completion by 2034. DOE had incurred costs of $527 million by the end of FY2018 and estimated the total lifecycle costs to range from $1.186 billion to $1.197 billion. Funding for Moab is appropriated annually in the Energy and Water Development and Related Agencies appropriations bill under the Non-Defense Environmental Cleanup account."], "subsections": []}]}, {"section_title": "Selected Issues for Congress", "paragraphs": ["Site remediation costs and time frames have exceeded amounts originally envisioned by Congress, the agencies, and the licensees due to an evolving understanding of the complexities and risks posed by unintended releases of contaminants from uranium mill tailings. In 1995, the GAO reported that DOE's total surface remediation costs were $2.3 billion, exceeding original 1982 estimates by $621 million. Additionally, long-term federal costs to manage disposal sites and persistent groundwater contamination remain uncertain due to unforeseen challenges and site-specific monitoring and maintenance needs. ", "For Title II sites, six sites have been transferred to DOE-LM as of FY2019. Licensees of remaining Title II sites continue to decommission and transfer their sites to DOE-LM. Prior to long-term federal management, UMTRCA directs federal and state regulatory agencies to apply the stringency of decommissioning requirements on a licensee so that the degree of long-term monitoring and maintenance requirements are minimized. DOE-LM manages a Title II site once the NRC or the state transfers the license from the licensee following decommissioning. ", "In certain instances, NRC, DOE-LM, state agencies, and licensees have disagreed about the adequacy of decommissioning, the degree of long-term monitoring, and the amount of funding needed to perform long-term federal management requirements. In some instances, differences in views among the agencies have affected the timing of decommissioning and license transfers to DOE-LM. In other instances, licensees have lacked adequate funding to complete decommissioning. The following sections describe selected issues regarding proposed legislation, site-specific issues decommissioning, and long-term financial assurance. "], "subsections": [{"section_title": "Cheney Disposal Cell Reauthorization", "paragraphs": ["DOE and residents continue to discover and excavate contaminated material at vicinity properties (i.e., buildings, roads, and sidewalks) around Grand Junction, CO, where uranium mill tailings were used as construction material prior to the enactment of UMTRCA. Discovered byproduct material from vicinity properties is disposed in the Cheney disposal cell, located 15 miles southeast of the Grand Junction processing site. DOE constructed the Cheney disposal cell in 1990 to accept residual radioactive material from the Title I Grand Junction processing site and vicinity properties contaminated by the use of uranium tailings as building materials.", "Under Section 112 of UMTRCA, DOE's authority to accept byproduct material at the Cheney disposal cell is scheduled to expire at the end FY2023 or until the cell reaches capacity, whichever comes first. DOE would be prohibited to operate the Cheney disposal cell after FY2023 absent the enactment of reauthorizing legislation. ", "In the 116 th Congress, the House passed H.R. 347 authorizing DOE to dispose of residual radioactive material from processing sites and byproduct material from vicinity sites in the Cheney disposal cell through FY2031. Similar versions of this legislation were introduced in the 115 th Congress."], "subsections": []}, {"section_title": "Title II Uranium Reimbursements", "paragraphs": ["Thirteen Title II uranium mills produced uranium concentrate under both federal procurement contracts and commercial civilian nuclear power production. Title X of the Energy Policy Act of 1992 ( P.L. 102-486 ) authorized reimbursements to pay Title II licensees for remedial costs proportional to the quantity of byproduct material produced under federal procurement contracts. Reimbursement payments under Title X do not absolve the licensees from completing site decommissioning.", "DOE-EM administers reimbursement payments to eligible Title II sites with funds appropriated from the Uranium Enrichment Decontamination and Decommissioning Fund, established under Title XI of the Energy Policy Act of 1992, to support remediation of federal uranium enrichment facilities. Title X reimbursements are subject to annual appropriations in the Energy and Water Development and Related Agencies appropriations bill.", "In 2000, eight years after the authorization of Title X reimbursements, the 106 th Congress recognized that the implementation of decommissioning by licensees was more costly and taking longer than originally envisioned. As of 2019, Title II licensees eligible for Title X continue to face similar decommissioning challenges. For example, committee report language in the FY2019 Energy and Water Development and Related Agencies appropriations bill directs DOE to use funds to \"reimburse licensees for approved claim balances in a timely manner and to avoid accumulating balances and liabilities.\" From FY1994 to FY2018, DOE reported that $355 million was reimbursed to 13 licensees. According to DOE, there were $26 million in approved but unpaid claims as of FY2018, and estimated remaining program liability was $99 million for the remaining sites eligible for reimbursements."], "subsections": []}, {"section_title": "Transfer Status and Funding", "paragraphs": ["Various technical, financial, and regulatory issues have affected the timing of the transfer of Title II sites to long-term federal management. NRC's statutory responsibility is to regulate uranium mills and tailings for Title II sites in a manner that allows a licensee to complete site decommissioning in manner so stringent that little long-term maintenance and monitoring would be required. Congress intended NRC to mitigate financial burdens to the licensees while requiring that all decommissioning requirements be fully met.", "The transfer of the remaining Title II sites to DOE-LM for long-term federal management would remain pending until NRC determines that the licensee has completed all decommissioning requirements. NRC estimates specific dates for some Title II sites, while others are listed as \"to be determined.\" Table A-1 identifies Title I and Title II sites that have transferred to long-term federal management, and Table A-2 identifies Title I and Title II sites that have not yet transferred to long-term federal management.", "DOE-LM would become responsible for long-term federal management of Title II sites currently licensed by NRC or an NRC agreement state upon the completion of decommissioning and site transfer. For some Title II sites, DOE-LM and NRC have reached differing conclusions regarding the adequacy of decommissioning, the degree and type of long-term monitoring requirements, and the funds needed to pay for long-term monitoring and maintenance costs. ", "Section 203 of UMTRCA authorized NRC to collect a bond or other financial arrangement to pay for the costs in the event that a licensee was unable to fulfill all of their decommissioning requirements. UMTRCA does not authorize the use of federal funding to pay for the decommissioning of Title II sites. In the event that the bond were insufficient to pay for the full decommissioning costs, UMTRCA provides no additional mechanism for funding to complete decommissioning. In some instances, Title II licensees have lacked adequate financial resources to complete NRC's decommissioning requirements. If left unreclaimed, exposure risks from releases of radiological and non-radiological contaminants may present issues to affected communities. The magnitude of public health and environmental risks posed by unreclaimed tailings may vary among individual sites."], "subsections": []}, {"section_title": "Long-Term Financial Assurance", "paragraphs": ["For sites that have transferred to long-term federal management, DOE-LM administers Title I and Title II sites under an NRC general license. UMTRCA authorized long-term monitoring and maintenance costs at Title I sites to be paid by the federal government. For Title II sites, Congress intended that the licensee would pay for any necessary long-term monitoring and maintenance costs using a one-time long-time surveillance charge (LTSC). Annual costs are largely dependent on the extent of site-specific groundwater monitoring and intermittent maintenance activities on the repository.", "Under current federal law there are different statutory authorities for DOE-LM to perform remediation at Title I sites and Title II sites under long-term federal management. For Title I sites, Congress authorized DOE-LM to implement groundwater remediation indefinitely, recognizing the ongoing remediation challenges at some Title I sites after decommissioning. UMTRCA does not provide DOE-LM remedial authority for Title II sites under long-term federal management. At Title II sites under long-term federal management, DOE-LM is authorized to perform monitoring, maintenance, and emergency measures. Emergency measures is not explicitly defined by statute, potentially raising issues of interpretation in the event of future remedial action needs. Selected issues with Title I and Title II long-term financial assurance are discussed in the following sections."], "subsections": [{"section_title": "Title I Sites", "paragraphs": ["Congress provides funding for the long-term federal management of Title I sites through DOE annual appropriations. For Title I sites under long-term federal management, program funding for DOE-LM is funded under Environmental and Other Defense Activities account in the Energy and Water Development and Related Agencies appropriations bill. DOE-EM continues to administer remediation at the Moab site in Utah. Funding for the Moab site is appropriated annually in the Energy and Water Development and Related Agencies appropriations bill under the Non-Defense Environmental Cleanup account.", "DOE annual expenditures can vary from site to site depending on costs related to many factors, including the degree of groundwater remediation or monitoring and disposal site maintenance. For example, from 2008 and 2012, an interagency report from January 2013 noted that total DOE expenditures at the Tuba City disposal site were $13.96 million (approximately $2.8 million per year), while total expenditures at the Mexican Hat disposal site were $110,000 (approximately $22,000 per year).", "Neither DOE-LM annual budget justifications nor annual appropriations bills specify funding for annual long-term federal management costs by site or for the site inventory as a whole. Annual funding for DOE-LM is presented in annual budget requests and appropriations as a single line-item. In all, DOE-LM oversees over 100 sites contaminated by radiological, chemical, and hazardous wastes associated with the legacy of nuclear weapons production during World War II and the Cold War. UMTRCA processing and disposal sites constitute 37 of those sites. Congress appropriated $159 million to DOE-LM in the Energy and Water Development and Related Agencies Appropriations Act, 2019 ( P.L. 115-244 ), the same amount as requested."], "subsections": []}, {"section_title": "Title II Sites", "paragraphs": ["For Title II sites, Congress intended that commercial uranium mill operators will pay for site decommissioning and the costs for a federal agency to perform long-term federal management. To cover these long-term federal management costs, NRC requires licensees to pay an LTSC upon the transfer of the site to DOE. Section 203 of UMTRCA provides NRC authority to collect this LTSC from the licensee to pay for DOE's costs to perform long-term maintenance, monitoring, and emergency measures. This one-time LTSC fee is deposited as a miscellaneous receipt into the General Fund of the U.S. Treasury when each site license is transferred to DOE.", "In the 1980 Final Generic Environmental Impact Statement for uranium milling, NRC described the justification for the minimum LTSC fee based on the assumption that average long-term monitoring at UMTRCA Title II sites would cost $2,500 per year. NRC assumed an average annual real rate of return, and each licensee is required to pay the minimum one-time L TSC of $ 250,000 (in 1978 dollars, adjusted for inflation). NRC has not revised the minimum LTSC since regulations were promulgated in 1985. NRC allows for the minimum LTSC fee to be increased based on expected site-specific surveillance or controls requirements if needed. UMTRCA does not authorize a mechanism to recover additional fees from licensees once the license has been transferred to DOE-LM. ", "The adequacy of the LTSC to cover DOE's costs to perform long-term maintenance and monitoring has been an issue. In 1995, the GAO recommended that NRC improve \"the accuracy of the one-time charge made to owner/operators to ensure that this charge fully covers future costs at their sites.\" In 2014, the DOE Office of Inspector General (IG) found that DOE-LM had spent $4.25 million at six Title II sites under long-term management. During the same three-year period, the IG report found that the available funds from the LTSC fees were $0.148 million. ", "To the extent that the LTSC fees are insufficient to cover annual monitoring and maintenance costs, DOE-LM would be responsible to carry out long-term management responsibilities, subject to availability of annual appropriations. DOE-LM has discretion to allocate appropriated funding among eligible sites under long-term federal management. If the current minimum LTSC do not fully cover annual long-term federal management costs for the remaining Title II sites when they transfer to DOE-LM, the IG report states \"the total cost to the American taxpayers could be significant.\"", "Yet, there is a limited availability of information by site and by year for DOE-LM's monitoring and maintenance costs at UMTRCA sites under long-term management. DOE-EM has provided life-cycle cost ranges and completion date estimates for Environmental Management sites, including the Moab site, in annual budget justifications. CRS was unable to identify DOE cost estimates for any other UMTRCA site.", "The federal government will be responsible for the long-term management costs for all UMTRCA sites once transferred to DOE-LM. Potential issues for Congress may include the decommissioning and transfer status of the remaining Title II sites, the adequacy of funding to complete decommissioning at certain sites if the licensee is unable to fulfill its obligations, and the adequacy of the long-term surveillance charges to meet future long-term management needs. "], "subsections": [{"section_title": "Appendix. Appendix", "paragraphs": [], "subsections": []}]}]}]}]}}
{"id": "R45903", "title": "Retaliatory Tariffs and U.S. Agriculture", "released_date": "2019-09-13T00:00:00", "summary": ["Certain foreign nations have targeted U.S. food and agricultural products with retaliatory tariffs since early 2018 in response to U.S. Section 232 tariffs on steel and aluminum imports and Section 301 tariffs levied on U.S. imports from China. Retaliatory tariffs have made imports of U.S. agricultural products relatively more expensive compared to similar products from competitor nations. In the short run, U.S. shipments of products to countries with retaliatory tariffs have declined, reducing overall global demand for affected U.S. agricultural products and driving down the prices of U.S. agricultural commodities. Depending on the length and depth of the tariffs and the range of products affected, some experts caution that the long-run trade impacts could inflict further harm as U.S. competitor countries have an incentive to expand their agricultural production.", "In response to U.S. Section 232 and Section 301 actions, China levied retaliatory tariffs on almost all U.S. agricultural products, ranging from 5% to 50%. In response to U.S. Section 232 tariffs, Canada, Mexico, the European Union (EU), and Turkey retaliated with tariffs during the summer of 2018 on U.S. fruit, nuts, prepared vegetables and meats, pork, cheese, breakfast cereal, fruit juices, and whiskey. India implemented retaliatory tariffs on certain U.S. products after a Presidential Proclamation removed India from the U.S. Generalized System of Preferences program in May 2019. Canada and Mexico levied retaliatory tariffs in mid-2018, but these tariffs were removed in May 2019 after the Trump Administration announced an agreement with Canada and Mexico to remove the Section 232 tariffs on imports from both countries to facilitate ratification of the U.S.-Mexico-Canada Agreement\u00e2\u0080\u0094a proposed regional free trade agreement that is meant to supersede the North American Free Trade Agreement (NAFTA).", "The total value of exports of U.S. food and agricultural products levied retaliatory tariffs in 2018 was $22 billion, down 27% from $30 billion in 2017. China accounted for about 80% of the total affected trade in both years. Despite the retaliatory tariffs, U.S. agricultural exports rose in 2018 to $140 billion from $138 billion in 2017, partly due to higher imports during the months leading up to the retaliatory tariffs and increased exports to other nonretaliating countries. With the continuation of retaliatory tariffs, U.S. Department of Agriculture (USDA) projects U.S. agricultural exports to decline about 4% in 2019.", "In the short run, retaliatory tariffs contributed to declining prices for certain U.S. agricultural commodities and reduced exports, particularly for soybeans. Declining prices and exports sales combined with rising input and farm machinery costs contributed to a 16% decrease in U.S. net farm income in 2018, compared with 2017. China's soybean imports are expected to resume growing over the next decade, but a USDA study expects the volume traded to be less than previously anticipated. Because of the retaliatory tariffs on U.S. soybeans, USDA projects that Brazil will account for two-thirds of the global growth in soybean exports to China. The United States accounted for 40% of China's total soybean imports in 2016 and 35% in 2017, compared with Brazil's 46% in 2016 and 53% in 2017. In 2018, the U.S. share of China's soybean import market dropped to 19% and Brazil's share was up at 76%.", "To help alleviate the financial loss incurred by U.S. farmers due to retaliatory tariffs, USDA announced $12 billion in financial assistance in 2018\u00e2\u0080\u0094referred to as a trade aid package\u00e2\u0080\u0094for certain U.S. agricultural commodities using Section 5 of the Commodity Credit Corporation (CCC) Charter Act (15 U.S.C. 714c). In 2019, USDA announced a second trade-aid package of $16 billion. Increased trade aid to U.S. farmers has generated questions from some World Trade Organization (WTO) members about whether the trade-aid package may violate U.S. WTO commitments.", "While trade-aid packages may provide short-term financial assistance, some studies and critics of the President's actions caution that the long-term consequences of the retaliatory tariffs may present more challenges. Even as China has raised tariffs on U.S. imports, it has improved access to its markets for other exporting countries. Brazil, Russia, and other countries are expanding their agricultural production to meet China's import demand. For example, Russia's investments during the past two decades have resulted in agricultural productivity growth ranging from 25% to 75%, with higher productivity growth along its southern region. Although still at relatively modest levels, China's total food and agricultural imports from Russia increased 61% between 2017 and 2018.", "The continuation of trade disputes and retaliatory tariffs may be of interest to Congress for the following reasons. Trade disputes have disrupted global markets and increased uncertainty in the farm input and output sectors. They may add to production costs, and they have dampened exports, impacted farm income, and triggered additional federal assistance for the farm sector. In the short run, there could be some transient benefits associated with various aspects of the agricultural sector. In the long run, other countries may expand agricultural production, potentially displacing U.S. agricultural exports to become larger food and agricultural suppliers to China."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["Since early 2018, certain foreign nations have targeted U.S. food and agricultural products with retaliatory tariffs (for more on tariffs, see Box 1 ) in response to U.S. Section 232 tariffs on steel and aluminum imports and U.S. Section 301 tariffs levied on imports from China. The first U.S. trade action occurred on March 8, 2018, when President Trump imposed tariffs of 25% on steel and 10% on aluminum imports (with some flexibility on the application of tariffs by country) using presidential powers granted under Section 232 of the Trade Expansion Act of 1962. Section 232 authorizes the President to impose restrictions on certain imports based on an affirmative determination by the Department of Commerce that the targeted import products threaten national security. The targeted exporters, China, Canada, Mexico, the European Union (EU), and Turkey, responded by levying retaliatory tariffs on U.S. food and agricultural products, and other goods. India proposed retaliatory tariffs but did not implement them until June 2019.", "A second action occurred in July 2018 when the Trump Administration used a Section 301 investigation to impose tariffs of 25% on $34 billion of selected imports from China, citing concerns over China's policies on intellectual property, technology, and innovation. In August 2018, the Administration levied a second round of Section 301 tariffs, also of 25%, on an additional $16 billion of imports from China. In September 2018, additional tariffs of 10% were applied to $200 billion of imports from China and, in May 2019, these were raised to 25%. On August 13, 2019, the Office of U.S. Trade Representative (USTR) published two lists of additional Chinese imports that would face 10% tariffs, effective September 1, 2019, and December 15, 2019. The imposition of the Section 301 tariffs on Chinese goods resulted in retaliatory tariffs by China. Additionally, in August 2019, China asked its state-owned enterprises to halt purchases of U.S. agricultural goods. On August 23, 2019, China further retaliated by levying two additional sets of tariffs: 5% or 10% tariffs on U.S. imports, including 695 different U.S. agricultural tariff lines effective September 1, 2019; and another 5% or 10% tariffs on U.S. imports including 184 different U.S. agricultural tariff lines effective December 15, 2019.", "During 2018, China, Canada, Mexico, the EU, and Turkey jointly levied retaliatory tariffs on more than 1,000 U.S. food and agricultural tariff lines. India prepared a list of U.S. products targeted for retaliatory tariffs in 2018 but refrained from implementing them. Then in 2019, India implemented retaliatory tariffs on certain U.S. lentils, apples, and tree nuts after the United States removed India from the U.S. Generalized System of Preferences (GSP) program on May 31, 2019. GSP provides duty-free tariff treatment for certain products from designated developing countries. India's removal from GSP is expected to raise duties valued at about $5 billion to $6 billion on goods the United States imports from India\u00e2\u0080\u0094or slightly more than 10% of India's total 2018 exports of $54 billion to the United States. In response to U.S. action, India implemented the retaliatory tariffs identified in 2018, with some changes, effective June 16, 2019. ", "On May 17, 2019, the Trump Administration reached an agreement with Canada and Mexico to remove the Section 232 tariffs on steel and aluminum imports from those countries and to remove all retaliatory tariffs imposed on U.S. goods. The Administration reduced tariffs on Turkish steel imports, and Turkey responded on May 21, 2019, by halving its retaliatory tariffs on U.S. imports. "], "subsections": [{"section_title": "Report Objectives", "paragraphs": ["This report recaps the chronology and the effect of U.S. Section 232 and Section 301 actions on U.S. food and agricultural imports and the retaliatory tariffs imposed on U.S. agricultural exports by its trading partners during 2018 and the spring of 2019. As China is subjected to the largest set of U.S. tariff increases and has levied the most expansive set of retaliatory tariffs on U.S. agricultural products, this report largely focuses on the effects of Chinese retaliatory tariffs on U.S. agricultural trade. Because almost all U.S. food and agricultural tariff lines are affected by Chinese retaliatory tariffs, the report provides illustrative examples using selected agricultural products. Thus, the report is not a comprehensive review of the effect of Chinese retaliatory tariffs on every U.S. agricultural product exported to China. ", "Retaliatory tariffs have made U.S. products relatively more expensive in China, with the result that Chinese imports from other countries have increased in lieu of U.S. products. This report discusses the short- and long-run economic effects of the changes in trade flows, locally, nationally, and globally. The long-run effects may potentially be more problematic, as China and Russia have increased their agricultural productivity over the past two to three decades, and China has increased investments in other countries to develop potential future sources of imports. Additionally, China has improved market access for imports from other countries while it has increased tariffs on U.S. imports. Finally, the report presents the views of selected U.S. agricultural stakeholders on retaliatory tariffs, and it identifies issues that may be of interest for Congress."], "subsections": []}]}, {"section_title": "Retaliatory Tariffs on U.S. Agricultural Exports", "paragraphs": ["Except for China, which faces both Section 232 and Section 301 tariffs, other countries' retaliatory tariffs respond only to U.S. Section 232 tariffs on U.S. imports of certain steel and aluminum products. Higher retaliatory tariffs represent increases above the World Trade Organization (WTO) Most Favored Nation (MFN) tariff rates or beyond any existing preferential tariff rates. Retaliatory tariffs for Canada and Mexico are increases from the existing North American Free Trade Agreement (NAFTA) rates, most of which, at zero percent, are below the MFN rates. ", " Table 1 summarizes the retaliatory tariff increases on U.S. agricultural products by comparing tariff increases of September 2018 with the retaliatory tariffs in effect in June 2019. A potential reason for observed changes in applied tariffs rates is that some tariffs are levied based on quantity (such as per ton or per kilograms) and, for purposes of analyses, tariffs are converted to percentage of total import value, ad valorem rates (see Box 2 ). When the price of a traded product changes, the ad valorem tariff rate imposed on a product can change. Additionally, it is not always possible to match the U.S. Harmonized Tariff Schedule (HTS) with the retaliatory country's 8- or 10-digit tariff code (see Box 1 ) . Thus, it may be difficult to link the U.S. Census Bureau trade data with the tariff codes of products affected by retaliatory tariffs. Therefore, this report makes use of both U.S. export data and partner country import data as appropriate to provide the most accurate measure of the magnitude of the affected U.S. trade. For U.S. retaliating trade partners, Table 1 provides the minimum, maximum, and simple (not trade-weighted) average retaliatory tariff hike rates."], "subsections": [{"section_title": "Chinese Retaliatory Tariffs18", "paragraphs": ["China is subject to the largest set of U.S. tariff increases\u00e2\u0080\u0094both the U.S. Section 232 steel and aluminum tariffs and the Section U.S. 301 tariffs in response to unfair trade practices. As a result, China has countered with an expansive list of retaliatory tariffs. In particular, all U.S. products affected by Chinese retaliatory tariffs in response to the U.S. Section 232 action also faced additional retaliatory tariffs in response to U.S. Section 301 trade action.", "China first retaliated against U.S. Section 232 action in April 2018, by raising tariffs on certain U.S. imports including agricultural products. During the first round of Chinese retaliatory tariffs, these products included pork, fruit, and tree nuts. In July 2018, China retaliated against U.S. Section 301 tariffs by raising tariffs on an expanded number of products, including most U.S. agricultural products exported to China. Tariffs were also raised on products affected by the earlier April 2018 retaliatory tariffs in response to U.S. Section 301 action, with most subject to an additional tariff of 25%.", "China levied two more rounds of retaliatory tariff increases (against U.S. Section 301 action) in 2018\u00e2\u0080\u0094in August and September\u00e2\u0080\u0094expanding the coverage of the affected products. In September 2018, China imposed 5% and 10% tariff increases on certain products (including agricultural products) which had not been subject to any retaliatory tariffs in response to U.S. Section 301 action. In June 2019, China increased tariffs on some additional products that had not been previously targeted with retaliatory tariffs, as well as some products that had been hit with the 5% or 10% retaliatory tariff in September 2018. As a result, almost all U.S. agricultural products shipped to China face retaliatory tariffs, ranging from 5% to 50% above their MFN tariff rates through August 31, 2019, with a simple average tariff rate increase of 24% across all products as of July 2019. See Table A-1 for information on average Chinese retaliatory tariffs across different food and agricultural product categories."], "subsections": []}, {"section_title": "Retaliatory Tariffs by Canada and Mexico", "paragraphs": ["In June 2018, Mexico levied a 15% tariff on U.S. sausage imports; a 20% tariff on other pork products, certain cheeses, apples, potatoes, and cranberries; and a 25% tariff increase on whey, blue-veined cheese, and whiskies. ", "Starting in July 2018, Canada imposed a retaliatory tariff of 10% on certain U.S. products including dairy, poultry, and beef products; coffee, chocolate, sugar, and confectionery; prepared food products; condiments; bottled water; and whiskies. ", "To facilitate the ratification of the proposed U.S.-Mexico-Canada Agreement (USMCA) that the leaders of the three countries agreed to on September 30, 2018, the United States removed the Section 232 tariffs on steel and aluminum imports from Canada and Mexico on May 17, 2019, and, in turn, these countries removed their retaliatory tariffs on U.S. imports. "], "subsections": []}, {"section_title": "Retaliatory Tariffs by the EU, Turkey, and India", "paragraphs": ["In June 2018, in response to U.S. Section 232 tariffs, the EU imposed a 25% tariff on imports of U.S. corn, rice, sweetcorn, kidney beans, certain breakfast cereals, peanut butter, orange juice, cranberry juice, whiskies, cigars, and other tobacco products, and a 10% tariff on certain essential oils. ", "In June 2018, Turkey also responded to U.S. Section 232 tariffs on Turkish steel imports by levying retaliatory tariffs on selected U.S. imports. On August 10, 2018, the United States doubled its tariffs on steel imports from Turkey to 50%, stating that the 25% tariffs did not reduce Turkish steel imports as much as anticipated. Turkey responded by doubling tariffs on certain U.S. imports including a 20% retaliatory tariff on U.S. tree nuts and certain prepared food, 25% and 50% tariffs on U.S. rice (depending on whether milled or unmilled), 60% tariff on U.S. tobacco, and 140% tariff on U.S. alcoholic beverages including whiskies. When the United States reduced its tariffs on Turkish steel imports on May 21, 2019, Turkey halved its retaliatory tariffs on U.S. imports. ", "India identified certain U.S. food products for retaliatory tariffs in 2018 but did not levy them until June 16, 2019. Indian tariff hikes above the MFN rate are 10% for imports of U.S. chickpeas, 29% for over-quota shelled almonds (ad valorem rate), and 20% for U.S. walnuts, apples, and lentils. "], "subsections": []}]}, {"section_title": "U.S. Agricultural Trade Affected by Tariff Hikes", "paragraphs": ["Foreign nations may target U.S. food and agricultural products with retaliatory tariffs for several reasons. First, the United States is the largest exporter of food and agricultural products, so many countries are able to retaliate against those goods. Second, agricultural commodities are often more easily substituted from among potential suppliers, so curbing imports from one country would not necessarily limit an importing country's access to the commodity. Third, several food and agricultural products are produced primarily in certain regions of the United States, and thus may be targeted with a view to negatively and disproportionately affecting the constituents of specific U.S. lawmakers. ", "The retaliatory tariffs imposed by U.S. trading partners affected many products exported by the United States, including meats, grains, dairy products, specialty and horticultural crops, and alcoholic beverages. As discussed in Box 3 , \"Tariffs Increase Import Prices,\" a number of factors affect trade, including tariffs that tend to increase the price of imported goods. In 2018, total imports of affected U.S. food and agricultural products by all retaliating countries amounted to almost $22 billion, based on customs data from these countries. This represents a 27% decline from the $29.7 billion in 2017 ( Figure 1 ). ", "Based on Chinese customs data, the total value of Chinese agricultural imports from the United States affected by retaliatory tariffs declined from $22.5 billion in 2017 to $14.7 billion in 2018. ", "Canadian customs data show that imports of U.S. agricultural products declined to $2.3 billion in 2018 from $2.4 billion in 2017. Canadian retaliatory tariffs include certain tariff lines covering prepared product categories under beef, poultry, dairy, fruit, vegetables, drinks, coffee and spices, chocolate and confectionary, and whiskey. As noted earlier, Canada removed its retaliatory tariffs on U.S. imports in May 2019, in response to the U.S. removal of Section 232 tariffs on steel and aluminum imports from Canada.", "A review of Mexican customs data finds that imports of U.S. agricultural products by Mexico also declined from $2.6 billion in 2017 to $2.5 billion in 2018, largely accounted for by sausage and pork products. Mexico's imports of these products declined from $2.3 billion in 2017 to $1.6 billion in 2018. In addition to pork products, Mexico had imposed retaliatory tariffs on cheeses, apples, prepared fruit, vegetables and other food, and whiskey. Mexico also removed its retaliatory tariffs on U.S. imports in May 2019, in response to U.S. removal of Section 232 tariffs on steel and aluminum imports from Mexico.", "EU customs data show the import value of U.S. food and agricultural products affected by the EU retaliatory tariffs increased to $1.3 billion in 2018 from $1.1 billion in 2017. The EU imposed tariff hikes on certain prepared vegetables, pulses, breakfast cereals, fruit juices, peanut butter, tobacco products, whiskey, and essential oils. A temporary surge in sales in the months prior to the imposition of duties appears to have offset a slump in sales that coincided with the onset of retaliatory duties later in the year ( Figure 2 ). Based on the quarterly import data, by the first quarter of 2019, the total value of EU imports of U.S. products affected by retaliatory tariffs was lower than during the last quarter of 2017 or the first quarter of 2018. Since the second quarter of 2018, EU imports of affected food and agricultural products from the United States declined. As discussed above, beyond the tariff increases, a number of factors may have contributed to this reduction in imports. For instance, when countries first released their proposed lists of products that they targeted for retaliation, some EU importers may have imported larger quantities of the affected products prior to the imposition of the duties, thus boosting EU imports of U.S. agricultural goods in 2018. ", "Similar to the EU, the total value of Turkish imports of U.S. food and agricultural products affected by retaliatory tariffs increased between 2017 ($299 million) and 2018 ($316 million), based on Turkish customs data. Turkey had imposed tariff hikes on certain tree nuts, prepared food, rice, tobacco, whiskey, and other alcoholic beverages. Imports in the months prior to the imposition of duties had increased ( Figure 2 ), which may have offset the decline in imports during the second half of 2018. In the third and fourth quarter of 2018, Turkish imports of affected U.S. food and agricultural products declined. Since May 2019, Turkey halved its retaliatory tariffs on imports from the United States.", "During 2018, India did not levy any retaliatory tariffs on imports of U.S. food and agricultural products. Starting in June 16, 2019, India implemented retaliatory tariffs on imports of U.S. almonds, walnuts, chickpeas, lentils, and apples. Based on the Indian customs data, the total value of Indian imports of these products was $824 million in 2017 and $859 million in 2018."], "subsections": [{"section_title": "U.S. Agricultural Exports to Retaliating Countries", "paragraphs": [" Table 2 presents U.S. agricultural exports to retaliating and nonretaliating countries, in nominal values, from 2014 to 2018. As discussed in Box 1 , U.S. exports to trading partners and the reported import values in destination countries can differ due to differences in HS classification of goods in different countries. Canada, the EU, Mexico, and Turkey levied retaliatory tariffs in 2018 on selected U.S. agricultural products, while China imposed retaliatory tariffs on almost all U.S. food and agricultural products. During 2018, India did not levy any retaliatory tariffs. Thus, the changes in 2018 U.S. food and agricultural exports, compared to prior years, varied across these countries ( Table 2 ). ", "Despite the retaliatory tariffs, U.S. agricultural exports grew from $138 billion in 2017 to $140 billion in 2018. Greater U.S. exports of products to nonretaliating countries ($76 billion in 2018, up from $66 billion in 2017) offset the value of trade lost to China and Turkey. In addition, increased U.S. exports of products without retaliatory tariffs and products targeted for retaliatory tariffs during the months prior to their implementation (to Canada, Mexico, and the EU) also helped to offset the decline in exports of products with retaliatory tariffs to these countries."], "subsections": []}]}, {"section_title": "U.S. Exports Under Chinese Retaliatory Tariffs45", "paragraphs": ["The Chinese market is important for several U.S. agricultural products. For example, in 2016 and 2017, the United States supplied over a third of China's total soybean imports, almost all of China's distillers' grain imports (primarily used as animal feed), and most of China's sorghum imports. In 2017, the Chinese market accounted for about 57% of global U.S. soybean exports, 17% of global U.S. cotton exports, 80% of global U.S. sorghum exports, 11% of global U.S. dairy product exports, 10% of global U.S. pork exports, 6% of global U.S. wheat exports, and 5% of global U.S. fruit exports.", "In response to U.S. Section 232 and Section 301 tariffs on U.S. imports of Chinese goods imposed in 2018, China levied retaliatory tariffs on imports of almost all U.S. agricultural products. In 2017, China was the second-leading export market by value for U.S. agricultural products. However, after the imposition of retaliatory tariffs on U.S. imports beginning in April 2018, U.S. agricultural exports to China experienced a 53% decline from $19.5 billion in 2017 to $9.2 billion in 2018 ( Figure 3 ). China thus moved down in rank to become the fourth-largest U.S. agricultural market, after Canada, Mexico, and Japan.", "Among other goods, China imposed a 25% retaliatory tariff on U.S. soybeans in July 2018. Since 2000, China had been the top export market for U.S. soybeans. In 2017, China imported about $12 billion worth of U.S. soybeans, accounting for 57% of the total value of all U.S. soybean exports that year. With higher tariffs in place, China has been purchasing more soybeans from Brazil and other countries to meet its demand. Consequently, U.S. soybean exports to China in 2018 declined to $3 billion ( Figure 3 ). U.S. Census Bureau trade data indicate China was still the top foreign destination for U.S. soybeans in 2018, followed by Mexico, which imported $1.8 billion of U.S. soybeans. ", "Reduced Chinese import demand in 2018 contributed to declining farm prices for affected commodities and lower U.S. agricultural exports to China for several commodities, including sorghum, soybeans, cotton, and pork. Consequently, U.S. soybean prices reached 10-year lows during July-October 2018 ( Figure 4 ), weighing on prices of other agricultural commodities, such as corn, that compete with soybeans for acreage. Prices recovered some during the last quarter of 2018, coincident with reported commitments by China to purchase a \"very substantial amount of U.S. agricultural\" goods. However, Chinese purchases failed to materialize and U.S. commodity prices resumed their downward trend through the first quarter of 2019 before stabilizing.", "As U.S. soybean prices declined in 2018, Brazilian soybean prices started to rise, indicative of a greater demand for Brazilian soybeans from China ( Figure 4 ). Since 2007, Brazilian and U.S. soybean prices had tended to move together. Starting in April 2018, U.S. soybean prices started to fall and Brazilian soybean prices started to rise. China's imposition of a 25% tariff on U.S. soybeans in July 2018 initially precipitated a widening of the gap between the two prices. On October 23, 2018, U.S. soybean Free on Board (FOB) prices were $86 per metric ton lower than Brazilian (Paranagu\u00c3\u00a1) FOB prices. ", "The Brazilian soybean price started to fall in late October in anticipation of a record-high South American soybean harvest. U.S. soybean prices started to climb at the same time, partly due to farmers' willingness to hold stocks and in response to larger exports to non-Chinese destinations. Anticipation of Chinese purchases also contributed to rebounding of U.S. prices. As Chinese purchases did not materialize, Brazilian and U.S. soybean prices started to diverge again in May 2019. ", "Although soybeans have been the agricultural commodity most affected by retaliatory tariffs (largely due to China's dominant role in the global soybean market), nearly all U.S. agricultural exports to China declined in 2018 relative to 2017 (see Table 3 )."], "subsections": []}, {"section_title": "Key Competitors for China's Agricultural Market56", "paragraphs": ["With retaliatory tariffs making U.S. agricultural products more expensive for Chinese buyers, exports from other countries to China increased during 2018. Some studies suggest that Brazil could become China's primary soybean supplier. Another study concludes that U.S.-China tariff escalation would make suppliers in the rest of the world more competitive relative to U.S. and Chinese suppliers. Russia also contends that it may become a major U.S. competitor for China's agricultural import market, although market watchers expect Russia will need years to become a major agricultural supplier to China. To explore these assertions, CRS examined Chinese import data to identify foreign sources that may have partially replaced some of the 2018 U.S. agricultural exports to China. Note that various factors can result in data differences between U.S. exports from the U.S. Census Bureau and imports from Chinese customs data ( Box 4 )."], "subsections": [{"section_title": "China's Total Annual Agricultural Imports", "paragraphs": ["According to Chinese customs data, China's imports of agricultural products were $117 billion in 2014 as compared to $127 billion in 2018, in nominal terms ( Figure 5 ). In 2014, the United States was the largest source of Chinese agricultural imports, accounting for nearly a quarter, or $28 billion, of China's total imports. Since 2017, Brazil and several other countries increased their shares of China's total imports, with Brazil overtaking the United States as China's largest agricultural supplier in 2017. Since the imposition of the retaliatory tariffs on U.S. imports in 2018, U.S. agricultural shipments to China declined to $15 billion, compared to $23 billion in 2017, even as overall Chinese imports increased to $127 billion. It is noteworthy that in 2016, when China's total agricultural imports were at the lowest point between 2014 and 2018, at $105 billion, U.S. market share was 21%, compared with 2018, when China's total agricultural imports were at $127 billion but U.S. market share was 12%. During the same period, Brazil's market share grew from 18% in 2016 to 26% in 2018. Additionally, China's imports from other countries increased, as indicated in Figure 5 . ", "Brazil appears to be the primary beneficiary of Chinese retaliatory tariffs on U.S. imports, with increased exports to China in 2018 of soybeans, cotton, tobacco, pork, and oilseeds. Australia also registered growth in import market shares for cotton, sorghum, pulses, fruit and nuts, dairy, and hides and skins. Canada increased its exports to China of feed and fodder products, hides and skins, and wheat. New Zealand's share of China's import market saw gains in dairy, and hides and skins. Thailand increased its export shipments of fruit, nuts and starches, and malt to China, while increased shipments from Indonesia were largely fats and oils. ", "Additionally, Russia has stated that it is ready to step in to fill in the gaps created by reductions in U.S. food and agricultural exports to China, according to various news media reports, although market watchers expect Russia will need years to become a major agricultural supplier to China. In July 2018, Chinese Commerce Minister Zhong Shan agreed with his Russian counterparts to \"deepen trade in soybeans and other agricultural products.\" China's imports of food and agricultural products from Russia increased 61%, from $679 million to nearly $1.1 billion, between 2017 and 2018, with strong import growth in oilseeds, wheat, fats and oils, cocoa and related products, beer, and animal products. ", "Various other countries from Central Asia, South and Southeast Asia, and Africa increased their exports of food and agricultural products to China during 2018 compared with 2017. Notably, China's wheat imports from Kazakhstan grew 34% and corn imports from Ukraine rose 20%. U.S. agricultural interests have reported concerns that the U.S.-China trade war in the form of tariffs and tariff retaliation could escalate further, potentially resulting in widespread, long-term damage, particularly for firms with complex international supply chains. For American farmers, the escalating conflict with China has contributed to declining soybean and related agricultural commodity prices in the short run, but studies indicate that the long-term consequences could be complex and have long-lasting impacts. ", "The following section examines how major U.S. agricultural product market shares fared in the Chinese import market during 2018. It also presents China's imports of selected agricultural commodities on a monthly basis starting in January 2018, through the first trimester of 2019 when the different retaliatory tariffs became effective."], "subsections": [{"section_title": "China's Imports of Soybeans", "paragraphs": ["According to Census data, China has been the top export market for U.S. soybeans since 2000. China imported $12 billion worth (32 million metric tons) of U.S. soybeans in 2017, accounting for 57% of the total value and volume of all U.S. soybean exports that year. With higher tariffs on U.S. soybeans, China has been purchasing more soybeans from Brazil and other countries to meet its demand. Consequently, U.S. soybean exports to China declined to $3 billion (8 million metric tons) in 2018. Based on Census trade data, China was still the top destination for U.S. soybeans in 2018, followed by Mexico\u00e2\u0080\u0094which imported $1.8 billion worth of U.S. soybeans.", "According to China's monthly customs data, China's import of U.S. soybeans in January 2018 was $2.5 billion ( Figure 6 ). China's monthly imports of U.S. soybeans started to decline after China announced retaliatory tariffs in response to U.S. Section 232 tariffs in April 2018, which did not include U.S. soybeans. By the time China imposed retaliatory tariffs in response to U.S. Section 301 tariffs (which included U.S. soybeans) in July 2018, China's import of U.S. soybeans had decreased to about $140 million for that month (from $2.5 billion in January 2018). U.S. soybean shipments to China continued to decline until November 2018, when China did not import any U.S. soybeans. In December 2018, the White House announced that China had committed to purchase a \"very substantial amount of agricultural\" goods. Following this and other announcements, China purchased U.S. soybeans during the first trimester of 2019. The largest of these purchases, worth $700 million, occurred in April 2019. However, China's imports of U.S. soybeans declined in May 2019, coincident with the continued escalation of the U.S.-China trade dispute and the imposition of an increase in the third round of U.S. Section 301 tariffs on Chinese imports in May 2019.", "During this tariff dispute, China has turned increasingly to Brazil to meet its demand for soybeans. In January 2018\u00e2\u0080\u0094prior to the tariff dispute\u00e2\u0080\u0094Chinese imports of Brazilian soybeans totaled less than $900 million, before increasing in May and June of 2018, when shipments of newly harvested soybeans from the Southern Hemisphere to China increased. By July 2018, Brazilian shipments were on the decline when China imposed 25% retaliatory tariffs on U.S. soybeans. Normally, newly harvested U.S. soybean shipments to China would have increased in the fall of 2018, whereas Chinese purchases of U.S. soybeans slowed to almost nil and were outpaced by Brazilian shipments to China. From February to May 2019, China expanded its purchases of U.S. soybeans, while also buying soybeans from Brazil, and increasing its soybean imports from Argentina, Russia, and Central Asian countries."], "subsections": []}, {"section_title": "China's Imports of Cotton", "paragraphs": ["According to Census trade data, U.S. cotton exports to China totaled over $1 billion in 2014. From 2017 to 2018, U.S. cotton exports to China declined 6%, from $978 million to $924 million. ", "Monthly Chinese customs data indicate that China's imports of U.S. cotton have decreased since the imposition of retaliatory tariffs in July 2018 ( Figure 7 ). During January 2018, China's cotton imports from the United States totaled $140 million. Following the announcement of retaliatory tariffs on some U.S. imports (in response to U.S. Section 232 action) in April 2018, China's imports of U.S. cotton shrank to $27 million in October 2018. While Chinese imports from the United States declined, China's imports from other countries have increased. Cotton shipments from Brazil and Australia posted the largest increases, followed by imports from India and Uzbekistan. Additionally China's imports of cotton from other Central Asian and West African countries have risen since June 2018 ( Figure 7 ). On July 26, 2019, China reportedly approved some domestic textile mills to buy 50,000 metric tons of U.S. cotton without being subject to retaliatory tariffs. However, since President Trump's announcement to levy 10% Section 301 tariffs on the remaining Chinese imports that were not subject to Section 301 tariffs, China responded in August 2019 by asking its state-owned enterprises to halt purchases of U.S. agricultural goods."], "subsections": []}, {"section_title": "China's Imports of Wheat", "paragraphs": ["In 2016, the United States supplied 26% of China's wheat imports. This share increased to 40% in 2017, but declined to 14% in 2018. Canadian wheat exports have largely replaced U.S. wheat shipments to the Chinese market, with Canada's share of China's wheat imports rising from 27% in 2016 to 54% in 2018. Kazakhstan and Russia also have increased their wheat exports to China in the wake of 25% Chinese retaliatory tariffs on U.S. wheat imports, which have been in effect since July 2018. ", "From January to June 2018, the United States shipped a total of $113 million of wheat to China ( Figure 8 ), compared with $256 million of U.S. wheat shipped during the same period in 2017. After China levied retaliatory tariffs on U.S. wheat in July 2018, U.S. wheat shipments to China were nil for the rest of the year. China imported $208 million of U.S. wheat in 2016 and $390 million of U.S. wheat in 2017. In March 2019, China imported $12 million of U.S. wheat. According to Chinese customs data, there have been no additional U.S. wheat shipments to China as of May 2019."], "subsections": []}, {"section_title": "China's Imports of Sorghum", "paragraphs": ["The United States accounted for nearly 90% of China's total sorghum imports in 2016 and 2017. The value of U.S. shipments of sorghum declined 24%, from close to $1 billion in 2017 to $726 million in 2018. China's monthly imports of U.S. sorghum have been negligible since China implemented retaliatory tariffs on them in July 2018 ( Figure 9 ). U.S. imports started to decline after May 2018, following China's imposition of retaliatory tariffs on some agricultural products in response to U.S. Section 232 tariffs in April 2018. Later, China imposed a 25% retaliatory tariff on U.S. sorghum in July 2018, leading to declines in U.S. sorghum shipments to China. ", "China's imports of U.S. sorghum declined after retaliatory tariffs were imposed, but China continued to import limited quantities from Australia, Myanmar, and Argentina. However, in the absence of Chinese purchases of U.S. sorghum, China's total sorghum imports since October 2018 have been negligible ( Figure 9 ). Therefore, despite the retaliatory tariffs, U.S. market share in 2018 was about 85% of China's total sorghum imports for the year. ", "On July 26, 2019, China reportedly allowed several domestic companies to buy U.S. sorghum without being subject to retaliatory tariffs. However, since President Trump's announcement to levy 10% Section 301 tariffs on remaining Chinese imports that do not yet have any Section 301 tariffs imposed on them, China responded in August 2019 by asking its state-owned enterprises to halt purchases of U.S. agricultural goods. "], "subsections": []}, {"section_title": "China's Imports of Pork and Pork Products", "paragraphs": ["The United States supplied 13% of China's total pork imports in 2016 ($400 million) and 2017 ($286 million). In 2018, U.S. pork shipments to China declined to $130 million and accounted for 6% of China's total pork imports. U.S. pork shipments to China began to decline in April 2018 following China's imposition of 25% retaliatory tariffs on U.S. pork (HS 0203 lines) in response to U.S. Section 232 tariffs on U.S. imports of Chinese steel and aluminum products ( Figure 10 ). In July 2018, these HS lines were subject to an additional 25% retaliatory tariff. This coincided with a further decline in Chinese imports of U.S. pork products from July through December 2018.", "Unlike the case of sorghum, China has continued to import some U.S. pork products, and import volumes generally increased from January through May 2019. Since the summer of 2018, China has suffered from a serious outbreak of African Swine Fever (ASF). Between September 2018 and May 2019, China reported over 2 million culled hogs. In March 2019, USDA reported that despite the retaliatory tariffs, because of ASF, U.S. pork products are entering China and USDA expects China's imports of U.S. pork to climb in 2019 due to the liquidation of some of China's hogs in an effort to control ASF. However, USDA reported that U.S. pork products still face Chinese retaliatory tariffs, which makes U.S. products relatively more expensive compared with pork from other countries. On July 26, 2019, China reportedly approved requests from several domestic companies to buy U.S. pork products without being subject to retaliatory tariffs. However, since President Trump's August 2019 announcement to levy 10% Section 301 tariffs on remaining Chinese imports that do not yet have any Section 301 tariffs levied on them, China responded by asking its state-owned enterprises to halt purchases of U.S. agricultural goods. On August 23, 2019, China imposed additional 10% tariffs on certain U.S. pork products, effective September 1, 2019, in response to new U.S. Section 301 tariffs on U.S. imports from China."], "subsections": []}, {"section_title": "China's Imports of Dairy Products", "paragraphs": ["Since 2016, the United States has been the third-largest supplier of dairy products to China ($1.3 billion in 2018), among over 140 suppliers, behind New Zealand ($4.2 billion) and the Netherlands ($2 billion). China is a growing market for dairy products. Chinese imports of dairy products increased over 50% from $10 billion in 2016 to $15 billion in 2018. Given the diversity of dairy product tariff lines and the varying rates of Chinese retaliatory tariffs levied on them, the trade effects on the aggregate group are not as clear as they are for other individual commodities. Figure 11 presents China's monthly imports of U.S. dairy products, since the large number of suppliers and differences in market shares across the suppliers are difficult to present in a single chart. ", "China imposed retaliatory tariffs on U.S. dairy products in July 2018. Given the diversity of dairy tariff lines, there is no clear trend in China's monthly imports of U.S. dairy products during the second half of 2018 and early 2019 ( Figure 11 ). Instead, annual U.S. dairy shipments to China increased 15% from $1.2 billion in 2017 to $1.3 billion in 2018. However, in China's growing market, imports from competitor countries grew faster from 2017 to 2018, with New Zealand's shipments increasing 15% from $3.7 billion to $4.2 billion; the Netherlands' shipments increasing 35% from $1.5 billion to $2 billion; and Australia's shipments increasing 32% from $1 billion to $1.3 billion. Although U.S. dairy shipments to China do not show any clear trend since January 2018, the retaliatory tariffs are likely contributing to faster market share growths for U.S. competitors in China than for the U.S. dairy sector, particularly since some dairy products are levied additional 5% retaliatory tariffs effective September 1, 2019."], "subsections": []}, {"section_title": "China's Imports of Hides and Skins", "paragraphs": ["The United States is the largest supplier of hides and skins to China, accounting for about 41% of China's total imports from 2016 to 2018. In 2017, shipments of U.S. hides and skins to China amounted to $918 million. After the imposition of retaliatory tariffs in July 2018, Chinese imports of U.S. hides and skins declined, with China's 2018 U.S. hides and skins imports totaling $664\u00c2\u00a0million. ", "Major U.S. competitors in China's hides and skins import market are Australia, Canada and New Zealand ( Figure 12 ). These countries have not been able to fill the gap created by the decline in U.S. shipments of hides and skins to China. Consequently, China's total hides and skins imports fell 25% in 2018, to $1.6 billion from $2.2 billion in 2017. U.S. shipments of hides and skins to China declined 28% during the same period. Notwithstanding the tariffs on U.S.-origin hides and skins, the decline in U.S. shipments largely mirrored the overall decline in China's imports, with the result that the United States continued to supply about 41% of China's total hides and skins imports in 2018, the same share as in the previous two years. U.S. shipments of hides and skins to China may further drop with the additional 10% retaliatory tariff on U.S. imports that became effective September 1, 2019."], "subsections": []}, {"section_title": "Retaliatory Partner Imports of Other Agricultural Products", "paragraphs": ["Analysis conducted by economists from University of California, Davis (UC Davis) found that Chinese retaliatory tariffs decreased U.S. alfalfa exports to China in 2018 compared to the previous two years. From 2016 to 2018, the United States supplied the largest share of China's alfalfa imports, accounting for about 79% of China's total alfalfa import market share in 2016 ($417 million) and 72% ($534 million) in 2018. In January 2018, China purchased U.S. alfalfa valued at $40 million. Following the imposition of retaliatory tariffs, U.S. monthly shipments of alfalfa to China started to decline in the summer of 2018. In November 2018, China's monthly imports of U.S. alfalfa amounted to $16 million and totaled $17 million in December 2018. ", "Another study from UC Davis indicates that U.S. pistachio exports also declined due to retaliatory tariffs from China and Turkey. A third study from UC Davis estimated a combined short-run export loss for 2018 of $2.64 billion for almonds, apples, pistachios, walnuts, pecans, sweet cherries, oranges, table grapes, raisins, and sour cherries in four major import markets (China including Hong Kong, India, Mexico, and Turkey). ", "It stands to reason that Chinese retaliatory tariffs may have also affected U.S. exports of certain other field crops, livestock and animal products, other specialty crops, and processed food products that are not covered in this report."], "subsections": []}]}]}, {"section_title": "Economic Impact of Retaliatory Tariffs", "paragraphs": ["U.S. agriculture, as a whole, is subject to intense competition, in both domestic and international markets. As a result, most commodity sectors operate with thin profit margins, making international sales an important component of revenue. Tariffs, by design, raise the cost of imported products (see Box 3 ). In general, an increase in import prices due to higher tariffs leads to a decrease in quantities purchased of the affected products as importers switch to other foreign suppliers or to alternate products within the domestic market. Thus, the trade impact of such a price increase will depend in large part on the number of available alternate foreign suppliers and the availability of substitutes within the domestic market. Furthermore, a decrease in exports will have an economy-wide effect as the supporting infrastructure\u00e2\u0080\u0094including farms, marketing cooperatives, warehousing and processing facilities, and transportation networks, for example\u00e2\u0080\u0094all lose business and revenues. This loss ripples further through the general economy and can cause decreases in employment and local, state, and federal tax revenues. This section of the report examines the short-term market impacts and selected economic analyses of longer-term impacts of the retaliatory tariffs."], "subsections": [{"section_title": "Short-Run Impacts", "paragraphs": ["In the short run (see Box 5 ), retaliatory tariffs resulted in lower 2018 purchases of U.S. agricultural products by countries implementing these tariffs. The prospects for U.S. agricultural exports to China in 2019 appear to be along the same trajectory. As discussed earlier ( Figure 2 ), U.S. food and agricultural imports by the EU and Turkey during the first quarter of 2019 were below the level of imports during the same period in 2017 and 2018. ", "Similarly, an examination of U.S. monthly exports to China from January to April 2019 demonstrates that the first quarter 2019 agricultural export levels have been below the export levels during the same period in 2017 and 2018 ( Figure 13 ). Generally, fall harvested crops are exported during late fall and early winter months, and export levels decline during the spring.", "Note that no retaliatory tariffs were in effect during 2017 or the first quarter of 2018. China levied the first round of retaliatory tariffs on U.S. imports in April 2018, in response to U.S. Section 232 tariffs. Other retaliating countries followed China's action with retaliatory tariffs in June 2018. Additionally, China expanded the range of affected U.S. imports and increased tariffs in additional rounds of retaliatory actions during the summer and fall of 2018, in response to U.S. Section 301 tariffs. With the continuation of existing retaliatory tariffs on almost all U.S. agricultural HS lines, China's proclamation that its state-owned enterprises will halt purchases of U.S. agricultural goods, and the 5% or 10% additional increase in retaliatory tariffs effective September and December 2019, U.S. exports of agricultural products affected by retaliatory tariffs could potentially continue to lose some market share in China.", "In addition to export losses, U.S. agriculture is facing other challenges in 2019. Abundant domestic and international supplies of grains and oilseeds in 2018 contributed to a fourth straight year of relatively weak agricultural commodity prices compared to previous years. U.S. soybean output and stocks were at record highs during 2018, putting downward pressure on soybean prices. Lower soybean prices contributed to lower corn prices during fall of 2018, as markets speculated that farmers would switch soybean acres to corn in 2019 ( Figure 14 ). ", "On December 1, 2018, the White House released a statement saying that China had agreed to purchase \"substantial amount of agricultural\" goods, among other goods. This statement was followed by press reports at different times stating that China had announced it would buy additional U.S. soybeans. The reported Chinese commitments to purchase U.S. soybeans did not materialize, and soybean prices, which had been on a downward trajectory since early 2018, declined further in early 2019. Soybean farm prices reached a 12-year low point in May 2019 at $8.02 per bushel. This coincided with President Trump's threat to raise Section 301 tariffs, on U.S. imports from China, from 10% to 25% and to impose additional tariffs on all remaining imports from China not currently covered by Sections 301 measures. The tariff increases from 10% to 25% were effective May 10, 2019. The Trump Administration announced its intent to impose additional tariff increases of 10% on all other products currently not covered by Section 301 tariffs. China responded by asking its state-owned enterprises to halt purchases of U.S. agricultural goods, and by levying two additional sets of tariffs: 5% or 10% tariffs on U.S. imports, including 695 different U.S. agricultural tariff lines effective September 1, 2019; and another 5% or 10% tariffs on U.S. imports including 184 different U.S. agricultural tariff lines effective December 15, 2019. ", "In 2018, the U.S. farm sector faced the challenge of declining exports and commodity prices for certain major field crops, in addition to rising operational costs. Various studies predicted that the imposition of U.S. Sector 232 tariffs on steel and aluminum, in tandem with the domestic content provisions of the USMCA, could increase the cost of production for U.S. farmers. A report released by the Association of Equipment Manufacturers states that the Trump Administration's Section 232 and Section 301 tariffs could hurt the U.S. economy by increasing consumer prices, including a 6% increase in the cost of manufacturing agricultural and construction equipment. U.S. agro-chemical manufacturers have also stated that cost increases, resulting from escalating tariffs, \"of pesticide products for crop and turf protection products ultimately will be passed on to American growers and businesses.\" ", "In a sector with relatively thin profit margins, small increases in costs associated with tariffs can sometimes lead to postponed equipment purchases, causing a ripple effect through the farm input sector. In 2019, several agricultural commodity prices remain under pressure from a record soybean and near-record corn harvest in 2018, diminished export prospects due to the ongoing trade dispute with China, and high levels of carryover stocks from the previous year."], "subsections": []}, {"section_title": "Potential Long-Run Implications", "paragraphs": ["A shift in trade patterns can become permanent if trade disruptions lead to new trade alliances or stimulate production in retaliating domestic markets or other competing foreign regions, thus increasing supplies from new sources. An example of such long-term impact of a disruption in trade on U.S. farm exports is the 1980 U.S. embargo on grain exports to the Soviet Union, which resulted in declines in U.S. commodity prices and export sales. A significant effect of the embargo was that the United States lost market share in sales to the Soviet Union. ", "Additionally, during the early 1970s, the United States imposed a partial embargo on the exports of soybeans, cottonseed, and certain other products as an inflation fighting measure. The U.S. soybean export embargo and high prices during this period reportedly prompted greater Japanese investments in Brazil's soybean industry, which has since become the U.S. soybean industry's major export competitor.", "As discussed in the section \" Key Competitors for China's Agricultural Market ,\" major agricultural exporters such as Brazil, Canada, Australia, and the EU have recently increased their farm exports to China. Additionally, countries such as Russia, Ukraine, some Central Asian countries, some Southeast Asian countries, and some African countries are seeking to establish and expand footholds in the Chinese market. For the latter group of countries, a prolonged U.S.-China trade war could facilitate their agricultural development and their share of global exports. ", "Assuming the continuation of retaliatory tariffs on U.S. soybeans, a USDA 10-year projection predicts that China's soybean imports would resume growing, but the volume of future soybean trade would be less than previously projected\u00e2\u0080\u0094122.8 million metric tons of Chinese imports from all origins with retaliatory tariffs in 2027 compared with 143 million metric tons of imports without retaliatory tariffs. With U.S. soybeans taxed by retaliatory tariffs, USDA projects that Brazil would likely account for two-thirds of the growth in global soybean exports to China. In comparison, the United States accounted for 35% of China's total soybean imports in 2017 and 18.5% in 2018, while Brazil accounted for 53% of China's total soybean imports in 2017 and 76% in 2018. For U.S. exporters, lower U.S. prices may stimulate additional demand by a number of countries, but these markets are not likely to absorb the entire volume displaced from China. The USDA report concludes that alternative export markets for U.S. soybeans can only absorb a fraction of the soybeans exported to China before trade tensions began, with imports in these countries growing by less than half of the reduction projected for Chinese soybean imports in 2027.", "China is also investing in agricultural production in U.S. competitor markets and is improving access for products from these countries. Russia has pledged land to Chinese farmers and has made a commitment to increase its exports of agricultural products to China. While these commitments are still speculative, during the last two decades, Russian agriculture has moved toward greater product specialization and strategic investments have been made based on agro-ecological characteristics. As a result, Russian regional agricultural productivity growth has increased between 25% and 75%, with higher productivity growths in parts of southern Russia.", "According to Chinese import data, Russia made inroads into China's food and agricultural market in 2018, with market share increases compared to 2017 of 14% for soybean oil; 4% for wheat; 1% for corn; 0.3% for soybeans; 2% for oilseeds; and some increases in hay market shares, among others. China's imports of food and agricultural products from Russia increased 61% between 2017 and 2018 ( Figure 15 ). China's imports of Russian cereals increased almost 400% during the same period, while oilseed imports grew 78%, fats and oils 72%, cocoa and related products 181%, beer 109%, and animal products 48%. While Russia's agricultural exports to China increased in 2018, the value of its shipments represented less than 1% of China's total agricultural product imports of $127 billion that year. Market watchers expect Russia will need years to become a major agricultural supplier to China.", "Globally, a USDA study reports that over 1,300 Chinese enterprises had overseas investments in agriculture, forestry, and fisheries valued at $26 billion in 2016. The investments include crop and livestock farming, fishing, processing, farm machinery, inputs, seeds, and logistics in over 100 countries. Most of China's foreign agricultural projects involve relatively small companies investing in neighboring countries in Southeast Asia, Russia's Far East, and Africa that have unexploited land and are often receptive to Chinese investment. China's agricultural investment decisions are linked to its \"One Belt, One Road\" initiative. Additionally, Chinese companies seeking sources of dairy, beef, and lamb imports have focused their investments and partnerships with New Zealand and Australia.", "Since 2018, China has taken additional actions to reduce import-export taxes and duties to facilitate agricultural imports from non-U.S. sources, particularly for non-U.S. oilseeds and products ( Box 6 ). Effective April 2019, value added taxes (VAT) on agricultural products were reduced to 9% from the original 11% or 17%. Starting January 1, 2019, reductions in customs duties, including MFN tariffs and temporary duty rates, were implemented for certain imported goods in order to boost imports and meet domestic demand. The temporary duty rates, which are even lower than the MFN tariffs, are in effect on 706 imported commodities, including some agricultural products. With retaliatory tariffs in place, U.S. agricultural exporters are unable to take full advantage of these improved terms of market access."], "subsections": []}, {"section_title": "Estimated Economic Impacts", "paragraphs": ["The following section provides examples of estimated economic impacts associated with retaliatory tariffs imposed on U.S. agricultural products by U.S. trading partners. These impacts are estimated at different scales by different studies, or are derived from market data. The examples are illustrative; they are not meant to be comprehensive."], "subsections": [{"section_title": "Commodity Level", "paragraphs": ["Various studies have estimated potential economic impacts arising from retaliatory tariffs on specific U.S. commodities (see Box 5 for general assumptions regarding these studies). For example, one study of short-term effects predicted U.S. farm prices would decrease in response to China's retaliatory tariffs, the value of U.S. exports to China would decline and U.S. farmers would reduce acreage planted the following year to soybeans, cotton, sorghum, and would reduce pork production, ultimately resulting in revenue declines for U.S. producers.", "A similar short-term impact analysis conducted by the Center for North American studies at Texas A&M University examined the impact on U.S. dairy of a 25% retaliatory tariff levied by Mexico on U.S. cheese imports and a 25% retaliatory tariff imposed by China on imports of U.S. dairy products. The study estimated export losses and pointed out that U.S. dairy exports are supported by a large infrastructure, including dairy farms, marketing cooperatives, and warehousing and processing facilities. Thus, the study concluded that any significant change in exports is likely to ripple through the supporting infrastructure and affect the general economy. In the case of Mexican tariffs on U.S. cheese, which Mexico removed in May 2019, the study estimated that U.S. economy-wide economic losses would be $991 million per year with nearly 5,000 lost jobs. In the case of Chinese tariffs on U.S. dairy imports, the study suggested that the economy-wide losses could total $2.8 billion per year and lead to over 13,000 jobs lost."], "subsections": []}, {"section_title": "State Level", "paragraphs": ["In September 2018, the Center for Agricultural and Rural Development (CARD) at Iowa State University estimated the short-run effects of the 2018 trade disruptions on the Iowa economy. This study incorporated the potential offsetting effects from USDA's trade-aid package. The study focused on the impact of foreign retaliatory tariffs on U.S. corn, soybean, hog, and ethanol markets along with labor and government revenue impacts from changes in these markets. It used a number of different modeling approaches that resulted in the following estimates of annual impact.", "The study estimated that Iowa's soybean industry would lose $159 million to $891 million, with an average revenue loss across all models of $545 million (Iowa soybeans are a $5.2 billion industry). The study estimated that Iowa's corn industry would lose $90 million to $579 million, with an average revenue loss across all models of $333 million (Iowa corn is an $8.5 billion industry). The study estimated that Iowa's pork/hog industry would lose $558 million to $955 million, with an average revenue loss across all models of $776 million (the Iowa pork/hog industry is a $7.1 billion industry). The study estimated that ethanol prices would drop 2%, resulting in approximately $105 million in lost revenues to Iowa ethanol producers (investors in the ethanol industry). The study points out that by mid-August 2018, corn prices retreated nearly 9% and ethanol prices receded by roughly 4%. Over the same period, corn futures for the 2018 crop declined 9% and ethanol futures declined 8%.", "In the longer term (see Box 5 for definition), according to the Iowa State University study, revenue losses in these industries would translate into additional lost labor income across the state. The study estimates that labor income declines from the impacts to the corn, soybean, and hog industries would range from $366 million to $484 million without federal offsets from the trade-aid package, and $245 million to $364 million with federal offsets. Iowa tax revenue losses (personal income and sales taxes) would range from $111 million to $146 million annually. Federal offsets would reduce tax losses to $75 million to $110 million. The study estimates overall losses in Iowa's gross state product of $1 billion to $2 billion annually (out of a total of $190 billion). ", "Similarly, a study commissioned by the Nebraska Farm Bureau on the short-run economic costs in 2018 for the state from the retaliatory tariffs concluded that Nebraska's general economy would incur costs between $164 million and $242 million in lost labor income, along with the loss of 4,100 to 6,000 jobs. In total, together with the direct agriculture-related costs, Nebraska's overall economic loss in 2018 was estimated at $859 million to $1.2 billion. Retaliatory tariffs in 2018 (on corn, soybeans, and hogs from all retaliating countries) were expected to reduce corn prices by $0.14 to $0.21 per bushel, soybean prices by $0.95 to $1.54 per bushel, and hog prices by $17.81 to $18.80 per head. These estimated price declines would translate into farm revenue losses for each commodity of corn ($257 million to $327 million); soybeans ($384 million to $531 million); and pork ($111 million). ", "The Nebraska Farm Bureau updated its analysis in 2019 and concluded that the ongoing retaliatory tariffs imposed by countries on U.S. agricultural exports would cost Nebraska producers $943 million in lost revenues in 2019. The methodology used for the analysis borrowed USDA's estimates of gross damages that were used in calculating USDA's trade-aid payments. The estimated loss calculation did not take into consideration trade-aid payments that Nebraska farmers may receive in 2019.", "Economists from University of California, Davis, found the short-run effects of the retaliatory tariffs on the 2018 crop for 10 selected specialty crops in four export markets\u00e2\u0080\u0094China, Mexico, Turkey, and India\u00e2\u0080\u0094to be $2.64 billion of lost export value and $3.34 billion of combined U.S. revenue losses. The crops considered are almonds, pecans, pistachios, walnuts, apples, oranges, raisins, sour cherries, sweet cherries, and table grapes. Mexico had retaliatory tariffs on apples and prepared fruit in 2018, but removed them in May 2019. India had identified apples, almonds, and walnuts for retaliatory tariffs in 2018 but did not implement these until June 2019."], "subsections": []}, {"section_title": "National-Level Effects of Retaliatory Tariffs", "paragraphs": ["Two studies conducted by researchers at Purdue University, using the Global Trade Analysis Project (GTAP) model (see Box 7 ), examined the potential long-run impacts of retaliatory tariffs on U.S. agriculture and the U.S. economy at the national level. As discussed in the box \"Key Economic Terms,\" the long-run effects are estimated assuming that the shock to the market, such as tariff increases, remains in place for a few years and sufficient time has passed to provide producers the opportunity to make changes in response to this shock. The studies discussed below assume that the retaliatory tariffs remain in place for three to five years.", "The first study estimated the long-run effects (defined in Box 7 as 3-5 years) of a 25% tariff imposed by China on soybeans and other selected U.S. agricultural products\u00e2\u0080\u0094wheat, corn, sorghum, rice, rapeseed, and beef. This study concluded that U.S. soybean market losses in China would, over the years, benefit Brazil. Given the U.S. soybean industry's large share of China's import market prior to the retaliatory tariffs, the study estimated large price declines and export losses for U.S. soybeans. Other commodities in the study appeared less dependent on the Chinese market, and the estimated losses are relatively smaller. The study predicted that overall economic welfare (see Box 8 ) for both the United States and China would decline, while economic welfare for Brazil would increase.", "The second study examined a scenario in which the USMCA would be implemented but the retaliatory tariffs related to Section 232 steel and aluminum tariffs would also exist. The study looked at two separate cases for retaliatory tariffs: (1) retaliatory tariffs were considered only for Mexico and Canada; and (2) retaliatory tariffs from all countries were considered. ", "This study estimated, in 2014 dollars, a net increase in annual U.S. agricultural exports of $450 million under USMCA, which is equal to about 1% of U.S. agricultural exports under NAFTA\u00e2\u0080\u0094$41 billion in 2014. It projected the export losses from the retaliatory tariffs imposed by Canada and Mexico to be $1.8 billion per year (in 2014 dollars), which would more than offset the projected export gain of $450 million from USMCA. When retaliatory tariffs from all countries were considered, export losses were estimated at around $8 billion. Note that both Canada and Mexico have removed their retaliatory tariffs since May 2019. ", "A study conducted by economists at Iowa State University examines the national-level effects of retaliatory tariffs imposed on U.S. pork, soybeans, corn, and wheat by China and Mexico during 2018. Note that Mexico removed the retaliatory tariffs in May 2019. The study simulates multiyear projections over a period of nine years. The study indicates that if the retaliatory tariffs were to continue, U.S. annual exports would decline by 30% for pork and corn, 15% for soybeans, and 1.5% for wheat compared with a baseline scenario that considers the average of the past three-year period. The study estimated that in the short run (which the paper defines as first three years with retaliatory tariffs), trade losses would translate to 26,000 job reductions on average annually in the United States and a decline in labor income of $1.5 billion due to a $5.3 billion reduction in national annual output. In the long run (defined by the paper as year seven through year nine with retaliatory tariffs), the annual impacts were estimated to grow to nearly 60,000 fewer jobs, $3.1 billion less labor income, and a loss of almost $12 billion in national output."], "subsections": []}, {"section_title": "Global-Level Effects", "paragraphs": ["The United Nations Conference on Trade and Development (UNCTAD) performed a global analysis of the U.S. Section 232 and Section 301 tariffs and the resulting retaliatory tariffs, including retaliatory tariffs on U.S. agricultural products. The analysis mainly focused on U.S.-China tariff escalation. Regarding agriculture, the study points out that China accounts for more than half of the global imports of soybeans and that the United States is the world's largest soybean producer. The study states that the Chinese tariffs on U.S. soybeans have substantially disrupted world trade of this commodity and observes that increased Chinese demand has resulted in higher prices for Brazilian soybeans. It cautions that while higher price premiums could be beneficial in the short run to Brazilian producers, they may hamper Brazilian procurers' long-run competitiveness. In a situation where the size and amount of the tariffs and their duration are unclear, Brazilian producers may be reluctant to make investment decisions that may turn unprofitable if tariffs are removed. Moreover, Brazilian firms using soybeans as inputs (e.g., feed for livestock) may lose competitiveness because of higher input prices.", "A USDA study released in 2019 found that the United States and Brazil are among the lowest-cost producers of soybeans. While land rental costs and labor costs are higher in the United States, poor soils and tropical ecology require Brazil to use higher levels of agrochemicals. Moreover, the United States has a transportation advantage over Brazil in exporting agricultural products to China. Specifically, the study concluded that transporting soybeans by truck from northern Mato Grosso to Brazil's primary soybean export port of Paranagu\u00c3\u00a1 cost $93 per metric ton (MT) in 2017. During the same period, transporting soybeans from Davenport, Iowa, to the Gulf of Mexico by truck, rail, and barge cost $65 per MT. Shipping soybeans by truck and rail from Sioux Falls, South Dakota, to the U.S. Pacific Northwest cost $68 per MT. The United States, therefore, has lower transportation costs and greater production efficiency (requiring less agrochemicals) compared with Brazil in producing and shipping agricultural products to Asian markets. According to the study, the current trade dispute and retaliatory tariffs may, in the long run, lead to inefficient allocation of resources and exploitation of less-productive lands than those in the United States."], "subsections": []}, {"section_title": "Some Possible Benefits to U.S. Agriculture", "paragraphs": ["Based on economic principles, if the price of an input such as soybeans or feed corn declines, the livestock sector would be expected to benefit. USDA's Economic Research Service's production expenses report states that the cost of livestock feed declined 1% between 2017 and 2018; however, it is expected to increase 4.5% in 2019. Additionally, the U.S. livestock sector is also facing retaliatory tariffs. Similarly, many processed food products that use raw agricultural products as inputs face Chinese retaliatory tariffs. ", "Some sectors may nevertheless benefit from retaliatory tariffs. For example, the Coalition for a Prosperous America (CPA) released a study stating that a permanent across-the-board 25% tariff on all imports from China would stimulate GDP growth and jobs in the U.S. economy. The study uses data from Boston Consulting Group that are not publicly available, and the publicly available working paper does not describe the Regional Economic Models, Inc. (REMI model) or the assumptions underlying the model. Regarding agriculture, the study states that when the USDA trade-aid programs are incorporated \"into the model, the additional government spending fully offsets the negative impact of the Chinese retaliation on US GDP.\"", "In addition to the CPA study, there have been anecdotal reports in the media that organic and small-holder farmers are benefiting from China's retaliatory tariffs."], "subsections": []}]}]}, {"section_title": "U.S. Stakeholder Views on Retaliatory Tariffs", "paragraphs": ["In May 2019, American Farm Bureau Federation President Zippy Duvall stated that, \"Retaliatory tariffs are a drag on American farmers and ranchers at a time when they are suffering more economic difficulty than many can remember,\" and urged negotiators to continue their work toward reopening markets with the European Union, China, and Japan. The president of the National Farmers Union (NFU) echoed the same sentiment, stating that the retaliatory tariffs \"could not come at a worse time for family farmers and ranchers, who are already coping with depressed commodity prices, environmental disasters, and chronic oversupply.\" The NFU president further stated that although temporary relief is appreciated, \"temporary solutions are not sufficient to address the permanent damage the trade war has inflicted on agricultural export markets.\"", "Various U.S. agricultural commodity groups have voiced similar concerns. For example, the American Soybean Association expressed \"extreme disappointment\" over USTR's escalating tariffs on China that led to retaliatory tariffs on soybeans. The National Pork Producers Council (NPPC) stated that the retaliatory tariffs are \"threatening the livelihoods of thousands of U.S. pig farmers.\" Due to African Swine Fever (ASF), China normally would have turned to the United States to meet its pork demand. With retaliatory tariffs in place, U.S. pork is more expensive than products from other sources in the Chinese market. NPPC Vice President Nick Giordano stated that from a U.S. farmer's perspective, China's increased demand for imported pork resulting from ASF in Chinese hogs would have been \"the single greatest sales opportunity in our industry's history.\" According to a report in the South China Morning Post , Iowa State University economist Dermot Hayes estimates that the trade dispute with China has cost American pig farmers $8 per animal, or $1 billion in total losses. The U.S. Dairy Export Council, in turn, stated in 2018 that the retaliatory tariffs that China and Mexico imposed could result in billions of dollars of lost sales for U.S. dairy producers. ", "A study released by the Association of Equipment Manufacturers states that tariffs on steel and aluminum have increased cost of agricultural production due to rising prices of farm equipment and their parts. In a comment filed with USTR, CropLife America and a specialty chemical trade group, Responsible Industry for a Sound Environment (RISE), state that cost increases, resulting from escalating tariffs, \"of pesticide products for crop and turf protection products ultimately will be passed on to American growers and businesses.\" ", "Dozens of stakeholder panels provided testimony to the USTR during hearings in June 2019 regarding a proposed notice to begin imposing additional tariffs of 25% to virtually all remaining imports from China. Hundreds of U.S. companies and industry groups, including some of the largest companies argued that, \"both sides will lose\" in a protracted trade war. \"Tariffs are taxes paid directly by U.S. companies, including those listed below\u00e2\u0080\u0094not China,\" stated a letter signed by more than 600 companies, including the Association of Equipment Manufacturers, American Bakers Association, Grocery Manufacturers Association, Juice Products Association, Distilled Spirits Council of the United States, and many other food retailers and associations related to the food industry.", "On June 21, 2019, hundreds of domestic producers and four manufacturing and labor groups sent a letter to President Trump urging him to maintain his hardline approach to China. The letter was signed by the Coalition for a Prosperous America, which includes mainly nonagricultural manufacturing companies and some food- and agriculture-related small companies like the Platt Cattle Company of Arizona and Johanna Foods of New Jersey.", "To help alleviate the losses from the retaliatory tariffs, USDA announced a second round of trade aid in 2019. Most industry groups welcomed this package but indicated their preference for trade rather than aid. American Farm Bureau Federation President Zippy Duvall stated, \"It is critically important to restore agricultural markets and mutually beneficial relationships with our trading partners around the world.\" Similar sentiments were expressed by a number of other major agricultural trade associations, such as the National Council of Farmer Cooperatives, the American Soybean Association, the National Cotton Council, the National Milk Producers Federation, and the National Pork Producers Council. For its part, the National Association of Wheat Growers stated that the trade-aid package \"is a Band-Aid when we really need a long-term fix.\""], "subsections": []}, {"section_title": "Issues for Congress", "paragraphs": ["In May 2019, President Trump proposed levying additional tariff increases on imports from China, but they were held in abeyance following a meeting between President Trump and Chinese President Xi Jinping at the G-20 summit in June 2019. However, President Trump stated on August 2019 that he would impose a tariff hike increase on all other Chinese products currently not covered by Section 301 tariffs. China responded by asking its state-owned enterprises to halt purchases of U.S. agricultural goods. On August 13, 2019, USTR released the remaining list of Chinese products that would be levied a 10% Section 301 tariff effective September 1, 2019, and another list of products that would be levied 10% Section 301 tariffs effective December 15, 2019. China in turn has retaliated by levying additional two sets of tariffs: 5% or 10% tariffs on U.S. imports, including 695 different U.S. agricultural tariff lines effective September 1, 2019; and another 5% or 10% tariffs on U.S. imports including 184 different U.S. agricultural tariff lines effective December 15, 2019.", "Given the length of the trade dispute over Section 232 and Section 301 actions and the expanding list of U.S. exports affected by the retaliatory tariffs, the list of affected sectors is also expanding. A June 2019 USTR hearing for Section 301 tariffs included a diversity of witnesses across 55 panels over a seven-day period. As such, an issue for congressional consideration may be whether compensation for the losses arising from the various trade disputes should extend beyond those producers of agricultural commodities identified in the Administration's trade-aid initiative. USDA, using its authority under the CCC, is administering this assistance. Retaliatory tariffs have arguably affected businesses beyond the farm gate, including agricultural exporters, input suppliers, agricultural shippers, and others, potentially raising the question of whether these industries merit government compensation for tariff-related losses. ", "Separately, some agricultural stakeholders have questioned the equity of the distribution of the 2018 trade aid payments. Once the formula became public, several commodity groups questioned the rationale for determining payments based on \"trade damage\" rather than the broader \"market loss\" measure. Similar questions have emerged about the 2019 trade-aid package. These questions concern the methodology used to calculate the payment rates, commodity coverage of the direct payments, and the equity of payments across regions and commodity sectors.", "The provision of trade aid has also raised questions regarding U.S. commitments under the WTO and other international agreements. Several WTO members, including the EU, Canada, Australia, New Zealand, India, and Ukraine, have asked for more details regarding USDA's trade-aid package to ascertain whether it could be considered market-distorting under U.S. WTO commitments.", "Given the growth of investments directed to increase agricultural productivity in many countries including Russia, and the recent gains that Russia, Brazil, and other countries have made in China's import market for agricultural products, it may be of interest to Congress to consider whether current policies are sufficient for U.S. agriculture to continue to expand its overseas markets.", "As other countries expand their agricultural production to meet China's import demand, studies by environmental groups caution that this agricultural expansion may occur at the expense of tropical forest and fragile habitats that are essential to maintain global biodiversity. The United States is one of the most efficient and lowest-cost producers of food and agricultural products. Congress may want to consider whether the current trade dispute could have long-term environmental costs as less productive or more environmentally vulnerable areas are cultivated for agricultural production in lieu of more efficient and less environmentally sensitive U.S. production."], "subsections": [{"section_title": "Appendix.", "paragraphs": [], "subsections": []}]}]}}
{"id": "R45911", "title": "Household Debt Among Older Americans, 1989-2016", "released_date": "2019-09-11T00:00:00", "summary": ["In the past three decades, debt has grown substantially among older Americans. The increase in debt among older Americans has raised concerns about financial security for people near or during retirement, not only because Americans aged 65 and older represent a large and growing proportion of the U.S. population, but also because increases in household debt might require retirees to devote a larger share of their fixed income from Social Security, pensions, or government subsidies toward paying debt. Older people also tend to have limited ability to adjust their labor supply to offset higher monthly debt obligations. Excessive debt payments may put more seniors, especially those living on limited incomes, at greater risk of financial insecurity.", "According to the Survey of Consumer Finances (SCF), the percentage of elderly households (i.e., those headed by individuals aged 65 and older) who held any debt increased from 37.8% in 1989 to 61.1% in 2016. During the same time, the median debt among elderly households with debt increased from $7,463 to $31,050 (in 2016 dollars), and the real average debt increased from $29,918 to $86,797 (in 2016 dollars). The median debt lies at the middle of the debt distribution, and the average debt is generally higher than the median debt because a relatively small percentage of people have very high debt.", "Between 1989 and 2016, growth in average household debt among elderly households with any debt largely resulted from mortgages, including growth in average debt secured by a residence (from $12,970 to $57,943 in 2016 dollars) and average debt for other residential properties (from $2,970 to $11,446 in 2016 dollars). Some researchers speculate that much of the growth in debt among elderly households through 2007 might have resulted from the increased availability of mortgage credit, whereas others argue that tightening underwriting standards on mortgage debt in the wake of the financial crisis have slowed mortgage originations among young borrowers, which consequently resulted in a shift of new mortgage originations toward older borrowers. Residential loans are usually considered to be long-term wealth builders, as the residence's market value may increase over time, and some researchers find that they are much less stressful to older people than other debt, such as credit card debt. However, some others also argue that households headed by individuals aged 65 and older held historically high levels of housing debt in 2016, which might expose them to greater vulnerability to housing market shocks than elderly households in previous cohorts.", "The change in debt among elderly households from 1989 to 2016 varied by age groups and asset levels. For example, the largest growth in the share of elderly households who have any debt was for those headed by individuals aged 75 and older. In terms of asset levels, households in the middle of the total asset distribution had the largest growth in the holding of any debt.", "Much of the change in debt among elderly households on average was well balanced by their assets. To measure the extent to which a household is burdened by debt, researchers and policymakers usually refer to the debt payments-to-income ratio and the total debt-to-asset ratio. Among elderly households with debt, the debt payment-to-income ratio increased from 8.7% in 1989 to 12.4% in 2016, and the debt-to-asset ratio increased from 5.1% to 9.0% during the same time. Both ratios peaked in 2010, the year after the recent economic recession, and then decreased from 2010 to 2016. The debt burden increased more rapidly for certain types of elderly households between 1989 and 2016. The debt-to-asset ratio among households headed by individuals aged 80 and older increased by 5 percentage points during this time. Likewise, the ratio among elderly households in the middle of the total asset distribution increased by more than 10 percentage points during the same time."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["Household debt among older Americans\u00e2\u0080\u0094including mainly residential debt, auto loans, student loans, and credit cards\u00e2\u0080\u0094has grown substantially from 1989 to 2016. The proportion of households headed by individuals aged 65 and older (hereinafter referred to as elderly households ) who held any debt increased from 37.8% to 61.1%, and the real median household debt among elderly households with debt increased from $7,463 to $31,050 (in 2016 dollars). ", "The increase in debt among older Americans has raised concerns about financial security for people near or during retirement for several reasons. First, Americans aged 65 and older represent a large and growing proportion of the U.S. population. Over the next 20 years, the share of the U.S. population aged 65 and older is expected to increase from about 17% to 22%. The increase in debt, together with the aging population, suggests that a large group of older Americans are not retiring debt free. Second, many older Americans, especially low-income people, rely on Social Security or other government-sponsored income transfers as their major sources of income. Increases in household debt might require retirees to devote a larger share of their fixed income and savings toward paying debt. Excessive debt payments may put more seniors, especially those living on limited incomes, at greater risk of financial insecurity. Third, researchers have shown that higher levels of debt may increase psychological stress and decrease physical health. These effects may be exacerbated for older people, as they usually have fixed income and limited ability to offset higher monthly debt obligations by working more. ", "This report presents evidence of the increase in debt from 1989 to 2016 among households headed by those aged 65 and older, using Survey of Consumer Finances (SCF) data. The discussion focuses on changes in the percentage of households holding debt; in median and average household debts; in selected types of debt; and in relative measures, such as the debt payments-to-income ratio and the total debt-to-asset ratio. This report also analyzes how household debt among older Americans varies across different age groups and asset distributions, and it explores various groups of elderly households with the largest debt burdens. Major types of debt discussed in this report mainly include residential debt, auto loans, student loans, and credit card balances. Nonloan debt\u00e2\u0080\u0094such as medical debt, past-due utility and other bills, and government-assessed fines and fees\u00e2\u0080\u0094is not covered in this report, because the population with those debts tends to be underrepresented in the SCF. "], "subsections": []}, {"section_title": "Household Debt by Age", "paragraphs": ["Traditional life-cycle theories predict that people tend to borrow in young adulthood when incomes are low but some costs such as education and housing are high, continue to borrow but at a slower pace during middle age as income and expenses converge, and then slowly deleverage through old age as they pay down debt. The SCF data show that Americans' debt experiences have generally conformed to life-cycle theories' predictions. During 1989 to 2016, the share of households who held any debt and the median and average level of household debts were highest among those headed by Americans aged 35 to 54 and lower among younger and older ages.", "In the past three decades, debt among households headed by individuals aged 65 and older grew faster than that among households headed by those aged 64 and younger. In 2016, average household debt increased from $59,134 in 1989 to $110,204 (in 2016 dollars) for households whose head was between the ages of 20 and 64, an increase of 86%, whereas the average household debt grew from $11,278 to $53,269 (in 2016 dollars) for households headed by those aged 65 and older, an increase of 3 72%. The average household debt nearly doubled for households in age groups younger than age 60, but it increased by about 4 times for the age groups 60-64, 65-69, and 70-74; by about 7 times for the age group 75-79; and by more than 10 times for the age group 80 and older (see Figure 1 ). "], "subsections": []}, {"section_title": "Trends in Household Debt Among Older Americans", "paragraphs": ["From 1989 to 2016, debt increased among households whose head was aged 65 and older. Both the share of elderly households with any debt and the median and average levels of debt have increased. Household debt includes mortgages, auto loans, student loans, and credit cards, as well as other debt products. "], "subsections": [{"section_title": "Share of Elderly Households Holding Debt and Median and Average Debt", "paragraphs": ["From 1989 to 2016, the share of households headed by individuals aged 65 and older who held debt increased, as did median and average household debt among elderly households with debt (see Figure 2 ). In 1989, about 37.8% of elderly households held debt, whereas in 2016 the share increased to 61.1%. The median debt of those elderly households with debt increased from $7,463 to $31,050 (in 2016 dollars) during the same time, and the real average debt increased from $29,918 to $86,797. The median debt lies at the middle of the debt distribution, and the average debt is generally higher than the median debt because a relatively small percentage of people have very high debt.", "The share of elderly households holding any debt has generally trended upward from 1989 to 2016. However, median and average debt peaked in 2010, the year after the 2007-2009 economic recession, and declined from 2010 to 2016. In 2016, the median amount of debt was about the same as in 2007, before the economic recession, and the average amount of debt was at about the midpoint of the averages in 2004 and 2007. ", "The financial crisis might have had a profound effect on the older population for several reasons. First, older people are likely to have been affected by employment instability. Research suggests that when the elderly lose jobs, it takes them significantly longer to find new ones, and their new jobs, if any, typically pay less than their previous jobs. Second, defined contribution (DC) retirement plans have replaced defined benefit (DB) plans, and they have become an important source of income for older Americans. Unlike DB plans, which provide a steady stream of income during retirement, DC plans fluctuate in value with the financial market, and their value depends in part on employees' investment skills. Employees generally bear the risk in DC plans. A recent study indicates that individuals' retirement account mismanagement and the large drop in the stock market during the financial crisis reduced potential retirement income for many older Americans during the past decade. "], "subsections": []}, {"section_title": "Components of Debt", "paragraphs": ["The growth in average household debt between 1989 and 2016 largely came from mortgages (see Figure 3 ), including both debt secured by a primary residence (from $12,970 to $57,943 in 2016 dollars) and debt for other residential properties (from $2,970 to $11,446 in 2016 dollars). In addition, the increase in auto loans (from $2,437 to $5,262) may explain part of the growth in household debt among elderly households. In 2016, primary residential mortgages accounted for 66.8% of overall elderly household debt on average, other residential debt for 13.2%, auto loans for 6.1%, student loans for 1.5%, credit card balances for 3.5%, and other debts for 8.9%. ", "Residential loans are usually considered long-term wealth builders, as the residence's market value may increase over time, which is generally not true for auto loans or credit card debt. Researchers have found that both residential and nonresidential debt may contribute to debt-related stress for older households, but residential debt is much less stressful than other debt, such as credit card debt. "], "subsections": [{"section_title": "Selected Components of Debt", "paragraphs": ["The share of elderly households who held certain selected types of debt, such as debt on a primary and other residences, auto loans, student loans, and credit card balances, increased from 1989 to 2016. The median amounts of those types of debt have also increased among elderly households with those debts. "], "subsections": [{"section_title": "Debt Secured by Residential Properties19", "paragraphs": ["The share of elderly households who held debt secured by a primary residence increased from 15.4% in 1989 to 33.4% in 2016 (see Table 1 ). During the same time, the median primary residential debt among those households with residential debt increased from $16,793 to $72,000 in real 2016 dollars (see Table 2 ). Studies suggest that much of the growth through 2007 might have resulted from the increased availability of mortgage credit during the build-up to the financial crisis. Some research indicates that millions of older Americans are carrying more mortgage debt than ever before, and recent cohorts have taken on more mortgage debt mostly because they purchased more expensive homes with smaller down payments. Since 2010, some scholars argue that tightening mortgage underwriting standards have made it more difficult for young borrowers to qualify for mortgages. Consequently, this trend has resulted in a shift of new mortgage originations toward older borrowers and an increase in the ages of borrowers with existing debt.", "A small proportion of elderly households held debt secured by other residential properties, such as a second house or a vacation property. The share of elderly households who held other residential debt slightly increased from 2.7% to 4.4% between 1989 and 2016, and the median debt on other residences increased from $23,323 to $98,000. Those types of debt were primarily concentrated among relatively higher-income elderly households."], "subsections": []}, {"section_title": "Auto Loans", "paragraphs": ["Auto loans also increased among households headed by individuals aged 65 and older from 1989 to 2016. The share of elderly households who held any auto loan increased from 10.3% to 21.2%, and the median auto loan grew from $7,463 to $11,000 (in 2016 dollars) for those households with auto debt. Rising auto loan debt among elderly households may have partly resulted from rising vehicle costs and longer auto loan maturities. "], "subsections": []}, {"section_title": "Student Loans", "paragraphs": ["A small share of elderly households held student loans, but the proportion increased over time. About 0.5% of elderly households held some student loans in 1989, and this share increased to 2.4% in 2016. Among those elderly households who held student loans, the median amount in 2016 dollars was $7,463 in 1989, which increased to $12,000 in 2016. Although the number of student loan borrowers aged 65 and older is much smaller than the younger population, elderly borrowers are more likely to default than their nonelderly counterparts. Student loan debt can be especially problematic for older Americans because, in the event of default on federal student loans, a portion of the borrower's Social Security benefits can be claimed to pay off the loans. The number of individuals aged 65 and older whose Social Security benefits were offset to pay student loans increased from about 6,000 in FY2002 to 38,000 in FY2015. Most of these federal student loans were incurred primarily for older Americans' own education rather than for their dependents' education."], "subsections": []}, {"section_title": "Credit Card Balances", "paragraphs": ["Credit card balances among elderly households increased from 1989 to 2016, and they were the most common type of debt for elderly households in 2016. From 1989 to 2016, the share of elderly households who held some credit card debt increased from 10.0% to 35.1%, and the median credit card balance increased from $952 to $2,400 (in 2016 dollars) among those with credit card debt. Studies suggest that credit card and other noncollateralized debt tends to carry higher interest rates than other types of credit, so with rising credit card debt, older Americans may need to dedicate more of their income to servicing their debt. Credit card debt is a leading reason for bankruptcy filings among older consumers. One study shows that elderly debtors in bankruptcy carried 50% more credit card debt than younger debtors, and the elderly cited credit card interest and fees as the main reason for filing bankruptcy. "], "subsections": []}]}]}, {"section_title": "Relative Measures Related to Debt", "paragraphs": ["Measures of outstanding household debt say little about how much of a burden the debt is or how much risk it poses to the population's financial health. The debt payment-to-income ratio and the debt-to-asset ratio are relative measures commonly used to address the degree of debt burden on households. "], "subsections": [{"section_title": "The Debt Payment-to-Income Ratio", "paragraphs": ["One measure of debt burden is calculated by comparing required debt payments to the income available to make those payments\u00e2\u0080\u0094the debt payment-to-income ratio. The ratio can measure the effects of interest rate changes and loan sizes on a household's liquidity. The debt payment-to-income ratio among elderly households who had some debt increased from 8.7% in 1989 to 16.7% in 2010, and then it declined to 12.4% in 2016 (see Figure 4 ). This ratio among elderly households was much lower than that for nonelderly households in 1989 (8.7% for elderly households compared with 16.1% for nonelderly households), but the difference in the ratio between elderly households and nonelderly households decreased over time. In 2016, the debt payment-to-income ratio for nonelderly households was 13.8%, compared with 12.4% for elderly households. ", "Delinquency on loan payments (e.g., the percentage of debtors with debt payment past due 60 days or more) can also suggest trouble meeting debt obligations. About 3.9% of households headed by individuals aged 65 and older with any debt had some payments past due 60 days or more in 2016 (see Figure 4 ). The share fluctuated between 1% and 5% from 1989 to 2016, and it did not show an increasing trend over time for older Americans. The share is generally higher for young households (around 10% for households headed by those aged between 18 and 34) and decreases as the head of household ages. These data suggest that although the debt payment-to-income ratio for elderly households is rising, this pattern might not indicate trouble meeting debt obligations."], "subsections": []}, {"section_title": "The Debt-to-Asset Ratio", "paragraphs": ["Another measure of debt burden is the debt-to-asset ratio. In addition to income, households can use assets to guard against financial risks. In general, the more assets a household has, the less likely it is to default on its debt. ", "As predicted by the life-cycle model, the debt-to-asset ratio is generally lower for elderly households than for nonelderly households, but from 1989 to 2016, the ratio grew more quickly for elderly households than for nonelderly households. According to the SCF, the debt-to-asset ratio increased from 5.1% in 1989 to 9.0% in 2016 for elderly households with debt (see Figure 5 ), whereas the ratio remained relatively stable for nonelderly households, at around 20%, during the same time. Among all debt types, the residential debt-to-asset ratio, which increased from 2.7% in 1989 to 7.4% in 2016, contributed to a large proportion of the growth in the debt-to-asset ratio for elderly households. The debt-to-asset ratio reached 11.7% in 2010, including a residential debt-to-asset ratio of 10.0%, which might have resulted from the increased availability of mortgage credit through 2007. In addition to the rise in the debt-to-asset ratio, the proportion of elderly households whose debt-to-asset ratio was greater than 50% increased from 7.4% in 1989 to 11.2% in 2016. "], "subsections": []}]}, {"section_title": "Bankruptcy Among Older Americans", "paragraphs": ["In addition to the increase in the debt-to-asset ratio, researchers have found a rise in the percentage of older Americans filing for relief under the bankruptcy code. Individuals may file for bankruptcy when they cannot meet their debt obligations. Scholars find that the proportion of bankruptcy filers aged 65 and older increased from 2.1% in 1991 to 12.2% in 2013-2016 (approximately 97,600 households), and the elderly cohort is the fastest-growing age demographic even after adjusting for the aging of the population. Those studies also suggest that although both younger (under age 65) and older (age 65 and older) bankruptcy debtors are financially struggling, older filers overall are in worse financial shape than younger filers in terms of secured and unsecured debt, income, assets, and the debt-to-income ratio. ", "Bankruptcy can be even more problematic for older debtors than younger debtors because it is generally harder for them to accumulate assets postbankruptcy. For example, compared with younger debtors, elderly debtors are less likely to find well-paying jobs because of perceptions of decreasing productivity and are less likely to build retirement savings because they have less time to accumulate wealth. Scholars argue that if the debtors filed bankruptcy as a result of chronic illness, bankruptcy does not improve their health or access to affordable healthcare or prescriptions. For this and other reasons, research suggests that older bankruptcy filers are significantly more likely to continue to struggle financially than younger filers. "], "subsections": []}]}, {"section_title": "Increased Debt Among Elderly Households by Age Groups", "paragraphs": ["Although household debt rose over the past three decades for elderly households overall and on average, the oldest Americans experienced the largest increase in debt. Among all elderly households, those headed by people aged 80 and older saw the fastest growth in the share of households with any debt, the median household debt, and the debt-to-asset ratio."], "subsections": [{"section_title": "Share of Elderly Households Holding Debt and Median Debt", "paragraphs": [" Figure 6 displays the share of elderly households who held any debt among four age groups from 1989 to 2016. In general, the proportion of elderly households with any debt declined with age for most survey years. For example, in 2016, about 70% of households headed by individuals aged 65-74 held debt, but the proportion was 61% for households in the 75-79 age group and 42% for those in the age group 80 and older. Over time, the proportion of elderly households with any debt increased for all age groups. In 2016, the share of households headed by those aged 65-69 with debt increased from 54.0% in 1989 to 69.8%, from 44.6% to 70.7% for the age group 70-74, from 27.6% to 60.7% for the age group 75-79, and from 12.5% to 41.5% for the age group 80 and older. Among all age groups, the largest growth was for the oldest age groups, aged 75-79 and aged 80 and older.", " Figure 7 shows median household debt among elderly households who had some debt by age groups from 1989 to 2016. Median household debt generally increased over time for each age group and peaked around the financial crisis. For households headed by those aged 80 and older, real median debt (in 2016 dollars) was $933 in 1989 and increased to $20,000 in 2016, almost 20 times greater. "], "subsections": []}, {"section_title": "Average Debt and Components of Debt", "paragraphs": ["On average, elderly households in all age groups hold more debt today than did similar households three decades ago in real dollars (see Table 3 ). Among all types of debt, primary residential debt experienced the largest growth, increasing by between 315% and 536% within the four elderly age groups. Following primary residential debt, elderly households experienced growth in other residential debt, auto loans, credit card balances, and student loans. Elderly households held almost no student loans in 1989, but the average amount in 2016 increased to more than $2,000 for households headed by those aged 65 to 69 and more than $1,000 for households headed by those aged 70 to 79. "], "subsections": []}, {"section_title": "The Debt-to-Asset Ratio", "paragraphs": ["The debt-to-asset ratio increased for all age groups among elderly households from 1989 to 2016, and the ratio increased the most among households headed by people aged 80 and older (see Figure 8 ). The debt-to-asset ratio among elderly households with any debt increased from 4.0% to 9.9% for households headed by those aged 65 to 69, from 7.1% to 9.8% for the age group 70-74, from 5.3% to 8.2% for the age group 75-79, and from 2.4% to 7.2% for the age group 80 and older. Residential debt explains the majority of the growth in total debt for every elderly household age group. "], "subsections": []}]}, {"section_title": "Increased Debt Among Elderly Households by Quintile of Total Assets", "paragraphs": ["This section discusses changes in debt from 1989 to 2016 for elderly households with different asset levels. It is important to analyze changes in debt across the household asset distribution for several reasons. First, a small group of wealthy households hold high levels of assets and debt; thus, average measures may not accurately reflect less wealthy households' financial situations. Second, elderly households are more likely than their nonelderly counterparts to draw down existing assets, such as withdrawing from retirement savings accounts and other investment accounts. Asset measurement may provide an important view of an elderly household's ability to afford debt obligations. ", "The change in household debt among elderly households from 1989 to 2016 varies widely across the household asset distribution. During this time period, elderly households in the middle of the asset distribution had a relatively larger growth in the probability of holding any debt, and those in the middle and the top of the asset distribution had the largest growth in median and average household debt. Elderly households in the bottom of the asset distribution usually held the least debt, but had the largest debt burden as reflected in the debt-to-asset ratio, whereas elderly households in the top of the asset distribution held the most debt, but had the smallest debt-to-asset ratio. "], "subsections": [{"section_title": "Share of Elderly Households Holding Debt and Median Debt", "paragraphs": [" Table 4 presents data on household debt by quintile of the total asset distribution among the elderly household population. Each quintile represents 20% of the elderly household population. The first quintile depicts the 20% of the elderly household population with the least assets, and the fifth quintile depicts the 20% of elderly households with the most assets. ", "The share of elderly households that held some debt generally increased from 1989 to 2016 for all asset quintiles. Elderly households in the first asset quintile were generally least likely to hold debt, and the share of those households who held any debt increased from 36.2% to 49.5%. Elderly households in the second, third, and fourth quintiles of total assets had the largest growth in the probability of holding any debt, with an increase of about 30 percentage points. The share of elderly households in the highest 20% of the asset distribution that held debt also increased from 37.3% in 1989 to 54.9% in 2016, but the increase was not as large as that among households in the middle of the asset distribution. ", " Table 5 presents median debt among elderly households with any debt by quintile of total assets from 1989 to 2016. Median debt generally increased for elderly households in all asset quintiles, with a larger percentage increase for elderly households in the middle of the asset distribution. Real median debt (in 2016 dollars) increased by about three times for elderly households in the first and the fifth asset quintiles, and it increased by about four times or more for elderly households in the second, third, and fourth quintiles. "], "subsections": []}, {"section_title": "Average Debt and Components of Debt", "paragraphs": ["Average debt generally increased from 1989 to 2016 for elderly households across the asset distribution, but the magnitude of growth differed among asset quintiles (see Table 6 ). Real average debt (in 2016 dollars) for elderly households in the lowest asset quintile was approximately twice as much in 2016 compared to 1989, whereas average debt for elderly households in the second through the fourth asset quintiles was generally three times as much in 2016 as in 1989. Average debt for households in the highest asset quintile also doubled, with the largest real increase of about $135,000. ", "For households in the lowest asset quintile, the growth in average debt mainly resulted from growth in primary residential debt, credit card debt, and auto loans. From 1989 to 2016, the increase in average primary residential debt contributed to 54% of the growth in average debt. The increase in average credit card debt explained about 30% of the growth in average debt among elderly households in the bottom asset quintile, and the increase in average auto loans explained almost 20% of the growth in average debt among those households. ", "The growth in debt among middle- and high-asset elderly households also mainly resulted from growth in residential debt. For higher-asset households, mortgage debt for second homes was also a part of this increase in debt. For households in the second through the fourth quintiles of total assets, growth in debt secured by primary residences generally accounted for about 80% of the growth in average debt. For households in the top asset quintile, growth in primary residential debt explained almost 70% of the growth in average debt, and the remaining 30% came mostly from other residential debt. ", "In addition, elderly households in the bottom asset quintile were more likely to have a higher proportion of debt held in other debt, including lines of credit, installment loans, loans against pensions or life insurance, margin loans, and miscellaneous, but the proportion decreased from 1989 to 2016. Elderly households in the first asset quintile on average held about 45% of their debt in other debt in 1989, and this proportion has declined to 20% in 2016."], "subsections": []}, {"section_title": "The Debt-to Asset-Ratio", "paragraphs": [" Figure 9 displays the debt-to-asset ratio among elderly households with debt by total asset quintiles in 1989 and 2016, decomposed into residential and nonresidential debt-to-asset ratios. The debt-to-asset ratios for households in the lowest asset quintile decreased during this time, although the residential debt-to-asset ratio slightly increased. In 2016, however, elderly households in the bottom 20% of the asset distribution still had a 43% debt-to-asset ratio, and most of the debt was based on nonresidential loans, such as credit card debt, auto loans, and student loans, which are usually considered as less effective long-term wealth builders than residential loans.", "Among households in the second through the fourth asset quintiles, the debt-to-asset ratio generally increased by around 10 percentage points from 1989 to 2016, with most of the increase in the residential debt-to-asset ratio. The debt-to-asset ratio increased slightly for elderly households in the top asset quintile, primarily because of growth in the residential debt-to-asset ratio, including debt on both the primary residence and other residences."], "subsections": []}]}, {"section_title": "Conclusion", "paragraphs": ["Debt among households headed by individuals aged 65 and older has increased substantially over the past 30 years. The share of elderly households who held any debt almost doubled, and median debt among households with debt increased by about four times. ", "Much of the rise in debt among older Americans is not necessarily associated with financial insecurity in retirement. Much of the change in debt among elderly households, across some age groups and through most of the asset distribution, is well balanced by their assets. As shown earlier, from 1989 to 2016, the debt-to-asset ratio among elderly households with debt increased from 5.1% to 9.0%. Individuals may also adjust behavior to meet their debt obligations. For instance, one study finds that both the presence and the level of debt increase the likelihood that older adults work and reduce the likelihood that they are retired. Data from the SCF also show that the percentage of elderly households with either the head of the household or a spouse working increased from 19.8% in 1989 to 29.7% in 2016. ", "Rising debt among certain elderly households, however, has shown signs of an increase in debt burden. For example, the debt-to-asset ratio among households headed by individuals aged 80 and older increased by 5 percentage points between 1989 and 2016, and the ratio among elderly households with middle asset levels increased by more than 10 percentage points during the same time. Rising debt might be more problematic for persons aged 80 and older because they might be more vulnerable to income risks, as they are more likely to have lower or no earnings (as they phase out of the labor force), exhaust existing retirement resources, have reduced purchasing power in certain defined benefit pensions, and incur higher medical expenses. In addition, older Americans now hold historically high levels of housing debt, which might make them more vulnerable to housing market swings than previous cohorts of retirees. Therefore, in addition to retirement income and saving adequacy, debt management may also be an important determinant of retirement security."], "subsections": []}]}}
{"id": "R45763", "title": "Department of State, Foreign Operations, and Related Programs: FY2020 Budget and Appropriations", "released_date": "2020-04-09T00:00:00", "summary": ["Each year, Congress considers 12 distinct appropriations measures, including one for the Department of State, Foreign Operations, and Related Programs (SFOPS), which includes funding for U.S. diplomatic activities, cultural exchanges, development and security assistance, and U.S. participation in multilateral organizations, among other international activities. On March 11, 2019, the Trump Administration submitted to Congress its SFOPS budget proposal for FY2020, which totaled $42.72 billion in discretionary funds ($42.88 billion when $158.9 million in mandatory retirement funds are included), reflecting adherence to discretionary funding caps, as determined by the Budget Control Act of 2011 (BCA; P.L. 112-25 ).", "The initial FY2020 request would have represented a 2.5% increase in SFOPS when compared to the FY2019 request but a 21% decrease in SFOPS funding when compared to the FY2019 enacted funding levels. Within these totals, Department of State and Related Agency funding would have been reduced by 15.7%, with the greatest cuts to the Educational and Cultural Exchange Programs (56%), International Organizations (26%), and the U.S. Agency for Global Media (22%) accounts. The Foreign Operations accounts would have seen a reduction of 23.5%, with the greatest cuts to the non-health development assistance (39%), humanitarian assistance (34%), and global health (28%) sectors.", "On May 16, 2019 the House Appropriations Committee agreed to its SFOPS measure ( H.R. 2839 ) that would have provided $56.54 billion in total spending ($56.39 billion in discretionary spending). The bill included either level or increased funding in nearly all accounts compared to FY2019. It did not include the President's proposal to consolidate spending into the proposed Economic Support and Development Fund (ESDF) and International Humanitarian Assistance (IHA) accounts, and moved the Economic Support Fund (ESF) account from Title III (Bilateral Economic Assistance) into Title IV (International Security Assistance) to make clear the committee's desire to keep ESF distinct from the Development Assistance (DA) account. Finally, the bill would have provided funds to make operational the new U.S. International Development Finance Corporation (pursuant to the BUILD Act of 2018; P.L. 115-254 ). On June 19, 2019, the House passed the FY2020 SFOPS legislation in a \"minibus\" measure that included three other appropriations bills\u00e2\u0080\u0094Labor, Health and Human Services, Education; Defense; and Energy and Water Development ( H.R. 2740 ). While the topline funding level remained the same, some monies were shifted among the various accounts due to adopted amendments.", "On September 26, 2019, the Senate Appropriations Committee approved its SFOPS measure for FY2020, S. 2583 , which would have provided $55.16 billion in total new funding ($54.377 billion net, after proposed rescission of $316 million of prior-year funds). Much like the House measure, the bill included level or increased funding for most accounts compared to FY2019 and did not include the President's proposals to consolidate spending into the ESDF and IHA accounts. However, unlike the House bill, the Senate committee measure kept ESF in Title III (Bilateral Economic Assistance), consistent with prior year appropriations.", "FY2020 began with all appropriations bills unfinished. Congress and the President approved two continuing resolutions to fund federal agencies through November 21, 2019 ( P.L. 116-59 ) and December 20, 2019 ( P.L. 116-69 ), respectively, at the FY2019 funding level. On December 20, 2019, Congress passed, and the President later signed, two consolidated appropriations bills ( P.L. 116-93 and P.L. 116-94 ). SFOPS funding was included as Division G of P.L. 116-94 , Further Consolidated Appropriations Act, 2020. The measure included $54.84 billion for SFOPS accounts in FY2020, a nearly 1% increase from the FY2019-enacted level and approximately 28% more than the Administration's request. Of that enacted total, $8.0 billion, or approximately 15% was designated as Overseas Contingency Operations (OCO).", "In March 2020, in response to the global spread of a novel coronavirus, COVID-19, Congress enacted three supplemental appropriations acts: the Coronavirus Preparedness and Response Supplemental Appropriations Act, 2020 ( P.L. 116-123 , signed into law March 6), the Family First Coronavirus Response Act ( P.L. 116-126 , signed into law March 18), and the Coronavirus Aid, Relief, and Economic Security Act (CARES Act, P.L. 116-136 , signed into law March 27). P.L. 116-123 included $1.25 billion in SFOPS accounts to prevent, prepare for, and respond to the virus, and the CARES Act added an additional $1.115 billion in SFOPS funds for this purpose. P.L. 116-127 did not include funds for SFOPS accounts. The Administration also amended its FY2020 budget request in a March 17 letter to Congress, requesting an additional $220 million in emergency SFOPS funds for COVID-19 response. With supplemental funds, total enacted SFOPS funding for FY2020 was $57.21 billion (after rescissions), a 5.2% increase over the FY2019-enacted level.", "This report provides an account-by-account comparison of the FY2020 SFOPS request (including the supplemental request), House and Senate SFOPS legislation, and the final FY2020 SFOPS appropriation (including supplemental appropriations) to FY2019 funding in Appendix A . The International Affairs (function 150) budget in Appendix B provides a similar comparison.", "This report will not be updated further unless there is renewed congressional activity on FY2020 appropriations."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Overview", "paragraphs": ["On March 11, 2019, the Trump Administration proposed its FY2020 budget for the Department of State, Foreign Operations, and Related Programs (SFOPS) accounts, which fund U.S. diplomatic activities, cultural exchanges, development and security assistance, and U.S. participation in multilateral organizations, among other international activities. The SFOPS budget includes most international affairs (function 150) funding, as well as funding for international commissions in the function 300 budget. Additional emergency funds were requested by the Administration on March 17, 2020, to respond to Coronavirus Disease 2019 (COVID-19). The total request, including these emergency supplemental funds, was $42.94 billion in discretionary funds ($43.10 billion when $158.9 million in mandatory retirement funds are included), which was 3% higher than the FY2019 request but 21% below the FY2019 enacted SFOPS funding level (after rescissions). It was lower than any SFOPS funding level in the last decade ( Figure 1 ), and represented about 3% of the total discretionary budget authority (an estimated $1.313 trillion) requested for federal programs in FY2020.", "The Further Consolidated Appropriations Act, 2020 ( P.L. 116-94 ), signed into law on December 20, 2019, included $54.84 billion for SFOPS accounts in FY2020, a nearly 1% increase from the FY2019-enacted level and approximately 28% more than the Administration's request. Supplemental funds to address the COVID-19 outbreak, requested and enacted in March 2020, added $2.37 billion to SFOPS accounts, bringing the FY2020 total to $57.21 billion. Of that enacted total, $8.0 billion was designated as Overseas Contingency Operations (OCO) and $2.37 billion (the COVID-19 funds) was designated as emergency funding.", "In SFOPS, there is often disparity between requested and enacted appropriations. During the Obama Administration, Congress typically provided less SFOPS funding than was requested, though the gap narrowed over time. Thus far in the Trump Administration, Congress has enacted significantly more SFOPS funding than the amount requested, both because the requested amounts have represented large cuts and because enacted funding levels have been high relative to most recent years ( Table 1 ). The FY2020 budget request continued this pattern."], "subsections": [{"section_title": "The Budget Control Act and Overseas Contingency Operations", "paragraphs": ["Since FY2012, the appropriations process has been shaped by the discretionary spending caps put in place by the Budget Control Act of FY2011 (BCA; P.L. 112-25 ). Congress has repeatedly amended the BCA to raise the caps, most recently by the Bipartisan Budget Act of 2019 (BBA 2019; P.L. 116-37 ). The BBA 2019 raised discretionary spending limits set by the BCA for FY2020 and FY2021, the final two years the caps are in effect. ", "In addition to raising the caps, another way that Congress has managed the constraints imposed by the BCA budget caps is through the use of Overseas Contingency Operations funding, which is excluded from the BCA discretionary budget caps. Congress began appropriating OCO in the SFOPS budget in FY2012, having previously provided OCO funds for the Department of Defense. Originally used to support shorter-term, temporary contingency-related programming in Afghanistan, Iraq, and Pakistan that was not part of the \"base\" or \"core\" budget, the use of OCO has expanded considerably over the years. In FY2019, OCO funds were used to support 11 different SFOPS accounts, from USAID operating expenses and the Office of Inspector General to International Disaster Assistance and Foreign Military Financing. ", "When Congress raised the BCA caps for FY2019, the Administration chose not to request OCO funding for FY2019 SFOPS. Congress nevertheless designated $8 billion of FY2019 SFOPS funding as OCO, a 33% reduction in OCO spending compared to FY2018 and the second year in a row that SFOPS OCO levels declined significantly. ", "While the FY2020 SFOPS request did not include OCO funding, the Administration's FY2020 defense budget request included an unprecedented amount of OCO funding, widely viewed as a means of increasing defense spending without amending the BCA's defense discretionary spending cap. Through BBA 2019, Congress established OCO funding targets for both defense and nondefense discretionary spending. For foreign affairs OCO, Congress designated $8 billion for FY2020 and FY2021, indicating its intent to continue to use OCO in SFOPS appropriation measures for the next two fiscal years. Congress adhered to that target, and remained consistent with FY2019 funding, in the final FY2020 SFOPS appropriation, providing $8 billion in OCO, representing nearly 14% of the total SFOPS funding ( Figure 2 )."], "subsections": []}]}, {"section_title": "Congressional Action", "paragraphs": ["House SFOPS Legislation. On May 16, 2019, FY2020 SFOPS legislation ( H.R. 2839 , with accompanying report H.Rept. 116-78 ) was introduced and approved by the full House Appropriations Committee. The legislation included total SFOPS funding of $56.54 billion, 0.4% higher than FY2019 enacted funding and 32% more than requested. Of that total, $48.54 billion was base funding\u00e2\u0080\u0094the 302(b) allocation level approved by the House committee\u00e2\u0080\u0094and $8 billion was designated as OCO. On June 19, 2019, the House passed the FY2020 SFOPS legislation in a \"minibus\" measure that included three other appropriations bills\u00e2\u0080\u0094Labor, Health and Human Services, Education; Defense; and Energy and Water Development ( H.R. 2740 ). While the topline funding level remained the same, some monies were shifted among the various accounts due to adopted amendments.", "Senate SFOPS Legislation . On September 26, 2019, the Senate Appropriations Committee approved an SFOPS measure for FY2020, S. 2583 (with accompanying report S.Rept. 116-126 ), that would have provided $55.16 billion in total new funding. This represented an increase of 0.1% from FY2019-enacted funding and a 27% increase from the requested level. Of that total, $47.16 was base funding and $8 billion was designated as OCO. The measure did not reach the Senate floor for consideration. ", "Continuing Resolutio ns . On September 26, 2019, the Senate approved H.R. 4378 , the Continuing Appropriations Act, 2020 (approved by the House on September 19 th ), which continued funding for most federal agencies and accounts at the FY2019 funding level through November 21, 2019. The legislation was signed by the President on September 27. On November 21, 2019, the Senate approved a second continuing resolution\u00e2\u0080\u0094 H.R. 3055 , the Further Continuing Appropriations Act, 2020, and Further Health Extenders Act of 2019 (approved by the House on November 19 th ). The legislation, which funded federal operations at the FY2019 funding level through December 20, 2019, was signed by the President on November 21, 2019.", "Enacted Legislation. On December 20, 2019, the President signed into law P.L. 116-94 , a full-year appropriation that included $54.84 billion in total SFOPS funding (Division G). This enacted level represented a nearly 1% increase from the FY2019-enacted funding level and was approximately 28% more than the Administration's FY2020 request. Of that total, $16.72 billion was for State Department and related agencies operations, and $38.70 billion was for foreign operations accounts. Nearly 15%, or $8.0 billion of the total SFOPS appropriation was designated as OCO.", "COVID- 19 Supplemental s . On March 17, the Trump Administration requested $220 million in supplemental SFOPS funds as part of a larger supplemental FY2020 appropriations request to address the COVID-19 pandemic. Also in March 2020, Congress enacted multiple supplemental appropriations, including the Coronavirus Preparedness and Response Supplemental Appropriations Act, 2020 ( P.L. 116-123 , signed into law March 6) and the Coronavirus Aid, Relief, and Economic Security (CARES) Act ( P.L. 116-136 , signed into law March 27). P.L. 116-123 included $1.25 billion for SFOPS accounts, including Diplomatic Programs ($264 million), USAID Inspector General ($1 million), Global Health Programs-USAID ($435 million), International Disaster Assistance ($300 million), and Economic Support Fund ($250 million). P.L. 116-136 included $1.115 billion for SFOPS accounts, including Diplomatic Programs ($324 million), USAID Operating Expenses ($95 million), International Disaster Assistance ($258 million), Migration and Refugee Assistance ($350 million), and the Peace Corps ($88 million).With these supplemental funds, enacted SFOPS funding for FY2020 totaled $57.208 billion, a 5.2% increase over the FY2019-enacted level and about 33% more than the Administration's request."], "subsections": []}, {"section_title": "State Department Operations and Related Agency\u00c2 Highlights", "paragraphs": ["For FY2020, the Administration sought to cut funding for the Department of State and Related Agency appropriations accounts from the $16.46 billion Congress enacted for FY2019 to $13.98 billion (including the supplemental request), a 15% reduction. The Administration's FY2020 request exceeded its FY2019 request for these accounts, which totaled $13.26 billion, by around 5.4%. The Administration's priorities to be funded through Department of State and Related Agency accounts included", "sustaining the global diplomatic workforce and operations; protecting U.S. government personnel and overseas missions; and preserving strategic participation in international organizations to achieve outcomes favorable to the United States and its allies.", "Conversely, the House bill and the Senate committee bill both sought to increase funding for these accounts. The House bill would have raised funding to $17.35 billion, or 5.4% above the FY2019 funding level. The Senate committee bill, if enacted, would have boosted funding to $16.53 billion, or 0.4% more than the FY2019 funding level. ", "The FY2020 initial enacted appropriation ( P.L. 116-94 ) provided $16.72 billion for the Department of State and Related Agency accounts, which is about 1.6% above the FY2019-enacted level. This funding level exceeded that of the Senate committee bill by 1.1% and was approximately 3.6% less than the amount included in the House bill. The Administration requested an additional $115 million in the Diplomatic Programs account for COVID-19 response activities in March 2020. P.L. 116-123 , the COVID-19 supplemental appropriation, provided an additional $264 million for the Diplomatic Programs account, and P.L. 116-136 provided an addition $324 million for Diplomatic Programs, bringing the total enacted funding for Department of State and Related Agency accounts to $17.31 billion, or 5.2% more than the FY2019 funding level.", " Table 3 provides detailed information regarding the extent of the Administration's proposed cuts to these accounts, the House and Senate committee bill funding levels, and the appropriations provided in P.L. 116-94 and P.L. 116-123 ."], "subsections": [{"section_title": "Proposed New Account", "paragraphs": ["The Worldwide Security Protection (WSP) sub-account within the Diplomatic Programs account has been used to fund programs that the State Department's Bureau of Diplomatic Security (DS) and other bureaus implement to protect the department's staff, property, and information. As part of its FY2020 request, the Administration asked Congress to create a new WSP standalone account and authorize the transfer of all unobligated WSP funds into this account by no later than the onset of FY2021 (October 1, 2020). The Administration maintained that creating this account would increase the transparency of WSP expenditures through more clearly indicating distinctions between funding for diplomatic programs and security-related activities. For its FY2021 budget request, the State Department reportedly intends to request WSP funding in this new account. To date, no legislation has been introduced in Congress that would create a new WSP account. "], "subsections": []}, {"section_title": "Selected Key Programs and Priorities", "paragraphs": ["As in previous years, the majority of both the funding the Administration requested and the budget authority Congress provided for the Department of State and Related Agency appropriations accounts was for diplomatic programs, diplomatic security and embassy construction, and contributions to international organizations and international peacekeeping activities. For FY2020, such programs accounted for approximately 88% of the Administration's request and 84% of the funds Congress appropriated for these accounts. Some of the Administration's priorities within these areas, as identified by the Department of State in its Congressional Budget Justification and other materials provided to Congress, are detailed below. "], "subsections": [{"section_title": "Diplomatic Programs", "paragraphs": ["The Diplomatic Programs account is the State Department's principal operating appropriation and serves as the source of funding for several key functions. These include domestic and overseas State Department personnel salaries; the operations of the department's strategic and managerial units, such as the Office of the Secretary and the Bureaus of Administration, Budget and Planning, Information Resource Management, and Legislative Affairs; and foreign policy programs administered by the Bureaus of African Affairs, Conflict and Stabilization Operations, and others. ", "The Administration's initial FY2020 request for Diplomatic Programs totaled $8.42 billion, an 8% reduction from the $9.17 billion Congress enacted for this account in FY2019. The House bill and Senate committee bill would have appropriated $9.25 billion and $8.89 billion, respectively, for this account. P.L. 116-94 , the FY2020-enacted appropriation, provided $9.13 billion for Diplomatic Programs, or 0.5% less than the FY2019 funding level and 8% more than the Administration's request", "The Administration maintained that its request was consistent with past congressional guidance regarding appropriate State Department on-board personnel volumes and would sustain the Foreign Service and Civil Service workforces at their end-of-2017 levels. Both the House bill and Senate committee bill included oversight provisions pertaining to Foreign Service and Civil Service personnel levels. The enacted legislation provided funding for not less than 12,870 permanent Civil Service staff and 13,031 permanent Foreign Service Officers, which the joint explanatory statement accompanying the law maintained was consistent with the State Department's current hiring targets and would restore State Department personnel to pre-hiring-freeze levels in place during FY2016.", "Among other priorities funded by the Diplomatic Programs account, the joint explanatory statement provided an additional $500,000 apiece to the Bureau of Democracy, Human Rights, and Labor and the Bureau of Economic and Business Affairs for implementation of the Global Magnitsky Human Rights Accountability Act (Subtitle F, Title XII, Division A of P.L. 114-328 ). The Senate committee report accompanying its bill, which also sought to provide this increased funding, stated that it was necessary for the hiring of additional staff to strengthen implementation of the law. The Senate committee report also expressed concern with what it characterized as the lack of information sharing between the Departments of State and the Treasury necessary for sanctioning foreign individuals for direct or indirect involvement in significant corruption or gross violations of human rights under this law. The committee report included a reporting requirement, which was made part of the enacted appropriations law, requiring the Secretary of State to submit a plan to Congress aimed at improving coordination with the Department of the Treasury on such efforts. ", "An additional $115 million was requested for Diplomatic Programs in March 2020 to help the State Department prevent, prepare for, and respond to the coronavirus epidemic, including maintaining consular operations, reimbursement of evacuation expenses, and emergency preparedness. Congress appropriated an additional $588 million in FY2020 supplemental Diplomatic Programs funds for this purpose, including $264 million in P.L. 116-123 and $324 million in P.L. 116-136 . These supplemental funds brought FY2020-enacted funding for this account to a total of $9.71 billion, or 5.9% above the FY2019-enacted level."], "subsections": []}, {"section_title": "Diplomatic Security", "paragraphs": ["The Administration's FY2020 budget request sought to provide approximately $5.41 billion for the department's key diplomatic security accounts: $3.78 billion for the Worldwide Security Protection (WSP) allocation within the Diplomatic Programs account and $1.63 billion for the Embassy Security, Construction, and Maintenance (ESCM) account. The WSP allocation supports the Bureau of Diplomatic Security (DS), which is responsible for implementing security programs to protect U.S. embassies and other overseas posts, diplomatic residences, and domestic State Department offices. The ESCM account supports the Bureau of Overseas Buildings Operations (OBO); provides the State Department's share of costs involved with the planning, design, construction, and maintenance of U.S. overseas posts around the world; and funds \"brick and mortar\" security measures at these posts. ", "As illustrated in Table 4 , enactment of the Administration's request would have marked a decline of 8% for WSP and 18% for ESCM relative to the FY2019 enacted figures. Among the priorities the Administration sought to fund through its request were the construction of new embassy compounds in Qatar, Brazil, and Malawi and new U.S. consulates in Italy and Indonesia. Proposed cuts included a $50 million reduction in DS operations in Iraq due to the suspension of operations at the U.S. Consulate General in Basrah. ", "The enacted legislation, P.L. 116-94 , appropriated $4.10 billion for WSP and $1.98 billion for ESCM, for a total of approximately $6.08 billion in diplomatic security funding. This funding totals around 12% more than the Administration's request, 7% more than the Senate committee bill would have provided, and 0.2% less than the appropriated funds included in the House bill. The aggregate appropriation for diplomatic security is nearly identical to that provided in FY2019. However, P.L. 116-94 appropriated around $7.4 million more for Worldwide Security Upgrades, a sub-item within ESCM that includes the State Department's share of the costs to plan, design, and build new embassies and other facilities abroad, while providing an equivalent lesser amount for the operations and repair and construction programs funded through ESCM. ", "The enacted appropriations law also carried over notification requirements from previous years that Congress applies to conduct oversight of diplomatic construction projects abroad, including ongoing embassy construction projects in Lebanon, Indonesia, Mexico, and India. With respect to the U.S. Consulate General in Basrah, the law requires that any change to the status of operations there is subject to consultation with and notification to Congress.", "Over the past several years, Congress provided no-year appropriations for both WSP and ESCM, thereby authorizing the State Department to indefinitely retain appropriated funds beyond the fiscal year for which they were appropriated. As a result, the department has carried over large balances of unexpired, unobligated WSP and ESCM funds each year that it is authorized to obligate for purposes including multiyear construction projects and unexpected security contingencies. For example, for FY2019, the State Department carried over more than $7.2 billion in previously appropriated funds for ESCM. In this context, P.L. 116-94 included a rescission of $242.5 million in unobligated ESCM funds previously appropriated pursuant to the Security Assistance Appropriations Act, 2017 (division B of P.L. 114-254 ) for embassy construction projects in high-threat countries that were subsequently postponed indefinitely. "], "subsections": []}, {"section_title": "Assessments to International Organizations and Peacekeeping Missions", "paragraphs": ["Through the Contributions to International Organizations (CIO) account, the United States pays its assessed contributions (membership dues) to the United Nations (U.N.), the U.N. system of organizations (including, for example, the International Atomic Energy Agency), inter-American organizations such as the Organization of American States, and other international organizations. Additional funding is provided to international organizations through the various multilateral assistance accounts, as described in the Foreign Operations section of this report. Separately, the United States pays its assessed contributions to U.N. peacekeeping missions through the Contributions for International Peacekeeping Operations (CIPA) account. Recent funding levels for both accounts are detailed in Table 5 . ", "The Administration's CIO account request noted that it prioritized funding for international organizations \"whose missions substantially advance U.S. foreign policy interests\" while cutting contributions to organizations whose work either does not directly affect U.S. national security interests or renders unclear results. While the request sought to fund the North Atlantic Treaty Organization (NATO) and the International Atomic Energy Agency near recent levels, it looked to cut funding for the World Health Organization (WHO) and the Food and Agriculture Organization (FAO) by approximately 50% each. The Administration's request specifically noted that these cuts owed to \"these entities' less direct linkages to U.S. national security and economic prosperity.\" ", "With regard to CIPA, the Administration's request assumed that the State Department would make progress in efforts to negotiate reductions in the overall budgets of peacekeeping missions or the closure of certain missions altogether. The U.S. assessment for U.N. peacekeeping (last negotiated in 2018) is 27.89%; however, Congress has capped the U.S. contribution at 25%. If the Administration's request was enacted, it would have provided 58% of total U.S. assessed dues owed for FY2020. The remainder of these dues would have been compounded into arrears. The State Department estimated that the United States accumulated about $725 million in peacekeeping arrears from FY2017 to FY2019 as a result of the U.S. cap.", "The FY2020 appropriations law provided a combined total of $3 billion for CIO and CIPA, which marked an increase of 40% relative to the Administration's request, and was 17% and 2% less, respectively, than the House and Senate committee funding levels. The joint explanatory statement explicitly provided that not less than $67.4 million of the CIO appropriation was for the FY2020 U.S. contribution to NATO, which totaled approximately 9% more than the U.S. contribution to the alliance in FY2018. The joint explanatory statement further noted that no funds were included in the law to withdraw the United States from NATO. Information provided to Congress by the Department of State indicates that the department intends to fund the WHO and FAO through this account near recent-year levels.", "With regard to CIPA, the joint explanatory statement maintained that sufficient funds were appropriated for the United States to continue providing contributions at the statutory level of 25% rather than the assessed rate of 27.89%. Both the House and Senate committee reports made note of compounding U.S. peacekeeping arrears. The House committee report recommended applying a share of the FY2020 CIPA appropriation for the payment of arrears accumulated in FY2017 and FY2018\u00e2\u0080\u0094however, this may not be possible as the final FY2020 CIPA appropriation provided in P.L. 116-94 was around $600 million less than the level included in the House bill. The Senate committee report encouraged the State Department to alleviate the issue of compounding arrears through reviewing peacekeeping missions for potential cost savings while ensuring mission effectiveness. "], "subsections": []}]}]}, {"section_title": "Foreign Operations Highlights", "paragraphs": ["The foreign operations accounts in the SFOPS appropriation, together with the Food for Peace and McGovern-Dole food aid programs funded through the agriculture appropriation, comprise the foreign assistance component of the international affairs budget. The Administration's initial FY2020 foreign operations request totaled $29.01 billion, about 1.5% more than the Administration requested for these accounts for FY2019 and 23% less than Congress enacted for FY2019. Total foreign aid, including the food aid programs in the agriculture appropriation, would have been cut by 27%. The foreign aid request outlined four general priorities:", "Supporting U.S. friends and allies Winning the great power competition Promoting a \"journey to self-reliance\" for developing countries Sharing the burden of international security and development with more partners", "Under the President's proposal, assistance levels would have been cut across all aid types and sectors. The House legislation, H.R. 2740 , included $39.2 billion for foreign operations, a slight increase compared to FY2019, and about 34% more than the Administration requested. The Senate committee bill, S. 2583 , included $38.95 billion for foreign operations accounts, almost level with the House recommendation. The omnibus appropriation, P.L. 116-94 , included $38.70 billion for foreign operations accounts, a 1.2% increase over FY2019 funding and 33% more than requested. ", "In response to the COVID-19 pandemic, the Administration requested an additional $105 million in the USAID Operating Expenses and Peace Corps accounts for FY2020. Congress in turn enacted $1.777 billion in additional foreign operations funds in COVID-19 supplemental appropriations legislation, primarily in the Global Health Programs, International Disaster Assistance, Migration and Refugee Assistance, and Economic Support Fund accounts, bringing total enacted foreign operations funding to $40.48 billion ( Table 6 ). "], "subsections": [{"section_title": "Proposed Account Consolidations and Restructuring", "paragraphs": ["In the FY2020 request, the Administration proposed to consolidate accounts in two areas:", "Most non-health development assistance accounts\u00e2\u0080\u0094Development Assistance; Economic Support Fund; Assistance to Europe, Eurasia and Central Asia; and the Democracy Fund\u00e2\u0080\u0094would have been combined into a single new Economic Support and Development Fund (ESDF). The Administration made a similar request for both FY2018 and FY2019, but Congress did not enact the proposed account restructuring. For the first time, the Administration proposed to consolidate the four humanitarian assistance accounts\u00e2\u0080\u0094International Disaster Assistance (IDA), Migration and Refugee Assistance (MRA), Food for Peace, Title II and Emergency Refugee and Migration Assistance (ERMA)\u00e2\u0080\u0094into a single International Humanitarian Assistance (IHA) account. Budget documents stated that the consolidated account would be managed by USAID under the policy authority of the State Department (see Humanitarian Assistance section below).", "The Administration suggested that consolidation of these accounts would streamline management to allow more efficient deployment of resources. ", "The House passed legislation, H.R. 2740 , did not adopt the account structure proposed by the Administration. However, it did move the Economic Support Fund account from Title III (bilateral economic assistance) of the bill to Title IV (security assistance), making comparisons of the two titles to the request or to prior appropriations potentially misleading. The committee report notes that ESF funds \"are provided to advance United States interests by helping countries meet political and security needs,\" and may be provided in countries that also receive Development Assistance funds, seemingly clarifying the purpose for distinct accounts rather than a combined ESDF. ", "The Senate committee bill did not adopt the account structure changes proposed by the Administration or the House bill. It did, however, add a \"restructured debt\" account line under the Treasury Programs heading, with $20 million in recommended funding, that was included in neither the Administration request nor the House bill. ", "P.L. 116-94 , like the Senate bill, maintained the development and humanitarian assistance account structure used in the FY2019 legislation, but added a $15 million line item for debt restructuring under Treasury Programs."], "subsections": []}, {"section_title": "Independent Agencies", "paragraphs": ["Under the original FY2020 request, funding for independent SFOPS agencies would have been reduced by 12% overall from FY2019 levels. Requested Peace Corps funding was $396.2 million (a 3.5% reduction from FY2019) and for the Millennium Challenge Corporation (MCC), $800 million (an 11.6% reduction). As in the FY2019 budget request, the FY2020 request proposed elimination of two independent development agencies\u00e2\u0080\u0094the Inter-American Foundation (IAF) and the U.S. Africa Development Foundation (USADF)\u00e2\u0080\u0094and incorporation of their staff and small grant activities into USAID's Western Hemisphere and Africa bureaus, respectively. The request specified that funding was included for 40 staff positions to enable this transition, as well as $20 million in ESDF to support small grants.", "H.R. 2740 , as passed, would have maintained funding for the MCC and USADF at FY2019 levels while increasing funding for the Peace Corps (3.5% increase) and IAF (44%, with the increase to be used to support the Central America Strategy, the Caribbean Basin Strategy, and for programs in Colombia). The committee report made clear that the committee did not assume the proposed consolidation of IAF and USADF into USAID.", "S. 2583 , the committee-passed bill, would have provided overall funding for independent agencies at much the same level recommended by the House bill, but would have maintained Peace Corps and MCC funding at the FY2019 level. USADF funding would have increased by 10% and IAF by 67% compared to FY2019, with the committee specifying that the funds were not for close-out costs.", "The enacted legislation adopted the Senate funding levels for all the independent agencies, a 1.3% increase, in total, over FY2019 funding.", "In March 2020, The Administration requested an additional $73 million for the Peace Corps to fund the emergency evacuation of volunteers during the COVID-19 pandemic. Congress enacted $88 million for this purpose in P.L. 116-136 . Including this funding, FY2020 appropriations for independent agencies to date total $1.474 billion. "], "subsections": []}, {"section_title": "Multilateral Assistance", "paragraphs": ["The various multilateral assistance accounts, through which the United States contributes to multilateral development banks and international organizations that pool funding from multiple donors to finance development activities, would have been cut by about 18% from FY2019, to $1.52 billion, under the request. As in the FY2018 and FY2019 requests, the Administration included no funding in the FY2020 request for the International Organizations and Programs (IO&P) account, which funds U.S. voluntary contributions to international organizations, primarily United Nations entities such as UNICEF. Congress appropriated $339 million for IO&P in FY2019. The Administration also requested no funding for the Global Environment Facility (GEF), describing the FY2019 appropriation as sufficient to cover FY2019 and FY2020. ", "The House legislation, H.R. 2740 , would have increased total funding for international organizations by nearly 26%, to $2.34 billion. This included a 91% increase compared to FY2019 for the IO&P account, with report language allocating funds for core contributions to specific agencies, including $147.5 million for UNICEF and $55.5 million for the U.N. Population Fund. The IO&P allocation also included $170.5 million for the U.N. Relief and Work Agency (UNRWA, which works in Palestinian territories) and report language specified that $226.6 million of multilateral assistance should support humanitarian and development efforts in the West Bank and Gaza. The bill also included $139.6 million for the GEF and $30 million for the International Fund for Agricultural Development.", "The Senate committee bill, S. 2583 , included $2.07 billion for multilateral aid accounts, an 11.5% increase over FY2019 funding. The increase was driven by a 12% IO&P funding increase and inclusion of $206.5 million in International Bank of Reconstruction and Development funding that was in the Administration request but not the House bill or the FY2019-enacted appropriation.", "The enacted legislation included a total of $2.082 billion for multilateral assistance, a 12% increase over FY2019 funding. Within that total, IO&P funding was increased by 15% to $390.5 million, offset in part by the lack of a contribution to the African Development Bank ($32 million in FY2019). All other multilateral accounts were funded at the same level as FY2019. "], "subsections": []}, {"section_title": "Export Promotion Assistance/International Development Finance Corporation (IDFC)", "paragraphs": ["Export promotion activities in FY2020, as in all recent years, are expected in total to return more to the Treasury through offsetting collections (such as fees and loan interest payments) of the Export-Import Bank and the Overseas Private Investment Corporation (OPIC) than is appropriated for these programs.", "In 2019, OPIC was dissolved and replaced by the new U.S. International Development Finance Corporation (DFC), which also incorporates USAID's Development Credit Authority (DCA). The request included increased administrative funding to support this transition ($98 million, compared to $80 million for OPIC administration and $10 million for DCA administration in FY2019). The FY2020 request also included $200 million in program funds to support DFC credit subsidies, technical assistance and feasibility studies. As in FY2018 and FY2019, the Administration's export promotion request called for the elimination of the U.S. Trade and Development Agency (TDA), seeking $12.1 million for an orderly shutdown. Congress appropriated $79.5 million for TDA in both FY2018 and FY2019.", "H.R. 2740 , as passed, did not include funding for OPIC, anticipating its termination under the BUILD Act, and instead provided funds for the DFC, including $164 million for the capital account (45% less than requested), to include $101 million for administrative expenses. It also set an $80 million limit on transfers to the DFC to support direct and guaranteed loans and included several reporting requirements for the new agency. The bill also included $75 million for TDA, a 5.7% cut from current year funding. ", "The Senate committee bill, S. 2583 , would have funded the DFC through several specific budget allocations: $98 million for administrative expenses, $150 million for an equity fund, $50 million (by transfer from the Development Assistance account) for a program accounts, and $2 million for the Inspector General. Like the House bill, the Senate committee bill anticipated offsetting collections to exceed DFC appropriations in FY2020. S. 2583 also included $79.5 million for TDA.", "P.L. 116-94 provided $299 million for a DFC corporate capital account (including $119 million for administrative expenses, $150 million for equity investments, and $30 million for other programs), $80 million for the cost of direct and guaranteed loans through a program account, and $2 million for the Inspector General. Like the House and Senate bills, the enacted legislation assumes that offsetting collections will make appropriations for the DFC unnecessary. The bill also included $79.5 million for TDA. "], "subsections": []}, {"section_title": "Key Sectors", "paragraphs": ["As in previous years, the bulk of aid requested for FY2020 was for global health, humanitarian, and security assistance programs. "], "subsections": [{"section_title": "Global Health", "paragraphs": ["The total request for the Global Health Programs (GHP) account for FY2020 was $6.34 billion, a 28% cut from the FY2019 enacted funding level. Global health sub-accounts would have been cut across the board under the request, with reductions ranging from 11% for malaria programs to nearly 55% for family planning and reproductive health programs ( Table 7 ). ", "HIV/AIDS program funding would have been cut by nearly 30% from FY2019 funding levels, though the Administration asserted that the requested funding would be sufficient to maintain treatment for all current recipients. The Administration proposed limiting U.S. Global Fund contributions to 25% of all donations, rather than the 33% that the United States has provided since the George W. Bush Administration. ", "The House legislation, H.R. 2740 , included nearly $9.30 billion for GHP, which would have increased GHP funding by 5% over FY2019 levels and was 47% more than requested. Sub-sector allocations specified in the accompanying report would have maintained level funding or slight increases for most health subsectors compared to FY2019 levels, with the exception of family planning and reproductive health funding, which would have increased by 30%. The bill included $1.56 billion for the Global Fund, retaining the U.S. contribution limit at 33% of the total, and directed the Administration to fully obligate the funds for the first installment of the new replenishment round. In addition, the House committee bill included a provision that would have prohibited funds appropriated in the act, or prior SFOPS Acts, from being used to implement the Administration's expansion of the \"Mexico City Policy,\" which prohibits all global health funding (expanded from family planning funding) to foreign NGOs engaged in voluntary abortion activities, even if such activities are conducted with non-U.S. funds.", "S. 2583 would have provided $9.12 billion for GHP in total, about 3% more than the FY2019 funding, with slight increases in all health subsectors compared to the FY2019 subsector allocations, as specified in the accompanying report. Compared to the House bill, the Senate committee bill included significantly less funding for family planning and reproductive health programs (-22%) and more for malaria programs (+4.5%). The bill would have provided $1.56 billion for the Global Fund, the same as the House bill. ", "P.L. 116-94 included a total of $9.09 billion for GHP, 2.9% more than the FY2019 funding level and 43% more than the Administration's request. The increase over FY2019 funding was driven by modest increases across all global health subcategories, as detailed in the explanatory statement, with the exception of family planning and reproductive health, which was maintained at the FY2019 funding level. The biggest increases were to HIV/AIDS (+3.5%) and nutrition (+3.4%) activities. Like the House and Senate bills, the enacted appropriation allocated $1.56 billion for the Global Fund.", "P.L. 116-123 , the first COVID-19 supplemental bill, included an additional $435 million for Global Health Programs, to be administered by USAID, \"for necessary expenses to prevent, prepare for and respond to coronavirus.\" This funding brought the GHP total for FY2020 to $9.53 billion, or nearly 8% more than the FY2019-enacted funding."], "subsections": []}, {"section_title": "Humanitarian Assistance", "paragraphs": ["The initial FY2020 budget request for humanitarian assistance was $5.97 billion, a 37% decrease from the FY2019 appropriation (including funds for Food for Peace in the Agriculture appropriation). The request continued a long-standing trend of humanitarian budget requests being significantly smaller than prior-year enacted funding levels, at times reflecting the fact that humanitarian assistance funds may be carried over from year to year and unobligated balances from prior years may still be available ( Figure 3 ). ", "The Administration's budget justification asserted that \"when combined with all available resources, average funding available for 2019 and 2020 roughly matches the highest-ever level of U.S. overseas humanitarian programming, and is sufficient to address needs for Syria, Yemen, and other crisis areas.\"", "For FY2020, as noted earlier, the budget proposed to fund all humanitarian assistance through a new, single global International Humanitarian Assistance (IHA) account. IHA would have been managed by the newly consolidated Humanitarian Assistance Bureau at USAID, but with a \"senior dual-hat leader\" under the policy authority of the Secretary of State reporting to both the Secretary of State and the USAID Administrator. The proposal would have effectively moved the administration of refugee and migration assistance funding from State to USAID. The State Department would have retained approximately 10% of MRA funding to support refugee diplomacy and administrative expenses, costs associated with resettlement of refugees in the United States, and support for refugee resettlement in Israel. ", "Within USAID, the proposal would also have eliminated the Food for Peace Act, Title II funding currently appropriated through the agriculture appropriation but administered by USAID. The Administration previously proposed this in FY2018 and FY2019, citing inefficiency and the ability to provide food assistance through other accounts. Under the proposed plan, emergency food assistance would also have been funded through the IHA account.", "H.R. 2740 , as passed, would have provided $7.97 billion in foreign operations humanitarian assistance, a 2% increase over FY2019 funding and about 26% more than requested. Funding was provided through the traditional accounts (IDA, MRA and ERMA) rather than the proposed IHA account. An additional $1.85 billion was included in the Senate committee-passed agriculture appropriation, H.R. 3164 , for Food for Peace.", "S. 2583 included $7.82 billion for foreign operations through the traditional account structure. The Senate committee-passed agriculture appropriation, S. 2522 , included $1.716 billion for Food for Peace, for a humanitarian aid total of $9.53 billion, almost level with FY2019-enacted funding. ", "The enacted omnibus legislation maintained both the account structure and funding levels for humanitarian assistance. P.L. 116-94 included a total of $9.55 billion for humanitarian assistance in the SFOPS ($7.83 billion) and Agriculture ($1.725 billion) divisions, a 0.2% increase over FY2019 funding, with slight increases to the IDA and Food for Peace accounts.", "COVID-19 supplemental appropriations enacted in March 2020 made additional humanitarian assistance available to prevent, prepare for and respond to the pandemic. P.L. 116-123 added $300 million to the IDA account and P.L. 116-136 added an additional $258 million for IDA and $350 million for MRA, bringing the enacted humanitarian assistance total to $10.46 billion ($8.74 billion in SFOPS), or about 10% more than the enacted FY2019 funding."], "subsections": []}, {"section_title": "Security Assistance", "paragraphs": ["The FY2020 request for military and security assistance was $7.415 billion, a 19% cut from FY2019 enacted levels. Reductions were proposed for every account ( Figure 4 ). As is typical, the bulk of security assistance requested by the Administration (67%) would have been Foreign Military Financing (FMF) aid to Israel ($3.3 billion), Egypt ($1.3 billion), and Jordan ($350 million). As in FY2018 and FY2019, the Administration's FY2020 request sought authority to provide FMF assistance through a combination of grants and loans, including loan guarantees, rather than the current use of FMF on an almost exclusive grant basis. The Administration asserted that loan authority would enable partners to purchase more U.S.-made defense equipment and promote burden sharing in security cooperation activities.", "FY2020 International Narcotics Control and Law Enforcement (INCLE) funding would have decreased by 37%, with a notable increase requested for Colombia ($209 million from $143 million in FY2018) and decrease for Afghanistan ($95 million, down from $160 million in FY2018). ", "The House legislation, H.R. 2740 , included $11.21 billion for security assistance, an almost 23% increase over the FY2019 funding level and a more than 50% increase over the Administration request. The difference was almost entirely due to the House bill including the Economic Support Fund account under security assistance rather than bilateral economic assistance. Excluding ESF funds, security assistance in the bill would have been reduced about 1% from FY2019 funding.", "The Senate committee bill, S. 2483 , included the traditional accounts under the security assistance heading and provided a total of $9.11 billion, on par with FY2019 funding. However, within that total INCLE funding would have decreased by 9% and NADR funding would have increased by 11% compared to FY2019.", "P.L. 116-96 provided $9.014 billion in security assistance accounts, a reduction of about 1.5% from FY2019 funding, keeping the FY2019 account structure. Funding was reduced from the FY2019 level for the INCLE, PKO and FMF accounts (-7.1%, -6.4%, and -0.6%, respectively), while NADR and IMET funding increased (+3.6% and +1.9%, respectively). "], "subsections": []}, {"section_title": "Other Foreign Assistance Sectors", "paragraphs": ["In addition to proposed cuts to global health and humanitarian assistance, the FY2020 budget request would have reduced funding from the previous year's enacted levels for almost all development sectors. Programs to counter trafficking in persons would have been cut the least, 25%, while activities related to environmental protection, microenterprise, water and sanitation, and education would have been cut by more than 60%. Democracy promotion and food security funding would have been reduced by about half. One exception to the proposed sector cuts was gender equality funding, which would have increased by about 80%, driven by the Women's Global Development and Prosperity Initiative (WGDP), rolled out by Ivanka Trump in February 2019, for which the budget request included $100 million ( Table 8 ). ", "The House legislation, H.R. 2740 , recommended development sector allocations similar to those enacted for FY2019, with the exception of environment programs, for which the allocation would have increased by 77%. In addition to the funding allocation, the environmental programs section also specified that funding may be used to support the U.N. Framework Convention on Climate Change (Paris Agreement) and that none of the funds in the act, or in prior SFOPS appropriations acts, may be used to withdraw from the Paris Agreement. The report accompanying the legislation ( H.Rept. 116-78 ) called for the USAID Administrator to provide a detailed implementation plan of the WGDP to Congress, including focus countries and planned metrics, within 90 days of enactment.", "Sector allocations in the Senate committee bill, S. 2483 , would have increased funding for democracy and environment programs relative to the FY2019 funding (+17% and +90%) and the House bill (+17% and +7%, respectively), while providing fewer funds for education and gender equality programs than both the FY2019 legislation (-28% and -25%) and the House bill (-30% and -35%). Senate committee allocation in all sectors, with the exception of gender equality (-59%), would have been higher than the Administration requested for FY2020. ", "P.L. 116-94 included sector allocations more similar to the FY2019 legislation than to the Administration's request. As in the House and Senate bills, the enacted legislation significantly increased environment sector funding compared to FY2019 (+81%). Funding for education (+7.2%), water and sanitation (+3.4%) and gender equality (+53.5%) also increased compared to FY2019, though the gender equality funding total included \"up to\" $100 million for the WGDP, creating potential for a significantly lower allocation. "], "subsections": []}]}, {"section_title": "Country and Regional Aid Allocations", "paragraphs": ["Top aid recipients under the request, consistent with recent years, would have been allies in the Near East who receive the bulk of military aid, including Israel and Egypt; strategically significant development partners such as Jordan and Afghanistan; and several global health focus countries in Africa ( Table 9 ). Notable reductions in aid were proposed for South Africa (-171%) and West Bank/Gaza (-43%). ", "The Near East and Africa would have continued to be the top regional aid recipients under the request, together comprising more than 75% of aid allocated by country or region ( Figure 5 ).The FY2020 request emphasized large increases for the Indo-Pacific and Europe and Eurasia regions relative to the FY2019 request, as part of the emphasis on countering Chinese and Russian influence. However, the requested funding for East Asia and the Pacific was 14% less, and the South and Central Asia request almost 17% less, than the FY2018 allocations for those regions (FY2019 country and regional allocations are not yet available). Aid to Europe and Eurasia would have been reduced by 54%, and aid to sub-Saharan Africa by 35%. Aid to the Western Hemisphere would decrease by 30%, though the FY2020 budget request sought authority to transfer $500 million in aid from unspecified accounts as necessary to meet needs related to the crisis in Venezuela. The MENA region would have seen the smallest proportionate cuts under the request, about 8%, and increased its share of regionally allocated aid from 36% to 44%.", "These country and regional allocations do not include the nearly $6 billion requested for humanitarian assistance. Humanitarian assistance is not requested by country and could significantly change country and regional aid totals once allocated. Nor do they include nonhumanitarian supplemental funds appropriated for COVID-19 response, which were not appropriated by country or region. ", "The House legislation and report, H.R. 2740 / H.Rept. 116-78 , did not provide comprehensive country and regional allocations, but did specify aid levels for several countries and regions, including $3.305 billion for Israel, $1.403 billion for Egypt, $1.525 billion for Jordan, $457 million for Colombia, $160 million to support the Indo-Pacific Strategy, $541 million designated for Central America as a region, and $280 million for the Countering Russian Influence Fund.", "S. 2583 / S. 126 also did not provide comprehensive allocations by country, but did specify many such aid levels, including $3.305 billion for Israel, $1.432 billion for Egypt, $1.650 billion for Jordan, $448 million for Ukraine, $403 million for Colombia, $322 million for Afghanistan, and $453.6 million for Iraq. The bill and report also included a total of $515 million for Central America as a region, $285 million for the Countering Russian Influence Fund, $375 million for a new Countering Chinese Influence Fund, and $200 million for the Relief and Recovery Fund to assist areas formerly controlled by ISIS.", "P.L. 116-94 and the accompanying explanatory statement include detailed funding directives for many countries and regional programs. Among the largest allocations are $3.305 billion for Israel, $1.525 billion for Jordan, $1.432 billion for Egypt, $448 million each for Ukraine and Colombia, and $452 million for Iraq. Major allocations for regional activities include $1.482 billion to support the Indo-Pacific Strategy and the Asia Reassurance Initiative Act of 2018 ( P.L. 115-409 ), $300 million for the Countering Chinese Influence Fund, $520 million for Central America (and a directive that funds appropriated for Central America in FY2019 be made available), and $290 million to carry out the purposes of the Countering Russian Influence Fund.", "Appendix A. SFOPS Funding, by Account", "Appendix B. International Affairs Budget", "The International Affairs budget, or Function 150, includes funding that is not in the Department of State, Foreign Operations, and Related Programs appropriation: foreign food aid programs (P.L. 480 Title II Food for Peace and McGovern-Dole International Food for Education and Child Nutrition programs) are in the Agriculture Appropriations, and the Foreign Claim Settlement Commission and the International Trade Commission are in the Commerce, Justice, Science appropriations. In addition, the Department of State, Foreign Operations, and Related Programs appropriation measure includes funding for certain international commissions that are not part of the International Affairs Function 150 account.", "Appendix C. SFOPS Organization Chart"], "subsections": []}]}]}}
{"id": "R45770", "title": "The U.S. Election Assistance Commission: Overview and Selected Issues for Congress", "released_date": "2019-06-14T00:00:00", "summary": ["The U.S. Election Assistance Commission (EAC) is an independent federal agency charged with helping improve the administration of federal elections. It was established by the Help America Vote Act of 2002 (HAVA; P.L. 107-252 ; 116 Stat. 1666; 52 U.S.C. \u00c2\u00a7\u00c2\u00a720901-21145) and includes a four-member commission, a professional staff, an inspector general, and three advisory bodies.", "The EAC\u00e2\u0080\u0094and the legislation that created it\u00e2\u0080\u0094marked a shift in the federal approach to election administration. Congress had set requirements for the conduct of elections before HAVA, but HAVA was the first federal election administration legislation also to back its requirements with substantial federal support. In addition to setting new types of requirements, it provided federal funding to help states meet those requirements and facilitate other improvements to election administration and created a dedicated federal agency\u00e2\u0080\u0094the EAC\u00e2\u0080\u0094to manage election administration funding and collect and share election administration information.", "There was broad support in Congress during the HAVA debate for the idea of providing some assistance along these lines. Both at the time and since, however, opinions have differed about exactly what kind of assistance to provide and for how long. Members have disagreed about whether the EAC should be temporary or permanent, for example, and about what\u00e2\u0080\u0094if any\u00e2\u0080\u0094regulatory authority it should have.", "Changes in the election administration landscape and in Congress have brought different aspects of the debate to the forefront at various times. The 112 th Congress saw the start of legislative efforts in the House to limit or eliminate the EAC, for example, while the agency's participation in the federal response to attempted foreign interference in the 2016 elections has been cited as new grounds to extend or expand it.", "These shifts have been reflected in some cases in legislative activity related to the agency. For example, bills have been introduced to grant the EAC additional authority as well as to eliminate it. Other legislative proposals would leave the fundamental role of the EAC largely as it is but add new versions of its existing responsibilities or change the way it performs those responsibilities. Such proposals would direct the EAC to administer new types of grants, for example, or add new members to its advisory bodies."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["The U.S. Election Assistance Commission (EAC) is an independent federal agency charged with helping improve the administration of federal elections. It was established by the Help America Vote Act of 2002 (HAVA; P.L. 107-252 ; 116 Stat. 1666; 52 U.S.C. \u00c2\u00a7\u00c2\u00a720901-21145) as part of Congress's response to administrative issues with the 2000 elections. ", "The EAC\u00e2\u0080\u0094and the legislation that created it\u00e2\u0080\u0094marked a shift in the federal approach to election administration. Congress had set requirements for the conduct of elections before HAVA, but HAVA was the first federal election administration legislation also to back its requirements with substantial federal support. In addition to setting new types of requirements, it provided federal funding to help states meet those requirements and facilitate other improvements to election administration and created a dedicated federal agency\u00e2\u0080\u0094the EAC\u00e2\u0080\u0094to manage election administration funding and collect and share election administration information.", "There was broad support in Congress during the HAVA debate for the idea of providing some assistance along these lines. Both at the time and since, however, opinions have differed about exactly what kind of assistance to provide and for how long. Members have disagreed about whether the EAC should be temporary or permanent, for example, and about what\u00e2\u0080\u0094if any\u00e2\u0080\u0094regulatory authority it should have.", "Changes in the election administration landscape and in Congress have brought different aspects of the debate to the forefront at various times. The 112 th Congress saw the start of legislative efforts in the House to limit or eliminate the EAC, for example, while the agency's participation in the federal response to attempted foreign interference in the 2016 elections has been cited as new grounds to extend or expand it.", "This report provides an introduction to the EAC in the context of such developments. It starts with an overview of the EAC's duties, structure, and operational funding, and then summarizes the history of the EAC and legislative activity related to the agency. The report closes with some considerations that may be of interest to Congress as it conducts oversight of the EAC and weighs whether or how to take legislative action on either the agency or election administration more broadly. "], "subsections": [{"section_title": "Notes on Terminology", "paragraphs": ["HAVA defines \"states\" as the 50 states, the District of Columbia, American Samoa, Guam, Puerto Rico, and the U.S. Virgin Islands. This report takes a similar approach. Except where context makes clear that another meaning is intended, such as in references to \"the 50 states,\" \"state\" is intended to include U.S. territories and the District of Columbia.", "\"Election Assistance Commission\" and \"EAC\" are used by some to refer to the four-member commission that is part of the agency. To avoid confusion, this report reserves those terms for the agency as a whole and uses \"commission\" for the four-member commission."], "subsections": []}]}, {"section_title": "Overview of the EAC", "paragraphs": ["The EAC was created by HAVA, Congress's primary legislative response to problems with the administration of the 2000 elections. Issues with the vote count in Florida delayed the results of the 2000 presidential race for weeks. Subsequent investigations revealed widespread problems with states' conduct of elections. They also generated recommendations about how to prevent similar problems in the future, including via more expansive federal partnerships with states and localities.", "Exactly what those partnerships should look like was a matter of debate. There was broad agreement that they should involve some federal assistance to states and localities. Proposals from Members on both sides of the aisle and in both chambers of Congress included federal funding for improvements to election administration and federal guidance on voting system standards, for example.", "Members disagreed, however, about other features of the partnerships. These disagreements were rooted in part in competing concerns. Some Members were concerned that certain types of federal involvement would shift the balance of election administration authority from states and localities, which have traditionally had primary responsibility for administering elections, to the federal government. Others worried that states and localities would not\u00e2\u0080\u0094or could not\u00e2\u0080\u0094make necessary changes to their election systems without federal intervention.", "Disagreements about the federal government's role in election administration played out in at least two discussions that were relevant to the EAC: (1) whether new federal election administration responsibilities should be assumed by extant federal entities like the Federal Election Commission's (FEC's) Office of Election Administration (OEA) or an entirely new agency; and (2) whether the new responsibilities should be focused solely on supporting states and localities or should also include more expansive authority to compel states and localities to act.", "The EAC, like HAVA as a whole, was a compromise. It was a new agency, but its role was envisioned primarily as a support role. As one of the primary architects of HAVA, Representative Robert Ney, noted in the markup of the 2001 version of the bill, ", "[T]he name that we did choose, by the way, for this Commission is not an accident. The purpose of this Commission is to assist State and local governments with their election administration problems, basically taking the attitude we are the government, we are here to help. Its purpose is not to dictate solutions or hand down bureaucratic mandates.", "The following subsections provide an overview of the agency that emerged as a compromise from HAVA. They describe the EAC's duties, structure, and operational funding."], "subsections": [{"section_title": "Duties", "paragraphs": ["Consistent with the positioning of the EAC as a support agency, HAVA strictly limits the agency's power to compel action by states and localities. Responsibility for enforcing HAVA's national election administration requirements is assigned by the act to the U.S. Department of Justice (DOJ) and state-based administrative complaint procedures rather than to the EAC. Decisions about exactly how to comply with those requirements are reserved to the states. And EAC rulemaking is explicitly restricted to regulations for the voter registration reports and federal mail voter registration form required by the National Voter Registration Act of 1993 (NVRA; P.L. 103-31 ; 107 Stat. 77).", "Those limits do not mean the agency has no ability to influence state or local action. The EAC can trigger DOJ investigations of suspected violations of federal election law, for example, and revoke voting system certifications and testing lab accreditations. The agency can audit its grantees and specify how they should address issues identified by the audits. Its voting system testing and certification program can be binding on states that choose\u00e2\u0080\u0094as some states have\u00e2\u0080\u0094to make some or all of it mandatory under state law. Its voluntary guidance, while nonbinding, could be used by other agencies to inform HAVA enforcement.", "However, the EAC's duties are primarily envisioned by HAVA\u00e2\u0080\u0094and have primarily functioned\u00e2\u0080\u0094as support tasks. They fall into two general categories: (1) administration of funding and (2) collection and sharing of information."], "subsections": [{"section_title": "Administration of Funding", "paragraphs": ["The EAC is responsible for administering federal funding for improvements to election administration, including most of the grant and payment programs authorized by HAVA and an election data collection grant program that was authorized and funded by the FY2008 Consolidated Appropriations Act ( P.L. 110-161 ).", "Congress appropriated $380 million for payments to states under HAVA in FY2018 ( P.L. 115-141 ), following reports of attempted foreign interference in the 2016 elections. Prior to those appropriations, funding was last provided for EAC-administered grants and payments in FY2010 (see Table 1 for details).", "The EAC's administrative responsibilities typically extend past the fiscal year for which funding is appropriated. Much of the funding it administers has been provided as multiyear or no-year funds, and it performs ongoing funding maintenance tasks, such as providing technical assistance to funding recipients and issuing advisory opinions about proposed uses of funds. Through its Office of Inspector General (OIG), the EAC also audits grantees to confirm that they are meeting funding conditions, such as matching-fund and maintenance-of-effort requirements, and using funds as intended."], "subsections": []}, {"section_title": "Collection and Sharing of Information", "paragraphs": ["HAVA folded the FEC's OEA into the EAC, transferring its staff, duties, and funding to the new agency. The OEA had performed a clearinghouse function at the FEC. That function was first established by the Federal Election Campaign Act of 1971 (P.L. 92-225; 86 Stat. 3) at the General Accounting Office (now called the Government Accountability Office [GAO]), as a source of election administration research and a forum for sharing election administration information. The function was transferred to the FEC when that agency was created in 1975 ( P.L. 93-443 ; 88 Stat. 1263).", "The mandate expanded at the FEC to include creating and updating voluntary federal standards for voting systems and, following the enactment of the NVRA in 1993, producing a biennial voter registration report and developing and maintaining a federal mail voter registration form. ", "These information collection and sharing functions have carried over to\u00e2\u0080\u0094and undergone further expansion at\u00e2\u0080\u0094the EAC. The following subsections describe the EAC's information collection and sharing duties."], "subsections": [{"section_title": "Research and Coordination", "paragraphs": ["Like its clearinghouse predecessors at GAO and the FEC, the EAC conducts election administration research and provides opportunities for election administration stakeholders to share their experience and expertise.", "Some of the work the EAC does as part of its research function is mandated specifically. The Election and Voting Survey (EAVS) it produces after each regular federal general election, for example, includes an NVRA-mandated voter registration report and reporting on military and overseas voting that is required by UOCAVA. The EAC was also directed by HAVA to conduct studies of military and overseas voting; voting system usability and accessibility; HAVA's voter identification requirement; use of Social Security information for voter verification; use of the internet in electoral processes; and postage-free absentee voting.", "The EAC also has considerable latitude to conduct other election administration research. It has issued a number of reports under this authority, including studies of rural versus urban election administration, alternative voting methods, and voter fraud and intimidation. The EAC has also released products that are specifically geared toward practitioners, such as a series of Quick Start Guides for election managers.", "The EAC facilitates information exchanges among election administration stakeholders in multiple ways, from publishing state and local best practices and requests for proposals to convening meetings and hosting roundtables and summits. One particularly high-profile example of the EAC's coordination work is its participation in the federal response to reports of attempted foreign interference in the 2016 elections. For more on that work, see the \" The Agency's Role in Federal Election Security Efforts \" section of this report."], "subsections": []}, {"section_title": "Voting System Guidelines, Testing, and Certification", "paragraphs": ["The FEC adopted the first voluntary federal voting system standards (VSS) in 1990 and updated them in 2002. The National Association of State Election Directors (NASED), a professional organization for state election directors, established a program to accredit labs to test voting systems to the VSS and certify systems as meeting the standards. When the EAC was created, it inherited enhanced versions of the FEC's and NASED's voting system guidelines, testing, and certification responsibilities.", "The VSS were replaced at the EAC by Voluntary Voting System Guidelines (VVSG), which were called \"guidelines\" to distinguish them from the mandatory voting systems standards included among HAVA's national election administration requirements. One of the EAC's advisory bodies, the Technical Guidelines Development Committee (TGDC), is charged with drafting the VVSG. The draft guidelines are made available to the public, the agency's executive director, and the EAC's other two advisory bodies, the Board of Advisors and the Standards Board, for review and comment before they are submitted to the commissioners for a vote on adoption.", "The commissioners are also responsible for accrediting laboratories to test voting systems to the VVSG and revoking lab accreditations; certifying, decertifying, and recertifying systems as meeting the VVSG; and issuing advisories to help voting system manufacturers and testing labs interpret the VVSG. The National Institute of Standards and Technology (NIST), which provides the TGDC with technical support on request and whose Director chairs the TGDC, is charged with monitoring voting system testing labs and making recommendations to the commission about lab accreditations and accreditation revocations.", "The VVSG were first adopted in 2005 and updated in 2015. The 2005 version updated and expanded the 2002 VSS to account for technological advances and to increase security and accessibility requirements. The 2015 iteration aimed to update outdated portions of the 2005 VVSG and increase the guidelines' testability.", "As of May 2019, the EAC was working on a second update (VVSG 2.0). Unlike previous versions of the VVSG, which were presented as device-specific recommendations, VVSG 2.0 separates higher-level principles and guidelines from technical details. The main document, which was released for public comment on February 28, 2019, sets out function-based principles, such as auditability, and guidelines, such as capacity to support efficient audits and resilience against intentional tampering. Supplementary documents are expected to provide the technical specifications required to help voting system manufacturers to implement\u00e2\u0080\u0094and voting system testing labs to test whether systems meet\u00e2\u0080\u0094the higher-level principles and guidelines.", "States are not required by federal law to adhere to the VVSG, but some have made the guidelines mandatory under their own state laws. States may also adopt other parts of the federal voting system testing and certification program. For example, they may choose to require voting systems to be tested by a federally accredited lab."], "subsections": []}, {"section_title": "Voluntary Guidance", "paragraphs": ["HAVA set new national election administration requirements\u00e2\u0080\u0094such as certain standards for voting systems and requirements to offer provisional voting, post sample ballots at the polls on Election Day, and create and maintain a computerized statewide voter registration list \u00e2\u0080\u0094and charged the EAC with adopting voluntary guidance about how to meet them.", "This voluntary guidance is intended to offer specifics about how to implement HAVA's general mandates. The EAC's guidance on statewide voter registration lists, for example, indicates that either a \"top-down\" system, in which a centrally located voter registration database is connected to local terminals, or a \"bottom-up\" system, in which information from locally hosted databases is used to update a central list, is acceptable under the law.", "As indicated by the name, this guidance is voluntary; states and localities can choose whether or not to adopt it. As noted above, however, the voluntary guidance the EAC issues could be used by other agencies to inform HAVA enforcement."], "subsections": []}]}]}, {"section_title": "Structure", "paragraphs": ["The EAC includes a four-member commission, a professional staff led by an executive director and general counsel, an OIG, and three advisory bodies: the Board of Advisors, the Standards Board, and the TGDC. Its primary oversight committees are the House Committee on House Administration and the Senate Committee on Rules and Administration. The components of the EAC are described in more detail in the subsections below.", "The structure of the EAC was informed by at least three objectives:", "State and Local Partnership . The EAC's advisory bodies play a central role in the agency's functioning, and state and local officials or the professional associations that represent them serve on or appoint members to all three bodies. Expert Input . The advisory bodies also feature a wide range of experience and expertise. In addition to state and local officials, members include representatives of voters, scientific and technical specialists, and disability access experts, among others. Bipartisanship . The commission and two of the advisory bodies are designed to be politically balanced, and the commission cannot take certain actions without a three-vote majority of its members.", "The agency's structure has also had implications for its functioning. For example, the three-vote quorum requirement for commission action has led at times to delays and inactivity. For more on such implications, see the \" Debate About the Permanence of the Agency \" section of this report."], "subsections": [{"section_title": "Commission", "paragraphs": ["The commission is designed to have four members, each of whom is required to have elections experience or expertise and no more than two of whom may be affiliated with the same political party. Candidates for the commission are recommended by the majority or minority leadership of the House or Senate and appointed by the President subject to the advice and consent of the Senate.", "Commissioners are appointed to four-year terms on staggered two-year cycles. They may be reappointed to up to one additional term and may continue to serve on \"holdover\" status after their terms expire, pending appointment of a successor. Two commissioners representing different political parties are chosen by the commission membership each year to serve one-year terms as chair and vice chair.", "Certain actions by the commission require a three-vote majority of its members. According to an organizational management document adopted by the commission in February 2015, the commission is responsible for setting EAC policy. Among the actions that require a policymaking quorum of the EAC's commissioners are adopting voluntary guidance and the VVSG, appointing an executive director or general counsel, and promulgating regulations for the NVRA-mandated voter registration reports and federal mail voter registration form."], "subsections": []}, {"section_title": "Professional Staff", "paragraphs": ["The EAC has two statutory officers\u00e2\u0080\u0094an executive director and a general counsel\u00e2\u0080\u0094who are appointed by the commission. Both serve four-year terms and are eligible for reappointment.", "HAVA grants the executive director the authority to hire other professional staff (see Figure 1 for an organizational chart of the agency as of 2019). As a matter of policy, the executive director is also responsible for the day-to-day operations of the agency, including preparing policy recommendations for consideration by the commissioners, implementing adopted policies, and handling administrative affairs.", "The size of the EAC's staff has varied, from the four commissioners and handful of OEA transfers in FY2004 to 50 full-time equivalent staff (FTEs) in FY2010 and around 30 FTEs since FY2015. The number of FTEs the agency could maintain was capped at 22 in FY2005 and 23 in FY2006. The cap was lifted in FY2007 and, as of May 2019, had not been reinstated."], "subsections": []}, {"section_title": "Advisory Bodies", "paragraphs": ["HAVA created three advisory bodies for the EAC: the Board of Advisors, the Standards Board, and the TGDC. The three bodies\u00e2\u0080\u0094whose members represent a variety of agencies, associations, organizations, and interests\u00e2\u0080\u0094play important roles in the agency's functioning. The following subsections describe their structures and responsibilities."], "subsections": [{"section_title": "The Board of Advisors and the Standards Board", "paragraphs": ["The EAC's Board of Advisors and its Standards Board review voluntary guidance and the VVSG before they are presented to the commissioners for a vote on adoption. In the event of a vacancy for executive director of the EAC, each of the boards is directed by HAVA to appoint a search committee for the position, and the commission is required to consider the candidates the search committees recommend. The commission is also directed to consult with the two boards on research efforts, program goals, and long-term planning; and the National Institute of Standards and Technology (NIST) must consult with the boards on its monitoring and review of voting system testing labs.", "The Board of Advisors was initially assigned 37 members, but its membership dropped to 35 with the 2016 merger of two of the organizations responsible for appointing its members. Sixteen members of the board are appointed by organizations that represent state and local officials, and seven represent federal entities. Four members are science and technology professionals, who are each appointed by the majority or minority leadership of the House or Senate. The remaining eight are voter representatives, two of whom are appointed by each of the chairs and ranking members of the EAC's two primary oversight committees. The overall membership of the board is intended to be bipartisan and geographically representative.", "The Standards Board has 110 members. They include two representatives of each of the U.S. jurisdictions that are eligible for HAVA's formula-based payments: the 50 states, the District of Columbia, American Samoa, Guam, Puerto Rico, and the U.S. Virgin Islands. Each pair of representatives consists of one state election official and one local election official who are not affiliated with the same political party.", "The Standards Board chooses nine of its members to serve two-year terms on its Executive Board. Executive Board members may serve no more than three consecutive terms, and no more than five Executive Board members may be either state officials, local officials, or members of the same political party."], "subsections": []}, {"section_title": "Technical Guidelines Development Committee", "paragraphs": ["The 15-member TGDC is charged with helping the executive director of the EAC develop and maintain the VVSG. The Director of NIST serves as the chair of the committee and, in consultation with the commission, appoints its other 14 members. Appointees to the TGDC must include an equal number of members of the Board of Advisors, Standards Board, and Architectural and Transportation Barriers Compliance Board (Access Board); one representative of each of the American National Standards Institute (ANSI) and the Institute of Electrical and Electronics Engineers (IEEE); two NASED representatives who are chosen by the organization and neither share a political party nor serve on the Board of Advisors or Standards Board; and other individuals with voting system-related scientific or technical expertise."], "subsections": []}]}, {"section_title": "Office of Inspector General", "paragraphs": ["The EAC is required to have an OIG under HAVA and the Inspector General Act of 1978, as amended ( P.L. 95-452 ; 92 Stat. 1101). As noted in the \" Administration of Funding \" section of this report, the EAC's OIG oversees audits of the use of HAVA funding and refers issues identified in audits to EAC management for resolution and, if necessary, corrective action. In one instance, for example, the OIG determined that a HAVA grantee could not document its grant costs, and the EAC put the organization on a payment plan to return the funds. In another case, some of a state's spending was found to be impermissible and some was found to be inadequately documented. The state was directed to repay the former funding to the U.S. Treasury and the latter to its HAVA state election fund.", "The OIG also oversees internal audits and investigations of the EAC. This work includes regular audits of the EAC's finances and compliance with federal laws, such as the Federal Information Security Management Act of 2002 ( P.L. 107-347 ; 116 Stat. 2899), and reports on management challenges facing the agency. It also includes special audits and investigations in response to complaints about fraud, waste, mismanagement, or abuse at the EAC, such as a 2008 investigation of allegations of political bias in the agency's preparation of a voter fraud and intimidation report and a 2010 investigation of complaints about its work environment."], "subsections": []}]}, {"section_title": "Operational Funding", "paragraphs": ["The EAC has received operational funding for salaries and expenses, including for its OIG, in addition to the funding it has received for the grants and payments it administers and for transfers to NIST for HAVA-related activities like monitoring voting system testing labs. EAC appropriations have been under the jurisdiction of the Financial Services and General Government (FSGG) Subcommittees of the House and Senate Appropriations Committees since those subcommittees were created in 2007.", "HAVA explicitly authorized up to $10 million in operational funding for the EAC in each of FY2003, FY2004, and FY2005. Congress appropriated significantly less than the authorized ceiling in the first two fiscal years: $2 million in FY2003 ( P.L. 108-7 ) and $1.2 million, plus approximately $500,000 transferred from the OEA, in FY2004 ( P.L. 108-7 ; P.L. 108-199 ). The House Appropriations Committee also recommended significant cuts to the President's budget request for the agency from FY2012 through FY2018, although the enacted bills hewed more closely to presidential and Senate proposals. For more on those cases, see the \" Setting up the Agency \" section of this report and Table 2 , respectively.", "Congress appropriated $10.8 million for EAC salaries and expenses in the final year for which operational funding was explicitly authorized for the agency, FY2005 ( P.L. 108-447 ). Although the explicit authorization of appropriations for EAC operations only ran through FY2005, the agency has continued to receive operational funding in subsequent years pursuant to its enabling legislation (see Table 2 for details).", "Some Members have proposed explicitly reauthorizing appropriations for EAC operations, although none of the proposals had been enacted as of May 2019. For more on such proposals, see the \" Proposals That Engage the Existing Role of the EAC \" section of this report."], "subsections": []}]}, {"section_title": "History of the EAC", "paragraphs": ["It took some time for the EAC to become operational. HAVA called for members to be appointed to the agency's commission within 120 days of the act's enactment (on October 29, 2002), but the first four commissioners did not take office for more than a year. Without commissioners, the agency drew limited appropriations, and the lack of commissioners and funding led to inactivity and missed deadlines.", "After nearly a decade of agency operations, the 112 th Congress saw the start of efforts to limit or eliminate the EAC, as some Members of Congress questioned whether there was still a need for the agency. More recently\u00e2\u0080\u0094following reports of attempted foreign interference in the 2016 elections\u00e2\u0080\u0094proponents of the EAC have cited the agency's participation in federal election security efforts as new grounds to preserve it.", "This section traces the history of the EAC from its origins in the wake of the 2000 elections to its position after the 2016 elections."], "subsections": [{"section_title": "Setting up the Agency", "paragraphs": ["HAVA called for members to be appointed to the commission by February 26, 2003, but the first four commissioners did not take office until December 13, 2003.", "The act also explicitly authorized up to $10 million in funding for EAC operations for each of FY2003, FY2004, and FY2005. With no commissioners in place for the first of those fiscal years or the start of the second, Congress appropriated significantly less than that amount in FY2003 and FY2004 ( P.L. 108-7 ; P.L. 108-199 ).", "In a 2004 oversight hearing on the EAC, some Members of Congress expressed concern that the limited early funding and delays in establishing the EAC had affected the agency's ability to perform its duties. One Member referred, for example, to missed deadlines for adopting voluntary guidance. As set out in HAVA, the deadlines for the EAC to adopt voluntary guidance for meeting the act's requirements preceded the deadlines for states to start meeting them. In theory, that would have given states the chance to review the agency's guidance before they finalized action on the requirements. In practice, the commissioners took office nearly a month-and-a-half after the first guidance was due and less than three weeks before states were supposed to have started meeting requirements.", "Some of the deadlines for conducting statutorily mandated research had also passed before the commissioners were sworn in, and some commissioners testified that the early issues had caused them to limit the scope of their ambitions for other projects. \"We are unable to do anything more than \u00e2\u0080\u00a6 really recite anecdotal things that we have heard as opposed to giving research-based guidance to States on how to implement\" certain election measures, then-Commissioner Ray Martinez said about the commission's ongoing guidance work, for example. He added, \"That is a critical point. We just don't have the means at this point to do anything other than how we are going about it, which I think is a very responsible and the best possible way that we can, but it is within the context of some very severely limited funds.\""], "subsections": []}, {"section_title": "Debate About the Permanence of the Agency", "paragraphs": ["Some aspects of HAVA, such as the provision for reappointment of EAC commissioners to a second four-year term and the absence of a sunset provision for the agency, are consistent with a vision of the EAC as a continuing agency. Others, such as explicitly authorizing only three years of operational funding, suggest something more temporary. That has left room for debate about how long-lasting the EAC should be.", "Some have viewed its proper role as permanent. At various points in the HAVA debate, for example, Members of the Senate characterized the agency as permanent. Other Members of Congress have highlighted benefits of ongoing EAC responsibilities like updating the VVSG, conducting the EAVS, and providing technical and other assistance to the states. They have argued that the tasks the EAC performs are essential and could not be carried out as effectively\u00e2\u0080\u0094or much more cost-effectively\u00e2\u0080\u0094by other agencies.", "Other Members have seen the agency as temporary. As of the beginning of the 112 th Congress, the EAC had distributed much of the funding it was authorized by HAVA to administer and completed a number of the studies HAVA directed it to conduct. The National Association of Secretaries of State had recently renewed a resolution\u00e2\u0080\u0094first adopted in 2005 and subsequently to be approved again in 2015\u00e2\u0080\u0094that called for the agency's elimination. The EAC's inspector general reported ongoing issues with the agency's performance management, information security, work environment, records management, and overhead expenses.", "Such factors were cited by some as evidence that the agency had outlived its usefulness. Bills were introduced to terminate the EAC, and the House Appropriations Committee recommended cutting or eliminating its operational funding. For more on those activities, see the \" Proposals to Terminate the EAC \" section of this report and Table 2 , respectively.", "The Senate also stopped confirming\u00e2\u0080\u0094and some congressional leaders stopped recommending \u00e2\u0080\u0094nominees to the EAC. The commission lost the numbers required for a policymaking quorum in December 2010 and both of its remaining members in December 2011 (see Figure 2 for details). The Senate, some of whose Members cited opposition to the ongoing existence of the agency rather than to individual nominees, did not confirm any new commissioners until December 2014.", "Without the numbers for a policymaking quorum, the commission could not take official action. One notable consequence was that it could not update the VVSG. The creation of the EAC was, in part, a response to the FEC's handling of the VSS. The committee report on legislation containing a precursor to the VVSG provisions of HAVA, for example, cited the FEC's failure to keep the VSS up to date. The lack of numbers for a quorum between December 2011 and the swearing-in of the newly confirmed commissioners in January 2015, however, left an almost 10-year gap between the EAC's initial adoption of the VVSG in 2005 and its first update in 2015."], "subsections": []}, {"section_title": "The Agency's Role in Federal Election Security Efforts", "paragraphs": ["The U.S. Intelligence Community reported in 2016 that foreign entities had attempted to interfere with that year's elections. The U.S. Department of Homeland Security (DHS) responded in January 2017 by designating election systems as critical infrastructure, and Congress responded in March 2018 by appropriating $380 million for payments to states that, it indicated in an accompanying explanatory statement, it intended to be used for enhancing election technology and improving election security (see Table 1 for details).", "The EAC has participated in both responses. First, it was charged with administering the new payments to states ( P.L. 115-141 ). Second, it helped set up\u00e2\u0080\u0094and, in some cases, serves as a member of\u00e2\u0080\u0094the special channels for sharing threat information and facilitating sector and subsector coordination that came with the critical infrastructure designation. Those channels include the Election Infrastructure Subsector's Government Coordinating Council and Executive Committee, Sector Coordinating Council, and Elections Infrastructure Information Sharing and Analysis Center.", "The EAC has also focused on election security in some of its other work. It has provided information technology management trainings for election officials, for example, and produced election security and critical infrastructure resources for voters.", "Supporters of a permanent role for the EAC have pointed to its participation in the federal government's election security efforts as a new reason to keep the agency. Other Members have also indicated that they see a longer-term role for the agency in light of the 2016 elections. For example, the House Appropriations Committee proposed increasing the EAC's operational funding above the President's budget request in FY2019 after seven years of recommending substantial cuts (see Table 2 for details)."], "subsections": []}]}, {"section_title": "Legislative Activity on the EAC", "paragraphs": ["The EAC has continued to be a subject of legislative activity since its creation by HAVA. It has been part of the appropriations process, receiving operational funding each fiscal year. For more on appropriations activity on the EAC, see the \" Operational Funding \" section of this report.", "It has also featured in a range of authorizing legislation. Some post-HAVA authorization bills have tapped into the existing role of the agency, while others have proposed changes to that role. There have also been proposals that focused less on the nature of the role the EAC performs than on how it performs that role."], "subsections": [{"section_title": "Proposals That Engage the Existing Role of the EAC", "paragraphs": ["The EAC has traditionally been responsible for managing certain election administration-related funding, adopting guidance for meeting some national election administration requirements, serving as a federal source of election administration expertise, conducting election administration research, and helping connect election administration stakeholders with one another. Members looking for a federal agency to perform such tasks\u00e2\u0080\u0094to administer new grants to states to conduct risk-limiting audits, for example, or to set standards for electronic poll books\u00e2\u0080\u0094have often turned to the EAC in their legislative proposals. Members have also proposed explicitly reauthorizing appropriations for EAC operations either permanently or for a set number of years.", " Table 3 presents selected examples of such bills."], "subsections": []}, {"section_title": "Proposals to Change the Role of the EAC", "paragraphs": ["The long-standing disagreements about the federal role in election administration that played out in the HAVA debate and in discussions about filling seats on the commission have also played out in post-HAVA legislative proposals. There have been proposals both to expand the EAC's authority and to eliminate the agency entirely. There have also been proposals to eliminate or substantially reduce the agency's funding. For more on proposed funding cuts, see the \" Operational Funding \" and \" Debate About the Permanence of the Agency \" sections of this report."], "subsections": [{"section_title": "Proposals to Terminate the EAC", "paragraphs": ["Some post-HAVA legislation has proposed eliminating the EAC. By the beginning of the 112 th Congress, almost a decade had passed since HAVA was enacted. As noted in the \" Debate About the Permanence of the Agency \" section of this report, the EAC was nearing the end of some of the bigger projects it had been assigned by HAVA. And other agencies, such as NIST, were already playing a central role in ongoing EAC responsibilities like the federal voting system testing and certification program. There was a sense among some Members that there was no longer a need for a separate agency to fill the role the EAC had been filling. Combined with concerns about how the agency was being managed, this prompted calls to terminate it. Bills to disband the EAC and transfer duties to other agencies were introduced in each Congress from the 112 th to the 115 th ."], "subsections": []}, {"section_title": "Proposals to Expand the EAC's Authority", "paragraphs": ["Other bills have taken the opposite tack, proposing new authority for the EAC. One such approach has been to revisit the limit on EAC rulemaking, proposing lifting it in certain cases\u00e2\u0080\u0094such as to permit the agency to promulgate regulations for a proposed new federal write-in absentee ballot\u00e2\u0080\u0094or striking it entirely. Another approach has been to propose giving the agency new powers to direct state or local action, such as imposing penalties for noncompliance with certain national election administration requirements or designating types of evidence that state and local officials may not use as grounds for removing individuals from the voter rolls.", " Table 4 presents selected examples of proposals to terminate the EAC or to expand its authority."], "subsections": []}]}, {"section_title": "Proposals to Change the Way the EAC Works", "paragraphs": ["Some post-HAVA legislation on the EAC has focused less on what the agency does and more on how it does it. Bills have been introduced that propose structural changes to the agency, such as adding members to its advisory bodies or creating new advisory boards or task forces, and procedural changes, such as adjusting the payment process for voting system testing, changing how the EAC submits its budget requests, and exempting the agency from certain federal requirements.", "Such proposals aim to address perceived weaknesses in the way the agency operates. Some proposals may be responses to perceived inefficiencies in current processes, such as delays caused by the commission's quorum requirement or the public comment requirement of the Paperwork Reduction Act of 1980 ( P.L. 96-511 ; 94 Stat. 2812), or to a perceived need for new kinds of experience or expertise at the agency. Other proposals may aim to prevent possible conflicts of interest, such as by eliminating direct payments from vendors to voting system testing labs, or to give Congress more insight into the agency's resource needs, such as by requiring it to submit budget requests to Congress at the same time as it sends them to the President or the Office of Management and Budget.", " Table 5 presents selected examples of these kinds of structural and procedural proposals."], "subsections": []}]}, {"section_title": "Potential Considerations for Congress", "paragraphs": ["Congress has the authority to conduct oversight of the EAC and to legislate on both the EAC in particular and election administration more generally. In addition to issues raised by previous legislative proposals, such as whether to terminate the agency, the following issues may be of interest to Members as they consider whether or how to undertake such activities or whether to maintain the status quo:", "Providing for New Expertise . The EAC was structured to ensure input from a range of election administration stakeholders, from voters to technical specialists to accessibility experts. However, new developments, such as new election security threats, might call for experience or expertise not currently represented at the agency. If Congress seeks to assure the EAC access to such experience or expertise, how might it do so? Some possible options include directing the EAC to consult with specialist organizations or agencies, funding specialized professional staff or creating specialized departments within the agency, adding members to one or more of the advisory bodies, and establishing new advisory bodies or task forces. Are there reasons to prefer some of these options over others? For example, the EAC's advisory bodies play a particularly central role in the functioning of the agency. Are there reasons to want certain stakeholders to have\u00e2\u0080\u0094or not to have\u00e2\u0080\u0094such direct access to EAC actions and decisionmaking?", "Assigning (and Reassigning) Responsibilities . The EAC is the only federal agency dedicated to election administration as a whole. As such, it is often taken to be the obvious choice to assume federal election administration responsibilities. As noted above, however, some Members have suggested that some of the duties currently in the EAC's portfolio might be better performed by other agencies or in other ways. Are there election administration-related issues about which parts of the federal government other than the EAC might have relevant expertise? For example, the EAC has traditionally been the primary federal repository of election administration best practices, but DHS also provides resources related to election security. Questions might arise, with respect to certain elections-related duties, about which agency\u00e2\u0080\u0094or combination of agencies\u00e2\u0080\u0094is best positioned to perform them. More broadly, how might the EAC's and other agencies' comparative advantages guide assignment of new federal election administration responsibilities or reassignment of existing responsibilities?", "Assessing and Meeting Resource Needs . The EAC has been described variously as both overfunded and underfunded. Developments like the emergence of new election security threats have prompted calls for additional resources for agency operations and for distribution to states via the EAC. How do current levels of funding match up to the agency's\u00e2\u0080\u0094and its grantees'\u00e2\u0080\u0094resource needs? Are there tools, such as concurrent budget submission or research into appropriate funding levels for HAVA payments, that might help Congress better assess those needs? Are there resources other than funding, such as security clearances for commissioners or professional staff, that the EAC needs and does not currently have?", "Considering the Role of the Quorum Requirement . The quorum requirement for official action by the commission has led at times to delays and inactivity, such as deferred updates to the VVSG. Does Congress seek to consider ways to reduce the likelihood or frequency of such delays? If so, would it prefer an approach that eliminated the need for a quorum in certain cases, such as by exempting certain actions from the quorum requirement, or one that reduced the likelihood of the commission being without a quorum? Options for the latter approach might include structural changes to the commission, such as adding or removing a seat, or procedural changes to the way commissioners are seated, such as revising the roles of the President and congressional leadership in the candidate selection process.", "Scheduling EAC Action . HAVA envisioned that the EAC would adopt voluntary guidance about how to meet the act's national election administration requirements before the states actually had to meet them. The idea was to give states the opportunity to review the federal guidance before finalizing their actions on the requirements. Subsequent legislative proposals have similarly called for new national election administration requirements and EAC guidance about how to meet them. How might deadlines be set in such proposals to give the EAC time to research and adopt meaningful guidance and the states time to make best use of it? Are there additional conditions that might need to be set\u00e2\u0080\u0094or support that might need to be provided\u00e2\u0080\u0094to ensure that the deadlines can be met?"], "subsections": []}]}}
{"id": "R44688", "title": "Congressional Staff: CRS Products on Size, Pay, Job Tenure, and Duties", "released_date": "2020-03-11T00:00:00", "summary": ["The manner in which staff are integrated and utilized within an organization may reflect the missions and priorities of that organization. In Congress, staff work for Members of Congress in personal, committee, and leadership offices, and are involved with every facet of congressional activity. Activities might include supporting a Member's representational, legislative, leadership, or administrative responsibilities as they arise in those settings.", "House and Senate staff activities may be of particular interest as one Congress comes to a close, and another Congress integrates new Members and staff in support of addressing its constitutional and representational responsibilities. Interest in staff issues may also arise when considering committee funding or appropriations for the legislative branch.", "CRS has several products about congressional staff, listed below, that provide information about staff roles and data over time about the number of staff, pay levels, and time in specific positions in Member office and committee settings. Congressional clients may contact the authors of the individual reports for additional information."], "reports": {"section_title": "", "paragraphs": ["T he manner in which staff are integrated and utilized within an organization may reflect the missions and priorities of that organization. In Congress, staff work for Members of Congress in personal, committee, and leadership offices, and are involved with every facet of congressional activity. Activities might include supporting a Member's representational, legislative, leadership, or administrative responsibilities as they arise in those settings. ", "House and Senate staff activities may be of particular interest as one Congress comes to a close, and another Congress integrates new Members and staff in support of addressing its constitutional and representational responsibilities. Interest in staff issues may also arise when considering committee funding or appropriations for the legislative branch.", "CRS has several products about congressional staff, listed below, that provide information about staff roles and data over time about the number of staff, pay levels, and time in specific positions in Member office and committee settings. Congressional clients may contact the authors of the individual reports for additional information."], "subsections": [{"section_title": "House of Representatives", "paragraphs": ["CRS Report R43947, House of Representatives Staff Levels in Member, Committee, Leadership, and Other Offices, 1977-2016 , by R. Eric Petersen and Amber Hope Wilhelm.", "CRS Report R44323, Staff Pay Levels for Selected Positions in House Member Offices, 2001-2018 , coordinated by R. Eric Petersen.", "CRS Report R44682, Staff Tenure in Selected Positions in House Member Offices, 2006-2016 , by R. Eric Petersen and Sarah J. Eckman.", "CRS Report R44322, Staff Pay Levels for Selected Positions in House Committees, 2001-2015 , coordinated by R. Eric Petersen.", "CRS Report R44683, Staff Tenure in Selected Positions in House Committees, 2006-2016 , by R. Eric Petersen and Sarah J. Eckman."], "subsections": []}, {"section_title": "Senate", "paragraphs": ["CRS Report R43946, Senate Staff Levels in Member, Committee, Leadership, and Other Offices, 1977-2016 , by R. Eric Petersen and Amber Hope Wilhelm.", "CRS Report R44324, Staff Pay Levels for Selected Positions in Senators' Offices, FY2001-FY2018 , coordinated by R. Eric Petersen.", "CRS Report R44684, Staff Tenure in Selected Positions in Senators' Offices, 2006-2016 , by R. Eric Petersen and Sarah J. Eckman.", "CRS Report R44325, Staff Pay Levels for Selected Positions in Senate Committees, FY2001-FY2015 , coordinated by R. Eric Petersen.", "CRS Report R44685, Staff Tenure in Selected Positions in Senate Committees, 2006-2016 , by R. Eric Petersen and Sarah J. Eckman."], "subsections": []}, {"section_title": "Staff Duties, Qualifications, Expectations, and Skills", "paragraphs": ["CRS Report R46262, Congressional Staff: Duties, Qualifications, and Skills Identified by Members of Congress for Selected Positions , by R. Eric Petersen."], "subsections": []}]}}
{"id": "R45810", "title": "Critical Minerals and U.S. Public Policy", "released_date": "2019-06-28T00:00:00", "summary": ["President Trump and various U.S. lawmakers have expressed concerns about U.S. reliance on critical mineral imports and potential disruption of supply chains that use critical minerals for various end uses, including defense and electronics applications. Chinese export quotas on a subset of critical minerals referred to as rare earth elements (REEs) and China's 2010 curtailment of REE shipments to Japan heightened U.S. vulnerability concern.", "In December 2017, Presidential Executive Order 13817, \"A Federal Strategy to Ensure Secure and Reliable Supplies of Critical Minerals,\" tasked the Department of the Interior to coordinate with other executive branch agencies to publish a list of critical minerals. The Department of the Interior published a final list of 35 critical minerals in May 2018.", "The concern among many in Congress has evolved from REEs and REE supply chains to include other minor minerals and metals that are used in small quantities for a variety of economically significant applications (e.g., laptops, cell phones, electric vehicles, and renewable energy technologies) and national defense applications. Also, as time passed, concerns increased about access to and the reliability of entire supply chains for rare earths and other minerals. Congressional action (e.g., National Defense Authorization Act for FY2014, P.L. 113-66 ) has led to the acquisition of REEs and other materials for the National Defense Stockpile. In 2017, the United States had no primary production of 22 minerals and was limited to byproduct production of 5 minerals on the critical minerals list. In contrast, the United States is a leading producer of beryllium and helium, and there is some U.S. primary production of 9 other critical minerals. China ranked as the lead global producer of 16 minerals and metals listed as critical. Although there are no single monopoly producers in China, as a nation, China is a dominant or near-monopoly producer of yttrium (99%), gallium (94%), magnesium metal (87%), tungsten (82%), bismuth (80%), and rare earth elements (80%).", "The United States is 100% import reliant on 14 minerals on the critical minerals list (aside from a small amount of recycling). These minerals are difficult to substitute inputs into the U.S. economy and national security applications; they include graphite, manganese, niobium, rare earths, and tantalum, among others. The United States is more than 75% import reliant on an additional 10 critical minerals: antimony, barite, bauxite, bismuth, potash, rhenium, tellurium, tin, titanium concentrate, and uranium.", "The current goal of U.S. mineral policy is to promote an adequate, stable, and reliable supply of materials for U.S. national security, economic well-being, and industrial production. U.S. mineral policy emphasizes developing domestic supplies of critical materials and encourages the domestic private sector to produce and process those materials. But some raw materials do not exist in economic quantities in the United States, and processing, manufacturing, and other downstream ventures in the United States may not be globally cost competitive. Congress and other decisionmakers have multiple legislative and administration options to weigh in deliberating on whether, and if so how, to address the U.S. role and vulnerabilities related to critical minerals."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["President Trump and various U.S. lawmakers have expressed concerns about U.S. reliance on critical mineral imports and the vulnerability to critical mineral disruptions of supply chains for various end uses, including defense and electronics applications. Chinese export quotas on a type of critical minerals referred to as rare earth elements (REEs) and China's curtailment of rare earth shipments to Japan over a maritime dispute in 2010 represented a wakeup call for the United States on China's near-monopoly control over global REE supply. The actions of the Chinese led to record high prices for REEs and, as a result, began to shine a light on the potential supply risks and supply chain vulnerability for rare earths and other raw materials and metals needed for national defense, energy technologies, and the electronics industry, among other end uses. U.S. legislators have introduced and deliberated on bills that would address the potential supply risk and vulnerability with respect to rare earth supply and bills that would promote domestic rare earth mine development. ", "After 2010, decisionmakers were faced with various policy questions, including is a domestic supply chain necessary to address potential supply risk; and would an RRE alternative supply chain outside China among allies provide reliable and less risky access to RREs? As events unfolded during the 2010s, it became clear that providing an upstream supply outside China was not enough, and that access to and the reliability of entire supply chains for rare earths and other minerals essential for the economy and national security also were vulnerable.", "The concern among many in Congress has evolved from rare earths and REE supply chains, to also include other minor minerals or metals that used in small quantities for a variety of economically significant applications. These minor metals are used in relatively small amounts in everyday applications such as laptops, cell phones and electric vehicles, and renewable energy technologies, in addition to national defense applications. In December 2017, the Presidential Executive Order (E.O.) 13817, \"A Federal Strategy to Ensure Secure and Reliable Supplies of Critical Minerals,\" tasked the Department of the Interior (DOI) to coordinate with other executive branch agencies to publish a list of \"critical minerals.\" DOI published a final list of 35 critical minerals in May 2018."], "subsections": [{"section_title": "From 2010 to Present", "paragraphs": ["Initially after China's actions in 2010 contributed to prices for the various elements increasing, the focus in Congress was on rare earth supply (e.g., where in the United States new REE production could begin). Since 2010, several bills have been introduced that would use a variety of policy options and approaches\u00e2\u0080\u0094from streamlining the permitting framework for rare earth elements and other mining and processing projects on federal land, to the additions of REEs to the National Defense Stockpile. Sections 1411 and 1412 of the National Defense Authorization Act for FY2014 ( P.L. 113-66 ) contained language for Department of Defense to begin studies of rare earth materials and to require purchases of heavy REEs for the national defense stockpile. ", "In 2010 the sole U.S. rare earth mine located in Mountain Pass, CA, owned by Molycorp, Inc., was dormant. From the mid-1960s through the 1980s, Molycorp's Mountain Pass mine was the world's dominant source of rare earth oxides. However, by 2000, nearly all of the separated rare earth oxides were imported, primarily from China. Because of China's REE oversupply and lower-cost production, as well as a number of environmental (e.g., a pipeline spill carrying contaminated water) and regulatory issues at Mountain Pass, Molycorp, Inc. ceased production at its mine in 2002. ", "Between 2010 and 2012, there was some optimism but also criticism over Molycorp Inc.'s approach to reopen the only rare earth mine in the United States and establish a vertically integrated operation including oxide separation, production of metal alloys, and permanent magnet production. A few important questions relevant to a vertically integrated approach were raised then as they are now", "How can a fully integrated supply chain be developed domestically? Is a domestic supply chain necessary to address potential supply risk?; and With China in a near-monopoly position in all aspects of the rare earth supply chain, would an alternative supply chain outside China among allies provide reliable and less risky access to needed rare earth elements? ", "Another immediate concern focused on the investment and skill level needed to build-out a reliable supply chain outside of China. ", "In 2012, Molycorp, Inc., reopened its Mountain Pass mine, and the Lynas Corporation, Ltd. began production in Australia which added more REEs to the global mix\u00e2\u0080\u0094albeit most of the production was in light rare earth elements (LREEs), not the heavy rare earth elements (HREEs) are needed for permanent magnets\u00e2\u0080\u0094the fastest growing use for rare earth elements at the time. Permanent magnets are important parts for national defense missile systems, wind turbines, and automobiles. With higher prices came lower demand as some companies began to use less REEs, try substitutes, or diversify their source of raw material supply outside of China. With China's production (including illegal production), there was more supply than demand for many of the REEs and prices declined. As a result of rapidly falling prices and Molycorp's debt, the Mountain Pass mine was not economically sustainable. Molycorp filed for Chapter 11 bankruptcy protection in June 2015. In June 2017, MP Mine Operations LLC (MPMO) purchased the Mountain Pass mine for $20.5 million. MPMO is an American-led consortium of which the Chinese-owned Leshan Shenghe Rare Earth Company has a 10% nonvoting minority share. In 2018, MMPO reportedly restarted production at Mountain Pass. See Table 1 for Molycorp's timeline. In March 2019, the Chinese government announced a reduction in REE production quotas and suggested that the REE produced in China would be sold only in China for its domestic manufacturing activity.", "As previously noted, the vulnerability concerned expanded from RREs to critical minerals. Assessments using a criticality matrix identified minerals (such as REEs, cobalt, and tantalum, among others) that could face supply restrictions and result in vulnerabilities to the economy and national security. Broad criticality assessments were prepared by the National Research Council, the Department of Energy (DOE), and the Massachusetts Institute of Technology (MIT) early in the recent discussion of mineral supply risk and potential mineral demand from the energy technology sector. Many others, such as Nassar, Du, and Graedel, have weighed in since 2010 on the criticality and supply risk question, providing a variety of models that examine the supply risk and vulnerabilities associated with these minerals. It is beyond the scope of this report to evaluate those models."], "subsections": []}, {"section_title": "Congressional Interest", "paragraphs": ["Proposed Congressional findings mentioned in a number of bills introduced since the 111 th Congress on critical minerals include:", "Emerging economies are increasing their demand for REEs as they industrialize and modernize; A variety of minerals are essential for economic growth and for infrastructure; The United States has vast mineral resources but at the same time is becoming more dependent on imports; Mineral exploration dollars in the United States are approximately 7% of the world total (compared to 19% in the early 90s); Heavy rare earth elements are critical to national defense; China has near-monopoly control over the rare earth value chain, and there has been a transfer of technology from U.S. firms and others to China in order to gain access to rare earths and downstream materials; Thorium regulations are a barrier to rare earth development in the United States; A sense of Congress that China could disrupt REE and other critical mineral supplies to the United States; It is important to develop the domestic industrial base for the production of strategic and critical minerals; and The United States must accept some risk in the form of aiding domestic investment opportunities. ", "The Senate Committee on Energy and Natural Resources held a hearing on S. 1317 , the American Mineral Security Act, on May 14, 2019, \"Examining the Path to Achieving Mineral Security.\" Two congressional hearings were held on critical minerals in the 115 th Congress: one on December 12, 2017, by the House Natural Resources Subcommittee on Energy and Mineral Resources on \"Examining Consequences of America's Dependence on Foreign Minerals,\" and a second on July 17, 2018, by the Senate Committee on Energy and Natural Resources to examine the final list of critical minerals. ", "Public resource and minerals policy options are among the options for creating reliable supply chains of these minerals and metals. The Administration and many in Congress have combined concerns over import dependence and developing domestic supply into a number of policy proposals that would aim to streamline the permitting process for domestic critical mineral production and possibly open more public lands to mineral exploration. A 2017 U.S. Geological Survey (USGS) report, Critical Mineral Resources of the United States , presents its mineral assessments of 23 critical minerals for the nation as a whole, but does not break out what might be available on federal lands, where many of the legislative proposals are directed. Others in Congress want to be sure that if a more efficient permitting process is put in place, all the mechanisms for environmental protection and public input are left intact, if not enhanced."], "subsections": []}, {"section_title": "The Scope of This Report", "paragraphs": ["This report examines the process by which the critical minerals list was drafted, why these minerals are being classified as critical, where production is taking place, and countries holding the largest reserves of critical minerals. There is a brief review of materials required for lithium-ion batteries and solar and wind energy systems, and a discussion of supply chains for rare earth elements and tantalum. This report also presents the statutory and regulatory framework for domestic mineral production, legislative proposals, and congressional and executive branch initiatives (and actions), as well as an overview of U.S. critical mineral policy.", "There are a number of policy issues related to U.S. critical minerals, such as trade policy (particularly with China) and conflict minerals, just to name two. Treatment of these issues is beyond the scope of this report."], "subsections": []}]}, {"section_title": "Brief History of U.S. Critical Minerals and Materials Policy", "paragraphs": ["Minerals for national security have long been a concern in the United States. For example, there were concerns over shortages of lead for bullets during the early 1800s. There were material shortages during WWII and the Korean War that contributed to the formation of the National Defense Stockpile. The current stockpile of strategic and critical minerals and materials was developed to address national emergencies related to national security and defense issues; it was not established as an economic stockpile. ", "In 1939, after Germany invaded Poland, the Strategic Materials Act of 1939 (50 U.S.C. \u00c2\u00a798, P.L. 76-117) provided the authority for the United States to establish a strategic materials stockpile. Then in 1946, the Strategic and Critical Materials Stockpiling Act was enacted so that the United States would be prepared for national military emergencies and to prevent material shortages. The 1946 Act (P.L. 79-520) set a target of $2.1 billion of materials to be spent for the stockpile. Congress increased funding for supplying the stockpile to $4 billion over four years (1950-1953). The Defense Production Act of 1950 (50 U.S.C. \u00c2\u00a74501, P.L.81-774) added $8.4 billion to expand supplies of strategic and critical materials.", "In 1951, President Truman formed the Materials Policy Commission (also known as the Paley Commission) which recommended a stockpile for strategic materials and the use of lower cost foreign sources of supply. President Eisenhower established long term stockpile goals during a national emergency as a way to prevent the shortages that occurred during World War II and the Korean War. ", "The initial time frame for the duration of the emergency the stockpile was intended to cover was three years, but later reduced to one year. However, with the passage of the 1979 Strategic and Critical Minerals Stockpiling Revision Act ( P.L. 96-41 ), a three-year military contingency was reestablished as a criterion for stockpile goals. Funding for the stockpile was subsequently increased to $20 billion.", "During the Cold-War era, the National Defense Stockpile (NDS) had an inventory of large quantities of strategic and critical materials. In the early 1990s, after the Cold War with the Soviet Union, the U.S. Congress supported an upgrade and modernization of the strategic materials stockpile. By FY1993, the National Defense Authorization Act (NDAA) for Fiscal Year 1993 ( P.L. 102-484 ) authorized a major sell-off of 44 obsolete and excess materials in the stockpile such as aluminum metal, ferrochromium, ferromanganese, cobalt, nickel, silver, tin, and zinc. The majority of these materials were sold to the private sector. Proceeds of these sales were transferred to other federal or Department of Defense (DOD) programs."], "subsections": [{"section_title": "The Modern Day Stockpile", "paragraphs": ["In 1988, the Secretary of Defense delegated the management of the stockpile to the Undersecretary of Defense for Acquisition, Technology, and Logistics and operational activities of the NDS to the Director of the Defense Logistics Agency (DLA). Among other duties, the DLA manages the day-to-day operations of the stockpile program.", "The current stockpile contains 37 materials valued at $1.152 billion. Much of the materials are processed metals or other downstream products such as, columbium (niobium) metal ingots, germanium metal, tantalum metal, metal scrap, beryllium rods, quartz crystals, and titanium metal.", "Congressional action starting in 2014 led to the acquisition of REEs and other materials for the NDS. The DLA is acquiring six materials based on the NDAA for FY2014: Ferro-niobium; dysprosium metal; yttrium oxide; cadmium-zinc-telluride substrates; lithium-ion precursors; and triamino-trinitrobezene.", "In FY2016, the DLA made progress on its FY2014 goals for high-purity yttrium and dysprosium metal. The NDS initiated a program to develop economical methods to recycle REEs from scrap and waste. The goal was to investigate technologies to determine whether recycling is feasible in the United States. Work on this project goal is ongoing.", "In addition to acquisitions and upgrades, Congress approved a DOD proposal to sell materials determined to be in excess of program needs as part of the FY2017 NDAA ( P.L. 114-328 )."], "subsections": []}]}, {"section_title": "Initiatives and Actions on Critical Minerals", "paragraphs": [], "subsections": [{"section_title": "Development of the Critical Minerals List", "paragraphs": ["E.O. 13817, \"A Federal Strategy to Ensure Secure and Reliable Supplies of Critical Minerals,\" published on December 20, 2017, tasked the Department of the Interior (DOI) to coordinate with other executive branch agencies in establishing a draft list of critical minerals published in the F ederal R egist er 60 days from the initial order. On December 17, 2017, the Secretary of the Interior issued Secretarial Order (No. 3359, \"Critical Mineral Independence and Security\") directing the U.S. Geological Survey (USGS) and Bureau of Land Management (BLM) to develop the list. DOI agencies, with cooperation from others (e.g., DOD, DOE, and members of the National Science and Technology Council Subcommittee on Critical and Strategic Mineral Supply Chains [CSMSC]), developed using specific criteria an unranked list of 35 minerals. The Secretary of the Interior issued the final list of critical minerals in May 2018.", "The USGS used the critical mineral early warning methodology developed by the CSMSC as its starting point for the draft list. One of the metrics used was the Herfindahl-Hirschman Index which measures the concentration of production by country or company. Another metric used was the Worldwide Governance Index, which was used to ascertain the political volatility of a country and is based on six indicators. The early warning methodology is a two-stage process. The first stage uses the geometric mean of three indicators to determine if the mineral is potentially critical: supply risk (production concentration), production growth (change in market size and geological resources), and market dynamics (price changes). The second stage uses the results of the first stage to determine which of the potentially critical minerals require an in-depth analysis. ", "In developing the list, the USGS also relied on its net import reliance data; its Professional Paper 1802, (referenced in footnote 14 of this report); NDAA FY2018 ( P.L. 115-91 ) from DOD; U.S. Energy Information Administration (EIA) data on uranium; and the input of several subject matter experts. The USGS established a threshold above which the minerals were deemed to be critical. Some minerals below the threshold that had critical applications were also included on the list. The USGS used a supply chain analysis to include some metals, such as aluminum, because the United States is 100% import reliant on bauxite, the primary source mineral for aluminum production. ", "The unranked list of 35 minerals does not indicate the levels of criticality for some versus others. This is of note because some earlier studies had shown that the supplies of platinum group metals, REEs, niobium, and manganese are potentially far more vulnerable than lithium, titanium, and vanadium. Further, the REEs are not broken out by element. Some of the heavy rare earth elements have been shown to be more critical and vulnerable to supply shortages than some of the lighter elements. "], "subsections": []}, {"section_title": "Other Federal Critical Minerals Actions", "paragraphs": ["In addition to developing a critical minerals list, Congress and various executive branch entities have invested in other actions related to critical minerals. Investment in research and development (R&D) is considered by many experts (e.g., DOE, MIT, and elsewhere) to play a critical role in the support for and development of new technologies that would address three primary areas: greater efficiencies in materials use; substitutes or alternatives for critical minerals; and recycling of critical minerals. Below is a summary of selected current federal R&D, and information and analysis activities on critical minerals at federal agencies. "], "subsections": [{"section_title": "Department of Energy30", "paragraphs": [], "subsections": [{"section_title": "Critical Materials Hub", "paragraphs": ["DOE's FY2019 budget request included funding for R&D on rare earth and other critical materials. DOE's \"Critical Materials Hub\" is conducting R&D on a number of critical material challenges, including \"end of life\" recycling to help mitigate any possible supply chain disruptions of REEs. Funding for the program was at $25 million, each year, for the past three fiscal years (FY2017-FY2019), as FY2019 is the third year of its second five-year research phase. Congress approved this level of support despite the Trump Administration's proposal to eliminate the program in FY2019 and FY2020. The Critical Materials Hub is funded under the Advanced Manufacturing R&D Consortia within DOE's Energy Efficiency and Renewable Energy Program."], "subsections": []}, {"section_title": "REEs from Coal", "paragraphs": ["Additionally, in FY2019 DOE proposed to launch its Critical Materials Initiative within the Fossil Energy R&D program under the Advanced Coal Energy Systems program to examine new technologies to recover REEs from coal and coal byproducts. Congress had appropriated funding for this project under the National Energy Technology Lab (NETL) R&D program during the Obama Administration, despite no request for funding. For FY2019, the Trump Administration requested $30 million in funding for the Critical Materials Initiative; Congress elected to support the initiative at $18 million. "], "subsections": []}, {"section_title": "Critical Minerals Report", "paragraphs": ["In December 2010 and December 2011, DOE issued Critical Materials Strategy reports. These reports examine and provide demand forecasts for rare earths and other elements required for numerous energy and electronic applications. An update on this research is forthcoming, according to DOE."], "subsections": []}]}, {"section_title": "Department of the Interior", "paragraphs": ["The National Minerals Information Center housed within the USGS provides an annual summary of critical mineral activity in its Mineral Commodities Summaries report and Minerals Yearbook. The USGS also provides mineral resource assessments and has in 2017 published a study on 23 mineral commodities, all of which have been listed as critical by the Administration. In 2010, the USGS released a report on the rare earth potential in the United States. A 2017 collaboration between the USGS and the State of Alaska issued a report on critical and precious minerals in Alaska and conducted a geospatial analysis identifying critical mineral potential in Alaska. The results of the analysis provided new information on areas of Alaska that might contain deposits of critical minerals. "], "subsections": []}, {"section_title": "Department of Defense", "paragraphs": ["In a DOD-led assessment of the U.S. manufacturing and defense industrial base and supply chain resiliency, there are sections on critical minerals and impacts on national security. The DOD continues to fulfill its stockpile goals for various critical materials and has funded small R&D projects related to rare earths.", "In 2009, the Office of Industrial Policy reviewed the rare earth mineral supply chain. The Office of the Secretary of Defense reviewed its National Defense Stockpile and issued a report titled: Reconfiguration of the National Defense Stockpile Report to Congress . ", "As part of the Ike Skelton National Defense Authorization Act for FY2011 (Section 843 of P.L. 111-383 ), the DOD was required by Congress to prepare an \"Assessment and Plan for Critical Rare Earth Materials in Defense Applications\" and report to a number of congressional committees by July 6, 2011. A DOD assessment and congressional appropriations supported new stockpile goals for HREEs. ", "In an April 2012 interview with Bloomberg News , the DOD head of industrial policy stated that DOD uses less than 5% of the rare earths used in the United States, and that DOD was closely monitoring the rare earth materials market for any projected shortfalls or failures to meet mission requirements. "], "subsections": []}, {"section_title": "White House Office of Science and Technology Policy", "paragraphs": ["In 2010, the White House Office of Science and Technology Policy (OSTP) formed an Interagency Working Group on Critical and Strategic Minerals Supply Chains. The group's focus is to establish critical mineral prioritization and to serve as an early warning mechanism for shortfalls, to establish federal R&D priorities, to review domestic and global policies related to critical and strategic minerals (e.g., stockpiling, recycling, trade, etc.), and to ensure the transparency of information.", "The White House National Science and Technology Council Subcommittee on Critical and Strategic Mineral Supply Chains produced a report describing a screening methodology for assessing critical minerals. The \"early warning screening\" approach for material supply problems was first included as a U.S. policy goal in the National Materials and Minerals Policy, Research and Development Act of 1980 (30 U.S.C. \u00c2\u00a71601) ( P.L. 96-479 )."], "subsections": []}]}]}, {"section_title": "Supply: Critical Minerals Production and Resources", "paragraphs": [], "subsections": [{"section_title": "Production/Supply", "paragraphs": ["According to the 2019 USGS Mineral Commodity Summaries report, China ranked as the number one producer of 16 minerals and metals listed as critical. While there are no single monopoly producers in China, as a nation China is a near-monopoly producer of yttrium (99%), gallium (94%), magnesium metal (87%), tungsten (82%), bismuth (80%), and rare earth elements (80%). China also produces roughly 60% or more of the world's graphite, germanium, tellurium, and fluorspar. In 2017, the United States had no primary production of 22 minerals and byproduct production of five minerals on the critical minerals list. There is some U.S. primary production of nine minerals, and the United States is a leading producer of beryllium and helium (see Table 2 , Figure 1 ). ", "China had gains in production that far outpaced the rest of the world. By 2003, China had already dominated in the production of graphite, indium, magnesium compounds, magnesium metal, REEs, tungsten, vanadium, and yttrium; it solidified its number one producing status of these minerals about a decade later. Chinese producers are seeking not only to expand their production capacity at home but to continue to negotiate long-term supply agreements or create equity partnerships around the world, particularly in Africa (cobalt and tantalum), Australia (lithium), and South America (lithium).", "The dominant producing region for chromium, manganese, platinum group metals, tantalum, and cobalt is southern Africa. Brazil produces 88% of the world's niobium, and Australia accounts for 58% of the world's lithium production, according to USGS data. According to USGS data, critical minerals dominated by a single producing country include: niobium from Brazil, cobalt from the Democratic Republic of the Congo (DRC), platinum group metals from South Africa, REEs (including yttrium), and tungsten from China."], "subsections": [{"section_title": "Production of Minerals and Mineral Resource Potential on Federal Land", "paragraphs": ["Current mineral production information on federal land is not available from the DOI. The Government Accountability Office (GAO) noted in a 2008, report that the DOI does not have the authority to collect information from mine operators on the amount of minerals produced or the amount of mineral reserves on public lands, and there is no requirement for operators to report production information to the federal government. ", "However, previous DOI and GAO reports completed in the early 1990s reported that gold, copper, silver, molybdenum, and lead were the five dominant minerals produced on federal lands under the General Mining Law of 1872 (30 U.S.C. \u00c2\u00a7\u00c2\u00a721-54). Currently, the vast majority of mining activity on federal lands is for gold in Nevada, based on past DOI information. The DOI report also showed that federal lands mineral production represented about 6% of the value of all minerals produced in the United States. There is uncertainty over how much production of minerals occur on federal lands. Most minerals listed as critical are locatable on U.S. federal lands under the General Mining Law of 1872; comprehensive information on which minerals are located and produced on federal land remains incomplete. An unanswered question is the extent that critical mineral resource potential exists on federal land. Until more is known through mineral resource assessments of federal land, it will be hard to determine the impact of opening federal land to development that is now withdrawn from mineral development.", "Some mining advocates support developing domestic supply chains in critical minerals. Other stakeholders support a diversified portfolio of reliable suppliers, particularly if foreign sources are more economic or if domestic production (or manufacturing) is uneconomic, not technically feasible, or environmentally unacceptable. "], "subsections": []}, {"section_title": "Byproduct Supply", "paragraphs": ["There are six critical minerals that are classified as byproducts: indium, tellurium, gallium, germanium, cobalt, and rhenium. There are important differences between main product and byproduct supply. Byproduct supply is limited by the output of the main product. For example, the amount of indium recoverable in zinc cannot be more than the quantity of indium in the zinc ore. As production of the main product continues, the byproduct supply may be constrained because a higher price of the byproduct does not increase its supply in the immediate term. Even in the long run, the amount of byproduct that can be economically extracted from the ore is limited. That is, byproduct supply is relatively inelastic (i.e., not particularly responsive to price increases of the byproduct). For byproducts, it is the price of the main product, not the byproduct that stimulates efforts to increase supply. But a high enough byproduct price may encourage new technologies that allow for greater byproduct recovery from the main product. There may be occasions when the main product supply contains more byproduct than is needed to meet demand. If this were the case, byproduct processing facilities would need to be expanded so that byproduct processing capacity would not be a limiting factor in byproduct supply.", "Another important difference between byproduct and main product is that only costs associated with byproduct production affect byproduct supply. Joint costs (costs associated with production of both products) are borne by the main product and do not influence byproduct supply. Byproducts are typically available at lower costs then the same product produced elsewhere as a main product, (e.g., REEs produced as a byproduct of iron ore in China would have lower production costs than would REEs produced elsewhere in the world as a main product). ", "Byproducts, typically, are not free goods, meaning that there are costs associated with their production. Byproducts could be without cost if two conditions are met: (1) production of main product must require the separation of the byproduct, and (2) no further processing of the byproduct is required after separation."], "subsections": []}, {"section_title": "Global Mineral Production", "paragraphs": [" Table 2 provides data on the global production of critical minerals and the leading producing countries. The data shows that production for nearly all of the critical minerals has increased since 2000, many of which have doubled (e.g., chromium, indium, lithium, manganese, niobium, and tantalum) or tripled (e.g., cobalt, gallium, and tellurium) in the amount produced. "], "subsections": []}]}, {"section_title": "Secondary Recovery of Critical Minerals in the United States", "paragraphs": ["Secondary recovery can occur from waste products during the metal refining and manufacturing process or from discarded end use products. As indicated in Table 3 , in the United States, there is little to no production or reserves and little to no secondary recovery currently for many (but not all) of the critical minerals of high net import reliance. ", "There is a significant amount of secondary recovery in the United States of nine critical minerals according to the USGS Mineral Commodity Summaries: aluminum, chromium, cobalt, gallium, indium, magnesium metal, platinum group metals, tin, and titanium. While U.S. capacity for secondary recovery of metals and other materials has not grown much between 1997 and 2016, rates of recovery have fluctuated annually. Steel is the most recycled material in the United States. There are well established infrastructures, for old and new scrap, for selected metals such as steel, copper, aluminum, cobalt, and chromium. For many other metals, such as manganese, REEs, and niobium, little-to-no recycling takes place in the United States because it is either economically or technically not viable. Countries in the European Union, Japan, and South Korea are strengthening their efforts in secondary recovery as emerging markets (e.g., China and India) seek to secure greater access to primary materials. ", "The quantity of most metal and materials available for recycling will likely continue to meet a fraction of demand, particularly if demand is rising. The rate of availability (i.e., based on the useful life of the product) puts a limit on how much can be recycled. According to the National Research Council, the primary impediment facing secondary recovery in the United States is the lack of clear policies and programs at all levels of government to embrace the recovery of materials. Without a national mandate, the National Research Council report indicates that state and local governments are likely to continue a \"patchwork\" of programs and policies.", " Table 3 illustrates the point that there is very little secondary recovery of critical minerals and metals in the United States. The data could indicate that there is a lack of infrastructure for secondary recovery of critical minerals and metals. Economic and technological factors must also be evaluated as to whether the benefits outweigh the costs for recovering certain materials, particularly the small amounts of critical minerals that may be available for secondary recovery (from manufacturing waste or end use products). Additional R&D may be needed to determine whether secondary recovery of the most import-dependent minerals could be increased to reduce U.S. import reliance. ", "In 2018, the USGS reports that for base metals and precious metals the recycling rate is much different. For example, the recycling rates were 28% for aluminum, 35% for copper, 52% for nickel, 18% for silver, and 25% for zinc. In 2014, steel in the auto industry was recycled at 106%\u00e2\u0080\u0094more steel than was used for domestic manufacturing. The recycling rate of steel is 90% for appliances containing steel and 67% for steel cans."], "subsections": []}, {"section_title": "Reserves and Resources", "paragraphs": ["There is a distinction between what is described when using the terms reserves and resources in the context of minerals. Reserves are quantities of mineral resources anticipated to be recovered from known deposits from a given date forward. All reserve estimates involve some degree of uncertainty. Proved reserves are the quantities of minerals estimated with reasonable certainty to be commercially recoverable from known deposits under current economic conditions, operating methods, and government regulations. Current economic conditions include prices and costs prevailing at the time of the estimate. Estimates of proved reserves do not include reserves appreciation. ", "Resources are concentrations in the earth's crust of naturally occurring minerals that can conceivably be discovered and recovered. Undiscovered technically recoverable resources are minerals that may be produced as a consequence of natural means, or other secondary recovery methods, but without any consideration of economic viability. They are primarily located outside of known deposits."], "subsections": [{"section_title": "U.S. Critical Mineral Reserves and Resources", "paragraphs": ["Regarding reserves, the USGS lists little to no reserves in all 35 of the critical minerals except for helium and beryllium and significant resource potential in only tungsten, lithium, vanadium, uranium, and REEs. Of the 14 critical minerals listed as 100% import dependent, the USGS lists some reserves for two: REEs and vanadium (see Table 4 and Figure 2 ). ", "Regarding resources, USGS identifies some resource potential for cesium, manganese, and niobium. There are byproduct resources of cobalt, germanium, tellurium, and rhenium that are associated with main products such as copper, zinc, and bauxite (see Table 4 ). The USGS is uncertain about U.S. and global reserves of several critical minerals as not enough data are available according to the USGS."], "subsections": []}, {"section_title": "Global Critical Mineral Reserves and Resources", "paragraphs": ["According to the USGS, at the global level, there are significant or abundant resource potential for the critical minerals for which the agency has data, which is some but not all of the critical minerals. Global resource potential is either unknown or uncertain for bismuth, cesium, germanium, indium, and tellurium. Most of the germanium, indium, and tellurium are obtained as byproducts of base metal production.", "China leads the world in reserves in seven critical minerals, including antimony, REEs, strontium, tellurium, tin, tungsten, and vanadium (see Table 4 ). China is among the top three reserve holders in barite, fluorspar, graphite, magnesium compounds, and titanium. ", " Table 4 provides available information on global resources of critical minerals, as well as information on the size of the reserves. Figure 2 provides information on the regional distribution of the reserves."], "subsections": []}]}, {"section_title": "Mineral Exploration", "paragraphs": ["Exploration expenditures for minerals in the United States have been rising since 2001. The United States has maintained about 8% of the annual exploration budget for minerals worldwide from 1997 to 2017. In 2017, these expenditures in the United States were at 225 exploration sites (out of 2,317 exploration sites worldwide); 41% of the U.S. sites were in Nevada, 14% in Alaska, and 11% in Arizona. It can take many years for mining firms to find and bring an economic deposit into production. Thus, it is important for the industry to keep mineral projects in the exploration-development process.", "In general, mineral exploration in the United States remains focused on a few minerals, most of which not considered critical. Exploration activity in the western states is primarily for gold, copper, molybdenum, silver, tungsten, and uranium. There had been some reported interest in expanding silica sand operations in Nevada, developing a copper-cobalt-gold project in Idaho on Forest Service land, and thorium production on federal lands along the Idaho/Montana border.", "Globally, Canada leads with the most active exploration sites, mostly for gold and base metals (over 500 sites), followed by Australia (about 500 sites) with investments mostly in gold, base metals, and uranium."], "subsections": [{"section_title": "Locations and Minerals Being Explored", "paragraphs": ["The locations and minerals being explored can be shape how critical mineral supply chains are or may evolve. These supply chains have relevance to various policy questions, including what is the long-term investment strategy in the United States to develop mineral extraction and downstream metal and manufacturing capacity; and, if the focus is on building a reliable supply chain, what part of that supply chain makes sense to develop in the United States?", "There have been recent new additions to the annual USGS mineral exploration review. Data on lithium, niobium, rare earth elements, and tungsten are now included. Data for other minerals such as scandium, vanadium, and yttrium have been compiled since 2014.", "The big global exploration story is about lithium. In 2016, global exploration dollars for lithium, cobalt, and gold rose significantly. The lithium exploration expenditures increased four-fold since 2015 and active exploration sites rose from 56 in 2012 to 167 sites in 2017. Lithium exploration expenditures, for example, rose from $22 million in 2015 to $128 million in 2017 as the number of lithium exploration companies grew from 23 in 2015 to 125 in 2017. The price of lithium rose by more than 150% from 2007 to 2016 and sits at 83% higher than its 10-year average. The number of cobalt sites rose by 121% since 2016.", "In the United States in 2017, gold remains in the top spot for the number of exploration sites (47%) followed by copper (12%), then lithium with 7% of the sites. USGS noted that there is continued interest in graphite, REEs, and tungsten in the United States, but the most notable sites are in gold exploration. Overall, 54% of the sites actively explored in the United States are for gold and silver and 22% for base metals. Worldwide, gold or silver accounts for 84% of the sites actively explored. ", "The USGS reported that the United States has accounted for about 7% to 8% of overall global exploration budget over the past 10 years (about $611 million in 2017). However, the annual review is not exactly a country-by-country comparison because the USGS uses regions such as Latin America and Africa to compare with individual countries such as Canada, Australia, and the United States. The mineral exploration budget directed at U.S. mineral deposits is above that of China (5%), Russia (4%), and many countries in Latin America.", "Latin America attracts the most exploration dollars with $2.4 billion, most of which are for gold and silver (58%) followed by base metals at 22% of exploration expenditures. Chile has seen the most investment in Latin America, followed by Peru. Latin America is home to 70% of the world's known lithium deposits, known as the \"lithium triangle\" consisting of Chile, Argentina, and Bolivia. In Argentina, lithium exploration sites account for 44% of exploration expenditures followed by gold/silver at 42%, and copper at 9%. Lithium is most developed in Chile because of its superior infrastructure for mining. Most exploration projects in Chile are for copper (49%) and gold (29%).", "There has been an uptick in lithium exploration in Australia as well. China invested $650 million (in U.S. dollars) in Australia in 2016, looking for lithium and gold, primarily. As ore grades decline at known reserve locations, many exploration companies are searching for high-grade deposits in remote locations, including the ocean floor. "], "subsections": []}]}]}, {"section_title": "Demand: Critical Mineral End Uses and U.S. Import Reliance", "paragraphs": [], "subsections": [{"section_title": "Demand for Critical Minerals", "paragraphs": ["The demand for mineral commodities is a derived demand which differs from consumer goods demand. Minerals are used as inputs for the production of goods and services. For example, the demand for rare earth elements is derived from the production of their end-use products or use, such as flat panel displays, automobiles, or catalysts. As a result, the demand for critical minerals depends on the strength of the demand of the final products for which they are inputs. An increase in the demand for the final product will lead to an increase in demand for critical minerals (or their substitutes). ", "In the case of derived demand, when mineral and metal prices rise, the extent to which the quantity of a material declines depends largely on the degree to which its price increase can be passed on to the final consumer, as well as the proportion of the final good's price that is accounted for by the mineral/metal commodity. That is, it might depend on the amount of critical mineral or metal used per unit of output. The major variables that determine the growth in demand for consumer goods are price and income growth."], "subsections": [{"section_title": "U.S. and Global Demand", "paragraphs": ["U.S. demand has declined for some critical minerals, and for others, demand has increased but not as much (in relative terms) as the increase in global supply. For example, over the past 20 years consumption fell for aluminum, chromium, manganese, platinum group metals, REEs, titanium, and tantalum, among others, and demand grew slowly for lithium, germanium, and graphite. Only for tellurium, niobium, and indium did the United States experience rapid demand growth (relative to supply). Some of the demand drivers in recent decades for critical minerals include permanent magnets using REEs, batteries using cobalt and lithium, automobiles and electronics using tantalum and niobium, and vanadium for steel production.", "Global demand data for each of the minerals listed as critical were not available at the time of this writing. Global demand data could shed more light on where the minerals are being used for metal alloying, the manufacturing of component parts, and final products. Embodied metals (those that are imported as final products) are not counted as demand.", "Many critical minerals, (e.g., manganese, tungsten, and vanadium) are used for steelmaking and infrastructure projects, such as roads, housing, rail lines, and electric power grids. Others (e.g., REEs, lithium, indium, tantalum, gallium, and germanium) are used in the manufacturing of high-value electronic products, such as laptops and batteries, renewable energy systems, and other consumer goods, such as automobiles and appliances (see Table 5 ). "], "subsections": []}, {"section_title": "Demand for Critical Minerals in China", "paragraphs": ["There has been a surge in demand for critical minerals in China. China's demand for natural resources rose to historic levels and may continue to rise over the long term, even with a slowing economy. In the recent past, China has been the fastest growing market for niobium, and in 2010 accounted for 25% of world niobium consumption. Manganese consumption rose from about 2,200 metric tons (mt) in 2003 to about 9,000 mt in 2008. China's demand for vanadium paralleled that of steel demand and rose 13% annually from 2003 to 2009. In general, vanadium demand in China is projected to double from 2010 to 2025 because of its continued use in steelmaking (including new steel-hardening requirements) and because of the potential for application in new battery technology used for large-scale renewable energy storage (e.g., vanadium-redux flow battery-VRFB). In 2010, China accounted for 85% of chrome ore import demand and is the world's leading producer of steel (accounting for over half the world's production in 2017 based on the most recent data). Chromium is a major production input for stainless steel. China's chrome imports will likely continue to increase as stainless steel demand at the global level remains a big part of China's high-valued exports, urbanization, and future industrial practices. ", "Overall, in 2017, China's cobalt smelters accounted for 60% of global supply, and 77% of cobalt demand in China went into batteries. In 2017, China accounted for about 25% of platinum demand, primarily used in jewelry making, and 26% of palladium demand, much of which is used in catalytic converters in automobiles.", "In order for this increasing demand scenario in China to play out, the cities would need to fill up with enough people who are making high enough wages to support the economic growth that China is seeking. It is uncertain whether such a high level of consumer demand will materialize. China's economic growth has slowed considerably in the recent past from around 10% annually in the first decade of the 2000s, to around 6% in 2014. However, China's demand for minerals will continue to put pressure on U.S. access to reliable supplies. "], "subsections": []}]}, {"section_title": "U.S. Imports of Strategic and Critical Minerals", "paragraphs": ["Aside from a small amount of recycling, the United States is 100% import reliant on 14 minerals on the critical minerals list, minerals that provide critical support for the U.S. economy and national security such as, graphite, manganese, niobium, rare earths, and tantalum, among others. The United States is more than 75% import reliant on an additional 10 critical minerals, including antimony, barite, bauxite, bismuth, potash, rhenium, tellurium, tin, titanium concentrate, and uranium. ", "The United States has increased its mineral imports from China over the past 20 years. Although the United States has diversified its sources for some of its material requirements since 1997, the United States imports significant quantities of critical minerals and metals and is dependent on China as either a primary or major provider of raw materials and several metals as of 2017 (see Table 5 and Figure 3 ). ", "While import reliance may be a cause for concern (and high levels of import reliance potentially a security risk), high import reliance is not necessarily the best measure, or even a good measure, of supply risk. A more relevant measure may be the reliability of the suppliers. The supply risk for potash or bauxite, for example, may not be the same as that for REEs or niobium due to the multiplicity of potential sources. There are a number of factors that affect the availability of mineral supplies that may have little to do with import reliance. A company that is the sole supplier, or a single country as a primary source, with export restrictions, would likely constitute supply risks. But any number of bottlenecks that might arise among both domestic and foreign producers, such as limited electric power, skilled labor shortages, equipment shortages, labor unrest, weather or transportation delays, and opposition on environmental policy grounds, could also pose supply risks. Any of these above-mentioned potential supply disruptions could raise costs or prices, and exacerbate the tightness of supplies. For other minerals, such as iron ore and molybdenum, the United States is self-sufficient. For aluminum, uranium, potash, cesium, and rubidium, the United States' chief trading partner is Canada, a stable ally. Also, U.S. companies have invested in overseas operations\u00e2\u0080\u0094for example, copper and bauxite mines\u00e2\u0080\u0094and, thus, U.S. supply sources for some materials are diversified, of higher quality, or lower cost, and located in countries that have extensive reserves and production capacity. Such conditions may not always exist in the United States, even when resources are present."], "subsections": []}]}, {"section_title": "Materials Analysis of Critical Minerals Content in Finished Products and Systems", "paragraphs": ["Materials analysis is a useful tool to better understand various aspects of mineral demand. For example, such analysis can provide information on how material inputs are used in component parts and how components are used in larger systems such as solar arrays, wind turbines, and automobiles. Using a material analysis, an analyst can obtain information on the material intensity of a unit of production. This analysis can lead to manufacturing efficiencies (i.e., getting the same or better performance using fewer materials) or show where and how material substitution, if possible, could occur. Manufacturing firms could then make short-term or long-term adjustments to their production processes. ", "Even with materials efficiencies, where less metal is used per unit of output, overall demand growth and lack of short-term supply capacity often drives up mineral prices. For example, households in some countries are likely to have multiple units of a variety of products such as laptops, flat panel televisions, and cell phones, etc. And because the materials intensity (small amounts per unit output) of critical minerals is relatively low for most end-use applications, low-cost manufactured goods may contain some high-cost materials. ", "The remainder of this section of the report provides information on the materials content of lithium-ion batteries, solar energy arrays, wind technologies, and permanent magnets, with a more detailed discussion of the material requirements for wind and solar energy systems."], "subsections": [{"section_title": "Lithium-Ion Batteries", "paragraphs": ["The use of lithium-ion batteries for the rapidly growing electric vehicle market is expected to transform the material requirements for battery technology. Material analysis of lithium-ion batteries would bring to light useful insights on materials composition, cost, technologies, and supply chains. In the case of the lithium-ion (li-ion) battery for electric vehicles, what is the material composition of the battery? In other words, how much cobalt, lithium, nickel, and other materials are needed per battery, how much are the material costs for each battery, and what percent of the total battery manufacturing cost do the materials represent? Then, further, what is the battery cost per electric vehicles? Analysts would want to know the point at which material price increases would warrant a shift in the use of those materials. Other useful insights in materials analysis would be to understand the suite of battery technologies being developed, their manufacturing capacity, and the ownership structure of the supply chain for the materials and the batteries. ", "A 2017 study by a group of battery technology researchers examined the supply risks associated with lithium-ion batteries and other battery technologies to examine the implication for a carbon-reduced environment. The authors posed the question: What are the material requirements for the battery? They identified features of a li-ion battery, e.g., low cost, high energy, and long life. They examined the raw material requirements for li-ion batteries, secondary supply potential, and supply risks associated with an exhaustible resource (e.g., mineral extraction may become uneconomic), the structure of the industry (e.g., whether there is a cartel or a monopoly producer involved), and a surge in demand. They used supply risk indicators discussed earlier, such as the risk of supply reduction, the risk of a surge in demand, market concentration, political stability, substitutability, and recyclability. ", "The researchers' second step was to determine the supply risk score on the technology level, for each of the six battery types. There is a lithium-cobalt oxide battery which has a high energy density but also a high cobalt content and price. The steep country risk associated with cobalt production in the Democratic Republic of the Congo (DRC) led researchers to look for alternative suppliers and materials that would provide high energy density and long life with less or no cobalt. One example would be to use a manganese-oxide battery, wherein cobalt is partially replaced by nickel and manganese. They pointed out that there are several new battery types that use combinations of lithium, aluminum, cobalt, iron, nickel, copper, graphite, phosphate, titanium, and manganese. The researchers identified lithium as needed for all battery types and graphite used for all except the lithium-iron-phosphate (LFP-LTO) type, which uses titanium instead. They reported that with a market breakthrough (by 2035) in the use of electric vehicles containing lithium battery technology , an annual growth rate of 7.5% is needed for lithium supply and 3% growth rate in cobalt supply to meet electric vehicle demand."], "subsections": []}, {"section_title": "Solar Energy Arrays and Wind Technologies", "paragraphs": ["In the case of solar arrays and wind turbine technologies, USGS Minerals Information Center conducted a technical analysis of byproduct minerals that are contained in solar energy systems: silver, cadmium, tellurium, indium, gallium, selenium, germanium, and four of the REEs used in wind technologies (dysprosium (Dy), neodymium (Nd), terbium (Te), and praseodymium (Pr)), using Clean Power Plan (CPP) and no-CPP scenarios. USGS concluded that regardless of the scenario, the transition to renewables is very likely to accelerate in the coming decades and that a number of minor metals are likely to be constrained; thus rates of production of those metals would need to be increased to meet demand unless there are manufacturing shifts. The analysis concluded that the supply of heavy REEs used in permanent magnets (currently used in some of the new wind turbines) will not keep pace with demand from multiple end uses. The USGS assumed an aggressive electric vehicle market, the increased use of the magnets in electric vehicles, and new wind turbines' use of permanent magnets containing REEs. There is some disagreement over whether significant increases in REEs for magnets that would be used in wind energy systems will occur.", "Additionally, USGS concluded that the growth in demand for byproduct metals in solar and wind energy systems would compete with usage in electric and hybrid vehicles, and consumer electronics. The report asserts that a key uncertainty is net material intensity, i.e., the quantity of the byproduct metal required per unit of installed electric generating capacity, minus the amount of recycled material. For solar cells, net material intensity per generating capacity is dependent on the conversion efficiency of solar cells.", "Related questions are: Where are the wind turbines and solar arrays being manufactured and which countries and firms would be impacted the most by any disruption in critical mineral supply for these end uses?"], "subsections": []}, {"section_title": "Permanent Magnets", "paragraphs": ["REEs in permanent magnets is another example of how materials analysis for end uses may inform understanding of critical minerals vulnerability. For example, some of the pertinent questions that might be raised with respect to permanent magnets include: How much Dy, Nd, Te, and Pr go into a neodymium-iron-boron (NdFeB) permanent magnet and what fraction of the total cost is each element? What are permanent magnet unit production costs and what portion of the total costs of a wind turbine or an automobile do the permanent magnets represent? And what is the likelihood and the economics of substitution? "], "subsections": []}, {"section_title": "Materials Review of Wind and Solar Energy Systems", "paragraphs": ["Below are simplified examples of material requirements for wind and solar systems. "], "subsections": [{"section_title": "Materials for Wind Energy", "paragraphs": ["Based on the Department of Energy Report, 20% Wind Energy by 2030 , wind power installations consist of four major parts: wind tower, rotor, electrical system, and drivetrain (e.g., generator, gearbox, and motor). Most of the common large wind turbines have tower heights over 200 feet and rotor blades as long as 150 feet. The average rated capacity of an onshore wind turbine is between 2.5 megawatts (MW) and 3 MW. DOE lists the following as the most important materials for large-scale manufacturing of wind turbines: steel, fiberglass, resins (for composites and adhesives), core materials, permanent magnets, and copper. Some aluminum and concrete is also required (see Table 6 below). DOE considers the raw materials for large-scale wind turbines to generally be in ample supply. Turbine manufacturing, however, would be 100% dependent on permanent magnet imports, primarily from China, as that country produces 75% of the world's permanent magnets which contain REEs (assuming certain drivetrains are used). But DOE and other wind power analysts also identify, as a potential concern, the need for increased manufacturing capacity for fiberglass and other components such as generators, and gear boxes. Wind power development trends at the time of the 20% Wind Energy by 2030 study were moving towards lighter-weight materials and high-strength composites such as glass fiber-reinforced plastic and carbon fiber-reinforced plastic. Increased production of fiberglass, commercial-grade carbon fiber, and permanent magnets (containing REEs) would be necessary if the United States were to achieve 20% wind energy by 2030. ", "Recent analysis indicates that the offshore wind industry could be a major driver for increasing REE demand. There are indications that the larger turbines which are better suited for offshore locations, which also contain REEs, may be more reliable and require less maintenance than onshore turbines. "], "subsections": []}, {"section_title": "Materials for Solar Energy", "paragraphs": ["There are two major types of photovoltaic (PV) cells: crystalline silicon cells (most widely used) and thin film solar cells. The silicon based PV cells are combined into modules (containing about 40 cells) then mounted in an array of about 10 modules. Ethylene-vinyl acetate and glass sheets typically frame the PV module with additional aluminum frames for added protection. Thin-film solar cells use layers of ultra-thin semi-conductor materials that can serve directly in rooftop shingles, roof tiles, and building facades. Thin-film PV cells have been noted to use cadmium-telluride or copper-indium-gallium-diselenide (see Table 7 below). A separate category of solar technology is concentrating solar power; these systems use mirrors to convert the sun's energy into heat and then into electricity."], "subsections": []}]}]}, {"section_title": "Selected Supply Chain Analysis", "paragraphs": ["With a supply chain analysis, it is just as important to know where new downstream capacity (processing, refining, and metals alloying) is being built or likely to be built in the world as it is to know the likely investors in upstream production capacity for critical minerals. ", "When looking at the complete supply picture it could be more easily determined where the potential risks are and what mitigation efforts may be available. Below, two illustrative supply chains are described: rare earth elements and tantalum."], "subsections": [{"section_title": "Rare Earth Elements", "paragraphs": [], "subsections": [{"section_title": "REE Supply", "paragraphs": ["Rare earth elements often occur with other elements, such as copper, gold, uranium, phosphates, and iron, and have often been produced as a byproduct. The lighter elements, such as lanthanum, cerium, praseodymium, and neodymium, are more abundant and concentrated and usually make up about 80%-99% of a total deposit. The heavier elements\u00e2\u0080\u0094gadolinium through lutetium and yttrium\u00e2\u0080\u0094are scarcer but very \"desirable,\" according to USGS commodity analysts.", "Most REEs throughout the world are located in deposits of the minerals bastnaesite and monazite. Bastnaesite deposits in the United States and China account for the largest concentrations of REEs, while monazite deposits in Australia, South Africa, China, Brazil, Malaysia, and India account for the second-largest concentrations of REEs. Bastnaesite occurs as a primary mineral, while monazite is found in primary deposits of other ores and typically recovered as a byproduct. Over 90% of the world's economically recoverable rare earth elements are found in primary mineral deposits (e.g., in bastnaesite ores)."], "subsections": []}, {"section_title": "REE Supply Chain", "paragraphs": ["The supply chain for rare earth elements generally consists of mining, separation, refining, alloying, and manufacturing (devices and component parts). A major issue for REE development in the United States is the lack of refining, alloying, and fabricating capacity that could process any rare earth production. ", "An April 2010 GAO report illustrates the lack of U.S. presence in the REE global supply chain at each of the five stages of mining, separation, refining oxides into metal, fabrication of alloys, and the manufacturing of magnets and other components. According to the 2010 GAO report, China produced about 95% of the REE raw materials and about 97% of rare earth oxides, and was the only exporter of commercial quantities of rare earth metals (Japan produced some metal for its own use for alloys and magnet production). About 90% of the metal alloys were produced in China, and China manufactures 75% of the NdFeB magnets and 60% of the samarium cobalt (SmCo) magnets. Thus, even as U.S. rare earth production ramps up, without significant supply chain investments, much of the processing and metal fabrication would likely occur in China.", "In the case of rare earths, it is not enough to develop REE mining operations outside of China alone without building the value-added refining, metal production, and alloying capacity that would be needed to manufacture component parts for end-use products. According to rare earth analyst Jack Lifton, vertically integrated companies may be more desirable. It may be the best way to secure investor financing for REE production projects. Joint ventures, consortiums, and cooperatives could be formed to support production at various stages of the supply chain at optimal locations around the world. Each investor or producer could have equity and offtake commitments. Where U.S. firms and U.S. allies invest may contribute to meeting the goal of providing a secure and stable supply of REEs, intermediate products, and component parts needed for the assembly of end-use products. ", "In 2019, rare earth analyst James Kennedy of ThREE Consulting writes that China's dominance and \"absolute advantage\" in the rare earth space is fundamentally reflected in its R&D efforts at its national labs and the Baotou Research Institute of Rare Earths in the fields of basic sciences, materials science, and rare earth metallurgy. ThREE Consulting has shown that China has filed more rare earth patents than the rest of the world combined and Kennedy states that patents acquired in the rare earth space are likely a proxy for next generation rare earth-related technology. ", "China's whole-of-government approach in the field of rare earths and other critical minerals may keep China in its position of dominance for the foreseeable future. "], "subsections": []}]}, {"section_title": "Tantalum", "paragraphs": ["Tantalum is a metallic element contained in the mineral tantalite and is extracted from primary and placer mineral deposits. It often occurs with niobium but is also present with other minerals such as rare earths, uranium, and cassiterite (tin ore). Tantalum has been produced as a primary product, a co-product, and as a byproduct of other ores. Tantalum's high melting point (3,000 degrees Centigrade) and corrosion resistance makes it super-capacitive, (i.e., characterized by a high capacity to store and release electrical charges). This metal, which is used in numerous high-tech electronic devices, is produced and traded in conflict areas in Central Africa; thus, in certain instances, tantalum is classified as a conflict mineral and subject to disclosure rules promulgated from the Dodd-Frank Wall Street Reform and Consumer Protection Act ( P.L. 111-203 , 15 U.S.C. \u00c2\u00a778). Section 1502 of the law includes a sense of the Congress that conflict minerals in the Democratic Republic of the Congo or adjoining countries are financing extreme levels of violence in the DRC. "], "subsections": [{"section_title": "Tantalum Supply", "paragraphs": ["There are four major sources of tantalum market supplies: primary production (industrial and artisanal ); tin slag processing; scrap reprocessing and recycling; and byproduct production (also referred to as secondary concentrate). Primary production accounts for about 70% of global supply. Historically, tantalum obtained from tin slag (waste) was primarily produced in Malaysia, Thailand, and Brazil. Tantalum has also been a byproduct of niobium, titanium, tin, and uranium produced in Malaysia, Brazil, China, and Russia.", "Recycled tantalum contributes to 30% of global supply, mostly recovered from \"pre-consumer scrap\" at the manufacturing plant. The United States and Mexico account for 61% of tantalum scrap recovery and it is estimated that scrap could provide 50% of global tantalum supply by 2025. ", "Based on USGS data , Brazil, Canada, Mozambique, and Nigeria were countries that led in primary tantalum production during the 1970s. Brazil and Canada continued to be the major producing countries in the 1980s. Australia took over the top spot in the late 1980s and 1990s, followed by Brazil until 2009, after which no primary production was reported for Australia by the USGS. The Australian mines were closed following the 2008 recession, reopened in 2012, but closed again shortly thereafter in 2012. Since about 2009, it has been noted by several sources that the DRC, with tens of thousands of artisanal miners, is a leading producing country (see Table 4 ). Recorded production for tantalum by the USGS indicates a shift in production\u00e2\u0080\u0094at least what has been reported\u00e2\u0080\u0094since 2000 from Australia and Brazil, to the DRC and Rwanda. ", "Over the past several decades, there were material gaps in the publically available data for tantalum; production data reported has been much less than processor receipts. In one example, the average producer's supply to total processor's receipts gap measured over six quarters was 73%. On average, reported production represents about 27% of total processors' receipts over the period. There was an average material difference of 381 metric tons. ", "Part of the explanation for such reporting patterns may be the highly unregulated nature of tantalum ore production and trade in Central Africa. High production in the unreported (informal) sector of the mining community drove prices down and forced many of the major production regions to close their operations. With low prices, investor interest is limited; investors are thus constrained by high risk in greenfield projects, (i.e., new projects or work that does not follow previous work). ", "The USGS data does not reflect the amount of production from unauthorized (often illegal) mining operations\u00e2\u0080\u0094usually artisanal mining operations. The USGS collects its data from a variety of sources but considers the tantalum industry as operating under \"a shroud of secrecy\" with incomplete access to data and not very transparent. Generally, there is insufficient data to make definitive determinations on the true production, capacity, and reserve levels for tantalum on a global basis. There are several reasons for this supply/demand material difference, including the following:", "Nonreporting or under-reporting all forms of supply (primary, byproduct, tin slag, and scrap) through the Tantalum-Niobium International Study Center (TIC) or elsewhere. High inventories. Several analysts have noted that since the recession of 2008 many companies were selling from their above-ground stocks. Illicit mining and trading. There are well-established networks for smuggling tantalum and other minerals out of Central Africa (and elsewhere) and into the marketplace. ", "Dependence on Africa's supply and that disruption could have consequences, e.g., price rises. Africa provides 80% of the primary tantalum production (60% from the DRC and Rwanda) as China dominates downstream processing and manufacturing capacity. The illicit mining component in the tantalum market makes it vulnerable and possibly unsustainable because it prevents large-scale producers from entering the market. Illegal tantalum trade has long-term implications for the entire supply chain leading to lower investment in all phases of the supply chain.", "In 2016, the USGS listed Australia and Brazil as having 85% of the world's tantalum reserves, but the USGS regularly states that data is not available for other countries or is just unknown. The USGS lists Australia, Brazil, and Canada as having the majority of the world identified tantalum resources."], "subsections": []}, {"section_title": "The Tantalum Supply Chain", "paragraphs": ["In 2017, Mancheri, et al., published a study that assessed the tantalum supply chain for regional production dependence, the potential for supply disruptions, and mechanisms to prevent disruptions using a \"resiliency\" of supply model. This method examines four resilience of supply indicators: diversity of supply, material substitution, recycling, and stockpiling, and is dependent on three factors: resistance, rapidity, and flexibility. Mancheri's study concludes that the tantalum market is flexible and resilient based on its handling of unreported and presumably illegal trade along with its impact on conventional large-scale tantalum producers. Mancheri's study concluded that stockpiling and substitution can mitigate some supply disruption.", "Generally, tantalum follows the following supply chain steps: ", "The primary ore is crushed and milled into an ore concentrate which is further refined into oxides (metal or powder) or K-Salt (which is reduced to tantalum metal), which is used for the manufacture of capacitors, wire, super alloys, and other fabricated forms. Downstream manufacturers use these materials for parts that are used by consumer product manufacturers and others. China has 16 tantalum processing plants; the United States has one, according to the Mancheri study. There are four processing plants in Germany and four in Japan. The metal or powder form is then used by electronics manufacturers to produce capacitors and other products. The manufactured parts are shipped to consumer product producers such as Motorola, Sony, Apple, Dell, and others. China dominates the production of capacitors. "], "subsections": []}]}]}, {"section_title": "Current Policy Framework", "paragraphs": [], "subsections": [{"section_title": "U.S. Mineral Policy", "paragraphs": ["As noted in two key statutes, the current goal of U.S. mineral policy is to promote an adequate, stable, and reliable supply of materials for U.S. national security, economic well-being, and industrial production. U.S. mineral policy emphasizes developing domestic supplies of critical materials and encourages the domestic private sector to produce and process those materials. But some raw materials do not exist in economic quantities in the United States, and processing, manufacturing, and other downstream ventures in the United States may not be cost competitive with facilities in other regions of the world. However, there have been public policies enacted or executive branch measures taken (for example, the percentage depletion allowance for U.S. mining operations and royalty-free production on public domain lands) to offset the U.S. disadvantage of its potentially higher-cost operations. The private sector also may achieve lower-cost operations with technology breakthroughs. ", "Based on this policy framework, Congress has held numerous legislative hearings on the impact of the U.S. economy's high import reliance on many critical materials, and on a range of potential federal investments that would support the development of increased domestic production and production from reliable suppliers. There has been a long-term policy interest in mineral import reliance and its impact on national security and the U.S. economy."], "subsections": [{"section_title": "General Mining Law of 1872: Mining on Federal Lands", "paragraphs": ["Mining of locatable minerals (also referred to as hardrock minerals) on federal lands is governed primarily by the General Mining Law of 1872 (30 U.S.C. \u00c2\u00a7\u00c2\u00a721-54). The original purposes of the Mining Law were to promote mineral exploration and development on federal lands in the western United States, offer an opportunity to obtain a clear title to mines already being worked, and help settle the West. The Mining Law grants free access to individuals and corporations to prospect for minerals on open public domain lands, and allows them, upon making a discovery, to stake (or \"locate\") a claim on the deposit. A valid claim entitles the holder to develop the minerals. The 1872 Mining Law originally applied to all valuable mineral deposits except coal (17 Stat. 91, 1872, as amended). ", "Public domain lands are those retained under federal ownership since their original acquisition by treaty, cession, or purchase as part of the general territory of the United States, including lands that passed out of but reverted back to federal ownership. \"Acquired\" lands\u00e2\u0080\u0094those obtained from a state or a private owner through purchase, gift, or condemnation for particular federal purposes rather than as general territory of the United States\u00e2\u0080\u0094are subject to leasing only and are not covered by the 1872 Law. Acquired lands are governed under the authority of the Mineral Leasing for Acquired Lands Act of 1947.", "Under the General Mining Law, mineral claims may be held indefinitely without any mineral production. Once lands were patented to convey full title to the claimant, the owner could use the lands for a variety of purposes, including nonmineral ones. However, using land under an unpatented mining claim for anything but mineral and associated purposes violates the General Mining Law. Critics believe that many claims are held for speculative purposes. However, industry officials argue that a claim may lie idle until market conditions make it profitable to develop the mineral deposit. Congress has placed a moratorium on patenting lands since 1994 under annual appropriation bills.", "The vast majority of mineral production in the United States occurs on private land and is regulated by the states which may use a leasing and permitting framework. The regulatory framework described below applies primarily to minerals produced on federal land but has implications for the entire U.S. mining industry. ", "There is debate over whether streamlining the permitting process on federal lands would make investing in mining in the United States more attractive or would incentivize investors. Proponents of streamlining the framework maintain that mining firms would be more likely to invest in the United States given a more rapid turnaround of the mine permitting process. However, mining firms have multi-factor decision making processes; they go to where the minerals are, and they often look for low political and country risk (good governance) and a sense of certainty of the regulatory environment, as well as low-cost production opportunities. ", "A debate has emerged over the past several decades over whether the federal government should impose a royalty on the value of minerals produced on public lands, as is the practice on other lands in the United States (i.e., state lands and private lands) and other parts of the world. Further discussion of this debate is beyond the scope of this report."], "subsections": []}]}, {"section_title": "Federal Land Management and Mineral Development: Regulatory Framework for Mineral Development on Federal Land", "paragraphs": ["Mineral development activities in the United States are subject to a suite of federal regulatory requirements. The specific statutes and regulations that will apply and how compliance is accomplished will vary depending on the specific mineral development project (e.g., specific actions may be required for compliance with federal law if the mining project may affect a federally protected species). That is, for mining on federal lands, there are various federal regulatory requirements that may apply in addition to the Federal Mining Law of 1872. These requirements encompass environmental reviews, adequate proof of financing, permits, surface management requirements, bonding, and public participation, among other requirements. The Appendix provides a list of the selected statutes and regulations related to mineral development on federal land. A discussion of the regulatory compliance process and the various federal, state, and other entities that may be involved is beyond the scope of this report. The following discussion focuses on the regulatory framework associated with management of and access to minerals for development on federal land.", "During the 1960s and 1970s, the Multiple Use Sustained Yield Act (16 U.S.C. \u00c2\u00a7\u00c2\u00a7528-531), Wilderness Act of 1964 (16 U.S.C. \u00c2\u00a7\u00c2\u00a71131-1136), National Forest Management Act of 1976 (43 U.S.C. \u00c2\u00a7\u00c2\u00a71701 et seq.), National Environmental Policy Act of 1969 (NEPA, 42 U.S.C. \u00c2\u00a7\u00c2\u00a74321 et seq.), and Federal Land Policy Management Act (FLPMA) (43 U.S.C. \u00c2\u00a71701 et seq.) addressed environmental protection, multiple use, and management of federal land generally. By imposing requirements on agency actions, these acts have affected mineral development under both the leasing system and the General Mining Law of 1872 claim-patent system. The General Mining Law contains no direct environmental controls, but mining claims are subject to all general environmental laws as a precondition for development. ", "The Bureau of Land Management (BLM) administers the mineral program on all federal land but other land managing agencies, such as the Forest Service (FS) must approve surface disturbing activity on its land. BLM and FS use the mine plan review process (which includes mining methods and reclamation plans) to determine the validity of the mine proposal and to determine how extensive of an environmental review is required under the Federal Land Policy and Management Act of 1976. "], "subsections": [{"section_title": "Federal Land Policy Management Act", "paragraphs": ["Under the Federal Land Policy and Management Act of 1976, Resource Management Plans (RMPs) are required for tracts or areas of public lands prior to development. BLM must consider environmental impacts during land-use planning when RMPs are developed and implemented. RMPs can cover large areas, often hundreds of thousands of acres across multiple counties. Through the land-use planning process, BLM determines which lands are open for mining claims and potential development. ", "Regarding land use plans FLPMA states: \"the Secretary [of the Interior] shall with public involvement and consistent with the terms and conditions of this Act, develop, maintain and, when appropriate, revise land use plans which provide by tracts or areas for the use of the public lands.\" Current planning regulations require preparation of an environmental review document for the land use plans under the National Environmental Policy Act.", "FLPMA requires that RMPs reflect diverse uses\u00e2\u0080\u0094such as timber, grazing, wildlife conservation, recreation, and energy\u00e2\u0080\u0094and consider the needs of present and future generations . Impacts of various uses are identified early in the process so that they can be weighed equitably against one another by the BLM. The plans are also intended to weigh the various benefits associated with public lands. "], "subsections": []}, {"section_title": "Withdrawals from Mineral Entry and Access to Federal Land", "paragraphs": ["The President and executive branch agencies historically issued executive orders, secretarial orders, and public land orders to withdraw federal lands from mineral entry and other uses under what was viewed as the President's authority, including certain statutory authorities such as the Antiquities Act (34 Stat. 225). Since 1976 executive withdrawals are governed by FLPMA. FLPMA repealed earlier land withdrawal authorities. Withdrawals of parcels exceeding 5,000 acres require congressional approval. ", "A withdrawal pursuant to FLPMA restricts the use of land under the multiple-use management framework, typically segregating the land from some or all public land laws as well as some or all of the mining and mineral leasing laws for a period of 20 years. Initially, the area is segregated for two years during which time an environmental review is conducted to determine whether a longer-term withdrawal of 20 years is warranted. The longer-term withdrawal is often subject to renewal by the Department of the Interior. ", "The withdrawal can be temporary or permanent. Under this section of the code the Secretary of the Interior may make, modify, extend, or revoke withdrawals. ", "Generally, federal land withdrawals are subject to valid existing rights, meaning that the minerals rights holder may develop those minerals subject to terms of the federal land-managing agency (e.g., the National Park Service, BLM, or the Forest Service).", "Mineral industry representatives maintain that federal withdrawals inhibit mineral exploration and limit the reserve base even when conditions are favorable for production. Thus, they state that without new reserves or technological advancements mineral production costs may rise. They further contend that higher domestic costs may lead to greater exploration on foreign soil, potentially boosting U.S. import dependence. ", "Critics of U.S. mineral development state that mining often is an exclusive use of land inasmuch as it can preclude other uses, and that in many cases there is no way to protect other land values and uses short of withdrawal of lands from development under the General Mining Law. They point to unreclaimed areas associated with previous hardrock mineral development, Superfund sites related to past mining and smelting, and instances where development of mineral resources could adversely affect or destroy scenic, historic, cultural, and other resources on public land.", "Congressional debate has been ongoing for decades over how much federal land should be available for the extractive industries or other uses and how much should be set aside (e.g., off limits or restricted) for conservation or environmental purposes. "], "subsections": []}]}]}, {"section_title": "Selected Critical Minerals-Related Legislation in the 115th and 116th Congresses", "paragraphs": [], "subsections": [{"section_title": "116th Congress", "paragraphs": ["H.R. 2531 , National Strategic and Critical Minerals Production Act , introduced by Representative Mark E. Amodei on May 7, 2019, and referred to House Committee on Natural Resources. The bill would define critical and strategic minerals and seeks to streamline the federal permitting process for domestic mineral exploration and development. It would establish responsibilities of the \"lead\" federal agency to set mine permitting goals, minimize delays, and follow time schedules when evaluating a mine plan of operations. The review process would be limited to 30 months, and the bill would establish the priority of the lead agency maximizing the development of the mineral resource while mitigating environmental impacts.", "H.R. 2500 , National Defense Authorization Act (NDAA) for Fiscal Year 2020 , reported in the House. The bill would require the Secretary of Defense to provide guidance on acquiring items containing rare earth elements and guidance on establishing a secure rare earth materials supply chain within the United States. The bill provides authority for the Secretary to acquire rare earth cerium and lanthanum compounds and electrolytic manganese metal. And further, for DOD purposes, the bill would prohibit the acquisition of tantalum from nonallied foreign nations. ", "The reported Senate version ( S. 1790 ) of the FY2020 NDAA does not contain similar language. ", "S. 1317 , American Mineral Security Act , introduced by Senator Murkowski on May 2, 2019, and referred to the Senate Committee on Energy and Natural Resources. ", "The bill would define what critical minerals are, but also would request that the Secretary of the Interior establish a methodology that would identify which minerals qualify as critical. The Secretary of the Interior would be required to maintain a list of critical minerals. The bill would establish an analytical and forecasting capability on mineral/metal market dynamics as part of U.S. mineral policy. The Secretary of the Interior would be required to direct a comprehensive resource assessment of critical mineral resource potential in the United States, assessing the most critical minerals first. ", "The bill would require that an agency review and report be intended to facilitate a more efficient process for critical minerals exploration on federal lands, and specifically would require performance metrics for permitting mineral development activity and report on the timeline of each phase of the process.", "The bill would require that the Department of Energy establish an R&D program to examine the alternatives to critical minerals and explore recycling and material efficiencies through the supply chain. The Department of the Interior would be required to produce an Annual Critical Minerals Outlook report that would provide forecasts of domestic supply, demand, and price for up to 10 years. ", "The Secretary of Labor, in consultation with the National Science Foundation and other relevant institutions, would be required to assess the availability of domestic technically trained personnel in the exploration production, manufacturing, recycling, forecasting, and analysis of minerals critical to the United States, noting, among other things, skills in short supply now, and those projected to be in short supply in the future. The Secretary would be required to design an interdisciplinary curriculum study on critical minerals and further, establish a competitive grants program for new faculty positions, internships, equipment needs, and research related to critical minerals. There would be $50 million authorized to carry out this act each year for fiscal years 2020-2029. "], "subsections": []}, {"section_title": "115th Congress", "paragraphs": ["H.R. 520 , National Strategic and Critical Minerals Production Act , introduced by Representative Mark E. Amodei on January 13, 2017, and referred to House Committee on Natural Resources. This bill is similar to H.R. 2531 described above (in the 116 th Congress).", "H.R. 1407 , METALS Act , introduced by Representative Duncan Hunter on March 7, 2017, and referred to the House Committee on Armed Services. ", "This bill would have established a strategic materials investment fund and allowed the Secretary of Defense to provide loans for domestic production and domestic processing of strategic and critical materials, and supported the development of new technologies for more efficient processing of strategic and critical materials. ", "For fiscal years 2018 through 2023, 1/10 of 1% of the amounts appropriated for \"covered programs\" would have been deposited into the fund. Covered programs would have been all major defense acquisition programs for development or procurement of aircraft or missiles. The bill would have established a prohibition on sale of domestic rare earth mines to foreign firms.", "H.R. 5515 ( P.L. 115-232 ) , John S. McCain N ational D efense A uthorization A ct for F iscal Year 2019 , included a provision to direct the Secretary of Defense to purchase rare earth permanent magnets and certain tungsten, tantalum, and molybdenum from sources outside of China, Russia, North Korea, and Iran to the extent possible.", "S. 1460 , Energy and Natural Resources Act of 2017, Subtitle D \u00e2\u0080\u0094Critical Minerals , introduced by Senator Murkowski on June 18, 2017, and referred to the Senate Committee on Energy and Natural Resources. This bill is similar to S. 1317 above (in the 116 th Congress).", "S. 145 , National Strategic and Critical Minerals Production Act (similar to H.R. 520 in the 115 th Congress), introduced by Senator Heller on January 12, 2017, and referred to the Senate Committee on Energy and Natural Resources. "], "subsections": []}, {"section_title": "Previous Congresses", "paragraphs": ["Similar bills on critical minerals were introduced in earlier Congresses. For example, in the 113 th Congress, there was S. 1600 , Critical Minerals Policy Act of 2013, and H.R. 761 , the National Strategic and Critical Minerals Production Act of 2013, which passed the House on September 18, 2013. Another bill in the 113 th Congress, H.R. 4883 , the National Rare Earth Cooperative Act of 2014, proposed to advance domestic refining of heavy rare earth oxides and the safe storage of thorium for future uses using a cooperative ownership approach. Thorium is associated with certain rare earth deposits and waste materials. The cooperative would have operated under a federal charter composed of suppliers and consumers as owners. "], "subsections": []}]}, {"section_title": "Additional Policy Options", "paragraphs": ["This section provides a discussion of selected policy options related to critical minerals that were included in legislation introduced in the 115 th and 116 th Congresses. In addition to weighing the advantages and disadvantages of the various policy options discussed above and below, policymakers have the option of maintaining the status quo of current policies. "], "subsections": [{"section_title": "Minerals Information Administration", "paragraphs": ["The USGS could establish a Minerals Information Administration for information and analysis on the global mineral/metal supply and demand picture. Companies producing minerals on public lands could be required to report production data to the federal agency. "], "subsections": []}, {"section_title": "Greater Exploration for Critical Minerals", "paragraphs": ["Encouragement of greater exploration for critical minerals in the United States, Australia, Africa, and Canada could be part of a broad international strategy. There are only a few companies in the world that can provide the exploration and development skills and technology for critical mineral development. These few companies are located primarily in the above four regions and China, and may form joint ventures or other types of alliances for R&D, and for exploration and development of critical mineral deposits worldwide, including those in the United States. Whether there should be restrictions on these cooperative efforts in the United States is a question for congressional deliberations."], "subsections": []}, {"section_title": "Other Policy Options", "paragraphs": ["Other action by Congress could include oversight of free trade issues associated with critical mineral supply. Two raw material issues associated with China export restrictions were taken up by the World Trade Organization (WTO). One case, settled in 2011, was filed by the United States against China and was related to restrictions on bauxite, magnesium, manganese, silicon metal, and zinc, among others (using export quotas and export taxes). The other case, resolved in 2012, was filed by the United States, Japan, and the European Union on export restrictions of rare earth oxides, tungsten, and molybdenum. The WTO ruled against China in both cases, concluding that China did not show the link between conservation of resources or environmental protection (and protection of public health) and the need for export restrictions.", "The United States could support more trade missions; support U.S. commercial delegations to China and other mineral-producing countries; and assist smaller and less-developed countries in improving their governance capacity. Although there are concerns that trade tariffs with China could impact the prices and availability of critical minerals and downstream metals imported from China, the effects would depend on the specifics of the tariffs as well as the particular mineral and metal involved. "], "subsections": []}, {"section_title": "Additional Considerations", "paragraphs": ["In China and other emerging economies, economic development will continue to have a major impact on the world supply and availability of raw materials and downstream products. Various countries may be faced with making adjustments to secure needed raw materials, metals, and finished goods for national security and economic development. China, Japan, and others are already actively engaged in securing reliable mineral supplies. Many firms have moved to China to gain access to its market, raw materials, or intermediate products, and generally lower-cost minerals production. At the same time, China is seeking technology transfer from many of these firms to expand its downstream manufacturing capacity. Despite China's current overcapacity and increased exports of some commodities, in the long run it may be in China's interest to use its minerals (plus imports) for domestic manufacturing of higher-valued downstream products (e.g., component parts and consumer electronics). Higher-cost, inefficient facilities and mines may close, resulting in China seeking more imports as mining industry consolidations are implemented. ", "The effects on China's dominance in the supply and demand of global raw materials could be addressed in part through consistent development of alternate sources of supply, use of alternative materials when possible, efficiency gains, aggressive R&D in development of new technologies, and comprehensive minerals information to support this effort. China is likely entering an era of fewer raw material exports which may instigate long-term planning by the private sector and government entities that want to meet U.S. national security, economic, and energy policy interests and challenges. Some stakeholders may seek to have some concerns addressed through the WTO. ", "Additional questions that may be deliberated by Congress include how long would it take to develop the skill set in the United States for downstream manufacturing activities? Would an international educational exchange program with those countries already involved in the refining and recycling of critical minerals be appropriate?", "More analysis would be useful to investigate U.S. firms' capacity to adjust to supply bottlenecks such as restrictions in other countries' exports, underinvestment in capacity, materials use in other countries and domestically, single source issues, strikes, power outages, natural disasters, political risk, and lack of substitutes. Having such analysis and understanding may inform public policy. More information could inform deliberations as Congress and other policymakers evaluate the available policy options and their effectiveness at minimizing the risk of potential supply interruption of critical and strategic minerals and metals."], "subsections": [{"section_title": "Appendix. Selected Statutes and Regulations Related to Mining on Federal Lands", "paragraphs": ["Selected Statutes that May Impact Mining Activities on Federal Lands (in alphabetical order)", "American Indian Religious Freedom Act ( P.L. 95-341 )", "Clean Air Act, 42 U.S.C. \u00c2\u00a77401 et seq.", "Clean Water Act, 33 U.S.C. \u00c2\u00a71251 et seq.", "Endangered Species Act, 16 U.S.C. \u00c2\u00a71531 et seq.", "Federal Land Policy and Management Act, 43 U.S.C. \u00c2\u00a71701-1784", "Federal Mine Safety and Health Act of 1977 ( P.L. 95-164 )", "General Mining Law of 1872, 30 U.S.C. \u00c2\u00a721-54", "Historic Preservation Act (P.L. 89-665)", "Mineral Leasing For Acquired Lands Act of 1947, 30 U.S.C. \u00c2\u00a7351-359 ", "Mining and Minerals Policy Act of 1970, 30 U.S.C. \u00c2\u00a721a", "National Environmental Policy Act, 42 U.S.C. \u00c2\u00a74321 et seq.", "National Forest Management Act 16 U.S.C. \u00c2\u00a71600-1687", "National Materials and Minerals Policy, Research, and Development Act of 1980, 30 U.S.C. \u00c2\u00a71601", "Resource Conservation and Recovery Act, 42 U.S.C. \u00c2\u00a76901 et seq.", "Toxic Substance Control Act ( P.L. 94-469 )", "Mining-Specific Regulations ", "Bureau of Land Management (BLM): 43 C.F.R. 3809\u00e2\u0080\u0094Regulations on surface management", "U.S. Forest Service (FS): 36 C.F.R. Part 228\u00e2\u0080\u0094Regulations on minerals"], "subsections": []}]}]}]}}
{"id": "R45861", "title": "Russia\u2019s Nuclear Weapons: Doctrine, Forces, and Modernization", "released_date": "2020-01-02T00:00:00", "summary": ["Russia's nuclear forces consist of both long-range, strategic systems\u00e2\u0080\u0094including intercontinental ballistic missiles (ICBMs), submarine-launched ballistic missiles (SLBMs), and heavy bombers\u00e2\u0080\u0094and shorter- and medium-range delivery systems. Russia is modernizing its nuclear forces, replacing Soviet-era systems with new missiles, submarines and aircraft while developing new types of delivery systems. Although Russia's number of nuclear weapons has declined sharply since the end of Cold War, it retains a stockpile of thousands of warheads, with more than 1,500 warheads deployed on missiles and bombers capable of reaching U.S. territory.", "Doctrine and Deployment", "During the Cold War, the Soviet Union valued nuclear weapons for both their political and military attributes. While Moscow pledged that it would not be the first to use nuclear weapons in a conflict, many analysts and scholars believed the Soviet Union integrated nuclear weapons into its warfighting plans. After the Cold War, Russia did not retain the Soviet \"no first use\" policy, and it has revised its nuclear doctrine several times to respond to concerns about its security environment and the capabilities of its conventional forces. When combined with military exercises and Russian officials' public statements, this evolving doctrine seems to indicate that Russia has potentially placed a greater reliance on nuclear weapons and may threaten to use them during regional conflicts. This doctrine has led some U.S. analysts to conclude that Russia has adopted an \"escalate to de-escalate\" strategy, where it might threaten to use nuclear weapons if it were losing a conflict with a NATO member, in an effort to convince the United States and its NATO allies to withdraw from the conflict. Russian officials, along with some scholars and observers in the United States and Europe, dispute this interpretation; however, concerns about this doctrine have informed recommendations for changes in the U.S. nuclear posture.", "Russia's current modernization cycle for its nuclear forces began in the early 2000s and is likely to conclude in the 2020s. In addition, in March 2018, Russian President Vladimir Putin announced that Russia was developing new types of nuclear systems. While some see these weapons as a Russian attempt to achieve a measure of superiority over the United States, others note that they likely represent a Russian response to concerns about emerging U.S. missile defense capabilities. These new Russian systems include, among others, a heavy ICBM with the ability to carry multiple warheads, a hypersonic glide vehicle, an autonomous underwater vehicle, and a nuclear-powered cruise missile. The hypersonic glide vehicle, carried on an existing long-range ballistic missile, entered service in late 2019.", "Arms Control Agreements", "Over the years, the United States has signed bilateral arms control agreements with the Soviet Union and then Russia that have limited and reduced the number of warheads carried on their nuclear delivery systems. Early agreements did little to reduce the size of Soviet forces, as the Soviet Union developed and deployed missiles with multiple warheads. However, the 1991 Strategic Arms Reduction Treaty, combined with financial difficulties that slowed Russia's nuclear modernization plans, sharply reduced the number of deployed warheads in the Russian force. The 2010 New START Treaty added modest reductions to this record but still served to limit the size of the Russian force and maintain the transparency afforded by the monitoring and verification provisions in the treaty.", "Congressional Interest", "Some Members of Congress have expressed growing concerns about the challenges Russia poses to the United States and its allies. In this context, Members of Congress may address a number of questions about Russian nuclear forces as they debate the U.S. nuclear force structure and plans for U.S. nuclear modernization. Congress may review debates about whether the U.S. modernization programs are needed to maintain the U.S. nuclear deterrent, or whether such programs may fuel an arms race with Russia. Congress may also assess whether Russia will be able to expand its forces in ways that threaten U.S. security if the United States and Russia do not extend the New START Treaty through 2026. Finally, Congress may review the debates within the expert community about Russian nuclear doctrine when deciding whether the United States needs to develop new capabilities to deter Russian use of nuclear weapons."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["Relations between the United States and Russia have shifted over time\u00e2\u0080\u0094sometimes reassuring and sometimes concerning\u00e2\u0080\u0094yet most experts agree that Russia is the only nation that poses, through its arsenal of nuclear weapons, an existential threat to the United States. While its nuclear arms have declined sharply in quantity since the end of the Cold War, Russia retains a stockpile of thousands of nuclear weapons, with more than 1,500 warheads deployed on missiles and bombers capable of reaching U.S. territory. The United States has always viewed these weapons as a potential threat to U.S. security and survival. It has not only maintained a nuclear deterrent to counter this threat, it has also signed numerous arms control treaties with the Soviet Union and later Russia in an effort to restrain and reduce the number and capabilities of nuclear weapons. The collapse of the 1987 Intermediate-range Nuclear Forces (INF) Treaty and the possible expiration of the 2010 New Strategic Arms Reduction Treaty (New START) in 2021 may signal the end to mutual restraint and limits on such weapons.", "The 2018 National Defense Strategy identifies the reemergence of long-term, strategic competition with Russia and China as the \"the central challenge to U.S. prosperity and security.\" It notes that Russia seeks \"to shatter the North Atlantic Treaty Organization and change European and Middle East security and economic structures to its favor.\" It argues that the challenge from Russia is clear when its malign behavior is \"coupled with its expanding and modernizing nuclear arsenal.\" ", "The 2018 Nuclear Posture Review (NPR) amplifies this theme. It notes that \"Russia has demonstrated its willingness to use force to alter the map of Europe and impose its will on its neighbors, backed by implicit and explicit nuclear first-use threats.\" The NPR describes changes to Russia's nuclear doctrine and catalogues Russia's efforts to modernize its nuclear forces, arguing that these efforts have \"increased, and will continue to increase, [Russia's] warhead delivery capacity, and provides Russia with the ability to rapidly expand its deployed warhead numbers.\"", "Congress has shown growing concern about the challenges Russia poses to the United States and its allies. It has expressed concerns about Russia's nuclear doctrine and nuclear modernization programs and has held hearings focused on Russia's compliance with arms control agreements and the future of the arms control process. Moreover, Members have raised questions about whether U.S. and Russian nuclear modernization programs, combined with the demise of restraints on U.S. and Russian nuclear forces, may be fueling an arms race and undermining strategic stability.", "This report seeks to advise this debate by providing information about Russia's nuclear doctrine, its current nuclear force structure, and its ongoing nuclear modernization programs. It is divided into five sections. The first section describes Russia's nuclear strategy and focuses on ways in which that strategy differs from that of the Soviet Union. The second section provides a historical overview of the Soviet Union's nuclear force structure. The third section details Russia's current force structure, including its long-range intercontinental ballistic missiles (ICBM), submarine-launched ballistic missiles (SLBM), and heavy bombers and shorter-range nonstrategic nuclear weapons. This section also highlights key elements of relevant infrastructure, including early warning, command and control, production, testing, and warhead storage. It also describes the key modernization programs that Russia is pursuing to maintain and, in some cases, expand its nuclear arsenal. The fourth section focuses on how arms control has affected the size and structure of Russia's nuclear forces. The fifth section discusses several potential issues for Congress."], "subsections": []}, {"section_title": "Strategy and Doctrine", "paragraphs": [], "subsections": [{"section_title": "Soviet Doctrine", "paragraphs": ["The Soviet Union valued nuclear weapons for both their political and military attributes. From a political perspective, nuclear weapons served as a measure of Soviet status, while nuclear parity with the United States offered the Soviet Union prestige and influence in international affairs. From a military perspective, the Soviet Union considered nuclear weapons to be instrumental to its plans for fighting and prevailing in a conventional war that escalated to a nuclear one. As a leading Russian analyst has written, \"for the first quarter-century of the nuclear age, the fundamental assumption of Soviet military doctrine was that, if a global war was unleashed by the 'imperialist West,' the Soviet Union would defeat the enemy and achieve victory, despite the enormous ensuing damage.\"", "Soviet views on nuclear weapons gradually evolved as the United States and the Soviet Union engaged in arms control talks in the wake of the 1962 Cuban Missile Crisis, and as the Soviet Union achieved parity with the United States. During the 1960s, both countries recognized the reality of the concept of \"Mutually Assured Destruction\" (MAD)\u00e2\u0080\u0094a situation in which both sides had nuclear retaliatory capabilities that prevented either side from prevailing in an all-out nuclear war. Analysts argue that the reality that neither side could initiate a nuclear war without facing the certainty of a devastating retaliatory attack from the other was codified in the agreements negotiated during the Strategic Arms Limitation Talks (SALT). With the signing of the 1972 Anti-Ballistic Missile (ABM) Treaty, both sides accepted limits on their ability to protect themselves from a retaliatory nuclear attack, thus presumably reducing incentives for either side to engage in a nuclear first strike.", "The Soviet Union offered rhetorical support to the nonuse of nuclear weapons throughout the 1960s and 1970s. At the time, this approach placed the Soviet Union on the moral high ground with nonaligned nations during the negotiations on the Nuclear Nonproliferation Treaty. The United States and its NATO allies refused to adopt a similar pledge, maintaining a \"flexible response\" policy that allowed for the possible use of nuclear weapons in response to a massive conventional attack by the Soviet Union and its Warsaw Pact allies. At the same time, however, most U.S. analysts doubted that Soviet support for the nonuse of nuclear weapons actually influenced Soviet warfighting plans, even though Soviet-Warsaw Pact advantages in conventional forces along the Central European front meant that the Soviet Union would not necessarily need to use nuclear weapons first.", "U.S. and NATO skepticism about a Soviet nonuse policy reflected concerns about the Soviet military buildup of a vast arsenal of battlefield and shorter-range nuclear delivery systems. These systems could have been employed on a European battlefield in the event of a conflict with the United States and NATO. On the other hand, interviews with Soviet military officials have suggested that this theater nuclear buildup was intended to \"reduce the probability of NATO's first use [of nuclear weapons] and thereby to keep the war conventional.\" ", "In addition, many U.S. commentators feared that the Soviet Union might launch a \"bolt from the blue\" attack against U.S. territory even in the absence of escalation from a conflict in Europe. Other military analysts suspect that the Soviet Union would not have initiated such an attack and likely did not have the capability to conduct an disarming attack against U.S. nuclear forces\u00e2\u0080\u0094a capability that would have been needed to restrain the effectiveness of a U.S. retaliatory strike. Instead, the Soviet Union might have launched its weapons on warning of an imminent attack, which has sometimes been translated as a retaliatory reciprocal counter strike , or in a retaliatory strike after initial nuclear detonations on Soviet soil. Many believe that, in practice, the Soviet Union planned only for these latter retaliatory strikes. ", "Regardless, some scholars argue that the Soviet leadership likely retained the option of launching a first strike against the United States. Improvements to the accuracy of U.S. ballistic missiles raised concerns in the Soviet Union about the ability of retaliatory forces to survive a U.S. attack. For Soviet leaders, the increasing vulnerability of Soviet missile silos called into question the stability of mutual deterrence and possibly raised questions about the Soviet Union's international standing and bargaining position in arms control negotiations with the United States.", "In 1982, General Secretary Leonid Brezhnev officially announced that the Soviet Union would not be the first nation to use nuclear weapons in a conflict. When General Secretary Brezhnev formally enunciated the Soviet no-first-use policy in the 1980s, actual Soviet military doctrine may have become more consistent with this declaratory doctrine, as the Soviet military hoped to keep a conflict in the European theater conventional. In addition, by the end of the decade, and especially in the aftermath of the accident at the Chernobyl Nuclear Power Plant, Soviet leader Mikhail Gorbachev believed that the use of nuclear weapons would lead to catastrophic consequences. "], "subsections": []}, {"section_title": "Russian Nuclear Doctrine", "paragraphs": ["Russia has altered and adjusted Soviet nuclear doctrine to meet the circumstances of the post-Cold War world. In 1993, Russia explicitly rejected the Soviet Union's no-first-use pledge, in part because of the weakness of its conventional forces at the time. Russia has subsequently revised its military doctrine and national security concept several times over the past few decades, with successive versions in the 1990s appearing to place a greater reliance on nuclear weapons. For example, the national security concept issued in 1997 allowed for the use of nuclear weapons \"in case of a threat to the existence of the Russian Federation as an independent sovereign state.\" The military doctrine published in 2000 expanded the circumstances in which Russia might use nuclear weapons, including in response to attacks using weapons of mass destruction against Russia or its allies, as well as in response to \"large-scale aggression utilizing conventional weapons in situations critical to the national security of the Russian Federation.\" ", "These revisions have led to questions about whether Russia would employ nuclear weapons preemptively in a regional war or only in response to the use of nuclear weapons in a broader conflict. In mid-2009, Nikolai Patrushev, the head of Russia's Security Council, hinted that Russia would have the option to launch a \"preemptive nuclear strike\" against an aggressor \"using conventional weapons in an all-out, regional, or even local war.\" ", "However, when Russia updated its military doctrine in 2010, it did not specifically provide for the preemptive use of nuclear weapons. Instead, the doctrine stated that Russia \"reserves the right to utilize nuclear weapons in response to the utilization of nuclear and other types of weapons of mass destruction against it and (or) its allies, and also in the event of aggression against the Russian Federation involving the use of conventional weapons when the very existence of the state is under threat.\" Compared with the 2000 version, which allowed for nuclear use \"in situations critical to the national security of the Russian Federation,\" this change seemed to narrow the conditions for nuclear weapons use. The language on nuclear weapons in Russia's most current 2014 military doctrine is similar to that in the 2010 doctrine. ", "Analysts have identified several factors that contributed to Russia's increasing reliance on nuclear weapons during the 1990s. First, with the demise of the Soviet Union and Russia's subsequent economic collapse, Russia no longer had the means to support large and effective conventional forces. Conflicts in the Russian region of Chechnya and, in 2008, neighboring Georgia also highlighted seeming weaknesses in Russia's conventional military forces. In addition, Russian analysts saw emerging threats in other neighboring post-Soviet states; many analysts believed that by even implicitly threatening that it might resort to nuclear weapons, Russia hoped it could enhance its ability to deter the start of, or NATO interference in, such regional conflicts. ", "Russia's sense of vulnerability, and its view that its security was being increasingly threatened, also stemmed from NATO enlargement. Russia has long feared that an expanding alliance would create a new challenge to Russia's security, particularly if NATO were to move nuclear weapons closer to Russia's borders. These concerns contributed to the statement in the 1997 doctrine that Russia might use nuclear weapons if its national survival was threatened. ", "For many in Russia, NATO's air campaign in Kosovo in 1999 underlined Russia's growing weakness and NATO's increasing willingness to threaten Russian interests. Russia's 2000 National Security Concept noted that the level and scope of the military threat to Russia was growing. It cited, specifically, \"the desire of some states and international associations to diminish the role of existing mechanisms for ensuring international security.\" It also noted that \"a vital task of the Russian Federation is to exercise deterrence to prevent aggression on any scale, nuclear or otherwise, against Russia and its allies.\" Consequently, it concluded, Russia \"must have nuclear forces capable of delivering specified damage to any aggressor state or a coalition of states in any situation.\" ", "The potential threat from NATO remained a concern for Russia in its 2010 and 2014 military doctrines. The 2010 doctrine stated that the main external military dangers to Russia were \"the desire to endow the force potential of the North Atlantic Treaty Organization (NATO) with global functions carried out in violation of the norms of international law and to move the military infrastructure of NATO member countries closer to the borders of the Russian Federation, including by expanding the bloc.\" It also noted that Russia was threatened by \"the deployment of troop contingents of foreign states (groups of states) on the territories of states contiguous with the Russian Federation and its allies and also in adjacent waters\" (a reference to the fact that NATO now included states that had been part of the Warsaw Pact). Russian concerns also extend ed to U.S. missile defense deployed on land in Poland and Romania and at sea near Russian territory as a part of the European Phased Adaptive Approach (EPAA). ", "Russia's possession of a large arsenal of nonstrategic nuclear weapons and dual-capable systems, combined with recent statements designed to remind others of the strength of Russia's nuclear deterrent, have led some to argue that Russia has increased the role of nuclear weapons in its military strategy and military planning. Before Russia's invasion of Ukraine in 2014, some analysts argued that Russia's nonstrategic nuclear weapons had \"no defined mission and no deterrence framework [had] been elaborated for them.\" However, subsequent Russian statements, coupled with military exercises that appeared to simulate the use of nuclear weapons against NATO members, have led many to believe that Russia might threaten to use its shorter-range, nonstrategic nuclear weapons to coerce or intimidate its neighbors. Such a nuclear threat could occur before or during a conflict if Russia believed that a threat to use nuclear weapons could lead its adversaries, including the United States and its allies, to back down. ", "Consequently, several analysts have argued that Russia has adopted an \"escalate to de-escalate\" nuclear doctrine. They contend that when faced with the likelihood of defeat in a military conflict with NATO, Russia might threaten to use nuclear weapons in an effort to coerce NATO members to withdraw from the battlefield. This view of Russian doctrine has been advanced by officials in the Trump Administration and has informed decisions made during the 2018 Nuclear Posture Review. However, Russia does not use the phrase \"escalate to de-escalate\" in any versions of its military doctrine, and debate exists about whether this is an accurate characterization of Russian thinking about nuclear weapons.", "Conflicting statements from Russia have contributed to disagreements among U.S. analysts over the circumstances under which Russia would use nuclear weapons. During a March 2018 speech to the Federal Assembly, President Putin seemed to affirm the broad role for nuclear weapons that Russia's military doctrine assigns: ", "I should note that our military doctrine says Russia reserves the right to use nuclear weapons solely in response to a nuclear attack, or an attack with other weapons of mass destruction against the country or its allies, or an act of aggression against us with the use of conventional weapons that threaten the very existence of the state. This all is very clear and specific. As such, I see it is my duty to announce the following. Any use of nuclear weapons against Russia or its allies, weapons of short, medium or any range at all, will be considered as a nuclear attack on this country. Retaliation will be immediate, with all the attendant consequences. There should be no doubt about this whatsoever.", "Putin and other Russian officials have extensively used what some Western analysts have described as \"nuclear messaging\" in the wake of Russia's annexation of Crimea and instigation of conflict in eastern Ukraine. Their references to Russia's nuclear capabilities have seemed like an effort to signal that Russia's stakes are higher than those of the West and that Russia is willing to go to great lengths to protect its interests. ", "At times, however, President Putin has offered a more restrained view of the role of nuclear weapons. In 2016, Putin stated that \"brandishing nuclear weapons is the last thing to do. This is harmful rhetoric, and I do not welcome it.\" He also dismissed suggestions that Russia would consider using nuclear weapons offensively, stating that \"nuclear weapons are a deterrent and a factor of ensuring peace and security worldwide. They should not be considered as a factor in any potential aggression, because it is impossible, and it would probably mean the end of our civilization.\"", "In October 2018, President Putin made a statement that some analysts interpreted as potentially moving toward a \"sole purpose\" doctrine, by which Russia would use nuclear weapons only in response to others' use of nuclear weapons. Putin declared: ", "There is no provision for a preventive strike in our nuclear weapons doctrine. Our concept is based on a retaliatory reciprocal counter strike. This means that we are prepared and will use nuclear weapons only when we know for certain that some potential aggressor is attacking Russia, our territory [with nuclear weapons]\u00e2\u0080\u00a6. Only when we know for certain\u00e2\u0080\u0094and this takes a few seconds to understand\u00e2\u0080\u0094that Russia is being attacked will we deliver a counterstrike\u00e2\u0080\u00a6. Of course, this amounts to a global catastrophe, but I would like to repeat that we cannot be the initiators of such a catastrophe because we have no provision for a preventive strike. "], "subsections": []}]}, {"section_title": "Soviet Nuclear Forces", "paragraphs": ["The Soviet Union conducted its first explosive test of a nuclear device on August 29, 1949, four years after the United States employed nuclear weapons against Japan at the end of World War II. After this test, the Soviet Union initiated the serial production of nuclear devices and work on thermonuclear weapons, and it began to explore delivery methods for its nascent nuclear arsenal. The Soviet Union tested its first version of a thermonuclear bomb in 1953, two years after the United States crossed that threshold. The Soviet stockpile of nuclear warheads grew rapidly through the 1960s and 1970s, peaking at more than 40,000 warheads in 1986, according to unclassified estimates (see Figure 1 ). Within this total, around 10,700 warheads were carried by long-range delivery systems, the strategic forces that could reach targets in the United States in the mid-1980s.", "By the 1960s, the Soviet Union, like the United States, had developed a triad of nuclear forces: land-based intercontinental ballistic missiles (ICBMs), submarine-launched ballistic missiles (SLBMs), and heavy bombers equipped with nuclear weapons. In 1951, the Soviet Union conducted its first air drop test of a nuclear bomb and began to deploy nuclear weapons with its Long-Range Aviation forces soon thereafter. Bomber aircraft included the M-4 Bison, which barely had the range needed to attack the United States and then return home. The Tu-95 Bear strategic bomber, which had a longer range, entered service in 1956. Later modifications of the Bear bomber have since been the mainstay of the Soviet/Russian nuclear triad's air leg.", "In 1956, the Soviet Union tested and deployed its first ballistic missile with a nuclear warhead, the SS-3, a shorter-range, or theater, missile. It tested and deployed the SS-4, a theater ballistic missile that would be at the heart of the 1962 Cuban Missile Crisis, by 1959. Soviet missile ranges were further extended with the deployment of an intermediate-range ballistic missile, the SS-5. The 1957 launch of the Sputnik satellite on a modified SS-6 long-range missile heralded the Soviet Union's development of ICBMs. By the end of the decade, the Soviet Union had launched an SS-N-1 SLBM from a Zulu-class attack submarine of the Soviet Navy. The undersea leg of the triad would steadily progress over the following decade with the deployment of SLBMs on the Golf class attack submarine and then the Hotel and Yankee class nuclear-powered submarines. ", "Manned since 1959 by a separate military service called the Strategic Rocket Forces, the ICBM leg came to dominate the Soviet nuclear triad. During the 1960s, the Soviet Union rapidly augmented its force of fixed land-based ICBMs, expanding from around 10 launchers and two types of missiles in 1961 to just over 1,500 launchers with eight different types of missiles in 1971. Because these missiles were initially based on soft launch pads or in vertical silos that could not withstand an attack from U.S. nuclear warheads, many concluded that the Soviet Union likely planned to use them in a first strike attack against U.S. missile forces and U.S. territory. ", "Moreover, the United States believed that the design of Soviet ICBMs provided the Soviet Union with the ability to contemplate, and possibly execute, a successful disarming first strike against U.S. land-based forces. Half of the ICBM missile types were different variants of the largest missile, the SS-9 ICBM. The United States referred to this as a \"heavy\" ICBM due to its significant throwweight, which allowed it to carry a higher-yield warhead, estimated at around 20 megatons. The United States believed, possibly inaccurately, that the missile's combination of improved accuracy and high yield posed a unique threat to U.S. land-based missiles. Concerns about Soviet heavy ICBMs persisted throughout the Cold War, affecting both U.S. force structure decisions and U.S. proposals for arms control negotiations. ", "Although smaller and less capable than its land-based forces, the sea-based leg of the Soviet triad was built up during the 1960s, with the deployment of SLBMs on Golf-, Hotel-, and Yankee- class submarines. These submarines carried intermediate-range (rather than intercontinental-range) missiles, but their mobility allowed the Soviet Union to threaten targets throughout Europe and, to a lesser extent, in the United States. The Soviet Union began the decade with 30 missile launchers on 10 submarines and ended it with 228 launchers on 31 submarines.", "By the end of the 1960s, the United States and the Soviet Union had initiated negotiations to limit the numbers of launchers for long-range missiles. The emerging parity in numbers of deployed nuclear-armed missiles, coupled with several nuclear crises, had paved the way for a recognition of their mutual deterrence relationship and arms control talks. As noted below, the Interim Agreement on Offensive Arms\u00e2\u0080\u0094negotiated as part of the Strategic Arms Limitation Talks (SALT I) and signed in 1972\u00e2\u0080\u0094capped the construction and size of ICBM silo launchers (in an effort to limit the number of heavy ICBMs in the Soviet force) and limited the number of launchers for SLBMs. It did not, however, limit the nuclear warheads that could be carried by ICBMs or SLBMs.", "As a result, the Soviet Union continued to modernize and expand its nuclear forces in the 1970s. During this time, the Soviet Union", "commissioned numerous Delta-class strategic missile submarines, armed with the single-warhead, intercontinental-range SS-N-8 SLBM; developed the Tu-22M Backfire intermediate-range bomber aircraft; began to develop a new supersonic strategic heavy bomber (eventually the Tu-160 Blackjack); and began to deploy the SS-20 intermediate-range ballistic missile in 1976, which, along with other missiles of its class, would be eliminated under the 1987 INF Treaty.", "The Soviet Union also pursued an extensive expansion of its land-based ICBM force. It not only developed a number of new types of ICBMs, but, in 1974, it began to deploy these missiles with multiple warheads (known as MIRVs, or multiple independent reentry vehicles). During this time frame the Soviet Union developed, tested, and deployed the 4-warhead SS-17 ICBM, 10-warhead SS-18 ICBM (a new heavy ICBM that replaced the SS-9), and 6-warhead SS-19 ICBM. Because each of these missiles could carry multiple warheads, the SALT I limit on ICBM launchers did not constrain the number of warheads on the Soviet missile force. Moreover, the ICBM force began to dominate the Soviet triad during this time (see Figure 2 ). ", "U.S. analysts and officials expressed particular concern about the heavy SS-18 ICBM and its subsequent modifications. The Soviet Union deployed 308 of these missiles, each with the ability to carry up to 10 warheads and numerous decoys and penetration aides designed to confuse missile defense radars. These concerns contributed to a debate in the U.S. defense community about a \"window of vulnerability\" in the U.S.-Soviet nuclear balance due to a Soviet advantage in cumulative ballistic missile throwweight. Some asserted that the Soviets' throwweight advantage could translate into an edge in the number of warheads deployed on land-based missiles. They postulated that the Soviet Union could attack all U.S. land-based missiles with just a portion of the Soviet land-based force, leaving it with enough warheads after an initial nuclear attack to dominate and possibly coerce the United States into surrendering without any retaliation. Others disputed this theory, noting that the United States maintained a majority of its nuclear warheads on sea-based systems that could survive a Soviet first strike and that the synergy of U.S. land-based, sea-based, and air-delivered weapons would complicate, and therefore deter, a Soviet first strike.", "Recent research examining the records of Soviet planners and officials suggests that Soviet missile developments during the 1970s did not seek to achieve, and did not have the capabilities needed for, a first-strike advantage or a warfighting posture. Instead, the Soviet Union began to harden its missile silos so they could survive attack and to develop an early warning system, thus moving toward a second-strike capability. ", "Moreover, the 1980s saw Soviet planners worrying about maintaining their second-strike capability in light of U.S. strategic offense and missile defense programs. The United States was modernizing its land-based ICBMs, ballistic missile submarines and SLBMs, and heavy bombers. Each of the new U.S. missiles would carry multiple warheads, and the Soviets believed all would have the accuracy to target and destroy Soviet land-based missiles. In March 1983, President Reagan announced the Strategic Defense Initiative, a missile defense program that he pledged would make ballistic missiles \"impotent and obsolete.\" The SS-18 ICBM, with its capacity to carry 10 warheads and penetration aids, provided a counter to these U.S. capabilities.", "During the 1980s, development continued across all three legs of the Soviet nuclear triad. The Typhoon-class strategic submarine and the Tu-160 Blackjack bomber entered into service. Anti-ship cruise missiles were joined by modern AS-15 land-attack cruise missiles. The Soviet Union continued to improve the accuracy of its fixed, silo-based missiles and began to deploy mobile ICBMs, adding both the road-mobile, single warhead SS-25 missile and the rail-mobile, 10-warhead SS-24 missile. ", "By the end of the 1980s, prior to the signing of the 1991 Strategic Arms Reduction Treaty (START), the Soviet Union had completed the backbone of what was to become the Russian nuclear triad of the 1990s. Its air leg consisted of Bear, Backfire, and Blackjack bombers. Its undersea leg consisted of Delta- and Typhoon-class submarines with MIRV SLBMs. Its ICBM leg consisted of the SS-18, SS-19, and SS-25 missiles. ", "During the Cold War, the Soviet Union produced and deployed a wide range of delivery vehicles for nonstrategic nuclear weapons. At different times during the period, it deployed devices small enough to fit into a suitcase-sized container; nuclear mines; shells for artillery; short-, medium-, and intermediate-range ballistic missiles; short-range, air-delivered missiles; and gravity bombs. The Soviet Union deployed these weapons at nearly 600 bases, with some located in Warsaw Pact countries in Eastern Europe, some in the Soviet Union's non-Russian republics along its western and southern perimeter, and others throughout the Soviet Union. Estimates vary, but many analysts believe that by 1991 the Soviet Union had more than 20,000 of these weapons. Before the collapse of the Warsaw Pact in 1989, the numbers may have been higher, in the range of 25,000 weapons. "], "subsections": []}, {"section_title": "Russian Nuclear Forces", "paragraphs": ["Like the Soviet Union, the Russia Federation maintains a triad of nuclear forces consisting of ICBMs, SLBMs, and heavy bombers. The total number of warheads in the Soviet and Russian arsenal and the number deployed on Soviet and Russian strategic forces began to decline in the late 1980s (see Figure 1 and Figure 2 above). These reductions were primarily driven by the limits in the 1991 START I Treaty, the 2002 Strategic Offensive Reductions Treaty, and the 2010 New START Treaty. The reductions also reflect the retirement of many older Soviet-era missiles and their replacement with new missiles that carry fewer warheads, as well as the effects of the fiscal crisis in the late 1990s, which slowed the deployment of the next generation of Russian missiles and submarines. Moreover, under the Nunn-Lugar Cooperative Threat Reduction program, the United States helped Russia, Ukraine, Belarus, and Kazakhstan move Soviet-era nuclear weapons back to Russian territory and to dismantle portions of the Soviet Union's nuclear arsenal. ", "Russia deploys its strategic nuclear forces at more than a dozen bases across its territory. These bases are shown on Figure 4 , below.", "Russia is currently modernizing most of the components of its nuclear triad. The current phase of modernization essentially began in 1998. The Soviet Union replaced its land-based missiles frequently, with new systems entering the force every 10-15 years and modifications appearing every few years. Russia has not kept up this pace. When it began the most recent modernization cycle, it was in the midst of a financial crisis. The crisis not only reduced the number of new missiles entering the force each year, but slowed the process. As a result, some of the systems that have had been under development since the late 1990s and early 2000s began to enter the force in the late 2000s, but others will not do so until the 2020s."], "subsections": [{"section_title": "Active Forces", "paragraphs": [], "subsections": [{"section_title": "Intercontinental Ballistic Missiles", "paragraphs": ["As was the case during the Soviet era, Russia's Strategic Rocket Forces (SRF) are a separate branch of the Russian armed forces. These forces are still the mainstay of Russia's nuclear triad. Today, the SRF includes three missile armies, which, in turn, comprise 11 missile divisions (see Figure 3 ). These divisions are spread across Russia's territory, from Vypolzovo in the west to the Irkutsk region in eastern Siberia. The Strategic Rocket Forces are estimated to have approximately 60,000 personnel.", "According to official and unofficial sources, Russia's ICBM force currently comprises 318 missiles that can carry up to 1,165 warheads, although only about 860 warheads are deployed and available for use. Over half of these missiles are MIRVed, carrying multiple warheads.", "Russia is modernizing its ICBM force, replacing the last of the missiles remaining from the Soviet era with new single warhead and multiple warhead missiles. According to U.S. estimates, Russia is likely to complete this modernization around 2022. It is anticipated that, after modernization, Russia's ICBM force will come to rely primarily on two missiles: the single-warhead SS-27 Mod 1 (Topol-M) and the SS-27 Mod 2 (Yars), which can carry up to 4 MIRV warheads.", "As discussed below, Russia is developing a new heavy ICBM, known as the Sarmat (SS-X-30), which is expected to deploy with 10 or more warheads on each missile. It may also carry the new Avangard hypersonic glide vehicle, also described below. According to unclassified reports, Russia has pursued other projects, including an intermediate-range version of the SS-27 Mod 2 (known as the RS-26) and a rail-mobile ICBM called Barguzin, but their future is unclear."], "subsections": []}, {"section_title": "Submarine-Launched Ballistic Missiles", "paragraphs": ["Russia's Strategic Naval Forces are a part of the Russian Navy. Ballistic missile submarines are deployed with the Northern Fleet, headquartered in Severomorsk in the Murmansk region, and the Pacific Fleet, headquartered in Vladivostok. ", "The Strategic Naval Forces have 10 strategic submarines of three different types: Delta, Typhoon, and Borei class. Some of these are no longer operational. The last submarine of the Typhoon class is used as a testbed for launches of the Bulava missile, which is deployed on the Borei-class submarines. The Delta and Borei-class submarines can each carry 16 SLBMs, with multiple warheads on a missile, \"for a combined maximum loading of more than 700 warheads.\" However, because Russia may have reduced the number of warheads on some of the missiles to comply with limitations set by the 2010 New START Treaty, the submarine fleet may carry only 600 warheads.", "Most of the submarines in Russia's fleet are the older Delta class, including one Delta III submarine and 6 Delta IV submarines. The last of these was built in 1992; they are based with Russia's Northern Fleet. Although older Delta submarines were deployed with three-warhead SS-N-18 missiles, the Delta IV submarines carry the four-warhead SS-N-23 missile. An upgraded version of this missile, known as the Sineva system, entered into service in 2007. Another modification, known as the Liner (or Layner), could reportedly carry up to 10 warheads.", "Russia began constructing the lead ship in its Borei class of ballistic missile submarines (SSBN) in 1996. After numerous delays, the lead ship joined the Northern Fleet in 2013. According to public reports, Russia will eventually deploy 10 Borei-class submarines, with 5 in the Pacific Fleet and 5 in the Northern Fleet. Three submarines are currently in service, all in the Northern Fleet, and five more are in \"various stages of construction.\" The latter five submarines will be an improved version, known as the Borei-A/II. The first of these has recently completed its sea trials. Russia plans to complete the first eight ships by 2023 and to finish the last two by 2027. Borei-class submarines can carry 16 of the SS-N-32 Bulava missiles; each missile can carry six warheads. The Bulava missile began development in the late 1990s. It experienced numerous test failures before it entered service in 2018."], "subsections": []}, {"section_title": "Heavy Bombers", "paragraphs": ["Russia's strategic aviation units are part of the Russian Aerospace Forces' Long-Range Aviation Command. This command includes two divisions of Tu-160 (Blackjack) and Tu-95MS (Bear H) aircraft, which are the current mainstay of Russia's strategic bomber fleet. These are located in the Saratov region, in southwestern Russia, and the Amurskaya region, in Russia's Far East.", "Unclassified sources estimate that Russia has 60 to 70 bombers in its inventory\u00e2\u0080\u009450 of them count under the New START Treaty. Around 50 of these are Tu-95MS Bear bombers; the rest are Tu-160 Blackjack bombers. The former can carry up to 16 AS-15 (Kh-55) nuclear-armed cruise missiles, while the latter can carry up to 12 AS-15 nuclear-armed cruise missiles. Both bombers can also carry nuclear gravity bombs, though experts contend that the bombers would be vulnerable to U.S. or allied air defenses in such a delivery mission. ", "Russia has recently modernized both of its bombers, fitting them with a new cruise missile system, the conventional AS-23A (Kh-101) and the nuclear AS-23B (Kh-102). A newer version of the Tu-160, which is expected to include improved stealth characteristics and a longer range, is set to begin production in the mid-2020s. Experts believe the fleet will then include around 50-60 aircraft, with the eventual development of a new stealth bomber, known as the PAK-DA, as a part of Russia's long-term plans."], "subsections": []}, {"section_title": "Nonstrategic Nuclear Weapons", "paragraphs": ["Russia has a variety of delivery systems that can carry nuclear warheads to shorter and intermediate ranges. These systems are generally referred to as nonstrategic nuclear weapons, and they do not fall under the limits in U.S.-Soviet or U.S.-Russian arms control treaties. According to unclassified reports, Russia has a number of nuclear weapons available for use by its \"naval, tactical air, air- and missile defense forces, as well as on short-range ballistic missiles.\" It is reportedly engaged in a modernization effort focused on \"phasing out Soviet-era weapons and replacing them with newer versions.\" Unclassified estimates place the number of warheads assigned to nonstrategic nuclear weapons at 1,830.", "Recent analyses indicate that Russia is both modernizing existing types of short-range delivery systems that can carry nuclear warheads and introducing new versions of weapons that have not been a part of the Soviet/Russian arsenal since the latter years of the Cold War. In May 2019, Lt. Gen. Robert P. Ashley of the Defense Intelligence Agency (DIA) raised this point in a public speech. He stated that Russia has 2,000 nonstrategic nuclear warheads and that its stockpile \"is likely to grow significantly over the next decade.\" He also stated that ", "Russia is adding new military capabilities to its existing stockpile of nonstrategic nuclear weapons, including those employable by ships, aircraft, and ground forces. These nuclear warheads include theater- and tactical-range systems that Russia relies on to deter and defeat NATO or China in a conflict. Russia's stockpile of non-strategic nuclear weapons [is] already large and diverse and is being modernized with an eye towards greater accuracy, longer ranges, and lower yields to suit their potential warfighting role. We assess Russia to have dozens of these systems already deployed or in development. They include, but are not limited to: short- and close-range ballistic missiles, ground-launched cruise missiles, including the 9M729 missile, which the U.S. Government determined violates the Intermediate-Range Nuclear Forces or INF Treaty, as well as antiship and antisubmarine missiles, torpedoes, and depth charges.", "It is not clear from General Ashley's comments, or from many of the other assessments of Russia's nonstrategic nuclear forces, whether Russia will deploy these new delivery systems with nuclear warheads. Many of Russia's medium- and intermediate-range missile systems, including the Kalibr sea-launched cruise missile and the Iskander ballistic and cruise missiles, are dual-capable and can carry either nuclear or conventional warheads. This is also likely true of the new 9M729 land-based, ground-launched cruise missile, the missile that the United States has identified as a violation of the 1987 INF Treaty. ", "It unclear why Russia retains, and may expand, its stockpile of nonstrategic nuclear weapons. Some argue that these weapons serve to bolster Russia's less capable conventional military forces and assert that as Russia develops more capable advanced conventional weapons, it may limit its nonstrategic modernization program and retire more of these weapons than it acquires. Others, however, see Russia's modernization of its nonstrategic nuclear weapons as complementary to an \"escalate to de-escalate\" nuclear doctrine and argue that Russia will expand its nonstrategic nuclear forces as it raises the profile of such weapons in its doctrine and warfighting plans."], "subsections": []}]}, {"section_title": "Key Infrastructure", "paragraphs": [], "subsections": [{"section_title": "Early Warning", "paragraphs": ["Russia deploys an extensive early warning system. Operated by its Aerospace Forces, the system consists of a network of early warning satellites that transmit to two command centers: one in the East, in the Khabarovsk region, and one in the West, in the Kaluga region. The data are then transmitted to a command center in the Moscow region. Russia also operates an extensive network of ground-based radars across Russia, as well as in neighboring Kazakhstan and Belarus, that are used for early warning of missile launches and to monitor objects at low-earth orbits. Russia uses the Okno observation station, located in Tajikistan, to monitor of objects that orbit at higher altitudes."], "subsections": []}, {"section_title": "Command and Control", "paragraphs": ["The Russian President is the Supreme Commander in Chief of the Russian Armed Forces, and he has the authority to direct the use of nuclear weapons. According to a 2016 DIA report, \"The General Staff monitors the status of the weapons of the nuclear triad and will send the direct command to the launch crews following the president's decision to use nuclear weapons. The Russians send this command over multiple C2 systems, which creates a redundant dissemination process to guarantee that they can launch their nuclear weapons.\" According to DIA, Russia \"also maintains the Perimetr system, which is designed to ensure that a retaliatory launch can be ordered when Russia is under nuclear attack.\" It is unknown whether the order to transfer warheads from central storage and release them to the forces is part of the launch authorization."], "subsections": []}, {"section_title": "Production, Testing, and Storage", "paragraphs": ["Russia has an extensive infrastructure of facilities for the production of nuclear weapons and missiles, although it has consolidated and reduced the size of this infrastructure since the end of the Cold War. Moreover, Russia has improved the security of its nuclear weapons facilities through U.S.-Russian cooperation under the Nunn-Lugar CTR program. ", "Russia has about a dozen research institutes and facilities that participate in the design and manufacture of nuclear and nonnuclear components for its nuclear weapons, provide stockpile support, and engage in civilian nuclear and other research. Russia, which has a significant stockpile of weapons-usable materials, no longer produces highly enriched uranium or plutonium for use in nuclear weapons. ", "Russia's nuclear weapons are stored at approximately 12 national central storage sites. According to analysts, Russia also maintains 34 base-level storage facilities (see Appendix B ). A special unit, the 12 th Main Directorate (GUMO), is responsible for security, transportation, and handling of the warheads. In a period immediately preceding a conflict, it is anticipated that nuclear warheads could be transferred from the national central storage sites to the base-level facilities. ", "Russia ratified the Comprehensive Test Ban Treaty (CTBT) in 2000. Although this treaty has yet to enter into force, Russia claims it has refrained from explosive nuclear testing in accordance with the treaty's requirements. Russia conducts hydrodynamic tests, which do not produce a nuclear yield, at a site located on Novaya Zemlya, an archipelago located in the Arctic Ocean. In his May 2019 speech, DIA Director General Ashley stated that \"the United States believes that Russia probably is not adhering to its nuclear testing moratorium in a manner consistent with the 'zero-yield' standard.\" However, when questioned about this assertion, he said that the U.S. intelligence community does not have \"specific evidence that Russia had conducted low-yield nuclear tests\" but that the DIA thinks Russia has \"the capability to do that.\""], "subsections": []}]}, {"section_title": "Key Modernization Programs", "paragraphs": ["In addition to replacing aging Soviet-era ICBMs, SLBMs, and ballistic missile submarines, Russia is developing several kinds of nuclear delivery vehicles. Some of these, like the Sarmat ICBM, may replicate capabilities that already exist; others could expand the force with new types of delivery systems not previously deployed with nuclear warheads. President Putin unveiled most of these systems during his March 1, 2018, annual State of the Nation address to the Federal Assembly, when he presented a range of weapons systems currently under development in Russia. His speech also featured videos and animations of new weapons systems. ", "During his speech, President Putin explicitly linked Russia's new strategic weapons programs to the U.S. withdrawal from the ABM Treaty in 2002. He said:", "We did our best to dissuade the Americans from withdrawing from the treaty. All in vain. The US pulled out of the treaty in 2002. Even after that we tried to develop constructive dialogue with the Americans. We proposed working together in this area to ease concerns and maintain the atmosphere of trust. At one point, I thought that a compromise was possible, but this was not to be. All our proposals, absolutely all of them, were rejected. And then we said that we would have to improve our modern strike systems to protect our security . [Emphasis added] In reply, the US said that it is not creating a global BMD system against Russia, which is free to do as it pleases, and that the US will presume that our actions are not spearheaded against the US\u00e2\u0080\u00a6.", "\u00e2\u0080\u00a6 the US, is permitting constant, uncontrolled growth of the number of anti-ballistic missiles, improving their quality, and creating new missile launching areas. If we do not do something, eventually this will result in the complete devaluation of Russia's nuclear potential. Meaning that all of our missiles could simply be intercepted.", "Let me recall that the United States is creating a global missile defence system primarily for countering strategic arms that follow ballistic trajectories. These weapons form the backbone of our nuclear deterrence forces, just as of other members of the nuclear club. As such, Russia has developed, and works continuously to perfect, highly effective but modestly priced systems to overcome missile defence. They are installed on all of our intercontinental ballistic missile complexes.", "These comments, and President Putin's repeated reference to U.S. ballistic missile defenses, provide a possible context for many of the ongoing modernization programs."], "subsections": [{"section_title": "Avangard Hypersonic Glide Vehicle", "paragraphs": ["The Avangard hypersonic glide vehicle (HGV), previously known as Project 4202, is a reentry body carried atop an existing ballistic missile that can maneuver to evade air defenses and ballistic missile defenses to deliver a nuclear warhead to targets in Europe and the United States. Russia views the Avangard system as a hedge to buttress its second-strike capability, ensuring that a retaliatory strike can penetrate U.S. ballistic missile defenses. In his March 2018 remarks, President Putin specifically stressed that Russia would pursue \"a new hypersonic-speed, high-precision new weapons systems that can hit targets at inter-continental distance and can adjust their altitude and course as they travel\" in response to the U.S. withdrawal from the ABM Treaty. Some U.S. analysts, however, have noted that the Avangard could be used \"as a first strike system to be used specifically against missile defenses, clearing the way for the rest of Russia's nuclear deterrent.\" Others have stressed that the Avangard is likely to serve as a niche capability that adds little to Russia's existing nuclear force structure.", "The Soviet Union first experimented with HGV technology in the 1980s, partly in response to the expected deployment of U.S. ballistic missile defense systems under the SDI program. The current program has been under development since at least 2004 and has undergone numerous tests. In the most recent test, on December 26, 2018, the glider was launched atop an SS-19 ICBM from the Dombarovskiy missile base in the Southern Urals toward a target on the Kamchatka Peninsula more than 3,500 miles away. According to some sources, Russia might deploy the Avangard on the SS-18, SS-19 and, potentially, on the new Sarmat ICBMs. Experts continue to debate Avangard's true technical characteristics. However, President Putin has stated that the system is capable of \"intensive maneuvering\" and achieving \"supersonic speeds in excess of Mach 20.\"", "After the December 2018 test, President Putin announced that the weapon would be added to Russia's nuclear arsenal in 2019. In January 2019, an official with Russia's Security Council confirmed that the Avangard had been integrated onto the SS-19 force. According to the Commander of Russia's Strategic Rocket Forces, the Dombarovskiy Missile Division will stand up a \"missile regiment comprising a modified command-and-control post and two silo-based launchers\" in 2019. On December 27, 2019, the Russian military announced that the Strategic Rocket Forces had activated two SS-19 missiles equipped with Avangard hypersonic glide vehicles. Although not specified in the Russian announcement, the missiles are likely deployed with the 13 th regiment of the Dombarovskiy (Red Banner) missile division based in the Orenburg region.", "The regiment has reportedly received two retrofitted UR-100NUTTkH (NATO reporting name: SS-19 Stiletto) ICBMs armed with one Avangard hypersonic boost-glide warhead each. According to earlier reports, the 13 th regiment is expected to eventually receive four more SS-19 ICBMs fitted with Avangard warheads.", "Reports have stated that the Strategic Rocket Forces will have two missile regiments, each with six Avangard systems by 2027. Each converted missile would carry one HGV. Russian officials have indicated that these missiles will count under the New START Treaty. Consequently, Russians officials conducted an exhibition of the system for U.S. inspectors, as mandated by the New START Treaty, prior to deployment. The exhibition demonstrated that each missile will carry one Avangard HGV, but it is not clear whether or how Russia demonstrated that each HGV would carry only one warhead."], "subsections": []}, {"section_title": "Sarmat ICBM", "paragraphs": ["The RS-28 Sarmat (SS-X-30) missile is a liquid-fueled heavy ICBM that Russia intends to eventually deploy as a replacement for the SS-18 heavy ICBM. Russia has been reducing the number of SS-18 missiles in its force since the 1990s, when the original START Treaty required a reduction from 308 to 154 missiles. Russia likely would have eliminated all of the missiles if the START II Treaty (described below) had entered into force, but it has retained 46 of them under New START, while awaiting the development of the Sarmat. Reports indicate that the Sarmat can carry 10, or according to some sources, 15 warheads, along with penetration aids, and potentially several Avangard hypersonic glide vehicles. Putin stated in his March 2018 speech that Sarmat weighs over 200 tons, but details about the ICBM's true weight, and thus its payload, remain unclear.", "Russia began testing the Sarmat missile in 2016; reports indicate that it is likely to be deployed in the Uzhur Missile Division around 2021. Russia also may deploy the missile at the Dombarovsky Missile Division, with an eventual total of seven Sarmat regiments with 46 missiles. This number is equal to roughly the number of SS-18 ICBMs that Russia has retained under New START and, therefore, indicates that Russia could be planning to deploy the Sarmat in a manner consistent with the limits in the treaty. Some have speculated, however, that Russia could exceed the limits in the treaty by eventually expanding its deployment of Sarmat missiles or increasing the number of warheads on each missile to exceed the treaty's warhead limits.", "In his March 2018 speech, President Putin highlighted the Sarmat missile's ability to confound and evade ballistic missile defense systems. As was the case with the SS-18 missile, the large number of warheads and penetration aids are designed to increase the probability that the missile's warhead could penetrate defenses and reach its target. In addition, President Putin noted that Sarmat could attack targets by flying over both the North and South Poles, evading detection by radars seeking missiles flying in an expected trajectory over the North Pole. He also stated that the missile \"has a short boost phase, which makes it more difficult to intercept for missile defense systems.\" He emphasized that Sarmat is a formidable missile and, owing to its characteristics, \"is untroubled by even the most advanced missile defense systems.\""], "subsections": []}, {"section_title": "Poseidon Autonomous Underwater Vehicle", "paragraphs": ["The existence of Poseidon, a nuclear-powered autonomous underwater vehicle (also known as Status 6 or Kanyon, its NATO designation), was first \"leaked\" to the press in November 2015, when a slide detailing it appeared in a Russian Ministry of Defense briefing. According to that slide, the autonomous underwater vehicle, or drone, could reach a depth of 1,000 meters, go at a speed of 100 knots, and have a range of up to 10,000 km. The slide indicated that the system would be tested between 2019 and 2025. Press reports indicate, however, that Russia has been testing the system since at least 2016, with the most recent test occurring in November 2018. However, the system may not be deployed until 2027.", "Russia may deploy the Poseidon drone on four submarines, two in the Northern Fleet and two in the Pacific Fleet. Each submarine would carry eight drones. According to some reports, each drone would be armed with a two-megaton nuclear or conventional payload that could be detonated \"thousands of feet\" below the surface. Russia could release the drone from its submarine off the U.S. coast and detonate it in a way that would \"generate a radioactive tsunami\" that could destroy cities and other infrastructure along the U.S. coast.", "When Russia first revealed the existence of this new drone, some analysts questioned whether Russia was developing a new first-strike weapon that could evade U.S. defenses and devastate the U.S. coastline. Russia, however, views the weapon as a second- or third-strike option that could ensure a retaliatory strike against U.S. cities. Like the Avangard and Sarmat, this system, according to Russian statements, would also serve as a Russian response to concerns about the U.S. withdrawal from the ABM Treaty and U.S. advances in ballistic missile defenses. As President Putin noted in his March 2018 speech, \"we have developed unmanned submersible vehicles that can move at great depths (I would say extreme depths) intercontinentally, at a speed multiple times higher than the speed of submarines, cutting-edge torpedoes and all kinds of surface vessels\u00e2\u0080\u00a6. They are quiet, highly manoeuvrable and have hardly any vulnerabilities for the enemy to exploit.\""], "subsections": []}, {"section_title": "Burevestnik Nuclear-Powered Cruise Missile", "paragraphs": ["The Burevestnik (SSC-X-9 Skyfall) is a nuclear-powered cruise missile intended to have \"unlimited\" range, because it would be powered by a nuclear reactor. In his March 2018 speech, Putin stressed that the \"low-flying stealth missile carrying a nuclear warhead, with almost an unlimited range, unpredictable trajectory and ability to bypass interception boundaries\" would be \"invincible against all existing and prospective missile defense and counter-air defense systems.\"", "According to reports, Russia has been conducting tests with a prototype missile, and with an electric power source instead of a nuclear reactor, since 2016. Tests have continued to take place as recently as January 2019. Reports indicate, however, that most of the tests have ended in failure, and that tests using a nuclear power source are unlikely to occur in the near future, as failed tests could spread deadly radiation. According to some reports, Russia is unlikely to deploy the cruise missile for at least another decade and, even then, the high cost could limit the number introduced into the Russian arsenal."], "subsections": []}, {"section_title": "Kinzhal Air-Launched Ballistic Missile", "paragraphs": ["Russia is developing a nuclear-capable air-launched ballistic missile, known as the Kinzhal, that could be launched on MiG-31K interceptor aircraft or Tu-22M bombers. According to press reports, the Kinzhal is a variant of the Iskander short-range ballistic missile currently in service with the Russian Armed Forces. The air-launched version may be intended to be launched while the aircraft is at supersonic speeds, adding to the system's invulnerability to U.S. air and missile defenses. President Putin noted this capability in his March 2018 speech, when he said that the missile \"flying at a hypersonic speed, 10 times faster than the speed of sound, can also maneuver at all phases of its flight trajectory, which also allows it to overcome all existing and, I think, prospective anti-aircraft and anti-missile defense systems, delivering nuclear and conventional warheads in a range of over 2,000 kilometers.\"", "Unless Russian aircraft approach U.S. shores before releasing the missile, however, it will not have the range needed to target U.S. territory. Instead, experts believe the missile is intended primarily to target naval vessels. President Putin stated that the system entered service in the Southern Military District in December 2017. Russia's Minister of Defense stated in February 2019 that MiG-31 crews have taken the Kinzhal on air patrols over the Black and Caspian seas. "], "subsections": []}, {"section_title": "Tsirkon Anti-Ship Hypersonic Cruise Missile", "paragraphs": ["Russia has been developing the Tsirkon (3M-22, NATO designated SS-N-33), an anti-ship hypersonic cruise missile, since at least 2011. The missile is \"designed for naval surface vessels and submarines, able to attack both ships and ground targets.\" It is intended to replace the SS-N-19 cruise missile on the Kirov-class cruisers and is expected to be test-launched from the new Yasen-class submarine Kazan . In a February 2019 address to the Federal Assembly, Putin stated that Tsirkon is a \"hypersonic missile that can reach speeds of approximately Mach 9 and strike a target more than 1,000 km away both under water and on the ground.\" He also stated that the missile could be launched from submarines. In late 2019, President Putin also noted that Russia would develop a land-based version of this missile as a response to the U.S. withdrawal from the INF Treaty. The Tsirkon is undergoing testing with potential deployment around 2020."], "subsections": []}, {"section_title": "Barguzin Rail-Mobile ICBM", "paragraphs": ["Russia has been developing a rail-mobile ICBM system to replace the SS-24 Mod 3 Scalpel since 2013. An ejection test of the missile appears to have been conducted. However, Russia may have canceled the program in 2017."], "subsections": []}, {"section_title": "RS-26 Rubezh ICBM", "paragraphs": ["Russia has been developing a version of its three-stage RS-24 Yars ICBM with only two stages. According to unclassified reports, Russia conducted four flight tests of this missile in the early part of this decade. Two of these flight tests\u00e2\u0080\u0094one that failed in September 2011 and one that succeeded in May 2012\u00e2\u0080\u0094flew from Plesetsk to Kura, a distance of approximately 5,800 kilometers (3,600 miles). The second two tests\u00e2\u0080\u0094in October 2012 and June 2013\u00e2\u0080\u0094were both successful. In both cases, the missile flew from Kapustin Yar to Sary-Shagan, a distance of 2,050 kilometers (1,270 miles). These tests raised questions about whether the missile was designed to violate, or circumvent, the limits in the 1987 INF Treaty, as that treaty banned the testing and deployment of missiles with a range between 500 and 5,500 kilometers. Russia appears to have cancelled this missile program in 2018, but some analysts believe it might reappear now that the INF Treaty has lapsed. "], "subsections": []}]}]}, {"section_title": "The Effect of Arms Control on Russia's Nuclear\u00c2 Forces", "paragraphs": ["The number of warheads on Soviet strategic nuclear delivery vehicles reached its peak in the mid-1980s and began to decline sharply by the early 1990s (see Figure 2 ). This decline continued, with a few pauses, through the 1990s and 2000s. While a number of factors likely contributed to this decline, most experts agree that these reductions were shaped by the limits in bilateral arms control agreements."], "subsections": [{"section_title": "The SALT Era (1972-1979)", "paragraphs": ["The United States and the Soviet Union signed their first formal agreements limiting nuclear offensive and defensive weapons in May 1972. The Strategic Arms Limitation Talks (SALT) produced two agreements: the Interim Agreement on Certain Measures with Respect to the Limitation of Strategic Offensive Arms (Interim Agreement) and the Treaty on the Limitation of Anti-Ballistic Missile Systems (ABM Treaty). The parties paired these two agreements, in part, to forestall an offense-defense arms race, where increases in the number of missile defense interceptors on one side would encourage the other to increase the number of missiles needed to saturate those defenses. The United States also sought to limit the number of large ICBMs in the Soviet offensive force, an area where the Soviet Union had an advantage over the United States. As a result, the Interim Agreement imposed a freeze on the number of launchers for ICBMs that the United States and the Soviet Union could deploy. (At the time the United States had 1,054 ICBM launchers and the Soviet Union had 1,618 ICBM launchers.) The two countries also agreed to freeze their number of SLBM launchers and modern ballistic missile submarines, though they could add SLBM launchers if they retired old ICBM launchers.", "Although the Interim Agreement limited the number of Soviet ICBM and SLBM launchers, it did not restrain the growth in the number of warheads carried on the missiles deployed in those launchers. After signing the agreement, both nations expanded the number of warheads on their missiles by deploying missiles with multiple warheads (MIRVs). The Soviet deployment of MIRVs led to a sharp increase\u00e2\u0080\u0094from around 2,000 to more than 6,100\u00e2\u0080\u0094in the number of warheads on ICBMs and SLBMs between 1972 and 1979. The second Strategic Arms Limitation Treaty (SALT II) sought to curb this growth by limiting the number of missiles that could carry multiple warheads. The treaty would have capped all strategic nuclear delivery systems at 2,400 and limited each side to 1,320 MIRVed ICBMs, MIRVed SLBMs, and heavy bombers equipped to carry nuclear-armed, air-launched cruise missiles (ALCMs). The treaty would not have limited the total number of warheads that could be carried on these delivery vehicles, even though the parties agreed that they would not deploy MIRVed ICBMs with more than 10 warheads each and MIRVed SLBMs with more than 14 warheads each.", "SALT II proved to be highly controversial. Some analysts argued that it would fail to reduce nuclear warheads or curb the arms race, while others argued that the treaty would allow the Soviet Union to maintain strategic superiority over the United States with its force of large, heavily MIRVed land-based ballistic missiles. Shortly after the Soviet Union invaded Afghanistan in December 1979, President Carter withdrew the treaty from the Senate's consideration. The Soviet Union continued to increase the number of warheads on its ICBMs and SLBMs, reaching around 10,000 warheads in 1989."], "subsections": []}, {"section_title": "INF and START (1982-1993)", "paragraphs": ["President Reagan entered office in 1981 planning to expand U.S. nuclear forces and capabilities in an effort to counter the perceived Soviet advantages in nuclear weapons. Initially, at least, he rejected the use of arms control agreements, but after Congress and many analysts pressed for more diplomatic initiatives, the Reagan Administration outlined negotiating positions to address intermediate-range missiles, long-range strategic weapons, and ballistic missile defenses. These negotiations began to bear fruit in the latter half of President Reagan's second term, with the signing of the Intermediate-Range Nuclear Forces (INF) Treaty in 1987. In the INF Treaty, the United States and Soviet Union agreed to destroy all intermediate-range and shorter-range ground-launched ballistic missiles and ground-launched cruise missiles with ranges between 500 and 5,500 kilometers (between 300 and 3,400 miles). The Soviet Union destroyed 1,846 missiles, including 654 SS-20 missiles that carried three warheads apiece, resulting in a reduction of more than 3,100 deployed warheads. The INF Treaty was seen as a significant milestone in arms control because it established an intrusive verification regime and eliminated entire classes of weapons that both sides regarded as modern and effective.", "The United States and the Soviet Union began negotiations on the Strategic Arms Reduction Treaty (START) in 1982, although the talks stopped between 1983 and 1985 after a Soviet walkout in response to the U.S. deployment of intermediate-range missiles in Europe. The Soviet Union viewed START as a continuation of the SALT process and initially proposed limits on the same categories of weapons defined in the SALT II Treaty: total delivery vehicles, MIRVed ballistic missiles, and heavy bombers equipped to carry nuclear-armed ALCMs. The United States, however, sought to change the units of account from launchers to missiles and warheads, and proposed deep reductions rather than marginal changes from the SALT II level. The United States specifically sought sublimits on heavy ICBMs (the Soviet SS-18) and heavily MIRVed ICBMs (at the time, the Soviet SS-19), but it did not include any limits on heavy bombers.", "The nations adjusted their positions in 1985 and 1986 and saw the beginnings of a convergence after the October 1986 summit in Reykjavik, Iceland. However, they were unable to reach agreement by the end of the Reagan Administration. President George H. W. Bush continued the negotiations during his term, and the United States and the Soviet Union signed START in July 1991. The countries agreed that each side could deploy up to 6,000 attributed warheads on 1,600 ballistic missiles and bombers, with up to 4,900 warheads on ICBMs and SLBMs (see Table 4 ). START also limited each side to 1,540 warheads on \"heavy\" ICBMs, which represented a 50% reduction in the number of warheads deployed on the SS-18 ICBMs. The United States placed a high priority on reductions in Soviet heavy ICBMs during the negotiations (as it had during the SALT negotiations) and seemed to succeed, with this provision, in reducing the Soviet advantage in this category of weapons.", "When the Soviet Union collapsed at the end of 1991, about 70% of the strategic nuclear weapons covered by START were deployed at bases in Russia, and the other 30% were deployed in Ukraine, Belarus, and Kazakhstan. In May 1992, the four newly independent countries and the United States signed a protocol that made all four post-Soviet states parties to the treaty, and Ukraine, Belarus, and Kazakhstan agreed to eliminate all of the nuclear weapons on their territory. The collapse of the Soviet Union also led to calls for deeper reductions in strategic offensive arms. As a result, the United States and Russia signed a second treaty, known as START II, in January 1993, weeks before the end of the Bush Administration. START II would have limited each side to between 3,000 and 3,500 warheads; reductions initially were to occur by the year 2003, but that deadline would have been extended until 2007 if the nations had approved a new protocol. In addition, START II would have banned all MIRVed ICBMs. As a result, it would have accomplished the long-standing U.S. objective of eliminating the Soviet SS-18 heavy ICBMs. ", "Although START II was signed in early January 1993, its full consideration was delayed until START entered into force at the end of 1994, during a dispute over the future of the Arms Control and Disarmament Agency. The U.S. Senate eventually consented to its ratification on January 26, 1996. The Russian Duma also delayed its consideration of START II as members addressed concerns about some of the limits. Russia also objected to the economic costs it would bear when implementing the treaty, because, with many Soviet-era systems nearing the end of their service lives, Russia would have to invest in new systems to maintain forces at START levels. This proved difficult as Russia endured a financial crisis in the latter half of the 1990s. The treaty's future clouded again after the United States sought to negotiate amendments to the 1972 ABM Treaty. With these delays and disputes, START II never entered into force, although Russian nuclear forces continued to decline as Russia retired its older systems."], "subsections": []}, {"section_title": "The Moscow Treaty and New START", "paragraphs": ["Although the START Treaty was due to remain in force through December 2009, the United States and Russia signed the Strategic Offensive Reductions Treaty, known as the Moscow Treaty, in May 2002. The United States had not expected to negotiate a new treaty. During a summit meeting with Russian President Putin, President Bush stated that the United States would reduce its \"operationally deployed\" strategic nuclear warheads to between 1,700 and 2,200 warheads during the next decade. President Putin indicated that Russia wanted to use the formal arms control process to reach a \"reliable and verifiable agreement\" in the form of a legally binding treaty that would provide \"predictability and transparency\" and ensure the \"irreversibility of the reduction of nuclear forces.\" The United States preferred a less formal process\u00e2\u0080\u0094such as an exchange of letters and, possibly, new transparency measures\u00e2\u0080\u0094that would allow the United States to maintain the flexibility to size and structure its nuclear forces in response to its own needs. The resulting treaty satisfied these objectives; it codified the planned reductions to 1,700-2,200 warheads, but it contained no definitions, counting rules, or schedules to guide implementation. Each party would simply declare the number of operationally deployed warheads (a term that remained undefined) in its forces at the implementation deadline of December 31, 2012. The treaty would then expire, allowing both parties to restore forces or remain at the limit. The treaty also lacked monitoring and verification provisions, but because the original START Treaty remained in force, its verification provisions continued to provide insights into Russian forces.", "Knowing that the verification provisions in START were due to expire in late 2009, the United States and Russia began to discuss options for arms control after START in mid-2006, but they were unable to agree on a path forward. The United States initially did not want to negotiate a new treaty, but it would have been willing to informally extend some of START's monitoring provisions. Russia wanted to replace START with a new treaty that would further reduce deployed forces while using many of the same definitions and counting rules in START. In December 2008, the two sides agreed that they wanted to replace START before it expired, but acknowledged that this task would have to be left to negotiations between Russia and the Obama Administration. These talks began in early 2009; the United States and Russia signed the new Strategic Arms Reduction Treaty (New START) in April 2010. ", "The New START Treaty limits each side to no more than 800 deployed and nondeployed ICBM and SLBM launchers and deployed and nondeployed heavy bombers equipped to carry nuclear armaments. Within that total, it limits each side to no more than 700 deployed ICBMs, SLBMs, and heavy bombers equipped to carry nuclear armaments. The treaty also limits each side to no more than 1,550 deployed warheads; this limit counts the actual number of warheads carried by deployed ICBMs and SLBMs, and one warhead for each deployed heavy bomber equipped for nuclear armaments. New START also contains a monitoring regime, similar to the regime in START, that requires extensive data exchanges, exhibitions, and on-site inspections to verify compliance with the treaty. ", "The limits in New START differ from those in the original START Treaty in a number of ways. First, START contained sublimits on warheads attributed to different types of strategic weapons, in part because the United States wanted the treaty to impose specific limits on elements of the Soviet force that were deemed to be destabilizing. New START, in contrast, contains only a single limit on the aggregate number of deployed warheads, thereby providing each nation with the freedom to mix their forces as they see fit. Second, under START, to determine the number of warheads that counted against the treaty limits, the United States and Russia tallied the number of deployed launchers, assuming that each launcher contained a missile carrying the number of warheads \"attributed\" to that type of missile. Under New START, the United States and Russia also count the number of deployed launchers, but instead of calculating an attributed number of warheads, they simply declare the total number of warheads deployed across their force.", " Table 4 summarizes the limits in START, the Moscow Treaty, and New START. Figure 4 shows how the numbers of warheads and launchers in Russia's strategic nuclear forces have declined over the last 20 years. Because the definitions and counting rules differ, it is difficult to compare the force sizes across treaties. Moreover, Russia's fiscal crisis in the late 1990s and subsequent delays in some of its modernization programs may have produced similar reductions even in the absence of arms control. Nevertheless, while the numbers of warheads on Soviet strategic nuclear forces peaked in the late 1980s, the numbers have declined since the two sides began implementing the reductions mandated by these treaties."], "subsections": []}]}, {"section_title": "Issues for Congress", "paragraphs": ["Congress has held several hearings in recent years where it has sought information about Russian nuclear weapons and raised concerns about the pace and direction of Russia's nuclear modernization programs. Specifically, some Members have questioned whether Russia and the United States are approaching a new arms race as both modernize their forces; they have addressed concerns about the future size and structure of Russia's nuclear forces if the New START Treaty lapses in 2021, and they have sought to understand the content of and debate about Russia's nuclear doctrine. This section reviews some of the key issues discussed in these hearings. "], "subsections": [{"section_title": "Arms Race Dynamics", "paragraphs": ["The United States and Russia are both pursuing modernization programs to rebuild and recapitalize their nuclear forces. Each began this process to replace existing systems that have been in service since the Cold War and are reaching the end of their service lives. In many cases, both nations have extended the life of these aging systems. Russia retains some ballistic missiles that the Soviet Union first fielded in the 1980s (and, therefore, were expected to be replaced by the early 2000s); it may retire many of these over the next 10 years as it completes its current modernization programs. The United States extended the life of its Ohio-class submarines from 30 to 42 years by refueling their reactor cores, and it extended the lives of both land-based and submarine-based missiles by replacing the propellant in existing motors and replacing guidance systems. The United States plans to begin fielding new systems in the late 2020s.", "Many analysts and observers have identified an arms race dynamic in these parallel modernization programs. Some believe that Russia is at fault\u00e2\u0080\u0094that the United States is falling behind because Russia began to deploy new missiles and submarines in the early 2000s, while the United States will not field similar systems until the late 2020s, and because Russia is developing new and more exotic systems, as described above. David Trachtenberg, the Principal Deputy Under Secretary of Defense for Policy, raised this point in April 2018, when he noted that \"it takes two to race.\" He stated that the United States is \"not interested in matching the Russians system for system. The Russians have been developing an incredible amount of new nuclear weapons systems, including the novel, nuclear systems that President Putin unveiled to great fanfare a number of months ago.\" Franklin Miller, a former Pentagon and National Security Council official, made a similar point during a Senate Armed Services Committee hearing in early 2019 when he noted that \"the [U.S.] program is not creating a nuclear arms race. Russia and China began modernizing and expanding their nuclear forces in the 2008-2010 timeframe and since then have been placing large numbers of new strategic nuclear systems in the field. The United States has not deployed a new nuclear delivery system in this century and the first products of our nuclear modernization program will not be deployed until the mid to late 2020s.\"", "Others argue that the United States is spurring the arms race, in that the expansive U.S. modernization program might heighten the mistrust between the two nations and provide Russia with an incentive to expand its programs beyond what was needed to replace aging Soviet-era systems. Former Secretary of Defense William Perry raised this point in an interview in 2015, when the Obama Administration offered its support to the full scope of U.S. nuclear modernization programs. He noted that \"we're now at the precipice, maybe I should say the brink, of a new nuclear arms race\" that \"will be at least as expensive as the arms race we had during the Cold War, which is a lot of money.\" ", "Some have disputed the notion that the modernization programs are either evidence of an arms race or an incentive to pursue one. Both nations are modernizing their forces because existing systems are aging out; neither is pursuing these programs because the other is modernizing its forces, and neither would likely cancel its programs if the other refrained from its efforts. As former Secretary of Defense Ashton Carter noted in 2016, \"In the end, though, this is about maintaining the bedrock of our security and after too many years of not investing enough, it's an investment that we, as a nation, have to make because it's critical to sustaining nuclear deterrence in the 21 st century.\" Russia seems to be in a similar position; it delayed a planned modernization cycle in the late 1990s and has been pursuing a number of programs at a relatively slow pace since that time. Moreover, the new types of strategic offensive arms introduced recently seem to be more of a response to concerns about U.S. missile defense programs than a response to U.S. offensive modernization programs."], "subsections": []}, {"section_title": "The Future of Arms Control", "paragraphs": ["The New START Treaty is due to lapse in 2021 unless the United States and Russia agree to extend it for a period of no more than five years. The Trump Administration is reportedly conducting an interagency review of New START to determine whether it continues to serve U.S. national security interests, and this review will inform the U.S. approach to the treaty's extension. Among the issues that might be under consideration are whether the United States should be willing to extend New START following Russia's violation of the INF Treaty, whether the limits in the treaty continue to serve U.S. national security interests, and whether the insights and data that the monitoring regime provides about Russian nuclear forces remain of value for U.S. national security.", "Russia's nuclear modernization programs, in general, and its development of new kinds of strategic offensive arms have also figured into the debate about the extension of New START. For example, General John Hyten, the commander of U.S. Strategic Command (STRATCOM), has stated that he believes New START serves U.S. national security interests because its monitoring regime provides transparency and visibility into Russian nuclear forces, and because its limits provide predictability about the future size and structure of those forces. However, in testimony before the Senate Armed Services Committee in February 2019, General Hyten expressed concern about Russia's new nuclear delivery systems\u00e2\u0080\u0094the Poseidon underwater drone, the Burevestnik nuclear-powered cruise missile, the Kinzhal air-launched ballistic missile, and the Tsirkon hypersonic cruise missile\u00e2\u0080\u0094which would not count under New START's limits. He noted that these weapons could eventually pose a threat to the United States and that he believed the United States and Russia should expand New START so they would count them under the treaty. ", "Some analysts have questioned whether this approach makes sense. As noted above, Russia is not likely to deploy these systems until later in the 2020s and, even then, the numbers are likely to be relatively small. On the other hand, Russia began to deploy the Avangard hypersonic glide vehicle in late December 2019 and may deploy the Sarmat heavy ballistic missile in 2020 or 2021. Both will count under New START if it remains in force. If Russia refuses to count the more exotic weapons under New START and the treaty expires, it will no longer be bound by any numerical limits on the number of long-range missiles and heavy bombers it can deploy, or the number of nuclear warheads that could be deployed on those missiles and bombers. Because Russia is already producing new missiles like the Yars, it could possibly accelerate production if New START expires to increase the number of warheads added to the force. Russia could also possibly add to the number of warheads deployed on some of these missiles, increasing them from four warheads to six to eight warheads per missile. In addition, Russia would likely have to limit the deployment of the Sarmat missile and retire old SS-18 missiles to remain under New START limits, but it could deploy hundreds of new warheads on the Sarmat between 2021 and 2026 if the treaty were not in place. According to some analyses, if Russia expanded its forces with these changes, it could possibly add more than 1,000 warheads to its force without increasing the number of deployed missiles between 2021 and 2026."], "subsections": []}, {"section_title": "The Debate Over Russia's Nuclear Doctrine", "paragraphs": ["The 2018 Nuclear Posture Review (NPR) adheres to the view that Russia has adopted an \"escalate to de-escalate\" strategy and asserts that Russia \"mistakenly assesses that the threat of nuclear escalation or actual first use of nuclear weapons would serve to 'de-escalate' a conflict on terms favorable to Russia.\" The NPR's primary concern is with a scenario where Russia executes a land-grab on a NATO ally's territory and then presents U.S. and NATO forces with a fait accompli by threatening to use nuclear weapons. The NPR thus recommends that the United States develop new low-yield nonstrategic weapons that, it argues, would provide the United States with a credible response, thereby \"ensuring that the Russian leadership does not miscalculate regarding the consequences of limited nuclear first use.\" ", "While some experts outside government agree with the assessment of Russian nuclear doctrine described in the Nuclear Posture Review, others argue that it overstates or is inconsistent with Russian statements and actions. Some have argued that the NPR's \"evidence of a dropped threshold for Russian nuclear employment is weak.\" They note that, although some Russian authors and analysts advocated such an approach, was not evident in the government documents published in 2010 and 2014. As a result, they argue that the advocates for this type of strategy may have lost the bureaucratic debates. Others have reviewed reports on Russian military exercises and have disputed the conclusion that there is evidence that Russia simulated nuclear use against NATO in large conventional exercises. ", "One analyst has postulated that Russia may actually raise its nuclear threshold as it bolsters its conventional forces. According to this analyst, \"It is difficult to understand why Russia would want to pursue military adventurism that would risk all-out confrontation with a technologically advanced and nuclear-armed adversary like NATO. While opportunistic, and possibly even reckless, the Putin regime does not appear to be suicidal.\" As a study from the RAND Corporation noted, Russia has \"invested considerable sums in developing and fielding long-range conventional strike weapons since the mid-2000s to provide Russian leadership with a buffer against reaching the nuclear threshold\u00e2\u0080\u0094a set of conventional escalatory options that can achieve strategic effects without resorting to nuclear weapons.\" Others note, however, that Russia has integrated these \"conventional precision weapons and nuclear weapons into a single strategic weapon set,\" lending credence to the view that Russia may be prepared to employ, or threaten to employ, nuclear weapons during a regional conflict.", "Appendix A. Russian Nuclear-Capable Delivery\u00c2\u00a0Systems", "Appendix B. Russian Nuclear Storage Facilities"], "subsections": []}]}]}}
{"id": "R46338", "title": "Veto Threats and Vetoes in the George W. Bush and Obama Administrations", "released_date": "2020-04-30T00:00:00", "summary": ["The Framers checked congressional legislative power by providing the President the power to veto legislation and, in turn, checked the President's veto power by providing Congress a means to override that veto. Over time, it has become clear that the presidential veto power, even if not formally exercised, provides the President some degree of influence over the legislative process. Most Presidents have exercised their veto power as a means to influence legislative outcomes. Of 45 Presidents, 37 have exercised their veto power.", "This report begins with a brief discussion of the ways Presidents communicate their intention to veto, oppose, or support a bill. It then examines the veto power and Congress's role in the veto process. The report then provides analysis of the use of veto threats and vetoes and the passage of legislation during the George W. Bush Administration (2001-2009) and the Obama Administration (2009-2017) with some observations of the potential influence of such actions on legislation.", "As specified by the U.S. Constitution (Article I, Section 7), the President has 10 days, Sundays excepted, to act once he has been presented with legislation that has passed both houses of Congress and either reject or accept the bill into law. The President has three general courses of action during the 10-day presentment period: The President may sign the legislation into law, take no action, or reject the legislation by exercising the office's veto authority. A President's return veto may be overridden, or invalidated, by a process also provided for in Article 1, Section 7, of the U.S. Constitution.", "Because Congress faces a two-thirds majority threshold to override a President's veto, veto threats may deter Congress from passing legislation that the President opposes. By going public with a veto threat, the President may leverage public pressure upon Congress to support his agenda. For purposes of this report, which focuses on the use of veto threats, the unit of analysis throughout is a veto (or a threatened veto), and the report does not distinguish between regular and pocket vetoes.", "Formal, written Statements of Administration Policy (SAPs, pronounced \"saps\") are frequently used to express the President's support for or opposition to particular pieces of legislation and may include statements threatening to use the veto power. Among the Bush and Obama Administrations' SAPs examined later in this report, for example, 24% and 48%, respectively, contained a veto threat.", "Although the relationship between Congress and a President may change every two years with each new Congress, the relationship between an Administration and its President may also change by presidential term. For example, while the number of veto threats in SAPs slowly increased during the first three Congresses of the Bush Administration, the number of veto threats grew sharply in the 110 th Congress. In comparison to the Bush Administration, the Obama Administration steadily increased its use of veto threats issued in SAPs in every subsequent Congress.", "President George W. Bush exercised the veto power 12 times during his presidency. Congress attempted to override six of President Bush's 12 vetoes and succeeded four times. President Barack Obama similarly exercised the veto power 12 times during his presidency. Congress also attempted to override six of President Obama's 12 vetoes and succeeded once. During the Bush and Obama Administrations, enrolled bills that passed both chambers and were met with a statement indicating that the President intended to veto the bill (a presidential veto threat SAP) were vetoed more often than were those that were met with a statement that agencies or senior advisors would recommend that the President veto the bill (a senior advisors threat SAP)."], "reports": {"section_title": "", "paragraphs": ["T he constitutional system of checks and balances and the separation of powers among the legislative, executive, and judicial branches is a cornerstone of the American system of government. By separating and checking powers in this way, the Framers hoped to prevent any person or group from seizing control over the nation's government. For example, the Framers checked congressional legislative power by providing the President the power to veto legislation and, in turn, checked the President's veto power by providing Congress a means to override that veto. Over time, it has become clear that the presidential veto power, even when not formally exercised, provides the President with an important tool to engage in the legislative process.", "Most Presidents have exercised their veto power in an effort to block legislation. Of 45 Presidents, 37 have exercised their veto power. As of the end of 2019, Presidents have issued 2,580 vetoes, and Congress has overridden 111. President George W. Bush vetoed 12 bills during his presidency. Congress attempted to override six of them and succeeded four times. President Barack Obama also vetoed 12 bills during his presidency. Congress attempted to override six of them and succeeded once. ", "Presidents have also attempted to influence the shape of legislation through the use of veto threats. Since the 1980s, formal, written Statements of Administration Policy (SAPs, pronounced \"saps\") have frequently been used to express the President's support for or opposition to particular pieces of legislation. SAPs sometimes threaten to use the veto power if the legislation reviewed reaches the President's desk in its current form. Among the George W. Bush Administration (2001-2009) and the Obama Administration (2009-2017) SAPs examined later in this report, for example, 24% and 48%, respectively, contained a veto threat. ", "This report begins with a brief discussion of the veto power and Congress's role in the veto process. It then examines the ways Presidents communicate their intention to veto, oppose, or support a bill. The report then provides and discusses summary data on veto threats and vetoes during the Bush and Obama Administrations."], "subsections": [{"section_title": "The President's Veto Power", "paragraphs": ["As specified by the U.S. Constitution (Article I, Section 7), the President has 10 days, Sundays excepted, to act once he has been presented with legislation that has passed both houses of Congress and either reject or accept the bill into law. Within those 10 days, Administration officials consider various points of view from affected agencies (as is the case throughout the legislative process) and recommend a course of action to the President regarding whether or not to veto the presented bill.", "The President has three general courses of action during the 10-day presentment period: The President may sign the legislation into law, take no action and allow the bill to become law without signature after the 10 days, or reject the legislation by exercising the office's veto authority. ", "The President may reject legislation in two ways. The President may veto the bill and \"return it, with his Objections to that House in which it shall have originated.\" This action is called a \"regular\" or \"return\" veto (hereinafter return veto). Congress typically receives the objections to the bill in a written veto message. ", "If Congress has adjourned during the 10-day period, the President might also reject the legislation through a \"pocket veto.\" This occurs when the President retains, but does not sign, presented legislation during the 10-day period, with the understanding that the President cannot return the bill to a Congress that has adjourned. Under these circumstances, the bill will not become law. A pocket veto is typically marked by a type of written veto message known as a \"Memorandum of Disapproval.\" As discussed in greater detail below, this practice has sometimes been controversial, because arguably it prevents Congress from attempting to override the President's veto."], "subsections": []}, {"section_title": "Congress's Response", "paragraphs": ["A President's return veto may be overridden, or invalidated, by a process provided for in Article 1, Section 7, of the U.S. Constitution. To override a return veto, Congress may choose to \"proceed to reconsider\" the bill. Passage by two-thirds of Members in each chamber is required to override a veto before the end of the Congress in which the veto is received. Neither chamber is under any constitutional, legal, or procedural obligation to conduct an override vote. It is not unusual for either chamber of Congress to make no effort to override the veto if congressional leaders do not believe they have sufficient votes to do so.", "If a two-thirds vote is successful in both chambers, the President's return veto is overridden, and the bill becomes law. If a two-thirds vote is unsuccessful in one or both chambers, the veto is sustained, and the bill does not become law. ", "In contrast, Congress cannot override the President's pocket veto. By definition, a pocket veto may occur only when a congressional adjournment prevents the return of the vetoed bill. If a bill is pocket vetoed while Congress is adjourned, the only way for Congress to pass a version of the policy contained in the vetoed bill is to reintroduce the legislation as a new bill, pass it through both chambers, and present it to the President again for signature. Recent Presidents and Congresses have disagreed about what constitutes an adjournment that prevents the return of a bill such that a pocket veto may be used.", "For purposes of the sections below concerning the use of veto threats, the unit of analysis is a veto. The analysis does not distinguish between regular and pocket vetoes."], "subsections": []}, {"section_title": "Veto Threats in the Legislative Process", "paragraphs": ["Because Congress faces a two-thirds majority threshold to override a President's veto, veto threats may deter Congress from passing legislation that the President opposes. The veto override threshold may also prompt Congress to change a bill in response to a veto threat. The Framers of the U.S. Constitution viewed the veto power as a way of reminding Congress that the President also plays an important legislative role and that threatening to use the veto power can influence legislators into creating more amenable bills. Political scientist Richard A. Watson writes that \"the veto is available to a President as a general weapon in his conflicts with Congress: Franklin Roosevelt sometimes asked his aides for 'something I can veto' as a lesson and reminder to congressmen that they had to deal with a President.\"", "Veto threats are, therefore, an important component in understanding the use of the President's veto power. In recent presidencies, these threats have generally been expressed either through SAPs or verbally. President Trump has also used social media to communicate his intention to veto, oppose, or support a bill. "], "subsections": [{"section_title": "Signaling Policy Intentions Before a Veto", "paragraphs": ["Presidents may signal their intention to support, oppose, or veto a bill early in the legislative process using both verbal and written means. For example, Presidents can mention in a speech that they intend to veto legislation, or they can authorize others (such as a press secretary) to verbally indicate the Administration's position on specific legislation. Presidents can also issue, through the Office of Management and Budget (OMB), formal, written SAPs to communicate their intention to veto, oppose, or support a bill. "], "subsections": [{"section_title": "Verbal Veto Threats", "paragraphs": ["Verbal veto threats may include commentary related to the President's strategy for working with Congress along with a threat to veto legislation if the President's policy agenda is not heeded. For example, at a press conference President George W. Bush explained, \"I want the Members of Congress to hear that once we set a budget we're going to stick by it. And if not, I'm going to use the veto pen of the President of the United States to keep fiscal sanity in Washington, D.C.\" In another instance, President Obama said that the House \"is trying to pass the most extreme and unworkable versions of a bill that they already know is going nowhere, that can't pass the Senate and that if it were to pass the Senate I would veto. They know it.\" In these remarks, both President Bush and President Obama used their words to attempt to deter Congress from passing bills that did not match the President's policy agenda and unambiguously remind the public of their veto power."], "subsections": []}, {"section_title": "Written Veto Threats", "paragraphs": ["Formal, written SAPs are frequently used to express the President's support for or opposition to particular pieces of legislation. The decision to issue a SAP is a means for the President to insert the Administration's views into the legislative debate. While SAPs provide Presidents an opportunity to assert varying levels of support for or against a bill, perhaps the most notable statement in a SAP is whether the Administration intends to veto the bill. Members of Congress may pay particular attention to a SAP when a veto threat is being made. At least one congressional leader has characterized SAPs as forerunner indicators of a veto.", "SAPs are often the first public document outlining the Administration's views on pending legislation and allow for the Administration to assert varying levels of support for or opposition to a bill. Because written threats are typically required to be scrutinized by the Administration through the central legislative clearance process in advance of their release, written SAP veto threats are often considered more formal than verbal veto threats.", "When a SAP indicates that the Administration may veto a bill, it appears in one of two ways:", "1. A statement indicating that the President intends to veto the bill (hereinafter a presidential veto threat) or 2. A statement that agencies or senior advisors would recommend that the President veto the bill (hereinafter a senior advisors veto threat). ", "These two types of SAPs indicate degrees of veto threat certainty. Generally speaking, a presidential veto threat signals the President's strong opposition to the bill. A senior advisors veto threat, on the other hand, may signal that the President may be more likely to enter into negotiations in order to reach a compromise with Congress on the bill. ", "By publicly issuing a veto threat, the President may leverage public pressure upon Congress to support the President's agenda. Furthermore, many SAPs propose a compromise to Congress wherein the President would not exercise a veto. In addition, a President or an Administration's senior advisors may not always issue a veto threat prior to a decision to veto passed legislation. As discussed below, both Presidents Bush and Obama vetoed legislation for which they never issued a written veto threat."], "subsections": []}]}]}, {"section_title": "Veto Threats Within Different SAP Types", "paragraphs": ["During both the Obama and Bush Administrations, roughly three-quarters of SAPs issued were on non-appropriations bills, and roughly one-quarter concerned appropriations bills. Each SAP signaled the Administration's intent to veto, oppose, or support a bill. There are fundamental differences between non-appropriations bill SAPs and appropriations bill SAPs. ", "Non-appropriations bill SAPs typically involve specific policy objections, such as how a program operates or what constituency the program is designed to serve. Appropriations bill SAPs, in contrast, often involve more general budgetary policy objections, such as the perceived need to balance the budget or to reallocate resources for other purposes. Therefore, the President may generally support a particular provision in an appropriations bill on programmatic policy grounds but oppose it for budgetary reasons. Or the President may oppose a particular provision in an appropriations bill for both programmatic and budgetary reasons.", "This report focuses on the impact of the President's veto threat in non-appropriations bill SAPs given their more targeted nature."], "subsections": []}, {"section_title": "Veto Threats During the George W. Bush and Obama Administrations", "paragraphs": ["Data in this report were compiled from SAPs located on the archived White House websites of the Bush and Obama Administrations. Using the classification of SAPs on each website, analysis was conducted with only non-appropriations SAPs for reasons described above. The analysis examined each SAP and individually assessed whether the SAP contained a veto threat, the type of threat (presidential or senior advisor), and whether the veto threat concerned a part of the bill or the whole bill. The analysis considers each SAP to be an individual veto threat. In instances where one bill received veto threats in multiple SAPs, veto threats were counted individually and not combined. To assess the final outcome of bills, the analysis used information on bill statuses located at Congress.gov and does not track whether bills that received a SAP were later combined into other legislative vehicles. The inherent limitations in this methodology make it difficult to determine direct effects of any veto threat on the final outcome of a bill. However, in the aggregate, general trends may be observed.", "The proportion of non-appropriation bill SAPs with veto threats steadily increased over the course of each of the two presidencies reviewed. SAPs containing veto threats as a proportion of all SAPs was at its highest at the conclusion of both President Bush's and President Obama's second terms. Figure 1 illustrates this trend by showing SAP veto threats as a percentage of issued SAPs. "], "subsections": [{"section_title": "George W. Bush Administration Veto Threats", "paragraphs": ["While the Bush Administration remained relatively consistent in the number of veto threats issued in SAPs during its first six years, the number of threats increased during the final two years of the Administration. The Bush Administration issued a total of 491 SAPs on non-appropriations bills. Just under one-quarter (24%) of the non-appropriations bill SAPs contained a veto threat: 24 presidential veto threats and 94 senior advisors veto threats. Of bills that received a presidential veto threat, one was signed by the President, seven were vetoed, and the remaining 16 did not make it to the President's desk. Of bills that received a senior advisors veto threat, 16 were signed, one was vetoed, and the remaining 77 were not passed by both chambers. Seven of the 12 Bush Administration vetoes were preceded by a SAP containing a veto threat. ", "While the number of veto threats in SAPs slowly increased during the first three Congresses of the Bush Administration (two in the 107 th Congress, three in the 108 th Congress, and seven in the 109 th Congress), the number of veto threats grew sharply in the 110 th Congress\u00e2\u0080\u0094to 107 veto threats\u00e2\u0080\u0094coinciding with Democrats gaining control of both chambers of Congress during the Republican President's final two years in office. This might suggest (and is supported by Obama Administration data) that the partisan constitution of Congress, as well as whether the Administration is in its first or second term, may impact the number of veto threats issued. Below, Figure 2 illustrates this change in the number of veto threats over time across the four Congresses associated with President Bush's two terms in office.", "Nevertheless, presidential veto threats in the Bush Administration remained a fraction of overall veto threats and often resulted in an actual veto. The rarity with which the Bush Administration issued presidential veto threats suggests that the Administration viewed them as a message to be used sparingly. ", "Although the relationship between Congress and a President may change every two years with each new Congress, the relationship between an Administration and its President may also change by presidential term. Compared to a President's first term, in a second term Administration, executive branch officials may become more adept in coordinating the veto power. Additionally, a second-term President cannot be re-elected, which may allow the Administration to take a stronger position on unfavorable legislation. Alternatively, it could be that the President lacks the political influence necessary to advance his legislative agenda and instead relies on veto power to block legislative vehicles more often as his presidency concludes. Figure 3 presents veto threat percentages by presidential term for the Bush Administration, showing an increase in the President's second term. ", "During President Bush's first term (2001-2005), 98% of SAPs did not contain a veto threat, 1% contained a senior advisors veto threat, and 1% contained a presidential veto threat. During President Bush's second term (2005-2009), 60% did not contain a veto threat, 32% contained a senior advisors veto threat, and 8% contained a presidential veto threat."], "subsections": []}, {"section_title": "Obama Administration Veto Threats", "paragraphs": ["In comparison to the Bush Administration, the Obama Administration steadily increased its use of veto threats issued in SAPs in every subsequent Congress. The Obama Administration issued 472 SAPs on non-appropriations bills. Just under half (48%) of these contained a veto threat: 43 presidential veto threats and 186 senior advisors veto threats. Of bills that received a presidential veto threat, four were ultimately signed by the President, five were vetoed, and 34 did not make it to the President's desk. Of bills that received a senior advisors veto threat, 17 were signed, two were vetoed, and 167 were not passed by the two chambers. Six of the 12 Obama Administration vetoes were preceded by a SAP containing a veto threat. ", "President Obama (a Democrat) issued more veto threats in his SAPs with each passing Congress. (Democrats controlled both chambers during the 111 th Congress and the Senate during the 112 th Congress, and Republicans controlled the House during the 113 th Congress and both chambers during the 114 th Congress. ) Below, Figure 4 illustrates this change in the number of veto threats over time by Congress.", "Although the number of veto threats increased over the course of the Obama presidency (eight in the 111 th Congress, 54 in the 112 th Congress, 63 in the 113 th Congress, and 104 in the 114 th Congress), the number of presidential veto threats remained small when compared to the total number of veto threats, varying from a low of 14.3% in the 111 th Congress to a high of 28.3% in the 114 th Congress. The increase over time in total number of veto threats may indicate that President Obama was presented with more legislation he was likely to oppose. However, the increase is mostly composed of senior advisors veto threats. This suggests that the Administration nonetheless treated presidential veto threats, compared to senior advisors veto threats, as a tool to be used more rarely. ", "As with the Bush Administration, President Obama's use of veto threats in the first and second terms differ. Figure 5 presents veto threat percentages by presidential term as opposed to by Congress. ", "During President Obama's first term (2009-2013), 69% of SAPs did not contain a veto threat, 27% contained a senior advisors veto threat, and 4% contained a presidential veto threat. During President Obama's second term (2013-2017), 39% of SAPs did not contain a veto threat, 49% contained a senior advisors veto threat, and 13% contained a presidential veto threat."], "subsections": []}]}, {"section_title": "Congressional Responses to Veto Threats", "paragraphs": ["CRS analyzed all veto threats contained in SAPs on non-appropriations legislation across these two Administrations and determined whether the veto threat was isolated to a provision of the bill (a partial bill veto threat) or if the veto threat was not particularized (a whole bill veto threat).", "President Bush issued partial bill veto threats and whole bill veto threats an equal amount of the time. However, the type of threat he used in each category varied. Of partial bill veto threats, 7% were presidential veto threats and the remaining 93% were senior advisors veto threats. Of whole bill veto threats, 34% were presidential veto threats and the remaining 66% were senior advisors veto threats. ", "In contrast, President Obama issued partial bill veto threats more sparingly (8% versus 92% for whole bill veto threats). Similar to President Bush, however, of partial bill veto threats, 6% were presidential veto threats and the remaining 94% were senior advisors veto threats. Of whole bill veto threats, 20% were presidential veto threats and the remaining 80% were senior advisors veto threats.", "The difference in frequency of partial and whole bill veto threats across the Administrations may suggest that the two Presidents viewed the use of veto threats differently: One President may have used partial threats to negotiate more with Congress, whereas another President preferred to threaten a veto only when he viewed an entire bill as unfavorable. Likewise, the increased frequency of partial bill senior advisors veto threats suggests that both Presidents preferred to use presidential veto threats in rejecting an entire bill and leaving senior advisors veto threats for negotiations where only part of a bill is unfavorable. "], "subsections": [{"section_title": "Legislative Action Following a Veto Threat", "paragraphs": ["A presidential veto threat in a SAP may be more likely than a senior advisors veto threat to deter passage of a bill because of the President's direct association with the threat. However, an analysis of these two Administrations does not necessarily support this argument. Figure 6 shows that bills appeared less likely to pass when the bill received a senior advisors veto threat versus a presidential veto threat. This may be due to a number of factors, including that senior advisors threats are more frequently issued than presidential veto threats (279 senior advisors threats and 67 presidential veto threats were issued across these two presidencies) or that Congress may perceive it to be beneficial to pass presidentially threatened legislation anyway based on certain political calculations and circumstances."], "subsections": []}]}, {"section_title": "Veto Threats and Veto Patterns", "paragraphs": ["During the Bush and Obama Administrations, enrolled bills that passed both chambers and were met with a presidential veto threat SAP were vetoed more often than were those that were met with a senior advisors threat. Figure 7 shows the outcomes of bills receiving veto threats that were passed by Congress and sent to the President. Across both the Bush and Obama Administrations, a bill that received a presidential veto threat and was passed was followed by a veto 70.6% of the time, whereas a bill that received a senior advisors veto threat was later vetoed 8.3% of the time.", "When a President vetoes a bill, it marks the end of the President's ability to procedurally affect whether or not a bill becomes law. Whether or not that specific bill becomes law is no longer in the President's hands. Congress may or may not elect to attempt an override. "], "subsections": [{"section_title": "George W. Bush Administration Vetoes and Ensuing Congressional Action", "paragraphs": ["President Bush exercised the veto power 12 times. Four of these vetoes were overridden. Six vetoed bills were forewarned with a written veto threat. (Four received a presidential threat, and two received senior advisors threats.) Three additional bills received statements noting the Administration's opposition to the bill but did not include a veto threat. None of the bills that Congress later overrode were preceded by a presidential veto threat. ", "Three-quarters of President Bush's vetoes (9 of 12) were preceded by a written statement of opposition to the bill. President Bush also issued multiple written veto threats on four bills that would later receive a veto: Three bills received two threats each, and one bill received two statements of opposition. "], "subsections": []}, {"section_title": "Obama Administration Vetoes and Ensuing Congressional Action", "paragraphs": ["President Obama vetoed 12 bills, and Congress overrode his veto once. As was true for President Bush, six of President Obama's vetoes were preceded by a written veto threat (four presidential and two senior advisors threats). Unlike the patterns observed for the Bush presidency, however, all of President Obama's veto threats were whole bill veto threats.", "Whereas President Bush also communicated in SAPs his opposition to three bills short of threatening a veto, President Obama either did not issue a SAP at all or issued one that contained a veto threat. One of President Obama's vetoed bills received two veto threats. President Obama's approach of issuing either no statement at all on a bill or a statement containing a veto threat marks a different approach from the one used by President Bush."], "subsections": []}]}]}}
{"id": "R46191", "title": "Reauthorization of the Federal Public Transportation Program", "released_date": "2020-01-23T00:00:00", "summary": ["The federal public transportation program is currently authorized through FY2020 as part of the Fixing America's Surface Transportation (FAST) Act ( P.L. 114-94 ). This report highlights several major issues that may arise as Congress considers program reauthorization.", "Public transportation includes local buses, subways, commuter rail, light rail, paratransit (often service for the elderly and disabled using small buses and vans), and ferryboat, but excludes Amtrak, intercity buses, and school buses. The FAST Act authorized $61.1 billion for five fiscal years beginning in FY2016, an average of $12.2 billion per year. Of the total amount, 80% was authorized from the mass transit account of the Highway Trust Fund, and 20% was authorized from the general fund of the U.S. Treasury. Most federal funding from the mass transit account is distributed to transit agencies through formula programs. Most of the general funding authorized is for the Capital Investment Grants (CIG) Program, also known as New Starts, which provides discretionary funding for large capital projects to create and extend rail and bus rapid transit systems.", "Reauthorization issues discussed in this report include the following:", "Funding levels and the solvency of the mass transit account . Annual spending from the mass transit account is projected to exceed annual revenues by about $5 billion through FY2025. Bringing receipts and expenditures into balance would require a cut in spending of the federal transit program, an increase in revenues paid into the account, or a combination of the two. Revenue options include increasing taxes that are dedicated to the mass transit accounts and transferring money from the general fund. C hanges to two federal loan programs that may be used for transit capital expenditures , t he Transportation Infrastructure Finance and Innovation Act (TIFIA) program and the Railroad Rehabilitation and Infrastructure Finance (RRIF) program . Issues include TIFIA's share of project costs, the speed and cost of obtaining a loan, and the authorization of federal funding to pay the credit risk premium of RRIF loans. Declining public transportation ridership . Options include linking federal formula funds to transit agencies' success in boosting ridership; redirecting CIG funding from building new rail facilities to refurbishing lines in dense cities where rail transit currently carries large numbers of riders; and funding research projects to explore partnerships between transit agencies and firms offering new mobility options such as ridesharing and bike sharing. F unding the CIG program . CIG has been proposed as a major source of funding for the Gateway Program, which is intended to build new rail tunnels and repair existing tunnels between New Jersey and New York. The amount sought for the Gateway Program is equal to several years of funding for CIG, at recent funding levels, and could overwhelm a program that is responsible for aiding projects throughout the country. Public transportation and climate change. Congress may consider how to reduce greenhouse gas emissions from surface transportation and adaptation provisions that aim to make the public transportation system more resilient. Options considered might include dedicated funding for resilience projects and greater funding for buying low and no emission buses. Buy America . This law places domestic content restrictions on federally funded transportation projects, including procurement of rolling stock. Issues that might arise include the share of components and subcomponents that have to be domestically sourced, the availability of waivers, and the standardization of requirements across modes."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["Approximately 27 million trips are taken on public transportation on an average day. Federal assistance to public transportation is provided primarily through the public transportation program administered by the Department of Transportation's (DOT's) Federal Transit Administration (FTA). The federal public transportation program was authorized from FY2016 through FY2020 as part of the Fixing America's Surface Transportation (FAST) Act ( P.L. 114-94 ). This report discusses the major issues that may arise as Congress considers reauthorization.", "In federal law, public transportation\u00e2\u0080\u0094also known as public transit, mass transit, and mass transportation\u00e2\u0080\u0094includes local buses, subways, commuter rail, light rail, paratransit (often service for the elderly and disabled using small buses and vans), and ferryboats, but excludes Amtrak, intercity buses, and school buses (49 U.S.C. \u00c2\u00a75302). About 48% of public transportation trips are made by bus, 38% by heavy rail (also called metro and subway), 5% by commuter rail, and 6% by light rail (including streetcars). Paratransit accounts for about 2% of all public transportation trips, and ferries about 1%.", "Public transportation accounts for about 3% of all daily transportation trips and about 7% of commute trips. Although ridership is heavily concentrated in a few large cities and their surrounding suburbs, especially the New York City metropolitan area, public transportation is provided in a wide range of places including small urban areas, rural areas, and Indian land."], "subsections": []}, {"section_title": "The Federal Public Transportation Program", "paragraphs": ["Most federal funding for public transportation is authorized in multiyear surface transportation acts. The FAST Act authorized $61.1 billion for five fiscal years beginning in FY2016, an average of $12.2 billion per year. The authorization for FY2020 is $12.6 billion. Of the total five-year amount, 80% was authorized from the mass transit account of the Highway Trust Fund. Funding authorized from the Highway Trust Fund is provided as contract authority, a type of budget authority that may be obligated prior to an appropriation. The other 20% was authorized from the general fund of the U.S. Treasury as appropriated budget authority.", "Funding for public transportation is sometimes provided under other authorities. The FY2018, FY2019, and FY2020 appropriations acts ( P.L. 115-141 , P.L. 116-6 , P.L. 116-94 ), for example, provided additional general fund money for several programs that typically receive funding only from the Highway Trust Fund, thereby raising the general fund share of federal public transportation expenditures to about 28% in FY2018, 26% in FY2019, and 21% in FY2020. Funding for the Public Transportation Emergency Relief Program, which provides grants for emergency repairs following natural disasters or other emergencies, is typically from the general fund provided in supplemental appropriations acts. Transit projects can also be funded with money transferred (or \"flexed\") from federal highway programs by state and local officials. In FY2016, the last year for which data are available, $1.3 billion in highway funds was flexed to transit. Excluding flexed highway funds and emergency relief funding, funding provided in FY2017 through FY2020 was above the level authorized in the FAST Act ( Figure 1 ).", "There are six major programs for public transportation authorized by the FAST Act: (1) Urbanized Area Formula; (2) State of Good Repair; (3) Capital Investment Grants (CIG) (also known as \"New Starts\"); (4) Rural Area Formula; (5) Bus and Bus Facilities; and (6) Enhanced Mobility of Seniors and Individuals with Disabilities. Typically, funding for all of these programs, except CIG, comes from the mass transit account of the Highway Trust Fund. CIG funding comes from the general fund. There are also a number of other much smaller programs ( Figure 2 )."], "subsections": []}, {"section_title": "Reauthorization Issues", "paragraphs": [], "subsections": [{"section_title": "Program Funding", "paragraphs": ["The average of $12.2 billion per year authorized for the federal public transportation program in the FAST Act represented about a 14% increase (unadjusted for inflation) from the previous authorization, the Moving Ahead for Progress in the 21 st Century Act (MAP-21; P.L. 112-141 ). The Senate Committee on Environment and Public Works reported a bill in August 2019 ( S. 2302 ) that would reauthorize highway infrastructure programs through FY2025 with a 27% increase over the funding provided by the FAST Act. A similar increase in the annual authorization of public transportation funding would provide for federal expenditures of about $15.5 billion per year.", "A higher level of federal funding might improve the condition and performance of public transportation infrastructure. One indicator of the condition of public transportation infrastructure is the reinvestment backlog, which DOT defines as \"an indication of the amount of near-term investment needed to replace assets that are past their expected useful lifetime.\" DOT estimated the reinvestment backlog to be $98 billion in 2014, about 13% of the total value of transit assets.", "In its biennial Conditions and Performance report, DOT projects how various future spending levels might affect the condition of public transportation infrastructure. The most recent report was published in November 2019 and used 2014 as the base year for projections. Capital expenditures on public transportation in 2014, DOT noted, totaled $17.7 billion from all sources, including federal, state, and local government support. Of this amount, $11.3 billion was spent on preserving the existing system and $6.4 billion on expansion. If this spending pattern were to continue over the 20 years between 2015 and 2034, DOT estimates, the investment backlog would grow to $116 billion (in 2014 inflation-adjusted dollars), an increase of 18%.", "DOT constructed two scenarios to estimate how much spending would be needed to eliminate the backlog and accommodate new riders. Under the assumption of low ridership growth, DOT estimated, $23.4 billion would be needed annually, an increase of about 32% (in 2014 inflation-adjusted dollars). In a scenario projecting high ridership growth, $25.6 billion would be needed annually, an increase of 45% (in 2014 inflation-adjusted dollars). DOT did not estimate the spending necessary if ridership is stagnant or dropping. However, it did estimate that $18.4 billion annually (adjusted for inflation) would eliminate the reinvestment backlog over 20 years if there was no spending on expansion.", "The focus of the federal public transportation program is on capital expenditures, but the program also supports operational expenses in some circumstances, as well as safety oversight, planning, and research. Greater federal support for transit operations could increase the quantity of transit service offered or reduce fares. In the past, particularly in the 1970s and early 1980s, such support caused the costs of providing service to increase, particularly through increases in wages and fringe benefits and by expanding services on routes with less demand. With greater flexibility to use federal funding for operating expenses, transit agencies could neglect maintenance and asset renewal, leading to a more rapid decline in the condition of capital assets. Existing flexibility to use capital funds for maintenance may help agencies preserve equipment and facilities.", "DOT does not make any recommendations about the relative shares of public transportation funding that should be borne by federal, state, and local governments. The federal share of government spending on public transportation has been around 15% to 20% over the past 30 years. A higher level of funding by the federal government may not necessarily translate into more spending overall if transit providers substitute federal dollars for their own."], "subsections": [{"section_title": "Highway Trust Fund Issues", "paragraphs": ["The solvency of the Highway Trust Fund and its two accounts, the highway account and the mass transit account, is a major issue in reauthorization of funding for the public transportation program. Outlays from the mass transit account have outpaced receipts for over a decade, an imbalance the Congressional Budget Office (CBO) projects will continue in the future under current law. For the five-year period beginning in FY2021, CBO expects the gap between revenues and outlays to total $26 billion, an average of $5.2 billion annually ( Table 1 ).", "The primary revenue source for the Highway Trust Fund is motor fuel taxes, which were last raised in 1993. Currently, of the 18.3 cents-per-gallon tax on gasoline and 24.3 cents-per-gallon tax on diesel that go to the Highway Trust Fund, 2.86 cents is deposited in the mass transit account. Congress has chosen to transfer general fund monies into the mass transit account to permit a higher level of spending than motor fuel tax revenues alone could sustain. These transfers have totaled $29 billion since they began in 2008. The FAST Act transferred $18.1 billion to the mass transit account from the general fund.", "According to FTA, a balance of at least $1 billion in the mass transit account is required to ensure that the agency has sufficient funds to make mandated payments to transit agencies. CBO estimates that if Congress were to extend current law without providing for further transfers from the general fund to the mass transit account, the balance in the mass transit account would be about $300 million at the end of FY2021 and would reach zero at some point in FY2022. This would likely require FTA to slow payments to transit agencies. Outlays also outpace receipts in the highway account, but solvency problems are expected to arrive earlier in the mass transit account.", "Bringing the receipts and outlays of the mass transit account into balance would involve a cut in program spending, an increase in revenues paid into the account, or a combination of the two. An increase in revenues could involve a commitment to regular transfers from the general fund. With the highway account facing similar problems, another possible change would be to redirect revenues from the mass transit account to the highway account and to fund the transit account with a general fund appropriation each year. This likely would make transit funding less certain, and it would not make up the entire shortfall in the highway account."], "subsections": []}]}, {"section_title": "Financing", "paragraphs": ["In addition to grants, the federal government supports public transportation infrastructure with direct loans and tax preferences for municipal bonds. Changes to two major federal loan programs relevant to public transportation\u00e2\u0080\u0094the Transportation Infrastructure Finance and Innovation Act (TIFIA) program and the Railroad Rehabilitation and Infrastructure Finance (RRIF) program\u00e2\u0080\u0094could be considered in reauthorization.", "TIFIA provides long-term, low-interest loans and other types of credit assistance for the construction of surface transportation projects (23 U.S.C. \u00c2\u00a7601 et seq.). Although the maximum federal share of project costs that may be provided by the TIFIA program was raised in MAP-21 from 33% to 49%, DOT has stated that it will provide more than 33% only in exceptional circumstances. To date, TIFIA has not covered more than 33% of the cost of any project. By limiting the TIFIA share in this way, DOT appears to be trying to maximize the leveraging of nonfederal resources, but it may be excluding projects that may not be financially viable without greater federal assistance. Public transportation projects typically cover a relatively small share of their costs from user fees, thus they usually need more government support than highway and bridge projects. Congress could direct DOT to consider a higher federal share in more circumstances or across the board.", "Some project sponsors have stated that the lengthy process and upfront costs for obtaining TIFIA assistance led them not to seek TIFIA loans. The FAST Act required DOT to expedite projects thought to be lower-risk\u00e2\u0080\u0094those requesting $100 million or less in credit assistance with a dedicated revenue stream unrelated to project performance and standard loan terms\u00e2\u0080\u0094but this has apparently not had a significant effect: two projects have received TIFIA loans of less than $100 million since the passage of the FAST Act. Congress could make small TIFIA loans more attractive by changing a requirement that project sponsors obtain two credit ratings; at present, that requirement applies to TIFIA loans for projects with debt of $75 million or more. Less stringent requirements for credit ratings may increase the risk to the government of these loans. Reauthorization legislation also could incorporate various proposals that have been suggested to speed up approvals, such as requiring more frequent meetings of the DOT officials who make recommendations on project loans to the Secretary of Transportation (known as the Council on Credit and Finance), hiring additional staff to more quickly assess applications, and mandating that DOT regularly publish information about the time it takes loan applications to reach milestones.", "The RRIF program was originally created to support freight railroads, particularly small freight railroads known as short lines, but loans are increasingly being made to commuter railroads. Legislative changes have made RRIF loans more attractive to commuter railroads. Recent changes also permit loans for transit-oriented development, that is economic development projects, including commercial and residential development, physically or functionally related to a passenger rail station. Several large loans have been made to transit agencies for commuter rail projects in the past few years, including $908 million to the Dallas Area Rapid Transit to finance a project from Dallas-Fort Worth Airport, $220 million to the Massachusetts Bay Transportation Authority for positive train control (PTC), and almost $1 billion to the New York Metropolitan Transportation Authority, also for PTC.", "The federal government requires project sponsors to make a payment known as a credit risk premium to offset the risk of a default. No federal funding has been authorized to pay the credit risk premiums for RRIF borrowers, although $25 million was made available for this purpose in the 2018 appropriations act. To enhance the attractiveness of RRIF for public transportation projects, Congress could authorize a federal subsidy for the credit risk premium from the Highway Trust Fund. Alternatively, Congress could provide for the credit risk premium from the general fund directly or as part of another program. For example, the Further Consolidated Appropriations Act, 2020 ( P.L. 116-94 ) makes RRIF credit risk premiums eligible for grants under the BUILD Transportation Discretionary Grants Program. Another RRIF-related proposal is to extend the authority to provide loans for transit-oriented development projects, which expires on September 30, 2020."], "subsections": []}, {"section_title": "Capital Investment Grants (CIG) Program", "paragraphs": ["Because the CIG program receives funding from the general fund, not the Highway Trust Fund, appropriators have greater influence over its funding than they do over other transit programs. Nevertheless, the authorization sets a benchmark for the program's funding level, creates the program's overall structure, and can provide more or less discretion for FTA in the program's implementation. These characteristics could be more important in reauthorization than usual because of disagreements about the existence and operation of the program between Congress and the Trump Administration.", "During the Obama Administration, FTA, among others, recommended significant increases in CIG funding to accommodate demand by project sponsors, especially because projects to expand the capacity of existing transit facilities, known as Core Capacity projects, were made eligible for funding beginning in FY2013. FTA noted in its FY2017 budget submission that the number of projects in the CIG \"pipeline\" had grown from 37 in FY2012 to 63 in FY2016. In addition, FTA asked Congress in its FY2017 budget request to increase annual CIG funding from the $2.3 billion authorized by the FAST Act to $3.5 billion, to accelerate projects to \"not only potentially lower financing costs incurred on these projects, but also allow FTA to better manage the overall program given the ever growing demand for funds.\"", "For FY2018 and FY2019, the Trump Administration proposed that funding should be limited to projects with existing commitments from the federal government, and that CIG funding should be phased out. In its funding recommendation for FY2018, FTA noted that \"future investments in new transit projects would be funded by the localities that use and benefit from these localized projects.\" House and Senate appropriators rejected this approach, directing FTA to continue working with project sponsors to develop projects, including issuing project evaluation ratings, and requiring the allocation of appropriations, with deadlines, to projects that have met the program requirements.", "With pressure for continued operation of the program, FTA has made several announcements of allocations of CIG funding to new projects. In July 2019, FTA stated that from the beginning of the Trump Administration in January 20, 2017, FTA had made CIG funding commitments to 25 new projects totaling $7.63 billion. It appears that FTA has dropped its call for phasing out the program; it recommended funding of $1.5 billion in FY2020, including $500 million for new projects. Congress agreed to nearly $2 billion for the program in the Further Consolidated Appropriations Act, 2020 ( P.L. 116-94 )."], "subsections": [{"section_title": "New York and New Jersey Gateway Program", "paragraphs": ["The Gateway Program, which involves a set of projects in a 10-mile section of the Northeast Corridor (NEC) between Penn Station in Newark, NJ, and Penn Station in New York City, would be designed to improve intercity passenger rail service by Amtrak, which owns the underlying infrastructure, as well as commuter rail service provided by New Jersey (NJ) Transit. NJ Transit ridership in the corridor is approximately 50 million passenger trips per year, making this among the most heavily traveled public transportation routes in the country.", "The project sponsors\u00e2\u0080\u0094the Port Authority of New York and New Jersey, in cooperation with the Gateway Program Development Corporation, New Jersey Transit Corporation, and Amtrak\u00e2\u0080\u0094have proposed $7 billion in CIG program funding for the costliest Gateway Program project to date. The $14 billion project is for the construction of a new tunnel under the Hudson River, the restoration of the current tunnel that was damaged by Hurricane Sandy in 2012, and the preservation of the Hudson Yards right-of-way linking the proposed new tunnel with Pennsylvania Station in New York City. In addition, the project sponsors propose to borrow several billion dollars for tunnel construction from the federal government through the RRIF program. NJ Transit, the lead sponsor of the $1.6 billion Portal North Bridge project across the Hackensack River in New Jersey, has proposed a CIG grant to cover about half the cost. The Gateway Program overall is estimated to cost about $30 billion.", "The federal amount sought for the Gateway Program is equal to several years of funding for CIG, at recent funding levels, and could potentially overwhelm a program that is responsible for aiding projects throughout the country. The largest CIG grant since FY2007 is $2.6 billion. FTA typically pays out such grants in smaller amounts over a prolonged construction period; single-year allocations of funding for individual projects have rarely exceeded $200 million.", "The proposed use of federal loans in conjunction with federal grants for the Gateway Program is also controversial. The statute governing TIFIA (23 U.S.C. \u00c2\u00a7603(b)(8)) states that proceeds from a TIFIA loan \"may\" be used as a nonfederal share of project costs if the loan will be repaid from nonfederal funds. The Trump Administration has been critical of CIG project sponsors using both federal grants and loans on public transportation projects. In June 2018, FTA circulated a letter stating the following:", "given the competitive nature of this discretionary program, the [CIG] statute specifically urges FTA to consider the extent to which the project has a local financial commitment that exceeds the required non-government share of the cost of the project. To this end, FTA considers U.S. Department of Transportation loans in the context of all Federal funding sources requested by the project sponsor when completing the CIG evaluation process, and not as separate from the Federal funding sources.", "The appropriations committees have taken action to prevent this policy from being implemented. For instance, Section 165 of Division G of the Consolidated Appropriations Act, 2019 ( P.L. 116-6 ), states that \"none of the funds made available under this Act may be used for the implementation or furtherance of new policies detailed in the 'Dear Colleague' letter distributed by the Federal Transit Administration to capital investment grant program project sponsors on June 29, 2018.\" In a potential reauthorization, Congress could seek to eliminate permanently DOT's discretion to block project sponsors from combining CIG grants and TIFIA loans on a single project. Bills pending in the House, H.R. 731 and H.R. 1849 , would allow recipients of TIFIA and RRIF support to elect to have the loans treated as nonfederal funds."], "subsections": []}, {"section_title": "Expediting CIG Projects", "paragraphs": ["Applying for CIG funding requires the development of extensive data and the preparation of many detailed reports and other documents, all of which are reviewed by FTA in making project approval determinations. Legislative changes in MAP-21 and the FAST Act sought to simplify the process. For example, MAP-21 reduced the number of separate FTA approvals for more expensive projects from four to three, and for less expensive projects from three to two. The less expensive projects, known as small starts projects, are those that cost $300 million or less to build and require $100 million or less of CIG funding. Moreover, MAP-21 authorized the use of project justification warrants in certain cases \"that allow a proposed project to automatically receive a satisfactory rating on a given criterion based on the project's characteristics or the characteristics of the project corridor.\" The FAST Act created an Expedited Project Delivery for Capital Investment Grants Pilot Program to more quickly review up to eight projects involving public-private partnerships in which the federal grant is 25% or less of the project cost. The federal share of a CIG project is typically about 50%.", "There have been no comprehensive evaluations of whether these changes have resulted in projects progressing more quickly through the CIG pipeline. However, there are options that could be considered to further speed CIG projects. For instance, the threshold for projects to qualify as small starts could be increased, and the use of warrants could be permitted in more circumstances. FTA has been slow to implement the Expedited Project Delivery for Capital Investment Grants Pilot Program. Increasing the permitted maximum federal share of project costs under the pilot program, currently 25%, might make the program more attractive to transit agencies."], "subsections": []}]}, {"section_title": "Falling Public Transportation Ridership", "paragraphs": ["According to data from the American Public Transportation Association (APTA), annual transit ridership reached a modern-era high of 10.7 billion trips in 2014. Since then, it has fallen by almost 8% to 9.9 billion trips in 2018. National trends in public transportation ridership are not necessarily reflected at the local level; thus, different areas may have different reasons for growth or decline. But at the national level, the two factors that most affect public transportation ridership are competitive factors and the supply of transit service. Several competitive factors, notably increased car ownership, the relatively low price of gasoline over the past few years, and the growing popularity of bikeshare, scooters, and ridesourcing services such as Lyft and Uber, appear to have reduced transit ridership. The amount of transit service supplied has generally grown over time, along with government investment, but average fares have risen faster than inflation, possibly deterring riders.", "The future of public transportation ridership in the short to medium term is likely to depend on population growth, the public funding commitment to supplying transit, and factors that make driving more or less attractive, such as the price of parking, the extent of highway congestion, and the implementation of fuel taxes, tolls, and mileage-based user fees.", "Under current law, federal grants to transit agencies are based mainly on population, population density, and the amount of service provided. Congress could address the issue of declining ridership by tying the allocation of federal formula funds to agencies' success in boosting ridership or fare revenue.", "Over the long term, the introduction of fully autonomous vehicles could reduce transit ridership, unless restrictions or fees make them an expensive alternative. However, there is significant uncertainty about when, or whether, fully autonomous vehicles will affect ridership. Given this uncertainty, federal capital funding might focus on buses, which last about 10 years, and not new rail systems that take many years to build and will remain in service for decades. Another option would be to redirect CIG funding from building new rail systems and lines to refurbishing rail transit in the large and dense cities where rail transit currently carries large numbers of riders.", "The emergence of new mobility options may have reduced transit ridership, but it also may present an opportunity for transit agencies to provide new services to improve customer mobility. FTA has funded some pilot projects through the Research, Development, Demonstration, and Deployment program. An option in reauthorization would be to fund a program that focuses on boosting transit ridership through mobility and technological innovations."], "subsections": []}, {"section_title": "Climate Change", "paragraphs": ["Surface transportation is a major source of carbon dioxide (CO 2 ) in the atmosphere, the main human-related greenhouse gas (GHG) contributing to climate change. At the same time, the effects of climate change on environmental conditions, such as extreme heat and global sea level rise, pose a threat to transportation infrastructure. Surface transportation reauthorization may seek to address environmental conditions with mitigation provisions that aim to reduce GHG emissions from surface transportation and adaptation provisions that aim to make the surface transportation system more resilient. S. 2302 , the reauthorization bill reported by the Senate Committee on Environment and Public Works in August 2019, included provisions that address climate change.", "GHG emissions from the transportation sector come mainly from passenger cars and light trucks. Public transportation might contribute to a reduction of GHG emissions if trips made in personal vehicles, particularly single-occupant trips, are made by trains and buses instead. The efficiency of public transportation in terms of GHG emissions depends, in part, on the amount of ridership in relation to the amount of transit supplied. GHG emissions from public transportation are also dependent on the sources of fuel used to power trains and buses, including the way in which electricity is generated.", "Specific policy options that might be considered to reduce GHG gases from public transportation vehicles could include funding for alternatives to diesel-powered buses, particularly electric buses using electricity generated from renewable sources. This could include a higher level of funding for the Low or No Emission Vehicle (Lo-No) Program. In the FAST Act, the discretionary Lo-No Program was funded as a $55 million annual set-aside from the Bus and Bus Facilities Program. Another possibility would be to require buses purchased using federal funds to have low or no emissions. Electric buses cost more to purchase than traditional diesel-powered buses, although the lifecycle cost is comparable. To overcome this, the federal government could offer low-interest or no-interest loans for the nonfederal share of the cost of buying electric buses.", "Adaptation is action to reduce the vulnerabilities and increase the resilience of the transportation system to the effects of climate change. Although much of the funding administered by FTA can be used to assess the potential impacts of climate change on public transportation infrastructure and to apply adaptation strategies, there is currently no dedicated surface transportation funding for adaptation projects. Reauthorization could create a new grant program dedicated to adaptation planning and projects or require that funds from other programs be set aside for such purposes."], "subsections": []}, {"section_title": "Emergency Relief Program", "paragraphs": ["The Public Transportation Emergency Relief (ER) Program (49 U.S.C. \u00c2\u00a75324; 49 C.F.R. \u00c2\u00a7602) 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, so-called resilience projects.", "FTA's ER program does not have a permanent annual authorization. Rather, all funds are authorized on a \"such sums as necessary\" basis and require an appropriation from the Treasury's general fund. Because of this, FTA cannot provide funding immediately after a disaster or emergency is declared. Transit agencies, therefore, typically rely on the Federal Emergency Management Agency (FEMA) to fund immediate needs beyond the capacity of state and local government. This could slow the response of transit agencies and blur the lines of responsibility between FTA and FEMA if funds are later appropriated for the ER program. Adding a quick-release mechanism to FTA's ER program would allow FTA funds to be approved and distributed within a few days of a disaster. Such a program already exists for the Federal Highway Administration, with an annual authorization of funds from the Highway Trust Fund, 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 mass transit account.", "The FTA's ER program does not have a limit on the amount that can be spent on resilience projects. Although this may allow for better projects, it can result in Congress appropriating larger amounts than might otherwise be necessary, and 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 natural hazards. A separate resilience program and changes to the ER program may be a more effective way to protect public transportation infrastructure from future disasters."], "subsections": []}, {"section_title": "Public Transportation Safety", "paragraphs": ["Public transportation is a relatively safe mode of passenger transportation compared with traveling by car and light truck. The fatality rate per passenger mile for cars and light trucks is about double that of transit buses and five times that of heavy rail. While the fatality rate per passenger mile for commuter rail is more comparable with cars and light trucks, most commuter rail fatalities are nonusers, such as trespassing pedestrians and those in vehicles struck at grade crossings.", "The federal government's role in public transportation safety has been expanded significantly since 2008. One of the major changes was the requirement in the Rail Safety Improvement Act of 2008 ( P.L. 110-432 ) for commuter railroads, along with Amtrak and freight railroads, to install positive train control (PTC), systems that use signals and sensors to monitor and control railroad operations.", "The federal requirement for PTC resulted in significant capital costs for commuter rail agencies, of which about 10% has been borne by the federal discretionary and formula funds. In addition to the initial costs of installing PTC, commuter rail agencies claim that there will be ongoing costs associated with PTC estimated to be about $160 million per year. Consequently, PTC implementation may have a detrimental effect on the overall financial condition of commuter rail agencies, and, without more funding from federal, state, or local government, may have a detrimental effect on the condition of commuter rail assets. Commuter rail agencies have proposed the creation of a new federal PTC funding program that could pay some or all of these ongoing costs. Separately, proposals have been advanced to dedicate federal funding for commuter railroads to improve the safety of highway-rail grade crossings."], "subsections": []}, {"section_title": "Buy America", "paragraphs": ["With the aim of protecting American manufacturing and manufacturing jobs, Buy America laws place domestic content restrictions on federally funded transportation projects. Buy America requirements vary according to the specific DOT funding program and administering agency. For projects funded by FTA there is a 100% U.S.-made requirement for iron, steel, and manufactured goods. However, Buy America does not apply to rolling stock if more than 70% of components, by value, are produced domestically and final assembly is in the United States. An addition to Buy America law in the National Defense Authorization Act for Fiscal Year 2020 ( P.L. 116-92 , \u00c2\u00a77613) prohibits transit agencies purchasing railcars and buses from certain government-owned, -controlled or -subsidized companies, such as the China Railway Rolling Stock Corporation and BYD, even if they are otherwise Buy America-compliant.", "Waivers of Buy America requirements can be provided by DOT agencies under certain circumstances, but these can be difficult and time-consuming to obtain. To speed up the waiver process, Congress could require that a waiver decision be made within a specific number of days. Each DOT agency has its own Buy America requirements, creating complications when a project involves funding from more than one of the agencies. Congress might seek to standardize Buy America requirements across the department. Other proposals have been to make Buy America requirements more stringent. For example, the Buy America 2.0 Act ( H.R. 2755 , 116 th Congress) would increase the share of public transit rolling stock components and subcomponents that must be produced in the United States by five percentage points annually beginning in FY2021, reaching 100% by FY2026. Such measures may make it more costly and time-consuming for transit agencies to procure vehicles."], "subsections": []}]}]}}
{"id": "R44835", "title": "Paid Family Leave in the United States", "released_date": "2019-05-29T00:00:00", "summary": ["Paid family leave (PFL) refers to partially or fully compensated time away from work for specific and generally significant family caregiving needs, such as the arrival of a new child or serious illness of a close family member. Although the Family and Medical Leave Act of 1993 (FMLA; P.L. 103-3) provides eligible workers with a federal entitlement to unpaid leave for a limited set of family caregiving needs, no federal law requires private-sector employers to provide paid leave of any kind. Currently, employees may access paid family leave if it is offered by an employer. In addition, workers in certain states may be eligible for state family leave insurance benefits that can provide some income support during periods of unpaid leave.", "As defined in state law and federal proposals, family caregiving activities that are eligible for PFL or family leave insurance generally include caring for and bonding with a newly arrived child and attending to serious medical needs of certain close family members. Some permit leave for other reasons, but in practice, day-to-day needs for leave to attend to family matters (e.g., a school conference or lapse in child care coverage), minor illness, and preventive care are not included among \"family leave\" categories.", "Employer provision of PFL in the private sector is voluntary. According to a national survey of employers conducted by the Bureau of Labor Statistics, 16% of private-industry employees had access to PFL through their employers in March 2018. The availability of PFL was more prevalent among professional and technical occupations and industries, high-paying occupations, full-time workers, and workers in large companies (as measured by number of employees). Recent announcements by several large companies indicate that access may be increasing among certain groups of workers.", "In addition, some states have enacted legislation to create state paid family leave insurance (FLI) programs, which provide cash benefits to eligible workers who engage in certain caregiving activities. California, Rhode Island, and New Jersey currently operate FLI programs, which offer 4 to 10 weeks of benefits to eligible workers. Three other states and the District of Columbia have enacted FLI programs, but they are not yet fully implemented and paying benefits. The New York program began phased implementation in 2018. The District of Columbia FLI legislation took effect in April 2017, and Washington State's FLI law took effect in July 2017; benefit payments start in 2020 for both programs. Massachusetts' family leave program was signed into law in June 2018; its benefit payments are to begin in January 2021.", "Many advanced-economy countries entitle workers to some form of paid family leave. Whereas some provide leave to employees engaged in family caregiving (e.g., of parents, spouses, and other family members), many emphasize leave for new parents, mothers in particular. The United States is the only Organization for Economic Co-operation and Development (OECD) member to not offer paid leave to new mothers.", "In December 2017, Congress passed H.R. 1 (P.L. 115-97), which included tax incentives to employers to voluntarily offer paid family and medical leave to employees. Proposals to expand national access to paid family leave have been introduced in the 116th Congress, such as the Family and Medical Insurance Leave Act (FAMILY Act; S. 463/H.R. 1185), which proposes to create a national wage insurance program for persons engaged in family caregiving activities or who take leave for their own serious health condition (i.e., a family and medical leave insurance program), and the New Parents Act (S. 920/ H.R. 1940) which would allow parents of a new child to receive Social Security benefits for the purposes of financing parental leave. Others have proposed using the tax code to provide tax advantages to individuals with caregiving responsibilities."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["Paid family leave (PFL) refers to partially or fully compensated time away from work for specific and generally significant family caregiving needs, such as the arrival of a new child or serious illness of a close family member. Although the Family and Medical Leave Act of 1993 (FMLA; P.L. 103-3 ) provides eligible workers with a federal entitlement to unpaid leave for a limited set of family caregiving needs, no federal law requires private-sector employers to provide paid leave of any kind. ", "Currently, employees may access PFL if offered by an employer. In addition, some states have created family leave insurance (FLI) programs, which provide cash benefits to eligible workers who engage in certain (state-identified) family caregiving activities. In these states, workers can access PFL by combining an entitlement to unpaid leave with state-provided insurance benefits. Some Congressional proposals to expand national access to paid family leave expand upon these existing mechanisms. A new tax credit, created in December 2017 ( P.L. 115-97 ), seeks to expand voluntary employer-provided PFL, and\u2014similar to the state insurance approach\u2014the Family and Medical Insurance (FAMILY Act; S. 463 / H.R. 1185 ), which proposes to create a national wage insurance program for persons engaged in family caregiving activities or who take leave for their own serious health condition. The New Parents Act ( S. 920 / H.R. 1940 ) would allow parents of a new child to receive Social Security benefits, to be repaid at a later date, for the purposes of financing parental leave. Others proposals, such as the Working Parents Flexibility Act of 2019 ( H.R. 1859 ) and the Freedom for Families Act ( H.R. 2163 ), would amend the tax code to provide tax-advantages to individuals with caregiving responsibilities.", "Members of Congress who support increased access to paid leave generally cite as their motivation the significant and growing difficulties some workers face when balancing work and family responsibilities, and the financial challenges faced by many working families that put unpaid leave out of reach. In general, expected benefits of expanded access to PFL include stronger labor force attachment for family caregivers and greater income stability for their families, and improvements to worker morale, job tenure, and other productivity-related factors. Potential costs include the financing of payments made to workers on leave, other expenses related to periods of leave (e.g., hiring a temporary replacement or productivity losses related to an absence), and administrative costs. The magnitude and distributions of costs and benefits will depend on how the policy is implemented, including the size and duration of benefits, how benefits are financed, and other policy factors.", "This report provides an overview of paid family leave in the United States, summarizes state-level family leave insurance programs, notes PFL policies in other advanced-economy countries, and notes recent federal legislative action to increase access to paid family leave. "], "subsections": []}, {"section_title": "Paid Family Leave in the United States", "paragraphs": ["Throughout their careers, many workers encounter a variety of family caregiving obligations that conflict with work time. Some of these are broadly experienced by working families but tend to be short in duration, such as episodic child care conflicts, school meetings and events, routine medical appointments, and minor illness of an immediate family member. Others are more significant in terms of their impact on families and the amount of leave needed, but occur less frequently in the general worker population, such as the arrival of a new child or a serious medical condition that requires inpatient care or continuing treatment. Although all these needs for leave may be consequential for working families, the term family leave is generally used to describe the latter, more significant, group of needs that tend to require longer periods of time away from work.", "As defined in state law and federal proposals, family caregiving activities that are eligible for PFL or leave insurance benefits generally include caring for and bonding with a newly arrived child and attending to the serious medical needs of certain close family members; some also allow leave or benefits for workers with certain military family needs. In practice, day-to-day needs for leave to attend to family matters (e.g., a school conference or lapse in child care coverage), minor illness (e.g., common cold), or preventive care are not included among family leave categories."], "subsections": [{"section_title": "Employer-Provided Paid Family Leave", "paragraphs": ["Employer-provided PFL in the private sector is voluntary. According to a national survey of employers conducted by the Bureau of Labor Statistics (BLS), 16% of private-industry employees had access to PFL (separate from other leave categories) through their employer in March 2018. These statistics, displayed in Table 1 , further show that PFL was more prevalent among managerial and professional occupations; information, financial, and professional and technical service industries; high-paying occupations; full-time workers; and workers in large companies (as measured by number of employees). Recent announcements by several large companies suggest that access may be increasing among certain groups of workers. Among new company policies announced in recent years, some emphasize parental leave (i.e., leave taken by mothers and fathers in connection with the arrival of a new child), and others offer broader uses of family leave.", "A 2017 study by the Pew Research Center (Pew) examined U.S. perceptions of and experiences with paid family and medical leave; its results provide insights into the need for such leave among U.S. workers and its availability for those who need it. Pew reports, for example, that 27% of persons who were employed for pay between November 2014 and November 2016 took leave (paid and unpaid) for family caregiving reasons or their own serious health condition over that time period, and another 16% had a need for such leave but were not able to take it. Among workers who were able to use leave, 47% received full pay, 36% received no pay, and 16% received partial pay. Consistent with BLS data, the Pew study indicates that lower-paid workers have less access to paid leave; among leave takers, 62% of workers in households with less than $30,000 in annual earnings reported they received no pay during leave, whereas this figure was 26% among those with annual household incomes at or above $75,000. "], "subsections": []}, {"section_title": "State-Run Family Leave Insurance Programs", "paragraphs": ["Some states have enacted legislation to create state paid FLI programs, which provide cash benefits to eligible workers who engage in certain caregiving activities. Four states\u2014California, New Jersey, New York, and Rhode Island\u2014have active programs. Three additional programs\u2014those in the District of Columbia (DC), Washington State, and Massachusetts\u2014await implementation. ", " Table 2 summarizes key provisions of state FLI laws and shows the following:", "The maximum weeks of benefits available to workers and wage replacement rates vary across states. Existing state FLI programs offer between 4 weeks (Rhode Island) and 10 weeks (New York) of benefits. Starting July 1, 2020, New Jersey is to increase benefit weeks from 6 to 12. When its plan is implemented, DC is to offer 8 weeks of paid family leave in 2020, and Washington State is to offer 12 weeks of paid family leave in the same year. New York's entitlement is to increase to 12 weeks of benefits when its plan is fully implemented in 2021. Massachusetts is to provide up to 12 weeks for family leave, unless leave is used to provide care to a seriously ill or injured military service member, when up to 26 weeks may be used. Program eligibility typically involves in-state employment of a minimum duration, minimum earnings in covered employment, or contributions to the insurance funds. All state FLI programs currently in operation are financed entirely by employee payroll tax receipts; however, when implemented, the DC program is set to be financed by employers. Massachusetts' and Washington State's programs are to be jointly financed by employers and employees, with some exceptions. Some FLI programs (e.g., Rhode Island) provide job protection directly to workers who receive FLI benefits, meaning that employers must allow a worker to return to his or her job after leave has ended. Workers in other states may receive job protection if they are entitled to leave under federal or state family and medical leave laws, and coordinate such job-protected leave and FLI benefits."], "subsections": []}]}, {"section_title": "Paid Family Leave in OECD Countries", "paragraphs": ["Many advanced-economy countries entitle workers to some form of paid family leave. Whereas some provide leave to employees engaged in family caregiving (e.g., of parents, spouse, and other family members), many emphasize leave for new parents, mothers in particular. ", "As of 2016, the Organization for Economic Co-operation and Development (OECD) family leave database counts 34 of its 35 members as providing some paid parental leave (i.e., to care for children) and maternity leave, with wide variation in the number of weeks and rate of wage replacement across countries. This is shown in Figure 1 , which plots the OECD's estimates of weeks of full-wage equivalent leave available to mothers. Weeks of full-wage equivalent leave are calculated as the number of weeks of leave available multiplied by the average wage payment rate. For example, a country that offers 12 weeks of leave at 50% pay would be said to offer 6 full-wage equivalent weeks of leave (i.e., 12 weeks x 50% = 6 weeks). ", "A smaller share (27 of 35) of OECD countries provides paid leave to new fathers. In some cases, fathers are entitled to less than a week of leave, often at full pay (e.g., Greece, Italy, and the Netherlands), whereas others provide several weeks of full or partial pay (e.g., Portugal provides five weeks at full pay, and the United Kingdom provides two weeks at an average payment rate of 20.2%). Some countries provide a separate entitlement to fathers for child caregiving purposes. This type of parental leave can be an individual entitlement for fathers or a family entitlement that can be drawn from by both parents. In the latter case, some countries (e.g., Japan, Luxembourg, and Finland) set aside a portion of the family entitlement for fathers' use, with the goal of encouraging fathers' participation in caregiving. Figure 2 summarizes paid leave entitlements reserved for fathers in OECD countries in 2016; it plots the OECD's estimates of weeks of full-wage equivalent paternity leave and parental leave reserved for fathers. ", "The OECD examined the availability of family caregiver leave among its member countries in 2011 and found that of the 25 countries for which it could identify information, 14 had polices providing paid leave to workers with ill or dying family members; these are summarized in Table 3 . Qualifying needs for leave, leave entitlement durations, benefit amounts, and eligibility conditions varied considerably across the countries included in the OECD study."], "subsections": []}, {"section_title": "Recent Federal PFL Legislation and Proposals", "paragraphs": ["The overarching goal of PFL legislative activity in the 116 th Congress has been to increase access to leave by reducing the costs associated with providing or taking leave. The Strong Families Act, which became law in December 2017 ( P.L. 115-97 ), allows employers to claim tax credits for a portion of wages paid to certain employees taking family or medical leave; this approach potentially increases access to PFL for workers while reducing the costs to employers of providing the leave. A second approach addresses costs incurred by workers taking leave. For example, the establishment of a national family leave insurance program, such as that proposed in the Family and Medical Insurance Leave Act (FAMILY Act; S. 463 / H.R. 1185 ), would provide cash benefits to eligible individuals who are engaged in certain caregiving activities, potentially making the use of unpaid leave (e.g., as provided by FMLA or voluntarily by employers) affordable for some workers. Proposals such as the New Parents Act ( S. 920 / H.R. 1940 ) would allow eligible new parents to receive to up to three months of Social Security benefits, in return for deferring retirement (or early retirement) by a period of time determined by the Social Security Administration to cover the costs of the parental benefit. Other approaches include proposals to create tax-advantaged parental leave savings accounts (e.g., the Working Parents Flexibility Act of 2019, H.R. 1859 ) and tax-advantaged distributions from health savings accounts for family and medical leave purposes (e.g., the Freedom for Families Act, H.R. 2163 ).", "In addition, the President's FY2020 budget proposes to provide six weeks of financial support to new parents through state unemployment compensation (UC) programs. A similar approach was taken in 2000 by the Clinton Administration, which\u2014via Department of Labor regulations\u2014allowed states to use their UC programs to provide UC benefits to parents who take unpaid leave under the FMLA, other approved unpaid leave, or otherwise take time off from employment after the birth or adoption of a child. The Birth and Adoption Unemployment Compensation rule took effect in August 2000, and it was later removed from federal regulations in November 2003."], "subsections": []}]}}
{"id": "R46182", "title": "Social Security and Vulnerable Groups\u2014Policy Options to Aid Widows", "released_date": "2020-01-16T00:00:00", "summary": ["As Congress actively considers Social Security reform options, one area of interest is Social Security policy levers to aid vulnerable groups\u00e2\u0080\u0094widows, low earners, caregivers, older beneficiaries, spouses, and never-married individuals. In the context of widows, researchers and policymakers have raised concerns about both benefit adequacy and benefit equity. In 2017, about 18% of all individuals aged 60 or older were widows; however, nearly 26% of individuals aged 60 or older living in poverty were widows.", "Benefit adequacy concerns stem from the facts that the widow has outlived the spouse, may contend with a reduced monthly income after the spouse's death, may confront significant medical and long-term care expenses associated with the deceased spouse's end-of-life care, and is at risk of outliving retirement resources and incurring significant expenses for long-term care. The focus tends to be on widows (women) rather than widowers (men). In 2017, the poverty rate was 14.6% for widowed women aged 60 or older and 10.8% for widowed women aged 60 or older receiving Social Security benefits, compared with 10.5% and 7.7%, respectively, for widowed men aged 60 or older.", "Benefit equity concerns stem from Social Security program rules that provide higher benefits to one-earner couples than to two-earner couples with identical lifetime earnings and Social Security payroll tax contributions. More equitable program rules, reflecting changes in family structure and work patterns of husbands and wives, would provide equal benefits for equal contributions.", "Several approaches to modifying Social Security benefits to aid widows are available. One approach is to adjust the Social Security program policy levers that most directly affect widows. These levers include the widow(er)'s limit, the provision of credits for delayed claiming, the parameters around benefits for disabled widows, and the lump-sum death benefit. Another approach is to develop an alternative widow benefit, envisioned as a percentage of the couple's combined Social Security benefits while both were alive, with the widow receiving the higher of this alternative benefit amount and the current-law widow benefit. Finally, proposals that would aid other vulnerable groups\u00e2\u0080\u0094enhanced benefits for low earners, reduced marriage requirements for divorced spouse and divorced survivor benefits, increased benefits for older beneficiaries, caregiver credits, and paid family leave\u00e2\u0080\u0094also would aid widows who are members of those targeted groups."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["As Congress continues to consider reforms to secure the Social Security program's solvency, a related discussion has e merged around targeted reforms for vulnerable groups\u00e2\u0080\u0094widows, low earners, caregivers, older beneficiaries, spouses, and never-married individuals\u00e2\u0080\u0094who may deserve targeted benefit enhancements as part of a broader Social Security reform package. This report focuses on widows and Social Security policy levers to aid them. ", "Researchers and policymakers have commented on both benefit adequacy and benefit equity in the context of Social Security benefits for widows. Concerns about the adequacy of Social Security benefits for widows stem from the fact that the widow has outlived the spouse and likely contends with a reduced monthly income after the spouse's death. The widow also may confront significant medical or long-term care expenses associated with the deceased spouse's end-of-life care. In addition, on average, women outlive men and today's widows face increased life expectancy relative to earlier birth cohorts, thus increasing the possibility of outliving their retirement resources and incurring significant expenses for their own long-term care.", "Benefit equity concerns stem from Social Security program rules that provide higher benefits to one-earner couples than to two-earner couples with identical lifetime earnings and payroll tax contributions. Social Security was designed in the era of a traditional family with a working husband and a wife devoted to home production. Marital patterns, gender roles, and work patterns have changed substantially since the 1930s. Benefit equity would be improved by providing equal benefits for equal contributions.", "This report seeks to", "discuss current-law Social Security provisions pertaining to widows; describe the characteristics of Social Security widow beneficiaries; illustrate the benefit adequacy and benefit equity concerns leading to a perceived need for targeted benefit enhancements for widows; explain policy levers that may be modified to aid widows; outline legislative proposals and proposals in the literature concerning widows, highlighting their projected effects on program solvency and estimated distributional effects; and identify other Social Security reform options that would indirectly benefit widows."], "subsections": []}, {"section_title": "Social Security Widow Benefits3", "paragraphs": [], "subsections": [{"section_title": "Overview", "paragraphs": ["Social Security provides monthly cash benefits to retired or disabled workers and their family members and to the family members of deceased workers. Workers become eligible for Social Security benefits by working in Social Security covered employment. A worker generally needs 40 earnings credits (10 years of covered employment) to obtain insured status and become eligible for a Social Security retired-worker benefit. Employers and employees each contribute payroll taxes of 6.2% of covered earnings, up to an annual limit on taxable earnings ($132,900 in 2019). Monthly benefits are based on the worker's career-average earnings in covered employment. Full retired-worker benefits are available at the full retirement age (FRA), currently age 66 and gradually increasing to age 67 in 2022 for individuals born in 1960 or later. Reduced retired-worker benefits are available beginning at age 62. Workers who claim benefits after the FRA are eligible for delayed retirement credits up to age 70.", "The spouse of a retired worker may receive a spousal benefit of up to 50% of the retired worker's basic benefit amount, called the primary insurance amount (PIA). The widow of a deceased worker may receive a survivor benefit of up to 100% of the deceased worker's PIA. Spousal and survivor (widow) benefits are subject to adjustments based on the (surviving) spouse's age at entitlement, the retired or deceased worker's age at entitlement, the receipt of a Social Security benefit based on the (surviving) spouse's own work record, earnings prior to the FRA above certain thresholds, and earnings from employment not covered by Social Security."], "subsections": []}, {"section_title": "Widow Benefits4", "paragraphs": ["Survivor benefits are derived from the deceased worker's Social Security insurance status and lifetime covered earnings. Spouses and former spouses of fully insured deceased workers (those with 40 or more earnings credits) are eligible for survivor benefits as long as they meet the other requirements for those benefits. For example, the surviving spouse (widow) must be aged 60 or older (sometimes referred to as a nondisabled widow ) and must not have remarried before age 60. A surviving spouse with a qualifying disability who has not remarried before age 50 may begin to receive survivor benefits at age 50 (referred to as a disabled widow ). The surviving spouse also may receive disabled widow benefits if disabled within 7 years after the death of the fully insured spouse, or before age 60, whichever is earlier. A divorced surviving spouse (divorced widow) who has not remarried before age 60 (age 50 if disabled) can claim a survivors benefit beginning at age 60 (age 50 if disabled) based on a marriage that lasted at least 10 years. ", "The widow benefit is a specified percentage of the deceased worker's PIA, depending on the widow's age and relationship to the deceased worker. If a widow qualifies for a retirement benefit based on the widow's own work record and the deceased spouse's work record, the widow has dual entitlement and receives the higher amount of the two benefits. In essence, if the widow's own worker benefit is lower than the deceased spouse's worker benefit, the widow receives the widow's own worker benefit plus a reduced widow benefit equal to the difference between the full widow benefit and the widow's retired worker benefit. Monthly benefits are adjusted each year by the cost-of-living adjustment that is applied to all Social Security benefits. Widow benefits are payable in the month of the deceased spouse's death, regardless of when the death occurred during the month."], "subsections": []}, {"section_title": "Reductions for Early Claiming", "paragraphs": ["A widow's benefit is affected by both the widow's own claiming age and the deceased spouse's claiming age. A widow who begins to collect a widow benefit at the FRA will receive 100% of the deceased spouse's PIA. A widow who begins collecting benefits before the FRA will receive reduced benefits. A nondisabled widow who claims benefits at age 60 or a disabled widow who claims at age 50 will receive 71.5% of the deceased worker's PIA, the largest reduction possible. ", "If the deceased worker claimed reduced benefits before the FRA, the widow benefit will be reduced as well, because it cannot exceed the deceased worker's reduced benefit amount. This provision is referred to as the widow(er)'s limit , under which the widow benefit may be reduced to a floor of 82.5% of the deceased worker's full PIA. Conversely, if the deceased worker claimed benefits after the FRA, the deceased worker's delayed retirement credits increase the widow benefit. In considering the reduction for the widow claiming benefits before the widow's FRA and the widow(er)'s limit reduction if the deceased worker claimed benefits before the deceased worker's FRA, the widow receives the smaller of the two benefit amounts. ", "Among nondisabled widow beneficiaries in December 2018, about 52.2% had their benefits reduced by claiming benefits before their own FRA, about 23.1% had their benefits reduced because their deceased spouse claimed benefits before the FRA, and about 4.1% had their benefits reduced because both the widow and the deceased spouse claimed benefits before their respective FRAs."], "subsections": []}, {"section_title": "Other Benefit Adjustments", "paragraphs": ["The total amount of survivor benefits paid on a deceased worker's account to qualifying family members is capped at 150% to 188% of the deceased worker's PIA, depending on the value of the PIA. If total survivor benefits exceed this family maximum , each person's benefit is reduced proportionately. In addition, if a widow claims benefits before the FRA and is working, the benefit may be reduced by the retirement earnings test, depending on the amount of earnings. Finally, widows with earnings not covered by Social Security may face reduced benefits due to the government pension offset."], "subsections": []}, {"section_title": "Characteristics of Social Security Widow Beneficiaries14", "paragraphs": ["In December 2018, 3.91 million individuals received Social Security widow benefits, representing about 6.2% of the 62.9 million Social Security beneficiaries ( Table 1 ). Women accounted for 96.3% of widow beneficiaries. More than 41% of nondisabled widow beneficiaries are aged 80 or older.", "In total, Social Security paid $5.26 billion in widow benefits in December 2018, averaging $1,388 per month for nondisabled widows and $747.41 per month for disabled widows ( Table 1 ). Among nondisabled widow beneficiaries, 12.1% had a monthly benefit less than $750, whereas 11.2% had a monthly benefit of $2,000 or more. About 79.4% of nondisabled widow beneficiaries aged 65 or older had their monthly benefit reduced because of their own early retirement (52.2%), early retirement by their deceased spouse (23.1%), or both (4.1%)."], "subsections": []}]}, {"section_title": "Perceived Need for Targeted Benefit Enhancements for Widows", "paragraphs": ["Researchers and policymakers have raised concerns about both benefit adequacy and benefit equity in the context of Social Security benefits for widows. Concerns about benefit adequacy stem from the facts that the widow has outlived the spouse, may contend with a reduced monthly income after the spouse's death, may confront significant medical and long-term care expenses associated with the deceased spouse's end-of-life care, and is at risk of outliving retirement resources and incurring significant expenses for long-term care. Concerns about benefit equity stem from Social Security program rules that provide higher benefits to one-earner couples than to two-earner couples with identical lifetime earnings and Social Security payroll tax contributions. More equitable program rules, reflecting changes in family structure and the work patterns of husbands and wives, would provide equal benefits for equal contributions."], "subsections": [{"section_title": "Benefit Adequacy Concerns", "paragraphs": ["A widow is at risk of a substantial income reduction after the spouse's death, compared with the couple's total income prior to the spouse's death. The widow's Social Security benefit may be 33% to 50% lower than the combined couple's Social Security benefit. The deceased spouse's pension from work may be lost or cut in half. The widow also may confront depleted assets from the deceased spouse's medical or long-term care expenses. In addition, on average, women outlive men and today's widows face increased life expectancy relative to earlier cohorts, potentially incurring significant expenses for their own long-term care and increasing the risk of outliving their retirement resources. These factors contribute to high observed poverty rates among widows and concerns about the adequacy of Social Security benefits in widowhood.", " Table 2 provides hypothetical examples of the differing benefit reductions experienced by widows depending on the relative earnings of the husband and wife. ", "In Example 1, spouse A (worker) in a single-earner couple receives a Social Security benefit at the FRA of $1,770 per month and spouse B (nonworker) receives a Social Security spouse benefit at the FRA of $885 per month (50% of the worker's benefit). The combined couple's retirement benefit is $2,655, or 150% of the worker's PIA (100% of the worker's PIA plus a spouse benefit equal to 50% of the worker's PIA). After the worker's death, the widow (spouse B) receives a widow benefit equal to 100% of the deceased worker's benefit, which is 67% of the combined couple's benefit while both were alive (or a 33% reduction). For the two-earner couple in Example 2, where spouse A and spouse B have equal earnings and both claim benefits at the FRA, their combined benefit is 200% of either worker's PIA ($1,120 for spouse A plus $1,120 for spouse B equals $2,240 combined for the couple). After spouse A's death, the widow (spouse B) continues to receive a worker benefit (which is equivalent to the widow benefit from the deceased husband). The total monthly benefit is 50% of the combined couple's benefit while both spouses were alive (or a 50% reduction). Example 3 shows a two-earner couple with unequal earnings. Spouse A receives a Social Security retirement benefit at the FRA of $1,770 per month. Spouse B, with lower earnings, receives a worker benefit at the FRA of $1,120 per month. The combined couple's benefit is $2,890 per month. Upon spouse A's death, the widow (spouse B) continues to receive a worker benefit, increased by the widow benefit to equal $1,770 per month, or 100% of the deceased worker's benefit. The widow's monthly benefit is 61% of the combined couple's benefit while both were alive (or a 39% reduction).", "Placing the Social Security benefit reduction experienced by a widow upon the spouse's death in the broader context of benefit adequacy requires assessing a single person's consumption needs relative to a couple's. Clearly, a single person's consumption (and thus income) needs are lower than a couple's. The precise amount of the reduction depends upon the extent of economies of scale experienced by a couple relative to a single person, that is, the degree to which a single person needs more than half the income of a couple to sustain the same standard of living. One way to operationalize this concept is to look at the differences between poverty thresholds for one-person and two-person families. The federal poverty threshold in 2018 for a one-person family over the age of 65 was 79% of the federal poverty threshold for a two-person family over the age of 65. The Census Bureau's Supplemental Poverty Measure results in a threshold for a one-adult family equal to about 70% of the threshold for a two-adult family. These measures suggest that Social Security widow benefits equaling between 50% and 67% of the combined couple's benefit while both spouses were alive may not be sufficient to sustain the widow's consumption.", "In addition to reduced Social Security benefits, widows are likely to lose part\u00e2\u0080\u0094or in some cases, all\u00e2\u0080\u0094of any private pension payments that were received by the deceased spouse. Prior to the Employee Retirement Income Security Act (ERISA) reforms in 1974, the default pension payout scheme was a single-life annuity that ended upon the retired worker's death. ERISA changed the default to a joint-and-survivor benefit that would continue payments to the widow, albeit at a reduced rate (typically 50%). Further reforms under the Retirement Equity Act of 1984 require the signatures of both the worker and the spouse when choosing a single-life benefit instead of the (default) joint-and-survivor benefit. In either case, the reduction in pension income upon widowhood can be substantial. Pension income also tends to decrease in real value over time, with very few private-sector defined-benefit pensions offering postretirement cost-of-living adjustments.", "Widows may experience significant reductions in wealth and private savings following their spouse's death because of medical and long-term care expenses at the end of life. One study finds that end-of-life out-of-pocket medical expenses are large both in absolute terms and relative to income. Among those in the lowest 25% of the income distribution, end-of-life medical expenses were found to equal roughly 70% of income.", "On average, women live longer than men, and women today live longer than women from earlier cohorts. Remaining life expectancy at retirement is projected to be 2.5 years greater for women reaching age 65 in 2019 compared with men reaching age 65 in 2019. In addition, remaining life expectancy at retirement has increased substantially across birth cohorts. For example, remaining cohort life expectancy for a woman reaching age 65 in 2019 is projected to be 21.5 years, compared with 20.0 years for a woman reaching age 65 in 1999 and 18.8 years for a woman reaching age 65 in 1979. However, these life expectancy gains are not shared equally by all men and women. Greater improvements in life expectancy have been experienced by those in the upper portions of the income distribution relative to those with lower incomes, resulting in a growing gap in life expectancy by income.", "With that as background, consider that in 2017, about 18% of all individuals aged 60 or older were widows; however, nearly 26% of individuals aged 60 or older who lived in families with income below the federal poverty threshold were widows, as shown in Table 3 . ", " Table 4 shows the poverty rate in 2017 among individuals aged 60 or older by Social Security beneficiary status and marital status. Among individuals aged 60 or older, the poverty rate among widows was 13.7%, compared with 9.5% for all individuals, 4.4% for married individuals living together, 17.6% for divorced or separated individuals, and 23.7% for never-married individuals. Poverty rates were lower across the board for individuals aged 60 or older who receive Social Security benefits, but still relatively high for widows (10.1%). Never-married individuals had the highest poverty rate among Social Security beneficiaries aged 60 or older, at 19.8%, whereas 2.4% of married individuals living together and receiving Social Security benefits lived in poverty. Although considerably smaller in number, non-Social Security beneficiaries aged 60 or older had substantially higher poverty rates, reaching 30.5% among widows (not shown).", "Older women\u00e2\u0080\u0094in general and among Social Security beneficiaries; among widowed women in particular as well as women who are divorced or separated\u00e2\u0080\u0094had higher poverty rates than older men. In 2017, the poverty rate was 14.6% for widowed women aged 60 or older and 10.8% for widowed women aged 60 or older receiving Social Security benefits, compared with 10.5% and 7.7%, respectively, for men aged 60 or older (see Table 5 ).", " Table 5 also provides the poverty rate for widows and widowers aged 60 or older, and widows and widowers aged 60 or older receiving Social Security benefits by age, race, ethnicity, educational attainment, and earnings in 2017. The poverty statistics provide clear evidence that widows are more vulnerable than widowers across all subgroups. The poverty statistics also show that receipt of Social Security benefits reduces poverty overall and, for many subgroups, narrows the gap in poverty rates between widows and widowers. Focusing on widows receiving Social Security benefits, young widows (aged 60-64) have a higher poverty rate (19.5%), and older widows (aged 75 or older) have moderately higher poverty rates (10%-11%), compared with widows aged 65-74 (roughly 8%). White, Asian, and non-Hispanic widows aged 60 or older receiving Social Security benefits have substantially lower poverty rates (around 9%) than black and Hispanic widows aged 60 or older receiving Social Security benefits (20.4% and 19.6%, respectively). Better-educated widows aged 60 or older receiving Social Security benefits have lower poverty rates. Among the small fraction of widows aged 60 or older receiving Social Security benefits who had any earnings in 2017, the poverty rate was 0.9%.", "Considering changes in all income sources, studies find that widows experience an income reduction of 35% to 40% upon their spouse's death. The reduction in income leads to significant increases in poverty rates among widows, the effects of which may compound over time for women who become widowed at younger ages and experience widowhood for longer time periods. Moreover, a substantial fraction of older adults living alone (which may include widows as well as divorced or separated individuals and never-married individuals) has income above the poverty threshold but still below a level that achieves long-term economic stability. Estimates from the CPS show that, in 2017, 16.7% of all widows aged 60 or older and 18.3% of all widows aged 60 or older receiving Social Security benefits lived in near poverty , meaning their family income is above the federal poverty threshold but below 150% of the federal poverty threshold."], "subsections": []}, {"section_title": "Benefit Equity Concerns", "paragraphs": ["Changes over the past 80-plus years in family structure and the work patterns of husbands and wives are not reflected in current Social Security program rules, leading to some concerns about benefit equity. Benefit equity suggests that equal lifetime earnings should yield equal benefits. However, under existing program rules, some two-earner couples with substantially higher earnings and contributions receive only slightly higher retirement and widow benefits than traditional one-earner couples with a working husband and a wife devoted to home production. Social Security benefits for a spouse with no labor market earnings were designed to be relatively generous. Thus, a traditional one-earner couple receives higher benefits than a two-earner couple with identical lifetime earnings and payroll tax contributions. ", "Consider the examples in Table 6 , which follow the same couples from Table 2 but add detail about their underlying earnings and Social Security payroll taxes paid. As before, the examples assume that both spouses retire at their full retirement age and receive unreduced benefits. Example 1 is the traditional one-earner couple, where spouse A earns wages in the workforce and spouse B specializes in home production (no wage earnings). Example 2 is a two-earner couple, with the same total annual earnings and payroll taxes as in Example 1, earned and paid in equal proportions by spouse A and B. Despite paying equal payroll taxes, the couple in Example 2 receives lower Social Security benefits during retirement and the total monthly benefit to the widow (spouse B) is substantially lower. In Example 3, spouse A's earnings are the same as in Example 1, but now spouse B also has earnings and makes payroll tax contributions. Although the combined benefit in retirement is somewhat higher in Example 3 than in Example 1, reflecting spouse B's earnings, the total monthly benefit to the widow is equal in both examples. Spouse B's earnings in example 3 do not increase the total monthly benefit in widowhood."], "subsections": []}]}, {"section_title": "Social Security Policy Options to Aid Widows", "paragraphs": ["Driven by concerns about Social Security benefit adequacy and benefit equity for widows, researchers, advocates, and policymakers have considered several approaches to modifying Social Security benefits to aid widows. One approach is to adjust the Social Security program policy levers that most directly affect widows. These levers include the fraction of the deceased worker's PIA that the surviving spouse would receive under the widow(er)'s limit, the provision of credits for delayed claiming, the parameters around benefits for disabled widows, and the lump-sum death benefit. Another approach is to develop an alternative widow benefit, envisioned as a percentage of the couple's combined Social Security benefits while both were alive, with the widow receiving the higher of this alternative benefit amount and the current-law widow benefit.", "This section looks to the research and policy literature, and previously introduced legislation in some cases, to describe policy options. The discussion identifies potential effects on benefit adequacy and benefit equity, and highlights projected effects on program solvency and estimated distributional effects."], "subsections": [{"section_title": "Widow(er)'s Limit", "paragraphs": ["As described earlier, the widow(er)'s limit reduces the widow benefit by as much as 17.5%, to a floor of 82.5% of the deceased worker's full PIA, if the deceased worker claimed reduced benefits before the FRA. The idea behind the widow(er)'s limit is that the widow's benefit cannot exceed the deceased worker's reduced benefit amount. The widow(er)'s limit also provides incentives for married workers to delay claiming Social Security benefits. However, it negatively affects benefit adequacy for widows, some of whom may have limited access to non-Social Security sources of income. Although the widow(er)'s limit is a little-known feature of the Social Security program, it affected the benefits of about 27% of Social Security nondisabled widow beneficiaries aged 65 or older in December 2018, or 857,135 beneficiaries.", "The effects of eliminating or modifying the widow(er)'s limit were estimated in a 2001 Social Security Administration (SSA) study, with data pertaining to the mid- to late 1990s. Eliminating the widow(er)'s limit would produce the largest estimated effects, increasing the total amount of widow benefit payments by about 5%. For widows who experience the maximum benefit reduction of 17.5% under the widow(er)'s limit, eliminating the widow(er)'s limit would substantially improve benefit adequacy. However, the SSA study estimated that only 14% of the increased benefit payments would be received by widows in poverty and that 40% would be received by widows near poverty (with income under 150% of the federal poverty threshold). Adjustments to the widow(er)'s limit could be designed to direct more of the increased benefit payments to widows in or near poverty, but then would affect fewer widows and would do less to improve benefit adequacy. Other options explored in the SSA study to modify the widow(er)'s limit, again affecting fewer widows, focus on individuals who are widowed before the FRA or cases in which the worker dies before the FRA. ", "Eliminating the widow(er)'s limit would mean that the widow would receive better survivor protection from Social Security than the (deceased) worker, considering that, if the spouse were to die before the worker, the worker would continue to receive a reduced worker benefit (for claiming before the FRA). None of the potential changes to the widow(er)'s limit address the equity concerns with current-law widows benefits. "], "subsections": []}, {"section_title": "Credits for Delayed Claiming", "paragraphs": ["Two bills\u00e2\u0080\u0094 S. 345 and H.R. 4123 \u00e2\u0080\u0094have been introduced in the 116 th Congress that would provide credits, or increased benefits, for widows who delay claiming or temporarily suspend receipt of benefits on their deceased spouse's work record. Among other changes, S. 345 would modify widow benefits as follows:", "For widows whose current-law benefit would be less than 100% of the deceased spouse's PIA, it would increase benefits by between 0.34% and 0.39% per month (up to 4.1% to 4.7% annually), depending on the widow's FRA, for each month of delayed claiming or suspension beyond age 60, up to 100% of the deceased spouse's PIA. For widows whose current-law benefit would be equal to or greater than 100% of the deceased spouse's PIA, it would increase monthly benefits at the retired-worker delayed retirement credit rate (0.67% per month, up to 8% annually, for individuals born in 1944 and later) for each month of delayed claiming or suspension, up to 124% of PIA if the deceased spouse's FRA was 67 or 132% of PIA if the deceased spouse's FRA was 66.", "Under H.R. 4123 , monthly widow benefits would be increased at the retired-worker delayed retirement credit rate (0.67% per month, up to 8% annually, for individuals born in 1944 and later) for widows who delay claiming or suspend benefits beyond their FRA, up to age 70.", "SSA's Office of the Chief Actuary (OCACT) estimated the financial effects on Social Security of S. 3457 , a 115 th Congress version of S. 345 . The estimates are based on the 2018 Trustees Report's intermediate assumptions and address the policy change's effects on the combined reserves of the Old-Age and Survivors Insurance and Disability Insurance Trust Funds. OCACT estimated that Section 4 of S. 3457 , pertaining to the increased widow benefits for delayed or suspended claiming described above, would worsen the Social Security program's actuarial balance by 0.02% of taxable payroll and would have resulted in about 400,000 widow beneficiaries receiving higher monthly benefits in 2018 if the provision had always been in effect. OCACT estimates of H.R. 4123 are not available. Both bills would improve benefit adequacy for affected widows, but would not address the equity concerns with current-law widow benefits."], "subsections": []}, {"section_title": "Benefit Parameters for Disabled Widows", "paragraphs": ["Three bills introduced in the 116 th Congress would adjust the parameters for disabled widow benefits. S. 345 , H.R. 4122 , and H.R. 4125 would expand eligibility for disabled widow benefits by eliminating the requirements that a disabled widow be at least 50 years old and that, if not disabled at the time of the spouse's death, the widow become disabled within seven years of the spouse's death (or by age 60, whichever is earlier). The bills would enhance benefits by eliminating the reduction of disabled widow benefits for those claiming before their FRA, effectively establishing a floor for disabled widow benefits equal to 100% of the deceased spouse's PIA.", "OCACT's estimates of S. 3457 's financial effects (mentioned above in \" Credits for Delayed Claiming \") found that Section 2 of the bill, pertaining to the expanded eligibility and benefit enhancements for disabled widow benefits described above, would worsen the Social Security program's actuarial balance by 0.02% of taxable payroll and would have resulted in about 600,000 widow beneficiaries receiving higher monthly benefits, or additionally receiving benefits, in 2018 if the provision had always been in effect. Although not directly addressed in the OCACT estimates, these eligibility expansions and benefit expansions could induce some widows with disabilities to apply for benefits who would not have done so under current law. OCACT did not produce estimates for H.R. 4122 and H.R. 4125 . These bills would improve benefit adequacy for affected disabled widows, but would not address the equity concerns with current-law widow benefits."], "subsections": []}, {"section_title": "Lump-Sum Death Benefit38", "paragraphs": ["When a Social Security-insured worker dies, the surviving spouse who was living with the deceased worker is entitled to a one-time, lump-sum death benefit of $255. The dollar value of the lump-sum death benefit has not changed since 1954, meaning that its real value, after adjusting for inflation, has eroded significantly over time. Over the years, proposals have been put forward to modify or eliminate the lump-sum death benefit, including several proposals to increase it. In the context of aiding widows as a vulnerable group, even a substantial increase in the lump-sum death benefit would provide only partial relief\u00e2\u0080\u0094through a one-time payment\u00e2\u0080\u0094for the deceased spouse's end-of-life expenses (medical and burial). As such, it would address the adequacy concerns with current-law widow benefits in only a limited fashion. As an across-the-board increase for all widows, it would not be targeted to those in poverty or near poverty. Moreover, it would not alleviate the equity concerns with current-law widow benefits. "], "subsections": []}, {"section_title": "An Alternative Widow Benefit", "paragraphs": ["Another approach to modifying Social Security benefits to aid widows is to calculate an alternative widow benefit. Many authors in the research and policy literature envision the alternative widow benefit as a percentage of the sum of the widow's own worker benefit (including any actuarial reductions or delayed retirement credits) and the deceased spouse's PIA (potentially including any actuarial reductions or delayed retirement credits). The widow would receive the higher of this alternative benefit amount and the current-law widow benefit. This approach is thought to both increase benefit adequacy and improve benefit equity. The alternative widow benefit could be capped at a specified level to improve targeting to low- and moderate-income widows and reduce cost. Current-law spouse benefits also could be reduced to offset the alternative widow benefit's cost.", "When calculating the combined benefit, the widow's own worker benefit would be reduced for claiming before the FRA, if applicable. Some proposals include the spouse benefit for this portion of the calculation as well, while others use only the widow's own worker benefit. Including the spouse benefit would broaden eligibility to include single-earner couples and provide greater improvements to benefit adequacy. Using only the widow's worker benefit would do more to improve the proposal's effects on benefit equity. ", "If the deceased spouse claimed benefits before the FRA, the calculation could use the deceased spouse's reduced worker benefit, or it could use the full PIA as if the deceased spouse had claimed benefits at the FRA. The latter approach would effectively eliminate the widow(er)'s limit for those who receive the alternative widow benefit, and is more effective at improving benefit adequacy for lower earners.", "Most proposals for an alternative widow benefit specify that the widow would receive the greater of 75% of the couple's combined worker benefits when both were alive and the current-law widow benefit, as illustrated in Table 7 following the example couples from Table 2 and Table 6 . ", "For the single-earner couple in Example 1a, assuming that both spouses claim benefits at the full retirement age, the alternative widow benefit would be 75% of $1,770, or $1,327.50. Since the alternative widow benefit is less than the current-law widow benefit of $1,770, the widow would continue to receive the current-law amount (equal to 67% of the combined couple's benefit). Note that if spouse benefits were included in the alternative widow benefit computation, and assuming that both spouses claim benefits at the full retirement age, the widow in Example 1b would receive 75% of the combined couple's benefit of $2,655, or about $1,991.25 per month, compared with 67% of the combined couple's benefit while both were alive under current law. For a two-earner couple where the husband and wife have equal earnings, and again assuming that both spouses claim benefits at the full retirement age, the widow benefit would increase from 50% of the combined couple's benefit while both spouses were alive to 75%, as shown in Example 2. The monthly widow benefit would increase from $1,120 under current law to $1,680 under the alternative widow benefit proposal. Example 3 shows a two-earner couple where the husband and wife have unequal earnings. Again assuming that both spouses claim benefits at the full retirement age, the widow benefit would increase from 61% of the combined couple's benefit while both spouses were alive to 75%. Although the monthly widow benefit would increase from $1,770 under current law to $2,167.50 under the alternative widow benefit proposal, the percentage increase in the widow benefit would be smaller than for the couple with equal earnings. ", "The examples in Table 7 show that the alternative widow benefit proposal, which does not include the value of the spouse benefit, would not improve widow benefits for nonworking survivors in single-earner couples. It would provide the greatest benefit to two-earner couples with roughly equal earnings. Including spouse benefits in the alternative widow benefit calculation would magnify the favorable treatment of nonworking spouses under current law. From the perspective of benefit equity, excluding the spouse benefit would allow the widow's own worker benefit to contribute to the alternative widow benefit on an equal footing with the deceased spouse's worker benefit.", "Without a cap on the alternative widow benefit, one study found that most of the proposal's benefits would go to higher-earning couples. Imposing a cap on the alternative widow benefit can improve benefit adequacy by targeting benefit increases to widows at the lower end of the income distribution. Several approaches are available, such as setting the cap at the PIA of a career average earner, the average benefit of all retired workers, or the average benefit of newly retired workers. The solvency and distributional analyses below impose a cap based on the PIA of a career average earner who becomes eligible for retired worker benefits in the same year the deceased spouse became entitled to worker benefits.", "As explained in detail below, based on SSA analysis, the alternative widow benefit's cost is modest and the distributional effects point to improvements in both benefit adequacy and benefit equity. The alternative widow benefit proposal would not reduce benefits for anyone. Thus, no transition period would be needed and it could be applied to new widow beneficiaries as well as current widow beneficiaries. If other changes to the Social Security program were desired to offset the alternative widow benefit's cost, policymakers could consider raising revenue (e.g., increasing the payroll tax), reducing cost (e.g., reducing spouse benefits, other benefit reductions), or both. However, depending on the alternative widow benefit's exact formulation, some approaches may be less desirable. For example, if the widow's spouse benefit is not included in the alternative widow benefit calculation, then offsetting the proposal's cost by reducing spouse benefits would not be appropriate. Additional solvency and distributional analyses could help policymakers to refine the details of any formal proposals."], "subsections": [{"section_title": "Cost and Solvency Effects", "paragraphs": ["Three bills introduced in the 116 th Congress contain a provision for the alternative widow benefit, constructed largely as described above. OCACT estimated the financial effects on Social Security of previous versions of two of these bills. OCACT also updates alternative widow benefit estimates after the Trustees Report is released each year. The estimates are based on the Trustees Report's intermediate assumptions and address the policy change's effects on the combined reserves of the Old-Age and Survivors Insurance and Disability Insurance Trust Funds.", "OCACT's latest estimates of the alternative widow benefit proposal's cost and solvency effects reflect the 2019 Trustees Report's intermediate assumptions. The estimates assume the proposal would be implemented for widows receiving benefits at the beginning of 2021 and those becoming eligible after 2021. The alternative widow benefit estimated by OCACT would be 75% of the couple's combined worker benefits when both were alive (the widow's own worker benefit and the deceased worker's PIA). It would apply actuarial reductions or delayed retirement credits to the widow's own worker benefit and the deceased spouse's PIA. Finally, it would impose a cap defined by the PIA of a hypothetical worker who earns the SSA average wage index every year and becomes eligible for retired worker benefits in the same year the deceased spouse became entitled to worker benefits. Under these alternative widow benefit parameters, the long-range actuarial balance would worsen by 4%. However, the changes are not large enough to change the year of reserve depletion, estimated to be 2035 in the 2019 Trustees Report under both current law and the alternative widow benefit proposal. "], "subsections": []}, {"section_title": "Distributional Effects", "paragraphs": ["SSA's Office of Research, Evaluation, and Statistics (ORES) estimated the alternative widow benefit proposal's distributional effects using the same underlying proposal parameters modeled by OCACT. The ORES estimates are derived from the Modeling Income in the Near Term, Version 7 (MINT7) microsimulation model. The estimates pertain to current-law beneficiaries aged 60 or older in 2030, 2050, and 2070. Outcomes of interest from the ORES MINT estimates include changes in benefits, household income, and poverty, among all beneficiaries and affected beneficiaries, disaggregated by gender, marital status, educational attainment, and household income quintile. ", "Among current-law beneficiaries aged 60 or older in 2030, the ORES MINT estimates suggest that 8% of beneficiaries will experience higher benefits under the alternative widow benefit relative to current law, including 10% of female beneficiaries, 11% of beneficiaries whose education was limited to high school, and 14% of beneficiaries with less than a high school education. The proposal would result in higher benefits for nearly one-third of current-law widow beneficiaries, with gains concentrated among those in poverty and in the bottom two-fifths of the household income distribution (due to the cap at the PIA of a career average wage worker). Similar, though slightly stronger, results are obtained for current-law beneficiaries aged 60 or older in 2050 and 2070. Among beneficiaries affected by the alternative widow benefit in 2030, the median benefit increase is 17%, again with the largest gains among those in poverty. The poverty rate is estimated to decrease by 10.2% (or 0.5 percentage points) among all current-law beneficiaries aged 60 or older in 2030, and by 38% (or 1.9 percentage points) among current-law widow beneficiaries aged 60 or older in 2030. In 2070, 43% of current-law widow beneficiaries aged 60 or older are estimated to experience a benefit increase. While the gains continue to be concentrated among the lowest income quintiles in 2050 and 2070, the poverty effects are muted in 2070 relative to 2030 and 2050. Gains relative to payable benefits (rather than scheduled benefits) in 2050 and 2070 are orders of magnitude larger but follow the same general patterns.", "When considering the alternative widow benefit's distributional effects, some of the proposal's limitations are worth noting. First, a person must have a qualifying marital history to receive widow benefits. As such, the alternative widow benefit would not improve benefit adequacy for a growing group of women who do not have a marital history that would qualify for widow benefits, including never-married women, who have a high poverty rate ( Table 4 ).", "Further, if the alternative widow benefit is based only on the widow's own worker benefit (not also including the spouse benefit), then both members of the couple would need to have a work history sufficient to earn Social Security worker benefits. Under this scenario, the alternative widow benefit would not improve benefit adequacy for nonworking survivors in single-earner couples.", "Finally, a higher Social Security widow benefit could lead to reduced or lost Supplemental Security Income payments for some widows, which in turn could lead to lost eligibility for other means-tested programs, such as Medicaid, the Supplemental Nutrition Assistance Program (formerly known as Food Stamps), and the Low Income Home Energy Assistance Program. Policymakers may wish to consider offsets or exclusions (hold-harmless provisions) in these programs to prevent loss of eligibility."], "subsections": []}]}]}, {"section_title": "Other Policy Changes That May Benefit Widows", "paragraphs": ["Several other policy changes proposed for other vulnerable groups would aid widows who are members of those targeted groups. Brief descriptions follow, along with references for more detailed information."], "subsections": [{"section_title": "Enhanced Benefits for Low Earners", "paragraphs": ["Under current law, the Social Security program has a special minimum benefit (SMB) for workers with many years of low earnings. However, the SMB grows with prices rather than wages, and thus affects fewer beneficiaries every year. In December 2018, 35,505 beneficiaries received the SMB, with an average monthly benefit of just over $900. In addition, the SMB is computed based on years of coverage, rather than lifetime earnings. The earnings threshold for a year of coverage in 2019 is $14,805 (by comparison, in 2019 a worker earns four quarters of coverage for traditional Social Security benefits with annual earnings of $5,440). A worker must have at least 11 years of coverage to qualify for the SMB, and the maximum SMB is obtained with 30 years of coverage.", "Proposals to improve benefit adequacy by providing an enhanced minimum benefit under Social Security take many forms and may serve to increase retirement income and reduce poverty among some older women and widows. Some proposals would reform the SMB to apply to a larger group of workers with substantial work histories and low earnings. The initial SMB could be tied to wage growth rather than price growth, the amount of earnings required for a year of coverage could be reduced, partial years of coverage could be allowed, and the amount of the SMB could be tied to a fraction of the federal poverty threshold, increasing with the number of years of coverage.", "Others point out that workers with shorter working careers are a larger group at greater risk of poverty in older age and would not be aided by a reformed SMB. Some options to address this group include (1) creating a new basic minimum benefit as a supplement to traditional Social Security benefits for low-income beneficiaries above the FRA and (2) revising the bend points and PIA factors in the traditional Social Security benefit formula to increase benefits for low earners and improve progressivity. Older women and widows from birth cohorts currently of retirement age may be well represented among workers with shorter working careers, given traditional propensities to leave the workforce for raising children and potentially for providing elder care. However, recent research suggests that women's labor force participation patterns are changing, with higher levels of employment early in life, motherhood coming later in life, motherhood's impact on employment lessening, and women working longer at older ages. Among women who worked at some point during their pregnancy, the fraction who reported quitting their jobs around the time of the birth decreased substantially for those having their first child in the early 2000s compared with those having their first child in the 1980s, whereas the fraction taking paid leave increased substantially and the fraction taking unpaid leave remained constant. Cohorts of women born in the 1950s and later are expected to enter their retirement ages with more work experience and more steeply sloped earnings patterns. "], "subsections": []}, {"section_title": "Reduced Marriage Duration Requirements for Divorced Spouse and Divorced Widow Benefits", "paragraphs": ["Under current law, a divorced spouse may claim Social Security spouse and/or survivor benefits if the marriage lasted at least 10 years and the person claiming benefits is unmarried. Divorced spouse benefits may be claimed beginning at age 62, whereas divorced survivor benefits may be claimed beginning at age 60 (or age 50 if disabled). Divorced spouses are entitled to the same spouse and survivor benefits as a married spouse, including applicable reductions when benefits are claimed before the divorced spouse's FRA.", "As shown in Table 3 , divorced individuals made up 16.6% of the population aged 60 or older in 2017, but 30.7% of the population aged 60 or older in poverty. The poverty rate among all divorced individuals aged 60 or older was 17.6% in 2017 ( Table 4 ), and 19.0% among divorced women aged 60 or older (not shown). Two studies found that the fraction of women aged 50-59 and 60-69 who are divorced from a marriage of less than 10 years\u00e2\u0080\u0094and thus not eligible for Social Security divorced spouse and divorced survivor benefits under current law\u00e2\u0080\u0094increased substantially between 1990 and 2004/2009. Since the 1950s, the age of first marriage (among women and men) has increased markedly, whereas the prevalence of divorce doubled between the 1960s and 1970s, with the probability of divorce substantially higher for those with some college or a high school degree compared with college graduates.", "Reducing the duration-of-marriage requirement for divorced spouses and survivors, for example to five, seven, or nine years, has been discussed as a way to reduce the poverty rate among this vulnerable population. One study found that, although such a policy change would affect a relatively small fraction of female retirees, the greatest potential income gain (and thus poverty reduction) would accrue to low-income divorced widows with marriages that lasted between five years and nine years."], "subsections": []}, {"section_title": "Increased Benefits for Older Beneficiaries", "paragraphs": ["As noted earlier, women tend to outlive men and remaining cohort life expectancy for a woman attaining age 65 has increased by nearly 2 years over the past 40 years, reaching 21.5 years in 2019 (compared with a greater gain of 4.4 years over the past 40 years for men, reaching 19.0 years for men attaining age 65 in 2019). With increased life expectancy comes greater risk of outliving one's non-Social Security retirement resources and, consequently, greater reliance on Social Security benefits. Poverty rates also increase with age, particularly among women (although Table 5 shows an even higher poverty rate among young widows aged 60-64). Some have outlined a modest longevity increase in Social Security benefits (specified as a percentage of the individual's benefit or a fixed dollar amount within a given retiree cohort) starting around age 80 to 85, or after 18 years to 20 years of benefit receipt. One proposal would target the benefit increase to low-income beneficiaries. Another would provide a delayed annuity for older beneficiaries whose benefit is below some minimum level relative to the federal poverty threshold and increase it with years of covered earnings. Estimates of an option to increase benefits by 5% for beneficiaries aged 85 or older (about 64% of whom are widows) in 2030 point to modest reductions in poverty. Proposals to increase the Social Security cost-of-living adjustment, for example by using the experimental Consumer Price Index for Americans 62 years of age and older (CPI-E) instead of the Consumer Price Index for urban wage earners and clerical workers (CPI-W), also tend to favor older beneficiaries."], "subsections": []}, {"section_title": "Caregiver Credits and Paid Family Leave", "paragraphs": ["Providing earnings credits for periods out of the labor force or with reduced earnings due to caregiving responsibilities has been proposed in many forms. Although not targeted toward widows, such policies would result in enhanced benefits for widows to the extent that the enhanced benefits were available for periods out of the labor force while caring for young children or elderly parents, or perhaps caring for a now-deceased spouse. Women are more likely than men to experience time out of the workforce while raising children. In March 2017, the labor force participation rate was 63.1% for mothers with children under the age of 3, 65.1% for mothers with children under the age of 6, and 76.0% for mothers with children aged 6 to 17. Comparable rates for men were 95.1%, 94.4%, and 91.5%, respectively. Women also are more likely than men to be caregivers, provide more hours of care, and provide more hands-on care. Women caregivers are less likely to be in the labor force than women who are not caregivers, whereas among men, the labor force participation rate for caregivers is essentially the same as the labor force participation rate for noncaregivers. ", "Options include providing caregivers with a number of dropout years (e.g., up to five years) to be excluded from the Social Security benefit formula, providing earnings credits (e.g., tied to a fraction of the average wage index for a given year or a fraction of the worker's prior earnings) to caregivers for years of caregiving (e.g., up to five years), and supplementing the retired worker benefit for caregivers in households with limited income (e.g., up to 125% of the federal poverty threshold).", "Related are ongoing policy discussions about establishing a system for paid family leave, which refers to partially or fully compensated time away from work for specific and generally significant family caregiving needs, such as the arrival of a new child or serious illness of a close family member. The National Defense Authorization Act for Fiscal Year 2020 ( P.L. 116-92 ) conferred a paid parental-leave benefit on certain federal employees covered by the Family and Medical Leave Act of 1993 ( P.L. 103-3 , as amended). Employer provision of paid family leave in the private sector is currently voluntary, and in March 2019 such leave was available to 18% of private-industry employees, according to data from the Bureau of Labor Statistics. As of January 2020, five states\u00e2\u0080\u0094California, New Jersey, New York, Rhode Island, and Washington State\u00e2\u0080\u0094have active programs. Four additional programs\u00e2\u0080\u0094those in Connecticut, the District of Columbia, Massachusetts, and Oregon\u00e2\u0080\u0094await implementation. Several bills have been introduced in the 116 th Congress to establish a national paid family leave program. Some would implement paid family leave through the Social Security program, either by creating a new program component in which covered workers and employers pay into the program and covered workers with periods of qualified caregiving draw benefits from the program, or by allowing eligible caregivers (parents) to receive some months of Social Security benefits in exchange for deferred claiming of retirement benefits to cover the caregiver benefit's costs. "], "subsections": []}]}]}}
{"id": "R45878", "title": "Small Business Credit Markets and Selected Policy Issues", "released_date": "2019-08-20T00:00:00", "summary": ["Small businesses are owned by and employ a wide variety of entrepreneurs\u00e2\u0080\u0094skilled trade technicians, medical professionals, financial consultants, technology innovators, and restaurateurs, among many others. As do large corporations, small businesses rely on credit to purchase inventory, to cover cash flow shortages that may arise from unexpected expenses or periods of inadequate income, or to expand operations. During the Great Recession of 2007-2009, lending to small businesses declined. A decade after the recession, it appears that while many small businesses enjoy increased access to credit, others might still face credit constraints.", "Congress has demonstrated an ongoing interest in credit availability for small businesses, viewing them as a medium for stimulating the economy and creating jobs. In general, Congress's interest in the small business credit market focuses on quantity and price\u00e2\u0080\u0094specifically (1) whether small businesses can reasonably obtain loans from private lenders and (2) whether the prices (lending rates and fees) of such credit are fair and competitive. Congress passed legislation to facilitate lending to small businesses that are likely to face hurdles in obtaining credit:", "The Small Business Act of 1953 (P.L. 83-163) established the Small Business Administration (SBA), which administers several types of programs to support capital access for small businesses that struggle to obtain credit on reasonable terms and conditions from private-sector lenders. The Community Reinvestment Act (CRA; P.L. 95-128 ) encouraged banks to address persistent unmet small business credit demands in low- and moderate-income (LMI) communities. The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act; P.L. 111-203 ) required the Bureau of Consumer Financial Protection (CFPB) to collect data from small business lenders concerning credit applications made by women-owned, minority-owned, and small businesses with the goal of better understanding their financing needs. The CFPB has not yet implemented this requirement.", "Data that capture small business borrowers' characteristics and lenders' underwriting processes (i.e., their processes for determining whether borrowers are creditworthy) could help to accurately determine whether small businesses have sufficient and fairly priced access to private credit. Various government agencies and financial institutions define small business using factors that may be based upon annual revenues, number of employees, market scope, market share, and some or all of the above factors. Because no consensus definition of a small business exists, data to analyze the small business credit market's performance are limited and fragmented. Moreover, certain small businesses face additional challenges that may force them to seek financing outside of traditional business credit markets. Many new start-up firms, for example, do not have the financial track records to qualify for standard business loans and frequently must rely on mortgage and consumer credit. In addition, many small businesses rely on customized lending products, thus limiting their choice of lenders to those with specialized underwriting methodologies or business models. The lack of a consensus definition of small business, along with the wide variety of idiosyncratic business risks, hinders the availability of conclusive evidence on the small business credit market's overall performance and, therefore, the ability to assess the effectiveness of various policy actions designed to increase small business lending.", "In 2017, the CFPB issued a request for information on the small business lending market to solicit feedback on how to implement the Dodd-Frank requirement to collect data from financial institutions on small business credit applications. Final rulemaking, however, has been delayed. In addition, various bills regarding the small business credit market have been introduced in the 116 th Congress. For example, H.Res. 370 would express \"the sense of the House of Representatives that small business owners seeking financing have fundamental rights, including transparent pricing and terms, competitive products, responsible underwriting, fair treatment from financing providers, brokers, and lead generators, inclusive credit access, and fair collection practices.\" H.R. 3374 would amend the Equal Credit Opportunity Act to require the collection of small business loan data related to LGBTQ-owned businesses. H.R. 1937 and S. 212 , the Indian Community Economic Enhancement Act of 2019, among other things, would require the Government Accountability Office to conduct a study to assess and quantify the extent to which federal loan guarantees, such as those provided by the SBA, have been used to facilitate credit access in these communities."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["Small businesses are owned by and employ a wide variety of entrepreneurs\u00e2\u0080\u0094skilled trade technicians, medical professionals, financial consultants, technology innovators, and restaurateurs, among many others. As do large corporations, small businesses rely on loans to purchase inventory, to cover cash flow shortages that may arise from unexpected expenses or periods of inadequate income, or to expand operations. The Federal Reserve has reported that lending to small businesses declined during the Great Recession of 2007-2009. During the recession, many firms scaled down operations in anticipation of fewer sales, and lenders also tightened lending standards. A decade after the recession, evidence on whether lending to small business has increased is arguably inconclusive. Some small firms may be able to access the credit they need; however, others may still face credit constraints, and still others may be discouraged from applying for credit. Furthermore, drawing direct conclusions about small business access to credit can be difficult because available data are limited and fragmented. ", "Congress has demonstrated an ongoing interest in small business loans (SBLs), viewing small businesses as a medium for stimulating the economy and creating jobs. Congress's interest in small business credit access generally focuses on (1) whether small businesses can secure credit from private lenders and (2) whether small businesses can obtain such credit at fair and competitive lending rates. In other words, policymakers are interested in whether market failures exist that impede small business access to credit and, if so, what policy interventions might be warranted to address those failures. Market failures, in economics and specifically in the SBL market context, refer to barriers that impede credit allocation by private lenders. For example, some lenders may be reluctant to lend to businesses with collateral assets (e.g., inventories) that are difficult to liquidate, as may be typical of some small businesses (e.g., restaurants). Under certain financial or regulatory circumstances, small loans may not generate sufficient returns to justify their origination costs, which also may be considered a market failure. In addition, market failures may exist when borrowers pay noncompetitive lending rates in excess of their default risk. Start-ups and some small businesses that provide niche products frequently must rely on mortgage or consumer credit or private equity investors rather than more traditional SBLs because lenders find it challenging to price loans for these firms, which could be another indicator of SBL market failure.", "Obtaining conclusive evidence on SBL market performance in terms of quantities and pricing is difficult for several reasons. First, there is no consensus definition of a small business across government and industry. Moreover, as the Federal Reserve stated, \"fully comprehensive data that directly measure the financing activities of small businesses do not exist.\" Drawing conclusions about the availability and costs of SBLs is not possible using existing data sources, which lack information such as the size and financial characteristics of the businesses that apply for credit, the types of loan products they seek, the types of lenders to whom they applied for credit, and which credit requests were rejected and which were approved. Second, the risks small business owners take are not standardized and vary extensively across industries and locations. For this reason, determining whether SBL prices (lending rates and fees) are competitive is difficult without standardized benchmark prices that can be used to compare the relative prices of other SBLs. ", "To address SBL market failures, Congress passed legislation to facilitate lending to small businesses that are likely to face hurdles obtaining credit. For example, the Small Business Act of 1953 (P.L. 83-163) established the Small Business Administration (SBA), which administers several types of programs to support capital access for small businesses that can demonstrate the inability to obtain credit at reasonable terms and conditions from private-sector lenders. The Community Reinvestment Act (CRA; P.L. 95-128 ) encouraged banks to address persistent unmet small business credit demands in low- and moderate-income (LMI) communities. The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act; P.L. 111-203 ) required the Bureau of Consumer Financial Protection (CFPB) to collect data from small business lenders to identify the financing needs of small businesses, especially those owned by women and minorities. (The CFPB has not yet implemented this requirement.) ", "In addition, various bills addressing the SBL market have been introduced in the 116 th Congress. For example, H.Res. 370 would express \"the sense of the House of Representatives that small business owners seeking financing have fundamental rights, including transparent pricing and terms, competitive products, responsible underwriting, fair treatment from financing providers, brokers, and lead generators, inclusive credit access, and fair collection practices.\" H.R. 3374 would amend the Equal Credit Opportunity Act to require the collection of small business loan data related to LGBTQ-owned businesses. H.R. 1937 and S. 212 , the Indian Community Economic Enhancement Act of 2019, among other things, would require the Government Accountability Office to assess and quantify the extent to which federal loan guarantees, such as those provided by the SBA, have been used to facilitate credit access in these communities.", "This report examines th e difficulty of assessing and quantifying market failures in the SBL market, which consists of small business borrowers (demanders) and lenders (suppliers). It begins by reviewing various ways to define a small business, illustrating that there is no consensus definition of the demand side of the SBL market across government or industry. The focus then shifts to describing the supply side\u00e2\u0080\u0094namely the types of lenders that lend to small businesses, as well as their lending business models and practices. The report subsequently attempts to identify credit shortages in certain SBL market segments (e.g., the market for small loans, loans for businesses with risky or unsuitable collateral, and loans for businesses in underserved communities). It also examines whether market failures associated with SBL pricing can be identified. Finally, the report concludes by briefly discussing the Dodd-Frank Act requirement that the CFPB collect data to facilitate the understanding of SBL market activity. "], "subsections": []}, {"section_title": "The Demand for SBLs: Multiple Definitions of a Small Business", "paragraphs": ["There is no universally accepted definition of a small business. The federal government and industry define small businesses differently in different circumstances. Although factors such as annual earnings, number of employees, type of business, and market share are typically considered, determining the universe of small businesses from which to collect data is difficult without a consensus definition. If a consensus definition existed, then identifying a small business for data-collection purposes would become more feasible\u00e2\u0080\u0094for example, a concise question on a loan application might identify whether the business applying for the loan met certain defined factors making it a small business. Below are examples of the ways regulators, researchers, Congress, and industry have defined small businesses:", "The SBA defines a small business primarily by using a size standards table it compiles and updates periodically. The table lists size thresholds for various industries by either average annual receipts or number of employees. The SBA also defines small businesses differently for different SBA programs. For example, the SBA's 7(a), Certified Development Company/504, and Small Business Investment Company (SBIC) programs have alternative size standards based on tangible net worth and average net income. Academic research frequently uses a firm that has 500 employees or fewer (but does not monopolize an industry) as a proxy measure for a small business. This definition has been adopted by various federal agencies, such as the U.S. Census Bureau, the Bureau of Labor Statistics, and the Federal Reserve. In addition, some research views microbusinesses as a subset of small businesses. A common academic definition of a microbusiness is a firm with only one owner, five employees or fewer, and annual sales and assets under $250,000. Small business definitions in statute also vary. For example, the Internal Revenue Service (IRS) sets different size standards for small businesses under various tax laws. The IRS provides certain tax forms for self-employed taxpayers and small businesses with assets under $10 million. The Patient Protection and Affordable Care Act of 2010 (ACA; P.L. 111-148 ), however, defined a small business in multiple ways (e.g., fewer than 50 full-time employees to avoid ACA's employer shared responsibility provision; fewer than 25 full-time equivalent employees for tax credits, etc.). According to a Federal Deposit Insurance Corporation (FDIC) survey, small and large banks have their own definitions of a small business. Small banks (defined as banks with $10 billion or less in assets) view a small business as one in which the owner \"wears many hats,\" referring to an owner who performs multiple tasks, perhaps because the firm is a start-up or still in its early growth stage. Large banks define small businesses more formally, in terms of annual revenues and sales. "], "subsections": []}, {"section_title": "The Supply of SBLs: Background on Lenders and Industry Underwriting and Funding Practices", "paragraphs": ["This section provides background on small business lenders and underwriting practices. Although small businesses rely on a variety of credit sources that include personal (consumer or mortgage) credit, family, friends, and crowd-funding, they also rely on various types of financial institutions (banks and nonbanks). Financial institutions vary in how they are regulated, the business models they adopt, the types of loans they offer, and the growth stages of the small businesses they serve. These differences are all factors involved when evaluating whether shortages exist in the SBL market. ", "Some lenders are increasingly using business credit scores to assess creditworthiness, and they may deny SBLs due to either a lack of or poor business credit history. The SBA since 2014 has also relied upon credit scores to qualify applicants for its 7(a) loan program. In 2016, the Small Business American Dream Gap Report found that many businesses failed to understand their business scores or even know that they had one. The text box below summarizes the information used to compute credit scores specifically for businesses."], "subsections": [{"section_title": "Types of Small Business Lenders", "paragraphs": ["Because banks have historically been the principal sources for commercial business lending, credit availability is frequently evaluated in terms of banking trends; however, nonbank financial institutions also engage in commercial business and industrial (C&I) lending. The Federal Reserve has reported that smaller firms are more likely than large firms to apply to nonbank lenders for credit. Credit unions have become an important source of small business loans in recent years. Likewise, nonbank fintech lenders have become an important source of credit in market segments that banks may have exited (e.g., business loans of $100,000 or less). "], "subsections": [{"section_title": "Bank Lending to Small Businesses", "paragraphs": ["Because the types of SBLs made by a bank may be related to its size, this section begins with bank size definitions. Small community banks , which may be defined as having total assets of $1 billion or less, are considered a subset of the larger category of community banks; c ommunity banks may be defined as having total assets up to $10 billion. Large banks have total assets that exceed $10 billion. ", "Community banks hold approximately 50% of outstanding SBLs (defined as the share of loans with principal amounts less than $100,000); however, the number and market share of community banks have been declining for more than a decade. Overall, the number of FDIC-insured institutions fell from a peak of 18,083 in 1986 to 5,477 in 2018. The number of institutions with less than $1 billion in assets fell from 17,514 to 4,704 during that time period, and the share of industry assets held by those banks fell from 37% to 7%. Meanwhile, the number of banks with more than $10 billion in assets rose from 38 to 138, and the share of total banking industry assets held by those banks increased from 28% to 84%. 87 The decline in community banks is meaningful because they have historically been one of the largest sources of funding for small businesses. Furthermore, some academic research suggests that, as banks grow, their enthusiasm for lending to starts-ups and small businesses may diminish. In 2015, the Federal Reserve highlighted a decline in the share of community banks' business loan portfolios with initial principal amounts under $100,000, suggesting that these banks were making fewer loans to small businesses."], "subsections": []}, {"section_title": "Credit Union Lending to Small Business Members", "paragraphs": ["Although some credit unions make SBLs, their commercial lending activities are limited. The Credit Union Membership Access Act of 1998 (CUMAA; P.L. 105-219 ) codified the definition of a credit union member business loan (MBL) and established a commercial lending cap, among other provisions. An MBL is any loan, line of credit, or letter of credit used for an agricultural purpose or for a commercial, corporate, or other business investment property or venture. The CUMAA limited (for one member or group of associated members) the aggregate amount of outstanding business loans to a maximum of 15% of the credit union's net worth or $100,000, whichever is greater. The CUMAA also limited the aggregate amount of MBLs made by a single credit union to the lesser of 1.75 times the credit union's actual net worth or 1.75 times the minimum net worth required to be well-capitalized. Three exceptions to the credit union aggregate MBL limit were authorized for (1) credit unions that have low-income designations or participate in the Community Development Financial Institutions program; (2) credit unions chartered for making business loans; and (3) credit unions with a history of primarily making such loans. ", "Generally speaking, the volume of credit union MBL lending is minor in comparison to the banking system. As of September 30, 2015, for example, credit unions reportedly accounted for approximately 1.4% of the commercial lending done by the banking system. A large credit union\u00e2\u0080\u0094one with $10 million or more in assets\u00e2\u0080\u0094might adopt a business lending model comparable to a small community bank or perhaps a midsize regional bank in the commercial loan market. Similar to community banks, approximately 85% of MBLs were secured by real estate in 2013, with some credit unions heavily concentrated in agricultural loans. A larger credit union (e.g., $1 billion or more in assets) could originate larger loans relative to most community banks with assets less than $1 billion. Despite competition with some banks in certain localities, the credit union system is significantly smaller than the banking system in terms of overall asset holdings and, correspondingly, has a smaller footprint in the broader commercial lending market. "], "subsections": []}, {"section_title": "Marketplace (Fintech) Lending", "paragraphs": ["The share of SBLs originated by nonbank fintech lenders has expanded. However, whether the increase in originations reflects an increase in small business lending is unclear because not all fintechs retain their loan originations in their asset portfolios. Fintechs may generate revenues by (1) originating loans and collecting underwriting fees; (2) selling the loans to third-party investors (via adoption of a private placement funding model, discussed in the below text box \"Funding Options for Lenders\"); and (3) collecting loan servicing fees (from either the borrowers or investors). The fintech lending model has attained a competitive edge by streamlining and expediting the more traditional labor- and paper-intensive manual underwriting process by, for example, adopting online application submission and proprietary artificial intelligence for underwriting. For this reason, marketplace lending has been both a substitute (providing credit in some loan markets not served by banks) and a complement (via numerous bank partnerships) to the banking system. If, for example, a fintech partners with a bank and subsequently transfers (sells) its loan originations to a bank's balance sheet, the loan would be reported as a banking asset; such scenarios make it difficult to isolate fintech firms' impact in the broader SBL market. "], "subsections": []}]}, {"section_title": "Access to Funding in Different Growth Stages", "paragraphs": ["This section explains the relationship between the growth stage of a small business and its access to credit. Start-ups and more established firms are likely to have different experiences obtaining business loans. In addition, underwriting requirements and the degree of loan product customization, which vary among lenders, may also be more suitable for borrowers at different stages. The text box at the end of this section summarizes some funding options for lenders that may also influence their underwriting practices and the types of loans they offer."], "subsections": [{"section_title": "Funding for Start-ups", "paragraphs": ["A firm's growth stage matters for credit access. During the initial start-up stage, small businesses typically have little collateral; their financial statements often lack sufficient histories of earnings and tax returns to meet lender requirements; and they typically do not have a performance track record during an economic downturn. As a result, lenders often find it difficult, time-consuming, and costly to determine whether a start-up is creditworthy. For this reason, start-ups often obtain funds from friends and family and drawdowns of personal savings. In addition, start-ups rely on financing from the owner's personal consumer credit products (e.g., credit cards, home equity loans) rather than a traditional commercial loan made by a financial institution. According to the Federal Reserve Small Business Credit Survey, which defines a small business as having $1 million or less in annual revenue, 42% of the small business owners surveyed used their personal credit scores to secure a loan and 45% used both their business and personal credit scores. Furthermore, having a low business credit score was reported as the number one reason why small businesses were rejected for credit, followed by an insufficient credit history. ", "Because many small businesses rely on personal credit history and consumer credit products (rather than business credit), declines in consumer credit availability during economic downturns are also likely to affect small businesses' access to credit. Home equity credit during the 2007-2009 recession declined along with real estate collateral prices, contributing to tighter lending standards. Likewise, any consumer credit cost increase is likely to affect certain small businesses. For example, given the rise in credit card rates over the recession, small businesses that carried large debt balances over several payment cycles might have paid higher borrowing costs relative to a more conventional business loan. Hence, changes in the availability and pricing of consumer credit are likely to have similar effects on consumers and some small businesses, especially start-ups. "], "subsections": []}, {"section_title": "Funding for Later-Stage Small Firms", "paragraphs": ["Once a firm enters into a more advanced growth stage, it may have one or more of the following attributes: ", "a positive cash flow, more than two years of experience, a high business credit score, or achieves $1 million or more in annual revenues. ", "Lenders can subsequently provide more mature businesses with one or more loans secured by their assets, supported by their credit and earnings histories. Accordingly, firms in later growth stages tend to have greater access to SBLs. Nevertheless, small firms still are more likely to obtain credit via relationship lending .", "Two prevailing commercial lending underwriting models are relationship and transactional lending . Small and community banks typically engage in relationship lending (or relationship banking), meaning that they develop close familiarity with their customers (i.e., soft information) and provide financial services within a circumscribed geographical area. Relationship lending provides a comparative advantage for pricing lending risks that are unique, infrequent, and localized. A relationship lender may also prefer being in close geographical proximity to the collateral (e.g., local real estate) borrowers used to secure their loans. The nature of the risks requires the loan underwriting process to be more labor-intensive. ", "By contrast, large institutions typically engage in transactional lending that frequently relies on automated, statistical underwriting methodologies and large volumes. Transactional lending provides a comparative advantage for loan pricing when the borrowers face more conventional business risks (i.e., hard information, such as sales fluctuations, costs of inputs, specific industry factors, and other relevant metrics) rather than idiosyncratic risks that are difficult for an automated underwriting model to quantify. By relying on conventional financial metrics and documentation, transactional lenders do not need to be located near their borrowers to monitor their financial health. Moreover, because underwriting is more automated for these institutions, credit requests are most frequently denied because of (1) weak business performance, (2) insufficient loan collateral, and (3) having too much existing debt outstanding.", "A lender's underwriting model influences the way it defines a small business. As previously mentioned, community banks tend to describe small businesses as those whose owners multitask, meaning that they perform multiple large-scale tasks rather than relying on designated, full-time employees. Small businesses who face these types of challenges are unlikely to provide (in a timely manner) the metrics necessary for automated underwriting and, therefore, tend to be underwritten manually when requesting credit. For manual underwriting, small firms' credit scores are often not essential to evaluate creditworthiness and determine loan terms. Instead, relationship lending allows for more tailoring of loans (e.g., customized lending terms or repayment schedules) to small firms' idiosyncratic needs. Hence, lenders with relationship lending models are likely more well-adapted to underwrite businesses with risks that are unusual and oftentimes difficult to quantify.", "By contrast, large banks use metrics such as the dollar amount of annual sales revenues to categorize a small business. Automated underwriting becomes more amenable for businesses with business credit scores and the ability to provide financial documentation in a timely manner. A bank may offer an unsecured credit card loan to a firm with reliable financial performance records, thus reducing the monitoring costs associated with collateralized lending. Furthermore, firms with standardized financials can obtain more standardized (noncustomized) and competitively priced loans, which can be delivered faster. In general, the average costs to originate (and fund) loans decrease as the volume of loans or loan amounts increase. Lenders with transactional lending models can benefit more (relative to manual underwriters) from such economies of scale because their customer bases include more borrowers with standardized and quantifiable risks.", "Although they tend to rely on different types of credit, both start-ups and well-established firms may be highly dependent on certain lenders that specialize in underwriting loans for certain industries (e.g., maritime, breweries and distilleries, or moving). In addition, some lenders primarily engaged in transactional underwriting may still rely on relationship lending under some limited circumstances. For example, a larger firm may be willing to relax supplementary financial requirements (known as covenants) designed to reduce credit risk for borrowers with whom the firm has an ongoing relationship. This type of action may be considered a form of manual underwriting. "], "subsections": []}]}]}, {"section_title": "Attempting to Identify SBL Market Failures", "paragraphs": ["This section attempts to find evidence of market failures that may be addressed by policy interventions. The specific areas of potential concern are (1) whether the lending industry is providing enough small loans for small businesses; (2) whether certain small businesses lack the type of collateral that lenders require to secure the loans; (3) whether the amount of credit provided in low- and moderate-income (LMI) communities is insufficient; and (4) whether the price of credit is too expensive for small businesses. "], "subsections": [{"section_title": "Shortage of Small Loans", "paragraphs": ["Reviewing the number of small-sized loans may help determine if a SBL market shortage exists, assuming that (1) lenders make small-sized loans to small businesses and (2) an ideal size definition exists. The FDIC provides multiple size definitions of SBLs: ", "loans with origination amounts less than or equal to $100,000; loans with origination amounts less than or equal to $250,000; loans to firms with gross annual revenues less than or equal to $1 million; and loans with origination amounts greater than $250,000 to firms satisfying any amenable small business definition.", "The FDIC's 2018 Small Business Lending Survey of 1,200 banks uses a C&I loan size limit of $1 million as a proxy for small business lending. ", "In 2015, the Federal Reserve specifically highlighted the decline of community banks' business loans with initial principal amounts under $100,000. The current interest-rate environment, which has been at a historic low since the recent recession, may influence this outcome. In a low-interest-rate environment, even relationship lenders may have a greater incentive to increase loan sizes to generate sufficient interest income to cover the costs of providing them. Assuming that the underwriting, servicing, and compliance costs do not vary with loan size, then incurring those fixed costs for larger-sized loans, which may be more likely to generate more interest revenue, may be more economical for lenders. The retreat from the $100,000 loan market might be temporary if interest rates rise in the future. Nonetheless, denials of SBL requests because of a shift in lenders' preferences toward originating larger loans may indicate a market failure.", "Attempting to find a proxy for market failure by examining the availability of SBLs of $100,000 or any size threshold is challenging for the following reasons:", "According to the Federal Reserve's Survey of Lending Terms , at the beginning of 2017, the average C&I loan size for all domestic commercial banks (excluding U.S. branches and agencies of foreign banks) was approximately $575,000; the average business loan size at small domestic banks was approximately $123,000; and the average loan size at large domestic banks was approximately $729,000. By contrast, at the beginning of 2007 (prior to the 2007-2009 recession), the average C&I loan size for all domestic commercial banks was approximately $379,000; the average business loan size at small domestic banks was approximately $117,000; and the average loan size at large domestic banks was approximately $578,000. Despite the 51.7% increase in average C&I loan size for all domestic commercial banks, the average C&I loan size for small commercial banks\u00e2\u0080\u0094which hold approximately 50% of outstanding SBLs\u00e2\u0080\u0094increased by a relatively modest 5.13%. Thus, it is not apparent that the smaller-size SBL market segment has been displaced. If lenders increase the total amount of SBLs made at $250,000 or $1 million, for example, while simultaneously making fewer loans of $100,000, then whether that outcome represents an increase or decrease in overall small business lending is subject to debate. Similarly, the FDIC noted that even the $1 million loan size limit may underestimate the amount of loans made to small firms. Some small firms (with annual revenues under $1 million) may get loans that exceed $1 million. Some SBLs may be secured by residential real estate and counted as mortgages. Conversely, the data collected may overstate SBLs to small businesses. The financial data on bank C&I loans do not report on loans made to a well-defined group of small firms. Instead, the data only report on small loans to all businesses (regardless of size), thus overstating the amount of SBLs, given that large businesses also receive loans of these sizes. The demand for $100,000 SBLs (from community banks) may have decreased. For example, technology firms, which represent many start-ups since the 2007-2009 recession, frequently do not purchase large amounts of inventory. Such firms that are able to operate out of the owners' homes may finance operations with personal savings and credit cards. Conversely, the demand for large loans may have increased . For example, some firms may determine that obtaining larger-size loans during the current low-interest-rate environment is more economical than having to reborrow at some point in the future at higher lending rates.", "In addition to the abovementioned issues, drawing conclusions about SBL shortages based primarily on the lending practices of community banks is premature in the absence of a comprehensive dataset that includes loans made by nonbank lenders. Fintech lenders may be filling the gap in small business lending left by a decline in community banks. Because fintech lenders generally are not required to hold capital against their portfolio loans or can fund via private placement, they may be able to take advantage of opportunities to lend to small businesses that would not generate sufficient profit margins for community banks. Loans retained in fintech lenders' portfolios or funded via private placement, however, are currently not reported to the federal banking regulators. Furthermore, businesses may have multiple loans and often seek credit from multiple lenders. In some cases, small businesses may be able to obtain credit from some lenders and not others, particularly in cases when borrowers inadvertently seek credit from lenders using incompatible underwriting models. In short, the focus on a particular loan size or particular lender type is arguably too narrow for evaluating performance in the SBL market."], "subsections": []}, {"section_title": "Collateral Eligibility for Secured Lending", "paragraphs": ["A market failure may exist if lenders are unwilling to provide loans backed by illiquid collateral (i.e., collateral that cannot be easily liquidated if the borrower fails to repay the loan)\u00e2\u0080\u0094an issue that may disproportionately affect certain small businesses. Banks and credit unions provide business loans via asset-based lending (ABL) guidelines that require firms to pledge assets (e.g., cash, receivables from inventory sales, inventory) as collateral for loans. For ABL purposes, federal banking regulators define a SBL as any loan to a small business (as defined by Section 3(a) of the Small Business Act of 1953 [P.L. 83-163 as amended] and implemented by the SBA) or a loan that does not exceed $2 million for commercial, corporate, business, or agricultural purposes. A bank typically provides fully collateralized short-term loans (under five years) to firms based upon their performance records (e.g., sufficient credit and earnings histories and assets), and it monitors the risks to the collateral that would need to be liquidated (sold) if the small business experienced financial distress. Similarly, credit unions can provide MBLs that comply with NCUA's ABL guidelines. ", "Some firms' inventory, however, may not be ideal for ABL guidelines. Collateral that would be difficult to liquidate without losing too much value may not be acceptable. For example, restaurants (a common type of small business) have leases, cooking equipment (likely to resell for less than its initial sale price), and inventories of food that would not generate the income necessary to recoup losses from a loan default. Restaurants also have difficulty demonstrating the ability to repay a loan over a period of years. For this reason, lenders may not accept a restaurant's collateral as security for a loan.", "In response to this market failure, the SBA administers various programs to facilitate small business credit access (typically loans for up to $5 million and for 5-25 years) for financially healthy firms with collateral or inventory less likely to satisfy ABL requirements. Some borrowers that can demonstrate the ability to repay (e.g., minimum business credit score, management experience, minimum levels of cash flow, some collateral, and personal guarantees by the business owners) still may not be able to obtain affordable credit elsewhere (i.e., from other lenders), which might seem paradoxical. This may be because the firm's inventory does not turn over at a steady pace (e.g., seasonal merchandise), and a lender would face difficulty quickly liquidating the collateral if the firm became financially distressed. For a fee, the SBA may retain the credit risk of a small business loan up to a certain percentage, and the lender assumes the remaining share of credit risk to ensure incentive alignment during underwriting. SBA-guaranteed loans frequently have higher lending rates relative to ABL loans, taking into account the guarantee (and loan servicing) fees charged to borrowers to compensate the federal agency for retaining a majority of the default risk and the additional risk correlated with illiquid collateral. ", "Following the recent recession, the SBA has reported an increase in the dollar amount of guaranteed lending over 2013-2018, which might indicate the ability to mitigate more market failures. If, however, borrowers fail to repay their loans and it is not possible to recover sufficient fees and proceeds from asset liquidations to cover the losses, then the SBA may need additional appropriations from Congress to account for the shortfall. The utility of government intervention in the form of SBA-guaranteed lending, therefore, is debatable. When borrowers are unable to obtain private-sector credit but subsequently repay their SBA loans, that outcome may suggest that a government guarantee helped correct a failure and improve SBL market performance. Conversely, when borrowers are unable to obtain private-sector credit and subsequently default on their SBA loans, that outcome suggests no market failure initially existed in the private SBL market. Monitoring loan performance is useful in distinguishing between a legitimate credit market barrier and an excessive lending risk, but such monitoring can only occur after loans have been originated and guaranteed, which underscores the difficulty of correctly identifying and effectively mitigating market failures. "], "subsections": []}, {"section_title": "SBLs and the Community Reinvestment Act", "paragraphs": ["A market failure may exist if lenders make fewer SBLs in low- and moderate-income (LMI) areas than in higher-income areas. The Community Reinvestment Act of 1977 (CRA; P.L. 95-128 ) was designed to encourage banking institutions to meet the credit needs of their entire communities. The federal banking regulatory agencies\u00e2\u0080\u0094the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency\u00e2\u0080\u0094currently implement the CRA. The regulators issue CRA credits, or points, when banks engage in qualifying activities\u00e2\u0080\u0094such as mortgage, consumer, and business lending; community investments; and low-cost services that would benefit LMI areas and entities\u00e2\u0080\u0094that occur within a designated assessment area. These credits are then used to issue each bank a performance rating. The CRA requires these ratings be considered when banks apply for charters, branches, mergers, and acquisitions, among other things.", "Under the CRA, the banking regulators award CRA credit to certain SBLs (including small farm loans), provided these loans meet both (1) a size test and (2) a purpose test. Small businesses that receive an SBL must either (1) meet the size eligibility standards for the SBA's Certified Development Company/504 or SBIC programs or (2) have gross annual revenues of $1 million or less to qualify for CRA credit. The loans must also promote community and economic development, as explained in the federal bank regulators' guidelines, to qualify for CRA credit.", " Figure 1 shows the distribution of SBLs for $1 million or less that were eligible for CRA credit over the 2009-2017 period across census tracts grouped into four relative income categories as measured against median family income (MFI). For comparison, the last column shows the median percentages of total SBLs over the entire period. The median figures are as follows: 5.2% in the low-income tracts (< 50% of MFI), 16.7% in the moderate-income tracts (50% \u00e2\u0089\u00a5 MFI < 80%), 40% in the middle-income tracts (80% \u00e2\u0089\u00a5 MFI <120%), and 37.9% in the upper-income tracts (120% \u00e2\u0089\u00a5 of MFI). This figure does not capture all CRA business lending because SBLs exceeding $1 million may also receive CRA credit. (In addition, the data in this figure represent a subset of lending activity that occurs in LMI tracts because large C&I loans, as well as consumer loans, may qualify for CRA credit.) Furthermore, changes in the number of SBL or CRA loans could indicate a change in the percentage of CRA credit awarded to SBLs, a change in total SBL originations, or both. ", "Despite data limitations, the trends suggest that the share of SBLs in LMI areas has remained steady at approximately 20% for almost a decade. Whether that share can increase further\u00e2\u0080\u0094which would suggest that credit may not be accessible for small businesses located in LMI areas\u00e2\u0080\u0094is difficult to determine. For example, the demand for small business credit in LMI areas may be lower relative to higher-income areas. The number of potential businesses and lending opportunities in LMI areas may be comparatively lower if a greater percentage of small businesses locate in areas where their prospective customers would have sufficient incomes to sustain demand for the products or services they offer. In short, the data on SBLs awarded CRA credit do not provide a way to measure the demand for SBLs. There is no information on the number of businesses located in LMI areas that applied for loans and were subsequently rejected, making it difficult to conclude that a failure exists in the SBL market in LMI areas. Accordingly, Congress has called for the collection of data from small business lenders, discussed in more detail in the section entitled \" CFPB Collection of Small Business Data .\" "], "subsections": []}, {"section_title": "Small Business Loan Pricing", "paragraphs": ["The pricing of SBLs\u00e2\u0080\u0094specifically interest rates and fees\u00e2\u0080\u0094is another consideration for evaluating the small business credit market's overall performance. A small business might not seek credit if it is too expensive. A small business might determine that it cannot afford an offer for credit if more of its financial resources (e.g., net income) must be devoted to paying interest than reinvesting in operations. When loan prices are set substantially higher than the risks posed by borrowers and the costs to acquire the funds used to make the loans, the pricing is not considered competitive. In economics, a competitive price is one that multiple suppliers would offer to buyers for the same good or service. A competitive price is often the best or lowest that a buyer can find for a good or service and, therefore, can be used as a benchmark price when comparison shopping to evaluate other offers. ", "Determining whether SBLs are competitively priced is challenging. A common market failure is imperfect information, or information asymmetry \u00e2\u0080\u0094when one party in a transaction has more accurate or more detailed information than the other party. This imbalance can result in inefficient outcomes. In the case of the small business credit market, the risks taken by small business owners are not standardized and vary extensively across industries and geographical locations. It is difficult for lenders to determine competitive loan pricing without sufficient comparable businesses from which to obtain reasonable estimates of expected losses and predict cash flows. Similarly, it may be difficult for small businesses to determine whether a loan offer is competitive without sufficient comparable business loans. ", "Relationship lending, as previously discussed, can alleviate an SBL market failure that arises from the inability to price credit risks. Relationship lending allows a lender to collect more information about a borrower's financial behaviors, which may result in less stringent collateral requirements and greater access to credit at a lower price over time.", "Disclosure laws are another way to potentially resolve this type of market failure. In consumer credit markets, the Truth-In-Lending Act of 1968 (TILA; P.L. 90-301) requires lenders to disclose the total cost of credit to consumers in the form of an annual percentage rate (APR). TILA is designed to ensure borrowers are aware of their loan costs. For some consumer products, regulators require lenders to provide greater disclosures about product features that could result in borrowers paying excessive rates and fees, especially in cases where they are unaware of assessed penalty fees and interest-rate increases. Effective disclosures arguably mitigate the incentive for lenders to charge substantial markups above funding costs and borrowers' risks, thus resulting in lower loan prices. ", "Although TILA applies to mortgage and consumer loans, it does not apply to business loans. For this reason, legislative proposals have been introduced in Congress to extend TILA disclosures to small firms. For example, H.R. 5660 , the Small Business Credit Card Act of 2018, would extend TILA disclosures to firms with 50 or fewer employees. Whether TILA protections for business credit would result in more competitive business loan terms is unclear. First, evidence suggests that TILA protections do not necessarily encourage consumers to shop for lower borrowing rates despite having more standardized (e.g., collateral) lending risks relative to businesses, suggesting it is unlikely TILA protections for small business would encourage them to shop around for credit. Second, some small businesses may already rely on certain types of credit to which TILA does apply. For example, some businesses obtain credit via personal credit cards and home equity loans, to which TILA disclosure requirements already apply. In addition, many lenders already disclose APRs on their business credit cards. "], "subsections": []}]}, {"section_title": "CFPB Collection of Small Business Data", "paragraphs": ["The Dodd-Frank Act requires financial institutions to compile, maintain, and report information concerning credit applications made by women-owned, minority-owned, and small businesses. This data collection is intended to \"facilitate enforcement of fair lending laws\" and to \"enable communities, governmental entities, and creditors to identify business and community development needs and opportunities of women-owned, minority-owned, and small businesses.\" The Dodd-Frank Act authorizes the CFPB to collect various data from financial institutions about the credit applications they receive from small businesses, including the number of the application and date it was received; the type and purpose of loan or credit applied for; the amount of credit applied for and approved; the type of action taken with regard to each application and the date of such action; the census tract of the principal place of business; the business's gross annual revenue; and the race, sex, and ethnicity of the business's principal owners. ", "On May 10, 2017, the CFPB announced that it was seeking public comment about the small business financing market, including relevant business lending data used and maintained by financial institutions and the costs associated with the collection and reporting of data. Specifically, the CFPB requested information on five categories: \"(1) small business definition, (2) data points, (3) financial institutions engaged in business lending, (4) access to credit and financial products offered to businesses, and (5) privacy.\" With respect to definition, the CFPB sought comment on the best definition of a small business and the burden of collecting data under that definition. In addition, the CFPB requested information on what data financial institutions should be required to collect and report, and which institutions should be exempted. The CFPB also requested feedback on product types offered to small businesses because the variety of terms and loan covenants that can be used to tailor loans, in addition to the interest rate, are part of the overall cost (price) of credit. The comment period closed on September 14, 2017. The CFPB has not yet issued a proposed rule, but it recently announced that such a rule was part of its spring 2019 regulatory agenda. ", "Evaluating the small business lending market's overall performance (in terms of market failures) would be easier with less fragmented, more complete data. Collecting data, however, poses challenges for the CFPB and industry lenders. First, the Equal Credit Opportunity Act prohibits the collection of race and gender information, thus increasing the difficulty for the CFPB to implement a rule that would require such reporting. In addition, the collection and reporting of SBL data would likely need to be converted to a digital format. The fixed costs to implement digital reporting systems could be relatively larger for small financial institutions than for large institutions. Large institutions have more customers (to justify the initial expense) and offer a more limited range of standardized products. Depending upon the collection requirements eventually implemented, some institutions might decide to offer more standardized, less tailored financial products to reduce reporting costs. It is possible that more financial institutions may require minimum loan amounts (e.g., exit the loan market delineated as $100,000 and below) to ensure that the loans generate enough revenue to cover the costs to fund and report data. "], "subsections": []}, {"section_title": "Conclusion", "paragraphs": ["From an economics viewpoint, the ability to evaluate the performance of various SBL market segments\u00e2\u0080\u0094specifically whether (1) a small business credit shortage exists or (2) pricing for loans to small businesses is significantly above the lending risks and funding costs\u00e2\u0080\u0094is extremely challenging. Policymakers have been interested in whether market failures that impede small business access to capital exist and, if so, what policy interventions might address those market failures. However, it is difficult to discern which policy interventions would be most well-suited to addressing potential small business credit market failures without better data about the market itself. Arriving at more definitive conclusions about the availability and costs of SBLs might be possible with information such as the size and financial characteristics of the businesses that apply for loans, the types of loan products they request, the type of lenders to whom they applied, and which applications were approved and rejected. Collecting the necessary data, however, presents both legal and cost challenges."], "subsections": []}]}}
{"id": "R45978", "title": "The Outdoor Recreation Economy", "released_date": "2019-10-22T00:00:00", "summary": ["Congress plays an overarching role in shaping outdoor recreation throughout the nation through legislation and oversight. As Congress continues to debate outdoor recreation issues\u00e2\u0080\u0094including provision of federal resources, planning efforts, and funding\u00e2\u0080\u0094data on the size, distribution, and relative importance of the outdoor recreation economy may inform these debates. Both historical and recent legislative and executive efforts centered on outdoor recreation have identified the economic importance of outdoor recreation. In 2016, Congress passed the Outdoor Recreation Jobs and Economic Impact Act ( P.L. 114-249 ), which directed the Bureau of Economic Analysis (BEA) in the Department of Commerce to create an account that would measure the outdoor recreation economy. BEA released the first official Outdoor Recreation Satellite Account (ORSA) statistics in September 2018 and updated them in September 2019.", "According to the ORSA statistics, in 2017, the current-dollar value added of the outdoor recreation economy was $427\u00c2 billion, or 2.2% of gross domestic product (GDP). ORSA statistics show that supporting activities, such as construction and travel and tourism expenses, accounted for approximately half of value added. Conventional outdoor recreation activities, as defined by BEA, accounted for another 30.7% of real outdoor recreation gross output; o ther recreation accounted for 19.3%. The outdoor recreation economy grew by 3.9% in 2017, faster than the 2.4% growth for the overall U.S. economy, and has grown approximately 9.9% since 2012. Real gross output, real compensation, and real employment all grew faster in the outdoor recreation economy than in the overall economy in 2016. BEA reports that the \"arts, entertainment, recreation, accommodation, and food services industry\" was the largest contributor to the outdoor recreation economy in 2017, accounting for $112.9 billion of current-dollar outdoor recreation value added, followed by retail trade. These two sectors were also the largest industries included in the ORSA statistics for both compensation ($67.3 billion) and employment (2.1 million) in 2017. BEA released prototype statistics for states, which found that Hawaii, Montana, Maine, Vermont, and Wyoming had the five highest proportions of state GDP generated from outdoor recreation in 2017.", "In addition to the ORSA statistics, which are measured for the nation as a whole or for individual states, federal agencies sometimes measure the specific economic impact of federal lands. According to some studies, visitors to federal lands generated $55 billion in value added in FY2012 and $53.9 billion in value added in FY2016 (FY2017 dollars). Differences in methods, data, and assumptions mean any comparison between these figures and the ORSA statistics can be highly general at best.", "It is difficult to precisely measure the total amount of outdoor recreation that Americans engage in, due to differences in data collection, measurement, definitions, and other factors between sources. One source, the National Survey on Recreation and the Environment (NSRE), measures the number of people who engage in 17 different outdoor activities and how often they do so. According to the NSRE, over 194 million respondents (approximately 82% of respondents) engage in the most popular form of outdoor recreation (visiting developed sites) in a given year. Americans report engaging in the most popular surveyed activity, viewing nature, over 32.4 billion times in a given year, although this activity is a major outlier. Rates of participation in surveyed activities vary substantially and can depend on geographic location, proximity to recreation resources, demographic factors, and other influences.", "In FY2017, lands managed by the four federal land management agencies (the Bureau of Land Management, Fish and Wildlife Service, Forest Service, and National Park Service) had approximately 596 million visits. Lands managed by other federal agencies (the Bureau of Reclamation, National Oceanic and Atmospheric Administration, and United States Army Corps of Engineers) also had significant visitation. Visits to the lands of these other agencies sometimes exceeded visits to lands managed by the four federal land management agencies. Although publicly owned lands (including federal lands) generally have the greatest amount of recreation visits, private lands can dominate certain types of recreation, particularly in the eastern United States."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["Congress plays an overarching role in shaping outdoor recreation throughout the nation through legislation and oversight. Congress's role in outdoor recreation resources, policies, and programs often involves the agencies that manage recreation resources on federal lands and waters. However, Congress also has supported crosscutting legislative, analytic, and planning efforts dedicated to outdoor recreation broadly, and it has established programs that facilitate recreation on nonfederal lands. Legislation, hearings, and congressional reports have indicated the significance of outdoor recreation economic activity as a decisionmaking consideration in many contexts, not just those involving federal lands. As Congress continues to debate outdoor recreation issues\u00e2\u0080\u0094including provision of federal resources, planning efforts, and funding\u00e2\u0080\u0094data on the size, distribution, and relative importance of the outdoor recreation economy may inform these debates. "], "subsections": []}, {"section_title": "Outdoor Recreation Jobs and Economic Impact Act", "paragraphs": ["In April 2016, the Secretary of the Interior announced that the Department of the Interior would sign a memorandum of understanding with the Department of Commerce to undertake a feasibility study to analyze outdoor recreation's impact on the U.S. economy. The Secretary noted that \"credible data on the tangible economic benefits of public lands\" would be a valuable resource for stakeholders, including Congress, and that the study would count the contributions of the outdoor recreation economy in a \"comprehensive and impartial\" way. Later that year, Congress explicitly authorized these efforts through passage of the Outdoor Recreation Jobs and Economic Impact Act. In addition to ensuring the availability of economic data on outdoor recreation, the act ensured methodological uniformity with other statistical activities of the Bureau of Economic Analysis (BEA) that analyze the economic impact of private industries.", "The act directed the Secretary of Commerce, acting through BEA, to assess and analyze the outdoor recreation economy of the United States and its contributions to the economy generally. The act required the Secretary to consider employment, sales, and contributions to travel and tourism, in addition to any other items the Secretary considered appropriate. Consequently, BEA developed the Outdoor Recreation Satellite Account (ORSA), an account using the same data and methods as BEA's gross domestic product (GDP) statistics. ", "BEA released the first ORSA prototype statistics for comment in February 2018, and it released the first official ORSA statistics in September 2018. BEA released the most recent ORSA statistics on September 20, 2019. Congress has indicated general approval of the ORSA and directed BEA to develop regional statistics in future years; BEA included state-level prototype statistics in the 2019 release. The House Appropriations Committee also directed the Department of Commerce, in coordination with the agencies of the Federal Recreation Council, to continue to refine the account and to report on the feasibility of identifying amounts allocated by the federal government to outdoor recreation efforts. "], "subsections": []}, {"section_title": "The National Outdoor Recreation Economy", "paragraphs": [], "subsections": [{"section_title": "About the Outdoor Recreation Satellite Account", "paragraphs": ["BEA prepares the ORSA statistics as required by the Outdoor Recreation Jobs and Impact Act. The most recent ORSA statistics, released in September 2019, measured the period from 2012 to 2017. ", "The ORSA \"measures the size of the outdoor recreation economy and the link between outdoor recreation and the broader U.S. economy.\" BEA constructed the ORSA by isolating outdoor recreation spending and production from the broader industries and categories that BEA already tracked. BEA compiles data into industry accounts (e.g., retail trade, manufacturing, construction, and others) and uses all this data to calculate gross domestic product (GDP). The ORSA is a satellite account in that it isolates and combines the parts of many individual industries that are related to outdoor recreation. For example, as described by BEA, existing industry accounts show \"the production of all apparel, whereas the ORSA shows the production of apparel used specifically for outdoor recreation activities, such as wetsuits and hiking boots.\" ", "The ORSA divides outdoor recreation activity into core activities and supporting activities. Core activities include the production and purchase of goods and services used directly for outdoor recreation, such as equipment, fuel, concessions, and fees. Supporting activities are defined as goods and services that facilitate access to outdoor recreation activities, such as travel and tourism expenses, local trips, construction, and government expenditures that support outdoor recreation (including local, state, and federal spending). BEA also organizes its statistics using conventional and broad views of outdoor recreation. The conventional activities include \"all recreational activities undertaken for pleasure that generally involve some level of intentional physical exertion and occur in nature-based environments outdoors,\" such as camping, fishing, hiking, and hunting. Other activities include additional activities undertaken for pleasure that occur outdoors that may not meet the conventional definition (i.e., do not require intentional physical exertion or occur in a nature-based setting), such as outdoor concerts and festivals and games and sports fields. The two categories of activities can be combined to generate a broad view of the outdoor recreation economy.", "BEA calculates the ORSA from the same data used to calculate GDP broadly. \u00c2\u00a0As such, the ORSA is directly comparable to other BEA products, including other satellite accounts, like those for arts and cultural production. In addition, the estimates used to create the ORSA follow internationally recognized standards for national accounting, including creating GDP, value added, and other measures. Thus, in theory, the ORSA results can be compared to other measures of GDP, gross output, and value added, although differing assumptions, data, and methods may influence to what degree other measures are equivalent to ORSA statistics. As described above, the ORSA combines data from many different BEA industries; thus, although very general comparisons can be made, direct comparisons risk double-counting. For example, comparing the size of the ORSA to the size of the apparel industry would be inaccurate, because some value added from the apparel industry is included in the ORSA. "], "subsections": []}, {"section_title": "Outdoor Recreation Satellite Account Estimates", "paragraphs": ["According to the ORSA statistics, in 2017, the current-dollar value added of the outdoor recreation economy was $427 billion. The outdoor recreation economy accounted for 2.2% of GDP. As shown in Figure 1 , supporting activities, such as construction and travel and tourism expenses, accounted for approximately half of outdoor recreation value added in 2017, approximately $213.9 million current dollars. Conventional outdoor recreation accounted for 30.7% of value added. Other recreation accounted for 19.3%. ", "BEA organizes its accounts by industry. BEA reports that the arts, entertainment, recreation, accommodation, and food services industry was the largest contributor to the outdoor recreation economy in 2017, accounting for $112.9 billion of current-dollar outdoor recreation value added. The second-largest industry in 2017 was retail trade, accounting for $95.7 billion of current-dollar value added. Figure 2 provides a full breakdown of contribution to value added by industry. ", "BEA reported that the outdoor recreation economy generated approximately 5.1 million jobs in 2017. The arts, entertainment, recreation, accommodation, and food services industry was the largest industry included in the ORSA for both compensation ($67.3 billion current dollars) and employment (2.1 million) in 2017. Retail trade was the second-largest industry for both compensation ($49.8 billion current dollars) and employment (1.6 million) in 2017. ", "The largest amount of value added in 2017 from an individual conventional outdoor recreation activity (as defined by BEA) came from boating/fishing, accounting for approximately $21\u00c2\u00a0billion in current-value dollars, or approximately 5% of value added from outdoor recreation (see Figure 3 ). The activities that generated the most value added are not necessarily the most popular, according to an FS participation survey. For example, although equestrian activities were among the six largest activities in terms of value added, an FS survey found that equestrian activities were among the three smallest activities for number of participants (see \" National Outdoor Recreation Participation \" for more information). ", "Although much of the economic activity tracked by BEA to calculate value added can be linked to a specific activity (see \" About the Outdoor Recreation Satellite Account \"), some economic activity cannot. For example, multiuse apparel and accessories (such as backpacks, bug spray, and other items) that can be used for many activities accounted for approximately $48.6 billion in current dollars, or over 11% of value added. ", "In real terms, the outdoor recreation economy grew 3.9% between 2016 and 2017, faster than the 2.4% growth for the overall U.S. economy. Real gross output, compensation, and employment all grew faster in the outdoor recreation economy than in the overall economy in 2017. Between 2012 and 2017, the outdoor recreation economy grew by approximately 9.9%. ", "In 2017, BEA released prototype statistics on the percentage of each state's GDP from outdoor recreation (see Figure 4 ). BEA's preliminary results found that Hawaii, Montana, Maine, Vermont, and Wyoming had the five highest proportions of state GDP from outdoor recreation. However, other measures of economic importance vary considerably by state. For example, California, Florida, and Texas had the highest total outdoor recreation value added. Wyoming, Hawaii, and Alaska and Maine (tied) had the highest percentage of state employment from outdoor recreation. The relative importance of recreation in individual states depends on the size of the outdoor recreation economy, the state's economy generally, and the state's employment and compensation patterns. It is unclear to what extent these estimates may change if BEA adjusts its methods for calculating state statistics. Official state statistics are scheduled for release in fall 2020.", "Other Estimates of Economic Activity", "In addition to the estimates created by BEA, researchers, advocacy groups, and industry associations create estimates of the outdoor recreation economy. Many groups estimate impacts of individual activities, sectors, geographic areas, or outdoor recreation areas (e.g., angling, winter snow sports, a given watershed, or a given state). The broadest of these is the Outdoor Industry Association's (OIA's) Outdoor Recreation Economy report, which has been produced annually since 2006. Prior to publication of the ORSA, OIA estimates were sometimes cited to gauge the size of the outdoor recreation economy as a whole. ", "According to OIA's 2017 report, the outdoor recreation economy generated $887 billion in consumer spending, the majority of which ($702 billion) was trip and travel spending, including airfare, lodging, fuel, groceries, tickets, lessons, guides, and other unspecified expenses spent anywhere away from home. OIA estimates that the outdoor recreation economy directly supports 7.6 million jobs. OIA also estimates that the outdoor recreation economy generates $65.3 billion in federal tax revenue and $59.2 billion in state and local tax revenue.", "OIA's estimates of the size of the outdoor recreation economy, and other estimation efforts, cannot be directly compared to the ORSA. This may be due to differences in method, assumptions, measurement, or statistics reported. Specifically, the OIA reports measure consumer spending and tax revenue, which are not part of the ORSA and are not directly comparable to any statistic reported in the ORSA. OIA's estimate of jobs (7.6 million) is higher than BEA's estimate of jobs (5.2 million), but it is unclear to what extent the data reported are similar in measurement or whether they represent the same year.", "BEA excluded exports and imports in its calculation, and these figures may be captured in OIA's statistics. BEA states that external reports on the outdoor recreation economy that include \"activities with a high share of spending on imported goods and services (such as apparel) will likely have higher estimates than the ORSA.\" BEA also states that other reports may include spending on items not used for outdoor recreation (for example, bicycles used for commuting). In general, because other reports do not give the same statistics as the ORSA, and due to methodological differences, it is unclear whether (and to what degree) the ORSA and other reports may or may not be in disagreement, despite apparent large differences in results. ", "The results of the ORSA and OIA reports have certain broad commonalities. For example, both reports find that large amounts of economic activity are driven by activities requiring relatively expensive purchases, such as vehicles (for example, boating or off-highway vehicle activities). Both reports also find that expenses related to travel, such as lodging, airfare, and food away from home, constitute large shares of the economic activity generated by outdoor recreation. "], "subsections": []}, {"section_title": "National Outdoor Recreation Participation", "paragraphs": ["According to one source, measures of national trends in outdoor recreation participation are based primarily on the National Survey on Recreation and the Environment (NSRE), a population-based survey conducted by the U.S. Forest Service (FS), sampling all areas of the country and participation in 17 outdoor activities. The NSRE measures both participation (the number of respondents who report engaging in the activity at least once over the course of a year) and consumption (the number of times the respondent indicates engaging in the activity). The survey does not estimate the total number of participants in outdoor recreation generally, only participation rates in the 17 activities studied. The most recent NSRE was completed for the period 1999-2009, and an update is ongoing. ", "The NSRE estimated that, for the activities considered, a maximum of 194 million people (visiting developed sites) and a minimum of 8 million people (primitive skiing) participated every year (see Table 1 for additional details). FS estimated that approximately 82% of NSRE respondents participated in visiting developed sites, the activity with the highest participation rate. In terms of the frequency with which participants engaged in each activity (shown as \"Activity Days\" in Table 1 ), FS estimated that participants engaged in the most popular activity (viewing nature) over 32.4 billion times; this activity, however, is a major outlier, and participants engaged in the next several most popular activities between 8.3 billion and 1.8 billion times. ", "Between 1999 and 2009, FS estimated that participation in nature-based outdoor recreation generally increased. The number of U.S. participants in the surveyed activities increased by 7.1% over this period. Certain activities, such as those oriented toward viewing and photographing nature, off-highway vehicle activities, and several physically challenging activities (e.g., kayaking, snowboarding, surfing) had relatively large increases in participation compared to the average over this period. ", "More people overall participate in outdoor recreation in the eastern United States than in the western United States, in large part because most of the U.S. population resides in the East. However, participation rates (measured as the number of participants per hundred people) are higher in the West for all activities except hunting and fishing. In addition to this broad trend, demographic factors, such as population size, age, gender, race, ethnicity, education, and income, are correlated with the rate of outdoor recreation. For example, relative to the general population, people engaging in hunting and fishing are more likely to be rural residents, and people engaging in skiing and snowboarding are more likely to be urban residents. Availability of and proximity to recreation settings also are highly correlated with the rate of outdoor recreation participation. ", "The amount of recreation that occurs on lands of differing ownership\u00e2\u0080\u0094for example, federal, state, local, and private\u00e2\u0080\u0094likely varies widely by activity and location (see section on \" Recreation Visits to Federal Lands \" for further discussion of recreation on federal lands). ", "Approximately 60% of lands in the United States are privately owned, and approximately 28% of the total land area is federally owned; the remainder is in a mix of state, local, tribal, and other ownerships. Over 92% of federal land is located in 11 western states and Alaska. The uneven distribution of federal land between the eastern and western United States influences what lands provide outdoor recreation opportunities in different regions of the United States, particularly given that, for some federal land management agencies, at least half of visits to the properties they administer come from people who live within 50 miles. ", "FS found that private lands were a more important recreation setting in the East, with the total number of recreation visits on private lands in the East nearly four times the number in the West. In the West, respondents reported that they spent the majority of activity days in all surveyed activities on publicly owned lands of any kind. In contrast, respondents in the East spent the majority of activity days in some surveyed activities on private lands and some on publicly owned lands. "], "subsections": []}]}, {"section_title": "Outdoor Recreation on Federal Lands", "paragraphs": ["The ORSA statistics measures the state of the outdoor recreation economy generally. From the standpoint of public lands management, there is often congressional interest in how the government's provision of recreational opportunities translates into economic activity in communities around federal recreation resources. Legislation, hearings, and congressional reports have indicated the significance of this economic activity as a policy consideration in contexts involving federal lands. In the past decade, federal agencies and interagency groups have conducted studies measuring economic contributions specific to federal lands. Because these studies examine multiple agencies under a single framework, and because they report value added, the results are comparable to one another. In the sense that value added is a consistent concept, they also may be generally comparable to other measures of value added, such as the ORSA results, although differences in methods, data, and assumptions mean any comparison can be, at best, highly general. ", "According to these studies, in FY2017 dollars, visitors spent approximately $54 billion in the local economies of federal recreation areas in FY2012 and $49.8 billion in FY2016, generating $55 billion in value added in FY2012 and $53.9 billion in value added in FY2016 (see Table 2 ). The studies indicate that outdoor recreation on federal lands directly supported 880,000 jobs in FY2012 and 826,000 jobs in FY2016. ", "The authors of the studies in Table 2 limited their studies of visitor spending to areas within 50 miles of the federal recreation site. The authors state that this limitation provides a conservative estimate. Although research suggests that many visits to federal recreation sites do indeed originate from nearby, the nationwide estimates discussed above (see \" The National Outdoor Recreation Economy \") indicate that a large proportion of economic activity derives from travel-related expenses. If the travel-related portion of economic activity related to federal sites is not being captured in these results because that activity occurs more than 50 miles from the federal recreation site, these studies may undercount the true value. Similarly, results of national studies indicate that activities requiring major purchases (e.g., vehicles) account for a large proportion of the outdoor recreation economy. If visitors do not report such expenditures, it also may result in undercounting. The agencies used different methods to measure visitation and economic activity; thus, estimates may be only generally comparable. "], "subsections": [{"section_title": "Federal Lands' Recreation Resources and Uses", "paragraphs": ["Federal lands comprise approximately 640 million acres in the United States, about 28% of the total land area. Approximately 92% (573 million acres) of federal lands are located in 11 western states and Alaska, with over one-third (224 million acres) of all federal land in Alaska alone. The Forest Service (FS) and the Bureau of Land Management (BLM) manage the majority of federal land. Nearly all federal land is open and available to the public for recreation.", "Although there is considerable overlap in the recreation opportunities across agencies, some agencies could be considered to have dominant niches. FS and BLM offer a range of opportunities, from camping, picnicking, and birdwatching in developed settings to activities in undeveloped backcountry, motorized recreation, and others. Opportunities on Fish and Wildlife Service land emphasize wildlife, fish, and birds. The National Park Service (NPS) is associated with \"iconic natural and cultural resources.\" Opportunities on land owned by the Bureau of Reclamation, National Oceanic and Atmospheric Administration, and U.S. Army Corps of Engineers (USACE) tend to center on water and underwater resources. Although some agencies' resources are used mostly by locals, all agencies have resources with regional, national, or international markets. "], "subsections": []}, {"section_title": "Recreation Visits to Federal Lands", "paragraphs": [" Table 3 presents information from various sources on recreation visits to federal lands from FY2012 to FY2017. In general, these statistics are not comparable to the NSRE estimates given above due to differences in measurement. The statistics indicate that, in general over this period for agencies with complete data, FS and NPS had the most visits. These statistics underscore that size and location are imperfect predictors of recreation resource use; USACE, for example, has higher visitation than several agencies that manage more federal land area. These differences may be due to proximity to population centers, the types of resources available on different lands, and other factors. "], "subsections": []}]}]}}
{"id": "R45922", "title": "Tax Issues Relating to Charitable Contributions and Organizations", "released_date": "2019-09-19T00:00:00", "summary": ["The federal government supports the charitable sector by providing charitable organizations and donors with favorable tax treatment. Individuals itemizing deductions may claim a tax deduction for charitable contributions. Estates can make charitable bequests. Corporations can deduct charitable contributions before computing income taxes. Further, earnings on funds held by charitable organizations and used for a related charitable purpose are exempt from tax. In FY2019, projected tax subsidies for charities, not including the value of the tax exemption on earnings of charities or the estate tax deduction, totaled $51.8 billion. If investment income of nonprofits were taxed at the 35% corporate tax rate in 2015, revenue collected is estimated at $26.7 billion (this amount excludes religious organizations). The cost of deducting bequests on estates is estimated at $4 billion to $5 billion.", "Charitable organizations include both operating charities (including religious institutions) and organizations that tend to hold assets and make grants to operating charities, most notably private foundations, but also donor-advised funds (DAFs) and supporting organizations. The tax code treats different types of organizations differently. For example, foundations and certain supporting organizations have minimum payout requirements, while DAFs do not. Limits on charitable giving also differ across gifts to different types of organizations.", "Changes in the tax revision enacted in late 2017, popularly known as the Tax Cut and Jobs Act (TCJA; P.L. 115-97 ), while not generally aimed at charitable deductions, reduced the scope of the tax benefit for charitable giving. A higher standard deduction and the limit on the deduction for state and local taxes caused more individuals to take the standard deduction, as opposed to itemizing deductions. As a result, many individuals who were able to deduct charitable contributions no longer claim this itemized deduction. Other changes exempted more estates from the estate tax, eliminating the benefit of deducting charitable contributions in these cases. Concerns have arisen that these changes are expected to lead to a reduction in charitable contributions.", "In 2018, charitable contributions were estimated at $427.7 billion, or 2.1% of gross domestic product (GDP). Charitable gifts come from four sources: individual contributions (accounting for 68%), foundations (accounting for 18%), bequests (accounting for 9%), and corporations (accounting for 5%). In 2018, estimates suggest approximately 54% of individual contributions are expected to have received a tax subsidy.", "Comparing giving levels in 2017 and 2018 provides some insight into the possible impacts of the 2017 tax revision on charitable giving and the charitable sector. Compared to 2017, 2018 contributions from individuals and bequests declined as a percentage of GDP (by 6% and 5%, respectively), while corporate contributions were virtually unchanged and foundation contributions rose by 2%. In 2017, an estimated 80% of individual contributions benefited from the tax subsidy for itemized deductions. Surveying the literature can also provide some insight regarding the effect of tax subsidies on charitable giving. Based on statistical estimates of the responsiveness of individual giving to tax subsidies, a decrease in individual giving of around 3% to 4% might be expected from the 2017 tax revision. Limitations in the data make the effect on estates difficult to estimate, but it could be a decrease of up to 8%; the small share of bequests in total giving, however, would lead even that effect to reduce overall charitable giving by less than 1%.", "A number of policy options could be considered with respect to the tax treatment of charitable giving or the tax treatment of charitable entities. The charitable deduction could be modified in ways that could extend charitable giving incentives to taxpayers not itemizing deductions, or with the intent of making charitable giving tax incentives more effective (inducing more giving for each dollar of lost federal tax revenue). There are also options related to the type of treatment of certain types of gifts, such as appreciated property or charitable miles driven. Some proposals have also been made to address concerns about aspects of certain charitable organizations, such as payouts by DAFs and university endowments. Some proposals would reverse certain changes made by the 2017 tax revision to the unrelated business income tax (UBIT) or impose administrative reforms."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["The federal government supports the charitable sector by providing charitable organizations and donors with favorable tax treatment. A primary source of support is allowing a tax deduction for charitable contributions made by individuals who itemize deductions, by estates, and by corporations. For charitable organizations, earnings on funds held by such organizations are exempt from the federal income tax. ", "The tax revision enacted in late 2017, popularly known as the Tax Cuts and Jobs Act ( P.L. 115-97 ), made some temporary changes that, while not specifically aimed at charitable deductions, reduced the scope of the tax benefit for charitable giving. These changes have caused more individuals to take the standard deduction, rather than itemizing deductions, and exempted more estates from the estate tax, eliminating the benefit of deducting charitable contributions in these cases. These changes are expected to lead to a reduction in charitable giving. There were other more minor changes, some enhancing the charitable deduction and some imposing more taxes on charitable organizations. ", "The report begins with a description of the charitable sector and tax provisions affecting the sector. The following sections discuss the magnitude of charitable deductions, including sources and beneficiaries, with historical data. The report then discusses the incentive effects of the deductions and the consequences for charitable giving, including potential effects of the 2017 tax revision. The report concludes with a discussion of policy options. "], "subsections": []}, {"section_title": "The Charitable Sector", "paragraphs": [], "subsections": [{"section_title": "Definitions and Overview", "paragraphs": ["The focus of this report is the charitable sector . Charities are one type of tax-exempt organization. Specifically, they are organizations with 501(c)(3) public charity status. As illustrated in Figure 1 , most 501(c) organizations are 501(c)(3) \"religious, charitable, and similar organizations.\" Charitable organizations fall within the broader nonprofit sector . In public policy discussions, the term nonprofit sector is often intended to include all organizations with federal tax-exempt status. ", "The Internal Revenue Code (IRC) describes approximately 30 types of tax-exempt organizations. Other types of tax-exempt organizations, in addition to charities, include social welfare organizations, labor unions, trade associations, chambers of commerce, fraternal societies, and political organizations. Within the nonprofit tax-exempt sector, the bulk of organizations are exempt from tax under IRC Section 501(c)(3) (they are \"religious, charitable, or similar organizations\"). Most of the tax-exempt sector's financial activity also takes place in 501(c)(3) organizations. ", "Every 501(c)(3) organization is classified as either a \"public charity\" or \"private foundation.\" Public charities have broad public support and tend to provide charitable services directly to the intended beneficiaries. Private foundations often are tightly controlled, receive significant portions of their funds from a small number of donors or a single source, and make grants to other organizations rather than directly carry out charitable activities. 501(c)(3) organizations are presumed to be private foundations unless they qualify for public charity status based on support and control tests."], "subsections": [{"section_title": "IRS Filing Requirements for 501(c)(3) Charities and Foundations", "paragraphs": ["In 2015, there were 1,088,447 registered 501(c)(3) public charities. Of this total, 314,744 were reporting public charities, and filed a Form 990. Form 990 collects information about the organization's finances, assets, and activities. Organizations with gross receipts of $50,000 or more are generally required to file a Form 990 or Form 990-EZ. Private foundations file a Form 990-PF. Smaller organizations are not required to file an annual return, but may be required to file an annual electronic notice, the \"e-postcard.\" Churches and other qualifying religious organizations are exempt from the annual information-reporting requirements. The informational returns (i.e., Form 990s) of exempt organizations are public, unlike individual and corporate income tax returns. ", "In addition to the information return, there are situations when tax-exempt organizations must file an income tax return. For example, tax-exempt organizations are subject to tax on income from business activities unrelated to their exempt purpose. Organizations subject to this tax, known as the unrelated business income tax (UBIT), must file a tax return using the Form 990-T. Two recent changes to UBIT became effective in 2018 (see the shaded box \"UBIT Changes for 2018\" below). Additionally, tax-exempt organizations must generally pay the same employment taxes (i.e., withhold income and payroll taxes of their employees) as for-profit employers. Finally, an organization's activities might require it to file other returns, such as an excise tax return."], "subsections": []}]}, {"section_title": "Current Tax Treatment", "paragraphs": ["Federal statute includes multiple tax preferences for nonprofit and charitable organizations. Donations to charitable organizations may be tax deductible, which subsidizes charitable giving. Additionally, nonprofit and charitable organizations are generally exempt from tax on most income, including investment income. ", "Some of the tax benefits are considered \"tax expenditures\" by the Joint Committee on Taxation (JCT), meaning the JCT provides an estimate of the amount of forgone revenue associated with the provision. Other tax benefits confer financial benefits to the sector, although the value of those benefits is not regularly estimated by the JCT. ", "In addition to the federal tax benefits discussed here, there may also be state and local tax benefits associated with nonprofit or charitable status. For example, in addition to income tax benefits that mirror federal income tax benefits, state and local governments may provide property or sales tax exemptions."], "subsections": [{"section_title": "The Tax Deduction for Charitable Contributions", "paragraphs": ["The primary tax expenditure for charities is the charitable deduction. Individual taxpayers who itemize their deductions can\u00e2\u0080\u0094subject to certain limitations\u00e2\u0080\u0094deduct charitable donations to qualifying organizations. The JCT estimated that in 2019, approximately 13% of taxpayers will itemize deductions. Corporations may also be able to deduct charitable contributions.", "Organizations qualified to receive tax-deductible charitable contributions include public charities and private foundations; federal, state, or local governments; and other less common types of qualifying organizations. Contributions to civic leagues, labor unions, most foreign organizations, lobbying organizations, political contributions, and contributions directly made to individuals are not deductible as charitable contributions. ", "There are limits on the deduction for charitable contributions for both individuals and corporations. For individuals, the deduction for gifts of cash or short-term capital gain property given to a public charity; private operating foundation; or federal, state, or local government is 60% of the taxpayer's adjusted gross income (AGI) (these limitations are summarized in Table 1 ). Gifts of cash or short-term capital gain property to private nonoperating foundations or certain other qualifying organizations are generally limited to 30% of AGI. ", "The contribution of appreciated assets has particularly beneficial treatment, as the value of most appreciated assets can be deducted without including the capital gains in income that would be subject to tax. Thus, gifts of appreciated property are generally subject to lower deduction limits. Donations of long-term capital gain property to public charities; private operating foundations; or federal, state, or local government are limited to 30% of AGI, while contributions to private nonoperating foundations or certain other qualifying organizations are generally limited to 20% of AGI. Individuals are allowed to carry forward charitable contributions that exceed the percentage limits for up to five years. ", "Corporate charitable contributions are generally limited to 10% of a corporation's taxable income. For a corporation, transfer of property to a charity might qualify as a deductible charitable contribution or a deductible business expense, but cannot be both. Like individuals, corporations are allowed to carry forward charitable contributions that exceed the percentage limits for up to five years. "], "subsections": [{"section_title": "Valuation Rules for Charitable Contributions", "paragraphs": ["There are several rules related to the valuation of charitable contributions (also summarized in Table 1 ). For cash contributions, the value is simply the amount donated. However, when property is donated, the charitable deduction may be limited to the fair market value of the property, the taxpayer's tax basis in the property, or some other amount. Generally, as noted above, taxpayers can deduct the full fair market value of long-term capital gain property. Taxpayers may also be able to deduct the full fair market value of tangible personal property donated to a charity whose use of the property is related to their tax-exempt purpose. ", "In some cases, the amount that can be deducted is limited to the donor's tax basis in the property. Specifically, deductions for contributions of property may be limited to basis for contributions of inventory or short-term capital gain property, contributions of tangible personal property that are used by a recipient organization for a purpose unrelated to the recipient's exempt purpose, or contributions to private foundations (other than certain private operating foundations). Donations of appreciated stock to private nonoperating foundations are not subject to this limit, and may be deducted using fair market value. Contributions of patents or other intellectual property may also be limited to the donor's basis in the property. Deductions are generally limited to the fair market value of the donated property, if the fair market value is less than the tax basis."], "subsections": []}, {"section_title": "Special Rules for Certain Types of Contributions", "paragraphs": ["There are a number of special rules related to donations of certain types of property, not all of which are discussed here. Special rules provide an enhanced deduction for C corporations contributing inventory to 501(c)(3) organizations for the care of the ill, the needy, or infants. There is also an enhanced deduction for businesses' contributions of food inventory. There are special rules associated with donations of vehicles, intellectual property, and clothing and household items. Another special provision allows for tax-free distributions from individual retirement accounts (IRAs) for charitable purposes. The IRA distribution provision is especially beneficial to nonitemizers because it excludes the distribution from income, which is equivalent to receiving the distribution and making a charitable deduction.", "Generally, a charitable deduction can be claimed only if the donor transfers their full interest in the property to a qualified recipient organization. This partial interest rule generally prohibits charitable deductions for contributions of income interests, remainder interest, or rights to use property. There is an exception to the partial interest rule for conservation contributions. Conservation contributions allow for charitable donations of conservation easements, where land, natural habitats, open space, or historically important sites are protected from development without the owner having to give up ownership of the property. Additionally, special rules increase the limit for appreciated property contributed for conservation purposes to 50% of AGI for individuals. For farmers and ranchers, including individuals and corporations that are not publicly traded, the limit is increased to 100% of income. Conservation contributions that exceed the 50% or 100% of income giving limits can be carried forward for 15 years, instead of the usual 5 years.", "Individuals can take a deduction for donations of property in the future with rights to the income stream for themselves or others, through a charitable remainder trust. In a charitable remainder trust, assets are transferred to a trust and a deduction taken for the present value of the future donation. The donor or other designated individual can receive a stream of income from the trust, for example, until death. Appreciated assets can be donated to the trust, which is tax exempt and pays no tax on the gain from the sale of assets."], "subsections": []}]}, {"section_title": "Recent Changes to Charitable Giving Tax Incentives", "paragraphs": ["Due to the 2017 tax revision (TCJA), the tax expenditure associated with the charitable deduction has fallen. Under TCJA, however, there were limited direct changes in tax policies affecting charities. The one change to the charitable deduction expanded the deduction, raising the AGI limit for individual cash contributions to public charities from 50% to 60% through 2025. However, other changes that reduced the number of itemizers, such as the expanded standard deduction and the limit on state and local tax deductions, reduced the number of itemizers and reduced the marginal incentive to give to charity for many taxpayers. ", "At times, Congress had passed legislation eliminating the percentage of AGI limit for charitable contributions made for disaster relief purposes. Recently, the Disaster Tax Relief and Airport and Airway Extension Act of 2017 ( P.L. 115-63 ) eliminated the limit for charitable contributions of cash for Hurricane Harvey, Irma, or Maria disaster relief. The Bipartisan Budget Act of 2018 ( P.L. 115-123 ) eliminated the limit for charitable contributions of cash associated with the 2017 California wildfires. "], "subsections": []}, {"section_title": "Charitable Tax Expenditures", "paragraphs": ["JCT's tax expenditure budget includes several charitable tax expenditures: the deduction for charitable giving, tax expenditures for certain tax-exempt bonds, and the exclusion for ministers housing allowance. The JCT provides charitable deduction tax expenditure estimates separately for contributions to 501(c)(3) educational institutions and health organizations. In FY2019, the tax expenditure for charitable deductions associated with giving to organizations other than education institutions or health organizations was $32.6 billion, while the tax expenditures for giving to educational institutions and health organizations were $8.2 billion and $4.3 billion, respectively (see Table 2 ). ", "Tax expenditures for the charitable deduction have recently declined. For FY2019, it is estimated that the charitable deduction will be associated with $45.1 billion in forgone revenue (see Figure 2 ). This is down from the estimated $61.0 billion in forgone revenue for FY2017, and $58.1 billion for FY2018. The decline in the charitable deduction tax expenditure is the result of (1) fewer taxpayers itemizing deductions following the 2017 tax revision ( P.L. 115-97 ); and (2) lower tax rates following the 2017 tax revision. ", "Most of the forgone revenue associated with the charitable deduction is from individual giving, as opposed to corporate giving. The charitable deduction does not reflect forgone revenue associated with giving from bequests (which is discussed further below). ", "There are also revenue effects associated with allowing nonprofit educational institutions and hospitals to issue tax-exempt bonds, and for the provision exempting the housing allowance of ministers from tax. Tax expenditures for charities in FY2019 are reported in Table 2 . "], "subsections": []}, {"section_title": "The Tax Treatment of Investment Income", "paragraphs": ["For charities, most investment income is exempt from tax (there is a tax on the investment income of certain endowments, which is discussed below). The JCT does not consider the exemption of charities' investment income from tax a tax expenditure, and thus does not provide an estimate of the forgone revenue associated with this tax treatment.", "Data from IRS Form 990 informational returns can be used to understand the magnitude of 501(c)(3)s' exemption for investment income. In 2015, charities had $32.6 billion in investment income, $35.8 billion in net capital gains (mostly from the sale of securities), $4.0 billion in net rental income, and $3.9 billion in royalties. If this income had been subject to a 35% income tax (the corporate income tax rate in 2015), $26.7 billion in revenue would have been raised. This number does not include religious organizations.", "IRS data for 2015 reported assets of $3.8 trillion held by charities, with about $1 trillion of that amount in land, buildings, and equipment. Private foundations had $0.8 trillion in assets, with $0.7 trillion in investment assets. A significant share of investment assets held in charities is held in university endowments, with an estimated value of $0.6 trillion in FY2018. Assets do not include assets of nonreporting religious organizations."], "subsections": [{"section_title": "Private Foundations", "paragraphs": ["Most private foundations differ from operating charities in that they often have a single donor or small group of donors. In addition, while a gift to a foundation is deductible for income (and estate and gift) tax purposes, the donated funds are not immediately used for active charitable purposes. Rather, funds are invested and donations are often made to charitable organizations from earnings that may allow the corpus of the foundation to be maintained and grow. Contributions to foundations benefit from both the charitable deduction, when the contribution is made, as well as the exemption on investment earnings, as earnings accrue on invested contributions over time. ", "To address concerns that foundations could retain earnings and grow indefinitely, and because foundations are often closely tied to a family or specific group of donors, tax laws require a minimum payout rate (5% of assets) and restrict activities that may benefit donors. The tax code imposes taxes and/or penalties for self-dealing, for failure to distribute income on excess business holdings, for investments that jeopardize the charitable purposes, and for taxable expenditures (such as lobbying or making open-ended grants to institutions other than charities). ", "Private foundations are subject to a 2% excise tax on their net investment income. However, the rate is reduced to 1% if qualifying charitable distributions are increased. In FY2017, excise taxes on private foundations generated $643.6 million in revenue."], "subsections": []}, {"section_title": "Donor-Advised Funds (DAFs) and Supporting Organizations", "paragraphs": ["Donor-advised funds (DAFs) allow individuals to make a gift to a fund in a sponsoring organization. Sponsoring organizations are charities that are allowed to receive tax-deductible donations. The gift is irrevocable, as in the case of a gift to a foundation or any other charity. The donor does not legally oversee the payment of grants to charities from the fund, which is determined by the sponsoring organizations. Donors make recommendations for grants (hence donor advised), and there is general agreement that these recommendations determine, with few exceptions, the contributions. DAFs, like private foundations, can accumulate assets and earn a return tax free, but they are not subject to many of the restrictions on foundations, including the minimum payout rate. ", "These funds have been growing rapidly, in part through funds set up by major financial institutions. According to the National Philanthropic Trust, in 2017 there were 463,622 individual DAFs, with contributions of $29.2 billion, assets of $110.0 billion, and recommended grants of $19.1 billion. The DAFs were managed by 53 national charities, 604 community foundations, and 345 single-issue charities. In 2018, more than 200,000 donors had accounts at Fidelity Charity, with grants of over $5.2 billion.", "Supporting organizations are organized for the benefit of public charities, and they provide grants to these charities. There are several types of supporting organizations (DAFs are themselves supporting organizations). Type I and Type II organizations support a single charity and are supervised or controlled by the supported charity (with Type I similar to a parent-subsidiary relationship and Type II similar to a brother-sister relationship). A Type III organization supports more than one charity and falls into the category of a functionally integrated supporting organization, or FISO (either through performing certain activities directly or exercising governance and direction) and nonfunctionally integrated (non-FISO). A Type III non-FISO has a number of additional restrictions, including a requirement to distribute the greater of 85% of net income or 3.5% of nonexempt-use assets. "], "subsections": []}, {"section_title": "College and University Endowments", "paragraphs": ["A college or university endowment fund\u00e2\u0080\u0094often referred to simply as an endowment\u00e2\u0080\u0094is an investment fund maintained for the benefit of the educational institution. University endowments have been the subject of some scrutiny, in part because of the juxtaposition of growing endowment sizes with increasing tuition at private universities. The 2017 tax revision, P.L. 115-97 , added a 1.4% excise tax on net investment income of nonprofit colleges and universities with assets of at least $500,000 per full-time student and more than 500 full-time students. The revenue gain was projected to be $0.2 billion per year."], "subsections": []}]}, {"section_title": "Tax-Exempt Hospitals", "paragraphs": ["For private nonprofit hospitals to be eligible for tax-exempt status, to be able to receive tax-deductible charitable contributions, and to be eligible for tax-exempt bond financing, they must meet a community benefit standard . Health care is not by itself a stated objective in the tax provisions determining charitable (501(c)(3)) status. Generally, the community benefit standard requires the hospital to show that it has provided benefits that promote the health of a broad class of persons in the community. One way hospitals may demonstrate that they have met the community benefit standard is by providing charity care (free or discounted services to charity patients). Other types of community benefit include participation in means-tested programs such as Medicaid; providing health professions education, conducting health services research, providing subsidized health services, funding community health improvement, and donating cash or in-kind contributions to other health-related community groups. Community-building activities (such as for housing and the environment) may qualify if a link to community health can be shown. The IRS does not count shortfalls associated with Medicare or bad debts from those not qualifying for charity care as part of the community benefit standard. ", "The Patient Protection and Affordable Care Act (PPACA; P.L. 111-148 ) added additional requirements for 501(c)(3) tax-exempt hospitals. Specifically, 501(r) requires these hospitals to conduct community health needs assessments, establishing a written financial assistance policy, limit charges to financial-assistance-eligible patients to amounts billed to insured patients, and not engage in extraordinary billing collections until an effort is made to determine eligibility for financial assistance. Tax-exempt hospitals report their community benefit actions on their Form 990. In 2014, total net community benefit expenses were $63.0 billion (8.84% of expenses); of that amount, $12.7 billion was for charity care (1.78% of expenses) and $26.3 billion for unreimbursed means-tested costs (3.7%, almost entirely Medicaid). One study estimated the cost of all federal, state, and local subsidies for tax-exempt hospitals (income, sales, and property tax benefits) to be $24.6 billion in 2011. Another study using 2012 data found that nonprofit hospitals' community benefit expenses were 7.63% of total expenses, while the value of nonprofit hospitals' tax exemption was 5.87% of total expenses. The study also evaluated incremental community benefits, or community benefits beyond those provided by for-profit hospitals. Incremental community benefits provided by nonprofit hospitals were estimated to be 5.71% of expenses in 2012. "], "subsections": []}, {"section_title": "Tax Treatment of Charitable Bequests", "paragraphs": ["Charitable donations made by an estate are generally referred to as charitable bequests . Decedents potentially subject to the estate tax can deduct charitable contributions. Estates are effectively subject to a 40% rate on amounts above the statutorily exempted value, which was set at $11.18 million per decedent for 2018. The estate tax exemption was doubled temporarily through 2025 by the 2017 tax revision, P.L. 115-97 . ", "Transfers to a spouse at death are also excluded from the estate tax, and any unused exemption can be added to the exemption of the second spouse. Because of the large exemption, a small share of estates are subject to the estate tax, although a significant share of charitable contributions made by bequests appear on estate tax returns. The increase in the exemption decreased the amount of bequests that receive a benefit from the charitable deduction.", "The data from decedents dying in 2013 showed $18.1 billion of bequests reported on all estate tax returns, with $10.2 billion reported on taxable returns. Some of the bequests reported on nontaxable returns may benefit from the tax deduction, indicating a range of revenue costs from $4.0 billion to $7.2 billion. While there are no data available for the effects after the 2017 tax revision, estimates suggest a revenue cost of around $4 billion to $5 billion. "], "subsections": []}]}]}, {"section_title": "Data Describing the Charitable Sector", "paragraphs": ["The following sections describe the charitable sector. Specifically, data are presented on the size of the sector and the sector's revenues (including charitable contributions). Since the potential effect of the 2017 tax revision on charitable giving is a policy issue of interest, changes in charitable giving between 2017 and 2018 are examined in more detail."], "subsections": [{"section_title": "The Size of the Charitable Sector", "paragraphs": ["For 2015, 501(c)(3) organizations reported $3.8 trillion in total assets ($2.3 trillion in net assets) and total revenues of $2.0 trillion (or approximately 11% of GDP). Most of IRS Form 990 filers are small (assets of less than $500,000) or medium-sized (assets of $500,000 up to $10 million) charities (41.2% and 47.2%, respectively). Large organizations, those with at least $10 million in assets, were 11.6% of Form 990 filers. Assets and revenues, and to a lesser extent contributions, are concentrated in these larger organizations. While large organizations are 11.6% of charitable organizations filing Form 990s, 93.1% of assets are held by, 87.1% of revenues are received by, and 71.5% of contributions are made to these large organizations. ", "Charitable contributions are a small share of revenues of 501(c)(3) organizations reporting to the IRS, accounting for 12.9% of revenue in 2015 ( Figure 4 ). The primary source of revenue (73.1%) is program services, such as tuition paid by college and university students, payments for hospital stays, and entry fees. Charitable organizations' revenue sources depend on the type of charity, with charitable giving, for example, being much less important for fee-for-service organizations such as educational institutions and hospitals. (These data represent those filing Form 990 returns. This excludes nonfiling religious organizations, which are likely to rely more on contributions.) "], "subsections": []}, {"section_title": "Magnitude, Sources, and Beneficiaries of Charitable Giving", "paragraphs": ["In absolute terms, charitable giving has increased over time. In 2015, total giving was $375.9 billion, including data not represented in the IRS data (primarily gifts to religious organizations). When considering the magnitude of the charitable sector in the economy, one metric is charitable giving as a share of GDP. In 2018, estimated total giving was $427.7 billion, or 2.1% of GDP.", "Charitable giving since 1978 has averaged 1.9% of GDP. However, as seen in Figure 5 , this average obscures variation over time and across business cycles. The smallest share of charitable giving occurred in 1995 (1.6% of GDP) while the largest share occurred five years later in 2000 (2.2% of GDP). ", "Private contributions to charitable organizations come from four different sources: individuals, foundations, bequests, and corporate giving. As shown in Figure 6 , individuals were the largest source of charitable giving in 2018 and totaled $292.1 billion, or 68.0%. As estimated subsequently in this report, 54% of that giving received a tax benefit from itemized deductions. Grants from foundations were the second-largest source of charitable contributions in 2018 at ($75.9 billion, or 17.7%), followed by charitable bequests ($39.7 billion, or 9.3%) and corporate giving ($20.1 billion, or 4.7%). ", "Changes in giving from different sources are consistent with expectations following the changes in incentives for giving resulting from the 2017 tax revision. As illustrated in Figure 7 , individual giving as a percentage of GDP fell by 6.0% between 2017 and 2018. Individual giving was expected to fall as (1) fewer taxpayers itemized deductions; and (2) lower marginal tax rates reduced the incentive to give. Taxpayers may also have shifted the timing of gifts, making gifts late in 2017 instead of 2018 to take advantage of larger deductions in 2017, when tax rates were higher and more taxpayers itemized deductions. ", "Giving from bequests as a percentage of GDP fell by 4.9% between 2017 and 2018. The share of bequests on taxable estate tax returns declined following the tax law changes. In contrast, there was little change in corporate charitable giving as a percentage of GDP (an increase of 0.3%). For corporations, the large change in the corporate tax rate might have reduced the incentive to give. Giving from foundations as a percentage of GDP increased by 2.0% between 2017 and 2018. Foundation giving was less likely to be directly affected by the tax policy changes between 2017 and 2018 (although contributions to foundations and future foundation giving might be affected). ", "Religious charities receive the largest share of charitable giving, receiving 29.1% of total giving in 2018 ( Figure 8 ). Education ranked next, at 13.7%, with human services 12.1%, gifts to foundations 11.8%, and health 9.5%. Other beneficiaries each accounted for less than 9.5%.", "Giving to most beneficiaries as a percentage of GDP fell between 2017 and 2018, as shown in Figure 9 , with the exception of gifts to international affairs. Giving to public-society benefit organizations as a percentage of GDP fell by 8.4%. Giving to religious organizations as a percentage of GDP fell by 6.4%, while giving to education as a percentage of GDP fell by 6.2%. Gifts to foundations as a share of GDP experienced a larger decline that other categories, falling by 11.5%. ", "Giving to religion as a percentage of GDP and as a share of total giving has declined over time, as shown in Figure 10 . Giving to most other beneficiaries has increased as a share of GDP, with the largest increases (in absolute terms) in giving to foundations and education. The decline in giving to religion from 2017 to 2018 may have just been part of a continuing trend, while the decline in giving to foundations may have reflected effects of the estate tax, or have been part of regular fluctuations in giving to foundations. "], "subsections": []}]}, {"section_title": "The Incentive Effects of Tax Benefits for Charitable Contributions and Organizations", "paragraphs": ["To understand how much charitable giving is induced by tax incentives, it is important to understand how donors respond to tax incentives. Individuals give for a variety of reasons (e.g., altruism); research indicates that tax benefits may also influence charitable giving. Tax benefits encourage charitable giving by reducing the cost of giving, with the federal government effectively subsidizing charitable giving. ", "For ordinary donations during donors' lifetimes (inter-vivos giving) and for donors not claiming the standard deduction, their marginal income tax rate determines the incentive effect by lowering the cost of giving. Donors who do not claim itemized deductions do not receive an incentive effect from the tax code. For gifts of appreciated property, subsidies are affected by the capital gains tax rate as well, regardless of whether itemized deductions are used. For bequests, the tax rate is the estate tax rate, but only a small fraction of estates are subject to tax. Corporate giving is potentially affected by the corporate tax rate. ", "Taxes also have income effects, which may be important for wealthy donors who donate large shares of income or leave large shares of their estates to charity; taxes reduce charitable giving by reducing disposable income. Deductions for charitable contributions not only provide a tax incentive for donating or leaving bequests, but also have an income effect that increases giving."], "subsections": [{"section_title": "Tax Subsidies for Charitable Giving, Inter-Vivos Giving", "paragraphs": ["Taxpayers who itemize their deductions face a lower cost of giving than other taxpayers. Prior to the 2017 tax revision, the majority of individuals' charitable giving was deducted. For the most recent year of tax data available, 2016, charitable deductions of $233.9 billion were reported on tax returns, although $12.3 billion of that number was on returns with no ultimate tax liability. According to Giving USA , in that same year individuals donated $279.4 billion, indicating that approximately 80% of charitable deductions benefited from some subsidy in that year. Taxpayers with $500,000 of adjusted gross income or more, representing slightly under 1% of returns, accounted for 38% of charitable contributions. Taxpayers with $100,000 to $500,000 of income, slightly over 16% of returns, accounted for 38% of itemized charitable contributions as well. ", "The amount of giving that benefits from tax reductions through itemized deductions is expected to have declined substantially in 2018 due to provisions of the 2017 tax revision. (Actual data on charitable deductions claimed from the IRS based on 2018 tax returns are not yet available.) This legislation is expected to decrease the share of itemizers due to a significant increase in the standard deduction and restrictions on itemized deductions, most importantly a $10,000 cap on deductions for state and local taxes. The Tax Policy Center (TPC) estimated the share of households reporting a benefit from deducting charitable contributions would fall from 21% to 9.1%. (This share reflects the share of the entire population, including nonfilers.) ", "Data from the TPC that estimate itemized charitable contributions can be used to estimate the share of individual charitable contributions that would be claimed as itemized deductions. For 2018, TPC estimates that itemized charitable deductions would have been $212.1 billion without the 2017 tax revision, with itemized deductions for charitable giving being an estimated $143.1 billion as a result of the 2017 tax revision. In other words, charitable contributions itemized on individual income tax returns are estimated to have fallen by about one-third as a result of the 2017 tax revision. Assuming a similar level of itemized deductions in 2018 under prior law as reflected in actual data for 2016 (80%), the share of charitable contributions itemized would be projected at 54%. ", "The tax savings from charitable contributions reflecting both the decline in itemizing and the small decline in tax rates also fell by about a third. The steepest declines were in the middle and upper middle of the income distribution (the benefit fell by 62% in the fourth quintile, while the benefit fell by 1.4% in top 0.1%). The TPC reported that taking into account all returns (including those not itemizing before the tax change), the average marginal tax rate across all donations fell from 20.7% to 15.2%."], "subsections": [{"section_title": "Gifts of Cash", "paragraphs": ["About two-thirds of charitable contributions in 2016 were in cash, and high-income taxpayers have a smaller share of cash contributions (47% in 2016 for taxpayers with income greater than $1 million). The price of charitable contributions for itemizers is (1-t), where t is the taxpayer's tax rate at which contributions are deducted. For example, if the individual is in a 25% tax bracket, every dollar the taxpayer donates and deducts from their income reduces their taxes by 25 cents. Hence, the tax price is 0.75, indicating that a taxpayer has to give up 75 cents for each dollar of charitable contributions. That is, if the taxpayer in that bracket contributes a dollar, he or she saves 25 cents in taxes and loses 75 cents that could have been used for other purposes. ", "Charitable giving is concentrated at higher income levels, and the effect of the incentive depends on the tax rate. Consider the top tax rate (applicable for taxpayers with very high income levels), which has fluctuated substantially since the income tax was introduced in 1913, beginning at rates as low as 7% and rising as high as 92%. Starting in the mid-1960s, the top rate was 70% for many years (although it rose slightly with the Vietnam War surcharge). Beginning with legislation in 1981, the top tax rate has been reduced substantially. Effective in 1982, it was reduced from 70% to 50%. In 1986, it was further reduced to 28%. Rate increases occurred in 1990 and 1993, decreases in 2001, increases in 2013, and decreases in 2017. Table 3 compares the magnitude of those past changes in tax price. Importantly, as marginal tax rates fall, the tax price of giving increases\u00e2\u0080\u0094in effect, the subsidy from the charitable deduction is reduced. Conversely, when marginal rates increase, the tax price of giving falls, and the subsidy of the charitable deduction increases. There were very large percentage changes in the 1981 and 1986 tax cuts, with much smaller changes subsequently. The effect of the top rate change in 2017 is relatively small compared to these earlier changes. ", "The TPC estimated that across all taxpayers the tax price rose by 6.9%, to reflect the change in itemized deductions as well as the small change in tax brackets. "], "subsections": []}, {"section_title": "Gifts of Appreciated Property", "paragraphs": ["The value of donating property differs from the value of cash donations; most property is appreciated property such as stocks and other property gaining value. Taxpayers with incomes of $500,000 or more account for 69% of these contributions. Currently, taxpayers are allowed to deduct the entire cost of donated property, without paying the capital gains tax. Since the cost of a dollar of consumption from sale of an appreciated asset is 1/(1-at g ), where t g is the capital gains tax rate and a is the share of value that would be taxed as a gain, the tax price of charitable giving of appreciated property is (1-t)/(1-at g ). The tax price effects in Table 3 reflect tax prices of assets with no appreciation. Table 4 shows the effects at the top rates for cases with appreciation of 50% of the value and 100% of the value. An appreciation approaching the full value would occur with assets that have been held for a long time and had a faster growth rate.", "Although changes in capital gains tax rates in isolation can affect the price of giving (for example, causing an increase in the price of giving by up to 10% in 1997), they sometimes offset the effects of a change in ordinary rates (as in 1986) and at other times exacerbate the effects. As with cash gifts, however, the largest changes to the tax price of appreciated property occurred in 1981 followed by 1986, where the price of charitable giving increased; the largest price decrease remains in 1993. "], "subsections": []}]}, {"section_title": "Tax Incentives for Bequests", "paragraphs": ["A small share of estates are subject to the estate tax, and that share has been further reduced by the 2017 tax revision, which doubled the estate tax exemption. According to the TPC, 0.2% of deaths were subject to the estate tax before the change, which fell to 0.1% after the increase in the exemption. ", "The latest IRS estate tax data are for decedents dying in 2013, before enactment of the 2017 tax revision. These data showed $18.1 billion of bequests reported on all estate tax returns, with $10.2 billion reported on taxable returns. The amount potentially benefiting from the estate tax deduction presumably fell between those two values, as the charitable deduction could have resulted in some estates not being taxable. Giving USA reported bequests of $26.3 billion in 2013 and $28.1 billion in 2014; thus, between 30% and 53% of bequests received the benefits of estate tax deductions. ", "The tax price of a bequest is (1-t e ), where t e is the estate tax rate. The capital gains tax rate does not apply because the capital gain on assets passed on at death is not recognized. The current estate tax rate is 40%. The estate tax rate has fluctuated over time. From the post-World War II period to 1976, the top rate was 77%, when it was reduced to 70%. In 1981, the rate was reduced over a three-year period to 55% from 1982 to 1984, an increase in tax price of 50%. The estate tax rate was lowered from 55% to 45% over the period from 2002 to 2007, a 22% price increase. The estate tax was repealed for 2010, an 82% increase in the tax price (although individuals were retroactively allowed to pay an estate tax at 2011 rates of 35% to avoid a provision that would have required future capital gains to be recognized on sale by heirs, called carryover basis ). For those electing the 2011 tax rate, the price increase was 18%. The tax rate was reduced to 35% temporarily for 2011 and 2012; in 2013, the rate was set at 40%, a decrease in the tax price compared to the temporary rates of 8%. Aside from the year of repeal in 2010, the largest price increase was 50%, and significant price changes were fewer than for inter-vivos gifts. ", "The benefits of the subsidy for bequests are also affected by the exemption, and the recent increases in exemptions make the tax subsidy less applicable\u00e2\u0080\u0094reducing the tax incentive for charitable bequests. Nevertheless, for bequests reported on estate tax returns, these bequests are concentrated in large estates. The 2013 estate tax data report only estates of $5 million or more, since smaller estates would be exempt, but 57% of contributions on these estates were in estates of $50 million or more, and 74% were reported for estates of $20 million or more. For taxable estates, 78% were reported on estates of $50 million or more, and 92% were reported on estates of $20 million or more. Thus, it appears that most charitable contributions that benefited from the tax subsidy would continue to do so under the new exemption level. "], "subsections": []}, {"section_title": "Incentives for Corporate Giving", "paragraphs": ["Corporate giving is a relatively small share of total giving. In 2013, the last year for which tax data were available, tax statistics indicated total contributions of $15.9 billion, while Giving USA reported $20.05 billion in 2018. ", "The incentive effects for corporate giving depend on the motivation. If charitable contributions are an expenditure for purposes of advertising and public relations, the deduction is like any other cost, and the corporate tax rate does not matter. If the contribution increases the welfare of managers, the donation reduces profit, and the corporate tax matters. ", "To the extent that the corporate tax price affects charitable giving, the tax price has changed infrequently. In 1981, the corporate tax rate was 46%. The 1986 legislation phased the rate down over two years to 34%, increasing the tax price by 22%. In 1993, the corporate tax rate increased to 35%, for a small tax price reduction of less than 2%. The corporate tax rate stayed at that level, until 2018, when the rate was reduced to 21%, for a tax price increase of 25%. "], "subsections": []}, {"section_title": "Accumulating Earnings Tax Free", "paragraphs": ["Numerous opportunities are available for adding to the tax benefit of a charitable contribution by accumulating earnings that are not subject to tax. In effect, the deduction for the charitable contribution is provided before it is actually spent on charitable activity. An example illustrates this point. If the interest rate is 10%, a dollar donated today and spent a year later by a tax-exempt charity will provide $1.10 in resources. If a taxpayer is subject to the 37% top tax rate on the earnings, the amount available to give to charity after paying taxes is $1.063. In the tax-exempt case, the tax price of giving is $0.61, while the tax price of giving in the taxable case is $0.63. The longer the asset is held by a tax-exempt entity, the greater the benefit to the charitable organizations: after 10 years tax-exempt accumulation leads to $2.69, while the amount available after paying tax is $1.84.", "There are a number of ways to accumulate funds without paying taxes on earnings, most notably through foundations, although they are required to pay out a minimum amount each year in charitable purposes. Other methods of delaying the payment of taxes is through private charities' endowment funds and supporting organizations, and well as DAFs, none of which is subject to payout restrictions. A DAF can act, in many ways, as a private foundation but without many of the restrictions of a private foundation. Taxing these earnings directly at the corporate rate would reduce the tax incentive for those subject to high individual marginal tax rates, but not eliminate it, given the lower corporate rate now in place. "], "subsections": []}]}, {"section_title": "The Aggregate Effect of Tax Incentives on Giving", "paragraphs": ["As previously discussed, the effect of changes in tax incentives on giving depends on the behavioral response to changes in tax rates. The measure is a price elasticity, which is the percentage change in charitable contributions divided by the percentage change in the tax price (in the case of individual cash giving, the tax price is one minus the tax rate). ", "Given the large changes in tax price that have occurred over time, it is useful to examine some historical data. Figure 5 above shows the pattern of giving as a percentage of GDP over the period 1978-2018. There is little indication of significant shifts in giving due to tax rate changes. Contributions after 1981, despite pronounced tax price increases at higher incomes, remained relatively stable as a percentage of GDP. The small peak around 1986 is generally attributed by most researchers to a temporary rise in deductions reflecting a timing shift as tax cuts for 1987 and 1988 were preannounced in the Tax Reform Act of 1986 (TRA86; P.L. 99-514 ), but by 1989 contributions had returned to their previous levels. Contributions following enactment of the 1993 tax increase fell rather than increased. Thus, there is little in the historical record to suggest a significant response to changes in tax incentives.", "Economists have employed a variety of statistical methods to try to formally estimate the effects of tax incentives on charitable giving. The effects can be measured by estimating a price elasticity, which is the percentage change in charitable contributions divided by the percentage change in tax price. Since increasing the price of giving will reduce the amount of giving (and vice versa), the price elasticity is a negative number. For example, if the elasticity is -0.7, a 10% increase in the tax price (1-t) will result in a 7% decrease in the amount of charitable contributions."], "subsections": [{"section_title": "Individual Charitable Contributions", "paragraphs": ["Some early statistical estimates indicated that giving was very responsive to the tax rate. The temporary increase in individual charitable contributions following the 1986 tax revision, where lower tax rates were announced in advance, caused researchers to suspect that some of these estimated effects were due to transitory changes. The most common instance of this transitory effect would be when income fluctuated: the periods when income rises and individuals are in higher tax brackets would be the best time to concentrate charitable giving. Thus, some of the relationship between high tax rates and higher contributions reflected timing and would overstate the response (i.e., the elasticity) to a permanent tax change. Statistical estimates are also made more difficult because charitable giving responds to income, so that higher incomes lead both to higher charitable contributions and, in a progressive tax rate system, to higher tax rates. ", " Appendix A contains a review of studies of the price elasticity of charitable giving that control for transitory effects. The elasticities in those studies range from close to 0 to -1.2. The review of that evidence points to an elasticity of around -0.5. That elasticity would imply that the percentage change in individual charitable contributions due to the 2017 tax revision (where the price rose by 7%) was a 3.5% decline in individual charitable contributions. For 2017, individual giving was $302.5 billion, suggesting a decline in charitable contributions of around $11 billion as a result of the 2017 tax revision. With a current average tax rate for individual contributions of 15.2%, the tax price would rise by 9% if all charitable deductions were eliminated. These effects would be twice as large with an elasticity of -1.0. The National Council on Nonprofits has estimated a similar effect of the 2017 tax change for individual contributions, a decline in charitable giving of $13 billion or more. ", "As a percentage of GDP, individual giving declined by about 6% from 2017 to 2018. Some of that decline might reflect a shift in giving from 2018 to later in 2017, to take advantage of the higher tax rates or the expectation of taking the standard deduction in the following year. Contributions as a percentage of GDP grew about 1.4% from 2016 to 2017. Many other factors, however, influence giving as a percentage of GDP, and individual giving as a share of GDP in 2018 was about the same as in 2015. "], "subsections": [{"section_title": "A Note on Beneficiaries of Charitable Tax Incentives", "paragraphs": ["The 2017 tax revision eliminated many charitable deductions taken for the middle and upper-middle-income taxpayers, leaving a charitable tax incentive mostly claimed by high-income individuals. The TPC estimates that in 2018 91.5% of the benefit for charity accrues to the top quintile (taxpayers with incomes of $153,300 or more), 83.5% is received by the top 10% (taxpayers with incomes of $222,900 or more), 56.4% is received by the top 1% (taxpayers with incomes of $754,800 or more), and 35% accrues to the top 0.1% (taxpayers with income of $3,318,600).", "The 2017 Panel Study of Income Dynamics (PSID) can be used to examine the patterns of giving by income class to different types of charitable organizations and also to examine the share of contributions likely to benefit low-income individuals (i.e., that go to charities and foundations that serve the poor). According to CRS's analysis of the PSID data, higher-income individuals give a larger share of their contributions to organizations that focused on health, education, arts, the environment, and international aid relative to contributions by lower-income individuals, while giving a smaller share to organizations focused on religion, youth and family services, community improvement, and directly providing basic necessities. For example, nearly two-thirds of contributions of those with incomes under $200,000 went to religious organizations, compared to roughly 47% for those with incomes over $200,000. In contrast, just over 5% of giving from families with income under $200,000 was directed to education purposes, compared to almost 19% for those with income over $200,000.", "The PSID data can also be used to estimate the share of various charitable benefits focused on the needs of the poor. Nearly 36% of charitable giving made by families with income under $200,000 was focused on the poor, compared to nearly 33% for families with income over $200,000. While the PSID sample sizes limit the ability to draw conclusions about charitable giving at very high income levels (greater than $1,000,000), they are suggestive that the share focused on the poor may further decline as income levels increase.", "As the changes from the TCJA resulted in a further concentration of charitable incentives toward high-income taxpayers, they also focused incentives on charitable giving less likely to benefit the poor and more likely to benefit organizations that focus on health, education, arts, the environment, and international aid. ", "Although it is difficult to separate various causal factors, the recipient organizations that experienced the largest decline in giving in 2018 were foundations, although there was also extraordinary growth in giving to foundations in 2017. Foundations may be the most likely beneficiary of transitory giving (in this instance, making of gifts that otherwise might be made in 2018 into 2017). Other recipient organizations that saw larger declines in donations were public society benefit (an umbrella for many types of organizations), religious organizations, and educational organizations. Beneficiary organizations that saw an increase in donations or smaller declines were international affairs, environment and animals, arts, and health. Again, it is difficult to determine any causal relationships; for example, religious giving has been declining as a share of total giving for many years. "], "subsections": []}]}, {"section_title": "Bequests", "paragraphs": ["Empirical estimates of the price elasticities for bequests are also reported in Appendix A . These estimates also vary significantly, although the evidence suggests they are more responsive to taxes than inter-vivos contributions. In the following calculations, an elasticity of -2.0 is used. ", "It is difficult to determine the effect of the recent changes in the exemption in the 2017 act because the share of bequests reported on estate tax returns differs substantially from the share represented by taxable returns (30%) and the share represented by all returns (53%). Some returns that would have been taxable without the charitable deduction but are not taxable without the deduction benefit from the incentive. In addition, a much smaller share of taxable estate returns would fall below the exemption for taxable returns. Assuming that the share with an estate of less than $20 million would no longer be subject to the estate tax, that share is 92% for taxable returns, indicating 2.4% of bequests would lose the tax incentive (8% of 30%). For all estates the share is 74%, which suggests 13.8% of bequests would lose the benefit of the charitable deduction (26% of 53%). ", "The tax price increase for those estates affected by the TCJA is 66%. Such a large price increase does not permit the use of a point elasticity estimate, so the underlying exponential formula is used, leading to a reduction in affected estates of 64% with an elasticity of -2.0. These calculations produce a range of percentage reductions in total bequests of 1.5% (0.64 times 2.4%) to 8.8% (0.64 times 13.8%). Bequests were $39.7 billion in 2017, suggesting a decline in bequests ranging from $0.6 billion to $3.5 billion. This same methodology can be used to estimate the effect on bequests of either eliminating the charitable deduction or repealing the estate tax, which would result in a further reduction of $7.0 billion to $10.0 billion. These estimates depend, however, on the elasticity. Excluding the one study that found no effect, the smallest elasticity estimated (-0.6) would result in an effect 30% smaller, and the largest (-3.0) would result in an effect 22% larger than these amounts.", "The National Council on Nonprofits has estimated a decline in bequests of $4 billion as a result of the 2017 tax revision. Because bequests vary considerably from year to year (and can be affected by very wealthy decedents as well as economic factors), examining changes from the previous year provides a limited amount of information. "], "subsections": []}, {"section_title": "Corporate Giving", "paragraphs": ["As noted above, some theories of corporate giving suggest that taxes do not affect a decision that is made for purposes of maximizing profits by generating advertising and goodwill. Empirical studies of the response are limited, dated, and quite mixed, including findings of large responses, small responses, no responses, and responses that are positive rather than negative. All of these findings make estimated effects on giving responses difficult to determine, although the corporate rate cut in 2017 substantially increased the tax price (by 22%) to the extent giving provided a benefit to managers. Corporate giving constituted the smallest share of total giving, amounting to $19.5 billion in 2017; therefore, the effects of the TCJA on overall corporate giving are likely small."], "subsections": []}]}, {"section_title": "Policy Options", "paragraphs": ["Some proposals to revise the tax treatment of charitable giving are aimed at increasing the incentive to give or changing the distribution of incentives across donors, while others are aimed at what may be perceived as abuses. "], "subsections": [{"section_title": "Options Related to Tax Incentives for Charitable Giving", "paragraphs": [], "subsections": [{"section_title": "Deduction for Nonitemizers", "paragraphs": ["As mentioned previously, tax incentives for giving are largely confined to higher-income households because these taxpayers are more likely to itemize their deductions (largely deductions for state and local taxes, mortgage interest, and charitable contributions), which tend to rise with income, or choose the standard deduction of a fixed dollar amount. This concentration of tax benefits on higher-income individuals also tends to favor the charities they favor, such as those pertaining to health, education, and the arts, while disfavoring religion and charities aimed at human services. The concentration of charitable giving incentives to those with higher incomes has increased as a result of the 2017 tax revision.", "Nonitemizers were able to claim a deduction for charitable contributions in the early 1980s. A temporary charitable deduction for itemizers was adopted in the Economic Recovery Tax Act of 1981 ( P.L. 97-34 ), initially allowing a deduction for 25% of contributions in 1982-1984, 50% in 1985, and a full deduction in 1986, with the provision then expiring. The deduction was also capped in the first three years, at $100 in the first two years and $300 in the third year.", "Over time, policymakers have continued to propose policies that would extend charitable tax benefits to all taxpayers, either by allowing a deduction for nonitemizers (often termed an above-the-line deduction , reflecting its position on the tax form) or by replacing the itemized deduction with a credit available to all taxpayers. In the 116 th Congress, Representative Danny Davis has introduced legislation that would allow an above-the-line deduction for charitable giving H.R. 1260 ), as have Representatives Henry Cuellar and Christopher Smith ( H.R. 651 ). (A similar bill was introduced in the 115 th Congress as H.R. 5771 .) Earlier proposals for an above-the-line charitable deduction include the Universal Charitable Giving Act of 2017 ( H.R. 3988 / S. 2123 ) in the 115 th Congress, introduced by Representative Mark Walker in the House and Senator James Lankford in the Senate. In the 116 th Congress, Representative Danny Davis has introduced legislation that would allow an above-the-line deduction for charitable giving ( H.R. 1260 ), as have Representatives Henry Cuellar and Christopher Smith ( H.R. 651 ). (A similar bill was introduced in the 115 th Congress as H.R. 5771 .) ", "Different models have been used to estimate the budgetary cost of a nonitemizer deduction. Using the Penn-Wharton Budget Model, the Indiana University Lilly Family School of Philanthropy estimates a nonitemizer deduction would cost between $14.4 billion and $16.1 billion in 2020 (see Table 5 for a summary of the revenue and charitable giving effects of the policy options evaluated in the study). Building on the Open Source Policy Center's Tax Calculator, Brill and Choe estimated such a change would cost $25.8 billion at 2018 levels (the revenue and charitable giving effects of the policy options in the study are summarized in Table 6 ). ", "These studies also estimated the effect of the proposals on charitable giving. One concern is whether further encouraging charitable contributions is an efficient way of achieving the benefits such charitable giving might bring. In general, if the price elasticity of giving is less than 1.0, the induced charitable giving will be less than the revenue cost, and more charitable giving could be obtained by making direct expenditures. If the elasticity is greater than 1.0, charitable giving will be greater than the revenue loss. (This argument also applies to existing charitable deductions.) ", "Brill and Choe used a unitary elasticity (an elasticity of -1.0) in their study, but found a smaller increase in charitable contributions ($21.5 billion) than the lost revenue (the absolute value of lost revenue) when evaluating an above-the-line or nonitemizer deduction. Presumably some additional revenue beyond the amount of induced giving is lost because some itemizers would move to the standard deduction, causing a loss of revenue unrelated to the charitable incentive. (Even very-high-income individuals who had no mortgages might be better off moving to a standard deduction because of the $10,000 cap on state and local tax deductions; the standard deduction for a married couple is $24,000).", "The Indiana University study looks at giving under a \"low-elasticity\" scenario (an elasticity of -0.5), a high-elasticity scenario (an elasticity of -1.0), and an income-based elasticity scenario. The increase in giving in 2020 under each scenario was $8.4 billion, $16.8 billion, and $24.9 billion, respectively. Under the low-elasticity scenario, an above-the-line deduction for giving would reduce revenues by $15.0 billion in 2020, while generating $8.4 billion in additional charitable giving. Under the high-elasticity scenario, the revenue reduction in 2020 is estimated at $15.5 billion, with additional charitable giving estimated at $16.8 billion. In the income-based elasticity scenario, the revenue reduction in 2020 is $16.1 billion, while additional charitable giving is $24.9 billion in 2020. Thus, if elasticities are less than 1.0, as the survey of studies accounting for transitional effects in Appendix A indicates, charitable deductions would likely be smaller than the revenue cost. ", "In evaluating the trade-off between revenue loss and charitable contributions, the charitable contributions from an above-the-line deduction would tend to go to charitable causes favored by lower- and middle-income taxpayers. These include religion, youth and family services, community improvement, and directly providing basic necessities. If the desired objective is to increase resources devoted to these activities, additional resources could be provided directly by the federal government, instead of induced via charitable giving incentives (which result in a loss in federal revenue). ", "The Indiana University study also looks at a scenario that would provide an enhanced nonitemizer deduction. In this policy, single filers with less than $20,000 in income ($40,000 for joint filers) would be able to deduct 200% of their charitable contributions. Taxpayers making less than $40,000 ($80,000 for joint filers) would be able to deduct 150% of their contributions. Under this policy, revenue losses would be between $15.9 billion and $18.2 billion in 2020, depending on the elasticities assumed. Charitable giving would increase by an estimated $9.2 billion to $27.7 billion, with the rise in giving greater than the loss in revenue in both the high-elasticity and income-based-elasticity case. This policy would tend to encourage additional giving by lower-income taxpayers.", "Adding a deduction for nonitemizers (or replacing the existing itemized deduction with a credit, as discussed below) would increase the complexity of the tax code for the individuals now taking the standard deduction. Charitable deductions require various types of substantiation and recordkeeping, and it is difficult for the IRS to monitor these contributions, especially with respect to small contributions where audit and investigation by the IRS are not cost effective. Charitable deductions are among the items with no third-party reporting, which makes enforcement more costly and difficult.", "Allowing a charitable deduction or credit to be taken regardless of whether a taxpayer itemizes or takes the standard deduction would further increase the share of taxpayers who take the standard deduction rather than itemizing deductions. The remaining major itemized deductions are state and local taxes and mortgage interest. Such a move would, for example, reduce the incentives for owner-occupied housing even further than the effects of the 2017 tax revision, which some might see as desirable and others as undesirable. "], "subsections": []}, {"section_title": "A Tax Credit for Charitable Giving", "paragraphs": ["An alternative to a nonitemizer deduction is to provide for a nonrefundable tax credit. It could either be as a substitute for or an addition to the current itemized deduction. Both the Indiana University and Brill and Choe studies estimate revenue effects and increased charitable contributions for a 25% credit. Indiana University considers a credit as an addition to the current itemized deduction, with an estimated revenue cost in 2020 of $20.6 billion to $24.6 billion, depending which elasticity is assumed. Brill and Choe consider a 25% credit that replaces the current itemized deduction, costing $31.1 billion at 2018 levels. ", "Brill and Choe estimate the credit would (at their assumed -1.0 price elasticity) increase charitable giving by $23.3 billion. The Indiana University study estimates increased contributions in 2020 of $35.1 billion for the higher income-based elasticities, $22.8 billion for the elasticity of -1.0, and $11.4 billion for an elasticity of -0.5.", "The induced contributions associated with the elasticities of -1.0 and -0.5 are smaller than the revenue losses and raises the basic concerns about the tradeoff between revenue loss and contributions. If the credit replaced the itemized deduction, it would shift more of the incentive to lower- and middle-income individuals by creating the same tax price for all taxpayers and thus to their preferred beneficiaries. Expanding the scope of the benefit for charitable contributions would, like a deduction, tend to increase complexity in compliance and tax administration, as well as potentially reduce the incentive for home ownership by reducing the number of itemizers. ", "If a credit substituted for the itemized deduction, it would be possible to set the credit so as not to lose revenue while equalizing the treatment of the charitable contribution incentive across taxpayers. For example, in a 2011 report by the Congressional Budget Office (CBO), an option of a 15% credit was considered, which, compared to a 25% credit, would have cost $20.4 billion less in 2006 dollars, and a larger amount at current income levels. "], "subsections": []}, {"section_title": "Modifying Charitable Giving Incentives: Caps and Floors", "paragraphs": ["Some proposals would cap expanded deductions. For example, the Universal Charitable Giving Act of 2017 ( H.R. 3988 / S. 2123 ) in the 115 th Congress would have limited the nonitemizer deduction to be one-third of the standard deduction that was available at that time. When a nonitemizer deduction was available in the early 1980s, it was limited to a certain percentage of contributions in the first three years of the temporary policy. Proposals have also been made to provide a floor, either under nonitemizer deductions or all deductions."], "subsections": [{"section_title": "Caps", "paragraphs": ["A cap for a deduction that provides a desired incentive could be inefficient, as the cap eliminates the incentive for those with giving above the cap while still resulting in a revenue loss. Nevertheless, a cap may be useful for a deduction for nonitemizers or a credit that does not replace the itemized deduction, as it would reduce the number of current itemizers who would switch to the standard deduction. The Indiana University study finds that imposing a cap of $8,000 for a joint return (and $4,000 for a single return) applied only to the nonitemizer deductions would have, depending on what giving elasticity is assumed, a revenue cost in the range of $5.6 billion to $16.6 billion in 2020 (less than the $8.4 billion to $24.9 billion estimate for a nonitemizer deduction without a cap). This cap is generous compared the one proposed in the Universal Charitable Giving Act of 2017 (one-third of the standard deduction in 2017, which was $12,700 for a married couple and $6,350 for a single return). The $8,000/$4,000 cap is about a third of the current standard deduction under the new law ($24,000 for married couples and $12,000 for singles in 2018). ", "The Indiana University study found an itemized deduction with this cap would increase charitable giving in 2020 by $16.6 billion assuming their high income-based elasticities, $11.2 billion at the elasticity of -1.0, and $5.6 billion at the elasticity of -0.5. With this cap, induced contributions are less than the revenue loss in all but the high income-based elasticity case (induced contributions are less than the revenue loss in all cases over the 10-year period). ", "Caps for itemized deductions could also be set at a certain rate, instead of a fixed dollar amount. For example, the Obama Administration's FY2010 and FY2011 budgets proposed limiting the value of itemized deductions to 28% (a rate below the top individual income tax rate at the time of 35%). By limiting the amount of the deduction, the value of the charitable tax incentive would decrease for taxpayers in tax brackets above 28%. However, the subsidy would become more equal across taxpayers in different tax brackets. The policy would also raise additional revenue and result in a decline in charitable giving. "], "subsections": []}, {"section_title": "Floors", "paragraphs": ["Floors would allow charitable deductions in excess of a given amount, either a dollar amount or a percentage of income. As opposed to a cap, a floor could increase the efficiency of the incentive; to the extent that contributions are above the floor in the absence of the incentive, the floor does not affect the incentive at the margin, even though it reduces revenue loss. The floor would also, if applied only to the nonitemizer deduction, reduce the attractiveness of this deduction and thus reduce the number of taxpayers who shift to a standard deduction. A 2% floor was included in the 2014 major tax reform proposal by then-chairman of the House Ways and Means Committee Dave Camp (the Tax Reform Act of 2014, H.R. 1 in the 113 th Congress).", "The Brill and Choe study estimated the revenue effect of a nonitemizer above-the-line deduction and the 25% credit with a floor of $1,000 for married couples and $500 for singles. For the above-the-line deduction, they found a substantial fall in the revenue loss from $25.8 billion to $14.6 billion, but a relatively small effect on charitable contributions (at their -1.0 price elasticity), which were estimated to fall from $21.5 billion to $19.1 billion. Thus, at their unitary price elasticity, the induced contributions were expected to be larger than the revenue loss. Looking at the same dollar floor for the 25% credit, the revenue loss was reduced even more, from $31.1 billion to $15.4 billion, presumably because the floor would apply to existing itemizers as well. The induced contributions (at the -1.0 price elasticity) fell from $23.3 billion to $20.0 billion.", "The Indiana University study examined a modified percentage-of-income floor where contributions below 1% of AGI would receive a 50% deduction and the remainder a full deduction. The estimates of revenue loss and induced giving depend on the elasticity that is assumed. In the high-elasticity case, giving in 2020 would increase by $23.7 billion, while the revenue loss would be $13.4 billion. At the elasticity of -1.0, induced giving would be $15.9 billion, while the revenue loss would be $12.8 billion. With an elasticity of -0.5, induced giving would be $7.9 billion, with a revenue loss of $12.3 billion. ", "In addition to potentially creating more \"bang for the buck,\" a floor (as long as it completely excluded contributions below a dollar amount or percentage of income) would simplify administration and compliance by having no deductions for small contributions. ", "In considering a percentage of income versus a dollar floor, a dollar floor would be more transparent and serve the purpose of excluding deductions for minor contribution amounts, but the percentage-of-income floor would be more efficient because it could provide a meaningful floor for wealthy taxpayers."], "subsections": []}]}, {"section_title": "Charitable Giving and Disaster Relief", "paragraphs": ["As noted previously, in the past Congress has passed legislation eliminating the percentage of AGI limit for charitable contributions made for disaster-relief purposes following certain disaster events. Senator Tim Scott has introduced legislation that would temporarily increase the limitation on charitable contributions made for relief efforts related to Hurricane Dorian ( S. 2476 ). Other proposals in the 116 th Congress would temporarily increase charitable giving limits following disaster events generally (the Tax Relief and Expedited Assistance for Disasters Act of 2019 (TREAD Act) ( H.R. 3287 ), introduced by Representative Tom Rice), or for disasters in 2019 (the Disaster Tax Relief Act of 2019, introduced by Representative Adrian Smith [ H.R. 2284 ] and Senator Deb Fischer [ S. 1133 ]). Other legislation introduced earlier in the 116 th Congress would have increased the limitation on charitable contributions made for relief efforts for disasters in 2018 (the 2018 Natural Disasters Tax Relief Act [ H.R. 1148 ], introduced by Representative Rice). "], "subsections": []}]}, {"section_title": "Gifts of Appreciated Property", "paragraphs": ["Gifts of appreciated property, as noted above, receive a double benefit: a deduction for the fair market value and an exclusion of the gain from tax. These benefits also create an incentive to overvalue a gift so as to maximize the value of the charitable deduction. Charities may also incur costs to maintain or sell the property and may not even want the contribution but will accept it so as not to antagonize a wealthy donor. ", "Several options could be considered for gifts of appreciated property. First, only contributions made in cash could be deductible, which would force the taxpayer to sell the property and then donate the proceeds to charity (thus incurring a capital gains tax and valuing the deduction at market value). A similar approach would be to allow a deduction equal to the basis in the property (usually, the amount originally paid for it). Taxpayers might still donate property with little appreciation, but that approach would also eliminate the double benefit and address the valuation issue. One difficulty with this option is that it would require either a loss of deduction or limit the optimal recipient in cases where the property was particularly desired to be used by the recipient, such as a contribution of a work of art to a museum. ", "An option that would eliminate the double benefit but not address the valuation problem would be to allow the contribution of appreciated property but to tax the appreciation as if it were a realized capital gain. This approach would address the problem of donating an artwork to a museum.", "The Tax Reform Act of 2014 ( H.R. 1 ) had provisions aimed at limiting the problems attached to valuation. The deduction would have been limited to basis except for property related to the purpose of the charitable institution, certain property receiving special treatment such as conservation easements, and publicly traded stock as long as it was no more than 10% of the total shares. ", "Another option is to allow a deduction only for the amount that the charity receives from a sale. One analyst has suggested (presumably to address property used by the charity) that the deduction be limited to the lesser of the benefit from sale, or the donor's tax basis plus one-half of the untaxed appreciation. ", "There are proposals to address concerns about inflated values of easements that may be associated with the use of syndicated partnerships to donate conservation easements. One proposal would limit the value of these deductions to 2.5 times the partnership adjusted basis (the Charitable Conservation Easement Program Integrity Act of 2019, introduced by Senator Steve Daines [ S. 170 ] and Representative Mike Thompson [ H.R. 1992 ])."], "subsections": []}, {"section_title": "Charitable Mileage Rate", "paragraphs": ["Charitable organizations can reimburse volunteers (without income tax consequences) for miles driven for charitable purposes. Nontaxable reimbursements by charities can be made up to the charitable mileage rate of 14 cents per mile. This rate was set in 1997, and has not been adjusted since. The IRS has the authority to adjust the business mileage rate (58 cents per mile for 2019) and the medical and moving expense mileage rate (20 cents per mile for 2019). The charitable mileage reimbursement rate is set in statute. ", "Legislation in the 116 th Congress, the CHARITY Act of 2019 ( S. 1475 / H.R. 3259 ), would align the charitable mileage reimbursement with the rate used for medical and moving expense purposes. Other legislation, the Volunteer Driver Tax Appreciation Act of 2019 ( H.R. 2072 ), introduced by Representative Collin Peterson, and the Nonprofit Relief Act of 2019 ( H.R. 3323 ), introduced by Representatives Carolyn Maloney and James Clyburn, propose increasing the charitable rate to match the business mileage rate. The Delivering Elderly Lunches and Increasing Volunteer Engagement and Reimbursements (DELIVER) Act of 2019, introduced by Representatives Joseph Morelle and Ron Wright ( H.R. 2928 ) and Senators Angus King and John Cornyn ( S. 1603 ), would raise the standard charitable mileage rate for delivery of meals to homebound individuals who are elderly, disabled, frail, or at-risk.", "Increasing the charitable mileage reimbursement rate could encourage charitable activity, such as meal delivery, and help adjust for the increase in the cost of automobile use since the late 1990s. A concern with increasing the charitable mileage rate, particularly to the business mileage rate, is that a higher rate could overcompensate volunteers for their automobile-related expenses (i.e., allow taxpayers to take a deduction that exceeds actual driving/vehicle use costs). "], "subsections": []}, {"section_title": "Proposals Relating to Tax-Exempt Organizations", "paragraphs": ["Some proposals relate to the treatment of the charitable organizations. Certain types of tax-exempt or charitable organizations may have specific or additional requirements."], "subsections": [{"section_title": "DAFs, Endowments, and Foundations (Nonactive Charities)", "paragraphs": ["Several policy options are related to entities that receive charitable contributions, but do not immediately use these contributions for a charitable purpose. These entities include DAFs, supporting organizations, and university endowments. One option could be to subject these organizations to rules similar to private foundations and Type III Non-FISO supporting organizations, and require a minimum payout. Another option is to require all funds in a DAF account to be distributed within five to seven years. ", "A proposal has been made to not allow foundations to make donations to DAFs, or require that if they do, the funds be spent immediately and with full disclosure. This option might address the concern that DAFs can be used to avoid transparency that is otherwise required of private foundations. The New York State Bar Association (NYSBA) Tax Section, commenting on an advance version of Treasury Notice 2017-73, addressing certain issues relating to DAFs, suggested that foundations could give to DAFs if the DAFs agree to distribute the funds immediately. The NYSBA also recommends applying the same rules as applied to foundations in cases where a pledge is made and DAF distributions satisfy it.", "A proposal to encourage greater use of DAFs would allow IRA rollover contributions to charity to go to DAFs (generally these contributions must go to public charities but cannot go to supporting organizations or DAFs). This proposal was included in the Charities Helping Americans Regularly Throughout the Year (CHARITY) Act of 2019, introduced by Senator John Thune ( S. 1475 ) and Representative Earl Blumenhauer ( H.R. 3259 ).", "Several policy options that relate to university endowments might be considered. These could include payout requirements, or measures to address offshore sheltering of earnings from the UBIT. Another proposal is to modify or repeal the tax on endowment net investment income enacted in the 2017 tax revision. The Reducing Excessive Debt and Unfair Costs of Education (REDUCE) Act of 2018 ( H.R. 5916 ) would have imposed an excise tax on undistributed required payouts from college and university endowments, with payout requirements designed to direct support lower- and middle-income students. Also in the 115 th Congress, the Don't Tax Higher Education Act ( H.R. 5220 ) would have repealed the endowment excise tax. ", "Another proposal would eliminate the provision that reduces the excise tax rate on private foundations contingent on distributions and directly reduce the excise tax rate to 1%. This proposal is included in the proposed CHARITY Act of 2019."], "subsections": []}, {"section_title": "Tax-Exempt Hospitals", "paragraphs": ["A nonprofit hospital applying for, or seeking to maintain, tax-exempt status as a \"charitable\" organization under IRC Section 501(c)(3) must meet the \"community benefit standard.\" Broadly, and as previously discussed, this standard requires the hospital to show that it has provided benefits that promote the health of a broad class of persons to the community. One way hospitals can demonstrate that they have met the community benefit standard is by providing charity care. The potential for increased coverage of health care for low-income individuals in the Affordable Care Act may have reduced the need for charity care and has raised questions about the need for the tax benefits for nonprofit hospitals. Disallowing tax-exempt bond financing was an option discussed during debates leading up to the 2017 tax revision. In addition, concerns have been raised about the enforcement of the community benefit standard."], "subsections": []}, {"section_title": "UBIT Provisions Adopted in the 2017 Tax Revision", "paragraphs": ["Some proposals reconsider the UBIT provisions adopted in the 2017 tax revision ( P.L. 115-97 ). One proposal would eliminate the separate business calculation of the UBIT (see the Nonprofit Tax Relief Act of 2019; H.R. 3323 ). Requiring that unrelated business taxable income be computed separately for each trade or business activity treats nonprofits differently from for-profit businesses, and it complicates administration and compliance because of the difficulties of classifying businesses. This provision may have been motivated by concerns about improper allocation of expenses across 501(c)(3) colleges' and universities' unrelated business activities. A 2013 IRS compliance report found that some colleges and universities were misallocating expenses between nonprofit and for-profit activities (which was already disallowed) and underpaying UBIT. ", "Criticisms have also arisen about a change in the 2017 tax revision that subjects transportation benefits for employees to the UBIT. The purpose of this provision was to treat nonprofit business like for-profit businesses (where deductions are denied). This provision includes free parking, which would require nonprofits (including churches) that provide parking for their employees to determine the value of this benefit and file a tax return, in some cases for the first time. The House Committee on Ways and Means has approved legislation (the Economic Mobility Act of 2019; H.R. 3300 ) that would, among other things, repeal the inclusion of certain fringe benefits in UBIT. Other legislation that would repeal the inclusion of nonprofit fringe benefits in UBIT includes Representative James Clyburn's Stop the Tax Hike on Charities and Places of Worship Act ( H.R. 1223 ); the Lessen Impediments From Taxes (LIFT) for Charities Act ( S. 632 ), introduced by Senators James Lankford and Christopher Coons; the Stop the Tax Hike on Charities and Places of Worship Act ( S. 501 ), introduced by Senator Sherrod Brown; and legislation introduced by Representative Mark Walker ( H.R. 1545 ). ", "The Preserve Charities and Houses of Worship Act ( S. 1282 ), introduced by Senator Ted Cruz, and the Nonprofits Support Act ( H.R. 513 ), introduced by Representative Michael Conaway, would repeal both of the TCJA provisions discussed above. "], "subsections": []}, {"section_title": "Administrative Reforms", "paragraphs": ["Several proposals have been made to provide administrative reforms. One such proposal is to require electronic filling of 990 forms. This proposal is included in the CHARITY Act of 2019.", "Another proposal, considering the task of monitoring a large number of charities, would be to provide more funds to the IRS or even to create a separate regulatory authority, given that the IRS is a revenue collection agency, not a nonprofit regulator. For that reason the IRS has few incentives to devote resources to enforcing the rules regarding nonprofits.", "Appendix A. Evidence on Elasticities for Charitable Giving", "Lifetime (Inter-Vivos) Giving", " Table A-1 reports the results of seven different studies (with a number of specifications that attempt to measure both permanent and transitory effects of changes in price and income on charitable giving). Two of these studies (Bakija 2000, and Bakija and McClelland 2002) also provided some critiques of other studies and some sensitivity analysis that is useful in understanding the studies and their strengths and weaknesses. Results that are not statistically significant have an asterisk. Lack of statistical significance means that, although a relationship that most closely fits the data is estimated, there is such deviation from that relationship in the observations that there is not a clear causal effect. Estimates that are not statistically significant are usually, although not always, associated with very small values that are close to zero.", "While the studies differ in methodology, as discussed below, one difference is the type of data used. Tax return data are available for general use only to researchers in the Treasury Department and the Joint Committee on Taxation. (The Congressional Budget Office [CBO] has access to taxpayer data but must have uses approved by the Joint Committee on Taxation.) The data on giving and tax rates are probably superior in these studies and contain a larger sample of high-income taxpayers; however, such research cannot be replicated or subjected to any sensitivity analysis by others. Other researchers have to use public-use data constructed from other sources. Of the seven studies in Table A-1 four (Randolph 1995, Auten et al. 2002, and Bakija and Heim 2008 and 2011) used taxpayer data, and all had as authors or coauthors a Treasury employee. The Bakija and McClelland (2002) study, with a CBO coauthor, included a sensitivity analysis for the Auten et al. study, but used a public-use file, not the tax data. The other two studies also used a public-use file.", "Many of the studies listed below report multiple results using different specifications and, in general, an attempt is made to report the results that appear to be preferred by the author(s). In the case of the Bakija and Heim (2011) report, the preferred estimate for the permanent elasticity is associated with variations in the state tax rate, and estimates from other specifications (such as allowing coefficients to vary across incomes) are even larger (see the discussion of that study). ", "For comparison with this table and to illustrate the importance of dealing with transitory effects, Bakija and McClelland (2002), who presented a range of strategies, also estimated a standard pooled cross-section estimate, the type that had been done prior to the evidence shown by the 1980s tax cuts that did not deal with transitory effects. That estimate showed results that are typical of past cross-sectional studies, a price elasticity of -1.22 and an income elasticity of 0.84.", "In general, the theoretical expectation is that transitory price effects are large and transitory income effects are small (due to the permanent income hypothesis or consumption smoothing). Price elasticities and income elasticities in cross-section studies are a combination of permanent and transitory effects. Thus, a lower permanent price elasticity and a higher permanent income elasticity would be expected than those observed in cross-section studies. Only two studies, Randolph (1995) and Bakija and Heim (2008) find these results, and the Bakija and Heim income elasticity is only marginally higher.", "Randolph (1995) was the first study to focus on the problem of transitory effects, and the technique used a 10-year panel that treated deviations from average income (and the resultant deviations from tax rates) as transitory. Permanent tax rates varied through changes in the tax law (and years around the 1981 and 1986 changes were excluded). This study allowed a long period of time to be transitory; therefore, it is possible that some of the permanent price and income effects are reflected in the transitory estimates, as the author acknowledges. Other studies tend to allow much shorter-term transitory effects, which might go too far in the other direction. Randolph's model allowed the price elasticity to vary by the share of giving, and he reports two measures: one unweighted with a price elasticity of -0.08, which is not statistically significant, and one weighted more heavily toward large contributors, which Randolph appears to prefer. The results in the Randolph study are consistent in general magnitude with the expectations based on the aggregate data discussed in the text: a small permanent price elasticity, a large transitory price elasticity, an income elasticity of around 1.0, and a smaller transitory income elasticity.", "Bakija (2000), who among other things replicates the Randolph results with public-use data, argues that the second weight, which yields an insignificant price elasticity, is more appropriate (although he criticizes other aspects of the model). In his own replications with public-use files he finds effects similar to Randolph's unweighted results but suggests the appropriate measure of the aggregate elasticity evaluated over the full sample. These results are similar to Randolph's unweighted results: he also finds similar results for the elasticity when confined to incomes over $100,000. Based on the specification he prefers and his replication, this approach basically finds no evidence of a permanent price response.", "The Randolph study differs from the other studies in some important ways. By using average income over the panel as permanent income and estimating transitory effects based on deviations, he allows a broad scope for shifting over time, whereas other studies use shorter periods. This choice may be influenced by experience with capital gains realizations studies, where using short periods to control for transitory effects was not successful in producing reasonable results.", "Barrett et al. (1997) allow limited intertemporal shifting variation and also a lagged value of giving to deal with adjustment. They focus particularly on how quickly adjustment takes place, which they find to be very rapid. Their panel also does not include tax rate changes after 1986, which are an important exogenous source of variation. They find a lower price elasticity than a standard cross section, but also a small income elasticity. Like the other studies, this study includes individual fixed effects that are designed to control for heterogeneity among taxpayers (e.g., a taste for philanthropy, religiosity). (Randolph could not employ individual fixed effects because he used an average over the entire panel for permanent income, which was then indistinguishable from a fixed effect.) One drawback, however, of fixed effects, as Barrett et al. acknowledge, is that the fixed effect could also be picking up permanent income effects, and so suppressing the value of that elasticity. The Barrett et al. study also allowed a more limited scope for intertemporal substitution.", "Auten et al. (2002) also use fixed effects and more limited intertemporal substitutions. As pointed out by Bakija and McClelland (2002), they also did not address known changes in the tax law (that is, 1986 was a higher-tax year than 1987, even though the high realizations in 1989 were associated with a preannounced drop in tax rates), which would tend to bias their price elasticities upward. This was a particular problem for panels that included 1986, and Bakija and McClelland reestimated their model using a public data file and found a much lower elasticity. ", "Bakija (2000) mainly contrasted his model with Randolph's by using legislated transitory changes in tax rates as the way to determine the transitory component of taxes. Bakija and McClelland base their analysis off Auten et al., and while they introduce a number of innovations, their main changes are to model expected tax changes and introduce adjustment lags.", "Bakija and Heim (2008) use a panel approach with tax data, with fixed effects, with more limited substitution frameworks than Randolph, and with attention to expectations of tax changes. They characterize intertemporal substitution mainly through those preannounced tax changes and allow shorter substitution periods. The main source of determining the price elasticity is the difference in response across taxpayers who had different changes in their tax rates. They also examine separate estimates for higher-income individuals. They obtain different estimates depending on how they deal with fixed time effects (variables meant to control for changes that affect all observations in a given year), which cannot be introduced into the higher income levels because they are so closely correlated across the sample with legislated changes in tax rates. The first one they reported, which did not use fixed time effects but incorporated a time trend, is included in the assessment.", "Bakija and Heim (2011) is similar to their 2008 study but reports effects for using the state tax rate alone, the federal tax rate alone, and the combined federal and state rate. The authors believe the state tax rate provides a more reliable measure of response because state tax rates allow a comparison of people with the same income but living in different states, and thus is less likely to reflect the effects of omitted variables. The federal rate or combined rate (where the federal rate would dominate) captures the effects of changes in income and the effects of exogenous federal tax changes. The study also reports effects when coefficients of nonprice variables (i.e., other than the tax variables) differ across income, finding higher permanent price elasticities (a permanent elasticity of -1.53). When the study allows price elasticities to vary across income, there is some indication that elasticities increase with higher incomes, but some estimates are statistically insignificant (including estimates for some high-income individuals). Statistically significant estimates of -1.19 are found for the $200,000-$500,000 class and of -1.71 for the over $1 million class; but estimates for the other classes were not statistically significant. ", "Ultimately no study is perfect, and thus it is difficult to choose a central elasticity from among these. Excluding the high elasticities in Auten et al. for the panel that covers 1986 and that are likely overstated, the elasticities range from essentially 0 to 1.2. It seems likely that the unweighted Randolph estimate may be biased downward, but some others may be biased upward because of fixed effects or short periods for intertemporal substitution. In addition, the response to the 1986 tax revision suggests a higher transitory price elasticity than permanent price elasticity, and intuition would suggest that charitable giving is a luxury that would tend to have an income elasticity above 1.0. Only the Randolph study finds effects consistent with these expectations, suggesting an elasticity of around 0.5. ", " Table A-2 reports the results of seven different studies that attempt to estimate both the price and wealth elasticities of charitable bequests. Although these studies find a diverse set of estimated elasticities, they reach two common general conclusions: (1) the price elasticity dominates the wealth elasticity and (2) charitable bequests, generally, respond elastically to changes in the tax price of bequests. The exception to this second conclusion is provided by Greene and McClelland (2001) and is likely explained by their focus on the portion of the tax price related to the exemption level.", "Appendix B. History of the Tax Treatment of Charitable Contributions and Organizations", "Charitable Contributions", "The charitable deduction was added by passage of the War Revenue Act of 1917 (P.L. 65-50). Senator Henry Hollis, the sponsor, argued that high wartime tax rates would absorb the surplus funds of wealthy taxpayers, which were generally contributed to charitable organizations. The deduction was originally limited to individuals. A deduction for trusts and estates was added in the Revenue Act of 1918 (P.L. 65-254), and a deduction for corporations was added in the Revenue Act of 1936 (P.L. 74-740).", "The deduction allowed in 1917 was limited to 15% of taxable income. Most of the revisions in the early tax law related to this limit. In 1944, it was changed to 15% of adjusted gross income. The corporate deduction was limited to 5% of income when introduced. In 1952, the individual limit was increased to 20%. The limit was increased to 30% in 1954, but the additional 10% had to go to specified charities (churches or religious orders, educational institutions, and hospitals). Thus, the 20% limit was retained for foundations and other charities. A carryover of unused deductions for two years was first allowed for corporations in 1954. In 1964, the carryover was increased to five years and extended to individuals. ", "The percentage limit on individual contributions to charities was increased to 50% by the Tax Reform Act of 1969 (P.L. 91-172) but was restricted to 30% for gifts of appreciated property. The percentage limit on corporate charitable contributions was increased to 10% of taxable income in the Economic Recovery Tax Act of 1981 ( P.L. 97-34 ). The limit on contributions to private foundations was increased to 30% for cash contributions by the Deficit Reduction Act of 1984 ( P.L. 98-369 ). ", "The Economic Recovery Tax Act of 1981 also allowed a temporary deduction for nonitemizers, but this provision was not extended by the Tax Reform Act of 1986 ( P.L. 99-514 ). ", "Concerns about abuse led to provisions requiring greater substantiation of gifts. The Deficit Reduction Act of 1984 ( P.L. 98-369 ) required written substantiation of contributions in excess of $2,000, and the Omnibus Budget Reconciliation Act of 1993 ( P.L. 103-66 ) lowered that amount to $250. The American Jobs Creation Act of 2004 ( P.L. 108-357 ) increased reporting requirements for donors of noncash gifts. ", "The Pension Protection Act of 2006 ( P.L. 109-280 ) provided for some temporary additional benefits (part of the \"extenders\") that were effective through 2007 at that time. The 2006 act also added restrictions on DAFs and certain supporting organizations. The 2006 law also tightened rules governing charitable giving in certain areas, including gifts of taxidermy, contributions of clothing and household items, contributions of fractional interests in tangible personal property, and recordkeeping and substantiation requirements for certain charitable contributions. ", "Temporary charitable giving incentives were further extended through 2009 by the Economic Emergency Economic Stabilization Act of 2008 ( P.L. 110-343 ), enacted in October 2008, and through 2011 by the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 ( P.L. 111-312 ). Some provisions were extended through 2013 by the American Taxpayer Relief Act ( P.L. 112-240 ). These provisions were made permanent in the Consolidated Appropriations Act ( P.L. 114-113 ). ", "The 2017 tax change, P.L. 115-97 , popularly known as the Tax Cuts and Jobs Act, increased the percentage-of-income limit for contributions of cash to public charities to 60% and eliminated the phase-out of itemized deductions on a temporary basis (through 2025). ", "Charitable Organizations ", "Corporations or associations organized for religious, charitable, or educational purposes were defined as exempt from tax in the original 1913 law establishing the income tax. ", "These organizations could earn exempt income from activities related to their mission and also from unrelated business activities whose profits were used for the exempt purpose. The Revenue Act of 1950 (P.L. 81-814) established the unrelated business income tax (UBIT) on the income from commercial activities (other than on churches). The UBIT also applied to rents from real estate sale-leaseback arrangements that relied on debt finance.", "The Tax Reform Act of 1969 (P.L. 91-172) defined private foundations, established a series of restrictions on them, imposed a 4% excise tax on their investment income (to share the cost of enforcement), and established a minimum payout requirement of 6% of assets to avoid a penalty. The 1969 legislation also expanded the UBIT to all tax-exempt organizations (including churches), and applied it to all debt-financed income. The Tax Reform Act of 1976 ( P.L. 94-455 ) changed the minimum distribution requirement to 5% of assets. The Revenue Act of 1978 ( P.L. 95-600 ) reduced the net investment income excise tax to 2%. The Deficit Reduction Act of 1984 ( P.L. 98-369 ) exempted certain operating foundations from the excise tax and reduced the tax to 1% for foundations making improvements in their distributions. The 2017 tax reduction ( P.L. 115-97 ) imposed an excise tax of 1.4% on investment income of certain private colleges and universities (excluding smaller ones), added certain fringe benefits (such as parking) to the UBIT base, and required UBIT to be calculated separately for each business activity. "], "subsections": []}]}]}]}}
{"id": "R45979", "title": "Financial Inclusion and Credit Access Policy Issues", "released_date": "2019-10-24T00:00:00", "summary": ["Access to basic financial products and services is generally considered foundational for households to manage their financial affairs, improve their financial well-being, and graduate to wealth building activities in the future. Financial inclusion in three domains can be particularly important for households:", "access to bank and other payment accounts; access to the credit reporting system; and access to affordable short-term small-dollar credit.", "In the United States, robust consumer credit markets allow most consumers to access financial services and credit products to meet their needs in traditional financial markets. For example, the vast majority of consumers have a bank account, a credit score, a credit card, and other types of credit products.", "Some consumers\u00e2\u0080\u0094who tend to be younger adults, low- and moderate-income (LMI) or possess an imperfect credit repayment history\u00e2\u0080\u0094can find gaining access to these banking and credit products and services difficult. Currently, consumers tend to rely on family or community connections to get their first bank account, establish a credit history, and gain access to affordable and safe credit. For those excluded, consumers may find managing their financial lives expensive and difficult.", "Different barriers affect different populations. For some younger consumers, a lack of a co-signer might make it more difficult to build a credit report history or a lack of knowledge or familiarity with financial institutions may be a barrier to obtaining a bank account. For consumers living paycheck to paycheck, a bad credit history or a lack of money could serve as barriers to obtaining affordable credit or a bank account. For immigrants, the absence of a credit history in the United States or language differences could be critical access barriers. For consumers who do not have familiarity or access to the internet or mobile phones, a group in which older Americans may be overrepresented, technology can be a barrier to accessing financial products and services.", "Financial institutions may find serving these consumers expensive or difficult, given their business model and safety and soundness regulation requirements. For example, lower-balance or less credit-worthy consumers may generally be less profitable for banks to serve. Likewise, some consumers may lack a credit history, making it difficult for lenders to determine their credit risk on a future loan.", "New technology has the potential to lower the cost of financial products and expand access to underserved consumers. For example, alternative (nontraditional) data may be able to better price default risk for lenders, which could expand credit access or make credit less expensive for some consumers. In addition, internet-based mobile wallets may provide affordable access to payment services for unbanked consumers. Yet, relevant consumer protection and data security laws and regulations may need to be reconsidered or updated in response to these technological developments. Policymakers debate whether existing regulation can accommodate financial innovation or whether a new regulatory framework is needed.", "Given the importance of financial inclusion to financial well-being, and the challenges facing certain segments of the population, this topic may continue to be the subject of congressional interest and legislative proposals. In the 116 th Congress, the House Financial Services Committee marked up and ordered reported H.R. 4067 , directing the Bureau of Consumer Financial Protection (CFPB) to report to Congress on these issues. In general, political debates around how to best achieve financial inclusion for underserved consumers relate to whether policy changes could help expand consumers' affordable access to these financial products and services. Disagreements exist about whether government programs or regulation should be used to directly support financial inclusion or whether laws and regulations make it more difficult for the private sector to create new or existing products targeted at serving underserved consumers."], "reports": {"section_title": "", "paragraphs": ["S afe and affordable financial services are an important tool for most American households to avoid financial hardship, build assets, and achieve financial security over the course of their lives. In the United States, robust consumer credit markets allow most consumers to access financial services and credit products to meet their needs in traditional financial markets. The vast majority of consumers have, for example, a bank account, a credit score, a credit card, and other types of credit products. However, some consumers\u00e2\u0080\u0094who tend to be younger adults, low- and moderate-income (LMI) consumers or possess imperfect credit repayment history\u00e2\u0080\u0094can find gaining access to these prod ucts and services difficult. For those excluded, consumers may find managing their financial lives expensive and difficult. ", "This report provides an overview on financial inclusion. It then focuses on three areas: (1) access to bank and other payment accounts; (2) inclusion in the credit reporting system; and (3) access to affordable short-term credit. These areas are generally considered foundational for households to successfully manage their financial affairs and graduate to wealth building activities in the future. Wealth building activities\u00e2\u0080\u0094such as access to homeownership, education, and other financial investments\u00e2\u0080\u0094are outside the scope of this report."], "subsections": [{"section_title": "Financial Inclusion Overview", "paragraphs": ["Financial inclusion refers to the idea that individuals \"have access to useful and affordable financial products and services that meet their needs\u00e2\u0080\u0094transactions, payments, savings, credit, and insurance\u00e2\u0080\u0094delivered in a responsible and sustainable way.\" Access to financial products allows households to better manage their financial lives, such as storing funds safely, making payments in exchange for goods and services, and coping with unforeseen financial emergencies, such as medical expenses or car or home repairs.", "In the United States, most households rely on financial products found at traditional depository intuitions\u00e2\u0080\u0094commercial banks or credit unions. Some households also use financial products and services outside of the banking system, either by choice or due to a lack of access to traditional institutions. While products outside the banking sector may better suit some households' needs, these products might also lack consumer protections or other benefits that traditional financial institutions tend to provide.", "Different barriers affect different populations. For some younger consumers, a lack of a co-signer might make it more difficult to build a credit report history or a lack of knowledge or familiarity with financial institutions may be a barrier to obtaining a bank account. For consumers living paycheck to paycheck, a bad credit history or a lack of money could serve as barriers to obtaining affordable credit or a bank account. For immigrants, the absence of a credit history in the United States or language differences could be critical access barriers. For consumers who do not have familiarity or access to the internet or mobile phones, a group in which older Americans may be overrepresented, technology can be a barrier to accessing financial products and services."], "subsections": [{"section_title": "Financial Product Access and Financial Well-Being", "paragraphs": ["Some consumers face barriers that make it more difficult for them to access traditional bank products, such as a bank account, enter the credit system, and gain access to financial product and service offerings in traditional financial markets. These barriers can be significant because they may disadvantage these consumers from effectively managing their financial lives and achieving financial well-being, which the Bureau of Consumer Financial Protection (CFPB) defines as", "1. having control over day-to-day, month-to-month finances; 2. having the ability to absorb a financial shock; 3. being on track to meet financial goals; and 4. being able to make choices that allow a person to enjoy life.", "Research has examined the factors involved in achieving financial well-being. For example, a CFPB study found that\u00e2\u0080\u0094after controlling for certain economic factors\u00e2\u0080\u0094money management is strongly associated with financial well-being. In addition, the CFPB has found that not having a bank account and nonbank transaction product use (e.g., check cashing or money orders) is correlated with lower financial well-being. Although nonbank short-term credit is also correlated with lower financial well-being, the effect is not as large as the financial products previously mentioned. Lastly, holding liquid savings is highly correlated with the CFPB's financial well-being scale.", "Academic research conducted abroad also suggests the importance of access to financial products to improve financial well-being. For example, some studies suggest that access to bank accounts can lead to more savings. In particular, debit accounts seem to have strong effects, by helping consumers save more by reducing money spent on financial services and monitoring costs. Moreover, access to faster and more secure payment services has also been shown to provide significant benefits to consumers, including helping lower-income consumers better handle financial shocks. Likewise, inclusion in credit bureaus also have positive effects on consumers by reducing market information asymmetry and allowing some consumers to obtain better terms of credit. In contrast, the evidence on the effect of small-dollar short-term credit on individuals' financial well-being is mixed. ", "Many Americans have low financial well-being and live paycheck to paycheck. National surveys suggest that about 40% of Americans find \"covering expenses and bills in a typical month is somewhat or very difficult,\" and they could not pay all of their bills on time in the past year. In addition, more than 40% of households did not set aside any money in the past year for emergency expenses. Therefore, a sizable portion of the adult population report they would have difficulty meeting an unexpected expense. If faced with a $400 unexpected expense, 39% of adults say they would borrow, sell something, or not be able to cover the expense. These financial struggles lead to real impacts on the health and wellness of these families; those with low financial well-being are more likely to face material hardship. "], "subsections": []}]}, {"section_title": "Access to Checking and Other Banking Accounts", "paragraphs": ["The banking sector provides valuable financial services for households that allow them to save, make payments, and access credit. Most U.S. consumers choose to open a bank account because it is a safe and secure way to store money. For example, the Federal Deposit Insurance Corporation (FDIC) insures up to $250,000 per depositor against an institution's failure. In addition, consumers gain access to payment services through checking accounts, such as bill pay and paper checks. Frequently, a checking account includes access to a debit card, which increases a consumer's ability to make payment transactions through the account. For most consumers, a checking or savings account is less expensive than alternative ways to access these types of services. Some studies suggest that affordable access to payment transactions may be particularly important for consumers to manage their financial lives.", "For most consumers, opening a bank account is relatively easy. Consumers undergo an account verification process and sometimes provide a small initial opening deposit of money into the account. Many consumers open their first depository account when they get their first job or start post-secondary education. Checking and savings accounts are often the first relationship that a consumer has with a financial institution, which can later progress into other types of financial products and services, such as loan products or financial investments.", "Safe and affordable financial services, especially for families with unpredictable income or expenses, have the potential to help households avoid financial hardship. However, many U.S. households\u00e2\u0080\u0094often those with low incomes, lack of credit histories, or credit histories marked with missed debt payments\u00e2\u0080\u0094do not use banking services. "], "subsections": [{"section_title": "The Unbanked and Underbanked", "paragraphs": ["According to the FDIC's 2017 National Survey of Unbanked and Underbanked Households, 6.5% of households in the United States were unbanked , meaning that these households do not have a bank account (see Figure 1 ). In addition, another 18.7% of households were underbanked , meaning that although these households had a bank account, they still obtained one or more of certain financial products and services outside of the banking system in the past year. These specified nonbank financial products, called alternative financial services , include check cashing, money orders, payday loans, auto title loans, pawn shop loans, refund anticipation loans, and rent-to-own services. Unbanked consumers tend to be lower-income, younger, have less formal education, of a racial or ethnic minority, disabled, and have incomes that varied substantially from month to month compared with the general U.S. population.", "Unbanked persons may be electing not to open a bank account due to costs, a lack of trust, or other barriers. According to the survey, these households report that they do not have a bank account because they do not have enough money, do not trust banks, and to avoid high and unpredictable bank fees. In addition, for immigrants, the account verification process may be more challenging to complete, and the consumer's country of origin may influence their trust of banks.", "In the past decade or so, the availability of free or low-cost checking accounts has reportedly diminished, and fees associated with checking accounts have grown. Some bank accounts require minimum account balances to avoid certain maintenance or service fees. The most common fees that checking account consumers incur are overdraft and nonsufficient fund fees. Overdraft services can help consumers pay bills on time, but fees can be costly particularly if used repeatedly. For consumers living paycheck to paycheck, maintaining bank account minimums and avoiding account overdrafts might be difficult, leading to unaffordable account fees. In addition, unpaid fees can lead to involuntary account closures, making it more difficult to obtain a bank account in the future."], "subsections": []}, {"section_title": "Checking and Savings Accounts: Banking Economics", "paragraphs": ["Depository institutions incur expenses to provide checking and savings accounts to consumers. In addition to specific account maintenance costs, physical banking branches incur costs to hire staff and maintain retail locations. ", "To recoup these costs, depository institutions make money from interest rate spreads (i.e., loaning out funds in checking and savings accounts) and account fees. Historically, some banks were willing to lose money on these types of accounts to begin a relationship with a client and later get more profitable business from the client, such as a credit card or mortgage loan. In fact, checking and savings accounts data might allow a bank to better underwrite and price loans to a consumer. In this way, banks with a checking account relationship with a consumer might be able to provide more attractive loan terms than other banks without this relationship.", "Given these dynamics, lower-balance or less credit-worthy consumers may generally be less profitable for banks to serve. Consumers with low checking or savings account balances provide banks minimal funds to lend out and make a profit with. Moreover, less credit-worthy consumers may be less likely to develop into a profitable relationship for the banks if the consumer is not in a position to obtain loans from the bank in the near future. Therefore, bank fees may be seen as the best way for banks to recoup their account costs for these consumers. Because of the way bank fees are structured, consumers with lower balances using checking and savings accounts tend to incur more fees than consumers with higher balances.", "Bank access may also have a geographic component, as some observers are concerned that banking des erts \u00e2\u0080\u0094 areas without a bank branch nearby \u00e2\u0080\u0094 exist in certain communities. Branch offices are still important to many consumers, even as mobile and online banking has become more popular. For example, most banked households visit a bank branch regularly, and one-third of banked households visit 10 or more times in a year. However, in the past 10 years, the number of bank branch offices has declined in the United States due to many causes, such as bank consolidations and the rise of online banking. Some argue that this has left some communities without any nearby bank branches, making it more difficult to access quality banking services, particularly in lower-income, non-urban areas. Yet others argue that banking deserts are not a major issue in the United States because they have been stable over time, and minority areas are less likely to be affected than other areas of the country."], "subsections": []}, {"section_title": "Banking Account Alternatives", "paragraphs": ["Unbanked households rely on nonbank alternative financial products and services. Both unbanked and underbanked households are more likely to use transaction alternative financial products than credit alternative financial products. Transaction alternative financial products include check cashing, money orders, and other nonbank transaction products. In a typical month, unbanked consumers are more likely to use cash, nonbank money orders, and prepaid cards to pay bills and receive income, in contrast to banked consumers, who are most likely to use direct deposit, electronic bank payments, personal checks, debit cards, and credit cards. ", "Alternative financial products can sometimes be less expensive, faster, and more convenient for some consumers. For example, although check cashing, money orders, and other nonbank transaction products might charge high fees, some consumers may incur higher or less predictable fees with a checking account. In addition, such alternative financial products might allow consumers to access cash more quickly, which might be valuable for consumers with tight budgets and little liquid savings or credit to manage financial shocks or other expenses. Lastly, nonbank stores often are open longer hours including evenings and weekends than banks, which might be more convenient for working households. Moreover, these nonbank stores might also be more likely to cater to a local ethnic or racial community, for example, by hiring staff who speak a native language and live in the local community. Although consumers may find benefits in using alternative financial products substitutes, these products may not always have all of the benefits of bank accounts, such as FDIC insurance or other consumer protections.", "General-purpose prepaid cards are another popular alternative to a traditional checking account. Use of prepaid cards is more prevalent among unbanked households\u00e2\u0080\u009426.9% of unbanked and 14.5% of underbanked households used a prepaid card in the past year. These cards can be obtained through a bank, at a retail store, or online, and they can be used in payment networks, such as Visa and MasterCard. General-purpose reloadable prepaid cards generally have features similar to debit and checking accounts, such as the ability to pay bills electronically, get cash at an ATM, make purchases at stores or online, and receive direct deposits. However, unlike checking accounts, prepaid card funds are not always federally insured against an institution's failure. Prepaid cards often have a monthly maintenance fee and other particular service fees, such as using an ATM or reloading cash. Some banks offer prepaid cards, yet unbanked consumers are much more likely to use a prepaid card from a store or website that is not a bank.", "Nonbank private-sector innovation could also provide more affordable financial products to unbanked and underbanked consumers. Whereas bank products may be expensive to provide to lower-income or less credit-worthy consumers, technology may be able to reduce the cost. For example, internet-based mobile wallets may provide access to payment services for unbanked consumers. Alternatives to a banking-based payment system have been proposed or pursued in other countries. For example, the M-pesa, a mobile payment system that does not use banks, has achieved a relatively high level of usage in parts of Africa. In addition, new mobile products aim to help consumers manage their money better and save by automating savings behavior. Yet, concerns continue to exist for internet-based products around data privacy and cybersecurity issues. Policymakers debate whether existing regulation can accommodate financial innovation or whether a new regulatory framework is needed."], "subsections": []}, {"section_title": "Access to Emergency Savings and Savings Accounts", "paragraphs": ["Some research suggests that emergency savings is crucial for a household's financial stability. The ability to meet unexpected expenses is particularly important, because within any given year, most households face an unexpected financial shock. For example, one study found that families with even a relatively small amount of non-retirement savings (e.g., $250-$750) are less likely in a financial shock to be evicted, miss a housing or utility payment, or receive means-tested public benefits. These findings are consistent throughout the income spectrum, not only for lower-income families.", "One barrier for building emergency savings may include not having a separate account dedicated to saving. For example, money in a transaction account intended for emergencies can be vulnerable to unintentional overspending. Although almost all banked households report having a checking account, roughly a quarter do not have a savings account. These households tend to be lower-income and living in rural areas and are more likely to be an ethnic or racial minority or working-age disabled compared with the U.S. population. Moreover, unbanked households are much less likely to report saving for unexpected expenses and emergencies (17.4%) than banked households (61.6%). Whereas most households save using a checking or savings account, most unbanked households save at home or with family or friends. In addition, saving with a prepaid card is much more common for unbanked households. Some recent research suggests that saving, not only through a savings account, but also through savings wallets on prepaid cards, can help consumers avoid high-cost credit and alternative financial services."], "subsections": []}, {"section_title": "Possible Policy Responses", "paragraphs": ["In regard to accessing financial products and services that help consumers manage their finances and achieve financial success, some research suggests that consumers may particularly benefit from (1) access to affordable electronic payment system services, for example, through a traditional bank account; and (2) a safe way to accumulate and hold emergency savings. The government, the private sector, and the nonprofit sector all may be in a position to help increase access to these types of financial products for the underserved. ", "Some propose changes to bank regulation to try to increase access to bank accounts. For example, the Community Reinvestment Act (CRA) encourages banking institutions to meet the credit needs of the areas they serve, particularly in LMI neighborhoods. Banks receive \"CRA credits\" for qualifying activities, such as mortgage, consumer, and business loans. Currently, providing bank accounts to LMI consumers or neighborhoods is not included in the calculation. Bank regulators are considering updating the CRA, and they recently received public comments on reforming implementation of the law. The Federal Reserve indicated that it is considering, due to public feedback, expanding the list of products and services that are eligible for CRA credits, including \"financial services and products aimed at helping consumers get on a healthier financial path,\" such as affordable checking and savings accounts for LMI consumers. Bank regulators may need to balance expanding CRA credit for these products with the CRA's statutory purpose, which was focused on encouraging bank lending activities to meet local communities' credit needs.", "Payment system improvements, either by the government or the private sector, may also have the potential to improve welfare for unbanked or underbanked consumers. Many of these consumers choose alternative financial payment products such as check cashers to access their funds quickly. These consumers might not require such alternative services if bank payment systems operated faster than they normally do. Both the private sector and the government are currently working on initiatives to make the bank payment system faster. For example, the Federal Reserve plans to introduce a real time payment system called FedNow in 2023 or 2024, which would allow consumers access to funds quickly after initiating the transfer. Faster payments may help some consumers avoid overdraft fees on checking accounts. However, some payments that households make would also be cleared faster\u00e2\u0080\u0094debiting their accounts more quickly\u00e2\u0080\u0094which could be disadvantageous to some of these households compared with the current system.", "Other policy proposals include the government directly providing accounts to retail customers. For example, offering banking services through postal offices or providing banking services online to the public through the Federal Reserve, which already provides accounts to banks. Opposition to these proposals often centers on the appropriate role for the government. Some argue that the government should not be competing with the private sector to provide these services to consumers, especially in the competitive banking market. Moreover, government bank accounts may not attract consumer demand. For example, the Treasury Department's myRA account program\u00e2\u0080\u0094which provided workers without a work retirement account a vehicle for retirement savings\u00e2\u0080\u0094closed after about three years, in part due to lack of participation.", "Financial education programs or outreach initiatives coordinated by the government, nonprofit organizations, and financial institutions could support financial inclusion as well. Given the importance of emergency savings, in 2019, CFPB Director Kraninger announced that the CFPB wants to focus on increasing consumer savings, through financial education initiatives and joint research projects with the financial industry. In addition, the \"Bank On\" movement\u00e2\u0080\u0094a coalition between city, state, and federal government agencies, community organizations, financial institutions, and others\u00e2\u0080\u0094aims to encourage unbanked consumers to open and use bank accounts. Bank accounts associated with the movement must have no overdraft fees, charge a minimal amount of monthly fees, have deposits that are federally insured, and offer traditional banking services, such as direct deposit, debit or prepaid cards, and online banking. Nearly 3 million accounts have been opened through the movement, generally to new bank customers, and consumers tend to actively use these accounts. ", "This topic may continue to be the subject of congressional interest and legislative proposals. In the 116 th Congress, the House Financial Services Committee marked up and ordered reported H.R. 4067 , directing the CFPB to report to Congress on unbanked, underbanked, and underserved consumers. In addition, other legislation introduced proposes establishing an office within the CFPB to work on unbanked and underbanked issues ( H.R. 1285 ) and proposes developing short-term non-retirement savings accounts for consumers with their employers automatically deducting from their paychecks ( S. 1019 , H.R. 2120 , S. 1053 ) or using their tax refund to save ( H.R. 2112 , S. 1018 )."], "subsections": []}]}, {"section_title": "Access to the Credit Reporting System", "paragraphs": ["The credit reporting industry collects information on consumers and uses it to estimate the probability of future financial behaviors, such as successfully repaying a loan or defaulting on it. The information collected has largely related to consumers' past financial performance and repayment history on traditional credit products. Consumer files generally do not contain information on consumer income or assets or on alternative financial services. Credit bureaus collect and store payment data reported to them by financial firms, and they or other credit scoring companies use this data to estimate individual consumers' creditworthiness, generally expressed as a numerical \"score.\" The three largest credit bureaus\u00e2\u0080\u0094Equifax, Experian, and TransUnion\u00e2\u0080\u0094provide credit reports nationwide that include repayment histories. Credit reports generally may not include information on items such as race or ethnicity, religious or political preference, or medical history. ", "This industry significantly affects consumer access to financial products, because lenders and other financial firms use consumer data when deciding whether to provide credit or other products to an individual and under what terms. Consumers who find it challenging to enter the traditional credit reporting system face challenges accessing many consumer credit products, such as mortgages or credit cards, because creditors are unable to assess the consumer's credit worthiness. This section examines some consumer credit reporting issues and related developments and policy issues."], "subsections": [{"section_title": "Credit Invisibles and Unscorables", "paragraphs": ["According to the CFPB, credit scores cannot be generated for approximately 20% of the U.S. population due to their limited credit histories. The CFPB categorizes consumers with limited credit histories into several groups. One category of consumers, referred to as credit invisibles , have no credit record at the three nationwide credit reporting agencies and, thus, do not exist for the purposes of credit reporting. Credit invisibles represents 11% of the U.S. adult population, or 26 million consumers (see Figure 2 ). Another category of consumers have a credit record and thus exist, but they cannot be scored or are considered un scorable . Unscorable consumers either have insufficient (short) histories or stale (outdated) histories. The insufficient and stale unscored groups, each containing more than 9 million individuals, collectively represent 8.3% of the U.S. adult population, or approximately 19 million consumers.", "Limited credit history is correlated with age, income, race, and ethnicity. Many consumers that are credit invisible or unscorable are young. For example, 40% of credit invisibles are under 25 years old. Moreover, consumers who live in lower-income neighborhoods or are black or Hispanic are also disproportionately credit invisible or unscorable compared with the U.S. population. "], "subsections": []}, {"section_title": "Barriers to Entering the Credit System", "paragraphs": ["Most young adults transition into the credit reporting system in their early twenties\u00e2\u0080\u009480% of consumers transition out of credit invisibility before age 25 and 90% before age 30. For young consumers, the most common ways to become credit visible is through credit cards, student loans, and piggybacking (i.e., becoming a joint account holder or authorized user on another person's account, such as a parent's account).", "Young adults in LMI neighborhoods tend to make the transition to credit visibility at older ages than young adults in higher-income neighborhoods. In urban areas, consumers over 25 years old from LMI neighborhoods have higher rates of credit invisibility than those in middle and upper income areas. In addition, the highest rates of credit invisibility for consumers over 25 years old are in rural areas, and these rates do not vary much based on neighborhood income. Credit invisible consumers in LMI and rural areas are less likely to enter the credit bureaus through a credit card than credit invisible consumers in other parts of the country, possibly because piggybacking is notably less common in LMI communities. Moreover, using student loans to become credit visible is also less common in LMI areas.", "Recent immigrants also have trouble entering the credit system when they come to the United States. Existing credit history from other countries does not transfer to the U.S. system. In addition, immigrants' alternative forms of identification, such as the Individual Taxpayer Identification Numbers (ITINs) might not be accepted by some financial services providers."], "subsections": []}, {"section_title": "Expanding Credit Visibility Policy Issues", "paragraphs": ["Consumers without a credit record have trouble accessing credit, but without access to credit, a consumer cannot establish a credit record. In general, there are two ways that policymakers tend to approach this issue, either by (1) expanding uptake of financial products reported in the current system or (2) expanding the types of information in the credit reporting system using alternative data."], "subsections": [{"section_title": "Expanding Use of Currently Reported Products", "paragraphs": ["The first approach often focuses on financial education and entry-level products. Financial education and partnerships between financial services providers and nonprofit groups may help consumers learn how credit reporting works, develop a credit history, and become scorable. For example, financial wellness programs at workplaces are a growing way to deliver these types of programs. Yet financial education, coaching, and counseling can be expensive and difficult to provide to consumers. ", "On the financial product side, tensions exist between expanding credit access to build a credit history and upholding consumer protection. For example, credit cards are the most common first product reported to credit bureaus, yet consumer protection regulations, such as the CARD Act of 2009, reduce young consumers' access to credit cards. Stakeholders believe that large financial services providers should develop entry-level credit products that are profitable and sustainable, without sacrificing consumer protections. For example, secured credit cards\u00e2\u0080\u0094which are \"secured\" by a consumer deposit, so the issuer faces little risk of default\u00e2\u0080\u0094can help establish a credit history, but currently, are less likely to move consumers to credit visibility than unsecured (regular) credit cards. Some consumer advocates believe that the security deposit is an obstacle for lower-income consumers. This issue epitomizes the difficulty in developing credit-building financial products for unscorable consumers that are safe, accessible, and prudent for the financial institution. "], "subsections": []}, {"section_title": "Using Alternative Data in Credit Reports", "paragraphs": ["Alternative data generally refers to data that the national consumer reporting agencies do not traditionally use (e.g., information other than traditional financial institution credit repayments) to calculate a credit score. It can include both financial and nonfinancial data. In a 2017 Request for Information, the CFPB included examples of alternative data, such as payments on telecommunications; rent or utilities; checking account transaction information; educational or occupational attainment; how consumers shop, browse, or use devices; and social media information.", "Alternative data could potentially be used to expand access to credit for current credit invisible or unscorable consumers, but it also could create data security risks or consumer protection violations. Alternative data used in credit scoring could increase accuracy, visibility, and scorability in credit reporting by including additional information beyond that which is traditionally used. The ability to calculate scores for the credit invisible or unscoreable consumer groups could allow lenders using these scores to better determine the creditworthiness of people in these groups. Arguably, this would increase access to\u00e2\u0080\u0094and lower the cost of\u00e2\u0080\u0094credit for some credit invisible or unscorable individuals, as lenders using alternative data are able to find new creditworthy consumers. However, in cases where the alternative data includes negative or derogatory information, it has the potential to harm some consumers' existing credit scores. Some prospective borrowers may be unaware that alternative data has been used in credit decisions, raising privacy and consumer protection concerns. Moreover, alternative data may pose fair lending risks if the data used are correlated with characteristics, such as race or ethnicity. ", "Using alternative data for credit reporting raises regulatory compliance questions, which may be why adaption of alternative data in the credit reporting system is currently limited. The main statute regulating the credit reporting industry is the Fair Credit Reporting Act (FCRA), which establishes consumers' rights in relation to their credit reports, as well as permissible uses of credit reports. It also imposes certain responsibilities on those who collect, furnish, and use the information contained in consumers' credit reports. Alternative data providers outside of the traditional consumer credit industry may find FCRA data furnishing requirements burdensome. Some alternative data may have accuracy issues, and managing consumer disputes requires time and resources. These regulations may discourage some organizations from furnishing alternative data, even if the data could help some consumers become scorable or increase their credit scores. In an effort to address such concerns, many consumer data industry firms use alternative data only when consumers' opt-in.", "Using alternative data for credit reporting may continue to be the subject of congressional interest and legislative proposals. In the 116 th Congress, the House Financial Services Committee marked up and ordered reported H.R. 3629 , which among other things directs the CFPB to report to Congress on the impact of using nontraditional data on credit scoring. In addition, other legislation introduced allows types of alternative data to be furnished to the credit bureaus ( S. 1828 , H.R. 4231 )."], "subsections": []}]}]}, {"section_title": "Access to Affordable Small-Dollar Credit", "paragraphs": ["Short-term, small-dollar loans are consumer loans with relatively low initial principal amounts, often less than $1,000, with relatively short repayment periods, generally for a small number of weeks or months. Small-dollar loans can be offered in various forms and by both traditional financial institutions (e.g., banks) and alternative financial services providers (e.g., payday lenders). ", "Many U.S. consumers do not have access to affordable small-dollar credit; often for these consumers, small-dollar credit is either expensive or difficult to access. The extent to which borrowers' financial situations would be harmed by using expensive credit or having limited access to credit is widely debated. Credit is an important way households pay for unexpected expenses and compensate for emergencies, such as a car or home repair, a medical expense, or a pay cut. Credit that can be paid back flexibly is particularly valued by consumers, especially those living paycheck to paycheck. Research suggests that access to this type of short-term credit can help households during short-term emergencies, yet unsustainable debt can harm households. Consumer groups often raise concerns regarding the affordability of small-dollar loans. Some borrowers may fall into debt traps , situations where borrowers repeatedly roll over existing loans into new loans and find it difficult to repay outstanding balances. Regulations aimed at reducing costs for borrowers may result in higher costs for lenders, possibly limiting or reducing credit availability for financially distressed individuals.", "This section focuses on expanding access to affordable small-dollar credit. Policymakers continue to be interested in ways to increase access to affordable credit because it is an important step in achieving financial stability. "], "subsections": [{"section_title": "Access to Traditional Bank Credit Products", "paragraphs": ["About 80% of U.S. households have access to bank or traditional financial institution credit products, such as a general or store credit card, a mortgage, an auto loan, a student loan, or a bank personal loan. Credit cards are the most common form of credit, and they are what most households use for small-dollar credit needs. In general, banks require a credit score or other information about the consumer to prudently underwrite a loan. Scorable and credit-worthy consumers are in a position to gain access to credit from traditional sources. Financial institutions also sometimes provide consumer loans to existing customers, even if the borrower lacks a credit score (e.g., a consumer with a checking account who is a student or young worker). Some institutions make these loans to build long-term relationships. ", "The remaining 20% of households do not have access to any traditional bank credit products, generally because they are either unscorable or have a blemished credit history. They are more likely to be unbanked, low-income, and minority households. Not having access to traditional bank credit is also correlated with age, formal education, disability status, and being a foreign-born noncitizen. According to an FDIC estimate, 12.9% of households had unmet demand for bank small-dollar credit. Of these households interested in bank credit, over three-quarters were current on bills in the last year, suggesting these households might be creditworthy.", "Policymakers often face a trade-off between consumer protection and access to credit when regulating the banking sector. Consumer protection laws at the state and federal levels often limit the profitability of small-dollar, short-term loans. For example, legislation such as the CARD Act of 2009 placed restrictions on subprime credit card lending. Small-dollar, short-term loans can be expensive for banks to provide. Although many of the underwriting and servicing costs are somewhat fixed regardless of size, smaller loans earn less total interest income, making them more likely to be unprofitable. Moreover, excluded consumers often are either unscorable or have a blemished credit history, making it difficult for banks to prudently underwrite loans for these consumers. In addition, banks face various regulatory restrictions on their permissible activities, in contrast to nonbanks. For these reasons, many banks choose not to offer credit products to some consumers.", "Nevertheless, banks have demonstrated interest in providing certain small-dollar financial services such as direct deposit advances, subprime credit cards, and overdraft protection services. In these cases, banks may face regulatory disincentives to providing these services, because bank regulators and legislators have sometimes demonstrated concerns about banks providing these products. For example, before 2013, some banks offered deposit advance products to consumers with bank accounts, which were short-term loans paid back automatically out of the borrower's next qualifying electronic deposit. Research findings from the CFPB suggest that although deposit advance was designed to be a short-term product, many consumers used it intensively. In the CFPB's sample, the median user was in debt for 31% of the year. Because of this sustained use and concerns about consumer default risk, in 2013, the Office of the Comptroller of the Currency (OCC), FDIC, and Federal Reserve issued supervisory guidance, advising banks to make sure deposit advance products complied with consumer protection and safety and soundness regulations. Many banks subsequently discontinued offering deposit advances. ", "At the same time, regulators and policymakers have implemented policies aimed at increasing credit availability. Regulation implemented pursuant to the CRA (the 1977 law discussed in the \"Access to Checking and Other Banking Accounts\" section above) encourages banking institutions to meet the credit needs of consumers in the areas they serve, particularly in LMI neighborhoods that tend to include these excluded consumers. However, the CRA applies only to individuals with an established relationship with a bank, excluding unbanked consumers in an area. Likewise, many small-dollar loan products may not be considered qualifying activities. Moreover, the CRA does not encourage banks from engaging in unprofitable activities, so the incentives it creates might be limited. "], "subsections": []}, {"section_title": "Credit Alternative Financial Products", "paragraphs": ["Credit alternative financial products include payday loans, pawn shop loans, auto title loans, and other types of loan products from nonbank providers. According to the FDIC, 6.9% of American households used a credit alternative financial service in 2017. Households that rely on credit alternative financial services are more likely to be lower-income, younger, and a racial or ethnic minority compared with the general U.S. population. ", "Some argue that credit alternative financial products are expensive and are more likely than bank products to lead to debt traps. Bank small-dollar credit may be less expensive for prime borrowers with credit histories or relationships with banks. For other consumers, credit alternative financial products might better serve their needs due to fee structure or less stringent underwriting. Yet, some of these consumers may not have access to bank products and thus rely on credit alternative financial products for their credit needs."], "subsections": []}, {"section_title": "New Technology and Market Developments", "paragraphs": ["New technology may have the potential to help expand access to affordable credit to underserved consumers. For example, new nonbank digital or mobile-based financial products may lower the cost to provide small-dollar loans, making it easier to expand credit access to the underserved. Other nonbank products try to reduce default risk, for example, through employer-based lending models, to expand access to credit for more consumers. ", "In addition, some lenders choose not to rely solely on the credit reporting system, and instead use alternative data directly to make credit decisions. New products that use alternative data on prospective borrowers\u00e2\u0080\u0094either publicly or with the borrower's permission\u00e2\u0080\u0094may be able to better price lenders' default risk, which could expand credit access or make credit cheaper for some consumers. Recent findings suggest that some types of alternative data\u00e2\u0080\u0094such as education, employment, and cash-flow information\u00e2\u0080\u0094might be promising ways to expand access to credit. For example, initial results from the Upstart Network's credit model, which uses alternative data to make credit and pricing decisions, shows that the model expands the number of consumers approved for credit, lowers the rate consumers pay for credit on average, and does not increase disparities based on race, ethnicity, gender, or age. Moreover, another recent study suggests that cash-flow data may more accurately predict creditworthiness, and its use would expand credit access to more borrowers, while meeting fair lending rules. ", "One market segment is particularly illustrative of this practice. With the proliferation of internet access and data availability, some new lenders\u00e2\u0080\u0094often referred to as marketplace lenders or fintech lenders\u00e2\u0080\u0094rely on online platforms and frequently underwrite loans using alternative data. Although fintech lending remains a small part of the consumer lending market, it has grown rapidly in recent years. According to the Government Accountability Office (GAO), \"in 2017, personal loans provided by these lenders totaled about $17.7 billion, up from about $2.5 billion in 2013.\" In addition, incumbent bank and nonbank lenders have adopted certain of these technologies and practices to varying degrees, and in some cases have partnered or contracted with fintech companies to build or run online, algorithmic platforms. ", "Yet, despite the potential of new technology in small-dollar lending markets, these technologies also create risks for consumers. For example, new digital technology exposes consumers to data security risks. In addition, lenders' alternative data used to make credit decisions could result in disparate impacts or other consumer protection violations. "], "subsections": []}, {"section_title": "Possible Policy Responses", "paragraphs": ["Policymakers and observers will likely continue to explore ways to make affordable and safe credit accessible to a greater portion of the population (in addition to including more people in the credit reporting system, as discussed in a previous section of the report).", "Changes to bank regulation could encourage more banking institutions to increase access to credit to underserved consumers. For example, some question the effectiveness of how the CRA is currently implemented, particularly with regard to short-term, small-dollar loans. As bank regulators consider updating the CRA, the Federal Reserve said that another area they are considering changing, due to public feedback, is expanding CRA-eligible products and services, such as payday loan alternatives and other small-dollar short-term loans for LMI consumers. Yet, as stated earlier in the report, bank regulators need to balance new CRA criteria with federal prudential regulations for safety and soundness , which requires banks to prudently undertake CRA-qualified activities and not engage in activities that are likely unprofitable to the bank.", "Reducing regulatory barriers may also allow more banking institutions to increase access to credit to underserved consumers. Financial regulators have taken recent steps to encourage banks to re-enter the small-dollar lending market. In October 2017, the OCC rescinded the 2013 guidance, and in May 2018 issued a new bulletin to encourage their banks to enter this market. In November 2018, the FDIC solicited advice about how to encourage more banks to offer small-dollar credit products. It is unclear whether these efforts will encourage banks to enter the small-dollar market with a product similar to deposit advance.", "In terms of using new technology and alternative data in consumer lending, questions exist about how to comply with fair lending and other consumer protection regulations. Currently, the federal financial regulators are monitoring these new technologies, but they have not provided detailed guidance. In February 2017, the CFPB requested information from the public about the use of alternative data and modeling techniques in the credit process. Information from this request led the CFPB to outline principles for consumer-authorized financial data sharing and aggregation in October 2017. These nine principles include, among other things, consumer access and usability, consumer control and informed consent, and data security and accuracy. According to the GAO, both fintech lenders and federally regulated banks that work with fintech lenders reported that additional regulatory clarification would be helpful. Therefore, the GAO recommended \"that the CFPB and the federal banking regulators communicate in writing to fintech lenders and banks that partner with fintech lenders, respectively, on the appropriate use of alternative data in the underwriting process.\" ", "Lastly, some advocate for the federal government providing small-dollar short-term loans to consumers directly if the private sector leaves some underserved, for example, through postal offices. Yet, providing credit to consumers is more risky than providing bank accounts or other banking services because some consumers will default on their loans. Opponents of the government directly providing consumer loans often centers on concerns about the federal government managing the credit risks it would undertake. These opponents generally argue that the private sector is in a more appropriate position to take these risks."], "subsections": []}]}, {"section_title": "Conclusion", "paragraphs": ["Access to bank and other payment accounts, the credit reporting system, and affordable short-term small-dollar credit are generally considered foundational for households to manage their financial affairs, improve their financial well-being, and graduate to wealth building activities in the future. In the United States, robust consumer credit markets allow most consumers to access financial services and credit products to meet their needs in traditional financial markets. Yet currently, consumers tend to rely on family or community connections to get their first bank account, establish a credit history, and gain access to affordable and safe credit. ", "Given the importance of financial inclusion to financial well-being, and the challenges facing certain segments of the population, this topic is likely to continue to be the subject of congressional interest and legislative proposals. As markets develop and technology continues to change, new financial products have the potential to lower costs and expand access. Yet, as this report described, relevant laws and regulations may need to be reconsidered or updated in response to these technological developments. Moreover, policymakers may consider whether other policy changes could help expand consumers' affordable access to these financial products and services. Disagreements will continue to exist around whether government programs or regulation should be used to directly support financial inclusion or whether laws and regulations make it more difficult for the private sector to create new or existing products targeted at underserved consumers. "], "subsections": []}]}}
{"id": "R44565", "title": "Digital Trade and U.S. Trade Policy", "released_date": "2019-05-21T00:00:00", "summary": ["As the global internet develops and evolves, digital trade has become more prominent on the global trade and economic policy agenda. The economic impact of the internet was estimated to be $4.2 trillion in 2016, making it the equivalent of the fifth-largest national economy. The digital economy accounted for 6.9% of current\u2010dollar gross U.S. domestic product (GDP) in 2017. Digital trade has been growing faster than traditional trade in goods and services.", "Congress has an important role to play in shaping global digital trade policy, from oversight of agencies charged with regulating cross-border data flows to shaping and considering legislation implementing new trade rules and disciplines through trade negotiations. Congress also works with the executive branch to identify the right balance between digital trade and other policy objectives, including privacy and national security.", "Digital trade includes end-products, such as downloaded movies, and products and services that rely on or facilitate digital trade, such as productivity-enhancing tools like cloud data storage and email. In 2017, U.S. exports of information and communications technology-enabled services (excluding digital goods) were an estimated $439 billion. Digital trade is growing on a global basis, contributing more to global domestic product (GDP) than financial or merchandise flows.", "The increase in digital trade raises new challenges in U.S. trade policy, including how to best address new and emerging trade barriers. As with traditional trade barriers, digital trade constraints can be classified as tariff or nontariff barriers. In addition to high tariffs, barriers to digital trade may include localization requirements, cross border data flow limitations, intellectual property rights (IPR) infringement, forced technology transfer, web filtering, economic espionage, and cybercrime exposure or state-directed theft of trade secrets. China's policies, in particular, such as those on internet sovereignty and cybersecurity, pose challenges for U.S. companies.", "Digital trade issues often overlap and cut across policy areas, such as IPR and national security; this raises questions for Congress as it weighs different policy objectives. The Organisation for Economic Co-operation and Development (OECD) points out three potentially conflicting policy goals in the internet economy: (1) enabling the internet; (2) boosting or preserving competition within and outside the internet; and (3) protecting privacy and consumers, more generally.", "While no multilateral agreement on digital trade exists in the World Trade Organization (WTO), other WTO agreements cover some aspects of digital trade. Recent bilateral and plurilateral agreements have begun to address digital trade rules and barriers more explicitly. For example, the proposed U.S.-Mexico-Canada Agreement (USMCA) and ongoing plurilateral discussions in the WTO on a potential e-commerce agreement could address digital trade barriers to varying degrees. Digital trade is also being discussed in a variety of international forums, providing the United States with multiple opportunities to engage in and shape global norms.", "With workers in the high-tech sector in every U.S. state and congressional district, and over two-thirds of U.S. jobs requiring digital skills, Congress has an interest in ensuring and developing the global rules and norms of the internet economy in line with U.S. laws and norms, and in establishing a U.S. trade policy on digital trade that advances U.S. interests."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["The rapid growth of digital technologies in recent years has created new opportunities for U.S. consumers and businesses but also new challenges in international trade. For example, consumers today access e-commerce, social media, telemedicine, and other offerings not imagined thirty years ago. Businesses use advanced technology to reach new markets, track global supply chains, analyze big data, and create new products and services. New technologies facilitate economic activity but also create new trade policy questions and concerns. Data and data flows form a pillar of innovation and economic growth. ", "The \"digital economy\" accounted for 6.9% of U.S. GDP in 2017, including (1) information and communications technologies (ICT) sector and underlying infrastructure, (2) digital transactions or e\u2010commerce, and (3) digital content or media. The digital economy supported 5.1 million jobs, or 3.3% of total U.S. employment in 2017, and almost two-thirds of jobs created in the United States since 2010 required medium or advanced levels of digital skills. As digital information increases in importance in the U.S. economy, issues related to digital trade have become of growing interest to Congress. ", "While there is no globally accepted definition of digital trade, the U.S. International Trade Commission (USITC) broadly defines digital trade as follows:", "The delivery of products and services over the Internet by firms in any industry sector, and of associated products such as smartphones and Internet-connected sensors. While it includes provision of e-commerce platforms and related services, it excludes the value of sales of physical goods ordered online, as well as physical goods that have a digital counterpart (such as books, movies, music, and software sold on CDs or DVDs).", "The rules governing digital trade are evolving as governments across the globe experiment with different approaches and consider diverse policy priorities and objectives. Barriers to digital trade, such as infringement of intellectual property rights (IPR) or protective industrial policies, often overlap and cut across sectors. In some cases, policymakers may struggle to balance digital trade objectives with other legitimate policy issues related to national security and privacy. Digital trade policy issues have been in the spotlight recently, due in part to the rise of new trade barriers, heightened concerns over data privacy, and an increasing number of cybertheft incidents that have affected U.S. consumers and companies. These concerns may raise the general U.S. interest in promoting, or restricting, cross-border data flows and in enforcing compliance with existing rules. Congress has an interest in ensuring the global rules and norms of the internet economy are in line with U.S. laws and norms.", "Trade negotiators continue to explore ways to address evolving digital issues in trade agreements, including in the proposed U.S.-Mexico-Canada Agreement (USMCA). Congress has an important role in shaping digital trade policy, including oversight of agencies charged with regulating cross-border data flows, as part of trade negotiations, and in working with the executive branch to identify the right balance between digital trade and other policy objectives.", "This report discusses the role of digital trade in the U.S. economy, barriers to digital trade, digital trade agreement provisions and negotiations, and other selected policy issues. "], "subsections": []}, {"section_title": "Role of Digital Trade in the U.S. and Global Economy", "paragraphs": ["The internet is not only a facilitator of international trade in goods and services, but is itself a platform for new digitally-originated services. The internet is enabling technological shifts that are transforming businesses. According to one estimate, the volume of global data flows (sending of digital data such as from streaming video, monitoring machine operations, sending communications) is growing faster than trade or financial flows. One analysis forecasts the global flows of goods, foreign direct investment (FDI), and digital data will add 3.1% to gross domestic product (GDP) from 2015-2020. The volume of global data flows is growing faster than trade or financial flows, and its positive GDP contribution offsets the lower growth rates of trade and FDI (see Figure 1 ). Focusing domestically, the Bureau of Economic Analysis (BEA) estimates that, from 1997-2017, real value added for the digital economy outpaced overall growth in the economy each year and, in 2017, the real value-added growth of the digital economy accounted for 25% of total real GDP growth.", "The increase in the digital economy and digital trade parallels the growth in internet usage globally. According to one study, over half of the world's population use the internet, including 95% of people in North America. As of 2017, 75% of U.S. households use wired internet access, but an increasing number rely on mobile internet access as the internet is integrated into people's everyday lives; 72% of U.S. adults own a smartphone. As of the end of 2018, approximately 40% of internet traffic in the United States came from mobile devices. Each day, companies and individuals across the United States depend on the internet to communicate and transmit data via various media and channels that continue to expand with new innovations (see Figure 2 ). ", "Cross-border data and communication flows are part of digital trade; they also facilitate trade and the flows of goods, services, people, and finance, which together are the drivers of globalization and interconnectedness. The highest levels reportedly are those flows between the United States and Western Europe, Latin America, and China. Efforts to impede cross-border data flows could decrease efficiency and other potential benefits of digital trade.", "Powering all these connections and data flows are underlying ICT. ICT spending is a large and growing component of the international economy and essential to digital trade and innovation. According to the United Nations, world trade in ICT physical goods grew to $2 trillion in 2017 with U.S. ICT goods exports over $146 billion. ", "Semiconductors, a key component in many electronic devices, are a top U.S. ICT export. Global sales of semiconductors were $468.8 billion in 2018, an increase of 6.81% over the prior year. U.S.-based firms have the largest global market share with 45% and accounted for 47.5% of the Chinese market. Given the importance of semiconductors to the digital economy and continued advances in innovation, countries such as China are seeking to grow their own semiconductor industry to lessen their dependence on U.S. exports. ", "ICT services are outpacing the growth of international trade in ICT goods. The OECD estimates that ICT services trade increased 40% from 2010 to 2016. The United States is the fourth-largest OECD exporter of ICT services, after Ireland, India, and the Netherlands. ICT services include telecommunications and computer services, as well as charges for the use of intellectual property (e.g., licenses and rights). ICT-enabled services are those services with outputs delivered remotely over ICT networks, such as online banking or education. ICT services can augment the productivity and competitiveness of goods and services. In 2017, exports of ICT services grew to $71 billion of U.S. exports while services exports that could be ICT-enabled were another $439 billion, demonstrating the impact of the internet and digital revolution. ", "ICT and other online services depend on software; the value added to U.S. GDP from support services and software has increased over the past decade relative to that of telecommunications and hardware. According to one estimate, software contributed more than $1.14 trillion to the U.S. value added to GDP in 2016, an increase of 6.4% over 2014, and the U.S. software industry accounted for 2.9 million jobs directly in 2016. Internet-advertising, an industry that would not exist without ICT, generated an additional 10.4 million U.S. jobs."], "subsections": [{"section_title": "Economic Impact of Digital Trade", "paragraphs": ["As the internet and technology continue to develop rapidly, increasing digitization affects finance and data flows, as well as the movement of goods and people. Beyond simple communication, digital technologies can affect global trade flows in multiple ways and have broad economic impact (see Figure 3 ). First, digital technology enables the creation of new goods and services, such as e-books, online education, or online banking services. Digital technologies may also add value by raising productivity and/or lowering the costs and barriers related to flows of traditional goods and services. For example, companies may rely on radio-frequency identification (RFID) tags for supply chain tracking, 3-D printing based on data files, or devices or objects connected via the Internet of Things (see text box ). In addition, digital platforms serve as intermediaries for multiple forms of digital trade, including e-commerce, social media, and cloud computing. In these ways, digitization pervades every industry sector, creating challenges and opportunities for established and new players. ", "Looking at digital trade in an international context, approximately 12% of physical goods are traded via international e-commerce. Global e-commerce grew from $19.3 trillion in 2012 to $27.7 trillion in 2016, of which 86% was business-to-business (B2B). One source estimates that cross-border business-to-consumer (B2C) e-commerce sales will reach approximately $1 trillion by 2020.", "These estimates do not quantify the additional benefits of digitization upon business efficiency and productivity, or of increased customer and market access, which enable greater volumes of international trade for firms in all sectors of the economy. Digitization efficiencies have the potential to both increase and decrease international trade. For example, one analysis found that logistics optimization technologies could reduce shipping and customs processing times by 16% to 28%, boosting overall trade by 6% to 11% by 2030; at the same time, however, automation, Artificial Intelligence (AI), and 3-D printing could enable more local production, thereby reducing global trade by as much as 10% by 2030. The overall impact of digitization has yet to be seen.", "One study coined the term \"digital spillovers\" to fully capture the digital economy and estimated the global digital economy, including such spillovers, was $11.5 trillion in 2016, or 15.5% of global GDP. Their analysis indicated that the long-term return on investment (ROI) for digital technologies is 6.7 times that of nondigital investments. ", "Blockchain is one emerging software technology some companies are using to increase efficiency and transparency and lower supply chain costs that depends on open data flows of digital trade. For example, in an effort to streamline processes, save costs, and improve public health outcomes, Walmart and IBM built a blockchain platform to increase transparency of global supply chains and improve traceability for certain imported food products. The initiative aims to expand to include several multinational food suppliers, farmers, and retailers and depends on connections via the Internet of Things and open international data flows. With increased applications, the Internet of Things may have a global economic impact of as much as $11.1 trillion per year, according to one study.", "Because of its ubiquity, the benefits and economic impact of digitization are not restricted to certain geographic areas, and businesses and communities in every U.S. state feel the impact of digitization as new business models and jobs are created and existing ones disrupted. One study found that the more intensively a company uses the internet, the greater the productivity gain. The increase in internet usage is also associated with increased value and diversity of products being sold. ", "The internet, and cloud services specifically, has been called the great equalizer, since it allows small companies access to the same information and the same computing power as large firms using a flexible, scalable, and on-demand model. For example, Thomas Publishing Co., a U.S. mid-sized, private, family-owned and -operated business, is transporting data from its own computer servers to data centers run by Amazon.com Inc. Digital platforms can minimize costs and enable small and medium-sized enterprises (SMEs) to grow through extended reach to customers or suppliers or integrating into a global value chain (GVC). More than 50% of businesses globally rely on data flows for cloud computing (see text box ).", "Digitization of customs and border control mechanisms also helps simplify and speed delivery of goods to customers. Regulators are looking to blockchain technology to improve efficiency in managing and sharing data for functions such as border control and customs processing of international shipments. With simpler border and customs processes, more firms are able to conduct business in global markets (or are more willing to do so). A study of U.S. SMEs on the e-commerce platform eBay found that 97% export, while that number is a full 100% in countries as diverse as Peru and Ukraine. Netflix, a U.S. firm offering online streaming services, increased its international revenue from $4 million in 2010 to more than $5 billion in 2017. ", "A similar argument has been made for firms and governments in low- and middle-income countries who can take advantage of the power of the internet to foster economic development. According to one official of the Asia-Pacific Economic Cooperation Forum (APEC), technology has enabled SMEs to open in new sectors such as ride-sharing and online order delivery services, and provides them with a \"bigger, better opportunity to grow and learn that to join a global value chain.\" Another study of SMEs estimated that the internet is a net creator of jobs, with 2.6 jobs created for every job that may be displaced by internet technologies; companies that use the internet intensively effectively doubled the average number of jobs. However, the costs of digital trade can be concentrated on particular sectors (see next section)."], "subsections": [{"section_title": "Digitization Challenges", "paragraphs": ["The U.S. digital economy supported 3.3% of total U.S. employment in 2017, and those jobs earned approximately one and a half times the average annual worker compensation of the overall U.S. economy, making them attractive source for future growth. Software, and the software industry, contributes to the GDP in all 50 states, with the value-added GDP of the software industry growing more than 40% in Idaho and North Carolina. Industries, such as media and firms in urban centers, account for a larger share of the benefits. Many in business and research communities are only beginning to understand how to take advantage of the vast amounts of data being collected every day. ", "However, sources of \"e-friction\" or obstacles can prevent consumers, companies, and countries from realizing the full benefits of the online economy. Causes of e-friction can fall into four categories: infrastructure, industry, individual, and information. Government policy can influence e-friction, from investment in infrastructure and education to regulation and online content filtering. According to some experts, economies with lower amounts of e-friction may be associated with larger digital economies. ", "While there are numerous positive digital dividends, there are also possible negative and uneven results across populations, such as the displacement of unskilled workers, an imbalance between companies with and without internet access, and the potential for some to use the internet to establish monopolies. While new technologies and new business models present opportunities to enhance efficiency and expand revenues, innovate faster, develop new markets, and achieve other benefits, new challenges also arise with the disruption of supply chains, labor markets, and some industries. For example, one study found a mismatch between workforce skills and job openings such as in Nashville, TN, which has an abundance of workers with music production and radio broadcasting skills but a scarcity of workers with IT infrastructure, systems management, and web programming skills. Another source notes over 11,000 open computing jobs in Michigan, with average salaries of over $80,000.", "The World Bank identified policy areas to try to ensure, and maintain, the potential benefits of digitization. Policy areas include establishing a favorable and competitive business climate, developing strong human capital, ensuring good governance, investing to improve both physical and digital infrastructure, and raising digital literacy skills. According to the World Economic Forum Global Competitiveness Index 4.0, the United States is ranked at the top with a score of 85.6% compared to the global median score of 60%. The study identifies the key drivers of productivity as human capital, innovation, resilience, and agility, noting that future productivity depends not only on investment in technology but investment in digital skills. While the United States is considered a \"super innovator,\" the report also notes \"indications of a weakening social fabric \u2026 and worsening security situation \u2026 as well as relatively low checks and balances, judicial independence, and transparency.\"", "With the rapid pace of technology innovation, more jobs may become automated, with digital skills becoming a foundation for economic growth for individual workers, companies, and national GDP. Over two-thirds of U.S. jobs created since 2010 require some level of digital skills. The OECD found that generic ICT skills are insufficient among a significant percentage of the global workforce and few countries have adopted comprehensive ICT skills strategies to help workers adapt to changing jobs. "], "subsections": []}]}]}, {"section_title": "Digital Trade Policy and Barriers", "paragraphs": ["Policies that affect digitization in any one country's economy can have consequences beyond its borders, and because the internet is a global \"network of networks,\" the state of a country's digital economy can have global ramifications. Protectionist policies may erect barriers to digital trade, or damage trust in the underlying digital economy, and can result in the fracturing, or so-called balkanization, of the internet, lessening any gains. What some policymakers see as protectionist, however, others may view as necessary to protect domestic interests. For examples of the types of digital trade barriers that are in place around the globe, please see Appendix.", "Despite common core principles such as protecting citizen's privacy and expanding economic growth, governments face multiple challenges in designing policies around digital trade. The OECD points out three potentially conflicting policy goals in the internet economy: (1) enabling the internet; (2) boosting or preserving competition within and outside the internet; and (3) protecting privacy and consumers more generally.", "Ensuring a free and open internet is a stated policy priority for the U.S. government. Like other cross-cutting policy areas, such as cybersecurity or privacy, no one federal entity has policy primacy on all aspects of digital trade, and the United States has taken a sectoral approach to regulating digitization. According to an OECD study, the United States is the only OECD country that uses a decentralized, market-driven approach for a digital strategy rather than having an overarching national digital strategy, agenda, or program.", "The Department of Commerce works to promote U.S. digital trade policies domestically and abroad. In 2015, Commerce launched a Digital Economy Agenda that identifies four pillars:", "1. \"Promoting a free and open Internet worldwide, because the Internet functions best for our businesses and workers when data and services can flow unimpeded across borders\"; 2. \"Promoting trust online, because security and privacy are essential if electronic commerce is to flourish\"; 3. \"Ensuring access for workers, families, and companies, because fast broadband networks are essential to economic success in the 21 st century\"; and 4. \"Promoting innovation, through smart intellectual property rules and by advancing the next generation of exciting new technologies.\"", "Commerce's digital attach\u00e9 program under the foreign commercial service helps U.S. businesses navigate regulatory issues and overcome trade barriers to e-commerce exports in key markets. ", "The Administration also works to promote U.S. digital priorities by identifying and challenging foreign trade barriers and through trade negotiations. As with traditional trade barriers, digital trade constraints can be classified as tariff or nontariff barriers. Tariff barriers may be imposed on imported goods used to create ICT infrastructure that make digital trade possible or on the products that allow users to connect, while nontariff barriers, such as discriminatory regulations or local content rules, can block or limit different aspects of digital trade. Often, such barriers are intended to protect domestic producers and suppliers. Some estimates indicate that removing foreign barriers to digital trade could increase annual U.S. real GDP by 0.1%-0.3% ($16.7 billion-$41.4\u00a0billion), increase U.S. wages up to 1.4%, and add up to 400,000 U.S. jobs in certain digitally intensive industries. "], "subsections": [{"section_title": "Tariff Barriers", "paragraphs": ["Historically, trade policymakers focused on overt trade barriers such as tariffs on products entering countries from abroad. Tariffs at the border impact goods trade by raising the prices of products for producers or end customers, if tariff costs are passed down, thus limiting market access for U.S. exporters selling products, including ICT goods. Quotas may limit the number or value of foreign goods, persons, suppliers, or investments allowed in a market. Since 1998, WTO countries have agreed to not impose customs duties on electronic transmissions covering both goods (such as e-books and music downloads) and services.", "While the United States is a major exporter and importer of ICT goods, tariffs are not levied on many of the products due to free trade agreements (FTAs) and the World Trade Organization (WTO) Information Technology Agreement (see below). Tariffs may still serve as trade barriers for those countries or products not covered by existing FTAs or the WTO ITA. ", "U.S. ICT services are often inputs to final demand products that may be exported by other countries, such as China. U.S. ICT services have shown increasing growth rates since the middle of 2014. "], "subsections": []}, {"section_title": "Nontariff Barriers", "paragraphs": ["Nontariff barriers (NTBs) are not as easily quantifiable as tariffs. Like digital trade, NTBs have evolved and may pose significant hurdles to companies seeking to do business abroad. NTBs often come in the form of laws or regulations that intentionally or unintentionally discriminate and/or hamper the free flow of digital trade.", "Nondiscrimination between local and foreign suppliers is a core principle encompassed in global trading rules and U.S. free trade agreements. While WTO agreements cover physical goods, services, and intellectual property, there is no explicit provision for nondiscrimination for digital goods. As such, NTBs that do not treat digital goods the same as physical ones could limit a provider's ability to enter a market. ", "Broader governance issues, including rule of law, transparency, and investor protections, can pose barriers and limit the ability of firms and individuals to successfully engage in digital trade. Similarly, market access restrictions on investment and foreign ownership, or on the movement of people, whether or not specific to digital trade or ICT sectors, may limit a company's ability enter a foreign market. Other NTBs are more specific to digital trade."], "subsections": [{"section_title": "Localization Requirements", "paragraphs": ["Localization measures are defined as measures that compel companies to conduct certain digital-trade-related activities within a country's borders. Governments often use privacy protection or national security arguments as justifications for these measures. Though localization policies can be used to achieve legitimate public policy objectives, some are designed to protect, favor, or stimulate domestic industries, service providers, or intellectual property at the expense of foreign counterparts and, in doing so, function as nontariff barriers to market access. In recent free trade agreements, the United States has aimed to ensure an open internet and eliminate digital trade barriers, while preserving flexibility for governments to pursue legitimate policy objectives (see below)."], "subsections": [{"section_title": "Cross-Border Data Flow Restrictions", "paragraphs": ["According to a 2017 USITC report, data localization was the most cited policy measure impeding digital trade, and the number of data localization measures globally has doubled in the last six years. One study found that over 120 countries have laws related to personal data protection, often requiring data localization. Regulations limiting cross-border data flows and requiring local storage are a type of localization requirement that prohibit companies from exporting data outside a country. ", "Such restrictions can pose barriers to companies whose transactions rely on the internet to serve customers abroad and operate more efficiently. For example, data localization requirements can limit e-commerce transactions that depend on foreign financial service providers or multinational firms' full analysis of big data from across an entire company or global value chain. Regulations limiting cross-border data flows may force companies to build local server infrastructure within a country, not only increasing costs and decreasing scale, but also creating data silos that may be more vulnerable to cybersecurity risks. According to some analysts, computing costs in markets with localization measures can be 30%-60% higher than in more open markets.", "Data localization requirements pose barriers to companies' efforts to operate more efficiently by migrating to the cloud or to SMEs attempting to enter new markets. According to some estimates, cloud computing accounted for 70% of related IT market growth between 2012 and 2015, and is expected to represent 60% of growth through 2020. Most of the largest global providers of cloud computing services are U.S. companies (Amazon, Microsoft, Google, and IBM). ", "Regulations or policies that limit data flows create barriers to firms and countries seeking to consume cloud services. One U.S. business group noted increased forced localization measures, citing examples in China, Colombia, the European Union (EU), Indonesia, South Korea, Russia, and Vietnam. The Business Software Alliance's 2018 Global Cloud Computing Scorecard highlighted barriers to cloud services in Indonesia, Russia, and Vietnam. For example, to comply with localization requirements and continue to serve consumers of Google's many cloud services (e.g., Gmail, search, maps) globally, the company is opening more data centers in the United States and internationally.", "Finding a global consensus on how to balance open data flows, cybersecurity, and privacy protection may be key to maintaining trust in the digital environment and advancing international trade. Countries are debating how to achieve the right balance and potential paths forward in plurilateral and multilateral forums and trade negotiations (see \" U.S. Bilateral and Plurilateral Agreements \"). "], "subsections": []}, {"section_title": "Other Localization Requirements", "paragraphs": ["In addition to cross-border data flow restrictions, localization policies include requirements to use local content, whether hardware or software, as a condition for manufacturing or access to government procurement contracts; use local infrastructure or computing facilities; or partner with a local company and transfer technology or intellectual property to that partner. Localization requirements can also pose a threat to intellectual property (discussed below).", "In April 2018, the Commerce Department announced plans to develop a \"comprehensive strategy to address trade-related forced localization policies, practices, and measures impacting the U.S. information and communications technology (ICT) hardware manufacturing industry.\" In creating a strategic response to the increase in protectionist localization policies globally, Commerce aims to preserve the competitiveness of the U.S. ICT sector."], "subsections": []}]}, {"section_title": "Intellectual Property Rights (IPR) Infringement", "paragraphs": ["While the internet and digital technologies have opened up markets for international trade, they also present ongoing and unique challenges for the protection and enforcement of intellectual property (IP), which are creations of the mind\u2014such as an invention, literary/artistic work, design, symbol, name, or image\u2014embodied in a physical or digital object. Intellectual property rights (IPR) are legal, private, enforceable, time-limited rights that governments grant to inventors and artists to exclude others from using their creations without their permission. Examples of IPR include patents, copyrights, trademarks, and trade secrets.", "Innovations in digital technologies fuel IPR infringement by enabling the rapid duplication and distribution of content that is low-cost and high-quality, making it easy, for instance, to pirate music, movies, software, and other copyrighted works, and to share them globally. The internet provides \"ease of conducting commerce through unverified vendors, inability for consumers to inspect goods prior to purchase, and deceptive marketing.\" Both copyright- and trademark-based industries face challenges tackling not only infringement in physical marketplaces, but increasingly also online marketplaces. Cyber-enabled theft of trade secrets is of growing concern. Trade secrets are essential to many businesses' operations and important assets, including those in ICT, services, biopharmaceuticals, manufacturing, and environmental and other technologies.", "IPR infringement in the digital environment is particularly difficult to quantify but considered to be significant, potentially exceeding the volume of sales through traditional physical markets. A 2016 industry study estimated the value of digitally pirated music, movies, and software (not actual losses) to be $213 billion in 2013 and growing to as much as $384-$856 billion in 2022. The IP Commission estimated that the annual cost to the U.S. economy from counterfeit goods, pirated software, and theft of trade secrets continues to surpass $225 billion and could reach $600 billion.", "Efforts to address IPR infringement raise issues of balance about, on one hand, protecting and enforcing IPR to protect the rights of content holders and incentivize innovation in the digital environment and, on the other hand, setting appropriate limitations and exceptions to ensure other economically and socially valuable uses. Content industries say that IP theft costs them sales, detracts from legitimate services, harms investors in these businesses, damages their brand or reputation, and hurts \"law-abiding\" consumers. Some technology product and service companies, as well as some civil society groups, assert that overly stringent IPR policies may stifle information flows and legitimate digital trade and these groups support \"fair use\" exceptions and limitations to IPR.", "Other IPR-related barriers to digital trade include government measures, policies, and practices that are intended to promote domestic \"indigenous innovation\" (i.e., develop, commercialize, and purchase domestic products and technologies) but that can also disadvantage foreign companies. These measures can be linked to \"forced\" localization barriers to trade. China, for instance, conditions market access, government procurement, and the receipt of certain preferences or benefits on a firm's ability to show that certain IPR is developed in China or is owned by or licensed to a Chinese party. Another example is India's data and server localization requirements, which USITC firms assert hurt market access and innovation in their sector. (See above.)"], "subsections": []}, {"section_title": "National Standards and Burdensome Conformity Assessment", "paragraphs": ["Local or national standards that deviate significantly from recognized international standards may make it difficult for firms to enter a particular market. An ICT product or software that conforms to international standards, for example, may not be able to connect to a local network or device based on a local or proprietary standard. Also, proprietary standards can limit a firm's ability to serve a market if their company practices or assets do not conform with (nor do their personnel have training in) those standards. As a result, U.S. companies may not be able to reach customers or partners in those countries.", "Similarly, redundant or burdensome conformity assessment or local registration and testing requirements often add time and expense for a company trying to enter a new market, and serve as a deterrent to foreign companies. For example, India's Compulsory Registration Order (CRO) mandates that manufacturers register their products with laboratories affiliated with or certified by the Bureau of Indian Standards, even if the products have already been certified by accredited international laboratories, and is an often-cited concern for U.S. businesses facing delays getting products to market. If a company is required to provide the source code, proprietary algorithms, or other IP to gain market access, it may fear theft of its IP and not enter that market (see above). "], "subsections": []}, {"section_title": "Filtering, Blocking, and Net Neutrality", "paragraphs": ["In some nations, government seeks strict control over digital data within its borders, such as what information people can access online, and how information is shared inside and outside its borders. Governments that filter or block websites, or otherwise impede access, form another type of nontariff barrier. For example, China has asserted a desire for \"digital sovereignty\" and has erected what is termed by some as the \"Great Firewall.\" A change to China's internet filters also blocks virtual private network (or VPN) access to sites beyond the Great Firewall. VPNs have been used by Chinese citizens to use websites like Facebook and by companies to access data outside of China (e.g., information from foreign subsidiaries or partners). ", "While China is the most well-known, it is not alone in seeking to control access to websites. For example, Thailand established a Computer Data Filtering Committee to use the court system to block websites that it views as violating public order and good order, as well as intellectual property. In Russia, citizens protested government censorship, including the blocking of a popular messaging application along with other websites and online tools. ", "Several U.S. and foreign policymakers have expressed concern about the influence that violent or harmful content online may have upon those who view or read it. In response, some countries have introduced legislation to regulate internet content, for example, to fight the impact and spread of violent material and false information. In the United States, significant First Amendment freedom of speech issues are raised by the prospect of government restrictions on the publication and distribution of speech, even speech that advocates terrorism. As a result, what users can access online may vary across countries, depending on national policy and preferences. These differences illustrate the complexity of the internet and evolving technologies, and the lack of global standards that prevails in other areas of international trade. ", "National-level net neutrality policies also differ widely. Net neutrality rules govern the management of internet traffic as it passes over broadband internet access services, whether those services are fixed or wireless. Allowing internet access providers to limit or otherwise discriminate against content providers, foreign and domestic, may create a nontariff barrier. In the United States, the Federal Communications Commission (FCC) classification of broadband internet service providers (ISPs) has been controversial domestically and may differ from how U.S. trading partners regulate ISPs. "], "subsections": []}, {"section_title": "Cybersecurity Risks", "paragraphs": ["The growth in digital trade has raised issues related to cybersecurity, the act of protecting ICT systems and their contents from cyberattacks. Cyberattacks in general are deliberate attempts by unauthorized persons to access ICT systems, usually with the goal of theft, disruption, damage, or other unlawful actions. Cybersecurity can also be an important tool in protecting privacy and preventing unauthorized surveillance or intelligence gathering. Although there is overlap between data protection and privacy, the two are not equivalent. Cybersecurity measures are essential to protect data (e.g., against intrusions or theft by hackers). However, they may not be sufficient to protect privacy.", "Cyberattacks can pose broad risks to financial and communication systems, national security, privacy, and digital trade and commerce. According to the White House Council of Economic Advisers, malicious cyberactivity (i.e., business disruption, theft of proprietary information) cost the U.S. economy up to $109 billion in 2016. Cybersecurity risks run across all industry sectors that rely on digital information. In the entertainment industry, for example, Iranian hackers stole unreleased episodes of HBO's \"Game of Thrones\" series, holding them for ransom, and potentially costing the company and risking intellectual property and harm to the corporate reputation. The Federal Bureau of Investigations (FBI) suspects Chinese hackers were behind a cyberattack on the Marriot's Starwood hotel chain that resulted in potentially stealing IPR and the personal information of up to 327 million hotel customers, including their birthdates and passport numbers. An FBI official testified to the Senate Judiciary Committee that Chinese espionage efforts have become \"the most severe counterintelligence threat facing our country today.\"", "Cybersecurity threats can disrupt business operations or supply chains. The 2017 WannaCry ransomware attack impacted public and private sector entities in over 150 countries with direct costs of at least $8 billion due to computer downtime, according to one estimate. In the widespread attack, computers in homes, schools, hospitals, government agencies, and companies were hit. The United States publicly attributed the cyberattack to North Korea, stating that \"these disruptions put lives at risk.\" Compromises of ITC supply chains can also pose a threat to organizations that rely on the tampered hardware as was alleged, for example, with some Supermicro microchips used in ITC manufacturing in China.", "Companies that rely on cloud services to store or transmit data may choose to use enhanced encryption to protect the communication and privacy, both internally and of their end customers. This, in turn, may impede law enforcement investigations if they are unable to access the encrypted data. However, restrictions on the ability for a firm to use encryption may make a company vulnerable to cyberattacks or cybertheft, demonstrating the need for policies and regulations to balance competing objectives."], "subsections": []}]}]}, {"section_title": "U.S. Digital Trade with Key Trading Partners", "paragraphs": ["The European Union (EU) and China are large U.S. digital trade partners and each has presented various challenges for U.S. companies, consumers, and policymakers."], "subsections": [{"section_title": "European Union", "paragraphs": ["Differences in U.S. and EU policies have ramifications on digital flows and international trade. The two partners' varying approaches to digital trade, privacy, and national security, have, at times, threatened to disrupt U.S.-EU data flows. ", "The transatlantic economy is the largest in the world, and cross-border data flows between the United States and EU are the highest in the world. In between 2003 and 2017, total U.S.-EU trade in goods and services (exports plus imports) nearly doubled from $594 billion to $1.2 trillion. ICT and potentially ICT-enabled services accounted for approximately $190 billion of U.S. exports to the EU in 2017. The two sides also account for a significant portion of each other's e-commerce trade (see Figure 4 ).", "The United States and EU account for almost half of each other's digitally deliverable service exports (e.g., business, professional, and technical services) and many of these services are incorporated into exported goods as part of GVCs (see Figure 5 and Figure 6 ). The UK alone accounted for 23% of U.S. digitally deliverable services exports. Almost 40% of the data flows between the United States and EU are through business and research networks.", "Despite close economic ties, differences between the United States and EU in their approaches to data flows and digital trade have caused friction in U.S.-EU economic and security relations. To address some of these differences, in 2013, the United States and the EU began, but did not conclude, negotiating a broad FTA. Negotiations included a number of digital trade issues such as market access for digital products, IPR protection and enforcement, cybersecurity, and regulatory cooperation, among other things. On October 16, 2018, the Trump Administration notified Congress under Trade Promotion Authority (TPA) of its intent to enter into negotiations with the EU. The Administration's specific negotiating objectives envision a wide-ranging agreement, including addressing digital trade, along with trade in goods, services, agriculture, government procurement, and other rules, such as on IPR and investment. However, no agreement exists on the scope of the negotiations. The EU negotiating mandates, in contrast, are narrower; they authorize EU negotiations with the United States to address industrial tariffs (excluding agricultural products) and nontariff regulatory barriers to make it easier for companies to prove that their products meet U.S. and EU technical requirements. ", "The Administration also notified Congress under TPA of its intent to negotiate a trade agreement with the UK post-Brexit, and the corresponding specific negotiating objectives likewise envision a broad agreement addressing digital trade issues. The UK cannot formally negotiate or conclude a new agreement until it exits the EU, which has exclusive competence over trade policy and negotiates trade deals on behalf of all EU member states. Details about the future UK-EU trade relationship remain largely unknown, and it is uncertain when and to what extent the UK will regain control of its national trade policy\u2014a major objective for Brexit supporters. These factors directly shape prospects for a proposed bilateral U.S.-UK free trade agreement."], "subsections": [{"section_title": "EU-U.S. Privacy Shield", "paragraphs": ["The United States and EU have different legal approaches to information privacy that extends into the digital world. After extensive negotiations, the EU-U.S. Privacy Shield entered into force on July 12, 2016, creating a framework to provide U.S. and EU companies a mechanism to comply with data protection requirements when transferring personal data between the EU and the United States. Under the Privacy Shield program, U.S. companies can voluntarily self-certify compliance with requirements such as robust data processing obligations. The agreement includes obligations on the U.S. government to proactively monitor and enforce compliance by U.S. firms, establish an ombudsman in the U.S. State Department, and set specific safeguards and limitations on surveillance. The United States and Switzerland also agreed to the Swiss-U.S. Privacy Shield, which will be \"comparable\" to the EU-U.S. agreement. ", "The Privacy Shield also involves an annual joint review by the United States and the EU, the second of which was completed in October 2018. Under the review, the commission found that the Privacy Shield is working and that the United States had made improvements and changes since the first review. The Commission, however, also noted areas of concern and specific recommendations."], "subsections": []}, {"section_title": "General Data Protection Regulation (GDPR)", "paragraphs": ["The EU's General Data Protection Regulation (GDPR), effective May 2018, established rules for EU member states to safeguard individuals' personal data. The GDPR is a comprehensive privacy regime that builds on previous EU data protection rules. It grants new rights to individuals to control personal data and creates specific new data protection requirements. The GDPR applies to (1) all businesses and organizations with an EU establishment that process (perform operations on) personal data of individuals (or \"data subjects\") in the EU, regardless of where the actual processing of the data takes place; and (2) entities outside the EU that offer goods or services (for payment or for free) to individuals in the EU or monitor the behavior of individuals in the EU. These measures have raised concerns about the GDPR's extraterritorial implications.", "While the GDPR is directly applicable at the EU member state level, individual countries are responsible for establishing some national-level rules and policies as well as enforcement authorities, and some are still in the process of doing so. As a result, some U.S. stakeholders have voiced concern about a lack of clarity and inadequate country compliance guidelines, as well as about the potential high cost of data storage and processing needed for compliance. Despite the lack of precise guidance, many companies have taken steps to implement its requirements. For example, Amazon touts its compliance with GDPR requirements and aims to assist its Amazon Web Services (AWS) corporate customers, many of whom are small and medium businesses, with their own compliance. It can be more challenging for SMEs to fully understand GDPR and comply with its notification and other requirements such as an individual's \"right to be forgotten\" and on data portability; there are indications that some U.S. businesses have chosen to exit the EU market.", "Some experts contend that the GDPR may effectively set new global data privacy standards, since many companies and organizations are striving for GDPR compliance to avoid being shut out of the EU market, fined, or otherwise penalized. In addition, some countries outside of Europe are imitating all or parts of the GDPR in their own privacy regulatory and legislative efforts. European Data Protection Authorities may have reinforced U.S. companies' concerns by initiating several enforcement actions in the fall of 2018, including a \u20ac50 million (approximately $57 million) fine on Google."], "subsections": []}, {"section_title": "Digital Single Market (DSM)", "paragraphs": ["Like the GDPR, EU policymakers are attempting to bring more harmonization across the region through the Digital Single Market (DSM). The DSM is an ongoing effort to unify the EU market, facilitate trade, and drive economic growth. The DSM's three pillars revolve around better online access to cross-border digital goods and services; a regulatory environment supporting investment and fair competition; and driving growth through investment in infrastructure, human capital, research, and innovation. Among its initiatives is a mandate to allow cross-border flows for nonpersonal data within the EU (with limited exceptions), but not necessarily externally. "], "subsections": []}]}, {"section_title": "China", "paragraphs": ["China presents a number of significant opportunities and challenges for the United States in digital trade. The modernization of the Chinese economy, coupled with a large and increasingly prosperous population, has led to a surge in the number of Chinese Internet users and made China a major source of global ecommerce. China's internet users grew from 21.5 million in 2000 to 829 million as of March 2019, and this trend will likely continue, given China's relatively low internet penetration rate (see Figure 7 .) China's online retail sales in 2018 totaled $1.1 trillion (more than double the U.S. level at $505 billion) and were the world's largest. E-Marketer predicts that China's e-commerce retail sales will reach $1.99 trillion in 2019, accounting for 35.3% of total sales and 55.8% of global online sales. ", "U.S. firms may benefit from expanding digital trade in China, but they may also face numerous challenges in the Chinese market. The USTR's 2019 report on foreign trade barriers included a digital trade fact sheet that cited countries and practices of \"key concern.\" Three Chinese digital policies were listed, including its restrictions on cross-border data flows and data localization requirements; extensive web filtering and blocking of legitimate sites, including blocks 10 of the top 30 global sites and up to 10,000 sites in total, affecting billions of dollars in potential U.S. business; and cloud computing restrictions and requirements to partner with a Chinese firm to enter the market and to transfer technology and IP to the partner. ", "The American Chamber of Commerce in China (AmCham China) 2019 business survey found that 73% of respondents who were engaged in technology and R&D-intensive industries stated that they faced significant or somewhat significant market barriers in China. The lack of sufficient IPR protection (cited by 35% of respondents) and restrictive cybersecurity-related policies (cited by 27% of respondents) ranked among the top three factors prohibiting firms from increasing innovation activities in China. The survey reflected significant concerns by member firms over eight Chinese ICT policies and restrictions (such as internet restrictions and censorship, IPR theft, and data localization requirements), with 72% to 88% of respondents stating that such measures impacted their competiveness and operations in China either somewhat or severely (see Table 1 ). ", "A Digital Trade Restrictiveness Index (DTRI) of 65 economies created by the European Centre for International Political Economy found China to have the most restrictive digital policies, followed by Russia, India, Indonesia, and Vietnam. The index report noted:", "China applies the most restrictive digital trade measures in many areas, including public procurement, foreign investment, Intellectual Property Rights (IPRs), competition policy, intermediary liability, content access and standards. The restrictions do not only impose higher costs for trading digital goods and services, they can also block digital trade altogether in certain sectors. In addition, China's data policies are extremely burdensome for companies, and the country also applies some quantitative trade restrictions and restrictions on e-commerce."], "subsections": [{"section_title": "Internet Governance and the Concept of \"Internet Sovereignty\"", "paragraphs": ["The Chinese government has sought to advance its views on how the internet should be expanded to promote trade, but also to set guidelines and standards over the rights of governments to regulate and control the internet, a concept it has termed \"Internet Sovereignty.\" The Chinese government appears to have first advanced a policy of \"Internet Sovereignty\" around June 2010 when it issued a White Paper titled \"the Internet of China,\" which stated the following:", "Within Chinese territory the Internet is under the jurisdiction of Chinese sovereignty. The Internet sovereignty of China should be respected and protected. Citizens of the People's Republic of China and foreign citizens, legal persons and other organizations within Chinese territory have the right and freedom to use the Internet; at the same time, they must obey the laws and regulations of China and conscientiously protect Internet security.", "In 2014, the Chinese government established the Central Internet Security and \"Informatization\" Leading Group, headed by Chinese president Xi Jinping, to \"strengthen China's Internet security and build a strong cyberpower.\" A year later, President Xi addressed an internet conference, stating \"we should respect the right of individual countries to independently choose their own path of cyber development, model of cyber regulation and Internet public policies, and participate in international cyberspace governance on an equal footing.\"", "Some analysts contend that China's internet sovereignty initiative represents an assertion that the government has the right to fully control the internet within China. Some see this as an attempt by the government to control information that is deemed a threat to social stability, in violation of the right to freedom of speech, which is guaranteed in China's Constitution. Other critics of China's internet sovereignty policy view it as an attempt by the government to limit market access by foreign internet, digital, and high technology firms in China, in order to boost Chinese firms and reduce China's dependence on foreign technology. "], "subsections": []}, {"section_title": "Cyber-Theft of U.S. Trade Secrets", "paragraphs": ["China is considered by most analysts to be the largest source of global theft of IP and a major source of cybertheft of U.S. trade secrets, including by government entities. To illustrate, a 2011 report by the U.S. Office of the Director of National Intelligence (DNI) stated: \"Chinese actors are the world's most active and persistent perpetrators of economic espionage. U.S. private sector firms and cybersecurity specialists have reported an onslaught of computer network intrusions that have originated in China, but the IC (Intelligence Community) cannot confirm who was responsible.\" The report goes on to warn that ", "China will continue to be driven by its longstanding policy of \"catching up fast and surpassing\" Western powers. The growing interrelationships between Chinese and U.S. companies\u2014such as the employment of Chinese-national technical experts at U.S. facilities and the off-shoring of U.S. production and R&D to facilities in China\u2014will offer Chinese government agencies and businesses increasing opportunities to collect sensitive US economic information.", "In May 2014, the U.S. Department of Justice issued a 31-count indictment against five members of the People's Liberation Army for cyber-espionage and other offenses that allegedly targeted five U.S. firms and a labor union for commercial advantage, the first time the Federal government had initiated such action against state actors.", "In April 2015, President Obama issued Executive Order 13964 authorizing certain sanctions against \"persons engaging in significant malicious cyber-enabled activates.\" This led to China send ing a high-level delegation to Washington, DC , a nd, o n September 25, 2015, Presidents Obama and Xi announced that they had reached an agreement on cyber-security and trade secrets that stated that neither country's government \" will conduct or knowingly support cyber-enabled theft of IP, including trade secrets or other confidential business information, with the intent of providing competitive advantages to companies or commercial sectors. \" Specifically, the two s ides agreed to", "Not conduct or knowingly support cyber-enabled theft of IP, including trade secrets or other confidential business information, with the intent of providing competitive advantages to companies or commercial sectors; Establish a high-level joint dialogue mechanism on fighting cybercrime and related issues; Work together to identify and promote appropriate norms of state behavior in cyberspace internationally; and Provide timely responses to requests for information and assistance concerning malicious cyber activities.", "The two sides also agreed to set up a high-level dialogue mechanism (which would take place twice a year) to address cybercrime and improve two-way communication when cyber-related concerns arise (including the creation of a hotline). The first meeting of the U.S.-China High-Level Joint Dialogue on Cybercrime and Related Issues was held in December 2015. China and the United States reached agreement on a document establishing guidelines for requesting assistance on cybercrime or other malicious cyber activities and for responding to such requests. Two more meetings were held in 2016. The dialogue was continued in October 2017 under the Trump Administration. The Administration's Section 301 trade dispute between the United States and China may have led to a suspension of the dialogue (see below). ", "It is difficult to assess the effectiveness of the September 2015 U.S.-China cyber agreement in reducing the level of Chinese cyber intrusions against U.S. entities seeking to steal trade secrets as no official U.S. statistics on such activities are publicly available. In August 2018, the U.S. Deputy Director of the Cyber Threat Intelligence Integration Center stated that \"the intelligence community and private-sector security experts continue to identify ongoing cyber activity from China, although at volumes significantly lower than before the bilateral U.S.-China cyber commitments of September 2015.\" In October 2018, CrowdStrike, a U.S. cybersecurity technology company, identified China as \"the most prolific nation-state threat actor during the first half of 2018.\" It found that Chinese entities had made targeted intrusion attempts against multiple sectors of the economy. In December 2018, U.S. Assistant Attorney General John C. Demers stated at a Senate hearing that from 2011-2018, China was linked to more than 90% of the Justice Department's cases involving economic espionage and two-thirds of its trade secrets cases."], "subsections": []}, {"section_title": "Cybersecurity Laws", "paragraphs": ["According to the USTR's 2017 report on China's WTO accession, China has not fulfilled all of its WTO market opening commitments. The USTR cited \"significant declines in commercial sales of foreign ICT products and services in China,\" as evidence that China continued to maintain \"mercantilist policies under the guise of cybersecurity.\" ", "The Chinese government pledged not to use recently enacted cyber and national security laws and regulations to unfairly burden foreign ICT firms, or to discriminate against foreign ICT firms in the implementation of various policy initiatives to promote indigenous innovation in China. Some Chinese laws or proposals include language stating that critical information infrastructure should be \"secure and controllable,\" an ambiguous term that has not been precisely defined by Chinese authorities. Other proposals of concern to U.S. firms appear to lay out policies that would require foreign ICT firms to hand over proprietary information. ", "Examples of measures of concern to foreign ICT firms include", "Cybers ecurity Law , passed by the government on November 7, 2016 (effective June 1, 2017), ascertains the principles of cyberspace sovereignty; defines the security-related obligations of network product and service providers; further enhances the rules for protection of personal information; establishes a framework of security protection for \"critical information infrastructure\"; and establishes regulations pertaining to cross-border transmissions of important data by critical information infrastructure. Some analysts have expressed concerns that one of the main goals of the new law is to promote the development of indigenous technologies and impose restrictions on foreign firms, and many multinational companies continue to voice concerns about the lack of clarity of the law's requirements, how the law will be interpreted and implemented through subsequent regulations, and to what extent it will impact their operations in China. National Security Law , enacted in July 2015, emphasizes the state's role in driving innovation and reviewing \"foreign commercial investment, special items and technologies, internet information technology products and services, projects involving national security matters, as well as other major matters and activities, that impact or might impact national security.\"", "Such restrictions could have a significant impact on U.S. ICT firms. According to BEA, U.S. exports of ICT services and potentially ICT-enabled services (i.e., services that are delivered remotely over ICT networks) to China totaled $18.7 billion in 2017. "], "subsections": []}]}, {"section_title": "Section 301 Action against China over Intellectual Property and Innovation Issues", "paragraphs": ["Concerns over China's policies on IP, technology, and innovation policies led the Trump Administration, in August 2017, to launch a Section 301 investigation of those policies. On March 22, 2018, President Trump signed a Memorandum on Actions by the United States Related to the Section 301 Investigation that identified four broad IPR-related policies that justified U.S. action under Section 301, stating that China", "1. Uses joint venture requirements, foreign investment restrictions, and administrative review and licensing processes to force or pressure technology tra nsfers from American companies; 2. Uses discriminatory licensing processes to transfer technologies from U.S. companies to Chinese companies; 3. D irects and facilitates investments and acquisitions which generate large-scale technology transfer; and 4. Conducts and supports cyber intrusions into U.S. computer networks to gain access to valuable business information. ", "The USTR estimates such policies cost the U.S. economy at least $50 billion annually. Under the Section 301 action, the Administration proposed to (1) implement 25% ad valorem tariffs on certain Chinese imports (which in sum are comparable to U.S. trade losses); (2) initiate a WTO dispute settlement case against China's \"discriminatory\" technology licensing (which it did on March 23, 2018); and (3) propose new investment restrictions on Chinese efforts to acquire sensitive U.S. technology. The Administration did not act on the last issue after Congress passed the Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA) ( P.L. 115-232 ) in August 2018 to modernize the existing U.S. review process of foreign investments in terms of national security. Among its changes, FIRRMA expanded the types of investment subject to review, including certain noncontrolling investments in \"critical technology.\"", "The Trump Administration subsequently imposed tariff hikes on $250 billion worth of imports from China in three separate stages in 2018, while China increased tariffs on $110 billion worth of imports from the United States (See Figure 8 ). In May 2019, the United States increased the tariff levels on the third tranche of products imported from China. China subsequently increased its tariff levels on its third tranche. "], "subsections": []}]}, {"section_title": "Digital Trade Provisions in Trade Agreements", "paragraphs": ["As the above analysis of EU and China policies demonstrates, there is not a single set of international rules or disciplines that govern key digital trade issues, and the topic is treated inconsistently, if at all, in trade agreements. As digital trade has emerged as an important component of trade flows, it has risen in significance on the U.S. trade policy agenda and that of other countries. ", "Given the stalemate in comprehensive WTO multilateral negotiations, trade agreements have not kept pace with the complexities of the digital economy and digital trade is treated unevenly in existing WTO agreements. More recent bilateral and plurilateral deals have started to address digital trade policies and barriers more comprehensively. The use of digital trade provisions in bilateral and plurilateral trade negotiations may help spur interest in the creation of future WTO frameworks that focus on digital trade and provide input for ongoing plurilateral negotiations occurring in the aegis of the WTO (see below)."], "subsections": [{"section_title": "WTO Provisions", "paragraphs": ["While no comprehensive agreement on digital trade exists in the WTO, other WTO agreements cover some aspects of digital trade and new plurilateral negotiations may set new rules and disciplines."], "subsections": [{"section_title": "General Agreement on Trade in Services (GATS)", "paragraphs": ["The WTO General Agreement on Trade in Services (GATS) entered into force in January 1995, predating the current reach of the internet and the explosive growth of global data flows. GATS includes obligations on nondiscrimination and transparency that cover all service sectors. The market access obligations under GATS, however, are on a \"positive list\" basis in which each party must specifically opt in for a given service sector to be covered.", "As GATS does not distinguish between means of delivery, trade in services via electronic means is covered under GATS. While GATS contains explicit commitments for telecommunications and financial services that underlie e-commerce, digital trade and information flows and other trade barriers are not specifically included. Given the positive list approach of GATS, coverage across members varies and many newer digital products and services did not exist when the agreements were negotiated. To address advances in technology and services, the Committee on Specific Commitments is examining how certain new online services, such as platform services, or specific regulations, such as data localization, could be classified and scheduled within GATS."], "subsections": []}, {"section_title": "Declaration on Global Electronic Commerce", "paragraphs": ["In May 1998, WTO members established the \"comprehensive\" Work Programme on Electronic Commerce and established a temporary customs duties moratorium on electronic transmission that has been extended multiple times. While multiple members submitted proposals to advance multilateral digital trade negotiations under the Work Programme, no clear path forward was identified. "], "subsections": []}, {"section_title": "Information Technology Agreement (ITA)", "paragraphs": ["The WTO Information Technology Agreement (ITA) aims to eliminate tariffs on the goods that power and utilize the internet, lowering the costs for companies to access technology at all points along the value chain. Originally concluded in 1996, the ITA was expanded to further cut tariffs beginning in July 2016. The expanded ITA is a plurilateral agreement among 54 developed and developing WTO members who account for over 90% of global trade in these goods. Some WTO members, such as Vietnam and India, are party to the original ITA, but did not join the expanded agreement. Like the original ITA, the benefits of the expanded agreement will be extended on a most-favored nation (MFN) basis to all WTO members. ", "Under the expanded ITA, the parties agreed to review the agreement's scope in the future to determine if additional product coverage is warranted as technology evolves. While the WTO ITA has expanded trade in the technology products that underlie digital trade, it does not tackle the nontariff barriers that can pose significant limitations."], "subsections": []}, {"section_title": "Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS)", "paragraphs": ["The TRIPS Agreement, in effect since January 1, 1995, provides minimum standards of IPR protection and enforcement. The TRIPS Agreement does not specifically cover IPR protection and enforcement in the digital environment, but arguably has application to the digital environment and sets a foundation for IPR provisions in subsequent U.S. trade negotiations and agreements, many of which are \"TRIPS-plus.\" ", "The TRIPS Agreement covers copyrights and related rights (i.e., for performers, producers of sound recordings, and broadcasting organizations), trademarks, patents, trade secrets (as part of the category of \"undisclosed information\"), and other forms of IP. It builds on international IPR treaties, dating to the 1800s, administered by the World Intellectual Property Organization, or WIPO (see below). TRIPS incorporates the main substantive provisions of WIPO conventions by reference, making them obligations under TRIPS. WTO members were required to fully implement TRIPS by 1996, with exceptions for developing country members by 2000 and least-developed-country (LDC) members until July 1, 2021, for full implementation. ", "TRIPS aims to balance rights and obligations between protecting private rights holders' interests and securing broader public benefits. Among its provisions, the TRIPS section on copyright and related rights includes specific provisions on computer programs and compilations of data. It requires protections for computer programs\u2014whether in source or object code\u2014as literary works under the WIPO Berne Convention for the Protection of Literary and Artistic Works (Berne Convention). TRIPS also clarifies that databases and other compilations of data or other material, whether in machine readable form or not, are eligible for copyright protection even when the databases include data not under copyright protection.", "Like the GATS, TRIPS predates the era of ubiquitous internet access and commercially significant e-commerce. TRIPS includes a provision for WTO members to \"undertake reviews in the light of any relevant new developments which might warrant modification or amendment\" of the agreement. The TRIPS Council has engaged in discussions on the agreement's relationship to electronic commerce as part of the WTO Work Programme on Electronic Commerce, focusing on protection and enforcement of copyright and related rights, trademarks, and new technologies and access to these technologies; new activity by the TRIPS Council to this end appears to be limited in recent years. "], "subsections": []}, {"section_title": "World Intellectual Property Organization (WIPO) Internet Treaties", "paragraphs": ["The World Intellectual Property Organization (WIPO) has been a primary forum to address IP issues brought on by the digital environment since the TRIPS Agreement. The WIPO Copyright Treaty and WIPO Performances and Phonograms Treaty\u2014often referred to jointly as the WIPO \"Internet Treaties\"\u2014established international norms regarding IPR protection in the digital environment. These treaties were agreed to in 1996 and entered into force in 2002, but are not enforceable, including under WTO dispute settlement. Shaped by TRIPS, the WIPO Internet Treaties are intended to clarify that existing rights continue to apply in the digital environment, to create new online rights, and to maintain a fair balance between the owners of rights and the general public. ", "Key features of the WIPO Internet Treaties include provisions for legal protection and remedies against circumventing TPMs, such as encryption, and against the removal or alteration of rights management information (RMI), which is data identifying works or their authors necessary for them to manage their rights (e.g., for licenses and royalties). The liability of online service providers and other communication entities that provide access to the internet was contested in the negotiations on the WIPO Internet Treaties. In the end, WIPO Internet Treaties leave it to the discretion of national governments to develop the legal parameters for ISP liability.", "As of March 2019, the WIPO Internet Treaties had 96 contracting parties. The United States implemented the WIPO Internet Treaties through the Digital Millennium Copyright Act of 1998 (DMCA) ( H.R. 2281 ), which set new standards for protecting copyrights in the digital environment, including prohibiting the circumvention of antipiracy measures incorporated into copyrighted works and enforcing such violations through civil, administrative, and criminal remedies. The DMCA also, among other things, limits remedies available against ISPs that unknowingly transmit copyright infringing information over their networks by creating certain \"safe harbors.\" India was one of the latest countries to join the treaties, entering them into force on December 25, 2018. The United States continues to call on trading partners, such as Turkey and Mexico, to fully implement the WIPO Internet Treaties."], "subsections": []}, {"section_title": "WTO Plurilateral Effort", "paragraphs": ["On the sidelines of the WTO Ministerial Conference, in December 2017, the United States, as part of a group of over 70 WTO members, agreed to \"initiate exploratory work together toward future WTO negotiations on trade related aspects of electronic commerce.\" The U.S. objectives include market access, data flows, nondiscriminatory treatment of digital products, protection of intellectual property and digital security measures, and intermediary liability, among others.", "The group formally launched the e-commerce initiative in January 2019. The official joint statement lists includes advanced economies such as the United States, the EU, and Australia, and also several developing countries such as China and Brazil. India stated it will not join, preferring to maintain its flexibility to favor domestic firms, limit foreign market access, and raise revenue in the future through potential customs duties.", "After the meeting, the U.S. Trade Representative's (USTR) statement emphasized the need for a high-standard agreement that includes enforceable obligations. The EU noted e-signatures, customs duties, forced disclosure of source code, and data localization measures among the potential new rules to be discussed. Some analysts raise concerns that the EU may seek more limited commitments on issues such as cross-border data flows. China has proposed the negotiations be limited to exploratory discussions rather than establishing obligations on topics such as data flows and data storage. The negotiating parties continue to discuss the scope of any potential agreement, but the outlook may be challenging given the different approaches and policies especially among the U.S., EU, and China."], "subsections": []}]}, {"section_title": "U.S. Bilateral and Plurilateral Agreements", "paragraphs": ["As traditional trade policy does not clearly reflect the pervasiveness of the digital economy, and data is increasingly incorporated into international trade, the line between goods and services, and the application of the existing multilateral trade agreement system, is not always clear. As discussed above, the WTO agreements provide limited treatment of some aspects of digital trade. The United States has sought to establish new rules and disciplines on digital trade in its bilateral and plurilateral trade negotiations."], "subsections": [{"section_title": "Existing U.S. Free Trade Agreements (FTAs)", "paragraphs": ["The United States has included an e-commerce chapter in its FTAs since it signed an agreement with Singapore in 2003 that has progressively evolved. The e-commerce chapter of U.S. FTAs usually begins by recognizing e-commerce as an economic driver and the importance of removing trade barriers to e-commerce. Most chapters contain provisions on nondiscrimination of digital products, prohibition of customs duties, transparency, and cooperation topics such as SMEs, cross-border information flows, and promoting dialogues to develop e-commerce. Some of the FTAs also include cooperation on consumer protection, as well as providing for electronic authentication and paperless trading. All FTAs allow certain exceptions to ensure that each party is able to achieve legitimate public policy objectives, protecting regulatory flexibility.", "The U.S.-South Korea FTA (KORUS) contains the most robust digital trade provisions in a U.S. FTA currently in force. In addition to the provisions in prior FTAs, KORUS includes provisions on access and use of the internet to ensure consumer choice and market competition. Most significantly, KORUS was the first attempt in a U.S. FTA to explicitly address cross-border information flows. The e-commerce chapter contains an article that recognizes its importance and discourages the use of barriers to cross-border data but does not explicitly mention localization requirements. The financial services chapter of KORUS also contains a specific, enforceable commitment to allow cross-border data flows \"for data processing where such processing is required in the institution's ordinary course of business.\"", "In 2018, the Trump Administration and South Korea agreed to limited modifications of the agreement, but no changes were made to provisions directly impacting digital trade."], "subsections": []}, {"section_title": "United States-Mexico-Canada Agreement (USMCA)", "paragraphs": ["The released text of the proposed USMCA with Canada and Mexico aims to revise and update the trilateral North American Free Trade Agreement (NAFTA), and illustrates the Trump Administration's approach to digital trade. The final text of the agreement pulls from and builds on many of the provisions from the Trans-Pacific Partnership (TPP) negotiated under President Obama which the United States did not ratify. The provisions of the proposed USMCA establish new rules and disciplines to remove trade barriers and counter discriminatory action while also providing governments with flexibility. The provisions go much further than the KORUS agreement in establishing obligations on multiple aspects of digital trade, and contrast sharply with China's authoritarian approach discussed above.", "USMCA provisions prohibit customs duties and discrimination against digital products, requirements for source code or algorithms disclosure, or technology transfer mandates. The agreement protects electronic authentication and signatures, electronic payment systems, and consumer access to the Internet. Provisions require anti-spam measures, domestic legal frameworks for online consumer and personal privacy protection, and identifies specific key principles and international guidelines that the parties must take into account. USMCA contains broad provisions to protect cross-border data flows and restrict data localization requirements; for financial services, open data flows is subject to the financial regulator having access to data necessary to fulfill its regulatory and supervisory role. The digital trade chapter also prohibits liability of internet intermediaries, in line with current U.S. law, and promotes the publication of government data through open-data formats. The parties agree to cooperate on and promote a number of issues including risk-based cybersecurity, privacy, SMEs, and the APEC Cross-Border Privacy Rules (see below)."], "subsections": []}]}]}, {"section_title": "Other International Forums for Digital Trade", "paragraphs": ["Given the cross-cutting nature of the digital world, digital trade issues touch on other policy objectives and priorities, such as privacy and national security. While U.S. and international trade agreements are one way for the United States to establish market opening and new rules and disciplines to govern digital trade, not every issue is necessarily suitable for an international trade agreement and not every international partner is ready, or willing, to take on such commitments. In other international forums outside of trade negotiations, other tools can be used to encourage high-level, nonbinding best practices and principles and align expectations.", "G-20. The influential Group of 20 (G-20) is one venue for establishing common principles, and digital issues have been on its agenda recently. At the 2017 meeting, G-20 leaders established the Digital Economy Task Force (DETF). The G-20 Digital Economy Ministerial Meeting issued a declaration that identified requisites for a thriving digital economy and specific recommendations. As host, Japan is expected to build on the digital economy agenda in 2019, with a specific emphasis on privacy and data governance.", "OECD. The OECD provides a forum to discuss principles and norms to facilitate a thriving digital economy. The OECD issued a series of reports in 2017 and 2018 related to digital trade, including an assessment of the digital transformation of each OECD economy and bridging the digital gender divide. The reports identified specific challenges and recommendations, including establishing a national digital strategy and removing market access barriers. The United States could work with its OECD partners to reinforce principles, including an open Internet and the need to balance public policy objectives. The OECD Global Forum on the Digital Security for Prosperity also allows for multi-stakeholder international engagement to discuss issues such as the governance of digital security issues. ", "APEC. The Asian Pacific Economic Cooperation (APEC) forum presents another opportunity for sharing best practices and setting high-level principles on issues that may be of greater concern to developing countries with less advanced digital economies and industry. APEC is implementing the Cross-Border Privacy Rules (CBPR) system to be consistent with the already established APEC Privacy Framework. According to the Business Software Alliance, most countries across the globe have data protection frameworks based on either the APEC CBPR system or the EU regime, but some countries still lack privacy laws. Currently, the United States, Japan, Mexico, Canada, South Korea, Singapore, Taiwan, and Australia are CBPR members; the Philippines is in the process of joining. Some observers view CBPR, which aims to reflect a diversity of national privacy regimes, as a scalable solution that could potentially be adopted multilaterally. Others may view the EU regime as a more comprehensive, top-down approach. Due to its voluntary nature, APEC has served as an incubator for potential plurilateral agreements.", "Regulatory cooperation. Ongoing regulatory cooperation efforts are another important tool for addressing differences between parties, better aligning regulatory requirements, and reducing inconsistencies and redundancies that can hamper or discriminate against the free flow of data, goods, and services. These forums provide an opportunity for U.S. agencies to work directly with overseas counterparts and focus on specific aspects of digital trade such as online privacy, consumer protection, and rules for online contract formation and enforcement. The EU-U.S. Privacy Shield is one example of regulatory authorities working together to address such issues."], "subsections": []}, {"section_title": "Issues for Congress", "paragraphs": ["Policy questions continue to evolve as the internet-driven economy and innovations grow. Digital trade is intimately connected to and woven into all parts of the U.S. economy and overlaps with other sectors, requiring policymakers to balance many different objectives. For example, digital trade relies on cross-border data flows, but policymakers must balance open data flows with public policy goals such as protecting privacy, supporting law enforcement, and improving personal and national security and safety. ", "The complexity of the debate related to cross-border data flows and digital trade more generally involves complementary and competing interests and stakeholders. Companies and individuals who seek to do business abroad, and trade negotiators who seek to open markets may focus on maintaining open market access, which may include cross-border data flows, while others may want to limit foreign competition. Privacy advocates may focus on protecting personal information. Meanwhile, law enforcement and defense advisors may seek the ability to access or limit information flows based on national security interests. ", "Digital trade raises numerous complex issues of potential interest to Congress with possible legislative and oversight implications. Issues include", "Understanding of the economic impact of digital trade on the U.S. economy and the effects of localization and other digital trade barriers on U.S. exports, jobs, and competition. Examining how best to balance market openness and cross-border data flows with other policy goals, such as right to privacy and the government's need for access to protect safety and national security. Considering if the United States would benefit from overarching digital privacy policy and what lessons can be drawn from other countries' experiences, and how to best balance this with U.S. trade negotiating objectives. Effectively addressing important digital trade barriers and cybertheft. Considering how best to assure public confidence and trust in network reliability and security that underlie the global digital economy and allow it to effectively and efficiently function. Examining evolving U.S. trade policy efforts, including how the proposed USMCA, WTO plurilateral, and potential new bilateral negotiations may address U.S. trade barriers, set new rules and disciplines, and respond to different standard-setting practices that may have global reach, including by the EU and China. Assessing if U.S. agencies have the necessary tools to accurately measure the size and scope of digital trade in order to analyze the impact of potential policies. Assessing the effectiveness of the Trump Administration's Section 301 actions involving Chinese trade practices and other bilateral efforts related to cybersecurity and digital trade."], "subsections": [{"section_title": "Appendix. Digital Trade Barriers", "paragraphs": ["Barriers to Internet Services", "Discriminatory treatment of digital goods and services Duties on digital goods or services Foreign investment restrictions Intermediary liability without safe harbor or fair-use provisions that could make internet platforms responsible for content posted by users Low de minimis threshold for customs duties on imported goods, including e-commerce purchases \"Snippet tax\" on search engines that quote text snippets as part of search results Taxes on over-the-top (OTT) services such as media, messaging, or voice-over-internet-protocol (VOIP) Web filtering and blocking of content", "Localization Barriers", "Data localization requirements prohibiting cross-border data flows and requiring the use of local servers for data storage or processing Limited or no access to foreign government procurement markets Requirement for use of local technology Comprehensive privacy regulations that may discriminate against foreign providers", "Technology Barriers", "Restrictions or prohibitions on use of encryption Source code, technology, or other intellectual property rights (IPR) forced transfer requirements Local testing and certification for imported information technology (IT) equipment may add costs or delays for imported goods", "Other Barriers", "Cybersecurity threats or local requirements Weak IPR enforcement"], "subsections": []}]}]}}
{"id": "R45933", "title": "Ebola Virus Disease Outbreak: Democratic Republic of Congo ", "released_date": "2019-09-27T00:00:00", "summary": ["The Ebola outbreak in the Democratic Republic of Congo (DRC) that began in August 2018 has eluded international containment efforts and posed significant challenges to local and international policymakers. The current outbreak is the 10 th and largest on record in DRC, and the world's second largest ever (after the 2014-2016 West Africa outbreak). On July 17, 2019, the World Health Organization (WHO) declared the current DRC outbreak to be a Public Health Emergency of International Concern (PHEIC) and called for increased donor funding. To date, the U.S. Agency for International Development (USAID) has announced nearly $158 million to support the response to the outbreak in DRC and neighboring countries, most of which has been funded through USAID-administered International Disaster Assistance (IDA) funds appropriated by Congress in FY2015.", "Challenges", "Broad challenges in DRC\u00e2\u0080\u0094including unresolved armed conflicts, shortfalls in the local health care system, political tensions, community grievances, and criminal activities\u00e2\u0080\u0094have hindered outbreak control. The main outbreak zone is an area of eastern DRC where long-running conflicts had already caused a protracted humanitarian crisis. In addition, the outbreak has coincided with a fraught political transition process in DRC, where a former opposition figure, Felix Tshisekedi, was inaugurated president in January 2019. The electoral process and tense negotiations over a coalition government have complicated Ebola response efforts, as well as coordination between national and provincial officials. Ebola and related response efforts have also diverted or interrupted already limited local health resources in affected areas. This phenomenon, in turn, has been linked to interruptions in routine immunization campaigns. Inadequate measles vaccine supplies have limited capacity to control a measles outbreak in DRC that began in January 2019 and has claimed more than 3,000 lives.", "Since June 2019, a handful of Ebola-infected individuals have been identified in the large city of Goma in eastern DRC (a staging area for humanitarian operations and U.N. peacekeeping activities in the country), in the city of Bukavu (south of the main outbreak zone), and in Uganda. Suspected cases were reported, but not confirmed, in Tanzania in mid-September 2019. Transmission outside the outbreak zone has been limited to date, which may be attributable to internationally supported surveillance and prevention efforts, as well as the use of an investigational vaccine. Concerns nevertheless persist that cases could spread to new areas and/or countries. Uganda (which borders the most affected areas in DRC) has prior experience in Ebola control, but Rwanda, Tanzania, and Burundi do not. Minimal state capacity and protracted conflict in South Sudan and the Central African Republic suggest that a coordinated disease control response in either setting could be highly challenging.", "Issue s for Congress", "A potential issue for Congress is the level of funding allocated for global health security and pandemic preparedness versus outbreak response, with funding for outbreak response to date outweighing support for global outbreak prevention. Separately, the State Department's designation of DRC as a \"Tier III\" (worst-performing) country under the Trafficking Victims Protection Act (TVPA, Division A of P.L. 106-386 , as amended) triggers restrictions on certain types of U.S. aid (not including IDA-funded activities). Several bills would authorize U.S. funding for programs intended to lower community resistance and otherwise support Ebola control in DRC and neighboring states, \"notwithstanding\" the TVPA restrictions. These include S. 1340 , the Ebola Eradication Act of 2019, which passed the Senate in September 2019; H.R. 3085 , a House companion bill; and a Senate committee draft of the FY2020 Department of State, Foreign Operations, and Related Programs appropriations bill circulated on September 18, 2019. Some Members of Congress have also monitored State Department security policies that have restricted U.S. government experts' travel to and within the outbreak zone."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["On August 1, 2018 , the World Health Organization (WHO) reported a new Ebola outbreak in eastern DRC, about a week after having declared the end of a separate outbreak in the west of the country. As of September 24, 2019, the WHO had reported 3,175 cases in the current outbreak, including 2,119 deaths. About 58% of all cases have been women and 28% children. The current outbreak is the 10 th on record in DRC, the largest to have occurred in the country, and the second largest ever, after the 2014-2016 Ebola outbreak in West Africa. Cases have been concentrated in North Kivu and Ituri provinces ( Figure 1 ), where long-running conflicts had already caused a protracted humanitarian crisis and are complicating Ebola control efforts. The number of new Ebola cases identified per week has fluctuated since the start of the outbreak ( Figure 2 ), but has generally trended downward slowly since peaking in April 2019. ", "The current outbreak has coincided with a fraught political transition process in DRC. A new president, parliament, provincial-level assemblies, and governors were elected between late 2018 and mid-2019, after years of delays, gridlock, political violence, and repression of opposition voices. Election delays in the Ebola-affected areas, an opposition stronghold, heightened tensions and spurred conspiracy theories, arguably hindering Ebola response. President Felix Tshisekedi, inaugurated in January 2019, was previously an opposition figure, but the coalition of his predecessor Joseph Kabila won supermajorities in parliament and at the provincial level. Observers questioned the legitimacy of the election results, and tense negotiations between the two political blocs (Tshisekedi's and Kabila's) delayed the naming of a new cabinet until late August 2019, while complicating relations between the national and provincial/local officials. ", "Several factors have foiled outbreak control efforts, including low Ebola awareness (early symptoms are similar to other common ailments like malaria), community distrust of health interventions, belated visits to health facilities (at which point survival prospects decline rapidly), and infection prevention control lapses in health facilities. Attacks by militia and criminal groups, political protests, health worker strikes, and security force abuses have also disrupted and impeded the response. In mid-September, for example, violent attacks in a new hotspot (Lwemba, Ituri Province) after the death of a local healthcare worker from Ebola prompted the indefinite suspension of Ebola control activities in the area. As a result, new cases continue to stem from unknown chains of transmission, and deaths continue to occur outside Ebola treatment centers.", "U.S. officials and other health experts have repeatedly raised concerns about broader challenges in DRC related to its health care system, political tensions, local grievances, and instability. USAID Administrator Mark Green testified to Congress in April 2019 that in DRC, \"You have a failed democracy in many, many ways\u00e2\u0080\u00a6. It will take more than simply a medical approach. It will take a development approach to try to tackle this terrible disease and to contain its outbreak.\" After traveling to DRC in August 2019, Administrator Green wrote, \"Decades of corrupt, authoritarian rule during which communities were denied any meaningful voice in their government have undermined the Congolese people's trust in institutions.\"", "Health experts have been troubled by reports of Ebola cases in major DRC cities (including the capital of North Kivu, Goma) and outside of DRC. Between June and August 2019, a total of four cross-border cases were detected in Uganda. Observers expressed optimism about the rapid detection and containment of these cases, but new concerns have arisen about subsequent suspected cases in Tanzania. In mid-September, WHO was informed by unofficial sources of a number of suspected Ebola cases in that country, including in the capital city of Dar es Salaam, while Tanzanian authorities asserted that there were no confirmed or suspected Ebola cases in the country. WHO has reportedly since sent personal protective equipment (PPE) and vaccination supplies to Tanzania, and recommended that the sickened patients (one of whom reportedly died) receive secondary confirmation testing at a WHO facility. As of September 21, none of the cases had received secondary confirmation. Ebola control in other neighboring countries such as South Sudan, Burundi, or Central Africa Republic, which have minimal state capacity and are affected by protracted conflicts and political crises, could be highly challenging if required."], "subsections": []}, {"section_title": "The International Response", "paragraphs": ["Outbreak control, treatment, and disease surveillance activities are being carried out primarily by DRC government employees (including health workers and frontline workers, who provide routine and essential services), as well as by international nongovernmental organizations, with U.N. agencies (including the WHO), other multilateral entities (including the World Bank), and foreign governments providing funding, expertise, coordination, and logistical assistance. ", "Classic Ebola outbreak control protocol entails", "infection prevention control (IPC) in health care facilities; management and isolation of patients in Ebola Treatment Centers (ETCs); fever surveillance with rapid diagnosis; tracing of Ebola cases and their contacts; and community awareness and adherence to IPC protocols, safe patient and body transport, safe burials, and household and environmental decontamination. ", "The extraordinary conditions on the ground in affected areas of eastern DRC have limited the effectiveness of conventional control measures, however, and are requiring ever-evolving strategies for containment, including aggressive vaccination campaigns (see text box below). Since the WHO declared the outbreak to be a Public Health Emergency of International Concern (PHEIC) in July 2019, it has sought to garner additional donor funds, as well as international support for addressing the political and security issues affecting Ebola control. ", "In July 2019, the WHO and the DRC Ministry of Health (MoH) released a fourth strategic response plan to \"definitively defeat\" the Ebola epidemic ( Table 1 ). The strategic plan is expected to cost over $462 million, including about $288 million for the public health response portion ( Table 1 ). In July 2019, the World Bank announced that it would provide $300 million toward the plan, about half of which would support the public health response, on top of prior funding commitments (discussed below). ", "The public health portion of the strategic plan, covering July 1 through December 31, 2019, purportedly takes into account lessons learned from the third strategic response plan (February through July 2019). This portion of the plan is based on", "strengthening political commitment, security, and operational support to improve acceptance of the response and access to insecure areas; deepening support for addressing the varied needs of communities affected by Ebola (beyond a single-minded focus on containment efforts), as a means toward fostering community ownership and involvement in Ebola responses; improving financial planning, monitoring and reporting; and bolstering preparedness of neighboring provinces and countries.", "The World Bank has urged other countries to provide additional support, and the WHO Director-General has urged donors to address disbursement delays. As of September 11, 2019, the WHO had received less than $60 million of the $288 million it sought for the current phase of the public health response. The United States is the top country donor for the public health response and has provided almost $158 million for the Ebola humanitarian response, largely supporting activities by nongovernmental organizations (NGOs), as discussed below."], "subsections": [{"section_title": "DRC Government Role", "paragraphs": ["DRC government employees and other Congolese nationals are the primary responders to the Ebola epidemic on the ground. As WHO Executive Director for Health Emergencies Dr. Michael Ryan noted in June 2019, \"If you go into the treatment facilities now it is Congolese doctors and nurses in the front line. There may be NGO or WHO badges on the tents but the doctors and nurses are Congolese; surveillance officers are Congolese; 80% of the vaccinators in this response are Congolese.\" The DRC government has provided health workers and administrative personnel, hired local frontline workers, organized volunteers, and conducted information awareness campaigns. The government has also offered certain health services free of charge in selected government health facilities, with donor support (discussed below). ", "From the start of the current outbreak, the DRC government's health responses were coordinated by the MoH, as in past Ebola outbreaks in DRC. In July 2019, however, President Tshisekedi transferred coordination responsibilities to an expert committee headed by the director of DRC's biomedical research institute, Dr. Jean-Jacques Muyembe, who reports directly to the president. Dr. Muyembe is a recognized expert on Ebola who helped investigate the first known outbreak of the disease, in DRC in 1976. Then-Health Minister Dr. Oly Ilunga resigned following Dr. Muyembe's appointment, citing a dilution of his authority as well as confusion about the coordination of DRC government Ebola responses, an insufficient focus on the health system, and opposition to utilizing the Johnson & Johnson experimental vaccine (see text box above). Ilunga was subsequently the target of scathing criticism in the leaked report of a DRC government investigative commission, which indicated, among other things, that Ilunga and his team had displayed an \"aggressive and ostentatious attitude\" when visiting the outbreak area and had squandered Ebola response funds on fancy cars and hotel rooms. These developments have suggested an internal power struggle over policy and control of funds for Ebola response. "], "subsections": []}, {"section_title": "U.N. and Other Multilateral Organizations", "paragraphs": ["Humanitarian experts, including U.S. officials, have repeatedly asserted that broader humanitarian access and security issues have stymied outbreak control efforts, and that international response efforts require increased coordination and transparency. In response to such concerns, in May 2019 U.N. Secretary-General Ant\u00c3\u00b3nio Guterres appointed MONUSCO Deputy Special Representative David Gressly, a U.S. citizen, to serve as a new U.N. Emergency Ebola Response Coordinator charged with establishing a \"strengthened coordination and support mechanism\" for Ebola response. While the WHO is to continue to lead \"all health operations and technical support activities to the government,\" Gressly is leading a broader U.N.-wide effort to strengthen political engagement, financial tracking, humanitarian coordination, and \"preparedness and readiness planning\" for Goma and surrounding countries. Gressly, who continues to report to the head of MONUSCO, portrayed his new role as a reflection of the need for \"more than just a public health response.\"", "The WHO has deployed some 700 personnel to DRC since the current outbreak began. These personnel are coordinating the public health response and providing operational and technical support to DRC government personnel and other actors. Particular areas of focus include detection and rapid isolation of Ebola cases, intensification of rapid multidisciplinary public health actions for Ebola cases, community engagement, and health system strengthening. In addition, the WHO is coordinating regional readiness exercises and assessments in adjacent areas of DRC and neighboring countries. Vaccination and disease surveillance efforts have been bolstered in Uganda, Rwanda, and Burundi. ", "The World Bank has stepped up its role in supporting the Ebola response effort since mid-2019. On July 24, the World Bank Group announced it was mobilizing up to $300 million\u00e2\u0080\u0094to be financed through the Bank's International Development Association and its Crisis Response Window\u00e2\u0080\u0094on top of $100 million disbursed previously through the International Development Association and the Bank's Pandemic Emergency Financing Facility (PEF). The PEF announced a further $30 million disbursement for DRC on August 23, 2019. World Bank resources have financed free health care and essential medicines in clinics in all affected areas, hazard pay for frontline health workers, handwashing stations, mobile laboratories, decontamination teams, psychosocial support teams, community engagement campaigns, and vaccination efforts. The injection of new resources aims to build on existing World Bank support to strengthen the DRC health system.", "The African Union (AU) Africa Centers for Disease Control and Prevention (Africa CDC) has supported international response efforts by deploying members of its voluntary response corps to DRC and neighboring countries. Africa CDC voluntary responders include epidemiologists and anthropologists, as well as communication, laboratory, and logistics experts from various African countries who are \"on standby for emergency deployment.\" To date, these responders have trained local health workers and community volunteers, set up laboratories, supplied personal protective equipment, and trained people in port-of-entry screening."], "subsections": []}, {"section_title": "The U.S. Government Response", "paragraphs": ["USAID and the U.S. Centers for Disease Control and Prevention (CDC) deployed staff to DRC and the region when the outbreak was first detected in August 2018. The United States is also the top country donor to the Ebola response effort, as noted above. As of September 10, USAID had announced more than $148 million for direct support to the Ebola response within DRC and another $9.8 million to support preparedness and prevention activities in neighboring countries. Those funds were drawn primarily ($156.1 million) from unobligated FY2015 International Disaster Assistance (IDA) funds that Congress appropriated on an emergency basis for Ebola response during the West Africa outbreak ( P.L. 113-235 ). According to USAID, the available balance of FY2015 emergency IDA Ebola funds stood at $105.5 million as of September 9. ", "More broadly, the United States is the top bilateral humanitarian donor to DRC and the top financial contributor to MONUSCO, which is providing logistical and security support to Ebola response efforts. USAID Administrator Green testified before Congress in April 2019 that \"there is sufficient money for fighting Ebola in DRC,\" asserting that nonfinancial challenges posed the primary constraint to containment efforts. U.S. funding commitments have continued to grow since then, however, as the outbreak has persisted and broadened.", "U.S. personnel are providing technical support from Kinshasa, Goma, and neighboring Rwanda and Uganda, while implementing partners (U.N. agencies and NGOs) are administering Ebola response efforts within the outbreak zone with U.S. resources. The Administration has placed strict constraints on the movement of U.S. personnel to and within affected areas, due to security threats. In September 2018, USAID and CDC withdrew personnel from the immediate outbreak zone due to security concerns, despite CDC's stated preference to maintain staff in the field. ", "U.S. support for outbreak control has included the following:", "USAID has provided grant funding to NGOs and U.N. entities carrying out Ebola response and preparedness activities, drawing primarily on IDA funds (as noted above). In October 2018, USAID deployed a Disaster Assistance Response Team (DART) to coordinate the U.S. response in support of the DRC government, the WHO, and other partners. USAID Ebola response funds have supported disease surveillance, infection prevention and control, safe and dignified burials, water and sanitation aid, prepositioning of medical supplies, humanitarian coordination, and logistics. U.S. bilateral economic and health aid funding for DRC has also supported programs that may ease humanitarian access or otherwise complement Ebola response activities. ", "CDC personnel have provided direct technical support to the DRC government, the WHO, and USAID's DART for disease surveillance, contact tracing, data management, infection protection and control, risk communication and community engagement, laboratory strengthening, emergency management, and surveillance at points of entry. CDC staff also have supported Ebola preparedness efforts in neighboring countries. ", "The Department of Defense has supplied laboratory training to Ugandan researchers and has partnered with them to conduct clinical Ebola vaccine trials."], "subsections": []}]}, {"section_title": "Challenges", "paragraphs": [], "subsections": [{"section_title": "Security Threats and Political Tensions", "paragraphs": ["Security threats have periodically forced the temporary cessation of Ebola case management in some areas, interrupted contact tracing, and frustrated surveillance efforts in high-transmission areas. Dozens of armed groups are active in the areas most affected by the outbreak. These include an array of local militias, along with the Allied Democratic Forces (ADF), a relatively large and opaque group implicated in attacks on U.N. peacekeepers, local military forces, and civilians. Road travel is often dangerous, with frequent reports of militia attacks, armed robbery, and kidnappings. In April 2019, the Islamic State claimed responsibility for an attack on local soldiers previously attributed to the ADF, the latest in a series of signs of emerging ties between the two. State security force personnel reportedly maintain ties with armed groups and have been implicated in atrocities, including civilian massacres in Beni territory since 2014. ", "Local mistrust of government officials and outsiders (including Congolese who are not from the immediate area)\u00e2\u0080\u0094sometimes rooted in conflict dynamics, ethnic tensions, and political friction\u00e2\u0080\u0094has prompted some community resistance to Ebola control efforts and led to attacks on health workers and facilities, including Ebola treatment centers. Some communities in Beni and Butembo have long opposed DRC's central government and complained of neglect and persecution. WHO officials have urged broader international support for \"political mediation, engagement with opposition, and negotiated solutions,\" asserting that \"[j]ust purely focusing on community engagement and participation will not fix what are deep seated political issues that need to be addressed at a higher level.\"", "Perceptions that outsiders are profiting financially from the outbreak, or that international intervention is driven more by fear of contagion than concern for locals' wellbeing, appear to have fueled conspiracy theories and community resistance. At a July 15 donors event on Ebola response in Geneva, WHO Director-General Dr. Tedros Adhanom Ghabreyesusi said that Congolese in the outbreak zone had asked him, \"Are you here to help us, or to prevent this thing from coming to you? Are you doing this for us, or for yourself?\" He added, \"It embarrasses me.\u00e2\u0080\u00a6 We should not appear to be seen as if we are parachuting in and out because of Ebola.\" DRC's then-Health Minister argued in the same meeting that local perceptions that the response was bringing cash into the region had fueled threats to health workers, including kidnappings."], "subsections": []}, {"section_title": "Health System Constraints", "paragraphs": ["Local perceptions that donors are more concerned with preventing the spread of Ebola to their countries than with helping Congolese communities are rooted, in part, in enduring health challenges. Maternal and infant deaths, for example, have for years regularly exceeded the current count of Ebola deaths but have received comparatively little attention. Authorities have redirected health resources in some areas for Ebola control, deepening local frustrations. Vaccination campaigns have also been interrupted in some Ebola hotspots. In Ituri province, for example, inadequate supply of measles vaccine has limited containment of a measles outbreak that began in January and has infected over 161,000 people, claiming over 3,000 lives. Health workers also are fighting a cholera outbreak that has infected over 15,000 people and killed at least 287.", "The WHO has reported that Ebola transmission is likely occurring in ill-equipped and understaffed health facilities. Inconsistent adherence to infection prevention and control, periodic disruptions in supply chain systems, and limited access to water for handwashing in some health facilities have complicated Ebola control efforts. In addition, some health workers have refused to wear personal protective equipment in health facilities or perform rudimentary infection prevention and control measures due to threats of violence by some members of the community. As of August 27, 2019, 156 health workers had contracted Ebola, at least 34 of whom had died. The MoH, WHO, and other partners have identified health facilities of concern and are addressing lapses in triage, case detection, and infection prevention and control."], "subsections": []}, {"section_title": "Reported Progress", "paragraphs": ["Community Engagement. The WHO and implementing partners have worked to deepen local engagement, with some reported positive results. Local Ebola committees in Butembo and Katwa (at the center of the outbreak zone in North Kivu), for example, are chaired and managed by community members who plan Ebola awareness and sensitization campaigns. Improved community engagement has reportedly contributed to increased participation in vaccine campaigns and safe and dignified burial practices. For example, the WHO reported in July 2019 that a high-risk contact in Katwa had sought vaccination and offered to bring other contacts. In an effort to reduce the risk of transmission and broaden access to Ebola treatment and case finding, the WHO also plans to establish smaller patient transit centers closer to communities. Replicating engagement activities in emergent hot spots remains a challenge, however.", "Ebola Therapeutics Advance. In August 2019, a clinical trial of four investigational Ebola treatments in DRC identified two \"strong performers,\" leading the WHO to state that \"these are the only drugs that future patients will be treated with.\" The trial, launched in late 2018, was co-sponsored by DRC's national biomedical research institute and the U.S. National Institutes of Health, and was carried out by an international research consortium coordinated by the WHO."], "subsections": []}]}, {"section_title": "Issues for Congress", "paragraphs": [], "subsections": [{"section_title": "U.S. Funding for DRC Ebola Response", "paragraphs": ["In FY2015, in the context of the West Africa outbreak, Congress appropriated $5.1 billion for Ebola response and preparedness on an emergency basis, including $1.436 billion in multiyear International Disaster Assistance (IDA) funds (Title IX of Division J, P.L. 113-235 ). U.S. funding for responding to the current outbreak has drawn primarily on the unobligated balance of these IDA funds. According to USAID, $105.5 million of these funds remained available for expenditure as of September 9, 2019. Should the outbreak continue or expand in new ways, Congress may consider what funding mechanisms, if any, the United States might use to support Ebola control. At the same time, the United States remains the lead country donor to the current Ebola response effort. Members may examine the U.S. role, vis-\u00c3\u00a0-vis other actors (including other countries, multilateral entities, and private sources), in financing Ebola response activities, and may debate strategies for securing additional contributions from other donors. "], "subsections": []}, {"section_title": "U.S. Aid Restrictions Related to Trafficking in Persons", "paragraphs": ["DRC is ranked as \"Tier III\" (worst) under the Trafficking Victims Protection Act (TVPA, P.L. 106-386 , as amended), which triggers prohibitions on certain types of U.S. aid absent a full or partial presidential waiver. In FY2019, in a departure from previous practice, President Trump did not partially waive the restrictions for DRC. Thus, pursuant to the TVPA, no \"nonhumanitarian, nontrade-related\" assistance may be provided \"to the government\" of DRC. ", "IDA funds, the core source of funding for U.S. Ebola response support to date, are exempt from the TVPA restrictions (22 U.S.C. \u00c2\u00a77102[10]). The TVPA further exempts economic and development assistance \"in support of programs of nongovernmental organizations.\" In practice, the Administration has interpreted the TVPA restrictions to apply broadly to various programs funded through the Development Assistance (DA) and Economic Support Fund (ESF) accounts, including some that would be implemented by NGOs, though it has not publicly provided a full account of affected activities. Some Members of Congress have expressed concern that some U.S. assistance that could help promote humanitarian access in Ebola-affected areas has been held up as a result. Testifying before the Senate in July 2019, a senior USAID official affirmed that some FY2018 aid resources that could help with Ebola control remained restricted in connection with the TVPA, but he and other Administration witnesses did not provide further details.", "Two bills introduced in the 116 th Congress ( S. 1340 , the Ebola Eradication Act of 2019, and H.R. 3085 , a House companion bill) would authorize assistance for a range of activities that could help lower community resistance or otherwise support Ebola control efforts in DRC and neighboring states, \"notwithstanding\" the TVPA restrictions. S. 1340 passed the Senate on September 23, 2019. Similar language was included in a draft FY2020 State, Foreign Operations Appropriations bill circulated by the Senate Appropriations Committee on September 18, 2019. That bill would also broadly provide at least $298.3 million in U.S. bilateral assistance for \"stabilization, global health, and bilateral economic assistance\" to DRC\u00e2\u0080\u0094slightly higher than the U.S. allocation for DRC in recent years, not counting food aid\u00e2\u0080\u0094\"including in areas affected by, and at risk from, the Ebola virus disease.\""], "subsections": []}, {"section_title": "Global Health Security", "paragraphs": ["The current Ebola outbreak has prompted resumption of discussions about strengthening health systems worldwide, particularly with regard to pandemic preparedness. In 2014, during the Obama Administration, the United States and the WHO co-launched the Global Health Security Agenda (GHSA) to improve countries' ability to prevent, detect, and respond to infectious disease threats. The United States, the largest donor to this multilateral effort, pledged to support it with $1 billion from FY2015 through FY2019. The Trump Administration has built on these efforts. In May 2019, the White House released the United States Government Global Health Security Strategy , which outlined the U.S. role in extending the Global Health Security Agenda and improving global health security worldwide. Although the Trump Administration, through the strategy and public statements, has supported extending the GHSA through 2024, officials have not provided comprehensive information on what that support would entail. ", "Members of Congress may continue to debate what role, if any, the United States should play in supporting global health system strengthening efforts to bolster global health security, and whether to adjust funding levels to meet ongoing and future infectious disease threats. Through regular appropriations, disease outbreak prevention and global health security efforts are funded through USAID pandemic influenza and CDC global health protection line items ( Table 2 ).", "On September 19, 2019, the House passed the Continuing Appropriations Act, 2020, and Health Extenders Act of 2019 ( H.R. 4378 ), which would authorize the transfer to the CDC of up to $20 million for Ebola preparedness and response activities from the Infectious Disease Rapid Response Reserve Fund. Other relevant bills introduced in the 116 th Congress include H.R. 2166 , which would codify U.S. engagement in the GHSA as specified in an executive order issued by the Obama Administration, and H.R. 826 , which seeks to facilitate research and treatment of neglected tropical diseases, including Ebola."], "subsections": []}]}]}}
{"id": "R46284", "title": "COVID-19 Relief Assistance to Small Businesses: Issues and Policy Options", "released_date": "2020-05-19T00:00:00", "summary": ["The U.S. Small Business Administration (SBA) administers several types of programs to support small businesses, including direct disaster loan programs for businesses, homeowners, and renters to assist their recovery from natural disasters; loan guaranty and venture capital programs to enhance small business access to capital; small business management and technical assistance training programs to assist business formation and expansion; and contracting programs to increase small business opportunities in federal contracting.", "Congressional interest in these programs has always been high, primarily because small businesses are viewed as a means to stimulate economic activity and create jobs, but it has become especially acute in the wake of the Coronavirus Disease 2019 (COVID-19) pandemic's widespread adverse economic impact on the national economy, including productivity losses, supply chain disruptions, major labor dislocation, and significant financial pressure on both businesses and households.", "This report provides a brief description of the SBA's programs, examines congressional action to assist small businesses during and immediately following the Great Recession (2007-2009), and discusses legislation to assist small businesses adversely affected by the COVID-19 pandemic, including", "P.L. 116-123 , the Coronavirus Preparedness and Response Supplemental Appropriations Act, 2020, which provided the SBA an additional $20 million for SBA disaster assistance administrative expenses and deemed the coronavirus to be a disaster under the SBA's Economic Injury Disaster Loan (EIDL) program. This change made economic injury from the coronavirus an eligible EIDL expense. P.L. 116-136 , the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), which, among other provisions, created the Paycheck Protection Program (PPP) to provide \"covered loans\" with a 100% SBA loan guarantee, a maximum term of 10 years, and an interest rate not to exceed 4% to assist small businesses, small 501(c)(3) nonprofit organizations, and small 501(c)(19) veterans organizations that have been adversely affected by COVID-19. The act also provides for loan deferment and forgiveness under specified conditions. A c overed loan is defined as a loan made to an eligible recipient from February 15, 2020, through June 30, 2020. The SBA announced that PPP loans will have a two-year term at an interest rate of 1.0%. P.L. 116-139 , the Paycheck Protection Program and Health Care Enhancement Act (Enhancement Act), among other provisions, appropriates an additional $321.335 billion for the PPP. H.R. 6800 , the Health and Economic Recovery Omnibus Emergency Solutions Act (HEROES Act), among other provisions, would expand PPP eligibility and provide small businesses additional flexibility by extending the PPP loan forgiveness covered period from eight weeks to the earlier of 24 weeks or December 31, 2020 .", "Some of the CARES Act's provisions (e.g., fee waivers, increased loan limits, and increased guarantee percentages) were used in legislation passed during the 111 th Congress to address the severe economic slowdown during and immediately following the Great Recession (2007-2009). The main difference between that legislation and the CARES Act is that the CARES Act includes loan deferrals, loan forgiveness, and greatly expanded eligibility, including, for the first time, specified types of nonprofit organizations.", "The SBA started accepting PPP loan applications on April 3, 2020. Because the SBA neared its $349 billion authorization limit for section 7(a) lending, which includes the PPP, the SBA stopped accepting new PPP loan applications on April 15. The SBA started accepting PPP loan applications once again on April 27, following the Enhancement Act's enactment on April 24, 2020. The act increased the SBA's section 7(a) loan authorization limit from $349 billion to $659 billion, and appropriated an additional $321.335 billion to support that level of lending.", "One lesson learned from the actions taken during the 111 th Congress to assist small businesses during and immediately following the Great Recession is the potential benefits that can be derived from providing additional funding for the SBA's Office of Inspector General (OIG) and the Government Accountability Office (GAO). GAO and the SBA's OIG can provide Congress information that could prove useful as Congress engages in congressional oversight of the SBA's administration of legislation to address COVID-19's adverse economic impact on small businesses, provide an early warning if unforeseen administrative problems should arise, and, through investigations and audits, serve as a deterrent to fraud. Requiring the SBA to report regularly on its implementation of the CARES Act could promote transparency and assist Congress in performing its oversight responsibilities. In addition, requiring both output and outcome performance measures and requiring the SBA to report this information to Congress and the public by posting that information on the SBA's website could enhance congressional oversight and public confidence in the SBA's efforts to assist small businesses."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["The Small Business Administration (SBA) administers several types of programs to support small businesses, including ", "direct disaster loan programs for businesses, homeowners, and renters to assist their recovery from natural disasters; loan guaranty and venture capital programs to enhance small business access to capital; small business management and technical assistance training programs to assist business formation and expansion; and contracting programs to increase small business opportunities in federal contracting.", "Congressional interest in the SBA's programs has increased in recent years, primarily because small businesses are viewed as a means to stimulate economic activity and create jobs. Congressional interest, however, has become especially acute in the wake of the Coronavirus Disease 2019 (COVID-19) pandemic's widespread adverse economic impact on the national economy, including productivity losses, supply chain disruptions, major labor dislocation, and significant financial pressure on both businesses and households. ", "P.L. 116-123 , the Coronavirus Preparedness and Response Supplemental Appropriations Act, 2020, was the first act during the 116 th Congress that included provisions targeting SBA assistance to small businesses adversely affected by COVID-19. The act provided the SBA an additional $20 million for SBA disaster assistance administrative expenses and deemed the coronavirus to be a disaster under the SBA's Economic Injury Disaster Loan (EIDL) program. This change made economic injury from the coronavirus an eligible EIDL expense. ", "Congress followed with P.L. 116-136 , the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). The CARES Act makes numerous changes to SBA programs, including the creation of the Paycheck Protection Program (PPP), which are loans 100% guaranteed by the SBA with a maximum term of 10 years and a maximum interest rate of no more than 4%. These loans are available to small businesses, small 501(c)(3) nonprofit organizations, and small 501(c)(19) veterans organizations\u00e2\u0080\u0094and are eligible for loan forgiveness. The SBA announced that the loans will have a two-year term at a 1.0% interest rate.", "The CARES Act provides deferment relief for PPP loans and existing loans made under the 7(a), 504/CDC, and Microloan programs. The act also appropriates $349 billion for PPP loan guarantees and subsidies (to remain available through FY2021), $10 billion for Emergency EIDL grants, $675 million for the SBA's salaries and expenses account, $25 million for the SBA's Office of Inspector General (OIG), $265 million for entrepreneurial development programs ($192 million for small business development centers (SBDCs), $48 million for women's business centers (WBCs), and $25 million for SBA resource partners to provide online information and training), and $17 billion for subsidies for the SBA's 7(a), 504/CDC, and Microloan programs.", "A summary of the CARES Act's major small business-related provisions is presented in the Appendix . ", "The SBA started accepting PPP loan applications on April 3, 2020. Because the SBA neared its $349 billion authorization limit for section 7(a) lending, which includes the PPP, the SBA stopped accepting new PPP loan applications on April 15, 2020. More than 1.66 million PPP loans totaling nearly $342.3 billion were approved by nearly 5,000 lenders. Most of the loans (74%) were for less than $150,000 (see Table 1 ).", "The SBA also stopped accepting COVID-19-related EIDL and Emergency EIDL grant applications on April 15, because the SBA was approaching its disaster loan assistance credit subsidy limit. COVID-19-related EIDL and Emergency EIDL grant applications already received continued to be processed on a first-in first-out basis.", "The SBA began accepting new EIDL and Emergency EIDL grant applications on a limited basis on May 4 to accommodate agricultural businesses that were provided EIDL eligibility by the Paycheck Protection Program and Healthcare Enhancement Act ( P.L. 116-139 ). The SBA is also processing applications from agricultural businesses that had submitted an EIDL application prior to the legislative change. Those agricultural businesses do not need to reapply. All other EIDL loan applications that were submitted before the SBA stopped accepting new applications on April 15 are being processed on a first-in, first-out basis.", "A summary of the Paycheck Protection Program and Healthcare Enhancement Act's major small business-related provisions is presented in the Appendix . ", "As of May 17, 2020, the SBA had approved 252,340 COVID-19-related EIDL loans, totaling $24.8 billion. As of May 8, the SBA had approved just over three million Emergency EIDL grants, totaling nearly $9.9 billion.", "The SBA resumed the acceptance of PPP applications on April 27, 2020, following enactment of the Paycheck Protection Program and Health Care Enhancement Act. The act increased the SBA's section 7(a) loan authorization limit from $349 billion to $659 billion, and appropriated $321.335 billion to support that level of lending. The act also appropriated $50 billion for EIDL, $10 billion for Emergency EIDL grants, and $2.1 billion for SBA salaries and expenses. ", "As of May 16, 2020, the SBA had approved, after cancellations, more than 4.3 million PPP loans totaling more than $513 billion (see Table 1 ). For comparative purposes, that loan approval amount is more than the amount the SBA has approved in all of its loan programs, including disaster loans, during the last 29 years (from October 1, 1991 through December 31, 2019; $509.9 billion).", "On May 15, 2020, the House passed H.R. 6800 , the Health and Economic Recovery Omnibus Emergency Solutions Act (HEROES Act) . The HEROES Act , among other provisions, would expand PPP eligibility to include all 501(c) nonprofit organizations and appropriate another $10 billion for Emergency EIDL grants .", "A summary of the HEROES Act's major small business-related provisions is presented in the Appendix . ", "This report begins with an overview of SBA disaster loans and discusses various issues related to providing disaster assistance to small businesses adversely affected by COVID-19. It presents an overview and discussion of SBA access to capital programs (including the 7(a) loan guarantee, 504/CDC loan guarantee, and Microloan program), SBA management and technical training programs (SBDCs, WBCs, SCORE, and Microloan technical assistance), and SBA contracting programs."], "subsections": []}, {"section_title": "Disaster Loans", "paragraphs": [], "subsections": [{"section_title": "Overview", "paragraphs": ["SBA disaster assistance is provided in the form of loans, not grants, which must be repaid to the federal government. The SBA's disaster loans are unique in two respects: (1) they go directly to the ultimate borrower, and (2) they are not limited to small businesses.", "SBA disaster loans for physical damage are available to individuals, businesses of all sizes, and nonprofit organizations in declared disaster areas. SBA disaster loans for economic injury (EIDL) are available to eligible small businesses, small agricultural cooperatives, small businesses engaged in aquaculture, and most private, nonprofit organizations in declared disaster areas. The SBA issues about 80% of its direct disaster loans to individuals and households (renters and property owners) to repair and replace homes and personal property. The SBA disbursed $401 million in disaster loans in FY2016, $889 million in FY2017, $3.59 billion in FY2018, and $1.5 billion in FY2019."], "subsections": []}, {"section_title": "Types of Disaster Loans", "paragraphs": ["The SBA Disaster Loan Program includes home disaster loans, business physical disaster loans, and EIDLs. This report focuses on the EIDL program because it is currently being used to address the adverse economic impact of COVID-19 on small businesses and other EIDL-eligible organizations. ", "P.L. 116-123 , the Coronavirus Preparedness and Response Supplemental Appropriations Act, 2020, deemed the coronavirus to be a disaster under the EIDL program. This change made economic injury from the coronavirus an eligible EIDL expense. The act also provided the SBA an additional $20 million for disaster loan administrative expenses.", "For a discussion of all SBA disaster loans, see CRS Report R41309, The SBA Disaster Loan Program: Overview and Possible Issues for Congress , by Bruce R. Lindsay. "], "subsections": []}, {"section_title": "Economic Injury Disaster Loans", "paragraphs": ["EIDLs provide up to $2 million for working capital (including fixed debts, payroll, accounts payable and other bills that cannot be paid because of the disaster's impact) to help small businesses, small agricultural cooperatives, small businesses engaged in aquaculture, and most private, nonprofit organizations meet their financial obligations and operating expenses that cannot be met as a direct result of the disaster. ", "Public nonprofit organizations and several specific business types are not eligible for EIDL assistance. Ineligible businesses include, but are not limited to, the following: ", "businesses that do not meet the SBA's small business eligibility criteria, including the SBA's size standards; businesses that derive more than one-third of their annual gross revenue from legal gambling activities; casinos and racetracks; religious organizations; political and lobbying concerns; government-owned concerns (expect for businesses owned or controlled by a Native American tribe); and businesses determined by the SBA to have credit available elsewhere.", "EIDL loan amounts are based on actual economic injury and financial needs, regardless of whether the business or eligible nonprofit suffered any property damage. If an applicant is a major source of employment, the SBA may waive the $2 million statutory limit. In addition, EIDL loan proceeds cannot be used to refinance long-term debt, expand facilities, pay dividends or bonuses, or for relocation.", "Applicants must have a credit history acceptable to the SBA, the ability to repay the loan, and present collateral for all EIDL loans over $25,000 if available. The SBA collateralizes real estate or other assets when available, but it will not deny a loan for lack of collateral.", "EIDL interest rates are determined by formulas established in law (discussed later) and are fixed for the life of the loan. EIDL interest rate ceilings are statutorily set at no more than 4% per annum. EIDL applicants are not eligible if the SBA determines that the applicant has credit available elsewhere. ", "EIDL loans can have maturities up to 30 years. The SBA determines an appropriate installment payment based on each borrower's financial condition, which, in turn, determines the loan term. There are no prepayment penalties.", "SBA EIDL assistance is not automatically available. It must be requested in one of two ways: (1) a state or territory governor can submit a request to the President for a major disaster declaration under the Robert T. Stafford Disaster Relief and Emergency Assistance Act or (2) a state or governor can submit a request for SBA EIDL from the SBA Administrator under the Small Business Act. ", "There was some initial concern that COVID-19 would not be a declarable disaster under the Small Business Act because it did not meet the legal definition for a disaster. As mentioned, to prevent any potential ambiguity, Title II of P.L. 116-123 deemed the coronavirus a disaster under Section 7(b)(2)(D) of the Small Business Act, making economic injury from the coronavirus an eligible expense under the SBA's Economic Injury Disaster Loan program."], "subsections": []}, {"section_title": "Initial EIDL Response to COVID-19", "paragraphs": ["On March 16, 2020, the SBA Administrator began issuing declarations for SBA EIDLs in response to states seeking SBA disaster assistance for small businesses. The SBA changed its requirement that a state or territory \"provide documentation certifying that at least five small businesses have suffered substantial economic injury as a result of the disaster, with at least one business located in each declared county/parish.\" Under new criteria, states and territories now \"are only required to certify that at least five small businesses within the state/territory have suffered substantial economic injury, regardless of where the businesses are located.\" The SBA announced that under the new criteria EIDL assistance may be available statewide instead of just within specific identified counties in declarations related to COVID-19."], "subsections": []}, {"section_title": "EIDL Funding", "paragraphs": ["Prior to the CARES Act's enactment, the SBA had about $1.1 billion in disaster loan credit subsidy available to support about $7 billion to $8 billion in disaster loans. Loan credit subsidy is the amount provided to cover the government's cost of extending or guaranteeing credit. The loan credit subsidy amount is about one-seventh of the cost of each disaster loan. The credit subsidy amount is used to protect the government against the risk of estimated shortfalls in loan repayments. There was some concern that the SBA's funding for disaster loan credit subsidies would have proven to be insufficient to meet the demand for disaster loans now that EIDL eligibility has been extended to economic injuries related to COVID-19.", "The CARES Act addressed this issue by providing an additional $10 billion to support the EIDL program. As mentioned, the Paycheck Protection Program and Health Care Enhancement Act (P.L. 116-139) appropriated an additional $50 billion for EIDL and $10 billion for Emergency EIDL grants."], "subsections": []}, {"section_title": "Surge Issues and Loan Processing Times", "paragraphs": ["Historically, the majority (80%) of SBA disaster loans have been for individuals and households. The significant number of businesses that will likely apply for EIDL assistance because of the economic damage the coronavirus caused may require the SBA to enhance its disaster business loan portfolio and increase staff to meet demand. As mentioned, in anticipation of increased EIDL demand, Title II of P.L. 116-123 provided the SBA with an additional $20 million, to remain available until expended, for SBA Disaster Loan Program administrative expenses.", "A Government Accountability Office (GAO) report found that the SBA provided disaster loans in roughly 18 days or less in response to Hurricanes Harvey, Irma, and Maria in 2017. Although the 2017 hurricanes created a high demand at that time for SBA disaster loans, it is unclear if GAO's findings can be extrapolated to the current COVID-19 pandemic. The sheer volume of EIDL applications in response to COVID-19 could be significantly higher because COVID-19 affects a much larger number of small businesses and organizations. In addition, the time needed for the SBA to expand the disaster loan portfolio and hire and train new and existing staff could compromise loan processing times.", "Loan processing times may be of significant concern to Congress and business owners alike. If loans are not processed quickly enough, businesses nationwide may suffer economic damage and, potentially, collapse. Consequently, Congress may examine options that could expedite loan processing, such as increased staffing and surge capabilities, waiving application requirements, and the use of expedited loans or bridge loans."], "subsections": [{"section_title": "Expedited Disaster Loans and Bridge Loans", "paragraphs": ["In response to criticism of SBA's disaster loan processing following the Gulf Coast hurricanes of 2005 and 2008, Congress passed P.L. 110-234 , the Small Business Disaster Response and Loan Improvements Act of 2008. The act created several programs to improve the disaster loan processing. Among them were the following:", "Expedited Disaster Assistance Loan Program (EDALP) to provide eligible EIDL applicants with expedited access to short-term guaranteed loans of up to $150,000. Immediate Disaster Assistance Program (IDAP) to provide eligible EIDL applicants with guaranteed bridge loans of up to $25,000 from private-sector lenders, with an SBA decision within 36 hours of a lender's application on behalf of a borrower. Private Disaster Assistance Program (PDAP) to make guaranteed loans available to homeowners and eligible EIDL applicants in an amount up to $2 million.", "The SBA, however, had difficulty implementing these programs. In his statement before the House Committee on Small Business, then-acting (and now the current) SBA Inspector General, Hannibal \"Mike\" Ware, stated,", "In the wake of disasters like Hurricane Sandy, congressional representatives expressed concern that SBA did not effectively develop and utilize programmatic innovations intended to assist in disbursing funds quickly and effectively. For instance, SBA did not implement statutory provisions of the Immediate Disaster Assistance Program (IDAP), Economic Injury Disaster Assistance Program (EDAP), and the Private Disaster Assistance Programs (PDAP), collectively known as the \"Guaranteed Disaster Assistance Programs\" mandated by Congress in 2008. These provisions were enacted with the expectation that they would allow SBA to provide expedited disaster loans in partnership with private sector lenders. These provisions remain unimplemented.", "He added that the SBA had difficulty implementing the programs because private lenders were reluctant to participate in the program. He mentioned the following impediments: ", "[the] cost of program participation under the current pricing structure and the lender's lack of infrastructure to deliver loans that meet SBA standards (such as evaluating eligibility and duplication of benefits); loan terms that include longer maturities than conventional lending practices; the high cost of providing these loans; inadequate collateral security; and their lack of expertise in the home loan sector. Lenders were also concerned that loan guarantees would be denied due to improper eligibility determinations.", "Because these programs had limited use, Congress included a provision in P.L. 115-141 , the Consolidated Appropriations Act, 2018 , which permanently cancelled $2.6 million in unobligated balances available for the IDAP and the EDALP.", "The CARES Act addressed loan processing issues by authorizing the SBA Administrator, in response to economic injuries caused by COVID-19, to ", "waive the \"credit not available elsewhere\" requirement, approve an applicant based solely on their credit score, not require applicants to submit a tax return or tax return transcript for approval, waive any rules related to the personal guarantee on advances and loans of not more than $200,000, and waive the requirement that the applicant needs to be in business for the one-year period before the disaster declaration (except that no waiver may be made for a business that was not in operation on January 31, 2020)."], "subsections": []}]}, {"section_title": "SBA EIDL Repayment and Forgiveness", "paragraphs": ["Under present law and regulations, the first SBA EIDL payment is normally due five months after disbursement. However, on March 23, 2020, the SBA announced that it would defer payments on existing disaster loans through December 31, 2020, \"to help borrowers during this unprecedented time.\" The SBA also announced that payments on new EIDL loans would be deferred for one year (interest does accrue).", "The CARES Act provides \"impacted borrowers\" adversely affected by COVID-19 complete payment deferment relief on a covered loan in its Paycheck Protection Program (PPP). The deferment may be for not less than six months and not more than one year if the borrower was in operation on February 15, 2020, and has an application for a covered loan approved or pending approval on or after the date of enactment. The SBA announced that PPP loan payments will be deferred for six months. However, interest will continue to accrue on these loans during the six-month deferment.", "The CARES Act also provides for PPP loan forgiveness under specified conditions related to the borrower's retention of employees. Loan forgiveness is rare, but has been used in the past to help businesses that were having difficulty repaying their loans. For example, loan forgiveness was granted after Hurricane Betsy, when President Lyndon B. Johnson signed the Southeast Hurricane Disaster Relief Act of 1965. Section 3 of the act authorized the SBA Administrator to grant disaster loan forgiveness or issue waivers for property lost or damaged in Florida, Louisiana, and Mississippi as a result of the hurricane. The act stated that,", "to the extent such loss or damage is not compensated for by insurance or otherwise, (1) shall at the borrower's option on that part of any loan in excess of $500, (A) cancel up to $1,800 of the loan, or (B) waive interest due on the loan in a total amount of not more than $1,800 over a period not to exceed three years; and (2) may lend to a privately owned school, college, or university without regard to whether the required financial assistance is otherwise available from private sources, and may waive interest payments and defer principal payments on such a loan for the first three years of the term of the loan."], "subsections": []}, {"section_title": "Disaster Grants", "paragraphs": ["Historically, businesses that suffer uninsured loss as a result of a major disaster declaration are not eligible for Federal Emergency Management Agency (FEMA) grant assistance, and grant assistance from other federal sources is limited. On some occasions, Congress has provided disaster assistance to businesses through the Department of Housing and Urban Development's (HUD's) Community Development Block Grant (CDBG) program. The CDBG program provides loans and grants to eligible businesses to help them recover from disasters as well as grants intended to attract new businesses to the disaster-stricken area. In a few cases, CDBG has also been used to compensate businesses and workers for lost wages or revenues.", "Although the President issued the first major disaster declaration to New York for COVID-19, CDBG disaster assistance is not available for all major disasters. States can use CDBG funding to respond to emergencies or other \"urgent needs\" through the conventional CDBG entitlement and states program, but existing (or future) CDBG monies generally must be reprogrammed in consultation with HUD to respond to the emergency. For these reasons, CDBG is generally used for long-term recovery needs rather than providing immediate, direct disaster assistance.", "Thus, Congress could consider providing business grants through FEMA or the SBA. Enlisting FEMA to administer the program may offer several benefits. First, FEMA already has grant processing operations in place. It might be relatively easier to expand the operations to include small businesses disaster grants rather than establishing new grant-making operations within SBA. Second, having FEMA administer the small business disaster grant program may limit duplication of administrative functions between FEMA and SBA. Third, it would provide access to FEMA's Disaster Relief Fund (DRF) which at the time of this writing has roughly $41 billion for disaster assistance activities.", "In contrast, Congress could decide to have SBA administer the program because it already has a framework in place to evaluate business disaster needs and disaster loan eligibility. Congress may need to make statutory changes to SBA's disaster loan account or authorize a new account to receive appropriations for disaster grants.", "Another concern about providing grants to businesses is whether businesses provided SBA EIDL will be eligible for grant assistance. For example, in some cases homeowners and businesses that accepted disaster loans were deemed ineligible for disaster grants. This may make some businesses reluctant to apply for SBA EIDL and instead hold out for the possibility of a grant. Congress may therefore allow businesses to use grant money to pay down their SBA EIDL.", "Another potential concern is waste, fraud, and abuse. For example, Section 1210 of the Disaster Recovery Reform Act of 2018 (DRRA, Division D of P.L. 115-254 ) prohibits the President from determining loans as duplicative assistance provided all federal assistance is used toward loss resulting from an emergency or major disaster under the Stafford Act. Consequently, businesses that obtain SBA EIDL and a grant for the same purposes would conceivably not be required to pay back the duplicative award.", "Congress could consider limiting grants to relatively small businesses as compared to what is considered a small business according to SBA size standards. For example, business grants could be limited to businesses with 10 or fewer employees. ", "The CARES Act authorizes the SBA Administrator to provide up to $10,000 as an advance payment in the amount requested within three days after receiving an EIDL application from an eligible entity. Applicants are not required to repay the advance payment, referred to in the CARES Act as an Emergency EIDL grant, even if subsequently denied an EIDL loan. Due to anticipated demand, the SBA limited Emergency EIDL grants to $1,000 per employee, up to a maximum of $10,000. ", "The CARES Act addresses waste, fraud, and abuse by providing the SBA's OIG $25 million for oversight of the SBA's administration of its lending programs and for investigations to serve as a general deterrent to fraud, waste, and abuse."], "subsections": []}, {"section_title": "SBA EIDL Interest Rates", "paragraphs": ["According to the SBA's March 17, 2020, press release, SBA EIDL interest rates for COVD-19 are 3.75% for businesses and 2.75% for nonprofit organizations. ", "SBA disaster loan interest rates have been a long-standing congressional concern. First, there is concern about the ability of disaster victims to pay off their loans. Second, there is concern about how interest rates are determined given the complexity of the statutory language about disaster loan interest rates. 15 U.S.C. \u00c2\u00a7636(d)(5)(C)) states that interest rates are \"in the case of a business, private nonprofit organization, or other concern, including agricultural cooperatives, unable to obtain credit elsewhere, not to exceed 4 per centum per annum.\" To determine EIDL interest rates, SBA uses a formula under 15 U.S.C. \u00c2\u00a7636(d)(4)(A):", "Notwithstanding the provisions of the constitution of any State or the laws of any State limiting the rate or amount of interest which may be charged, taken, received, or reserved, the maximum legal rate of interest on any financing made on a deferred basis pursuant to this subsection shall not exceed a rate prescribed by the Administration, and the rate of interest for the Administration's share of any direct or immediate participation loan shall not exceed the current average market yield on outstanding marketable obligations of the United States with remaining periods to maturity comparable to the average maturities of such loans and adjusted to the nearest one-eighth of 1 per centum, and an additional amount as determined by the Administration, but not to exceed 1 per centum per annum: Provided, That for those loans to assist any public or private organization for the handicapped or to assist any handicapped individual as provided in paragraph (10) of this subsection, the interest rate shall be 3 per centum per annum.", "Congress could request SBA to reevaluate its interpretation of 15 U.S.C. \u00c2\u00a7636(d)(4)(A) and provide detailed information explaining how the formula provides nonprofit organizations with lower interest rates than small businesses. Alternatively, Congress could change the formula under the Small Business Act if it considered the language ambiguous, or it could designate an interest rate (including a zero interest rate) for all SBA EIDL for the duration of COVID-19. "], "subsections": []}]}, {"section_title": "SBA Capital Access Programs", "paragraphs": [], "subsections": [{"section_title": "Overview", "paragraphs": ["The SBA has authority to make direct loans but, with the exception of disaster loans and loans to Microloan program intermediaries, has not exercised that authority since 1998. The SBA indicated that it stopped issuing direct business loans primarily because the subsidy rate was \"10 to 15 times higher\" than the subsidy rate for its loan guaranty programs. Instead of making direct loans, the SBA guarantees loans issued by approved lenders to encourage those lenders to provide loans to small businesses \"that might not otherwise obtain financing on reasonable terms and conditions.\" With few exceptions, to qualify for SBA assistance, an organization must be both a for-profit business and small."], "subsections": []}, {"section_title": "What Is a \"Small Business\"?", "paragraphs": ["To participate in any of the SBA loan guaranty programs, a business must meet the Small Business Act's definition of small business . This is a business that", "is organized for profit; has a place of business in the United States; operates primarily within the United States or makes a significant contribution to the U.S. economy through payment of taxes or use of American products, materials, or labor; is independently owned and operated; is not dominant in its field on a national basis; and does not exceed size standards established, and updated periodically, by the SBA. ", "The business may be a sole proprietorship, partnership, corporation, or any other legal form."], "subsections": []}, {"section_title": "What Is \"Small\"?48", "paragraphs": ["The SBA uses two measures to determine if a business is small: SBA-derived industry specific size standards or a combination of the business's net worth and net income. For example, businesses participating in the SBA's 7(a) loan guaranty program are deemed small if they either meet the SBA's industry-specific size standards for firms in 1,047 industrial classifications in 18 subindustry activities described in the North American Industry Classification System (NAICS) or do not have more than $15 million in tangible net worth and not more than $5 million in average net income after federal taxes (excluding any carryover losses) for the two full fiscal years before the date of the application. All of the company's subsidiaries, parent companies, and affiliates are considered in determining if it meets the size standard.", "The SBA's industry size standards vary by industry, and they are based on one of the following four measures: the firm's (1) average annual receipts in the previous three (or five) years, (2) number of employees, (3) asset size, or (4) for refineries, a combination of number of employees and barrel per day refining capacity. Historically, the SBA has used the number of employees to determine if manufacturing and mining companies are small and average annual receipts for most other industries.", "The SBA's size standards are designed to encourage competition within each industry. They are derived through an assessment of the following four economic factors: \"average firm size, average assets size as a proxy of start-up costs and entry barriers, the 4-firm concentration ratio as a measure of industry competition, and size distribution of firms.\" The SBA also considers the ability of small businesses to compete for federal contracting opportunities and, when necessary, several secondary factors \"as they are relevant to the industries and the interests of small businesses, including technological change, competition among industries, industry growth trends, and impacts of size standard revisions on small businesses.\" "], "subsections": []}, {"section_title": "SBA Loan Guarantee Programs", "paragraphs": [], "subsections": []}, {"section_title": "Overview", "paragraphs": ["The SBA provides loan guarantees for small businesses that cannot obtain credit elsewhere. Its largest loan guaranty programs are the 7(a) loan guaranty program, the 504/CDC loan guaranty program, and the Microloan program.", "The SBA's loan guaranty programs require personal guarantees from borrowers and share the risk of default with lenders by making the guaranty less than 100%. In the event of a default, the borrower owes the amount contracted less the value of any collateral liquidated. The SBA can attempt to recover the unpaid debt through administrative offset, salary offset, or IRS tax refund offset. Most types of businesses are eligible for loan guarantees. A list of ineligible businesses (such as insurance companies, real estate investment firms, firms involved in financial speculation or pyramid sales, and businesses involved in illegal activities) is contained in 13 C.F.R. \u00c2\u00a7120.110. With one exception, nonprofit and charitable organizations are also ineligible.", "Most of these programs charge fees to help offset program costs, including costs related to loan defaults. In most instances, the fees are set in statute. For example, for 7(a) loans with a maturity exceeding 12 months, the SBA is authorized to charge lenders an up-front guaranty fee of up to 2% for the SBA guaranteed portion of loans of $150,000 or less, up to 3% for the SBA guaranteed portion of loans exceeding $150,000 but not more than $700,000, and up to 3.5% for the SBA guaranteed portion of loans exceeding $700,000. Lenders who have a 7(a) loan that has a SBA guaranteed portion in excess of $1 million can be charged an additional fee not to exceed 0.25% of the guaranteed amount in excess of $1 million. ", "7(a) loans are also subject to an ongoing servicing fee not to exceed 0.55% of the outstanding balance of the guaranteed portion of the loan. In addition, lenders are authorized to collect fees from borrowers to offset their administrative expenses.", "In an effort to assist small business owners, the SBA has, from time-to-time, reduced its fees. For example, in FY2019, the SBA waived the annual service fee for 7(a) loans of $150,000 or less made to small businesses located in a rural area or a HUBZone and reduced the up-front one-time guaranty fee for these loans from 2.0% to 0.6667% of the guaranteed portion of the loan. ", "In addition, pursuant to P.L. 114-38 , the Veterans Entrepreneurship Act of 2015, the SBA is required to waive the up-front, one-time guaranty fee on all veteran loans under the 7(a) SBAExpress program (up to and including $350,000) \"except during any upcoming fiscal year for which the President's budget, submitted to Congress, includes a cost for the 7(a) program, in its entirety, that is above zero.\"", "The SBA's goal is to achieve a zero subsidy rate, meaning that the appropriation of budget authority for new loan guaranties is not required."], "subsections": []}, {"section_title": "7(a) Loan Guaranty Program57", "paragraphs": ["The 7(a) loan guaranty program is named after the section of the Small Business Act that authorizes it. The loans are made by SBA lending partners (mostly banks but also some other financial institutions) and partially guaranteed by the SBA. Borrowers may use 7(a) loan proceeds to establish a new business or to assist in the operation, acquisition, or expansion of an existing business. 7(a) loan proceeds may be used to ", "acquire land (by purchase or lease); improve a site (e.g., grading, streets, parking lots, landscaping), including up to 5% for community improvements such as curbs and sidewalks; purchase one or more existing buildings; convert, expand, or renovate one or more existing buildings; construct one or more new buildings; acquire (by purchase or lease) and install fixed assets; purchase inventory, supplies, and raw materials; finance working capital; and refinance certain outstanding debts.", "In FY2019, the SBA approved 51,907 7(a) loans to 46,111 small businesses totaling $23.2 billion. In FY2019, there were 1,708 active lending partners providing 7(a) loans. ", "The 7(a) program's current guaranty rate is 85% for loans of $150,000 or less and 75% for loans greater than $150,000 (up to a maximum guaranty of $3.75 million, or 75% of $5 million). Although the SBA's offer to guarantee a loan provides an incentive for lenders to make the loan, lenders are not required to do so. ", "A 7(a) loan is required to have the shortest appropriate term, depending upon the borrower's ability to repay. The maximum term is 10 years, unless the loan finances or refinances real estate or equipment with a useful life exceeding 10 years. In that case, the loan term can be up to 25 years, including extensions.", "Lenders are permitted to charge borrowers fees to recoup specified expenses and are allowed to charge borrowers \"a reasonable fixed interest rate\" or, with the SBA's approval, a variable interest rate. The SBA uses a multistep formula to determine the maximum allowable fixed interest rate for all 7(a) loans (with the exception of the Export Working Capital Program and Community Advantage loans) and periodically publishes that rate and the maximum allowable variable interest rate in the Federal Register . ", "In May 2020, the maximum allowable fixed interest rates are 11.25% for 7(a) loans of $25,000 or less; 10.25% for loans over $25,000 but not exceeding $50,000; 9.25% for loans over $50,000 up to and including $250,000; and 8.25% for loans greater than $250,000.", "Maximum interest rates allowed on variable-rate 7(a) loans are pegged to either the prime rate, the 30-day London Interbank Offered Rate (LIBOR) plus 3%, or the SBA optional peg rate, which is a weighted average of rates that the federal government pays for loans with maturities similar to the guaranteed loan. The allowed spread over the prime rate, LIBOR base rate, or SBA optional peg rate depends on the loan amount and the loan's maturity (under seven years or seven years or more). The adjustment period can be no more than monthly and cannot change over the life of the loan."], "subsections": []}, {"section_title": "The 504/CDC Loan Guaranty Program64", "paragraphs": ["The 504/CDC loan guaranty program uses Certified Development Companies (CDCs), which are private, nonprofit corporations established to contribute to economic development within their communities. Each CDC has its own geographic territory. The program provides long-term, fixed-rate loans for major fixed assets, such as land, structures, machinery, and equipment. Program loans cannot be used for working capital, inventory, or repaying debt. A commercial lender provides up to 50% of the financing package, which is secured by a senior lien. The CDC's loan of up to 40% is secured by a junior lien. The SBA backs the CDC with a guaranteed debenture. The small business must contribute at least 10% as equity.", "To participate in the program, small businesses cannot exceed $15 million in tangible net worth and cannot have average net income of more than $5 million for two full fiscal years before the date of application. Also, CDCs must intend to create or retain one job for every $75,000 of the debenture ($120,000 for small manufacturers) or meet an alternative job creation standard if they meet any one of 15 community or public policy goals.", "Maximum 504/CDC participation in a single project is $5 million and $5.5 million for manufacturers and specified energy-related projects; the minimum is $25,000. There is no limit on the project size. Loan maturity is 10 years for equipment and 20 or 25 years for real estate. Unguaranteed financing may have a shorter term. The maximum fixed interest rate allowed is established when the debenture backing the loan is sold and is pegged to an increment above the current market rate for 5-year and 10-year U.S. Treasury issues.", "The SBA is authorized to charge CDCs ", "a one-time, up-front guaranty fee of up to 0.5% of the debenture (0.5% in FY2020), an annual servicing fee of up to 0.9375% of the unpaid principal balance (0.3205% for regular 504/CDC loans and 0.322% for 504/CDC debt refinance loans in FY2020), a funding fee (not to exceed 0.25% of the debenture), an annual development company fee (0.125% of the debenture's outstanding principal balance), and a one-time participation fee (0.5% of the senior mortgage loan if in a senior lien position to the SBA and the loan was approved after September 30, 1996). ", "In addition, CDCs are allowed to charge borrowers a processing (or packaging) fee of up to 1.5% of the net debenture proceeds and a closing fee, servicing fee, late fee, assumption fee, Central Servicing Agent (CSA) fee, other agent fees, and an underwriters' fee.", "In FY2019, the SBA approved 6,099 504/CDC loans to 6,008 small businesses totaling nearly $5.0 billion. In FY2019, 212 CDCs provided at least one 504/CDC loan."], "subsections": []}, {"section_title": "504/CDC Refinancing Program", "paragraphs": ["During the Great Recession (2007-2009), Congress authorized the SBA to temporarily allow, under specified circumstances, the use of 504/CDC program funds to refinance existing commercial debt (e.g., not from SBA-guaranteed loans) for business expansion under the 504/CDC program. In 2010, Congress authorized, for two years, the expansion of the types of projects eligible for refinancing of existing debt under the 504/CDC program to include projects not involving business expansion, provided the projects met specific criteria. In the 114 th Congress, Congress reinstated the expansion of the types of projects eligible for refinancing under the 504/CDC loan guaranty program in any fiscal year in which the refinancing program and the 504/CDC program as a whole do not have credit subsidy costs. Specifically, each CDC is required to limit its refinancing so that, during any fiscal year, the new refinancing does not exceed 50% of the dollars it loaned under the 504/CDC program during the previous fiscal year. This limitation may be waived if the SBA determines that the refinance loan is needed for good cause. ", "Commercial loans eligible for the 504/CDC Refinancing program being used to finance long-term fixed asset debt cannot have a loan-to-value (LTV) ratio of more than 90% of the fair market value of the eligible fixed asset(s) serving as collateral. Loans that are used to partly refinance eligible business operating expenses (e.g., salaries, rent, utilities) cannot exceed an LTV ratio of more than 85% of the fair market value of the collateral. The fees associated with the 504/CDC Refinancing program are the same as the 504/CDC Loan Guaranty program except the ongoing guaranty servicing fee may vary. In FY2020, the annual guaranty servicing fee is 0.3205% for regular 504/CDC loans and 0.322% for 504/CDC debt refinance loans.", "In FY2019, the SBA approved 166 refinancing loans totaling $154.8 million."], "subsections": []}, {"section_title": "The Microloan Program72", "paragraphs": ["The Microloan program provides direct loans to qualified nonprofit intermediary Microloan lenders that, in turn, provide \"microloans\" of up to $50,000 to small businesses and nonprofit child care centers. Microloan lenders also provide marketing, management, and technical assistance to Microloan borrowers and potential borrowers. ", "The program was authorized in 1991 as a five-year demonstration project and became operational in 1992. It was made permanent, subject to reauthorization, by P.L. 105-135 , the Small Business Reauthorization Act of 1997. Although the program is open to all small businesses, it targets new and early stage businesses in underserved markets, including borrowers with little to no credit history, low-income borrowers, and women and minority entrepreneurs in both rural and urban areas who generally do not qualify for conventional loans or other, larger SBA guaranteed loans.", "Microloans can be used for working capital and acquisition of materials, supplies, furniture, fixtures, and equipment. Loans cannot be made to acquire land or property. Loan terms are up to seven years.", "The SBA charges intermediaries an interest rate that is based on the five-year Treasury rate, adjusted to the nearest one-eighth percent (called the Base Rate), less 1.25% if the intermediary maintains a historic portfolio of Microloans averaging more than $10,000 and less 2.0% if the intermediary maintains a historic portfolio of Microloans averaging $10,000 or less. The Base Rate, after adjustment, is called the Intermediary's Cost of Funds. The Intermediary's Cost of Funds is initially calculated one year from the date of the note and is reviewed annually and adjusted as necessary (called recasting). The interest rate cannot be less than zero.", "On loans of more than $10,000, the maximum interest rate that can be charged to the borrower is the interest rate charged by the SBA on the loan to the intermediary, plus 7.75%. On loans of $10,000 or less, the maximum interest rate that can be charged to the borrower is the interest charged by the SBA on the loan to the intermediary, plus 8.5%. Rates are negotiated between the borrower and the intermediary and typically range from 7% to 9%.", "The SBA does not charge intermediaries up-front or ongoing service fees under the Microloan program.", "In FY2019, 5,533 small businesses received a Microloan, totaling $81.5 million. The average Microloan was $14,735 and the average interest rate was 7.5%."], "subsections": []}, {"section_title": "SBA Loan Enhancements to Address the Great Recession", "paragraphs": ["Many of the proposals under consideration to address the capital needs of small businesses adversely affected by the COVID-19 pandemic were used to address the severe economic slowdown during and immediately following the Great Recession (2007-2009). The main difference is that given the unique nature of the COVID-19 pandemic's impact on households, especially physical distancing and the resulting decrease in consumer spending, there is an added emphasis today on SBA loan deferrals, loan forgiveness, and expanded eligibility, including, for the first time, specified types of nonprofit organizations.", "During the 111 th Congress, P.L. 111-5 , the American Recovery and Reinvestment Act of 2009 (ARRA), provided the SBA an additional $730 million, including $375 million to temporarily subsidize the 7(a) and 504/CDC loan guaranty programs' fees ($299 million) and to temporarily increase the 7(a) program's maximum loan guaranty percentage to 90% ($76 million). ARRA also included provisions designed to increase the amount of leverage issued under the SBA's Small Business Investment Company (SBIC venture capital) program. SBICs provide loans and equity investments in small businesses.", "ARRA's funding for the fee subsidies and 90% maximum loan guaranty percentage was about to be exhausted in November 2009, when Congress passed the first of six laws to provide additional funding to extend the loan subsidies and 90% maximum loan guaranty percentage.", "P.L. 111-118 , the Department of Defense Appropriations Act, 2010, provided the SBA $125 million to continue the fee subsidies and 90% maximum loan guaranty percentage through February 28, 2010. P.L. 111-144 , the Temporary Extension Act of 2010, provided the SBA $60 million to continue the fee subsidies and 90% maximum loan guaranty percentage through March 28, 2010. P.L. 111-150 , an act to extend the Small Business Loan Guarantee Program, and for other purposes, provided the SBA authority to reprogram $40 million in previously appropriated funds to continue the fee subsidies and 90% maximum loan guaranty percentage through April 30, 2010. P.L. 111-157 , the Continuing Extension Act of 2010, provided the SBA $80 million to continue the SBA's fee subsidies and 90% maximum loan guaranty percentage through May 31, 2010. P.L. 111-240 , the Small Business Jobs Act of 2010, provided $505 million (plus an additional $5 million for administrative expenses) to continue the SBA's fee subsidies and 90% maximum loan guaranty percentage from the act's date of enactment (September 27, 2010) through December 31, 2010. P.L. 111-322 , the Continuing Appropriations and Surface Transportation Extensions Act, 2011, authorized the SBA to use funds provided under the Small Business Jobs Act of 2010 to continue the SBA's fee subsidies and 90% maximum loan guaranty percentage through March 4, 2011, or until available funding is exhausted.", "On January 3, 2011, the SBA announced that the fee subsidies and 90% maximum guarantee percentage ended because funding for these enhancements had been exhausted. ", "In addition to providing additional funding for fee subsidies, P.L. 111-240 , among other provisions", "increased the 7(a) program's gross loan limit from $2 million to $5 million; increased the 504/CDC Program's loan limits from $1.5 million to $5 million for \"regular\" borrowers, from $2 million to $5 million if the loan proceeds are directed toward one or more specified public policy goals, and from $4 million to $5.5 million for manufacturers; temporarily expanded for two years the eligibility for low-interest refinancing under the SBA's 504/CDC program for qualified debt; temporarily increased for one year the SBAExpress Program's loan limit from $350,000 to $1 million (expired on September 26, 2011); increased the Microloan Program's loan limit for borrowers from $35,000 to $50,000; and increased the loan limits for Microloan intermediaries after their first year in the program from $3.5 million to $5 million; authorized the U.S. Treasury to make up to $30 billion of capital investments for a Small Business Lending Fund ($4 billion was issued); authorized to be appropriated $1.5 billion for the State Small Business Credit Initiative Program; authorized a three-year Intermediary Lending Pilot Program to allow the SBA to make direct loans to not more than 20 eligible nonprofit lending intermediaries each year totaling not more than $20 million. The intermediaries, in turn, would be allowed to make loans to new or growing small businesses, not to exceed $200,000 per business; established an alternative size standard for the 7(a) and 504/CDC loan programs to enable more small businesses to qualify for assistance; and provided small businesses with about $12 billion in tax relief.", "There were also efforts during the 111 th and 112 th Congresses to require the SBA to reinstate direct lending to small businesses.", "During the 111 th Congress", "H.R. 3854 , the Small Business Financing and Investment Act of 2009, was passed by the House on October 29, 2009, by a vote of 389-32. It would have authorized a temporary SBA direct lending program. ", "During the 112 th Congress", "H.R. 3007 , the Give Credit to Main Street Act of 2011, introduced on September 21, 2011, and referred to the House Committee on Small Business, would have authorized the SBA to provide direct loans to small businesses that have been in operation as a small business for at least two years prior to its application for a direct loan. The maximum loan amount would have been the lesser of 10% of the firm's annual revenues or $500,000. H.R. 5835 , the Veterans Access to Capital Act of 2012, introduced on May 18, 2012, and referred to the House Committee on Small Business, would have authorized the SBA to provide up to 20% of the annual amount available for guaranteed loans under the 7(a) and 504/CDC loan guaranty programs, respectively, in direct loans to veteran-owned and -controlled small businesses. "], "subsections": []}, {"section_title": "Current Issues, Debates, and Lessons Learned", "paragraphs": ["During the 111 th Congress (2009-2010), there was a consensus in Congress that the federal government had to take decisive action to address the capital needs of small businesses, primarily as a means to promote job retention and creation. Similar sentiments are being expressed today as Congress considers proposals to assist small businesses adversely affected by the COVID-19 pandemic.", "Many Members of Congress argued during the 111 th Congress that the SBA should be provided additional resources to assist small businesses in acquiring capital necessary to start, continue, or expand operations with the expectation that in so doing small businesses will create jobs. Others worried about the long-term adverse economic effects of spending programs that increase the federal deficit. They advocated business tax reduction, reform of financial credit market regulation, and federal fiscal restraint as the best means to help small businesses further economic growth and job creation. ", "Given the coronavirus's widespread adverse economic impact, including productivity losses, supply chain disruptions, labor dislocation, and financial pressure on businesses and households, there has been relatively little concern expressed about federal fiscal restraint during the current pandemic. The debate has been primarily over which specific policies would have the greatest impact and which types of small businesses and small business owners should be helped the most. ", "As mentioned, many of the enhancements to the SBA's capital access programs that were made during the 111 th Congress, such as increasing loan limits, providing fee subsidies, increasing loan guaranty percentages, and expanding eligibility criteria are being considered again. These changes had a demonstrated impact on small business lending during and immediately following the Great Recession. SBA lending increased. For example, the SBA's OIG found that SBA 7(a) loan approvals increased 39% and 504/CDC loan approval increased 73% from March to July 2009, largely due to ARRA's fee reductions and increased loan guarantee percentages. Lending volume remained below pre-recession levels, but was much higher than before the fee reductions and increase in the loan guarantee percentage were implemented. ", "The OIG also noted that the increased loan volume \"may be impacting Agency staffing requirements and program risk.... Without adequate training and supervision, the increased demands on loan center staff could impact the quality of Agency loan reviews.\" ", "Also, in 2012, the SBA issued a press release lauding P.L. 111-240 's impact on SBA loan volume:", "With loan volume steadily increasing for the past six quarters, the U.S. Small Business Administration's loan programs posted the second largest dollar volume ever in FY 2012, supporting $30.25 billion in loans to small businesses. That amount was surpassed only by FY 2011, which was heavily boosted by the loan incentives under the Small Business Jobs Act of 2010.", "The data demonstrate that ARRA and the Small Business Jobs Act of 2010 helped small businesses access capital. However, because the SBA primarily gathers data on program output (e.g., loan volume, number of small businesses served, default rates) as opposed to program outcomes (e.g., small business solvency, job creation, wealth generation) it is difficult to know how effective these programs were in assisting small businesses or if other approaches might have produced better (or different) results.", "Among the lessons learned from earlier small business stimulus packages is that additional funding for the SBA OIG to conduct oversight of the SBA's implementation of stimulus changes could help Congress in its oversight responsibilities. Additional funding for the SBA OIG to conduct investigations of potentially fraudulent behaviors by borrowers and lenders could also prove useful in deterring fraud, waste, and abuse. In addition, requiring the SBA to periodically report to Congress and on its website both output and outcome performance data could help Congress in its oversight responsibilities and assure the public that the taxpayer's dollars are being spent both efficiently and effectively."], "subsections": []}]}, {"section_title": "SBA Entrepreneurial Development Programs85", "paragraphs": [], "subsections": [{"section_title": "Overview", "paragraphs": ["The SBA has provided technical and managerial assistance to small businesses since it began operations in 1953. Initially, the SBA provided its own small business management and technical assistance training programs. Over time, the SBA has relied increasingly on third parties to provide that training. ", "Congressional interest in the SBA's management and technical assistance training programs has increased in recent years, primarily because these programs are viewed as a means to assist small businesses create and retain jobs. The FY2020 budget appropriated $239 million, funding about 14,000 resource partners, including 63 lead small business development centers (SBDCs) and nearly 900 SBDC local outreach locations, 125 women's business centers (WBCs), and 350 chapters of the mentoring program, SCORE. ", "The SBA reports that nearly a million aspiring entrepreneurs and small business owners receive mentoring and training from an SBA-supported resource partner each year. Most of this training is free, and some is offered at low cost.", "The Department of Commerce also provides management and technical assistance training for small businesses. For example, its Minority Business Development Agency provides training to minority business owners to assist them in obtaining contracts and financial awards."], "subsections": []}, {"section_title": "Small Business Development Centers", "paragraphs": ["SBDCs provide free or low-cost assistance to small businesses using programs customized to local conditions. SBDCs support small businesses in marketing and business strategy, finance, technology transfer, government contracting, management, manufacturing, engineering, sales, accounting, exporting, and other topics. SBDCs are funded by SBA grants and matching funds equal to the grant amount. ", "SBDC funding is allocated on a pro rata basis among the states (including the District of Columbia, the Commonwealth of Puerto Rico, the U.S. Virgin Islands, Guam, and American Samoa) by a statutory formula \"based on the percentage of the population of each State, as compared to the population of the United States.\" If, as is currently the case, SBDC funding exceeds $90 million, the minimum funding level is \"the sum of $500,000, plus a percentage of $500,000 equal to the percentage amount by which the amount made available exceeds $90 million.\"", "There are 63 lead SBDC service centers, one located in each state (four in Texas and six in California), the District of Columbia, Puerto Rico, the U.S. Virgin Islands, Guam, and American Samoa. These centers manage more than 900 SBDC outreach locations. In FY2020, the SBA was provided $135 million for SBDC grants through the regular appropriations process and an additional $192 million in supplemental funding for SBDC grants in the CARES Act.", "In FY2019, SBDCs provided technical assistance training and counseling services to 254,821 unique SBDC clients, and 17,810 new businesses were started largely as a result of SBDC training and counseling."], "subsections": []}, {"section_title": "Microloan Technical Assistance", "paragraphs": ["Congress authorized the SBA's Microloan lending program in 1991 ( P.L. 102-140 , the Departments of Commerce, Justice, and State, the Judiciary, and Related Agencies Appropriations Act, 1992) to address the perceived disadvantages faced by women, low-income, veteran, and minority entrepreneurs and business owners gaining access to capital to start or expand their business. The program became operational in 1992. Initially, the SBA's Microloan program was authorized as a five-year demonstration project. It was made permanent, subject to reauthorization, by P.L. 105-135 , the Small Business Reauthorization Act of 1997.", "The SBA's Microloan Technical Assistance Program is affiliated with the SBA's Microloan lending program but receives a separate appropriation. This program provides grants to Microloan intermediaries for management and technical training assistance to Microloan program borrowers and prospective borrowers. There are currently 144 active Microloan intermediaries serving 49 states, the District of Columbia, and Puerto Rico.", "Under the Microloan program, intermediaries are eligible to receive a Microloan technical assistance grant \"of not more than 25% of the total outstanding balance of loans made to it.\" Grant funds may be used only to provide marketing, management, and technical assistance to Microloan borrowers, and no more than 50% of the funds may be used to provide such assistance to prospective Microloan borrowers and no more than 50% of the funds may be awarded to third parties to provide that technical assistance. Grant funds also may be used to attend required training.", "In most instances, intermediaries must contribute, solely from nonfederal sources, an amount equal to 25% of the grant amount. In addition to cash or other direct funding, the contribution may include indirect costs or in-kind contributions paid for under nonfederal programs. ", "The SBA does not require Microloan borrowers to participate in the Microloan Technical Assistance Program. However, intermediaries typically require Microloan borrowers to participate in the training program as a condition of the receipt of a microloan. Combining loan and intensive management and technical assistance training is one of the Microloan program's distinguishing features.", "The SBA was provided $34.5 million for Microloan Technical Assistance grants in FY2020."], "subsections": []}, {"section_title": "Women's Business Centers", "paragraphs": ["The WBC Renewable Grant Program was initially established by P.L. 100-533 , the Women's Business Ownership Act of 1988, as the Women's Business Demonstration Pilot Program, targeting the needs of socially and economically disadvantaged women. The act directed the SBA to provide financial assistance to private, nonprofit organizations to conduct demonstration projects giving financial, management, and marketing assistance to small businesses, including start-up businesses, owned and controlled by women. The WBC program was expanded and provided permanent legislative status by P.L. 109-108 , the Science, State, Justice, Commerce, and Related Agencies Appropriations Act, 2006.", "Since the program's inception, the SBA has awarded WBCs a grant of up to $150,000 per year. WBC initial grants are currently awarded for up to five years, consisting of a base period of 12 months from the date of the award and four 12-month option periods. The SBA determines if the option periods are exercised and makes that determination subject to the continuation of program authority, the availability of funds, and the recipient organization's compliance with federal law, SBA regulations, and the terms and conditions specified in a cooperative agreement. WBCs that successfully complete the initial five-year grant period may apply for an unlimited number of three-year funding intervals.", "During their initial five-year grant period, WBCs are required to provide a nonfederal match of one nonfederal dollar for each two federal dollars in years one and two (1:2), and one nonfederal dollar for each federal dollar in years three, four, and five (1:1). After the initial five-year grant period, the matching requirement in subsequent three-year funding intervals is not more than 50% of federal funding (1:1). The nonfederal match may consist of cash, in-kind, and program income.", "Today, there are 125 WBCs located throughout most of the United States and the territories. In FY2019, WBCs provided technical assistance training and counseling services to 64,527 unique WBC clients, and 2,087 new businesses were started largely as a result of WBC training and counseling.", "In FY2020, the SBA was provided $22.5 million for WBC grants in the regular appropriations process and an additional $48 million in supplemental funding for WBC grants in the CARES Act."], "subsections": []}, {"section_title": "SCORE (formerly the Service Corps of Retired Executives)", "paragraphs": ["SCORE was established on October 5, 1964, by then-SBA Administrator Eugene P. Foley as a national, volunteer organization, uniting more than 50 independent nonprofit organizations into a single, national nonprofit organization. ", "The SBA currently provides grants to SCORE to provide in-person mentoring, online training, and \"nearly 9,000 local training workshops annually\" to small businesses. SCORE's 350 chapters and more than 800 branch offices are located throughout the United States and partner with more than 10,000 volunteer counselors, who are working or retired\u00c2\u00a0business owners, executives and corporate leaders, to provide management and training assistance to small businesses \"at no charge or at very low cost.\"", "In FY2019, SCORE provided technical assistance training and counseling services to 195,242 unique SCORE clients, and 480 new businesses were started largely as a result of SCORE training and counseling.", "In FY2020, the SBA was provided $11.7 million for SCORE grants."], "subsections": []}, {"section_title": "Current Issues, Debates and Lessons Learned", "paragraphs": ["Congress provided additional funding for SBA entrepreneurial development programs during and immediately following the Great Recession. For example, ARRA provided an additional $24 million for Microloan Technical Assistance grants. The Small Business Jobs Act of 2010 provided SBDCs an additional $50 million and temporarily waived SBDC, Microloan Technical Assistance, and WBC matching requirements. ", "Similar proposals have been made to address the COVID-19 pandemic. For example, S. 3518 , the COVID-19 RELIEF for Small Businesses Act of 2020, as introduced, would provide an additional $150 million for SBA's entrepreneurial development programs, including $40 million for SBDCs, $18.75 for WBCs, $1 million to SCORE, and $50 million for M icroloan T echnical A ssistance grants . The bill also would waive SBDC , Microloan Technical Assistance, and WBC grant matching requirements . The CARES Act appropriates $265 million for entrepreneurial development programs ($192 million for SBDCs, $48 million for WBCs, and $25 million for SBA resource partners to provide online information and training). The act also waives SBDC and WBC matching requirements.", "Congress could require the SBA's resource partners to report to the SBA both output and outcome performance data for these grants and to require the SBA to report that information to Congress and make that information available to the public on the SBA website."], "subsections": []}]}, {"section_title": "SBA Contracting Programs109", "paragraphs": [], "subsections": [{"section_title": "Overview", "paragraphs": ["Federal agencies are required to facilitate the maximum participation of small businesses as prime contractors, subcontractors, and suppliers. For example, federal agencies are generally required to reserve contracts that have an anticipated value greater than the micro-purchase threshold (currently $10,000), but not greater than the simplified acquisition threshold (currently $250,000) exclusively for small businesses unless the contracting officer is unable to obtain offers from two or more small businesses that are competitive with market prices and the quality and delivery of the goods or services being purchased.", "Several SBA programs assist small businesses in obtaining and performing federal contracts and subcontracts. These include various prime contracting programs, subcontracting programs, and other assistance (e.g., contracting technical training assistance and oversight of the federal small business goaling program and the Surety Bond Guarantee program)."], "subsections": []}, {"section_title": "8(a) Program112", "paragraphs": ["The SBA's 8(a) Minority Small Business and Capital Ownership Development Program provides business development assistance to businesses owned and controlled by persons who are socially and economically disadvantaged, have good character, and demonstrate a potential for success. ", "Although the 8(a) Program was originally established in the 1980s for the benefit of disadvantaged individuals, Congress expanded the program to include small businesses owned by four disadvantaged groups. Small businesses owned by Alaska Native Corporations (ANCs), Community Development Corporations (CDCs), Indian tribes, and Native Hawaiian Organizations (NHOs) are also eligible to participate in the 8(a) Program under somewhat different requirements.", "Federal agencies are authorized to award contracts for goods or services, or to perform construction work, to the SBA for subcontracting to 8(a) firms. The SBA is authorized to delegate the function of executing contracts to the procuring agencies and often does so. Once the SBA has accepted a contract for the 8(a) Program, the contract is awarded through either a restricted competition limited to just 8(a) participants (a set aside) or on a sole source basis, with the contract amount generally determining the acquisition method used.", "For individually owned small businesses, when the contract's anticipated total value, including any options, is less than $4 million ($7 million for manufacturing contracts), the contract is normally awarded without competition (as a sole source award). In contrast, when the contract's anticipated value exceeds these thresholds, the contract generally must be awarded via a set aside with competition limited to 8(a) firms so long as there is a reasonable expectation that at least two eligible and responsible 8(a) firms will submit offers and the award can be made at fair market price. ", "Similar to other participants, firms owned by ANCs, CDCs, NHOs, and Indian tribes are eligible for 8(a) set asides and may receive sole source awards valued at less than $4 million ($7 million for manufacturing contracts). However, firms owned by ANCs and Indian tribes can also receive sole source awards in excess of $4 million ($7 million for manufacturing contracts) even when contracting officers reasonably expect that at least two eligible and responsible 8(a) firms will submit offers and the award can be made at fair market price. NHO-owned firms may receive sole source awards from the Department of Defense under the same conditions.", "The 8(a) program is designed to help federal agencies achieve their statutory goal of awarding at least 5% of their federal contracting dollars to small disadvantaged businesses.", "In FY2018, the federal government awarded $29.5 billion to 8(a) firms."], "subsections": []}, {"section_title": "Historically Underutilized Business Zone Program117", "paragraphs": ["The SBA oversees the Historically Underutilized Business Zones (HUBZones) Program. The program assists small businesses located in HUBZone-designated areas through set asides, sole source awards (so long as the award can be made at a fair and reasonable price, and the anticipated total value of the contract, including any options, is below $4 million, or $7 million for manufacturing contracts) and price evaluation preferences (of up to 10%) in full and open competitions. The HUBZone program targets assistance to small businesses located in areas with low income, high poverty, or high unemployment. To be certified as a HUBZone small business, at least 35% of the small business's employees must generally reside in a HUBZone. ", "The HUBZone contracting program is designed to help federal agencies achieve their statutory goal of awarding at least 3% of their federal contracting dollars to HUBZone small businesses.", "In FY2018, the federal government awarded $9.8 billion to HUBZone-certified small businesses."], "subsections": []}, {"section_title": "Service-Disabled Veteran-Owned Small Business Program", "paragraphs": ["The SBA oversees the Service-Disabled Veteran-Owned Small Business (SDVOSB) Program. The program allows agencies to set aside contracts for SDVOSBs. Federal agencies may award sole source contracts to SDVOSBs so long as the award can be made at a fair and reasonable price, and the anticipated total value of the contract, including any options, is below $4 million ($6.5 million for manufacturing contracts). For purposes of this program, veterans with service-related disabilities are defined as they are under the statutes governing veterans affairs. ", "The SDVOSB contracting program is designed to help federal agencies achieve their statutory goal of awarding at least 3% of their federal contracting dollars to SDVOSBs.", "In FY2018, the federal government awarded $22.5 billion to SDVOSBs."], "subsections": []}, {"section_title": "Women-Owned Small Business Program", "paragraphs": ["The SBA oversees the Women-Owned Small Businesses (WOSB) Program. Under this program, federal contracting officers may set aside federal contracts (or orders) for WOSBs and Economically Disadvantaged Women-Owned Small Businesses (EDWOSBs) in industries in which the SBA determines WOSBs are substantially underrepresented in federal procurement. Federal contracting officers can also set aside federal contracts for EDWOSBs exclusively in industries in which the SBA determines WOSBs are underrepresented in federal procurement.", "The WOSB Program is designed to help federal agencies achieve their statutory goal of awarding at least 5% of their federal contracting dollars to WOSBs.", "Federal agencies may award sole source contracts to WOSBs so long as the award can be made at a fair and reasonable price, and the anticipated total value of the contract, including any options, is below $4 million ($6.5 million for manufacturing contracts).", "In FY2018, the federal government awarded $23.4 billion to WOSBs."], "subsections": []}, {"section_title": "SBA Surety Bond Program123", "paragraphs": ["The SBA's Surety Bond Guarantee Program has been operational since April 1971. It is designed to increase small business' access to federal, state, and local government contracting, as well as private sector contracting, by guaranteeing bid, performance, payment, and specified ancillary bonds \"on contracts \u00e2\u0080\u00a6 for small and emerging contractors who cannot obtain bonding through regular commercial channels.\" The program guarantees individual contracts of up to $6.5 million, and up to $10 million for federal contracts if a federal contracting officer certifies that such a guarantee is necessary. The $6.5 million limit is periodically adjusted for inflation. The SBA's guarantee currently ranges from 80% to 90% of the surety's loss if a default occurs.", "In FY2019, the SBA guaranteed 9,905 bid and final surety bonds (a payment bond, performance bond, or both a payment and performance bond) with a total contract value of nearly $6.5 billion.", "A surety bond is a three-party instrument between a surety (who agrees to be responsible for the debt or obligation of another), a contractor, and a project owner. The agreement binds the contractor to comply with the contract's terms and conditions. If the contractor is unable to successfully perform the contract, the surety assumes the contractor's responsibilities and ensures that the project is completed. Surety bonds encourage project owners to contract with small businesses that may not have the credit history or prior experience of larger businesses and may be at greater risk of failing to comply with the contract's terms and conditions.", "Surety bonds are important to small businesses interested in competing for federal contracts because the federal government requires prime contractors\u00e2\u0080\u0094prior to the award of a federal contract exceeding $150,000 for the construction, alteration, or repair of any building or public work of the United States\u00e2\u0080\u0094to furnish a performance bond issued by a surety satisfactory to the contracting officer in an amount that the officer considers adequate to protect the government."], "subsections": []}, {"section_title": "Current Issues, Debates and Lessons Learned", "paragraphs": ["Congress included enhancements for small business contracting in both ARRA (increased funding and higher maximum bond amounts for the SBA Surety Bond program) and the Small Business Jobs Act of 2010 (new restrictions on the consolidation or bundling of contracts that make it more difficult for small businesses to be awarded the contract). The CARES Act authorizes federal agencies to modify a contract's terms and conditions to reimburse contractors\u00e2\u0080\u0094at the minimum billing rate not to exceed an average of 40 hours per week\u00e2\u0080\u0094for any paid leave (including sick leave) the contractor provides to keep its employees or subcontractors in a ready state through September 30, 2020. Eligible contractors are those whose employees or subcontractors cannot perform work on a federally-approved site due to facility closures or other restrictions because of COVID-19 and cannot telework because their job duties cannot be performed remotely."], "subsections": []}]}, {"section_title": "Concluding Observations", "paragraphs": ["In response to the Great Recession, Congress took a number of actions to enhance small businesses' access to capital, management and training programs, and contracting opportunities. The goal then, as it is now, was to provide small businesses with the resources necessary to survive the economic downturn and retain or create jobs. Some of the CARES Act's provisions (e.g., fee waivers, increased loan limits, and increased guarantee percentages) were used in legislation passed during the 111 th Congress to address the severe economic slowdown during and immediately following the Great Recession (2007-2009). The main difference between that legislation and the CARES Act is that the CARES Act includes loan deferrals, loan forgiveness, and greatly expanded eligibility, including, for the first time, specified types of nonprofit organizations.", "The CARES Act's inclusion of loan deferral and forgiveness is, at least partly, due to the unique economic dislocations and reduction in consumer spending resulting from individuals and households engaging in physical distancing to avoid COVID-19 infection.", "As mentioned, because COVID-19's adverse economic impact is so widespread, including productivity losses, supply chain disruptions, labor dislocation, and financial pressure on businesses and households, there has been relatively little concern expressed about federal fiscal restraint during the current pandemic. The debate has been primarily over which specific policies would have the greatest impact and which types of small businesses and small business owners should be helped the most.", "Among the lessons learned from the 111 th Congress is the potential benefits that can be derived from providing additional funding for the SBA's Office of Inspector General and the Government Accountability Office. GAO and the SBA's OIG can provide Congress information that could prove useful as Congress engages in congressional oversight of the SBA's administration of the CARES Act, provide an early warning if unforeseen administrative problems should arise, and, through investigations and audits, serve as a deterrent to fraud.", "Requiring the SBA to report regularly on its implementation of the CARES Act could also promote transparency and assist Congress in performing its oversight responsibilities. In addition, requiring output and outcome performance measures and requiring the SBA to report this information directly to both Congress and the public by posting that information on the SBA's website could enhance both congressional oversight and public confidence in the SBA's efforts to assist small businesses."], "subsections": [{"section_title": "Appendix. Major Provisions of the CARES Act, the Paycheck Protection Program and Health Care Enhancement Act, and the HEROES Act", "paragraphs": ["The Coronavirus Aid, Relief, and Economic Security Act (CARES Act; P.L. 116-136)", "established a Paycheck Protection Program (PPP) to provide \"covered loans\" with a 100% SBA loan guarantee, a maximum term of 10 years, and an interest rate not to exceed 4% to assist small businesses and other organizations adversely affected by the Coronavirus Disease 2019 (COVID-19). The SBA announced that PPP loans will have a two-year term at a 1.0% interest rate; defines a covered loan as a loan made to an eligible recipient from February 15, 2020, through June 30, 2020; waives the up-front loan guarantee fee and annual servicing fee, the no credit elsewhere requirement, and the requirements for collateral and a personal guarantee for a covered loan; expands eligibility for a covered loan to include 7(a) eligible businesses and any business, 501(c)(3) nonprofit organization, 501(c)(19) veteran's organization, or tribal business not currently eligible that has not more than 500 employees or, if applicable, the SBA's size standard in number of employees for the industry in which they operate. Sole proprietors, independent contractors, and eligible self-employed individuals are also eligible to receive a covered loan; increases the maximum loan amount for a covered loan to the lesser of (1) 2.5 times the average total monthly payments by the applicant for payroll costs incurred during the one-year period before the date on which the loan is made plus the outstanding balance of any 7(a) loan (made on or after January 31, 2020) that is refinanced as part of a covered loan, or (2) $10 million; allows borrowers to refinance 7(a) loans (made on or after January 31, 2020) as part of a covered loan; specifies that covered loans are nonrecourse (meaning that the SBA cannot pursue collections actions against the recipient(s) in the case of nonpayment) except to the extent that the covered loan proceeds are used for nonauthorized purposes; allows covered loans to be used for payroll costs, costs related to the continuation of group health care benefits during periods of paid sick, medical, or family leave, and insurance premiums, employee salaries, commissions, or similar compensations, mortgage payments, rent, utilities, and interest on any other debt obligations that were incurred before the covered period; expands lender delegated loan approval authority for making covered loans to all 7(a) lenders to expedite PPP loan processing; requires lenders, when evaluating borrower eligibility for a covered loan, to consider whether the borrower was in operation on February 15, 2020, had employees for whom the borrower paid salaries and payroll taxes, and paid independent contractors; requires borrowers to, among other acknowledgements, make a good faith certification that the covered loan is needed because of the uncertainty of current economic conditions and to support ongoing operations, and acknowledge that the funds will be used to retain workers, maintain payroll, or make mortgage payments, lease payments, and utility payments; requires lenders to provide \"impacted borrowers\" adversely affected by COVID-19 \"complete payment deferment relief\" on a covered PPP loan for not less than six months and not more than one year if the borrower was in operation on February 15, 2020, and has an application for a covered loan approved or pending approval on or after the date of enactment. The SBA announced that covered loan payments will be deferred for six months. However, interest will continue to accrue on these loans during the six-month deferment; presumes that each eligible recipient that applies for a PPP loan is an impacted borrower and authorizes the SBA Administrator to purchase covered loans sold on the secondary market so that affected borrowers may receive a deferral for not more than one year. The SBA has announced that the deferment relief on covered loans will be for six months; provides for the forgiveness of covered loan amounts equal to the amount the borrower spent during an 8-week period after the loan's origination date on payroll costs, interest payment on any mortgage incurred prior to February 15, 2020, payment of rent on any lease in force prior to February 15, 2020, and payment on any utility for which service began before February 15, 2020. The amount of loan forgiveness cannot exceed the covered loan's principal amount. The forgiveness is reduced proportionally by formulas related to the borrower's retention of full-time equivalent employees compared to the borrower's choice of either: (1) the period beginning on February 15, 2019, and ending on June 30, 2019, or (2) January 1, 2020, and February 29, 2020; and by the amount of any reduction in pay of any employee beyond 25% of their salary or wages during the most recent full quarter before the covered period. Borrowers that re-hire workers previously laid off will not be penalized for having a reduced payroll at the beginning of the period. Cancelled debt resulting from loan forgiveness would not be included in the borrower's taxable federal income; The SBA has announced that due to likely high subscription, at least 75% of the forgiven loan amount must have been used for payroll; requires the SBA to pay the principal, interest, and any associated fees that are owed on an existing 7(a), 504/CDC, or Microloan that is in a regular servicing status for a six-month period starting on the next payment due. Loans that are already on deferment will receive six months of payment by the SBA beginning with the first payment after the deferral period. Loans made up until six months after enactment will also receive a full six months of SBA loan payments; requires federal banking agencies or the National Credit Union Administration Board applying capital requirements under their respective risk-based capital requirements to provide a covered loan with a 0%-risk weight; increases the SBA's lending authorization under Section 7(a) of the Small Business Act from $30 billion to $349 billion during the covered period; increases the SBAExpress loan limit from $350,000 to $1 million (reverts to $350,000 on January 1, 2021); permanently eliminates the zero subsidy requirement to waive SBAExpress loan fees for veterans; appropriates $349 billion for loan guarantees and subsidies (remaining available through FY2021), $675 million for the SBA's salaries and expenses account, $25 million for the SBA's Office of Inspector General (OIG), $265 million for entrepreneurial development programs ($192 million for SBDCs, $48 million for WBCs, and $25 million for SBA resource partners to provide online information and training), $17 billion for subsidies for certain loan payments, and $10 million for the Department of Commerce's Minority Business Development Agency; allows the period of use of FY2018 and FY2019 grant awards made under the State Trade Expansion Program (STEP) through FY2021; reimburses (up to the grant amount received) STEP award recipients for financial losses relating to a foreign trade mission or a trade show exhibition that was cancelled solely due to a public health emergency declared due to COVID-19; waives SBDC and WBC matching requirements; requires federal agencies to continue to pay small business contractors and revise delivery schedules, holding small contractors harmless for being unable to perform a contract due to COVID-19 caused interruptions until September 2021; requires federal agencies to promptly pay small business prime contractors and requires prime contractors to promptly pay small business subcontractors within 15 days, notwithstanding any other provision of law or regulation, for the duration of the President invoking the Defense Production Act in response to COVID-19; and provides SBA Emergency Injury Disaster Loan (EIDL) enhancements during the covered period of January 31, 2020, through December 31, 2020, including expanding eligibility beyond currently eligible small businesses, private nonprofit organizations, and small agricultural cooperatives, to include startups, cooperatives, and eligible ESOPs (employee stock ownership plans) with not more than 500 employees, sole proprietors, and independent contractors; authorizing the SBA Administrator, in response to economic injuries caused by COVID-19, to waive the no credit available elsewhere requirement, approve an applicant based solely on their credit score, not require applicants to submit a tax return or tax return transcript for approval, waive any rules related to the personal guarantee on advances and loans of not more than $200,000, waive the requirement that the applicant needs to be in business for the one-year period before the disaster declaration, except that no waiver may be made for a business that was not in operation on January 31, 2020; authorizing the SBA Administrator, through December 31, 2020, to provide up to $10,000 as an advance payment in the amount requested within three days after receiving an EIDL application from an eligible entity. Applicants are not required to repay the advance payment, even if subsequently denied an EIDL loan. The funds may be used for any eligible EIDL expense, including, among other expenses, providing paid sick leave to employees unable to work due to COVID-19, maintaining payroll to retain employees, and meeting increased costs to obtain materials due to supply chain disruptions. The SBA limited EIDL-advance payments to $1,000 per employee, up to a maximum of $10,000; and appropriating an additional $10 billion for EIDL assistance.", "The Paych eck Protection Program and Health Care Enhancement Act ( P.L. 116-139 )", "increases the SBA's lending authorization under Section 7(a) of the Small Business Act from $349 billion during the covered period to $659 billion; requires that no less than $30 billion of this authorization amount be set aside for loans issued by insured depository institutions and credit unions with consolidated assets of $10 billion to $50 billion; requires that no less than $30 billion of this authorization amount be set aside for loans issued by community financial institutions (including community development financial institutions (CDFIs), minority depository institutions, SBA-certified development companies, and SBA microloan intermediaries), and insured depository institutions and credit unions with consolidated assets less than $10 billion; increases the PPP appropriation amount from $349 billion to $670.335 billion; appropriates an additional $50 billion for EIDL loans; appropriates an additional $10 billion for Emergency EIDL grants; appropriates an additional $2.1 billion for the SBA's salaries and expenses account (to remain available until September 30, 2021); and provides agricultural enterprises eligibility for Emergency EIDL grants and EIDL loans during the covered period (January 31, 2020 through December 31, 2020).", "The Health and Economic Recovery Omnibus Emergency Solutions Act (HEROES Act; H.R. 6800 )", "H.R. 6800 , would, among other provisions:", "expand the PPP loan covered period from June 30, 2020, to December 31, 2020; extend PPP eligibility to all 501(c) nonprofit organizations of all sizes; establish a minimum PPP loan maturity of five years; require, as of the date of enactment, that 25% of existing PPP funds be issued to small businesses with 10 or fewer employees; 25% of existing funds be issued to nonprofit organizations, with at least half of this amount going to nonprofit organizations with not more than 500 employees; and the lesser of 25% of existing PPP funds or $10 billion be issued to community financial institutions, such as Community Development Financial Institutions (CDFIs), SBA microloan intermediaries, and SBA-certified development companies; establish technical assistance grants for small community financial institutions with assets of less than $10 billion; bifurcate the SBA's lending authority for the 7(a) and PPP programs; increase the SBA's 7(a) loan authorization amount from $30 billion to $75 billion for FY2020; provide SCORE and veterans business outreach centers eligibility for $10 million each from the CARES Act's $265 million entrepreneurial development resource partners grant program; amend the PPP loan forgiveness by extending the 8-week period to the earlier of 24 weeks or December 31, 2020, mandate loan forgiveness data collection and reporting, and eliminate the 75%/25% rule on the use of loan proceeds; allow certain previously incarcerated individuals to be approved for PPP and SBA disaster loans; temporarily increase, for FY2020, the 7(a) loan program guaranty from up to 75% for loans with an outstanding loan balance exceeding $150,000 and 85% for loans with an outstanding loan balance of $150,000 or less to 90% of the outstanding loan balance; temporarily increase, through December 31, 2020, the SBAExpress loan guaranty from not more than 50% of the outstanding loan balance to not more than 90% of the outstanding loan balance on loans up to $350,000 and not more than 75% of the outstanding loan balance on loans greater than $350,000; temporarily reduce, for FY2020, 7(a) and 504/CDC fees to the maximum extent possible given available appropriations; temporarily increase, for FY2020, the maximum 7(a) loan amount from $5 million to $10 million and the maximum 504/CDC loan amount from $5.5 million to $10 million; and permanently increase the 504/CDC maximum loan amount for small manufacturers from $5.5 million to $10 million; authorize, for each of fiscal years 2021-2025, $80 million for Microloan technical assistance grants and $110 million for Microloan; and authorize to be appropriated during FY2020, to remain available until expended, $50 million for Microloan technical assistance grants and $7 million for Microloans; appropriate $500 million for fee reductions and guaranty and maximum loan amount increases; and appropriate $10 billion for Emergency EIDL grants."], "subsections": []}]}]}}
{"id": "R45945", "title": "Frequently Asked Questions About Flag Law", "released_date": "2019-10-07T00:00:00", "summary": ["The \"flag code\" is the federal law that sets forth guidelines for the appearance and display of the U.S. flag (\"flag\") by private citizens. These guidelines specify times and conditions for display of the flag, manners and methods of display, and buildings where such display should occur. The guidelines for flag display vary based on the context and occasion, and there are detailed specifications for displaying flags at \"half-staff.\" The flag code also specifies how to deliver the Pledge of Allegiance to the flag and appropriate conduct while watching a performance of the National Anthem. Most of the flag code contains no explicit enforcement mechanisms, and relevant case law would suggest that the provisions without enforcement mechanisms are declaratory and advisory only.", "Efforts by states to punish verbal flag disparagement or prevent disrespectful flag display (\"flag-misuse laws\") have been struck down by the Supreme Court in Street v. New York and Spence v. Washington as free speech violations under the First and Fourteenth Amendments of the U.S. Constitution. Federal and many state laws also specify punishments for physical mistreatment of the U.S. flag (\"flag-desecration laws\"), although under Texas v. Johnson and U nited S tates v. Eichman , the Court held that application of these laws against expressive conduct violates free speech precepts. A separate issue is that federal and many state flag-misuse laws provide punishment for placing advertising images on a U.S. flag or displaying an image of a flag on merchandise. While these laws have not been challenged on free speech grounds, the Court has reserved the question whether the Johnson and Eichman holdings would apply in a commercial context, and it seems likely these laws would survive judicial scrutiny. Finally, while federal courts of appeals have rejected Establishment Clause challenges to recitation of the Pledge of Allegiance in classrooms despite language in the Pledge describing \"one Nation under God,\" the Court in West Virginia State Board of Education v. Barnette held that a state law mandating that students participate in a recitation of the Pledge of Allegiance violates free speech precepts."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "What Laws Regulate the Treatment of the U.S. Flag?", "paragraphs": ["The federal law regulating flags (\"flag code\") sets forth guidelines for private citizens on the appearance and display of the U.S. flag (\"flag\"). The flag code also specifies how to deliver the Pledge of Allegiance to the flag and appropriate conduct while watching a performance of the National Anthem. Most of the flag code contains no explicit enforcement mechanisms, and relevant case law would suggest that provisions without enforcement mechanisms are declaratory and advisory only. Efforts by states to punish either verbal flag disparagement or disrespectful flag display (\"flag-misuse laws\") have been struck down under First Amendment free speech precepts that apply to the states through the Due Process Clause of the Fourteenth Amendment. ", "Federal law and many state laws also provide penalties for physical mistreatment of the flag (\"flag-desecration\" laws), although application of these laws would generally violate the U.S. Constitution. For instance, the federal Flag Protection Act, which criminalizes flag desecration, was struck down on First Amendment free speech grounds as prohibiting symbolic speech. Some federal and state flag-misuse laws also prohibit placing advertising images on the U.S. flag or displaying the U.S. flag on merchandise; these laws may also be vulnerable to free speech challenges, although the Supreme Court has reserved this question. Finally, there are mandatory state requirements directing the daily recital of the Pledge of Allegiance by teachers that have been upheld against Establishment Clause challenges, although a requirement that students participate in such recitation was struck down as a violation of free speech. "], "subsections": []}, {"section_title": "What Are the Voluntary Guidelines for How U.S. Flags Are Displayed?", "paragraphs": ["The flag code provides detailed guidelines for the appearance and display of the flag. The flag is to contain thirteen horizontal stripes, alternating red and white, and the union of the flag (the blue field) is to contain one star for each state. Flags are displayed from sunrise to sunset; however, a properly illuminated flag may be displayed at night. The flag should be hoisted briskly and lowered ceremoniously and should not be displayed during days of inclement weather unless an all-weather flag is used. The flag should be displayed daily on or near the main building of every public institution, in or near polling places on election day, and in or near schools on school days. There are guidelines for when a flag is used in a procession, displayed on a float or motorcar, displayed with other flags, or displayed from a flagpole. There are also detailed guidelines for when and how flags are to be displayed at half-staff. There are guidelines for when a flag is used to cover a casket and for when a flag is suspended across a building corridor or lobby. There is a description of the appropriate conduct of persons during the hoisting, lowering, and passing of the flag, and there are directions for how a flag is not to be treated. Finally, the President can modify the flag display requirements of the flag code."], "subsections": []}, {"section_title": "Can Prohibitions on Flag Misuse or Desecration Be Enforced?", "paragraphs": ["The Supreme Court has repeatedly struck down the application of flag improper use or desecration laws on free speech grounds. In Street v. New York , the Court considered a challenge to a law that made it a misdemeanor to \"publicly mutilate, deface, defile, or defy, trample upon, or cast contempt upon either by words or act [any flag of the United States].\" In Street , the defendant, learning of the shooting of civil rights activist James Meredith, burned a flag on a Brooklyn street corner while stating \"Yes; that is my flag; I burned it. If they let that happen to Meredith, we don't need an American flag.\" The Court in Stree t first concluded that the trial record did not establish whether the defendant's conviction had been for burning the flag or for the accompanying words, so it considered either as possible grounds for the conviction. The Court evaluated the purported governmental interest in punishing the defendant's words, rejecting the argument that the government's intent was to deter the incitement of unlawful acts. The Court next held that the speech in question was not \"fighting words,\" i.e., words so inherently inflammatory that they were \"likely to provoke the average person to retaliations, and thereby cause a breach of the peace.\" Nor, the Court concluded, was the statute narrowly drawn to punish only words of that character. Further, the Court dismissed the argument that government interests in avoiding \"shocking\" or disrespectful speech outweighed the freedom to express one's opinions about the flag. Finally, the Court concluded that freedom of speech protected public expression of opinions about the flag, even if such opinions are defiant or contemptuous. Because it had sufficient basis to overrule the conviction based on the spoken words alone, the Court declined to pass upon the validity of the New York law as applied to the flag burning.", "In the subsequent flag-misuse case of Spence v. Washington , a college student was convicted under a Washington State improper use law for affixing a peace symbol made of removable tape to a U.S. flag and hanging the flag upside down from an apartment window. The defendant testified that he had put the peace symbol on the flag as a protest against the Cambodian invasion and the killing of students at Kent State University during anti-war protests. The Court held that the student's act was symbolic speech, an activity imbued with communication. The Court also held there were no facts to support a breach of the peace, nor was there a valid governmental interest in avoiding offensive speech. The Court concluded that the flag had not been damaged by the removable tape, so maintaining the physical integrity of the flag was not at issue. Thus, the Court concluded that no governmental interest existed to support the conviction within the contours of the First Amendment.", "In Texas v. Johnson , a political demonstration participant at the 1984 Republican National Convention in Dallas was convicted of burning a flag in front of Dallas City Hall. He was convicted under a Texas statute that prohibited the desecration of a venerated object, sentenced to a year in jail, and fined $2000. Texas conceded that the flag burning was expressive conduct, but argued that there was sufficient governmental interest in such prohibition. The Court rejected the argument that the law was designed to prevent breaches of the peace, noting that no such breach occurred in this case and that Texas had not shown that every flag-burning was \"directed to inciting or producing imminent lawless action and is likely to incite or produce such action.\" Further, Texas already had a statute that prohibited breaches of the peace. ", "The Court in Johnson also held that Texas's assertion that the law was needed to preserve the flag as a symbol of nationhood and national unity only showed that the law was targeting expression, not conduct. Further, the law's application only to severe acts of physical abuse against the flag that were likely to be offensive made clear that the restriction was content-based. The Court found Texas's expressed interest\u00e2\u0080\u0094that flag-burning casts doubts on the meaning of the flag as a national symbol\u00e2\u0080\u0094could not be justified because society found the burning offensive or disagreeable. Thus, the defendant's conviction was held to violate the First Amendment.", "In response to the Johnson decision, Congress enacted the Flag Protection Act of 1989. Two separate groups of protestors were prosecuted for flag burning under this act, and their cases were considered by the Supreme Court in U nited S tates v. Eichman . As the government in Eichman conceded that the defendant's conduct was expressive, the Court limited its decision to whether the Flag Protection Act was constitutionally distinct from the Texas statute in Johnson . The government contended the Flag Protection Act did not target expressive conduct, but was intended to protect the physical integrity of the flag in order to safeguard the flag's identity \"as the unique and unalloyed symbol of the Nation.\" It argued that, unlike the Texas statute in Johnson that prohibited only flag desecration \"that seriously offend[s]\" onlookers, the act's prohibitions were not based on motive, intended message, or the likely effects of the conduct on onlookers.", "The Court, however, held that the mere destruction of a U.S. flag did not affect the significance of the flag as a symbol of national unity unless that destruction was done with the intent to communicate a message. Further, the language of the act\u00e2\u0080\u0094which prohibits mutilating, defacing, defiling or trampling upon a flag\u00e2\u0080\u0094connotes disrespectful treatment of a flag in order to damage the flag's symbolic value, and the exception for disposal of \"worn or soiled\" flags exempts acts traditionally associated with patriotic respect for the flag. Thus, the Court held that the act was a regulation of expressive activity and, consistent with its decision in Johnson , struck it down.", "Resolutions were introduced in the 115th Congress proposing a constitutional amendment to authorize Congress to prohibit physical desecration of the flag, but no similar resolutions have been introduced in the 116th Congress thus far. "], "subsections": []}, {"section_title": "Can a U.S. Flag Be Used for Advertising?", "paragraphs": ["Flag-misuse laws sometimes include a prohibition on the use of the U.S. flag for certain forms of commercial speech such as advertising. Commercial speech, however, has fewer constitutional protections than other forms of speech. The Supreme Court considers speech commercial when: (1) it is contained in an advertisement; (2) refers to a specific product or service; and (3) the speaker has an economic motivation for making it. The Court in Eichman , when striking down the Flag Protection Act, noted that its opinion did not extend to prohibitions on the commercial exploitation of the U.S. flag. Thus, the question remains whether prohibitions on the use of flags for advertising purposes violates the First Amendment. ", "It does not appear that any court has directly addressed whether the use of a U.S. flag in advertising is commercial speech. One difficulty in analyzing this issue is that the display of a flag in advertising appears to add little expressive content to the commercial aspects of the advertisement. In other words, while a U.S. flag may be used in an advertisement and its use may be economically motivated (fulfilling the first and third criteria for commercial speech), the display of a flag is unlikely to convey information about the specific product or service. Rather, the expressive content of displaying the flag would appear to be to link the product or service to a political message such as patriotism or national pride. To the extent that the display of the flag in an advertisement communicated an idea such as patriotism, then it might not even be treated as commercial speech but would be analyzed as expressive conduct. ", "Even if advertising using a flag was evaluated as commercial speech, the statute prohibiting it might still be found to violate free speech, as commercial speech does retain some free speech protections. In Central Hudson Gas & Elec. v. Public S ervice Comm ission , the Court considered whether the Public Service Commission of the State of New York could order electric utilities in New York State to cease advertising promoting electricity use. The Court noted a \"common sense\" distinction between speech proposing commercial transactions that occurs in an area traditionally subject to government regulation and other varieties of speech. Consequently, the Court applied a four-part analysis for commercial speech. First, for commercial speech to be protected, it must concern lawful activity and not be misleading. Next, there must be a substantial government interest in its regulation. If both inquiries yield positive answers, the Court must determine whether the regulation directly advances the governmental interest asserted and whether it is \"narrowly drawn\" to be no more extensive than necessary to serve that interest. ", "In Central Hudson , the Court held that New York's interest in reducing inequities in the regulated electricity market that would be caused by increased energy consumption was substantial, as was the government's energy conservation interest. The Court went on to hold, however, that it was speculative whether the governmental interest in avoiding inequities would be served, and that this interest was only served if other factors that affected electricity rates remained constant. The Court did find that the State's interest in energy conservation was substantial and that the parties did not dispute that advertising would increase sales. The Court, however, struck down the advertising ban as not narrowly drawn to that interest, in that it prohibited not only advertising that would increase energy use but also advertising that would have an energy neutral effect or would lead to a net decrease in energy consumption. ", "It should be noted that, despite the more limited protection afforded commercial speech, the Supreme Court has not upheld governmental suppression of truthful commercial speech in more than twenty years. Further, several post- Central Hudson cases seem to afford more protection to commercial speech than originally contemplated by the case. For instance, in City of Cincinnati v. Discovery Network, Inc. , the Court, considering a City of Cincinnati regulation banning commercial publications from public newsracks, rejected the \"bare assertion that the 'low value' of commercial speech is a sufficient justification for [a] selective and categorical ban on newsracks dispensing 'commercial handbills.'\" Rejecting the city's regulation, the Court noted that \"the city's argument attaches more importance to the distinction between commercial and noncommercial speech than our cases warrant and seriously underestimates the value of commercial speech.\" Similarly, in 44 Liquormart, Inc. v. Rhode Island , Justice Stevens, writing for a plurality, suggested that the First Amendment requires a full, \"rigorous review\" of any commercial speech regulations \"unrelated to the preservation of a fair bargaining process[.]\" ", "Even applying the Hudson analysis, there are arguments that flag-misuse laws regarding advertising would violate free speech. Assuming such advertising neither involved an inherently unlawful activity nor was intended to mislead a viewer (the first prong of the Central Hudson test), the law would be subject to the remaining three prongs of Central Hudson : whether there is a substantial government interest, whether the law directly advances that governmental interest and whether the law is \"narrowly drawn.\" While this analysis would occur in the context of commercial speech, the Court's analysis of restrictions on symbolic speech, which is similar to the analysis of commercial speech, would be relevant.", "For instance, while concerns about avoiding a breach of the peace is a substantial governmental interest, it seems unlikely that, after Spence and Johnson , the Court would find that prohibiting using a flag for commercial advertising was intended to avoid a breach of the peace. Similarly, preserving the flag as a symbol of national unity, while it might be a substantial governmental interest, would also seem unlikely to be significantly damaged by the use of flags for commercial activity. Finally, as in Eichman , preserving the physical integrity of a privately owned flag would be unlikely to be a sufficient government interest to outweigh the suppression of expressive conduct. Thus, a court would be likely to find that enforcement of a flag-misuse statute against a commercial advertisement violates precepts of free speech."], "subsections": []}, {"section_title": "Can Schools Require Teacher-Led Recitation of the Pledge of Allegiance?", "paragraphs": ["Teacher-led recitations of the Pledge of Allegiance have been challenged as violations of the Establishment Clause of the First Amendment. Specifically, a variety of federal courts have addressed whether the use of the phrase \"one Nation under God\" in the Pledge of Allegiance renders a recitation of the Pledge by a teacher to students unconstitutional. For instance, the U.S. Court of Appeals for the Ninth Circuit Court (Ninth Circuit) held that daily recitations of the Pledge of Allegiance violates the Establishment Clause of the First Amendment. That decision was overturned by the Supreme Court on other grounds, however, and a later decision by the Ninth Circuit reached the opposite conclusion. ", "In Newdow v. Unite d States Congress , the Ninth Circuit considered a case brought by a father that argued the Pledge of Allegiance recitation by his daughter's public school teacher violated the Establishment Clause of the First Amendment. The father did not claim that his daughter was compelled to recite the Pledge, but argued that his daughter was compelled to watch her state-employed teacher proclaim that there is a God and that the United States is nation under that God.", "The Ninth Circuit considered this challenge using the \"coercion test,\" first articulated in the case of Lee v. Weisman , which held that \"the Constitution guarantees that government may not coerce anyone to support or participate in religion or its exercise, or otherwise to act in a way which establishes a state religion or religious faith, or tends to do so.\" In Weisman , the court concluded that \"the graduation prayers bore the imprint of the State and thus put school-age children who objected in an untenable position.\" The Court also considered the \"heightened concerns with protecting freedom of conscience from subtle coercive pressure in the elementary and secondary public schools,\" holding that the school district's supervision and control of the graduation ceremony put impermissible pressure on students to participate in, or at least show respect during, the prayer. The court in Newdow similarly reasoned that the school had placed its students in the untenable position of choosing between participating in the Pledge or protesting and that the monotheistic religious content of the Pledge was not de minimus.", "The Supreme Court, however, overturned the Newdow case on other grounds, holding that the child's father, who had disputed custody over his child, lacked standing to bring the case. Subsequently, the Ninth Circuit, considering a Pledge of Allegiance passed by Congress after the Newdow decision (but using the same words), concluded that its previous opinion in Newdow was no longer binding precedent, that Supreme Court Establishment Clause case law had subsequently changed, and that Congress, when passing the new version of the Pledge of Allegiance, established a secular purpose for the use of the terms \"Under God.\" Thus, the Ninth Circuit upheld the recitation of the Pledge of Allegiance by public school teachers. Other United States Courts of Appeals have also rejected Establishment Clause challenges to the recitation of the Pledge of Allegiance in public schools."], "subsections": []}, {"section_title": "Do Students Have to Recite of the Pledge of Allegiance?", "paragraphs": ["The flag code provides that the Pledge of Allegiance shall be rendered standing at attention facing the flag with the right hand over the heart. Many states have statutes providing that schools provide for an opportunity for the daily recitation of the Pledge by public school students. The Court in West Virginia State Board of Education v. Barnette , however, held that that mandating that a student participate in a recitation of the Pledge of Allegiance violates free speech principles under the First Amendment. ", "As noted previously, the federal \"flag code\" specified conduct when delivering the Pledge of Allegiance is voluntary. In West Virginia State Board of Education , the Supreme Court considered a West Virginia Board of Education (Board) mandate for public school students to perform the Pledge on a daily basis. A child who would not participate was expelled until such time as they complied and the child's parent or guardian could be fined $50 or jailed for up to 30 days. The Court concluded that the requirement, that students perform a stiff-arm salute and recite the Pledge, was a violation of the free speech protections of the First Amendment. ", "The plaintiffs in Ba rnette were Jehovah's witnesses whose religious beliefs conflicted with the requirement of pledging allegiance to the laws of a secular government. The Court analyzed the Board requirement as compelled speech holding that the mandated flag salute was a form of symbolic utterance. The Court also noted that remaining passive during a flag salute did not present the kind of clear and present danger that would justify regulation. The Court also discounted arguments that the Pledge fostered national unity, noting that \"[a]uthority here is to be controlled by public opinion, not public opinion by authority.\" The Court held that these precepts applied regardless of whether there was a religious basis for the student's objection to performing the Pledge."], "subsections": []}]}}
{"id": "R46185", "title": "The Impeachment Process in the Senate", "released_date": "2020-01-21T00:00:00", "summary": ["After the House impeaches a federal officer, the Senate conducts a trial to determine if the individual should be removed from office. The Senate has a set of rules specific to the conduct of an impeachment trial, most of which originated in the early 19 th century.", "The impeachment rules lay out specific steps that the Senate takes to organize for a trial. House managers (Members of the House who present the case against the impeached officer in the Senate) read the articles of impeachment on the Senate floor. The Presiding Officer and Senators take an oath to do impartial justice, and the Senate issues a \"summons\" to the accused and requests that a written answer be filed. The House Managers are also invited to respond to the answer of the impeached officer.", "Actions after these organizing steps, however, are not specified in the impeachment rules. The impeachment rules mention some actions that are common in judicial trials, such as opening and closing statements by the parties to the case and the examination of witnesses, but provide little specific guidance. Instead, the rules allow the Senate, when sitting for a trial, to set particular procedures through the approval of \"orders.\" Some orders of the Senate are unanimous consent agreements, but others are proposals adopted by the Senate. If such a proposal is considered while the Senate is sitting for the trial, then debate is limited by the impeachment rules. As a result, the support of three-fifths of the Senate to invoke cloture is not necessary to reach a vote to approve a procedural proposal. In previous trials, such proposals have been subject to amendment. Senate published precedents do not provide guidance on what can or cannot be included in such an order.", "Compared to when the Senate meets in legislative and executive session, the opportunity for individual participation by Senators in a Senate trial is limited. The rules require that any debate among Senators take place in closed session. Senators can make motions under the impeachment rules, but these rules are silent on what motions can be offered, and when. In modern trials, when Senators proposed motions, it was often pursuant to a previously-agreed-to order of the Senate. Senators can also submit written questions during the trial\u00e2\u0080\u0094to House Managers, counsel for the impeached officer, or witnesses\u00e2\u0080\u0094that the Presiding Officer presents on their behalf. Orders of the Senate, however, might structure the time and process for posing questions. During the open portion of an impeachment trial, Senators spend most of the time listening to arguments presented by House Managers and counsel for the impeached officer.", "Impeachment Rule XI allows the Senate to create trial committees to hear and consider evidence and report it to the Senate. Such committees were not intended to be used for presidential impeachments, but four of the five impeachment trials completed since 1936 concerned federal judges, and in each of these cases the Senate established a trial committee.", "When the Senate meets in closed session to deliberate, each Senator may speak only once on each question. Such remarks are limited to 15 minutes on the final question\u00e2\u0080\u0094whether the impeached officer is guilty or not guilty\u00e2\u0080\u0094and to 10 minutes on other questions. On the final question, Senators respond \"guilty\" or \"not guilty\" on each article of impeachment. The support of two-thirds of Senators present on an article is necessary to convict.", "The Presiding Officer of a trial operates much like the Presiding Officer in regular Senate session, in that the Chair may issue an initial ruling, but any Senator could request that the full Senate vote instead. Because of the debate limitations in the impeachment rules, procedural decisions appealed or submitted by the Chair can be reached with majority support. In a presidential impeachment trial, the Chief Justice of the United States is the Presiding Officer.", "Although the impeachment rules prescribe that the Senate convene at noon for a trial, six days a week, a Senate majority can alter this schedule. It is possible for the Senate to conduct legislative and executive business on the same calendar days that it meets for a trial, but it must meet in legislative or executive session to do so. When the Senate is sitting as a Court of Impeachment, legislative and executive business cannot occur.", "The information presented in this report is drawn from published sources of congressional rules and precedents, as well as the public record of past impeachment trial proceedings. It provides an overview of the procedures, and some past actions, but should not be treated or cited as an authority on congressional proceedings. Authoritative guidance on the interpretation and possible application of rules and precedents can be obtained only through consultation with the Office of the Senate Parliamentarian."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["Under the terms of the U.S. Constitution, it is the responsibility of the House to impeach (meaning, formally accuse) a federal officer of high crimes and misdemeanors, and the responsibility of the Senate to try and then possibly convict that officer. The Senate therefore does not initiate impeachment proceedings, but instead acts after the House has charged a federal officer with wrongdoing. ", "The Constitution grants the Senate the sole power to try all impeachments, and establishes four requirements for an impeachment trial in the Senate: (1) the support of two-thirds of Senators present is necessary to convict; (2) Senators must take an oath or an affirmation; (3) the punishments the Senate can issue cannot extend further than removal from office and disqualification from holding future office; and (4) in the case of a presidential impeachment trial, the Chief Justice, and not the Vice President or a Senator, is the presiding officer. ", "All other trial procedures are left to the Senate to determine itself. Indeed, in 1993, the Supreme Court ruled\u00e2\u0080\u0094in response to a claim by an impeached federal judge that his trial was unconstitutional because the Senate relied, in part, on a committee to collect evidence\u00e2\u0080\u0094that the judicial branch did not have a role to play in assessing the validity of Senate impeachment procedures. According to the Supreme Court, the Constitution placed a few specific requirements on the trial, and \"their nature suggests that the Framers did not intend to impose additional limitations on the form of the Senate proceedings.\"", "In each of the 15 impeachment trials the Senate has completed since 1789, the Senate has therefore determined its method of proceeding. Although attention was certainly paid to past precedent, the Senate established unique procedures for each trial to some extent, and sometimes the decisions reached regarding process were consensual or even unanimous. Notably, of the 5 full trials conducted in the last 80 years, 4 were of federal judges. In these four cases the Senate appointed a trial committee, composed of an equal number of Senators from each party, to hear and consider evidence and report it to the Senate. This history did not provide the Senate with a robust set of precedents to look to for guidance on how to conduct a modern trial, particularly if a committee will not be used. Trial committees were not intended to be used for presidential impeachments, and the only trial since 1936 conducted without a committee was that of President William Jefferson Clinton. That trial illustrates the many procedural decisions reached that were tailored for that particular set of circumstances. ", "This report summarizes the existing rules and some past practices of the Senate related to an impeachment trial of a federal official. It does not discuss possible grounds for impeachment or other Constitutional or legal issues which are addressed in CRS Report R46013, Impeachment and the Constitution , by Legislative Attorneys Jared P. Cole and Todd Garvey. The information presented in this report is drawn from published sources of congressional rules and precedents, as well as the public record of past impeachment trial proceedings. It provides an overview of the procedures and should not be treated or cited as an authority on congressional proceedings. Consultation with the Office of the Senate Parliamentarian is always advised regarding the possible application of rules and precedents. "], "subsections": []}, {"section_title": "History of the Impeachment Rules of the Senate", "paragraphs": ["The Senate adopted a set of impeachment rules in 1868, recommended by a select committee appointed for that purpose, in anticipation of the trial of President Andrew Johnson. These were not the first rules regarding impeachment ever agreed to in the Senate. The Senate had agreed to rules for its two earliest impeachment trials (Senator William Blount, 1798-1799, and District Judge John Pickering, 1803-1804), but it seems to have considered the rules to apply only to the trial of that particular individual. For the third impeachment trial, that of Supreme Court Justice Samuel Chase (1804-1805), the Senate approved 19 impeachment rules, and these rules appear to have been used in the next two trials (District Judge James H. Peck, 1831-1832, and District Judge West H. Humphreys, 1862). The 1868 select committee in the Johnson impeachment was explicit in its intent to recommend permanent rules, deeming it \"proper, to report general rules for the trial of all impeachments.\" The select committee recommended 25 rules, many of which were the same as those adopted for the Chase trial, and some of which codified practices from previous trials. ", "The rules reported by the 1868 select committee in the Johnson impeachment chiefly concerned the mode and manner of preparing for a trial. Some Senators argued that impeachment rules should not be too prescriptive regarding the actual trial proceedings, believing such decisions to be best made after the Senate had convened for the trial. They recognized that the outcome of a trial could depend \"upon the rulings and mode of proceeding during the trial.\" But the lack of detail in the rules also reflected the nature of Senate proceedings in the middle of the 19 th century. Without designated party floor leaders and with very few staff, Senators were accustomed to discussing procedures on the floor, effectively working out a method of proceeding on legislation as they went along.", "The Senate adopted the rules reported by the select committee, and they have operated as the rules for impeachment trials since 1868, with very few changes. During the Johnson trial, when disputes arose about the interpretation of the rules, the Senate agreed to three changes to clarify their intent. Despite calls to revise the rules for the impeachment trials conducted early in the 20 th century, the impeachment rules were not changed again until 1935. At that time, the Senate, in response to reported low attendance by Senators during the 1933 trial of district judge Harold Louderback, agreed to the current Rule XI, which allows for the establishment of a committee to receive evidence and hear testimony from witnesses (see discussion of trial committees below). ", "The Senate next reviewed its impeachment rules in 1974, when the House was expected to impeach President Richard Nixon. (The House had not impeached a federal officer since 1936.) At that time, the Senate directed the Committee on Rules and Administration to examine Senate impeachment rules and precedents with a view toward recommending necessary revisions for the conduct of a trial. The Committee met twice to discuss the rules and to pose questions to the Senate Parliamentarian and his assistant, and over two additional days it also heard testimony from Senators regarding the rules. The Majority Leader wrote a letter to the Rules Committee proposing significant changes to the impeachment rules, and the Committee discussed these proposed changes as well. ", "The Rules Committee reported an original resolution (S.Res. 390, 93 rd Congress) proposing adjustments to 13 of the 26 rules. Of the suggested changes, nearly all were meant to clarify the meaning of the rule or to codify what had been the practice in past trials. The Committee did not recommend any major changes to the rules or report any new rules. As the accompanying committee report explained, \"there appeared to be a consensus among the Members that for the most part the existing rules should be retained and that amendments thereto should be proposed only with the most valid justification.\" ", "The Senate, however, never took up the resolution reported by the Rules Committee in 1974 because President Nixon resigned before being impeached by the House. Twelve years later, when the House next impeached an officer, the Senate again directed the Rules and Administration Committee to review the rules. The Rules Committee in 1986 recommended the changes that had been approved by the committee in 1974, and the Senate agreed to them. ", "No further changes have been made to the impeachment rules. The rules, formally titled the \"Rules of Procedure and Practice in the Senate When Sitting on the Trial of Impeachments\" are printed in the Senate Manual as well as in a 1986 Senate document that also describes precedents and practices at an impeachment trial, Procedure and Guidelines for Impeachment Trials in the United States Senate."], "subsections": []}, {"section_title": "Impeachment Trial Procedures and Practice", "paragraphs": [], "subsections": [{"section_title": "Brief Overview", "paragraphs": ["When the Senate conducts an impeachment trial, it does so in a procedural mode that is distinct both from legislative session (where bills and resolutions are considered) and from executive session (where nominations and treaties are considered). The differences are significant, but precedent does dictate that if the impeachment rules are silent, the regular Standing Rules of the Senate, where applicable, may guide proceedings. ", "The impeachment rules prescribe a series of steps for the start of the trial, which are described below. The Senate follows these steps to organize itself for the trial and then requests written statements from the impeached officer and from the House regarding the charges. The next stage is the receipt and presentation of evidence, and the impeachment rules provide little guidance regarding this process. Actions taken at this stage have varied from trial to trial. Arguments are made on the Senate floor by House managers (Members of the House selected to prosecute the case in the Senate) and counsel for the impeached officer (an attorney or attorneys who were chosen by the accused). The Senate could decide to request documents and hear testimony from witnesses, who could receive questions from the House managers, counsel for the impeached officer, and Senators. ", "Senators are expected to attend the trial, but their individual participation in open session is limited. They can submit questions in writing\u00e2\u0080\u0094for a witness, House manager, or counsel for the impeached officer\u00e2\u0080\u0094but the Presiding Officer of the trial, not the Senator, reads the question, announcing which Senator posed it. Debate among Senators is not allowed during the trial unless the Senate, by majority vote, goes into closed session, where the length of time each Senator can speak is limited. The Senate impeachment rules refer to opportunities for both Senators and the parties to the case to place proposals before the Senate for a vote; in modern practice, however, the Senate has structured the order of considering proposals, either by unanimous consent or by agreeing to a resolution by majority vote. ", "Votes can occur in open or closed session on procedural questions, such as those that might set the schedule for the trial, structure time for arguments and questions, and arrange for witnesses. In previous trials, the vote on the final question of whether or not to convict has always occurred in open session. Conviction requires a vote of two-thirds of Senators present on any article of impeachment."], "subsections": []}, {"section_title": "Receipt and Presentation of Articles of Impeachment", "paragraphs": ["The impeachment rules establish a timeline for the Senate to take several actions after it receives formal notice from the House regarding an impeachment. Specifically, under Impeachment Rule I, Senate action is triggered by the receipt of notice from the House \"that managers are appointed\" and \"are directed to carry articles of impeachment to the Senate.\" The House, in modern practice, first agrees to articles of impeachment in the form of a simple resolution (H.Res.), and then agrees to another privileged resolution (or sometimes multiple resolutions) that serves to instigate action in the Senate as prescribed by the rule. In this second resolution (or series of resolutions), the House selects Representatives who serve as \"impeachment managers.\" These Members of the House will argue the case for impeachment before the Senate. The resolution also grants authority to the House managers to take actions to prepare and conduct the trial in the Senate. Finally, the resolution directs that a message be sent to the Senate to inform them that managers have been appointed. ", "In practice, after receipt of the message from the House, the following actions take place in the Senate:", "The Senat e, by unanimous consent, establishes a time for the House Managers to prese nt the articles of impeachment to the Senate . Impeachment Rule I provides that the \"Secretary of the Senate shall immediately inform the House of Representatives that the Senate is ready to receive the managers.\" Instead of following the letter of the rule, however, the Senate reaches a unanimous consent agreement that sets a specific time for the Secretary to invite the House managers to appear. The time agreed upon in modern trials has been within a day or two of receipt of the House message. Scheduling a time is more convenient for all Senators, and these unanimous consent agreements have been reached within the context of a rule that appears to require immediate action. ", "A House manager reads the articles of impeachment aloud on the Senate floor, sometimes after a live quorum call to bring Senators into the chamber. The impeachment rules require that the articles of impeachment be \"exhibited,\" which means read before the Senate. At a time arranged by unanimous consent, and sometimes after a live quorum call to ascertain the presence of Senators, the House Managers arrive on the floor of the Senate, are announced by the Secretary to the Majority or the Sergeant at Arms, and are escorted by the Sergeant at Arms to seats assigned to them in front of the Senate rostrum. The Presiding Officer then directs the Sergeant at Arms to make a proclamation required by Impeachment Rule II: ", "\"All persons are commanded to keep silence, on pain of imprisonment, while the House of Representatives is exhibiting to the Senate of United States articles of impeachment against _____.\"", "A House Manager, typically the Chair of the House Judiciary Committee, then reads the articles in full before the Senate. The House Manager also makes a statement that the House reserves the right to amend the articles of impeachment. The Presiding Officer then announces, again using language from Impeachment Rule II, that the Senate will \"take proper order on the subject of impeachment\" and notify the House. The House Managers then exit the Senate chamber."], "subsections": []}, {"section_title": "Organizing for the Trial", "paragraphs": ["Impeachment Rule III provides that after the articles are presented by the House managers, the Senate will proceed to consider the articles at 1 o'clock the next day (unless the next day is a Sunday), or sooner if ordered by the Senate. In modern trials, the Senate has most often taken the steps necessary to organize for an impeachment trial on the same day that the articles of impeachment were read on the floor. After the presentation of the articles, the Senate takes the following steps to organize for a trial:", "The Presiding Officer of the trial takes the oath of office. The Constitution requires that Senators be \"on Oath or Affirmation\" when sitting for the purpose of trying an impeachment. The Senate developed the practice of first swearing in the presiding officer of the trial, who then administers the oath to all Senators.", "In the case of a presidential impeachment, the Chief Justice acts as presiding officer. Impeachment Rule IV requires that notice be given to the Chief Justice of the time and place of the trial. It further provides that the Chief Justice is to be administered the oath by the \"Presiding Officer of the Senate.\" The Chief Justice takes the same oath as the Senators (see below for text). Although the Vice President of the United States, as President of the Senate, could act as Presiding Officer of the Senate and administer the oath to the Chief Justice, in the Clinton impeachment trial, the President Pro Tempore of the Senate administered the oath to the Chief Justice. In the Clinton trial the Senate also agreed by unanimous consent that a bipartisan group of six Senators escort the Chief Justice to the dais.", "Senators are administered the oath of office. The Presiding Officer of the Trial administers the following oath to Senators, as provided in Impeachment Rule XXV:", "[Do you] solemnly swear (or affirm, as the case may be) that in all things appertaining to the trial of the impeachment of____, now pending, [you] will do impartial justice according to the Constitution and laws: So help [you] God.", "In modern practice, the Chief Justice asks all Senators, who are standing at their desks, to raise their right hands as he reads the oath, and Senators respond, all together, \"I do.\" Senators also sign an official oath book, which serves as the permanent record of the administration of the oath. Senators are required to take the oath before participating in the trial, and Senators who might be absent at the time the oath is administered en masse inform the presiding officer as soon as possible so that they can take the oath separately.", "At this point, any Senator wishing to be excused from participating in the trial could ask to be excused from this service. In the past, the Senate has excused Senators from service in an impeachment trial only at their request. ", "The Senate issues a \" s ummons\" and request s an \"answer\" from the impeached official and a \"replication\" (or response) from the House Managers. It is a necessary early step of an impeachment trial that the impeached officer be informed of the charges through an official process. Impeachment Rule VIII states that after the articles have been presented and the Senate has organized for a trial, \"\u00e2\u0080\u00a6a writ of summons shall issue to the person impeached\u00e2\u0080\u00a6\" The Senate accomplishes this by agreeing to an \"order,\" sometimes in the form of a resolution, directing that a summons be issued. Impeachment Rule XXV provides the language of the summons, which, in accordance with Rule VIII, includes the articles of impeachment. ", "The Senate, when it adopts an order for a summons, also directs the accused official to file a written answer to the articles of impeachment. The Senate determines the date by which this answer must be filed. Under long-standing practice, the Senate also sets a date by which the House Managers can file a formal written response to the impeached officer's answer\u00e2\u0080\u0094which is called a \"replication\"\u00e2\u0080\u0094with the Senate. The length of time the Senate provides for the impeached officer to file an answer and for the House managers to file a replication has varied in modern practice, from a few days to several weeks.", "An order or resolution regarding the summons and replication is not subject to debate, pursuant to Impeachment Rule XXIV, but is subject to amendment. The order or resolution can be approved by a majority of Senators voting, a quorum being present. ", "On the day that the Senate majority has established for the return of the summons, Impeachment Rule IX provides that the Senate convene the trial at 12:30 p.m. The officer who served the summons (typically the Sergeant at Arms under Impeachment Rule VI) swears an oath, administered by the Secretary of the Senate, that the service was performed.", "Other administrative and organization al decisions. Impeachment Rule VII states that \"The Presiding Officer of the Senate shall direct all necessary preparations in the Senate Chamber.\" Note that this is the regular presiding officer of the Senate, as these arrangements could be made in advance of the trial. ", "In practice, the Senate, through a unanimous consent agreement or a resolution, makes decisions regarding such matters as staff access to the floor and the placement of furniture and equipment in the well to be used for trial presentations. The Senate might take such actions in legislative session before the trial, or the actions could be taken shortly after the Senate convenes for the trial.", "For example, in the Clinton impeachment trial, the Senate agreed to guidelines specifying which Senate staff with official impeachment duties would have access to the floor. It did so by unanimous consent in legislative session before the start of the trial. Additional unanimous consent agreements granted privileges of the floor to the counsel and assistants to counsel for the President, as well as to assistants to the Chief Justice and to the House Managers. The Senate also, by unanimous consent, established a method for allocating tickets to the Senate gallery. "], "subsections": []}, {"section_title": "Determining Trial Proceedings: Orders of the Senate", "paragraphs": ["While the previously identified steps have occurred, with minor variations, in every Senate impeachment trial, actions subsequent to organization have varied considerably. To establish impeachment trial procedures, the Senate could reach unanimous consent agreements or vote on propositions offered by Senators, House Managers, or counsel for the impeached officer. When adopted, these procedural agreements are referred to as \"orders\" of the Senate. Impeachment Rule XXIV contains the provision that, when the Senate is convened to conduct a trial, \"orders and decisions\" of the Senate shall be voted on \"without debate.\" This prohibition on debate applies when the Senate trial is meeting in open session; if a majority of Senators wished to discuss a proposed order, they could agree to do so in closed session, and in that forum each Senator would be limited to speaking only once, and for a maximum of 10 minutes. (See \"Closed Deliberations by Senators\" section below.) Furthermore, Impeachment Rule XXI provides further that \"all preliminary or interlocutory questions, and all motions, shall be argued for not exceeding one hour (unless the Senate otherwise orders) on each side,\" which means that, in some cases, the Senate could hear arguments from House Managers and counsel for the impeached on procedural proposals for up to two hours.", "In contrast, under the regular rules of the Senate, most matters are not subject to any debate restrictions. As a result, a cloture process\u00e2\u0080\u0094requiring the support of three-fifths of the Senate on legislation and most other items\u00e2\u0080\u0094is sometimes necessary to end debate and reach a vote. It is for this reason that the support of three-fifths of the Senate (or 60 Senators, assuming no more than one vacancy) is usually considered to be necessary for the Senate to reach a decision that cannot be reached by consensus. ", "The limits on debate when the Senate is sitting for an impeachment trial, however, allow the Senate to reach decisions without the threat of a filibuster. Without the need for cloture, most questions voted on during a Senate impeachment trial can be approved with the support of a majority of Senators voting. The major exception to this, of course, is that conviction requires the support of two-thirds of Senators present.", "Because cloture is not required, a Senate majority can agree to orders that affect the proceedings in a trial. It is not clear, however, how quickly a majority could do so in the absence of broad agreement among Senators and the parties to the case. Orders proposed by Senators are subject to amendment offered by other Senators. For example, in the trial of Secretary of War William W. Belknap, Senators offered multiple amendments to a series of orders that the Senate considered. In a more recent example, during the Clinton impeachment trial, the Minority Leader offered two amendments to a resolution ( S.Res. 30 ) to establish trial procedures offered by the Majority Leader. (Both amendments, which attempted to shorten the trial, failed.) Senators cannot, in open session, debate amendments to orders proposed by Senators. ", "Furthermore, in past trials Senators have demanded the division of an \"order,\" and the division of amendments to an order, that contained substantive, separate directions for a trial. Under regular Senate procedures, both amendments and resolutions containing separate provisions are susceptible to division. If any single Senator demanded a division, each provision would be considered separately for amendment and voted upon.", "Finally, there is little guidance in Senate published precedents as to what constitutes a proper \"order\" that would be eligible to be called up expeditiously and decided by majority vote during an impeachment trial. The impeachment rules mention several rules that could be altered by an \"order\": the time the Senate meets for the first day of the trial (Rule XII), and other days of meeting thereafter (Rule XIII); the length of time for the House Managers and counsel for the impeached officer to argue propositions before the Senate (Rule XXI); the number of people who may make opening and closing arguments (Rule XXII); and who may serve a summons (Rule XXV). Impeachment Rule XXVI permits the Senate to adopt a non-debatable order to fix the date and time for considering articles, even if it had missed a previously scheduled meeting. Impeachment Rule XI, which, as noted above, the Senate approved in 1935 to allow the use of committees to receive evidence, also states such committees can be created by order.", "The Senate, however, while sitting for an impeachment trial, has agreed to many other orders that are not directly mentioned in the impeachment rules. During the Clinton trial in the 106 th Congress, for example, the Senate agreed to S.Res. 16 and S.Res. 30 , which structured most aspects of proceedings by establishing deadlines for filings, allotting time for arguments, and making certain motions in order at specific points in the trial. If these resolutions constituted \"orders\" under Impeachment Rule XXIV, they were among the most comprehensive orders agreed to for a trial. Thus, based on Senate practice, it appears that \"orders\" of the Senate during impeachment trials can affect many more procedures than those specifically delineated in the impeachment rules. Senate precedents, however, might limit what can be included in such an order.", "In the absence of broad agreement regarding how to proceed with a trial, Senators might contest the inclusion of particular provisions of an order\u00e2\u0080\u0094for example, those that appear to be in direct conflict with the impeachment rules or past practice, or those that Senators argue are unconstitutional. While Senators can be expected to consult the precedents for guidance, ultimately a Senate majority will decide these questions, using the process for interpreting procedures discussed below.", "If all Senators are voting, the majority necessary to approve an order of the Senate is 51 Senators; tie votes fail in the Senate. If all Senators are not voting, however, this number changes. The vote necessary for approval is a majority of those voting, assuming a quorum is present. The quorum required for an impeachment trial is 51 Senators\u00e2\u0080\u0094the same as in regular Senate proceedings. During impeachment trials, however, the party leaders often implore Senators to attend all sessions, and committee meetings are unlikely to be scheduled during times the Senate is expected to be sitting for the trial. This is due to past criticisms of the Senate for light attendance at trials when evidence was presented, including from counsel of impeached officers who feel Senators must be present to listen to arguments before they vote."], "subsections": []}, {"section_title": "Consideration and Collection of Evidence", "paragraphs": ["The actions taken by the Senate to consider and collect evidence in each trial have varied considerably. The impeachment rules provide guidance only on a few particulars, necessitating that the Senate determine, each time it organizes for a trial, the manner of proceeding from that point forward. ", "It is therefore not possible to describe, in the same manner as above, the parliamentary steps the Senate is expected to take to consider evidence in a trial. This section instead reviews the impeachment rules related to this stage of the trial, how these rules have been interpreted, and how their terms have been modified in past practice. Because in most modern trials the Senate has relied on a trial committee to consider and collect evidence, it then describes how these committees are established and some of their practices."], "subsections": [{"section_title": "What the Impeachment Rules Provide", "paragraphs": [], "subsections": [{"section_title": "Opening and Closing Arguments by the House Managers and Counsel for the Impeached Officer", "paragraphs": ["During an impeachment trial in the Senate, Senators spend most of the time listening to arguments presented by the House Managers and the counsel for the impeached officer. Impeachment Rule XV states that counsel for the parties \"shall be admitted to appear and be heard upon an impeachment.\" ", "The impeachment rules further reference both opening and closing arguments that would be made by the parties to the case. Specifically, Impeachment Rule XXII states that the House of Representatives will provide opening remarks first, followed by the counsel for the impeached. It also provides that the case shall be opened \"by one person\" on each side, but in practice opening remarks have been divided among multiple managers and multiple counsel for the impeached. ", "With regard to closing arguments, Rule XXII provides that the House Managers will speak last, and permits two House Managers and two people for the impeached officer to make closing arguments. The number of individuals allowed to participate in closing arguments has been modified in past trials by order of the Senate.", "The impeachment rules do not place a time limit on opening and closing statements, although in past trials the Senate has agreed to place such limits on the parties. The Senate has also allowed the side speaking first to reserve time for rebuttal."], "subsections": []}, {"section_title": "Arguments by the House Managers and Counsel for the Impeached Officer on Questions and Motions", "paragraphs": ["Impeachment Rule XXI limits the time for arguments that can be made during the trial on any \"questions\" or \"motions\" that might arise to one hour on each side, unless otherwise ordered by the Senate. ", "The impeachment rules provide no guidance regarding what particular questions or motions can be raised by the parties to the case. Rule XVI simply requires that all such motions (and \"objections, requests, or applications\") should be addressed to the Presiding Officer and put in writing if demanded by any Senator or the Presiding Officer. Examples of questions that have been argued pursuant to this rule include, from the 1868 trial of President Johnson, a motion by the defense that the trial be postponed for 40 days to allow for preparation of the answer to the articles of impeachment and, from the 1936 trial of Judge Ritter, a motion by the counsel for the impeached to strike an article deemed repetitive. In general, in past trials, the Senate has controlled, through the adoption of orders, what propositions can be placed before the body and voted on while it is sitting for an impeachment trial.", "The impeachment rules do not address which side speaks first on questions and motions, but it is by practice the side proposing the motion. The Senate has altered the time available for such arguments by unanimous consent or other order of the Senate. The side speaking first has asked to reserve time for rebuttal.", "It is important to note that there appears to be a distinction between motions filed and argued by the parties to the case in an impeachment trial, and motions offered by Senators. When House managers or counsel for an impeached officer propose a \"motion,\" they are requesting that the Senate reach a judgement (perhaps by agreeing to an order on the subject). They are not necessarily forcing Senate action on their proposal as written. During an impeachment trial, the Senate, at least in modern practice, has generally controlled when and what motions are proposed before the full Senate by the parties to the case, and it also determines the method of responding to such motions (which might not be a direct vote on the question). ", "For example, in the 2010 trial of Judge Porteous, counsel for the impeached filed three motions that were argued by the parties to the case: a motion to dismiss Article 1, a motion to dismiss Article 2, and a motion to dismiss all articles because they aggregated multiple charges. The Senate heard arguments from each side (pursuant to a unanimous consent agreement that limited arguments on all motions to two hours, equally divided) and deliberated in closed session. When the Senate reconvened in open session, rather than act directly on the propositions as presented, the Majority Leader moved to hold preliminary votes on individual allegations within the articles. This motion was defeated 94-0. Effectively, it served as a response to the three motions filed by the defense and argued by the parties to the case. ", "In another modern example, the Senate heard arguments by the parties, under the terms of a unanimous consent agreement, regarding a motion by the impeached officer that Impeachment Rule XI, allowing the creation of a trial committee, was unconstitutional and that there be a full and free trial before the Senate and witnesses be subpoenaed for that purpose. After deliberating in closed session, the Senate returned to open session and the Majority Leader moved that the Senate not hear additional witnesses in the case. The motion was agreed to 61-32 (7 Senators not voting), and served as a response to the arguments by counsel for the impeached officer that the full Senate, not the trial committee, should receive evidence."], "subsections": []}, {"section_title": "Motions or Orders Offered by Senators Are Not Debatable in Open Session and Are Acted upon Without Objection or by the Yeas and the Nays", "paragraphs": ["Impeachment Rule XXIV refers to \"orders and decisions\" of the Senate, which in practice have been proposed by Senators, not by the parties to the case. As discussed above, such \"orders\" are sometimes offered in the form of resolutions. In impeachment trials, however, it appears that such resolutions were proposed as if they were motions and were not subject to layover requirements, or taken up by a motion to proceed, which is the usual way that the Senate would process a resolution. Impeachment Rule XIX requires any motion or order proposed by a Senator (except a motion to adjourn) be in writing and put by the Presiding Officer.", "Impeachment Rule XXIV prohibits debate on orders of the Senate in open session, but the Senate could vote to go into closed session, in which case each Senator could speak for up to 10 minutes on the motion or order. Impeachment Rule XXIV also provides that orders of the Senate can be agreed to by unanimous consent but, short of unanimous consent, the vote on an order must be by the yeas and the nays (a roll call vote). An exception is made for the motion to adjourn, which could be voted on by voice vote or division (or if the yeas and nays are ordered, by roll call vote, as under regular Senate procedures).", "Otherwise, the impeachment rules do not reference proposals offered by Senators. In the 19 th and early 20 th century trials, it appears that a variety of propositions regarding procedure were proposed by Senators. In the modern trials, some motions were permitted pursuant to a previously-agreed-to resolution, or under the terms of a unanimous consent agreement. For example, in the 1999 trial of President Clinton, a Senator offered a motion to dismiss the articles that was permitted under the terms of S.Res. 16 . Similarly, later in the same trial, the Minority Leader offered a motion that the Senate proceed to closing arguments, and this motion appears to have been permitted under the terms of S.Res. 30 .", "In other modern instances, however, Senators appear to have offered motions that were not explicitly allowed under a previous order and presumably were permitted by the standing impeachment rules and precedents. For example, during the trial of President Clinton, a Senator moved that Senators be permitted to insert statements they made in the closed session into the Congressional Record . In another example, during the 1986 trial of Judge Harry Claiborne, a Senator moved to postpone the decision on motions filed by the defendant. It is also possible that such motions were effectively offered by a kind of tacit unanimous consent, and if any Senator had objected, they could not have been considered. Unanimous consent cannot always be required for a Senator to propose a motion or order, however, as that would allow a single Senator to block procedural decisions. Neither the impeachment rules nor the published precedents provide explicit guidance on what propositions can be offered by Senators while sitting on an impeachment trial. There is also no guidance regarding precedence among the various motions, although the Senate precedents establishing that the Majority Leader is entitled to priority in recognition, followed by the Minority Leader, presumably continue to apply in an impeachment trial.", "Still other motions have been offered pursuant to the regular standing rules of the Senate. In 1999, for example, several Senators moved to suspend certain impeachment rules (to allow for unlimited debate on questions in open session). To suspend the rules, Senators must provide one calendar day's notice in writing of their intent to offer a motion to suspend. Adoption of such a motion requires a two-thirds affirmative vote. During the Clinton trial, the Senate considered motions to suspend under the terms of a unanimous consent agreement or a resolution, and it is not entirely clear from the proceedings or published precedents when such motions would otherwise be in order."], "subsections": []}, {"section_title": "Witnesses", "paragraphs": ["The impeachment rules contain little guidance in relation to the calling and questioning of witnesses. Impeachment Rule XVII states that witnesses shall be examined first by the side who requested them, and then cross-examined by the other side. It also specifies that only one person from each side shall conduct the examination and cross-examination. Witnesses are also required to be sworn by the Secretary of the Senate or other authorized person, in a form provided by Senate Rule XXV:", "\"You, ______, do swear (or affirm, as the case may be) that the evidence you shall give in the case now pending between the United States and ______, shall be the truth, the whole truth, and nothing but the truth, so help you God.\" ", "Impeachment Rule VI is intended to grant the Senate the ability to compel the attendance of witnesses (and, more generally, to enforce any \"orders, mandates, writs, precepts, and judgments\" deemed \"essential or conducive to the ends of justice\"). In modern practice, the Senate has relied on the other branches of government to enforce its subpoenas, as discussed in detail in other CRS reports. For example, in the 1989 trial of Judge Alcee Hastings, when a key witness refused to testify, the Senate in legislative session took up and approved by unanimous consent a resolution directing the Senate Legal Counsel to bring a civil action to enforce the subpoena. Senate Legal Counsel obtained an order from the U.S. District Court for the District of Columbia directing the witness to testify, and when the witness continued to refuse to do so, he was incarcerated until the end of the trial.", "The Senate impeachment rules do not address the selection of witnesses. In practice, the Senate determines which witnesses will be heard, if any. (If a trial committee is used, the trial committee selects and subpoenas the witnesses.) The parties to the case do not have the right under the rules to call whom they choose. To be clear, it is the House Managers and counsel for the impeached who know the charges and know what evidence they would like to present, and, in practice, the Senate weighs their requests heavily. In some recent trials, the Senate has requested pretrial statements or trial memoranda from both parties, which discuss possible evidence to be presented, including desired witnesses. On the basis of such requests, the Senate (or the trial committee) decides which witnesses to hear and possibly subpoena.", "In the modern judicial trials, witnesses were examined in the trial committees, and not on the floor before the full Senate. In the Clinton trial in 1999, the Senate agreed to an order that depositions from three witnesses be taken, but did not agree to hear testimony from any witness on the floor. The last time witnesses were examined and cross-examined on the Senate floor was during the impeachment trial of Judge Ritter in 1936."], "subsections": []}, {"section_title": "Questions by Senators", "paragraphs": ["During the presentation of evidence by the House Managers and counsel for the impeached officer, Senators are generally expected to attend, but not speak. Impeachment Rule XIX, however, does allow a Senator to question a witness, manager, or counsel of the person impeached. The Senator must put the question in writing and submit it to the Presiding Officer, who then reads the question out loud. In practice, the Presiding Officer identifies the Senator posing the question before reading it.", "As noted, witnesses have not testified before the full Senate since the 1936 trial of Judge Ritter, so there are no modern examples to look to concerning Senators questioning witnesses on the floor. In trial committees, Senators have submitted questions for witnesses. In addition, resolutions establishing trial committees have explicitly authorized the chair of the trial committee to \"waive the requirement\u00e2\u0080\u00a6that questions by a Senator to a witness, a manager, or counsel shall be reduced to writing and put by the presiding officer.\" ", "In modern trials, Senators have posed questions to House managers and counsel for the impeached. In the 1999 trial of President Clinton, the Senate agreed to a resolution ( S.Res. 16 , 106 th Congress) that established procedures in addition to the impeachment rules to structure a period of questioning by Senators. S.Res. 16 provided that after opening arguments by the House Managers and the President's counsel, \"Senators may question the parties for a period of time not to exceed 16 hours.\" During the Clinton trial, Senators directed their questions to one side or the other, and the party leaders asked that questions be submitted to them first, so that they could identify duplications and structure the order of questions (which alternated between Republican and Democratic Senators' questions). The Chief Justice announced that he thought five minutes would be a sufficient time to answer each question, and an effort was made to keep the time used by each side roughly equal. Over 100 questions were posed by Senators over the course of two days.", "In other modern trials, Senators asked questions of the House Managers and counsel for the accused on the floor, apparently without a unanimous consent agreement or other order of the Senate structuring the questioning process. During the 2010 trial of Judge Porteous, for example, after the trial committee had issued its report, the Senate agreed by unanimous consent to limit the time for arguments on all motions filed by Judge Porteous to one hour for each side, and to limit the time for final arguments on all four articles of impeachment to one and a half hours for each side. The agreement did not explicitly address time for questions. Senators, during the arguments, sent questions in writing to the Presiding Officer, who asked the clerk to read them at a time deemed appropriate, including after the expiration of the time limits set by unanimous consent. In this trial, Senators' questions were sometimes directed to both sides."], "subsections": []}]}, {"section_title": "Creation of a Trial Committee", "paragraphs": ["Impeachment Rule XI allows for the appointment of a trial committee of Senators to receive evidence and take testimony on behalf of the Senate for an impeachment. Rule XI does not contain language explicitly limiting the application of trial committees; however, the 1974 Rules and Administration Committee report regarding amendments to the impeachment rules stated that, \"nothing but action by the full Senate on all aspects of a presidential impeachment was conceivable\" and that the legislative history to the proposed amendments should \"clearly reflect\" this understanding by members of the Committee. The Senate has chosen to appoint trial committees for every modern impeachment of a judge since the 1980s.", "Trial committees serve to relieve the full Senate of the potentially lengthy process of these early trial tasks and instead devote time to its legislative workload. Transcripts of all proceedings conducted and evidence received by the trial committee are transmitted to the full Senate when the committee's work is completed. This material provides a potential opportunity to move quickly to closing arguments and deliberation on the final question of whether an impeached officer is guilty or not guilty. ", "Trial committees are typically created by a simple resolution that authorizes the majority and minority leaders to each recommend six Senators, including, more recently, a chair and vice chair, respectively. Impeachment Rule XI does not fix the membership or size of a trial committee, nor does it require party balance; in modern practice, however, the Senate has routinely agreed to a bipartisan 12-member committee. Resolutions creating trial committees also typically include a funding provision, and may authorize a committee to waive certain impeachment rules, direct a committee on what it should report to the Senate, or establish a date at which the committee will terminate.", "In addition to receiving evidence and testimony, trial committees can reach decisions concerning certain pre-trial requests and motions filed by the parties to the case, and they can question witnesses. Trial committees process motions filed by House Managers in a fashion similar to that which the Senate would use when sitting as a court of impeachment. The committee holds a hearing to receive oral arguments from the trial parties, allots time for questioning by committee members, deliberates in closed session, and ultimately votes to make a determination in relation to the request. Modern trial committees have routinely declined to consider motions to dismiss an article or articles of impeachment, citing a lack of authority to do so. Trial committees also have examined witnesses called by House managers and counsel to the accused. Typically, a witness is first examined by the trial parties, after which committee members have been able to ask their own questions. Under the impeachment rules, questions by Senators are to be submitted in writing, although the Senate has waived this rule to allow for direct questioning by Senators in trial committees.", "Once a trial committee has completed its work, as previously discussed, it will issue a report to the Senate compiling all evidence, exhibits, and witness testimony it received. That material is considered as having been received and taken before the full Senate for the purposes of delivering a final vote on articles of impeachment. The trial committee's work does not preclude the Senate itself from calling additional witnesses, hearing further testimony, or revisiting motions raised by House managers and counsel for the accused. The full Senate did not choose to hear witnesses or request any further evidence in any of the four completed trials in which a committee was used."], "subsections": []}]}, {"section_title": "Closed Deliberations by Senators", "paragraphs": ["Closed door deliberation by the Senate while sitting for an impeachment trial is established through Impeachment Rules XX and XXIV. Rule XX states that a Senate impeachment trial is to be conducted in open session, except for when the doors shall be closed for deliberation. A motion to go into closed door session can be acted upon without objection, or if an objection is raised, by a roll call vote without debate. Note that this method of entering closed session when the Senate is sitting for an impeachment trial\u00e2\u0080\u0094approving a motion by majority vote\u00e2\u0080\u0094is different from the method used during regular Senate session. Outside of an impeachment trial, a single Senator can move that the Senate go into closed session, and, if the motion is seconded by another Senator, the Senate will proceed to secret session.", "Rule XXIV specifies, in part, that during closed door deliberations, each Senator may speak only once on each question. Such remarks are limited to 10 minutes per Senator on \"interlocutory\" questions and to 15 minutes on \"the final question,\" (i.e., whether the impeached officer is guilty or not guilty), regardless of the number of articles of impeachment. In other words, in the final debate, regardless of whether the Senate is considering one article of impeachment or many, each Senator has only one opportunity to speak for no more than 15 minutes.", "When the Senate enters a closed session, the specific procedures followed are guided by the Senate's standing rules, rather than its impeachment rules. The Sergeant at Arms clears the chamber and galleries of everyone except for Senators and staff designated under Senate Rule XXIX, paragraph 2, who are sworn to secrecy. The Senate rule further provides access for the Senate Secretary, the Assistant Secretary, the Principal Legislative Clerk, the Parliamentarian, the Executive Clerk, the Minute and Journal Clerk, the Sergeant at Arms, and the Secretaries to the Majority and Minority, as well as other individuals the Presiding Officer \"shall think necessary.\" During impeachment trials, the Senate has, in practice, extended floor privileges in closed session to additional designated staff by unanimous consent agreement.", "A record of closed session deliberations is kept, as with all proceedings of impeachment trials, pursuant to Impeachment Rule XIV. Unlike open session records, which are made available to the public, closed session transcripts are kept under an injunction of secrecy unless lifted by the Senate by resolution or unanimous consent. Accordingly, Senators and staff are expected to refrain from public discussion of closed door deliberations. Senate Standing Rule XXIX, paragraph 5, provides for possible expulsion from the Senate (if a Senator) or dismissal from service (if an officer or employee) as punishment for divulging closed door proceedings. In recent Senate impeachment trials, the Senate has allowed Senators to insert their closed session remarks into the Congressional Record .", "As mentioned above, in the 1999 trial of President Clinton, Senators attempted to allow for open deliberation and debate in an impeachment trial by moving to suspend the impeachment rules. No such proposals were agreed to by the Senate during the Clinton trial, and all deliberation throughout the trial occurred in closed sessions. "], "subsections": []}, {"section_title": "Voting on Articles of Impeachment", "paragraphs": ["Conviction requires a guilty vote on at least one article of impeachment by two-thirds of Senators present. Assuming 100 Senators present, the support of 67 Senators is needed to convict on an article. If fewer Senators are present, the threshold to convict will accordingly be reduced as well (e.g., 97 Senators present would require 65 votes to convict). A response of \"present\" effectively supports acquittal, as it counts in the denominator against which the threshold to convict is calculated. ", "Following closed door deliberations on the final question of whether to convict or acquit an impeached officer, the Senate reconvenes in open session to vote on the articles of impeachment. Articles are typically voted on in the order they were exhibited by House Managers. It is not in order to further divide an article. ", "Pursuant to Impeachment Rule XXIII, the Presiding Officer puts the question on each article separately, and each vote is required to be by roll call. The legislative clerk is directed to read the article of impeachment aloud and then the roll is called, to which Senators must rise from their seats and answer \"guilty\" or \"not guilty\" on the question of impeachment. Voting on the articles of impeachment is to continue without interruption, pursuant to Rule XXII, unless the Senate adjourns the trial. After voting has commenced, adjournments of the trial can be for only one day, or sine die , that is, without a specific date to return, if ever. Under the rule, a motion to reconsider a vote on an article of impeachment is not in order. ", "Under Senate Standing Rule XII, Senators are required to vote upon call of their name unless excused by the Senate or due to a conflict of interest. The question of excusing a Senator from voting is disposed of after the call of the roll is completed but before the result is announced. Senators have been excused from voting on articles of impeachment in past trials due to their absences from arguments or owing to their participation as a witness in the trial. (Senators have also been excused from participating in the trial at all; see above \"Organizing for the Trial.\")", "If an officer is convicted by two-thirds of Senators present, \"such a vote operates automatically and instantaneously to separate the person impeached from office.\" The Senate may then choose to take the additional action to move to disqualify a convicted officer from holding further office, although this step is not required. The Senate has established that a vote to disqualify requires a simple majority voting affirmatively, and not two-thirds as with conviction."], "subsections": []}]}, {"section_title": "Senate Interpretation of the Impeachment Rules and the Role of the Presiding Officer", "paragraphs": ["The Presiding Officer of an impeachment trial does not possess any more independent control over proceedings than the Presiding Officer does during the more common Senate deliberations on legislation or nominations. While the Presiding Officer, in either case, may rule on the proper interpretation of the rules and procedures of the Senate, that ruling can be challenged by any Senator. In legislative or executive sessions of the Senate, if any Senator appeals a ruling by the Presiding Officer, the full Senate considers the question, \"Shall the decision of the Chair stand as the judgment of the Senate?\"", "Impeachment Rule VII lays out the process of challenging a ruling as it applies during an impeachment trial. It states in part", "And the Presiding Officer on the trial may rule on all questions of evidence including, but not limited to, questions of relevancy, materiality, and redundancy of evidence and incidental questions, which ruling shall stand as the judgment of the Senate, unless some Member of the Senate shall ask that a formal vote be taken thereon, in which case it shall be submitted to the Senate for decision without debate; or he may at his option, in the first instance, submit any such question to a vote of the Members of the Senate.", "In other words, while the impeachment rules grant the Presiding Officer the authority to rule on questions, they also state that a single Senator could instead request that the full Senate vote on any such question. In that case, pursuant to this rule, the question is not debatable, and a majority of Senators voting would determine the outcome. (By precedent, House Managers or counsel for the impeached could not ask that a question be submitted to the Senate. ) The published precedents state that all decisions of the Chair are subject to appeal.", "If a ruling concerning the admissibility of evidence is appealed (or if the Presiding Officer submits such a question), the question put to the Senate is: \"Is the evidence admissible?\" In the case of other procedural issues the Senate would vote on, the phrasing of the question put to the Senate could vary with the question. For example, in 1986, during the trial of Judge Claiborne, the Presiding Officer ruled, in response to a motion by the defense counsel and at the request of the Majority Leader, \"It is the Chair's determination that the question of standard of evidence is for each Senator to decide individually when voting on Articles of Impeachment.\" A Senator requested that the Senate vote on the question instead, and the Presiding Officer put the question on whether the motion of the counsel for the impeached judge\u00e2\u0080\u0094that the Senate establish a \"beyond a reasonable doubt\" standard of proof in the trial\u00e2\u0080\u0094was \"well taken.\" By a vote of 17 yeas and 75 nays (8 Senators not voting), the Senate voted that the motion was not well taken, effectively agreeing with the ruling of the Presiding Officer. ", "The Senate, in short, is the final arbiter on any procedural questions. Impeachment Rule VII states that \"the vote shall be taken in accordance with the Standing Rules of the Senate.\" That means these questions could be settled by roll call vote, but only if that request for the yeas and nays is supported by 1/5 of a quorum (11 Senators), or, if the Senate recently voted, 1/5 of the Senators who voted. ", "The impeachment rules make several other references to the Presiding Officer of the trial. Impeachment Rule IV restates the constitutional requirement that when the President of the United States has been impeached, the Chief Justice of the United States shall serve as the Presiding Officer. Impeachment Rule III tasks the Presiding Officer with administering the oath to Senators. Rule V grants him general power to execute decisions of the Senate where necessary (which would include, for example, signing a summons the Senate ordered to be issued to the person impeached, or signing a subpoena that the Senate had agreed to issue). Rule XIII directs the Presiding Officer to cause the proclamation to be declared at the start of each day commanding those present to keep silent. Rule XVI requires that the parties to the case\u00e2\u0080\u0094the House Managers and the impeached officer and his counsel\u00e2\u0080\u0094address the Presiding Officer when proposing motions, objecting to proceedings, or making any request related to the trial. As mentioned above, Rule XIX requires the Presiding Officer to read aloud any question submitted in writing by a Senator. The Presiding Officer also puts the question on the vote on the articles of impeachment, pursuant to Rule XXIII and as described above. ", "The Presiding Officer of the trial can vote when he or she is a Senator. If the Vice President is presiding over a trial, and if there is a tie vote, then the Vice President may vote. In presidential impeachment trials, however, the Vice President cannot preside and cannot vote. The Chief Justice, when presiding over an impeachment trial, would not be expected to vote, even in the case of a tie. If a vote on a question results in a tie, the question is decided in the negative."], "subsections": []}, {"section_title": "Conducting Legislative and Executive Business", "paragraphs": ["When the Senate convenes as a Court of Impeachment, it is in a distinct procedural mode, different from legislation session, where it considers bills and resolutions, and executive session, where it considers treaties and nominations. In addition to having its own set of rules, the Court of Impeachment also keeps a separate Journal. (The Journal is the Constitutionally-required record of parliamentary actions taken by the Senate.) Business in these distinct procedural modes is kept entirely separate. For example, bills and resolutions cannot be introduced when the Senate is in the mode of sitting for the trial, and committee reports cannot be filed. This might mean that the Senate chooses to spend some period of a day meeting in legislative or executive session and also spend a period meeting as Court of Impeachment, in order to provide an opportunity for other actions to occur. ", "For some legislative actions, unanimous consent may effectively be required. Notably, the Senate must have a period for \"morning business\" in legislative session for various actions to occur\u00e2\u0080\u0094including the introduction of legislation and the filing of committee reports. In modern practice, this is provided for in unanimous consent agreements for each day the Senate meets. The Senate would need to reach a similar unanimous consent agreement for legislative sessions held on days during the trial in order for these actions to be allowed. Alternatively, the Senate could agree by unanimous consent to arrange other methods for these actions to occur, even though the Senate has not met that day in legislative session.", "The impeachment rules provide for the Senate to convene for an impeachment trial at noon (Rule XIII) every day except Sunday after a trial has begun (Rule III). While this might have been the expected schedule in the middle of the 19 th century, the impeachment rules also provide for the Senate to modify this schedule by \"order.\" In modern practice, the Senate has adjusted the meeting days and times. Most often, the Senate agreed by unanimous consent to the time of the next meeting. Alternatively, a motion to adjourn the Senate sitting in a trial of impeachment to a time certain is subject to amendment, but it is not debatable and could be agreed to by majority vote. The Senate also could agree to an order altering the default time for the Senate to sit for the trial each day, and this order would not be subject to debate. In short, a numerical majority can determine the day and times of meeting for an impeachment trial.", "Impeachment Rule XIII also provides that, when the trial adjourns, the Senate resumes consideration of legislative (or executive) business. The Rule states, \"(t)he adjournment of the Senate sitting in said trial shall not operate as an adjournment of the Senate.\" As a result, it is possible for the Senate to convene to conduct business in legislative (or executive) session before noon, convene the trial at noon pursuant to the rules (or at some other time if decided by the Senate), adjourn the impeachment trial for the day and return to legislative (or executive) session to conduct more business. The Senate could also meet for other purposes on days the Senate is not meeting for the trial.", "In the modern judicial trials and during the Clinton trial, the Senate did conduct other business on some of the days on which it also considered articles of impeachment. Limited legislative business was accomplished during the six weeks of the Clinton trial, but that trial occurred at the very start of the 106 th Congress (1999-2000), while committees were still organizing and legislation may have still been developing. Other factors could certainly affect the ability of the Senate to approve legislation while a trial is being conducted. Bipartisan support is generally necessary to take up most legislation in the Senate, and forming such coalitions could be challenging if the impeachment proceedings are contentious. The attention of Senators and their staff might also be expected to be directed toward impeachment proceedings.", "In addition, it is not clear how some procedures that apply to the consideration of legislation and nominations in the Senate are impacted when the Senate sits for an impeachment trial. For example, if cloture was filed on a matter in legislative session, and the Senate was sitting in trial when the cloture motion matured, it is not clear if the Senate would vote on the cloture motion at that time, or instead not until it adjourned the trial for the day. It is also not clear how legislation to be considered under expedited procedure statutes, such as the Congressional Review Act, the War Powers Resolution, or the Trade Act (each of which provide for specific Senate actions at times certain) could be impacted by a Senate trial. "], "subsections": []}]}}
{"id": "R46011", "title": "FY2020 Appropriations for Agricultural Conservation", "released_date": "2020-01-21T00:00:00", "summary": ["The Agriculture appropriations bill funds the U.S. Department of Agriculture (USDA) except for the Forest Service. The FY2020 Further Consolidated Appropriations Act ( P.L. 116-94 , Division B) includes funding for conservation programs and activities at USDA, among other departments.", "Agricultural conservation programs include both mandatory and discretionary spending. Most conservation program funding is mandatory and is authorized in omnibus farm bills. Other conservation programs\u00e2\u0080\u0094mostly technical assistance\u00e2\u0080\u0094are discretionary spending funded through annual appropriations. The FY2020 appropriation includes an increase from FY2019 levels for discretionary conservation programs and generally rejects the Administration's proposed reductions to discretionary and mandatory conservation programs.", "The largest discretionary conservation program is the Conservation Operations (CO) account, which funds conservation planning and implementation assistance on private agricultural lands across the country. The CO account is administered by the Natural Resources Conservation Service (NRCS) and funds more than half of the agency's total staff positions. The FY2020 enacted appropriation increases funding for CO by $10.1 million above FY2019 levels to $829.6 million.", "A decline in funding for CO over time has resulted in declining NRCS staffing levels. Much of the conservation technical assistance provided by NRCS is funded through the Conservation Technical Assistance program within CO. Funds are used to support salaries and expenses for NRCS staff, technology development, conservation system design, compliance reviews, grants to partners for additional technical assistance capacity, and resource assessment reports. Reduced staff could impact NRCS's ability to provide technical assistance and administer farm bill conservation programs to farmers and ranchers.", "The recently created Farm Production and Conservation (FPAC) Business Center receives $206.5 million in the FY2020 appropriation\u00e2\u0080\u0094$9.8 million less than in FY2019. The FPAC Business Center is responsible for various administrative services for three USDA agencies, including NRCS. In FY2019, Congress realigned funding from NRCS discretionary and mandatory program accounts and NRCS staff to the Business Center. It is unclear how the transfer of NRCS positions and funding to the FPAC Business Center has impacted the agency's overall operations relative to the decline in CO funding. The FY2020 explanatory statement directs USDA to report to Congress on the efficiencies gained through the Business Center's creation, along with other staffing plans.", "Other discretionary spending is primarily for watershed programs. The largest\u00e2\u0080\u0094Watershed and Flood Prevention Operations (WFPO)\u00e2\u0080\u0094is funded at $175 million in FY2020. This is an increase in WFPO funding from FY2019 levels of $150 million. The FY2020 appropriation also funds other discretionary water-related programs, such as the Watershed Rehabilitation Program ($10 million), Water Bank program ($4 million), and wetland mitigation banking ($5 million).", "Most mandatory conservation programs are authorized in omnibus farm bills and do not require an annual appropriation. However, previous Congresses have reduced mandatory conservation program funding through Changes in Mandatory Program Spending (CHIMPS) in the annual agricultural appropriations law every year between FY2003 and FY2018. The Trump Administration requested CHIMPS to two mandatory conservation programs for FY2020, but neither of these proposed reductions to mandatory conservation programs is included in the enacted FY2020 appropriation.", "Agriculture appropriations bills may also include policy-related provisions that direct how the executive branch should carry out the appropriations. In the FY2020 appropriations act, these range from waiving specific programmatic requirements to requiring reports to Congress."], "reports": {"section_title": "", "paragraphs": ["T he Agriculture appropriations bill\u00e2\u0080\u0094formally called the Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act\u00e2\u0080\u0094funds all of the U.S. Department of Agriculture (USDA), excluding the U.S. Forest Service. For FY2020, the House Appropriations Committee reported H.R. 3164 on June 6, 2019 (including H.Rept. 116-107 ). Funding for USDA was included in a five-bill minibus appropriations bill ( H.R. 3055 ) that passed the House on June 25, 2019. The Senate Appropriations Committee reported S. 2522 on September 19, 2019 (including S.Rept. 116-110 ). The full Senate did not act on this bill by October 1, 2019, so FY2020 began without a full-year appropriation. To avoid a lapse in funding, Congress and the President approved two consecutive continuing resolutions to fund federal agencies at the FY2019 level ( P.L. 116-59 and P.L. 116-69 , respectively). The Senate passed a four-bill minibus appropriations bill ( H.R. 3055 ) on October 31, 2019, setting up negotiations with the House for a final bill. On December 20, 2019, Congress passed and the President signed the FY2020 Further Consolidated Appropriations Act ( P.L. 116-94 ), which includes agriculture and related agencies under Division B. ", "This report provides a brief overview of the conservation-related provisions in the FY2020 Agriculture appropriations acts. For a general analysis of the FY2020 appropriations for agriculture, see CRS Report R45974, Agriculture and Related Agencies: FY2020 Appropriations ."], "subsections": [{"section_title": "Conservation Appropriations", "paragraphs": ["USDA administers a number of agricultural conservation programs that assist private landowners with natural resource concerns. These include working lands programs, land retirement and easement programs, watershed programs, technical assistance, and other programs. The two lead agricultural conservation agencies within USDA are the Natural Resources Conservation Service (NRCS), which provides technical assistance and administers most conservation programs, and the Farm Service Agency (FSA), which administers the Conservation Reserve Program (CRP).", "Most conservation program funding is mandatory, obtained through the Commodity Credit Corporation (CCC) and authorized in omnibus farm bills (about $6.4 billion of CCC budget authority for conservation in FY2020). The Agriculture Improvement Act of 2018 (2018 farm bill; P.L. 115-334 ) reauthorized most mandatory conservation programs through FY2023. Other conservation programs\u00e2\u0080\u0094mostly providing technical assistance\u00e2\u0080\u0094operate with discretionary funding provided in annual appropriations (about $1 billion annually). ", "The FY2020 appropriation included an increase from FY2019 levels for discretionary conservation programs. The Administration's FY2020 request proposed a decrease for discretionary conservation funding from the FY2019 enacted levels and reductions in funding for mandatory conservation programs. The FY2020 appropriation does not generally include these proposed reductions and would continue to redirect some conservation funding to the Farm Production and Conservation (FPAC) Business Center."], "subsections": []}, {"section_title": "Discretionary Conservation Programs", "paragraphs": [], "subsections": [{"section_title": "Conservation Operations", "paragraphs": ["NRCS administers all discretionary conservation programs. The largest program and the account that funds most NRCS activities is Conservation Operations (CO). The CO account primarily funds Conservation Technical Assistance (CTA), which provides conservation planning and implementation assistance from field staff placed in almost all counties within the United States and its territories. Other components of CO include the Soil Survey, Snow Survey and Water Supply Forecasting, and Plant Materials Centers ( Figure 1 ).", "Technical assistance for conservation is currently funded through both mandatory and discretionary sources, with CO being the primary account receiving discretionary funding from annual appropriations. The Trump Administration's FY2020 budget requested $755.0 million for CO, $64.5 million less than the amount enacted for FY2019, in part due to a proposed consolidation of mandatory and discretionary accounts to pay for conservation technical assistance. USDA has proposed consolidating funding through multiple Administrations, but Congress has never adopted this approach (see \" Funding for Technical Assistance \" section below). The FY2020 appropriation increases CO funding in FY2020 by $10.1 million from FY2019 and directs CO funding for a number of conservation programs ( Table 1 ). Report language further directs funding to selected activities ( Table 4 )."], "subsections": [{"section_title": "Funding for Technical Assistance", "paragraphs": ["NRCS is the current federal provider of technical assistance for agriculture conservation. NRCS provides technical assistance at the request of the landowner to conserve and improve natural resources. The assistance includes technical expertise combined with knowledge of local conditions and is provided through a network of federal staff located throughout the United States. ", "Much of the conservation technical assistance provided by NRCS is funded through the CTA program within CO. Funds are used to support salaries and expenses for NRCS staff, technology development, conservation system design, compliance reviews, grants to partners for additional technical assistance capacity, and resource assessment reports. Total funding for CO has fluctu ated in recent years. In some cases, such fluctuation is the result of an Administration's request. In other cases, funding changes reflect national budget dynamics that are not unique to CO (e.g., reductions caused by sequestration in FY2013, and funding increases through budget agreements in FY2014-FY2020). In inflation-adjusted dollars, CO has declined over the past 20 years (see Figure 2 ). ", "The other side of agricultural conservation assistance is financial assistance. Financial assistance provides direct payments to landowners to implement certain conservation practices or to conserve and protect natural resources on private land. Most programs that provide financial assistance are authorized through omnibus farm bills and receive funding from mandatory sources, and thus do not require an annual appropriation. ", "In addition to technical assistance provided through CTA and CO, technical assistance is also part of farm bill conservation programs, which are funded through a program's mandatory authorization. Most technical assistance activities within mandatory programs support the delivery of some level of financial assistance as part of a contract or agreement. These activities could include providing designs, standards, and specifications needed to install approved conservation practices and activities. ", "Generally, technical assistance prior to a producer entering into a contract for financial assistance is considered to be part of CTA. It is not until after a producer signs a contract for financial assistance that technical assistance is funded from the individual mandatory program rather than CTA. Once the financial assistance contract is complete, most mandatory program funds are no longer available to support ongoing assistance in maintaining the conservation plans, practices, and activities implemented under the financial assistance program.", "Since the mid-1990s, Congress and various Administrations have proposed changes to how technical assistance is funded. The Administration's FY2020 budget request proposed to transfer funding from mandatory conservation programs and discretionary appropriations to a consolidated account dedicated to technical assistance for farm bill conservation programs. This concept is not new. A similar proposal was included in the FY2018-FY2019 (Trump) and FY2014-FY2017 (Obama) presidential budget requests."], "subsections": []}, {"section_title": "NRCS Staffing Levels", "paragraphs": ["The CO account funds more than half of NRCS staff, with other, smaller discretionary programs and mandatory conservation programs accounting for the remainder. A decline in CO funding, therefore, correlates to a decline in the number of NRCS staff. Total, actual, permanent positions at NRCS that are funded by CO have generally declined through FY2018. This reduction in staff has been further magnified by a growing number of unfilled positions at the agency (see Figure 3 ). ", "The FPAC Business Center has also impacted NRCS staffing and funding levels (for more information on the Business Center, see the \" Farm Production and Conservation Business Center \" section). The FY2020 appropriation provides the Administration's requested level of $206.5 million in discretionary funding for the FPAC Business Center. This is $10 million less than Congress provided in FY2019. This appropriation is separate from the transfer of funds from the three FPAC agencies. In FY2019, Congress realigned funding and staff to the Business Center, including funding from NRCS discretionary accounts and $60.2 million from mandatory farm bill conservation program accounts. The FY2019 realignment of funds and staff included the transfer of approximately 882 staff years from NRCS to the Business Center (over 9% of effective NRCS staff years). The transfer of funding and functions are a part of the Business Center's goal of achieving efficiencies within the FPAC mission area. Given the decline in CO-funded technical assistance staff years, it is difficult to evaluate how the transfer of NRCS positions to the FPAC Business Center has impacted the agency's overall operations and ability to provide technical assistance to farmers and ranchers. Also unclear is the extent to which the Business Center's realignment of staff may have contributed to the decrease in NRCS staffing levels and to the increase in total unfilled NRCS positions."], "subsections": []}]}, {"section_title": "Watershed Programs", "paragraphs": ["The FY2020 appropriation includes funding for watershed activities, including Watershed and Flood Prevention Operations (WFPO)\u00e2\u0080\u0094a program that assists state and local organizations with planning and installing measures to prevent erosion, sedimentation, and flood damage. The appropriation increases WFPO funding to $175 million, $25 million more than the FY2019 level of $150 million. The FY2020 Administration request proposed that no funding be provided for the program.", "Since FY2014, Congress has directed a portion of CO funds to select WFPO activities. The enacted appropriation includes similar directive language ($5.6 million; see Table 1 ), in addition to the $175 million for the program as a whole. This is less than the $11.2 million proposed in the Senate-passed bill. Neither the House-passed bill nor the Administration's request included such directive language.", "The FY2020 appropriation also includes $10 million for the Watershed Rehabilitation Program\u00e2\u0080\u0093\u00e2\u0080\u0093the same as the FY2019 level. The Watershed Rehabilitation Program repairs aging dams previously built by USDA under WFPO. The Administration's request included no funding for FY2020. ", "The 2018 farm bill provides $50 million annually in permanent mandatory funding for WFPO and Watershed Rehabilitation activities. The mandatory funding is in addition to discretionary funding provided through annual appropriations."], "subsections": []}]}, {"section_title": "Mandatory Conservation Programs", "paragraphs": ["Mandatory conservation programs are generally authorized in omnibus farm bills and receive funding from the CCC and thus do not require an annual appropriation. The 2018 farm bill reauthorized mandatory funding for many of the agricultural conservation programs through FY2023. Because most of these programs are classified as mandatory, nonexempt spending, they are reduced annually by sequestration.", "The President's FY2020 budget requested a reduction of $40 million annually to the Agricultural Conservation Easement Program and the elimination of the Conservation Stewardship Program. Both programs were reauthorized to receive mandatory funding in the 2018 farm bill through FY20203. The FY2020 appropriation does not reduce these or other mandatory farm bill conservation programs."], "subsections": []}, {"section_title": "Farm Production and Conservation Business Center", "paragraphs": ["The Farm Production and Conservation (FPAC) mission area was created in 2017 as part of a larger departmental reorganization. FPAC includes NRCS, FSA, the Risk Management Agency (RMA), and a new FPAC Business Center. The FPAC Business Center is responsible for financial management, budgeting, human resources, information technology, acquisitions/procurement, strategic planning, and other customer-oriented operations of three agencies\u00e2\u0080\u0094NRCS, FSA, and RMA. Congress reduced funding for NRCS, FSA, and RMA in FY2019 to realign funding and staff to the FPAC Business Center.", "The FY2020 appropriation includes the Administration's requested level of $206.5 million for the Business Center. This is $9.8 million less than the enacted FY2019 appropriation (see Table 2 ). According to the Administration's FY2020 request, the proposed reduction is the result of \"realizing efficiency improvements.\" The proposed reduction for FY2020 to the FPAC Business Center's appropriation could affect the implementation of conservation programs if efficiencies are not realized. ", "The explanatory statement of the FY2020 appropriation directs USDA to produce a report to the Appropriations Committees within 60 days of enactment on the center's efficiency gains, the metrics by which such gains are measured, and its hiring acceleration and reorganization plans. Similar language was included in the Senate committee report ( S.Rept. 116-110 ), which also cited concerns related to the Business Center's delays in filling critical vacancies, potentially resulting in delayed deployment of conservation and commodity programs. The Senate committee report expressed concern that additional functions and staff positions affiliated with NRCS state offices are being moved to the FPAC Business Center. ", "The FY2020 appropriation directs a transfer of funds to the FPAC Business Center from other accounts, including mandatory conservation programs and farm loan accounts. This transfer could result in NRCS effectively receiving less in total funding if the amount shifted would have been used for NRCS administrative or technical assistance had the Business Center not been created. In total, the direct appropriation and transfer of funds would provide the FPAC Business Center with $282.8 million in FY2020 (see Table 2 )."], "subsections": []}, {"section_title": "Policy-Related Provisions", "paragraphs": ["In addition to setting budgetary amounts, the Agriculture appropriations bill may also include policy-related provisions that direct how the executive branch should carry out an appropriation. These provisions may have the force of law if they are included in the text of an appropriations act, but their effect is generally limited to the current fiscal year (see Table 3 ). Policy-related provisions generally do not amend the U.S. Code or have long-standing effects.", "For example, the WFPO program has historically been called the \"small watershed program,\" because no project may exceed 250,000 acres, and no structure may exceed 12,500 acre-feet of floodwater detention capacity or 25,000 acre-feet of total capacity. The FY2020 enacted appropriation includes a policy provision that waives the 250,000-acre project limit when the project's primary purpose is something other than flood prevention. This provision does not amend the WFPO authorization and therefore is effective only for the funds provided during the current appropriation year.", " Table 3 compares some of the policy provisions in the Farm Production and Conservation Programs (Title II) and General Provisions (Title VII) titles of the FY2019 and FY2020 Agriculture appropriations bills related to conservation. Many of these provisions were also included in past years' appropriations acts. The table is divided by agency and account according to their location within the FY2019 and FY2020 acts.", "The explanatory statement that accompanies the final appropriations\u00e2\u0080\u0094and the House and Senate report language that accompanies the committee-reported bills\u00e2\u0080\u0094may also provide policy instructions. These documents do not have the force of law but often explain congressional intent, which Congress expects the agencies to follow (see Table 4 ). The committee reports and explanatory statement may need to be read together to capture all of the congressional intent for a given fiscal year.", "Many of these provisions have been included in past years' appropriations acts. Some provisions in report language and bill text address conservation programs that are not authorized or funded within the annual appropriations (i.e., mandatory spending for farm-bill-authorized programs). Table 4 is divided by the administering agency and by account according to the location of each provision within the two reports."], "subsections": []}]}}
{"id": "R45966", "title": "The Temporary Assistance for Needy Families Block Grant: Legislative Issues in the 116th Congress", "released_date": "2019-10-09T00:00:00", "summary": ["The Temporary Assistance for Needy Families (TANF) block grant was created by the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA; P.L. 104-193 ). That law culminated four decades of debate about how to revise or replace the Aid to Families with Dependent Children (AFDC) program. Most AFDC assistance was provided to families headed by single mothers who reported no work in the labor market, and the debates focused on whether such aid led to dependency on assistance by discouraging work and the formation and maintenance of two-parent families.", "TANF provides a fixed block grant to states ($16.5 billion total per year) that has not been adjusted at either the national or state levels since 1996. The TANF block grant is based on expenditures in the AFDC program in the early to mid-1990s, and thus the distribution of funds among the states has been \"locked in\" since that time. The purchasing power of the block grant has also declined over time due to inflation. Since 1997, it has lost 36% of its initial value.", "The debates that led to the creation of TANF in 1996 focused on the terms and rules around public assistance to needy families with children. However, PRWORA created TANF as a broad-purpose block grant. States may use TANF funds \"in any manner that is reasonably calculated\" to achieve the block grant's statutory purposes, which involve TANF providing states flexibility to address the effects or the root causes of economic and social disadvantage of children. For pre-TANF programs, public assistance benefits provided to families comprised 70% of total spending. In FY2018, such public assistance comprised 21% of all TANF spending. States spend TANF funds on activities such as child care, education and employment services (not necessarily related to families receiving assistance), services for children \"at risk\" of foster care, and pre-kindergarten and early childhood education programs. There are few federal rules and little accountability for expenditures other than those made for assistance.", "Before the 1996 law, many states experimented with programs to require work or participation in job preparation activities for AFDC recipients. PRWORA established \"work participation requirements.\" Most of these requirements relate to a performance system that applies to the state as a whole, and are not requirements that apply to individuals. The system requires states to meet a minimum work participation rate (WPR). The complex rules of the WPR can be met through several different routes in addition to engaging unemployed recipients in job preparation activities: caseload reduction, state spending beyond what is required under TANF, and assistance to needy parents who are already working. In FY2018, all but one state met the participation standard. A total of 18 states met their minimum WPR through caseload reduction alone.", "Spending on assistance and the number of individuals receiving assistance have both declined substantially since the mid-1990s. The reduction in the assistance caseload was caused more by a decline in the percentage of those who were eligible receiving benefits than a decline in the number of people who met TANF's state-defined definitions of financial need. Assistance under TANF alleviates less poverty than it did under AFDC. While there have been expansions in other low-income assistance programs since PRWORA was enacted, such as the refundable tax credits from the Earned Income Tax Credit (EITC) and the child tax credit, those programs do not provide ongoing assistance on a monthly basis.", "Some of the TANF reauthorization bills introduced in the 115 th and 116 th Congresses attempt to focus a greater share of TANF dollars on activities related to assistance and work. Additionally, these bills would revise the system by which state programs are assessed on their performance in engaging assistance recipients in work or job preparation activities."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["The Temporary Assistance for Needy Families (TANF) block grant provides grants to states, the District of Columbia, territories, and tribes to help them finance a wide range of benefits and services that address economic disadvantage among children. It is best known as a source to help states finance public assistance benefits provided to needy families with children. However, a state may use its TANF funds \"in a ny manner that is reasonably calculated\" to help achieve TANF's statutory goals to assist families so that children may live in their own homes or with relatives; end dependence on government benefits for needy parents through work, job preparation, and marriage; reduce out-of-wedlock pregnancies; and promote the formation and maintenance of two-parent families.", "TANF was created by the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA; P.L. 104-193 ). That law provided TANF program authority and funding through FY2002. Since that original expiration of funding, TANF has been funded through a series of extensions (one for five years, and others for shorter periods of time). Most current TANF policies date back to the 1996 law. ", "The major TANF issues facing the 116 th Congress stem from questions about whether or not TANF's current policy framework allows states to de-emphasize addressing the original concerns that led to the creation of TANF, which centered on the terms and conditions under which needy families with children could receive public assistance benefits. Most families receiving public assistance in TANF's predecessor programs were headed by single mothers. TANF public assistance (for the remainder of this report, the term \"assistance\" will be used) takes the form of payments to families to help them meet ongoing basic needs, such as food, clothing, and shelter. The assistance is often paid in cash (a monthly check), but it might also be paid on behalf of families in the form of vouchers or payments to third parties. To be eligible for assistance, a family must have a minor child and be determined as \"needy\" according to the rules of the state. The amount of the assistance benefit is also determined by the state. In July 2017, the monthly TANF assistance benefit for a family of three ranged from $170 a month in Mississippi to $1,021 per month in New Hampshire.", "To provide context for a discussion of TANF issues in the 116 th Congress, this report", "describes the main issues discussed in the debates leading to the enactment of PRWORA in 1996; provides an overview of the TANF block grant and its funding; discusses current uses of TANF funds; describes how states are held accountable for achieving the federal goals of TANF and the \"work participation requirements\"; and discusses the decline in the TANF caseload and the implications for how it affects child poverty.", "The report also describes legislation introduced in the 115 th and the 116 th Congress as it relates to the issues of TANF funding levels and distribution, the uses of funds, and the \"work participation\" requirements.", "This report does not address all potential issues related to TANF, particularly those related to issues of family structure (a discussion of responsible fatherhood issues, for example, can be found in CRS Report RL31025, Fatherhood Initiatives: Connecting Fathers to Their Children ). "], "subsections": []}, {"section_title": "The Debates That Led to the Creation of TANF", "paragraphs": ["The modern form of assistance to needy families with children dates back to the mothers' pensions (sometimes called \"widows' pensions\") funded by state and local governments beginning in the early 20 th century. Federal funding for these programs was first provided in the Social Security Act of 1935, through grants to states in the Aid to Dependent Children (ADC) program, later renamed the Aid to Families with Dependent Children (AFDC) program. The purpose of these grants was to help states finance assistance to help mothers (mostly single mothers and widows or women married to a disabled father) stay at home and care for their children.", "The goal of keeping mothers out of the labor force to rear their children was met by resistance from some states and localities. Politically, any consensus regarding this policy goal eroded over time, as increasing numbers of women\u00e2\u0080\u0094particularly married white women\u00e2\u0080\u0094joined the labor force. Additionally, those receiving assistance were increasingly African American families where the father was alive but absent. Benefits and the terms and conditions under which benefits were provided varied considerably by state. A series of administrative and court decisions in the 1950s and 1960s made the terms under which AFDC was provided more uniform across the states, though income eligibility thresholds and benefit levels continued to vary considerably among states up to the end of AFDC and the enactment of TANF.", "In 1969, the Nixon Administration proposed ending AFDC and replacing it with a negative income tax. While the program would have provided an income guarantee, it also would have gradually phased out benefits as an incentive to work. This proposal passed the House twice but never passed the Senate. In 1972, the Senate Finance Committee proposed to guarantee jobs to AFDC recipients who had school-age children. This proposal was not adopted in the full Senate. President Carter proposed combining the negative income tax with a public service jobs proposal. This, too, was not enacted.", "In 1981, during the Reagan Administration, the focus of debates over assistance to needy families shifted to a greater emphasis on work requirements and devolution of responsibility to the states. In 1982, President Reagan proposed to shift all responsibility for AFDC to the states, while the federal government would assume all responsibility for Medicaid. This was not enacted. ", "The 1980s also saw an increasing concern that single parents were becoming dependent on assistance. Research showed that while most individuals used AFDC for short periods of time, some received assistance for long periods. There was continuing concern that receipt of AFDC\u00e2\u0080\u0094assistance generally limited to single mothers\u00e2\u0080\u0094led to more children being raised in single parent families. The Family Support Act of 1988 established an education and training program and expanded participation requirements for AFDC recipients. Additionally, the federal government and states fielded numerous experiments that tested approaches to moving assistance recipients (mostly single mothers) into work. These experiments indicated that mandatory participation in a program providing employment services could increase employment and earnings and reduce receipt of assistance. ", "The cash assistance caseload began to increase in 1988, rising to its historical peak in March of 1994. Amid that caseload increase, then-Presidential candidate Bill Clinton pledged to \"end welfare as we know it.\" The subsequent plan created by the Clinton Administration was not adopted; instead, House Republicans crafted a plan following the 1994 midterm elections that became the basis of the legislation enacted in 1996. PRWORA created TANF and established", "a statutorily set amount of funding to states under the TANF basic block grant through FY2002; new rules for assistance recipients, such as a five-year time limit on federally funded benefits; and a broad-purpose block grant, giving states flexibility in how funds are used."], "subsections": []}, {"section_title": "TANF Funding Levels and Distribution among the States", "paragraphs": ["The bulk of TANF funding is in the form of a basic block grant. Both the total amount of the basic block grant ($16.5 billion per year) and each state's share of the grant are based on the amount of federal and state expenditures in TANF's predecessor programs (AFDC and related programs) in the early to mid-1990s. States must also expend a minimum amount of their own funds on TANF or TANF-related programs under the maintenance of effort (MOE) requirement. That minimum totals $10.4 billion per year. The MOE is based on state expenditures in the predecessor programs in FY1994. ", "PRWORA froze funding at both the national and state levels through FY2002. TANF has never been comprehensively reauthorized; rather, it has been extended through a series of short-term extensions and one five-year extension. Thus, a funding freeze that originally was to run through FY2002 has now extended through FY2019. There have been no adjustments for changes\u00e2\u0080\u0094such as inflation, the size of the cash assistance caseload, or changes in the poverty population\u00e2\u0080\u0094to the total funding level or each state's level of funding."], "subsections": [{"section_title": "Distribution of Funding Among the States", "paragraphs": ["While there were some federal rules for the AFDC program, states determined their own income eligibility levels and benefit amounts paid under it. There were wide variations among the states in benefit amounts, and some states varied benefit amounts by locality. In January 1997, the maximum AFDC benefit for a family of three was $120 per month in Mississippi (11% of the federal poverty level) and $703 per month in Suffolk County, NY (63% of the federal poverty level). ", "The variation in AFDC benefit amounts created wide differences in TANF funding relative to each state's number of children in poverty because PRWORA \"locked in\" these historical variations in the funding levels among the states. The state disparities in TANF funding, measured as the TANF grant per poor child, have persisted. Figure 1 shows that, generally, Southeastern states have lower grants per child living in poverty than states in the Northeast, on the West Coast, or in the Great Lakes region. ", "PRWORA included a separate fund, supplemental grants, that addressed the funding disparity among the states. From FY1998 to FY2011, supplemental grants were made to 17 states, all in the South and West, based on either low grant amounts per poor person or high rates of population growth. Supplemental grants were funded at $319 million (compared to the $16.5 billion in the basic TANF block grant), and hence had a limited effect on total TANF grant per poor child. Funding for these grants expired at the end of June 2011 and has not been reauthorized by Congress since."], "subsections": []}, {"section_title": "Impact of Inflation on the Value of the Block Grant", "paragraphs": ["Over time, inflation has eroded the value (purchasing power) of the TANF block grant and the MOE spending level. While annual inflation has been relatively low since FY1997 (averaging 2.1% per year), the decline in TANF's purchasing power has compounded to a loss in value of 36% from FY1997 to FY2018. Under the Congressional Budget Office's (CBO's) January 2019 inflation projections, if TANF funding remains at its current (FY2019) level through FY2029, the value of the TANF block grant would degrade even further, falling to half of its value in FY1997.", " Figure 2 shows the decline in the value of the TANF grant from FY1997 through FY2018, and as projected under the CBO January 2019 economic forecast."], "subsections": []}, {"section_title": "Contingency Funds for Recessions", "paragraphs": ["PRWORA established a contingency fund (originally $2 billion) that would be available in states with high unemployment or increased food assistance caseloads. Its funding was depleted in the last recession (exhausted in FY2010). Beginning with FY2011, the fund has received appropriations of $608 million per year. ", "The fund provides extra grants for states that", "have high and rising unemployment (a 6.5% unemployment rate that is also at least 110% of the rate in the prior two years) or Supplemental Nutrition Assistance Program (SNAP) caseloads that are at least 10% higher than they were in 1994 or 1995; and spend more from their own funds than they spent in FY1994.", "The law provides that a state may receive up to 20% of its basic block grant in contingency funds; however, the funds are paid on a first-come-first-served basis. If the appropriation is insufficient to pay the full amount of contingency funds, they are prorated to the qualifying states.", "Both population growth and the increase in the rate at which SNAP-eligible households receive benefits have resulted in most states continuing to meet the SNAP caseload trigger for contingency funds through FY2019. Thus, most states with sufficient state spending on TANF-related activities could continue to draw from the contingency fund. The fund generally spends all of its total each year, regardless of the health of the economy\u00e2\u0080\u0094and thus, it is not serving its original purpose to provide a source of counter-cyclical funding."], "subsections": []}, {"section_title": "Legislation Related to Funding Levels and Distribution", "paragraphs": ["The bills discussed in this report, with the exception of the RISE Out of Poverty Act ( H.R. 7010 , 115 th Congress), would maintain the overall TANF funding level and its distribution among the states, essentially extending the funding freeze that has prevailed since FY1997. A five-year reauthorization was proposed in the Jobs and Opportunity with Benefits and Services for Success Act, both as reported from the House Ways and Means Committee in the 115 th Congress ( H.R. 5861 ) and in its revised version in the 116 th Congress ( H.R. 1753 / S. 802 ). Both versions of the bill would eliminate the TANF contingency fund and use savings to offset an equal increase in mandatory child care spending. The Promoting Employment and Economic Mobility Act ( S. 3700 ; 115 th Congress) would have been a three-year reauthorization. ", "H.R. 7010 would have indefinitely authorized funding for TANF. It would have provided for both an initial increase in TANF funding and ongoing annual increases. The initial increase for each state would have reflected both inflation and child population growth since 1997; future increases would have increased the block grant annually for those factors. While H.R. 7010 would not have redistributed funds among the states, the increases in funding would have been greater for those states that experienced faster child population growth than for those with slower growth, no growth, or population losses. In addition to the higher, capped funding amount of the basic block grant, H.R. 7010 would have provided open-ended (unlimited) matching funds for subsidized employment and to guarantee child care to certain populations. It would also have increased TANF contingency funds. ", " Table 1 summarizes provisions related to TANF funding levels and the distribution of funds in selected legislation introduced in the 115 th and 116 th Congresses."], "subsections": []}]}, {"section_title": "Use of Funds", "paragraphs": ["Though most of the debates leading to PRWORA in 1996 and the creation of TANF focused on assistance to needy families with children, the law as written created a broad-purpose block grant. Thus, TANF is not a program. It is a funding stream that is used by states for a wide range of benefits and services. "], "subsections": [{"section_title": "Authority to Spend TANF Funds and Count MOE Dollars", "paragraphs": ["States have broad discretion on how they expend federal TANF grants. States may use TANF funds \"in any manner that is reasonably calculated\" \u00c2\u00a0to accomplish the block grant's statutory purposes, which involve TANF increasing the flexibility of states in operating programs designed to", "provide assistance to needy families so that children may be cared for in their own homes or in the homes of relatives; end the dependence of needy parents on government benefits by promoting job preparation, work, and marriage; prevent and reduce the incidence of out-of-wedlock pregnancies and establish annual numerical goals for preventing and reducing the incidence of these pregnancies; and encourage the formation and maintenance of two-parent families.", "There are no requirements on states to spend TANF funds for any particular benefit or activity. Current law does not have a statutory definition of \"core activities\" to guide states to prioritize spending among the wide range of benefits and services for which TANF funds may be used. States also determine what is meant by \"needy\" for activities related to the first two statutory goals of TANF. And states may use federal TANF funds for activities related to reducing out-of-wedlock pregnancies and promoting two-parent families without regard to need.", "In addition to expending federal funds on allowable TANF activities, federal law permits states to use a limited amount of these funds for other programs. A maximum of 30% of the TANF block grant may be used for the following transfers or expenditures:", "transfers to the Child Care and Development Block Grant (CCDBG); transfers to the Social Services Block Grant (SSBG) (the maximum transfer to the SSBG is set at 10% of the basic block grant); and a state match for reverse commuter grants, providing public transportation from inner cities to the suburbs.", "The range of expenditures on activities that states may count toward the maintenance of effort requirement is\u00e2\u0080\u0094like the authority to spend federal funds\u00e2\u0080\u0094quite broad. The expenditures need not be \"in TANF\" itself, but in any program that provides benefits and services to TANF-eligible families in cash assistance, child care assistance, education and job training, administrative costs, or any other activity designed to meet TANF's statutory goals. States may count expenditures made by local governments toward the MOE requirement. Additionally, there is a general rule of federal grants management that permits states to count as a state expenditure third-party (e.g., nongovernmental) in-kind donations, as long as they meet the requirements of providing benefits or services to TANF-eligible families and meet the requirements for the types of activities that states may count toward the MOE requirement.", "Most federal rules about state accountability apply only to expenditures on assistance and families receiving assistance. TANF has few federal rules for the other expenditure categories. Thus, the federal rules under the CCDBG (e.g., the CCDBG health and safety requirements) apply only to federal TANF dollars transferred to CCDBG. These rules do not apply to TANF funds spent on child care but not transferred to CCDBG. The same principle applies to spending in most other expenditure categories where federal programs exist (e.g., child welfare services and early childhood education, such as Head Start). There is also little in the way of accountability for TANF spending other than assistance spending. "], "subsections": []}, {"section_title": "TANF Expenditures", "paragraphs": ["Expenditures on TANF assistance have shrunk as a share of total TANF spending. As shown in Figure 3 , total (federal and state) expenditures on assistance totaled $21.9 billion in FY1995 under AFDC. This accounted for more than 7 out of 10 dollars spent on AFDC and related programs. However, by FY2018 assistance accounted for 1 out of 5 TANF dollars. ", " Figure 4 shows the national total of TANF federal and state dollars by activity in FY2018. Most states shifted spending toward areas such as refundable tax credits and child welfare, pre-kindergarten, and other services. Additionally, for child care and work education and training, the reported expenditures are the total expenditures made from TANF and MOE funds\u00e2\u0080\u0094not necessarily expenditures to support families receiving assistance. ", "There is also considerable variation among the states in the share of spending devoted to each of these major categories of expenditures. Figure 5 shows expenditures by major category and state for FY2018. States are sorted by the share of their total expenditures devoted to assistance. The figure shows a wide range of expenditure patterns among the states. For example, the share of total expenditures devoted to assistance range from a low of 2.5% (Arkansas) to a high of 65.8% (Kentucky). Child care expenditures vary from zero in two states (Tennessee and Texas) to a high of 65.6% (Delaware). ", "TANF's flexible funding permits states to use TANF funds in different and innovative ways. For example, states used TANF funds to develop nurse home visiting programs prior to the creation of the primary federal program (Maternal, Infant, and Early Childhood Home Visiting). States also used the flexibility inherent in TANF to develop subsidized jobs programs and different models of subsidizing jobs, including subsidizing private sector jobs. "], "subsections": []}, {"section_title": "Legislative Proposals on the Use of TANF Funds", "paragraphs": ["The Jobs and Opportunity with Benefits and Services for Success Act, both as reported from the House Ways and Means Committee in the 115 th Congress ( H.R. 5861 ) and its revised version in the 116 th Congress ( H.R. 1753 / S. 802 ), has provisions that would require at least 25% of TANF expenditures from federal funds and expenditures counted as MOE dollars to be spent on \"core\" activities. The bills would provide a statutory definition of \"core\" activities that includes assistance, work activities, work supports, case management, and nonrecurrent short-term benefits. They would prohibit direct spending on child care within TANF by requiring that TANF dollars be transferred to the CCDBG in order for states to use federal TANF funds for child care, and they would restrict TANF spending on child welfare services. They would also phase out the ability of states to count the value of donated, in-kind services toward their MOE spending requirement. Additionally, they would limit TANF funds to providing benefits and services only to families with incomes under 200% of the federal poverty level (FPL). The version in the 116 th Congress would prohibit direct spending on early childhood education with TANF federal dollars. ", "The RISE Out of Poverty Act ( H.R. 7010 , 115 th Congress) would not have directly limited states' use of basic block grant funds, though it had some provisions related to standards for cash benefit amounts that could affect state spending on assistance versus other benefits and services. H.R. 7010 also had separate matching funds for subsidized employment and guaranteed child care. ", "S. 3700 (115 th Congress) would not have restricted the use of TANF funds. Rather, it would have required additional reporting by states on TANF expenditures. It would have required separate reports on the amount of TANF spending on (1) families that received assistance, and (2) those below 200% of the federal poverty level.", " Table 2 summarizes provisions related to the use of TANF funds in legislation proposed in the 115 th and 116 th Congresses. "], "subsections": []}]}, {"section_title": "Work Requirements", "paragraphs": ["A major focus of the debates that led to the enactment of PRWORA was how to move assistance recipients into employment. Under AFDC law, most adult recipients were reported as not working (at least, not working in the formal labor market). In the 1980s and 1990s, both the federal government and the states conducted a series of demonstrations of different employment strategies for AFDC recipients, which concluded that mandatory work participation requirements\u00e2\u0080\u0094in combination with funded employment services\u00e2\u0080\u0094could, on average, increase employment and earnings and reduce assistance expenditures. These demonstrations also found that if such requirements and services were further combined with continued government support to supplement wages, family incomes could, on average, be increased. Mandatory participation requirements meant that if an individual did not comply with work requirements, they would be sanctioned through a reduction in their family's benefit.", "TANF implemented work requirements through a performance system that applies to the state , rather than implementing requirements on individuals; thus, the mandatory work participation requirements that apply to individual recipients are determined by the states rather than federal law. States have considerable flexibility in how they may implement their requirements. "], "subsections": [{"section_title": "Performance Measurement: The Minimum Work Participation Rate", "paragraphs": ["The performance standard states must meet, or risk being penalized, is a minimum work participation rate (WPR). The minimum WPR is a performance standard for the state; it does not apply directly to individual recipients. The TANF statute requires states to have 50% of their families receiving assistance who have a \"work-eligible individual\" meet standards of participation in work or activities\u00e2\u0080\u0094that is, a family member must be in specified activities for a minimum number of hours. There is a separate participation standard of 90% that applies to the two-parent families. A state that does not meet its minimum WPR is at risk of being penalized through a reduction in its block grant.", "The WPR represents the percentage of families with a work-eligible individual who are either working or participating in job preparation activities. Federal rules list those activities, and also require participation for a minimum number of hours per week (which vary by family type). Federal TANF law limits the extent to which states may count pre-employment activities such as job search and readiness or education and training."], "subsections": [{"section_title": "Alternative Ways of Meeting the Minimum WPR", "paragraphs": ["The complex rules of the WPR can be met through several different routes in addition to engaging unemployed recipients in job preparation activities: assistance paid to needy parents who are already working, caseload reduction, and state spending beyond what is required under TANF. ", "States receive credit toward their minimum WPR for \"unsubsidized employment\"\u00e2\u0080\u0094employment of a work-eligible individual in a regular, unsubsidized job. In the early years of TANF, states began to increase aid to families that obtained jobs while they received assistance. States changed the rules of their programs to allow families with an adult who went to work while on TANF to continue receiving assistance at higher earnings levels and for longer periods of time after becoming employed. This policy helped states meet their minimum WPR, as unsubsidized employment counts toward meeting that requirement. Additionally, such \"earnings supplements\" helped raise incomes of working recipients.", "In recent years, states have implemented new, separate programs that provide assistance to low-income working parents. For example, Virginia has a program that provides $50 per month for up to one year to former recipients who work and are no longer eligible for regular TANF assistance. Other states, such as California, provide small (e.g., $10 per month) TANF-funded supplements to working parents who receive Supplemental Nutrition Assistance Program (SNAP) benefits. Because these programs are TANF-funded and are assistance, they too help states meet the minimum WPR requirements. ", "The statutory work participation targets (50% for all families, 90% for two-parent families) can be reduced by a \"caseload reduction credit.\" This credit reduces the participation standard one percentage point for each percentage point decline in the number of families receiving assistance since FY2005. Additionally, under a regulatory provision, a state may get extra credit for caseload reduction if it spends more than is required under the TANF MOE. Because of the caseload reduction credit, the effective standards states face are often less than the 50% and 90% targets, and they vary by state and by year.", "Another practice states have engaged in to help meet their minimum WPR is aiding families in \"solely state-funded programs\"\u00e2\u0080\u0094those funded with state dollars that do not count toward the TANF MOE. If a family is assisted with state monies not counted toward the TANF MOE, the state is not held accountable for that family by TANF's rules. Many states have moved two-parent families out of TANF and into solely state-funded programs, as these families carry a higher minimum work participation rate. In FY2018, 25 jurisdictions reported no two-parent families in their TANF assistance caseload, though all but two of these jurisdictions did aid two-parent families. Some states have excluded other families from TANF, particularly those less likely to be employed. For example, Illinois assists several categories of families in a non-TANF, solely state-funded program: parents with infants, refugees, pregnant women, unemployed work-eligible individuals not assigned to an activity, and individuals in their first month of TANF receipt."], "subsections": []}, {"section_title": "Meeting the Minimum WPR in 2018", "paragraphs": ["In FY2018, all states except Montana met their all-family (50%) minimum WPR standard. In that year,", "18 states met their minimum all-family WPR through caseload reduction alone; and 4 additional states plus Puerto Rico met their minimum all-family WPR through a combination of caseload reduction and credit for state spending in excess of what is required under MOE rules.", "That is, 23 jurisdictions met their mandatory work participation standard without needing to engage a single recipient in work or job preparation activities. Note that these jurisdictions did report that some recipients in some of their families were working or engaged in job preparation activities, although they did not have to be in order to meet federal requirements.", "In terms of participation in work or job preparation activities in FY2018, states relied heavily on \"unsubsidized employment\" (i.e., families that receive TANF assistance while a work-eligible member is employed in a regular, unsubsidized job). As shown in Figure 6 , participation in unsubsidized employment was the most common activity, with a monthly average of 40.8% of TANF work-eligible individuals reporting unsubsidized employment during FY2018. ", "In terms of funded employment services, the highest rate of participation among work-eligible individuals was 6.5% in job search and readiness in FY2018. In that year, 3.0% of work-eligible individuals participated in vocational educational training. Close to half of all work-eligible individuals reported no work or participation in activities during a typical month in FY2018."], "subsections": []}]}, {"section_title": "Sanctions for Refusing to Comply with Work Requirements", "paragraphs": ["Work requirements mean that participation in work or a job activity is mandatory for certain recipients of assistance. Individuals who do not comply with a work requirement risk having their benefits reduced or ended; thus, such financial sanctions operate as an enforcement mechanism.", "TANF requires a state to sanction a family by reducing or ending its benefits for refusing to comply with work requirements; however, under current law TANF does not prescribe the sanction the state must use, and the amount of the sanction is determined by the state. Most states ultimately end benefits to families who do not comply with work requirements, though a lesser sanction is often used for first, and sometimes second, instances of noncompliance. ", "States can define \"good cause\" and other exceptions for families refusing to comply, allowing them to avoid sanctions. Additionally, federal law and regulations provide protections against sanctioning certain recipients. States are prohibited from sanctioning single parents with a child under the age of six if the parent cannot obtain affordable child care. States can also provide a waiver of program rules (including work requirements) for victims of domestic violence. "], "subsections": []}, {"section_title": "TANF Legislation Addressing Work Participation", "paragraphs": ["Data indicating that nearly half of all work-eligible individuals were not engaged in activities in a typical month and states' reliance on unsubsidized employment has raised concerns that states have not focused on moving unemployed recipients into work. The effectiveness of the minimum WPR standard\u00e2\u0080\u0094the primary federal provision to motivate states to try to engage unemployed recipients\u00e2\u0080\u0094has been questioned. As discussed above, the caseload reduction credit has lowered the minimum WPR required of states, sometimes to zero. States have engaged in various practices to help them meet the minimum WPR. Even with relatively low rates of participation in job preparation activities, most states have met their WPR, raising the question as to whether states are \"hitting the target, but missing the point.\" "], "subsections": [{"section_title": "Outcome Measures of Performance", "paragraphs": ["The Jobs and Opportunity with Benefits and Services for Success Act, both as reported from the House Ways and Means Committee in the 115 th Congress ( H.R. 5861 ) and its revised version in the 116 th Congress ( H.R. 1753 / S. 802 ), would replace the minimum WPR with a new performance system based on employment outcomes. H.R. 5861 would have replaced the WPR with employment outcomes based on the measures used in the Workforce Innovation and Opportunity Act (WIOA) programs, measuring employment rates and earning levels among those who exit TANF assistance. Each state would have been required to negotiate performance levels with HHS. States that failed to meet those levels would have been at risk of being penalized. The proposal would also have required the development of a model to adjust the outcomes statistically for differences across states in the characteristics of their caseloads and economic conditions.", "H.R. 1753 / S. 802 introduced in the 116 th Congress would also end the minimum WPR, but replace it with a different outcome measure: the number of people who have left TANF assistance and are employed after six months divided by the total TANF caseload. Each state would negotiate a performance level with HHS on this measure, and risk being penalized through a reduction in its block grant if it fell short of that level. States would also be required to collect and report data on the WIOA measures that were contained in the 115 th Congress version of the bill, but these would be for informational purposes only.", "The other bills discussed in this report would have retained the WPR. However, S. 3700 (115 th Congress) would have required the collection of WIOA-like performance measure data and a study by HHS of the impact of moving from the WPR to a performance system based on outcome measures.", "Examining outcomes is often intuitively appealing. Outcomes such as job entry or leaving assistance with a job seem to measure more aptly whether TANF is achieving its goal of ending dependence of needy parents on government benefits through work. However, outcome measures can have their own unintended consequences in terms of influencing the design of state programs. The most commonly cited unintended consequence is \"cream skimming,\" improving performance outcomes through serving only those most likely to succeed and leaving behind the hardest-to-serve. The statistical adjustment models contained in these proposals attempt to mitigate the incentive to \"cream skim,\" but such models might not capture all relevant differences in caseload characteristics.", "In addition, it can be argued that outcomes do not directly measure the effectiveness of a program. Some families would leave the cash assistance rolls even without the intervention of a program. The effectiveness of a program can also be measured by whether the program made a difference: that is, did it result in more or speedier exits from the program and improve a participant's employment and earnings? That can only be measured by an evaluation of the impact of a program. There is research indicating that long-term impacts of labor force programs are not necessarily related to short-term outcome measures."], "subsections": []}, {"section_title": "Universal Engagement", "paragraphs": ["Current law requires that each adult (or minor who is not in high school) be assessed in terms of their work readiness and skills. States have the option to develop an Individual Responsibility Plan (IRP) on the basis of that assessment, in consultation with the individual, within 90 days of the recipient becoming eligible for assistance. As of July 2017, 37 states and the District of Columbia had IRP plans for TANF assistance recipients. Under current law, the contents of the plan must include an assessment of the skills, prior work experience, and employability of the recipient. The IRP is also required to describe the services and supports that the state will provide so that the individual will be able to obtain and keep employment in the private sector.", "In 2002, the George W. Bush Administration proposed, as part of its TANF reauthorization, a \"universal engagement\" requirement. The legislation written to implement the Administration's reauthorization proposal would have required states to create a written individualized plan for each family. This universal engagement proposal passed the House three times between 2002 and 2005 and was included in bills reported from the Senate Finance Committee during that period, but it was never enacted.", "H.R. 5861 , the version of the Jobs and Opportunity with Benefits and Services for Success Act in the 115 th Congress, revived the notion of requiring a plan for each work-eligible individual. The plan, required within 60 days of an individual becoming eligible for benefits, would have incorporated a requirement that the individual participate in the same activities that currently count toward the WPR for the minimum number of hours that currently apply in the rules for WPR participation. The minimum hours vary by family type (e.g., 20 hours per week for single parents, 30 for other family types). States would have had the ability to determine the sanction for noncompliance. ", "H.R. 1753 / S. 802 , the revised version of this bill in the 116 th Congress, directs states to require that all work-eligible individuals who have been assessed and have an individualized plan, except single parents caring for infants, engage in the listed activities for a minimum number of hours based on the individuals' family types. Further, it specifies a formula (hours of participation divided by required hours) for sanctioning families with individuals who refuse to comply with work requirements, instead of allowing states to determine the sanction. States with families who fail to meet these requirements would be at risk of being penalized through a reduction in their block grant.", "The requirement in H.R. 1753 / S. 802 that all work-eligible individuals participate or be subject to sanction may raise a number of issues:", "As discussed, current law and regulations afford protections against sanctioning single parents with children under six who cannot obtain affordable child care, and victims of domestic violence. It is unclear how these protections would interact with a new \"universal engagement\" proposal. The emphasis on an individual participation requirement\u00e2\u0080\u0094rather than a participation rate\u00e2\u0080\u0094may raise questions about whether other groups should be exempted or afforded special treatment. For example, should ill, disabled, aged parent, or caretaker recipients be exempt from requirements? Further, individuals with disabilities must be accommodated in the workplace, and reduced hours is one of the potential accommodations. Thus, if Congress were to consider requiring disabled individuals to work, it might consider special dispensations for them that included a reduced-hour requirement. Research suggests that mandatory participation requirements result in fairly large amounts of noncompliance. The bill specifies how that noncompliance would be dealt with\u00e2\u0080\u0094a proportional reduction in benefits\u00e2\u0080\u0094but evidence is lacking on the impacts of that specific sanction versus other forms of sanctioning. The pre-1996 research, while finding that sanctioning was important in enforcing mandatory requirements, which led to higher employment and lower assistance, did not produce evidence on whether any specific form of sanctioning was more effective than others.", "H.R. 7010 (115 th Congress) also included \"universal engagement\" provisions, but their general intent was to require that each family have a plan rather than to enforce work participation requirements. This bill also would have required states, before sanctioning noncomplying recipients, to notify the family of the noncompliance; provide the noncomplying individual with an opportunity for a face-to-face meeting; and consider whether the noncompliance resulted from mental or physical barriers to employment, limited English proficiency, or failure to receive or access services in the family's plan.", " Table 3 summarizes the work participation provisions of the selected TANF legislation in the 115 th and 116 th Congresses."], "subsections": []}]}]}, {"section_title": "The TANF Caseload Decline and Child Poverty", "paragraphs": ["The debate that led to the creation of TANF in 1996 focused on assistance to needy families with children\u00e2\u0080\u0094primarily those with one parent, usually a mother without employment in the formal labor market. As discussed earlier in this report, three provisions of law largely shaped the current TANF landscape: ", "limited funding for TANF; TANF's broad authority for states to use funds on a wide range of activities, which has allowed states to use TANF funds for activities unrelated to assistance and the population receiving assistance; and the mandatory work participation rates, which provide states incentives to reduce the cash assistance caseload as well as expand aid to families with earnings."], "subsections": [{"section_title": "Caseload Decline: Reduction in Need or Fewer Families in Need Receiving Benefits?", "paragraphs": [" Figure 7 shows estimates that fewer eligible people actually received cash assistance for selected years over the period covered. The selected years include 1995, the year before the enactment of PRWORA; 2000 and 2007, which both represent peaks in the economic cycle; 2010, the year following the end of the most recent recession; and 2016, the most recent year for which data are available. The figure shows that the population eligible for assistance has varied with the economic cycle. However, except for a brief uptick in the caseload during the most recent recession, the number of people receiving assistance has generally declined. ", "The TANF caseload decline resulted from both a decline in the population eligible for assistance (the population in need) and a decline in the share of the eligible population actually receiving benefits; however, much of it was the result of the decline in the share of the eligible population receiving benefits. In 1995, 81.6% of estimated AFDC-eligible individuals received benefits. In 2016, 26.6% of people estimated to be eligible for TANF cash assistance received benefits. "], "subsections": []}, {"section_title": "Child Poverty and Its Alleviation", "paragraphs": ["How has the decline in the share of eligible individuals affected the child poverty rate? Figure 8 compares the national child poverty rate using income that does not include assistance and income with assistance (AFDC in 1995, TANF thereafter) included. In the selected years the figure covers, both AFDC and TANF reduced the child poverty rate by less than 1 percentage point. In 1995, AFDC income reduced the observed poverty rate by 0.9 percentage points. In 2016, TANF reduced the observed poverty rate by 0.2 percentage points.", "Though AFDC did relatively little to change the child poverty rate, it did reduce the severity of poverty for children. Figure 9 compares the child deep poverty rate (family incomes under 50% of the poverty threshold) using income that does not include assistance and income with assistance (AFDC in 1995, TANF thereafter) included. AFDC income reduced the deep child poverty rate from 11.2% to 6.6% in 1995. In contrast, TANF assistance decreased the child deep poverty rate from 7.7% to 7.1% in 2016.", "Another way to examine how the decline in the share of individuals eligible for TANF has diminished the role assistance has played in alleviating child poverty is to examine the pre- and post-assistance aggregate poverty gap. The poverty gap for a poor family is the difference between its poverty threshold and total money income. For example, if a family's poverty threshold is $25,000 and it has money income equal to $20,000, its poverty gap is $5,000. If another family with the same poverty threshold has money income equal to $10,000, its poverty gap is $15,000. The poverty gap for a nonpoor family is, by definition, $0. The aggregate poverty gap is the poverty gap for each poor family summed, and it therefore represents a measure of the depth of poverty (in dollars) for every family in the country combined. If the aggregate gap were somehow filled (i.e., if the family in the first example earned or received an extra $5,000, the family in the second earned or received an extra $15,000, and this same pattern repeated for all families in poverty) poverty would be eliminated.", " Table 4 shows the pre- and post-assistance poverty gaps for families with children for selected years from 1995 to 2016 in constant (inflation-adjusted) 2016 dollars. In 1995, AFDC reduced the poverty gap by over $24 billion (more than 27% of the pre-assistance poverty gap of approximately $90 billion). After 1996, the poverty gap varied with the economic cycle. However, the share of the gap that was reduced by TANF assistance declined throughout the period in both dollar and percentage terms. In 2016, TANF cash assistance reduced the poverty gap by approximately $4 billion, or 5.7%."], "subsections": []}, {"section_title": "TANF Legislation Addressing the Caseload Decline and Child\u00c2 Poverty", "paragraphs": ["The drop in the share of TANF-eligible individuals who receive benefits may raise the question of whether a goal of TANF should be caseload reduction per se, regardless of whether or not the size of the population in need is growing. Under TANF, the primary incentive for states to maintain or reduce the number of families receiving assistance is that states are provided a limited amount of TANF funds. States bear the financial risk of the costs of an increase in the number of families receiving assistance. Such an increase would mean a state would have fewer TANF funds to spend on activities other than assistance. The state might have to use more non-TANF dollars if it wanted to make up the shortfall. On the other hand, fewer families receiving assistance frees up funds to use for such activities. All the bills discussed in this report would maintain a limitation on TANF funds distributed to states to finance assistance, though the RISE Out of Poverty Act ( H.R. 7010 , 115 th Congress) would increase those funds for inflation and population growth.", "All the bills discussed in this report would either eliminate or limit the caseload reduction credit against the TANF work participation standards. This would eliminate or limit one incentive for states to reduce their assistance caseload. However, states would still have the incentive to reduce their caseload because of limited funding. ", "The bills discussed in this report that would require a minimum percentage of TANF spending be on \"core\" activities do not directly address the question of whether the caseload decline has left a population unserved. They would constrain states in what they spend TANF dollars on, not who benefits from this spending. States would be able to meet the requirement by spending a sufficient amount on work activities, but those dollars could serve disadvantaged parents who do not receive assistance. ", "H.R. 7010 would have required states to have procedures in place, such as pre-sanction reviews, and prohibit full-family sanctions for failure to meet program requirements. These provisions could have affected the share of the TANF-eligible population that receives assistance.", "All of the bills discussed in this report except S. 3700 (115 th Congress) would make child poverty reduction a goal of the TANF block grant. H.R. 7010 would have also required states to determine family budgets sufficient to meet needs and required them to ensure that the amount of assistance paid by the state meets those needs. This is not a requirement under current law. Under AFDC, states were required to determine a dollar standard of \"need,\" but were not required to pay assistance in the amount of \"need.\" ", " Table 5 summarizes provisions related to child poverty reduction and incentives for caseload reduction in selected TANF legislation proposed in the 115 th and 116 th Congress."], "subsections": []}]}, {"section_title": "Conclusion", "paragraphs": ["The debates that led to the creation of TANF focused on the terms and conditions under which assistance for needy families with children had been provided. However, Congress created TANF as a broad-purpose block grant that funds a wide range of benefits and services related to childhood economic disadvantage. Since the mid-1990s, states have shifted spending from assistance to those other TANF-funded benefits and services. Spending on assistance fell as the number of families and individuals receiving assistance fell. Much of the decline in the assistance caseload resulted from a drop in the share of eligible people receiving benefits. A substantial number of children and their parents were eligible for TANF assistance but did not receive it; in 2016, an estimated total of 12.4 million individuals were eligible but did not receive TANF assistance, compared to 4.5 million individuals who received benefits at some point in that year. The result was a diminished impact of assistance on alleviating child poverty. ", "Other means-tested programs have grown in terms of spending and recipients (e.g., the Earned Income Tax Credit (EITC), the child credit, the Supplemental Nutrition Assistance Program (SNAP), and Medicaid). However, these programs do not provide ongoing cash assistance to families to meet basic needs. SNAP provides food assistance, Medicaid provides medical assistance, and the refundable tax credits\u00e2\u0080\u0094the EITC and the refundable portion of the child credit\u00e2\u0080\u0094provide families with income only once a year at tax refund time. ", "If policymakers conclude there is an unmet need for ongoing cash assistance to families to meet basic needs, they might consider changes to TANF or consider other alternatives outside of TANF. A common feature of most of the bills discussed in this report is an attempt to focus a greater share of TANF dollars on activities related to assistance and work, and revamp the way state programs are assessed on their performance in engaging assistance recipients in work or job preparation activities. The elimination of the caseload reduction credit would remove one of the incentives to reduce the number of families receiving assistance. ", "However, there are proposals that would go beyond changes to TANF to address issues related to economic security for families with children. In 2019, a National Academy of Sciences panel on child poverty proposed converting the child tax credit, with a refundable portion that is currently paid once a year through tax refunds, into a monthly, almost universal child allowance. The NAS proposal would provide the child allowance to families both with and without earnings. The NAS stated:", "The principal rationale for a child allowance paid on a monthly basis is that it would provide a steady, predictable source of income to counteract the irregularity and unpredictability of market income\u00e2\u0080\u00a6. Because the child allowance would be available to both low-income and middle-class families, it would carry little stigma and would not be subject to the varying rules and administrative discretion of a means-tested program, thereby promoting social inclusion.", "Other proposals would seek to guarantee jobs or subsidize jobs. For example, the ELEVATE Act ( H.R. 556 / S. 136 ), introduced by Representative Danny Davis and Senator Wyden, would provide matching grants to states (100% federally funded grants during recessions) to subsidize wage paying jobs for individuals. ", "These proposals echo some of the proposals that were made during past debates. Guaranteed incomes\u00e2\u0080\u0094a child allowance is, in effect, a guaranteed income for families with children\u00e2\u0080\u0094and guaranteed or expanded jobs programs were both proposed in the past. Should Congress again consider such proposals, they may raise issues that have been recurring themes in the debates on policies for low-income individuals, such as whether benefits should be universal or targeted; whether intervention should be in the form of income, services, or employment; whether there should be behavioral conditions (e.g., a requirement to work) attached to aid; and whether policies should be determined nationally or at the state and local levels."], "subsections": []}]}}
{"id": "R40638", "title": "Federal Grants to State and Local Governments: A Historical Perspective on Contemporary Issues", "released_date": "2019-05-22T00:00:00", "summary": ["The federal government is expected to provide state and local governments about $750 billion in federal grants in FY2019, funding a wide range of public policies, such as health care, transportation, income security, education, job training, social services, community development, and environmental protection. Federal grants account for about one-third of total state government funding, and more than half of state government funding for health care and public assistance.", "Congressional interest in federal grants to state and local governments has always been high given the central role Congress has in determining the scope and nature of the federal grant-in-aid system, the amount of funding involved, and disagreements over the appropriate role of the federal government in domestic policy generally and in its relationship with state and local governments.", "Federalism scholars agree that congressional decisions concerning the scope and nature of the federal grants-in-aid system are influenced by both internal and external factors. Internal factors include congressional party leadership and congressional procedures; the decentralized nature of the committee system; the backgrounds, personalities, and ideological preferences of individual Members; and the customs and traditions (norms) that govern congressional behavior. Major external factors include input provided by voter constituencies, organized interest groups, the President, and executive branch officials. Although not directly involved in the legislative process, the Supreme Court, through its rulings on federalism issues, also influences congressional decisions concerning the federal grants-in-aid system.", "Overarching all of these factors is the evolving nature of cultural norms and expectations concerning government's role in American society. Over time, the American public has become increasingly accepting of government activism in domestic affairs generally, and of federal government intervention in particular. Federalism scholars attribute this increased acceptance of, and sometimes demand for, government action as a reaction to the industrialization and urbanization of American society; technological innovations in communications, which have raised awareness of societal problems; and exponential growth in economic interdependencies brought about by an increasingly global economy.", "This report provides a historical synopsis of the evolving nature of the federal grants-in-aid system, focusing on the role Congress has played in defining the system's scope and nature. It begins with an overview of the contemporary federal grants-in-aid system and then examines its evolution over time, focusing on the internal and external factors that have influenced congressional decisions concerning the system's development. It concludes with an assessment of the scope and nature of the contemporary federal grants-in-aid system and raises several issues for congressional consideration, including possible ways to augment congressional capacity to provide effective oversight of this system."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "The Congressional Role", "paragraphs": ["Over the years, the federal intergovernmental system of governance has been characterized by many scholars as becoming increasingly centralized and coercive, with the federal government using federal grants, federal mandates, and federal preemption of state authority to expand its influence in many policy areas previously viewed as being the traditional responsibility of state and local governments. In FY2019, the federal government is expected to provide state and local governments about $750 billion in federal grants encompassing a wide range of public policy areas, such as health care, transp ortation, income security, education, job training, social services, community development, and environmental protection. Federal grants account for just under one-third of total state government funding, and more than half of state government funding for health care and public assistance.", "Congress has a central role in determining the scope and nature of federal grant programs. In its legislative capacity, Congress first determines what it wants to accomplish and then decides whether a grant-in-aid program is the best means to achieve it. Congress then selects which of the six grant mechanisms to use (project categorical grant, formula categorical grant, formula-project categorical grant, open-end reimbursement categorical grant, block grant, or general revenue sharing), and crafts legislation to accomplish its purpose, incorporating the chosen grant instrument. As with all legislation generally, Congress oversees the grant's implementation to ensure that the federal administrating agency is held accountable for making certain that congressional expectations concerning program performance are met.", "Federalism scholars agree that congressional decisions concerning the scope and nature of the federal grants-in-aid system are influenced by both internal and external factors. Internal factors include congressional party leadership and congressional procedures; the decentralized nature of the committee system; the backgrounds, personalities, and ideological preferences of individual Members (especially those of party leaders and committee and subcommittee chairs and ranking minority Members); and the customs and traditions (norms) that govern congressional behavior. Major external factors include input provided by voter constituencies, organized interest groups (especially the National Governors Association, the National League of Cities, U.S. Conference of Mayors, and the National Association of Counties), the President, and executive branch officials. Although not directly involved in the legislative process, the Supreme Court, through its rulings on federalism issues, also influences congressional decisions concerning federal grant-in-aid programs.", "Overarching all of these factors is the evolving nature of cultural norms and expectations concerning government's role in American society. Over time, although the American public has become increasingly skeptical of government performance, they have also become increasingly accepting of government activism in domestic affairs generally, and of federal government activism in particular. Federalism scholars attribute this increased acceptance of, and sometimes demand for, government action as a reaction to the industrialization and urbanization of American society; technological innovations in communications, which have raised awareness of societal problems; and exponential growth in economic interdependencies brought about by an increasingly global economy.", "This report provides a historical synopsis of the evolving nature of the federal grants-in-aid system, focusing on the role Congress has played in defining the system's scope and nature. It begins with an overview of the contemporary federal grants-in-aid system and then examines its evolution over time, focusing on the internal and external factors that have influenced congressional decisions concerning the system's development. It concludes with an assessment of the scope and nature of the contemporary federal grants-in-aid system and raises several issues for congressional consideration, including possible ways to augment congressional capacity to provide effective oversight of this system."], "subsections": []}, {"section_title": "Federal Grants to State and Local Governments", "paragraphs": ["Different federal departments and agencies, including the U.S. Census Bureau, the Government Accountability Office (GAO), and the U.S. Office of Management and Budget (OMB), use different definitions to determine what counts as a federal grant-in-aid program. However, there is agreement on the general characteristics associated with each grant type.", "The three general types of federal grants to state and local governments are categorical grants, block grants, and general revenue sharing (see Table 1 ). Categorical grants can be used only for a specifically aided program and usually are limited to narrowly defined activities. Block grants can be used only for a specifically aided set of programs and usually are not limited to narrowly defined activities. General revenue sharing can be used for any purpose not expressly prohibited by federal or state law and is not limited to narrowly defined activities.", "The four types of categorical grants are project categorical grants, formula categorical grants, formula-project categorical grants, and open-end reimbursement categorical grants. Project categorical grants are awarded on a competitive basis through an application process specified by the federal agency making the grant. Formula categorical grants are allocated among recipients according to factors specified within enabling legislation or administrative regulations (e.g., population, median household income, per capita income, poverty, and number of miles driven). Formula-project categorical grants use a mixture of fund allocation means, typically involving the use of a formula specified within enabling legislation or administrative regulations to allocate available funds among the states, followed by an application process specified by each recipient state to allocate available funds on a competitive basis among local governments or other eligible applicants. Open-end reimbursement categorical grants, often regarded as the equivalent of formula categorical grants, provide a reimbursement of a specified proportion of recipient program costs, eliminating competition among recipients as well as the need for an allocation formula."], "subsections": [{"section_title": "A Continuum of Federal Grant Administrative Conditions", "paragraphs": ["Of the six grant types, project categorical grants typically impose the most restraint on recipients (see Table 1 ). Federal administrators have a high degree of control over who receives project categorical grants (recipients must apply to the appropriate federal agency for funding and compete against other potential recipients who also meet the program's specified eligibility criteria); recipients have relatively little discretion concerning aided activities (funds must be used for narrowly specified purposes); and there is a relatively high degree of federal administrative conditions attached to the grant, typically involving the imposition of federal standards for planning, project selection, fiscal management, administrative organization, and performance.", "General revenue sharing imposes the least restraint on recipients. Federal administrators have a low degree of discretion over who receives general revenue sharing (funding is allocated automatically to recipients by a formula or formulas specified in legislation); recipients have broad discretion concerning aided activities; and there is a relatively low degree of federal administrative conditions attached to the grant, typically involving periodic reporting criteria and the application of standard government accounting procedures.", "Block grants are at the midpoint in the continuum of recipient discretion. Federal administrators have a low degree of discretion over who receives block grants (after setting aside funding for administration and other specified activities, the remaining funds are typically allocated automatically to recipients by a formula or formulas specified in legislation); recipients have some discretion concerning aided activities (typically, funds can be used for a specified range of activities within a single functional area); and there is a moderate degree of federal administrative conditions attached to the grant, typically involving more than periodic reporting criteria and the application of standard government accounting procedures, but with fewer conditions attached to the grant than project categorical grants."], "subsections": []}]}, {"section_title": "Outlays for Federal Grants to State and Local Governments", "paragraphs": ["As indicated in Table 2 , outlays for federal grants to state and local governments have generally increased over the years, with a relatively rapid increase from FY2008 through FY2010 due primarily to the enactment of P.L. 111-5 , the American Recovery and Reinvestment Act of 2009 (ARRA). ARRA provided state and local governments $274.7 billion in grants, contracts, and loans combined. State and local governments received $52.9 billion in ARRA grants, contracts, and loans in FY2009, $111.9 billion in FY2010, $68.8 billion in FY2011, $25.6 billion in FY2012, 11.8 billion in FY2013, and $1.6 billion in FY2014 to assist their recovery from the \"Great Recession\" (December 2007-June 2009). ", "As expected, after reaching $608.4 billion in FY2010, outlays for federal grants to state and local governments declined somewhat in FY2011 as ARRA funding began to unwind, and then declined further to $544.6 billion in FY2012 and to $546.2 billion in FY2013 as most of ARRA's funding expired. Outlays for federal grants to state and local governments have increased since then, primarily due to increased outlays for Medicaid. ", "As indicated in Table 2 and Figure 1 , in FY2019 health care is anticipated to account for more than half of total outlays for federal grants to state and local governments (an estimated $453.9 billion in FY2019, or 60.6% of the total), followed by income security ($114.2 billion, or 15.2%), education, training, employment, and social services ($67.5 billion, or 9.0%), transportation ($67.2 billion, or 9.0%), community and regional development ($21.9 billion, or 2.9%), and all other ($24.9 billion, or 3.3%). ", "Medicaid, with $418.7 billion in expected federal outlays in FY2019, has, by far, the largest budget of any federal grant-in-aid program. Ten other federal grants to state and local governments are expected to have federal outlays in excess of $10 billion in FY2019: Federal-Aid Highways ($43.9 billion), Child Nutrition ($23.9 billion), Tenant Based Rental Assistance\u2014Section 8 vouchers ($22.3 billion), the Children's Health Insurance Fund ($18.4 billion), Accelerating Achievement and Ensuring Equity (Education for the Disadvantaged\u2014$17.4 billion), Temporary Assistance for Needy Families ($16.5 billion), Special Education ($13.2 billion), State Children and Families Services Programs ($10.9 billion), Urban Mass Transportation Grants ($10.3 billion), and the Disaster Relief Fund ($10.2 billion).", " Table 3 provides data on outlays for federal grants to state and local governments in nominal and constant (inflation-adjusted) dollars, as a percentage of total federal outlays and as a percentage of national gross domestic product (GDP) for selected fiscal years since FY1960. It also indicates the percentage of these outlays that are payments for individuals, as opposed to payments for capital improvements and government operations.", "As indicated in Table 3 , total outlays for federal grants to state and local governments have generally increased since the 1960s. However, the magnitude of those increases has varied over the years. For example, outlays for federal grants to state and local governments increased, in nominal dollars, 187.3% during the 1960s, 246.4% during the 1970s, 33.4% during the 1980s, 98.0% during the 1990s, and 98.6% during the first decade of the 2000s. ", "Outlay growth for federal grants to state and local governments has, in most years, exceeded inflation. However, as indicated in Table 3 , those outlays, expressed in constant (FY2012) dollars, did not keep pace with inflation during the early 1980s and during the early 2010s.", "Federalism scholars have noted that since the 1980s, the focus of federal grants to state and local governments has shifted from providing assistance to places (e.g., to build public highways, support public education, criminal justice systems, economic development endeavors, and government administration) to people (e.g., providing health care benefits, social welfare income, housing assistance, and social services). Much of this shift is attributed to Medicaid, which has experienced relatively large outlay growth over the past several decades. As shown in Table 3 , during the 1960s and 1970s about one-third of total outlays for federal grants to state and local governments were for individuals, compared with more than 75% in FY2018."], "subsections": []}, {"section_title": "Number of Federal Grants to State and Local Governments", "paragraphs": ["In the past, the now-defunct U.S. Advisory Commission on Intergovernmental Relations (ACIR) and OMB used information contained in the Catalog of Federal Domestic Assistance (CFDA) to count the number of federal grants to state and local governments. The CFDA \"is a government-wide compendium of Federal programs, projects, services, and activities that provide assistance or benefits to the American public.\" It lists 15 categories of federal grants: formula grants (including formula categorical grants, formula-project categorical grants, and block grants); project grants; direct payments for specified uses to individuals and private firms; direct payments with unrestricted use to beneficiaries who meet federal eligibility requirements; direct loans; guaranteed/insured loans; insurance; sale, exchange, or donation of property and goods; use of property, facilities, and equipment; provision of specialized services; advisory services and counseling; dissemination of technical information; training; investigation of complaints; and federal employment. It lists all authorized federal grant programs, including grants that have not received an appropriation. Because the CFDA focuses on the needs of applicants, if a program uses a separate application or other delivery mechanism, the CFDA considers it a separate program. This complicates efforts to count federal grants to state and local governments. ", "ACIR periodically published counts of funded federal grants to state and local governments during the 1960s and then for Fiscal Years 1975, 1978, 1981, 1984, 1987, 1989, 1991, 1993, and 1995. OMB provided counts of funded grants to state and local governments for FY1980-FY2003. Because they used a different methodology to determine which grant programs to include in their count, their results differed. OMB consistently identified fewer federal grants to state and local governments than ACIR. For example, in FY1995, OMB identified 608 funded federal grants to state and local governments compared to ACIR's count of 633. No authoritative count of funded federal grants to state and local governments is known to have been issued in recent years.", "ACIR included in its counts all direct cash grants to state or local governmental units, other public bodies established under state or local law, or their designee; payments for grants-in-kind, such as purchases of commodities distributed to state or local governmental institutions; payments to nongovernmental entities when such payments result in cash or in-kind services or products that are passed on to state or local governments; payments to state and local governments for research and development that is an integral part of their provision of services; and payments to regional commissions and organizations that are redistributed at the state or local level to provide public services.", "OMB counted only grants for traditional governmental operations, as defined in OMB Circular A-11. The definition covered only grants that \"support State or local programs of government operations or provision of services to the public.\" It excluded federal grants that went directly to individuals, fellowships, most grants to nongovernmental entities, and technical research grants.", "A search of the CFDA's 2018 print edition and electronic version indicated that state governments, local governments, U.S. territories, and federally recognized tribal governments are eligible to apply for 1,616 federal grants (defined as authorized project grants, formula grants, cooperative agreements, direct payments for specified uses, and direct payments for unrestricted uses). Of these grants, 141 were not currently funded, 160 were research or fellowship programs that were not targeted solely at either public institutions of higher education or other public agencies, and 41 had broad eligibility extending beyond state and local governments. Removing them from the list left 1,274 funded federal grants to state and local governments (see Table 4 ).", "Because there is no consensus on the methodology used to count federal grants to state and local governments, the 1,274 count of federal grants to state and local governments listed in Table 4 should be viewed as illustrative, as opposed to definitive, of the current number of federal grants to state and local governments.", "As the data in the table suggest, the number of federal grants to state and local governments increased slowly from 1902 to 1930. Then, partly in reaction to the Great Depression, Congress doubled the number of federal grants to state and local governments during the 1930s, and continued to increase the number of federal grants to state and local governments during the 1940s and 1950s. ", "During the mid-1960s, Congress increased the number of federal grants to state and local governments exponentially, primarily in response to national social movements concerning poverty and civil rights. Nine federal grants to state and local governments were added in 1961, 17 in 1962, 20 in 1963, 40 in 1964, 109 in 1965, 53 in 1966, 3 in 1967, and 4 in 1968. ", "Congress continued to increase the number of federal grants to state and local governments during the 1970s, but at a relatively slow pace as it addressed budgetary constraints presented by \"guns versus butter\" issues associated with the Vietnam conflict. Then, at the urging of President Ronald Reagan in 1981, Congress approved the largest reduction in the number of federal grants to state and local governments in American history by creating 9 new block grants which consolidated 77 categorical grants and revised two earlier block grants. The Reagan Administration also eliminated funding for 62 categorical grants in 1981, mainly through authority provided under P.L. 97-35 , the Omnibus Budget Reconciliation Act of 1981. ", "The number of federal grants to state and local governments increased relatively slowly during the remainder of the 1980s, as Congress faced budgetary constraints presented by demographic changes in American society that led to escalating costs for several federal entitlement programs, especially for Social Security, Medicare and Medicaid, and by the Reagan Administration's general opposition to the expansion of the federal grants-in-aid system.", "As the data in Table 4 indicate, the number of federal grants to state and local governments continued to increase during the 1990s, and has continued to do so, but more slowly in recent years."], "subsections": []}, {"section_title": "Land Grants and \"Dual Federalism\": 1776-1860", "paragraphs": ["The relative influence of internal versus external factors on congressional decisions affecting the federal grants-in-aid system has varied, both over time and in each specific policy area. Prior to the Civil War, external factors, especially cultural norms and expectations concerning government's role in American society, restricted congressional options concerning enactment of federal grant-in-aid programs for state and local governments.", "During this time period, America was primarily a rural nation of farmers. Travel conditions were, compared with today's standards, primitive. Many Americans rarely left their home state, and many others never set foot in another state. Government as we know it today, with regulations and spending programs affecting many aspects of American life, did not exist. Although ratification of the Articles of Confederation and Perpetual Union on March 1, 1781, formally established the United States of America, personal allegiance was still directed more toward the individual's home state than to the nation. It was an era of what federalism scholars have called \"dual federalism,\" where states were expected to be the primary instrument of governance in domestic affairs.", "However, even before the Constitution's ratification, the federal government found ways to provide state and local governments with assistance to encourage them to pursue national policy objectives. For example, under the Articles of Confederation and Perpetual Union, Congress did not have the power to lay and collect taxes and relied heavily on state donations to fund the government. This lack of revenue, and expenses related to national defense, limited congressional spending options in domestic affairs. The Congress of the Confederation addressed that issue by adopting the Land Ordinance of 1785. The Ordinance generated revenue for the government by authorizing the sale of land acquired from Great Britain at the conclusion of the American Revolutionary War. The Ordinance also required every new township incorporated in those lands, called the Ohio Country, to be subdivided into 36 lots (or sections), each 1 mile square. Lots 8, 11, 26, and 29 were reserved for the United States. The new townships were required to use Lot 16 \"for the maintenance of public schools, within the said township. \" Some schools are still located in lot 16 of their respective townships, although many of the school lots were sold to raise money for public education. These land grants for public education were reauthorized by Congress in the Northwest Ordinance of 1787. Congress subsequently adopted similar legislation for all states admitted to the union from 1802 to 1910, with exceptions for Texas, which retained all of its public land, and Maine and West Virginia, which were formed from other states. From 1802 to 1848, one lot in each township was to be used for education, from 1848 to 1890 two lots, and from 1894 to 1910, with one exception, four lots.", "When the Framers met in Philadelphia in 1787 to rework the Articles of Confederation and Perpetual Union, the national economy was in recession, state governments were saddled with large debts left over from the Revolutionary War, the continental dollar was unstable and destined to be a national joke (\"not worth a continental\"), the navy could not protect international shipping, and the army proved unable to protect its own arsenal during Shay's rebellion in 1786. To address these issues, Congress was provided 17 specific powers in Article 1, Section 8 of the U.S. Constitution, ratified in 1789, including the power to coin money, establish post offices, regulate copyright laws, declare war, regulate the Armed Forces, borrow money, and, importantly, lay and collect taxes.", "The power to lay and collect taxes provided Congress the means to expand the federal government's role in domestic affairs. Moreover, the Supreme Court issued several rulings under Chief Justice John Marshall concerning congressional authority to regulate interstate commerce that effectively cleared the way for congressional activism in domestic policy. However, the prevailing view in Congress at this time was that any power not explicitly provided to Congress in the Constitution was excluded purposively, suggesting that in the absence of specific, supporting constitutional language the exercise of governmental police powers (the regulation of private interests for the protection of public safety, health, and morals; the prevention of fraud and oppression; and the promotion of the general welfare) was either meant to be a state or local government responsibility, or outside the scope of governmental authority altogether.", "Nevertheless, during the 1800s there were congressional efforts, primarily from representatives from western states, to adopt legislation to provide federal cash assistance for various types of internal improvement projects to encourage western migration and promote interstate commerce. Most of these efforts failed, primarily due to sectional divisions within Congress which, at that time, made it difficult to build coalitions large enough to adopt programs that targeted most of their assistance to western states. Some opposition came from Members of Congress who viewed reducing the national debt from the American Revolutionary War as a higher priority. Other Members opposed federal interventions as a matter of political philosophy. They viewed the provision of cash assistance for internal improvements, other than for post roads, which were specifically mentioned in the Constitution as a federal responsibility, a violation of states' rights, as articulated in the Tenth Amendment: \"The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.\"", "Given the prevailing views concerning the limited nature of the federal government's role in domestic affairs, Congress typically authorized federal land grants to states instead of authorizing direct cash assistance to states for internal improvements. For example, in 1823 Ohio received a federal land grant of 60,000 acres along the Maumee Road to raise revenue to improve that road. In 1827, Ohio received another federal land grant of 31,596 acres to raise revenue for the Columbus and Sandusky Turnpike.", "In 1841, nine states (Ohio, Indiana, Illinois, Alabama, Missouri, Mississippi, Louisiana, Arkansas, and Michigan) \u0336 and, with three exceptions, all subsequent newly admitted states \u0336 were designated land grant states and guaranteed at least 500,000 acres of federal land to be auctioned to support transportation projects, including roads, railroads, bridges, canals, and improvement of water courses, that expedited the transportation of United States mail, military personnel, and military munitions. By 1900, over 3.2 million acres of federal land were donated to these states to support wagon road construction. Congress also authorized the donation of another 4.5 million acres of federal land to Illinois, Indiana, Michigan, Ohio, and Wisconsin to raise revenue for canal construction and 2.225 million acres to Alabama, Iowa, and Wisconsin to improve river navigation. In addition, states were provided 37.8 million acres for railroad improvements and 64 million acres for flood control. States were provided wide latitude in project selection, and federal oversight and administrative regulations were minimal.", "Although land grants were prevalent throughout the 1800s, given prevailing views concerning states' rights, land grants, as well as cash grants, were subject to opposition on constitutional grounds. For example, in 1854, Congress adopted legislation authorizing the donation of 10 million acres of federal land to states to be sold to provide for the indigent insane. President Franklin Pierce vetoed the legislation, claiming that", "I cannot find any authority in the Constitution making the federal government the great almoner of public charity throughout the United States. To do so would, in my judgment, be contrary to the letter and spirit of the Constitution, and subversive of the whole theory upon which the union of these States is founded.... I respectfully submit that, in a constitutional point of view, it is wholly immaterial whether the appropriation be in money, or in land.... should this bill become a law, ... the several States instead of bestowing their own means on the social wants of their own people, may themselves ... become humble supplicants for the bounty of the Federal Government, reversing the state's true relation to this Union.", "One notable exception to the federal reluctance to provide cash grants to states occurred in 1837. The federal government used proceeds from western land sales to retire the federal debt in 1836. The Deposit Act of 1836 directed that, after reserving $5 million, any money in the federal Treasury on January 1, 1837, shall be distributed to states in proportion to their respective representation in the House and Senate. There were no restrictions placed on how states were to use the funds. About $30 million was distributed to states in three quarterly payments in 1837 before the banking crisis of 1837 led to a recession and payments were stopped. To avoid a promised veto from President Andrew Jackson, the legislation indicated that the funds were a deposit subject to recall, rather than an outright grant of cash.", "Overall, domestic policy in the United States prior to the Civil War was dominated by states. As a federalism scholar put it:", "With respect to the classic trinity of sovereign powers\u2013taxation, the police power, and eminent domain\u2013the states enjoyed broad autonomous authority, which they exercised vigorously. Indeed, property law, commercial law, corporation law, and many other aspects of law vital to the economy were left almost exclusively to the states.... Federalism thus provided a receptive structure for expressions of state autonomy and pursuit of state-oriented economic objectives, not only as a matter of constitutional theory and the distribution of formal authority but also as a matter of real power. "], "subsections": []}, {"section_title": "The Origins of the Modern Grants-In-Aid System: 1860-1932", "paragraphs": ["The Union's victory in the Civil War marked the beginning of a second evolutionary era in American federalism. It effectively put to an end to the doctrine that the Constitution was a compact among sovereign states, each with the right to nullify an act of Congress that the state deemed unconstitutional, and each with the legal right to secede from the Union. It also signaled the triumph of the northern states' commercialism over the southern states' agrarianism:", "Unimpeded by the political opposition of the southern slavocracy, the Republican coalition of north and west carried through a program of comprehensive changes that insured the expansion of industry, commerce, and free farming.... Instead of the policies of economic laissez faire that the slavocracy had demanded ... the Republicans substituted the doctrine that the federal government would provide assistance for business, industry, and farming; the protective tariff, homestead, land subsidies for agricultural colleges, transcontinental railroads and other internal improvements, national banks. When the defeated south came back into the Union, it had to accept the comprehensive alternation in government policy and economic institutions that historian Charles A. Beard was later to name the Second American Revolution.", "Following the war, three constitutional amendments\u2014the Thirteenth adopted in 1865, the Fourteenth adopted in 1868, and the Fifteenth Amendment adopted in 1870\u2014abolished slavery, prohibited states from denying due process or equal protection to any of their citizens, and banned racial restrictions on voting, respectively. In addition, Congress enacted the Reconstruction Acts of 1867 and 1868, which imposed military government on the formally secessionist states and required universal manhood suffrage. Despite this active federal presence in domestic policy in the South following the Civil War, the concept of dual federalism and deference to states in domestic affairs remained a part of American culture. For example, several Supreme Court rulings during this time period limited congressional efforts to override state laws on civil rights, in effect leaving civil and voting rights matters to states until the 1950s and 1960s. The Supreme Court also limited congressional efforts to regulate interstate commerce by limiting the Interstate Commerce Commission's authority.", "Reflecting prevailing views concerning dual federalism, and limited federal fiscal resources, the first on-going, federal cash grant to states, other than for the support of the National Guard, was not adopted until 1879. P.L. 45-186, the Federal Act to Promote the Education of the Blind, appropriated $250,000 to create a perpetual source of income for the purchase of teaching materials for the blind. It marked the beginning of the modern federal grants-in-aid system. The funds were used to purchase interest bearing bonds. The interest was used to purchase teaching materials for the blind. These teaching materials were then distributed among the states (and the District of Columbia) annually, with each state applying for assistance receiving a share of the available teaching materials based on the state's share of the total number of pupils enrolled in public schools of education for the blind. The second federal cash grant to states was authorized by the Hatch Act of 1887. It provided each state an annual cash grant of $15,000 to establish agricultural experiment stations. In 1888, an annual grant of $25,000 was appropriated for the care of disabled veterans in state hospitals. States were provided $100 per disabled veteran. In 1890, funding was provided to subsidize resident instruction in the land grant colleges made possible by the Morrill Act of 1862, which provided each existing and future state with 60,000 acres of federal land, plus an additional 30,000 acres for each of its congressional representatives, to be sold for the endowment, support, and maintenance of at least one college where the leading subject was agriculture and the mechanic arts. ", "In 1902, there were five federal grants to states and local governments (in addition to funding for the National Guard): teaching materials for the blind, agricultural experiment stations, the care of disabled veterans, resident instruction in the land grant colleges, and funding to the District of Columbia. Outlays for these grants were about $7 million in FY1902, or about 1% of total federal outlays. State and local government total outlays at that time were slightly over $1 billion, evidence of the relatively limited nature of federal involvement in domestic policy at that time. ", "An important difference between land grants and cash grants had emerged, even at this early date. Because federal grants were funded from the federal treasury, many in Congress felt that they had an obligation to ensure that the funds were spent by states in an appropriate manner. As a result, Congress began to attach an increasing number of administrative requirements to these grant programs. For example, in 1889, states were required to match federal funding for the care of disabled veterans or lose it. The Morrill Act of 1890 authorized the Secretary of the Interior to withhold payments, pending an appeal to Congress, from states that failed to meet conditions specified in the act. In 1895, expenditures authorized by the Hatch Act for agricultural experiment stations were conditioned by annual audits. In 1911, funding authorized by the Weeks Act to support state efforts to prevent forest fires was conditioned by advance approval of state plans for the funds' use, annual audits and inspections, and a state matching requirement.", "The Sixteenth Amendment's ratification in 1913 provided Congress the authority to lay and collect taxes on income. Although the federal income tax initially generated only modest amounts, it provided Congress an opportunity to shift from land grants to cash grants to encourage state and local governments to provide additional attention to policy areas Congress considered of national interest. Between 1913 and 1923, Congress adopted new federal grant-in-aid programs for highway construction, vocational education, public health, and maternity care. Outlays for federal grants to state and local governments increased from $12 million in FY1913 to $118 million in FY1922.", "In 1923, Massachusetts brought suit against the Secretary of the Treasury, Andrew Mellon, claiming that the maternal care grants authorized by the Sheppard-Towner Act of 1921 were unconstitutional infringements on states' rights. The Supreme Court dismissed the case on the grounds that it lacked jurisdiction. Nonetheless, Justice George Sutherland, writing on behalf of the unanimous Court, indicated that, in his view, this form of congressional spending was not unconstitutional because federal grants to state and local governments were optional and, as such, were not coercive instruments. As a result, although few new federal grants to state and local governments were adopted during the remainder of the 1920s, those grants were now accepted as a legal means for Congress to encourage state and local governments to pursue national goals."], "subsections": []}, {"section_title": "The New Deal and the Rise of \"Cooperative Federalism\": 1932-1960", "paragraphs": ["Political scientists contend that about once in every generation partisan affiliations realign across the nation, typically taking a few years to materialize but often becoming apparent during a \"critical\" presidential election. Critical elections typically result in relatively dramatic and lasting changes in the partisan composition within Congress and state governments. They also usually signal the coming to power of a new partisan coalition that dominates congressional decisionmaking for a relatively long period of time. For example, the election of 1896 ended the political stalemate between the Democratic and Republican parties and solidified the Republican Party's position as the majority party for the next 36 years. The election of 1932 signaled a new period of Democratic Party dominance, particularly in the \"Solid South,\" that lasted until the 1970s, when partisan attachments began to weaken, southern states became increasingly Republican, and the two major political parties became increasingly competitive, each seemingly on the verge of achieving majority party status at various times, but unable to retain that status permanently.", "The 1932-1960 period also saw the emergence of the \"congressional conservative coalition,\" the unofficial title given to the shifting political alliances of southern, conservative Democrats and Republican Members. The conservative coalition became an increasingly important counter-balance to large Democratic majorities in both houses of Congress. Members of the conservative coalition generally advocated balanced budgets and states' rights, especially in civil rights legislation. They used congressional procedures, such as the filibuster or threat of a filibuster, to win concessions from the Democratic majority, and, in some instances, to prevent legislation they opposed from becoming law. They also benefitted from the congressional seniority system, which, during this time period, allocated committee chairmanships according to seniority. Because many of the congressional districts in the \"solid south\" were noncompetitive seats, southern representatives held a disproportionate number of committee chairmanships in the House, further strengthening the conservative coalition's influence on congressional policymaking.", "The conservative coalition prevented civil rights legislation from being enacted during this time period, but it could not prevent Democratic majorities in the House and Senate from expanding the federal government's presence in domestic policy. However, throughout this time period, the conservative coalition actively sought concessions to ensure that any new federal programs, including any new grants to state and local governments, respected state rights. As a result, the grant-in-aid programs adopted during this time period tended to be in policy areas where state and local governments were already active, such as in education, health care, and highway construction, or where additional federal assistance was welcomed, such as job creation. Also, federal administrative conditions attached to these grants during this era focused on the prevention of corruption and fraudulent expenditures as opposed to encouraging states to move in new policy directions. As a result, federalism scholars have labeled this time period as an era of \"cooperative federalism,\" where intergovernmental tensions were relatively minor and state and local governments were provided flexibility in project selection.", "Faced with unprecedented national unemployment and economic hardship, President Franklin Delano Roosevelt advocated a dramatic expansion of the federal government's role in domestic affairs during his presidency, including an expansion of federal grant-in-aid programs as a means to help state and local governments combat poverty and create jobs. Congress approved 16 new, continuing federal grants to state and local governments from 1933 to 1938, and increased funding for federal grants to states and local governments from $214 million in FY1932 to $790 million in FY1938.", "Congress also enacted several temporary, emergency relief grant-in-aid programs that distributed federal funds to states according to the state's fiscal capacity. Congress devised mathematical formulas, based on a variety of economic and business measures, to allocate funding to each state, resulting in the share of relief funds varying among states based on the formula's assessment of need. At their peak, in 1935, emergency relief measures provided states nearly $1.9 billion to create jobs and provide emergency assistance for the unemployed. The emergency relief programs were terminated during the 1940s, but they established a precedent for extensive federal involvement with state and local governments in areas of national concern and for the use of mathematical formulas for distributing federal assistance. ", "The Social Security Act of 1935 (SSA) was, arguably, the most significant legislative enactment of the New Deal period. It established a federal presence in social welfare policy. New federal grant-in-aid programs were established for old age assistance, aid to the blind, aid to dependent children, unemployment compensation, maternal and child health, crippled children, and child welfare. The act also enhanced federal oversight of grants to state and local governments as auditing requirements were now required in almost all grant programs. In addition, in 1939, state employees administering SSA programs were required to be selected by merit system procedures, a major advancement for the development of professional state and local government administration and a signal of the declining influence of state and local party bosses in American society. In 1940, the Hatch Act restricted the political activities of state and local government employees paid with federal funds.", "Legally, New Deal legislation was based on an expanded interpretation of congressional authority to spend through grant-in-aid programs to promote the nation's welfare under Article 1, Section 8, clause 1 of the Constitution, often referred to as the congressional \"spending power.\" Federal expenditures through grant-in-aid programs during the New Deal were made in several functional areas, including some, such as social welfare, that were traditionally viewed as state responsibilities. Opponents of an expanded role for the federal government in domestic policy argued that New Deal grant programs precluded state action in these traditionally state functional areas and, as such, violated the Constitution's Tenth Amendment. Advocates of an expansion of federal involvement in domestic affairs argued that the power of Congress to spend is more extensive than, rather than concurrent with, enumerated or even implied law-making powers. This disagreement led to a number of Supreme Court cases, a full discussion of which is beyond the scope of this report. The Supreme Court rejected the New Deal's expansion of federal authority in 8 of the first 10 cases that it decided. Then, after President Roosevelt's failed legislative proposal to \"pack the Court\" in 1937, the Supreme Court upheld the constitutionality of several New Deal laws, including the Social Security Act. As a federalism scholar noted,", "A new era of judicial construction had been launched. The commerce power was given broad interpretation in cases upholding the Labor Relations Act. The older distinction between direct and indirect effects of commercial activity was abandoned and the more realistic \"stream-of-commerce\" concept adopted. The scope of Federal taxing power was also broadened expansively. In sanctioning the Social Security Act, the unemployment excise tax on employers was upheld as a legitimate use of the tax power, and the grants to the states were viewed as examples of Federal-state collaboration, not Federal coercion. The act's old-age and benefit provisions were deemed to be proper because \"Congress may spend money in aid of general welfare.\" When combined, these decisions obviously amounted to last rites for judicial dual federalism. ", "Although the Supreme Court was no longer viewed as a major obstacle for the expansion of the federal grants-in-aid system, external factors led to a reduction in outlays for federal grants to state and local governments from FY1939 to FY1946 as Congress focused on defense-related issues during World War II. For example, outlays for federal grants to state and local governments averaged $947 million from FY1939 through FY1946, less than half of the New Deal's peak. Following the war, the number of federal grants to state and local governments began to increase at a somewhat accelerated pace, reaching 68 grants in 1950 and 132 grants in 1960. Outlays for federal grants to state and local governments also accelerated, from $859 million in FY1945, to $2.3 billion in FY1950, to $3.2 billion in FY1955, and to $7 billion in 1960. A new development was increased outlays targeted at urban areas, such as grants for airport construction (1946), urban renewal (1949), and urban planning (1954). The most significant federal grant-in-aid program enacted during the 1950s was the $25 billion, 13-year Federal-Aid Highway Act of 1956, which authorized the construction of the then-41,000 mile National System of Interstate and Defense Highways, with a 1972 target completion date. For the next 35 years, federal surface transportation policy focused on the completion of the interstate system."], "subsections": []}, {"section_title": "The Great Society and the Rise of \"Coercive Federalism\": 1960-1980", "paragraphs": ["The 1960s was a turbulent decade, marked by both political and social upheaval of historic proportions. Three leading public figures were assassinated: President John F. Kennedy in 1963, civil rights leader the Reverend Martin Luther King Jr. in 1968, and President Kennedy's brother, presidential candidate and Senator Robert Kennedy, in 1968. The civil rights movement, led by the Reverend King, was often met with violent resistance, with bombings of black churches, murders of civil rights workers, and televised police beatings of civil rights demonstrators. One of the defining moments of the civil rights movement was the march on Washington, DC, in August 1963, where the Reverend King made his famous \"I Have A Dream\" speech. Congress responded to the social turmoil by adopting the Civil Rights Act of 1964, which superseded state civil rights laws by prohibiting discrimination based on race, color, religion, or national origin; the Voting Rights Act of 1965, which superseded state election laws by outlawing literacy tests, poll taxes, and other means to discourage minority voting; and the Civil Rights Act of 1968, which superseded state civil rights laws by prohibiting discrimination in the sale, rental, and financing of housing. Nonetheless, race riots took place in several urban areas in 1965 and in 1967.", "During the latter half of the decade, the civil rights movement was joined by what has been called the hippie movement, where young people rebelled against the conservative norms of the time and disassociated themselves from mainstream liberalism and materialism. This \"counterculture\" movement began in the United States and sparked a social revolution throughout much of the Western world. It began as a reaction against the conservatism and social conformity of the 1950s, and the U.S. government's military intervention in Vietnam. These groups questioned authority and government, and demanded more freedom and rights for women, gays, and minorities, as well as greater awareness of the need to protect the environment and address poverty.", "The social movements and social unrest that swept across the nation during the 1960s had a strong impact on Congress. Reflecting the growing public demand for congressional action to address civil rights, poverty, and the environment, in 1961 the House approved, 217-212, a proposal by Speaker Sam Rayburn to enlarge the House Rules Committee from 12 to 15 Members. Prior to the change, the House Rules Committee was divided, 6 to 6, along ideological lines. Because a majority vote is necessary for the issuance of a legislative rule, the House Rules Committee served as an institutional barrier to the passage of legislation that the committee's more conservative Members believed infringed on states' rights, including civil rights legislation.", "The enlargement of the House Rules Committee in 1961 signaled the weakening of the conservative coalition's influence within Congress and enabled the large Democratic majorities elected during the early 1960s in the House and Senate to adopt a succession of civil rights laws, highlighted by the previously mentioned Civil Rights Act of 1964. It also enabled Congress to expand the federal grants-in-aid system, focusing on grants designed to protect the environment and address poverty, both directly through public assistance and job training programs and indirectly through education, housing, nutrition, and health care programs.", "These legislative efforts were both supported and encouraged by President Lyndon Baines Johnson. For example, during his commencement address at the University of Michigan on May 22, 1964, President Johnson announced that he would establish working groups to prepare a series of White House conferences and meetings to develop legislative proposals to revitalize urban America, address environmental problems, and improve educational opportunities \"to begin to set our course toward the Great Society\" which \"demands an end to poverty and racial injustice, to which we are totally committed.\" The term \"The Great Society\" came to symbolize legislative efforts during the 1960s to address poverty and racial injustice.", "In concert with President Johnson's Great Society initiatives, Congress nearly tripled the number of federal grants to state and local governments during the 1960s, from 132 in 1960 to 387 in 1968. In 1965 alone, 109 federal grants to state and local governments were adopted, including Medicaid, which now has, by far, the largest budget of any federal grant-in-aid program. Outlays for federal grants to state and local governments also increased, from $7 billion in FY1960 to $20 billion in FY1969. Functionally, federal grants for health care increased from $214 million in FY1960 to $3.8 billion in FY1970, for income security from $2.6 billion to $5.7 billion, for education, training, employment, and social services from $525 million to $6.4 billion, for transportation from $3 billion to $4.6 billion, and for community and regional development from $109 million to $1.7 billion.", "For the most part, these legislative efforts were not opposed by state and local government officials and their affiliated public interest groups (e.g., National Governors Association, National League of Cities, U.S. Conference of Mayors, and National Association of Counties), primarily because federal grants are voluntary and, in many instances, provided funding for activities that had broad public support. However, the new grants had a number of innovative features that distinguished them from their predecessors. Previously, most federal grants to state and local governments supplemented existing state efforts and, generally, did not intrude on state and local government prerogatives. Most of the federal grants created during the 1960s, on the other hand, were designed purposively by Congress to encourage state and local governments to move into new policy areas, or to expand efforts in areas identified by Congress as national priorities, especially in environmental protection and water treatment, education, public assistance, and urban renewal.", "In addition, there was an increased emphasis on narrowly focused project, categorical grants to ensure that state and local governments were addressing national needs. Most of the new grants had relatively low, or no, matching requirements, to encourage state and local government participation. New incentive grants encouraged states to move into new policy areas and to diversify eligible grant recipients, including individuals, nonprofit organizations, and specialized public institutions, such as universities. A greater emphasis also was on grants to urban areas. For example, outlays for federal grants targeted at metropolitan areas more than tripled during the 1960s, and grew to include about 70% of total federal grant-in-aid funding, up from about 55% at the beginning of the decade. There was also a greater emphasis on mandated planning requirements.", "Although most of the federal grants adopted during the 1960s were narrowly focused project, categorical grants, the first two block grants were enacted during this time period. P.L. 89-749, the Comprehensive Health Planning and Public Health Services Amendments of 1966, later known as the Partnership for Public Health Act, created a block grant for comprehensive health care services (now the Preventive Health and Health Services Block Grant). It replaced nine formula categorical grants. Two years later, Congress created the second block grant, the Law Enforcement Assistance Administration's Grants for Law Enforcement program (sometimes referred to as the \"Crime Control\" or \"Safe Streets\" block grant) in the Omnibus Crime Control and Safe Streets Act of 1968. Unlike the health care services block grant, it was created de novo , and did not consolidate any existing categorical grants.", "The rapid expansion of federal grants to state and local governments during the 1960s led to a growing concern that the intergovernmental grant-in-aid system had become dysfunctional and needed to be reformed. For example, ACIR argued that along with the expansion of the federal grant system came \"a rising chorus of complaints from state and local government officials\" concerning the inflexibility of fiscal and administrative requirements attached to the grants. It suggested that state and local government officials were subjected to an information gap because they found it difficult to keep up with the host of new programs and administrative requirements. It also cited the need for improved coordination among programs, noting that many state and local government officials were reporting administrative difficulties dealing with federal agencies and those agencies' regional offices:", "Between 1962 and 1965 four new systems of regional offices were established as a consequence of grants-in-aid legislation. Adding these bodies to the separate, already existing regional structures brought the total number of regional systems to 12. Regional boundaries and field office locations varied widely. Kentucky, to cite the most extreme case, had to deal with federal agencies in ten different cities. This confusion imposed burdens on the recipients of grants and also made the task of coordinating operations by federal agencies in pursuit of national objectives more difficult.", "During the 1970s, President Richard Nixon and his successor, President Gerald R. Ford, argued that the intergovernmental grant-in-aid system was dysfunctional and advocated the sorting out of governmental responsibilities, with the federal government taking the lead in some functional areas and states in others. They also advocated a shift from narrowly focused categorical grants, especially project categorical grants, toward block grants and revenue sharing. They argued that block grants and general revenue sharing provided state and local governments additional flexibility in project selection and promoted program efficiency by reducing administrative costs. They, and others, believed that state and local governments should be provided additional flexibility in project selection and relief from federal administrative requirements because", "greater reliance on state and local governments promotes a sense of state and local community responsibility and self-reliance; state and local government officials are closer to the people than federal administrators and, as a result, are better positioned to discern and adapt public programs to state and local needs and conditions; state and local governments encourage participation and civic responsibility by allowing more people to become involved in public questions; active state and local governments encourage experimentation and innovation in public policy design and implementation; active state and local governments reduce administrative workload on the federal government, which creates program efficiencies; and active state and local governments reduce the political turmoil that sometimes results from single policies that govern the entire nation.", "Opponents of a shift from categorical grants to block grants and revenue sharing presented several arguments, including", "because funding comes from the federal Treasury, Congress has both the right and an obligation to determine how that money is spent; many state and local governments lack the fiscal resources to provide levels of government services necessary to provide the poor and disadvantaged a minimum standard of living and equal access to governmental services, such as education and health care, which are essential to economic success. Therefore, Congress must act to ensure uniform levels of essential governmental services throughout the nation; state and local governments that have the fiscal resources to provide levels of government services necessary to provide the poor and disadvantaged a minimum standard of living and equal access to governmental services essential to economic success are often unable to do so because they compete with other state and local governments for business and taxpaying residents. As a result, state and local governments tend to focus available resources on programs designed to attract business investment and taxpaying residents to their communities and states rather than on programs assisting the poor and disadvantaged. Therefore, Congress must act to ensure uniform levels of essential governmental services throughout the nation; Congress has both the right and the obligation to ensure through the carrot of grant-in-aid programs and the stick of federal requirements that certain national goals, such as civil rights, equal employment opportunities, protection for the environment, and care for the poor and aged, are met because it is difficult to achieve change when reform-minded citizens must deal with 50 state governments and more than 79,000 local governments; and some governmental services have either costs or benefits that spill over onto other localities or states. Water and air pollution controls, for example, benefit not only the local community that pays for the air or water pollution controls, but all of the communities that are located downwind or downstream from that community. Because state and local taxpayers are generally reluctant to pay for programs whose benefits go to others, state and local governments often underfund programs with significant spillover effects. Therefore, Congress must act to ensure that these programs are funded at logical levels.", "Opponents also asserted that the arguments presented by advocates for a shift in emphasis to block grants and revenue sharing were actually a \"smoke screen\" masking their true intent which, allegedly, was to shift federal resources to their core constituencies. As mentioned previously, most federal grant-in-aid funding during the 1960s and 1970s was targeted to metropolitan areas, which, at that time, were considered Democratic Party strongholds. Many observers believed that shifting from project categorical grants to block grants or general revenue sharing would result in less money for metropolitan areas and more money for suburban and rural areas, areas that were more likely to be populated by Republicans than Democrats. This shift would occur because project categorical grants are awarded on a competitive basis by federal administrators while block grant and revenue sharing funding is allocated according to pre-determined formula, often with minimum funding guarantees for each state and with a portion of the funding determined by either population or per capita income. Because block grant and revenue sharing funding tends to be more geographically dispersed than project categorical grants, congressional debates over which grant mechanism was best had partisan overtones that often transcended discussions over which grant mechanism would improve grant performance.", "Some federalism scholars have also suggested that Congress tends to prefer categorical grants over block grants and revenue sharing because Members take pride in the authorship of sponsored programs. They argue that categorical grants provide more opportunities for sponsorship, and more opportunities for receiving political credit for that sponsorship, than block grants or revenue sharing. In their view, constituents are more interested in a Member's ability to serve in a material way than in their competence in broad policymaking or in \"the rightness of positions on issues of principle, form or structure.\" As a result, they argue that Members are more likely to be recognized for sponsoring or supporting specific, narrowly focused categorical grants than by championing a more general block grant or revenue sharing approach. For example, they assert that Members are more likely to receive recognition and political credit from constituents for sponsoring and supporting legislation to prevent lead-based paint poisoning among children than for legislation covering the broad area of preventive health services. ", "Presidents Nixon's and Ford's efforts to gain congressional approval for a shift in emphasis from categorical grants to block grants and revenue sharing were only partially successful. For example, in his 1971 State of the Union speech, President Nixon announced a plan to consolidate 129 federal grant programs in six functional areas\u201433 in education, 26 in transportation, 12 in urban community development, 17 in manpower training, 39 in rural community development, and 2 in law enforcement\u2014into what he called six \"special revenue sharing\" programs. Unlike the categorical grants they would replace, the proposed special revenue sharing programs had no state matching requirements and relatively few auditing or oversight requirements, and the funds were distributed automatically by formula without prior federal approval of plans for their use. ", "The education, transportation, rural community development, and law enforcement proposals failed to gain congressional approval, primarily because they generated opposition from interest groups affiliated with the programs who worried that the programs' future funding would be compromised. However, three block grants, the first signed by President Nixon and the remaining two signed by President Ford, were approved. ", "The Comprehensive Employment and Training Assistance Block Grant program, created by the Comprehensive Employment and Training Act of 1973, merged 17 existing manpower training categorical grant programs. The Community Development Block Grant program (CDBG), created by the Housing and Community Development Act of 1974, consolidated six existing community and economic development categorical grant programs. Title XX social services, later renamed the Social Services Block Grant program, was created de novo and, therefore, did not consolidate any existing categorical grant programs. It was authorized by the 1974 amendments of the Social Security Act, which was signed into law on January 4, 1975. Also, in 1972, general revenue sharing was approved by Congress. General revenue sharing distributed funds to states from 1972 to 1981 and to localities from 1972 to 1986.", "Nevertheless, Congress retained an emphasis on the use of categorical grants. On December 31, 1980, there were 534 categorical grant programs, 5 block grant programs, and 1 general revenue sharing program. Of the categorical grant programs, 361 were project categorical grants, 42 were project, formula categorical grants, 111 were formula categorical grants, and 20 were open-ended reimbursement categorical grants. Overall, categorical grants accounted for 79.3% of the $91.3 billion in outlays for federal grants to state and local governments that year, block grants accounted for 11.3%, and general revenue sharing 9.4%.", "Efforts to sort out governmental responsibilities were also met with resistance in Congress. For example, President Nixon's six special revenue sharing proposals would have provided state and local governments the leading role in decisionmaking in those six functional areas. Also, his proposed Family Assistance Plan would have replaced several public assistance categorical grant programs with a national public assistance system covering all low-income families with children. Although his Family Assistance Plan was not adopted, Congress did nationalize several adult-age public assistance grant-in-aid programs in 1972, including old-age assistance, aid to the blind, and aid to the permanently and totally disabled."], "subsections": [{"section_title": "Another Related Development: Federal Mandates", "paragraphs": ["Another related, new development during the 1960s and 1970s was the imposition by Congress of numerous federal mandates on state and local government officials. The concept of mandates covers a broad range of policy actions with centralizing effects on the intergovernmental system, including statutory direct-order mandates, both total and partial statutory preemption of state and local government law, federal tax policies affecting state and local tax bases, and regulatory action taken by federal courts and agencies. Many federalism scholars also consider program-specific and crosscutting federal grant administrative conditions mandates, even though the grants themselves are voluntary.", "Crosscutting requirements are, perhaps, the most widely recognized mandate. They are a condition of federal assistance that applies across-the-board to all, or most, federal grants to advance a national social or economic goal. Title VI of the Civil Rights Act of 1964 was the first post-World War II statute to use a crosscutting requirement. It specifies that", "No person in the United States shall, on the ground of race, color, or national origin, be excluded from participation in, be denied the benefits of, or be subjected to discrimination under any program receiving Federal financial assistance.", "In 1980, OMB counted 59 crosscutting requirements intended to further national social or economic goals in a variety of functional areas, including education and the environment. ", "Some of the statutory direct-order mandates adopted during this era included the Equal Employment Opportunity Act of 1972, which extended the prohibitions against discrimination in employment contained in the Civil Rights Act of 1964 to state and local government employment; the Fair Labor Standards Act Amendments of 1974, which extended the prohibitions against age discrimination in the Age Discrimination in Employment Act of 1967 to state and local government employment; and the Public Utilities Regulatory Policy Act of 1978, which established federal requirements concerning the pricing of electricity and natural gas. ", "ACIR suggested that the expansion of federal intergovernmental regulatory activity during the 1960s and 1970s fundamentally changed the nature of intergovernmental relations in the United States: ", "During the 1960s and 1970s, state and local governments for the first time were brought under extensive federal regulatory controls.... Over this period, national controls have been adopted affecting public functions and services ranging from automobile inspection, animal preservation and college athletics to waste treatment and waste disposal. In field after field the power to set standards and determine methods of compliance has shifted from the states and localities to Washington. ", "The continued emphasis on categorical grants, the increased emphasis on provisions encouraging states to move in new policy directions, and, especially, the increased imposition of federal mandates on state and local governments during the 1960s and 1970s led some federalism scholars to label the 1960s and 1970s as the beginnings of a shift toward \"coercive federalism.\" Cooperative features were still present, but congressional deference to state and local government prerogatives seen in previous eras was no longer in force. Instead of focusing primarily on the \"carrot\" of federal assistance to encourage state and local governments to pursue policies that aligned with national goals, Congress increasingly relied on the \"stick\" of federal mandates."], "subsections": []}]}, {"section_title": "Congress Asserts Its Authority: The Devolution Revolution That Wasn't, 1980-2000", "paragraphs": ["By the end of the 1970s, the social turmoil that marked the previous two decades had receded. Into the 1980s, the United States and most of the Western world experienced a revival of conservative politics, the advancement of free market solutions to improve government efficiency and solve social problems, and a renewed emphasis on materialism and the possession of consumer goods. Yet, at the same time, social change continued to affect American lifestyles, as women became fixtures in the workplace, the gay rights movement become more active, environmental concerns intensified, and rock concerts featuring the leading rock bands and performers of the era were televised to millions of viewers across the nation and the world to raise money for various social causes, such as famine relief, support for family farms, and AIDS prevention and treatment.", "The seemingly contradictory societal trends of self-promotion and altruism that swept across American society during the 1980s and 1990s were reflected in responses to national public opinion polls concerning politics and government. These polls evidenced a growing public hostility toward government intrusion and government performance, especially the federal government's performance, despite growing support for specific programs and regulations that represented the polar opposite of these attitudes. Perhaps reflecting these seemingly contradictory trends, during this era the public tended to elect a President of one political party and a Congress of another. Moreover, nationally, the two-party political system became more competitive as the once solid Democratic South turned increasing Republican. The Republican Party's resurgence was evidenced by its winning the presidency from 1981 to 1993, and its achieving majority status in the Senate from 1981 to 1987, and in both houses of Congress from 1995 to 2001.", "President Ronald Reagan's election in 1980, coupled with the Republican Party's resurgence, especially its winning majority party status in the Senate that year, signaled for some the potential for a \"devolution revolution\" in American federalism, where unfunded federal mandates would be rescinded, \"burdensome\" administrative federal grant-in-aid conditions removed, and the cooperative features of the federal grants-in-aid system enhanced. This belief was based on President Reagan's commitment to reducing the federal budget deficit. Because he was convinced that it was necessary to increase defense spending, President Reagan concluded that the only way to reduce the federal budget deficit was to increase revenue by encouraging economic growth through tax reduction and regulatory relief, and limiting the growth of federal domestic expenditures. As a former governor, he trusted state and local governments' ability to provide essential government services. As a result, he advocated a sorting out of governmental responsibilities that would reduce the federal government's role in domestic affairs, increase the emphasis on block grants to provide state and local government officials greater flexibility in determining how the program's funds are spent, and impose fiscal restraint on all federal grant-in-aid programs.", "For example, on February 18, 1981, President Reagan addressed a joint session of Congress and proposed the consolidation of 84 existing categorical grants into 6 new block grants and requested significant funding reductions for a number of income maintenance categorical grants, including housing (rental) assistance, food stamps (now Supplemental Nutrition Assistance Program), Medicaid, and job training. Congress subsequently approved P.L. 97-35 , the Omnibus Budget Reconciliation Act of 1981, which consolidated 77 categorical grants and two earlier block grants into the following nine new block grants:", "Elementary and Secondary Education (37 categorical grants), Alcohol, Drug Abuse, and Mental Health Services (10 categorical grants), Maternal and Child Health Services (9 categorical grants), Preventive Health and Human Services Block Grant (merged 6 categorical grants with the Health Incentive Grants for Comprehensive Health Services Block Grant), Primary Care (2 categorical grants), Community Services (7 categorical grants), Social Services (one categorical grant and the Social Services for Low Income and Public Assistance Recipients Block Grant), Low-Income Home Energy Assistance (1 categorical grant), and a revised Community Development Block Grant program (adding an existing discretionary grant and 3 categorical grants).", "Overall, funding for the categorical grants bundled into these block grants was reduced 12%, about $1 billion, from their combined funding level the previous year. President Reagan argued that the funding reductions would not result in the loss of services for recipients because the reductions would be offset by administrative efficiencies. In addition, the Reagan Administration eliminated funding for 62 categorical grants in 1981, mainly through authority provided under the Omnibus Budget Reconciliation Act of 1981.", "Some observers were convinced that the adoption of the Omnibus Budget Reconciliation Act of 1981 was proof of the coming devolution revolution. The number of federal grants to state and local governments was reduced and outlays for federal grants to state and local governments fell for the first time since World War II, from $94.7 billion in FY1981 to $88.1 billion in FY1982. However, in retrospect, federalism scholars now consider the 1981 block grants as more \"historical accidents than carefully conceived restructurings of categorical programs\" because they were contained in a lengthy bill that was primarily designed to reduce the budget deficit, not to reform federalism relationships. The bill was adopted under special parliamentary rules requiring a straight up or down vote without the possibility of amendment, and it was not considered and approved by authorizing committees of jurisdiction. Nonetheless, largely due to the Omnibus Budget and Reconciliation Act of 1981, in 1984 there were 12 block grants in operation (compared to 392 categorical grants), accounting for about 15% of total grants-in-aid funding.", "During the remainder of his presidency, President Ronald Reagan submitted 26 block grant proposals to Congress, with only one, the Federal Transit Capital and Operating Assistance Block Grant, added in 1982. In addition, Congress approved the Job Training Partnership Act of 1982, which created a new block grant for job training to replace the block grant contained in the Comprehensive Employment and Training Act of 1973.", "Federalism scholars generally agree that President Reagan had unprecedented success in achieving congressional approval for block grants in 1981. However, they also note that most of President Reagan's subsequent block grant proposals failed to gain congressional approval, primarily because they were opposed by organizations that feared, if enacted, the block grants would result in less funding for the affected programs. For example, in 1982, President Reagan proposed, but could not get congressional approval for, a $20 billion \"swap\" in which the federal government would return to states full responsibility for funding Aid to Families With Dependent Children (AFDC) (now Temporary Assistance for Needy Families) and food stamps (now Supplemental Nutrition Assistance Program) in exchange for federal assumption of state contributions for Medicaid. As part of the deal, he also proposed a temporary $28 billion trust fund or \"super revenue sharing program\" to replace 43 other federal grant programs, including 19 social, health, and nutrition services programs, 11 transportation programs, 6 community development and facilities programs, 5 education and training programs, Low Income Home Energy Assistance, and general revenue sharing. The trust fund, and federal taxes supporting it, would begin phasing out after four years, leaving states the option of replacing federal tax support with their own funds to continue the programs or allowing the programs to expire.", "Both the swap proposal and the proposed devolution of 43 federal grants failed to gain congressional approval, primarily because they were opposed by organizations and Members who feared that, if enacted, the proposals would result in less funding for the affected programs. For example, the National Governors Association supported the federal takeover of Medicaid, but objected to assuming the costs for AFDC and food stamps. The economy was weakening at that time and governors worried that they would not have the fiscal capacity necessary to support the programs without continued federal assistance.", "Evidence of a coming devolution revolution proved elusive as the upward trend in outlays for federal grants to state and local programs resumed in FY1983, although at a somewhat lower rate of increase than during the previous two decades. As shown in Table 2 , outlays for federal grants to state and local governments increased from $91.4 billion in FY1980 to $135.3 billion in FY1990 and $285.9 billion in FY2000. Medicaid accounted for much of that revenue growth, increasing from $13.9 billion in FY1980 to $41.1 billion in FY1990 and $117.9 billion in FY2000.", "Functionally, as shown in Table 2 , outlays for federal grants to state and local governments for health care increased from $15.8 billion in FY1980 to $124.8 billion in FY2000. Also, outlays for federal grants to state and local governments for income security increased from $18.5 billion in FY1980 to $68.7 billion in FY2000; for education, training, employment, and social services from $21.9 billion to $36.7 billion; for transportation from $13.0 billion to $32.2 billion; and for community and regional development from $6.5 billion to $8.7 billion. ", "The number of federal grants to state and local governments fell at the beginning of this era, from 541 in 1981 to an era low of 405 in 1984, but then resumed an upward trend. As indicated in Table 4 , there were 541 grants to state and local governments in 1981, 405 in 1984, 435 in 1987, 492 in 1989, 557 in 1991, 593 in 1993, 633 in 1995, and 664 in 1998. Moreover, the number of intergovernmental mandates continued to increase throughout the era. ACIR, for example, identified 36 significant federal mandates affecting state and local governments in 1980. In 1990, it identified 63. ACIR concluded that \"despite efforts to constrain the growth of intergovernmental regulation, the 1980s remained an era of regulatory expansion rather than contraction.\" It offered the following explanation for the increased number of federal mandates during the 1980s:", "The causes of this continued regulatory growth are complex and varied. Many regulations address important and well documented problems from pollution to health care to civil rights. The goals associated with these programs are popular not only with the general public but with state and local government officials as well. But, whereas the Congress in the past might have responded to emerging needs with a new federal aid program, the scarcity of federal funds during a decade of historic deficits has made the alternative of federal mandates look increasingly attractive to federal policymakers.", "Some observers believed that the anticipated devolution revolution might be realized following the 1994 congressional elections, which resulted in the Republican Party gaining majority status in both the House and Senate. As evidence of the potential for a devolution revolution they pointed to the Unfunded Mandate Reform Act of 1995 (UMRA). Its intent was to limit the federal government's ability to impose costs on state and local governments or on the private sector through unfunded mandates. Providing relief from unfunded mandates was one of the stated goals of the Republican Party's 1994 Contract With America. ", "Under UMRA, congressional committees have the initial responsibility to identify certain federal mandates in measures under consideration. If the measure contains a federal mandate, the authorizing committee must provide the measure to the Congressional Budget Office (CBO). It reports back to the committee an estimate of the mandate's costs. The office must prepare full quantitative estimates for each reported measure with mandate costs over pre-determined thresholds in any of the first five fiscal years the legislation would be in effect. CBO's cost estimates include the direct costs of the federal mandates contained in the measure, or in any necessary implementing regulations; and the amount of new or existing federal funding the legislation authorizes to pay these costs. The thresholds triggering a full CBO cost estimate are adjusted annually for inflation. They were originally $50 million for intergovernmental mandates and $100 million for private sector mandates. The thresholds in 2019 are $82 million for intergovernmental mandates and $164 million for private sector mandates. CBO must prepare brief statements of cost estimates for those mandates that have estimated costs below these thresholds.", "Members can raise a point of order if the measure containing the mandate lacks a CBO cost estimate, either because the committee failed to publish the CBO's cost estimate in its report or in the Congressional Record , or CBO determined that no reasonable estimate of the mandate's cost was feasible. Members can also raise a point of order if the measure has an intergovernmental cost estimate that exceeds the annually adjusted cost threshold in any of the first five fiscal years the mandate would be in effect.", "UMRA's impact on unfunded mandates has been relatively limited. For example, from 1996 to May 2019, 62 points of order were raised in the House and 4 in the Senate. One point of order, concerning a 1996 minimum wage bill, was sustained in the House and two points of order, concerning amendments relating to an increase in the minimum wage in 2005, were sustained in the Senate. In addition, UMRA covers only certain types of unfunded federal mandates. As a federalism scholar argued,", "UMRA primarily covers only statutory direct orders, excluding most grant conditions and preemptions whose fiscal effects fall below the threshold. Statutory direct orders dealing with constitutional rights, prohibition of discrimination, national security, and Social Security are among those excluded from coverage. Moreover, analytic and procedure requirements do not apply to appropriations bills, floor amendments or conference reports\u2013those tools of \"unorthodox lawmaking\" that have become increasingly prevalent in the Congress.", "Moreover, another federalism scholar noted that the overall record of the 104 th Congress, expected by some to decentralize and devolve federalism relationships, was more status quo than devolutionary:", "Shifting back to the overall record of the 104 th Congress, it is appropriate here to note the various proposed devolutionary bills that were defeated. Chief among these was the proposed Medicaid block grant with a $163 billion cut in funding over five years. Both a public housing blocking proposal and the big regulatory reform measure that would have seriously limited the Federal government's power to issue rules affecting health, safety, and the environment were scuttled. Extension of the Clean Water Act, enactment of a consolidation of eighty-odd manpower training programs, and passage of a revised Endangered Species Act, which eliminated the Federal authority to restrict threatening activities, were all successfully resisted. A rollback of affirmative action, a conservative shift in the Superfund's program and rules, and the proposed Product Liability Legal Reform Act of 1996 were also scuttled. Of the nine here, two died because of Senate rejection; three, because of a presidential veto or the threat of one; two others failed because neither chamber dared take either one up; and the last two died because of a deadlocked Conference Committee and a lack of time to consider a Conference Report.", "The devolution revolution never fully materialized during this era, despite growing public hostility toward the federal government. The emphasis on categorical grants and the issuance of federal mandates continued. Yet, some decentralization of decisionmaking authority did take place during the era. For example, in 1980, there were four block grants in operation. In 2000, there were 24 block grants, including the Surface Transportation Program (1991) and the Temporary Assistance for Needy Families (TANF) program (1996). Funded at $16.7 billion annually, TANF rivaled the Surface Transportation Program during this era for the largest budget of all the block grants. In addition, Congress authorized state waivers for Medicaid starting in 1981, and for child welfare assistance programs starting in 1994.", "The seemingly contradictory trends of centralization and decentralization that took place in the federal intergovernmental system during the 1980s and 1990s perhaps reflected the contradictory societal trends that swept across America at the time. As mentioned previously, national public opinion polls indicated that the public was increasingly dissatisfied with the performance of government, especially the federal government's performance, and expressed a growing hostility toward government (and Congress) as a whole. It could be argued that these views suggest that the public wanted Congress to devolve federal grant-in-aid programs to state and local governments or, at least, provide state and local governments greater flexibility in determining how the grants' funding should be spent. Yet, at the same time, the public also expressed relatively strong support for individual federal government programs (and individual Members of Congress). It could be argued that these views suggest that the public wanted Congress to maintain federal government control over these programs, and expressed approval of their individual Members for doing so.", "Another possible explanation for the continued focus on categorical grants and the imposition of federal mandates during this era is that federalism issues tend to be a second order priority for many federal policymakers. For example, it could be argued that President Reagan's commitment to strengthening federalism through program decentralization and devolution was unrivaled in the modern era. Yet, in an analysis of the Reagan Administration's federalism policies, a leading federalism scholar concluded that \"devolutionary policies consistent with the president's definition of federalism reform ... consistently lost out in the Reagan Administration when they ... conflicted with the sometimes competing goals of reducing the federal deficit, deregulating the private sector, and advancing the conservative social agenda.\" For example, this scholar noted that President Reagan opposed the expansion of General Revenue Sharing, advocated the elimination of the deductibility of state and local taxes, supported the preemption of state laws regulating double-trailer trucks and establishing minimum drinking ages, overrode state objections to increased off-shore oil drilling and increased use of nuclear power, and supported efforts to require states to establish workfare programs for public assistance recipients and suing localities which sought to retain aggressive affirmative action hiring policies."], "subsections": []}, {"section_title": "Federal Grants to State and Local Governments in the 21st Century", "paragraphs": ["Some observers thought that the number of federal grants to state and local governments and outlays for federal grants to state and local governments might fall during George W. Bush's presidency (2001-2009), given federal budgetary pressures created by what many called the \"war on terror\" following 9/11, President Bush's commitment to reducing the annual federal budget deficit and addressing the federal debt, and the Republican Party's winning majority status in the House of Representatives from 2001 to 2007 and in the Senate for portions of 2001 and 2002, and from 2003 to 2007. Yet, outlays for federal grants to state and local governments increased during his presidency, from $285.8 billion in FY2000 to $461.3 billion in FY2008. ", "Others thought that the \"the ascendancy of George W. Bush to the presidency, in concert with a remarkably unified Republican control of the Congress, presaged a period of unified government \u2026 [that would lead to] the arrest and even reversal of federal policy centralization.\" For example, President Bush used his authority to grant state waivers to increase state flexibility in the use of Medicaid funds and, in his second term, in complying with No Child Left Behind requirements. He also proposed grant consolidations of community development programs, state control of the Head Start program, and waivers of regulations in many low-income programs (called superwaivers). However, despite these efforts, federalism scholars argue that the federal government continued to further centralize its authority in many policy areas during his presidency, often with President Bush's approval. For example, President Bush supported the extension of \"federal goals and standards to such areas as education testing, sales tax collection, emergency management, infrastructure, and elections administration\" and the imposition of restrictions on partial-birth abortions, new work requirements for TANF recipients, and new standards for issuing secure driver's licenses. President Bush also supported legislative efforts to prohibit same-sex marriage. ", "The expansion and centralization of the federal grants-in-aid system continued under President Barack Obama and has continued, albeit counter to his recommendations, under President Trump. As shown in Table 2 , outlays for federal grants to state and local governments has continued to increase in recent years (from $660.8 billion in FY2016 to $674.7 billion in FY2017, and to an anticipated $728.0 billion in FY2018), largely due to increased outlays for Medicaid (increasing from $368.3 billion in FY2016 to $374.7 billion in FY2017, and to an anticipated $400.4 billion in FY2018). However, outlays for federal grants to state and local governments has increased in other policy areas as well. ", "As shown in Table 4 , the number of federal grants to state and local governments has also increased, from 664 in 1998, to 953 in 2009, 996 in 2012, 1,188 in 2015, and 1,274 in 2018. In addition, the emphasis on categorical grants has been retained, as 1,253 of the 1,274 funded federal grants to state and local governments in 2018 were categorical grants, and 21 were block grants. ", "Also, despite UMRA, unfunded federal mandates have continued to be issued in many policy areas. For example, CBO reports that from January 1, 2006, to December 31, 2018, 217 laws were enacted with at least one intergovernmental mandate as defined under UMRA. These laws imposed 443 mandates on state and local governments, with 16 of these mandates exceeding UMRA's threshold, 14 with estimated costs that could not be determined, and 413 with estimated costs below the threshold. CBO reported that hundreds of other laws had an effect on state and local government budgets, but those laws did not meet UMRA's definition of a federal mandate.", "Grant conditions, historically the predominant means used to impose federal control over state and local government actions, have also continued to be used to promote national goals. For example, many observers consider the adoption of the No Child Left Behind Act of 2001, signed into law on January 8, 2002, to be President George W. Bush's signature federalism achievement. Although the act allows states to define the standards used for testing, it imposed federal testing, teaching, and accountability standards on states and school districts that, overall, significantly increased federal influence on public elementary and secondary education throughout the nation. In addition, during his presidency, the Help America Vote Act of 2002 instituted \"sweeping new federal standards, along with new funding, that regulated significant features of state and local election processes.\"", "President Obama did not issue a formal federalism plan and did not formally advocate a major shift in funding priorities within functional categories. Instead, the Obama Administration attempted to cultivate", "a place-based approach, customizing support for communities based on their specific assets and challenges. This new approach seeks out communities' plans or vision for addressing a set of challenges and then works across agency and program silos to support those communities in implementing their plans. ", "However, the expansion of Medicaid eligibility under P.L. 111-148 , the Patient Protection and Affordable Care Act (ACA), which President Obama strongly endorsed, increased health care's position as the leading category of federal assistance to state and local governments. The ACA also either authorized or amended 71 federal categorical grants to state and local governments, further enhancing the role of categorical grants in the intergovernmental grant-in-aid system.", "The Obama Administration did not formally advocate a major shift in funding priorities from categorical grants to block grants, or from block grants to categorical grants. However, the number of funded block grants declined somewhat during the Obama Administration, from 24 in 2009 to 20 in 2016. Also, although the Obama Administration did support ARRA's funding for two relatively significant temporary block grants (the $53.6 billion Government Services State Fiscal Stabilization Fund for public education; and the $3.2 billion Energy Efficiency and Conservation Block Grant for energy efficiency and conservation programs) and ARRA's provision of additional, temporary funding to TANF ($5 billion), the Child Care and Development Block Grant ($2 billion), the Community Development Block Grant ($1 billion), the Community Services Block Grant ($1 billion), and the Native American Housing Block Grant ($510 million) programs, the Obama Administration generally advocated enactment of new competitive categorical grant programs (e.g., TIGER surface transportation grants and Race to the Top education grants) rather than the expansion of existing block grants or the creation of new ones. However, the Obama Administration did advocate the consolidation of categorical grant programs in several functional areas as a means to reduce duplication and promote program efficiency. For example, the Obama Administration supported the consolidation of dozens of surface transportation categorical grant programs into other surface transportation categorical grant programs in P.L. 112-141 , the Moving Ahead for Progress in the 21 st Century Act of 2012 (MAP-21). The Obama Administration also advocated the merging of categorical grant programs in the Department of Homeland Security as a means to \"better target these funds.\" ", "The Trump Administration indicated in its FY2018 budget request that it intended to refocus federal grants on \"the highest priority areas,\" provide \"a greater role for state and local governments,\" \"slow the growth of grant spending over the 10-year budget window,\" and \"rein in the growth of Medicaid.\"", "This budget proposes to cap federal funding for the Medicaid program, to establish a state matching requirement for the Supplemental Nutrition Assistance Program, to eliminate the Community Development Block Grant and Social Services Block Grant programs, and to make other reductions that reestablish an appropriate federal-state fiscal relationship and contribute to achieve a balanced federal budget by 2027. Among other grant initiatives, the budget proposes to establish a 25% non-federal cost match for FEMA [Federal Emergency Management Agency] preparedness grant awards that currently require no cost match \u2026 authorizes a new Federal Emergency Response Fund to rapidly respond to public health outbreaks \u2026 reforms the Centers for Disease Control and Prevention through a new $500 million block grant to increase state flexibility and focus on the leading public health challenges specific to each state \u2026 [and] includes $200 billion in budget authority related to the [Trump Administration's] infrastructure initiative.", "The Trump Administration continued to advocate for these objectives in its FY2019 and FY2020 budget requests. For example, the Administration indicated in its FY2019 budget request that", "Over many decades, the increasing number of grants and size of grants has created overlap between programs, and complexity for grantees, and has made it difficult to compare program performance and conduct oversight. The multiple layers of grants administration can increase the cost of administration and create inefficiencies and duplication. Less Federal control gives State and local recipients more flexibility to use their knowledge of local conditions and need to administer programs and projects more efficiently. The 2019 Budget takes steps toward limiting the Federal role, and reducing spending.", "This budget slows the growth of grant spending over the 10-year budget window and, in particular, starts to rein in the growth of Medicaid ... The Budget provides $749 billion in outlays for aid to State and local governments in 2019, an increase of 3% from 2018. The increase is entirely due to spending for the Administration's infrastructure initiative; all grant spending other than Medicaid and the infrastructure initiative will decline by 11% in 2019.", "The Trump Administration repeated its intent to slow the growth of federal aid to state and local governments in its FY2020 budget request:", "This budget slows the growth of grant spending over the 10-year budget window and, in particular, starts to rein in the growth of Medicaid, which accounts for 56 percent of total grant spending to State and local governments. The Budget provides $751 billion in outlays for aid to State and local governments in 2020, an increase of less than one percent from spending in 2019.", "Among its proposals to slow the growth of federal aid to state and local governments and improve federal grant performance, the Administration recommended that", "Medicaid be converted to a block grant or be subject to a per capita spending cap indexed to the Consumer Price Index \"to support States as they transition to more sustainable health care programs and encourage them to pursue innovative ideas to that aim to curb costs moving forward.\" states be provided \"maximum flexibility over their Medicaid programs\" to place the program \"on a sound fiscal path.\" funding be eliminated for \"lower priority grant programs,\" such as the Sea Grant, Coastal Zone Management Grants, and the Pacific Coastal Salmon Recovery Fund. funding be eliminated for Community Development Block Grants and the Economic Development Administration.", "In addition, the Trump Administration noted that its President's Management Agenda, released in March 2018, included a cross-agency priority goal of achieving results-oriented accountability for federal grants funding. The Administration's goal is to ensure that federal grants to state and local governments are \"delivered to intended recipients as efficiently as possible\" by standardizing the grants management process and data, building shared IT infrastructure, managing risk, and achieving program goals and objectives. The Administration also included proposals \"to require able-bodied adults participating in the Supplemental Nutrition Assistance Program (SNAP) enter and re-enter the job market and work toward self-sufficiency.\""], "subsections": []}, {"section_title": "Congressional Issues", "paragraphs": ["As the data in Table 2 , Table 3 , and Table 4 attest, outlays for federal grants to state and local governments, in both nominal and constant dollars, and the number of federal grants to state and local governments have continued to increase since the mid-1980s. Given its increased size and cost, providing effective congressional oversight of federal grants to state and local governments can be a daunting task. Given the decentralized nature of the congressional committee system, Congress is well positioned to provide effective oversight of individual federal grants to state and local governments. However, it could be argued that the decentralized nature of the congressional committee system is not optimally conducive to providing effective oversight of the interactive effects of multiple federal grants to state and local governments, or of the potential interactive effects of federal grants to state and local governments and federal tax policy.", "In the past, the independent, bipartisan ACIR, which operated from 1959 to 1996, provided Congress and others a series of authoritative reports on the status and operation of intergovernmental grants, both as individual programs and as a collective system. GAO has published several reports over the years on federal grants that have helped to fill the informational and analytic void left by ACIR's demise. However, it could be argued that Congress may wish to examine whether a reconstituted ACIR, perhaps one that focuses on the structure and operation of the intergovernmental system as a whole, might prove useful as an additional source of information and analysis as it conducts oversight of the federal grants to state and local governments. For example, such an organization could provide an accepted methodology for counting federal grants to state and local governments, and provide Congress periodic assessments of the intergovernmental grant system's overall performance."], "subsections": []}, {"section_title": "Concluding Remarks", "paragraphs": ["It could be argued that the recent upward trend in outlays for federal grants to state and local governments is about to end because there is a general consensus that anticipated growth in federal discretionary spending, which includes outlays for federal grants to state and local governments, may be targeted for reductions as part of an effort to address the federal deficit and debt. However, Congress's historical tendency to use federal grants to state and local governments as a means to create jobs and promote national economic growth suggests that the upward trend in federal grant outlays and federal grant numbers that has been experienced over the past several decades may continue, although at a slower pace. President Trump's FY2020 budget request estimates that total outlays for federal grants to state and local governments will increase from $696.5 billion in FY2018 to an anticipated $749.5 billion in FY2019 and $750.7 billion in FY2020.", "In retrospect, with the exception of the early 1980s, federal grant funding, the number of federal grants, and the issuance of federal mandates have increased under both Democratic and Republican Congresses and Presidents. Historically, there have been notable differences between the two parties' approaches toward federalism. Although both parties have generally opposed unfunded federal mandates, the Republican Party has done so more aggressively, as evidenced by its 1994 Contract With America, sponsorship of UMRA, and recent legislative efforts to broaden UMRA's coverage to include, when requested by the chair or ranking Member of a committee, the prospective costs of legislation that would change conditions of federal financial assistance. The Republican Party has also advocated the devolution of certain federal grant-in-aid programs to state and local governments while the Democratic Party has generally opposed devolution. The Republican Party has also been more aggressive in its support of the decentralization of grants-in-aid decisionmaking to state and local governments through the consolidation of categorical grants into block grants, for revenue sharing, and administrative relief from various grant conditions. But, overall, the historical record suggests that for most Members of both political parties, regardless of their personal ideological preferences, federalism principles are often subordinated to other policy goals, such as reducing the federal budget deficit, promoting social values or environmental protection, and guaranteeing equal treatment and opportunity for the disadvantaged. As long at this continues to be the case, and the public continues to express support for specific government programs \u0336 even if they generally oppose \"big\" government as a whole \u0336 there is little evidence to suggest that the general historical trends of increasing numbers of federal grants to state and local governments, increasing outlays for those grants, an emphasis on categorical grants, and continued enactment of federal mandates, both funded and unfunded, are likely to change."], "subsections": []}]}}
{"id": "R45817", "title": "Mozambique: Politics, Economy, and U.S. Relations", "released_date": "2019-09-12T00:00:00", "summary": ["Mozambique, a significant recipient of U.S. development assistance, is a southeastern African country nearly twice the size of California, with a population of 27.9 million people. It achieved rapid growth following a postindependence civil war (1977-1992), but faces a range of political, economic, and security challenges. These include a political scandal over state-guaranteed, allegedly corrupt bank loans received by state-owned firms, which created public debt that the government did not disclose to the International Monetary Fund (IMF). This placed the country's relations with the IMF at risk and has had major negative repercussions for the economy, donor relations, and Mozambique's governance record. Other challenges include unmet development needs, a range of governance shortcomings, organized crime, an ongoing economic slump, and political conflict and violence involving both mainstream political actors and violent extremists. Mozambique is also recovering from two powerful cyclones that hit the country in March and April 2019 (addressed in CRS Report R45683, Cyclones Idai and Kenneth in Southeastern Africa: Humanitarian and Recovery Response in Brief ).", "Between 2013 and 2016, the country experienced political violence arising from a dispute between the former socialist majority party, FRELIMO, and the leading opposition political party, RENAMO. (The latter is a former armed rebel group that fought the FRELIMO government during the civil war.) Their recent dispute, prompted by years of varied RENAMO grievances linked to FRELIMO's control of the state, led to numerous armed clashes between government and RENAMO forces. In 2019, the two parties signed a permanent cease-fire and a final political and military accord to end their dispute, but they have yet to fully implement those agreements, and the potential for failure remains. Since late 2017, Mozambique also has faced attacks by a violent Islamist extremist group that is active along its far northern coast. The group\u00e2\u0080\u0094known as Al Sunnah wa Jama'ah (ASWJ), among other names\u00e2\u0080\u0094has killed hundreds, often via beheading.", "The loan scandal has had far-reaching consequences: It has spurred local and U.S. criminal prosecutions, led some donor governments to suspend aid, undermined the state's credibility, and placed the country in debt distress, reducing its access to credit financing needed to help fund development and government operations. The scandal also is widely seen as contributing to a post-2015 slump in economic growth, which had been rapid for most of the post-civil war period. While that growth expanded the economy and contributed to a decline in extreme poverty, the majority of Mozambicans have remained poor, and while some socioeconomic indicators have improved, the country faces a range of persistent socioeconomic challenges. Development gains have remained limited despite large inflows of foreign assistance and foreign direct investment (FDI). Much of this FDI has financed large industrial projects, many of which have been criticized for being poorly integrated with the broader domestic economy\u00e2\u0080\u0094in which the informal sector and small-scale economic activity prevail\u00e2\u0080\u0094and for generating relatively few jobs or broad reductions in poverty.", "Mozambique's future may be transformed by the development of large natural gas reserves, discovered in the county's north in 2010. Gas exports are expected to begin in the early to mid-2020s and, together with rising exports of coal, to spur rapid economic growth. The U.S.-based firms Anadarko and ExxonMobil, the latter in partnership with Italy's ENI energy firm, lead international oil company consortia developing the reserves, although a merger involving Anadarko is likely to result in the sale of its Mozambique assets to France's Total SA. While the state may face challenges in effectively governing and managing the large anticipated influx of gas revenue, it has taken some steps to address such challenges. The government plans to establish a sovereign wealth fund to preserve gas income, which it intends to allocate, in part, to infrastructure development, poverty reduction, and economic diversification.", "U.S.-Mozambican ties are cordial and historically have centered on development cooperation. U.S. assistance, funded at an annual average of $452 million between FY2016 and FY2018, has focused primarily on health programs. Given recent events, U.S. engagement and aid may increasingly focus on the development of economic ties and security cooperation, notably to counter ASWJ, which is active in the area where large-scale gas processing development is underway. For many years, Mozambique received relatively limited congressional attention, but interest in the country may be growing; the country hosted congressional delegations in 2016 and 2018. U.S. humanitarian responses to the recent cyclones have also drawn congressional engagement. Developments in the country\u00e2\u0080\u0094including the rise of violent extremism and prospects for U.S. private-sector investment and U.S. bilateral aid program outcomes in a context in which state corruption poses substantial challenges\u00e2\u0080\u0094could attract increasing congressional attention in the coming years."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Overview and U.S. Engagement", "paragraphs": ["Mozambique, in southeastern Africa, faces political, economic, and security headwinds, some arguably related to the continuous domination of the state by the Mozambique Liberation Front (FRELIMO) political party. FRELIMO, a former armed liberation movement that fought for self-determination and freedom from Portuguese colonial rule, has held a parliamentary majority since achieving independence in 1975. Prior to a resurgence of political tensions and violence in 2013 between FRELIMO and RENAMO, a former armed rebel movement that is now the main opposition party, Mozambique was widely viewed as having made a durable transition to peace after its postindependence civil war (1977-1992). It also made a transition, beginning in the late 1980s, from politically and economically centralized, one-party, socialist rule, to a multiparty democratic system underpinned by a largely market-based economy. ", "The development of large offshore natural gas reserves discovered in the country's north in 2010 is expected to lead to gas exports in the early to mid-2020s and, together with rising exports of coal, to spur rapid economic growth and reverse a slump that began in 2016. This downturn was preceded by nearly two decades of post-civil war economic expansion underpinned, in part, by inflows of foreign direct investment (FDI) tied to large industrial projects. Mozambique has also received large inflows of foreign aid aimed at addressing its myriad development challenges. While there has been marked progress in reducing poverty rates and raising a range of once very low socioeconomic indicators, most Mozambicans (see Figure 1 ) have remained poor, and there are many unmet development needs. There also have been regional and demographic disparities regarding access to the fruits of growth. Large FDI-driven industrial projects prioritized by the state, for instance, have helped speed macroeconomic growth rates, but often have provided relatively few jobs or economic gains for the general population.", "Corruption and elite use of political influence to accumulate private wealth also have grown over the post-civil war period (see below), with worrisome implications for the economy and stability. The post-2015 economic decline followed disclosures that the government had failed to report to the International Monetary Fund (IMF) over $2 billion in state-guaranteed debt, which violated the terms of Mozambique's cooperation with the IMF. Two foreign banks provided these loans, in an allegedly corrupt manner, to state-owned firms registered as private entities and controlled by state intelligence officials.", "This set of events, known as the \"hidden debt affair,\" has had far-reaching consequences. It has spurred an ongoing major political scandal, Mozambican and U.S. prosecutions, and aid suspensions by multiple donor governments (albeit not by the United States). Along with broader indicators of corruption, the debt affair also has prompted some observers to question whether the state has the political will and capacity to administer effectively\u00e2\u0080\u0094and in the public interest\u00e2\u0080\u0094a large projected windfall of earnings from the energy sector. The government recently requested IMF technical assistance in undertaking an assessment of governance and corruption challenges.", "The scandal also reduced Mozambique's sovereign debt ratings and placed it in debt distress, reducing the state's access to credit needed for development projects and government operations. As of late 2018, Mozambique's public debt totaled about $15.9 billion\u00e2\u0080\u0094110.5% of gross domestic product (GDP)\u00e2\u0080\u0094and the country was $1.2 billion in arrears.", "Mozambique also faces security challenges. It is gradually overcoming a destabilizing political dispute spurred by long-standing RENAMO grievances over alleged electoral misconduct and continuous de facto FRELIMO control of the state. The dispute turned into a low-level armed conflict between RENAMO and state forces between 2013 and late 2016, when a temporary cease-fire was signed. It was later extended. In 2018, the two parties signed political and military agreements to end their dispute, and in August 2019 they signed a permanent cease-fire prior to signing a comprehensive peace accord. Since late 2017, the country also has faced a brutal insurgency by armed Islamist extremists in its far north, in an area where large-scale gas development operations are underway. Trafficking of persons, wildlife, and illicit drugs, along with other organized crime activity, also poses security challenges.", "Mozambique enjoys cordial relations with the United States and receives sizable U.S. global health assistance, but has received relatively limited congressional attention since the early 2000s. However, the country hosted congressional delegations in 2016 and 2018 that focused on such issues as U.S. health and wildlife aid and the RENAMO-FRELIMO conflict. Recent developments and policy challenges in Mozambique have the potential to draw increased congressional attention. These include increasing U.S. private-sector stakes in the energy sector, the implications of state corruption for the government's integrity and status as a U.S. development and investment partner, U.S. government counterterrorism concerns, and recovery from two powerful cyclones that hit the country in March and April 2019. The devastation caused by the cyclones has prompted an ongoing U.S. assistance response\u00e2\u0080\u0094funded at a level of $74 million as of May 31\u00e2\u0080\u0094in support of humanitarian needs and longer-term recovery efforts, alongside a broader international response. (On these issues, see CRS Report R45683, Cyclones Idai and Kenneth in Southeastern Africa: Humanitarian and Recovery Response in Brief .)"], "subsections": []}, {"section_title": "Political Background and Dynamics", "paragraphs": ["Mozambique gained independence in 1975, after a long FRELIMO-led armed struggle against Portuguese colonial rule. In 1977, RENAMO, a guerrilla group initially formed as a proxy of the white minority regime in Rhodesia (now Zimbabwe), initiated attacks against the socialist FRELIMO-led state, sparking a civil war. The war caused hundreds of thousands of deaths, social displacement, a mass refugee exodus into nearby countries, and widespread destitution. These effects were exacerbated by natural disasters, as well as by FRELIMO's abortive attempts to control the economy, which prompted a turn toward economic liberalization in the late 1980s. After internationally aided peace talks, a new constitution was ratified in 1990. Peace accords signed in 1992 ended the war and, along with U.N.-aided peacebuilding efforts, paved the way for RENAMO's transformation into a political party and multiparty elections in 1994.", "Postwar politics mainly have centered on intra-FRELIMO competition and polarized rivalry between FRELIMO, which has held an electoral majority since 1994, and RENAMO. Broad public postwar support for reconciliation and peacebuilding initially led to a system of informal bargaining among political elites over policymaking, giving RENAMO influence that it might not otherwise have had. Over time, however, FRELIMO increasingly wielded its electoral majority, aided by its strong influence over the electoral system, to marginalize RENAMO. ", "The country's constitution, which concentrates executive power in the office of the directly elected president, augmented FRELIMO's power, as did its influence over the economy and FDI flows. This was notably the case under former President Armando Guebuza (in office 2005-2015), a FRELIMO hardliner who accrued substantial private wealth. He centralized power in the presidency, appointed loyalists to state posts, and reportedly fostered an influential network of relatives and associates, many of whom used political ties to advance their business interests.", "Resentful of FRELIMO's continuous political and economic dominance and of not being allocated governorships in provinces where it claimed electoral majorities\u00e2\u0080\u0094and due to enduring bitterness over a narrow 1999 presidential election loss\u00e2\u0080\u0094RENAMO has routinely engaged in a politics of obstruction and protest. It has repeatedly boycotted elections or parliament, usually citing electoral grievances, and periodically it has threatened to withdraw from the political process or resort to violence to achieve its aims.", "Afonso Dhlakama\u00e2\u0080\u0094RENAMO's sole postwar leader until his death in 2018\u00e2\u0080\u0094spearheaded this approach, to mixed effect. While RENAMO's approach periodically won it concessions, such as incremental electoral reforms, Dhlakama often appeared to overplay his hand, making weighty demands that the FRELIMO government often rejected, either outright or after parliamentary debate. RENAMO was also considered to be afflicted by internal divisions, poor organization, and erratic leadership under Dhlakama. He also thwarted the emergence of rivals within the party, which helped spur the formation in 2009 of the Democratic Movement of Mozambique (MDM) by RENAMO dissidents led by Daviz Simango, the mayor of Beira, a key city. The MDM became the third-largest party in parliament in 2009 and nearly doubled its gains in the 2014 election. It also won four city elections in 2013, but lost all but Beira in 2018.", "Until 2013, periodic warnings by RENAMO that it might resort to coercion or violence to achieve its aims remained only threats, notwithstanding many small-scale, mostly unarmed confrontations between its supporters and authorities. Its potential to employ the force of arms, however, was always a risk, as the 1992 peace accords had permitted Dhlakama to maintain an armed personal protection unit with police-like powers. RENAMO also has long held the loyalty of ex-fighters who were not integrated into the national military at the end of the war, some with access to civil war-era arms caches and abiding postwar reintegration grievances."], "subsections": [{"section_title": "RENAMO-Government Armed Conflict", "paragraphs": ["In late 2012, Dhlakama retreated to his former wartime base and began to marshal a military force. In early 2013, RENAMO\u00e2\u0080\u0094in a manner reminiscent of its civil war tactics\u00e2\u0080\u0094launched armed attacks on police and military personnel, state facilities (e.g., health posts), and some civilian targets. Periodic clashes with state forces led to dozens of fatalities, including of civilians. Conflict waned for a time after a 2014 preelection cease-fire accord. RENAMO, however, dissatisfied with the 2014 election results and other responses to its demands, later abandoned the accord, and hostilities resumed. The renewed conflict, Human Rights Watch (HRW) reported, featured \"enforced disappearances, arbitrary detentions, summary killings and destruction of private property allegedly committed by government forces, and political killings, attacks on public transport and looting of health clinics by alleged RENAMO forces.\"", "Throughout the conflict, there were numerous on-again-off-again peace talks and provisional agreements, but binding accord was stymied repeatedly by violence, brinksmanship, and intransigence by the two sides\u00e2\u0080\u0094and by RENAMO's often shifting demands. At the start of the conflict, these centered on electoral law reforms and equitable party representation on the electoral commission. Later, among other ends, RENAMO sought", "the inclusive and nonpartisan allocation of the fruits of economic growth, including extractive sector earnings; completion of the integration of an agreed number of RENAMO fighters into the military, command posts for RENAMO officers, and related demands; and an end to FRELIMO domination of the state, including through a process of increased political decentralization under which RENAMO would be allocated governorships in areas where it has claimed high rates of electoral support.", "A 2016 cease-fire largely halted hostilities, and in early 2018, President Filipe Jacinto Nyusi and Dhlakama negotiated a framework accord on political decentralization. Uncertainty over prospects for the agreement arose after Dhlakama's death in early May 2018, but weeks later parliament enacted a series of constitutional amendments largely in line with the accord. These provide for elected provincial, district, and municipal assemblies, and for the leading delegate of the party with a simple majority in each assembly to become the chief executive at that level (i.e., governor, district administrator, or mayor.) RENAMO's disarmament has remained a bone of contention for FRELIMO. After the May 2018 decentralization reforms, FRELIMO parliamentarians delayed action on additional legislation necessary to implement the reforms, pending RENAMO's disarmament. In July 2018, however, the government and RENAMO signed a memorandum of understanding (MOU) on RENAMO military integration and demobilization. Parliament then passed some decentralization laws, and in early August, an agreement for implementing the July military accord was signed. Tensions over RENAMO's claims of fraud in the October 2018 local elections slowed the demobilization process, as did late 2018 disputes over RENAMO integration into the military and police. "], "subsections": [{"section_title": "2019 Permanent Cease-fire and Peace Agreement", "paragraphs": ["In July 2019, a group of 50 RENAMO fighters began the process of demilitarization, demobilization, and reintegration (DDR) at a largely symbolic ceremony at Satunjira, RENAMO's wartime headquarters in central Mozambique. The DDR process was conducted by a committee of government and RENAMO military representatives and foreign military observers, including a U.S. officer. Six demobilizing RENAMO members handed over weapons. Why more did not turn in weapons is not clear from news accounts, but this outcome could raise questions over RENAMO's commitment to the process if it resulted from a deliberate decision by RENAMO to defer a more extensive handover of arms. DDR began on the same day that the parliament passed a law providing immunity from prosecution for those accused of crimes related to the post-2013 armed hostilities between the government and RENAMO. On August 1, 2019, President Nyusi and RENAMO leader Ossufo Momade signed an agreement making the 2016 cease-fire permanent, and on August 6 signed a final peace accord. The signing drew widespread international plaudits. During a September 2019 visit to Mozambique, Pope Francis strongly endorsed the accords and the message of reconciliation underlying them. He also warned against corruption and plundering of natural resources.", "On August 21, a parliamentary majority adopted the peace accords as law\u00e2\u0080\u0094though MDM, the third largest party, abstained, and 37 of 89 RENAMO legislators were absent. The law includes the two 2019 agreements accords, the August 2018 DDR agreement, and related documents on implementation and monitoring. Key outcomes are to include the final disarmament and DDR of all armed RENAMO elements, the decommissioning of RENAMO bases, the provision of police protection for senior RENAMO officials, and the integration of selected RENAMO elements into the police and military, including at unit command levels. The accord does not provide for a RENAMO role in the State Information and Security Service (SISE), a longstanding RENAMO demand; RENAMO reportedly views SISE as having played key roles in the government's post-2012 security operations against RENAMO. ", "International funding to support implementation of the accord is anticipated under the accords, which provide for a donor-funded \"basket fund,\" but do not specify which governments would contribute to the fund, the amounts needed, or what the fund would support. Press reports have suggested that an informal side agreement or \"elite bargain\" may exist under which \"significant monetary compensation\" might be paid to RENAMO leaders. Whether provided officially by donors or through unofficial supplementary arrangements, the allocation of funding for the peace process\u00e2\u0080\u0094particularly any payments to individuals\u00e2\u0080\u0094could become contentious.", "Successful implementation of the accords would require progress on a number of fronts, including final passage of pending legislation relating to the decentralization of state power, a free, fair, and transparent electoral process, and completion of the DDR process for all of RENAMO's 5,000-plus fighters. Such demobilization could be hindered by internal RENAMO splits (see below) or if armed RENAMO members perceive that they face threats if they proceed with disarmament. The possible salience of the latter concern was underscored by RENAMO's mid-August claim that \"dozens\" of its members had \"been assaulted by police and members of the ruling Frelimo party across the country\" after the August 6 peace agreement was signed. RENAMO has also reported that its members have faced harassment and property arson, as well as removal of party flag displays, which it blames on government elements.", "Another potential hindrance to disarmament\u00e2\u0080\u0094and possibly to RENAMO's electoral prospects\u00e2\u0080\u0094are ongoing intra-RENAMO divisions. Such splits emerged in early 2019 when Momade replaced several top RENAMO civilian and military officials after he was elected president of RENAMO. In June 2019, a group of RENAMO combatants accused Momade\u00e2\u0080\u0094RENAMO's 2019 presidential candidate\u00e2\u0080\u0094of ethnically centered nepotism over the allocation of internal party and military integration posts. They also accused him of cooperating with the state intelligence service and of ordering the execution of two RENAMO officers. They demanded he resign, threatened to kill him if he did not, and asserted that demobilization would not proceed while he was leader. The group, whose members call themselves the RENAMO \"Junta Militar\" (military board), claim to represent RENAMO nationally and consider the peace accords null and void. They elected RENAMO general Mariano Nhongo as their leader in mid-August. A key Junta Militar grievance is their claim that Momade has \"excluded 60%\" of RENAMO forces from the DDR and security service integration process. The group also has called for elections to be postponed to enable Nhongo to compete in the electoral contest. ", "The Junta Militar may not be able to force a postponement of the election or displace Momade as national RENAMO leader. Observers and the opposition MDM party, however, see a need for the Junta's concerns to be addressed, as the group is a potential peace- and electoral-process spoiler. The Junta has threatened to violently halt the 2019 election, and press reports have attributed several attacks by unidentified assailants to the group, which reported in early September 2019 that the national military had attacked a Junta's base. A separate smaller RENAMO subgroup also has demanded Momade's departure. "], "subsections": []}]}, {"section_title": "Recent Elections and Forthcoming 2019 Electoral Contest", "paragraphs": ["General elections were last held in 2014, after tense local elections in 2013, which RENAMO boycotted. Electoral preparations took place amid armed RENAMO-government clashes, but hostilities waned after a prevote cease-fire. Because then-President Guebuza was term-limited, FRELIMO chose as its candidate then-Minister of Defense Filipe Jacinto Nyusi, a longtime party member from the gas-rich north. Nyusi won the presidency with 57% of the vote\u00e2\u0080\u0094a sharp drop from Guebuza's 75% in 2009. Dhlakama won 37%, and MDM leader Simango won 6%. FRELIMO garnered 144 of 250 seats in parliament, RENAMO, 89, and the MDM, 17. ", "Despite some local and international criticism of the vote and a reported range of electoral process irregularities, the results were internationally accepted as generally credible and confirmed by the constitutional court\u00e2\u0080\u0094although it questioned the vote tabulation process. RENAMO rejected the results, boycotted parliament in protest, and demanded the creation of a joint FRELIMO-RENAMO caretaker government, as well as the appointment of governors, ministers, and other officials from both parties. FRELIMO rejected these demands and RENAMO later took its parliamentary seats. ", "Local elections in October 2018 were generally peaceful in most of the country, notwithstanding some electoral violence and procedural irregularities, and allegations of police protection of FRELIMO supporters involved in violent acts. Prior to the vote, RENAMO threatened to deploy armed men to stop what it asserted were state efforts to rig the results. After the vote, opposition parties launched multiple legal appeals, but local courts reportedly rejected nearly all on technical grounds. RENAMO and the MDM, claiming fraud and irregularities, protested the outcomes in multiple cities, and RENAMO threatened to halt the peace process, but ultimately did not do so. As discussed above, the peace process has continued, but remains incomplete.", "National elections are to be held in October 2019, and campaigning opened in late August. Press outlets have reported the alleged FRELIMO use of state resources and pressuring of public workers to support the party, localized intimidation of election campaigners of various parties, and sporadic election violence, including two murders. ", "Pre-election voter registration in spring 2019 was controversial. Some 90% of voting-age adults reportedly registered to vote, but the process featured indications of possible manipulation by STAE, the election administration secretariat. STAE calculated an unusually high adult population in at least two historically pro-FRELIMO provinces and sent extra registration teams to those areas, while doing the opposite in Zambezia, a RENAMO stronghold. As a result, registration in several key pro-FRELIMO provinces exceeded the number of voting-age adults. On the basis of the larger electorate in Gaza, the national election commission, the CNE, awarded nine additional seats to the traditionally FRELIMO-leaning province. RENAMO appealed the registration in Gaza, but its case was thrown out on a technicality. ", "In August the CNE rejected a private organization's offer to audit the Gaza registration. The Gaza controversy also prompted the resignation of the head of the National Statistics Institute. He had faced sharp criticism from President Nyusi after strongly defending the integrity of the census data at the heart of questions over 2019 voter registrations in the province, thus bolstering questions over the integrity of the voter registration process. Another factor that could work in the government's favor is the impact of the large cyclones that hit the country March and April 2019, primarily in areas where RENAMO is viewed as enjoying positive electoral prospects. Thousands of potential voters in the affected region were displaced and/or lost identification or voter registration papers as a result of the storms and related flooding. RENAMO has also accused STAE's chief of favoring FRELIMO. "], "subsections": []}]}, {"section_title": "Violent Islamist Extremism", "paragraphs": ["Mozambique faces a growing security threat that is separate and distinct from the RENAMO-state conflict. Since October 2017, members of an Islamist extremist group have carried out many attacks in mostly Muslim coastal districts of Cabo Delgado Province, adjacent to Tanzania. The group is known locally as Al Shabaab (\"the youth\" in Arabic, and also the name of a separate Al Qaeda-linked Somali group) and as Ansar al Sunnah (\"Defenders of the Sunnah\" [Islamic prophetic tradition]) or Al Sunnah wa Jama'ah (ASWJ, \"Adherents of the Sunnah\"). ", "The group, whose leadership and aims remain opaque, has targeted police stations, other state facilities and personnel, and local civilians\u00e2\u0080\u0094along with contractors working for the U.S.-based energy firm Anadarko. ASWJ attackers have raided provisions and arms and used arson to cause extensive destruction to village buildings and crops. They often employ crude weapons, notably machetes, but also guns and explosives and have reportedly killed more than 300 people\u00e2\u0080\u0094often by beheading\u00e2\u0080\u0094spurring population displacements. Group members often reportedly target those they view as cooperating with the state. Several recent attacks attributed to ASWJ have killed significant numbers of state security forces, as well as civilians. Numerous insurgents have also been killed in clashes with security forces.", "Information on the group is limited and contested, as access to the affected area by journalists and researchers has been curtailed by insecurity largely viewed as attributable to the group and by systemic state obstruction and harassment of journalists in the area. The group may include members of a violent Islamist Tanzanian movement and may have ties to the potentially Islamic State (IS)-linked Allied Democratic Forces (ADF) group in Central Africa; several reported ADF members from Uganda with alleged links to ASWJ have been arrested in Mozambique. In May 2018, several ASWJ members posted a social media video stating that they planned to pledge allegiance to IS. In 2019, IS has claimed responsibility for several attacks. ", "ASWJ was reportedly formed in 2014 by two or more local Islamists, some of whom may have received military training abroad, and foreign African Islamist extremists. It may also have roots in a group formed by dissidents from the state-affiliated Islamic Council who formed a group called Ansar al Sunna in the late 1990s. The group generally does not claim its attacks and has issued few statements about its goals. Some researchers report that the group espouses jihad (armed struggle against perceived enemies of Islam), the creation of a Sharia (Islamic law)-based state, and rejection of state institutions and services (e.g., education, taxation, and voting). Its ideas may be influenced by foreign Islamist ideologies, and by trade and social ties to the Swahili Coast, a cultural-linguistic and religious region extending northward to southern Somalia. Some accounts suggest that the group has been influenced, in particular, by Sheikh Aboud Rogo Mohammed, a Kenyan preacher whose Swahili-language teachings circulated widely in East Africa. Rogo, who was subject to U.S. and U.N. sanctions for supporting Somalia's Al Shabaab, was assassinated in 2012.", "ASWJ members reportedly initially proselytized locally to advance their beliefs and build a base of adherents, and later employed a mix of payments and coercion to recruit. Their activities attracted a mix of local opposition, including from the provincial officials of the national Islamic Council, and local support. ASWJ reportedly has provided business loans and employment to locals in exchange for fealty to the group. Poor young males with limited education appear to be key targets, and ASWJ may sponsor the Islamic education abroad of some.", "Some analysts contend that ASWJ, like many African Islamist armed groups, largely comprises disaffected youth who may be influenced by Islamist ideology but are driven primarily by anger over local grievances (e.g., economic disparities, limited or poor state services, and high unemployment). Other notably intense sources of local anger that the group may exploit include the loss of local agricultural and fishing livelihoods, the seizure of land by local and state elites, and nontransparency and corruption in compensation processes associated with the growth of the natural gas and gemstone mining industries. Other sources of local tension are rivalries, including over land and political party affiliation, between the mostly Catholic Makonde and mostly Muslim Mwani people, among other local ethnic groups.", "Some analysts believe that ASWJ is directly involved in illicit activity that is prevalent in the region. Others suggest that the group does \"not control any major contraband trade\" and that the \"illicit economy as a whole provides varied opportunities\" exploited by the group, which in the future could potentially become more deeply involved in illicit trafficking and other networks. Illicit activity in the affected region includes petty corruption (e.g., police and public services bribery), trafficking of heroin, persons, ivory and other poached wildlife items, gold, and gemstones, as well as illicit timber trade and an untaxed cross-border trade in consumer goods. State officials are key reported beneficiaries of such trade.", "State security forces' heavy-handed, arguably often ineffective responses to ASWJ violence also appear to have alienated local populations. Security forces reportedly often arrive at attack sites well after the insurgents have departed and arrest locals whom they identify as linked to the group, often on dubious grounds. Detainees have been beaten or treated inhumanely and illegally detained by military forces, or held by police without charges and beyond the legally permitted period. Some have reported torture, and there are unconfirmed reports of extrajudicial killings by security forces. Mass arrests, starting after ASWJ's October 2017 initiation of conflict, have been followed by mass trials of alleged perpetrators of ASWJ-linked crimes."], "subsections": []}, {"section_title": "Economy, Development Challenges, and Aid", "paragraphs": ["Mozambique sustained rapid post-civil war growth: GDP grew by an annual average of 8.4% from 1993, at the end of the war, through 2015. In 2016, however, growth fell to 3.8% from 6.6% in 2015, and in 2018 has slumped further, to 3.3%. The IMF has attributed this decline to weak global commodity prices, poor weather conditions, and \"the issue of undisclosed loans in the spring of 2016 and the ensuing freeze in donor support.\" The RENAMO-government conflict also may have contributed to the slowdown, and the effects of the two cyclones in 2019 may further reduce growth in the short to medium term.", "While Mozambique's long period of post-civil war growth reduced extreme poverty, poverty rates generally remain high. In 1996, shortly after the war, 83% of the population lived on less than $1.90 a day (the international comparative poverty line, as measured in constant 2011 dollars); by 2014 (when last measured) 62.4% did so. Mozambicans have remained among the world's poorest people, with an estimated average GDP per capita of $476 in 2018 (current dollars)\u00e2\u0080\u0094the seventh-lowest globally, and down from a peak of $620 in 2014. In addition, income is unequally distributed. Similarly, while multiple social indicators have improved since the war (e.g., rates of child and maternal mortality and access to health care and education), they have advanced from a low starting point, and many remain poor by regional and global standards. Mozambique ranked 180 th among 189 countries assessed on the 2018 U.N. Human Development Index (HDI, a comparative statistical composite measure), and is making limited progress toward achieving most of the U.N. Sustainable Development Goals.", "Development gains may have remained limited due to a growth pattern in which FDI inflows have centered on large export-oriented industrial projects (e.g., bauxite smelting, power plants, mining, large-scale agriculture, and, recently, natural gas development). While such projects have helped spur high aggregate GDP growth rates, they often have functioned as commercial enclaves with weak linkages to the broader economy. Many such projects have generated relatively few permanent jobs or other benefits for the general population, and some have enjoyed state policy favoritism and tax breaks that tend to benefit project investors, rather than society at large. Financial gains from such activities have strongly favored politically connected elites involved in such projects as investor intermediaries, technical experts, regulators, and local business partners. Some megaprojects, such as large mines, have resulted in loss of farmland and population displacements, sometimes to marginal areas where subsistence farming is difficult. Some large projects, however, may be starting to benefit the broader society, as with extractive sector investment in multiuse infrastructure (e.g., roads and railways). ", "The disjuncture between the local economy and megaproject activity is significant. Most Mozambicans, an estimated 86% or more of the work force, make their living in the informal sector, often as subsistence and cash crop farmers, fishermen, and small-scale manufacturers and traders. Productivity within this large segment of the economy, however, is constrained by little access to credit, business training, or technical expertise. Youth unemployment is a particular challenge. Nearly 68% of Mozambicans are age 25 or younger, and many young people from rural areas, home to 65% of the population in 2017, often gravitate toward cities, where job growth has not kept up with increasing education and training rates\u00e2\u0080\u0094even though these are low.", "Mozambique's socioeconomic development gains have remained moderate, despite sizable inflows of net official development assistance (ODA). Such aid averaged $1.96 billion annually from 2008 through 2017, making the country the 15 th -largest recipient globally in the period, during which the United States provided an average of $367 million annually (19% of net ODA) and was the largest bilateral donor. "], "subsections": [{"section_title": "Investment Climate and Sectoral Trends", "paragraphs": ["Despite some improvements in the ease of doing business, the economy remains constrained by high transaction costs and taxes, cumbersome regulations and laws, poor transport and other infrastructure, and corruption (see below). Mozambique scored 16 th out of 48 sub-Saharan African countries assessed in the World Bank Doing Business 2019 survey score, but it scored 135 th out of 190 countries globally. Its indicators for starting a business, access to credit, certain investor protections, and tax payment complexity were notably poor.", "Recent FDI activity has centered on the growing coal sector and natural gas development (see below). FDI peaked at $6.2 billion in 2013 but has since declined steadily, to $2.3 billion in 2017 (latest data), though levels remain far higher than prior to the discovery of gas. Mozambique is a top regional FDI destination; it received the sixth-largest FDI inflows in Africa in 2017. Its total FDI stock is also large; at $37.5 billion in 2017, it was the fourth-largest in Africa. Annual U.S. FDI into Mozambique from 2013 to 2017 averaged $824 million a year (18% of such FDI).", "Agriculture. Agriculture is the backbone of the domestic economy and plays an indirect role in ensuring stability, as a source both of incomes and affordable food for urban consumers. Mozambique has extensive agricultural land and water resources and favorable agro-climatic conditions in many areas, though soil quality is often nutrient-poor, and droughts and floods are frequent. In 2017, the sector employed an estimated 72% of the labor force and contributed about 21% of GDP. The sector is dominated by smallholders (about 90% of producers) but has attracted more than 400 large commercial investment projects over the past two decades. Such projects have centered on food production, sugar, tobacco, cotton, cashew nuts, biofuels, and timber, and attracted at least $6.5 billion in investment between 2002 and 2012. The sector, and notably agro-processing, remains a key source of FDI opportunities. ", "Notwithstanding agriculture's prominence in the economy and in state economic plans, for years the sector has reportedly received relatively limited state funding. Key challenges include low productivity rates and diverse constraints (e.g., relating to transport, input and credit access, and underinvestment in various areas), and contested land rights. The impacts of large FDI agro-projects have been mixed. Some have been given preferential access to prime land by the state and/or displaced smallholders, but a number have created jobs, often via smallholder contract farming involving the provision of technical assistance and inputs. Many also contribute to the national food supply; farming projects targeting local markets have enjoyed particular success.", "Mining . Mozambique is reported to have up to 25.6 billion tons of coal reserves, although the amount that may be recovered on economically favorable terms may be far smaller. Production and exports began in 2010 and have risen rapidly, notwithstanding a price-induced slump in coal export volumes in 2016. Mozambique is now Africa's second-largest coal producer (after South Africa). Coal exports contributed 45% of all export value in 2017 and are expected to rise. Mining of other resources is also growing. Exports of graphite (used in lithium ion batteries), titanium, and related ores (niobium and tantalum) are increasing: these exports contributed 4% of export value in 2017. Mozambique has long exported precious stones (3% of exports in 2017) and has other varied, largely untapped mineral and ore reserves.", "Power Sector . About 27% of Mozambicans had access to electricity in 2017. The power sector is a key focus of FDI and state investment, both for export and local use. Hydropower accounts for about 81% of installed capacity, but there are several coal, natural gas, and solar electricity generation projects underway, primarily for industrial and commercial use, and sizable further generation potential. Key challenges include grid weaknesses, regional domestic access disparities, poverty (i.e., an inability to pay), and regulatory and policy challenges (e.g., a need for price, market, and sector financing reforms). In 2017, the World Bank provided $150 million to upgrade the grid and improve the public utility. Mozambique also receives support under the U.S. Agency for International Development (USAID) Power Africa program.", "Natural Gas . Mozambique is estimated to have at least 100 trillion cubic feet (TCF) of proved reserves of natural gas (hereinafter, \"gas\"), placing it among the top 15 countries in terms of reserves. Some sources report far higher estimates, and further exploration and assessment is underway. Energy firms are building gas extraction and processing infrastructure to export output from the main reserves, which were discovered beginning in 2010 in a complex of offshore gas fields in the Rovuma Basin, a geologic zone in Mozambique's far north. Such activity is expected to grow; the IMF has projected that total Rovuma Basin investments may exceed $100 billion. ", "U.S.-based Anadarko Petroleum leads one international consortium developing the Rovuma reserves, with production slated to begin in 2024. U.S.-based ExxonMobil leads development of a second area in partnership with Italy's ENI and several smaller energy firms. An ENI-operated offshore floating liquefied gas processing and export platform is expected to produce Mozambique's first Rovuma exports in 2022. Additional offshore blocks are also being explored. Gas exports are expected to greatly expand public revenues\u00e2\u0080\u0094after the state's share of capital development costs are paid off\u00e2\u0080\u0094and fuel rapid GDP growth. The IMF projects a gas-linked spike in GDP growth from 4% in 2022 to 11.1% in 2024. Gas is also forecast to be used domestically in a variety of industries. Since 2004, gas has been exported via a pipeline to South Africa from two smaller onshore gas fields in central Mozambique. The pipeline also feeds a power plant in Mozambique."], "subsections": []}, {"section_title": "Mozambican Government Debt Controversy and U.S. Prosecutions", "paragraphs": ["Beginning in 2013, the government guaranteed a series of allegedly corrupt, off-budget bank loans to state-owned enterprises (SOEs) totaling more than $2 billion. It did not report this debt to the IMF until 2016, well after the loans were revealed in the press. This failure to report violated its obligations to the IMF and created an ongoing scandal that led some donors to suspend some aid. The funds at issue, loans or securities syndicated by foreign private banks, went to three SOEs owned by the State Information and Security Service (SISE), the Defense Ministry, and other state agencies. The SOEs' affairs could be kept confidential because technically they were private and because SISE classified their activities as secret on national security grounds.", "SISE ostensibly formed the SOEs\u00e2\u0080\u0094ProIndicus, Mozambique Asset Management (MAM), and Empresa Mo\u00c3\u00a7ambicana de Atum (Ematum)\u00e2\u0080\u0094to, respectively, perform coastal surveillance; build and maintain shipyards; and engage in tuna fishing. Ematum reportedly was also to be used as a channel for off-budget maritime security spending. The SOEs' business plans were based on dubious assumptions and the firms pursued few of their ostensible intended purposes. None turned a profit and all entered credit default, saddling the state with repayment.", "In late 2018, the U.S. Department of Justice (DOJ) indicted three Mozambican officials, an executive of Privinvest, a foreign shipbuilding firm, and foreign investment bankers whom DOJ accused of a joint conspiracy \"to defraud investors and potential investors\" in relation to the SOEs' loans. DOJ said the indictees \"created the maritime projects\" to divert parts of the financing to \"pay at least $200 million in bribes and kickbacks to themselves,\" state officials, and others. The loans at issue were provided by Russian state-owned VTB Bank and multinational investment bank Credit Suisse\u00e2\u0080\u0094and/or syndicated as securities sold by the latter. Indictees include then-Finance Minister Manuel Chang, a SISE official, and a representative of the office of then-President Guebuza. They collaborated with two Privinvest officials and three Credit Suisse employees, all indictees in the case. No employees of VTB Bank were charged.", "DOJ also charged that \"to hide from the public and the IMF\" the fraud-related \"near bankruptcy\" of the SOEs, the indicted bankers proposed an exchange of Mozambican-issued Eurobonds for Credit Suisse securities sold to fund the Ematum loan. The state and Ematum's investors accepted the exchange in April 2016. The three SOEs then defaulted on their loans. ", "After the debts were revealed, the government resisted disclosing further information about the loans, but was forced to do so as a condition for continuing cooperation with IMF, which has publicly linked the loans to corruption. The IMF and the World Bank demanded an audit, which the independent firm Kroll Associates conducted on behalf of Mozambique's national prosecutor. The government restricted Kroll's access to documents, but the firm was able to identify $713 million in apparent deal price inflation and $500 million in unaccounted-for financing. Mozambique's parliament also investigated the loans, and national judicial authorities are pursuing criminal prosecutions, although local civil society groups have criticized these efforts as slow and selective. Local arrests in the case, including a son of ex-President Guebuza, SISE officials, and other high-profile figures, began only after the U.S. indictment was issued.", "In late 2018, Chang was arrested in South Africa on a U.S. extradition warrant, but South African officials instead accepted an extradition request from Mozambique. In late May 2019, the government and its creditors provisionally agreed to restructure the Ematum Eurobond bonds and $535 million in VTB MAM debts, though further negotiation is likely. The case has generated multiple lawsuits, including a government effort to negate portions of the debt. Two of the indicted bankers have pled guilty to various charges. More legal and financial fallout is possible, particularly if the government of President Nyusi\u00e2\u0080\u0094the defense minister when the loans were signed\u00e2\u0080\u0094does not effectively ensure that those responsible are held to account, or if indictees in the case reveal new information or other cases of corruption. ", "Meanwhile, local and international civil society groups are advocating nonpayment of the debt and asserting that the debt is \"odious,\" or morally and legally illegitimate, and thus subject to repudiation. On June 4, the Mozambique Constitutional Council ruled that the Ematum debt was illegal, but the implications are unclear. "], "subsections": []}]}, {"section_title": "Corruption and Crime", "paragraphs": ["The debt scandal is the highest-profile instance of corruption, but it is not unique. Corruption, both small- and large-scale, is \"endemic ... particularly in the police, judiciary and civil service,\" but corruption prosecutions, especially of officials, are rare. The country ranked 158 out of 180 countries on Transparency International's Corruption Perceptions Index 2018 , and its World Bank Worldwide Governance Indicators (WGI) rankings also have declined. While the IMF reports that Mozambique has a \"relatively comprehensive anti-corruption legislative framework,\" the institutional capacity to implement the framework has remained weak, as has judicial accountability. Heavy state involvement in multiple economic sectors, and nontransparency in state processes, contracting, and outcomes, the IMF reports, also create opportunities for corruption and conflicts of interest, notably in the extractive sector.", "A nexus also reportedly exists between public corruption, organized crime, and large black markets in goods. Drug trafficking has been reported to fund political party activity, and corruption may be tied to some political killings. The analytical nonprofit Global Financial Integrity (GFI) reports that illicit financial outflows (i.e., business bribery, tax evasion, money laundering, and trade and transfer mispricing/misinvoicing) may have contributed as much as 48% of the country's trade with advanced economies in 2015. According to the State Department, \"[f]inancial fraud, especially tax evasion, and drug trafficking,\" alongside \"misappropriation of state funds, kidnappings, human trafficking ... and wildlife trafficking,\" generate a large share of money laundering. Trafficking is facilitated by a \"largely unpatrolled coastline, porous land borders, and a limited rural law enforcement presence,\" making the country a major corridor for flows of illicit goods. ", "Drug trafficking is a notable challenge. Mozambique has long been and remains a transit point for illicit trafficking of heroin (mostly from South Asia, notably Pakistan, via sea), cocaine (from South America, via air), and precursor chemicals. Most narcotics are reportedly bound for South Africa and other countries in the region, but some transit onward to Europe and North America. The heroin trade is especially well developed. The volume trafficked through the country may total 40 tonnes or more a year and contribute $100 million or more to the local economy.", "Given the weakness of fiscal and anticorruption institutions, some observers have questioned whether the state has the political will and ability to effectively govern the large expected influx of gas revenue. The government has taken some steps to address such challenges. For instance, in 2009, Mozambique joined the Extractive Industries Transparency Initiative (EITI), a voluntary international effort to make extractive industry revenue contracts and revenue payment and receipt data publicly accessible, and to increase related fiscal accountability. The government plans to require beneficial ownership and business interest transparency, to establish a sovereign wealth fund to preserve and manage gas income, and to allocate a fixed share of gas revenue to fund infrastructure development, poverty reduction, and economic diversification."], "subsections": []}, {"section_title": "U.S. Relations and Assistance", "paragraphs": ["Bilateral relations are cordial, although the United States has expressed concern over the hidden debts affair\u00e2\u0080\u0094a concern underlined by the late 2018 U.S. DOJ indictment of several high-ranking Mozambican officials in the matter. Stated U.S. policy goals in Mozambique include democratic, transparent, and inclusive governance; enhanced health and education; sustainable economic growth, trade, poverty reduction, and investment; and food security and access to nutrition. U.S. aid programs also have sought to strengthen Mozambique's ability to respond to transnational crime, including trafficking in persons, narcotics, and wildlife. Efforts to counter the growing extremist threat in an area that hosts large U.S. natural gas industrial operations are another growing priority. The United States also is the leading bilateral donor in international efforts to address humanitarian and rebuilding needs caused by widespread destruction in central and northern areas hit by massive cyclones in early 2019. The State Department projects that cyclone recovery may require billions of dollars in the years ahead.", "The United States also supports efforts to reach a durable settlement between RENAMO and the government. It is a member of the ad hoc international contact group on Mozambique, which helps mediate between the two parties and includes the European Union, China, Botswana, the UK, Norway, and Switzerland (the group's chair). The United States also planned to deploy military observers to join a team that was to monitor implementation of the 2014 cease-fire, but never did, as the accord fell apart due to RENAMO's refusal to disarm.", "Cooperative bilateral ties were reflected in a five-year, $506.9 million Millennium Challenge Corporation compact signed in 2007 and completed in 2013. The compact supported increased access to clean water and sanitation, transportation upgrades, land tenure improvements, and increased farmer income and production, primarily in northern Mozambique. In addition, a 196-volunteer member Peace Corps program supports education and health care projects.", "According to the FY2020 State Department budget request for Mozambique, U.S. bilateral aid", "seeks to address key drivers of instability in northern Mozambique, including ineffective local governance and government service delivery, and a pervasive lack of jobs, especially for youth. Assistance will help local institutions to transparently and effectively address citizens' basic needs; support the government in providing high quality basic education services; and catalyze private sector investment to help the large youth population develop workforce skills essential to participate in emerging economic opportunities.", "U.S. nonemergency bilateral development aid totaled nearly $472 million in FY2018 appropriations. Of this, $428 million was for health programs, nearly $40 million for development activities, $0.7 million for International Military Education and Training (IMET), and $3.6 million for food aid. The Trump Administration requested $251.7 million in development aid for Mozambique for FY2019, of which it proposed to allocate 97% to health programs. While Congress has enacted FY2019 foreign aid appropriations, country allocations\u00e2\u0080\u0094which the Administration and appropriators negotiate annually\u00e2\u0080\u0094have not yet been finalized. The FY2020 request is for $403.5 million, of which health aid would compose 98.5% ($397.5 million), with $5.6 million for other development activities and $0.5 million for IMET.", "Health care programs have been the main focus of U.S. aid programs for years. The bulk of funding has supported HIV/AIDS programming to address Mozambique's high adult HIV prevalence rate of 12.5% (2017). Most of this aid has been funded under the Global Health Program (GHP)-State Department account and administered under the U.S. President's Emergency Plan for AIDS Relief (PEPFAR). Additional GHP-USAID funds support programs to combat malaria\u00e2\u0080\u0094the cause of roughly 29% of all deaths and 42% of deaths of children under the age of five\u00e2\u0080\u0094under the President's Malaria Initiative. Such funds also support programs to combat tuberculosis and enhance maternal and child health, family planning and reproductive health, and nutrition. Until FY2017, agricultural development, mostly under the U.S. Feed the Future (FTF) initiative, was another priority area for U.S. aid. FTF activities have focused on enhancing agricultural productivity, improving nutrition, and connecting farmers to markets, notably in north-central Mozambique in areas with poor nutrition that contain or are near key trade corridors. Basic education was a key priority in FY2018, with funding at $13.7 million, but requested funding for education decreased to $3.5 million in FY2019 and $3 million in FY2020. Aid has also supported good governance programs, with a focus on building the capacity of civil society groups to engage in policy analysis and advocacy.", "Mozambique periodically receives some U.S. Fish and Wildlife Service funding, and USAID supports a range of wildlife law enforcement capacity building, conservation, and CBNRM programs. In recent years, USAID has also supported coastal urban city governments' adaptation to rising sea levels and regional conservation and management, as in the Limpopo River Basin. Wildlife-centered programs aim to address widespread wildlife poaching, wildlife trafficking\u00e2\u0080\u0094both of wildlife from Mozambique and that trafficked through Mozambique to and from other countries\u00e2\u0080\u0094and the recovery of wildlife populations that in some areas were systematically depleted by hunting during the civil war. In addition to being a key ivory source country, Mozambique is a key regional wildlife trafficking transit country, notably of elephant ivory and rhino horn destined for Asia. Other key species, including lions and other big cats, are also systematically poached in Mozambique."], "subsections": [{"section_title": "Security Issues", "paragraphs": ["According to the State Department, Mozambique's government lacks adequate capacity to deal with the \"complexity of violent extremism.\" The department is helping the government to develop a comprehensive counterextremism approach, including a \"holistic security, community engagement, and communications approach ... to address governance and development issues\" while also helping to build the capabilities of Mozambican security forces. Together with other donor governments, the State Department is working to help foster those outcomes and increase U.S. counterextremism program assistance. U.S. government interagency teams and experts have consulted in Mozambique with state, civil society, academic, and private-sector actors to better understand the drivers of violent extremism and unmet socioeconomic needs and grievances that may underlie the phenomenon. They have also compiled an \"extensive list of recommended interventions\" aimed at countering the growth of extremism and addressing unmet needs.", "The State Department nevertheless reports that \"there are still significant gaps in our understanding of the violent extremism affecting northern Mozambique ... [including] the extent of the groups, their motivations, objectives and funding sources.\" It plans to adjust the U.S. strategy as knowledge increases. According to State Department Southern African Affairs Director Stefanie Amadeo, some recommended activities are underway, including", "[a] grant program to promote constructive dialogue between local residents and youth, religious leaders, and security forces in Cabo Delgado province through the Islamic Council; a baseline assessment and strategic communications program to assist key stakeholders with more effective youth messaging and outreach; the provision of U.S. logistics and communications advisors to support the Mozambican government's efforts; and programs to build the capacity of civilian law enforcement to engage with affected communities and investigate suspected acts of terrorism.", "USAID is also funding a $2 million program centered on mitigating drivers of instability and violent extremism in Cabo Delgado through efforts to increase youth economic and civic empowerment, foster constructive community-local government engagement, and build local governments' capacity to address community and youth priorities. ", "In addition, in mid-2018, Mozambique became a Partnership for Regional East Africa Counterterrorism (PREACT) country. PREACT activities have yet to be determined, but may include funding for law enforcement, justice, military, and civil society programs. PREACT is a multiyear, multisector initiative that supports a range of counterextremism programs and efforts to contain and/or disrupt terrorist networks. Programs range from vocational and educational efforts to counter extremist messaging and economic inducements to law enforcement, military, and specialized counterterrorism unit training and capacity-building to intelligence, surveillance, and reconnaissance equipment and technical assistance.", "International narcotics smuggling through Mozambique is a long-standing U.S. concern. In 2017, the Drug Enforcement Administration (DEA) opened an office in Maputo, and it is currently \"developing mechanisms to facilitate future information sharing on money laundering.\" These include a \"working relationship\" with Mozambique's attorney general and National Criminal Investigations Service (SERNIC), the lead antidrug law enforcement agency, which in 2018 \"agreed to establish a joint DEA/SERNIC drug investigative unit to combat transnational organized crime.\" The State Department reports that while a range of weaknesses remain, the government has shown progress in enforcing anti-money-laundering (AML) laws and regulations\u00e2\u0080\u0094including by investigating ties between heroin trafficking and official corruption\u00e2\u0080\u0094and that efforts are underway to establish bilateral AML records-exchange procedures. ", "In addition, Mozambique engages in military-to-military cooperation with the U.S. Defense Department's Africa Command (AFRICOM), and in early 2019 participated in Cutlass Express 2019, a multination naval exercise. A portion of the exercise focused on combatting illegal trafficking and maritime piracy, and the interception of illegal fishing vessels in Pemba and offshore waters near Mozambique's gas fields."], "subsections": []}, {"section_title": "Trade", "paragraphs": ["Mozambique is eligible for trade benefits under the African Growth and Opportunity Act (AGOA, Title I, P.L. 106-200 , as amended), including textile benefits, but its AGOA exports are limited. They accounted for less than 1% of an average annual $123 million in total exports to the United States from 2014 through 2018. U.S. exports to the country averaged $231 million a year during the same period. To help the government increase firms' use of AGOA, USAID supported development of a Mozambique AGOA utilization strategy, released in May 2018. Mozambique hosted the U.S. Corporate Council on Africa's US-Africa Business Summit in June 2019, which was attended by a U.S. high-level delegation. The U.S. Commercial Service has recently expanded its presence in Mozambique, in part due to rising U.S. investment in the energy sector."], "subsections": []}]}, {"section_title": "Outlook", "paragraphs": ["Mozambique may enjoy substantial economic growth after expected gas exports begin in the mid-2020s, and as coal exports rise, but the government may face significant challenges in effectively using those resources for the benefit of its people. A range of governance challenges\u00e2\u0080\u0094including corruption, state institutional weaknesses, and an untested new system of political decentralization\u00e2\u0080\u0094may continue to hinder socioeconomic development. The still-incomplete peace process between RENAMO and the government also poses a risk to stability, as does the geographically limited but extremely brutal extremist violence in the north. The United States is providing assistance to help the country address these challenges, in addition to continuing to provide significant amounts of assistance for the health sector. If recent-year aid allocation trends are maintained, such cooperation is likely to persist in the coming years."], "subsections": []}]}}
{"id": "R41184", "title": "Small Business Administration 504/CDC Loan Guaranty Program", "released_date": "2019-05-29T00:00:00", "summary": ["The Small Business Administration (SBA) administers programs to support small businesses, including several loan guaranty programs designed to encourage lenders to provide loans to small businesses \"that might not otherwise obtain financing on reasonable terms and conditions.\" The SBA's 504 Certified Development Company (504/CDC) loan guaranty program is administered through nonprofit Certified Development Companies (CDCs). It provides long-term fixed rate financing for major fixed assets, such as land, buildings, equipment, and machinery. Of the total project costs, a third-party lender must provide at least 50% of the financing, the CDC provides up to 40% of the financing through a 100% SBA-guaranteed debenture, and the applicant provides at least 10% of the financing. Its name is derived from Section 504 of the Small Business Investment Act of 1958 (P.L. 85-699, as amended), which provides the most recent authorization for the SBA's sale of 504/CDC debentures. In FY2018, the SBA approved 5,874 504/CDC loans amounting to nearly $4.8 billion.", "Congressional interest in the SBA's 504/CDC program has increased in recent years because of concern that small businesses might be prevented from accessing sufficient capital to enable them to grow and create jobs. For example, during the 111th Congress, P.L. 111-240, the Small Business Jobs Act of 2010", "increased the 504/CDC program's loan guaranty limits from $1.5 million to $5 million for \"regular\" borrowers, from $2 million to $5 million if the loan proceeds are directed toward one or more specified public policy goals, and from $4 million to $5.5 million for manufacturers; temporarily expanded, for two years, the types of projects eligible for 504/CDC program refinancing of existing debt; created an alternative 504/CDC size standard to increase the number of businesses eligible for assistance; and provided $505 million (plus an additional $5 million for administrative expenses) to extend temporary fee subsidies for the 504/CDC and 7(a) loan guaranty programs and a temporary increase in the 7(a) program's maximum loan guaranty percentage to 90%.", "The temporary fee subsidies and 90% loan guaranty percentage ended on January 3, 2011, and the temporary expansion of the projects eligible for 504/CDC program refinancing of existing debt expired on September 27, 2012.", "During the 114th Congress, P.L. 114-113, the Consolidated Appropriations Act, 2016, reinstated the expansion of the types of projects eligible for refinancing under the 504/CDC loan guaranty program in any fiscal year in which the refinancing program and the 504/CDC program as a whole do not have credit subsidy costs. The act requires each CDC to limit its refinancing so that, during any fiscal year, the new refinancings do not exceed 50% of the dollars it loaned under the 504/CDC program during the previous fiscal year.", "This report examines the rationale provided for the 504/CDC program; its borrower and lender eligibility standards; operating requirements; and performance statistics, including loan volume, loss rates, proceeds usage, borrower satisfaction, and borrower demographics.", "This report also examines congressional action taken to help small businesses gain greater access to capital, including enactment of P.L. 111-5, the American Recovery and Reinvestment Act of 2009 (ARRA); P.L. 111-240; P.L. 114-113; and issues related to the SBA's oversight of 504/CDC lenders."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Small Business Administration Loan Guaranty Programs", "paragraphs": ["The Small Business Administration (SBA) administers programs to support small businesses, including several loan guaranty programs designed to encourage lenders to provide loans to small businesses \"that might not otherwise obtain financing on reasonable terms and conditions.\" The SBA's 504 Certified Development Company (504/CDC) loan guaranty program provides long-term fixed rate financing for major fixed assets, such as land, buildings, equipment, and machinery. Its name is derived from Section 504 of the Small Business Investment Act of 1958 (P.L. 85-699, as amended), which provides the most recent authorization in the act concerning the SBA's monthly sale of 20-year and 25-year 504/CDC debentures and bimonthly sale of 10-year 504/CDC debentures. ", "The 504/CDC loan guaranty program is administered through nonprofit Certified Development Companies (CDCs). Of the total project costs, a third-party lender must provide at least 50% of the financing, the CDC provides up to 40% of the financing backed by a 100% SBA-guaranteed debenture, and the applicant provides at least 10% of the financing.", "The borrower makes two loan payments, one to the third-party lender and another to the CDC. The third-party loan, typically provided by a bank, can have a fixed or variable interest rate, is negotiated between the lender and the borrower, is subject to an interest rate cap, and must have at least a 7-year term for a 10-year debenture and at least 10-year term for a 20- or 25-year debenture. The CDC loan has a fixed interest rate that is determined when the SBA sells the debenture to fund the loan. The CDC loan's term is either 10 years (typically for machinery or equipment) or 20 years or 25 years (typically for real estate).", "The SBA's debenture is backed by the full faith and credit of the United States and is sold to underwriters that form debenture pools. Investors purchase interests in the debenture pools and receive Development Company Participation certificates (DCPC) representing ownership of all or part of the pool. DCPCs have a minimum value of $25,000 and can be sold on the secondary market.", "The SBA and CDCs use various agents to facilitate the sale and service of the certificates and the orderly flow of funds among the parties. After a 504/CDC loan is approved and disbursed, accounting for the loan is set up at the Central Servicing Agent (CSA, currently PricewaterhouseCoopers Public Sector LLP), not the SBA. The SBA guarantees the timely payment of the debenture. If the small business is behind in its loan payments, the SBA pays the difference to the investor on every semiannual due date. ", "In FY2018, the SBA approved 5,874 504/CDC loans amounting to nearly $4.8 billion. At the end of FY2018, there were 56,601 504/CDC loans with an unpaid principal balance of about $25.8 billion.", "Historically, one of the justifications presented for funding the SBA's loan guaranty programs has been that small businesses can be at a disadvantage, compared with other businesses, when trying to obtain access to sufficient capital and credit. Congressional interest in small business access to capital, in general, and the 504/CDC program, in particular, has increased in recent years because of concern that small businesses might be prevented from accessing sufficient capital to enable them to grow and create jobs.", "Congress authorized several changes to the 504/CDC program during the 111 th Congress in an effort to increase the number and amount of 504/CDC loans. For example", "P.L. 111-5 , the American Recovery and Reinvestment Act of 2009 (ARRA), provided $375 million to temporarily reduce fees in the SBA's 7(a) and 504/CDC loan guaranty programs ($299 million) and to temporarily increase the 7(a) program's maximum loan guaranty percentage to 90% ($76 million). Congress subsequently appropriated another $265 million and authorized the SBA to reprogram another $40 million to extend those subsidies and the loan modification through May 31, 2010. ARRA also authorized the SBA to allow, under specified circumstances, the use of 504/CDC program funds to refinance existing debt for business expansion. P.L. 111-240 , the Small Business Jobs Act of 2010, increased the 504/CDC program's loan guaranty limits from $1.5 million to $5 million for \"regular\" borrowers, from $2 million to $5 million if the loan proceeds are directed toward one or more specified public policy goals, and from $4 million to $5.5 million for manufacturers. The act also temporarily expanded for two years after the date of enactment (or until September 27, 2012) the types of projects eligible for refinancing of existing debt under the 504/CDC program; provided $505 million (plus an additional $5 million for administrative expenses) to continue fee subsidies for the 7(a) loan guaranty program and the 504/CDC program through December 31, 2010; and established an alternative size standard that allows more companies to qualify for 504/CDC assistance. P.L. 111-322 , the Continuing Appropriations and Surface Transportation Extensions Act, 2011, authorized the SBA to continue the fee subsidies and the 7(a) program's 90% maximum loan guaranty percentage through March 4, 2011, or until funding provided for these purposes in P.L. 111-240 was exhausted (which occurred on January 3, 2011).", "During the 114 th Congress, P.L. 114-113 , the Consolidated Appropriations Act, 2016, reinstated the expansion of the types of projects eligible for refinancing under the 504/CDC loan guaranty program in any fiscal year in which the refinancing program and the 504/CDC program as a whole do not have credit subsidy costs. The act requires each CDC to limit its refinancing so that, during any fiscal year, the new refinancings do not exceed 50% of the dollars it loaned under the 504/CDC program during the previous fiscal year. This limitation may be waived if the SBA determines that the refinance loan is needed for good cause. An interim final rule implementing the new refinancing program was issued by the SBA on May 25, 2016, effective June 24, 2016.", "During the 115 th Congress, P.L. 115-371 , the Small Business Access to Capital and Efficiency (ACE) Act, amended the Small Business Investment Act of 1958 to increase the threshold amount for determining when a CDC is required to secure an independent real estate appraisal for a 504/CDC loan (from if the estimated value of the project property is greater than $250,000 to if the estimated value of the project property is greater than the federal banking regulator appraisal threshold, which was increased from $250,000 to $500,000 in 2018).", "In addition, the Trump Administration proposed in its FY2020 budget request that the maximum dollar amount for a 504 loan to a small manufacturer be increased to $6.5 million from $5.5 million. ", "This report opens with a discussion of the rationale for the 504/CDC program and then examines the program's borrower and lender eligibility standards; program requirements; and program statistics, including loan volume, loss rates, proceeds usage, borrower satisfaction, and borrower demographics. Next, it surveys congressional action taken during recent Congresses to enhance small business access to capital, including ARRA, P.L. 111-240 , P.L. 114-113 , and P.L. 115-371 . ", "This report also discusses issues raised concerning the SBA's administration of the program, including the oversight of 504/CDC lenders."], "subsections": []}, {"section_title": "Program Participants and Financing Contribution", "paragraphs": ["As shown in Table 1 , 504/CDC projects generally have three main participants: a third-party lender provides 50% or more of the financing; a CDC provides up to 40% of the financing through a 504/CDC debenture, which is 100% guaranteed by the SBA; and the borrower contributes at least 10% of the financing.", "The CDC's contribution, and the amount of the SBA's 100% guaranteed debenture, generally cannot exceed 40% of the financing for standard 504/CDC loans. It cannot exceed 35% of the financing for new businesses (defined as \"a business that is two years old or less at the time the loan is approved\") or if the loan is for either a limited-market property (defined as \"a property with a unique physical design, special construction materials, or a layout that restricts its utility to the use for which it is designed\") or a special purpose property. The SBA lists 27 limited and special purpose properties (e.g., dormitories, golf courses, hospitals, and bowling alleys). The CDC's contribution cannot exceed 30% of the financing when the borrower is a new business and the loan is for either a limited-market property or a special purpose property.", "Borrowers must contribute at least 10% of the financing for standard 504/CDC loans and at least 15% of the financing if the borrower is a new business or if the loan is for a limited-market property or a special purpose property. They must contribute at least 20% of the financing if the borrower is a new business and the loan is for either a limited-market property or a special purpose property."], "subsections": []}, {"section_title": "Borrower Eligibility Standards and Program Requirements", "paragraphs": [], "subsections": [{"section_title": "Borrower Eligibility Standards", "paragraphs": ["To be eligible for a SBA business loan, a small business applicant must", "be located in the United States; be a for-profit operating business (except for loans to eligible passive companies); qualify as small; demonstrate a need for the desired credit and that the funds are not available from alternative sources, including personal resources of the principals; and be certified by a lender that the desired credit is unavailable to the applicant on reasonable terms and conditions from nonfederal sources without SBA assistance.", "Several types of businesses are prohibited from participating in the program. For example, financial businesses primarily engaged in the business of lending, such as banks and finance companies; life insurance companies; businesses located in a foreign country; businesses deriving more than one-third of their gross annual revenue from legal gambling activities; businesses that present live performances of a prurient sexual nature; and businesses with an associate who is incarcerated, on probation, on parole, or has been indicted for a felony or a crime of moral turpitude are ineligible.", "To qualify for a SBA business loan, applicants must be creditworthy and able to reasonably assure repayment. The SBA requires lenders to consider the applicant's", "character, reputation, and credit history; experience and depth of management; strength of the business; past earnings, projected cash flow, and future prospects; ability to repay the loan with earnings from the business; sufficient invested equity to operate on a sound financial basis; potential for long-term success; nature and value of collateral (although inadequate collateral will not be the sole reason for denial of a loan request); and affiliates' effect on the applicant's repayment ability."], "subsections": []}, {"section_title": "Borrower Program Requirements", "paragraphs": [], "subsections": [{"section_title": "Use of Proceeds", "paragraphs": ["A 504/CDC loan can be used to", "purchase land and make necessary improvements to the land, such as adding streets, curbs, gutters, parking lots, utilities, and landscaping; purchase buildings and make improvements to the buildings, such as altering the building's facade and updating its heating and electrical systems, plumbing, and roofing; purchase, transport, dismantle, or install machinery and equipment, provided the machinery and equipment have a useful life of at least 10 years; purchase essential furniture and fixtures; pay professional fees that are directly attributable and essential to the project, such as title insurance, title searches and abstract costs, surveys, and zoning matters; finance short-term debt ( bridge financing ) for eligible expenses that are directly attributable to the project and the financing term is three years or less; pay interim financing costs, including points, fees, and interest; create a contingency fund, provided the fund does not exceed 10% of the project's construction costs; finance \"do-it-yourself\" construction expenses, including renovations and the installation of machinery and equipment; and finance permissible debt refinancing with or without business expansion.", "A 504/CDC loan cannot be used for working capital or inventory."], "subsections": []}, {"section_title": "Job Creation and Retention Requirement", "paragraphs": ["All 504/CDC borrowers must meet at least one of two specified economic development objectives. First, borrowers, other than small manufacturers, must create or retain at least one job for every $75,000 of project debenture within two years of project completion. Borrowers who are small manufacturers (defined as a small business with its primary North American Industry Classification System Code in Sectors 31, 32, and 33 and all of its production facilities located in the United States) must create or retain at least one job per $120,000 of project debenture within two years of project completion.", "Borrowers enter the number of jobs to be created or retained as a result of the project in their application for funds and the CDC verifies that the project meets the job creation or retention requirements. The jobs created do not have to be at the project facility, but 75% of the jobs must be created in the community in which the project is located. Using job retention to satisfy this requirement is allowed only if the CDC \"can reasonably show that jobs would be lost to the community if the project was not done.\"", "If the borrower does not meet the job creation or retention requirement, the borrower can retain eligibility by meeting (1) any 1 of 5 community development goals, (2) any 1 of 10 public policy goals, or (3) any 1 of 3 energy reduction goals, provided that the CDC's overall portfolio of outstanding debentures meets or exceeds the job creation or retention criteria of at least 1 job opportunity created or retained for every $75,000 in project debenture (or for every $85,000 in project debenture for projects located in special geographic areas such as Alaska, Hawaii, state-designated enterprise zones, empowerment zones, enterprise communities, labor surplus areas, or opportunity zones). Loans to small manufacturers are excluded from the calculation of this average.", "The five community development goals are", "improving, diversifying, or stabilizing the economy of the locality; stimulating other business development; bringing new income into the community; assisting manufacturing firms; or assisting businesses in labor surplus areas as defined by the U.S. Department of Labor.", "The 10 public policy goals are", "revitalizing a business district of a community with a written revitalization or redevelopment plan; expanding exports; expanding the development of women-owned and -controlled small businesses; expanding small businesses owned and controlled by veterans (especially service-disabled veterans); expanding minority enterprise development; aiding rural development; increasing productivity and competitiveness (e.g., retooling, robotics, modernization, and competition with imports); modernizing or upgrading facilities to meet health, safety, and environmental requirements; assisting businesses in or moving to areas affected by federal budget reductions, including base closings, either because of the loss of federal contracts or the reduction in revenues in the area due to a decreased federal presence; or reducing unemployment rates in labor surplus areas, as defined by the U.S. Department of Labor.", "The three energy reduction goals are", "reducing existing energy consumption by at least 10%; increasing the use of sustainable designs, including designs that reduce the use of greenhouse gas-emitting fossil fuels or low-impact design to produce buildings that reduce the use of nonrenewable resources and minimize environmental impact; or upgrading plant, equipment, and processes involving renewable energy sources such as the small-scale production of energy for individual buildings' or communities' consumption, commonly known as micropower, or renewable fuel producers including biodiesel and ethanol producers.", "If the project cannot meet any of these guidelines, then the debenture amount must be reduced to meet the job creation or retention requirement."], "subsections": []}, {"section_title": "Loan Amounts", "paragraphs": ["The minimum 504/CDC debenture is $25,000. P.L. 111-240 increased the maximum gross debenture amount", "from $1.5 million to $5 million for regular 504/CDC loans; from $2 million to $5 million if the loan proceeds are directed toward one or more of the public policy goals described above; from $4 million to $5.5 million for small manufacturers; from $4 million to $5.5 million for projects that reduce the borrower's energy consumption by at least 10%; and from $4 million to $5.5 million for projects for plant, equipment, and process upgrades of renewable energy sources, such as the small-scale production of energy for individual buildings or communities consumption (commonly known as micropower), or renewable fuel producers, including biodiesel and ethanol producers."], "subsections": []}, {"section_title": "Loan Terms, Interest Rate, and Collateral", "paragraphs": [], "subsections": [{"section_title": "Loan Terms", "paragraphs": ["The SBA determines the 504/CDC program's loan terms and publishes them in the Federal Register . The current maturity for a 504/CDC loan is generally ", "20 or 25 years for real estate; 10 years for machinery and equipment; and 10, 20, or 25 years based upon a weighted average of the useful life of the assets being financed.", "The maturities for the first mortgage issued by the third-party lender must be at least 7 years when the CDC/504 loan is for a term of 10 years and at least 10 years when the loan is for 20 or 25 years."], "subsections": []}, {"section_title": "Interest Rates", "paragraphs": ["As mentioned previously, 504/CDC borrowers make two loan payments, one to the third-party lender and one to the CDC. The third-party loan can have a fixed or variable interest rate, is negotiated between the lender and the borrower, and is subject to an interest rate cap. ", "The third-party loan's interest rate \"must be reasonable\" and the interest rate cap is published by the SBA in the Federal Register . The current maximum interest rate that a third-party lender is allowed to charge for a commercial loan that funds any portion of the cost of a 504/CDC project is 6% greater than the New York prime rate or the maximum interest rate permitted in that state, whichever is less.", "Borrowers have a general sense of what their 504/CDC loan's interest rate will be when their completed loan application is submitted to the SBA for approval. However, the loan's exact interest rate is not known until after it is pooled with other 504/CDC loan requests and sold to private investors (typically large institutional investors such as pension funds, insurance companies, and large banks). Investors receive interest on the debt, called a debenture, semi-annually. Borrowers make monthly payments.", "The 504/CDC loan's interest rate has several components: the debenture interest rate (i.e., the rate that determines interest paid semi-annually to investors who purchase the debenture), the note rate (i.e., the monthly-pay equivalent of the debenture rate, which is typically four to eight basis points higher than the debenture interest rate depending on the length of the loan's term), and the effective rate (i.e., the note rate and the cost impact of ongoing fees). Effective rates are provided to CDCs on a full-term basis and in 5-year increments.", "The debenture interest rate is based on comparable market conditions for long-term government debt at the time of sale and pegged to an increment above the current market rate. The SBA's fiscal agent, currently Eagle Compliance, LLC, reaches an agreement with the underwriters on the sale price of the debentures and, after reaching this agreement, must obtain approvals from the SBA and Treasury before proceeding.", "In May 2019, the 10-year 504/CDC debenture rate was 2.66%, the comparable Treasury market rate was 2.22%, the note rate was 2.76%, and the effective full-term interest rate was 4.69%. In May 2019, the 20-year 504/CDC debenture rate was 2.88%, the comparable Treasury market rate was 2.43%, the note rate was 2.93%, and the effective full-term interest rate was 4.69%. For 25-year 504/CDC debentures sold in May 2019, the debenture rate was 3.07%, the comparable Treasury market rate was 2.43%, the note rate was 3.11%, and the effective full-term interest rate was 4.97%."], "subsections": []}, {"section_title": "Collateral", "paragraphs": ["The SBA usually takes a second lien position on the project property to secure the loan. The SBA's second lien position is considered adequate when the applicant meets all of the following criteria:", "strong, consistent cash flow that is sufficient to cover the debt; demonstrated, proven management; the business has been in operation for more than two years; and the proposed project is a logical extension of the applicant's current operations.", "If one or more of the above factors is not met, additional collateral or increased equity contributions may be required. All collateral must be insured against such hazards and risks as the SBA may require, with provisions for notice to the SBA and the CDC in the event of impending lapse of coverage. However, for 504/CDC loans, the applicant's cash flow is the primary source of repayment, not the liquidation of collateral. Thus, \"if the lender's financial analysis demonstrates that the small business applicant lacks reasonable assurance of repayment in a timely manner from the cash flow of the business, the loan request must be declined, regardless of the collateral available or outside sources of cash.\""], "subsections": []}]}]}]}, {"section_title": "CDC Eligibility Standards, Operating Requirements, and Program Requirements", "paragraphs": [], "subsections": [{"section_title": "CDC Eligibility Standards", "paragraphs": ["CDCs apply to the SBA for certification to participate in the 504/CDC program. A CDC must be a nonprofit corporation, and it must", "be in good standing in the state in which it is incorporated; be in compliance with all laws, including taxation requirements, in the state in which it is incorporated and any other state in which it conducts business; provide the SBA a copy of its IRS tax exempt status; indicate its area of operations, which is the state of the CDC's incorporation; and have a board of directors that fulfills specified requirements, such as having at least nine voting members, requiring a quorum of at least 50% of its voting membership to transact business, and meets at least quarterly.", "If approved by the SBA, newly certified CDCs are on probation for two years. At the end of this time, the CDC must petition for either permanent CDC status or a single, one-year extension of probation. To be considered for permanent CDC status or an extension of probation, the CDC must have satisfactory performance as determined by the SBA in its discretion. Examples of the factors that may be considered in determining satisfactory performance include the CDC's risk rating, on-site review and examination assessments, historical performance measures (like default rate, purchase rate, and loss rate), loan volume to the extent that it impacts performance measures, and other performance-related measurements and information (such as contribution toward SBA's mission).", "In FY2018, 194 CDCs provided at least one 504/CDC loan."], "subsections": []}, {"section_title": "CDC Operating Requirements", "paragraphs": ["The CDC's board of directors is allowed to establish a loan committee composed of members of the CDC who may or may not be on the CDC's board of directors. The loan committee reports to the board and must meet specified requirements, such as having at least two members with commercial lending experience satisfactory to the SBA, generally requiring all of its members to live or work in the area of operations of the state in which the 504/CDC project they are voting on is located, not allowing any CDC staff to serve on the loan committee, and requiring a quorum of at least five committee members authorized to vote to hold a meeting. In addition, multistate CDCs are required to have a separate loan committee \"for each state into which the CDC expands.\"", "The SBA also has a number of requirements concerning CDC staff, such as requiring CDCs to \"have qualified full-time professional staff to market, package, process, close and service loans\" and \"directly employ full-time professional management,\" typically including an executive director (or the equivalent) to manage daily operations.", "CDCs are also required to operate \"in accordance with all SBA loan program requirements\" and provide the SBA \"current and accurate information about all certification and operational requirements.\" CDCs with 504/CDC loan portfolio balances of $20 million or more are required to submit financial statements audited in accordance with generally accepted accounting principles (GAAP) by an independent certified public accountant (CPA). CDCs with 504/CDC loan portfolio balances of less than $20 million must, at a minimum, submit a review of their loan portfolio balances by an independent CPA or independent accountant in accordance with GAAP. The auditor's opinion must state that the financial statements are in conformity with GAAP."], "subsections": []}, {"section_title": "CDC Program Requirements", "paragraphs": [], "subsections": [{"section_title": "The Application Process", "paragraphs": ["CDCs must analyze each application in a commercially reasonable manner, consistent with prudent lending standards. The CDC's analysis must include", "a financial analysis of the applicant's pro forma balance sheet. The pro forma balance sheet must reflect the loan proceeds, use of the loan proceeds, and any other adjustments such as required equity injection or standby debt; a financial analysis of repayment ability based on historical income statements, tax returns (if an existing business), and projections, including the reasonableness of the supporting assumptions; a ratio analysis of the financial statements including comments on any trends and a comparison with industry averages; a discussion of the owners' and managers' relevant experience in the type of business, as well as their personal credit histories; an analysis of collateral adequacy, including an evaluation of the collateral and lien position offered as well as the liquidation value; a discussion of the applicant's credit experience, including a review of business credit reports and any experience the CDC may have with the applicant; and other relevant information (e.g., if the application involves a franchise and the success of the franchise).", "CDCs submit this information, using required SBA forms, to the Sacramento, CA, loan processing center."], "subsections": [{"section_title": "Accredited Lender Program Status", "paragraphs": ["In 1991, the SBA established the ALP on a pilot basis to provide CDCs that \"have developed a good partnership with their SBA field office in promoting local economic development and have demonstrated a good track record in the submission of documentation needed for making and servicing of sound loans\" an expedited process for approving loan applications and servicing actions. P.L. 103-403 , the Small Business Administration Reauthorization and Amendments Act of 1994, authorized the SBA to establish the ALP on a permanent basis.", "CDCs may apply to the SBA for ALP status. Selection is based on several factors, including the CDC's experience as a CDC, the number of 504/CDC loans approved, the size of the CDC's portfolio, its record of compliance with SBA loan program requirements, and its record of cooperation with all SBA offices. The SBA is able to process loan requests from ALP-CDCs more quickly than from regular CDCs because it relies on their credit analysis when making the decision to guarantee the debenture. About one-third of CDCs have ALP status (77 of 226) and they account for about 60% to 70% of all 504/CDC lending each year."], "subsections": []}, {"section_title": "Premier Certified Lenders Program Status", "paragraphs": ["P.L. 103-403 also authorized the SBA's Premier Certified Lenders Program (PCLP) on a pilot basis through October 1, 1997. The program's authorization was later extended through October 1, 2002, and given permanent statutory authorization by P.L. 106-554 , the Consolidated Appropriations Act, 2001 (\u00a71: H.R. 5667 , the Small Business Reauthorization Act of 2000).", "ALP-CDCs must apply to the SBA for PCLP status. CDCs provided PCLP status have increased authority to process, close, service, and liquidate 504/CDC loans. The loans are subject to the same terms and conditions as other 504/CDC loans, but the SBA delegates to the PCLP-CDC all loan approval decisions, except eligibility. Selection is based on several factors, including all of the factors used to assess ALP status plus evidence that the CDC is \"in compliance with its Loan Loss Reserve Fund (LLRF) requirements [described below], has established a PCLP processing goal of 50%, and has a demonstrated ability to process, close, service and liquidate 504 and/or PCLP loans.\"", "PCLP-CDCs are required to establish and maintain a LLRF for its financings under the program. The LLRF is used to reimburse the SBA for 10% of any loss sustained by the SBA resulting from a default in the payment of principal or interest on a PCLP debenture. Each LLRF must equal 1% of the original principal amount of each PCLP debenture.", "As of September 30, 2017, 15 CDCs had active PCLP status. In recent years, the number and amount of 504/CDC loans made through the PCLP program have declined. In FY2009, 373 PCLP loans amounting to $185.4 million were disbursed. In FY2018, 27 PCLP loans totaling $23.8 million were dispersed."], "subsections": []}, {"section_title": "Real Estate Appraisals", "paragraphs": ["As part of its analysis of each application, CDCs are required to have an independent appraisal conducted of the real estate if the estimated value of the project property is greater than the federal banking regulator appraisal threshold (currently $500,000). CDCs may be required to have an independent appraisal conducted of the real estate if the estimated value of the project property is equal to or less than the federal banking regulator appraisal threshold \"and such appraisal is necessary for appropriate evaluation of creditworthiness.\" The appraiser must have no appearance of a conflict of interest and be either state licensed or state certified. When the project property's estimated value is more than $1 million, the appraiser must be state certified."], "subsections": []}, {"section_title": "Pre-Closing Interim Disbursements", "paragraphs": ["SBA-approved 504/CDC loans are not closed until after project-related construction is complete, which often takes one to two years. All loans must be disbursed within 48 months of approval. Prior to the sale of a debenture and the SBA's funding of the 504/CDC loan, the borrower may obtain interim financing from a third-party lender, usually the same lender that provided the loan covering 50% of the total 504 project financing. The proceeds from the debenture sale repay the interim lender for the amount of the 504/CDC project costs that it advanced on an interim basis."], "subsections": []}, {"section_title": "Closing", "paragraphs": ["The CDC closes the loan in time to meet a specific debenture funding date. At the time of closing, the project must be complete (except funds put into a construction escrow account to complete a minor portion of the project). The SBA's district counsel reviews the closing package and notifies the Central Servicing Agent (CSA, currently PricewaterhouseCoopers Public Sector LLP) and the CDC via email if the loan is approved for debenture funding. If the loan is approved, the CDC forwards specified documents needed for the debenture funding directly to the CSA using a transmittal letter or spreadsheet. As mentioned, because the 504/CDC program provides permanent or take-out financing, an interim lender (either the third-party lender or another lender) typically provides financing to cover the period between SBA approval of the project and the debenture sale. Proceeds from the debenture sale are used to repay the interim lender for the amount of the project costs that it advanced on an interim basis."], "subsections": []}]}]}, {"section_title": "Loan Guaranty and Servicing Fees", "paragraphs": ["Borrowers are currently charged fees amounting to about 3.5% of the net debenture proceeds plus annual servicing and guaranty fees of about 1% of the unpaid debenture balance. Some of these fees are charged by the SBA to the CDC and others are charged by the CDC directly to the borrower."], "subsections": [{"section_title": "SBA Fees", "paragraphs": ["The SBA is authorized to charge CDCs five fees to help recoup the SBA's expenses: a guaranty fee, servicing fee, funding fee, development company fee, and participation fee."], "subsections": [{"section_title": "Guaranty Fee", "paragraphs": ["The SBA is authorized to charge CDCs a one-time, up-front guaranty fee of 0.5% of the debenture. The SBA elected not to charge this fee in FY2009, FY2010, and FY2011, and in FY2016, FY2017, and FY2018. The SBA charged this fee in FY2012, FY2013, FY2014, and FY2015, and is charging this fee in FY2019."], "subsections": []}, {"section_title": "Servicing Fee", "paragraphs": ["The SBA is authorized to charge CDCs an ongoing servicing fee paid monthly by the borrower and adjusted annually based on the date the loan was approved. By statute, the fee is the lesser of the amount necessary to cover the estimated cost of purchasing and guaranteeing debentures under the 504/CDC program or 0.9375% per annum of the unpaid principal balance of the loan. The SBA's servicing fee for FY2019 is 0.368% of the unpaid principal balance for regular 504/CDC loans and 0.395% for 504 refinancing loans."], "subsections": []}, {"section_title": "Funding Fee", "paragraphs": ["The SBA charges CDCs a funding fee, not to exceed 0.25% of the debenture, to cover costs incurred by the trustee, fiscal agent, and transfer agent."], "subsections": []}, {"section_title": "Development Company Fee", "paragraphs": ["For SBA loans approved after September 30, 1996, the SBA charges CDCs an annual development company fee of 0.125% of the debenture's outstanding principal balance. The fee must be paid from the servicing fees collected by the CDC and cannot be paid from any additional fees imposed on the borrower."], "subsections": []}, {"section_title": "Participation Fee", "paragraphs": ["The SBA charges third-party lenders a one-time participation fee of 0.5% of the senior mortgage loan if in a senior lien position to the SBA and the loan was approved after September 30, 1996. The fee may be paid by the third-party lender, CDC, or borrower."], "subsections": []}]}, {"section_title": "CDC Fees", "paragraphs": ["CDCs are allowed to charge borrowers a processing (or packaging) fee, closing fee, servicing fee, late fee, assumption fee, CSA fee, other agent fees, and underwriters' fee."], "subsections": [{"section_title": "Processing (or Packaging) Fee", "paragraphs": ["The CDC is allowed to charge borrowers a processing (or packaging) fee of up to 1.5% of the net debenture proceeds. Two-thirds of this fee is considered earned and may be collected by the CDC when the SBA issues an Authorization for the Debenture. The portion of the processing fee paid by the borrower may be reimbursed from the debenture proceeds."], "subsections": []}, {"section_title": "Closing Fee", "paragraphs": ["The CDC is also allowed to charge \"a reasonable closing fee sufficient to reimburse it for the expenses of its in-house or outside legal counsel, and other miscellaneous closing costs.\" Up to $2,500 in closing costs may be financed out of the debenture proceeds."], "subsections": []}, {"section_title": "Servicing Fee", "paragraphs": ["CDCs can also charge an annual servicing fee of at least 0.625% per annum and no more than 2% per annum on the unpaid balance of the loan as determined at five-year anniversary intervals. A servicing fee greater than 1.5% for rural areas and 1% elsewhere requires the SBA's prior written approval, based on evidence of substantial need. The servicing fee may be paid only from loan payments received. The fees may be accrued without interest and collected from the CSA when the payments are made. CSAs are entities that receive and disburse funds among the various parties involved in 504/CDC financing under a master servicing agent agreement with the SBA."], "subsections": []}, {"section_title": "Late Fee and Assumption Fee", "paragraphs": ["Loan payments received after the 15 th of each month may be subject to a late payment fee of 5% of the late payment or $100, whichever is greater. Late fees will be collected by the CSA on behalf of the CDC. Also, with the SBA's written approval, CDCs may charge an assumption fee not to exceed 1% of the outstanding principal balance of the loan being assumed."], "subsections": []}, {"section_title": "Central Servicing Agent Fee", "paragraphs": ["CSAs are allowed to charge an initiation fee on each loan and an ongoing monthly servicing fee under the terms of the master servicing agreement. The current ongoing CSA monthly servicing fee is 0.1% per annum of the loan amount. Also, \"agent fees and charges necessary to market and service debentures and certificates may be assessed to the borrower or the investor.\" CDCs must review the agent's services and related fees \"to determine if the fees are necessary and reasonable when there is an indication from a third party that an agent's fees might be excessive, or when an applicant complains about the fees charged by an agent.\" In cases in which fees appear to be unreasonable, CDCs \"should contact\" the SBA and if a SBA investigation determines that the fee is excessive, the agent \"must reduce the fee to an amount SBA deems reasonable, refund any sum in excess of that amount to the applicant, and refrain from charging or collecting from the applicant any funds in excess of the amount SBA deems reasonable.\""], "subsections": []}, {"section_title": "Underwriters' Fee", "paragraphs": ["Borrowers are also charged an up-front underwriters' fee of 0.4% for 20-year loans and 0.375% for 10-year loans. The underwriters' fee is paid by the borrower to the underwriter. Underwriters are approved by the SBA to form debenture pools and arrange for the sale of certificates."], "subsections": []}]}, {"section_title": "Fee Subsidies", "paragraphs": ["As mentioned previously, the SBA was provided more than $1.1 billion in funding in 2009 and 2010 to subsidize the 504/CDC program's third-party participation fee and CDC processing fee, subsidize the SBA's 7(a) program's guaranty fee, and increase the 7(a) program's maximum loan guaranty percentage from up to 85% of loans of $150,000 or less and up to 75% of loans exceeding $150,000 to 90% for all standard 7(a) loans. The last extension, P.L. 111-322 , the Continuing Appropriations and Surface Transportation Extensions Act, 2011, authorized the SBA to continue the fee subsidies and the 7(a) program's 90% maximum loan guaranty percentage through March 4, 2011, or until funding provided by the Small Business Jobs Act of 2010 for this purpose was exhausted (which occurred on January 3, 2011).", "The Obama Administration argued that additional funding for the SBA's loan guaranty programs, including the 504/CDC program's fee subsidies, improved the small business lending environment, increased both the number and amount of SBA guaranteed loans, and supported \"the retention and creation of hundreds of thousands of jobs.\" Critics contended that small business tax reduction, reform of financial credit market regulation, and federal fiscal restraint are better means to assist small business economic growth and job creation."], "subsections": []}]}]}, {"section_title": "Program Statistics", "paragraphs": [], "subsections": [{"section_title": "Loan Volume", "paragraphs": [" Table 2 shows the number and amount of 504/CDC loans that the SBA approved and the number and amount of 504/CDC loans after cancellations and other modifications are taken into account in FY2005-FY2018. Each year, 5% to 15% of SBA-approved 504/CDC loans are subsequently canceled for a variety of reasons, typically by the borrower (e.g., funds are no longer needed or there was a change in ownership).", "As the data indicate, the number and amount of 504/CDC loans declined in FY2008 and FY2009. The most likely causes for the decline were decreased small business demand for capital during the recession; difficulties in secondary credit markets, especially from October 2008 to February 2009; and a tightening of small business credit lending standards.", "The number and amount of 50 4/CDC loans increased during FY2010 and FY2011 and reached prerecession levels in FY2012. The SBA attributed the increase in FY2010 and FY2011 to the continuation of 504/CDC fee subsidies, which were in place through most of FY2010 and the first quarter of FY2011.", "The continuing economic recovery, which contributed to increased demand for small business loans generally, and the temporary two-year expansion of the types of projects eligible for 504/CDC program refinancing of existing commercial debt (through September 27, 2012) under P.L. 111-240 , the Small Business Jobs Act of 2010, most likely also contributed to the program's increased loan volume in FY2011 and FY2012. For example, the SBA approved 307 loans amounting to $255.3 million in 504/CDC refinancing under the temporary expansion in FY2011 and 2,424 loans amounting to $2.26 billion in 504/CDC refinancing under the temporary expansion in FY2012 (see Table 3 ).", "As expected, given the expiration of the temporary refinancing expansion, 504/CDC loan volume declined in FY2013 and FY2014. The program's loan volume has generally increased somewhat since then."], "subsections": []}, {"section_title": "Appropriations for Subsidy Costs", "paragraphs": ["The SBA's goal is to achieve a zero subsidy rate for its loan guaranty programs. A zero subsidy rate occurs when the SBA's loan guaranty programs generate sufficient revenue through fees and recoveries of collateral on purchased (defaulted) loans to not require appropriations to issue new loan guarantees. As indicated in Table 4 , fees and recoveries did not generate enough revenue to cover 7(a) loan losses from FY2010 through FY2013, and 504/CDC loan losses from FY2012 through FY2015. Appropriations were provided to address the shortfalls."], "subsections": []}, {"section_title": "Use of Proceeds and Borrower Satisfaction", "paragraphs": ["In FY2016, borrowers used 504/CDC loan proceeds to", "purchase land and existing building (51.56%), building (construction, remodeling, improvements, etc.) (21.10%), machinery and equipment (purchase, installation, etc.) (7.09%), make renovations to a building (4.90%), purchase land (5.18%), other expenses (eligible contingency expenses, interim interest, etc.) (2.84%), purchase improvements (2.30%), debt to be refinanced (1.51%), professional fees (appraiser, architect, legal, etc.) (1.41%), add an addition to a building (1.04%), purchase or install fixtures (0.55%), or make leasehold improvements to a building (0.52%).", "In 2008, the Urban Institute surveyed 504/CDC borrowers and found that two-thirds of the respondents rated their overall satisfaction with their 504/CDC loan and loan terms as either excellent (21%) or good (45%). About one out of every four borrowers (23%) rated their overall satisfaction with their loan and loan terms as fair, 8% rated their overall satisfaction as poor, and 4% reported that they did not know or did not respond. In addition, 87% of the survey's respondents reported that the 504/CDC loan was either very important (53%) or somewhat important (34%) to their business success (4% reported that it was somewhat unimportant, 4% reported very unimportant, and 6% reported that they did not know or did not respond).", "In March 2014, the Government Accountability Office (GAO) released a report examining the 504/CDC program. GAO reported that from FY2003 through March 31, 2013, the top four types of small businesses funded by 504/CDC loans were hotels (12%), restaurants (5%), doctor's offices (4%), and dentist's offices (3%). GAO also reported that 85% of approved 504/CDC loans and dollars went to existing small businesses and 15% went to new small businesses."], "subsections": []}, {"section_title": "Borrower Demographics", "paragraphs": ["In 2008, the Urban Institute found that about 9.9% of private-sector small business loans were issued to minority-owned small businesses and about 16% of those loans were issued to women-owned businesses. In FY2018, 28.7% of the total amount of 504/CDC approved loans went to minority-owned businesses (20.5% Asian, 6.6% Hispanic, 1.4% African American, and 0.1% Native American) and 10.6% went to women-owned businesses. Based on its comparative analysis of private-sector small business loans and the SBA's loan guaranty programs, the Urban Institute concluded that", "Overall, loans under the 7(a) and 504 programs were more likely to be made to minority-owned, women-owned, and start-up businesses (firms that have historically faced capital gaps) as compared to conventional small business loans. Moreover, the average amounts for loans made under the 7(a) and 504 programs to these types of firms were substantially greater than conventional small business loans to such firms. These findings suggest that the 7(a) and 504 programs are being used by lenders in a manner that is consistent with SBA's objective of making credit available to firms that face a capital opportunity gap."], "subsections": []}]}, {"section_title": "Congressional Issues", "paragraphs": [], "subsections": [{"section_title": "Fee Subsidies and the 7(a) Program's 90% Maximum Loan Guaranty Percentage", "paragraphs": ["As mentioned previously, the SBA was provided more than $1.1 billion in funding in 2009 and 2010 to subsidize the 504/CDC program's third-party participation fee and CDC processing fee, subsidize the SBA's 7(a) program's guaranty fee, and increase the 7(a) program's maximum loan guaranty percentage from up to 85% of loans of $150,000 or less and up to 75% of loans exceeding $150,000 to 90% for all standard 7(a) loans. The Obama Administration argued that this additional funding improved the small business lending environment, increased both the number and amount of SBA guaranteed loans, and supported \"the retention and creation of hundreds of thousands of jobs.\" Critics argued that small business tax reduction, reform of financial credit market regulation, and federal fiscal restraint are a better means to assist small business economic growth and job creation."], "subsections": []}, {"section_title": "Program Administration", "paragraphs": ["The SBA's Office of Inspector General (OIG) and the GAO have independently reviewed the administration of SBA's loan guaranty programs. Both agencies have reported deficiencies that they argued needed to be addressed, including issues involving the oversight of 504/CDC lenders.", "On March 23, 2010, the SBA's OIG released the results of an audit of \"25 of 100 statistically selected CDC/504 loans approved under Premier Certified Lender (PCL) authority that were disbursed during fiscal year (FY) 2008.\" The loans \"had been approved by 3 of the most active of the 24 PCLs\" operating in 2008.", "The audit was initiated \"based on concerns that PCLs were engaging in risky underwriting practices and that five PCLs were paying their executives excessive compensation.\" The OIG determined that ", "PCLs may not have used prudent practices in approving and disbursing 68% of the sampled loans, totaling nearly $8.9 million, due to poor loan underwriting, and eligibility or loan closing issues. Specifically, 40% of the loans had faulty underwriting repayment analyses, and 52% of the loans had eligibility and/or loan closing issues.... Projecting our sample results to the universe of CDC/504 loans disbursed in 2008 by these three PCLs, we estimate with 90% confidence that at least 572 loans, totaling nearly $254.9 million in CDC/504 loan proceeds, had weaknesses in the underwriting process, eligibility determinations or loan closing. Of this amount, we estimate that a minimum of 183 loans, totaling $56.4 million or more, were made to borrowers based on faulty repayment analyses. We also estimate that lenders disbursed $209 million or more to borrowers who had eligibility and/or loan closing issues.", "In terms of dollars paid for CDC executive compensation, the OIG found that", "4 of the 5 CDCs reviewed were among the top 10 highest for executive compensation.... In terms of percentage of gross receipts spent on executive compensation, 3 of the 5 questioned CDCs ranked among the top 10 highest of the 56 CDCs that had gross receipts over $1 million.", "The OIG made several recommendations to address these issues, including changing the SBA's Standard Operating Procedures (SOP) to require lenders to use", "(1) the actual cash flow method to determine borrower repayment ability for businesses using accrual accounting, (2) historical salary levels to estimate salaries of the borrower's officers, and (3) historical sales data to make sales projections.", "It also recommended that the SBA develop a process \"to ensure that corrective actions are taken in response to the Agency's onsite reviews to ensure these conditions do not continue, and/or guidance for these reviews should be modified, as appropriate, to ensure that reviewers properly assess lender determination of borrower repayment ability and eligibility.\"", "The OIG reported that the SBA", "disagreed that SOP 50 10 should be revised to strengthen lender repayment analyses by requiring the use of the actual cash flow method and historical salary and sales data. The Agency also did not believe an additional process was needed to ensure that corrective actions are taken to improve lender performance, but acknowledged that better use of onsite review results are needed to make more informed lender decisions and programmatic determinations.", "In 2009, GAO released an analysis of the SBA's oversight of the lending and risk management activities of lenders that extend 7(a) and 504/CDC loans to small businesses. GAO recommended that the SBA strengthen its oversight of these lenders and argued that although the SBA's \"lender risk rating system has enabled the agency to conduct some off-site monitoring of lenders, the agency does not use the system to target lenders for on-site reviews or to inform the scope of the reviews.\" GAO also noted that", "the SBA targets for review those lenders with the largest SBA-guaranteed loan portfolios. As a result of this approach, 97% of the lenders that SBA's risk rating system identified as high risk in 2008 were not reviewed. Further, GAO found that the scope of the on-site reviews that SBA performs is not informed by the lenders' risk ratings, and the reviews do not include an assessment of lenders' credit decisions.", "GAO argued that although the SBA \"has made improvements to its off-site monitoring of lenders, the agency will not be able to substantially improve its lender oversight efforts unless it improves its on-site review process.\"", "As mentioned previously, in recent years, both the number and amount of 504/CDC loans made through the PCLP has declined. In FY2009, 373 PCLP loans amounting to $185.4 million were disbursed. In FY2018, 27 PCLP loans totaling $23.8 million were dispersed.", "In addition, the SBA's Office of Credit Risk Management (OCRM) created new metrics in 2015 for monitoring 504/CDC lender loan performance called SMART (measuring the lender's solvency and financial condition, management and governance, asset quality and servicing, regulatory compliance, and technical issues and mission) and updated those metrics in 2016. SMART is designed to \"assist OCRM in identifying high risk lenders and ensuring that lender oversight drives meaningful review activities, findings, and corrective actions that reduce risk to the SBA.\" OCRM also created a \"detailed bench-marking analysis project that will serve to establish quantitative performance metrics and indicators of quality (Preferred, Acceptable and Less than Acceptable) to be incorporated into each area of risk assessment identified in the ... SMART protocol measurement attributes.\""], "subsections": []}]}, {"section_title": "Legislative Activity During the 111th Congress", "paragraphs": ["As mentioned previously, Congress approved legislation in 2009 (ARRA) that provided the SBA an additional $730 million, including $299 million to temporarily reduce fees in the SBA's 504/CDC loan guaranty and 7(a) programs and $76 million to temporarily increase the 7(a) program's loan guaranty from up to 85% of loans of $150,000 or less and up to 75% of loans exceeding $150,000.", "Congress approved legislation in 2010 ( P.L. 111-240 , the Small Business Jobs Act of 2010) that was designed to enhance small business access to capital. Among other provisions, the act ", "provided $510 million to extend the 504/CDC and 7(a) loan guaranty programs' fee subsidies and the 7(a) program's 90% maximum loan guaranty percentage through December 31, 2010 (later extended to March 4, 2011) or until available funding was exhausted (which occurred on January 3, 2011); increased the 504/CDC program's loan limits from $1.5 million to $5 million for regular 504/CDC loans; from $2 million to $5 million if the loan proceeds are directed toward one or more of the program's specified public policy goals; from $4 million to $5.5 million for small manufacturers; from $4 million to $5.5 million for projects that reduce the borrower's energy consumption by at least 10%; and from $4 million to $5.5 million for projects for plant, equipment, and process upgrades of renewable energy sources, such as the small-scale production of energy for individual buildings or communities consumption (commonly known as micropower), or renewable fuel producers, including biodiesel and ethanol producers; temporarily expanded, for two years after enactment (through September 27, 2012), the types of projects eligible for 504/CDC program refinancing of existing commercial debt; and authorized the SBA to establish an alternative size standard for the 7(a) and 504/CDC programs that uses maximum tangible net worth and average net income as an alternative to the use of industry standards and established an interim size standard of a maximum tangible net worth of not more than $15 million and an average net income after federal taxes (excluding any carryover losses) for the preceding two fiscal years of not more than $5 million.", "The Obama Administration argued that increasing maximum loan limit for SBA programs (including the 504/CDC program) would allow the SBA to \"support larger projects,\" which would \"allow the SBA to help America's small businesses drive long-term economic growth and the creation of jobs in communities across the country.\" The Administration also argued that increasing the maximum loan limits for these programs will be \"budget neutral\" over the long run and \"help improve the availability of smaller loans.\"", "Critics of increasing the SBA's maximum loan limits argued that doing so might increase the risk of defaults, resulting in higher guaranty fees or the need to provide the SBA additional funding. Others advocated a more modest increase in the maximum loan limits to ensure that the 7(a) program \"remains focused on startup and early-stage small firms, businesses that have historically encountered the greatest difficulties in accessing credit\" and \"avoids making small borrowers carry a disproportionate share of the risk associated with larger loans.\" ", "Others contended that creating a small business direct lending program within the SBA would reduce paperwork requirements and be more efficient in providing small businesses access to capital than modifying existing SBA programs that rely on private lenders to determine if they will issue the loans. Also, as mentioned previously, others argued that providing additional resources to the SBA or modifying the SBA's loan programs as a means to augment small businesses' access to capital is ill-advised. In their view, the SBA has limited impact on small businesses' access to capital. They argued that the best means to assist small business economic growth and job creation is to focus on small business tax reduction, reform of financial credit market regulation, and federal fiscal restraint."], "subsections": []}, {"section_title": "Legislative Activity During the 112th Congress", "paragraphs": ["As mentioned previously, Congress did not approve any changes to the 504/CDC program during the 112 th Congress. However, legislation was introduced during the 112 th Congress to change the program, including several proposals to extend the now-expired two-year temporary expansion of the eligibility of 504/CDC refinancing projects not involving expansions.", "Proponents of extending the 504/CDC refinancing expansion provision, initially enacted as part of P.L. 111-240 , the Small Business Jobs Act of 2010, argued that it would create jobs by enabling small business owners to lower their monthly payments \"at no cost to taxpayers\" and \"is one of many things that we should be doing to put more capital in the hands of America's job creators.\"", "Opponents worried that the provision may require funding to cover loan losses in the future, arguing that \"commercial refinancing may pose an undue risk \u2026 at a time of significant budgetary constraints.\" Others opposed the expansion of 504/CDC refinancing on economic or ideological grounds, arguing that federal fiscal restraint, business tax reduction, and business regulatory relief would provide greater assistance to small businesses than expanding an existing SBA spending program.", "H.R. 2950 , the Small Business Administration 504 Loan Refinancing Extension Act of 2011, was introduced on September 15, 2011, and referred to the House Committee on Small Business. The bill would have allowed 504/CDC loans to be used to refinance projects not involving expansions as long as the financing did not exceed 90% of the value of the collateral for the financing for an additional year beyond the two years from the date of enactment that was authorized by the Small Business Jobs Act of 2010. ", "S.Amdt. 1833 , the INVEST in America Act of 2012\u2014an amendment in the nature of a substitute for H.R. 3606 , the Jumpstart Our Business Startups Act\u2014was introduced on March 15, 2012. It would have allowed 504/CDC loans to be used to refinance projects not involving expansions for an additional year beyond the two years from the date of enactment authorized by the Small Business Jobs Act of 2010. The amendment was ruled nongermane by the chair on March 21, 2012, and was not included in the final version of the bill that was approved by the Senate the following day.", "S. 3572 , the Restoring Tax and Regulatory Certainty to Small Businesses Act of 2012, was introduced on September 19, 2012, and referred to the Senate Committee on Small Business and Entrepreneurship and the Senate Committee on Finance. It would have allowed 504/CDC loans to be used to refinance projects not involving expansions for an additional year and a half beyond the two years from the date of enactment authorized by the Small Business Jobs Act of 2010.", "S. 1828 , a bill to increase small business lending, and for other purposes, was introduced on November 8, 2011, and referred to the Senate Committee on Small Business and Entrepreneurship. The bill would have reinstated for a year following the date of its enactment the fee subsidies for the 504/CDC and 7(a) loan guaranty programs and the 90% loan guaranty percentage for the 7(a) program that were originally funded by ARRA."], "subsections": []}, {"section_title": "Legislative Activity During the 113th Congress", "paragraphs": ["Two bills were introduced during the 113 th Congress to reinstate the temporary two-year expansion of projects eligible for 504/CDC program refinancing of existing debt, which expired on September 27, 2012. H.R. 1240 , the Commercial Real Estate and Economic Development (CREED) Act of 2013, would have reinstated the temporary expansion of the projects eligible for 504/CDC program refinancing of existing debt for five years following the bill's enactment. It was referred to the House Committee on Small Business on March 18, 2013. Its companion bill in the Senate ( S. 289 ) was referred to the Senate Committee on Small Business and Entrepreneurship on February 12, 2013, and was ordered to be reported favorably, with an amendment, on June 17, 2013. As amended, S. 289 would have reinstated the temporary expansion of the projects eligible for 504/CDC program refinancing of existing debt during any fiscal year in which the 504/CDC program is operating at zero subsidy.", "In addition, H.R. 4652 , the Increasing Small Business Lending Act, would have authorized fee waivers for the 7(a) and 504/CDC programs."], "subsections": []}, {"section_title": "Legislative Activity During the 114th Congress", "paragraphs": ["As mentioned previously, P.L. 114-113 , the Consolidated Appropriations Act, 2016, reinstated the expansion of the types of projects eligible for refinancing under the 504/CDC loan guaranty program in any fiscal year in which the refinancing program and the 504/CDC program as a whole do not have credit subsidy costs. The act requires each CDC to limit its refinancing so that, during any fiscal year, the new refinancings do not exceed 50% of the dollars it loaned under the 504/CDC program during the previous fiscal year. This limitation may be waived if the SBA determines that the refinance loan is needed for good cause. An interim final rule implementing the new refinancing program was issued by the SBA on May 25, 2016, effective June 24, 2016.", "The act also eliminated an alternative job retention goal provision that allowed borrowers that do not meet the 504/CDC program's job creation and retention goals to participate in the expanded refinancing program, but limited that participation to \"not more than the product obtained by multiplying the number of employees of the borrower by $65,000.\" ", "Previously, H.R. 2266 , the Commercial Real Estate and Economic Development Act of 2015, would have reinstated the temporary expansion of projects eligible for 504/CDC program refinancing of existing debt for five years following enactment. Its companion bill in the Senate ( S. 966 ), as amended in committee, would have reinstated the temporary expansion of the refinancing program during any fiscal year in which the 504/CDC program is operating at zero subsidy. Also, the Obama Administration had requested in its FY2016 budget request authority to reinstate the 504/CDC refinancing program (without a business expansion requirement) in FY2016 to support up to $7.5 billion in lending."], "subsections": []}, {"section_title": "Legislative Activity During the 115th Congress", "paragraphs": ["As mentioned previously, P.L. 115-371 , the Small Business Access to Capital and Efficiency (ACE) Act, increased the threshold amount for determining when a CDC is required to secure an independent real estate appraisal for a 504/CDC loan (from if the estimated value of the project property is greater than $250,000 to if the estimated value of the project property is greater than the federal banking regulator appraisal threshold, which was recently increased from $250,000 to $500,000). The act also increased the threshold amount for determining when a CDC may be required to secure an independent real estate appraisal for a 504/CDC loan (from if the estimated value of the project property is equal to or less than $250,000 and such appraisal is necessary for appropriate evaluation of creditworthiness to if the estimated value of the project property is equal to or less than the federal banking regulator appraisal threshold and such appraisal is necessary for appropriate evaluation of creditworthiness). The change was designed to \"remove the uncertainty lenders now have juggling two different real estate appraisal thresholds.\" ", "In addition, S. 347 , the Investing in America's Small Manufacturers Act, among other provisions, would have allowed CDCs to provide up to 50% of project costs instead of up to 40% if the borrower is a small manufacturer and the 504/CDC loan guarantee program's subsidy cost for that current fiscal year is not above zero."], "subsections": []}, {"section_title": "Concluding Observations", "paragraphs": ["During the 111 th Congress, congressional debate concerning proposed changes to the SBA's loan guaranty programs, including the 504/CDC program, centered on the likely impact the changes would have on small business access to capital, job retention, and job creation. As a general proposition, some, including President Obama, argued that economic conditions made it imperative that the SBA be provided additional resources to assist small businesses in acquiring capital necessary to start, continue, or expand operations, and create jobs. Others worried about the long-term adverse economic effects of spending programs that increase the federal deficit and advocated business tax reduction, reform of financial credit market regulation, and federal fiscal restraint as the best means to assist small business economic growth and job creation.", "In terms of specific program changes, continuing the 504/CDC program's temporary fee subsidies, increasing its loan limits, temporarily (and later permanently) expanding its refinancing options, and authorizing the SBA to establish an alternative size standard were designed to achieve the same goal: to enhance job creation and retention by increasing the ability of 504/CDC borrowers to obtain credit at affordable rates. ", "Critics argued that these actions might increase the risk of defaults and result in higher guaranty fees or the need to provide the SBA additional funding to cover loan subsidy costs. Others advocated a more modest increase in the maximum loan limits to ensure that the programs focus on start-ups and early-stage small firms, \"businesses that have historically encountered the greatest difficulties in accessing credit,\" and that they avoid \"making small borrowers carry a disproportionate share of the risk associated with larger loans.\"", "During the 112 th -115 th Congresses, congressional oversight focused on the SBA's administration of the program changes enacted during the 111 th Congress, the impact of those changes on the SBA's lending, and ways to address and minimize increased costs associated with loan losses. Although there continues to be widespread congressional support for providing assistance to small businesses, federal fiscal constraints may impede efforts to further expand the 504/CDC program in the near future.", "Given existing fiscal constraints, it is likely that congressional oversight during the 116 th Congress will continue to focus on (1) the SBA's administration of the 504/CDC program to ensure that the program is as efficient as possible; and (2) the program's efficacy in job retention and creation."], "subsections": []}]}}
{"id": "R45811", "title": "Hypersonic Weapons: Background and Issues for Congress", "released_date": "2020-03-17T00:00:00", "summary": ["The United States has actively pursued the development of hypersonic weapons\u00e2\u0080\u0094maneuvering weapons that fly at speeds of at least Mach 5\u00e2\u0080\u0094as a part of its conventional prompt global strike program since the early 2000s. In recent years, the United States has focused such efforts on developing hypersonic glide vehicles, which are launched from a rocket before gliding to a target, and hypersonic cruise missiles, which are powered by high-speed, air-breathing engines during flight. As Vice Chairman of the Joint Chiefs of Staff and former Commander of U.S. Strategic Command General John Hyten has stated, these weapons could enable \"responsive, long-range, strike options against distant, defended, and/or time-critical threats [such as road-mobile missiles] when other forces are unavailable, denied access, or not preferred.\" Critics, on the other hand, contend that hypersonic weapons lack defined mission requirements, contribute little to U.S. military capability, and are unnecessary for deterrence.", "Funding for hypersonic weapons has been relatively restrained in the past; however, both the Pentagon and Congress have shown a growing interest in pursuing the development and near-term deployment of hypersonic systems. This is due, in part, to the growing interest in these technologies in Russia and China, both of which have a number of hypersonic weapons programs and are expected to field an operational hypersonic glide vehicle\u00e2\u0080\u0094potentially armed with nuclear warheads\u00e2\u0080\u0094as early as 2020. The United States, in contrast to Russia and China, is not currently considering or developing hypersonic weapons for use with a nuclear warhead. As a result, U.S. hypersonic weapons will likely require greater accuracy and will be more technically challenging to develop than nuclear-armed Chinese and Russian systems.", "The Pentagon's FY2021 budget request for all hypersonic-related research is $3.2 billion\u00e2\u0080\u0094up from $2.6 billion in the FY2020 request\u00e2\u0080\u0094including $206.8 million for hypersonic defense programs. At present, the Department of Defense (DOD) has not established any programs of record for hypersonic weapons, suggesting that it may not have approved either requirements for the systems or long-term funding plans. Indeed, as Assistant Director for Hypersonics (Office of the Under Secretary of Defense for Research and Engineering) Mike White has stated, DOD has not yet made a decision to acquire hypersonic weapons and is instead developing prototypes to assist in the evaluation of potential weapon system concepts and mission sets.", "As Congress reviews the Pentagon's plans for U.S. hypersonic weapons programs, it might consider questions about the rationale for hypersonic weapons, their expected costs, and their implications for strategic stability and arms control. Potential questions include the following:", "What mission(s) will hypersonic weapons be used for? Are hypersonic weapons the most cost-effective means of executing these potential missions? How will they be incorporated into joint operational doctrine and concepts? Given the lack of defined mission requirements for hypersonic weapons, how should Congress evaluate funding requests for hypersonic weapons programs or the balance of funding requests for hypersonic weapons programs, enabling technologies, and supporting test infrastructure? Is an acceleration of research on hypersonic weapons, enabling technologies, or hypersonic missile defense options both necessary and technologically feasible? How, if at all, will the fielding of hypersonic weapons affect strategic stability? Is there a need for risk-mitigation measures, such as expanding New START, negotiating new multilateral arms control agreements, or undertaking transparency and confidence-building activities?"], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["The United States has actively pursued the development of hypersonic weapons as a part of its conventional prompt global strike (CPGS) program since the early 2000s. In recent years, it has focused such efforts on hypersonic glide vehicles and hypersonic cruise missiles with shorter and intermediate ranges for use in regional conflicts. Although funding for these programs has been relatively restrained in the past, both the Pentagon and Congress have shown a growing interest in pursuing the development and near-term deployment of hypersonic systems. This is due, in part, to the growing interest in these technologies in Russia and China, leading to a heightened focus in the United States on the strategic threat posed by hypersonic flight. Open-source reporting indicates that both China and Russia have conducted numerous successful tests of hypersonic glide vehicles, and both are expected to field an operational capability as early as 2020 . ", "Experts disagree on the potential impact of competitor hypersonic weapons on both strategic stability and the U.S. military's competitive advantage. Nevertheless, current Under Secretary of Defense for Research and Engineering (USD R&E) Michael Griffin has testified to Congress that the United States does not \"have systems which can hold [China and Russia] at risk in a corresponding manner, and we don't have defenses against [their] systems.\" Although the John S. McCain National Defense Authorization Act for Fiscal Year 2019 (FY2019 NDAA, P.L. 115-232 ) accelerated the development of hypersonic weapons, which USD R&E identifies as a priority research and development area, the United States is unlikely to field an operational system before 2023. However, the United States, in contrast to Russia and China, is not currently considering or developing hypersonic weapons for use with a nuclear warhead. As a result, U.S. hypersonic weapons will likely require greater accuracy and will be more technically challenging to develop than nuclear-armed Chinese and Russian systems. ", "In addition to accelerating development of hypersonic weapons, Section 247 of the FY2019 NDAA required that the Secretary of Defense, in coordination with the Director of the Defense Intelligence Agency, produce a classified assessment of U.S. and adversary hypersonic weapons programs, to include the following elements:", "(1) An evaluation of spending by the United States and adversaries on such technology.", "(2) An evaluation of the quantity and quality of research on such technology.", "(3) An evaluation of the test infrastructure and workforce supporting such technology.", "(4) An assessment of the technological progress of the United States and adversaries on such technology.", "(5) Descriptions of timelines for operational deployment of such technology.", "(6) An assessment of the intent or willingness of adversaries to use such technology. ", "This report was delivered to Congress in July 2019. Similarly, Section 1689 of the FY2019 NDAA requires the Director of the Missile Defense Agency to produce a report on \"how hypersonic missile defense can be accelerated to meet emerging hypersonic threats.\" The findings of these reports could hold implications for congressional authorizations, appropriations, and oversight. ", "The following report reviews the hypersonic weapons programs in the United States, Russia, and China, providing information on the programs and infrastructure in each nation, based on unclassified sources. It also provides a brief summary of the state of global hypersonic weapons research development. It concludes with a discussion of the issues that Congress might address as it considers DOD's funding requests for U.S. hypersonic technology programs."], "subsections": []}, {"section_title": "Background", "paragraphs": ["Several countries are developing hypersonic weapons, which fly at speeds of at least Mach 5 (five times the speed of sound), but none have yet introduced them into their operational military forces. There are two primary categories of hypersonic weapons", "Hypersonic glide vehicles (HGV) are launched from a rocket before gliding to a target. Hypersonic cruise missiles are powered by high-speed, air-breathing engines, or \"scramjets,\" after acquiring their target.", "Unlike ballistic missiles, hypersonic weapons do not follow a ballistic trajectory and can maneuver en route to their destination. As Vice Chairman of the Joint Chiefs of Staff and former Commander of U.S. Strategic Command General John Hyten has stated, hypersonic weapons could enable \"responsive, long-range, strike options against distant, defended, and/or time-critical threats [such as road-mobile missiles] when other forces are unavailable, denied access, or not preferred.\" Conventional hypersonic weapons use only kinetic energy\u00e2\u0080\u0094energy derived from motion\u00e2\u0080\u0094to destroy unhardened targets or, potentially, underground facilities. ", "Hypersonic weapons could challenge detection and defense due to their speed, maneuverability, and low altitude of flight. For example, terrestrial-based radar cannot detect hypersonic weapons until late in the weapon's flight. Figure 1 depicts the differences in terrestrial-based radar detection timelines for ballistic missiles versus hypersonic glide vehicles.", "This delayed detection compresses the timeline for decision-makers assessing their response options and for a defensive system to intercept the attacking weapon\u00e2\u0080\u0094potentially permitting only a single intercept attempt. ", "Furthermore, U.S. defense officials have stated that both terrestrial- and current space-based sensor architectures are insufficient to detect and track hypersonic weapons, with USD R&E Griffin noting that \"hypersonic targets are 10 to 20 times dimmer than what the U.S. normally tracks by satellites in geostationary orbit.\" Some analysts have suggested that space-based sensor layers\u00e2\u0080\u0094integrated with tracking and fire-control systems to direct high-performance interceptors or directed energy weapons\u00e2\u0080\u0094could theoretically present viable options for defending against hypersonic weapons in the future. Indeed, the 2019 Missile Defense Review notes that \"such sensors take advantage of the large area viewable from space for improved tracking and potentially targeting of advanced threats, including HGVs and hypersonic cruise missiles.\" ", "Other analysts have questioned the affordability, technological feasibility, and/or utility of wide-area hypersonic weapons defense. As physicist and nuclear expert James Acton explains, \"point-defense systems, and particularly [Terminal High-Altitude Area Defense (THAAD)], could very plausibly be adapted to deal with hypersonic missiles. The disadvantage of those systems is that they can only defend small areas. To defend the whole of the continental United States, you would need an unaffordable number of THAAD batteries.\" In addition, some analysts have argued that the United States' current command and control architecture would be incapable of \"processing data quickly enough to respond to and neutralize an incoming hypersonic threat.\" (A broader discussion of hypersonic weapons defense is outside the scope of this report.)"], "subsections": [{"section_title": "United States", "paragraphs": ["The Department of Defense (DOD) is currently developing hypersonic weapons under the Navy's Conventional Prompt Strike program, which is intended to provide the U.S. military with the ability to strike hardened or time-sensitive targets with conventional warheads, as well as through several Air Force, Army, and DARPA programs. Those who support these development efforts argue that hypersonic weapons could enhance deterrence, as well as provide the U.S. military with an ability to defeat capabilities such as advanced air and missile defense systems that form the foundation of U.S. competitors' anti-access/area denial strategies. In recognition of this, the 2018 National Defense Strategy identifies hypersonic weapons as one of the key technologies \"[ensuring the United States] will be able to fight and win the wars of the future.\""], "subsections": [{"section_title": "Programs", "paragraphs": ["Unlike China and Russia, the United States is not currently developing hypersonic weapons for use with a nuclear warhead. As a result, U.S. hypersonic weapons will likely require greater accuracy and will be more technically challenging to develop than nuclear-armed Chinese and Russian systems. Indeed, according to one expert, \"a nuclear-armed glider would be effective if it were 10 or even 100 times less accurate [than a conventionally-armed glider]\" due to nuclear blast effects. ", "According to open-source reporting, the United States has a number of major offensive hypersonic weapons and hypersonic technology programs in development, including the following (see Table 1 ):", "U.S. Navy\u00e2\u0080\u0094Conventional Prompt Strike (CPS); U.S. Army\u00e2\u0080\u0094Long-Range Hypersonic Weapon (LRHW); U.S. Air Force\u00e2\u0080\u0094AGM-183 Air-Launched Rapid Response Weapon (ARRW, pronounced \"arrow\"); DARPA\u00e2\u0080\u0094Tactical Boost Glide (TBG); DARPA\u00e2\u0080\u0094Operational Fires (OpFires); and DARPA\u00e2\u0080\u0094Hypersonic Air-breathing Weapon Concept (HAWC, pronounced \"hawk\").", "These programs are intended to produce operational prototypes, as there are currently no programs of record for hypersonic weapons. Accordingly, funding for U.S. hypersonic weapons programs is found in the Research, Development, Test, and Evaluation accounts, rather than in Procurement. "], "subsections": [{"section_title": "U.S. Navy", "paragraphs": ["In a June 2018 memorandum, DOD announced that the Navy would lead the development of a common glide vehicle for use across the services. The common glide vehicle is being adapted from a Mach 6 Army prototype warhead, the Alternate Re-Entry System, which was successfully tested in 2011 and 2017. Once development is complete, \"Sandia National Laboratories, the designer of the original concept, then will build the common glide vehicles\u00e2\u0080\u00a6. Booster systems are being developed separately.\" ", "The Navy's Conventional Prompt Strike (CPS) is expected to pair the common glide vehicle with a submarine-launched booster system, achieving initial operational capability (IOC) on a Virginia-class submarine with Virginia Payload Module in FY2028. The Navy is requesting $1 billion for CPS in FY2021\u00e2\u0080\u0094an increase of $415 million over the FY2020 request and $496 million over the FY2020 appropriation\u00e2\u0080\u0094and $5.3 billion across the five-year Future Years Defense Program (FYDP). "], "subsections": []}, {"section_title": "U.S. Army", "paragraphs": ["The Army's Long-Range Hypersonic Weapon program is expected to pair the common glide vehicle with the Navy's booster system. The system is intended to have a range of 1,400 miles and \"provide the Army with a prototype strategic attack weapon system to defeat A2/AD capabilities, suppress adversary Long Range Fires, and engage other high payoff/time sensitive targets.\" The Army is requesting $801 million for the program in FY2021\u00e2\u0080\u0094$573 million over the FY2020 request and $397 million over the FY2020 appropriation\u00e2\u0080\u0094and $3.3 billion across the FYDP. It plans to conduct flight tests for LRHW from FY2021 to FY2023, field combat rounds in FY2023, and transition to a program of record in the fourth quarter of FY2024. "], "subsections": []}, {"section_title": "U.S. Air Force", "paragraphs": ["T he AGM-183 Air- L aunched Rapid Response Weapon is expected to leverage DARPA's Tactical Boost Glide technology to develop an air-launched hypersonic glide vehicle prototype capable of travelling at speeds up to Mach 20 at a range of approximately 575 miles. Despite testing delays due to technical challenges, ARRW completed a successful flight test in June 2019 and is expected to complete flight tests in FY2022. The Air Force has requested $382 million for ARRW in FY2021\u00e2\u0080\u0094up from $286 million in the FY2020 request and appropriation\u00e2\u0080\u0094and $581 million across the FYDP, with no funds requested beyond FY2022. ARRW is a project under the Air Force's Hypersonics Prototyping Program Element, which is intended to demonstrate concepts \"to [enable] leadership to make informed strategy and resource decisions \u00e2\u0080\u00a6 for future programs.\" ", "In February 2020, the Air Force announced that it had cancelled its second hypersonic weapon program, the Hypersonic Conventional Strike Weapon (HCSW), which had been expected to use the common glide vehicle, due to budget pressures that forced it to choose between ARRW and HCSW. Air Force acquisition chief Will Roper explained that ARRW was selected because it was more advanced and gave the Air Force additional options. \"[ARRW] is smaller; we can carry twice as many on the B-52, and it's possible it could be on the F-15,\" he explained. The Air Force will continue its technical review of HCSW through March 2020."], "subsections": []}, {"section_title": "DARPA", "paragraphs": ["DARPA, in partnership with the Air Force, continues to test Tactical Boost Glide, a wedge-shaped hypersonic glide vehicle capable of Mach 7+ flight that \"aims to develop and demonstrate technologies to enable future air-launched, tactical-range hypersonic boost glide systems.\" TBG will \"also consider traceability, compatibility, and integration with the Navy Vertical Launch System\" and is planned to transition to both the Air Force and the Navy. DARPA has requested $117 million\u00e2\u0080\u0094down from the $162 million FY2020 request and the $152 million FY2020 appropriation\u00e2\u0080\u0094for TBG in FY2021. ", "DARPA's Operational Fires reportedly seeks to leverage TBG technologies to develop a ground-launched system that will enable \"advanced tactical weapons to penetrate modern enemy air defenses and rapidly and precisely engage critical time sensitive targets.\" DARPA has requested $40 million for OpFires in FY2021\u00e2\u0080\u0094down from the $50 million FY2020 request and appropriation\u00e2\u0080\u0094and intends to transition the program to the Army. ", "In the longer term, DARPA, with Air Force support, is continuing work on the Hypersonic Air-breathing Weapon Concept, which \"seeks to develop and demonstrate critical technologies to enable an effective and affordable air-launched hypersonic cruise missile.\" Assistance Director for Hypersonics Mike White has stated that such a missile would be smaller than DOD's hypersonic glide vehicles and could therefore launch from a wider range of platforms. Director White has additionally noted that HAWC and other hypersonic cruise missiles could integrate seekers more easily than hypersonic glide vehicles. DARPA requested $7 million to develop HAWC in FY2021\u00e2\u0080\u0094down from the $10 million FY2020 request and $20 million FY2020 appropriation. "], "subsections": []}, {"section_title": "Hypersonic Missile Defenses", "paragraphs": ["DOD is also investing in counter-hypersonic weapons capabilities, although USD R&E Michael Griffin has stated that the United States will not have a defensive capability against hypersonic weapons until the mid-2020s, at the earliest. In September 2018, the Missile Defense Agency (MDA)\u00e2\u0080\u0094which in 2017 established a Hypersonic Defense Program pursuant to Section 1687 of the FY2017 NDAA ( P.L. 114-840 )\u00e2\u0080\u0094commissioned 21 white papers to explore hypersonic missile defense options, including interceptor missiles, hypervelocity projectiles, laser guns, and electronic attack systems. In January 2020, MDA issued a draft request for prototype proposals for a Hypersonic Defense Regional Glide Phase Weapons System interceptor. This effort is intended to \"reduce interceptor key technology and integration risks, anchor modeling and simulation in areas of large uncertainty, and to increase the interceptor technology readiness levels (TRL) to level 5.\" MDA has also awarded four companies\u00e2\u0080\u0094Northrop Grumman, Raytheon, Leidos, and L3Harris\u00e2\u0080\u0094with $20 million contracts to design prototype space-based (low-Earth orbit) sensors by October 31, 2020. Such sensors could theoretically extend the range at which incoming missiles could be detected and tracked\u00e2\u0080\u0094a critical requirement for hypersonic missile defense, according to USD Griffin. MDA requested $206.8 million for hypersonic defense in FY2021\u00e2\u0080\u0094up from its $157.4 million FY2020 request\u00e2\u0080\u0094and $659 million across the FYDP. In addition, DARPA is working on a program called Glide Breaker, which \"will develop critical component technology to support a lightweight vehicle designed for precise engagement of hypersonic threats at very long range.\" DARPA requested $3 million for Glide Breaker in FY2021\u00e2\u0080\u0094down from $10 million in FY2020. "], "subsections": []}]}, {"section_title": "Infrastructure", "paragraphs": ["According to a study mandated by the FY2013 National Defense Authorization Act ( P.L. 112-239 ) and conducted by the Institute for Defense Analyses (IDA) , the United States had 48 critical hypersonic test facilities and mobile assets in 2014 needed for the maturation of hypersonic technologies for defense systems development through 2030 . These specialized facilities, which simulate the unique conditions experienced in hypersonic flight (e.g., speed, pressure, heating), included 10 DOD hypersonic ground test facilities, 11 DOD open-air ranges, 11 DOD mobile assets, 9 NASA facilities, 2 Department of Energy facilities, and 5 industry or academic facilities. In its 2014 evaluation of\u00c2\u00a0 U.S. hypersonic test and evaluation infrastructure, IDA\u00c2\u00a0noted that\u00c2\u00a0 \" no current U.S. facility can provide full-scale, time-dependent, coupled aerodynamic and thermal-loading environments for flight durations necessary to evaluate these\u00c2\u00a0characteristics above\u00c2\u00a0Mach 8. \" \u00c2\u00a0Since the 2014\u00c2\u00a0study report was published,\u00c2\u00a0the University of Notre Dame has opened a Mach 6 hypersonic wind t unnel and at least one hypersonic testing facility has been inactivated. D evelopment of Mach 8 and Mach 10 wind tunnels at Purdue University and the University of Notre Dame , respectively, is ongoing. In addition, t he University of Arizona plans to modify one of its wind tunnels to enable Mach 5 testing by early 2021 , while Texas A&M University\u00e2\u0080\u0094 in partnership with Army Futures Command\u00e2\u0080\u0094plans to complete construction of a kilometer-long Mach 10 wind tunnel by 2021 . ( For a list of U.S. hypersonic test assets and their capabilities, see the Appendix .) ", "The United States also uses the Royal Australian Air Force Woomera Test Range in Australia and the And\u00c3\u00b8ya Rocket Range in Norway for flight testing. In January 2019, the Navy announced plans to reactivate its Launch Test Complex at China Lake, CA, to improve air launch and underwater testing capabilities for the conventional prompt strike program. ", "In addition, in March 2020, DOD announced that it had established a \"hypersonic war room\" to assess the U.S. industrial base for hypersonic weapons and identify \"critical nodes\" in the supply chain. Initial findings are to be released in mid-2020. "], "subsections": []}]}, {"section_title": "Russia", "paragraphs": ["Although Russia has conducted research on hypersonic weapons technology since the 1980s, it accelerated its efforts in response to U.S. missile defense deployments in both the United States and Europe, and in response to the U.S. withdrawal from the Anti-Ballistic Missile Treaty in 2001. Detailing Russia's concerns, President Putin stated that \"the US is permitting constant, uncontrolled growth of the number of anti-ballistic missiles, improving their quality, and creating new missile launching areas. If we do not do something, eventually this will result in the complete devaluation of Russia's nuclear potential. Meaning that all of our missiles could simply be intercepted.\" Russia thus seeks hypersonic weapons, which can maneuver as they approach their targets, as an assured means of penetrating U.S. missile defenses and restoring its sense of strategic stability. "], "subsections": [{"section_title": "Programs", "paragraphs": ["Russia is pursuing two hypersonic weapons programs\u00e2\u0080\u0094the Avangard and the 3M22 Tsirkon (or Zircon)\u00e2\u0080\u0094and has reportedly fielded the Kinzhal (\"Dagger\"), a maneuvering air-launched ballistic missile. ", "Avangard ( Figure 2 ) is a hypersonic glide vehicle launched from an intercontinental ballistic missile (ICBM), giving it \"effectively 'unlimited' range.\" Reports indicate that Avangard is currently deployed on the SS-19 Stiletto ICBM, though Russia plans to eventually launch the vehicle from the Sarmat ICBM. Sarmat is still in development, although it may be deployed by 2021. Avangard features onboard countermeasures and will reportedly carry a nuclear warhead. It was successfully tested twice in 2016 and once in December 2018, reportedly reaching speeds of Mach 20; however, an October 2017 test resulted in failure. Russian news sources claim that Avangard entered into combat duty in December 2019.", "In addition to Avangard, Russia is developing Tsirkon, a ship-launched hypersonic cruise missile capable of traveling at speeds of between Mach 6 and Mach 8. Tsirkon is reportedly capable of striking both ground and naval targets. According to Russian news sources, Tsirkon has a range of between approximately 250 and 600 miles and can be fired from the vertical launch systems mounted on cruisers Admiral Nakhimov and Pyotr Veliky , Project 20380 corvettes, Project 22350 frigates, and Project 885 Yasen-class submarines, among other platforms. These sources assert that Tsirkon was successfully launched from a Project 22350 frigate in January 2020. U.S. intelligence reports indicate that the missile will become operational in 2023.", "In addition, Russia has reportedly fielded Kinzhal, a maneuvering air-launched ballistic missile modified from the Iskander missile. According to U.S. intelligence reports, Kinzhal was successfully test fired from a modified MiG-31 fighter (NATO code name: Foxhound) as recently as July 2018\u00e2\u0080\u0094striking a target at a distance of approximately 500 miles\u00e2\u0080\u0094and is expected by U.S. intelligence sources to become ready for combat by 2020. Russia plans to deploy the missile on both the MiG-31 and the Su-34 long-range strike fighter. Russia is working to mount the missile on the Tu-22M3 strategic bomber (NATO code name: Backfire), although the slower-moving bomber may face challenges in \"accelerating the weapon into the correct launch parameters.\" ", "Russian media has reported Kinzhal's top speed as Mach 10, with a range of up to 1,200 miles when launched from the MiG-31. The Kinzhal is reportedly capable of maneuverable flight, as well as of striking both ground and naval targets, and could eventually be fitted with a nuclear warhead. However, such claims regarding Kinzhal's performance characteristics have not been publicly verified by U.S. intelligence agencies, and have been met with skepticism by a number of analysts."], "subsections": []}, {"section_title": "Infrastructure", "paragraphs": ["Russia reportedly conducts hypersonic wind tunnel testing at the Central Aero-Hydrodynamic Institute in Zhukovsky and the Khristianovich Institute of Theoretical and Applied Mechanics in Novosibirsk, and has tested hypersonic weapons at Dombarovskiy Air Base, the Baykonur Cosmodrome, and the Kura Range."], "subsections": []}]}, {"section_title": "China", "paragraphs": ["According to Tong Zhao, a fellow at the Carnegie-Tsinghua Center for Global Policy, \"most experts argue that the most important reason to prioritize hypersonic technology development [in China] is the necessity to counter specific security threats from increasingly sophisticated U.S. military technology, including [hypersonic weapons].\" In particular, China's pursuit of hypersonic weapons, like Russia's, reflects a concern that U.S. hypersonic weapons could enable the United States to conduct a preemptive, decapitating strike on China's nuclear arsenal and supporting infrastructure. U.S. missile defense deployments could then limit China's ability to conduct a retaliatory strike against the United States. ", "China has demonstrated a growing interest in Russian advances in hypersonic weapons technology, conducting flight tests of a hypersonic-glide vehicle (HGV) only days after Russia tested its own system. Furthermore, a January 2017 report found that over half of open-source Chinese papers on hypersonic weapons include references to Russian weapons programs. This could indicate that China is increasingly considering hypersonic weapons within a regional context. Indeed, some analysts believe that China may be planning to mate conventionally armed HGVs with the DF-21 and DF-26 ballistic missiles in support of an anti-access/area denial strategy. China has reportedly not made a final determination as to whether its hypersonic weapons will be nuclear- or conventionally-armed\u00e2\u0080\u0094or dual-capable. "], "subsections": [{"section_title": "Programs", "paragraphs": ["China has conducted a number of successful tests of the DF-17, a medium-range ballistic missile specifically designed to launch HGVs. U.S. intelligence analysts assess that the missile has a range of approximately 1,000 to 1,500 miles and could be deployed in 2020. China has also tested the DF-41 intercontinental ballistic missile, which could be modified to carry a conventional or nuclear HGV, according to a report by a U.S. Congressional commission. The development of the DF-41 thus \"significantly increases the [Chinese] rocket force's nuclear threat to the U.S. mainland,\" the report states. ", "China has tested the DF-ZF HGV (previously referred to as the WU-14) at least nine times since 2014. U.S. defense officials have reportedly identified the range of the DF-ZF as approximately 1,200 miles and have stated that the missile may be capable of performing \"extreme maneuvers\" during flight. Although unconfirmed by intelligence agencies, some analysts believe the DF-ZF will be operational as early as 2020. ", "According to U.S. defense officials, China also successfully tested Starry Sky-2 (or Xing Kong-2), a nuclear-capable hypersonic vehicle prototype, in August 2018. China claims the vehicle reached top speeds of Mach 6 and executed a series of in-flight maneuvers before landing. Unlike the DF-ZF, Starry Sky-2 is a \"waverider\" that uses powered flight after launch and derives lift from its own shockwaves. Some reports indicate that the Starry Sky-2 could be operational by 2025. U.S. officials have declined to comment on the program."], "subsections": []}, {"section_title": "Infrastructure", "paragraphs": ["China has a robust research and development infrastructure devoted to hypersonic weapons. USD (R&E) Michael Griffin stated in March 2018 that China has conducted 20 times as many hypersonic tests as the United States. China tested three hypersonic vehicle models (D18-1S, D18-2S, and D18-3S)\u00e2\u0080\u0094each with different aerodynamic properties\u00e2\u0080\u0094in September 2018. Analysts believe that these tests could be designed to help China develop weapons that fly at variable speeds, including hypersonic speeds. Similarly, China has used the Lingyun Mach 6+ high-speed engine, or \"scramjet,\" test bed ( Figure 3 ) to research thermal resistant components and hypersonic cruise missile technologies. ", "According to Jane's Defence Weekly , \"China is also investing heavily in hypersonic ground testing facilities.\" CAAA operates the FD-02, FD-03, and FD-07 hypersonic wind tunnels, which are capable of reaching speeds of Mach 8, Mach 10, and Mach 12, respectively. China also operates the JF-12 hypersonic wind tunnel, which reaches speeds of between Mach 5 and Mach 9, and the FD-21 hypersonic wind tunnel, which reaches speeds of between Mach 10 and Mach 15. China is expected to have an operational wind tunnel capable of reaching speeds of Mach 25 by 2020. China is known to have tested hypersonic weapons at the Jiuquan Satellite Launch Center and the Taiyuan Satellite Launch Center."], "subsections": []}]}]}, {"section_title": "Issues for Congress", "paragraphs": ["As Congress reviews the Pentagon's plans for U.S. hypersonic weapons programs during the annual authorization and appropriations process, it might consider a number of questions about the rationale for hypersonic weapons, their expected costs, and their implications for strategic stability and arms control. This section provides an overview of some of these questions."], "subsections": [{"section_title": "Mission Requirements", "paragraphs": ["Although the Department of Defense is funding a number of hypersonic weapons programs, it has not established any programs of record, suggesting that it may not have approved requirements for hypersonic weapons or long-term funding plans. Indeed, as Assistant Director for Hypersonics (USD R&E) Mike White has stated, DOD has not yet made a decision to acquire hypersonic weapons and is instead developing prototypes to \"[identify] the most viable overarching weapon system concepts to choose from and then make a decision based on success and challenges.\" As Congress conducts oversight of U.S. hypersonic weapons programs, it may seek to obtain information about DOD's evaluation of potential mission sets for hypersonic weapons, a cost analysis of alternative means of executing these mission sets, and an assessment of the enabling technologies\u00e2\u0080\u0094such as space-based sensors or autonomous command and control systems\u00e2\u0080\u0094that may be required to employ or defend against hypersonic weapons. "], "subsections": []}, {"section_title": "Funding Considerations", "paragraphs": ["Assistant Director for Hypersonics (USD R&E) Mike White has noted that DOD is prioritizing offensive programs while it determines \"the path forward to get a robust defensive strategy.\" This approach is reflected in DOD's FY2021 request, which allocates $206.8 million for hypersonic defense programs\u00e2\u0080\u0094of a total $3.2 billion request for all hypersonic-related research. Similarly, in FY2020, DOD requested $157.4 million for hypersonic defense programs\u00e2\u0080\u0094of a total $2.6 billion for all hypersonic-related research. ", "Although the Defense Subcommittees of the Appropriations Committees increased FY2020 appropriations for both hypersonic offense and defense above the FY2020 request, they expressed concerns, noting in their joint explanatory statement of H.R. 1158 \"that the rapid growth in hypersonic research has the potential to result in stove-piped, proprietary systems that duplicate capabilities and increase costs.\" To mitigate this concern, they appropriated $100 million for DOD to establish a Joint Hypersonic Transition Office to \"develop and implement an integrated science and technology roadmap for hypersonics\" and \"establish a university consortium for hypersonic research and workforce development\" in support of DOD efforts. Given the lack of defined mission requirements for hypersonic weapons, it may be challenging for Congress to evaluate the balance of funding for hypersonic weapons programs, enabling technologies, supporting test infrastructure, and hypersonic missile defense. "], "subsections": []}, {"section_title": "Strategic Stability", "paragraphs": ["Analysts disagree about the strategic implications of hypersonic weapons. Some have identified two factors that could hold significant implications for strategic stability: the weapon's short time-of-flight\u00e2\u0080\u0094which, in turn, compresses the timeline for response\u00e2\u0080\u0094 and its unpredictable flight path\u00e2\u0080\u0094which could generate uncertainty about the weapon's intended target and therefore heighten the risk of miscalculation or unintended escalation in the event of a conflict. This risk could be further compounded in countries that co-locate nuclear and conventional capabilities or facilities . ", "Some analysts argue that unintended escalation could occur as a result of warhead ambiguity, or from the inability to distinguish between a conventionally armed hypersonic weapon and a nuclear-armed one. However, as a United Nations report notes, \"even if a State did know that an HGV launched toward it was conventionally armed, it may still view such a weapon as strategic in nature, regardless of how it was perceived by the State firing the weapon, and decide that a strategic response was warranted.\" Differences in threat perception and escalation ladders could thus result in unintended escalation. Such concerns have previously led Congress to restrict funding for conventional prompt strike programs.", "Other analysts have argued that the strategic implications of hypersonic weapons are minimal. Pavel Podvig, a senior research fellow at the United Nations Institute for Disarmament Research, has noted that the weapons \"don't \u00e2\u0080\u00a6 change much in terms of strategic balance and military capability.\" This, some analysts argue, is because U.S. competitors such as China and Russia already possess the ability to strike the United States with intercontinental ballistic missiles, which, when launched in salvos, could overwhelm U.S. missile defenses. Furthermore, these analysts note that in the case of hypersonic weapons, traditional principles of deterrence hold: \"it is really a stretch to try to imagine any regime in the world that would be so suicidal that it would even think threating to use\u00e2\u0080\u0094not to mention to actually use\u00e2\u0080\u0094hypersonic weapons against the United States ... would end well.\""], "subsections": []}, {"section_title": "Arms Control", "paragraphs": ["Some analysts who believe that hypersonic weapons could present a threat to strategic stability or inspire an arms race have argued that the United States should take measures to mitigate risks or limit the weapons' proliferation. Proposed measures include expanding New START, negotiating new multilateral arms control agreements, and undertaking transparency and confidence-building measures.", "The New START Treaty, a strategic offensive arms treaty between the United States and Russia, does not currently cover weapons that fly on a ballistic trajectory for less than 50% of their flight, as do hypersonic glide vehicles and hypersonic cruise missiles. However, Article V of the treaty states that \"when a Party believes that a new kind of strategic offensive arm is emerging, that Party shall have the right to raise the question of such a strategic offensive arm for consideration in the Bilateral Consultative Commission (BCC).\" Accordingly, some legal experts hold that the United States could raise the issue in the BCC of negotiating to include hypersonic weapons in the New START limits. However, because New START is due to expire in 2021, unless extended through 2026, this solution is likely to be temporary. ", "As an alternative, some analysts have proposed negotiating a new international arms control agreement that would institute a moratorium or ban on hypersonic weapon testing. These analysts argue that a test ban would be a \"highly verifiable\" and \"highly effective\" means of preventing a potential arms race and preserving strategic stability. Other analysts have countered that a test ban would be infeasible, as \"no clear technical distinction can be made between hypersonic missiles and other conventional capabilities that are less prompt, have shorter ranges, and also have the potential to undermine nuclear deterrence.\" These analysts have instead proposed international transparency and confidence-building measures, such as exchanging weapons data; conducting joint technical studies; \"providing advance notices of tests; choosing separate, distinctive launch locations for tests of hypersonic missiles; and placing restraints on sea-based tests.\" "], "subsections": [{"section_title": "Appendix. U.S. Hypersonic Testing Infrastructure114", "paragraphs": [], "subsections": []}]}]}]}}
{"id": "R45792", "title": "Off-Label Use of Prescription Drugs", "released_date": "2019-07-01T00:00:00", "summary": ["When the Food and Drug Administration (FDA) approves a drug for sale in the United States, the approval includes a section entitled \"Indications for Use.\" This section lists the one or more diseases, conditions, or symptoms for which the drug's sponsor (usually the manufacturer) has provided, to FDA's satisfaction, evidence in support of the drug's safety and effectiveness. FDA approval is also based on its review of the drug's dosage, packaging, manufacturing plan, and labeling. Before changing any of those elements, the sponsor must inform, and usually receive permission from, FDA.", "In essence, FDA regulates all approval and post-approval aspects of a drug product. But FDA traditionally has not regulated the practice of medicine. Physicians, therefore, may prescribe an FDA-approved drug for indications that FDA has not reviewed for safety and effectiveness. Those uses, furthermore, are not addressed in the labeling information regarding, among other things, dosing, warnings about interactions with other drugs, and possible adverse events.", "How Are Off-Label Prescription Drugs Used?", "Prescribing for so-called off-label uses can be accepted medical practice, often reflecting cutting-edge clinical expertise. For example, this is the case with oncology drug use, more than half of which is off-label. Off-label prescribing can be a reasonable choice when labeling overlooks certain populations\u00e2\u0080\u0094for example, when a drug tested in adults is prescribed to children. A drug may be used off-label when it was tested for the treatment of one disease and prescribed in an attempt to prevent or treat another, when it was tested at one dose and used at higher or lower doses, or when it was tested in an eight-week trial and prescribed for long-term use. Estimates for how common off-label prescriptions are in the United States are hardly precise. Credible researchers have estimated they make up as little as 12% and as much as 38% of doctor-office prescriptions.", "What Are the Risks of Off-Label Prescriptions?", "Prescriptions for off-label uses of FDA-approved drugs are made without the benefit of an FDA-reviewed analysis of safety and effectiveness data. Physicians may resort to such prescribing to take advantage of new ideas and treatment approaches when available information to support them is inadequate. However, despite the potential risks associated with off-label uses, efforts to prohibit such uses might hurt the public. Some off-label prescribing may result because manufacturers have chosen not to invest the resources needed to have FDA add indications to the drug's approval and labeling.", "A worst-case scenario for the nation's health would be the widespread acceptance of a drug for an off-label use that sufficient research would have revealed to be ineffective, unsafe, or both. Aside from the drug's direct harm, the time spent waiting to see whether it worked would have been time not spent exploring other treatment options.", "Unchecked off-label prescribing may also threaten the FDA gold standard of drug approval. If clinicians had already accepted a new use into practice through off-label prescribing, a manufacturer may choose to not invest resources to go through clinical trials and the FDA process to win approval.", "Although manufacturers do share information on off-label uses, courts have sometimes found they had overstepped allowable bounds. Congress has given permission for limited sharing. Are there other ways to share clinical information that do not put the public's health or FDA's authority at risk?", "What Role Can Congress Play in the Use of Off-Label Prescriptions?", "How might Congress, in its legislative or oversight roles, consider the use of off-label drugs to protect the public's health? Legislators and health analysts have suggested both restrictive and permissive actions regarding off-label use. Ideas\u00e2\u0080\u0094some of which conflict with others\u00e2\u0080\u0094include", "disclosure to patients; data collection, availability, and analysis; dissemination of clinical data; linking reimbursement and coverage to evidence of safety and effectiveness; clinical research and research transparency; clinical guidance; congressional oversight through the Government Accountability Office, the Federal Trade Commission, and the Department of Health and Human Services; and consideration of other countries' approaches to off-label use.", "Some actions would require federal legislation. Other proposals would involve actions by other entities, such as state authorities and professional organizations, which Congress could urge."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["Both legislators and regulators have expressed concern about the safety and effectiveness of prescription drugs prescribed for \"off-label uses\"\u00e2\u0080\u0094purposes other than those for which the Food and Drug Administration (FDA) has approved their sale. Two recent incidents illustrate the bases for those concerns.", "The first involves a drug already on the market. Safety experts raised concerns about ketamine, a drug available as an injectable anesthetic. They noted that physicians have created outpatient clinics to administer intravenous ketamine in an off-label use to treat depression and migraines. FDA has not reviewed clinical data that could support the clinics' promotional claims of safety and effectiveness.", "In August 2018, a second incident occurred in a Texas courtroom. Astra Zeneca settled a case concerning its alleged promotion of Seroquel for uses other than those for which it had sought and obtained FDA approval for sale in the United States. The core of the complaint by the state of Texas was that the company promoted the drug's use in children, although the FDA-approved labeling of the drug was for adult use. It was one of a number of settlements since 2000 resulting in payments by drug companies for the promotion of off-label uses.", "To help understand the issues involving off-label use, and how these issues might concern Congress, this report addresses five questions:", "What is drug labeling? What is off-label use? How are off-label prescriptions used in medicine today? What are the risks and benefits associated with off-label prescriptions? What concerns, if any, does Congress have about such prescriptions? If Congress wanted to do something about off-label prescriptions, what would be some of the options?"], "subsections": []}, {"section_title": "Drug Labeling and Off-Label Use", "paragraphs": ["To market a prescription drug in the United States, a manufacturer needs FDA approval. To obtain that approval, the manufacturer must demonstrate the drug's safety and effectiveness according to criteria specified in law and agency regulations. It must also ensure that its manufacturing plant passes FDA inspection.", "Finally, it must obtain FDA approval for the drug's labeling\u00e2\u0080\u0094a term that covers all written material about the drug, including, for example, packaging, prescribing information for physicians, and patient brochures. FDA, thus, approves the drug and its labeling for a specific use. That use specifies the disease or condition, the population, and the way the drug is packaged and administered.", "When a physician prescribes a drug for reasons other than those specified in the FDA approval and labeling, the medical profession considers this to be off-label use .", "FDA regulates the drug and the manufacturer. Each state regulates clinicians and pharmacies. A licensed physician may\u00e2\u0080\u0094except in highly restricted circumstances \u00e2\u0080\u0094prescribe the approved drug without limitation. A prescription to an individual whose demographic or medical characteristics differ from those indicated in a drug's FDA-approved labeling is accepted medical practice.", "In a 2006 study of drug prescribing by office-based physicians, 21% of prescriptions were written for off-label uses. Of those off-label prescriptions, the study's authors found that 27% were backed by strong scientific support. A 2016 Canadian study of primary care clinics found an overall rate of 12% of prescriptions for off-label uses. The percentage varied, however, by therapeutic class, ranging from 5% for ear, nose, and throat medications to 25% for central nervous system medications. An econometric model from the National Ambulatory Medical Care Survey estimated a 38% rate of off-label use.", "Research has shown that more than half of oncology drug use is off-label. A 2018 study examined 43 FDA-approved cancer drugs and compared their 99 labeled uses with the acceptable uses published by a national compendium Medicare relies on to make coverage decisions. Of the 451 compendium-accepted uses, 56% were off-label. Of the off-label uses, the authors deemed 91% as \"well-accepted off-label use.\""], "subsections": [{"section_title": "Labeling: History, Requirements, and Value", "paragraphs": ["History. Drug labeling has been central to FDA's role as a protector of the public's health since 1906. That year, Congress (1) required that sellers state on a drug's label the \"quantity or proportion of any alcohol [or] opium\" contained, and (2) considered as \"misbranded\" any drug whose label was \"false or misleading.\" Requirements that drugs be safe were not established until 1938. Congress did not require they be effective until 1962.", "Requirements. Today, a drug's labeling is more than the sticker the pharmacy places on the amber vial it dispenses to a customer. The Federal Food, Drug, and Cosmetics Act (FFDCA) and associated FDA regulations require and describe a product's labeling as \"a compilation of information about the product, approved by FDA, based on the agency's thorough analysis of the new drug application (NDA) or biologics license application (BLA) submitted by the applicant. This labeling contains information necessary for safe and effective use.\"", "FDA requires that labeling begin with a highlights section that includes, if appropriate, black-box warnings, so called because their black borders signify importance. The regulations list the required elements of labeling:", "Value. Labeling plays a major role in the presentation of safety and effectiveness information. For clinicians, it is a primary source of prescribing information. The manufacturer submits the approved labeling for publication in the widely used Physician's Desk Reference . That labeling also serves as the basis for several patient-focused information sheets that manufacturers, pharmacy vendors, and many web-based drug information sites produce."], "subsections": []}, {"section_title": "Off-Label Use: Description and Examples", "paragraphs": ["Off-label prescribing can reflect cutting-edge clinical expertise. It can also be a response to price: a physician may choose to prescribe a lower-priced drug instead of a specifically labeled higher-priced one. Or a physician may prescribe off-label in an attempt to try a different treatment approach when other options have failed.", "Sometimes an off-label use becomes so widespread that it becomes accepted practice. However, without the backing of carefully designed clinical trials and expert analysis, it remains unknown whether the drug is, in fact, safe and effective for the off-label use. Also unknown are dosing details and systematically evaluated associated adverse events.", "Examples of off-label use include", "a drug tested for the treatment of one disease prescribed in an attempt to prevent or treat another; a drug tested at one dose used at higher or lower doses; a drug tested in adults prescribed to children; and a drug tested in an eight-week trial prescribed for long-term use.", " Table 1 lists several examples of FDA-approved drugs widely prescribed for off-label uses.", "Although FDA materials do not list off-label uses, several drug compendia include both labeled and off-label uses. For Medicare coverage, for example, the Social Security Act defines \"medically accepted indication\" as those, in addition to uses approved by FDA, that have been evaluated and supported and listed in one of several compendia, or for which there is \"supportive clinical evidence in peer reviewed medical literature.\""], "subsections": []}]}, {"section_title": "Benefits and Risks of Off-Label Use", "paragraphs": ["Why has Congress given FDA the authority to regulate whether a drug may be on the U.S. market? Two key reasons: to protect patients and to encourage research in a competitive pharmaceutical industry.", "By statute and regulation, FDA now approves a drug for a specific use once its sponsor (usually the manufacturer) has provided sufficient evidence that the drug is safe and effective for that use. FDA has developed procedures for the review of that evidence. The FDA-approved labeling, which informs the clinician about dosing and likely and unlikely adverse events, helps protect the individuals for whom the drug is prescribed.", "Labeling also helps protect the interests of the manufacturers who invest in the clinical trials that demonstrate safety and effectiveness. For new drugs and new uses of already approved drugs, the sponsor receives a period of market protection, in the form of regulatory exclusivity for the sale of the drug for those uses. Payors\u00e2\u0080\u0094such as private health insurers or Medicare\u00e2\u0080\u0094benefit from FDA-approved labeling in their evaluation of whether to pay for a drug's use.", "But use of a drug evolves as clinicians (and the manufacturer) share their experiences regarding off-label uses, which, by definition, were not part of the premarket clinical studies used to obtain FDA approval. Off-label use can benefit patients. In some instances, such as in the treatment of rare diseases, clinical practice may use drugs approved for other indications. A manufacturer may choose not to invest in trials for such a small patient group. A patient whose physician is already prescribing the drug off-label may not want to enroll in a clinical trial where there is a chance he or she may be assigned to the placebo group. Once drugs are well-established in off-label uses, manufacturers rarely design studies to determine or verify the safety and effectiveness of such uses. Individuals and groups wanting to conduct such studies may find it hard to obtain funding.", "Examples of adverse events (AEs) associated with the use of drugs for specific off-label uses include heart valve damage from the use of fenfluramine and phentermine (fen-phen) for weight loss, and seizures from the use of tiagabine hydrochloride for depression. Using a Canadian primary care database that captured all prescriptions, the reason for each prescription, and adverse events, researchers looked at the rate of AEs for on-label use, off-label use associated with \"strong scientific evidence,\" and off-label use without such evidence. They found more AEs for off-label prescriptions than for on-label prescriptions. However, off-label use associated with strong scientific evidence had similar rates of AEs as did on-label uses. The increased risk of AEs for off-label use was concentrated in those uses without strong scientific evidence.", "Manufacturers benefit from sales for off-label uses. However, they risk losing that market should a competitor complete studies to obtain FDA approval and labeling for those uses. Researchers who are not supported by the manufacturer who try to assess the safety and effectiveness of off-label uses are hampered by the inexact nature of secondary data sources: the standard clinical trial data collection in preparation for an FDA application is not available for off-label uses. What may begin as hopeful and intermittent off-label use may gain momentum and offer opportunities for planned studies.", "Drug and device companies argue that current regulations prevent them from distributing important information to physicians and payors about unapproved, off-label uses of their products. In November 2016, FDA held a two-day public meeting to hear from various groups regarding off-label uses of approved or cleared medical products. In June 2018, FDA issued final guidances explaining the agency's policy about medical product communications that include data and information not contained in FDA-approved labeling.", "One FDA guidance document, in particular, described the types of information that a manufacturer could provide payors and formulary committees about unapproved uses of approved products. FDA made two points especially relevant to off-label uses.", "First, FDA differentiates among its audiences in its presentation of information. The material it allows in product labeling is directed to a clinical audience. FDA staff have reviewed the information and require that it be presented in a way that is understandable by individual clinicians, who often do not have the statistical sophistication or data analysis skills or resources to fully evaluate the claims of manufacturers. This guidance notes, though, that payors and formulary committees do have such expertise and resources. FDA also acknowledges that it is useful for payors to have information in their decisions on coverage, but it wants to ensure that the information manufacturers provide is not misleading.", "Second, the FDA guidance describes what harm could come from allowing more sharing of information about off-label use.", "Some firm communications regarding unapproved products or unapproved uses of approved/cleared/licensed medical products may potentially undermine substantial government interests related to health and safety. These interests include motivating the development of robust scientific data on safety and efficacy; maintaining the premarket review process for safety and efficacy of each intended use in order to prevent harm, to protect against fraud, misrepresentation, and bias, and to develop appropriate instructions for use for medical products; protecting the integrity and reliability of promotional information regarding medical product uses; and preventing the diversion of health care resources toward ineffective treatments.", "The concerns FDA raised in the June 2018 final guidance documents might explain why Congress may be interested in exploring the issue of off-label use further."], "subsections": []}, {"section_title": "History of Congressional Interest and Action", "paragraphs": ["Congress has developed a system to protect the public by ensuring that drugs sold in the United States have met clinical and manufacturing standards of safety and effectiveness. Labeling is the mechanism that bridges the regulated drug and the use of that drug in clinical practice. The labeling establishes the uses for which the manufacturer has demonstrated safety and effectiveness to FDA's satisfaction. Congress and the FDA have tried several approaches, using labeling as a tool, to reduce the risk to patients. Table A-1 includes examples of congressional and FDA actions to expand the information provided in a drug's labeling. The actions have addressed topics such as", "content labeling, directions for use, permissible and prohibited advertising, research incentives to support labeling specific to population subgroups (e.g., children), criteria for Medicare coverage, required and permissible labeling changes, and balance of benefit and risk information in labeling and advertising.", "Manufacturers, meanwhile, want to be able to provide information to insurers and other entities (such as the Centers for Medicare and Medicaid Services [CMS] and hospital pharmacy and therapeutics committees) that decide whether to cover a drug in a policy and whether to limit reimbursement for specific uses. Congress has provided some leeway relative to its earlier prohibition on promotional activities. For example, in 2016, it broadened the types of health care economic information drug and device manufacturers could provide to payors (e.g., insurance companies). Although the underlying FFDCA section continues to exclude information related only to an off-label use, it now requires \"a conspicuous and prominent statement describing any material differences between the health care economic information and the labeling approved for the drug.\" Several bills concerning off-label use have been introduced that would have expanded the information that manufacturers could provide about off-label uses. For example, the Subcommittee on Health of the House Committee on Energy and Commerce marked up H.R. 2026 (115 th Congress), the Pharmaceutical Information Exchange Act, in January 2018, which would have allowed the provision of scientific information to payors, in addition to health care economic information. Then-Subcommittee Chair Michael Burgess, in commenting on the bill's effort to clarify how manufacturers can share \"if it is based on competent and reliable evidence,\" expressed strong support for the bill. He noted \"the importance of cutting edge information in medicine and science to optimize patient care and outcomes \u00e2\u0080\u00a6 and [how the bill] could have the potential to save patients' lives.\"", "Then-Ranking Member (now, Chair) Frank Pallone, Jr., though, argued that the ability to communicate about off-label use \"had great potential to undermine\" FDA's approval process and to \"hamstring\" its enforcement efforts. H.R. 2026 passed the subcommittee, although it did not reach the floor in the 115 th Congress."], "subsections": []}, {"section_title": "Possible Avenues of Future Congressional Interest", "paragraphs": ["Off-label use presents both opportunities and risks to clinicians, patients, manufacturers, and researchers. At times, those interests clash. Academics, public health organizations, and journals have suggested what actions Congress might take based on their particular concerns regarding off-label prescriptions. These actions include both direct legislation and oversight activities to encourage action by other entities. The 116 th Congress might consider some of these varied approaches, summarized in the issues described below.", "Disclosure to patients. Most individuals, unaware of the nuances of FDA regulation, may not know that physicians may prescribe drugs for uses that FDA has not reviewed for safety and effectiveness. Several potential opportunities for providing this information exist. Congress could require or work with the states to require that", "the prescriber inform the patient about the off-label use and describe the meaning of off-label use; the prescriber note in the prescription why the drug is being prescribed; or the pharmacist inform the patient that the use is off-label.", "Data collection and availability. FDA, under federal law, determines whether a drug requires a prescription. The states, under their individual laws, determine what information the prescription order contains. Because clinicians do not need to note on the prescription order why they are prescribing a drug (e.g., simvastatin for high cholesterol or citalopram for depression), the information in pharmacy, administrative, and clinical databases often cannot directly identify off-label uses. Therefore, as Congress and other public policy groups consider whether and how to address off-label drug prescribing, they do not have adequate information on the scope and details of the practice. Congress could require or work with the states to encourage", "clinicians to note on prescriptions the reason for medication use (e.g., the specific condition, disease, or symptom), thereby allowing that information to appear in pharmacy databases, which would enable focused analysis of off-label uses; the establishment of confidential registries of off-label prescribing and follow-up information that FDA (or other designated scientifically appropriate agencies) could use in its electronic surveillance systems to identify associated adverse events and other drug use problems; or FDA to increase its surveillance of available data sources, such as registries and administrative and clinical databases, to identify patterns of off-label use and evidence suggesting effectiveness and associated adverse events.", "Dissemination. Because some information may be valuable to clinicians and entities that influence prescribing decisions (such as insurers and pharmacy and therapeutics committees), Congress could allow manufacturers to disseminate information about off-label uses that they have developed or of which they are aware, perhaps subject to certain limitations or accompanying reporting requirements. Possibilities include", "broader sharing of clinical analyses of off-label use with coverage deciders (e.g., CMS, insurers, pharmacy and therapeutics committees) to support requests that they cover a particular use of the drug; and dissemination of clinical analyses of off-label use at clinical and pharmaceutical conferences.", "Oversight. With an estimated 12% to 38% of all prescriptions' (and 56% of oncology prescriptions') being written for uses not listed on FDA-approved labeling, valid information on the extent of off-label use and the effect of such use on manufacturer, insurer, and clinician behavior could potentially better inform debate on how to best protect the public's health. Congress could direct", "the Government Accountability Office (GAO) to study the extent of off-label use in government-provided care (e.g., Department of Veterans Affairs, Bureau of Prisons, and Indian Health Service) and in government-funded care (e.g., Medicare and Medicaid); the Secretary of Health and Human Services (HHS) to contract with the National Academy of Medicine or a similar organization to assemble management or industrial policy experts to study the costs and rewards to industry of off-label prescriptions; or FDA and the Federal Trade Commission to investigate drugs whose off-label prescriptions account for a particularly high percentage of all prescriptions or that generate a particularly high percentage or high dollar value of sales.", "Pricing. The decision to use a drug off-label based solely or primarily on price introduces a new element to study. For example, the pricing difference between Avastin and Lucentis, both made by the same manufacturer with the same active ingredient, is so large that many ophthalmologists use the lower priced Avastin in their treatment of macular degeneration, despite its being an off-label use. The manufacturer included the treatment of macular degeneration in its application to FDA for Lucentis. To explore the ramifications of a traditionally nonclinical element in prescribing decisions, Congress could require", "the HHS Secretary to study the relationship among pricing, access, and prescribing and its effect on patient safety.", "Reimbursement. Although FDA approval of a drug\u00e2\u0080\u0094not for each use of a drug\u00e2\u0080\u0094is a requirement for sale in the United States, the decision to reimburse a physician or patient for a drug is made by entities such as the CMS and private insurers. Such decisions, therefore, influence what drugs are prescribed and, in part, for what uses drugs are prescribed. Congress could direct", "the HHS Secretary to study such coverage decisions or to contract with the National Academy of Medicine or a similarly equipped entity to do so; or HHS to form a task force to include CMS and FDA, along with private insurers and others involved in coverage decisions, and patient and clinician groups representing those affected by coverage decisions, to identify areas in need of action and to recommend steps in those directions.", "Congress also could encourage", "payors to require safety and effectiveness evidence before covering off-label uses.", "Research. The traditional path toward adding an indication (reason for use) to the labeling of a drug already approved for other uses has been for the sponsor of the drug to conduct clinical trials and submit a supplemental new drug application (NDA) to FDA. The widespread extent of off-label use suggests that relying on that model is not helping prescribers get better information. Congress could consider", "assigning responsibility (and funding) to the National Institutes of Health and the Patient-Centered Outcomes Research Institute for safety and effectiveness evaluations of off-label uses; or requiring, for a drug that has substantial (to be defined) off-label sales, that the manufacturer fund studies, such as clinical trials, to assess the safety and effectiveness of the drug for the off-label use and submit evidence to the HHS Secretary. Depending on the Secretary's assessment of the evidence, the Secretary could request that the manufacturer amend the drug's labeling either to add the off-label use to the label as an approved use or to add a statement that clinical evidence does not support the safety and effectiveness of the drug for the off-label use.", "Research transparency. FDA regulations describe standards for the design and analysis of clinical trials that a sponsor uses in an NDA. Studies done by or for the manufacturer or by other groups or individuals are not always made public, in which case their findings cannot be reviewed and evaluated. Because the results of such studies may be used in support of off-label uses, by providing positive and negative incentives, Congress could consider requiring or encouraging", "prospective posting of the designs and statistical plans of studies of off-label uses; or public reporting of studies of off-label use.", "Clinical guidance. Professional societies and other clinical groups often supplement the information available to prescribers from FDA-approved labeling, medical journals, and information from manufacturers. They can issue guidelines and recommend best practices. Congress could engage such groups and encourage", "professional societies to develop evidence-based clinical guidelines and training regarding off-label use.", "Precedents from other countries. The United States is not alone in facing the health care and economic implications of off-label use. For example, the member countries of the European Union have addressed measures involving reimbursement, guidance for prescribers, professional standards, and informed consent. Congress could require", "HHS to contract with the National Academy of Medicine or a similarly equipped entity to review measures taken by the European Union and other regulatory bodies and recommend legislative or administrative actions as appropriate."], "subsections": []}, {"section_title": "Concluding Comments", "paragraphs": ["Concerns over off-label use overlap with questions raised by some legislators and regulators in other contexts. In addition to clearly related issues such as what is allowable information in direct-to-consumer advertising, promotion to clinicians, and material shared with payors and insurers, off-label use also affects the entire basis of FDA regulation of drugs through its authority to approve drugs. That means it directly or indirectly affects research, clinical innovation, transparency, patents and exclusivities, pricing, and access.", "Changes in law or regulation in any one area may have benefits in some areas and drawbacks in others. For example, FDA's initiative to encourage research in drugs used traditionally but never reviewed and approved by FDA\u00e2\u0080\u0094so-called legacy drugs\u00e2\u0080\u0094stems from its desire for evidence of safety and effectiveness. Such evidence helps protect patients from possible use of ineffective, unsafe, or misdosed drugs. That initiative, in turn, helps enable sponsors to conduct the clinical trials, submit new drug applications, obtain regulatory exclusivity with the new drug approval\u00e2\u0080\u0094and then raise the price of the new branded product while expecting FDA to honor the exclusivity and block the sale of the drug by others. For example, clinicians had been prescribing a compounded version of progestin for use in preventing preterm delivery. Such use had never been adequately tested in clinical trials. One company conducted those trials, and FDA approved its new drug application. The initial price for the new drug, Makena, was $30,000 for a 20-week course; patients had been paying pharmacists $200-$400 for the same course. Unanticipated price increases can also arise from the apparent following of FDA procedures. For example, a new owner of the FDA-approval of an old antiparasitic generic drug raised the price from $14 per tablet to $750, Daraprim's initial price. Such sudden and large price increases become a barrier to patient access and, therefore, a potential threat to health.", "In the case of off-label prescribing, actions in any direction\u00e2\u0080\u0094whether by Congress, FDA, or the courts\u00e2\u0080\u0094could have both intended and unanticipated effects. Actions to limit off-label prescribing could have the intended effects of reducing safety risks and the economic cost of using drugs ineffective for their prescribed purposes. Such limits, however, could also stifle informed clinical exploration. Similarly, incentives to mount clinical trials needed to add an indication to the label could help identify and disseminate information on dosing and contradictions. Such incentives, however, could also hurt. For example, a brand drug that added a new indication to its labeling could prevent, through exclusivities, generics from similarly modifying their labeling. Patients could need to pay more.", "The recent debates over the right-to-try movement regarding use of investigational drugs by terminally ill patients may preview discussion about any proposed restrictions on off-label use. The Goldwater Institute, considered a key impetus to development and passage of the 2018 enactment of a right-to-try act, looks to diminish government's role in an individual's choice and has supported dissemination of off-label information.", "Congress has built a process in which a robust FDA can regulate drugs to protect the public's health. Is there cause for concern that perhaps a third of prescriptions are for off-label uses and that, in at least one study, three-quarters of those had minimal or no accepted scientific evidence to support their use?", "Policy tension exists over the line between wanting to ensure individuals' freedom to take drugs for off-label uses and wanting to protect the public from the risk of unsafe or ineffective drugs. Where to draw that line\u00e2\u0080\u0094and how to know when it may be time to move the line\u00e2\u0080\u0094is of continuing interest to regulators and legislators."], "subsections": [{"section_title": "Appendix. Selected Actions to Expand Information in Drug Labeling", "paragraphs": [], "subsections": []}]}]}}
{"id": "R45999", "title": "National Flood Insurance Program: The Current Rating Structure and Risk Rating 2.0", "released_date": "2019-11-07T00:00:00", "summary": ["The National Flood Insurance Program (NFIP) is the primary source of flood insurance coverage for residential properties in the United States, with more than five million policies in over 22,000 communities in 56 states and jurisdictions. FEMA is planning to introduce the biggest change to the way the NFIP calculates flood insurance premiums, known as Risk Rating 2.0 , since the inception of the NFIP in 1968 . The new premium rates are scheduled to go into effect on October 1, 2021, for all NFIP policies across the country.", "Risk Rating 2.0 will continue the overall policy of phasing out NFIP subsidies, which began with the Biggert-Waters Flood Insurance Reform Act of 2012 and continued with the Homeowner Flood Insurance Affordability Act of 2014. Under the change, premiums for individual properties will be tied to their actual flood risk. Because the limitations on annual premium increases are set in statute, Risk Rating 2.0 will not be able to increase rates faster than the existing limit for primary residences of 5%-18% per year.", "According to FEMA, Risk Rating 2.0 will", "reflect an individual property's risk, reflect more types of flood risk in rates, use the latest actuarial practices to set risk-based rates, provide rates that are easier to understand for agents and policyholders, and reduce complexity for agents to generate a flood insurance quote.", "The NFIP's current rating structure follows general insurance practices in effect at the time that the NFIP was established and has not fundamentally changed since the 1970s . The current NFIP rating structure uses several basic characteristics to classify properties based on flood risks. Structures are evaluated by their flood zone on a Flood Insurance Rate Map (FIRM), occupancy type, and the elevation of the structure. FEMA uses a nationwide rating system that combines flood zones across many geographic areas, and calculates expected losses for groups of structures that are similar in flood risk and key structural aspects, assigning the same rate to all policies in a group.", "According to FEMA, flood zones will no longer be used in calculating a property's flood insurance premium following the introduction of Risk Rating 2.0. Instead, the premium will be calculated based on the specific features of an individual property, including structural variables such as the foundation type of the structure, the height of the lowest floor of the structure relative to base flood elevation, and the replacement cost value of the structure. The current rating system includes two sources of flood risk: the 1%-annual-chance fluvial (river) flood and the 1%-annual-chance coastal flood. As proposed, Risk Rating 2.0 will incorporate a broader range of flood frequencies and sources than the current system, as well as geographical variables such as the distance to water, the type and size of nearest bodies of water, and the elevation of the property relative to the flooding source.", "According to FEMA, although flood zones on a FIRM will not be used to calculate a property's flood insurance premium, flood zones will still be used for floodplain management purposes, and the boundary of the Special Flood Hazard Area will still be required for the mandatory purchase requirement."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["The National Flood Insurance Program (NFIP) is the primary source of flood insurance coverage for residential properties in the United States, with more than five million policies in over 22,000 communities in 56 states and jurisdictions. The program collects about $4.6 billion in annual revenue from policyholders' premiums, fees and surcharges and provides over $1.3 trillion in coverage. The NFIP was established by the National Flood Insurance Act of 1968. The general purpose of the NFIP is both to offer primary flood insurance to properties with significant flood risk, and to reduce flood risk through the adoption of floodplain management standards. A longer-term objective of the NFIP is to reduce federal expenditure on disaster assistance after floods.", "The Federal Emergency Management Agency (FEMA), which administers the NFIP, is planning to introduce Risk Rating 2.0 , which represents the biggest change to the way the NFIP calculates flood insurance premiums since its inception. The new rates are scheduled to go into effect on October 1, 2021, for all NFIP policies. ", "The price of insurance is generally based on three components: (1) the average annual loss, which is the expected loss per year; (2) the risk, which depends on the variability or uncertainty in loss estimates; and (3) expenses. These rating factors are used to calculate the premium that is sufficient to cover expected losses. The methodologies used to estimate these components, particularly the average annual loss and the risk, have changed over the decades that the NFIP has been in operation. This report will outline how the NFIP currently rates risks and sets premiums to cover losses, and how these are expected to change with the introduction of Risk Rating 2.0."], "subsections": []}, {"section_title": "The NFIP's Current Rating Structure", "paragraphs": [], "subsections": [{"section_title": "How the NFIP Currently Determines Flood Insurance Premiums", "paragraphs": ["The NFIP's current rating structure follows general insurance practices in effect at the time that the NFIP was established and has not fundamentally changed since the 1970s. The current NFIP rating structure uses several basic characteristics to classify properties based on flood risks. Structures are evaluated by their specific flood zone on a Flood Insurance Rate Map (FIRM), occupancy type, and the elevation of the structure relative to the Base Flood Elevation (BFE). In addition, the premium structure includes estimates for the expenses of the NFIP, including servicing of policies.", "FEMA uses a nationwide rating system that combines flood zones across many geographic areas. Individual policies do not necessarily reflect topographical features that affect flood risk. FEMA calculates expected losses for groups of structures that are similar in flood risk and key structural aspects, and assigns the same rate to all policies in a group. For example, two properties that are rated as the same NFIP risk (e.g., both are one-story, single-family dwellings with no basement, in the same flood zone, and elevated the same number of feet above the BFE ) , are charged the same rate per $100 of insurance, although they may be located in different states with differing flood histories or rest on different topography, such as a shallow floodplain as opposed to a steep river valley. In addition, two properties in the same flood zone are charged the same rate, regardless of their location within the zone."], "subsections": [{"section_title": "Risk Modeling", "paragraphs": ["FEMA's current efforts to model risk consider only the potential for coastal storm surge and fluvial (river) flooding. The NFIP expresses flood risk in terms of the expected economic loss due to inundation and the probability of that loss. Information about the flood hazard is determined through NFIP flood studies, the vulnerability of the structure being insured, and the performance of certain flood protection measures. This is incorporated into a flood risk assessment, which yields an estimate of the average annual loss. The insurance rate is determined from this loss after adjusting for expenses, deductibles, underinsurance (because not all structures are insured to their full value), and other factors.", "In inland areas, NFIP flood studies focus on a river's watershed, the topography along the river and adjacent floodplain where structures are located, and the hydraulic characteristics of the river and floodplain. In coastal areas, the studies also assess the effects of storm surge and wave action. Models of relevant physical processes are coupled with statistical models of weather events to compute flood depths and velocities, and their likelihood of occurring. The model prediction results are summarized in reports and portrayed on FIRMs which show water surface elevations, floodplain boundaries, and flood zones. ", "An area of specific focus on the FIRM is the Special Flood Hazard Area (SFHA). Properties in an SFHA are subject to the mandatory purchase requirement, which requires owners of properties in the mapped SFHA, in a community that participates or has participated in the NFIP, to purchase flood insurance as a condition of receiving a federally backed mortgage. Within the SFHA, there are two broad flood zones, the A zone and the V zone. V zones are distinguished from A zones in that V zones are subject to wave action (i.e., coastal flooding)."], "subsections": []}, {"section_title": "Geographical and Structural Variables", "paragraphs": ["To calculate the premium, the current rating system considers the flood zone , the building occupancy type, the foundation type, the number of floors, the presence or not of a basement, whether the property is entitled to a subsidy, whether or not the property is a primary residence, prior claims, and the structure's elevation relative to the BFE. The amount of coverage and the deductible will also affect the premium. "], "subsections": []}, {"section_title": "Premium Subsidies and Cross-Subsidies", "paragraphs": ["Except for certain subsidies, flood insurance rates in the NFIP are directed to be \"based on consideration of the risk involved and accepted actuarial principles,\" meaning that the rate is reflective of the true flood risk to the property. FEMA determines full-risk rates by estimating the probability of a given level of flooding, damage estimates based on that level of flooding, and accepted actuarial principles. However, Congress has directed FEMA not to charge actuarial rates for certain categories of properties and to offer subsidies or cross-subsidies to certain classes of properties in order to achieve the program's objectives so that that owners of certain existing properties in flood zones are able to afford flood insurance. There are three main categories of properties which pay less than full risk-based rates:", "1. Those built or substantially improved before FEMA published the first post-1974 flood insurance rate map (FIRM); 2. Most properties newly mapped into a SFHA on or after April 1, 2015, if the applicant gets flood insurance coverage within a year of the mapping; and 3. Those that had flood insurance on the property that complied with a prior FIRM, but the property was remapped into a different rate class (a practice known as \"grandfathering\")."], "subsections": [{"section_title": "Pre-FIRM Subsidy", "paragraphs": ["Pre-FIRM properties are those which were built or substantially improved before December 31, 1974, or before FEMA published the first FIRM for their community, whichever was later. By statute, premium rates charged on structures built before they were first mapped into a flood zone that have not been substantially improved, known as pre-FIRM structures, are allowed to have lower premiums than what would be expected to cover predicted claims. The availability of this pre-FIRM subsidy was intended to allow preexisting floodplain properties to contribute in some measure to pre-funding their recovery from a flood disaster instead of relying solely on federal disaster assistance. In essence, flood insurance could distribute some of the financial burden among those protected by flood insurance and the public. As of September 2018, approximately 13% of NFIP policies received a pre-FIRM subsidy. Historically, the total number of pre-FIRM policies is relatively stable, but the percentage of those policies by comparison to the total policy base has decreased."], "subsections": []}, {"section_title": "Newly Mapped Subsidy", "paragraphs": ["The Homeowner Flood Insurance Affordability Act of 2014 (HFIAA) established a new subsidy for properties that are newly mapped into a SFHA on or after April 1, 2015, if the applicant obtains coverage that is effective within 12 months of the map revision date. Certain properties may be excluded based on their loss history. The rate for eligible newly mapped properties is equal to the Preferred Risk Policy (PRP) rate, but with a higher Federal Policy Fee, for the first 12 months following the map revision. After the first year, the newly mapped rate begins to transition to a full-risk rate, with annual increases to newly mapped policy premiums calculated using a multiplier that varies by the year of the map change. As a result of the increases to the multiplier, premiums for newly-mapped policies are increasing 15% per year. As of September 2018, about 4% of NFIP policies receive a newly mapped subsidy. "], "subsections": []}, {"section_title": "Grandfathering", "paragraphs": ["FEMA allows owners of properties that were built in compliance with the FIRM which was in effect at the time of construction to maintain their old flood insurance rate class if their property is remapped into a new flood rate class. This practice is colloquially referred to as grandfathering, and is separate and distinct from the pre-FIRM subsidy. A property can be grandfathered due to a change in its flood zone or a change in its BFE. ", "Zone grandfathering is the most common form of grandfathering. An example of zone grandfathering would be a property that is initially mapped into a flood zone and is built to the proper building code and standards, and is later remapped to a higher-risk flood zone. If the policyholder has maintained continuous insurance coverage under the NFIP, the owner of this property can pay the flood insurance premium based on the prior mapped zone. ", "Elevation grandfathering occurs when a new FIRM increases the BFE, but the property itself does not change flood zones. For example, a property that was initially mapped as being four feet above BFE but is now, under the revised FIRM, only one foot above BFE, would still be allowed to pay the premium associated with a property four feet above BFE.", "FEMA does not consider the practice of grandfathering to be a subsidy for the NFIP, per se, because grandfathered properties are within a class of policies that are not subsidized for the class as a whole; instead, the discount provided to an individual policyholder is cross-subsidized by other policyholders in the NFIP. Thus, while grandfathering does intentionally allow policyholders to pay premiums that are less than their actuarial rate, the discount is offset by others in the same rate class as the grandfathered policyholder. As of September 2018, about 9% of NFIP policies were grandfathered."], "subsections": []}]}]}, {"section_title": "Premium, Fees, and Surcharges", "paragraphs": ["In addition to the building and contents premium, NFIP policyholders pay a number of fees and surcharges mandated by law. "], "subsections": [{"section_title": "Paid by All Policyholders", "paragraphs": ["The Federal Policy Fee (FPF) was authorized by Congress in 1990 and helps pay for the administrative expenses of the program, including floodplain mapping and some of the insurance operations. The amount of the Federal Policy Fee is set by FEMA and can increase or decrease year to year. Since October 2017, the FPF has been $50 for Standard Flood Insurance Policies (SFIPs), $25 for Preferred Risk Policies (PRPs), and $25 for contents-only policies. A reserve fund assessment was authorized by Congress in the Biggert-Waters Flood Insurance Reform Act of 2012 (BW-12) to establish and maintain a reserve fund to cover future claim and debt expenses, especially those from catastrophic disasters. Since April 2016, FEMA has charged every NFIP policy a reserve fund assessment equal to 15% of the premium. All NFIP policies are also assessed a surcharge following the passage of HFIAA. The amount of the HFIAA surcharge is dependent on the type of property being insured. For primary residences, the charge is $25; for all other properties, the charge is $250. "], "subsections": []}, {"section_title": "Paid by Most Policyholders", "paragraphs": ["The NFIP requires most policyholders to purchase Increased Cost of Compliance (ICC) coverage . This is in effect a separate insurance policy to offset the expense of complying with more rigorous building code standards when local ordinances require them to do so. The ICC policy has a separate rate premium structure, and provides an amount up to $30,000 in payments for certain eligible expenses. Congress has capped the amount that can be paid for ICC coverage at $75. ICC coverage is not required on condominium units and content-only policies."], "subsections": []}, {"section_title": "Paid by Some Policyholders", "paragraphs": ["In April 2019, FEMA began charging a Severe Repetitive Loss premium equivalent to 5% of the premium on all severe repetitive loss properties. If a community is on probation from the NFIP, all policyholders in that community will be charged a probation surcharge of $50 for a full one-year period, even if the community brings its program into compliance and is removed from probation. "], "subsections": []}]}]}, {"section_title": "Proposed Rating Structure Under Risk Rating 2.0", "paragraphs": [], "subsections": [{"section_title": "How the NFIP Will Determine Flood Insurance Premiums", "paragraphs": ["As proposed, NFIP premiums calculated under Risk Rating 2.0 will reflect an individual property's flood risk, in contrast to the current rating system in which properties with the same NFIP flood risk are charged the same rates. This will involve the use of a larger range of variables than in the current rating system, both in terms of modeling the flood risk and also in assessing the risk to each property. "], "subsections": [{"section_title": "Risk Modeling", "paragraphs": ["The current rating system includes only two sources of flood risk: the 1%-annual-chance fluvial flood and the 1 %-annual-chance coastal flood . In contrast, Risk Rating 2.0 is designed to incorporate a broader range of flood frequencies and sources, including pluvial flooding (flooding due to heavy rainfall) , flooding due to tsunami, and coastal erosion outside the V zone. Risk Rating 2.0 is expected to use a multi-model approach to support the development of the new rates, with data from multiple sources including existing NFIP map data, NFIP policy and claims data, United States Geological Survey (USGS) 3-D elevation data, National Oceanographic and Atmospheric Administration (NOAA) SLOSH storm surge data, and U.S. Army Corps of Engineers data sets. ", "According to FEMA, Risk Rating 2.0 will also use three commercial catastrophe models to estimate future loss potential. The use of catastrophe models to estimate potential losses caused by events such as hurricane wind, storm surge, inland flooding, tornadoes, earthquakes, and wildfires has become a standard risk management practice in the insurance industry. Catastrophe models were initially developed to address the shortcomings inherent in using historical data to project potential losses from infrequent, severe events that impacted many properties that were not geographically diverse. While each peril model reflects factors specific to the peril being modeled, catastrophe models generally have similar components, including modules simulating (1) the probability of the particular catastrophe occurring; (2) the intensity of the catastrophe; (3) the damage to structures; and (4) the allocation of the amount of the loss among those responsible for payment. ", "The first stage of catastrophe modeling is to generate a stochastic event set, which is a database of simulated events. Each event is characterized by a probability of occurrence (event rate) and geographic area affected. Thousands of possible event scenarios are simulated, based on realistic parameters and historical data, to model probabilistically what could happen in the future. The hazard component of catastrophe models quantifies the severity of each event in a geographical area, once the event has occurred. An event footprint is generated, which is a spatial representation of hazard intensity from a specific event. For example, a model could calculate the peak wind speeds at each location affected by hurricane winds. Property vulnerability is modeled using mean damage ratios (MDRs), which are losses expressed as a percent of value, for a given hazard level (e.g., hurricane wind speed) and location. MDRs give the average percentages of damage that are expected for a structure with the characteristics input into the model. Finally, a financial or insurance module quantifies the financial consequences of each event from various financial perspectives. The policy terms such as deductibles, limits, and reinsurance are applied to the damage from each insured property from the vulnerability model to calculate the allocation of the loss amount.", "In the first stage of Risk Rating 2.0 modeling, FEMA is to conduct probabilistic flood risk analyses, in which structures are assigned specific annualized probabilities of being impacted by flood, and to validate these results with NFIP historical data. The next step is to compare the results of this analysis with the output of commercial catastrophe models. Finally, FEMA is to generate average annual loss values for certain geographies, focusing particularly on leveed areas and complex flooding hazards."], "subsections": []}, {"section_title": "Geographic and Structural Variables", "paragraphs": ["Geographical variables to be used in Risk Rating 2.0 are to include the distance to water and the type of water (e.g., river, stream, coast), the elevation of the property relative to the flooding source, and the stream order, which is a measure of the relative size of streams and rivers. The structural variables which have been identified by FEMA for use in Risk Rating 2.0 include the foundation type of the structure, the height of the lowest floor of the structure relative to BFE, and the replacement cost value of the structure. "], "subsections": []}, {"section_title": "Replacement Cost Value", "paragraphs": ["In the current NFIP rating system, rates are based on the amount of insurance purchased for a structure rather than the replacement cost of that structure. For most actuarially-rated structures, the NFIP classifies the first $60,000 of building coverage for single-family residences ($175,000 for businesses) and $25,000 of contents coverage as the basic limit. It charges higher rates for coverage below this amount, because losses are more likely to occur in this range. Rates for additional coverage above the basic limit are lower. The basic and additional rates are weighted to account for the average tendency to buy less insurance than the replacement value. For example, a post-FIRM single-family property in Zone A with no basement would currently pay a basic rate of 1.1% per $100 coverage on the first $60,000 and an additional rate of 0.3% per $100 of coverage over $60,000.", "The two-tiered rating structure was used by the NFIP for two reasons. First, it ensured that the premium collected is sufficient to cover the typical claim, even if a policy is under-insured; according to FEMA, most NFIP claims are below $60,000. By charging a high rate for coverage up to $60,000, a policyholder's premium is likely to be sufficient to cover a typical claim. Secondly, it encouraged policyholders to insure their structure fully. By charging a low additional rate, policyholders are encouraged not just to insure a typical claim, but to insure against the unlikely but possible higher claim. ", "For much of the NFIP's existence, the two-tiered rating structure operated with minimal inequity. However, as the range of replacement values widened, particularly through the 2000s, the potential for inequity caused by rating based on coverage instead of structure value grew. Two groups are most subject to inequity. First, structures whose value is closer to the $60,000 basic limit pay more than they would if their rate was based on their structure value because their entire rate is mainly comprised of the higher basic rate. Second, structures whose value is above $250,000 pay less than they would if their rate was based on structure value, because their rate is based on an average structure value that is much less than their actual structure value. In addition, high-valued structures can produce much higher claims than lower valued structure with the same intensity of damage. ", "If replacement cost value were to be used in setting NFIP premium rates, it is anticipated that those structures with higher replacement costs than current local or national averages would begin paying more for their NFIP coverage than those structures that are below the average, which would pay less. How much more, or how much less, is undetermined."], "subsections": []}, {"section_title": "Mitigation Credits in Risk Rating 2.0", "paragraphs": ["Risk Rating 2.0 is to initially provide credits for three mitigation actions: ", "1. installing flood openings according to the criteria in 44 C.F.R. \u00c2\u00a760.3 ; 2. elevating onto posts, piles, and piers; and 3. elevating machinery and equipment above the lowest floor . ", "FEMA has not yet given any information on how these credits will be applied to individual property premiums. Currently the only mitigation activity for which the NFIP gives premium credit is elevating a structure, so Risk Rating 2.0 could encourage individual policyholders to do more to mitigate the flood risk for their property. "], "subsections": []}]}, {"section_title": "Risk Rating 2.0 and Flood Zones", "paragraphs": ["Flood zones are to no longer be used in calculating a pro perty's flood insurance premium following the introduction of Risk Rating 2.0; instead, the premium are to be calculated based on the specific features of an individual property. However, as proposed, flood zones will still be needed for floodplain management purposes ; for example, all new construction and substantial improvements to buildings in Zone V must be elevated on pilings, posts, piers, or columns. T he boundary of the SFHA will still be required for the mandatory purchase requirement . The FIRM map appeal process will still exist, but once Risk Rating 2.0 begins, map appeals are not to have any effect on the premium that a policyholder pays.", "Although FEMA has not yet given any details of how grandfathered properties will be affected by Risk Rating 2.0, other than to say that \"all properties will be on a glide path to actuarial rates,\" the implication of the fact that flood zones will no longer be used to set premiums appears to indicate that zone grandfathering, at least, will no longer be relevant. "], "subsections": []}]}, {"section_title": "Maximum Premium Increases under Current Statute", "paragraphs": ["FEMA has statutory authority to set premium rates. The limitations on annual premium increases are also set in statute, and Risk Rating 2.0 will not be able to increase rates annually beyond these caps. HFIAA set maximum rate increases for primary residences at 5-18% per year. HFIAA permits individual property increases of up to 18%, but limits the rate class increases to 15% per year. In other words, the average annual premium rate increase for primary residences within a single risk classification rate may not be increased by more than 15% a year, while the individual premium rate increase for any individual policy may not be increased by more than 18% each year. Other categories of properties are required to have their premium increased by 25% per year until they reach full risk-based rates: this includes non-primary residences, non-residential properties, business properties, properties with severe repetitive loss, properties with substantial cumulative damage, and properties with substantial damage or substantial improvement after July 6, 2012.", "However, FEMA does not consider everything that policyholders pay to the NFIP to be part of the premium and therefore subject to these caps. When premium rates are calculated for compliance with the statutory caps, FEMA only includes the building and contents coverage, the Increased Cost of Compliance coverage, and the reserve fund assessment. Other fees and surcharges are not considered part of the premium and therefore are not subject to the premium cap limitations, including the Federal Policy Fee, the HFIAA surcharge and, if relevant, the 5% Severe Repetitive Loss premium and/or probation surcharge. ", " Table 1 shows the effects of a maximum statutory increase on the national average premium for a Standard Flood Insurance Policy (SFIP) which pays the full $75 for Increased Cost of Compliance (ICC) coverage. According to FEMA, the national average premium for an SFIP is $700. The reserve fund assessment for this policy would be $105 and the ICC premium would be $75, for a total premium of $880. For an SFIP primary residence, the maximum 18% increase would be calculated on this premium of $880, leading to an increase of $158.40 and a new premium of $1038.40. However, an SFIP primary residence would also pay an FPF of $50 and a HFIAA surcharge of $25, so the total amount due to the NFIP after an 18% increase would be $1113.40. ", "An SFIP for a non-primary residence would be subject to a 25% increase on the initial premium of $880, leading to an increase of $220 and a new premium of $1100. Costs for such a policy for a non-primary residence would also include an FPF of $50 and a HFIAA surcharge of $250, so the total amount due to the NFIP after a 25% increase would be $1,400. "], "subsections": [{"section_title": "Risk Rating 2.0 and NFIP Cross-Subsidies", "paragraphs": ["The current three categories of properties which pay less than the full risk-based rate (pre-FIRM, newly-mapped, and grandfathered) are determined by the date when the structure was built relative to the date of adoption of the FIRM, rather than the flood risk or the ability of the policyholder to pay. As proposed, the new rating system will not eliminate the three categories, nor the process of phasing out subsidies which began with BW-12, but rate changes will not necessarily be uniform within each category. Premiums for individual properties will be tied to their actual flood risk rather than the flood zone, but the rate at which the subsidies will be phased out will continue to be constrained by law. ", "In general, Risk Rating 2.0 is expected to lead to the reduction of cross-subsidies between NFIP policyholders, and the eventual elimination of premium subsidies and cross-subsidies once all properties are paying the full risk-based rate. However, certain non-insurance activities of the NFIP are funded by cross-subsidies from NFIP policyholders' premiums. For example, through a program called the Community Rating System (CRS), FEMA encourages communities to improve upon the minimum floodplain management standards that are required to participate in the NFIP. Policyholders in communities which participate in the CRS can get discounts of 5% to 45% on their flood insurance premiums. These discounts are determined by the activities carried out by the community to reduce flood and erosion risk and adopt measures to protect natural and beneficial floodplain functions. The National Research Council estimated that the CRS program provided an average 11.4% discount on SFIP premiums across the NFIP. The CRS discount is cross-subsidized into the NFIP program, such that the discount for one community ends up being offset by increased premium rates in all communities across the NFIP. An average 11.4% discount for CRS communities is cross-subsidized and shared across NFIP communities through a cost (or load) increase of 13.4% to overall premiums. It is not yet clear how Risk Rating 2.0 will affect the CRS cross-subsidy. ", "In addition, as much as 42% of the funding for flood mapping and floodplain management is collected from NFIP policyholders in the form of the FPF. About 66% of the resources from the FPF are allocated to flood mapping, with floodplain management receiving about 19% of the overall income from the FPF. Again, it is not yet clear how Risk Rating 2.0 might affect funding for floodplain management and flood risk mapping. "], "subsections": []}]}, {"section_title": "Concluding Observations", "paragraphs": ["FEMA believes that the more transparent and accurate flood insurance pricing in Risk Rating 2.0 will lead to better risk communication and an increase in flood insurance take-up rate. However, Risk Rating 2.0 is not designed to increase or decrease revenue for the NFIP. According to FEMA, Risk Rating 2.0 will not be allowed to create a shortfall relative to the amount of premium income under the current rating system. If the new rates lead to a shortfall, the rating plan will be revised. ", "FEMA is carrying out an actuarial analysis and cannot give any information at the time of writing about the number or percentage of properties which will see their premiums change under Risk Rating 2.0. However, certain types of properties may be more likely to be affected, either positively or negatively. These may include zone-grandfathered properties, properties which are currently on the border of flood zones, properties currently outside the SFHA at risk of pluvial flooding, and properties with above-average or below-average replacement cost values. For example, the use of distance to water, rather than flood zone, may mean that premiums for properties at the landward boundary of an SFHA could go down, while premiums for a property at the water boundary could go up. ", "Concerns about premium increases in the past have focused on certain subsidized properties, but under Risk Rating 2.0 all types of properties may be subject to higher rates of increase than at present. For example, as of April 1, 2019, the premium for pre-FIRM properties increased by 7.3% and the premium for newly mapped properties increased by 15%. Premiums for post-FIRM V zone properties increased by 6%, post-FIRM A zones increased by 4%, and X zone properties increased by 1%. These properties could face higher premiums under Risk Rating 2.0. ", "Risk Rating 2.0 is may lead to premium increases for some NFIP policyholders, which could raise questions of affordability. When the Biggert-Waters Flood Insurance Reform Act of 2012 (BW-12) went into effect, constituents from multiple communities expressed concerns about the elimination of lower rate classes, arguing that it created a financial burden on policyholders, risked depressing home values, and could lead to a reduction in the number of NFIP policies purchased. Similar concerns may be expressed with Risk Rating 2.0. Although risk-based price signals could give policyholders a clearer understanding of their true flood risk, charging actuarially sound premiums may mean that insurance for some properties is considered unaffordable, or that premiums increase at a rate which may be considered to be politically unacceptable.", "FEMA does not currently have the authority to implement an affordability program, nor does FEMA's current rate structure provide the funding required to support an affordability program. However, affordability provisions are included in the three bills which have been introduced in the 116 th Congress for long-term reauthorization of the NFIP: the National Flood Insurance Program Reauthorization Act of 2019 ( H.R. 3167 ), and the National Flood Insurance Program Reauthorization and Reform Act of 2019 ( S. 2187 ) and its companion bill in the House, H.R. 3872 . As Congress considers a long-term reauthorization of the NFIP, a central question may be who should bear the costs of floodplain occupancy in the future and how to address the concerns of constituents facing increases in flood insurance premiums. "], "subsections": []}]}}
{"id": "R46196", "title": "Solar Energy: Frequently Asked Questions", "released_date": "2020-01-27T00:00:00", "summary": ["Use of solar energy for electricity generation is growing in the United States and globally. In the United States, solar energy overall accounted for 2.2% of total electricity generation in 2018, up from 0.7% in 2014.", "This report addresses a dozen frequently asked questions that may be of interest to lawmakers as the growing use of solar energy potentially affects a variety of areas of congressional interest. The first set of questions looks at different technologies that use solar energy to generate electricity and their costs and prevalence over time. Costs for all components of solar photovoltaic (PV) systems, including cells, modules, inverters, and other related equipment, have generally declined in recent years. Assessing solar energy costs for consumers is challenging because there are many local factors to consider. Another question considers whether using solar energy is a reliable form of electricity generation given its variable nature.", "The second set of questions discusses federal and state policies aimed at promoting deployment of solar energy in the United States. At the federal level, tax incentives reduce the after-tax cost of investing in solar property, thereby encouraging taxpayers to invest in more solar property than they would have absent tax incentives. Federal tax incentives include an investment tax credit for businesses, eligibility for accelerated depreciation for businesses, and a residential energy efficient property tax credit for individuals. At the state level, renewable portfolio standards (or, more broadly, electricity portfolio standards) require electric utilities to procure a specified amount of electricity from designated, eligible sources. Twenty-nine states, three U.S. territories, and the District of Columbia are implementing electricity portfolio standards. All of these policies include solar energy as an eligible source. Utility-scale solar systems typically benefit from electricity portfolio standards, while commercial- and residential-scale systems typically benefit from a different state policy called net metering. Net metering allows individual electricity consumers to receive payment for the electricity produced by systems installed on their property (or, in some cases, systems not installed on their property but with which consumers have a contractual arrangement).", "Another set of questions considers the U.S. manufacturing base for solar products and U.S. tariffs, which have been applied over the years on imports of solar equipment. The results on the nation's solar manufacturing industry have been mixed. Different parts of the solar PV supply chain have responded differently to the tariffs. For some components, such as the assembly of solar modules, domestic production has increased since the imposition of tariffs. By one count, about 20 factories assembled PV modules in the United States in 2018. For other components, such as solar cell production, tariffs have not had this effect. At present, there is one major domestic producer of crystalline-silicon solar cells; several producers of solar cells have closed U.S. plants since 2012. A related question discusses the number of U.S. jobs supported by the domestic solar industry, which employed more than 240,000 full-time equivalent workers in 2018. Of these positions, 64% involved two solar sectors, the installation of solar systems and project development.", "The final questions address some potential environmental considerations associated with the use of solar energy, such as land use. Standard metrics for measuring land use impacts for different energy technologies do not exist. When considering total land area occupied, solar typically requires more land to produce the same amount of electricity than many other sources. Other aspects of land requirements affect comparisons among energy sources, including technology developments over time, land cover change, and time-to-recovery. Po ssible effects on agricultural production are also discussed. Some farmers view solar energy favorably as an income supplement, but others raise concerns about long-term damage to soil health and agricultural productivity. Some researchers are investigating options for dual-use solar PV systems known as agrivoltaics, in which the same land could be used for simultaneous crop production and electricity generation."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "How Does Solar Energy Work?1", "paragraphs": ["The energy in sunlight can be converted into electricity in either of two ways: by using solar photovoltaic cells or by concentrating solar energy to produce heat for electricity generation. Solar energy can also be used to heat water for direct use, but this report focuses only on electricity generation applications."], "subsections": [{"section_title": "Solar Photovoltaic (PV)", "paragraphs": ["Sunlight can interact with certain materials to directly produce electricity in a process known as the photovoltaic (PV) effect. Silicon (more specifically, crystalline-silicon, or c-Si) is the most commonly used material today, but other materials (e.g., cadmium telluride) also can be used. Research is ongoing into alternative materials and designs that might be more efficient or less expensive than c-Si. ", "To construct a PV cell to generate electricity, PV material is manufactured into ingots, which are then cut into wafers ( Figure 1 ). Wafers are typically 15 centimeters (cm) wide along each side and around one-hundredth of a centimeter thick, although exact dimensions may vary by manufacturing process. Wafers are processed into cells, which are then assembled into modules, also called panels. A module typically consists of 60 to 72 cells mounted on a plastic backing within a frame. Modules are typically installed in groups, known as arrays, with the number of modules in the array depending upon the available space and the desired generation capacity of the project. ", "A PV system includes modules and a variety of structural and electronic components, known as balance of system (BOS) equipment, to tie the system together. Structural BOS equipment includes brackets, on which the modules are mounted. For ground-mounted systems, these brackets can be either fixed or able to rotate during the day to face the sun. Mounting systems that can rotate are known as tracking systems. Modules mounted on tracking systems tend to generate more electricity than modules on fixed-mount systems, all else being equal, because the tracking systems can optimize the amount of sunlight hitting the module over the course of a day. One key piece of BOS equipment is an inverter, an electronic device that converts the electricity generated by PV modules into a form that is usable in the U.S. electric system. Other electronic BOS equipment includes charge controllers, circuit breakers, meters, and switch gear. Some PV systems also include integrated energy storage systems such as batteries. ", "PV systems can be divided into three categories, based primarily on capacity. ", "Utility- scale systems (i.e., solar farms) may range in capacity from a few megawatts (MW) to a few hundred MW. They are typically owned and operated like other central power plants. Utility-scale projects are typically connected to the electricity transmission system, the network of high-voltage lines that move electricity over long distances. Commercial-scale systems typically range in capacity from a few kilowatts (kW; 1,000 kW = 1 MW) to a few hundred kW. They may be installed on the ground or on rooftops, and are typically owned or hosted by commercial, industrial, or institutional entities. Some may be connected to the transmission system, and some may be connected to the electricity distribution system, the network of low-voltage lines that deliver electricity directly to most consumers. Residential -scale systems typically have generation capacity of a few kW. Most residential-scale projects are installed on rooftops and connected to the distribution system. ", "Another way to categorize PV systems is by ownership model. Systems connected to the transmission system (typically utility-scale) are generally owned by utilities or independent power producers, as is the case for other central power plants. Smaller systems may use other ownership models, depending on what applicable state laws allow.", "Customer-owned systems are owned directly by the electricity consumer benefiting from the system. The consumer might buy the system outright or finance it in the same way as for other property improvements (e.g., loan). Third-party ownership (i.e., solar leasing) is an ownership model in which an electric consumer, such as a homeowner, allows a company to build a solar system on the consumer's property. The company owns and maintains the solar system while the consumer uses the electricity produced by the system. The consumer pays back the cost of the system to the company through either lease payments or a power purchase agreement. Community solar (i.e., solar gardens) is an ownership model in which multiple electricity consumers may purchase or lease shares of a solar system through a subscription. Subscribers can benefit from the project by receiving electricity, financial payments, or both. Community solar systems are usually not installed on a subscriber's property, and the systems may be owned by a utility or another type of entity. "], "subsections": []}, {"section_title": "Concentrating Solar Power", "paragraphs": ["Concentrating solar power (CSP) technologies collect and concentrate energy from sunlight to heat certain fluids (liquids or gases). CSP plants use these heated fluids to produce electricity, either by creating steam to drive a steam turbine or by directly running a generator. CSP plants can be designed with thermal energy storage systems. At least one CSP plant with storage operating in the United States is capable of generating electricity 24 hours a day."], "subsections": []}]}, {"section_title": "How Much Electricity Comes From Solar Energy?11", "paragraphs": ["Electricity generation from solar energy has grown in recent years, as shown in Figure 2 . Solar energy overall (PV and CSP combined) accounted for 0.7% of total U.S. electricity generation in 2014 and 2.2% of the total in 2018, according to data from the U.S. Energy Information Administration (EIA). Most generation (96% in 2018) from solar energy comes from PV systems. Large-scale systems, defined by EIA as those greater than 1 MW, accounted for 61% of overall generation from solar energy in 2014, the first year for which EIA reported generation data for different size categories. By 2018, the share from large-scale systems had increased to 68%."], "subsections": []}, {"section_title": "How Much Does a Solar PV System Cost?13", "paragraphs": ["Costs for solar PV systems vary by size, as shown in Figure 3 . The figure shows an estimate of average U.S. solar PV system costs per unit of capacity, as of the first quarter of 2018 (Q1 2018), based on an analysis by the Department of Energy's National Renewable Energy Laboratory (NREL). Costs for any individual project could differ based on project-specific circumstances. Two general findings from NREL's analysis are supported by numerous other studies, namely that larger projects tend to be cheaper on a per-unit basis, and that costs for projects of all sizes have declined in recent years. ", "Utility-scale systems have the lowest unit costs, ranging from an average of $1.06 per watt of direct current (hereinafter, W) to $1.13/W in 2018, depending on whether projects were mounted on fixed brackets or tracking systems, respectively. Commercial-scale systems cost $1.83/W on average in Q1 2018, and residential-scale systems cost $2.70/W on average. The total system cost differences shown in Figure 3 are driven primarily by higher \"soft costs.\" These costs include, for example, costs associated with permitting, interconnecting with the grid, and installer overhead costs. The soft costs are much higher for smaller-scale systems, per watt, than for utility-scale systems. ", "PV system costs have declined, as shown by data from the NREL analysis shown in Figure 4 . NREL reported costs from 2010 to Q1 2018. NREL credits cost declines over this time period to cost declines in all system components (i.e., modules, inverters, BOS equipment, labor, and other soft costs). ", "PV module costs increased between 2017 and 2018 as a result of tariffs discussed in the section \" How Are U.S. Tariffs Affecting Domestic Solar Manufacturing? ,\" offsetting cost declines in other system components, according to the NREL report. "], "subsections": []}, {"section_title": "How Does Solar Energy Impact Electricity Costs for Consumers?16", "paragraphs": ["Generalizing the cost impacts to consumers for solar systems is challenging because costs for these systems vary across the United States. Additionally, solar system costs are declining in both absolute terms (as discussed in the previous section) and relative to other sources of electric power. In parts of the country, new solar systems are sometimes among the least cost-options for generating electricity. This was not generally the case a few years ago. ", "Policies aimed at promoting solar energy make an assessment of costs more complex. For example, tax incentives, as discussed in the section \" What Federal Tax Incentives Support Solar Energy Development? ,\" can reduce the ownership costs for businesses or individuals that purchase solar energy systems. Some of those costs are then transferred to taxpayers. The following discussion focuses on electricity costs only from a consumer's point of view.", "Consumers' electricity costs can be measured in two ways. The first way is the electricity rate, typically expressed in cents per kilowatt-hour (cents/kWh). The second way is the electricity bill, typically the total costs for electricity that consumers pay each month expressed in dollars. In most cases, an electricity bill reflects the costs to produce electricity (typically, the applicable electricity rate times the amount of electricity consumed), the costs to deliver electricity to the consumer, and any other fees as determined by state or local regulators (e.g., contributions to funds that provide bill relief to low-income households). Electricity rates can go down while bills go up, and vice versa.", "Multiple factors can determine how solar energy might affect what consumers pay for electricity. Many of these factors vary based on local circumstances. They can also change over time as the profile of electricity sources changes."], "subsections": [{"section_title": "Comparing Electricity Costs", "paragraphs": ["One way to compare electricity costs is by estimating the lifetime costs of energy systems. Lifetime costs include the initial construction and installation cost plus operation and maintenance (O&M) costs, fuel costs, and other costs. Electricity rates are strongly influenced by total lifetime costs for all the electricity generators serving a given area. Lifetime costs for solar energy have historically been higher than for many other sources, but that is changing in many parts of the United States. For example, one commonly used measure of lifetime costs is the levelized cost of electricity (LCOE), usually expressed in dollars per megawatt-hour of generation ($/MWh) and averaged over the lifetime of a project. LCOE estimates attempt \"apples-to-apples\" comparisons among technologies because the estimates account for how much electricity a given power plant is expected to produce over its lifetime. According to widely cited estimates from one consulting firm, 2019 LCOE for new utility-scale solar systems ranged from $32/MWh to $42/MWh. By comparison, LCOE for new wind generation was $28/MWh-$54/MWh and for natural gas combined cycle generation was $44/MWh-$68/MWh.", "Another factor in consumers' bills is the extent to which electricity from solar energy displaces electricity generation from existing sources. If existing power plants are called upon to produce less electricity than planned when they were first built due to the availability of power from less expensive sources, the owners still need to pay the construction cost of their unneeded capacity. Such costs are known as stranded costs. Depending on each state's regulatory framework, stranded costs might be borne by power plant owners or be passed through to consumers in electric bills.", "To the extent that solar systems require new transmission lines to deliver electricity to consumers, the cost of building those lines may result in higher electricity bills. Utility-scale solar, which is frequently located in rural areas distant from consumers, may have higher associated cost impacts on bills than, for example, residential-scale solar, depending upon project details. On the other hand, installation of solar systems can sometimes avoid upgrades to transmission systems, resulting in potentially lower costs for consumers. In other cases, though, solar systems necessitate upgrades to local distribution systems, which might increase costs for customers. In states with carbon pricing policies in place, increased solar energy deployment could reduce the bill impacts associated with the carbon price.", "Generating solar energy has approximately zero marginal cost. Marginal costs reflect the variable costs of producing incremental amounts of electricity from an existing source. Marginal costs are typically dominated by fuel costs, which are not relevant for solar energy. When solar energy is present in an area, fewer fuel-consuming electricity sources are required, which tends to drive down marginal costs for the regional electricity system overall. This effect may diminish as the number of solar electricity generators increases in an area, because nearby solar PV systems tend to maximize their electricity production at the same time (usually midday). If all of the midday electricity demand were to be met by solar PV, there would no incremental cost benefit to adding more solar PV systems to the region. ", "The rate and bill impacts discussed above would apply to all electricity consumers within a region in which solar energy development is taking place. Consumers that install rooftop solar systems or participate in community solar projects (\"solar customers\") could have different bill impacts. Most states allow solar customers to be financially compensated for the electricity generated by the projects they host. The most common type of policy for this compensation is net metering, though some states have established net metering alternatives. Depending on a consumer's electricity demand and the size of the solar energy project, solar consumers participating in net metering or related policies could reduce their electricity bills to zero. "], "subsections": []}]}, {"section_title": "Is Solar Energy Reliable?22", "paragraphs": ["One potential reliability concern for solar energy is due to its variable nature, dependent on the availability of sunlight. For example, solar PV systems cannot produce electricity at night, and their output can vary during the day depending on local weather conditions (e.g., cloudiness). The physical requirements of the electricity system are such that the supply and demand of electricity must equal each other at all times. Currently, to ensure reliability, other sources of electricity generation are used when solar energy is not available. Expanding other types of electricity system infrastructure, such as transmission lines or energy storage assets, could also address this limitation. Alternatively, policies and regulatory frameworks that incent greater electricity consumption during daytime hours and less at night (i.e., load shifting) could reduce the reliability impact of solar energy's variability. ", "Another potential reliability concern for solar energy arises from the mismatch between the hours of the day when generation from solar energy peaks (typically midday) and when electricity demand peaks (typically several hours later). To maintain reliability, some sources of electricity have to quickly increase their output to account for the simultaneous drop-off in output from solar generators and increase in demand. As more solar systems are installed, the need for other sources that can quickly change output levels typically increases. This situation is often referred to as the \"duck curve\" because the shape of the plot showing the difference between demand and output from solar generators resembles a duck. Not all electricity generators are capable of quickly changing their output, and their deployment may not match the levels of deployment of solar generators. Load shifting, operational changes to non-solar sources, and deployment of more flexible resources (e.g., energy storage) are all possible ways to address the duck curve. Some analysis suggests that electric vehicle deployment might also act as a form of load shifting and address the duck curve, at least if vehicle charging occurs when output from solar sources is high. ", "A third potential reliability concern comes from the fact that solar PV produces direct current (DC) electricity. Conventional generators produce alternating current (AC) electricity, and the grid is optimized for AC. An inverter is an electrical device that converts DC to AC; grid-connected solar PV systems require an inverter. For this reason, solar is sometimes referred to as an \"inverter-based resource.\" Generators that produce AC also inherently contribute to grid reliability by providing what are known as \"essential reliability services\" or \"ancillary services.\" Most of these services arise from the way generators physically respond to changes in the balance of electricity supply and demand over fractions of seconds. Inverter-based resources do not inherently provide these services, although inverters can be designed (and are being deployed) to provide some of these services. ", "The electric power industry and its federal and state regulators have been studying ways to protect system reliability from the unique nature of inverter-based resources since at least 2008. Additionally, Congress has funded a variety of research programs related to electric reliability. No widespread reliability issues due to solar appear to have occurred to date, though some local reliability issues have been reported. "], "subsections": []}, {"section_title": "What Federal Tax Incentives Support Solar Energy Development?30", "paragraphs": ["Various provisions in the Internal Revenue Code (IRC) support investment in solar energy equipment. These provisions reduce the after-tax cost of investing in solar property, thereby encouraging taxpayers to invest in more solar property than they would have absent tax incentives. Tax incentives for solar energy property were first enacted in 1978. Several incentives for solar are currently part of the tax code. Historically, the value of tax incentives for solar has fluctuated, although the current tax credit rates were established in 2005. Under current law, solar tax incentives are scheduled to phase down in the coming years from their 2019 rates."], "subsections": [{"section_title": "Tax Incentives for Businesses", "paragraphs": ["Investments in certain renewable energy property, including solar, qualify for an investment tax credit (ITC). The amount of the credit is determined as a percentage of the taxpayer's basis in eligible property (generally, the basis is the cost of acquiring or constructing eligible property). The credit rate for solar was 30% through 2019, 26% in 2020 and 22% in 2021. Solar energy has a permanent 10% ITC that is to go into effect in 2022. The expiration dates for the ITC are commence construction deadlines. For example, solar property that was under construction by the end of 2019 may qualify for the 30% tax credit, even if the property is not placed in service (or ready for use) until a later date.", "Special provisions in the tax code allow solar energy property to be depreciated over a shorter period of time than would normally be the case. Specifically, solar energy property is classified as five-year property in the Modified Accelerated Cost Recovery System (MACRS). The depreciable basis (the amount that is recovered through depreciation deductions over time) of solar energy property is reduced by 50% of any ITC claimed. Thus, if a 30% ITC was claimed on a $1 million investment in solar energy property, $850,000 would be depreciated under the schedule for five-year MACRS property. Accelerating depreciation reduces the after-tax cost of investing in solar energy property. ", "Temporarily, through 2022, certain investments in solar energy property are eligible for 100% bonus depreciation. This eligibility means that for these investments, the expense can be deducted immediately (i.e., expensed). Bonus depreciation is scheduled to phase down after 2022. It is scheduled to decrease to 80% in 2023, 60% in 2024, 40% in 2025, and 20% in 2026, before being 0% in 2027. Bonus depreciation may be claimed for new as well as used property. Regulated public utilities cannot claim bonus depreciation. Tax-exempt organizations, such as electric cooperatives, also cannot claim bonus depreciation, and typically are limited in their ability to benefit from tax incentives more broadly. "], "subsections": []}, {"section_title": "Tax Incentives for Individuals", "paragraphs": ["Individuals purchasing solar energy property may qualify for the residential energy-efficient property credit. Through 2019, the tax credit for individuals is 30% of the cost of solar electric property installed on the taxpayer's residence. The tax credit rate is scheduled to be 26% in 2020 and 22% in 2021, with the credit expiring after 2021. The tax credit is nonrefundable, meaning that the amount of the credit a taxpayer can claim in the tax year is limited to the taxpayer's income tax liability. However, unused tax credits can be carried forward to the following tax year. "], "subsections": []}]}, {"section_title": "How Much Do Solar Tax Incentives Cost?", "paragraphs": ["Tax expenditure estimates are one source of information on the \"cost\" of solar tax incentives. Tax expenditures are, by definition, the amount of forgone revenue associated with special provisions in the tax code, such as tax credits and accelerated cost recovery. For FY2019, the Joint Committee on Taxation (JCT) estimates that the amount of forgone revenue associated with the business ITC for solar was $3.4 billion. The amount of forgone revenue associated with the residential energy-efficient property credit for FY2019 was an estimated $2.0 billion. This figure, however, includes all eligible technologies. While most of this was due to solar energy property, JCT does not estimate the forgone revenue associated with solar separate from other eligible technologies. The revenue loss for five-year MACRS for all eligible energy property (primarily wind and solar, but other technologies are eligible) is estimated at less than $50 million in FY2018. Because bonus depreciation is not a solar- or even energy-specific provision, a tax expenditure estimate for bonus depreciation for solar is not available. ", "Internal Revenue Service (IRS) data also provide information on individual claims of tax credits for solar electric property. In 2017, individuals filed 381,242 tax returns that claimed the residential energy-efficient property credit for solar electric property. The total cost of solar electric property for which tax credits were claimed was $5.5 billion, generating approximately $1.6 billion in individual income tax credits."], "subsections": []}, {"section_title": "What State Policies Support Solar Energy Development?46", "paragraphs": ["Per the Federal Power Act, states have jurisdiction over most aspects of electricity generation and distribution. Consequently, many policies that affect the development solar energy are implemented by states. This section discusses one common state policy, a renewable portfolio standard. Other state policies designed to accelerate the deployment of solar energy include net metering (mentioned in the section \" How Does Solar Energy Impact Electricity Costs for Consumers? \"), state tax credits, and allowing third-party ownership (i.e., solar leasing).", "Renewable portfolio standards (or, more broadly, electricity portfolio standards), as typically implemented, set requirements on utilities to procure a minimum share of their electricity sales from specified renewable sources such as solar. Many factors influence solar energy development, but renewable portfolio standards are widely credited as being a key factor historically, as they have provided a policy-driven source of demand for renewable electricity generation. Twenty-nine states, three U.S. territories, and the District of Columbia are implementing mandatory electricity portfolio standards, and an additional eight states and one territory have voluntary standards. Of these, nine jurisdictions have targets of 100% clean energy. Jurisdictions differ in their definitions of eligible clean energy sources, but solar is eligible in all cases. Nineteen of these policies include specific requirements or extra incentives for solar. "], "subsections": []}, {"section_title": "How Are U.S. Tariffs Affecting Domestic Solar Manufacturing?52", "paragraphs": ["The United States has applied tariffs on imports of solar energy equipment since 2012. The different types of equipment comprising a solar PV system are discussed in the section \" How Does Solar Energy Work? \" ", "The Obama Administration imposed double- and triple-digit antidumping and countervailing duty tariffs on U.S. imports of solar cells and modules from China in 2012 and 2015 and on imports from Taiwan in 2015. The Trump Administration imposed a tariff, which started at 30% in 2018 and declines by 5% yearly until reaching 15% in 2021, on photovoltaic solar cells and modules from most countries. The tariff includes some exemptions, such as an annual 2.5 gigawatt (GW) tariff-free quota for solar cells as long as the final module assembly takes place in the United States. Several dozen developing countries are excluded from the tariff as long as their import levels stay small, and certain technologies, such as thin-film solar PV products or smaller crystalline silicon PV cells, are not subject to the tariff. This tariff is scheduled to expire in February 2022, but it may be extended, at the President's discretion, for up to four additional years. It is assessed on top of the previously existing tariffs on Chinese and Taiwanese producers, leading to tariff rates as high as 239% on some PV products made in China. In 2018, the Trump Administration placed a 25% duty on steel and a 10% duty on aluminum imported from most countries. These duties affect BOS equipment, such as PV brackets, module frames, cabling, power electronics housing, batteries, and wiring, and are projected to add 2% - 5% to PV system costs. Additional tariffs on a long list of Chinese products, including inverters and other solar equipment, were imposed at a 10% rate in September 2018. The rate was raised to 25% in May 2019.", "The tariff effects have not been felt evenly across the solar industry's manufacturing segments (i.e., polysilicon production, ingot and wafer production, solar cell production, and module assembly). To date the tariffs have not encouraged expansion of U.S. manufacturing in the more technologically advanced segment of the PV manufacturing supply chain, namely the production of crystalline-silicon solar cells. However, U.S. production of solar modules, into which cells are assembled, rose in 2018, and a few companies, including one Chinese manufacturer, have opened solar module assembly plants in the United States. The increased domestic production of modules draws on imported parts and components, reflecting the industry's global supply chain. ", "U.S. solar tariffs have negatively affected the one segment of the PV supply chain in which the United States traditionally has been the most competitive, the production of polysilicon, the key raw material used in the manufacture of the vast majority of solar cells. China retaliated against the Obama Administration tariffs by imposing double-digit tariffs on polysilicon shipped from the United States to China, which had been a significant export market for U.S. producers. These tariffs have had an adverse effect on U.S. production of polysilicon, which shrank 40% between 2015 and 2018. The U.S. share of global polysilicon production is also down, falling to 11% of the global total in 2017 from 29% in 2010. The production of wafers made from polysilicon, which in turn are cut to make individual cells, has largely been discontinued in the United States, with China accounting for more than 80% of global wafer production in 2017. ", "Solar cell production has significant economies of scale, so manufacturers generally centralize production in large plants. As shown in Figure 5 , annual domestic U.S. PV cell production shrank to 124 megawatts (MW) in 2018, the lowest level since 2010. Domestic manufacturers of PV modules import nearly all of their solar cells, which represent a substantial portion of the cost and value of a finished module (27% in Q4 2018, according to Wood Mackenzie, an energy consultancy). China accounted for more than two-thirds of the world's solar cell production in 2017. ", "Despite the various trade actions in 2018, solar cell prices in the United States declined from 20 cents per watt at the beginning of that year to 10 cents per watt at year-end 2018, which represented a 50% decrease in cost. Meanwhile, figures from the United States International Trade Commission (ITC) show U.S. imports of solar cells more than doubled by value from 2016 to 2018. This trend continued despite the additional tariffs on solar cells and modules that took effect in 2018, with U.S. imports of solar cells rising 32% during the first seven months of 2019 compared to the same period in 2018. ", "One possible reason for the rise in cell imports is that the Trump Administration's solar tariff allows up to 2.5 GW of unassembled solar cells to be imported into the United States duty-free each year the tariff is in effect. These can then be assembled into solar modules in the United States. From February 2018 to the end of 2018, about a quarter, or 650 MW, of the duty-free tariff rate quota was filled. The low fill rate during the first year may be because there was not enough module assembly capacity in the United States to use those cells, and because some PV cells were stockpiled prior to the imposition of the tariff. If the 2.5 GW quota is reached in any year, foreign-made cells will be subject to U.S. tariffs for the balance of that year. ", "The uncertainty surrounding the tariffs limits the incentive to expand solar cell production in the United States. For example, the Trump Administration's solar tariff is initially set to last four years, with the tariff rate declining by five percentage points in each year the tariff is in effect. The other tariffs may be discontinued at the President's discretion. A new cell factory would need a large capital investment and about two years to construct. The possibility that some or all of the tariffs will be eliminated in the near future may discourage creation of new manufacturing capacity. At present, Panasonic is the only major domestic producer of crystalline-silicon solar cells, and several producers of solar cells have closed U.S. plants since 2012. ", "Unlike cell production, domestic module assembly is growing. A count by the Solar Foundation, a trade group, indicates that approximately 20 factories assembled PV modules in the United States in 2018. Annual U.S. PV module production increased to 1.4 GW in 2018, up from 970 MW in 2017, but down from a record high of 1.7 GW in 2016, the year the federal investment tax credit had been set to expire (see Figure 5 ). It typically takes about six months to construct a new solar-module assembly facility and begin operation at scale. PV Magazine , an industry publication, reported that 3.9 GW of new module manufacturing capacity was under construction or had recently come online as of late 2018. Hanwha Q Cells, a South Korean company, and Jinko Solar, a Chinese company (the largest module producer in the world), have opened new module-assembly facilities in the United States. A Canadian company, Heliene, reopened a shuttered solar module facility in Minnesota. NREL reports that several additional solar companies expect to add another 4 GW of U.S. module assembly capacity. ", "In 2017, China accounted for more than 70% of total global module production. One challenge for domestic producers is that U.S. module facilities are smaller than the most efficient plants in Asia, meaning they generally lack the economies of scale that are central in driving down unit costs. The two companies\u00e2\u0080\u0094SolarWorld and Suniva\u00e2\u0080\u0094that petitioned the Trump Administration to put tariffs on imported cells and modules have both ceased production. ", "Because U.S. tariffs are much higher on imports from China and Taiwan than on products of other countries, the tariffs have encouraged manufacturers of cells and modules to serve the U.S. market from other Asian countries. PV module shipments into the United States from Malaysia, South Korea, Vietnam, Mexico, and Thailand have largely replaced module imports from China, which shrank to less than 1% of total U.S. imports by 2018. These five countries accounted for nearly 85% of $2.8 billion in PV modules imported into the United States in 2018. ", "Inverters made in China now face a 25% U.S. tariff. To avoid the U.S. tariff, two large suppliers of inverters to the U.S. market are reportedly planning to shift production from China to other locations. According to the Solar Energy Industries Association (SEIA), U.S. inverter production is declining, primarily due to the closure of two major U.S. facilities at the end of 2016. Backsheets and junction boxes are other examples of solar energy components needed for solar panel assembly, and they are also among the products that face a 25% tariff if they are imported from China. ", "Module prices globally have declined steeply over the past decade. While prices in the U.S. market have fallen as well, despite the tariffs on imported cells and modules, they remained 61% higher, on average, than the global average selling price in 2018, according to NREL. One factor contributing to this price differential is the preference of U.S. purchasers for Tier 1 solar modules, which may be 10% to 30% more expensive and may be more reliable than Tier 2 and Tier 3 solar modules, although they may not necessarily be the best-performing modules on the market. Projects using Tier 1 modules may be easier to finance than those using modules not classified as Tier 1. "], "subsections": []}, {"section_title": "What U.S. Jobs Are Supported by the Solar Industry?86", "paragraphs": ["The federal government does not collect data on employment in the solar energy industry. According to a report by the Solar Foundation, the industry provided 242,300 full-time equivalent jobs in 2018 ( Figure 6 ). Of these positions, 85% involved work other than manufacturing, such as installation of solar systems and project management, wholesale trade and distribution, and operations and maintenance. ", "Most employment in the solar energy industry\u00e2\u0080\u009464% in 2018\u00e2\u0080\u0094involves two solar sectors, the installation of solar systems and project development, whether on rooftops of individual homes or larger projects. Although the federal government does not track employment specific to the solar energy industry, the Bureau of Labor Statistics (BLS) publishes occupational data for solar PV installers. These data indicate that employment in PV installation may be significantly lower than the figures reported by SEIA for the combined solar installation and project development segment of the industry. BLS predicts the overall employee occupational count for solar PV installers of 9,700 workers in 2018 will rise by 63% to 15,800 jobs in 2028. BLS predicts that solar installation will be the fastest-growing occupation in the nation over the next decade. BLS reports the median pay for a PV installer in 2018 was $42,680 per year, or $20.52 per hour, about 13% above the national median for all workers.", "At the end of 2018, the number of solar jobs as reported by the Solar Foundation was approximately 7% lower than in 2016, with installation jobs accounting for most of the decline. The annual number of PV systems installed in the United States shrank 14% to about 327,000 in 2018 from approximately 380,000 in 2016.", "Direct employment in U.S. solar manufacturing was about 34,000 workers in November 2018, according to the Solar Foundation, accounting for about 14% of total employment related to the solar energy sector. The number of reported jobs dropped by 4,400 from November 2016. One reason for the decline may be that the tariffs raised the cost of foreign inputs that are assembled into solar systems in U.S. factories, making those factories' products more expensive.", "Due to automation, a significant increase in employment in U.S. solar manufacturing is considered to be unlikely. One market research firm says module manufacturing accounted for about 1,200 U.S. jobs in 2018, but is projected to fall to just over a 1,000 workers by 2024. A review of publicly available information by CRS suggests that there are fewer than 2,000 workers involved in domestic polysilicon production. There is also limited employment related to the assembly of solar factory production equipment for wafers, cells, and modules in the United States because this equipment is made mainly in Europe and China. "], "subsections": []}, {"section_title": "What Land Requirements Does Solar Energy Have?92", "paragraphs": ["Land is required for the extraction, production, and consumption of energy and for the generation, transmission, and distribution of electricity. There is not a generally accepted standard metric or methodology for a comparison of land use impacts across energy technologies. Different studies evaluate land use in different ways and may or may not account for upstream and downstream process steps associated with electricity generation (e.g., extraction of fuels or resources used for electricity generation), for the intensity of the impact of the activity on the occupied land, or for the time-to-recovery. Other factors that may not be incorporated into comparisons include location-dependent factors, such as solar incidence, or co-location of different activities with the energy generation, such as solar panels on rooftops. ", "Estimates of power density for different energy sources vary by methodology and technology type studied. Some estimates consider the area of the power plant only, while others include land areas used for fuel production, electricity transmission, waste disposal, or other factors. Estimates can change with time as technology innovation leads to increased energy efficiency; such is the case for solar energy, with newer and more efficient technologies leading to increased power density.", "When considering total land area occupied, renewable energy sources generally require more land to produce the same amount of electricity than nonrenewable sources. One metric used in the energy sector that accounts for land use is power density, which can be expressed as a unit of power per unit of area (e.g., watts per square meter). A review of 54 studies which examined the power density of electric power production in the United States found that solar energy has a lower power density than natural gas, nuclear, oil, and coal, but solar energy has a higher power density than wind, hydro, biomass, and most geothermal. The review accounted for energy conversion efficiencies, capacity factors, and infrastructure area, including infrastructure associated with energy production (e.g., mines). The review did not control for time, reporting that the earliest study included in the analysis was from 1974; however, the review concluded that, of the nine energy types evaluated, only solar had a statistically significant relationship between power density and time. Published values for power density for solar systems range from 1.5 to 19.6 W e /m 2 . Generally, solar thermal and utility-scale photovoltaic (PV) were found to require more land area to produce the same amount of electricity than residential PV and concentrated solar. While the technology for residential PV and utility-scale PV is similar, sloped rooftops may allow more sunlight to reach otherwise flat panels for residential systems, and the spacing of panels at utility-scale facilities (regardless of tilt) to provide for maintenance and to avoid shading may lead to lower power densities. Another review found that both location-dependent parameters and technology-dependent parameters affect the variability of land use energy intensity of solar electricity generation. ", "In addition to power density, other factors may be relevant when evaluating energy sources and land use. Two examples are land use and land cover change, which account for the previous state of the land before an energy project was developed. In the case of solar, some solar energy systems may change land use and land cover to a smaller degree than others. For example, rooftop solar PV systems do not change how the underlying land is used or covered. Another factor is co-location of activities where land can be occupied but not used exclusively by its occupier. For example, farming and grazing can occur on land around wind turbines and underneath solar panels (this dual-use solar is referred to as \"agrivoltaics\"). Time-to-recovery is another factor to consider. Some technologies may impact land such that the land can recover to its previous state after use in a matter of months or a few years; other technologies may impact the land in such a way that it may take decades or centuries for the land to recover to its previous state. According to the Department of Energy, \"further work is critically needed to determine appropriate land-use metrics for meaningful cross-comparisons.\""], "subsections": []}, {"section_title": "What Are Potential Impacts of Solar Energy Development on Agriculture?103", "paragraphs": ["Agricultural land has become increasingly desirable for siting utility-scale solar PV systems (i.e., solar farms) for electrical generation. One concern that some raise about solar farm development is that siting solar arrays on agricultural lands can also displace agricultural production. With solar generation capacity in the United States increasing from less than 1 GW in 2010 to 50 GW in 2018, demand for large tracts of reliably sunlit, cleared, unobstructed acreage is also growing. California, North Carolina, Texas, and Florida had the largest U.S. cumulative solar capacity in the third quarter of 2019, with California the largest. ", "While some individual farm operations develop PV arrays through their own investments in solar technologies as an income supplement or as an on-site energy source for their farming operations, private solar development companies have increasingly turned to long-term leasing arrangements with farmers to site PV arrays. Farmers benefit from the lease and solar developers get access to the scarce commodity of land. Prime agricultural lands often represent very large tracts of land in potentially suitable locations. As important as large tracts of acreage may be, other variables determine whether a satisfactory lease is negotiated. The quality of the terrain, local weather factors, proximity to grid connections, local transmission capacity, proximity to main roads, conservation and environmental impact issues, local/regional land use regulations, and flood risks all contribute to the suitability of particular agricultural acreage for a solar development company. ", "In potential lease arrangements, farmers are often interested in whether or not the PV array will curtail, if not completely end, their ability to continue farming. Typically, contractors constructing solar farms will strip the topsoil and then mount the PV modules on concrete footings. Not only does this remove the land from agricultural production during the period of the lease, it can become prohibitively expensive to restore the land to production after a lease terminates. The concern that the agricultural land can be permanently lost to production even after a lease ends is a factor when considering whether to maximize energy capacity on land at the expense of agricultural production. Suitable land where solar generation can be maximized will tend to be highly compensated relative to the potential of the agricultural operation. For example, while marginally productive acreage may be tilled, its yield potential is often quite low, and the environmental costs can be high (e.g., erodible soils). This type of acreage may be suitable for maximization of solar generation without significant threat to overall agricultural production.", "Under other lease arrangements, solar energy development might occur without detriment to farming. While the land is attractive for siting solar PV arrays, it is also valuable as productive farmland. In these arrangements, vegetation growth may be possible under and around the solar system. The University of Massachusetts Crop Research and Education Center is exploring agrivoltaics, where modules are raised high enough off the ground and spaced in a way that crops can still grow around and beneath them, but also permit an economically viable solar development. Fear of a decline in agricultural production may be an important factor in some opposition to solar development, particularly where the value of the land for solar exceeds the current value for agriculture. Research examining the impact on agricultural yields of solar development could prove important to informing future investment in solar generation. State and federal grants to support development of dual-use agrivoltaic systems, such as the Solar Massachusetts Renewable Target (SMART), could help offset these systems' additional costs.", "Because U.S. agricultural land often enjoys favorable property tax treatment, different states/regions may establish regulations governing the use of agricultural lands for nonagricultural purposes. Local and regional planning commissions can constrain solar development, and may require various permits and clearances that could challenge the longer-term economic feasibility of the solar development, regardless of the suitability of the land for solar deployment. Successfully co-locating agricultural production with solar development could reduce some of the land use planning constraints\u00e2\u0080\u0094or outright prohibitions\u00e2\u0080\u0094that may come with productive agricultural lands proposed for solar development."], "subsections": []}]}}
{"id": "R45889", "title": "Unemployment Compensation (UC): Issues Related to Drug Testing", "released_date": "2019-11-04T00:00:00", "summary": ["Recent interest in Unemployment Compensation (UC) drug testing has grown at both the federal and state levels. The policy interest in mandatory drug testing of individuals who are applying for or receiving UC benefits parallels two larger policy trends. First, some state legislatures have considered drug testing individuals receiving public assistance benefits. While UC is generally considered social insurance (rather than public assistance), the concept of drug testing UC recipients (who are receiving state-financed benefits from a program authorized under state laws) could be interpreted as a potential extension of this state-level interest. Second, over recent years, Congress has considered issues related to UC pro gram integrity, including drug testing, which may be viewed as addressing UC program integrity concerns.", "Under the current interpretation of federal law, and subject to specific exceptions, the U.S. Department of Labor (DOL) requires states to determine entitlement to benefits under their UC programs based only on facts or causes related to the individual's state of unemployment. Under this reasoning, individuals may be disqualified for UC benefits if they lost their previous job because of illegal drug use. Until recently, the prospective drug testing of UC applicants or beneficiaries has been generally prohibited. However, P.L. 112-96 expanded the breadth of allowable UC drug testing to include prospective drug testing based upon job searches for suitable work in an occupation that regularly conducts drug testing. On October 4, 2019, DOL issued a new final rule on this type of prospective testing after a previous, promulgated rule was repealed using the Congressional Review Act. This new final rule is effective November 4, 2019.", "Stakeholders have made a variety of arguments for and against expanded UC drug testing. Proponents of prospective drug testing cite not only program integrity concerns, but also the importance of job readiness for UC claimants as well as state discretion in matters of UC eligibility and administration. Opponents of the prospective drug testing of UC claimants argue that it would impose additional costs and undermine the fundamental goals of the UC program, which include the timely provision of income replacement to individuals who lost a job through no fault of their own. Some stakeholders also expressed concern that expanded UC drug testing could create barriers to UC benefit receipt among eligible individuals and discourage UC claims filing. Stakeholders have also raised at least two legal concerns with the new final UC drug testing rule: (1) some commenters have argued that the new final rule may violate the Fourth Amendment of the U.S. Constitution, and (2) some commenters have argued that the new final rule improperly delegates authority to the states to identify occupations that regularly conduct drug testing. Other policy issues to consider related to expanding UC drug testing include administrative concerns, such as state establishment of a drug testing program for UC claimants as well as the potential provision of and funding for drug treatment services.", "For a shorter summary of recent events related to UC drug testing, see CRS Insight IN10909, Recent Legislative and Regulatory Developments in States' Ability to Drug Test Unemployment Compensation Applicants and Beneficiaries . For additional information on the federal-state UC system generally, see CRS Report RL33362, Unemployment Insurance: Programs and Benefits . For additional insights on reissuing a rule that had been repealed under the Congressional Review Act, see CRS Insight IN10996, Reissued Labor Department Rule Tests Congressional Review Act Ban on Promulgating \"Substantially the Same\" Rules ."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Federal-State UC Program and Drug Testing", "paragraphs": ["The joint federal-state Unemployment Compensation (UC) program, created by the Social Security Act of 1935, provides unemployment benefits to eligible individuals who become involuntarily unemployed and meet state-established eligibility rules. Federal laws and regulations provide some broad guidelines on UC benefit coverage, eligibility, and benefit determination. However, state laws determine the specific parameters, resulting in essentially 53 different UC programs. States administer UC benefits with oversight from the U.S. Department of Labor (DOL).", "The main objectives of UC are to (1) offer workers income maintenance during periods of unemployment due to lack of work, providing partial wage replacement as an entitlement; (2) help maintain purchasing power and to stabilize the economy; and (3) help prevent dispersal of the employer's trained labor force, skill loss, and the breakdown of labor standards during temporary high levels of unemployment. The UC program attempts to meet these objectives in a number of ways. For example, individuals who receive UC are required to register with the Employment Service and to be able, available and searching for suitable work. ", "Under federal law, all states currently have the option to disqualify individuals for UC benefits if they lost their job because of illegal drug use. In addition, there has been recent and sustained congressional interest in prohibiting individuals who are engaged in unlawful use of controlled substances (whether or not such use was the cause of unemployment) from receiving UC benefits. In the 112 th Congress, states were given the option to require drug testing for UC applicants under specific and limited circumstances. A portion of these circumstances required that DOL issue a rule listing occupations that regularly require drug testing. On October 4, 2019, the new rule was finalized after a previous, promulgated rule was repealed using the Congressional Review Act. This new final rule is effective November 4, 2019. Thus, after this date, nothing in federal UC law would prohibit states from drug testing UC applicants who are searching for employment solely in those occupations listed in this final rule.", "The issue of drug testing in the UC program may be viewed in the context of two larger policy trends. First, some state legislatures have expressed interest in drug testing individuals receiving public assistance benefits. Although UC is generally considered to be social insurance (rather than public assistance), drug testing UC beneficiaries could be interpreted as a potential extension of this state-level interest. ", "Second, there has been sustained congressional interest in UC program integrity generally, and this has included drug testing certain applicants or beneficiaries. For instance, during the period from 2011 to 2015 Congress passed three laws ( P.L. 112-40 , P.L. 112-96 , \u00c2\u00a0and\u00c2\u00a0 P.L. 113-67 ) that either added or clarified state administrative responsibilities to decrease UC benefit overpayments, and one of those laws ( P.L. 112-96 ) also imposed new restrictions on UC eligibility. Furthermore, P.L. 112-96 clarified that drug testing may be included among UC program integrity measures to ensure that benefits are not distributed to individuals who are involved in illegal drug use, presuming that this behavior may impede prospects for future employment.", "This report provides general background on issues related to UC benefits and illegal drug use; discusses recent developments related to the expansion of UC drug testing under state and federal laws as well as federal regulation; and analyzes selected policy considerations relevant to UC drug testing, including arguments for and against expanded drug testing, potential legal concerns, and administrative considerations."], "subsections": [{"section_title": "UC Eligibility and Disqualification", "paragraphs": ["The UC program generally does not provide UC benefits to the self-employed, individuals who are unable to work, or individuals who do not have a recent earnings history. Eligibility for UC benefits is based on attaining qualified wages and employment in covered work over a 12-month period (called a base period) prior to unemployment. To receive UC benefits, claimants must be able, available, and actively searching for work. UC claimants generally may not refuse suitable work, as defined under state laws, and maintain their UC eligibility. In addition, states may disqualify claimants who lost their jobs because of inability to work, voluntarily quit without good cause, were discharged for job-related misconduct, or refused suitable work without good cause. ", "The methods states use to determine monetary eligibility (based on an individual's previous earnings history) and nonmonetary eligibility (based on other characteristics related to an individual's unemployment status) vary across state UC programs. An ineligible individual is prohibited from receiving UC benefits under a state's laws until the condition serving as the basis for ineligibility no longer exists. UC eligibility is generally determined on a weekly basis. State UC programs may also disqualify individuals who apply for UC benefits. In this situation, which is distinct from ineligibility, an individual has no rights to UC benefits until she or he requalifies under a state's laws, usually by serving a predetermined disqualification period or obtaining new employment. In some situations, UC benefits may be reduced or wage credits may be cancelled for disqualified individuals."], "subsections": []}, {"section_title": "Disqualification for Unemployment Due to Illegal Drug Use", "paragraphs": ["Virtually all states currently disqualify individuals for UC benefits if they lost their jobs because of illegal drug use; it may be considered a \"discharge for misconduct connected with the work.\" In addition, 20 states have UC laws that specifically address other circumstances under which alcohol misuse, illegal drug use, and related occurrences, including refusing to undergo a drug test or testing positive for drugs or alcohol, may be disqualifying. Table 1 reproduces DOL's recent summary information on the 20 states with UC drug provisions."], "subsections": []}]}, {"section_title": "UC Drug Testing: Recent Developments", "paragraphs": ["DOL's current interpretation of federal law requires states to determine UC entitlement based only on facts or causes related to the individual's unemployment status, subject to specific exceptions. Current state laws and regulations that disqualify individuals based upon illegal drug use (as discussed above) have been tailored to fit this DOL interpretation. Recent federal legislative and regulatory developments, however, have expanded states' authority to prospectively drug test UC applicants and beneficiaries. These recent developments include the enactment of a federal law permitting two new types of drug testing, the issuance of guidance and regulations to support the implementation of the law, the overturning of these regulations, and the issuing of a new final rule."], "subsections": [{"section_title": "New Allowable Drug Testing Under P.L. 112-96", "paragraphs": ["Section 2105 of the Middle Class Tax Relief and Job Creation Act of 2012 ( P.L. 112-96 ; enacted on February 22, 2012) amended federal law to allow (but not require) states to conduct two types of drug testing. First, it expanded the long-standing state option to disqualify UC applicants who were discharged from employment with their most recent employer (as defined under state law) for unlawful drug use by allowing states to drug test these applicants to determine UC benefit eligibility or disqualification. Second, it allowed states to drug test UC applicants for whom suitable work (as defined under state law) is available only in an occupation that regularly conducts drug testing, with such occupations to be determined under new regulations required to be issued by the Secretary of Labor."], "subsections": [{"section_title": "2014 DOL Program Guidance: State Drug Testing Based upon Losing Employment Due to Illegal Use of Controlled Substances", "paragraphs": ["On October 9, 2014, DOL released guidance on disqualifying UC applicants based upon certain \"for cause\" discharges. This guidance (which remains in effect at this time) provided states with direction on how to conduct drug testing of UC applicants who are discharged from employment with their most recent employer for illegal use of controlled substances. States are permitted to deny benefits to individuals under these circumstances. "], "subsections": []}, {"section_title": "2016 DOL Rule: State Drug Testing Based upon Job Search in an Occupation that Regularly Conducts Drug Testing (Repealed)", "paragraphs": ["On August 1, 2016, DOL issued 20 C.F.R. Part 620, implementing the provisions of P.L. 112-96 related to the drug testing of UC applicants for whom suitable work (as defined under state law) is available only in an occupation that regularly conducts drug testing (as determined under regulations issued by DOL). The rule provided a list of the applicable occupations (20 C.F.R. Part 620.3) for which drug testing is regularly conducted. Significantly, the section of the regulations following this list (20 C.F.R. Part 620.4) limited a state's ability to conduct a drug test on UC applicants to those individuals who are only available for work in an occupation that regularly conducts drug testing under 20 C.F.R. Part 620.3. Thus, although an individual's previous occupation may have been listed in 20 C.F.R. Part 620.3, as long as she or he was currently able to work, available to work, and searching for work in at least one occupation not listed in 20 C.F.R. \u00c2\u00a7620.3, the individual could not be subject to drug testing to determine eligibility for UC (unless she or he had been discharged for a drug-related reason).", "Various stakeholders raised concerns about the UC drug testing provisions enacted under P.L. 112-96 and the 2016 DOL rule finalized under 20 C . F . R . Part 620 . For example, advocates for UC beneficiaries claimed that drug testing applicants did not address any policy problem. On the other hand, a state administration stakeholder group and some Members of Congress contended that states needed more flexibility in implementing drug testing than was offered under the DOL rule. As the 115 th Congress met, the DOL rule was unpopular with some M embers , who considered DOL's interpretation too narrow ."], "subsections": []}]}, {"section_title": "Disapproval of 2016 DOL Rule Using Congressional Review Act", "paragraphs": ["Shortly after DOL released the final 2016 rule related to establishing state UC program occupations that regularly conduct drug testing, policymakers used the Congressional Review Act (CRA) to overturn 20 C.F.R. \u00c2\u00a7620. On January 1, 2017, Representative Kevin Brady introduced a CRA resolution ( H.J.Res. 42 ) to nullify DOL's 2016 rule. H.J.Res. 42 was passed by the House on February 15, 2017, and passed by the Senate on March 14, 2017. President Trump signed H.J.Res. 42 into law as P.L. 115-17 on March 31, 2017. Because the list of occupations that require regular drug testing no longer exists within the Code of Federal Regulations (as a result of P.L. 115-17 ), the ability to prospectively test UC claimants based upon occupation became no longer available to states. Without this rule, states could drug test UC claimants only if they were discharged from employment because of unlawful drug use or for refusing a drug test. ", "In the Congressional Record for H.J.Res. 42 , several Members provided justifications for their support or opposition of the measure. Representative Kevin Brady, a supporter of the measure, argued that although the intent of the UC drug testing provisions in P.L. 112-96 was to provide states the ability to determine how to best implement drug testing programs, the final regulation narrowed the law to circumstances in which testing is legally required (rather than the broader definition of generally required by employer) and removed state discretion in conducting drug testing in their UC programs. Representative Richard E. Neal, an opponent of the measure, argued there was no evidence that unemployed workers have higher rates of drug abuse than the general population. He also noted that it appeared that some states may be trying to limit the number of workers who collect UC benefits. ", "In addition, in the Congressional Record for S.J.Res. 23 , the Senate companion bill to H.J.Res. 42 , Senator Cruz stated his reasons for support of the Disapproving Rule:", "The wording of the 2012 job creation act clearly demonstrated that Congress intended to provide States the ability to determine how to best implement these plans.... However, years after the law's passage, the Obama Department of Labor substantially narrowed the law beyond congressional intent to circumstances where testing is legally required, not where it is merely permitted. That narrow definition undermined congressional intent and it undermined the flexibility of the States to conduct drug testing in their programs, as permitted by Congress. This regulation is overly prescriptive. It removes State discretion regarding implementation, and it ignores years of congressional concern on both sides of the aisle."], "subsections": []}, {"section_title": "2019 DOL Reissued Rule32", "paragraphs": ["On November 5, 2018, DOL published a Notice of Proposed Rulemaking (NPRM) to reissue the rule identifying occupations that regularly conduct drug testing for purposes of Section 2105 of P.L. 112-96 . It was subsequently issued, with no substantive changes, as a new final rule on October 4, 2019. Because the 2016 regulation on this issue was repealed using the Congressional Review Act, this new rule is subject to the reissue requirements of the CRA. The CRA prohibits an agency from reissuing the rule in \"substantially the same form\" or issuing a \"new rule that is substantially the same\" as the disapproved rule, \"unless the reissued or new rule is specifically authorized by a law enacted after the date of the joint resolution disapproving the original rule.\"", "According to the front matter of the 2018 NPRM, DOL addressed the reissue requirements of the CRA by asserting that the new rule represents:", "a substantially different and more flexible approach to the statutory requirements than the 2016 Rule, enabling States to enact legislation to require drug testing for a far larger group of UC applicants than the previous Rule permitted. This flexibility is intended to respect the diversity of States' economies and the different roles played by employment drug testing in those economies.", " Table 2 compares the list of occupations\u00e2\u0080\u0094for which states were permitted to drug test UC applicants for whom suitable work (as defined under state law) is available only in an occupation that regularly conducts drug testing\u00e2\u0080\u0094provided in 20 C.F.R. Section 620.3 in the 2016 DOL rule and the 2019 DOL reissued final rule. The 2019 reissued final rule includes the same occupations listed in the repealed 2016 rule (20 C.F.R. \u00c2\u00a7620.3(a)-(h)) and also provides for two additional types of occupations: ", "those identified by state laws as requiring drug testing (20 C.F.R. \u00c2\u00a7620.3(i)); and those for which states have a \"factual basis for finding that employers hiring employees in that occupation conduct pre- or post-hire drug testing as a standard eligibility requirement for obtaining or maintaining employment in that occupation\" (20 C.F.R. \u00c2\u00a7620.3(j)).", "DOL developed the list of occupations set out under 20 C.F.R. Section 620.3(a)-(h) in both the 2016 rule and the reissued 2018 proposed/2019 final rule in consultation with federal agencies that have expertise in drug testing: the Substance Abuse and Mental Health Services Administration (SAMHSA) of the U.S. Department of Health and Human Services; the U.S. Department of Transportation; the U.S. Department of Defense; the U.S. Department of Homeland Security; DOL's Bureau of Labor Statistics (BLS); and DOL's Occupational Safety and Health Administration (OSHA).", "In the NPRM 2018, DOL justified the additional types of occupations that are included in the 2019 reissued rule (20 C.F.R. \u00c2\u00a7620.3(i) and (j)) by highlighting the flexibility that these categories provide, such as their responsiveness to heterogeneity across states in labor market conditions and policy preferences:", "Employers exercise a variety of approaches and practices in conducting drug testing of employees. Some States have laws that impose very minimal restrictions on employer drug testing of employees while other States have very detailed and proscriptive requirements about what actions the employer can take. That diversity of State treatment also renders an exhaustive list of such occupations impractical. The proposed Rule therefore lays out a flexible standard that States can individually meet under the facts of their specific economies and practices."], "subsections": []}]}, {"section_title": "UC Drug Testing: Arguments For and Against", "paragraphs": ["In the context of recent legislative and regulatory developments, stakeholders have made a number of arguments in support of and in opposition to expanded UC drug testing. This section provides a discussion of these arguments, including comments on the proposed 2018 UC drug testing rule, which contribute additional context for this issue. Policymakers may also consider several types of administrative issues raised by expanded UC drug testing, including program establishment, funding considerations, and the provision of drug treatment services. These are discussed in this section as well.", "In addition to the expanded UC drug testing authorized under P.L. 112-96 , recent Congresses have considered two alternative approaches to the drug testing of UC applicants and beneficiaries: adding a new federal UC drug testing requirement (i.e., rather than a state option to drug test) or using some type of risk-assessment tool to guide the drug testing of UC claimants. Appendix A provides a discussion of legislation introduced in recent Congresses that would have used these alternative approaches to expanding UC drug testing. None of these bills advanced out of the committees to which they were referred. "], "subsections": [{"section_title": "Arguments in Favor of Expanded UC Drug Testing", "paragraphs": ["Proponents of prospective drug testing assert this new UC program function is warranted by program integrity concerns. Additionally, they argue that in today's job market, the ability to pass a drug test is required to be \"job ready.\" Finally, proponents contend that allowing a state to determine the jobs requiring drug testing for itself reflects the UC system's general approach of allowing states flexibility to shape their own UC programs."], "subsections": [{"section_title": "Program Integrity", "paragraphs": ["The Office of Management and Budget (OMB) has designated the UC program as one of 19 \"high-error\" programs. In FY2017, the UC improper payment rate was 12.5%, with a total of $4.1 billion in improper payments. Thus, expanded UC drug testing may be viewed as one type of program integrity measure. The authority for the expanded UC drug testing under Section 2105 of P.L. 112-96 was enacted along with several other program integrity measures (authorized under Sections 2103 and 2104 of P.L. 112-96 ) to ensure that UC benefits are not distributed to individuals involved in illegal drug use, presuming that this behavior may impede prospects for future employment."], "subsections": []}, {"section_title": "Job Readiness", "paragraphs": ["More specifically, expanded UC drug testing has been described by supporters as a type of program integrity activity that promotes \"job readiness.\" Because federal law requires that UC claimants be able to work, available to work, and actively searching for work as a condition of eligibility, drug testing may be viewed as a measure that helps to verify an ability and availability to work; the logic being that individuals with substance abuse problems would not meet this UC eligibility requirement. For example, Representative Kevin Brady's statements at a September 7, 2016, House Ways and Means Human Resources Subcommittee hearing on \"Unemployment Insurance: An Overview of the Challenges and Strengths of Today's System,\" provide an example of this argument:", "In a world where more and more industries and careers require workers who are drug free, especially in security-sensitive professions with many directed, by the way, by Federal law, this important reform signed by President Obama made sound policy since then and continues to today. If you have lost a job due to drug use, you have established you are not fully able to work. If you can't take a new job because you can't pass a required basic routine drug test, you are not really available for work either. In both cases, you have forfeited your eligibility to receive unemployment payments subsidized by employers. ", "Additionally, in a letter supportive of H.J.Res. 42 , which nullified DOL's 2016-finalized rule related to establishing state UC program occupations that regularly conduct drug testing, the UWC \u00e2\u0080\u0093 Strategic Services on Unemployment & Workers' Compensation (UWC) presented a similar argument:", "Drug testing is a critical requirement of employment in many industries and generally in determining whether a prospective employee will be able to perform the responsibilities of work for which the individual has applied. The results of drug tests are also indications of whether an individual is able to work and available to work so as to be eligible to be paid unemployment compensation."], "subsections": []}, {"section_title": "State Flexibility", "paragraphs": ["Supporters of expanded UC drug testing also make the argument that states ought to have the option to prospectively drug test UC claimants as an extension of general state discretion in UC eligibility and administration. Although there are broad requirements under federal law regarding UC benefits, much of the specifics of eligibility are set out under each state's laws. In this way, expanded drug testing, at the option of states, fits with the joint federal-state nature of the UC system."], "subsections": []}]}, {"section_title": "Arguments Against Expanded UC Drug Testing", "paragraphs": ["Opponents of the prospective drug testing of UC claimants raise a number of concerns: increased administrative costs, conflicts with the goals of the UC program to provide timely income replacement, and potential legal concerns (see the \" Potential Legal Concerns \" section)."], "subsections": [{"section_title": "Increased Administrative Costs", "paragraphs": ["Some of the organizations that provided comments on DOL's 2018 proposed rule cite the increased costs of expanded UC drug testing. Details of UC administrative funding are discussed in more detail below in the section on \" Funding a State Drug Testing Program .\" But briefly, the addition of new administrative functions performed by state UC programs without additional administrative funding amounts and/or funding sources is of concern to some stakeholders. For example, in its letter to DOL commenting on the 2018 proposed rule, the Michigan Employment Lawyers Association claims:", "It is well documented that states don't have adequate funding to truly run their UI programs in a fully efficient and effective manner. As states are experiencing record low administrative funding which is based on unemployment levels, which are historically low, they can scarcely afford additional administrative burdens. Because federal law prohibits assigning this cost to claimants, states would have to absorb the full cost of drug testing thousands of unemployed workers. At a time when they are already struggling to administer their UI programs because of reductions in federal administrative funding, this is a cost they can ill-afford."], "subsections": []}, {"section_title": "Conflicts with Fundamental Goals of UC Program", "paragraphs": ["Opponents of expanded UC drug testing also make the argument that it does not serve, and could even undermine, the fundamental goals of the UC program, which include the timely provision of income replacement to individuals who lost a job through no fault of their own. For instance, advocates for UC beneficiaries claim that drug testing applicants does not address any policy problem. Some stakeholders also worry that expanded UC drug testing could create barriers to UC benefit receipt among eligible individuals (e.g., by discouraging UC claims filing). The comment from Southeastern Ohio Legal Services on DOL's 2018 proposed rule includes the following claims: \"There is no evidence that unemployed workers have higher rates of drug abuse than the general population. Requiring this testing would also add just one more barrier to UI applicants trying to meet the cost of living.\" Similarly, in their comment on the 2018 proposed rule, Senator Ron Wyden and Representative Danny K. Davis asserted:", "Not only is UI recipiency near a record low, but numerous states in recent years have shortened the number of weeks of UI benefits available to workers. On top of that, more than half of states have insufficient UI trust fund balances, meaning they could only pay unemployment benefits for a short time if a recession hits. The Department of Labor should focus on protecting workers and addressing these challenges to the UI system before the next recession, not proposing regulations to further undermine access to earned benefits."], "subsections": []}]}]}, {"section_title": "Potential Legal Concerns55", "paragraphs": ["Stakeholders have also raised at least two legal concerns with DOL's 2019 final rule. First, some commenters have argued that UC drug testing programs implemented in accordance with the final rule may violate the Fourth Amendment of the U.S. Constitution. Second, some commenters argue that the rule improperly delegates authority to the states to identify occupations that regularly conduct drug testing. These issues are analyzed in turn."], "subsections": [{"section_title": "Constitutional Considerations in Drug Testing UC Beneficiaries58", "paragraphs": ["Congress amended Section 303 of the Social Security Act in 2012 to clarify that nothing in federal law prevents states from testing two groups of UC applicants for illicit drug use: (1) those terminated from their previous positions because of drug use (hereinafter referred to as the \"previously terminated\" group), and (2) those who are suited to work \"in an occupation that regularly conducts drug testing\" (hereinafter referred to as the \"regularly tested occupation\" group). As discussed above, DOL issued regulations to guide states on how to design and implement drug testing programs in accordance with Section 303 of the Social Security Act. Constitutional considerations, including protections against unreasonable government searches, may inform the implementation of government-mandated drug testing programs. ", "This section begins with a general overview of the Fourth Amendment and then reviews three Supreme Court opinions addressing the constitutionality of drug testing programs in the employment context, as well as two lower court cases involving similar state laws that conditioned the receipt of federal benefits on passing drug tests. The section concludes with an assessment of factors that might affect the constitutionality of a UC drug testing program in light of the Fourth Amendment."], "subsections": [{"section_title": "Fourth Amendment Overview", "paragraphs": ["The Fourth Amendment protects the \"right of the people\" to be free from \"unreasonable searches and seizures\" by the federal government. Although Fourth Amendment protections do not extend to purely private action, the Supreme Court has held that its protections extend to state and local action through the Due Process Clause of the Fourteenth Amendment. Governmental conduct generally has been found to constitute a \"search\" for Fourth Amendment purposes where it infringes \"an expectation of privacy that society is prepared to consider reasonable.\" The Court has held on a number of occasions that government-administered drug tests are searches under the Fourth Amendment. Therefore, the constitutionality of a law that requires an individual to pass a drug test to receive UC likely would turn on whether the drug test is reasonable under the circumstances.", "Whether a search is reasonable depends on the nature of the search and its underlying governmental purpose. Reasonableness under the Fourth Amendment generally requires individualized suspicion, which often, particularly in the criminal law enforcement context, takes the form of a court-issued warrant based on probable cause that a legal violation has occurred. The purpose of a warrant is to ensure that government-conducted searches are legally authorized, rather than \"random or arbitrary acts of government actors.\" However, the Court has held that a warrant is not \"essential\" under all circumstances to make a search reasonable, particularly when \"the burden of obtaining a warrant is likely to frustrate the governmental purpose behind the search.\" ", "The Court has noted, for instance, that \"the probable-cause standard ... may be unsuited to determining the reasonableness of administrative searches\" that are conducted for purposes unrelated to criminal investigations. For these noncriminal, administrative searches, courts typically employ a reasonable suspicion standard, which is \"a lesser standard than probable cause.\" The Court has \"deliberately avoided reducing [the reasonable suspicion standard] to a neat set of legal rules,\" but at a minimum, the standard requires that, in light of the \"totality of the circumstances,\" there is a \"particularized and objective basis,\" beyond \"a mere hunch,\" that a search would uncover wrongdoing.", "Additionally, while a search generally must be based on \"some quantum of individualized suspicion\" to be reasonable under the Fourth Amendment, the Court has held that \"a showing of individualized suspicion is not a constitutional floor.\" \"In limited circumstances,\" when a search imposes a minor intrusion on an individual's privacy interests, while furthering an \"important government interest\" that would be undermined by requiring individualized suspicion, \"a search may be reasonable despite the absence of such suspicion.\" ", "The Court has recognized an exception to the typical individualized suspicion requirement \"when special needs, beyond the normal need for law enforcement, make the warrant and probable-cause requirement impracticable,\" and the government's needs outweigh privacy interests invaded by a search. The Court noted that \"[o]ur precedents establish that the proffered special need for drug testing must be substantial\u00e2\u0080\u0094important enough to override the individual's acknowledged privacy interest.\" The Court has recognized two categories of \"special needs\" substantial enough to justify suspicionless drug testing: in the employment context, where individuals perform activities involving matters of public safety, and the public school setting, involving children in the government's care.", "In instances where the government argues that \"drug tests 'fall within the closely guarded category of constitutionally permissible suspicionless searches',\" courts determine whether such searches are reasonable under the circumstances by balancing the competing interests of the government conducting the search and the private individuals who are subject to the search. Thus, even if special needs exist, government-mandated searches could still run afoul of the Fourth Amendment if they are excessively intrusive or otherwise significantly invade the privacy interests of affected individuals.", "The Court has assessed the constitutionality of governmental drug testing programs in a number of contexts. Three opinions in the employment context seem especially relevant to the question of whether a mandatory, suspicionless drug test for the receipt of UC would be considered an unreasonable search in violation of the Fourth Amendment. Additionally, two lower court cases, in which state laws that established mandatory, suspicionless drug testing programs as a condition to receiving Temporary Assistance for Needy Families (TANF) (formerly welfare) benefits were successfully challenged on Fourth Amendment grounds, could provide relevant insight into how future courts might assess the constitutionality of a UC drug testing program. These five cases are assessed in turn. "], "subsections": []}, {"section_title": "Supreme Court Drug Testing Precedent", "paragraphs": ["In Skinner v. Railway Labor Executives Association , the Court upheld as reasonable under the Fourth Amendment Federal Railroad Administration (FRA) regulations that required breath, blood, and urine tests of railroad workers involved in train accidents. The Court held that the \"special needs\" of railroad safety\u00e2\u0080\u0094for \"the traveling public and the employees themselves\"\u00e2\u0080\u0094made traditional Fourth Amendment requirements of a warrant and probable cause \"impracticable\" in this context. According to the Court, covered rail employees had \"expectations of privacy\" as to their own physical condition that were \"diminished by reasons of their participation in an industry that is regulated pervasively to ensure safety,\" and the testing procedures utilized \"pose[d] only limited threats to the justifiable expectations of privacy of covered employees.\" In these circumstances, the majority held, it was reasonable to conduct the tests, even in the absence of a warrant or reasonable suspicion that any employee may be impaired. ", "In National Treasury Employees Union v. Von Raab , which was handed down on the same day as Skinner , the Court upheld suspicionless drug testing of U.S. Customs Service personnel who sought transfer or promotion to certain \"sensitive\" positions\u00e2\u0080\u0094i.e., those that require carrying guns or are associated with drug interdiction. The Court concluded that covered employees had \"a diminished expectation of privacy interests\" due to the nature of their job duties. Additionally, the applicable testing procedures were minimally invasive on privacy interests because employees were provided advanced notice of testing procedures; urine samples were only tested for specified drugs and were not used for any other purposes; urine samples were provided in private stalls; employees were not required to share personal medical information except to licensed medical professionals, and only if tests were positive; and the testing procedures were \"highly accurate.\" Therefore, the Court held that the suspicionless drug testing program was reasonable under the Fourth Amendment. ", "In contrast, the Court in Chandler v. Miller struck down a Georgia statute requiring candidates for certain elective offices be tested for illicit drug use. The majority opinion noted several factors distinguishing the Georgia law from drug testing requirements upheld in earlier cases. First, there was no \"fear or suspicion\" of generalized illicit drug use by state elected officials. The Court noted that, while not a necessary constitutional prerequisite, evidence of historical drug abuse by the group targeted for testing might \"shore up an assertion of special need for a suspicionless general search program.\" In addition, the law did not serve as a \"credible means\" to detect or deter drug abuse by public officials because the timing of the test was largely controlled by the candidate rather than the state and legal compliance could be achieved by a mere temporary abstinence. Finally, the \"relentless scrutiny\" to which candidates for public office are subjected made suspicionless testing less necessary than in the case of safety-sensitive positions beyond the public view. The Chandler Court went on to stress that searches conducted without individualized suspicion generally must be linked to a degree of public safety \"important enough to override the individual's acknowledged privacy interest\" to be reasonable. At least outside the context of drug testing related to children in the government's care, the Chandler Court seemed to indicate that \"where ... public safety is not genuinely in jeopardy, the Fourth Amendment precludes the suspicionless search, no matter how conveniently arranged.\" "], "subsections": []}, {"section_title": "Lower Court Cases Involving TANF Drug Testing", "paragraphs": ["The federal district court ruling in Marchwinski v. Howard , which was affirmed by the U.S. Court of Appeals for the Sixth Circuit as a result of an evenly divided en banc panel, involved a state program requiring the suspicionless drug testing of TANF applicants. The district court in Marchwinski stated that \"the Chandler Court made clear that suspicionless drug testing is unconstitutional if there is no showing of a special need [] that ... [is] grounded in public safety.\" According to the Marchwinski court, the state's \"primary justification ... for instituting mandatory drug testing is to move more families from welfare to work.\" This legislative objective, however, is not \"a special need grounded in public safety\" that would justify a suspicionless search, in the court's view. The court also noted that allowing the state to conduct suspicionless drug tests in this context would provide a justification for conducting suspicionless drug tests of all parents of children who receive governmental benefits of any kind, such as student loans and a public education, which \"would set a dangerous precedent.\" Thus, the court granted the plaintiffs' motion for a preliminary injunction, concluding that the \"Plaintiffs have established a strong likelihood of succeeding on the merits of their Fourth Amendment claim.\" The state subsequently agreed to halt suspicionless drug testing.", "In another TANF case, Lebron v. Secretary, Florida Department of Children and Families , a three-judge panel of the U.S. Court of Appeals for the Eleventh Circuit unanimously affirmed a district court's ruling that a mandatory drug testing law applicable to TANF beneficiaries in Florida was unconstitutional. While \"viewing all facts in the light most favorable to the State,\" the panel concluded that \"the State has not demonstrated a substantial special need to carry out the suspicionless search.\" The panel also determined that the state had not provided evidence to support the notion that drug use by TANF recipients was any different than that of the Florida population at-large, and even if it had, this \"drug-testing program is not well designed to identify or deter applicants whose drug use will affect employability, endanger children, or drain public funds.\" The state did not seek en banc review or appeal the panel decision to the Supreme Court."], "subsections": []}, {"section_title": "Applicability of Case Law to UC Drug Testing", "paragraphs": ["Whether a government drug testing program comports with the Fourth Amendment may depend largely on the program's purpose and scope. Supreme Court precedent indicates that drug testing programs, unrelated to criminal law enforcement, that only authorize testing based on an individualized, reasonable suspicion of drug use\u00e2\u0080\u0094such as through direct observation of an individual's drug impairment by trained personnel at a UC application site\u00e2\u0080\u0094are more likely to comport with the Fourth Amendment. In the absence of suspicion, the Court has held that governmental drug tests must promote \"special needs\" compelling enough to outweigh the privacy interests of the individuals subject to the test. Under current precedent, the Court has only recognized two contexts where \"special needs\" have justified suspicionless drug tests when balanced against the subjects' competing privacy interests: in cases where individuals were employed in occupations involving public safety concerns; and the public school setting , where the government is responsible for the health and safety of children.", "Although not dispositive, Supreme Court case law also suggests that suspicionless drug testing programs imposed on a subset of the population that has a \"demonstrated problem of drug abuse\" may help tilt the balancing test in the government's favor, especially if the testing program is designed to effectively address the problem. Moreover, drug testing programs that require results to be kept confidential to all but a small group of nonlaw enforcement officials, are not conducted for criminal law enforcement purposes, and only minimally affect an individual's life are more likely to be considered reasonable. On the other hand, programs that allow drug test results to be shared, especially with law enforcement, or that otherwise have the potential to negatively impact multiple or significant aspects of an individual's life, may be less likely to be considered reasonable.", "Given this case law, the constitutionality of a UC drug testing program will likely depend on how the program is structured. Additionally, the constitutional analysis might vary as it applies to each of the two categories of UC applicants that states are permitted to test under Section 303 of the Social Security Act\u00e2\u0080\u0094i.e., the \"regularly tested occupation\" and \"previously terminated\" categories. Specifically, questions of whether individualized suspicion might justify testing appears potentially relevant to certain \"previously terminated\" UC applicants. Additionally, \"special needs\" analysis could be relevant to UC applicants who fall in DOL's proposed \"regularly tested occupation\" category. The remainder of this section addresses these potentially constitutionally significant characteristics of any UC drug testing program, in turn."], "subsections": [{"section_title": "Individualized Suspicion and \"Previously Terminated\" Applicants", "paragraphs": ["The reasons why an individual falls into the \"previously terminated\" category could be relevant to a reasonable suspicion analysis, but, as discussed below, whether or not there is reasonable suspicion to support testing a particular applicant will likely depend on how the category is defined and the facts and circumstances associated with that applicant's employment termination. ", "For example, the strength of the evidence tying an individual's termination to illicit drug use might be relevant. If a UC applicant was terminated from his or her previous position because of a criminal drug conviction or because of a failed employer-mandated drug test, there might be more compelling evidence for a reasonable suspicion analysis than if an at-will employee was fired for a number of reasons unrelated to drugs but also, in part, because he or she was rumored to have used illicit drugs outside of work. If a termination was based on the results of an employer-administered drug test, the relative strength of the test results on a reasonable suspicion analysis might be affected by the reliability of the drug test's results, whether or not the test was conducted pursuant to procedures sufficient to ensure urine or blood samples had not been tampered with, and whether or not those who performed the test were adequately trained. A reasonable suspicion analysis might also be affected by the time lapse between the termination and the UC drug test. A court might conclude, for instance, that a UC drug test is less likely to uncover illicit drug use if many months have passed since a UC applicant was fired, than if the termination and test happened within a few days of each other."], "subsections": []}, {"section_title": "Special Needs and the \"Regularly Tested Occupation\" Group", "paragraphs": ["A special needs analysis could be relevant to mandatory drug testing of UC applicants who fall in the \"regularly tested occupation\" cohort. The relative strength of a special needs legal defense of such a suspicionless drug testing program would likely depend on how the \"regularly tested occupation\" group is defined by implementing states. Additionally, there are notable differences between (1) individuals applying for UC benefits while searching for jobs in a \"regularly tested occupation\" and who are tested for illicit drugs by UC administrators and (2) individuals who are currently performing or in the final stages of being hired to perform safety-sensitive duties and who are drug tested by an employer. As discussed below, whether a reviewing court would consider these distinctions to be constitutionally significant is unclear. The remainder of this section first analyzes potentially relevant factors associated with how states might define the \"regularly tested occupation\" category, and then assesses the potentially constitutionally relevant distinctions between employer-mandated and UC administrator-mandated drug testing.", "In the absence of individualized suspicion, the Supreme Court has cautioned that \"where ... public safety is not genuinely in jeopardy, the Fourth Amendment precludes the suspicionless search, no matter how conveniently arranged.\" Absent a court recognizing a new category of special needs that may outweigh an individual's privacy interests, states, at a constitutional minimum, would likely need to define the \"regularly tested occupation\" group to encompass only occupations that involve matters of public safety in accordance with the Supreme Court special needs precedent. The \"regularly tested occupations\" category in DOL's 2019 regulation delineates a number of occupations that appear to be in line with those previously upheld under special needs precedent. These include an occupation that requires the employee to carry a firearm and an occupation that is subject to drug testing under Federal Railway Administration, Federal Motor Carrier Safety Administration, Federal Aviation Administration, or Federal Transit Administration regulations.", "However, the regulations also do not prohibit states from testing for \"[a]n occupation where the State has a factual basis for finding that employers hiring employees in that occupation conduct pre- or post-hire drug testing as a standard eligibility requirement for obtaining or maintaining employment in the occupation.\" As described below, it might be possible for an occupation to fall within the latter category but not comport with current Fourth Amendment precedent.", "Because the Fourth Amendment's protections against unreasonable searches and seizures only apply to governmental action, drug testing imposed by private employers \"not acting as an agent of the Government or with the participation or knowledge of any governmental official \" are completely \"unguarded by Fourth Amendment constraints.\" Consequently, private employers might regularly impose suspicionless drug tests in some occupations that do not involve safety-sensitive special needs because they are not constrained by the Fourth Amendment. However, Fourth Amendment protections would apply to drug tests imposed on the same individuals to the extent they are mandated by a state as part of a UC program. As a result, state programs that require suspicionless drug tests of UC applicants who are suitably employed in occupations that are regularly subject to drug testing by private employers but, nevertheless, are not related to public safety functions in accordance with Supreme Court precedent could potentially run afoul of the Fourth Amendment. ", "However, even if a state's \"regularly tested occupation\" drug testing program is limited to individuals whose suitable work is grounded in public safety in line with the Supreme Court's special needs jurisprudence, the program might still raise constitutional concerns. UC beneficiaries, unlike the plaintiffs in Skinner and Von Raab , are not actively performing or directly being considered for employment to perform duties grounded in public safety by the governmental entity that would be administering drug tests tied to the UC program. To the contrary, these individuals would merely be applying for or receiving unemployment benefits while agreeing not to turn down \"suitable work\" as defined by state law. A reviewing court might find this distinction constitutionally significant and, consequently, consider a UC drug testing program as more akin to the TANF drug testing programs addressed by the Marchwinski and Lebron courts than the testing programs upheld in Skinner and Von Raab . Under this line of reasoning, a reviewing court could conclude that, regardless of how it is structured, the underlying purpose of a UC drug testing program is primarily designed \"to promote work ... and conserve resources\" and, consequently, not sufficiently tied to public safety concerns that would warrant a special needs exception to the Fourth Amendment's protection against unreasonable searches."], "subsections": []}, {"section_title": "Other Potentially Relevant Factors", "paragraphs": ["Additional factors that a reviewing court might weigh when balancing the government's interest in conducting a drug test and the individual's competing privacy interests include the prevalence of illicit drug use in the cohort of UC applicants who are subject to suspicionless drug testing; how effectively the drug testing program is designed to identify and eliminate illicit drug use; whether procedural safeguards are in place to ensure that sufficiently trained personnel conduct the test, testing samples are protected from contamination, test results are accurate, and the test subject's medical and other personal information are protected; and the extent to which drug test results are shared beyond the UC program and could negatively affect other aspects of an individual's life. Regarding the latter factor, laws that authorize drug test results to be shared with law enforcement personnel, in particular, might raise heightened Fourth Amendment concerns."], "subsections": []}]}]}, {"section_title": "Subdelegation of DOL's Authority150", "paragraphs": ["Section 303( l )(1)(A)(ii) of the Social Security Act permits a state to adopt legislation for the drug testing of UC applicants when the only suitable work for such applicants is in occupations that regularly conduct drug testing. The section provides that these occupations will be determined \"under regulations issued by the Secretary of Labor.\" DOL's 2019 final regulations identify eight occupations that regularly conduct drug testing, including certain aviation and motor carrier occupations described in existing Federal Aviation Administration and Federal Motor Carrier Safety Administration regulations. In addition, the regulations identify two more occupations with reference to a state's involvement in the determination:", "(1) An occupation specifically identified in the State law of that State as requiring an employee to be tested for controlled substances; and", "(2) An occupation where the State has a factual basis for finding that employers hiring employees in that occupation conduct pre- or post-hire drug testing as a standard eligibility requirement for obtaining or maintaining employment in the occupation.", "Because these two additional occupations would seem to be determined by the state, some have contended that DOL is improperly subdelegating the authority it was provided by Section 303( l )(1)(A)(ii) to the state. Commenting on the 2018 reproposed regulations, the National Employment Law Project maintained:", "Congress mandated that occupations that regularly drug test are to be \"determined under regulations issued by the Secretary of Labor.\" In violation of that explicit directive, DOL has issued an NPRM that simply hands that power to the States, and provides little to no guidance concerning how that determination is to be made.", "When a statute delegates authority to a federal officer or agency, subdelegation to an outside party other than a subordinate federal officer or agency is generally assumed to be improper absent an affirmative showing of congressional authorization. In U.S. Telecom Association v. Federal Communications Commission , the U.S. Court of Appeals for the District of Columbia Circuit (D.C. Circuit) explained that subdelegations to outside parties are problematic because \"lines of accountability may blur, undermining an important democratic check on government decision-making.\" The D.C. Circuit further observed that subdelegation increases the risk that an outside party may pursue policy goals that are inconsistent with those of the agency and the underlying statute.", "While subdelegation by a federal agency to an outside party is generally prohibited, courts have permitted some outside party input into an agency's decisionmaking. In U.S. Telecom , the D.C. Circuit concluded that outside party input is permissible when it acts as a reasonable condition for granting federal approval, such as the need to obtain a local license or permit; when the outside party is simply providing factual information to a federal agency; and when the outside party is providing advice or policy recommendations to a federal agency that retains final decisionmaking authority.", "In Fund for Animals v. Kempthorne , the U.S. Court of Appeals for the Second Circuit determined that the U.S. Fish and Wildlife Service (FWS) did not improperly subdelegate its authority when it issued an order permitting state fish and wildlife agencies to kill certain migratory birds without a permit to prevent depredations of wildlife and plants. Pursuant to the Migratory Bird Treaty Act, the FWS is authorized to make certain determinations involving migratory birds, including when to allow for their hunting, capture, or killing. The plaintiffs in Fund for Animals , a group of individuals and environmental organizations, challenged the depredation order, arguing that the killing of the relevant birds could only be authorized by the FWS and not a state fish and wildlife agency.", "The Second Circuit contended that the depredation order operated as a \"grant of permission\" that was conditioned on a state fish and wildlife agency's determination that a depredation would occur if action were not taken. Citing U.S. Telecom , the court viewed this kind of determination as permissible outside party input. The court maintained that the depredation order did not represent a delegation of authority, but was an exercise of FWS's permitting authority that incorporated relevant local concerns.", "In light of Fund for Animals , it seems possible to argue that a state's role in identifying \"occupations that regularly conduct drug testing\" should be viewed like the state fish and wildlife agency's role in making determinations about depredations. One might contend that DOL's 2019 regulations are not a delegation of authority to the states, but instead provide for an incorporation of local concerns to identify the relevant occupations. Like the FWS, DOL would arguably be conditioning the drug testing of unemployment compensation applicants, at least for some individuals, on the state's identification of certain occupations.", "Ultimately, a legal challenge of the final regulations seems possible. Opponents of the state's role in identifying \"occupations that regularly conduct drug testing\" would likely maintain that the regulations provide more than a condition for identifying when the drug testing of UC applicants is appropriate, but are a delegation to an outside party without the explicit authorization of Congress. Proponents might insist, however, that the regulations simply provide the state an opportunity to identify a condition for such drug testing."], "subsections": []}]}, {"section_title": "UC Drug Testing: Administrative Considerations", "paragraphs": ["In order for a state to begin actively drug testing individuals applying for UC benefits under the authority provided by P.L. 112-96 and the newly reissued final DOL rule required by Section 2105, it must consider several policy issues related to designing, financing, and implementing a program. States must establish drug testing programs\u00e2\u0080\u0094and, according to DOL, three states (Mississippi, Texas, and Wisconsin) have already enacted laws to do so. States may also consider the issue of providing and funding drug treatment services for UC claimants."], "subsections": [{"section_title": "Establishing a State Drug Testing Program", "paragraphs": ["States that enact laws to drug test UC applicants under the authority provided them by P.L. 112-96 must establish their own drug testing programs. According to DOL guidance, states may enter into a contract with an entity to conduct the drug tests on behalf of the state. When conducting tests for illegal use of controlled substances, the state must use a test that meets or exceeds the standards of the Mandatory Guidelines for Federal Workplace Drug Testing Programs, published by the Substance Abuse and Mental Health Services Administration (SAMHSA), or the U.S. Department of Transportation (DOT) procedures. Tests that do not meet or exceed (i.e., have more rigorous standards for sample collection, chain of custody, and other procedural requirements) SAMHSA guidelines or DOT procedures may not be used to determine an individual's eligibility for UC."], "subsections": []}, {"section_title": "Funding a State Drug Testing Program", "paragraphs": ["Funding for the additional costs associated with DOL-approved drug testing programs would come from the same state administrative grants that states use to run their UC programs generally; states would be prohibited from requiring UC claimants to pay for any drug testing costs.", "Administrative costs for state UC programs are financed through the Federal Unemployment Tax Act (FUTA), one of two types of payroll taxes on employers. The 0.6% effective net FUTA tax paid by employers on the first $7,000 of each employee's earnings (no more than $42 per worker per year) funds federal and state administrative costs, loans to insolvent state UC accounts, the federal share (50%) of Extended Benefit (EB) payments, and state employment services. In FY2018, an estimated $6.3 billion was collected in federal FUTA taxes, whereas an estimated $37.1 billion was collected in State Unemployment Tax Acts (SUTA) taxes to finance UC benefits. As discussed above in the section on \" Arguments Against Expanded UC Drug Testing ,\" some opponents of expanded UC drug testing are concerned about the adequacy of the existing stream of FUTA revenue for the new administrative function of drug testing UC applicants."], "subsections": []}, {"section_title": "States with New Drug Testing Laws Under P.L. 112-96", "paragraphs": ["According to DOL, three states\u00e2\u0080\u0094Mississippi, Texas, and Wisconsin\u00e2\u0080\u0094have enacted laws under the UC drug testing authority provided by P.L. 112-96 . For summary information on these state laws, see Appendix B . The implementation of these laws is subject to applicable federal law, including the final DOL rule required by Section 2105 of P.L. 112-96 . Thus, in the absence of a final rule and until the issuance of the new rule, the three states had not implemented their programs."], "subsections": []}, {"section_title": "Providing Drug and Alcohol Treatment Services", "paragraphs": ["One of the underlying goals of the UC program is to provide income security after an individual becomes unemployed so that she or he may find suitable work. At least one state (Wisconsin) has a program addressing the underlying barriers of illicit drug use preventing work-readiness. In this program, if an employer voluntarily reports that a claimant failed a pre-employment drug test (without a valid prescription) and the claimant has not established that she or he had good cause, the claimant is to be offered the option to attend a drug treatment program and complete a skills assessment. If the claimant agrees to undergo drug treatment and complete a skills assessment, and does so in the required timeframe, the individual may continue to collect UC benefits. The Wisconsin UC program is to furnish the claimant with referrals and instructions in order to complete the assessment and access treatment directly. The claimant must also continue to meet all other UC program requirements. The program includes a budget of $500,000 to fund and administer a statewide substance abuse program."], "subsections": [{"section_title": "Funding Drug Treatment Services for UC Claimants", "paragraphs": ["Currently, no funding streams exist within the UC program dedicated to financing drug treatment services. Federal law sets limits on the permissible uses of SUTA funds. Section 3304(a)(4) of the Internal Revenue Code\u00c2\u00a0(IRC)\u00c2\u00a0and Section 303(a)(5) of the SSA set out the \"withdrawal standard\" for how states may use SUTA funds deposited within their state account in the Unemployment Trust Fund (UTF). Neither Section 3304(a) of the IRC nor Section 303(a)(5) of the SSA includes drug treatment services as a permissible use of SUTA funds. Additionally, grants to states for administrative expenses, which are financed by FUTA revenue, are limited under current law. Section 901(c)(1)(A) of the SSA sets out the authorized uses of these FUTA funds, which do not include drug treatment services.", "Nothing in federal UC law, however, prohibits states from using funding from non-FUTA or non-SUTA sources to finance drug treatment services for UC claimants. For instance, many states collect additional taxes for administrative purposes, including job training, employment service administration, or technology improvements. According to DOL, in 2019 there were 30 states with additional taxes for administrative purposes. It appears that none of these taxes have been collected for the purposes of funding drug treatment services.", "Appendix A. Additional Recent Legislative Approaches to UC Drug Testing", "In addition to the recent statutory and regulatory developments in UC drug testing related to P.L. 112-96 , legislation introduced in recent Congresses has proposed using other approaches to drug test UC applicants and beneficiaries. These approaches have generally either proposed a new federal UC drug testing requirement or some type of risk-assessment tool to guide the drug testing of UC claimants.", "New Federal Requirement to Drug Test", "One legislative option would be to add a new federal requirement to drug test UC applicants and beneficiaries. This type of approach differs from allowing states to expand UC drug testing (as under P.L. 112-96 ). There have been some proposals calling for this approach in recent Congresses. For example, H.R. 2001 (112 th Congress)\u00c2\u00a0would have created a new federal requirement that individuals be deemed ineligible for UC benefits based on previous employment from which they were separated due to an employment-related drug or alcohol offense. This proposal would have required states to amend their state UC laws.", "H.R. 1172 \u00c2\u00a0(113 th Congress) also would have created a new federal requirement that individuals be deemed ineligible for UC benefits based on previous employment from which they were separated due to an employment-related drug or alcohol offense. It would have denied benefits to anyone who (1) was discharged from employment for alcohol or drug use, (2) was in possession of controlled substance at a place of employment, (3) refused the employer's drug test, or (4) tested positive on the employer's drug test for illegal or controlled substances. This proposal would have required states to amend their state UC laws.", "Another proposal, the Accountability in Unemployment Act ( H.R. 3615 in the 112 th Congress, H.R. 1277 in the 113 th Congress, and H.R. 1136 in the 114 th Congress),\u00c2\u00a0would have created a new federal requirement for states to drug test all UC claimants as a condition of benefit eligibility. Under this proposal, if an individual tested positive for certain controlled substances (in the absence of a valid prescription or other authorization under a state's laws), he or she would have been required to retake a drug test after a 30-day period and test negative in order to be eligible for UC benefits. This proposal would have made individuals ineligible for UC benefits for five years after a third positive drug test.", "Risk Assessment-Based Drug Testing", "Another policy approach toward UC drug testing proposed in recent Congresses involves using a substance abuse risk assessment tool to screen UC applicants and beneficiaries and then drug test those individuals determined likely to be engaged in the unlawful use of controlled substances. In this way, such an approach attempts to avoid suspicionless drug testing. This type of proposal was introduced in the Ensuring Quality in the Unemployment Insurance Program (EQUIP) Act in the 112 th Congress ( H.R. 3601 ) , 113 th Congress ( H.R. 3454 ) , 114 th Congress ( H.R. 2148 ) , 115 th Congress ( H.R. 3330 ) , and the 116 th Congress ( H.R. 1121 ) . The EQUIP Act would have added a new federal requirement that individuals undergo a substance abuse risk assessment for each benefit year as a condition of eligibility for UC in all states. This new federal requirement would also have required individuals deemed to be at high risk for substance abuse\u00e2\u0080\u0094based on the assessment results\u00e2\u0080\u0094to test negative for controlled substances within one week after the assessment to qualify for UC benefits. Under this proposal, the screening assessment tool would have had to have been approved by the director of the National Institutes of Health and been \"designed to determine whether an individuals has a high risk of substance abuse.\"", "Appendix B. Enacted State UC Laws Subsequent to P.L. 112-96", "According to DOL's 2018 Comparison of State Unemployment Compensation Laws , three states have enacted laws under the authority provided by P.L. 112-96 (with \"implementation subject to applicable Federal law\"): Mississippi, Texas, and Wisconsin.", "Mississippi", "Section 40 of SB2604, Regular Session 2012 (Chapter 515; signed by Governor on May 1, 2012) added drug testing provisions to state UC eligibility requirements under Mississippi state law. This 2012 Mississippi law", "permits drug testing on individuals as a condition of eligibility for benefits if the individual was discharged because of unlawful drug use or if s/he is seeking suitable work only in an occupation that requires drug testing. Individuals may be denied benefits based on the results of these drug tests, but may end the disqualification period early by submitting acceptable proof of a negative drug test from an approved testing facility.", "Texas", "In Texas, SB21 (Chapter 1141, enacted July 14, 2013; effective September 1, 2013) added drug testing provisions to state UC eligibility requirements under state law. This 2013 Texas law", "permits drug testing, as a condition of eligibility of benefits, on individuals for whom suitable work is available only in an occupation that regularly conducts pre-employment drug testing.", "Wisconsin", "Section 3115 of 2015 Wisconsin Act 55 (2015 Senate Bill 21, enacted July 12, 2015) added drug testing provisions to state UC eligibility requirements under Wisconsin state law. This 2015 Wisconsin law", "require[s] the establishment of rules for a drug testing program for controlled substances, including rules identifying occupations for which drug testing is regularly conducted in the State. "], "subsections": []}]}]}]}}
{"id": "R46320", "title": "U.S. Army Corps of Engineers: Annual Appropriations Process and Issues for Congress", "released_date": "2020-04-21T00:00:00", "summary": ["The U.S. Army Corps of Engineers (USACE) is an agency within the Department of Defense with both military and civil works responsibilities. The agency's civil works activities consist largely of the planning, construction, and operation of water resource projects to maintain navigable channels, reduce the risk of flood and storm damage, and restore aquatic ecosystems. Congress directs USACE's civil works activities through authorization legislation, annual and supplemental appropriations, and oversight.", "Unlike federal funding for highways and municipal water infrastructure, the majority of federal funds provided to USACE are not distributed by formula to states or through competitive grant programs. Instead, USACE generally is directly engaged in the planning and construction of projects. The majority of the agency's appropriations are used to perform work on geographically specific studies and congressionally authorized projects. Between FY2010 and FY2020, USACE discretionary appropriations, typically funded through Title I of annual Energy and Water Development appropriations acts, have ranged from $4.72 billion in FY2013 to $7.65 billion in FY2020. Congress also has provided USACE with emergency supplemental appropriations, most often as part of flood response and recovery efforts (see CRS In Focus IF11435, Supplemental Appropriations for Army Corps Flood Response and Recovery , for more information).", "USACE's annual appropriations process generally involves three major milestones: the President's budget request, congressional deliberation and enactment of appropriations, and Administration development of a USACE work plan. Each of the milestones is accompanied by various documents, such as USACE budget justifications, congressional conference reports, and USACE work plans.", "The process begins with the release of the President's budget request, typically in early February. The request's appendix includes funding levels for different USACE accounts (e.g., Investigations, Construction, Operation and Maintenance). USACE also releases more detailed documents (i.e., press book, budget justifications) providing information on the projects that the request would fund. Congress may consider the President's budget request, stakeholder interests, and other factors when creating an annual Energy and Water Development appropriations bill and its USACE civil works title. In reports accompanying appropriations bills, Congress provides direction to USACE on how to allocate enacted appropriations to various USACE activities and types of projects. In the months following enactment, the Administration develops a work plan that adheres to congressional direction regarding the priorities for the funding provided above the requested amount (e.g., $2.7 billion for 26 categories of USACE activities in FY2020) and the number of new starts (e.g., six new studies and six new construction projects using FY2020 appropriations).", "Some USACE-related topics repeatedly arise in congressional appropriations deliberations For example, Congress often considers how to address the increasing maintenance needs of USACE's aging infrastructure, stakeholder demand for USACE projects, and the number of finalized project studies awaiting construction. Issues for Congress also may include the distribution of appropriations (e.g., activity type, new starts, and geographic distribution) and the level of discretion Congress provides the Administration in allocating USACE's funding in the work plan."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["The U.S. Army Corps of Engineers (USACE) is an agency within the Department of Defense with both military and civil works responsibilities. Congress directs USACE's civil works activities through authorization legislation, annual and supplemental appropriations, and oversight activities. This report summarizes USACE's annual discretionary appropriations for civil works activities, which typically are funded through Title I of annual Energy and Water Development appropriations acts. First, the report introduces USACE and its funding. Second, it summarizes the appropriations process through discussions of three major milestones: President's budget request, congressional appropriations process, and annual USACE work plan. Third, the report provides a brief discussion of trends and policy questions related to USACE annual appropriations."], "subsections": [{"section_title": "USACE Primer", "paragraphs": ["A military Chief of Engineers commands USACE's civil and military operations. The Assistant Secretary of the Army for Civil Works (ASACW) provides civilian oversight of USACE. The agency's responsibilities are organized into eight geographically based divisions, which are further divided into 38 districts. ", "As part of USACE's civil works activities, Congress has authorized and appropriated funds for the agency to perform the following: ", "water resource projects for maintaining navigable channels and harbors, reducing risk of flood and storm damage, and restoring aquatic ecosystems, among other purposes; environmental infrastructure assistance; regulation of activities affecting certain waters and wetlands activities; and remediation of sites involved in the development of U.S. nuclear weapons from the 1940s through the 1960s, administered under the Formerly Utilized Sites Remedial Action Program (FUSRAP). "], "subsections": []}, {"section_title": "USACE Funding", "paragraphs": ["From FY2010 to FY2020, Congress provided USACE with appropriations ranging from $4.72 billion in FY2013 to $7.65 billion in FY2020. Unlike federal funding for highways and municipal water infrastructure, the majority of federal funds provided to USACE are not distributed by formula to states or through competitive grant programs. Instead, USACE generally expends the appropriations on its congressionally authorized water resource projects. That is, the majority of USACE's appropriations are for the planning, construction, and operation of the agency's water resource projects, such as multipurpose dams and commercial navigation improvements along coasts and inland waterways.", "Congress generally funds USACE civil works through Title I of annual Energy and Water Development appropriations acts. In addition to funding the agency's water resource activities, Congress provided $100 million for environmental infrastructure activities, $210 million for USACE regulatory activities, and $200 million for FUSRAP in FY2020.", "Each year, some USACE projects receive construction funds; however, many authorized USACE construction projects have not been federally funded for years after their authorization. That is, Congress has authorized construction projects and rehabilitation and repair work that totals an estimated $96 billion: approximately $32 billion of authorized but unfunded projects and approximately $64 billion of rehabilitation and repair work (e.g., for dam safety). This is often referred to as the agency's construction backlog . The backlog includes much more authorized work than can be accomplished with annual construction appropriations, which has ranged from $2.1 billion to $2.7 billion annually during FY2018 through FY2020. A subset of the projects in the backlog are funded in a given year, and many projects in the backlog receive no funds for years. ", "Congress also has provided USACE with emergency supplemental appropriations in some years, typically in response to floods. Most of these supplemental funds are directed to repairing damage to existing USACE facilities, paying for flood fighting and repair of certain levees and dams maintained by nonfederal entities, and constructing new riverine and coastal flood control improvements. For more information on supplemental funds for USACE and associated congressional direction, see CRS In Focus IF11435, Supplemental Appropriations for Army Corps Flood Response and Recovery , by Nicole T. Carter and Anna E. Normand.", "In addition to federal funding, most USACE activities require a nonfederal sponsor to share some portion of project costs. For some project types (e.g., levees), nonfederal sponsors are required to perform operation, maintenance, repairs, replacement, and rehabilitation of the works once construction is complete. For more information on nonfederal cost-share requirements, see CRS Report R45185, Army Corps of Engineers: Water Resource Authorization and Project Delivery Processes , by Nicole T. Carter and Anna E. Normand."], "subsections": []}]}, {"section_title": "Annual Appropriations Process", "paragraphs": ["The annual appropriations process generally involves three major milestones: President's budget request, congressional deliberation and enactment of appropriations, and Administration development of a USACE work plan (see Figure 1 ). The process begins with the release of the President's budget request, typically in early February (i.e., roughly eight months before the start of the fiscal year addressed by the request), although it is sometimes delayed. Congress may consider the President's budget request, stakeholder interests, and other factors when creating an annual Energy and Water Development appropriations bill that includes USACE civil works activities. The length of the congressional appropriations process varies from year to year, as shown in Figure 1 . Following enactment of the Energy and Water Development bill, the Administration develops a USACE work plan, which identifies the amount of additional funding provided to specific studies and projects. The following sections describe these major milestones in more detail."], "subsections": [{"section_title": "President's Budget Request", "paragraphs": ["The President's budget request for USACE typically is for funding at the account level (i.e., Investigation, Construction, and Operation and Maintenance), as shown in the appendix to the President's FY2020 budget request. The agency's budget justification includes more detailed information regarding the request by providing information for specific activities, such as the level of funding requested for particular USACE studies and construction projects. USACE also publishes a summary of this information in a document it refers to as the p ress b ook . The press book shows the requested funding for USACE projects for each state and identifies how the President's requests for various accounts are distributed across the agency's business line s (i.e., types of activities, such as navigation, restoration, and recreation) in a crosswalk (see Appendix A ).", "In recent years, the executive branch has used various metrics, including benefit-cost ratios and other performance criteria, to identify which projects and activities to include in the President's request. For example, to identify operation and maintenance investments, the Administration's budget development guidance has used risk assessments, which consist of an evaluation of an existing project's condition and the consequences of reduced project performance (i.e., the consequence of not making an investment). USACE budget development guidance describes these metrics and other aspects of the budget development process each year. Recent Administrations also have limited funding for new starts to focus on completing existing projects and on actions to address aging infrastructure."], "subsections": []}, {"section_title": "Congressional Appropriation Acts", "paragraphs": ["As shown in Figure 2 , since FY2006, Congress has appropriated more for USACE civil works than the President requested in all but one year. In the text of enacted appropriations laws, Congress generally provides appropriations to USACE at the account level (see Table 1 for a description of the accounts and their FY2018 to FY2020 appropriations amounts). Accompanying appropriations reports (i.e., conference reports, committee reports, or explanatory statements), which sometimes are incorporated into law by reference, often identify specific USACE projects and programs to receive appropriated funds. ", "In addition to regular appropriations, Congress provided USACE with various emergency supplemental appropriations from FY2006 to FY2019. For example, Congress provided a total of more than $47 billion for flood fighting (e.g., construction of temporary levees) and flood recovery (e.g., construction of flood risk reduction in states and territories affected by flooding) over those years, as well as $4.6 billion for economic recovery as part of the American Recovery and Reinvestment Act of 2009 ( P.L. 111-5 ). These supplemental appropriations are not shown in Figure 2 . ", "Generally, Congress provides the majority of USACE's funding to two accounts\u00e2\u0080\u0094the Construction account and the Operation and Maintenance (O&M) account. The O&M account has made up a growing portion of the agency's use of annual appropriations, as shown in Figure 3 . Between FY2006 and FY2020, the O&M account increased from 37% of USACE annual appropriations in FY2006 and FY2007 to a high of 53% in FY2018 and FY2019."], "subsections": [{"section_title": "Additional Funding", "paragraphs": ["For decades, Congress provided funding to USACE projects that were not included in the President's request until the House and Senate earmark moratoriums limited Congress's ability to select which site-specific projects would receive funding. Since the 112 th Congress, in lieu of increasing funding for specific projects, Congress has provided additional funding for specified categories of work within some USACE budget accounts. That is, in recent appropriations cycles, Congress has included additional funding categories for various types of USACE projects (e.g., additional funding for inland navigation), along with directions and limitations on the use of these funds on authorized studies and projects. Recent levels of additional funding are shown in Figure 4 . For example, Congress provided $2.69 billion more in P.L. 116-94 than the President's request for FY2020. Of this $2.69 billion, $2.53 billion was identified as additional funding for 26 categories of USACE activities in four budget accounts (see Appendix B ). In Figure 4 , categories are aggregated into navigation activities, flood risk reduction activities, and other authorized project purposes (e.g., environmental restoration). Since FY2014, Congress also has specified in each appropriations bill the number and types of studies and projects to be selected to receive funding for the first time (referred to as new starts ). For example, Congress directed USACE to use FY2020-enacted funding to initiate a maximum of six new studies and six new construction projects."], "subsections": []}]}, {"section_title": "Agency Work Plan", "paragraphs": ["Since FY2012, Congress has directed USACE to produce an annual work plan describing how funds will be allocated at the project level. For example, in FY2020, the explanatory statement accompanying the Further Consolidated Appropriations Act, 2020 ( P.L. 116-94 ), called for USACE, within 60 days after enactment of the appropriations bill, to issue a work plan that includes the specific amount of additional funding to be allocated to each project. The Administration develops the work plan, which typically consists of tables that list the projects, the amount of additional funding that each project is to receive, and a one- or two-sentence description of what USACE is to accomplish with the funds for the project. For projects not in the budget justifications that accompanied the President's budget request, the information included in the work plan may be the extent of the Administration's public explanation of the project-level work to be accomplished during the fiscal year. ", "During the FY2014 to FY2019 period, investments in some USACE business lines increased and investments in other business lines decreased. As shown in Figure 5 , Congress provided year-to-year increases in funding for navigation, which exceeded annual navigation spending in the FY2006 to FY2013 period. In contrast, annual funding for the environment (i.e., environmental restoration and environmental stewardship business lines) was less from FY2014 to FY2019 (ranging from $470 million to $591 million annually) compared with funding in the earlier FY2006 to FY2012 period, which ranged from $609 million to $680 million annually. ", "Funding for flood risk reduction has remained around 30% of the total annual appropriations for most of the years in the FY2006 to FY2019 period shown in Figure 5 . The majority of the annual flood-related funds shown in Figure 5 are for riverine flood risk reduction activities. For example, of the construction funds for flood risk reduction provided in annual appropriations acts for FY2017, FY2018, and FY2019, funding for coastal storm damage reduction represented 11%, 9%, and 7%, respectively. The explanatory statement accompanying the FY2020 appropriations act ( P.L. 116-94 ) includes the following statement: \"Within the flood and storm damage reduction mission, the Corps is urged to strive for an appropriate balance between inland and coastal projects.\" ", "Of the previously mentioned $47 billion in flood-related supplemental appropriations from FY2006 to FY2019, Congress provided around $24 billion for construction of flood risk reduction projects. Congress provided almost $15 billion of the $47 billion to the Flood Control and Coastal Emergencies (FCCE) account for flood fighting and repair of certain nonfederal flood risk reduction projects during the FY2006 to FY2019 period. In contrast, annual appropriations for FCCE generally have been less than $35 million and used for emergency response training and preparedness ( Table 1 ). "], "subsections": []}]}, {"section_title": "Trends and Policy Questions", "paragraphs": ["Congress may consider the following trends and policy questions when determining future appropriations and funding allocation language directed to USACE.", "Shift to Administration -Developed Work Plans", "Since earmark moratorium policies were introduced in the 112 th Congress, Congress has provided annual appropriations above the President's request to fund various additional categories of work (see Figure 4 for funding levels from FY2012 to FY2020). The Administration follows congressional guidance regarding priorities, new starts, and other matters, in part, to develop post-enactment agency work plans that specify which projects are to receive the additional funding. Unlike the justification documents that accompany the President's budget request, the Administration limits the project-level details in the work plan to a few sentences per project. Potential policy questions related to the shift to Administration-developed work plans include the following:", "What is the effect on congressional oversight when the USACE work plan provides fewer project-level details than the budget request? As Congress debates the limits on congressionally directed spending (or earmarks), will considerations include the type of direction Congress can provide USACE on the use of additional funding? How might Congress address differences between its priorities and the Administration's priorities for USACE in future fiscal years' appropriations?", "Construction Backlog", "According to USACE, in early FY2020, there was a construction backlog of $96 billion, including projects with signed Chief's reports (i.e., reports recommending new projects for congressional construction authorization), dam modifications, and deferred maintenance. At the FY2021 budget release press conference, the Chief of Engineers stated that since the enactment of the last Water Resources Development Act (Title I of America's Water Infrastructure Act of 2018; P.L. 115-270 ), he had signed 19 Chief's reports, representing over $9 billion in proposed construction; he also said he anticipated signing another 19 Chief's reports by the end of CY2020. If Congress authorizes these projects, the construction backlog would likely continue to increase more quickly than construction would progress using available USACE appropriations. For example, Congress appropriated $2.2 billion in FY2019 and $2.7 billion in FY2020 for the Construction account and required five new construction starts in FY2019 and six new construction starts in FY2020. Potential policy questions related to the construction backlog include the following:", "How might Congress address the national demand for water resource infrastructure projects, in part illustrated by the USACE construction backlog? How might Congress address stakeholder interest in new starts and identify a path to construction for authorized but unfunded USACE projects? ", "Shift to Operation and Maintenance", "U.S. water infrastructure is aging; the majority of the nation's dams, locks, and levees are more than 50 years old. An increasing share of USACE's annual discretionary appropriations goes to O&M activities, including activities to maintain USACE-constructed water infrastructure (see Table 1 for description of activities funded by the O&M account). The O&M account increased from 37% of USACE annual appropriations in FY2006 and FY2007 to a high of 53% in FY2018 and FY2019. The following is a potential policy question related to the shift toward more annual appropriations being used to for O&M:", "How might Congress address the funding of aging USACE infrastructure, while also meeting the other demands for agency projects and funds? ", "Navigation", "As discussed in the box titled \"Navigation Trust Funds,\" in P.L. 116-136 , Congress altered how some Harbor Maintenance Trust Fund spending is accounted for in relation to budget caps. Congress, as recently as for FY2020 appropriations in P.L. 116-94 , has reduced the funds to be derived from the Inland Waterways Trust Fund for some projects to allow more inland waterway construction projects to proceed. The Administration has proposed identifying additional ways for waterway interests to contribute to the costs of inland waterway construction and O&M. Potential policy questions related to funding navigation actives include the following:", "How might Congress address the interest of the inland waterways industry and its stakeholders in spending on waterway construction that exceeds the Inland Waterways Trust Fund's ability to cover 50% of the construction costs? Will the anticipated changes to Harbor Maintenance Trust Fund accounting toward budget caps and allocations result in congressional adjustments to the annual appropriations levels for USACE or other federal agencies' appropriations?", "Flood Risk Reduction", "Congress has directed around 30% of USACE's annual appropriations to support flood risk reduction activities, with around 90% of these funds, in most years, supporting riverine flood risk reduction. In addition, as previously noted, the FCCE account typically receives annual appropriations around $35 million, and its flood response and repair activities are primarily funded through supplemental appropriations. Potential policy questions related to funding flood risk reduction actives include the following:", "Will Congress or the Administration address the balance between inland and coastal projects referenced in the explanatory statement accompanying USACE's FY2020 appropriations in P.L. 116-94 ? What are the consequences of primarily using supplemental appropriations to fund FCCE activities, including repair of damaged nonfederal levees?", "Environment", "As previously noted, appropriations for USACE's environmental activities in recent years have been less than in the late 2000s. Annual funding for the environment was less from FY2014 to FY2019 (ranging from $470 million to $591 million) compared with funding in the earlier FY2006 to FY2012 period, which ranged from $609 million to $680 million annually. Postponed investments in aquatic ecosystem restoration may result in missed opportunities to attenuate wetlands loss and realize related ecosystem benefits. Potential policy questions related to the funding of USACE environmental actives include the following:", "What are the consequences of the current level and distribution of USACE restoration funding?", "Appendix A. USACE Business Line/Account Crosswalk", "Congress appropriates funding to the U.S. Army Corps of Engineers (USACE) for its civil works activities at the account level (e.g., Investigation, Construction, and Operation and Maintenance [O&M]). Table 1 provides a description of each account. Activities funded in these accounts are categorized by business lines based on the type of activities. Whereas some business line activities (e.g., navigation, flood damage reduction, restoration, recreation) are spread across accounts (e.g., Investigations, Construction, O&M), other business line activities are exclusive to one account with the same name (e.g., Formerly Utilized Sites Remedial Action Program, regulatory, expenses). Along with the President's budget request, USACE publishes a press book that identifies in a crosswalk how the President's requests for various accounts are distributed across the agency's business lines. For example, Figure A-1 shows the crosswalk for the FY2018 President's budget request for USACE; the columns are the accounts, and the rows are the business lines. Following enactment of appropriations and work plan development, USACE typically also calculates the level of funding for each business line.", "Appendix B. Additional Funding Categories and Amounts", "Since the 112 th Congress, Congress has provided additional funding for specific categories of work within some USACE budget accounts (e.g., Investigations, Construction, O&M, Mississippi River and Tributaries). Table B-1 shows the additional funding Congress provided in FY2018 to FY2020 for 26 categories of USACE activities across four budget accounts. Congress directed USACE to produce a work plan no later than 60 days after enactment of the appropriations bill, allocating these additional funds to projects meeting the criteria of the categories and any other direction provided in the explanatory statement or conference report. Some states received funding for larger projects, whereas others received funding for less extensive work. For example, under the Construction account, the work plan allocated $100 million or more per state in additional funding to 10 states\u00e2\u0080\u0095Alabama, California, Florida, Illinois, Louisiana, North Dakota, New Jersey, Pennsylvania, Tennessee, and Texas\u00e2\u0080\u0095in at least one of FY2018, FY2019, or FY2020; the work plans over that same period included between $1 million and $7 million annually per state for other states (e.g., Minnesota, Montana, New Mexico, Nevada, and Utah). "], "subsections": []}]}}
{"id": "R46193", "title": "Federal Income Tax Treatment of the Family Under the 2017 Tax Revisions", "released_date": "2020-01-24T00:00:00", "summary": ["The federal income tax treatment of the family is affected by several major structural elements applicable to all taxpayers: amounts deductible from taxable income through standard deductions, personal exemptions, and itemized deductions; the rate structure (which varies across taxpayer types); the earned income credit and the child credit; and the alternative minimum tax. Some of these provisions only affect high-income families and some only low-income families, but they are the tax code's fundamental structural features. They lead to varying tax burdens on families depending on whether the family is headed by a married couple or a single individual, whether children are in the family, and the number of children if so. These provisions also affect the degree to which taxes change when a couple marries or divorces.", "The 2017 tax revision ( P.L. 115-97 , popularly known as the Tax Cuts and Jobs Act) changed many of these fundamental provisions, although those changes are scheduled to expire after 2025. This report examines these temporary changes and how they affect families. The prior provisions (which will return absent legislative changes) are discussed in CRS Report RL33755, Feder a l Income Tax Treatment of the Family , by Jane G. Gravelle, which also includes the historical development of family-related provisions and some of the justifications for differentiating across families, especially with respect to the number of children.", "The 2017 tax revision effectively eliminated personal exemptions claimed for the taxpayer, their spouse (if married), and any dependent (often referred to as the dependent exemption ). However, the increased standard deduction more than offset these losses for taxpayers (and their spouses, if married). In addition, for many taxpayers, the increased child credit more than offset the losses from the eliminated dependent exemption. The tax revision also lowered rates for all three types of tax returns (joint, single, and head of household), although the effects were more pronounced for joint returns.", "In general, the changes retain significant aspects of prior law. The income tax code after the 2017 tax revision remains progressive across income levels for any given type of family, although effective tax rates are slightly lower. Among families with the same ability to pay (using a measure that estimates how much additional income families need to attain the same standard of living as their size increases), families with children are still favored at the lower end of the income scale, whereas families with children are still penalized at the higher end of the scale. This favorable treatment toward families with children is extended further up into the middle-income level under the 2017 revisions due to the changes in the child credit.", "The tax system is largely characterized by marriage bonuses (lower taxes when a couple marries than their combined tax bill as singles) through most of the income distribution, although marriage penalties still exist at the bottom (due to the earned income credit) and top (due to the rate structure) of the income distribution. The penalties at the top appear to be somewhat smaller in the new law due to changes in the rate structure and lower tax rates."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["The federal tax treatment of the family is affected by several major structural elements of the income tax code applicable to all taxpayers: deductions such as the standard deduction, personal exemptions, and itemized deductions; the marginal tax rate structure (which varies by filing status); the earned income credit and the child credit; and the alternative minimum tax. Some of these provisions affect only high-income families and some only low-income families, but they are the tax code's fundamental structural features. They lead to varying tax burdens on families depending on whether the family is headed by a married couple or a single individual, whether children are in the family, and the number of children if so.", "The 2017 tax revision ( P.L. 115-97 , popularly known as the Tax Cuts and Jobs Act, or TCJA) changed many of these fundamental provisions, although those changes are scheduled to expire after 2025. This report examines these temporary changes and how they affect families. The prior provisions (and ones that will return absent legislative changes) are discussed in a previous CRS report, which also includes the historical development of family-related provisions and some of the justifications for differentiating across families, especially with respect to the number of children. ", "This report does not consider other, more narrowly focused tax code provisions, such as those that apply only to certain types of income (e.g., special treatment for certain types of capital income or self-employment income) or particular additional benefits (e.g., benefits for the blind and elderly or for child care expenses). ", "The first section discusses the structural changes made in the TCJA, and the following sections discuss equity issues and the marriage penalty."], "subsections": []}, {"section_title": "Structural Changes Made in the TCJA", "paragraphs": ["Taxes are determined by first subtracting deductions (either the standard deduction or the sum of itemized deductions) and personal exemptions (for the taxpayer, their spouse [if married filing jointly], and any dependents) from income to arrive at taxable income. Then the marginal rate structure is applied to this measure of taxable income. Finally, tax credits are subtracted from this amount to determine tax liability. Two of the major credits claimed by families are the earned income tax credit (EITC) and the child tax credit. ", "The new law expanded the child credit for many taxpayers, although it did not change the earned income tax credit. In addition to these provisions, the law changed the exemption levels for the alternative minimum tax (a tax aimed at broadening the overall tax base and applying flat rates with a large fixed exemption), which is imposed if it is larger than the regular tax.", "All amounts in this discussion are for 2018, the year the tax changes were first implemented. Some amounts will change in the future as they are indexed for inflation. The revision also changed the measure used to index for inflation to the chained consumer price index (CPI) rather than the basic CPI. The chained CPI takes into account changes in the mix of spending, and because spending tends to increase for goods with smaller price increases, the chained CPI is smaller than the basic CPI. For 2018, it only affected the EITC (in a minor way), as the other provisions (such as standard deductions and the rate structure) were stated explicitly in the tax revision. "], "subsections": [{"section_title": "Standard Deduction, Itemized Deductions, and Personal Exemption and Child Credits", "paragraphs": ["In calculating their taxable income, taxpayers may subtract either the standard deduction or the sum of their itemized deductions. The standard deduction varies by the taxpayer's filing status: single (an unmarried individual with no dependents), joint (a married couple), and head of household (a single parent). The standard deduction is beneficial\u00e2\u0080\u0094that is, it results in a lower tax liability\u00e2\u0080\u0094when itemized deductions (such as for state and local taxes, mortgage interest, and charitable contributions) are smaller than the standard deduction amount. The standard deduction is annually adjusted for inflation. ", "Under prior law, taxpayers could claim a personal exemption for themselves and each family member. In addition, a child credit was allowed for children under the age of 17. The child credit was (and still is) partially refundable, so that taxpayers with no tax liability can receive some or all of the child credit as a refund greater than taxes owed. The refundable portion of the credit was limited to 15% of earned income in excess of $3,000. (The refundable portion of the child credit is sometimes referred to as the additional child tax credit or ACTC. The lowest-income taxpayers generally receive all of the child credit in the form of the ACTC.) Personal exemptions and child credits were phased out under prior law. Personal exemptions were indexed for inflation, but the child credit was not. ", "As shown in Table 1 , the 2017 tax revision substantially increased the standard deduction and the maximum amount of the child credit while eliminating the personal exemption. It also increased the refundable portion of the child credit, both by increasing the maximum amount of the ACTC and by reducing the earned income amount used to calculate the ACTC. It also substantially increased the level at which the child credit is phased out.", "For many taxpayers, the amount of income exempt from tax (i.e., the amount subtracted before applying tax rates) has increased under the 2017 tax revision. For example, prior to P.L. 115-97 , a married couple with no children that claimed the standard deduction would have $21,300 in tax-exempt income (the combination of a standard deduction of $13,000 and two personal exemptions for the taxpayers of $4,150). Under current law, their first $24,000 would not be subject to tax. In general, the loss of personal exemptions for children was more than offset by increases in the maximum child credit from $1,000 per child to $2,000 per child. The act also provided a $500 credit for dependents that did not qualify for the child credit.", "Higher-income families with children also benefited from the increase in the new child credit's phaseout level, which was higher than the previous personal exemption and significantly higher than the prior-law child credit's phaseout range (see Table 1 ).", "As under prior law, the standard deduction will be annually adjusted for inflation and the child credit (or family credit) will not be adjusted for inflation (with the exception of the $1,400 limit on refundability, which is indexed). The prior-law personal exemption was indexed annually for inflation. Were these provisions to be continued over a long period, the child credit would continually decline in real value, whereas the prior-law personal exemption would not. Moreover, the new inflation index is less generous than the prior one. ", "The tax change also restricted itemized deductions. Although it retained the major itemized deductions for mortgage interest, state and local taxes, and charitable contributions, it limited the deduction for state and local taxes to $10,000, reduced the cap on mortgages with interest eligible for the deduction from $1 million to $750,000, and eliminated a number of other minor itemized deductions. These amounts are not indexed for inflation. As a result of increases in the standard deduction and restrictions on itemized deductions, about 13% of taxpayers are expected to itemize deductions, compared to 30% under prior law. Analysis suggests most of those who continue to itemize are higher income."], "subsections": []}, {"section_title": "Earned Income Tax Credit", "paragraphs": ["The other major tax credit for families under current law is the earned income tax credit (EITC). This credit is aimed at helping lower-income workers and is fully refundable, meaning that those with little to no income tax liability can receive the credit's full amount. While the credit is generally available to all low-income workers, the credit formula is much more generous for families with children, and the majority of benefits go to families with children.", "The EITC varies based on a recipient's earnings: the credit equals a fixed percentage (the credit rate ) of earned income until it reaches its maximum level. The EITC then remains at its maximum level over a subsequent range of earned income, between the earned income amount and the phaseout amount threshold . Finally, the credit gradually phases out to zero at a fixed rate (the phaseout rate ) for each additional dollar of adjusted gross income (AGI) (or earned income, whichever is greater) above the phaseout amount threshold. The credit rate, earned income amount, maximum credit, and phaseout amount threshold all vary by number of children, and are more generous for families with more children, as illustrated in Figure 1 .", "In 2018, the maximum credit amounts were $519, $3,461, $5,716, and $6,431 for families with zero, one, two, or three or more children, respectively. In addition, the phaseout amount threshold is higher for married couples than for unmarried recipients. Hence, the income level at which the credit begins to phase out is slightly more than $5,000 greater for married joint filers than it is for unmarried filers (heads of households and singles). ", "The 2017 revision made no explicit changes to the EITC, but the change in the inflation indexing formula slightly lowered the credit's value. For example, the credit's maximum value for a family with three or more children under prior law would have been $6,444, rather than $6,431 for a family with three or more children under the revision.", "A taxpayer with no qualifying children must be between 25 and 64 years of age to be eligible for the EITC. "], "subsections": []}, {"section_title": "Rate Structure and Alternative Minimum Tax", "paragraphs": ["The 2017 tax revision also altered the statutory marginal tax rates that apply to taxable income. There are currently seven marginal tax rates, and the income ranges over which they apply ( tax brackets ) differ based on the taxpayer's filing status, with brackets at the lower rates half the width for singles as those of married couples (who file jointly) and heads of household in between. The width of the bracket determines how much income is taxed at a given rate and the wider the brackets the more income is taxed at lower rates. That means singles (and to a lesser extent heads of households) are subject to higher tax rates at lower levels of income than married couples. Under prior law, most taxpayers were subject to tax rates of 10% and 15%. The 10% rate applied for the first $19,050 of taxable income for joint returns, the first $13,600 for head of household returns, and the first $9,525 for single returns. The 15% bracket ended at $77,400 of taxable income for joint returns, $51,850 for heads of households, and $38,700 for singles. The tax revision retained the 10% rate, but reduced the 15% rate to 12%. ", "Above those income levels, rates of 25%, 28%, 33%, 35%, and 39.6% applied, and single bracket widths were less than half as wide as the equivalent married brackets. The 2017 revisions reduced those rates by amounts ranging from 3 to 9 percentage points, with new rates of 22%, 24%, 32%, 35%, and 37%. Under prior law, the top rate of 39.6% applied to taxable income over $480,050 for joint returns. The new law reduced the top rate to 37% and applied it to taxable income over $600,000; the remaining taxable income that had been subject to a 39.6% rate is taxed at 35%. Under prior law, the 39.6% top rate was reached at $426,700 for singles; under the revision, the new top rate of 37% applies to taxable income over $500,000 for singles.", "The law also revised the alternative minimum tax. Under prior law, the alternative minimum tax imposed a 26% tax rate on alternative minimum taxable income above $86,000 for married couples and $55,400 for unmarried tax filers. The exemption began to phase out at $164,100 for married couples and $123,100 for singles. A higher rate of 28% applied to AMT taxable income above $191,500 for joint returns and $95,750 for single returns. AMT income begins with ordinary taxable income and adds back the standard deduction, personal exemptions, and state and local tax deductions for itemizers, as well as some other tax preferences (such as tax-exempt interest from private activity bonds and accelerated depreciation). ", "The tax revision left the AMT's basic structure unchanged, but increased the exemption amounts to $109,400 for married couples and $70,300 for single returns. It also increased the phaseout point for the exemption to $1,000,000 for joint returns and $500,000 for singles. ", "Other elements of the 2017 tax revision affected whether a taxpayer would be subject to the AMT. Whether the AMT applies depends on deductions from the regular tax compared to the AMT exemption, as well as the tax rates. Lower regular tax rates and a higher standard deduction increase the chance a taxpayer is subject to the AMT, whereas higher AMT exemptions, elimination of personal exemptions, and the limit on the deduction for state and local taxes decrease the chance a taxpayer is subject to the AMT. The rate brackets and AMT amounts are indexed annually for inflation. ", "At higher income levels (up to slightly over $300,000 of taxable income for joint returns and about half that amount for other returns), several factors contribute to lower tax liabilities under the 2017 tax revision, primarily the relatively large reduction in marginal tax rates, as shown in the tax rates in Table 2 , Table 3 , and Table 4 . As indicated in those tables, as a result of P.L. 115-97 , marginal rates increase somewhat over narrow bands of higher income levels, particularly for heads of households and to a lesser extent single returns, before declining again.", "The changes in tax rates are only one factor determining tax liabilities, as other tax code features\u00e2\u0080\u0094including broadly applicable features discussed in this report and others that apply to a narrower range of taxpayers\u00e2\u0080\u0094can affect tax liability."], "subsections": []}]}, {"section_title": "Treatment of Families with Different Incomes: Equity Issues", "paragraphs": ["The new income tax code (as well as the income tax under prior law) is progressive: as income increases and taxpayers have an increased ability to pay, tax rates rise. Studies generally suggest, however, that after taking all of the 2017 tax revision's provisions into account, higher-income groups tend to have the largest percentage increase in after-tax income. Hence, while still progressive, the new income tax is less progressive in comparison to the prior-law income tax. In addition, as time goes on, the relative tax burden on low-income families is expected to increase. This increase at the lower end of the income distribution is partially due to the new inflation indexing provision, which will reduce the earned income credit's value for low-income working families. The increased tax burden also reflects the loss of health care subsidies due to the elimination of the penalty for not purchasing health insurance. The decreased tax burdens (relative to prior law) for high-income individuals also reflect, in this distributional estimate, lower taxes' effects on capital income (including lower corporate tax rates and the pass-through deduction for business income), which affect higher-income individuals, who own most of the capital. "], "subsections": [{"section_title": "Effects on Burdens at the Lower End of the Income Distribution", "paragraphs": ["The tax change had no effect on after-tax income in 2018 for low-income families that already had effectively no or negative tax liability and did not have enough income to be eligible for the maximum child credit. In future years, the inflation indexing could eventually reduce the earned income credit's value. As incomes rise, families with children will tend to benefit more than families without children, primarily due to the expanded child credit. These effects can be illustrated by comparing the prior- and current-law breakeven levels. The breakeven level is the amount of income at which a taxpayer begins to owe income taxes (i.e., the level at which tax liability turns from negative or zero to positive). Table 5 shows these levels for married and single-headed families with zero to three children.", "The smallest increase in the income level at which taxes begin to be owed is for singles with no children. These taxpayers began to owe taxes when income was $12,669 under prior law, but begin to owe at $13,419 under current law, an increase of $750. Under prior law, this income level was in part a result of the standard deduction and personal exemption (a combined $10,650 that was exempt from tax) and in part a result of a reduced EITC (the taxpayer's income resulted in a partially phased out credit). Under current law, a greater amount of income is exempt from tax\u00e2\u0080\u0094$12,000 compared to $10,650\u00e2\u0080\u0094and the EITC is slightly reduced as a result of the new inflation adjustment. A married couple without children begins to pay taxes when their income is $24,000 under current law, compared with $21,300 under prior law, a $2,700 increase entirely driven by the changes in the personal exemptions and the standard deduction. For these taxpayers, under prior law their first $21,300 was exempt from tax as a result of the standard deduction and personal exemptions, and they were ineligible for the EITC at this income level because the credit was entirely phased out. Under current law, their first $24,000 is exempt from tax as a result of the increased standard deduction (and they remain ineligible for the EITC).", "The breakeven point for families with children is greater than the standard deduction (or under prior law, the standard deduction and personal exemptions) as a result of the EITC (although it is phased out from its maximum level) and the child credit. Although the increased standard deduction increases exempt levels and the additional $1,000 of the child credit is the equivalent of a $8,333 deduction for each child at the new tax bracket these income levels fall into ($1,000/.12), these income levels are mostly still in the earned income credit's phaseout range. Thus, although taxpayers gain from the increased deductions and child credits as income rises, they lose earned income tax credits, making the increase in the exemption level smaller. The benefit increases when the increased income levels tend to be largely out of the EITC's phaseout range (which is largely the case for families with three children). ", "Lower-income families either receive a negligible benefit (for those without children) or a significant benefit (for those with children) because the new child credit is more generous than the prior personal exemption in terms of tax savings. As income rises, the child credit continues to contribute to lower taxes. It is not until marginal tax rates reach 24% (which occurs at $165,000 of taxable income for a joint return) that the increased child credit has the same value as the prior personal exemption in terms of tax savings. The moderate income levels also benefit from lower tax rates, as the 15% rate that applies to taxable income from $19,050 to $77,000 is reduced to 12%."], "subsections": []}, {"section_title": "Effects on Burdens at the Higher End of the Income Distribution", "paragraphs": ["At higher income levels, lower tax rates (which are quite large for taxable incomes of slightly more than $300,000 for joint returns and about half that amount for other returns) account for lower taxes, as shown in the tax rates in Table 2 , Table 3 , and Table 4 . As indicated in those tables, rates increase at somewhat higher levels\u00e2\u0080\u0094particularly for head of household and, to a lesser extent, single returns\u00e2\u0080\u0094before declining again. ", "For joint returns, the larger rate reductions occur between $156,150 and $316,000 of taxable income, as well at incomes of $480,050 to $600,000, while these reductions appear at lower income levels for head of household and single returns. Taxpayers are also less likely to pay the alternative minimum tax. Although regular tax rates are lowered, two factors reduce the AMT's scope. One is the significant increase in the AMT exemption. In addition, taxpayers at the upper end of the distribution have smaller itemized deductions for state and local taxes, which are a preference item for the AMT. Larger families also have a reduction in the difference between the regular and AMT base, as personal exemptions and standard deductions were part of that base under prior law, but child credits were not. Replacing personal exemptions for children with the child credit reduces the difference between the AMT and the regular base.", "At higher income levels, losing the full state and local tax deduction can increase tax burdens. The average state and local tax deduction is about 5% of income; evaluated at a 35% or 37% tax rate, the loss is equivalent to a two percentage point change in marginal tax rates. ", "For high-income families with children, the increase in the phaseout levels lowers burdens, particularly as compared to the phaseout for the preexisting tax credit, although the benefit relative to income diminishes as income rises because of the fixed dollar amount. ", "Overall data on distributional effects show significantly larger effects at high income levels, but some of the estimated relatively larger benefit to high-income taxpayers is due to reductions in the tax burden on capital income, including the pass-through deduction (which allows a 20% reduction in capital income for some earnings from unincorporated business) and the lower corporate tax rate, which benefits higher-income individuals, who receive most of the capital income. The effect of structural features at high income levels is ambiguous because the tax change raised tax rates for certain portions of taxable income and lowered them for others, and also capped the state and local tax deduction. "], "subsections": []}, {"section_title": "Treatment of Families with Different Incomes", "paragraphs": ["This section examines the patterns of both vertical equity (how tax rates change as incomes rise) and horizontal equity (how tax rates change across different types of families with the same ability to pay using effective tax rate calculations [taxes as a percentage of income]). These rates can also be compared to those calculated for prior law in a previous CRS report.", "With respect to horizontal equity, this report uses an equivalency scale similar to the one used to calculate variations in poverty lines by family size. An equivalency scale estimates how much income families of different sizes and compositions need to achieve the same standard of living. In defining families that have the same ability to pay, CRS used an adjustment based on a research study that reviewed a broad range of equivalency studies and is similar to that used for adjusting official poverty levels for different family sizes. The scale has a smaller adjustment for children than for adults. The equivalency scale also accounts for the common use of resources (such as a kitchen or bathroom) in a family, which means increases in required income are not proportional to family size. Under this standard, a single person requires about 62% of the income of a married couple; a couple with four children requires about three times the income. Thus, compared to a married couple with no children with $20,000 of income, an equivalent single person would need slightly over $12,000, and a married couple with four children would need $60,000 to have the same standard of living. ", "Provisions included in the calculations are the rate structure, the larger of the standard deduction or itemized deductions (the latter are assumed to be 12.7% of income, with 5.3% of income reflecting the state and local tax deduction included in the alternative minimum tax base, based on the latest tax data), personal exemptions, the earned income credit, the child credit, and the alternative minimum tax. ", " Table 6 reports the 2018 effective tax rates for low- and middle-income taxpayers at different levels of income, for family sizes of up to seven individuals, and for the three basic types of returns\u00e2\u0080\u0094single, joint, and head of household. Table 7 reports the tax rates for higher-income families. The column heading indicates the income level for married couples. Effective tax rates in each column reflect the effective tax rates of families with the same standard of living. The rates for different families should be compared by looking down the columns. For example, in Table 6 , a married couple with no children (the reference family) and $25,000 in income pays 0.4% of their income in taxes, but a married couple with one child with the same ability to pay (i.e., same standard of living at about $30,844 of income) receives a subsidy (i.e., on net they get a refund greater than taxes owed) of 12.1% of their income, whereas a single with an equivalent before-tax standard of living pays 2.2% of income in taxes. Overall, these effective tax rates indicate that low-income families with children receive significant benefits from the income tax, compared to those with similar abilities to pay but without children.", "These numbers assume that taxpayers (and their children) are eligible for both the child credit and the EITC. These are illustrative calculations that do not account for any other tax preferences and are designed to show how the tax law's basic structural, family-related features affect burdens. ", "Across each family type, effective tax rates are progressive, increasing as income increases. Compared to prior law, tax rates change relatively little at the lowest income level due to the lack of change in the earned income credit and because the child credit increases by a limited amount (about $75) for many of the poorest families. As incomes rise into the lower-middle, middle-, and upper-middle-income levels, rates fall slightly for families without children, whereas families with children have significant reductions in effective tax rates due to the increase in the maximum child credit and the increases in the child credit phaseout levels. At the highest income levels, effects range from small rate cuts to small rate increases, which reflect the trade-off between the changes in rates and the reductions in itemized deductions. In contrast with prior law, none of the examples in these tables are subject to the AMT.", "These tables suggest that the pattern of tax burden by family size varies across the income scale, and reflects the interactions of the earned income credit, the child credit, and graduated rates, including phaseout effects. Moreover, the variation across families that have the same ability to pay is substantial. At low incomes, families with children, whether headed by a married couple or a single parent, are favored (i.e., receive significant subsidies from the tax code) because of the EITC and the child credit. The largest negative tax rates tend to accrue to returns with around two or three children, because the largest EITCs are available for three or more children and the child credits increase with the number of children. The rate increases (or rather, negative rates decline in absolute value) because larger families need more income, which may begin to phase them out of the EITC.", "As incomes rise, families with children are still favored, but the largest families have the largest subsidies or the smallest tax rates, because the child credit lowers taxes more for these families. Eventually, large families begin to be penalized because the value of the child credit and personal exemptions relative to income declines and larger families that require more income are pushed up through the rate brackets. As incomes reach very high levels, however, the rates converge as the tax approaches a flat tax. Note that itemized deductions are assumed to be a constant fraction of income, and thus a proportional exclusion, except when the $10,000 limit on state and local tax deductions is binding. ", "Compared to prior law, the new system retains and expands the favorable treatment of families with children through most of the income spectrum. This effect occurs partly because the EITC rate is much lower for single taxpayers or two-member joint returns with no qualifying children than it is for families with children. Also, if one accepts the ability-to-pay standard, the EITC has an inappropriate adjustment for family size. To achieve equal tax rates based on the ability-to-pay standard, the amount on which the EITC applies and the income at which the phaseout begins should be tied to family size but the EITC credit rate should be the same for all families. Changing the rate, as was done in 1990 and retained when the EITC was expanded in 1993, does not accomplish equal treatment across families of different sizes, providing too much adjustment for some families and not enough for others.", "The child credit also contributes to the favorable treatment of families with children, including in the middle- and upper-middle-income levels, where it is not phased out. The greater refundability level, the increased size of the credit beyond that needed to replace the personal exemption at most income levels, and the significantly increased phaseout levels all make the child credit a significant factor in increasing the favorable treatment for families with children.", "Tax rates also differ for families without children (singles and married couples). At most income levels, childless singles have higher effective tax rates than childless married couples. This effect reflects efforts to eliminate marriage penalties, which in turn result in a tax penalty for single individuals. ", "Other aspects of the tax system should also be considered, such as the child care credit and the treatment of married couples where only one individual works outside the home. These families are better off because the spouse not employed outside the home can perform services at home that result in cost savings, perform household tasks that increase leisure time for the rest of the family, or enjoy leisure. The value of this time, which is not counted in the measured transactions of the economy, is referred to as imputed income . This imputed income is not taxed, and it would probably be impractical to tax it. Nevertheless, the tax burden as a percentage of cash plus imputed income is lower for such a family."], "subsections": []}]}, {"section_title": "Marriage Penalties and Bonuses", "paragraphs": ["Because of the progressive rate structure, taxes can be affected by marriage, introducing either a penalty or a bonus when two individuals get married. Concerns about the marriage penalty reflect a reluctance to penalize marriage in a society that upholds such traditions. As the tax law shifted in the past to reduce the marriage penalty, it also expanded marriage bonuses. Studies of this issue indicate that the tax system favors marriage, conferring significant bonuses on married couples (or penalties on singles).", "The new law retains many of the elements that affect marriage penalties and bonuses, including wider tax brackets for joint returns (which eliminate marriage penalties and produce bonuses for those without children in the middle-income brackets), the more generous rate structure for head of household (which affects penalties and bonuses for families with children), and marriage penalties embedded in the alternative minimum tax. Under the new rate structure, the income levels at which marriage penalties are precluded because of the doubling of the brackets are higher. At the same time, the law also introduces a new potential source of a marriage penalty at high income levels by retaining the same dollar cap on state and local tax deductions for both joint and single returns. ", "These choices have consequences not only for incentives but for equitable treatment of singles and married couples. As shown above in Table 6 and Table 7 , in the middle-income brackets, where the marriage penalty was largely eliminated, singles with the same ability to pay are subject to higher taxes than married couples. Singles benefit at lower income levels because their lower required incomes do not phase them out of the earned income credit. In contrast, lower-income married taxpayers are more likely to be subject to marriage penalties because of the EITC's structure. Under prior law, at very high incomes, married couples may have paid a larger share of their income because of marriage penalties that remained in the AMT and the upper brackets of the rate structure, but these effects do not appear in any of the current-law examples, in part because the AMT does not apply.", "This section explores the treatment of married couples and singles in an additional dimension by assuming that singles live together and share the same economies of scale that married couples do. These individuals could be roommates, but they could also be partners who differ from married couples only in that they are not legally married. Single individuals who live together in the same fashion as married couples have the same ability to pay with the same income. However, remaining single can alter their tax liability, causing it to either rise or fall, depending on the split of income between the two individuals. If one individual earns most of the income, tax burdens will be higher for two individuals who are not married than for a married couple with the same total income, because the standard deductions are smaller and the rate brackets narrower (up to the 35% tax rate, tax brackets for singles are half those of joint returns). If income is evenly split between the two individuals, there can be a benefit from remaining single. Married individuals have to combine their income, and the rate brackets for joint returns in the higher-income brackets, although wider than those for single individuals, are not twice as wide. At all levels they are not twice as wide as for heads of household. In addition, the earned income credit contains marriage penalties and bonuses.", "The marriage penalty or bonus might, in the context of the measures of household ability to pay, also be described as a singles bonus or penalty. In any case, in considering this issue's incentive and equity dimensions, these families' tax rates should be compared across family marital status at each income level. ", " Table 8 and Table 9 show the average effective tax rates for married couples and for unmarried couples with the same combined income, both where income is evenly split and where all income is received by one person. In one case there is no child and in the other one child. These income splits represent the extremes of the marriage penalty and the marriage bonus. The same reference income classes and equivalency scales as in Table 6 and Table 7 are used.", "Note that uneven income splits in the case of a family with a child can yield different results depending on whether the individual with the income can claim the child and therefore receive the benefits of the head-of-household rate structure, the higher earned income credit, the dependency exemption, and the child credit. If not, that individual files as a single.", "The tables indicate that both marriage penalties and bonuses persist. In the case of families without children, however, penalties do not exist in the middle-income ranges, only bonuses. In this case, singles who live together and have uneven incomes would see their tax rates fall if they got married. Both bonuses and penalties exist at the lower income levels because of the earned income tax credit. If income is evenly split, the phaseout ranges are not reached as quickly for singles because each of the partners has only half the income. If all of the income is earned by one of the singles in the single partnership, phaseout of the credit still occurs and the individual also has a smaller standard deduction, and thus pays a higher tax. The smaller deductions and narrower rate brackets also cause the higher tax rates through the middle-income brackets. At very high income levels, marriage penalties can also occur. The penalty is due to not doubling the rate brackets after the 12% bracket. In addition, the dollar limit on the deduction of state and local taxes is the same for married couples and individual taxpayers, so that if two singles with high incomes and high state and local taxes marry, they can lose $10,000 in deductions. At the same time, taxpayers tend not to be subject to the AMT, which retains marriage penalties (by having an exemption for joint returns that is less than twice that for single returns).", "As compared to prior law, marriage penalties at higher income levels are mixed. In some cases penalties are lower, presumably due to the extension of the reach of the double width of rate brackets for singles versus joint returns, as well as lower tax rates in general and the AMT's more limited reach. In some cases penalties are higher due to the state and local tax deduction limit. ", "Matters are more complex for families with children. Table 8 and Table 9 illustrate this effect for a family with one child. At the lowest income level, and a 50/50 split, one of the singles files a single return with a very small negative rate because of the small earned income credit for those without children, whereas the other claims a child and has a much higher negative tax rate than a married couple because there is no phaseout of benefits. The combination also involves a smaller child credit because it is not completely refundable. The combined result is a lower benefit than that of a married couple, and thus there is a marriage bonus. This income split eventually leads to a marriage penalty because of the favorable head-of-household standard deduction and rate structure, as well as the state and local tax deduction cap.", "With one of the pair earning all of the income, the results depend on whether the partner with the income can claim the child. If that person cannot, the tax burden is higher throughout the income scale, reflecting the loss of benefits from the child via credits and the rate structure. If the person with the income can claim the child (thus using the more favorable head-of-household schedule and receiving a child credit), joint returns are still favored (except at the lowest income levels), but not by nearly as much.", "Which of these last two assumptions seems more likely depends on the circumstances. When couples divorce, they typically move to different residences, and the most usual outcome is that the mother, who typically has lower earnings, has the child. According to the Census Bureau, 83% of children who live with one parent live with their mother. In that case, there would likely be a marriage bonus. If the couple divorce but live together, presumably the higher-income spouse would claim the child. However, if a couple never married and the child is only related to one parent, that person, more likely the mother and more likely to have low income, would claim the child. If such a couple married and had low incomes, they could obtain the earned income credit, and a study of low-income families indicates that this latter effect, the bonus, is the EITC's most common effect. ", "Which circumstances are more characteristic of the economy? Note first that, although people refer to the marriage penalty for a particular family situation or the aggregate size of the marriage penalty, it is really not possible, in many cases, to determine the size of the penalty or bonus. The effect of the assignment of a child is demonstrated in Table 8 and Table 9 , but other features matter. Only when a married couple has only earned income, no dependent children, and no itemized deductions or other special characteristics, and only if it is assumed that their behavior would not have been different if their marital status had been different, can one actually measure the size of the marriage penalty or bonus. There is no way to know which of the partners would have custody of the children and therefore be eligible for head-of-household status and the accompanying personal exemptions and child credits.", "If the marriage bonus is viewed instead as a singles penalty on cohabitating partners, the share of the population affected is limited to less than 10% of households. About a third of those have children. Cohabitating partners are more likely than roommates to fully enjoy the consumption of joint goods that would equate them to married couples."], "subsections": []}, {"section_title": "Conclusion", "paragraphs": ["The 2017 tax revision continued, and in some cases expanded, the favorable treatment of families with children in the lower and middle income levels on an ability-to-pay basis. At the lowest incomes, this treatment was maintained largely due to the EITC's preexisting effects, although increasing the refundable child tax credit added to this favorable treatment. More favorable treatment was increased and extended up through the income classes because of the increase in the child tax credit amount and the increase in the income level at which the credit is phased out. At the highest income levels, rate changes tended to favor joint returns over singles and heads of household, largely due to the rate structure.", "As was the case with prior law, marriage bonuses occur through most income brackets, but penalties can exist at the lower end of the income distribution, particularly for families with children in which the lower income earner has custody of children, due to the earned income credit and the child credit. The rate structure continues to lead to a potential marriage penalty at high income levels. The 2017 revisions also introduced a new provision that could contribute to the marriage penalty at high incomes: the $10,000 limit on itemized deductions for state and local taxes, which is the same amount for married and single individuals."], "subsections": []}]}}
{"id": "R45915", "title": "Immigration Detention: A Legal Overview", "released_date": "2019-09-16T00:00:00", "summary": ["The Immigration and Nationality Act (INA) authorizes\u00e2\u0080\u0094and in some cases requires\u00e2\u0080\u0094the Department of Homeland Security (DHS) to detain non-U.S. nationals (aliens) arrested for immigration violations that render them removable from the United States. An alien may be subject to detention pending an administrative determination as to whether the alien should be removed, and, if subject to a final order of removal, pending efforts to secure the alien's removal from the United States. The immigration detention scheme is multifaceted, with different rules that turn on several factors, such as whether the alien is seeking admission into the United States or has been lawfully admitted into the country; whether the alien has engaged in certain proscribed conduct; and whether the alien has been issued a final order of removal. In many instances DHS maintains discretion to release an alien from custody. But in some instances, such as when an alien has committed specified crimes, the governing statutes have been understood to allow release from detention only in limited circumstances.", "The immigration detention scheme is mainly governed by four INA provisions that specify when an alien may be detained:", "1. INA Section 236(a) generally authorizes the detention of aliens pending removal proceedings and permits aliens who are not subject to mandatory detention to be released on bond or on their own recognizance; 2. INA Section 236(c) generally requires the detention of aliens who are removable because of specified criminal activity or terrorist-related grounds after release from criminal incarceration; 3. INA Section 235(b) generally requires the detention of applicants for admission, such as aliens arriving at a designated port of entry as well as certain other aliens who have not been admitted or paroled into the United States, who appear subject to removal; and 4. INA Section 241 (a) generally requires the detention of aliens during a 90-day period after the completion of removal proceedings and permits (but does not require) the detention of certain aliens after that period.", "These provisions confer substantial authority upon DHS to detain removable aliens, but that authority has been subject to legal challenge, particularly in cases involving the prolonged detention of aliens without bond. DHS's detention authority is not unfettered, and due process considerations may inform the duration and conditions of aliens' detention. In 2001, the Supreme Court in Zadvydas v. Davis construed the statute governing the detention of aliens following an order of removal as having implicit, temporal limitations. The Court reasoned that construing the statute to permit the indefinite detention of lawfully admitted aliens after their removal proceedings would raise \"serious constitutional concerns.\" In 2003, however, the Court in Demore v. Kim ruled that the mandatory detention of certain aliens pending their removal proceedings, at least for relatively brief periods, was constitutionally permissible. The interplay between the Zadvydas and Demore rulings has called into question whether the constitutional standards for detention prior to a final order of removal differ from those governing detention after a final order is issued. Several lower courts have interpreted Demore to mean that mandatory detention pending removal proceedings is not per se unconstitutional, but that Zadvydas cautions that if this detention becomes \"prolonged\" it may not comport with due process requirements.", "Additionally, some lower courts have recognized constraints on DHS's detention power that the Supreme Court has not yet considered. For instance, some courts have ruled that the Due Process Clause requires aliens in removal proceedings to have bond hearings when detention becomes prolonged, where the government bears the burden of proving that the alien's continued detention is justified. In addition, a settlement agreement known as the \" Flores Settlement,\" which is enforced by a federal district court, currently limits DHS's ability to detain alien minors who are subject to removal. Further, while litigation concerning immigration detention has largely centered on the duration of detention, some courts have considered challenges to the conditions of immigration confinement, generally under the standards applicable to pretrial detention in criminal cases. Some courts have also restricted DHS's ability to take custody of aliens detained by state or local law enforcement officials upon issuance of \"immigration detainers.\"", "In short, while DHS generally has broad authority over the detention of aliens, that authority is not without limitation. As courts continue to grapple with legal and constitutional challenges to immigration detention, Congress may consider legislative options that clarify the scope of the federal government's detention authority."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["The Immigration and Nationality Act (INA) authorizes\u00e2\u0080\u0094and in some cases requires\u00e2\u0080\u0094the Department of Homeland Security (DHS) to detain non-U.S. nationals (aliens) arrested for immigration violations that render them removable from the United States. The immigration detention regime serves two primary purposes. First, detention may ensure an apprehended alien's presence at his or her removal hearing and, if the alien is ultimately ordered removed, makes it easier for removal to be quickly effectuated. Second, in some cases detention may serve the additional purpose of alleviating any threat posed by the alien to the safety of the community while the removal process is under way. ", "The INA's detention framework, however, is multifaceted, with different rules turning on whether the alien is seeking initial admission into the United States or was lawfully admitted into the country; whether the alien has committed certain criminal offenses or other conduct rendering him or her a security risk; and whether the alien is being held pending removal proceedings or has been issued a final order of removal. ", "In many cases detention is discretionary, and DHS may release an alien placed in formal removal proceedings on bond, on his or her own recognizance, or under an order of supervision pending the outcome of those proceedings. But in other instances, such as those involving aliens who have committed specified crimes, there are only limited circumstances when the alien may be released from custody.", "This report outlines the statutory and regulatory framework governing the detention of aliens, from an alien's initial arrest and placement in removal proceedings to the alien's removal from the United States. In particular, the report examines the key statutory provisions that specify when an alien may or must be detained by immigration authorities and the circumstances when an alien may be released from custody. The report also discusses the various legal challenges to DHS's detention power and some of the judicially imposed restrictions on that authority. Finally, the report examines how these legal developments may inform Congress as it considers legislation that may modify the immigration detention framework."], "subsections": []}, {"section_title": "Legal and Historical Background", "paragraphs": [], "subsections": [{"section_title": "The Federal Immigration Authority and the Power to Detain Aliens", "paragraphs": ["The Supreme Court has long recognized that the federal government has \"broad, undoubted power over the subject of immigration and the status of aliens,\" including with respect to their admission, exclusion, and removal from the United States. This authority includes the power to detain aliens pending determinations as to whether they should be removed from the country. The Court has predicated this broad immigration power on the government's inherent sovereign authority to control its borders and its relations with foreign nations. Notably, the Court has \"repeatedly emphasized that 'over no conceivable subject is the legislative power of Congress more complete than it is over' the admission of aliens,\" and that \"Congress may make rules as to aliens that would be unacceptable if applied to citizens.\" ", "Despite the government's broad immigration power, the Supreme Court has repeatedly declared that aliens who have physically entered the United States come under the protective scope of the Due Process Clause of the Fifth Amendment, which applies \"to all 'persons' within the United States, including aliens, whether their presence here is lawful, unlawful, temporary, or permanent.\" Due process protections generally include the right to a hearing and a meaningful opportunity to be heard before deprivation of a liberty interest. And one of the core protections of the Due Process Clause is the \"[f]reedom from bodily restraint.\" But while the Supreme Court has recognized that due process considerations may constrain the federal government's exercise of its immigration power, there is some uncertainty regarding when these considerations may be consequential. ", "Generally, aliens seeking initial entry into the United States typically have more limited constitutional protections than aliens present within the country. The Supreme Court has long held that aliens seeking entry into the United States have no constitutional rights regarding their applications for admission, and the government's detention authority in those situations seems least constrained by due process considerations. Thus, in Shaughnessy v. United States ex rel. Mezei , the Supreme Court upheld the indefinite detention of an alien who was denied admission into the United States following a trip abroad. The Court ruled that the alien's \"temporary harborage\" on Ellis Island pending the government's attempts to remove him did not constitute an \"entry\" into the United States, and that he could be \"treated as if stopped at the border.\"", "Nevertheless, some courts have suggested that the constitutional limitations that apply to arriving aliens pertain only to their procedural rights regarding their applications for admission, but do not foreclose the availability of redress when fundamental liberty interests are implicated . Thus, some lower courts have concluded that arriving aliens have sufficient due process protections against unreasonably prolonged detention, and distinguished Mezei as a case involving the exclusion of an alien who potentially posed a danger to national security that warranted the alien's detention. Furthermore, regardless of the extent of their due process protections, detained arriving aliens may be entitled to at least some level of habeas corpus review, in which courts consider whether an individual is lawfully detained by the government.", "But due process considerations become more significant once an alien has physically entered the United States. As discussed above, the Supreme Court has long recognized that aliens who have entered the United States, even unlawfully, are \"persons\" under the Fifth Amendment's Due Process Clause. That said, the Court has also suggested that \"the nature of that protection may vary depending upon [the alien's] status and circumstance.\" In various opinions, the Court has suggested that at least some of the constitutional protections to which an alien is entitled may turn upon whether the alien has been admitted into the United States or developed substantial ties to this country. ", "Consequently, the government's authority to detain aliens who have entered the United States is not absolute. The Supreme Court, for instance, construed a statute authorizing the detention of aliens ordered removed to have implicit temporal limitations because construing it to allow the indefinite detention of aliens ordered removed\u00e2\u0080\u0094at least in the case of lawfully admitted aliens later ordered removed\u00e2\u0080\u0094would raise \"serious constitutional concerns.\" Declaring that the government's immigration power \"is subject to important constitutional limitations,\" the Court has determined that the Due Process Clause limits the detention to \"a period reasonably necessary to secure removal.\" ", "Additionally, while the Supreme Court has recognized the government's authority to detain aliens p ending formal removal proceedings, the Court has not decided whether the extended detention of aliens during those proceedings could give rise to a violation of due process protections. But some lower courts have concluded that due process restricts the government's ability to indefinitely detain at least some categories of aliens pending determinations as to whether they should be removed from the United States.", "In sum, although the government has broad power over immigration, there are constitutional constraints on that power. These constraints may be most significant with regard to the detention of lawfully admitted aliens within the country, and least powerful with regard to aliens at the threshold of initial entry into the United States. "], "subsections": []}, {"section_title": "Development of Immigration Laws Concerning Detention", "paragraphs": ["From the outset, U.S. federal immigration laws have generally authorized the detention of aliens who are subject to removal. The first U.S. law on alien detention was the Alien Enemies Act in 1798, which subjected certain aliens from \"hostile\" nations during times of war to being detained and removed. But Congress passed no other laws on the detention of aliens for nearly a century. Starting in 1875, however, Congress enacted a series of laws restricting the entry of certain classes of aliens (e.g., those with criminal convictions), and requiring the detention of aliens who were excludable under those laws until they could be removed. In construing the government's detention authority, the Supreme Court in 1896 declared that \"[w]e think it clear that detention or temporary confinement, as part of the means necessary to give effect to the provisions for the exclusion or expulsion of aliens, would be valid.\" Over the next few decades, Congress continued to enact laws generally mandating the detention and exclusion of proscribed categories of aliens seeking entry into the United States, as well as aliens physically present in the United States who became subject to removal.", "In 1952, Congress passed the INA, which distinguished between aliens physically arriving in the United States and those who had entered the country. Aliens arriving in the country who were found ineligible for entry were subject to \"exclusion,\" and those already present in the United States who were found to be subject to expulsion were deemed \"deportable.\" For aliens placed in exclusion proceedings, detention generally was required, unless immigration authorities, based on humanitarian concerns, granted the alien \"parole,\" allowing the alien to enter and remain in the United States pending a determination on whether he or she should be admitted. In the case of deportable aliens, detention originally was authorized but not required, and aliens in such proceedings could be released on bond or \"conditional parole.\" Congress later amended the INA to require, in deportation proceedings, the detention of aliens convicted of aggravated felonies, and authorized their release from custody only in limited circumstances, such as when the alien was a lawful permanent resident (LPR) who did not pose a threat to the community or a flight risk. ", "In 1996, Congress enacted the Illegal Immigration Reform and Immigrant Responsibility Act (IIRIRA), which made sweeping changes to the federal immigration laws. IIRIRA replaced the INA's exclusion/deportation framework, which turned on whether an alien had physically entered the United States, with a new framework that turned on whether an alien had been lawfully admitted into the country by immigration authorities. Aliens who had not been admitted, including those who may have unlawfully entered the country, could be barred entry or removed from the country based on specified grounds of inadmissibility listed under INA Section 212. Aliens who had been lawfully admitted, however, could be removed if they fell under grounds of deportability specified under INA Section 237. A standard, \"formal\" removal proceeding was established for deportable aliens and most categories of inadmissible aliens. But IIRIRA created a new \"expedited removal\" process that applied to a subset of inadmissible aliens. This process applies to arriving aliens and certain aliens who recently entered the United States without inspection, when those aliens lack valid entry documents or attempted to procure their admission through fraud or misrepresentation.", "IIRIRA generally authorized (but did not require) immigration authorities to detain aliens believed to be removable pending those aliens' formal removal proceedings, but permitted their release on bond or \"conditional parole.\" IIRIRA, however, required the detention of aliens who were inadmissible or deportable based on the commission of certain enumerated crimes or for terrorist-related grounds, generally with no possibility of release from custody. IIRIRA also generally required the detention of \"applicants for admission,\" including aliens subject to expedited removal, pending determinations as to whether they should be removed (such aliens, however, could still be paroled into the United States by immigration officials in their discretion). This mandatory detention requirement has been applied even if those aliens were subsequently transferred to formal removal proceedings. Finally, IIRIRA created a detention scheme in which aliens with final orders of removal became subject to detention during a 90-day period pending their removal, and the government could (but was not required to) continue to detain some of those aliens after that period. ", "A table showing the development of these immigration detention laws can be found in Table A-1 ."], "subsections": []}]}, {"section_title": "Modern Statutory Detention Framework", "paragraphs": ["Since IIRIRA's enactment, the statutory framework governing detention has largely remained constant. This detention framework is multifaceted, with different rules turning on whether the alien is seeking admission into the United States or was lawfully admitted within the country; whether the alien has committed certain enumerated criminal or terrorist acts; and whether the alien has been issued a final administrative order of removal. Four provisions largely govern the current immigration detention scheme:", "1. INA Section 236(a) generally authorizes the detention of aliens pending formal removal proceedings and permits (but does not require) aliens who are not subject to mandatory detention to be released on bond or their own recognizance; 2. INA Section 236(c) generally requires the detention of aliens who are removable because of specified criminal activity or terrorist-related grounds; 3. INA Section 235(b) generally requires the detention of applicants for admission (e.g., aliens arriving at a designated port of entry) who appear subject to removal; and 4. INA Section 241(a) generally mandates the detention of aliens during a 90-day period after formal removal proceedings, and authorizes (but does not require) the continued detention of certain aliens after that period.", "While these statutes apply to distinct classes of aliens at different phases of the removal process, the statutory detention framework \"is not static,\" and DHS's detention authority \"shifts as the alien moves through different phases of administrative and judicial review.\"", "This section explores these detention statutes and their implementing regulations, including administrative and judicial rulings that inform their scope and application. (Other detention provisions in the INA that apply to small subsets of non-U.S. nationals, such as alien crewmen, or arriving aliens inadmissible for health-related reasons, are not addressed in this report. )", "A table providing a comparison of these major INA detention statutes can be found in Table A-2 ."], "subsections": [{"section_title": "Discretionary Detention Under INA Section 236(a)", "paragraphs": ["INA Section 236(a) is the \"default rule\" for aliens placed in removal proceedings. The statute is primarily administered by Immigration and Customs Enforcement (ICE), the agency within DHS largely responsible for immigration enforcement in the interior of the United States. Section 236(a) authorizes immigration authorities to arrest and detain an alien pending his or her formal removal proceedings. Detention under INA Section 236(a) is discretionary, and immigration authorities are not required to detain an alien subject to removal unless the alien falls within one of the categories of aliens subject to mandatory detention (e.g., aliens convicted of specified crimes under INA Section 236(c), discussed later in this report). ", "If ICE arrests and detains an alien under INA Section 236(a), and the alien is not otherwise subject to mandatory detention, the agency has two options: ", "1. it \"may continue to detain the arrested alien\" pending the removal proceedings; or 2. it \"may release the alien\" on bond in the amount of at least $1500, or on \"conditional parole.\" ", "Generally, upon release (whether on bond or conditional parole), the alien may not receive work authorization unless the alien is otherwise eligible (e.g., the alien is an LPR). And ICE may at any time revoke a bond or conditional parole and bring the alien back into custody.", "In the event of an alien's release, ICE may opt to enroll the alien in an Alternatives to Detention (ATD) program, which allows ICE the ability to monitor and supervise the released alien to ensure his or her eventual appearance at a removal proceeding."], "subsections": [{"section_title": "Initial Custody Determination and Administrative Review", "paragraphs": ["Following the arrest of an alien not subject to mandatory detention, an immigration officer may, at any time during formal removal proceedings, determine whether the alien should remain in custody or be released. But when an alien is arrested without a warrant, DHS regulations provide that the immigration officer must make a custody determination within 48 hours of the alien's arrest, unless there is \"an emergency or other extraordinary circumstance\" that requires \"an additional reasonable period of time\" to make the custody determination. DHS has defined \"emergency or other extraordinary circumstance\" to mean a \"significant infrastructure or logistical disruption\" (e.g., natural disaster, power outage, serious civil disturbance); an \"influx of large numbers of detained aliens that overwhelms agency resources\"; and other unique facts and circumstances \"including, but not limited to, the need for medical care or a particularized compelling law enforcement need.\"", "After ICE's initial custody determination, an alien may, at any time during the removal proceedings, request review of that decision at a bond hearing before an immigration judge (IJ) within the Department of Justice's (DOJ's) Executive Office for Immigration Review. While the alien may request a bond hearing, INA Section 236(a) does not require a hearing to be provided at any particular time. If there is a bond hearing, regulations specify that it \"shall be separate and apart from, and shall form no part of, any deportation or removal hearing or proceeding.\" During these bond proceedings, the IJ may, under INA Section 236(a), determine whether to keep the alien in custody or release the alien, and the IJ also has authority to set the bond amount. Following the IJ's custody decision, the alien may obtain a later bond redetermination only \"upon a showing that the alien's circumstances have changed materially since the prior bond redetermination.\"", "Both the alien and DHS may appeal the IJ's custody or bond determination to the Board of Immigration Appeals (BIA), the highest administrative body charged with interpreting federal immigration laws. The filing of an appeal generally will not stay the IJ's decision or otherwise affect the ongoing removal proceedings. The BIA, however, may stay the IJ's custody determination on its own motion or when DHS appeals that decision and files a motion for a discretionary stay. Moreover, if ICE had determined that the alien should not be released or had set bond at $10,000 or greater, any order of the IJ authorizing release (on bond or otherwise) is automatically stayed upon DHS's filing of a notice of intent to appeal with the immigration court within one business day of the IJ's order, and the IJ's order will typically remain held in abeyance pending the BIA's decision on appeal."], "subsections": []}, {"section_title": "Standard and Criteria for Making Custody Determinations", "paragraphs": ["Following the enactment of IIRIRA, the DOJ promulgated regulations to govern discretionary detention and release decisions under INA Section 236(a). These regulations require the alien to \"demonstrate to the satisfaction of the officer that . . . release would not pose a danger to property or persons, and that the alien is likely to appear for any future proceeding.\" Based on this regulation, the BIA has held that the alien has the burden of showing that he or she should be released from custody, and \"[o]nly if an alien demonstrates that he does not pose a danger to the community should an [IJ] continue to a determination regarding the extent of flight risk posed by the alien.\" ", "Some federal courts, however, have held that if an alien's detention under INA Section 236(a) becomes prolonged, a bond hearing must be held where the burden shifts to the government to prove that the alien's continued detention is warranted. For example, the U.S. Court of Appeals for the Ninth Circuit (Ninth Circuit ) has reasoned that, given an individual's \"substantial liberty interest\" in avoiding physical restraint, the government should prove by clear and convincing evidence that the detention is justified. The Supreme Court has not yet addressed the proper allocation of the burden of proof for custody determinations under INA Section 236(a). On the one hand, the Court has held that the statute does not itself require the government to prove that an alien's continued detention is warranted or to afford the alien a bond hearing. On the other hand, the Court has not decided whether due process considerations nonetheless compel the government to bear the burden of proving that the alien should remain in custody if detention becomes prolonged. ", "While INA Section 236(a) and its implementing regulations provide standards for determining whether an alien should be released from ICE custody, they do not specify the factors that may be considered in weighing a detained alien's potential danger or flight risk. But the BIA has instructed that an IJ may consider, among other factors, these criteria in assessing an alien's custody status:", "whether the alien has a fixed address in the United States; the alien's length of residence in the United States; whether the alien has family ties in the United States; the alien's employment history; the alien's record of appearance in court; the alien's criminal record, including the extent, recency, and seriousness of the criminal offenses; the alien's history of immigration violations; any attempts by the alien to flee prosecution or otherwise escape from authorities; and the alien's manner of entry to the United States. ", "The BIA and other authorities have generally applied these criteria in reviewing custody determinations. In considering an alien's danger to the community or flight risk, \"any evidence in the record that is probative and specific can be considered.\" The BIA has also instructed that, in deciding whether an alien presents a danger to the community and should not be released from custody, an IJ should consider both direct and circumstantial evidence of dangerousness, including whether the facts and circumstances raise national security considerations. In addition, although bond proceedings are \"separate and apart from\" formal removal proceedings, evidence obtained during a removal hearing \"may be considered during a custody hearing so long as it is made part of the bond record.\""], "subsections": []}, {"section_title": "Limitations to Administrative Review of Custody Determinations", "paragraphs": ["Under DOJ regulations, an IJ may not determine the conditions of custody for classes of aliens subject to mandatory detention. In these circumstances, ICE retains exclusive authority over the alien's custody status. These limitations apply to", "arriving aliens in formal removal proceedings (including arriving aliens paroled into the United States); aliens in formal removal proceedings who are deportable on certain security and related grounds (e.g., violating espionage laws, criminal activity that \"endangers public safety or national security,\" terrorist activities, severe violations of religious freedom); and aliens in formal removal proceedings who are subject to mandatory detention under INA Section 236(c) based on the commission of certain enumerated crimes.", "Although aliens who fall within these categories may not request a custody determination before an IJ, they may still seek a redetermination of custody conditions from ICE. In addition, aliens detained under INA Section 236(c) based on criminal or terrorist-related conduct may request a determination by an IJ that they do not properly fall within that designated category, and that they are thus entitled to a bond hearing."], "subsections": []}, {"section_title": "Judicial Review of Custody Determinations", "paragraphs": ["An alien may generally request review of ICE's custody determination at a bond hearing before an IJ, and the alien may also appeal the IJ's custody decision to the BIA. INA Section 236(e), however, expressly bars judicial review of a decision whether to detain or release an alien who is subject to removal:", "The Attorney General's discretionary judgment regarding the application of this section shall not be subject to review. No court may set aside any action or decision by the Attorney General under this section regarding the detention or release of any alien or the grant, revocation, or denial of bond or parole.", "Even so, the Supreme Court has determined that, absent clear congressional intent, INA provisions barring judicial review do not foreclose the availability of review in habeas corpus proceedings because \"[i]n the immigration context, 'judicial review' and 'habeas corpus' have historically different meanings.\" Thus, despite INA Section 236(e)'s limitation on judicial review, the Court has held that the statute does not bar federal courts from reviewing, in habeas corpus proceedings, an alien's statutory or constitutional challenge to his detention. The Court has reasoned that an alien's challenge to \"the statutory framework\" permitting his detention is distinct from a challenge to the \"discretionary judgment\" or operational \"decision\" whether to detain the alien, which is foreclosed from judicial review under INA Section 236(e). Lower courts have similarly held that they retain jurisdiction to review habeas claims that raise constitutional or statutory challenges to detention. For that reason, although a detained alien may not seek judicial review of the government's discretionary decision whether to keep him or her detained, the alien may challenge the legal authority for that detention under the federal habeas statute.", "The Supreme Court has also considered whether a separate statute, INA Section 242(b)(9), bars judicial review of detention challenges. That statute provides:", "Judicial review of all questions of law and fact, including interpretation and application of constitutional and statutory provisions, arising from any action taken or proceeding brought to remove an alien from the United States under this subchapter shall be available only in judicial review of a final order [of removal] under this section.", "The Court has construed INA Section 242(b)(9) as barring review of three specific actions (except as part of the review of a final order of removal): (1) an order of removal, (2) the government's decision to seek removal (including the decision to detain the alien), and (3) the process by which an alien's removability would be determined. But the Court has declined to read the statute as barring all claims that could technically \"arise from\" one of those three actions. Thus, the Court has held that INA Section 242(b)(9) does not bar review of claims challenging the government's authority to detain aliens because such claims do not purport to challenge an order of removal, the government's decision to seek removal, or the process by which an alien's removability is determined. "], "subsections": []}]}, {"section_title": "Mandatory Detention of Criminal Aliens Under INA Section 236(c)", "paragraphs": ["While INA Section 236(a) generally authorizes immigration officials to detain aliens pending their formal removal proceedings, INA Section 236(c) requires the detention of aliens who are subject to removal because of specified criminal or terrorist-related grounds."], "subsections": [{"section_title": "Aliens Subject to Detention Under INA Section 236(c)", "paragraphs": ["INA Section 236(c)(1) covers aliens who fall within one of four categories:", "1. An alien who is inadmissible under INA Section 212(a)(2) based on the commission of certain enumerated crimes, including a crime involving moral turpitude, a controlled substance violation, a drug trafficking offense, a human trafficking offense, money laundering, and any two or more criminal offenses resulting in a conviction for which the total term of imprisonment is at least five years. 2. An alien who is deportable under INA Section 237(a)(2) based on the conviction of certain enumerated crimes, including an aggravated felony, two or more crimes involving moral turpitude not arising out of a single scheme of criminal misconduct, a controlled substance violation (other than a single offense involving possession of 30 grams or less of marijuana), and a firearm offense. 3. An alien who is deportable under INA Section 237(a)(2)(A)(i) based on the conviction of a crime involving moral turpitude (generally committed within five years of admission) for which the alien was sentenced to at least one year of imprisonment. 4. An alien who is inadmissible or deportable for engaging in terrorist activity, being a representative or member of a terrorist organization, being associated with a terrorist organization, or espousing or inciting terrorist activity.", "The statute instructs that ICE \"shall take into custody any alien\" who falls within one of these categories \"when the alien is released [from criminal custody], without regard to whether the alien is released on parole, supervised release, or probation, and without regard to whether the alien may be arrested or imprisoned again for the same offense.\""], "subsections": []}, {"section_title": "Prohibition on Release from Custody Except in Special Circumstances", "paragraphs": ["While INA Section 236(c)(1) requires ICE to detain aliens who are removable on enumerated criminal or terrorist-related grounds, INA Section 236(c)(2) provides that ICE \"may release an alien described in paragraph (1) only if\" the alien's release \"is necessary to provide protection to a witness, a potential witness, a person cooperating with an investigation into major criminal activity, or an immediate family member or close associate of a witness, potential witness, or person cooperating with such an investigation,\" and the alien shows that he or she \"will not pose a danger to the safety of other persons or of property and is likely to appear for any scheduled proceeding.\" Under the statute, \"[a] decision relating to such release shall take place in accordance with a procedure that considers the severity of the offense committed by the alien.\"", "Without these special circumstances, an alien detained under INA Section 236(c) generally must remain in custody pending his or her removal proceedings. Furthermore, given the mandatory nature of the detention, the alien may not be released on bond or conditional parole, or request a custody redetermination at a bond hearing before an IJ."], "subsections": []}, {"section_title": "Limited Review to Determine Whether Alien Falls Within Scope of INA Section 236(c)", "paragraphs": ["Although an alien detained under INA Section 236(c) has no right to a bond hearing before an IJ, DOJ regulations allow the alien to seek an IJ's determination \"that the alien is not properly included\" within the category of aliens subject to mandatory detention under INA Section 236(c). The BIA has determined that, during this review, the IJ should conduct an independent assessment, rather than a \"perfunctory review,\" of DHS's decision to charge the alien with one of the specified criminal or terrorist-related grounds of removability under INA Section 236(c). According to the BIA, the alien is not \"properly included\" within the scope of INA Section 236(c) if the IJ concludes that DHS \"is substantially unlikely to establish at the merits hearing, or on appeal, the charge or charges that would otherwise subject the alien to mandatory detention.\" If the IJ determines that the alien is not properly included within INA Section 236(c), the IJ may then consider whether the alien is eligible for bond under INA Section 236(a)."], "subsections": []}, {"section_title": "Constitutionality of Mandatory Detention", "paragraphs": ["The mandatory detention requirements of INA Section 236(c) have been challenged as unconstitutional but, to date, none of these challenges have succeeded. In Demore v. Kim , an LPR (Kim) who had been detained under INA Section 236(c) for six months argued that his detention violated his right to due process because immigration authorities had made no determination that he was a danger to society or a flight risk. The Ninth Circuit upheld a federal district court's ruling that INA Section 236(c) was unconstitutional. The Ninth Circuit determined that INA Section 236(c) violated Kim's right to due process as an LPR because it afforded him no opportunity to seek bail.", "The Supreme Court reversed the Ninth Circuit's decision, holding that mandatory detention of certain aliens pending removal proceedings was \"constitutionally permissible.\" The Court noted that it had previously \"endorsed the proposition that Congress may make rules as to aliens that would be unacceptable if applied to citizens,\" and the Court also cited its \"longstanding view that the Government may constitutionally detain deportable aliens during the limited period necessary for their removal proceedings, . . .\" The Court concluded that \"Congress, justifiably concerned that deportable criminal aliens who are not detained continue to engage in crime and fail to appear for their removal hearings in large numbers, may require that persons such as [Kim] be detained for the brief period necessary for their removal proceedings.\"", "The Court also distinguished its 2001 decision in Zadvydas v. Davis , where it declared that \"serious constitutional concerns\" would be raised if lawfully admitted aliens were indefinitely detained after removal proceedings against them had been completed. The Court reasoned that, unlike the post-order of removal detention statute at issue in Zadvydas , INA Section 236(c) \"governs detention of deportable criminal aliens pending their removal proceedings ,\" and thus \"serves the purpose of preventing deportable criminal aliens from fleeing prior to or during their removal proceedings, . . .\" Yet in Zadvydas , removal was \"no longer practically attainable\" for the detained aliens following the completion of their proceedings, and so their continued detention \"did not serve its purported immigration purpose.\" The Court further distinguished Zadvydas because that case involved a potentially indefinite period of detention, while detention under INA Section 236(c) typically lasts for a \"much shorter duration\" and has a \"definite termination point\"\u00e2\u0080\u0094the end of the removal proceedings.", "Although the Supreme Court in Demore ruled that mandatory detention pending removal proceedings is not unconstitutional per se, the Court did not address whether there are any constitutional limits to the duration of such detention under INA Section 236(c). Some lower courts, however, have construed Demore to apply only to relatively brief periods of detention. Ultimately, in Jennings v. Rodriguez , the Supreme Court held that DHS has the statutory authority to indefinitely detain aliens pending their removal proceedings, but did not decide whether such prolonged detention is constitutionally permissible."], "subsections": []}, {"section_title": "Meaning of \"When the Alien Is Released\"", "paragraphs": ["INA Section 236(c)(1) instructs that ICE \"shall take into custody any alien\" who falls within one of the enumerated criminal or terrorist-related grounds \" when the alien is released \" from criminal custody. And under INA Section 236(c)(2), ICE may not release \"an alien described in paragraph (1)\" except for witness protection purposes. ", "In its 2019 decision in Nielsen v. Preap , the Supreme Court held that INA Section 236(c)'s mandatory detention scheme covers any alien who has committed one of the enumerated criminal or terrorist-related offenses, no matter when the alien had been released from criminal incarceration. The Court observed that INA Section 236(c)(2)'s mandate against release applies to \"an alien described in paragraph (1)\" of that statute, and that INA Section 236(c)(1), in turn, describes aliens who have committed one of the enumerated crimes. The Court determined that, although INA Section 236(c)(1) instructs that such aliens be taken into custody \"when the alien is released,\" the phrase \"when . . . released\" does not describe the alien, and \"plays no role in identifying for the [DHS] Secretary which aliens she must immediately arrest.\" The Court thus held that the scope of aliens subject to mandatory detention under INA Section 236(c) \"is fixed by the predicate offenses identified\" in INA Section 236(c)(1), no matter when the alien was released from criminal custody.", "The Court also opined that, even if INA Section 236(c) requires an alien to be detained immediately upon release from criminal custody, ICE's failure to act promptly would not bar the agency from detaining the alien without bond. The Court relied, in part, on its 1990 decision in United States v. Montalvo-Murillo , which held that the failure to provide a criminal defendant a prompt bond hearing as required by federal statute did not mandate the defendant's release from criminal custody. Citing Montalvo-Murillo , the Court in Preap recognized the principle that if a statute fails to specify a penalty for the government's noncompliance with a statutory deadline, the courts will not \"'impose their own coercive sanction.'\" In short, the Court declared , \"it is hard to believe that Congress made [ICE's] mandatory detention authority vanish at the stroke of midnight after an alien's release\" from criminal custody.", "The Court thus reversed a Ninth Circuit decision that had restricted the application of INA Section 236(c) to aliens detained \"promptly\" upon their release from criminal custody, but noted that its ruling on the proper interpretation of INA Section 236(c) \"does not foreclose as-applied challenges\u00e2\u0080\u0094that is, constitutional challenges to applications of the statute as we have now read it.\"", "In sum, based on the Court's ruling in Preap , INA Section 236(c) authorizes ICE to detain covered aliens without bond pending their formal removal proceedings, regardless of whether they were taken into ICE custody immediately or long after their release from criminal incarceration. That said, the Court has left open the question of whether the mandatory detention of aliens long after their release from criminal custody is constitutionally permissible. "], "subsections": []}]}, {"section_title": "Mandatory Detention of Applicants for Admission Under INA Section 235(b)", "paragraphs": ["The INA provides for the mandatory detention of aliens who are seeking initial entry into the United States, or who have entered the United States without inspection, and who are believed to be subject to removal. Under INA Section 235(b), an \"applicant for admission,\" defined to include both an alien arriving at a designated port of entry and an alien present in the United States who has not been admitted, is generally detained pending a determination about whether the alien should be admitted into the United States. The statute thus covers aliens arriving at the U.S. border (or its functional equivalent), as well as aliens who had entered the United States without inspection, and are later apprehended within the country. ", "The statute's mandatory detention scheme covers (1) applicants for admission who are subject to a streamlined removal process known as \"expedited removal\" and (2) applicants for admission who are not subject to expedited removal, and who are placed in formal removal proceedings."], "subsections": [{"section_title": "Applicants for Admission Subject to Expedited Removal", "paragraphs": ["INA Section 235(b)(1) provides for the expedited removal of arriving aliens who are inadmissible under INA Section 212(a)(6)(C) or (a)(7) because they lack valid entry documents or have attempted to procure admission by fraud or misrepresentation. The statute also authorizes the Secretary of Homeland Security to expand the use of expedited removal to aliens present in the United States without being admitted or paroled if they have been in the country less than two years and are inadmissible on the same grounds. Based on this authority, DHS has employed expedited removal mainly to (1) arriving aliens; (2) aliens who arrived in the United States by sea within the last two years, who have not been admitted or paroled by immigration authorities; and (3) aliens found in the United States within 100 miles of the border within 14 days of entering the country, who have not been admitted or paroled by immigration authorities. More recently, however, DHS has expanded the use of expedited removal to aliens who have not been admitted or paroled, and who have been in the United States for less than two years (a legal challenge to this expansion is pending at the time of this report's publication).", "Generally, an alien subject to expedited removal may be removed without a hearing or further review unless the alien indicates an intention to apply for asylum or a fear of persecution if removed to a particular country. If the alien indicates an intention to apply for asylum or a fear of persecution, he or she will typically be referred to an asylum officer within DHS's U.S. Citizenship and Immigration Services (USCIS) to determine whether the alien has a \"credible fear\" of persecution or torture. If the alien establishes a credible fear, he or she will be placed in \"formal\" removal proceedings under INA Section 240, and may pursue asylum and related protections."], "subsections": [{"section_title": "Detention During Expedited Removal Proceedings", "paragraphs": ["INA Section 235(b)(1) and DHS regulations provide that an alien \"shall be detained\" pending a determination on whether the alien is subject to expedited removal, including during any credible fear determination; and if the alien is found not to have a credible fear of persecution or torture, the alien will remain detained until his or her removal. Typically, the alien will be initially detained by Customs and Border Protection (CBP) for no more than 72 hours for processing (e.g., fingerprints, photographs, initial screening), and the alien will then be transferred to ICE custody pending a credible fear determination if the alien is subject to expedited removal and requests asylum or expresses a fear of persecution. ", "Under INA Section 212(d)(5), however, DHS may parole an applicant for admission (which includes an alien subject to expedited removal) on a case-by-case basis \"for urgent humanitarian reasons or significant public benefit.\" Based on this authority, DHS has issued regulations that allow parole of an alien in expedited removal proceedings, but only when parole \"is required to meet a medical emergency or is necessary for a legitimate law enforcement objective.\""], "subsections": []}, {"section_title": "Aliens Who Establish a Credible Fear of Persecution or Torture", "paragraphs": ["INA Section 235(b)(1) provides that aliens who establish a credible fear of persecution or torture \"shall be detained for further consideration of the application for asylum\" in formal removal proceedings. The alien will typically remain in ICE custody during those proceedings. As noted above, DHS retains the authority to parole applicants for admission, and typically will interview the alien to determine his or her eligibility for parole within seven days after the credible fear finding. Under DHS regulations, the following categories of aliens may be eligible for parole, provided they do not present a security or flight risk:", "persons with serious medical conditions; women who have been medically certified as pregnant; juveniles (defined as individuals under the age of 18) who can be released to a relative or nonrelative sponsor; persons who will be witnesses in proceedings conducted by judicial, administrative, or legislative bodies in the United States; and persons \"whose continued detention is not in the public interest.\"", "Under DHS regulations, a grant of parole ends upon the alien's departure from the United States, or, if the alien has not departed, at the expiration of the time for which parole was authorized. Parole may also be terminated upon accomplishment of the purpose for which parole was authorized or when DHS determines that \"neither humanitarian reasons nor public benefit warrants the continued presence of the alien in the United States.\"", "For some time, the BIA took the view that aliens apprehended after unlawfully entering the United States (i.e., not apprehended at a port of entry), and who were first screened for expedited removal but then placed in formal removal proceedings following a positive credible fear determination, were not subject to mandatory detention under INA Section 235(b)(1). Instead, the BIA determined, these aliens could be released on bond under INA Section 236(a) because, unlike arriving aliens, they did not fall within the designated classes of aliens who are ineligible for bond hearings under DOJ regulations. Thus, the BIA concluded, INA Section 235(b)(1)'s mandatory detention scheme \"applie[d] only to arriving aliens.\"", "In 2019, Attorney General (AG) William Barr overturned the BIA's decision and ruled that INA Section 235(b)(1)'s mandatory detention scheme applies to all aliens placed in formal removal proceedings after a positive credible fear determination, regardless of their manner of entry. The AG reasoned that INA Section 235(b)(1) plainly mandates that aliens first screened for expedited removal who establish a credible fear \"shall be detained\" until completion of their formal removal proceedings, and that the INA only authorizes their release on parole. The AG also relied on the Supreme Court's 2018 decision in Jennings v. Rodriguez , which construed INA Section 235(b) as mandating the detention of covered aliens unless they are paroled. Finally, the AG concluded, even though nonarriving aliens subject to expedited removal are not expressly barred from seeking bond under DOJ regulations, that regulatory framework \"does not provide an exhaustive catalogue of the classes of aliens who are ineligible for bond.\"", "In a later class action lawsuit, the U.S. District Court for the Western District of Washington ruled that INA Section 235(b)(1)'s mandatory detention scheme is unconstitutional, and that aliens apprehended within the United States who are first screened for expedited removal and placed in formal removal proceedings following a positive credible fear determination are \"constitutionally entitled to a bond hearing before a neutral decisionmaker\" pending consideration of their asylum claims. The court thus ordered the government to (1) provide bond hearings within seven days of a bond hearing request by detained aliens who entered the United States without inspection, were first screened for expedited removal, and were placed in formal removal proceedings after a positive credible fear determination; (2) release any aliens within that class whose detention time exceeds that seven-day limit and who did not have a bond hearing; and (3) if a bond hearing is held, require DHS to prove that continued detention is warranted to retain custody of the alien.", "The DOJ has appealed the district court's ruling to the Ninth Circuit. The Ninth Circuit has stayed the lower court's injunction pending appeal insofar as it requires the government to hold bond hearings within seven days, to release aliens whose detention time exceeds that limit, and to require DHS to have the burden of proof. But the court declined to stay the lower court's order that aliens apprehended within the United States who are initially screened for expedited removal, and placed in formal removal proceedings after a positive credible fear determination, are \"constitutionally entitled to a bond hearing.\" Thus, the Ninth Circuit's order \"leaves the pre-existing framework in place\" in which unlawful entrants transferred to formal removal proceedings after a positive credible fear determination were eligible for bond hearings.", "As a result of the district court's ruling, aliens apprehended within the United States who are initially screened for expedited removal and transferred to formal removal proceedings following a positive credible fear determination remain eligible to seek bond pending their formal removal proceedings. On the other hand, arriving aliens who are transferred to formal removal proceedings are not covered by the court's order, and generally must remain detained pending those proceedings, unless DHS grants parole."], "subsections": []}]}, {"section_title": "Applicants for Admission Who Are Not Subject to Expedited Removal", "paragraphs": ["INA Section 235(b)(2) covers applicants for admission who are not subject to expedited removal. This provision would thus cover, for example, unadmitted aliens who are inadmissible on grounds other than those described in INA Section 212(a)(6)(C) and (a)(7) (e.g., because the alien is deemed likely to become a public charge, or the alien has committed specified crimes). The statute would also cover aliens who had entered the United States without inspection, but who are not subject to expedited removal because they were not apprehended within two years after their arrival in the country. ", "The INA provides that aliens covered by INA Section 235(b)(2) \"shall be detained\" pending formal removal proceedings before an IJ. As discussed above, however, DHS may parole applicants for admission pending their removal proceedings, and agency regulations specify circumstances in which parole may be warranted (e.g., where detention \"is not in the public interest\"). Absent parole, aliens covered by INA Section 235(b)(2) generally must be detained and cannot seek their release on bond."], "subsections": []}]}, {"section_title": "Detention of Aliens Following Completion of Removal Proceedings Under INA Section 241(a)", "paragraphs": ["INA Section 241(a) governs the detention of aliens after the completion of removal proceedings. The statute's detention authority covers two categories of aliens: (1) aliens with a final order of removal who are subject to detention during a 90-day \"removal period\" pending efforts to secure their removal; and (2) certain aliens who may (but are not required to) be detained beyond the 90-day removal period. The Supreme Court has construed the post-order of removal detention statute as having implicit temporal limitations. "], "subsections": [{"section_title": "Detention During 90-Day Removal Period", "paragraphs": ["INA Section 241(a)(1) provides that DHS \"shall remove\" an alien ordered removed \"within a period of 90 days,\" and refers to this 90-day period as the \"removal period.\" The statute specifies that the removal period \"begins on the latest of the following\":", "The date the order of removal becomes administratively final. If the alien petitions for review of the order of removal, and a court orders a stay of removal, the date of the court's final order in the case. If the alien is detained or confined for nonimmigration purposes (e.g., criminal incarceration), the date the alien is released from that detention or confinement. ", "INA Section 241(a)(2) instructs that DHS \"shall detain\" an alien during the 90-day removal period. The statute also instructs that \"[u]nder no circumstance during the removal period\" may DHS release an alien found inadmissible on criminal or terrorist-related grounds under INA Section 212(a)(2) or (a)(3)(B) (e.g., a crime involving moral turpitude); or who has been found deportable on criminal or terrorist-related grounds under INA Section 237(a)(2) or (a)(4)(B) (e.g., an aggravated felony conviction).", "The former Immigration and Naturalization Service (INS) previously issued guidance interpreting these provisions as only authorizing, but not requiring, the detention of \"non-criminal aliens\" during the 90-day removal period. There is no indication that DHS has rescinded that policy. But according to the agency, the statute generally requires the detention during the removal period of terrorists and aliens who have committed the specified crimes enumerated in the statute. Under this policy, however, if a criminal alien subject to mandatory detention has been granted withholding of removal or protection under the Convention Against Torture (CAT), the alien may be released if the agency is not pursuing the alien's removal.", "While INA Section 241(a)(1) specifies a 90-day removal period, it also provides that this period may be extended beyond 90 days and that the alien may remain in detention during this extended period \"if the alien fails or refuses to make timely application in good faith for travel or other documents necessary to the alien's departure or conspires or acts to prevent the alien's removal subject to an order of removal.\"", "INA Section 241(a)(3) provides that, if the alien either \"does not leave or is not removed within the removal period,\" the alien will be released and \"subject to supervision\" pending his or her removal. DHS regulations state that the order of supervision must specify the conditions of release, including requirements that the alien (1) periodically report to an immigration officer and provide relevant information under oath; (2) continue efforts to obtain a travel document and help DHS obtain the document; (3) report as directed for a mental or physical examination; (4) obtain advance approval of travel beyond previously specified times and distances; and (5) provide ICE with written notice of any change of address."], "subsections": []}, {"section_title": "Continued Detention Beyond Removal Period", "paragraphs": ["Typically, an alien with a final order of removal is subject to detention during the 90-day removal period, and must be released under an order of supervision if the alien does not leave or is not removed within that period. INA Section 241(a)(6), however, states that an alien \"may be detained beyond the removal period\" if the alien falls within one of three categories:", "1. an alien ordered removed who is inadmissible under INA Section 212(a) (e.g., an arriving alien who lacks valid entry documents); 2. an alien ordered removed who is deportable under INA Sections 237(a)(1)(C) (failure to maintain or comply with conditions of nonimmigrant status), 237(a)(2) (specified crimes including crimes involving moral turpitude, aggravated felonies, and controlled substance offenses), or 237(a)(4) (security and terrorist-related grounds); or 3. an alien whom DHS has determined \"to be a risk to the community or unlikely to comply with the order of removal.\"", "DHS regulations provide that, before the end of the 90-day removal period, ICE will conduct a \"custody review\" for a detained alien who falls within one of the above categories, and whose removal \"cannot be accomplished during the period, or is impracticable or contrary to the public interest,\" to determine whether further detention is warranted after the removal period ends. The regulations list factors that ICE should consider in deciding whether to continue detention, including the alien's disciplinary record, criminal record, mental health reports, evidence of rehabilitation, history of flight, prior immigration history, family ties in the United States, and any other information probative of the alien's danger to the community or flight risk. ", "ICE may release the alien after the removal period ends if the agency concludes that travel documents for the alien are unavailable (or that removal \"is otherwise not practicable or not in the public interest\"); the alien is \"a non-violent person\" and likely will not endanger the community; the alien likely will not violate any conditions of release; and the alien does not pose a significant flight risk. Upon the alien's release, ICE may impose certain conditions, including (but not limited to) those specified for the release of aliens during the 90-day removal period, such as periodic reporting requirements. ", "If ICE decides to maintain custody of the alien, it may retain custody authority for up to three months after the expiration of the 90-day removal period (i.e., up to 180 days after final order of removal). At the end of that three-month period, ICE may either release the alien if he or she has not been removed (in accordance with the factors and criteria for supervised release), or refer the alien to its Headquarters Post-Order Detention Unit (HQPDU) for further custody review. If the alien remains in custody after that review, the HQPDU must conduct another review within one year (i.e., 18 months after final order of removal), and (if the alien is still detained) annually thereafter."], "subsections": []}, {"section_title": "Constitutional Limitations to Post-Order of Removal Detention", "paragraphs": ["Although INA Section 241(a) authorizes (and in some cases requires) DHS to detain an alien after removal proceedings, the agency's post-order of removal detention authority has been subject to legal challenge, particularly when the alien remained detained indefinitely pending efforts to secure his or her removal to another country. Eventually, in Zadvydas v. Davis , a case involving the prolonged detention of lawfully admitted aliens who had been ordered removed, the Supreme Court interpreted the statute consistently with due process principles to limit detention generally to a six-month period after a final order of removal.", "In Zadvydas , the Supreme Court considered whether INA Section 241(a)'s post-order of removal detention statute should be construed as having an implicit time limitation to avoid serious constitutional concerns. The Court determined that \"[a] statute permitting indefinite detention of an alien would raise a serious constitutional problem\" under the Due Process Clause. The Court reasoned that \"[f]reedom from imprisonment\u00e2\u0080\u0094from government custody, detention, or other forms of physical restraint\u00e2\u0080\u0094lies at the heart of the liberty that Clause protects,\" and found no justifications for the indefinite detention of aliens whose removal is no longer practicable. While the Court recognized that a potentially indefinite detention scheme may be upheld if it is \"limited to specially dangerous individuals and subject to strong procedural protections,\" INA Section 241(a)(6)'s post-removal period detention scheme was different because it applied \"broadly to aliens ordered removed for many and various reasons, including tourist visa violations.\" The Court thus concluded that the statute could not be lawfully construed as authorizing indefinite detention. ", "Notably, the Court rejected the government's contention that indefinite detention pending removal was constitutionally permissible under Shaughnessy v. United States ex rel. Mezei , which, many decades earlier, had upheld the indefinite detention on Ellis Island of an alien denied admission into the United States and ordered excluded. The Zadvydas Court distinguished Mezei , which involved an alien considered at the threshold of entry, because \"once an alien enters the country, the legal circumstance changes, for the Due Process Clause applies to all 'persons' within the United States, including aliens, whether their presence here is lawful, unlawful, temporary, or permanent.\" ", "The Zadvydas Court determined there was no indication that Congress had intended to confer immigration authorities with the power to indefinitely confine individuals ordered removed. Although INA Section 241(a)(6) states that an alien \"may be detained\" after the 90-day removal period, the Court reasoned, the statute's use of the word \"may\" is ambiguous and \"does not necessarily suggest unlimited discretion.\"", "For these reasons, applying the doctrine of constitutional avoidance, the Court held that INA Section 241(a)(6) should be construed as authorizing detention only for \"a period reasonably necessary to secure removal.\" The Court thus construed the statute as having an implicit temporal limitation of six months following a final order of removal. If that six-month period elapses, the Court held, the alien generally must be released from custody if he \"provides good reason to believe that there is no significant likelihood of removal in the reasonably foreseeable future.\"", "In Clark v. Martinez , the Supreme Court considered whether the presumptive six-month time limitation established in Zadvydas applied to aliens who had not been lawfully admitted into the United States, and who were being detained after their 90-day removal periods had lapsed. The Court concluded that the time limitation read into INA Section 241(a)(6) for deportable aliens in Zadvydas equally applied to inadmissible aliens. But unlike in Zadvydas, the Court did not rest its decision on matters of constitutional avoidance. Instead, the majority opinion (written by Justice Scalia, who had dissented in Zadvydas ), relied on the principle of statutory construction that a provision should have the same meaning in different circumstances. \"[B]ecause the statutory text provides for no distinction between admitted and nonadmitted aliens,\" the Martinez Court reasoned, the provision should be interpreted as having the same, presumptive six-month time limit for both categories of aliens.", "In reaching this conclusion, the Supreme Court rejected the government's invitation to construe the detention statute differently when applied to unadmitted aliens, which the government contended was proper because of the limited constitutional protections available to such aliens. The majority stated that \"[b]e that as it may, it cannot justify giving the same detention provision a different meaning when such aliens are involved.\""], "subsections": []}, {"section_title": "Post-Zadvydas Regulations Addressing Likelihood of Removal and Special Circumstances Warranting Continued Detention", "paragraphs": ["Following the Supreme Court's decision in Zadvydas , the former INS issued regulations that established \"special review procedures\" for aliens who remain detained beyond the 90-day removal period. Under these rules, an alien may \"at any time after a removal order becomes final\" submit a written request for release because there is no significant likelihood of removal in the reasonably foreseeable future. The HQPDU will consider the alien's request and issue a decision on the likelihood of the alien's removal. Generally, if the HQPDU determines that there is no significant likelihood of removal, ICE will release the alien subject to any appropriate conditions. But if the HQPDU concludes that there is a significant likelihood of the alien's removal in the reasonably foreseeable future, the alien will remain detained pending removal.", "The regulations provide, however, that even if the HQPDU concludes that there is no significant likelihood of the alien's removal in the reasonably foreseeable future, the alien may remain detained if \"special circumstances\" are present. The regulations list four categories of aliens whose continued detention may be warranted because of special circumstances: (1) aliens with \"a highly contagious disease that is a threat to public safety\"; (2) aliens whose release \"is likely to have serious adverse foreign policy consequences for the United States\"; (3) aliens whose release \"presents a significant threat to the national security or a significant risk of terrorism\"; and (4) aliens whose release \"would pose a special danger to the public.\"", "Some courts, though, have ruled that the former INS exceeded its authority by issuing regulations allowing the continued detention of aliens in \"special circumstances.\" Both the Fifth and Ninth Circuits have concluded that the Supreme Court in Zadvydas never created an exception for the indefinite detention post-order of removal of aliens considered particularly dangerous. Instead, these courts concluded, the Supreme Court had merely suggested that it might be within Congress's power to enact a law allowing for the prolonged detention of certain types of aliens following an order of removal, not that Congress had done so when it enacted INA Section 241(a)(6), which does not limit its detention authority to \"specific and narrowly defined groups.\" The Tenth Circuit, on the other hand, has ruled that the former INS's interpretation of the statute to permit indefinite detention in special circumstances was reasonable. The Supreme Court has not yet considered whether INA Section 241(a)(6) authorizes indefinite post-order of removal detention in special circumstances."], "subsections": []}]}]}, {"section_title": "Select Legal Issues Concerning Detention", "paragraphs": ["As the above discussion reflects, DHS has broad authority to detain aliens who are subject to removal, and for certain classes of aliens (e.g., those with specified criminal convictions) detention is mandatory with no possibility of release except in limited circumstances. Further, while the Supreme Court has recognized limits to DHS's ability to detain aliens after removal proceedings, the Court has recognized that the governing INA provisions appear to allow the agency to detain aliens potentially indefinitely pending those proceedings.", "But some have argued that the prolonged detention of aliens during their removal proceedings without bond hearings is unconstitutional. Moreover, the government's ability to detain alien minors, including those accompanied by adults in family units, is currently limited by a binding settlement agreement known as the\u00c2\u00a0 Flores Settlement, which generally requires the release of minors in immigration custody. Apart from concerns raised by prolonged detention, there has been criticism over the lack of regulations governing the conditions of confinement. Additionally, for aliens detained by criminal law enforcement authorities, DHS's authority to take custody of such aliens for immigration enforcement purposes through \"immigration detainers\" has been subject to legal challenge. The following sections provide more discussion of these developing issues. "], "subsections": [{"section_title": "Indefinite Detention During Removal Proceedings", "paragraphs": ["In Zadvydas v. Davis , discussed above, the Supreme Court in 2001 ruled that the indefinite detention of aliens after the completion of removal proceedings raised \"a serious constitutional problem,\" at least for those who were lawfully admitted, and thus construed INA Section 241(a)(6)'s post-order of removal detention provision as containing an implicit six-month time limitation. In 2003, the Court in Demore v. Kim held that the mandatory detention of aliens pending removal proceedings under INA Section 236(c) was \"constitutionally permissible,\" but did not decide whether there were any constitutional limits to the duration of such detention. Later, though, some lower courts ruled that the prolonged detention of aliens pending removal proceedings raised similar constitutional issues as those raised after a final order, and, citing Zadvydas , construed INA Section 236(c) as containing an implicit temporal limitation. In 2018, the Supreme Court held in Jennings v. Rodriguez that the government has the statutory authority to indefinitely detain aliens pending their removal proceedings, but left the constitutional questions unresolved.", "The Jennings case involved a class action by aliens within the Central District of California who had been detained under INA Sections 235(b), 236(c), and 236(a), in many cases for more than a year. The plaintiffs claimed that their prolonged detention without a bond hearing violated their due process rights. In 2015, the Ninth Circuit upheld a permanent injunction requiring DHS to provide aliens detained longer than six months under INA Sections 235(b), 236(c), and 236(a) with individualized bond hearings. The court expressed concern that the detention statutes, if construed to permit the indefinite detention of aliens pending removal proceedings, would raise \"constitutional concerns\" given the reasoning of the Supreme Court in Zadvydas . Although the Supreme Court in Demore had upheld DHS's authority to detain aliens without bond pending removal proceedings, the Ninth Circuit construed Demore's holding as limited to the constitutionality of \"brief periods\" of detention, rather than cases when the alien's detention lasts for extended periods. ", "Recognizing the constitutional limits placed on the federal government's authority to detain individuals, the Ninth Circuit, as a matter of constitutional avoidance, ruled that the INA's detention statutes should be construed as containing implicit time limitations. The court therefore interpreted the mandatory detention provisions of INA Sections 235(b) and 236(c) to expire after six months' detention, after which the government's detention authority shifts to INA Section 236(a) and the alien must be given a bond hearing. The court also construed INA Section 236(a) as requiring bond hearings every six months. In addition, the court held that continued detention after an initial six-month period was permitted only if DHS proved by clear and convincing evidence that further detention was warranted. ", "In Jennings , the Supreme Court rejected as \"implausible\" the Ninth Circuit's construction of the challenged detention statutes. The Court determined that the Ninth Circuit could not rely on the constitutional avoidance doctrine to justify its interpretation of the statutes. The Court distinguished Zadvydas , which the Ninth Circuit had relied on when invoking the constitutional avoidance doctrine, because the post-order of removal detention statute at issue in that case did not clearly provide that an alien's detention after the 90-day removal period was required. According to the Jennings Court, the statute at issue in Zadvydas was sufficiently open to differing interpretations that reliance on the constitutional avoidance doctrine was permissible. But the Jennings Court differentiated the ambiguity of that detention statute from INA Sections 235(b) and 236(c), which the Court held were textually clear in generally requiring the detention of covered aliens until the completion of removal proceedings. And the Court also observed that nothing in INA Section 236(a) required bond hearings after an alien was detained under that authority, or required the government to prove that the alien's continued detention was warranted after an initial six-month period. According to the Court, the Ninth Circuit could not construe the statutes to require bond hearings simply to avoid ruling on whether they passed constitutional muster. Having rejected the Ninth Circuit's interpretation of INA Sections 235(b), 236(a), and 236(c) as erroneous, the Court remanded the case to the lower court to address, in the first instance, the plaintiffs' constitutional claim that their indefinite detention under these provisions violated their due process rights.", "In short, the Jennings Court held that the government has the statutory authority to detain aliens potentially indefinitely pending their removal proceedings, but did not decide whether such indefinite detention is unc onstitutional . While the Supreme Court has not yet addressed the constitutionality of indefinite detention during removal proceedings, the Court had indicated in Demore v. Kim that aliens may be \"detained for the brief period necessary for their removal proceedings.\" And in a concurring opinion in Demore , Justice Kennedy declared that a detained alien \"could be entitled to an individualized determination as to his risk of flight and dangerousness if the continued detention became unreasonable or unjustified.\" ", "After the Jennings decision, some lower courts have concluded that the detention of aliens during removal proceedings without a bond hearing violates due process if the detention is unreasonably prolonged. Some courts have applied these constitutional limitations to the detention of aliens arriving in the United States who are placed in removal proceedings, reasoning that, although such aliens typically have lesser constitutional protections than aliens within the United States, they have sufficient due process rights to challenge their prolonged detention. In reaching this conclusion, some courts have addressed the Supreme Court's 1953 decision in Shaughnessy v. United States ex rel. Mezei , which upheld the detention without bond of an alien seeking entry into the United States. These courts determined that Mezei is distinguishable because, in that case, the alien had already been ordered excluded when he challenged his detention, and the alien potentially posed a danger to national security that warranted his confinement.", "In addition, while the Jennings Court held that INA Section 236(a) does not mandate that a clear and convincing evidence burden be placed on the government in bond hearings, some courts have concluded that the Constitution requires placing the burden of proof on the government in those proceedings.", "At some point, whether in the Jennings litigation or another case, the Supreme Court may decide whether the indefinite detention of aliens pending removal proceedings is constitutionally permissible. In doing so, the Court may also reassess the scope of constitutional protections for arriving aliens seeking initial entry into the United States. The Court may also decide whether due process compels the government to prove that an alien's continued detention is justified at a bond hearing. The Court's resolution of these questions may clarify its view on the federal government's detention authority."], "subsections": []}, {"section_title": "Detention of Alien Minors", "paragraphs": ["As discussed, DHS has broad authority to detain aliens pending their removal proceedings, and in some cases detention is mandatory except in certain limited circumstances. But a 1997 court settlement agreement (the \" Flores Settlement\") currently limits the period in which an alien minor (i.e., under the age of 18) may be detained by DHS. Furthermore, under federal statute, an unaccompanied alien child (UAC) who is subject to removal is generally placed in the custody of the Department of Health and Human Services' Office of Refugee Resettlement (ORR), rather than DHS, pending his or her removal proceedings. In 2019, DHS promulgated a final rule that purports to incorporate these limitations with some modifications.", "The Flores Settlement originates from a 1985 class action lawsuit brought by a group of UACs apprehended at or near the border, who challenged the conditions of their detention and release. The parties later settled the plaintiffs' claims regarding the conditions of their detention, but the plaintiffs maintained a challenge to the INS's policy of allowing their release only to a parent, legal guardian, or adult relative. In 1993, following several lower court decisions, the Supreme Court in Reno v. Flores upheld the INS's release rule, reasoning that the plaintiffs had no constitutional right to be released to any available adult who could take legal custody, and that the INS's policy sufficiently advanced the government's interest in protecting the child's welfare.", "Ultimately, in 1997, the parties reached a settlement agreement that created a \"general policy favoring release\" of alien minors in INS custody. Under the Flores S ettlement, the government generally must transfer within five days a detained minor to the custody of a qualifying adult or a nonsecure state-licensed facility that provides residential, group, or foster care services for dependent children. But the alien's transfer may be delayed \"in the event of an emergency or influx of minors into the United States,\" in which case the transfer must occur \"as expeditiously as possible.\" In 2001, the parties stipulated that the Flores Settlement would terminate \"45 days following [the INS's] publication of final regulations implementing this Agreement.\"", "In 2008, Congress enacted the William Wilberforce Trafficking Victims Protection Reauthorization Act of 2008 (TVPRA), which \"partially codified the Flores Settlement by creating statutory standards for the treatment of unaccompanied minors.\" Under the TVPRA, a UAC must be placed in ORR's custody pending formal removal proceedings, and typically must be transferred to ORR within 72 hours after DHS determines that the child is a UAC. Following transfer to ORR, the agency generally must place the UAC \"in the least restrictive setting that is in the best interest of the child,\" and may place the child with a sponsoring individual or entity who \"is capable of providing for the child's physical and mental well-being.\"", "In 2015, the Flores plaintiffs moved to enforce the Flores Settlement, arguing that DHS (which had replaced the former INS in 2003) violated the settlement by adopting a no-release policy for Central American families and confining minors in secure, unlicensed family detention facilities. In response, the government argued that the Flores Settlement did not apply to accompanied minors. In an order granting the plaintiffs' motion, the federal district court ruled that the Flores Settlement applied to both accompanied and unaccompanied minors, and that accompanying parents generally had to be released with their children. In a later order, the court determined that, upon an \"influx of minors into the United States,\" DHS may \"reasonably exceed\" the general five-day limitation on detention, and suggested that 20 days may be reasonable in some circumstances.", "In 2016, the Ninth Circuit upheld the district court's ruling that the Flores Settlement applies to both accompanied and unaccompanied minors, but held that the settlement does not require DHS to release parents along with their children. In any event, the effect of the Flores Settlement has been that DHS typically will release family units in their entirety pending removal proceedings, apparently because of the risks and difficulties that releasing the children only (while keeping the parents in detention) would pose, and the absence of a state licensing scheme for family detention facilities. Moreover, a federal district court has ruled that a \"government practice of family separation without a determination that the parent was unfit or presented a danger to the child\" likely violates due process.", "On August 23, 2019, DHS published a final rule that it claims \"parallel[s] the relevant and substantive terms of the Flores Settlement\" with some important modifications. Among other things, the rule c reates an alternative federal licensing scheme for DHS family detention facilities (which are not eligible for state licensing) that would enable DHS to detain minors together with their accompanying parents throughout the removal proceedings. This modification arguably conflicts with the Flores Settlement's \" general policy favoring release\" of alien minors from government custody. Yet DHS argues that the modification is compelled by changed circumstances, including the increased number of family unit apprehensions since 1997, and that detaining families together pending their removal proceedings \"will enable DHS to maintain family unity \" while enforcing federal immigration laws .", "Under the terms of the 2001 stipulation, the Flores Settlement will terminate 45 days after the government publishes final regulation s \"implementing the A greement. \" The key question in the Flores litigation likely will be whether the final rule \" implement [s] the Agreement\" within the meaning of the settlement's termination provision. If the court overseeing the Flores Settlement concludes that the rule meets that criteria, the DHS rule will effectively supersede the Flores Settlement. That said, w hile the final rule modifies the Flores Settlement to some degree, it largely incorporates the terms of that agreement . Thus, if the rule is upheld, DHS's detention authority over alien minors would remain subject to some constraints ."], "subsections": []}, {"section_title": "Conditions of Confinement", "paragraphs": ["Although the INA describes when an alien subject to removal may be detained and released from custody, neither the INA nor its implementing regulations currently provide any specific standards for the conditions of confinement. ICE, however, has developed \"Performance-Based National Detention Standards\" (PBNDS) governing the treatment of detained aliens. These standards apply to all ICE detention facilities, contract detention facilities, and state or local government facilities used by ICE through intergovernmental service agreements. ", "The PBNDS require, among other things, clean and safe facilities; adequate food services; access to medical care; adequate bedding and personal hygiene; reasonable disability accommodations; communication and language assistance; access to telephone and mail; visitation rights; access to recreational programs; religious accommodations; work opportunities; and access to legal materials. In addition, CBP, the DHS component with primary responsibility for immigration enforcement along the border, has created similar standards governing the detention of aliens in CBP custody (e.g., arriving aliens in expedited removal proceedings).", "While the Supreme Court has generally addressed challenges to the duration of immigration detention, the Court has not addressed challenges to the conditions of immigration confinement. Lower courts, however, have considered detained aliens' constitutional challenges to the conditions of their confinement, generally under the standard applicable to pretrial detention in criminal cases. Under that standard, a detainee's conditions of confinement violate his or her right to due process if they amount to \"punishment.\" To meet that threshold, a detainee must show that prison officials intended to punish him or her, or that the conditions of detention are not reasonably related to a legitimate governmental objective. ", "More specifically, in cases involving claims of inadequate medical treatment, courts have typically analyzed such claims under the \"deliberate indifference\" standard. This standard looks to whether the detaining authority \"knows of and disregards an excessive risk to inmate health or safety.\" ", "In addition, even though aliens seeking initial entry into the United States typically have lesser constitutional protections than aliens within the United States, some courts have held that aliens detained at the border have substantive due process protections, such as the right to be free from \"inhumane treatment\" or \"gross physical abuse.\" These cases suggest that aliens detained at the border may sometimes challenge the conditions of their confinement.", "In the past, some courts have rejected constitutional challenges to the conditions of immigration detention (or, in some cases, conditions of release), concluding that, while the alleged conditions may have been unpleasant or restrictive, they did not amount to a due process violation. As the Supreme Court once stated in a case about pretrial detention, \"[l] oss of freedom of choice and privacy are inherent incidents of confinement in such a facility. And the fact that such detention interferes with the detainee's understandable desire to live as comfortably as possible and with as little restraint as possible during confinement does not convert the conditions or restrictions of detention into 'punishment.'\" Other courts, however, have ruled unconstitutional conditions of immigration confinement that are particularly unreasonable, such as the deprivation of medical care and other basic necessities. ", "As for minors, the Flores Settlement provides that those apprehended by DHS may be detained only in a \"safe and sanitary\" facility. The Flores Settlement also requires that state-licensed facilities comply with applicable state child welfare laws and building codes, and provide various services including routine medical care and education. In a few instances, the federal district court overseeing the Flores litigation has ruled that DHS violated the Flores Settlement by exposing minors to substandard conditions.", "Additionally, Congress, through appropriations legislation, has imposed certain requirements on the conditions of detention. For example, Congress has directed CBP and ICE to report their compliance with applicable detention facility standards (such as the PBNDS), and to provide certain other detention-related information, including the average length of detention and any instances in which an individual has died while in DHS custody.", "Thus, while federal statutes or regulations generally do not specify the standards for immigration detention, there are some important legal constraints on the treatment of detained aliens."], "subsections": []}, {"section_title": "Immigration Detainers", "paragraphs": ["Generally, upon issuing an administrative warrant, ICE may arrest and detain an alien pending a determination about whether the alien should be removed from the United States. But if an alien is in criminal custody by state or local law enforcement officers (LEOs) (e.g., if an alien is arrested by local police), ICE may take custody of the alien through the use of an \"immigration detainer.\" An immigration detainer is a document by which ICE advises the LEOs of its interest in individual aliens whom the LEOs are detaining, and requests the LEOs to take certain actions that could facilitate removal (e.g., holding the alien temporarily, notifying ICE before releasing the alien). ", "ICE's predecessor agency, the INS, had long issued detainers for potentially removable aliens in criminal custody. Eventually, in 1986, Congress enacted the Anti-Drug Abuse Act, which, among other things, explicitly authorized the use of detainers for deportable aliens who were arrested for violating controlled substance laws. Citing this authority, as well as its general immigration enforcement powers under the INA, the INS promulgated two separate regulations on detainers, one governing aliens arrested for controlled substance offenses, and another governing aliens arrested for other criminal offenses. In 1997, the INS merged both regulations into one, and that regulation is currently codified at 8 C.F.R. \u00c2\u00a7 287.7. The detainer regulation, as amended, provides the following:", "Any authorized immigration officer may at any time issue a Form I-247, Immigration Detainer-Notice of Action, to any other Federal, State, or local law enforcement agency. A detainer serves to advise another law enforcement agency that the Department seeks custody of an alien presently in the custody of that agency, for the purpose of arresting and removing the alien. The detainer is a request that such agency advise the Department, prior to release of the alien, in order for the Department to arrange to assume custody, in situations when gaining immediate physical custody is either impracticable or impossible. ", "The regulation further instructs that, upon issuance of a detainer, the LEO \"shall maintain custody of the alien for a period not to exceed 48 hours\" beyond the time when the alien would have otherwise been released (excluding Saturdays, Sundays, and holidays) to facilitate transfer of custody to ICE.", "Although the detainer regulation instructs that LEOs \"shall maintain custody\" of an alien, reviewing courts have construed the regulation as being permissive rather than mandatory. For example, the Third Circuit has reasoned that the regulation calls a detainer a \"request,\" that INA Section 287(d) does not require state or local LEOs to detain aliens subject to removal, and that DHS's (and the former INS's) policy statements have construed detainers as being \"requests rather than mandatory orders.\" And the Third Circuit has also ruled that construing immigration detainers as mandatory would run afoul of the \"anti-commandeering\" principles of the Tenth Amendment, which prohibits the federal government from compelling state and local officials to enforce a federal regulatory scheme. ", "As a result of judicial construction of the detainer regulation, LEOs may (but need not) notify ICE about an alien's release date and hold the alien pending transfer to ICE. Given the permissive nature of detainers, some state and local jurisdictions have restricted compliance with detainers except in limited circumstances (e.g., the alien has been convicted of or charged with a serious crime). Despite these restrictions, ICE generally issues detainers \"[r]egardless of whether a federal, state, local, or tribal [LEO] regularly cooperates\" with the detainer request.", "While DHS regulations authorize immigration detainers for removable aliens in criminal custody, courts have addressed legal challenges to the continued detention of aliens who would have otherwise been released from criminal custody (e.g., on bail, upon completion of sentence), but who remain detained pending their transfer to ICE. ", "For example, in the past, ICE issued detainers so long as there was \"reason to believe\" the alien was subject to removal. But some courts have invalidated, on statutory or constitutional grounds, the use of detainers that are based only on ICE's representations about an alien's removability or the initiation of an investigation into the alien's immigration status. In Moreno v. Napolitano , a federal district court ruled that ICE's issuance of a detainer without an administrative arrest warrant exceeded its statutory authority under the INA absent a determination that the alien was likely to escape before a warrant could be obtained. In Morales v. Chadbourne , which involved the detention of a naturalized U.S. citizen, the First Circuit held that a detainer constitutes a new arrest under the Fourth Amendment, and must be supported by probable cause of the alien's removability. And in Orellana v. Nobles County , a federal district court held that a detainer claiming a \"reason to believe\" that an alien is subject to removal \"does not provide a constitutionally sufficient basis\" to detain an alien absent a \"particularized assessment\" of the alien's likelihood of escaping.", "In response to these court rulings, ICE in 2017 created new immigration detainer guidelines. Among other things, ICE officers \"must establish probable cause to believe that the subject is an alien who is removable from the United States before issuing a detainer.\" And the detainer must come with either an administrative arrest warrant or a warrant of removal (if the alien has been ordered removed) signed by an authorized ICE officer.", "Despite ICE's revised detainer policy, some courts have held that, under the Fourth Amendment, immigration detainers supported by probable cause that an alien is removable still do not justify the alien's continued detention by state or local LEOs unless there is probable cause that the alien has committed a criminal offense giving those LEOs a basis to detain the alien for criminal prosecution. These rulings are largely informed by the Supreme Court's 2012 decision in Arizona v. United States , which held that a state statute authorizing police officers unilaterally to arrest an alien suspected of being removable was preempted by federal law, which exclusively gave the authority to enforce civil immigration laws to federal immigration officers. So these courts reason, because state and local LEOs generally lack the authority to enforce civil immigration laws, they may not hold an alien under an immigration detainer unless there is an independent basis\u00e2\u0080\u0094such as probable cause of a crime\u00e2\u0080\u0094to justify the continued detention.", "In City of El Cenizo v. Texas , however, the Fifth Circuit held that state and local LEOs do not need probable cause of a crime to hold an alien pursuant to an immigration detainer. The court reasoned that many state laws permit seizures without probable cause of a crime, such as those relating to mentally ill individuals, and that \"civil removal proceedings necessarily contemplate detention absent proof of criminality.\" The circuit court also distinguished Arizona because that case \"involved unilateral status-determinations [by the state] absent federal direction ,\" while a detainer \"always requires a predicate federal request before local officers may detain aliens for the additional 48 hours.\"", "Courts are thus divided over whether immigration detainers are permissible under the Fourth Amendment. Some courts have held that a detainer need be supported only by probable cause of an alien's removability to avoid constitutional violations, while other courts require probable cause of criminal activity before an alien may be held pending transfer to ICE. Given that ICE considers detainers to be integral to its efforts to arrest and remove aliens convicted of specified crimes, the split in court opinion on the circumstances when detainers may be honored could have significant consequences for ICE's enforcement policies in different jurisdictions. "], "subsections": []}]}, {"section_title": "Conclusion", "paragraphs": ["DHS generally has substantial authority to detain aliens who are subject to removal. But the governing laws on detention may differ depending on the circumstances, including (1) whether the alien is seeking initial admission into the United States or had been lawfully admitted into the country; (2) the type of removal proceedings in which the alien is placed; (3) whether the alien has committed specified criminal or terrorist-related activity; (4) whether the alien is a UAC or falls within some other category subject to special rules for detention; and (5) whether the alien is being held for formal removal proceedings or has been ordered removed and is awaiting effectuation of the removal order.", "Typically, DHS may detain aliens who are placed in formal removal proceedings, but may release the alien on bond, on his or her own recognizance, or under an order of supervision pending the outcome of those proceedings. In some cases, such as those involving aliens who have committed specified crimes, or aliens arriving in the United States who are placed in expedited removal proceedings, detention is mandatory and the alien may not be released from custody except in limited circumstances. Furthermore, DHS generally must detain aliens who have received final orders of removal for up to 90 days while their removal is effectuated, and the agency retains the discretion to detain certain classes of aliens after that 90-day period has lapsed.", "However, there are some constraints on DHS's detention power. The Supreme Court has determined that the indefinite detention of aliens after formal removal proceedings would raise \"serious constitutional concerns,\" at least for those who were lawfully admitted into the United States and became subject to removal. And while the Court has recognized that governing statutes confer broad authority to DHS to detain aliens without bond pending their removal proceedings, some lower courts have held that due process requires the government to provide detained aliens with bond hearings after prolonged periods of detention and to prove that any continued detention is justified. Furthermore, DHS's ability to detain family units pending their proceedings remains constrained by the Flores Settlement, which limits the length of detention of alien minors. In addition, while detention litigation has largely centered on the duration of detention, detained aliens have also sometimes brought challenges to the conditions of their confinement. And more recently, some courts have imposed restrictions on DHS's ability to take custody of aliens in state or local law enforcement custody through immigration detainers. ", "As courts continue to grapple over the scope of DHS's detention power, Congress may consider legislative proposals that would either limit or expand that authority. For instance, some recent bills would end mandatory detention entirely, afford all aliens the opportunity to be released on bond pending removal proceedings, and require DHS to prove that any continued detention is warranted. Certain bills would also require DHS to promulgate regulations for detention facilities; require the periodic inspection of those facilities; or impose standards governing the conditions of detention, such as requiring medical screenings and access to food, water, shelter, and hygiene. As for custody determinations, some bills would require DHS to consider ATD programs instead of bond or conditional parole, and require placing some aliens in such programs (e.g., asylum applicants). Other bills would generally require the release of aliens considered \"vulnerable,\" such as those who are detained with children, and limit the amount of any bond. In addition, some bills would create time limitations for an IJ to conduct bond hearings, and require periodic bond hearings while an alien remains in custody.", "Conversely, some bills would specify that an alien may be detained for an indefinite period pending removal proceedings, and require the alien to prove by clear and convincing evidence that he or she is not a flight or escape risk in order to be released. Some bills would also expand the classes of aliens subject to mandatory detention to include aliens present in the United States without inspection, criminal gang members, and aliens arrested for (but not yet convicted of) specified crimes. Other bills would override the Flores Settlement effectively to extend INA Section 235(b)(1)'s mandatory detention scheme governing applicants for admission to family units. Finally, some bills would clarify DHS's detainer authority to provide that ICE may issue detainers so long as there is probable cause that an alien is removable. ", "In short, as reviewing courts continue to test the outer limits to DHS's detention authority, Congress may consider additional legislative options that inform the scope of that authority."], "subsections": [{"section_title": "Appendix.", "paragraphs": ["The following tables provide (1) an overview of the development of U.S. immigration detention laws, and (2) a comparison of the various detention regimes under current law."], "subsections": []}]}]}}
{"id": "R46190", "title": "Petitions for Rulemaking: An Overview", "released_date": "2020-01-23T00:00:00", "summary": ["The Administrative Procedure Act (APA), enacted in 1946, is known primarily for its procedural requirements for notice-and-comment rulemaking. Those requirements state that when issuing regulations, agencies must generally give public notice (i.e., issue a proposed rule), hold a public comment period, and publish a final rule.", "A lesser known provision in the APA is a petition mechanism through which any interested party can request an agency to issue, amend, or repeal a rule (Section 553(e)). Such petitions are sometimes referred to as 553(e) petitions, petitions for rulemaking, petitions for reconsideration, administrative petitions, or citizens' petitions. The APA petition mechanism is a potentially efficient (and arguably underused) means for an individual or stakeholder to call on an agency to take a particular action.", "Although Section 553(e) is only one sentence in length and provides very little detail, other sections of the APA contain some additional requirements for agencies with regard to receiving, considering, and responding to rulemaking petitions. An agency is not necessarily required to grant the petition or take the requested action, but the APA does require the agency to consider the petition and respond and to do so \"within a reasonable time.\" Notably, however, agencies have a great deal of discretion in determining the specifics of their procedures for receiving, considering, and responding to petitions. In 2014, the Administrative Conference of the United States (ACUS) found that \"few agencies have in place official procedures for accepting, processing, and responding to petitions for rulemaking\" and that \"how petitions are received and treated varies across\u00e2\u0080\u0094and even within\u00e2\u0080\u0094agencies.\"", "The APA's requirement for a petition mechanism applies to all agencies covered by the APA, which includes executive agencies and independent regulatory agencies. The APA's definition of rule is broad and covers a variety of agency actions, including several types of actions that are not subject to the APA's notice-and-comment rulemaking procedures. Such actions include agency interpretive rules and policy statements\u00e2\u0080\u0094categories that are often colloquially referred to as \"guidance documents\"\u00e2\u0080\u0094and rules of agency organization, procedure, and practice. Thus, the petition mechanism could potentially be used for more than just rules that have undergone, or would be required to undergo, the APA's notice-and-comment procedures.", "If an agency grants a petition for rulemaking\u00e2\u0080\u0094thus issuing, amending, or repealing a rule per request of the petitioner\u00e2\u0080\u0094any relevant procedural requirements for rulemaking or other type of action would still apply. Furthermore, in taking any action pursuant to a petition, the agency may act only within the delegated authority Congress has provided to it in statute.", "This report briefly discusses the origin of the APA petition mechanism, outlines the mechanism's requirements for agencies, provides information from various outside sources about what may make an effective petition, discusses potential benefits to agencies and the public, and, finally, identifies some examples of statutory petition mechanisms that Congress created in addition to the APA's."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["Federal rulemaking is one of the crucial methods through which public policy is established and implemented in the United States. Under the constitutional separation of powers system, Congress enacts statutes th at often delegate rulemaking authority to federal agencies. Using that delegated authority, agencies issue regulations to implement those statutes and set the details of public policy. ", "To structure the ways in which agencies issue regulations pursuant to their delegated authority, Congress has created a statutory scheme of procedural controls. The most significant of these controls is the Administrative Procedure Act (APA) of 1946, which generally requires agencies to issue a proposed rule and take public comment prior to issuing a final rule. Congress designed these basic steps\u00e2\u0080\u0094which create the backbone of the federal rulemaking process\u00e2\u0080\u0094to allow for public input into federal agencies' policymaking decisions. As one scholar noted, \"One of the APA's objectives was to open rulemaking to public participation, especially by those whose interests might be adversely affected by an agency's actions. Congress viewed hearing from such parties as a normal part of the legislative process, and therefore applicable to rulemaking.\" ", "The APA's notice and comment requirements are possibly the best known and most significant mechanism allowing for public input into the rulemaking process. A lesser known procedural control that Congress created in the APA is a petition mechanism through which any interested party can request an agency to issue, amend, or repeal a rule. An agency is not necessarily required to grant the petition or take the requested action, but the APA does require the agency to respond and to do so in a \"reasonable time.\" Thus, the APA petition mechanism is a potentially efficient (and arguably underused) means for an individual or stakeholder to call on an agency to take a particular action.", "This report briefly discusses the origin of the APA petition mechanism, outlines the mechanism's requirements for agencies, provides information from various outside sources about what may make an effective petition, discusses potential benefits to agencies and the public, and, finally, identifies some examples of statutory petition mechanisms that Congress created in addition to the APA's. "], "subsections": []}, {"section_title": "APA Petition Mechanism: Historical Origins", "paragraphs": ["The APA's petition mechanism essentially re-stated the right to petition the government established by the U.S. Constitution, which can be traced as far back as the Magna Carta and Declaration of Independence. "], "subsections": [{"section_title": "U.S. Constitution", "paragraphs": ["The principles on which the APA's petition mechanism are based are generally traced by scholars to the Magna Carta and, in the American context, to the Declaration of Independence. Though it was centuries old by the time of the American Revolution, the Magna Carta was a heavy influence on the colonists who declared their independence from Britain in the 1770s. The Declaration of Independence, which relied on many of the stated rights and liberties granted under the Magna Carta, referenced the failure of the British government to respond to petitions by stating the following immediately after its list of grievances: \"In every stage of these Oppressions We have Petitioned for Redress in the most humble terms: Our repeated Petitions have been answered only by repeated injury.\" Thus, the implication was that the colonists had an inherent right to petition the king, as well as a right to a response. ", "Likely as a direct consequence of this perceived slight by the British government, the founders explicitly stated in the First Amendment of the U.S. Constitution that the people had a right to petition the government. Specifically, the First Amendment states that \"Congress shall make no law \u00e2\u0080\u00a6 abridging \u00e2\u0080\u00a6 the right of the people \u00e2\u0080\u00a6 to petition the Government for a redress of grievances.\" Although the First Amendment establishes a right to petition the government, it goes no further in detailing whether or how the government shall respond. "], "subsections": []}, {"section_title": "The Administrative Procedure Act", "paragraphs": ["The lineage of this constitutional provision can be traced forward into the 20 th century and directly to the APA itself. The APA's petition mechanism, which allows interested persons to petition the government to take a rulemaking action, could easily be considered a more modern application of the constitutional right to petition. One scholar described the APA as \"the bill of rights for the new regulatory state\" that \"defined the relationship between government and governed.\" The petition mechanism appears to fit within that characterization. Indeed, the APA's legislative history confirms the link: \"Every agency possessing rule-making authority will be required to set up procedures for the receipt, consideration, and disposition of these petitions. The right of petition is written into the Constitution itself. This subsection confirms that right where Congress has delegated legislative powers to administrative agencies.\"", "Congress enacted the APA in 1946 following a large expansion of the federal government's size and authorities during the Franklin D. Roosevelt Administration's New Deal. The APA is considered by most observers to be a compromise between two groups in Congress: conservatives who were wary of the rapid growth of the administrative state and liberals who wanted to protect the ability of agencies to exercise their delegated administrative power. This balance was reflected in the foreword to the compiled legislative history of the APA, in which Senate Judiciary Committee Chairman Pat McCarran stated that although the APA \"is brief, it is a comprehensive charger of private liberty and a solemn undertaking of official fairness. It is intended as a guide to him who seeks fair play and equal rights under law, as well as to those invested with executive authority. It upholds law and yet lightens the burden of those in whom the law may impinge.\" ", "The petition mechanism, like other elements of the APA, can be contextualized by considering this balancing act between these two main perspectives on the administrative process reforms of the 1930s and 1940s. Many conservatives in Congress who believed that the rapid expansion of the government in the New Deal had the potential to threaten individual rights saw a petition mechanism as a way to provide individuals a means through which they could address grievances directly to government agencies. Some liberals in Congress who were generally more trusting of regulatory agencies and wanted to protect recently enacted New Deal programs were willing to agree to a petition mechanism, but they were cautious about how much would be required of agencies to respond. The petition provision that was ultimately included in the final version of the APA can be seen as a compromise between these two sides and is discussed in detail below. "], "subsections": []}]}, {"section_title": "APA Petition Mechanism: Overview and Requirements", "paragraphs": ["Section 553(e) of the APA states, \"Each agency shall give an interested person the right to petition for the issuance, amendment, or repeal of a rule.\" Such petitions are sometimes referred to as 553(e) petitions, petitions for rulemaking, petitions for reconsideration, administrative petitions, or citizens' petitions."], "subsections": [{"section_title": "Scope of the Petition Mechanism", "paragraphs": ["The APA's requirement for a petition mechanism applies to all agencies covered by the APA, which includes executive agencies and independent regulatory agencies. ", "Section 553(e) states that the right to petition applies to any \"interested person.\" The Attorney General's Manual on the A dministrative P rocedure A ct , which was published in 1947 and provides the executive branch's interpretation of the APA, states that the right to petition \"must be accorded to any 'interested person'\" and that \"it will be proper for an agency to limit this right to persons whose interests are or will be affected by the issuance, amendment or repeal of a rule.\" ", "The scope of agency actions that are covered by the right to petition is wide-ranging. The APA's definition of rule is broad and covers a variety of agency actions, including several types of actions that are not subject to the APA's notice-and-comment rulemaking procedures. Such actions include agency interpretive rules and policy statements\u00e2\u0080\u0094categories that are often colloquially referred to as \"guidance documents\"\u00e2\u0080\u0094and rules of agency organization, procedure, and practice. Thus, the petition mechanism could potentially be used for more than just rules that have undergone, or would be required to undergo, the APA's notice-and-comment procedures."], "subsections": []}, {"section_title": "Interaction with APA Rulemaking Procedures", "paragraphs": ["If an agency grants a petition requesting that it issue, amend, or repeal a rule, any relevant procedural requirements for rulemaking or other type of action would still apply. The Attorney General's Manual states, \"If the agency is inclined to grant the petition, the nature of the proposed rule would determine whether public rule making proceedings under section 4(a) and (b) are required.\" In other words, a rulemaking action is not subject to, or exempt from, any procedural requirements as a result of the action having been taken pursuant to a petition under the APA\u00e2\u0080\u0094it does not provide an alternative means for an agency to take an action without going through otherwise-required procedures. Rather, the granting of the petition merely serves as a starting point for the agency to take an action. If the nature of the action requires notice-and-comment rulemaking, for example, the agency must still engage in those procedures.", "In any action an agency chooses to take pursuant to a petition, the agency may act only within the delegated authority that Congress has provided to it in statute. A petition can serve only as a procedural mechanism that could cause or encourage an agency to take action under its established authority. "], "subsections": []}]}, {"section_title": "Agency Consideration and Response to Petitions", "paragraphs": ["Although Section 553(e) is only one sentence in length and provides very little detail, other sections of the APA contain some additional requirements for agencies with regard to receiving, considering, and responding to matters presented to them, including rulemaking petitions. Those requirements are discussed below. Notably, however, agencies have a great deal of discretion in determining the specifics of their procedures for receiving, considering, and responding to petitions. "], "subsections": [{"section_title": "Submission and Consideration of Petitions", "paragraphs": ["Whereas the constitutional right to petition under the First Amendment does not require the government to consider or respond to a petition\u00e2\u0080\u0094as described by one scholar, \"it is little more than the right to make a clamor\" \u00e2\u0080\u0094the legislative history of the APA's petition mechanism stated that Congress did not intend for agencies to consider petitions \"in a merely pro forma manner.\" Furthermore, the legislative history states that \"where such petitions are made, the agency must fully and promptly consider them.\" Thus, the APA's legislative history suggests that agencies are minimally required to consider rulemaking petitions and arguably to do so in a timely manner.", "The text of the APA itself provides little information, however, on how agencies are to consider petitions, thus leaving quite a bit of discretion regarding the process and elements of agencies' consideration of petitions. The Attorney General's Manual states that agencies ", "should establish, and publish \u00e2\u0080\u00a6 procedural rules governing the receipt, consideration and disposition of petitions filed pursuant to section 4(d) [of the APA]. These procedural rules may call, for example, for a statement of the rulemaking action which the petitioner seeks, together with any data available in support of his petition, a declaration of the petitioner's interest in the proposed action, and compliance with reasonable formal requirements."], "subsections": [{"section_title": "Agency Procedures for Consideration of Petitions", "paragraphs": ["Several agencies have established such requirements for the submission of petitions. For example, the Food and Drug Administration (FDA) has issued regulations requiring certain petitioners to submit four copies of a petition, sign the petition, and include information referenced in the petition as applicable, among other things. Under those same regulations, the FDA commissioner must follow certain procedures and consider specified criteria when making a decision on whether to grant a petition, such as whether the petition is in the public interest and is being pursued in good faith. ", "On the contrary, some agencies have not established additional requirements for petitioners and merely have the minimal requirements of the APA as a basis for their petition process. For example, the Securities and Exchange Commission provides an address for petitions and asks petitioners to \"set forth the text of any proposed rule or amendment\" or \"specify the rule the repeal of which is sought\" but requires little else of petitioners explicitly in its regulations.", "In some cases, agencies publish a notice in the Federal Register acknowledging receipt of a petition and asking for public comment as part of its consideration process. For example, in June 2017, the Department of Transportation's Federal Motor Carrier Safety Administration (FMCSA) issued a notice stating, \"In response to petitions for reconsideration of the final rule on lease and interchange of passenger-carrying commercial motor vehicles (CMVs) published on May 27, 2015, and effective on July 27, 2015, FMCSA intends to revise the regulations to address 'chartering' (subcontracting) and the 48-hour delay in preparing a lease. FMCSA is requesting public comment on the proposed responses to the petitions discussed below.\" This public input would not substitute for the notice-and-comment rulemaking requirements of the APA if the agency decides to grant a petition, but it could assist the agency in gauging public interest and could provide information to assist the agency in its decision."], "subsections": []}, {"section_title": "ACUS Recommendations on Consideration of Petitions", "paragraphs": ["In 2014, the Administrative Conference of the United States (ACUS) reported that \"few agencies have in place official procedures for accepting, processing, and responding to petitions for rulemaking\" and that \"how petitions are received and treated varies across\u00e2\u0080\u0094and even within\u00e2\u0080\u0094agencies.\" ACUS issued several recommendations related to petitions for rulemaking, including some that addressed the consideration of petitions. The recommendations stated that, for example, \"Each agency that has rulemaking authority should have procedures, embodied in a written and publicly available policy statement or procedural rule, explaining how the agency receives, processes, and responds to petitions\" and that \"the procedures should indicate how the agency will coordinate the consideration of petitions with other processes and activities used to determine agency priorities, such as the Unified Agenda and retrospective review of existing rules.\" ACUS also recommended that \"the procedures should explain what type of data, argumentation, and other information make a petition more useful and easier for the agency to evaluate.\" Such information could be of assistance to petitioners as they are preparing to petition agencies. "], "subsections": []}]}, {"section_title": "Response to Petitions", "paragraphs": ["The APA requires that agencies respond to petitions in a timely manner. Specifically, Section 555(b) states that \"with due regard for the convenience and necessity of the parties or their representatives and within a reasonable time, each agency shall proceed to conclude a matter presented to it.\" This provision has generally been interpreted to apply to a number of potential matters brought to an agency, including petitions for rulemaking: \"Citing various combinations of \u00c2\u00a7\u00c2\u00a7 553(e), 555(b), and 555(e), courts have repeatedly found that agencies must at least 'respond' to petitions for rulemaking.\" ", "Furthermore, the APA appears to require that if the response to a petition is a denial, the agency must provide a reason for the denial. Section 555(e) states that \"prompt notice shall be given of the denial in whole or in part of a written application, petition, or other request of an interested person made in connection with any agency proceeding. Except in affirming a prior denial or when the denial is self-explanatory, the notice shall be accompanied by a brief statement of the grounds for denial.\" Although these provisions appear to establish a requirement for the agency to provide a timely response and a reason for denial, the APA does not further explicate what a response might or should entail.", "Presumably, if an agency grants a petition, the agency would conduct any procedural requirements that may apply (such as if the petition requested the agency to issue a rule subject to the APA's notice-and-comment requirements). Simply receiving a petition, however, does not require the agency to grant a petitioner's request. The legislative history of the APA states that agencies have several options in responding to petitions, including denial: \"The agency may either grant the petition, undertake public rulemaking proceedings as provided by subsections (a) and (b) of this section, or deny the petition.\" The Attorney General's Manual appears to express a similar view: \"the mere filing of a petition does not require the agency to grant it or to hold a hearing or to engage in any other public rule making proceedings.\" Thus, it appears that the agency is not necessarily obligated to grant any petition, but it must meet the minimum requirements of receiving the petition and responding to it in a timely manner. "], "subsections": [{"section_title": "ACUS Recommendations on Agency Responses to Petitions", "paragraphs": ["The ACUS recommendations mentioned above also addressed agencies' responses to petitions, stating that agencies \"should provide a reasoned explanation beyond a brief statement of the grounds for denial\" and \"should not reflexively cite only resource constraints or competing priorities.\" Furthermore, ACUS recommended that agencies should adopt in their procedures \"an expectation that it will respond to all petitions for rulemaking within a stated period (e.g., within 6, 12, or 18 months of submission),\" \"[e]stablish and make publicly available an individual target timeline for responding to that petition,\" and \"provide the petitioner and the public with a brief explanation for the delay, along with a reasonable new target timeline,\" if the target cannot be met."], "subsections": []}, {"section_title": "Denial of a Petition: Judicial Review", "paragraphs": ["An agency's denial of a petition may also be subject to judicial review. Section 706(2) of the APA states that courts can review and set aside final agency actions that are \"arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.\" Section 555's requirement for the agency to give notice of the denial of a petition and to generally accompany the denial with a \"brief statement of the grounds for denial\" has, at times, been interpreted in combination with Section 706(2) of the APA to require the agency to issue a rational (but potentially brief) explanation for a denial of a petition. In some instances, courts have found agencies' denials of petitions to be in violation of the APA. Frequently when this has occurred, courts have remanded the denial to the agency to reconsider the petition. "], "subsections": []}]}]}, {"section_title": "Potential Benefits of Rulemaking Petitions", "paragraphs": ["Rulemaking petitions have several potential benefits, such as that they can provide additional, low-cost opportunities for public participation in federal rulemaking. The subsections below identify and discuss several potential benefits of rulemaking petitions. However, as discussed in the last subsection below, responding to rulemaking petitions could potentially require agencies to allocate resources they would otherwise use elsewhere."], "subsections": [{"section_title": "Public Involvement in Rulemaking", "paragraphs": ["The primary benefit is arguably the opportunity for stakeholders and interested persons to engage directly in a significant type of federal policymaking. Federal rulemaking is the means through which most federal statutes and programs are implemented, and public participation in that process has been an essential component since the APA was enacted in 1946. The benefits of public participation could flow in both directions: Non-agency parties have a chance to make their views known to agencies, and agencies could learn from petitioners about the impacts of their rules\u00e2\u0080\u0094previously issued or not-yet-issued\u00e2\u0080\u0094by obtaining additional information or perspectives they may not otherwise consider. One study of the use of petitions for rulemaking under the Endangered Species Act found that outside groups petitioning the Fish and Wildlife Service provided useful information for identifying species that are \"at least as deserving of protection under the Act as species identified by the agency on its own,\" further concluding that \"these public participation tools might have an important role to play in collecting dispersed or diffuse information to help better inform agency decisionmaking.\" "], "subsections": []}, {"section_title": "Less Costly Than Judicial Review", "paragraphs": ["The rulemaking petition process provides an arguably more democratic, widely available opportunity for public access by individuals and entities who may not otherwise have an opportunity to challenge agency rules through the courts by seeking judicial review. Filing a petition with a federal agency under the APA or another statutory petition mechanism is likely to be less costly financially and resource-wise than the potential cost of litigation."], "subsections": []}, {"section_title": "Potential for Compelling an Agency to Act", "paragraphs": ["Petitions for rulemaking can potentially serve as a mechanism to try to force an agency to issue a rule through a court challenge: On occasion, rulemaking petitions that were denied and challenged have led to court orders for the issuance of a rule. For example, in 1999, a group of stakeholders petitioned the Environmental Protection Agency (EPA) to regulate greenhouse gas emissions from new motor vehicles under its Clean Air Act regulatory authority. EPA took comments on the petition and published notice in 2003 that it was denying the petition. After a judicial challenge to the denial of the petition, in 2007, the Supreme Court held that EPA's reasons for denial of the petition were invalid and that EPA did have the authority to regulate greenhouse gas emissions under the Clean Air Act. The Court determined that, under the Clean Air Act, EPA must make a determination on the merits of whether to regulate greenhouse gas emissions or provide a reasonable explanation why it cannot or will not make that decision. "], "subsections": []}, {"section_title": "Potential Intersection with Retrospective Review of Regulations and Regulatory Budgeting", "paragraphs": ["Rulemaking petitions can also encourage agencies to review or eliminate specific regulations that are outdated, ineffective, or overly burdensome. Administrations going back at least to the 1970s have required agencies to engage in retrospective regulatory review. The Trump Administration has taken that requirement a step further with its \"one-in-two-out\" regulatory requirement, which requires agencies to identify offsetting costs from at least two rules for every rule that imposes new costs. Rulemaking petitions could provide an information mechanism for agencies to comply with these requirements: Outside parties could help identify regulations or portions of regulations that are ripe for revision or elimination. "], "subsections": []}, {"section_title": "Increase in Public Legitimacy of Agency Rulemaking", "paragraphs": ["Additionally, by allowing for participation in addition to the notice-and-comment requirements of the APA, agencies could potentially increase their public legitimacy\u00e2\u0080\u0094either for a particular regulation or as a more general matter. The APA's legislative history acknowledges a potential \"public relations\" improvement for agencies that use petitions, stating that petitions \"should be a most useful instrument of both improving the public relations of administrative agencies and protecting the public by affording interested persons a legal and regulatory means of securing the issuance, change, or rescission of a rule.\" An announcement in the Federal Register that an agency is considering granting a petition could serve as a notification similar to an advance notice of proposed rulemaking (ANPRM), which is another mechanism for early public participation in the rulemaking process. Such a notice could indicate, even in highly tentative terms, the type of action being considered by the agency and invite public input."], "subsections": []}]}, {"section_title": "Potential Disadvantages for Rulemaking Petitions", "paragraphs": ["Nonetheless, considering and responding to rulemaking petitions can be time- and resource-intensive for agencies. In 2013, the Nuclear Regulatory Commission (NRC) published a proposed rule to amend its procedures for receiving and considering petitions. In the document, the agency cited an increase in the number of rulemaking petitions it had received recently, stating that this \"presented a significant resource challenge to the NRC.\" Such allocation of resources could cause delays in other activities at an agency, such as issuing other regulations. The use of resources to respond to a petition varies widely depending on the nature and content of the petition, however. "], "subsections": []}, {"section_title": "What Makes a Petition Effective?", "paragraphs": ["The effectiveness of, and timing of response to, a petition for rulemaking likely depends on many factors, including the quality and nature of the arguments presented, the policy preferences of the agency and the Administration, any statutory requirements or constraints the agency faces, the evidence available to the agency and its ability to justify taking any particular action, and whatever preferences the agency and Administration may have for prioritization of resources at the agency. ", "Many of these factors are outside of the control of a petitioner, but there are certain steps a petitioner might take to make a stronger case to the agency. Some outside groups have offered advice to the public for how to petition agencies more effectively. For example, the Center for Effective Government suggested that a petition for rulemaking should include information such as an explanation of the proposed action; the language the petitioner would like to propose for a new or amended rule or eliminate from a rule; information and arguments that support the petitioner's proposed action, including relevant technical and scientific data; specific facts or circumstances that support the proposed action; and relevant legal information about any specific laws or statutory provisions that is relevant to the petition and the rule in question. ", "Individual agencies may provide guidance, or even requirements, for petitioners on their websites or in their regulations. For example, some of the suggestions provided by the Center for Effective Government above are from the Federal Aviation Administration's (FAA) regulations and guidance, which are on its website. Similarly, the NRC has regulations and detailed information on its website on how to submit petitions, as well as information tracking petitions that have been submitted to it, including visual information on the number and status of the petitions that have been submitted.", "As noted above, however, ACUS found in 2014 that few agencies had established official procedures for receiving, considering, and responding to petitions. As such, guidance may not necessarily be available for any particular agency's expectations or requirements. In such circumstances, general guidelines, such as those referred to above from the Center for Effective Government, may be useful."], "subsections": []}, {"section_title": "Other Statutory Authorities for Petitions for Rulemaking", "paragraphs": ["In addition to the APA petition mechanism, Congress has enacted various criteria for specific agencies' decisionmaking processes. Generally, these additional statutory mechanisms appear to build upon the 553(e) petition mechanism. A comprehensive list of all such provisions is beyond the scope of this report, but some examples include the following:", "The Fixing America's Surface Transportation Act required FMCSA to publish on a publicly accessible website a summary of all petitions for regulatory action submitted to FMCSA; \"prioritize the petitions submitted based on the likelihood of safety improvements resulting from the regulatory action requested;\" respond to each petition within 180 days of posting the summary; prioritize responses to petitions consistent with a petition's potential to reduce crashes, improve enforcement, and reduce unnecessary burdens; and keep an updated inventory of the petitions on its website. The Endangered Species Act states, \"To the maximum extent practicable, within 90 days after receiving the petition of an interested person under section 553(e) of title 5, to add a species to, or to remove a species from, either of the lists published under subsection (c), the Secretary [of the Interior] shall make a finding as to whether the petition presents substantial scientific or commercial information indicating that the petitioned action may be warranted. If such a petition is found to present such information, the Secretary shall promptly commence a review of the status of the species concerned. The Secretary shall promptly publish each finding made under this subparagraph in the Federal Register.\" The Food, Drug, and Cosmetic Act contains requirements for the Secretary of Health and Human Services and for individuals petitioning the agency for a regulation on food additives. The statute lists information the petitions shall include, such as detailed scientific information about the additive and \"full reports of investigations made with respect to the safety for use of such additive, including full information as to the methods and controls used in conducting such investigations.\" It also requires a petition to respond to requests from the Secretary for additional information and further requires the Secretary to publish notice of the regulation proposed by the petitioner. "], "subsections": []}]}}
{"id": "R46282", "title": "Department of Veterans Affairs: Caregiver Support", "released_date": "2020-03-24T00:00:00", "summary": ["The conflicts in Iraq and Afghanistan have presented a new challenge for the United States as servicemembers returned from combat with serious injuries that may have been fatal in previous conflicts. These servicemembers require ongoing personal care services, which are often provided by family members and loved ones. In recognition of this significant challenge, Congress enacted the Caregivers and Veterans Omnibus Health Services Act of 2010 ( P.L. 111-163 ), which required the Department of Veterans Affairs (VA) to establish specific supports for caregivers of veterans.", "The Veterans Health Administration (VHA), within VA, offers caregiver support through two programs that were established by the act:", "a Program of General Caregiver Support Services ( general caregivers program ); and a Program of Comprehensive Assistance for Family Caregivers ( family caregiver s program ).", "The general caregivers program offers a basic level of support, such as education and training, to caregivers of veterans of all eras enrolled in VA health care. The family caregivers program offers comprehensive supports, such as health care benefits and a monthly stipend, to caregivers of veterans who were seriously injured in the line of duty on or after September 11, 2001 (post-9/11 veterans). VA refers to these two programs collectively as the Caregiver Support Program.", "The general caregivers program does not have an application or eligibility determination process. The limited services provided under this program are, generally, available to all caregivers of veterans enrolled in VA health care. Veterans and caregivers who apply for the family caregivers program undergo a multistep eligibility determination process that includes an initial assessment, education, training, and an in-home assessment. VA determines both administrative and clinical eligibility of veterans and caregivers. Caregivers who are eligible and designated as a family caregiver receive a unique suite of comprehensive services and benefits to help them provide care to the veteran.", "The VA Maintaining Internal Systems and Strengthening Integrated Outside Networks Act of 2018 (VA MISSION Act; P.L. 115-182 , as amended) required VA to expand eligibility for the family caregivers program to caregivers of veterans of all eras. Expansion is being implemented in two phases, as required by the VA MISSION Act. Veterans who were seriously injured in the line of duty before May 7, 1975, are to become eligible first. Two years later, veterans who served and were injured in the line of duty between May 7, 1975, and September 11, 2001, are to become eligible for the program.", "This expansion, which has yet to go into effect, is expected to generate a large increase in enrollment and may lead to changes to the underlying structure of the family caregivers program due to a large increase in the number of eligible individuals. Unlike the population currently eligible for the program, this newly eligible population comprises older individuals who may have different disabling conditions that require personal care assistance, which may present a challenge to eligibility determination based on an injury in the line of duty.", "Eligibility expansion is contingent on the implementation and certification of a functioning information technology (IT) system required to fully support the program. The VA MISSION Act required that VA complete certification of a system by October 1, 2019. VA did not meet that deadline and has not yet certified an IT system.", "VA published a proposed rule to implement the changes required under the VA MISSION Act on March 6, 2020. The public comment period for the proposed rule ends on May 5, 2020.", "This report provides an overview of the VA Caregiver Support Program, including", "eligibility criteria that veterans and caregivers must meet to qualify for both the family caregivers program and the general caregivers program; a catalogue of the services and benefits provided under the two programs; and current issues related to implementation of modifications under the VA MISSION Act.", "The Appendix provides background on the program evolution and a legislative history of the program."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["The Department of Veterans Affairs (VA) Caregiver Support Program was born from a new challenge facing veterans returning from recent conflicts. The conflicts in Afghanistan and Iraq (Operation Enduring Freedom, Operation Iraqi Freedom, and subsequent operations, hereinafter referred to as OEF/OIF ) led to a growing number of seriously disabled veterans, many of whom require extended care for the remainder of their lives. Some of those seriously injured while serving in these conflicts survived with injuries that would have been fatal in previous conflicts. In the Vietnam Era, five out of every eight seriously injured servicemembers survived. In OEF/OIF, seven out of eight seriously injured servicemembers survived.", "Seriously injured servicemembers returning from OEF/OIF conflicts often sustained polytraumatic injuries requiring medically complex care, intensive rehabilitation, and extended or long-term care. Such injuries can include physical injuries (e.g., traumatic brain injuries, amputations, serious burns, spinal cord injuries, and blindness), as well as mental health issues (e.g., posttraumatic stress disorder [PTSD], anxiety, and depression). These types of injuries often have lasting implications for the Department of Defense (DOD) and VA health care and disability systems.", "Researchers found that family members and close friends to veterans often shouldered much of the burden in the rehabilitation of returning veterans. Family members and friends relocated for extended periods of time while veterans received treatment in hospital settings. Moreover, family and friends often left jobs to act as caregivers for veterans.", "In recognition of this significant challenge to families, Congress enacted the Caregivers and Veterans Omnibus Health Services Act of 2010 ( P.L. 111-163 ), which required VA to establish specific supports for caregivers of veterans. The Veterans Health Administration (VHA), within VA, offers caregiver support through two programs established by the act:", "a Program of General Caregiver Support Services (general caregivers program) ; and a Program of Comprehensive Assistance for Family Caregivers ( family caregivers program ).", "The general caregivers program offers a basic level of support, such as education and training, to caregivers of veterans of all eras enrolled in VA health care. The family caregivers program offers comprehensive supports, such as health care benefits and a monthly stipend, to caregivers of veterans who were seriously injured in the line of duty on or after September 11, 2001. VA refers to these two programs collectively as the Caregiver Support Program.", "The Caregiver Support Program is distinct from other VA programs in that the beneficiary is a nonveteran with some relationship to a living veteran. VA services and benefits are typically provided only to veterans. (VA does provide some services and benefits to families of deceased veterans, with a few exceptions. ) Generally, caregiver services and benefits are available to caregivers only while the veteran receiving care is living. ", "After many years of advocacy from veterans organizations, among others, the VA Maintaining Internal Systems and Strengthening Integrated Outside Networks Act of 2018 (VA MISSION Act; P.L. 115-182 , as amended) was enacted. It required VA to expand eligibility for supports under the family caregivers program to caregivers of veterans of all eras. Expansion is being implemented in two phases, as required by the VA MISSION Act. Veterans who were seriously injured in the line of duty before May 7, 1975, are to become eligible first. Two years later, veterans who served and were injured in the line of duty between May 7, 1975, and September 11, 2001, are to become eligible for the program. ", "This expansion, which has yet to go into effect, is expected to generate a large increase in enrollment and may lead to changes to the underlying structure of the family caregivers program due to a large increase in the number of eligible individuals. Unlike the population currently eligible for the program, this newly eligible population is older and may have different disabling conditions that require personal care assistance, characteristics that may present a challenge to determining eligibility based on an injury in the line of duty. (See the text box \"Proposed Rule Published on March 6, 2020\" for information on a proposed rule to implement requirements under the VA MISSION Act.)"], "subsections": []}, {"section_title": "The Caregiver Support Program", "paragraphs": ["Title I of the Caregivers and Veterans Omnibus Health Services Act of 2010 ( P.L. 111-163 ) includes programs and services to provide support to caregivers of veterans. Specifically, the act amends Title 38, Chapter 17, Subchapter II of the United States Code (U.S.C.) by establishing two programs to assist family caregivers. The first is a Program of Comprehensive Assistance for Family Caregivers, for caregivers of eligible veterans who incurred a serious injury in the line of duty while actively serving in the military on or after September 11, 2001 (referred to as the as the family caregivers program in this report). The second is a Program of General Caregiver Support Services, for caregivers of covered veterans of all eras enrolled in the VA health care system (referred to as the general caregivers program in this report). VA refers to the two programs together as the Caregiver Support Program. The Appendix provides a legislative history of the Caregiver Support Program.", "Title I of the act also amends Title 38 of the U.S.C. to provide the following services: (1) medical care to certain primary family caregivers; (2) counseling and mental health services to certain family caregivers and other caregivers; and (3) lodging and subsistence for attendants who travel with veterans for medical treatment, regardless of whether they require an attendant for such travel.", "The VA MISSION Act required VA to add additional services to the family caregivers program, to implement a new information technology (IT) system to support the family caregivers program, and to expand eligibility for the program to caregivers of veterans of all eras."], "subsections": [{"section_title": "Caregiver Designations and Eligibility for Support", "paragraphs": ["Title I of the Caregivers and Veterans Omnibus Health Services Act of 2010 ( P.L. 111-163 ) creates two caregiver designations: general caregiver and family caregiver. Within the family caregiver designation, the act established a primary designation. VA refers to individuals not designated primary as secondary family caregivers. Multiple individuals can be designated as a family caregiver for one veteran, hence the primary and secondary designations. Both primary and secondary family caregivers are provided supports through the family caregivers program. General caregivers are provided supports through the general caregivers program. Caregiver designation is conferred based on both the veteran's and the caregiver's eligibility for either of the two programs. Figure 1 shows these caregiver designations under the appropriate VA program."], "subsections": []}, {"section_title": "Eligibility for the General Caregivers Program", "paragraphs": ["The general caregivers program does not have a formal application process. Likewise, VA does not require a clinical evaluation to obtain benefits through the general caregivers program. A general caregiver may not be a primary or secondary family caregiver, as designated under the family caregivers program, and must provide personal care services to a veteran who is enrolled in the VA health care system and is either", "unable to perform an activity of daily living (ADL), or in need of supervision or protection based on symptoms or residuals of neurological or other impairment or injury (supervision or protection).", "The veteran's general caregiver is not required to reside with the veteran. ", "To receive services under the general caregivers program, the veteran or the caregiver must contact a local VA medical center. The caregiver is identified in the veteran's medical record for the purpose of care coordination. VA health care providers are required to recognize the caregiver as a collaborative partner in the care of the veteran."], "subsections": []}, {"section_title": "Eligibility for the Family Caregivers Program", "paragraphs": ["The family caregivers program requires veterans and their caregivers to undergo an eligibility determination process before conferring caregiver designation under the program. Individuals who wish to be designated by VA as primary or secondary family caregivers must complete and sign a joint application with the veteran. Figure 2 describes the eligibility requirements that veterans and caregivers must meet before submitting an application, and the process used to determine eligibility after the application is submitted."], "subsections": [{"section_title": "Veteran Eligibility Criteria", "paragraphs": ["To qualify for the family caregivers program, an individual must first either (1) meet the statutory definition of a veteran , meaning an individual who served in the active military, naval, or air service and who was discharged or released under conditions other than dishonorable, or (2) be a servicemember who has been issued a date of medical discharge from the military.", "Since the inception of the family caregivers program, the basis of veteran eligibility has been a serious injury incurred in the line of duty on or after September 11, 2001. As such, veterans eligible for this program are referred to as post-9/11 veterans. (See the \" Issues for Congress \" section for information on eligibility for pre-9/11 veterans.) In addition to this post-9/11 requirement, the veteran must have been in need of personal care services for a minimum of six continuous months due to either of the following clinical criteria:", "an inability to perform one or more activities of daily living (ADL), or a need for supervision or protection based on symptoms or residuals of neurological or other impairment or injury (supervision or protection).", "In addition to those criteria, the veteran's primary care team must determine clinically that it is in the best interest of the veteran to participate in the program. The veteran cannot receive personal care services simultaneously and regularly by another individual or entity who is not the family caregiver. The veteran must agree to receive care at home from the family caregiver and to receive ongoing care from a primary care team after VA designates a family caregiver.", "The following section describes the ADLs recognized by VA for the purpose of establishing eligibility for the family caregivers program. The section below that one describes the VA-recognized reasons why a veteran may need supervision or protection; these reasons are based on symptoms or residuals of neurological or other impairment or injury."], "subsections": [{"section_title": "Eligibility Based on ADLs", "paragraphs": ["VA considers the following seven ADLs when determining a veteran's eligibility for the family caregiver program:", "1. Eating. The ability to feed oneself. Specifically, the process of eating, chewing, and swallowing. This does not include preparing food. 2. Grooming. The ability to safely tend to personal hygiene needs. 3. Bathing. The ability to wash the entire body safely. 4. Dressing and u ndressing. The ability to dress and/or undress the upper and lower body with or without dressing aids. 5. Toileting. The ability to maintain perineal hygiene and adjust clothing before and/or after using the toilet or bedpan; the ability to manage an ostomy, including cleaning the area around stoma but not managing equipment; or ability to manage urinary catheter or urinal. 6. Prosthetic a djustment. The ability to adjust special prosthetic or orthopedic appliances without assistance. The adjustment of appliances that any person (with or without a disability) would need assistance with should not be scored (e.g., supports, belts, lacing at back). 7. Mobility. The ability to transfer safely from bed to chair and/or chair to toilet, the ability to turn and position self in bed, the ability to walk safely on a variety of surfaces, and the ability to go upstairs.", "The inability to perform any one of these ADLs for a minimum of six continuous months is a qualifying factor for enrollment in the program.", "The VA also tracks a veteran's ability to perform instrumental activities of daily living (IADLs). However, IADLs are not considered in the eligibility determination process."], "subsections": []}, {"section_title": "Eligibility Based on Supervision or Protection", "paragraphs": ["VA recognizes seven reasons that a veteran may need supervision or protection under this clinical criterion:", "1. Seizures . The veteran is unable to manage seizures independently. 2. Planning and o rganizing. The veteran has difficulty planning and organizing daily tasks, appointments, and medication regiments. 3. Safety. The veteran is unable to maintain safety with self and others. This may include a risk of falling or wandering. 4. Sleep. The veteran has difficulty regulating sleep without intervention. 5. Delusions/ h allucinations. The veteran is unable to maintain safe behavior in response to delusions (irrational beliefs) or hallucinations (serious disturbances in perception). 6. Impairment of r ecent m emory. The veteran has difficulty remembering recent events and learning new information. 7. Affective/ b ehavioral d ysregulation ( s elf- r egulation) . The veteran is unable to regulate behavior without exhibiting any of the following behaviors: aggressive or combative with self or others, verbally disruptive including yelling, threatening and excessive profanity, impaired decision making, inability to appropriately stop activities, and disruptive, infantile or socially inappropriate behavior.", "The need for supervision or protection based on any one of these reasons for a minimum of six continuous months is a qualifying factor for enrollment in the program."], "subsections": []}]}, {"section_title": "Family Caregiver Eligibility Criteria", "paragraphs": ["Under the family caregivers program, a caregiver must be at least 18 years of age, and be either a family member or a person who is living with the veteran or will live with the veteran upon approval. An individual is considered a family member if he or she is the eligible veteran's spouse, son, daughter, parent, step-family member, or extended family member.", "Although the family caregiver status includes the term family , the individual is not required to have any familial relationship with the veteran. Furthermore, to apply for the family caregivers program, an individual is not required to currently live with the veteran. The individual simply has to certify that he or she will live with the veteran upon approval as a family caregiver."], "subsections": []}, {"section_title": "Applying for the Family Caregivers Program", "paragraphs": ["If a veteran meets the eligibility criteria for the family caregivers program, he or she is encouraged to apply using VA form 10-10CG. The application can either be mailed to the VA Health Eligibility Center or submitted to the caregiver support coordinator at the veteran's local VA medical center. The application asks the veteran to identify up to three family caregivers\u00e2\u0080\u0094one primary family caregiver and two secondary family caregivers. ", "The qualification requirements are the same for the primary or secondary family caregivers. However, primary family caregivers are provided additional benefits, which are listed in Table 1 .", "After receiving the application, VA evaluates eligibility by identifying the veteran's potential qualifying injury and assessing whether it may render the veteran in need of personal care services. Before the approval and designation of family caregiver(s), the applicant undergoes an initial assessment, education, training, and an initial home care assessment.", "The entire VA approval process should be completed within 45 calendar days from the date of submission of an application. The 45-day deadline can be extended if a veteran is hospitalized during the application process or if the caregiver has not completed the required education and training."], "subsections": [{"section_title": "Initial Assessment", "paragraphs": ["A VA primary care team initially assesses each caregiver applicant to confirm that he or she is able to complete caregiver education and training. This initial assessment is completed at a VA medical center. The primary goals of this initial assessment are to assess whether the caregiver applicant can (1) communicate and understand details of the specific care needs related to the veteran and (2) follow a specific treatment plan for the veteran.", "During this initial assessment, the VA primary care team determines whether the veteran is eligible for the program. The team examines administrative eligibility (i.e., whether the veteran is enrolled in the VA health care system and has a documented serious injury that was incurred or aggravated in the line of duty on or after September 11, 2001) and clinical eligibility (i.e., the veterans need for personal care services). The veteran is assigned to a tier level during the clinical evaluation based on the number of hours of personal care services needed. (See the text box \"Centralized Eligibility and Appeals Teams\" for information on how VA is implementing centralized teams to change the eligibility determination process.) ", "During the initial assessment, prospective caregivers are eligible for the Veterans Transportation Service (VTS) program. The VTS provides free transportation services to and from a VA medical center."], "subsections": []}, {"section_title": "Education and Training", "paragraphs": ["Following the initial assessment, VA administers a training program that consists of topics generally applicable to caregivers, as well as topics targeted to the needs of the specific veteran. The training program must cover 10 specific core competencies: medication management, vital signs and pain control, infection control, nutrition, functional activities, activities of daily living, communication and cognition skills, behavior management skills, skin care, and caregiver self-care.", "During this education and training process, prospective caregivers are eligible for either VTS or the VA beneficiary travel program, which reimburses travel expenses related to the veteran's medical appointments. The prospective caregiver can be reimbursed for expenses such as the cost of transport, lodging, and meals. In addition, during this period VA provides respite care for the veteran, if necessary. (For information on respite care, see the \" Services and Benefits for General Caregivers \" section.)"], "subsections": []}, {"section_title": "Initial Home Care Assessment", "paragraphs": ["The final step before approval and designation is an initial home care assessment. In this step, a VA clinician or clinical team visits the veteran's home to assess whether the caregiver is competent to provide personal care services and to measure the veteran's well-being.", "The clinician or clinical team assesses the veteran's ability to complete ADLs and IADLs, identifies special care needs (e.g., use of a feeding tube), monitors vital signs, looks for signs of abuse or neglect, notes other potential health or safety risks, and screens both the veteran and the caregiver for depression. The clinician or clinical team is not responsible for developing a care plan or for management of the veteran's conditions. However, the clinician or clinical team is responsible for reporting any findings to the veteran's primary care team. The clinician or clinical team can also recommend referrals for follow-up care.", "VA requires that this assessment be completed within 10 days of certification that the caregiver completed the requisite education and training curriculum. If the veteran is hospitalized before the assessment is conducted, VA must conduct the assessment within 10 days from the date the veteran returns home."], "subsections": []}, {"section_title": "Approval and Designation", "paragraphs": ["If the veteran and his or her caregiver(s) are deemed eligible following the initial home care assessment, VA will approve the application and designate the primary and/or secondary family caregivers. Approval of one caregiver is not contingent on the approval of other caregivers listed on the application. For instance, if a veteran designates two caregivers, but only one of the two completed the required training, VA may still approve the individual who completed the training. ", "VA informs veterans and caregivers deemed ineligible of their ability to appeal the decision. Appeals may be filed at either the local VA facility or at the VISN level."], "subsections": []}]}, {"section_title": "Ongoing Monitoring and Revocation of Caregiver Status", "paragraphs": ["Veterans and family caregivers are subject to ongoing monitoring while enrolled in the family caregivers program. VA requires ongoing assessments every 90 days. Assessments can be completed in-person, through video telehealth, or by phone, as well as with an annual in-home visit. The annual visit must be completed in the veteran's home. The purpose of ongoing monitoring is to monitor the veteran's overall health and well-being and adequacy of the personal care services provided by the family caregiver.", "Caregiver status can be revoked immediately if VA determines that the caregiver or the veteran no longer meet eligibility criteria, or if VA makes a clinical determination that having the family caregiver is no longer in the best interest of the veteran. If the family caregiver designation is revoked because the veteran's condition improves\u00e2\u0080\u0094or as the result of the veteran's death or institutionalization\u00e2\u0080\u0094the caregiver will continue to receive benefits for 90 days following the loss of the caregiver designation.", "The family caregiver or the veteran can request that the caregiver designation be revoked. If requested by the caregiver, benefits will terminate immediately upon the date that the caregiver requests revocation. If requested by the veteran, the caregiver will continue to receive benefits for 30 days. If the caregiver whose status is being revoked was a primary family caregiver and another primary family caregiver is designated within 30 days, the revoked caregiver's benefits will terminate the day before the new family caregiver is designated as such. "], "subsections": []}]}, {"section_title": "Services and Benefits Available to Caregivers", "paragraphs": [" Table 1 lists the services and benefits available under the two caregiver support programs (i.e., the Program of General Caregiver Support Services and the Program of Comprehensive Assistance for Family Caregivers). The table also details which of the three categories of caregiver status (i.e., general caregiver, secondary family caregiver, or primary family caregiver) are eligible for the specific service or benefit. The general caregiver category, which confers the least services and benefits, is presented first; followed by the primary family caregiver category, which confers the most services and benefits. In developing Table 1 , CRS consulted Title 38 of the Code of Fe deral Regulations (38 C.F.R. \u00c2\u00a7\u00c2\u00a771.40 and 71.50), as well as publicly available VHA Directive 1152(1). A detailed description of each service and benefit appears below the table."], "subsections": [{"section_title": "Services and Benefits for General Caregivers", "paragraphs": ["As shown in Table 1 , the general caregivers are eligible for various services and benefits: limited to access to the VA caregiver support line; peer mentoring; education, training, and technical support; telehealth; counseling; and respite care. These services and benefits are detailed below.", "The caregiver support line is available to general and family caregivers, as well as to any individual who calls to learn more about offered services and eligibility. The support line serves as a resource referral center for individuals seeking caregiver information, provides referrals to local VA medical center caregiver support coordinators and other VA or community resources, and provides emotional support to callers.", "The caregiver support line also hosts monthly education calls for caregivers. An individual must be a caregiver of a veteran enrolled in VA health care, and participants must register for the call in advance. This optional benefit includes courses on managing difficult behavior, self-care, and other topics.", "The peer support mentoring program facilitates a mentor/mentee relationship between caregivers. Caregivers can join the program as both mentors and mentees. Mentors receive training and are considered volunteers by VA. This program generally asks mentees to commit to a minimum of six months of mentoring. However, VA also offers one-time connections for caregivers who cannot commit to long-term mentoring but who may need brief support.", "VA offers a variety of education, training , and t echnical s upport , which includes specific programs such as the Building Better Caregivers program and REACH VA, as well as online tools to assist in caregiving duties. This is separate and distinct from the required training that family caregivers must participate in to qualify under the family caregivers program.", "Building Better Caregivers is an online workshop that offers weekly lessons, guidance, group support, and access to an alumni community for graduates of the program. The workshops are anonymous to facilitate open communication among caregivers.", "REACH VA is an individual coaching program for caregivers designed to help them build skills to take care of themselves and the veterans for whom they are providing personal care services. This program, unlike others available to general caregivers, is available only to caregivers of veterans diagnosed with amyotrophic lateral sclerosis (ALS), dementia, multiple sclerosis (MS), PTSD, or spinal cord injury/disorder. Coaches generally provide four individual hour-long coaching sessions over a period of two to three months. Additional sessions can be provided if the caregiver and coach believe that they will be beneficial.", "Telehealth services are provided directly to the veteran. However, they are an indirect benefit to the caregiver, because they allow the veteran to receive medical services without needing a caregiver's assistance in transporting the veteran to medical appointments. Caregivers are able to access VA mobile applications, such as MyHealtheVet , which allows them to view electronic health records, reorder medication, and contact health care providers via secure messaging, among other things.", "The counseling services provided to general caregivers include consultation, professional counseling, marriage and family counseling, training, and mental health services. However, these services are available only if a veteran's medical team determines that the service is \"in connection with the treatment\" of a veteran's disability. In other words, the counseling services may be authorized only if they further the objectives of a veteran's treatment plan. For instance, marriage and family counseling may be provided only if it is intended to address the veteran's mental health. VA clinicians are authorized to refer caregivers to the community for counseling when it is not related to the veteran's treatment.", "Veterans are eligible for 30 days of respite care per calendar year, in general. Respite care is short-term relief for the caregiver, in which another individual acts as the primary caregiver. This care can be provided in an institutional setting or as 24-hour per day in-home care. The respite care must be medically and age-appropriate. Respite care can be provided at the home, in a VA community Living Center, through a contracted community skilled nursing home, or through a VA adult day care program."], "subsections": []}, {"section_title": "Services and Benefits for Secondary Family Caregivers", "paragraphs": ["Secondary family caregivers are eligible for the same suite of benefits as general caregivers. In addition, veterans under the family caregivers program receive primary care team support and monitoring. Secondary family caregivers receive more comprehensive mental health services and travel reimbursement (described below).", "Unlike the counseling services provided to general caregivers, secondary family caregivers can receive mental health services regardless of the medical benefit to the veteran. These services can be provided with the health of the caregiver in mind rather than treatment of the veteran. Services include individual and group therapy, individual counseling, and peer support groups. Mental health services are limited to outpatient care and do not include medication or medication management.", "Secondary family caregivers are eligible for travel reimbursement through the VA Beneficiary Travel program when travel is related to the veteran's medical treatment. Reimbursement is not provided when travel is related solely to the treatment of the caregiver (e.g., travel to a VA medical center for mental health services). To receive travel reimbursement, the veteran must be eligible for the program. If eligible, reimbursement includes expenses for lodging and meals, as well as for travel to and from medical appointments."], "subsections": []}, {"section_title": "Services and Benefits for Primary Family Caregivers", "paragraphs": ["Primary family caregivers are eligible for all of the benefits available to both general caregivers and secondary family caregivers. In addition to those benefits, primary family caregivers are eligible to receive health care through the Civilian Health and Medical Program of the Department of Veterans Affairs (CHAMPVA) and to receive a monthly stipend based on the number of hours of personal care services that a veteran requires.", "Enrollment in the family caregivers program does not confer eligibility for h ealth care services to all primary family caregivers. Individuals must meet additional criteria to be eligible for enrollment in CHAMPVA. Specifically, caregivers must be unable to access any other form of health plan contract, such as health insurance or a state health plan. Distinct from VA health care provided to enrolled veterans, CHAMPVA is primarily a health insurance program where individuals receive care from private sector health care providers."], "subsections": [{"section_title": "Caregiver Stipend", "paragraphs": ["In the clinical determination process during the initial assessment, VA assigns veterans to one of three tier levels based on the amount of hours of personal care service required:", "Tier 1. A maximum of 10 hours of caregiver assistance per week. Tier 2. A maximum of 25 hours of caregiver assistance per week. Tier 3. A maximum of 40 hours of caregiver assistance per week.", "The tier level is used to calculate monthly stipend levels for primary family caregivers. VA determines the monthly value of the stipend by multiplying the hours corresponding to the assigned tier level by the hourly wage for a home health aide, then multiplying the result by 4.35 weeks (the average number of weeks in a month, according to VA). VA uses the 75 th percentile hourly wage index for a home health aide for the geographic region in which the veteran and caregiver reside, as determined by the Bureau of Labor Services (see the text box \"Caregiver Stipend Formula\" for the stipend formula).", "The monthly stipend varies based on the assigned tier level and the geographic region in which the veteran and caregiver reside. The 75 th percentile hourly wage for home health aides ranges from $8.91 in Ponce, PR, to $36.48 in Santa Rosa, CA, with a median nationwide of $13.00. Table 2 provides the average monthly stipend amounts nationwide by tier level. ", "Despite receiving a stipend, primary family caregivers are not considered VA employees and the stipend is not considered taxable income."], "subsections": []}]}]}, {"section_title": "Caregiver Support Program Administration and Funding", "paragraphs": ["This section details the administrative structure of the Caregiver Support Program and provides historical funding for the program. The narrative explaining the administrative structure of the program is largely adapted from the publicly available VHA Directive 1152(1). The funding history is compiled from VA congressional budget submissions."], "subsections": [{"section_title": "Caregiver Support Program Administration", "paragraphs": ["The Caregiver Support Program is administered by a central office within VHA. The Caregiver Support Program Office develops national policy and procedures and provides guidance, oversight, and support to regional and local VA staff regarding caregiver support.", "Two other VA national offices, the Health Eligibility Center (HEC) and the Office of Community Care, perform significant roles in administration of the Caregiver Support Program. The HEC is responsible for processing applications for the family caregiver program. The Office of Community Care calculates and processes stipend payments for family caregivers and administers enrollment and claims processing for family caregivers in CHAMPVA.", "Regionally, each VISN ensures that every medical center within the VISN employs at least one full-time equivalent Caregiver Support Coordinator and that the program is operated consistently across the VISN. The VISN also maintains a process for appeals related to clinical disputes, which includes independent external review. The VISN employs a clinical staff member as a VISN lead for the Caregiver Support Program.", "The VISN lead acts as an intermediary between the central office and the Caregiver Support Coordinators at the local level. The VISN lead provides guidance and support to the Caregiver Support Coordinators within the VISN. ", "The caregiver support coordinator administers the program locally at each VA medical center. The coordinator is responsible for managing the family caregiver program at the operational level by coordinating the application process, the initial home care assessment, and ongoing monitoring. The individual also acts as an advocate for caregivers and veterans internally by ensuring that services and benefits are available, as well as by creating educational tools and developing programs. VA has mandated that each medical center have at least one full-time equivalent caregiver support coordinator."], "subsections": []}, {"section_title": "Caregiver Support Program Funding", "paragraphs": ["VA began reporting actual operating expenditures for the Caregiver Support Program in its annual budget submissions in FY2012. Figure 3 shows actual expenditures for FY2012 through FY2019. Between FY2012 and FY2015\u00e2\u0080\u0094the first years of implementation of the Caregiver Support Program\u00e2\u0080\u0094expenditures grew by 41.0% annually. Since FY2015, expenditures for the program have stabilized substantially. Between FY2015 and FY2018, expenditures grew by 2.3% annually. In FY2019, expenditures were lower than anticipated, decreasing by 13% from expenditures in FY2018. VA has indicated that decreasing enrollment in recent years may be due to decreasing application approval rates and increases in revocations for veterans and caregivers who do not meet eligibility requirements.", "The monthly stipend for primary family caregivers in the family caregivers program comprises the largest portion of spending under the Caregiver Support Program. In FY2019, for instance, stipend payments totaled approximately $347 million, or 79% of total program expenditures.", "Expansion of the family caregiver program to pre-9/11 veterans is expected to significantly increase demand for the program. VA has factored this expected increase into future budget estimates. VA estimates that the program will cost $710 million in FY2020 and nearly $1.2 billion in FY2021."], "subsections": []}]}]}, {"section_title": "Issues for Congress", "paragraphs": ["Title 1 of the VA MISSION Act expands eligibility for the family caregiver program to pre-9/11 veterans in two phases. This expanded eligibility depends on certification of a new information technology (IT) system to administer the program:", "Phase 1. Veterans who have a serious injury incurred or aggravated in the line of duty in the active military, naval, or air service on or before May 7, 1975. Phase 2. Two years after certification, the program is to expand to cover veterans of all eras.", "Expanding eligibility for the Caregiver Support program raises two potential issues: (1) delays in implementation of an IT system to fully support the system and (2) increased costs associated with eligibility expansion under the act. As program eligibility expands, these issues may be of interest to policymakers.", "In addition to these two issues, the program may change in other significant ways when VA modifies the regulations necessary to implement the eligibility expansion. VA published a proposed rule to implement the changes required under the VA MISSION Act on March 6, 2020. The public comment period for the proposed rule ends on May 5, 2020. Furthermore, rulemaking to add the expansion populations must be finalized, at the very least, prior to expansion becoming effective."], "subsections": [{"section_title": "IT System Implementation Required for Expansion Is Delayed", "paragraphs": ["The act required VA to implement a new IT system to fully support the family caregiver program by October 1, 2018\u00e2\u0080\u0094nearly four months after the legislation was enacted. The IT system must be able to (1) retrieve the data needed to assess and monitor program and workload trends, (2) manage data for program participation that exceeds VA estimates, and (3) integrate the system with other VHA IT systems.", "The act required VA to certify that the system had been implemented no later than October 1, 2019. The first phase of eligibility expansion is to become effective when the IT system is certified. However, VA has not yet certified an IT system. ", "Prior to enactment of the VA MISSION Act, the IT system used to support the family caregivers program, the Caregiver Application Tracker (CAT), was deemed inadequate. Specifically, limitations with CAT did not grant the Caregiver Support Program office ready access to the workload data needed to monitor the effects of the program on VA medical center resources. VA attempted to add functionality to CAT in a project called CAT Rescue. However, CAT Rescue was terminated in April 2018 after VA reported defects during system testing.", "When the VA MISSION Act was enacted, VA was in the midst of replacing CAT with a new IT system, called the Caregivers Tool (CareT). This project began in September 2015. However, VA identified deficiencies in CareT during acceptance testing and terminated the project in February 2019. ", "In March 2019, VA began a third effort to acquire a replacement system, which is based on an existing commercial product. The new system is referred to as the Caregiver Record Management Application (CARMA).", "VA is deploying CARMA in three phases. The first phase replaced CAT with CARMA and was completed in October 2019. The second phase automated stipend processing within CARMA and was completed in January 2020. The third phase is expected to be completed in summer 2020. In this third phase, VA is updating other legacy systems, enabling online application submission, and enhancing reporting functionality (e.g., business analytics tools). VA has indicated that it expects to certify the system at the completion of phase 3 and the first eligibility expansion will occur at that time. Figure 4 illustrates a timeline of VA initiatives designed to replace the current IT system that supports the program and requirements of the VA MISSION Act."], "subsections": []}, {"section_title": "Expansion Is Expected to Increase Costs", "paragraphs": ["The family caregivers program currently serves approximately 20,000 post-9/11 veterans and their caregivers. When the first phase of expansion begins, to pre-9/11 veterans injured in the line of duty before May 7, 1975, VA projects that approximately 83,000 additional veterans and their caregivers will become eligible for the program. The number of eligible veterans and caregivers would potentially continue to grow when eligibility expands to all pre-9/11 veterans.", "The largest cost driver in the family caregivers program is the monthly stipend to family caregivers. In FY2019, stipend payments totaled approximately $347 million, or 79% of total program expenditures. With expansion of the magnitude projected by VA, the number of caregivers receiving monthly stipends will increase. VA estimates that expenditures for the stipend will total $870 million in FY2021 and nearly $1.2 billion in FY2022.", "As the program expands, other program components may require additional resources to meet the demand resulting from the increased numbers of eligible veterans and caregivers. For instance, as it is currently structured, the program requires ongoing monitoring in a veteran and caregiver's home. In general, a VA clinical team that includes at least two individuals must visit each home on at least an annual basis. To continue to meet this requirement, VA will likely need to increase staffing levels to conduct similar program monitoring and oversight.", "VA requested nearly $1.2 billion in FY2021 (the first full year implementation of phase 1 of the eligibility expansion), a 276% increase from FY2019 (the last full year in which eligibility was available only to post-9/11 veterans). The FY2022 advance appropriation request is $1.5 billion, which represents only a partial year of implementation of phase 2 of the eligibility expansion. "], "subsections": [{"section_title": "Appendix. Program Evolution and Legislative\u00c2 History", "paragraphs": ["Program Evolution", "As military operations in Afghanistan and Iraq progressed, the provision of services and supports to family caregivers of veterans seriously injured in these conflicts moved to the forefront. Family caregiver issues became a focus of the President's Commission on Care for America's Returning Wounded Warriors, established by President G.W. Bush on March 8, 2007. Tasked with providing a comprehensive review of the care provided to injured servicemembers returning from the recent conflicts in Afghanistan and Iraq, the commission issued several recommendations to the President, Congress, DOD, and VA in a final report. Among these recommendations were several DOD and VA recommendations to strengthen family support programs, including providing \"families of servicemembers who require long-term personal care with appropriate training and counseling to support them in their new caregiving roles.\" ", "VA Advisory Committee on OEF/OIF Veterans and Families", "In April 2007, VA established an independent advisory committee to assess the situation of OEF/OIF veterans and families. The committee was tasked with examining existing VA benefits and services and the need for new benefits and services tailored to OEF/OIF veterans. Committee membership included representation from veterans, family members, and caregivers, as well as veteran service organizations and other advocates and specialists. In 2008, the committee issued an interim report with preliminary observations and recommendations that centered around several themes, including family and caregivers. The Advisory Committee's recommendations, among others, were to increase support to families and caregivers. Specifically, the committee's recommendations and findings consisted of three priorities for caregivers: (1) mental health counseling services for those caregiving for severely injured veterans, particularly over a prolonged time period; (2) financial counseling and fiscal support while caring for severely disabled veterans, as well as training programs; and (3) enhanced efforts regarding information and education about available VA benefits and services.", "VA Caregiver Advisory Board", "In June 2008, VA established an interdisciplinary Caregiver Advisory Board to develop a caregiver assistance program. The board's chartered activities include identifying core caregiver needs, developing initial recommendations for VA caregiver support services, and overseeing eight caregiver assistance pilot programs. The pilot programs were conceptualized in December 2007 to examine ways to improve education and to provide training and resources for caregivers assisting veterans. Most of the programs focus on supporting caregivers of veterans with specific conditions, such as dementia and traumatic brain injury. These pilot programs were conducted through the end of FY2009.", "Caregivers and Veterans Omnibus Health Services Act of 2010", "Leading up to enactment of the Caregivers and Veterans Omnibus Health Services Act of 2010 ( P.L. 111-163 ), the 111 th Congress engaged in considerable debate and deliberation about various legislative proposals to assist family caregivers of veterans. The following provides a legislative history of significant proposals to address assistance to family caregivers of veterans and, more specifically, veterans injured in the conflicts in Afghanistan and Iraq. This history begins with legislation first enacted in the 109 th Congress to address greater services and support to family caregivers and ends with passage of the Caregivers and Veterans Omnibus Health Services Act of 2010 in the 111 th Congress.", "The initial congressional response to providing assistance to family caregivers of veterans from recent conflicts in Iraq and Afghanistan dates back to the 109 th Congress. On May 4, 2006, S. 2753 was introduced by Senator Daniel Akaka. The bill would have required a VA program to improve the provision of caregiver assistance services for veterans. Although the bill did not necessarily focus on caregiving assistance to veterans serving in recent conflicts, but rather all veterans, in his introductory speech Senator Akaka stated:", "With more veterans returning from combat with severely debilitating injuries, young spouses and parents have been forced to take on an unexpected role as caregivers. Many have interrupted their own careers to dedicate time and attention to the care and rehabilitation of loved ones. These caregivers do not plan for this to happen and are not prepared mentally or financially for their new role. Therefore, we must protect, educate, and lend a helping hand to the caregivers who take on the responsibility and costly burden of caring for veterans, both young and old. This legislation serves to provide comprehensive assistance to these caregivers.", "Provisions from S. 2753 were included as Section 214 of the Veterans Benefits, Healthcare, and Information Technology Act of 2006 ( P.L. 109-461 ) and enacted on December 22, 2006. P.L. 109-461 authorized VA to conduct a two-year pilot program to improve assistance provided to caregivers, particularly in home-based settings, and authorized $5 million to be appropriated for each of FY2007 and FY2008. The 110 th Congress extended authorization of the caregiver assistance pilot programs through the end of FY2009 under Section 809 of the Veterans' Mental Health and Other Care Improvements Act of 2008 ( P.L. 110-387 ).", "Assistance to family caregivers received further legislative attention in the 111 th Congress, with legislative proposals introduced to specifically target caregivers of veterans injured while serving in OEF/OIF. In the Senate, Senator Akaka introduced the Family Caregiver Program Act of 2009 ( S. 801 ) on April 2, 2009. In his introductory remarks, Senator Akaka stated:", "Some veterans returning from the recent wars in Iraq and Afghanistan, as well as previous conflicts, suffer from disabilities that prevent them from being fully independent. This is a sad fact of war. The legislation I am introducing today is designed to provide for several improvements in health care for veterans by supporting the family members who care for them. The challenges faced by family caregivers are well known to us. We have been working on this issue for nearly two years \u00e2\u0080\u00a6 I think we are now beyond the scope of that original pilot program and I believe that a full-fledged permanent program is needed in VA that would have a national program for the caregivers of seriously injured veterans to provide them with education, grants, counseling, and other support services. ", "An amended version of S. 801 was reported by Senator Akaka on September 29, 2009 ( S.Rept. 111-80 ). The amended version would have, among other things, authorized VA to waive the cost of emergency care for caregivers of veterans; created a comprehensive program to provide assistance to the caregivers of severely injured veterans; authorized VA to pay for the caregivers' lodging and subsistence, as well as the expenses of travel for the period consisting of travel to and from a treatment facility and the duration of a treatment episode at that facility; and required VA to collaborate with DOD to conduct a national survey of family caregivers.", "The House also introduced legislation that would specifically provide assistance to caregivers of OEF/OIF veterans. On July 9, 2009, Representative Michael H. Michaud introduced the Caregiver Assistance and Resource Enhancement Act ( H.R. 3155 ). On July 15, 2009, H.R. 3155 as amended, was ordered reported out of the House Veterans' Affairs Committee ( H.Rept. 111-224 ). The bill was then passed by the House on July 27, 2009. As passed by the House, H.R. 3155 would have required VA to provide support services (including CHAMPVA medical care and stipends) to the eligible caregivers of OEF and OIF veterans. To be eligible, veterans would need to meet three conditions: (1) have a severe service-connected disability or illness; (2) be in need of caregiver services, such that without such services, the veteran would require hospitalization, nursing home care, or other residential institutional care; and (3) be unable to carry out the activities of daily living (including instrumental activities of daily living).", "A \"hold\" was placed on S. 801 that prevented the Senate from considering this measure. Subsequently, on October 28, 2009, Senator Akaka introduced a separate bill, the Caregivers and Veterans Omnibus Health Services Act of 2010 ( S. 1963 ), which included provisions from S. 801 , among other provisions. S. 1963 was passed by the Senate on November 11, 2009. The family caregiver provisions in the Senate-passed bill would have waived charges for humanitarian care to attendants of covered veterans under certain circumstances; provided family caregiver assistance including training, respite care, mental health services, and stipends; and provided lodging and subsistence for family caregivers. It would have also required VA, in coordination with DOD, to design and conduct a survey on caregivers and family caregivers.", "On April 22, 2010, an amended version of S. 1963 was passed by Congress. The final version reflected a compromise agreement between the House and the Senate and included provisions derived from a number of bills, including the earlier Senate-passed S. 1963 and House-passed H.R. 3155 . On May 5, 2010, President Obama signed into law P.L. 111-163 , the Caregivers and Veterans Omnibus Health Services Act of 2010. Title I of the act provides programs and services to provide support to caregivers of veterans.", "Following enactment of the 2010 legislation that established the Caregiver Support Program, there were a number of legislative attempts to expand eligibility for the Program of Comprehensive Assistance for Family Caregivers to veterans of all eras. This effort ultimately culminated with the enactment of the VA Maintaining Internal Systems and Strengthening Integrated Outside Networks Act of 2018 (VA MISSION Act; P.L. 115-182 , as amended). "], "subsections": []}]}]}]}}
{"id": "R46242", "title": "Major Agricultural Trade Issues in 2020", "released_date": "2020-02-27T00:00:00", "summary": ["Sales of U.S. agricultural products to foreign markets absorb about one-fifth of U.S. agricultural production, thus contributing significantly to the health of the farm economy. Farm product exports, which totaled $136 billion in FY2019 (see chart), make up about 8% of total U.S. exports and contribute positively to the U.S. balance of trade. The economic benefits of agricultural exports also extend across rural communities, while overseas farm sales help to buoy a wide array of industries linked to agriculture, including transportation, processing, and farm input suppliers.", "A major area of interest for the 116 th Congress during its first session was the loss of export demand for agricultural products in the wake of tariff increases imposed by the Trump Administration on U.S. imports of steel and aluminum from certain countries and other imported products from China. Some of the affected countries levied retaliatory tariffs on U.S. agricultural products, contributing to a 53% decline in value of U.S. agricultural exports to China in 2018 and a broader decline in exports across countries imposing retaliatory tariffs in 2019. To help mitigate the economic impact from export losses, the U.S. Department of Agriculture (USDA) authorized two short-term assistance (\"trade aid\") programs to producers of affected agricultural commodities, valued at up to $12 billion in 2019 and $16 billion in 2019.", "Other major agricultural trade developments in 2019 included efforts to ratify the U.S.-Mexico-Canada Agreement (USMCA), trade negotiations with China, Japan, and the European Union, and continued review of U.S. participation in the World Trade Organization (WTO). The USMCA was ratified by Mexico and the U.S. Congress, and awaits ratification by Canada before it can enter into force. The United States and Japan signed an agreement increasing market access for many U.S. agricultural exports to Japan. This agreement, which does not require congressional approval, excludes provisions pertaining to non-tariff measures that could become future trade barriers for U.S. agricultural exporters. A second-stage negotiation toward a more comprehensive pact could commence in 2020.", "In January 2020, President Trump signed a \"Phase One\" executive agreement (that also does not require congressional approval) with the Chinese government on trade and investment issues, including agriculture. Under the agreement, China is not required to repeal any tariffs, but it has reduced certain retaliatory tariffs and is granting tariff exclusions for various agricultural products in order to reach a target level of U.S. imports\u00e2\u0080\u0094$32 billion (relative to a 2017 base of $24 billion) over a two-year period. The coronavirus outbreak since January 2020 may affect China's ability to meet these commitments.", "In addition to further negotiations with Japan and China, the Administration has stated its intent to pursue trade agreements with the European Union, India, Kenya, the United Kingdom, and possibly other countries. The Trump Administration has also indicated that reforming the WTO is a priority for 2020. The WTO Ministerial Conference in June 2020 presents an opportunity to address pressing concerns over agricultural reform efforts.", "Among other agricultural trade issues that may arise in the 116 th Congress are proposed changes to U.S. trade remedy laws to address imports of seasonal produce affecting growers in the Southeast, the establishment of a common international framework for approval, trade, and marketing of the products of agricultural biotechnology, and foreign restrictions on U.S. exports of meat that are inconsistent with international trade protocols. Additionally, U.S. beef and pork face trade barriers in several markets because of U.S. producers' use of growth promotants and the feed additive ractopamine."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["This report identifies selected current major trade issues for U.S. agriculture that may be of interest in the second session of the 116 th Congress. It provides background on individual trade issues and attempts to bring perspective on the significance of each for U.S. agricultural trade. Each trade issue summary concludes with an assessment of its status.", "The report begins by examining a series of overarching issues. These include U.S. agricultural trade and its importance to the sector; a brief description of the trade policy being pursued by the Trump Administration in 2020 and its ramifications for U.S. agricultural exports; an update on the Administration's 2019 trade policy actions; a discussion of the ongoing and proposed new trade negotiations planned for 2020; and an update on World Trade Organization (WTO) agricultural issues related to the United States\u00e2\u0080\u0094including the Administration's 2020 plans to engage in reforming the institution. The report then reviews a number of ongoing trade policy concerns to U.S. agriculture, including non-tariff measures, and trade barriers and disputes involving specialty crops, livestock, and dairy issues. The format for these trade issues is similar, consisting of background and perspective on the issue at hand and an assessment of their current status."], "subsections": []}, {"section_title": "Overview of U.S. Agricultural Trade1", "paragraphs": ["U.S. agricultural exports have long been a bright spot in the U.S. balance of trade, with exports exceeding imports in every year since 1960. In recent years, the value of farm exports has remained below the record level of $152 billion reached in FY2014. The U.S. Department of Agriculture (USDA) reports U.S. agricultural exports in FY2019 of $136 billion (see Figure 1 ). The FY2019 export total represents an $8 billion decline from FY2018. The decline in the value of farm exports since FY2014 initially reflected lower market prices for bulk commodities, such as soybeans and corn. Agricultural prices and U.S. exports of certain commodities, such as soybeans, were further affected by retaliatory tariffs imposed on U.S. agricultural imports by China and some other countries since 2018 in response to the Trump Administration's imposition of tariffs on certain imports from China and on U.S. imports of steel and aluminum from selected countries.", "In FY2019, U.S. agricultural imports were $131 billion, up $3 billion from FY2018, resulting in an agricultural trade surplus of $5 billion. This is below the surplus of $16 billion in FY2018 and below the record high in nominal dollars of $43 billion in FY2014.", "Agricultural exports are important both to farmers and to the U.S. economy. During the calendar years 2017 and 2018, the value of U.S. agricultural exports accounted for 8% and 9% of total U.S. exports, respectively. USDA's Economic Research Service (ERS) estimates that in 2017 U.S. agricultural exports generated about 1,161,000 full-time civilian jobs, including 795,000 jobs outside the farm sector. Exports account for around 20% of total farm production by value and are a major outlet for many farm commodities, absorbing over three-fourths of U.S. output of cotton and about half of total U.S. production of wheat and soybeans. Although feed crops and wheat account for most exports by volume, the high value product (HVPs) category\u00e2\u0080\u0094which includes live animals, meat, dairy products, fruits and vegetables, nuts, fats, hides, manufactured feeds, sugar products, processed fruits and vegetables, and other processed food products\u00e2\u0080\u0094accounted for 68% of the value of agricultural exports in FY2019. ", "All states export agricultural commodities, but a minority of states account for a majority of farm export sales. In calendar year 2018, the 10 leading agricultural exporting states based on value\u00e2\u0080\u0094California, Iowa, Illinois, Minnesota, Texas, Nebraska, Kansas, Indiana, North Dakota, and Missouri\u00e2\u0080\u0094accounted for 58% of the total value of U.S. agricultural exports that year. ", "In December 2018, Congress reauthorized major agricultural export promotion programs through FY2023 with the 2018 farm bill ( P.L. 115-334 ). Title III of the farm bill includes provisions covering export credit guarantee programs, export market development programs, and international science and technical exchange programs designed to develop agricultural export markets in emerging economies. Among other provisions, the 2018 farm bill permits funding to operate two U.S. agricultural export promotion programs in Cuba\u00e2\u0080\u0094the Market Access Program and the Foreign Market Development Cooperator Program."], "subsections": []}, {"section_title": "Trump Administration Trade Priorities for 202014", "paragraphs": ["In establishing policy for U.S. participation in international trade, the Trump Administration has emphasized reducing U.S. bilateral trade deficits; focusing on renegotiating existing trade agreements that it viewed as being \"unfair;\" initiating new bilateral agreements; and responding to the trade practices of U.S. trading partners that it viewed as unfair, in violation of international trading commitments, or threatening to U.S. industry. Under various provisions of law, the Administration imposed punitive tariffs on U.S. imports of steel and aluminum from certain countries and on U.S. imports of selected products from China. These countries in turn, responded with retaliatory tariffs on U.S. exports, particularly agricultural products.", "During the second session of the 116 th Congress, the Trump Administration's agenda may focus on the following priorities:"], "subsections": [{"section_title": "Trade Agreement Implementation and Monitoring", "paragraphs": [], "subsections": [{"section_title": "U.S.-Mexico-Canada Agreement (USMCA)", "paragraphs": ["Legislation implementing a new trade agreement among the United States, Mexico, and Canada was enacted on January 29, 2020. The agreement awaits ratification by Canada, and certification by the United States that all parties have completed the necessary steps for entry into force. The U.S.-Mexico-Canada agreement replaces the North American Free Trade Agreement (NAFTA), which took effect in 1994."], "subsections": []}, {"section_title": "\"Stage One\" U.S.-Japan Trade Agreement (USJTA)", "paragraphs": ["On October 7, 2019, the Trump Administration signed the \"Stage One\" trade agreement with Japan, which included significant market access improvements in Japan for U.S. agricultural exports. The agreement took effect on January 1, 2020. Because it dealt only with tariffs and other market access issues, pursuant to P.L. 114-26 , the agreement did not require congressional approval. The Administration has indicated that it hopes to negotiate a second trade agreement with Japan that addresses a broader range of issues. Such an agreement might require congressional approval."], "subsections": []}, {"section_title": "U.S.-China Phase One Agreement", "paragraphs": ["On January 15, 2020, President Trump signed a \"Phase One\" executive agreement with China on trade and investment issues, including agriculture. This agreement, which entered into force on February 14, 2020, did not require congressional approval as it consisted largely of commitments by China. The Administration has stated its intent to negotiate a second phase of the agreement with China. Depending on the scope of such a negotiation, the Administration could be required under law to consult with Congress in advance and to submit an eventual agreement for congressional approval. "], "subsections": []}]}, {"section_title": "Ongoing and Proposed Negotiations", "paragraphs": ["The Office of the U.S. Trade Representative (USTR) has indicated that the United States may also pursue new trade agreements with the European Union (EU), India, Kenya, the United Kingdom (UK), and a number of other countries. The Administration has stated that the U.S.-Kenya and the U.S.-UK negotiations will be \"comprehensive,\" dealing with other trade-related issues in addition to market access. In those cases, the Administration might be required to consult with Congress in advance of negotiations and to submit any agreements for congressional approval. "], "subsections": []}, {"section_title": "Multilateral Trading System Reforms", "paragraphs": ["USTR has indicated interest in WTO institutional reform. The upcoming WTO Ministerial Conference in June 2020 in Kazakhstan presents the United States and WTO members with an opportunity to address reform efforts, which are expected to include consideration of the WTO's treatment of agricultural trade. Some Members of Congress have indicated WTO reform to be a priority for 2020. "], "subsections": []}]}, {"section_title": "Agricultural Trade Disputes and Negotiations26", "paragraphs": ["Since early 2018, Canada, China, the EU, India, Mexico, and Turkey targeted U.S. food and agricultural products with retaliatory tariffs in response to tariffs imposed by the United States on imports of steel and aluminum and certain imports from China. To facilitate ratification of USMCA, the United States removed tariffs on steel and aluminum imports from Canada and Mexico and these countries removed their retaliatory tariffs on U. S. agricultural imports in May 2019. The retaliatory tariffs made imports of U.S. agricultural products relatively more expensive compared to similar products from competitor nations. ", "Initially, the announcements of retaliatory tariffs led to an increase in U.S. agricultural exports as importing countries built stocks in anticipation of the tariffs. U.S. agricultural exports increased slightly in 2018. In 2019, however, U.S. agricultural exports declined about 2%, due to lower global demand for affected U.S. agricultural products and downward pressure on prices of some commodities.", "In the short run, retaliatory tariffs contributed to price declines for certain U.S. agricultural commodities and to a reduction in exports, particularly for soybeans. Declining prices and export sales, combined with rising input and farm machinery costs, contributed to a 16% decrease in U.S. net farm income in 2018, which prompted USDA to provide trade aid payments to the farm sector in 2018 and 2019."], "subsections": [{"section_title": "Negotiations with China", "paragraphs": ["Imports from China have been subject to U.S. tariff increases on steel and aluminum under Section 232 of the Trade Expansion Act, which allows the President to impose tariffs on imports that \"threaten to impair the national security.\" Additionally, U.S. imports of certain other Chinese products are subject to tariff increases under Section 301 of the Trade Act of 1974, which allows tariffs in response to trade practices that are determined to be unfair and injurious to a U.S. industry. China first retaliated in April 2018, by raising tariffs on certain U.S. imports, including agricultural products such as pork, fruit, and tree nuts. These retaliatory tariffs are in addition to existing Most Favored Nation (MFN) tariffs that China levies on imports from all countries including the United States. By September 2019, China had levied retaliatory tariffs on almost all U.S. agricultural products, ranging from 5% to 60%. ", "After the imposition of retaliatory tariffs on U.S. products, U.S. agricultural exports to China experienced a 53% decline from $19.5 billion in 2017 to $9.2 billion in 2018. The Chinese market is important for several U.S. agricultural products. For example, in 2016 and 2017, the United States supplied over one-third of China's total soybean imports, almost all of China's distillers' grain imports (primarily used as animal feed), and most of China's sorghum imports. With the retaliatory tariffs in effect, U.S. soybean exports to China in 2018 declined in value to $3 billion (8 billion metric tons [MT]) from $12 billion (32 billion MT) in 2017. Similarly, the value of U.S. exports of sorghum and distillers dry grain declined about 40% and 30% respectively from 2017 to 2018. Most other U.S. agricultural exports to China also declined in 2018.", "Negotiations to resolve the U.S.-China dispute began in the fall of 2019 and resulted in a \"Phase One\" executive agreement (that does not require congressional approval) on trade and investment issues, including agriculture, signed in January 2020. Under the agreement, China is to import $32 billion worth of additional U.S. agricultural products over a two-year period. This implies an average annual increase of two-thirds from a 2017 base of $24 billion. Products mentioned in the agreement include oilseeds, meat, cereals, cotton, and seafood. China has not committed to tariff exemptions or import levels for any specific products, but it may grant tariff exclusions on U.S. imports on a case-by-case basis. On February 18, 2020, China released a list indicating that it may be willing to grant one-year tariff exemptions on most agricultural products.", "China agreed to improve its administration of tariff-rate quotas (TRQs) on wheat, corn, and rice to comply with a WTO ruling in favor of the United States in a dispute case regarding China's TRQ administration. Changes in China's TRQ administration would be expected to improve market access for these U.S. grains."], "subsections": [{"section_title": "Other Provisions of the Phase One agreement", "paragraphs": ["Domestic support : China agreed to improve the transparency of its domestic agricultural support measures. ", "Sanitary and phytosanitary measures: China agreed to implement science- and risk-based food safety regulations. China also agreed to finalize phytosanitary protocols for U.S. avocadoes, blueberries, potatoes, barley, alfalfa pellets and cubes, almond meal pellets and cubes, hay, and California nectarines, and to implement a transparent, predictable, efficient, science- and risk-based regulatory process for the evaluation and authorization of products of agricultural biotechnology. In exchange, the United States agreed to complete its regulatory notice process for imports of Chinese fragrant pears, citrus, and jujube, and to complete a phytosanitary protocol for bonsai.", "L ivestock and fish: China agreed to improve access for U.S. beef products, including eliminating age restrictions on cattle slaughtered for export, eliminating traceability requirements, and establishing maximum residue levels for three hormones that are approved for use in livestock in the United States. It agreed to engage in technical discussions to import U.S. live cattle for breeding. China agreed to broaden the list of pork products that are eligible for importation, and to conduct a risk assessment for the veterinary drug ractopamine, which is allowed in U.S. beef and pork production. With respect to poultry, after having lifted a five-year ban on imports of U.S. poultry in November 2019, China agreed to adopt import regulations consistent with the World Organization for Animal Health Terrestrial Animal Health Code; this would potentially limit future import bans imposed due to avian influenza to poultry from the affected U.S. region rather than the entire country. China also agreed to approve for importation 26 aquatic species from the United States, and to streamline its procedures for registering U.S. seafood facilities and products. ", "Technical Barriers to Trade: China agreed to implement the USDA Public Health Information System, an electronic system to provide export health certificates to an importing country in advance of shipment arrival. It also made commitments to provide regulatory certainty and market stability regarding U.S. dairy and infant formula products, rice, distillers' dried grains with solubles, feed additives, and pet foods. It agreed not to undermine market access for U.S. exports that use trademarks and generic terms by recognizing geographical indications (GI) in international agreements. GIs are place names used to identify products that come from certain regions or locations.", "Status and Outlook : The U.S.-China Phase One agreement is expected to improve opportunities for certain U.S. exporters; however, it may not create notable new market demand. Instead, it may produce a rearrangement of trading patterns between China and its various import suppliers, in which case the market price effects may be limited. Additionally, the coronavirus outbreak is expected to slow China's economic growth in the near-term, and may reduce Chinese overall import demand for agricultural products. It has also been disrupting global supply chains going in and out of China. Therefore, U.S. agricultural exports to China could fall short of the target of $32 billion additional exports to the 2017 base over a two-year period. The agreement provides China some flexibility to meet its purchase commitment. Both the United States and China \"acknowledge that purchases will be made at market prices based on commercial considerations and that market conditions, particularly in the case of agricultural goods, may dictate the timing of purchases within any given year\" (Chapter 6, Article 6.2.1 of the Phase One agreement).", "Under the agreement, China is not required to repeal any tariffs, but it has reduced certain retaliatory tariffs and will grant one-year tariff exclusions for various agricultural products in order to reach a target level of U.S. imports. Effective February 14, 2020, China halved the additional 5% and 10% retaliatory tariffs that it had imposed on U.S. products in August 2019. Nevertheless, tariffs imposed in April and July 2018, ranging from 2.5% to 55%, remain in place. USDA and USTR have stated that China has also taken a number of other actions to begin implementing its agriculture related commitments. Both China and the United States have indicated they expect to engage in further negotiations on trade during 2020."], "subsections": []}]}, {"section_title": "Negotiations with Canada and Mexico42", "paragraphs": ["Soon after taking office in January 2017, the Trump Administration announced its desire to renegotiate the North America Free Trade Agreement (NAFTA) among the three countries. Nonetheless, the United States imposed tariffs on steel and aluminum imports from Canada and Mexico in 2017. The United States also threatened tariffs on imported passenger vehicles, an action that would have a significant impact on both Canada and Mexico. In June 2018, Mexico retaliated against the steel and aluminum tariffs with a 15% tariff on U.S. sausage imports; a 20% tariff on other pork products, certain cheeses, apples, potatoes, and cranberries; and a 25% tariff on whey, blue-veined cheese, and whiskies. The following month, Canada imposed a retaliatory tariff of 10% on certain U.S. products, including dairy, poultry and beef products; coffee, chocolate, sugar and confectionery; prepared food products; condiments; bottled water; and whiskies. ", "A new trade agreement, referred to as the United States-Mexico-Canada Agreement (USMCA), was announced in 2018. The U.S. implementing legislation was enacted on January 29, 2020. Mexico has ratified the USMCA and the Canadian Parliament has begun deliberations on the agreement. After ratification by all three countries, and certification by the United States that all parties have taken actions required under the agreement, the agreement would enter into force. The agricultural provisions of USMCA are summarized below.", "All food and agricultural products that had zero tariffs under NAFTA is to remain at zero under USMCA. This includes all agricultural imports from Mexico and almost all from Canada\u00e2\u0080\u0094excepting certain dairy and poultry products. Canada is to increase market access for U.S. dairy products via TRQs. U.S. dairy imports within a TRQ is to enter Canada duty-free, while imports beyond the quota level face higher over-quota tariff rates of over 200% in many cases. Canada is to replace poultry TRQs under NAFTA with new TRQs. These are expected to lead to greater imports of U.S. eggs, turkey meat, and eggs, but reduce the quantity of U.S. chicken meat that can be imported into Canada duty free. Imports of U.S. poultry products above the set quotas is to face tariffs exceeding 200%. The United States, agreed to provide additional access to Canadian dairy products, sugar, peanuts and peanut products. Canada is to provide treatment and price to U.S. wheat equivalent to those of Canadian wheat if the U.S. wheat variety is registered as being similar to a Canadian variety. Currently, U.S. wheat exports to Canada are graded as feed wheat, and as such command a lower price. Four Members of Congress have requested USTR to work closely with Canada, through the Consultative Committee on Agriculture, to expedite the process for the registration of U.S. wheat varieties in Canada. The United States, Canada, and Mexico are required to treat the distribution of each other's spirits, wine, beer, and other alcoholic beverages as they do for products of national origin. The agreement establishes listing requirements for a product to be sold, along with specific limits on cost markups. Regarding sanitary and phytosanitary measures (SPS), USMCA requires greater transparency in rules and regulatory alignment among the three countries. It also would establish a new mechanism for technical consultations to resolve SPS issues. USMCA includes procedural safeguards for recognition of new geographical indications. USMCA would protect the GIs for food products that Canada and Mexico have already agreed to in trade negotiations with the EU, and would lay out transparency and notification requirements for recognition of any proposed new GIs. In a side letter accompanying the agreement, Mexico confirmed a list of 33 terms for cheese that would remain available as common names for U.S. cheese producers to use in exporting cheeses to Mexico. The list includes some terms that are protected as GIs by the EU. USMCA provisions also would protect certain U.S., Canadian, and Mexican spirits as distinctive products. USMCA signatories agreed to protect the confidentiality of proprietary formula information in the same manner for domestic and imported products. USMCA includes provisions for a Working Group for Cooperation on Agricultural Biotechnology to facilitate information exchange on policy and trade-related matters associated with agricultural biotechnology, an issue that was not covered under NAFTA.", "Status : The United States removed the tariffs it had imposed on steel and aluminum imports from Canada and Mexico on May 17, 2019, and, in turn, these countries removed their retaliatory tariffs on U.S. imports. USMCA requires ratification by Canada to enter into force. "], "subsections": []}, {"section_title": "\"Stage One\" U.S. Japan Trade Agreement (USJTA)49", "paragraphs": ["On October 7, 2019, the United States and Japan signed the U.S.-Japan Trade Agreement (USJTA), which provides for limited tariff reductions and quota expansions to improve U.S. access to Japan's market, including for agricultural products. The agreement, which entered into force January 1, 2020, also provides for reciprocal U.S. tariff reductions, largely on industrial goods. Japan previously negotiated agricultural market access provisions with the United States in the context of the Trans-Pacific Partnership (TPP), a 2016 agreement among 12 Pacific-facing nations that the United States did not ratify. Those provisions were folded into the agreement that the remaining TPP countries agreed upon\u00e2\u0080\u0094TPP-11\u00e2\u0080\u0094that went into force for Japan on December 30, 2018. As Japan began to improve market access for TPP-11 countries, various U.S. agricultural exports to Japan became less competitive compared to products from TPP-11 countries. ", "Under the USJTA, Japan provides the same level of market access to U.S. products included in the USJTA as it provides to exports from TPP-11 member countries. Japan agreed to eliminate or reduce tariffs for certain U.S. agricultural exports and to provide preferential quotas for other U.S. agricultural products. Some products included in TPP-11 such as rice and certain dairy products are not included in the USJTA. Key agricultural provisions of USJTA are provided below.", "Japan is to reduce tariffs on meat products such as beef and pork or gradually eliminate them. Upon entry into force, tariffs were eliminated for certain products, including almonds, walnuts, blueberries, cranberries, corn, sorghum, and broccoli. Japan is to phase out tariffs in stage s for products such as cheeses, processed pork, poultry, beef offal, ethanol, wine, frozen potatoes, oranges, fresh cherries, egg products, and tomato paste. Japan agreed to provide country-specific quotas (CSQ) to all products that the United States had negotiated CSQs for under TPP, excepting for rice. Products covered by CSQs include wheat, wheat products, malt, whey, processed cheese, glucose, fructose, corn starch, potato starch, and inulin. Japan agreed to reduce the mark-ups on U.S. products that Japanese state trading enterprises import under quotas and sell in the domestic market with an additional price mark-up that makes them more expensive that the domestic product. Under Japan's WTO market access schedule, it reserves the right to temporarily increase tariffs on imports of sensitive agricultural products when they exceed a set threshold, or when the price of the imported product is below a set threshold. Under USJTA, Japan agreed to restrict the use of these additional tariffs (known as safeguards) on U.S. beef, pork, whey, oranges and race horses. Under TPP, the United States had negotiated market access under TRQs that were open to all TPP members, for barley and barley products other than malt; butter; skim and other milk powder; cocoa products; evaporated and condensed milk; edible fats and oils; vegetable preparations; coffee, tea and other preparations; chocolate, candies and confectionary; and sugar. No corresponding U.S. access to these TPP-wide TRQs is included in USJTA. The United States agreed to reduce tariffs on imports of certain perennial plants and cut flowers, persimmons, green tea, chewing gum, certain confectionary products, and soy sauce. The United States also agreed to provid e Japan the opportunity to export more beef by fold ing a country-specific quota for Japan of 200 MT into a larger TRQ designated for \"other countries.\"", "Status: The Administration took a staged approach to U.S. negotiations with Japan in order to facilitate expedited market access improvements for U.S. agricultural products in Japan. The first stage agreement (USJTA) is much more limited than a traditional U.S. free trade agreement, allowing the USJTA ( P.L. 114-26 ) to take effect without approval by Congress. In consequence, the text does not address non-tariff issues such as sanitary and phytosanitary measures, agricultural biotechnology, technical barriers to trade, or geographical indications. These issues are expected to be covered in a further negotiation, which may commence in 2020. ", "In February 2019, after the USJTA entered into force, Japan reached a trade agreement with the EU under which Japan agreed to recognize more than 200 EU GIs. If USTR were to determine that any of these European GIs poses a barrier to U.S. agricultural exports to Japan, the lack of legal text regarding geographical indications and the absence of a formal dispute settlement mechanism could limit U.S. ability to challenge such a barrier under the USJTA. Both the United States and Japan are members of the WTO, so the United States could challenge potential new trade barriers as inconsistent with Japan's WTO commitments."], "subsections": []}, {"section_title": "U.S.-EU Agricultural Trade54", "paragraphs": ["The Trump Administration's decision to impose tariffs on steel and aluminum affected imports from the EU. In June 2018, the EU responded to the steel and aluminum tariffs by imposing a 25% tariff on imports of U.S. corn, rice, sweetcorn, kidney beans, certain breakfast cereals, peanut butter, orange juice, cranberry juice, whiskies, cigars, and other tobacco products, and a 10% tariff on certain essential oils. The EU also could be affected if the United States were to impose tariffs on passenger vehicles, and could respond with further punitive tariffs against U.S. exports.", "On October 18, 2019, the United States imposed additional tariffs on $7.5 billion worth of U.S. imports from the EU. The action, authorized by WTO dispute settlement procedures, came after USTR determined that the EU and certain EU member states had not complied with a WTO Dispute Settlement Body ruling recommending the withdrawal of subsidies on the manufacture of large civil aircraft.", "USTR has indicated that additional tariffs initially will be limited to 10% of the product value on large civil aircraft and 25% on agricultural and other products from the EU. In total, 561 agricultural tariff lines are affected, including cheeses, biscuits, pork products, fish products, fruit products, olives, whiskies, liquors, and wine. The UK, which left the EU in January 2020, is included among the affected countries, and 56 tariff lines of UK products are subject to additional 25% tariffs."], "subsections": [{"section_title": "Limited Expected Role of Agricultural Issues in Upcoming Trade Talks", "paragraphs": ["Against this background, in October 2018, USTR officially notified the Congress of the Trump Administration's plans to enter into formal trade negotiations with the EU. This action followed a July 2018 U.S.-EU Joint Statement by President Trump and then-European Commission President Jean-Claude Juncker announcing that they would work to reduce tariffs and other trade barriers, address unfair trading practices, and increase U.S. exports of soybeans and certain other products. Previously, in 2016, U.S.-EU negotiations to create a Transatlantic Trade and Investment Partnership (T-TIP) under the Obama Administration stalled after 15 rounds. Among the areas of contention were certain regulatory and administrative differences between the United States and the EU on issues of food safety, public health, and product naming schemes for some types of food and agricultural products.", "The United States and the EU are the world's largest trade and investment partners. While food and agricultural trade between the United States and the EU27 accounts for less than 1% of the value of overall trade in total goods and services, the EU27 remains a leading export market for U.S. agricultural exports. It accounted for about 8% of the value of all U.S. exports and ranked as the fifth largest market for U.S. food and farm exports in 2019\u00e2\u0080\u0094after Canada, Mexico, China, and Japan. In 2019, U.S. exports of agricultural and related product exports to the EU27 totaled $12.4 billion, while U.S. imports of agricultural and related product imports from the EU27 totaled $29.7 billion, resulting in a U.S. trade deficit of approximately $17.3 billion. This is the reverse of U.S. trade surpluses with the EU27 during the 1990s. Leading U.S. agricultural exports to the EU27 were corn and soybeans, tree nuts, distilled spirits, fish products, wine and beer, planting seeds, tobacco products, and processed foods. Leading U.S. agricultural imports from the EU27 were wine, distilled spirits, beer, drinking waters, olive oil, cheese, baked goods, processed foods, and cocoa products.", "In January 2019, USTR announced its negotiating objectives for the agricultural portion of a U.S.-EU trade agreement following a public comment period and a hearing involving several leading U.S. agricultural trade associations. The objectives include greater market access, changes to EU administration of tariff-rate quotas, and changes to a variety of EU regulations. Among regulatory issues, key U.S. objectives include harmonizing regulatory processes and standards to facilitate trade, including sanitary and phytosanitary standards, and establishing specific commitments for trade regarding agricultural biotechnologies. The U.S. objectives also include addressing geographical indications by protecting generic terms for common use. U.S. agricultural interests generally support including agriculture as part of the U.S. negotiating objectives for a U.S.-EU trade agreement. The EU negotiating mandate, however, states that a key EU goal is \"a trade agreement limited to the elimination of tariffs for industrial goods only, excluding agricultural products.\" Several Members of Congress have stated their opposition to the EU's decision to exclude agricultural policies in their negotiating mandate.", "The U.S.-EU trade negotiations come amid heightened U.S.-EU trade frictions. In response to U.S. Section 232 tariffs on steel and aluminum imports, the EU had retaliated in June 2018 by imposing a tariff increase of 25% on imports of certain U.S. food and beverage products. The value of U.S. agricultural exports to the EU28 (included the UK) targeted by these additional tariffs is approximately $1.2 billion in 2018, or about 9% of total U.S. agricultural exports to the EU28. In October 2019, U.S.-EU trade tensions escalated further when the United States imposed additional tariffs on $7.5 billion worth of certain U.S. imports from the EU, including food products. This action\u00e2\u0080\u0094authorized by the WTO\u00e2\u0080\u0094followed a USTR investigation initiated in April 2019 under Section 301 of the Trade Act of 1974. ", "Aside from ongoing trade tension, some of the same issues that stalled U.S.-EU agricultural talks in the T-TIP negotiations could prove to be equally intractable today. For food and agricultural products, a series of non-tariff issues stem in part from commercial and cultural practices often enshrined in EU laws and regulations that vary from those of the United States\u00e2\u0080\u0094namely differences involving SPS and technical barriers to trade, broadly covering laws and regulations measures intended to protect public health\u00e2\u0080\u0094as well as differences involving GIs. ", "Status: The outlook for the new U.S.-EU trade talks remains uncertain, given ongoing trade tensions. Whether or not the talks will include food and agriculture is also uncertain, as there continues to be disagreement between the two trading partners about the scope of the negotiations, particularly the EU's intent to exclude agriculture from the talks. Perhaps the overarching goal for the U.S. side is addressing the U.S. trade deficit in agricultural products with the EU.", "Public statements by U.S. and EU officials in early 2020 signaled that the U.S.-EU trade talks might include SPS and regulatory barriers to agricultural trade. It is not clear, however, that both sides agree which specific types of non-tariff trade barriers might actually be part of the talks. Some press reports indicate that USDA officials have said that selected SPS barriers as well as GIs would need to be addressed. Specific SPS issues important to the U.S. side include the EU's prohibitions on the use of hormones in meat production (see \" U.S.-EU Beef Hormone Dispute \") and pathogen reduction treatments for poultry (see section \" U.S.-EU Dispute Over Pathogen Reduction Treatments (PRTs) \"), and EU restrictions on the use of biotechnology (see section \" Agricultural Biotechnology \"). Other press reports, however, indicate that some EU officials have downplayed the extent that certain non-tariff barriers\u00e2\u0080\u0094such as biotechnology product permits, approval of certain pathogen rinses for poultry, regulations on pesticides or food standards\u00e2\u0080\u0094would be part of the talks. The United States continues to push for additional concessions from the EU. More formal discussions are expected in spring 2020."], "subsections": []}, {"section_title": "Limited Expected Role of Agricultural Issues in Upcoming Trade Talks", "paragraphs": ["Against this background, in October 2018, USTR officially notified the Congress of the Trump Administration's plans to enter into formal trade negotiations with the EU. This action followed a July 2018 U.S.-EU Joint Statement by President Trump and then-European Commission President Jean-Claude Juncker announcing that they would work to reduce tariffs and other trade barriers, address unfair trading practices, and increase U.S. exports of soybeans and certain other products. Previously, in 2016, U.S.-EU negotiations to create a Transatlantic Trade and Investment Partnership under the Obama Administration stalled after 15 rounds. Among the areas of contention were certain regulatory and administrative differences between the United States and the EU on issues of food safety, public health, and product naming schemes for some types of food and agricultural products.", "The United States and the EU are the world's largest trade and investment partners. While food and agricultural trade between the United States and the EU27 accounts for less than 1% of the value of overall trade in total goods and services, the EU27 remains a leading export market for U.S. agricultural exports. It accounted for about 8% of the value of all U.S. exports and ranked as the fifth largest market for U.S. food and farm exports in 2019\u00e2\u0080\u0094after Canada, Mexico, China, and Japan. In 2019, U.S. exports of agricultural and related product exports to the EU27 totaled $12.4 billion, while U.S. imports of agricultural and related product imports from the EU27 totaled $29.7 billion, resulting in a U.S. trade deficit of approximately $17.3 billion. This is the reverse of U.S. trade surpluses with the EU27 during the 1990s. Leading U.S. agricultural exports to the EU27 were corn and soybeans, tree nuts, distilled spirits, fish products, wine and beer, planting seeds, tobacco products, and processed foods. Leading U.S. agricultural imports from the EU27 were wine, distilled spirits, beer, drinking waters, olive oil, cheese, baked goods, processed foods, and cocoa products.", "In January 2019, USTR announced its negotiating objectives for the agricultural portion of a U.S.-EU trade agreement following a public comment period and a hearing involving several leading U.S. agricultural trade associations. The objectives include greater market access, changes to EU administration of tariff-rate quotas, and changes to a variety of EU regulations. Among regulatory issues, key U.S. objectives include harmonizing regulatory processes and standards to facilitate trade, including sanitary and phytosanitary standards, and establishing specific commitments for trade regarding agricultural biotechnologies. The U.S. objectives also include addressing geographical indications by protecting generic terms for common use. U.S. agricultural interests generally support including agriculture as part of the U.S. negotiating objectives for a U.S.-EU trade agreement. The EU negotiating mandate, however, states that a key EU goal is \"a trade agreement limited to the elimination of tariffs for industrial goods only, excluding agricultural products.\" Several Members of Congress have stated their opposition to the EU's decision to exclude agricultural policies in their negotiating mandate.", "The U.S.-EU trade negotiations come amid heightened U.S.-EU trade frictions. In response to U.S. Section 232 tariffs on steel and aluminum imports, the EU had retaliated in June 2018 by imposing a tariff increase of 25% on imports of certain U.S. food and beverage products. The value of U.S. agricultural exports to the EU28 (included the UK) targeted by these additional tariffs is approximately $1.2 billion in 2018, or about 9% of total U.S. agricultural exports to the EU28. In October 2019, U.S.-EU trade tensions escalated further when the United States imposed additional tariffs on $7.5 billion worth of certain U.S. imports from the EU, including food products. This action\u00e2\u0080\u0094authorized by the WTO\u00e2\u0080\u0094followed a USTR investigation initiated in April 2019 under Section 301 of the Trade Act of 1974. ", "Aside from ongoing trade tension, some of the same issues that stalled U.S.-EU agricultural talks in the T-TIP negotiations could prove to be equally intractable today. For food and agricultural products, a series of non-tariff issues stem in part from commercial and cultural practices often enshrined in EU laws and regulations that vary from those of the United States\u00e2\u0080\u0094namely differences involving SPS and technical barriers to trade, broadly covering laws and regulations measures intended to protect public health\u00e2\u0080\u0094as well as differences involving GIs.", "Status: The outlook for the new U.S.-EU trade talks remains uncertain, given ongoing trade tensions. Whether or not the talks will include food and agriculture is also uncertain, as there continues to be disagreement between the two trading partners about the scope of the negotiations, particularly the EU's intent to exclude agriculture from the talks. Perhaps the overarching goal for the U.S. side is addressing the U.S. trade deficit in agricultural products with the EU.", "Public statements by U.S. and EU officials in early 2020 signaled that the U.S.-EU trade talks might include SPS and regulatory barriers to agricultural trade. It is not clear, however, that both sides agree which specific types of non-tariff trade barriers might actually be part of the talks. Some press reports indicate that USDA officials have said that selected SPS barriers as well as GIs would need to be addressed. Specific SPS issues important to the U.S. side include the EU's prohibitions on the use of hormones in meat production (see \" U.S.-EU Beef Hormone Dispute \") and pathogen reduction treatments for poultry (see section \" U.S.-EU Dispute Over Pathogen Reduction Treatments (PRTs) \"), and EU restrictions on the use of biotechnology (see section \" Agricultural Biotechnology \"). Other press reports, however, indicate that some EU officials have downplayed the extent that certain non-tariff barriers\u00e2\u0080\u0094such as biotechnology product permits, approval of certain pathogen rinses for poultry, regulations on pesticides or food standards\u00e2\u0080\u0094would be part of the talks. The United States continues to push for additional concessions from the EU. More formal discussions are expected in spring 2020."], "subsections": []}]}]}, {"section_title": "Trade Aid in Response to Trade Retaliation89", "paragraphs": ["During 2018 and 2019, the Secretary of Agriculture used his authority under the Commodity Credit Corporation Charter Act to initiate two ad hoc trade assistance programs in response to foreign trade retaliation targeting U.S. agricultural products. The trade aid packages were part of the Administration's effort to provide short-term assistance to farmers for the temporary loss of important international markets. On July 24, 2018, USDA announced the first \"trade aid\" package, which targeted production of selected agricultural commodities in 2018 and was valued at up to $12 billion. On May 23, 2019, USDA announced a second package, which targeted production of an expanded list of commodities and was valued at up to an additional $16 billion. Thus, the two years of combined trade assistance were valued at up to $28 billion.", "Both trade aid packages included (1) a Market Facilitation Program (MFP) of direct payments to producers of commodities most affected by the trade retaliation, (2) a Food Purchase and Distribution Program (FPDP) designed to partially offset lost export sales of affected commodities, and (3) an Agricultural Trade Promotion (ATP) program to expand foreign markets. The largest part of the aid is two years of MFP payments initially valued at a combined $24.5 billion (up to $10 billion in 2018 and $14.5 billion in 2019).", "Status: As of February 10, 2020, USDA estimates that it has spent $8.6 billion under the 2018 MFP and $14.2 billion under the 2019 MFP. Payments of this magnitude could attract international attention about whether they are consistent with WTO rules and U.S. commitments on domestic support, as some WTO member countries are questioning whether this additional aid violates U.S. spending limits under the WTO. The trade aid packages raise other potential questions as well. For instance, if the U.S.-China Phase One trade agreement does not produce the commodity purchases promised by China, or if commodity prices remain relatively low, should another trade aid package, or some alternative compensatory measure, be provided in 2020, and possibly beyond? If MFP payments are provided in the future, should USDA revise its payment formulation to provide a broader distribution of payments across the U.S. agricultural sector? "], "subsections": []}, {"section_title": "Future Trade Negotiations95", "paragraphs": [], "subsections": [{"section_title": "India", "paragraphs": ["India is the world's second most populous country after China. Since 2000, its economy has been the fastest growing in the world. Given the rapid growth in population and income among a large segment of the population, demand for higher-value food products such as fruits, nuts, dairy products, and other livestock products, is expected to increase among Indian consumers. While India is among the world's largest producers and consumers of a range of crop and livestock commodities, USDA projects India will continue to be an important importer of dairy products, vegetable oils, pulses, tree nuts, and fruit, and that it will continue to be a major exporter of rice, cotton and buffalo meat.", "U.S. agricultural exports to India have increased since 2015, reaching $1.6 billion in 2017 ( Figure 2 ). In 2018, U.S. exports declined to $1.5 billion, coinciding with India's imposition of retaliatory tariffs on imports of U.S. almonds, walnuts, apples, chickpeas, and lentils, but U.S. exports rebounded to $1.8 billion in 2019 due to increased sales of cotton and tree nuts (largely pecans, pistachios, and dried coconut). Tree nuts (mainly almonds), cotton, and fresh fruit are key U.S. exports to India. However, other U.S. high-value products are registering rapid growth. For example, U.S. dairy exports to India grew by almost 300% from $16 million in 2015 to $60 million in 2019.", "In 2019, the United States imported agricultural products valued at $2.6 billion from India. Spices, rice, essential oils, tea, processed fruit and vegetables, and other vegetable oils are the leading U.S. imports from India.", "U.S.-India trade negotiations follow a period of trade tensions. In March 2018, the United States levied additional tariffs on steel and aluminum imports from India. India responded by identifying certain U.S. food products for retaliatory tariffs but did not levy them until June 16, 2019, after the United States terminated preferential treatment for India under the Generalized System of Preferences (GSP). India's retaliatory tariffs range from 10% to 25% on imports of U.S. chickpeas, shelled almonds, walnuts, apples, and lentils. Both countries' tariffs are likely to become an issue if the United States and India undertake a major trade negotiation, as USTR has proposed. "], "subsections": [{"section_title": "Trade Policy Issues", "paragraphs": ["India's tariffs and non-tariff barriers have prevented greater market penetration of U.S. agricultural products. India maintains very high tariffs on many products, for example 60% on flowers, 100% on raisins, and 150% on alcoholic beverages. Since 2017, a system of annual import quotas on pulses has restricted U.S. exports of pulses to India. U.S. exports of wheat and barley to India are currently restricted due to its zero-tolerance standard for certain pests and weeds, and restrictions also exist on imports of livestock genetic material.", "Similarly, processed products, including ethanol, are subject to various restrictions that prevent U.S. exports to India. India bans imports of tallow, fat, and oils of animal origin. India's complex requirements for U.S. dairy products have been a barrier for expanding U.S. exports. In 2015, India revised its health certificate requirement for pork imports. Since then, the United States has been seeking approval to export pork to India. ", "USTR asserts that India's customs regulations are not transparent or predictable. India's approval process for genetically engineered products are slow and not transparent. ", "India maintains a large and complex program for public food stockholding, both to distribute food to poor consumers and to stabilize market prices, essentially subsidizing domestic production. India provides a broad range of support to its agricultural sector. In May 2018, the United States argued at the WTO that India was under-reporting its price supports for rice and wheat. In November 2018, the United States questioned India's price support for cotton, while Australia has questioned India's price support for sugarcane.", "Status : In 2019, in response to various U.S. concerns over India's trade barriers, the United States revoked India's eligibility for preferential tariff treatment under the U.S. GSP. Total value of U.S. imports of agricultural products from India were down 1% in 2019 from $2.7 billion in 2018 to $2.6 billion in 2019. USTR has stated that it hopes to reach an agreement in 2020 that will, among other things, provide greater access to the Indian market for U.S. agricultural products, potentially in exchange for U.S. restoration of India's eligibility under GSP. "], "subsections": []}]}, {"section_title": "Kenya", "paragraphs": ["On February 6, 2020, the Trump Administration announced that the United States intends to negotiate a comprehensive trade agreement with Kenya using the authority under P.L. 114-26 . The Administration asserts that such a trade agreement will complement Africa's regional integration efforts, including as part of the African Continental Free Trade Area (AfCFTA), to which the United States has pledged support. ", "Kenya hosts three international agricultural research centers that focus on innovations, including agricultural biotechnology, to sustainably improve global food security. These institutions are the International Livestock Research Institute, the World Agroforestry Center, and the International Centre of Insect Physiology and Ecology.", "Kenya is an emerging middle-income country, home to more than 47 million people with an estimated population growth rate of 2.5% in 2017. USDA projects Kenya's real GDP per capita to grow at an annual rate of about 4% though 2031. With anticipated growth in population and per capita income, Kenya has the potential to increase its imports of food and other agricultural products. Kenya's top five agricultural imports are wheat, palm oil, sugar, corn and rice. Its top exports from the United States are wheat, vegetable oils excluding soybean oil, pulses, coarse grains, and other products that include many prepared food products ( Figure 3 )."], "subsections": [{"section_title": "Trade Policy Issues", "paragraphs": ["Kenya is a beneficiary of the African Growth and Opportunity Act, most recently extended in P.L. 114-27 , under which it has duty-free access to the U.S. market for 6,400 products including agricultural products. In 2019, the United States imported agricultural products valued at $126 million from Kenya, with major products being macadamia and cashew nuts, coffee, tea, roses, and non-edible vegetable and nut oils.", "Kenya's MFN tariffs\u00e2\u0080\u0094rates that apply to imports from the United States\u00e2\u0080\u0094are relatively high. For example, simple average MFN tariffs for animal products are 23.1%, dairy products are 51.7%, fruit and vegetables are 22%, cereals and preparations are 22.2%, sugar is 40%, and fish products are 24.8%. Other concerns raised by USDA include a Kenyan ban on imports of genetically engineered (GE) agricultural products (although it has approved field trials for GE cotton and drought and insect resistant corn), bans on imports of U.S. whole peas and lentils, and had a ban on wheat from the U.S. Pacific Northwest over concerns regarding a certain fungus. In February 2020, Kenya adopted a phytosanitary protocol that allows wheat growers in Washington State, Oregon, and Idaho access to Kenya's wheat market, potentially allowing increased U.S. wheat exports to Kenya. ", "Status : USTR has said it plans to officially notify Congress of its intent to start negotiations following consultations with Congress as required by the Bipartisan Congressional Trade Priorities and Accountability Act of 2015 ( P.L. 114-26 ). Subsequently, USTR is to publish notices in the Federal Register requesting public comment on the direction, focus, and content of the trade negotiations with Kenya. USTR is to publish objectives for the negotiations at least 30 days before trade negotiations begin. Some Members of Congress have expressed their support for a free trade agreement with Kenya."], "subsections": []}]}, {"section_title": "United Kingdom (UK)", "paragraphs": ["In January 2020, the UK left the EU. It remains a member of the EU customs union, so U.S.-UK trade continues to be governed by agreements between the United States and the EU in addition to WTO rules. However, the UK has announced its intention to withdraw from the EU customs union on December 31, 2020. Thereafter, U.S.-UK trade will occur under WTO rules unless a separate agreement is reached between the United States and the UK. The UK entered the WTO as a member of the EU, and does not have its own schedule of commitments under the WTO. U.S.-UK trade would thus continue to be governed by the EU WTO schedule, with some confusion regarding what share of quota and subsidy commitments made by the EU will henceforth apply to the UK. Therefore, some Members of Congress have indicated that a comprehensive U.S.-UK trade agreement should be a priority for the United States. ", "The UK has accounted for about 1.3% of total U.S. agricultural exports from 2015 to 2019. Major U.S. exports are wine and beer, tree nuts, prepared food, soybeans, live animals and other products ( Figure 4 ). The United States does not export notable quantities of meat products to the UK, and the Trump Administration and some Members of Congress and U.S. agricultural industry would like to expand exports of these products in the post-Brexit environment. ", "As a member of the EU, the UK posed the same set of trade barriers to U.S. agricultural exports as those discussed under \" U.S.-EU Agricultural Trade \". In particular, hormone treated beef, chlorine-washed poultry, and bio-engineered food products have faced restrictions in accessing EU markets. The UK has sent mixed signals regarding these issues and has hinted that it may allow imports of genetically engineered U.S. agricultural products. At the same time, some reports indicate the UK will not allow imports of chlorine-washed chicken meat.", "Among other goals for U.S. agricultural trade, USTR has identified reducing or eliminating tariffs, providing adjustment periods for U.S. import-sensitive products before initiating tariff reduction, eliminating non-tariff barriers that discriminate against U.S. agricultural goods, improving UK's TRQ administration, promoting regulatory compatibility, and establishing commitments for trade in agricultural biotechnology products. USTR has also articulated specific goals regarding sanitary and phytosanitary provisions, customs and trade facilitation, rules of origin, and technical barriers to trade. Some Members of Congress have requested that improved market access for U.S. rice be an objective of U.S. negotiators.", "Status : On October 16, 2018, the Trump Administration notified Congress of proposed trade agreement negotiations with the UK. The UK could not formally negotiate or conclude a new agreement until it exited the EU, which occurred on January 31, 2020, and any agreement could not take effect until the UK exits the EU single market and customs union. Given the proposed scope of the negotiations, any resulting agreement would likely be subject to ratification by Congress. "], "subsections": []}]}, {"section_title": "WTO and U.S. Agriculture128", "paragraphs": ["The World Trade Organization is an international organization that administers the rules and agreements negotiated among its 164 members to eliminate trade barriers and govern trade. It also serves as an important forum for resolving trade disputes through its committee structures and its Dispute Settlement Body, which approves reports issued by panels of legal experts and a separate Appellate Body. The United States was a major force behind the establishment of the WTO in 1995. ", "Under the WTO's Agreement on Agriculture (AoA), agreed in 1995, national agricultural policies\u00e2\u0080\u0094including domestic farm support, agricultural export subsidies, and restrictive import controls\u00e2\u0080\u0094were placed under a multilaterally agreed-upon set of disciplines for the first time. WTO members agreed to reform their domestic agricultural support policies, increase access to imports, and reduce export subsidies. The disciplines on these three \"pillars\" of agricultural policy involved freezing (or \"binding\") protective measures and subsidies at base period levels, then instituting annual reductions from the bound levels. Article 15 of the AoA granted developing and least-developed countries special rights or extra leniency\u00e2\u0080\u0094termed \"special and differential treatment\"\u00e2\u0080\u0094in the implementation of their policy commitments. Specifically, they had longer periods over which to reduce subsidies and to improve market access. They were also allowed to retain certain subsidies that were prohibited for other countries.", "During the AoA's early years, Article 13, known as the Peace Clause or \"due restraint\" clause, provided additional impetus for reform. The Peace Clause provided temporary protection for market-distorting domestic support and export subsidy measures from challenges under other WTO provisions, as long as these measures complied with certain requirements. However, such subsidies would be open to challenge after the Peace Clause expired around January 2004. ", "The AoA was envisioned as a first step in the process of global market liberalization in the agricultural sector. The impending expiration of the Peace Clause coupled with Article 20's directive to continue the reform process led WTO members to launch the Doha Round of negotiations in 2001. But, the Doha Round failed to reach consensus on formulas to reduce tariffs and agricultural subsidies, due in part to disagreements among developing countries that wished to retain their special and differential treatment under the AoA and wealthier countries that wanted to limit such preferences. The Doha Round has been at an impasse since 2009. ", "The WTO's effectiveness as a negotiating body for broad-based trade liberalization and its role in resolving trade disputes therefore have come under intensified scrutiny in recent years. The WTO has struggled to address newer issues, such as digital trade and regulations affecting services. In addition, the Appellate Body is effectively non-functional due to the United States' decision to block the nomination of members, which prevents it from having a quorum needed to resolve disputes.", "Status: USTR has stated that WTO institutional reform is a priority in 2020. Some Mof Congress have voiced their agreement. The WTO's chair for agricultural negotiations may circulate a negotiating framework for the June 2020 meeting of WTO trade ministers in Kazakhstan that includes rules designed to increase sustainable agricultural production. The meeting may also consider a proposal by a group representing 19 countries, known as the Cairns Group, to \"cap and reduce by at least half the current sum of global agricultural trade- and production-distorting domestic support entitlements by 2030.\" "], "subsections": [{"section_title": "2018 Farm Bill, Trade Aid, and WTO Compliance138", "paragraphs": ["Under the AoA, the United States has committed to limit its domestic support program spending deemed most trade-distorting (referred to as \"amber box\" outlays) to $19.1 billion per year. The AoA spells out the rules for countries to determine whether their policies are potentially trade-distorting, how to calculate the costs of any distortion using a specially defined indicator, the \"Aggregate Measure of Support\" (AMS), and how to report those costs to the WTO in a public and transparent manner. While the AMS is subject to a spending limit, the AoA provides four potential exemptions from the AMS spending limit.", "First, if a program's outlays are considered to be minimally trade distorting or non-trade distorting (in accordance with specific criteria listed in Annex 2 of the AoA), then they may qualify as \"green box\" programs and not be included in the AMS. Second, if program spending is trade-distorting but has offsetting features that limit the production associated with support payments, then they may qualify as \"blue box\" programs and not be included in the AMS. Third, if AMS outlays for a specific commodity are sufficiently small relative to the output value of that commodity (product-specific de minimis), they may be exempted. Finally, if aggregate AMS outlays are small relative to the value of total agricultural production (non-product-specific de minimis)\u00e2\u0080\u0094then they may be exempted. Any AMS left over after applying these four exemptions constitutes the amber box. ", "Since the WTO's establishment, the United States has generally met its WTO amber box spending commitment. However, in some years U.S. compliance has hinged on judicious use of de minimis exemptions, which permit it to exclude certain spending from being considered under its amber box limit (see Figure 5 ). To date, no WTO member has challenged these exemptions.", "Since 2010, U.S. outlays on potentially market-distorting farm programs have been trending upward ( Figure 5 ). From 2011 through 2016, AMS outlays (amber box plus de minimis exemptions) averaged $14.6 billion per year. However, several policy developments since 2016 have created uncertainty about whether the United States will remain in compliance with the rules and spending limits for domestic support programs that it has agreed to in the WTO. These developments are, first, farm program changes under both the 2018 farm bill ( P.L. 115-334 ), which expanded payment eligibility and eliminated certain programs from payment limits, and, second, USDA trade aid programs implemented in 2018 and 2019 under other statutory authorities in response to foreign trade retaliation targeting U.S. agricultural products (see \" Trade Aid in Response to Trade Retaliation \"). ", "U.S. AMS spending is estimated to have been higher in 2017 through 2019, based on CRS compilation of USDA program data. Outlays in 2017 are estimated to have been $16.5 billion; however, the classification of $10.1 billion in program spending as de minimis exemptions would limit amber box outlays to $6.3 billion. The addition of the Administration's two MFP \"trade aid\" payments, valued at $8.6 billion in 2018 and approximately $10.7 billion in 2019, are estimated to push total AMS outlays above the U.S. amber box spending limit\u00e2\u0080\u0094to $22.4 billion in 2018 and $23.6 billion in 2019. Whether the United States will violate its spending commitment or not would be expected to depend on the extent that de minimis exemptions apply for those two years.", "The United States has yet to notify spending to the WTO under any of the trade assistance programs, so the exact WTO spending classification is currently unknown. However, past practice can serve as a guide for the likely notification. The FPDP and ATP programs for 2018 and 2019 are expected to have been implemented in a similar manner during both years. USDA outlays under food purchase and distribution programs have historically been notified to the WTO as green box compliant and thus not subject to any spending limit. Trade promotion programs, such as ATP, are not notified under domestic support, because they do not involve direct payments to producers. Thus, the FPDP and ATP programs are not expected to affect the United States' ability to meet its WTO commitments. ", "Payments under the two MFP programs were structured differently during 2018 and 2019. As a result, they are likely to be notified under different WTO classifications. The specific manner of determining how payments are made to individual producers is likely to determine their WTO status. Potential AMS classifications are:", "USDA's MFP payments for 2018 were based on each farm's harvested production of eligible crops during 2018 times a fixed per-unit payment rate. Payments to dairy were based on historical production, while hog payments used mid-year inventory data. Under this specification, 2018 MFP payments are likely to be notified as coupled, product-specific AMS and would count against the U.S. annual spending limit of $19.1 billion (unless they are exempted under the product-specific de minimis exemption). USDA's MFP payments for 2019 were coupled to a producer having planted at least one eligible commodity within the county, but they are independent of which commodity or commodities were planted. Under this specification, the 2019 MFP payments would appear to be coupled to planted acres\u00e2\u0080\u0094a producer has to plant an eligible crop to get a payment\u00e2\u0080\u0094but are non-product-specific, thus possibly notifiable as non-product-specific AMS.", "Status: Most recent studies suggest that, for U.S. program spending to exceed the $19.1 billion cumulative spending limit, even with the addition of large MFP payments and higher traditional program support levels, a combination of events would have to occur that would broadly depress commodity prices. Perhaps more relevant to U.S. agricultural trade is the concern that, because the United States plays such a prominent role in most international markets for agricultural products, any distortion resulting from U.S. policy could be both visible and potentially vulnerable to challenge under WTO rules."], "subsections": []}, {"section_title": "U.S. Challenges to Farm Support Spending of WTO Members146", "paragraphs": ["Since the inception of the WTO in 1995, the United States has initiated 46 WTO dispute cases related to agriculture. Of these cases, 34 were fully or partially decided in favor of the United States by the WTO panel hearing the case. "], "subsections": [{"section_title": "U.S. Challenges of China's Agricultural Domestic Support", "paragraphs": ["In September 2016, USTR filed a dispute settlement case (DS511) at the WTO over China's domestic agricultural support policies, alleging they were inconsistent with WTO rules and commitments. USTR contended that the level of support that China provided for rice, wheat, and corn had exceeded\u00e2\u0080\u0094by nearly $100 million from 2012 through 2015\u00e2\u0080\u0094the level to which China had committed to when it joined the WTO. USTR also asserted that China's price support for domestic production had been above the world market prices since 2012, thereby creating an incentive for Chinese farmers to increase production of the subsidized crops, which in turn displaced imports from the United States and elsewhere. In December 2016, USTR requested that the WTO establish a dispute settlement panel to examine China's domestic support levels for these crops. ", "On February 28, 2019, the WTO dispute settlement panel found that China had exceeded its domestic support limits for wheat and rice in each year between 2012 and 2015 and therefore was not in compliance with its WTO commitment. The panel made recommendations that China change its calculations of reference prices and domestic support in order to comply with its WTO commitments. The panel did not make a ruling on corn because China had already made changes to its support for corn that were found to be less trade distorting than the method used prior to 2015.", "Status: Under the U.S.-China Phase One trade agreement, China stated that it will respect its WTO obligations and publish in its official journal its laws, regulations and other measures pertaining to its domestic support programs and policies. "], "subsections": []}, {"section_title": "U.S. Challenges to China's Agricultural Market Access Policy", "paragraphs": ["On December 15, 2016, USTR filed another WTO dispute settlement case (DS517) against China, alleging that China administered its TRQs for wheat, rice, and corn in such a way that the duty-free quotas were never filled, even when imported grains were priced lower than domestic grains. ", "USTR stated that China's TRQ administration appeared to restrict imports and failed to provide sufficient information to permit the processing of quota applications and importation. ", "On September 22, 2017, a WTO dispute settlement panel was established on China \u00e2\u0080\u0093 Tariff Rate Quotas for Certain Agricultural Products . On April 18, 2019, the panel ruled in favor of the United States, stating that \"China's administration of its TRQs for wheat, rice and corn were inconsistent with its obligations under the WTO to administer TRQs on a transparent, predictable and fair basis.\" The panel recommended that China make changes to its TRQ administration to conform to its WTO obligations.", "Status : In the U.S.-China Phase One trade agreement, China stated that it will ensure that its TRQ measures conform with the WTO panel ruling. "], "subsections": []}, {"section_title": "U.S. Challenges to India's Domestic Agricultural Support", "paragraphs": ["In May 2018, the United States asserted at the WTO that India had not accurately notified the WTO of its spending on its market price support for rice and wheat for the marketing years 2010/11 through 2013/14. The United States alleged that India's market price support for wheat and rice exceeded its allowable levels of trade distorting domestic support under the WTO. ", "In November 2018, the United States also challenged India's domestic support for cotton at the WTO, stating that it exceeded its allowable level under its WTO commitments. At about the same time, Australia, Brazil, and Guatemala challenged India's level of domestic support for sugar, charging that India had violated its WTO commitment levels.", "In February 2019, the United States further challenged India at the WTO, stating that it had substantially underreported its market price support for chickpeas, pigeon peas, black matpe (a type of black lentil), mung beans, and lentils. According to USTR, when calculated using the AoA methodology, India's market price support for each of these pulses has exceeded the allowable levels of trade-distorting domestic support under India's WTO commitments.", "The United States' challenge to India's domestic support for rice and wheat was raised at the May 2018 WTO Committee on Agriculture meeting. USTR raised the issue concerning India's cotton price support during the November 2018 committee meeting, and the challenge against India's domestic support for pulses was raised at the February 2019 meeting.", "Status: USTR may continue challenging India's domestic support for agriculture at upcoming WTO Committee on Agriculture (COA) meetings and, if necessary, could pursue these concerns through WTO's dispute settlement mechanism. India's domestic support for agriculture could be an issue during U.S.-India trade negotiations or during the discussions related to WTO reform on agriculture."], "subsections": []}]}, {"section_title": "Foreign Challenges to U.S. Farm Support156", "paragraphs": ["The U.S. shift toward greater use of domestic trade laws and less reliance on the WTO to address concerns about other countries' trade policies could also produce unintended consequences as trading partners consider responding to a pattern of increasing U.S. farm support outlays over the past decade. For example, in lieu of using the WTO's dispute settlement process to have an independent panel resolve disputes, countries may choose to use trade remedy investigations performed by their national authorities to impose anti-dumping (AD) duties on products found to be sold below cost and countervailing duties (CVD) on imports found to be unfairly subsidized or otherwise traded unfairly. ", "Under the Article 13 of the 1995 WTO Agreement on Agriculture (AoA), a provision known as the Peace Clause kept members from taking action against domestic subsidies of WTO members who complied with their AoA commitments. Article 13's protection expired in January 2004, making countries with subsidies to their agricultural sectors vulnerable to AD or CVD actions by their trading partners. Since then, a number of challenges to U.S. imports have involved repeated or multiple investigations into the same products (examples include Mexican investigations into apples and the Peruvian investigation into corn). Large trade aid payments to the U.S. farm sector in 2018 and 2019 have raised new questions from some WTO members, who may perceive these payments as providing an unfair advantage for the U.S. agricultural sector.", "When a country initiates an AD or a CVD investigation of U.S. agricultural exports, the U.S. government and the affected industries may participate in the investigation by providing evidence, such as showing that any subsidies were permissible under WTO rules or that the imposition of duties is not justified. U.S. exporters may also challenge an AD or CVD ruling under free trade agreements, such as NAFTA or USMCA in the future. A third option is for the United States to bring a claim via the WTO dispute settlement process, alleging that the trading partner has violated the WTO Anti-Dumping Agreement or the Agreement on Subsidies and Countervailing Measures. However, the WTO Appellate Body, which hears appeals of cases from WTO dispute settlement panels, currently lacks a sufficient number of judges to issue rulings, because the United States has blocked the appointment of judges to replace those whose terms have expired. This means that the Appellate Body is unable to adjudicate disputes. ", "Peru currently imposes countervailing duties on U.S. ethanol imports. In May 2019, Colombia imposed preliminary duties on U.S. ethanol for a four-month period during a countervailing duty investigation. In 2018, Peru initiated a similar investigation into U.S. corn, and China launched an investigation into U.S. sorghum, although neither case has resulted in countervailing duties to date.", "Status : Over the years, trading partners have expanded the scope of U.S. programs that they considered to be \"actionable\"\u00e2\u0080\u0094that is, potentially subject to punitive duties. In some cases, programs other than those that the United States reports to the WTO under its amber box commitments have been the subject of foreign government investigations. These have included direct payments to farmers, subsidies for biodiesel and ethanol, export credit guarantees, farm ownership and operating loans, and Market Access and Foreign Market Development Programs operated by the Foreign Agricultural Service. In 2019, a European Parliament report suggested that perhaps the U.S. Environmental Quality Incentives Program could be considered an unfair subsidy to the U.S. farm sector. Given the WTO's limited ability to resolve disputes though legal procedures at present, the United States may have difficulty challenging duties levied on U.S. agricultural products by a country with which the United States does not have a trade agreement that includes dispute resolution provisions. "], "subsections": []}]}, {"section_title": "Non-Tariff Trade Barriers", "paragraphs": [], "subsections": [{"section_title": "Sanitary and Phytosanitary (SPS) and Other Non-Tariff Barriers162", "paragraphs": ["SPS measures are laws, regulations, standards, and procedures that governments employ as \"necessary to protect human, animal or plant life or health\" from the risks associated with the spread of pests, diseases, or disease-carrying and causing organisms, or from additives, toxins, or contaminants in food, beverages, or feedstuffs. Examples include product standards, requirements that products be produced in disease-free areas, quarantine and inspection procedures, sampling and testing requirements, residue limits for pesticides and drugs in foods, and limits on food additives. Technical barriers to trade (TBTs) cover both food and non-food traded products. TBTs in agriculture include SPS measures, but also include other types of measures related to health and quality standards, testing, registration, and certification requirements, as well as packaging and labeling regulations. Both SPS and TBT measures regarding food safety and related public health protection are addressed in various multilateral trade agreements and are regularly notified to and debated within both the SPS Agreement and TBT Agreement within the WTO. Under the agreements, countries are encouraged to observe established and recognized international standards, and avoid any improper use of SPS and TBT measures that might create barriers to trade that are not supported by science.", "Examples of prominent U.S. trade concerns involving SPS and TBT issues include restrictions in some global markets on the use of agricultural biotechnology (see section \" Agricultural Biotechnology \"), EU prohibitions on the use of hormones in meat production (see \" U.S.-EU Beef Hormone Dispute \"), and the use of pathogen reduction treatments for poultry (see section \" U.S.-EU Dispute Over Pathogen Reduction Treatments (PRTs) \").", "Bilateral and regional free trade agreements (FTAs) between the United States and other countries address SPS and TBT matters. Provisions in most U.S. FTAs have generally reaffirmed rights and obligations of both parties under the WTO SPS and TBT agreements. Some FTAs have resulted in the establishment of a standing bilateral committee to enhance understanding of each other's measures and to consult regularly on related matters. Some FTAs have included side letters or agreements for the parties to continue to cooperate on scientific and technical issues, which in some cases may be related to certain specific market access concerns. However, to date, most FTAs have not addressed specific non-tariff trade concerns directly. ", "In the early 2010s, as part of the lead up to negotiations , with the EU and with Asia-Pacific countries, there were active efforts to \"go beyond\" the rules, rights, and obligations in the WTO SPS and TBT Agreements, as well as beyond commitments in existing U.S. FTAs. These efforts were often referred to as \"WTO-Plus\" rules, or alternatively, as \"SPS-Plus\" and \"TBT-Plus\" rules, and they were intended to address concerns that trade negotiations might not adequately address SPS concerns and cover \"all significant barriers in a single comprehensive agreement.\" Related issues involved the need to more effectively address enhanced regulatory cooperation and coherence between trading partners in an FTA. Many in Congress also continued to call for \"effective rules and enforceable rules to strengthen the role of science\" to resolve international trade differences in FTA negotiations. ", "Status: Statements by USDA and EU officials in early 2020 signaled that issues involving SPS barriers and regulatory cooperation could become part of the U.S.-EU Trade Agreement negotiations. Other statements by USDA officials further indicated that certain long-standing SPS disputes\u00e2\u0080\u0094including the EU's continued ban on the use of hormones and certain pathogen reduction treatments in meat production\u00e2\u0080\u0094might also be part of the negotiations. These and other non-tariff barriers continue to be actively debated as part of the official U.S. trade agenda. Among U.S. concerns involving the application of such measures in some countries is the perception that their use may not be based on accepted science or on international standards, and that they instead constitute disguised protectionist barriers to U.S. exports. ", "In recent developments, both USMCA and the U.S.-China Phase One trade agreement incorporated policy changes regarding SPS and TBT measures that go beyond the rules, rights, and obligations in the WTO. Those changes also go beyond commitments in existing U.S. trade agreements. Specifically, according to the U.S. International Trade Commission, USMCA \"goes further [than previous agreements] in requiring transparency and encouraging harmonization or equivalence of SPS measures\" and incorporates all of the proposed enhanced TPP disciplines \"in the areas of equivalence, science and risk analysis, transparency, and cooperative technical consultations.\" Some industry representatives claim USMCA \"goes beyond TPP in establishing deadlines for 'import checks,' by requiring importing parties to inform exporters or importers within five days of shipments being denied entry.\" The final U.S.-China Phase One trade agreement also requires both parties to \"engage each other cooperatively\" on agriculture-related technical and SPS measures, including \"risk communication.\" It further requires that China implement a phytosanitary protocol to allow the importation of U.S. agricultural crops, and establish various protocols and certificate requirements. Both of these U.S. FTAs are notable in that they specifically address agricultural biotechnology in the agreement. "], "subsections": []}, {"section_title": "Ongoing Trade Issues Involving SPS Measures174", "paragraphs": ["Outside of the FTA negotiation process, various U.S. federal agencies regularly address trade concerns involving SPS and TBT measures as part of their day-to-day oversight and regulatory responsibilities. For example, the United States maintains ongoing interagency processes and mechanisms to identify, review, analyze, and address foreign government standards-related measures that may function as barriers to trade. These activities are coordinated through the USTR-led Trade Policy Staff Committee, which comprises representatives from several federal agencies, including USDA, the Department of Commerce (DOC), and the State Department. USTR also chairs an interagency group (i.e., both USDA and non-USDA agencies with SPS and TBT responsibilities) that meets weekly to review SPS and TBT measures involving globally traded goods that are notified to the WTO, as required under the SPS and TBT agreements. These agency officials also work with their international counterparts on an ongoing basis on various trade concerns involving SPS and TBT measures. USTR tracks issues related to SPS and TBT measures as part of a series of ongoing annual reports. In addition, USDA's Animal and Plant Health Inspection Service (APHIS) administers various regulatory and control programs pertaining to animal and plant health and quarantine, humane treatment of animals, and the control and eradication of pests and diseases. APHIS also oversees SPS certification requirements for imported and exported agricultural goods. This work is ongoing. ", "Status: While specific SPS and TBT issues regarding individual agricultural commodities generally fall outside most formal FTA negotiations, statements by USDA officials in early 2020 have signaled that certain issues that arise from normal day-to-day operations within the Executive Branch could become part of the U.S.-EU trade agreement negotiations. Press reports indicate that such issues could include EU concerns involving phytosanitary certificates for U.S. imports of apples and pears from some EU countries as well as post-arrival requirements for U.S. imports of sheep and goat semen from the EU. U.S. concerns include the EU's restrictions on the use of agricultural chemicals and biotechnology, animal cloning, pesticide maximum residues limits, and import requirements for live cattle and animal byproducts."], "subsections": []}, {"section_title": "Agricultural Biotechnology181", "paragraphs": ["Agricultural biotechnology refers primarily to the commercial development of plants and animals through recombinant DNA techniques to provide certain desired characteristics, primarily herbicide tolerance and pest resistance. More recently, the term has come to encompass a range of new technologies that manipulate genetic material through targeted in vivo or in vitro techniques, popularly referred to as genomic \"editing\" (e.g., CRISPR-Cas9) rather than just recombinant DNA techniques. U.S. soybean, corn, cotton, and sugar beet producers have rapidly adopted genetically engineered (GE) varieties of these crops since commercialization began in the mid-1990s. Globally, the United States leads in cultivating GE crops, accounting for nearly 40% of total acres growing GE crops worldwide. ", "Elsewhere in the world, the adoption and cultivation of GE crops by both producers and consumers are mixed. Argentina and Brazil, for example, are major cultivators and exporters of GE corn and soybeans. India is a major cultivator of GE cotton. EU policy is more complicated. Through labeling requirements, strict traceability rules for imported food and commodities, and comparatively strong democratic pressures from the public at local levels, the EU has made cultivation and sale of GE foods and crops very difficult. Moreover, while the European Commission (EC) has approved varieties of GE commodities for import and marketing, individual member states may maintain bans. This opposition in the EU has also been a factor in opposition to GE crops in less developed countries. Many African countries have largely followed the EU in restricting or banning the commercial cultivation of GE crops, confining cultivation mostly to field trials and greenhouse containment. ", "In March 2018, the U.S. Secretary of Agriculture stated that the United States will not regulate plants created through genomic editing as long as they are developed without using a plant pest as the donor or vector, and are not plant pests themselves. In contrast, the European Court of Justice ruled in July 2018 that organisms obtained by mutagenesis are genetically modified organisms (GMOs) and are, in principle, within the scope of the GMO Directive, which governs the deliberate release of GMOs into the environment. The European Court considers the risks posed by new mutagenic techniques such as gene editing (CRISPR-Cas9), to be similar to crops created from transgenesis, where GE crops have genetic material from other, unrelated organisms introduced into the host plant. ", "China's reluctance to approve GE crops or GE imports remains a source of frustration for U.S. agricultural interests. Nonetheless, U.S.-developed GE varieties appear to be grown in China despite Chinese laws banning their cultivation. In September 2016, China agreed to improve its agricultural biotechnology approval process and, in January 2019, it announced approval of five new GE traits in imported crops for processing, the first new approvals since June 2017. At the same time, the ministry amended regulations on safety assessment, import approval, and labeling of agricultural GMOs without notifying the changes to the WTO, nor soliciting comments from stakeholders. In the U.S.-China Phase One trade agreement, China agreed to establish a predictable and risk-based regulatory regime with respect to its safety evaluation of agricultural biotechnology. With respect to GE products for animal feed or further processing, China also agreed to reduce the time between submission of applications for authorization and a final decision to approve or disapprove. ", "For the first time in an FTA, the USMCA specifically includes provisions to improve transparency and coordination in approving and bringing to market products of agricultural biotechnology. USMCA provisions will cover crops produced with all biotechnology methods, including recombinant DNA and gene editing. ", "Trade negotiations concerning agricultural biotechnology also involve labeling issues and other provisions that address the unintended presence of unapproved GE products in food and commodity imports. In 2016, Congress enacted P.L. 114-216 , comprehensive legislation to govern the mandatory labeling of bioengineered foods, a term defined in the act and similar to the terms GE foods and GMOs . USDA's Agricultural Marketing Service established the National Bioengineered Food Disclosure Standard to regulate the mandatory disclosure of bioengineered foods and food ingredients to consumers. Food manufacturers, retailers, and importers are responsible for making disclosures. Importers are responsible for ensuring that all imported bioengineered foods comply with the new regulation. ", "Implementation of the labeling standard began on January 1, 2020, and compliance is voluntary until January 1, 2022, when it becomes mandatory. The labeling standard does not require refined products derived from bioengineered crops (e.g., refined soy oil, high-fructose corn syrup) to be labeled if the modified genetic material is not detectable in the food product. The Agricultural Marketing Service stated that it does not expect the new regulation to disrupt foreign trade. ", "Status: A key objective of U.S. trade negotiations has been to establish a common framework for GE approvals and adoption. This includes labeling practices consistent with the U.S. guidelines and harmonized regulatory procedures concerning GE presence in products that are consistent with the Codex Alimentarius Commission Annex on Food Safety Assessment in Situations of Low-Level Presence of Recombinant-DNA Plant Material in Food. This general policy was reiterated through publication of the June 2019 Executive Order on Modernizing the Regulatory Framework for Agricultural Products . For the first time in an FTA, the USMCA specifically includes provisions to improve transparency in approving and bringing to market products of agricultural biotechnology. The Phase One trade agreement with China has resulted in China's agreement to establish a predictable and risk-based regulatory regime regarding its safety evaluation of agricultural biotechnology."], "subsections": []}, {"section_title": "Geographical Indications (GIs)190", "paragraphs": ["GIs are geographical names that act to protect the quality and reputation of a distinctive product originating in a certain region. The term GI is most often applied to wines, spirits, and agricultural products. Some food producers benefit from the use of GIs because their products gain recognition for their distinctiveness, thereby differentiating them in the marketplace. In this manner, GIs can be commercially valuable. GIs may also be eligible for relief from acts of infringement or unfair competition. While the use of GIs may protect consumers from deceptive or misleading labels, they also have the potential to impair trade when the use of names that are considered common or generic in one market are protected in another. Examples of registered or established GIs include Parmigiano Reggiano cheese and Prosciutto di Parma ham from the Parma region of Italy, Roquefort cheese from France, Champagne from the region of the same name in France, Irish whiskey, Darjeeling tea, Florida oranges, Idaho potatoes, Vidalia onions, Washington State apples, and Napa Valley wines. ", "GIs are protected by the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), which obligates WTO members to recognize and protect GIs as intellectual property. The United States is a signatory of TRIPS and is subject to its rights and obligations. Accordingly, under TRIPS, the United States and EU have committed to providing a minimum standard of protection for GIs (i.e., protecting GI products to avoid misleading the public and prevent unfair competition) and an \"enhanced level of protection\" to wines and spirits that carry a GI, subject to certain exceptions. However, the United States considers some EU GIs to be generic or semi-generic terms. For example, in the United States, feta is considered the generic name for a type of cheese; however, it is protected as a GI in Europe. As such, cheese produced in the United States may not be exported for sale as feta cheese in the EU, since only feta produced in countries or regions currently holding GI registrations may be sold there commercially. ", "Laws and regulations governing GIs differ markedly between the United States and EU, which further complicates this issue. More than 3,300 product names registered and protected in the EU for foods, wine, and spirits originating in both EU member states and other countries. In addition, registered products often fall under GI protections in certain third-country markets, and some EU GIs have been trademarked in some non-EU countries pursuant to those countries' trade agreements with the EU. For example, Canada has agreed to recognize a list of 143 EU GIs in Canada, and Japan has agreed to recognize more than 200 EU GIs in Japan. These GI protections could limit U.S. sales of certain products to these countries. ", "The EU is in the process of negotiating trade agreements with several other U.S. trading partners, including Mexico, Australia, New Zealand, and the Mercosur states (Argentina, Brazil, Paraguay, and Uruguay). Each of these efforts include a selected list of GIs that would become protected under the proposed trade agreement. In December 2019, the EU also entered into an agreement with China regarding GIs that would protect a reported 100 EU GIs in China. ", "Some Members of Congress, particularly those with dairy constituencies, have claimed that EU protections for GIs are being misused to create market and trade barriers. Much of this debate is focused on expanding restrictions on the use of certain terms used by cheesemakers, such as \"parmesan,\" \"asiago,\" and \"feta,\" which are generally regarded as generic names in the United States. Some U.S. industry groups, however, are trying to institute GI protections to promote distinctive American agricultural products. For example, the American Origin Products Association, which represents certain U.S. potato, maple syrup, ginseng, coffee, and chili pepper producers and certain U.S. winemakers, seeks to work with federal authorities to \"create of a list of qualified U.S. distinctive product names, which correspond to the GI definition.\" ", "Status: Statements by USDA officials in early 2020 have signaled that concerns about GIs could resurface as part of the U.S.-EU trade talks. In addition, both USMCA and the U.S.-China Phase One trade agreement address GIs in ways that could further complicate future U.S.-EU discussions. Specifically, USMCA includes language regarding the transparency of GI applications, approvals, and cancellations, along with guidelines for determining whether a term is customary in common use. USMCA also includes a side letter between the United States and Mexico regarding more than 30 cheese terms. These provisions may prove to be incompatible with GI provisions that are likely to be part of a trade agreement between the EU and Mexico, as well as existing provisions in the EU-Canada Comprehensive Economic and Trade Agreement. The U.S.-China Phase One trade agreement requires China to \"not undermine market access for U.S. exports to China of goods,\" and provides the United States with \"necessary opportunities to raise disagreement\" regarding GIs, among other provisions. These provisions may also prove to be incompatible with provisions agreed to in the 2019 EU-China agreement which protect certain EU GIs in China."], "subsections": []}, {"section_title": "U.S.-EU Beef Hormone Dispute205", "paragraphs": ["The United States and the EU have engaged in a long-standing trade dispute over the EU's ban on hormone-treated meat. The EU adopted restrictions on livestock production in the early 1980s, limiting the use of natural hormones to therapeutic purposes, banning the use of synthetic hormones, and prohibiting imports of animals and meat from animals that have been administered the hormones. In response, the United States, which maintains that beef produced using hormones is safe for consumers, suspended trade concessions with the EU in 1999 by imposing retaliatory tariffs of 100% ad valorem on selected EU food products. Despite an ongoing series of WTO dispute settlement proceedings and decisions, the United States and the EU continue to disagree on a range of legal and procedural issues, as well as the scientific evidence and consensus affirming the safety of hormone-treated beef.", "In January 2009, USTR announced its intent to make changes to the list of EU products subject to increased tariffs under the dispute, including changes to the EU countries and products affected, with additional tariffs on some products. The EU claimed that this action constituted an \"escalation\" of the dispute. In May 2009, following a series of negotiations, the United States and the EU signed a memorandum implementing an agreement specifying actions intended to resolve this dispute over the next several years, and the United States suspended its retaliatory tariffs for imported EU products under the dispute.", "As part of the 2009 memorandum, the EU agreed to expand market access to U.S. exports of beef raised without hormones as part of its High-Quality Beef (HQB) TRQ. The EU's HQB quota is set at 45,000 MT annually and assessed a tariff of 20%. However, as the HQB quota is open to other beef-exporting nations, this has effectively limited the ability for U.S. beef producers to fully benefit under the quota. According to USTR and the U.S. beef industry, most of the HQB quota was being filled by countries other than the United States, and the EU has been unwilling to consider an allocation that would reserve a significant part of the HQB quota for the United States. ", "In December 2016, USTR proposed reinstating retaliatory tariffs on EU products under the U.S.-EU beef hormone dispute, given the U.S. contention that the U.S.-specific allocation of the EU's HQB import quota for hormone-free beef had not expanded pursuant to the 2009 memorandum. In February 2017, USTR convened a hearing to review this possible retaliatory action. In late 2018, the EU agreed to review its existing HQB quota and renegotiate its quota with the United States with the expectation that a revised HQB agreement would be implemented in early 2019. The United States ultimately did impose retaliatory tariffs in connection with the dispute. ", "Status: The U.S. and the EU reached an agreement in principle regarding U.S.-specific allocation of the EU's HQB import quota for hormone-free beef in June 2019. The agreement provides that the United States would be allocated 35,000 MT of the 45,000 HQB quota (about 78%), phased-in over a seven year period. Starting January 1, 2020, the phased-in quota allocations are as follows: 18,500 MT (2020), 23,000 MT (2021), 25,400 MT (2022), 27,800 (2023), 30,200 MT (2024), 32,600 MT (2025), 35,000 (2026 and subsequent years). During this time, the remaining amount of the quota each year would be available to other exporting countries. Current substantial users of EU's HQB quota\u00e2\u0080\u0094Australia, Argentina, and Uruguay\u00e2\u0080\u0094all had to agree to the reallocation in order for the agreement to be compliant with WTO rules.", "The EU continues to impose bans and restrictions on meat produced using hormones, beta agonists, and other growth promotants, and it allows only imports of beef produced without hormones subject to the EU's HQB quota. The EU's restrictions involving meat production continues to be actively debated as part of the official U.S. trade agenda, as these types of practices are common in U.S. meat production. Statements by USDA officials in early 2020 have signaled that this issue could resurface as part of the U.S.-EU trade agreement negotiations."], "subsections": []}, {"section_title": "U.S.-EU Dispute Over Pathogen Reduction Treatments (PRTs)217", "paragraphs": ["In January 2009, the United States escalated a long-running dispute with the EU over its refusal to accept imports of U.S. poultry that are subject to certain pathogen reduction treatments (PRTs). PRTs are antimicrobial rinses that have been approved for use by the USDA in poultry production to reduce the amount of microbes on meat. Meat and poultry products processed with PRTs are judged safe by the United States and also by European food safety authorities. However, the EU prohibits the use of PRTs and the importation of poultry treated with these substances. The EU generally opposes such chemical interventions and asserts that its own poultry producers follow much stricter production and processing rules that are more effective in reducing microbiological contamination than simply washing poultry products. In general, EU consumer groups argue that the use of such treatments compensates for poor hygiene in the supply chain. The United States requested WTO consultations with the EU on the matter, a prerequisite first step toward the establishment of a formal WTO dispute settlement panel. A WTO panel was subsequently established in November 2009, but this case has not moved forward.", "In 2013, USDA submitted an application for the approval of peroxyacetic acid as a PRT for poultry. Although the EU initially put forward a proposal to authorize the PRT, it withdrew its proposal in December 2015, citing the European Food Safety Authority's (EFSA) opinion of insufficient evidence of peroxyacetic acid's efficacy against campylobacter. ", "EFSA cleared lactic acid for reducing pathogens on beef carcasses, cuts, and trimmings in 2011. In 2013, the EU lifted its ban on the use of lactic acid in beef PRTs on beef carcasses, half-carcasses, and beef quarters in the slaughterhouse. In 2017, the National Pork Producers Council submitted an application to EFSA to approve organic lactic and acetic acid for use on pork carcasses and cuts. EFSA's panel report, issued in October 2018, concluded that use of the treatments does not pose a safety concern provided that the substances comply with EU specifications for food additives and that their use is efficacious compared to untreated meat. However, EFSA raised questions about whether lactic and acetic acid were more efficacious than water treatment for certain applications.", "Status: The United States continues to maintain that PRTs are a \"critical tool during meat processing that helps further the safety of products being placed on the market\" and continues to seek EU approval of certain PRTs for beef, pork, and poultry. To date, the United States and the EU have not been able to agree on a number of issues related to veterinary equivalency, and the EU continues to prohibit any substance other than water to remove contamination from animal products unless the EU approves the substance. Statements by USDA officials in early 2020 have signaled that this issue could resurface as part of the U.S.-EU trade agreement negotiations."], "subsections": []}, {"section_title": "Trade Restrictions on Ractopamine Use226", "paragraphs": ["Ractopamine, an animal drug that increases animal weight gain and meat yield, is approved by the U.S. Food and Drug Administration (FDA) for use in U.S. cattle, hog, and turkey production. It is also approved for use in countries such as Canada, Japan, Mexico, and South Korea, but many other countries ban the use of ractopamine in meat production. In 2012, the Codex Alimentarius\u00e2\u0080\u0094the international food standards organization that sets guidelines to protect public health and ensure fair practices in the food trade\u00e2\u0080\u0094set maximum residue levels for ractopamine in beef and pork. However, several of the largest markets for U.S. meat exports have restricted imports of meat produced with ractopamine, despite U.S. adherence to the residue standards established by Codex. ", "USTR, in its \"2019 National Trade Estimate Report on Foreign Trade Barriers,\" states that the EU, China, Taiwan, and Thailand continue to restrict U.S. meat exports produced with ractopamine. According to USDA's Food Safety and Inspection Service, U.S. meat exports\u00e2\u0080\u0094particularly pork\u00e2\u0080\u0094may be shipped to markets with ractopamine restrictions if the exported product is raised without ractopamine and is certified through USDA's Never Fed Beta Agonists Program. U.S. exports to markets that have ractopamine restrictions are subject to increased certification and testing costs, potentially affecting competitiveness and dampening market opportunities.", "Status : USDA and USTR continue to encourage trading partners to accept international standards on the use of ractopamine. Under the U.S.-China Phase One trade agreement, China agreed to consult with U.S. experts and conduct a risk assessment of ractopamine that is consistent with Codex standards. The assessment is to be based on conditions and use in the United States. The countries are to set up a working group to discuss steps to follow based on a risk assessment of ractopamine. The United States exported 250% more pork to China in 2019 than 2018 largely because of China's African Swine Fever outbreak. An agreement on a ractopamine maximum residue limit (MRL) should facilitate more U.S. pork shipments to China going forward."], "subsections": []}]}, {"section_title": "Selected Trade Issues Involving Specialty Crops", "paragraphs": ["The United States has gone from being a net exporter of fresh and processed fruits and vegetables in the early 1970s to being a net importer of fruits and vegetables today. Although U.S. fruit and vegetable exports totaled $9.2 billion in 2018, U.S. imports of fruits and vegetables were $24.8 billion, resulting in a gap between imports and exports of $15.6 billion (excludes nuts). Several factors have contributed to this trade imbalance including a relatively open import regime and lower average tariffs in the United States, increased competition from low-cost or government-subsidized producing countries, and non-tariff trade barriers to U.S. exports in some countries. Additionally, other market factors, such as exchange rate fluctuations and structural changes in the U.S. food industry, as well as increased U.S. overseas investment and diversification in market sourcing by U.S. companies, have contributed to the trade imbalance. Increased domestic and year-round demand for fruits and vegetables as well as opportunities for counter-seasonal supplies through imports have also contributed to this trade situation. Despite U.S. efforts to address some of these issues as part of recent FTA discussion, a number of these issues are unresolved. Other U.S. concerns include import competition regarding seasonal produce from Mexico, long-standing suspensions agreements between the U.S. and Mexico involving fresh tomatoes, and regulatory requirements regarding retail wine sales in Canada."], "subsections": [{"section_title": "Import Competition of Seasonal Produce from Mexico231", "paragraphs": ["Mexico remains the largest foreign supplier of U.S. imports of vegetables and fruits (excluding bananas). Production of some Mexican fruits and vegetables\u00e2\u0080\u0094tomatoes, peppers, cucumbers, berries, and melons\u00e2\u0080\u0094has increased in recent years in part due to Mexico's investment in large-scale greenhouse production facilities and other types of technological innovations. Reportedly, protected (greenhouse/shade) production in Mexico has risen to nearly 101,000 acres in 2016, up from about 19,500 acres in 2000. According to researchers, Mexican growers benefit from a combination of relatively lower labor costs and subsidies invested in the specialty crop sector under various government programs, including Mexico's Agriculture Promotion Program and its AgriFood Productivity and Competiveness Program. These programs are generally focused on increasing the infrastructure capacity of Mexico's agricultural sector. The Florida Fruit and Vegetable Association (FFVA) claims that Mexico's produce industry benefits from subsidies paid by the Mexican government and that it prices its products below fair market value, and therefore should be subject to both AD duties and CVD on U.S. imports of some fruits and vegetables. Trade concerns by U.S. growers have primarily centered on imported tomatoes, peppers, and berries. ", "One of the Trump Administration's initial agriculture-related objectives in the renegotiation of NAFTA included a proposal to establish new rules for seasonal and perishable products, such as fruits and vegetables. The proposal would have established a separate domestic industry provision for perishable and seasonal products in AD and CVD proceedings, making it easier for a group of regional producers to initiate an injury case and to prove injury, thereby resulting in CVD or AD duties on the imported products responsible for the injury. This could protect certain U.S. seasonal produce growers in some regions by making it easier to initiate trade remedy cases. The U.S. International Trade Commission (USITC) has previously reviewed trade remedy cases involving perishable agricultural products\u00e2\u0080\u0094namely, Fall-harvested Round White Potatoes from Canada and Spring Table Grapes from Chile\u00e2\u0080\u0094that proved difficult to settle. As noted by USTR, current trade laws \"are really not set up for seasonal product,\" making it difficult to prove injury over a period of time.", "Support for seasonal produce protections through changes to U.S. trade laws is mixed. Some Members of Congress supported including seasonal protections as part of NAFTA's renegotiation. Others opposed including such protections, contending that seasonal production complements rather than competes with U.S. growing seasons. Others worried it could open the door to an \"uncontrolled proliferation of regional, seasonal, perishable remedies against U.S. exports.\" Most U.S. food and agricultural sectors, including some fruit and vegetable producer groups, opposed including seasonal protections as part of the renegotiation. Some worried that efforts to push for seasonal protections would derail the renegotiation. Others claimed that such efforts would favor a few \"politically-connected, wealthy agribusiness firms from Florida\" at the expense of others in the U.S. produce industry and at the expense of both consumers and growers in other fruit and vegetable producing states, such as California. The Agricultural Technical Advisory Committee for Trade in Fruits and Vegetables (F&V ATAC) supported not including seasonal provisions in the NAFTA renegotiation. In January 2018, F&V ATAC passed a resolution supporting the withdrawal of the seasonal and perishable trade remedy proposal from the U.S. negotiating objectives.", "Changes to USMCA released in October 2018 did not alter U.S. trade remedy laws to address seasonal produce trade. USTR claimed it tried to include such provisions but was unable to do so. In response, the Agricultural Trade Improvement Act of 2018 ( S. 3510 ; H.R. 7015 ) was introduced in the House and the Senate. These bills were reintroduced in the 116 th Congress but renamed as Defending Domestic Produce Production Act of 2019 ( S. 16 ; H.R. 101 ). ", "Status: USMCA does not include changes to U.S. trade remedy laws to address seasonal produce trade. Although lawmakers from Florida and Georgia continued to push USTR for seasonal produce provisions in USMCA, others in Congress continued to oppose such changes. In January 2020, USTR announced that it planned to investigate trade practices by Mexico's produce industry, hold field hearings in Florida and Georgia, and engage the help of U.S. International Trade Commission (USITC) and DOC to monitor imports, among other actions. One Member of Congress claimed USTR's plan would \"sidestep the issue and install policies\" that could result in future trade conflicts; another encouraged USTR to \"consider data from a variety of sources\" when examining the issue. Some in Congress have raised concerns about the possible negative impacts of imported fruits and vegetables on U.S. growers more broadly. Legislation introduced in the 116 th Congress ( S. 564 ) would establish a task force to identify countervailable subsidies and dumping practices to counter perceived unfair trade practices involving imports within the U.S. produce market. "], "subsections": []}, {"section_title": "U.S.-Mexico Tomato Suspension Agreements253", "paragraphs": ["The U.S.-Mexico Tomato Suspension Agreement is an agreement between DOC and signatory producers/exporters of fresh tomatoes grown in Mexico that suspends the U.S. AD investigation into whether Mexican fresh tomatoes were sold into the U.S. market at less than fair value. Fresh tomatoes imported from Mexico have been governed by suspension agreements since 1996. The first suspension agreement became effective in November 1996. The Mexican signatory growers and the United States entered into new agreements in 2002, 2008, and 2013. Under the 2013 agreement, the signatories agreed to suspend the AD investigation and monitor compliance with the agreement. The basis for the suspension agreement was a commitment by each signatory producer/exporter to sell tomatoes at or above the stated reference price in order to eliminate the injurious effects of exports of fresh tomatoes to the United States. The agreement set different floor prices for Mexican fresh tomatoes during the summer and winter and specifies prices for open field/adapted-environment and controlled-environment production. These price floors covered all types of fresh or chilled tomatoes from Mexico. The agreement did not cover tomatoes that are for processing. ", "In early 2018, DOC initiated consultations with the Mexican tomato growers and exporters to negotiate possible revisions to the 2013 agreement. DOC also initiated its five-year sunset review of the suspended AD investigation and published the preliminary and final results of its analysis in late 2018. DOC's analysis indicated that dumping of fresh tomatoes was likely to occur/recur and calculated weighted-average dumping margins of up to 188%. In November 2018, the Florida Tomato Exchange requested that the United States withdraw from the suspension agreement, eliminate the reference prices, and resume the related initial 1996 AD investigation. They claim the pricing agreements failed to ensure that Mexico did not undercut U.S. growers, costing the Florida tomato industry $3.4 billion to $6.8 billion per year in lost sales. Several Members of Congress expressed support for withdrawing from the agreement. Among the groups that opposed withdrawal were the Fresh Produce Association of the Americas and other groups representing Mexican growers and exporters as well as businesses, various associations, and local and county governments. These groups claim the U.S. lost sales because Mexico offers more variety of tomatoes that appeal to consumers and commercial users. ", "DOC initially announced its intention to withdraw from the agreement in February 2019 following its periodic review of the agreement, which concluded that Mexican fresh tomatoes have been sold into the U.S. market at less than fair value. In May 2019, the United States terminated the 2013 agreement and announced it would resume collecting tariffs on chilled and fresh tomatoes from Mexico, and later set a preliminary dumping margin of 25.28%. Mexican tomato grower filed a suit at the Court of international Trade requesting an injunction against the reimposed tariffs. The Mexican government claimed that the new duties would cost its tomato industry more than $350 million annually. USITC resumed its AD investigation of Mexican tomatoes, and concluded that U.S. growers are \"threatened with material injury\" from imports. ", "Status: Between May and September 2019, the United States and Mexican tomato growers considered various proposals regarding a possible revised agreement. On September 19, 2019, DOC signed a new suspension agreement with Mexico's growers and exporters of fresh tomatoes. DOC and USITC suspended their respective AD investigations. The new suspension agreement sets increased minimum prices for specialty and organic tomatoes at certain times of the year, and establishes new inspections requirements of tomato shipments crossing the border to prevent low-quality tomatoes from entering the United States where they might undercut domestic prices. ", "More recently, there have been growing concerns that a virus (brown rugose) found in tomatoes imported from Mexico could be harmful to U.S.-grown tomatoes and peppers. Increased inspections have reportedly caused border delays of product shipments, and have led to complaints from Mexican officials that such detentions are \"unjustified.\" During the last two months of 2019, the United States reportedly returned 43 tomato shipments inspected at the U.S.-Mexico border. "], "subsections": []}, {"section_title": "Regulatory Requirements Regarding Retail Wine Sales in Canada270", "paragraphs": ["In Canada, the authority to import and distribute alcohol rests with the provincial governments. Starting in 2015, British Columbia (BC) initiated a series of policies and regulations that provide BC wine exclusive access to retail channels and grocery store shelves, while imported wine may be sold in grocery stores only through a \"store within a store\" \u00e2\u0080\u0094that is, a space that is physically separated from the main retail outlet with separate cash registers. In 2016, Quebec\u00e2\u0080\u0094the largest wine-importing province in Canada\u00e2\u0080\u0094enacted policies that would streamline provincial approval for Quebec wines. Most wine in Quebec is distributed through retail outlets owned by its provincial liquor authority, the Soci\u00c3\u00a9t\u00c3\u00a9 des alcools du Qu\u00c3\u00a9bec. The rules allow Quebec small wine producers to bypass the provincial liquor board. Regulations are also in place in Ontario requiring that 50% of the wine on display at a grocery store meet certain requirements that some claim make it difficult for imported products to compete with like domestic products. According to the U.S.-based Wine Institute, Canada is the leading export market for California wine\u00e2\u0080\u0094the leading wine producing state in the United States\u00e2\u0080\u0094accounting for $448 million in sales in 2018. ", "In January 2017, the Obama Administration initiated trade enforcement action against Canada at the WTO regarding Canada's BC wine measures. Subsequent actions by the Trump Administration, in September 2017, led to the United States requesting formal consultations with Canada regarding BC wine measures. USTR states that \"discriminatory regulations implemented by British Columbia are unfairly keeping U.S. wine off of grocery store shelves\" and that the measures are inconsistent with Canada's commitments and obligations under the WTO. The United States reiterated its concerns as part of a second complaint issued in this case in July 2018. Argentina, Australia, New Zealand, and the EU joined the consultation. The WTO case remains active.", "Status: The USMCA includes a side letter addressing U.S. concerns about Canada's BC wine measures. As outlined in the side letter, Canada would modify certain measures that provide preferential grocery store shelf space to wines produced within the province and \"implement any changes no later than November 1, 2019.\" At this time, it is unclear whether Canada has taken additional action to address U.S. concerns about the status of BC's regulations. The USMCA side letter does not address potential market barriers to U.S. wine in Quebec and Ontario. Canada's wine regulations in certain provinces continues to be a concern to some in Congress. "], "subsections": []}]}, {"section_title": "Issues Related to Livestock and Meat Trade280", "paragraphs": ["In 2019, exports of U.S. livestock and poultry products totaled $24.1 billion, and imports totaled $14.2 billion. Foreign demand for U.S. animals and products supports prices of domestic livestock and poultry producers, while imports supplement U.S. consumer demand for a variety of livestock and poultry products. Recent trade agreements with Canada and Mexico, China, and Japan will facilitate increased livestock and poultry product exports to these four markets, which accounted for 65% of the value of total U.S. exports of these products in 2019. The U.S.-Japan agreement lowers tariffs for U.S. beef and pork products, and adjusts beef and pork safeguards. These measures offer U.S. livestock producers benefits that competing exporters have enjoyed under the TPP-11, the successor to Trans-Pacific Partnership agreement\u00e2\u0080\u0094from which the Trump Administration withdrew the United States before its ratification. Under U.S.-China Phase One trade agreement, China agreed to abide by international standards and guidelines for trade, while expanding market access for more meat products that the USDA Food Safety and Inspection Service regulates should ease the process for U.S. meat and poultry exporters. "], "subsections": [{"section_title": "Export Bans on U.S. Meat and Poultry", "paragraphs": ["USDA forecasts that exports of meat and poultry products will represent about 17% of U.S. domestic production in 2020. Periodically, foreign countries impose export bans on U.S. meat products in response to an outbreak of certain animal diseases. The bans are disruptive for livestock producers and meat exporters, are often inconsistent with internationally accepted protocols, and vary in terms of scope and duration. For example, bans were imposed on U.S. beef exports because of the discovery of bovine spongiform encephalopathy (BSE, or mad cow disease) in 2003. An outbreak of highly pathogenic avian influenza (HPAI) at the end of 2014 and early 2015 in U.S. turkey and egg-laying flocks triggered export bans on poultry products by more than 30 countries. The bans were imposed on all U.S. products even though the HPAI outbreaks were not in areas in close proximity to commercial broiler production.", "The World Organization for Animal Health (known as OIE) has established trade protocols when disease outbreaks occur in countries that export meat and poultry products. According to OIE, in most cases total export bans are not recommended or needed when there is a BSE or HPAI discovery or outbreak in exporting countries. In 2013, the OIE determined that the United States is at \"negligible risk\" for BSE, meaning that U.S. surveillance and safeguard systems are adequate. For HPAI, USDA, in collaboration with states, has implemented increased flock biosecurity and has placed a system to rapidly contain and eradicate an outbreak of HPAI.", "Over the years, while some foreign markets imposed total bans on U.S. beef exports following the 2003 BSE incident, other export markets for U.S. beef imposed specific conditions for imports of U.S. beef. For example, Japan and South Korea\u00e2\u0080\u0094two major importers of U.S. beef\u00e2\u0080\u0094required that imported U.S. beef be produced from cattle under 30 months of age. China did not lift its ban on U.S. beef exports until 2017 and included an under 30-month age restriction. Regarding poultry, some foreign markets imposed total bans on poultry exports during the HPAI outbreak, while other markets imposed export bans only from the regions affected by the outbreak, consistent with the recommended OIE regionalization protocol that allows for trade from regions that are disease free. As the United States demonstrated that the outbreak was contained and then eliminated, most of these bans were lifted. ", "Status: China lifted the ban on U.S. beef in 2017 but continued to restrict imports of U.S. beef to cattle under 30 months of age, similar to other countries maintaining age restrictions. However, under the U.S.-China Phase One trade agreement, China agreed to amend import protocols that align with international standards. China agreed to (1) eliminate the cattle age restriction; (2) recognize that the U.S. traceability system meets or exceeds OIE guidelines for maintaining \"negligible risk\" for bovine disease, and if the U.S. status should change, China would set import regulations that follow OIE guidelines; and (3) adopt MRLs for certain hormones used in U.S. beef production, and follow Codex MRL guidelines. China continues to require that U.S. beef exporters participate in the USDA Agricultural Marketing Service export verification program, which verifies that U.S. suppliers are meeting importing country requirements. In 2019, the U.S. shipped about 10,507 MT of beef to China, representing about 1% of total U.S. beef exports. U.S. beef exports to China were valued at $85.3 million.", "China lifted its ban on the import of U.S. poultry meat in November 2019, allowing U.S. poultry exports from FSIS-approved poultry plants. Under the U.S.-China Phase One trade agreement, the United States and China agreed to finalize a protocol accepting regionalization when there are outbreaks of poultry diseases, and China agreed to follow OIE guidelines on international trade. Poultry industry analysts believe U.S. poultry exports to China could reach $1 billion in a short time, which would exceed record exports of $750 million in 2008.", "China's hog industry was hit hard with African Swine Fever in 2019, leaving a large gap in China's pork supplies and increasing demand for pork imports. In 2019, the value of U.S. pork and pork product exports (includes pork offal) to China more than doubled to $1.3 billion. Under the U.S.-China Phase One trade agreement, China is to increase the number of U.S. pork products inspected by FSIS that are eligible for import."], "subsections": []}, {"section_title": "U.S. Meat and Poultry Imports", "paragraphs": ["Currently, 33 countries are eligible to export meat and poultry to the United States. Before the United States authorizes imports of meat or poultry, APHIS conducts risk assessments of any foreign animal diseases that could pose a threat to U.S. animal health. APHIS maintains a list of countries and their animal health status for critical diseases. Also, FSIS must determine if foreign meat or poultry inspection systems provide an \"equivalent\" level of sanitation and protection of public health as the U.S. system. Foreign governments provide documentation on how their inspection systems are regulated, and FSIS conducts onsite audits of foreign facilities. FSIS also conducts equivalency verification and periodic audits of countries already approved to export meat and poultry to the United States."], "subsections": [{"section_title": "Imports of Chicken from China", "paragraphs": ["In August 2013, FSIS confirmed that China's poultry processing inspection system was equivalent to the U.S. inspection system. This allowed China to export processed (cooked) poultry meat that is sourced raw from the United States or from countries eligible to export poultry to the United States. In March 2016, FSIS recommended that the process of verifying equivalency for China's poultry slaughter inspection system move forward. In August 2017, FSIS released an audit report confirming that China's poultry processing system remained equivalent. ", "In November 2019, FSIS issued a final rule that determined that China's poultry slaughter system is equivalent and that China could export domestically slaughtered poultry meat to the United States. China may only export fully cooked\u00e2\u0080\u0094not shelf stable-products. China is not permitted to export raw poultry products due to animal disease risks. The United States did not import poultry meat from China in 2018 and 2019.", "These actions were the culmination of a process that began in 2005, when China requested that USDA evaluate its poultry inspection system. Congress halted the process in FY2006, when appropriations provisions prohibited FSIS from expending funds to evaluate China's poultry inspection system. The process resumed in FY2010 on the condition that FSIS provide Congress with regular reports on the equivalency process. The possibility that the United States could import poultry meat from China has alarmed some food safety advocates and some Members of Congress because of concerns about relatively lax food safety enforcement in China for both domestically consumed products and exports. Testimony presented during a Congressional-Executive Commission on China hearing highlighted concerns regarding China's food safety.", "Status: In response to concern about China's record on food safety, Section 738 of Division B of the Further Consolidated Appropriations Act, 2020 ( P.L. 116-94 ) prohibits USDA from using any funds to purchase Chinese raw or processed poultry products for feeding programs, including the school lunch and school breakfast programs. Section 741 of Division B of the FY2020 appropriations act prohibits USDA from finalizing the proposed rule to allow the importation of slaughtered Chinese poultry unless certain conditions are met to ensure the food safety of poultry meat imports from China.", "Under the U.S.-China Phase One trade agreement, China may submit a formal request to the United States to evaluate regional avian influenza (AI) status. Within 30 days of receipt of the request, APHIS would initiate an evaluation of conditions in the regions in order to determine if a region or regions could be recognized as AI-free. Such a determination would allow China to export raw poultry meat if FSIS determines that poultry plants in the region(s) met equivalency standards."], "subsections": []}, {"section_title": "Fresh Beef Imports from Brazil and Argentina", "paragraphs": ["The United States restricts or prohibits imports of animals or animal products (including meat) from countries where highly infectious animal diseases exist in order to protect U.S. herds. Fresh beef imports from Brazil and Argentina have been prohibited or restricted because of foot-and-mouth disease (FMD) in the two countries. U.S. beef imports from Brazil and Argentina have mostly been limited to fully cooked/processed product. Argentina was approved to export fresh beef to the United States from 1997-2001, until the United States halted exports after an Argentine FMD outbreak in 2001.", "In December 2013, APHIS proposed a rule that would allow fresh beef imports from 13 regions in Brazil. In August 2014, APHIS proposed a separate rule to allow fresh beef imports from Patagonia and northern Argentina. In July 2015, APHIS released final rules to allow the import of fresh beef from these regions of Brazil and Argentina. USDA risk assessments determined that, under certain circumstances, fresh beef could be safely imported from Brazil and Argentina without threatening the FMD-free status of the United States. Some livestock industry stakeholders, such as the National Cattlemen's Beef Association and the National Farmers Union, have expressed opposition to allowing fresh beef from Brazil and Argentina because neither country is considered to be free of FMD. FMD was eradicated in the United States in 1929, and any introduction of the disease back into the United States could be economically devastating for the livestock industry. In 2013, the Department of Homeland Security estimated that the cost of an FMD outbreak in the United States could exceed $50 billion.", "In May 2015, FSIS found that Brazil's beef inspection system would provide an equivalent level of food safety as the U.S. system. In August 2016, USDA announced that Brazil was approved to ship fresh beef to the United States, and the first shipments arrived the following month. In June 2017, USDA suspended imports of fresh beef from Brazil after FSIS found problems with re-inspected Brazilian beef at the U.S. port of entry. According to USDA, FSIS was re-inspecting 100% of Brazilian fresh beef imports and refused entry to 11% of shipments, well above the 1% refusal rate for other beef imports.", "In November 2018, FSIS announced that the Argentine beef inspection system was equivalent, and the country could export fresh beef to the United States. FSIS also announced that within six months of the November 2018 equivalency determination, the agency would undertake additional onsite audits of Argentina's raw beef inspection system. The United States imported about 1,623 MT of fresh beef from Argentina in 2019. Argentina holds a 20,000 MT ton duty-free TRQ allotment for beef shipments to the United States.", "Status : On February 21, 2020, the United States lifted the suspension on imports of raw, intact beef from Brazil. FSIS released a targeted on-site audit report on February 20, 2020 that addressed corrective actions taken by Brazil. Raw beef imports from Brazil will be subject to re-inspection at U.S. points of entry by FSIS.", "FSIS released an on-site audit report on Argentina's meat inspection system in September 2019 and noted that further on-site audits would be conducted to ensure that corrective actions undertaken as a result of the audit were implemented. "], "subsections": []}, {"section_title": "Meat Exports Under U.S.-Japan Trade Agreement (USJTA)", "paragraphs": ["Japan is a leading export market for U.S. beef and pork products. In 2019, U.S. beef and beef product exports to Japan totaled about $2 billion, and pork and pork products amounted to $1.5 billion. Exports of both products were lower than the value of shipments in 2018, partly due to the preferential tariff treatment that competing exporters, such as Australia, New Zealand, Canada, and Mexico, have with Japan through the TPP-11 agreement.", "For example, Japan's beef imports from TPP-11 member nations entered at a 26.6% tariff rate in 2019 (year 2 of the TPP-11 agreement), but U.S. beef entered with a tariff rate of 38.5%. Under USJTA, the tariff on U.S. beef is now aligned with the TPP-11 tariff rates. Under these agreements, Japan's tariff on beef from the TPP-11 countries and the United States is scheduled to decline until it reaches 9% in year 15 of the USJTA (year 16 of TPP-11).", "Similarly, Japan's tariffs on imports of U.S. pork are reduced under the agreement, matching the TPP-11 tariff rates. Instead of an ad valorem rate of 4.3% on U.S. pork, the rate is 1.9% in the first year of the agreement, and is phased out in year 9. Japan maintains a variable duty mechanism (gate price), which is set to a fixed value and will gradually decline until year 9.", "U.S. beef and pork exports are not subject to Japan's WTO safeguards, but to U.S.-specific safeguards for beef and pork. The U.S. beef safeguard threshold is set at 242,000 MT and increases annually after year 2 of the agreement. Japan will terminate the beef safeguard measure if it does not trigger for four consecutive years after year 14 of the agreement. The U.S. pork safeguard will trigger if imports of U.S. pork exceed 112% of the largest import volume in the previous three years. The pork safeguard will terminate after year 10 of the agreement.", "Status: USJTA has been in effect since January 1, 2020, and U.S. meat exports to Japan are expected to increase as a result."], "subsections": []}]}]}, {"section_title": "Issues in Dairy Product Trade321", "paragraphs": ["The United States exported $6.0 billion in dairy products in 2019, and imported $3.1 billion worth of products. Reform of dairy pricing and establishing specific dairy product TRQs in Canada is expected to expand access in that market for U.S. dairy producers. The USJTA lowers tariffs for U.S. dairy products and expands some dairy product TRQs. Like U.S. livestock producers, dairy producers gain benefits that competing exporters have enjoyed under the TPP-11. Under the U.S.-China Phase One trade agreement, China is to streamline the regulatory process to facilitate trade in U.S. dairy and infant formula."], "subsections": [{"section_title": "U.S. Dairy Exports to Canada", "paragraphs": ["The Canadian dairy sector limits production, sets prices, and restricts imports. Canadian imports of dairy products are restricted through TRQs, with over-quota tariffs in excess of 200% for some products. Although Canada is the second-largest market for U.S. dairy exports, U.S. exports would likely be higher but for Canadian import restrictions.", "In recent years, U.S. milk producers began exporting increased quantities of ultra-filtered (UF) milk to Canada. UF milk is a high-protein liquid product made by separating and concentrating certain milk components (such as protein and fat) for use as ingredients in dairy products, such as cheese, yogurt, and ice cream. U.S. UF milk found a market among Canadian cheese makers in 2008 after Canada revised its compositional standards for cheese. This revision significantly reduced the use of several milk products that U.S. processors had been supplying to Canadian food manufacturers, including milk protein concentrates and dried protein products. ", "In recent years, growing demand for butterfat in Canada resulted in increased Canadian milk production and, consequently, surplus supplies of skim milk. To address the surplus, Canada adopted the Class 7 milk price classification in 2017 (Class 6 in Ontario). Milk classified as Class 7 comprises skim milk components\u00e2\u0080\u0094primarily milk protein concentrates and skim milk powder (SMP)\u00e2\u0080\u0094used to process dairy products. Prices for Class 7 products were set at low levels. Once the Class 7 regime was implemented, Canadian skim milk products became cheaper. Canada expanded global exports of SMP with the consequence that U.S. producers lost exports of high-protein UF milk to Canadian cheese and yogurt processors.", "According to USDA, the value of U.S. UF milk exports to Canada peaked at nearly $107 million in 2015 but declined after the Class 7 regime was implemented in 2017 to $49 million in 2017 and $32 million in 2018. At the same time, Canada's exports of SMP more than tripled in 2017 to $133 million, compared with $42 million in 2016 before the Class 7 price regime was implemented. Eliminating Canada's Class 7 pricing regime became a priority for the U.S. dairy industry when NAFTA renegotiations commenced in 2017.", "Status : Under USMCA, Canada agreed to eliminate the Class 7 pricing regime six months after USMCA enters into force. Canada also agreed to reclassify Class 7 products according to their end use and base its selling price on a formula that takes into consideration the USDA reported nonfat dry milk price. Also under the agreement, Canada would be required to monitor its exports of milk protein concentrates, SMP, and infant formula and report at the harmonized tariff schedule level monthly.", "Although Canada would maintain its milk supply management system under USMCA, it would expand TRQs for U.S. milk, cheese, cream, skim milk powder, condensed milk, yogurt, and several other dairy products. U.S. dairy products within the USMCA TRQs would enter Canada duty free, while U.S. exports above the TRQ quantities would be subject to the existing over-quota tariffs. In return, the United States agreed to establish TRQs for imports of Canadian dairy products. ", "In total, under USMCA Canada would grant the United States duty-free access to nearly 17,000 MT of dairy products in the first year of the agreement, 100,000 MT in the sixth year, and 109,000 MT in year 19. The USMCA quota is specific to the United States and would be in addition to the 93,648 MT of WTO global quota, which is open to U.S. dairy products as well as to those from other WTO member countries as was the case under NAFTA."], "subsections": []}, {"section_title": "Dairy Exports under U.S.-Japan Trade Agreement (USJTA)", "paragraphs": ["U.S. exports of dairy products to Japan totaled nearly $283 million in 2019, making Japan the fifth largest dairy export market for the United States. The Japanese dairy sector is protected by high import tariff rates and TRQ. In addition, competing exporters of dairy products to Japan (Australia, New Zealand, Canada, and the EU) have preferential tariffs through free trade agreements. The USJTA is expected to improve the competitive position of U.S. dairy producers through tariff reductions, and eventual tariff elimination in 15 years. Japan also established a country specific TRQ of 5,400 MT for U.S. whey products that is to increase to 9,000 MT in year 10. In-quota exports are to enter duty-free at the beginning of the agreement and tariffs on over-quota exports are to be eliminated in five years. Over-quota tariffs on other dairy products are to be phased out at various times through the agreement.", "Status: \"Stage One\" of USJTA became effective on January 1, 2020. Unlike the provisions the United States had negotiated with Japan under the Trans-Pacific Partnership (TPP), USJTA does not include TRQs for certain dairy products such as butter and skim milk powder. The U.S. dairy industry has identified that the lack of provisions on non-tariff measures, such as GIs, could prove to be a market access barrier for certain U.S. cheese exports to the Japanese market. Additional negotiations with Japan toward a more comprehensive agreement are expected in 2020 and may address these issues."], "subsections": []}, {"section_title": "U.S.-China Phase One Trade Agreement: Dairy", "paragraphs": ["China was the third-largest market for U.S. dairy exports in 2019 at nearly $374 million, but this total was 25% lower than in 2018 as retaliatory tariffs hindered trade. Under the U.S.-China Phase One trade agreement, China is to streamline the regulatory process to facilitate U.S. exports. China is to accept dairy products manufactured in facilities compiled by FDA and which have a USDA dairy sanitary certificate. China is to accept that the U.S. dairy regulatory system provides the same level of safety as China's system. FDA is to provide China updated lists of dairy facilities under FDA jurisdiction. In addition, China's General Administration of Customs China and the FDA is to hold technical discussions regarding FDA guidance (U.S. Import Alert 99-30) on dairy products and the presence of melamine in imports of Chinese milk products. For infant formula, China is to also streamline its import approval process (such as issuing product registrations, technical reviews, and considering FDA's review, inspections and regulatory determinations).", "Status: The U.S.-China Phase One trade agreement entered into force February 14, 2020. "], "subsections": []}]}, {"section_title": "U.S.-Mexico Sugar Suspension Agreements327", "paragraphs": ["In December 2014, DOC signed suspension agreements with the government of Mexico and Mexican sugar producers and exporters that prevented the imposition of CVD and AD on U.S. imports of Mexican sugar. This was a consequence of U.S. government determinations that Mexican sugar was being subsidized by the government of Mexico and was being sold into the U.S. market at less than fair value.", "The suspension agreements limit Mexico's sugar exports to the United States to the residual of U.S. needs for domestic human use in a given marketing year after subtracting U.S. production and imports from other countries. The agreements establish minimum reference prices for Mexican sugar that are above U.S. sugar program loan levels for domestically produced sugar. Another provision limits the share of Mexican sugar that can enter the United States as refined sugar. ", "After the suspension agreements took effect, a number of stakeholders in the U.S. sugar market asserted that the suspension agreements had not worked as intended and had not entirely eliminated the injury caused by the subsidization and dumping of Mexican sugar. One widely held criticism was that cane refiners who were dependent on imports of raw cane from Mexico had received an inadequate share of sugar from Mexico. Another criticism leveled at the agreements was that Mexican exporters were not always adhering to limits on the share of Mexican sugar imports that are refined sugar as compared with raw sugar, nor to the specified minimum reference prices.", "In November 2016, the American Sugar Coalition\u00e2\u0080\u0094representing sugar cane and sugar beet producers and sugar processors, refiners, and workers\u00e2\u0080\u0094called on DOC to withdraw from the agreements, an action that could have caused AD and CVD duties to be imposed on Mexican sugar. Imperial Sugar Company, a U.S. cane refiner, also advocated for withdrawal. The Sweetener Users Association, which represents sugar-using businesses, recommended renegotiating the agreements to address their shortcomings and warned that terminating them would virtually eliminate Mexican sugar from the U.S. market. In November 2016, DOC issued results of a preliminary administrative review, in which it concluded that the agreements may not have entirely redressed the injury, and that certain import transactions may not have adhered to the terms in the agreements.", "In June 2017, the United States and Mexico agreed to amendments to the suspension agreements. Under the amendments, effective October 1, 2017, the price of imported Mexican raw sugar was increased from $0.2225 per pound to $0.23 per pound. The price of imported refined sugar was increased from $0.26 per pound to $0.28 per pound. The maximum share of refined sugar imports was limited to 30%, with raw sugar imports constituting at least 70% of the total, compared with 53% and 47%, respectively, under the 2014 agreement. The agreement also requires that imported raw sugar be loaded in bulk and be free flowing\u00e2\u0080\u0094that is, not packaged. Any raw sugar imports that are packaged would be counted toward the refined sugar allotment. In addition, if USDA determines that the United States requires additional sugar imports to meet its needs, Mexico would be awarded the first opportunity to fill the need.", "Status: In October 2019, the U.S. Court of International Trade (USCIT) voided the 2017 suspension agreements because DOC failed to follow recordkeeping requirements during the negotiations over the agreement. CSC Sugar LLC, a sugar trader and refiner of liquid sugar sued because the agreement changed the purity definition of refined sugar, harming its business, and it was unable to provide comment on the changes. As a result of the USCIT ruling, the 2014 suspension agreement provisions went back into force.", "On January 15, 2020, the DOC and Mexico agreed to new terms for the suspension agreement, specifically limiting imports from Mexico to 1,004,726 short tons from October 2019 through September 2020, with the share of refined sugar limited to 30% of import volume. CSC Sugar LLC again filed suit in the USCIT to block the new agreements between the United States and Mexico."], "subsections": []}]}}
{"id": "R45825", "title": "Federal Preemption: A Legal Primer", "released_date": "2019-07-23T00:00:00", "summary": ["The Constitution's Supremacy Clause provides that federal law is \"the supreme Law of the Land\" notwithstanding any state law to the contrary. This language is the foundation for the doctrine of federal preemption, according to which federal law supersedes conflicting state laws. The Supreme Court has identified two general ways in which federal law can preempt state law. First, federal law can expressly preempt state law when a federal statute or regulation contains explicit preemptive language. Second, federal law can impliedly preempt state law when Congress's preemptive intent is implicit in the relevant federal law's structure and purpose.", "This report begins with an overview of certain general preemption principles. In both express and implied preemption cases, the Supreme Court has made clear that Congress's purpose is the \"ultimate touchstone\" of its statutory analysis. The Court's analysis of Congress's purpose has at times been informed by a canon of statutory construction known as the \"presumption against preemption,\" which instructs that federal law should not be read as preempting state law \"unless that was the clear and manifest purpose of Congress.\" However, the Court has recently applied the presumption somewhat inconsistently, raising questions about its current scope and effect. Moreover, in 2016, the Court held that the presumption no longer applies in express preemption cases.", "After reviewing these general themes in the Supreme Court's preemption jurisprudence, the report turns to the Court's express preemption case law. In this section, the report analyzes how the Court has interpreted federal statutes that preempt (1) state laws \"related to\" certain subjects, (2) state laws concerning certain subjects \"covered\" by federal laws and regulations, (3) state requirements that are \"in addition to, or different than\" federal requirements, and (4) state \"requirements,\" \"laws,\" \"regulations,\" and \"standards.\" While preemption decisions depend heavily on the details of particular statutory schemes, the Court has assigned some of these phrases specific meanings even when they have appeared in different statutory contexts.", "Finally, the report reviews illustrative examples of the Court's implied preemption decisions. In these cases, the Court has identified two subcategories of implied preemption: \"field preemption\" and \"conflict preemption.\" Field preemption occurs when a pervasive scheme of federal regulation implicitly precludes supplementary state regulation, or where states attempt to regulate a field where there is clearly a dominant federal interest. Applying these principles, the Court has held that federal law occupies a number of regulatory fields, including alien registration, nuclear safety regulation, and the regulation of locomotive equipment.", "In contrast, conflict preemption occurs when simultaneous compliance with both federal and state regulations is impossible (\"impossibility preemption\"), or when state law poses an obstacle to the accomplishment of federal goals (\"obstacle preemption\"). The Court has extended the scope of impossibility preemption in two recent decisions, holding that compliance with both federal and state law can be \"impossible\" even when a regulated party can (1) petition the federal government for permission to comply with state law, or (2) avoid violations of the law by refraining from selling a regulated product altogether. In its obstacle preemption decisions, the Court has concluded that state law can interfere with federal goals by frustrating Congress's intent to adopt a uniform system of federal regulation, conflicting with Congress's goal of establishing a regulatory \"ceiling\" for certain products or activities, or by impeding the vindication of a federal right."], "reports": {"section_title": "", "paragraphs": ["T he Constitution's Supremacy Clause provides that \"the Laws of the United States . . . shall be the supreme Law of the Land; and the Judges in every State shall be bound thereby, any Thing in the Constitution or Laws of any State to the Contrary notwithstanding.\" This language is the foundation for the doctrine of federal preemption, according to which federal law supersedes conflicting state laws.", "Federal preemption of state law is a ubiquitous feature of the modern regulatory state and \"almost certainly the most frequently used doctrine of constitutional law in practice.\" Indeed, preemptive federal statutes shape the regulatory environment for most major industries, including drugs and medical devices, banking, air transportation, securities, automobile safety, and tobacco. As a result, \"[d]ebates over the federal government's preemption power rage in the courts, in Congress, before agencies, and in the world of scholarship.\" These debates over federal preemption implicate many of the themes that recur throughout the federalism literature. Proponents of broad federal preemption often cite the benefits of uniform national regulations and the concentration of expertise in federal agencies. In contrast, opponents of broad preemption often appeal to the importance of policy experimentation, the greater democratic accountability that they believe accompanies state and local regulation, and the \"gap-filling\" role of state common law in deterring harmful conduct and compensating injured plaintiffs.", "These broad normative disputes occur throughout the Supreme Court's preemption case law. However, the Court has also identified different ways in which federal law can preempt state law, each of which raises a unique set of narrower interpretive issues. As Figure 1 illustrates, the Court has identified two general ways in which federal law can preempt state law. First, federal law can expressly preempt state law when a federal statute or regulation contains explicit preemptive language. Second, federal law can impliedly preempt state law when its structure and purpose implicitly reflect Congress's preemptive intent.", "The Court has also identified two subcategories of implied preemption: \"field preemption\" and \"conflict preemption.\" Field preemption occurs when a pervasive scheme of federal regulation implicitly precludes supplementary state regulation, or when states attempt to regulate a field where there is clearly a dominant federal interest. In contrast, conflict preemption occurs when compliance with both federal and state regulations is a physical impossibility (\"impossibility preemption\"), or when state law poses an \"obstacle\" to the accomplishment of the \"full purposes and objectives\" of Congress (\"obstacle preemption\").", "Figure 1. Preemption TaxonomySource: CRS.", "While the Supreme Court has repeatedly distinguished these preemption categories, it has also explained that the presence of an express preemption clause in a federal statute does not preclude implied preemption analysis. In Geier v. American Honda Motor Co ., the Court held that although a preemption clause in a federal automobile safety statute did not expressly displace state common law claims involving automobile safety, the federal statute and associated regulations nevertheless impliedly preempted those claims based on conflict preemption principles. Congress must therefore consider the possibility that the laws it enacts may be construed as impliedly preempting certain categories of state law even if those categories do not fall within the explicit terms of a preemption clause.", "This report provides a general overview of federal preemption to inform Congress as it crafts laws implicating overlapping federal and state interests. The report begins by reviewing two general principles that have shaped the Court's preemption jurisprudence: the primacy of congressional intent and the \"presumption against preemption.\" The report then discusses how courts have interpreted certain language that is commonly used in express preemption clauses. Next, the report reviews judicial interpretations of statutory provisions designed to insulate certain categories of state law from federal preemption (\"savings clauses\"). Finally, the report discusses the Court's implied preemption case law by examining illustrative examples of its field preemption, impossibility preemption, and obstacle preemption decisions."], "subsections": [{"section_title": "General Preemption Principles", "paragraphs": [], "subsections": [{"section_title": "The Primacy of Congressional Intent", "paragraphs": ["The Supreme Court has repeatedly explained that in determining whether (and to what extent) federal law preempts state law, the purpose of Congress is the \"ultimate touchstone\" of its statutory analysis. The Court has further instructed that Congress's intent is discerned \"primarily\" from a statute's text. However, the Court has also noted the importance of statutory structure and purpose in determining how Congress intended specific federal regulatory schemes to interact with related state laws. Like many of its statutory interpretation cases, then, the Court's preemption decisions often involve disputes over the appropriateness of consulting extra-textual evidence to determine Congress's intent."], "subsections": []}, {"section_title": "The Presumption Against Preemption", "paragraphs": ["In evaluating congressional purpose, the Court has at times employed a canon of construction commonly referred to as the \"presumption against preemption,\" which instructs that federal law should not be read to preempt state law \"unless that was the clear and manifest purpose of Congress.\" The Court regularly appealed to this principle in the 1980s and 1990s, but has invoked it inconsistently in recent cases. Moreover, in a 2016 decision, the Court departed from prior case law when it held that the presumption no longer applies in express preemption cases.", "The Court's repudiation of the presumption in express preemption cases can be traced to the growing popularity of textualist approaches to statutory interpretation, as many textualists have expressed skepticism about such \"substantive\" canons of construction. Unlike \"semantic\" or \"linguistic\" canons, which express rules of thumb concerning ordinary uses of language, substantive canons favor or disfavor particular outcomes \u00e2\u0080\u0094even when those outcomes do not follow from the most natural reading of a statute's text. Because of these effects, prominent textualists have expressed suspicion about substantive canons' legitimacy. According to textualist critics of the presumption against preemption, a statute's inclusion of a preemption clause provides sufficient evidence of Congress's intent to preempt state law. These critics contend that in light of this clear expression of congressional intent, preemption clauses should be given their \"ordinary meaning\" rather than any narrower constructions that the presumption might dictate. The Supreme Court ultimately adopted this position in its 2016 decision in Puerto Rico v. Franklin California Tax-Free Trust .", "The Court has also endorsed certain narrower exceptions to the presumption against preemption. Specifically, the Court has declined to apply the presumption in cases involving (1) subjects which the states have not traditionally regulated, and (2) areas in which the federal government has traditionally had a \"significant\" regulatory presence. In Buckman Company v. Plaintiffs' Legal Committee , for example, the Court declined to apply the presumption when it held that federal law preempted state law claims alleging that a medical device manufacturer had defrauded the Food and Drug Administration during the pre-market approval process for its device. The Court refused to apply the presumption in Buckman on the grounds that states have not traditionally policed fraud against federal agencies, reasoning that the relationship between federal agencies and the entities they regulate is \"inherently federal in character.\" Likewise, in Arizona v. Inter Tribal Council of Arizona, Inc. , the Court declined to apply the presumption in holding that the National Voter Registration Act preempted a state law requiring voter-registration officials to reject certain registration applications. In refusing to apply the presumption, the Court explained that state regulation of congressional elections \"has always existed subject to the express qualification that it terminates according to federal law.\"", "Similarly, the Court has declined to apply the presumption in cases involving areas in which the federal government has traditionally had a \"significant\" regulatory presence. In United States v. Locke , the Court held that the federal Ports and Waterways Safety Act preempted state regulations regarding navigation watch procedures, crew English language skills, and maritime casualty reporting based in part on the fact that the state laws concerned maritime commerce\u00e2\u0080\u0094an area in which there was a \"history of significant federal presence.\" In such an area, the Court explained, \"there is no beginning assumption that concurrent regulation by the State is a valid exercise of its police powers.\"", "However, the status of the Locke exception to the presumption against preemption is unclear. In its 2009 decision in Wyeth v. Levine , the Court invoked the presumption when it held that federal law did not preempt certain state law claims concerning drug labeling. In allowing the claims to proceed, the Court acknowledged that the federal government had regulated drug labeling for more than a century, but explained that the presumption can apply even when the federal government has long regulated a subject. This reasoning stands in some tension with the Court's conclusion in Locke that the presumption does not apply when states regulate an area where there has been a \"history of significant federal presence.\" Whether the presumption continues to apply in fields traditionally regulated by the federal government accordingly remains unclear."], "subsections": []}]}, {"section_title": "Language Commonly Used in Express Preemption Clauses", "paragraphs": ["Congress often relies on the language of existing preemption clauses in drafting new legislation. Moreover, when statutory language has a settled meaning, courts often look to that meaning to discern Congress's intent. This section of the report discusses how the Supreme Court has interpreted federal statutes that preempt (1) state laws \"related to\" certain subjects, (2) state laws concerning certain subjects \"covered\" by federal laws and regulations, (3) state requirements that are \"in addition to, or different than\" federal requirements, and (4) state \"requirements,\" \"laws,\" \"regulations,\" and \"standards.\" While preemption decisions depend heavily on the details of particular statutory schemes, the Court has assigned some of these phrases specific meanings even when they have appeared in different statutory contexts."], "subsections": [{"section_title": "\"Related to\"", "paragraphs": ["Preemption clauses frequently provide that a federal statute supersedes all state laws that are \"related to\" a specific matter of federal regulatory concern. The Supreme Court has characterized such provisions as \"deliberatively expansive\" and \"conspicuous for [their] breadth.\" At the same time, however, the Court has cautioned against strictly literal interpretations of \"related to\" preemption clauses. Instead of reading such clauses \"to the furthest stretch of [their] indeterminacy,\" the Court has relied on legislative history and purpose to cabin their scope. The following subsections discuss the Court's interpretation of three statutes that contain \"related to\" preemption clauses: the Employee Retirement Income Security Act, the Airline Deregulation Act, and the Federal Aviation Administration Authorization Act."], "subsections": [{"section_title": "Employee Retirement Income Security Act", "paragraphs": ["The Employee Retirement Income Security Act (ERISA) contains perhaps the most prominent example of a preemption clause that uses \"related to\" language. ERISA imposes comprehensive federal regulations on private employee benefit plans, including (1) detailed reporting and disclosure obligations, (2) schedules for the vesting, accrual, and funding of pension benefits, and (3) the imposition of certain duties of care and loyalty on plan administrators. The statute also contains a preemption clause providing that its requirements preempt all state laws that \"relate to\" regulated employee benefit plans. In interpreting this provision, the Supreme Court has identified two categories of state laws that are preempted by ERISA because they \"relate to\" regulated employee benefit plans: (1) state laws that have a \"connection with\" such plans, and (2) state laws that contain a \"reference to\" such plans.", "The Court has held that state laws have an impermissible \"connection with\" ERISA plans if they govern or interfere with \"a central matter of plan administration.\" In contrast, state laws that indirectly affect ERISA plans are not preempted unless the relevant effects are particularly \"acute.\" Applying these standards, the Court has held that ERISA preempts state laws governing areas of \"core ERISA concern,\" like the designation of ERISA plan beneficiaries and the disclosure of data regarding health insurance claims. In contrast, the Court has held that ERISA does not preempt state laws imposing surcharges on certain types of insurers and mandating wage levels for specific categories of employees who work on public projects. The Court has explained that these state laws are permissible because they affect ERISA plans only indirectly, and that ERISA preempts such laws only if the relevant indirect effects are particularly \"acute.\"", "The Court has also held that ERISA preempts state laws that contain an impermissible \"reference to\" ERISA plans. Under the Court's case law, a state law will contain an impermissible \"reference to\" ERISA plans where it \"acts immediately and exclusively upon ERISA plans,\" or where the existence of an ERISA plan is \"essential\" to the state law's operation. In Mackey v. Lanier Collection Agency & Service, Inc. , for example, the Court held that ERISA\u00e2\u0080\u0094which does not prohibit creditors from garnishing funds in regulated employee benefit plans\u00e2\u0080\u0094preempted a state statute that prohibited the garnishment of funds in plans \"subject to . . . [ERISA].\" Because the challenged state statute expressly referenced ERISA plans, the Court held that it fell within the scope of ERISA's preemption clause even if it was enacted \"to help effectuate ERISA's underlying purposes.\" Similarly, in Ingersoll-Rand Company v. McClendon , the Court held that ERISA\u00e2\u0080\u0094which provides a federal cause of action for employees discharged because of an employer's desire to prevent a regulated pension from vesting\u00e2\u0080\u0094preempted an employee's state law claim alleging that he was terminated in order to prevent his regulated pension from vesting. The Court reasoned that ERISA preempted this state law claim because the action made \"specific reference to\" and was \"premised on\" the existence of an ERISA-regulated pension plan. Finally, in District of Columbia v. Greater Washington Board of Trade , the Court held that ERISA preempted a state statute that required employers providing health insurance to their employees to continue providing coverage at existing benefit levels while employees received workers' compensation benefits. The Court reached this conclusion on the grounds that ERISA regulated the relevant employees' existing health insurance coverage, meaning that the state law specifically referred to ERISA plans."], "subsections": []}, {"section_title": "Airline Deregulation Act", "paragraphs": ["The Airline Deregulation Act (ADA) is another example of a statute that employs \"related to\" preemption language. Enacted in 1978, the ADA largely deregulated domestic air transportation, eliminating the federal Civil Aeronautics Board's authority to control airfares. In order to ensure that state governments did not interfere with this deregulatory effort, the ADA prohibited states from enacting laws \" relating to a price, route, or service of an air carrier.\" The Supreme Court's interpretation of the ADA's preemption clause has largely followed its ERISA decisions in applying the \"connection with\" and \"reference to\" standards. In Morales v. Trans World Airlines, Inc ., for example, the Court relied in part on its ERISA case law to conclude that the ADA preempted state consumer protection statutes prohibiting deceptive airline fare advertisements. Specifically, the Court reasoned that because the challenged state statutes expressly referenced airfares and had a \"significant effect\" on them, they \"related to\" airfares within the meaning of the ADA's preemption clause."], "subsections": []}, {"section_title": "Federal Aviation Administration Authorization Act", "paragraphs": ["The Federal Aviation Administration Authorization Act of 1994 (FAAA) is a third example of a statute that utilizes \"related to\" preemption language. While the FAAA (as its title suggests) is principally concerned with aviation regulation, it also supplemented Congress's deregulation of the trucking industry. The statute pursued this objective with a preemption clause prohibiting states from enacting laws \" related to a price, route, or service of any motor carrier . . . with respect to the transportation of property.\" In interpreting this language, the Supreme Court has relied on the \"connection with\" standard from its ERISA and ADA case law. However, the Court has also acknowledged that the clause's \"with respect to\" qualifying language significantly narrows the FAAA's preemptive scope.", "In Rowe v. New Hampshire Motor Transport Association , the Supreme Court relied in part on its ERISA and ADA case law to hold that the FAAA preempted certain state laws regulating the delivery of tobacco, including a law that required retailers shipping tobacco to employ motor carriers that utilized certain kinds of recipient-verification services. The Court reached this conclusion for two principal reasons. First, the Court reasoned that the requirement had an impermissible \"connection with\" motor carrier services because it \"focuse[d] on\" such services. Second, the Court concluded that the state law fell within the terms of the FAAA's preemption clause because of its effects on the FAAA's deregulatory objectives. Specifically, the Court reasoned that the state law had a \"connection with\" these objectives because it dictated that motor carriers use certain types of recipient-verification services, thereby substituting the state's commands for \"competitive market forces.\"", "However, the Court has also held that the FAAA's \"with respect to\" qualifying language significantly narrows the statute's preemptive scope. In Dan's City Used Cars, Inc. v. Pelkey , the Court relied on this language to hold that the FAAA did not preempt state law claims involving the storage and disposal of a towed car. Specifically, the Court held that the FAAA did not preempt state law claims alleging that a towing company (1) failed to provide the plaintiff with proper notice that his car had been towed, (2) made false statements about the condition and value of the car, and (3) auctioned the car despite being informed that the plaintiff wanted to reclaim it. In allowing these claims to proceed, the Court observed that the FAAA's preemption clause mirrored the ADA's preemption clause with \"one conspicuous alteration\"\u00e2\u0080\u0094the addition of the phrase \"with respect to the transportation of property.\" According to the Court, this phrase \"massively\" limited the scope of FAAA preemption. And because the relevant state law claims involved the storage and disposal of towed vehicles rather than their transportation , the Court held that they did not qualify as state laws that \"related to\" motor carrier services \"with respect to the transportation of property.\""], "subsections": []}, {"section_title": "Conclusion", "paragraphs": ["The Supreme Court's case law concerning \"related to\" preemption clauses reflects a number of general principles. The Court has consistently held that state laws \"relate to\" matters of federal regulatory concern when they have a \"connection with\" or contain a \"reference to\" such matters. Generally, state laws have an impermissible \"connection with\" matters of federal concern when they prescribe rules specifically directed at the same subject as the relevant federal regulatory scheme, or when their indirect effects on the federal scheme are particularly \"acute.\" As a corollary to the latter principle, the Court has made clear that state laws having only \"tenuous, remote, or peripheral\" effects on an issue of federal concern are not sufficiently \"related to\" the issue to warrant preemption. In contrast, a state law contains an impermissible \"reference to\" a matter of federal regulatory interest (and therefore \"relates to\" such a matter) when it \"acts immediately and exclusively upon\" the matter, or where the existence of a federal regulatory scheme is \"essential\" to the state law's operation. Finally, the inclusion of qualifying language can narrow the scope of \"related to\" preemption clauses. As the Court made clear in Dan's City , the scope of \"related to\" preemption clauses can be significantly limited by the addition of \"with respect to\" qualifying language."], "subsections": []}]}, {"section_title": "\"Covering\"", "paragraphs": ["The Supreme Court has interpreted a preemption clause that allowed states to enact regulations related to a subject until the federal government adopted regulations \"covering\" that subject as having a narrower effect than \"related to\" preemption clauses. The Court reached this conclusion in CSX Transportation, Inc. v. Easterwood , where it interpreted a preemption clause in the Federal Railroad Safety Act allowing states to enact laws related to railroad safety until the federal government adopted regulations \"covering the subject matter\" of such laws. In Easterwood , the Court explained that \"covering\" is a \"more restrictive term\" than \"related to,\" and that federal law will accordingly \"cover\" the subject matter of a state law only if it \"substantially subsume[s]\" that subject.", "Applying this standard, the Court held that federal laws and regulations did not preempt state law claims alleging that a train operator failed to maintain adequate warning devices at a grade crossing where a collision had occurred. The Court allowed these claims to proceed on the grounds that the relevant federal regulations\u00e2\u0080\u0094which required states receiving federal railroad funds to establish a highway safety program and \"consider\" the dangers posed by grade crossings\u00e2\u0080\u0094did not \"substantially subsume\" the subject of warning device adequacy. Specifically, the Court reasoned that the federal regulations did not \"substantially subsume\" this subject because they established the \"general terms of the bargain\" between the federal government and states receiving federal funds, but did not reflect an intent to displace supplementary state regulations.", "However, the Easterwood Court held that federal law preempted other state law claims alleging that the relevant train traveled at an unsafe speed despite complying with federal maximum-speed regulations. In holding that these claims were preempted, the Court reasoned that federal maximum-speed regulations \"substantially subsumed\" (and therefore \"covered\") the subject of train speeds because they comprehensively regulated that issue, reflecting an intent to preclude additional state regulations. Accordingly, while the Court has made clear that \"covering\" preemption clauses of the sort at issue in Easterwood have a narrower effect than \"related to\" clauses, specific determinations that federal law \"covers\" a subject will depend heavily on the details of particular regulatory schemes."], "subsections": []}, {"section_title": "\"In addition to, or different than\"", "paragraphs": ["A number of federal statutes preempt state requirements that are \"in addition to, or different than\" federal requirements. The Supreme Court has explained that these statutes preempt state law even in cases where a regulated entity can comply with both federal and state requirements. The Court adopted this position in National Meat Association v. Harris , where it interpreted a preemption clause in the Federal Meat Inspection Act (FMIA) prohibiting states from imposing requirements on meatpackers and slaughterhouses that are \"in addition to, or different than\" federal requirements. In Harris , the Court held that certain California slaughterhouse regulations were \"in addition to, or different than\" federal regulations because they imposed a distinct set of requirements that went beyond those imposed by federal law. Because the California requirements differed from federal requirements, the Court explained, they fell within the plain meaning of the FMIA's preemption clause even if slaughterhouses were able to comply with both sets of restrictions.", "Preemption clauses that employ \"in addition to, or different than\" language often raise a second interpretive issue involving the status of state requirements that are identical to federal requirements (\"parallel requirements\"). The Supreme Court has interpreted two statutes employing this language to not preempt parallel state law requirements. In instructing lower courts on how to assess whether state requirements in fact parallel federal requirements, the Court has explained that state law need not explicitly incorporate federal standards in order to avoid qualifying as \"in addition to, or different than\" federal requirements. Rather, the Court has indicated that state requirements must be \" genuinely equivalent\" to federal requirements in order to avoid preemption under such clauses. One lower court has interpreted this instruction to mean that state restrictions do not genuinely parallel federal restrictions if a defendant could violate state law without having violated federal law.", "The Court has also explained that state requirements do not qualify as \"in addition to, or different than\" federal requirements simply because state law provides injured plaintiffs with different remedies than federal law. Accordingly, absent contextual evidence to the contrary, preemption clauses that employ \"in addition to, or different than\" language will allow states to give plaintiffs a damages remedy for violations of state requirements even where federal law does not offer such a remedy for violations of parallel federal requirements."], "subsections": []}, {"section_title": "\"Requirements,\" \"Laws,\" \"Regulations,\" and \"Standards\"", "paragraphs": ["Federal statutes frequently preempt state \"requirements,\" \"laws,\" \"regulations,\" and/or \"standards\" concerning subjects of federal regulatory concern. These preemption clauses have required the Supreme Court to determine whether such terms encompass state common law actions (as opposed to state statutes and regulations) involving the relevant subjects.", "The Supreme Court has explained that absent evidence to the contrary, a preemption clause's reference to state \"requirements\" includes state common law duties. In contrast, the Court has interpreted one preemption clause's reference to state \"law[s] or regulation[s]\" as encompassing only \"positive enactments\" and not common law actions. The Court reached this conclusion in Sprietsma v. Mercury Marine , where it considered the meaning of a preemption clause in the Federal Boat Safety Act of 1971 (FBSA) prohibiting states from enforcing \"a law or regulation\" concerning boat safety that is not identical to federal laws and regulations. The FBSA also includes a \"savings clause\" providing that compliance with the Act does not \"relieve a person from liability at common law or under State law.\" In Sprietsma , the Court held that the phrase \"a law or regulation\" in the FBSA did not encompass state common law claims for three reasons. First, the Court reasoned that the inclusion of the article \"a\" before \"law or regulation\" implied a \"discreteness\" that is reflected in statutes and regulations, but not in common law. Second, the Court concluded that the pairing of the terms \"law\" and \"regulation\" indicated that Congress intended to preempt only positive enactments. Specifically, the Court reasoned that if the term \"law\" were given an expansive interpretation that included common law claims, it would also encompass \"regulations\" and thereby render the inclusion of that latter term superfluous. Finally, the Court reasoned that the FBSA's savings clause provided additional support for the conclusion that the phrase \"law or regulation\" did not encompass common law actions. ", "Lastly, while the Court had the opportunity to determine whether a preemption clause's use of the term \"standard\" encompassed state common law actions in Geier v. American Honda Motor Co., Inc. , it ultimately declined to take up that question and resolved the case on other grounds discussed in greater detail below."], "subsections": []}]}, {"section_title": "Savings Clauses", "paragraphs": ["Many federal statutes contain provisions that purport to restrict their preemptive effect. These \"savings clauses\" make clear that federal law does not preempt certain categories of state law, reflecting Congress's recognition of the need for states to \"fill a regulatory void\" or \"enhance protection for affected communities\" through supplementary regulation. The law regarding savings clauses \"is not especially well developed,\" and cases involving such clauses \"turn very much on the precise wording of the statutes at issue.\" With these caveats in mind, this section discusses three general categories of savings clauses: (1) \"anti-preemption provisions,\" (2) \"compliance savings clauses,\" and (3) \"remedies savings clauses.\""], "subsections": [{"section_title": "Anti-Preemption Provisions", "paragraphs": ["Some savings clauses contain language indicating that \"nothing in\" the relevant federal statute \"may be construed to preempt or supersede\" certain categories of state law, or that the relevant federal statute \"does not annul, alter, or affect\" state laws \"except to the extent that those laws are inconsistent\" with the federal statute. Certain statutes containing this \"inconsistency\" language further provide that state laws are not \"inconsistent\" with the relevant federal statute if they provide greater protection to consumers than federal law. Some courts and commentators have labeled these clauses \"anti-preemption provisions.\"", "While the case law on anti-preemption provisions is not well-developed, some courts have addressed such provisions in the context of defendants' attempts to remove state law actions to federal court. Specifically, certain courts have relied on anti-preemption provisions to reject removal arguments premised on the theory that federal law \"completely\" preempts state laws concerning the relevant subject. In Bernhard v. Whitney National Bank , for example, the U.S. Court of Appeals for the Fifth Circuit relied on an anti-preemption provision in the Electronic Funds Transfer Act to reject a defendant-bank's attempt to remove state law claims involving unauthorized funds transfers to federal court. A number of federal district courts have also adopted similar interpretations of other anti-preemption provisions."], "subsections": []}, {"section_title": "Compliance Savings Clauses", "paragraphs": ["Some savings clauses provide that compliance with federal law does not relieve a person from liability under state law. The principal interpretive issue with such clauses is whether they limit a statute's preemptive effect (a question of federal law) or are instead intended to discourage the conclusion that compliance with federal regulations necessarily renders a product nondefective as a matter of state tort law.", "While the Supreme Court has not adopted a generally applicable rule concerning the meaning of compliance savings clauses, it has concluded that such clauses can support a narrow interpretation of a statute's preemptive effect. In Geier v. American Honda Motor Co., Inc. , the Court relied in part on a compliance savings clause in the National Traffic and Motor Vehicle Safety Act (NTMVSA) to hold that the statute did not expressly preempt state common law claims against an automobile manufacturer. The NTMVSA contains (1) a preemption clause prohibiting states from enforcing safety standards for motor vehicles that are not identical to federal standards, and (2) a \"savings clause\" providing that compliance with federal safety standards does not \"exempt any person from any liability under common law.\" In Geier , the Court explained that although it was \"possible\" to read the NTMVSA's preemption clause standing alone as encompassing the state law claims, that reading of the statute would leave the Act's savings clause without effect. The Court accordingly held that the NTMVSA did not expressly preempt the state law claims based in part on the Act's savings clause. Similarly, in Sprietsma v. Mercury Marine , the Court reasoned that a nearly identical savings clause in the FBSA \"buttresse[d]\" the conclusion that state common law claims did not qualify as \"law[s] or regulation[s]\" within the meaning of the statute's preemption clause. The Court has accordingly relied on compliance savings clauses to inform its interpretation of express preemption clauses, but has not held that such clauses automatically insulate state laws from preemption."], "subsections": []}, {"section_title": "Remedies Savings Clauses", "paragraphs": ["Some savings clauses provide that \"nothing in\" a federal statute \"shall in any way abridge or alter the remedies now existing at common law or by statute.\" While the case law on these \"remedies savings clauses\" is limited, the Supreme Court has interpreted one such clause as evincing Congress's intent to disavow field preemption, but not as preserving state laws that conflict with federal objectives."], "subsections": []}, {"section_title": "\"State\" Versus \"State or Political Subdivision Thereof\"", "paragraphs": ["Some savings clauses limit a federal statute's preemptive effect on certain laws enacted by \"State[s] or political subdivisions thereof,\" while others by their terms protect only \"State\" laws. The Supreme Court has twice held that savings clauses that by their terms applied only to \"State\" laws also insulated local laws from preemption. In Wisconsin Public Intervenor v. Mortier , the Court held that the Federal Insecticide, Fungicide, and Rodenticide Act did not preempt local ordinances regulating pesticides based in part on a savings clause providing that \"State[s]\" may regulate federally registered pesticides in certain circumstances. In concluding that the term \"State\" included political subdivisions of states, the Court relied on the principle that local governments are \"convenient agencies\" by which state governments can exercise their powers. Similarly, in City of Columbus v. Ours Garage & Wrecker Service , the Court held that the Interstate Commerce Act (ICA) did not preempt municipal safety regulations governing tow-truck operators based in part on a savings clause providing that the ICA \"shall not restrict the safety regulatory authority of a State with respect to motor vehicles.\" Relying in part on its reasoning in Mortier , the Court explained that absent a clear statement to the contrary, Congress's reference to the regulatory authority of a \"State\" should be read to preserve \"the traditional prerogative of the States to delegate their authority to their constituent parts.\""], "subsections": []}]}, {"section_title": "Implied Preemption", "paragraphs": ["As discussed, federal law can impliedly preempt state law even when it does not do so expressly . Like its express preemption decisions, the Supreme Court's implied preemption cases focus on Congress's intent. The Supreme Court has recognized two general forms of implied preemption. First, \"field preemption\" occurs when a pervasive scheme of federal regulation implicitly precludes supplementary state regulation, or when states attempt to regulate a field where there is clearly a dominant federal interest. Second, \"conflict preemption\" occurs when state law interferes with federal goals."], "subsections": [{"section_title": "Field Preemption", "paragraphs": ["The Supreme Court has held that federal law preempts state law where Congress has manifested an intention that the federal government occupy an entire field of regulation. Federal law may reflect such an intent through a scheme of federal regulation that is \"so pervasive as to make reasonable the inference that Congress left no room for States to supplement it,\" or where federal law concerns \"a field in which the federal interest is so dominant that the federal system will be assumed to preclude enforcement of state laws on the same subject.\" Applying these principles, the Court has held that federal law occupies a variety of regulatory fields, including alien registration, nuclear safety, aircraft noise, the \"design, construction, alteration, repair, maintenance, operation, equipping, personnel qualification, and manning\" of tanker vessels, wholesales of natural gas in interstate commerce, and locomotive equipment."], "subsections": [{"section_title": "Examples", "paragraphs": [], "subsections": [{"section_title": "Grain Warehousing", "paragraphs": ["In its 1947 decision in Rice v. Santa Fe Elevator Corp oration , the Supreme Court held that federal law preempted a number of fields related to grain warehousing, precluding even complementary state regulations of those fields. In that case, the Court held that the federal Warehouse Act and associated regulations preempted a variety of state law claims brought against a grain warehouse, including allegations that the warehouse had engaged in unfair pricing, maintained unsafe elevators, and impermissibly mixed different qualities of grain. The Court discerned Congress's intent to occupy the relevant fields from an amendment to the Warehouse Act that made the Secretary of Agriculture's authorities \"exclusive\" vis-\u00c3\u00a0-vis federally licensed warehouses. Because the text and legislative history of this amendment reflected Congress's intent to eliminate overlapping federal and state warehouse regulations, the Court held that federal law occupied a number of fields involving grain warehousing. As a result, the Court concluded that the Warehouse Act preempted certain state law claims that intruded into those federally regulated fields, even if federal law established standards that were \"more modest\" and \"less pervasive\" than those imposed by state law."], "subsections": []}, {"section_title": "Immigration: Alien Registration", "paragraphs": ["The Court has also held that federal law preempts the field of alien registration. In its 1941 decision in Hines v. Davidowitz , the Court held that federal immigration law\u00e2\u0080\u0094which required aliens to register with the federal government\u00e2\u0080\u0094preempted a Pennsylvania law that required aliens to register with the state, pay a registration fee, and carry an identification card. In reaching this conclusion, the Court explained that because alien regulation is \"intimately blended and intertwined\" with the federal government's core responsibilities and Congress had enacted a \"complete\" regulatory scheme involving that field, federal law preempted the additional Pennsylvania requirements.", "The Court reaffirmed these general principles from Hines in its 2012 decision in Arizona v. United States . In Arizona , the Court held that the Immigration and Nationality Act (INA), which requires aliens to carry an alien registration document, preempted an Arizona statute that made violations of that federal requirement a crime under state law. In holding that federal law preempted this Arizona requirement, the Court explained that like the statutory framework at issue in Hines , the INA represented a \"comprehensive\" regulatory regime that \"occupied the field of alien registration.\" Specifically, the Court inferred Congress's intent to occupy this field from the INA's \"full set of standards governing alien registration,\" which included specific penalties for noncompliance. The Court accordingly held that federal law preempted even \"complementary\" state laws regulating alien registration like the challenged Arizona requirement.", "However, the Court has also made clear that other types of state laws concerning aliens do not necessarily fall within the preempted field of alien registration . In its 1976 decision in De Canas v. Bica , the Court held that federal law did not preempt a California law prohibiting the employment of aliens not entitled to lawful residence in the United States. The Court reached this conclusion on the grounds that nothing in the text or legislative history of the INA\u00e2\u0080\u0094which did not directly regulate the employment of such aliens at the time\u00e2\u0080\u0094suggested that Congress intended to preempt all state regulations concerning the activities of aliens. Instead, the Court reasoned that while the INA comprehensively regulated the immigration and naturalization processes, it did not address employment eligibility for aliens without legal immigration status. As a result, the Court held that the challenged California law fell outside the preempted field of alien registration. The Court has also upheld several state laws regulating the activities of aliens since De Canas . In Chamber of Commerce v. Whiting , for example, the Court held that federal law did not preempt an Arizona statute allowing the state to revoke an employer's business license for hiring aliens who did not possess work authorization. The Court has accordingly made clear that the preempted field of alien registration does not encompass all state laws concerning aliens."], "subsections": []}, {"section_title": "Nuclear Energy: Safety Regulation", "paragraphs": ["The Supreme Court has also held that federal law preempts the field of nuclear safety regulation. However, the Court has explained this field does not encompass all state laws that affect safety decisions made by nuclear power plants. Instead, the Court has concluded that state laws fall within the preempted field of nuclear safety regulation if they (1) are motivated by safety concerns and implicate a \"core federal power,\" or (2) have a \"direct and substantial\" effect on safety decisions made by nuclear facilities.", "This division of authority is the result of a regulatory regime that has changed significantly over the course of the 20th century. Before 1954, the federal government maintained a monopoly over the use, control, and ownership of nuclear technology. However, in 1954, the Atomic Energy Act (AEA) allowed private entities to own, construct, and operate nuclear power plants subject to a \"strict\" licensing and regulatory regime administered by the Atomic Energy Commission (AEC). In 1959, Congress amended the AEA to give the states greater authority over nuclear energy regulation. Specifically, the 1959 Amendments allowed states to assume responsibility over certain nuclear materials as long as their regulations were \"coordinated and compatible\" with federal requirements. While the 1959 Amendments reserved certain key authorities to the federal government, they also affirmed the states' ability to regulate \"activities for purposes other than protection against radiation hazards.\" Congress reorganized the administrative framework surrounding these regulations in 1974, when it replaced the AEC with the Nuclear Regulatory Commission (NRC).", "The Supreme Court has held that while this regulatory scheme preempts the field of nuclear safety regulation, certain state regulations of nuclear power plants that have a non-safety rationale fall outside this preempted field. The Court identified this distinction in Pacific Gas and Electric Company v. State Energy Resources Conservation & Development Commission , where it held that federal law did not preempt a California statute regulating the construction of new nuclear power plants. Specifically, the California statute conditioned the construction of new nuclear power plants on a state agency's determination concerning the availability of adequate storage facilities and means of disposal for spent nuclear fuel. In challenging this state statute, two public utilities contended that federal law made the federal government the \"sole regulator of all things nuclear.\" However, the Court rejected this argument, reasoning that while Congress intended that the federal government regulate nuclear safety , the relevant statutes reflected Congress's intent to allow states to regulate nuclear power plants for non-safety purposes. The Court then concluded that the California law survived preemption because it was motivated by concerns over electricity generation and the economic viability of new nuclear power plants\u00e2\u0080\u0094not a desire to intrude into the preempted field of nuclear safety regulation.", "In addition to holding that the AEA does not preempt all state statutes and regulations concerning nuclear power plants, the Court has upheld certain state tort claims related to injuries sustained by power plant employees. In Silkwood v. Kerr-McGee Corp oration , the Court upheld a punitive damages award against a nuclear laboratory arising from an employee's injuries from plutonium contamination. In upholding the damages award, the Court rejected the laboratory's argument that the award impermissibly punished and deterred conduct related to the preempted field of nuclear safety. Instead, the Court concluded that federal law did not preempt such damages awards because it found \"no indication\" that Congress had ever seriously considered such an outcome. Moreover, the Court observed that Congress had failed to provide alternative federal remedies for persons injured in nuclear accidents. According to the Court, this legislative silence was significant because it was \"difficult to believe\" that Congress would have removed all judicial recourse from plaintiffs injured in nuclear accidents without an explicit statement to that effect. The Court also reasoned that Congress had assumed the continued availability of state tort remedies when it adopted a 1957 amendment to the AEA. Under the relevant amendment, the federal government partially indemnified power plants for certain liabilities for nuclear accidents\u00e2\u0080\u0094a scheme that reflected an assumption that plaintiffs injured in such accidents retained the ability to bring tort claims against the power plants. Based on this evidence, the Court rejected the argument that Congress's occupation of the field of nuclear safety regulation preempted all state tort claims arising from nuclear incidents.", "The Court applied this reasoning from Silkwood six years later in English v. General Electric Company , where it held that federal law did not preempt state tort claims alleging that a nuclear laboratory had retaliated against a whistleblower for reporting safety concerns. In allowing the claims to proceed, the Court rejected the argument that federal law preempts all state laws that affect plants' nuclear safety decisions. Rather, the Court explained that in order to fall within the preempted field of nuclear safety regulation, a state law must have a \"direct and substantial\" effect on such decisions. While the Court acknowledged that the relevant tort claims may have had \"some effect\" on safety decisions by making retaliation against whistleblowers more costly than safety improvements, it concluded that such an effect was not sufficiently \"direct and substantial\" to bring the claims within the preempted field. In making this assessment, the Court relied on Silkwood , where it held that the relevant punitive damages award fell outside the field of nuclear safety regulation despite its likely impact on safety decisions. Because the Court concluded that the type of damages award at issue in Silkwood affected safety decisions \"more directly\" and \"far more substantially\" than the whistleblower's retaliation claims, it held that the retaliation claims were not preempted."], "subsections": []}]}, {"section_title": "Conclusion", "paragraphs": ["A determination that federal law preempts a field has powerful consequences, displacing even state laws and regulations that are consistent with or complementary to federal law. However, because of these effects, the Court has cautioned against overly hasty inferences that Congress has occupied a field. Specifically, the Court has rejected the argument that the comprehensiveness of a federal regulatory scheme is sufficient to conclude that federal law occupies a field, explaining that Congress and federal agencies often adopt \"intricate and complex\" laws and regulations without intending to assume exclusive regulatory authority over the relevant subjects. The Court has accordingly relied on legislative history and statutory structure\u00e2\u0080\u0094in addition to the comprehensiveness of federal regulations\u00e2\u0080\u0094in assessing field preemption arguments.", "The Court has also adopted a narrow view of the scope of certain preempted fields. For example, the Court has rejected the proposition that federal nuclear energy regulations preempt all state laws that affect the preempted field of nuclear safety regulation, explaining that state laws fall within that field only if they have a \"direct and substantial\" effect on it. As a corollary to this principle, the Court has held that in certain contexts, generally applicable state laws are more likely to fall outside a federally preempted field than state laws that \"target\" entities or issues within the field. In O neok, Inc. v. Learjet, Inc. , for example, the Court held that state antitrust claims against natural gas pipelines fell outside the preempted field of interstate natural gas wholesaling because the relevant state antitrust law was not \"aimed\" at natural gas companies and instead applied broadly to all businesses.", "Finally, the Court's case law underscores that Congress can narrow the scope of a preempted field with explicit statutory language. In Pacific Gas , for example, the Court held that the preempted field of nuclear safety regulation did not encompass state laws motivated by non-safety concerns based in part on a statutory provision disavowing such an intent. While the Court has subsequently narrowed the circumstances in which it will apply Pacific Gas 's purpose-centric inquiry to state laws affecting nuclear energy, it has reaffirmed the general principle that Congress can circumscribe a preempted field's scope with such \"non-preemption clauses.\""], "subsections": []}]}, {"section_title": "Conflict Preemption", "paragraphs": ["Federal law also impliedly preempts conflicting state laws. The Supreme Court has identified two subcategories of conflict preemption. First, federal law impliedly preempts state law when it is impossible for regulated parties to comply with both sets of laws (\"impossibility preemption\"). Second, federal law impliedly preempts state laws that pose an obstacle to the \"full purposes and objectives\" of Congress (\"obstacle preemption\"). The two subsections below discuss these subcategories of conflict preemption."], "subsections": [{"section_title": "Impossibility Preemption", "paragraphs": ["The Supreme Court has held that federal law preempts state law when it is physically impossible to comply with both sets of laws. To illustrate this principle, the Court has explained that a hypothetical federal law forbidding the sale of avocados with more than 7% oil content would preempt a state law forbidding the sale of avocados with less than 8% oil content, because avocado sellers could not sell their products and comply with both laws. The Court has characterized impossibility preemption as a \"demanding defense,\" and its case law on the issue is not as well-developed as other areas of its preemption jurisprudence. However, the Court extended impossibility preemption doctrine in two recent decisions concerning prescription drug labeling."], "subsections": [{"section_title": "Example: Generic Drug Labeling", "paragraphs": ["In PLIVA v. Mensing and Mutual Pharmaceutical Co. v. Bartlett , the Court held that federal regulations of generic drug labels preempted certain state law claims brought against generic drug manufacturers because it was impossible for the manufacturers to comply with both federal and state law. In both cases, plaintiffs alleged that they suffered adverse effects from certain generic drugs and argued that the drugs' labels should have included additional warnings. In response, the drug manufacturers argued that the Hatch-Waxman Amendments (Hatch-Waxman) to the Food, Drug, and Cosmetic Act preempted the state law claims. Under Hatch-Waxman, drug manufacturers can secure Food and Drug Administration (FDA) approval for generic drugs by demonstrating that they are equivalent to a brand-name drug already approved by the FDA. In doing so, the generic drug manufacturers need not comply with the FDA's standard preapproval process, which requires extensive clinical testing and the development of FDA-approved labeling. However, generic drug makers that use the streamlined Hatch-Waxman process must ensure that the labels for their drugs are the same as the labels for corresponding brand-name drugs, meaning that generic manufacturers cannot unilaterally change their labels.", "In both PLIVA and Bar t lett , the Court held that the Hatch-Waxman Amendments preempted the relevant state law claims because it was impossible for the generic drug manufacturers to comply with both federal and state law. Specifically, the Court reasoned that it was impossible for the drug makers to comply with both sets of laws because federal law prohibited them from unilaterally altering their labels, while the state law claims depended on the existence of a duty to make such alterations. In other words, the Court reasoned that it was impossible for the manufacturers to comply with both their state law duty to change their labels and their federal duty to keep their labels the same. In reaching this conclusion in PLIVA , the Court rejected the argument that it was possible for manufacturers to comply with both federal and state law by petitioning the FDA to impose new labeling requirements on the corresponding brand-name drugs. The Court rejected this argument on the grounds that impossibility preemption occurs whenever a party cannot independently comply with both federal and state law without seeking \"special permission and assistance\" from the federal government. Similarly, in Bartlett , the Court rejected the argument that it was possible for generic drug makers to comply with both federal and state law by refraining from selling the relevant drugs. The Court rejected this \"stop-selling\" argument on the grounds that it would render impossibility preemption \"all but meaningless.\" As a result, an evaluation of whether it is \"impossible\" to comply with both federal and state law must presuppose some affirmative conduct by the regulated party.", "Despite its decisions in PLIVA and Bartlett , the Court has rejected impossibility preemption arguments made by brand-name drug manufacturers, who are entitled to unilaterally strengthen the warning labels for their drugs. In Wyeth v. Levine , the Court held that federal law did not preempt a state law failure-to-warn claim brought against the manufacturer of a brand-name drug, reasoning that it was possible for the manufacturer to strengthen its label for the drug without FDA approval. However, the Wyeth Court noted that an impossibility preemption defense may be available to brand-name drug manufacturers when there is \"clear evidence\" that the FDA would have rejected a proposed change to a brand-name drug's label."], "subsections": []}]}, {"section_title": "Obstacle Preemption", "paragraphs": ["Federal law also impliedly preempts state laws that pose an \"obstacle\" to the \"full purposes and objectives\" of Congress. In its obstacle preemption cases, the Court has held that state law can interfere with federal goals by frustrating Congress's intent to adopt a uniform system of federal regulation, conflicting with Congress's goal of establishing a regulatory \"ceiling\" for certain products or activities, or by impeding the vindication of a federal right. However, the Court has also cautioned that obstacle preemption does not justify a \"freewheeling judicial inquiry\" into whether state laws are \"in tension\" with federal objectives, as such a standard would undermine the principle that \"it is Congress rather than the courts that preempts state law.\" The subsections below discuss a number of cases in which the Court has held that state law poses an obstacle to the accomplishment of federal goals."], "subsections": [{"section_title": "Example: Foreign Sanctions", "paragraphs": ["The Supreme Court has concluded that state laws can pose an obstacle to the accomplishment of federal objectives by interfering with Congress's choice to concentrate decisionmaking in federal authorities. The Court's decision in Crosby v. National Foreign Trade Council illustrates this type of conflict between state law and federal policy goals. In Crosby , the Court held that a federal statute imposing sanctions on Burma preempted a Massachusetts statute that restricted state agencies' ability to purchase goods or services from companies doing business with Burma. The Court identified several ways in which the Massachusetts law interfered with the federal statute's objectives. First, the Court reasoned that the Massachusetts law interfered with Congress's decision to provide the President with the flexibility to add or waive sanctions in response to ongoing developments by \"imposing a different, state system of economic pressure against the Burmese political regime.\" Second, the Court explained that because the Massachusetts statute penalized certain individuals and conduct that Congress explicitly excluded from federal sanctions, it interfered with the federal statute's goal of limiting the economic pressure imposed by the sanctions to \"a specific range.\" In identifying this conflict, the Court rejected the state's argument that its law \"share[d] the same goals\" as the federal act, reasoning that the additional sanctions imposed by the state law would still undermine Congress's intended \"calibration of force.\" Finally, the Court concluded that the Massachusetts law undermined the President's capacity for effective diplomacy by compromising his ability \"to speak for the Nation with one voice.\""], "subsections": []}, {"section_title": "Example: Automobile Safety Regulations", "paragraphs": ["The Court has concluded that some federal laws and regulations evince an intent to establish both a regulatory \"floor\" and \"ceiling\" for certain products and activities. The Court has interpreted certain federal automobile safety regulations, for example, as not only imposing minimum safety standards on carmakers, but as insulating manufacturers from certain forms of stricter state regulation as well. In Geier v. American Honda Motor Co. , the Court held that the National Traffic and Motor Vehicle Safety Act (NTMVSA) and associated regulations impliedly preempted state tort claims alleging that an automobile manufacturer had negligently designed a car without a driver's side airbag. While the Court rejected the argument that the NTMVSA expressly preempted the state law claims, it reasoned that the claims interfered with the federal objective of giving car manufacturers the option of installing a \"variety and mix\" of passive restraints. The Court discerned this goal from, among other things, the history of the relevant regulations and Department of Transportation (DOT) comments indicating that the regulations were intended to lower costs, incentivize technological development, and encourage gradual consumer acceptance of airbags rather than impose an immediate requirement. The Court accordingly held that the NTMVSA impliedly preempted the state law claims because they conflicted with these federal goals.", "However, the Court has rejected the argument that federal automobile safety standards impliedly preempt all state tort claims concerning automobile safety. In Williamson v. Mazda Motor of America, Inc. , the Court held that a different federal safety standard did not preempt a state law claim alleging that a carmaker should have installed a certain type of seatbelt in a car's rear seat. While the regulation at issue in Williamson allowed manufacturers to choose between a variety of seatbelt options, the Court distinguished the case from Geier on the grounds that the DOT's decision to offer carmakers a range of choices was not a \"significant\" regulatory objective. Specifically, the Court reasoned that because the DOT's decision to offer manufacturers a range of options was based on relatively minor design and cost-effectiveness concerns, the state tort action did not conflict with the purpose of the relevant federal regulation."], "subsections": []}, {"section_title": "Example: Federal Civil Rights", "paragraphs": ["The Court has also held that state law can pose an obstacle to federal goals where it impedes the vindication of federal rights. In Felder v. Casey , the Court held that 42 U.S.C. \u00c2\u00a7 1983 (Section 1983)\u00e2\u0080\u0094which provides individuals with the right to sue state officials for federal civil rights violations\u00e2\u0080\u0094preempted a state statute adopting certain procedural rules for bringing Section 1983 claims in state court. Specifically, the state statute required Section 1983 plaintiffs to provide government defendants 120 days' written notice of (1) the circumstances giving rise to their claims, (2) the amount of their claims, and (3) their intent to bring suit. The Court held that federal law preempted these requirements because the \"purpose\" and \"effect\" of the requirements conflicted with Section 1983's remedial objectives. Specifically, the Court reasoned that the requirements' purpose of minimizing the state's liability conflicted with Section 1983's goal of providing relief to individuals whose constitutional rights are violated by state officials. Moreover, the Court concluded that the state statute's effects interfered with federal objectives because its enforcement would result in different outcomes in Section 1983 litigation based solely on whether a claim was brought in state or federal court."], "subsections": []}]}, {"section_title": "Conclusion", "paragraphs": ["The Supreme Court has held that state law can conflict with federal law in a number of ways. First, state law can conflict with federal law when it is physically impossible to comply with both sets of laws. While the Court has characterized this type of impossibility preemption argument as a \"demanding defense,\" its decisions in PLIVA and Bartlett arguably extended the doctrine's scope. In those cases, the Court made clear that impossibility preemption remains a viable defense even in instances in which a regulated party can petition the federal government for permission to comply with state law or stop selling a regulated product altogether.", "State law can also conflict with federal law when it poses an \"obstacle\" to federal goals. In evaluating congressional intent in obstacle preemption cases, the Court has relied upon statutory text, structure, and legislative history to determine the scope of a statute's preemptive effect. Relying on these indicia of legislative purpose, the Court has held that state laws can pose an obstacle to federal goals by interfering with a uniform system of federal regulation, imposing stricter requirements than federal law (where federal law evinces an intent to establish a regulatory \"ceiling\"), or by impeding the vindication of a federal right.", "While obstacle preemption has played an important role in the Court's preemption jurisprudence since the mid-20th century, recent developments may result in a narrowing of the doctrine. Indeed, commentators have noted the tension between increasingly popular textualist theories of statutory interpretation\u00e2\u0080\u0094which reject extra-textual evidence as a possible source of statutory meaning\u00e2\u0080\u0094and obstacle preemption doctrine, which arguably allows courts to consult such evidence. Identifying this alleged inconsistency, Justice Thomas has categorically rejected the Court's obstacle preemption jurisprudence, criticizing the Court for \"routinely invalidat[ing] state laws based on perceived conflicts with broad federal policy objectives, legislative history, or generalized notions of congressional purposes that are not embodied within the text of federal law.\"", "The Court's recent additions may also presage a narrowing of obstacle preemption doctrine, as some commentators have characterized Justices Gorsuch and Kavanaugh as committed textualists. Indeed, the Court's 2019 decision in Virginia Uranium, Inc. v. Warren suggests that Justices Gorsuch and Kavanaugh may share Justice Thomas's skepticism toward obstacle preemption arguments. In that case, Justice Gorsuch authored an opinion joined by Justices Thomas and Kavanaugh in which he rejected the proposition that implied preemption analysis should appeal to \"abstract and unenacted legislative desires\" not reflected in a statute's text. While Justice Gorsuch did not explicitly endorse a wholesale repudiation of what he characterized as the \"purposes-and-objectives branch of conflict preemption,\" he emphasized that any evidence of Congress's preemptive purpose must be sought in a statute's text and structure."], "subsections": []}]}]}]}}
{"id": "R46321", "title": "Department of Health and Human Services: FY2021 Budget Request ", "released_date": "2020-04-17T00:00:00", "summary": ["This report provides information about the FY2021 budget request for the U.S. Department of Health and Human Services (HHS). Historically, HHS has been one of the larger federal departments in terms of budgetary resources. Estimates by the Office of Management and Budget (OMB) indicate that HHS has accounted for at least 20% of all federal outlays in each year since FY1995. Most recently, HHS is estimated to have accounted for 27% of all federal outlays in FY2019. (FY2019 funding levels are generally considered final, whereas some FY2020 funding levels remain estimates.)", "The FY2021 President's budget request was submitted to Congress on February 10, 2020. Subsequently, on March 17, 2020, the President submitted a letter to Congress about FY2021 budget amendments (along with a supplemental appropriations request for FY2020) related to the response to the Coronavirus Disease 2019 (COVID-19) outbreak. According to the letter, these budget amendments would have budgetary effects for the FY2021 President's request for some HHS accounts at the Centers for Disease Control and Prevention (CDC) and the National Institutes of Health (NIH). The letter did not contain sufficient details to incorporate potential effects of these amendments into the FY2021 request numbers contained in this report. As a result, the report reflects the President's initial request as submitted on February 10.", "Under the FY2021 President's budget request, as submitted in February 2020, HHS would spend an estimated $1.37 trillion in outlays in FY2021. This would be $48 billion (+4%) more than estimated HHS outlays in FY2020 and $156 billion (+13%) more than actual HHS outlays in FY2019. Mandatory spending typically comprises the majority of the HHS budget. Two mandatory spending programs\u00e2\u0080\u0094Medicare and Medicaid\u00e2\u0080\u0094are expected to account for 86% of all estimated HHS outlays in FY2021, according to the President's budget request. Medicare and Medicaid are entitlement programs, meaning the federal government is required to make mandatory payments to individuals, states, or other entities based on criteria established in authorizing law.", "While mandatory spending is controlled (but not always provided) by authorizing laws, all discretionary spending is controlled and provided through the annual appropriations process. Discretionary spending accounts for about 8% of HHS outlays in the FY2021 President's budget request. Although discretionary spending represents a relatively small share of the HHS budget, the department nevertheless receives more discretionary money than most federal departments. According to OMB data, HHS accounted for nearly 8% of all discretionary budget authority across the government in FY2019."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "About the U.S. Department of Health and Human Services (HHS)", "paragraphs": ["The mission of HHS is to \"enhance the health and well-being of Americans by providing for effective health and human services and by fostering sound, sustained advances in the sciences underlying medicine, public health, and social services.\" ", "HHS is currently organized into 11 main agencies, called operating divisions (listed below), which are responsible for administering a wide variety of health and human services programs, and conducting related research. In addition, HHS has a number of staff divisions within the Office of the Secretary (OS). These staff divisions fulfill a broad array of management, research, oversight, and emergency preparedness functions in support of the entire department. ", "HHS Operating Divisions", "Eight of the HHS operating divisions are part of the U.S. Public Health Service (PHS). PHS agencies have diverse missions in support of public health, including the provision of health care services and supports (e.g., IHS, HRSA, SAMHSA); the advancement of health care quality and medical research (e.g., AHRQ, NIH); the prevention and control of disease, injury, and environmental health hazards (e.g., CDC, ATSDR); and the regulation of food and drugs (e.g., FDA). ", "The three remaining HHS operating divisions\u00e2\u0080\u0094ACF, ACL, and CMS\u00e2\u0080\u0094are not PHS agencies. ACF and ACL largely administer human services programs focused on the well-being of vulnerable children, families, older Americans, and individuals with disabilities. CMS\u00e2\u0080\u0094which accounts for the largest share of the HHS budget by far\u00e2\u0080\u0094is responsible for administering Medicare, Medicaid, and the State Children's Health Insurance Program (CHIP), in addition to certain programs related to private health insurance.", "(For a summary of each operating division's mission and links to agency resources related to the FY2021 budget request, see the Appendix .)"], "subsections": []}, {"section_title": "Context for the FY2021 President's Budget Request", "paragraphs": ["The Budget and Accounting Act of 1921 (P.L. 67-13), as amended, requires the President to submit an annual consolidated federal budget to Congress at the beginning of each regular congressional session, not later than the first Monday in February. Many of the proposals in the President's budget would require changes to laws that govern mandatory spending levels or policies, which are typically established on a multiyear or permanent basis. Discretionary spending , however, which is roughly one-third of the budget, is decided and controlled each fiscal year through the annual appropriations process. While Congress is ultimately not required to adopt the President's proposals or recommendations, the submission of the President's budget typically initiates the congressional budget process and informs Congress of the President's recommended spending levels for agencies and programs. ", "The FY2021 President's budget request was submitted to Congress on February 10, 2020. Less than two months before this, all 12 of the annual appropriations acts for FY2020 had been enacted into law on December 20, 2019. The FY2020 funding levels shown in FY2021 President's budget materials generally reflect enacted annual levels, with limited exceptions. The exceptions include cases in which full-year mandatory funds had not yet been provided for programs typically funded outside of the annual appropriations process (e.g., mandatory funding for the Temporary Assistance for Needy Families Block Grant or the Community Health Center Fund). In such cases, the FY2021 President's budget generally uses estimated FY2020 funding levels based on annualized amounts provided in the most recent short-term funding extensions. Because some FY2020 amounts have not been finalized, this report generally refers to FY2020 funding levels as estimates , whereas amounts for earlier years are called actual or final . In addition, amounts shown for FY2020 do not include supplemental appropriations or other spending effects resulting from coronavirus disease response measures that have been enacted since the FY2021 President's budget request was submitted."], "subsections": []}, {"section_title": "Overview of the FY2021 HHS Budget Request", "paragraphs": ["Under the President's budget request, HHS would spend an estimated $1.370 trillion in outlays in FY2021 (see Table 1 ). This is $48 billion (+4%) more than estimated HHS outlays in FY2020 and about $156 billion (+13%) more than actual HHS outlays in FY2019. ", "Historical estimates by the Office of Management and Budget (OMB) indicate that HHS has accounted for at least 20% of all federal outlays in each year since FY1995. Most recently, OMB estimated that HHS accounted for 27% of all federal outlays in FY2019, and projects that it would account for 28% of outlays if all proposals in the President's budget request were enacted. ", " Figure 2 displays proposed FY2021 HHS outlays by major program or spending category in the President's request. As this figure shows, mandatory spending typically accounts for the vast majority of the HHS budget. In fact, two mandatory spending programs\u00e2\u0080\u0094Medicare and Medicaid\u00e2\u0080\u0094are expected to account for 86% of all estimated HHS spending in FY2021. Medicare and Medicaid are entitlement programs, meaning the federal government is required to make mandatory payments to individuals, states, or other entities based on criteria established in authorizing law. ", "This figure also shows that discretionary spending accounts for about 8% of estimated FY2021 HHS outlays in the President's request. Although discretionary spending represents a relatively small share of total HHS spending, the department nevertheless receives more discretionary funding than most federal departments. According to OMB data, HHS accounted for almost 8% of all discretionary budget authority across the government in FY2019. The Department of Defense was the only federal agency to account for a larger share of all discretionary budget authority in that year (50%)."], "subsections": [{"section_title": "Budgetary Resources Versus Appropriations", "paragraphs": ["As previously mentioned, the HHS budget reflects funding from a broad set of budgetary resources that includes, but is not limited to, the amounts provided to HHS through the annual appropriations process. As a result, certain amounts shown in FY2021 HHS budget materials (including amounts for prior years) will not match amounts provided to HHS by annual appropriations acts and displayed in accompanying congressional documents. There are several reasons for this, discussed briefly below."], "subsections": [{"section_title": "Mandatory and Discretionary Spending", "paragraphs": ["Mandatory spending makes up a large portion of the HHS budget. Whereas all discretionary spending is controlled and provided through the annual appropriations process, all mandatory spending is controlled by the program's authorizing statute. In most cases, that authorizing statute also provides the funding for the program (e.g., State Children's Health Insurance Program). However, the budget authority for some mandatory programs (including Medicaid), while controlled by criteria in the authorizing statute, must still be provided through the annual appropriations process; such programs are commonly referred to as appropriated entitlements or appropriated mandatories . Certain budget documents may show only discretionary spending, while others may also show some or all types of mandatory spending. "], "subsections": []}, {"section_title": "HHS in the Appropriations Process", "paragraphs": ["The HHS budget request accounts for the department as a whole, while the appropriations process divides HHS funding across three different appropriations bills. Most of the department's discretionary appropriations are provided through the Departments of Labor, Health and Human Services, and Education, and Related Agencies (LHHS) Appropriations Act. However, funding for certain HHS agencies and activities is provided in two other bills\u00e2\u0080\u0094the Departments of the Interior, Environment, and Related Agencies Appropriations Act (INT) and the Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act (AG). Table 2 lists HHS agencies by appropriations bill. Each of these three appropriations acts provides discretionary HHS funding. In some cases, these acts also provide the necessary funding for appropriated mandatories at HHS. However, authorizing laws provide funding for other mandatory spending programs. "], "subsections": []}, {"section_title": "Proposed Law and Current Law Estimates for Mandatory Programs", "paragraphs": ["HHS budget materials include two different estimates for mandatory spending programs when appropriate: proposed law and current law . The p roposed law estimates take into account changes in mandatory spending proposed in the FY2021 HHS budget request. Such proposals would generally need to be enacted into law to affect the budgetary resources ultimately available to the mandatory spending program. HHS materials may also show a current law or current services estimate for mandatory spending programs. These estimates assume that no changes will be made to existing policies, and instead estimate mandatory spending for programs based on criteria established in current authorizing law. The HHS budget estimates in this report reflect the proposed law estimates for mandatory spending programs, but readers should be aware that other HHS, OMB, or congressional estimates might reflect current law instead."], "subsections": []}, {"section_title": "User Fees and Other Types of Collections", "paragraphs": ["In some cases, agencies within HHS have the authority to expend user fees and other types of collections that effectively supplement their appropriations. In addition, agencies may receive transfers of budgetary resources from other sources, such as from the Public Health Service Evaluation Set-Aside (also referred to as the PHS Tap) or one of the mandatory funds established by the Patient Protection and Affordable Care Act (ACA; P.L. 111-148 , as amended). Budgetary totals that account for these sorts of resources in the HHS estimates are often referred to as being at the program level . HHS agencies that have historically had notable differences between the amounts in the appropriations bills and their program level include, for instance, FDA (due to user fees) and AHRQ (due to transfers)."], "subsections": []}, {"section_title": "Scorekeeping and Display Conventions", "paragraphs": ["The Administration may choose to follow different conventions than those of congressional scorekeepers for its estimates of HHS programs. For example, certain transfers of funding between HHS agencies (or from HHS to other federal agencies) that occurred in prior fiscal years, or are expected to occur in the current fiscal year, may be accounted for in the Administration's estimates but not necessarily in the congressional documents. "], "subsections": []}]}]}, {"section_title": "HHS Budget by Operating Division", "paragraphs": [" Figure 3 provides a breakdown of the FY2021 HHS budget request by operating division. When taking into account mandatory and discretionary budget authority (i.e., total budget authority), CMS accounts for the largest share of the request: nearly $1.3 trillion. The majority of the CMS budget request would go toward mandatory spending programs, such as Medicare and Medicaid. Spending on Medicare and Medicaid is expected to increase from FY2020 levels under the President's request, both in terms of proposed law and current law estimates. The request also includes a number of legislative proposals that would reduce spending on these programs (relative to current law, but not the prior year) if enacted. ", "When looking exclusively at discretionary budget authority (as illustrated in Figure 3 and detailed in Table 3 ), funding for CMS is comparatively smaller, accounting for $3.7 billion of the HHS discretionary request. Discretionary CMS funds primarily support program operations and federal administrative activities, though some funds also go toward efforts to reduce health care fraud and abuse.", "The largest share of the HHS discretionary request would go to the PHS agencies: roughly $64.8 billion in combined public health funding for FDA, HRSA, IHS, CDC, ATSDR, NIH, and SAMHSA (no funds would go to AHRQ under the request ). NIH would receive the largest amount of discretionary budget authority of any single HHS operating division: $37.7 billion. This represents a decrease of roughly $2.6 billion (-6%) from FY2020. All of the existing NIH institutes and centers would receive a decrease under the request. The majority of the proposed NIH budget would support biomedical research performed by hospitals, medical schools, universities, and other research institutions around the country.", "ACF would receive the second-largest discretionary funding level among the HHS operating divisions: $20.2 billion. This would represent a decrease of roughly $4.2 billion (-17%) from FY2020. The majority of the discretionary ACF request (more than 80%) would go to early childhood care and education programs, such as Head Start and the Child Care and Development Block Grant. As has been the case since FY2018, the budget proposes to eliminate several ACF programs, including the Low Income Home Energy Assistance Program (LIHEAP) and the Community Services Block Grant (CSBG).", " Table 4 puts the FY2021 request for each HHS operating division and the Office of the Secretary into context, displaying it along with estimates of funding provided over the four prior fiscal years (FY2017-FY2019). These totals are inclusive of both mandatory and discretionary funding. ", "The amounts in this table are shown in terms of budget authority (BA) and outlays. BA is the authority provided by federal law to enter into contracts or other financial obligations that will result in immediate or future expenditures involving federal government funds. Outlays occur when funds are actually expended from the Treasury; they could be the result of either new budget authority enacted in the current fiscal year or unexpended budget authority that was enacted in previous fiscal years. As a consequence, the BA and outlays in this table represent two different ways of accounting for the funding that is provided to each HHS agency through the federal budget process. For example, Table 4 shows $0 in FY2021 BA for AHRQ because the President's budget proposes to eliminate this agency; however, the table shows an estimated $299 million in FY2021 AHRQ outlays, reflecting the expected expenditure of funds previously provided to the agency. "], "subsections": [{"section_title": "Appendix. HHS Operating Divisions: Missions and FY2021 Budget Resources", "paragraphs": ["This appendix provides for each operating division a brief summary of its mission, the applicable appropriations bill, the FY2021 budget request level, and links to additional resources related to that request. ", "Food and Drug Administration (FDA)", "The FDA mission is focused on regulating the safety, efficacy, and security of human foods, dietary supplements, cosmetics, and animal foods; and the safety and effectiveness of human drugs, biological products (e.g., vaccines), medical devices, radiation-emitting products, and animal drugs. It also regulates the manufacture, marketing, and sale of tobacco products. ", "Relevant Appropriations Bill: ", "Agriculture, Rural Development, Food and Drug Administration, and Related Agencies (AG)", "FY2021 Request: ", "BA: $3.293 billion Outlays: $3.552 billion", "Additional Resources Related to the FY202 1 Request:", "Congressional Justification (all-purpose table on p. 19), https://www.fda.gov/media/135078/download BIB chapter (p. 20), https://www.hhs.gov/sites/default/files/fy-2021-budget-in-brief.pdf#page=24 ", "Health Resources and Services Administration (HRSA)", "The HRSA mission is focused on \"improving health care to people who are geographically isolated, economically or medically vulnerable.\" Among its many programs and activities, HRSA supports health care workforce training; the National Health Service Corps; and the federal health centers program, which provides grants to nonprofit entities that provide primary care services to people who experience financial, geographic, cultural, or other barriers to health care. ", "Relevant Appropriations Bill: ", "LHHS", "FY2021 Request: ", "BA: $11.444 billion Outlays: $11.951 billion ", "Additional Resources Related to the FY2021 Request:", "Congressional Justification (all-purpose table on p. 17), https://www.hrsa.gov/sites/default/files/hrsa/about/budget/budget-justification-fy2021.pdf BIB chapter (p. 28), https://www.hhs.gov/sites/default/files/fy-2021-budget-in-brief.pdf#page=32 ", "Indian Health Service (IHS)", "The IHS mission is to provide \"a comprehensive health service delivery system for American Indians and Alaska Natives\" and \"raise the physical, mental, social, and spiritual health of American Indians and Alaska Natives to the highest level.\" IHS provides health care for approximately 2.2 million eligible American Indians and Alaska Natives through a system of programs and facilities located on or near Indian reservations, and through contractors in certain urban areas. ", "Relevant Appropriations Bill: ", "Departments of the Interior, Environment, and Related Agencies (INT)", "FY2021 Request: ", "BA: $6.391 billion Outlays: $6.479 billion ", "Additional Resources Related to the FY202 1 Request:", " Congressional Justification (all-purpose table on p. 8), https://www.ihs.gov/sites/budgetformulation/themes/responsive2017/display_objects/documents/FY_2021_Final_CJ-IHS.pdf BIB chapter (p. 37), https://www.hhs.gov/sites/default/files/fy-2021-budget-in-brief.pdf#page=41", "Centers for Disease Control and Prevention (CDC) and Agency for Toxic Substances and Disease Registry (ATSDR)", "The CDC mission is focused on \"disease prevention and control, environmental health, and health promotion and health education.\" CDC is organized into a number of centers, institutes, and offices, some focused on specific public health challenges (e.g., injury prevention) and others focused on general public health capabilities (e.g., surveillance and laboratory services). ", "In addition, the ATSDR is headed by the CDC director. For that reason, the ATSDR budget is often shown within CDC. Following the conventions of the FY2021 HHS BIB, ATSDR's budget request is included in the CDC totals shown in this report. ATSDR's work is focused on preventing or mitigating adverse effects resulting from exposure to hazardous substances in the environment. ", "Relevant Appropriations Bills: ", "LHHS (CDC) INT (ATSDR)", "FY202 1 Request (CDC and ATSDR combined): ", "BA: $7.134 billion Outlays: $8.174 billion ", "Additional Resources Related to the FY202 1 Request:", " CDC Congressional Justification (all-purpose table on p. 25), https://www.cdc.gov/budget/documents/fy2021/FY-2021-CDC-congressional-justification.pdf ATSDR Congressional Justification, https://www.cdc.gov/budget/documents/fy2021/FY-2021-ATSDR-congressional-justification.pdf BIB chapter (p. 43), https://www.hhs.gov/sites/default/files/fy-2021-budget-in-brief.pdf#page=47 ", "National Institutes of Health (NIH)", "The NIH mission is focused on conducting and supporting research \"in causes, diagnosis, prevention, and cure of human diseases\" and \"in directing programs for the collection, dissemination, and exchange of information in medicine and health.\" NIH is organized into 27 research institutes and centers, headed by the NIH Director. (The FY2021 President's budget assumes that AHRQ's functions will be consolidated within NIH, in the new National Institute for Research on Safety and Quality [NIRSQ]. This assumption is reflected in the figures below. )", "Relevant Appropriations Bill: ", "LHHS", "FY2021 Request: ", "BA: $37.905 billion Outlays: $39.807 billion ", "Additional Resources Related to the FY2021 Request:", " Congressional Justification (all-purpose table on p. 15), available at https://officeofbudget.od.nih.gov/pdfs/FY21/br/1-OverviewVolumeSingleFile-toPrint.pdf BIB chapter (p. 54), available at https://www.hhs.gov/sites/default/files/fy-2021-budget-in-brief.pdf#page=58", "Substance Abuse and Mental Health Services Administration (SAMHSA)", "The SAMHSA mission is focused on reducing the \"impact of substance abuse and mental illness on America's communities.\" SAMHSA coordinates behavioral health surveillance to improve understanding of the impact of substance abuse and mental illness on children, individuals, and families, and the costs associated with treatment. ", "Relevant Appropriations Bill: ", "LHHS", "FY2021 Request: ", "BA: $5.598 billion Outlays: $5.984 billion ", "Additional Resources Related to the FY202 1 Request:", " Congressional Justification (all-purpose table on p. 6), https://www.samhsa.gov/sites/default/files/about_us/budget/fy-2021-samhsa-cj.pdf BIB chapter (p. 63), https://www.hhs.gov/sites/default/files/fy-2021-budget-in-brief.pdf#page=67", "Agency for Healthcare Research and Quality (AHRQ)", "The AHRQ mission is focused on research to make health care \"safer, higher quality, more accessible, equitable, and affordable.\" Specific AHRQ research efforts are aimed at reducing the costs of care, promoting patient safety, measuring the quality of health care, and improving health care services, organization, and financing. The FY2021 President's budget proposes eliminating AHRQ and consolidating certain key AHRQ functions within NIH, in the new National Institute for Research on Safety and Quality (NIRSQ).", "Relevant Appropriations Bill: ", "LHHS", "FY202 1 Request: ", "BA: $0 Outlays: $0.303 billion ", "Additional Resources Related to the FY202 1 Request:", "Congressional Justification for the proposed National Institute for Research on Safety and Quality, https://www.ahrq.gov/sites/default/files/wysiwyg/cpi/about/mission/budget/2021/FY_2021_CJ_NIRSQ.pdf There is no FY2021 BIB chapter for AHRQ.", "Centers for Medicare & Medicaid Services (CMS)", "The CMS mission is focused on supporting \"innovative approaches to improve quality, accessibility, and affordability\" of Medicare, Medicaid, the State Children's Health Insurance Program (CHIP), and private insurance, and on supporting private insurance market reform programs. The President's budget estimates that in FY2021, \"over 145 million Americans will rely on the programs CMS administers including Medicare, Medicaid, the Children's Health Insurance Program (CHIP), and the [Health Insurance] Exchanges.\"", "Relevant Appropriations Bill: ", "LHHS", "FY2021 Request: ", "BA: $1,297.294 billion Outlays: $1,232.275 billion", "Additional Resources R elated to the FY2021 Request:", " Congressional Justification (all-purpose table on p. 9), https://www.cms.gov/About-CMS/Agency-Information/PerformanceBudget/FY2021-CJ-Final.pdf BIB chapter (p. 69), https://www.hhs.gov/sites/default/files/fy-2021-budget-in-brief.pdf#page=73", "Administration for Children and Families (ACF) ", "The ACF mission is focused on promoting the \"economic and social well-being of children, youth, families, and communities.\" ACF administers a wide array of human services programs, including Temporary Assistance for Needy Families (TANF), Head Start, child care, the Social Services Block Grant (SSBG), and various child welfare programs. ", "Relevant Appropriations Bill: ", "LHHS", "FY202 1 Request: ", "BA: $54.976 billion Outlays: $57.489 billion ", "Additional Resources Related to the FY2021 Request:", "Congressional Justification (all-purpose table on p. 6), https://www.acf.hhs.gov/sites/default/files/olab/fy_2021_congressional_justification.pdf BIB chapter (p. 141), https://www.hhs.gov/sites/default/files/fy-2021-budget-in-brief.pdf#page=145", "Administration for Community Living (ACL) ", "The ACL mission is focused on maximizing the \"independence, well-being, and health of older adults, people with disabilities across the lifespan, and their families and caregivers.\" ACL administers a number of programs targeted at older Americans and the disabled, including Home and Community-Based Supportive Services and State Councils on Developmental Disabilities.", "Relevant Appropriations Bill: ", "LHHS", "FY202 1 Request: ", "BA: $2.097 billion Outlays: $2.153 billion ", "Additional Resources Related to th e FY2021 Request:", "Congressional Justification (not yet available online); see excerpts, including a downloadable version of the all-purpose table, at https://acl.gov/about-acl/budget BIB chapter (p. 159), https://www.hhs.gov/sites/default/files/fy-2021-budget-in-brief.pdf#page=163"], "subsections": []}]}]}}
{"id": "R45816", "title": "FY2019 National Defense Authorization Act (H.R. 5515)", "released_date": "2019-07-18T00:00:00", "summary": ["For FY2019, the Trump Administration requested $708.1 billion to fund programs falling under the jurisdiction of the House and Senate Armed Services Committees and subject to authorization by the annual National Defense Authorization Act (NDAA).", "The annual National Defense Authorization Act (NDAA) authorizes appropriations for the Department of Defense (DOD) and defense-related atomic energy programs of the Department of Energy. In addition to authorizing appropriations, the NDAA establishes defense policies and restrictions, and addresses organizational administrative matters related to DOD. Unlike an appropriations bill, the NDAA does not provide budget authority for government activities.", "The President's FY2019 budget request for DOD reflected in part the department's efforts to align its priorities with the 2018 National Defense Strategy and conform to discretionary spending limits set by the Budget Control Act of 2011 (BCA; P.L. 112-25 ) as amended by the Bipartisan Budget Act of 2018 (BBA 2018; P.L. 115-23 ).", "Of the $708.1 billion, the Trump Administration's request included $639.1 billion in discretionary funding for the so-called base budget\u00e2\u0080\u0094that is, funds intended to pay for defense-related activities that DOD and other agencies would pursue even if U.S. armed forces were not engaged in contingency operations in Afghanistan, Iraq, Syria, and elsewhere. The remaining $69 billion of the request, designated as funding for Overseas Contingency Operations (OCO), would fund the incremental costs of those ongoing contingency operations, as well as any other costs that Congress and the President agreed to so designate.", "The request was consistent with discretionary spending limits (or caps) on defense activities originally established by the Budget Control Act of 2011 (BCA; P.L. 112-25 ) and amended by the Bipartisan Budget Act of 2018 (BBA 2018; P.L. 115-123 ). The FY2019 defense spending cap is $647 billion and applies to discretionary defense programs (excluding OCO). The cap includes programs outside the scope of the NDAA and for which the Administration requested approximately $8 billion. Thus, the portion of the cap applicable to spending authorized by the NDAA is approximately $639 billion.", "On May 24, 2018, the House voted 351-66 to pass H.R. 5515 , an amended version of the FY2019 NDAA reported by the House Armed Services Committee. On June 18, 2018, the Senate voted 85-10 to pass its version of H.R. 5515 , after replacing the House-passed text of H.R. 5515 with an amended version of the FY2019 proposal reported by the Senate Armed Services Committee ( S. 2987 ). On July 25, 2018, a conference committee reported a revised version of the bill ( H.Rept. 115-874 ). On July 26, 2018, the House voted 359-54 to approve the conference report. On August 1, the Senate voted 87-10 to approve the conference report. The conference version authorized approximately the same amount as the President's request, though with several billions of dollars of adjustments to amounts within the appropriation titles. On August 13, 2018, President Donald J. Trump signed the bill into law ( P.L. 115-232 ).", "Congressional authorization of FY2019 defense authorizations reflected a running debate about the size of the defense budget given the strategic and budgetary issues facing the United States."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["The annual National Defense Authorization Act (NDAA) authorizes appropriations for the Department of Defense (DOD) and defense-related atomic energy programs of the Department of Energy.", "In addition to authorizing appropriations, the NDAA establishes defense policies and restrictions, and addresses organizational administrative matters related to DOD. The bill incorporates provisions governing military compensation, the department's acquisition process, and aspects of DOD policy toward other countries, among other subjects. Enacted to authorize annual defense appropriations since FY1962, the bill also sometimes serves as a vehicle for legislation that originates in congressional committees other than the armed services committees.", "Unlike an appropriations bill, the NDAA does not provide budget authority for government activities. While the NDAA does not provide budget authority, historically it has provided a fairly reliable indicator of congressional sentiment on funding for particular programs. The bill authorizes funding for DOD activities at the same level of detail at which budget authority is provided by the corresponding defense and military construction appropriations bills. As defense authorization and appropriations bills can differ on a line-item level, some observers view defense authorizations as funding targets rather than amounts. According to the Government Accountability Office (GAO), \"An authorization act is basically a directive to Congress itself, which Congress is free to follow or alter (up or down) in the subsequent appropriation act.\"", "In addition, committee reports accompanying the NDAA often contain language directing an individual, such as a senior DOD official, to take a specified action by a date certain. Although such directive report language is not legally binding, agency officials generally regard it as a congressional mandate and respond accordingly."], "subsections": []}, {"section_title": "Legislative Activity", "paragraphs": [" Table 1 and Table 2 below provide an overview of legislative actions taken on the FY2019 NDAA, along with relevant funding authorization figures for budget functions in different versions of the bill considered by the 115 th Congress."], "subsections": [{"section_title": "Selected Actions", "paragraphs": ["For FY2019, the Trump Administration requested $708.1 billion to fund programs falling under the jurisdiction of the House and Senate Armed Services Committees and subject to authorization by the annual National Defense Authorization Act (NDAA).", "On May 24, 2018, the House voted 351-66 to pass H.R. 5515 (Roll no. 230), an amended version of the FY2019 NDAA reported by the House Armed Services Committee. That bill would have authorized approximately the same amount as the President's request, including $639.1 billion ($1.1 million less than the request) for the so-called base budget\u00e2\u0080\u0094that is, funds intended to pay for defense-related activities that DOD and other agencies would pursue even if U.S. armed forces were not engaged in contingency operations in Afghanistan, Iraq, Syria, and elsewhere. The remaining $69 billion ($158,000 less than the request), designated as funding for Overseas Contingency Operations (OCO), would have funded the incremental costs of those ongoing contingency operations, as well as any other costs that Congress and the President agreed to so designate.", "On June 18, 2018, the Senate voted 85-10 to pass its version of H.R. 5515 (Record Vote Number 128), after replacing the House-passed text of H.R. 5515 with an amended version of the FY2019 proposal reported by the Senate Armed Services Committee ( S. 2987 ). That bill would have authorized $707.9 billion, including $639.4 billion ($492.4 million more than the request) for the base budget and $68.5 billion ($515.4 million less than the request) for OCO.", "On July 23, 2018, a conference committee reported a compromise version of the bill ( H.Rept. 115-863 ). However, the initial conference report required revision due in part to technical issues. On July 25, 2018, the conference committee reported a revised conference report ( H.Rept. 115-874 ). That bill authorized approximately the same amount as the President's request, though with several billions of dollars of adjustments to amounts within the appropriation titles.", "On July 26, 2018, the House voted 359-54 to approve the conference report (Roll no. 379). On August 1, the Senate voted 87-10 to approve the conference report (Record Vote Number 181). On August 13, 2018, President Donald J. Trump signed the bill into law ( P.L. 115-232 ). ", "The legislation marked the first NDAA since the FY1997 act enacted prior to the start of the fiscal year."], "subsections": []}, {"section_title": "Bill Overview", "paragraphs": ["House and Senate conferees authorized $708.1 billion in discretionary budget authority for national defense programs in the final version of the conference report for H.R. 5515 ( H.Rept. 115-874 ), an increase of $16 billion (2.3%) from the FY2018 enacted amount. While that figure was approximately the same amount as the President's request for FY2019, it included billions of dollars in adjustments to amounts for individual DOD appropriation titles, as well as for atomic energy defense programs and other defense-related activities. See Table 2 .", "For example, of the $616.9 billion authorized for DOD base budget activities, the conference report included $132.3 billion for procurement, an increase of $1.8 billion (1.3%) from the President's request; $91.7 billion for research, development, test, and evaluation (RDT&E), an increase of $670 million (less than 1%) from the request; $198.5 billion for operation and maintenance, a decrease of $960 million (less than 1%) from the request; $147.1 billion for military personnel, a decrease of $1.2 billion (approximately 1%) from the request; and $10.3 billion for military construction and family housing, a decrease of $123 million (1.2%).", "The conference report also included $21.9 billion for atomic energy defense programs, an increase of $108.6 million (less than 1%) from the President's request; and $300 million for other defense-related activities, an increase of $86 million (40%) from the request."], "subsections": []}]}, {"section_title": "Background", "paragraphs": ["Congressional authorization of FY2019 defense authorizations reflects a running debate about the size of the defense budget given the strategic and budgetary issues facing the United States.", "The President's FY2019 budget request for DOD was shaped in part by the department's efforts to align its priorities with its 2018 National Defense Strategy and conform to discretionary spending limits set by the Budget Control Act of 2011 (BCA; P.L. 112-25 ) as amended by the Bipartisan Budget Act of 2018 (BBA 2018; P.L. 115-23 )."], "subsections": [{"section_title": "Strategic Context8", "paragraphs": ["On December 18, 2017, the Trump Administration released its first National Security Strategy (NSS). The NSS maintains that, in addition to the threats posed to the United States by rogue regimes and violent extremist organizations that have been a central focus of national security policy since the end of the Cold War, great power rivalry and competition have once again become a central feature of the international security landscape. To advance U.S. interests effectively within this strategic context, the Administration argues, the United States must improve domestic American security and bolster economic competitiveness while rebuilding its military.", "The NSS further argues that that since the 1990s, the United States has \"displayed a great degree of strategic complacency,\" largely as a result of overwhelming and unchallenged U.S. military and economic superiority. Operations in the Balkans, Africa, Afghanistan, and Iraq, while challenging and complex undertakings, did not require fundamental revision of the capabilities of the United States. Yet both China and Russia appear to be developing capabilities and concepts that potentially \"overmatch,\" or demonstrate technological superiority, to U.S. military capabilities.", "Released in January 2018, DOD's 11-page unclassified summary of the 2018 National Defense Strategy (NDS) articulates how the department plans to advance U.S. objectives outlined in the White House's National Security Strategy (NSS). Consistent with comparable documents issued by prior Administrations, the NDS maintains that there are five central external threats to U.S. interests: China, Russia, North Korea, Iran, and terrorist groups with global reach. In a break from previous Administrations, however, the NDS views retaining the U.S. strategic competitive edge relative to China and Russia as a higher priority than countering violent extremist organizations. It also contends that, unlike most of the period since the end of the Cold War, the Joint Force must now operate in contested domains where freedom of access and maneuver is no longer assured.", "Accordingly, the NDS summary called for \"increased and sustained investment\" to counter evolving threats from China and Russia: \"Long-term strategic competitions with China and Russia are the principal priorities for the Department, and require both increased and sustained investment, because of the magnitude of the threats they pose to U.S. security and prosperity today, and the potential for those threats to increase in the future.\" The NDS organizes DOD activities along three central interconnected \"lines of effort\": rebuilding military readiness and improving the joint force's lethality, strengthening alliances and attracting new partners, and reforming the department's business practices. ", "In June 2017, several months before the release of the NDS, Chairman of the Joint Chiefs of Staff Marine General Joseph Dunford recommended that Congress increase the regular, or base, defense budget between 3% and 5% a year above inflation (\"real growth\") to maintain the U.S. competitive advantage against strategic competitors such as China and Russia. \"We know now that continued growth in the base budget of at least 3% above inflation is the floor necessary to preserve just the competitive advantage we have today and we can't assume that our adversaries will stand still,\" he said."], "subsections": []}, {"section_title": "Budgetary Context", "paragraphs": ["Congressional action on the FY2019 NDAA was shaped in part by a focus on controlling federal spending amid rising federal debt. The Budget Control Act emphasized limiting discretionary spending, including defense spending. However, mandatory spending makes up the largest share of federal spending and is projected to increase at a faster rate than discretionary spending. See Figure 1 ."], "subsections": [{"section_title": "Historical Perspectives14", "paragraphs": ["As the 115 th Congress considered the President's FY2019 request for defense spending, OMB had estimated that since 9/11, outlays for defense discretionary programs in nominal dollars (not adjusted for inflation) would increase 122% from $306.1 billion in FY2001 to $678 billion in FY2019, while outlays for non-defense discretionary programs would increase 83% from $343 billion in FY2001 to $626 billion in FY2019. OMB had also estimated that outlays for mandatory programs would increase 172% from $1 trillion in FY2001 to $2.7 trillion in FY2019, while outlays for net interest payments on the national debt would increase 76% from $206.2 billion in FY2001 to $363.4 billion in FY2019.", "The Congressional Budget Office had projected mandatory spending and net interest payments would increase at faster rates than defense and nondefense discretionary spending over the next decade. CBO had also projected net interest payments on the national debt would surpass defense discretionary outlays in FY2023. "], "subsections": []}, {"section_title": "FY2019 Budget Request", "paragraphs": ["President Donald J. Trump's FY2019 budget request, released on February 12, 2018, included $726.8 billion for national defense, a major federal budget function that encompasses defense-related activities of the federal government.", "National defense is one of 20 major functions used by the Office of Management and Budget (OMB) to organize budget data and is the largest in terms of discretionary spending. The national defense budget function (identified by the numerical notation 050) comprises three subfunctions: DOD\u00e2\u0080\u0093Military (051); atomic energy defense activities primarily of the Department of Energy (053); and other defense-related activities (054), such as FBI counterintelligence activities.", "The $726.8 billion national defense budget request included $716 billion in discretionary budget authority and $10.8 billion in mand atory budget authority."], "subsections": []}, {"section_title": "Portion of Defense Budget Subject to NDAA", "paragraphs": ["Of the $726.8 billion requested for national defense, approximately $708.1 billion was subject to authorization by the annual National Defense Authorization Act (NDAA). The remainder of the request was either for mandatory funds not requiring annual authorization or for discretionary funds under the jurisdiction of other congressional committees.", "Of the $708.1 billion, the Trump Administration's revised request included $639.1 billion in discretionary funding for the so-called base budget \u00e2\u0080\u0094that is, funds intended to pay for defense-related activities that the Department of Defense (DOD) and other agencies would pursue even if U.S. armed forces were not engaged in contingency operations, designated Overseas Contingency Operations (OCO), in Afghanistan, Iraq, Syria, and elsewhere. The remaining $69 billion of the request would fund the incremental costs of OCO, as well as any other costs that Congress and the President agreed to so designate.", "The request was consistent with discretionary spending limits (or caps) on defense activities originally established by the Budget Control Act of 2011 (BCA; P.L. 112-25 ) and amended by the Bipartisan Budget Act of 2018 (BBA 2018; P.L. 115-123 ). The FY2019 defense spending cap was $647 billion and applied to discretionary defense programs (excluding OCO). The cap included programs outside the scope of the NDAA and for which the Administration requested approximately $8 billion. Thus, the portion of the cap applicable to spending authorized by the NDAA was approximately $639 billion."], "subsections": []}, {"section_title": "Budget Control Act", "paragraphs": ["As part of an agreement to increase the statutory limit on public debt, the BCA aimed to reduce annual federal budget deficits by a total of at least $2.1 trillion from FY2012 through FY2021 compared to projected levels, with approximately half of the savings to come from defense. The spending limits (or caps) apply separately to defense and nondefense discretionary budget authority. The caps are enforced by a mechanism called sequestration that automatically cancels previously enacted appropriations by an amount necessary to reach pre-specified levels. The BCA effectively exempted certain types of discretionary spending from the statutory limits, including funding designated for Overseas Contingency Operations (OCO)/Global War on Terrorism (GWOT). In the past, Congress has amended the legislation to raise the spending limits (thus lowering its deficit-reduction effect by corresponding amounts), but, as of July 2019, it had not changed the limits for FY2020 and FY2021.", "OCO Funding Shift", "Of the $686.1 billion for DOD, the Trump Administration's initial request included $597.1 billion for the base budget. The remaining $89 billion was designated as funding for OCO. However, in an amendment to the budget after Congress raised spending caps as part of the Bipartisan Budget Act of 2018 (BBA 2018; P.L. 115-123 ), the Administration removed the OCO designation from $20 billion of funding, in effect, shifting that amount into the base budget request. In a statement on the budget amendment, White House Office of Management and Budget Director Mick Mulvaney said the amended request fixed \"long-time budget gimmicks\" in which OCO funding had been used for base budget requirements. Beginning in FY2020, \"the Administration proposes returning to OCO's original purpose by shifting certain costs funded in OCO to the base budget where they belong,\" he wrote."], "subsections": []}]}]}, {"section_title": "Selected Policy Issues", "paragraphs": [], "subsections": [{"section_title": "Military Personnel36", "paragraphs": ["The Administration requested authorization for an active-duty end-strength of 1.3 million personnel, an increase of 15,600 personnel from the enacted FY2018 level; and for a reserve component end-strength of 824,700 personnel, an increase of 800 personnel from the enacted FY2018 level.", "The House version of the bill would have supported the Administration's request, while the Senate amendment would have authorized an end-strength of 9,439 fewer personnel than requested, including 8,639 fewer active-duty personnel and 800 fewer reserve component personnel. The act authorizes the Administration's requested end-strength. See Table 3 ."], "subsections": [{"section_title": "Military Pay Raise38", "paragraphs": ["Title 37, Section 1009, of the United States Code (37 U.S.C. \u00c2\u00a71009) provides a permanent formula for an automatic annual increase in basic pay that is indexed to the annual increase in the Employment Cost Index (ECI), a survey prepared by the Department of Labor's Bureau of Labor Statistics, for \"wages and salaries\" of private industry workers. The FY2019 budget request proposed a 2.6% increase in basic pay for military personnel in line with the formula in current law. The Senate amendment included a provision that would have waived the automatic increase in basic pay under 37 U.S.C. \u00c2\u00a71009 and specified a pay raise of 2.6%. The enacted bill contains no provision relating to a general increase in basic pay, thereby leaving in place the automatic adjustment of 37 U.S.C. \u00c2\u00a71009 amounting to 2.6% in 2019."], "subsections": []}, {"section_title": "Officer Management Overhaul", "paragraphs": ["Title V of the act contains provisions that modified key parts of the Defense Officer Personnel Management Act (DOPMA; P.L. 96-513 ) governing the appointment, promotion, and separation of military officers. Changes include allowing civilians with operationally relevant training or experience to enter the military up to the rank of O-6\u00e2\u0080\u0094a colonel in the Army, Air Force, or Marine Corps; or captain in the Navy\u00e2\u0080\u0094and creating an \"alternative promotion\" process for officers in specialized fields."], "subsections": []}]}, {"section_title": "Military Construction39", "paragraphs": ["The Administration requested $11.4 billion in new budget authority for DOD military construction and family housing projects, including $10.5 billion in base budget funding and $921 million in Overseas Contingency Operations (OCO) funding. See Table 4 ."], "subsections": [{"section_title": "Selected Military Construction Projects", "paragraphs": ["The act authorizes less funding than requested for some of the most valuable military construction projects. For example, the act authorizes", "$105 million for the MIT-Lincoln Laboratory, West Lab Compound Semiconductor Laboratory and Microsystem Integration Facility (CSL/MIF), at Hanscom Air Force Base, MA ($120 million less than requested); $181 million for Phase 1, Increment 2 of the National Geospatial-Intelligence Agency complex known as Next NGA West (N2W) in St. Louis, MO ($33 million less than requested); and $140 million for Phase 2 of the long-range discriminating radar system complex at Clear Air Force Station, AK ($44 million less than requested)."], "subsections": []}, {"section_title": "OCO Projects", "paragraphs": ["Most of the $921 million requested for military construction using OCO funds was for projects related to the European Deterrence Initiative (see the \" European Deterrence Initiative (EDI) \" section). The act authorizes an additional $30.4 million for flight line support facilities and an additional $40 million for a personnel deployment processing facility, both at Al Udeid Air Base, Qatar. The act does not authorize the $69 million requested for a high-value detention facility at Guantanamo Bay, Cuba."], "subsections": []}]}, {"section_title": "Acquisition Policy40", "paragraphs": ["Congress generally exercises its legislative powers to affect defense acquisitions through Title VIII of the NDAA, typically entitled Acquisition Policy, Acquisition Management, and Related Matters . In some years, the NDAA also contains titles specifically dedicated to aspects of acquisition, such as Title XVII of the FY2018 NDAA, entitled Small Business Procurement and Industrial Base Matters .", "Congress has been particularly active in legislating acquisition reform over the last four years. For FY2016-FY2019, NDAA titles specifically related to acquisition reform contained an average of 80 provisions (318 in total), compared to an average of 47 such provisions (466 in total) in the NDAAs for the preceding 10 fiscal years.", "Examples of recent acquisition reform-related provisions include the following:", "Changes to the role of the Chiefs of the Military Services and the Commandant of the Marine Corps (collectively referred to as the Service Chiefs) in the acquisition process (Section 802 of P.L. 114-92 , the FY2016 NDAA); Splitting the office of the Under Secretary of Defense for Acquisition, Technology, and Logistics (USD [AT&L]) into two separate offices: the office of the Under Secretary of Defense for Acquisition and Sustainment (USD A&S) and the office of the Under Secretary of Defense for Research and Engineering (USD R&E) (Section 901 of P.L. 114-328 , the FY2017 NDAA); Strengthening the role of the military departments in acquisitions (see, for example, Section 897 of P.L. 114-328 , the FY2017 NDAA); Increasing the government-wide simplified acquisition threshold from $150,000 to $250,000 (Section 805 of P.L. 115-91 ); and, Creating or expanding numerous rapid acquisition authorities, such as establishing middle tier acquisition pathways for rapid production and fielding (Section 804 of the FY2016 NDAA), and expanding and making permanent authorities relating to prototyping and follow-on production conducted using procurement authorities known as other transactions (Section 815 of P.L. 114-92 , the FY2016 NDAA) .", "While the FY2019 NDAA generally does not include sweeping defense acquisition system reform-related provisions similar to those included in the FY2016-FY2018 NDAAs, it does include numerous provisions making other changes relating to defense acquisitions, such as the following:", "Creating a framework to consolidate defense acquisition-related statutes in a new Part V of Subtitle A of Title 10, U.S. Code (Sections 801-809); Increasing the DOD micro-purchase threshold from $5,000 to $10,000 (Section 821); Requiring DOD to conduct a study of the frequency and effects of so-called \"second bite at the apple\" bid protests involving the same contract award or proposed award filed through both the Government Accountability Office (GAO) and the U.S. Court of Federal Claims (Section 822); Splitting the Title 41 definition of commercial item into separate definitions for commercial product and commercial service (Section 836); and Limiting the government-wide use of lowest price technically acceptable (LPTA) source selection criteria (Section 880)."], "subsections": []}, {"section_title": "European Deterrence Initiative (EDI)45", "paragraphs": ["The act authorizes $6.3 billion in OCO funding for the European Deterrence Initiative (EDI), an effort DOD began in 2014 to reassure NATO allies in Central and Eastern Europe of a continued U.S. commitment to their national security after the Russian military intervention in Ukraine, in addition to $250 million for Ukraine security assistance. Of the latter amount, $50 million was authorized for \"lethal assistance,\" including anti-armor weapon systems, mortars, crew-served weapons and ammunition, grenade launchers and ammunition, small arms and ammunition; as well as counter-artillery radars, including medium-range and long-range counter-artillery radars that can detect and locate long-range artillery. Most of the EDI funding is intended for prepositioning a division-sized set of equipment in Europe and boosting the regional presence of U.S. forces."], "subsections": []}, {"section_title": "Iraqi and Syrian Forces Training48", "paragraphs": ["The act authorizes $1.4 billion in OCO funding for activities to counter the Islamic State of Iraq and Syria (ISIS) by training and equipping Iraqi Security Forces and vetted Syrian opposition forces. The act includes a provision (Section 1233) limiting the use of roughly half of the $850 million for Iraq until the Secretary of Defense submits a report to the congressional defense committees on the U.S. strategy in Iraq. Another provision (Section 1231) limits the use of all of the $300 million for Syria until the President submits a report to congressional committees on the U.S. strategy in Syria. The Administration submitted the required reports to Congress in early 2019."], "subsections": []}, {"section_title": "Foreign Investment49", "paragraphs": ["In response to concerns from some Members of Congress that certain foreign direct investment, primarily by Chinese firms, may pose risks to U.S. national defense and economic security, Title XVII of the act incorporates provisions designed to limit foreign access to sensitive U.S. technology. Subtitle A of Title XVII, the Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA), expands the purview of the Committee on Foreign Investment in the United States (CFIUS) to address national security concerns in part by amending the current process for the committee to review, on behalf of the President, the national security implications of foreign direct investment in U.S. companies. Subtitle B of Title XVII, the Export Controls Act of 2018, includes provisions to expand controls for exporting certain \"dual-use\" civilian and military items in part by requiring the establishment of an \"interagency process to identify emerging and foundational technologies.\""], "subsections": []}, {"section_title": "Prohibition on Chinese Telecommunications Equipment50", "paragraphs": ["In response to concerns from some Members of Congress that Chinese telecommunications equipment manufacturers may pose a security risk to U.S. communications infrastructure, the act includes a provision (Section 889) prohibiting the heads of federal agencies from procuring telecommunications equipment or services from companies linked to the government of China, including Huawei Technologies Company and ZTE Corporation, among others. Huawei filed suit against the United States over the provision, arguing that it amounts to an unconstitutional \"bill of attainder.\"", "Another provision of the act (Section 1091) prohibits DOD from obligating funds authorized to be appropriated by the act or otherwise available for Chinese language instruction provided by Confucius Institutes, language and culture centers affiliated with China's Ministry of Education, unless the Under Secretary of Defense for Personnel and Readiness issues a waiver. It also bars DOD use of any obligated funds to support a Chinese language program at an institution of higher education that hosts a Confucius Institute."], "subsections": []}]}, {"section_title": "Selected Acquisition Programs52", "paragraphs": [], "subsections": [{"section_title": "Strategic Nuclear Forces53", "paragraphs": ["DOD has described upgrading the nuclear triad\u00e2\u0080\u0094that is, submarines armed with submarine-launched ballistic missiles, land-based intercontinental ballistic missiles, and strategic bombers carrying gravity bombs and air-launched cruise missiles\u00e2\u0080\u0094as its \"number one priority.\" ", "The Trump Administration's 2018 Nuclear Posture Review, released in February 2018, reiterated the findings of previous reviews \"that the nuclear triad\u00e2\u0080\u0094supported by North Atlantic Treaty Organization (NATO) dual-capable aircraft and a robust nuclear command, control, and communications system\u00e2\u0080\u0094is the most cost-effective and strategically sound means of ensuring nuclear deterrence.\"", "The department said that programs\u00e2\u0080\u0094such as the Columbia-class ballistic missile submarine, B-21 long-range strike bomber, and Long-Range Standoff (LRSO) cruise missile\u00e2\u0080\u0094to replace the existing inventory of systems intended to deliver nuclear weapons would be \"fully funded\" for the year if its FY2019 budget requests were met.", "See Table 5 for information on the FY2019 budget request and authorizations for selected strategic offense and long-range systems."], "subsections": [{"section_title": "Columbia-Class Ballistic Missile Submarine58", "paragraphs": ["The Columbia-class program, previously known as the Ohio replacement program (ORP) or SSBN(X) program, is a program to design and build a new class of 12 ballistic missile submarines (SSBNs) to replace the Navy's current force of 14 Ohio-class SSBNs. The Navy has identified the Columbia-class program as its top priority program. The service wants to procure the first Columbia-class boat in FY2021. The Navy's proposed FY2019 budget requested $3 billion in advance procurement (AP) funding and $705 million in research and development funding for the program. The budget also included $1.3 billion to continue refurbishing the Trident II (or D-5) missiles that arm the submarines. The act authorizes $3.2 billion for the Columbia-class program. The act supports the President's request for refurbishment of the Trident II missiles, and increased research-and-development funding for the effort."], "subsections": []}, {"section_title": "B-21 Long-Range Strike Bomber59", "paragraphs": ["The budget request included $2.3 billion to continue development of the B-21 long-range bomber, which the Air Force describes as one of its top three acquisition priorities. Acquisition of the airplane is slated to begin in 2023. The new bomber\u00e2\u0080\u0094like the B-2s and B-52s currently in U.S. service\u00e2\u0080\u0094could carry conventional as well as nuclear weapons. For the latter role, the request included $615 million to continue development of the Long-Range Standoff Weapon (LRSO), a cruise missile that would replace the 1980s-vintage Air-Launched Cruise Missile (ALCM) currently carried by U.S. bombers. The act supports the President's budget request for the B-21 bomber. The act authorizes an increase of $85 billion for the LRSO to $700 million."], "subsections": []}, {"section_title": "Land-Based Ballistic Missiles60", "paragraphs": ["The budget request included $345 million to continue developing a new, land-based intercontinental ballistic missile (ICBM), known as the Ground-Based Strategic Deterrent (GBSD), which in 2029 would begin replacing the Minuteman III missiles currently in service. The act authorizes an increase of $69 million to $414 million for the new Ground-Based Strategic Deterrent."], "subsections": []}, {"section_title": "Low-Yield D-5 Nuclear Warhead 61", "paragraphs": ["The budget request included $65 million for the W76-2 warhead modification program. The effort is intended to modify an unspecified number of Trident II MK4/W76 warheads, each of which has a yield of 100 kilotons, into a lower-yield variant referred to as the W76-2. The atomic weapons used at Hiroshima and Nagasaki were roughly 15 and 20 kilotons, respectively. The Trump Administration's February 2018 Nuclear Posture Review called for \"low-yield\" nuclear options to preserve \"credible deterrence against regional aggression.\" The act authorizes the requested funding."], "subsections": []}]}, {"section_title": "Ballistic Missile Defense Programs63", "paragraphs": ["Since the late 1940s, the United States has developed and deployed ballistic missile defenses (BMD) to defend against enemy missiles. Since the start of an expanded initiative under President Ronald Reagan in 1985, BMD has been a key national security interest in Congress. Lawmakers have since appropriated more than $200 billion for a broad range of research and development programs and deployment of BMD systems. The United States has deployed a global array of networked ground-, sea-, and space-based sensors for target detection and tracking, an extensive number of ground- and sea-based hit-to-kill (direct impact) and blast fragmentation warhead interceptors, and a global network of command, control, and battle management capabilities to link those sensors with those interceptors.", "The Trump Administration's FY2019 budget request included a total of $12.9 billion for defense against ballistic missiles, of which $9.9 billion would be allocated to the Missile Defense Agency (MDA).", "See Table 6 for information on the FY2019 budget request and authorization actions for selected ballistic missile defense systems."], "subsections": [{"section_title": "U.S. Homeland Missile Defense", "paragraphs": ["The Administration requested a total of approximately $2.6 billion for the Ground-Based Midcourse Defense (GMD), which included funding for systems and related improvements such as Common Kill Vehicle Technology, Pacific Discriminating Radar, and Long Range Discrimination Radar. As of November 2017, the system comprised 44 interceptor missiles at two sites, including 40 at Fort Greely in Alaska and four at Vandenberg Air Force Base in California. The interceptors are intended to destroy intercontinental ballistic missiles (ICBMs) with ranges in excess of 5,500 kilometers launched toward U.S. territory from countries such as North Korea. The department is adding another site at Fort Greely with 20 interceptors as part of a plan to expand the system to include 64 interceptors. The request included funding for an additional four interceptors and 10 silos, as well as continued development of a new warhead called the Redesigned Kill Vehicle (RKV) intended to replace the existing warhead known as the Exoatmospheric Kill Vehicle (EKV).", "While the House and Senate generally supported the request for the GMD system\u00e2\u0080\u0094they authorized the procurement request and most of the RDT&E request\u00e2\u0080\u0094conferees included a provision (Section 1683) that requires at least one successful flight intercept test of the RKV before it could enter production. The provision also requires the director of the Missile Defense Agency to report on ways to accelerate the fielding of the additional 20 interceptors with RKVs at Fort Greely."], "subsections": []}, {"section_title": "Regional Missile Defense", "paragraphs": ["The Administration's budget request included $1.1 billion for procurement and additional development work associated with the Terminal High-Altitude Air Defense (THAAD) interceptors, intended to intercept short-, medium-, and intermediate-range ballistic missiles. THAAD is a transportable system designed to defend troops abroad and population centers. In testing, the system has generally performed well by most measures, but it has not operated in combat. Both the House and Senate supported the Administration's request for $874 million in procurement for 82 THAAD interceptors and increased funding for associated research and development.", "The request included $1.4 billion in procurement funding for the Army's Patriot system, including 240 Patriot Advanced Capability (PAC-3)/Missile Segment Enhancement (MSE) interceptors. The most mature U.S. BMD system, Patriot was used with mixed results in combat in the 1991 and 2003 wars against Iraq and is fielded around the world by the United States and other countries that have purchased the system. Patriot is a mobile system and designed to defend relatively small areas such as military bases and airfields. Patriot works with THAAD to provide an integrated and overlapping defense against incoming missiles in their final phase of flight. The act supports the Administration's request.", "The act includes a provision (Section 241) requiring the Secretary of the Army to report on the survivability of air defense artillery, including \"an analysis of the utility of relevant active kinetic capabilities, such as a new, long-range counter-maneuvering threat missile and additional indirect fire protection capability units to defend Patriot and Terminal High Altitude Area Defense batteries.\""], "subsections": []}]}, {"section_title": "Military Space Programs70", "paragraphs": ["The President's budget request included $9.3 billion in funding for National Security Space (NSS) acquisition programs.", "National Security Space is one of 12 Major Force Programs (MFP) of the DOD and includes funding for space launches, satellites, and support activities. MFP-12 includes funding for some classified programs and, for the most part, does not include funding for National Geospatial-Intelligence Agency (NGA) and National Reconnaissance Office (NRO) programs.", "See Table 7 for information on the FY2019 budget request and authorization actions for selected military space programs."], "subsections": [{"section_title": "Evolved Expendable Launch Vehicle", "paragraphs": ["The budget request for NSS acquisition programs included approximately $2 billion to continue acquiring satellite launchers under the Evolved Expendable Launch Vehicle (EELV) program and to continue developing a replacement for the Russian-made rocket engine used in some national security space launches since the early 2000s. The act supported the budget request.", "The act includes a provision (Section 1603) to designate the EELV program as the National Security Space Launch (NSSL) program, effective March 1, 2019. The provision also requires the Secretary of Defense to consider both \"reusable and expendable launch vehicles\" in any future solicitations \"for which the use of a reusable launch vehicle is technically capable and maintains risk at acceptable levels.\""], "subsections": []}, {"section_title": "Global Positioning System", "paragraphs": ["The budget request included approximately $1.5 billion for the GPS satellite program and related projects. The technology provides worldwide positioning, navigation, and timing (PNT) information to military and civilian users. Funding would support launch of two GPS III satellites, development of GPS Next Generation Operational Control System (OCX), and integration of Military GPS User Equipment (MGUE) intended in part to provide a more powerful jam-resistant signal and information to military personnel in contested environments. The act authorizes $18 million less than the requested $1.4 billion in research and development funding due to what the conferees described as \"insufficient justification.\""], "subsections": []}, {"section_title": "Space-Based Infrared System", "paragraphs": ["The budget request included $842 million for the Space-Based Infrared System (SBIRS), including $704 million for research, development, test, and evaluation and $138 million for procurement. The system is a successor to the Defense Support Program (DSP) designed in part to provide early warning of a strategic missile attack on the United States and to support missile defense activities. The request was intended to support launch of Geosynchronous Earth Orbit (GEO) satellites and development of Next-Generation Overhead Persistent Infrared (OPIR) satellites. The act authorizes increasing RDT&E funding by $100 million to $804 million to \"accelerate sensor development.\"", "The act includes a provision (Section 1613) requiring the Secretary of Defense to evaluate supply chain vulnerabilities for protected satellite communications and OPIR. The conference report accompanying the bill directs the head of the Government Accountability Office (GAO) \"to review the early planning for the next generation OPIR system and associated ground capabilities,\" and assess, in part, \"to what extent will the next generation OPIR system continue to fulfill existing key SBIRS capabilities?\""], "subsections": []}, {"section_title": "Advanced Extremely High Frequency and Satellite Communications Projects", "paragraphs": ["The budget request included $842 million for Advanced Extremely High Frequency (AEHF) and Satellite Communications (SATCOM) projects, including $677 million in research, development, test, and evaluation and $91 million in procurement. The projects are intended in part to provide communications that are secure, survivable, and resistant to jamming. Funding was to support the fifth and sixth AEHF satellites, as well as activities to improve AEHF operational resiliency through programs such as Protected Tactical Service (PTS), Protected SATCOM Services-Aggregated (PSCS-A), and Protected Tactical Enterprise Service (PTES). The act supports the budget request.", "The act includes a provision (Section 1614) requiring the Secretary of Defense to report on how the evolved strategic satellite program, PTS, and PTES \"will meet the requirements for resilience, mission assurance, and the nuclear command, control, and communication missions of the Department of Defense.\""], "subsections": []}, {"section_title": "U.S. Space Command", "paragraphs": ["The act includes a provision (Section 1601) requiring the President, with the advice and assistance of the Chairman of the Joint Chiefs of Staff and through the Secretary of Defense, to establish U.S. Space Command as a subordinate unified command under U.S. Strategic Command \"for carrying out joint space warfighting operations.\"", "The provision states the commander of U.S. Space Command is responsible for \"ensuring the combat readiness of forces assigned to the space command\" and \"monitoring the preparedness to carry out assigned missions of space forces assigned to unified combatant commands other than the United States Strategic Command.\""], "subsections": []}]}, {"section_title": "Ground Vehicle Programs94", "paragraphs": ["In addition to modernizing the ground forces' existing armored combat vehicles such as the M-1 Abrams tank, M-2 Bradley Infantry Fighting Vehicle (IFV), and Stryker wheeled combat vehicle, the Administration's FY2019 budget request included funding for newer capabilities, including mobile defense against cruise missiles and unmanned aircraft, and improved firepower and mobility for infantry units.", "See Table 8 for information on the FY2019 budget request and authorizations for selected ground vehicle programs."], "subsections": [{"section_title": "Legacy Systems", "paragraphs": ["The act authorizes most of the approximately $2.7 billion requested to upgrade the Army's fleet of M-1 Abrams tanks, the service's main battle tank that entered service in 1980. The funding was intended to upgrade a portion of the fleet with a system enhancement package (SEP) that includes new armor, electronics, and weapons stations. It was also to equip three brigades with the Trophy active protection system (APS), designed in part to automatically acquire, track, and respond with hard or soft kill capabilities to a variety of threats, including rocket-propelled grenades (RPGs) and anti-tank guided missiles (ATGMs).", "The act authorizes more funds than requested to accelerate two other components of the Army's current combat vehicle fleet. It authorizes $413 million, $44 million more than requested, to replace the flat underside of many types of the Stryker wheeled combat vehicles with a V-shaped bottom intended to more effectively mitigate the explosive force of buried landmines or improvised explosive devices (IEDs). It also authorized $529 million, $110 million more than requested, to replace the chassis and powertrain of the M-109 Paladin self-propelled howitzer with the more powerful and robust chassis of the Bradley troop carrier.", "The act authorizes fewer funds than requested for components of the Army's existing combat vehicle fleet. It authorizes $875 million, $172 million less than requested, to continue modernizing the Bradley primarily due to a \"program decrease.\" It also authorizes $244 million, $22 million less than requested, for the Amphibious Combat Vehicle (ACV), a successor to the Marine Corps' AAV-7 amphibious troop carrier; and $797 million, $31 million less than requested, for the Armored Multi-Purpose Vehicle (AMPV), intended to the place the Vietnam-era M-113 tracked personnel carrier.", "The act includes a provision (Section 254) requiring the Secretary of the Army to develop a strategy to competitively procure a new transmission for the Bradley fighting vehicle, including an analysis of potential cost savings and performance improvements from a transmission common to the Bradley family of vehicles, including the AMPV and Paladin."], "subsections": []}, {"section_title": "Infantry Firepower and Mobility", "paragraphs": ["The Administration requested $449 million to develop and begin purchasing vehicles intended to boost the lethality and mobility of Army Infantry Brigade Combat Teams (IBCTs). The bulk of the funds were to develop a lightweight tank, designated Mobile Protected Firepower (MPF). The remainder of the funds were to begin purchasing four-wheel-drive, off-road vehicles for reconnaissance missions and troop transport, designated Light Reconnaissance Vehicle (LRV) and Ground Mobility Vehicle (GMV), respectively.", "The act authorizes $370 million for the programs, $79 million less than requested, with most of the reduction due to a \"Mobile Protected Firepower decrease.\"", "The act includes a provision (Section 248) requiring the Secretary of the Army to submit a report to the Armed Services Committees on active protection systems (APS) for armored combat and tactical vehicles. Specifically, the provision required the report to: assess the effectiveness of such systems recently tested on the Abrams, Bradley, and Stryker; discuss plans for further testing, proposals for future development, and a timeline for fielding; and describe how the service plans to incorporate such systems into new armored combat and tactical vehicles, such as MPF, AMPV, and the Next Generation Combat Vehicle (NGCV), the Army's replacement for the Bradley."], "subsections": []}, {"section_title": "Air Defense", "paragraphs": ["The Administration requested $504 million for programs intended to enhance mobile Army defense against aircraft, including unmanned aerial systems and cruise missiles. These include a Stryker combat vehicle equipped to launch Stinger missiles, designated Interim Maneuver Short-Range Air Defense systems (IM-SHORAD), and a larger, truck-mounted missile launcher, designated Indirect Fire Protection Capability (IFPC).", "The act authorizes $565 million for the programs, $61 million more than requested, driven by an increase to IFPC for \"interim cruise missile defense.\"", "The act includes a provision (Section 241) requiring the Secretary of the Army to submit a report to the Armed Services Committees on the service's efforts to improve the survivability of air defense artillery, including an analysis of new technology and additional units to defend Patriot and THAAD batteries."], "subsections": []}]}, {"section_title": "Shipbuilding Programs100", "paragraphs": ["In December 2016, the Navy adopted a new force goal of 355 ships\u00e2\u0080\u0094a total similar to the 350-ship fleet President Trump had called for during the 2016 election campaign. The 355-ship plan replaced a previous 308-ship plan the Navy had adopted in March 2015.", "The Navy's proposed FY2019 budget requested the procurement of 10 combat ships, including two Virginia-class attack submarines, three DDG-51 class destroyers, one Littoral Combat Ship (LCS), two TAO-205 class oilers, one Expeditionary Sea Base ship, and one towing, salvage, and rescue ship.", "The act authorizes $1.9 billion more than the request, including funding for the 10 combat ships requested, as well as two additional LCSs. The act authorizes procurement of a fourth Ford-class aircraft carrier (CVN-81). The act also authorizes procurement of additional noncombat ships, including a cable ship that was not requested and three more ship-to-shore connectors than the five that were requested. ", "See Table 9 for summary information on the FY2019 budget request and authorization actions for selected shipbuilding programs."], "subsections": [{"section_title": "Carrier 'Block Buy'", "paragraphs": ["The Administration's $1.6 billion request to fund a Ford-class aircraft carrier was intended as the fourth of eight annual increments to cover the estimated $12.6 billion cost of what will be the third ship of the Ford class. That ship, designated CVN-80 and named Enterprise , is slated for delivery to the Navy at the end of FY2027.", "While the act does not authorize appropriations for a fourth Ford-class aircraft carrier (CVN-81), the law allows for the procurement to occur in conjunction with CVN-80. Proponents of such an arrangement, known as block buy contracting, contend that it could accelerate the delivery of the fourth ship and reduce the overall cost of the two vessels.", "The act includes a provision (Section 121) stating that before the funds could be used for a block buy, the Secretary of Defense would have to certify to the congressional defense committees an analysis demonstrating that the approach would \"result in significant savings compared to the total anticipated costs of carrying out the program through annual contracts.\""], "subsections": []}, {"section_title": "Littoral Combat Ships105", "paragraphs": ["In addition to the Administration's request of $646 million to procure a Littoral Combat Ship, the act authorizes $950 million to procure two more LCSs, which conferees described as a \"program increase\u00e2\u0080\u0094two ships.\" The increase more than offset a decrease of $37.7 million in procurement funding for the program to \"align plans and other costs with end of production.\""], "subsections": []}, {"section_title": "Amphibious Landing Ships", "paragraphs": ["The act authorizes an additional $500 million for an LPD-17-class amphibious landing transport or a variant of that ship designated LX(R) and an additional $182.5 million for three more air-cushion landing craft in addition to the five requested to haul tanks and other equipment ashore from transport ships."], "subsections": []}, {"section_title": "2017 Destroyer Collisions", "paragraphs": ["The act includes provisions intended to address factors perceived to have contributed to the two separate collisions in 2017 involving Pacific Fleet destroyers that resulted in the deaths of 17 U.S. sailors. A provision (Section 322) requires that Navy ships be subject to inspections with \"minimal notice\" to the crew and annual reports on \"the material readiness of Navy ships as compared to established material requirements standards,\" among other topics. Another provision (Section 323) limited to 10 years the time that aircraft carriers, amphibious ships, cruisers, destroyers, frigates, and littoral combat ships can be based outside the United States. Another provision (Section 526) stated the Secretary of the Navy is to require key watch standers\u00e2\u0080\u0094that is, a person standing watch on a ship, such as an officer of the deck, engineering officer of the watch, conning officer or piloting officer\u00e2\u0080\u0094to \"maintain a career record of watchstanding hours and specific operational evolutions.\""], "subsections": []}]}, {"section_title": "Aviation Systems106", "paragraphs": ["The act, for the most part, authorizes funding for the Administration's request for military aircraft acquisition.", "The act authorizes additional funding for 15 more aircraft than requested, including six AH-64 Apache attack helicopters, five UH-60 Black Hawk utility helicopters, two MQ-9 Reaper reconnaissance and attack unmanned aerial vehicles (UAVs), one RQ-4 Global Hawk long-range reconnaissance UAV, and one E-2 Hawkeye airborne surveillance aircraft. The act authorizes less funding than requested for other programs, including the MQ-25 Stingray carrier-based refueling and reconnaissance UAV and the KC-46 refueling tanker aircraft.", "See Table 10 for information on the FY2019 budget request and authorizations for selected aircraft programs."], "subsections": [{"section_title": "Fighter and Attack Aircraft", "paragraphs": ["The budget request included $8.8 billion for the procurement of 77 F-35 Lightning II aircraft as part of the Joint Strike Fighter (JSF) program. The quantity includes 48 Air Force F-35As, equipped for conventional runway operations, 20 Marine Corps F-35Bs, equipped for short takeoff and vertical landing (STOVL) operations; and nine Navy F-35Cs, equipped for aircraft carrier operations. ", "The House version of the bill generally would have supported the Administration's request, while the Senate amendment would have cut funding associated with two aircraft\u00e2\u0080\u0094one F-35A and one F-35C\u00e2\u0080\u0094due to \"program realignment.\" While the act authorizes $133 million (1%) less procurement funding than requested, it authorizes the requested quantity of F-35 aircraft.", "The act includes a provision (Section 1282) limiting the delivery of any F-35s to Turkey (which plans to buy 100 of the aircraft) until the Secretary of Defense submits a report to congressional committees on the Turkish government's plan to purchase the S-400 air and missile defense system from Russia. The report was to include \"an assessment of impacts on other United States weapon systems and platforms operated jointly with the Republic of Turkey,\" including the F-35, Patriot surface-to-air missile system, CH-47 Chinook heavy-lift helicopter, AH-64 Apache helicopter, UH-60 Black Hawk helicopter, and F-16 Fighting Falcon fighter jet. ", "To compensate for the slower-than-planned fielding of the F-35 aircraft, the budget request included funds to mitigate a shortfall in the Navy's fleet of strike fighters by buying new F/A-18s and upgrading planes of that type already in service. The House version of the bill and the Senate amendment would have supported the request. The act generally supports the request, authorizing $56 million (3%) less than the $2 billion requested for 24 F/A-18s and $18 million (1%) more than the $1.5 billion requested to modify existing versions of the aircraft.", "Section 127 of the act requires the Secretary of the Navy to work to modify the F/A-18 aircraft \"to reduce the occurrence of, and mitigate the risk posed by, physiological episodes affecting crewmembers of aircraft,\" by replacing the cockpit altimeter, upgrading the onboard oxygen system generation system, redesigning aircraft life support systems, and installing equipment associated with improved physiological monitoring and alert systems.", "The act authorizes $300 million in procurement funding not included in the President's request to begin buying an unspecified number of new OA-X light attack aircraft. Section 246 of the act requires the Secretary of the Air Force to submit to the congressional defense committees a report on the service's OA-X \"experiment\" and how the program incorporates partner nation requirements.", "The act authorizes $201 million for modifications to the A-10 Thunderbolt II ground-attack aircraft known as the Warthog, including $65 million more than the President's request for additional wing replacements. "], "subsections": []}, {"section_title": "Tanker Aircraft", "paragraphs": ["The Administration requested $2.6 billion to procure 15 KC-46A Pegasus aircraft as part of low-rate initial production (LRIP). The KC-46A Pegasus is an aerial refueling tanker intended to replace approximately one-third of the existing Cold War-era KC-135 Stratotanker fleet. The House version of the bill would have cut the procurement quantity to 12 planes and the Senate amendment to 14 planes. While the act authorizes $213 million (8%) less than requested in procurement funding for the program, it authorizes the requested quantity of aircraft. Section 146 of the act limits the use of the funding to procure some of the aircraft until the Secretary of the Air Force certifies to the congressional defense committees the plane's refueling and mission avionics systems meet FAA and Air Force requirements."], "subsections": []}, {"section_title": "Combat Support and Surveillance Aircraft", "paragraphs": ["The act authorizes $1.1 billion to procure five E-2D Advanced Hawkeye early-warning aircraft, $152 million and one aircraft more than the Administration's request. The report accompanying the Senate Armed Services Committee's version of the bill noted \"the vital contributions of the E-2D Advanced Hawkeye to present and future carrier air wing operations\" and recommended the increase, which was included on the Chief of Naval Operations' unfunded priorities list.", "The President's budget request included an Air Force plan to develop a network of sensors called Advanced Battle Management System (ABMS) rather than move forward, as planned, with recapitalizing the E-8C Joint Surveillance Target Attack Radar System (JSTARS) aircraft, which provides airborne battle management, command and control, intelligence, surveillance, and reconnaissance. The House version of the bill would have authorized $623 million not included in the request to fund the E-8C recapitalization. The act authorizes $30 million to \"continue JSTARS recap [ground moving target indicator] radar development.\" The act also includes a provision (Section 147) limiting funds to retire any JSTARS aircraft until the Secretary of Defense certifies to the congressional defense committees that ABMS is ready for operations.", "The act authorizes $820 million to procure 31 MQ-9 Reapers, a reconnaissance and ground-attack unmanned aerial vehicle (UAV), $46 million and two aircraft more than the Administration's request, to accelerate development of ABMS.", "The act authorizes $780 million to procure four MQ-4 Global Hawks, a long-range reconnaissance UAV, $81 million and one aircraft more than the Administration's request. The report accompanying the House Armed Services Committee's version of the bill recommends an increase in funding to procure an additional EQ-4 variant equipped with the Battlefield Airborne Communications Node (BACN) to improve tactical communications.", "The act authorizes $567 million to continue research and development of the MQ-25 Stingray, a carrier-based aerial refueling and reconnaissance UAV, $117 million less than the Administration's request due to what conferees described as \"Insufficient Air Vehicle budget justification.\" Section 219 of the act instructs the Secretary of the Navy to work to modify the aircraft carrier USS George Washington (CVN-73) to support the fielding of the MQ-25."], "subsections": []}, {"section_title": "Helicopters", "paragraphs": ["The act authorizes $1.5 billion to procure 66 AH-64 Apache attack helicopters (including new and remanufactured models), $168 million and six helicopters more than the request \"to address [Army National Guard] shortfalls.\"", "Similarly, the act authorizes $1.3 billion to procure 73 UH-60 Black Hawk utility helicopters (including new models and upgrades), $85 million and five helicopters more than the request for \"additional UH-60Ms for [Army National Guard].\""], "subsections": [{"section_title": "Appendix.", "paragraphs": ["Following are the full citations of CRS products identified in tables by reference number only.", "CRS Reports", "CRS Report R41129, Navy Columbia (SSBN-826) Class Ballistic Missile Submarine Program: Background and Issues for Congress , by Ronald O'Rourke.", "CRS Report R44463, Air Force B-21 Raider Long-Range Strike Bomber , by Jeremiah Gertler. ", "CRS Report R43049, U.S. Air Force Bomber Sustainment and Modernization: Background and Issues for Congress , by Jeremiah Gertler. ", "CRS Report R41464, Conventional Prompt Global Strike and Long-Range Ballistic Missiles: Background and Issues , by Amy F. Woolf. ", "CRS Report RL33745, Navy Aegis Ballistic Missile Defense (BMD) Program: Background and Issues for Congress , by Ronald O'Rourke. ", "CRS Report R44498, National Security Space Launch at a Crossroads , by Steven A. Hildreth. ", "CRS Report R43240, The Army's Armored Multi-Purpose Vehicle (AMPV): Background and Issues for Congress , by Andrew Feickert. ", "CRS Report R42723, Marine Corps Amphibious Combat Vehicle (ACV): Background and Issues for Congress , by Andrew Feickert. ", "CRS Report R44968, Infantry Brigade Combat Team (IBCT) Mobility, Reconnaissance, and Firepower Programs , by Andrew Feickert. ", "CRS Report RS20643, Navy Ford (CVN-78) Class Aircraft Carrier Program: Background and Issues for Congress , by Ronald O'Rourke. ", "CRS Report RL32418, Navy Virginia (SSN-774) Class Attack Submarine Procurement: Background and Issues for Congress , by Ronald O'Rourke. ", "CRS Report RL32109, Navy DDG-51 and DDG-1000 Destroyer Programs: Background and Issues for Congress , by Ronald O'Rourke. ", "CRS Report RL33741, Navy Littoral Combat Ship (LCS) Program: Background and Issues for Congress , by Ronald O'Rourke. ", "CRS Report R44972, Navy Frigate (FFG[X]) Program: Background and Issues for Congress , by Ronald O'Rourke. ", "CRS Report RL30563, F-35 Joint Strike Fighter (JSF) Program , by Jeremiah Gertler. ", "CRS Report RL34398, Air Force KC-46A Tanker Aircraft Program , by Jeremiah Gertler. ", "CRS Report RS22103, VH-71/VXX Presidential Helicopter Program: Background and Issues for Congress , by Jeremiah Gertler. ", "CRS Report R43618, C-130 Hercules: Background, Sustainment, Modernization, Issues for Congress , by Jeremiah Gertler and Timrek Heisler. ", "CRS Report RL31384, V-22 Osprey Tilt-Rotor Aircraft Program , by Jeremiah Gertler.", "Insights, In Focus", "CRS Insight IN10931, U.S. Army's Initial Maneuver, Short-Range Air Defense (IM-SHORAD) System , by Andrew Feickert. ", "CRS In Focus IF10954, Air Force OA-X Light Attack Aircraft Program , by Jeremiah Gertler."], "subsections": []}]}]}]}]}}
{"id": "R45793", "title": "PFAS and Drinking Water: Selected EPA and Congressional Actions", "released_date": "2020-01-23T00:00:00", "summary": ["Per- and polyfluoroalkyl substances (PFAS) are fluorinated chemicals that have been used in an array of commercial, industrial, and U.S. military applications for decades. Some of the more common applications include nonstick coatings, food wrappers, waterproof materials, and fire suppressants. Detections of some PFAS in drinking water supplies and uncertainty about potential health effects associated with exposure to particular PFAS above certain concentrations have increased calls for the U.S. Environmental Protection Agency (EPA) to address these substances in public water supplies. For those few PFAS for which scientific information is available, animal studies suggest that exposure to particular substances above certain levels may be linked to various health effects, including developmental effects; changes in liver, immune, and thyroid function; and increased risk of some cancers. In 2009, EPA listed certain PFAS for formal evaluation under the Safe Drinking Water Act (SDWA) to determine whether regulations may be warranted. EPA has not issued drinking water regulations for any PFAS but has taken various actions to address PFAS contamination.", "In the 116 th Congress, Members have introduced more than 40 bills to address PFAS through various means. The National Defense Authorization Act (NDAA) for FY2020, P.L. 116-92 , includes multiple PFAS provisions regarding primarily the Department of Defense (DOD), but several involve EPA and other federal agencies. Among the EPA provisions, Title LXXIII, Subtitle A, directs EPA to require public water systems to conduct additional monitoring for PFAS and creates a grant program for public water systems to address PFAS and other emerging contaminants. The House of Representatives passed H.R. 535 , a broad PFAS bill, on January 10, 2020. Among SDWA provisions, H.R. 535 would direct EPA to issue drinking water regulations for at least two PFAS within two years and establish a separate standard-setting process for PFAS.", "In February 2019, EPA released its PFAS Action Plan, which discusses the agency's current and proposed actions to address these substances under its various statutory authorities. Regarding SDWA, the plan notes that EPA is following the statutory process for evaluating PFAS\u00e2\u0080\u0094particularly perfluorooctanoic acid (PFOA) and perfluorooctane sulfonate (PFOS)\u00e2\u0080\u0094to determine whether national primary drinking water regulations are warranted. The Fall 2019 Regulatory Agenda indicated that EPA planned to propose preliminary regulatory determinations for PFOA and PFOS by the end of 2019 and finalize determinations by January 2021.", "The absence of a national health-based drinking water standard for any PFAS has increased interest in the SDWA process for regulating contaminants. The statute prescribes a risk- and science-based process for evaluating and regulating contaminants in drinking water. The evaluation process includes identifying contaminants of potential concern, assessing health risks, collecting occurrence data (and developing reliable analytical methods necessary to do so), and making determinations as to whether a national drinking water regulation is warranted for a contaminant.", "PFAS include thousands of diverse chemicals, and setting drinking water standards for individual or groups of PFAS raises technical and scientific challenges. For example, SDWA requires EPA to make determinations and set standards using the best available peer-reviewed science and occurrence data. However, data on the potential health effects and occurrence are available for few of these substances. Further, EPA may face challenges in developing test methods and identifying treatment technologies for a diverse array of PFAS. Contamination of drinking water by PFAS can pose challenges for states and communities, and some have called for EPA to establish enforceable standards. State drinking water regulators have noted that many states may face significant obstacles in setting their own standards.", "For contaminants not regulated under SDWA, EPA is authorized to issue non-enforceable health advisories, which provide information on health effects, testing methods, and treatment techniques for contaminants of concern. In 2016, EPA established health advisory levels for PFOA and PFOS in drinking water at 70 parts per trillion (separately or combined).", "SDWA also authorizes EPA to take actions it deems necessary to abate an imminent and substantial endangerment to public health from a contaminant present in or likely to enter a public water system or an underground source of drinking water. Actions may include issuing orders requiring persons who caused or contributed to the endangerment to provide alternative water supplies or to treat contamination. Since 2002, EPA has used this authority to require responses to PFOA and/or PFOS contamination of water supplies associated with four sites, including three DOD sites."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["The detection of certain per- and polyfluoroalkyl substances (PFAS) in some public water supplies has generated public concern and increased congressional attention to the U.S. Environmental Protection Agency's (EPA) efforts to address these substances. Over the past decade, EPA has been evaluating several PFAS under the Safe Drinking Water Act (SDWA) to determine whether national drinking water regulations may be warranted. EPA has not issued SDWA regulations for any PFAS but has taken various actions to address PFAS contamination. Using SDWA authorities, in 2016, EPA issued non-enforceable health advisories for two PFAS\u00e2\u0080\u0094perfluorooctanoic acid (PFOA) and perfluorooctane sulfonate (PFOS)\u00e2\u0080\u0094in drinking water.", "The 116 th Congress has held hearings on PFAS and passed legislation to address PFAS contamination issues through various authorities and departments and agencies. The National Defense Authorization Act (NDAA) for Fiscal Year 2020 ( P.L. 116-92 ) includes several PFAS provisions involving the Department of Defense (DOD) and other federal agencies. Of the EPA provisions related to drinking water, Title LXXIII, Subtitle A, directs EPA to require public water systems to conduct additional monitoring for PFAS and establishes a grant program for public water systems to address PFAS and other emerging contaminants. On January 10, 2020, the House passed H.R. 535 , a broad PFAS bill that would direct EPA and other federal agencies to take numerous actions to address PFAS. Among its provisions, H.R. 535 would amend SDWA to direct EPA to regulate PFAS in drinking water and would authorize grants for communities for treatment technologies. Other bills would variously direct EPA to take regulatory and other actions under several environmental statutes, including SDWA. Similar to H.R. 535 , multiple SDWA bills would require EPA to establish final or interim drinking water regulations for some or all PFAS, require monitoring for more of these substances, or authorize grants to assist communities in treating PFAS in drinking water. (See Table 1 .)", "PFAS are a large, diverse group of fluorinated compounds, some of which have been used for decades in a wide array of commercial, industrial, and U.S. military applications. Since the 1940s, more than 1,200 PFAS compounds have been used in commerce, and about 600 are still in use today. The chemical characteristics of PFAS have led to the widespread use of these substances for beneficial purposes (such as firefighting) and in the processing and manufacture of many commercial products, such as nonstick cookware, food wrapper coatings, stain-resistant carpets, waterproof clothing, and food containers. ", "The two PFAS most frequently detected in water supplies are PFOA and PFOS. Since 2002, U.S. manufacturers have phased out the production and most uses of PFOS. In coordination with EPA, manufacturers completed the phase-out of PFOA production by 2015. EPA reports that food and consumer products represent a large portion of exposure to PFOA and PFOS, while drinking water can be an additional source in the small percentage of communities with contaminated water supplies. ", "Among the thousands of different PFAS, few have sufficient health effects studies for determining a threshold at which adverse effects are not expected to occur. Most studies of potential health effects of PFAS have focused on PFOA and PFOS because of their predominant historical use. For those PFAS for which scientific information is available, animal studies suggest that exposure to particular substances above certain levels may be linked to various health effects, including developmental effects; changes in liver, immune, and thyroid function; and increased risk of some cancers. A discussion of these studies and their results is beyond the scope of this report.", "In 2016, EPA reported that public water systems in 29 states had detected at least one PFAS in their water supplies. In total, 63 public water systems serving approximately 5.5 million people reported detections of PFOA and PFOS (separately or combined) above EPA's health advisory level of 70 parts per trillion (ppt). EPA has reported that PFAS contamination of drinking water \"is typically localized and associated with a specific facility.\" According to the Agency for Toxic Substances and Disease Registry, PFAS may have been released to surface or ground water from manufacturing sites, industrial use, use and disposal of PFAS-containing consumer products (e.g., unlined landfills), fire/crash training areas, wastewater treatment facilities, and the spreading of contaminated biosolids. A discussion of PFAS use, including at U.S. military installations, and PFAS disposal is not included in this report. ", "Uncertainty about potential health effects that may be associated with exposure to specific PFAS above particular concentrations\u00e2\u0080\u0094combined with the absence of a federal health-based drinking water standard\u00e2\u0080\u0094has posed challenges and created uncertainty for states, water suppliers and their customers, homeowners using private wells, and others regarding treatment or other potential responses. State drinking water regulators and others have called for greater federal leadership to address these substances through several federal laws and, specifically, have urged EPA to set federal drinking water standards for one or more PFAS under SDWA. Representatives of public water systems have supported EPA's commitment to follow the statutory process for regulating contaminants in drinking water, which prioritizes regulating those that occur at levels and frequency of public health concern.", "SDWA provides EPA with several authorities to address emerging contaminants in public water supplies and drinking water sources. These include the authority to (1) issue health advisories, (2) regulate contaminants in water provided by public water systems, and (3) issue enforcement orders in certain circumstances. For more than a decade, EPA has been using SDWA authorities to evaluate several PFAS\u00e2\u0080\u0094particularly PFOA and PFOS\u00e2\u0080\u0094to determine whether national drinking water regulations may be warranted. To date, EPA has not promulgated drinking water regulations for any PFAS but has taken a number of related actions. ", "In February 2019, EPA issued a PFAS Action Plan, which identifies and discusses the agency's current and proposed efforts to address PFAS through several statutory authorities, including SDWA. These actions range from potential regulatory actions to public outreach on PFAS. Many of these actions support EPA's evaluation of PFAS for potential regulation under SDWA. These include research and development of analytical methods needed to accurately measure substances in drinking water, development of additional toxicity information to increase understanding of potential health risks associated with exposures to different PFAS, and research on drinking water treatment effectiveness and costs for various PFAS. EPA also plans to generate occurrence data for more PFAS to determine their frequencies and concentrations in public water supplies. Further, EPA is working with federal, state, and tribal partners to develop risk communication materials on PFAS and plans to develop an interactive map on potential PFAS sources and occurrence. Table A-1 includes EPA's selected actions and associated timelines relevant to addressing PFAS in drinking water. ", "The challenges of regulating individual substances or categories of PFAS in drinking water are multifaceted and may raise several policy and scientific questions. Technical issues involve availability of data, detection methods, and treatment techniques for related but diverse contaminants. Scientific questions exist about health effects attributed to many individual PFAS and whether health effects can be generalized from one or a category of PFAS to others. Policy and regulatory considerations may involve setting priorities among numerous unregulated contaminants, the value of establishing uniform national drinking water standards, and the ability to demonstrate the relative risk-reduction benefits compared to compliance costs to communities associated with regulating individual or multiple PFAS. The absence of a federal health-based standard can pose challenges for states and communities with PFAS contamination. State drinking water regulators have noted that many states may face significant obstacles in setting their own standards.", "This report provides an overview of EPA's ongoing and proposed actions to address PFAS under SDWA authorities, with particular focus on the statutory process for evaluating PFAS\u00e2\u0080\u0094particularly PFOA and PFOS\u00e2\u0080\u0094for potential regulation. It also reviews PFAS-related legislation introduced in the 116 th Congress, with emphasis on bills that would amend SDWA. This report does not address the status of scientific research on health effects that may be associated with exposure to one or more PFAS, nor does it discuss federal actions regarding other environmental statutes, such as the Toxic Substances Control Act (TSCA) and the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). "], "subsections": []}, {"section_title": "Addressing PFAS Using SDWA Authorities", "paragraphs": ["SDWA provides EPA with several authorities to address emerging contaminants in drinking water supplies and sources. The act authorizes EPA to promulgate regulations that include enforceable standards and monitoring requirements for contaminants in water provided by public water systems. For contaminants that are not regulated under the act, SDWA authorizes EPA to issue contaminant-specific health advisories that include technical guidance and identify concentrations that are expected to be protective of sensitive populations. In addition, if the appropriate state and local authorities have not acted to protect public health, SDWA authorizes EPA to take actions to abate an imminent and substantial endangerment to public health from \"a contaminant that is present in or is likely to enter a public water system or an underground source of drinking water.\" "], "subsections": [{"section_title": "Evaluating Emerging Contaminants for Regulation", "paragraphs": ["SDWA specifies a multistep process for evaluating contaminants to determine whether a national primary drinking water regulation is warranted. The evaluation process includes identifying contaminants of potential concern, assessing health risks, collecting occurrence data (and developing reliable analytical methods necessary to do so), and making determinations as to whether or not regulatory action is needed for a contaminant. ", "To make a positive determination that a national drinking water regulation is warranted for a contaminant, EPA must find that ", "a contaminant may have an adverse health effect; it is known to occur or there is a substantial likelihood that it will occur in public water systems with a frequency and at levels of public health concern; and in the sole judgment of the EPA Administrator, regulation of the contaminant presents a meaningful opportunity for health risk reduction for persons served by water systems. "], "subsections": [{"section_title": "Identifying Contaminants That May Warrant Regulation", "paragraphs": ["SDWA Section 1412(b) requires EPA to publish, every five years, a list of contaminants that are known or anticipated to occur in public water systems and may require regulation under the act. Before publishing a final contaminant candidate list (CCL), EPA is required to provide an opportunity for public comment and consult with the scientific community, including the Science Advisory Board. ", "In 2009, EPA placed PFOA and PFOS on the third such list (CCL 3) for evaluation. In preparing the CCL 3, EPA considered over 7,500 chemical and microbial contaminants and screened these contaminants based on their potential to occur in public water systems and potential health effects. EPA selected 116 of the contaminants on the proposed CCL based on more detailed evaluation of occurrence, health effects, expert judgement, and public input. ", "In 2016, EPA published the fourth list, CCL 4, which carried over many CCL 3 contaminants, including PFOA and PFOS. EPA carried forward these contaminants to continue evaluating health effects, gathering national occurrence data, and developing analytical methods. "], "subsections": []}, {"section_title": "Monitoring for Emerging Contaminants in Public Water Systems", "paragraphs": ["To generate data on the nationwide occurrence of emerging contaminants in public water supplies, EPA is required to administer a monitoring program for unregulated contaminants. SDWA directs EPA to promulgate, every five years, an unregulated contaminant monitoring rule (UCMR) that requires public water systems to test for no more than 30 contaminants. Only a representative sample of systems serving 10,000 or fewer people is required to conduct monitoring. EPA uses data collected through UCMRs to estimate whether the occurrence of the contaminant in public water supplies is local, regional, or national in scope. ", "UCMRs set a minimum reporting level (MRL) for each contaminant. MRLs are not health based; rather, they establish concentrations for reporting and data collection purposes. EPA makes the UCMR monitoring results available to the public and reports the number of detections above the MRL and also detections above EPA's health-based reference levels (discussed below), where available. The act includes an authorization of appropriations to cover monitoring and related costs for small systems (serving 10,000 persons or fewer). However, large systems pay UCMR monitoring and laboratory costs.", "In 2012, EPA issued the third UCMR (UCMR 3), under which 4,864 public water systems tested their drinking water for six PFAS\u00e2\u0080\u0094including PFOA and PFOS\u00e2\u0080\u0094between January 2013 and December 2015. Among these systems, EPA reported the following monitoring results for PFOA and PFOS: ", "117 of the public water systems reported detections of PFOA at levels above the MRL of 20 ppt, and 95 reported detections of PFOS at concentrations above the MRL of 40 ppt.", "Overall, 63 of the 4,864 (1.3%) water systems that conducted PFAS monitoring reported at least one sample with PFOA and/or PFOS (separately or combined) concentrations exceeding EPA's health advisory level of 70 ppt for PFOA and PFOS. Actual exposures among individuals served by these systems would be expected to vary depending on water use and consumption. EPA estimates that these 63 water systems serve approximately 5.5 million individuals. Of the 63 systems:", "9 reported detections of both PFOS and PFOA above 70 ppt; 4 reported detections of PFOA above 70 ppt; 37 reported detections of PFOS above 70 ppt; and 13 reported detections of PFOA and PFOS (combined but not separately) above 70 ppt. ", "Systems with PFOA or PFOS detections above 70 ppt were located in 21 states, the Pima-Maricopa Indian community, and 2 U.S. territories. ", "EPA's PFAS Action Plan notes that the agency intends to propose monitoring requirements for other PFAS when it proposes the next UCMR (UCMR 5) in 2020. As of January 2020, EPA has developed an analytical method to detect 29 PFAS in drinking water supplies. The plan states that the agency would use the monitoring data gathered through UCMR 5 to evaluate the national occurrence of additional PFAS. The agency is currently working to develop analytical methods to support monitoring for additional PFAS."], "subsections": []}, {"section_title": "Regulatory Determinations", "paragraphs": ["SDWA requires EPA, every five years, to make a regulatory determination\u00e2\u0080\u0094a determination of whether or not to promulgate a national primary drinking water regulation\u00e2\u0080\u0094for at least five contaminants on the CCL. To consider a contaminant for a regulatory determination (RD), EPA requires, at a minimum, a peer-reviewed risk assessment and nationally representative occurrence data. In selecting contaminants for an RD, SDWA requires EPA to give priority to those that present the greatest public health concern while considering a contaminant's health effects on specified subgroups of the population (e.g., infants, children, pregnant women) who may be at greater risk of adverse health effects due to exposure to a contaminant.", "As noted above, to make a positive determination to regulate a contaminant, EPA must find that (1) a contaminant may have an adverse health effect; (2) it is known to occur or there is a substantial likelihood that it will occur in public water systems with a frequency and at levels of public health concern; and (3) in the sole judgment of the EPA Administrator, regulation of the contaminant presents a meaningful opportunity for health risk reduction for persons served by water systems. SDWA directs EPA to publish a preliminary determination and seek public comment prior to making an RD. EPA may also make RDs for contaminants not listed on the CCL if EPA finds that the statutory criteria regarding health effects and occurrence are satisfied.", "EPA has issued RDs for CCL 1 through CCL 3. EPA published final determinations that no regulatory action was appropriate or necessary for nine contaminants on CCL 1 (2003) and 11 contaminants (including perchlorate) on CCL 2 (2008). In the most recent RD (2016), EPA determined that regulation was not needed for four of the 116 contaminants listed on CCL 3. EPA delayed a determination on a fifth contaminant, strontium, \"in order to consider additional data and decide whether there is a meaningful opportunity for health risk reduction by regulating strontium in drinking water.\" ", "In 2014, when EPA published preliminary RDs for contaminants on CCL 3 (including PFOA and PFOS), UCMR 3 monitoring was underway and national occurrence data were not available. EPA did not include any PFAS among the contaminants selected for the third RD. In November 2016, EPA included PFOA and PFOS on the agency's list of unregulated contaminants for which sufficient health effect and occurrence data were available to make RDs. ", "The next round of RDs is scheduled for 2021, although SDWA does not prevent EPA from making determinations outside of that five-year cycle. In the Fall 2019 Unified Regulatory Agenda , EPA expected to propose preliminary determinations for two PFAS\u00e2\u0080\u0094PFOA and PFOS\u00e2\u0080\u0094by the end of 2019, followed by final determinations by January 2021."], "subsections": []}, {"section_title": "Developing Regulations and Standards for Emerging Contaminants", "paragraphs": ["Once the Administrator makes a determination to regulate a contaminant, SDWA allows EPA 24 months to propose a \"national primary drinking water regulation\" and request public comment. EPA is required to promulgate a final rule within 18 months after the proposal. SDWA authorizes EPA to extend the deadline to publish a final rule for up to nine months, by notice in the Federal Register . ", "For each contaminant that EPA determines to regulate, EPA is required to establish a non-enforceable maximum contaminant level goal (MCLG) at a level at which no known or anticipated adverse health effects occur and which allows an adequate margin of safety. An MCLG is based solely on health effects data and does not reflect cost or technical feasibility considerations. EPA derives an MCLG based on an estimate of the amount of a contaminant that a person can be exposed to on a daily basis that is not anticipated to cause adverse health effects over a lifetime. This amount is derived using the best available peer-reviewed studies and incorporates uncertainty factors to provide a margin of protection for sensitive subpopulations. In developing an MCLG, EPA also estimates the general population's exposure to a contaminant from drinking water and other sources (e.g., food, dust, soil, and air). After considering other exposure routes, EPA estimates the proportion of exposure attributable to drinking water (i.e., the relative source contribution). When exposure information is not available, EPA uses a default assumption that 20% of exposure to a contaminant is attributable to drinking water. EPA applies the relative source contribution to ensure that an individual's total exposure from all sources remains within the estimated protective level.", "The MCLG provides the basis for calculating a drinking water standard. Thus, EPA's ability to develop a drinking water regulation for a contaminant is dependent, in part, on the availability of peer-reviewed scientific studies.", "Drinking water regulations generally specify a maximum contaminant level (MCL)\u00e2\u0080\u0094an enforceable limit for a contaminant in public water supplies. SDWA requires EPA to set the MCL as close to the MCLG as feasible. When assessing feasibility, the law directs EPA to consider the best available (and field-demonstrated) treatment technologies, taking cost into consideration. If the treatment of a contaminant is not feasible\u00e2\u0080\u0094technologically or economically\u00e2\u0080\u0094EPA may establish a treatment technique in lieu of an MCL. Each regulation also establishes associated monitoring, treatment, and reporting requirements. These regulations can cover multiple contaminants and, generally, establish an MCL for each contaminant covered by the regulation.", "Regulations generally take effect three years after promulgation. EPA may allow up to two additional years if the Administrator determines that more time is needed for public water systems to make capital improvements. (States have the same authority for individual water systems. ) The law directs EPA to review\u00e2\u0080\u0094and if necessary revise\u00e2\u0080\u0094each regulation every six years and requires that any revision maintain or provide greater health protection."], "subsections": []}]}, {"section_title": "Health Advisories", "paragraphs": ["For emerging contaminants of concern, data may be limited, particularly regarding a contaminant's potential health effects and occurrence in public water supplies. SDWA authorizes EPA to issue health advisories for contaminants in drinking water that are not regulated under the act. These advisories provide information on a contaminant's health effects, chemical properties, occurrence, and exposure. They also provide technical guidance on identifying, measuring, and treating contaminants. ", "Health advisories include non-enforceable levels for concentrations of contaminants in drinking water. EPA sets health advisories at levels that are expected to protect the most sensitive subpopulations (e.g., nursing infants) from any deleterious health effects, with a margin of protection, over specific exposure durations (e.g., one-day, 10-day, or lifetime). These non-regulatory levels are intended to help states, water suppliers, and others address contaminants for which federal (or state) drinking water standards have not been established. Some states may use health advisories to inform their own state-specific drinking water regulations. ", "Health advisories may be used to address various circumstances: to provide interim guidance while EPA evaluates a contaminant for possible regulation, to provide information for contaminants with limited or localized occurrence that may not warrant regulation, and to address short-term incidents or spills. EPA has issued health advisories for more than 200 contaminants to address different circumstances and subsequently established regulations for many of these contaminants.", "In May 2016, EPA issued health advisory levels for lifetime exposure to PFOA and PFOS in drinking water. EPA established the Lifetime Health Advisory level for PFOA and PFOS at 70 ppt, separately or combined. In calculating the health advisory level, EPA applied a relative source contribution of 20% (i.e., an assumption that 20% of PFOS and/or PFOA exposure is attributable to drinking water and 80% is from diet, dust, air or other sources). These levels are intended to protect the most sensitive subpopulations (e.g., nursing infants), with a margin of safety, over a lifetime of daily exposure. The Lifetime Health Advisories replaced Provisional Health Advisories that EPA issued in 2009 to address short-term exposures to PFOA and PFOS."], "subsections": []}, {"section_title": "Emergency Powers Orders", "paragraphs": ["SDWA Section 1431 grants EPA \"emergency powers\" to issue orders to abate an imminent and substantial endangerment to public health from \"a contaminant that is present in or is likely to enter a public water system or an underground source of drinking water\" and if the appropriate state and local authorities have not acted to protect public health. This authority is available to address both regulated and unregulated contaminants. The EPA Administrator \"may take such actions as he may deem necessary\" to protect the health of persons who may be affected. Actions may include issuing orders requiring persons who caused or contributed to the endangerment to provide alternative water supplies or to treat contamination. When using this authority, EPA generally coordinates closely with states. ", "EPA reports that it has used its emergency powers under Section 1431 to require responses to PFOA and/or PFOS releases and related contamination of drinking water supplies at four sites, three of which involved the Department of Defense (DOD). ", "Warminster Naval Warfare Center, Pennsylvania. In 2014, EPA issued an administrative enforcement order directing the U.S. Navy to address PFOS in three drinking water supply wells at and near this National Priorities List site. Former Pease Air Force Base, New Hampshire. In August 2015, EPA issued an administrative enforcement order to require the U.S. Air Force to design and construct a system to treat water systems contaminated from releases of PFOA and PFOS at the former Pease Air Force Base in New Hampshire. Horsham Air Guard Station/Willow Grove, Pennsylvania . In 2015, EPA issued an order directing the Air Guard/Air Force to treat onsite drinking water wells and to provide treatment for private offsite wells. Chemours Washington Works Facility , West Virginia/Ohio. EPA issued three emergency orders to this facility in 2002, 2006, and 2009\u00e2\u0080\u0094and amended the 2009 order in 2017 to incorporate the 2016 Lifetime Health Advisory level\u00e2\u0080\u0094requiring DuPont and Chemours to offer water treatment, connection to a public water system, or bottled water where PFOA concentrations exceeded 70 ppt."], "subsections": []}]}, {"section_title": "Related Legislation in the 116th Congress", "paragraphs": ["In the 116 th Congress, more than 40 bills have been introduced to address PFAS through a broad range of actions and federal agencies. The NDAA for FY2020 (P.L 116-92) and House-passed H.R. 535 include provisions to reduce exposures to PFAS in drinking water and to prevent or remediate the contamination of groundwater, surface water, and drinking water supplies from releases of these substances. ", "This discussion focuses primarily on legislation that amends the Safe Drinking Water Act (SDWA) or otherwise affect public water systems. Table 1 briefly describes relevant provisions of such bills offered in the 116 th Congress. ", "In the context of SDWA, congressional attention has focused primarily on whether EPA might set drinking water standards (MCLs) for PFOA, PFOS, and/or other PFAS. SDWA directs EPA to follow a regulatory development process for contaminants, which includes consideration of technical feasibility and the assessment of health risk reduction benefits and costs, among other factors. On occasion, Congress has directed EPA to promulgate a regulation for a particular contaminant within a specified time frame. Congress has used this approach to prompt EPA to regulate certain contaminants already under review and/or to specify a deadline for issuing regulations under development. In the case of PFAS, representatives of public water systems and others have cautioned against bypassing SDWA's science-based and risk-driven process. As regulatory compliance costs are borne by communities, public water suppliers have urged that regulations be data-driven to better ensure risk reduction benefits. Others have urged \"federal leadership\" to provide more certainty to states and communities with contaminated water supplies. State drinking water regulators have noted that some states may lack the resources to assess and/or the authority to regulate drinking water contaminants that are not federally regulated, including PFAS. As with certain other contaminants, some states have urged EPA to set national standards. A further concern is that state-by-state actions could create public confusion regarding the safety of drinking water. "], "subsections": [{"section_title": "National Defense Authorization Act", "paragraphs": ["Enacted December 20, 2019, the NDAA for FY2020 ( P.L. 116-92 ) contain PFAS provisions specific to DOD, EPA, and several other federal agencies. Some NDAA provisions involve the use of aqueous film forming foam, while others address DOD remediation of PFAS-contaminated drinking water, groundwater, and surface water. Among the EPA provisions, the NDAA addresses drinking water as follows: ", "Section 7311 requires EPA to add to UCMR 5 all PFAS or categories of PFAS with validated test methods. Section 7312 amends SDWA to establish a grant program within the Drinking Water State Revolving Fund to assist water systems in addressing emerging contaminants with an emphasis on PFAS. Section 7312 authorizes appropriations of $100 million annually for FY2020-FY2024 for this purpose."], "subsections": []}, {"section_title": "House-Passed H.R. 535", "paragraphs": ["On January 10, 2020, the House passed H.R. 535 , a broad PFAS bill. H.R. 535 contains a range of provisions that would address PFAS using multiple authorities, including several EPA-administered laws. Regarding drinking water, the bill includes several specific provisions, some of which would amend SDWA:", "Section 5 would amend SDWA to require EPA, within two years of enactment, to promulgate a national primary drinking water regulation for PFAS with standards for PFOA and PFOS at a minimum. It would establish a separate regulatory process for PFAS to accelerate EPA's promulgation of drinking water standards. Among other provisions, this section would require EPA to propose a regulation for a PFAS within 18 months (rather than 24 months) of making a determination to regulate it. This section would allow EPA, when developing regulations, to rely on health risk information for one PFAS to make reasoned extrapolations regarding the health risks of other PFAS. It would also direct EPA to issue a health advisory within a year of finalizing a toxicity value for a single PFAS or class of PFAS. Section 6 would prohibit EPA (but not states) from imposing penalties for violations of PFAS drinking water regulations until five years after the date of promulgation (to allow systems time to make capital improvements as needed for compliance). Section 7 would add SDWA Section 1459E to direct EPA to establish a competitive grant program to assist community water systems with installing treatment technologies to address PFAS contamination. To support this program, Section 7 would authorize annual appropriations of $125 million for FY2020 and FY2021 and $100 million for FY2022-FY2024. EPA would be required to give funding priority to community water systems that (1) serve a \"disadvantaged community or a disproportionately exposed community,\" (2) provide at-least a 10% cost share, or (3) demonstrate the capacity to maintain the treatment technology.", "Other bills introduced in the 116 th Congress would variously require EPA to establish an MCL for specific PFAS or for PFAS as a group. These include S. 1507 (as reported), S. 1473 , and H.R. 2377 . Additionally, S. 1507 and H.R. 2800 would require public water systems to conduct monitoring for more PFAS in drinking water. Several bills\u00e2\u0080\u0094including S. 1507 , H.R. 2533 / H.R. 2741 (Title II), and H.R. 1417 / S. 611 \u00e2\u0080\u0094would authorize grants for public water systems and/or households to treat PFAS in drinking water. In contrast, H.R. 2570 would direct EPA to establish PFAS manufacturing fees to support the \"PFAS Treatment Trust Fund.\" Amounts in the trust fund would be available to EPA, without further appropriation, to make grants to community water systems and municipal wastewater treatment works for costs associated with PFAS removal."], "subsections": [{"section_title": "Appendix. Selected Drinking-Water-Related Actions by EPA", "paragraphs": [], "subsections": []}]}]}]}}
{"id": "R45780", "title": "Fiscal Policy Considerations for the Next Recession", "released_date": "2019-06-20T00:00:00", "summary": ["Although the United States is currently experiencing its longest economic expansion, history has shown that economic expansions inevitably give way to economic slowdowns. If the next slowdown is significant, the economy could enter a recession, which is typically characterized by falling output and rising unemployment. Short-term forecasts are predicting continued economic expansion, but predicting when the economy may transition from expansion to recession is notoriously difficult, as the ebb and flow of the economy is determined by many different factors, including a number that lie outside the country's borders.", "This report identifies and summarizes options Congress may consider in response to a possible recession. Recognizing that the economy has the potential to return to full employment without intervention, one policy option is simply to allow the economy to correct on its own with the support of certain \"automatic stabilizers\" already in place. Automatic stabilizers work without congressional action to lower taxes and increase spending as the economy weakens. Examples include the progressive structure of the income tax system and Unemployment Compensation (UC) benefits, among others. Congress also has a range of other options it could consider when designing a stimulus package should a recession occur and automatic stabilizers are not sufficient to counteract it.", "The options presented in this report are drawn from the Congressional Budget Office (CBO) and Moody's Analytics, both of which estimated the impact of specific policies or approaches in response to the Great Recession. While a general approach to stimulating a weakened economy with reduced taxes and increased spending is often advocated, specific policies have different impacts on the economy and differing administrative complexities. CBO's and Moody's estimates provide insight into which specific policy options may be most worthwhile to implement during the next downturn. The policy options presented\u00e2\u0080\u0094or variations of them\u00e2\u0080\u0094are ones commonly considered when designing a fiscal stimulus package and are not unique to either CBO or Moody's.", "The United States' recent budget deficits and the country's long-run budget outlook could influence the size of any stimulus package. Large and persistent budget deficits can hamper economic growth by lowering the rate of capital formation via reduced national saving, and can potentially offset short-term economic stimulus. At the same time, high levels of debt relative to gross domestic product can constrain a country's borrowing capacity. There are no signs that federal borrowing capacity will be exhausted in the short term. However, the consequences of exhausted fiscal space may be worth considering in designing the next stimulus package since it would increase both deficits and the debt."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["The United States is currently experiencing the longest economic expansion in its history. Although short-term forecasts are predicting continued economic expansion, some economists have expressed uncertainty over how long the expansion will continue. History has shown that economic expansions inevitably give way to economic slowdowns. If the next slowdown is significant, the economy could enter a recession, which is typically characterized by falling output and rising unemployment. Predicting when the economy may transition from expansion to recession, however, is notoriously difficult, as the ebb and flow of the economy is determined by many different factors, including a number that lie outside the country's borders.", "Countercyclical fiscal policy may help to stabilize the economy when it enters a recession. Countercyclical fiscal policy refers to short-term tax and spending adjustments to stimulate consumer and business demand in an effort to counteract economic contraction and return the economy to its potential. Effective fiscal stimulus does not always require contemporaneous legislative action by Congress. There are certain \"automatic stabilizers\" that work without congressional action to lower taxes and increase spending as the economy weakens. As a result, an economic slowdown or recession does not necessarily warrant a policy response. However, Congress has a range of options it could consider when designing a stimulus package should a recession occur and automatic stabilizers are not sufficient to counteract it.", "This report identifies and summarizes options Congress may consider in response to a recession. The analysis begins by reviewing the features effective countercyclical fiscal policies are commonly thought to have, and then distinguishes between countercyclical and growth-oriented policies. Next, the report summarizes and evaluates potential fiscal policy options that Congress could consider. The options presented are drawn from those policies considered during the Great Recession for which estimates of their potential economic impact exist. The report concludes with a brief discussion about enacting fiscal stimulus in the context of the country's long-run budget outlook."], "subsections": []}, {"section_title": "Effective Countercyclical Fiscal Policy", "paragraphs": ["Effective fiscal policy in response to recessions of average duration and severity is usually considered to have three general features: it is timely, targeted, and temporary. For fiscal policy to be effective in returning the economy to its potential, it must stimulate the economy at the appropriate time. Implemented too early, and there is a risk that fiscal tools are wasted and not available if the downturn becomes more severe. Implemented too late, and there is a risk that the downturn becomes so severe that much more fiscal (and monetary) stimulus is needed to stabilize the economy. Alternatively, the economy could have already returned to a path toward full potential on its own, in which case untimely stimulus risks overheating the economy. Timely implementation of fiscal policy is made inherently difficult by three well-known lags: the lag in recognizing a recession, the lag in negotiating and implementing a policy response, and the lag between policy implementation and when the economy is affected.", "A targeted fiscal stimulus will produce the most \"bang for the buck,\" or, in economics jargon, involve changes with the largest \"multipliers.\" Fiscal policy multipliers measure the change in economic output in response to a dollar change in taxes or a dollar change in spending. For example, a multiplier of 1.5 means that $1.00 of stimulus will lead to a $1.50 change in output. Conversely, a multiplier of 0.75 means that $1.00 of stimulus will lead to a $0.75 change in output. Larger multipliers suggest larger stimulative effects. Economists use multipliers to estimate the impact a particular fiscal policy, or collection of polices, will have on the economy. ", "On the revenue side, it appears that the largest multipliers are associated with tax reductions that are targeted at lower-income households and those with less access to liquid assets. These individuals are more likely, out of necessity, to increase their spending in response to a tax cut or rebate than those with higher incomes or more accessible forms of wealth. Business tax reductions also are estimated to stimulate demand, but most analyses find the multiplier effects to be smaller than those of well-targeted individual tax reductions. This finding is the result of research that indicates businesses are slow to respond to investment tax incentives, that business tax rate reductions primarily benefit existing capital rather than new investment, and that hiring incentives do not directly address the primary factor that influences the decision to bring on more employees, which is the demand for businesses' products and services.", "Direct spending increases usually register as highly stimulative on a per-dollar basis, although some spending increases are able to work their way more quickly into the economy than others. For example, spending on unemployment benefits and food stamp assistance increase automatically during a recession and are targeted at households most vulnerable during a downturn. As a result, their potential to stimulate demand are usually estimated to be quite large. Assistance to state and local governments to relieve budgetary pressures and maintain spending are estimated to be moderately cost effective. Spending on infrastructure, while believed to have a significant impact on the economy given enough time, can take many months to take effect due to the length of time it takes to plan and complete such projects. ", "Temporary stimulus can help to contain the budgetary impact of tax reductions and spending increases, which, in turn, can increase the effectiveness of the stimulus by mitigating the adverse effect large deficits can have on long-term growth. Although fiscal stimulus must result in a deficit to affect overall spending, deficits themselves are not necessarily problematic. Large and sustained deficits, however, can have undesirable effects. For example, as the economy starts to recover from a downturn, continued deficits can lead to higher interest rates as the government competes with the private sector for loanable funds. Higher interest rates can counteract the stimulus as the government's need to finance deficits \"crowds out\" private-sector investment and consumption. These higher interest rates can also attract borrowing from abroad, causing the dollar to appreciate and reducing net exports. Deficits can also harm longer-run economic growth since they reduce national saving, which is closely linked to the capital formation process that is critical for economic growth."], "subsections": []}, {"section_title": "Countercyclical Versus Growth-Oriented Policies", "paragraphs": ["Before discussing potential policy options for countering an economic downturn, it is useful to distinguish between countercyclical fiscal policies and growth-oriented policies. Some confusion arises because of the terminology used and the time frame in question. Economists view cyclical fluctuations, also known as the business cycle, as short-run phenomena that occur as the result of various external \"shocks\" that temporarily move the economy away from its long-run growth path. These transitory shocks often influence the economy via changes in total spending or, in economic terms, aggregate demand. During a recession, total spending generally falls below the economy's productive capacity, resulting in rising unemployment and falling capital utilization. In an expansion, total spending rises until it matches the economy's productive capacity, requiring firms to deploy previously idle resources. Countercyclical fiscal (and monetary) policies have the potential to affect aggregate demand (i.e., total spending) and decrease the severity of fluctuations in the economy that occur over the business cycle.", "In contrast to the business cycle, economic growth is a long-run phenomenon that is tied to factors that determine the productive capabilities of the economy. Thus, whereas countercyclical policies tend to focus on the demand side of the economy, growth-oriented polices target the supply side with the goal of influencing the sources of growth\u00e2\u0080\u0094mainly, the quantity and quality of employed labor, the amount of capital, and the level of technology. The sources of long-run growth are taken to be more or less fixed in the short run, making them less of a concern over a single business cycle. Growth-oriented policies therefore take a longer-term approach to structuring the government's tax and spending initiatives with the aim of improving the incentives to work, invest, and innovate. Part of this approach is minimizing uncertainty over tax and spending policy itself, so that households and businesses can make long-lasting decisions that will support growth. Another part of this approach is prudent management of deficits and the debt so that high interest rates do not inhibit growth factors, such as investment. ", "This report analyzes policy options from a countercyclical, and not a long-term growth, perspective."], "subsections": []}, {"section_title": "Potential Countercyclical Fiscal Policy Tools", "paragraphs": ["Countercyclical fiscal policy tools may be sorted into two categories\u00e2\u0080\u0094automatic stabilizers and discretionary changes that require legislative action. Automatic stabilizers are features built into the economy's tax and transfer system that lower taxes and increase spending as the economy weakens. They take effect automatically without the need for congressional action. Discretionary policies refer to legislative changes to individual and business taxes, and to government spending enacted in response to economic conditions. The distinction between the two can become blurred; automatic stabilization policies can be modified in response to an economic downturn by legislative action, and discretionary changes could be made to take effect and expire automatically if certain criteria are met. ", "The following sections review a select set of policy options that are often considered in response to a recession. The options are drawn from the Congressional Budget Office (CBO) and Moody's Analytics, both of which estimated the impact of specific policies or approaches in response to the Great Recession. While a general approach to stimulating a weakened economy with reduced taxes and increased spending is often advocated, specific policies have different impacts on the economy and differing administrative complexities. CBO's and Moody's estimates provide insight into which specific policy options may be most worthwhile to implement during the next downturn. The policy options presented\u00e2\u0080\u0094or variations of them\u00e2\u0080\u0094are ones commonly considered when designing a fiscal stimulus package and are not unique to either CBO or Moody's. However, policymakers may consider that the economy has the potential to return to full employment without intervention. As such, one policy option is to allow the economy to correct itself. ", "Fiscal policy's estimated impact in response to the next recession is likely different from the impact estimated by CBO and Moody's in response to the Great Recession. Generally accepted economic theory holds that fiscal policy has a greater impact on the economy the further it is from full employment. This is because there is a greater abundance of idle resources that can be brought back into producing goods and services. The Great Recession was the most severe downturn since the Great Depression, and the economy was far from full employment. Thus, estimates of the impact of stimulus at that time may be an upper bound for fiscal policy's stimulative effect. Additionally, hindsight has allowed economists to improve their estimation techniques. Still, the relative magnitudes estimated by CBO and Moody's will conceivably still hold if they are updated in the future. ", "It is important to briefly discuss the inherent difficulty of estimating the exact impact specific fiscal policies could have on the economy. All of the estimates presented below (and elsewhere) are based on models that rely on a set of assumptions about how individuals and businesses may react to policy changes, and on assumptions about how the Federal Reserve may adjust monetary policy to accommodate or to offset a fiscal policy change. The assumptions are subject to significant uncertainty. It is also never known what would happen in the absence of a particular stimulus package change (i.e., the counterfactual). As a result, the focus should be on the relative magnitudes of policies' impacts and not on individual point estimates. One set of CBO estimates presented below is qualitative. Still, the estimates presented in this section were made using conventional methods and provide a starting point for understanding how specific policies may affect the economy. "], "subsections": [{"section_title": "Automatic Stabilizers", "paragraphs": ["The automatic stabilizers that receive the most attention are the progressive structure of the income tax system and Unemployment Compensation (UC) benefits. During an economic downturn, more taxpayers begin to move into lower marginal tax brackets as employment and incomes fall, reducing the proportion of income subject to tax and helping to cushion the fall in spending. Likewise, with rising unemployment, more individuals will have met the conditions required to qualify for UC benefits (i.e., state government spending increases), which provide some income support and, in turn, can help mitigate the negative impact rising unemployment has on aggregate demand. Other programs that may act as automatic stabilizers include the Supplemental Nutrition Assistance Program (SNAP, formerly the Food Stamp program), Medicaid, and Temporary Assistance for Needy Families (TANF). ", "Automatic stabilizers are attractive because they can be designed to satisfy the three criteria for effective countercyclical policy. These programs take effect automatically in a timely fashion to help stabilize demand as the economy begins to weaken and even before a recession has been declared. Therefore, the lag between recognition and implementation is reduced. Automatic stabilizers are also targeted to individuals whose incomes are falling, which suggests a large \"bang for the buck.\" And finally, these programs generally continue to provide support if the downturn becomes more severe, but gradually taper off as the economy begins to improve, making them temporary. However, if the recession is long enough, some individuals may exhaust their benefits before the recession is over. For example, UC benefits may be claimed by an individual for six months or less in most cases. Making adjustments to automatic stabilizers in response to a recession is discussed in the \" Government Spending \" section. ", "While an attractive first line of defense against a weakening economy, automatic stabilizers may not provide enough stimulus to counteract a severe or prolonged economic downturn. In such cases, the stabilizers may need to be adjusted or supplemented with additional fiscal tools. Modifying automatic stabilizers before or in response to a recession\u00e2\u0080\u0094for example, by expanding or extending coverage\u00e2\u0080\u0094arguably crosses into the realm of discretionary fiscal policy. Potential modifications to current automatic stabilizers are discussed in the \" Direct Payments and Transfers to Households \" section of the report, along with estimates of the economic impact of these changes. Neither CBO nor Moody's estimated the impact of the baseline automatic stabilizers. "], "subsections": []}, {"section_title": "Individual Tax Relief", "paragraphs": ["Enacting individual tax relief to boost demand is an option for stimulating the economy since personal consumption accounts for approximately 70% of U.S. GDP. Tax cuts or rebates that are spent will have the largest impact; tax cuts that are saved do not lead to additional spending and therefore have no stimulative impact. As discussed previously, tax relief directed toward lower- and moderate-income households appears to provide the most \"bang for the buck.\" Delivering targeted tax relief to these households, however, can be complicated by the fact that many of them do not pay income taxes and may not file tax returns. Additionally, careful consideration is needed about how to deliver any tax relief so that household incomes are increased as soon as possible. Table 1 summarizes CBO's and Moody's estimates of the impact of several individual tax policies\u00e2\u0080\u0094discussed in more detail below\u00e2\u0080\u0094that were considered, and in some cases enacted, in response to the Great Recession. "], "subsections": [{"section_title": "Lump-Sum Rebates", "paragraphs": ["One way to provide an infusion of money directly into the budgets of lower- and moderate-income households is to issue tax \"rebates.\" Limitations on the administrative aspects of delivering such rebates, sometimes also referred to as \"lump-sum\" or \"cash\" rebates, has resulted in the stimulus being structured as an advanced tax credit based on a prior year's income, but used to offset a future year's tax liabilities. This was the general approach used most recently in response to the 2001 recession and again during the Great Recession. ", "The Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA; P.L. 107-16 ) provided a lump-sum rebate check of up to $600 for joint filers, $500 for head of household filers, and $300 for single filers. However, the rebate was actually an advanced credit for taxes to be paid on income earned in 2001. The advanced credit was based on taxpayers' 2000 tax returns. Taxpayers then included the credit when completing their 2001 tax returns and were allowed to keep any overpayment if the credit they received (estimated using their 2000 returns) was too large. Individuals who had no tax liability in 2000 were ineligible for the credit. Eligible rebate recipients received their checks between July and October of 2001. The legislation was enacted in early June. ", "The Economic Stimulus Act of 2008 (ESA; P.L. 110-185 ) also provided a tax rebate to individuals. Like the 2001 rebate, the ESA rebate was actually an advanced credit for 2008 taxes, based on returns filed in 2007. Unlike the 2001 rebate, the ESA rebate was made partly refundable to target lower-income households. The rebate was equal to the lesser of $600 ($1,200 for joint filers) and the individual's 2007 tax liability. Since the calculation depended on taxes paid in 2007, lower-income households who did not need to file a 2007 return would have been ineligible for a rebate. However, the law stipulated that for those who had not filed a 2007 tax return, but whose total income was at least $3,000, the rebate was equal to $300 ($600 for joint filers). Rebate recipients also were eligible for an additional $300 rebate per child under the age of 17. Disbursements of rebate checks mostly occurred between the end of April and middle of May of 2008."], "subsections": []}, {"section_title": "Making Work Pay Tax Credit and Payroll Tax Holiday", "paragraphs": ["An alternative to issuing lump sum rebates is to spread the tax reduction over time. The American Recovery and Reinvestment Act (ARRA; P.L. 111-5 ) attempted such an approach by creating the Making Work Pay (MWP) tax credit, which was available in 2009 and 2010. The MWP tax credit was equal to 6.2% of a taxpayer's earned income up to $400 for single filers and $800 for joint filers. Because individuals must pay 6.2% of their income toward the Social Security portion of payroll taxes, and because the credit was fully refundable, the credit effectively eliminated the Social Security tax on the first $6,450 of a single filer's income and the first $12,900 of joint filers' income. The credit began phasing out for workers with incomes exceeding $75,000 ($150,000 for joint filers), and was not available to those with incomes greater than $95,000 ($190,000 for joint filers). The refundability of the credit helped to benefit lower-income households. The MWP tax credit expired at the end of 2010.", "Following the expiration of the MWP credit, the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 ( P.L. 111-312 ) enacted a payroll tax \"holiday.\" The holiday reduced workers' share of the Social Security payroll tax by 2 percentage points, from 6.2% to 4.2% on income up to $106,800 for 2011. The analogous tax for self-employed workers was reduced similarly from 12.4% to 10.4%. Because payroll taxes are withheld from each paycheck a worker receives, the reduction provided a benefit spread out over the year. The holiday did not benefit the lowest-income workers as much as the MWP credit because to receive the same $400 benefit, an individual needed to earn $20,000. Additionally, workers whose income was not subject to the Social Security tax did not benefit from the holiday because they had no tax to be reduced. The holiday was extended two more times, once through February 2012, and then again through the end of 2012. ", "Both the MWP tax credit and the payroll holiday assisted only individuals who were working. Because unemployment typically increases during a recession, neither of these policies assisted those who had lost their job. However, unemployed individuals did receive UC benefits. "], "subsections": []}, {"section_title": "Reduction in Individual Income Tax Rates", "paragraphs": ["Taxes could be reduced by lowering individual income tax rates. The Internal Revenue Service (IRS) would need to publish new withholding tables to enable employers to adjust employee withholdings so the reduction would be reflected in workers' paychecks. The IRS could make this change rather quickly; new withholding tables were published within two months of the enactment of P.L. 115-97 , commonly referred to as the Tax Cuts and Jobs Act, or TCJA. ", "A drawback of an across-the-board tax rate reduction, from a short-term stimulus perspective, is that it would not have the maximum effect on demand. To have maximum effect, tax reductions must target lower- and moderate-income households because the spending of these households is most responsive to increases in after-tax income. However, an across-the-board income tax rate reduction is not well-targeted to these households because they pay little or no income taxes, and therefore would not benefit much, or at all, from a tax rate reduction. At the same time, many of those who would not benefit from an income tax rate reduction are working and therefore paying payroll taxes. ", "Because the stimuluative effect of an across-the-board rate reduction is low, so too is its cost effectiveness. Although households in the lower tax brackets would receive a benefit, the majority of such a tax reduction would flow to taxpayers at the upper end of the income distribution. This is because higher-income households pay a disproportionate share of income taxes. But as previously discussed, these households are estimated not to be as responsive to increases in after-tax income as lower- and moderate-income households. Combined with a likely large revenue loss from an across-the-board rate reduction, this implies that the \"bang for the buck\" would be low. The stimulative effect is further diminished if sizable deficits lead to higher interest rates, crowding out private investment. ", "The cost associated with this approach could be reduced by limiting the reduction to the lower brackets. However, because of the marginal structure of the income tax, many upper-income households would receive a tax cut, albeit small relative to their income, because a portion of their earnings falls within the lower tax brackets. The costs could also be contained by making the reduction temporary, but compared to other options, it would still be relatively expensive. "], "subsections": []}, {"section_title": "Reduction in Dividend and Capital Gains Taxes", "paragraphs": ["A reduction in taxes on capital gains and dividends is another option for providing individual tax relief as a countercyclical measure. Currently, long-term capital gains and dividends are taxed at rates of 0%, 15%, or 20%, depending on an individual's tax bracket. Capital gains and dividends qualify as long term if the underlying asset has been held for at least a year. Short-term capital gains are taxed at the individual's ordinary income tax rate; the maximum individual income tax rate in 2019 is 37%. Long-term capital gains and dividends have received preferential tax treatment to varying degrees since the Omnibus Budget Reconciliation Act of 1990 (OBRA90; P.L. 101-508 ). Prior to 1990, capital gains and dividends had been taxed at ordinary rates as the result of the Tax Reform of 1986 ( P.L. 99-514 ). Capital gains and dividends tax rates were last reduced (to 0% and 15%) in an attempt to stimulate the economy by the Jobs and Growth Tax Relief Reconciliation Act of 2003 ( P.L. 108-27 ). The American Taxpayer Relief Act of 2012 ( P.L. 112-240 ) increased the top rate to 20% for high-income individuals, resulting in the current three-rate regime. The Health Care and Education Reconciliation Act of 2010 ( P.L. 111-152 ) added a 3.8% tax on high-income individuals, bringing the effective top tax rate to 23.8%. ", "The effectiveness of reducing taxes on capital gains and dividends in stimulating the economy is likely to be small. The overwhelming majority of capital gains and dividends income is received by taxpayers in the upper end of the income distribution, which implies the majority of any tax reduction would accrue to these taxpayers. For example, the Urban-Brookings Tax Policy Center (TPC) estimates that 95.8% of the tax on long-term capital gains and dividends is paid by taxpayers in the top 20% of the income distribution, and 76.5% is paid by taxpayers in the top 1%. Although there is an argument that lower taxes on investment income may be beneficial for longer-term growth, effective stimulus must increase demand in the short run."], "subsections": []}]}, {"section_title": "Business Tax Incentives", "paragraphs": ["The economy can also be stimulated by boosting business spending. The primary focus when targeting business spending has been new investment, which is a component of aggregate spending (demand). Business investment, while comprising a smaller share of GDP than consumer spending, is much more volatile than consumer spending and hence typically decreases more during recessions. However, the decline in investment spending may be in direct response to the decline in overall spending, which makes it difficult for policy to induce businesses to invest more. This section reviews a number of possible business tax incentives that Congress may consider during the next recession. Table 2 summarizes CBO's and Moody's estimates of the impact of several business tax polices\u00e2\u0080\u0094discussed in more detail below\u00e2\u0080\u0094that were considered, and in some cases enacted, in response to the Great Recession. "], "subsections": [{"section_title": "Provide Incentives for Investment", "paragraphs": ["Incentives that directly target new investment are thought to be one of the more effective stimulus policies among business tax incentives. Two general approaches for encouraging investment are by accelerating depreciation or offering an investment tax credit. Accelerated depreciation allows a business to deduct from its income the cost of an investment faster than its useful (economic) life would dictate and, as a result, increases the after-tax return on eligible new investments. The most accelerated form of depreciation is expensing, and it allows a business to deduct the full cost of a qualified investment in the year it is purchased instead of spreading the deduction over a number of years. Accelerated depreciation is not currently available as a stimulus option since the 2017 tax revision ( P.L. 115-97 ) provided expensing for equipment through 2022, followed by a four-year phase-out period. ", "An investment tax credit would allow a business to offset its tax liability by an amount equal to a fraction of its investment. The amount of investment that occurs in response to a tax credit depends on how responsive investment is to reduced investment costs. The empirical literature has not generally found total investment to be considerably responsive to tax incentives. Intuitively, this can be explained by the fact that investments require large and one-off expenditures involving durable assets that require time to plan and incorporate into the production process. The responsiveness of investment to tax incentives may be lower during recessions than more normal times since recessions are periods of heightened uncertainty, which reduces the desire to make investments.", "If investment incentives are to be included in a stimulus package, they are likely to be more effective if they are available for a short period of time to encourage businesses to take advantage of them and to limit the budgetary impact."], "subsections": []}, {"section_title": "Reduce the Corporate Income Tax Rate", "paragraphs": ["Reducing the corporate income tax rate could provide stimulus by increasing new corporate investment. Historically, however, corporate tax rate reductions have not been part of stimulus packages. When compared to alternative options, the short-term stimulus effect of a corporate rate reduction is likely to be small. This is for two primary reasons. First, investment incentives are most effective when they stimulate new investment. Although a reduction in the corporate tax rate would encourage some new investment by increasing the after-tax return to investment, it would also, and primarily, provide a windfall benefit to existing capital. Thus, the \"bang for the buck\" is expected to be quite low. ", "Second, investment decisions are made with an eye toward future economic conditions since many assets are long-lived. If a rate reduction is temporary, or if corporate decisionmakers suspect rates will be higher in the future, the incentive to invest is lower. A rate reduction in response to the next recession may even be smaller than could be expected in the past because P.L. 115-97 permanently lowered the corporate tax rate from 35% to 21%. "], "subsections": []}, {"section_title": "Net Operating Loss Carrybacks", "paragraphs": ["Allowing net operating losses to be carried back could provide tax relief for some businesses. When a business experiences a loss it owes no tax in that year (known as a loss year ). Currently, the business may use a loss to reduce future taxes by claiming it as a deduction against income earned after the loss year. This process is known as carrying forward a loss , and a business may carry a loss forward indefinitely until there is no more loss to be deducted. Prior to the 2017 tax revision ( P.L. 115-97 ), businesses were able to use losses to obtain a refund for past taxes paid, a process known as carrying back a loss . Losses had generally been limited to a two-year carryback since 1997, but this was temporarily extended to five years during the Great Recession. Businesses prefer to carry losses back rather than carry them forward because carrybacks produce an immediate and certain benefit, whereas carryforwards reduce taxes at some uncertain time in the future.", "Allowing losses to be carried back would help some firms with cash flow problems. A business in a loss position may have trouble making payroll and covering other operating expenses. Carryback losses would provide these firms with an infusion of cash and potentially allow them to ride out an economic downturn with less need to lay off workers. It would also allow firms in a loss position (or close to it) to benefit more from immediate expensing, which would help investment. The stimulative effects of loss carrybacks are generally thought to be small because they are not tied to increased investment or employment. Economic uncertainty may overshadow the incentive to invest during a recession, and profitable investment opportunities are less available during a recession. "], "subsections": []}, {"section_title": "Hiring Incentives", "paragraphs": ["The tax code could be used to directly target rising unemployment during a recession via a hiring tax credit. During a downturn businesses cut back on hiring, and, depending on the severity of the recession, lay off employees. One way to address the reduction in the demand for employees is to reduce the cost of hiring and retaining workers by offering a tax credit tied to firms' payroll costs. To be most effective, only hiring and retention that would not otherwise occur would be eligible. This is inherently difficult because it is impossible to know whether a business is being encouraged to hire an employee or simply claiming the tax incentive because it is eligible. Past attempts to better target hiring and retention incentives have resulted in complex administrative issues, which have discouraged participation. These issues have created some skepticism over the effectiveness of this policy, and the literature has found mixed results.", "A deeper structural relationship between the employment decisions of firms and the performance of the economy would likely limit even a well-designed hiring incentive during a recession. The demand for labor by firms depends on the demand for its products and services. If consumers are withholding spending on goods and services, the firms' desire to hire workers to fill orders and produce goods is reduced regardless of a hiring incentive. "], "subsections": []}]}, {"section_title": "Government Spending", "paragraphs": ["The government can boost aggregate demand directly with increased spending. Like tax incentives, spending policies can take many forms, but three broad categories are helpful for classifying government spending: direct payments and transfers to households, aid to states and local governments, and government purchases of goods and services. This section discusses each of these categories. Table 3 summarizes CBO's and Moody's estimates of the impact of several spending policies\u00e2\u0080\u0094discussed in more detail below\u00e2\u0080\u0094that were enacted in response to the Great Recession. "], "subsections": [{"section_title": "Direct Payments and Transfers to Households", "paragraphs": ["Examples of direct payments and transfers to households include extending or enhancing UC benefits and increasing SNAP (formerly the Food Stamp program) benefits. These options would boost the disposable income of unemployed or underemployed individuals, who could be expected to spend nearly all of the stimulus. Therefore, the stimulative effect of direct payments and transfers to households in distress is believed to be large. These policies may also be comparatively simple to enact and administer because they would build on programs already in place. ", "Congress has extended UC benefits in response to eight recessions in recent history. Extending the duration of UC benefits would give individuals who are unemployed more time to secure employment. Congress could also, or additionally, enhance the benefit amount recipients received. In addition to extending the duration of UC benefits, ARRA ( P.L. 111-5 ) also increased the amount eligible beneficiaries received by $25 each week. ARRA also provided for a tax exclusion up to the first $2,400 of unemployment benefits received. The increase in the standard deduction enacted by P.L. 115-97 , however, reduces the ability of an exclusion to enhance benefits. There is no consensus about how long of an extension or how large of an enhancement is appropriate. If the appropriate balance is not struck, there could be adverse effects, particularly with respect to accepting gainful employment once the economy has improved.", "SNAP benefits were also increased across-the-board during the Great Recession by ARRA ( P.L. 111-5 ). SNAP households' monthly benefit amounts are calculated using a maximum benefit and household-specific circumstances (such as household size). The ARRA provision specifically increased the maximum monthly benefit by 13.6%, thereby increasing the food purchasing power of eligible low-income households. Though the ARRA increase was originally expected to be effective through 2018, the duration of the increase in SNAP benefits was subsequently shortened to March 31, 2014, by P.L. 111-226 , and then to October 31, 2013, by P.L. 111-296 to offset the cost of these bills. "], "subsections": []}, {"section_title": "Aid to States and Local Governments", "paragraphs": ["Aid to states and localities could support aggregate demand if their budgets become strained due to an economic downturn. Most states have balanced-budget requirements that limit their ability to carry out independent countercyclical policy. As states and municipalities experience budgetary pressure from declining tax revenue, state and local governments may need to raise taxes and cut spending, including laying off employees. Therefore, aid to states and localities, while not generally believed to be as stimulative as direct transfers to individuals, is predicted to be moderately effective at combating a downturn as a \"defensive\" stimulus that can help to maintain services, taxes, and employment. ", "Typically aid to states has been provided through existing programs. Assistance could be provided through a general revenue transfer, although this approach is not typically used. In the past, one way Congress has provided aid to states is via Medicaid enhancement. In response to the Great Recession, ARRA ( P.L. 111-5 ) temporarily increased the federal medical assistance percentage (FMAP) by 6.2 percentage points. FMAP is the rate at which the federal government reimburses states for Medicaid expenditures and is used for determining the federal government's share of a number of other domestic social policy programs, such as the State Children's Health Insurance Program (CHIP) and foster care and adoption assistance. ARRA also provided funding to support state and local first responders, as well as school systems. "], "subsections": []}, {"section_title": "Infrastructure", "paragraphs": ["Direct federal infrastructure investment, and aid to state and local governments to invest in infrastructure, is an option for supporting demand and stimulating the economy. Economic downturns often experience a drop in overall investment by the private sector. By making expenditures in public works, the government can offset the reduction in private investment while at the same time making investments in long-lived projects that will reap a benefit after the downturn has passed. Examples of types of infrastructure investments the government may make include roads, bridges, railroads, ports, airports, energy grids, and management of water resources, among others. ", "Infrastructure investment may not be the ideal policy tool to combat a mild recession. The \"bang for the buck\" measure for government investment is usually estimated to be high, but infrastructure projects take a long time to get under way and a longer time to complete. There is a good chance that a recession could be over by the time the stimulus from such investment affects the economy. This does not mean that infrastructure investment is not desirable, and it may be justified based on longer-term growth policies."], "subsections": []}]}]}, {"section_title": "Stimulus and the Budget Outlook", "paragraphs": ["The United States' recent budget deficits and the country's long-run budget outlook could influence the size of any stimulus package. The FY2018 real (inflation-adjusted) deficit equaled 3.8% of gross domestic product (GDP), which was higher than the average federal deficit since FY1969 (2.9% of GDP). Real deficits are projected to increase over the next 10 years. In its latest economic forecast, the Congressional Budget Office (CBO) projected that U.S. debt held by the public would also increase over the next 10 years, from 77.8% of GDP in FY2018 to 92.7% of GDP in FY2029. Large and persistent budget deficits can hamper economic growth by lowering the rate of capital formation via reduced national saving, and can potentially offset short-term economic stimulus. At the same time, high levels of debt relative to GDP can constrain a country's borrowing capacity. There are no signs that federal borrowing capacity will be exhausted in the short term. However, Congress may consider the consequences of exhausted fiscal space in designing the next potential stimulus package since it would increase both deficits and the debt. "], "subsections": []}]}}
{"id": "R46314", "title": "Federal Student Loan Debt Relief in the Context of COVID-19", "released_date": "2020-04-16T00:00:00", "summary": ["The Higher Education Act of 1965 (HEA; P.L. 89-329, as amended) authorizes the operation of three federal student loan programs: the William D. Ford Federal Direct Loan (Direct Loan) program, the Federal Family Education Loan (FFEL) program, and the Federal Perkins Loan program. As of December 31, 2019, $1.5 trillion in such loans, borrowed by or on behalf of 42.8 million individuals, remained outstanding. In response to the current coronavirus disease 2019 (COVID-19) pandemic, numerous questions have arisen regarding student loan repayment flexibilities and debt relief that may be available to individuals to alleviate potential financial effects related to COVID-19.", "The HEA authorizes several flexibilities that may be relevant to individuals facing financial difficulties resulting from COVID-19. These include the following:", "Loan deferment and forbearance options offer a borrower temporary relief from the obligation to make monthly payments. In certain instances, interest does not accrue during deferment periods; although interest does accrue during forbearance periods. Periods of deferment or forbearance do not count toward the 120 monthly payments required to qualify for Public Service Loan Forgiveness (PSLF), nor do they count toward the 20- or 25-year repayment periods under the income-driven repayment plans. Income-driven repayment (IDR) plans afford borrowers the opportunity to make payments in amounts that are capped at a specified share or proportion of their discretionary income over a repayment period not to exceed 20 or 25 years, depending on the plan. At the end of the repayment period, the remaining balance of an individual's loans is forgiven.", "Recent administrative and congressional actions, including the enactment of the Coronavirus Aid, Relief, and Economic Security (CARES) Act ( P.L. 116-136 ), provide additional student loan relief measures:", "Interest rates on federally held student loans are being set to 0% from March 13, 2020, through September 30, 2020. Federally held student loans are being placed in a special administrative forbearance for March 13, 2020, through September 30, 2020. During this time, borrowers will not be required to make payments due on their loans. This special administrative forbearance will count toward the 120 monthly payments required to qualify for PSLF, the 20- and 25-year repayment periods under the IDR plans, and the nine voluntary payments required for individuals to rehabilitate their defaulted loans. Debt collections activities, including involuntary collection activities such as wage garnishment and offset of certain federal benefits (e.g., federal income tax return benefits, Social Security benefits) are being suspended on federally held student loans for March 13, 2020, through September 30, 2020."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["The Higher Education Act of 1965 (HEA; P.L. 89-329, as amended) authorizes the operation of three federal s tudent loan programs: the William D. Ford Federal Direct Loan (Direct Loan) program, the Federal Family Education Loan (FFEL) program, and the Federal Perkins Loan program. While new loans are authorized to be made only through the Direct Loan program, FFEL and Perkins Loan program loans remain outstanding and borrowers of such loans remain responsible for repaying them. ", "As of December 31, 2019, $1.5 trillion in these loans, borrowed by or on behalf of 42.8 million individuals, remained outstanding. ", "Direct Loan program loans are owned by the U.S. Department of Education (ED). As of December 31, 2019, approximately 35.3 million borrowers owed about $1.3 trillion in Direct Loan debt. FFEL program loans may be held by private lenders, guaranty agencies, or ED. As of December 31, 2019, approximately 11.8 million borrowers owed about $257.2 billion in FFEL program debt. Of that, approximately $87.7 billion was held by ED, representing between 3.3 million and 6 million borrowers, and $169.3 billion was held by private lenders or guaranty agencies, representing debt for between 6.0 million and 7.2 million borrowers. Perkins Loan program loans may be held by institutions of higher education (IHEs) that made the loans or by ED. As of December 31, 2019, about 1.9 million borrowers owed approximately $5.9 billion in Perkins Loans.", "In response to the current coronavirus disease 2019 (COVID-19) pandemic, numerous questions have arisen regarding student loan repayment flexibilities and debt relief that may be available to individuals to alleviate potential financial effects related to COVID-19. The HEA generally authorizes several options for qualifying individuals. Recent administrative and congressional action, including the enactment of the Coronavirus Aid, Relief, and Economic Security (CARES) Act ( P.L. 116-136 ), provide additional student loan relief measures. ", "This report provides an overview of student loan repayment flexibilities and debt relief provisions that may be available to borrowers facing financial difficulties resulting from the pandemic. It first lists some pre-existing loan terms and conditions (authorized through statute and regulations) that may be available to individuals. It then discusses specific administrative and congressional actions taken to address student loan debt in the context of COVID-19. The report concludes with a brief description of additional existing authorities that could be utilized to address other aspects of student loan relief."], "subsections": []}, {"section_title": "Pre-existing Loan Terms and Conditions", "paragraphs": ["Several loan terms and conditions that offer forms of repayment relief to borrowers were authorized in statute and regulations prior to the onset of the COVID-19 pandemic. These include periods of deferment and forbearance, which offer borrowers temporary relief from the obligation to make monthly payments; and the availability of income-driven repayment (IDR) plans (e.g., income-based repayment, Pay As You Earn [PAYE]), which afford borrowers the opportunity to make payments in amounts that are capped at a specified share or proportion of their discretionary income, for a maximum repayment period of 20 or 25 years."], "subsections": [{"section_title": "Deferment", "paragraphs": ["A deferment is a temporary period during which a borrower's obligation to make regular monthly payments of principal or interest is suspended, and during which an interest subsidy (i.e., interest does not accrue) may be provided. Where an interest subsidy is not provided, unpaid interest that has accrued on a borrower's loan during a deferment is capitalized (i.e., added to the principal) at the expiration of the deferment period. Periods of deferment do not count toward the 120 monthly payments required to qualify for Public Service Loan Forgiveness (PSLF), and most are not included in a borrower's repayment period (e.g., periods of unemployment deferment do not count toward the maximum repayment periods of 20 or 25 years under the IDR plans). In most instances, a borrower must proactively apply for and request a deferment. ", "A deferment may be granted for a variety of reasons. Unemployment deferment and economic hardship deferment (described below) may be especially relevant to individuals facing financial difficulties due to COVID-19. These types of deferment are available to borrowers of loans made under the Direct Loan, FFEL, and Perkins Loan programs."], "subsections": [{"section_title": "Unemployment Deferment", "paragraphs": ["A borrower who is seeking to obtain full-time employment and is either not employed or employed less than full-time may be granted an unemployment deferment . To be eligible, a borrower must either be receiving unemployment benefits or document that he or she has registered with a public or private employment agency (if one is available within 50 miles) and is diligently seeking to obtain full-time employment. ", "The deferment may be granted for an initial six-month period, and may be extended in six-month increments. A borrower may receive the deferment for a maximum cumulative period of three years, which may include one or more episodes of unemployment. ", "During an unemployment deferment, an interest subsidy is provided on Direct Subsidized Loans, the subsidized component of Direct Consolidation Loans, FFEL Stafford (Subsidized) Loans, the subsidized component of FFEL Consolidation Loans, and Perkins Loans."], "subsections": []}, {"section_title": "Economic Hardship Deferment", "paragraphs": ["A borrower may qualify for a deferment during periods while he or she is experiencing an economic hardship. To qualify, a borrower must be (1) receiving payments under a federal or state public assistance program (e.g., Temporary Assistance for Needy Families [TANF], Supplemental Security Income [SSI], Supplemental Nutrition Assistance Program [SNAP], state general public assistance, other means-tested benefits), or (2) working full-time and have a monthly income that does not exceed an amount equal to 150% of the poverty line applicable to the borrower's family size, as calculated on a monthly basis.", "The deferment may be granted for periods of up to one year at a time, and may be extended up to a cumulative maximum of three years. Periods of up to three years while a borrower qualifies for an economic hardship deferment may be counted as part of the repayment period for each of the IDR plans.", "During an economic hardship deferment, an interest subsidy is provided on Direct Subsidized Loans, the subsidized component of Direct Consolidation Loans, FFEL Stafford Loans, the subsidized component of FFEL Consolidation Loans, and Perkins Loans."], "subsections": []}]}, {"section_title": "Forbearance", "paragraphs": ["Forbearance constitutes permission for a borrower to temporarily cease making monthly payments, to make payments in reduced amounts, or to make payments over an extended period of time. During periods of forbearance, no interest subsidies are provided (i.e., interest continues to accrue) and borrowers ultimately remain responsible for paying all of the interest that accrues on their loans. Borrowers may pay the interest as it accrues during forbearance. At the end of the forbearance period, any unpaid accrued interest is capitalized into the principal balance of Direct Loan program and FFEL program loans; it is not capitalized (but remains due) for Perkins Loan program loans. Periods of forbearance do not count toward the 120 monthly payments required to qualify for PSLF, and are not included in a borrower's repayment period (e.g., periods of student loan debt burden forbearance do not count toward the maximum repayment periods of 20 or 25 years under the IDR plans). Generally, borrowers must apply for forbearance.", "General forbearance and student loan debt burden forbearance (described below) may be especially relevant to individuals facing financial difficulties due to COVID-19. These types of forbearance are available to borrowers of loans made under the Direct Loan, FFEL, and Perkins Loan programs. "], "subsections": [{"section_title": "General Forbearance", "paragraphs": ["A borrower may request a general forbearance (sometimes referred to as a discretionary forbearance) on the basis of experiencing a temporary hardship due to financial difficulties, a change in employment, medical expenses, or other reasons.", "General forbearance may be granted for an initial period of up to 12 months, renewed upon the borrower's request, and limited to a maximum of 36 months. At the end of the forbearance period, any unpaid interest that accrued during the period is capitalized."], "subsections": []}, {"section_title": "Student Loan Debt Burden Forbearance", "paragraphs": ["A borrower may receive a forbearance on the basis of having a federal student loan debt burden that equals or exceeds 20% of his or her total monthly taxable income. To qualify, a borrower must demonstrate that his or her required monthly payments on HEA Title IV federal student loans (e.g., loans made under the Direct Loan, FFEL, or Perkins Loan programs) equal or exceed that amount. ", "Student loan debt burden forbearance may be granted for an initial period of up to 12 months, may be renewed upon the borrower's request, and is limited to a maximum of 36 months."], "subsections": []}]}, {"section_title": "Income-Driven Repayment Plans", "paragraphs": ["IDR plans afford borrowers the opportunity to make payments in amounts that are capped at a specified share or proportion of their discretionary income over a repayment period not to exceed 20 to 25 years, depending on the plan. At the end of the repayment period, the remaining balance of an individual's loans is forgiven. Under these plans, it is possible for a borrower's monthly payment to equal $0. ", "There are several IDR plans currently available to borrowers: the Income-Contingent Repayment (ICR) plan, the Income-Based Repayment (IBR) plans (one version of which is available to individuals who qualify as a new borrower on or after July 1, 2014; and another which is available to individuals who do not qualify as a new borrower as of that date), the Pay As You Earn (PAYE) repayment plan, and the Revised Pay As You Earn (REPAYE) repayment plan. In general, Direct Loan borrowers (other than Parent PLUS Loan borrowers) are eligible for any of these plans. FFEL program borrowers (other than Parent PLUS loan borrowers) are only eligible for the IBR plans. Perkins Loan borrowers are not eligible for any IDR plan.", "Individuals must apply to repay their loans according to an IDR plan. In addition, they must annually provide documentation of their income and family size to remain eligible for IDR repayment. Borrowers may update their income and family size at any time if either changes. Upon submission of such information, a borrower's monthly payment amount will be recalculated accordingly."], "subsections": []}]}, {"section_title": "Administrative and Congressional Actions Taken in Response to COVID-19", "paragraphs": ["Recently, ED and Congress have taken steps to provide additional forms of relief to federal student loan borrowers. This includes cancelling Direct Loans for payment periods during which qualifying individuals withdrew from their course of study due to COVID-19, waiving Direct Subsidized Loan limitations for students affected by COVID-19, temporarily setting interest rates to 0% on qualifying loans, expanding the instances under which a forbearance may be available to borrowers of qualifying loans, and temporarily ceasing collections on qualifying defaulted loans."], "subsections": [{"section_title": "Returning Direct Loans", "paragraphs": ["Under the HEA, a Direct Loan borrower may be required to return or repay all or part of the Direct Loans borrowed if the student does not complete a payment or enrollment period at an IHE for which the loan was received. Required procedures for such returns or repayments vary depending on whether a student did not begin attendance at an IHE or whether he or she withdrew."], "subsections": [{"section_title": "Failure to Begin Attendance", "paragraphs": ["If a student does not begin attendance at an IHE in a payment or enrollment period, Title IV funds (including Direct Loan funds) must be returned to ED by the IHE and/or the student according the regulatory provisions. For Direct Loan amounts required to be returned by the student, the IHE must immediately notify ED (or its loan servicers) when it becomes aware that the student will not begin or has not begun attendance. Loan servicers then issue a final demand letter to the borrower. The demand letter requires the borrower to repay any loan principal and accrued interest within 30 days from the date the letter is mailed. If the borrower fails to comply with the demand letter, he or she is considered in default on the loan.", "In March 2020, ED issued guidance to IHEs specifying some flexibilities that may be used to address the return of Direct Loans by recipients who did not begin attendance at an IHE due to COVID-19. ED stated that if a student was unable to begin attendance due to a COVID-19-related school closure, the IHE is not required to notify the loan servicer of the student's failure to begin attendance. By waiving this requirement, loan servicers would not issue demand letters, and borrowers would be able to repay any loans according to the terms of the promissory note, including receiving a six-month grace period prior to the start of repayment."], "subsections": []}, {"section_title": "Withdrawal", "paragraphs": ["HEA Section 484B specifies that when a Title IV aid recipient withdraws from an IHE before the end of the payment or enrollment period for which funds were disbursed, Title IV funds (including any Direct Loans received) must be returned to ED by the IHE and/or aid recipient according to statutorily prescribed rules (this is often referred to as Return of Title IV Aid). If an aid recipient is required to return any portion of a Direct Loan, he or she repays it in accordance with the terms of the loan.", "The CARES Act authorizes several waivers with respect to Return of Title IV Aid procedures. Specific to Direct Loan borrowers, the act requires ED to cancel a borrower's obligation to repay the entire portion of a Direct Loan associated with a payment period during which the student withdraws from an IHE as a result of a qualifying emergency ."], "subsections": []}]}, {"section_title": "Direct Subsidized Loan Limitations", "paragraphs": ["Since July 1, 2013, a student who is a first-time borrower may only borrow Direct Subsidized Loans for a period that may not exceed 150% of the published length of the academic program in which he or she is currently enrolled (e.g., six years for enrollment in a four-year bachelor's degree program). This is referred to as the Direct Subsidized Loan maximum eligibility period. ", "If a Direct Subsidized Loan borrower subject to this provision remains enrolled beyond the applicable maximum eligibility period, he or she will lose the interest subsidy and will become responsible for paying the interest that accrues on his or her Direct Subsidized Loans after the date that the maximum eligibility period is exceeded.", "The CARES Act specifies that ED shall exclude from the maximum eligibility period any semester (or equivalent) that the student does not complete due to a qualifying emergency, if ED is \"able to administer such policy in a manner that limits complexity and the burden on the student.\""], "subsections": []}, {"section_title": "Entering Repayment", "paragraphs": ["In general, borrowers of Direct Loan, FFEL, and Perkins Loan program loans are required to make payments on the loans during a repayment period. The repayment period for Direct Subsidized Loans, Direct Unsubsidized Loans, FFEL Stafford Loans, FFEL Unsubsidized Loans, and Perkins Loans begins after a grace period. The grace period begins after the borrower ceases to be enrolled in an eligible postsecondary program on at least a half-time basis (enrollment on at least a half-time basis is often referred to as in-school status for federal student loan purposes). The repayment period for Direct PLUS Loans (to graduate students and to parents of dependent undergraduate students), Direct Consolidation Loans, FFEL PLUS Loans, and FFEL Consolidation Loans is required to begin when the loan is fully disbursed. However, borrowers of these loans, along with borrowers of Direct Subsidized Loans, Direct Unsubsidized Loans, FFEL Stafford Loans, FFEL Unsubsidized Loans, and Perkins Loans, may qualify for a deferment on the basis of their in-school status (or the in-school status of the student on whose behalf a PLUS Loan was made to a parent borrower), during which time they are not required to make payments on their loans but interest may accrue. A borrower qualifies for such an in-school deferment if he or she, or the student on whose behalf a PLUS Loan is made, is enrolled on at least a half-time basis.", "ED has announced some flexibilities for borrowers of Direct Loan and FFEL program loans whose loan status was in-school on the date the student's attendance at an IHE was interrupted due to COVID-19. The loan status of such borrowers will continue to be reported as in-school until the IHE determines that the student has withdrawn from it. ED has permitted IHEs to defer reporting a student's withdrawn status if the IHE has a reasonable expectation that it will reopen at the start of a payment period that begins no later than 90 days following its COVID-19-related closure and that the student will resume attendance when the IHE reopens. ", "ED guidance does not address Perkins Loans."], "subsections": []}, {"section_title": "Interest Accrual", "paragraphs": ["Interest is charged on loans made under the Direct Loan, FFEL, and Perkins Loan programs. Typically, under a limited set of circumstances the federal government subsidizes some or all of the interest that would otherwise accrue on certain Direct Subsidized Loans, FFEL Stafford Loans, and Perkins Loans. ", "For March 13, 2020, through September 30, 2020, the Administration has set interest rates on federally held student loans (e.g., all Direct Loan program loans, and FFEL and Perkins Loan program loans held by ED) to 0%. The CARES Act specifies that during this time interest will not accrue. This means borrowers will not be responsible for paying interest on their ED-held loans for this period. This will permit borrowers to enter into a period of deferment or forbearance without concern for whether interest would accrue and capitalize. Borrowers who continue making payments on their loans during this time of 0% interest will not have decreased monthly payments. They will have the full amount of the payments applied toward loan principal. Borrowers who are eligible for this benefit need not apply for it; ED will automatically adjust their accounts to reflect the 0% interest. ", "In addition, ED has authorized FFEL program lenders and institutions that hold Perkins Loans to provide the same 0% interest rate on these nonfederally held loans on a voluntary basis. Borrowers who are ineligible for the 0% interest rate benefit because their FFEL program loan holder or Perkins Loan program IHE is not providing it may take advantage of the 0% interest period by consolidating such loans into a Direct Consolidation Loan, which is eligible for the 0% interest rate.", "This 0% interest rate, coupled with the various options for temporary cessation of payments (e.g., forbearance, deferment) discussed throughout this report, means that qualifying borrowers may temporarily cease payments on their loans without interest accruing or being subject to capitalization when they begin to make payments again at a later point in time."], "subsections": []}, {"section_title": "Cessation of Payments", "paragraphs": ["In addition to the pre-existing deferment and forbearance options available to borrowers, ED and Congress have recently taken further steps to enable borrowers to temporarily cease making payments on their qualifying loans.", "For March 13, 2020, through September 30, 2020, federally held student loans (e.g., all Direct Loan program loans, and FFEL and Perkins Loan program loans held by ED) will be placed in an administrative forbearance. During this time, borrowers will not be required to make payments due on their loans. Borrowers who are eligible for this benefit need not apply for it; ED will automatically suspend payments. ", "In implementing these provisions, ED has indicated that borrowers may opt out of this special administrative forbearance by contacting their loan servicer. In addition, any payments made on a borrower's account between March 13, 2020, and September 30, 2020, can be refunded to the borrower. A borrower must contact his or her loan servicer to request a refund.", "ED has also authorized FFEL program lenders and institutions that hold Perkins Loans to provide this special administrative forbearance to borrowers on a voluntary basis. Borrowers who are ineligible for this benefit because their FFEL program loan holder or Perkins Loan program IHE is not providing it may take advantage of the benefit by consolidating such loans into a Direct Consolidation Loan.", "Generally, periods of forbearance do not count toward the 120 monthly payments required to qualify for PSLF, and are not included in a borrower's repayment period (e.g., periods of unemployment deferment do not count toward the maximum repayment periods of 20 or 25 years under the IDR plans). However, the CARES Act specified that ED \"shall consider each month for which a loan payment was suspended\" under this special administrative forbearance \"as if the borrower of the loan had made a payment for the purpose of any loan forgiveness program or loan rehabilitation program.\" Thus, for Direct Loan borrowers (the only borrowers eligible for PSLF) this special administrative forbearance will count toward the 120 monthly payments required to qualify for PSLF if the borrower was in a qualifying repayment plan prior to the payment suspension and also works full-time in qualifying employment during the suspension. ", "For borrowers of federally held loans, the suspended payments will also count toward the 20- and 25-year repayment periods under the IDR plans, and toward the nine voluntary payments within 10 consecutive months required for individuals to rehabilitate their defaulted loans. It is unclear whether suspended payments on nonfederally held FFEL program loans whose lender has authorized this special administrative forbearance would count toward the 20- and 25-year repayment periods under applicable IDR plans. Perkins Loans, regardless of whether they are held by ED or an IHE, are ineligible for IDR plans.", "In addition, ED recently authorized institutions that hold Perkins Loans to grant a forbearance to borrowers who are in repayment and are unable to make payments due to COVID-19. Under this forbearance, interest would continue to accrue. The initial forbearance period may not exceed three months, but it may be extended upon a borrower providing supporting documentation. Borrowers must request the forbearance from the IHE. This period of forbearance counts toward the three-year maximum limit on the number of years of forbearance that may be granted to a Perkins Loan borrower."], "subsections": []}, {"section_title": "Loan Default and Collections", "paragraphs": ["Defaulting on a federal student loan can result in a number of adverse consequences for a borrower. Upon default, the borrower's obligation to repay the loan is accelerated (i.e., the entire unpaid balance of principal and interest becomes due in full). In addition, the borrower loses eligibility for certain borrower benefits (e.g., deferment, loan forgiveness), as well as eligibility to receive additional Title IV federal student aid. A defaulted borrower may have his or her student loan account transferred to an ED-contracted private collection agency (PCA) that will contact the borrower and offer him or her options for voluntary debt resolution, such as loan rehabilitation, consolidation out of default, or entry into a voluntary repayment agreement. If such voluntary debt resolution attempts do not succeed, involuntary collection practices may be utilized, which include administrative wage garnishment; offset of federal income tax returns, Social Security benefits, and certain other federal benefits; and civil litigation."], "subsections": [{"section_title": "Collection of Defaulted Loans", "paragraphs": ["For March 13, 2020, through September 30, 2020, ED will halt the above-described involuntary debt collection practices, and ED-contracted PCAs will stop proactive collection activities (i.e., stop making collection calls and sending letters or billing statements to defaulted borrowers) for all federally held student loans (e.g., all Direct Loan program loans, and FFEL and Perkins Loan program loans held by ED). However, borrowers may contact PCAs to continue repayment arrangements they had made prior to implementation of this policy or to consolidate their loans out of default.", "Borrowers of federally held loans whose federal tax refund or Social Security benefits were in the process of being withheld on or after March 13, 2020, and before September 30, 2020, will have any offset portion returned to them. Borrowers whose wages were garnished between March 13, 2020, and September 30, 2020, will have their wages refunded.", "In addition, ED has authorized institutions to stop collection activities on defaulted Perkins Loans that they hold through September 30, 2020, upon notification from a borrower, a member of the borrower's family, or another reliable source that the borrower has been affected by COVID-19."], "subsections": []}, {"section_title": "Satisfactory Repayment Arrangements, Loan Rehabilitation, and Consolidation Out of Default", "paragraphs": ["To regain Title IV student aid eligibility, a defaulted federal student loan borrower must make six on-time, voluntary monthly payments on a defaulted loan. In addition, loan rehabilitation offers defaulted borrowers an opportunity to have their loan(s) reinstated as active and to have other borrower benefits and privileges restored. To rehabilitate a loan, Direct Loan, FFEL, or Perkins Loan program borrowers must make nine on-time payments according to generally applicable procedures. Alternatively, a borrower may use the proceeds of a new Direct Consolidation Loan to pay off one or more defaulted Direct Loan, FFEL, and Perkins Loan program loans. To become eligible to do so, a borrower must make three consecutive, on-time, full monthly payments on a defaulted loan. ", "ED has stated that for specified periods, if a borrower of a defaulted Direct Loan, FFEL, or Perkins Loan program loan fails to make any of the consecutive monthly payments required to re-establish eligibility for Title IV federal student aid, to rehabilitate such defaulted loans, or to consolidate such defaulted loans out of default, the borrower shall not be considered to have missed any of those payments. "], "subsections": []}]}, {"section_title": "Reporting to Consumer Reporting Agencies", "paragraphs": ["Information about a borrower's federal student loans is reported to nationwide consumer reporting agencies on a regular basis. Information reported includes items such as loan amount and repayment status (e.g., whether a borrower is current on making payments).", "The CARES Act specifies that through September 30, 2020, ED shall ensure that any payment that has been suspended under the special administrative forbearance described above shall be reported to a consumer reporting agency as if it were a regularly scheduled payment made by the borrower."], "subsections": []}, {"section_title": "Teacher Loan Forgiveness", "paragraphs": ["The Teacher Loan Forgiveness program provides loan forgiveness benefits to borrowers of qualifying Direct Loan and FFEL program loans. To qualify for benefits, a borrower must serve as a full-time teacher for at least five consecutive complete academic years in a qualifying school or public education service agency that serves children from low-income families.", "The CARES Act specifies that ED shall waive the requirement that years of qualifying teaching service be consecutive if an individual's service was temporarily interrupted due to a qualifying emergency, and after such temporary disruption the borrower resumes teaching and ultimately completes a total of five years of qualifying service. Qualifying service may include service performed before, during, and after the qualifying emergency."], "subsections": []}]}, {"section_title": "Additional Flexibilities", "paragraphs": ["In addition to the above-described administrative and congressional actions that have been taken in response to COVID-19, further flexibility and authority is provided through the Higher Education Relief Opportunities for Students Act (HEROES Act). The HEROES Act can only be implemented, however, in connection with a war or other military action or a national emergency declared by the President. The HEROES Act provides the Secretary with authority to waive or modify statutory and regulatory requirements that apply to the HEA Title IV student aid programs in an effort to help affected individuals. There are three categories of affected individuals:", "1. those who are serving on active duty or performing qualifying National Guard duty during a war or other military operation or national emergency; 2. those who reside or are employed in an area that is declared a disaster area by any federal, state, or local official in connection with a national emergency; and 3. those who suffered direct economic hardship as a direct result of a war or other military operation or national emergency.", "Examples of support that may be available to student loan borrowers under the HEROES Act include the following:", "For borrowers of loans made under the Direct Loan, FFEL, and Perkins Loan programs who are in the 1 st or 2 nd categories of affected individuals, the initial grace period excludes any period, not to exceed three years, during which a borrower is an affected individual. Borrowers of loans made under the Direct Loan, FFEL, and Perkins Loan programs who were in an \"in-school\" status but left school because they became a 1 st or 2 nd category affected individual may retain their in-school status for up to three years. During this period, the Secretary will pay any interest that accrues on a FFEL Stafford Loan. Borrowers of loans made under the Direct Loan, FFEL, and Perkins Loan programs who were in an \"in-school\" deferment or a graduate fellowship deferment but left school because they became a 1 st or 2 nd category affected individual may retain their deferment for a period of up to three years during which they are affected. During this period, the Secretary will pay any interest that accrues on a FFEL Stafford Loan. For borrowers of Perkins Loans who are in the 1 st or 2 nd categories of affected individuals, any forbearance granted on the basis of their status as an affected individual is excluded from the usual three-year limit on forbearance. Also, for these categories of affected individuals, borrowers of Perkins Loans may be granted forbearance based on an oral request and without written documentation for a one-year period and an additional three-month transition period. Borrowers of FFEL program loans who are in the 1 st or 2 nd categories of affected individuals may be granted forbearance based on an oral request and without written documentation for a one-year period and an additional three-month transition period. For borrowers that may qualify for Teacher Loan Forgiveness (Direct Loan and FFEL program borrowers) or Perkins Loan Cancellation (Perkins Loan program borrowers) on the basis of continuous or uninterrupted qualifying service, such service will not be considered interrupted by any period during which they are in the 1 st or 2 nd categories of affected individuals or during a three-month transition period. For borrowers who defaulted on Direct Loan, FFEL, or Perkins Loan program loans and are seeking to rehabilitate their loans by making nine on-time payments according to generally applicable procedures, any payments missed during periods when they are in the 1 st or 2 nd categories of affected individuals or during a three-month transition period shall not be considered an interruption in the series of payments required for loan rehabilitation. For borrowers who defaulted on Direct Loan, FFEL, or Perkins Loan program loans and are seeking to reestablish eligibility for Title IV federal student aid by making six consecutive on-time payments, any payments missed during periods when they are in the 1 st or 2 nd categories of affected individuals or during a three-month transition period shall not be considered an interruption in the series of payments required for purposes of reestablishing Title IV eligibility. For borrowers who defaulted on Direct Loan or FFEL program loans and are seeking to consolidate loans out of default, any payments missed during the period when they are in the 1 st or 2 nd category of affected individuals or during a three-month transition period shall not be considered an interruption in the series of payments required for purposes of reestablishing Title IV aid eligibility. Borrowers who are repaying their Direct Loan or FFEL program loans according to an IDR plan and because of their status as 1 st or 2 nd category affected individuals are unable to provide information normally required annually to document their income and family size may maintain their current payment amount for a period of up to three years, including a three-month transition period. This flexibility is made in lieu of having their payment amount adjusted to be based on a standard 10-year repayment plan or an alternative repayment plan, as applicable."], "subsections": []}]}}
{"id": "R46285", "title": "Coronavirus Preparedness and Response Supplemental Appropriations Act, 2020 (P.L. 116-123): First Coronavirus Supplemental", "released_date": "2020-03-25T00:00:00", "summary": ["In the early months of 2020, the federal government began to express concern over the global outbreak of Coronavirus Disease 2019 (COVID-19). COVID-19 is a viral respiratory illness caused by a novel coronavirus. By late January, the Secretary of the U.S. Department of Health and Human Services (HHS) had invoked certain authorities to direct existing funds to respond to the COVID-19 outbreak. The HHS Secretary declared COVID-19 to be a Public Health Emergency, effective January 27, 2020.", "On February 24, 2020, the Trump Administration submitted an initial emergency supplemental appropriations request to Congress. The Administration requested $1.25 billion in new funds for the HHS Public Health and Social Services Emergency Fund (PHSSEF) to support COVID-19 response efforts. The request included a number of other proposals, mostly related to repurposing existing funds from across the government toward response activities. All told, the Administration estimated needing to allocate about $2.5 billion toward COVID-19 response efforts.", "On March 4, 2020, the Coronavirus Preparedness and Response Supplemental Appropriations Act, 2020 ( H.R. 6074 ), was introduced in the House. The bill was passed by the House (415-2) on March 4 and by the Senate (96-1) on March 5. The bill was signed into law ( P.L. 116-123 ) on March 6. This supplemental appropriations act is the first such act to be enacted in the aftermath of the COVID-19 outbreak. Any subsequent such actions are beyond the scope of the report.", "According to the Congressional Budget Office (CBO), Division A of P.L. 116-123 provides roughly $7.8 billion in discretionary supplemental appropriations. (CBO estimates that provisions in Division B will cost roughly $490 million, but those provisions are not the focus of this report.) The funds in Division A of P.L. 116-123 are primarily intended to prevent, prepare for, and respond to the coronavirus. (For purposes of the bill, the term coronavirus refers to SARS-CoV-2, the virus that causes COVID-2019, or another coronavirus with pandemic potential.)", "The majority of the funds in Division A are appropriated to HHS agencies and accounts. In total, the bill appropriates $6.5 billion to HHS, representing 84% of all funds in the bill. In general, these funds are for health emergency prevention, preparedness, and response activities related to COVID-19. Funds largely support domestic activities, but certain accounts include funds that may be allocated for global health activities. The HHS funds are distributed as follows:", "The PHSSEF receives almost half of all funds in Division A, with appropriations totaling $3.4 billion when including $300 million in appropriations that are contingent upon future actions by HHS. PHSSEF funds are provided for the development of countermeasures and vaccines, as well as for the purchase of vaccines, therapeutics, diagnostics, necessary medical supplies, medical surge capacity, and administrative activities. The Centers for Disease Control and Prevention (CDC) receives the next-largest share of all funds in the supplemental: $2.8 billion, accounting for more than a quarter of all funds in Division A. In general, these funds are intended to support core public health functions, including surveillance, laboratory capacity, infection control, and other activities. The funds are also for global disease detection and emergency response, as well as for activities carried out using the Infectious Diseases Rapid Response Reserve Fund (IDRRRF). Remaining HHS funds are appropriated to the Food and Drug Administration ($61 million) and the National Institutes of Health ($836 million).", "In addition to amounts appropriated to HHS, the supplemental provides $20 million in administrative funds for the Disaster Loans Program Account within the Small Business Administration (SBA). The supplemental also includes provisions clarifying that SBA disaster loans and economic injury disaster loans may be made in response to COVID-19. Finally, the supplemental provides nearly $1.3 billion (about 16% of all funds in Division A) to support foreign operations activities across several agencies and funding mechanisms. This includes funding to help the Department of State maintain consular operations, reimburse for evacuation expenses, and support emergency preparedness. Additional funds are provided for global health, international disaster assistance, economic support, and certain oversight activities."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["By late February and early March 2020, the global outbreak of Coronavirus Disease 2019 (COVID-19), a viral respiratory illness caused by a novel coronavirus, had entered a new phase, with community spread occurring in many countries and several U.S. states. Concerns grew over the potential for the disease to spread widely, leading to increased hospitalizations and deaths. On March 6, 2020, Congress and the President enacted the Coronavirus Preparedness and Response Supplemental Appropriations Act, 2020 ( P.L. 116-123 ), to provide emergency supplemental appropriations to prevent, prepare for, and respond to the coronavirus outbreak. This report provides an overview of appropriations in Division A and relevant policies and requirements pursuant to the supplemental. Funding in Division A is designated as being provided as an emergency requirement.", "For the purposes of the supplemental, the term \"coronavirus\" refers to SARS-CoV-2, the virus that causes COVID-2019, or another coronavirus with pandemic potential. For an overview of congressional reporting requirements in the act, see CRS Insight IN11236, Oversight Provisions in H.R. 6074, the Coronavirus Preparedness and Response Supplemental Appropriations Act , by Ben Wilhelm. "], "subsections": [{"section_title": "Lead-Up to Enactment", "paragraphs": ["Prior to the enactment of P.L. 116-123 , domestic health coronavirus preparedness and response activities were primarily supported by the U.S. Department of Health and Human Services (HHS) using certain existing funding streams and transfer authorities. For instance, on January 25, 2020, the HHS Secretary determined that COVID-19 response activities would be supported by an allotment of $105 million from existing balances in the Infectious Disease Rapid Response Reserve Fund (IDRRRF; see the \" Centers for Disease Control and Prevention (CDC) \" section of this report). In addition, on February 2, 2020, HHS reportedly notified Congress of its intention to transfer up to $136 million to COVID-19 response efforts from other existing HHS accounts. ", "On February 24, 2020, the Administration asked Congress for emergency supplemental appropriations of $1.25 billion for the HHS Public Health and Social Services Emergency Fund (PHSSEF) to support COVID-19 response efforts. The Administration's request included a number of other proposals, mostly related to repurposing existing funds from across the government, including HHS funds for current Ebola response activities. All told, the Administration estimated needing to allocate about $2.5 billion toward COVID-19 repose efforts. ", "The supplemental appropriations bill, H.R. 6074 , was introduced and passed in the House on March 4, 2020; passed in the Senate on March 5, 2020; and signed into law ( P.L. 116-123 ) by the President on March 6, 2020. "], "subsections": []}, {"section_title": "Overview of the Supplemental", "paragraphs": ["Division A of P.L. 116-123 provides a total of $7.767 billion in supplemental appropriations to aid in the U.S. and global coronavirus preparedness and response. This total includes $6.497 billion for the HHS (including contingent amounts), $20 million for the Small Business Administration, and $1.250 billion for foreign operations activities provided across several agencies and funding mechanisms. The funding is largely intended to aid in the domestic public health response to the outbreak, with limited amounts available for global health, diplomatic programs, and domestic and international economic assistance activities. Division B, which addresses telehealth services, is covered in CRS Report R46239, Telehealth and Telemedicine: Frequently Asked Questions . ", " Table 1 displays funds appropriated in Division A. The table is organized by each federal department or agency, with funds further broken down by account, program, or activity. The text below the table is organized in the same order and includes more detailed information on the purposes and specified uses of these funds."], "subsections": []}]}, {"section_title": "Health and Human Services (HHS)", "paragraphs": ["Titles I and III of P.L. 116-123 provide a total of about $6.5 billion in appropriations to the Department of Health Human Services (HHS) for health emergency response activities related to COVID-19. The funds in these titles are provided to \"prevent, prepare for, and respond to coronavirus, domestically or internationally.\" Funds largely support domestic activities, but certain accounts have available funding for HHS global health activities. (For information on additional international funding, see the \" Foreign Operations \" section of this report.) "], "subsections": [{"section_title": "Food and Drug Administration (FDA)", "paragraphs": ["Title I provides $61 million to FDA for domestic and international efforts \"to prevent, prepare for, and respond to coronavirus\" to be used for activities such as development of medical countermeasures (e.g., therapeutics, vaccines, and diagnostics), advanced manufacturing for medical products, monitoring of medical product supply chains, and related administrative activities. "], "subsections": []}, {"section_title": "Centers for Disease Control and Prevention (CDC)", "paragraphs": ["Title III makes $2.2 billion available to CDC for domestic and international preparedness and response activities, including the following:", "Not less than $950 million is for grants or cooperative agreements to \"States, localities, territories, tribes, tribal organizations, urban Indian health organizations, or health service providers.\" (The bill calls for HHS to allocate at least half of these funds within 30 days of enactment.) The funds are for core public health functions, including surveillance, laboratory capacity, infection control, and other activities. Per the bill, each grantee that received a Public Health Emergency Preparedness (PHEP) grant for FY2019 shall receive 90% of that amount (totaling $561 million). In addition, not less than $40 million shall be allocated to tribes and tribal organizations. The bill requires certain grantees receiving these funds to submit a spend plan to the CDC not later than 45 days after the date of enactment. Several days after enactment, on March 11, 2020, CDC announced almost $600 million in awards to state and local PHEP grantees, additional funding to the cities of Houston and Philadelphia, and $750,000 to the Cherokee Nation, for a total of $605 million. On March 20, HHS announced that the CDC was preparing to provide an additional $80 million in funding to tribes, tribal organizations, and urban Indian organizations for response activities. In total, the $81 million to tribes and tribal organizations exceeds the required allocation in the supplemental. Based on these initial reports, CRS estimates that, as of the date of this report, about $265 million remains to be used at the CDC Director's discretion to target funds for certain jurisdictions or organizations, research, public health activities, and administrative functions. Not less than $300 million is for global disease detection and emergency response. $300 million shall be transferred to the CDC Infectious Disease Rapid Response Reserve Fund (IDRRRF). Amounts in the IDRRRF may be used to prevent, prepare for, and respond to an infectious disease emergency, as authorized by several titles of the Public Health Service Act, and may be transferred by the CDC Director between CDC, the National Institutes of Health (NIH), and the Public Health and Social Services Emergency Fund (PHSSEF) accounts. Funds may be used for domestic and global activities. ", "In addition to the activities detailed above, the supplemental specifies that the funds appropriated to the CDC may be used for grants for the construction, alteration, or renovation of nonfederally owned facilities to improve preparedness and response capability at the state and local level."], "subsections": []}, {"section_title": "National Institutes of Health (NIH)", "paragraphs": ["Title III makes $836 million available to the National Institute of Allergy and Infectious Diseases (NIAID) at NIH. These funds are for preparedness and response to COVID-19. NIAID supports scientific research on COVID-19 and other coronaviruses, as well as product development for medical countermeasures (e.g., vaccines) that could be used to curb the spread of the virus and/or to lessen its health impact. The bill specifies that", "of the total provided to NIAID, not less than $10 million is to be transferred to National Institute of Environmental Health Sciences (NIEHS) for worker-based training to prevent and reduce exposure of hospital employees, emergency first responders, and other workers who are at risk of exposure to coronavirus through their work duties. NIEHS is the primary NIH institute for environmental health research. "], "subsections": []}, {"section_title": "Public Health and Social Services Emergency Fund (PHSSEF)", "paragraphs": ["The Public Health and Social Services Emergency Fund is an account used in appropriations acts to provide the HHS Secretary with one-time or emergency funding, as well as annual funding for the office of the HHS Assistance Secretary for Preparedness and Response (ASPR). Title III of P.L. 116-123 makes $3.1 billion available to the PHSSEF for domestic and international coronavirus preparedness and response. PHSSEF funds may support a variety of activities, including ", "product development and manufacturing for medical countermeasures (vaccines, diagnostics, and therapeutics) prioritizing platform-based technologies with U.S.-based manufacturing capabilities; the development of manufacturing platforms for such products; the purchase of medical countermeasures and medical supplies; the expansion of medical surge capacity; grants to improve nonfederally owned facilities to improve preparedness and response capabilities at the state and local level; and grants to improve nonfederally owned facilities for the production of medical countermeasures.", "Title III also states that the HHS Secretary may take actions authorized under current law to ensure that products developed with provided funding will be affordable in the commercial market; however, the Secretary cannot take actions that delay the development of such products. ", "The bill specifies that, out of the $3.1 billion:", "$100 million is to be transferred to the Health Resources and Services Administration (HRSA) Bureau of Primary Health Care for grants under the Health Centers Program. Up to $2 million is to be transferred to, and merged with, funding for the HHS Office of Inspector General for the oversight of the activities supported with funds appropriated to HHS in titles I and III. An unspecified amount may be transferred to, and merged with, the Covered Countermeasure Process Fund. This fund may compensate eligible individuals who suffer injuries as a result of a medical countermeasure administered or used under a declaration of the Public Readiness and Emergency Preparedness Act (PREP Act).", "In addition to the $3.1 billion appropriation to the PHSSEF, the supplemental provides another $300 million in PHSSEF appropriations that are contingent upon future actions by HHS. The contingent funds may be used to purchase medical products (e.g., vaccines, therapeutics, and diagnostics). However, in order for the additional $300 million to become available, HHS must certify to the House and Senate Appropriations Committees that (1) funds from the initial $3.1 billion that had been allotted for purchase of such products will be obligated imminently and (2) the additional funds are necessary to purchase vaccines, therapeutics, or diagnostics in quantities that will adequately address the public health need."], "subsections": []}, {"section_title": "HHS General and Other Provisions", "paragraphs": ["Title III contains a number of general and other provisions that provide further guidance or additional requirements associated with the supplemental funds. For example, these provisions give HHS certain hiring and contract flexibilities. In addition, they authorize HHS to use funds to restore certain prior obligations, and they establish certain expectations with respect to spend plans, transfers, and reporting and notifications to Congress. "], "subsections": [{"section_title": "Use of Funds to Restore Prior Obligations", "paragraphs": ["Title III includes general provisions authorizing HHS to use amounts appropriated in this title to restore certain obligations incurred by HHS prior to the date of enactment for activities related to coronavirus preparedness and response. In some cases, HHS is required to reverse these actions. Specifically, HHS is directed to restore any amounts that had been transferred or reprogrammed for these purposes pursuant to a notice to appropriations committees on February 2, 2020. ", "Title III general provisions also specify that funds for certain grant awards or cooperative agreements to states, localities, and other entities are to include amounts to reimburse those entities for costs incurred for relevant public health and other preparedness and response activities between January 20, 2020, and the date of enactment. "], "subsections": []}, {"section_title": "HHS Spend Plans, Transfers, and Reporting and Notification Requirements", "paragraphs": ["Titles III includes the following reporting and notification requirements for HHS, generally, and for specific HHS agencies:", "Spend Plan: HHS must provide a spend plan to the House and Senate Appropriations Committees not later than 30 days after the date of enactment. The spend plan must address anticipated uses of all funds made available to HHS in the supplemental. The spend plan must be updated and submitted to these committees every 60 days until September 30, 2024, and must include a list of each contract obligation in excess of $5 million that has not previously been reported.", "Transfer Authority: HHS must notify the House and Senate Appropriations Committees 10 days in advance of a transfer made between CDC, NIH, and PHSSEF accounts. HHS may transfer nearly all amounts appropriated in Title III to these specified agencies and accounts, provided the transfers are made to prevent, prepare for, and respond to coronavirus, domestically or internationally.", "Contracting: HHS must notify the House and Senate Appropriations Committees prior to using funding provided under Title III to enter into contracts with individuals for the provision of personal services to support coronavirus preparedness and response. ", "Infectious Disease Rapid Response Reserve Fund (IDRRRF): The HHS Secretary, in consultation with the CDC Director, shall provide a report to the House and Senate Appropriations Committees every 14 days for a full year after the Secretary has made certain determinations with respect to the IDRRRF. Specifically, these reports must be made if the Secretary, pursuant to Section 231 of P.L. 115-245 , has made IDRRRF funds available (1) after declaring a Public Health Emergency or (2) determining that an infectious disease emergency has significant potential to imminently occur and to affect national security or the health and security of U.S. citizens. In the case of the COVID-19 outbreak, the HHS Secretary issued a determination allowing for the allotment of funds from the IDRRRF on January 25, 2020. The Secretary subsequently declared COVID-19 to be a Public Health Emergency Public Emergency effective January 27, 2020. The report to the appropriations committees must detail IDRRRF commitment and obligation information in excess of $5 million and upon request of the committees. "], "subsections": []}]}]}, {"section_title": "Small Business Administration", "paragraphs": ["Title II of P.L. 116-123 provides the Small Business Administration (SBA) with $20 million until expended for administrative expenses to carry out the SBA Disaster Loan Program. Title II also deems the coronavirus outbreak a disaster under Section 7(b)(2)(D) of the Small Business Act. Prior to the amendment, some questioned whether the coronavirus outbreak would meet the Small Business Act's legal definition of a disaster. The amendment addresses this question and clarifies that SBA Economic Injury Disaster Loans (EIDL) can be made available. ", "Title II does not provide additional funding to the SBA for disaster loans, including SBA EIDL. Instead, SBA EIDL loan funding in response to the coronavirus outbreak (as well as SBA disaster loan funding for other incidents) is to be funded by roughly $1.2 billion in disaster loan credit subsidy, which includes just over $1.1 billion in disaster loan credit subsidy carried over from previous years. This is possible because the Disaster Loan Account is a \"no-year\" account. No-year funding does not lapse at the end of the fiscal year. Rather, it is carried over to the next fiscal year. ", "A summary of the supplemental released by the House Appropriations Committee noted that the SBA is expected to make $1 billion in credit subsidy available to support the cost of anticipated defaults and related expenses of about $7 billion in EIDL loans. Still, the $1.2 billion in loan subsidy may be of concern to some if EIDL assistance in response to the outbreak becomes significant, if there is an uptick in 2020 disasters, or both. Consequently, Congress could consider providing additional supplemental funding through another appropriations package. ", "In addition, though the coronavirus outbreak is now considered by the SBA to be a disaster, SBA EIDL is not being made automatically available to businesses. Instead, EIDL must be requested by the state or territory governor by requesting one of the following types of declarations: (1) a major disaster declaration under the under the Robert T. Stafford Disaster Relief and Emergency Assistance Act ( P.L. 93-288 , as amended); (2) an SBA EIDL declaration under the Small Business Act (P.L. 83-163); (3) an SBA EIDL declaration under the Small Business Act based on the determination of a natural disaster by the Secretary of Agriculture; or (4) an SBA EIDL declaration based on the determination of the Secretary of Commerce that a fishery resource disaster has occurred."], "subsections": []}, {"section_title": "Foreign Operations", "paragraphs": ["Title IV of P.L. 116-123 provides a total of $1.25 billion for Department of State, Foreign Operations, and Related Programs (SFOPS) appropriations accounts, $264 million of which is to be managed by the Department of State and $971 million of which is to be managed by the U.S. Agency for International Development (USAID). "], "subsections": [{"section_title": "Department of State", "paragraphs": ["Title IV designates $264 million for the Department of State's Diplomatic Programs account, which is the department's principal operating account. Generally, the account provides for human resources functions, overseas programs, security programs, and diplomatic policy and support. P.L. 116-123 indicates that the emergency funds for Diplomatic Programs are meant to support consular operations, reimburse evacuation expenses, and bolster emergency preparedness measures."], "subsections": []}, {"section_title": "Bilateral Assistance", "paragraphs": ["The act specified the provision of $971 million across a number of bilateral assistance appropriations accounts. These include the following:", "Office of Inspector General. $1 million to USAID's Office of Inspector General to support oversight of COVID-19-related programming. Global Health Programs. $435 million to the Global Health Programs (GHP) account, with which USAID intends to prioritize the following interventions in developing countries affected by and at-risk of COVID-19: screening at points of entry and exit; the purchase of key health commodities (e.g., diagnostics, personal protective equipment, and disinfectants); the prevention and control of infections in critical health facilities; readiness to identify, diagnose, manage, and treat cases rapidly; the identification and follow-up of contacts; awareness-raising in populations through risk-communication and community-engagement; the implementation of health measures for travelers; logistics and supply-chain management; global and regional coordination; and country-level readiness and response. ", "According to USAID, the \"funding will help address the threat of COVID-19 in the following high-priority countries:\u00c2\u00a0The Islamic Republic of Afghanistan; the Republics of Angola, Indonesia, Iraq, Kazakhstan, Kenya, South Africa, Tajikistan, The Philippines, Turkmenistan, Uzbekistan, Zambia, and Zimbabwe; the People's Republic of Bangladesh; Burma; the Kingdom of Cambodia; the Federal Democratic Republic of Ethiopia; the Kyrgyz Republic; the Lao People's Democratic Republic; Mongolia; the Federal Republic of Nepal; the Federal Republic of Nigeria; the Islamic Republic of Pakistan; the Kingdom of Thailand; and the Socialist Republic of Vietnam.\" ", "The supplemental specifies that, out of the total appropriated to the GHP account, $200 million is to be transferred into USAID's Emergency Reserve Fund (ERF) to support coronavirus-related programs, including pandemic prevention, preparedness, and control. The ERF was established under the GHP account within final FY2017 appropriations ( P.L. 115-31 ) \"to enable the United States and the international public health community to respond rapidly to emerging health threats.\"", "International Disaster Assistance. $300 million for coronavirus response efforts through the International Disaster Assistance (IDA) account. Broadly, the account is used for relief and recovery efforts in the wake of disasters\u00e2\u0080\u0094both natural and human-induced. Economic Support Fund. $250 million in emergency funds for addressing coronavirus-related \"economic, security, and stabilization requirements\" through the Economic Support Fund (ESF). The ESF account supports myriad objectives, ranging from more traditional development activities to those that advance U.S. political and strategic goals. "], "subsections": []}, {"section_title": "Foreign Operations General Provisions", "paragraphs": ["In the general provisions of Title IV of P.L. 116-123 , Congress primarily offers guidance and requirements on transfer authorities, the Administration's strategy for fighting COVID-19 on an international scale, and the intervals in which Congress requires reporting. ", "Transfer Authorities. The act provides broad transfer authorities across GHP, IDA, and ESF, in an effort to grant flexibility to USAID in its COVID-19 response. However, five days prior to transferring funds, the Secretary of State or USAID Administrator must notify the House and Senate Appropriations Committees of the transfer's details. Strategy. The act requires the Secretary of State and USAID Administrator to issue a joint strategy to \"prevent, prepare for, and respond to coronavirus abroad\" within 15 days of the supplemental's enactment. Reporting. In addition to regular reporting requirements for each appropriations account, the act includes a provision that requires additional reporting for the supplemental funds. The act requires the Secretary of State and USAID Administrator to jointly submit to the House and Senate Appropriations Committees a report detailing the use of the supplemental funds within 30 days of enactment. Following submission of the report, it is required to be updated every 60 days until September 30, 2022, and then every 180 days after that until all funds have been expended. This reporting structure is relatively consistent with other SFOPS supplemental appropriations measures that have been enacted in the past decade. Use of Funds to Restore Prior Obligations. The act specifies that supplemental funds appropriated to certain accounts (Diplomatic Programs, GHP, IDA, and ESF) may be used to reimburse accounts administered by the Department of State and the USAID for obligations incurred prior to enactment for activities to prevent, prepare for, and respond to coronavirus. (Certain limitations are placed on use of these funds for certain obligations previously incurred by ESF.) "], "subsections": []}]}]}}
{"id": "R46292", "title": "Freedom of Information Act (FOIA) Processing Changes Due to COVID-19: In Brief", "released_date": "2020-03-27T00:00:00", "summary": ["As federal agencies adjust their operations in light of the COVID-19 pandemic, activities related to the processing and release of government information are also changing. Agencies such as the Federal Bureau of Investigation within the Department of Justice, the U.S. Postal Service, and the Centers for Disease Control and Prevention within the Department of Health and Human Services, among others, have announced changes to their processing of Freedom of Information Act (FOIA) requests due to the pandemic.", "Government information requests through FOIA may be impacted by COVID-19 in two ways. First, certain types of information related to the outbreak may be eligible for expedited consideration; FOIA requests are to be expedited as soon as practicable in cases in which the person requesting the records demonstrates a compelling need. Second, processes for locating information may change due to employees working remotely or on administrative leave.", "This In Brief report provides an overview of the typical FOIA request process and usual conditions for requesting expedited processing of a request. The report then provides analysis of the impact of agency procedures in response to the pandemic on government information availability, and concludes with a survey of announced agency processing alterations."], "reports": {"section_title": "", "paragraphs": ["R ecently, the Federal Bureau of Investigation (FBI) announced that it would only accept mailed Freedom of Information Act (FOIA) requests and not those submitted electronically due to the COVID-19 pandemic. Conversely, the Centers for Disease Control and Prevention (CDC) has adopted a contrasting policy, saying that CDC would not be able to respond to mailed FOIA requests and that requests should be placed electronically. These examples of differing policies, among others examples not mentioned, when combined with agencies' adoption of additional telework flexibilities , raise questions about how agencies will be responding to FOIA requests in the near future.", "This report provides an overview of the FOIA request process and actual and potential FOIA request processing changes within federal government agencies as a result of COVID-19."], "subsections": [{"section_title": "Processing a FOIA Request", "paragraphs": ["FOIA does not require requests for agency information to be submitted in a particular format, only that the request reasonably describes the records sought and complies with agency regulations. Most agencies accept requests via mail, email, web form, or fax. The statute also requires the affirmative disclosure of certain categories of agency information, such as \"substantive rules of general applicability,\" \"rules of procedure,\" and, since 2016, records requested three or more times.", "While the text of FOIA does not specifically dictate the method in which the public must request information from an agency, FOIA does prescribe how an agency is to respond to the request. From an administrative perspective, FOIA directs the amount of time an agency has to respond to a request, defines whether and how an agency may recoup costs for providing services in response to a request, and provides nine instances where an agency may exempt information from public disclosure. ", "After an agency receives a request, the agency is to inform the requester of its receipt. Generally, an agency is to respond to a correctly routed, simple request within 20 days with a determination of the scope of the documents the agency will produce and any exemptions it will apply to withhold records or information. Complex or incorrectly routed requests may be subject to additional days of processing, per the statute (5 U.S.C. \u00c2\u00a7552(a)(6)). Also, agencies managing backlog s of FOIA requests do not always process requests within the statutory period. When completed, a written response may provide the information requested or some of the information requested with redactions per one of FOIA's nine exemptions, inform the requester that the agency does not have responsive records, or deny a request entirely due to one of the nine exemptions. Requesters may administratively appeal an agency's adverse decision."], "subsections": []}, {"section_title": "COVID-19 Considerations for Locating Information", "paragraphs": ["Government information requests through FOIA may be impacted by COVID-19 in two ways: (1) certain types of information related to the outbreak may be eligible for expedited consideration; and (2) processes for locating information may change due to employees working remotely or on administrative leave."], "subsections": [{"section_title": "Expedited Processing of Requests", "paragraphs": ["Pursuant to 5 U.S.C. \u00c2\u00a7552(a)(6)(E), processing of FOIA requests is to be expedited as soon as practicable in cases in which the person requesting the records demonstrates a compelling need. Statute defines a \"compelling need\" as a case where ", "the lack of expedited treatment could reasonably be expected to pose an imminent threat to someone's life or physical safety; or there is an urgency to inform the public about an actual or alleged federal government activity, but only if the request is made by a person who is primarily engaged in disseminating information. ", "Agencies may also establish additional standards for granting expedited processing. Whereas agencies are to initially respond to most FOIA requests within 20 days, they must determine whether to grant expedited processing within 10 days. "], "subsections": []}, {"section_title": "Changes Due to Remote Work", "paragraphs": ["Locating information responsive to a FOIA request requires employees and systems to search and review the information . Additionally, not all agency information is created or available in a digital format. Per the Department of Justice's FOIA.gov portal, ", "There is no central office in the government that handles FOIA requests for all federal departments and agencies.... There are many different officials at these agencies who work hard every day to make sure that the FOIA works. There are the FOIA professionals who search for and process records in response to FOIA requests, FOIA Contacts and FOIA Public Liaisons who work with FOIA requesters to answer questions and resolve concerns, and Chief FOIA Officers who oversee their agency's compliance with the FOIA.", "Because of the decentralized FOIA process at federal agencies, multiple physical and digital systems and many people may be involved in processing a single request. However, given the work flexibilities at many agencies due to COVID-19, some or all of the members of an agency's FOIA team may currently be working offsite. If a record responsive to a request is only available on-site in a paper format, that record's practical availability may be limited by these conditions."], "subsections": []}]}, {"section_title": "Survey of FOIA Processing Changes for Selected Agencies", "paragraphs": ["While challenges in locating responsive information may occur at any agency, responses to requests for information during the COVID-19 outbreak have varied. CRS performed a search of federal department websites and their components. As of March 26, 2020, CRS identified statements by 13 agencies regarding COVID-19's impact on FOIA request processing. ", " Table 1 presents these recent statements regarding the impact of COVID-19 or simply changes in agencies' abilities to process FOIA requests, provides Code of Federal Regulations (C.F.R.) citations to each agency's policy regarding expedited FOIA requests, and notes whether the agency has made additional allowances for expediting requests. The table should be considered a snapshot in time, as agencies may update or change their statements.", "Of the 13 agencies identified, 8 altered the transmission method by which a FOIA request should be submitted. Some statements also discuss current operating status, and mention anticipated delays due to COVID-19. Six of the identified agencies have additional allowances for expediting requests: U.S. Air Force, Department of Housing and Urban Development, Department of Labor, Department of Veterans Affairs, National Archives and Records Administration, and Office of Government Information Services. Of the six agencies that established additional allowances for expediting requests, five permit expediting cases where due process rights would be impacted, four permit expediting cases where there exist possible questions affecting public confidence in the federal government's integrity, one permits expediting due to humanitarian needs, and one permits expediting at the discretion of the agency's FOIA Officer. The exact language from the C.F.R. is provided in Table 1 below."], "subsections": []}]}}
{"id": "R45820", "title": "Department of Health and Human Services: FY2020 Budget Request", "released_date": "2019-07-17T00:00:00", "summary": ["Historically, the U.S. Department of Health and Human Services (HHS) has been one of the larger federal departments in terms of budgetary resources. Estimates by the Office of Management and Budget (OMB) indicate that HHS has accounted for at least 20% of all federal outlays in each year since FY1995. Most recently, HHS is estimated to have accounted for 27% of all federal outlays in FY2018.", "Final FY2019 appropriations had not been enacted for a few HHS operating divisions and accounts prior to the development of the FY2020 President's budget request. As a result, the FY2019 estimates contained in FY2020 President's budget materials (and this report) are based on annualized amounts provided in the FY2019 continuing resolution for this subset of HHS accounts. The remainder of the HHS estimates for FY2019 are based on enacted full-year appropriations contained in Division B of P.L. 115-245 , along with current services estimates for mandatory spending.", "Under the FY2020 President's budget request, HHS would spend an estimated $1.286 trillion in outlays in FY2020. This is $56 billion (+5%) more than estimated HHS spending in FY2019 and $166 billion (+15%) more than actual HHS spending in FY2018. Mandatory spending typically comprises the majority of the HHS budget. Two programs\u00e2\u0080\u0094Medicare and Medicaid\u00e2\u0080\u0094are expected to account for 86% of all estimated HHS spending in FY2020, according to the President's budget request. Medicare and Medicaid are \"entitlement\" programs, meaning the federal government is required to make mandatory payments to individuals, states, or other entities based on criteria established in authorizing law.", "Discretionary spending accounts for about 8% of HHS outlays in the FY2020 President's budget request. Although discretionary spending represents a relatively small share of total HHS spending, the department nevertheless receives more discretionary money than most federal departments. According to OMB data, HHS accounted for 7% of all discretionary budget authority across the government in FY2018.", "This report provides information about the FY2020 HHS budget request. It begins with a review of the department's mission and structure. Next, the report provides some context for the FY2020 President's budget request. It then discusses the concept of the HHS budget as a whole, in comparison to how funding is provided to HHS through the annual appropriations process. The report continues with a breakdown of the HHS request by operating division. An appendix summarizes the mission of each HHS operating division and identifies additional agency-level resources related to the FY2020 budget request."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "About the U.S. Department of Health and Human Services (HHS)", "paragraphs": ["The mission of HHS is to \"enhance the health and well-being of Americans by providing for effective health and human services and by fostering sound, sustained advances in the sciences underlying medicine, public health, and social services.\" ", "HHS is currently organized into 11 main agencies, called \"operating divisions\" (listed below), which are responsible for administering a wide variety of health and human services programs, and conducting related research. In addition, HHS has a number of \"staff divisions\" within the Office of the Secretary (OS). These staff divisions fulfill a broad array of management, research, oversight, and emergency preparedness functions in support of the entire department. ", "HHS Operating Divisions", "Eight of the HHS operating divisions are part of the U.S. Public Health Service (PHS). PHS agencies have diverse missions in support of public health, including the provision of health care services and supports (e.g., IHS, HRSA, SAMHSA); the advancement of health care quality and medical research (e.g., AHRQ, NIH); the prevention and control of disease, injury, and environmental health hazards (e.g., CDC, ATSDR); and the regulation of food and drugs (e.g., FDA). ", "The three remaining HHS operating divisions\u00e2\u0080\u0094ACF, ACL, and CMS\u00e2\u0080\u0094are not PHS agencies. ACF and ACL largely administer human services programs focused on the well-being of vulnerable children, families, older Americans, and individuals with disabilities. CMS\u00e2\u0080\u0094which accounts for the largest share of the HHS budget by far\u00e2\u0080\u0094is responsible for administering Medicare, Medicaid, and the State Children's Health Insurance Program (CHIP), in addition to some aspects of the private health insurance\u00c2\u00a0market. ", "(For a summary of each operating division's mission and links to agency resources related to the FY2020 budget request, see the Appendix .)"], "subsections": []}, {"section_title": "Context for the FY2020 President's Budget Request", "paragraphs": ["The initial President's budget request for FY2020 was submitted to Congress on March 11, 2019, about five weeks after the statutory deadline. (Additional components of the FY2020 request were released in subsequent weeks.) The delay in the budget submission was attributable, in part, to protracted negotiations over seven of the FY2019 annual appropriations acts, which resulted in a five-week partial government shutdown. (Five of the 12 annual appropriations acts had already received full-year appropriations for FY2019 when the shutdown commenced.)", "At HHS, the FY2019 shutdown primarily affected FDA, IHS, and ATSDR. The remaining HHS operating and staff divisions generally had already received full-year FY2019 funding prior to the start of the fiscal year (Division B of P.L. 115-245 ). Full-year appropriations for FDA, IHS, and ATSDR were ultimately enacted on February 15, 2019, almost five months after the start of the fiscal year ( P.L. 116-6 ).", "In light of this delay, the source of the FY2019 numbers contained in the FY2020 President's budget materials varies by HHS agency. In the case of FDA, IHS, and ATSDR, amounts shown for FY2019 were estimated based on annualized funding levels under the FY2019 continuing resolution (Division C of P.L. 115-245 , as amended), not final full-year enacted levels. By contrast, amounts shown for the remaining HHS agencies generally reflect enacted full-year appropriations provided in Division B of P.L. 115-245 . "], "subsections": []}, {"section_title": "Overview of the FY2020 HHS Budget Request", "paragraphs": ["Under the President's budget request, HHS would spend an estimated $1.286 trillion in outlays in FY2020 (see Table 1 ). This is $56 billion (+5%) more than estimated HHS spending in FY2019 and about $166 billion (+15%) more than actual HHS spending in FY2018. ", "Historical estimates by the Office of Management and Budget (OMB) indicate that HHS has accounted for at least 20% of all federal outlays in each year since FY1995. Most recently, OMB estimated that HHS accounted for 27% of all federal outlays in FY2018. ", " Figure 1 displays proposed FY2020 HHS outlays by major program or spending category in the President's request. As this figure shows, mandatory spending typically accounts for the vast majority of the HHS budget. In fact, two programs\u00e2\u0080\u0094Medicare and Medicaid\u00e2\u0080\u0094are expected to account for 86% of all estimated HHS spending in FY2020. Medicare and Medicaid are \"entitlement\" programs, meaning the federal government is required to make mandatory payments to individuals, states, or other entities based on criteria established in authorizing law. ", "This figure also shows that discretionary spending accounts for about 8% of estimated FY2020 HHS outlays in the President's request. Although discretionary spending represents a relatively small share of total HHS spending, the department nevertheless receives more discretionary money than most federal departments. According to OMB data, HHS accounted for 7% of all discretionary budget authority across the government in FY2018, the same as the Department of Homeland Security. The Department of Defense was the only federal agency to account for a larger share of all discretionary budget authority in that year (47%)."], "subsections": [{"section_title": "Budgetary Resources Versus Appropriations", "paragraphs": ["Readers should be aware that the HHS budget includes a broader set of budgetary resources than the amounts provided to HHS through the annual appropriations process. As a result, certain amounts shown in FY2020 HHS budget materials (including amounts for prior years) will not match amounts provided to HHS by annual appropriations acts and displayed in accompanying congressional documents. There are several reasons for this: ", "M andatory spending makes up a large portion of the HHS budget, and much of that spending is provided directly by authorizing laws, not through appropriations acts. All discretionary spending is controlled and provided through the annual appropriations process. By contrast, all mandatory spending is controlled by the program's authorizing statute. In most cases, that authorizing statute also provides the funding for the program. However, the budget authority for some mandatory programs (including Medicaid), while controlled by criteria in the authorizing statute, must still be provided through the annual appropriations process; such programs are commonly referred to as \"appropriated entitlements\" or \"appropriated mandatories.\" The HHS budget request takes into account the department as a whole, while the appropriations process divides HHS funding across three different appropriations bills. Most of the discretionary funding for the department is provided through the Departments of Labor, Health and Human Services, and Education, and Related Agencies (LHHS) Appropriations Act. However, funding for certain HHS agencies and activities is appropriated in two other bills\u00e2\u0080\u0094the Departments of the Interior, Environment, and Related Agencies Appropriations Act (INT) and the Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act (AG). Table 2 lists HHS agencies by appropriations bill. ", "The Administration may choose to follow different conventions than those of congressional scorekeepers for its estimates of HHS programs. For example, certain transfers of funding between HHS agencies (or from HHS to other federal agencies) that occurred in prior fiscal years, or are expected to occur in the current fiscal year, may be accounted for in the Administration's estimates but not necessarily in the congressional documents. HHS budget materials include two different estimates for mandatory spending programs in FY2019 when appropriate: proposed law and current law . Proposed law estimates take into account changes in mandatory spending proposed in the FY2020 HHS budget request. Such proposals would need to be enacted into law to affect the budgetary resources ultimately available to the mandatory spending program. HHS materials may also show a current law or current services estimate for mandatory spending programs. These estimates assume that no changes will be made to existing policies, and instead estimate mandatory spending for programs based on criteria established in current authorizing law. The HHS budget estimates in this report reflect the proposed law estimates for mandatory spending programs, but readers should be aware that other HHS, OMB, or congressional estimates might reflect current law instead. In some cases, agencies within HHS have the authority to expend user fees and other types of collections that effectively supplement their appropriations. In addition, agencies may receive transfers of budgetary resources from other sources, such as from the Public Health Service Evaluation Set-Aside (also referred to as the PHS Tap) or one of the mandatory funds established by the Patient Protection and Affordable Care Act (ACA; P.L. 111-148 , as amended). Budgetary totals that account for these sorts of resources in the Administration estimates are referred to as being at the \"program level.\" HHS agencies that have historically had notable differences between the amounts in the appropriations bills and their program level include FDA (due to user fees) and AHRQ (due to transfers). The program level for each agency is listed in the table entitled \"Composition of the HHS Budget Discretionary Programs\" in the HHS FY2020 Budget in Brief."], "subsections": []}]}, {"section_title": "HHS Budget by Operating Division", "paragraphs": [" Figure 2 provides a breakdown of the FY2020 HHS budget request by operating division. When taking into account both mandatory and discretionary budget authority (i.e., total budget authority shown in Figure 2 ), CMS accounts for the largest share of the request (nearly $1.17 trillion). The majority of the CMS budget request would go toward mandatory spending programs, such as Medicare and Medicaid. ", "When looking exclusively at discretionary budget authority, funding for CMS is comparatively smaller, accounting for just $3.6 billion of the HHS discretionary request. The largest share of the discretionary request would go to the PHS agencies (roughly $59.4 billion in combined funding for FDA, HRSA, IHS, CDC, ATSDR, NIH, and SAMHSA; no funds would go to AHRQ under the request ). NIH would receive the largest amount ($33.5 billion) of discretionary budget authority of any HHS operating division, and ACF would receive the second-largest amount ($18.3 billion). ", " Table 3 puts the FY2020 request for each HHS operating division and the Office of the Secretary into context, displaying it along with estimates of funding provided over the three prior fiscal years (FY2017-FY2019). These totals are inclusive of both mandatory and discretionary funding. ", "The amounts in this table are shown in terms of budget authority (BA) and outlays. BA is the authority provided by federal law to enter into contracts or other financial obligations that will result in immediate or future expenditures involving federal government funds. Outlays occur when funds are actually expended from the Treasury; they could be the result of either new budget authority enacted in the current fiscal year or unexpended budget authority that was enacted in previous fiscal years. As a consequence, the BA and outlays in this table represent two different ways of accounting for the funding that is provided to each HHS agency through the federal budget process. For example, Table 3 shows $0 in FY2020 BA for AHRQ because the President's budget proposes to eliminate this agency; however, the table shows an estimated $299 million in FY2020 AHRQ outlays, reflecting the expected expenditure of funds previously provided to the agency. "], "subsections": [{"section_title": "Appendix. HHS Operating Divisions: Missions and FY2020 Budget Resources", "paragraphs": ["This appendix provides for each operating division a brief summary of its mission, the applicable appropriations bill, the FY2020 budget request level, and links to additional resources related to that request. ", "Food and Drug Administration (FDA)", "The FDA mission is focused on regulating the safety, efficacy, and security of human foods, dietary supplements, cosmetics, and animal foods; and the safety and effectiveness of human drugs, biological products (e.g., vaccines), medical devices, radiation-emitting products, and animal drugs. It also regulates the manufacture, marketing, and sale of tobacco products. ", "Relevant Appropriations Bill: ", "AG", "FY2020 Request: ", "BA: $3.329 billion Outlays: $2.837 billion", "Additional Resources Related to the FY2020 Request:", "Congressional Justification (all-purpose table on p. 15), https://www.fda.gov/downloads/AboutFDA/ReportsManualsForms/Reports/BudgetReports/UCM633738.pdf . BIB chapter (p. 21), https://www.hhs.gov/sites/default/files/fy-2020-budget-in-brief.pdf#page=25 . ", "Health Resources and Services Administration (HRSA)", "The HRSA mission is focused on \"improving health care to people who are geographically isolated, economically or medically vulnerable.\" Among its many programs and activities, HRSA supports health care workforce training; the National Health Service Corps; and the federal health centers program, which provides grants to nonprofit entities that provide primary care services to people who experience financial, geographic, cultural, or other barriers to health care. ", "Relevant Appropriations Bill: ", "LHHS", "FY2020 Request: ", "BA: $11.004 billion Outlays: $11.864 billion ", "Additional Resources Related to the FY2020 Request:", "Congressional Justification (all-purpose table on p. 16), https://www.hrsa.gov/sites/default/files/hrsa/about/budget/budget-justification-fy2020.pdf . BIB chapter (p. 29), https://www.hhs.gov/sites/default/files/fy-2020-budget-in-brief.pdf#page=33 . ", "Indian Health Service (IHS)", "The IHS mission is to provide \"a comprehensive health service delivery system for American Indians and Alaska Natives\" and \"raise the physical, mental, social, and spiritual health of American Indians and Alaska Natives to the highest level.\" IHS provides health care for approximately 2.2 million eligible American Indians and Alaska Natives through a system of programs and facilities located on or near Indian reservations, and through contractors in certain urban areas. ", "Relevant Appropriations Bill: ", "INT", "FY2020 Request: ", "BA: $6.104 billion Outlays: $5.970 billion ", "Additional Resources Related to the FY2020 Request:", " Congressional Justification (all-purpose table on p. 7), https://www.ihs.gov/sites/budgetformulation/themes/responsive2017/display_objects/documents/FY2020CongressionalJustification.pdf BIB chapter (p. 36), https://www.hhs.gov/sites/default/files/fy-2020-budget-in-brief.pdf#page=40 . ", "Centers for Disease Control and Prevention (CDC) and Agency for Toxic Substances and Disease Registry (ATSDR)", "The CDC mission is focused on \"disease prevention and control, environmental health, and health promotion and health education.\" CDC is organized into a number of centers, institutes, and offices, some focused on specific public health challenges (e.g., injury prevention) and others focused on general public health capabilities (e.g., surveillance and laboratory services). ", "In addition, the Agency for Toxic Substances and Disease Registry (ATSDR) is headed by the CDC director. For that reason, the ATSDR budget is often shown within CDC. Following the conventions of the FY2020 HHS BIB, ATSDR's budget request is included in the CDC totals shown in this report. ATSDR's work is focused on preventing or mitigating adverse effects resulting from exposure to hazardous substances in the environment. ", "Relevant Appropriations Bills: ", "LHHS (CDC) INT (ATSDR)", "FY2020 Request (CDC and ATSDR combined): ", "BA: $6.767 billion Outlays: $7.877 billion ", "Additional Resources Related to the FY2020 Request:", " CDC Congressional Justification (all-purpose table on p. 23), https://www.cdc.gov/budget/documents/fy2020/fy-2020-cdc-congressional-justification.pdf . ATSDR Congressional Justification, https://www.cdc.gov/budget/documents/fy2020/fy-2020-atsdr.pdf . BIB chapter (p. 43), https://www.hhs.gov/sites/default/files/fy-2020-budget-in-brief.pdf#page=47 . ", "National Institutes of Health (NIH)", "The NIH mission is focused on conducting and supporting research \"in causes, diagnosis, prevention, and cure of human diseases\" and \"in directing programs for the collection, dissemination, and exchange of information in medicine and health.\" NIH is organized into 27 research institutes and centers, headed by the NIH Director. (The FY2020 President's budget assumes that AHRQ's functions will be consolidated within NIH, in the new National Institute for Research on Safety and Quality (NIRSQ). This assumption is reflected in the figures below. )", "Relevant Appropriations Bill: ", "LHHS", "FY2020 Request: ", "BA: $33.669 billion Outlays: $36.652 billion ", "Additional Resources Related to the FY2020 Request:", " Congressional Justification (all-purpose table on p. 18), available at https://officeofbudget.od.nih.gov/pdfs/FY20/br/Overview-Volume-FY-2020-CJ.pdf . BIB chapter (p. 52), available at https://www.hhs.gov/sites/default/files/fy-2020-budget-in-brief.pdf#page=56 . ", "Substance Abuse and Mental Health Services Administration (SAMHSA)", "The SAMHSA mission is focused on reducing the \"impact of substance abuse and mental illness on America's communities.\" SAMHSA coordinates behavioral health surveillance to improve understanding of the impact of substance abuse and mental illness on children, individuals, and families, and the costs associated with treatment. ", "Relevant Appropriations Bill: ", "LHHS", "FY2020 Request: ", "BA: $5.535 billion Outlays: $5.684 billion ", "Additional Resources Related to the FY2020 Request:", " Congressional Justification (all-purpose table on p. 8), https://www.samhsa.gov/sites/default/files/samhsa-fy-2020-congressional-justification.pdf . BIB chapter (p. 60), https://www.hhs.gov/sites/default/files/fy-2020-budget-in-brief.pdf#page=64 . ", "Agency for Healthcare Research and Quality (AHRQ)", "The AHRQ mission is focused on research to make health care \"safer, higher quality, more accessible, equitable, and affordable.\" Specific AHRQ research efforts are aimed at reducing the costs of care, promoting patient safety, measuring the quality of health care, and improving health care services, organization, and financing. The FY2020 President's budget proposes eliminating AHRQ and consolidating certain key AHRQ functions within NIH, in the new National Institute for Research on Safety and Quality (NIRSQ).", "Relevant Appropriations Bill: ", "LHHS", "FY2020 Request: ", "BA: $0 Outlays: $0.299 billion ", "Additional Resources Related to the FY2020 Request:", "Congressional Justification for the proposed National Institute for Research on Safety and Quality, https://www.ahrq.gov/sites/default/files/wysiwyg/cpi/about/mission/budget/2020/FY_2020_CJ_-NIRSQ.pdf . There is no FY2020 BIB chapter for AHRQ.", "Centers for Medicare & Medicaid Services (CMS)", "The CMS mission is focused on supporting \"innovative approaches to improve quality, accessibility, and affordability\" of Medicare, Medicaid, the State Children's Health Insurance Program (CHIP), and private insurance, and on supporting private insurance market reform programs. The President's budget estimates that in FY2020, \"over 145 million Americans will rely on the programs CMS administers including Medicare, Medicaid, the Children's Health Insurance Program (CHIP), and the [Health Insurance] Exchanges.\"", "Relevant Appropriations Bill: ", "LHHS", "FY2020 Request: ", "BA: $1,169.091 billion Outlays: $1,156.333 billion", "Additional Resources Related to the FY2020 Request:", " Congressional Justification (all-purpose table on p. 9), https://www.cms.gov/About-CMS/Agency-Information/PerformanceBudget/FY2020-CJ-Final.pdf . BIB chapter (p. 65), https://www.hhs.gov/sites/default/files/fy-2020-budget-in-brief.pdf#page=69 .", "Administration for Children and Families (ACF) ", "The ACF mission is focused on promoting the \"economic and social well-being of children, youth, families, and communities.\" ACF administers a wide array of human services programs, including Temporary Assistance for Needy Families (TANF), Head Start, child care, the Social Services Block Grant (SSBG), and various child welfare programs. ", "Relevant Appropriations Bill: ", "LHHS", "FY2020 Request: ", "BA: $52.121 billion Outlays: $53.208 billion ", "Additional Resources Related to the FY2020 Request:", "Congressional Justification (all-purpose table on p. 6), https://www.acf.hhs.gov/sites/default/files/olab/acf_congressional_budget_justification_2020.pdf . BIB chapter (p. 122), https://www.hhs.gov/sites/default/files/fy-2020-budget-in-brief.pdf#page=126 .", "Administration for Community Living (ACL) ", "The ACL mission is focused on maximizing the \"independence, well-being, and health of older adults, people with disabilities across the lifespan, and their families and caregivers.\" ACL administers a number of programs targeted at older Americans and the disabled, including Home and Community-Based Supportive Services and State Councils on Developmental Disabilities.", "Relevant Appropriations Bill: ", "LHHS", "FY2020 Request: ", "BA: $1.997 billion Outlays: $2.238 billion ", "Additional Resources Related to the FY2020 Request:", "Congressional Justification (all-purpose table on p. 13), https://acl.gov/sites/default/files/about-acl/2019-04/FY2020%20ACL%20CJ%20508.pdf . BIB chapter (p. 136), https://www.hhs.gov/sites/default/files/fy-2020-budget-in-brief.pdf#page=140 ."], "subsections": []}]}]}}
{"id": "R44972", "title": "Navy Frigate (FFG[X]) Program: Background and Issues for Congress", "released_date": "2019-05-29T00:00:00", "summary": ["The FFG(X) program is a Navy program to build a class of 20 guided-missile frigates (FFGs). The Navy wants to procure the first FFG(X) in FY2020, the next 18 at a rate of two per year in FY2021-FY2029, and the 20th in FY2030. The Navy's proposed FY2020 budget requests $1,281.2 million for the procurement of the first FFG(X). The Navy's FY2020 budget submission shows that subsequent ships in the class are estimated by the Navy to cost roughly $900 million each in then-year dollars.", "The Navy intends to build the FFG(X) to a modified version of an existing ship design\u2014an approach called the parent-design approach. The parent design could be a U.S. ship design or a foreign ship design. At least four industry teams are reportedly competing for the FFG(X) program. Two of the teams are reportedly proposing to build their FFG(X) designs at the two shipyards that have been building Littoral Combat Ships (LCSs) for the Navy\u2014Austal USA of Mobile, AL, and Fincantieri/Marinette Marine (F/MM) of Marinette, WI. The other two teams are reportedly proposing to build their FFG(X) designs at General Dynamics/Bath Iron Works, of Bath, ME, and Huntington Ingalls Industries/Ingalls Shipbuilding of Pascagoula, MS.", "On May 28, 2019, it was reported that a fifth industry team that had been interested in the FFG(X) program had informed the Navy on May 23, 2019, that it had decided to not submit a bid for the program. This fifth industry team, like one of the other four, reportedly had proposed building its FFG(X) design at F/MM.", "The Navy plans to announce the outcome of the FFG(X) competition in July 2020.", "The FFG(X) program presents several potential oversight issues for Congress, including the following:", "whether to approve, reject, or modify the Navy's FY2020 funding request for the program; whether the Navy has appropriately defined the cost, capabilities, and growth margin of the FFG(X); the Navy's intent to use a parent-design approach for the FFG(X) program rather than develop an entirely new (i.e., clean-sheet) design for the ship; cost, schedule, and technical risk in the FFG(X) program; whether any additional LCSs should be procured in FY2020 as a hedge against potential delays in the FFG(X) program; the potential industrial-base impacts of the FFG(X) for shipyards and supplier firms; whether to build FFG(X)s at a single shipyard, as the Navy's baseline plan calls for, or at two or three shipyards; and the potential impact on required numbers of FFG(X)s of a possible change in the Navy's surface force architecture."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["This report provides background information and discusses potential issues for Congress regarding the Navy's FFG(X) program, a program to procure a new class of 20 guided-missile frigates (FFGs). The Navy's proposed FY2020 budget requests $1,281.2 million for the procurement of the first FFG(X).", "The FFG(X) program presents several potential oversight issues for Congress. Congress's decisions on the program could affect Navy capabilities and funding requirements and the shipbuilding industrial base.", "This report focuses on the FFG(X) program. A related Navy shipbuilding program, the Littoral Combat Ship (LCS) program, is covered in detail in CRS Report RL33741, Navy Littoral Combat Ship (LCS) Program: Background and Issues for Congress , by Ronald O'Rourke. Other CRS reports discuss the strategic context within which the FFG(X) program and other Navy acquisition programs may be considered."], "subsections": []}, {"section_title": "Background", "paragraphs": [], "subsections": [{"section_title": "Navy's Force of Small Surface Combatants (SSCs)", "paragraphs": ["In discussing its force-level goals and 30-year shipbuilding plans, the Navy organizes its surface combatants into large surface combatants (LSCs), meaning the Navy's cruisers and destroyers, and small surface combatants (SSCs), meaning the Navy's frigates, LCSs, mine warfare ships, and patrol craft. SSCs are smaller, less capable in some respects, and individually less expensive to procure, operate, and support than LSCs. SSCs can operate in conjunction with LSCs and other Navy ships, particularly in higher-threat operating environments, or independently, particularly in lower-threat operating environments.", "In December 2016, the Navy released a goal to achieve and maintain a Navy of 355 ships, including 52 SSCs, of which 32 are to be LCSs and 20 are to be FFG(X)s. Although patrol craft are SSCs, they do not count toward the 52-ship SSC force-level goal, because patrol craft are not considered battle force ships, which are the kind of ships that count toward the quoted size of the Navy and the Navy's force-level goal.", "At the end of FY2018, the Navy's force of SSCs totaled 27 battle force ships, including 0 frigates, 16 LCSs, and 11 mine warfare ships. Under the Navy's FY2020 30-year (FY2020-FY2049) shipbuilding plan, the SSC force is to grow to 52 ships (34 LCSs and 18 FFG[X]s) in FY2034, reach a peak of 62 ships (30 LCSs, 20 FFG[X]s, and 12 SSCs of a future design) in FY2040, and then decline to 50 ships (20 FFG[X]s and 30 SSCs of a future design) in FY2049."], "subsections": []}, {"section_title": "U.S. Navy Frigates in General", "paragraphs": ["In contrast to cruisers and destroyers, which are designed to operate in higher-threat areas, frigates are generally intended to operate more in lower-threat areas. U.S. Navy frigates perform many of the same peacetime and wartime missions as U.S. Navy cruisers and destroyers, but since frigates are intended to do so in lower-threat areas, they are equipped with fewer weapons, less-capable radars and other systems, and less engineering redundancy and survivability than cruisers and destroyers.", "The most recent class of frigates operated by the Navy was the Oliver Hazard Perry (FFG-7) class ( Figure 1 ). A total of 51 FFG-7 class ships were procured between FY1973 and FY1984. The ships entered service between 1977 and 1989, and were decommissioned between 1994 and 2015. ", "In their final configuration, FFG-7s were about 455 feet long and had full load displacements of roughly 3,900 tons to 4,100 tons. (By comparison, the Navy's Arleigh Burke [DDG-51] class destroyers are about 510 feet long and have full load displacements of roughly 9,300 tons.) Following their decommissioning, a number of FFG-7 class ships, like certain other decommissioned U.S. Navy ships, have been transferred to the navies of U.S. allied and partner countries."], "subsections": []}, {"section_title": "FFG(X) Program", "paragraphs": [], "subsections": [{"section_title": "Meaning of Designation FFG(X)", "paragraphs": ["In the program designation FFG(X), FF means frigate, G means guided-missile ship (indicating a ship equipped with an area-defense AAW system), and (X) indicates that the specific design of the ship has not yet been determined. FFG(X) thus means a guided-missile frigate whose specific design has not yet been determined."], "subsections": []}, {"section_title": "Procurement Quantity and Schedule", "paragraphs": [], "subsections": [{"section_title": "Procurement Quantity", "paragraphs": ["The Navy wants to procure 20 FFG(X)s, which in combination with the Navy's planned total of 32 LCSs would meet the Navy's 52-ship SSC force-level goal. A total of 35 (rather than 32) LCSs have been procured through FY2019, but Navy officials have stated that the Navy nevertheless wants to procure 20 FFG(X)s.", "The Navy's 355-ship force-level goal is the result of a Force Structure Analysis (FSA) that the Navy conducted in 2016. The Navy conducts a new or updated FSA every few years, and it is currently conducting a new FSA that is scheduled to be completed by the end of 2019. Navy officials have stated that this new FSA will likely not reduce the required number of small surface combatants, and might increase it. Navy officials have also suggested that the Navy in coming years may shift to a new surface force architecture that will include, among other things, a larger proportion of small surface combatants.", " Figure 2 shows a Navy briefing slide depicting the potential new surface force architecture, with each sphere representing a manned ship or an unmanned surface vehicle (USV). Consistent with Figure 2 , the Navy's 355-ship goal, reflecting the current force architecture, calls for a Navy with twice as many large surface combatants as small surface combatants. Figure 2 suggests that the potential new surface force architecture could lead to the obverse\u2014a planned force mix that calls for twice as many small surface combatants than large surface combatants\u2014along with a new third tier of numerous USVs."], "subsections": []}, {"section_title": "Procurement Schedule", "paragraphs": ["The Navy wants to procure the first FFG(X) in FY2020, the next 18 at a rate of two per year in FY2021-FY2029, and the 20th in FY2030. Under the Navy's FY2020 budget submission, the first FFG(X) is scheduled to be delivered in July 2026, 72 months after the contract award date of July 2020."], "subsections": []}]}, {"section_title": "Ship Capabilities, Design, and Crewing", "paragraphs": [], "subsections": [{"section_title": "Ship Capabilities and Design", "paragraphs": ["As mentioned above, the (X) in the program designation FFG(X) means that the design of the ship has not yet been determined. In general, the Navy envisages the FFG(X) as follows:", "The ship is to be a multimission small surface combatant capable of conducting anti-air warfare (AAW), anti-surface warfare (ASuW), antisubmarine warfare (ASW), and electromagnetic warfare (EMW) operations. Compared to an FF concept that emerged under a February 2014 restructuring of the LCS program, the FFG(X) is to have increased AAW and EMW capability, and enhanced survivability. The ship's area-defense AAW system is to be capable of local area AAW, meaning a form of area-defense AAW that extends to a lesser range than the area-defense AAW that can be provided by the Navy's cruisers and destroyers. The ship is to be capable of operating in both blue water (i.e., mid-ocean) and littoral (i.e., near-shore) areas. The ship is to be capable of operating either independently (when that is appropriate for its assigned mission) or as part of larger Navy formations.", "Given the above, the FFG(X) design will likely be larger in terms of displacement, more heavily armed, and more expensive to procure than either the LCS or an FF concept that emerged from the February 2014 LCS program restructuring.", " Figure 3 shows a January 2019 Navy briefing slide summarizing the FFG(X)'s planned capabilities. For additional information on the FFG(X)'s planned capabilities, see the Appendix A ."], "subsections": []}, {"section_title": "Dual Crewing", "paragraphs": ["To help maximize the time that each ship spends at sea, the Navy reportedly is considering operating FFG(X)s with dual crews\u2014an approach, commonly called blue-gold crewing, that the Navy uses for operating its ballistic missile submarines and LCSs."], "subsections": []}]}, {"section_title": "Procurement Cost", "paragraphs": ["The Navy wants the follow-on ships in the FFG(X) program (i.e., ships 2 through 20) to have an average unit procurement cost of $800 million to $950 million each in constant 2018 dollars. The Navy reportedly believes that the ship's cost can be held closer to the $800 million figure. By way of comparison, the Navy estimates the average unit procurement cost of the three LCSs procured in FY2019 at $523.7 million (not including the cost of each ship's embarked mission package), and the average unit procurement cost of the three DDG-51 class destroyers that the Navy has requested for procurement in FY2020 at $1,821.0 million. ", "As shown in Table 2 , the Navy's proposed FY2020 budget requests $1,281.2 million for the procurement of the first FFG(X). The lead ship in the program will be considerably more expensive than the follow-on ships in the program, because the lead ship's procurement cost incorporates most or all of the detailed design/nonrecurring engineering (DD/NRE) costs for the class. (It is a traditional Navy budgeting practice to attach most or all of the DD/NRE costs for a new ship class to the procurement cost of the lead ship in the class.) As shown in Table 2 , the Navy's FY2020 budget submission shows that subsequent ships in the class are estimated by the Navy to cost roughly $900 million each in then-year dollars over the next few years.", "The Navy's FY2020 budget submission estimates the total procurement cost of 20 FFG(X)s at $20,470.1 million (i.e., about $20.5 billion) in then-year dollars, or an average of about $1,023.5 million each. Since the figure of $20,470.1 million is a then-year dollar figure, it incorporates estimated annual inflation for FFG(X)s to be procured out to FY2030."], "subsections": []}, {"section_title": "Acquisition Strategy", "paragraphs": [], "subsections": [{"section_title": "Parent-Design Approach", "paragraphs": ["The Navy's desire to procure the first FFG(X) in FY2020 does not allow enough time to develop a completely new design (i.e., a clean-sheet design) for the FFG(X). (Using a clean-sheet design might defer the procurement of the first ship to about FY2024.) Consequently, the Navy intends to build the FFG(X) to a modified version of an existing ship design\u2014an approach called the parent-design approach. The parent design could be a U.S. ship design or a foreign ship design.", "Using the parent-design approach can reduce design time, design cost, and cost, schedule, and technical risk in building the ship. The Coast Guard and the Navy are currently using the parent-design approach for the Coast Guard's polar security cutter (i.e., polar icebreaker) program. The parent-design approach has also been used in the past for other Navy and Coast Guard ships, including Navy mine warfare ships and the Coast Guard's new Fast Response Cutters (FRCs)."], "subsections": []}, {"section_title": "No New Technologies or Systems", "paragraphs": ["As an additional measure for reducing cost, schedule, and technical risk in the FFG(X) program, the Navy envisages developing no new technologies or systems for the FFG(X)\u2014the ship is to use systems and technologies that already exist or are already being developed for use in other programs."], "subsections": []}, {"section_title": "Number of Builders", "paragraphs": ["Given the currently envisaged procurement rate of two ships per year, the Navy's baseline plan for the FFG(X) program envisages using a single builder to build the ships. Consistent with U.S. law, the ship is to be built in a U.S. shipyard, even if it is based on a foreign design. Using a foreign design might thus involve cooperation or a teaming arrangement between a U.S. builder and a foreign developer of the parent design. The Navy has not, however, ruled out the option of building the ships at two or three shipyards. At a December 12, 2018, hearing on Navy readiness before two subcommittees (the Seapower subcommittee and the Readiness and Management Support subcommittee, meeting jointly) of the Senate Armed Services Committee, the following exchange occurred:", "SENATOR ANGUS KING (continuing):", "Talking about industrial base and acquisition, the frigate, which we're talking about, there are 5 yards competing, there are going to be 20 ships. As I understand it, the intention now is to award all 20 ships to the winner, it's a winner take all among the five. In terms of industrial base and also just spreading the work, getting the\u2014getting the work done faster, talk to me about the possibility of splitting that award between at least two yards if not three.", "SECRETARY OF THE NAVY RICHARD SPENCER:", "You bring up an interesting concept. There's two things going on here that need to be weighed out. One, yes, we do have to be attentive to our industrial base and the ability to keep hands busy and trained. Two, one thing we also have to look at, though, is the balancing of the flow of new ships into the fleet because what we want to avoid is a spike because that spike will come down and bite us again when they all go through regular maintenance cycles and every one comes due within two or three years or four years. It gets very crowded. It's not off the table because we've not awarded anything yet, but we will\u2014we will look at how best we can balance with how we get resourced and, if we have the resources to bring expedition, granted, we will do that."], "subsections": []}, {"section_title": "Block Buy Contracting", "paragraphs": ["As a means of reducing their procurement cost, the Navy envisages using one or more fixed-price block buy contracts to procure the ships."], "subsections": []}]}, {"section_title": "Competing Industry Teams", "paragraphs": ["As shown in Table 1 , at least four industry teams are reportedly competing for the FFG(X) program. Two of the teams are reportedly proposing to build their FFG(X) designs at the two shipyards that have been building Littoral Combat Ships (LCSs) for the Navy\u2014Austal USA of Mobile, AL, and Fincantieri/Marinette Marine (F/MM) of Marinette, WI. The other two teams are reportedly proposing to build their FFG(X) designs at General Dynamics/Bath Iron Works (GD/BIW), of Bath, ME, and Huntington Ingalls Industries/Ingalls Shipbuilding (HII/Ingalls) of Pascagoula, MS.", "As also shown in Table 1 , a fifth industry team that had been interested in the FFG(X) program reportedly informed the Navy on May 23, 2019, that it had decided to not submit a bid for the program. As shown in the table, this fifth industry team, like one of the other four, reportedly had proposed building its FFG(X) design at F/MM.", "On February 16, 2018, the Navy awarded five FFG(X) conceptual design contracts with a value of $15.0 million each to the leaders of the five industry teams shown in Table 1 . Being a recipient of a conceptual design contract was not a requirement for competing for the subsequent Detailed Design and Construction (DD&C) contract for the program.", "The Navy plans to announce the outcome of the FFG(X) competition\u2014the winner of the DD&C contract\u2014in July 2020. "], "subsections": []}, {"section_title": "Program Funding", "paragraphs": [" Table 2 shows funding for the FFG(X) program under the Navy's FY2020 budget submission."], "subsections": []}]}]}, {"section_title": "Issues for Congress", "paragraphs": [], "subsections": [{"section_title": "FY2020 Funding Request", "paragraphs": ["One issue for Congress is whether to approve, reject, or modify the Navy's FY2020 funding request for the program. In assessing this question, Congress may consider, among other things, whether the work the Navy is proposing to do in the program in FY2020 is appropriate, and whether the Navy has accurately priced that work."], "subsections": []}, {"section_title": "Cost, Capabilities, and Growth Margin", "paragraphs": ["Another issue for Congress is whether the Navy has appropriately defined the cost, capabilities, and growth margin of the FFG(X)."], "subsections": [{"section_title": "Analytical Basis for Desired Ship Capabilities", "paragraphs": ["One aspect of this issue is whether the Navy has an adequately rigorous analytical basis for its identification of the capability gaps or mission needs to be met by the FFG(X), and for its decision to meet those capability gaps or mission needs through the procurement of a FFG with the capabilities outlined earlier in this CRS report. The question of whether the Navy has an adequately rigorous analytical basis for these things was discussed in greater detail in earlier editions of this CRS report."], "subsections": []}, {"section_title": "Balance Between Cost and Capabilities", "paragraphs": ["Another potential aspect of this issue is whether the Navy has arrived at a realistic balance between its desired capabilities for the FFG(X) and the its estimated procurement cost for the ship. An imbalance between these two could lead to an increased risk of cost growth in the program. The Navy could argue that a key aim of the five FFG(X) conceptual design contracts and other preliminary Navy interactions with industry was to help the Navy arrive at a realistic balance by informing the Navy's understanding of potential capability-cost tradeoffs in the FFG(X) design."], "subsections": []}, {"section_title": "Number of VLS Tubes", "paragraphs": ["Another potential aspect of this issue concerns the planned number of Vertical Launch System (VLS) missile tubes on the FFG(X). The VLS is the FFG(X)'s principal (though not only) means of storing and launching missiles. As shown in Figure 3 (see the box in the upper-left corner labeled \"AW,\" meaning air warfare), the FFG(X) is to be equipped with 32 Mark 41 VLS tubes. (The Mark 41 is the Navy's standard VLS design.)", "Supporters of requiring the FFG(X) to be equipped with a larger number of VLS tubes, such as 48, might argue that the FFG(X) is to be roughly half as expensive to procure as the DDG-51 destroyer, and might therefore be more appropriately equipped with 48 VLS tubes, which is one-half the number on recent DDG-51s. They might also argue that in a context of renewed great power competition with potential adversaries such as China, which is steadily improving its naval capabilities, it might be prudent to equip the FFG(X)s with 48 rather than 32 VLS tubes, and that doing so might only marginally increase the unit procurement cost of the FFG(X).", "Supporters of requiring the FFG(X) to have no more than 32 VLS tubes might argue that the analyses indicating a need for 32 already took improving adversary capabilities (as well as other U.S. Navy capabilities) into account. They might also argue that the FFG(X), in addition to having 32 VLS tubes, is also to have a separate, 21-cell Rolling Airframe Missile (RAM) missile launcher (see again the \"AW\" box in the upper-left corner of Figure 3 ), and that increasing the number of VLS tubes from 32 to 48 would increase the procurement cost of a ship that is intended to be an affordable supplement to the Navy's cruisers and destroyers.", "Potential oversight questions for Congress might be: What would be the estimated increase in unit procurement cost of the FFG(X) of increasing the number of VLS tubes from 32 to 48? What would be the estimated increase in unit procurement cost of equipping the FFG(X) with 32 VLS tubes but designing the ship so that the number could easily be increased to 48 at some point later in the ship's life?"], "subsections": []}, {"section_title": "Growth Margin", "paragraphs": ["Another potential aspect of this issue is whether, beyond the specific question of the number of VLS tubes, the Navy more generally has chosen the appropriate amount of growth margin to incorporate into the FFG(X) design. As shown in the Appendix A , the Navy wants the FFG(X) design to have a growth margin (also called service life allowance) of 5%, meaning an ability to accommodate upgrades and other changes that might be made to the ship's design over the course of its service life that could require up to 5% more space, weight, electrical power, or equipment cooling capacity. As shown in the Appendix A , the Navy also wants the FFG(X) design to have an additional growth margin (above the 5% factor) for accommodating a future directed energy system (i.e., a laser or high-power microwave device) or an active electronic attack system (i.e., electronic warfare system). ", "Supporters could argue that a 5% growth margin is traditional for a ship like a frigate, that the FFG(X)'s 5% growth margin is supplemented by the additional growth margin for a directed energy system or active electronic attack system, and that requiring a larger growth margin could make the FFG(X) design larger and more expensive to procure.", "Skeptics might argue that a larger growth margin (such as 10%\u2014a figure used in designing cruisers and destroyers) would provide more of a hedge against the possibility of greater-than-anticipated improvements in the capabilities of potential adversaries such as China, that a limited growth margin was a concern in the FFG-7 design, and that increasing the FFG(X) growth margin from 5% to 10% would have only a limited impact on the FFG(X)'s procurement cost.", "A potential oversight question for Congress might be: What would be the estimated increase in unit procurement cost of the FFG(X) of increasing the ship's growth margin from 5% to 10%?"], "subsections": []}]}, {"section_title": "Parent-Design Approach", "paragraphs": ["Another potential oversight issue for Congress concerns the parent-design approach for the program. One alternative would be to use a clean-sheet design approach, under which procurement of the FFG(X) would begin about FY2024 and procurement of LCSs might be extended through about 2023.", "As mentioned earlier, using the parent-design approach can reduce design time, design cost, and technical, schedule, and cost risk in building the ship. A clean-sheet design approach, on the other hand, might result in a design that more closely matches the Navy's desired capabilities for the FFG(X), which might make the design more cost-effective for the Navy over the long run. It might also provide more work for the U.S. ship design and engineering industrial base.", "Another possible alternative would be to consider frigate designs that have been developed, but for which there are not yet any completed ships. This approach might make possible consideration of designs, such as (to cite just one possible example) the UK's new Type 26 frigate design, production of which was in its early stages in 2018. Compared to a clean-sheet design approach, using a developed-but-not-yet-built design would offer a reduction in design time and cost, but might not offer as much reduction in technical, schedule, and cost risk in building the ship as would be offered by use of an already-built design."], "subsections": []}, {"section_title": "Cost, Schedule, and Technical Risk", "paragraphs": ["Another potential oversight issue for Congress concerns cost, schedule, and technical risk in the FFG(X) program. The Navy can argue that the program's cost, schedule, and technical risk has been reduced by use of the parent-design approach and the decision to use only systems and technologies that already exist or are already being developed for use in other programs, rather than new technologies that need to be developed.", "Skeptics, while acknowledging that point, might argue that lead ships in Navy shipbuilding programs inherently pose cost, schedule, and technical risk, because they serve as the prototypes for their programs, and that, as detailed by CBO and GAO, lead ships in Navy shipbuilding programs in many cases have turned out to be more expensive to build than the Navy had estimated. A May 2019 report from the Government Accountability Office (GAO) on the status of various Department of Defense (DOD) acquisition programs states the following about the FFG(X) program:", "Current Status", "The FFG(X) program continues conceptual design work ahead of planned award of a lead ship detail design and construction contract in September 2020. In May 2017, the Navy revised its plans for a new frigate derived from minor modifications of an LCS design. The current plan is to select a design and shipbuilder through full and open competition to provide a more lethal and survivable small surface combatant.", "As stated in the FFG(X) acquisition strategy, the Navy awarded conceptual design contracts in February 2018 for development of five designs based on ships already demonstrated at sea. The tailoring plan indicates the program will minimize technology development by relying on government-furnished equipment from other programs or known-contractor-furnished equipment.", "In November 2018, the program received approval to tailor its acquisition documentation to support development start in February 2020. This included waivers for several requirements, such as an analysis of alternatives and an affordability analysis for the total program life cycle. FFG(X) also received approval to tailor reviews to validate system specifications and the release of the request for proposals for the detail design and construction contract\u2026.", "Program Office Comments", "We provided a draft of this assessment to the program office for review and comment. The program office did not have any comments."], "subsections": []}, {"section_title": "Procurement of LCSs in FY2020 as Hedge against FFG(X) Delay", "paragraphs": ["Another potential issue for Congress is whether any additional LCSs should be procured in FY2020 as a hedge against potential delays in the FFG(X) program. Supporters might argue that, as detailed by GAO, lead ships in Navy shipbuilding programs in many cases encounter schedule delays, some quite lengthy, and that procuring additional LCSs in FY2020 could hedge against that risk at reasonable cost by taking advantage of hot LCS production lines. Skeptics might argue that the Navy does not have a requirement for any additional LCSs, and that funding the procurement of additional LCSs in FY2020 could reduce FY2020 funding available for other Navy or DOD programs, with an uncertain impact on net Navy or DOD capabilities."], "subsections": []}, {"section_title": "Potential Industrial-Base Impacts of FFG(X) Program", "paragraphs": ["Another issue for Congress concerns the potential industrial-base impacts of the FFG(X) for shipyards and supplier firms."], "subsections": [{"section_title": "Shipyards", "paragraphs": ["One aspect of this issue concerns the potential impact on shipyards of the Navy's plan to shift procurement of small surface combatants from LCSs to FFG(X)s starting in FY2020, particularly in terms of future workloads and employment levels at the two LCS shipyards, if one or both of these yards are not involved in building FFG(X)s.", "If a design proposed for construction at one of the LCS shipyards is chosen as the winner of the FFG(X) competition, then other things held equal (e.g., without the addition of new work other than building LCSs), workloads and employment levels at the other LCS shipyard (the one not chosen for the FFG(X) program), as well as supplier firms associated with that other LCS shipyard, would decline over time as the other LCS shipyard's backlog of prior-year-funded LCSs is completed and not replaced with new FFG(X) work. If no design proposed for construction at an LCS shipyard is chosen as the FFG(X)\u2014that is, if the winner of the FFG(X) competition is a design to be built at a shipyard other than the two LCS shipyards\u2014then other things held equal, employment levels at both LCS shipyards and their supplier firms would decline over time as their backlogs of prior-year-funded LCSs are completed and not replaced with FFG(X) work.", "As mentioned earlier, the Navy's current baseline plan for the FFG(X) program is to build FFG(X)s at a single shipyard. One possible alternative to this baseline plan would be to build FFG(X)s at two or three shipyards, including one or both of the LCS shipyards. This alternative is discussed further in the section below entitled \" Number of FFG(X) Builders .\"", "Another possible alternative would be would be to shift Navy shipbuilding work at one of the LCS yards (if the other wins the FFG(X) competition) or at both of the LCS yards (if neither wins the FFG(X) competition) to the production of sections of larger Navy ships (such as DDG-51 destroyers or amphibious ships) that undergo final assembly at other shipyards. Under this option, in other words, one or both of the LCS yards would function as shipyards participating in the production of larger Navy ships that undergo final assembly at other shipyards. This option might help maintain workloads and employment levels at one or both of the LCS yards, and might alleviate capacity constraints at other shipyards, permitting certain parts of the Navy's 355-ship force-level objective to be achieved sooner. The concept of shipyards producing sections of larger naval ships that undergo final assembly in other shipyards was examined at length in a 2011 RAND report."], "subsections": []}, {"section_title": "Supplier Firms", "paragraphs": ["Another aspect of the industrial-base issue concerns the FFG(X) program's potential impact on supplier firms (i.e., firms that provide materials and components that are incorporated into ships). Some supporters of U.S. supplier firms argue that the FFG(X) program as currently structured does not include strong enough provisions for requiring certain FFG(X) components to be U.S.-made, particularly since two of the five industry teams reported to be competing for the FFG(X) program (see the earlier section entitled \" Competing Industry Teams \") are reportedly using European frigate designs as their proposed parent design. For example, the American Shipbuilding Suppliers Association (ASSA)\u2014a trade association for U.S. ship supplier firms\u2014states:", "The US Navy has historically selected US manufactured components for its major surface combatants and designated them as class standard equipment to be procured either as government-furnished equipment (GFE) or contractor-furnished equipment (CFE). In a major departure from that policy, the Navy has imposed no such requirement for the FFG(X), the Navy's premier small surface combatant. The acquisition plan for FFG(X) requires proposed offerings to be based on an in-service parent craft design. Foreign designs and/or foreign-manufactured components are being considered, with foreign companies performing a key role in selecting these components. Without congressional direction, there is a high likelihood that critical HM&E components on the FFG(X) will not be manufactured within the US shipbuilding industrial supplier base.\u2026.", "The Navy's requirements are very clear regarding the combat system, radar, C4I suite, EW [electronic warfare], weapons, and numerous other war-fighting elements. However, unlike all major surface combatants currently in the fleet (CGs [cruisers], DDGs [destroyers]), the [Navy's] draft RFP [Request for Proposals] for the FFG(X) does not identify specific major HM&E components such as propulsion systems, machinery controls, power generation and other systems that are critical to the ship's operations and mission execution. Instead, the draft RFP relegates these decisions to shipyard primes or their foreign-owned partners, and there is no requirement for sourcing these components within the US shipbuilding supplier industrial base.", "The draft RFP also does not clearly identify life-cycle cost as a critical evaluation factor, separate from initial acquisition cost. This ignores the cost to the government of initial introduction [of the FFG(X)] into the [Navy's] logistics system, the training necessary for new systems, the location of repair services (e.g., does the equipment need to leave the US?), and the cost and availability of parts and services for the lifetime of the ship. Therefore, lowest acquisition cost is likely to drive the award\u2014certainly for component suppliers.", "Further, the US Navy's acquisition approach not only encourages, but advantages, the use of foreign designs, most of which have a component supplier base that is foreign. Many of these component suppliers (and in some cases the shipyards they work with) are wholly or partially owned by their respective governments and enjoy direct subsidies as well as other benefits from being state owned (e.g., requirements relaxation, tax incentives, etc.). This uneven playing field, and the high-volume commercial shipbuilding market enjoyed by the foreign suppliers, make it unlikely for an American manufacturer to compete on cost. As incumbent component manufacturers, these foreign companies have a substantial advantage over US component manufacturers seeking to provide equipment even if costs could be matched, given the level of non-recurring engineering (NRE) required to facilitate new equipment into a parent craft's design and the subsequent performance risk.", "The potential outcome of such a scenario would have severe consequences across the US shipbuilding supplier base\u2026. the loss of the FFG(X) opportunity to US suppliers would increase the cost on other Navy platforms [by reducing production economies of scale at U.S. suppliers that make components for other U.S. military ships]. Most importantly, maintaining a robust domestic [supplier] manufacturing capability allows for a surge capability by ensuring rapidly scalable capacity when called upon to support major military operations\u2014a theme frequently emphasized by DOD and Navy leaders.", "These capabilities are a critical national asset and once lost, it is unlikely or extremely costly to replicate them. This would be a difficult lesson that is not in the government's best interests to re-learn. One such lesson exists on the DDG-51 [destroyer production] restart, where the difficulty of reconstituting a closed production line of a critical component manufacturer\u2014its main reduction gear\u2014required the government to fund the manufacturer directly as GFE, since the US manufacturer for the reduction gear had ceased operations.", "Other observers, while perhaps acknowledging some of the points made above, might argue one or more of the following:", "foreign-made components have long been incorporated into U.S. Navy ships (and other U.S. military equipment); U.S-made components have long been incorporated into foreign warships (and other foreign military equipment); and requiring a foreign parent design for the FFG(X) to be modified to incorporate substitute U.S.-made components could increase the unit procurement cost of the FFG(X) or the FFG(X) program's acquisition risk (i.e., cost, schedule, and technical risk), or both.", "Current U.S. law requires certain components of U.S. Navy ships to be made by a manufacturer in the national technology and industrial base. The primary statute in question\u201410 U.S.C. 2534\u2014states in part:", "\u00a72534. Miscellaneous limitations on the procurement of goods other than United States goods", "(a) Limitation on Certain Procurements.-The Secretary of Defense may procure any of the following items only if the manufacturer of the item satisfies the requirements of subsection (b):\u2026", "(3) Components for naval vessels.-(A) The following components:", "(i) Air circuit breakers.", "(ii) Welded shipboard anchor and mooring chain with a diameter of four inches or less.", "(iii) Vessel propellers with a diameter of six feet or more.", "(B) The following components of vessels, to the extent they are unique to marine applications: gyrocompasses, electronic navigation chart systems, steering controls, pumps, propulsion and machinery control systems, and totally enclosed lifeboats.", "(b) Manufacturer in the National Technology and Industrial Base.-", "(1) General requirement.-A manufacturer meets the requirements of this subsection if the manufacturer is part of the national technology and industrial base\u2026. ", "(3) Manufacturer of vessel propellers.-In the case of a procurement of vessel propellers referred to in subsection (a)(3)(A)(iii), the manufacturer of the propellers meets the requirements of this subsection only if-", "(A) the manufacturer meets the requirements set forth in paragraph (1); and", "(B) all castings incorporated into such propellers are poured and finished in the United States.", "(c) Applicability to Certain Items.-", "(1) Components for naval vessels.-Subsection (a) does not apply to a procurement of spare or repair parts needed to support components for naval vessels produced or manufactured outside the United States\u2026.", "(4) Vessel propellers.-Subsection (a)(3)(A)(iii) and this paragraph shall cease to be effective on February 10, 1998\u2026.", "(d) Waiver Authority.-The Secretary of Defense may waive the limitation in subsection (a) with respect to the procurement of an item listed in that subsection if the Secretary determines that any of the following apply:", "(1) Application of the limitation would cause unreasonable costs or delays to be incurred.", "(2) United States producers of the item would not be jeopardized by competition from a foreign country, and that country does not discriminate against defense items produced in the United States to a greater degree than the United States discriminates against defense items produced in that country.", "(3) Application of the limitation would impede cooperative programs entered into between the Department of Defense and a foreign country, or would impede the reciprocal procurement of defense items under a memorandum of understanding providing for reciprocal procurement of defense items that is entered into under section 2531 of this title, and that country does not discriminate against defense items produced in the United States to a greater degree than the United States discriminates against defense items produced in that country.", "(4) Satisfactory quality items manufactured by an entity that is part of the national technology and industrial base (as defined in section 2500(1) of this title) are not available.", "(5) Application of the limitation would result in the existence of only one source for the item that is an entity that is part of the national technology and industrial base (as defined in section 2500(1) of this title).", "(6) The procurement is for an amount less than the simplified acquisition threshold and simplified purchase procedures are being used.", "(7) Application of the limitation is not in the national security interests of the United States.", "(8) Application of the limitation would adversely affect a United States company\u2026.", "(h) Implementation of Naval Vessel Component Limitation.-In implementing subsection (a)(3)(B), the Secretary of Defense-", "(1) may not use contract clauses or certifications; and", "(2) shall use management and oversight techniques that achieve the objective of the subsection without imposing a significant management burden on the Government or the contractor involved.", "(i) Implementation of Certain Waiver Authority.-(1) The Secretary of Defense may exercise the waiver authority described in paragraph (2) only if the waiver is made for a particular item listed in subsection (a) and for a particular foreign country.", "(2) This subsection applies to the waiver authority provided by subsection (d) on the basis of the applicability of paragraph (2) or (3) of that subsection.", "(3) The waiver authority described in paragraph (2) may not be delegated below the Under Secretary of Defense for Acquisition, Technology, and Logistics.", "(4) At least 15 days before the effective date of any waiver made under the waiver authority described in paragraph (2), the Secretary shall publish in the Federal Register and submit to the congressional defense committees a notice of the determination to exercise the waiver authority.", "(5) Any waiver made by the Secretary under the waiver authority described in paragraph (2) shall be in effect for a period not greater than one year, as determined by the Secretary....", "In addition to 10 U.S.C. 2534, the paragraph in the annual DOD appropriations act that makes appropriations for the Navy's shipbuilding account (i.e., the Shipbuilding and Conversion, Navy, or SCN, appropriation account) has in recent years included this proviso:", "\u2026 Provided further , That none of the funds provided under this heading for the construction or conversion of any naval vessel to be constructed in shipyards in the United States shall be expended in foreign facilities for the construction of major components of such vessel\u2026.", "10 U.S.C. 2534 explicitly applies to certain ship components, but not others. The meaning of \"major components\" in the above proviso from the annual DOD appropriations act might be subject to interpretation.", "The issue of U.S.-made components for Navy ships is also, for somewhat different reasons, an issue for Congress in connection with the Navy's John Lewis (TAO-205) class oiler shipbuilding program."], "subsections": []}]}, {"section_title": "Number of FFG(X) Builders", "paragraphs": ["Another issue for Congress whether to build FFG(X)s at a single shipyard, as the Navy's baseline plan calls for, or at two or three shipyards. As mentioned earlier, one possible alternative to the Navy's current baseline plan for building FFG(X)s at a single shipyard would be to build them at two or three yards, including potentially one or both of the LCS shipyards. The Navy's FFG-7 class frigates, which were procured at annual rates of as high as eight ships per year, were built at three shipyards. Supporters of building FFG(X)s at two or three yards might argue that it could", "boost FFG(X) production from the currently planned two ships per year to four or more ships per year, substantially accelerating the date for attaining the Navy's small surface combatant force-level goal; permit the Navy to use competition (either competition for quantity at the margin, or competition for profit [i.e., Profit Related to Offers, or PRO, bidding]) to help restrain FFG(X) prices and ensure production quality and on-time deliveries; and perhaps complicate adversary defense planning by presenting potential adversaries with multiple FFG(X) designs, each with its own specific operating characteristics.", "Opponents of this plan might argue that it could", "weaken the current FFG(X) competition by offering the winner a smaller prospective number of FFG(X)s and perhaps also essentially guaranteeing the LCSs yard that they will build some number of FFG(X)s; substantially increase annual FFG(X) procurement funding requirements so as to procure four or more FFG(X)s per year rather than two per year, which in a situation of finite DOD funding could require offsetting reductions in other Navy or DOD programs; and reduce production economies of scale in the FFG(X) program by dividing FFG(X) among two or three designs, and increase downstream Navy FFG(X) operation and support (O&S) costs by requiring the Navy to maintain two or three FFG(X) logistics support systems."], "subsections": []}, {"section_title": "Potential Change in Navy Surface Force Architecture", "paragraphs": ["Another potential oversight issue for Congress concerns the potential impact on required numbers of FFG(X)s of a possible change in the Navy's surface force architecture. As mentioned earlier, Navy officials have stated that the new Force Structure Assessment (FSA) being conducted by the Navy may shift the Navy to a new fleet architecture that will include, among other thing, a larger proportion of small surface combatants\u2014and, by implication, a smaller proportion of large surface combatants (i.e., cruisers and destroyers). A change in the required number of FFG(X)s could influence perspectives on the annual procurement rate for the program and the number of shipyards used to build the ships. A January 15, 2019, press report states:", "The Navy plans to spend this year taking the first few steps into a markedly different future, which, if it comes to pass, will upend how the fleet has fought since the Cold War. And it all starts with something that might seem counterintuitive: It's looking to get smaller.", "\"Today, I have a requirement for 104 large surface combatants in the force structure assessment; [and] I have [a requirement for] 52 small surface combatants,\" said Surface Warfare Director Rear Adm. Ronald Boxall. \"That's a little upside down. Should I push out here and have more small platforms? I think the future fleet architecture study has intimated 'yes,' and our war gaming shows there is value in that.\"", "An April 8, 2019, press report states that Navy discussions about the future surface fleet include", "the upcoming construction and fielding of the [FFG(X)] frigate, which [Vice Admiral Bill Merz, the deputy chief of naval operations for warfare systems] said is surpassing expectations already in terms of the lethality that industry can put into a small combatant.", "\"The FSA may actually help us on, how many (destroyers) do we really need to modernize, because I think the FSA is going to give a lot of credit to the frigate\u2014if I had a crystal ball and had to predict what the FSA was going to do, it's going to probably recommend more small surface combatants, meaning the frigate \u2026 and then how much fewer large surface combatants can we mix?\" Merz said.", "An issue the Navy has to work through is balancing a need to have enough ships and be capable enough today, while also making decisions that will help the Navy get out of the top-heavy surface fleet and into a better balance as soon as is feasible.", "\"You may see the evolution over time where frigates start replacing destroyers, the Large Surface Combatant [a future cruiser/destroyer-type ship] starts replacing destroyers, and in the end, as the destroyers blend away you're going to get this healthier mix of small and large surface combatants,\" he said\u2014though the new FSA may shed more light on what that balance will look like and when it could be achieved."], "subsections": []}]}, {"section_title": "Legislative Activity for FY2020", "paragraphs": [], "subsections": [{"section_title": "Summary of Congressional Action on FY2020 Funding Request", "paragraphs": [" Table 3 summarizes congressional action on the Navy's FY2020 funding request for the LCS program.", "Appendix A. Navy Briefing Slides from July 25, 2017, FFG(X) Industry Day Event", "This appendix reprints some of the briefing slides that the Navy presented at its July 25, 2017, industry day event on the FFG(X) program, which was held in association with the Request for Information (RFI) that the Navy issued on July 25, 2017, to solicit information for better understanding potential trade-offs between cost and capability in the FFG(X) design. The reprinted slides begin on the next page.", "Appendix B. Competing Industry Teams", "This appendix presents additional background information on the industry teams competing for the FFG(X) program.", "February 16, 2018, Press Report About Five Competing Industry Teams", "A February 16, 2018, press report about the five competing industry teams reportedly competing for the FFG(X) program (i.e., the five industry teams shown in Table 1 ) stated the following:", "The Navy would not confirm how many groups bid for the [FFG(X)] work. At least one U.S.-German team that was not selected for a [conceptual] design contract, Atlas USA and ThyssenKrupp Marine Systems, told USNI News they had submitted for the [DD&C] competition....", "During last month's Surface Navy Association [annual symposium], several shipbuilders outlined their designs for the FFG(X) competition.", "Austal USA", "Shipyard: Austal USA in Mobile, Ala.", "Parent Design: Independence-class [i.e., LCS-2 class] Littoral Combat Ship", "One of the two Littoral Combat Ship builders, Austal USA has pitched an upgunned variant of the Independence-class LCS as both a foreign military sales offering and as the answer to the Navy's upgunned small surface combatant and then frigate programs. Based on the 3,000-ton aluminum trimaran design, the hull boasts a large flight deck and space for up to 16 Mk-41 Vertical Launching System (VLS) cells.", "Fincantieri Marine Group", "Shipyard: Fincantieri Marinette Marine in Marinette, Wisc.", "Parent Design: Fincantieri Italian FREMM", "As part of the stipulations of the FFG(X) programs, a contractor can offer just one design in the competition as a prime contractor but may also support a second bid as a subcontractor. Fincantieri elected to offer its 6,700-ton Italian Fregata europea multi-missione (FREMM) design for construction in its Wisconsin Marinette Marine shipyard, as well as partner with Lockheed Martin on its Freedom-class pitch as a subcontractor. The Italian FREMM design features a 16-cell VLS as well as space for deck-launched anti-ship missiles.", "General Dynamics Bath Iron Works", "Shipyard: Bath Iron Works in Bath, Maine", "Parent Design: Navantia \u00c1lvaro de Baz\u00e1n-class F100 Frigate", "The 6,000-ton air defense guided-missile frigates fitted with the Aegis Combat System have been in service for the Spanish Armada since 2002 and are the basis of the Australian Hobart-class air defense destroyers and the Norwegian Fridtjof Nansen-class frigates. The Navantia partnership with Bath is built on a previous partnership from the turn of the century. The F100 frigates were a product of a teaming agreement between BIW, Lockheed Martin and Navantia predecessor Izar as part of the Advanced Frigate Consortium from 2000.", "Huntington Ingalls Industries", "Shipyard: Ingalls Shipbuilding in Pascagoula, Miss.", "Parent Design: Unknown", "Out of the competitors involved in the competition, HII was the only company that did not present a model or a rendering of its FFG(X) at the Surface Navy Association symposium in January. A spokeswoman for the company declined to elaborate on the offering when contacted by USNI News on Friday. In the past, HII has presented a naval version of its Legend-class National Security Cutter design as a model at trade shows labeled as a \"Patrol Frigate.\"", "Lockheed Martin", "Shipyard: Fincantieri Marinette Marine in Marinette, Wisc.", "Parent Design: Freedom-class [i.e., LCS-1 class] Littoral Combat Ship", "Of the two LCS builders, Lockheed Martin is the first to have secured a foreign military sale with its design. The company's FFG(X) bid will have much in common with its offering for the Royal Saudi Navy's 4,000-ton multi-mission surface combatant. The new Saudi ships will be built around an eight-cell Mk-41 vertical launch system and a 4D air search radar. Lockheed has pitched several other variants of the hull that include more VLS cells.", "\"We are proud of our 15-year partnership with the U.S. Navy on the Freedom-variant Littoral Combat Ship and look forward to extending it to FFG(X),\" said Joe DePietro, Lockheed Martin vice president of small combatants and ship systems in a Friday evening statement.", "\"Our frigate design offers an affordable, low-risk answer to meeting the Navy's goals of a larger and more capable fleet.\"", "May 28, 2019, Press Report About One Industry Team Deciding to Not Submit a Bid", "On May 28, 2019, it was reported that one of the five industry teams that had been interested in the FFG(X) program had informed the Navy on May 23 that it had decided to not submit a bid for the program. The May 28, 2019, press report about this industry team's decision stated:", "Lockheed Martin won't submit a bid to compete in the design of the Navy's next-generation guided-missile (FFG(X)) frigate competition, company officials told USNI News on Tuesday [May 28].", "The company elected to focus on its involvement developing the frigate combat system and other systems rather than forward its Freedom-class LCS design for the detailed design and construction contract Naval Sea Systems Command plans to issue this summer, Joe DePietro, Lockheed Martin vice president of small combatants and ship systems, told USNI News.", "\"We reviewed the entire program and obviously, given some of the stuff that has already happened that is outside of the contract for the program\u2014that includes the designation of our combat management system, COMBATSS 21, derived off of Aegis; we have the Mk-41 vertical launch system; the processing for our anti-submarine warfare area; advanced [electronic warfare] and platform integration,\" he said.", "\"As we evaluated all of those different areas, we determined not to pursue, as a prime contractor, the FFG(X) detailed design and construction.\"", "The company informed the Navy on May 23 it would not join the other bidders for the hull design, two sources familiar with the notification told USNI News.", "While the design passed two Navy reviews, the company told the service it felt the Freedom design would be stretched too far to accommodate all the capabilities required, one source told USNI News\u2026.", "While Lockheed is moving away from leading a frigate team, the company will be heavily involved with whoever wins. The FFG(X)'s COMBATSS-21 Combat Management System will be derived from the company's Aegis Combat System, and Lockheed Martin makes the ship's vertical launch system."], "subsections": []}]}]}}
{"id": "R46364", "title": "Suspension of the Rules: House Practice in the 115th Congress (2017-2018)", "released_date": "2020-05-19T00:00:00", "summary": ["Suspension of the rules is the most commonly used procedure to call up measures on the floor of the House of Representatives. As the name suggests, the procedure allows the House to suspend its standing and statutory rules in order to consider broadly supported legislation in an expedited manner. More specifically, the House temporarily sets aside its rules that govern the raising and consideration of measures and assumes a new set of constraints particular to the suspension procedure.", "The suspension of the rules procedure has several parliamentary advantages: (1) it allows non-privileged measures to be raised on the House floor without the need for a special rule, (2) it enables the consideration of measures that would otherwise be subject to a point of order, and (3) it streamlines floor action by limiting debate and prohibiting floor amendments. Given these features, as well as the required two-thirds supermajority vote for passage, suspension motions are generally used to process less controversial legislation.", "In the 115 th Congress (2017-2018), measures considered under suspension made up 64% of the bills and resolutions that received floor action in the House (952 out of 1,498 measures). The majority of suspension measures were House bills (83%), followed by Senate bills (10%) and House resolutions (5%). The measures covered a variety of policy areas but most often addressed government operations, such as the designation of federal facilities or amending administrative policies.", "Most measures that are considered in the House under the suspension procedure are sponsored by a House or Senate majority party member. However, suspension is the most common House procedure used to consider minority-party-sponsored legislation regardless of whether the legislation originated in the House or Senate. In 2017 and 2018, minority-party members sponsored 27% of suspension measures, compared to 14% of legislation subject to different procedures, including privileged business (27 measures) and unanimous consent (48 measures). There were no minority-party sponsored bills that were considered under the terms of a special rule.", "Most suspension measures are referred to at least one House committee before their consideration on the floor. The House Committee on Natural Resources was the committee of primary jurisdiction for the plurality of suspension measures considered in the 115 th Congress. Additional committees\u00e2\u0080\u0094such as Energy and Commerce, Homeland Security, Oversight and Government Reform (now Oversight and Reform), Foreign Affairs, and Veterans' Affairs\u00e2\u0080\u0094also served as the primary committee for a large number of suspension measures.", "Suspension motions are debatable for up to 40 minutes. In most cases, a fraction of that debate time is actually used. In the 115 th Congress, the average amount of time spent considering a motion to suspend the rules was 12\u00c2\u00bd minutes.", "The House adopted nearly every suspension motion considered in 2017 and 2018. Approval by the House, however, did not guarantee final approval in the 115 th Congress. The Senate passed or agreed to 37% of the bills, joint resolutions, and concurrent resolutions initially considered in the House under suspension of the rules, and 316 measures were signed into law.", "This report briefly describes the suspension of the rules procedure, which is defined in House Rule XV, and provides an analysis of measures considered under this procedure during the 115 th Congress. Figures and one table display statistics on the use of the procedure, including the prevalence and form of suspension measures, sponsorship of measures by party, committee consideration, length of debate, voting, resolution of differences between the chambers, and the final status of legislation. In addition, an Appendix illustrates trends in the use of the suspension procedure from the 110 th through the 115 th Congresses (2007-2018)."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["The House of Representatives has standing rules that govern how bills and resolutions are to be taken up and considered on the floor. However, to expedite legislation receiving floor action, the House may temporarily set aside these rules for measures that are not otherwise privileged for consideration. This can be done by agreeing to a special order of business resolution (special rule) or by adopting a motion to suspend the rules and pass the underlying measure. In general, special rules enable the consideration of complex or contentious legislation, such as major appropriations or reauthorizations, while the suspension of the rules procedure is usually applied to broadly supported legislation that can be approved without floor amendments or extensive debate in the chamber.", "Most bills and resolutions that receive floor action in the House are called up and considered under suspension of the rules. The suspension procedure allows non-privileged measures to be raised without a special rule, waives points of order, limits debate, and prohibits floor amendments. Motions to suspend the rules and pass the measure require a two-thirds vote, so the procedure is typically reserved for bills and resolutions that can meet a supermajority threshold. ", "Decisions to schedule bills for consideration under suspension are generally based on how widely supported the measures are, how long Members wish to debate them, and whether they want to propose floor amendments. These decisions are not necessarily related to the subject matter of the measure. Accordingly, measures brought up under suspension cover a wide range of policy areas but most often address government operations, such as the designation of federal facilities.", "This report describes the suspension procedure, which is defined in clause 1 of House Rule XV, and provides an analysis of measures considered under suspension during the 115 th Congress (2017-2018). Figures 1-8 display statistical data, including the prevalence and form of suspension measures, sponsors of measures, committee consideration, length of floor debate, voting, and resolution of differences between the chambers. Table 1 summarizes the final legislative status of measures initially considered in the House under the suspension of the rules. Finally, the Appendix depicts the use of the suspension procedure from the 110 th through the 115 th Congresses (2009-2018)."], "subsections": []}, {"section_title": "House Rule XV (Clause 1)", "paragraphs": ["The suspension of the rules procedure is established by clause 1 of House Rule XV. Bills, resolutions, House amendments to Senate bills, amendments to the Constitution, conference reports, and other types of business may be considered under suspension, even those \"that would otherwise be subject to a point of order \u00e2\u0080\u00a6 [or have] not been reported or referred to any calendar or previously introduced.\" ", "Suspension motions are in order on designated days. Rule XV states that \"the Speaker may not entertain a motion that the House suspend the rules except on Mondays, Tuesdays, and Wednesdays and during the last six days of a session of Congress.\" Suspension measures, however, may be considered on other days by unanimous consent or under the terms of a special order of business (special rule) reported by the Committee on Rules and agreed to by the House.", "A motion to suspend the rules is a compound motion to suspend the House rules and pass a bill or agree to a resolution. When considering such a motion, the House is voting on the two questions simultaneously. Once recognized, the Member making the motion will say, \"Mr. [or Madam] Speaker, I move to suspend the rules and pass___.\" The House rules that are suspended under this procedure include those that \"would impede an immediate vote on passage of a measure \u00e2\u0080\u00a6 such as ordering the previous question, third reading, recommittal, or division of the question.\"", "A measure considered under the suspension procedure is not subject to floor amendment. The motion to suspend and pass the measure, though, may provide for passage of the measure in an amended form. That is, the text to be approved may be presented in a form altered by committee amendments or by informal negotiations. Suspension measures that are passed with changes incorporated into the text are passed \"as amended.\" There are no separate votes on the floor approving such amendments.", "Suspension motions are \"debatable for 40 minutes, one-half in favor of the motion and one-half in opposition thereto.\" However, in most instances, a true opponent never claims half the time, and most speakers come to the floor to express support for the measure. Debate time is controlled by two floor managers, one from each party, who sit on a committee of jurisdiction. Each manager makes an opening statement and may yield increments of the 20 minutes they control to other Members to debate the measure.", "Once debate has concluded, a single vote is held on the motion to suspend the rules and pass the measure. The motion requires approval by \"two-thirds of the Members voting, a quorum being present.\" Should the vote fall short of the two-thirds required for passage (290, if all Members vote), the measure is not permanently rejected. Before the end of the Congress, the House may consider the measure again under suspension, or the Committee on Rules may report a special rule that provides for floor consideration of the measure."], "subsections": []}, {"section_title": "Prevalence and Form of Suspension Measures, 115th Congress", "paragraphs": ["As illustrated in Figure 1 , the majority of measures considered on the House floor during the 115 th Congress were initially called up under the suspension of the rules procedure. Sixty-four percent of all measures that received floor action were initially considered under suspension (952 out of the 1,498), compared to those under the terms of a special rule (12%), unanimous consent (10%), or privileged business (15%).", " Figure 2 displays the form of suspension measures. Most of the measures considered under suspension during the 115 th Congress (94%) were bills. House bills made up 83% of the suspension total, Senate bills 10%. The remaining measures were House resolutions, House concurrent resolutions, and House joint resolutions. There were no Senate concurrent or joint resolutions considered under suspension of the rules in the 115 th Congress."], "subsections": []}, {"section_title": "Sponsors of Suspension Measures", "paragraphs": ["As represented in Figure 3 , most suspension measures were sponsored by members of the majority party during the 115 th Congress. House or Senate majority-party members sponsored 73% of all bills and resolutions initially considered in the House under suspension, while House majority-party members sponsored 627 (73%) of the 855 House-originated measures (designated with an H.R., H.Res., H.Con.Res. or H.J.Res. prefix). ", "Suspension is, however, the most common procedure used to consider minority-sponsored legislation in the House by a wide margin. In the 115 th Congress, 77% of the minority-sponsored measures that were considered on the House floor were raised under the suspension procedure. Members of the House or Senate minority parties sponsored 27% of all suspension measures originating in either chamber, compared to 14% of legislation subject to different procedures, including privileged business (27 measures) and unanimous consent (48 measures). Minority-party House Members sponsored 228 (27%) of the 855 House measures considered under suspension. There were no minority-sponsored measures considered under the terms of a special rule."], "subsections": []}, {"section_title": "Committee Consideration", "paragraphs": [], "subsections": [{"section_title": "Committee Referral", "paragraphs": ["Most suspension measures are referred to at least one House committee before their consideration on the chamber floor. In the 115 th Congress, 896 out of the 952 suspension measures considered (94%) were previously referred to a House committee. Of the 55 measures that were considered without a referral, 51 were Senate bills that were \"held at the desk,\" and four were House resolutions that provided concurrence to Senate amendments with an amendment. ", "Measures may be referred to multiple House committees before receiving floor action. When a bill or resolution is referred to more than one House committee, the Speaker will designate one committee as primary, meaning it is the committee exercising jurisdiction over the largest part of the measure. Generally, the chair of the committee of primary jurisdiction works with majority party leadership to determine if and when a measure should be considered under suspension. Figure 4 shows the number and percentage of measures brought up under suspension from each House committee of primary jurisdiction.", "The House Committee on Natural Resources was the committee of primary jurisdiction for the plurality of measures considered under suspension in the 115 th Congress: 146, or 15%, of the total number of suspension measures considered. Many of these bills concerned the designation or use of federally owned land. ", "For most House committees, the majority of their referred measures that reached the floor were raised under the suspension procedure. In the 115 th Congress, the three exceptions were the Committee on House Administration\u00e2\u0080\u0094which had several measures considered by unanimous consent\u00e2\u0080\u0094and the Committees on Budget and Appropriations, which had all or most of their measures considered pursuant to special rules, respectively. For the other committees, suspension measures ranged from 56% to 100% of the total number of the committee's measures receiving floor action ( Figure 5 ).", "Since suspension motions require a two-thirds majority for passage, House committees that handle less contentious subjects tend to have more of their measures considered under the suspension procedure in comparison to other committees. In the 115 th Congress, high-suspension committees included Small Business and Homeland Security (100% of measures receiving floor action); Veterans' Affairs (92%); and Science, Space, and Technology (90%). The Small Business Committee's measures sought to authorize new business development programs. Veterans' Affairs measures included authorizations, reauthorizations, and bills designating federal facilities. "], "subsections": []}, {"section_title": "Committee Markup and Reporting", "paragraphs": ["While suspension measures are not subject to floor amendments, committees may recommend amendments to legislative texts during markup meetings or through informal negotiations. The motion to suspend the rules can include these proposed changes when a Member moves to suspend the rules and pass the measure \"as amended.\" In the 115 th Congress, 521 suspension measures (55% of the total) were considered \"as amended,\" meaning that the text to be approved differed from the measure's introduced text.", "Clause 2 of House Rule XIII requires that measures reported by House committees must be accompanied by a written report. Otherwise, they are not placed on a calendar of measures eligible for floor consideration. However, the written report requirement is among those rules suspended under the suspension procedure. Thus, measures may be called up on the floor under suspension of the rules even if a committee never ordered them to be reported or wrote an accompanying committee report. Instead, the motion to suspend the rules discharges the committee and moves the legislation directly to the House floor. ", "In the 115 th Congress, 659 (69%) suspension measures were ordered to be reported by a House committee. Of this number, 505 were reported with an accompanying House committee report. Fifty-seven measures that did not have a House report did have a Senate report (of these, 24 were Senate bills that did not receive a House committee referral), while 390 measures had no written report from either chamber (41% of the total number of suspension measures)."], "subsections": []}]}, {"section_title": "Floor Consideration", "paragraphs": [], "subsections": [{"section_title": "Raising Measures (Day of Week)", "paragraphs": ["Pursuant to Rule XV, motions to suspend the rules are regularly in order on Mondays, Tuesdays, and Wednesdays or on the last six days of a session of Congress. However, suspension motions may be considered on other days by unanimous consent or under the terms of a special rule reported by the Committee on Rules and agreed to by the House.", "As displayed in Figure 6 , in the 115 th Congress, the plurality of suspension measures were considered on Tuesdays (446, 47% of the total number considered), followed by Mondays (279, 29%) and Wednesdays (168, 18%). In addition, 31 suspension measures were considered on Thursdays and 28 on Fridays. Of these, seven were considered by unanimous consent, while 52 were called up under suspension pursuant to permission included in a special rule reported by the Rules Committee and agreed to by the full House. Such special rules included a provision stating, \"It shall be in order at any time on the legislative day of ___ for the Speaker to entertain motions that the House suspend the rules as though under clause 1 of rule XV.\""], "subsections": []}, {"section_title": "Majority and Minority Floor Managers", "paragraphs": ["Pursuant to Rule XV, suspension measures are \"debatable for 40 minutes, one-half in favor of the motion and one-half in opposition thereto.\" In practice, there is rarely a true opponent to a motion to suspend the rules, and the time is divided between two floor managers, usually one from each party, who both favor the motion. The floor managers each control 20 minutes of debate. The managers may be their parties' sole representatives for or against the motion, or they may yield increments of the 20-minute allotment to other Members.", "Typically, the relevant committee chairs and ranking members select the majority and minority floor managers for particular bills and resolutions. These managers may be the measure's sponsor, the chair or ranking member of the measure's committee of primary jurisdiction, or another committee member.", "In the 115 th Congress, the measure's sponsor served as the majority manager on 23% of the suspension measures receiving floor action. The committee chair managed 28% of the measures. The minority manager was the measure's sponsor for 9% of the measures and the committee's ranking member for 25% of the measures considered. ", "Occasionally, floor managers controlling time on a motion to suspend the rules ceded their control to other Members during debate. By unanimous request, the other Member then controlled the remaining amount of time allotted.", "In one identified case, another Member claimed the time in true opposition during the initial floor consideration on the basis of both the majority and minority floor managers favoring the measure. Pursuant to the rule, the Member in true opposition then controlled 20 minutes of debate. In at least two instances, the minority manager opposed the measure. "], "subsections": []}, {"section_title": "Debate", "paragraphs": [], "subsections": [{"section_title": "Managers and Additional Speakers", "paragraphs": ["A majority floor manager makes the motion to suspend the rules by stating, \"Mr. [or Madam] Speaker, I move to suspend the rules and pass the bill [or resolution] ____.\" The Speaker (or Speaker pro tempore) responds, \"Pursuant to the rule, the gentleman[woman] from [state] and the gentleman[woman] from [state] each will control twenty minutes.\" The majority and minority managers then, in turn, make opening statements regarding the measure using the 20 minutes each controls. ", "If the majority and minority managers have secured additional speakers, the speakers generally alternate between the parties within the 40-minute limit. During the 115 th Congress, on a motion to suspend the rules, the average number of speakers in addition to the floor managers was fewer than two. On 56% of the measures (531) considered, there were one or two additional speakers. On 28% of the measures (268) considered, there were no additional speakers, and in 14% of the measures (136) considered, there were three to 13 additional speakers. Seventeen measures had 14 or more additional speakers. The measure with the most additional speakers (34), H.J.Res. 2 , proposing an amendment to the Constitution, was allowed four hours of debate under the terms of a special rule ( H.Res. 811 ).", "At the start of the debate period, the majority manager may request \"unanimous consent that all Members may have five legislative days in which to revise and extend their remarks and add extraneous materials on this bill [resolution].\" This request enables general leave statements to be inserted into the Congressional Record . In 20% of the suspension measures considered in the 115 th Congress, a written general leave statement appeared in the Record following in-person remarks, indicating that the remarks were submitted on the day the legislation was considered. General leave statements submitted on a day other than the day of consideration appear in the Extension of Remarks section of the Congressional Record ."], "subsections": []}, {"section_title": "Length of Consideration", "paragraphs": ["Suspension measures are limited to a maximum of 40 minutes of debate under Rule XV. However, if there are time gaps between speakers or procedural interruptions, such as a vote on a motion to adjourn, the time period between the start of the first speaker's remarks and the conclusion of debate may exceed 40 minutes. The statistics displayed in Figure 7 show the length of consideration of suspension measures as documented in Congress.gov, not the accumulated length of statements, as kept by official timekeepers in the chamber.", "In the 115 th Congress, the average length of consideration on a motion to suspend the rules was 12 minutes and 21 seconds, and more than half of the measures considered had a debate period of 10 minutes or less. Thus, while overall debate is limited to 40 minutes under the rule, on most suspension measures, a fraction of that time was actually expended during consideration. Twenty-eight measures, however, had consideration periods that exceeded 40 minutes due to procedural delays or, in the case of H.J.Res. 2 , proposing an amendment to the Constitution, due to the terms of a special rule ( H.Res. 811 ), which enabled four hours of debate. "], "subsections": []}]}, {"section_title": "Voting and Passage in the House", "paragraphs": ["House leaders generally choose measures for suspension that are likely to achieve the two-thirds majority threshold for passage. Thus, almost all suspension measures were passed by the House in the 115 th Congress.", "The House passed, via motions to suspend the rules, 790 of the 794 House bills that were initially considered under suspension. Four House bills did not receive the requisite supermajority. Three of these bills were later considered and approved under the terms of a special rule. The other bill did not return to the floor and therefore did not pass the House.", "The House agreed to all House resolutions (47) and concurrent resolutions (10) that were considered under suspension. The House approved three out of the four House joint resolutions. The House joint resolution that did not receive the requisite supermajority was H.J.Res. 2 , proposing a balanced budget amendment to the Constitution. The House approved 93 out of the 97 Senate bills under the suspension procedure. One of the Senate bills, which initially failed in the House, was later passed under the terms of a special rule. The other three Senate bills did not receive further consideration in the House."], "subsections": [{"section_title": "Voice Votes", "paragraphs": ["Most suspension motions are agreed to in the House by voice vote, which is the chamber's default method of voting on most questions. In 2017 and 2018, this method of voting led to the final approval of 72% (687) of the motions to suspend the rules and pass the measures (see Figure 8 ). "], "subsections": []}, {"section_title": "Record Votes", "paragraphs": ["After the initial voice vote, Members triggered an eventual record vote (often called a roll call vote) on 266 (28%) of the suspension measures considered in the 115 th Congress. This was done by demanding the \"yeas and nays,\" objecting to the vote \"on the grounds that a quorum is not present,\" or, in two cases, demanding a recorded vote. In most instances, the chair elected to postpone the vote to a later period within two additional legislative days, pursuant to clause 8 of House Rule XX. Of the 266 record votes, two immediately followed debate on the measure. The remaining 264 votes were postponed to another time on the legislative schedule, usually later the same day.", "In the 115 th Congress, 257 suspension motions were adopted by record vote, and nine motions to suspend the rules were defeated by record votes. The defeat of a motion to suspend the rules, however, does not necessarily kill the legislation. The Speaker may choose to recognize a Member at a later time to make another motion to suspend the rules and pass the bill, or the House may consider the measure pursuant to a special rule reported by the Committee on Rules. Accordingly, four of the initially unsuccessful measures were later called up and passed under the terms of a special rule. The House Rules Committee reported a special rule for another measure, but the special rule was not considered on the floor, so the measure did not receive further action. Four additional measures were not considered again, via any procedure, before the end of the 115 th Congress. Thus, of the measures initially considered on the House floor under suspension of the rules, five did not receive House approval. "], "subsections": []}]}]}, {"section_title": "Final Disposition of Measures Considered Under Suspension of the Rules", "paragraphs": [], "subsections": [{"section_title": "Passed by the Senate", "paragraphs": ["Although suspension measures generally receive broad support, measures that receive the requisite two-thirds majority in the House are not guaranteed passage in the Senate. As noted in Table 1 , in the 115 th Congress, the Senate agreed to one of the four House joint resolutions and six of the 10 House concurrent resolutions considered under suspension of the rules. The Senate passed 229 of the 794 House bills initially considered under suspension (29%). ", "Of the number of suspension measures that passed the House and Senate, 77 entered a \"resolution of differences\" stage between the chambers. Fifty-eight House measures and 19 Senate bills were subject to an amendment exchange process. (No measure initially considered under suspension of the rules had bicameral differences resolved in a conference committee.) Two of these measures, H.R. 88 and H.R. 695 , did not have their differences resolved because the House and Senate did not agree on the final text as amended by both chambers. ", "The House passed, with amendments, two Senate bills ( S. 488 and S. 2497 ) that did not enter the \"resolving differences\" stage because the Senate did not take up the House amendments. Likewise, the Senate passed, with amendments, four House bills ( H.R. 4969 , H.R. 4203 , H.R. 1967 , and H.R. 1020 ) that did not receive final passage because the House did not take up the Senate amendments. Thus, these bills, as well as H.R. 88 and H.R. 695 , were not enacted into law."], "subsections": []}, {"section_title": "Presidential Action", "paragraphs": ["Of the measures initially considered under suspension during the 115 th Congress, President Trump was presented with 223 House bills, 92 Senate bills, and one House joint resolution for signature or veto. The President signed all of these measures (vetoing none), so a total of 315 bills, and one joint resolution, were enacted into law (see Table 1 )."], "subsections": [{"section_title": "Appendix. Use of Suspension Motions, 110th-115th Congresses", "paragraphs": [], "subsections": []}]}]}]}}
{"id": "R46311", "title": "Federal Communications Commission: Progress Protecting Consumers from Illegal Robocalls", "released_date": "2020-04-10T00:00:00", "summary": ["The number of robocalls continues to grow in the United States, and the figures tend to fluctuate based on the introduction of new government and industry attempts to stop them and robocallers' changing tactics to thwart those attempts (see Figure ). In 2019, U.S. consumers received 58.5 billion robocalls, an increase of 22% from the 47.8 billion received in 2018, according to the YouMail Robocall Index. In 2016, the full first year the Robocall Index was tabulated, that figure was 29.1 billion calls\u00e2\u0080\u0094half the number of calls in 2019. Further, the Federal Communications Commission (FCC) states that robocalls make up its biggest consumer complaint category, with over 200,000 complaints each year\u00e2\u0080\u0094around 60% of all the complaints it receives. A robocall is any telephone call that delivers a pre-recorded message using an automatic (computerized) telephone dialing system. The Telephone Consumer Protection Act of 1991 ( P.L. 102-243 ) regulates robocalls. Legal robocalls are used by legitimate call originators for political, public service, and emergency messages. Illegal robocalls are usually associated with fraudulent telemarketing campaigns. The FCC estimates that eliminating illegal scam robocalls would provide a public benefit of $3 billion annually. A survey by Truecaller, a company that tracks and blocks robocalls, puts that figure as high as $10.5 billion.", "Figure . Robocalls per Month, April 2019 through March 2020", "(in billions)", "Source: Robocall Index, https://www.robocallindex.com .", "Over the past three years, the FCC has pursued a multi-part strategy for combatting illegal robocalls. The agency has", "issued hundreds of millions of dollars in fines for violations of its Truth in Caller ID rules; expanded its rules to reach foreign calls and text messages; enabled voice service providers to block certain clearly unlawful calls before they reach consumers' phones; clarified that voice service providers may offer call-blocking services by default; and called on the industry to \"trace back\" illegal spoofed calls and text messages to their original sources.", "Other wide-ranging steps by the FCC to stop illegal robocalls include mandating the implementation of call authentication technologies by the telecommunications industry, creating databases of numbers that should not be called, and establishing a reassigned numbers database. Major recent FCC regulatory actions include a June 2019 FCC Declaratory Ruling and Third Further Notice of Proposed Rulemaking, and a March 2020 FCC Order and Further Notice of Proposed Rulemaking. The FCC was empowered to take many of these actions by the Pallone-Thune Telephone Robocall Abuse Criminal Enforcement and Deterrence Act (TRACED Act) signed into law on December 30, 2019 ( P.L. 116-105 ).", "Although these steps appear to be having some impact, scammers remain determined to continue their attempts to defraud consumers using robocalls. Historically, decreases in the number of robocalls are sometimes followed shortly thereafter by spikes in those numbers, illustrating how robocallers continue to overcome measures to stop them (e.g., by changing their originating numbers). Most of the tools being used against robocalls have been developed recently, while some are still under development. Therefore, it may take telecommunications providers some time to fully implement them, and it may be some time before a long-term and ongoing decrease in robocall numbers will be realized. The positive impacts of FCC initiatives on fraudulent robocalls, as well as potential negative impacts on the telemarketing industry due to blocking legitimate calls, may be the subject of continued oversight by Congress."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["Robocalls are the top complaint received by the Federal Communications Commission (FCC) and a consistent congressional concern. A robocall, also known as \"voice broadcasting,\" is any telephone call that delivers a pre-recorded message using an automatic (computerized) telephone dialing system, more commonly referred to as an automatic dialer or \"autodialer.\" ", "The Telephone Consumer Protection Act of 1991 (TCPA) regulates robocalls. Legal robocalls are used by legitimate call originators for political, public service, and emergency messages, which are legal. Other legitimate uses can be, for example, to announce school closures or to remind consumers of medical appointments. Illegal robocalls are usually associated with fraudulent telemarketing campaigns, but an illegal robocall under the TCPA does not necessarily mean that the robocall is fraudulent. Illegal, fraudulent calls usually include misleading or inaccurate Caller ID information to disguise the identity of the calling party and trick called parties, which is called \"spoofing.\" Scammers sometimes use \" neighbor spoofing \" so it will appear that an incoming call is coming from a local number . They may also spoof a number from a legitimate company or a government agency that consumers know and trust . Like robocalls more generally, spoofing can also be used for legitimate purposes, such as to hide the number of a domestic violence shelter or an individual employee extension at a business or government agency. This report addresses robocalls that are both illegal under the TCPA as well as intended to defraud, not robocalls that are defined only as illegal.", "The number of robocalls continues to grow in the United States, and the figures tend to fluctuate based on the introduction of new government and industry attempts to stop them and robocallers' changing tactics to thwart those attempts (see Figure 1 ). In 2019, U.S. consumers received 58.5 billion robocalls, an increase of 22% from the 47.8 billion received in 2018, according to the YouMail Robocall Index. In 2016, the full first year the Robocall Index was tabulated, that figure was 29.1 billion calls\u00e2\u0080\u0094half the number of calls in 2019. Further, the FCC states that robocalls make up its biggest consumer complaint category, with over 200,000 complaints each year\u00e2\u0080\u0094around 60% of all the complaints it receives. ", "Over the past three years, the FCC has pursued a multi-part strategy for combatting spoofed robocalls. The agency has", "issued hundreds of millions of dollars in fines for violations of its Truth in Caller ID rules; expanded its rules to reach foreign calls and text messages; enabled voice service providers to block certain clearly unlawful calls before they reach consumers' phones; clarified that voice service providers may offer call-blocking services by default; and called on the industry to \"trace back\" illegal spoofed calls and text messages to their original sources.", "The FCC estimates that eliminating illegal scam robocalls would provide a public benefit of $3 billion annually. A survey by Truecaller, a company that tracks and blocks robocalls, puts that figure as high as $10.5 billion."], "subsections": []}, {"section_title": "The Telephone Robocall Abuse Criminal Enforcement and Deterrence Act", "paragraphs": ["The Pallone-Thune Telephone Robocall Abuse Criminal Enforcement and Deterrence Act (TRACED Act) empowered the FCC to take specific actions to fight illegal robocalls; it was signed into law on December 30, 2019 ( P.L. 116-105 ). The law requires the FCC to", "administer a forfeiture penalty for violations (with or without intent) of the prohibition on certain robocalls; promulgate rules establishing when a provider may block a voice call based on information provided by the call authentication framework, called Secure Telephony Identity Revisited (STIR) and Signature-based Handling of Asserted information using toKENs (SHAKEN) (together known as \"STIR/SHAKEN\"), and establish a process to permit a calling party adversely affected by the framework to verify the authenticity of its calls; initiate a rulemaking to help protect subscribers from receiving unwanted calls or texts from a caller using an unauthenticated number; assemble, in conjunction with the Department of Justice, an interagency working group to study and report to Congress on the enforcement of the prohibition of certain robocalls; and initiate a proceeding to determine whether its policies regarding access to number resources could be modified to help reduce access to numbers by potential robocall violators. ", "STIR/SHAKEN is seen by many, including the FCC, as a particularly important part of achieving the projected cost savings associated with eliminating illegal robocalls. STIR/SHAKEN must be implemented by June 30, 2021. "], "subsections": []}, {"section_title": "Ongoing Efforts to Combat Robocalls", "paragraphs": ["Both the telecommunications industry and the FCC are taking steps to counter illegal robocalls. The telecommunications industry has developed new technologies and other tools to detect and block illegal robocalls. The FCC has taken steps to create a policy environment in which those tools can be implemented. The FCC has also expanded the scope of some existing rules and continues to target and fine illegal robocallers."], "subsections": [{"section_title": "Call Blocking Initiatives", "paragraphs": ["In November 2017, the FCC authorized telecommunications providers to block calls originating from numbers that should not originate calls, or that are invalid, unallocated, or unused, without violating call completion rules. In December 2018, the FCC adopted a declaratory ruling clarifying that wireless providers are authorized to take measures to stop unwanted text messaging as well as unwanted calls. The FCC has also encouraged companies that block calls to establish an appeals process for erroneously blocked callers. "], "subsections": [{"section_title": "Do Not Originate Registry and Other Call Blocking", "paragraphs": ["The telecommunications industry has now widely implemented the blocking of numbers that should not originate calls, called the \"Do Not Originate\" (DNO) Registry. In November 2017, the FCC promulgated rules on the creation and use of the DNO Registry. The rules explicitly allow service providers to block calls from two categories of number: (1) numbers that the subscriber has asked to be blocked, such as \"in-bound only\" numbers (numbers that should not ever originate a call); and (2) unassigned numbers, as the use of such a number indicates that the calling party is intending to defraud a consumer.", "USTelecom, a trade association representing telecommunications-related businesses in the United States, maintains this registry and works with industry to implement DNO call blocking for in-bound numbers associated with government agencies."], "subsections": []}, {"section_title": "2020 FCC Report on Call Blocking", "paragraphs": ["On December 20, 2019, the FCC released a public notice seeking comments for its first of two staff reports on call blocking issues mandated by the TRACED Act. The agency asked for comments on", "the availability and effectiveness of call blocking tools offered to consumers; the impact of the FCC's actions on illegal calls; the impact of call blocking on 911 services and public safety; and any other issues parties would like to see addressed. ", "Comments were due January 29, 2020, and reply comments were due February 28, 2020."], "subsections": []}]}, {"section_title": "Caller ID Authentication", "paragraphs": ["Illegitimate robocallers nearly always spoof their originating number. That is, they deliberately falsify the Caller ID information they are transmitting to disguise their identity. One way to help consumers recognize spoofing and identify scams is to verify who is calling through Caller ID authentication. Over the past few years, the telecommunications industry developed a set of protocols, the STIR/SHAKEN framework that enables phone companies to verify that the Caller ID information transmitted with a call matches the caller's phone number. Once fully implemented, STIR/SHAKEN is expected to reduce the effectiveness of illegal spoofing and enable the identification of illegal robocallers. The FCC mandated the adoption of STIR/SHAKEN on March 31, 2020. These steps are discussed in detail in the section of this report, \" FCC Order and Further Notice of Proposed Rulemaking, March 2020 .\""], "subsections": []}, {"section_title": "Call Traceback", "paragraphs": ["More than 30 voice service providers participate in the USTelecom Industry Traceback Group (ITG), which was formally established in May 2016. The ITG is a collaborative effort of companies across the wireline, wireless, voice over internet protocol, and cable industries that actively trace and identify the source of illegal robocalls. The ITG coordinates with federal and state law enforcement agencies to identify non-cooperative providers so those agencies can take enforcement action, as appropriate. ", "During 2019, ITG members conducted more than 1,000 tracebacks, associated with more than 10 million illegal robocalls. This activity has resulted in more than 20 subpoenas and/or civil investigative demands from federal and state enforcement agencies. The ITG published its first status report in January 2020. "], "subsections": []}, {"section_title": "Reassigned Numbers Database", "paragraphs": ["When a consumer cancels service with a voice provider, the provider may reassign the number to a new consumer. If callers are unaware of the reassignment, they can make unwanted calls to the new consumer, unintentionally violating the Telephone Consumer Protection Act. ", "In March 2018, the FCC proposed that one or more databases be created to provide callers with the comprehensive and timely information they need to discover potential number reassignments before making a call. In December 2018, the commission authorized the creation of a reassigned numbers database to enable callers to verify whether a telephone number has been permanently disconnected and is therefore eligible for reassignment\u00e2\u0080\u0094before calling that number\u00e2\u0080\u0094thereby helping to protect consumers with reassigned numbers from receiving unwanted calls. On January 24, 2020, the FCC requested public comment on the technical requirements developed for the database by the North American Numbering Council (NANC). Comments were due February 24, 2020, and reply comments were due March 9, 2020. "], "subsections": []}]}, {"section_title": "FCC Declaratory Ruling and Third Further Notice of Proposed Rulemaking, June 2019", "paragraphs": ["On June 6, 2019, the FCC adopted a declaratory ruling and third further notice of proposed rulemaking (FNPRM), \"Advanced Methods to Target and Eliminate Unlawful Robocalls and Call Authentication Trust Anchor.\""], "subsections": [{"section_title": "Declaratory Ruling", "paragraphs": ["The declaratory ruling empowers phone companies to block suspected illegal robocalls by default (customers may opt out) and asserts the FCC's view that carriers can allow consumers to opt in to more aggressive call-blocking tools, known as white-listing. Both blocking by default and opt-in white-listing tools seek to stop unwanted calls on the voice provider's network before calls reach the consumer's phone. "], "subsections": [{"section_title": "Call-Blocking Programs (Opt Out)", "paragraphs": ["Call-blocking programs have become more popular and effective in the past few years. There are numerous blocking tools for different platforms, and the number of available tools is growing. Many service providers only offer these programs on an opt-in basis, limiting their potential impact. Providing a call-blocking program as the default option can significantly increase consumer participation while maintaining consumer choice."], "subsections": []}, {"section_title": "White-List Programs (Opt In)", "paragraphs": ["White-list programs require consumers to specify the telephone numbers from which they wish to receive calls\u00e2\u0080\u0094all other calls are blocked. Smartphones have provided a new way to implement white-list programs, because they store the consumer's contact list. When the consumer's contacts change, the white list can be updated. The declaratory ruling asserts the FCC's view that nothing in the Communications Act of 1934 or the FCC's rules prohibits a service provider from offering opt-in white-list programs. "], "subsections": []}]}, {"section_title": "Third Further Notice of Proposed Rulemaking", "paragraphs": ["The FNPRM requested feedback on several proposals: a safe harbor for providers that implement blocking of calls that fail caller authentication under STIR/SHAKEN, protections for critical calls, mandating Caller ID authentication, and measuring the effectiveness of robocall solutions. Comments were due on July 24, 2019, and reply comments were due on August 23, 2019."], "subsections": [{"section_title": "Safe Harbor for Call-Blocking Programs Based on Potentially Spoofed Calls", "paragraphs": ["The FCC proposed a narrow safe harbor for voice service providers that offer call-blocking programs that take into account (1) whether a call has been properly authenticated under the SHAKEN/STIR framework and (2) may potentially be spoofed. The safe harbor limits liability for voice service providers if they block a legal robocall. Among other elements, the FCC proposed a safe harbor for voice service providers that choose to block calls that fail SHAKEN/STIR authentication and asked whether there might be other instances where authentication would fail. The FCC also asked how it could ensure that wanted calls are not blocked and sought comment as to how to identify and remedy the blocking of wanted calls."], "subsections": []}, {"section_title": "Protections for Critical Calls", "paragraphs": ["The FCC requested comments on whether it should require voice providers offering call-blocking to maintain a \"critical calls list\" of emergency numbers that must not be blocked. Such lists would include, for example, the outbound numbers of 911 call centers and other government emergency services. The blocking prohibition would apply only to STIR/SHAKEN-authenticated calls. "], "subsections": []}, {"section_title": "Mandating Caller ID Authentication", "paragraphs": ["The FCC requested comments on its proposal to mandate implementation of the STIR/SHAKEN authentication framework, if major voice providers fail to meet the end-of-2019 deadline for voluntary implementation. This is the topic of the FCC order issued on March 31, 2020, and is discussed in detail in the next section of this report, \" FCC Order and Further Notice of Proposed Rulemaking, March 2020 .\""], "subsections": []}, {"section_title": "Measuring the Effectiveness of Robocall Solutions", "paragraphs": ["The FCC requested feedback on whether it should create a mechanism to provide information to consumers about the effectiveness of voice providers' robocall solutions and, if so, how it should define and evaluate that effectiveness. The FCC also asked how it could obtain the information needed for such an evaluation."], "subsections": []}]}]}, {"section_title": "FCC Order and Further Notice of Proposed Rulemaking, March 2020", "paragraphs": ["The FCC published its latest guidance and proposals on March 31, 2020, in a new order and FNPRM."], "subsections": [{"section_title": "Order", "paragraphs": ["The new rules require implementation of Caller ID authentication using STIR/SHAKEN. Specifically, the rules require \"all originating and terminating voice service providers to implement STIR/SHAKEN in the Internet Protocol (IP) portions of their networks by June 30, 2021, a deadline that is consistent with Congress's direction in the recently-enacted TRACED Act,\" described earlier in, \" The Telephone Robocall Abuse Criminal Enforcement and Deterrence Act .\" Most experts say that widespread deployment of STIR/SHAKEN will reduce the effectiveness of illegal spoofing, allow law enforcement to identify bad actors more easily, and help phone companies to identify calls with illegally spoofed Caller ID information before those calls reach their subscribers. "], "subsections": []}, {"section_title": "Further Notice of Proposed Rulemaking", "paragraphs": ["The FNPRM requests public comments on", "expanding the STIR/SHAKEN implementation mandate to cover intermediate voice service providers; extending the implementation deadline by one year for small voice service providers pursuant to the TRACED Act; adopting requirements to promote caller ID authentication on voice networks that do not rely on IP technology; and implementing other aspects of the TRACED Act. ", "Comments to the FNPRM are due on May 15, 2020, and reply comments are due on May 29, 2020."], "subsections": []}]}, {"section_title": "Other FCC Actions Related to Robocalls", "paragraphs": ["Other FCC actions to fight illegal robocallers include ongoing enforcement actions, an extension of a robocall ban to international callers, and the establishment of a hospital robocall protection group."], "subsections": [{"section_title": "Ongoing Enforcement Actions", "paragraphs": ["Since January 2017, the FCC has imposed or proposed about $240 million in forfeitures against robocallers. One case involved an individual who made more than 96 million illegal robocalls over the course of three months. Another involved an individual who conducted a large-scale robocalling campaign that marketed health insurance to vulnerable populations. In both cases, the illegal calls disrupted an emergency medical paging service."], "subsections": []}, {"section_title": "Extension of Robocall Ban to International Callers", "paragraphs": ["In 2018, Congress amended the Communications Act of 1934 to prohibit spoofing activities directed at U.S. consumers from callers outside the United States and Caller ID spoofing using alternative voice and text messaging services. To implement these amendments, the FCC issued rules in July 2019 that expanded the act's prohibition on the use of misleading and inaccurate Caller ID information."], "subsections": []}, {"section_title": "Hospital Robocall Protection Group", "paragraphs": ["The TRACED Act of 2019 required the FCC to establish a Hospital Robocall Protection Group. For most consumers, robocalls are a potentially fraudulent nuisance. For hospitals, though, the robocalls can present challenges that are increasingly threatening doctors and patients:", "At Tufts Medical Center, administrators registered more than 4,500 calls between about 9:30 and 11:30 a.m. on April 30, 2018, said Taylor Lehmann, the center's chief information security officer. Many of the messages seemed to be the same: Speaking in Mandarin, an unknown voice threatened deportation unless the person who picked up the phone provided their personal information.", "The FCC began soliciting nominations for the group in March 2020. Once established, the group is to be charged to develop and issue best practices regarding (1) how voice service providers can better combat unlawful robocalls made to hospitals; (2) how hospitals can better protect themselves from such calls; and (3) how the federal government and state governments can help combat such calls."], "subsections": []}]}, {"section_title": "Outlook", "paragraphs": ["The FCC has taken wide-ranging steps to stop illegal robocalls, including imposing fines on law breakers; mandating the implementation of call authentication technologies by the telecommunications industry; creating databases of numbers that should not be called; and providing regulatory permission to implement call blocking. Although these steps appear to be having some impact, scammers remain determined to continue their attempts to defraud consumers using robocalls. Historically, decreases in the number of robocalls are sometimes followed shortly thereafter by spikes in those numbers, illustrating how robocallers continue to overcome measures to stop them (e.g., by changing their originating numbers). Most of the tools being used against robocalls have been developed recently, while some are still under development. Therefore, it may take telecommunications providers some time to fully implement them, and it may be some time before a long-term and ongoing decrease in robocall numbers will be realized. The positive impacts of FCC initiatives on fraudulent robocalls, as well as potential negative impacts on the telemarketing industry due to blocking legitimate calls, may be the subject of continued oversight by Congress."], "subsections": []}]}}
{"id": "R45749", "title": "War Legacy Issues in Southeast Asia: Unexploded Ordnance (UXO)", "released_date": "2019-06-03T00:00:00", "summary": ["More than 40 years after the end of the Vietnam War, unexploded ordnance (UXO) from numerous conflicts, but primarily dropped by U.S. forces over Cambodia, Laos, and Vietnam during the Vietnam War, continues to cause casualties in those countries. Over the past 25 years, the United States has provided a total of over $400 million in assistance for UXO clearance and related activities in those three countries through the Department of Defense (DOD), Department of State (DOS), and United States Agency for International Development (USAID), as well as funding for treatment of victims through USAID and the Leahy War Victims fund. Although casualty numbers have dropped in recent years, no systematic assessment of affected areas has been done, and many observers believe it may still take decades to clear the affected areas.", "War legacy issues such as UXO clearance and victim assistance may raise important considerations for Congress as it addresses the impact of U.S. participation in conflicts around the world and how the United States should deal with the aftermath of such conflicts. The continued presence of UXO in Southeast Asia raises numerous issues, including appropriate levels of U.S. assistance for clearance activities and victim relief; coordination in efforts among DOD, DOS, and USAID; the implications of U.S. action on relations with affected countries; whether U.S. assistance in Southeast Asia carries lessons for similar activity in other parts of the world, including Iraq and Afghanistan; and, more generally, efforts to lessen the prevalence of UXO in future conflicts.", "Many observers argue that U.S. efforts to address UXO issues in the region, along with joint efforts regarding other war legacy issues such as POW/MIA identification and Agent Orange/dioxin remediation, have been important steps in building relations with the affected countries in the post-war period. These efforts that have proceeded furthest in Vietnam, where the bilateral relationship has expanded across a wide range of economic and security initiatives. In Cambodia and Laos, where bilateral relations are less developed, UXO clearance is one of the few issues on which working-level officials from the United States and the affected countries have cooperated for years. Although some Cambodians and Laotians view U.S. demining assistance as a moral obligation and the U.S. government has viewed its support for UXO clearance as an important, positive aspect of its ties with the two countries, the issue of UXO has not been a major factor driving the relationships.", "The Consolidated Appropriations Act, 2019 ( P.L. 116-6 ) provides $196.5 million for \"conventional weapons destruction\" around the world, including $159.0 million for \"humanitarian demining,\" with $3.85 million appropriated for Cambodia, $30.0 million for Laos, and $15.0 million for Vietnam.", "The Legacies of War Recognition and Unexploded Ordnance Removal Act ( H.R. 2097 ) would authorize $50 million per year for fiscal years 2020 to 2024 for humanitarian assistance in Cambodia, Laos, and Vietnam to develop national UXO surveys, conduct UXO clearance, and finance capacity building, risk education, and support for UXO victims."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Overview", "paragraphs": ["The remnants of the Vietnam War (1963-1975) and other regional conflicts have left mainland Southeast Asia as a region heavily contaminated with unexploded ordnance, or UXO. More than 45 years after the United States ceased its extensive bombing of Cambodia, Laos, and Vietnam, hundreds of civilians are still injured or killed each year by UXO from those bombing missions or by landmines laid in conflicts be tween Cambodia and Vietnam (1975-1978), China and Vietnam (1979-1990) and during the Cambodian civil war (1978-1991). While comprehensive surveys are incomplete, it is estimated that more than 20% of the land in Cambodia, Laos, and Vietnam are contaminated by UXO. ", "Over more than 25 years, Congress has appropriated more than $400 million to assist Cambodia, Laos, and Vietnam in clearing their land of UXO. More than 77% of the assistance has been provided via programs funded by the Department of State. In addition, the United States has provided treatment to those individuals maimed by UXO through U.S. Agency for International Development (USAID) programs and the Leahy War Victims Fund. ", "Despite ongoing efforts by the three countries, the United States, and other international donors, it reportedly could take 100 years or more, at the current pace, to clear Cambodia, Laos, and Vietnam of UXO. During that time period, more people will likely be killed or injured by UXO. In addition, extensive areas of the three nations will continue to be unavailable for agriculture, industry, or habitation, hindering the economic development of those three nations. ", "In 2016, President Obama pledged $90 million over a three-year period for UXO decontamination programs in Laos\u00e2\u0080\u0094an amount nearly equal to the total of U.S. UXO assistance to that nation over the previous 20 years. The Consolidated Appropriations Act, 2019 ( P.L. 116-6 ) provides $196.5 million globally for \"conventional weapons destruction,\" including $159.0 million for \"humanitarian demining,\" under the Department of State's International Security Assistance programs. Of the humanitarian demining funds, $3.85 million is appropriated for Cambodia, $30.0 million for Laos, and $15.0 million for Vietnam. The act also provides $13.5 million for global health and rehabilitation programs under the Leahy War Victims Fund.", "Moving forward, the 116 th Congress will have an opportunity to consider what additional efforts, if any, the U.S. government should undertake to address the war legacy issue of UXO in mainland Southeast Asia in terms of the decontamination of the region and the provision of medical support or assistance to UXO victims. Beyond the immediate assistance such UXO-related programs would provide to Cambodia, Laos, and Vietnam, U.S. aid on this war legacy issue may also foster better bilateral ties to those nations. For example, some observers view U.S. assistance to Vietnam for the war legacy issue of Agent Orange/dioxin contamination as playing an important role in improving bilateral relations."], "subsections": []}, {"section_title": "Background on Unexploded Ordnance", "paragraphs": [], "subsections": [{"section_title": "What Is Unexploded Ordnance (UXO)?", "paragraphs": ["Unexploded ordnance (UXO) is defined as military ammunition or explosive ordnance which has failed to function as intended. UXO is also sometimes referred to as Explosive Remnants of War (ERW) or \"duds\" because of their failure to explode or function properly. UXO includes mines, artillery shells, mortar rounds, hand or rocket-propelled grenades, and rocket or missile warheads employed by ground forces (see Figure 1 ). Aerial delivered bombs, rockets, missiles, and scatterable mines that fail to function as intended are also classified as UXO. While many of these weapons employ unitary warheads, some weapons\u00e2\u0080\u0094primarily certain artillery shells, rocket and missile warheads and aerial bombs\u00e2\u0080\u0094employ cluster munitions, which disperse a number of smaller munitions as part of their explosive effect. Often times, these submunitions fail to function as intended. In addition, abandoned or lost munitions that have not detonated are also classified as UXO. ", "The probability of UXO detonating is highly unpredictable; it depends on whether or not the munition has been fired, the level of corrosion or degradation, and the specific arming and fusing mechanisms of the device. \"Similar items may respond very differently to the same action\u00e2\u0080\u0094one may be moved without effect, while another may detonate. Some items may be moved repeatedly before detonating and others may not detonate at all.\" In all cases, UXO poses a danger to both combatants and unaware and unprotected civilians."], "subsections": []}, {"section_title": "Military Use", "paragraphs": ["Military munitions are used in a variety of ways. Some are used in direct force-on-force combat against troops, combat vehicles, and structures. Others, such as emplaced anti-personnel and anti-vehicle mines or scatterable mines, can be used to attack targets, deny enemy use of key terrain, or establish barriers to impede or influence enemy movement. Cluster munitions can either explode on contact once dispensed or can remain dormant on the ground until triggered by human or vehicular contact. The military utility of cluster weapons is that they can create large areas of destruction, meaning fewer weapons systems and munitions are needed to attack targets."], "subsections": []}, {"section_title": "Mines and Cluster Munitions", "paragraphs": ["Two particular classes of ordnance\u00e2\u0080\u0094mines and cluster munitions\u00e2\u0080\u0094have received a great deal of attention. Emplaced mines by their very nature pose a particular threat because they are often either buried or hidden and, unless their locations are recorded or some type of warning signs are posted, they can become easily forgotten or abandoned as the battlefield shifts over time. Cluster munitions are dispersed over an area and are generally smaller than unitary warheads, which can make them difficult to readily identify (see Figure 2 ). Since the conclusion of the Vietnam War, many of the newer mines and cluster munitions have a self-destruct or disarming capability. However, as long as their explosive charge remains viable, they pose a hazard to people. ", "Both mines and cluster munitions have been subject to international protocols to limit or ban their development, transfer, and use. The 1999 Ottawa Convention \"prohibits the use, stockpiling, production, and transfer of anti-personnel landmines (APLs). It requires states to destroy their stockpiled APLs within four years and eliminate all APL holdings, including mines currently planted in the soil, within 10 years.\" The 2010 Convention on Cluster Munitions prohibits all use, stockpiling, production and transfer of cluster munitions. The United States has refused to sign either convention, citing the military necessity of these munitions. The United States has, however, been a States Party to the Convention on the Use of Certain Conventional Weapons (CCW) since 1995, which \"aims to protect military troops from inhumane injuries and prevent noncombatants from accidentally being wounded or killed by certain types of arms.\" In 2009, the United States ratified Protocol V of the CCW, Explosive Remnants of War. Protocol V \"covers munitions, such as artillery shells, grenades, and gravity bombs, that fail to explode as intended, and any unused explosives left behind and uncontrolled by armed forces.\" Under Protocol V \"the government controlling an area with explosive remnants of war is responsible for clearing such munitions. However, that government may ask for technical or financial assistance from others, including any party responsible for putting the munitions in place originally, to complete the task. No state-party is obligated to render assistance.\"", "The United States has undertaken a variety of initiatives\u00e2\u0080\u0094including mandating changes to munitions design and adopting federal safeguards and policy regulating their usage\u00e2\u0080\u0094to help limit the potential hazards posed to noncombatants by these UXO."], "subsections": []}, {"section_title": "U.S. Policy on Cluster Munitions", "paragraphs": ["On June 19, 2008, then-Secretary of Defense Robert Gates issued a new policy on the use of cluster munitions. The policy stated that \"[c]luster munitions are legitimate weapons with clear military utility,\" but it also recognized \"the need to minimize the unintended harm to civilians and civilian infrastructure associated with unexploded ordnance from cluster munitions.\" To that end, the policy mandated that after 2018, \"the Military Departments and Combatant Commands will only employ cluster munitions containing submunitions that, after arming, do not result in more than 1% unexploded ordnance (UXO) across the range of intended operational environments.\"", "On November 30, 2017, then-Deputy Secretary of Defense Patrick Shanahan issued a revised policy on cluster munitions. The revised policy reverses the 2008 policy that established an unwaiverable requirement that cluster munitions used after 2018 must leave less than 1% of unexploded submunitions on the battlefield. Under the new policy, combatant commanders can use cluster munitions that do not meet the 1% or less unexploded submunitions standard in extreme situations to meet immediate warfighting demands. Furthermore, the new policy does not establish a deadline to replace cluster munitions exceeding the 1% rate, and these munitions are to be removed only after new munitions that meet the 1% or less unexploded submunitions standard are fielded in sufficient quantities to meet combatant commander requirements. However, the new DOD policy stipulates that the Department \"will only procure cluster munitions containing submunitions or submunition warheads\" meeting the 2008 UXO requirement or possessing \"advanced features to minimize the risks posed by unexploded submunitions.\""], "subsections": []}]}, {"section_title": "UXO in Southeast Asia", "paragraphs": [], "subsections": [{"section_title": "Overview", "paragraphs": ["Although UXO in Southeast Asia can date back to World War II, the majority of the hazard is attributed to the Vietnam War. While an undetermined amount of UXO associated with the Vietnam War was from ground combat and emplaced mines, an appreciable portion of UXO is attributed to the air war waged by the United States from 1962 to 1973, considered by some to be one of the most intense in the history of warfare. One study notes the United States", "dropped a million tons of bombs on North Vietnam. Three million more tons fell on Laos and Cambodia\u00e2\u0080\u0094supposedly \"neutral\" countries in the conflict. Four million tons fell on South Vietnam\u00e2\u0080\u0094America's ally in the war against communist aggression. When the last raid by B-52s over Cambodia on August 15, 1973, culminated American bombing in Southeast Asia, the United States had dropped more than 8 million tons of bombs in 9 years. Less than 2 years later, Cambodia, Laos, and South Vietnam were communist countries.", "The U.S. State Department in 2014 characterized the problem by country.", "Cambodia: Nearly three decades of armed conflict left Cambodia severely contaminated with landmines and unexploded ordnance (UXO). The Khmer Rouge, the Royal Cambodian Armed Forces (RCAF), the Vietnamese military, and, to a lesser extent, the Thai army, laid extensive minefields during the Indochina wars. These minefields are concentrated in western Cambodia, especially in the dense \"K-5 mine belt\" along the border with Thailand, laid by Vietnamese forces during the 1980s. UXO\u00e2\u0080\u0094mostly from U.S. air and artillery strikes during the Vietnam War and land battles fought along the border with Vietnam\u00e2\u0080\u0094contaminates areas in eastern and northeastern Cambodia. While the full extent of contamination is unknown, the Landmine and Cluster Munition Monitor reports that a baseline survey completed in 2012 of Cambodia's 124 mine-affected districts found a total of 1,915 square kilometers (739 square miles) of contaminated land. Laos: Laos is the most heavily bombed country per capita in the world as a result of the Indochina wars of the 1960s and 1970s. While landmines were laid in Laos during this period, UXO, including cluster munitions remnants (called \"bombies\" in Laos), represents a far greater threat to the population and account for the bulk of contamination. UXO, mostly of U.S. origin, remains in the majority of the country's 18 provinces. Vietnam: UXO contaminates virtually all of Vietnam as a result of 30 years of conflict extending from World War II through the Vietnam War. The most heavily contaminated provinces are in the central region and along the former demilitarized zone (DMZ) that divided North Vietnam and South Vietnam. Parts of southern Vietnam and areas around the border with China also remain contaminated with UXO."], "subsections": []}, {"section_title": "The Situation in Cambodia", "paragraphs": ["The Kingdom of Cambodia is among the world's most UXO-afflicted countries, contaminated with cluster munitions, landmines, and other undetonated weapons. U.S. bombing of northeastern Cambodia during the Vietnam War, the Vietnamese invasion in 1979, and civil wars during 1970s and 1980s all contributed to the problem of unexploded ordnance. In 1969, the United States launched a four-year carpet-bombing campaign on Cambodia, dropping 2.7 million tons of ordnance, including 80,000 cluster bombs containing 26 million submunitions or bomblets. Up to one-quarter of the cluster bomblets failed to explode, according to some estimates. In addition, the Vietnamese army mined the Cambodia-Thai border as it invaded the country and took control from the Khmer Rouge in 1979. The Vietnamese military, Vietnam-backed Cambodian forces, the Khmer Rouge, and Royalist forces reportedly all deployed landmines during the 1979-1989 civil war period. Cambodian Prime Minister Hun Sen occasionally has referred to the U.S. bombing of Cambodia, which occurred between 1969 and 1973, when criticizing the United States; however, the historical event has not been a major issue in recent U.S.-Cambodian relations. "], "subsections": [{"section_title": "Contamination and Casualties", "paragraphs": ["There have been over 64,700 UXO casualties in Cambodia since 1979, including over 19,700 deaths. The Cambodia Mine/ERW Victim Information System (CMVIS) has recorded an overall trend of significant decreases in the number of annual casualties: 58 in 2017 compared to 111 in 2015, 186 in 2012 and 286 in 2010. Despite progress, the migration of poor Cambodians to the northwestern provinces bordering Thailand, one of the most heavily mined areas in the world, has contributed to continued casualties. Cambodia, with 25,000 UXO-related amputees, has the highest number of amputees per capita in the world. The economic costs of UXO include obstacles to infrastructure development, land unsuitable for agricultural purposes, and disruptions to irrigation and drinking water supplies. ", "Open Development Cambodia, a website devoted to development-related data, reports that since the early 1990s, about 580 square miles (1,500 square kilometers) of land has been cleared of UXO. \u00c2\u00a0Estimates of the amount of land still containing UXO vary. According to some reports, about 50% of contaminated land has been cleared, and an estimated 630 square miles (1,640 square kilometers) of land still contain UXO. Many of the remaining areas are the most densely contaminated, including 21 northwestern districts along the border with Thailand that contain anti-personnel mines laid by the Vietnamese military and that account for the majority of mine casualties."], "subsections": []}, {"section_title": "Cleanup Efforts", "paragraphs": ["Between 1993 and 2017, the U.S. government contributed over $133.6 million for UXO removal and disposal, related educational efforts, and survivor assistance programs in Cambodia. These activities are carried out largely by U.S. and international nongovernmental organizations (NGOs), in collaboration with the Cambodian Mine Action Center, a Cambodian NGO, and the Cambodian government. USAID's Leahy War Victims Fund has supported programs to help provide medical and rehabilitation services and prosthetics to Cambodian victims of UXO. Nonproliferation, Anti-terrorism, Demining and Related Programs (NADR) funding for demining activities was $5.5 million in both 2015 and 2016, $4.2 in 2017, and $2.9 million in 2018. Global donors contributed over $132 million between 2013 and 2017, mostly for clearance efforts. In 2017, the largest contributors of demining and related assistance were the United States, United Kingdom, Australia, Japan, and Germany, providing approximately $10.6 million in total. ", "In 2018, the Cambodian government and Cambodian Mine Action and Victim Assistance Authority (CMAA), a government agency, launched the National Mine Action Strategy (NMAS) for 2018-2025. The goal of removing UXO from all contaminated areas by 2025 would require the clearance of 110 square kilometers per year at a cost of about $400 million. The NMAS estimated that at the current rate of progress, however, Cambodia would need a little over 10 years to complete clearance of all known mined areas. Some experts are concerned that declining international assistance could jeopardize clearance goals. In 2017, total international demining support to Cambodia decreased by 61%, largely due to lower contributions from Australia and Japan."], "subsections": []}]}, {"section_title": "The Situation in Laos", "paragraphs": ["From 1964 through 1973, the United States military reportedly flew 580,000 bombing runs and dropped over 2 million tons of cluster munitions, including over 270 million cluster bombs, on the small land-locked country. The total was more than the amount dropped on Germany and Japan combined in World War II. An estimated one-third of these munitions failed to explode. The Lao government claims that up to 75-80 million submunitions or bomblets released from the cluster bombs remain in over one-third of the country's area. Military conflicts during the French colonial period and the Laotian Civil War during the 1960s and 1970s have also contributed to the problem of UXO/ERW.", "The U.S. bombing campaign in Laos was designed to interdict North Vietnamese supply lines that ran through Laos. The bombing campaign also supported Lao government forces fighting against communist rebels (Pathet Lao) and their North Vietnamese allies. Cluster munitions were considered the \"weapon of choice\" in Laos because they could penetrate the jungle canopy, cover large areas, and successfully attack convoys and troop concentrations hidden by the trees. The most heavily bombed areas in Laos were the northeastern and southern provinces, although UXO can be found in 14 of the country's 17 provinces. The bombings in the northeast were intended to deny territory, particularly the Plain of Jars, to Pathet Lao and North Vietnamese forces and, in the south, to sever the Ho Chi Minh Trail, which crossed the border into eastern Laos. The northeastern part of Laos was also used as a \"free drop zone\" where planes that had taken off from bases in Thailand and had been unable to deliver their bombs, could dispose of them before returning to Thailand."], "subsections": [{"section_title": "Contamination and Casualties", "paragraphs": ["According to the Geneva-based Landmine and Cluster Munition Monitor , since 1964, there have been over 50,000 mine and ERW casualties in Laos, including over 29,000 people killed. An estimated 40% of victims are children. In 2012, the Lao government's Safe Path Forward Strategic Plan II set a target to reduce UXO-related casualties to 75 per year by 2020, from levels between 100-200 victims annually during the 2000s. The country has already met these goals: in 2017, the number of reported casualties was 41, including four killed. ", "Cluster munitions have hampered economic development in the agricultural country. UXO contamination affects one-quarter of all Lao villages, and 22% of detonations occur through farming activities. Unexploded ordnance adversely affects not only agricultural production, but also mining, forestry, the development of hydropower projects, and the building of roads, schools, and clinics. Expenditures on demining efforts and medical treatment divert investment and resources from other areas and uses. Many injured UXO survivors lose the ability to be fully productive. According to the Lao government, there appears to be a significant correlation between the presence of UXO and the prevalence of poverty."], "subsections": []}, {"section_title": "Cleanup Efforts", "paragraphs": ["Lao PDR officials state that the country needs $50 million annually for ongoing UXO/ERW clearance, assistance to victims, and education, of which the Lao government contributes $15 million. International assistance comes from numerous sources, including Japan, the United States, and the United Nations Development Program (UNDP). The United States has contributed a total of $169 million for UXO clearance and related activities since 1995, with funding directed to international NGOs and contractors. That makes Laos the third largest recipient of conventional weapons destruction funding over that period, after Afghanistan and Iraq. In 2016, the United States announced a three-year, $90 million increase in assistance covering FY2016-FY2018. Half the amount, or $45 million, is aimed at conducting the first nationwide cluster munitions remnant survey, while the other half is aimed at clearance activities.", "Since the early 1990s, the U.S. Department of Defense (DOD) has been involved in training Lao personnel in demining techniques. U.S. UXO clearance and related humanitarian aid efforts, administered by the State Department (DOS), began in 1996. U.S. support also helped to establish the Lao National Demining Office, the UXO Lao National Training Center, and the Lao National Regulatory Authority. ", "The United States finances the bulk of its mine clearance operations through the NADR foreign aid account. NADR demining programs constitute the largest U.S. assistance activity in Laos, which receives little U.S. development aid compared to other countries in the region. It has been channeled primarily to international nongovernmental organizations (NGOs), the UNDP's trust fund for UXO clearance, and the Lao National Unexploded Ordnance Program (UXO Lao). Laos also has received humanitarian assistance through the USAID Leahy War Victims Fund for prosthetics, orthotics, and rehabilitation ($1.4 million in 2011-2013).", "For many years in the 1990s and 2000s, UXO-related clearance programs were one of the primary areas of substantive cooperation between the United States and Laos. Some argue that such activity has helped foster bilateral ties with a country whose authoritarian government is deeply inward looking. When President Obama became the first U.S. President to visit Laos in 2016, announcing the $90 million UXO aid package, he said: \"Given our history here, I believe that the United States has a moral obligation to help Laos heal. And even as we continue to deal with the past, our new partnership is focused on the future.\""], "subsections": []}]}, {"section_title": "The Situation in Vietnam", "paragraphs": ["War Legacy issues\u00e2\u0080\u0094Agent Orange/dioxin contamination, MIAs, and UXO\u00e2\u0080\u0094played an important role in the reestablishment of diplomatic relations between the United States and Vietnam, and it led to the development of a comprehensive partnership between the two nations. Vietnam's voluntary effort to locate and return the remains of U.S. MIAs was a significant factor in the restoration of diplomatic relations. U.S. assistance to decontaminate Da Nang airport of Agent Orange/dioxin likely contributed to the two nations' move to a comprehensive partnership. While not as prominent, U.S. UXO assistance to Vietnam most likely has been a factor in establishing trust between the two governments. ", "The UXO in Vietnam are remnants from conflicts spanning more than a century, potentially as far back as the Sino-French War (or Tonkin War) of 1884-1885 and as recent as the Cambodian-Vietnamese War (1975-1978) and the border conflicts between China and Vietnam from 1979 to 1991. According to one account, during Vietnam's conflicts with France and the United States (1945-1975), more than 15 million tons of explosives were deployed\u00e2\u0080\u0094four times the amount used in World War II. It is generally presumed, however, that the majority of the UXO in Vietnam are from the Vietnam War, also known in Vietnam as \"the Resistance War Against America\" (1955-1975). "], "subsections": [{"section_title": "Contamination and Casualties", "paragraphs": ["Estimates of the amount of UXO in Vietnam vary. According to one source, \"at least 350,000 tons of live bombs and mines remain in Vietnam.\" Another source claims \"around 800,000 tons of unexploded ordnance remains scattered across the country.\" ", "Viewed in terms of land area, the Vietnamese government estimates that between 6.1 and 6.6 million hectares (23,500-25,500 square miles) of land in Vietnam\u00e2\u0080\u0094or 19% to 21% of the nation\u00e2\u0080\u0094is contaminated by UXO. An official Vietnamese survey started in 2004 and completed in 2014 estimated that 61,308 square kilometers (23,671 square miles) was contaminated with UXO. According to the survey, UXO is scattered across virtually all of the nation, but the province of Quang Tri, along the previous \"demilitarized zone\" (DMZ) between North and South Vietnam, is the most heavily contaminated (see Figure 3 ). ", "Figures on the number of UXO casualties in Vietnam also vary. One source says, \"No one really knows how many people have been injured or killed by UXO since the war ended, but the best estimates are at least 105,000, including 40,000 deaths.\" In its report on UXO casualties in Vietnam, however, the Landmine and Cluster Munition Monitor listed the casualty figures for 1975-2017 as 38,978 killed and 66,093 injured. For 2017 only, the Landmine and Cluster Munition Monitor reported eight deaths and six injured. ", "A survey of UXO casualties determined that the three main circumstances under which people were killed or injured by UXO were (in order): scrap metal collection (31.2%); playing/tampering (27.6%); and cultivating or herding (20.3%). In some of Vietnam's poorer provinces, people proactively seek out and collect UXO in order to obtain scrap metal to sell to augment their income, despite the inherent danger."], "subsections": []}, {"section_title": "Cleanup Efforts", "paragraphs": ["On March 8, 2018, Vietnam's Ministry of National Defence (MND) established the Office of the Standing Agency of the National Steering Committee of the Settlement of Post-war Unexploded Ordnance and Toxic Chemical Consequences, or Office 701, to address the nation's UXO issue. Office 701 is responsible for working with individuals and organizations to decontaminate Vietnam of UXO to ensure public safety, clean the environment, and promote socio-economic development. Under a 2013 directive by the Prime Minister, the Vietnam National Mine Action Center (VNMAC) was established within the MND with responsibility for proposing policy, developing plans, and coordinating international cooperation for UXO clearance. The MND's Center for Bomb and Mine Disposal Technology (BOMICEN) is the central coordinating body for Vietnam's UXO clearance operations. In addition, Vietnam created a Mine Action Partnership Group (MAPG) to improve coordination of domestic and international UXO clearance operations.", "BOMICEN typically sets up project management teams (PMTs) that work with provincial or local officials to identify, survey, and decontaminate UXO. The PMTs usually interview local informants about possible UXO sites and then conduct field evaluations to determine if UXO is present and suitable for removal by Vietnam's Army Engineering Corps. The PMTs also collect information about the decontamination site and report back to BOMICON about the location and type of UXO removed. ", "Besides the clearance operations directly conducted by Vietnam, several nations and international organizations conduct UXO removal projects in Vietnam, including the Danish Demining Group (DDG), the Mines Advisory Group (MAG), Norwegian People's Aid (NPA), and PeaceTrees Vietnam. In 2016, the Korea International Cooperation Agency (KOICA), in cooperation with VNMAC and the United Nations Development Programme (UNDP), initiated a $32 million, multi-year UXO project in the provinces of Binh Dinh and Quang Binh. The joint project began operations in March 2018 and is scheduled to end in December 2020.", "NGOs working in Vietnam report some issues in their collaboration with the MND, which has declared portions of contaminated provinces off limits for UXO surveying and decontamination. Many of these areas contain villages and towns inhabited by civilians. In addition, the MND has not been providing information about any UXO clearance efforts being conducted in these areas. The lack of information sharing has hindered efforts to establish a nationwide UXO database that is being used to refine UXO location and clearance techniques. "], "subsections": []}]}]}, {"section_title": "U.S. UXO Assistance in Southeast Asia", "paragraphs": ["Since 1993, the United States has provided UXO and related assistance to Southeast Asia via several different channels, including the Center for Disease Control (CDC), the Department of Defense (DOD), the Department of State (DOS), and the U.S. Agency for International Development (USAID)(see Table 1 ). For all three countries covered by this report, most of the assistance has been provided by DOS through its Nonproliferation, Anti-terrorism, Demining and Related Programs/Conventional Weapons Destruction (NADR-CWD) account. USAID assistance to Cambodia, Laos, and Vietnam has consisted primarily of Leahy War Victims Fund programs for prostheses, physical rehabilitation, training, and employment. Laos, Cambodia, and Vietnam have been the largest recipients of U.S. conventional weapons destruction (CWD) funding in East Asia. ", "In December 2013, the United States and Vietnam signed a Memorandum of Understanding on cooperation to overcome the effects of \"wartime bomb, mine, and unexploded ordnance\" in Vietnam. In their November 2017 joint statement, President Trump and President Tran Dai Quang \"committed to cooperation in the removal of remnants of explosives from the war.\""], "subsections": [{"section_title": "U.S. Department of State and USAID Activities", "paragraphs": ["Department of State and USAID demining and related assistance support the work of international NGOs in Cambodia, Laos, and Vietnam. International NGOs work primarily with local NGOs in Cambodia and, to a greater extent, collaborate with government entities in Laos and Vietnam. The main areas of assistance are clearance, surveys, and medical assistance. In Cambodia, the Department of State and USAID support programs that collaborate with and train Cambodian organizations in clearance activities, conduct geographical surveys, help process explosive material retrieved from ERW, and provide mine risk education. In Laos, U.S. assistance includes clearance and survey efforts, medical and rehabilitation services, education and training assistance to victims and families, and mine risk education. In Vietnam, the United States provides mine clearance and survey support, capacity building programs, and medical assistance and vocational training for victims."], "subsections": []}, {"section_title": "U.S. Department of Defense (DOD) and UXO Remediation Activities", "paragraphs": ["DOD's role in remediating UXO in Southeast Asia falls under the category of \"Support to Humanitarian Mine Action (HMA).\" Chairman of the Joint Chiefs of Staff (CJCS) Instruction \"Department of Defense Support to Humanitarian Mine Action, CJCSI 3207.0IC\" dated September 28, 2018, covers DOD's responsibilities in this regard. DOD's stated policy is", "to relieve human suffering and the adverse effects of land mines and other explosive remnants of war (ERW) on noncombatants while advancing the Combatant Commanders' (CCDRs') theater campaign plan and U.S. national security objectives. The DOD HMA program assists nations plagued by land mines and ERW by executing \"train-the-trainer\" programs of instruction designed to develop indigenous capabilities for a wide range of HMA activities.", "It is important to note that U.S. Code restricts the extent to which U.S. military personnel and DOD civilian employees can actively participate in UXO activities as described in the following section:", "Exposure of USG Personnel to Explosive Hazards. ", "By law, DOD personnel are restricted in the extent to which they may actively participate in ERW clearance and physical security and stockpile management (PSSM) operations during humanitarian and civic assistance. Under 10 U.S.C. 401(a)(1), Military Departments may carry out certain \"humanitarian and civic assistance activities\" in conjunction with authorized military operations of the armed forces in a foreign nation. 10 U.S.C. 407(e)(1) defines the term \"humanitarian demining assistance\" (as part of humanitarian and civic assistance activities) as \"detection and clearance of land mines and other ERW, and includes the activities related to the furnishing of education, training, and technical assistance with respect to explosive safety, the detection and clearance of land mines and other ERW, and the disposal, demilitarization, physical security, and stockpile management of potentially dangerous stockpiles of explosive ordnance.\" However, under 10 U.S.C. 407(a)(3), members of the U.S. Armed Forces while providing humanitarian demining assistance shall not \"engage in the physical detection, lifting, or destroying of land mines or other explosive remnants of war, or stockpiled conventional munitions (unless the member does so for the concurrent purpose of supporting a United States military operation).\" Additionally, members of the U.S. Armed Forces shall not provide such humanitarian demining and civic assistance \"as part of a military operation that does not involve the armed forces.\" Under DOD policy, the restrictions in 10 U.S.C. 407 also apply to DOD civilian personnel.", "In general terms, U.S. law restricts DOD to \"train-the-trainer\" type UXO remediation activities unless it is required as part of a U.S. military operation involving U.S. armed forces. "], "subsections": []}, {"section_title": "U.S. Indo Pacific Command and UXO Remediation in Vietnam, Cambodia, and Laos72", "paragraphs": ["U.S. Indo Pacific Command (USINDOPACOM) is responsible for U.S. military activities in Vietnam, Cambodia, and Laos. As part of USINDOPACOM's Theater Campaign Plan, selected UXO remediation activities for Vietnam, Cambodia, and Laos are briefly described in the following sections: ", "Vietnam: USINDOPACOM has tasked U.S. Army Pacific (USARPAC) as the primary component responsible for land-based UXO operations and the Pacific Fleet (PACFLT) as the primary component responsible for underwater UXO operations in Vietnam. FY2018 accomplishments and FY2019 and FY2020 plans are said to include:", "FY2018 : ", "Trained individuals on International Mine Action Standards (IMAS) Level I and II;", "Trained individuals on Explosive Ordnance Disposal (EOD) instructor development;", "Familiarized individuals on EOD equipment;", "Conducted medical first responder training;", "Trained individuals on medical instructor development;", "Trained individuals on underwater remote vehicle operations; and", "Trained individuals on ordnance identification.", "FY2019 :", "Continue training on International Mine Action Standards Level I;", "Train individuals on how to develop training lanes for demining;", "Exercise IMAS Level I concepts;", "Increase Vietnamese medical first responder force structure; and", "Continue EOD instructor development.", "FY2020 :", "Plan to train on IMAS Level II with qualified IMAS Level I students;", "Plan to enhance advanced medical-related technique training;", "Plan to train in demolition procedures;", "Plan to train in maritime UXO techniques; ", "Plan to conduct mission planning and to conduct a full training exercise; and ", "Plan to conduct instructor development. ", "Cambodia: USINDOPACOM has tasked Marine Forces Pacific (MARFORPAC) to be responsible for land-based UXO operations in Cambodia. Plans for FY2019 through FY2021 include:", "FY2019 :", "Train in IMAS EOD Level I;", "Train on EOD instructor development;", "Familiarize students on EOD Level I equipment;", "Review medical first responder training;", "Train on medical instructor development;", "Train in ordnance identification; and", "Train in IMAS Demining Non-Technical Survey/Technical Survey (NTS/TS) techniques. ", "FY2020 :", "Plan to continue to develop capacity with IMAS EOD Level I and II training;", "Plan to continue to build capacity with IMAS Demining Non-Technical Survey/Technical Survey techniques;", "If EOD Level I and II training successful, plan to initiate EOD Level III training in late FY2020;", "Plan to increase student knowledge of lane training development;", "Plan to exercise IMAS Level II concepts;", "Plan to increase Cambodian medical first responder force structure; and", "Plan to continue EOD instructor development.", "FY2021 :", "Plan to train on IMAS EOD Level II and EOD Level III with the qualified Level I and Level II students to increase their numbers;", "Plan to train on IMAS Demining NTS/TS with the qualified students to increase their numbers;", "Plan to enhance advanced medical-related techniques;", "Plan to train in demolition procedures;", "Plan to conduct mission planning and a full training exercise; and", "Plan to conduct instructor development events.", "Laos: USINDOPACOM has tasked Marine Forces Pacific (MARFORPAC) to be responsible for land-based UXO operations in Laos. Plans for FY2019 through FY2021 include:", "FY2019:", "Conduct training on IMAS EOD Level I;", "Conduct training on EOD instructor development;", "Conduct familiarization on EOD Level I equipment;", "Conduct a review of medical first responder training;", "Conduct medical instructor development training; and", "Conduct training on ordnance identification.", "FY2020 :", "Plan to continue to build capacity with training in IMAS EOD Level I and II;", "Plan to increase knowledge on lane training development;", "Plan to exercise IMAS Level II concepts;", "Plan to increase medical first responder force structure and knowledge; and ", "Plan to continue EOD instructor development.", "FY2021 :", "Plan to train on IMAS EOD Level II with the qualified Level I and Level II students to increase their numbers;", "Plan to enhance advance medical-related techniques;", "Plan to train in demolition procedures;", "Plan to conduct mission planning and conduct a full training exercise; and", "Continue to conduct instructor development."], "subsections": []}]}, {"section_title": "Implications for Congress", "paragraphs": ["The U.S. government has been providing UXO-related assistance to Southeast Asia for over 25 years, with contributions amounting to over $400 million. Despite this sustained level of support, as well as the efforts of the governments of Cambodia, Laos, and Vietnam, it may take decades to clear these three nations of the known UXO contamination. These estimates, however, are based on incomplete information, as systematic nationwide UXO surveys have not been completed in either Cambodia or Laos. ", "The Legacies of War Recognition and Unexploded Ordnance Removal Act ( H.R. 2097 ) would authorize $50 million each year for fiscal years 2020 to 2024 for address the UXO issue in Cambodia, Laos, and Vietnam. The legislation also would authorize the President to provide humanitarian assistance for developing national UXO surveys, UXO clearance, and support for capacity building, risk education and UXO victims assistance in each nation. It would require the President to provide an annual briefing on related activities to the House Committee on Appropriations, the House Committee on Foreign Affairs, the Senate Committee on Appropriations, and the Senate Committee on Foreign Relations. ", "Southeast Asia's ongoing UXO challenge may present a number of issues for Congress to consider and evaluate. Among those issues are", "F undin g levels \u00e2\u0080\u0094It is uncertain how much money it would take to decontaminate all three nations or provide adequate assistance to their UXO victims. Given this uncertainty, is the level of U.S. assistance being provided to Cambodia, Laos, and Vietnam to conduct humanitarian demining projects adequate to significantly reduce the UXO casualty risk in a reasonable time period? In addition, is the recent distribution of funding across the three nations equitable given their relative degrees of UXO contamination and their internal ability to finance demining projects? Coordination across agencies \u00e2\u0080\u0094Is there appropriate coordination across the U.S. agencies\u00e2\u0080\u0094the Department of Defense, the Department of State, and USAID\u00e2\u0080\u0094in providing demining assistance in Southeast Asia? Are these agencies utilizing the appropriated funds efficiently and effectively? Focus on clearance \u00e2\u0080\u0094Most of the appropriated funds have been for humanitarian demining projects and technical support, with less funding for assistance to UXO victims. The focus on clearance, rather than assistance on UXO victims, may in part be due to a concern about possible post-conflict liability issues. In light of past practices, should the U.S. government increase its support for UXO victims in Cambodia, Laos, and Vietnam beyond those being currently provided via the Leahy War Victims Fund? Implications for bilateral relations \u00e2\u0080\u0094Has the amount and types of U.S. UXO assistance to Cambodia, Laos, and Vietnam been a significant factor in bilateral relations with each of those nations? In Vietnam, work on war legacy issues formed an early part of building normalized relations in the post-War period\u00e2\u0080\u0094ties that have broadened into closer strategic and economic linkages. In Cambodia and Laos, UXO-related assistance has been one of the broadest areas for substantive cooperation between the United States and two countries with which the United States has had relatively cool relations. Would a change in the amount or type of assistance provided be beneficial to U.S. relations with Cambodia, Laos, or Vietnam? Should the U.S. government use UXO assistance to pressure other entities, such as Vietnam's MND, to be more cooperative in the UXO decontamination effort? UXO p revention \u00e2\u0080\u0094The Department of Defense has implemented a policy that is to eventually replace all cluster munitions with ones whose failure rate is below 1%. Should the U.S. government undertake additional efforts to reduce the amount of post-conflict UXO from U.S. munitions, including prohibiting the use of U.S. funding for certain types of submunitions that may leave UXO? Given DOD's current views and policies on cluster munitions and landmines, does this preclude the United States from joining the 2010 Convention on Cluster Munitions or 1999 Ottawa Convention on Landmines? Precedents and lessons for other parts of the world \u00e2\u0080\u0094Are there lessons that can be drawn from U.S. assistance for UXO clearance and victim relief in Southeast Asia that may be applicable to programs elsewhere in the world, including Afghanistan and Iraq? Have the levels of assistance the United States has offered in Southeast Asia signaled a precedent for other parts of the world?", "During the 115 th Congress, legislation was introduced that would have addressed some of these general issues associated with UXO, though none directly addressed the current situation in Southeast Asia. The Unexploded Ordnance Removal Act ( H.R. 5883 ) would have required the Secretary of Defense, in concurrence with the Secretary of State, to develop and implement a strategy for removing UXO from Iraq and Syria. The Cluster Munitions Civilian Protection Act of 2017 ( H.R. 1975 and S. 897 ) would have prohibited the obligation or expenditure of U.S. funds for cluster munitions if, after arming, the unexploded ordnance rate for the submunitions was more than 1%. "], "subsections": []}]}}
{"id": "R46014", "title": "FEMA Individual Assistance Programs: An Overview", "released_date": "2019-12-05T00:00:00", "summary": ["Following a presidential declaration of emergency or major disaster, the Federal Emergency Management Agency (FEMA) may provide three primary forms of assistance: Individual Assistance (IA), Public Assistance (PA), and Hazard Mitigation Assistance (HMA). IA, which is the focus of this report, provides aid to affected individuals and households. PA provides grants to local, state, territorial, and Indian tribal governments, as well as certain private nonprofit organizations for emergency protective measures, debris removal operations, and repair or replacement of damaged public infrastructure. HMA funds pay for mitigation and resiliency projects and programs to reduce the threat or impacts of future disasters.", "State, territorial, and Indian tribal governments do not automatically receive IA when a disaster occurs. Instead, the governor or tribal chief executive must request that the President declare an emergency or major disaster and that IA be authorized. When drafting such a request, the state, territorial, or Indian tribal government must demonstrate that the incident exceeds their capacity to effectively respond without federal assistance. FEMA then evaluates the request using a set of factors and provides a recommendation to the President. The evaluation of the IA factors, in addition to helping FEMA determine whether or not to recommend the President declare a major disaster, helps FEMA identify the types of IA that are needed.", "This report provides brief descriptions of the categories of IA authorized under the Robert T. Stafford Disaster Relief and Emergency Assistance Act (Stafford Act; P.L. 93-288 , as amended; 42 U.S.C. \u00c2\u00a7\u00c2\u00a75121 et seq.):", "1. Mass Care and Emergency Assistance; 2. Crisis Counseling Assistance and Training Program; 3. Disaster Unemployment Assistance; 4. Disaster Legal Services; 5. Disaster Case Management; and 6. Individuals and Households Program.", "The information regarding the Individuals and Households Program (IHP) is covered in greatest detail herein, because it is the primary assistance program for providing federal assistance to individuals and households following a presidential declaration of emergency or major disaster. The IHP provides financial and/or direct assistance to eligible individuals and households who, as a result of a disaster, have uninsured or under-insured necessary expenses and serious needs that cannot be met through other means or forms of assistance. Forms of financial assistance include some categories of Housing Assistance (e.g., Rental Assistance) and Other Needs Assistance (ONA), and forms of direct assistance include other categories of Housing Assistance (e.g., Transportable Temporary Housing Units).", "The IA program information is based on the guidance that FEMA released in March 2019, to serve as a comprehensive IA program policy resource; the Individual Assistance Program and Policy Guide (IAPPG) applies to emergencies and disasters declared on or after March 1, 2019.", "This report also briefly describes the updated factors considered when evaluating a governor's request for IA pursuant to a presidential declaration of emergency or major disaster, which became effective June 1, 2019. As required by Section 1109 of the Sandy Recovery Improvement Act of 2013 (SRIA, Division B of P.L. 113-2 ), FEMA released these updated factors to establish more objective criteria for evaluating the need for assistance, clarify eligibility requirements, and expedite a presidential declaration determination."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["Following a presidential declaration of emergency or major disaster, the Federal Emergency Management Agency (FEMA) may provide three primary forms of assistance: Individual Assistance (IA), Public Assistance (PA), and Hazard Mitigation Assistance (HMA). IA, which is the focus of this report, provides aid to affected individuals and households, and can take the form of assistance for housing and for other needs through the Individuals and Households Program, crisis counseling, disaster unemployment assistance, disaster legal services, and disaster case management services, as well as mass care and emergency assistance. PA provides grants to local, state, territorial, and Indian tribal governments, as well as certain private nonprofit organizations, for emergency protective measures, debris removal operations, and repair or replacement of damaged public infrastructure. HMA funds pay for mitigation and resiliency projects and programs to reduce the threat or impacts of future disasters. This report provides brief descriptions of the categories of IA authorized under the Robert T. Stafford Disaster Relief and Emergency Assistance Act (Stafford Act; P.L. 93-288, as amended; 42 U.S.C. \u00c2\u00a7\u00c2\u00a75121 et seq.). The information is based on the program guidance that FEMA released in March 2019, to serve as a comprehensive IA program policy resource; the Individual Assistance Program and Policy Guide (IAPPG) applies to emergencies and disasters declared on or after March 1, 2019.", "State, territorial, and Indian tribal governments do not automatically receive IA when a disaster occurs. Following an incident , the governor or tribal chief executive must request that the President declare an emergency or major disaster and that IA be authorized. When drafting a request for a major disaster declaration authorizing IA, the state, territorial, or Indian tribal government must demonstrate that the incident exceeds their capacity to effectively respond without federal assistance. FEMA then evaluates the request using a set of factors before providing a recommendation to the President. In March 2019, FEMA released the updated factors considered when evaluating a governor's request for IA, which became effective June 1, 2019. Thus, this report also lists and briefly describes the updated IA factors."], "subsections": []}, {"section_title": "Individual Assistance Programs", "paragraphs": ["Various types of FEMA IA may be provided to disaster survivors. The available IA options depend on the type of declaration (i.e., an \"emergency\" or \"major disaster\"), and the type(s) of IA requested by the governor of the affected state or the tribal chief executive. These requests must be authorized by FEMA (for information on the factors considered when determining whether to authorize IA, see the \" IA Factors \" section, below) . FEMA's IA program includes ", "1. Mass Care and Emergency Assistance ; 2. Crisis Counseling Assistance and Training Program ; 3. Disaster Unemployment Assistance ; 4. Disaster Legal Services ; 5. Disaster Case Management ; and 6. Individuals and Households Program. ", "A brief description of each form of IA is included below."], "subsections": [{"section_title": "Mass Care and Emergency Assistance14", "paragraphs": ["Mass Care and Emergency Assistance (MC/EA) involves the provision of life-sustaining services to disaster survivors prior to, during, and following an incident through short-term recovery. MC/EA includes seven service \"activities\": (1) sheltering; (2) feeding; (3) distribution of emergency supplies; (4) support for individuals with disabilities and others with access and functional needs; (5) reunification services for adults and children; (6) support for household pets, service animals, and assistance animals; and (7) mass evacuee support."], "subsections": []}, {"section_title": "Crisis Counseling Assistance and Training Program16", "paragraphs": ["The Crisis Counseling Assistance and Training Program (CCP) provides grant funding to eligible local, state, territorial, and Indian tribal governments, as well as nongovernmental organizations. CCP supplements efforts to assist individuals and communities with recovering from the effects of a disaster through community-based outreach and the provision of services, such as crisis counseling, psycho-education, and coping skills development. CCP also provides support by linking the disaster survivor with other resources, such as individuals and agencies that help survivors in the recovery process. The program provides short- to intermediate-term assistance to support mental and emotional health needs. Two CCP programs provide assistance for different lengths of time: (1) the Immediate Services Program provides funding for up to 60 days following a major disaster declaration; and (2) the Regular Services Program provides funding for up to nine months from the notice of award."], "subsections": []}, {"section_title": "Disaster Unemployment Assistance23", "paragraphs": ["Disaster Unemployment Assistance (DUA) provides benefits to individuals who were previously employed or self-employed, were rendered jobless or whose employment was interrupted as a direct result of a major disaster, and are ineligible for regular unemployment insurance. DUA may also provide re-employment assistance. DUA benefits may continue for up to 26 weeks following the declaration of a major disaster."], "subsections": []}, {"section_title": "Disaster Legal Services27", "paragraphs": ["Disaster Legal Services (DLS) are provided free to low-income individuals who require them because of a major disaster. The provision of services is \"confined to the securing of benefits under the [Stafford] Act and claims arising out of a major disaster.\" Assistance may include help with insurance claims, drawing up new wills and other legal documents lost in the disaster, help with home repair contracts and contractors, and appeals of FEMA decisions. Disaster Legal Services are provided through an agreement with the American Bar Association's Young Lawyers Division. Neither the statute nor the regulations establish cost-share requirements or time limitations for DLS."], "subsections": []}, {"section_title": "Disaster Case Management31", "paragraphs": ["The Disaster Case Management (DCM) program partners case managers with disaster survivors to develop and implement disaster recovery plans that address their unmet needs. The program is time-limited, and shall not exceed 24 months from the date of the major disaster declaration."], "subsections": []}, {"section_title": "Individuals and Households Program34", "paragraphs": ["The Individuals and Households Program (IHP) provides financial and/or direct assistance to eligible individuals and households who, as a result of a disaster, have uninsured or under-insured necessary expenses and serious needs that cannot be met through other means or forms of assistance. The IHP is the primary way FEMA assists disaster survivors. Although it may meet basic needs, it cannot compensate for all losses. The categories of IHP assistance are Housing Assistance and Other Needs Assistance (ONA) (see Table 1 ). The period of assistance is generally limited to 18 months following the date of the emergency or major disaster declaration."], "subsections": [{"section_title": "Housing Assistance", "paragraphs": ["Multiple types of Housing Assistance may be provided to meet disaster survivors' post-disaster housing needs. Housing Assistance includes the subcategories of Financial Housing Assistance and Direct Housing Assistance. The appropriate types of housing assistance depend on various considerations, including, but not limited to, cost-effectiveness; availability; suitability; and access to services. The federal cost share for FEMA housing assistance is 100%. The following sections provide a brief overview of each type of Housing Assistance organized by subcategory.", "Financial Housing Assistance", "Financial Housing Assistance is grant funding provided directly to the individual or household by FEMA. Some types of Financial Housing Assistance are subject to a limit on the amount of Financial Housing Assistance an individual or household is eligible to receive.", "Lodging Expense Reimbursement (LER) provides funding for out-of-pocket short-term lodging costs and taxes when the applicant is displaced from their primary residence because it is uninhabitable or inaccessible. Rental Assistance (including Initial Rental Assistance and Continued Rental Assistance) provides funding to rent alternate housing accommodations while the applicant is displaced from their primary residence because it is uninhabitable, inaccessible, affected by a utility outage, or unavailable. Home Repair Assistance provides funding to repair an owner-occupied primary residence, utilities, and infrastructure, subject to the maximum amount of financial assistance. Home Replacement Assistance provides funding to help replace a disaster-destroyed owner-occupied primary residence, subject to the maximum amount of financial assistance.", "Direct Housing Assistance", "Direct Housing Assistance is housing provided to the individual or household by FEMA or the state, territorial, or Indian tribal government. Direct Housing Assistance is not subject to the limit on the maximum amount of financial assistance an individual or household is eligible to receive. However, FEMA may only provide Direct Housing Assistance when Rental Assistance (a type of Financial Housing Assistance) is not available or is insufficient. ", "Multifamily Lease and Repair (MLR) places disaster survivors in leased, repaired or improved multifamily temporary housing units (e.g., apartments). Transportable Temporary Housing Units (TTHUs) place disaster survivors in purchased or leased temporary housing units. TTHU sites must meet specific requirements, including (1) providing access to available and functional utilities; (2) complying with government ordinances; and (3) satisfying federal floodplain management and Environmental Planning and Historic Preservation (EHP) compliance review requirements. Direct Lease places disaster survivors in leased residential properties. Permanent Housing Construction (PHC) is a last resort used to provide home repair and new construction services to homeowners in insular areas or another location where no alternative housing resources are available."], "subsections": []}, {"section_title": "Other Needs Assistance", "paragraphs": ["Other Needs Assistance (ONA) provides a grant of financial assistance for other disaster-related necessary expenses and serious needs, and includes the subcategories of SBA-Dependent ONA and Non-SBA-Dependent ONA. ONA is subject to a limit on the amount of assistance an individual or household is eligible to receive. Further, ONA assistance may be somewhat limited because some ONA-eligible items and amounts available to be awarded are predetermined by FEMA and the state, territorial, or Indian tribal government. The federal cost share for ONA is 75%, and the non-federal cost share is the remaining 25%. The following sections provide an overview of each type of ONA organized by subcategory.", "SBA-Dependent ONA", "FEMA and the SBA collaborate in determining applicant eligibility for SBA-Dependent ONA. To receive SBA-Dependent types of ONA, applicants must first apply for an SBA disaster loan. SBA-Dependent ONA is only available to individuals or households who do not qualify for an SBA disaster loan or whose SBA disaster loan amount is insufficient.", "Personal Property Assistance provides funding to repair or replace eligible items damaged or destroyed as a result of a disaster. Transportation Assistance provides funding to repair or replace a vehicle damaged by a disaster. Moving and Storage Assistance provides funding to relocate and store essential personal property while repairs are made, and then return the property to the repaired primary residence. Group Flood Insurance Policy enables FEMA or the state, territorial, or Indian tribal government to pay $600 for three years of flood insurance for real and personal property through the National Flood Insurance Program (NFIP). Upon the expiration of the group policy, the applicant must purchase and maintain their own flood insurance; failure to do so may affect future IHP eligibility.", "Non-SBA-Dependent ONA", "Non-SBA-Dependent types of ONA may be awarded regardless of the individual or household's SBA disaster loan status.", "Funeral Assistance provides funding to assist with eligible expenses. Medical and Dental Assistance provides funding to assist with eligible expenses. Childcare Assistance is provided in the form of a one-time payment that covers up to eight cumulative weeks of childcare and eligible expenses to care for children aged 13 and under, and/or children up to age 21 who have a disability. Miscellaneous Expenses provides funding for reimbursement of eligible items purchased or rented after a disaster to assist with recovery. Critical Needs Assistance (sometimes referred to as \"Immediate Needs Assistance\") is provided in the form of a one-time payment of $500 to individuals or households who need life-saving and life-sustaining items because they are displaced from their primary dwelling as a result of a disaster. Clean and Removal Assistance is provided in the form of a one-time payment to address floodwater contamination for individuals or households whose primary residence experienced flood damage (any assistance received will be deducted from any subsequent award of Home Repair Assistance)."], "subsections": []}]}]}, {"section_title": "IA Factors for a Major Disaster Declaration", "paragraphs": ["State, territorial, and Indian tribal governments do not automatically receive Individual Assistance (IA) when an incident occurs. The governor or tribal chief executive must request that the President declare an emergency or major disaster and that IA be authorized. This is because federal assistance is intended to supplement\u00e2\u0080\u0094not supplant\u00e2\u0080\u0094local, state, territorial, or Indian tribal government response and recovery efforts. In making such a request, the governor or tribal chief executive is claiming and must demonstrate that they are unable to effectively respond to the incident without federal assistance. ", "The governor or tribal chief executive's request for a presidential declaration of emergency or major disaster must include information about the actions and resources that have been or will be committed, and an estimate of the amount and severity of the disaster-caused damages, in addition to other required information. Specific factors are considered by FEMA when evaluating the need for supplemental federal assistance to individuals (i.e., IA) pursuant to a request for a major disaster declaration. FEMA provides a recommendation to the President, and the decision to grant a declaration request is at the President's discretion. The authority to designate assistance types to be made available is delegated to the FEMA Assistant Administrator for the Disaster Assistance Directorate."], "subsections": [{"section_title": "IA Factors", "paragraphs": ["On March 21, 2019, as required by Section 1109 of the Sandy Recovery Improvement Act of 2013 (SRIA, Division B of P.L. 113-2 ), FEMA issued a final rule revising the factors considered when evaluating a governor's request for IA. The factors were revised to establish more objective criteria for evaluating the need for assistance, clarify eligibility requirements, and expedite a presidential declaration determination. These factors became effective June 1, 2019. In addition to the revised factors, FEMA also produced guidance for use by state, territorial, and Indian tribal governments when drafting requests for major disaster declarations authorizing IA. In addition to determining IA eligibility, the factors are also used to identify the types of IA that will be made available to the requesting state/territory/Indian tribal government.", "The factors considered when evaluating a governor's request for a major disaster declaration authorizing Individual Assistance are intended to assess the \"severity, magnitude, and impact of a disaster, as well as the capabilities of the affected jurisdictions.\" \"FEMA will always consider all relevant information submitted as part of a declaration request.\" As was the case prior to the adoption of the revised IA factors, major disaster declarations are made at the President's discretion and the IA factors do not limit presidential discretion. Brief descriptions of the factors are as follows:", "1. State Fiscal Capacity and Resource Availability requires an evaluation of the resources available to the local and state/territorial/Indian tribal government, nongovernmental organizations, and the private sector, combined with the circumstances that contribute to a lack of sufficient resources, resulting in a need for supplemental federal assistance. This factor includes two subfactors: a. Fiscal Capacity evaluates the state's ability to raise revenue for disaster response and recovery using one of two variables: (1) increasing or decreasing, or higher or lower state total taxable resources (TTR); or (2)\u00c2\u00a0higher or lower state gross domestic product (GDP), which may be considered as the primary alternative to TTR for requesting territories or when TTR data is unavailable. Higher or lower per capita personal income by local area may also be considered with TTR or state GDP when FEMA needs to better assess the need for supplemental federal assistance within a local area. In addition, other factors may be considered because even states with a high fiscal capacity may be affected by disasters that overwhelm their capabilities, or the variables (i.e., TTR and state GDP) may not accurately reflect a state's fiscal capacity due to extenuating circumstances; and b. Resource Availability evaluates whether the disaster-caused needs can be met using non-Stafford Act sources. Two variables are considered: (1)\u00c2\u00a0resources and services provided by local and state/territorial/Indian tribal governments, and nongovernmental and private sector organizations; and (2)\u00c2\u00a0the cumulative effect of recent disasters occurring in the previous 24-month period. 2. Uninsured Home and Personal Property Losses considers the results of the FEMA-State Preliminary Damage Assessment (PDA) process to evaluate the extent of damage and estimated cost of assistance. The subfactors considered include (1) the \"peril that caused the disaster damage\" because it may affect insurance coverage; (2) the percentage of affected applicants with insurance for the peril that caused the damage; (3) whether the concentration of damages is in one area or if it is widespread; (4) the number of homes damaged and degree to which they are damaged (i.e., whether habitability is affected); (5) the estimated cost of assistance based on the PDA data and historical data; (6) the estimated rate of homeownership for the affected homes, which may influence whether the IHP is needed, and what types of housing assistance should be made available; and (7) other relevant PDA data that may demonstrate a need for supplemental federal assistance. 3. Disaster Impacted Population Profile evaluates the recovery challenges of the impacted population considering the affected community's demographics as compared with national averages. 4. Impact to Community Infrastructure evaluates the disaster's impact by considering disruption, damage, or destruction for more than 72 hours to any of the following three subfactors: (1) Life-Saving and Life-Sustaining Services that provide an \"essential community function that ... will affect public health and safety\", such as police, fire, and emergency medical services (EMS), medical facilities, and water treatment services; (2) Essential Community Services that improve quality of life, such as schools and childcare providers, and social services; and (3) Transportation Infrastructure and Utilities that, for example, render housing uninhabitable or inaccessible, or affect the delivery of services. 5. Casualties , including the number of individuals who are missing, injured, or deceased as a result of a disaster, indicate the level of trauma, which may influence the appropriate types of IA assistance to provide.", "Disaster Related Unemployment identifies the number of individuals who may have lost work or become unemployed as a result of the disaster and who do not qualify for standard unemployment insurance."], "subsections": []}]}]}}
{"id": "R45977", "title": "The Elementary and Secondary Education Act (ESEA), as Amended by the Every Student Succeeds Act (ESSA): A Primer", "released_date": "2019-10-17T00:00:00", "summary": ["The primary source of federal aid for elementary and secondary education is the Elementary and Secondary Education Act (ESEA)\u00e2\u0080\u0094particularly its Title I-A program, which authorizes federal aid for the education of disadvantaged students. The ESEA was initially enacted in 1965 (P.L. 89-10), and was most recently comprehensively amended and reauthorized by the Every Student Succeeds Act (ESSA; P.L. 114-95 ).", "Under Title I-A, the ESEA as amended by the ESSA continues to require states and public schools systems to focus on educational accountability as a condition for the receipt of grant funds. Public school systems and individual public schools are held accountable for monitoring and improving achievement outcomes for students and closing achievement gaps, sustaining a focus that was initiated by amendments to the ESEA made by the No Child Left Behind Act of 2001 (NCLB; P.L. 107-110 ) but modified under the ESSA. While states were given more latitude to develop their accountability systems under the ESSA provisions, as a condition of receiving Title I-A funds each state must continue to have content and academic achievement standards and aligned assessments in reading/language arts (RLA), mathematics, and science for specific grade levels. States must now have an accountability system that incorporates (1) long-term and interim performance goals for specified measures; (2) weighted indicators based, in part, on these goals; and (3) an annual system for meaningful differentiation that is used to identify schools that need additional support to improve student achievement.", "Beyond Title I-A, other ESEA programs provide grants and contracts for a variety of educational purposes. ESEA programs and general provisions are included in eight titles, which collectively received appropriations of $25.2 billion in FY2019. The ESEA's titles are as follows:", "Title I: Programs for disadvantaged students, student assessment, migratory students, and neglected and delinquent students. Title II: Programs for teachers, principals, and school leaders; literacy; and American history and civics education. Title III: Programs to support English language acquisition for English learners. Title IV: Programs to support a well-rounded education, safe and healthy students, and technology; after-school instruction and care; charter schools; magnet schools; family engagement in education; and various national activities. Title V: Programs to support rural education. Title VI: Programs for Indian education, Native Hawaiian education, and Alaska Native education. Title VII: Impact Aid programs. Title VIII: General provisions.", "This report provides an overview of major provisions of the ESEA. It also includes a table showing annual appropriations for ESEA programs for FY2017 through FY2019, as well as a table showing the transition in authorized programs and related appropriations from FY2016, when NCLB provisions were still in effect, to FY2017, when ESSA provisions took effect. Finally, a table detailing authorizations of appropriations under current law is also included. The ESSA authorized appropriations for ESEA programs through FY2020."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["The primary source of federal aid to elementary and secondary education is the Elementary and Secondary Education Act (ESEA)\u00e2\u0080\u0094particularly its Title I-A program, which authorizes federal aid for the education of disadvantaged students. The ESEA was initially enacted in 1965 (P.L. 89-10) \"to strengthen and improve educational quality and educational opportunities in the Nation's elementary and secondary schools.\" It was most recently comprehensively amended and reauthorized by the Every Student Succeeds Act (ESSA; P.L. 114-95 ), which was enacted \"to ensure that every child achieves.\" The ESSA authorized appropriations for ESEA programs through FY2020. FY2019 appropriation for ESEA programs are $25.2 billion.", "Under Title I-A, the ESEA as amended by the ESSA continues to require states and public schools systems to focus on educational accountability as a condition for the receipt of grant funds. Public school systems and individual public schools are held accountable for monitoring and improving achievement outcomes for students and closing achievement gaps, sustaining a focus that was initiated by amendments to the ESEA made by the No Child Left Behind Act of 2001 (NCLB; P.L. 107-110 ) but modified under the ESSA. While states were given more latitude to develop their educational accountability systems under the ESSA provisions, as a condition for receiving Title I-A funds each state must continue to have content and academic achievement standards and aligned assessments in reading/language arts (RLA), mathematics, and science for specific grade levels. States must now have an accountability system that incorporates (1) long-term and interim performance goals for specified measures; (2) weighted indicators based, in part, on these goals; and (3) an annual system for meaningful differentiation that is used to identify schools that need additional support to improve student achievement.", "Beyond Title I-A, other authorized ESEA programs provide, for example, grants to support: the education of migratory students; recruitment and professional development of teachers; language instruction for English learners (ELs); well-rounded education, safe and healthy students, and technology initiatives; after-school instruction and care programs; expansion of charter schools and other forms of public school choice; education services for Native American, Native Hawaiian, and Alaska Native students; Impact Aid to compensate local educational agencies (LEAs) for taxes forgone due to certain federal activities; and innovative educational approaches or instruction to meet particular student needs. ", "In order to receive funds under Title I-A and several other formula grant programs authorized by the ESEA, each state educational agency (SEA) must submit a state plan to the U.S. Department of Education (ED). These plans can be submitted for individual formula grant programs or, if permitted by the Secretary of Education (hereinafter referred to as the Secretary), the SEA may submit a consolidated state plan based on requirements established by the Secretary. Following the enactment of the ESSA, all SEAs submitted consolidated state plans. The Secretary has approved these plans for all 50 states, the District of Columbia, and Puerto Rico. ", "This report provides a brief overview of major provisions of the ESEA. It is organized by title and part of the act. Annual appropriations for ESEA programs are provided through the Departments of Labor, Health and Human Services, and Education, and Related Agencies (L-HHS-ED) Appropriations Act, and are shown in this report based on the most recent data available from the U.S. Department of Education, Budget Service for FY2017 through FY2019. Table 2 provides ESEA appropriations for FY2016 and FY2017 to depict the transition from the ESEA as amended by the NCLB to the ESEA as amended by the ESSA. Table 3 provides authorizations of appropriations included in the ESEA as amended by the ESSA. The Appendix provides a list of selected acronyms used in the report. "], "subsections": []}, {"section_title": "Title I: Improving the Academic Achievement of the\u00c2 Disadvantaged", "paragraphs": ["The introductory text for ESEA Title I includes the purpose of Title I and authorizations of appropriations for FY2017 through FY2020 for each part of the title. The purpose of Title I is \"to provide all children significant opportunity to receive a fair, equitable, and high-quality education, and to close educational achievement gaps.\" The introductory text prior to Title I-A also requires states to reserve funds provided under Title I-A for school improvement activities and allows them to reserve Title I-A funds for direct students services. As such, while these reservations of funds appear before Title I-A in the ESEA, they are examined following the Title I-A discussion to provide greater context. The introductory text prior to Title I-A also provides authority for states to reserve funds for state administration for Title I-A, Title I-C, and Title I-D. "], "subsections": [{"section_title": "Administration (Section 1004)", "paragraphs": ["Section 1004 permits states to reserve funds under Title I-A, Title I-C, and Title I-D for administration. Under this provision, a state may reserve 1% of the amount received under parts A, C, and D, or $400,000 (whichever is greater) for state administration."], "subsections": []}, {"section_title": "Part A: Grants to Local Educational\u00c2 Agencies6", "paragraphs": ["Title I-A authorizes federal aid to LEAs for the education of disadvantaged children. Title I-A grants provide supplementary educational and related services to low-achieving and other students attending elementary and secondary schools with relatively high concentrations of students from low-income families, as well as eligible students who live in the areas served by these public schools but attend private schools. Title I-A is also a vehicle to which a number of requirements affecting broad aspects of public elementary and secondary education for all students have been attached as conditions for receiving these grants. "], "subsections": [{"section_title": "Calculation of Title I-A Grants", "paragraphs": ["Title I-A grants are calculated by ED at the LEA level. The funds are then provided to SEAs, which are required to reserve funds for school improvement activities and may reserve funds for administration and direct student services. SEAs also adjust grant amounts for LEAs for which ED is unable to determine grant amounts, such as newly created LEAs or charter schools that are their own LEAs. In calculating Title I-A grant amounts, ED determines grant amounts under four different formulas\u00e2\u0080\u0094Basic, Concentration, Targeted, and Education Finance Incentive Grants (EFIG)\u00e2\u0080\u0094although funds allocated under all of these formulas are combined and used for the same purposes by recipient LEAs. While the allocation formulas have several distinctive elements, the primary factor used in all four is the estimated number of children aged 5-17 in families in poverty. Other factors included in one or more formulas include a state expenditure factor based on average per pupil expenditures for public elementary and secondary education, weighting schemes designed to increase aid to LEAs with the highest concentrations of poverty, and a factor to increase grants to states with high levels of expenditure equity among their LEAs. Each formula also has an LEA hold harmless provision and a state minimum grant provision.", "While there are several rules related to school selection, LEAs must generally rank their public schools by their percentages of students from low-income families, and serve them in rank order. This must be done without regard to grade span for any eligible school attendance area in which the concentration of children from low-income families exceeds 75%. An LEA also has the option of serving all high schools in rank order in which the concentration of children from low-income families is 50% or greater. Below these benchmarks, an LEA can choose to serve schools in rank order at specific grade levels (e.g., only serve elementary schools in order of their percentages of children from low-income families) or continue to serve schools at all grade levels in rank order. Once schools are selected, Title I-A funds are allocated among them on the basis of their number of students from low-income families. LEAs are not required to allocate the same amount of Title I-A funds per low-income child to each school. They may provide higher grants per low-income child at schools with high rates of these children than are allocated per low-income child to schools with lower rates of these children."], "subsections": []}, {"section_title": "Types of Title I-A Programs", "paragraphs": ["There are two basic types of Title I-A programs. Schoolwide programs are authorized if the percentage of low-income students served by a school is 40% or higher. In schoolwide programs, Title I-A funds may be used to improve the performance of all students in a school. For example, funds might be used to provide professional development services to all of a school's teachers, upgrade instructional technology, or implement new curricula. The other basic type of Title I-A school service model is the targeted assistance program (TAP). Under TAPs, Title I-A-funded services are generally limited to the lowest-achieving students in the school. For example, students may receive additional instruction in an after-school program, or funds may be used to hire a teacher's aide who provides additional assistance to low-achieving students in their regular classroom. In general, schools have substantial latitude in how they use Title I-A funds, provided the funds are used to improve student academic achievement."], "subsections": []}, {"section_title": "Standards, Assessments, and Accountability Requirements (Section 1111)", "paragraphs": ["As previously mentioned, each SEA must submit a state plan to ED to receive funds under Title I-A and several other state formula grant programs authorized under the ESEA. For Title I-A purposes, the plan requires the SEA to provide information or assurances related to its standards, assessments, and accountability system. Requirements related to each of these areas are discussed below."], "subsections": [{"section_title": "Standards", "paragraphs": ["In its state plan, each SEA receiving Title I-A funds is required to provide an assurance that it has adopted challenging academic content standards and aligned academic achievement standards (hereinafter collectively referred to as academic standards) in RLA, mathematics, and science (and any other subject selected by the state). The academic standards must include at least three levels of achievement (e.g., basic, proficient, and advanced). In addition, states are required to demonstrate that these academic standards are aligned with entrance requirements for credit-bearing coursework in the state's system of public higher education and relevant state career and technical education standards. ", "A state is permitted to adopt alternate academic achievement standards for students with the most significant cognitive disabilities provided, among other requirements, that the standards are aligned with the state's challenging academic content standards. The state is also required to demonstrate that it has adopted English language proficiency standards that are derived from the domains of speaking, listening, reading, and writing; address the different proficiency levels of English learners; and align the English language proficiency standards with the challenging state academic standards. ", "The ESEA explicitly maintains that a state is not required to submit any of the aforementioned standards to the Secretary of Education (the Secretary) for review or approval. Also, the Secretary does not have the authority \"to mandate, direct, control, coerce, or exercise any direction or supervision over any of the challenging State academic standards adopted or implemented by a State.\" "], "subsections": []}, {"section_title": "Assessments", "paragraphs": ["Each state plan must demonstrate that the SEA, in consultation with LEAs, has implemented assessments in RLA, mathematics, and science. The mathematics and RLA assessments must be administered in each of grades 3-8 and once during high school. The science assessment must be administered once in grades 3-5, grades 6-9, and grades 10-12. Thus, each state must administer 17 assessments each school year, but no individual student will take more than 3 of these assessments in a given school year. The assessments must be aligned with the state academic standards. ", "A state may implement alternate assessments aligned with state academic standards and alternate academic achievement standards for students with the most significant cognitive disabilities. However, for each subject tested no more than 1% of all students tested may take the alternate assessment. Each state plan must also demonstrate that the LEAs in the state will administer an annual assessment of English proficiency for all English learners that is aligned with the state's English language proficiency standards.", "In addition to state assessments, each state receiving Title I-A funds must also agree to participate in the National Assessment of Educational Progress (NAEP) assessments of 4 th and 8 th grade students in reading and math every two years. "], "subsections": []}, {"section_title": "Accountability System", "paragraphs": ["In its state plan, each SEA is required to describe its academic accountability system. The system must include state established long-term goals (and measures of interim progress) for all students and separately for each focal subgroup of students for academic achievement as measured by proficiency on the state RLA and mathematics assessments and high school graduation rates. In addition, the goals for subgroups of students who are behind on any of these measures must take into account the improvement needed to close statewide achievement gaps. Also, the system must include long-term goals (and measures of interim progress) for increases in the percentage of English learners making progress in achieving English proficiency, as defined by the state.", "The state must then use a set of indicators that are based, in part, on the long-term goals it established to measure annually the performance of all students and each subgroup of students to evaluate public schools. These indicators must include the following: ", "1. public school student performance on the RLA and mathematics assessments as measured by student proficiency, and for high schools this may also include a measure of student growth on such assessments; 2. for public elementary and secondary schools that are not high schools, a measure of student growth or another indicator that allows for \"meaningful differentiation\" in school performance; 3. for public high schools, graduation rates; 4. for all public schools in the state, progress in achieving English language proficiency ; and 5. for all public schools in the state, at least one indicator of school quality or student success (e.g., a measure of student engagement, postsecondary readiness, or school climate). ", "Based on these indicators, the SEA must establish a system for annually \"meaningfully differentiating\" all public schools that gives substantial weight to each indicator but in the aggregate provides greater weight to the first four than to the school quality and student success indicators. The system must also identify any school in which any subgroup of students is \"consistently underperforming,\" as determined by the state. ", "Based on the state's system for annual meaningful differentiation, each SEA must establish a state-determined methodology to identify for comprehensive support and improvement (CSI): (1) at least the lowest-performing 5% of all schools receiving Title I-A funds, (2) all public high schools failing to graduate 67% or more of their students, (3) schools required to implement additional targeted support (see below) that have not improved in a state-determined number of years, and (4) additional statewide categories of schools, at the state's discretion. The LEAs in which schools are identified for CSI are required to work with stakeholders to develop a school improvement plan that, among other requirements, must include evidence-based interventions, be based on a school-level needs assessment, and identify resource inequities. An LEA may also offer students enrolled in a school identified for CSI the option to transfer to another public school in the LEA. If a school does not improve within a state-determined number of years (no more than four years), the school must be subject to more rigorous state-determined actions.", "States are required to identify for targeted support and improvement (TSI) any school in which one or more subgroups of students are consistently underperforming as determined by the state. Each of these schools is required to develop and implement a plan to improve student outcomes that includes evidence-based interventions. If a school fails to improve within a number of years determined by the LEA, additional actions must be taken. For a school in which one or more subgroups are performing at a level that if reflective of an entire school's performance would result in its identification for CSI, the school must be identified for additional targeted support and improvement (ATSI) activities, which must include an identification of resource inequities. If a school identified as meeting the criteria for ATSI does not improve within a state-determined number of years, the state is required to identify the school for CSI. ", "In its state plan, the SEA must also provide an explanation of how the state will factor into its accountability system the requirement that 95% of all students and each subgroup of students participate in the required assessments."], "subsections": []}]}, {"section_title": "Teacher Requirements", "paragraphs": ["Any teacher or paraprofessional working in a program supported with Title I-A funds must meet applicable state certification and licensure requirements. In addition, states participating in Title I-A must describe in their state plans how low-income and minority children enrolled in Title I-A schools are not served at disproportionate rates by \"ineffective, out-of-field, or inexperienced teachers.\" The state must also describe the measures that will be used to assess and evaluate the state's success in this area."], "subsections": []}]}, {"section_title": "School Improvement (Section 1003)", "paragraphs": ["To serve schools that are identified for comprehensive support and improvement or targeted support and improvement under Title I-A, SEAs are required to reserve the greater of (1) 7% of the total amount the state receives under Title I-A or (2) the sum of the amount that the state reserved for school improvement in FY2016 and received under the School Improvement Grant (SIG) program for FY2016. Beginning in FY2018, an SEA is only permitted to reserve the full amount of funds for school improvement if no LEA receives a smaller Title I-A grant than it did during the prior fiscal year due to the implementation of this provision. Of the funds reserved for school improvement, states are required under ESSA provisions to provide at least 95% to LEAs through formula or competitive grants to serve schools that are implementing comprehensive support and improvement activities or targeted support and improvement activities. "], "subsections": []}, {"section_title": "Direct Student Services (Section 1003A)", "paragraphs": ["In addition to the required reservation of Title I-A funds for school improvement, SEAs have the option of reserving up to 3% of the Title I-A funds they receive for direct student services. This optional reservation of funds was not included in the law prior to the ESSA. Of the funds reserved, states must distribute 99% to geographically diverse LEAs using a competitive grant process that prioritizes grants to LEAs that serve the highest percentages of schools identified for comprehensive support and improvement or that are implementing targeted support and improvement plans. Funds for direct student services may be reserved without regard to how the reservation of funds may affect LEA grant amounts. Funds may be used by LEAs for a variety of purposes, including to pay the costs associated with the enrollment and participation of students in academic courses not otherwise available at the students' school; credit recovery and academic acceleration courses that lead to a regular high school diploma; activities that lead to the successful completion of postsecondary level instruction and examinations that are accepted for credit at institutions of higher education (IHEs), including reimbursing low-income students for the costs of these examinations; and public school choice if an LEA does not reserve funds for this purpose under Section 1111."], "subsections": []}, {"section_title": "Part B: Grants for State Assessment and Enhanced Assessment Instruments", "paragraphs": ["Title I-B authorizes the State Assessment Grant program to support the development of the state standards and assessments required under Title I-A; the administration of those assessments; and related activities, such as improving assessments for English learners. Two funding mechanisms are authorized: (1) formula grants to states for the development and administration of the state standards and assessments required under Title I-A, and (2) competitive grants to states to carry out related activities beyond the minimum assessment requirements. The allocation of funds depends on a statutorily established \"trigger amount\" of $369.1 million. For annual appropriations at or below the trigger amount, the entire appropriation is used to award formula grants to states. Under the formula grant program, the Secretary then provides each state with a minimum grant of $3 million. Any remaining funds are subsequently allocated to states in proportion to their number of students ages 5 to 17. For an annual appropriation above the trigger amount, the difference between the appropriation and trigger amount is used to award competitive grants to states."], "subsections": [{"section_title": "Assessment System Audit (Section 1202)", "paragraphs": ["The ESEA as amended by the ESSA permits the Secretary to reserve up to 20% of the funds appropriated for the State Assessment Grant program to make grants to states to conduct assessment system audits. From the funds reserved for this purpose, the Secretary is required to make an annual grant to the state of not less than $1.5 million to conduct a statewide assessment system audit and provide subgrants to LEAs to conduct assessment audits at the LEA level."], "subsections": []}, {"section_title": "Innovative Assessment and Accountability Demonstration Authority (Section 1204)", "paragraphs": ["The ESEA as amended by the ESSA includes a new demonstration authority for the development and use of an \"innovative assessment system.\" A state, or a consortium of states, may apply for the demonstration authority to develop an innovative assessment system that \"may include competency-based assessments, instructionally embedded assessments, interim assessments, cumulative year-end assessments, or performance based assessments that combine into an annual summative determination for each student\" and \"assessments that validate when students are ready to demonstrate mastery or proficiency and allow for differentiated student support based on individual learning needs.\" During the first three years in which the Secretary grants demonstration authority, not more than seven SEAs may have their applications for the authority approved. Separate funding is not provided under the demonstration authority; however, states may use a portion of the formula and competitive grant funding provided through the State Assessment Grant program discussed above to carry out this demonstration authority."], "subsections": []}]}, {"section_title": "Part C: Education of Migratory Children", "paragraphs": ["Title I-C authorizes grants to SEAs for the education of migratory children and youth. A migratory child or youth is one who made a qualifying move in the preceding 36 months as a migratory agricultural worker or migratory fisher or moved with or to join a parent or spouse who is a migratory agricultural worker or migratory fisher. Among other purposes, the program assists states in supporting high-quality, comprehensive educational programs and services during the school year, summer, and intersession periods that address the unique needs of migratory children. Funds are allocated by formula on the basis of each state's number of migratory children and youth aged 3-21 and Title I-A state expenditure factor (discussed above). ED may also make grants for the coordination of services and transfer of educational records for migratory students."], "subsections": []}, {"section_title": "Part D: Prevention and Intervention Programs for Children and Youth Who Are Neglected, Delinquent, or At Risk", "paragraphs": ["Title I-D authorizes a pair of programs intended to improve education for students who are neglected, delinquent, or at risk of dropping out of school. Subpart 1 authorizes grants for the education of children and youth in state institutions for the neglected or delinquent, including community day programs and adult correctional institutions. Funds are allocated to SEAs on the basis of the number of such children and youth and the Title I-A state expenditure factor. A portion of each SEA's grant is to be used to provide transition services to children and youth transferring to regular public schools. ", "Under Subpart 2, Title I-A funds are provided to each SEA based on the number of children and youth residing in local correctional facilities or attending community day programs for delinquent children and youth. These Title I-A funds are used to make grants to LEAs with high numbers or percentages of children and youth in locally operated correctional facilities for children and youth. These children and youth are then served in accordance with Title I-D provisions. Funds are used, for example, to provide transition programs, dropout prevention programs, special programs to meet the unique academic needs of participating children and youth, and mentoring and peer mediation. "], "subsections": []}, {"section_title": "Part E: Flexibility for Equitable Per-Pupil Funding", "paragraphs": ["ESEA Title I-E provides the Secretary with the authority to enter into demonstration agreements that provide flexibility to LEAs to deliver equitable per-pupil funding. The weighted per-pupil funding system must allocate substantially more funding to students from low-income families, English learners, and students with other characteristics associated with educational disadvantage selected by the LEA than is allocated to other students. Prior to the 2019-2020 school year, up to 50 LEAs were permitted to apply for the flexibility to consolidate eligible federal funds and state and local funds to create a single school funding system based on weighted per-pupil allocations (using weights or allocations to provide funding to schools). Beginning with the 2019-2020 school year, the number of LEAs permitted to participate under Title I-E is not capped provided a \"substantial majority\" of the LEAs participating in previous years have met program requirements."], "subsections": []}, {"section_title": "Part F: General Provisions", "paragraphs": ["Title I-F provides for the development of federal regulations for Title I programs and state administration of these programs. Part F also prohibits federal control of the \"specific instructional content, academic achievement standards and assessments, curriculum or program of instruction\" of states, LEAs, or schools, and clarifies that nothing in Title I is to be \"construed to mandate equalized spending per pupil for a State, local educational agency, or school.\" "], "subsections": []}]}, {"section_title": "Title II: Preparing, Training, and Recruiting High-Quality Teachers, Principals, and Other School Leaders", "paragraphs": ["Title II includes programs centered on teachers, school leaders (e.g., principals), literacy, and American history and civics education. Programs focused on teachers and school leaders support activities and initiatives such as professional development, staff recruitment and retention, performance-based compensation systems, and the establishment of a statewide science, technology, engineering, and mathematics (STEM) master teacher corps. Other Title II programs focus on literacy education, providing grants to support literacy efforts from birth through grade 12 and supporting school library programs, early literacy services, and the provision of high-quality books to children and adolescents. Title II also includes American history and civic education programs that provide academies for teachers and students to learn more about these topics and authorizes national activities related to American history and civics education. Title II's introductory text includes the purpose of the title, several definitions, and authorizations of appropriations for FY2017 through FY2020 for the programs authorized in Title II. "], "subsections": [{"section_title": "Part A: Supporting Effective Instruction", "paragraphs": ["Part A authorizes a program of state grants that may be used for a variety of purposes related to preparation, training, recruitment, retention, and professional development of elementary and secondary education teachers and school leaders. The formula grants are allocated to SEAs based on student population and poverty counts, as well as a base guarantee determined by the amount each state received in FY2001 under antecedent programs. The base guarantee is being phased out through FY2022. SEAs may reserve a share of funds for administration and statewide services, such as teacher or principal support programs; preparation academies; licensing or certification reform; improving equitable access to effective teachers; reforming or improving teacher and principal preparation programs; training teachers in the use of student data; and technical assistance to LEAs. ", "SEAs are required to suballocate at least 95% of grants to LEAs. Grants to LEAs are made based on student population and poverty counts. However, states are authorized to reserve up to 3% of the amount otherwise reserved for subgrants for LEAs for state-level activities focused on school leaders. Funds received by LEAs may be used for a variety of purposes including recruiting, hiring, and retaining effective teachers; teacher and school leader evaluation and support systems; professional development activities for teachers and principals; and class-size reduction."], "subsections": []}, {"section_title": "Part B: National Activities", "paragraphs": ["Subpart 1 authorizes the Teacher and School Leader Incentive Fund. This program provides competitive grants to LEAs, SEAs or other state agencies, the Bureau of Indian Education, or a partnership of one of these entities with one or more nonprofit or for-profit entities to develop, implement, improve, or expand performance-based teacher and principal compensation systems or human capital management systems for teachers, principals, and other school leaders in high-needs schools.", "Subpart 2 authorizes Literacy Education for All, Results for the Nation to improve student academic achievement in reading and writing from early education through grade 12. Under Subpart 2, competitive Comprehensive Literacy State Development Grants (Section 2222) are provided to SEAs. SEAs subsequently provide competitive subgrants to one or more eligible LEAs for the development and implementation of a comprehensive literacy instruction plan, professional development, and other activities. SEAs may also award competitive subgrants for early literacy services to one or more eligible early childhood education programs. In addition, SEAs may use funds to develop or enhance comprehensive literacy instruction plans. SEAs must ensure that at least 15% of funds are used to serve children from birth through age 5, 40% to serve children in kindergarten to grade 5, and 40% to serve children in grades 6 through 12. Funds reserved under Section 2222 for evaluation purposes must be used to conduct a national evaluation of the grant and subgrant programs authorized under Subpart 2 (Section 2225). Under the Innovative Approaches to Literacy program (Section 2226), the Secretary may award grants, contracts, or cooperative agreements to eligible entities to promote literacy programs that support the development of literacy skills in low-income communities through school library programs, early literacy services, and programs to provide high-quality books regularly to children from low-income communities. ", "Subpart 3 authorizes American History and Civics Education programs. Section 2232 authorizes the Presidential and Congressional Academies for American History and Civics. Presidential Academies offer professional development opportunities for teachers of American history and civics. Congressional Academies provide a seminar or institute for outstanding students of American history and civics. Section 2233 authorizes national activities that provide competitive grants to promote new and existing evidence-based strategies to encourage innovative American history, civics and government, and geography instruction and learning strategies, and professional development for teachers and school leaders.", "Subpart 4 authorizes several programs related to educators, school leaders, technical assistance, and evaluation. Section 2242 authorizes the Supporting Effective Educator Development (SEED) program, which provides competitive grants to support nontraditional teacher certification or preparation routes, evidence-based professional development, professional development to support dual or concurrent enrollment, and professional enhancement activities that may lead to an advanced credential. Section 2243 authorizes the School Leader Recruitment and Support program, which provides competitive grants to improve the recruitment, placement, support, and retention of principals and other school leaders in high-need schools. Section 2244 authorizes a comprehensive center focused on students at risk of not attaining full literacy skills due to a disability. Funds may also be used to provide technical assistance or evaluate state and LEA activities under Title II-B. Section 2245 authorizes the STEM Master Teacher Corps program, which provides competitive grants to support the development of a statewide STEM master teacher corps or to support the implementation, replication, or expansion of effective STEM professional development programs. "], "subsections": []}, {"section_title": "Part C: General Provisions", "paragraphs": ["Part C includes a supplement, not supplant provision that applies to funds provided under Title II. It also states that nothing in Title II authorizes the Secretary or any federal employee to mandate, direct, or control specific aspects of a state's, LEA's, or school's educational program, including, for example, instructional content, curricula, academic standards, academic assessments, staff evaluation systems, specific definitions of staff effectiveness, professional standards, licensing, or certification. Title II also states that none of the provisions in the title shall be construed to affect collective bargaining or other such agreements between school or district employees and their employers."], "subsections": []}]}, {"section_title": "Title III: Language Instruction for English Learners and Immigrant Students", "paragraphs": ["Title III authorizes programs that are focused on improving the academic attainment of ELs, including immigrant students. Under the Title III-A state grants program, funds are used at the state level to support activities such as consultation to develop statewide standardized entrance and exit procedures. Funds are used by LEAs for activities such as effective language instructional programs, professional development, and supplemental activities. Title III also authorizes two national programs, a professional development project and a clearinghouse related to the education of ELs. The introductory text to Title III authorizes appropriations for FY2017 through FY2020."], "subsections": [{"section_title": "Part A: English Language Acquisition, Language Enhancement, and Academic Achievement Act", "paragraphs": ["The English Language Acquisition program was designed to help ensure that ELs, including immigrant students, attain English proficiency, develop high levels of academic attainment in English, and meet the same challenging state academic standards that all students are expected to meet. The program was also designed to assist educators, SEAs, and LEAs in developing and implementing effective language instruction educational programs to assist in teaching ELs and developing and enhancing their capacity to provide effective instructional programs to prepare ELs to enter all-English settings. Title III-A also promotes parental, family, and community participation in language instruction educational programs for the parents, families, and communities of ELs. ", "Formula grant allocations are made to SEAs based on the proportion of EL students and immigrant students in each state relative to all states. These amounts are weighted by 80% and 20%, respectively. SEAs may reserve not more than 5% of the funds received for working with LEAs to establish standardized statewide entrance and exit procedures, providing effective teacher and principal preparation and professional development activities, and planning evaluation, administration, and interagency coordination. SEAs are required to make subgrants to eligible entities based on the relative number of EL students in schools served by those entities. SEAs are also required to reserve not more than 15% of the state allocation to make grants to eligible entities that have experienced a significant increase in the percentage or number of immigrant students enrolled in schools in the geographic area served by the entity.", "Eligible entities receiving subgrants are required to use funds for three activities. First, funds must be used to increase the English language proficiency of ELs by providing effective language instructional programs that demonstrate the program is successfully increasing English language proficiency and student academic achievement. Second, funds must be used to provide effective professional development to school staff or community-based personnel. Third, funds must be used to provide and implement other \"effective activities or strategies that enhance or supplement language instruction educational programs for ELs,\" including parent, family, and community engagement activities. Eligible entities receiving grants from the funds reserved specifically for immigrant students are required to use these funds to support activities that \"provide enhanced instructional opportunities\" for immigrant students.", "While Title III-A focuses on the education of ELs, Title I-A also contains provisions that specifically apply to this student population, as noted previously. For example, Title I-A requires that states establish English language proficiency standards that are derived from the domains of speaking, listening, reading, and writing and are aligned with challenging state academic standards. Under Title I-A, LEAs are required to assess English language proficiency annually using assessments aligned with the state English language proficiency standards."], "subsections": [{"section_title": "National Programs (Sections 3131 and 3202)", "paragraphs": ["A portion of Title III-A funds are reserved to support two specific national programs: (1) the National Professional Development Project (Section 3131), and (2) the National Clearinghouse for English Language Acquisition and Language Instruction Educational Programs (Section 3202). Under the National Professional Development Project, grants are awarded on a competitive basis for a period of up to five years to IHEs or public or private entities with relevant experience and capacity working in consortia with SEAs or LEAs to provide for professional development activities that will improve classroom instruction for ELs and help personnel working with these students to meet professional standards. The National Clearinghouse is responsible for collecting, analyzing, synthesizing, and disseminating information about language instruction educational programs for ELs and related programs."], "subsections": []}]}, {"section_title": "Part B: General Provisions", "paragraphs": ["Part B includes definitions relevant to Title III, statutory provisions authorizing the National Clearinghouse (discussed above), and the development of regulations for Title III."], "subsections": []}]}, {"section_title": "Title IV: 21st Century Schools", "paragraphs": ["Title IV authorizes a range of programs and activities including a block grant program, a program to support learning opportunities during non-school hours, programs to support charter schools and magnet schools, a family engagement program, an innovation and research program, programs to provide community support for student success, national activities for school safety, and programs focused on arts education, video programming for preschool and elementary school children, and gifted and talented education."], "subsections": [{"section_title": "Part A: Student Support and Academic Enrichment (SSAE) Grants", "paragraphs": ["Title IV-A authorizes SSAE grants to improve students' academic achievement by increasing the capacity of states, LEAs, schools, and local communities to (1) provide all students with access to a well-rounded education, (2) improve school conditions for student learning, and (3) improve the use of technology in order to increase the academic achievement and digital learning of all students. Formula grants are made to states based on their Title I-A funding from the prior year. States then make formula subgrants to LEAs. LEAs must use SSAE funds for three broad categories of activities: (1) supporting well-rounded educational opportunities, (2) supporting safe and healthy students, and (3) supporting the effective use of technology. If an LEA receives a grant of $30,000 or more, it must provide assurances that it will use at least 20% for activities to support a well-rounded education, at least 20% for activities to support safe and healthy students, and at least some of its funds to support the effective use of technology. If an LEA receives a grant of less than $30,000, it is only required to provide an assurance regarding the use of funds for at least one of the three categories."], "subsections": []}, {"section_title": "Part B: 21st Century Community Learning Centers", "paragraphs": ["Title IV-B supports activities provided during non-school hours that offer learning opportunities for school-aged children. Formula grants are made to SEAs based on their Title I-A funding from the prior year. States subsequently award grants to local entities (e.g., LEAs, community-based organizations) on a competitive basis for a period of three to five years. In awarding subgrants, SEAs are required to give priority to applicants proposing to target services to students who attend schools implementing CSI or TSI activities or other schools identified by the LEA in need of intervention support to improve student academic achievement and other outcomes; enroll students who may be at risk for academic failure, dropping out, or involvement with criminal or delinquent activities, or who lack \"strong positive role models\"; or target the families of such students. Local entities may use funds for activities that improve student academic achievement and support student success, such as academic enrichment learning programs, mentoring, tutoring, well-rounded education activities, programs to support a healthy and active lifestyle, technology education, expanded library service hours, parenting skills programs, drug and violence prevention programs, counseling programs, STEM programs, and programs that build career competencies and career readiness. "], "subsections": []}, {"section_title": "Part C: Enhancing Opportunity Through Quality Charter Schools", "paragraphs": ["The Charter Schools Program (CSP) supports the startup of new charter schools and the replication and expansion of high-quality charter schools (Section 4303). It also assists charter schools in accessing credit to acquire and renovate facilities and includes a competitive grant program that provides per-pupil facilities aid (Section 4304). The CSP also provides funding for national activities to support the startup, replication, and expansion of charter schools; the dissemination of best practices; program evaluation; and stronger charter authorizing practices (Section 4305). Of the funds appropriated for Title I-C, 65% is provided for the startup, replication, and expansion of charter schools; 22.5% for national activities; and 12.5% for facilities financing."], "subsections": []}, {"section_title": "Part D: Magnet Schools Assistance Program", "paragraphs": ["Title IV-D provides grants to LEAs to plan and operate magnet schools\u00e2\u0080\u0094public schools of choice designed to encourage voluntary enrollment by students of different racial backgrounds. LEAs that are operating under a court-ordered desegregation plan or have voluntarily adopted a federally approved desegregation plan are eligible to receive grants to establish and operate magnet schools. In awarding grants, the Secretary is required to give priority to LEAs that demonstrate the greatest need for assistance, based on the expense or difficulty of effectively carrying out approved desegregation plans and the magnet school program; propose to implement a new or revise an existing magnet school program based on evidence-based methods and practices or replicate an existing magnet school with a demonstrated track record of success; plan to admit students by methods other than academic examinations, such as a lottery; and propose to increase racial integration by taking into account socioeconomic diversity in the design and implementation of the magnet school program."], "subsections": []}, {"section_title": "Part E: Family Engagement in Education Programs", "paragraphs": ["Title IV-E provides competitive grants to statewide organizations to establish family engagement centers. These centers promote parent education and family engagement in education programs and provide comprehensive training and technical assistance to SEAs, LEAs, and schools identified by SEAs and LEAs; organizations that support family-school partnerships; and other organizations that carry out such programs."], "subsections": []}, {"section_title": "Part F: National Activities", "paragraphs": ["Title IV-F authorizes a range of programs. Each is discussed briefly below.", "Subpart F-1 authorizes the Education Innovation and Research (EIR) program, which provides competitive grants to eligible entities to create, develop, implement, replicate, or take-to-scale entrepreneurial, evidence-based, field-initiated innovations to improve achievement and attainment for high-need students. Three types of grants (early phase, mid-phase, and expansion grants) are awarded primarily based on the past demonstrated success of the grantee in meeting these goals. ", "Subpart F-2 authorizes the Promise Neighborhoods program (Section 4624) and the Full-Service Community Schools (FSCS) program (Section 4625). They were authorized by the ESEA prior to the enactment of the ESSA using authority previously available in Title V-D-1 to create programs of national significance. Both programs are designed to provide pipeline services, which deliver a \"continuum of coordinated supports, services, and opportunities,\" to children in distressed communities. More specifically, the Promise Neighborhoods program provides a comprehensive, effective continuum of coordinated services in neighborhoods with high concentrations of low-income individuals, multiple signs of distress (e.g., high rates of poverty, academic failure, and juvenile delinquency), and schools implementing comprehensive or targeted support and improvement activities under Title I-A. The FSCS program provides grants to public elementary and secondary schools to participate in a community-based effort to coordinate and integrate educational, developmental, family, health, and other comprehensive services through community-based organizations and public and private partnerships. Access to such services is provided in schools to students, families, and the community.", "Subpart F-3 authorizes National Activities for School Safety. A portion of funds appropriated for these activities must be used for the Project School Emergency Response to Violence (Project SERV). Project SERV provides grants to LEAs, IHEs, and the Bureau of Indian Education (BIE) for BIE schools where the learning environment has been disrupted due to a violent or traumatic crisis. Funds for National Activities for School Safety that are not used for Project SERV may be used for other activities to improve student well-being during or after the school day.", "Subpart F-4 authorizes three programs focused on academic enrichment. Section 4642 authorizes competitive grants for arts education under the Assistance for Arts Education Program. Section 4643 authorizes grants to support educational and instructional video programming, accompanying support materials, and digital content to promote school readiness for preschool and elementary school children and their families through the Ready to Learn Programming program. Section 4644 authorizes the Javits Gifted and Talented Students Education Program, which provides grants to enhance the ability of elementary and secondary schools to identify gifted and talented students, including low-income and at-risk students, and meet their special educational needs. The section also supports the National Research Center for the Education of Gifted and Talented Children and Youth."], "subsections": []}]}, {"section_title": "Title V: Flexibility and Accountability", "paragraphs": ["Title V includes both funding transferability authority and programs to support rural education. Funding transferability authority allows states and LEAs to transfer federal funds from certain ESEA programs to other ESEA programs to enable them to address their particular needs. The Rural Education Assistance Program (REAP) provides additional resources to rural LEAs that might lack the resources to compete effectively for federal grants or might receive formula grant allocations that are too small to meet their intended purposes. The two rural education programs included in Title V provide LEAs with substantial flexibility in how they use their grant funds. "], "subsections": [{"section_title": "Part A: Funding Transferability for State and Local Educational Agencies", "paragraphs": ["Funding transferability for states and LEAs is included under Title V-A to provide states and LEAs with the \"flexibility to target Federal funds to the programs and activities that most effectively address\" their \"unique needs.\" In general, states are able to transfer funds from three formula grants programs that focus on teachers and school leaders, provide block grants, and provide after-school programming to formula grant programs focused on special populations (i.e., disadvantaged students, migratory students, neglected and delinquent students, and ELs). More specifically, states are permitted to transfer up to 100% of the funds allotted to them for state-level activities under Title II-A, Title IV-A, or Title IV-B to Title I-A, Title I-C, Title I-D, Title III-A, and one other ESEA program. Similarly, LEAs are also permitted to transfer funds from formula grant programs that focus on teachers and school leaders or provide block grants to formula grant programs focused on special populations. More specifically, LEAs are permitted to transfer 100% of the funds received under Title II-A or Title IV-A to Title I-A, Title I-C, Title I-D, Title III-A, and one other ESEA program. SEAs and LEAs are prohibited from transferring funds from Title I-A, Title I-C, Title I-D, Title III-A, and one other ESEA program to any other program."], "subsections": []}, {"section_title": "Part B: Rural Education Initiative", "paragraphs": ["Title V-B authorizes the Rural Education Achievement Program (REAP), which is designed to assist rural LEAs that may lack the resources to compete effectively for competitive grants and that may receive grants under other ESEA programs that are too small to be effective in meeting their specified purposes. ", "Subpart 1 authorizes the Small, Rural School Achievement (SRSA) program, which (1) provides eligible rural LEAs with the flexibility to use funds received under Title II-A and Title IV-A to carry out local activities authorized under certain ESEA programs, and (2) authorizes a formula grant program for rural LEAs under which funds received may be used under several other ESEA programs. Eligibility for both the flexibility authority and the grant program is based on criteria such as average daily attendance or population density and locale codes. ", "Subpart 2 authorizes the Rural and Low-Income School (RLIS) program, which provides formula grants to states. SEAs then make subgrants to eligible LEAs by formula or competition as determined by the SEA. LEA eligibility criteria include a school-age child poverty rate of 20% or more and meeting certain locale requirements. Similar to the SRSA grants, RLIS grants may be used under several other ESEA programs or for parent involvement activities. LEAs cannot receive both an SRSA grant and a RLIS grant. An LEA that is eligible for grants under both the SRSA and RLIS programs must select the grant program under which it will receive funds."], "subsections": []}, {"section_title": "Part C: General Provisions", "paragraphs": ["Part C contains several prohibitions against federal control of educational curricula, academic standards and assessments, or programs of instruction as a condition of receipt of funds under Title V. It also states that nothing in Title V shall be construed to mandate equalized spending per pupil for a state, LEA, or school."], "subsections": []}]}, {"section_title": "Title VI: Indian, Native Hawaiian, and Alaska Native Education", "paragraphs": ["Title VI provides funds specifically for the education of Indian, Native Hawaiian, and Alaska Native children. With respect to Indian education, the ESEA authorizes formula grants to LEAs, Indian tribes and organizations, BIE schools, and other entities to support elementary and secondary school programs that meet the unique cultural, language, and educational needs of Indian children. Funds are also provided for competitive grants to examine the effectiveness of services for Indian children and to provide support and training for Indian individuals to work in various capacities in the education system. Title VI also authorizes competitive grants to organizations with experience in operating Native Hawaiian programs to provide services to improve Native Hawaiian education. A Native Hawaiian Education Council is also authorized under Title VI. In addition, Title VI authorizes competitive grants for activities and services intended to improve education for Alaska Natives, such as the development of curricular materials and professional development. "], "subsections": [{"section_title": "Part A: Indian Education", "paragraphs": ["Subpart 1 authorizes formula grants to eligible LEAs, Indian tribes and organizations, BIE schools, and other entities to support the development of elementary and secondary school programs for Indian students that are designed to meet the unique cultural, language, and educational needs of such students and ensure that all students meet their state's challenging academic standards. Grant allocations are determined based on the number of eligible Indian children served by the eligible entity and state average per pupil expenditures. ", "Subpart 2, Special Programs and Projects to Improve Educational Opportunities for Indian Children, authorizes two competitive grant programs: (1) Improvement of Educational Opportunities for Indian Children and Youth (Section 6121) and (2) Professional Development for Teachers and Education Professionals (Section 6122). The former supports projects to develop, examine, and demonstrate the effectiveness of services and programs to improve educational opportunities and achievement of Indian children and youth. The latter focuses on efforts such as providing support and training to qualified Indian individuals to become effective teachers, school leaders, and administrators. ", "Subpart 3, National Activities, authorizes funds for a variety of purposes including research, evaluation, and data collection and analysis. It also authorizes Grants to Tribes for Education Administrative Planning, Development, and Coordination (Section 6132), as well as for Native American and Alaska Native Language Immersion Schools and Programs (Section 6133). ", "Subpart 4 establishes the National Advisory Council on Indian Education (NACIE; Section 6141) and authorizes a preference for Indian entities under programs authorized by Subparts 2 and 3."], "subsections": []}, {"section_title": "Part B: Native Hawaiian Education", "paragraphs": ["Part B authorizes competitive grants to Native Hawaiian educational or community-based organizations, charter schools, or other public or private nonprofit organizations with experience in operating Native Hawaiian programs, or consortia of these entities, to provide a wide variety of services intended to improve education for Native Hawaiians. In the awarding of grants, priority is to be given to activities that are intended to improve reading skills for Native Hawaiian students in grades K-3, meet the needs of at-risk children and youth, increase participation by Native Hawaiians in fields or disciplines in which they are underemployed, or increase the use of the Hawaiian language in instruction. Specifically authorized activities include early childhood education and care, services for Native Hawaiian students with disabilities, and professional development for educators. Title VI-B also establishes a Native Hawaiian Education Council, which provides coordination activities, technical assistance, and community consultations related to the educational needs of Native Hawaiians."], "subsections": []}, {"section_title": "Part C: Alaska Native Education", "paragraphs": ["Part C authorizes competitive grants for a variety of activities and services intended to improve education for Alaska Natives. Eligible grantees include Alaska Native organizations with relevant experience, Alaska Native organizations that lack relevant experience and partner with an SEA, LEA, or Alaska Native organization operating relevant programs; or an entity located in Alaska that is predominantly governed by Alaska Natives and meets other specified criteria. Authorized uses of funds include, for example, the development of curriculum materials that address the special needs of Alaska Native students, training and professional development, early childhood and parenting activities, and career preparation activities."], "subsections": []}]}, {"section_title": "Title VII: Impact Aid", "paragraphs": ["Title VII compensates LEAs for the \"substantial and continuing financial burden\" resulting from federal activities. These activities include federal ownership of certain lands, as well as the enrollments in LEAs of children of parents who work and/or live on federal land (e.g., children of parents in the military and children living on Indian lands). The federal government provides compensation via Impact Aid for lost tax revenue because these activities deprive LEAs of the ability to collect property or other taxes from these individuals (e.g., members of the Armed Forces living on military bases) even though the LEAs are obligated to provide free public education to their children.", "Title VII authorizes several types of Impact Aid payments. These include payments under Section 7002, Section 7003, Section 7007, and Section 7008, which are discussed briefly below.", "Payments Relating to Federal Acquisition of Real Property ( Section 7 002 ) . Section 7002 compensates LEAs for the federal ownership of certain property. To qualify for compensation, the federal government must have acquired the property, in general, after 1938 and the assessed value of the land at the time it was acquired must have represented at least 10% of the assessed value of all real property within an LEA's area of service.", "Payments for Eligible Federally Connected Children (Basic Support Payments, Section 7 003 ) . Section 7003 compensates LEAs for enrolling \"federally connected\" children. These are children who reside with a parent who is a member of the uniformed services living on or off federal property, reside with a parent who is an accredited foreign military officer living on or off federal property, reside on Indian lands, reside in low-rent public housing, or reside with a parent who is a civilian working and/or living on federal land.", "Two payments are made under Section 7003. Section 7003(b) authorizes \"basic support payments\" for federally connected children. Basic support payments are allocated directly to LEAs by ED based on a formula that uses weights assigned to different categories of federally connected children and cost factors to determine maximum payment amounts. Section 7003(d) authorizes additional payments to LEAs based on the number of certain children with disabilities who are eligible to receive services under the Individuals with Disabilities Education Act (IDEA). Payments are limited to IDEA-eligible children whose parents are members of the uniformed services (residing on or off federal property) and those residing on Indian lands. ", "Construction ( Section 7 007 ) . Section 7007 provides funds for construction and facilities upgrading to certain LEAs with high percentages of children living on Indian lands or children of military parents. These funds are used to make formula and competitive grants.", "Facilities Maintenance ( Section 7 008 ) . Section 7008 provides funds for emergency repairs and comprehensive capital improvements at schools that ED currently owns but LEAs use to serve federally connected military dependent children. "], "subsections": []}, {"section_title": "Title VIII: General Provisions", "paragraphs": [], "subsections": [{"section_title": "Part A: Definitions", "paragraphs": ["Part A (Section 8101) provides definitions of a variety of terms used frequently throughout the ESEA, such as \"local educational agency,\" \"state educational agency,\" \"evidence-based,\" \"four-year adjusted cohort graduation rate,\" \"professional development,\" \"state,\" and \"well-rounded education.\""], "subsections": []}, {"section_title": "Part B: Flexibility in the Use of Administrative and Other Funds", "paragraphs": ["Part B authorizes SEAs and LEAs to consolidate and jointly use funds available for administration under multiple ESEA programs. In order to qualify for this flexibility, SEAs must demonstrate that a majority of their resources are provided from nonfederal sources. LEAs need SEA approval to consolidate their funds. Part B also authorizes the consolidation of funds set aside for the Department of the Interior under various ESEA programs and the McKinney-Vento Homeless Education program."], "subsections": []}, {"section_title": "Part C: Coordination of Programs, Consolidated State and Local Plans and Applications", "paragraphs": ["Part C authorizes SEAs and LEAs to prepare single, consolidated plans and reports for all \"covered\" ESEA programs. In general, the covered programs are the ESEA formula grant programs administered via SEAs. "], "subsections": []}, {"section_title": "Part D: Waivers", "paragraphs": ["Under this provision, the Secretary is authorized to waive most statutory and regulatory requirements associated with any program authorized by the ESEA, if specifically requested by an SEA or Indian tribe. LEAs may submit waiver requests through their SEA. The SEA may then submit the request to the Secretary if it approves the waiver. Schools must submit their waiver requests to their LEAs, which in turn submit those requests to the SEA. "], "subsections": []}, {"section_title": "Part E: Approval and Disapproval of State Plans and Local Applications", "paragraphs": ["Part E includes provisions related to secretarial approval of state ESEA plans and SEA approval of LEA plans. In both cases, the Secretary and the SEA, respectively, have 120 days from the day the plan was submitted to make a written determination that the submitted plan does not comply with relevant requirements. If such a determination is made, among other actions, the state or LEA must be notified immediately of the determination, provided with a detailed description of the specific plan provisions that failed to meet the requirements, offered an opportunity to revise and resubmit the plan within 45 days of the determination being made, provided technical assistance upon request (from the Secretary or SEA, respectively), and provided with a hearing within 30 days of the plans resubmission. "], "subsections": []}, {"section_title": "Part F: Uniform Provisions", "paragraphs": ["Subpart 1 contains provisions for the participation of private school students and staff in those ESEA programs where such participation is authorized. Under the relevant ESEA programs, services provided to private school students or staff are to be equitable in relation to the number of such students or staff eligible for each program; secular, neutral, and non-ideological, with no funds to be used for religious worship or instruction; and developed through consultation between public and private school officials. Provision is made for bypassing SEAs and LEAs that cannot or have not provided equitable services to private school students or staff, and serving private school students and staff in these areas through neutral, third-party organizations. Provision is also made for the submission of complaints regarding implementation of these requirements. Subpart 1 also prohibits federal control of private or homeschools, or the application of any ESEA requirement to any private school that does not receive funds or services under any ESEA program. It also states that no ESEA provisions apply to homeschools.", "Subpart 2 contains a wide range of provisions, including the following:", "a general definition of \"maintenance of effort,\" as applied in several ESEA programs (Section 8521); a requirement that ED publish guidance on prayer in public schools, and a requirement that LEAs receiving ESEA funds certify to their SEAs that they do not limit the exercise of \"constitutionally protected prayer\" in public schools (Section 8524); a requirement that recipient SEAs, LEAs, and public schools have a \"designated open forum\" to provide equal access to the Boy Scouts (Section 8525); a prohibition on the use of ESEA funds to \"promote or encourage sexual activity (Section 8526)\"; a prohibition on federal control of educational curricula, content or achievement standards, building standards, or allocation of resources (Section 8526A and Section 8527); a requirement that LEAs receiving funds under any ED program provide to the armed services access to directory information on secondary school students, unless students or their parents request that such information not be released (Section 8528); a prohibition on federally sponsored testing of students or teachers, with some exceptions (Section 8529); an \"Unsafe School Choice Option\" under which students in states receiving ESEA funds who attend a \"persistently dangerous\" public school, or who are victims of violent crime at school, are to be offered the opportunity to transfer to a \"safe\" public school (Section 8532); a requirement related to the transfer of school disciplinary records (Section 8537); a requirement related to consultation between LEAs and Indian tribes and tribal organizations (Section 8538); a requirement that ED provide outreach and technical assistance to rural LEAs (Section 8539); and a prohibition related to the aiding and abetting of sex abuse (Section 8546).", "Subpart 3 includes teacher liability protection. This subpart provides limitations on liability for teachers in school for harm caused by an act or omission of the teacher on behalf of the school if certain conditions (e.g., the teacher was acting within the scope of his or her employment) are met. ", "Subpart 4 contains gun-free requirements. Each state receiving funds under the ESEA must have a state law that requires LEAs to expel for at least one year any student who is determined to have brought a firearm to a school or possessed a firearm at a school under the jurisdiction of an LEA in the state. The chief administering officer of the LEA may modify this requirement on a case-by-case basis. In addition, no LEA may receive funds unless it has a policy requiring that any student who brings a firearm or weapon to a school served by the LEA is referred to the criminal justice or juvenile delinquency system. ", "Subpart 5 prohibits smoking within indoor facilities providing kindergarten, elementary, or secondary education or library services to children, if the services are funded directly or indirectly by the federal government, or the facility is constructed, operated, or maintained using federal funds."], "subsections": []}, {"section_title": "Part G: Evaluations", "paragraphs": ["Part G authorizes ED to reserve 0.5% of the funds appropriated for ESEA programs, other than Titles I, for program evaluations if funds for this purpose are not separately authorized."], "subsections": []}]}, {"section_title": "Appropriations and Authorizations of Appropriations for Programs Authorized by the\u00c2 ESEA", "paragraphs": ["Appropriations included in Table 1 are based on the most recent data available from ED's Budget Service Office. The amounts shown reflect any reprogramming or transfers of funds done by ED as of the time this table was prepared to provide the actual level of funding allocated to each program/activity. This list of \"programs/activities\" does not take into account the number of programs, projects, or activities that may be funded under a single line-item appropriation, so the actual number of ESEA programs, projects, or activities being supported through appropriations is not shown. It should be noted that ED considers all of the funds provided in an appropriations act for a given fiscal year, including advance appropriations provided for the following fiscal year, to be appropriations for the given fiscal year. For example, for the purposes of appropriations, ED considers all of the funds provided in the FY2019 appropriations act, including advance appropriations provided in FY2020, to be FY2019 appropriations. ", " Table 2 provides ESEA appropriations for FY2016 and FY2017 to depict the transition from the ESEA as amended by the NCLB to the ESEA as amended by the ESSA. Programs authorized under the ESEA as amended by either the NCLB or the ESSA are included. Programs and activities are referred to by their names in the ESEA as amended by the ESSA if a program was in both the ESEA as amended by the ESSA and by the NCLB. If the program had a different name in the ESEA as amended by the NCLB, the name is included in parentheses. Programs are listed in the order in which they appear in the ESEA as amended by the ESSA if they also appeared in the ESEA as amended by the NCLB. For programs that appear in only the ESEA as amended by either the ESSA or the NCLB, programs are listed in the order they appear or appeared in law. For some programs that were funded in FY2016 but not in FY2017, it is possible that another program authorized in FY2017 provided funding for similar purposes. For example, the Elementary and Secondary School Counseling program was funded in FY2016 but not in FY2017. School counseling activities are an allowable use of funds under the SSAE program created under the ESSA. The same methodology as discussed above was used in determining appropriations amounts for each program.", " Table 3 provides the authorized level of appropriations for each program included in the ESEA that has a specified authorization of appropriations. The ESEA includes authorizations of appropriations for FY2017 through FY2020."], "subsections": [{"section_title": "Appendix. Glossary of Acronyms", "paragraphs": [], "subsections": []}]}]}}
{"id": "R46361", "title": "FY2020 Defense Appropriations Act: P.L. 116-93 (H.R. 2968, S. 2474, H.R. 1158)", "released_date": "2020-05-15T00:00:00", "summary": ["The FY2020 Defense Appropriations Act, enacted as Division A of H.R. 1158 , the Consolidated Appropriations Act for FY2020, provides a total of $687.8 billion in discretionary budget authority, all to fund activities of the Department of Defense (DOD), except for $1.1 billion for certain activities of the intelligence community.", "As enacted, the bill provides 99.6% of the funding requested by President Trump requested for programs falling within the scope of this bill.", "To comply with the FY2020 cap on DOD base budget funding that was in effect at the time the FY2020 budget request was submitted, the Administration included in its request $97.9 billion intended for DOD base budget activities, but which was designated as part of the Overseas Contingency Operations (OCO) request and thus was exempt from the cap for all practical purposes. The Appropriations Committees of the House and Senate treated these funds as part of the base budget request.", "Activities funded by the annual defense appropriations act accounted for more than 90% of the budget authority included in the Trump Administration's $761.8 billion budget request for national defense-related activities in FY2020. The balance of the request consisted of activities funded by other appropriations bills (e.g., DOD's military construction program and defense-related nuclear energy work of the Energy Department) and certain amounts appropriated automatically as a result of permanent law."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["This report provides an overview of the FY2020 Defense Appropriations Act ( P.L. 116-93 ) and serves as an access portal to other CRS products providing additional context, detail, and analysis relevant to particular aspects of that legislation.", "The following Overview tracks the legislative history of the FY2020 defense appropriations act and summarizes the budgetary and strategic context within which it was being debated. Subsequent sections of the report summarize the act's treatment of major components of the Trump Administration's budget request, including selected weapons acquisition programs and other provisions."], "subsections": []}, {"section_title": "Overview", "paragraphs": ["For FY2020, the Trump Administration requested a total of $750.0 billion in discretionary budget authority for national defense-related activities. This included $718.3 billion (95.8% of the total) for the military activities of the Department of Defense (DOD). The balance of the national defense budget request is for defense-related activities of the Energy Department and other agencies. ", "Of the amount requested for DOD, $689.5 billion fell within the scope of the annual defense appropriations bill, as did $1.1 billion for certain expenses of the intelligence community. This bill does not include funding for military construction and family housing, which is provided by the appropriations bill that funds those activities, the Department of Veterans Affairs, and certain other agencies. Also not included in the FY2020 defense bill is $7.8 billion in accrual payments to fund the TRICARE for Life program of medical insurance for military retirees, funding for which is appropriated automatically each year, as a matter of permanent law (10 U.S.C. 1111-1117). (See Figure 1 .)", "The FY2020 Defense Appropriations Act, enacted as Division A of H.R. 1158 , the Consolidated Appropriations Act for FY2020, provides a total of $687.8 billion for DOD, which is $2.86 billion less than President Trump requested for FY 2020. (See Table 1 .) "], "subsections": [{"section_title": "Base Budget, OCO, and Emergency Spending", "paragraphs": ["Since the terrorist attacks of September 11, 2001, DOD has organized its budget requests in various ways to designate funding for activities that either are related to the aftermath of those attacks or otherwise are distinct from regularly recurring costs to man, train, and equip U.S. armed forces for the long haul. The latter are funds that have come to be referred to as DOD's \"base budget.\" Since 2009, the non-base budget funds have been designated as funding for Overseas Contingency Operations (OCO).", "Since enactment of the Budget Control Act (BCA) of 2011 ( P.L. 112-25 ), which set binding annual caps on defense and non-defense discretionary spending, the OCO designation has taken on additional significance. Spending designated by the President and Congress as OCO or for emergency requirements (such as the storm damage remediation funds in the enacted FY2020 defense bill) is effectively exempt from the spending caps.", "Under the law in effect when the FY2020 budget was submitted to Congress, the defense spending cap for FY2020 was $576.2 billion. The Administration's FY2020 budget request for defense-related programs included that amount for the base budget plus an additional $97.9 billion that also was intended to fund base budget activities but which was designated as OCO funding, in order to avoid exceeding the statutory defense spending cap.", "The Armed Services and Appropriations Committees of both the Senate and the House treated the \"OCO for base\" funds as part of the base budget request. The issue became moot with the enactment on August 2, 2019 of the Bipartisan Budget Act of 2019 ( P.L. 116-37 ) which raised the defense spending cap for FY2020 to $666.5 billion. "], "subsections": []}, {"section_title": "Legislative History", "paragraphs": ["Separate versions of the FY2020 defense appropriations bill were reported by the Appropriations Committees of the House and Senate. After the House committee reported its version ( H.R. 2968 ), the text of that bill was incorporated into H.R. 2740 , which the House passed on June 19, 2019, by a vote of 226-203. The Senate committee reported its version of the bill ( S. 2474 ) on September 12, 2019, but the Senate took no action on that measure. A compromise version of the defense bill was agreed by House and Senate negotiators and then was incorporated by amendment into another bill ( H.R. 1158 ), which was passed by both chambers. (See Table 2 .)", "In the absence of a formal conference report on the bill, House Appropriations Committee Chairman Nita Lowey inserted in the Congressional Record an Explanatory Statement to accompany the enacted version of H.R. 1158 ."], "subsections": []}]}, {"section_title": "Strategic Context", "paragraphs": ["The President's FY2020 budget request for DOD reflects a shift in strategic emphasis based on the 2018 National Defense Strategy (NDS), which called for \"increased and sustained investment\" to counter evolving threats from China and Russia. This marks a change from the focus of U.S. national security policy for nearly the past three decades and a renewed emphasis on competition between nuclear-armed powers, which had been the cornerstone of U.S. strategy for more than four decades after the end of World War II.", "During the Cold War, U.S. national security policy and the design of the U.S. military establishment were focused on the strategic competition with the Union of Soviet Socialist Republics and on containing the spread of communism globally. In the years following the collapse of the Soviet Union, U.S. policies were designed \u00e2\u0080\u0093 and U.S. forces were trained and equipped \u00e2\u0080\u0093 largely with an eye on dealing with potential regional aggressors such as Iraq, Iran, and North Korea and recalibrating relations with China and Russia. ", "After the terrorist attacks of September 11, 2001, U.S. national security policy and DOD planning focused largely on countering terrorism and insurgencies in the Middle East while containing, if not reversing, North Korean and Iranian nuclear weapons programs. However, as a legacy of the Cold War, U.S. and allied military forces had overwhelming military superiority over these adversaries and, accordingly, counter-terrorism and counterinsurgency operations were conducted in relatively permissive environments.", "The 2014 Russian invasion of the Crimean peninsula and subsequent proxy war in eastern Ukraine fostered a renewed concern in the United States and in Europe about an aggressive and revanchist regime in Moscow. Meanwhile, China began building and militarizing islands in the South China Sea in order to lay claim to key shipping lanes and to reinforce its claims to sovereignty over the South China Sea, itself. Together, these events highlighted anew the salience in the U.S. national security agenda of competing with other great powers , that is, states able and willing to use military force unilaterally to accomplish their objectives. At the same time, the challenges that had surfaced at the end of the Cold War (e.g., fragile states, genocide, terrorism, and nuclear proliferation) remained serious threats to U.S. interests.", "In some cases, adversaries appear to be collaborating to achieve shared or compatible objectives and to take advantage of social and economic tools to advance their agendas. Some states are also collaborating with non-state proxies (including, but not limited to, militias, criminal networks, corporations, and hackers) and deliberately blurring the lines between conventional and irregular conflict and between civilian and military activities. In this complex security environment, conceptualizing, prioritizing, and managing these numerous problems, arguably, is more difficult than it was in eras past.", "The Trump Administration's December 2017 National Security Strategy (NSS) and the 11-page unclassified summary of the January 2018 National Defense Strategy (NDS) explicitly reorient U.S. national security strategy (including defense strategy) toward a primary focus on great power competition with China and Russia and on countering their military capabilities. ", "In addition to explicitly making great power competition the primary U.S. national security concern, the NDS also argues for a focus on bolstering the competitive advantage of U.S. forces, which, the document contends, has eroded in recent decades vis-\u00c3\u00a0-vis the Chinese and Russian threats. The NDS also maintains that, contrary to what was the case for most of the years since the end of the Cold War, U.S. forces now must assume that their ability to approach military objectives will be vigorously contested.", "The Trump Administration's strategic orientation, as laid out in the NSS and NDS is consistent with the strategy outlined in comparable documents issued by prior Administrations, in identifying five significant external threats to U.S. interests: China, Russia, North Korea, Iran, and terrorist groups with global reach. In a break from previous Administrations, however, the NDS views retaining the U.S. strategic competitive edge relative to China and Russia as a higher priority than countering violent extremist organizations. Accordingly, the new orientation for U.S. strategy is sometimes referred to a \"2+3\" strategy, meaning a strategy for countering two primary challenges (China and Russia) and three additional challenges (North Korea, Iran, and terrorist groups)."], "subsections": []}, {"section_title": "Budgetary Context", "paragraphs": ["In the more than four decades since the end of U.S. military involvement in Vietnam, annual outlays by the federal government have increased by a factor of nine. The fastest growing segment of federal spending during that period has been mandatory spending for entitlement programs such as Social Security, Medicare, and Medicaid. (See Figure 2 .)", "Over the past decade, a central consideration in congressional budgeting was the Budget Control Act of 2011 (BCA; P.L. 112-25 ) as amended, which was intended to control federal spending by enforcement through sequestration of government operating budgets in case discretionary spending budgets failed to meet separate caps on defense and nondefense discretionary budget authority. ", "The act established binding annual limits (or caps) to reduce discretionary federal spending through FY2021 by $1.0 trillion. Sequestration provides for the automatic cancellation of previous appropriations, to reduce discretionary spending to the BCA cap for the year in question.", "The caps on defense-related spending apply to discretionary funding for DOD and for defense-related activities by other agencies, comprising the national defense budget function which is designated budget function 050 . The caps do not apply to funding designated by Congress and the president as emergency spending or spending on OCO. ", "Congress repeatedly has enacted legislation to raise the annual spending caps. However, at the time the Administration submitted its budget request for FY2020, the national defense spending cap for that year remained $576 billion \u00e2\u0080\u0093 a level enacted in 2013 that was $71 billion lower than the revised cap for FY2019. ", "To avert a nearly 11% reduction in defense spending, the Administration's FY2020 base budget request conformed to the then-binding defense cap. But the Administration's FY2020 request also included $165 billion designated as OCO funding (and thus exempt from the cap) of which $98 billion was intended for base budget purposes. The Armed Services and Appropriations Committees of the House and Senate disregarded this tactic, and considered all funding for base budget purposes as part of the base budget request. "], "subsections": []}, {"section_title": "Selected Elements of the Act", "paragraphs": [], "subsections": [{"section_title": "Military Personnel Issues", "paragraphs": [], "subsections": [{"section_title": "Military End-strength", "paragraphs": ["P.L. 116-93 funds the Administration's proposal for a relatively modest net increase in the number of active-duty military personnel in all four armed forces, but includes a reduction of 7,500 in the end-strength of the Army. According to Army budget documents, the reduction was based on the fact that the service had not met higher end-strength goals in FY2018. ", "The act also funds the proposed reduction in the end-strength of the Selected Reserve \u00e2\u0080\u0093 those members of the military reserve components and the National Guard who are organized into operational units that routinely drill, usually on a monthly basis. (See Table 3 )"], "subsections": []}, {"section_title": "Military Pay Raise", "paragraphs": ["As was authorized by the FY2020 National Defense Authorization Act ( P.L. 116-92 ), P.L. 116-93 funds a 3.1% increase in military basic pay that took effect on January 1, 2020."], "subsections": []}, {"section_title": "Sexual Assault Prevention and Treatment", "paragraphs": ["The act appropriates $61.7 million for DOD's Sexual Assault Prevention and Response Office (SAPRO), adding to the amount requested $35.0 million for the Special Victims' Counsel (SVC) program . The SVC organization provides independent legal counsel in the military justice system to alleged victims of sexual assault. ", "The act also provides $3.0 million (not requested) to fund a pilot program for treatment of military personnel for Post-Traumatic Stress Disorder related to sexual trauma. The program was authorized by Section 702 of the FY2019 National Defense Authorization Act ( P.L. 115-232 ). "], "subsections": []}, {"section_title": "Child Care", "paragraphs": ["P.L. 116-93 added a total of $110 million to the $1.1 billion requested for DOD's childcare program. This is the largest employer-sponsored childcare program in the United States, with roughly 23,000 employees attending to nearly 200,000 children of uniformed service members and DOD civilians.", "The act and its accompanying explanatory statement let stand a requirement in the Senate Appropriations Committee report on S. 2474 for the Secretary of Defense to give Congress a detailed report on DOD's childcare system including plans to increase its capacity and a prioritized list of the top 50 childcare center construction requirements."], "subsections": []}]}, {"section_title": "Strategic, Nuclear-armed Systems", "paragraphs": ["P.L. 116-93 generally supports the Administration's FY2020 budget request to continue the across-the-board modernization of nuclear and other long-range strike weapons started by the Obama Administration. The Trump Administration's FY2020 budget documentation described as DOD's \"number one priority\" this modernization of the so-called nuclear triad: ballistic missile-launching submarines, long-range bombers, and land-based intercontinental ballistic missiles (ICBMs). "], "subsections": []}, {"section_title": "Hypersonic Weapons", "paragraphs": ["P.L. 116-93 generally supported the Administration's effort to develop an array of long-range missiles that could travel at hypersonic speed \u00e2\u0080\u0093 that is, upwards of five times the speed of sound (3,800 mph) \u00e2\u0080\u0093 and that would be sufficiently accurate to strike distant targets with conventional (non-nuclear) warheads. Although ballistic missiles travel as fast, the types of weapons being developed under the \"hypersonic\" label differ in that they can maneuver throughout most of their flight trajectory.", "DOD has funded development of hypersonic weapons since the early 2000s. However, partly because of reports that China and Russia are developing such weapons, DOD identified hypersonic weapons as an R&D priority in its FY2019 budget request and is seeking \u00e2\u0080\u0093 and securing from Congress \u00e2\u0080\u0093 funding to accelerate the U.S. hypersonic program. The FY2020 DOD budget request continued this trend, and Congress supported it in the enacted FY2020 defense appropriations bill. ", "P.L. 116-93 also provided more than three times the amount requested to develop defenses against hypersonic missiles. Such weapons are difficult to detect and track because of the low altitude at which they fly and are difficult to intercept because of their combination of speed and maneuverability.", "The act also added $100 million, not requested, to create a Joint Hypersonics Transition Office to coordinate hypersonic R&D programs across DOD. In the Explanatory Statement accompanying the enacted FY2020 defense bill, House and Senate negotiators expressed a concern that the rapid growth in funding for hypersonic weapons development might result in duplication of effort among the services and increased costs."], "subsections": []}, {"section_title": "Ballistic Missile Defense Systems", "paragraphs": ["In general, P.L. 116-93 supported the Administration's proposals to strengthen defenses against ballistic missile attacks, whether by ICBMs aimed at U.S. territory, or missiles of shorter range aimed at U.S. forces stationed abroad, or at the territory of allied countries. The missile defense budget request reflected recommendations of the Administration's Missile Defense Review , published in January 2019. (See Table 6 )"], "subsections": [{"section_title": "U.S. Homeland Missile Defense Programs", "paragraphs": ["Compared with the Administration's budget request, P.L. 116-93 shifted several hundred million dollars among various components of the system intended to defend U.S. territory against ICBMs. In the explanatory statement accompanying the bill, House and Senate negotiators indicated that the impetus for these changes was DOD's August 2019 cancellation of an effort to develop an improved warhead -- designated the Replacement Kill Vehicle (RKV) -- to be carried by the system's Ground-Based Interceptors (GBIs).", "Partly by reallocating funds that had been requested for the RKV programs, the act provides a total of $515.0 million to develop an improved interceptor missile that would replace the GBI and its currently deployed kill vehicle. It also provides:", "$285 million for additional GBI missiles and support equipment; and $180 million for R&D intended to improve the reliability GBIs."], "subsections": []}]}, {"section_title": "Defense Space Programs", "paragraphs": ["P.L. 116-93 was generally supportive of the Administration's funding requests for acquisition of military space satellites and satellite launches. (See Table 7 .)"], "subsections": [{"section_title": "Space Force O&M Funding", "paragraphs": ["Congress approved $40.0 million of the $72.4 million requested for operation of the newly created Space Force, authorized by P.L. 116-92 , the FY2020 National Defense Authorization Act. The Explanatory Statement accompanying the bill asserted that DOD had provided insufficient justification for the Space Force budget request. Therefore, DOD received nearly 44% less in Space Force operating funds than it requested. The Explanatory Statement also directed the Secretary of the Air Force to give the congressional defense committees a month-by-month spending plan for FY2020 Space Force O&M funding."], "subsections": []}]}, {"section_title": "Ground Combat Systems", "paragraphs": ["The act supported major elements of the Army's plan to upgrade its currently deployed fleet of ground-combat vehicles. One departure from that plan was the act's provision of 30% more than was requested to increase the firepower of the Stryker wheeled troop-carrier. The program would replace that vehicle's .50 caliber machine gun \u00e2\u0080\u0093 effective against personnel \u00e2\u0080\u0093 with a 30 mm cannon that could be effective against lightly armored vehicles. (See Table 8 .)"], "subsections": [{"section_title": "Army Modernization Plan", "paragraphs": ["The act sends a mixed message regarding congressional support for the Army's strategy for developing a new suite of combat capabilities. The service plans to pay for the new programs \u00e2\u0080\u0093 in part -- with funds it anticipated in future budgets that were slated to pay for continuation of upgrade programs for existing systems. Under the Army's new plan, those older programs would be truncated to free up the anticipated funds. In effect, this means that planned upgrades to legacy systems would not occur so investments in development of new systems could be made sooner. The Army has proposed that programs to upgrade Bradley fighting vehicles and CH-47 Chinook helicopters be among those utilized as these \"bill-payers\". The enacted bill provides one-third less than was requested for Bradley upgrades, with the $223.0 million that was cut being labelled by the Explanatory Statement as \"excess to need.\" However, the enacted version of the appropriations bill \u00e2\u0080\u0093 like the versions of that bill passed by the House and Senate \u00e2\u0080\u0093 provides nearly triple the amount requested for the Chinook upgrade, appropriating $46.2 million rather than the $18.2 million requested. The amount appropriated is the amount that had been planned for the Chinook upgrade in FY2020, prior to the publication of the Army's new modernization plan. In the reports accompanying their respective versions of the bill, the House and Senate Appropriations Committees each had challenged the Army's plan to forego upgrades to the existing CH-47 fleet."], "subsections": []}, {"section_title": "Optionally Manned Fighting Vehicle (OMFV)", "paragraphs": ["P.L. 116-93 reined in the Army's third effort in 20 years to develop a replacement for the 1980s-vintage Bradley infantry fighting vehicle, providing $205.6 million of the $378.4 million requested for the Optionally-Manned Fighting Vehicle (OMFV) program. The program had come under fire on grounds that it was too technologically ambitious to be managed under a streamlined acquisition process (Section 804 authority), as the Army proposed. ", "The issue became moot after P.L. 116-93 was enacted, when the Army announced on January 16, 2020, that it was cancelling the OMFV contracting plan and restarting it with new design parameters."], "subsections": []}]}, {"section_title": "Military Aviation Systems", "paragraphs": ["P.L. 116-93 generally supports the budget request for the major aviation programs of all four armed forces. (See Table 9 )"], "subsections": [{"section_title": "Chinook Helicopter Upgrades", "paragraphs": ["An indicator of potential future disagreements between Congress and the Army was the act's insistence that a planned upgrade of the service's CH-47 Chinook helicopter continue as had been planned prior to submission of the FY2020 budget request. As discussed above, this is one of several programs to improve currently deployed equipment that the Army wants to curtail in order to free up funds in future budgets for the wide-ranging modernization strategy it announced in late 2019.", "Prior to tagging the program as a \"bill-payer\" for new programs, the Army had projected a FY2020 request of $46.4 million associated with procurement of improved \"Block II\" CH-47s. The amended FY2020 request for the program was $18.2 million, reflecting the Army's decision to truncate the planned procurement. The enacted version of the FY2020 defense bill \u00e2\u0080\u0093 like the versions passed by the House and approved by the Senate Appropriations Committee \u00e2\u0080\u0093 provided $46.2 million for the program. "], "subsections": []}, {"section_title": "F-15 Fighter", "paragraphs": ["The act provides $985.5 million of the $1.05 billion requested for eight F-15s to partly fill the gap in Air Force fighter strength resulting from later-than-planned fielding of the F-35A Joint Strike Fighter. The act shifted funds for two of the eight aircraft and some design efforts (a total of $364.4 million) to the Air Force's Research and Development account on grounds that those F-15s would be used for testing.", "The Explanatory Statement accompanying the act directs the Secretary of the Air Force to provide the House and Senate Armed Services and Appropriations Committees with a review of options for reducing the Air Force's shortfall in its planned complement of fighters."], "subsections": []}]}, {"section_title": "Shipbuilding Programs", "paragraphs": ["P.L. 116-93 supports major elements of the Navy's shipbuilding budget request. The request in turn reflects a 2016 plan to increase the size of the fleet to 355 ships, a target some 15% higher than the force goal set by the previous Navy plan. The request included \u00e2\u0080\u0093 and the act generally supports \u00e2\u0080\u0093 funds to begin construction of a number of relatively large, unmanned surface and subsurface ships that carry weapons and sensors and would further enlarge the force.", "The act departed from the budget request on two issues that involved more than $1 billion apiece:", "It denied a total of $3.2 billion budgeted for one of the three Virginia -class submarines included in the Administration's request, adding $1.4 billion of those funds instead to the funds requested (and approved by the act) for the other two subs. The increase is intended to pay for incorporating into the two funded ships the so-called Virginia Payload Module -- an 84-foot-long, mid-body section equipped with four large-diameter, vertical launch tubes for storing and launching additional Tomahawk missiles or other payloads. It provided a total of $1.2 billion, not requested, for specialized ships and a landing craft to support amphibious landings by Marine Corps units. (See Table 10 .)", "Notes: The Appendix lists the full citation of each CRS product cited in this table by its ID number."], "subsections": [{"section_title": "Appendix. CRS Reports, In Focus, and Insights", "paragraphs": ["Following, in numerical order, are the full citations of CRS products cited in this report.", "CRS Reports", "CRS Report RS20643, Navy Ford (CVN-78) Class Aircraft Carrier Program: Background and Issues for Congress , by Ronald O'Rourke.", "CRS Report RL30563, F-35 Joint Strike Fighter (JSF) Program , by Jeremiah Gertler.", "CRS Report RL30624, Navy F/A-18E/F and EA-18G Aircraft Program , by Jeremiah Gertler.", "CRS Report RL31384, V-22 Osprey Tilt-Rotor Aircraft Program , by Jeremiah Gertler.", "CRS Report RL32109, Navy DDG-51 and DDG-1000 Destroyer Programs: Background and Issues for Congress , by Ronald O'Rourke.", "CRS Report RL32418, Navy Virginia (SSN-774) Class Attack Submarine Procurement: Background and Issues for Congress , by Ronald O'Rourke.", "CRS Report RL32665, Navy Force Structure and Shipbuilding Plans: Background and Issues for Congress , by Ronald O'Rourke.", "CRS Report RL33640, U.S. Strategic Nuclear Forces: Background, Developments, and Issues , by Amy F. Woolf.", "CRS Report R41129, Navy Columbia (SSBN-826) Class Ballistic Missile Submarine Program: Background and Issues for Congress , by Ronald O'Rourke.", "CRS Report R42972, Sequestration as a Budget Enforcement Process: Frequently Asked Questions , by Megan S. Lynch.", "CRS Report R43049, U.S. Air Force Bomber Sustainment and Modernization: Background and Issues for Congress , by Jeremiah Gertler.", "CRS Report R43240, The Army's Armored Multi-Purpose Vehicle (AMPV): Background and Issues for Congress , by Andrew Feickert.", "CRS Report R43838, Renewed Great Power Competition: Implications for Defense\u00e2\u0080\u0094Issues for Congress , by Ronald O'Rourke.", "CRS Report R43543, Navy LPD-17 Flight II and LHA Amphibious Ship Programs: Background and Issues for Congress , by Ronald O'Rourke.", "CRS Report R43546, Navy John Lewis (TAO-205) Class Oiler Shipbuilding Program: Background and Issues for Congress , by Ronald O'Rourke.", "CRS Report R44039, The Defense Budget and the Budget Control Act: Frequently Asked Questions , by Brendan W. McGarry.", "CRS Report R44229, The Army's M-1 Abrams, M-2/M-3 Bradley, and M-1126 Stryker: Background and Issues for Congress , by Andrew Feickert.", "CRS Report R44463, Air Force B-21 Raider Long-Range Strike Bomber , by Jeremiah Gertler.", "CRS Report R44519, Overseas Contingency Operations Funding: Background and Status , by Brendan W. McGarry and Emily M. Morgenstern.", "CRS Report R44874, The Budget Control Act: Frequently Asked Questions , by Grant A. Driessen and Megan S. Lynch.", "CRS Report R44891, U.S. Role in the World: Background and Issues for Congress , by Ronald O'Rourke and Michael Moodie.", "CRS Report R44968, Infantry Brigade Combat Team (IBCT) Mobility, Reconnaissance, and Firepower Programs , by Andrew Feickert.", "CRS Report R44972, Navy Frigate (FFG[X]) Program: Background and Issues for Congress , by Ronald O'Rourke.", "CRS Report R45288, Military Child Development Program: Background and Issues , by Kristy N. Kamarck.", "CRS Report R45349, The 2018 National Defense Strategy: Fact Sheet , by Kathleen J. McInnis.", "CRS Report R45519, The Army's Optionally Manned Fighting Vehicle (OMFV) Program: Background and Issues for Congress , by Andrew Feickert.", "CRS Report R45811, Hypersonic Weapons: Background and Issues for Congress , by Kelley M. Sayler.", "CRS Report R46002, Military Funding for Border Barriers: Catalogue of Interagency Decisionmaking , by Christopher T. Mann and Sofia Plagakis.", "CRS Report R46107, FY2020 National Defense Authorization Act: Selected Military Personnel Issues , coordinated by Bryce H. P. Mendez.", "CRS Report R46211, National Security Space Launch , by Stephen M. McCall.", "CRS Report R46216, The Army's Modernization Strategy: Congressional Oversight Considerations , by Andrew Feickert and Brendan W. McGarry.", "Congressional In Focus", "CRS In Focus IF10541, Defense Primer: Ballistic Missile Defense , by Stephen M. McCall.", "CRS In Focus IF10657, Budgetary Effects of the BCA as Amended: The \"Parity Principle\" , by Grant A. Driessen.", "CRS In Focus IF11244, FY2020 National Security Space Budget Request: An Overview , by Stephen M. McCall and Brendan W. McGarry.", "CRS In Focus IF11326, Military Space Reform: FY2020 NDAA Legislative Proposals , by Stephen M. McCall.", "Congressional Insights", "CRS Insight IN11052, The Defense Department and 10 U.S.C. 284: Legislative Origins and Funding Questions , by Liana W. Rosen.", "CRS Insight IN11083, FY2020 Defense Budget Request: An Overview , by Brendan W. McGarry and Christopher T. Mann.", "CRS Insight IN11148, The Bipartisan Budget Act of 2019: Changes to the BCA and Debt Limit , by Grant A. Driessen and Megan S. Lynch.", "CRS Insight IN11210, Possible Use of FY2020 Defense Funds for Border Barrier Construction: Context and Questions , by Christopher T. Mann."], "subsections": []}]}]}]}}
{"id": "R45789", "title": "Long-Term Budgeting within the Congressional Budget Process: In Brief", "released_date": "2019-06-28T00:00:00", "summary": ["Members of Congress, the Administration, and outside groups have expressed concern over long-term projections of deficits and debt levels. The Congressional Budget Office (CBO) has stated that federal deficits and debt held by the public, which are higher than average, are projected to increase sharply over the next 30 years.", "Some have argued that the current congressional budget process has created, or at least exacerbated, the projected long-term deficit and debt challenges. It has been said that the current process does not encourage or require the consideration of long-term budgetary outcomes. Some argue that the lack of a formal requirement for Congress to consider long-term budget outcomes discourages long-term planning and encourages policy outcomes that are desirable in the short term at the expense of the long-term budget situation. It has therefore been suggested that Congress adopt a long-term budget focus.", "In considering budget or budget process reform, it may be useful to review current congressional tools that may be used for long-term budgeting. For example, information and data are publicly available that project spending, revenue, deficit, and debt levels in the long term, and in some instances, data evaluating the long-term outlook of specific programs are available. Congressional committees are useful resources for long-term budgeting as they gather information and make policy recommendations on individual programs, as well as the budget as a whole. In addition, Congress is able to develop and consider a multiyear budget plan in the form of a budget resolution. The budget resolution may also trigger the budget reconciliation process, which has been used to make legislative changes addressing long-term budgetary levels. Also, the House and Senate have internal rules that restrict or prohibit consideration of legislation that would have certain long-term budgetary effects (e.g., the PAYGO rule and the long-term deficit rule). And lastly, there are laws that restrict or prohibit the enactment of budgetary legislation that would have certain long-term budgetary effects (such as 10-year discretionary spending limits and statutory PAYGO)."], "reports": {"section_title": "", "paragraphs": ["T he Constitution grants Congress enormous power and freedom to engage in what we now refer to as budgeting. First, the Constitution grants Congress the power of the purse but does not prescribe or require any specific budgetary legislation or budgetary outcomes. Further, the Constitution allows the House and Senate to determine the rules of their internal proceedings but does not prescribe or establish any budgetary rules or restrictions. Congress has thus developed certain types of budgetary legislation as well as rules and practices that govern the content and consideration of that budgetary legislation. This collection of budgetary legislation, rules, and practices is referred to as the congressional budget process. ", "Some have criticized the current congressional budget process and the budget outcomes that it has produced and have suggested that Congress adopt a more long-term budget focus. There is no consensus on what is meant by long term . For example, advocates of biennial budgeting (i.e., two-year budget resolutions, two-year appropriations legislation) sometimes characterize a two-year cycle as long-term budgeting. Some view the current 10-year budget window (described below) as being a form of long-term budgeting, while others consider long-term budgeting to span a lengthier period, such as 30 years or 50 years. ", "There is also no general consensus on what is required by long-term budgeting. Would it simply require Congress to stay informed of the long-term projections for spending, revenue, deficits, and debt? Would it require Congress to affirmatively vote annually on policies that are projected to continue year to year? Would it require Congress to adopt a long-term budget plan or long-term fiscal targets (e.g., debt-to-GDP ratio limits)? And if targets were agreed upon, would it require automatic triggers to enforce fiscal targets (e.g., automatic spending cuts or automatic tax increases)? "], "subsections": [{"section_title": "Rationale for Long-Term Budgeting", "paragraphs": ["Members of Congress, the Administration, and outside groups have expressed concern over projected levels of deficits and debt. The Congressional Budget Office (CBO) recently stated that federal deficits and debt held by the public, which are higher than average, are projected to increase sharply over the next 30 years. CBO states that deficits would rise from 4.2% of gross domestic product (GDP) in 2019 to 8.7% in 2049. According to CBO, federal debt held by the public is currently 78% of GDP, significantly higher than the 50-year average of 42%. Under current law, budget deficits would cause the debt to be 92% of GDP by 2029 and 144% of GDP by 2049, which \"would be the highest in the nation's history by far.\" If policymakers want debt in 2049 to equal its current share of GDP (78%), the deficit would need to be reduced by $400 billion every year until then, CBO has projected.", "Some have argued that the current congressional budget process has created, or at least exacerbated, the projected long-term deficit and debt challenges. One recurring criticism is that the process does not encourage or require the consideration of long-term budgetary outcomes. Some argue that the lack of a formal requirement for Congress to consider long-term budget outcomes discourages long-term planning and encourages policy outcomes that are desirable in the short term at the expense of the long-term budget situation. Further, they argue that the current process does not even deter or prohibit Congress from enacting legislation that worsens the long-term deficit and debt projections. They argue that Congress needs to adopt a long-term budget focus. This report provides information on existing resources and congressional rules related to a long-term budget focus."], "subsections": []}, {"section_title": "Challenges Associated with Long-Term Budgeting", "paragraphs": ["There are potential challenges or obstacles associated with the adoption of a long-term budget focus within the current congressional budget process. ", "Many think of the budget as being decided annually, but most policies that dictate how much will be spent and collected are fixed. Mandatory spending makes up 70% of total spending, is generally set by laws enacted years or decades ago, and remains in effect without the need for annual congressional approval. (Mandatory spending includes Medicare, Social Security, Medicaid, and interest on the debt.) Likewise, the collection of revenue as prescribed by the tax code continues without the need for legislative action. These mandatory spending and revenue policies change only if Congress and the President enact legislation making such changes. Under current law, these fixed spending and revenue policies are projected to result in increasing deficits and debt. Many argue that addressing rising deficit and debt in the long term would require policy changes. Another challenge associated with long-term budgeting is that any projected levels of spending and revenue are inherently uncertain. The further out spending and revenue are projected, the more uncertain they become. For example, within CBO's long-term budget projections (referenced above), the agency notes that such projections are \"very uncertain.\" CBO concludes that while debt as a percentage of GDP in 2049 would likely be much greater than it is today if current laws remain unchanged, many factors (e.g., labor force participation, productivity in the economy, interest rates on federal debt, and health care costs per person) may alter actual outcomes.", "Other challenges associated with long-term budgeting include the difficulty of budgeting for unforeseen events (such as military engagements, natural disasters, and downturns in the economy); underlying projection assumptions; and the problem of setting fiscal policy or establishing long-term goals that a future Congress may not support. "], "subsections": []}, {"section_title": "Information Available to Congress on the Long-Term Budget Outlook", "paragraphs": ["Information and data are publicly available to assist Congress in understanding the projected long-term budget situation. Projections are available that show spending, revenue, deficits, and debt in the long term, and in some instances, data evaluating the long-term outlook of specific programs are available. Selected examples of that information are described below."], "subsections": [{"section_title": "General Budgetary Projections for the Upcoming 10-Year Period", "paragraphs": ["CBO regularly publishes budgetary and economic projections, which are formally known as the annual Budget and Economic Outlook but are often referred to in Congress as the annual baseline. These baseline projections cover a 10-year period, which is often referred to as the budget window. These projections are based on the assumption that current laws regarding federal spending and revenues will generally remain in place. The Budget and Economic Outlook includes information on projected spending, revenue, deficits, debt, economic growth, and alternative fiscal scenarios. Congress typically uses this baseline as a benchmark against which it measures legislative proposals. ", "The Office of Management and Budget (OMB) also publishes budgetary and economic projections. As required by law, OMB includes information in the President's annual budget request on projected spending and revenue. Such projections typically span 10 years. ", "In addition to the information provided on the 10-year budgetary outlook under current law, CBO provides Congress with cost estimates of certain proposed legislation. The Congressional Budget Act of 1974 (the Budget Act) requires that the CBO provide an estimate for any bill reported from committee. These cost estimates provide information on how the legislation would affect spending, revenues, and the deficit over the next 10 years relative to the baseline. Such cost estimates assist Congress in adhering to the budget resolution and other points of order, described below. "], "subsections": []}, {"section_title": "General Budgetary Projections for the Upcoming Decades", "paragraphs": ["Each year, CBO provides Congress with its Long-Term Budget Outlook , which shows the effects of demographic trends, economic developments, and rising health care costs on federal spending, revenues, and deficits over the next 30 years. The report also shows the long-term budgetary and economic effects of some alternative policies.", "In addition, in its cost estimates, CBO is required to note whether the underlying legislation would increase deficits in future decades. To assist the Senate in complying with its \"long-term deficit rule\" (described below), CBO notes whether the legislation would increase on-budget deficits in any of the four consecutive 10-year periods beginning with 2030. ", "OMB provides long-term projections in the President's annual budget request in a section titled, \"Long Term Budget Outlook.\" These projections recently spanned a 25-year period and include projections under different fiscal scenarios.", "The Government Accountability Office also provides information and interactive tools on projected spending, revenue, deficits, and debt over the next 70 years. "], "subsections": []}, {"section_title": "Spending Projections for Individual Programs", "paragraphs": ["Long-term information and projections are available for some individual programs. For example, the Social Security and Medicare Trustees issue respective actuarial estimates of each trust fund for the next 75 years. These reports contain both short- and long-range projections of annual program expenditures and payroll tax receipts. There are also estimates of the actuarial deficits over the next 75 years that represent the shortfall between the program's projected expenditures and income. ", "In addition, the CBO provides long-term projections on specific programs. For example, CBO publishes recurring reports on the long-term projections for Social Security, the long-term implications of the Future Years Defense Program, and 10-year costs of U.S. nuclear forces. "], "subsections": []}]}, {"section_title": "Current Congressional Tools for Long-Term Budgeting", "paragraphs": ["The Constitution grants Congress the power of the purse. In carrying out such duties, Congress has developed budget-related rules and legislation as well as committees to carry out this responsibility. Some of these tools might be used in long-term budgeting."], "subsections": [{"section_title": "Congressional Committees", "paragraphs": ["Congressional committees serve Congress by specializing in particular policy areas. They do this by gathering information, making policy recommendations, and performing oversight. In the course of this work, committees study and make recommendations related to the long-term implications of the specific programs within their jurisdiction. For example, the Senate Finance Committee and the House Ways and Means Committee may hold hearings on the long-term outlook for Social Security. ", "In addition, the House and Senate each have a Budget Committee, established by the Budget Act. They enjoy jurisdiction over the budget resolution, the budget reconciliation process (described below), and the budget process generally. As stated by the Senate Budget Committee, \"The [Budget] Committee, the budget resolution and reconciliation process, and enforcement authorities were created to enable Congress to create, enforce, and manage the annual Federal budget, including all types of Federal spending and revenues.\"", "The Budget Committees may impact the budget and the budget process in many ways. They are responsible for developing and drafting a budget plan in the form of a budget resolution. A budget resolution agreed to by the House and Senate may trigger the budget reconciliation process, which has been used to make legislative changes reducing future deficits (described below). During the development of the budget plan, the Budget Committees gather information on the budget from many sources. They review the President's budget submission, and the director of OMB typically testifies before each Budget Committee. Additionally, the committees closely review CBO's annual budget and economic outlook for the upcoming 10 years, and the director of CBO testifies before the Budget Committees to answer questions. ", "The Budget Committees also hold hearings and consider legislation related to the budget process and the budget as a whole. This has included examining the long-term budget outlook and the potential for a more long-term budget process. Since the Budget Committees enjoy jurisdiction over the budget process generally, they would likely be involved in any efforts to alter the current process. "], "subsections": []}, {"section_title": "The Budget Resolution and the Budget Reconciliation Process", "paragraphs": ["The budget resolution reflects an annual agreement between the House and Senate on spending and revenue levels for the upcoming fiscal year and at least four additional years. The budget resolution does not become law. Therefore, no money is spent or collected as a result of its adoption. Instead, it is an agreement between the House and Senate meant to assist Congress in considering an overall budget plan. Once agreed to by both chambers in the exact same form, the budget resolution creates parameters that may be enforced in two primary ways: (1) by points of order and (2) by using the budget reconciliation process."], "subsections": [{"section_title": "Enforcement through Points of Order", "paragraphs": ["Once the budget resolution has been agreed to by both chambers, certain levels contained in it are enforceable through points of order. This means that if legislation is being considered on the House or Senate floor that would violate certain levels contained in the budget resolution, a Member may raise a point of order against the consideration of that legislation. ", "The Budget Act requires that the budget resolution include the following budgetary levels for the upcoming fiscal year and at least four additional years (often referred to as out years): total spending, total revenues, the surplus/deficit, new spending for each major functional category, the public debt, and (in the Senate only) Social Security spending and revenue levels. The Budget Act also requires that the aggregate amounts of spending recommended in the budget resolution be allocated among committees. "], "subsections": []}, {"section_title": "Enforcement through the Budget Reconciliation Process", "paragraphs": ["While points of order can be effective in enforcing the budgetary goals outlined in the budget resolution, they can be raised against legislation only when it is pending on the House or Senate floor. Moreover, points of order cannot limit direct spending or revenue levels resulting from current law. Often, for the budgetary levels in the budget resolution to be achieved, Congress must pass legislation to alter the levels of revenue and/or direct spending resulting from existing law. In this situation, Congress seeks to reconcile the levels of direct spending and revenue under existing law with those budgetary levels expressed in the budget resolution. To assist in this process, the budget reconciliation process allows special consideration of legislation that would accomplish those budgetary levels expressed in the budget resolution.", "If Congress intends to use the reconciliation process, reconciliation directives must be included in the annual budget resolution. These directives instruct individual committees in the House and Senate to develop and report legislation that would change laws within their jurisdiction related to direct spending, revenue, or the debt limit. Such reconciliation legislation is then eligible to be considered under special expedited procedures in both the House and Senate. These procedures are especially important in the Senate as they include a limit on debate time. This means the legislation does not require the support of three-fifths of Senators to bring debate to a close. ", "Since 1980, Congress has sent the President 25 reconciliation acts, 21 of which were signed into law. Reconciliation has most often been used to enact legislation that was projected to reduce deficits. For example, between 1981 and 1984, four reconciliation bills were enacted that were each projected to decrease the deficit. Reconciliation legislation can be used to make policy changes that are temporary or permanent, therefore affecting the long-term budget. For a brief description of each reconciliation bill enacted into law, see CRS Report R40480, Budget Reconciliation Measures Enacted Into Law: 1980-2017 , by Megan S. Lynch.", "While the reconciliation process has been used to enact legislation that was projected to increase the net deficit, a Senate rule (known as the Byrd rule) prohibits reconciliation legislation from increasing the net deficit outside the \"budget window.\" (The budget window is the period covered by the underlying budget resolution and recently has spanned 10 years. )"], "subsections": []}]}, {"section_title": "Additional Rules and Points of Order", "paragraphs": ["The House and Senate have many additional budget-related points of order that seek to restrict or prohibit consideration of different types of budgetary legislation, some of which have long-term implications. These points of order are found in various places such as the Budget Act, House and Senate standing rules, and past budget resolutions.", "For example, the House and Senate have pay-as-you-go (PAYGO) rules that prohibit the consideration of direct spending or revenue legislation that is projected to increase the deficit in either of two time periods: (1) the period consisting of the current fiscal year, the budget year, and the four ensuing fiscal years following the budget year and (2) the period consisting of the current fiscal year, the budget year, and the ensuing nine fiscal years following the budget year. ", "Additionally, in the Senate, a rule exists that is often referred to as the \"long-term deficit point of order.\" It prohibits the consideration of legislation that would cause a net increase in deficits of more than $5 billion in any of the four consecutive 10-year periods beginning after the upcoming 10 years. Previously, the House had a similar rule that prohibited consideration of legislation that would cause a net increase in mandatory spending in excess of $5 billion during the same period. The House rule is no longer in effect. "], "subsections": []}, {"section_title": "Additional Budget Enforcement Mechanisms Currently in Effect", "paragraphs": ["In addition to points of order, there are other types of budget enforcement mechanisms that seek to restrict or prohibit the enactment of budgetary legislation over the long term. "], "subsections": [{"section_title": "Legal Limits on Annual Discretionary Spending", "paragraphs": ["The Budget Control Act of 2011 (BCA; P.L. 112-25 ) established statutory limits on discretionary spending for a 10-year period ( FY2012-FY2021 ) . (S imilar discretionary spending limits were in effect between FY1991 and FY2002.) The BCA sets separate annual limits for defense discretionary and nondefense discretionary spending. The defense category consists of discretionary spending in budget function 050 (national defense) only. The nondefense category includes discretionary spending in all other budget functions. If discretionary appropriations are enacted that exceed a statutory limit for a fiscal year, across-the-board reductions (i.e., sequestration) of nonexempt budgetary resources are triggered to eliminate the excess spending within the applicable category. "], "subsections": []}, {"section_title": "Statutory PAYGO", "paragraphs": ["In February 2010, the Statutory Pay-As-You-Go Act of 2010 ( P.L. 111-139 ) was enacted establishing a budget enforcement mechanism commonly referred to as \"Statutory PAYGO.\" Statutory PAYGO is generally intended to discourage enactment of legislation that is projected to increase the on-budget deficit over five and 10 years. ", "To enforce Statutory PAYGO, OMB is required to record the budgetary effects of newly enacted revenue and direct spending legislation over the course of a year. After the end of a congressional session, OMB is required to issue an annual PAYGO report noting whether a debit has been recorded for the current budget year. If no such debit is found, no action occurs. If a debit is found, however, the President must issue a sequestration order, which automatically implements across-the-board cuts to non-exempt direct spending programs to compensate for the amount of the debit. "], "subsections": []}]}, {"section_title": "Selected Budget Enforcement Related Mechanisms No Longer in\u00c2 Effect", "paragraphs": ["While the following budget related mechanisms are no longer in effect, they provide insight into Congress's past budget process reform efforts and the desire for long-term budgeting."], "subsections": [{"section_title": "Statutory Deficit Limits", "paragraphs": ["In 1985, the Balanced Budget and Emergency Deficit Control Act ( P.L. 99-177 )\u00e2\u0080\u0094referred to as the Gramm-Rudman-Hollings Act\u00e2\u0080\u0094employed budget process mechanisms in an attempt to force Congress and the President to balance the budget within a six-year period by specifying annual deficit limits for each fiscal year (1986-1991). The act required that both the President and Congress adhere to the deficit limits when developing their budget plans. The act did not specify what policy changes should be made to achieve deficit reduction, leaving Congress and the President to negotiate over possible revenue increases and spending decreases. To enforce the specified deficit limits, the act set forth a specific process for the cancellation of spending by sequestration in the event that the deficit limits were breached. ", "These deficit targets and related enforcement mechanism were amended by the Balanced Budget and Emergency Deficit Control Act of 1987 ( P.L. 100-119 ) and then were fundamentally revised by the Budget Enforcement Act of 1990 ( P.L. 101-508 ), which replaced the focus on deficit targets under Gramm-Rudman-Hollings with a two-pronged approach to budgetary enforcement: the implementation of PAYGO procedures to control new direct spending and revenue legislation and discretionary spending limits to control the level of discretionary spending. For more information, see CRS Report R41901, Statutory Budget Controls in Effect Between 1985 and 2002 , by Megan S. Lynch."], "subsections": []}, {"section_title": "The Joint Select Committee on Deficit Reduction (111th Congress)", "paragraphs": ["The BCA created a Joint Select Committee on Deficit Reduction. The committee comprised 12 Members from the House and Senate\u00e2\u0080\u0094three chosen by each of the chambers' party leaders. The committee was instructed to develop legislation to reduce the budget deficit by at least $1.5 trillion over the 10-year period FY2012-FY2021. Legislation reported by the committee would then be eligible to be considered under special expedited procedures in both the House and Senate. These procedures are especially important in the Senate since they include a limit on debate time. This means the legislation does not require the support of three-fifths of Senators to bring debate to a close.", "The BCA stipulated that if a measure meeting specific requirements was not enacted by January 15, 2012, then an automatic process would be triggered to enforce the budgetary goal established for the committee. The committee did not reach agreement on such legislation, and while the committee is no longer in effect, the automatic process triggered by the lack of enactment still remains. This comprises annual downward adjustments of the discretionary spending limits (described above) and sequester of nonexempt mandatory spending programs through FY2027."], "subsections": []}, {"section_title": "The Joint Select Committee on Budget and Appropriations Process Reform (115th Congress)", "paragraphs": ["The Bipartisan Budget Act of 2018 ( P.L. 115-123 ) created the Joint Select Committee on Budget and Appropriations Process Reform. The committee comprised 16 Members from the House and Senate\u00e2\u0080\u0094four chosen by each of the chambers' party leaders. The committee was tasked with formulating recommendations and legislative language to \"significantly reform the budget and appropriations process.\" ", "The committee held a markup on draft legislation that concluded on November 29, 2018. The principal recommendation in the draft provided that the budget resolution would be adopted for a two-year cycle rather than the current annual cycle. The committee ultimately did not vote to report the bill as amended, and it was never considered by the full house."], "subsections": []}]}]}]}}
{"id": "R45992", "title": "The Emoluments Clauses and the Presidency: Background and Recent Developments", "released_date": "2019-11-05T00:00:00", "summary": ["Recent litigation involving the President has raised legal issues concerning formerly obscure constitutional provisions that prohibit the acceptance or receipt of \"emoluments\" in certain circumstances. First, the Foreign Emoluments Clause (Article I, Section 9, Clause 8 of the Constitution) prohibits any person \"holding any Office of Profit or Trust under\" the United States from accepting \"any present, Emolument, Office, or Title, of any kind whatever\" from a foreign government unless Congress consents. Second, the Domestic Emoluments Clause (Article II, Section 1, Clause 7) prohibits the President from receiving \"any other Emolument [beyond a fixed salary] from the United States, or any of them.\" These two provisions (collectively, the Emoluments Clauses) have distinct, but related, purposes. The purpose of the Foreign Emoluments Clause is to prevent corruption and limit foreign influence on federal officers. The Clause grew out of the Framers' experience with the European custom of gift-giving to foreign diplomats, which the Articles of Confederation prohibited. The purpose of the Domestic Emoluments Clause is to preserve the President's independence by preventing the legislature and the states from exerting influence over him \"by appealing to his avarice.\"", "An important threshold issue in examining the Emoluments Clauses is determining who is subject to their terms. The scope of the Domestic Emoluments Clause is clear: it applies to \"[t]he President.\" The scope of the Foreign Emoluments Clause is less clear. By its terms, the Clause applies to any person holding an \"Office of Profit or Trust under\" the United States. The prevailing view is that this language reaches only federal, and not state, officeholders. According to the Department of Justice's Office of Legal Counsel (OLC), which has a developed body of opinions on the Foreign Emoluments Clause, offices \"of profit\" include those that receive a salary, while offices \"of trust\" require discretion, experience, and skill. There is some disagreement over whether elected federal officers, such as the President, are subject to the Foreign Emoluments Clause. Some legal scholars have argued that, as a matter of original public meaning, the Foreign Emoluments Clause reaches only appointed officers (and not elected officials). Other legal scholars dispute that argument, however, and OLC has presumed that the Foreign Emoluments Clause applies to the President. A recent district court opinion on this issue came to the same conclusion.", "Another key disputed issue over the scope of the Emoluments Clauses is what constitutes an \"emolument.\" This question has divided legal scholars, and federal courts have only recently addressed the issue. Debate has largely centered on whether the Emoluments Clauses restrict private, arm's-length market transactions between covered officials and governments, or whether the Clauses are limited to office- or employment-based compensation. For its part, OLC has at times appeared to adopt a fact-specific, functional view of the Clauses, focusing on the purpose and potential effect of the specific payments or benefits at issue as they relate to the Clauses' goals of limiting influence on the President and federal officers. The only two courts to decide the issue adopted a broad definition of \"emolument\" as reaching any benefit, gain, or advantage of more than de minimis value, but those decisions are not final.", "Courts are divided over whether the Emoluments Clauses may be enforced through civil litigation. Among other things, the doctrine of standing may present a significant limitation on the ability of public officials or private parties to seek judicial enforcement of the Emoluments Clauses. Standing, grounded in Article III of the Constitution, requires a plaintiff to identify a personal injury (known as an \"injury-in-fact\") that is actual or imminent, concrete, and particularized. The injury must also be \"fairly traceable\" to allegedly unlawful conduct of the defendant and \"likely to be redressed by the requested relief.\" Different plaintiffs in ongoing Emoluments Clause cases have relied on various theories to support standing, with mixed results. States and private parties, including business competitors to an office holder, have asserted injuries in the form of increased competition and loss of business from the alleged constitutional violations. Some Members of Congress have relied on the alleged deprivation of their opportunity to vote on the acceptance of emoluments under the Foreign Emoluments Clause to support their standing to sue. The lower courts have reached different conclusions on these standing issues, and the Supreme Court has yet to weigh in on the matter. If the courts lack jurisdiction to enforce the Emoluments Clauses, the political process would be the remaining avenue to enforce the provisions, such as through legislation or political pressure. The adequacy of those options is, however, disputed."], "reports": {"section_title": "", "paragraphs": ["T he Constitution contains three provisions that mention the term \"emolument\": ", "1. The Foreign Emoluments Clause . Article I, Section 9, Clause 8 provides that \"no Person holding any Office of Profit or Trust under [the United States], shall, without the Consent of Congress, accept of any present, Emolument, Office, or Title, of any kind whatever, from any King, Prince, or foreign State\"; 2. The Domestic Emoluments Clause . Article II, Section 1, Clause 7 provides that \"[t]he President shall, at stated Times, receive for his Services, a Compensation, which shall neither be encreased nor diminished during the Period for which he shall have been elected, and he shall not receive within that Period any other Emolument from the United States, or any of them\"; and 3. The Ineligibility Clause. Article I, Section 6, Clause 2 provides (among other things) that no Member of Congress shall \"be appointed\" during his or her term \"to any civil Office under the Authority of the United States, which shall have been created, or the Emoluments whereof shall have been encreased during such time[.]\" ", "The first two of these Clauses are the focus of this report. For most of their history, the Foreign and Domestic Emoluments Clauses (collectively, the Emoluments Clauses or the Clauses) were little discussed and largely unexamined by the courts. Recent litigation involving the President, however, has led to multiple federal court decisions more fully addressing the Clauses' scope and application. ", "This report accordingly provides an overview of the Emoluments Clauses as they relate to the President, focusing on the legal issues that have been central to the recent litigation. More specifically, this report discusses (1) the history and purpose of the Clauses; (2) whether the President is a person holding an \"Office of Profit or Trust under [the United States]\" for purposes of the Foreign Emoluments Clause; (3) the scope of the Emoluments Clauses, focusing specifically on disputes over the breadth of the term \"emolument\"; and (4) how the Clauses may be enforced."], "subsections": [{"section_title": "History and Purpose of the Emoluments Clauses", "paragraphs": [], "subsections": [{"section_title": "Founding Era", "paragraphs": [], "subsections": [{"section_title": "Foreign Emoluments Clause", "paragraphs": ["The Foreign Emoluments Clause's basic purpose is to prevent corruption and limit foreign influence on federal officers. At the Constitutional Convention, Charles Pinckney of South Carolina introduced the language that became the Foreign Emoluments Clause based on \"the necessity of preserving foreign Ministers & other officers of the U.S. independent of external influence.\" The Convention approved the Clause unanimously without noted debate. During the ratification debates, Edmund Randolph of Virginia\u00e2\u0080\u0094a key figure at the Convention\u00e2\u0080\u0094explained that the Foreign Emoluments Clause was intended to \"prevent corruption\" by \"prohibit[ing] any one in office from receiving or holding any emoluments from foreign states.\"", "The Clause reflected the Framers' experience with the then-customary European practice of giving gifts to foreign diplomats. Following the example of the Dutch Republic, which prohibited its ministers from receiving foreign gifts in 1651, the Articles of Confederation provided that \"any person holding any office of profit or trust under the United States, or any of them\" shall not \"accept of any present, emolument, office, or title of any kind whatever, from any king, prince, or foreign state.\" The Foreign Emoluments Clause largely tracks this language from the Articles, although there are some differences.", "During the Articles period, American diplomats struggled with how to balance their legal obligations and desire to avoid the appearance of corruption, against prevailing European norms and the diplomats' wish to not offend their host country. A well-known example from this period, which appears to have influenced the Framers of the Emoluments Clause, involved the King of France's gift of an opulent snuff box to Benjamin Franklin. Concerned that receipt of this gift would be perceived as corrupting and violate the Articles of Confederation, Franklin sought (and received) congressional approval to keep the gift . Following this precedent, the Foreign Emoluments Clause prohibits federal officers from accepting foreign presents, offices, titles, or emoluments, unless Congress consents."], "subsections": []}, {"section_title": "Domestic Emoluments Clause", "paragraphs": ["The Domestic Emoluments Clause's purpose is to preserve the President's independence from Congress and state governments. To accomplish this end, the Clause contains two key provisions. First, it provides that the President shall receive a compensation for his services, which cannot be increased or decreased during his term, thus preventing Congress from using its control over the President's salary to exert influence over him. To preserve presidential independence further, the Clause provides that, apart from this fixed salary, the President shall not receive \"any other Emolument\" from the United States or any state government. In light of its purpose, the Domestic Emoluments Clause\u00e2\u0080\u0094unlike the Foreign Emoluments Clause\u00e2\u0080\u0094does not permit Congress to assent to the receipt of otherwise prohibited emoluments from the state or federal governments.", "The Domestic Emoluments Clause, which drew upon similar provisions in state constitutions, received little noted debate at the Constitutional Convention. Its meaning, however, was elucidated by Alexander Hamilton in The Federalist No. 73 . Hamilton wrote that the Domestic Emoluments Clause was designed to isolate the President from potentially corrupting congressional influence: because the President's salary is fixed \"once for all\" each term, the legislature \"can neither weaken his fortitude by operating on his necessities, nor corrupt his integrity by appealing to his avarice.\" Similarly, Hamilton explained that because \"[n]either the Union, nor any of its members, will be at liberty to give . . . any other emolument,\" the President will \"have no pecuniary inducement to renounce or desert the independence intended for him by the Constitution.\" Other Framers echoed this sentiment during the ratification debates."], "subsections": []}]}, {"section_title": "Nineteenth and Twentieth Century Practice", "paragraphs": ["The Foreign Emoluments Clause provides a role for Congress in determining the propriety of foreign emoluments, in that receipt of an emolument otherwise prohibited by the Clause is permitted with the consent of Congress. Under this authority, Congress has in the past provided consent to the receipt of particular presents, emoluments, and decorations through public or private bills, or by enacting general rules governing the receipt of gifts by federal officers from foreign governments. For example, in 1966, Congress enacted the Foreign Gifts and Decorations Act, which provided general congressional consent for foreign gifts of minimal value, as well as conditional authorization for acceptance of gifts on behalf of the United States in some cases.", "Several Presidents in the 19th century\u00e2\u0080\u0094such as Andrew Jackson, Martin Van Buren, John Tyler, and Benjamin Harrison \u00e2\u0080\u0094notified Congress of foreign presents that they had received, and either placed the gifts at its disposal or obtained consent to their receipt. Other 19th century Presidents treated presents that they received as \"gifts to the United States, rather than as personal gifts.\" Thus, in one instance, President Lincoln accepted a foreign gift on behalf of the United States and then deposited it with the Department of State.", "In the 20th century, some Presidents have sought the advice of the Department of Justice's Office of Legal Counsel (OLC) on whether acceptance of particular honors or benefits would violate the Emoluments Clauses. Three such OLC opinions addressed whether (1) President Kennedy's acceptance of honorary Irish citizenship would violate the Foreign Emoluments Clause; (2)\u00c2\u00a0President Reagan's receipt of retirement benefits from the State of California would violate the Domestic Emoluments Clause; and (3)\u00c2\u00a0President Obama's acceptance of the Nobel Peace Prize would violate the Foreign Emoluments Clause."], "subsections": []}]}, {"section_title": "Persons Subject to the Emoluments Clauses", "paragraphs": ["An important threshold issue in examining the Emoluments Clauses is determining who is subject to their terms. The scope of the Domestic Emoluments Clause is clear: it applies to \"[t]he President.\" The Clause prohibits the President from receiving emoluments from state or federal governments, aside from his fixed federal salary. The Foreign Emoluments Clause applies to any person holding an \"Office of Profit or Trust under [the United States].\" OLC, which has developed a body of opinions on the Emoluments Clauses, has opined that the President \"surely\" holds an \"Office of Profit or Trust\" under the Constitution. OLC opinions are generally considered binding within the executive branch.", "There has been significant academic debate about whether OLC's conclusion comports with the original public meaning of the Foreign Emoluments Clause. Some legal scholars have argued that the Foreign Emoluments Clause does not apply to elected officials such as the President, but only to certain appointed federal officers. Other scholars support OLC's view that the President holds an office of profit and trust under the United States under the original meaning of the Foreign Emoluments Clause.", "In addition to textual and structural arguments, these scholars debate the significance of Founding-era historical evidence. To support the view that the Foreign Emoluments Clause does not apply to the President, academics have observed that, among other things, (1) a 1792 list produced by Alexander Hamilton of \"every person holding any civil office or employment under the United States\" did not include elected officials such as the President and Vice President; (2)\u00c2\u00a0George Washington accepted gifts from the Marquis de Lafayette and the French Ambassador while President without seeking congressional approval; and (3)\u00c2\u00a0Thomas Jefferson similarly received and accepted diplomatic gifts from Indian tribes and foreign nations, such as a bust of Czar Alexander I from the Russian government, without seeking congressional approval. On the other side of the debate, scholars have observed that, among other things, (1) during Virginia's ratification debates, Edmund Randolph directly stated that the Foreign Emoluments Clause applies to the President; (2) George Mason, another Framer, articulated a similar view in those same debates; and (3) Alexander Hamilton, discussing the dangers of foreign influence on republics in The Federalist No. 22 , stated that this concern extends to a republic's elected officials.", "Beyond examining contemporaneous historical evidence of the Foreign Emoluments Clause's original public meaning, other evidence (such as text, precedent, and settled practice) is often used\u00e2\u0080\u0094at least by some jurists\u00e2\u0080\u0094to inform constitutional meaning and interpretation. As a textual matter, both the Constitution itself and contemporaneous sources refer to the Presidency as an \"Office.\" The President receives compensation for his service in office (that is, \"Profit\") and is tasked with many important constitutional duties (that is, \"Trust\"). Furthermore, as discussed earlier, historical practice from the 19th and 20th centuries could support the view that the President is subject to the Foreign Emoluments Clause. Unlike Washington's and Jefferson's actions, several 19th century Presidents notified Congress or sought congressional approval upon receipt of gifts by foreign governments. Finally, the common practice among recent Presidents of placing their financial interests in a blind trust or its equivalent could reflect a concern that presidential financial holdings may implicate the Foreign Emoluments Clause. ", "The parties in recent litigation involving the Emoluments Clauses have not disputed that the Foreign Emoluments Clause applies to the President. A single district court decision has reached the merits of this issue. Weighing the evidence discussed above, that court held that \"the text, history, and purpose of the Foreign Emoluments Clause, as well as executive branch precedent interpreting it, overwhelmingly support the conclusion\" that the Foreign Emoluments Clause applies to the President. This case is currently on appeal before the full Fourth Circuit. "], "subsections": []}, {"section_title": "The Meaning of \"Emolument\"", "paragraphs": ["A key disputed issue regarding the scope of the Emoluments Clauses is what constitutes an \"emolument.\" This question has divided legal scholars and has only recently been addressed by any federal courts.", "Scholars, courts, and executive branch agencies have offered several potential definitions of \"emolument\":", "1. Office-related definitions . Black's Law Dictionary defines an \"emolument\" as an \"advantage, profit, or gain received as a result of one's employment or one's holding of office.\" Some scholars argue that this employment- or office-centric definition of the term is the definition encompassed by the Emoluments Clauses, meaning that the Clauses prohibit covered officials from receiving compensation \"for the personal performance of services\" as an officer or employee but do not bar \"ordinary business transactions\" between a covered official and government. 2. Any \"profit, gain, advantage, or benefit . \" Others argue that the term \"emolument\" is broader in scope, applying to any profit, gain, advantage, or benefit. Under this broader conception, even \"ordinary, fair market value transactions\" between a covered official and foreign or domestic governments would be prohibited. Two recent district court decisions adopted this broader definition of \"emolument.\" 3. Functional or purpose-based d ef initions. Both the Department of Justice's OLC and the Comptroller General of the United States, on behalf of the Government Accountability Office (GAO), have issued opinions on whether the acceptance of particular payments, benefits, or positions would implicate the Emoluments Clauses. These opinions have at times appeared to adopt a fact-specific, functional view of the Clauses, focusing on the purpose and potential effect of the specific payments or benefits at issue as they relate to the Clauses' goals of limiting influence on the President and federal officers. The relevant assessment in some of these opinions has appeared to be whether the payments or benefits are intended to or could \"influence . . . the recipient as an officer of the United States\" under the totality of the circumstances. At least one commentator has asserted that the OLC and GAO opinions support a middle view that Presidents or other federal officers may receive \"certain fixed benefits\" without those benefits being considered emoluments so long as they are not \"subject to foreign or domestic government manipulation or adjustment in connection with\" the office.", "Debates over the scope of the Clauses have largely centered on their text, their history and purpose, and historical practice. With respect to text, for instance, proponents of a broad definition emphasize the use of the word \"any\" in both Clauses and the phrase \"any kind whatever\" in the Foreign Emoluments Clause. They also contrast those provisions with the limiting term \"whereof\" that links emoluments to \"civil Office\" in the Ineligibility Clause (the provision that limits the ability of Members of Congress to hold dual positions). But proponents of a narrower, office- or employment-limited definition note that the word \"any\" in the Clauses may simply be read as extending coverage to multiple forms of emoluments (beyond just monetary remuneration). They further assert that the use of \"emolument\" in the Ineligibility Clause is clearly tied to an office-based definition and supports applying the same definition to the other provisions. As for the Clauses' history and purpose, both sides point to dictionary definitions and other uses of the word (including by Framers) contemporaneous with the Constitution's drafting to support their preferred definition. Proponents of a broad definition also argue that statements about the general anti-corruptive purpose of the Clauses support reading it expansively, while proponents of an office- or employment-limited definition assert that the Clauses were the product of a \"balancing of values\" that included attracting candidates for federal service who may have had conflicting commercial interests. As for the corpus of OLC and GAO opinions interpreting the Clauses, proponents of the broader and narrower definitions both cite opinions that they argue support their favored definitions.", "In 2018 and 2019, two federal district courts substantively addressed the Emoluments Clauses' scope for the first time. Both courts concluded that the term \"emolument\" as used in the Clauses \"is broadly defined as any profit, gain, or advantage.\" As to the Clauses' text, the courts found significant the use of \"expansive modifiers\" like \"any other\" and \"any kind whatever,\" and rejected the proposition that the term's office-related use in the Ineligibility Clause should control its use in the other Clauses. With respect to the Clauses' history and purpose, the courts, while acknowledging that broader and narrower definitions of \"emolument\" both existed at the time of ratification, found the weight of the historical evidence and the Clauses' \"broad anti-corruption\" purpose supported the more expansive definition. Finally, the courts viewed executive branch precedent and practice as \"overwhelmingly consistent with .\u00c2\u00a0.\u00c2\u00a0. [an] expansive view of the meaning of the term 'emolument,'\" observing that \"OLC pronouncements repeatedly cite the broad purpose of the Clauses and the expansive reach of the term 'emolument.'\"", "The recent court decisions construing the Emoluments Clauses are not final, however. In fact, as discussed below, one of the decisions was reversed by a panel of the Fourth Circuit on a separate issue regarding the standing of the plaintiffs to sue, and the full Fourth Circuit has agreed to consider the district court's rulings. The other decision has been certified for an immediate appeal to the District of Columbia Circuit. Thus, the import of these decisions is uncertain. "], "subsections": []}, {"section_title": "Enforcement of the Clauses", "paragraphs": ["Separate from issues regarding the scope of the Emoluments Clauses is how the provisions' mandates are enforced, including whether and to what extent the federal courts and Congress have a role in addressing violations of the Clauses. A principal hurdle in recent litigation involving the President has been the doctrine of standing. Standing is a threshold limitation concerning whether the person or entity suing in federal court has a \"right to make a legal claim or seek judicial enforcement of a duty or right.\" The limitation includes a constitutional component stemming from Article III of the U.S. Constitution, which limits the exercise of federal judicial power to \"Cases\" or \"Controversies.\" The Supreme Court has interpreted this \"case-or-controversy limitation\" to require, among other things, that a litigant have \"a personal stake in the outcome of the controversy\" before the court. At a minimum, a plaintiff must establish that he or she has suffered a personal injury (often called an \"injury-in-fact\") that is actual or imminent and concrete and particularized. In other words, the injury cannot be \"abstract,\" must affect the plaintiff in a \"personal and individual way,\" and must actually exist or at least be \"certainly impending\" rather than merely possible in the future. The plaintiff must also show \"a sufficient causal connection between the injury and the conduct complained of\" (causation) and \"a likelihood that the injury will be redressed by a favorable decision\" (redressability). ", "Recent lawsuits over the Emoluments Clauses have been filed in three federal courts by (1)\u00c2\u00a0private parties who argue they compete for business with properties related to the alleged violations of the Clauses, as well as a public interest organization (the \"SDNY litigation\"); (2)\u00c2\u00a0the State of Maryland and the District of Columbia (the \"Maryland litigation\"); and (3) over 200 Members of Congress (the \"Congressional litigation\"). Each set of plaintiffs implicate distinct legal issues and precedents related to standing. Private-party competitor plaintiffs rely on the notion of \"competitor standing,\" which holds that an economic actor may have standing to challenge unlawful action that benefits a direct competitor in a way that increases competition in the relevant market. State plaintiffs also rely on a competitor standing theory and additionally assert harms to certain sovereign and \"quasi-sovereign\" interests of the state related to tax revenue, diminution of their sovereign authority, and the economic well-being of state residents in general. Finally, Members of Congress assert standing stemming from the alleged deprivation of their constitutionally prescribed opportunity to vote on the permissibility of particular emoluments under the Foreign Emoluments Clause, which implicates a unique set of standing principles that apply specifically to legislative plaintiffs. More broadly, regardless of the status or classification of the plaintiffs, the fact that a lawsuit involving the Emoluments Clauses seeks a court ruling on the constitutionality of the conduct of an official within another branch of the federal government means that courts must conduct an \"especially rigorous\" standing inquiry given underlying separation-of-powers concerns.", "Attempts by these various plaintiffs to sue for alleged violations of the Emoluments Clauses have thus far met with mixed results. With respect to private-party competitor plaintiffs, the district court in the SDNY litigation concluded that several such plaintiffs lacked standing because it was \"wholly speculative\" that any loss of business or increase in competition could be traced to alleged violations of the Emoluments Clauses rather than \"government officials' independent desire to patronize [the] businesses\" allegedly involved in those violations based on factors such as service and location. But the Second Circuit recently reversed the district court's ruling regarding the competitor plaintiffs, concluding that \"a plaintiff-competitor who alleges a competitive injury caused by a defendant's unlawful conduct that skewed the market in another competitor's favor [has standing] notwithstanding other possible, or even likely, causes for the benefit going to the plaintiff's competition.\" ", "As for state plaintiffs, a different district court concluded in the Maryland litigation that the State of Maryland and the District of Columbia (D.C.) had standing to sue as competitors based on their interests, along with the interests of their citizens, in hotels and event spaces that competed with a hotel in D.C. related to the alleged unconstitutional conduct. The court reasoned that, based on specific factual allegations regarding diversion of business to that hotel, the plaintiffs were \"placed at a competitive disadvantage\" because of violations of the Clauses that \"unfairly skew[ed] the hospitality market\" against them. Yet a panel of the Fourth Circuit reversed this decision, concluding that the theory of standing hinged on the proposition that government customers were patronizing the relevant hotel \"because the [h]otel distributes profits or dividends\" in violation of the Clauses \"rather than due to any of the [h]otel's other characteristics.\" In the panel's view, such a proposition required \"speculation into the subjective motives of independent actors . . . not before the court, undermining a finding of causation.\" The Fourth Circuit panel's decision has itself now been vacated, however, with the full Fourth Circuit agreeing to hear the case. ", "Finally, as to Members of Congress, the district court in the Congressional litigation determined in 2018 that over 200 Members had standing to sue under the Foreign Emoluments Clause based on the deprivation of their \"opportunity to exercise their constitutional right to vote on whether to consent prior to . . . acceptance of prohibited emoluments.\" Faced with Supreme Court precedent indicating that individual legislators generally lack standing to sue for institutional injuries that amount to \"abstract dilution of institutional legislative power,\" but may have standing when their votes on specific items \"have been completely nullified,\" the district court concluded that the Members alleging violations of the Foreign Emoluments Clause fell into the latter category. Central to the district court's decision in the Congressional litigation was its view that the Member-plaintiffs lacked an adequate legislative remedy for the alleged violations without court intervention. According to the court, although Congress as a whole could pass \"legislation on the emoluments issue\" to consent to or reject perceived emoluments, the political process would do nothing to address the deprivation of the Members' opportunity to give advance approval or disapproval of particular emoluments in the first instance. ", "As with the court rulings on the definition of the term \"emolument,\" the judicial decisions on standing to enforce the Emoluments Clauses are all subject to further review by the respective circuit courts. It is thus possible that the outcomes in some or all the opinions just described could change. If the effective split between the Second and Fourth Circuits on the viability of competitor standing theories as they relate to alleged violations of the Emoluments Clauses endures, Supreme Court review is also possible. ", "Beyond standing, other doctrines may present potential roadblocks to judicial enforcement of the Clauses. For instance, though its continued vitality is questionable, the Supreme Court has traditionally applied a \"zone of interests\" test as a prudential aspect of the standing inquiry, which \"denies a right of review if the plaintiff's interests are marginally related to or inconsistent with the purposes implicit in the constitutional provision\" at issue. Applying this test in the context of the Emoluments Clauses, the district court in the SDNY litigation involving private competitors concluded that such competitors fell outside the zone of interests of the Clauses, because the Emoluments Clauses stemmed from \"concern with protecting the . . . government from corruption and undue influence\" and were not \"intended . . . to protect anyone from competition.\" Another potential barrier is the political question doctrine, a separation-of-powers-based limitation on the ability of courts to hear disputes where there is, among other things, a \"textually demonstrable constitutional commitment of the issue to a coordinate political department; or a lack of judicially discoverable and manageable standards for resolving it.\" In the SDNY litigation, the district court concluded that Congress's authority to \"consent to violations\" of the Foreign Emoluments Clause meant that Congress, rather than the judiciary, would be \"the appropriate body to determine whether\" the alleged conduct \"infringes on that power.\" ", "Reversing both these rulings, however, the Second Circuit recently concluded that (1) \"a plaintiff who sues to enforce a law that limits the activity of a competitor satisfies the zone of interests test even though the limiting law was not motivated by an intention to protect entities such as plaintiffs from competition,\" and (2) the judiciary's responsibility to adjudicate alleged violations of the Constitution was not lessened by the \"mere possibility that Congress might grant consent\" to particular emoluments. The district courts in the Maryland litigation and the Congressional litigation likewise agreed that the zone of interests test and political question doctrine did not bar those suits. But like the other issues raised in recent litigation involving the Emoluments Clauses, further review of the application of these doctrines is possible. Ultimate resolution of the issues is thus uncertain and will likely depend on the nature of the plaintiff involved.", "If the courts lack jurisdiction to enforce the Emoluments Clauses, the political process would be the remaining avenue for enforcement. In this vein, Congress could seek to enforce the Emoluments Clauses through legislation, political pressure, or potentially impeachment and removal. For instance, given that the Foreign Emoluments Clause explicitly provides a role for Congress in evaluating the propriety of the receipt of foreign emoluments by federal officers, Congress may be empowered to create civil or criminal remedies for violations or establish prophylactic reporting requirements through legislation. Indeed, one bill from the 115th Congress would have required certain reports and divestiture of personal financial interests of the President posing a potential conflict of interest, among other things. Resolutions have also been introduced in the 115th and 116th Congresses objecting to perceived violations of the Foreign Emoluments Clause, as well as calling on the President to take certain actions based on alleged potential violations. That said, it is unclear whether legislative actions would provide an effective means to enforce the Emoluments Clauses against the President, given the possibility of veto and potential separation-of-powers objections. As noted above, the adequacy of these legislative options has been a central issue in the Congressional litigation as it relates to Members' standing, and the issue is subject to further review at the appellate level."], "subsections": []}]}}
{"id": "R40957", "title": "Unfunded Mandates Reform Act: History, Impact, and Issues", "released_date": "2019-05-22T00:00:00", "summary": ["The Unfunded Mandates Reform Act of 1995 (UMRA) culminated years of effort by state and local government officials and business interests to control, if not eliminate, the imposition of unfunded intergovernmental and private-sector federal mandates. Advocates argued the statute was needed to forestall federal legislation and regulations that imposed obligations on state and local governments or businesses that resulted in higher costs and inefficiencies. Opponents argued that federal mandates may be necessary to achieve national objectives in areas where voluntary action by state and local governments and business failed to achieve desired results.", "UMRA provides a framework for the Congressional Budget Office (CBO) to estimate the direct costs of mandates in legislative proposals to state and local governments and to the private sector, and for issuing agencies to estimate the direct costs of mandates in proposed regulations to regulated entities. Aside from these informational requirements, UMRA controls the imposition of mandates only through a procedural mechanism allowing Congress to decline to consider unfunded intergovernmental mandates in proposed legislation if they are estimated to cost more than specified threshold amounts. UMRA applies to any provision in legislation, statute, or regulation that would impose an enforceable duty upon state and local governments or the private sector. It does not apply to duties stemming from participation in voluntary federal programs; rules issued by independent regulatory agencies; rules issued without a general notice of proposed rulemaking; and rules and legislative provisions that cover individual constitutional rights, discrimination, emergency assistance, grant accounting and auditing procedures, national security, treaty obligations, and certain elements of Social Security. In most instances, UMRA also does not apply to conditions of federal assistance.", "State and local government officials argue that UMRA's coverage should be broadened, with special consideration given to including conditions of federal financial assistance. During the 116th Congress, H.R. 300, the Unfunded Mandates Information and Transparency Act of 2019, would broaden UMRA's coverage to include both direct and indirect costs, such as foregone profits and costs passed onto consumers, and, when requested by the chair or ranking member of a committee, the prospective costs of legislation that would change conditions of federal financial assistance. The bill also would make private-sector mandates subject to a substantive point of order and remove UMRA's exemption for rules issued by most independent agencies. The House approved similar legislation during the 112th, 113th, 114th, and 115th Congresses.", "This report examines debates over what constitutes an unfunded federal mandate and UMRA's implementation. It focuses on UMRA's requirement that CBO issue written cost estimate statements for federal mandates in legislation, its procedures for raising points of order in the House and Senate concerning unfunded federal mandates in legislation, and its requirement that federal agencies prepare written cost estimate statements for federal mandates in rules. It also assesses UMRA's impact on federal mandates and arguments concerning UMRA's future, focusing on UMRA's definitions, exclusions, and exceptions that currently exempt many federal actions with potentially significant financial impacts on nonfederal entities. An examination of the rise of unfunded federal mandates as a national issue and a summary of UMRA's legislative history are provided in Appendix A. Citations to UMRA points of order raised in the House and Senate are provided in Appendix B."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "An Overview of UMRA, Its Origins, and Provisions", "paragraphs": [], "subsections": [{"section_title": "Overview", "paragraphs": ["The Unfunded Mandates Reform Act of 1995 (UMRA) established requirements for enacting certain legislation and issuing certain regulations that would impose enforceable duties on state, local, or tribal governments or on the private sector. UMRA refers to obligations imposed by such legislation and regulations as \"mandates\" (either \"intergovernmental\" or \"private sector,\" depending on the entities affected). The direct cost to affected entities of meeting these obligations are referred to as \"mandate costs,\" and when the federal government does not provide funding to cover these costs, the mandate is termed \"unfunded.\"", "UMRA incorporates numerous definitions, exclusions, and exceptions that specify what forms and types of mandates are subject to its requirements, termed \"covered mandates.\" Covered mandates do not include many federal actions with potentially significant financial impacts on nonfederal entities. This report's primary purpose is to describe the kinds of legislative and regulatory provisions that are subject to UMRA's requirements, and, on this basis, to assess UMRA's impact on federal mandates. The report also examines debates that occurred, both before and since UMRA's enactment, concerning what kinds of provisions UMRA ought to cover, and considers the implications of experience under UMRA for possible future revisions of its scope of coverage.", "This report also describes the requirements UMRA imposes on congressional and agency actions to establish covered mandates. For most legislation and regulations covered by UMRA, these requirements are only informational. For reported legislation that would impose covered mandates on the intergovernmental or private sectors, UMRA requires the Congressional Budget Office (CBO) to provide an estimate of mandate costs. Similarly, for regulations that would impose covered mandates on the intergovernmental or private sectors, UMRA requires that the issuing agency provide an estimate of mandate costs (although the specifics of the estimates required for legislation and for regulations differ somewhat). Also, solely for legislation that would impose covered intergovernmental mandates, UMRA establishes a point of order in each house of Congress through which the chamber can decline to consider the legislation. This report examines UMRA's implementation, focusing on the respective requirements for mandate cost estimates on legislation and regulations, and on the point of order procedure for legislation proposing unfunded intergovernmental mandates."], "subsections": []}, {"section_title": "Origin", "paragraphs": ["The concept of unfunded mandates rose to national prominence during the 1970s and 1980s primarily through the response of state and local government officials to changes in the nature of federal intergovernmental grant-in-aid programs and to regulations affecting state and local governments. Before then, the federal government had traditionally relied on the provision of voluntary grant-in-aid funding to encourage state and local governments to perform particular activities or provide particular services that were deemed to be in the national interest. These arrangements were viewed as reflecting, at least in part, the constitutional protections afforded state and local governments as separate, sovereign entities. During the 1970s and 1980s, however, state and local government advocates argued that a \"dramatic shift\" occurred in the way the federal government dealt with states and localities. Instead of relying on the technique of subsidization to achieve its goals, the federal government was increasingly relying on \"new, more intrusive, and more compulsory\" programs and regulations that required compliance under the threat of civil or criminal penalties, imposed federal fiscal sanctions for failure to comply with the programs' requirements, or preempted state and local government authority to act in the area. These new, more intrusive and compulsory programs and regulations came to be referred to as \"unfunded mandates\" on states and localities.", "State and local government advocates viewed these unfunded federal intergovernmental mandates as inconsistent with the traditional view of American federalism, which was based on cooperation, not compulsion. They argued that a federal statute was needed to forestall federal legislation and regulations that imposed obligations on state and local governments that resulted in higher costs and inefficiencies. UMRA's enactment in 1995 culminated years of effort by state and local government officials to control, if not eliminate, the imposition of unfunded federal mandates.", "Advocates of regulatory reform adapted the concept of unfunded mandates to their view that federal regulations often impose financial burdens on private enterprise. Critics of government regulation of business argued that these regulations impose unfunded mandates on the private sector, just as federal programs and regulations impose fiscal obligations on state and local governments. As a result, various business organizations subject to increased federal regulation came to support state and local government efforts to enact federal legislation to control unfunded federal intergovernmental mandates. Private-sector advocates argued that they, too, should be provided relief from what they viewed as burdensome federal regulations that hinder economic growth. Subsequently, proposals to control unfunded mandates that were developed in the early 1990s contained provisions addressing not only federal intergovernmental mandates, but federal private-sector mandates as well.", "During floor debate on legislation that became UMRA, sponsors of the measure emphasized its role in bringing \"our system of federalism back into balance, by serving as a check against the easy imposition of unfunded mandates.\" Opponents argued that federal mandates may be necessary to achieve national objectives in areas where voluntary action by state and local governments or business failed to achieve desired results. See Appendix A for a more detailed examination of the rise of unfunded federal mandates as a national issue and of UMRA's legislative history."], "subsections": []}, {"section_title": "Summary of UMRA's Provisions", "paragraphs": ["The congressional commitment to reshaping intergovernmental relations through UMRA is reflected in its eight statutory purposes:", "(1) to strengthen the partnership between the Federal Government and State, local, and tribal governments;", "(2) to end the imposition, in the absence of full consideration by Congress, of Federal mandates on State, local, and tribal governments without adequate Federal funding, in a manner that may displace other essential State, local, and tribal governmental priorities;", "(3) to assist Congress in its consideration of proposed legislation establishing or revising Federal programs containing Federal mandates affecting State, local, and tribal governments, and the private sector by\u2014(A) providing for the development of information about the nature and size of mandates in proposed legislation; and (B) establishing a mechanism to bring such information to the attention of the Senate and the House of Representatives before the Senate and the House of Representatives vote on proposed legislation;", "(4) to promote informed and deliberate decisions by Congress on the appropriateness of Federal mandates in any particular instance;", "(5) to require that Congress consider whether to provide funding to assist State, local, and tribal governments in complying with Federal mandates, to require analyses of the impact of private sector mandates, and through the dissemination of that information provide informed and deliberate decisions by Congress and Federal agencies and retain competitive balance between the public and private sectors;", "(6) to establish a point-of-order vote on the consideration in the Senate and House of Representatives of legislation containing significant Federal intergovernmental mandates without providing adequate funding to comply with such mandates;", "(7) to assist Federal agencies in their consideration of proposed regulations affecting State, local, and tribal governments, by\u2014(A) requiring that Federal agencies develop a process to enable the elected and other officials of State, local, and tribal governments to provide input when Federal agencies are developing regulations; and (B) requiring that Federal agencies prepare and consider estimates of the budgetary impact of regulations containing Federal mandates upon State, local, and tribal governments and the private sector before adopting such regulations, and ensuring that small governments are given special consideration in that process; and", "(8) to begin consideration of the effect of previously imposed Federal mandates, including the impact on State, local, and tribal governments of Federal court interpretations of Federal statutes and regulations that impose Federal intergovernmental mandates. ", "To achieve its purposes, UMRA's Title I established a procedural framework to shape congressional deliberations concerning covered unfunded intergovernmental and private-sector mandates. This framework requires CBO to estimate the direct mandate costs of intergovernmental mandates exceeding $50 million and of private-sector mandates exceeding $100 million (in any fiscal year) proposed in any measure reported from committee. It also establishes a point of order against consideration of legislation that contained intergovernmental mandates with mandate costs estimated to exceed the threshold amount. In addition, Title II requires federal administrative agencies, unless otherwise prohibited by law, to assess the effects on state and local governments and the private sector of proposed and final federal rules and to prepare a written statement of estimated costs and benefits for any mandate requiring an expenditure exceeding $100 million in any given year. All threshold amounts under these provisions are adjusted annually for inflation. In 2019, the threshold amounts are $82 million for intergovernmental mandates and $164 million for private sector mandates.", "In general, the requirements of Titles I and II apply to any provision in legislation, statute, or regulation that would impose an enforceable duty upon state and local governments or the private sector. However, UMRA does not apply to duties stemming from participation in voluntary federal programs, rules issued by independent regulatory agencies, or rules issued without a general notice of proposed rulemaking. Exceptions also exist for rules and legislative provisions that cover individual constitutional rights, discrimination, emergency assistance, grant accounting and auditing procedures, national security, treaty obligations, and certain elements of Social Security legislation. In most instances, UMRA also does not apply to conditions of federal assistance.", "UMRA's Title III also called for a review of federal intergovernmental mandates to be completed by the now-defunct U.S. Advisory Commission on Intergovernmental Relations (ACIR) within 18 months of enactment. ACIR completed a preliminary report on federal intergovernmental mandates in January 1996, but the final report was not released. Finally, UMRA's Title IV authorizes judicial review of federal agency compliance with Title II provisions."], "subsections": []}]}, {"section_title": "What Is an Unfunded Federal Mandate?", "paragraphs": ["One of the first issues Congress faced when considering unfunded federal mandate legislation was how to define the concept. For example, during a November 3, 1993, congressional hearing on unfunded mandate legislation, Senator Judd Gregg argued,", "Any bill reported out this committee [Governmental Affairs] should precisely define what constitutes an unfunded federal mandate.... An appropriate definition is crucial because it will drive almost everything else that occurs. Without a precise definition, endless litigation would likely ensue over what is and what is not an unfunded federal mandate. A true solution to the problem cannot allow it to become more cost-effective to pay the bills than to seek payment. Furthermore, the definition cannot be too restrictive. It would solve nothing to cut off one particular type of unfunded mandate, only to prompt Congressional use of another to accelerate.", "The difficulty Congress faced in defining the concept was that there were strong disagreements, among academics, practitioners, and elected officials, over how to define it. These disagreements appear motivated by concerns about which classes of costs incurred by state and local governments (or the private sector) should be identified and controlled for in the legislative or regulatory process. They have typically been conducted, however, as disputes about which classes of such costs are properly considered as obligatory requirements on the affected entities. The resulting focus on whether or not particular kinds of costs are \"mandatory\" has tended to obscure consideration of the core policy question concerning what kinds of costs should be subjected to informational requirements or procedural restrictions such as those that UMRA establishes."], "subsections": [{"section_title": "Competing Definitions", "paragraphs": ["In 1979, one set of federalism scholars defined unfunded federal intergovernmental mandates broadly as including \"any responsibility, action, procedure, or anything else that is imposed by constitutional, administrative, executive, or judicial action as a direct order or that is required as a condition of aid.\" In 1984, ACIR offered a rationale for defining unfunded federal intergovernmental mandates which excluded conditions of aid. ACIR argued that defining unfunded federal intergovernmental mandates was difficult because federal grant-in-aid programs typically include both incentives and mandates backed by sanctions or penalties:", "Few federal programs affecting state and local governments are pure types.... Every grant-in-aid program, including General Revenue Sharing, the least restrictive form of aid, comes with federal \"strings\" attached. Here, as in other areas, there is no such thing as a free lunch....", "In the intergovernmental sphere, then, [mandates] and subsidy are less like different parts of a dichotomy than opposing ends of a continuum. At one extreme is the general support grant with just a few associated conditions or rules; at the other is the costly, but wholly unfunded, national \"mandate.\" In between are many programs combining subsidy and [mandate] approaches, in varying degrees and in various ways.", "ACIR argued that because federal grant-in-aid programs typically combine subsidy and mandate approaches, grant-in-aid programs should be classified according to their degree of compulsion. It argued that conditions of grant aid should not be classified as a mandate because \"one of the most important features of the grant-in-aid is that its acceptance is still viewed legally as entirely voluntary\" and \"although it is difficult for many jurisdictions to forego substantial financial benefits, this option remains real.\" ACIR also argued that most grant conditions affect only the administration of those activities funded by the program, and \"grants-in-aid generally provide significant benefits to the recipient jurisdiction.\"", "ACIR argued that federal grant-in-aid programs that \"cannot be side-stepped, without incurring some federal sanction, by the simple expedient of refusing to participate in a single federal assistance program\" should be considered mandates. ACIR provided four examples of federal activities that, in the absence of sufficient compensatory funding, could be an unfunded intergovernmental mandate: (1) direct legal orders that must be complied with under the threat of civil or criminal penalties; (2) crosscutting or generally applicable requirements imposed on grants across the board to further national social and economic policies; (3) programs that impose federal fiscal sanctions in one program area or activity to influence state and local government policy in another area; and (4) federal preemption of state and local government law.", "In 1994, several organizations representing state and local governments issued a set of unfunded mandate principles which defined unfunded federal intergovernmental mandates as", "any federal requirement that compels state or local activities resulting in additional state or local expenditures; any federal requirement that imposes additional conditions or increases the level of state and local expenditures needed to maintain eligibility for existing federal grants; any reduction in the rate of federal matching for existing grants; and any federal requirement that reduces the productivity of existing state or local taxes and fees and/or that increases the cost of raising state and local revenue (including the costs of borrowing).", "Also in 1994, ACIR introduced the term \"federally induced costs\" to replace what it described as \"the pejorative and definitional baggage associated with the term 'mandates.'\" ACIR identified the following types of federal activities that expose states and localities to additional costs:", "statutory direct orders; total and partial statutory preemptions; grant-in-aid conditions on spending and administration, including matching requirements; federal income tax provisions; federal court decisions; and administrative rules issued by federal agencies, including regulatory delays and nonenforcement.", "ACIR defended its inclusion of grant-in-aid conditions in its list of \"federally induced costs,\" which it had excluded from its definition of federal mandates a decade earlier, by asserting that although the option of refusing to accept federal grants \"seemed plausible when federal aid constituted a small and highly compartmentalized part of state and local revenues, it overlooks current realities. Many grant conditions have become far more integral to state and local activities\u2014and far less subject to voluntary forbearance\u2014than originally suggested by the contractual model.\"", "On April 28, 1994, John Kincaid, ACIR's executive director, testified at a congressional hearing that legislation concerning unfunded mandates \"should recognize that unfunded Federal mandates include, in reality, a range of Federally-induced costs for which reimbursements may be legitimate considerations.\" State and local government officials generally advocated the inclusion of ACIR's \"federally induced costs\" in legislation placing conditions on the imposition of unfunded intergovernmental mandates. However, organizations representing various environmental and social groups, such as the Committee on the Appointment of People With Disabilities, the Natural Resources Defense Council, the American Federation of State, County, and Municipal Employees, and the Service Employees International Union, argued that ACIR's definition was too broad. These groups testified at various congressional hearings that some federal mandates, particularly those involving the environment and constitutional rights, should be retained, even if they were unfunded."], "subsections": [{"section_title": "Statutory Direct Orders", "paragraphs": ["With respect to definitions, there was, and continues to be, a general consensus among federalism scholars, state and local government officials, and other organizations that federal policies which impose unavoidable costs on state and local governments or business are, in the absence of sufficient compensatory funding, unfunded federal mandates. Because statutory direct orders, such as the Equal Employment Opportunity Act of 1972, which bars employment discrimination on the basis of race, color, religion, sex, and national origin, are compulsory, they are considered federal mandates. In the absence of sufficient compensatory funding, they are unfunded federal mandates. However, there was, and continues to be, a general consensus that some statutory direct orders, particularly those involving the guarantee of constitutional rights, should be exempt from legislation placing conditions on the imposition of unfunded federal mandates. For example, on April 28, 1994, then-Governor (and later Senator) Benjamin Nelson, testifying on behalf of the National Governors Association at a congressional hearing on unfunded mandate legislation, argued,", "At the outset, Mr. Chairman, I want to make it absolutely crystal clear that the Governors' position opposing unfunded environmental mandates must not be interpreted as an effort to discontinue environmental legislation and regulations or oppose any individual's civil or constitutional rights. The Governors consider the protection of public health and State natural resources as among the most important responsibilities of our office. We all take an oath of office to protect the health and safety of our citizens. In addition, we have worked with Congress over the years to enact strong Federal environmental laws."], "subsections": []}, {"section_title": "Total and Partial Statutory Preemptions", "paragraphs": ["Total and partial preemptions of state and local spending and regulatory authority by the federal government are compulsory, but there was, and continues to be, disagreement concerning whether they should be considered federal mandates, or whether they should be included in legislation designed to provide relief from unfunded federal mandates. Total preemptions in the intergovernmental arena prevent state and local government officials from implementing their own programs in a policy area. For example, states have been \"stripped of their powers to engage in economic regulation of airlines, bus, and trucking companies, to establish a compulsory retirement age for their employees other than specified state policymakers and judges, or to regulate bankruptcies with the exception of the establishment of a homestead exemption.\"", "Partial preemption typically is a joint enterprise, \"whereby the federal government exerts its constitutional authority to preempt a field and establish minimum national standards, but allows regulatory administration to be delegated to the states if they adopt standards at least as strict as the federal rules.\" Legally, the state decision to administer a partial preemption program is voluntary. States that do not have a program in a particular area or do not wish to assume the costs of administration and enforcement can opt out and allow the federal government to enforce the standards. Nonetheless, the federal standards apply.", "Total and partial statutory preemptions are distinct from unfunded federal intergovernmental mandates because they do not necessarily impose costs or require state and local governments to take action. Nonetheless, some federalism scholars and state and local government officials have argued that total and partial statutory preemptions should be included in legislation placing conditions on the imposition of unfunded federal mandates because they can have similar adverse effects on state and local government flexibilities and, in some instances, resources. A leading federalism scholar identified 557 federal preemption statutes as of 2005.", "Others argue that total and partial preemptions are distinct from unfunded federal mandates and, therefore, should not be included in legislation placing conditions on the imposition of unfunded federal mandates. In addition, some business organizations oppose including preemptions in any law or definition involving unfunded federal mandates because federal preemptions can result in the standardization of regulation across state and local jurisdictions, an outcome favored by some business interests, particularly those with interstate and global operations."], "subsections": []}, {"section_title": "Grant-in-Aid Conditions", "paragraphs": ["Conditions of grants-in-aid are generally not considered unfunded mandates because the costs they impose on state and local governments can be avoided by refusing the grant. However, federalism scholars and state and local government officials have argued that, in the absence of sufficient compensatory funding, grant conditions should be considered unfunded federal intergovernmental mandates, even though the grants themselves are voluntary. In their view, federal \"grants often require major commitments of state resources, changes in state laws, and even constitutional provisions to conform to a host of federal policy and administrative requirements\" and that some grant programs, such as Medicaid, are \"too large for state and local governments to voluntarily turn down, or when new and onerous conditions are added some time after state and local governments have become dependent on the program.\" For example, on April 28, 1994, Patrick Sweeney, a Democratic Member of Ohio's state House of Representatives testifying on behalf of the National Conference of State Legislatures (NCSL), asserted at a congressional hearing on unfunded mandate legislation that", "A great majority of the current problem can be attributed to Federal entitlements that are defined but then not adequately funded, and the proliferation of a mandatory requirement for what previously were voluntary programs. Programs like Medicaid are voluntary in theory only. A State cannot unilaterally opt out of Medicaid at any time it wishes, once it is in the program, without having to obtain a Federal waiver or face certain lawsuits. "], "subsections": []}, {"section_title": "Federal Tax Provisions", "paragraphs": ["Federalism scholars and state and local government officials argue that federal tax policies that preempt state and local authority to tax specific activities or entities are unfunded mandates, and should be covered under legislation placing restrictions on unfunded mandates, because the fiscal impact of preempting state or local government revenue sources cannot be avoided and \"can be every bit as costly\" as mandates ordering state or local government action. For example, P.L. 105-277 , the Omnibus Consolidated and Emergency Supplemental Appropriations Act, 1999 (Title XI, Internet Tax Freedom Act) created a three-year moratorium preventing state and local governments from taxing internet access, or imposing multiple or discriminatory taxes on electronic commerce. A grandfather clause allowed states that had already imposed and collected a tax on internet access before October 1, 1998, to continue implementing those taxes. The moratorium on internet access taxation was extended eight times and made permanent by P.L. 114-125 , the Trade Facilitation and Trade Enforcement Act of 2015. The grandfather clause was temporarily extended through June 30, 2020. The NCSL has cited research suggesting that states could receive an additional $6.5 billion annually in state sales tax revenue if the moratorium was lifted.", "In addition, because most state and local income taxes have been designed purposively to conform to federal tax law, changes in federal tax policy can impact state and local government finances. For example, federal tax cuts adopted in 2001 and 2003 affecting depreciation, dividends, and estate taxes \"forced states to acquiesce and accept their consequences or decouple from the federal tax base.\" Yet, federal tax changes are generally considered not to be unfunded mandates because states and localities can avoid their costs by decoupling their income tax from the federal income tax. Nevertheless, because federal tax changes can affect state and local government tax bases, most state and local government officials advocate their inclusion in federal legislation placing conditions on the imposition of unfunded federal mandates."], "subsections": []}, {"section_title": "Federal Court Decisions; Administrative Rules Issued by Federal Agencies; and Regulatory Delays and Nonenforcement", "paragraphs": ["Federalism scholars, state and local government officials, and other organizations argue that, in the absence of sufficient compensatory funding, court decisions and regulatory actions taken by federal agencies, including regulatory delays and nonenforcement, are unfunded mandates and should be included in legislation placing conditions on the imposition of unfunded mandates because these actions can impose costs on state and local governments that cannot be avoided. UMRA's provisions concerning administrative rules are discussed in greater detail later in this report (see the section on \" UMRA and Federal Rulemaking (Title II) \")."], "subsections": []}]}, {"section_title": "UMRA's Definition of an Unfunded Federal Mandate", "paragraphs": ["After taking various definitions into consideration, Congress defined federal mandates in UMRA more narrowly than state and local government officials had hoped. Federal intergovernmental mandates were defined as any provision in legislation, statute, or regulation that \"would impose an enforceable duty upon State, local, or tribal governments\" or \"reduce or eliminate the amount\" of federal funding authorized to cover the costs of an existing mandate. Provisions in legislation, statute, or regulation that \"would increase the stringency of conditions of assistance\" or \"would place caps upon, or otherwise decrease\" federal funding for existing intergovernmental grants with annual entitlement authority of $500 million or more could also be considered a federal intergovernmental mandate, but only if the state, local, or tribal government \"lack authority under that program to amend their financial or programmatic responsibilities to continue providing required services that are affected by the legislation, statute, or regulation.\"", "Private-sector mandates were defined as \"any provision in legislation, statute, or regulation that would impose an enforceable duty upon the private sector\" or \"reduce or eliminate the amount\" of federal funding authorized \"for the purposes of ensuring compliance with such duty.\" ", "Key words in both definitions are \"enforceable duty.\" Because statutory direct orders, total and partial preemptions, federal tax policies that preempt specific state and local tax policies, and administrative rules issued by federal agencies cannot be avoided, they are enforceable duties and are covered under UMRA. In contrast, because federal grants are voluntary, grant conditions are not considered enforceable duties and, therefore, are not covered under UMRA. Federal tax policies that impose costs on state and local governments that can be avoided by decoupling the state or local government's affected income tax provision from the federal income tax code are not enforceable duties, and, therefore, also are not covered under UMRA.", "UMRA considers a mandate unfunded unless the legislation authorizing the mandate fully meets its estimated direct costs by either (1) providing new budget authority (direct spending authority or entitlement authority) or (2) authorizing appropriations. If appropriations are authorized, the mandate is still considered unfunded unless the legislation ensures that in any fiscal year, either (1) the actual costs of the mandate are estimated not to exceed the appropriations actually provided; (2) the terms of the mandate will be revised so that it can be carried out with the funds appropriated; (3) the mandate will be abolished; or (4) Congress will enact new legislation to continue the mandate as an unfunded mandate. This mechanism for reviewing and revising mandates on the basis of their actual costs, which was introduced into UMRA in the \"Byrd look-back amendment\" (as described in Appendix A ), applies only to intergovernmental mandates enacted in legislation as funded through appropriations."], "subsections": [{"section_title": "Exemptions and Exclusions", "paragraphs": ["UMRA generally excluded preexisting federal mandates from its provisions, but, as mentioned previously, it did include any provision in legislation, statute, or regulation that \"would increase the stringency of conditions of assistance\" or \"would place caps upon, or otherwise decrease\" federal funding for existing intergovernmental grants with annual entitlement authority of $500 million or more. However, this provision applies \"only if the state or locality lacks authority to amend its financial or programmatic responsibilities to continue providing the required services.\" ", "On June 28, 2012, the Supreme Court ruled in National Federation of Independent Business (NFIB) v. Sebelius that the withdrawal of all Medicaid funds from the states for failure to comply with Medicaid's expansion under health care reform ( P.L. 111-148 ; the Patient Protection and Affordable Care Act) violated the Tenth Amendment. Prior to that ruling, CBO determined that large intergovernmental entitlement grant programs, such as Medicaid and Temporary Assistance to Needy Families, \"allow states significant flexibility to alter their programs and accommodate new requirements,\" and, as a result, it determined that UMRA provisions generally did not apply to these programs. Subsequent to the Supreme Court's ruling, CBO has indicated that UMRA's provisions may apply to changes in \"the stringency of conditions\" or reductions in funding for \"certain large mandatory programs \u2026 if the affected governments lack the flexibility to alter the programs.\"", "Otherwise, UMRA's Title I does not apply to conditions of federal assistance; duties stemming from participation in voluntary federal programs; and legislative provisions that cover individual constitutional rights, discrimination, emergency assistance, grant accounting and auditing procedures, national security, treaty obligations, and certain parts of Social Security relating to the old-age, survivors, and disability insurance program under title II of the Social Security Act.", "UMRA did not indicate that these exempted provisions and rules were not federal mandates. Instead, it established that their costs would not be subject to its provisions requiring written cost estimate statements, or to its provisions permitting a point of order to be raised against the consideration of reported legislation in which they appear. The Senate Committee on Governmental Affairs report accompanying S. 1 , The Unfunded Mandates Reform Act of 1995, provided its reasoning for adopting the exempted provisions and rules:", "A number of these exemptions are standard in many pieces of legislation in order to recognize the domain of the President in foreign affairs and as Commander-in-Chief as well as to ensure that Congress's and the Executive Branch's hands are not tied with procedural requirements in times of national emergencies. Further, the Committee thinks that Federal auditing, accounting and other similar requirements designed to protect Federal funds from potential waste, fraud, and abuse should be exempt from the Act.", "The Committee recognizes the special circumstances and history surrounding the enactment and enforcement of Federal civil rights laws. During the middle part of the 20th century, the arguments of those who opposed the national, uniform extension of basic equal rights, protection, and opportunity to all individuals were based on a States rights philosophy. With the passage of the Civil Rights Acts of 1957 and 1964 and the Voting Rights Act of 1965, Congress rejected that argument out of hand as designed to thwart equal opportunity and to protect discriminatory, unjust and unfair practices in the treatment of individuals in certain parts of the country. The Committee therefore exempts Federal civil rights laws from the requirements of this Act.", "In addition, as will be discussed in the next section, UMRA does not require all legislative provisions that contain federal mandates, even those that contain mandates that meet UMRA's definition, to have a CBO written cost estimate statement. In some instances, CBO may determine that cost estimates may not be feasible or complete. In addition, UMRA only requires estimates of direct costs imposed by the legislation. Estimates of indirect, secondary costs, such as effects on prices and wages when the costs of a mandate imposed on one party are passed on to others, such as customers or employees, are not required."], "subsections": []}]}]}, {"section_title": "UMRA and Congressional Procedure (Title I)", "paragraphs": [], "subsections": [{"section_title": "UMRA's Procedures", "paragraphs": ["Under Title I, which took effect on January 1, 1996, CBO was directed, to the extent practicable, to assist congressional committees, upon their request, in analyzing the budgetary and financial impact of any proposed legislation that may have (1) a significant budgetary impact on state, local, and tribal governments; (2) a significant financial impact on the private sector; or (3) a significant employment impact on the private sector. In addition, CBO was directed, if asked by a committee chair or committee ranking minority member, to conduct a study, to the extent practicable, of the budgetary and financial impact of proposed legislation containing a federal mandate. If reasonably feasible, the study is to include estimates of the future direct costs of the federal mandate \"to the extent that such costs significantly differ from or extend beyond the 5-year period after the mandate is first effective.\"", "Although the actions noted above are technically discretionary, UMRA does contain mandatory directives. When an authorizing committee reports a public bill or joint resolution containing a federal mandate, UMRA requires the committee to provide the measure to CBO for budgetary analysis. CBO is required to provide the committee a cost estimate statement of a mandate's direct costs if those costs are estimated to equal or exceed predetermined amounts, adjusted for inflation, in any of the first five fiscal years the legislation would be in effect. In 2019, those threshold amounts are $82 million for intergovernmental mandates and $164 million for private-sector mandates. CBO is also required to inform the committee if the mandate has estimated direct costs below these thresholds and briefly explain the basis of the estimate.", "CBO must also identify any increase in federal appropriations or other spending that has been provided to fund the mandate. The federal mandate is considered unfunded unless estimated costs are fully funded. As described above, under \" UMRA's Definition of an Unfunded Federal Mandate ,\" UMRA provides that mandate costs be considered as funded only if the legislation covers the mandate costs either by providing new direct spending or entitlement authority or by authorizing appropriations and incorporating a mechanism to provide for the mandate to be revised or abolished if the requisite appropriations are not provided.", "Direct costs for intergovernmental mandates are defined as \"the aggregate estimated amounts that all State, local and tribal governments would be required to spend or would be prohibited from raising in revenues in order to comply with the Federal intergovernmental mandate.\" Direct costs for private-sector mandates are defined as \"the aggregate estimated amounts that the private sector will be required to spend in order to comply with the Federal private sector mandate.\" ", "To accomplish these tasks, CBO created the State and Local Government Cost Estimates Unit within its Budget Analysis Division to prepare intergovernmental mandate cost estimate statements as well as other studies on the budgetary effects of mandates. It also added new staff to its program analysis divisions to prepare private-sector mandate cost estimate statements.", "A congressional committee is required to include the CBO estimate of mandate costs in its report on the bill. If the mandate cost estimate is not available, or if the report is not expected to be in print before the legislation reaches the floor for consideration, the committee is to publish the mandate cost estimate in the Congressional Record in advance of floor consideration. In addition to identifying direct costs, the committee's report must also assess the likely costs and benefits of any mandates in the legislation, describe how they affect the competitive balance between the private and public sectors, state the extent to which the legislation would preempt state, local, or tribal law, and explain the effect of any preemption. For intergovernmental mandates alone, the committee is to describe in its report the extent to which the legislation authorizes federal funding for direct costs of the mandate, and detail whether and how funding is to be provided."], "subsections": []}, {"section_title": "CBO Cost Estimate Statements", "paragraphs": ["CBO submitted 13,310 estimates of mandate costs to Congress from January 1, 1996, when UMRA's Title I became effective, to May 20, 2019 (see Table 1 ). Each of these statements examined the mandate costs imposed on the private sector or state, local, and tribal governments by provisions in a specific bill, amendment, or conference report. About 11.5% of these cost estimate statements (1,537 of 13,310 cost estimate statements) identified costs imposed by intergovernmental mandates, and less than 1.0% of them (115 of 13,310 cost estimate statements) identified intergovernmental mandates that exceeded UMRA's threshold. CBO was unable to determine costs imposed by intergovernmental mandates in 79 bills, amendments, or conference reports. ", "CBO has submitted 13,187 estimates to Congress that examined private-sector mandate costs imposed by provisions in a specific bill, amendment, or conference report from January 1, 1996, when UMRA's Title I became effective, to May 20, 2019 (see Table 2 ). The number of statements transmitted to Congress shown in Table 2 is less than the number shown in Table 1 because CBO is sometimes asked to review a specific bill, amendment, or conference report solely for intergovernmental mandates.", "About 15.3% of these private-sector estimates (2,022 of 13,187 cost estimate statements) identified costs imposed by mandates, and about 3.2% of them (427 of 13,187 cost estimate statements) identified costs that exceeded UMRA's threshold. CBO was unable to determine costs imposed by private-sector mandates in 299 bills, amendments, or conference reports."], "subsections": []}, {"section_title": "Points of Order for Initial Consideration", "paragraphs": ["UMRA provides for the enforcement of its informational requirements on legislation by establishing a point of order in each chamber against consideration of a measure on which the reporting committee has not published the required estimate of mandate costs. This point of order applies only to measures reported by committees (for which CBO estimates of mandate costs are required), but it applies for both intergovernmental and private-sector mandates. In addition, however, if the informational requirement is met, a point of order against consideration of a measure may still be raised, if, for any fiscal year, the estimated total mandate cost of unfunded intergovernmental mandates in the measure exceeds UMRA's threshold amount ($82 million in 2019). This point of order may be raised also if CBO reported that no reasonable estimate of the cost of intergovernmental mandates was feasible.", "Uniquely among the requirements established by UMRA, this substantive point of order addressing intergovernmental mandates contained in legislation constitutes a potential means of control over the actual imposition of mandate costs. Even in this case, however, the mechanisms established by UMRA provide a means of controlling mandates only on the basis of estimates of the costs that will be incurred in subsequent fiscal years. The only provision of UMRA that offers a possibility of controls based on costs actually incurred by affected entities is the requirement, mentioned earlier, that a mandate can be considered funded through appropriations only if it directs that, if insufficient appropriations are made, the mandate must be revised, abolished, or reenacted as unfunded.", "In several respects, the applicability of the substantive point of order differs from that of the informational point of order. First, it applies to any measure coming to the floor for consideration, whether or not reported by a committee, and also to conference reports. For a measure that has been reported, this point of order applies to the measure in the form reported, including, for example, to a committee amendment in the nature of a substitute. In addition, this point of order applies against an amendment or motion (such as a motion to recommit with amendatory instructions), and does so on the basis not that the mandate costs of the amendment or motion itself exceeds the threshold, but that the amendment or motion would cause the total mandate costs in the measure to do so. Finally, however, this point of order applies only against intergovernmental mandates. UMRA imposes no comparable control in relation to private-sector mandates.", "Because federal mandates are created through authorization bills, the UMRA points of order generally do not apply to bills reported by the House and Senate Committees on Appropriations. However, if an appropriation bill, resolution, amendment, or conference report contains legislative provisions that would either increase the direct costs of a federal intergovernmental mandate that exceeds the threshold, or cause those costs to exceed the threshold, a point of order may be raised against the provisions themselves. In the Senate, if this point of order is sustained, the provisions are stricken from the bill.", "In the House, the chair does not rule on a point of order raised under these provisions. Instead, the House, by majority vote, determines whether to consider the measure despite the point of order. To prevent dilatory use of the point of order, the chair need not put the question of consideration to a vote unless the Member making the point of order meets the \"threshold burden\" of identifying specific language that is claimed to contain the unfunded mandate. Also, if several points of order could be raised against the same measure, House practices under UMRA allow all of them to be disposed of at once by a single vote on consideration. If the Committee on Rules proposes a special rule for considering the measure that waives the point of order, UMRA subjects the special rule itself to a point of order, which is disposed of by the same mechanism.", "In the Senate, if questions are raised challenging the applicability of an UMRA point of order (e.g., to prevent its use for dilatory purposes), the presiding officer, to the extent practicable, consults with the Committee on Homeland Security and Governmental Affairs to determine if the measure contains an intergovernmental mandate and with the Senate Committee on the Budget to determine if the mandate's direct costs meet UMRA's threshold for allowing a point of order to be raised. The Senate Committee on the Budget may draw for this purpose on CBO cost estimate statements. If there are no such challenges, or the presiding officer rules against the challenge, the Senate determines whether to consider the measure despite the point of order. It may do so by voting on a motion to waive the point of order.", "Initially, a majority vote was sufficient to waive the point of order in the Senate. In 2005, the Senate increased its threshold to waive an UMRA point of order to three-fifths of Senators duly chosen and sworn (normally 60 votes), as was already required of many other Budget Act points of order. Two UMRA points of order were raised in the Senate that year, and both were sustained, defeating two amendments to an appropriations bill that would have increased the minimum wage (see Table 3 ). In 2007, the Senate returned its threshold for waiving an UMRA point of order to a majority vote.", "On April 2, 2009, the Senate approved, by unanimous consent, an amendment ( S.Amdt. 819 ) to S.Con.Res. 13 , the concurrent budget resolution for FY2010, which would have again increased the vote necessary in the Senate to waive an UMRA point of order to three-fifths of Senators duly chosen and sworn (normally 60 votes). The amendment was subsequently dropped in the final version of the concurrent budget resolution for FY2010.", "On March 23, 2013, the Senate agreed, by voice vote, to an amendment ( S.Amdt. 538 ) to S.Con.Res. 8 , the concurrent budget resolution for FY2014. It would have restored the requirement for waiving an UMRA point of order in the Senate to three-fifths of the full Senate (normally 60 votes). S.Con.Res. 8 was received in the House on April 15, 2013, and held at the desk. Because the House did not act on the measure, and no other legislation on the matter was approved by Congress, the simple majority requirement for appealing or waiving UMRA points of order in the Senate remained in effect.", "On May 5, 2015, the Senate agreed to the conference report on S.Con.Res. 11 , the concurrent budget resolution for FY2016, which the House had previously agreed to on April 30, 2015. The resolution included a provision that restored the requirement for waiving an UMRA point of order in the Senate to three-fifths of Senators duly chosen and sworn (normally 60 votes).", "Prior to the Senate's increasing the threshold necessary to waive an UMRA point of order, a scholar familiar with UMRA argued that, inasmuch as the general floor procedures of the Senate already allows Senators to force a majority vote on a mandate by moving to strike it from the bill, UMRA's enforcement procedure of waiving a point of order by majority vote meant that UMRA mattered only in the House. As evidence of this, the scholar noted that during UMRA's first 10 years of operation, when the threshold to waive an UMRA point of order was a majority vote in both the House and Senate, 13 UMRA points of order were raised, all in the House (see Table 3 ).", "As indicated in Table 3 , 62 UMRA points of order have been raised in the House. Only one of these points of order, the first one, which was raised on March 28, 1996, in opposition to a proposal to add a minimum wage increase to the Contract With America Advancement Act of 1996, resulted in the House voting to reject consideration of a proposed provision. During the 111 th -114 th Congresses, UMRA points of order in the House were often raised not to challenge unfunded federal mandates per se , but to use the 10 minutes of debate allowed each House Member initiating an UMRA point of order to challenge the pace of legislative consideration, limitations on the offering of amendments to appropriations bills, or the inclusion of earmarks in legislation.", "Also, as indicated in Table 3 , UMRA points of order have been raised in the Senate four times. In 2005, points of order were raised against two amendments relating to an increase in the minimum wage. In each case the Senate declined to waive the point of order, and the chair ruled that the amendment was out of order because it contained unfunded intergovernmental mandates in excess of the threshold. In 2009, an UMRA point of order was raised against intergovernmental mandates in a health care reform bill. The Senate voted to waive the point of order, 55-44. The Senate subsequently approved the bill with the mandates. In 2016, an UMRA point of order was raised against intergovernmental mandates in a bill designed to assist Puerto Rico in addressing its debt. The Senate voted to waive the point of order, 85-13. The Senate subsequently approved the bill with the mandates."], "subsections": []}, {"section_title": "Impact on the Enactment of Statutory Intergovernmental and Private-Sector Mandates", "paragraphs": ["Although UMRA points of order have been sustained just three times, most state and local government officials assert that UMRA has reduced \"the number of unfunded federal mandates by acting as a deterrent to their enactment.\" For example, in 2001, Raymond Scheppach, then-NGA's executive director, testified before a House subcommittee that UMRA had slowed the growth of unfunded mandates and improved communications between federal policymakers and state and local government officials:", "Direct mandates have declined sharply in the wake of the Act. But I would venture that UMRA has had an even greater intangible benefit. As Congressman Portman once told us, he was certain this would be one of those bills that he could frame and hang on his wall, and it would become just another relic of history. But, to his surprise, the Act has led\u2014time and again\u2014to members asking his advice: \"Do you think this bill will cause an UMRA problem? With whom should I work?\" The very threat of a CBO report has engendered efforts to reach out to state and local leaders before the fact\u2014instead of after. It has changed the nature of our intergovernmental discussion in a very positive way.", "More recently, NCSL has argued that UMRA has brought increased attention to the fiscal effects of federal legislation on state and local governments, improved federal accountability, and enhanced consultation. In addition, there have been documented instances in which either sponsors of legislation have modified provisions to avoid a CBO statement that unfunded intergovernmental mandate costs exceeded the threshold, or measures with such costs estimated to exceed the threshold were altered prior to floor consideration to reduce their costs below the threshold.", "As mentioned previously, since UMRA's Title I became effective in 1996, CBO has submitted 13,310 written cost estimate statements to Congress that examined the costs imposed by provisions in a specific bill, amendment, or conference report on the private sector and/or state and local governments. It identified intergovernmental mandates in 1,537 of them (11.5%). CBO reports that, as of December 31, 2018, 15 laws (containing 21 intergovernmental mandates) have been enacted since UMRA became effective in 1996 that have costs estimated to exceed the statutory threshold. Those laws are as follows:", "Two increases in the minimum wage. P.L. 104-188 , the Small Business Job Protection Act of 1996, enacted in 1996, was estimated to cost state and local governments more than $1 billion during the first five years that it was in effect. P.L. 110-28 , the U.S. Troop Readiness, Veterans' Care, Katrina Recovery, and Iraq Accountability Appropriations Act, 2007, enacted in 2007, was estimated to cost state and local governments slightly less than $1 billion during the first five years that it was in effect. A reduction in federal funding for administering the food stamp program, now the Supplemental Nutrition Assistance Program, in P.L. 105-185 , the Agricultural Research, Extension, and Education Reform Act of 1998, enacted in 1998, was estimated to cost states between $200 million and $300 million annually. Preemption of state taxes on premiums for certain prescription drug plans in P.L. 108-73 , the Family Farmer Bankruptcy Relief Act of 2003, enacted in 2003, was estimated to cost states $70 million in revenue in 2006, the first year it was in effect, and increase to about $95 million annually by 2010. The temporary preemption of states' authority to tax certain internet services and transactions in P.L. 108-435 , the Internet Tax Nondiscrimination Act, enacted in 2004, was estimated to reduce state and local government tax revenue by at least $300 million. The extension of this preemption in P.L. 110-108 , the Internet Tax Freedom Act Amendments Act of 2007, enacted in 2007, was estimated to reduce state and local government tax revenue by about $80 million annually. Making the moratorium permanent (while allowing state and local governments that had been collecting such taxes prior to October 1, 1998 to continue to collect such taxes, but only through June 2020) in P.L. 114-125 , the Trade Facilitation and Trade Enforcement Act of 2015, enacted in 2016, was estimated to cost state and local governments more than $100 million in the final three months of fiscal year 2020 (July through September) and more than several hundred million dollars annually thereafter. The requirement that state and local governments meet certain standards for issuing driver's licenses, identification cards, and vital statistics documents in P.L. 108-458 , the Intelligence Reform and Terrorism Prevention Act of 2004, enacted in 2004, was estimated to cost state and local governments more than $100 million over 2005-2009, with costs exceeding the threshold in at least one of those years. The elimination of matching federal payments for some child support spending in P.L. 109-171 , the Deficit Reduction Act of 2005, enacted in 2006, was estimated to cost states more than $100 million annually beginning in 2008. The requirement that state and local governments withhold taxes on certain payments for property and services in P.L. 109-222 , the Tax Increase Prevention and Reconciliation Act of 2005, enacted in 2006, was estimated to cost state and local governments more than $70 million annually beginning in 2011. Requirements on rail and transit owners and operators to train workers and submit reports to the Department of Homeland Security in P.L. 110-53 , the Implementing Recommendations of the 9/11 Commission Act of 2007, enacted in 2007, was estimated to cost state and local governments more than UMRA's threshold in at least one of the first five years following enactment. The requirement that commuter railroads install train-control technology in P.L. 110-432 , the Railroad Safety Enhancement Act of 2008, enacted in 2008, was estimated to cost state and local governments more than UMRA's threshold in at least one of the first five years following enactment. The requirement that public entities that handle health insurance information comply with new regulations; health insurance plans pay an annual fee based on average number of people covered by the policy; public employers pay an excise tax on employer-sponsored health insurance coverage defined as having high costs; health insurance plans comply with new standards for extending coverage; and public entities must comply with new notice and reporting requirements on health insurance plans in P.L. 111-148 , the Patient Protection and Affordable Care Act, enacted in 2010, was estimated to have costs for state and local governments that would greatly exceed UMRA's thresholds in each of the first five years following enactment. The requirement that schools provide meals that comply with new standards for menu planning and nutrition and with nutrition standards for all food sold in schools in P.L. 111-296 , the Healthy, Hunger-Free Kids Act of 2010, enacted in 2010, was estimated to have costs for state and local governments that would exceed UMRA's threshold beginning the first year that the mandates take effect. The aggregate cost of requiring Puerto Rico and its instrumentalities to comply with the directives and processes of a federal oversight board tasked with overseeing the territory's fiscal affairs and to pay for the costs of the oversight board's staff and operating expenses in P.L. 114-187 , the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA), enacted in 2016, was estimated to exceed UMRA's threshold. ", "State and local government interest groups argue that these statistics confirm UMRA's effectiveness in serving as a deterrent to the enactment of new unfunded mandates that exceed UMRA's threshold and meet UMRA's definition of a federal mandate. However, they also argue that many mandates with costs below UMRA's threshold, or that do not meet UMRA's definition of a federal mandate, have been adopted since UMRA's enactment.", "CBO also reports that from January 1, 2006, to December 31, 2018, 217 laws were enacted with at least one intergovernmental mandate as defined under UMRA. These laws imposed 443 mandates on state and local governments, with 16 of these mandates exceeding UMRA's threshold, 14 with estimated costs that could not be determined, and 413 with estimated costs below the threshold. CBO reported that hundreds of other laws had an effect on state and local government budgets, but those laws did not meet UMRA's definition of a federal mandate.", "As mentioned previously, CBO has submitted 13,187 cost estimate statements to Congress that examined the costs imposed by provisions in a specific bill, amendment, or conference report that might impact the private sector. It identified private-sector mandates in 2,022 of them (15.3%). CBO reports that from January 1, 2006, to December 31, 2018, 330 laws were enacted with at least one private-sector mandate as defined under UMRA. These laws imposed 836 mandates on the private sector, with 128 of these mandates exceeding UMRA's threshold, 96 with estimated costs that could not be determined, and 612 with estimated costs below the threshold."], "subsections": []}, {"section_title": "Congressional Issues for Title I", "paragraphs": [], "subsections": [{"section_title": "Exemptions and Exclusions", "paragraphs": ["State and local government officials argue that UMRA's exemptions and exclusions reduce its effectiveness in limiting the enactment of unfunded federal intergovernmental mandates. They argue that federal programs in the exempted and excluded areas can still result in the imposition of costs on state, local, and tribal governments. Also, because UMRA does not include these costs as \"mandates,\" they are exempt even from the requirement for CBO to estimate these costs. For example, in 2008, NCSL asserted that \"although fewer than a dozen mandates have been enacted that exceed the threshold established in UMRA, Congress has shifted at least $131 billion in costs to states over the past five years\" and that during the 110 th Congress at least $31 billion in additional costs were imposed on states through new mandates.", "To reduce these costs, NCSL has recommended that UMRA's provisions on points of order and requirements for written cost estimate statements also apply to (1) all open-ended entitlement grant-in-aid programs, such as Medicaid, and legislative provisions that would cap or enforce a ceiling on the cost of federal participation in any entitlement or mandatory spending program; (2) new conditions of federal funding for existing federal grants and programs; (3) legislative provisions that reduce state revenues, especially when changes to the federal tax code are retroactive or otherwise provide states with little or no opportunity to prospectively address the impact of a change in federal law on state revenues; and (4) mandates that fail to exceed the statutory threshold only because they do not affect all states.", "For the most part, business interests have generally supported state and local government officials in their efforts to broaden UMRA's coverage of federal intergovernmental mandates. In perhaps the most extensive effort to obtain various viewpoints on UMRA, in 2005, the Government Accountability Office (GAO) held group meetings, individual interviews, and received written responses from 52 individuals and organizations, including academic centers and think tanks, businesses, federal agencies, public interest advocacy groups, and state and local governments, concerning unfunded mandates. GAO reported that UMRA's coverage was the issue most frequently commented on by parties from all five sectors, including business, and that most of the parties representing business viewed UMRA's relatively narrow coverage as a major weakness that leaves out many federal actions with potentially significant financial impacts on nonfederal parties. However, GAO also found that the business sector has \"generally been in favor of federal preemptions for reasons such as standardizing regulation across state and local jurisdictions.\"", "Although GAO found that most of the parties it contacted viewed UMRA's coverage of intergovernmental mandates as being too narrow, it also reported that some of the participants opposed an expansion of UMRA's coverage:", "A few parties from the public interest sector and academic/think tank sectors considered some of the existing exclusions important or identified UMRA's narrow scope as one of the act's strengths.... Specifically, these parties argued in favor of maintaining UMRA's exclusions or expanding them to include federal actions regarding public health, safety, environmental protection, workers' rights, and the disabled.... [They also] focused on the importance of the existing exclusions, particularly those dealing with constitutional and statutory rights, such as those barring discrimination against various groups. ", "With respect to private-sector mandates in legislation, UMRA allows a point of order to be raised only if UMRA's informational requirements are not met; that is, only if the committee reporting the measure fails to publish a CBO cost estimate statement of the private-sector mandate's costs. Over the years, various business organizations, including the U.S. Chamber of Commerce, have advocated the extension of UMRA's substantive point of order for intergovernmental mandates to the private sector, permitting a point of order to be raised against consideration of legislation that includes private-sector mandates with costs that exceed UMRA's threshold.", "The GAO report also noted that \"parties primarily from the academic/think tank and state and local governments sectors ... noted that while much attention has been focused on the actual (direct) costs of mandates, it is important to consider the broader implications on affected nonfederal entities beyond direct costs, including indirect costs such as opportunity costs, forgone revenues, shifting priorities, and fiscal trade-offs.\"", "During the 114 th Congress, H.R. 50 , the Unfunded Mandates Information and Transparency Act of 2015, passed by the House on February 4, 2015, and its Senate companion bill, S. 189 , would have broadened UMRA's coverage to include both direct and indirect costs, such as foregone profits and costs passed onto consumers, and, when requested by the chair or ranking member of a committee, the prospective costs of legislation that would change conditions of federal financial assistance. The bills also would have made private-sector mandates subject to a substantive point of order and remove UMRA's exemption for rules issued by most independent agencies. ", "H.R. 50 , and its Senate companion bill, S. 1523 , were reintroduced in the 115 th Congress as the Unfunded Mandates Information and Transparency Act of 2017. The House passed H.R. 50 on July 13, 2018. The House also passed similar legislation during the 112 th Congress ( H.R. 4078 , the Red Tape Reduction and Small Business Job Creation Act: Title IV, the Unfunded Mandates Information and Transparency Act of 2012), the 113 th Congress ( H.R. 899 , the Unfunded Mandates Information and Transparency Act of 2014; and H.R. 4 , the Jobs for America Act: Division III, the Unfunded Mandates Information and Transparency Act of 2014), and, as just mentioned, during the 114 th Congress ( H.R. 50 , the Unfunded Mandates Information and Transparency Act of 2015).", "During the 116 th Congress, H.R. 300, the Unfunded Mandates Information and Transparency Act of 2019, was introduced on January 8, 2019."], "subsections": []}]}]}, {"section_title": "UMRA and Federal Rulemaking (Title II)", "paragraphs": ["UMRA's Title II, which became effective on March 22, 1995, generally requires federal agencies, unless otherwise prohibited by law, to prepare written statements that identify costs and benefits of a federal mandate to be imposed through the rulemaking process that may result in the expenditure by state, local, and tribal governments, in the aggregate, or by the private sector, of $100 million or more (adjusted annually for inflation) in any one year, before \"promulgating any general notice of proposed rulemaking.\" In 2019, the threshold for preparing a written statement is $164 million. These informational requirements for regulations, like the Title I cost estimate requirements for legislation, apply to both intergovernmental and private-sector mandates. Title II establishes no equivalent to the point of order mechanism in Title I through which either house can decline to consider legislation proposing covered unfunded intergovernmental mandates above the applicable threshold level.", "The written assessments that federal agencies are to prepare for their regulations must identify the law authorizing the rule and include a qualitative and quantitative assessment of anticipated costs and benefits, the share of costs to be borne by the federal government, and the disproportionate budgetary effects upon particular regions, state, local, or tribal governments, or particular segments of the private sector. Assessments must also include estimates of the effect on the national economy, descriptions of consultations with nonfederal government officials, and a summary of the evaluation of comments and concerns obtained throughout the promulgation process. Impacts of \"any regulatory requirements\" on small governments must be identified, notice must be given to those governments, and technical assistance must be provided. Also, federal agencies are required, to the extent permitted in law, to develop an \"effective process to permit elected officers of State, local, and tribal governments (or their designated employees with authority to act on their behalf) to provide meaningful and timely input in the development of regulatory proposals containing significant Federal intergovernmental mandates.\" UMRA also requires federal agencies to consider \"a reasonable number\" of regulatory alternatives and select the \"least costly, most cost-effective or least burdensome alternative\" that achieves the objectives of the rule.", "UMRA requires the Office of Management and Budget's (OMB's) director to collect the executive branch agencies' written cost estimate statements and periodically forward copies to CBO's director. It also directs OMB to establish pilot programs in at least two federal agencies to test innovative regulatory approaches to reduce regulatory burdens on small governments, and provide Congress a written annual report detailing compliance with the act by each agency for the preceding reporting period. OMB's director has delegated these responsibilities to its Office of Information and Regulatory Affairs (OIRA).", "Most of these provisions were already in place when UMRA was adopted. For example, Executive Order 12866, issued in September 1993, required agencies to provide OIRA with assessments of the costs and benefits of all economically significant proposed rules (defined as having an annual impact on the economy of $100 million or more), including some rules that were not mandates; identify regulatory alternatives and explain why the planned regulatory action is preferable to other alternatives; issue regulations that were cost-effective and impose the least burden on society; and seek the views of state, local, and tribal officials before imposing regulatory requirements that might significantly or uniquely affect them."], "subsections": [{"section_title": "Title II's Exemptions and Exclusions", "paragraphs": ["UMRA's requirement for federal agencies to issue written cost estimate statements for mandates issued through the rulemaking process that may result in expenditures of $100 million or more (adjusted annually for inflation) by state and local governments, in the aggregate, or by the private sector, in any one year, is subject to the exemptions and exclusions that apply to legislative provisions (e.g., conditions of federal assistance, duties arising from participation in a voluntary federal program, and constitutional rights of individuals). UMRA's requirements also do not apply (1) to provisions in rules issued by independent regulatory agencies; (2) if the agency is \"otherwise prohibited by law\" from considering estimates of costs in adopting the rule (e.g., under the Clean Air Act the primary air quality standards are health-based and the courts have affirmed that the U.S. Environmental Protection Agency is not to consider costs in determining air quality standards for ozone and particulate matter); or (3) to any rule for which the agency does not publish a general notice of proposed rulemaking in the Federal Register . GAO has found that about half of all final rules published in the Federal Register are published without a general notice of proposed rulemaking, including some rules with impacts over $100 million annually.", "In addition, UMRA's threshold for federal mandates in rules is limited to expenditures, in contrast to the thresholds in Title I which refer to direct costs. As a result, a federal rule's estimated annual effect on direct costs might meet Title I's threshold, but might not meet Title II's threshold if the rule does not compel nonfederal entities to spend that amount. For example, under Title I, direct costs include any amounts that state and local governments are prohibited from raising in revenue to comply with the mandate. These costs are not considered when determining whether a mandate meets Title II's threshold because funds not received are not expenditures.", "Also, in contrast to Title I, Title II does not require the agencies issuing regulations to address the question of whether federal funding is available to cover the costs to the private sector of mandates imposed by regulations. In general, agencies lack authority to provide such funding, which could be provided only by legislative action. Title II addresses the funding only of intergovernmental mandates, and only by requiring that agencies identify the extent to which federal resources may be available to carry out those mandates. The differences in the coverage of Title I and Title II may reflect a compromise reached with congressional Members who opposed using UMRA as a vehicle to address broader regulatory reform advocated by business interests. For example, Senator John Glenn argued in the Senate Committee on Governmental Affairs' committee report on UMRA:", "Another problematic change from S. 993 is the expansion of the \"regulatory accountability and reform\" provisions of Title 2 to go beyond intergovernmental mandates to address any and all regulatory effects on the private sector. The intended purpose of S. 1 is to control unfunded Federal mandates on State and local governments. I have always supported that goal. Moreover, I believe that if we keep the bill sharply focused on that purpose, we can get the legislation passed quickly and signed into law. If, however, we let the bill be stretched to cover other issues, we hurt prospects for enactment and we break our pledge to our friends in the State and local governments.... I believe that the bill should be brought back to its original purpose by limiting regulatory analysis to intergovernmental mandates.... In short, I support using this legislation to control intergovernmental regulatory costs. I oppose using this bill to address broader regulatory reform issues."], "subsections": []}, {"section_title": "Federal Agency Cost Estimate Statements in Major Federal Rules", "paragraphs": ["From March 22, 1995, when UMRA's Title II became effective, to the end of FY2016, OMB reviewed 1,060 final rules with estimated benefits and/or costs exceeding $100 million annually. Most (73.6%) of those \"major\" rules (780) did not contain provisions meeting UMRA's definition of a mandate. ", "Whereas, as Table 1 and Table 2 show, CBO identified slightly more private-sector mandates than intergovernmental mandates, Table 4 shows that most of the mandates identified in regulations have been directed at the private sector. This emphasis appears consistent with the original concern of business advocates to extend the concept of mandates to the area of regulatory reform. ", "As indicated in Table 4 , during the time period covered, 280 major rules met UMRA's definition of a mandate on the private sector and, therefore, were issued an UMRA cost estimate statement and 15 met UMRA's definition of a mandate on state, local, and tribal governments and, therefore, were issued an UMRA cost estimate statement. ", "The 15 intergovernmental rules, 9 issued by the U.S. Environmental Protection Agency (EPA), were as follows:", "EPA's Rule on Standards of Performance for Municipal Waste Combustors and Emissions Guidelines (1995), with estimated costs of $320 million annually; EPA's Standards of Performance for New Stationary Sources and Guidelines for Control of Existing Sources: Municipal Solid Waste Landfills (1996), with estimated costs of $110 million annually; EPA's National Primary Drinking Water Regulations: Disinfectants and Disinfection Byproducts (1998), with estimated costs of $700 million annually; EPA's National Primary Drinking Water Regulations: Interim Enhanced Surface Water Treatment (1998), with estimated costs of $300 million annually; EPA's National Pollutant Discharge Elimination: System B Regulations for Revision of the Water Pollution Control Program Addressing Storm Water Discharges (1999), with estimated costs of $803.1 million annually; EPA's National Primary Drinking Water Regulations; Arsenic and Clarifications to Compliance and New Source Contaminants Monitoring (2001), with estimated costs of $189 million to $216 million annually; EPA's National Primary Drinking Water Regulations: Long Term 2 Enhanced Surface Water Treatment (2005), with estimated costs between $80 million and $130 million per year; EPA's National Primary Drinking Water Regulations: Stage 2 Disinfection Byproducts Rule (2006), with estimated costs of at least $100 million annually; U.S. Department of Health and Human Services' (DHHS's) Health Insurance Reform; Modifications to the Health Insurance Portability and Accountability Act (HIPAA) Electronic Transaction Standards (2009), with estimated costs of $1.1 billion per year; EPA's National Emission Standards for Hazardous Air Pollutants from Coal- and Oil-Fired Electric Utility Steam Generating Units and Standards for Performance for Electric Utility Steam Generating Units (2011), with estimated costs of $9.6 billion annually; U.S. Department of Agriculture's (USDA's) Nutrition Standards in the National School Lunch and School Breakfast Programs (2012), with estimated costs of $479 million annually; DHHS's Patient Protection and Affordable Care Act; Benefit and Payment Parameters for 2014 (issued FY2013), 2015 (issued FY2014), 2016 (issued FY2015), and 2017 (issued FY2016). Although DHHS was unable to quantify the user fees that will be associated with these three rules, CBO found that the combined administrative cost and user fee impact for each of them may be high enough to constitute a state, local, or tribal government mandate under UMRA; and U.S. Department of Labor's Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales and Computer Employees (2016) revised and indexed for inflation salary thresholds for determining overtime requirements for salaried workers. CBO found that employee enumeration impacts and compliance costs were estimated to be well over $100 million annually and that, in addition to private sector industries, some local government entities will be substantially affected by the rule."], "subsections": []}, {"section_title": "Impact on the Rulemaking Process", "paragraphs": ["In 1997, Senators Fred Thompson and John Glenn, chair and ranking minority member of the Senate Committee on Governmental Affairs, respectively, asked GAO to review federal agencies' implementation of UMRA's Title II. On February 4, 1998, GAO issued its report, concluding that \"our review of federal agencies' implementation of Title II of UMRA indicates that this title of the act has had little direct effect on agencies' rulemaking actions during the first 2 years of its implementation.\"", "GAO concluded that Title II had limited impact on agencies' rulemaking primarily because of its limited coverage. For example, GAO noted that written mandate cost estimate statements were not on file at CBO for 80 of the 110 economically significant rules published in the Federal Register between March 22, 1995, and March 22, 1997. GAO examined the 80 economically significant rules that lacked a written mandate cost estimate statement and concluded that UMRA did not require a written mandate cost estimate statement for 78 of them because the rule either did not have an associated notice of proposed rulemaking (18 instances); did not impose an enforceable duty (3 instances); imposed such a duty but only as a condition of federal assistance (33 instances); imposed such a duty but only as part of a voluntary program (11 instances); did not involve an expenditure of $100 million in any single year by the private sector or by state, local, and tribal governments (12 instances); or incorporated requirements specifically set forth in law (1 instance). GAO concluded that written mandate cost estimate statements should have been filed at CBO for two of the rules that lacked one, but, in both instances, the rules appeared to satisfy UMRA's written statement requirements.", "Even where UMRA applied, GAO concluded that the act did not appear to have had much effect on federal agencies' rulemaking actions because UMRA does not require agencies to take the actions required in the statute if the agencies determine that the actions are duplicative of other actions or that accurate estimates of the rule's future compliance costs are not feasible. Because federal agencies' rules commonly contain an estimate of compliance costs, GAO found that most agencies rarely prepared a separate UMRA written cost estimate statement. Moreover, Executive Order 12866, which was issued more than a year before UMRA's enactment, already required federal agencies to provide OIRA with assessments of the costs and benefits of all economically significant rules. GAO also concluded that UMRA did not substantially change agencies' intergovernmental consultation processes.", "In 2001, OMB's director, Mitchell L. Daniels Jr., acknowledged at a House hearing coinciding with UMRA's fifth anniversary that UMRA's Title II had not resulted in major changes in federal agency rulemaking. He noted that, according to OMB's five annual reports to Congress on the implementation of Title II, 80 rules had required the preparation of a separate written mandate cost estimate statement (see Table 4 ). He said that \"it was hard to believe that only 80 regulations had significant impacts on state, local, or tribal governments, or the private sector. In fact, it appears that agencies have attempted to limit their consultative processes, and ignored potential alternative remedies, by aggressively utilizing the exemptions outlined by the Act.\" He added that \"when agencies fail to solicit or consider the views of states and localities, they deny themselves the benefit of state and local innovation and experience. This will not be accepted practice in this [George W. Bush] Administration.\"", "In 2004, GAO released a second study of UMRA's implementation of Title II (and the first for Title I), focusing on statutes enacted and rules published during 2001 and 2002. GAO found that 5 of 377 statutes enacted and 9 of 122 major or economically significant final rules issued in 2001 or 2002 were identified as containing federal mandates at or above UMRA's thresholds. GAO concluded its report by stating that \"the findings raise the question of whether UMRA's procedures, definitions, and exclusions adequately capture and subject to scrutiny federal statutory and regulatory actions that might impose significant financial burdens on affected nonfederal parties.\" ", "As noted earlier, in 2005, GAO sought and received input from participating parties about UMRA's strengths and weaknesses and potential options for reinforcing the strengths or addressing the weaknesses. It also held a symposium on federal mandates to examine those identified strengths and weaknesses in more depth. Although the symposium's participants viewed UMRA's coverage as its most significant issue, GAO reported that comments received concerning federal agency consultation with state and local governments under Title II \"focused on the quality of consultations across agencies, which was viewed as inconsistent\" and that \"a few parties commented that UMRA had improved consultation and collaboration between federal agencies and nonfederal levels of government.\" ", "At a Senate hearing held on April 14, 2005, OIRA's director, John Graham, testified that OMB includes summaries of agency consultations with state and local government officials in its annual report to Congress and that \"this year's report shows an increased level of engagement.\" He added that there were \"some very good examples of consultation that are documented in that report at the Department of Education, the Environmental Protection Agency and so forth, but I think that it would be fair to say that those best practices are not necessarily uniform across the federal government or across any particular agency.\" State and local government officials testifying at the hearing stated that federal agency consultation had improved somewhat, but remained \"sporadic.\" "], "subsections": []}, {"section_title": "Congressional Issues for Title II", "paragraphs": [], "subsections": [{"section_title": "Exemptions and Exclusions", "paragraphs": ["State and local government public interest groups continue to advocate a broadening of Title II's coverage. For example, as mentioned previously, they advocate a broader definition of what UMRA considers a mandate, under the presumption that a broader definition would subject more rules to Title II. An alternative approach would be to separate debates concerning the definition of \"mandate\" and UMRA's coverage, and, instead, apply Title II's information requirements to whatever classes of federally induced costs Congress deems appropriate to cover. This approach might be implemented by incorporating coverage of various kinds of \"federally induced costs,\" adopting the terminology proposed earlier by ACIR. In either case, inasmuch as Title II's requirements are informational only, their extension to new classes of regulations, or to new kinds of federally induced costs, would not affect the authority of agencies to issue regulations or the substance of the regulations that could be issued.", "As mentioned previously, UMRA's threshold for federal mandates in rules is limited to expenditures, in contrast to the thresholds in Title I that refer to direct costs. Introduced during the 116 th Congress, H.R. 300 , the Unfunded Mandates Information and Transparency Act of 2019, would broaden UMRA's coverage to include both direct and indirect costs, such as foregone profits and costs passed onto consumers, and, when requested by the chair or ranking member of a committee, the prospective costs of legislation that would change conditions of federal financial assistance. ", "State and local government advocacy groups have also argued that Title II should apply to rules issued by independent regulatory agencies. Although OMB does not review rules issued by independent regulatory agencies, in recent years it has included information concerning independent regulatory agency rules in its annual UMRA report to Congress. According to those reports, independent regulatory agencies issued 271 major rules from FY1997 through FY2016. H.R. 300 would remove UMRA's exemption for rules issued by most independent agencies.", "The National Association of Counties (NACO) and other state and local government public interest groups have also advocated a strengthening of OMB's role in the enforcement of Title II to ensure consistent application of UMRA's provisions across federal agencies. For example, NCSL's current policy statement on unfunded mandates recommends that UMRA be amended to include \"the creation of an office within the Office of Management and Budget that is analogous to the State and Local Government Cost Estimates Unit at the Congressional Budget Office.\" Business organizations, led by the U.S. Chamber of Commerce, also have advocated an independent review of federal agency cost estimates, recommending that the reviews be conducted by OMB or GAO. They also have advocated the permitting of early judicial challenges to an agency's failure to complete an UMRA cost estimate statement or for completing one that is deficient.", "During the 112 th Congress, H.R. 214 , the Congressional Office of Regulatory Analysis Creation and Sunset and Review Act of 2011, would have created a Congressional Office of Regulatory Analysis. The bill included a provision that would have transferred from CBO's director to the director of the proposed Congressional Office of Regulatory Analysis the responsibility to compare federal agency estimates of the cost of regulations implementing an act containing a federal mandate with the CBO's estimate of those costs. The Congressional Office of Regulatory Analysis would also have received federal agency statements that accompany significant regulatory actions.", "As mentioned previously, organizations representing various environmental and social groups have argued that UMRA has achieved its stated goals of strengthening the partnership between the federal government and state, local, and tribal governments by promoting informed and deliberate decisions by Congress on the appropriateness of federal mandates. In their view, broadening UMRA's coverage would dilute its impact. For example, a participant at GAO's 2005 symposium on federal mandates argued that eliminating any of UMRA's exclusions and exemptions might make the identification of mandates less meaningful, saying \"The more red flags run up, the less important the red flag becomes.\" Also, some of the participants at the symposium from the academic, policy research institute, and public interest advocacy sectors argued that it was essential that some of the existing exclusions, such as those dealing with constitutional and statutory rights barring discrimination against various groups, be retained. They also advocated additional exclusions to include federal actions regarding public health, safety, environmental protection, workers' rights, and the disabled."], "subsections": []}, {"section_title": "Federal Agency Consultation Requirements", "paragraphs": ["State and local government public interest groups assert that enhanced requirements for federal agency consultation with state and local government officials during the rulemaking process are needed. For example, the NCSL has asserted that federal agency \"consultation with state and local governments in the construction of these rules is haphazard.\" It recommends that Title II be amended to include \"enhanced requirements for federal agencies to consult with state and local governments.\" ", "OMB asserts that \"federal agencies have been actively consulting with states, localities, and tribal governments in order to ensure that regulatory activities were conducted consistent with the requirements of UMRA.\" In addition, OMB notes that it has had guidelines in place since September 21, 1995, to assist federal agencies in complying with the act. The current guidelines suggest that (1) intergovernmental consultations should take place as early as possible, beginning before issuance of a proposed rule and continuing through the final rule stage, and be integrated explicitly into the rulemaking process; (2) agencies should consult with a wide variety of state, local, and tribal officials; (3) agencies should estimate direct benefits and costs to assist with these consultations; (4) the scope of consultation should reflect the cost and significance of the mandate being considered; (5) effective consultation requires trust and significant and sustained attention so that all who participate can enjoy frank discussion and focus on key priorities; and (6) agencies should seek out state, local, and tribal views on costs, benefits, risks, and alternative methods of compliance, and whether the federal rule will harmonize with and not duplicate similar laws in other levels of government.", "OMB often includes summaries of selected consultation activities by agencies whose actions affect state, local, and tribal governments in its annual draft and final UMRA reports to Congress. OMB has argued that the summaries are an indication that federal agencies are complying with the act. For example, in OMB's final 2015 UMRA report to Congress, OMB wrote in the introduction to these summaries:", "Four agencies subject to UMRA (the Departments of Energy, Health and Human Services, Interior, and Labor) provided examples of consultation activities that involved State, local, and tribal governments not only in their regulatory processes, but also in their program planning and implementation phases. These agencies have worked to enhance the regulatory environment by improving the way in which the Federal Government relates to its intergovernmental partners. Many of the departments and agencies not listed here (i.e., the Departments of Justice, State, Treasury, and Veterans Affairs, the Small Business Administration, and the General Services Administration) do not often impose mandates upon States, localities, or tribes, and thus have fewer occasions to consult with these governments. Other agencies, such as the National Archives and Records Administration, are exempt from UMRA's reporting requirements, but may nonetheless engage in consultation where their activities would affect State, local, and Tribal governments.", "As the following descriptions indicate, Federal agencies conduct a wide range of consultations. Agency consultations sometimes involve multiple levels of government, depending on the agency's understanding of the scope and impact of its rule or policy.", "As mentioned previously, H.R. 300 , the Unfunded Mandates Information and Transparency Act of 2019, would require federal agencies to enhance their consultation with UMRA stakeholders."], "subsections": []}]}]}, {"section_title": "Concluding Observations", "paragraphs": ["In 1995, UMRA's enactment was considered an historic, milestone event in the history of American intergovernmental relations. For example, when signing UMRA, President Bill Clinton said,", "Today, we are making history. We are working to find the right balance for the 21 st century. We are recognizing that the pendulum had swung too far, and that we have to rely on the initiative, the creativity, the determination, and the decisionmaking of people at the State and local level to carry much of the load for America as we move into the 21 st century.", "Since UMRA's enactment, parties participating in its implementation and researchers in the academic community, policy research institutes, and nonpartisan government agencies have reached different conclusions concerning the extent of UMRA's impact on intergovernmental relations and whether UMRA should be amended. State and local government officials and federalism scholars generally view UMRA as having a limited, though positive, impact on intergovernmental relations. In their view, the federal government has continued to expand its authority through the \"carrots\" of increased federal assistance and the \"sticks\" of grant conditions, preemptions, mandates, and administrative rulemaking. Facing what they view as a seemingly ever growing federal influence in American governance, they generally advocate a broadening of UMRA's coverage to enhance its impact, emphasizing the need to include conditions of grant assistance and a broader range of federal agency rulemaking, including rules issued by independent regulatory agencies. ", "Other organizations, representing various environmental and social groups, argue that UMRA's coverage does not need to be broadened. In their view, UMRA has accomplished its goals of fostering improved intergovernmental relations and ensuring that when Congress votes on major federal mandates it is aware of the costs imposed by the legislation. They assert that UMRA's current limits on coverage should be maintained or reinforced by adding exclusions for mandates regarding public health, safety, workers' rights, environmental protection, and the disabled.", "During the 111 th Congress, UMRA received increased attention as Congress considered various proposals to reform health care. Governors, for example, expressed opposition to proposals that would have required states to contribute toward the cost of expanding Medicaid eligibility, asserting that the expansion could inflate state deficits and impose on states what Tennessee Governor Philip Bredesen reportedly described as the \"mother of all unfunded mandates.\" As mentioned previously, at that time, CBO had determined that UMRA provisions did not apply to Medicaid's conditions of federal assistance because, in its view, states had \"significant flexibility to make programmatic adjustments in their Medicaid programs to accommodate\" new federal requirements. Following the Supreme Court's ruling in National Federation of Independent Business (NFIB) v. Sebelius (June 28, 2012), CBO indicated that UMRA's provisions may apply to changes in \"the stringency of conditions\" or reductions in funding for \"certain large mandatory programs \u2026 if the affected governments lack the flexibility to alter the programs.\"", "As discussed previously, H.R. 300 , the Unfunded Mandates Information and Transparency Act of 2019, would", "require CBO to assess the prospective costs of changes in conditions of federal financial assistance when requested by the chair or ranking member of a committee; broaden UMRA's coverage to include assessments of indirect as well as direct costs by amending the definition of direct costs to include forgone profits, costs passed onto consumers or other entities, and, to the extent practicable, behavioral changes; expand the scope of reporting requirements to include regulations imposed by most independent regulatory agencies; make private-sector mandates subject to a substantive point of order; establish principles for federal agencies to follow when assessing the effects of regulations on state and local governments and the private sector, including requiring the agency to identify the problem it seeks to address, determining whether existing laws or regulations could be modified to address the problem, identifying alternatives, and designing regulations in the most cost-effective manner available; expand the scope of cost statements accompanying significant regulatory actions to include, among other requirements, a reasonably detailed description of the need for the proposed rulemaking or final rule and an explanation of how the proposed rulemaking or final rule will meet that need; an assessment of the potential costs and benefits of the proposed rulemaking or final rule; estimates of the mandate's future compliance costs and any disproportionate budgetary effects upon any particular regions of the nation or state, local, or tribal governments; a detailed description of the agency's consultation with the private sector or elected representatives of the affected state, local, or tribal governments; and a detailed summary of how the agency complied with each of the regulatory principles included in the bill; no longer allow a federal agency to forgo UMRA analysis because the agency published a rule without first issuing a notice of proposed rulemaking; require federal agencies to meet enhanced levels of consultation with state, local, and tribal governments and the private sector before issuing a notice of proposed rulemaking or a final rule; and require federal agencies to conduct a retrospective analysis of the costs and benefits of an existing regulation when requested by the chair or ranking member of a committee.", "Advocates argue that these reforms will \"improve the quality of congressional deliberations and ... enhance the ability of Congress, federal agencies, and the public to identify federal mandates that may impose undue harm on state, local, and tribal governments and the private sector.\" Opponents argue that these reforms are \"an assault on the nation's health, safety, and environmental protections, would erect new barriers to unnecessarily slow down the regulatory process, and would give regulated industries an unfair advantage to water down consumer protections.\"", "Underlying disagreements over UMRA's future are fundamentally different values concerning American federalism. One view emphasizes the importance of freeing state and local government officials from the constraints brought about by the directives and costs associated with federal mandates so they can experiment with innovative ways to achieve results with greater efficiency and cost effectiveness. This view focuses on the positive effect active state and local governments can have in promoting a sense of state and community responsibility and self-reliance, encouraging participation and civic responsibility by allowing more people to become involved in public questions, adapting public programs to state and local needs and conditions, and reducing the political turmoil that sometimes results from single policies that govern the entire nation.", "Another view emphasizes the federal government's responsibility to ensure that all citizens are afforded minimum levels of essential government services. This view focuses on the propensity of states to restrict governmental services because they compete with one another for businesses and taxpaying residents; the variation in state fiscal capacities that makes it difficult for some states to provide certain governmental services even though they might have the political will to do so; and the propensity of states to have different views concerning what services are essential and what constitutes a sufficient level of essential government services.", "Given these disagreements over fundamental values, it is perhaps not surprising that there are differences of opinion concerning UMRA's future. Using President Clinton's words, debates over UMRA's future are more than just arguments over who will pay for what; they are also about finding \"the right balance\" for American federalism in the 21 st century.", "Appendix A. The Rise of Unfunded Mandates as a National Issue and UMRA's Legislative History", "Unfunded mandates became a national issue during the 1980s as state and local government officials and their affiliated public interest groups, led by the National League of Cities (NLC), U.S. Conference of Mayors (USCM), and National Association of Counties (NACO), began an intensive lobbying effort to limit unfunded intergovernmental mandates. Their efforts were supported by various business organizations, led by the U.S. Chamber of Commerce, which opposed the imposition of unfunded mandates on both state and local governments and the private sector, particularly mandates issued through federal rules. ", "Increased Number and Cost of Unfunded Mandates", "State and local government officials became involved in the issue of unfunded federal mandates during the 1980s primarily because the number and costs of unfunded intergovernmental mandates were increasing and, by then, nearly every community in the nation had become subject to their effects. For example, ACIR reported that during the 1980s the costs of unfunded intergovernmental mandates were increasing at a rate faster than federal assistance. ACIR also identified 63 federal statutes as of 1990 that, in its view, imposed \"major\" restrictions or costs on state and local governments. Many of the statutes involved civil rights, consumer protection, improved health and safety, and environmental protection. Only 2 of the 63 statutes it identified, the Davis-Bacon Act of 1931 and Hatch Act of 1940, were enacted prior to 1964, 9 were enacted during the 1960s, 25 during the 1970s, 21 during the 1980s, and 6 in 1990. A study completed by the Clinton Administration's National Performance Review identified 172 laws in force that imposed requirements (regardless of the magnitude of their impact) on state and local governments as of December 1992.", "Some of the major federal statutes adopted during the 1970s that imposed relatively costly federal mandates on state and local governments were the Equal Employment Opportunity Act of 1972, which extended the prohibitions against discrimination in employment contained in the Civil Rights Act of 1964 to state and local government employment; the Fair Labor Standards Act Amendments of 1974, which extended the prohibitions against age discrimination in the Age Discrimination in Employment Act of 1967 to state and local government employment; and the Public Utilities Regulatory Policy Act of 1978, which established federal requirements concerning the pricing of electricity and natural gas. One of the more costly federal mandates enacted during the 1970s was Section 504 of the Rehabilitation Act of 1973. It prohibited discrimination against handicapped persons in federally assisted programs. CBO estimated that it would require states and localities to spend $6.8 billion over 30 years to equip buses with wheelchair lifts, to install elevators in subway systems, and to expand access to public transit systems for the physically disabled.", "Three of the more costly unfunded federal mandates adopted during the 1980s were the Safe Drinking Water Act Amendments of 1986 (which was estimated to impose an additional cost of between $2 billion and $3 billion on state and local governments to improve public water systems); the Asbestos Hazard Emergency Response Act of 1986 (which required schools to remove hazardous asbestos at an estimated cost of $3.15 billion over 30 years); and the Water Quality Act of 1987 (which was estimated to cost states and localities about $12 billion in capital costs for wastewater treatment). ACIR estimated that new federal mandates adopted between 1983 and 1990 cost state and local governments between $8.9 billion and $12.7 billion, depending on the definition of mandate used; in FY1991, federal mandates imposed estimated costs of between $2.2 billion and $3.6 billion on state and local governments; and additional mandates, not included in these estimates, were scheduled to take effect in the years ahead.", "ACIR suggested that the expansion of federal intergovernmental mandates during the 1960s, 1970s, and 1980s fundamentally changed the nature of intergovernmental relations in the United States: ", "During the 1960s and 1970s, state and local governments for the first time were brought under extensive federal regulatory controls.... Over this period, national controls have been adopted affecting public functions and services ranging from automobile inspection, animal preservation and college athletics to waste treatment and waste disposal. In field after field the power to set standards and determine methods of compliance has shifted from the states and localities to Washington. ", "State and Local Governments Seek Relief from Unfunded\u00a0Mandates", "Edward I. Koch, then mayor of New York City and a former Member of Congress, was one of the first public officials to highlight the mandate issue. In 1980, he authored an article criticizing what he called \"the mandate millstone.\" He noted that as a Member of Congress he voted for many federal mandates \"with every confidence that we were enacting sensible permanent solutions to critical problems\" but now that he was a mayor he had come to realize that \"over the past decade, a maze of complex statutory and administrative directives has come to threaten both the initiative and the financial health of local governments throughout the country.\" ", "The continued growth in the number and cost of federal mandates during the 1980s and early 1990s generated renewed and heightened opposition from state and local government officials and their affiliated public interest groups. This opposition culminated in the National Unfunded Mandates (NUM) Day initiative, sponsored by the NLC, USCM, NACO, and International City/County Management Association. Held on October 27, 1993, local government officials across the nation held press conferences and public forums criticizing unfunded mandates, and released a study of the costs imposed by federal mandates on local governments. Over 300 cities and 128 counties participated in the study, which, when extrapolated nationally, estimated that federal mandates imposed additional costs of $6.5 billion annually for cities and $4.8 billion annually for counties. ", "The NUM Day methodology used to estimate the costs of unfunded federal mandates was later challenged because of the absence of independent validation of local government submissions and the nonrandom nature of the participating jurisdictions. However, politically, NUM Day was considered a success by its organizers for two reasons. First, it attracted unprecedented media attention to the issue of unfunded federal mandates. For example, the number of newspaper articles discussing unfunded federal mandates increased from 22 in 1992, to 179 in 1993, and to 836 in 1994. Second, it increased congressional awareness of state and local government concerns about unfunded mandates. For example, on January 5, 1995, Senator John Glenn mentioned NUM Day as having an impact on congressional awareness of unfunded mandates at a Senate congressional hearing on S. 1 \u2014The Unfunded Mandate Reform Act:", "On October 27, 1993, State and local elected officials from all over the Nation came to Washington and declared that day\u2014\"National Unfunded Mandates Day.\" These officials conveyed a powerful message to Congress and the Clinton Administration on the need for Federal mandate reform and relief. They raised four major objections to unfunded Federal mandates.", "First, unfunded Federal mandates impose unreasonable fiscal burdens on their budgets;", "Second, they limit State and local government flexibility to address more pressing local problems like crime and education;", "Third, Federal mandates too often come in a \"one-size-fits-all\" box that stifles the development of more innovative local efforts\u2014efforts that ultimately may be more effective in solving the problem the Federal Mandate is meant to address; and ", "Fourth, they allow Congress to get credit for passing some worthy mandate or program, while leaving State and local governments with the difficult tasks of cutting services or raising taxes in order to pay for it.", "State and local government officials continued to lobby Congress for mandate relief legislation and coordinated their efforts to increase public awareness of their concerns. For example, on March 21, 1994, state and local government officials across the nation held town hall meetings and their affiliated public interest groups sponsored a rally on the Capitol steps to draw media attention to their concerns about unfunded federal mandates. The NLC and state municipal leagues across the country also declared October 24-30, 1994, Unfunded Mandates Week, which also generated considerable media coverage.", "The Initial Congressional Response", "The efforts of state and local government officials appeared to have an effect on congressional legislative activity concerning unfunded federal mandates. During the 102 nd Congress (1991-1992), 12 federal mandate relief bills were introduced in the House and 10 were introduced in the Senate. All of these bills failed to be reported out of committee, and only one had a congressional hearing. During the first session of the 103 rd Congress (1993), 32 federal mandate relief bills were introduced and one of them, S. 993 , the Federal Mandate Accountability and Reform Act of 1994 cosponsored by Senators John Glenn and Dirk Kempthorne, was reported by the Senate Governmental Affairs Committee on June 16, 1994. It contained several provisions that were later in UMRA, and included an amendment offered by Senator Byron Dorgan \"to include the private sector under the CBO and Committee mandate cost analysis requirements of Title I of S. 993 , and a Glenn amendment to allow CBO to waive the private-sector cost analysis if CBO cannot make a \"reasonable estimate\" of the bills cost.\" The bill was considered by the Senate on October 6, 1994, without a time agreement. After the introduction of several amendments and some debate, the Senate proceeded to other issues and adjourned without voting on the measure. The House Government Operations Committee also reported a bill, H.R. 5128 , the Federal Mandates Relief for State and Local Government Act of 1994, sponsored by Representative John Conyers Jr., on October 5, 1994. It was similar to S. 993 , but its approval was delayed, reportedly due to concerns raised by several senior Democratic Members worried that mandate legislation might make it more difficult to adopt laws to protect the environment and address social issues. Congress adjourned before the bill could move to the floor for consideration.", "Core Federalism Principles Debated During UMRA's\u00a0Consideration ", "The Republican Party gained control of the House of Representatives for the first time in 40 years following the congressional elections held on November 8, 1994. They also achieved a slim majority in the Senate as well. Mandate reform was a key provision in the Republican Party's \"Contract With America.\" Perhaps reflecting its importance to the Republican leadership, the prospective Senate majority leader, Senator Robert Dole, designated a revised unfunded mandate relief bill, cosponsored by Senators Kempthorne and Glenn and introduced on January 4, 1995, the opening day of the new Congress, as S. 1 , the Unfunded Mandates Reform Act of 1995. The Senate Governmental Affairs Committee and Senate Budget Committee held a joint hearing on the bill the following day and it was reported out of the Senate Governmental Affairs Committee with three amendments (9 to 4) on January 9, 1995, and out of the Senate Budget Committee with four amendments (21-0) also on January 9, 1995. ", "To expedite Senate floor consideration, neither committee filed a committee report. Instead, the committee chairs, Senator William Roth Jr. on behalf of the Senate Governmental Affairs Committee and Senator Pete Domenici on behalf of the Senate Budget Committee, each submitted a chairman's statement for insertion into the Congressional Record . When Senate floor consideration commenced on January 12, 1995, Senator Robert Byrd objected to several features of the way the legislation was being handled, including the absence of a committee report and the pace of consideration. In addition, Senators introduced 228 amendments to the bill. Floor debate lasted for more than two weeks. During floor debate, Senator Kempthorne argued that the bill should be adopted out of a sense of fairness to state and local governments and as a commitment to federalism principles: ", "Under this legislation, we are acknowledging for the first time, in a meaningful way, that there must be limits on the Federal Government's propensity to impose costly mandates on other levels of government. As the representatives of those governments have very effectively demonstrated, this is a real problem. Cities, for example, generally are fortunate if they have adequate resources just to meet their own local responsibilities. Unfunded Federal mandates have put a real strain on those resources. This has been the practice of the Federal Government for the past several decades, but in recent years it has mushroomed into an intolerable burden. ", "This has been due, at least in part, to the Federal Government's own budget crisis. In the past, if Congress felt that a particular problem warranted a national solution, it would often fund that solution with Federal dollars. Mandates imposed on State and local governments could frequently be offset with generous Federal grants. But the Federal Government no longer has the money to fund the governmental actions it wishes to see accomplished throughout the country. In fact, it hasn't had the money to do this for many years. Instead, it borrowed for a long time, to cover those costs. But now the Federal deficit is so large, that the only alternative left for imposing so-called national solutions is to impose unfunded mandates.... ", "The State legislators and Governors know this. This is why they feel so strongly that legislation regarding this practice must first be in place, before they are asked to ratify a balanced budget amendment. Otherwise, in the drive to achieve a balance Federal budget, Congress might be tempted to mandate that State and local governments shall pick up many of the costs that were formerly Federal. This is why any effort to add a sunset provision to this bill ought to be opposed. Our commitment to protect federalism ought to be permanent. ", "S. 1 is designed to put in place just such a mechanism. In this regard, it may truly be called balanced legislation. First of all, it helps bring our system of federalism back into balance, by serving as a check against the easy imposition of unfunded mandates. And, second, it does so in a way that strikes a balance between restraining the growth of mandates and recognizing that there may be legitimate exceptions. ", "Senator Frank Lautenberg was among those opposing UMRA. He argued that the bill should be defeated because, among other things, the federal government has an obligation to set national standards to protect the environment and ensure the quality of life for all Americans:", "Halting interstate pollution is an important responsibility of the Federal Government. And I am concerned that this act may have a chilling effect on future Federal environmental legislation. Another issue that may get loss in this debate is the benefit that States and their citizens derive from Federal mandates\u2014even those not fully funded. States may say, we know how best to care for our citizens; a program that may be good for New Jersey, may not be good for Idaho or Ohio. But, I would argue that there is a broader national interest in some very fundamental issues which transcend that premise. I would argue that historically, not all States have provided a floor of satisfactory minimum decency standards for their citizens and that, as a democratic and fair society, we should worry about that. Further, as a practical matter, I would argue that the policies of one State in a society such as ours will certainly affect citizens and taxpayers of another State just as certainly as unfunded mandates can. ", "Let us look at our welfare system. There has been a lot of discussion about turning welfare over to the States, with few or virtually no Federal guidelines or requirements. What would happen if we do that? Would we see a movement of the disadvantaged between States, putting a heavier burden on the citizens of a State that provides more generous benefits? ", "Let us look at occupational safety, or environmental regulation. With a patchwork of differing standards across the States, would we see a migration of factories and jobs to States with lower standards? I think so. But by mandating floors in environmental and workplace conditions, the Federal Government ensures that States will comply with minimal standards befitting a complex, interrelated, and decent society. ", "Or let us look at gun control. My State of New Jersey generally has strong controls on guns. But New Jerseyans still suffer from an epidemic of gun violence\u2013in no small measure because firearms come into New Jersey from other States. Without strong national controls, this will remain a problem. That is why we passed a ban on all assault weapons and why we passed the Brady bill. ", "Currently the Federal Government discourages a scenario whereby a given State decides not to enforce some worker health and safety laws as a way of lowering costs and attracting industry. A State right next door might feel compelled to lower its standards in order to remain competitive. In the absence of a Federal Standard, we would likely see a bidding war that lowers the quality of life for all Americans. ", "These are some of a host of very fundamental, very basic, and even profound questions raised by the notion that we should never have unfunded mandates. These are questions each Member of the Senate should consider long and hard, before moving to drastically curtail\u2014or make impossible\u2014any unfunded mandates.", "After voting on 44 amendments and several cloture motions, the Senate approved S. 1 on January 27, 1995, 86-10.", "One of the amendments approved by the Senate was the \"Byrd look-back amendment,\" which is the only provision in UMRA that allows for the regulation of any mandates based on actual rather than estimated costs. It provided that legislation containing intergovernmental mandates would be considered funded, and hence not subject to a point of order, if it authorized appropriations to cover the estimated direct costs of the intergovernmental mandate and incorporated a prescribed mechanism requiring further review if, in any fiscal year, Congress did not appropriate funds sufficient to cover those costs. Under this mechanism, if the responsible federal agency determines that the appropriation provided was insufficient to cover the estimated direct costs of the mandate it shall notify the appropriate authorizing committees not later than 30 days after the start of the fiscal year and submit recommendations for either implementing a less costly mandate or making the mandate ineffective for the fiscal year. The statutory mechanism must also include expedited procedures for the consideration of legislative recommendations to achieve these outcomes not later than 30 days after the recommendations are submitted to Congress. Finally, the mechanism must provide that the mandate \"shall be ineffective until such time as Congress has completed action on the recommendations of the responsible federal agency.\" After Senator Robert Byrd offered this amendment, the Senate adopted it on January 26, 1995, 100-0.", "The House companion bill to S. 1 was H.R. 5 , the Unfunded Mandate Reform Act of 1995, which was cosponsored by Representatives William F. Clinger Jr., Rob Portman, Gary A. Condit, and Thomas M. Davis. It was reported by the House Government Reform and Oversight Committee, on January 13, 1995, by voice vote and without hearings. Floor consideration began on January 20, 1995. Numerous amendments were introduced by Democratic Members to add various exemptions to the bill, such as the health of children and the disabled, the disposal of nuclear waste, and child support enforcement. These amendments were rejected on party-line votes. On February 1, 1995, H.R. 5 was adopted, 360-74, inserted into S. 1 as a House substitute, and sent to conference. ", "There were two major differences between the House and Senate versions of S. 1 . The House version did not include the Byrd look-back amendment, and it permitted judicial review of federal agency compliance with the bill's provisions. Initially, House conferees refused to accept the Byrd look-back amendment and Senate conferees; worried that outside parties could delay regulations for years by filing lawsuits, refused to accept judicial review of federal agency compliance with the bill's provisions. Negotiations continued for six weeks. The deadlock over judicial review was ended by allowing judicial review of whether an appropriate analysis of mandate costs was done, but restricting the court's ability to second-guess the quality of the cost estimates. The deadlock over the Byrd look-back amendment ended when House conferees accepted its inclusion after being assured that its intent was to make certain that Congress, rather than an executive agency, retained responsibility for setting policy.", "The Senate adopted the conference report, which renamed the bill the Unfunded Mandates Reform Act of 1995, on March 15, 1995, 91-9, and the House adopted it the next day, 394-28. President Bill Clinton signed it on March 22, 1995.", "Appendix B. UMRA Points of Order", "1. Representative Bill Archer, \"Contract With America Advancement Act of 1996,\" House debate on motion to recommit H.R. 3136 , Congressional Record , vol. 142, part 5 (March 28, 1996), pp. 6931-6937. 2. Representative Rob Portman, \"The Employee Commuting Act of 1996,\" House debate on H.R. 1227 , Congressional Record , vol. 142, part 9 (May 23, 1996), pp. 12283-12287. 3. Representative Bill Orton, \"The Welfare\u2014Medicaid Reform Act of 1996,\" House debate on H.R. 3734 , Congressional Record , vol. 142, part 13 (July 18, 1996), p. 17668. 4. Representative Melvin Watt, \"The Housing Opportunity and Responsibility Act,\" House debate on H.R. 2 , Congressional Record , vol. 143, part 5 (May 1, 1997), pp. 7006-7012. 5. Representative John Ensign, \"The Nuclear Waste Policy Act of 1997,\" House debate on H.R. 1270 , Congressional Record , vol. 143, no, 148 (October 29, 1997), pp. H9655-H9657. 6. Representative Gerald Soloman, \"The Agricultural Research, Extension, and Education Reform Act of 1998,\" House debate on the conference report for S. 1150 , Congressional Record , vol. 144, part 8 (June 4, 1998), pp. H9655-H9657. 7. Representative Jerrold Nadler, \"The Bankruptcy Reform Act of 1998,\" House debate on H.R. 3150 , Congressional Record , vol. 144, part 8 (June 10, 1998), pp. 11853-11857. 8. Representative Steve Largent, \"The Minimum Wage Increase Act,\" House debate on H.R. 3846 , Congressional Record , vol. 144, part 2 (March 9, 2000), pp. 2623-2624. 9. Representative James Gibbons, \"The Nuclear Waste Policy Amendments Act of 2000,\" House debate on S. 1287 , Congressional Record , vol. 146, part 2 (March 22, 2000), pp. 3234-3236. 10. Representative John Conyers, \"The Internet Nondiscrimination Act of 2000,\" House debate on H.R. 3709 , Congressional Record , vol. 146, part 6 (May 10, 2000), pp. 7483-7485. 11. Representative Charles Stenholm, \"The Medicare RX 2000 Act,\" House debate on H.R. 4680 , Congressional Record , vol. 146, part 9 (June 28, 2000), pp. 12650-12653. 12. Representative Jim Moran, \"The Department of Transportation Appropriations Act, 2002,\" House debate on H.R. 2299 , Congressional Record , vol. 147, part 9 (June 26, 2001), pp. 11906-11910. 13. Representative James Gibbons, \"The Yucca Mountain Repository Site Approval Act,\" House debate on H.J.Res. 87 , Congressional Record , vol. 148, part 5 (May 8, 2002), pp. 7145-7148. 14. Representative Sheila Jackson-Lee, \"The Real ID Act of 2005,\" House debate on H.R. 418 , Congressional Record , vol. 151, no. 13 (February 9, 2005), pp. H437-H442. 15. Representative James McGovern, \"The Energy Policy Act of 2005,\" House debate on H.R. 6 , Congressional Record , vol. 151, no. 48 (April 20, 2005), pp. H2174-H2178. 16. Senator Kit Bond, \"The Transportation, Treasury, HUD and Independent Agencies Appropriations Act, 2006,\" Senate debate on H.R. 3058 , Congressional Record , vol. 151, no. 133 (October 19, 2005), p. S11547. 17. Senator Ted Kennedy, \"The Transportation, Treasury, HUD and Independent Agencies Appropriations Act, 2006,\" Senate debate on H.R. 3058 , Congressional Record , vol. 151, no. 133 (October 19, 2005), p. S11548. 18. Representative Jim McDermott, \"The Deficit Reduction Act of 2005,\" House debate on H.R. 4241 , Congressional Record , vol. 151, no. 152 (November 17, 2005), pp. H10531-H10534. 19. Representative Jim McDermott, \"The Deficit Reduction Act of 2005,\" House debate on H.Res. 653 , Congressional Record , vol. 152, no. 10 (February 1, 2006), pp. H37-H40. 20. Representative Tammy Baldwin, \"The Communications Opportunity, Promotion, and Enhancement Act of 2006,\" House debate on H.R. 5252 , Congressional Record , vol. 152, no. 72 (June 8, 2006), pp. H3506-H3510. 21. Representative Jim McDermott, \"The Federal Election Integrity Act of 2006,\" House debate on H.R. 4844 , Congressional Record , vol. 152, no. 118 (September 20, 2006), pp. H6742-H6745. 22. Representative Pete Sessions, \"The Children's Health and Medicare Protections Act of 2007,\" House debate on H.R. 3162 , Congressional Record , vol. 153, no. 124-125 (August 1, 2007), pp. H9288-H9290. 23. Representative Pete Sessions, \"The Children's Health Insurance Program Reauthorization Act of 2007,\" House debate on H.R. 3963 , Congressional Record , vol. 153, no. 163 (October 25, 2007), pp. H12027-H12029. 24. Representative Jeff Flake, \"Senate Amendments to H.R. 6 , Energy Independence and Security Act of 2007,\" House debate on H.R. 6 , Congressional Record , vol. 153, no. 186 (December 6, 2007), pp. H4255-H4259. 25. Representative Mike Conaway, \"The Renewable Energy and Energy Conservation Tax Act of 2008,\" House debate on H.R. 5351 , Congressional Record , vol. 154, no. 32 (February 27, 2008), pp. H1079-H1082. 26. Representative Paul Broun, \"The Paul Wellstone Mental Health and Addiction Equity Act of 2007,\" House debate on H.R. 1424 , Congressional Record , vol. 154, no. 37 (March 5, 2008), pp. H1259-H1262. 27. Representative Jeff Flake, \"The Food, Conservation, and Energy Act of 2008,\" House debate on H.R. 2419 , Congressional Record , vol. 154, no. 79 (May 14, 2008), pp. H3784-H3789. 28. Representative Eric Cantor, \"The Comprehensive American Energy Security and Consumer Protection Act,\" House debate on H.R. 6899 , Congressional Record , vol. 154, no. 147 (September 16, 2008), pp. H8152-H8157. 29. Representative Jeff Flake, \"The Consolidated Security, Disaster Assistance and Continuing Appropriations Act, 2009,\" House debate on H.R. 2638 , Congressional Record , vol. 154, no. 152 (September 24, 2008), pp. H9218-H9220. 30. Representative David Drier, \"The American Recovery and Reinvestment Act,\" House debate on H.R. 1 , Congressional Record , vol. 155, no. 30 (February 13, 2009), pp. H1524-H1536. 31. Representative Jeff Flake, \"The Omnibus Appropriations Act, 2009,\" House debate on H.R. 1105 , Congressional Record , vol. 155, no. 33 (February 25, 2009), pp. H2643-H2646. 32. Representative Jeff Flake, \"The Agriculture, Rural Development, Food and Drug Administration Appropriations Act, 2010,\" House debate on H.R. 2997 , Congressional Record , vol. 155, no. 101 (July 8, 2009), pp. H7783-H7786. 33. Representative Jeff Flake, \"The Military Construction and Veteran's Affairs Appropriations Act, 2010,\" House debate on H.R. 3082 , Congressional Record , vol. 155, no. 103 (July 10, 2009), pp. H7951-H7953. 34. Representative Jeff Flake, \"The Energy and Water Development Appropriations Act, 2010,\" House debate on H.R. 3183 , Congressional Record , vol. 155, no. 106 (July 15, 2009), pp. H8107-H8109. 35. Representative Jeff Flake, \"The Financial Services and General Government Appropriations Act, 2010,\" House debate on H.R. 3170 , Congressional Record , vol. 155, no. 107 (July 16, 2009), pp. H8191-H8193. 36. Representative Jeff Flake, \"The Transportation, Housing and Urban Development Appropriations Act, 2010,\" House debate on H.R. 3288 , Congressional Record , vol. 155, no. 112 (July 23, 2009), pp. H8593-H8594. 37. Representative Jeff Flake, \"The Departments of Labor, Health, and Human Services, and Education Appropriations Act, 2010,\" House debate on H.R. 3293 , Congressional Record , vol. 155, no. 113 (July 24, 2009), pp. H8593-H8594. 38. Representative Jeff Flake, \"The Department of Defense Appropriations Act, 2010,\" House debate on H.R. 3326 , Congressional Record , vol. 155, no. 116 (July 29, 2009), pp. H8977-H8978. 39. Senator Robert Corker, \" H.R. 3590 , the Service Members Home Ownership Act of 2009,\" remarks in the Senate, Congressional Record , daily edition, vol. 155, no. 199 (December 23, 2009), pp. S13803-S13804. 40. Representative Paul Ryan, \"Providing for Consideration of Senate Amendments to H.R. 3590 , Service Members Home Ownership Tax Act of 2009, and Providing for Consideration of H.R. 4872 , Health Care and Education Reconciliation Act of 2010,\" House debate on H.Res. 1203 , Congressional Record , daily edition, vol. 156, no. 43 (March 21, 2010), pp. H1825-H1828. 41. Representative Jeff Flake, \"Providing For Consideration of H.R. 5822 , Military Construction and Veterans Affairs and Related Agencies Appropriations Act, 2011,\" House debate on H.R. 5822 , Congressional Record , vol. 156, no. 112 (July 28, 2010), pp. H6206-H6209. 42. Representative Jeff Flake, \"Providing For Consideration of H.R. 5850 , Transportation, Housing And Urban Development, and Related Agencies Appropriations Act, 2011,\" House debate on H.R. 5850 , Congressional Record , vol. 156, no. 113 (July 29, 2010), pp. H6298-H6290. 43. Representative Jeff Flake, \"Providing For Consideration of Senate Amendment to House Amendment to Senate Amendment to H.R. 4853 , Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010,\" House debate on H.R. 4853 , Congressional Record , vol. 156, no. 157 (December 16, 2010), pp. H8525-H8526. 44. Representative Keith Ellison, \"Providing For Consideration of H.R. 1255 , Government Shutdown Prevention Act of 2011,\" House debate on H.Res. 194 , Congressional Record , vol. 157, no. 46 (April 1, 2011), pp. H2219-H2222. 45. Representative John Garamendi, \"Providing For Further Consideration of H.R. 1540 , National Defense Authorization Act for Fiscal Year 2012,\" House debate on H.R. 276 , Congressional Record , vol. 157, no. 73 (May 25, 2011), pp. H3423-H3424. 46. Representative Keith Ellison, \"Providing For Consideration of H.R. 2017 , Department of Homeland Security Appropriations Act, 2012,\" House debate on H.Res. 287 , Congressional Record , vol. 157, no. 77 (June 1, 2011), pp. H3816-H3818. 47. Representative John Garamendi, \"Providing For Further Consideration of H.R. 2021 , Jobs and Energy Permitting Act of 2011 and Providing for Consideration of H.R. 1249 , America Invents Act,\" House debate on H.Res. 316 , Congressional Record , vol. 157, no. 73 (June 22, 2011), pp. H4379-H.4380. 48. Representative Marcia Fudge, \"Providing For Consideration of H.R. 1315 , Consumer Financial Protection Safety and Soundness Improvement Act of 2011,\" House debate on H.Res. 358 , Congressional Record , vol. 157, no. 110 (July 21, 2011), p. H5302. 49. Representative Gwen Moore, \"Providing For Consideration of H.Res. 358 , Protect Life Act,\" House debate on H.Res. 430 , Congressional Record , vol. 157, no. 153 (October 13, 2011), pp. H6869, H6870. 50. Representative Gwen Moore, \"Providing For Consideration of H.R. 3630 : Middle Class Tax Relief and Job Creation Act of 2011,\" House debate on H.Res. 491 , Congressional Record , vol. 157, no. 191 (December 13, 2011), pp. H8745-H8748. 51. Representative Gwen Moore, \"Providing For Consideration of H.R. 4089 : Sportsmen's Heritage Act of 2012, and for Other Purposes,\" House debate on H.Res. 614 , Congressional Record , vol. 158, no. 55 (April 17, 2012), pp. H1860-H1862. 52. Representative Gwen Moore, \"Providing For Consideration of H.R. 4970 , the Violence Against Women Reauthorization Act of 2012, and Providing For Consideration of H.R. 4310 , the National Defense Authorization Act for Fiscal Year 2013,\" House debate on H.Res. 656 , Congressional Record , vol. 158, no. 70 (May 16, 2012), pp. H2776-H2731. 53. Representative Gwen Moore, \"Providing For Consideration of House Joint Resolution 118, Disapproving Rule Relating To Waiver and Expenditure Authority with Respect to the Temporary Assistance For Needy Families Program. Providing For Consideration of H.R. 3409 , the Stop The War On Coal Act of 2012; and Providing For Proceedings during the Period from September 22, 2012, through November 12, 2012,\" House debate on H.Res. 788 , Congressional Record , vol. 158, no. 128 (September 20, 2012), pp. H6165-H6173. 54. Representative Jared Polis, \"Providing For Consideration of H.R. 273 , Elimination of 2013 Pay Adjustment, and for Other Purposes,\" House debate on H.Res. 66 , Congressional Record , vol. 159, no. 24 (February 14, 2013), pp. H517-H519. 55. Representative Donna Edwards, \"Providing For Consideration of H.R. 1947 , Federal Agriculture Reform and Risk Management Act of 2013; and Providing for Consideration of H.R. 1797 , Pain-Capable Unborn Child Protection Act,\" House debate on H.Res. 266 , Congressional Record , vol. 159, no. 87 (June 18, 2013), pp. H3708-H3710. 56. Representative Jim McGovern, \"Providing For Further Consideration of H.R. 1947 , Federal Agriculture Reform and Risk Management Act of 2013,\" House debate on H.Res. 271 , Congressional Recor d, vol. 159, no. 88 (June 19, 2013), pp. H3770-H3774. 57. Representative Jim McGovern, \"Providing For Consideration of H.R. 7 , No Taxpayer Funding for Abortion and Abortion Insurance Full Disclosure Act of 2014, and Providing for Consideration of Conference Report on H.R. 2642 , Federal Agriculture Reform and Risk Management Act of 2013,\" House debate on H.Res. 465 , Congressional Recor d, vol. 160, no.16 (January 28, 2014), pp. H1443-H1445. 58. Representative Danny Davis, \"Providing For Consideration of H.R. 4438 , American Research and Competitiveness Act of 2014,\" House debate on H.R. 4438 , Congressional Record , vol. 160, no. 68 (May 7, 2014), pp. H3465-H3466. 59. Representative Jim McGovern, \"Providing For Further Consideration of H.R. 4435 , Howard P. \"Buck\" McKeon National Defense Authorization Act for Fiscal Year 2015; and Providing for Consideration of H.R. 3361 , USA FREEDOM Act,\" House debate on H.R. 4435 , Congressional Record , vol. 160, no.77 (May 21, 2014), pp. H4699-H4701. 60. Representative Jared Polis, \"Providing For Further Consideration of H.R. 5 , Student Success Act,\" House debate on H.R. 5 , Congressional Record , vol. 161, no.33 (February 26, 2015), pp. H1180-H1182. 61. Representative Bonnie Watson Coleman, \"Providing For Consideration of H.R. 1732 , Regulatory Integrity Protection Act of 2015; Providing for Consideration of Conference Report on S.Con.Res. 11 , Concurrent Resolution on the Budget, Fiscal Year 2016; and Providing for Consideration of H.J.Res. 43 , Disapproval of District of Columbia Reproductive Health Non-Discrimination Amendment Act of 2014,\" House debate on H.Res. 231 , Congressional Record , vol. 161, no.64 (April 30, 2015), pp. H2672-H2674. 62. Representative Louise Slaughter, \"Providing For Consideration of the Senate Amendment to H.R. 2146 , Defending Public Safety Employees' Retirement Act,\" House debate on H.Res. 321 , Congressional Record , vol. 161, no. 98 (June 18, 2015), pp. H4497-H4507. 63. Representative Elizabeth Esty, \"Providing For Consideration of H.R. 2130 , Red River Private Property Protection Act, and Providing for Consideration of Motions to Suspend the Rule,\" House debate on H.Res. 556 , Congressional Record , vol. 161, no. 178 (December 9, 2015), pp. H9092-H9095. 64. Representative Joaquin Castro, \"Providing For Consideration of H.R. 5325 , Legislative Branch Appropriations Act, 2017,\" House debate on H.Res. 771 , Congressional Record , vol. 162, no. 91 (June 9, 2016), pp. H3586-H3588. 65. Senator Bernie Sanders, \"National Sea Grant College Program Amendments of 2015 (Puerto Rico Oversight, Management, and Economic Stability Act\u2013PROMESA),\" Senate debate on S. 2328 , Congressional Record , vol. 162, no. 105 (June 29, 2016), pp. S4691-S4702. 66. Representative Jim McGovern \"Providing For Consideration of H.R. 5698, Protect and Serve Act of 2018; Providing For Consideration of S. 2372 , Veterans Cemetery Benefit Correction Act; and Providing For Consideration of H.R. 2, Agriculture and Nutrition Act of 2018,\" House debate on H.Res. 891 , Congressional Record , vol. 164, no. 80 (May 16, 2018), pp. H3991-H3993."], "subsections": []}]}}
{"id": "R45809", "title": "Critical Infrastructure: Emerging Trends and Policy Considerations for Congress ", "released_date": "2019-07-08T00:00:00", "summary": ["Protection of the nation's critical infrastructure (CI) against asymmetric physical or cyber threats emerged in the late 1990s as a policy concern, which was then further amplified by the 9/11 terrorist attacks. Congress created the Department of Homeland Security (DHS) in the wake of the attacks, and directed the new Department to identify, prioritize, and protect systems and assets critical to national security, the economy, and public health or safety. Identification of CI assets was, and remains, a complex and resource-intensive task.", "Many governmental and non-governmental stakeholders increasingly advocate for a fundamentally different approach to critical infrastructure security, maintaining that criticality is not a fixed characteristic of given infrastructure assets. Rather, they argue, criticality should be understood in the context of ensuring system-wide resilience of American government, society, and economic life against the full range of natural and manmade hazards.", "Congress further elevated resilience as a priority when it passed the Cybersecurity and Infrastructure Security Agency (CISA) Act into law in late 2018. As the name indicates, CISA was created to lead the national cybersecurity and infrastructure security effort as an operational component of DHS. In April 2019, leadership of the new agency identified a set of 56 National Critical Functions (NCF) (\" Appendix A : National Critical Functions\") which it plans to use as the basis of a resilience-based CI risk management approach. However, implementation will rely to a large degree on repurposed legacy programs. Thus, CI policy is currently at an inflection point that raises several potentially pressing issues for Congress:", "Scope of federal CI policy: The CI security enterprise has expanded significantly from its early focus on protecting systems and assets \"essential to the minimum operations of the economy and government\" against deliberate attack. Congress may consider narrowing the scope of CI policy. The legacy policy framework: National CI policy retains many legacy mandates and programs designed to support asset protection despite a long-term policy shift towards an all-hazards resilience framework. Congress may consider revising existing asset identification and reporting requirements statutorily linked to federal homeland security grant award processes. Validity of new risk management methods: Congress may assess the potential advantages and drawbacks of the resilience framework, and NCF as the basis for national-level infrastructure risk assessments and investment prioritization. In the past, Congress has called for external validation of DHS risk management methods and may wish to do so in the present case given its comparative novelty. Roles and responsibilities of federal agencies: The Homeland Security Act of 2002 created DHS and consolidated many of the federal government's CI security functions in a large-scale reorganization of government and its mission that is still ongoing. Congress may consider transfer of certain infrastructure security related functions to or from DHS as appropriate. Scope of regulation: Congress may consider legislating compulsory compliance with security standards in cases where voluntary private-sector measures are deemed insufficient to protect national security, the economy, and public health or safety. Appropriateness of existing public-private partnership structures: CISA plans to maintain the current sector specific public-private partnership structures as the preferred vehicle for information sharing and policy coordination. Congress may consider whether adjustment or replacement of these structures is needed to better align partnership efforts with the emerging federal emphasis on system-level resilience. Effectiveness of public-private partnerships: CISA and its predecessor organizations have not been able to provide reliable data indicating the reach and effectiveness of public-partnership programs in incentivizing efficient private investments in national level (as opposed to enterprise level) resilience. Congress may consider whether new or revised reporting requirements are necessary."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["Critical infrastructure (CI) refers to the machinery, facilities, and information that enable vital functions of governance, public health, and the economy. Adverse events may occur when CI systems and assets are subject to loss or disruption for any cause, whether by natural disasters or deliberate attack. ", "This report highlights four key areas of enduring policy concern for Congress, and outlines the parameters of ongoing debates within them. A section is devoted below to each key area: defining and identifying CI; understanding and assessing CI risk; federal organization to address CI; and the role of the private sector. "], "subsections": []}, {"section_title": "Defining and Identifying CI", "paragraphs": ["Presidential Decision Directive 63 (PDD-63) on critical infrastructure protection, released in 1998, was the first high-level policy guidance for critical infrastructure protection in the contemporary era. It framed the critical infrastructure issue in terms of national vulnerability to potentially devastating asymmetric attacks. The directive presented U.S. military economic and military might as \"mutually reinforcing and dependent\" elements of national power dependent upon critical infrastructure to function properly. The directive provided an austere definition of critical infrastructure as \"those physical and cyber-based systems essential to the minimum operations of the economy and government.\" ", "PDD-63 set ambitious national goals for the elimination of any significant national vulnerability to \"non-traditional\" asymmetric cyber or physical attacks on CI. In practice, it has proven extremely difficult even to establish consistent criteria for assessing the criticality of specific assets and systems, in part because criticality relates not only to the physical attributes of infrastructure systems and assets, but also to the perspectives, values, and priorities of those making the assessment. The sheer scale, complexity, and interconnectedness of the U.S. and global economies complicate efforts to identify and inventory critical assets and systems. For example, the United States electricity sub-sector alone has nearly 7,000 operational power plants, which in turn depend upon other infrastructure assets and complex supply chains to support continuing operations."], "subsections": [{"section_title": "The Evolving Definition of CI", "paragraphs": ["The most commonly cited statutory definition of critical infrastructure was established in the USA PATRIOT Act of 2001 ( P.L. 107-56 ), and echoes PDD-63 in its focus on protecting the industrial and demographic foundations of national mobilization against catastrophic risks. The USA PATRIOT Act defines critical infrastructure as \"systems and assets, whether physical or virtual, so vital to the United States that the incapacity or destruction of such systems and assets would have a debilitating impact on security, national economic security, national public health or safety, or any combination of those matters.\" ", "Over time, critical infrastructure policy has expanded from its earlier emphasis on the physical foundations of national power to a wider concern with provision of essential services and customary conveniences to the public.", "The universe of threats to CI commonly considered by Congress and executive branch departments and agencies has also expanded since the early post-9/11 period. The intelligence community continues to devote significant attention to asymmetric threats to CI posed by state and non-state adversaries who lack the means to directly confront U.S. military power, or for strategic reasons choose to avoid direct military confrontation. Asymmetric attacks may use a combination of physical or cyber means to damage or disrupt domestic CI systems and assets, or cause mass civilian casualties. However, natural disasters and other causes of damage and disruption not directly linked to terrorism or other intentional acts have become more salient elements of critical infrastructure policy and practice in the years since 9/11.", "Although the USA PATRIOT Act's definition of critical infrastructure remains law and is still commonly cited as a basis for official policy, CI policymakers have lowered the threshold of criticality to include infrastructure-related events with disruptive, but not necessarily catastrophic, effects at all levels of society and government. Policy increasingly reflects local, society-centric perspectives on infrastructure that place emphasis on it as an enabler of prosperity, public safety, and civic life. ", "For example, National Infrastructure Protection Plan (NIPP), published by DHS in 2013 as official policy guidance for interagency coordination and public-private partnerships, defines critical infrastructure as \"assets, systems, and networks that underpin American society,\" and considers impacts of a wide range of natural and manmade hazard events at the national, regional, and local levels. ", "Successive Administrations since 1998 have gradually expanded the aperture of CI policy beyond protection of sectors regarded as essential to national security, the economy, and public health and safety. This reflects a global trend among developed countries toward CI policies favoring society-centric resilience at the system level over security-oriented protection of specific assets deemed at risk. ", "In January 2017, the Department of Homeland Security (DHS) designated U.S. election systems as a sub-sector of the Government Facilities critical infrastructure sector, which also includes national monuments and icons and education facilities. The components of the elections systems as described by DHS include physical locations (storage facilities, polling places, and locations where votes are tabulated) and technology infrastructure (voter registration databases, voting systems, and other technology used to manage elections and to report and validate results). The criticality of these facilities, systems, and assets derives primarily from their essential role in supporting the nation's civic life. ", "Currently, there are 16 critical infrastructure sectors as set forth in Presidential Policy Directive 21 (PPD-21), \"Critical Infrastructure Security and Resilience,\" and elaborated in the 2013 NIPP. The federal government uses CI sectors as an organizing framework for voluntary public-private partnerships with self-identified CI owner-operators. Public-private partnership activities are non-regulatory in nature. DHS has overall responsibility for coordination of partnership programs and activities, but in several cases other federal agencies are assigned leading roles as Sector-Specific Agencies (SSAs). (The roles and responsibilities of the public and private sectors are discussed in the final section of this report, \" The Role of the Private Sector .\") Together, these sectors represent a broad and diverse array of national economic activity and social life, each with its own distinct characteristics. ", "The expanding multiplicity and breadth of definitions used for critical infrastructure designation has policy implications for Congress. Each officially-designated critical infrastructure sector is represented by formal coordination bodies, which include numerous private sector stakeholder groups and representatives of state, local, tribal, and territorial (SLTT) governments. In addition, industry and non-profit groups may participate in certain sector-wide activities. As sectors mature, new public and private sector communities of interest emerge within the broader critical infrastructure enterprise, each with its own unique perspective on what criticality means as applied to the nation's infrastructure.", "For this reason, there is no single, consistently applied definition of critical infrastructure. Even though the most commonly cited statutory definition of CI has not changed in nearly two decades, identification and prioritization of critical systems and assets as categories of applied practice reflects diverse interests and perspectives, which continue to evolve. This suggests that definitions of critical infrastructure are not merely a matter of semantics, and the multiplicity of official definitions in common use is not simply a matter of imprecision. Rather, variation reflects diverse constituencies' efforts to negotiate the boundaries of congressional responsibility, the scope of government programs, and the nature and extent of public-private sector relationships at any given point in time."], "subsections": []}, {"section_title": "CI Protection vs. CI Resilience", "paragraphs": ["Critical infrastructure policy has taken on two distinct orientations that significantly overlap but nonetheless reflect different organizational perspectives and requirements. Critical infrastructure protection (CIP) emphasizes the identification, prioritization, and protection of infrastructure assets. Criticality from this perspective is generally defined in terms of the consequences of asset loss or system disruption (i.e., an infrastructure asset or system is critical to the degree that loss or disruption of service would have system-level impacts on essential functions of society, the economy, or government). Critical infrastructure resilience (CIR) emphasizes broad investments in hazard mitigation and preparedness during steady-state periods, and adaptation during emergencies, to ensure availability of critical infrastructure functions that enable provision of essential services. ", "Much of the major legislation that serves as the foundation for CI policy was passed in the immediate aftermath of the 9/11 attacks, when concerns with physical protection of critical assets predominated in policy circles. However, policy practice in the United States and other developed countries has increasingly favored a focus on system resilience over asset protection. As such, national CI policy reflects a hybrid approach that contains elements of both CIP and CIR. This can exacerbate already complex issues inherent in defining criticality and identifying what exactly is critical in the context of time and place. Recognizing this inherent tension, this report uses the term \"critical infrastructure security\" to discuss CI policy without favoring CIP or CIR."], "subsections": []}, {"section_title": "CIP Asset Lists, Catalogs, Databases, and Reports", "paragraphs": ["CIP-focused legislation and government policy directives since 2001 have frequently contained requirements for the creation of asset lists, catalogs, databases, and reports to identify systems and assets that meet a given threshold of criticality, and thus require higher than ordinary levels of protection against plausible threats. The logic is simple on its face: we need to know what we have; what is most important; and what we need to protect. ", "However, application of this logic often introduces many complexities in actual practice, and so national-level issues of asset identification and prioritization persist across all CI sectors. Nonetheless, inventory requirements are typically the first step of the broader risk management strategies applied to critical infrastructure protection, both at the national level and in the private sector at the enterprise level. Definitional criteria of criticality will likely continue to be a subject of considerable debate within the CI policy community, but the forcing mechanism provided by list/no-list decisions serve to define what specific assets are considered critical in actual practice. "], "subsections": [{"section_title": "Policy Guidance for Asset Identification", "paragraphs": ["One of the earliest examples of a CIP-based inventory requirement is the National Strategy for the Physical Protection of Critical Infrastructures and Key Assets , released in February 2003 just before the newly created Department of Homeland Security began operations. The strategy directed DHS to develop a \"uniform methodology for identifying facilities, systems, and functions with national-level criticality,\" and use it to \"build a comprehensive database to catalog these critical facilities, systems, and functions.\"", "It was followed by the December 2003 release of Homeland Security Presidential Directive 7: Critical Infrastructure Identification, Prioritization, and Protection (HSPD-7), which served as the basis of CI policy development and implementation for the next decade until it was superseded by PPD-21 in 2013. HSPD-7 shared the CIP-orientation of other early policy documents, directing federal departments and agencies to \"identify, prioritize, and coordinate the protection of critical infrastructure and key resources in order to prevent, deter, and mitigate the effects of deliberate efforts to destroy, incapacitate, or exploit them.\" DHS claimed in the 2006 NIPP\u00e2\u0080\u0094the first plan of its type\u00e2\u0080\u0094that it had compiled a comprehensive CI database to meet the CI identification requirement.", "However, a 2006 DHS Inspector General (IG) report found that these early efforts to produce a national database of CI assets suffered from conceptual and methodological shortcomings. The report stated that the Department's National Asset Database had rapidly grown from 160 key assets in 2003 to include 77,069 assets in 2006, and that listed assets included everything from nuclear power plants and dams to local petting zoos and water parks. The IG report concluded that the database contained many entries that listed \"unusual, or out-of-place, assets whose criticality is not readily apparent,\" without providing assurance that truly critical assets were included. Likewise, data collection procedures were not standardized, so that San Francisco listed its entire light rail system as a single asset, while New York City listed its subway stations as multiple individual assets. "], "subsections": []}, {"section_title": "Congressional Oversight of Asset Identification", "paragraphs": ["Congress subsequently included provisions for the National Asset Database as part of the Implementing the Recommendations of the 9-11 Commission Act of 2007 ( P.L. 110-53 , The 9-11 Commission Act). The legislation requires compilation of a national database of vital systems or assets, and creation of a separate classified list of \"prioritized critical infrastructure,\" to be updated annually and submitted to Congress. The classified list is to include assets that the Secretary determined would cause national or regional catastrophic effects if subject to disruption or destruction. Other provisions include definitions of infrastructure-related terms, and a requirement for the Secretary to implement certain quality control procedures to ensure that asset nominations from state governments or other sources meet the threshold of criticality as determined by the Secretary.", "A 2013 Government Accountability Office (GAO) report found that DHS had improved its processes for critical asset identification, but that significant questions regarding reporting criteria and methodology persisted. The report documented frequent changes in nomination and adjudication criteria and reporting format used by National Critical Infrastructure Prioritization Program (NCIPP), which DHS instituted to fulfil the congressional mandate of the 9-11 Commission Act. After 2009, NCIPP assessed criticality of all nominations according to four types of potential adverse consequences above certain designated thresholds: fatalities, economic loss, mass evacuation length, and national security impacts. ", "Methodological adjustments were subsequently made in some cases to account for unique CI characteristics. For example, collapse of the U.S. financial system would likely not cause immediate mass casualties, but might still have debilitating second-order effects on national security, economic security, and public health and safety. The same might also apply to election infrastructure used in federal elections, which was added as a CI sub-sector in 2017. The report noted that asset nomination vetting methods had not undergone an independent peer review. It recommended to Congress that DHS commission such a review to \"assure that the NCIPP list identifies the nation's highest priority infrastructure.\""], "subsections": []}, {"section_title": "Policy and Legal Implications of Criticality Designation", "paragraphs": ["Being listed as a prioritized asset in the NCIPP immediately elevates a given asset making it an object of national significance under relevant statutes. This action may affect government prioritization of certain on-site risk assessments, administration of regulatory regimes and grant programs, conduct of certain criminal prosecutions, and emergency preparedness and response coordination, among other activities. Exact numbers of nominated assets are not publicly available due to classification requirements, but they number in the thousands. ", "Despite the often significant ramifications of the NCIPP list, the 2013 GAO report found that some state governments were opting not to participate in DHS data calls, citing compliance burdens, technical limitations, and cost-benefit calculations. For example, some states said they lacked expertise to develop scenarios and model complex infrastructure systems with sufficient fidelity to assess likely consequences of failure or disruption. For this reason alone, the NCIPP list cannot be regarded as a current and complete national inventory of critical systems and assets. Furthermore, GAO found that DHS was unable to provide documentation to show that it had complied with the statutory annual reporting requirement in recent years. The inherent complexities of CI inventory and categorization as described above also suggest the presence of persistent difficulties in assuring the completeness, quality, and currency of centralized inventories of CI assets requiring protected status. "], "subsections": []}]}, {"section_title": "CIR Identification of Systems and Assets", "paragraphs": ["CIR prioritizes adaptive use of critical capabilities to enable continuity of service during periods of stress on critical infrastructure systems. This approach to CI inventory expands the scope of data collection to include any and all assets within a given CI sector that might be useful in emergency planning or contingency situations\u00e2\u0080\u0094regardless of their inclusion on a particular list. The data can then be used as needed to identify alternative means of maintaining critical functions and providing essential services if systems and assets ordinarily used to provide these services are compromised. ", "The major CI interagency database using the capabilities approach is known as Homeland Infrastructure Foundation\u00e2\u0080\u0093Level Data (HIFLD). Four lead agencies\u00e2\u0080\u0094DHS, Department of Defense (DOD), the National Geospatial-Intelligence Agency, and the U.S. Geological Survey\u00e2\u0080\u0094compile data gleaned from outreach to public and private sector partners, and make it available to eligible law enforcement, emergency management, and other organizations at all levels of government. ", "HIFLD is comprised of hundreds of data \"layers,\" which encompass nearly every conceivable category of asset relevant to homeland security functions and are curated by designated partner agencies, or \"stewards\" as they are known. Layers include assets considered critical under any definition, which are essential to supporting lifeline CI functions of energy, communications, transportation systems, and water and wastewater systems. However, HIFLD also includes many asset categories that are not necessarily critical according to any given statutory or official definition of criticality, but may become critical in the context of specific emergencies or CI policy decisions\u00e2\u0080\u0094for example, truck driving schools, express shipping facilities, and cruise ship terminals. ", "The Department of Health and Human Services (HHS) used HIFLD during the 2017 hurricane season to locate day care centers in impacted areas. These specific day care centers would likely not be defined as critical under the common statutory definition of CI, because they were not so vital to the functioning of the national public health system as a whole that physical loss of the facilities would be debilitating at the national level. However, knowledge of where these centers were located was essential in allowing HHS to provide a critical public health service\u00e2\u0080\u0094ensuring the safety of children in a disaster zone. ", "The HIFLD partnership model is intended to enable relevant agencies at all levels of government and certain private sector entities to leverage a large universe of readily-accessible infrastructure data to address real-world use cases. Unlike the NCIPP list, it does not elevate the status of specific systems and assets in ways that directly support official functions of federal oversight, regulation, and administration. However, it is widely used to inform preparedness and incident management activities of federal and SLTT agencies. ", "The robust development of HIFLD partnerships at all levels of government in recent years contrasts with the declining state participation in NCIPP documented by GAO. Nonetheless, CIP-based approaches to inventory of CI assets remain relevant. For example, provisions of the 2017 National Defense Authorization Act related to national preparedness against electromagnetic threats and hazards required DHS to determine, to the extent practicable, \"the critical utilities and national security assets and infrastructure that are at risk.... \" Likewise, specific chemical manufacturing facilities posing a high risk for malicious exploitation continue to be subject to DHS inspection and regulatory enforcement under Chemical Facility Anti-Terrorism Standards (CFATS) first authorized by Congress in 2007. These regulations require owner-operators to protect their facilities against cyber and physical threats according to specified standards. "], "subsections": []}, {"section_title": "Issues for Congress", "paragraphs": ["Congress may consider the implications of the policy shift towards system-level resilience for legacy programs, such as the NCIPP asset list. Continuing policy changes made by DHS may further reduce the profile of NCIPP specifically, and asset-protection approaches to CI risk management in general. Stakeholder participation in NCIPP is not cost-neutral, so Congress may consider the frequency of data calls, elimination of any overlapping efforts or duplication, or additional appropriations to support data gathering and analysis. Congress may also consider updates to National Asset Database requirements contained in the 9/11 Commission Act to ensure their continuing relevance and applicability to emerging CISA programs and priorities, and their alignment with the requirements of other congressionally authorized programs, such as the Homeland Security Grant Program."], "subsections": []}]}, {"section_title": "Understanding and Assessing CI Risk", "paragraphs": ["Efforts to identify and prioritize CI systems and assets are part of a larger national effort to systematically understand and assess homeland security risks. In recent decades, Congress has frequently sought authoritative assessments of national level risk to CI. Risk assessments may be used to inform planning and resource allocation decisions related to congressional appropriations, emergency preparedness, regulatory oversight of certain industries, federal grant funding, and voluntary security measures by CI owner-operators. ", "DHS, which is responsible for coordination and oversight of the national infrastructure security effort, defines risk as the \"potential for an unwanted outcome resulting from an incident, event, or occurrence, as determined by its likelihood and the associated consequences.\" DHS officially considers three factors as components of risk: threat, vulnerability, and consequence.", "DHS defines threat as \"a natural or man-made occurrence, individual, entity, or action that has or indicates the potential to harm life, information, operations, the environment, and/or property.\" Threat assessments usually include data on human adversaries or natural hazards, such as extreme weather events. In the case of the former, threat estimates are based on available information about the identity of threat actors or groups, and their motivations, capabilities, and observed targets. Information on likely timing, methods, and frequency of attacks may also be incorporated if available. In the case of natural hazards, likelihood and severity of event occurrence is usually estimated using databases of past similar events in conjunction with predictive modeling of weather, tectonic activity, and the like. ", "DHS defines vulnerability as the \"physical feature or operational attribute that renders an entity, asset, system, network, or geographic area open to exploitation or susceptible to a given hazard.\" Vulnerability assessments provide information about characteristics of assets or systems that may leave them open to exploitation or damage from a threat or hazard. This may include, for example, software design characteristics or structural weaknesses in a levy system. Assessments may contain recommendations for adoption of resilience measures to mitigate identified vulnerabilities. ", "DHS defines consequence as the \"effect of an event, incident, or occurrence.\" As discussed in the previous section, criticality assessments focus on potential consequences of adverse events that disrupt or destroy infrastructure systems and assets. These assessments use a range of technical and non-technical methods of assessment. Research centers, universities, and industry groups develop and refine many different modeling methodologies to inform infrastructure security investments and activities of federal agencies and SLTT jurisdictions. In other cases, recognized subject-matter experts and responsible officials make non-technical assessments based upon accumulated knowledge and experience. Consequence-based criticality assessments can be used to inform risk assessments when combined with threat and vulnerability assessments. ", "Since 2007, DHS has applied these elements of risk to its various planning, programs, and budget activities as a function: \"risk is a function of threat, vulnerability, and consequence,\" or R=f(TVC). Critics have challenged the usefulness of this formula on several grounds. They assert DHS has not demonstrated the capability to accurately assign probabilities to rare events like terrorist attacks, or otherwise determine precise values for all the terms in the equation. Likewise, the terms of the equation are not necessarily independent from one another. Complex interactions between threat, vulnerability, and predicted consequences make application of this formula to grant applications and other resource allocation decisions related to risk mitigation problematic. ", "DHS recognized in 2018 the need to provide a \"complete systemic risk picture\" for CI, and has proposed revision or updates to risk assessment approaches described above. Several significant legislative and executive branch initiatives related to CI risk assessment were instituted in 2018-2019 to establish the organizational basis for significant changes. The Cybersecurity and Infrastructure Security Agency Act of 2018 (CISA Act; P.L. 115-278 ) created the eponymous agency (CISA) as an operational component of DHS to take over the functions previously carried out by the National Protection and Programs Directorate (NPPD) as a DHS headquarters organization. ", "The creation of a dedicated agency for infrastructure security elevates CI risk management as an area of policy focus. CISA has established the National Risk Management Center (NRMC) as a \"planning, analysis, and collaboration center\" to manage national CI risk. According to CISA, the NRMC will adopt an \"evolved approach\" to CI risk management, which emphasizes cross-sector analysis, and capabilities-oriented approaches to identification and prioritization of CI."], "subsections": [{"section_title": "Issues for Congress", "paragraphs": ["Congress may request information from CISA on its efforts to institutionalize new risk management methods and approaches, and to ensure that these are validated by qualified external reviewers. The National Laboratories, the relevant university-based DHS Centers of Excellence, certain other universities and research centers, industry research groups, and the Homeland Security Advisory Council may provide relevant expertise in infrastructure risk assessment methodology. The Homeland Security Act specifies how the Secretary of Homeland Security may leverage these organizational resources in support of homeland security activities. Congress may choose to exercise its discretion in establishing funding priorities and program guidance for these organizations as appropriate to support national CI security goals. "], "subsections": []}]}, {"section_title": "Federal Organization to Address CI", "paragraphs": ["Federal organization to address CI issues has changed significantly in response to evolving threats and the accompanying maturation of the homeland security enterprise. Three distinct periods of development are covered below: the initial policy development and coordination initiatives of the late 1990s; the post-9/11 reorganization of federal government to counter terrorist threats to infrastructure; and the ongoing transition to the all-hazards resilience framework for infrastructure security. "], "subsections": [{"section_title": "From the 1990s to the Homeland Security Act", "paragraphs": ["Federal attention to CI policy increased in the 1990s as concerns grew about the potential for malicious exploitation of the expanding interface between computing technologies and physical infrastructure. The Clinton Administration established the Commission on Critical Infrastructure Protection in 1996 with a mandate to produce a report on infrastructures \"that constitute the life support systems\" of the nation, with a focus on emerging cyber threats. Two years later the Administration issued PDD-63 based in part on the Commission's report, requiring the government \"to swiftly eliminate any significant vulnerability\" of critical infrastructures to \"non-traditional\" cyber or physical attack within five years. ", "The organizational directives set forth in PDD-63 focused on increasing interagency coordination by leveraging existing federal entities. The National Coordinator for Security, Infrastructure Protection and Counter-Terrorism, the senior executive position created by the directive, did not report directly to the President, and his duties were confined largely to leadership of an interagency coordination group and service as executive director of a stakeholder advisory group. ", "Congress chartered a blue ribbon commission in 1999 to assess both terrorist threats to national security and early efforts to implement PDD-63. The Gilmore Commission, as it was known, submitted a report to Congress and the White House in December of 2000 titled \"Toward a National Strategy for Combating Terrorism.\" The report found that implementation of PDD-63 was incomplete, and that the nascent CIP enterprise had developed only fitfully since it was signed in 1998. Specifically, it found ", "Information Sharing and Analysis Centers (ISACs) created to facilitate broader risk awareness in government and industry about infrastructure vulnerabilities and threats were \"still embryonic.\" The National Coordinator for Security, Infrastructure Protection, and Counterterrorism had broad authorities that left little time for CIP responsibilities, and lacked program and budget authority. No overall national CIP strategy existed to guide government actions. The National Infrastructure Protection Center (NIPC), responsible for CI threat and vulnerability assessments, warning and response coordination, and law enforcement investigation and response activities, had taken few concrete actions to establish its basic functions under Federal Bureau of Investigation (FBI) auspices. "], "subsections": []}, {"section_title": "Consolidation and the Creation of DHS", "paragraphs": ["The 9/11 attacks had a galvanizing effect on homeland security policy, and, by extension, critical infrastructure protection. Policy initiatives that had previously languished became matters of urgent national concern overnight. Two broad tracks of legislative action emerged. The first favored reestablishing the Office of Homeland Security and the national coordination role under statute, with the addition of certain budget authorities, responsibilities, and oversight requirements, similar in organization and scope to the National Office of Drug Control Policy. This option followed the recommendations of the Gilmore Commission, and would have left much of the existing federal government structure intact, focusing on improved interagency coordination to ensure increased protection against major terrorist attacks. ", "The second legislative track favored comprehensive consolidation of government counterterrorism functions under a single federal agency to be named the National Homeland Security Agency. This track followed the recommendations of a blue ribbon panel chartered by DOD in 1998 to study 21 st century security issues, known as the Hart-Rudman Commission. Key supporters in Congress believed that dispersion of homeland security-related functions across federal departments and agencies whose missions were not primarily security related had left the nation vulnerable to terrorist attacks. They favored consolidation to ensure clearer lines of executive authority, centralization of relevant counterterrorism functions, and better interagency coordination, among other anticipated benefits. The Homeland Security Act of 2002 generally reflected the approach that the Hart-Rudman Commission had advocated for.", "The Homeland Security Act P.L. 107-296 transferred many infrastructure security functions to DHS\u00e2\u0080\u0094functions which previously had been regarded as properly belonging to the various diverse spheres of business, finance, commerce, energy, public health, agriculture, and environmental protection. GAO designated creation of DHS as high risk in 2003 because of the large number of agencies being transferred, and the management challenges this presented to the new department. DHS ultimately incorporated nearly three dozen federal agencies and other entities into four major directorates: Information Analysis and Infrastructure Protection, Science and Technology, Border and Transportation Security, and Emergency Preparedness and Response. Although several long-established agencies such as the Coast Guard retained customary missions not related to homeland security, the new departmental structure prioritized their homeland security related missions, especially counterterrorism. "], "subsections": [{"section_title": "Policy and Budgetary Implications of Organizational Change", "paragraphs": ["This approach represented a change from what infrastructure policy had previously been. The White House had regarded CIP as only tangentially related to counterterrorism functions of government before 9/11. The Office of Management and Budget (OMB) stated in a report to Congress on federal counterterrorism programs, submitted in August 2001, that \"CIP is a separate but related mission.\" The authors justified this distinction on the grounds that infrastructure risks were diverse, and included many hazards beyond terrorism to include equipment failure, human error, weather and natural disasters, and criminal activity. They wrote, \"This year's report focuses on combating terrorism, mentioning CIP efforts only where they directly impact the combating terrorism mission.\" That direct impact, according to budget estimates in the 2001 report, was negligible. CIP funding that overlapped counterterrorism amounted to less than half of one percent of the total CIP funding of $2.6 billion requested by the White House for the 2002 fiscal year. ", "9/11 changed the budget picture significantly, as seen in the 2003 OMB report to Congress. Infrastructure programs and activities that had not previously been seen as directly impacting the combating terrorism mission were included in the report, and their relation to counterterrorism efforts highlighted.", "Requested budget increases for FY2004 reflected the newfound centrality of counterterrorism priorities across federal departments and agencies with infrastructure-related programs. The White House request for FY2004 was $12.1 billion, representing an increase of more than 450% over its final pre-9/11 request, and included 28 federal entities outside the newly-created DHS. The 2003 report did not provide a separate estimate of the proportion of the CIP-related budget that overlapped counterterrorism, as the 2001 report had. This was hardly necessary in any case, because CIP in all its diverse aspects had largely been redefined as a counterterrorism mission. "], "subsections": []}]}, {"section_title": "Evolution of CI Policy Since the Establishment of DHS", "paragraphs": ["Creation of a new purpose-built department was intended to ensure that CIP and other core homeland security missions were institutionalized as top federal priorities under unified leadership. Under the new consolidation of functions, more than half of the government's pre-9/11 homeland security funding was transferred to a single agency. However, the amalgam of independent agencies transferred to DHS retained significant independence as operational components of the new Department. Likewise, other departments and agencies outside DHS retained many of the infrastructure security functions they had before 9/11. Therefore, despite significant changes, CIP remains a highly distributed enterprise that competes for limited resources with other priorities across the federal government. "], "subsections": [{"section_title": "Perceived Threat of Terrorism and CIP Priorities", "paragraphs": ["As long as the threat of terrorism continued to be an overriding national priority, counterterrorism continued to be a focal point for critical infrastructure security policy. However, by the time Hurricane Katrina struck the Gulf Coast in August 2005, nearly four years after the 9/11 attacks, public perception of the terrorist threat had already softened considerably. In the immediate aftermath of the attacks, 46% of Americans surveyed by Gallup named terrorism as the most important problem facing the United States. By the second half of 2005, the percentage hovered between 6%-8%. This broad trend has continued, with periodic upticks caused by high-profile incidents. Gallup surveys in early 2019 did not list terrorism as a category of public concern, because it did not garner sufficient responses to be included in results. ", "After Katrina, the well-publicized failure of the extensive levy system designed to protect New Orleans from catastrophic floods further highlighted the vulnerability of critical systems and assets to diverse hazards besides terrorism. Issues of equipment failure, human error, weather and natural disasters, and criminal activity highlighted in the pre-9/11 OMB report (described above) reemerged as national-level policy concerns. "], "subsections": []}, {"section_title": "New Strategic Directions", "paragraphs": ["In 2006, the Critical Infrastructure Task Force of the Homeland Security Advisory Council initiated a public policy debate arguing that the government's critical infrastructure policies were focused too much on protecting assets from terrorist attacks and not focused enough on improving the resilience of assets against a variety of threats. According to the Task Force, such a defensive posture was \"brittle.\" Not all possible targets could be protected and adversaries could find ways to defeat defenses, still leaving the nation having to deal with the consequences. In 2008, as part of its oversight function, the House Committee on Homeland Security held a series of hearings addressing resilience. At those hearings, DHS officials argued that government policies and actions did encourage resilience as well as protection. Even so, subsequent policy documents made greater reference to resilience.", "The 2010 Quadrennial Homeland Security Review (QHSR), the first top-level DHS strategic review submitted to Congress under Title VII of the Homeland Security Act, highlighted the diversity of missions and stakeholders in what had become an expansive enterprise. The QHSR stated that, \"while the importance of preventing another terrorist attack in the United States remains undiminished, much has been learned since September 11, 2001, about the range of challenges we face.\" Examples of threats and hazards included natural disasters (specifically, Hurricane Katrina), widespread international cyberattacks, the expansion of transnational criminal activities, and contagious diseases. ", "The QHSR noted the leadership role of DHS in managing risks to critical infrastructure, as well as other homeland security missions related to immigration, border security, cybersecurity, and disaster response. However, it presented homeland security as a decentralized enterprise shared by diverse stakeholders in the public and private sector. \"[A]s a distributed system,\" the report read, \"no single entity is responsible for or directly manages all aspects of the enterprise.\"", "In 2013, PPD-21 superseded HSPD-7, which had provided authoritative policy guidance for federal infrastructure protection for a decade. PPD-21, which remains in force, informed development of the 2013 NIPP. It placed less emphasis protection of physical infrastructure assets against terrorist threats than HSPD-7 did. Rather, it emphasized all-hazards CI resilience as part of a broader national disaster preparedness effort. \"Critical infrastructure must be secure and able to withstand and rapidly recover from all hazards,\" it stated. \"Achieving this will require integration with the national preparedness system across prevention, protection, mitigation, response, and recovery.\" ", "The 2014 QHSR further expanded the boundaries of critical infrastructure security beyond terrorism-related threats to include factors such as aging and neglect of critical systems and assets\u00e2\u0080\u0094recasting once-ordinary issues of investment, maintenance, and utility service provision as homeland security concerns. DHS did not submit a QHSR to Congress in 2017 as required by the Homeland Security Act. This means there is no current departmental-level statement that specifies DHS strategic direction and priorities for infrastructure security or other homeland security goals. ", "The boundaries of responsibility for critical infrastructure security\u00e2\u0080\u0094as well as the definition of critical infrastructure itself\u00e2\u0080\u0094continue to be negotiated among Congress, executive branch departments and agencies, SLTT jurisdictions, and a diverse array of private-sector stakeholders. For example, in 2002 Congress directed the U.S. Department of Agriculture (USDA) to transfer the Plum Island Animal Disease Center to DHS under the Homeland Security Act ( P.L. 107-296 ), based partly on concerns that terrorists might target the nation's food and agriculture sector with contagious pathogens. However, in 2018 Congress authorized transfer of a replacement facility and its functions back to USDA from the DHS Science and Technology Directorate under the Consolidated Appropriations Act of 2018 ( P.L. 115-141 ), as proposed by the White House in its FY2019 budget request. After a relatively brief period of extensive consolidation in the early 2000s, critical infrastructure security in the federal government has evolved into a distributed enterprise loosely structured by institutionalized partnerships and policy frameworks that increasingly emphasize an all-hazards approach to critical infrastructure security."], "subsections": []}]}, {"section_title": "Issues for Congress", "paragraphs": ["Congress may consider which aspects of critical infrastructure security properly reside within the homeland security enterprise, and which relate more closely to government responsibilities in areas of commerce, trade, and public utilities regulation. The distributed enterprise model of critical infrastructure security based on an all-hazards approach potentially elides boundaries between homeland security and other dimensions of infrastructure policy. Likewise, the definition of homeland security itself continues to evolve beyond its counterterrorism roots. ", "DHS has not submitted a top-level strategy to Congress since the 2014 QHSR. (As noted above, a quadrennial review was due to Congress no later than December 31, 2017.) A more current strategy or other high-level policy statement might serve to more clearly define current Departmental goals, the parameters of its activities related to critical infrastructure security, and how these relate to activities of interagency partners with infrastructure-related responsibilities. ", "Congressional interest in homeland security strategy was indicated by the Quadrennial Homeland Security Review Technical Corrections Act of 2019 ( H.R. 1892 ), which passed the House of Representatives unanimously and was referred to the Senate Committee on Homeland Security and Governmental Affairs on May 15, 2019. The proposed act would require DHS to consult with relevant advisory committees when developing its capstone strategy, and to more directly link the strategy with budgeting, program management, and prioritization, among other provisions, including new deadlines linked to the budget cycle rather than the end of the calendar year.", "Congress has periodically acted to define organizational relationships within DHS. The Department was originally formed with four main directorates, each of which corresponded with a primary homeland security mission. The centralized directorate structure under headquarters management has given way to a more federated structure that emphasizes the operational role and organizational identity of its operational components. Most recently, the National Protection and Programs Directorate, which administered many of the Department's infrastructure partnership programs, was made an agency within DHS through the 2018 CISA Act. Congress may consider the nature of intra-Departmental organization and relationships within DHS as appropriate, and what degree of centralization or federation best supports the critical infrastructure security mission."], "subsections": []}]}, {"section_title": "The Role of the Private Sector", "paragraphs": ["Although much of the nation's CI is privately owned, the public may be put at risk if these privately owned critical systems fail. Management of CI risk within a complex ownership and regulatory environment presents enduring policy challenges.", "Legislators and other policymakers have generally favored variations of the federated partnership model first elaborated in PDD-63, which relies on voluntary collaboration between the public and private sectors (as opposed to regulatory mandates) to guide investment in critical infrastructure security. Under this model, CI owner-operators, not the government, have ultimate responsibility for assessing and mitigating risk at the enterprise level. At the same time, Congress has directed executive branch agencies to assess and manage risk at the national level. Infrastructure risk management is structured under this framework as a collaborative endeavor between the public and private sectors reliant on incentives, information sharing, and voluntary investments in security.", "Investments in critical infrastructure security in the private sector are largely the purview of private individuals or entities, but many of the most serious risks are borne collectively by the public and larger business community. Under the current partnership structure, government and private-sector representatives collaboratively ascertain what individual enterprise-level investments in security and resilience are necessary to manage CI risk at the societal level. ", "While there is little question that businesses, government, and society have a \"clear and shared interest\" in CI resilience, it is often difficult at the policy level to work out exactly who should bear responsibility for up-front costs of investment, and what mandatory requirements, regulatory oversight measures, and cost-recovery mechanisms might be necessary in a given case."], "subsections": [{"section_title": "Incentives for Private Sector Participation", "paragraphs": ["By and large, the federal government relies upon the private sector to voluntarily develop CI risk management strategies and mitigation investments to support national resilience goals. The 2013 NIPP states that, \"Government can succeed in encouraging industry to go beyond what is in their commercial interest and invest in the national interest through active engagement in partnership efforts.\" In practice, government efforts to encourage voluntary investments in infrastructure resilience through public-private partnerships have varied in extent and effectiveness, particularly when risks in question are diffuse and involve low-probability/high-consequence events such as major terrorist attacks or earthquakes. ", "The main incentives for industry participation are threefold: improved access to risk information from government sources on security threats and hazards; the value of analyses of national-level risks that exceed the capabilities of most private companies to provide for themselves; and the opportunity to engage with government to influence CI policy. Congress acted to reduce barriers to information sharing between the public and private sectors through the Critical Infrastructure Information Act of 2002, which is designed to ensure confidentiality of industry information shared with DHS in good faith under the Protected Critical Infrastructure Information (PCII) program. Likewise, a number of public-private coordination councils established under the authority of Presidential directives provide a forum for policy discussions and deliberation. ", "A 2019 report by the Organization for Economic Cooperation and Development (OECD) found that voluntary information sharing and collaboration partnerships in advanced industrialized economies \"[do not] necessarily guarantee a strong enough incentive structure to ensure that sufficient investments are effectively made to attain expected resilience targets.\" Most developed countries augment voluntary policy instruments with regulatory mandates to spur investments in resilience in certain sectors. Regulatory mandates tend to be favored for CI sectors or sub-sectors where incident impacts are potentially catastrophic and elicit broad public concern, such as nuclear meltdowns, gas pipeline explosions, airliner crashes, or terrorist theft of chemicals for use in explosives. According to an academic survey of public-private partnerships for CI security, collaborative approaches more broadly apply \"as risks become more privatized\" and \"harms are more divisible and isolated with respect to their impacts.\""], "subsections": []}, {"section_title": "Federal Regulation", "paragraphs": ["Policymakers have generally sought to limit the regulatory reach of government within CI security enterprise. For example, PDD-63 stated that \"we should, to the extent feasible, seek to avoid outcomes that increase government regulation or expand unfunded government mandates to the private sector.\" The Homeland Security Act created an organization\u00e2\u0080\u0094DHS\u00e2\u0080\u0094with wide-ranging responsibilities, but relatively narrow regulatory mandates. The Transportation Security Administration has (but does not exercise) regulatory oversight over oil and gas pipeline security. The Coast Guard regulates certain aspects of port security\u00e2\u0080\u0094a mission that long predates the transfer of the service to DHS under the Homeland Security Act. Finally, CISA directly regulates certain chemical facilities under the Chemical Facilities Anti-Terrorism Standards program to prevent terrorist exploitation of the chemical industry. ", "Many other federal, state, and local agencies exercise regulatory authorities that are related to infrastructure security, but are not necessarily specific to homeland security. For instance, the Nuclear Regulatory Commission (NRC) regulates civilian nuclear facilities and enforces extensive safety and reporting requirements. Many of these requirements are traceable to the partial reactor meltdown at Three Mile Island in 1979, and as such are treated as industrial safety and reliability issues in most cases. Many of the aspects of infrastructure security most relevant to homeland security, such as facility protection against deliberate attacks, are overseen by the NRC, not DHS.", "Agencies with dual responsibilities for regulation and partnership typically separate the two roles\u00e2\u0080\u0094a lesson learned from early experience with NIPC, which was not clearly separated from the law-enforcement functions of the FBI, and thus had difficulty eliciting participation from private sector entities in its early stages. (See \" From the 1990s to the Homeland Security Act \" section). The preponderance of DHS infrastructure security programs focus on enhancing voluntary collaboration with infrastructure security partners through development of information sharing, analysis, training, and coordination capabilities, as well as voluntary on-site assessments in certain cases. "], "subsections": []}, {"section_title": "The Voluntary CI Partnership Structure", "paragraphs": ["Current CI partnership structures are organized under the authority of PPD-21. The directive is implemented through sector and cross-sector partnership structures described in the 2013 NIPP. The 2013 NIPP outlined an infrastructure protection effort that was less centralized and less focused on critical asset protection than previous iterations of the NIPP, instead emphasizing distributed responsibility among an expansive group of stakeholders committed to common national resilience goals. NIPP partnerships at the federal level are administered by CISA in partnership with other DHS components, and other federal departments and agencies."], "subsections": [{"section_title": "Government Coordinating Councils and Sector-Specific Agencies", "paragraphs": ["Each of the 16 CI sectors under the NIPP framework has its own Government Coordinating Council (GCC) and Sector Coordinating Council (SCC). GCCs are made up of federal and SLTT agencies, and, according to the NIPP, enable \"interagency, intergovernmental, and cross-jurisdictional coordination\" on infrastructure issues of common concern. Each GCC is led by a designated federal agency with sector-relevant responsibilities and expertise, known as a Sector-Specific Agency (SSA). DHS leads or co-leads 10 of the 16 GCCs as the SSA. Other SSAs include the Environmental Protection Agency, the Government Services Agency, and the departments of Agriculture, Defense, Energy, Health and Human Services, Transportation, and Treasury. (See Table 1 for description of CI sectors and SSAs, and Appendix C for visualization of CI partnership structure). ", "SSAs leverage various NIPP partnership structures to formulate sector-specific infrastructure protection plans that support the overall goals of the NIPP, taking unique sector characteristics and requirements into account. The sector-specific plans contain broad analyses of sector risks, interdependencies with other CI sectors, and stakeholders and partners, which together are used to develop sector-specific resilience goals and measures of effectiveness."], "subsections": []}, {"section_title": "Sector Coordinating Councils", "paragraphs": ["Each SCC is made up of private-sector trade associations and individual CI owner-operators. SCCs are self-organized and self-governed, but must be recognized by the corresponding GCC as \"appropriately representative\" of the sector. They have an advisory relationship with the federal government, and also have coordination and information-sharing functions between government and private-sector stakeholders. SCCs may also support independently organized Information Sharing and Analysis Centers (ISACs) specific to their sector to facilitate information sharing among stakeholders. The National Council of ISACs currently lists 24 member organizations. ISACs maintain operations centers, deploy representatives to the National Cybersecurity and Communications Integration Center (NCCIC) and National Infrastructure Coordinating Center (NICC), conduct preparedness exercises, and prepare a range of informational products for their members. Reliable data on the scale and scope of private-sector participation in SCC activities across CI sectors is not available, but it varies widely depending on sector characteristics. "], "subsections": []}, {"section_title": "Cross-Sector Councils", "paragraphs": ["Four cross-sector councils serve to represent key stakeholder groups whose broad interests are not specific to one sector. The State, Local, Territorial, and Tribal Government Coordinating Council (SLTTGCC) is intended to enhance infrastructure resilience partnerships between SLTT jurisdictions, and to represent their common governance-related interests in GCC and SCC deliberations. The Critical Infrastructure Cross-Sector Council consists of the chairs and vice-chairs of the SCCs, and coordinates cross-sector issues among private-sector CI stakeholders. The Regional Consortium Coordinating Council represents regional CI resilience coalitions and encourages sharing of best practices among them. ", "The Federal Senior Leadership Council (FSLC) is composed of senior officials from federal departments and agencies responsible for implementation of the NIPP, and is chaired by the CISA Director or his designee. It exercises leadership over the other cross-sector councils. According to its charter, the FSLC forges policy consensus among federal agencies on CI risk management strategies, coordinates \"issue management resolution\" among the other cross-sector councils, develops coordinated resource requests, and advances collaboration with international partners, among other activities. "], "subsections": []}, {"section_title": "Advisory Councils", "paragraphs": ["The various NIPP partnership councils may organize certain deliberations under the auspices of the Critical Infrastructure Partnership Advisory Council (CIPAC), which was first established in 2006. The CIPAC Charter has been renewed several times since then, most recently in 2018. Under certain circumstances, CIPAC provides NIPP coordinating councils and member organizations legal exemption from Federal Advisory Committee Act (FACA) provisions for open meetings, chartering, public involvement, and reporting in order to facilitate discussion between CI stakeholders on sensitive topics relating to infrastructure security. CIPAC engages its government and private-sector stakeholders through the NIPP partnership structure to develop consensus policy advice and recommendations for DHS and other relevant agencies. ", "The Homeland Security Advisory Committee (HSAC) provides advice and recommendations to the Secretary of Homeland Security on matters related to homeland security. Members are appointed by the Secretary, and include leaders from state and local government, first responder communities, the private sector, and academia. The Secretary may also establish subcommittees to focus attention on specific homeland security issues as needed. CI-relevant subcommittees have focused on cybersecurity and emerging technologies. ", "The National Infrastructure Advisory Council is a committee made up of senior industry leaders who advise the President and SSAs on CI policy. It is not formally part of the NIPP partnership structure, but plays an intermediary role between the various coordination councils, the Secretary of Homeland Security, and the President by providing a mechanism for consultation between public and private sector representatives at the highest levels of government. First established by executive order on October 16, 2001, it is tasked with monitoring \"the development and operations of critical infrastructure sector coordinating councils and their information sharing mechanisms\" and encouraging private industry to improve risk management practices, among other activities. ", "This partnership structure is more flat than hierarchical, and is realized in multiple formats to include symposia, research collaborations, working groups, policy deliberations, and emergency preparedness and response activities. By design, participation in these activities often crosses organizational lines and includes governmental and non-governmental stakeholders. Increasingly, partnership activities include representatives from multiple CI sectors, due to recognition of the interdependencies inherent in complex CI systems and the general policy trend favoring system resilience over asset protection. "], "subsections": []}, {"section_title": "Operational Elements of the Partnership System", "paragraphs": ["The distributed partnership structure has several operational elements maintained by DHS that provide centralized hubs for various non-regulatory coordination and information sharing functions. The National Infrastructure Coordinating Center (NICC) collects, analyzes, and shares threat or other operational information throughout the critical infrastructure partnership network on a real-time basis. It also conducts training and exercises and provides decision support to private sector partners. It is part of the DHS National Operations Center, which serves as the principal operations center for the Department of Homeland Security. Additionally, the National Cybersecurity and Communications Integration Center (NCCIC) serves as a monitoring and incident response center for incidents affecting cybersecurity and communications networks, and also performs several related analytic functions. CISA administers both the NICC and the NCCIC. "], "subsections": []}]}, {"section_title": "Assessing the Effectiveness of This Approach", "paragraphs": ["The underlying policy premise of the current partnership system is that removing or mitigating disincentives to information sharing and increasing trust between the public and private sector will lead to greater industry willingness to invest in system-level resilience. Three related questions may be considered:", "To what extent are private sector owner-operators actually embracing collaboration and information-sharing initiatives offered by federal departments and agencies under the current partnership system? Is private-sector participation in these initiatives incentivizing effective investments (beyond those made for business reasons) in programs to reduce overall public risk? What legislative remedies are appropriate in cases where broader and more effective investments in risk reduction are necessary? ", "Given the diversity and breadth of the critical infrastructure enterprise as currently defined, the answers to these questions vary across sectors. Rigorous empirical analyses that might shed light on the extent and effectiveness of collaboration within the voluntary framework are scarce. ", "A 2013 study found that fewer than half of the 16 CI sectors had strong \"communities of interest\" that actively engaged in CIP issues through NIPP partnership structures. CI communities of interest were strongest in those sectors with strong trade or professional associations unified by relatively specific threats posing individual risk to member companies. A 2011 study found that the most important factor in private-sector risk mitigation investment is a company's own cost-benefit analysis; and that many CI owner-operators believed government will (or should) cover externalized social costs incurred by loss or disruption of company facilities due to a terrorist attack. ", "GAO testimony provided to Congress in 2014 asserted that DHS partnership efforts faced challenges, and identified three key factors that impact effectiveness of the partnership approach:", "recognizing and addressing barriers to sharing information, sharing the results of DHS assessments with industry and other stakeholders, and measuring and evaluating the performance of DHS's partnership efforts.", "GAO found that DHS did not systematically collect data on reasons for industry participation or non-participation in security surveys and vulnerability surveys, and whether or not security improvements were made as a result. GAO asserted that DHS cannot adequately evaluate program effectiveness absent these measures. ", "Although DHS concurred and agreed to corrective measures, GAO reported that it had not verified DHS's progress in implementing them. Overall, the picture that emerges from this testimony and other sources is one of extensive partnership activity across multiple CI sectors, but relatively few measures to systematically assess effectiveness of this activity in meeting CI resilience goals. "], "subsections": []}, {"section_title": "Issues for Congress", "paragraphs": ["Congress may explore the progress DHS has made in implementing GAO recommended data gathering and analysis initiatives. Availability of data and rigorous analyses may enable Congress to better ascertain the effectiveness of the partnership system in incentivizing industry information sharing and investments in risk reduction. ", "CISA and its predecessor organizations have not been able to provide reliable data indicating the reach and effectiveness of public-partnership programs in incentivizing bidirectional information sharing and efficient private investments in national level (as opposed to enterprise level) resilience. (The volume and quality of industry information shared with DHS through the PCII program may be one of several useful indicators of program effectiveness.) Congress may address this gap, such as through introduction of appropriate reporting requirements.", "Congress may also consider enhancement of regulatory authorities of federal departments and agencies as appropriate to meet national CI resilience goals in cases where voluntary measures do not result in effective industry action to mitigate risk, or emergent threats make immediate action necessary. One recent example is the Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA), which expands the jurisdiction of the Committee on Foreign Investment in the United States (CFIUS) to prevent foreign adversaries from exploiting the legitimate trade system to gain control of CI assets or related information. ", "Likewise, Congress may exercise oversight in cases where regulatory authorities related to infrastructure security exist but are not exercised, as in the case of TSA described above. ", "CISA plans to maintain the current sector specific public-private partnership structures as the preferred vehicle for information sharing and policy coordination. Congress may consider whether adjustment or replacement of these structures is needed to streamline and better align partnership efforts with the emerging federal risk management approach, which emphasizes inter-sectoral analysis and resilience rather than sector-specific asset identification and protection.", "Appendix A. National Critical Functions", "Appendix B. Key Terms", "Appendix C. Sector and Cross-Sector Coordinating Structures"], "subsections": []}]}]}}
{"id": "R46140", "title": "\u201cStage One\u201d U.S.-Japan Trade Agreements", "released_date": "2019-12-20T00:00:00", "summary": ["On October 7, 2019, after six months of formal negotiations, the United States and Japan signed two agreements intended to liberalize bilateral trade. One, the U.S.-Japan Trade Agreement (USJTA), provides for limited tariff reductions and quota expansions to improve market access. The other, the U.S.-Japan Digital Trade Agreement, includes commitments pertaining to digital aspects of international commerce, such as cross-border data flows. These agreements constitute what the Trump and Abe Administrations envision as \"stage one\" of a broader trade liberalization negotiation, which the two leaders first announced in September 2018. The two sides have stated their intent to continue negotiations on a more comprehensive deal after these agreements enter into force. Congress has an interest in U.S.-Japan trade agreement negotiations given congressional authority to regulate foreign commerce and the agreements' potential effects on the U.S. economy and constituents.", "USJTA is to reduce or eliminate tariffs on agriculture and some industrial goods, covering approximately $14.4 billion ($7.2 billion each of U.S. imports and exports) or 5% of bilateral trade. The United States is to reduce or eliminate tariffs on a small number (241) of mostly industrial goods, while Japan is to reduce or eliminate tariffs on roughly 600 agricultural tariff lines and expand preferential tariff-rate quotas for a limited number of U.S. products. The United States framed the digital trade commitments as \"gold standard,\" with commitments on nondiscriminatory treatment of digital products, and prohibition of data localization barriers and restrictions on cross-border data flows, among other provisions. The stage one agreement excludes most other goods from tariff liberalization and does not cover market access for services, rules beyond digital trade, or nontariff barriers. Notably, the agreement does not cover trade in autos, an industry accounting for one-third of U.S. imports from Japan. Japan's decision to participate in bilateral talks came after President Donald Trump threatened to impose additional auto tariffs on Japan, based on national security concerns.", "Prior to the Trump Administration, the United States negotiated free trade agreements (FTAs) that removed virtually all tariffs between the parties and covered a broad range of trade-related rules and disciplines in one comprehensive negotiation, driven in significant part by congressionally mandated U.S. negotiating objectives. Nontariff issues often require implementing legislation by Congress to take effect, and Congress has typically considered implementing legislation for past U.S. FTAs through expedited procedures under Trade Promotion Authority (TPA). The Trump Administration, however, plans to put the stage one agreements with Japan into effect without action by Congress. The Administration plans to use delegated tariff authorities in TPA to proclaim the USJTA market access provisions, while the U.S.-Japan Digital Trade Agreement does not appear to require changes to U.S. law and is being treated as an Executive Agreement. Japan's Diet (the national legislature) ratified the pact in December 2019. The Administration expects the agreements to take effect in early 2020, with negotiations on the second stage of commitments to begin within four months.", "The Trump Administration's interest in bilateral trade negotiations is tied to its withdrawal from the Trans-Pacific Partnership (TPP) agreement in 2017, which included the United States and Japan, along with 10 other Asia-Pacific countries. In general, TPP was far more comprehensive than the stage one U.S.-Japan agreements, as it would have eliminated most tariffs among the parties and created rules and disciplines on a number of trade-related issues, such as intellectual property rights and services. Japan's FTAs with other countries, including the TPP-11, which entered into force among the remaining TPP members in 2018, and an FTA with the European Union (EU), which took effect in 2019, have led to growing concerns among U.S. industry and many in Congress that U.S. exporters face certain disadvantages in the Japanese market. The USJTA will largely place U.S. agricultural exporters on par with Japan's other FTA partners with regard to tariffs, but unlike the TPP and its successor, the agreement excludes some agricultural products, such as rice and barley. It also does not include rules, such as on technical barriers to trade (TBT) and sanitary and phytosanitary measures, and therefore will not address various nontariff barriers U.S. agriculture and other industries face in Japan. Thus, U.S. agricultural exporters may continue to be at some disadvantage in the Japanese market compared to those from TPP countries or the EU.", "In general, Congress and U.S. stakeholders support the agreements due to the expected benefits to U.S. agriculture and cross-border digital trade. At the same time, the overall economic effects of the agreement are likely to be modest due to the limited scope of the agreement. Many observers contend the deal should not be a substitute for a comprehensive trade agreement and view the second stage of talks as critical to U.S. interests. If more comprehensive negotiations begin in 2020, they may become intertwined with other bilateral issues, such as concerns among many Japanese officials that the United States has a waning interest in maintaining its current influence in East Asia, and upcoming negotiations over the renewal of the U.S.-Japan agreement on how to share the costs of basing U.S. military troops in Japan. Some Members of Congress have also raised questions over whether the staged approach to the U.S.-Japan negotiations is in the best interest of the United States, and what it may mean for future U.S. trade agreement negotiations. There are also questions about whether the agreements adhere to multilateral trade rules under the World Trade Organization (WTO), given their limited scope, and whether the Administration has adequately consulted with Congress in its negotiation and implementation of the new agreements."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["On October 7, 2019, after six months of formal negotiations, the United States and Japan signed two agreements intended to liberalize bilateral trade. One, the U.S.-Japan Trade Agreement (USJTA), provides for limited tariff reductions and quota expansions to improve market access. The other, the U.S.-Japan Digital Trade Agreement, includes commitments pertaining to digital aspects of international commerce, such as on data flows. These agreements constitute what President Donald Trump and Prime Minister Shinzo Abe envision as \"stage one\" of a broader trade liberalization negotiation, which the two leaders first announced in September 2018. The two sides have stated their intent to begin second stage negotiations on a more comprehensive deal after these agreements enter into force. ", "Congress will not have a role in approving the two agreements. The Trump Administration intends to use delegated tariff proclamation authorities in Trade Promotion Authority (TPA) to enact the tariff changes and quota modifications, while the digital trade commitments, which would not require changes to U.S. law, are in the form of an Executive Agreement. Japan's Diet (the national legislature), however, had to ratify the pact, and did so on December 5, 2019, paving the way for entry into force on January 1, 2020. The two Japan deals raise a number of issues for Congress, including their limited coverage and staged approach, as compared to past U.S. free trade agreement (FTA) negotiations, the trade authorities used to bring them into effect in the United States, questions over their compliance with World Trade Organization (WTO) rules, and questions over how they compare with the trade agreement the United States previously negotiated with Japan in the former Trans-Pacific Partnership (TPP) and current TPP-11.", "Given the narrow scope of the agreements, particularly the USJTA tariff commitments, their commercial and strategic impact is likely to be determined by whether a more comprehensive bilateral agreement can be achieved. Many Members of Congress and other stakeholders support the agreements, but view the prospective second stage of trade talks as critical for U.S. interests. At the same time, some observers have raised questions about the potential coverage of issues in future talks and whether there will be sufficient political support in both countries to make progress, especially during an election year in the United States."], "subsections": []}, {"section_title": "Background and Motivation for Negotiations", "paragraphs": ["In October 2018, in line with TPA requirements under the Bipartisan Congressional Trade Priorities and Accountability Act of 2015 ( P.L. 114-26 ; TPA-2015), the Administration provided Congress 90 days advance notification of its intent to begin negotiations. The Administration released its negotiating objectives, which included a number of issues beyond tariffs and digital trade, in December of the same year. ", "The Trump Administration's interest in a trade agreement with Japan is closely tied to its decision to withdraw the United States from the TPP in 2017, and to pursue bilateral agreements, as opposed to the more regional approach taken under TPP. It also reflects the Administration's strategy of focusing on reaching agreements with major U.S. trade partners, especially those with which the United States runs a trade deficit (the U.S. goods trade deficit with Japan was $67.2 billion in 2018, the fourth-largest bilateral U.S. deficit). Although TPP included 10 countries in addition to the United States and Japan, the U.S.-Japan component of the agreement was the most economically consequential given existing U.S. trade agreements with 6 of the 10 other participants, and the relatively small economies of the remaining four (Brunei, Malaysia, New Zealand, and Vietnam).", "In these limited, stage one agreements with Japan, the Administration has attempted to address concerns raised by TPP proponents, especially agricultural groups, that the U.S. withdrawal placed U.S. exporters at a disadvantage in the Japanese market, in particular given Japan's recently enacted trade agreements with other trade partners. Following U.S. withdrawal from the TPP, Japan led efforts among the remaining 11 TPP countries to conclude the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP or TPP-11), which took effect in December 2018 for the first six signatories who ratified, including Japan, and for Vietnam in early 2019. The TPP-11 includes the comprehensive tariff liberalization commitments of TPP (near complete elimination among the parties), and the majority of TPP rules and disciplines on numerous trade-related issues, though the parties agreed to suspend a small number of nontariff commitments sought largely by the United States, following the U.S. withdrawal. ", "Japan's FTA with the European Union (EU), which is to eventually remove nearly all tariffs and establish trade rules between the parties, went into effect in February 2019. It provides for elimination of the EU's 10% auto tariff, and elimination or reduction of most Japanese agricultural tariffs. Additional trade agreements involving Japan could take effect in coming years, compounding U.S. exporter concerns, including the possible 2020 conclusion of the Regional Comprehensive Economic Partnership (RCEP), which includes Japan, China, and 13 other Asian countries.", "Given Japan's commitment to TPP, Prime Minister Abe was initially hesitant to agree to bilateral U.S. trade negotiations, instead urging the Trump Administration to reconsider its withdrawal. Japan's decision to participate in bilateral talks came after President Trump raised the possibility, based on national security concerns, of imposing unilateral motor vehicle tariffs on Japan, an industry of national significance and accounting for one-third of U.S. goods imports from Japan (see \" Motor Vehicles and Threat of U.S. Section 232 Tariffs \"). The importance of the U.S.-Japan security relationship may also have factored into Japan's decisionmaking. Japan relies heavily on the United States for its military defense. The two countries' agreement on how to share the costs of the roughly 50,000 U.S. troops stationed in Japan is due to be renegotiated in 2020 as the current agreement expires at the end of March 2021. President Trump has called for Japan to significantly increase its contributions, perhaps by as much as fourfold. Japan, some analysts suggest, may see a bilateral trade agreement as way to reduce tension in the bilateral relationship, in light of other pressing security issues. Additionally, the Trump Administration may try to use the cost-sharing negotiations to extract concessions from Japan in proposed stage-two trade negotiations, or vice versa.", "As the United States' fourth-largest trading partner and the world's third-largest economy, Japan routinely features prominently in U.S. trade policy. In 2018, Japan accounted for 5% of total U.S. exports ($121 billion) and 6% of total U.S. imports ($179 billion). The United States is arguably even more important to Japan, representing its second-largest trading partner after China in 2018, and accounting for nearly 20% of Japan's goods exports. The two countries are also major investment partners, with Japanese foreign direct investment (FDI) in the United States valued at $484 billion in 2018 on a historical cost basis, largely in manufacturing, and U.S. FDI in Japan valued at $125 billion, concentrated in finance and insurance. Major areas of U.S. focus in the trade relationship include market access for U.S. agricultural goods, given Japan's relatively high tariffs in this sector, and the elimination of various nontariff barriers, such as in the motor vehicles and services sectors."], "subsections": [{"section_title": "Agriculture and Japan's Other Trade Agreements", "paragraphs": ["Japan is an important market for U.S. farmers and ranchers, accounting for about 9% of total U.S. agricultural exports to all destinations since 2014. In 2018, Japan was the third-largest export market for the United States, after Canada and Mexico, with $12.9 billion in U.S. agricultural exports\u00e2\u0080\u0094out of a total of $140 billion\u00e2\u0080\u0094shipped to Japan. Corn, beef, pork, soybeans, and wheat make up more than 60% of total U.S. agricultural exports to Japan ( Figure 1 ).", "With TPP-11 and the EU-Japan FTA entering into force in late 2018 and early 2019, exports from EU and TPP-11 member countries became more competitive for Japanese importers. U.S. agricultural exports to Japan meanwhile declined 7% ($8.3 billion) from January through August 2019, compared with the same period in 2018 ($9 billion). According to Japanese Customs data, notable product-specific declines during the first nine months of 2019, compared to the same period in 2018, include non-durum wheat (down 13%), pork (down 7%), and beef (down 4%). Over the same period, Japanese imports of these commodities from several EU and TPP-11 countries have increased. With the stage one U.S.-Japan agreement resulting in lower tariff rates on most U.S. agricultural products in the near term, it could improve the outlook for U.S. agricultural exporters."], "subsections": []}, {"section_title": "Motor Vehicles and Threat of U.S. Section 232 Tariffs", "paragraphs": ["Motor vehicles and parts are the largest U.S. import category from Japan ($56.0 billion in 2018), while Japan imports few U.S.-made autos ($2.4 billion in 2018), despite having no auto tariffs ( Figure 2 ). U.S. industry argues the latter stems from nontariff barriers, including discriminatory regulatory treatment, while Japan argues that U.S. producers' inability to cater to the Japanese market is to blame. Although Japan buys few U.S. cars, Japanese-owned production facilities in the United States (valued at $51 billion in 2018) employ more than 170,000 workers, according to the Bureau of Economic Analysis (BEA). President Trump has repeatedly flagged the U.S. automotive trade deficit and noted that U.S. goals in broader trade talks include market access outcomes that will increase U.S. auto production and employment, but no provisions on motor vehicles were included in the stage one agreement.", "In May 2019, one year after the start of an investigation by the U.S. Department of Commerce under Section 232 of the Trade Expansion Act of 1962 (19 U.S.C. \u00c2\u00a71862), President Trump proclaimed motor vehicle and parts imports, particularly from Japan and the EU, a threat to U.S. national security. This determination asserted that the imports affect \"American-owned\" producers' global competitiveness and research and development on which U.S. military superiority depends. Under affirmative Section 232 determinations, the President is granted authority to impose import restrictions, including tariffs. Toyota and other Japanese-owned auto firms took particular issue with the President's emphasis on U.S. ownership in his determination, noting their significant U.S. investments in automotive manufacturing and research facilities. The President directed the U.S. Trade Representative (USTR) to negotiate with Japan (and the EU) to address this threat and report back within 180 days. Speaking immediately after the signing of the USJTA, USTR Lighthizer stated that in light of the new trade agreement, the Administration has no intent, \"at this point,\" to pursue additional Section 232 U.S. auto import restrictions. Japan also remains subject to Section 232 tariffs on U.S. steel and aluminum imports, which the Administration implemented in March 2018."], "subsections": []}, {"section_title": "U.S. Trade Agreement Authorities", "paragraphs": ["Congress sets objectives for U.S. trade negotiations and establishes certain authorities to enact agreements that make progress toward achieving those objectives in Trade Promotion Authority (TPA) legislation under the Bipartisan Congressional Trade Priorities and Accountability Act of 2015 ( P.L. 114-26 ; TPA-2015). TPA allows for expedited consideration of implementing legislation to enact trade agreements covering tariff and nontariff barriers, provided the Administration meets certain notification and consultation requirements. It also provides the President, under Section 103(a) (19 U.S.C. \u00c2\u00a74202(a)), delegated authority to proclaim limited tariff reductions without further congressional action. The limits on Section 103(a) authority primarily relate to the amount and staging of the reduction in duty rates (see \" U.S. Tariff and Quota Commitments \"). ", "Prior to the Trump Administration, the United States negotiated FTAs that removed virtually all tariffs between the parties and covered a broad range of trade-related rules and disciplines in one comprehensive negotiation. Nontariff issues often require implementing legislation by Congress to take effect, and Congress has typically considered implementing legislation for past U.S. FTAs under TPA's expedited procedures. The Trump Administration, however, plans to put the limited, stage one agreements with Japan into effect without congressional approval. The Administration intends to use delegated authorities pursuant to Section 103(a) of TPA to proclaim the tariff changes included in the USJTA, while the U.S.-Japan Digital Trade Agreement does not appear to require changes to U.S. law and is being treated as an Executive Agreement. Some observers and Members of Congress have questioned whether Section 103(a) authorizes the President to also establish rules of origin and modify import quotas, which are components of the U.S. market access tariff commitments in the USJTA. ", "The language of Section 103(a) proclamation authority originated in the Reciprocal Trade Agreements Act of 1934, when tariff barriers were the primary focus of trade agreement negotiations. Similar language has been included in subsequent iterations of the TPA statue, including the current TPA-2015, which is effective through July 1, 2021. Past U.S. Administrations have invoked Section 103(a) and its past iterations to modify U.S. tariffs and implement agreements addressing tariff barriers. Most recently, in 2015 President Barack Obama invoked this authority to implement an agreement among members of the Asia-Pacific Economic Cooperation (APEC) forum to reduce duties on environmental goods. "], "subsections": []}]}, {"section_title": "Agreement Provisions", "paragraphs": ["The two agreements included in the \"stage one\" U.S.-Japan trade deal cover tariff and quota commitments on industrial and agricultural goods and commitments on digital trade. The limited coverage and composition represents a significant departure from recent U.S. trade agreements, which typically are comprehensive and cover additional issues such as customs procedures, government procurement, labor and environment protections, intellectual property rights (IPR), services, and investment. ", "Notably, neither agreement includes a formal dispute settlement mechanism to enforce commitments should either side take fault with the other's implementation. The Trump Administration points to Article 6 of the USJTA, which lays out a 60-day consultation process for resolving issues relating to \"the operation or interpretation\" of the agreement as a means to resolve disputes relating to tariffs and quota commitments. A future comprehensive deal could include a formal dispute settlement mechanism, but it is unclear how this would affect the initial agreements."], "subsections": [{"section_title": "U.S.-Japan Trade Agreement (Tariff and Quota Commitments)", "paragraphs": ["The USJTA, which covers tariff and quota commitments, is four pages in length and includes eleven articles governing the operation of the agreement. Two separate annexes include the specific tariff reduction schedules for the United States and Japan. The annexes also include staging categories, which lay out the timeline for tariff reductions, and rules of origin, which specify the conditions under which imports are considered to originate from each country and therefore are eligible for the preferential tariff treatment. In total, the agreement is to reduce or eliminate tariffs on approximately $14.4 billion or 5% of bilateral trade ($7.2 billion each of U.S. imports and exports, Figure 3 ). The agreement also includes provisions providing for amendment and termination procedures (Article 8 and Article 10, respectively). ", "While the Trump Administration has stated that the USJTA should \"enable American [agricultural] producers to compete more effectively with countries that currently have preferential tariffs in the Japanese market,\" the U.S.-Japan agreement is narrower in scope than either TPP-11 or the EU-Japan FTA. In particular, because of the legal authority under which the United States negotiated the USJTA, the agricultural provisions address only tariffs and quotas, while TPP-11 and the EU-Japan FTA also address many other policies that may interfere with trade in agricultural products. As a result, U.S. agricultural exporters may continue to be at some disadvantage in the Japanese market against those from the TPP-11 countries or the EU. Lack of legal text on non-market-access provisions, such as agricultural biotechnology, geographical indications, sanitary and phytosanitary measures, and technical barriers to trade (TBT) in the USJTA may limit the United States' ability to challenge potential future trade barriers in Japan (and vice versa) related to these issues, for example, if Japan were to align its requirements for agricultural imports more closely with those of the EU or of TPP-11 countries."], "subsections": [{"section_title": "U.S. Tariff and Quota Commitments", "paragraphs": ["The USJTA tariff schedule commits the United States to reduce or eliminate tariffs on 241 tariff lines that accounted for $7.2 billion of U.S. imports from Japan in 2018 (about 5% of total U.S. goods imports from Japan). Per requirements under TPA's tariff proclamation authorities, which as discussed, the Administration intends to use to implement the agreement, U.S. products slated for tariff elimination must have less than a 5% current U.S. most-favored nation (MFN) tariff rate. The authority allows for the Administration to reduce tariffs by 50% for products with current MFN tariff rates above 5%. According to the USJTA tariff schedule, the United States is to eliminate tariffs on 169 of covered U.S. tariff lines, while the remaining 72 are to be reduced to 50% of their current MFN rate.", "Unlike the former TPP, which committed the United States to eliminate tariffs on 99% of U.S. tariff lines, the USJTA agreement is to affect a relatively small share of U.S. imports from Japan, both because it covers fewer products and does not include autos and auto parts, the largest single U.S. import category. The U.S. tariff schedule of the USJTA states that auto and auto parts \"will be subject to further negotiations with respect to the elimination of customs duties.\" Under TPP, by contrast, the United States committed to eliminate its 2.5% car tariff over 25 years and its 25% light truck tariff over 30 years.", "Most of the U.S. products covered in the agreement are industrial goods. Select tariff lines from 30 different U.S. Harmonized Schedule (HS) chapters or categories are included. However, roughly half of the covered products, both in terms of the number of tariff lines and U.S. import value, are from three chapters: machinery (U.S. imports of $3.3 billion in 2018), electrical machinery ($771 million), and tools ($683 million). Other product categories include optical/medical equipment ($534 million), iron and steel articles ($305 million), rubber ($302 million), organic chemicals ($182 million), inorganic chemicals ($182 million), musical instruments ($133 million), copper and articles ($125 million), photographic and cinematographic goods ($118 million), railway ($105 million), and toys ($79 million). The top 10 tariff lines covered by the agreement accounted for $3 billion of U.S. imports in 2018 or 42% of all imports covered ( Table 1 ). U.S. tariffs on these 10 products are to be eliminated either upon entry into force (EIF) of the agreement or at the start of year two.", "The United States also agreed to reduce or eliminate tariffs on 42 agricultural tariff lines on imports from Japan, which include certain perennial plants and cut flowers, persimmons, green tea, chewing gum, certain confectionary products, and soy sauce. In a side letter, the United States agreed to modify its tariff-rate quota (TRQ) for imports of Japanese beef. TRQs involve a two-tiered tariff scheme in which imports within an established quota face lower tariff rates, and imports beyond the quota face higher tariff rates. The United States has agreed to eliminate the 200 metric tons (MT) country-specific beef quota for Japan and increase its quota for \"other countries or areas\" to 65,005 MT. This would enable Japan to ship additional amounts of beef to the United States at low tariff rates under the increased \"other countries or areas\" quota."], "subsections": []}, {"section_title": "Japan's Tariff and Quota Commitments", "paragraphs": ["Under the USJTA, Japan agreed to eliminate or reduce tariffs for certain U.S. agricultural products and to provide preferential quotas for other U.S. agricultural products. Japan's commitments cover approximately 600 tariff lines, accounting for $7.2 billion of U.S. exports in 2018, according to the USTR. Essentially, Japan is providing the same level of market access to the products included in the USJTA as provided to exports from countries that are members of TPP-11. Some products included in TPP-11 such as rice and certain dairy products, however, are not included in the USJTA. According to the USTR, once this agreement is implemented, over 90% of U.S. food and agricultural products exported to Japan will either enter duty-free or receive preferential tariff access. ", "When TPP-11 went into effect in December 2018, Japan implemented its first set of tariff cuts and TRQ expansions for TPP-11 countries, and followed these with a second round of tariff cuts and TRQ expansions on April 1, 2019, the start of its new fiscal year. In the USJTA, Japan agreed to accelerate and adjust its TRQ expansion and tariff reduction schedule so that Japan's imports of affected U.S. agricultural products are to receive the same level of market access as imports from TPP-11 countries. This means that tariff rates under the USJTA are to fall slightly faster than those under the TPP-11. For example, under TPP-11, tariffs on beef imports into Japan, previously 38.5%, were reduced to 27.5% in Year 1, to 26.6% in Year 2, and are to reach 9% in Year 16. Under the USJTA, tariffs on Japanese imports of U.S. beef would be reduced to 26.6% in Year 1 and would reach 9% in Year 15."], "subsections": [{"section_title": "Key Products and Provisions", "paragraphs": ["Japan is to reduce tariffs on meat products that collectively accounted for $2.9 billion of U.S. exports to Japan in 2018. Tariffs on processed beef products, including beef jerky and meat extracts, are to be eliminated in 5 to 15 years. Japan's right to raise tariffs if imports of U.S. beef exceed a specified level are to be restricted, and would be eliminated if the specified level is not exceeded for four consecutive fiscal years after Year 14. Tariffs on pork muscle cuts are to be eliminated over 9 years, and tariffs on processed pork products are to go to zero in Year 5. Certain fresh and frozen pork products would continue to be subject to Japan's variable levies when import prices are low, but the maximum variable rate is to be reduced by almost 90% by Year 9. As with beef, Japan's right to raise tariffs if imports of U.S. pork exceed a specified level is to be restricted. Japan is to gradually increase the amount of U.S. fresh, chilled, and frozen pork that could be imported annually without triggering additional tariffs, and such tariffs are to be terminated at the end of Year 10. Japan is to eliminate tariffs immediately upon entry into force of the agreement on selected products, including almonds, walnuts, blueberries, cranberries, sweet corn, grain sorghum, and broccoli, that collectively accounted for $1.3 billion of U.S. exports to Japan in 2018. Tariffs on corn used for feed, the largest U.S. agricultural export to Japan ($2.8 billion or 22% of total U.S. agricultural exports to Japan in 2018), are also to be eliminated upon entry into force of the agreement. Japan is to phase out tariffs in stages for products accounting for $3 billion of U.S. exports in 2018, such as cheeses, processed pork, poultry, beef offal, ethanol, wine, frozen potatoes, oranges, fresh cherries, egg products, and tomato paste. Japan agreed to provide country-specific quotas (CSQ) for some products, which provide access to a specified quantity of imports from the United States at a preferential tariff rate, generally zero. The CSQs would provide these products the same access into Japan as would have been accorded if the United States had joined the TPP-11. Products covered by CSQs include wheat, wheat products, malt, processed cheese, glucose, fructose, corn starch, potato starch and inulin. Additionally, Japan agreed to create a single whey CSQ for the United States that would begin at 5,400 MT and grow to 9,000 MT in Year 10. This CSQ combines the provisions of three separate CSQs for whey under the TPP provisions: whey used in infant formula (3,000 MT); whey mineral concentrate (4,000 MT); and whey permeate (2,000 MT). Japan agreed to improve access for U.S. skim milk powder by introducing an annual global (WTO) tender for 750 MT of skim milk powder, which would be accessible to the U.S. as well as other WTO-member exporters. This is viewed to represent a minor concession, given that the United States exported 713,000 MT of skim milk powder in 2018. Japan agreed to reduce the government-mandated mark-up on imported U.S. wheat and barley, which are controlled by state trading enterprises. Japan agreed to limit the use of safeguard measures to control surges in imports of U.S. whey, oranges, and race horses."], "subsections": []}, {"section_title": "Quota-Specific Issues", "paragraphs": ["According to the USTR, Japan has stated a commitment to \"match the [agricultural] tariffs\" provided to TPP-11 member countries in USJTA. While Japan's tariff schedule under the USJTA attempts to match the TPP-11 schedule, the TRQ schedule falls short of the TPP-11 schedule, potentially disadvantaging market access for some U.S. agricultural products. Under the TPP provisions, Japan had agreed to provide a rice CSQ for the United States, which was to start at 50,000 MT in Year 1 and reach 70,000 MT in Year 13. The U.S.-Japan Trade Agreement does not make provisions for a CSQ for U.S. rice, but Japan has made provisions for a CSQ for Australian rice under the TPP-11. TPP-11 additionally includes provisions for global TRQs for barley and barley products other than malt; butter; skim and other milk powder; cocoa products; evaporated and condensed milk; edible fats and oils; vegetable preparations; coffee, tea and other preparations; chocolate, candies and confectionary; and sugar. No corresponding TRQs are included in the U.S.-Japan agreement. ", "Japan's simple average MFN tariff on all agricultural imports was 15.7% in 2018, although almost 22% of the Japanese agricultural tariff lines had MFN tariff rates greater than 15%. Many of the agricultural products subject to in-quota tariffs are subject to additional mark-ups through the state trading system, making the products more expensive to Japanese consumers. This may tend to suppress imports. For example, 29% of the amount of whey for infant formula that could have been imported under the TRQ was actually imported into Japan in 2017, and the corresponding fill rates for skim-milk powder ranged between 25% and 34%. Given that many TRQ quotas go unfilled and that over-quota tariff rates are extremely high, there is little trade beyond the set quota levels."], "subsections": []}]}]}, {"section_title": "U.S.-Japan Digital Trade Agreement", "paragraphs": ["Digital trade, a growing part of the U.S. and global economy, is an area in which the United States and Japan have had largely similar goals on addressing the lack of common trade rules and disciplines. Digital trade entails not only digital products and services delivered over the internet, but is also a means to facilitate economic activity and innovation, as companies across sectors increasingly rely on digital technologies to reach new markets, track global supply chains, and analyze big data. The USTR has referred to the U.S.-Japan Digital Trade Agreement, which parallels the proposed U.S.-Mexico-Canada Agreement (USMCA), as the \"most comprehensive and high-standard trade agreement\" negotiated on digital trade barriers. Provisions of the U.S.-Japan Digital Trade Agreement largely reflect the proposed USMCA, as well as related U.S. negotiating objectives that Congress established under TPA, suggesting the agreement is likely to serve as a template for future U.S. FTAs. The agreement has also been cast by the USTR as demonstrating the \"continued leading role\" of both nations in global rulemaking on digital trade. In this view, U.S.-Japan approaches on rules and standards could set precedents for other ongoing talks, including at the WTO on a potential e-commerce agreement, where conflicting approaches to digital and data issues by other participating members (such as China) have been raised as joint concerns. ", "Key Provisions and Selected Comparisons", "Key commitments of the U.S.-Japan Digital Trade Agreement are highlighted below, with some comparisons to the latest U.S. and Japanese commitments in USMCA and TPP-11, respectively. In USMCA and TPP-11, given the crosscutting nature of digital trade and cross-border data flows, related provisions are covered in multiple FTA chapters beyond digital trade or e-commerce, including financial services, IPR, technical barriers to trade, and telecommunications. Like the USJTA, the U.S.-Japan Digital Trade Agreement includes provisions allowing for potential amendments and possible termination (Article 22).", "Customs duties and nondiscrimination . Commitments prohibit customs duties on products transmitted electronically and discrimination against digital products, including coverage of tax measures. Cross-border data flows and data localization . Commitments prohibit restrictions on cross-border data flows, except as necessary for \"legitimate public policy objectives.\" It also prohibits requirements for \"localization of computing facilities\" (i.e., data localization) as a condition for conducting business. Financial service providers are covered under the rules on data localization, as long as financial regulators have access to information for regulatory and supervisory purposes. This approach is distinct from Japan's commitments under TPP-11, which excludes financial services, but is similar to U.S. commitments under USMCA. Consumer protection and privacy . Commitments require parties to adopt or maintain online consumer protection laws, as well as a legal framework on privacy to protect personal information of users of digital trade. The content and enforcement of these laws are left to each government's discretion, while encouraging development of mechanisms to promote interoperability between different regimes. Unlike USMCA, there is no explicit reference to take into account guidelines of relevant international bodies' privacy frameworks, such as the Asia-Pacific Economic Cooperation (APEC) forum or the Organization for Economic Co-operation and Development (OECD). However, both the United States and Japan have endorsed and participate in the APEC Cross-Border Privacy Rules (CBPR) system. Source code and technology transfer . Commitments prohibit requiring the transfer or disclosure of software source code or algorithms expressed in source code as a condition for market access, with some exceptions. By comparison, under TPP-11 algorithms are not covered. Liability for interactive computer services . Commitments limit imposing civil liability with respect to third-party content for internet platforms that depend on interaction with users, with some exclusions such as for intellectual property rights infringement. This rule reflects provisions of the U.S. Communications Decency Act, which has raised concerns for some Members of Congress and civil society organizations about inclusion in U.S. FTAs, amid ongoing debate about the provisions' merits and possible revision to the law in the future. Cybersecurity . Commitments promote collaboration on cybersecurity and use of risk-based strategies and consensus-based standards over prescriptive regulation in dealing with cybersecurity risks and events. Open government data . Commitments promote publication of and access to government data in machine-readable and open format for public usage. Cryptography . Commitments prohibit requiring the transfer or access to proprietary information, including a particular technology or production process, by manufacturers or suppliers of information and communication technology (ICT) goods that use cryptography, as a condition for market access, with some exceptions, such as for networks and devices owned, controlled, or used by government."], "subsections": []}]}, {"section_title": "Views and Next Steps", "paragraphs": [], "subsections": [{"section_title": "U.S. Views", "paragraphs": ["In general, the stage one agreements have been well received by several Members of Congress and U.S. stakeholders for the expected benefits to agriculture and cross-border digital trade. At the same time, many observers also contend the deals should not be a substitute for a comprehensive agreement and view the second stage of talks as critical to U.S. interests. The U.S. Trade Advisory Committee Report to the USTR and Congress reflects a range of views from among the various committees represented. The private sector Advisory Committee for Trade Policy and Negotiations (ACTPN) expressed support for the initial deals and the \"significant boost to the U.S. economy that will result from implementation,\" while urging immediate negotiation of a comprehensive agreement and recommending several priorities for the talks. The Intergovernmental Policy Advisory Committee (IGPAC), which is composed of representatives from state and local governments, however, argued that the agreement did not meet most negotiating objectives under TPA, due to its \"narrow nature.\" In the view of the Labor Advisory Committee, the deal is a \"lopsided agreement designed to address short-term political objectives.\" Various industry committees issued reports outlining priorities for future talks. Some cited what they viewed as the USTR's lack of consultation and the lack of dispute settlement provisions in the agreements as concerns. ", "Overall, many observers agree that the USJTA is important for U.S. agriculture to regain competitiveness in the Japanese market. At the same time, some raise concerns about product exclusions and the lack of provisions on nontariff barriers that were generally covered in past U.S. FTAs. One trade policy expert cautioned against the tariff-only approach as a model for future U.S. agreements. Given this concern, U.S. businesses have strongly advocated for continued progress toward a more comprehensive agreement. Other stakeholders question whether there will be sufficient political support in both countries to make progress in future talks, especially during an election year in the United States. In particular, since the agriculture sector\u00e2\u0080\u0094among countries' most sensitive markets and thus typically relegated to final stage negotiations\u00e2\u0080\u0094has already secured access, some view the United States as having limited leverage to secure further concessions. Other trade experts view the agreement as failing to maximize the potential of the U.S.-Japan economic relationship, both in terms of the market access gains, which essentially had already been agreed to in TPP, but also in terms of advancing U.S.-Japan leadership on rulemaking. More broadly, some view successful next-stage talks as also being critical to \"engineer an American return to the regional economic architecture.\" Under this outlook, reaching a second-stage comprehensive agreement with Japan could help ease the perception among many East Asian policymakers and scholars that the Trump Administration's Indo-Pacific strategy has an insufficient economic component."], "subsections": []}, {"section_title": "Japanese Views", "paragraphs": ["While Prime Minister Abe framed the agreement as a \"win-win outcome\" that benefits both countries, some Japanese observers have criticized the agreement as a one-sided deal benefiting the political and economic interests of the United States. In particular, critics cite the lack of U.S. market access commitments in the auto sector in exchange for Japanese agricultural concessions, as well as the lack of concrete commitment by the United States not to impose Section 232 auto tariffs, despite verbal assurances from the Trump Administration. Instead, in a joint statement, both sides indirectly alluded to the issue, committing to \"refrain from taking measures against the spirit of these agreements \u00e2\u0080\u00a6 and make efforts for an early solution to other tariff-related issues.\" An estimate by the Japanese government of the economic benefits of a bilateral trade deal assumes the removal of U.S. auto tariffs\u00e2\u0080\u0094an approach criticized by some members of the Japanese Diet, who remain skeptical of achieving this future concession. More broadly, some analysts point to Japan conceding to bilateral talks as dimming any prospect for a possible U.S. return to TPP, a long-held Japanese goal. In others' view, the deal was favorable to Japan in achieving the primary goals of avoiding potential auto tariffs and sealing an expeditious conclusion of an agreement limited to goods\u00e2\u0080\u0094Prime Minister Abe's initial characterization of the deal. Further, while Japan made concessions in agriculture, they remain limited to commitments in past Japanese trade agreements (TPP-minus in some cases). Japanese industry broadly welcomes the agreement, in particular the sectors that gain from reduced U.S. tariffs, but like U.S. industry, urge further progress."], "subsections": []}, {"section_title": "Next Steps", "paragraphs": ["Japan ratified the agreements on December 5, 2019, while the Trump Administration previously signed an executive agreement on the digital trade commitments, and is expected to issue a proclamation implementing the agreed tariff changes in December, paving the way for entry into force in January 2020. In its notification to Congress of the U.S. intent to enter into the agreements, the Administration stated that it \"looks forward to continued collaboration with Congress on further negotiations with Japan to achieve a more comprehensive trade agreement.\" The Administration did not specify a timeline, however. The United States and Japan stated their intent to \"conclude consultations within four months after the date of entry into force of the United States-Japan Trade Agreement and enter into negotiations thereafter in the areas of customs duties and other restrictions on trade, barriers to trade in services and investment, and other issues in order to promote mutually beneficial, fair, and reciprocal trade.\" While USTR trade negotiating objectives released at the outset of the talks in December 2018 suggested a broad range of issues beyond tariffs and digital trade are to be covered, it remains unclear what specific issues would be the subject of the next-stage talks."], "subsections": []}]}, {"section_title": "Issues for Congress", "paragraphs": ["The stage one agreements with Japan on agriculture, industrial goods, and digital trade, as well as the approach the Trump Administration has taken to negotiate them represent a significant shift in U.S. trade agreement policy. Given its constitutional authority to regulate foreign commerce, Congress may reflect on whether this shift aligns with congressional objectives. Congress may also consider the impact of the agreements on the U.S. economy, including the implications of completing (or not completing) a broader second-stage deal with Japan, and how a staged approach affects the countries' ability to achieve additional agreements."], "subsections": [{"section_title": "Congressional Role in Limited Scope and Staged Agreements", "paragraphs": ["The Administration's plan to implement the stage one U.S.-Japan agreements without the approval of Congress, an unprecedented move for U.S. FTA negotiations, has prompted debate among some Members over the appropriate congressional role. In a November 26, 2019, letter to the USTR some Members sought clarification from the Administration regarding its intent to implement the agreements and how Section 103(a) trade authorities under TPA allow the Administration to enter into a tariff agreement with Japan. Some analysts and Members cite uncertainties as to whether the delegated authorities also permit implementation of changes in rules of origin and quota modifications under the agreements. Some Members further suggest that future debate over potential reauthorization of TPA should consider congressional intent behind these delegated tariff authorities. At the same time, other Members have indicated that they would not object to the Administration's plan to implement the agreements with Japan without congressional approval. On procedure, questions have been raised by some as to whether the Administration has fulfilled the consultation requirements of TPA throughout the negotiations\u00e2\u0080\u0094Section 103(a) includes fewer requirements with respect to tariff-only agreements. The digital trade commitments do not appear to require changes to U.S. law, but the inclusion of certain provisions has prompted some congressional debate. In the case of past U.S. FTAs, such debate would typically play out during congressional debate and formal consideration of legislation to implement the respective agreement under TPA. Key questions for Congress may include", "What role should Congress play in limited trade agreements, given the authorities and requirements established in TPA? Should Congress consider changes to delegated authorities in future consideration of potential TPA reauthorization?"], "subsections": []}, {"section_title": "Staged Negotiation or Comprehensive Deal", "paragraphs": ["Congress set negotiating objectives for U.S. trade agreements in statute in its 2015 grant of TPA (19 U.S.C. \u00c2\u00a73802). Based on these guidelines and as required by TPA, the Trump Administration laid out 22 specific areas of focus for its bilateral negotiations with Japan. The stage one U.S.-Japan trade agreements, however, include provisions related to two of these areas: a limited reduction of tariffs on trade in goods and digital trade. The Administration has stated its intent to address the remaining issues in future negotiations, but its ability to conclude and implement such negotiations depend on the political landscape and will in both countries, making a second-phase deal an uncertain prospect. While the U.S. trade advisory committees generally support the initial-stage agreements, some, such as the services sector advisory committee, also argue that the two-stage or perhaps a multi-stage approach could make it more challenging for the United States to achieve the strongest possible overall outcomes in certain sectors. ", "The staged approach also raises questions over the potential economic impact of the agreement. Due to the Administration's intended use of Section 103(a) proclamation authorities to enact the agreed tariff changes with Japan, an economic assessment by the U.S. International Trade Commission (USITC) will not be required for this stage one deal. The agreement may have a modest overall effect on the U.S. economy, given that it covers a small share of bilateral trade, but it could be significant for the U.S. agricultural exporters that will enjoy improved access to Japan's highly protected market. Key questions for Congress may include", "How do these stage one agreements with Japan affect the ability of the United States to negotiate a more comprehensive agreement in the future? Do staged trade negotiations adhere to Congress's negotiating objectives in TPA, and should Congress support this staged approach in future U.S. trade negotiations?"], "subsections": []}, {"section_title": "Section 232 Auto Tariff Threat", "paragraphs": ["Congress delegated authority to the President to enact tariffs under Section 232 specifically to address possible threats to U.S. national security. President Trump, however, has stated that his use of tariff authorities have been a critical tool in getting U.S. trade partners to the negotiating table, and Japan's Foreign Minister, Toshimitsu Motegi, who negotiated the phase-one deal for Japan, highlighted the importance of avoiding Section 232 auto tariffs as a key outcome of the U.S.-Japan negotiations. The Administration has yet to publish the Commerce Department's report outlining the national security threat posed by auto imports, despite direct requests from Congress and legal requirement to do so. Some trade analysts caution that U.S. use or threat of trade barriers as negotiating leverage undermines existing global trade rules and could set a precedent used by other countries against the United States in the future. Many Members of Congress have questioned the security rationale behind the President's proposed and implemented tariff actions, and some support legislation revising Section 232 authorities. Key questions for Congress may include", "Does the use of Section 232 tariff authorities as leverage in broader trade and tariff negotiations represent an appropriate use of the delegated authorities? What are the potential long-term implications to U.S. and global trade policy of using the threat of tariff increases as leverage in trade liberalization negotiations?"], "subsections": []}, {"section_title": "WTO Compliance", "paragraphs": ["The limited scope of the USJTA commitments (in particular, the exclusion of auto trade), has led several analysts and some Members of Congress to question the extent to which the agreement adheres to Article XXIV of the General Agreement on Tariffs and Trade (GATT) under the WTO. This provision requires regional trade agreements outside the WTO to eliminate duties and other restrictive regulations of commerce on \"substantially all trade\" between the parties. As discussed, U.S. market access commitments in the initial deal cover a limited share of U.S. goods imports from Japan. Congress has historically taken issue with other countries' partial scope agreements, advocating for better adherence to Article XXIV, including within TPA and other trade statutes. Some analysts suggest this concern could be mitigated if the stage one U.S.-Japan agreement were to qualify as an \"interim agreement\" under Article XXIV; but these agreements must include a \"plan and schedule\" for the formation of the free trade area within a \"reasonable length of time.\" In practice, however, WTO members have rarely challenged other trading partners' agreements for consistency with these requirements under formal dispute settlement proceedings. Whether or not the agreement ultimately is inconsistent with the letter or spirit of WTO rules likely depends on the timeline and scope of the next-stage U.S.-Japan talks, which both sides have indicated aim to be comprehensive in scope. Key questions for Congress may include", "Are the stage one agreements consistent with U.S. obligations under the WTO? Does the limited scope of the agreements set precedents for other countries to negotiate other partial trade agreements that liberalize trade on a limited set of products or sectors that could potentially discriminate against the United States, as well as potentially undermine respect and adherence to the letter and spirit of WTO rules?"], "subsections": []}, {"section_title": "Comparison to TPP (and TPP-11) and Strategic Considerations", "paragraphs": ["The Trump Administration's bilateral trade agreement negotiations with Japan represent an alternative to the U.S.-Japan trade agreement negotiated as part of TPP. Given the Trump Administration's decision to conclude a limited, stage one agreement, the most significant distinction with TPP (and TPP-11) at this point is that TPP covered a much broader range of commitments. For example, USJTA commits the countries to reduce or eliminate tariffs on small share of each country's overall tariff lines, whereas TPP committed both countries to eliminate tariffs on all but a limited number of agricultural products. In addition, this phase-one agreement with Japan includes one nontariff issue, digital trade, whereas TPP covered issues such as rules on technical barriers to trade, sanitary and phytosanitary measures, state-owned enterprises, labor and environmental standards, investment and intellectual property rights protections, and market access for services, among others. As discussed, whether the Administration will include such commitments in future negotiations with Japan\u00e2\u0080\u0094and in what form\u00e2\u0080\u0094remains to be seen. ", "The Trump Administration's bilateral approach to negotiations with Japan also differs from the Obama Administration's and the George W. Bush Administration's multiparty approach to TPP, which may be tied to differing strategic priorities by the Administrations. For example, the Obama Administration saw the TPP as the economic component of its rebalance to Asia and a vehicle to establish rules that reflect U.S. interests and values as the regional framework for commerce, rather than allowing other countries, such as China, to set regional norms. The broad membership of TPP, arguably, was an important component of this strategy, creating an opportunity to harmonize rules across multiple trading partners, and creating a greater likelihood of attracting additional future participants. The Trump Administration, alternatively, has prioritized achieving fair and reciprocal trade, both in its objectives for the U.S.-Japan trade agreement and its broader Indo-Pacific strategy. The Administration argues that a bilateral approach to negotiations allows the United States to take full advantage of its economic heft to secure the most advantageous terms and allows for better enforceability. Key questions for Congress may include", "How has the U.S. withdrawal from TPP affected U.S. economic and strategic interests in Japan and the Asia-Pacific region and what is the best approach to advancing those interests moving forward in the next stage of talks with Japan? What are the costs and benefits of bilateral versus regional or multiparty approaches to U.S. trade agreement negotiations? Should the United States consider joining TPP-11?"], "subsections": []}]}]}}
{"id": "R46000", "title": "Poverty in the United States in 2018: In Brief", "released_date": "2019-11-08T00:00:00", "summary": ["In 2018, approximately 38.1 million people, or 11.8% of the population, had incomes below the official definition of poverty in the United States. Poverty statistics provide a measure of economic hardship. The official definition of poverty for the United States uses dollar amounts called poverty thresholds that vary by family size and the members' ages. Families with incomes below their respective thresholds are considered to be in poverty. The poverty rate (the percentage that was in poverty) fell from 12.3% in 2017. This was the fourth consecutive year since the most recent recession that the poverty rate has fallen.", "The poverty rate for female-householder families in 2018 (24.9%, down 1.3 percentage points from the previous year) was higher than that for male-householder families (12.7%) or married-couple families (4.7%), neither of which registered a decline from 2017. Of the three age groups\u00e2\u0080\u0094children under 18, the working-age population, and those age 65 and older\u00e2\u0080\u0094the 65-and-older population used to have the highest poverty rates, but now has the lowest: 28.5% of the aged population was poor in 1966, but 9.7% was poor in 2018. People under 18, in contrast, had the highest poverty rate of the three age groups: 16.2% of this population was poor in 2018. From 2017 to 2018, poverty rates fell among children (from 17.4% to 16.2%) and the working-age population (from 11.1% to 10.7%), but not among the aged population (9.7% in 2018). Poverty was not equally prevalent in all parts of the country. The poverty rate for Mississippi (19.7%) appeared highest but was in a statistical tie with New Mexico (19.5%). New Hampshire's poverty rate (7.6%) was lowest in 2018.", "Criticisms of the official poverty measure have inspired poverty measurement research and eventually led to the development of the Supplemental Poverty Measure (SPM). The SPM uses different definitions of needs and resources than the official measure.", "The SPM includes the effects of taxes and in-kind benefits (such as housing, energy, and food assistance) on poverty, while the official measure does not. Because some types of tax credits are used to assist the poor (as are other forms of assistance), the SPM may be of interest to policymakers. The poverty rate under the SPM (12.8%) was about 1 percentage point higher in 2018 than the official poverty rate (11.8%). Under the SPM, the profile of the poverty population is slightly different than under the official measure. Compared with the official measure, poverty rates under the SPM were lower for children (13.7% compared with 16.2%) and higher for working-age adults (12.2% compared with 10.7%) and the 65-and-older population (13.6% compared with 9.7%). While the SPM reflects more current measurement methods, the official measure provides a comparison of the poor population over a longer time period, including some years before many current antipoverty assistance programs had been developed. In developing poverty-related legislation and conducting oversight on programs that aid the low-income population, policymakers may be interested in these historical trends."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["In 2018, approximately 38.1 million people, or 11.8% of the population, had incomes below the official definition of poverty in the United States. The poverty rate (the percentage that were in poverty) fell from 12.3% in 2017, while the number of persons in poverty declined from 39.6 million.", "In this report, the numbers and percentages of those in poverty are based on the Census Bureau's estimates. While this official measure is often regarded as a statistical yardstick rather than a complete description of what people and families need to live, it does offer a measure of economic hardship faced by the low-income population: the poverty measure compares family income against a dollar amount called a poverty threshold , a level below which the family is considered to be poor. The Census Bureau releases these poverty estimates every September for the prior calendar year. Most of the comparisons discussed in this report are year-to-year comparisons. This report only considers a number or percentage to have changed from the previous year, or to be different from another number or percentage, if the difference has been tested to be statistically significant at the 90% confidence level. ", "However, in addition to the most recent year's data, this report presents a historical perspective as well as information on poverty for demographic groups (by family structure, age, race and Hispanic origin, and work status) and by state.", "Over the past several decades, criticisms of the official poverty measure have led to the development of an alternative research measure called the Supplemental Poverty Measure (SPM), which the Census Bureau also computes and releases. Statistics comparing the official measure with the SPM are provided at the conclusion of this brief.", "The SPM includes the effects of taxes and in-kind benefits (such as housing, energy, and food assistance) on poverty, while the official measure does not. Because some types of tax credits are used to assist the poor, as are other forms of assistance, the SPM may be of interest to policymakers. However, the official measure provides a comparison of the poor population over a longer time period, including some years before many current antipoverty assistance programs had been developed. In developing poverty-related legislation and conducting oversight on programs that aid the low-income population, policymakers may be interested in these historical trends."], "subsections": [{"section_title": "How the Official Poverty Measure Is Computed", "paragraphs": ["The Census Bureau determines a person's poverty status by comparing his or her resources against a measure of need. For the official measure, resources is defined as total family income before taxes, and the measure of \"need\" is a dollar amount called a poverty threshold. There are 48 poverty thresholds that vary by family size and composition. If a person lives with other people to whom he or she is related by birth, marriage, or adoption, the money income from all family members is used to determine his or her poverty status. If a person does not live with any family members, his or her own income is used. Only money income before taxes is used in calculating the official poverty measure, meaning this measure does not treat in-kind benefits such as the Supplemental Nutritional Assistance Program (SNAP, formerly known as food stamps), housing subsidies, or employer-provided benefits as income.", "The poverty threshold dollar amounts vary by the size of the family (from one person not living in a family, to nine or more family members living together) and the ages of the family members (how many of the members are children under 18 and whether or not the family head is 65 years of age or older). Collectively, these poverty thresholds are often referred to as the poverty line . As a rough guide, the poverty line in 2018 can be thought of as $25,701 for a family of four, $19,985 for a family of three, $16,247 for a family of two, or $12,784 for an individual not living in a family, though the official measure is actually much more detailed. ", "The threshold dollar amounts are updated annually for inflation using the Consumer Price Index. Notably, the same thresholds are applied throughout the country: no adjustment is made for geographic variations in living expenses.", "The official poverty measure used in this report is the federal government's definition of poverty for statistical purposes, such as comparing the number or percentage of people in poverty over time. A related definition of poverty, the poverty guidelines published by the Department of Health and Human Services (HHS), is used for administrative purposes such as eligibility criteria for assistance programs and will not be discussed in this report. "], "subsections": []}]}, {"section_title": "Historical Perspective", "paragraphs": [" Figure 1 shows a historical perspective of the number and percentage of the population below the poverty line. The number in poverty and the poverty rates are shown from the earliest year available (1959), through the most recent year available (2018). Because the total U.S. population has grown over time, poverty rates are useful for historical comparisons because they control for population growth.", "Poverty rates fell through the 1960s. Since then, they have generally risen and fallen according to the economic cycle, though during the most recent two expansions poverty rates did not fall measurably until four to six years into the expansion. Historically notable lows occurred in 1973 (11.1%) and 2000 (11.3) . Poverty rate peaks occurred in 1983 (15.2%), 1993 (15.1%), and 2010 (15.1%).", "Poverty rates tend to rise during and after recessions, as opposed to leading economic indicators such as new housing construction, whose changes often precede changes in the performance of the overall economy. The poverty rate's lag is explainable in part by the way it is measured: it uses income from the entire calendar year.", "Notably, the poverty rate in 2018 registered a fourth consecutive annual decrease since the most recent recession, though it remained higher than the rate in 2000, the most recent low point."], "subsections": []}, {"section_title": "Poverty for Demographic Groups10", "paragraphs": ["The drop in the U.S. poverty rate (from 12.3% in 2017 to 11.8% in 2018) affected some demographic groups more than others, notably people in female-householder families, children and the population aged 18 to 64, and the non-Hispanic white population. Details for selected demographic groups are described below."], "subsections": [{"section_title": "Family Structure", "paragraphs": ["Because poverty status is determined at the family level by comparing resources against a measure of need, vulnerability to poverty may differ among families of different compositions. In this section, poverty data by family structure are presented using the official poverty measure, with \"families\" defined as persons related by birth, marriage, or adoption to the householder (the person in whose name the home is owned or rented). In the \" Supplemental Poverty Measure \" section of this report, a different definition will be used. ", "Families with a female householder and no spouse present (female-householder families) have historically had higher poverty rates than both married-couple families and families with a male householder and no spouse present (male-householder families). This remained true in 2018: female-householder families experienced a poverty rate of 24.9%, compared with 4.7% for married-couple families and 12.7% for male-householder families. Unlike the other two family types, however, female-householder families experienced a decline in their poverty rate of 1.3%. Their 2018 rate of 24.9%, down from 26.2% in 2017, appeared to be among the lowest poverty rates for female-householder families on record. ", "Among individuals not living in families, the poverty rate was 20.2% in 2018, not distinguishable from the previous year. "], "subsections": []}, {"section_title": "Age", "paragraphs": ["When examining poverty by age, three main groups are noteworthy for distinct reasons: under 18, 18 to 64, and 65 and older. People under age 18 are typically dependent on other family members for income, particularly young children below their state's legal working age. People aged 18 to 64 are generally thought of as the working-age population and typically have wages and salaries as their greatest source of income. People age 65 and older, referred to as the aged population, are often eligible for retirement, and those who do retire typically experience a change in their primary source of income.", "Children and the working-age population experienced decreases in poverty. Among children, 11.9 million, or 16.2%, were poor, down from 12.8 million or 17.4% in 2017. Among the working-age population, 21.1 million, or 10.7%, were in poverty, down from 21.9 million or 11.1% in 2017. The aged population did not register any significant changes in its number in poverty or its poverty rate from 2017 to 2018: 5.1 million, or 9.7%, were poor.", "From a historical standpoint, the poverty rate for those age 65 and over used to be the highest of the three groups. In 1966, people age 65 and over had a poverty rate of 28.5%, compared with 17.6% for those under 18 and 10.5% for working-age adults. By 1974, the poverty rate for people age 65 and over had fallen to 14.6%, compared with 15.4% for people under 18 and 8.3% for working-age adults. Since then, people under 18 have had the highest poverty rate of the three age groups, as shown in Figure 3 ."], "subsections": []}, {"section_title": "Race and Hispanic Origin13", "paragraphs": ["Poverty rates vary by race and Hispanic origin, as shown in Figure 4 . In surveys, Hispanic origin is asked separately from race; accordingly, people identifying as Hispanic may be of any race. The poverty rate fell for non-Hispanic whites (from 8.5% in 2017 to 8.1% in 2018). Among blacks (20.8%), Asians (10.1%), and Hispanics (17.6%), the poverty rate did not register any statistically significant change from 2017."], "subsections": []}, {"section_title": "Work Status", "paragraphs": ["While having a job reduced the likelihood of being in poverty, it did not guarantee that a person or his or her family would avoid poverty. Among the 18 to 64-year-old population living in poverty, 77.2% had jobs in 2018. Poverty rates among workers in this age group were 5.1% for all workers, 2.3% for full-time year-round workers, and 12.7% for part-time or part-year workers, none of which were measurably changed from the previous year. Similarly, no significant change was detected among those who did not work at least one week in 2018 (29.7% were poor). ", "Because poverty is a family-based measure, the change in one member's work status can affect the poverty status of his or her entire family. Among all 18 to 64-year-olds who did not have jobs in 2018, 58.9% lived in families in which someone else did have a job. Among poor 18 to 64-year-olds without jobs, 18.5% lived in families where someone else worked."], "subsections": []}]}, {"section_title": "Poverty Rates by State19", "paragraphs": ["Poverty is not equally prevalent in all parts of the country. The map in Figure 5 shows states with relatively high poverty rates across parts of the Appalachians, the Deep South, and the Southwest, with the poverty rate in Mississippi (19.7%) among the highest in the nation, not statistically different from the rate in New Mexico (19.5%). The poverty rate in New Hampshire (7.6%) was lowest. When comparing poverty rates geographically, it is important to remember that the official poverty thresholds are not adjusted for geographic variations in the cost of living\u00e2\u0080\u0094the same thresholds are used nationwide. As such, an area with a lower cost of living accompanied by lower wages will appear to have a higher poverty rate than an area with a higher cost of living and higher wages, even if individuals' purchasing power were exactly the same in both areas. ", "Puerto Rico and 14 states experienced poverty rate declines from 2017 to 2018: one in the Midwest (Illinois), three in the Northeast (Massachusetts, New Jersey, and New York); five in the South (Florida, Georgia, Louisiana, North Carolina, and West Virginia); and five in the West (Arizona, California, Colorado, Oregon, and Washington). Connecticut was the only state to experience an increase, and 35 states, as well as the District of Columbia, did not register a statistically significant change."], "subsections": []}, {"section_title": "Supplemental Poverty Measure", "paragraphs": ["Criticisms of the official measure have led to the development of the Supplemental Poverty Measure (SPM). Described below are the development of the official measure, its limitations, attempts to remedy those limitations, the research efforts that eventually led to the SPM's first release in November 2011, and a comparison of poverty rates in 2018 based on the SPM and the official measure."], "subsections": [{"section_title": "How the Official Poverty Measure Was Developed", "paragraphs": ["The poverty thresholds were originally developed in the early 1960s by Mollie Orshansky of the Social Security Administration. Rather than attempt to compute a family budget by using prices for all essential items that low-income families need to live, Orshansky focused on food costs. Unlike other goods and services such as housing or transportation, which did not have a generally agreed-upon level of adequacy, minimum standards for nutrition were known and widely accepted. According to a 1955 U.S. Department of Agriculture (USDA) food consumption survey, the average amount of their income that families spent on food was roughly one-third. Therefore, using the cost of a minimum food budget and multiplying that figure by three yielded a figure for total family income. That computation was possible because USDA had already published recommended food budgets as a way to address the nutritional needs of families experiencing economic stress. Some additional adjustments were made to derive poverty thresholds for two-person families and individuals not living in families to reflect the relatively higher fixed costs of smaller households."], "subsections": []}, {"section_title": "Motivation for a Supplemental Measure", "paragraphs": ["While the official poverty measure has been used for over 50 years as the source of official statistics on poverty in the United States, it has received criticism over the years for several reasons. First, it does not take into account benefits from most of the largest programs that aid the low-income population. For instance, it uses money income before taxes\u00e2\u0080\u0094meaning that it does not necessarily measure the income available for individuals to spend, which for most people is after-tax income. Therefore, any effects of tax credits designed to assist persons with low income are not captured by the official measure. The focus on money income also does not account for in-kind benefit programs designed to help the poor, such as SNAP or housing assistance.", "The official measure has also been criticized for the way it characterizes families' and individuals' needs in the poverty thresholds. That is, the method used to compute the dollar amounts used in the thresholds, which were originally based on food expenditures in the 1950s and food costs in the 1960s, does not accurately reflect current needs and available goods and services. Moreover, the official measure does not take account of the sharing of expenses and income among household members not related by birth, marriage, or adoption. And, as mentioned earlier, the official thresholds do not take account of geographic variations in the cost of living.", "In 1995, a panel from the National Academy of Sciences issued a report, Measuring Poverty: A New Approach, which recommended improvements to the poverty measure. Among the suggested improvements were to have the poverty thresholds reflect the costs of food, clothing, shelter, utilities, and a little bit extra to allow for miscellaneous needs; to broaden the definition of \"family;\" to include geographic adjustments as part of the measure's computation; to include the out-of-pocket costs of medical expenses in the measure's computation; and to subtract work-related expenses from income. An overarching goal of the recommendations was to make the poverty measure more closely aligned with the real-life needs and available resources of the low-income population, as well as the changes that have taken place over time in their circumstances, owing to changes in the nation's economy, society, and public policies (see Table 1 ).", "After over a decade and a half of research to implement and refine the methodology suggested by the panel, conducted both from within the Census Bureau as well as from other federal agencies and the academic community, the Census Bureau issued the first report using the Supplemental Poverty Measure (SPM) in November 2011."], "subsections": []}, {"section_title": "Official and Supplemental Poverty Findings for 201827", "paragraphs": ["Compared with the official measure, the SPM takes into account greater detail of individuals' and families' living arrangements and provides a more up-to-date accounting of the costs and resources available to them. Because the SPM recognizes greater detail in relationships among household members and geographically adjusts housing costs, it provides an updated rendering, compared with the official measure, of the circumstances in which the poor live. In that context, some point out that the SPM's measurement of taxes, transfers, and expenses may offer policymakers a clearer view of how government policies affect the poor population today. However, the SPM was developed as a research measure, and the Office of Management and Budget set the expectation that it would be revised periodically to incorporate improved measurement methods and newer sources of data as they became available; it was not developed for administrative purposes. Conversely, the official measure's consistency over a longer time span makes it easier for policymakers and researchers to make historical comparisons. ", "Under the SPM, the profile of the poverty population is slightly different than under the official measure. The SPM was 1 percentage point higher in 2018 than the official poverty rate (12.8% compared with 11.8%; see Figure 6 ). More people aged 18 to 64 are in poverty under the SPM (12.2% compared with 10.7% under the 2018 official measure), as are people age 65 and over (13.6%, compared with 9.7% under the official measure). The poverty rate for people under age 18 was lower under the SPM (13.7% in 2018) than under the official measure (16.2%, with foster children included). Again, the SPM uses a different definition of resources than the official measure: the SPM includes in-kind benefits which generally help families with children; subtracts out work-related expenses, which are often incurred by the working-age population; and subtracts medical out-of-pocket expenses, which are incurred frequently by people age 65 and older.", "With the geographically adjusted thresholds, the poverty rate in 2018 was lower under the SPM than under the official measure for the Midwest (9.2% compared with 10.4%), while it was higher than the official measure for the Northeast (12.2% compared with 10.3%), the West (14.4% compared with 11.2%), and the South (13.9% compared with 13.6%)."], "subsections": []}]}]}}
{"id": "R45969", "title": "The September 11th Victim Compensation Fund (VCF)", "released_date": "2019-10-17T00:00:00", "summary": ["The September 11 th Victim Compensation Fund (VCF) provides cash benefits to certain persons whose health may have been affected by exposure to debris or toxic substances in the aftermath of the September 11, 2001 terrorist attacks on the Pentagon, the World Trade Center, and the terrorist-related aircraft crash at Shanksville, PA. Congress created the original VCF shortly after the 2001 terrorist attacks to provide compensation to persons injured and the families of persons killed in the attacks and their immediate aftermath. The original VCF closed in 2003.", "In 2011, Congress reopened the VCF to provide benefits to persons who responded to the terrorist attack sites, were involved in the cleanup of these sites, or lived in lower Manhattan during the attacks. The reopened VCF was authorized through October 3, 2016. However, the VCF was reauthorized in December 2015 ( P.L. 114-113 ) and July 2019 ( P.L. 116-34 ). All VCF claims must be filed by October 1, 2090.", "Since its reopening, the VCF has awarded more than $5.5 billion to more than 23,000 claimants. There is no cap on the total VCF award amount, but there are limits on the amounts of individual awards for economic and noneconomic losses claimants suffered. The 2019 reauthorization legislation provides all necessary appropriations for VCF awards and administrative expenses through the end of FY2092."], "reports": {"section_title": "", "paragraphs": ["T he September 11 th Victim Compensation Fund (VCF) provides cash benefits to certain persons whose health may have been affected by the aftermath of the September 11, 2001 terrorist attacks on the Pentagon, the World Trade Center, and the terrorist-related aircraft crash at Shanksville, PA. The VCF was most recently reauthorized on July 29, 2019, with the enactment of the Never Forget the Heroes: James Zadroga, Ray Pfeifer, and Luis Alvarez Permanent Authorization of the September 11 th Victim Compensation Fund Act ( P.L. 116-34 ). All VCF claims must be filed by October 1, 2090. There is no cap on total benefits that may be paid. ", "This report provides an overview of the VCF, including its history, current law, and appropriations. It also provides an Appendix of current VCF program statistics. "], "subsections": [{"section_title": "History of the VCF", "paragraphs": ["On September 22, 2001, the Air Transportation Safety and System Stabilization Act (ATSSA; P.L. 107-42 ) was enacted into law. Quickly passed by Congress in the wake of the September 11, 2001 terrorist attacks, this legislation provided various forms of relief to the American airline industry and affirmed Congress's commitment to improving airline safety. Title IV of the ATSSA also established the VCF to compensate persons injured or the representatives of persons killed in the attacks or their immediate aftermath. ", "The VCF originally closed in 2003 but was reopened and expanded in 2011 to provide compensation to the 2001 terrorist attacks' responders and others, such as certain New York City residents, who may have suffered health effects in the aftermath of the attacks. The VCF was reauthorized in December 2015 and July 2019 and is currently authorized through the end of FY2092 with an October 1, 2090 deadline for VCF claims. "], "subsections": [{"section_title": "Original VCF (2001)", "paragraphs": ["The original VCF, created by Title IV of the ATSSA, provided cash benefits to two groups of persons who suffered physical injury or death as a result of the terrorist attacks of September 11, 2001:", "persons who were present at the World Trade Center, Pentagon, or aircraft crash site in Shanksville, PA, at the time of or in the immediate aftermath of the aircraft crashes at those sites on September 11, 2001; and passengers and crew of any aircraft that crashed on September 11, 2001, as a result of terrorist activity.", "The Attorney General appointed a special master to determine the benefit amount for each claimant. The benefit amount payable to each claimant was based on the individual's economic losses (such as loss of future earnings) and noneconomic losses (such as pain and suffering). The VCF statute specifically prohibited any payments for punitive damages. Benefits were reduced by certain collateral source payments, such as life insurance benefits, available to the claimant. There was no cap on the amount of benefits that any one person could receive or on total benefits paid. ", "By filing a VCF claim, a person waived his or her right to file a civil action or be a party to such an action in any federal or state court for damages related to the September 11, 2001 terrorist-related aircraft crashes. This provision established the VCF as an alternate and expedited route to compensation for victims while providing some protection against lawsuits for damages that may have been brought by victims against the air carriers; airframe manufacturers; the Port Authority of New York and New Jersey, who owned the World Trade Center; or any other entity. ", "Congress provided funding for the VCF through an appropriation of \"such sums as may be necessary\" for benefit payment and administration. The VCF's special master was required to promulgate regulations to govern the program within 90 days of the law's enactment, and all claims had to be filed within two years of the regulations' promulgation, at which time the VCF would close. The original VCF received 7,403 claims and made awards totaling $7.049 billion to 5,560 claimants. "], "subsections": []}, {"section_title": "Reopened VCF (2011)", "paragraphs": ["The original VCF closed to new claims in December 2003. However, concerns about injuries and illnesses incurred by persons involved in emergency response, recovery, and debris removal operations at the September 11 th aircraft crash sites led Congress to reopen the VCF with the enactment of Title II of the James Zadroga 9/11 Health and Compensation Act of 2010 (Zadroga Act; P.L. 111-347 ). The reopened VCF extended eligibility for cash benefits to persons who suffered physical injuries or illnesses as a result of rescue, recovery, or debris removal work at or near the September 11 th aircraft crash sites during the from September 11, 2001 to May 30, 2002, as well as for certain persons who lived, worked, or were near the World Trade Center on September 11, 2001. ", "The VCF was initially reopened for new claims through October 3, 2016. Total benefits and administrative costs were limited to $2.775 billion, unlike in the original VCF, which had no cap on total funding for benefits, allowing the special master to award benefits without considering the benefits' total cost. Under the reopened VCF, attorney fees were limited to 10% of the VCF award."], "subsections": []}, {"section_title": "VCF Reauthorizations", "paragraphs": [], "subsections": [{"section_title": "2015 Reauthorization", "paragraphs": ["The VCF was first reauthorized on December 18, 2015, which extended the claim period for five years, with the enactment of Title IV of Division O of the Consolidated Appropriations Act, 2016 (Zadroga Reauthorization Act of 2015; P.L. 114-113 ). Under this reauthorization, claims approved before the reauthorization date were considered Group A claims, which were subject to the same rules as claims under the reopened VCF and to the $2.775 billion cap on total benefit payments. All other claims filed before the December 18, 2020 deadline were considered Group B claims subject to additional rules and funding caps established by the reauthorization legislation including a $4.6 billion cap on benefits. The 2015 reauthorization created a total funding cap of $7.375 billion for Groups A and B benefits."], "subsections": []}, {"section_title": "2019 Reauthorization", "paragraphs": ["The VCF was reauthorized again in 2019 with the enactment of the Never Forget the Heroes: James Zadroga, Ray Pfeifer, and Luis Alvarez Permanent Authorization of the September 11 th Victim Compensation Fund Act ( P.L. 116-34 ). Under this legislation, the VCF is authorized through the end of FY2092, with an October 1, 2090 deadline for all VCF claim filings. The 2019 reauthorization appropriates \"such sums as may be necessary\" for VCF benefit payments and administrative expenses for each fiscal year through the end of FY2092. "], "subsections": []}]}]}, {"section_title": "Overview of the VCF Under Current Law", "paragraphs": [], "subsections": [{"section_title": "VCF Eligibility", "paragraphs": ["To be eligible for VCF benefits, a person must have", "died as a passenger or crew member on one of the aircraft hijacked on September 11, 2001; died as a direct result of the terrorist-related aircraft crashes or rescue, recovery, or debris removal in the immediate aftermath of the September 11, 2001 terrorist attacks; or been present at a September 11 th crash site in the immediate aftermath of the September 11, 2001 terrorist attacks and suffered physical harm as a direct result of the crashes or the rescue, recovery, and debris removal efforts."], "subsections": [{"section_title": "Physical Harm", "paragraphs": ["To be eligible for the VCF, survivors (individuals who did not die as passengers or crew members of the hijacked aircraft or as a direct result of the September 11 th terrorist attacks, including rescue, recovery, and debris removal), must have suffered physical harm as a result of the attacks. Physical harm is demonstrated by the presence of a World Trade Center (WTC)-related physical health condition as defined for the purposes of the World Trade Center Health Program (WTCHP). "], "subsections": [{"section_title": "WTC-Related Physical Health Condition", "paragraphs": ["A WTC-related physical health condition is a physical health condition covered by the WTCHP. These conditions are those provided in statute at Sections 3312(a) and 3322(b) of the Public Health Service Act (PHSA) and those added through rulemaking by the WTCHP administrator. Per Section 3312(a) of the PHSA, to be covered by the WTCHP and thus compensable under the VCF, a condition must be on the list of WTCHP-covered conditions and it must be determined that exposure in the aftermath of the September 11, 2001 terrorist attacks \"is substantially likely to be a significant factor in aggravating, contributing to, or causing the illness or health condition.\" In most cases, the VCF requires that a person's condition be WTCHP certified for that condition to be compensable.", "The WTCHP provides standardized guidance to determine whether a person's condition was caused by exposure in the aftermath of the September 11, 2001 terrorist attacks. This determination is based on a combination of the amount of time a person was physically present at a site and the specific activities\u00e2\u0080\u0094such as search and rescue, sleeping in a home in Lower Manhattan, or just passing through a site\u00e2\u0080\u0094in which the person engaged. For example, a person who was engaged in search and rescue activities at the WTC site between September 11 and September 14, 2001, must have been present for at least 4 hours for the WTCHP to certify his or her condition and thus compensable by the VCF, whereas a person whose only activity was passing through Lower Manhattan during the same period, and who was not caught in the actual dust cloud resulting from the buildings' collapse, would have to have been in the area for at least 20 hours to be eligible for compensation. The WTCHP evaluates conditions that do not meet the minimum exposure criteria on a case-by-case basis using \"professional judgement\" and \"any relevant medical and/or scientific information.\"", "WTCHP-covered mental health conditions may not be used to establish VCF eligibility, as the VCF does not include any provisions for benefit payments for mental health conditions. "], "subsections": []}, {"section_title": "Cancer as a WTC-Related Physical Health Condition", "paragraphs": ["The WTCHP statute does not include any type of cancer in the list of WTC-related health conditions. However, the statute does require the WTCHP administrator to periodically review the available scientific evidence to determine if any type of cancer should be covered by the WTCHP and, by extension, the VCF. If the WTCHP administrator is petitioned to add conditions to the WTC-related health conditions' list, the administrator is required, within 90 days, to either request a recommendation on action from the WTC Scientific/Technical Advisory Committee (STAC) or make a determination on adding the health condition. If the administrator requests a recommendation from the STAC, that recommendation must be made within 90 days of its receipt and the WTCHP administrator must act on that request within an additional 90 days. ", "On September 7, 2011, Representatives Carolyn B. Maloney, Jerrold Nadler, Peter King, Charles B. Rangel, Nydia M. Velazquez, Michael G. Grimm, and Yvette Clarke and Senators Charles E. Schumer and Kirsten E. Gillibrand filed a petition, in the form of a letter to the WTCHP administrator, requesting that the administrator \"conduct an immediate review of new medical evidence showing increased cancer rates among firefighters who served at ground zero\" and that the administrator \"consider adding coverage for cancer under the Zadroga Act.\" In response to this petition, the WTC administrator requested that the STAC \"review the available information on cancer outcomes associated with the exposures resulting from the September 11, 2001 terrorist attacks, and provide advice on whether to add cancer, or a certain type of cancer, to the List specified in the Zadroga Act.\" ", "On September 12, 2012, based on the STAC's recommendations, the WTCHP administrator added more than 60 types of cancer, covering nearly every body system and including any cancers in persons less than 20 years of age and any rare cancers, to the list of WTC-related health conditions, thus making these conditions compensable under the VCF. ", "In a review of the decision to add cancers to the list of WTC-related health conditions, the Government Accountability Office (GAO) found that the WTCHP administrator used a hazards-based approach to evaluate cancers. This approach evaluated whether exposures in the aftermath of the September 11, 2001 terrorist attacks were associated with types of cancer but did not evaluate the probability of developing cancer based on a given exposure. A GAO-convened scientific panel indicated that the hazards-based approach the WTCHP administrator used was reasonable given data constraints and the fact that there is a certification process to determine if a cancer or other condition on the WTC-related health list meets the statutory requirement of being \"substantially likely to be a significant factor in aggravating, contributing to, or causing the illness or health condition.\" The panel also indicated that this approach could have benefited from an independent peer review process. The WTCHP administrator stated that peer review was not possible given the statutory time constraints to act on the petition and the STAC's recommendation. ", "One year later, the WTCHP administrator added prostate cancer to the list of WTC-related health conditions. In addition, the WTCHP administrator established minimum latency periods for certain types of cancer and maximum onset periods for certain types of aerodigestive disorders. "], "subsections": []}]}]}, {"section_title": "VCF Operations", "paragraphs": ["The Civil Division of the Department of Justice administers the VCF. The Attorney General appoints the VCF special master and up to two deputies, who serve at the pleasure of the Attorney General. The VCF special master, currently Rupa Bhattacharyya, decides VCF eligibility and benefits. A claimant dissatisfied with the special master's decision on his or her claim may file an appeal and request a hearing before a VCF-appointed hearing officer. There is no further right of appeal or judicial review of VCF decisions. However, a claimant may amend his or her claim after a decision has been made if the claimant has new material relevant to the claim. "], "subsections": [{"section_title": "Registration and Claim Deadlines", "paragraphs": ["All claims for VCF benefits must be filed by October 1, 2090. Before filing a claim, a potential claimant must have registered with the VCF by one of the following applicable deadlines:", "October 3, 2013, if the claimant knew, or reasonably should have known, that he or she suffered a physical harm or died as a result of the September 11 th attacks or rescue, recovery, or debris removal efforts, and that he or she was eligible for the VCF on or before October 3, 2011; or within two years of the date the claimant knew, or reasonably should have known, that he or she has a WTC-related physical health condition or died as a result of the September 11 th attacks and is eligible for the VCF. ", "If a claimant has a condition that is later added to the list of WTCHP-covered conditions, then the two-year period begins on the later of the dates when a government entity, such as the WTCHP or a state workers' compensation agency, determines that the condition is related to the September 11 th attacks, or when a claimant's condition is added to the WTCHP-covered list of conditions. "], "subsections": []}]}, {"section_title": "VCF Benefits", "paragraphs": ["Under current law, there is no cap on the total VCF benefit amount that may be paid, but there are limits on individual benefit amounts. The special master determines VCF benefits based on the claimant's economic and noneconomic losses. For noneconomic losses, there is a cap of $250,000 for cancer claims and $90,000 for all other claims. For cases in which a WTC-related health condition causes death, the presumed award provided in the VCF regulations for noneconomic loss is $250,000 plus an additional $100,000 for the person's spouse and each dependent. In addition, the special master may exceed the noneconomic loss limits if the Special Master determines that the claim presents \"special circumstances.\" ", "When calculating economic losses, the special master is permitted to consider only the first $200,000 in annual income when determining losses to past earnings and future earning capacity, which limits the amount of economic losses that can be paid. The special master is required to periodically adjust this amount to account for inflation. VCF benefits are reduced by certain collateral source payments available to claimants, such as life insurance benefits, workers' compensation payments, and government benefits related to the person's injury or death, including Social Security Disability Insurance and the Public Safety Officers' Benefits program.", "The 2019 reauthorization provides that any benefit award that the special master had previously reduced due to insufficient funding to pay all VCF awards is to be paid in full. "], "subsections": []}, {"section_title": "Exclusivity of Remedy", "paragraphs": ["Congress established the VCF to be an \"administrative alternative to litigation for the victims of the [September 11, 2001] terrorist attacks.\" As such, to receive a VCF award, a person must forfeit his or her right to bring any lawsuit in any state or federal court against any entity, such as the airlines, airframe manufacturers, or building owners, for damages related to the attacks or their aftermath and must withdraw any pending legal claims. However, a person may maintain his or her eligibility for the VCF and bring a lawsuit against \"any person who is a knowing participant in any conspiracy to hijack any aircraft or commit any terrorist act,\" or bring a lawsuit to recover collateral source obligations such as life insurance benefits owed to the victim. ", "In addition, the VCF statute grants the United States District Court for the Southern District of New York exclusive jurisdiction over any lawsuits related to the September 11, 2001 terrorist attacks and establishes liability limits for the airlines, airframe manufacturers, airports, City of New York, and any person with property interest in the World Trade Center such as the Port Authority of New York and New Jersey. ", "The VCF statute caps attorney fees for claimant assistance at 10% of the VCF award amount. The special master has the authority to reduce any attorney fees it deems excessive for services rendered. ", "Under provisions of the Justice for United States Victims of State Sponsored Terrorism Act, a person who receives a VCF award is barred from receiving any additional compensation from the United States Victims of State Sponsored Terrorism Fund. "], "subsections": []}]}, {"section_title": "VCF Appropriations", "paragraphs": ["The 2019 VCF reauthorization appropriates \"such sums as may be necessary\" for FY2019 and each fiscal year through FY2092 for the payment of VCF awards, with all funds to remain available until expended. Thus, funding for the VCF will not require annual appropriations or be subject to the annual appropriations process. "], "subsections": [{"section_title": "Appendix. VCF Award Data", "paragraphs": [], "subsections": []}]}]}}
{"id": "R45890", "title": "Wild and Scenic Rivers: Designation, Management, and Funding", "released_date": "2019-08-28T00:00:00", "summary": ["Congress established the National Wild and Scenic Rivers System (NWSRS) in 1968 through the Wild and Scenic Rivers Act (WSRA; P.L. 90-542) to preserve free-flowing rivers for the benefit and enjoyment of present and future generations and to complement the then-current national policy of constructing dams and other river structures that altered flow. Designated rivers usually are referred to as wild and scenic rivers (WSRs). The WSRA established three classes of WSRs\u00e2\u0080\u0094wild, scenic, and recreational\u00e2\u0080\u0094reflecting the characteristics of the rivers at the time of designation and affecting the type and amount of subsequently allowable development. The system now includes 226 river units comprising over 13,400 miles in 41 states and the Commonwealth of Puerto Rico.", "WSRs may come into the NWSRS either by congressional designation or by state nomination to the Secretary of the Interior. WSRs may be located on federal lands, nonfederal lands, or a combination of both. Some WSRs on nonfederal land are referred to as partnership wild and scenic rivers (or partnership WSRs). The WSRA does not define this term; it is an umbrella term used to describe WSRs with generally similar characteristics, such as nonfederal management and land ownership, but partnership WSRs can vary. WSRs on nonfederal land also may be added to the NWSRS through an administrative process, wherein states may apply to the Secretary of the Interior for inclusion of a state-protected river. Rivers added to the system through state nomination, or rivers designated by Congress that run through both federal and nonfederal lands, generally are not referred to as partnership WSRs.", "In the case of congressionally designated rivers, Congress may first direct in legislation that a study be conducted to determine whether the river area is suitable for wild and scenic designation. Congress generally specifies in the designating legislation that either the Secretary of Agriculture or the Secretary of the Interior administer the WSR. If the designated WSR contains federal land, the Secretary then manages the river through the federal land management agency of jurisdiction\u00e2\u0080\u0094the Bureau of Land Management, the National Park Service (NPS), or the Fish and Wildlife Service within the Department of the Interior or the Forest Service within the U.S. Department of Agriculture. The relevant local jurisdiction manages partnership WSRs and state-nominated WSRs, with certain administrative functions carried out at the federal level.", "WSRs are administered to protect and enhance the values for which the rivers were included in the system and to preserve the rivers' free-flowing condition. The agency, or the relevant local jurisdiction for WSRs on nonfederal land, prepares a comprehensive resource management plan (CRMP) to guide management. The WSRA prohibits federally licensed or assisted water resources projects that would have a \"direct and adverse\" effect on the values for which a river was established and prohibits the Federal Energy Regulatory Commission from licensing projects on or directly affecting a designated river segment. The agency of jurisdiction enforces this provision; on partnership WSRs and state-nominated WSRs, NPS enforces this provision. In addition to the provisions of the WSRA, management of WSRs on federal lands differs based on the statutory management criteria for each agency's lands. Each federal land management agency specifies policies regarding river management at varying levels of detail. Agencies typically provide the most protection to wild rivers.", "For congressionally designated rivers on federal lands, Congress provides funds for operations and maintenance through annual appropriations for the relevant agencies. Agencies sometimes provide funding separately for individual rivers or provide funding through broader budget activities, not specific to an individual river. Rivers added to the NWSRS through state nomination typically do not receive federal funding. However, partnership WSRs receive funding through NPS. The WSRA authorizes federal agencies to provide technical assistance to states and their political subdivisions (such as counties, townships, and others), landowners, organizations, or individuals in planning, protecting, and managing WSRs.", "Designation of wild and scenic rivers has been controversial in some cases, especially for WSRs containing nonfederal lands. Initially following enactment of the WSRA, Congress designated rivers primarily on federal land. Over the past 20 years, Congress has designated or authorized for study an increasing number of partnership WSRs. Opinions regarding the balance of federal and local control over partnership WSRs have varied. Some have observed that Congress intended the state nomination authority to be the primary means for rivers on nonfederal lands to be included in the system, but this designation method has not been used in recent years. Congress may consider whether it is preferable to encourage use of the state-nominated process, which includes a set of fixed provisions, or to continue to establish partnership WSRs through individual designating statutes, whose provisions vary."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["Congress established the National Wild and Scenic Rivers System (NWSRS) in 1968 through the Wild and Scenic Rivers Act (WSRA). The WSRA established a policy of preserving designated free-flowing rivers for the benefit and enjoyment of present and future generations. It also complemented the then-current national policy of constructing dams and other structures that altered flow along many rivers. Designated rivers usually are referred to as wild and scenic rivers (WSRs). The WSRA established three classes of WSRs, reflecting the characteristics of a river at the time of designation and affecting the type and amount of development that may be allowed afterward: ", "W ild rivers are free from impoundments (dams, diversions, and so forth) and generally inaccessible except by trail. The watersheds are primitive, and the shorelines are essentially undeveloped. Scenic rivers are free from impoundments and in generally undeveloped areas but are accessible in places by roads. Recreational rivers are readily accessible by road, with some shoreline development, and may have been subject to some impoundment or diversion in the past.", "At the passage of the WSRA in 1968, Congress initially designated 789 miles in eight rivers as part of the NWSRS and began to expand the system in 1972; since then, every Congress has added rivers. Altogether, the system now includes 226 river units comprising over 13,400 miles in 41 states and the Commonwealth of Puerto Rico. ", "Congress plays an ongoing role in shaping the NWSRS through legislation and oversight. Congress establishes new WSRs within the system, directs the Administration to study potential WSRs, and determines the level of agency funding for WSR administration. For individual WSRs, Congress has made specific provisions concerning river management, land acquisition and use in river corridors, and other matters. Ongoing issues for Congress include whether to designate additional WSRs, how to address local and federal roles on nonfederal river segments, and more."], "subsections": []}, {"section_title": "Designation and Study", "paragraphs": ["Rivers may come into the NWSRS either by congressional designation or by state nomination to the Secretary of the Interior. In some cases, prior to adding a river to the system, Congress first directs in legislation that a study be conducted to determine whether the river area is suitable for wild and scenic designation. Congress also has directed the Secretaries of Agriculture and the Interior to evaluate rivers for inclusion in the NWSRS through agency planning processes. Congress may designate rivers as part of the system without first requiring a study.", "The Secretary of the Interior or Agriculture, as appropriate, is responsible for conducting authorized studies and reporting to the President on the suitability of a proposed addition. The President in turn submits recommendations to Congress. The act states that the studies are to discuss, among other things,", "the \"outstandingly remarkable values\" (ORVs) that make the area worthy or unworthy of addition to the system; current land ownership and use; potential future uses of the land and water that could be affected by addition to the system; the federal agency that would administer the area; the cost of acquiring the land, if applicable; and the extent to which management costs would be shared by state and local agencies. ", "The act also directs the administering agency to determine which river classification\u00e2\u0080\u0094wild, scenic, or recreational\u00e2\u0080\u0094best fits the designated river segments. However, Congress may preclude the need for these agency determinations by specifying particular classifications in law. ", "Although Congress designates most rivers, the Secretary of the Interior also may add WSRs to the NWSRS through administrative action. A state-nominated river may be added to the national system if the river is designated for protection under state law, approved by the Secretary of the Interior, and permanently administered by a state agency (see \" State-Administered Wild and Scenic Rivers \" for further information). A minority of wild and scenic river designations have been made in this manner.", "The WSRA affords rivers designated by Congress for study (known as study rivers ) the same protections as designated rivers (see \" Agency Role After Designation ,\" below). These protections last through the study process and extend to a three-year period following the transmittal of the final study report by the President to Congress. The act does not protect rivers studied through an agency's planning process, although the agency may use other authorities to protect attributes such as free flow or ORVs."], "subsections": []}, {"section_title": "Agency Role After Designation", "paragraphs": ["After Congress designates a river segment as a WSR, the segment falls under the jurisdiction of one of the four major federal land management agencies. The agency's role depends on the ownership of the land through which the river flows. If the river flows through federal lands (wholly or in part), the agency of jurisdiction manages the river as part of its overall land management activities. The National Park Service (NPS) acts as the federal administrator for rivers entirely on nonfederal lands. For these rivers, NPS may provide technical and financial assistance to relevant jurisdictions; it also ensures compliance with Section 7 of the WSRA, which prohibits certain water resources projects that would adversely affect the values for which the rivers were established (see \" Water Resources Projects: Section 7 ,\" below). The WSRA authorizes or prohibits certain activities for all WSRs. However, management of WSRs differs based on the lands where individual rivers lie and other factors.", "Various federal agencies administer rivers in the NWSRS designated by Congress. Typically, Congress specifies that either the Secretary of Agriculture or the Secretary of the Interior administer newly designated WSRs. The designated Secretary then administers the river through one of the four federal land management agencies\u00e2\u0080\u0094the Bureau of Land Management (BLM), NPS, or U.S. Fish and Wildlife Service (FWS) within the Department of the Interior or the Forest Service (FS) within the Department of Agriculture. Unless otherwise specified by Congress, rivers administered by the Secretary of the Interior and managed by NPS become part of the National Park System, and those managed by FWS become part of the National Wildlife Refuge System. ", "Following designation, the agency prepares a management plan (often called a comprehensive resource management plan , or CRMP) for the designated segment. The CRMP is to \"provide for the protection of the river values\" by addressing issues such as development of lands and facilities, user capacities, and other management practices. By law, CRMPs must address", "resource protection, development of lands and facilities, user capacities, and other management practices necessary or desirable to achieve the purposes of the WSRA.", "Agencies sometimes provide more specific direction regarding CRMP components. For example, in addition to the components listed, BLM specifies that CRMPs should describe existing resource conditions, including detailed descriptions of ORVs; define the goals for protecting river values and the desired condition of the river; address water quality and instream flow; identify resources requiring compliance with other authorities; identify regulatory authorities of other agencies that relate to river values; and describe a river monitoring strategy.", "CRMPs generally are to be completed within three fiscal years after the date of a river's designation. There is no statutory requirement that CRMPs be updated. In some river study authorizations, Congress has required the study agency to develop a CRMP in concert with the study process. In some cases, Congress has adopted these CRMPs in the legislation designating the river. Agencies have sometimes developed elements of the CRMP while studying the river, even if not directed by Congress to do so.", "The agency determines the boundaries of areas along the designated river. The land area included may not exceed an average of 320 acres per mile of river designated (an average quarter-mile-wide corridor of land on each side of the river) or 640 acres per mile in Alaska (an average half-mile-wide corridor of land on each side of the river)."], "subsections": [{"section_title": "General Management", "paragraphs": ["Rivers are administered to protect and enhance the values for which the rivers were included in the NWSRS (usually interpreted as being the rivers' ORVs). Congress directed that the agencies give primary emphasis to protecting aesthetic, scenic, historic, archaeological, and scientific features of designated rivers. Congress also directs that other land uses not be limited unless they \"substantially interfere with public use and enjoyment of these values.\" The WSRA prohibits water resource projects, such as dams, if they would have a \"direct and adverse effect\" on the values for which the river was designated (see \" Water Resources Projects: Section 7 \" below, for further discussion). ", "Management of lands within wild and scenic corridors varies with the class of the designated river, the values for which the river was included in the system, the managing agency, and land ownership in the river corridor. Generally, agencies manage wild rivers with the highest level of restrictions in terms of development and water resource use, scenic rivers with an intermediate level of restrictions, and recreational rivers with the lowest level of restrictions. "], "subsections": []}, {"section_title": "Minerals", "paragraphs": ["The WSRA withdraws federal lands within the boundaries of wild WSRs from appropriation under the mining and mineral leasing laws. No new mining claims or leases can be granted on these lands. Existing valid claims or leases within the designated WSR boundary remain in effect, and activities may be allowed subject to regulations designed to protect river values (for example, regulations that minimize sediment, discharge, or visual impacts). NPS and FWS generally prohibit mineral development on their lands; thus, the mineral collection provisions of the WSRA generally only affect activity on FS and BLM lands.", "The WSRA does not withdraw federal lands within the boundaries of scenic or recreational WSRs from the mining and mineral leasing laws. Filing of new claims and leases is permitted to the extent allowed by other laws and policies governing the land. Existing valid claims or leases within the designated WSR boundary remain in effect, and activities may be allowed, subject to regulations that minimize surface disturbance, water sedimentation, pollution, and visual impairment. Reasonable access to mining claims and mineral leases is permitted. "], "subsections": []}, {"section_title": "Water Resources Projects: Section 7", "paragraphs": ["Section 7 of the WSRA prohibits federally licensed or assisted water resources projects, such as dams and reservoirs, that would have a \"direct and adverse\" effect on the values for which the river was established. Outside the designated segments (such as upstream, downstream, or on a tributary), the WSRA prohibits projects that would \"invade \u00e2\u0080\u00a6 or unreasonably diminish\" the segment's fish, wildlife, scenic, or recreational resources. The WSRA also explicitly prohibits the Federal Energy Regulatory Commission from licensing any new dam, water conduit, reservoir, powerhouse, transmission line, or other project on or directly affecting a designated river segment. These prohibitions often are referred to as Section 7 or Section 7(a ) prohibitions.", "Each managing agency is responsible for determining the impact of a proposed federal or federally assisted water resources project on rivers it administers. NPS is responsible for the implementation of Section 7 on partnership WSRs (see \" Partnership Wild and Scenic Rivers \"), regardless of the degree to which the agency shares other management functions, and on state-managed WSRs. \u00c2\u00a0The determination usually focuses on impacts to identified ORVs and free-flowing condition; it may include analysis of impacts to water quality, upland conditions (such as vegetation and soils), or other values. The baseline for evaluating impacts is the resource condition on the date of designation. If conditions have improved since that date, some agencies specify that Section 7 determinations be based upon the improved condition."], "subsections": []}]}, {"section_title": "WSRs on Federal Lands", "paragraphs": ["In addition to the statutory direction discussed above, management of WSRs on federal lands differs based on the statutory management criteria for each agency's lands. FS and BLM manage their lands for a sustained yield of multiple uses. NPS manages the National Park System under a dual mission: to preserve unique resources and to provide for their enjoyment by the public. FWS manages the National Wildlife Refuge System (NWRS) under a dominant mission to conserve plants and animals for the benefit of future and present generations. These varying missions shape the management decisions the federal land management agencies make regarding WSRs on their lands."], "subsections": [{"section_title": "Forest Service and Bureau of Land Management", "paragraphs": ["WSRs managed by FS and BLM are subject to the provisions of the WSRA and any provisions under which the agencies administer the national forests (for FS) or public lands (for BLM). FS and BLM manage their lands for a sustained yield of multiple uses, including (but not limited to) grazing, timber harvesting, energy and mineral development, fish and wildlife habitat, and recreation. Thus, FS and BLM management of WSRs addresses how lands in or surrounding the WSR corridor may be used. As discussed above, management also varies with the class of the designated river and the values for which it was included in the system.", "In accordance with the WSRA, FS and BLM create CRMPs for each river after designation; these plans establish management objectives for the river. Agency guidance (such as policy manuals and handbooks) may specify that certain activities be governed by the CRMP. For example, FS policy states that activities such as insect, disease, and invasive species treatment; transportation systems (such as roads, trails, and airfields); and recreation (among others) be managed in accordance with the CRMP for each river. ", "In other cases, the agencies have given directions regarding various activities for their WSRs more broadly. Both agencies do not generally allow timber harvesting, road building, and structures and improvements (such as campgrounds, boat launches, and administrative sites) in wild river corridors. Both agencies allow more development in scenic and recreational rivers corridors. FS prohibits motorized travel in wild river corridors. BLM discourages new rights-of-way and utility corridors in all WSR areas. Both agencies allow for continued grazing and wildfire management, including through prescribed fire, in WSR areas. FS and BLM manage wildfire, pests, insects, and disease in ways compatible with adjacent lands outside the river corridor."], "subsections": []}, {"section_title": "Fish and Wildlife Service", "paragraphs": ["Rivers managed by the Secretary of the Interior through FWS become part of the NWRS. FWS manages the NWRS under a dominant mission to conserve plants and animals for the benefit of future and present generations. WSRs managed by FWS are subject to the provisions of the WSRA and any provisions under which the NWRS is administered. In the case of any conflict between these authorities, the more restrictive provisions apply. FWS does not otherwise have specific policy or other guidance regarding management of WSRs. "], "subsections": []}, {"section_title": "National Park Service", "paragraphs": ["Rivers managed by the Secretary of the Interior through NPS become part of the National Park System. NPS manages the National Park System under a dual mission: to preserve unique resources and to provide for their enjoyment by the public. NPS-managed WSRs are subject to the provisions of the WSRA and any provisions under which the National Park System and the specific units are administered. In the case of any conflict between these authorities, the more restrictive provisions apply. "], "subsections": []}]}, {"section_title": "Wild and Scenic Rivers on Nonfederal Lands", "paragraphs": ["WSRs need not flow entirely through federal land. WSRs on nonfederal lands differ based on whether they were designated by Congress or through an administrative process. WSRs designated by Congress may flow wholly through nonfederal land or may have segments on nonfederal land. WSRs on nonfederal land managed at the state, county, or other nonfederal level, and usually congressionally designated, are referred to colloquially as partnership wild and scenic rivers (or partnership WSRs).", "WSRs also may be designated through an administrative process. States may apply to the Secretary of the Interior for inclusion of a state-protected river in the NWSRS. The relevant state administers WSRs added to the system in this way. These WSRs, as well as those that contain both federal and nonfederal land, generally are not referred to as partnership WSRs."], "subsections": [{"section_title": "Partnership Wild and Scenic Rivers", "paragraphs": ["The WSRA does not define the term partnership WSRs ; rather, it is an umbrella term used to refer to WSRs with certain similar features. NPS administers all WSRs with these features. In general terms, common features of partnership WSRs are as follows: ", "Lands are not federally owned, and federal ownership is not authorized in legislation. The river management plan is created at the local level and often locally approved prior to designation. NPS may provide technical assistance. A local organization, often open or broadly participatory in nature (called a council , committee , or other term), oversees implementation of the management plan. These organizations may receive technical assistance from NPS. Overall administration is the responsibility of NPS, but land use and management are governed by authorities at the relevant nonfederal level (e.g., township zoning ordinances). Costs of managing and protecting the WSR are shared but generally include some federal support (see \" Funding ,\" below). Partnership WSRs usually are congressionally designated, although exceptions exist. For example, NPS refers to the Westfield River as a partnership WSR, but its designation occurred through state nomination.", "The WSRA does not describe these features, aside from local jurisdiction over land use. These features have been codified in individual river study legislation or designating legislation or have developed locally during the study or designation process. Because the WSRA does not define the term partnership WSRs , not all partnership WSRs have all of these characteristics and not all WSRs with some of these characteristics are referred to in this way. ", "As with WSRs generally, Congress typically designates partnership WSRs following a congressionally authorized study. Studies on partnership WSRs often are similar to studies of WSRs generally, including identifying ORVs meriting protection (see \" Designation \"), though Congress sometimes specifies matters studies must address. ", "Partnership WSR studies also may identify existing forms of protection in the river corridor, such as local zoning laws, and additional options to confer protection within local jurisdictions (such as laws regarding vegetative cutting, sand and gravel removal, placement of new structures and septic systems, and others). In some cases, local governments have chosen to strengthen land use requirements during a WSR study (for example, by passing certain zoning ordinances) to demonstrate the adequacy of local protections prior to requesting congressional designation. Congress has prohibited condemnation in WSR corridors in urban areas with adequate zoning ordinances; therefore, strengthened land use requirements may protect against condemnation in certain areas, strengthen the case for designation, or contribute to other goals. ", "During the WSR study, stakeholders may develop a river management plan, sometimes using NPS technical assistance and funding. Congress may identify such plans as satisfying the CRMP requirements of the WSRA in designating legislation. ", "Although not required under the WSRA, NPS administers all partnership WSRs. Congress sometimes has specified which relevant local jurisdictions, such as states and towns, manage designated partnership WSRs through cooperative agreements. To date, locally based river management councils or committees have been formed on each partnership river specifically for this purpose. Congress may specify the role of management councils or similar local organizations in individual river designating legislation, in written agreements authorized by the river's designating legislation, or both. ", "A WSR designation on nonfederal land does not transfer ownership to the federal government; relevant local authorities and jurisdictions continue to govern land use and management of these rivers. After designation, partnership WSRs are managed according to the established CRMP. Local jurisdictions (e.g., the relevant county, township, or city, as appropriate) generally make laws that implement the CRMP, such as land use restrictions and zoning laws, and carry out management actions. The WSRA authorizes federal agencies to enter into cooperative agreements with state and local governments for administering a river area, and NPS may provide technical or financial assistance for managing river resources. NPS remains responsible for implementing Section 7 reviews of proposed water resources projects (see \" Water Resources Projects: Section 7 \")."], "subsections": []}, {"section_title": "State-Administered Wild and Scenic Rivers", "paragraphs": ["Although Congress designates most rivers, the Secretary of the Interior also can add WSRs to the NWSRS by administrative action. A state desiring WSR designation for a river on nonfederal lands must establish permanent river protections compatible with the WSRA. The state may then apply to the Secretary of the Interior to approve inclusion of the river in the NWSRS. The Secretary of the Interior typically directs NPS to evaluate whether the provisions of the WSRA have been fulfilled\u00e2\u0080\u0094including whether adequate protections are in place, whether the river is in free-flowing condition, and whether it possesses at least one ORV. If the NPS determines that the application meets the requirements and the Secretary of the Interior concurs, the river is added to the NWSRS.", "Rivers designated administratively have protections identical to rivers designated by Congress. The WSRA precludes federal management of such rivers; thus, state or local agencies manage WSRAs designated this way. (Although these rivers sometimes are called state-administered rivers, they need not necessarily be administered by states.) The federal government may not provide funding for state-administered WSRs and may not condemn or acquire lands in the river corridor. NPS reviews proposed water resource projects (see \" Water Resources Projects: Section 7 \")."], "subsections": []}, {"section_title": "Segments on Nonfederal Lands", "paragraphs": ["Congress may designate WSRs with segments on federal and nonfederal land (for example, Congress could designate a river that begins on FS lands and flows onto private lands). Management of nonfederal segments of these rivers varies, depending on what provisions Congress includes in designating legislation. For example, Congress may specify that nonfederal segments are to be managed by state, county, local, or other nonfederal elements. Some of these rivers are managed through cooperative agreements; in other cases, Congress has specified objectives for nonfederal elements. In still other cases, Congress has not specified how nonfederal areas are to be managed."], "subsections": []}]}, {"section_title": "Funding", "paragraphs": ["For rivers administered by the four federal land management agencies, Congress provides funds for operations and maintenance through annual congressional appropriations for the relevant agencies. Each agency approaches river management differently in its budget. Rivers administered exclusively by states typically do not receive federal funding for river administration.", "The WSRA authorizes federal agencies to assist states and their political subdivisions (such as counties, townships, and others), landowners, organizations, or individuals in planning, protecting, and managing WSRs; this provision includes financial and technical assistance, except in the case of administratively designated WSRs. NPS administers partnership WSRs and provides technical and financial assistance to manage these rivers."], "subsections": [{"section_title": "National Park Service", "paragraphs": ["Funding for WSRs administered by the NPS depends on the designated river's location. NPS WSRs that are part of another National Park System unit are funded through appropriations for that individual unit. A few WSRs are stand-alone units of the National Park System and receive their own line-item appropriations. The National Park Service budget also contains separate line items for the partnership WSRs. Funding for WSRs listed individually in the NPS budget, as well as for overall program administration over the past five years, appears in Table 1 ."], "subsections": []}, {"section_title": "Bureau of Land Management, Forest Service, and Fish and Wildlife Service", "paragraphs": ["BLM lists the total annual amount enacted for WSRs in the \"Cross-Cutting Programs\" section of its budget justification, shown below in Table 2 . ", "FS, in its \"Recreation, Heritage, and Wilderness\" budget activity, includes a combined line item for management of wild and scenic rivers and wilderness areas; it does not report a distinct figure for WSRs. Similarly, FWS does not report a distinct figure for WSRs but incorporates WSR funding into its broader \"National Wildlife Refuge System\" budget activity."], "subsections": []}]}, {"section_title": "Issues for Congress", "paragraphs": ["WSR designation has been controversial in some cases, especially for WSRs containing nonfederal lands. Initially, Congress primarily designated rivers on federal land and rivers on nonfederal land were primarily added to the NWSRS through the state nomination authority. However, the state nomination authority has not been used since 2004, and Congress has designated all WSRs (on federal and nonfederal land) since that time. Congress also has increasingly authorized river studies on nonfederal lands. With this increase in congressional studies and designations of nonfederal lands, concern has centered on local control of relevant lands, including potential for federal acquisition of newly designated lands. ", "The potential use of condemnation authority to acquire lands on partnership WSRs has been particularly contentious. The WSRA limits the federal government's condemnation powers for some but not all river areas. According to the Interagency Wild and Scenic Rivers Council, the federal government has rarely used condemnation authority in respect to WSRs, and nearly all uses of condemnation occurred in the early years of the WSRA. Congress has sometimes prohibited the use of condemnation in designating legislation for individual river segments. ", "Opinions regarding the balance of federal and local control over partnership WSRs have varied. Some stakeholders contend that the current partnership WSR model is successful. Others have expressed concern that provisions of WSR designation legislation\u00e2\u0080\u0094for example, that partnership WSRs are to be administered as part of the National Park System unless otherwise specified\u00e2\u0080\u0094may lead to an undesirable loss of local control. Still other observers have expressed concern that local laws may not adequately protect partnership WSRs. As discussed previously, the attributes of each partnership WSR are created separately by individual designating laws or by local and federal agency choices before or after designation\u00e2\u0080\u0094as opposed to stemming from a defined category in the WSRA. Thus, it may be unclear whether these concerns are broadly applicable. Congress and NPS have used varying methods to address concerns about local versus federal control of partnership WSRs and about adequate levels of protection for partnership WSRs, either in individual designating legislation or in agency action prior to or after designation. ", "In contrast to the partnership WSR model, the state-nominated process for designating WSRs consists of a fixed set of provisions. The process affords rivers the same protection as congressionally designated WSRs but precludes federal management or land acquisition (including by condemnation), and the state must demonstrate that adequate legal protections are in place prior to designation. Some have observed that Congress intended the state nomination authority to be the primary means for nonfederal river segments to be included in the system and that Congress envisioned the states taking a prominent role in developing the NWSRS. Prior to the 2000s, most nonfederal river segments were designated under the state nomination authority. However, this designation method has not been used since 2004; costs of designation and management at the state level, and state and local politics, may have contributed to this decline. Congress may consider whether it is preferable to encourage use of the state-nominated process, which includes a set of fixed provisions, or to continue to establish partnership WSRs though individual designating statutes, whose provisions vary."], "subsections": []}]}}
{"id": "R46198", "title": "Internet Regimes and WTO E-Commerce Negotiations", "released_date": "2020-01-28T00:00:00", "summary": ["From retail to agriculture or healthcare, digitization has affected all sectors and allowed more industries to engage with customers and partners around the globe. Many U.S. companies thrived in the initial online environment, which lacked clear rules and guidelines, quickly expanding their offerings and entering foreign markets. As the internet has evolved, however, governments have begun to impose national laws and regulations to pursue data protection, data security, privacy, and other policy objectives. The lack of global rules and norms for data and digital trade is leading to differences in these domestic internet regimes. Competing internet regimes and conflicting data governance rules increase trade barriers and limit investment flows and international commerce, restricting the ability of U.S. businesses and consumers to enter and compete in some markets. For example, foreign internet regimes may use national security regulations to block cross-border data flows, disrupting global supply chains and limiting the potential use of and gains from emerging technologies. The creation of national technology standards can also limit market access by foreign firms.", "As the digital economy expands, the diversity in digital rules is poised to grow in complexity and create new trade restrictions. The resulting patchwork of technical standards and national systems creates challenges for international trade, and may signal an impending fracturing of the global internet. Without agreement on global norms or common trade rules, some analysts foresee a splitting of the internet into distinct nation-led \"dataspheres\" and virtual trading blocs.", "The internet is global, governed by common technical protocols; it may also be regulated at the national level, although there is no international consensus on the proper role for governments. The lack of multilateral trade rules governing the digital economy has led to efforts to establish common global rules and norms. Over 75 countries, including the United States, are participating in World Trade Organization e-commerce negotiations, which aim to establish a global framework and obligations to enable nondiscriminatory digital trade. Proposals by the United States, the European Union (EU), and China illustrate the variation in member objectives, highlight potentially controversial issues, and raise questions about the likelihood of meaningful consensus.", "In general, the United States adopts a market-driven approach that supports an open, interoperable, secure, and reliable internet that facilitates the free flow of online information and supports other policy objectives such as privacy and national security. The EU, while supporting the role of the market and free flow of information also emphasizes the need for data protection, internal regional integration, and \"technological sovereignty,\" a recent and evolving concept in the EU.", "In contrast to the U.S. and EU approaches, which both emphasize the open global internet, China pursues a state-led approach that maintains a firewall between the Chinese internet and the rest of the world. China's government strictly controls the flow of information on its networks and restricts the companies who can participate in its digital economy. Many aspects of internet service and content in China are prohibited to U.S. firms. China is exporting its system through its direct export of goods and services, including surveillance technologies, and is trying to influence international standards and norms to allow space for China's model of strict state controls. Other countries, such as India and Vietnam, are building their own internet regimes, borrowing from the Chinese, European, and U.S. approaches.", "Congress has an interest in addressing growing protectionist policies and trade barriers, and in developing U.S. rules and standards for internet governance that promote digital trade and economic growth, balanced among other policy objectives. The divergence in national internet regimes and its impact on digital trade raises numerous complex issues of potential concern to Congress. These include whether to support initiating new bilateral trade negotiations specific to digital trade; how the United States can conclude a successful plurilateral WTO e-commerce negotiation that achieves greater reciprocity and market access for U.S. exporters and removes barriers to trade; how such an outcome can be balanced with other policy objectives; and whether federal engagement in and support for international standards-setting bodies is sufficient."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["National internet regimes, as defined by individual countries' domestic policies and rules, are growing more divergent, a trend that has significant implications for international trade and the future growth of U.S. and global digital economies. The evolving digital economy increases productivity and drives growth in the overall economy, but may be threatened by differences in national rules and potential fracturing of the global internet. Congress has an interest in ensuring the U.S. digital economy thrives and shapes the global rules and norms for digital trade.", "As internet technology expanded from its origins in the military and defense sector into the commercial arena in the 1990s, consumers and firms began to conduct transactions in an online environment that lacked clear rules and guidelines. Some U.S. firms took advantage of the open global commons and thrived, quickly expanding their offerings and entering foreign markets. In many foreign markets, U.S.-based Google dominates search and e-mail, Facebook is the number one social network, and Amazon is the first stop for online shopping. However, in certain other markets, some of which are important for the United States, trade barriers limit or block those same websites.", "While national rules-setting may focus on domestic priorities, policies that affect digitization in any one country's economy can have consequences beyond its borders. The internet is a global \"network of networks,\" and the state of a country's digital economy can have global ramifications, such as affecting the security and efficacy of connected networks. Differences in the internet governance and data policies of the United States and some major trading partners, such as People's Republic of China (PRC or China) and the European Union (EU), are creating a growing set of trade barriers for U.S. firms seeking to do business abroad. Trade barriers include, for example, rules and regulations governing foreign investment, market and network access, e-commerce, and data collection and usage. The United States generally advocates a free and open internet, using standard-setting forums and other means of international cooperation to ensure non-discriminatory market access, advance common emerging technology standards, promote collaborative open-source architecture, and influence the internet regimes of trading partners balanced with other public policy objectives, including national security. ", "Trade agreement negotiations present an opportunity to remove trade barriers and establish common trade rules and disciplines to achieve U.S. negotiating objectives. Across the globe, U.S. and other bilateral and plurilateral agreements have created a plethora of overlapping and often inconsistent rules between various trading partners. The lack of multilateral rules on digital trade is a key focus of U.S. trade policy. Ongoing e-commerce negotiations at the World Trade Organization (WTO) provide a significant opportunity to establish enforceable multilateral rules that align with U.S. policy priorities and help bridge growing differences in national rules and trade treatments. However, such negotiations face inherent challenges, including possibly divergent, and even conflicting, positions. ", "Congress has a strong interest in the rise of the varying internet regimes and their current and potential impact on U.S. digital trade and the economy. Through legislation and oversight, Congress can directly and indirectly shape U.S. internet policy and official positions in trade negotiations and international standard-setting forums. Congress pro-actively established U.S. digital trade negotiating objectives for trade agreements and has supported provisions in free trade agreements (FTAs) to address the lack of multilateral digital trade rules and market opening commitments, most recently in the U.S.-Japan trade agreement and the U.S.-Mexico-Canada Agreement (USMCA). Congress can also influence U.S. positions in the ongoing WTO negotiations.", "This report will compare some aspects of various national internet regimes and then examine the ongoing WTO e-commerce negotiations and certain international forums that present an opportunity to establish global rules and technology standards and to minimize or prevent potential problems created by diverging systems."], "subsections": [{"section_title": "Digital Trade and Digital Economy", "paragraphs": ["While no single definition or measure of the digital economy exists, according to the Bureau of Economic Analysis, the \"digital economy\" accounted for 6.9% of U.S. GDP in 2017, including (1) information and communications technologies (ICT) sector and underlying infrastructure; (2) digital transactions or e\u00e2\u0080\u0090commerce; and (3) digital content or media. ", "According to the ITC definition, laptop sales are included in digital trade as is the transmission of an email or online purchase, but the t-shirt a consumer may order online is not. ", "From agriculture and manufacturing to healthcare, the collection, exchange, and processing of data is transforming and increasing productivity across the economy. Data is traded as end products (e.g., music file, marketing tools), inputs for producing digital and physical goods and services (e.g., 3D printing file, Uber), or sources of information leading to further action (e.g., real-time supply chain analytics). New data is created every day by individuals sending text messages, sharing photos, or searching online, by automated machine-to-machine transmissions in manufacturing, or by vehicles in connected transportation systems. According to one calculation, 2.5 quintillion bytes (or 2.5 x 10 18 ) of data are produced daily. To put that number into context, 2.5 quintillion bytes of data would fill 10 million blu-ray discs, the height of which stacked would measure the height of four Eiffel Towers on top of one another. At the other extreme, a single short text message could represent 21 bytes and a single high-definition movie could require 4 million bytes. ", "The digital economy depends on data flows to send data between individuals, organizations or devices, often crossing national boundaries. For example, in 2017, approximately 12% of international trade of physical goods was facilitated by e-commerce and almost 20% of China's imports and exports was enabled by digital platforms. A separate study showed that digital products accounted for 70% of the U.S. services trade surplus in 2017. Cross-border data flows grew by a factor of 45 between 2005 and 2016 and continue to expand. The volume of global data flows is growing faster than global trade or financial flows, and its positive GDP contribution offsets the lower growth rates of trade and foreign direct investment (FDI). ", "The global \"datasphere\" is expected to grow from 33 Zettabytes (ZB) in 2018 to 175 ZB by 2025. One study predicts there will be more than 150 billion connected devices across the globe by 2025. Today, China has the fastest-growing regional datasphere, while the U.S. datasphere is relatively mature, with an already high penetration of people online. As China and other regions' dataspheres expand, the United States' and EU's relative shares of the global datasphere will decline (see Figure 1 ). ", "As the volume and importance of data grows, policymakers are increasingly interested in how data is gathered, stored, and used, and how to best balance policy goals and objectives, such as supporting international trade flows and protecting personal privacy. The future growth of the global digital economy and digital trade specifically will be shaped by the policies that govern global data flows and other internet-related rules set at national, regional, and multilateral levels. China's expected digital growth, in particular, may increase its ability to shape the rules of the global datasphere, which may not align with U.S. interests and could create additional trade barriers (see \" The People's Republic of China (PRC) \")."], "subsections": []}, {"section_title": "Technology Convergence and International Rules-Setting", "paragraphs": ["The ICT sector is experiencing a convergence between technical spheres that had previously been separate and independent technologies: telecommunications, media and consumer electronics, and information technology (computers) (see Figure 2 ). The ability to stream videos on multiple devices (e.g., television, tablets, mobile phones) demonstrates the convergence of technologies and previously separate services. Separate policies, technical standards and protocols traditionally governed each sub-sector, but today companies that provide services across all sectors and the governments that traditionally regulated these services separately must wrestle with how best to govern the converged spheres.", "Although there are common technical protocols governing the flow of traffic, interconnections, and data transfers across networks, there is no single set of international rules or disciplines that govern key digital trade issues such as electronic contracts or cross-border data flows, and the topic is treated inconsistently, if at all, in trade agreements. The lack of multilateral rules governing the digital economy has led, on the one hand, to countries creating diverging national policies and, on the other hand, to efforts to establish common global rules. Countries may seek common rules on some digital issues, such as technical standards, but set different national rules on others (e.g., privacy, data protection) to reflect domestic priorities or cultural norms. Governments may also try to shape international standards and norms to benefit their domestic industries.", "The emergence of national internet regimes that govern and divide the global datasphere raises a number of issues. First, national regimes allow a government to create rules and policies that advance domestic priorities and reflect local norms. Without shared rules or interoperability between national regimes, differing requirements for internet and data governance can lead to increased trade and investment barriers, which can restrict the willingness and ability of businesses and consumers to enter some markets. U.S. firms offering services that can be traded remotely using the internet or another digital network (so-called \"potential\" ICT-enabled [PICTE] services) can be blocked from markets with discriminatory restrictions in place. For example, many U.S. firms' inability to access the Chinese online market raises growing concerns about discrimination and protectionism, as other countries may emulate China and its internet regime. ", "Second, the existence of globalized supply chains that dominate international trade may be threatened if rules governing national or regional dataspheres do not provide for reciprocity or limit companies' ability to share data with global subsidiaries, partners, or customers. Disrupted trade and global supply chains could not only result in limited growth of individual companies, but could also impede a country's economic competitiveness if participation is limited to those entities within what amounts to a virtual trading bloc. For example, Qualcomm might not be able to sell its chips to some countries if the technical requirements vary nationally, or John Deere might not be able to service customers in certain markets if data flows with its U.S. headquarters are blocked. Similarly, the diffusion of knowledge and potential gains from emerging technologies that depend on global economies of scale could be impeded by diverging standards or regulations that create artificial borders and constrain data aggregation thereby, for example, diminishing effective development of artificial intelligence and machine learning which depends on collecting and processing vast volumes of data.", "Third, as in other areas of international trade, the party(ies) that ultimately set the global internet rules and technical standards for data and emerging technologies will gain first-mover advantage. Past industry experience suggests that companies who are the first to market new technologies often capture the bulk of the revenues. To that end, some governments have actively promoted their domestic policies in an effort to convince other countries to adopt similar regimes that may not align with U.S. policies and priorities. For example, China promotes its national standards and technologies through international sales of its domestic technologies based on domestic technical standards, particularly in Africa and Latin America. Furthermore, some countries in these regions have begun to import China's internet-sovereignty policies, a form of what some consider to be digital authoritarianism (see discussion below). ", "The EU also aims to set global standards on competition and privacy through its rules and enforcement actions that compel multinational technology firms to change behavior and adjust business models. For example, the EU actively promotes its data privacy regime by requiring that trading partners have \"adequate\" domestic data privacy regimes (as judged by EU authorities) to allow for the bilateral free flow of personal data that many companies depend on to operate. Individual EU countries may impose further requirements for security purposes that could further constrain a business's operations.", "Varying policy approaches and the lack of global rules and consensus have resulted in a diversity of digital trade rules that will grow in complexity as the digital economy expands. Some analysts predict that the inconsistencies and diversity in rules and regulations may create hard splits between different dataspheres leading to digital trading blocs. Ongoing e-commerce negotiations at the WTO aim to set a common foundation of trade rules and disciplines and could lead to interoperability mechanisms to build bridges between differing internet regimes. While internet policies evolve at national levels and WTO e-commerce negotiations are ongoing, multiple international forums are discussing internet governance issues with active participation from the U.S. public and private sector. These forums often may identify best practices, principles, and frameworks but do not necessarily lead to enforceable rules (see text box International Discussions of Internet Norms ). "], "subsections": []}]}, {"section_title": "U.S. and Major Trading Partners' Internet Regimes", "paragraphs": [], "subsections": [{"section_title": "U.S. Approach", "paragraphs": ["Maintaining a global network that is open, interoperable, reliable, and secure is a stated policy priority for the U.S. government. Some Members of Congress have introduced bills supporting an open internet and expanded global internet access (see, for example, H.R. 600 and H.R. 739 ).", "Congress recognized these priorities with respect to trade in its enhanced digital trade policy objectives for U.S. trade negotiations in the Bipartisan Congressional Trade Priorities and Accountability Act of 2015 ( P.L. 114-26 ), or Trade Promotion Authority (TPA), signed into law in June 2015. The proposed USMCA made progress on these objectives, establishing a legal framework for an open North American digital economy that ensures cross-border data flows and protects consumers and data privacy, among its many provisions.", "Under the proposed USMCA, the United States, Mexico, and Canada agreed to a common set of digital trade rules, which may serve as a template for future U.S. FTAs. According to USTR, the new U.S.-Japan digital trade agreement, signed in October 2019, \"meets the gold standard on digital trade rules set by the USMCA.\" The provisions in the USMCA and U.S.-Japan agreement build on the digital trade rules agreed under the proposed Trans-Pacific Partnership (TPP), now in force under the Comprehensive and Progressive Agreement on Trans-Pacific Partnership (CPTPP or TPP-11) among 11 countries, not including the United States. Mexico, Canada, and Japan are all members of the TPP-11. The TPP-11 rules have some clear differences from those in EU or Chinese FTAs. For example, the TPP-11 agreement provisions ensure open cross-border data flows while EU and Chinese FTAs exclude similar provisions.", "No single federal entity has primacy on all aspects of the digital economy, and the United States has not taken a holistic domestic approach to regulating the digital economy or governing the internet. As noted for a congressional hearing on internet architecture and the multiple federal agencies involved in safeguarding it domestically, unlike some other countries, \"the [U.S.] government does not manage the internet, nor direct its use, but rather sets the laws, policies, and procedures for the private sector, academia, and individuals to follow in their use of the internet.\" ", "The United States and China are the lead economies setting and attempting to export their rules and are often seen as the two ends of the policy spectrum. Other countries are forming national approaches that reflect their own domestic priorities."], "subsections": []}, {"section_title": "The People's Republic of China (PRC)", "paragraphs": ["China presents a number of significant opportunities and challenges for the United States in digital trade. China aims to be a \"cyber superpower,\" and its trade and internet policies reflect state direction and industrial policy, limiting the free flow of information and individual privacy and discriminating against foreign companies. The Chinese government has sought to advance its views on how the internet should be expanded to promote trade, but also to set guidelines and standards over the rights of governments to regulate and control the internet, a concept it has termed \"Internet Sovereignty.\" The Chinese government appears to have first advanced a policy of \"Internet Sovereignty\" around June 2010, when it issued a white paper titled \"the Internet of China,\" which stated the following:", "Within Chinese territory the Internet is under the jurisdiction of Chinese sovereignty. The Internet sovereignty of China should be respected and protected. Citizens of the People's Republic of China and foreign citizens, legal persons and other organizations within Chinese territory have the right and freedom to use the Internet; at the same time, they must obey the laws and regulations of China and conscientiously protect Internet security.", "Analysts characterize \"cyber sovereignty\" or \"internet sovereignty\" as an organizing principle of internet governance that contrasts with the U.S. support for a global, open internet. As one analyst stated, \"the Chinese internet governance model is the first real challenge to a free and open internet.\" China is clear in its position that: ", "the principle of sovereignty\u00e2\u0080\u00a6 also includes cyberspace. Countries should respect each other's right to choose their own path of cyber development, model of cyber regulation and Internet public policies, and participate in international cyberspace governance on an equal footing. ", "A multitude of Chinese rules and initiatives illustrates the government's efforts to achieve cyber sovereignty. China benefits from a tightly controlled domestic system that not only allows the government to maintain strict controls on information dissemination, but also protects its market to the advantage of Chinese domestic economic players. When compared with the United States, China does not clearly separate the state from the economy. In 2016, citing national security justifications, China released its National Cybersecurity Strategy Report, which stated that its authorities would \"firmly defend the cyber sovereignty of China using all means including economic, administrative, scientific, legal, diplomatic and military ways.\"", "China's state control over the internet and its use of digital technologies to control its domestic population, including through extensive digital surveillance and harvesting of big data for its social credit system, has been termed \"digital authoritarianism\" (see text box U.S. Policy and Chinese Digital Authoritarianism ). The PRC social credit system includes two connected but distinct systems: a system for monitoring individual behavior, still in the pilot stages, and a more robust system for monitoring corporate behavior. Each firm's social credit profile is the aggregate of potentially hundreds of data points compiled into a central database developed by China's National Development and Reform Commission. Data disclosure requirements under the new social credit system may obligate firms to provide the Chinese government with sensitive data, such as personnel information or technological know-how. Multinational firms in China are already subject to the system's data reporting requirements; they have raised concerns that certain provisions and rating criteria could be used to discriminate against multinational firms (including for political purposes) lead to a more opaque market access regime, and increase compliance costs. ", "China's so-called \"Great Firewall\" censors or blocks many foreign websites or mobile apps, as well as content the government considers subversive. According to Freedom House, a U.S.-based non-governmental organization, China was the worst abuser of internet freedom in 2018. Differences between what U.S. and Chinese users can access on the same online platforms furthers the split of the Chinese internet regime from the rest of the world and raises concerns about access to information and freedom of speech.", "China's national internet governance regime is underscored by its recently-passed Cybersecurity Law, as well as other regulations that raise a variety of concerns for U.S. firms doing business in China. For example, companies are obliged to provide the government with full access to their proprietary data, if requested. The law's rules include requirements for: ", "storing data locally and limiting cross-border data flows; cybersecurity testing and reviews of \"critical network equipment\" and \"critical information infrastructure\" operators by government authorities; and the use of \"secure and controllable\" technology in certain sectors mandating suppliers purchase Chinese products among other limitations. ", "Fearing they could potentially lose control of their intellectual property and proprietary data, many U.S. firms have opted not to enter or faced constraints to remain in the Chinese market. Some foreign firms with customers in China try to address concerns about potential government access to their proprietary data by segregating data transiting to or through China from the rest of their business. This may require U.S. firms to partner with local Chinese firms such as through joint ventures. For example, Apple is unable to offer many of its newer services within China and its iCloud service is available only through a local government-backed provider. ", "China's policies also raise concerns among some U.S., EU, and other government officials and company executives about Chinese companies operating overseas or on a cross-border basis using business models that give Chinese firms access to sensitive data. If Chinese companies need to follow domestic Chinese laws and Chinese government directives, U.S. and other officials fear that sensitive data involving their citizens and corporate entities could be exposed to the Chinese government.", "China also exports domestically-produced technologies, including security cameras, telecommunications hardware, and internet filtering software, to other countries where governments may seek not only to increase security but also to exert greater control over populations and contain internal dissent. Analysts disagree as to whether China is aggressively exporting digital authoritarianism as an overarching internet governance system, including sales of the enabling technologies and underlying infrastructure to potentially provide Chinese authorities access to data. The alternative is that China is simply promoting domestic industry exports. Regardless of intent, the results in countries that import Chinese goods, services, and policies show how China's technology exports are expanding the country's influence in ICT markets and international standards forums in ways that advance Chinese goals and norms.", "China also uses its domestic technical standards to separate itself from the broader international community. China, for example, exports its ICT products and services, as well as its technology standards, through projects under its Belt and Road Initiative and, in particular, its Digital Silk Road. China promotes indigenous innovation of technology and investment in domestic research and development projects (R&D) in emerging technologies like artificial intelligence and fifth-generation telecommunications (5G), the future backbone of the internet of things (IoT). Procurement contracts in China require or prefer domestic standards to international ones and/or require domestic production of ICT equipment. In recent years, China has increased its participation in international standards-setting bodies such as the International Organization for Standardization (ISO); its assumption of leadership positions in these organizations illustrates China's efforts to balance its isolationist tendencies and cyber-sovereignty policies with the potential economic gain that comes from international engagement and shaping global standards (see \" Standards Development \"). "], "subsections": []}, {"section_title": "European Union (EU)", "paragraphs": ["The EU approach to internet governance, including digital trade, is less state-controlled than China's internet regime, but more regulatory and prescriptive than the current U.S. approach. The EU seeks to establish itself as a technology leader and set its own mark on global internet norms. EU Commission president Ursula von der Leyen outlined her priorities for her new executive vice-president for a digital age and stated, \"[w]e have to work hard on technological sovereignty.\" ", "The EU Council's June 2019 strategic agenda echoed these sentiments:", "We need to ensure that Europe is digitally sovereign and obtains its fair share of the benefits of this development. Our policy must be shaped in a way that embodies our societal values, promotes inclusiveness, and remains compatible with our way of life. To this end, the EU must work on all aspects of the digital revolution and artificial intelligence: infrastructure, connectivity, services, data, regulation and investment. This has to be accompanied by the development of the service economy and the mainstreaming of digital services.", "The same document refers to the need for a level playing field in trade and highlights the importance of \"ensuring fair competition, reciprocity and mutual benefits\" in trade policy. The EU will need to balance its goals of achieving technological sovereignty without isolating the region to achieve gains from expanded international trade that require interoperability and open access and data flows.", "An EU Commission document frames Europe's technological sovereignty, itself an emerging and undefined term, as an initiative within a broader EU industrial strategy. The document specifically tasks the new executive vice president with \"striving for digital leadership\" while preserving the \"European way.\" EU officials characterize the region's internet regime as a third way between those of the United States and China. Some in the EU support a policy of cyber sovereignty and an independent European internet architecture. As one commentator stated, \"If there is an American internet and a Chinese internet, there should also be a European one \u00e2\u0080\u0094 a framework in which Europeans can make their own decisions about data and privacy, free expression and state security, and taxation and competition.\" ", "Critics see the EU's desire for internet sovereignty as driven by protectionist and anti-competitive motives to incubate and grow European champions in the digital sphere that can effectively compete against large U.S. and Chinese internet firms. Others view the EU effort less antagonistically, noting German chancellor Angela Merkel's statement that \"we need to commit ourselves to protecting the core of the internet as a global, public good.\" Merkel clarified her vision of European cyber sovereignty stating, \"on the one hand, we want to preserve our digital sovereignty while on the other hand, we don't want to isolate ourselves but act multilaterally\u00e2\u0080\u00a6 In my understanding, digital sovereignty does not mean protectionism or state authorities deciding what kind of information can be disseminated \u00e2\u0080\u0094 which is censorship \u00e2\u0080\u0094 but it rather describes the capability to shape the digital transformation, both as an individual and as a society.\"", "In defining the \"European way,\" the EU has set precedents in some areas of the digital economy. Examples of major EU digital initiatives with global implications that may impact U.S. firms doing business in the EU include the following:", "EU General Data Protection Regulation (GDPR) . The GDPR, which took effect on May 25, 2018, establishes a set of binding and enforceable rules for the protection of personal data throughout the EU. The GDPR seeks to strengthen individual fundamental rights and facilitate business by ensuring more consistent implementation of data protection rules EU-wide. With no multilateral rules on cross-border data flows, some experts contend that the GDPR may effectively set new global data privacy standards, since many U.S. and foreign companies and organizations are striving for GDPR compliance to avoid being shut out of the EU market, fined, or otherwise penalized. In addition, some countries outside of Europe (e.g., Brazil) are imitating all or parts of the GDPR in their own privacy regulatory and legislative efforts whether on their own initiative or at the EU's behest. Cloud-hosting Services . The German Economy Ministry, with support from other EU leaders, is working to develop a cloud-hosting service (Gaia-X) to provide European government agencies and companies a European alternative to U.S. and China-based cloud service providers, such as Amazon Web Services or Microsoft. According to the ministry, the aim is to ensure European users that the data is \"sovereign\" and not subject to potential (mis)use by foreign law enforcement or intelligence services, or being blocked for political reasons such as a trade dispute. In a similar effort to limit its current dependence on U.S. technology companies, France's Interior Ministry is planning to offer an internal government cloud service known as Nextcloud. Digital Single Market (DSM). EU policymakers are attempting to bring more harmonization across the region and break down barriers among EU countries under the DSM initiative. The DSM is an ongoing effort to unify the EU market, facilitate trade, and drive economic growth through technology and digital trade. The EU has rolled out multiple initiatives and rules under the DSM, with which any firm doing business in the EU must comply. It is not clear how the DSM initiatives will align with U.S. policy and norms. For example, a new Digital Services Act will provide for uniform rules for online platforms and digital services, including rules on intermediary liability, updating various sets of existing rules in the EU. Others stakeholders raise concerns that platform regulation may limit competition and favor EU entities. Digital Services T axes (DSTs) . Several countries in Europe, and the European Commission, have proposed or adopted taxes on revenue earned by multinational corporations (MNCs) in certain \"digital economy\" sectors from activities linked to the user-based activity of their residents. These proposals have generally been labeled as DSTs. Proponents of DSTs argue that digital firms are \"undertaxed.\" U.S. critics, in particular, see DSTs as an attempt to target U.S. tech companies, especially as minimum thresholds are high enough that only the largest digital MNCs, which tend to be American, would be subject to the tax. Without a multilateral agreement or an EU-wide rule, DST policies vary across European countries. Countries outside the EU, such as Canada, are also considering implementing a DST. Some countries are implementing domestic DSTs while multilateral negotiations on digital service taxes are occurring under the Organization for Economic Co-operation and Development (OECD).", "These EU initiatives may add to current heightened tension in the U.S.-EU trade and economic relationship. New U.S.-EU trade negotiations could de-escalate tensions and address internet governance issues, but no agreement exists on the scope of potential bilateral trade negotiations although discussions continue.", "Despite common rules across the EU, the United Kingdom's (UK's) future internet regime after the country's withdrawal from the EU (\"Brexit\") is unclear. The UK has stated that it will continue to follow GDPR, but would need an adequacy decision by the EU to prevent disruptions to the free flow of personal data between the EU and the UK. Without such a decision, individual organizations would have to use other means specifically approved by the EU to transfer personal data between the UK and EU (e.g., standard contractual clauses). The EU is set to evaluate the UK data protection framework in 2020. UK leaders seek regulatory autonomy from the EU post-Brexit in some areas and alignment with the EU in others, but it is not clear if and how potential UK regulatory changes would affect internet policy or if any changes by the UK would align it more closely with U.S. policy. Differences in U.S. and UK internet policies will likely need to be addressed in any future bilateral trade negotiations."], "subsections": []}, {"section_title": "Other Approaches", "paragraphs": ["While some countries may use the U.S. or Chinese approach to internet governance as a model, often they seek to balance these influences with their own domestic policies and priorities. Across the spectrum between U.S. and Chinese internet policies lie a variety of national policies neither as open as the former nor as closed as the latter. Other countries often wish to retain trading and investment relationships with both U.S. and Chinese partners. India and Vietnam illustrate two such examples. "], "subsections": [{"section_title": "India", "paragraphs": ["India is seeking to become a technology leader and has asserted itself on the international stage while protecting its domestic industries. On the one hand, India seeks to aggressively export technology services and prioritizes opening access to foreign markets for specific types of services in trade negotiations so that Indian technology workers can work abroad. ", "On the other hand, India uses protectionist rules and regulations to shield its domestic industry from foreign competition. For example, India's draft e-commerce policy is intended to favor domestic entities through requirements for local data storage and national standards, among other provisions. Additional policies under consideration by the Indian government would restrict international e-commerce platforms operations and would require them to adjust their supply chains. India has cited security as the rationale for its draft Personal Data Protection Bill, which would also establish broad data localization requirements and limit cross-border transfer of some data. At times, India has taken steps to curb internet freedom, such as temporarily shutting down mobile networks or blocking social media apps in certain regions, justifying such as actions as an attempt to halt disinformation.", "Although India joined the WTO Information Technology Agreement to eliminate tariffs on ICT goods such as multi-component semiconductors, it has since begun imposing tariffs on some ICT imports. The EU filed for consultation with India over the tariffs in 2019, the first step in WTO dispute settlement. The United States and five other WTO members have since joined the request. In addition, India does not support extending the temporary WTO moratorium on tariffs on electronic transmissions that will expire in mid-2020. India's ability to block a consensus decision to continue the moratorium may increase the pressure to address the topic in the ongoing WTO e-commerce negotiations. To date, India has elected not to participate in the plurilateral negotiations (see below).", "Due to concerns about Indian market access restrictions on U.S. exports, in 2019, President Trump terminated India's eligibility for the U.S. Generalized System of Preferences (GSP), which gives duty-free tariff treatment to certain U.S. imports from eligible developing countries to support their economic development. To address frictions in the trading relationship, the two countries began bilateral trade discussions to address key U.S. concerns regarding access to India's market. Negotiations are ongoing and it is unclear whether they will address nontariff barriers to digital trade, such as data localization requirements and other internet rules."], "subsections": []}, {"section_title": "Vietnam", "paragraphs": ["Vietnam is adopting elements of the Chinese internet approach in some policy areas. For example, in June 2018, Vietnam passed its Law on Cybersecurity with requirements for data localization and access to information by Vietnamese authorities on the grounds of national security, among other provisions. ", "At the same time, Vietnam is liberalizing its economy and seeking to gain from the U.S.-China trade war as U.S. companies relocate their supply chains from China to other nearby Asian destinations. To spur economic growth and integration, Vietnam joined TPP-11, which went into effect in January 2019. However, the country has a two-year grace period before being subject to dispute settlement for parts of the e-commerce chapter, including provisions on cross-border data flows and localization prohibitions. U.S. firms and others will be watching to see how Vietnam reconciles its current restrictive internet with its TPP-11 commitments for open data flows. Vietnam could, for example, create carve-outs or relax the requirements of its cybersecurity regulations, or it could maintain the rules and claim national security as a legitimate public policy objective and exemption under TPP-11. ", "Vietnam also appears to be aligning with the United States in the telecommunications sector. For example, Vietnamese providers are refraining from purchasing 5G equipment from Chinese suppliers, noting concerns voiced by U.S. cybersecurity officials (see text box Standards, 5G, and National Security ). The Vietnamese government has not taken a formal position in favor of western or Chinese telecommunications equipment and standards."], "subsections": []}]}]}, {"section_title": "WTO Plurilateral E-commerce Negotiations", "paragraphs": [], "subsections": [{"section_title": "Background: Digital Trade Rules", "paragraphs": ["Trade negotiations are a tool to create binding and enforceable rules and disciplines to promote international trade and bridge differing internet regimes. No comprehensive agreement on digital trade exists in the WTO as the General Agreement on Trade in Services (GATS) entered into force in January 1995, before the explosive growth of global data flows and digital trade. ", "Initially, digital trade was a niche concern, primarily focused on trade in ICT goods and e-commerce. Certain WTO agreements cover some aspects of digital trade, such as the WTO Information Technology Agreement (ITA) on tariffs. As noted, since 1998, WTO members have also agreed to a moratorium on customs duties for electronic transactions. Although the ban is temporary it has been continuously renewed, most recently until the next ministerial conference in June 2020. As the WTO ITA and e-commerce moratorium illustrate, multilateral trade negotiations to date focused mainly on tariffs and non-discrimination, as well as broad statements of cooperation. Non-tariff barriers were broadly left unaddressed and standards development were left to technicians and academia. As internet-connected technologies continue to evolve, many emerging areas still lack common definitions, standards, and metrics. Today, standards conversations attract a wide range of stakeholders and WTO plurilateral negotiations provide an opportunity to set new international rules and disciplines for digital trade.", "Recent bilateral and plurilateral trade agreements have begun to incorporate commitments on the digital economy, adding to the complex mixture of international trade rules that companies must follow. Although the various FTAs differ in their scope and participants, their provisions can provide ideas and templates for broader WTO negotiations. While not every country participates in an FTA with digital trade rules, all countries are involved in the digital economy and have a stake in shaping its future growth.", "Over 75 countries, including the United States, are participating in ongoing WTO e-commerce negotiations aiming to establish a global framework and obligations that enable digital trade in a nondiscriminatory and less trade restrictive manner. Participants released the Joint Statement on Electronic Commerce at the 11th\u00c2\u00a0WTO Ministerial Conference in December 2017 announcing their intent to \"initiate exploratory work together toward future WTO negotiations on trade-related aspects of electronic commerce.\" Australia, Japan, and Singapore are coordinating the initiative, known as the Joint Statement Initiative or JSI and participants include both developed and developing countries. Negotiations began in January 2019, initially focused on information exchanges, education, and outreach, especially to developing country members who expressed interest but may not yet have developed a clear domestic digital trade agenda or policy.", "Multiple parties have submitted proposals outlining their positions and desired scope for the negotiations. The proposals reflect the diversity and evolving state of internet regimes globally. Some developing countries have opted not to participate, including India and South Africa, who want to protect their flexibility and policy space. These parties may not want to commit to an agreement that may constrain their efforts to incubate, or protect, domestic industry or to raise potential tariff revenue on digital products. However, it is not clear why some countries, such as Vietnam, that have agreed to digital trade commitments in other FTAs (such as TPP-11) are not taking part, though they may do so later."], "subsections": []}, {"section_title": "Positions among Major Participants", "paragraphs": ["The United States was one of the first parties to submit an initial discussion paper for the WTO e-commerce talks. The U.S. discussion paper includes \"trade provisions that represent the highest standard in safeguarding and promoting digital trade\" and reflects the U.S. support for a market-driven, open, interoperable internet under a multi-stakeholder system. The paper builds on and enhances many of the commitments contained in TPP/TPP11 that were further refined in USMCA. Key provisions in the U.S. proposal include trade rules to:", "protect cross-border data flow and prevent data localization mandates; ensure fair treatment of digital products; protect proprietary information, including protecting source code and prohibit forced technology transfer; collaborate on cybersecurity; and facilitate internet services and trade. ", "For financial services, the proposal includes the same compromise included in the USMCA to prohibit data localization, provided that regulators have adequate access. The U.S. proposal also includes the USMCA provisions requiring that parties adopt or maintain a legal framework to protect personal information and encourages the development of interoperability mechanisms, though it does not specifically reference the APEC work on privacy. In line with recent U.S. FTAs, the U.S. proposal includes protecting internet intermediaries from liability for hosting content, a topic of ongoing congressional debate.", "China's proposal focuses on facilitating e-commerce and global value chains as a means to help WTO members, especially developing countries, benefit from digital trade. It reflects its state-driven model. In contrast to the U.S. desire for an ambitious, high-standard agreement, China believes negotiations should \"set a reasonable level of ambition\" given members' varying levels of industry development, as well as historical and cultural traditions. China advocates respect for parties' differing policies on internet sovereignty, data security and privacy protection, and wants to allow for other regulatory measures to achieve \"reasonable public policy objectives.\" In China's view, data flows, data storage, and treatment of digital products should be subjects for exploratory discussions rather than solid commitments. Development needs like bridging the digital divide and capacity building are highlighted throughout the Chinese proposal. Seemingly in response to U.S. restrictions on trade with Chinese firms such as Huawei, a second proposal from China focuses on preventing members from limiting or blocking trade in ICT equipment and products. China's proposal reflects its visions of a world with separate national internets, in which international agreements allow sovereign states to maintain control and impose additional restrictions on firms within their borders. The limited overlap between the U.S. and Chinese proposals illustrates the difficulties negotiators will need to overcome to achieve a meaningful outcome.", "The EU proposal falls between the U.S. and Chinese proposals. The EU seeks a \"comprehensive and ambitious set of WTO disciplines and commitments\" including provisions on e-commerce, consumer and personal data protection, and intellectual property protection. The EU advocates revising the outdated WTO Reference Paper on Telecommunications Services to better promote competition, something not mentioned in the U.S. proposal. The proposal also reflects the EU domestic policy emphasis on protecting personal privacy. Though the EU proposes allowing cross-border data flows and prohibiting localization requirements, it also allows members to \"adopt and maintain the safeguards they deem appropriate to ensure the protection of personal data and privacy, including through the adoption and application of rules for the cross-border transfer of personal data.\" Some analysts see the exception as nullifying the commitment to cross-border data flows.", "Other countries have put forth proposals reflecting their own domestic policies. The majority of proposals seek to extend the moratorium on duties on electronic transmissions and contain provisions on consumer protection and security. In general, the proposals represent an attempt to bridge the limited Chinese and open U.S. proposals. ", "Industry in general supports the ongoing plurilateral negotiations as a means both to attain enforceable rules and provide the certainty needed for business operations and to expand international trade. One international coalition of information technology industry groups, for example, published its priorities for the negotiations including: open cross-border data flows, prohibiting tariffs and taxes on data flows and ICT goods, protection of source code, algorithms, and encryption, among other provisions. The Global Services Coalition similarly endorsed the WTO e-commerce negotiations to promote trade in services and digitally enabled services. In general, the USMCA, U.S.-Japan agreement, and U.S. proposal reflect the provisions sought by industry, with exceptions to achieve legitimate public policy objectives in a least trade-restrictive manner. ", "On the other hand, one coalition of civil society organizations opposes the ongoing WTO negotiations, believing that any agreement would favor large multinational technology companies at the expense of developing country entrepreneurs and workers. Another civil society group stated that negotiations should focus on transparency, consumer protection and consumer rights, promoting competition, ensuring dispute resolution, and securing citizen access to their online data. It also warned, however, that data protection, privacy, net neutrality, artificial intelligence, and cybersecurity should not be part of a trade agreement. Some consumer groups have engaged constructively with WTO representatives to advocate for transparency in the negotiations and multi-stakeholder dialogues. A clear consensus among the consumer groups on how to address the issues of data privacy and data flows has yet to emerge."], "subsections": []}, {"section_title": "Selected Issues and Challenges", "paragraphs": ["The parties aim to streamline proposals into a common text ahead of the next WTO ministerial conference in Kazakhstan in June 2020. Given the diversity of the parties' positions and national regimes, the negotiations will need to address controversial issues to achieve a meaningful agreement. Some hope that significant progress and some level of political agreement are possible by then, although the parties will likely require more time to reach an agreement with meaningful and enforceable obligations.", "Clear commonalities, as well as differences, appear among the proposals, foreshadowing likely controversies and challenges as the negotiations move forward. These include:", "E-signatures, e-contracts, and related measures to facilitate e-commerce and protect consumers will likely attract wide consensus from all parties.", "The U.S., Chinese, and EU proposals all include an extension of the WTO temporary moratorium on customs duties on electronic transmissions , but their positions, as well as those of other members, vary as to whether it should be made permanent. ", "Digital services taxes , such as those in place in various EU countries and under consideration in some EU and non-European countries, may be addressed directly or could be excluded from the final trade agreement and left for ongoing OECD negotiations that cover broader international tax issues.", "The United States and some other parties seek broad protections for cross-border data flows and prohibitions on d ata localization requirements . Other parties support open data flows but under a narrower scope (e.g., for certain sectors or types of data) or with broader exceptions. As noted, China does not want to include any commitments related to data flows.", "Personal data privacy will be among the most difficult issues. While privacy preferences and rules affect trade, privacy policies and concerns are broader than international trade and trade agreements, for example, affecting medical or financial regulation. The agreement could also address interoperability mechanisms (e.g. certification schemes, contracts, or other data-specific agreements) in addition to or instead of identifying specific privacy protections or obligations.", "Cybersecurity provisions, if included, could include specific commitments to prohibit or allow certain actions or policies, or may focus on cooperation between the parties.", "As in every negotiation, the parties must balance creating obligations to facilitate trade with respecting parties' sovereignty. Maintaining sufficient flexibility and policy space may be especially important for those members still determining their domestic digital agenda. Analysts expect that the plurilateral negotiators will have to decide between scope and inclusion. A narrow agreement with limited scope and provisions, such as those focused on e-commerce facilitation, would likely retain the greatest number of negotiating participants but could have less impact. On the other hand, a high-standard broad agreement with deeper commitments, such as that between the United States and Japan, may deter participants who are not yet willing or able to accept all the obligations. Possible approaches include the following.", "A staggered approach or early harvest could allow the parties to reach an early consensus on some less controversial issues, potentially providing a basis for further rounds of negotiations. Such an agreement would provide an early \"win\" and establish a common framework for future negotiation, but may not have a high level of impact in countering trade barriers or bridging disparate internet regimes. ", "Some experts suggest a tiered agreement that contains provisions that all parties accept with additional voluntary commitments. For example, all parties may be willing to accept binding commitments on the less controversial issues (such as e-signatures). Another tier with more ambitious provisions, such as prohibitions on data localization, could be agreed on a non-most favored nation (MFN) or reciprocity basis so that only the subset of parties that undertake the obligation would receive that benefit. For example, if country A agrees to no data localization requirements, it may still impose such requirements on countries that do not undertake the same commitment. This type of agreement would create a common framework, but would not necessarily prevent the splitting of the internet into different \"dataspheres\" if major economies do not adopt higher-standard provisions.", "I nteroperability mechanisms could be created under the auspices of the WTO or existing systems could be expanded to allow for open data flows between different cybersecurity or data privacy regimes. ", "S taged implementation and capacity building provisions have been included in other WTO agreements and may provide another way to provide flexibility and achieve both broad scope and inclusion. Such an agreement could allow certain parties, especially developing countries, more time to make domestic changes and implement commitments. Capacity building could also encourage all parties to commit to the more ambitious level of obligations. For example, the WTO Trade Facilitation Agreement (TFA) requires that \"donor members\" who do not require implementation assistance, such as the United States, provide the needed capacity building and support to developing and least-developed members. Members determine their own implementation schedules and progress in implementation is explicitly linked to technical and financial capacity. The TFA was the last concluded WTO multilateral agreement and implementation of members' commitments is ongoing."], "subsections": []}, {"section_title": "Standards Development and Trade", "paragraphs": ["Standards development and international standards, while not part of trade policy, are often referenced in trade agreements given that standards help shape market access. The growth of international trade in ICT goods and emerging technologies relies on interoperability and international standards. Traditionally, technology companies and telecommunication providers saw value in developing international standards that enable technology companies to build to one standard worldwide, bring products to market faster, sell equipment globally, achieve economies of scale, and reduce the cost of equipment. As technologies develop and converge, standards development becomes more complicated and participation and interest in the process grows. According to the WTO Technical Barriers to Trade Committee, WTO members are mandated to use relevant international standards as the basis for regulation, with some exceptions, and not create unnecessary obstacles to international trade. U.S. FTAs refer to this \"TBT Committee Decision on International Standards\" in defining commitments on international standards. Using international standards encourages transparency, innovation, and flexibility; such standards can evolve as technologies and new best practices develop. ", "Today, SDOs that develop these international standards (e.g., International Organization for Standardization (ISO), 3rd Generation Partnership Project (3GPP)) are drawing attention not only from ICT sector and academic participants, but also from industries that rely on ICT goods and services as well as government organizations. Standards development illustrates the divergence between the U.S. and Chinese approaches to ICT.", "China has a state-led approach to standardization. Under its Revised Standardization Law, effective in 2018, the Standardization Administration of China sets compulsory standards, but also endorses the adoption of international standards. In an effort to promote its industrial policies, develop domestic standards, and internationalize them, China has increased its participation in international standards development, especially for emerging technologies. While some stakeholders welcome China's participation, others question the benefits and risks of Chinese involvement in some of these forums. Some stakeholders raise concerns that China is pursuing a strategic and nationalist, rather than market-driven and best-of-breed-technology, focus because of the Communist Party of China's interest in protecting and advancing its values on a world stage. Analysts have pointed out that China shows a preference for multilateral institutions such as the U.N. or WTO in which each country has a single vote rather than U.S.-backed multi-stakeholder standards institutions (SDOs) with a wider range of participants and more diverse views that dilute governments' clout. ", "Debate over international versus Chinese standards, for example, has dominated many SDO discussions on emerging 5G networks as competition arises between Chinese and Western technology companies. China directs Chinese industry's participation in global SDOs--including leading technical committees, hosting forums, conducting 5G R&D, contributing to 5G specifications--and in international projects. China's industry and academic participants are state- controlled entities and typically work to institutionalize Chinese national standards at the global level. ", "As a counterweight, some U.S. stakeholders advocate for increased participation by U.S. officials in SDOs and government resources for U.S. business and non-government participants to help maintain U.S. leadership in the development of emerging technologies. The Trump Administration echoed these sentiments in Executive Order (EO) 13859, stressing the importance of U.S. leadership in developing technical standards for AI. In response, the National Institute of Standards and Technology (NIST) issued a plan for federal engagement in AI standards calling for the U.S. government to \"commit to deeper, consistent, long-term engagement in AI standards development activities to help the United States to speed the pace of reliable, robust, and trustworthy AI technology development.\""], "subsections": []}]}, {"section_title": "Issues for Congress", "paragraphs": ["Given the critical and growing role of the internet to the U.S. economy, Congress has a policy and legislative interest in the current divergence in national internet regimes and its impact on digital trade, future trade negotiations, standards-setting, and other major U.S. policy objectives. Key issues for Congress include:", "Examining the U.S. position in the ongoing WTO plurilateral e-commerce negotiations. Congress may explore the value of digital trade provisions in potential new bilateral trade negotiations.", "Exploring China's digital authoritarianism and its impact on the digital economy and global rules. This could include the effect on U.S. firms doing business in China, as well as the effect on other countries' internet regimes, including identifying which countries or sectors are emulating China's digital rules or technical standards. Congress previously held hearings on the threat to free speech and security aspects posed by PRC internet sovereignty. ", "Examining efforts by the United States to counter China's digital policies. For example, investments by the new U.S. International Development Finance Corporation (DFC) could focus on telecommunications and internet infrastructure and policy. Some analysts have suggested that Congress establish a digital development fund dedicated to shaping global norms and developing countries' internet regimes. A bipartisan bill ( H.R. 1359 ) directs executive branch agencies to partner with domestic and foreign partners to \"encourage the efforts of developing countries to improve and secure mobile and fixed access to the Internet in order to catalyze innovation, spur economic growth and job creation, \u00e2\u0080\u00a6 promote free speech, democracy, and good governance\u00e2\u0080\u00a6 and the multi-stakeholder approach to Internet governance.\"", "Understanding the potential long-term impact of the splintering internet on the U.S. economy. Without agreement on the underlying rules or convergence on international norms, the risk of a fractured global internet increases. Congressional oversight could examine the value, both economic and political, of U.S. leadership and U.S. norms governing the global internet. Congress could consider asking the U.S. ITC to investigate the economic impact of this fracturing on U.S. businesses and consumers. Congress could analyze the different approaches and commitments related to internet governance contained in EU or Chinese FTAs, and how they differ from U.S. agreements and objectives. More immediately, Congress could examine the economic impact of the recent technology trade restrictions in China and other countries on U.S. companies.", "Overseeing ongoing efforts to establish global standards and rules through U.S. participation in SDOs, international forums, and recent and ongoing trade negotiations. For example, Congress could hold hearings on U.S. government and private sector involvement in standard-setting and China's increasing role in international standards discussions. Congress could probe executive branch agencies about specific U.S. objectives and engagement in ongoing negotiations related to internet governance and examine if the United States needs a clear strategy for outreach to international partners to build consensus on issues in advance of formal meetings and conferences. Similarly, Congress may consider promoting hosting of some standards meetings and international discussions so that more U.S. stakeholders could participate and provide direct feedback."], "subsections": []}]}}
{"id": "R45956", "title": "Human Rights in China and U.S. Policy: Issues for the 116th Congress", "released_date": "2019-10-09T00:00:00", "summary": ["This report examines selected human rights issues in the People's Republic of China (PRC) and policy options for Congress. U.S. concern over human rights in China has been a central issue in U.S.-China relations, particularly since the Tiananmen crackdown in 1989. In recent years, human rights conditions in China have deteriorated, while bilateral tensions related to trade and security have increased, possibly creating both constraints and opportunities for U.S. policy on human rights.", "After consolidating power in 2013, Chinese Communist Party (CCP) General Secretary and State President Xi Jinping intensified and expanded the reassertion of party control over society that began during the final years of his predecessor, Hu Jintao. Since 2015, the government has enacted new laws that place further restrictions on civil society in the name of national security, authorize greater control over minority and religious groups, and reduce the autonomy of citizens. PRC methods of social and political control are evolving to include the widespread use of sophisticated surveillance and big data technologies.", "Government arrests of human rights advocates and lawyers, which intensified in 2015, were followed by party efforts to instill ideological conformity across various spheres of society. In 2016, President Xi launched a policy known as \"Sinicization,\" through which the government has taken additional measures to compel China's religious practitioners and ethnic minorities to conform to Chinese culture, the socialist system, and Communist Party policies and to eliminate foreign influences. In the past decade, the PRC government has imposed severe restrictions on the religious and cultural activities, and increasingly on all aspects of the daily lives, of Uyghurs, a Turkic ethnic group who practice a moderate form of Sunni Islam and live primarily in the far western Xinjiang Uyghur Autonomous Region. Since 2017, government authorities in Xinjiang have detained, without formal charges, up to an estimated 1.5 million Uyghurs out of a population of about 10.5 million, and a smaller number of ethnic Kazakhs, in ideological re-education centers. Some may have engaged in religious and ethnic cultural practices that the government now perceives as extremist or terrorist, or as manifesting \"strongly religious\" views or thoughts that could lead to the spread of religious extremism or terrorism. Members of the 116 th Congress have introduced several bills and resolutions related to human rights issues in China, particularly regarding Tibetans, Uyghurs, and religious freedom.", "Successive U.S. Administrations and Congresses have deployed an array of means for promoting human rights and democracy in China, often exercised simultaneously. Policy tools include open censure of China; quiet diplomacy; congressional hearings, legislation, investigations, statements, letters, and visits; funding for rule of law and civil society programs in the PRC; support for human rights defenders and prodemocracy groups; sanctions; bilateral dialogue; internet freedom efforts; international broadcasting; and coordinated international pressure, including through multilateral organizations. Another high-profile practice is the State Department's issuance of congressionally mandated country reports and/or rankings, including on human rights, religious freedom, and trafficking in persons.", "Broadly, possible approaches for promoting human rights in China may range from those emphasizing bilateral and international engagement to those conditioning the further development of bilateral ties on improvements in human rights conditions in China; in practice, approaches may combine elements of both engagement and conditionality. Some approaches may reflect a perceived need to balance U.S. values and human rights concerns with other U.S. interests in the bilateral relationship. Others may challenge the assumption that promoting human rights values involves trade-offs with other interests, reflecting instead a view that fostering greater respect for human rights is fundamental to other U.S. objectives.", "(This report does not discuss the distinct human rights and democracy issues in the PRC's Hong Kong Special Administrative Region. For information on developments in Hong Kong, see CRS In Focus IF11295, Hong Kong's Protests of 2019 , by Michael F. Martin.)"], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Human Rights Developments in China1", "paragraphs": [], "subsections": [{"section_title": "Overview", "paragraphs": ["Thirty years after the June 1989 Tiananmen Square crackdown, the Chinese Communist Party (CCP) remains firmly in power. People's Republic of China (PRC) leaders have maintained political control through a mix of repression and responsiveness to some public preferences, delivering economic prosperity to many citizens, co-opting the middle and educated classes, and stoking nationalism to bolster CCP legitimacy. The party has rejected reforms that it perceives might undermine its monopoly on power, and continues to respond forcefully to signs of autonomous social organization, independent political activity, or social instability. The party is particularly wary of unsanctioned collective activity among sensitive groups, such as religious congregations, ethnic minorities, industrial workers, political dissidents, and human rights defenders and activists. Technological advances have enhanced the government's ability to monitor the activities of these groups, particularly Tibetan Buddhists and Uyghur Muslims. ", "Some experts refer to the PRC model of governance as \"responsive authoritarianism\" or, in some aspects, \"consultative authoritarianism.\" Despite the government's many repressive policies, some reports indicate that many PRC citizens may appreciate the government's focus on stability, are generally satisfied with the government's performance, and are optimistic about the future, although the depth of their support for the government is unclear. CCP General Secretary and State President Xi Jinping's anti-corruption campaign, in which over 1.5 million party members have been punished and which is viewed by many experts as partly a political purge, appears to have gained widespread popular support. ", "For part of the leadership term of Hu Jintao, who served as CCP General Secretary and State President from 2002 to 2012, the party tolerated limited public criticism of state policies, relatively unfettered dissemination of news and exchange of opinion on social media on many social topics, and some investigative journalism and human rights advocacy around issues not seen as threatening to CCP control. After consolidating power in 2013, Xi Jinping intensified and expanded the reassertion of party control over society that began during the final years of Hu's term, and strengthened his own control over the party. In high-profile speeches, Xi has repeated the maxim, \"The party exercises overall leadership over all areas of endeavor in every part of the country.\" In 2018, Xi backed a constitutional amendment removing the previous limit of two five-year-terms for the presidency, clearing the way for him potentially to stay in power indefinitely. Xi also has cultivated what some observers view as a cult of personality, launching far-reaching campaigns for Chinese citizens, beginning with pre-school, to study his political philosophy. Some analysts argue that Xi's efforts to bolster the party and his leadership reflect a heightened sense of insecurity rather than confidence in the CCP's ability to address internal and external threats, and that he and his supporters among the party elite have responded by choosing to \"clamp down and not loosen up.\""], "subsections": []}, {"section_title": "New Laws and Policies", "paragraphs": ["Since Xi's rise to power, the PRC government has introduced laws and policies that enhance the legal authority of the party and state to counteract potential ideological, political, and human rights challenges. In 2013, the CCP issued a directive (Document No. 9) that identified seven \"false ideological trends, positions, and activities,\" largely aimed at reining in the media and liberal academics. In 2015, the government launched a crackdown on over 250 human rights lawyers and activists, detaining many of them and convicting over a dozen of them of \"disturbing social order,\" subversion, and other crimes. PRC authorities targeted, in particular, legal staff of the Fengrui Law Firm in Beijing, which had taken on high profile human rights cases, and revoked the firm's business license in 2018. The government has also placed greater constraints upon environmental activism, which has been a relatively vibrant area of civil society, viewing it as a threat to social stability. ", "Since 2015, the government has enacted new laws that place further restrictions on civil society in the name of national security, authorize greater control over minority and religious groups, particularly Uyghur Muslims, and reduce the autonomy of citizens. A law regulating foreign non-governmental organizations (NGOs), which took effect in 2017, places such NGOs under the jurisdiction of the Ministry of Public Security, tightens their registration requirements, and imposes greater controls on their activities, funding, and staffing. Some international NGOs that specialize in rule of law, rights advocacy, and labor rights have suspended their work in China. ", "A new Cybersecurity Law, which went into effect in 2017, codifies broad governmental powers to control and restrict online traffic, including for the purposes of protecting social order and national security. The law also places a greater legal burden upon private internet service providers to monitor content and assist public security organs. A new National Intelligence Law, also enacted in 2017, obliges individuals, organizations, and institutions to assist and cooperate with state intelligence efforts. ", "In 2016, President Xi launched a policy known as \"Sinicization,\" through which the government has taken measures to further compel China's religious practitioners and ethnic minorities to conform to Chinese culture, the socialist system, and Communist Party policies. Many analysts view this strategy as the CCP's response to what it perceives as excessive feelings of separateness and divided loyalties among some religious and ethnic groups. In April 2016, Xi presided over a conference on national religious affairs, the first Chinese president in over ten years to do so. He emphasized that the \"legitimate rights of religious peoples must be protected,\" but also stated, \"We must resolutely guard against overseas infiltrations via religious means.... \" At the 19 th Party Congress in October 2017, Xi emphasized, \"We will fully implement the Party's basic policy on religious affairs, uphold the principle that religions in China must be Chinese in orientation, and provide active guidance to religions so that they can adapt themselves to socialist society.\" The Revised Regulations on Religious Affairs, which took effect in February 2018, place an emphasis on religious and social harmony and the prevention of religious extremism and terrorism."], "subsections": []}, {"section_title": "Freedom of Speech", "paragraphs": ["The PRC Constitution provides for many civil and political rights, including, in Article 35, the freedoms of speech, press, assembly, association, and demonstration, and in Article 36, \"freedom of religious belief.\" Other provisions in China's constitution and laws, however, circumscribe or condition these freedoms, and the state routinely restricts these freedoms in practice. Under Xi's leadership, the government has further closed the space for free speech and silenced independent journalists. Authorities have used criminal prosecution, civil lawsuits, and other forms of harassment and punishment to intimidate and silence journalists and authors. ", "Since 2013, China has dropped three places, from 173 to 177 (out of 180 countries), on Reporters Without Borders' World Press Freedom Index . The recent clampdown includes not only political speech but also \"vulgar, immoral, and unhealthy\" content. More than 60 journalists and bloggers currently are detained in China. In July 2019, a court in Sichuan province sentenced dissident Huang Qi to 12 years in prison for \"providing state secrets to foreign entities.\" In 1998, Huang had created \"64 Tianwang,\" a website that reported on sensitive topics, including government corruption and human rights violations. ", "The PRC government, which operates one of the most extensive and sophisticated internet censorship systems in the world, blocks access to over 20% of the world's most trafficked websites, according to one source. Xi also has attempted to place greater controls on the use of censorship circumvention tools, such as virtual private networks (VPNs). Although the government often tolerates the use of VPNs for some purposes, such as academic research and international business, it sometimes punishes people for providing VPN services without authorization or for using VPNs to disseminate sensitive information. The use of VPNs is not widespread, either due to a lack of interest or to inconveniences such as slower browsing speeds."], "subsections": []}, {"section_title": "New Surveillance Technologies", "paragraphs": ["PRC methods of social and political control are evolving to include the widespread use of sophisticated surveillance and big data technologies. Human rights groups and the U.S. Department of State argue that these methods, which have not yet been fully deployed nationally, violate rights to privacy, \"mental autonomy,\" and the presumption of innocence, and are used to restrict freedoms of movement, association, and religion. Chinese authorities and companies have installed ubiquitous surveillance cameras, as well as facial, voice, iris, and gait recognition equipment, ostensibly to reduce crime, but likely also to track the movements of ethnic Tibetans and Uyghurs (also spelled \"Uighurs\") and critics of the regime. In Xinjiang, police and officials reportedly are collecting massive amounts of data and entering it into an \"Integrated Joint Operations Platform\" (IJOP). The IJOP reportedly flags individuals who exhibit behaviors that authorities view as deviating from the norm or potentially threatening to social stability. Many forms of lawful, peaceful, daily activities may be viewed suspiciously by authorities through the use of this law enforcement tool. ", "The government is developing a \"social credit system\" that would not only rate individuals' credit worthiness but also how well they abide by rules and regulations. It involves aggregating data on individuals and \"creating measures to incentivize 'trustworthy' conduct, and penalize untrustworthy' conduct.\" Citizens deemed untrustworthy may be banned from making purchases for travel, prevented from applying for certain types of jobs, or denied educational opportunities for their children. Examples of untrustworthy behavior include traffic violations, smoking in prohibited areas, making repeated purchases that indicate poor character, and posting untruthful news online."], "subsections": []}, {"section_title": "Labor Rights and Student Activism", "paragraphs": ["The PRC government, which generally restricts the operations of independent labor groups, has been carrying out a year-long suppression campaign against labor activism in Guangdong province, a center for export-oriented manufacturing, and elsewhere. Authorities have harassed, detained, and arrested labor organizers and activists, labor NGOs, social workers, and journalists who attempted to provide support to workers, and students and recent graduates from around the country who advocated for their rights. Workers have protested low pay, unsafe or unhealthy working conditions, and other violations of the China's Labor Law. Over 50 labor activists are in custody or their whereabouts are unknown. In July 2018, workers at Jasic Technology Corporation in Shenzhen attempted to form their own union and went on strike to protest the dismissal of labor organizers. Other labor unrest during this time related to fair wages and the safety and health of working conditions.", "Since August 2018, authorities in Beijing have attempted to silence student labor activists at Peking University in Beijing, one of the country's most prestigious institutions of higher learning. At least 21 members of the university's Marxist Society have been placed under house arrest or have disappeared, and many others have been interrogated or surveilled. Although the students are not agitating for Western-style democracy, the CCP appears to fear that the movement could help workers to independently organize and stage protests at a time when labor demonstrations are rising across the country, or ignite other forms of social activism. The government appears particularly sensitive to student movements originating in China's most elite university, a traditional incubator of political activism. "], "subsections": []}, {"section_title": "China, Global Human Rights, and the United Nations", "paragraphs": ["In part to defend and promote acceptance of its own principles of human rights, on the global stage, China has rejected notions of universal human rights, supported principles of non-intervention, and emphasized economic development over the protection of individual civil and political rights. A member of the United Nations Human Rights Council (UNHRC) most recently in 2017-2019, China sponsored its first ever UNHRC resolutions in 2017 and 2018, both of which passed, emphasizing national sovereignty, calling for \"quiet dialogue\" and cooperation rather than investigations and international calls for action, and advocating for the Chinese model of state-led development. In July 2019, China sponsored a UNHRC resolution, which was adopted by a vote of 33 to 13, reaffirming the \"contribution of development to the enjoyment of human all rights.\" In a speech given on global Human Rights Day in 2018, President Xi provided his perspective on \"people-centered human rights,\" including a \"path of human rights development with Chinese characteristics in line with its own conditions\" and emphasizing the \"right to subsistence and development as primary basic human rights.\" "], "subsections": []}]}, {"section_title": "Religious and Ethnic Minority Policies", "paragraphs": ["According to Freedom House, the extent of allowed religious freedom and activity among China's estimated 350 million religious practitioners varies widely by religion, region, and ethnic group, depending on \"the level of perceived threat or benefit to [Communist] party interests, as well as the discretion of local officials.\" The party's Sinicization policy and the 2018 amendments to the government's Regulations on Religious Affairs have affected all religions to varying degrees. New policies further restrict religious travel to foreign countries and contacts with foreign religious organizations and tighten bans on religious practice among party members and state employees and the religious education of minors. Religious venues are required to raise the national flag and teach traditional Chinese culture and \"core socialist values,\" and online religious activities now need approval by the provincial Religious Affairs Bureau. "], "subsections": [{"section_title": "Christians", "paragraphs": ["Christianity is the second-largest religion in China after Buddhism, and is growing steadily. Between an estimated 70 million and 90 million Chinese Christians worship in both officially-registered and unregistered churches. China's Siniciz ation campaign has intensified government efforts to pressure churches that are not formally approved by the government, and hundreds reportedly have been shut down in recent years. Since 2014, authorities have ordered crosses removed from nearly 4,000 churches, particularly in Z hejiang and Henan provinces, where there are large and growing Christian populations. The U.S. Commission on International Religious Freedom reported that roughly 1,000 church leaders were detained for brief periods in 2018. In Nanjing, municipal authorities launched a five-year Sinicization campaign that the U.S. Department of State characterized as aiming to incorporate \"Chinese elements into church worship services, hymns and songs, clergy attire, and the architectural style of church buildings.\" (See Figure 1 ) ", "In September 2018 , the PRC government and the Vatican , which have disagreed over the appointment of bishops, religious freedom, and the Vatican's diplomatic ties with Taiwan, reached a breakthrough in negotiations on diplomatic relations. According to a 2018 provisional agreement, Beijing is to recognize the Pope as the head of the Catholic Church in China, the Vatican is to recognize seven excommunicated Chinese bisho ps appointed by PRC authorities, and China is to appoint future bishops, while the Pope has veto power over their nomination. Some observers have criticized the possible arrangement, which they believe would strengthen state control over Catholics in China. In June 2019, the Vatican asked the PRC government to refrain from harassing Catholic clergy who want to remain loyal to the Pope rather than pledge allegiance to the Chinese Patriotic Catholic Association, the official organization that governs Catholics in China."], "subsections": []}, {"section_title": "Falun Gong", "paragraphs": ["Falun Gong combines traditional Chinese exercise movements with Buddhist and Daoist concepts and precepts formulated by its founder, Li Hongzhi. In the mid-1990s, the spiritual exercise gained tens of millions of adherents across China, including members of the Communist Party. Authorities have harshly suppressed Falun Gong beginning in 1999 after thousands of adherents gathered in Beijing to protest growing restrictions on their activities. Hundreds of thousands of practitioners who refused to renounce Falun Gong were sent to Re-education through Labor (RTL) centers until they were deemed \"transformed.\" ", "Since the formal dismantling of the RTL penal system in 2014, many Falun Gong detainees reportedly have been sent to \"Legal Education Centers\" to undergo indoctrination, or to mental health facilities. Overseas Falun Gong groups reported that in 2018, authorities arrested or harassed approximately 9,000 Falun Gong practitioners for refusing to renounce the spiritual exercise. In November 2018, judiciary officials in Changsha, Hunan province suspended the licenses of two lawyers for six months for arguing that Falun Gong was not an illegal cult and for engaging in speech that \"disrupted courtroom order.\" Falun Gong overseas organizations claim that over 4,300 adherents have died in government custody since 1999.", "Some reports allege that Falun Gong practitioners held in detention facilities in China were victims of illegal organ harvesting\u00e2\u0080\u0094the unlawful, large-scale, systematic, and nonconsensual removal of body organs for transplantation\u00e2\u0080\u0094while they were still alive, resulting in their deaths. The claims of organ harvesting from Falun Gong detainees are based largely upon circumstantial evidence and interviews. China reportedly has made efforts to reform its organ-transplant system, to outlaw organ trafficking and the use of organs from executed prisoners, create a national organ registry, and encourage voluntary donations. Overseas Falun Gong organizations claim that the practice of organ harvesting continues. "], "subsections": []}, {"section_title": "Tibetans", "paragraphs": ["The Tibetan Autonomous Region (TAR) is home to about 2.7 million Tibetans out of China's total ethnic Tibetan population of 6 million. Most of China's remaining ethnic Tibetan population lives in Tibetan autonomous prefectures and counties in bordering provinces. Although some Tibetans advocate independence, the Dalai Lama, the Tibetan Buddhist spiritual leader who has lived with other Tibetan exiles in Dharamsala, India since a failed Tibetan uprising against Chinese rule in 1959, has proposed a \"middle way approach,\" or \"genuine autonomy\" without independence in Tibet. China's leaders have referred to the middle way as \"half independence\" or \"independence in disguise\" and to the Dalai Lama as a \"separatist\" and a \"wolf in monk's robes.\" Talks between PRC officials and representatives of the Dalai Lama on issues related to Tibetan autonomy and the return of the Dalai Lama have been stalled since 2010. ", "Following anti-government protests in 2008, TAR authorities imposed increasingly expansive controls on Tibetan religious life and culture. These include a heightened police presence within monasteries; the ideological re-education of Tibetan Buddhist monks and nuns; the arbitrary detention and imprisonment of Tibetans; strengthened media controls; and greater restrictions on the use of the Tibetan language in schools. Authorities in some Tibetan areas, in an effort to prevent \"separatist\" thoughts and activities, have inspected private homes for pictures of the Dalai Lama, examined cell phones for Tibetan religious and cultural content, and monitored online posts for political speech. ", "Since 2016, authorities have destroyed religious structures and homes at the Larung Gar and Yanchen Gar monasteries in Sichuan Province, and evicted roughly 11,500 monks and nuns. The PRC government insists that Chinese laws, and not Tibetan Buddhist religious traditions, govern the process by which lineages of Tibetan lamas are reincarnated, and that the state has the right to choose the successor to the current Dalai Lama. U.S. officials and some Members of Congress have expressed support for the right of Tibetans to choose their own religious leaders without government interference. Since 2009, 155 Tibetans within China are known to have self-immolated, many apparently to protest PRC policies or to call for the return of the Dalai Lama, and 123 are reported to have died."], "subsections": []}, {"section_title": "Uyghurs", "paragraphs": ["The Uyghurs are a Turkic ethnic group who practice a moderate form of Sunni Islam and live primarily in the Xinjiang Uyghur Autonomous Region (XUAR). In the past decade, PRC authorities have imposed severe restrictions on the religious and cultural activities of Uyghurs. Ethnic unrest in Xinjiang erupted in 2009, featuring Uyghur violence against Han Chinese and government reprisals. Subsequent periodic clashes between Uyghurs and Xinjiang security personnel spiked between 2013 and 2015, and PRC leaders responded with more intensive security measures, including thousands of arrests. ", "Following the 2016 appointment of a new Communist Party Secretary to the XUAR, Chen Quanguo, and the implementation of new national security and counterterrorism laws and regulations on religious practice, Xinjiang officials stepped up security measures aimed at the Uyghur population. They included tighter restrictions on movement, the installation of thousands of neighborhood police kiosks, and ubiquitous surveillance cameras. Authorities reportedly have collected biometric data, including DNA samples, blood types, and fingerprints of Uyghur residents, for identification purposes. XUAR authorities also have implemented systems and installed phone apps to register and monitor Uyghurs' electronic devices and online activity for \"extremist\" content. ", "The PRC government has instituted policies intended to assimilate Uyghurs into Han Chinese society and reduce the influences of Uyghur, Islamic, and Arabic cultures and languages. The XUAR enacted a regulation in 2017 that prohibits \"expressions of extremification,\" including wearing face veils, growing \"irregular\" beards, and expanding halal practices beyond food. Authorities reportedly have banned traditional Uyghur wedding and funeral customs and Islamic names for children. Thousands of mosques in Xinjiang reportedly have been demolished as part of a \"mosque rectification\" or safety campaign. PRC authorities reportedly have conscripted as many as a million citizens to live temporarily in the homes of Uyghurs and other Muslim minorities to assess their hosts' loyalty to the Communist Party. "], "subsections": [{"section_title": "Mass Internment of Uyghurs", "paragraphs": ["Since 2017, Xinjiang authorities have undertaken the mass internment of Turkic Muslims, some of whom may have engaged in religious and ethnic cultural practices that the government now perceives as extremist or terrorist, or as manifesting \"strongly religious\" views or thoughts that could lead to the spread of religious extremism or terrorism. The government has detained, without formal charges, up to an estimated 1.5 million Uyghurs out of a population of about 10.5 million, and a smaller number of ethnic Kazakhs, in ideological re-education centers. Over 400 prominent Uyghur intellectuals reportedly have been detained or their whereabouts are unknown. Many detainees reportedly are forced to express their love of the Communist Party and Xi Jinping, sing patriotic songs, and renounce or reject many of their religious beliefs and customs. According to former detainees, conditions in the centers are often crowded and unsanitary, and treatment often includes psychological pressure, forced labor, beatings, and food deprivation. ", "PRC officials describe the Xinjiang camps as \"vocational education and training centers\" in which \"trainees\" study Chinese, take courses on PRC law, learn job skills, and undergo \"de-extremization\" or are \"cured of ideological infection.\" The government states that the centers \"have never made any attempts to have the trainees change their religious beliefs.\" In July 2019, some Chinese officials claimed that most detainees had \"returned to society\" and to their families, while in August 2019, other officials stated that the \"only 500,000 Uyghurs\" were held in 68 camps. Some Uyghurs living abroad, however, claim that they still have not heard from missing relatives in Xinjiang. Some reports indicate that many of those released from re-education centers have been placed under house arrest or in state-run factories, and continue to be held under close political supervision."], "subsections": []}]}, {"section_title": "Hui Muslims", "paragraphs": ["The Hui, another Muslim minority group in China who number around 11 million, largely have practiced their faith with less government interference. The Hui are more geographically dispersed and culturally assimilated than the Uyghurs, are generally physically indistinguishable from Hans, and do not speak a non-Chinese language. China's new religious policies have affected the Hui and other Muslims outside of Xinjiang, but less severely than the Uyghurs. Nonetheless, authorities in the Ningxia Hui Autonomous Region have ordered mosques to be \"Sinicized\"\u00e2\u0080\u0094minarets have been taken down, onion domes have been replaced by traditional Chinese roofs, and Islamic motifs and Arabic writings have been removed. Officials have cancelled Arabic classes in some mosques and private schools, and calls to prayer have been banned in Yinchuan, the capital of Ningxia. In Beijing, authorities have mandated that Arabic signage over Halal food shops be removed. ", "In August 2018, thousands of Hui Muslims gathered in front of a newly-built mosque in Weizhou, Ningxia, in an attempt to block the government's announced demolition of the building due in part to its Middle Eastern architectural style. While the government backed down on its threat to destroy the mosque, PRC anticorruption investigators have begun investigating local Hui officials who they say have \"strayed from the party's leadership and political discipline in religious matters.\""], "subsections": []}]}, {"section_title": "U.S. Efforts to Advance Human Rights in China", "paragraphs": [], "subsections": [{"section_title": "Human Rights and U.S.-China Relations", "paragraphs": ["Human rights conditions in the PRC have been a recurring point of friction and source of mutual mistrust in U.S.-China relations, particularly since the Tiananmen Square crackdown in 1989 and the end of the Cold War in 1991. China's persistent human rights violations, as well as its authoritarian political system, often have caused U.S. policymakers and/or the American public to view the PRC government with greater suspicion. Chinese officials may in turn view expressed human rights concerns by U.S. policymakers, and the broader U.S. democracy promotion agenda, as tools meant to undermine CCP rule and slow China's rise. Frictions over human rights may affect other issues in the relationship, including those related to economics and security. In engaging China on human rights issues, the United States has often focused on China's inability or unwillingness to respect universal civil and political rights, while China prefers to tout its progress in delivering economic development and well-being, and advancing social rights for its people, including ethnic minorities. "], "subsections": [{"section_title": "U.S. Policy Evolution", "paragraphs": ["In the period following the 1989 Tiananmen Square crackdown, the United States sought to leverage China's desire for \"most favored nation\" (MFN) trade status by linking its annual renewal to improvements in human rights conditions in China. The Clinton Administration ultimately abandoned this direct linkage, however, in favor of a general policy of engagement with China that it hoped would contribute to improved respect for human rights and greater political freedoms for the Chinese people. President Bill Clinton, in his 1999 State of the Union Address, summed up the long-term aspirations of this approach, stating, \"It's important not to isolate China. The more we bring China into the world, the more the world will bring change and freedom to China.\" In the following more than two decades, U.S. Administrations and Congresses employed broadly similar strategies for promoting human rights in China, combining efforts to deepen trade and other forms of engagement to help create conditions for positive change, on the one hand, with specific human rights promotion efforts, on the other. Presidents Bill Clinton, George W. Bush, and Barack Obama held that U.S. engagement with China and encouraging China to respect international norms, including on human rights, would result in mutual benefits, including China's own success and stability. ", "Policy tools for promoting human rights have included open censure of China; quiet diplomacy, such as closed-door discussions; congressional investigations, hearings, legislation, statements, letters, and visits; funding for human rights and democracy foreign assistance programs in the PRC; congressionally-mandated reports on human rights in China; support for human rights defenders and pro-democracy groups in China, Hong Kong, and the United States; economic sanctions; efforts to promote Internet freedom; support for international broadcasting; and coordination of international pressure, including through multilateral organizations. In addition, some U.S. officials and Members of Congress have regularly met with Chinese dissidents and with the Dalai Lama and exiled Tibetan officials, in both Washington, D.C. and Dharamsala, India, where the headquarters of the Central Tibetan Administration (sometimes referred to as the Tibetan government-in-exile) is located. Beijing opposes such meetings as encouraging Tibetan independence and contravening the U.S. policy that Tibet is part of China."], "subsections": [{"section_title": "Trump Administration Policy", "paragraphs": ["In recent years, policy analysts have increasingly debated the effectiveness of aspects of the U.S. engagement strategy with China, including, in light of China's deepening domestic political repression, its results in securing improvements in Beijing's respect for human rights and political freedoms. Under President Trump, U.S. policy documents have declared that China's international integration has not liberalized its political or economic system, and the United States has begun to place less emphasis on engagement. The Trump Administration has referred to China as a \"revisionist power,\" a strategic competitor, or even an adversary, and curtailed some government-to-government cooperation. Some critics of the Administration's China policy argue that U.S. effectiveness and credibility on human rights is strengthened when the United States works with allies and within international organizations to promote human rights and democracy globally and in China, while maintaining openness to engaging China's government and society, where appropriate.", "A U.S. policy approach that is less concerned with maintaining broad engagement with China may afford greater space and opportunity to push the PRC on human rights concerns. Trump Administration efforts in this area arguably have been uneven to date, with some commentators criticizing the Administration for inconsistency in its commitment to human rights issues as it pursues other priorities with China, particularly on trade. More broadly, the Administration has placed less emphasis on existing multilateral institutions and on multilateral diplomacy in its foreign policy, including with regard to human rights. ", "The forcefulness of the Administration's public rhetoric on PRC human rights issues has differed between the President and some senior Administration officials. Since 2018, some Administration officials have used increasingly sharp language on China's human rights abuses. Vice President Mike Pence's October 2018 speech on the Administration's China policy, which was critical of China across a broad set of policy areas, cited concern over China's \"control and repression of its own people\" and referenced \"an unparalleled surveillance state.\" At the announcement of the Department of State's 2019 release of its annual report on human rights practices around the world, Secretary of State Michael Pompeo stated that China was in a \"league of its own\" in the area of human rights violations. In July 2019, Pompeo described the situation in Xinjiang in particular as \"one of the worst human rights crises of our time,\" and \"the stain of the century.\"", "President Trump generally has not publicly raised the issue of human rights in China and reportedly remains focused largely on trade issues. In July 2019, President Trump met with survivors of religious persecution around the world, including four individuals from China: a Uyghur Muslim, a Tibetan Buddhist, a Christian, and a Falun Gong practitioner. In September 2019 at a United Nations event on religious freedom, the President issued a broad statement calling for an end to religious persecution, but did not mention religious freedom issues in China specifically; his later remarks to the U.N. General Assembly, as they related to China, emphasized trade issues.", "The Trump Administration has not attempted to restart the U.S.-China Human Rights Dialogue, which Beijing suspended in 2016. Many other operative elements of U.S. human rights policy toward China, however, reflect continuity with prior administrations; many are statutorily mandated and/or continue to be funded by Congress (as described below). The State Department's most recent \"integrated country strategy\" for China, released in August 2018, includes an objective to \"advocate for and urge China to adhere to the rule of law, respect the individual rights and dignity of all its citizens, and ease restrictions on the free flow of information and ideas to advance civil society.\" "], "subsections": []}]}]}, {"section_title": "Policy Options and Tools", "paragraphs": [], "subsections": [{"section_title": "Human Rights and Democracy Foreign Assistance Programs", "paragraphs": ["Since 2001, U.S. foreign assistance programs have sought to promote human rights, civil society, democracy, rule of law, and Internet freedom in China. In addition, some programs also have addressed environmental and rule of law issues and focused upon sustainable development, environmental conservation, and preservation of indigenous culture in Tibetan areas of China. U.S.-funded programs do not provide assistance to PRC government entities or directly to Chinese non-governmental organizations (NGOs), and are predominantly awarded in the form of grants to U.S.-based NGOs and academic institutions.", "The State Department's Bureau of Democracy, Human Rights, and Labor (DRL) has generally administered programs to promote human rights and democracy in China, while the U.S. Agency for International Development (USAID) has administered the aforementioned programs in Tibet and some additional programs in the areas of the environment and rule of law. DRL programs across China have generally supported rule of law development, civil society, labor rights, religious freedom, government transparency, public participation in government, and Internet freedom. Between 2001 and 2018, the U.S. government provided approximately $241 million for DRL programs in China, $99 million for Tibetan programs, and $72 million for environmental and rule of law efforts in the PRC (see Figure 2 above). Since 2015, Congress has appropriated additional funds for Tibetan communities in India and Nepal ($6 million in FY2019). Since 2018, Congress also has provided $3 million annually to strengthen institutions and governance in the Tibetan exile communities."], "subsections": []}, {"section_title": "National Endowment for Democracy Grants", "paragraphs": ["Established in 1983, the National Endowment for Democracy (NED) is a private, nonprofit foundation \"dedicated to the growth and strengthening of democratic institutions around the world.\" Funded primarily by an annual congressional appropriation, NED has played an active role in promoting human rights and democracy in China since the mid-1980s.", "A grant-making institution, NED\u00c2\u00a0has supported projects in China carried out by grantees that include its four affiliated organizations; Chinese, Tibetan, and Uyghur human rights and democracy groups and media platforms based in the United States and Hong Kong; and a small number of NGOs based in mainland China. Program areas have included efforts related to prisoners of conscience; rights defenders; freedom of expression; civil society; the rule of law; public interest law; Internet freedom; religious freedom; promoting understanding of Tibetan, Uyghur, and other ethnic concerns in China; government accountability and transparency; political participation; labor rights; public policy analysis and debate; and rural land rights, among others.", "NED currently describes China as a priority country in Asia in light of the \"significant and systemic challenges to democratization\" there. NED grants for China (including Tibet and Hong Kong) totaled approximately $7 million in 2017 and $6.5 million in 2018. This support is provided using NED's regular congressional appropriations."], "subsections": []}, {"section_title": "International Broadcasting", "paragraphs": ["The U.S. Agency for Global Media (USAGM; formerly the Broadcasting Board of Governors) utilizes international broadcasting and media activities to \"advance the broad foreign policy priorities of the United States, including the universal values of freedom and democracy.\" It targets resources to areas \"most impacted by state-sponsored disinformation\" (as well as by violent extremism), and identifies people in China as a key audience. USAGM-supported Voice of America (VOA) and Radio Free Asia (RFA) provide external sources of independent or alternative news and opinion to Chinese audiences. The two media services play small but unique roles in providing U.S.-style broadcasting, journalism, and public debate in China. VOA, which offers mainly U.S. and international news, and RFA, which serves as an uncensored source of domestic Chinese news, often report on important world and local events, including human rights issues.", "The PRC government regularly jams and blocks VOA and RFA Mandarin, Cantonese, Tibetan, and Uyghur language radio and television broadcasts and Internet sites, while VOA English services generally receive less interference. VOA and RFA have made efforts to enhance their Internet services, develop circumvention or counter-censorship technologies, and provide access to their programs on social media platforms. USAGM increasingly emphasizes digital and social media content in China, arguing that these are \"effective channels for information-seeking people to evade government firewalls.\" The agency describes RFA Uyghur as the \"only Uyghur language news outlet for the Xinjiang Uyghur Autonomous Region,\" and states that the outlet's social media content is popular among the Uyghur exile community, which shares the content with Uyghurs in Xinjiang. "], "subsections": []}, {"section_title": "Sanctions", "paragraphs": ["China is subject to some U.S. economic sanctions in response to its human rights conditions. The sanctions' effects have been limited, however, and arguably largely symbolic. Many sanctions imposed on China as a response to the 1989 Tiananmen crackdown (including restrictions on foreign aid, military and government exchanges, and export licenses) are no longer in effect. Remaining Tiananmen-related sanctions suspend Overseas Private Investment Corporation programs and restrict export licenses for U.S. Munitions List (USML) items and crime control equipment. ", "The United States also limits its support for international financial institution (IFI) lending to China for human rights reasons. For example, U.S. representatives to IFIs may by law support projects in Tibet only if they do not encourage the migration and settlement of non-Tibetans into Tibet or the transfer of Tibetan-owned properties to non-Tibetans, due in part to the potential for such activities to erode Tibetan culture and identity. Relatedly, China also has been subject to potential nonhumanitarian and nontrade-related foreign assistance restrictions as a result of its State Department designation as a \"Tier 3\" (worst) country for combating human trafficking in recent years."], "subsections": [{"section_title": "Sanctions on Individuals", "paragraphs": ["The Global Magnitsky Human Rights Accountability Act, enacted as part of the National Defense Authorization Act for FY2017 ( P.L. 114-328 , Subtitle F, Title XII), authorizes the President to impose both economic sanctions and visa denials or revocations against foreign individuals responsible for \"gross violations of internationally recognized human rights.\" The Trump Administration has thus far sanctioned one Chinese security official, Gao Yan, pursuant to the Global Magnitsky Act. According to the Treasury Department, Gao headed the Public Security Bureau branch in Beijing at which human rights activist Cao Shunli was held and denied medical treatment; Cao died in March 2014. The executive branch may also utilize Section 7031(c) of the Department of State, Foreign Operations, and Related Appropriations Act, 2019 (Division F of P.L. 116-6 ) or the broad authorities under Section 212 of the Immigration and Nationality Act (INA) to impose visa sanctions on individuals responsible for human rights abuses.", "Numerous human rights advocates and Members of Congress have called on the Trump Administration to sanction Chinese government officials responsible for the human rights abuses occurring in Xinjiang; many have argued for Global Magnitsky sanctions against XUAR Party Secretary Chen Quanguo, in particular. Press reports suggest the Trump Administration has been considering sanctions under the Global Magnitsky Act against Xinjiang officials, but has delayed actions in the midst of the U.S.-China bilateral trade negotiations. In October 2019, the State Department announced visa restrictions against an unspecified number of \"Chinese government and Communist Party officials who are believed to be responsible for, or complicit in, the detention or abuse of Uighurs, Kazakhs, or other members of Muslim minority groups\" in Xinjiang, and stated that the officials' family members may also be subject to visa restrictions."], "subsections": []}, {"section_title": "Designations and Actions Pursuant to the International Religious Freedom Act", "paragraphs": ["The International Religious Freedom Act of 1998 (IRFA, P.L. 105-292 ) mandates that the President produce an annual report on the status of religious freedom in countries around the world and identify \"countries of particular concern\" (CPCs) for \"particularly severe violations of religious freedom,\" and prescribes punitive actions in response to such violations. The law provides a menu of potential sanctions against CPCs, such as foreign assistance restrictions or loan prohibitions, but provides the executive branch with significant discretion in determining which, if any, actions to take.", "U.S. reports under IRFA have been consistently critical of China's religious freedom conditions, and the U.S. government has designated China as a CPC in each of its annual designation announcements since IRFA's enactment. Consistent with prior administrations, the Trump Administration has to date chosen not to take new actions against the Chinese government pursuant to IRFA and instead referred to existing, ongoing sanctions to satisfy the law's requirements. These existing sanctions relate to the above-mentioned restrictions on exports of crime control and detection equipment adopted following the Tiananmen crackdown."], "subsections": []}, {"section_title": "Visa Sanctions Pursuant to the Reciprocal Access to Tibet Act", "paragraphs": ["The Reciprocal Access to Tibet Act (RATA, P.L. 115-330 ), enacted in December 2018, requires that, absent a waiver by the Secretary of State, no individual determined to be \"substantially involved in the formulation or execution of policies related to access for foreigners to Tibetan areas\" may receive a visa or be admitted to the United States while PRC policies restricting foreigners' access to Tibetan areas of China remain in place. The State Department is to report to Congress annually for five years following RATA's enactment, identifying the individuals who had visas denied or revoked pursuant to the law, and, \"to the extent practicable,\" provide a broader list of the \"substantially involved\" individuals."], "subsections": []}, {"section_title": "Export Controls", "paragraphs": ["On October 7, 2019, the U.S. Department of Commerce announced that it would add 28 PRC entities to the Bureau of Industry and Security (BIS) \"entity list\" under the Export Administration Regulations (EAR), asserting that the entities \"have been implicated in human rights violations and abuses in the implementation of China's campaign of repression, mass arbitrary detention, and high-technology surveillance against Uighurs, Kazakhs, and other members of Muslim minority groups in the XUAR.\" The entities to be added include eight technology companies, the XUAR Public Security Bureau (PSB) and eighteen subordinate PSBs, and the PSB-affiliated Xinjiang Police College. The action imposes licensing requirements prior to the sale or transfer of U.S. items to these entities. For each entity, the Commerce Department indicated that there would be a presumption of license denial for all items subject to the EAR, with the exception of certain categories to be subject to a case-by-case review. ", "Secretary of Commerce Wilbur Ross stated that adding the entities would \"ensure that our technologies, fostered in an environment of individual liberty and free enterprise, are not used to repress defenseless minority populations.\" Previously, Members of Congress had written to Secretary Ross and other senior Administration officials urging them to expand the entity list \"to ensure that U.S. companies are not assisting, directly or indirectly, in creating the vast civilian surveillance or big-data predictive policing systems being used in [Xinjiang].\" Some observers believe the decision could result in significant adverse business impacts for some of the Chinese technology companies."], "subsections": []}]}, {"section_title": "Multilateral Diplomacy", "paragraphs": ["The United States also has engaged in multilateral diplomacy to advocate for improved human rights conditions in China. For example, in March 2016, the United States joined 11 other countries to deliver a joint statement at the United Nations Human Rights Council criticizing China's human rights record and calling on China to uphold its human rights commitments. ", "The Trump Administration has curtailed U.S. participation in some multilateral human rights organizations, most prominently by announcing the U.S. withdrawal from the UNHRC in June 2018, and arguably has placed less emphasis on multilateral diplomacy. The United States reportedly did not sign a 2018 joint letter by 15 foreign ambassadors in Beijing requesting a meeting with XUAR Party Secretary Chen Quanguo to raise concerns over human rights abuses in Xinjiang. On July 8, 2019, 22 nations issued a joint statement to the UNHRC president and the U.N. High Commissioner on Human Rights calling on China to \"refrain from the arbitrary detention and restrictions on freedom of movement of Uighurs, and other Muslim and minority communities in Xinjiang,\" and to \"allow meaningful access to Xinjiang for independent international observers.\" The statement, which was signed by numerous countries that are not current members of the UNHRC, was not signed by the United States. ", "The Trump Administration has sought some new venues through which to issue multilateral statements on certain PRC human rights issues, particularly on religious freedom. The State Department convened a Ministerial to Advance Religious Freedom in July 2018 and July 2019, with participation from foreign delegations and civil society leaders, and each time released a joint statement expressing concern over religious freedom conditions in China. The United States was joined in the 2019 statement by Canada, Kosovo, the Marshall Islands, and the United Kingdom. More broadly, the Administration is also working to establish an \"International Religious Freedom Alliance\" comprised of governments \"dedicated to confronting religious persecution around the world,\" presumably including in China.", "Despite its withdrawal from the UNHRC, the United States has also continued to participate in some Council activities in its capacity as a U.N. member state, such as the Universal Periodic Review (UPR) process, including China's most recent UPR. During China's review in November 2018, over one dozen countries, including the United States, raised questions and concerns about China's treatment of Tibetans, Uyghurs, and other minorities, as well as over freedom of religion in China. The United States made four recommendations, including for China to \"abolish all forms of arbitrary detention, including internment camps in Xinjiang, and immediately release the hundreds of thousands, possibly millions, of individuals detained in these camps.\" "], "subsections": []}]}]}]}}
{"id": "R45753", "title": "The Front End of the Nuclear Fuel Cycle: Current Issues", "released_date": "2019-07-29T00:00:00", "summary": ["Nuclear power contributes roughly 20% of the electrical generation in the United States. Uranium is the fundamental element in fuel used for nuclear power production. The nuclear fuel cycle is the cradle-to-grave life cycle from extracting uranium ore from the earth through power production in a nuclear reactor to permanent disposal of the resulting spent nuclear fuel.", "The front-end of the nuclear fuel cycle considers the portion of the nuclear fuel cycle leading up to electrical power production in a nuclear reactor. The front-end of the nuclear fuel cycle has four stages: mining and milling, conversion, enrichment, and fabrication. Mining and milling is the process of removing uranium ore from the earth, and physically and chemically processing the ore to develop \"yellow-cake\" uranium concentrate. Uranium conversion produces uranium hexafluoride, a gaseous form of uranium, from uranium concentrate. Uranium enrichment physically separates and concentrates the fissile isotope U-235. The enriched uranium used in nuclear power reactors is approximately 3%-5% U-235, while weapons-grade enriched uranium is greater than 90% U-235. Nuclear fuel fabrication involves manufacturing enriched uranium fuel rods and assemblies highly specific to a nuclear power reactor.", "Historically, the Atomic Energy Commission (AEC), a predecessor federal agency to the Department of Energy (DOE) and the Nuclear Regulatory Commission (NRC), promoted uranium production through federal procurement contracts between 1947 and 1971. Since the late 1980s, U.S. nuclear utilities and reactor operators have purchased increasingly more foreign-origin uranium for reactor fuel than domestically produced uranium. In 1987, about half of uranium used in domestic nuclear reactors was foreign origin. By 2018, however, 93% of uranium used in U.S. nuclear reactors was foreign origin. No uranium conversion facilities currently operate in the United States. There is one operational U.S. commercial uranium enrichment facility, which has the capacity to enrich approximately one-third of the country's annual reactor requirements. In addition to newly mined uranium, U.S. nuclear power reactors also rely on secondary sources of uranium materials. These sources include federal and commercial stockpiles, reenrichment of depleted uranium, excess feed from underfeeding during commercial enrichment, and downblending of higher enriched uranium.", "The global uranium market operates with multiple industries exchanging uranium products and services through separate, nondirect, and interrelated markets. Producers, suppliers, and utilities buy, sell, store, and transfer uranium materials. Nuclear utilities and reactor operators diversify fuel sources among primary and secondary supply, and may acquire uranium from multiple domestic and foreign suppliers and servicers. For example, a nuclear power utility in the United States may purchase uranium concentrate that has been mined and milled in Australia, converted in France, enriched in Germany, and fabricated into fuel in the United States.", "On January 16, 2018, two domestic uranium producers\u00e2\u0080\u0094representatives from the uranium mining/milling industry\u00e2\u0080\u0094petitioned the U.S. Department of Commerce to conduct a Section 232 investigation pursuant to the Trade Expansion Act of 1962 (19 U.S.C. \u00c2\u00a71862) to examine whether U.S. uranium imports pose a threat to national security. The department found that uranium imports into the United States posed a threat to national security as defined under Section 232. In a July 12, 2019, memorandum, President Trump announced he did not concur with the Department of Commerce's \"finding that uranium imports threaten to impair the national security of the United States as defined under section 232 of the Act.\"", "The Section 232 uranium investigation into uranium imports has increased the discussion about the nuclear fuel supply chain and potential future U.S. uranium needs. Included in the July 12, 2019, memorandum, the Trump Administration established a Nuclear Fuel Working Group, to assess the challenges facing the domestic uranium industry and to consider options to \"revive and expand the nuclear energy sector.\" Given uncertainties regarding the long-term viability of the domestic uranium production and commercial nuclear power sectors, continued issues associated with the front-end of the nuclear fuel cycle may persist."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["The United States has more nuclear power reactors than any country worldwide. The 98 operable nuclear generating units provide approximately 20% of the electrical generation in the United States. Uranium is the fundamental element used to fuel nuclear power production. The front-end of the nuclear fuel cycle comprises the industrial stages starting with uranium extraction from the earth and ending with power production in a nuclear reactor. Congressional interest in the front-end of the nuclear fuel cycle is associated with many factors, including (1) domestic uranium production and supply, (2) concerns about increasing reliance on uranium imports, and (3) the economic viability of U.S. nuclear power reactors.", "Historically, the U.S. Atomic Energy Commission (AEC), a predecessor federal agency to the Department of Energy (DOE) and the Nuclear Regulatory Commission (NRC), promoted uranium production in the United States through federal procurement contracts between 1947 and 1971. The majority of domestic uranium concentrate production prior to 1971 supported the development of nuclear weapons and naval propulsion reactors. After 1971, uranium mill operators produced uranium concentrate primarily for use in commercial nuclear power reactors. ", "By the late 1980s, nuclear utilities and reactor operators in the United States purchased more uranium from foreign suppliers than domestic producers. By 2017, 93% of the uranium purchased by U.S. nuclear utilities and reactor operators originated in a foreign country. Nuclear utilities and reactor operators diversify uranium supplies among multiple domestic and foreign sources, intending to minimize fuel costs. For example, a nuclear utility in the United States may purchase uranium concentrate that has been mined and milled in Australia, converted in France, enriched in Germany, and fabricated into fuel in the United States. ", "Examination of the current status of the front-end of the nuclear fuel cycle highlights broad policy questions about the federal government's role in sustaining or promoting nuclear fuel production in the United States. This report describes the front-end of the nuclear fuel cycle and the global uranium marketplace, analyzes domestic sources and imports of various types of uranium materials involved in the fuel cycle, and provides a discussion about the current issues. The back-end of the nuclear fuel cycle comprises the storage of spent nuclear fuel (SNF) after it is discharged from a nuclear reactor; however, issues associated with SNF storage and disposal are not discussed in this report. This report does not discuss potential environmental, public health, and proliferation issues associated with the front-end of the nuclear fuel cycle. "], "subsections": []}, {"section_title": "Front-End of the Nuclear Fuel Cycle", "paragraphs": ["The front-end of the nuclear fuel cycle is composed of four stages: ", "Uranium mining and milling is the process of removing uranium ore from the earth and physically and chemically processing the ore to develop \"yellowcake\" uranium concentrate. Uranium conversion produces uranium hexafluoride (UF 6 ), a gaseous form of uranium, from solid uranium concentrate. Uranium enrichment separates and concentrates the fissile isotope U-235 in the gaseous UF 6 form to produce enriched uranium capable of sustaining a nuclear chain reaction in a commercial nuclear power reactor. Uranium fuel f abrication involves producing uranium oxide pellets, which are subsequently loaded into reactor-specific fuel rods and assemblies, which in turn are loaded into a nuclear power reactor. "], "subsections": [{"section_title": "Primary Supply", "paragraphs": ["The nuclear fuel produced from processing newly mined uranium ore through fuel fabrication is referred to as primary supply . The stages from uranium mining through uranium fuel fabrication are described in the following sections."], "subsections": [{"section_title": "Stage 1: Mining and Milling\u00e2\u0080\u0094Production of Uranium Concentrate", "paragraphs": ["The front-end of the nuclear fuel cycle begins with mining uranium ore from the earth, through conventional (surface mining, open pits, underground) or nonconventional, in-situ recovery (ISR) methods. The type of extraction method employed depends on geology, ore body concentration, and economics. The majority of uranium resources in the United States are located in geological deposits in the Colorado plateau, Texas gulf coast region, and Wyoming basins. The United States has a relatively low quality and quantity of uranium reserves compared to the leading uranium-producing countries. For example, the Nuclear Energy Agency and the International Atomic Energy Agency rank the United States' reasonably assured uranium resources as 12 th worldwide. ", "Uranium milling involves physical and chemical processing of uranium ore to generate uranium concentrate (U 3 O 8 ), commonly called \"yellowcake\" uranium. Uranium milling operations crush and grind the mined ore, which is chemically dissolved with acid or alkaline solutions and subsequently concentrated. Milling operations produce a large quantity of waste material, termed tailings , relative to the amount of uranium concentrate produced. NRC estimates 2.4 pounds of yellowcake uranium oxide is produced from 2,000 pounds of uranium ore. The tailings, or waste material, generated by uranium milling operations prior to the 1970s were largely abandoned, exposing radioactive sand-like particles to be dispersed into the air, surface, and groundwater by natural erosion and human disturbances. The enactment of the Uranium Mill Tailings Radiation Control Act (UMTRCA; P.L. 95-604 ) authorized a remedial action program for cleanup of abandoned mill tailings prior to 1978 and authorized a regulatory framework to manage tailings generated at sites operating after 1978. In the United States, ISR methods have replaced conventional mining and milling by pumping acid or alkaline solutions through an underground ore body. After uranium in the ore is dissolved in solution, it is pumped to the surface and processed to produce uranium concentrate.", "In the first quarter of 2019, five ISR facilities are operating in the United States\u00e2\u0080\u0094all in Wyoming\u00e2\u0080\u0094with approximately 11.2 million pounds of annual production capacity, and one conventional uranium mill, located in Utah, in operation with an annual capacity of 6 million pounds of ore per day. Additionally, there are 13 million pounds of annual production capacity at 11 ISR operations permitted and licensed, partially permitted and licensed, developing, or on standby."], "subsections": []}, {"section_title": "Stage 2: Conversion\u00e2\u0080\u0094Production of Uranium Hexafluoride", "paragraphs": ["Uranium concentrate is shipped to a uranium conversion facility where UF 6 is chemically produced. At room temperature, UF 6 is a solid, and it transforms to a gas at higher temperatures. UF 6 is described as \"natural,\" as the isotopic composition has not been altered relative to the composition that exists in nature. According to the World Nuclear Association, there are six uranium conversion plants worldwide. The Honeywell plant in Metropolis, IL, is the only uranium conversion facility in the United States. It has not produced UF 6 since November 2017."], "subsections": []}, {"section_title": "Stage 3: Enrichment\u00e2\u0080\u0094Production of Enriched Uranium", "paragraphs": ["After uranium conversion, the UF 6 is feed material for uranium enrichment . Natural uranium has an isotopic composition of approximately 0.71% U-235, the fissile isotope of uranium. Civilian nuclear power fuel is generally enriched to 3%-5% U-235. Uranium enrichment in the United States was largely performed using a gaseous diffusion technology until 2013. Currently, one uranium enrichment plant, which employs gas centrifuge technology, operates in the United States. The gas centrifuge technology is described below. ", "Inflow UF 6 gas\u00e2\u0080\u0094referred to as the feed \u00e2\u0080\u0094enters a gas centrifuge. The centrifuge spins at high speeds and centrifugal forces drive the slightly more massive U-238 isotopes outward, while less massive U-235 isotopes concentrate near the center of the centrifuge. The process repeats many times in a cascade of centrifuges, gradually increasing the isotopic composition of U-235 from 0.71% to 3%-5%. During this process, the chemical composition remains as UF 6 , while the isotopic composition of UF 6 has been modified. The product stream is enriched uranium hexafluoride (enUF 6 ) and the waste stream\u00e2\u0080\u0094called the tails\u00e2\u0080\u0094is depleted uranium (DU). ", "The greater the difference in the isotopic composition of U-235 in the product and tails, the greater the energy requirements. Separative work units (SWUs) describe the energy required to enrich a given feed quantity to a given assay. Uranium enrichment yields a relatively higher mass of depleted uranium as the enriched uranium product."], "subsections": []}, {"section_title": "Stage 4: Fabrication\u00e2\u0080\u0094Production of Uranium Oxide, Fuel Rods, and Assemblies", "paragraphs": ["The final step in producing usable nuclear fuel involves fuel fabrication . At fabrication plants, enriched uranium is converted to uranium oxide (UO 2 ) powder and subsequently formed into small ceramic pellets. The pellets are loaded into cylindrical fuel rods and then combined to form fuel assemblies specific to a particular reactor. The fuel assemblies are loaded into the nuclear reactor for power production. The precise enrichment level and types of fuel rods and assemblies are specific to each reactor."], "subsections": []}]}, {"section_title": "Secondary Supply", "paragraphs": ["Secondary supplies describe uranium materials which may not have been directly processed through the front-end of the nuclear fuel cycle. Secondary supply may describe excess uranium from underfeeding during commercial enrichment, uranium materials held in commercial inventories, uranium held in the federal government's excess uranium inventory, and from the downblending of higher enriched uranium. According to DOE, secondary sources of uranium produced from reenrichment of depleted uranium and underfeeding represent the two largest sources of secondary supply in the market. A uranium market analyst estimated that all secondary supplies account for more than a quarter of total annual world uranium supply (48 million pounds U 3 O 8 equivalent) as of December 2018. The relative contribution of secondary uranium supplies may vary from year-to-year. "], "subsections": [{"section_title": "Underfeeding", "paragraphs": ["Uranium enrichment inherently involves a trade-off between energy requirements and quantity of product and tails produced. Enrichment operators aim to balance these requirements as the optimal tails assay. Under certain conditions, enrichment operators elect to underfeed , which generates tails with a lower assay relative to the optimal tails assay. Underfeeding allows the enrichment operator to supply the enriched uranium product at the assay desired, produce lower quantities of tails for storage and disposal, and use relatively less feed material. The trade-off is the higher energy requirement per enriched product. The excess feed material not enriched as a result of underfeeding is considered a secondary supply."], "subsections": []}, {"section_title": "Traders and Brokers", "paragraphs": ["Uranium traders and brokers buy, sell, and store various types of uranium materials and have no direct operational role in producing or consuming nuclear fuel cycle material. The decision to buy, hold, and sell uranium materials is dependent on market conditions. For example, in 2014 the Senate Committee on Homeland Security and Governmental Affairs examined the activities of banks and bank holding companies in physical markets for commodities, including an examination of Goldman Sachs' involvement with buying and selling physical uranium products. Goldman Sachs described its activities in the uranium market as \"buying uranium from mining companies, storing it, and providing the uranium to utilities when they wanted to process more fuel for their nuclear power plants.\" Goldman's physical uranium inventory valuation peaked in 2013 at $242 million, and the company planned on exiting the market by 2018 when their contracts with utilities had ended. The current status of Goldman's holdings is not publicly known, as uranium sales contracts are privately negotiated. EIA provides a list of uranium sellers to owners and operators of U.S. civilian nuclear power reactors, which may include companies involved with uranium operations at various stages of the front-end of the nuclear fuel cycle. "], "subsections": []}, {"section_title": "Commercial Inventories", "paragraphs": ["Nuclear utilities and reactor operators stockpile inventories of various types of uranium materials. The primary reasons to maintain stockpiles are economic considerations and to insulate their operations from potential supply chain disruptions. According to the U.S. Energy Information Administration (EIA), total uranium inventories for owners and operators of U.S. civilian nuclear power reactors more than doubled from 2002 to 2016 ( Figure 2 ). EIA tracked inventory quantities of specific uranium materials from 2007 to 2016. During that time, owners and operators of U.S. civilian nuclear power reactors increased inventories of uranium concentrate and enriched UF 6 by the largest relative margin. As of 2016, EIA reported the total uranium inventory for U.S. utilities was 128 million pounds U 3 O 8 (eq)."], "subsections": []}, {"section_title": "Excess Federal Uranium Inventory", "paragraphs": ["DOE maintains inventories of uranium both essential to, and excess to, national security missions. DOE maintains excess inventories of various types of uranium materials, which are sold on commercial markets to support cleanup services for former federal uranium enrichment facilities.", "Some have expressed concern that DOE's uranium transfers are depressing uranium prices by introducing federal uranium materials into an already oversupplied market. In 2015, the House Oversight and Government Reform Subcommittee on the Interior examined the impact of the sales of DOE's excess uranium inventory. The Government Accountability Office (GAO) raised concerns about the transparency of methodology used to determine uranium transfer quantities, and expressed legal concerns with some DOE uranium transfers from 2012 through 2013. The Secretary of Energy determines whether transfers of uranium will adversely affect the domestic production uranium industry. In FY2017, Secretary of Energy Rick Perry determined natural uranium hexafluoride transfer of up to 1,200 metric tons of uranium (MTU) per year would not cause adverse material impact on domestic uranium producers. ", "Explanatory language in the conference report accompanying the Energy and Water, Legislative Branch, and Military Construction and Veterans Affairs Appropriations Act, 2019 ( P.L. 115-244 , H.Rept. 115-929 ) directs DOE to end the uranium transfers and explains that $60 million above the budget request is appropriated in lieu of anticipated profits from those transfers. The DOE FY2020 budget request decreased funding requests for the Portsmouth cleanup by approximately $52 million, indicating DOE intends to resume uranium transfers in FY2020."], "subsections": []}]}]}, {"section_title": "Global Uranium Market and Fuel Supply Chains", "paragraphs": ["The uranium market operates with multiple industries exchanging uranium products and services through separate, nondirect, and interrelated markets. Producers, suppliers, and utilities buy, sell, store, and transfer uranium materials. For example, a contract may be established between a nuclear utility and a uranium producer for a given amount of uranium concentrate production over a certain number of years. The uranium producer generates uranium concentrate, which is shipped to a conversion facility. The utility contracts with a conversion facility to convert uranium concentrate to UF 6 . Finally, the utility may arrange a contract for uranium enrichment services.", "Uranium transactions occur through bilateral contractual agreements between buyers, sellers, and traders. Civilian nuclear power utilities purchase uranium through long-term multiyear contracts or through the spot market as a one-time purchase and delivery. For uranium materials delivered in 2018, roughly 84% were purchased through long-term contracts and about 16% through spot market purchases. ", "In the United States, utilities may simultaneously arrange contracts with multiple uranium producers or suppliers for a given number of years. For example, a U.S. nuclear power utility may decide to engage with a uranium producer in Canada, a uranium conversion facility in the United States, a uranium enrichment facility in Germany, and a uranium fuel fabricator in the United States ( Figure 3 ). That same utility may arrange another contract for uranium concentrate from Australia, uranium conversion in France, uranium enrichment in the Netherlands, and uranium fuel fabrication in the United States. At the same time, the utility may also decide to acquire uranium materials from a secondary supply source or through a trader or broker. Traders or brokers may not produce uranium products or services, but they buy, sell, and store materials to utilities and other suppliers. In this way, nuclear utilities and reactor operators may seek to diversify nuclear fuel sources between primary and secondary suppliers to avoid supply disruptions."], "subsections": [{"section_title": "Uranium Imports and Exports", "paragraphs": ["The U.S. International Trade Commission (ITC) categorizes imports and exports by the Harmonized Tariff Schedule (HTS). ITC reports uranium imports relevant to the nuclear fuel cycle in different HTS categories and subcategories (see Table 1 ). For this report, CRS provides data from only the top five importing or exporting countries from 1992 through January 2019. Other countries may have contributed lesser amounts of uranium imports or exports over that time period, but those data were not included in this report."], "subsections": []}]}, {"section_title": "Analysis of Uranium Supply to U.S. Nuclear Power Reactors", "paragraphs": ["Since the late 1980s, U.S. nuclear utilities and reactor operators have purchased increasingly more foreign-origin uranium for reactor fuel than domestically produced uranium. Historically, the AEC, a predecessor federal agency to DOE and NRC, promoted uranium production through federal procurement contracts between 1947 and 1971. After 1971, uranium mill operators produced uranium concentrate primarily for the production of civilian nuclear energy. In 1987, about half of uranium used in domestic nuclear reactors was foreign origin; by 2018, EIA reported 93% of uranium used in domestic nuclear reactors was foreign origin. ", "The DOE recognizes the term domestic as physical facilities operating within the United States, regardless of a foreign corporation ownership. Several domestic uranium producers, suppliers, enrichers, and utilities operating in the United States have foreign ownership or are subsidiaries of foreign corporations. On the other hand, DOE does not consider brokers and traders of already milled, converted, or enriched uranium as part of the domestic industry, as they are not associated with physical production of those materials. The term foreign is used to describe any non-U.S. based facility or material origin. ", "The following sections describe domestic uranium sources and foreign imports associated with the front-end of the nuclear fuel cycle by year and country. Uranium materials sourced from various countries may be associated with that country's natural resources, operational fuel cycle facilities, and trade agreements with the United States. For example, Australia, one of the largest exporters of uranium concentrate to the United States, has the largest reasonably assured uranium resources worldwide, but it does not have a commercial nuclear power plant in operation. On the other hand, some overseas producers may not have the geologic resources to mine and mill uranium concentrate, but they may operate conversion or enrichment operations. "], "subsections": [{"section_title": "Uranium Ores and Concentrates", "paragraphs": ["Uranium extraction worldwide has shifted away from conventional (underground or surface mining) to unconventional (ISR) methods. In 2016, ISR facilities produced about half of the annual global uranium concentrate. ISR methods are less capital-intensive operations relative to conventional mining methods, yet the uranium ore must be hosted within a geological formation suitable for extraction by ISR. ", "Preliminary data for domestic uranium concentrate production in the United States in 2018 totaled approximately 1.5 million pounds, the lowest domestic uranium concentrate production since the early 1950s. Domestic uranium concentrate production outlook remains low for 2019. EIA estimated the first-quarter domestic production of uranium concentrate was 58,000 pounds, approximately four times lower than any reported quarter since 1996. ", "Uranium ore and concentrates are imported into the United States from countries with considerable uranium production programs. According to the World Nuclear Association, the largest uranium-producing countries in the world in 2017 were, in order of uranium concentrate production: Kazakhstan, Canada, Australia, Namibia, Niger, Russia, Uzbekistan, China, the United States, and Ukraine. ", "Uranium concentrate imports are presented in Table 2 and Table 3 . As a practical matter, CRS combines \"uranium ore and concentrates\" ( Table 2 ) and \"natural uranium oxide\" ( Table 3 ) as similar materials produced from uranium mining and milling. In 2018, the United States imported the largest quantities of uranium concentrate from Canada and Australia at 4.2 million kg (11 million pounds U 3 O 8 (eq)) and 1.1 million kg (2.9 million pounds U 3 O 8 (eq)), respectively. ", "The United States does not currently have an operational uranium conversion facility to convert uranium concentrate to UF 6 . Consequently, uranium concentrate imported into the United States must be exported to a foreign country capable of conversion and enrichment services or stored in inventories."], "subsections": []}, {"section_title": "Uranium Hexafluoride", "paragraphs": ["The production of UF 6 is the second stage of the front-end of the nuclear fuel cycle. The United States currently has one commercial conversion facility, the Honeywell International, Inc. plant in Metropolis, IL. The facility suspended operations in 2018 due to \"a worldwide oversupply of uranium hexafluoride\" and is currently being maintained at a \"ready-idle\" status. With the Honeywell facility on standby, the United States does not have a domestic uranium conversion facility in operation. The Honeywell facility in Metropolis continues to be operated by ConverDyn Corporation as a warehouse and international trading platform for UF 6 and uranium concentrate. According to ConverDyn, 62 million pounds of UF 6 are stored at the facility as of 2018. According to the World Nuclear Association, the majority of commercial uranium conversion capacity is located in Canada, China, France, Russia, and the United States. ", "Since 1992, the United States' largest import source of UF 6 was from Canada (137 million kg). The next highest country providing UF 6 imports to the United States over that time period was the United Kingdom (5.6 million kg) ( Table 4 ).", "The export trade data for UF 6 provide additional insight into the international flow of UF 6 , which is feed material for commercial uranium enrichment. The ITC has two types of export classifications, Domestic Exports and Foreign Exports . These definitions are not the same as the definitions for these terms as interpreted by DOE and described previously.", "Domestic exports are \"goods that are grown, produced, or manufactured in the United States and commodities of foreign origin that have been changed in the United States, including changes made in a U.S. Foreign Trade Zone, from the form in which they were imported, or which have been enhanced in value by further processing or manufacturing in the United States.\" ( Table 5 ) Foreign Exports \"(re-exports) consist of commodities of foreign origin that have previously been admitted to U.S. Foreign Trade Zones or entered the United States for consumption, including entry into a CBP [U.S. Customs and Border Protection] bonded warehouse, and which, at the time of exportation, are in substantially the same condition as when imported.\" ( Table 6 )", "The incidence of domestic ex ports may demonstrate domestic uranium concentrate that has undergone uranium conversion in the United States prior to export. Another explanation is that the incidence of domestic ex ports may indicate foreign mined and milled uranium concentrate imported into the United States that was converted and exported.", "The incidence of foreign ex ports may indicate UF 6 imported into the United States that was reexported for enrichment services in a foreign country. This interpretation is consistent with the comments provided by ConverDyn, which stated that Honeywell operates as a \"global trading warehouse.\" Since 2010, UF 6 foreign exports have totaled roughly 32 million kg to four countries: Russia, Germany, Netherlands, and the United Kingdom."], "subsections": []}, {"section_title": "Enriched Uranium", "paragraphs": ["Historically, the federal government operated gaseous diffusion uranium enrichment facilities at Oak Ridge, TN, Paducah, KY, and Portsmouth, OH, which supplied enriched uranium for defense purposes during World War II and the Cold War. The federal government used uranium enrichment services at these sites to produce enriched uranium for private contracts to commercial nuclear power plants after 1967. As of 2019, these enrichment sites have ceased operations and are undergoing decontamination and decommissioning managed by DOE's Office of Environmental Management. DOE's estimated program life-cycle costs for decontamination and decommissioning collectively for the three sites range from $70.8 billion to $78.3 billion.", "As of 2019, the Urenco gas centrifuge uranium enrichment facility near Eunice, NM, is the only operational uranium enrichment facility in the United States. The Urenco facility has the capacity to supply approximately one-third of the annual requirements for U.S. reactors. Several other domestic uranium enrichment facilities began NRC licensing, though no enrichment facilities are proceeding with construction.", "According to the World Nuclear Association, the majority of commercial uranium enrichment services are performed in China, France, Germany, the Netherlands, Russia, the United Kingdom, and the United States. Smaller-capacity uranium enrichment plants are located in several other countries. Urenco operates uranium enrichment facilities in the United Kingdom, Germany, and the Netherlands.", "According to the ITC trade data, the top five countries exporting enriched UF 6 to the United States in 2018 were the Netherlands (785,046 kg), Germany (591,108 kg), Russia (547,768 kg), and the United Kingdom (461,187 kg) ( Table 7 ).", "Between 1993 and 2013, downblended Russian HEU supplied approximately half of the enriched uranium used in U.S. domestic reactors under the Russian HEU agreement, known as the Megatons to Megawatts program. This U.S.-Russian agreement provides for the purchase of 500 MT of downblended HEU from dismantled Russian nuclear weapons and excess stockpiles for commercial nuclear fuel in the United States. After the Megatons to Megawatts program expired in 2013, imports of enriched uranium from Russia decreased by approximately 50% ( Table 7 ). Today, the enriched uranium from Russia imported into the United States comes from mined and milled uranium concentrate, not from downblended uranium from weapons. The enriched uranium which is imported from Russia, or any other country, may have been mined and processed in various other countries, including material exported from the United States."], "subsections": []}, {"section_title": "Fuel Fabrication", "paragraphs": ["Three fuel fabrication facilities are located in the United States: (1) Global Nuclear Fuel Americas plant in Wilmington, NC, (2) Westinghouse Columbia Fuel Fabrication Facility in Columbia, SC, and (3) Framatome facility in Richland, WA. Fuel fabrication facilities are located in multiple countries, and may offer various services (conversion, pelletizing, rod/assembly) and capacity of those services."], "subsections": []}, {"section_title": "Uranium Purchases vs. Uranium Imports", "paragraphs": ["ITC data separates uranium material by the type and quantity that physically entered or exited the United States. ITC data does not estimate the amount of uranium materials purchased by utilities for a given year. ITC data does not infer the quantities of uranium materials used, stored, or processed by a nuclear utility and reactor operator. ITC data differs from the EIA data reporting, which may combine purchases by country for uranium concentrate, uranium hexafluoride, and enriched uranium as equivalents of U 3 O 8 . ", "The EIA data indicates the country of origin of uranium purchased by U.S. nuclear utilities and reactor operators. EIA data does not necessarily indicate that those materials were directly imported into the United States as a given uranium material from that country. ", "Comparing ITC and EIA data for the country of Kazakhstan provides some insight into the flow of uranium materials through the global nuclear fuel cycle. According to the World Nuclear Association, Kazakhstan has been the world's leading producer of uranium concentrate since 2009 and produced 21,700 tons of uranium in 2018.", "Between 2013 and 2017, uranium concentrate imports from Kazakhstan into the United States were 18% to 54% of the uranium purchases by U.S. nuclear utilities and reactor operators ( Figure 4 ). The difference between the uranium purchased by utilities and the uranium concentrate imported into the United States may represent some portion of the origin material which was converted, enriched, and/or stockpiled in other countries prior to being imported into the United States, in the same form or as a different uranium material. ", "For example, a portion of Kazakhstan uranium purchased by U.S. utilities may have been produced as uranium concentrate in Kazakhstan and subsequently transported to conversion facilities in France for the production of UF 6 . After conversion, the UF 6 may have been then transported to an enrichment facility in the Netherlands for the production of enriched UF 6 . Finally, the enriched UF 6 may have been imported into the United States for fuel fabrication and ultimately used in a U.S. nuclear reactor. This comparison of the reported EIA and ITC data with uranium purchases and imports from Kazakhstan illustrates how enriched UF 6 is imported from countries such as Germany, the United Kingdom, and the Netherlands, whereas U.S. nuclear utilities and reactor operators reportedly purchased no uranium originating from those countries. Uranium purchases and imports may vary from year to year."], "subsections": []}]}, {"section_title": "Current Issues", "paragraphs": ["On January 16, 2018, two U.S. domestic uranium mining companies petitioned the U.S. Department of Commerce (DOC) to investigate whether uranium imports from foreign state-owned enterprises, such as those in Russia, China, and Kazakhstan, pose a threat to national security. The investigation into uranium import restrictions sparked a debate between uranium producers; uranium mine and mill operators; and nuclear utilities, reactor operators, and suppliers. Uranium producers asserted that a heavy reliance on foreign uranium constitutes a national security risk and threatens the viability of domestic uranium production. Conversely, nuclear utilities and reactor operators contended that increased fuel costs from trade restrictions would place additional financial burdens on nuclear utilities, potentially causing the premature shutdown of economically marginal nuclear power plants.", "Stakeholders on both sides of the debate generally agreed that the proposed quotas would increase fuel costs for nuclear utilities and increase revenues for domestic uranium mining. For example, a report sponsored by the Nuclear Energy Institute (NEI) concluded that a 25% quota could increase fuel costs by $500 million to $800 million annually and potentially higher in the years immediately following implementation. An economic study funded by the petitioners estimated uranium mining revenues from a 25% quota would increase by $551 million to $690 million per year and would increase fuel costs by $0.41 per megawatt-hour (MWh). Another study estimated that the $0.41 per MWh increase in fuel costs for nuclear generators would translate to approximately $317 million per year.", "The uranium Section 232 investigation also raised policy questions about Congress's role under Section 232. Under current federal law, trade actions imposed by the President under Section 232 do not require congressional approval apart from actions related to petroleum imports."], "subsections": [{"section_title": "Section 232 Investigation\u00e2\u0080\u0094Uranium Imports", "paragraphs": ["Section 232 of the Trade Expansion Act of 1962 (19 U.S.C. \u00c2\u00a71862) provides the President with the ability to impose restrictions on certain imports based on an affirmative determination by DOC that the product under investigation \"is being imported into the United States in such quantities or under such circumstances as to threaten to impair the national security.\" The industry petition called for the President to enact a quota, pursuant to Section 232, on uranium imports such that \"25% of the average historical consumption will be reserved for newly produced U.S. uranium.\" On July 18, 2018, DOC began an investigation into uranium imports under Section 232. The Department of Commerce's Bureau of Industry and Security (BIS) accepted public comments until September 10, 2018.", "The statute establishes a process and timelines for a Section 232 investigation, but does not provide a clear definition of \"national security,\" allowing the executive branch to use a broad interpretation, and the potential scope of any investigation can be expansive. DOC submitted a report to the President on April 14, 2019. The report has not been made public. "], "subsections": []}, {"section_title": "Presidential Determination", "paragraphs": ["According to a presidential memorandum released by the Trump Administration on July 12, 2019, DOC determined \"uranium is being imported into the United States in such quantities and under such circumstances as to threaten to impair the national security of the United States as defined under section 232 of the Act.\" The President did not concur with DOC findings that \"uranium imports threaten to impair the national security of the United States as defined under section 232 of the Act.\" ", "However, the President expressed significant concerns regarding national security, calling for a \"fuller analysis of national security considerations with respect to the entire nuclear fuel supply chain....\" The memorandum established a Nuclear Fuel Working Group, cochaired by the Assistant to the President for National Security Affairs and the Assistant to the President for Economic Policy, which will also include representatives from other executive branch agencies. The working group will \"examine the current state of domestic nuclear fuel production to reinvigorate the entire nuclear fuel supply chain,\" and provide a report to the President within 90 days of the memorandum.", "The Department of Commerce conducted a Section 232 investigation for uranium imports in 1988. The investigation was initiated at a time when U.S. utilities imported 37.5% of the actual or projected domestic uranium requirements from foreign sources for two consecutive years. No trade actions were imposed as a result of that investigation."], "subsections": [{"section_title": "Concerns of Uranium Producers and Local Communities", "paragraphs": ["Trade restrictions on uranium imports were generally supported by domestic uranium producers, national and state mining associations, and other companies associated with uranium production. Some elected officials, including the U.S. Senators from Wyoming, one of the largest uranium-producing states, supported trade actions on uranium imports. The Section 232 petition asserts that the long-term viability of the domestic uranium production industry is threatened by unfair market practices by foreign state-owned enterprises. Supporters of the petition anticipate trade quotas would provide domestic uranium producers relief by increasing the price of uranium, and subsequently increasing domestic uranium production. According to advocates of this approach, increased uranium prices and production may offer direct and indirect employment opportunities and economic stimulus to local economies. ", "The Wyoming Mining Association (WMA) offered support to uranium import actions in its comment letter:", "WMA believes the petition sets forth a compelling case that the current state of the domestic uranium mining industry is not simply a result of foreign competition legitimately underpricing domestic producers. It now is clear that foreign, state-mandated and state-supported uranium production is thwarting our domestic industry's ability to compete in an oversupplied and underpriced market.", "One of the domestic uranium producers who submitted the Section 232 petition to DOC expressed concern with the President's determination to not take actions on uranium imports. An Energy Fuels statement also suggests that the petition \"has been very successful.\" The company further stated, \"We are very pleased to have gained the attention and action of the Administration to address the energy and national security issues raised in the petition and Department of Commerce investigation.\"", "Another U.S. uranium producer, Cameco, agreed with the President's determination to not take actions on uranium imports under Section 232. Cameco has uranium assets in the United States, Canada, and Kazakhstan. Cameco operates the largest operational uranium recovery capacity in the United States, the Smith Ranch-Highland ISR operation in Wyoming. "], "subsections": []}, {"section_title": "Concerns of Nuclear Utilities and Reactor Operators and Suppliers", "paragraphs": ["Representatives from nuclear utilities and reactor operators, industry trade groups, think tanks, converters, enrichers, and foreign governments opposed the trade actions on uranium imports proposed by the petitioners. Nuclear utilities and reactor operators asserted that quotas on uranium imports may increase fuel costs, causing financially vulnerable nuclear reactors to shut down earlier than currently planned. The Ad Hoc Utilities Group (AHUG), collectively representing U.S. nuclear generators, asserted, \"Imports assure the security of nuclear fuel supply and the reliability of the electric grid. Nuclear generators source from a diverse set of suppliers at all stages of the nuclear fuel cycle with the majority of supply coming from the U.S. and our allies in Canada, Australia, and Western Europe.\" ", "Operators of U.S. conversion and enrichment facilities in the United States publicly expressed concern with uranium import quotas. Malcolm Critchley, the marketing agent for ConverDyn, stated that quotas \"would undoubtedly cause suppliers to divert uranium [from Honeywell].... to other locations outside of the United States if the supplier did not have a known domestic customer at the time of import.\" ", "U.S. uranium enrichers shared these concerns. Melissa Mann, the president of Urenco USA\u00e2\u0080\u0094the only uranium enrichment operation in the United States\u00e2\u0080\u0094noted that with the ceased operations at Honeywell and the Department of Energy termination of its barter program, \"there is currently no source of natural UF 6 in the United States.\" Urenco receives deliveries of UF 6 from Cameco's Port Hope facility in Canada and Orano's Comhurex II in France. She cautioned, \"Should remedies in the uranium Section 232 investigation be imposed that disrupt deliveries of UF 6 to [New Mexico], operation of the facility\u00e2\u0080\u0094and the $5 billion investment in the plant\u00e2\u0080\u0094could be jeopardized,\" and \"the lack of feed material to enrich would also jeopardize delivery of low enriched uranium to fuel fabricators, putting at risk utility reactor reload schedules and reactor operations.\"", "Some utilities have dismissed claims about the dependence on foreign-sourced uranium and vulnerability to supply chain disruptions. For example, Dominion Energy noted that concerns with foreign supply disruptions were exaggerated because \"in the past five years, our only delays or interruptions in nuclear fuel component deliveries have been from U.S. based fuel cycle suppliers.\""], "subsections": []}]}, {"section_title": "Legislation and Congressional Oversight", "paragraphs": ["In March 2018, the Trump Administration imposed tariffs on foreign imports of steel and aluminum pursuant to Section 232. This was the first implementation of trade actions under Section 232 since 1986. Some Members of Congress have questioned whether the Administration's use of Section 232 on steel and aluminum imports is an appropriate use of the trade statute and relies upon broad interpretations of the definition of national security. Bills have been introduced in both chambers ( H.R. 1008 and S. 365 ) in the 116 th Congress that would amend Section 232 to provide for congressional disapproval of certain trade actions with the enactment of a disapproval resolution. ", "The uranium Section 232 investigation was discussed in a September 6, 2018, hearing by the Senate Appropriations Committee, Subcommittee on Commerce, Justice, Science, and Related Agencies. At that hearing, Richard Ashooh, Commerce Assistant Secretary for Export Administration at BIS, suggested that the uranium investigation had prompted the agency to consider \"creative ideas\" outside of using import restrictions. ", "On February 5, 2019, the House Committee on Natural Resources requested from the uranium producers that had submitted the petition to the Department of Commerce, \"All documents and communications ... relating to the Department of Commerce Section 232 Investigation on uranium.\""], "subsections": []}]}, {"section_title": "Policy Considerations", "paragraphs": ["As a broad policy matter, Congress may consider the federal role in issues associated with the front-end of the nuclear fuel cycle. The uranium materials and service industry delivers fuel for commercial nuclear power reactors, which is largely traded and purchased under private contracts in a global marketplace. Similar to other energy markets, uranium supply is an issue on which Congress may or may not elect to intervene.", "As discussed previously, the United States ceased production of HEU for weapons in 1964, due to the determination of sufficient stockpiles. Fuel for nuclear naval propulsion is supplied by government HEU stockpiles, and the production of HEU for naval propulsion ended by 1992. Questions about the sufficiency of the defense uranium stockpile and future uranium requirements for defense and other purposes are beyond the scope of this report."], "subsections": [{"section_title": "Domestic Uranium Production Viability", "paragraphs": ["The financial viability in the short term and long term for domestic uranium producers\u00e2\u0080\u0094uranium miners and millers\u00e2\u0080\u0094in the United States remains uncertain. Domestic uranium production experienced a sharp decline during the early 1980s, and has remained at comparatively low levels over the past 25 years. ", "Recently, global demand for uranium has been depressed due to a number of factors, including the continued shutdown of most Japanese nuclear power reactors following the Fukushima Daiichi accident. In 2018, domestic uranium concentrate production was 1.5 million pounds, down approximately 40% from 2017, and at the lowest annual production levels since 1950. U.S. uranium producers have dealt with poor market conditions by decreasing production and imposing employment layoffs. Domestic uranium producers have reportedly engaged in purchasing uranium concentrate on the market at lower spot market prices to fill delivery obligations at relatively higher contract prices. States have proposed legislation intended to provide some financial relief for domestic uranium producers. "], "subsections": []}, {"section_title": "Nuclear Power Viability", "paragraphs": ["U.S. nuclear power plants face economic issues and a general uncertainty over their long-term economic viability. Of the 98 operating nuclear reactors, 12 are scheduled to shut down, prior to license expiration, by 2025. The Plant Vogtle nuclear expansion project in Georgia, currently the only new construction of nuclear power reactors in the United States, is reportedly billions of dollars over budget and years behind schedule. A 2018 report by the Union of Concerned Scientists asserts that roughly one-third of nuclear power plants are unprofitable and modest changes in costs may have profound impacts on other nuclear power plants' economic viability. "], "subsections": []}, {"section_title": "Tribes and Environmental Considerations", "paragraphs": ["Some Native American tribes and public interest groups in the United States opposed trade actions on uranium imports due to concerns that uranium import restrictions would promote increased domestic uranium mining and milling operations. These groups suggested the health and environmental issues associated with historical uranium mining and milling have not been adequately addressed. Persistent soil, surface and groundwater contamination associated with historical uranium mining and milling remains a concern for some communities. For example, federal, state, and tribal agencies manage environment impacts associated with historical uranium mining and milling operations that occurred on Navajo Nation lands.", "Given environmental impacts associated with historical domestic uranium mining and milling operations, Congress may consider examining potential long-term environmental or public health consequences of expanding domestic uranium production and the adequacy of bonding and long-term financial assurance requirements for current or future uranium production operations undergoing site reclamation and decommissioning."], "subsections": []}]}]}}
{"id": "R45942", "title": "Issues in the Reauthorization of Amtrak", "released_date": "2019-10-04T00:00:00", "summary": ["Amtrak\u00e2\u0080\u0094officially the National Railroad Passenger Corporation\u00e2\u0080\u0094has been the national intercity passenger railroad since 1971, and currently serves over 500 stations on a network approximately 22,000 miles long. In some markets, such as the busy Northeast Corridor (NEC) connecting Washington, New York, and Boston, it has captured a greater share of intercity passengers than domestic airlines. In other, more rural markets, some see it as a vital link to the national transportation system despite low levels of ridership. Though Amtrak is legally a private for-profit corporation, the federal government controls the company's operations. A five-year authorization of federal funding for Amtrak was included in the Fixing America's Surface Transportation (FAST) Act of 2015 ( P.L. 114-94 ), which expires at the end of FY2020.", "Since its inception, Amtrak has depended on annual appropriations from the federal government to cover its capital (infrastructure, vehicles) and operating (train crews, maintenance) costs. Amtrak's financial health has improved in recent years. In 2018, according to the railroad, revenue covered 79% of its expenses, the highest ratio it has ever reported. Amtrak's preferred metric for financial performance, its adjusted operating loss, declined to $168 million, but this figure does not take its capital needs into account. Increased contributions from commuter railroads that use the NEC have played an important role in reducing the need for federal support. Amtrak's ridership continues to increase, as does its relative share of passenger miles traveled, though both remain small on a national scale when compared to road and air traffic.", "Despite these improvements, a large backlog of capital projects remains unfunded, and Amtrak remains under pressure to further reduce its need for operating subsidies. Capacity constraints will make further ridership increases difficult to achieve without capital expenditures for additional equipment and track improvements.", "The Amtrak system is divided into two subsets for funding purposes, the NEC and the National Network (everything else), each facing its own set of challenges. Congress may want to explore opportunities to further differentiate these systems in terms of how they are funded and managed. Comparatively high revenues on the NEC compared to operating costs have prompted occasional proposals to either partially or fully privatize the existing service, while its large capital backlog and lack of a long-term dedicated funding source have raised questions about whether a new NEC-only funding mechanism is needed. The National Network, meanwhile, encompasses both short-distance corridors supported by state governments and long-distance routes that require the largest federal subsidies in the Amtrak system. Amtrak is under pressure to accomplish two goals that at times seem to work against one another: to serve as the national passenger railroad, including through the operation of long-distance routes, and to reduce or eliminate the need for federal subsidies. While Congress has repeatedly taken steps to preserve long-distance passenger trains, both the Trump Administration and Amtrak have voiced support for shifting focus away from long-distance trains and toward serving a larger number of shorter corridors. Any such rebalancing, however, would be contingent on state support that is far from certain.", "Apart from funding, other issues facing Amtrak have been on the congressional agenda for years. On-time performance has seen only sporadic improvement since the enactment of a 2008 law designed to enforce the preferential treatment, codified in statute since the 1970s, of Amtrak trains running on freight tracks. Onboard food and beverage service, long seen by critics as a contributor to financial losses but by supporters as integral to the rail travel experience, has mirrored Amtrak as a whole in improving its financial performance while still falling short of goals set by Congress. Installation of a key safety technology mandated in 2008 is continuing according to federally approved schedules, but Amtrak routes that operate on track owned by freight or commuter railroads face the additional hurdle of demonstrating interoperability with those railroads' safety systems, putting the timeline to full implementation at risk."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Background and Context", "paragraphs": ["Amtrak\u00e2\u0080\u0094legally the National Railroad Passenger Corporation\u00e2\u0080\u0094was created by the Rail Passenger Service Act of 1970 and began operating in 1971, taking over intercity passenger service from financially distressed private railroad companies. It originally did not own any rail infrastructure, eventually coming to own some assets cast off by bankrupt private railroads. It is operated as a private company and not a government corporation, but the President appoints the members of its Board of Directors and its primary stockholder is the U.S. Department of Transportation (DOT), with a small proportion of common stock held by other railroad companies. Amtrak currently serves over 500 stations in 46 states and the District of Columbia, running over 300 trains per day on a network approximately 22,000 miles long ( Figure 1 ). ", "Since 2008, Amtrak services have been grouped into three business lines: (1) the Washington-New York-Boston Northeast Corridor (NEC), (2) short-distance corridors under 750 miles long with service supported by state governments, and (3) long-distance trains serving destinations over 750 miles apart, usually once per day on an overnight schedule. Under the Fixing America's Surface Transportation (FAST) Act of 2015 ( P.L. 114-94 ), the state-supported short-distance and long-distance routes were grouped together into the National Network. Amtrak's Thruway network of over 150 intercity bus routes serves as a feeder service for passenger trips originating or terminating in cities off the rail system. ", "Over 31 million trips were taken on Amtrak in 2018, a company record. Amtrak system ridership has exceeded 30 million trips every year since 2011, and has increased 26% over the last 15 years, with much of that growth coming on Amtrak's state-supported short-distance corridors ( Figure 2 ). Approximately 48% of all Amtrak trips were taken on state-supported routes in 2018, compared with 38% on the Northeast Corridor and the remaining 14% on long-distance trains. State-supported routes have accounted for the plurality of Amtrak trips among its three business lines every year since 2005. One contributing factor to the growth of state-supported route traffic over that period is that Amtrak and its state partners have added new routes and additional daily trains.", "Despite record ridership levels, Amtrak trains are roughly as full as they have been at any point in the past decade (see discussion of load factor below), and Amtrak passengers account for a small fraction of intercity passenger travel volume nationwide. In 2017, the most recent year for which such data are available, Amtrak generated 6.5 billion passenger-miles (one passenger-mile is equal to one passenger traveling one mile) of traffic volume; by comparison, domestic air travel generated 694 billion passenger-miles, over 100 times as many as Amtrak. Highway users generated an estimated 5.5 trillion passenger-miles in 2017, including 365 billion on buses, though this includes trips that are not intercity in nature. However, Amtrak passenger-miles have seen a greater cumulative percent increase since 2004 than highway passenger-miles, and saw a greater cumulative percent increase than domestic air passenger-miles from 2008 to 2015 before being overtaken in 2016 ( Figure 3 ). Though Amtrak ridership has been steady or rising in terms of trips taken, Amtrak passenger-miles have declined somewhat since 2013, suggesting an increase in shorter trips. The NEC is the only market in which Amtrak serves a larger proportion of intercity trips than airlines, with both lagging far behind highway travel. Lack of equipment and track capacity have inhibited Amtrak from increasing service on the NEC."], "subsections": []}, {"section_title": "Amtrak's Finances5", "paragraphs": ["Amtrak's expenses exceed its revenues each year. In FY2018, Amtrak's revenues totaled $3.2 billion, against expenses of $4.1 billion, for a net loss of $868 million. That loss was covered by federal grants made to Amtrak by DOT (see the discussion of funding issues later in this report). Revenues covered 79% of the railroad's total expenses in FY2018, the highest ratio over the 15 years for which comparable data are available (see Figure 4 and Table 1 ).", "Under pressure from Congress and several Administrations, Amtrak has reduced\u00e2\u0080\u0094but not eliminated\u00e2\u0080\u0094its reliance on federal subsidies to support its operations. Amtrak had net losses of roughly $900 million in each of FY2017 and FY2018, the first two years in the past 15 in which net losses were less than $1 billion. One important reason for this improvement is a doubling of revenue from commuter railroads using the NEC from pre-2016 to post-2016, due to higher payments required under the cost allocation policy established by Section 212 of the Passenger Rail Investment and Improvement Act of 2008 (PRIIA; Division B of P.L. 110-432 ) and enforceable by the Surface Transportation Board (STB) under Section 11305 of the FAST Act.", "By Amtrak's preferred metric, which adjusts the net loss by removing depreciation and certain other expenses, annual operating losses have been reduced to a figure smaller than $250 million in each of the past five fiscal years; this figure was over twice as large in nominal terms in the years prior to 2007 ( Figure 5 ). The effect is more dramatic when taking the effects of inflation into account; in constant 2019 dollars, the figure was four times as large in 2007 as it was in 2018. This metric, dubbed the a djusted o perating r esult , is seen by Amtrak as more closely reflecting the need for federal operating support, but it does not take the railroad's capital investment needs into account.", "By another measure, which allocates costs and revenues to each available seat-mile of passenger capacity offered, Amtrak has recovered at least 96% of operating costs every year since 2014, up from below 80% in the preceding years ( Figure 6 ). One contributing factor to this improved financial performance is likely the requirement, contained in PRIIA, that operating losses on short-distance routes located off the NEC be offset by state funds, effective on the first day of FY2014.", "One measure of efficiency is the passenger load factor, which measures what percentage of the available seats is being used by passengers. Amtrak's load factor has varied within a fairly narrow band since 2004. Its current load factor, 51%, is near the record load factor Amtrak reported in FY1988. Load factor varies across Amtrak's three business lines, with NEC and Long Distance trains at 58% and 57%, respectively, in FY2018, while state-supported routes lagged at 40%.", "Improving load factor is one way of boosting revenue without increasing costs, but this can be difficult if passenger traffic is not distributed evenly along a route. Routes on which one station generates a large share of originating and terminating traffic are likely to have relatively low load factors in some segments but higher load factors in the \"peak segment.\" For example, if a train on the NEC is sold out between Philadelphia and New York, Amtrak may not be able to accommodate passengers who wish to travel between Baltimore and New York, resulting in empty seats between Baltimore and Philadelphia. If Amtrak were to accommodate these riders with additional cars, this could reduce load factor even as it increases ridership."], "subsections": []}, {"section_title": "Funding Issues", "paragraphs": ["As discussed above, Amtrak has never generated sufficient revenue to cover its operating and capital expenses. The Administration requests funding for Amtrak each year as part of its DOT budget request. Amtrak also submits a separate appropriation request to Congress each year; typically, that request is larger than the Administration's request. Table 2 shows the difference in the requests submitted for FY2020.", "Congress addresses Amtrak's subsidy in the annual Transportation, Housing and Urban Development, and Related Agencies Appropriations Act. For most of Amtrak's existence, Congress has divided Amtrak's grant into two categories, operating and capital grants. The operating grant could be thought of as relating to Amtrak's annual cash loss, and the capital grant as relating to the depreciation of Amtrak's assets, as well as an amount for Amtrak debt repayments. ", "Congress changed the structure of federal grants to Amtrak in Title XI of the FAST Act. Starting in FY2017, Amtrak's appropriation has been divided between funding for the operationally self-sufficient NEC, which has large capital needs, and the National Network, which has modest capital needs (as the tracks are almost entirely owned and maintained by freight railroads) but runs an operating deficit of several hundred million dollars. The change was intended to increase transparency of the costs of Amtrak's two major lines of business and eliminate cross-subsidization between them; operating profits from the NEC and state access payments for use of the NEC will be reinvested in that corridor, and passenger revenue, state payments, and federal grants for the National Network will be used for that account.", "Amtrak's reliance on annual appropriations has made it difficult to fund long-term capital projects. DOT's Inspector General has noted that the lack of long-term funding \"has significantly affected Amtrak's ability to maintain safe and reliable infrastructure and equipment, and increased its capital program's annual cost.\" Amtrak's FY2020 budget request suggests a multiyear appropriation to provide some additional stability without fundamentally altering the mechanism by which Amtrak receives its federal funding.", "Most federal funding for highway and transit programs is provided by a special form of budget authority, contract authority, which allows DOT to obligate funds from the Highway Trust Fund in advance of an appropriation. This permits DOT to commit to support highway projects that may take several years to complete. There have been proposals to create a similar trust fund for Amtrak, in order to provide a greater level of financial stability and permit such long-term funding of capital projects. Such efforts have faced objections from some Members of Congress opposed to Amtrak receiving federal funding. There is also a practical challenge to identifying a revenue source for an Amtrak trust fund. The Highway Trust Fund, which receives revenue from taxes on motor fuels and heavy trucks, is not authorized to spend money on intercity rail services; in any event, the revenues flowing into the fund are far below the level required to support the levels of federal highway and transit spending authorized by Congress, necessitating several transfers of money from the general fund since 2008. If a passenger rail trust fund were to be funded solely from a tax on passengers, the cost of Amtrak tickets could rise by several dollars per ticket at current ridership levels, potentially contravening the purpose of the fund by reducing ridership."], "subsections": []}, {"section_title": "Issues for Congress", "paragraphs": [], "subsections": [{"section_title": "Maintaining and Improving the Northeast Corridor", "paragraphs": ["Amtrak has stated that there is a $28.1 billion backlog of state-of-good-repair projects on the NEC, which Amtrak revenue alone is unable to fund, and which does not include capital projects deemed necessary to increase capacity. It seems unlikely that private investors would be prepared to provide that funding in exchange for a share of the operating profits generated by NEC passenger trains. The obstacles facing such an investor would be largely the same as the ones currently facing Amtrak: operating profits are insufficient to cover capital costs, and the ability to increase revenue by running additional trains into Penn Station in New York City, by far the most popular origin and destination point on the NEC, will be limited until and unless major capital improvements not included within the state-of-good-repair backlog, including a new tunnel under the Hudson River, are completed. The fragmented control of NEC infrastructure, some of which is owned by state governments, would persist even if Amtrak's assets in the corridor were operated by some private entity. A provision of the FAST Act required the Federal Railroad Administration (FRA) to solicit proposals to design, build, operate, and maintain high-speed rail systems on federally designated high-speed rail corridors, including the NEC. No such proposal was submitted for the NEC.", "Plans to create a separate entity to own and/or operate the NEC, including as part of larger plans to reorganize or privatize the entire passenger rail system, have been proposed but have never been adopted in full. In 2002, the Amtrak Reform Council submitted its recommendations to Congress for a \"restructured and rationalized national intercity rail passenger system\" as required by the Amtrak Reform and Accountability Act of 1997. Among other measures, the council endorsed organizing NEC infrastructure assets under a separate government corporation that would control the assets and manage rail operations and capital improvements. The council admitted in its recommendations that this new infrastructure company would not be able to fund its own capital needs, and endorsed continued federal funding in addition to funds committed by the states. A similar suggestion, which was known as the Competition for Intercity Passenger Rail in America Act, was proposed in 2011 by the leadership of the House Committee on Transportation and Infrastructure but never introduced. ", "Some proposals have called for a dedicated funding source, backed by taxes or fees within the region served by the NEC. The thinking behind this is that restructuring of the NEC would be more attractive politically if it were dependent mainly on revenue raised within the region rather than on federal government resources. As the NEC passes through eight states and the District of Columbia, creation of a dedicated regional funding source is likely to require some form of interstate agreement, with each state concerned that its contribution is commensurate with the benefits it expects to receive."], "subsections": []}, {"section_title": "The Future of the National Network", "paragraphs": ["Critics of Amtrak have often questioned the necessity of continuing to operate long-distance trains, which usually require the largest operating subsidies, both in total dollars and in dollars per trip or per passenger-mile. Proponents of passenger rail have contended that these operating losses are distorted by Amtrak accounting practices, pointing to the allocation of fixed costs to individual routes and the differing treatment of state and federal grant funds. Amtrak has responded that its accounting practices, based on a performance tracking system developed by DOT's Volpe Transportation Systems Center in conjunction with the Federal Railroad Administration (FRA) and Amtrak, accurately allocate costs among its various routes. Amtrak points out, for example, that while its California Zephyr between Chicago and Emeryville, CA, has greater revenue per trip than an average Northeast Regional train on the NEC, the long-distance train requires nine times as many employees, twice as much equipment, and more switching operations in rail yards for every trip. Amtrak has proposed shifting its focus from maintaining existing levels of service on all 15 long-distance routes currently in the Amtrak system to shorter corridors that would be supported by the states. ", "Amtrak is under pressure to accomplish two goals that at times seem to work against one another: to serve as the national passenger railroad, including through the operation of long-distance routes, and to reduce or eliminate the need for federal subsidies. Federal law provides that \"Amtrak shall operate a national rail passenger transportation system which ties together existing and emergent regional rail passenger service and other intermodal passenger service.\" The phrase \"national rail passenger transportation system\" is defined to include \"long-distance routes of more than 750 miles between endpoints operated by Amtrak as of the date of enactment of the Passenger Rail Investment and Improvement Act of 2008.\" However, Amtrak also has statutory power to discontinue routes, notwithstanding the above provisions. ", "In its FY2020 budget request, the Trump Administration proposed a reduction in annual appropriations to the National Network, with the expectation that either states would support continued operation of long-distance routes or Amtrak would discontinue them. The Administration proposed to offset this reduction with a $550 million appropriation to a new Restoration and Enhancements discretionary grant program, which would allow states to gradually ramp up to their full contributions, with a federal subsidy decreasing each year over a five-year period.", "In its own FY2020 budget request, Amtrak requested an appropriation equal to the full $1.8 billion authorization contained in the FAST Act, but stated some support for changing the way the National Network is funded in the future (emphasis added):", "Amtrak appreciates the Administration's focus on expanding intercity passenger rail service to today's many underserved cities and corridors across the nation. We believe that a modernization of the National Network, with the right level of dedicated and enhanced federal funding , would allow Amtrak to serve more passengers efficiently while preserving our ability to maintain appropriate Long Distance routes.", "Removing federal support for long-distance service could create a circumstance in which, if one state along the route declined to contribute to its operating costs, Amtrak might be left with little recourse other than to discontinue the route. Proponents of continued long-distance train service point to the large proportion of trips taken on long-distance trains between origins and destinations other than the endpoints, and to the trains' relatively high load factor (57% in FY2018) compared to other Amtrak routes (58% on the NEC, 40% on state-supported routes), an indicator of efficient utilization of passenger space. However, depending on the number of cars in each train, this could conceal an inefficient utilization of engines and engineers, as a short train may require the same crew as a longer one no matter how many passengers are aboard.", "Existing state-supported routes could also face service cuts due to a lack of state support. The Chicago-Indianapolis Hoosier State route was created in 1980 to provide service on days when the thrice-weekly Cardinal long-distance train did not operate. When PRIIA Section 209 went into effect at the beginning of FY2014, requiring the state of Indiana to cover all operating losses associated with the route, state political support began to wane, and the route was threatened with discontinuance. Under a different section of PRIIA, the state contracted with a private railroad company to operate the route, but that company withdrew from the agreement before the base contract period had expired, returning responsibility to the state government. The Hoosier State was discontinued on June 30, 2019, after Indiana declined to provide further funding. ", "Section 210 of PRIIA required Amtrak to generate performance improvement plans for all 15 of its long-distance routes, starting with the 5 worst-performing routes based on 2008 data. These reports contained a number of recommended actions to improve long-distance train performance according to various metrics: the Customer Satisfaction Index (CSI), on-time performance (OTP), and cost recovery (CR). There has been uneven improvement in long-distance train performance in the intervening years. Two routes have higher CSI scores (now referred to as eCSI scores) than they did in 2008, six routes have better on-time performance, and five have improved cost recovery rates. All other scores for these routes have stayed the same or worsened. The extent to which any actions taken as a result of the Section 210 plans either improved route performance or mitigated its decline is unclear."], "subsections": []}, {"section_title": "Access to Freight Rail Infrastructure and On-Time Performance", "paragraphs": ["Freight train interference is one cause of poor on-time performance on Amtrak routes. By law, Amtrak is to be given \"preference\" over other railroad traffic when using tracks it does not own. In practice this preference has been difficult to enforce, as freight railroads have little incentive to be overly accommodating to Amtrak trains, for which they are reimbursed only the incremental cost of Amtrak's use of their tracks. Sections 207 and 213 of PRIIA directed FRA, Amtrak, and STB to develop minimum on-time performance standards, and gave STB enforcement power over railroads that failed to meet these standards. Final metrics and standards went into effect in 2010, before being suspended in 2012 amid court challenges. ", "Following a series of court decisions that ultimately upheld Amtrak's role in developing performance standards but altered the role of the STB, FRA and Amtrak are free to reformulate new on-time performance standards. At a June 2019 Senate hearing, Amtrak CEO Richard Anderson said this could be completed in less than 90 days, though he declined to commit to a specific timeline. Anderson compared these standards to similar metrics in use in the commercial aviation industry.", "Current law permits the U.S. Department of Justice (DOJ) to enforce Amtrak's statutory track preference. Anderson has noted in communications with lawmakers that DOJ has done so only once in Amtrak's history, against the Southern Pacific railroad in 1979. Amtrak has requested that a similar enforcement power be granted statutorily to Amtrak, going so far as to recommend specific bill language that would allow Amtrak to sue host railroads.", "Another option is to make funding available to states to assist them in purchasing tracks used by passenger trains from their freight railroad owners. The state of Michigan pursued this strategy, using roughly $150 million in federal grant funds awarded in 2011 to purchase the 135-mile rail corridor from Kalamazoo to Dearborn on the Chicago-Detroit corridor. At the time of the transaction in 2012, previous owner Norfolk Southern Railway had placed several sections of the corridor under slow orders due to poor infrastructure conditions. After several years of repairs and construction funded in part by additional federal grants beyond those used to purchase the line, Amtrak's on-time performance on the Chicago-Detroit Wolverine service rose from 53% in FY2015 to nearly 70% in FY2016, though it has declined slightly since (and 70% is still below the 80% standard initially set under PRIIA 207).", "Using a slightly different ownership structure, the state of North Carolina supports several passenger trains per day between Raleigh and Charlotte on tracks owned by the North Carolina Railroad, a state-owned entity that leases its tracks to Norfolk Southern. Norfolk Southern agreed to increased passenger service on the line in return for extensive public investment in improving and expanding the infrastructure. The number of daily trains offered by the state-supported Piedmont service has increased, and the service has exceeded the 80% on-time performance standard for state-supported routes in five of the past seven years.", "Public ownership of rail infrastructure can be beneficial for passenger rail on-time performance because of the lessened incentive to give priority to freight traffic. Where a freight railroad may find it more profitable to delay passenger trains to accommodate freight trains, a public owner might give preference to passenger services instead. However, in situations that involve public-sector purchases of busy freight lines, it is likely that the affected freight railroads would demand protection for their services as a condition in any sale agreements. Freight railroads are less likely to give up control of their busiest main lines than in the case of parallel or secondary lines. ", "One issue that has hindered congressional efforts to encourage competition in passenger rail service is that freight railroads' statutory obligation to carry passenger trains applies only to trains operated by Amtrak. This may be one reason that states that have initiated state-supported routes have uniformly contracted with Amtrak to be the operator. For other operators to be able to compete with Amtrak on equal footing, legislation may be needed to address their rights to make use of freight railroads' infrastructure. "], "subsections": []}, {"section_title": "Food and Beverage Service", "paragraphs": ["Amtrak has served food and beverages since it began operating in 1971, continuing the practice of its predecessor companies. As far back as 1981, Congress prohibited Amtrak from providing food and beverage service at a loss, and this prohibition is still in the statutes governing Amtrak: ", "Amtrak may ... provide food and beverage services on its trains only if revenues from the services each year at least equal the cost of providing the services.", "The law does not define what is to be included in the \"cost of providing the services.\" Amtrak has stated that providing food and beverage service is essential to meeting the needs of passengers, especially on long-distance trains, and it has interpreted the law as requiring that revenues cover the costs of food and beverage items and commissary operations but not the labor cost of Amtrak employees providing food service aboard trains. When on-board labor costs are excluded, Amtrak says, the service covers its costs. When labor costs are included, however, the service operates at a significant deficit (see Table 4 ).", "Amtrak has taken measures, at Congress's direction, to reduce costs for food and beverage service. In 1999, it shifted from handling food and beverage supplies internally to contracting out such activities. More recently, Amtrak announced it would be discontinuing its traditional dining car service on several long-distance routes, in part to save money. A House proposal in the 112 th Congress would have required FRA to contract out Amtrak's onboard food and beverage service but acknowledged that the service may operate at a loss. Section 11207 of the FAST Act requires Amtrak to develop a plan to eliminate food and beverage service losses, and prohibits federal funds from being used to cover losses starting five years after enactment\u00e2\u0080\u0094but also provides that no Amtrak employee shall lose his or her job as a result of any changes made to eliminate losses. Congress provided that Amtrak could eliminate the losses on food and beverage service through \"ticket revenue allocation.\" Although that phrase is not defined in the law, it implies that Amtrak could declare that a portion of the ticket prices paid by certain passengers is dedicated to food and beverage service, as it already does for passengers traveling in first-class accommodations."], "subsections": []}]}, {"section_title": "Positive Train Control Interoperability Issues", "paragraphs": ["Positive train control (PTC) is an interconnected system of signals and communication devices designed to prevent collisions and derailments by automatically slowing or stopping a train if its engineer fails to do so. The Railway Safety Improvement Act of 2008 (RSIA; Division A of P.L. 110-432 ) required all tracks used by passenger trains to be equipped with PTC by the end of 2015, now effectively extended to December 31, 2020, by subsequent laws and regulations. ", "All Amtrak-owned or -controlled track had PTC in operation on January 1, 2019, except approximately one mile of slow-speed track in the complex Chicago and Philadelphia terminal areas, and PTC is installed on 85% of other railroads' route miles that Amtrak uses. However, to fully comply with the PTC mandate, PTC-equipped Amtrak trains must be certified interoperable with all PTC systems installed by host railroads, and Amtrak's PTC system must be interoperable with other railroads' PTC-equipped trains that use its tracks. At the end of 2018, Amtrak had achieved interoperability with 2 railroads out of a total of 13 that use its tracks, though this does not necessarily reflect Amtrak's progress achieving interoperability with its host railroads. ", "The Government Accountability Office has found that of all railroads subject to the statutory mandate, only two commuter railroads have achieved full operation and full interoperability. If Amtrak does not achieve 100% interoperability with its host railroads by the deadline, absent a waiver or subsequent extension (which FRA has stated it will not issue), Amtrak would need to suspend rail service on noncompliant lines or risk enforcement action in the form of financial penalties for each day it operates in violation of the mandate."], "subsections": []}]}}
{"id": "R46274", "title": "The Palestinians and Amendments to the Anti-Terrorism Act: U.S. Aid and Personal Jurisdiction", "released_date": "2020-03-18T00:00:00", "summary": ["Two recent amendments to the Anti-Terrorism Act (ATA, 18 U.S.C. \u00c2\u00a7\u00c2\u00a7 2331 et seq. ) have significant implications for U.S. aid to the Palestinians and U.S. courts' ability to exercise jurisdiction over Palestinian entities. They are the Anti-Terrorism Clarification Act of 2018 (ATCA, P.L. 115-253 ) and the Promoting Security and Justice for Victims of Terrorism Act of 2019 (PSJVTA, \u00c2\u00a7 903 of the Further Consolidated Appropriations Act, 2020, P.L. 116-94 ).", "Congress passed ATCA after a U.S. federal lawsuit (known in various incarnations as Waldman v. PLO and Sokolow v. PLO ) against the Palestinian Authority (PA) and Palestine Liberation Organization (PLO) that an appeals court dismissed in 2016. The trial court had found that the PA and PLO were responsible under ATA (at 18 U.S.C. \u00c2\u00a7 2333) for various terrorist attacks by providing material support to the perpetrators. However, the U.S. Court of Appeals for the Second Circuit ruled that the attacks, \"as heinous as they were, were not sufficiently connected to the United States to provide specific personal jurisdiction\" in U.S. federal courts.", "Amendments to ATA . ATCA provided that a defendant consents to personal jurisdiction in U.S. federal court for lawsuits related to international terrorism if the defendant accepts U.S. foreign aid from any of the three accounts from which U.S. bilateral aid to the Palestinians has traditionally flowed. In December 2018, the PA informed the United States that it would not accept aid that subjected it to federal court jurisdiction. Consequently, all bilateral aid ended on January 31, 2019.", "PSJVTA eliminated a defendant's acceptance of U.S. foreign aid as a trigger of consent to personal jurisdiction\u00e2\u0080\u0094thus partly reversing ATCA\u00e2\u0080\u0094and instead provides that PA/PLO payments related to a terrorist act that kills or injures a U.S. national act as a trigger of consent to personal jurisdiction. The PA/PLO may face strong Palestinian domestic opposition to discontinuing such payments. PSJVTA also directs the State Department to establish a mechanism for resolving and settling plaintiff claims against the PA/PLO. President Trump stated in a signing statement that this provision could interfere with the exercise of his \"constitutional authorities to articulate the position of the United States in international negotiations or fora.\"", "Implications of stopping U.S. aid and prospects for resumption . It is unclear to what extent the stop to U.S. security assistance for the PA has affected Israel-PA security cooperation and could affect it in the future. The U.S. Security Coordinator for Israel and the Palestinian Authority (USSC) said in December 2019 that the suspension of aid had not significantly affected Israel-PA security cooperation, but that the disruption of initiatives aimed at facilitating cooperation and helping reform the PA security sector had some impact on PA acquiescence to USSC requests aimed at reform and greater professionalization.", "Even though PSJVTA removed acceptance of U.S. bilateral aid as a trigger for personal jurisdiction, the actual resumption of U.S. aid may depend on political decisions by Congress and the Administration, as well as cooperation from the PA. For FY2020, Congress has appropriated $75 million in PA security assistance for the West Bank and $75 million in economic assistance for the \"humanitarian and development needs of the Palestinian people in the West Bank and Gaza.\" However, the Trump Administration had previously suggested that restarting U.S. aid for Palestinians could depend on a resumption of PA/PLO diplomatic contacts with the Administration, which may be unlikely in the current U.S.-Israel-Palestinian political climate. Additionally, it is possible that the PA might not accept aid if doing so could be perceived domestically as giving in to U.S. political demands on the peace plan, or as tacitly agreeing to the new triggers of potential PA/PLO liability in PSJVTA.", "Implications for p ersonal jurisdiction . The extent to which Congress can provide by statute\u00e2\u0080\u0094such as through ATA\u00e2\u0080\u0094that a foreign entity (in this case, the PA/PLO) is deemed to consent to personal jurisdiction appears to be untested in court. The deemed consent provision in ATA may encounter legal challenges on the basis that it could constitute an unconstitutional condition. A condition attached to government benefits is unconstitutional if it forces the recipient to relinquish a constitutional right that is not reasonably related to the purpose of the benefit. If this concept applies to personal jurisdiction, a reviewing court may need to determine whether submission to jurisdiction has a rational relationship with PA/PLO payments or other PA/PLO activities, such as maintenance of facilities in the United States."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction and Issues for Congress", "paragraphs": ["This report provides background information and analysis on two amendments to the Anti-Terrorism Act (ATA, 18 U.S.C. \u00c2\u00a7\u00c2\u00a7 2331 et seq. ): the Anti-Terrorism Clarification Act of 2018 (ATCA, P.L. 115-253 ), which became law in October 2018; and the Promoting Security and Justice for Victims of Terrorism Act of 2019 (PSJVTA, \u00c2\u00a7 903 of P.L. 116-94 ), which became law in December 2019. The report focuses on the impact of this legislation on the following key issues:", "U.S. aid to the Palestinians.", "Whether federal courts have personal jurisdiction over the Palestinian Authority (PA) and Palestine Liberation Organization (PLO) for terrorism-related offenses."], "subsections": []}, {"section_title": "Amendments to Anti-Terrorism Act", "paragraphs": ["The ATA generally prohibits acts of international terrorism, including the material support of terrorist acts or organizations. It also provides a civil cause of action through which Americans injured by such acts can sue responsible persons or entities for treble damages. Prior to ATCA, the ATA did not dictate personal jurisdiction."], "subsections": [{"section_title": "Anti-Terrorism Clarification Act of 2018", "paragraphs": ["Congress passed ATCA in the wake of a U.S. federal lawsuit (known in various incarnations as Waldman v. PLO and Sokolow v. PLO ) that an appeals court dismissed in 2016. The plaintiffs were eleven American families who had members killed or wounded in various attacks against Israeli targets during the second Palestinian intifada (or uprising, which took place between 2000 and 2005). The trial court found that the PA and PLO were liable for the attacks because they provid ed material support to the perpetrators. 6 The jury awarded damages of $218.5 million, an amount trebled automatically under the ATA , bringing the total award to $655.5 million. On appeal, however, the U.S. Court of Appeals for the Second Circuit (Second Circuit) dismissed the suit for lack of personal jurisdiction. Discussed in more detail below, personal jurisdiction is the principle that defendants in U.S. courts must have \"minimum contacts\" to the forum for the court to adjudicate the dispute. In Waldman/ Sokolow , the Second Circuit conclude d that the terrorist attacks, \"as heinous as they were, were not sufficiently connected to the United States\" to create personal jurisdiction in U.S. federal courts.", "ATCA amended ATA (at 18 U.S.C. \u00c2\u00a7 2334) by, among other things, stating that a defendant consented to personal jurisdiction in U.S. federal court for lawsuits related to international terrorism if the defendant accepted U.S. foreign aid from any of the following three accounts after the law had been in effect for 120 days :", "Economic Support Fund (ESF); International Narcotics Control and Law Enforcement (INCLE); or Nonproliferation, Anti-terrorism, Demining, and Related Programs (NADR).", "Although ATCA's terms do not specifically cite the PA/PLO, ATCA's reference to the three accounts from which U.S. bilateral aid to the Palestinians has traditionally flowed (see \" U.S. Aid to Palestinians \" below) suggests that ATCA was responding to the appellate ruling in the Waldman/Sokolow cases on personal jurisdiction.", "In December 2018, then-PA Prime Minister Rami Hamdallah wrote to Secretary of State Michael Pompeo that the PA would not accept aid that subjected it to U.S. federal court jurisdiction. Consequently, U.S. bilateral aid to the Palestinians ended on January 31, 2019."], "subsections": []}, {"section_title": "Promoting Security and Justice for Victims of Terrorism Act of 2019", "paragraphs": ["In December 2019, Congress passed PSJVTA as \u00c2\u00a7\u00c2\u00a0903 of the Further Consolidated Appropriations Act, 2020, P.L. 116-94 . PSJVTA changes the legal framework by replacing certain provisions in ATCA that triggered consent to personal jurisdiction for terrorism-related offenses. These changes include eliminating ATCA's provision triggering consent when a defendant accepts U.S. foreign aid. In place of that provision, PSJVTA provides that the following three actions trigger consent to personal jurisdiction:", "Making payments to individuals imprisoned for terrorist acts against Americans or to families of individuals who died while committing terrorist acts against Americans; Maintaining or establishing any PA/PLO office, headquarters, premises, or other facilities or establishments in the United States; or Conducting any activity (other than some specified exceptions) on behalf of the PA or PLO while physically present in the United States.", "Unlike ATCA, which did not mention specific Palestinian entities by name, PSJVTA expressly applies its new jurisdictional triggers exclusively to the PA and PLO.", "The prospect of ending PA/PLO payments that could activate the first trigger may encounter strong opposition among Palestinians. Similar payments to Palestinians in connection with alleged terrorist acts continued even after they led to a legal suspension of significant ESF funding for the PA under the Taylor Force Act (Title X of P.L. 115-141 ) when it became effective in March 2018. By partly reversing ATCA with respect to the acceptance of aid, PSJVTA could facilitate the resumption of various types of aid, but would still provide for conditions that are reasonably likely to trigger PA/PLO consent to personal jurisdiction, subject to the question of constitutionality.", "PSJVTA also directs the State Department to create a claims process for U.S. nationals harmed by terrorist attacks that they attribute to the PA or PLO. Under PSJVTA, the Secretary of State, in consultation with the Attorney General, has 30 days from the date of enactment (December 20, 2019) to \"develop and initiate a comprehensive process for the Department of State to facilitate the resolution and settlement of covered claims.\" Covered claims are defined to mean pending and successfully completed civil actions against the PA or PLO under the ATA, as well as those lawsuits previously dismissed for lack of personal jurisdiction. The Secretary of State has 120 days after enactment to begin meetings with claimants to discuss the state of lawsuits and settlement efforts. The Secretary of State has 180 days after enactment to begin negotiations with the PA and PLO to settle covered claims. There is no provision withdrawing pending cases from court, however, and jurisdictional provisions applicable before PSJVTA continue to apply to such cases if consent to jurisdiction existed under them. The settlement mechanism will apparently operate in tandem with court proceedings.", "President Trump stated in a signing statement that the claims process provision in PSJVTA could interfere with the exercise of his \"constitutional authorities to articulate the position of the United States in international negotiations or fora.\" He further stated that his Administration would \"treat each of these provisions consistent with the President's constitutional authorities with respect to foreign relations, including the President's role as the sole representative of the Nation in foreign affairs.\" To date, CRS does not have information about whether the executive branch has taken steps to create a claims process under PSJVTA."], "subsections": []}]}, {"section_title": "Implications for U.S. Policy and Law", "paragraphs": ["The end of U.S. security assistance and existing economic assistance projects for Palestinians in January 2019, in light of ATCA, has had implications for U.S. policy. The enactment of PSJVTA in December 2019 to partly reverse ATCA and otherwise amend ATA also has policy and legal implications related to U.S. aid and personal jurisdiction over Palestinian entities (see timeline at Figure 1 )."], "subsections": [{"section_title": "U.S. Aid to Palestinians", "paragraphs": [], "subsections": [{"section_title": "After ATCA", "paragraphs": ["While the Administration made drastic reductions to aid for the Palestinians during 2018 , the ongoing use of prior-year funding meant that the changes had not affected aid for the PA security forces or existing economic aid projects at the time ATCA took effect. Some sources suggested that the Administration and Congress belatedly realized ATCA's possible impact, and subsequently began considering how to reduce or reverse some of its consequences.", "The end of bilateral aid has halted U.S.-funded programs that began in 1975 with a focus on economic and humanitarian needs, and expanded starting in 1994 (in the context of the Israeli-Palestinian peace process) to assist the newly formed PA with security and Palestinian self-governance. The following are changes in status to key aid streams.", "Economic assistance. Although the Trump Administration decided in September 2018 to reprogram all of the FY2017 ESF aid from the West Bank and Gaza to other recipients, some aid projects continued in the West Bank and Gaza using prior-year funding. These projects shut down in January 2019. ESF appropriations for the West Bank and Gaza from FY1975 to FY2016 have totaled some $5.26 billion. Security assistance. After the Administration reprogrammed or discontinued various funding streams for the Palestinians during 2018, the main U.S. aid category remaining was the INCLE account. This security assistance account supported nonlethal train-and-equip programs for PA West Bank security forces (PASF). INCLE assistance, along with $1 million per year in NADR assistance, also ended in January 2019 due to ATCA. INCLE appropriations for the PASF from FY2008 to FY2019 have totaled some $919.6 million. The office of the U.S. Security Coordinator for Israel and the Palestinian Authority (USSC, see textbox below) continues to conduct a \"security cooperation-only mission\" that does not involve funding support, but still facilitates Israel-PA security coordination.", "After ATCA's enactment, the Administration reportedly favored amending ATCA to allow security assistance to continue because of the priority U.S. officials place on Israel-PA security cooperation, which many in Israel also highly value. In an October 29, 2019, hearing before the House Foreign Affairs Subcommittee on the Middle East, North Africa, and International Terrorism, Assistant Secretary of State for Near Eastern Affairs David Schenker said that the Administration was willing to \"engage with Congress on every level\" to consider ways to revisit or \"fix\" ATCA to allow the resumption of certain types of aid to Palestinians.", "Israeli officials have strongly supported U.S. security assistance as a way to improve PA security capabilities and encourage the PA to coordinate more closely with Israeli security forces. Before U.S. bilateral aid to the Palestinians had ceased, other sources suggested that Israeli officials had reached out to the Administration and Members of Congress in hopes that some arrangement would be able to ensure that U.S. security assistance could continue while also maintaining recourse in U.S. courts against the PA/PLO for past alleged acts of terror .", "It is unclear to what extent the stop to U.S. security assistance for the PA has affected Israel-PA security cooperation and could affect it in the future. One analyst wrote in January 2019 that even without U.S. aid, the PA would have a strong interest in coordinating security with its Israeli counterparts. Media reports have routinely suggested that Israel and the PA share a core objective in countering Hamas in the West Bank. However, the same analyst wrote that over the long term, \"termination of [U.S.-funded programs] in areas like training, logistics, human resources, and equipment provision will undoubtedly have a negative impact on the PASF's overall capabilities and professionalism.\" Another analyst said that without U.S. security aid, the PA will have fewer incentives to continue security cooperation with Israel. A spokesman for PA President Mahmoud Abbas responded to the halt in aid by saying it would \"have a negative impact on all, create a negative atmosphere and increase instability.\""], "subsections": []}, {"section_title": "After PSJVTA", "paragraphs": ["Even though PSJVTA removed acceptance of U.S. bilateral aid as a trigger of PA/PLO consent to personal jurisdiction, the actual resumption of U.S. aid may depend on political decisions by Congress and the Administration, as well as cooperation from the PA. The conference report for the Further Consolidated Appropriations Act, 2020 ( P.L. 116-94 ), enacted in December 2019, provided the following earmarks:", "$75 million in INCLE for security assistance in the West Bank for the PA; $75 million in ESF for the \"humanitarian and development needs of the Palestinian people in the West Bank and Gaza.\"", "The conference report said that these funds \"shall be made available if the Anti-Terrorism Clarification Act of 2018 is amended to allow for their obligation.\" The inclusion of PSJVTA in P.L. 116-94 may satisfy that condition.", "It is unclear whether the executive branch will implement the aid provisions. The Trump Administration had previously suggested that restarting U.S. aid for Palestinians could depend on a resumption of PA/PLO diplomatic contacts with the Administration. Such a resumption of diplomacy may be unlikely in the current U.S.-Israel-Palestinian political climate, particularly following the January 2020 release of a U.S. peace plan that the PA/PLO strongly opposes. Additionally, under its terms, the Taylor Force Act would preclude any ESF deemed to directly benefit the PA. The Administration's omission of any bilateral assistance\u00e2\u0080\u0094security or economic\u00e2\u0080\u0094for the West Bank and Gaza in its FY2021 budget request, along with its proposal in the request for a $200 million Diplomatic Progress Fund ($25 million in security assistance and $175 million in economic) to support future diplomatic efforts, may potentially convey some intent by the Administration to condition aid to Palestinians on PA/PLO political engagement with the U.S. peace plan.", "Additionally, it is unclear whether the PA would cooperate with a U.S. effort to provide aid to Palestinians given U.S.-Palestinian political tensions and the way that PSJVTA amended ATA. Even if accepting aid would no longer potentially trigger PA/PLO liability in U.S. courts, it is possible that\u00e2\u0080\u0094given PA concerns about national dignity\u00e2\u0080\u0094the PA might not accept aid if doing so could be perceived domestically as giving in to U.S. political demands on the peace plan, or as tacitly agreeing to the new triggers of potential PA/PLO liability in PSJVTA (see \" Promoting Security and Justice for Victims of Terrorism Act of 2019 \" above).", "If the executive branch and the PA agree on the resumption of aid, it is unclear how the economic portion of aid would specifically address humanitarian and development needs in the West Bank and Gaza. In the October 29, 2019, committee hearing mentioned above, U.S. Agency for International Development (USAID) Assistant Administrator for Middle East Affairs Michael Harvey was asked what type of aid should be given priority. Harvey said that, without prejudging, if the political decision were made to resume ESF assistance, water and wastewater projects have historically been key objectives, and thus could be places to start."], "subsections": []}]}, {"section_title": "Personal Jurisdiction", "paragraphs": ["One of the aims of the amendments to ATA described above is to enhance personal jurisdiction over defendants accused of carrying out terrorist attacks that injure U.S. nationals. To try any civil case, U.S. courts must have both subject matter jurisdiction and personal jurisdiction over the defendant. ATA provides for subject matter jurisdiction by providing a cause of action for U.S. nationals injured by applicable acts of terrorism. However, for a court to exercise personal jurisdiction over the defendant, the Due Process Clause of the Fifth or Fourteenth Amendment must be satisfied. Due process requires that the defendant have sufficient \"minimum contacts\" in the forum adjudicating the lawsuit such that the maintenance of the suit there does not offend \"traditional notions of fair play and substantial justice.\"", "Foreign entities, including foreign political but non-sovereign entities such as the PA and PLO, are entitled to due process and can challenge a court's jurisdiction based on a lack of personal jurisdiction. Under the doctrine of general personal jurisdiction, a foreign entity can be sued for virtually any matter without regard to the nature of its contacts with the forum state. The Supreme Court has held that, for courts to exercise general personal jurisdiction, a defendant entity must have enough operations in that state to be essentially \"at home\" there. When general jurisdiction is not available, maintenance of a lawsuit against a foreign defendant requires specific personal jurisdiction. Specific jurisdiction exists where there is a significant relationship among the defendant, the forum, and the subject matter of the litigation. Based on this test, ATA lawsuits against the PA and PLO have failed for want of specific personal jurisdiction.", "Personal jurisdiction can be waived and litigants can consent to personal jurisdiction that might otherwise be lacking. But the extent to which Congress can provide by statute that a foreign entity is deemed to consent to personal jurisdiction by making payments or through the maintenance of facilities in the United States appears to be untested. Plaintiffs' efforts to obtain personal jurisdiction over the PA and PLO based on the criteria provided in ATCA, including acceptance of foreign aid and the maintenance of facilities in the United States, failed because plaintiffs could not prove that any of the criteria had been met, obviating the need for the courts to address ATCA's constitutionality. ", "The new deemed consent provisions in PSJVTA may encounter challenges in court on the basis that they could constitute an unconstitutional condition on permission to operate in the United States. A condition attached to government benefits is unconstitutional if it forces the recipient to relinquish a constitutional right that is not reasonably related to the purpose of the benefit. If this concept applies to personal jurisdiction, a reviewing court may need to determine whether submission to such jurisdiction is either voluntary or has a rational relationship with PA/PLO payments or other PA/PLO activities, including maintenance of facilities in the United States. On the other hand, because ATA is a federal foreign affairs-related statute, Congress may have greater leeway to establish jurisdiction based on deemed consent."], "subsections": []}]}, {"section_title": "Looking Ahead: Questions", "paragraphs": ["Responses to the following questions could have important implications for U.S. policy and law.", "Given that acceptance of aid no longer triggers consent to personal jurisdiction, will the PA cooperate with the implementation of U.S. security and economic aid that Congress appropriated in December 2019 for FY2020 for the West Bank and Gaza? Will the Trump Administration provide the appropriated FY2020 security and economic aid to Palestinians? If so, when? What are the effects of the cutoff\u00e2\u0080\u0094since January 2019\u00e2\u0080\u0094of U.S. aid to the West Bank and Gaza? Depending on the timing and other circumstances surrounding a possible resumption of aid, what effects could an aid resumption have? Will the PA/PLO stop payments to prisoners accused of terrorist acts against Americans (or payments to the prisoners' families) in order to avoid being deemed to consent to personal jurisdiction under PSJVTA? If PSJVTA's provisions on PA/PLO consent to personal jurisdiction are challenged in court, will they be upheld as constitutional? Will the Trump Administration comply with the requirement in PSJVTA for the State Department to establish a process for resolving and settling claims against the PA/PLO under ATA? If so, what would the process look like and what outcomes would it produce?"], "subsections": []}]}}
{"id": "R46365", "title": "Child Support Enforcement-Led Employment Services for Noncustodial Parents: In Brief", "released_date": "2020-05-18T00:00:00", "summary": ["The Child Support Enforcement (CSE) program is a federal-state partnership that seeks to ensure child support is a regular source of income for families. The program transfers financial support from a noncustodial parent (NCP) to a child's primary caretaker (usually a custodial parent). Nearly two-thirds of participating custodial families report having incomes below 200% of the federal poverty threshold. The CSE program collects about two-thirds of the current support that is due each year, with the remainder that is unpaid becoming arrears (i.e., past-due support).", "Many NCPs who do not pay their obligations in full struggle with finding consistent and sufficient employment. Employment programs within the context of CSE are designed to increase NCP employment and child support collections. Many states have CSE-led employment programs and a number of practitioners report that, in their experience, these services are a more effective tool for NCPs with limited ability to pay than other enforcement strategies. CSE employment programs only serve a small proportion of NCPs making zero or partial payments; many observers primarily attribute this to a lack of sustainable funding. In response, some policymakers have proposed dedicating federal funding for CSE-led employment services.", "CSE employment programs use varied eligibility criteria, but they typically focus on low-income NCPs. Programs also vary in their reliance on mandatory or voluntary recruitment policies, or both. Mandatory recruitment involves courts ordering parents who are behind in their payments to participate or risk incarceration. Voluntary recruitment relies on NCP interest and referrals from CSE staff, courts, and partner organizations.", "CSE employment programs usually provide a wide range of services, including intensive case management, employment, child support, parenting/fatherhood, and other support services. Service provision is often contracted to partner agencies or community organizations. In terms of employment services, programs traditionally provide services such as job readiness, job search, and job development. Participants are less likely to participate in transitional jobs (short-term subsidized employment) or more intensive vocational education and training services.", "Under current law, federal funds that can be used by CSE programs to support employment services are fairly limited. Although the federal government normally reimburses each state at 66% of all allowable expenditures on CSE activities\u00e2\u0080\u0094financing that totaled more than $3.5 billion in FY2018\u00e2\u0080\u0094employment services are currently not a reimbursable activity. Similarly, the second largest CSE funding stream, incentive payments (expected to exceed $510 million for FY2018), cannot be automatically used to support employment services. States can pursue Section 1115 waiver demonstrations as a means to receive federal matching payments or request authorization to spend incentive funds on employment services, but both approaches come with restrictions. States can also tap non-CSE federal funding to support employment services for NCPs, such as the Temporary Assistance for Needy Families (TANF) block grant, but this use must compete with other potential uses for the funding.", "Several rigorous evaluations have been conducted on two employment service models with NCPs: traditional employment services and transitional jobs. Evidence on the effectiveness of traditional employment services for NCPs is mixed, with the most recent federally funded, large-scale random assignment study on this model finding little or no impacts. Earlier evaluations reported more promising effects. Transitional jobs programs are more expensive and challenging to implement, but a recent federally funded, large-scale random assignment evaluation on this model reported stronger impacts than traditional employment services. The effects were substantial while participants were in subsidized jobs, modest for a period after the transitional jobs ended, but then usually continued to fade over time."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Background", "paragraphs": ["This report discusses issues related to providing employment services targeted at noncustodial parents (NCPs) within the context of the Child Support Enforcement (CSE) program. The CSE program is a federal-state partnership that currently operates in all 50 states; the District of Columbia (DC); the territories of Guam, Puerto Rico, and the U.S. Virgin Islands; and 60 tribal nations. The program seeks to promote parental responsibility and ensure children receive support from both parents, notably through financial income transferred from an NCP to a child's primary caretaker (usually a custodial parent). In FY2018, the CSE program provided services on behalf of 14.7 million children, about 20% of children in the United States. One analysis estimated that nearly two-thirds of families receiving CSE services in 2015 had income below 200% of the poverty threshold. The CSE program collected 66% of the current support that was due in FY2018, continuing the program's record of slow but steady improvement in recent years. However, $11.5 billion in current support that was due went uncollected, becoming arrears (i.e., past due support).", "A number of observers have concluded that some NCPs have a currently limited ability to pay that restricts how much support is collected, and that those NCPs would benefit from employment services being offered in the context of the CSE program. NCP employment and earnings, particularly through stable, formal employment, are positively linked to child support payment compliance. This association is likely because NCPs with higher earnings have a better ability to pay, but also because formal employment facilitates the use of income withholding, a particularly effective CSE tool. Also, many low-income NCPs face one or more significant barriers to having consistent employment and sufficient income to pay child support, including low wages and benefits, irregular and unsteady jobs, limited education or marketable skills, health conditions (e.g., substance use), lack of transportation or housing, discrimination, and history with the criminal justice system. Proponents of CSE employment programs argue that they respond to the concern that NCPs need help securing employment, but might be less likely than other populations to access employment services through the workforce development system or public benefit programs. In addition, they posit that the CSE program is a unique platform for providing employment services in that it already reaches NCPs in practice, has a strong interest in improving NCPs' earnings and child support payments, and can leverage CSE policies so that they act as employment incentives and not barriers for NCPs. ", "Although CSE employment programs are fairly widespread, they are not found everywhere and appear to serve a relatively small proportion of NCPs who struggle to secure adequate employment and regularly pay their obligations in full. To explain why CSE employment programs operate on a limited scale, CSE officials and observers have primarily cited a lack of sufficient and sustainable funding. (The federal government normally reimburses each state for 66% of all allowable expenditures on CSE activities, but employment services are currently not an allowable activity and funding through other mechanisms within the program is limited. ) Many of those same observers have proposed that legislation be enacted to address this issue.", "This report first reviews how CSE-led employment programs may be designed with regard to NCP eligibility and recruitment, as well as services provided. This is followed by an explanation of the current federal funding options for these programs. The next section reviews the available evidence on the effectiveness of employment programs that have been led by or conducted in cooperation with CSE. The report concludes by highlighting recent proposals to dedicate federal funding for CSE employment programs."], "subsections": []}, {"section_title": "Program Eligibility and Recruitment", "paragraphs": ["CSE employment programs must establish criteria to determine eligibility for services. Unemployed, or underemployed, low-income NCPs who are struggling to meet their obligations are the population that most frequently qualifies for services. Programs may also serve additional types of NCPs, like those who are in the process of paternity or order establishment, to facilitate recruitment or expand their reach. Alternatively, CSE employment programs may narrowly target services to conserve resources and prioritize certain cases (e.g., those owing current support versus those owing arrears only). Eligibility criteria can also help limit duplication with other public programs or risks of supplanting their funding.", "Another important decision CSE employment programs make is whether to rely on mandatory or voluntary recruitment policies, or both. Courts can issue mandatory orders for NCPs to participate in a work program. When NCPs fail to pay child support, states may issue contempt citations or file criminal nonsupport charges that bring parents before a court. (The required administrative and court processes can be expensive for the CSE program and state. ) At this point, the court may give NCPs the choice to seek work as an alternative to incarceration, or order them to do so. Depending on the jurisdiction and court, NCPs may be left to their own discretion for how to secure employment, or they may be firmly connected to or ordered into an employment program that can provide relevant services and assistance. As a result, among the population presented with the choice of participating in a mandatory work program versus incarceration, enrollment and engagement rates are usually fairly high. ", "Alternatively, or additionally, CSE employment programs can focus on voluntary recruitment. This approach allows programs to serve more NCPs than just those who have been brought into court. Program referrals can be made by staff from CSE agencies, courts, community organizations, and probation or parole offices. Even when programs are voluntary, court referrals and the consequences of nonpayment (e.g., license suspensions, interest charged on debt, the risk of eventually being incarcerated) give NCPs strong incentives to participate. Still, several voluntary programs report that recruitment and retention is challenging in that many NCPs referred to or made aware of the programs decline to participate voluntarily or stay engaged. In response, programs have developed several strategies for boosting recruitment and retention, including expansive program eligibility rules, incentives (e.g., removal of CSE-initiated driver's license suspensions, forgiveness of state-owed arrears), intensive case management, co-locating services, and aggressive and multifaceted outreach. "], "subsections": []}, {"section_title": "Program Services", "paragraphs": ["CSE employment programs typically provide a wide range of services, which can require the involvement of many partner organizations. Intensive case management is generally considered critical for engaging NCPs, assessing their needs holistically, coordinating service receipt, and monitoring participant progress. CSE agencies may handle this general case management or make arrangements (e.g., contract) with other organizations to do so. Case managers and other program staff may refer NCPs to external resources for issues such as housing, mental health, substance use, legal aid, and financial education, although services may be limited in many communities. CSE employment programs may also provide NCPs with access to parenting and fatherhood services, including classes and referrals to resources for addressing parenting time (child access and visitation), co-parent mediation, and other legal concerns related to parenthood.", "Providing employment services is often contracted or delegated to partnering government workforce agencies or community organizations with relevant expertise. These entities typically provide NCPs with traditional services such as employment-focused case management, job search assistance, employment assessments, job readiness, basic or remedial education, short-term job skills training, job development and placement, and job retention. These services may be provided in both individual and group settings. Employment programs may also provide work supports including transportation assistance, small incentives to promote program engagement, and specialized services for those with criminal records such as records expungement or voluntary drug testing. Less commonly, NCPs may participate in subsidized employment, on-the-job training, vocational training and education, and other, more intensive employment services. "], "subsections": []}, {"section_title": "Federal Funding", "paragraphs": ["Under current law, federal funds that can be used by CSE programs to fund employment services are fairly limited. The funding streams that are available may be uncertain from year-to-year, of short duration, or limited in amount relative to the potential demand for these services. ", "The largest source of federal funding for state CSE administration is the previously mentioned 66% reimbursement rate for state and local expenditures on allowable CSE activities, with no ceiling on the total amount of federal reimbursement. Federal matching payments on net totaled more than $3.5 billion in FY2018, and accounted for approximately 90% of federal CSE funding for states in recent years. However, spending on work activities has not been allowed as a federally reimbursable cost. Alternatively, states can apply for a waiver under Section 1115 of the Social Security Act to receive federal matching payments for the purposes of a demonstration project designed to promote program objectives. With respect to waiver projects, states have to invest new funds (not redirect funding), they are time limited (typically two to five years) and must be evaluated, and total federal reimbursement must not exceed $2 million. ", "The second largest CSE funding stream is incentive payments, which are designed to reward states for strong program performance and were estimated to exceed $510 million in FY2018. Incentive payments must be reinvested back into the program on activities that are eligible for reimbursement. However, states can request authorization to use incentive payments for activities that are not eligible for federal reimbursement but may contribute to improving the effectiveness or efficiency of child support, such as employment programs. Incentive spending must supplement and not supplant other state CSE funding, states can determine how much of their incentive payment to allocate toward an approved activity, and the program does not have to be formally evaluated. ", "There are also non-CSE federal funding streams that can support NCP employment activities, although they may not be directly under the control of the program or available on a consistent basis. For example, Temporary Assistance for Needy Families (TANF) funding can support employment programs for NCPs. States can include NCPs as members of TANF-eligible family units and provide assistance and other services funded by TANF or separate state maintenance-of-effort (MOE) programs, even when no other family member is receiving assistance. States can also use TANF or state MOE funding to provide non-assistance services and benefits, such as employment services, to needy individuals such as NCPs when doing so is consistent with TANF goals. The TANF block grant provides states with considerable flexibility in the use of its funds, so NCP employment programs have to compete with many other potential expenditure options.", "Similarly, funding for the Workforce Innovation and Opportunity Act's adult and dislocated worker programs and the Supplemental Nutrition Assistance Program's Employment & Training programs can be used to provide employment services to NCPs who meet these programs' respective eligibility criteria. In addition, the Wagner-Peyser Act Employment Service (ES) makes labor exchange services (e.g., counseling, job search and placement assistance) universally available to all individuals. States and localities have also used a variety of other public and private funding to support CSE employment pilots, including competitive grants from the Department of Health and Human Services' (HHS') Office of Child Support Enforcement (OCSE) and Office of Family Assistance (OFA). "], "subsections": []}, {"section_title": "Research Evidence on Program Effectiveness", "paragraphs": ["The effectiveness of CSE-led or CSE-supported employment programs has been analyzed by a few rigorous evaluations. While many agencies and partner organizations providing employment services note that NCPs who participate in employment programs show improvement when measured on the basis of comparing pre- and post-participation outcomes such as earnings and child support payments, this kind of analysis cannot address what would have occurred if NCPs had not participated in those particular services. For example, NCPs might have secured employment without assistance, received employment services through another program, or benefited from changes in the economy over time. Rigorous research designs such as random assignment use valid comparison groups to isolate impacts , which are the changes in outcomes causally attributable to a program or policy. This report focuses on statistically significant employment, earnings, and child support payment findings from random assignment experiments and other research designs that can plausibly identify program impacts. In social policy, new or alternative interventions are often compared to a services-as-usual condition developed through many years of trial and error, sometimes including previous rounds of rigorous evaluation. Research in disciplines as varied as social policy, education, medicine, and business has found that the most common pattern of results when interventions undergo rigorous evaluation is \"weak\" or \"no effects.\" A similar pattern of results has been observed for employment and training programs serving low-income populations other than NCPs. Studies that do not find large positive impacts may still identify potentially promising changes for intervention implementation, design, or strategy. ", "Employment programs for NCPs have not shown consistent impacts on employment, earnings, and child support compliance when subjected to rigorous evaluation. Cross-site variation from two rigorous evaluations suggests that robust involvement from CSE in employment programs might be beneficial for generating impacts, relative to less CSE involvement. However, there is no rigorous evidence on the relative effectiveness of spending on employment programs versus alternative CSE program activities. The combination of these points also means there is no rigorous evidence that spending on employment services is less effective than alternative collection strategies, and many CSE practitioners believe from experience that these programs are a more effective tool for NCPs with a limited ability to pay. ", "Rigorous evidence with NCPs is available for two employment program models: traditional employment services and transitional jobs. Alternative employment services that are more common with other low-income populations (e.g., substantive occupational skills training) have typically not been rigorously evaluated with NCPs and therefore are not discussed in this report. Earnings supplements such as the Earned Income Tax Credit, which provide monetary payments to individuals who work in an effort to increase employment and promote other policy objectives, are not regularly included as a service by CSE employment programs and are also not covered here."], "subsections": [{"section_title": "Traditional Employment Services", "paragraphs": ["Evidence on the effectiveness of providing traditional employment services to NCPs is mixed. Commonly provided employment services include job search assistance, job readiness training, employment-related assessments, job development services, job retention services, rapid re-employment, employment planning, and work supports. The National Child Support Noncustodial Parent Employment Demonstration (CSPED) was a large-scale random assignment study that enrolled more than 10,000 NCPs across sites in eight states between October 2013 and September 2016. Participants were randomly assigned to either a group eligible for CSPED services, or a group receiving CSE agencies' regular services. CSPED increased the receipt of a combination of case management, employment, parenting, and enhanced child support services, although the level of additional service receipt has been characterized as a \"fairly light-touch\" for such a hard-to-employ population. More intensive services such as subsidized employment or on-the-job training were rarely accessed. Overall, CSPED did not consistently increase employment, earnings, or child support compliance relative to CSE agencies' usual services. While context, population served, program features, and service receipt varied somewhat in the participating states, there were few differences in impacts by state. ", "Several earlier, single-state evaluations of CSE-employment programs providing similar employment or more comprehensive services reported more promising impacts, although these studies used research designs that make their results subject to greater uncertainty. An older, multi-state random assignment demonstration also found that an employment program (predominantly providing traditional employment services, peer support groups, and enhanced child support services) did not increase NCPs' employment or earnings, although it did increase the likelihood of formal child support payments, and there was some evidence suggesting impacts for earnings and employment among harder-to-employ subgroups. ", "The evaluated demonstrations varied somewhat in their target populations, although all served highly disadvantaged populations. They also varied in whether they evaluated programs using mandatory, voluntary, or mixed-recruitment strategies, and the research designs and pattern of results do not provide clear evidence as to whether any approach is more likely to produce stronger impacts. The programs provided typical or even fairly robust levels of service, relative to the field of CSE-led employment programs. Rigorous evaluations of programs providing analogous services to fatherhood and prisoner reentry populations with large proportions of NCPs have also infrequently reported impacts on employment, earnings, or child support outcomes."], "subsections": []}, {"section_title": "Transitional Jobs", "paragraphs": ["Another strategy that has been tested with NCPs, and shown more promising medium and longer-term effects, is transitional jobs, which are short-term subsidized public, nonprofit, or private employment opportunities designed to increase participants' income while helping them to \"learn to work by working.\" The end goal is to increase NCPs' ability to secure and retain unsubsidized employment. A large-scale random assignment study found that a recent collection of programs generated substantial increases in employment, earnings, and the likelihood of child support payment while NCPs were in subsidized employment. These short-term employment impacts demonstrate that such programs can successfully target individuals who want to work but would otherwise struggle to secure consistent employment. The subsidized employment provides these individuals with meaningful work and income. For the period immediately after the transitional jobs ended, participants had modestly higher earnings and employment. However, for most programs the earnings and employment impacts faded away over time, although the increased likelihood of child support payment more often persisted. These findings are similar to those from transitional jobs programs serving other low-income populations (e.g., formerly incarcerated individuals, TANF recipients). Transitional jobs programs are more expensive and challenging to implement than traditional employment services, as programs need to secure work opportunities for participants and pay a portion of their wages for a period of time."], "subsections": []}]}, {"section_title": "Recent Policy Proposals", "paragraphs": ["Two notable, recent executive branch proposals have recommended increasing federal funding for CSE employment programs, though neither has been adopted. The Obama Administration proposed allowing federal reimbursement of state CSE program expenditures to fund certain job services offered to eligible NCPs (Notice of Proposed Rulemaking, November 17, 2014). The Trump Administration, in its FY2021 budget submission, proposed allowing federal reimbursement of state CSE program expenditures for mandatory work activities, capped at 2% of the total federal reimbursement of that state's CSE expenditures. ", "Legislation related to employment services for NCPs has also been introduced in the 116 th Congress. The Julia Carson Responsible Fatherhood and Healthy Families Act of 2019 ( H.R. 3507 ) proposes allowing federal reimbursement of state CSE program expenditures to fund certain job services (a more expansive set of services than in the Obama Administration proposal) offered to eligible NCPs. Other legislation would try to encourage states to focus more TANF funding on employment services, which might benefit some NCPs (typically, a parent of a child receiving TANF assistance). The Jobs and Opportunity with Benefits and Services for Success Act ( H.R. 1753 / S. 802 ) would require that state TANF plans detail how low-income NCPs will be able to access employment services through TANF. The Accelerating Individuals into the Workforce Act ( H.R. 4571 ) would redirect funding from the TANF contingency fund to support subsidized employment opportunities for eligible individuals, including NCPs of minor children receiving TANF assistance. Policymakers have also proposed funding new programs, separate from CSE and TANF, for providing employment services. The ELEVATE Act of 2019 ( H.R. 556 / S. 136 ) would provide funding for public and private subsidized employment programs that could serve NCPs and other populations. The Pandemic TANF Assistance Act ( S. 3672 ) also would provide funding that could be used for, among other purposes, certain subsidized employment opportunities for low-income populations (which could include NCPs)."], "subsections": []}]}}
{"id": "R46049", "title": "Space Weather: An Overview of Policy and Select U.S. Government Roles and Responsibilities", "released_date": "2020-01-06T00:00:00", "summary": ["Space weather refers to conditions on the sun, in the solar wind, and within the extreme reaches of Earth's upper atmosphere. In certain circumstances, space weather may pose hazards to space-borne and ground-based critical infrastructure systems and assets that are vulnerable to geomagnetically induced current, electromagnetic interference, or radiation exposure. Hazardous space weather events are rare, but may affect broad areas of the globe. Effects may include physical damage to satellites or orbital degradation, accelerated corrosion of gas pipelines, disruption of radio communications, damage to undersea cable systems or interference with data transmission, permanent damage to large power transformers essential to electric grid operations, and radiation hazards to astronauts in orbit.", "In 2010, Congress directed the White House Office of Science and Technology Policy (OSTP) to improve national preparedness for space weather events and to coordinate related federal space weather efforts ( P.L. 111-267 ). OSTP established the Space Weather Operations, Research, and Mitigation (SWORM) Working Group, which released several strategic and implementation plans, including the 2019 National Space Weather Strategy and Action Plan. The White House provided further guidance through two executive orders (E.O. 13744 and E.O. 13865) regarding space weather and electromagnetic pulses (EMPs), respectively.", "The National Oceanic and Atmospheric Administration and the National Weather Service are the primary civilian agencies responsible for space weather forecasting. The National Laboratories (administered by the Department of Energy), the National Aeronautics and Space Administration (NASA), and the National Science Foundation support forecasting activities with scientific research. Likewise, the U.S. Geological Survey provides data on the earth's variable magnetic field to inform understanding of the solar-terrestrial interface. The Department of Homeland Security disseminates warnings, forecasts, and long-term risk assessments to government and industry stakeholders as appropriate. The Department of Energy is responsible for coordinating recovery in case of damage or disruption to the electric grid. The Department of State is responsible for engagement with international partners to mitigate hazards of space weather. The Department of Defense supports military operations with its own space weather forecasting capabilities, sharing expertise and data with other federal agencies as appropriate.", "The Congressional Budget Office estimated that federal agencies participating in the SWORM Working Group \"allocated a combined total of nearly $350 million to activities related to space weather\" in FY2019. NASA allocated the majority ($264 million) of the $350 million total.", "Congress enacted S. 1790 in December 2019 as the National Defense Authorization Act for Fiscal Year 2020 (2020 NDAA). The 2020 NDAA amended Sections 320 and 707 of the Homeland Security Act of 2002 ( P.L. 107-296 ) to enact a series of homeland security-related provisions that parallel the E.O. 13865 framework for critical infrastructure resilience and emergency response. The 2020 NDAA also repealed Section 1691 of the National Defense Authorization Act for Fiscal Year 2018 ( P.L. 115-91 ), which authorized a \"Commission to Assess the Threat to the United States from Electromagnetic Pulse Attacks and Similar Events.\" Other provisions in the 2020 NDAA require the National Guard to clarify relevant \"roles and missions, structure, capabilities, and training,\" and report to Congress no later than September 30, 2020, on its readiness to respond to electromagnetic pulse events affecting multiple states. Separately, some Members of Congress have introduced the Space Weather Research and Forecasting Act ( S. 881 ), which would define certain federal agency roles and responsibilities, among other provisions."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["Space weather refers to the dynamic conditions in Earth's outer space environment. This includes conditions on the Sun, in the solar wind, and in Earth's upper atmosphere. Space weather phenomena include ", "solar flares or periodic intense bursts of radiation from the sun caused by the sudden release of magnetic energy, coronal mass ejections composed of clouds of solar plasma and electromagnetic radiation, ejected into space from the sun, high-speed solar wind streams emitted from low density regions of the sun, and solar energetic particles or highly-charged particles formed at the front of solar flares and coronal mass ejections.", "Hazardous space weather events are rare, but may cause geomagnetic disturbances (GMDs) that affect broad areas of the globe. Such events may pose hazards to space-borne and ground-based CI systems and assets that are vulnerable to geomagnetically induced current, electromagnetic interference, or radiation exposure (see Figure 1 ). ", "Several notable events illustrate space weather hazards, and how their potential impact has broadened over time with technological advances. The 1859 \"Carrington event,\" named for the British solar astronomer who first observed it, caused auroras as far south as Central America and disrupted telegraph communications. In 1972, a GMD knocked out long-distance telephone service in Illinois. In 1989, another GMD caused a nine-hour blackout in Quebec, and melted some power transformers in New Jersey. In 2005, X-rays from a solar storm disrupted GPS signals for a short time. ", "This report provides an overview of federal government policy developed under the existing legislative framework, and describes the specific roles and responsibilities of select federal departments and agencies responsible for the study and mitigation of space weather hazards."], "subsections": []}, {"section_title": "Federal Interagency Activities", "paragraphs": ["Over the past several decades, the federal government's interest in space weather and its effects has grown. Congress has required individual federal agencies to conduct certain space weather-related activities related to agency missions. However, federal interagency work began in earnest with the establishment of the interagency National Space Weather Program (NSWP) in 1995 by the Department of Commerce's Office of the Federal Coordinator for Meteorology. The program was directed by the NSWP Council that included representatives from interested federal agencies. The NWSP Council coordinated federal space weather strategy development between 1995 and 2015 in partnership with federal agencies, industry, and the academic community. ", "In 2010, Congress directed the White House Office of Science and Technology Policy (OSTP) to improve national preparedness for space weather events and to coordinate federal space weather activities of the NSWP Council. This marked the beginning of a period during which the White House assumed leadership of federal space weather policy. OSTP's National Science and Technology Council established the Space Weather Operations, Research and Mitigation (SWORM) Working Group in 2014 to lead federal strategy and policy development. The NSWP Council was deactivated the following year, when SWORM published a national space weather preparedness strategy, titled the \"National Space Weather Strategy\" (the 2015 Plan).", "In 2016, President Obama signed Executive Order (E.O.) 13744, \"Coordinating Efforts to Prepare the Nation for Space Weather Events\" directing federal space weather preparedness activities to be carried out \"in conjunction\" with those activities already identified in the 2015 Plan. The SWORM Working Group released an updated national space weather strategy in 2019, titled \"The National Space Weather Strategy and Action Plan\" (the 2019 Plan). The same year, President Trump signed E.O. 13865, \"Coordinating National Resilience to Electromagnetic Pulses,\" directing the federal government to \"foster sustainable, efficient, and cost-effective approaches\" to improve national resilience to the effects of electromagnetic pulses.", "Taken together, the 2019 Plan and E.O. 13865 prioritize investment in CI resilience initiatives over scientific research and forecasting, and represent a shift in policy from that of the previous Administration set forth in the 2015 Plan and E.O 13744. The 2019 Plan focuses on three objectives related to protection of assets, space weather forecasting, and planning for space weather events, and identifies the agencies and departments with responsibilities under each objective ( Figure 2 ). E.O. 13865 directs relevant federal agencies to identify regulatory and cost-recovery mechanisms that the government may use to compel private-sector investments in resilience. This approach differs from most other federal infrastructure resilience initiatives, which generally rely upon voluntary industry adoption of resilience measures. ", "E.O. 13865 applies both to space weather and manmade electromagnetic hazards (such as a nuclear attack) and refers to both types of hazard as electromagnetic pulse (EMP). This may create ambiguity in cases where a given provision could apply either to manmade or natural electromagnetic hazards. For example, E.O. 13865 directs the Secretary of Homeland Security to \"incorporate events that include EMPs as a factor in preparedness scenarios and exercises,\" without specifying whether a space weather event or nuclear attack scenario should be exercised, or which should be prioritized. The fact that E.O. 13865 does not formally supersede E.O. 13744 (which refers solely to space weather) may create further ambiguity in cases where policies of the previous and current Administrations are not in direct alignment, or else reflect differing priorities. Federal agencies typically regard\u00e2\u0080\u0094and refer to\u00e2\u0080\u0094manmade EMP and naturally-occurring GMDs as related, but distinct phenomena."], "subsections": []}, {"section_title": "Select Department and Agency Roles and Responsibilities", "paragraphs": ["This section provides an overview of federal roles and responsibilities for space weather-related research and emergency preparedness. Federal agency roles and responsibilities fall into four major categories: early warning and forecasting; research and development (R&D); basic scientific research; risk assessment and mitigation, including modeling and information sharing; and response and recovery. Some agencies have roles and responsibilities in more than one category. This section only includes entities that relevant executive orders or strategies have designated as the federal lead for a specific objective or requirement. This does not include agencies whose role is confined to participation in working groups, harmonizing internal policies with national strategy or directives, contributing refinements to analytical products or models produced by other agencies, or ensuring their own continuity-of-operations in case of a space weather event. ", "Each sub-section includes a summary of the department or agency mission and the relevant authorities under which it operates. If applicable, the agency-specific provisions of the two executive orders currently in force\u00e2\u0080\u0094E.O. 13744 and E.O. 13865\u00e2\u0080\u0094are listed in a table, followed by information about implementing programs and activities. Provisions applicable only to manmade EMP threats, such as high-altitude nuclear detonations, are excluded.", "The 2019 Plan is referenced in cases where the executive orders do not provide specific or complete guidance to given federal entities. Departments and agencies are ordered alphabetically for ease of reference. "], "subsections": [{"section_title": "Department of Commerce18", "paragraphs": ["In 1988, Congress authorized the Secretary of Commerce to \"prepare and issue predictions of electromagnetic wave propagation conditions and warnings of disturbances in such conditions.\" The Secretary of Commerce delegated those responsibilities to the National Oceanic and Atmospheric Administration (NOAA). The Secretary of Commerce also directed NOAA to fulfill the department's space weather responsibilities in 2016 under E.O. 13744 and in 2019 under E.O. 13865 ( Table 1 ). ", "Both executive orders direct the Secretary to improve services and partner with relevant stakeholders. The 2016 order refers to the hazard of concern as space weather, while the 2019 order refers to it as natural EMPs. ", "NOAA's space weather work falls primarily under two line offices: National Weather Service (NWS) and National Environmental Satellite, Data, and Information Service (NESDIS). NWS operates and maintains observing systems to support forecasting of space weather including the National Solar Observatory Global Oscillation Network Group, a series of ground-based observatories. NWS also operates the Space Weather Prediction Center, which provides real-time monitoring and forecasting of solar events and disturbances and develops models to improve understanding and predict future events. NESDIS maintains NOAA's space weather data through the National Centers for Environmental Information. It also develops and manages several satellite programs which collect solar and space weather-related observations, including the Geostationary Operational Environmental Satellites (GOES) and the Space Weather Follow-on program."], "subsections": []}, {"section_title": "Department of Defense (DOD)25", "paragraphs": ["E.O. 13744 directed DOD to provide space weather forecasts and related products to support military operations of the United States and its partners ( Table 2 ).", "The FY2018 National Defense Authorization Act (NDAA; P.L. 115-91 ) codified the language in E.O. 13744. According to the FY2018 NDAA", "It is the sense of Congress that the [Secretary of Defense] should ensure the timely provision of operational space weather observations, analyses, forecasts, and other products to support the mission of the DOD including the provision of alerts and warnings for space weather phenomena that may affect weapons systems, military operations, or the defense of the United States. ", "E.O. 13865 reiterates the E.O. 13744 requirement verbatim, except that it substitutes the phrase \"naturally occurring EMPs\" for \"space weather phenomena.\" E.O. 13865 also directs DOD to take further steps related to EMP characterization, warning systems, effects, and protection of DOD systems and infrastructure and the United States from EMPs. "], "subsections": [{"section_title": "Air Force", "paragraphs": ["The U.S. Air Force is the lead for all DOD and Intelligence Community (IC) space weather information. Air Force weather personnel provide space environmental information, products, and services required to support DOD operations as required. Air Force space weather operations and capabilities support all elements of the DOD and its decisionmakers. The Congressional Budget Office (CBO) estimates that the Department of Defense, primarily the Air Force, allocated $24 million to space weather activities in FY2019.", "The 557 th Weather Wing, located at Offutt Air Force Base, Nebraska, conducts most of DOD's space weather-related activities. It uses ground-based and space-based observing systems, including the Solar Electro-optical Observing Network (SEON), a network of ground-based observing sites providing 24-hour coverage of solar phenomena; ground-based ionosondes and other sensors providing data in the ionosphere; and space-based observations from the Defense Meteorological Satellite Program."], "subsections": []}, {"section_title": "Army", "paragraphs": ["The Army has two full-time meteorologists to coordinate space weather support within the Army and with other DOD and federal agencies. "], "subsections": []}, {"section_title": "Navy", "paragraphs": ["The Naval Research Laboratory's (NRL's) Remote Sensing and Space Science Divisions and the Naval Center for Space Technology also contribute to the DOD's space weather activities. For example, the Wide-field Imager for Solar Probe Plus (WISPR), launched in August 2018, was designed and developed for NASA by NRL's Space Design Division. WISPR determines the fine-scale electron density and velocity structure of the solar corona and the source of shocks that produce solar energetic particles."], "subsections": []}]}, {"section_title": "Department of Energy (DOE)32", "paragraphs": ["DOE is responsible for monitoring and assessing the potential disruptions to energy infrastructure from space weather, and for coordinating electricity restoration under authorities granted to it by the White House and Congress. ", "E.O. 13744 directs DOE to protect and restore the electric power grid in the event of a presidentially declared grid emergency associated with a geomagnetic disturbance. E.O. 13865 assigns additional roles and responsibilities to DOE specific to R&D and coordination with the private sector to better understand electromagnetic threats and hazards, and their possible effects on the electric power grid ( Table 3 ). ", "Relevant programs and activities for energy infrastructure protection and threat mitigation are led by the DOE's Office of Cybersecurity, Energy Security, and Emergency Response (CESER) (under the Office of Electricity), and the Federal Energy Regulatory Commission (FERC), the North American Electric Reliability Corporation (NERC), and DOE's national laboratories. "], "subsections": [{"section_title": "Office of Cyber Security, Energy Security, and Emergency Response (CESER)", "paragraphs": ["In February 2018, DOE announced the creation of CESER, a new office created from the Office of Electricity Delivery and Energy Reliability (OE). CESER has two main divisions: Infrastructure Security and Energy Response (ISER), and Cybersecurity for Energy Delivery Systems. ISER's mission is \"to secure U.S. energy infrastructure against all hazards, reduce the impact of disruptive events, and respond to and facilitate recovery from energy disruptions, in collaboration with the private sector and state and local governments.\" ", "The DOE has produced a number of reports on GMDs and EMPs. In compliance with the National Space Weather Action plan, ISER produced a 2019 report on geomagnetic disturbances and the impact on the electricity grid. This report was designed to provide a better understanding of GMD events in order to protect the U.S. electricity grid. ", "Prior to the reorganization, DOE's OE collaborated with the Electric Power Research Institute (EPRI), a nonprofit organization that conducts research and develops projects focused on electricity. In 2016, the OE and EPRI together developed the Joint Electromagnetic Pulse Resilience Strategy , and subsequently the DOE Electromagnetic Pulse Resilience Action Plan in January 2017. E.O. 13865 refers to EMPs in two categories: human-made high-altitude (HEMP) and natural EMPs\u00e2\u0080\u0094often referred to as GMDs by government agencies. These DOE-EPRI documents focus specifically on human-made nuclear threats and categorize GMDs separately from EMPs. However, the 2017 plan notes that \"many of the actions proposed herein ... are also relevant to geomagnetic disturbances (GMD), which are similar in system interaction and effects to the E3 portion of the nuclear EMP waveform.\" "], "subsections": []}, {"section_title": "Federal Energy Regulatory Commission (FERC)", "paragraphs": ["FERC is an independent government agency officially organized as part of DOE. The Energy Policy Act of 2005 (EPAct05; P.L. 109-58 ) authorized FERC to oversee the reliability of the bulk-power system. FERC's jurisdiction is limited to the wholesale power market and the transmission of electricity in interstate commerce. ", "EPAct05 authorized the creation of an electric reliability organization (ERO) to establish and enforce reliability standards subject to FERC oversight. The ERO authors the standards for critical infrastructure protection. These standards, which FERC can approve or remand back, are mandatory and enforceable (with fines potentially over $1 million/day for noncompliance). In November 2018, FERC issued a final rule on reliability and transmission system performance standards for GMDs directing NERC to develop \"corrective action plans\" to mitigate GMD vulnerabilities, and to authorize time extensions to implement \"corrective action plans\" on a case-by-case basis. Additionally, the final rule accepts the ERO's submitted research plan on GMDs."], "subsections": []}, {"section_title": "North American Electric Reliability Corporation (NERC)", "paragraphs": ["In 2006 FERC certified NERC as the ERO for the United States. NERC works closely with the public and private electric utilities to develop and enforce FERC-approved standards. Part of NERC's role includes reducing risks and vulnerabilities to the bulk-power system. In April 2019, NERC created a task force in response to E.O. 13865 to examine potential vulnerabilities associated with EMPs and to develop possible areas for improvement, focusing on nuclear EMP threats. "], "subsections": []}, {"section_title": "National Laboratories", "paragraphs": ["DOE oversees 17 national laboratories that advance science and technology research and development to support DOE's mission. The Los Alamos National Laboratory is currently working on a study of EMP and GMD physical characteristics and effects on critical infrastructure, to be carried out in four phases."], "subsections": []}]}, {"section_title": "Department of Homeland Security (DHS)46", "paragraphs": ["Under Presidential Policy Directive 21 (PPD-21), DHS is the lead U.S. agency for critical infrastructure protection and disaster preparedness. E.O. 13744 and E.O. 13865 assign several roles and responsibilities to DHS specific to space weather and EMPs ( Table 4 ).", "Both executive orders assign responsibility to DHS for early warning, response, and recovery functions related to space weather preparedness. However, E.O. 13865 also requires DHS to incorporate EMP scenarios into preparedness exercises, to conduct extensive R&D initiatives to better model EMP hazards and develop mitigation technologies, and to enhance critical infrastructure resilience against EMP hazards in coordination with other relevant federal agencies. ", "Relevant programs and activities are managed by the Department's Science and Technology Directorate, as well as two DHS operational components: the Cybersecurity and Infrastructure Security Agency, and the Federal Emergency Management Agency. DHS utilizes an all-hazards risk management approach. Therefore, programs are generally not hazard-specific, but rather may be used to support space weather resilience activities as needed."], "subsections": [{"section_title": "Science and Technology Directorate (S&T)", "paragraphs": ["S&T conducts R&D projects in partnership with federal agencies and the national laboratories, providing tools and analyses to help utilities better predict localized effects of space weather and enhance grid resilience. For example, the Geomagnetic Field Calculator Tool, developed for this purpose by S&T in partnership with NASA, is in the online testing phase. "], "subsections": []}, {"section_title": "Cybersecurity and Infrastructure Security Agency (CISA)", "paragraphs": ["CISA administers public-private partnership programs that provide training, technical assistance, and on-site risk assessments to relevant private-sector and federal partners. CISA, the Department of Energy, and interagency partners are producing technical guidance for electric utilities and other industry stakeholders on mitigation of electromagnetic hazards, which may include space weather. CISA provides long-term risk guidance and recommendations on EMP and other hazards to industry stakeholders through the National Risk Management Center. CISA provides real-time space weather advisories to private sector owner-operators of vulnerable infrastructure on an as-needed basis. "], "subsections": []}, {"section_title": "Federal Emergency Management Agency (FEMA)51", "paragraphs": ["FEMA develops operations plans and annexes that coordinate use of national resources to address consequences of space weather events. Recent operational documents include the Federal Operating Concept for Impending Space Weather Events (Space Weather Concept of Operations (CONOP)) and the Power Outage Incident Annex and Nuclear/Radiological Incident Annex to the Response and Recovery Federal Interagency Operational Plans. FEMA also periodically incorporates space weather scenarios into all-hazard education, training, and exercise programs. In 2017, FEMA conducted operational and tabletop exercises with federal and state partners. In 2018, FEMA conducted a space weather exercise for senior federal officials. "], "subsections": []}]}, {"section_title": "Department of the Interior (DOI)53", "paragraphs": ["The U.S. Geological Survey (USGS) is DOI's lead scientific agency and \"provides research and integrated assessments of natural resources; supports the stewardship of public lands and waters; and delivers natural hazard science to protect public safety, health, and American economic prosperity.\" The Secretary of the Interior has delegated responsibilities from E.O. 13744 and E.O. 13865 to USGS ( Table 5 ). ", "E.O. 13865 requires USGS to enhance understanding of the variations of the Earth's magnetic field associated with all EMPs, manmade and space weather-related, whereas E.O. 13744 specifies only those resulting from solar-terrestrial interactions. ", "USGS conducts space weather-related activities through the Geomagnetism program under the Natural Hazards Mission Area. The Geomagnetism program collects data about the Earth's dynamic magnetic field at 11 observatories. USGS provides these data and resulting products to federal agencies, oil drilling services companies, geophysical surveying companies, the electric-power industry, and several international agencies, among others. For example, NOAA's Space Weather Prediction Center and the Air Force use USGS observatory data in geomagnetic warnings and forecasts. Congress appropriated $1.9 million to the Geomagnetism program in FY2019. "], "subsections": []}, {"section_title": "Department of State (DOS)56", "paragraphs": ["DOS is the lead foreign affairs agency in the executive branch. Among DOS's responsibilities is negotiating and promoting international norms and practices with respect to outer space. DOS maintains that these efforts contribute to its broader objective of promoting American prosperity through advancing bilateral relationships and leveraging international institutions. ", "E.O. 13744 requires the Secretary of State to lead implementation of U.S. diplomatic and public diplomacy efforts to enhance the international community's capacity to respond to space weather events. Similarly, E.O. 13865 directs the Secretary of State to lead U.S. engagement with allies and partners to enhance resilience to the effects of EMPs, which may include space weather (see Table 6 ). DOS's Bureau of Oceans and International Environmental and Scientific Affairs has traditionally been responsible for advancing U.S. diplomatic engagement on these matters."], "subsections": [{"section_title": "Bureau of Oceans and International Environmental and Scientific Affairs (OES)", "paragraphs": ["Congress established the Bureau of Oceans and International Environmental and Scientific Affairs in Section 9 of the Department of State Appropriations Authorization Act of 1973 ( P.L. 93-126 ). OES is responsible for building international partnerships in multilateral fora to strengthen both U.S. and international resilience to extreme events, including those pertaining to space weather. For example, OES's Office of Space and Advanced Technology leads U.S. delegations to the United Nations (U.N.) Committee on the Peaceful Uses of Outer Space (COPUOS). In 2017, OES participated in a workshop co-hosted by the United Nations and NASA on the International Space Weather Initiative (ISWI). The ISWI was first launched in 2009 to advance space weather science through deploying instruments to collect relevant space weather data, analyzing and interpreting the data obtained from those instruments, and communicating the results of that analysis to the public. The United States and 43 other U.N. member states that participated in this workshop found that strengthening the international framework for space weather services could be accomplished through several means. These included further improving ground and space-based space weather observation infrastructure, sharing best practices for space weather risk assessment and mitigation, increasing coordination on space weather forecasting services, and developing space weather mitigation plans for integration into broader contingency planning for disaster management. These action items are consistent with DOS's responsibilities to contribute to the realization of the 2019 Plan's three key objectives. Efforts by COPUOS to make progress in these and other focus areas are ongoing. "], "subsections": []}]}, {"section_title": "National Aeronautics and Space Administration (NASA)65", "paragraphs": ["Under 51 U.S.C. \u00c2\u00a720301, NASA is responsible for scientific research on the \"Sun-Earth connection through the development and operation of research satellites and other means.\" While E.O. 13865 does not address NASA, E.O. 13744 further directs NASA to ", "(i) implement and support a national research program to understand the Sun and its interactions with Earth and the solar system to advance space weather modeling and prediction capabilities applicable to space weather forecasting;", "(ii) develop and operate space-weather-related research missions, instrument capabilities, and models; and", "(iii) support the transition of space weather models and technology from research to operations and from operations to research.", "The Heliophysics Division of NASA's Science Mission Directorate supports fundamental research on the sun, some of which is important for space weather prediction, but most of which is less directly applicable. Congress appropriated $720 million to the Heliophysics Division in FY2019. CBO estimates that NASA allocated $264 million to space weather activities in FY2019. The Heliophysics Division funds intramural and extramural research and operates a fleet of research spacecraft in Earth orbit and beyond to study the sun, the solar wind, and their interaction with Earth and the rest of the Solar System (see Figure 3 ). When a space weather event or disturbance is observed, NASA also provides research data and modeling results to NOAA for operational use by the Space Weather Prediction Center.", "In addition to its research activities, NASA has unique operational concerns regarding space weather. First, while multiple agencies and the private sector operate satellites in Earth orbit, above the protection provided by Earth's atmosphere, NASA also has spacecraft in orbits far beyond Earth for planetary exploration and other missions. Earth's magnetic field provides significant protection against space weather for Earth-orbiting satellites, but spacecraft outside Earth's magnetosphere do not benefit from this protection and so have additional requirements for radiation shielding and other countermeasures. Second, NASA is the only U.S. agency with human astronauts in space, so it has unique human safety concerns. Human safety concerns are particularly significant for planned future missions to the Moon and other destinations that are beyond Earth's protective magnetosphere."], "subsections": []}, {"section_title": "National Science Foundation (NSF)69", "paragraphs": ["Congress established the NSF to \"promote the progress of science; to advance the national health, prosperity, and welfare; to secure the national defense; and for other purposes.\" E.O. 13744 further directs NSF to \"support fundamental research linked to societal needs for space weather information through investments and partnerships, as appropriate.\" NSF supports space weather research in two directorates: (1) the Geosciences Directorate, including through the Atmospheric and Geospace Sciences division (AGS) and the Office of Polar Programs (OPP), and (2) the Mathematical and Physical Sciences (MPS) Directorate, through the Astronomical Sciences division (AST). E.O. 13865 does not address NSF.", "NSF reports that FY2018 space weather funding totaled approximately $105 million, including about $45 million for AST. CBO estimates that NSF allocated $22 million to space weather activities in FY2019. NSF primarily provides grants to research institutions to conduct scientific studies, including universities and private entities that focus on fundamental research questions related to space weather and its impacts. The AGS division supports both basic sciences research and observational and cyber-infrastructure facilities\u00e2\u0080\u0094including the National Center for Atmospheric Research's High Altitude Observatory\u00e2\u0080\u0094to improve understanding of the dynamics of the sun, Earth's atmosphere, and near-space environment, and how the sun interacts with Earth's atmosphere. OPP support includes the Antarctic and Astrophysics Geospace program and the IceCube Neutrino Observatory (jointly funded with the MPS Division of Physics). In the ATS division\u00e2\u0080\u0094the federal steward for ground-based astronomy in the United States\u00e2\u0080\u0094observations focus mainly on the sun, and activities include management of the National Solar Observatory (NSO) Integrated Synoptic Program and the Daniel K. Inouye Solar Telescope (DKIST). According to NSF, DKIST will play an important role in enhancing the fundamental understanding of space weather and its drivers. In addition, NSF supports the development of numerical models of the space weather chain, including the sun, solar wind, and geospace. ", "E.O. 13744 further directs NSF, in collaboration with other federal agencies, to identify mechanisms for advancing space weather observations, models, and predictions, and for sustaining and transitioning appropriate capabilities from research to operations and operations to research. As noted in the agency's March 2018 announcement regarding space weather operations to research proposals, NSF's primary role in space weather readiness efforts is support for basic research that advances fundamental understanding of space weather and related processes, including \"the generation of solar storms, their propagation through the interplanetary medium, and their impact on the near-Earth space environment.\""], "subsections": []}]}, {"section_title": "Federal Agency Spending on Space Weather Activities", "paragraphs": ["A comprehensive account of total federal agency spending on space weather-related activities is not available. In a cost estimate for the Space Weather Research and Forecasting Act ( S. 881 in the 116 th Congress), CBO estimated that the federal agencies in the National Space Weather Program and the Space Weather Operations, Research, and Mitigation Working Group \"allocated a combined total of nearly $350 million to activities related to space weather\" in FY2019. CBO estimated that the National Aeronautics and Space Administration (NASA) allocated the majority ($264 million) of the $350 million total. Total federal agency allocations towards space weather activities may differ from year to year. For example, CBO estimated federal agencies that were a part of the National Space Weather Program \"spent a total of $160 million\" in FY2016 on activities related to space weather."], "subsections": []}, {"section_title": "Legislation in the 116th Congress", "paragraphs": ["The 116 th Congress continues to consider and pass legislation related to space weather research, forecasting, preparedness, response, and recovery. "], "subsections": [{"section_title": "The National Defense Authorization Act for Fiscal Year 2020 (P.L. 116-92)", "paragraphs": ["Congress enacted S. 1790 in December 2019 as the National Defense Authorization Act for Fiscal Year 2020 (2020 NDAA). The 2020 NDAA amended Sections 320 and 707 of the Homeland Security Act of 2002 ( P.L. 107-296 ) to enact a series of homeland security-related provisions that parallel the E.O. 13865 framework for critical infrastructure resilience and emergency response. See Table 7 for a summary of the new requirements.", "The 2020 NDAA also repealed Section 1691 of the National Defense Authorization Act for Fiscal Year 2018 ( P.L. 115-91 ) , which authorized a \"Commission to Assess the Threat to the United States from Electromagnetic Pulse Attacks and Similar Events.\" The Congressional EMP Commission was to conduct an EMP threat assessment and make policy recommendations to Congress. Senior commission members have publicly claimed a prominent role in developing E.O. 13865, which \"seeks to implement core recommendations of the Congressional EMP Commission on an accelerated basis.\" House-passed versions of the 2020 NDAA cited the publication of E.O. 13865 when repealing Section 1691. ", "Other provisions in the 2020 NDAA require the National Guard to clarify relevant \"roles and missions, structure, capabilities, and training,\" and report to Congress no later than September 30, 2020, on its readiness to respond to electromagnetic pulse events affecting multiple states."], "subsections": []}, {"section_title": "The Space Weather Research and Forecasting Act (S. 881) and Promoting Research and Observations of Space Weather to Improve the Forecasting of Tomorrow (PROSWIFT) Act (H.R. 5260)", "paragraphs": ["These similar but not identical bills, introduced by Senator Gary Peters and Representative Ed Perlmutter respectively, set forth provisions designed to improve the ability of the United States to forecast space weather events and mitigate the effects of space weather. The bills provide statutory authority for an interagency working group (such as SWORM, which was established administratively by the NSTC in 2014). Other major provisions of the bills concern federal agency roles and responsibilities, the establishment of an advisory group, R&D, data sharing, and certain congressional reporting requirements. S. 881 also includes provisions related to the protection of critical infrastructure. The Senate Committee on Commerce, Science, and Transportation ordered S. 881 to be reported without amendment in April 2019. S. 881 was reported out of the committee and placed on the Senate Legislative Calendar in December 2019. H.R. 5260 was referred to several House committees for consideration in November 2019. Previous versions of these bills were introduced in the 114 th and 115 th Congresses. "], "subsections": []}]}]}}
{"id": "R45260", "title": "Ghana: Current Issues and U.S. Relations in Brief", "released_date": "2019-07-25T00:00:00", "summary": ["Ghana, a country of 28 million people on West Africa's Atlantic coast, faces diverse development challenges, but has built a robust democracy notable for consistent peaceful turnovers of executive power since a transition to multiparty rule in the early 1990s. The country also has made progress toward many of the socioeconomic outcomes that successive U.S. administrations have sought to foster in Africa, and U.S. policymakers have tended to view Ghana as a stable U.S. partner in an often volatile region. Substantial U.S. bilateral aid has both been premised on and arguably contributed to Ghana's generally positive development trajectory.", "Amicable relations between the United States and Ghana, a former British colony, have persisted since 1957, when Ghana became the first colonized sub-Saharan African country to gain independence. In 2008, then-President George W. Bush visited Ghana to showcase U.S. aid programs on trade, entrepreneurship, health, education, and Ghana's first Millennium Challenge Corporation (MCC) compact. In 2009, then-President Barack Obama traveled to Ghana to highlight the nation as a democratic model for other African countries.", "The Trump Administration has not pursued any major policy shifts toward Ghana, but bilateral ties have recently come under strain with imposition, in early 2019, of selected visa sanctions on Ghanaian nationals by the U.S. Department of Homeland Security. In practice, the sanctions\u00e2\u0080\u0094imposed in response to reported noncooperation with U.S. immigration law enforcement proceedings and deportation orders\u00e2\u0080\u0094mean that U.S. consular officials are restricting the issuance of certain U.S. visas to Ghanaian citizens. The Administration also has proposed sharp cuts in bilateral aid as part of its emphasis on reducing foreign assistance, which could affect relations.", "During the Obama Administration, U.S. aid to Ghana was provided primarily under U.S. Agency for International Development (USAID)-administered global presidential development initiatives. These included Feed the Future (FTF, a global food security effort), the Global Health Initiative (GHI), the Global Climate Change Initiative (GCCI), and several Africa-specific initiatives: Power Africa, Trade Africa, and the Young African Leaders Initiative (YALI). In 2014 Ghana signed a second MCC compact focused on the electrical power sector. Ghana was also selected to join the Obama Administration's African Peacekeeping Rapid Response Partnership (APRRP) and its Security Governance Initiative (SGI), both launched in 2014. Ghana is a key international peacekeeping troop contributor in Africa, and engages in regular joint military training exercises and other security cooperation with the United States.", "According to a March 2019 State Department fact sheet on U.S.-Ghana relations, the United States and Ghana \"share a long history promoting democracy, human rights, and the rule of law,\" and Ghana is a model for other African countries \"in promoting resilient democratic institutions, transparent and peaceful transitions of power and regional stability.\" There have also been robust \"people-to-people\" relations since the late 1950s, notably in the form of learning exchange visits and cooperation among educational and scientific institutions, and thousands of Ghanaians have been educated in the United States. There are close cultural ties, notably between Ghanaians and African-Americans; there is a substantial African-American expatriate community in Ghana."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Overview", "paragraphs": ["Ghana, a country of 28 million people on West Africa's Atlantic coast, faces diverse development challenges, but has built a robust democracy notable for consistent peaceful turnovers of executive power since a transition to multiparty rule in the early 1990s. The country also has made progress toward many of the socioeconomic outcomes that successive U.S. administrations have sought to foster in Africa, and U.S. policymakers have tended to view Ghana as a stable U.S. partner in an often-volatile region. Substantial U.S. bilateral aid has both been premised on and arguably contributed to Ghana's generally positive development trajectory.", "Amicable relations between the United States and Ghana, a former British colony, have persisted since 1957, when Ghana became the first colonized sub-Saharan African country to gain independence. In 2008, then-President George W. Bush visited Ghana to showcase U.S. aid programs on trade, entrepreneurship, health, education, and Ghana's first Millennium Challenge Corporation (MCC) compact. In 2009, then-President Barack Obama traveled to Ghana to highlight the nation as a democratic model for other African countries. The Trump Administration has signaled support for continued close cooperation, although there has been some recent tension over reported Ghanaian noncooperation with U.S. immigration law enforcement proceedings. The Administration also has proposed sharp cuts in bilateral aid as part of its overall emphasis on reducing foreign assistance, which could affect relations.", "During the Obama Administration, U.S. aid to Ghana was provided primarily under U.S. Agency for International Development (USAID)-administered global presidential development initiatives. These included Feed the Future (FTF, a global food security effort), the Global Health Initiative (GHI), the Global Climate Change Initiative (GCCI), and several Africa-specific initiatives: Power Africa, Trade Africa, and the Young African Leaders Initiative (YALI). In 2014 Ghana signed a second MCC compact focused on the electrical power sector. Ghana was also selected to join the Obama Administration's African Peacekeeping Rapid Response Partnership (APRRP) and its Security Governance Initiative (SGI), both launched in 2014. Ghana is a key international peacekeeping troop contributor in Africa, and engages in regular joint military training exercises and other security cooperation with the United States. ", "Ghana has also played an active and constructive role in regional affairs. It has been a leader in various regional interventions to address political and security crises in West Africa and has hosted refugees fleeing conflict. The Ghanaian government is currently helping to mediate long-standing government-opposition political tensions in neighboring Togo. It also hosted a regional hub that supported United Nations (U.N.) operations to counter the 2014-2015 Ebola outbreak in nearby countries. Ghanaians have played leadership roles in regional and multilateral organizations. Ghana supports Economic Community of West African States and African Union efforts to foster regional and continental economic integration. At a global level, Ghana seeks to sustain positive donor relations, aid, and investment, and contribute to multilateral policymaking relating to peace, stability, development, and scientific cooperation, while also expanding its foreign export markets."], "subsections": []}, {"section_title": "Politics and Governance", "paragraphs": ["The predecessor of Ghana's incumbent president Nana Addo Dankwa Akufo-Addo was John Dramani Mahama, who came to office in July 2012 as the constitutional successor of President John Atta Mills, who died in office of natural causes earlier that month. Mahama then won election in polls held in late 2012.", "Ghana's most recent general elections, held on December 7, 2016, were generally regarded as free and fair, despite tensions and isolated incidents of political violence. The presidential race featured a rematch between Mahama, of the National Democratic Congress (NDC), and Akufo-Addo, of the New Patriotic Party (NPP). These two parties dominate national politics to such an extent that Ghana effectively has a two-party system. Akufo-Addo won 53.7% of votes\u00e2\u0080\u0094exceeding the 50-percent-plus-one threshold necessary to preclude a runoff vote\u00e2\u0080\u0094against 44.5% for Mahama. Akufo-Addo took office in January 2017. The NPP also won 171 of 275 legislative seats and the NDC 104. ", "The strength of Akufo-Addo's first-round win was noteworthy, as he had lost two prior presidential runoffs by razor-thin margins. Despite moderate economic improvements in 2016, widespread frustration over poor economic performance under Mahama likely clinched his electoral defeat. During Mahama's tenure, multiple downward economic trends converged, spurring repeated protests over unemployment and socioeconomic challenges."], "subsections": [{"section_title": "Government Policy Priorities", "paragraphs": ["For two decades, control of Ghana's executive and legislative branches has alternated between the NDC, which has generally supported a social-democratic vision and a key economic role for the state, and the NPP, which has emphasized a more free-market, private-sector-centered approach. Despite these different ideological outlooks, the parties' election platforms and policy records have been broadly similar. Both have tried to foster private-sector-driven growth and foreign investment, while also supporting state investments in industrialization and infrastructure, and both have emphasized the importance of social services and welfare programs.", "President Akufo-Addo is the scion of a well-known political family and a former member of parliament who served as Foreign Affairs Minister and Justice Minister under the NPP government of former President John Kufuor. A major goal of the Akufo-Addo administration\u00e2\u0080\u0094as set out in the NPP's 2016 election platform, presidential speeches, and government policy documents\u00e2\u0080\u0094is to improve the economy. Notable emphases include efforts to increase access to commercial credit, reduce business costs, and support private-sector-led economic expansion and job growth. Priorities include industrialization, economic diversification, state investment in infrastructure, and tax incentives targeting manufacturing in selected sectors (e.g., light industries, pharmaceuticals, petrochemicals, and garments and textiles). In July 2019, the government launched a $320 million initiative called the Infrastructure for Poverty Eradication Programme, under which each of 275 constituencies are to be given $1 million to invest in infrastructure chosen by local stakeholders. Some funding for preexisting commitments is also included.", "The Akufo-Addo administration also seeks to strengthen public social service and safety net programs, with a focus on health, education, and housing. In September 2017, it launched the Free Senior High School program, under which universal senior high school (SHS, i.e., post-ninth-grade) education is entirely publicly funded. Previously, there were a limited number of SHS institutions, admission was competitive, and students had to pay fees. The SHS program has reportedly created challenges with respect to accommodating a large influx of students. In May 2019, the government launched a Social and Partnership Council, which is to manage a partnership between the government, organized labor, and employers aimed at increasing economic competitiveness and growth and ensuring constructive labor-business relations.", "The Akufo-Addo administration also has pledged to create a series of regional development authorities, build public institutional capacities, combat corruption, and enhance governance and accountability. The government seeks to accomplish all of these goals while also reining in public spending, running a balanced budget, and stabilizing the currency. In official remarks, President Akufo-Addo has placed high priority on reducing Ghana's reliance on foreign assistance, noting a need to \"discard a mindset of dependency and living on handouts\" and \"to build an economy that is not dependent on charity and handouts \u00e2\u0080\u00a6 a Ghana beyond aid.\" In July 2019, Akufo-Addo reiterated his call for self-reliance and African-driven regional development."], "subsections": []}, {"section_title": "Law Enforcement and the Rule of Law", "paragraphs": ["Public sector corruption in Ghana has been a chronic challenge. In July 2019, Transparency International and Afrobarometer, a survey organization, released data indicating that roughly a third of Ghanaians reported having paid a public service bribe in the last 12 months, believing that corruption had increased during that period, and thinking that the government is doing a bad job of countering corruption. A majority, 60%, also reported believing that ordinary citizens could make a difference in the fight against corruption. In recent years there have been several high-profile bribery scandals involving top officials, including a major one in 2015-2016 that forced many judges from office. Although both NDC- and NPP-led governments have taken steps to combat corruption, new cases have regularly emerged during the administrations of both parties. ", "Akufo-Addo has pledged to tackle the corruption issue, including by strengthening the asset declaration system for officials and ensuring nonpartisan prosecution of public corruption. In early 2018, the government created an Office of the Special Prosecutor to address state corruption. Akufo-Addo's nomination of former Mahama administration Justice Minister and Attorney General (AG) Martin Amidu to fill the post generated some controversy. Amidu had been dismissed as AG under Mahama after accusing multiple colleagues in the then-ruling NDC of fraud, and later pursued corruption cases through private litigation. In May 2017, Akufo-Addo announced the arrest of customs officials implicated in $276 million in revenue losses in an under-invoicing import collusion case. He also ordered an investigation into the president of Ghana Football Association (GFA) for corruption-related offenses, and later dissolved the GFA. The matter drew intense local public attention.", "Akufo-Addo and the NPP have faced criticism for failing to rein in allegedly criminal acts of intimidation by NPP youth supporters, notably the Delta Force, a pro-NPP political vigilante group. These acts appears linked to unmet demands for patronage or jobs by NPP youth loyalists who helped secure the NPP's 2016 electoral victories. In early 2017, Delta Force members committed acts of assault and rioting, leading to criminal cases against several, and group members later disrupted court proceedings in these cases. Although Akufo-Addo condemned the group, those prosecuted were fined rather than imprisoned. ", "Drug traffickers use Ghana as a hub for the transshipment of cocaine from Latin America and heroin from southwest Asia. These drugs are typically shipped onward to markets in Europe, South Africa, and North America, and Ghanaian drug mules are regularly arrested at airports abroad, although Ghana also is a destination point. There is close U.S.-Ghanaian cooperation to fight drug trafficking. The U.S. Drug Enforcement Administration (DEA) opened an office in Ghana in 2009 and in 2010 helped set up a specially vetted police unit, which the DEA later designated a Sensitive Investigative Unit (SIU), one of a few in Africa. In cooperation with Ghana, the DEA has carried out several extraditions and other law enforcement operations. Since 2012, Ghana also has hosted a State Department International Law Enforcement Academy Regional Training Center. The center trains law enforcement officials from across West Africa. "], "subsections": [{"section_title": "A Threat of Terrorism?", "paragraphs": ["Ghana has not faced Islamist terrorist attacks on its soil, but could, given a rise in violent Islamist extremist attacks and insurgencies in recent years in West Africa, notably including the Sahel, which abuts Ghana's northern border. C\u00c3\u00b4te d'Ivoire and Burkina Faso, which neighbor Ghana, have both faced mass-casualty extremist attacks in urban areas in recent years. Ghana's contribution of troops to the U.N. Multidimensional Integrated Stabilization Mission in Mali (MINUSMA) could also potentially spur extremists to target Ghana.", "There are few, if any, overt signs of widespread radicalization among Ghana's Muslims, who in 2010 comprised nearly 18% of the population and were concentrated primarily in the Northern and Ashanti regions. Ghanaian Islamic practices primarily draw on Sufi traditions (which emphasize personal human-divine spiritual relations) and the Ahmadiyya movement (a global sect with historical origins in India). There are some indications that radicalization of Ghanaians by foreigners or by Ghanaians drawing on foreign extremist ideologies may be occurring, though likely on a limited basis. ", "A Libyan government report on the Islamic State (IS) in Libya that spurred parliamentary debate in October 2017 reportedly suggested that between 50 and 100 Ghanaians may have joined that group. Some local analysts believe there may be a significantly higher number of radicalized Ghanaians with IS links. In early 2018, several individuals in possession of grenades, one with suspected IS ties, were arrested in Ghana.", "A separate matter that has caused some local controversy was the Mahama government's 2016 agreement to host two Yemenis who had been imprisoned for 14 years as U.S. enemy combatants in Guantanamo Bay, Cuba. Despite controversy in the case\u00e2\u0080\u0094including a legal suit over the agreement's legality and NPP criticism of the NDC government's original acceptance of the men\u00e2\u0080\u0094the Akufo-Addo government allowed them to remain in the country as refugees after the agreement expired in early 2018."], "subsections": []}]}, {"section_title": "Human Rights", "paragraphs": ["Ghana has a free and active press and a generally positive record on upholding individual rights and freedoms. Nevertheless, the State Department's 2018 Country Reports on Human Rights Practices documents a range of serious human rights challenges, including", "arbitrary or unlawful killings by the government or its agents; harsh and life-threatening prison conditions; corruption in all branches of government; lack of accountability in cases of violence against women and children, including female genital mutilation/cutting; infanticide of children with disabilities; criminalization of same-sex sexual conduct, although rarely enforced; and exploitative child labor, including forced child labor.", "Trafficking in persons (TIP) activities are a notable challenge. In 2015, Ghana signed the first U.S. bilateral Child Protection Compact Partnership, a multi-year plan to address child sex trafficking and forced labor. Notwithstanding this initiative, the State Department rates Ghana's anti-TIP efforts as poor and ranked Ghana on the Tier 2 Watch List in 2015, 2016, and 2017. This ranking placed Ghana at risk of losing certain types of U.S. aid under the Trafficking Victims Protection Act of 2000 (TVPA, P.L. 106-386 , as amended).", "In 2018, Ghana's TIP ranking improved to Tier 2, a determination indicating that the government does not fully meet minimum anti-TIP standards set out in the TVPA, but is making significant efforts to do so. Ghana remained a Tier 2 country in 2019. As in 2018, the 2019 report states that Ghana is a source, transit, and destination for men, women, and children subjected to forced labor in a range of domestic industries, as well as to sex work. According to the report, child labor in the fisheries sector is particularly widespread. Child labor in the cocoa sector has also been a particular concern of U.S. policy-makers for many years. A range of public-private U.S. Department of Labor-monitored programs to end such child labor are in place, as provided for under the 2001 Harkin-Engel Protocol and several follow-up agreements."], "subsections": []}]}, {"section_title": "Economy", "paragraphs": ["Ghana has largely recovered from a period of low growth under former President Mahama. The value of Ghana's GDP reached an estimated $65 billion in 2018, up from an annual average of $55.8 billion from 2013 through 2017, while GDP grew by 5.6% in 2018\u00e2\u0080\u0094an arguably healthy rate, but one lower than the 8.1% rate achieved in 2017. The International Monetary Fund (IMF) projects that the growth rate will rise to 8.8% in 2019 before slowing to an average of 3.7% over the next five years. In the aggregate, however, that growth would be significant; the IMF anticipates that GDP will be worth $97 billion in 2024. ", "Increases in the prices of Ghana's key commodity exports have helped spur the post-Mahama recovery. Historically, Ghana's most important exports have been cocoa and gold. Crude oil has become a third major commodity export since 2010, when production from newly discovered oil fields began. The oil and gas sector is expected to rapidly expand following a period of weak oil prices and a number of technical production challenges.", "Ghana's domestic economy is more diverse and dynamic than the economies of many of its West African peers. The services sector, which includes a small stock market, a nascent call- and information-processing sector, and a mobile money market worth $35 billion, has grown particularly rapidly since the mid-2000s. Services, which are centered in cities, where about 56% of Ghanaians live, contributed an estimated 42% of GDP in 2017. Agriculture's share of GDP has declined over the past decade, from 36% in 1997 to 20% in 2017, but the sector remains an economic keystone; it employed 34% of the labor force in 2017. ", "Compared with much of West Africa, Ghana has fairly effective public goods and service provision capacities, and relatively high cell phone usage and electricity access rates, which underpin production, digital trade, and financial transactions. Access to reliable power is projected to increase as multiple new power plant projects come online\u00e2\u0080\u0094though in the meantime, power generation and transmission capacities remain unreliable and costly. Ghana is also continuing to expand natural gas production and related transport and storage infrastructure, primarily for use in electricity production, but also for applications in other sectors (e.g., for fertilizer production).", "A multi-year slide in the exchange value of Ghana's Cedi currency that began under Mahama has continued under Akufo-Addo, hurting the trade balance and hindering economic activity, due to a heavy reliance on imported goods. Despite the NPP's strong criticism of the Mahama government's deficit spending and other aspects of its economic policy record, including its high deficit spending, the Akufo-Addo administration has continued to borrow heavily to fund its policy agenda. It sold $2 billion worth of Eurobonds in May 2018 and another $3 billion in March 2019, after issuing roughly $1.2 billion in state-backed bonds to finance state-owned enterprise energy sector debts earlier in the Akufo\u00c2\u00adAddo administration. Public debt climbed from 57.1% of GDP in 2016, Mahama's final year in office, to 59.6% of GDP in early 2018 (latest data). Debt payments and efforts to fulfill the NPP's campaign pledges have helped drive such spending.", "To help Ghana address fiscal imbalances, external account deficits, exchange rate-linked rises in inflation, and power shortages, in 2015 the IMF began a $925 million, policy-conditioned Extended Credit Facility (ECF) loan program. The Akufo-Addo government maintained the program, while requesting and receiving waivers allowing deviations from some ECF targets. The program was extended into early 2019. The IMF has generally praised the government's economic performance, notably regarding revenue collection efforts, public debt audits aimed at identifying invalid claims, and accountability measures (e.g., the creation of a Special Prosecutor post (see above) and a proposed Public Financial Management Act). It has also called new government credit commitments \"justified,\" while also warning that the national debt loads remain \"at high risk of distress.\"", "Annual foreign direct investment (FDI) has generally grown in recent years, especially in the energy sector. According to the U.N. Conference on Trade and Development, FDI flows into Ghana averaged $3.3 billion annually between 2014 and 2016, while FDI stock averaged $26.5 billion. The World Bank's 2019 Doing Business Report ranks Ghana 114 th out of 190 countries surveyed. This is far below its 2012 ranking of 63 rd among 183 countries, yet still placed Ghana in the top-performing quarter of African countries. Under Mahama, Ghana created an Investment Promotion Center to oversee FDI and streamline investment procedures. While in its 2019 Investment Climate Statement for Ghana the State Department reported that Ghana has \"one of the more open\" investment climates in Africa, it also cited a number of \"troubling\" foreign investment policy in recent years."], "subsections": []}, {"section_title": "U.S. Relations", "paragraphs": ["The Trump Administration has not announced any major changes in U.S. policy toward Ghana, but has proposed a sharp reduction to USAID and State Department-administered aid for Ghana, which could affect bilateral relations. According to the State Department, the United States and Ghana \"share a long history promoting democracy, human rights, and the rule of law,\" and Ghana is a model for its peers throughout Africa \"in promoting resilient democratic institutions, transparent and peaceful transitions of power and regional stability.\" There have also been robust \"people-to-people\" relations since the late 1950s, notably in the form of learning exchange visits and cooperation among educational and scientific institutions, and thousands of Ghanaians have been educated in the United States. There are close cultural ties, notably between Ghanaians and African-Americans; there is a substantial African-American expatriate community in Ghana.", "Despite generally amicable bilateral relations, the U.S. Department of Homeland Security (DHS) in coordination with the Department of State imposed visa sanctions on Ghana in January 2019, citing a \"lack of cooperation in accepting their nationals ordered removed from the United States\"\u00e2\u0080\u0094an issue of particular salience for the Trump Administration. The restrictions affect tourist and business visitor visas for certain government officials and, in some cases, their families and attendants. The United States had earlier warned that it might take such an action: in June 2018, the United States alleged that Ghana's government was insufficiently cooperating with U.S. deportation orders by not interviewing or providing travel documents to Ghanaians being deported from the United States. In such cases, the United States pays for charter flights to effect removals."], "subsections": [{"section_title": "Bilateral Cooperation and U.S. Assistance", "paragraphs": ["Bilateral cooperation is diverse, ranging from security matters to development assistance programs to professional development and learning exchanges. A flagship exchange program is the Young African Leaders Initiative (YALI), for which Ghana hosts a Regional Leadership Center. YALI, launched by the Obama Administration in 2010, fosters the development of emergent young African business, civic, and public management leaders through U.S. exchange -based fellowships and follow-up learning and networking in Africa. Another notable initiative is Power Africa, also begun by the Obama Administration, which supports increased access to electricity. The Trump Administration has maintained both programs, but requested less funding for them than did the Obama Administration. ", "Ghana also hosts a USAID West Africa regional mission and is a beneficiary of its programs, such as the West Africa Trade Hub, which helps build regional trade and investment capacities and seeks to increase AGOA exports. About 139 Peace Corps volunteers, who are part of a program that has been operational since 1961, work in the areas of education, agriculture, and health. Ghana periodically receives additional assistance under State Department and USAID regional programs, periodic short-term programs by other U.S. agencies, and special regional or global initiatives, such as the African Peacekeeping Rapid Response Partnership.", "Bilateral State Department and USAID-administered assistance totaled $143 million in FY2018, and funded programs related to health ($75 million), agriculture ($35 million) and education ($20 million), among other sectors. Health aid in FY2018 focused on nutrition, family planning, and reproductive, child, and maternal health programs, as well as efforts to combat HIV/AIDS and malaria. The Trump Administration has requested $62.8 million for FY2020\u00e2\u0080\u0094a 56% decrease from actual FY2018 levels. Proposed health sector assistance would comprise $42 million, nearly 67% of the FY2020 request, while agriculture programs would constitute much of the balance. "], "subsections": []}, {"section_title": "MCC Compact", "paragraphs": ["In 2012, Ghana completed a five-year $536 million Millennium Challenge Corporation (MCC) compact focused on improving the agricultural economy, roads and ferry investments, and rural banks, as well as education, water, sanitation, and power service delivery. In 2014, Ghana signed a second five-year MCC compact, a $498 million set of projects, matched by $37.4 million in Ghanaian public funding. Focused entirely on private- and public-sector electrical system capacity building, it is designed to meet current and future power demand, spur growth, and reduce poverty. A key goal is to improve the service quality and reliability of the Electricity Company of Ghana (ECG), the main national power utility, through technical and governance capacity building, and to bring in a private-sector operator, possibly a U.S. firm, to partially privatize ECG and enhance its commercial viability. This element of the compact has spurred labor opposition and is contingent on ECG clearing much of its legacy debt (a factor in the government's previously discussed recent $1.2 billion bond offering).", "The compact provides technical aid for the northern region's power utility and supports efforts to improve power sector regulatory capacities, reform electricity tariff structures, and attract power sector investment. It also seeks to improve energy supply and demand management and energy use efficiency, and provides limited support for distributed, off-grid, solar-power systems and increased access to power connections by small businesses. Gas sector commercialization, the implementation of a national-gas-to-power plan, and the operationalization of an independent electricity producer framework are other areas of compact activity.", "In 2018, the MCC Board of Directors selected Ghana as one of five West African countries eligible for a concurrent MCC compact that would focus on promoting \"cross-border economic integration, trade, and collaboration\"\u00e2\u0080\u0094a new authority granted by Congress under the AGOA and MCA Modernization Act of 2018 ( P.L. 115-167 ). Consideration of Ghana's suitability for a concurrent compact is ongoing."], "subsections": []}, {"section_title": "Security Cooperation", "paragraphs": ["U.S. and Ghanaian interests in addressing regional political and security crises have often aligned, and Ghana has won international plaudits for its steady contribution of troops to international peacekeeping operations in Africa and elsewhere. For years, Ghana's military has received U.S. training in support of such activities, and Ghana has periodically provided the U.S. military with access to its military facilities, in support of both military exercises and crisis response actions (e.g., emergency embassy evacuations). It also hosts a U.S. military Exercise Reception Facility used to expedite U.S. and Ghanaian troop deployments in West Africa.", "U.S.-Ghanaian security cooperation is rooted in bilateral defense agreements dating back to 1972. In early 2018, the two countries signed an updated Status of Forces Agreements (SOFA, a type of agreement governing bilateral defense cooperation and the rights and privileges of U.S. troops stationed in partner countries). The State Department described the agreement as a routine update of the terms governing U.S.-Ghanaian defense cooperation, and as supporting planned joint exercises and the U.S. provision of up to $20 million in military equipment to Ghana. Most of this equipment is being provided primarily under the African Peacekeeping Rapid Response Partnership (APRRP), a U.S. initiative that supports partner military peacekeeping training, with a focus on logistics, troop deployment, and interoperability capacity-building. Ghana has also long participated in the U.S. International Military Education and Training (IMET) program.", "Ratification of the SOFA by Ghana's parliament, however, proved controversial. It was preceded by press accounts suggesting that the United States wanted to establish one or more military bases in Ghana, an allegation that the State Department refuted. Opposition members of parliament boycotted the vote, citing national sovereignty concerns. While ostensibly a protest against U.S-Ghanaian cooperation, their action appears likely to have been primarily motivated by NPP-NDC partisan rivalry. The Mahama/NDC administration had itself pursued robust security cooperation with the United States.", "Ghana is a partner of the North Dakota National Guard under the State Partnership Program, which pairs U.S. state National Guard units with foreign partner nations in support of U.S. security cooperation goals. Ghana has also hosted and benefitted from various U.S. Africa Command (AFRICOM) activities centered on regional crisis-response and maritime security. Ghana has also received Department of Defense (DOD) counternarcotics capacity-building assistance in some years, including aid that ranged between $1 million in FY2017 and $3.5 million in FY2015. DOD has also provided ship traffic monitoring equipment and patrol boats, administered training, and pursued maritime cooperation, in part to boost Ghana's capacity to counter maritime piracy. ", "In the first half of the 2010s, Ghana received some bilateral Foreign Military Financing, as well as periodic Nonproliferation, Antiterrorism, Demining and Related Programs-Export Control and Related Border Security assistance (NADR-EXBS, last provided in FY2015 at a level of $200,000). FMF supported Ghana's capacity to deploy trained, equipped international peacekeeping troops. NADR aid supported efforts to increase internal and regional security by targeting small arms trafficking. Other U.S. security sector assistance has been provided under the State Department's West Africa Regional Security Initiative (WARSI). WARSI supports increased access to justice, rule of law capacity-building, security sector reform, and efforts to bolster partner nations' capacity to counter transnational threats, including illicit drug trafficking."], "subsections": []}]}, {"section_title": "Outlook", "paragraphs": ["Despite periodic challenges, a long history of positive U.S.-Ghanaian relations suggests that bilateral cooperation relating to development, trade, and security is likely to endure. President Akufo-Addo's stated goal of decreasing and ultimately ending Ghana's need for foreign aid, and his embrace of private-sector-led growth models, are likely to be received positively by most U.S. policymakers. His message of economic self-reliance may resonate, in particular, with the Trump Administration, given President Trump's contention that leaders of all countries should prioritize their own nations' economic interests. If Ghana is able to become more self-sufficient and boost its economic production and trade capacity, diversify its economy, and reduce poverty, it could also become a more significant U.S. trade partner."], "subsections": []}]}}
{"id": "R46304", "title": "COVID-19: China Medical Supply Chains and Broader Trade Issues", "released_date": "2020-04-06T00:00:00", "summary": ["The outbreak of Coronavirus Disease 2019 (COVID-19), first in China, and then globally, including in the United States, is drawing attention to the ways in which the U.S. economy depends on manufacturing and supply chains based in China. This report aims to assess current developments and identify immediate and longer range China trade issues for Congress.", "An area of particular concern to Congress is U.S. shortages in medical supplies\u00e2\u0080\u0094including personal protective equipment (PPE) and pharmaceuticals\u00e2\u0080\u0094as the United States steps up efforts to contain COVID-19 with limited domestic stockpiles and insufficient U.S. industrial capacity. Because of China's role as a global supplier of PPE, medical devices, antibiotics, and active pharmaceutical ingredients, reduced export from China have led to shortages of critical medical supplies in the United States. Exacerbating the situation, in early February 2020, the Chinese government nationalized control of the production and distribution of medical supplies in China\u00e2\u0080\u0094directing all production for domestic use\u00e2\u0080\u0094and directed the bureaucracy and Chinese industry to secure supplies from the global market. Now apparently past the peak of its COVID-19 outbreak, the Chinese government may selectively release some medical supplies for overseas delivery, with designated countries selected, according to political calculations.", "Congress has enacted legislation to better understand and address U.S. medical supply chain dependencies, including P.L. 116-136 , The Coronavirus Aid, Relief, and Economic Security (CARES) Act, that includes several provisions to", "expand drug shortage reporting requirements; require certain drug manufacturers to draw up risk management plans; require the U.S. Food and Drug Administration (FDA) to maintain a public list of medical devices that are determined to be in shortage; and direct the National Academies of Science, Engineering, and Medicine to conduct a study of pharmaceutical supply chain security.", "Other potential considerations for Congress include whether and how to incentivize additional production of health supplies, diversify production, address other supply chain dependencies (e.g., microelectronics), fill information and data gaps, and promote U.S. leadership on global health and trade issues.", "The crisis that has emerged for the U.S. economy is defined, in large part, by a collapse of critical supply, as well as a sharp downturn in demand, first in China and now in the United States and globally. As China's manufacturing sector recovers, while the United States and other major global markets are grappling with COVID-19, some fear China could overwhelm overseas markets, as it ramps up export-led growth to compensate for the sharp downturn of exports in the first quarter of 2020, secure hard currency, and boost economic growth. China may also seek to make gains in strategic sectors\u00e2\u0080\u0094such as telecommunications, microelectronics, and semiconductors\u00e2\u0080\u0094in which the government undertook extraordinary measures to sustain research and development and manufacturing during the COVID-19 outbreak in China."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Overview", "paragraphs": ["The outbreak of coronavirus disease (COVID-19), first in the People's Republic of China (PRC or China), and now globally, including in the United States, is drawing attention to the ways in which the United States and other ec onomies depend on critical manufacturing and global value chains that rely on production based in China. Congress is particularly concerned about these dependencies and has passed legislation to better understand and address them. An area of particular concern to Congress in the current environment is U.S. shortages of medical supplies\u00e2\u0080\u0094including personal protective equipment (PPE) and pharmaceuticals\u00e2\u0080\u0094as the United States steps up efforts to contain COVID-19 with limited domestic stockpiles and insufficient U.S. industrial capacity. Because of China's role as a global supplier of PPE, medical devices, antibiotics, and active pharmaceutical ingredients (API), reduced exports from China have led to shortages of critical medical supplies in the United States.", "Starting in early February 2020, U.S. health care experts began warning of a likely global spread of COVID-19, and early reports of U.S. medical supply shortages began to emerge. At the same time, the Chinese government nationalized control of the production and distribution of medical supplies in China, directing all production for domestic use. The Chinese government also directed the national bureaucracy, local governments, and Chinese industry to secure supplies from the global market. This effort likely exacerbated medical supply shortages in the United States and other countries, particularly in the absence of domestic emergency measures that might have locked in domestic contracts, facilitated an earlier start to alternative points of production, and restricted exports of key medical supplies. As China's manufacturing sector recovers while the United States and other countries are grappling with COVID-19, the Chinese government may selectively release some medical supplies for overseas delivery. Those decisions are likely to be driven, at least in part, by political calculations, as it has done recently with many countries around the world.", "COVID-19 was identified in China in December 2019 and peaked in late January 2020. In response, China shut down a large part of its economy in an effort to contain the outbreak. A key factor in the sharp economic slowdown in China was the dramatic downturn of both demand and supply after Chinese officials imposed restrictions in the third week of January on movement of people and goods in and out of localities across China. Since the COVID-19 outbreak in China has eased, the Chinese government's efforts to restart business activities has been slow and uneven across sectors and locations. Companies have sought to meet new government requirements for virus containment and faced worker and supply shortages as interregional logistics have remained constrained. Resumption of bilateral trade will likely be uneven due to bottlenecks in inputs, locations of containers, and logjams in current shipments. U.S. companies typically maintain anywhere from two to ten weeks of inventory, and transportation time for trans-Pacific container shipments is typically three weeks. With this timeframe in mind, initial shortages that U.S. firms faced of deliveries of microelectronics, auto parts, and health and medical products could intensify over the next few months. There could be additional shortages in a wide range of imports that transit via container ship (e.g., processed raw materials, intermediate industrial goods, and finished consumer products).", "As China's economic activities resume, other countries around the world are taking an economic hit. As in China, new restrictions around the world on the movement of people and business operations could trigger sharp new slowdowns in demand, transportation, and logistics worldwide, further dragging down prospects for global trade recovery. Suppressed global demand will likely further complicate efforts to orchestrate a rebound in China's (or global) economic activity. In sectors where China has extensive capacity (such as steel), some fear China could overwhelm overseas markets, as it ramps up export-led growth to compensate for the sharp economic downturn in the first quarter of 2020.", "Congress faces current choices that will influence the longer-range U.S. trade trajectory vis-a-vis China. Since the imposition of Section 301 tariffs on U.S. imports from China and China's retaliatory tariffs beginning in 2018, some Members have raised questions about the dependence of U.S. supply chains on China for critical products. There are also concerns about the potential ramifications of these dependencies, particularly in times of crisis or PRC nationalization of industry. Current demand pressures during the COVID-19 pandemic could increase U.S. reliance on medical supplies from China, at least in the short term (provided that the Chinese government is willing to export these supplies to the United States). At the same time, these pressures are also incentivizing diversification efforts."], "subsections": []}, {"section_title": "U.S.-China Trade and the Impact of COVID-19", "paragraphs": ["As the United States' third-largest trading partner in 2019, bilateral trade with China is important to the U.S. economy, and the recent sharp downturn in activity affects a wide range of U.S. industries. Total U.S. trade with the world (the sum of exports and imports of goods and services) was $5.6 trillion in 2019, equivalent to 26% of U.S. gross domestic product (GDP); China accounts for 11% of U.S. trade. Key facts about the relationship include the following: ", "China's, total merchandise trade with the United States in 2019 amounted to $558.9 billion; China is the United States' third largest export market for goods. U.S. goods exports to China in 2019 were valued at $106.6 billion in 2019; China is the top source of U.S. imports. U.S. goods imports from China reached $452.2 billion in 2019; U.S. services exports to China in 2019 were valued at $56.7 billion (mostly travel and transport); U.S. services imports from China in 2019 were valued at $18 billion (about half of this amount was travel and transport); and U.S. foreign direct investment (FDI) stock in China in 2018 reached $116.5 billion while China's FDI stock in the United States reached $60.2 billion in 2018. Top U.S. exports to China include semiconductor chips, devices, parts and manufacturing machines; agriculture; aircraft, turbojets, turbo propellers, and gas turbines; optical and medical equipment; autos; plastics; and pharmaceutical products ( Figure 1 ). Top U.S. imports from China include microelectronics (computers and cell phones) and appliances, furniture, bedding and lighting; toys, games and sports equipment; plastics; knitted and non-knitted apparel, textile fabric, linens, and footwear; auto parts; articles of iron and steel; medical and surgical instruments; and, organic chemicals (including active pharmaceutical ingredients and antibiotics)."], "subsections": [{"section_title": "China First Quarter (Q1) 2020 Slowdown Effects on U.S. Industries", "paragraphs": ["Since late January, the outbreak of COVID-19 in China has had a direct economic impact on U.S. firms that operate in China, export to or sell goods and services directly in China, or depend on Chinese goods and services for their operations in the United States and abroad. Some analysts estimate that China experienced a sharp drop in economic growth by as much as 9% in Q1 2020 and a 17.2% drop in exports in January-February 2020 compared to the same period in 2019. China's economy is globally connected through trade, investment, and tourism. The economic slowdown and global spread of COVID-19, combined with global travel and transportation restrictions and other effects, are now causing worldwide economic fallout. Indicators in key industries, include:", "China has recorded a sharp downturn in microelectronics production and sales and the United States could experience a similar drop due to a potential gap in availability. Almost half the value of U .S. imports from China in 2019 was mobile phones, computers and related parts . Foxconn, a Taiwan firm that produces the iPhone for Apple in China, received formal government permission to reopen its facilities in mid-February but has faced challenges because of quarantine and transportation restrictions. Foxconn's plan to offer $1,000 to each returning worker suggests potential lingering concerns about the risk of infection or other labor constraints. The company may also face supply constraints of key microelectronics inputs. Other companies that use Foxconn for contract manufacturing in China include Amazon, Cisco, Dell, Google, Hewlett Packard, Nintendo, and Sony, as well as Chinese firms Huawei and Xiaomi. The U.S. auto industry and manufacturers in South Korea, Japan, and Germany quickly faced manufacturing bottlenecks because of the lack of availability of auto parts supplies from China. The spread of COVID-19 to other major auto manufacturing markets, including the United States, Germany, Japan and South Korea may pose additional constraints. China exported $9.6 billion in auto part s to the United States in 2019 . U.S. manufacturing faces potential shortages of intermediate inputs for steelmaking and heavy manufacturing, such as refined manganese metal, ferrosilicon, and ferrovanadium. Manganese and ferrovanadium are steel strengtheners that depend on China-based processing. While manganese is mined around the world, China controls 97% of manganese processing. Ferrosilicon is used to extract oxygen from liquid steel, and is mostly produced in China. China exported al most $10 billion in iron and steel products to the United States in 2019 . U.S. retailers, tourism, and service providers that rely on the Chinese consumer base have also taken a hit in China. Many closed or significantly curtailed operations. U.S. retailers reduced operating hours or shuttered stores in response to COVID-19. For example, Starbucks closed about half its 4,200 retail outlets in China between late January and late February. Retailers and tourism service providers around the world have seen significantly reduced revenue as fewer Chinese citizens travel abroad China's outbound tourism spending in 2018 was $277 billion, of which an estimated $36 billion was in the United States ."], "subsections": []}, {"section_title": "Transportation, Logistics and Broader Considerations", "paragraphs": ["Measures to contain the COVID-19 outbreak have significantly curtailed global transportation links. The consequence is the prevention of the transport of many products and manufacturing inputs. Passenger air traffic has slowed significantly, taking offline significant air cargo capacity for microelectronics and other products that ship by air. Container shipments are also constrained by the current backlog and dependence on domestic trucking and rail transportation, as well as on the ability of countries to staff port operations.", "U.S. airlines started suspending flights to China in late January 2020 and have suspended other routes as COVID-19 has spread globally. United Airlines announced steep flight cuts and said in early March 2020 that ticket bookings were down 70% for Asia-Pacific flights, noting that this downturn was magnified by a surge in flight cancellations. The company noted that revenue in April and May could drop as much as 70%. While Federal Express (FedEx) and United Parcel Service (UPS) announced in early March that they continued to run flights in and out of affected countries, they warned that limitations on travel could delay some shipments, although freight carriers are now starting to repurpose passenger flights for cargo which could help expand capacity. Quarantine of aircrew and restrictions on the ground in China with regard to labor, production, supply and logistics likely significantly curtailed shipments. On March 26, 2020, the Civil Aviation Administration of China (CAAC) restricted all airlines running passenger flights in and out of China to one flight per week, further constraining air freight capacity.", "Container shipping from China has faced serious constraints because of shortages of workers and trucking constraints. These constraints are affecting both U.S. imports to and exports from China. The Port of Los Angeles has announced that shipments scheduled from China between February and April 2020 have been cut by 25%. Los Angeles and Long Beach ports project a 15% to 17% drop in cargo volumes in Q1 2020. One in nine Southern California jobs is tied to the ports, including people who work on the docks, drive trucks, and move boxes in warehouses, according to the Executive Director of the Port of Los Angeles. The Port Authority of New York and New Jersey has requested $1.9 billion in federal aid to offset a forecasted 30% year-on-year drop in cargo volumes.", "In the immediate term, shipping and logistical constraints are slowing U.S. exports to Asia. U.S. exporters of meat, poultry, hay, oranges and other produce are reporting that refrigerated containers are in short supply and cold storage facilities are overflowing with inventory. U.S. and global manufacturing\u00e2\u0080\u0094including production that recently shifted out of China to other parts of Asia and to Mexico\u00e2\u0080\u0094is still recovering from disruptions in Chinese supply. Vietnam, Taiwan, Malaysia, South Korea, Japan, Thailand, and Singapore all have strong supply chain links with China and reported Q1 supply shortages. ", "Even as China's production resumes, these Asian countries are now grappling with their own COVID-19 outbreaks, further complicating recovery. The situation is exacerbated by spread of COVID-19 in other important manufacturing markets such as South Korea, Italy, Germany, and Mexico. Disruptions in Chinese supply chains were initially expected to have a limited macroeconomic effect on developed markets in the short term, but as the outbreak has spread globally and Chinese firms and logistics operations have struggled to return to full capacity, a wide range of U.S. imports from China, including raw materials, intermediate industrial inputs, and consumer products, are likely to be in short supply. U.S. firms with operations in China or that depend on production in China may be prompted to diversify away from China and begin establishing new supply chains. The head of the EU Chamber of Commerce in China said in late February that the disruption from COVID-19 had driven home the need for foreign companies to diversify away from China."], "subsections": []}, {"section_title": "Prospects for U.S. Exports", "paragraphs": ["Within this context, U.S. firms may find some opportunities to increase exports to China, so long as global port operations resume and current logjams are resolved. Increased U.S. exports could be driven in part by recent tariff liberalization. As part of the phase one trade deal that the United States and China signed in mid-January 2020 to resolve some issues the United States raised under Section 301, the United States and China agreed, effective February 14, 2020, to cut by 50% the tariffs they imposed in September 2019. China announced a tariff exemption process for 700 tariff lines, including some agriculture, medical supplies, raw materials, and industrial inputs. ", "With China's recovery, the U.S. government could press China to make up for lost time on U.S. purchases. COVID-19 may make it difficult for both sides to meet these targets, however, given the economic fallout in both countries. As part of the phase one trade deal, China committed to purchase at least $200 billion above a 2017 baseline amount of U.S. agriculture ($32 billion), energy ($52.4 billion), manufacturing goods ($77.7 billion), and services ($37.9 billion) between January 1, 2020 and December 31, 2021. Regarding agriculture, in November 2019, China's National Development and Reform Commission (NDRC) announced detailed rules for the application and allocation of grain and cotton import tariff-rate quotas for 2020 that specify imports for wheat (9.636 million tons, 90% state-owned trade), corn (7.2 million tons, 60% state-owned trade), rice (5.32 million tons, 50% state trade), and cotton (894,000 tons, 33% state-owned trade). NDRC included in these rules a requirement that companies applying for tariff-rate quotas must have a \"positive record\" in China's corporate social credit system. This requirement allows the Chinese government to restrict or impose terms on certain U.S. cotton exporters. China could use this requirement to create counter pressure in response to recent U.S. congressional action to block U.S. imports of textiles and apparel that contain cotton from China's Xinjiang region due to concerns over forced labor there. With falling oil prices, China would arguably have to buy a significant larger volume of goods to reach its purchase obligations that are benchmarked by dollar value."], "subsections": [{"section_title": "Force Majeure Provisions", "paragraphs": ["The crisis is also calling into question China's ability to implement the U.S.-China phase one trade deal signed in January 2020. The agreement has a force majeure provision\u00e2\u0080\u0094which allows parties to opt out of contractual obligations without legal penalty because of developments beyond their control\u00e2\u0080\u0094that could give China flexibility in implementing its commitments. The deal was finalized in December 2019 and signed in mid-January 2020, when Chinese officials reportedly knew about the severity of the COVID-19 outbreak in Wuhan, which raises questions about the rationale and timing of the decision to include the force majeure provision. A factor further complicating the potential for resumption and expansion of U.S. exports is Chinese companies' invocation of force majeure certifications. For example, China National Petroleum Company (CNPC) used the outbreak of COVID-19 to declare force majeure in cancelling some liquefied natural gas (LNG) imports, a move followed by a downturn in overall oil and gas demand. The Ministry of Commerce has since provided free certifications to Chinese companies that need to declare force majeure . Chinese companies and courts rely on an interpretation of force majeure that is different from the standard legal interpretation in the United States, which allows both parties to cancel contract terms and revert to a pre-contract baseline. In China, force majeure is used to cancel an obligation by the party invoking the provision while the other party may still be obligated to perform and honor contract terms. For example, if a payment is blocked or forgiven by the Chinese government, the other party may still be expected to perform according to the contract terms without the foreign party being reimbursed for any additional costs incurred. Moreover, Chinese courts are unlikely to allow foreign firms to prosecute Chinese firms that do not perform according to their contracts."], "subsections": []}]}]}, {"section_title": "U.S. Reliance on China for Health Care and Medical Products", "paragraphs": ["In the midst of the pandemic, Congress is expressing a strong interest in responding to U.S. shortages of medical supplies\u00e2\u0080\u0094including PPE and pharmaceuticals\u00e2\u0080\u0094as the United States steps up efforts to contain and counter COVID-19 with limited domestic stockpiles and constraints on U.S. industrial capacity. Because of China's role as a major U.S. and global supplier of medical PPE, medical devices, antibiotics, and active pharmaceutical ingredients ( Appendix B ), reduced exports from China have led to shortages of critical medical supplies in the United States. While some analysts and industry groups have pointed to tariffs as a disincentive to U.S. imports of health and medical products, supply shortages due to the sharp spike in demand, as well as the nationalization and diversion of supply to China, appear to be stronger drivers. According to China Customs data, in 2019 China exported $9.8 billion in medical supplies and $7.4 billion in organic chemicals\u00e2\u0080\u0094a figure that includes active pharmaceutical ingredients and antibiotics\u00e2\u0080\u0094to the United States. While there are no internationally-agreed guidelines and standards for classifying these products, U.S. imports of pharmaceuticals, medical equipment and products, and related supplies are estimated to have been approximately $20.7 billion (or 9.2% of U.S. imports), according to CRS calculations using official U.S. data ( Figure 2 and Table 1 )."], "subsections": [{"section_title": "China Nationalizes Medical Production and Supply", "paragraphs": ["In early February 2020, the Chinese government nationalized control of the production and dissemination of medical supplies in China. Concerned about shortages and its ability to contain the COVID-19, the Chinese government transferred authority over the production and distribution of medical supplies from the Ministry of Information Industry and Technology (MIIT) to the NDRC, China's powerful central economic planning ministry. NDRC commandeered medical manufacturing and logistics down to the factory level and has been directing the production and distribution of all medical-related production, including U.S. companies' production lines in China, for domestic use. In response to government directives, foreign firms with significant production capacity in China, including 3M, Foxconn, and General Motors, shifted significant elements of their operations to manufacturing medical PPE. By late February 2020, China had ramped up face mask production\u00e2\u0080\u0094both basic surgical masks and N95 masks\u00e2\u0080\u0094from a baseline of 20 million a day to over 100 million a day.", "China's nationalization efforts, while understandable as part of its efforts to address an internal health crisis, may have denied the United States and other countries that depend on open and free markets for their health care supply chains access to critical medical supplies ( Table 2 and Table 3 ). On February 3, 2020, China's Ministry of Commerce directed its bureaucracy, local governments and industry to secure critical technology medical supplies and medical-related raw material inputs from the global market, a situation that likely further exacerbated supply shortages in the United States and other markets. To ensure sufficient domestic supplies to counter COVID-19, China's Ministry of Commerce also called on its regional offices in China and overseas to work with PRC industry associations to prioritize securing supplies from global sources and importing these products. The Ministry of Commerce provided a list of 51 medical suppliers and distributors in 14 countries and regions to target in quickly assuring supply. The Ministry also prioritized food security and the need to increase meat imports. China's trade data shows that these policies led to steep increases in China's imports of essential PPE and medical supplies, including the raw materials needed to make products such as N95 masks. The policies also contributed to sharp decreases in China's exports of these critical medical products to the world. (See Table 2 .)", "On March 29, 2020, the Australian government imposed new temporary restrictions on all foreign investment proposals in Australia out of concern that strategic investors\u00e2\u0080\u0094particularly those of Chinese origin\u00e2\u0080\u0094might target distressed assets. This comes after authorities discovered two instances of Chinese property developers in Australia purchasing large volumes of medical supplies (and precious metals) for shipment to China. Risland\u00e2\u0080\u0094a wholly-owned subsidiary of one of China's largest property developers, Country Garden Holdings\u00e2\u0080\u0094reportedly shipped 82 tons of medical supplies from Australia to China on February 24, 2020. The shipment included 100,000 medical gowns and 900,000 pairs of gloves. Greenland Australia\u00e2\u0080\u0094a subsidiary of another large Chinese property developer backed by the Chinese government, Greenland Group\u00e2\u0080\u0094implemented instructions from the Chinese government to secure bulk supplies of medical items from the global market. Greenland reportedly sourced from Australia and other countries, 3 million protective masks, 700,000 hazmat suits, and 500,000 pairs of gloves for export to China over several weeks in January and February 2020."], "subsections": []}, {"section_title": "Implications of China's Export Constraints: U.S. Shortages and Policy Response", "paragraphs": ["As the United States ramps up efforts to contain the spread of COVID-19, reduced production and exports of pharmaceuticals and PPE from China are exacerbating shortages of critical medical supplies. Minnesota-based 3M, a large-scale manufacturer of N95 respirators, for example, told The New York Times that all masks manufactured at its Shanghai factory were sold to meet China's domestic demand; other mask manufacturers, such as Canada's Medicom, have stated that the Chinese government has not yet authorized them to export PPE. China's Ministry of Commerce has claimed it is not imposing export restrictions on medical supplies, but this statement may not apply to the current situation as all of China's domestic production is controlled by the government and geared toward domestic consumption.", "U.S. national and state-level health authorities have been reporting shortages of medical supplies\u00e2\u0080\u0094including PPE such as gowns and face masks\u00e2\u0080\u0094since February. On March 18, President Trump issued Executive Order 13909, Prioritizing and Allocating Health and Medical Resources to Respond to the Spread of COVID\u00e2\u0080\u009319 , which announced the President's invocation of the Defense Production Act of 1950 (DPA) in response to the COVID-19 pandemic. The DPA confers broad presidential authorities to mobilize domestic industry in service of the national defense, defined in statute as various military activities and \"homeland security, stockpiling, space, and any directly related activity\" (50 U.S.C. \u00c2\u00a74552), including emergency preparedness activities under the Stafford Act, which has been used for public health emergencies. Among other authorities, Title I of the DPA allows the President to require persons (including businesses and corporations) to (1) prioritize and accept government contracts for materials and services, and (2) allocate or control the general distribution of materials, services, and facilities as necessary to promote the national defense. The Administration, however, is only publicly providing limited direction to the private sector under this authority.", "Any potential use of the DPA to respond to the COVID-19 pandemic may require some amount of time to produce adequate supplies, considering the large volumes of products, particularly PPE and ventilators, which are currently in urgent demand. Many U.S. firms are hesitant to invest in substantial increases in production, including obtaining the capital equipment and other inputs required, until they have a guaranteed buyer and price. Manufacturing firms, such as General Motors, Ford Motor Company, and Tesla are repurposing factory production for ventilators, but defense logistics experts expect this effort to take months. Additionally, in the United States, PPE and ventilators for use in the health care setting are considered medical devices and require marketing permission from the U.S. Food and Drug Administration (FDA).", "The Trump Administration's relatively late formal invocation and activation of the DPA, which could effectively serve as an export constraint on U.S.-produced medical supplies, arguably left discretion to U.S. companies to decide whether to fill export or domestic orders first. By contrast, governments in Taiwan, Thailand, France, and Germany boosted production but restricted exports, further curtailing U.S. supply options. In January and February 2020, organizers of U.S. private sector relief efforts reportedly purchased large amounts of U.S. PPE products for airlift to China, further depleting U.S. supplies.", "Some Members of Congress have called for broader tariff relief or at least new exclusions for existing tariffs and a moratorium on any new tariffs. Other Members and U.S. domestic producers argue that such liberalization could open the U.S. market to a flood of imports during an economic downturn. The Office of the United States Trade Representative (USTR) announced on March 6, 2020, that it would lift tariffs imposed under Section 301 authorities on 19 specific products and 8 10-digit subheadings of medical supply and equipment items from China ( Table 4 ).", "The Administration appears reluctant to liberalize non-health related tariffs, preferring to delay tariff payments instead. In late March 2020, the U.S. Customs and Border Protection sent notices to companies saying that officials will approve some delays in tariff payments to offer economic relief due to the severity of COVID-19; they may also be weighing a broader suspension of collecting duties. Separate from COVID-19, with regard to existing tariff exemptions, on March 20, USTR invited industry to submit public comments beginning on April 20, regarding whether USTR should extend certain tariff exclusions on other products already granted in June 2019 that expire in June 2020. A broader liberalization of U.S. tariffs on Chinese goods during the COVID-19 outbreak, could further expose the U.S. economy to Chinese excess industrial capacity at a point of economic downturn in the United States. Chinese firms also could capture market share and gain a unique foothold in the U.S. market through market softening and if the United States were to relax FDA and other product certifications. ", "In an effort to quickly bring overseas medical supplies into the United States, the Federal Emergency Management Agency (FEMA), announced on March 29, 2020 that it was arranging airlift for 22 flights, most from Asia, over the subsequent two weeks. The airlift is for medical supplies that medical distributors already planned to import into the United States, but it accelerates their delivery arrival time by shipping by air instead of ocean freight.", "Separate from medical supplies specific to COVID-19, a longer-term disruption of China's pharmaceutical and medical exports could increase the cost of everyday drugs and routine medical procedures in the United States. This could happen as it becomes harder to import APIs for common drugs and components for medical devices. According to FDA officials, in 2018, China ranked second among countries that export drugs and biologics to the United States by import line (accounting for 13.4% of U.S. imports of those products). However, FDA states it is not able to determine the volume of APIs that China is manufacturing given the complexity of the supply chain and gaps in what pharmaceutical companies are required to disclose about their inputs. China is also a leading supplier of APIs in global supply chains for painkillers, diabetes medicines, and antibiotics, meaning a slowdown in API exports from China could increase cost pressures faced by U.S. drug manufacturers. For example, China accounts for 52% of U.S. imports of penicillin, 90% of tetracycline, and 93% of chloramphenicol. On February 27, FDA Commissioner Stephen Hahn announced that a manufacturer of an unspecified human drug informed FDA of a shortage the drug's supply related to a Chinese API manufacturer affected by COVID-19. Because information disclosed to FDA regarding drug shortages is considered proprietary, FDA did not disclose the name of the drug in question, but did note that alternatives exist for patient use.", "China's role as the primary supplier of APIs to global manufacturers of generic pharmaceuticals, particularly in India, is likely to increase overall costs of generic pharmaceuticals for consumers in the United States in the short-to-medium term. The outbreak of COVID-19 in India could also affect the availability of generic pharmaceuticals in the United States. India, which supplies approximately 40% of generic pharmaceuticals used in the United States, imports nearly 70% of its APIs from China. In March 2020, India imposed export restrictions on several drugs whose supply chains rely on China, leading to fears of potential global shortages of generic drugs that have since escalated after India announced a nationwide 21-day lockdown."], "subsections": []}, {"section_title": "Global Trade Restrictions", "paragraphs": ["Amid concerns about the availability of personal protective equipment (PPE), medical supplies, and pharmaceuticals, a growing number of nations have applied export controls and other restrictions on the overseas sales of these products. While export controls do not necessarily prohibit export activity, they make export licenses a requirement, which could lead to transactions being delayed and potentially denied or cancelled. As medical professionals around the world scramble to find gloves, face shields, protective garments, disinfectants, ventilators, and other equipment needed to fight COVID-19, these measures are highlighting the risks\u00e2\u0080\u0094and exacerbating the challenges\u00e2\u0080\u0094of relying on complex global supply chains and distribution channels. World Trade Organization (WTO) rules prohibit export bans except for rare instances in which a member invokes a measure citing national security concerns. In an effort to promote transparency, the WTO is publishing a list of temporary export bans that countries are enacting during COVID-19 and notifying to the WTO. On March 30, 2020, the G-20 issued a joint statement that emphasized the importance of keeping markets open and ensuring the adequate production and fair and equitable distribution of medical products to where they are most needed. The statement emphasized that any measures a country might adopt to protect health should be targeted, proportionate, transparent, and temporary.", "So far this year, China and more than 24 other economies, including India and, more recently, the European Union, have imposed either limits or formal or de facto bans on certain exports. Many of the existing and proposed measures could restrict access to markets on which the United States depends for certain imports. These include medical ventilators (for which Singapore and China accounted for 35% and 17%, respectively, of U.S. imports in 2019), breathing and gas masks (France, the United Kingdom, and Italy, 47% combined), CT scanners (Germany, 50%), medical protective equipment of textile materials (China, 72%), digital and infrared thermometers (China, 36%), pharmaceuticals (Ireland, Germany, Switzerland, and Italy, 53% combined), and tetracycline and penicillin (China, 90% and 52%, respectively)."], "subsections": []}]}, {"section_title": "China's Economic Recovery: Prospects and Implications", "paragraphs": ["China's leaders are focusing on resuming manufacturing production to jumpstart economic growth. At an executive session of China's cabinet, the State Council, on March 17, Chinese officials emphasized the importance of stabilizing employment and announced that the government would streamline business approvals and fast-track approvals for large infrastructure projects. They also offered government support to alleviate shortages of labor, raw materials, funds, and protective gear. To facilitate economic activity, the Chinese government also appears to be liberalizing company health requirements and lifting intra-provincial and intra-city travel and transportation restrictions. NDRC spokesperson Meng Wei said on March 17, 2020 that transportation was operating normally. Zhejiang, Jiangsu, and Shanghai were operating at close to 100% of normal capacity; and over 90% of large-scale industrial companies outside of Hubei had resumed production. Company reports of opening and resumption of operations may not mean that these facilities are fully online or operating at pre-crisis levels, however. Several economic analysts and news outlets, including the Financial Times , have published alternative measures of business resumption rates using proxies for economic activity\u00e2\u0080\u0094such as data on traffic congestion, air pollution levels, and container freight movement. Overall, many of these measures suggest that businesses across China are not returning to full capacity at the rates being reported by local and provincial governments. In Wuhan, the center of the original outbreak, the Hubei provincial government issued a notice in March\u00e2\u0080\u0094that applies to Wuhan as Hubei's capital\u00e2\u0080\u0094allowing certain companies to resume work ahead of other production. This included companies in the medical and health industry, as well as companies producing protective gear, disinfectant, daily necessities, agriculture, and products critical to national and global supply chains."], "subsections": [{"section_title": "China Positioning to Export", "paragraphs": ["China's economy depends on exports and the foreign exchange it earns through exports as well as on the large productive role that foreign firms play in the domestic market and as exporters. Seeking to stabilize drops in foreign investment and trade, on March 12, Commerce Vice Minister Wang Shouwen held a call with 400 members of the American Chamber of Commerce in China, and on March 13, he held a similar webinar with the European Chamber of Commerce in China's Advisory Council. Vice Minister Wang pressed companies to reopen operations and increase investments in China. Other Chinese agencies represented included NDRC, MIIT, the National Health Commission, the General Administration of Drug Supervision, the State Administration for Market Regulation, the General Administration of Customers, the Civil Aviation Administration of China, the Ministry of Transportation, and the State Taxation Administration.", "During past crises, such as the global financial crisis of 2008-09, China has pressed firms to idle facilities and keep them production-ready (instead of shuttering them) and retain workers (instead of laying them off) to maintain social stability and facilitate efforts to quickly ramp up production and exports later. These stimulus efforts are sometimes less visible than fiscal policies in other countries. Several market watchers have noted that, while a 17% drop in Chinese exports in January-February 2020 is significant, it is not as dramatic when considering China's economy was shuttered for much of February. This indicates that Chinese industry may have had sufficient stock already at ports for export when the crisis hit. This also signals the potential power of a resumed export push from China.", "China's economic recovery is important to the United States and the global economy, as it is an important center of demand and supply. At the same time, during this period of global economic downturn, the United States and other countries are now potentially vulnerable to a concerted PRC export push and any effort it makes to take additional market share in strategic sectors."], "subsections": []}, {"section_title": "Steel Overcapacity", "paragraphs": ["Chinese overcapacity in steel has been highly contentious for its global impacts, and China could potentially see exports as a quick way to reduce inventories and secure needed cash. Similar to what happened during the global financial crisis in 2008-09, China is poised to take additional global market share in 2020 because it did not dial back production during the COVID-19 outbreak. Chinese blast furnaces continued to run during the COVID-19 crisis, and China's steel production for January-February 2020 was up 3% over the same period in 2019. Meanwhile, due to collapsing domestic demand and logistics constraints, China's finished steel inventories rose by 45% in January-February 2020 over the same period in 2019. China's steel production at the end of 2019 was already at an all-time high of almost 1 billion tons, with China producing over 50% of global supply, according to the World Steel Association and China's State Statistical Bureau ( Figure 3 ). "], "subsections": []}, {"section_title": "Export VAT Rebate", "paragraphs": ["On March 17, 2020, China's Ministry of Finance announced it was increasing the export value added tax (VAT) rebate for almost 1,500 Chinese products, effective March 20, 2020. Most of the products (1,084) are receiving a 13% rebate; a small number (380) are receiving a 9% rebate. The export VAT rebate is a focused policy tool with quick effects that China typically employs to boost targeted exports during times of slowdown. It typically reduces the export VAT on products down to or close to zero. (See Table 5 .)", "The rebates reflect a strong policy push for steel exports, as well as construction and building materials (e.g., insulation, wood products, glass and fiberglass). China is also promoting the export of a range of insecticides and industrial and organic chemicals. The rebates encourage the export of agricultural products in categories for which China promised to increase purchases from the United States\u00e2\u0080\u0094such as live breeding animals, meat and dairy\u00e2\u0080\u0094suggesting the government may be incentivizing exports for industries that might face additional U.S. imports. Absent in China's policy push are incentives to encourage the sale of pharmaceuticals, PPE, and other medical products overseas.", "The export VAT rebates also appear to be incentivizing China's export of wild animals and their byproducts overseas ( Table 5 ). With assessments that COVID-19 could have originated in wild animals and potentially passed to humans in open air markets that sell these animals, China's National People's Congress announced on February 24 a ban on the sale and consumption of wild animals in China. While the export incentive might help the government to eradicate domestic markets by providing an economic incentive to export, this move could spread the risk to global markets. "], "subsections": []}, {"section_title": "China Pushing Ahead in Strategic Sectors", "paragraphs": ["Now apparently past its peak of the COVID-19 outbreak, China is prepared to capitalize on the investments it made during the past few months to push ahead on goals outlined in its Made in China 2025 (MIC 2025) industrial plan, which includes several strategic health sectors ( Figure 4 ). Introduced by China's State Council in May 2015, MIC 2025 is an ambitious state-led program that seeks to create competitive advantages for China in certain strategic industries. The plan aims to move China up the manufacturing value chain, expand its global market competitiveness, and reduce its reliance on foreign firms and their intellectual property (IP) over time. (See Figure 4 ). The program has been a major focus of the Trump Administration's Section 301 actions against China because of the distorting and predatory policies the initiative has set in motion related to technology transfer, intellectual property, and innovation.", "Biotechnology, pharmaceuticals, and medical devices are key components of MIC 2025 industrial plans that support Chinese firms in efforts to increase their global market share of generic drugs and medical equipment, and develop new innovative drugs. Toward this end, the Chinese government restricts market access for foreign pharmaceutical firms. It requires foreign firms to conduct clinical trials in China, disclose proprietary information for drug trials and sales, and enter into partnerships to secure a spot on reimbursable drug lists. Moreover, medical equipment subsidies require that 60% of a product's components be produced in China by a PRC firm. These policies continue despite amendments to the Drug Administration Act in 2019 which were designed to make it easier for foreign pharmaceutical companies to operate in China.", "China may have been serving its commercial ambitions in decisions it made during the COVID-19 outbreak in China:", "China has restricted access to medical information about COVID-19, including access for the U.S. Centers for Disease Control and Prevention (CDC), potentially putting U.S. science, research and development (R&D), and industry at a disadvantage. While some of these controls may be politically motivated, they also may be driven by China's market ambitions. The government's tight controls over biotechnology and pharmaceutical testing, treatment, and analysis in China could advantage its state firms. China ordered that all viral samples from the beginning of the COVID-19 outbreak be destroyed or sent to the Wuhan Institute of Virology, a national lab run by China's military. This move centralizes the government's knowledge about the potential origins of the virus and provides unique insights about its trajectory and treatment. The Wuhan Institute of Virology operates China's only biocontainment level 4 (P4) lab, a specialized facility for studies on highly contagious and fatal diseases. The Lab was developed by the Merieux Foundation under a government agreement between France and China. In another effort by the Chinese government to control access to important health information, the World Health Organization (WHO)'s visit to China came over a month after the outbreak of the virus. Only a subset of the WHO-China Joint Mission on COVID-19 delegation was allowed to visit Wuhan. China appears to have been slow to approve foreign drug patents potentially relevant to COVID-19 until it needed them at the height of the crisis. For example, Gilead Sciences\u00e2\u0080\u0094a U.S. company based in California\u00e2\u0080\u0094had several patents for its antiviral drug Remdesivir's use in coronaviruses that have been pending approval since 2016. The Chinese government has been requiring the company to conduct clinical trials in China and did not approve these patents until well into the crisis. The Chinese government may have benefitted from long-standing foreign patent application information that becomes public over time once a patent application is filed in China, even if the approval is still pending. The Chinese government also likely benefits from the insights gained through the clinical trials conducted in China and the viral samples that foreign companies share. Gilead, as well as other U.S. companies, sent the Chinese government samples of its drugs during the COVID-19 outbreak. The Chinese government cracked down on BrightGene BioMedical Technology Co.\u00e2\u0080\u0094a PRC firm based in Suzhou, China\u00e2\u0080\u0094for the company's premature announcement that it could compound a generic version of Remdesivir. The government's move may be less of an effort to protect foreign firms than to position China's national labs. The Wuhan Institute of Virology, for example, has applied to patent an adaptation of Remdesivir. This could potentially complicate Gilead's and other U.S. firms' way forward in China. China offered significant funding to Chinese biotech, pharmaceutical, and health logistics companies to expand capacity and capabilities to combat COVID-19. For example, Jointown\u00e2\u0080\u0094a top Chinese medical supplier\u00e2\u0080\u0093issued preferential bonds in February 2020, and the State Council's CITIC purchased private placement shares in the company.", "PRC official media is featuring stories about how the Chinese leadership is using its current control of medical production and supply chains to selectively help other countries, while promoting ties to China. State media is also highlighting China's interest in advancing its global medical leadership role. China's global health leadership was a key element of people-to-people exchanges envisioned in China's initial rollout of its \"One Belt One Road\" initiative in 2015. During a call to Italian Prime Minister Conte on March 17, 2020, Chinese Communist Party Chairman Xi Jinping referenced a new Chinese government initiative\u00e2\u0080\u0094a Health Silk Road\u00e2\u0080\u0094that appears designed to promote Chinese leadership and products in the health sector. Such efforts also aim to deflect criticism of China's alleged corralling and destruction of the initial virus samples and efforts to prevent sharing of information among medical practitioners and the global community. Some experts have highlighted how this suppression of health information violates the obligations of WHO members to immediately share information about outbreaks for the safety of the world.", "The Chinese government reportedly undertook extraordinary measures during the COVID-19 outbreak to sustain R&D and manufacturing for priority national projects and in strategic sectors\u00e2\u0080\u0094such as telecommunications, microelectronics, and semiconductors\u00e2\u0080\u0094including in Wuhan, the epicenter of China's outbreak. These efforts have potential ramifications for U.S. and foreign firms' relative competitive market position as companies compete in 5G and other emerging sectors. This is particularly the case if their China operations were closed or are now significantly curtailed in the United States and other markets. According to the Nikk ei Asia Review , in February and March 2020, the Chinese government operated special transportation and quarantined dormitories at Yangtze Memory Technology, Co., Ltd. (YMTC), China's national champion to develop memory chips. YMTC is located in eastern Wuhan. The government saw continued operations as an issue of national security and issued special local and central government dispensation to keep the facility operational amidst the outbreak. Separate reports indicate that HiSilicon\u00e2\u0080\u0094the semiconductor subsidiary of China's leading telecommunications equipment company Huawei\u00e2\u0080\u0094also sustained operations during the outbreak. Huawei's chairman and chief executive told T he Wall Street Journal on March 25, 2020 that the company plans to boost its research and development budget in 2020 by $5.8 billion to more than $20 billion."], "subsections": []}]}, {"section_title": "Issues for Congress", "paragraphs": ["Congress faces choices in the near-term that will affect not only the immediate situation, but also the longer-range U.S. trade and economic trajectory vis-a-vis China, with a potentially significant impact on the global economy as well. The outbreak of COVID-19 has prompted a sharp collapse of transportation, services, and manufacturing production\u00e2\u0080\u0094including supply shortages of essential medical and health care products needed to contain COVID-19. The COVID-19 pandemic has also precipitated a sharp downturn in consumer demand, first in China and now globally. Questions already brewing since the imposition of U.S. Section 301 tariffs are intensifying congressional concerns and debates about potential short-term and long-term steps to address U.S. supply chain dependence on China for critical products, and the potential ramifications of these dependencies. These ramifications could be particularly marked in times of crisis or of PRC nationalization of industry. At the same time, some U.S. companies and Members of Congress are calling for lowering tariffs on goods from China. The urgent need for pharmaceutical and medical supplies is fueling systemic market pressures to increase U.S. reliance on China trade because China is an important source of many of these critical inputs and products. Whether and on what terms the Chinese government might be willing to export medical supplies to the United States remains uncertain. "], "subsections": [{"section_title": "Dependency of U.S. Health Care Supply Chains on China", "paragraphs": ["The current shortages of critical medical supplies in the United States has exposed current U.S. health care dependencies on China. As China positions its industries to realize its MIC 2025 goals in biotechnology, pharmaceuticals, and medical equipment, the Chinese government is pursuing industrial polices to advance into higher positions in the global industrial value chain, raising longer-range questions about what this might portend for U.S. reliance on China as an increasingly competitive supplier.", "As China's manufacturing capacity comes back online while the United States and other major global markets continue to grapple with COVID-19, the Chinese government appears to be selectively releasing some medical supplies for overseas delivery. China appears to be selecting designated countries, at least to some extent (although the precise degree cannot be determined), according to political calculations and has been playing up its role in Chinese state propaganda, as evidenced with China's deliveries to Italy and Serbia. Most foreign governments appear to be paying for these supplies although a small subset of packages may be aid. There are also reports by other countries that some of China's medical supplies and testing kits are faulty. In a sign that China might be using the crisis to push substandard products or gain market share in developed markets over traditional U.S. suppliers based in China that produce for export, PRC state propaganda has blamed shortages on alleged FDA failures to certify Chinese products for import. This raises the question of why products made by U.S. firms in China that are already FDA certified are not first in line for export to the United States given that these firms also expanded capacity during the crisis in China. Several prominent U.S. companies, including 3M, have indicated they do not have PRC government authorization to export.", "In this environment, Congress faces choices about how best to incentivize production of health supplies in the United States, potentially in collaboration with other countries, to counter COVID-19 and future pandemics, and/or whether to impose any conditions on this production. With an eye to China's industrial policies, Congress may also consider the potential longer-term advantages and disadvantages of diversifying U.S. supply and on-shoring of certain capabilities. Congress may also want to consider potential collaboration with like-minded countries, and ways to counter the effects on lesser-developed economies that could be hit particularly hard by COVID-19. China is likely to seek to retain the medical market share and edge it gains through COVID-19, particularly as these gains help advance China's MIC 2025 industrial policy goals in biotechnology, pharmaceuticals, and medical equipment. At the same time, the United States and other countries may seek to diversify away from China because of vulnerabilities highlighted during the outbreak. ", "Recent legislative action related to these issues includes:", "P.L. 116-136 , The Coronavirus Aid, Relief, and Economic Security (CARES) Act includes several provisions that expand drug shortage reporting requirements to include APIs and medical devices. The bill also requires certain drug manufacturers to draw up risk management plans and requires the FDA to maintain a public list of medical devices that are determined to be in shortage. Additionally, the bill directs the National Academies of Science, Engineering, and Medicine to conduct a study of pharmaceutical supply chain security. The CARES Act also waives certain congressional oversight and reporting requirements under the Defense Production Act of 1950's (DPA; 50 U.S.C. \u00c2\u00a7\u00c2\u00a74501 et seq.) Title III Expansion of Productive Capacity and Supply, which governs purchases and loans made by the federal government to expand productive capacity in promotion of national defense, broadly defined. S. 3538 would require companies to report on the sources of their APIs and would tighten laws encouraging the U.S. Department of Veteran Affairs to buy American pharmaceuticals. The bill calls for federal financing guarantees to U.S. medical supply companies with production in the United States and would increase the tax deduction temporarily for businesses investing in medical equipment and facilities related to COVID-19. S. 3343 , The Medical Supply Chain Security Act, calls for enhanced security of the medical supply chain and enhanced FDA authority to request information about the sources of drugs and medical devices. It would require medical device manufacturers to report expected shortages to the FDA. A companion bill, H.R. 6049 , was introduced in the House of Representatives on March 2, 2020. S. 3537 would require the FDA to establish a registry to track APIs and institute a country-of-origin label for imported drugs. The bill would provide economic incentives for producing pharmaceuticals and medical equipment in the United States. The bill also would prohibit federal agencies and health facilities from purchasing APIs and other pharmaceutical products manufactured in China without an FDA waiver certifying that China is the sole source. H.R. 5982 , The Safe Medicine Act, would direct HHS to assess vulnerabilities in the U.S. pharmaceutical supply chain by issuing a report that examines U.S. dependence on China for critical APIs and gaps in domestic pharmaceutical manufacturing capabilities. H.R. 6386 , The No Chinese Handouts In National Assistance (CHINA) Act, would prohibit any funds made available in Appropriations acts for FY2020 from being used to compensate any individual or business controlled by the Chinese government. The Act adopts the definition of government control established in Section 721(a) of the Defense Production Act of 1950 (U.S.C. 4565(a)). H.R. 4710 , The Pharmaceutical Independence Long-Term Readiness Act, would direct the Department of Defense to include a section in each national defense strategy that outlines steps to address gaps in the U.S. pharmaceutical manufacturing base and strengthen pharmaceutical supply chains with single points of failure. S. 3432 , The Securing America's Medicine Cabinet Act of 2020, would take steps to strengthen U.S. competitiveness in advanced pharmaceutical manufacturing by enhancing the advanced manufacturing programs of the FDA. It also would designate certain research universities as \"National Centers of Excellence in Advanced Pharmaceutical Manufacturing.\" Several Members of Congress have introduced bills to amend certain provisions under the Defense Production Act of 1950 (DPA; 50 U.S.C. \u00c2\u00a7\u00c2\u00a74501 et seq.). Some Members have also introduced several resolutions in the House and Senate that call on the President to use DPA authorities to facilitate the production of medical supplies. Bills and resolutions related to DPA are compiled and summarized in Appendix B .", "In addition to recent legislation introduced by Members of Congress, the Trump Administration reportedly drafted an Executive Order in mid-March 2020 that seeks to increase U.S. production capacity while eliminating loopholes that have allowed the U.S. government to buy pharmaceuticals, PPE, and ventilators from overseas."], "subsections": []}, {"section_title": "Other U.S. Supply Chain Dependencies", "paragraphs": ["COVID-19 provides a direct learning experience\u00e2\u0080\u0094potentially more compelling than any war game or natural disaster simulation\u00e2\u0080\u0094about the direct effects and costs of a serious disruption or cutoff of critical supplies from China to the United States. Key broader questions facing the United States that have serious implications for future economic and trade relations include:", "What are the consequences for U.S. interests when China nationalizes production and distribution and hardens its borders as it did during the COVID-19 crisis? What happens if Chinese government planners corner global supply alternatives? What happens if the United States hardens its own borders? What happens if U.S. allies and partners are in crisis and turn to national tools and approaches? What supply lines are available to the United States? What is current baseline U.S. production capacity and what is U.S. production capacity in the event an Administration invokes the Defense Production Act (DPA)? What control do chief executive officers of U.S. companies or the U.S. government have over U.S. corporate facilities and operations that are nationalized in China? What are U.S. dependencies on China in other critical areas such as microelectronics?"], "subsections": []}, {"section_title": "U.S. Market Competitiveness and Tariff Policy", "paragraphs": ["Congress faces a series of interrelated questions about whether and how to calibrate trade policy to best position the United States in the current crisis and beyond. In response to a U.S. investigation of China's unfair trading practices under Section 301, since 2018, the United States has imposed a series of tariffs and China has responded with a series of counter tariffs that now affect a majority of trade between the two countries. Temporary tariff relief for medical supplies and pharmaceuticals could incentivize imports for the United States and other markets, but tariff policy cannot address the deeper issues of supply shortages, export constraints imposed by a number of countries including China, and product certification requirements in the United States and other markets. Tariff liberalization has been insufficient to address industrial policies within borders such as regulatory standards, procurement terms, and local content requirements that China and others impose in a range of sectors including pharmaceuticals and medical equipment. ", "Recent actions by countries around the world to impose export barriers highlight potential gaps and limits to the power of WTO rules prohibiting export bans during times of global crisis. These actions also raise questions about what new rules or protocols might be needed in the future. Liberalization of U.S. import requirements also created some of the challenges the United States is facing now, such as loosening requirements for U.S. pharmaceutical firms to report on shortages and how they classify imported content for finished products that qualify as U.S. products. New liberalization could reward Chinese industrial policies in medical equipment and pharmaceuticals that seek to win new ground for Chinese firms in overseas markets. The potential for China to overwhelm global markets as it leans on exports for economic recovery raise questions about whether additional policy measures might be needed. Rather than waiting until market injury has already occurred to seek damages, for example, Congress may want to be watching trade patterns for signs of import surges and oversee the Administration's potential use of safeguard measures. Similar to the Australian government's decision on March 29, 2020 to impose new temporary restrictions on all foreign investment proposals out of concern that strategic investors\u00e2\u0080\u0094particularly those of Chinese origin\u00e2\u0080\u0094might target distressed assets, Congress may want to carefully monitor or consider whether to impose requirements about potential predatory commercial activity in the United States."], "subsections": []}, {"section_title": "Information and Data Gaps", "paragraphs": ["The outbreak of COVID-19 has exposed gaps in U.S. understanding of U.S. domestic competencies and dependencies on China and other sources of global supply. Vulnerabilities regarding raw materials, such as APIs, are not well recorded in trade and industry data. They are particularly complicated to track when materials are shipped from China and processed in a third market such as India. In similar fashion, the United States has relaxed definitions of what qualifies as a U.S. product with imported content, masking the extent to which domestically-produced products may still rely on inputs from overseas. Pharmaceutical company stockpiles are proprietary, and companies do not have to report on reserves. They are only required to report when they have a shortfall, which does not leave enough time, particularly in times of emergency, for national and contingency planning. ", "Under the International Investment Survey Act of 1976 (22 U.S.C. \u00c2\u00a73101 et. seq.), the President has wide authority over the collection of corporate activity abroad for statistical and analytic purposes. The Act also confers on the President the authority to request mandatory surveys of companies under specific deadlines with the ability to invoke civil and criminal penalties for noncompliance. The President has the authority to study the adequacy of current information and recommend improvements, and the Act requires him to report to Congress.", "To address these issues, Congress could consider whether to request the President to invoke his authority over the U.S. government's collection of data on corporate activity abroad. These corporate surveys could obtain specific supply chain information about the status of PPE and medical supply production, distribution, and export policy situation facing U.S. companies overseas, including in China. The surveys also could cover other sectors of potential congressional concern. This information could inform legislation that Congress has already passed or is considering with regard to overseas supply chains, including sourcing from China."], "subsections": []}, {"section_title": "Unique Role of the U.S. Federal Government", "paragraphs": ["At a time when U.S. health care systems, states, and countries overseas are seeking to secure limited medical supplies, the U.S. federal government has a unique role to play in ensuring adequate domestic and global production, contracting of supply (both domestically and globally), and distribution of these resources. Even as new capacity might be available in China, for example, who are the U.S. actors positioned to try to secure this supply and through what pathways? Lack of coordination at the federal level has led states to scramble and compete against each other for critical medical supplies in the current crisis. Among the key questions related to these issues, Congress may explore answers to such questions as: ", "How does the U.S. federal government position itself vis-a-vis U.S. state and private actors? How does the U.S. federal government position itself vis-a-vis other foreign governments trying to secure similar supplies? What is the U.S. government's posture toward supplies needed in the developing world? How might expanded production capacity created in the United States not only help the U.S. market but also those of other countries, in the near term and over the longer term?"], "subsections": []}, {"section_title": "U.S. Leadership on Global Trade and Health Issues", "paragraphs": ["The current COVID-19 pandemic provides a unique opportunity to reaffirm U.S. global leadership on trade and health issues and to counter China's nationalization and likely politicization of its domestic medical supply production capacity. China's export restraints and cornering of the global supply of medical products ahead of others in February 2020 have created serious strains on the open trade system, further incentivizing other countries to close borders and restrict any access to supplies they may have. These moves also have given China market power over other countries' procurement decisions as governments around the world grapple with how best to secure critical supplies. Early signs show that China is closely controlling and releasing supplies to other governments through contracts and some aid in ways that seek to improve China's global image and may come with other quid pro quo terms that are not yet visible. China's economic recovery ahead of others could further challenge and undermine key tenets of the open trade system, particularly if China exports pent up domestic capacity with a disregard for what the current state of the global economy is prepared to absorb on market terms. ", "While some European countries have imposed export restraints on their health supplies, some politicians in Europe are concerned about how the Chinese government is manipulating the crisis and China's position in global supply chains for political gain. Some analysts have expressed concern that China is trying to position itself as a responsible global leader in health, while violating the core tenets of WHO membership in failing to share critical information and access in the critical first few weeks as the crisis emerged in Wuhan. Members concerned about maintaining U.S. global economic leadership during the COVID-19 pandemic may consider using hearings, legislation, and statements to communicate key issues to be addressed. ", "Possible questions for Congress in the context of COVID-19 include:", "whether to prioritize economic openness and free flows of information; whether to prioritize diversifying sources of medical supplies, and if so, how; how best to overcome current and future bottlenecks in health care supply chains in the United States and partner nations; whether to respond to China's attempts to control the global narrative about key COVID-19 events, and if so, how; and whether to look to reform global health and trade governance in light of COVID-19 developments, and if so, how.", "Some Members are calling for hearings to address the role of the WHO during the COVID-19 outbreak and are raising questions about the need to reform global health governance. Other Members are looking at the chronology of events in the COVID-19 outbreak to maintain an accurate record that is not distorted by Chinese state propaganda. Some Members are also looking at the social media platforms that the Chinese government is using to convey state propaganda\u00e2\u0080\u0094such as Twitter\u00e2\u0080\u0094and raising questions about whether this access should be allowed. Several Members have expressed an interest in potential measures to hold China accountable for its slowness to acknowledge, address, and share information regarding the outbreak of COVID-19 as H.R. 6373 required by WHO members.", "Appendix A. Bills and Resolutions Related to the Defense Production Act of 1950 (DPA)", "1. P.L. 116-136 - Coronavirus Aid, Relief, and Economic Security (CARES) Act P.L. 116-136 , Section 4017 waives certain congressional oversight and reporting requirements under the Defense Production Act of 1950's (DPA; 50 U.S.C. \u00c2\u00a7\u00c2\u00a74501 et seq.) Title III Expansion of Productive Capacity and Supply. Although the bulk of DPA authorities are made available at the President's discretion, Title III requires an Act of Congress for purchases or loans made to expand productive capacity in promotion of the national defense, broadly defined, for amounts greater than $50 million, and written notifications made to the relevant congressional committees of jurisdiction\u00e2\u0080\u0094the Committee on Banking, Housing, and Urban Affairs of the Senate, and the Committee on Financial Services of the House of Representatives\u00e2\u0080\u0094at least 30 days in advance. Section 4017 waives these provisions for a period of two years upon enactment. Notably, Title III already included language allowing the President to waive these requirements in a national emergency or at the non-delegable determination of the President. 2. H.R. 6373 - To increase the amount available under the\u00c2\u00a0Defense Production Act\u00c2\u00a0of 1950 to respond to the coronavirus epidemic, and for other purposes.", "H.R. 6373 would increase the authorized funding amount for the Defense Production Act Fund (DPA Fund) to $3 billion for FY2020-2021 from the current level of $133 million annually in response to the COVID-19 emergency. The bill also would allow for enhanced public and congressional oversight regarding the use of those funds through mandatory quarterly reporting on the use of DPA funds to congressional committees of jurisdiction, and to be made available to the public. Incorporated as a provision of H.R. 6379 - Take Responsibility for Workers and Families Act (Section 119). ", "1. H.R. 6399 - To amend the\u00c2\u00a0Defense Production Act\u00c2\u00a0of 1950 to ensure the supply of certain medical articles essential to national defense, and for other purposes.", "H.R. 6399 would amend the DPA statute to fortify industry production of medical resources in response to the COVID-19 emergency.", "1. S. 3568 - A bill to require the President to use authorities under the\u00c2\u00a0Defense Production Act\u00c2\u00a0of 1950 to require emergency production of medical equipment to address the COVID-19 outbreak.", "S. 3568 would seek to compel the President to exercise the Defense Production Act for the development of specific medical equipment, including: N95 respirators, medical ventilators, face shields, medical exam gloves, surgical gowns, and other medical equipment as needed to respond to the COVID-19 emergency. The bill would also compel the President to establish a price on those goods. This bill is the Senate companion bill to H.R. 6390 .", "1. S.Res. 547 - A resolution encouraging the President to use authorities provided by the\u00c2\u00a0Defense Production Act\u00c2\u00a0of 1950 to scale up the national response to the coronavirus crisis.", "S.Res. 547 calls upon the President to exercise\u00c2\u00a0Defense Production Act\u00c2\u00a0authorities to increase production of medical supplies, including personal protective equipment, to respond to the COVID-19 emergency. It supports the use of such authorities to: (1) distribute medical materials, including by directing suppliers to prioritize and accept contracts to restock the Strategic National Stockpile; and (2) establish voluntary agreements and provide financial incentives to manufacturers and suppliers of critical medical equipment.", "1. S. 3570 - A bill to provide for the expedited procurement of equipment needed to combat COVID-19 under the\u00c2\u00a0Defense Production Act\u00c2\u00a0of 1950. 2. S. 3570 would trigger the breadth of authorities under the DPA to effect: a major purchase order for 300 million N95 masks; requires the National Response Coordination Center to conduct a national assessment on current medical supply needs and a follow up major purchase order to fulfill the needs identified in the assessment; waive restrictions on dollar limitations for orders executed under DPA and a 30 day waiting period for orders that exceed $50 million; and authorize increased funding for DPA accounts that are being considered for supplemental COVID-19 spending packages. 3. H.Res. 906 - Calling on the President to invoke the\u00c2\u00a0Defense Production Act\u00c2\u00a0to respond to COVID-19.", "H.Res. 906 calls on the President to: (1) use all relevant authorities of the\u00c2\u00a0Defense Production Act\u00c2\u00a0to direct the domestic production of supplies to address COVID-19; and (2) share specified information regarding the use of such authorities with Congress. The resolution also\u00c2\u00a0states that Congress stands ready to make additional appropriations available for this effort.", "1. H.R. 6398 - To provide for the expedited procurement of equipment needed to combat COVID-19 under the\u00c2\u00a0Defense Production Act\u00c2\u00a0of 1950.", "H.R. 6398 is the companion bill to S. 3570 , which would trigger the breadth of authorities under the DPA to effect: a major purchase order for 300 million N95 masks; requires the National Response Coordination Center to conduct a national assessment on current medical supply needs and a follow up major purchase order to fulfill the needs identified in the assessment; waive restrictions on dollar limitations for orders executed under DPA and a 30 day waiting period for orders that exceed $50 million; and authorize increased funding for DPA accounts that are being considered for supplemental COVID-19 spending packages.", "1. H.R. 6390 - To require the President to use authorities under the\u00c2\u00a0Defense Production Act\u00c2\u00a0of 1950 to require emergency production of medical equipment to address the COVID-19 outbreak.", "H.R. 6390 would seek to compel the President to exercise the Defense Production Act for the development of specific medical equipment, including: N95 respirators, medical ventilators, face shields, medical exam gloves, surgical gowns, and other medical equipment as needed to respond to the COVID-19 emergency. The bill would also compel the President to establish a price on those goods. This bill is the House companion bill to S. 3568 .", "Appendix B. U.S. Imports of Select Medical Products"], "subsections": []}]}]}}
{"id": "R45994", "title": "Federal Land Management Agencies\u2019 Mandatory Appropriations Accounts", "released_date": "2019-11-05T00:00:00", "summary": ["Management of lands and resources is a principal mission for four federal agencies\u00e2\u0080\u0094the Bureau of Land Management (BLM), Fish and Wildlife Service (FWS), Forest Service (FS), and National Park Service (NPS). Most of the appropriations for these agencies come from discretionary appropriations enacted by Congress through annual appropriations laws. However, each of the agencies also receives mandatory appropriations under provisions of authorizing statutes enacted by Congress. Under these laws, the agencies spend money without further action by Congress.", "A number of issues arise for Congress in deciding the type of appropriations to provide and the terms and conditions of appropriations. One consideration is whether mandatory (rather than discretionary) appropriations best suit the purposes of the program or activity and Congress's role in authorizing, appropriating, and conducting oversight. Another question is how to fund any mandatory appropriation\u00e2\u0080\u0094namely, whether through general government collections (in the General Fund of the Treasury) or through a specific collection (e.g., from a particular activity or tax). A third issue is how to use the funds in a mandatory account, such as for agency activities, revenue sharing with state and local governments, or grant programs.", "In FY2018, the four agencies together had $3.17 billion in mandatory appropriations, which was 19% of their total discretionary and mandatory appropriations for the year ($16.36 billion). This funding was provided through 68 separate accounts, of which each agency had a dozen or more. The dollar amount of mandatory appropriations varied widely among the agencies (from $300.4 million for BLM to $1.46 billion for FWS), as did the percentage of each agency's total appropriations that was mandatory (from 10% for FS to 45% for FWS). (See the figure below.)", "BLM had 18 accounts with mandatory spending authority in FY2018. Of these, seven had mandatory appropriations each exceeding $5.0 million, with the largest account containing $157.8 million. The accounts typically are funded from agency receipts of various sorts. Most accounts support BLM activities, although several are compensation programs that share revenue with state or local governments. FY2018 total mandatory appropriations for BLM were $300.4 million, which was 18% of combined BLM mandatory and discretionary appropriations of $1.65 billion.", "FWS had 12 accounts with mandatory spending authority in FY2018. Of these, seven had mandatory appropriations each exceeding $5.0 million, and the largest had $829.1 million. Funding mechanisms for these accounts vary, including receipts; excise and fuel taxes; and fines, penalties, and forfeitures. Several accounts, including some of the largest, provide grants to states (and other entities); other accounts fund agency activities or provide compensation to counties. FY2018 total mandatory appropriations for FWS were $1.46 billion, which was 45% of combined FWS mandatory and discretionary appropriations of $3.27 billion.", "FS had 22 accounts with mandatory spending authority in FY2018. Of these, 10 had mandatory appropriations each exceeding $5.0 million, with the largest account containing $234.6 million. Agency receipts fund many accounts, although one is supplemented by the General Fund of the Treasury, as needed. Almost all accounts support agency activities, but one is for a compensation program. FY2018 total mandatory appropriations for FS were $705.1 million, which was nearly 10% of combined FS mandatory and discretionary appropriations of $7.29 billion.", "NPS had 16 accounts with mandatory spending authority in FY2018. Of these, 11 had mandatory appropriations each exceeding $5.0 million; the largest had $301.5 million. Funding sources for the accounts vary, including agency receipts, offshore energy development revenues, District of Columbia payments, the General Fund of the Treasury, donations, and an endowment. Almost all of the accounts support agency activities, but one is for recreation assistance grants to states and another is a compensation program. FY2018 total mandatory appropriations for NPS were $704.9 million, which was 17% of the combined NPS mandatory and discretionary total of $4.16 billion.", "Source: CRS, based on sources including FY2020 agency budget justifications, which contain FY2018 actual funding levels, and FY2018 appropriations laws, including Division G of P.L. 115-141 , P.L. 115-72 , and P.L. 115-123 and accompanying explanatory statements ."], "reports": {"section_title": "", "paragraphs": ["L and management is a principal mission for four federal agencies: the Bureau of Land Management (BLM), the Fish and Wildlife Service (FWS), and the National Park Service (NPS), all in the Department of the Interior (DOI), and the Forest Service (FS) in the Department of Agriculture (USDA). Together, these agencies administer approximately 610 million acres, about 95% of all federal lands. In addition, the agencies have various programs that provide financial and technical assistance to state or local governments, other federal agencies, and/or private landowners.", "Each year, the four agencies receive billions of dollars in appropriations for managing federal lands and resources and related purposes (e.g., state and local grant programs). Together, the four agencies had total appropriations of $16.36 billion in FY2018. Most of the FY2018 funds\u00e2\u0080\u0094$13.19 billion (81%)\u00e2\u0080\u0094came from discretionary appropriations enacted by Congress through appropriations laws. However, each of the agencies also has mandatory appropriations provided under various authorizing statutes enacted by Congress. Laws authorizing mandatory appropriations allow the agencies to spend money without further action by Congress. In FY2018, the four agencies together had $3.17 billion in mandatory appropriations, which was 19% of the total appropriations for the year. Each of the four agencies had a dozen or more mandatory accounts in FY2018. Many of them were relatively small, with funding of less than $5.0 million each, for instance. However, several mandatory accounts each exceeded $100.0 million. ", "This report focuses on the mandatory appropriations for the four major federal land management agencies. It first discusses issues for Congress in considering whether to establish mandatory appropriations for programs or activities. Next, it briefly compares the FY2018 mandatory appropriations of the four agencies. The report then provides detail on the FY2018 mandatory accounts of each of the four federal agencies, as well as additional context on these appropriations over a five-year period (FY2014-FY2018). "], "subsections": [{"section_title": "Issues for Congress", "paragraphs": ["The Constitution (Article I, \u00c2\u00a79) prohibits withdrawing funds from the Treasury unless the funds are appropriated by law. A number of issues arise for Congress in deciding the type of appropriations to provide and the terms and conditions of appropriations. One consideration is whether mandatory (rather than discretionary) appropriations best suit the purposes of the program or activity and Congress's role in authorizing, appropriating, and conducting oversight. Another question is how to fund any mandatory appropriations\u00e2\u0080\u0094namely, whether through general government collections (in the General Fund of the Treasury) or through a specific collection (e.g., from a particular activity or tax). A third issue is how to use the funds in a mandatory account, such as for agency activities, revenue sharing with state and local governments, or grant programs."], "subsections": [{"section_title": "Mandatory vs. Discretionary Appropriations", "paragraphs": ["Congress may consider various factors in deciding whether to provide discretionary or mandatory appropriations for a program or activity. A key consideration is whether authorizing or appropriating laws will control funding. Discretionary spending \u00c2\u00a0programs generally are established through authorization laws, which might authorize specific levels of funding for one or more fiscal years. However, the annual appropriations process determines the extent to which those programs actually will be funded, if at all.\u00c2\u00a0 Mandatory spending \u00c2\u00a0is controlled by authorization laws. For this type of spending, the program usually is created and funded in the same law,\u00c2\u00a0and the law typically includes language specifying that the program's funding shall be made available \"without further appropriation.\" Many of the mandatory appropriations covered in this report are provided under laws within the purview of the House Committee on Natural Resources and the Senate Committee on Energy and Natural Resources. In contrast, discretionary appropriations are provided through appropriations laws within the purview of the House and Senate Committees on Appropriations. ", "The frequency with which Congress prefers to review program funding can be a factor in deciding whether to establish mandatory or discretionary appropriations. Authorizing laws (providing mandatory appropriations) generally are permanent and are reviewed not on a particular schedule but rather on an as-needed basis, as determined by the authorizing committees. On the one hand, this can foster stability in mandatory funding, in that the funding mechanisms may not be revised frequently. On the other hand, mandatory appropriations may fluctuate if they depend on revenue sources that might vary from year to year, such as on economic conditions. ", "In contrast, Congress generally provides discretionary appropriations on an annual basis. This allows for program funding to be adjusted from year to year in response to changing conditions and priorities, and it provides Congress with opportunities for regular program oversight. However, this approach may provide less certainty of funding from year to year, as each program essentially competes with other congressional priorities within overall budget constraints.", "Congress has chosen to fund some programs or activities with both mandatory and discretionary appropriations. In these cases, both the authorizing laws and the appropriations laws govern a portion of program funding. This approach may allow annual review and decisionmaking on discretionary appropriations to supplement mandatory funding; it also may allow flexibility in providing each type of funding for a different purpose. However, this dual approach may be less efficient or reliable than one type of funding. "], "subsections": []}, {"section_title": "Funding Sources", "paragraphs": ["Congress determines the funding source(s) that support mandatory appropriations. Although many factors may influence the selection of a funding source, a primary consideration is whether the monies should come from government collections in the General Fund of the Treasury or a specific collection, which often is deposited in a special account. The General Fund is the default for government collections unless otherwise specified in law, and it contains monies under a variety of authorities. Many if not all Americans might contribute to the General Fund, for example through income or other taxes. This source might be favored for some mandatory appropriations because it allows central funds to support federal lands managed on behalf of the general public. ", "In practice, few of the FY2018 mandatory accounts for the four land management agencies received funding from the General Fund. One account that received monies from the General Fund is BLM and FS payments under the Secure Rural Schools and Community Self-Determination Act of 2000 (SRS). SRS authorized an optional, alternative revenue-sharing payment program for FS generally and for BLM for certain counties in Oregon. The payment amount is determined by a formula based in part on historical revenue payments. Funding for the payment derives from agency receipts and transfers from the General Fund of the Treasury. ", "Alternatively, Congress may choose to fund mandatory accounts for the four land management agencies from specific collections. In FY2018, specific collections derived from agency receipts, taxes, license fees, tariff and import duties, and donations, among other sources. This approach might be preferred because the revenues derive from activities related to land management and use, especially if the collections are used to invest in the lands and communities from which they are derived. ", "In FY2018, nearly all mandatory appropriations for the four federal land management agencies were funded by specific collections. Many of these appropriations derived from agency receipts under laws that provide for the collection and retention of money from the sale, lease, rental, or other use of the lands and resources under the agencies' jurisdiction. Agency land uses contributing to receipts included timber harvesting, recreation, and livestock grazing. ", "Under some laws, agencies retain 100% of their receipts (e.g., each agency's Operation and Maintenance of Quarters account). Other laws direct an agency to retain a portion of receipts; for instance, BLM's Southern Nevada Public Land Sales account contains 85% of receipts from certain BLM land sales and exchanges in Nevada. Still other laws allow an agency to decide the amount of receipts to be deposited in a special account. The FS Knutson-Vandenberg Trust Fund, for example, contains revenue generated from timber sales, with the amount of deposits determined by FS on a case-by-case basis. ", "Federal excise taxes and fuel taxes funded (at least in part) other FY2018 mandatory appropriations. For example, excise taxes, charged on specific items or groups of items, funded two major FWS programs\u00e2\u0080\u0094Federal Aid in Wildlife Restoration (sometimes referred to as Pittman-Robertson) and Federal Aid in Sport Fish Restoration (sometimes referred to as Dingell-Johnson). Under both programs, the taxes are paid primarily by the people who might benefit from the subsequent expenditures. For the Wildlife Restoration program, taxed items include certain guns, ammunition, and bows and arrows, with the funds primarily used for wildlife restoration programs. Under the Sport Fish Restoration program, the taxed items include sport fishing equipment; this program also receives taxes on motor boat and small engine fuels. The appropriations are used for sport fish restoration programs.", "Under licensing fee programs, land users might pay for a particular activity, with the receipts intended to benefit these users or support a related agency program. In FY2018, licensing fees were used for a major FWS program\u00e2\u0080\u0094the Migratory Bird Conservation Account. Under this program, hunters purchase \"Duck Stamps\" in order to hunt waterfowl and collectors purchase the stamps for collection and conservation purposes. FWS primarily uses the funds derived from these purchases to acquire lands and easements and to protect waterfowl habitat, with the lands and easements added to the National Wildlife Refuge System. Licensing fees also were used in FY2018 to support two relatively small FS programs\u00e2\u0080\u0094Smokey Bear and Woodsy Owl\u00e2\u0080\u0094with the proceeds shared between the licensing contractor and FS (for wildfire prevention and environmental conservation initiatives, respectively). ", "Tariffs and import duties funded some FY2018 mandatory accounts. For instance, FS's Reforestation Trust Fund receives tariffs collected on imported wood products, up to $30.0 million annually. In addition, import duties on fishing boats and tackle support FWS's Sport Fish Restoration account, and import duties on certain arms and ammunition support FWS's Migratory Bird Conservation account.", "The federal land management agencies have authority to accept donations from individuals and organizations for agency projects and activities. All but FS have mandatory authority for some or all donations. For instance, in FY2018, FWS and NPS each had a primary mandatory account comprised of the donations. BLM had two relatively small mandatory accounts containing donations for particular purposes (i.e., rangeland improvements and cadastral surveys.)"], "subsections": []}, {"section_title": "Uses of the Funds", "paragraphs": ["Laws that establish mandatory accounts typically specify how the monies will be used. A general question for Congress is whether the receipts should be retained for use by the collecting agency or shared with state or local governments or other entities or individuals. For accounts retained for agency use, there are additional considerations. These considerations include whether the monies should be available for a broad array of agency activities or restricted to more narrow purposes, such as Administration priorities, purposes related to the activities that generated the receipts, or activities exclusively at the sites that generated the revenues. For shared accounts, additional considerations include how to divide the funds (e.g., among states) and whether and how to provide revenue-sharing payments or establish grant programs. "], "subsections": [{"section_title": "Agency Activities", "paragraphs": ["Some of the FY2018 mandatory accounts of the four federal land management agencies were authorized to be used by the agencies. Supporters have viewed this approach as fostering reinvestment in lands from which revenues were derived, which can support continued land uses. Critics contend that agency discretion over use of receipts could incentivize revenue-generating uses over other priorities, such as habitat conversation. ", "Some of the mandatory FY2018 accounts were available to be used for broad purposes. For example, the four agencies' Recreation Fee accounts can be used for maintenance and facility enhancement, visitor services, law enforcement, and habitat restoration, among other purposes. Similarly, the NPS account for Concession Franchise Fees is authorized for visitor services and high-priority resource management programs and operations. Under both of these fee programs, most of the fees are retained at the collecting site. ", "Other FY2018 mandatory accounts funded specific agency activities related to the derivation of the receipts. For example, receipts of salvage timber sales fund the FS Timber Salvage Sale Fund; the appropriations can be used to prepare, sell, and administer other salvage sales. As another example, the NPS Transportation Systems Fund is derived from fees for public transportation services within the National Park System. It is used for costs of transportation services in the collecting park units."], "subsections": []}, {"section_title": "State and Local Compensation", "paragraphs": ["Some mandatory spending authorities require revenue sharing with state or local governments, essentially as compensation for the tax-exempt status of federal lands. The accounts commonly provide for compensation based on a specified share of agency receipts. Issues of debate have centered on the level of and basis for compensation and the extent to which consistent and comprehensive compensation should be made across federal lands. ", "In FY2018, some of the compensation programs encompassed a broad land base (e.g., all national forests), whereas others had a much narrower base (e.g., the national forests in three counties in northern Minnesota). In addition, some programs specified the allowed uses of the funds, and others were not restricted. FS payments to states, for example, can be used only on roads and schools, whereas BLM sharing of grazing receipts can be used generally for the benefit of the counties in which the lands are located .", "For some lands or resources, there is no compensation. Where there is compensation, the proportion granted to state and local governments has varied widely, even among programs of one agency. For BLM, for instance, the proportion of revenues from land sales that is shared with states is generally 4% (of gross proceeds) but is 15% for Nevada for certain land sales in the state. In addition, the state share of grazing fee receipts is 12.5% within grazing districts but 50% outside of grazing districts. Some (but not all) compensation programs reduce payments under the Payments in Lieu of Taxes Program."], "subsections": []}, {"section_title": "Grant Programs", "paragraphs": ["Still other mandatory accounts provide funding for states (and other entities) through formula or competitive grants. They typically provide federal money to accomplish some shared goal or purpose. The area of the state and the size of the population are common parameters used in calculating payments for formula grants. Further, payments typically are made for less than 100% of project costs. For instance, in two FWS grant programs with formula allocations (Wildlife Restoration and Sport Fish Restoration), states and territories may receive a maximum of 75% of costs of projects related, respectively, to wildlife restoration and sport fish habitat (among other purposes). Some observers have viewed the combination of a formula fixed in law and mandatory spending as giving states substantial predictability of federal funding.", "Other mandatory accounts are allocated for grants through competition among projects. For example, under the Migratory Bird Conservation account, waterfowl habitat acquisitions must be approved by a federally appointed panel based on nominations of the Secretary of the Interior, among other requirements. "], "subsections": []}]}]}, {"section_title": "Agency Accounts with Mandatory Appropriations", "paragraphs": [], "subsections": [{"section_title": "Overview and Comparison", "paragraphs": ["This section provides information on the mandatory appropriations for each of the four federal land management agencies. It first presents a brief comparison of the number and dollar amounts of mandatory accounts for the four agencies collectively. It then provides detail on each agency's FY2018 mandatory appropriations. For each agency, the discussion separately describes each account with at least $5.0 million in mandatory appropriations in FY2018, including the enabling legislation and the source and use of the funds. It then collectively summarizes each agency's accounts with less than $5.0 million in FY2018 mandatory appropriations. For each agency, the section provides a table showing the amount of mandatory appropriations for each account and a figure comparing the accounts. ", "Collectively, in FY2018, the four agencies received $3.17 billion in mandatory appropriations, which was 19% of their total mandatory and discretionary appropriations of $16.36 billion. Discretionary appropriations of $13.19 billion accounted for the remaining 81% of total appropriations for the four agencies. ", "The total dollar amount of mandatory appropriations varied widely among the agencies, from $300.4 million for BLM to $1.46 billion for FWS, as did the percentage of each agency's total appropriation that was mandatory (from 10% for FS to 45% for FWS). Figure 2 shows total appropriations for each agency and the portions that were discretionary and mandatory. Specifically, in FY2018, mandatory appropriations were as follows, in order of increasing amounts: ", "$300.4 million for BLM, which was 18% of total agency discretionary and mandatory appropriations ($1.65 billion); $704.9 million for NPS, which was 17% of total agency discretionary and mandatory appropriations ($4.16 billion); $705.1 million for FS, which was 10% of total agency discretionary and mandatory appropriations ($7.29 billion); and $1.46 billion for FWS, which was 45% of total agency discretionary and mandatory appropriations ($3.27 billion). ", "In FY2018, the four agencies operated with a total of 68 mandatory accounts. FWS had the fewest accounts (12), followed by NPS (16), BLM (18), and FS (22). Moreover, the amount of mandatory appropriations ranged widely among accounts, from less than $0.1 million (for several accounts) to $829.1 million (for FWS's Federal Aid in Wildlife Restoration). In general, most of the accounts were relatively small. Specifically, of the 68 accounts, ", "33 (49%) each had mandatory appropriations of less than $5.0 million, 24 (35%) each had mandatory appropriations of between $5.0 million and $50.0 million, 3 (4%) each had mandatory appropriations of between $50.0 million and $100.0 million, and 8 (12%) each had mandatory appropriations exceeding $100.0 million."], "subsections": []}, {"section_title": "Bureau of Land Management", "paragraphs": ["BLM currently administers 246 million acres, heavily concentrated in Alaska and other western states. BLM lands, officially designated as the National System of Public Lands, include grasslands, forests, high mountains, arctic tundra, and deserts.", "BLM had 18 accounts with mandatory spending authority in FY2018. Seven of these accounts had appropriations each exceeding $5.0 million, with the largest account containing $157.8 million. The accounts typically are funded from agency receipts of various sorts. Although several are compensation programs that provide for revenue sharing with state or local governments, most accounts fund BLM activities. Table 1 and Figure 3 show the BLM mandatory appropriations for FY2018.", "FY2018 mandatory appropriations for BLM for all 18 accounts were $300.4 million. This amount was 18% of total BLM mandatory and discretionary appropriations of $1.65 billion in FY2018. Discretionary appropriations of $1.35 billion accounted for the remaining 82% of total BLM appropriations."], "subsections": [{"section_title": "Southern Nevada Public Land Sales and Earnings on Investments (Federal Funding)", "paragraphs": ["Several laws authorize the sale of some public lands in Nevada. The most extensive authority is the Southern Nevada Public Land Management Act (SNPLMA). Under this authority, BLM is authorized to sell or exchange land in Clark County, NV, with a goal of allowing for community expansion and economic development in the Las Vegas area. Of total receipts, 85% are deposited in a special account, which may be used for activities in Nevada, such as federal acquisition of environmentally sensitive lands; capital improvements; and development of parks, trails, and natural areas in Clark County. (The other 15% of receipts are allocated to the state of Nevada, as discussed in \" Payments to Nevada from Receipts on Land Sales ,\" below.) ", "The FY2018 mandatory appropriation for this account was $157.8 million. Appropriations vary depending on the amount and value of lands sold. Over the five years from FY2014 to FY2018, the annual mandatory appropriation increased from $51.6 million in FY2014, although FY2018 was the only year in which the appropriation exceeded $100.0 million. "], "subsections": []}, {"section_title": "Oil and Gas Permit Processing Improvement Fund", "paragraphs": ["The Oil and Gas Permit Processing Improvement Fund was established by the Energy Policy Act of 2005. The fund supports BLM's oil and gas management program and includes 50% of rents from onshore mineral leases as well as revenue from fees charged by BLM for applications for permits to drill (APDs). BLM uses the receipts from both sources for the coordination and processing of oil and gas use authorizations on onshore federal and Indian trust mineral estate land. The receipts generally are targeted for use in particular areas; receipts from onshore mineral leases are used by BLM \"project offices,\" and not less than 75% of the revenue from APD fees is to be used in the state where collected. ", "The FY2018 mandatory appropriation for the Oil and Gas Permit Processing Improvement Fund was $40.2 million. Appropriations have varied based on factors such as the number of active, nonproducing leases (on which rents are paid) each year, the number of APDs issued each year, and the addition of APD fees to the fund beginning in FY2016. Over the five years from FY2014 to FY2018, the annual mandatory appropriation increased overall from $14.1 million in FY2014, with the highest funding level in FY2018 ($40.2 million). The appropriation averaged $24.1 million annually over the five-year period. "], "subsections": []}, {"section_title": "Secure Rural Schools", "paragraphs": ["The Oregon and California (O&C) and Coos Bay Wagon Road (CBWR) grant lands are lands that were granted to two private firms, then returned to federal ownership for failure to fulfill the terms of the grants. The federal government makes revenue-sharing payments to the western Oregon counties where these lands are located to compensate for the tax-exempt status of federal lands. Under the Act of August 28, 1937, the payments for the O&C lands are 50% of receipts (mostly from timber sales). Under the Act of May 24, 1939, CBWR payments are up to 75% of receipts but cannot exceed the taxes that a private landowner would pay. The funds may be used for any governmental purpose. ", "Because of declining receipts, Congress enacted the Secure Rural Schools and Community Self-Determination Act of 2000 (SRS) to provide alternative payments\u00e2\u0080\u0094initially through FY2006\u00e2\u0080\u0094based in part on historic rather than current receipts. The law has been amended and payments have been reauthorized several times. Most recently, the 115 th Congress provided SRS payments for FY2017 and FY2018. Under SRS, most of the funds are paid to the O&C and CBWR counties for governmental purposes. BLM retains a small portion of the funds for use on the O&C and CBWR lands. ", "SRS payments are disbursed after the fiscal year ends. The FY2018 mandatory appropriation\u00e2\u0080\u0094to cover the FY2017 SRS payment\u00e2\u0080\u0094was $35.2 million. Over the five years from FY2014 to FY2018, the appropriation fluctuated between $35.2 million in FY2018 and $39.6 million in FY2014, except in FY2017. In FY2017, the appropriation for SRS was $0, due to the (temporary) expiration of the SRS program. Because of the expiration, payments to the O&C counties reverted to the revenue-sharing payments authorized under the aforementioned 1937 and 1939 statutes and were $22.9 million in FY2017."], "subsections": []}, {"section_title": "Recreation Enhancement Act, Bureau of Land Management", "paragraphs": ["The Federal Lands Recreation Enhancement Act (FLREA) authorizes five agencies, including BLM, to charge and collect fees for recreation. The program initially was authorized for 10 years but has been extended, most recently through September 30, 2020. FLREA authorizes different kinds of fees, outlines criteria for establishing fees, and prohibits charging fees for certain activities or services. Under the law, BLM charges standard amenity fees in areas or circumstances where a certain level of services or facilities is available and expanded amenity fees for specialized services. ", "The agency retains the collected fees. In general, at least 80% of the revenue is to be retained and used at the site where it was collected, with the remaining fees used agency-wide. Under law, the Secretary of the Interior can reduce the amount of collections retained at a collecting site to not less than 60% for a fiscal year, if collections are in excess of reasonable needs. ", "The law gives BLM (and other agencies in the program) broad discretion in using revenues for specified purposes, which primarily aim to benefit visitors directly. Purposes include facility maintenance, repair, and enhancement; interpretation and visitor services; signs; certain habitat restoration; and law enforcement. The Secretary of the Interior and the Secretary of Agriculture may use a portion of the revenues to administer the recreation fee program.", "The FY2018 mandatory appropriation for BLM's Recreation Enhancement Act was $26.8 million. Appropriations vary depending on fee rates, the number of locations charging fees, and the number of visitors to BLM lands. Over the five years from FY2014 to FY2018, the annual mandatory appropriation increased overall from $17.7 million in FY2014 to $26.8 million in FY2018, the highest funding level. The appropriation averaged $22.2 million annually over the five-year period. "], "subsections": []}, {"section_title": "Payments to Nevada from Receipts on Land Sales", "paragraphs": ["As noted in \" Southern Nevada Public Land Sales and Earnings on Investments (Federal Funding) ,\" SNPLMA allocates 15% of receipts from land sales near Las Vegas to the state of Nevada. Specifically, it allocates 5% of receipts to the state's general education program and 10% of receipts to the Southern Nevada Water Authority for water treatment and transmission facilities in Clark County. (The other 85% of receipts under SNPLMA are deposited in a special federal account, as discussed above.) ", "The FY2018 mandatory appropriation for payments to Nevada from receipts on land sales was $12.6 million. Over the five years from FY2014 to FY2018, the annual mandatory appropriation fluctuated from a low of $5.1 million in FY2014 to a high of $15.8 million in FY2017 and averaged $10.7 million."], "subsections": []}, {"section_title": "Forest Ecosystem Health and Recovery", "paragraphs": ["The Forest Ecosystem Health and Recovery Fund was created by the Department of the Interior and Related Agencies Appropriations Act, 1993. Its purposes and authority have been amended several times. Under current law, funds are derived from the federal share (i.e., the monies not granted to the states or counties) of receipts from the sale of salvage timber from any BLM lands. Salvage sales involve the timely removal of insect-infested, dead, damaged, or down trees that are commercially usable, to capture some of the economic value of the timber resource before it deteriorates or to remove the associated trees for forest health purposes. In general, the fund is used to respond to forest damage and to reduce the risk of catastrophic damage to forests (e.g., through severe wildfire). More specifically, the money can be used to plan, prepare, administer, and monitor salvage timber sales, as well as to reforest salvage timber sites. It also can be used for actions that address forest health problems that could lead to catastrophic damage, such as tree density control and hazardous fuels reduction. ", "The FY2018 mandatory appropriation for the Forest Ecosystem Health and Recovery Fund was $9.6 million. Appropriations vary from year to year, in part because sales and associated deposits may occur over multiple years. They also vary due to factors that influence tree mortality (e.g., catastrophic wildfires, insect infestations), market fluctuations for the demand and price of the associated harvested wood products, and the expiration or reauthorization of SRS payments. Over the five years from FY2014 to FY2018, the annual mandatory appropriation averaged $7.7 million, ranging from a low of $3.3 million in FY2017 to a high of $12.0 million in FY2015. "], "subsections": []}, {"section_title": "Timber Sales Pipeline Restoration", "paragraphs": ["The Timber Sales Pipeline Restoration Fund was authorized by the Omnibus Consolidated Rescissions and Appropriations Act, 1996, for BLM (and FS; see \" Forest Service \" section below). The fund contains the federal share of receipts (i.e., the monies not granted to the states or counties) from certain canceled-but-reinstituted O&C timber sales. The account operates as a revolving fund, with 75% of the receipts from timber sales used to prepare additional sales (other than salvage). The other 25% of the receipts is to be used for recreation projects on BLM land. Under law, when the Secretary of the Interior finds that the allowable sales level for the O&C lands has been reached, the Secretary may end payments to this fund and transfer any remaining money to the General Fund of the Treasury as miscellaneous receipts. ", "The FY2018 mandatory appropriation for the Timber Sales Pipeline Restoration Fund was $7.5 million. Appropriations vary from year to year, in part because sales and associated deposits may occur over multiple years. They also vary based on market fluctuations for the demand and price of the associated harvested wood products and the expiration or reauthorization of SRS payments. Over the five years from FY2014 to FY2018, the annual mandatory appropriation fluctuated from a low of $0.4 million in FY2017 to a high of $9.8 million in FY2015 and averaged $5.2 million annually."], "subsections": []}, {"section_title": "Accounts with Less Than $5.0 Million", "paragraphs": ["BLM had 11 additional accounts with mandatory appropriations of less than $5.0 million each in FY2018. These accounts collectively received $10.9 million in mandatory appropriations in FY2018 and ranged from less than $0.1 million to $3.3 million, as shown in Table 1 . Three of the accounts are payment programs under which BLM shares proceeds of land sales or land uses (e.g., livestock grazing) with states and counties. Under some authorities, the states and counties may use the payments for general purposes, such as for the benefit of affected counties; other laws specify particular purposes for which the payments can be used, such as for schools and roads. ", "Various sources fund the other eight accounts, with BLM retaining the proceeds for particular purposes, as follows: ", "Two of the accounts are funded by land sales in particular areas and are used for purposes including land acquisition, resource preservation, and the processing of land use authorizations. Two accounts are funded by contributions for cadastral surveys and for administering and improving grazing lands and are used for these purposes. One account is funded from rents paid by BLM employees living in government housing and is used to maintain and repair the housing. One account is funded by revenues from mineral lease sales on a particular site and is used to remove environmental contamination. One account is funded primarily by fees collected from commercial users of roads under BLM jurisdiction and is used to maintain the areas. One account is funded by timber receipts under stewardship contracts and is used for purposes including other stewardship contracts. "], "subsections": []}]}, {"section_title": "Fish and Wildlife Service", "paragraphs": ["FWS administers the National Wildlife Refuge System (NWRS), which consists of land and water designations. The system includes wildlife refuges, waterfowl production areas, and coordination areas, as well as mostly territorial lands and submerged lands and waters within mainly marine wildlife refuges and marine national monuments. FWS also manages other lands within and outside of the NWRS. ", "FWS had 12 accounts with mandatory spending authority in FY2018. Seven of these accounts had appropriations each exceeding $5.0 million, and the largest had $829.1 million. Funding mechanisms for these accounts vary, including receipts; excise and fuel taxes; and fines, penalties, and forfeitures. In addition, three of the accounts receive discretionary appropriations in addition to the mandatory appropriations shown in this report. Several accounts, including some of the largest, provide grants to states (and other entities); other accounts fund agency activities or provide compensation to counties. Table 2 and Figure 4 show the FWS mandatory appropriations for FY2018.", "FY2018 mandatory appropriations for all 12 FWS accounts were $1.46 billion. This amount was 45% of total FWS mandatory and discretionary appropriations of $3.27 billion in FY2018. Discretionary appropriations of $1.81 billion accounted for the remaining 55% of total FWS appropriations."], "subsections": [{"section_title": "Federal Aid in Wildlife Restoration (Pittman-Robertson)", "paragraphs": ["In 1937, the Federal Aid in Wildlife Restoration Act created the Federal Aid in Wildlife Restoration Fund, also known as the Pittman-Robertson Fund, in the Treasury. As amended, the act directs that excise taxes on certain guns, ammunition, and bows and arrows be deposited into the fund each fiscal year for allocation and dispersal in the year following their collection. The Appropriations Act of August 31, 1951, provided for mandatory appropriations for the excise taxes deposited into the Pittman-Robertson Fund in the year after they are collected. Many programs are funded from the Pittman-Robertson Fund. The majority of the annual funding is allocated to states and territories, which can receive funding to cover up to 75% of the cost of FWS-approved wildlife restoration projects, including acquisition and development of land and water areas. Funding also is provided for hunter education programs and multistate conservation grants. FWS is authorized to use a limited amount of the funds to administer the program. In addition, interest on balances in the account is allocated to the North American Wetlands Conservation Fund.", "Pittman-Robertson received $829.1 million in mandatory appropriations in FY2018. This amount included $17.8 million for projects under the North American Wetlands Conservation Act (see \" North American Wetlands Conservation Fund \"). The mandatory appropriation for Pittman-Robertson varies based on the amount of federal excise taxes collected. Over the five years from FY2014 to FY2018, annual mandatory appropriations varied by more than $100 million, with a low of $725.5 million in FY2016 and a high of $829.1 million in FY2018. The appropriation averaged $790.0 million annually over the five-year period. "], "subsections": []}, {"section_title": "Federal Aid in Sport Fish Restoration (Dingell-Johnson)", "paragraphs": ["In 1950, Congress passed the Federal Aid in Sport Fish Restoration Act, now known as the Dingell-Johnson Sport Fish Restoration Act. The act authorized funding equal to the amount of taxes collected on certain sport fishing equipment to be allocated to the states to be used to carry out sport fish restoration activities. The Appropriations Act of August 31, 1951, provided for mandatory appropriations for the amounts used to carry out the act. Since its passage, the Dingell-Johnson Act has been amended several times to add additional programs and to modify the source of funding. In 1984, funding for this act became part of a larger Aquatic Resources Trust Fund established in the Deficit Reduction Act of 1984. In 2005, the account name was changed to the Sport Fish Restoration and Boating Fund. In its current form, the fund receives deposits from five sources: (1) taxes on motorboat fuel (after $1 million is credited to the Land and Water Conservation Fund); (2) taxes on small engine fuel used for outdoor power equipment; (3) excise taxes on sport fishing equipment, such as fishing rods, reels, and lures; (4) import duties on fishing boats and tackle; and (5) interest on unspent funds in the account. Deposits into the fund are available for appropriation in the year after they are collected.", "As amended, the Dingell-Johnson Act funds many programs through the Dingell-Johnson Fund. The majority of funds are used for formula grants to states and territories for projects to benefit sport fish habitat, research, inventories, education, stocking of sport fish into suitable habitat, and more. The states and territories can receive funding to cover up to 75% of the cost of restoration projects, including acquiring and developing land and water areas. In addition to funds apportioned to states for sport fish restoration projects, funding is allocated to administer various other FWS programs, including Boating Infrastructure Improvement, National Outreach, Multistate Conservation Grants, Coastal Wetlands, Fishery Commissions, and the Sport Fishing and Boating Partnership Council. In addition, FWS uses monies from the fund to carry out projects identified through the North American Wetlands Conservation program. ", "Dingell-Johnson received $439.2 million in mandatory appropriations in FY2018. This amount included $17.2 million for projects under the North American Wetlands Conservation Act (see \" North American Wetlands Conservation Fund \" for more information). The mandatory appropriation for Dingell-Johnson fluctuates from year to year, because the amount of deposits into the fund varies annually. Over the five years from FY2014 to FY2018, annual mandatory appropriations varied by more than $35 million, with a low of $406.8 million in FY2014 and a high of $442.3 million in FY2016. The appropriation averaged $430.9 million annually over the five-year period. "], "subsections": []}, {"section_title": "Migratory Bird Conservation Account61", "paragraphs": ["The Migratory Bird Conservation Account was created in 1934 as the repository for revenues derived from the sale of Migratory Bird Hunting and Conservation Stamps, commonly known as Duck Stamps. In addition to revenues from Duck Stamps, the fund receives deposits from import duties on certain arms and ammunition, as well as other sources. Funding in the Migratory Bird Conservation Account can be used for the printing and sales costs of Duck Stamps and for the Secretary of the Interior to acquire lands and easements and protect waterfowl habitat, with the lands and easements added to the NWRS. Prior to acquisition of a property for addition to the NWRS, the Migratory Bird Conservation Commission must approve the property from a list of properties that the Secretary of the Interior nominates for acquisition. Also prior to acquisition, the state in which the acquisition is to occur must enact a law consenting to acquisition by the United States, FWS must consult with the state, and the state's governor must approve the acquisition. ", "The Migratory Bird Conservation Account received $81.3 million in mandatory appropriations in FY2018. The mandatory appropriation for the Migratory Bird Conservation Account varies from year to year based on fluctuations in deposits from the sale of Duck Stamps and import duties. Over the five years from FY2014 to FY2018, annual mandatory appropriations varied by nearly $20 million, with a low of $62.6 million in FY2015 and a high of $82.3 million in FY2017. The appropriation averaged $72.7 million annually over the five-year period. "], "subsections": []}, {"section_title": "Cooperative Endangered Species Conservation Fund", "paragraphs": ["Unlike the other mandatory accounts, the mandatory appropriation for the Cooperative Endangered Species Conservation Fund (CESCF) is not directly available for allocation and disbursal. Rather, the mandatory appropriation is paid into a special fund, known as the CESCF, from which funding may be made available in subsequent years through further discretionary action by Congress. As such, the mandatory appropriation for CESCF is different from the mandatory appropriations for other FWS accounts. The mandatory appropriation that is annually deposited into the CESCF consists of an amount equal to 5% of the combined amount covered in the Federal Aid in Sport Fish Restoration and Federal Aid in Wildlife Restoration accounts and an amount equal to the excess balance above $500,000 of the sum of penalties, fines, and forfeitures received under the Endangered Species Act and the Lacey Act. Funding made available from the CESCF through discretionary appropriations supports grant funding programs that assist states with the conservation of threatened and endangered species and the monitoring of candidate species on nonfederal lands.", "The CESCF received $74.7 million in mandatory appropriations in FY2018. The mandatory appropriation for the CESCF varies from year to year due to fluctuations in Pittman-Robertson and Dingell-Johnson and in the penalties, fines, and forfeitures collected. Over the five years from FY2014 to FY2 018, annual mandatory appropriations varied by more than $8 million, between a low of $67.7 million in FY2016 and a high of $75.9 million in FY2017."], "subsections": []}, {"section_title": "North American Wetlands Conservation Fund", "paragraphs": ["The North American Wetlands Conservation Act was enacted in 1989 to provide funding mechanisms to carry out conservation activities in wetlands ecosystems throughout the United States, Canada, and Mexico. The funding supports partnerships among interested parties to protect, enhance, restore, and manage wetland ecosystems, and it requires that the partner stakeholders match the federal funding at a minimum rate of one to one. Mandatory funding for the program comes from court-imposed fines for violations of the Migratory Bird Treaty Act. Additional mandatory funding is derived from interest earned on funds from excise taxes on hunting equipment under Pittman-Robertson and transfers from Dingell-Johnson. (See \" Federal Aid in Wildlife Restoration (Pittman-Robertson) \" and \" Federal Aid in Sport Fish Restoration (Dingell-Johnson) \" for more information.) ", "The North American Wetlands Conservation Fund received $11.5 million in mandatory appropriations in FY2018. The mandatory appropriation for the North American Wetlands Conservation Fund varies from year to year due to fluctuations in fines related to violations of the Migratory Bird Treaty Act. Over the five years from FY2014 to FY2018, mandatory appropriations varied by more than $8 million, with a low of $11.4 million in FY2017 and a high of $19.6 million in FY2015. The appropriation averaged $16.2 million annually over the five-year period. "], "subsections": []}, {"section_title": "National Wildlife Refuge Fund", "paragraphs": ["The Refuge Revenue Sharing Act was enacted to compensate counties for the loss of revenue due to the tax-exempt status of NWRS lands administered by FWS. The National Wildlife Refuge Fund, also called the Refuge Revenue Sharing Fund, accumulates net receipts from the sale of certain products, which are used to pay the counties in the year following their collection pursuant to the act. The act also authorizes FWS to deduct funds from the receipts to cover certain costs related to revenue-producing activities. Counties receive payments for FWS-managed lands that were acquired (fee lands) or reserved from the public domain. Counties receive a payment for fee lands based on a formula that pays the greater of (1) $0.75 per acre, (2) three-fourths of 1% of fair market value of the land, or (3) 25% of net receipts. Payments for reserved lands are 25% of the net receipts. In a given year, if receipts are not sufficient to cover the payments, the act authorizes annual discretionary appropriations to make up some or all of the difference. If receipts exceed the amount needed to cover payments, the excess is transferred to the Migratory Bird Conservation Account. From FY2014 to FY2017, mandatory and discretionary spending together provided between 20% and 30% of the full, authorized level in the formula, with mandatory appropriations making up between 28% and 41% of the total.", "The National Wildlife Refuge Fund received $9.4 million in mandatory appropriations in FY2018. The mandatory appropriation for the National Wildlife Refuge Fund fluctuates from year to year due to changes in revenues collected that determine the available funding. Over the five years from FY2014 to FY2018, annual mandatory appropriations varied by more than $4 million, with a low of $7.0 million in FY2014 and a high of $11.4 million in FY2016."], "subsections": []}, {"section_title": "Federal Lands Recreation Enhancement Act83", "paragraphs": ["In general, FLREA allows national wildlife refuge managers to retain not less than 80% of entrance and user fees collected at the refuge to improve visitor experiences, protect resources, collect fees, and enforce laws relating to public use, among other purposes. The remaining amount (up to 20%) is to be made available for agency-wide distribution. In practice, some FWS regions have chosen to return 100% of funds to the collecting sites. ", "The Recreation Fee Program received $7.5 million in mandatory appropriations in FY2018. Appropriations vary depending on fee rates, the number of locations charging fees, and the number of visitors to FWS lands. Over the five years from FY2014 to FY2018, the annual mandatory appropriation increased by more than $2 million, with a low of $5.1 million in FY2014 and a high of $7.5 million in FY2018."], "subsections": []}, {"section_title": "Accounts with Less Than $5.0 Million", "paragraphs": ["FWS had five additional accounts with mandatory appropriations of less than $5.0 million each in FY2018. These accounts collectively received $7.8 million in mandatory appropriations in FY2018, and they ranged from $0.2 million to $4.0 million, as shown in Table 2 . These accounts receive funding from donations and receipts collected for certain activities. For some accounts, the activities are restricted to selected refuges or properties. In general, these funds are used for fish and wildlife conservation purposes or for the maintenance or conservation of specific FWS-administered resources. Specific purposes include the following: ", "The Contributed Funds account consists of donations, which are used to support various fish and wildlife conservation projects. The Operations and Maintenance of Quarters Fund receives the rents and charges from employees occupying FWS quarters and is used to maintain the structures. The Lahontan Valley and Pyramid Lake Fish and Wildlife Fund uses the receipts associated with a water rights settlement in Nevada to support restoration and enhancement of wetlands and fisheries in the area. Proceeds from the sale of certain lands in the area also are deposited in the fund. The Proceeds from Sales Fund uses the receipts from sales of resources on U.S. Army Corps of Engineers land managed by FWS to cover the expenses of managing those sales and carrying out development, conservation, and maintenance of these lands. The Community Partnership Enhancement Fund supports collaboration with local groups (e.g., state, local, or academic organizations) whose contributions support local refuges. "], "subsections": []}]}, {"section_title": "Forest Service", "paragraphs": ["FS is charged with conducting forestry research, providing assistance to nonfederal forest owners, and managing the 193-million-acre National Forest System (NFS). The NFS consists of national forests, national grasslands, land utilization projects, and several other land designations. ", "FS had 22 accounts with mandatory spending authority in FY2018. Of the 22 accounts, 10 had mandatory appropriations each exceeding $5.0 million in FY2018, with the largest account containing $234.6 million. The remaining 12 accounts had appropriations of less than $5 million each in FY2018 (and half of those had less than $1 million each). Agency receipts fund many of these accounts, although one is supplemented by the General Fund of the Treasury, as needed. Almost all of the accounts support agency activities, but one is for a compensation program. In addition, import tariffs fund one account and license fees fund another. Table 3 and Figure 5 show the FS mandatory appropriations for FY2018.", "FY2018 mandatory appropriations for FS for all 22 accounts were $705.1 million. This amount was nearly 10% of total FS mandatory and discretionary appropriations of $7.29 billion in FY2018. Discretionary appropriations of $6.58 billion accounted for the remaining 90% of total FS appropriations. "], "subsections": [{"section_title": "Payment to States Funds", "paragraphs": ["Payment to States Funds provide compensation or revenue-sharing payments to specified state and local governments. The payments are required based on different laws with varying (but sometimes related) purposes and disbursement formulas, as summarized below. The funds generally consist of receipts from sales, leases, rentals, or other fees for using NFS lands or resources (e.g., timber sales, certain recreation fees, and communication site leases). ", "25% R evenue- S haring P ayments . The Act of May 23, 1908, requires states to receive annual payments of 25% of the average gross revenue generated over the previous seven years on the national forests in the state, for use on roads and schools in the counties containing those lands. Funded through receipts, the payment is made to the state after the end of the fiscal year. The state cannot retain any of the funds but allocates the payment to the counties based on the area of national forest land in each county. SRS P ayments . SRS authorized an optional, alternative payment to both the FS 25% revenue-sharing payments and the BLM payments to the counties in Oregon containing the O&C and CBWR lands. The payment amount is determined by a formula that is based in part on historical revenue payments and that declines overall by 5% annually. Similar to the 25% revenue-sharing payments, the payment is made after the end of the fiscal year and the bulk of the payment is to be used for roads and schools in the counties containing the national forests. The agency may retain a portion of the payment for use on specified projects. Funding for the payment first comes from receipts and, if necessary, is supplemented through transfers from the General Fund of the Treasury. The original authorization for SRS payments expired at the end of FY2006, but Congress reauthorized the payments several times (through various laws) and payments were made annually from FY2001 through FY2016. The authorization expired for the FY2016 SRS payment, and counties received the 25% revenue-sharing payment for one year, in FY2017. Congress then reauthorized the SRS payments for two years (FY2017 and FY2018). SRS payments are disbursed after the fiscal year ends, so the FY2017 payment was made in FY2018 and the FY2018 payment was made in FY2019. National Grassland Fund P ayments . These payments are authorized by the Bankhead-Jones Farm Tenant Act, which requires payments of 25% of net (rather than gross) receipts directly to the counties for roads and schools in the counties where the national grasslands are located. These payments are sometimes referred to as Payments to Counties, because the payment is made directly to the counties and the allocation is based on the national grassland acreage in each county. Payments to Minnesota Counties . Enacted in 1948, this program pays three northern Minnesota counties 0.75% of the appraised value of the land, without restrictions on using the funds. ", "The FY2018 mandatory appropriation for the Payment to States Funds was $234.6 million. The funding level in this account varies annually, depending on fluctuations in revenue from the NFS and whether SRS is authorized. For example, over the five years from FY2014 to FY2018, annual mandatory appropriations averaged $269.6 million. The FY2018 appropriation was lower than the annual average, and the FY2017 appropriation ($73.1 million) was much lower than the annual average. These low figures occurred primarily because of the expiration of SRS payments in FY2017. SRS payments are generally higher than 25% payments and often require supplemental funding from the General Fund of the Treasury. "], "subsections": []}, {"section_title": "Cooperative Work\u00e2\u0080\u0094Knutson-Vandenberg Trust Fund", "paragraphs": ["The Knutson-Vandenberg (K-V) Trust Fund was established by the Act of June 6, 1930, and is funded through revenue generated by timber sales. The agency determines the amount collected on each sale, which can be up to 100% of receipts from the sale. The fund is used for two purposes. First, the fund is used on the site of the timber sale to reforest and improve timber stands or to mitigate and enhance non-timber resource values. Second, unobligated balances from the fund may be used for specified land management activities within the same FS region in which the timber sale occurred. ", "The K-V Trust Fund received $187.2 million in mandatory appropriations in FY2018. Because the deposits are determined on a sale-by-sale basis, the balance in the fund varies from year to year. Over the five years from FY2014 to FY2018, mandatory appropriations ranged from a low of $61.5 million in FY2015 to a high of $250.0 million in FY2014. The average annual mandatory appropriation was $155.7 million. "], "subsections": []}, {"section_title": "Recreation Fee Program, Forest Service", "paragraphs": ["FS charges and collects recreational fees under several programs and deposits those funds into the Recreation Fees account to be used for specified purposes. Under FLREA, FS is one of five federal agencies authorized to charge, collect, and retain fees for specified recreational activities on federal lands. FLREA directs that at least 80% of the fees collected from FS are to be available without further appropriation for use at the site where they were collected. FS typically uses the money for visitor services, law enforcement, and other purposes authorized under FLREA. In addition to FLREA, FS is authorized to collect and retain fees at two specific sites: Grey Towers National Historic Site and the Shasta-Trinity National Recreation Area (NRA). FS is authorized to use the fees collected at the Grey Towers National Historic Site for program support and administration. The agency may use the fees collected at the Shasta-Trinity NRA for the same purposes as FLREA, as well as for direct operating or capital costs associated with the issuance of a marina permit. FS also administers the multiagency National Recreation Reservation Service program, which collects reservation fees for those recreational facilities on federal lands that allow reservations. FS is responsible for collecting the fees and issuing pass-through payments to other agencies. ", "The FY2018 mandatory appropriation for the Recreation Fee Program was $100.6 million. Appropriations vary depending on fee rates, the number of locations charging fees, and the number of visitors to FS lands. Over the five years from FY2014 to FY2018, mandatory appropriations ranged from a low of $70.7 million in FY2014 to a high of $100.6 million in FY2018. The average annual mandatory appropriation during the period was $87.2 million. "], "subsections": []}, {"section_title": "Timber Salvage Sale Fund", "paragraphs": ["The Timber Salvage Sale Fund is funded through receipts from timber sales (or portions of sales) designated as salvage by the agency, and its funds may be used to prepare, sell, and administer other salvage sales. Salvage sales involve the timely removal of insect-infested, dead, damaged, or down trees that are commercially usable to capture some of the economic value of the timber resource before it deteriorates or to remove the associated trees for stand improvement. The fund may be used for timber sales with any salvage component. ", "The FY2018 mandatory appropriation for the FS Timber Salvage Sale Fund was $41.9 million. Appropriations vary from year to year, based on factors that influence tree mortality (e.g., catastrophic wildfires, insect infestations) and market fluctuations for the demand and price of the harvested timber. From FY2014 to FY2018, mandatory appropriations ranged from a low of $33.2 million in FY2014 to a high of $41.9 million in FY2018. The mandatory appropriation averaged $37.5 million annually over the five-year period."], "subsections": []}, {"section_title": "Cooperative Work\u00e2\u0080\u0094Other Trust Fund", "paragraphs": ["This trust fund collects deposits from cooperators and partners for use on NFS lands or for funding research programs. The deposits may be made under an assortment of instruments, including cooperative agreements, permits, or contracts, and with a variety of partners, for services involving any aspect of forestry ranging from timber measurement to fire protection, among others. These services vary widely in scope and duration, and the associated deposits also vary widely, commensurate with the scale of those services. The deposits may be made pursuant to a specific agreement or project, or they may include funds pooled from multiple cooperators for later spending on related projects. The amount of deposits is specified in each instrument. ", "The FY2018 mandatory appropriation for the trust fund was $39.4 million. Because the fund consists of deposits under many individual cooperative agreements or other instruments, the funding level varies considerably from year to year. Over the five years from FY2014 to FY2018, mandatory appropriations ranged from a low of $34.6 million in FY2014 to a high of $84.1 million in FY2016. The mandatory appropriation averaged $48.2 million annually over the five-year period. "], "subsections": []}, {"section_title": "Reforestation Trust Fund", "paragraphs": ["The Reforestation Trust Fund was created in 1980 to eliminate the backlog of reforestation and timber stand improvement work on NFS lands. Deposits to this account come from tariffs on specified imported wood products, up to $30.0 million annually. Funds may be used for a range of activities related to reforestation (e.g., site preparation for natural regeneration, seeding, or tree planting) and to improve timber stands (e.g., removing vegetation to reduce competition, fertilization). ", "In FY2018, the Reforestation Trust Fund received $27.2 million in mandatory appropriations. Funding generally has been at or around the maximum of $30.0 million annually. Over the five years from FY2014 to FY2018, the mandatory appropriation averaged $29.4 million annually. "], "subsections": []}, {"section_title": "Stewardship Contracting Fund108", "paragraphs": ["Congress authorized FS and BLM to combine timber sale contracts and land restoration services contracts into stewardship contracts . This allows the agencies to retain and use the revenue generated from the sale of timber to offset the cost of specified restoration work on their lands. FS and BLM each are authorized to retain any receipts in excess of the cost of the restoration work in their respective Stewardship Contracting Funds and to use those funds on future stewardship contracts. ", "In FY2018, the mandatory appropriation for the Stewardship Contracting Fund was $23.6 million. Funding varies based on the extent that there are receipts in excess of costs. Over the five years from FY2014 to FY2018, mandatory appropriations ranged from a low of $11.2 million in FY2014 to a high of $23.6 million in FY2018 and averaged $15.8 million annually."], "subsections": []}, {"section_title": "Cost Recovery (Land Uses)", "paragraphs": ["FS is authorized to collect and retain fees to cover the costs of processing and monitoring certain special-use authorizations for the use and occupancy of NFS lands. The processing and monitoring fees are based on the estimated number of hours it will take FS to process the application (or renew the authorization) and to monitor the activity to ensure compliance with the authorization. The rates are updated annually to adjust for inflation. ", "The FY2018 mandatory appropriation for Cost Recovery (Land Uses) was $11.0 million. Funding varies based on the number and type of special-use authorizations. From FY2014 to FY2018, mandatory appropriations ranged from a low of $5.4 million in FY2014 to a high of $11.0 million in FY2018 and averaged $7.8 million annually. "], "subsections": []}, {"section_title": "Operation and Maintenance of Forest Service Quarters", "paragraphs": ["This account allows the agency to collect rent from employees who use government-owned housing and to use the funds to maintain and repair the structures. The FY2018 mandatory appropriation was $10.0 million. Over the five years from FY2014 to FY2018, funding was relatively consistent and mandatory appropriations averaged $9.0 million annually. "], "subsections": []}, {"section_title": "Brush Disposal", "paragraphs": ["This account receives money from timber purchasers. The fund is used on timber sale sites to dispose of treetops, limbs, and other debris from timber cutting; reduce fire and insect hazards; assist reforestation; and conduct related activities. FS identifies the amount required to cover the costs of those activities for each timber sale. ", "The FY2018 mandatory appropriation for Brush Disposal was $7.6 million. From FY2014 to FY2018, mandatory appropriations ranged from a low of $7.6 million in FY2018 to a high of $9.7 million in FY2015. The appropriation averaged $8.3 million annually. "], "subsections": []}, {"section_title": "Accounts with Less Than $5.0 Million", "paragraphs": ["FS had 12 additional accounts with mandatory appropriations of less than $5.0 million each in FY2018, all of which can be used on specified agency activities. These accounts collectively received $21.8 million in mandatory appropriations in FY2018, and they ranged from less than $0.1 million to $4.7 million, as shown in Table 3 . ", "Nine of these accounts are funded through receipts or fees for use of NFS lands or resources, with FS retaining the proceeds for particular purposes, as follows. Three accounts are associated with the sale of timber or non-timber wood products and may be used for implementation of additional timber sales, payment for road construction associated with timber sales, or program administration. Four accounts are associated with land use fees. Of these, two accounts are funded through land use fees for specific purposes (e.g., commercial filming or photography, organizational camps) and two accounts are funded through land use fees in specific areas; the funds in those accounts generally may be used for program administration and other specified purposes. Two accounts are funded through land sales and are used for purposes such as land acquisition, building maintenance, rehabilitation, and construction.", "Of the remaining three accounts, one is funded through licensee royalty fees and used to support nationwide initiatives related to wildfire prevention and environmental conservation. Another account is funded through recoveries from judgements, settlements, bond forfeitures, and related actions from permittees or timber purchasers who fail to complete the required work, and the funds are used to complete the work or repair any associated damage. The other account is funded through revenue generated from recycling or other waste reduction or prevention programs; its funds are used to implement other recycling, waste reduction, or prevention programs."], "subsections": []}]}, {"section_title": "National Park Service", "paragraphs": ["NPS administers the National Park System, with 80 million acres of federal land in all 50 states and the District of Columbia. The system contains 419 units with diverse titles, including national park, national preserve, national historic site, national recreation area, and national battlefield, among others. ", "NPS had 16 accounts with mandatory spending authority in FY2018. Of these, 11 accounts had mandatory appropriations each exceeding $5.0 million; the largest had $301.5 million. Funding sources for the accounts vary and include agency receipts, offshore energy development revenues, District of Columbia payments, the General Fund of the Treasury, donations, and an endowment. Almost all of the accounts support agency activities, but one is for recreation assistance grants to states and another is a compensation program. Table 4 and Figure 6 show NPS mandatory appropriations for FY2018.", "FY2018 mandatory appropriations for all 16 NPS accounts totaled $704.9 million. This amount was 17% of the $4.16 billion total for NPS mandatory and discretionary appropriations combined in FY2018. Discretionary appropriations of $3.46 billion accounted for the remaining 83% of total NPS appropriations."], "subsections": [{"section_title": "Recreation Fee Program", "paragraphs": ["Like other federal land management agencies, NPS charges, retains, and spends recreation fees under FLREA. FLREA authorizes NPS to charge entrance fees at park units and to charge certain recreation and amenity fees for specialized uses of park facilities and services. FLREA directs that, in general, at least 80% of the fees collected at a park unit are to be available without further appropriation for use at the site where they were collected. In practice, NPS's policy is to allow park units that collect less than $0.5 million annually to retain 100% of collections at the site; park units that collect over $0.5 million annually retain up to 80% of collections. Funds not retained at the collecting site are placed in a centralized account for use agency-wide, including at sites where fee collection is infeasible or relatively low. NPS projects compete for funding from this centralized account, and the NPS director ultimately selects projects for funding. ", "NPS generally has discretion in using its collections for purposes specified in FLREA. These purposes include maintaining and improving recreation facilities, providing visitor services, providing law enforcement related to public use and recreation, and restoring certain wildlife habitats. Under an agency policy that took effect in FY2018, parks are to obligate 55% of new allocations to deferred maintenance projects. ", "In FY2018, NPS revenues from the Recreation Fee Program were $301.5 million. Over the five years from FY2014 to FY2018, program revenues increased by approximately 65%, owing to entrance fee increases and growth in the numbers of park visitors, among other factors. The recreation fees averaged $251.8 million annually over the five-year period. NPS typically collects more under FLREA than the other four agencies in the program combined (BLM, FS, FWS, and the Bureau of Reclamation). "], "subsections": []}, {"section_title": "Concession Franchise Fees", "paragraphs": ["NPS concessioners contract with the agency to provide visitor services such as lodging and food within the parks. The National Park Service Concessions Management Improvement Act of 1998 directs that all franchise fees and other monetary considerations from NPS concessions contracts be deposited into a special account. NPS is authorized to use most of these funds at the collecting park for visitor services and high-priority resource management programs and operations. This account is gradually replacing an earlier type of concessions funding\u00e2\u0080\u0094the concessions improvement accounts (see \" Concessions Improvement Accounts ,\" below)\u00e2\u0080\u0094as concessions contracts are renewed. ", "In FY2018, NPS received $126.3 million in concession franchise fees, a 2% increase over FY2017 receipts ($123.8 million). Over the FY2014-FY2018 period, NPS concession franchise fee receipts averaged $108.3 million annually. Agency revenues from concession franchise fees increased by nearly 50% over five years (FY2014-FY2018), as park visitation increased and as older concessions contracts were replaced by new contracts awarded under the 1998 act. NPS has stated that, under the 1998 act, \"the Service has experienced increased competition for contracts, which has resulted in improved visitor services, higher revenue, and increased returns to the government.\" "], "subsections": []}, {"section_title": "GOMESA Mandatory Land Acquisition and State Assistance", "paragraphs": ["The Gulf of Mexico Energy Security Act of 2006 (GOMESA) provides mandatory appropriations to the Land and Water Conservation Fund's (LWCF's) state assistance program, which is administered by NPS. The funding consists of a percentage of revenues from qualified offshore oil and gas leases in the Gulf of Mexico. GOMESA revenues for the LWCF are exclusively for the state grant program (rather than for land acquisition by the federal land management agencies). The GOMESA revenues are used for formula grants to states for outdoor recreation purposes, including recreational planning, acquiring recreational lands and waters, and developing outdoor recreation facilities. ", "In FY2018, the LWCF state assistance program received $62.6 million under GOMESA. Historically, mandatory appropriations to the LWCF state assistance program under GOMESA had been relatively small compared to other NPS mandatory accounts. For instance, during the five-year period from FY2014 to FY2018, the funding constituted less than $1.5 million for each year except FY2018 ($62.6 million). GOMESA entered a new revenue-sharing phase in FY2017\u00e2\u0080\u0094often referred to as Phase II \u00e2\u0080\u0094in which qualified leasing revenues from an expanded geographic area are shared with the LWCF (and with certain states). This has resulted in higher revenue shares than in GOMESA's first decade. Because the law specifies that revenues shall be shared with recipients in the fiscal year immediately following that in which they are received, FY2018 was the first fiscal year that reflected Phase II revenue sharing."], "subsections": []}, {"section_title": "Donations", "paragraphs": ["The NPS Donations account includes donated funds received by the Secretary of the Interior for the National Park System under the authority of the NPS Organic Act. The account does not represent all donations to NPS; for example, it excludes in-kind contributions of goods and services. Donations are tracked to assure that the funds are used for the purposes for which they were donated. ", "In FY2018, the mandatory appropriation from donations was $47.1 million. Annual donations may fluctuate considerably from year to year. For FY2014-FY2018, donation amounts ranged from a low of $47.1 million in FY2018 to a high of $159.1 million in FY2015. Over the five-year period, donations averaged $84.1 million annually. Changes may be due to variations in the number and size of major gifts NPS receives in a given year. Some donations are tied to federal matching programs whose funding may fluctuate or expire. For instance, the Helium Stewardship Act (discussed in \" Construction\u00e2\u0080\u0094Helium Act ,\" below) provided mandatory appropriations to NPS in FY2018 and FY2019 that incentivized matching donations."], "subsections": []}, {"section_title": "Annuity Benefits for U.S. Park Police", "paragraphs": ["The Annuity Benefits for U.S. Park Police program reimburses the District of Columbia for benefit payments to U.S. Park Police annuitants that exceed deductions from salaries of active members of the U.S. Park Police. The program applies to Park Police hired before January 1, 1984. Payments are made to retirees, surviving spouses, and dependents. Since FY2002, the program has operated as a permanent appropriation; prior to that, payments were funded through NPS discretionary appropriations.", "In FY2018, mandatory appropriations for the annuity benefits were $44.3 million. The appropriations stayed relatively steady from FY2014 to FY2018. For example, FY2017 appropriations were $44.6 billion and FY2016 appropriations were $44.8 billion. Over time, payments from the program may be expected to gradually decline, as the program applies only to the annuitants of Park Police hired prior to 1984."], "subsections": []}, {"section_title": "Transportation Systems Fund", "paragraphs": ["NPS is authorized to collect fees for the use of public transportation services within the National Park System. All the fees must be used on costs associated with transportation services in the park unit in which they were collected. Currently, 19 park units have approval to collect transportation fees. ", "In FY2018, NPS had $28.1 million in mandatory appropriations from transportation fees. Annual park visitation levels and other factors affect the collections. In addition, the number of parks approved to charge a transportation fee has grown, from 14 parks in FY2014 to the current 19. Annual collections generally grew over five years from $17.4 million in FY2014 to $28.1 million in FY2018, but the FY2018 amount was lower than FY2017 ($28.6 million)."], "subsections": []}, {"section_title": "Land and Water Conservation Fund Contract Authority", "paragraphs": ["The Land and Water Conservation Fund Act of 1965 gives NPS contract authority for the acquisition of lands and waters, not to exceed $30 million of the money authorized to be appropriated each fiscal year. For FY2018, Congress provided NPS with LWCF contract authority of $28.0 million. In earlier years, including FY2014-FY2017, Congress had rescinded this contract authority in annual appropriations laws. "], "subsections": []}, {"section_title": "Operation and Maintenance of Quarters", "paragraphs": ["NPS is authorized to provide employees with government-owned or government-leased housing when conditions of employment or availability of housing warrant this arrangement. The NPS also is authorized to provide employees with related facilities, such as furniture, equipment, and utilities. Under law, the NPS charges rental rates for housing and fees for facilities based on their \"reasonable value\" to the employees. The agency may collect the rents and charges through payroll deductions or other arrangements, and the collections are deposited into a special fund. NPS uses the funds to operate and maintain agency housing in units of the National Park System.", "For FY2018, NPS reported mandatory appropriations of $22.4 million for operation and maintenance of quarters. Over the five-year period from FY2014 to FY2018, the receipts were relatively steady, ranging from a low of $21.2 million in FY2016 to a high of $23.1 million in FY2014. "], "subsections": []}, {"section_title": "Construction\u00e2\u0080\u0094Helium Act", "paragraphs": ["The Helium Stewardship Act of 2013 authorized mandatory appropriations totaling $50 million over two fiscal years (FY2018 and FY2019) to pay the federal funding share of NPS challenge cost-share projects aimed at addressing deferred maintenance and correcting deficiencies in NPS infrastructure. The projects require at least a 50% match from a nonfederal funding source (including in-kind contributions). The act provided $20 million of the funding in FY2018 and $30 million in FY2019. After sequestration, NPS reported $18.7 million as the FY2018 mandatory appropriation. "], "subsections": []}, {"section_title": "Concessions Improvement Accounts", "paragraphs": ["Some older NPS concessions contracts, developed under the Concessions Policy Act of 1965, require the concessioner to deposit a portion of gross receipts or a fixed sum of money in a separate bank account. With NPS approval, a concessioner may spend the funds for facilities that directly support the concession's visitor services. ", "The FY2018 mandatory appropriation for the Concessions Improvement Accounts was $12.1 million. The amounts deposited in the Concessions Improvement Accounts have varied from year to year. Annual collections are affected by multiple factors, such as changes in numbers of park visitors, the gradual replacement of the Concessions Improvement Accounts with contracts using concessions franchise fees (described in \" Concession Franchise Fees ,\" above), and other factors. From FY2014 to FY2018, annual appropriations ranged from a low of $3.5 million in FY2015 to a high of $12.1 million in FY2018. "], "subsections": []}, {"section_title": "Park Buildings Lease and Maintenance Fund", "paragraphs": ["The Park Buildings Lease and Maintenance Fund consists of the rent money derived from leases on NPS buildings and other property under various statutes. The Secretary of the Interior is authorized to enter into a lease with any person or governmental entity for the use of buildings and property throughout the National Park System. Rental payments under these leases are deposited into a special account, which may be used for infrastructure needs of NPS units, including facility refurbishment, repair and replacement, and maintenance of the leased properties. Separately, NPS and other agencies are authorized to lease historic properties to any person or organization provided the lease will ensure the preservation of the property. NPS retains the proceeds of these leases to defray the costs of administration, maintenance, repair, and related expenses on the leased property or other properties on the National Register of Historic Places. ", "In FY2018, NPS received $9.6 million in mandatory appropriations from the leasing of park properties. The amount was similar to FY2017 collections of $9.4 million but represented an increase of about 20% over FY2014 collections of $7.9 million."], "subsections": []}, {"section_title": "Accounts with Less Than $5.0 Million", "paragraphs": ["NPS had five additional accounts with mandatory appropriations of less than $5.0 million each in FY2018. These accounts collectively received $4.1 million in mandatory appropriations in FY2018, and they ranged from less than $0.1 million to $2.3 million, as shown in Table 4 . Two of the accounts expend fees collected from park users to support improvements at a range of parks; these are the Deed Restricted Parks Fee Program, which applies to park units where deed restrictions prohibit entrance fees and allows those parks to use other recreation fees for projects that enhance the visitor experience, and the Filming and Photography Special Use Fee Program, which provides for the collection of commercial filming and photography fees at park units and authorizes their use for purposes similar to those in the Recreational Fee Program. The other three accounts are specific to individual park units. The account for Payment for Tax Losses on Land Acquired for Grand Teton National Park uses certain visitor fees from Grand Teton and Yellowstone National Parks to compensate the state of Wyoming for tax losses due to federal land acquisitions for Grand Teton. The account for Delaware Water Gap, Route 209 Operations consists of fees from commercial vehicles at Delaware Water Gap National Recreation Area, which may be used for the operation and maintenance of U.S. Route 209 within the park boundaries. The account for Preservation, Birthplace of Abraham Lincoln consists of an endowment to preserve the Abraham Lincoln Birthplace National Historic Site in Kentucky. "], "subsections": []}]}]}]}}
{"id": "R46023", "title": "Copyright Act and Communications Act Changes in 2019 Related to Television", "released_date": "2020-01-13T00:00:00", "summary": ["On December 20, 2019, President Donald J. Trump signed the Satellite Television Community Protection and Promotion Act of 2019, and the Television Viewer Protection Act of 2019 (Titles XI and X of Division P, respectively, of the Further Consolidated Appropriations Act, 2020, P.L. 116-94 ). The act permanently extends some legal provisions governing the retransmission of distant network broadcast signals, while repealing others. In addition, the act permanently extends and changes rules for retransmission consent negotiations between television station owners and operators of satellite and cable systems.", "Congress enacted the new laws to prevent the expiration at the end of 2019 of provisions of communications and copyright laws related to the retransmission of broadcast television signals by cable operators, telephone companies (telcos), and satellite operators, pursuant to the STELA Reauthorization Act of 2014 ( P.L. 113-200 ). (STELA stands for the Satellite Television Extension and Localism Act.) Congress had repeatedly reenacted several of these temporary provisions over several decades.", "Copyright Act Provisions", "Generally, copyright owners have exclusive legal rights to license their works. The Copyright Act limits these rights for owners of copyrights to programming carried by retransmitted broadcast television signals. The act provides for statutory licenses that allow cable, telco, and satellite operators to retransmit television broadcast station signals under certain circumstances, even if one or more owners of the copyrights to the programs carried by those signals do not agree. Section 119 of the Copyright Act, which was due to expire at the end of 2019, allows satellite operators to avoid negotiating with copyright holders of programming that they transmit from outside a subscriber's local area and instead pay a royalty fee to the U.S. Copyright Office. The Copyright Office in turn pays the rights holders. The Satellite Television Community Protection and Promotion Act of 2019 permanently extends Section 119 of the Copyright Act, but limits the types of \"unserved households\" eligible to receive the distant signals. It also requires DIRECTV, a satellite operator, to retransmit local broadcast signals in all 210 U.S. television markets in order to continue using the compulsory copyright license described in this section.", "Communications Act Provisions", "Generally, commercial broadcast television stations may either require cable, telco, and satellite operators to carry their signals within the stations' local markets for no fee or demand that the operators negotiate for the right to retransmit the stations' signals within those markets in exchange for a fee. The Television Viewer Protection Act of 2019 made permanent three provisions of the Communications Act. One of the newly permanent provisions permits a satellite operator to retransmit broadcast station signals outside of the stations' local markets without the consent of those stations, if the satellite operator is retransmitting the signals pursuant to Section 119 of the Copyright Act. A second prohibits broadcast stations from entering into exclusive contracts with cable, satellite, or telco operators.", "The third newly permanent provision of the Communications Act requires all parties to negotiate retransmission consent in \"good faith\" and assigns the Federal Communications Commission (FCC) a mediation role in the event any party accuses another of failing to negotiate in good faith. However, the act specifies that collective negotiation by smaller cable, telco, and/or satellite operators with large station group owners is not a violation of good faith. On the other hand, the Communications Act specifies that joint retransmission consent negotiations by separately owned (as defined by the FCC) broadcasters within the same market is a violation of good faith. In December 2019, the FCC reinstated rules related to the enforcement of its local ownership limits. If a television company that owns a station in a market sells advertising for another station in the same market under an agreement with that station's owner, the FCC attributes ownership of both stations to that company."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["The retransmission of television signals to subscribers of cable, telephone company (telco), and satellite services has been governed in part by the Satellite Television Extension and Localism Act Reauthorization Act of 2014 (STELA Reauthorization Act; P.L. 113-200 ). Some provisions of this law, which amended the Copyright Act of 1976 and the Communications Act of 1934, were set to expire at the end of 2019. As described in \" Legislation ,\" with the enactment of the Satellite Television Community Protection and Promotion Act of 2019, and the Television Viewer Protection Act of 2019 (Titles XI and X of Division P, respectively, of the Further Consolidated Appropriations Act, 2020 P.L. 116-94 ), Congress permanently extended certain Copyright Act and Communications Act provisions that affect direct broadcast satellite service to viewers in rural areas; limited the ability of separately owned broadcast stations to jointly negotiate with cable and satellite operators over the retransmission of television signals; and affirmed the role of the Federal Communications Commission (FCC) in resolving disputes that could potentially interrupt television service to subscribers of cable, telephone, and satellite services.", "In addition, Congress amended the Copyright Act to restrict the number of households eligible to receive non-local broadcast television signals via satellite distributors, and encouraged DIRECTV, a satellite operator, to retransmit local broadcast television signals, where available, in all local television markets. Congress amended the Communications Act to permit small video programming service distributors to negotiate collectively with large broadcast station groups, and increase transparency in bills for new customers of video distribution services.", "To provide context for the current debate, this report provides background information about how households receive television programming, how the television industry operates, and how the Copyright and Communications Acts determine what programs viewers receive. After describing the now-repealed provisions of the copyright act, the report summarizes the provisions of the Copyright and Communications Act enacted by Congress in 2019. Finally, it addresses the relationship between the new provisions and FCC media ownership rules, which the FCC amended in December 2019."], "subsections": []}, {"section_title": "Background", "paragraphs": ["A household may receive broadcast television programming through one or more of three methods: ", "1. by using an individual antenna that receives broadcast signals directly over the air from television stations; 2. by subscribing to a multichannel video programming distributor (MVPD), such as a cable or satellite provider or a telco, which brings the retransmitted signals of broadcast stations to a home through a copper wire, a fiber-optic cable, or a satellite dish installed on the premises; or 3. by using a high-speed internet (broadband) connection. A household may subscribe to a streaming service either that includes broadcast television programming on an on-demand basis, or as a package of prescheduled programming, that is, a \"virtual MVPD\" (vMVPD).", "As Figure 1 indicates, the total number of U.S. households subscribing to an MVPD has declined over the past 10 years. In 2010, about 104.2 million households subscribed to an MVPD, compared with about 87.4 million households in 2019. In place of MVPDs, an increasing number of households rely on video provided over broadband connections (including vMVPDs) or via over-the-air broadcast transmission.", "Currently, two direct broadcast satellite providers\u00e2\u0080\u0094DIRECTV and DISH\u00e2\u0080\u0094offer video service to most of the land area and population of the United States. As of June 2019, DIRECTV had approximately 17.4 million U.S. subscribers, while DISH had approximately 9.5 million U.S. subscribers. Both have lost subscribers since September 2014, when DIRECTV had approximately 20.2 million U.S. subscribers and DISH had approximately 14.0 million U.S. subscribers."], "subsections": []}, {"section_title": "Broadcast Television Markets", "paragraphs": [], "subsections": [{"section_title": "Federal Communications Commission Licensing and Localism", "paragraphs": ["The FCC licenses broadcast television station owners for eight-year terms to use the public airwaves, or spectrum, in exchange for operating stations in \"the public interest, convenience and necessity,\" pursuant to Section 310(d) of the Communications Act. In 1952, the FCC formally allocated television broadcast frequencies among local communities. The basic purpose of the allocation plan was to provide as many communities as possible with sufficient spectrum to permit one or more local television stations \"to serve as media for local self-expression.\""], "subsections": []}, {"section_title": "Television Communities vs. Local Television Markets", "paragraphs": ["Until the mid-1960s, the television audience research firm the Nielsen Company restricted its measurement of television station viewership to the major metropolitan areas that were the first to have broadcast television stations. Among other factors, the station considers the estimated number of viewers it attracts with programs when determining the prices that it can charge advertisers. Thus, station viewership plays a significant role in a station's ability to generate revenue. After hearings in the House of Representatives produced accusations that stations licensed to large cities were pressuring the rating services not to measure audiences of stations licensed to smaller cities, Nielsen began to assign each U.S. county to a unique geographic television market in which Nielsen could measure viewing habits. Nielsen's construct, known as Designated Market Areas (DMAs), has been widely used to define local television markets since the late 1960s. The definitions of DMAs are important in determining which television broadcast signals an MVPD subscriber may watch.", "Nielsen generally assigns each county to one of 210 DMAs based on the predominance of viewing of broadcast television stations in that county. In addition, Nielsen assigns each broadcast television station to a DMA. Nielsen bases each station's DMA on the home county of its FCC community of license. Stations seek to have their signals reach as many people as possible living within their DMAs. They generally have little incentive to reach viewers living outside their DMAs, as they are typically unable to charge advertisers for access to those viewers.", "Broadcast stations' contractual agreements with television networks and other suppliers of programming generally give them the exclusive rights to air that programming within their DMAs. Advertisers use DMAs to measure television audiences and to plan and purchase advertising from stations to target viewers within those geographic regions."], "subsections": []}]}, {"section_title": "Retransmission of Broadcast Signals via MVPDs", "paragraphs": [" Figure 2 illustrates the relationships among viewers; broadcast television stations; cable, telco, and satellite operators; cable and broadcast networks; and owners of television programming content."], "subsections": [{"section_title": "Related Communications Laws", "paragraphs": ["Generally, subscribers to cable, telco, and satellite services may receive television stations located within their DMAs as part of their video packages. Whether or not subscribers do so, however, depends in part on the decisions of broadcast stations to require these services to retransmit their signals or to opt instead to negotiate for compensation. In addition, satellite operators may choose not to provide any local broadcast service in a particular DMA. The Communications Act gives broadcast stations and satellite operators the rights to make these choices."], "subsections": [{"section_title": "Must Carry; Carry One, Carry All", "paragraphs": ["Every three years, commercial broadcast television stations may choose to require cable, telco, and satellite operators to retransmit their signals. By statute, a cable operator or telco must carry the signals of all television stations seeking \"must carry\" status and assigned to the DMA in which the cable operator is located. Satellite operators are required to carry the signals of all stations assigned to a DMA that seek must carry status to viewers in that DMA, if they choose to carry the signal of at least one local television station in the market. Policymakers often call this provision \"carry one, carry all.\" The applicability of these provisions to telcos is uncertain.", "Due in part to the carry one, carry all provision, DIRECTV has opted not to retransmit any local broadcast television stations in 12 DMAs. They are Alpena, MI; Bowling Green, KY; Caspar-Riverton, WY; Cheyenne, WY/Scottsbluff, NE; Grand Junction, CO; Glendive, MT; Helena, MT; North Platte, NE; Ottumwa, IA; Presque Isle, ME; San Angelo, TX; and Victoria, TX."], "subsections": []}, {"section_title": "Retransmission Consent", "paragraphs": ["In lieu of choosing must carry status, commercial broadcasting stations may opt to seek compensation from cable, telco, and satellite operators for carriage of their signals in exchange for granting retransmission consent. In contrast to the must carry laws, which differ for cable and satellite operators, the retransmission consent laws apply to all MVPDs.", "If a broadcast station opts for retransmission consent negotiations, MVPDs must negotiate with it for the right to retransmit its signal within the station's DMA. In addition, cable operators may negotiate with the station for consent to retransmit the station's signals outside of the station's DMA. However, the contracts that broadcast stations have with program suppliers, such as television networks, may limit the stations' ability to consent to the retransmission of their signals outside of their markets. Most television broadcast stations are part of a portfolio owned by broadcast station groups. Most cable systems are part of multiple-system operations owned by corporations. Negotiations over retransmission consent generally occur at the corporate level, rather than between an individual station and a local cable system.", "Greater competition among MVPDs has increased the negotiating advantage of broadcast television stations since 1993, when they first had the right to engage in retransmission consent negotiations. At that time, large MVPDs refused to pay broadcast stations directly for retransmission rights. Instead, several broadcast networks negotiated on behalf of their affiliates for alternative forms of compensation. The networks sought carriage of new cable networks owned by their parent companies, and split the proceeds they received from the cable networks with the affiliates.", "As satellite operators and telcos entered the market in competition with cable operators, broadcast stations could encourage the cable subscribers to switch, and vice versa. Broadcast stations began to demand cash in exchange for carriage. As Figure 3 indicates, the total amount of retransmission fees paid by MVPDs has increased from $0.21 billion in 2006 to $12.38 billion in 2019. The 2019 totals include fees paid by vMVPDs, which did not exist in 2006."], "subsections": []}]}, {"section_title": "Related Copyright Laws", "paragraphs": ["Generally, copyright owners have the exclusive legal right to \"perform\" publicly their works, and, as is the case with online distribution of their programs, to license their works to distributors in marketplace negotiations. The Copyright Act limits these rights for owners of programming contained in retransmitted broadcast television signals. The Copyright Act guarantees MVPDs the right to perform publicly the copyrighted broadcast television programming, as long as they abide by FCC regulations and pay royalties to content owners at rates set and administered by the government. In some instances, MVPDs need not pay content owners at all, because Congress set a rate of $0.", "The Copyright Act contains three statutory copyright licenses governing the retransmission of local and distant television broadcast station signals. Local signals are broadcast signals retransmitted by MVPDs within the local market of the subscriber (\"local-into-local service\"). Distant signals are broadcast signals imported by MVPDs from outside a subscriber's local area.", "1. The cable statutory license, codified in Section 111, permits cable operators to retransmit both local and distant television station signals. This license relies in part on former and current FCC rules and regulations as the basis upon which a cable operator may transmit distant broadcast signals. 2. The local satellite statutory license, codified in Section 122, permits satellite operators to retransmit local signals on a royalty-free basis. To use this license, satellite operators must comply with the rules, regulations, and authorizations established by the FCC governing the carriage of local television signals. 3. The distant satellite statutory license, codified in Section 119, permits satellite operators to retransmit distant broadcast television signals. Congress has renewed this provision in five-year intervals. In 2004, Congress inserted a \"no distant if local\" provision, which prohibits satellite operators from importing distant signals into television markets where viewers can receive the signals of broadcast network affiliates over the air.", "Under the statutory license, cable, telco, and satellite operators make royalty payments every six months to the U.S. Copyright Office, an agency of the Library of Congress. The head of this office, the Register of Copyrights, places the money in an escrow account and maintains the \"Statement of Account\" that each operator files. Congress has charged the Copyright Royalty Board (CRB), which is composed of three administrative judges appointed by the Librarian of Congress, with distributing the royalties to copyright claimants. It also has the task of adjusting the rates at five-year intervals, and annually in response to inflation. For additional information about these licenses, see CRS Report R44473, What's on Television? The Intersection of Communications and Copyright Policies , by Dana A. Scherer.", "Through a series of laws ( Table 1 ) enacted over the last 30 years, Congress created new sections or modified existing sections of the Copyright Act and the Communications Act to regulate the satellite retransmission of broadcast television and to encourage competition between satellite and cable operators. Congress began the process with the enactment of the Satellite Home Viewer Act of 1988 (SHVA; P.L. 100-667 ), revised it further in several laws leading to the Satellite Television Extension and Localism Act (STELA) of 2010 ( P.L. 111-175 ), and amended the process again with the enactment of the STELA Reauthorization Act of 2014. Most recently, the enactment the Satellite Television Community Protection and Promotion Act of 2019, and the Television Viewer Protection Act of 2019, (Titles XI and X of Division P, respectively, of the Further Consolidated Appropriations Act, 2020, P.L. 116-94 ) permanently extended some legal provisions governing retransmission of distant network broadcast signals, while repealing others."], "subsections": []}, {"section_title": "Expiring Provision of Copyright Act", "paragraphs": ["Certain provisions in the STELA Reauthorization Act were set to expire on December 31, 2019. The copyright provision set to expire was Section 119 of the Copyright Act (17 U.S.C. \u00c2\u00a7119). This section enables satellite operators to obtain rights to copyrighted programming carried by distant broadcast network affiliates, superstations, and other independent stations. Under this regime, the satellite operators submit a statement of account and pay a statutorily determined royalty fee to the U.S. Copyright Office on a semiannual basis, avoiding the transactions costs of negotiating with each individual copyright holder.", "A satellite operator is allowed to retransmit the signals of up to two distant stations affiliated with a network (ABC, CBS, FOX, NBC, or PBS) to a subset of subscribing households that are deemed \"unserved\" with respect to that network. The \"unserved household\" limitation does not apply to the retransmission of superstations (see Table 1 , note a). Pursuant to Section 119, satellite operators may retransmit superstations to commercial establishments as well as households.", "Section 119 specified five different categories of unserved households:", "1. a household located too far from a broadcast station's transmitter to receive signals using an antenna; [Section 119(d)(10)(A)] 2. a household that received written consent from a local network affiliate to receive a distant signal; [Section 119(d)(10)(B)] 3. a household that\u00e2\u0080\u0094even if it could receive a local broadcast signal over the air\u00e2\u0080\u0094nevertheless received a satellite retransmission of a distant signal on October 31, 1999, or whose satellite provider terminated the distant signal retransmission after July 11, 1998, and before October 31, 1999, pursuant to court injunction; [Section 119(d)(10)(C)] 4. operators of recreational vehicles and commercial trucks who complied with certain documentation requirements; [Section 119(d)(10)(D)] 5. a household that received delivery of distant network signals via C-band before October 31, 1999. [Section 119(d)(10)(E)]", "In 2010, Congress provided an incentive for DISH to offer local-into-local service in all 210 markets with the enactment of STELA."], "subsections": [{"section_title": "Revenues Collected by Copyright Office", "paragraphs": ["As Table 2 indicates, between 2014 and 2019 the amount of Section 119 royalties collected by the Copyright Office declined by 89%. According to the Register of Copyrights, the decline is due in part to the drop in the number of distant network stations carried and the conversion of non-network superstations, such as WGN, to cable networks. In addition, as Figure 1 indicates, the total number of households subscribing to satellite television declined from about 34.4 million in 2014 to 27.3 million in 2019."], "subsections": []}]}, {"section_title": "Expiring Provisions of Communications Act", "paragraphs": ["Several provisions of the Communications Act were also set to expire at the end of 2019. Some of those provisions cross-reference Section 119 of the Copyright Act. "], "subsections": [{"section_title": "Cross-References to Section 119 of Copyright Act", "paragraphs": ["Section 325(b)(2)(B) and (C) of the Communications Act [47 U.S.C. \u00c2\u00a7325(b)(2)(B)-(C)] permit a satellite operator to retransmit distant broadcast signals of stations without first seeking retransmission consent from those stations, if the satellite operator is retransmitting the signals pursuant to Section 119 of the Copyright Act. ", "Section 338(a)(3) of the Communications Act [47 U.S.C. \u00c2\u00a7338(a)(3)] states that a low-power station whose signals are retransmitted by a satellite operator pursuant to Section 119 of the Copyright Act [17 U.S.C. \u00c2\u00a7119(a)(14)] is not entitled to must carry rights.", "Section 339(a)(1)(A) of the Communications Act (47 U.S.C. \u00c2\u00a7339) permits satellite operators to retransmit the signals of a maximum of two affiliates of the same network in single day to households located outside of those stations' DMAs, subject to Section 119 of the Copyright Act. Section 339(a)(1)(B) states that satellite operators may retransmit local broadcast signals under 17 U.S.C. \u00c2\u00a7122 in addition to any distant signals they may retransmit under Section 119 of the Copyright Act. Section 339(a)(2)(A) discusses rules for retransmitting broadcast station signals to satellite subscribers meeting the \"unserved household\" definition under Section 119 of the Copyright Act [17 U.S.C. \u00c2\u00a7119(d)(10)(C)]. Section 339(a)(2)(D) and (c)(4)(A), in describing households eligible to receive distant signals, cross-reference the \"unserved household\" definition under 17 U.S.C. \u00c2\u00a7119(d)(10)(A). Section 339(a)(2)(G) states that \"this paragraph shall not affect the ability to receive secondary transmissions ... as an unserved household under section 119(a)(12) of title 17, United States Code.\" Section 339(c)(2) describes the process under which a household may seek a local affiliate's permission to receive a distant signal, and therefore qualify as an \"unserved household\" under Section 119 of the Copyright Act [17 U.S.C. \u00c2\u00a7119(d)(10)(B)].", "Section 340(3)(2) of the Communications Act [47 U.S.C. \u00c2\u00a7340] states that a satellite operator that retransmits a distant broadcast signal pursuant to 17 U.S.C. \u00c2\u00a7119 need not comply with FCC regulations that would otherwise require the satellite operator to black out certain programs of that station.", "Section 342 of the Communications Act [47 U.S.C. \u00c2\u00a7342] cross-references Section 119 of the Copyright Act [17 U.S.C. \u00c2\u00a7119(g)(3)(A)(iii)], and describes the process through which DISH may obtain a certification from that FCC demonstrating that it is providing local-into-local service in all 210 DMAs. Under 17 U.S.C. \u00c2\u00a7119(g)(3), upon presenting this certification, among other documents, to the Florida district court that had enjoined DISH from using the Section 119 license, DISH would be eligible to use it. (See \" Expiring Provision of Copyright Act .\")"], "subsections": []}, {"section_title": "Good Faith Requirements for Retransmission Consent Negotiations", "paragraphs": ["Section 325(b)(3)(C) of the Communications Act (47 U.S.C. \u00c2\u00a7325(b)(3)(C)) prohibits broadcast stations from engaging in exclusive contracts for carriage. This section also requires both broadcast stations and MVPDs to negotiate retransmission in \"good faith,\" subject to marketplace conditions. Moreover, according to this section, the coordination of negotiations among separately owned television broadcast stations within the same DMA is a per se violation of the good faith standards.", "The FCC implements the good faith negotiation statutory provisions through a two-part framework. First, the FCC has a list of nine good faith negotiation standards. The FCC considers a violation of any of these standards to be a per se breach of the good faith negotiation obligation. Second, the FCC may determine that based on the \"totality of circumstances,\" a party has failed to negotiate retransmission consent in good faith. Under this standard, a party may present facts to the FCC that, given the totality of circumstances, reflect an absence of a sincere desire to reach an agreement that is acceptable to both parties and thus constitute a failure to negotiate in good faith."], "subsections": [{"section_title": "Complaints Regarding Good Faith Standard Violations", "paragraphs": ["Over the last 13 years, both broadcast television station owners and MVPDs have filed complaints with the FCC that their counterparty has failed to negotiate in good faith. In some instances, the FCC has found that the complaint lacked validity. In 2016, the FCC reached a consent decree with Sinclair Broadcast Group after completing an investigation. In other instances, the FCC has monitored retransmission consent negotiations even when a party has not filed a complaint. In some cases, stations and/or MVPDs withdraw complaints from the FCC after reaching retransmission consent agreements. In November 2019, the FCC found that seven different station group owners had violated the per se good faith negotiation standards with respect to AT&T, and directed the parties to commence good faith negotiation."], "subsections": []}]}, {"section_title": "Good Faith Provisions and FCC Media Ownership Rules", "paragraphs": ["Section 325(b)(3)(C)(iv) directs the FCC to adopt rules that prohibit the coordination of negotiations among separately owned television broadcast stations within the same DMA. Unlike the good faith provisions of the Communications Act, the prohibition on coordination is permanent. Additionally, the FCC has adopted a rule declaring such behavior a per se violation of its good faith negotiation standards. ", "In a related matter, the FCC's rules regarding both the number of stations one entity may own within a DMA and the attribution of that ownership have been in flux. The FCC's ownership rules generally prohibit one company from owning two of the top four ranked stations (usually, stations affiliated with the ABC, CBS, FOX, and NBC networks) within the same DMA. In 2016, the FCC adopted rules specifying that if one television station sells more than 15% of the weekly advertising time on a competing local broadcast television station, it would consider the stations to be under common ownership or control, for the purposes of enforcing its local media ownership rule. In 2017, however, the FCC eliminated this rule as part of a reconsideration of its 2016 decision. ", "In September 2019, the U.S. Court of Appeals for the Third Circuit vacated and remanded the FCC's 2017 reconsideration. On November 29, 2019, the court vacated, as of that date, the rule changes adopted by the FCC in 2017. The FCC issued an order in December 2019 that amended its rules to reflect the court's mandate and clarify which rules remain in effect. The FCC has not publicly stated whether it will seek review of the Third Circuit's decision by the U.S. Supreme Court. Likewise, the FCC has not publicly stated how it will proceed with media ownership rulemaking it initiated in 2018, in light of the court's ruling."], "subsections": []}]}]}, {"section_title": "Legislation in 2019", "paragraphs": ["On December 20, 2019, President Donald J. Trump signed the Satellite Television Community Protection and Promotion Act of 2019, and the Television Viewer Protection Act of 2019 (Titles XI and X of Division P, respectively, of the Further Consolidated Appropriations Act, 2020, P.L. 116-94 ). These laws amended both the Copyright and Communications Acts."], "subsections": [{"section_title": "Copyright Act Revisions", "paragraphs": ["Title XI of P.L. 116-94 permanently extends Section 119 of the Copyright Act, but limits the scope of \"unserved households\" eligible to receive the distant signals to two categories of households. The first category includes operators of recreational vehicles and commercial trucks who have complied with certain documentation requirements. The second category, added by the act, includes households in \"short markets\" in the definition of \"unserved household.\" The act defines a short market as ", "a local market in which programming of one or more of the four most widely viewed television networks nationwide is not offered on either the primary stream or multicast stream transmitted by any network station in that market, or is temporarily or permanently unavailable as a result of an act of god or other force majeure event beyond the control of the carrier.", "The act also amends the Copyright Act to condition the eligibility of satellite operators to retransmit distant signals via a compulsory copyright license to unserved households on whether or not they retransmit local television signals in all 210 DMAs. After May 31, 2020, satellite subscribers who fall within the two categories of unserved households described above are no longer eligible to receive distant signals pursuant to the compulsory copyright license unless their satellite operator provides local-into-local service. ", "Likewise, the other four categories of households described in \" Expiring Provision of Copyright Act \" are no longer able to receive distant signals pursuant to the compulsory license after May 31, 2020, or until their satellite operator provides local service in all 210 markets, whichever is earlier.", "The act also specifies that satellite operators will not lose access to the distant compulsory license if their failure to deliver local signals in all 210 markets is due to a retransmission consent impasse. As described in \" Must Carry; Carry One, Carry All ,\" DISH currently does so, but DIRECTV does not. "], "subsections": []}, {"section_title": "Communications Act Revisions", "paragraphs": ["Title X of the act permanently extends portions of the Communications Act set to expire at the end of 2019, while amending others. The following provisions that had been set to expire at the end of 2019 are now permanent:", "A satellite operator may retransmit broadcast station signals outside of the station's local markets without retransmission consent from those stations, if the operator is retransmitting the signals pursuant to Section 119 of the Copyright Act. Broadcast stations may not enter into exclusive contracts with MVPDs. Broadcast stations and MVPDs must negotiate retransmission consent in \"good faith.\" In the event any party accuses another of failing to negotiate in good faith, the accusing party may petition the FCC to mediate. Joint retransmission consent negotiations by separately owned broadcast stations within the same market constitutes failure to negotiate in good faith.", "In addition, Title X amended the Communications Act to state that a qualified \"MVPD buying group\" representing smaller cable, telco, and/or satellite operators may negotiate retransmission consent with large broadcast station group owners without violating the good faith requirement. The buying group may represent only cable, telco, or satellite operators with 500,000 or fewer subscribers nationally. The broadcast station owner with whom the qualified MVPD group negotiates retransmission consent must reach more than 20% of the \"national audience.\" This amendment takes effect no later than March 19, 2020, that is, 90 days after the enactment of P.L. 116-94 . "], "subsections": [{"section_title": "Relationship to FCC Media Ownership Rules", "paragraphs": [], "subsections": [{"section_title": "Local Ownership Rules", "paragraphs": ["As described in \" Good Faith Provisions and FCC Media Ownership Rules ,\" on December 20, 2019, the FCC reinstated the media and ownership rules it had adopted in 2016. ", "Under the reinstated rules, a single company may not own more than one station in a DMA unless eight independently owned stations remain (eight voices test). In addition, stations that jointly sell 15% or more of one another's advertising time count as \"owned\" for the purposes of the FCC's ownership rules. This means that non-top-four stations may not jointly negotiate with a separately owned top-four affiliate that sells its advertising time, if common ownership would violate the FCC's eight voices test. Likewise, two non-top four stations may not jointly negotiate retransmission consent in the same market if common ownership would violate the FCC's eight voices test."], "subsections": []}, {"section_title": "National Ownership Rules", "paragraphs": ["The FCC, in measuring the national reach of a broadcast station owner, discounts the number of television households reached within a DMA by a station operating in the Ultra High Frequency (UHF) band by half. In some instances, a station group may reach 20% or fewer households nationally with the \"UHF discount,\" but more than 20% of U.S. households absent the discount. According to estimates from the research firm BIA Advisory Services, as of May 2019, the two companies falling in this category were NBC Universal and Gray Television. Thus, a qualified MVPD buying group could not negotiate with NBC Universal or Gray Television unless the FCC repeals the UHF discount.", "In some markets, a television company may effectively operate stations under joint sales agreements or shared services agreements without having them count toward the national ownership limit. Thus, depending on how the FCC interprets the good faith provisions, an MVPD with fewer than 500,000 subscribers nationwide might not be able to use a qualified buying group to negotiate for retransmission of stations operated by a company that reaches 20% or more of U.S. households nationwide. ", "It is far less common for a company to operate third-party stations in a market in which it does not own a station than in a market in which it does own a station. There are 93 DMAs in which a third party operates at least one station and owns at least one station. In contrast, there are five DMAs in which a third party operates at least one station but does not own any stations. Nonetheless, as Congress advises the FCC on the implementation of this good faith provision, the role of third-party owners in retransmission consent negotiations remains an issue that may be considered."], "subsections": []}]}]}]}]}}
{"id": "RS21126", "title": "Tax Cuts and Economic Stimulus: How Effective Are the Alternatives?", "released_date": "2020-05-14T00:00:00", "summary": ["The economic effects of the Coronavirus Disease 2019 (COVID-19) pandemic has led Congress to enact general fiscal stimulus in the form of tax cuts and spending increases. Further stimulus may be considered. This report discusses tax cuts enacted during the Great Recession, as well as those recently enacted and those under consideration.", "In response to the Great Recession several types of tax cuts were debated as possible fiscal stimulus\u00e2\u0080\u0094with fiscal stimulus legislation enacted in February 2008 ( P.L. 110-185 ) and a much larger one in February 2009 ( P.L. 111-5 ). Both bills included individual tax cuts aimed at lower- and middle-income individuals, along with business tax cuts. In December 2010, along with an extension of expiring tax cuts, a temporary payroll tax cut was adopted. Many, but not all, tax cuts that were expiring after 2012 were extended permanently.", "A tax cut for stimulus is more effective the greater the fraction of it that is spent. Empirical evidence suggests individual tax cuts will be more likely to be spent if they go to lower-income individuals, making the tax rebate for lower-income individuals likely more effective than several other tax cuts. There is some weak evidence that tax cuts received in a lump sum will have a smaller stimulative effect than those reflected in paychecks, but this evidence is uncertain. However, studies of the 2001 rebate found that a significant amount of that rebate was spent. While temporary individual tax cuts likely have smaller effects than permanent ones, temporary cuts contingent on spending (such as temporary investment subsidies or a sales tax holiday) are likely more effective than permanent cuts. (Sales tax holidays may, however, be very difficult to implement.) The effect of business tax cuts is uncertain, but likely small for tax cuts whose main effects are through cash flow. Multiplier estimates reflect these considerations.", "Multiplier estimates from fiscal stimulus enacted during the Great Recession suggest that the most effective tax stimulus provisions in the recent legislation addressing the COVID-19 pandemic were likely the individual rebates, with business provisions having smaller effects. The Paycheck Protection Program and spending and transfer programs were also likely to have larger effects, although some of these demand-side stimulus programs that transferred incomes to individuals may be less effective due to the unique nature of the supply constraints in the current environment. Even if they do not stimulate spending, these measures could also be viewed as relief measures that may help individuals and businesses deal with debt and be more able to comply with social distancing measures designed to prevent the spread of the coronavirus."], "reports": {"section_title": "", "paragraphs": ["T he economic effects of the Coronavirus Disease 2019 (COVID-19) pandemic has led Congress to consider general fiscal stimulus in the form of tax cuts. Additional stimulus proposals are under consideration. This report discusses tax cuts proposed or enacted during the Great Recession, current enacted provisions, and potential ones, and their potential effectiveness."], "subsections": [{"section_title": "Tax Cuts During the Great Recession", "paragraphs": ["Several tax cuts were discussed during consideration of fiscal stimulus in response to the Great Recession, and the specific proposal (the American Recovery and Reinvestment Act of 2009, P.L. 111-5 ). This stimulus as enacted included individual tax cuts directed at lower- and middle-income individuals and also included business tax cuts. ", "An earlier fiscal stimulus ( P.L. 110 - 185 ) adopted in February 2008 included rebates and accelerated depreciation (bonus depreciation) for businesses. Some of these types of provisions were included in stimulus tax cut legislation in 2001-2003 and some of the debate centered on the effectiveness of alternatives. Among the tax cuts discussed in 2001 were tax rebates targeted toward lower-income individuals, a speed-up of tax rate reductions for higher-income individuals, a temporary sales tax holiday, a temporary payroll tax holiday, a temporary investment stimulus, corporate tax cuts (primarily repealing the alternative minimum tax), and dividend reductions. The 2001 tax cut included a rebate and the final version of the 2002 tax cut bill included a temporary investment stimulus. President Bush proposed accelerated rate cuts and dividend relief in his stimulus package for 2003. Proposals such as rebates were made by Democratic leaders. Although the economy recovered from the recession, issues of fiscal stimulus arose again in the 109 th Congress in the wake of Hurricane Katrina. The tax stimulus enacted in response included rebates for both low- and middle-income individuals and temporary bonus depreciation for businesses. ", "In February of 2009, Congress passed a much larger package ( P.L. 111-5 ), which included spending and tax cuts. Among tax cuts the single largest provision was a two-year refundable earnings credit, the making-work-pay credit, with a dollar cap that was provided through a change in withholding rather than a rebate. Other tax components targeted lower-income individuals and businesses. The business provisions included a bonus depreciation extension and a carryback of net operating losses. The legislation also extended the Alternative Minimum Tax, which tends to go to higher-income individuals. ", "In December of 2010, along with extending expiring tax cuts (which tended to benefit middle- and higher-income individuals) and unemployment benefits, P.L. 111-312 adopted a temporary two-percentage-point reduction in the payroll tax. As with the making-work-pay credit, its benefits were received in paychecks over time. Unlike the rebate or making-work-pay credit, the payroll tax reduction was not targeted to lower- and middle-income families. Many, but not all, tax cuts that were expiring after 2012 were extended permanently. The payroll tax reduction was not extended, and bonus depreciation was extended for a year. "], "subsections": []}, {"section_title": "Tax Cuts In Response to the Coronavirus", "paragraphs": ["Congress has enacted four measures relating to the coronavirus. The first was an appropriations bill, the Coronavirus Preparedness and Response Supplemental Appropriations Act, 2020 ( P.L. 116-123 ), which provided $8.3 billion in emergency funding for federal agencies to respond to the coronavirus. This measure was followed by two relief measures that contained tax provisions. The Families First Coronavirus Response Act ( P.L. 116-127 ) provided refundable employer tax credits against payroll taxes to compensate for family and medical leave mandated in the bill. The estimated cost is $95 billion in revenue loss along with $10 billion in outlays because the credit is refundable. The bill also had spending provisions that increased the total cost to $191 billion. ", "The Coronavirus Aid, Relief, and Economic Security (CARES) Act ( P.L. 116-136 ) had much larger revenue effects, including a refundable rebate, phased out at high-income levels, of $393 billion ($142 billion in revenue loss and $151 billion in outlays), $229 billion in business tax provisions (primarily increasing the use of net operating losses but including a tax credit for retaining employees costing $55 billion), and a number of minor individual tax provisions costing $11 billion. The bill also provided a delay in the payment of payroll taxes, increasing cash flow by $352 billion in the first two years, which were subsequently offset by later payments. ", "The CARES Act also included another relief provision, the Paycheck Protection Program (PPP), which was structured as a loan for small business that could be forgiven if the business retained workers. The PPP was estimated to cost $377 billion, and it also contained a provision excluding the forgiven loan from being included in income (which the tax law otherwise would have counted as income). The exclusion may be negated by IRS guidance disallowing the deduction of expenses. Although structured as a loan forgiveness, such a program has a similar effect as the employee retention tax credit. The PPP can also be considered as an alternative to unemployment benefits because loan forgiveness is contingent on retaining and paying employees. ", "The CARES Act also had direct spending, transfers, and other deferrals or loans that increased its overall cost to $1.7 trillion; the largest of these provisions in dollar terms was an expansion in unemployment benefits that cost $268 billion. ", "The final bill, The Paycheck Protection Program and Health Care Enhancement Act ( P.L. 116-139 ) did not include tax provisions. It would add $321 billion to the PPP, $62 billion in additional small business loan authority, and $100 billion in health-related spending ($75 billion for health providers and $25 billion for COVID-19 testing). ", "Additional stimulus legislation may be considered, which might include aid to state and local governments and additional funds for the PPP."], "subsections": []}, {"section_title": "The Effectiveness of Alternative Tax Cuts", "paragraphs": ["Effectiveness of a tax cut for short run stimulus purposes is judged by the extent to which the tax cut increases private demand (either consumption or investment spending). A tax cut that is saved will have no short term stimulative economic effect (or long term one, if the cut is financed by a deficit, since increased private saving would be offset by decreased government saving). Thus, in general, tax cuts received by individuals will not be successful as a short-run stimulus if they lead to additional saving, and tax cuts received by firms will not be successful unless they lead to spending on investment (or lead quickly to spending on consumption by shareholders). Because part of a tax cut is saved, no tax cut will be as stimulative as government spending.", "The following four propositions can generally be supported by economic theory and empirical evidence:", "(1) Individual income tax cuts directed at lower-income individuals will likely have a larger effect than cuts directed at higher income individuals, other things equal. This distributional effect suggests that the most effective tax cut would be a rebate which is not only a flat amount but specifically directed at lower-income individuals (who did not have tax liability). While payroll and sales taxes are more concentrated among lower-and moderate-income individuals than the normal income tax, they are largely proportional taxes and the bulk of them will still go to middle- and higher-income individuals. Most income tax cuts actually exclude the bottom 44% of the population who do not pay income tax unless they are refundable (as with the February 2008 cut). Similarly, payroll tax cuts exclude 16% of the population who do not pay payroll taxes. Tax reductions enacted in 2001 were concentrated among the upper part of the income distribution as are dividend and capital gains tax reduction. A flat dollar reduction, if refundable, would be more concentrated on lower and middle incomes than tax cuts that reduce rates or allow deductions.", "(2) There is weak empirical evidence and even weaker theoretical basis that a lump sum tax cut is less likely to be spent than one received in small increments (e.g. through withholding). This effect could make a rebate less effective than alternative individual tax cuts if it were not for the distributional evidence. However, the distributional effect is more solidly grounded in economic theory, and is based on more concrete and extensive empirical evidence. ", "(3) Certain types of temporary tax cuts are likely to be more effective than permanent ones while, in other cases, they are less effective. The most important illustration of this effect is a temporary investment subsidy, but it could also apply to a temporary sales tax holiday or any design where spending is required to obtain the subsidy and is for a limited duration. Otherwise, temporary cuts are likely to be less effective than permanent ones.", "(4) Corporate tax cuts that do not make new investments more profitable are unlikely to have much effect on investment or consumer spending, especially when the economy is in a recession, and the effect of corporate rate cuts is likely small.", "The remainder of this report provides a summary of the evidence and economic reasoning supporting these propositions, followed by a brief discussion of current policies. Before discussing these propositions, however, it is important to note the differences between a model where individuals consume based primarily on current income compared to those where individuals consume primarily out of permanent (lifetime) income, because much of the empirical analysis focuses on this issue. Optimal lifetime consumption models imply that consumption is based on permanent income and suggest very little will be spent out of transitory income (because it has little effect on permanent income). Thus, a temporary tax cut, which is the normal mode of a fiscal stimulus, would be ineffective. Extensive empirical investigation has rejected this permanent income model in its pure form and suggests that consumption responds to permanent and current income.", "Proposition 1: A tax cut directed at lower - income individuals should have a larger effect on spending than one directed at higher - income individuals.", "Data show that the fraction of income saved rises as income rises. One study found that the savings rate for the top 1% was at least 300 times the average. Arraying families by wealth, another study found that the top 1% saved 37%, the next 9% saved 15%, and the bottom 90% saved 0%. ", "This pattern is far too pronounced to be accounted for by business cycle reasons and cannot be explained by life-cycle patterns and thus implies a departure from the permanent income model of consumption. A saving rate that rises across incomes could be expected even in a permanent income model if each individual has the same permanent saving rate. At any time, some individuals may be earning lower than average amounts and others higher than average amounts. Thus the transitory income would understate permanent income in some cases and overstate it in others. Since more individuals with unusually low incomes would fall into the lower groups (and more with higher incomes into the high groups), some pattern of rising saving rates is expected. But empirically the effect is far too large to be explained by this phenomenon (which can be examined by looking at variations over time for an individual). A rising saving share with income could also arise from life-cycle reasons. Typically income is low in the early years of life, rises during the working career and falls at retirement. If individuals want consumption to be smoother than income, they will save less when they are young and old and have lower incomes, and save more in the middle when they have higher incomes. However, when examining the data, age does very little to explain saving behavior and the patterns of rising saving rates with income persist within age groups.", "Aside from these empirical observations, there are theoretical reasons to expect that lower-income individuals are likely to spend more of an additional dollar of income than do higher-income individuals, especially in the case of a temporary tax cut, which is the kind of cut normally associated with fiscal stimulus. They may have a lower-lifetime saving rate because social welfare programs are likely to have a higher wage replacement rate during instances of bad luck (e.g., disability) or old age and because they are less likely to wish to leave bequests. Indeed, for some means-tested programs, assets can disqualify an individual from coverage. They may have less information with which to optimize over time and, if they save at all, simply have a target amount (at least in the short run), so that additional income is spent (including temporary income increases). Finally, they are more likely to be subject to liquidity constraints; that is, to prefer to spend more than their earnings and not be able to because they cannot borrow and have no assets. Indeed, permanent income theories suggest that temporary tax cuts for non-liquidity constrained individuals may have virtually no effect, while tax cuts for liquidity constrained individuals will be largely spent.", "Proposition 2. A tax cut provided through a lump sum payment may be less likely to be spent than one which shows up in withholding, but the evidence is weak.", "This differential effect (which would not occur in a permanent income model) was pointed out by the Congressional Budget Office (CBO) in its studies of the effectiveness of alternative tax cuts. CBO referred to a comparison of results from two studies that examined the effect of income tax refunds, and of expected rate cuts from pre-announced tax cuts of the early 1980s. Both studies rejected the permanent income model (suggesting some spending effects from a transitory tax cut), but larger effects were found for the rate reductions.", "There are, however, two reservations about comparing these two events to gain insight into the effects of lump-sum tax cuts versus tax cuts reflected in paychecks over time. First, to the extent that individuals use over-withholding as a means of forcing themselves to save, one would not expect spending to rise when the refund is received, even though it might rise when an unplanned rebate is received. Thus, finding a smaller amount of spending out of a refund than out of tax cuts reflected in paychecks may not be very meaningful. Secondly, the model assumes that individuals were certain that the later phases of the Reagan tax cuts would be received. If there was some uncertainty, however, the fact that spending did not increase until the tax cut was actually received may partially reflect not the failure of the permanent income model, but the lack of certainty about receipt of the cut. If a differential does indeed exist, this effect could make the payroll tax cut (and sales tax holidays) more effective than a rebate. However, these \"lump sum\" effects would have to be offset by the distributional effects discussed in proposition I and supported by considerable empirical evidence. For that reason, it would be difficult to conclude that a payroll tax holiday would be more effective than a rebate directed at low-income individuals. In addition, some evidence on the 2001 and 2008 tax rebates suggested that a large fraction of that rebate was spent. Evidence on the payroll tax cut in 2011 found a smaller share of that tax cut spent than the rebate, but that difference may reflect methodological and distributional differences or differences in economic conditions.", "Proposition 3. Certain types of temporary tax cuts may be more effective than permanent\u00c2\u00a0ones.", "In general, the permanent income modeling of consumption, even when it does not hold in a pure form, suggests that temporary tax cuts will be less effective than permanent ones, presenting something of a dilemma because tax cuts motivated for fiscal policy reasons need to be temporary (if they are not to hamper long-term growth). However, temporary tax cuts that depend on spending (rather than receiving income) are likely to be more effective in the short run than permanent ones. During a period of slack employment, a payroll or individual income tax cut is simply a temporary windfall which can be spent at any time without any further consequence for the size of the tax cut. But if the tax benefit is triggered by spending, a temporary tax cut will be more effective (just as a temporary sale tends to induce a large response). The most common example is the investment tax credit or a similar subsidy, such as temporary partial expensing of investment, but the same would be true of a temporary sales tax holiday. Although expensing of equipment is no longer an option (as 100% is currently allowed following the 2017 tax cut), investment credits would still be a possible investment incentive.", "Note that while this feature may make a temporary tax cut more effective than a permanent one, it does not mean that the stimulus is more effective than other alternatives when all factors are considered. Most evidence suggests that investment subsidies have a small effect on investment and that the temporary investment subsidy enacted in 2006 was not very effective. And, it may be particularly difficult to induce investment (even with a temporary subsidy) when excess capacity exists. While firms benefit from the temporary subsidy, they lose the benefit of delaying cash outlays. If investment is insensitive to these cost effects, a subsidy directed at increasing consumption may be more effective even if the latter is not the type where the temporary nature provides a benefit. In the case of the sales tax holiday versus other individual cuts, there may be a substantial implementation lag in arranging the sales tax holiday since sales taxes are imposed by the states, and fiscal stimulus may be applied at the wrong time. Moreover, the anticipation of the holiday should be contractionary. That is, a pre-announced future temporary spending subsidy is initially contractionary. ", "Proposition 4. Corporate tax cuts that do not make new investments more profitable would not have much effect; corporate rate cuts are less effective than investment subsidies.", "One proposal considered in the past was a repeal of the corporate alternative minimum tax with a refund of existing credits. Such a change does not necessarily make new investment more profitable; indeed, it is possible that new investment may be subject to higher tax burdens under the regular rates than under the lower rates in the AMT. The corporate AMT was permanently repealed after the 2017 tax cut, but other measures of a similar nature might be considered. An extension of net operating loss (NOL) carrybacks was proposed in the 2009 stimulus package and would likely not make investments more profitable although a temporary restoration of NOL carrybacks (which were eliminated in the 2017 tax cut), as well as additional measures to allow benefits of losses was included in proposals to aid businesses severely affected by COVID-19.", "Economic theory suggests that the investment decision should be driven by its expected profitability. A tax decrease not associated with that profitability should have no effect on investment. Rather, a tax decrease (which increases a firm's cash flow) is more likely to be spent on reducing debt, or paying out dividends. Both choices would not expand aggregate demand. Similarly, a corporate rate reduction, which largely benefits existing capital, would have modest effect compared to a stimulus directed at new investment.", "There is a potential constraint, however: if the firm does not have access to outside capital or finds outside capital excessively costly, cash flow might have an effect on investment. This effect would be likely, however, to be focused on small firms. There is some empirical evidence of a positive relationship between firm investment and cash flow. However, interpreting this evidence with respect to the effectiveness of a corporate cash flow as a stimulus to investment spending during an economic contraction is hampered by two important reservations. First, in most cases, cash flow is correlated with the productivity of investment and investment growth, and investment may be responding not to cash flow but to investment outlook. Secondly, even if there is some independent effect of cash flow in normal circumstances, then whether an increase in cash flow would induce a firm to make new investments during periods of excess capacity is doubtful. In any case, a choice that is more focused on investment (such as an investment subsidy) would have a more pronounced effect than one that is not. During the period of tight credit now being experienced a net operating loss carryback may have more effect because distressed firms are finding it more difficult to borrow.", "General corporate rate cuts are less likely to be effective than investment subsidies because they have a smaller \"bang-for-the-buck\" because much of their cost is a windfall that only affects cash flow and not the return to new investment. Since even temporary investment subsidies do not appear to have worked effectively, a corporate rate cut or other provision that primarily affects cash flow would be expected to have a small effect."], "subsections": []}, {"section_title": "Multipliers and the Effectiveness of Stimulus Proposals", "paragraphs": ["This evidence on the effectiveness of alternative stimulus methods is reflected in multipliers. A multiplier indicates how much additional output is produced by a given amount of revenue loss or spending increases. For example, a multiplier of 0.5 estimates that a dollar of revenue loss produces $0.50 of additional output, whereas a multiplier of 1.5 indicates that a dollar of revenue loss will produce $1.50 of additional output. Multipliers differ among policies and also depend on how close the economy is to full employment.", "During the Great Recession, multipliers for a refundable rebate (constituting most of the individual tax relief in the CARES Act) were estimated in a range of 0.4 to 1.22 by the Congressional Budget Office (CBO) and at 1.22 by a private forecaster (Moody's). Net operating loss benefits (constituting most of the business provisions in the CARES Act) were estimated at 0 to 0.4 by CBO and 0.25 by Moody's. Non-tax options, such as direct transfers to individuals and aid to state and local governments had multipliers similar to, or larger than, refundable rebates. CBO estimated multipliers of between 0.4 and 2.1 for direct transfers (such as unemployment) whereas Moody's estimated multipliers between 1.55 and 1.71. Aid to state and local governments has multipliers estimated at 0.4 to 1.8 by CBO and 1.34 by Moody's. The larger multipliers for these options reflected the greater share of the benefit spent. ", "It is possible that standard multipliers do not apply in this recession when consumers face supply constraints that inhibit spending due to the closure of businesses. By contrast, employment has declined very rapidly since March. Some families receiving tax rebates include workers who have lost their jobs or otherwise seen their incomes diminish due to COVID-19. Although only a subset of the population, their rate of spending may be higher than the standard multiplier would suggest. Penn-Wharton Budget Model researchers estimate that the effects of the CARES Act implies a multiplier of 0.4 for the rebates and 0.2 for business provisions. This study assigned similar multipliers of around 0.4 to the PPP and most other provisions but estimated higher multipliers for spending on health and disaster (0.8) and aid to state and local governments (0.7). ", "Even if the CARES Act and other measures enacted to address the effects of the coronavirus are not very effective as stimulus measures, the measures could also be thought of as relief measures more than stimulus measures. For example, if individuals and businesses use payments to pay debt, these payments do not increase spending, but they may help individuals to avoid credit problems and businesses to survive. They may also make it easier for individual and businesses to comply with social distancing measures to help prevent the spread of the coronavirus. "], "subsections": []}]}}
{"id": "R45235", "title": "Economic and Fiscal Conditions in the U.S. Virgin Islands", "released_date": "2020-02-13T00:00:00", "summary": ["Fiscal and economic challenges facing the U.S. Virgin Islands (USVI) government raise several issues for Congress. Congress may choose to maintain oversight of federal policies that could affect the USVI's long-term fiscal stability. Congress also may consider further legislation that would extend or restructure long-range disaster assistance programs to mitigate those challenges and promote greater resiliency of infrastructure and public programs. Federal responses to the USVI's fiscal distress could conceivably affect municipal debt markets more broadly. Greater certainty in federal funding for disaster responses and Medicaid could support the USVI economy.", "The USVI, like many other Caribbean islands acquired by European powers, were used to produce sugar and other tropical agricultural products and to further strategic interests such as shipping and the extension of naval forces. Once the United States acquired the U.S. Virgin Islands shortly before World War I, they effectively ceased to have major strategic importance. Moreover, at that time the Virgin Islands' sugar-based economy had been in decline for decades.", "While efforts of mainland and local policymakers eventually created a robust manufacturing sector after World War II, manufacturing in the Virgin Islands has struggled in the 21 st century. In particular, the 2012 closing of the HOVENSA refinery operated by Hess Oil resulted in the loss of some 2,000 jobs and left the local economy highly dependent on tourism and related services. A renovation of the HOVENSA complex is reportedly in progress.", "The territorial government, facing persistent economic challenges, covered some budget deficits with borrowed funds, which has raised concerns over levels of public debt and unfunded pension liabilities. Local policymakers have proposed tax increases and austerity measures to bolster public finances, which currently operate with restricted liquidity. The Government Accountability Office (GAO) expressed doubts that those fiscal measures would restore access to capital markets or address shortfalls in the funding of public pensions. The previous governor, Kenneth Mapp, set forth measures in his FY2019 budget proposals to delay expected public pension insolvency from 2024 to 2025 and promised to outline other measures that would further delay insolvency until 2028. Governor Albert Bryan Jr. succeeded Mapp in January 2019.", "Damage caused by two powerful hurricanes\u00e2\u0080\u0094Irma and Maria\u00e2\u0080\u0094that hit the USVI in September 2017 created additional economic and social challenges. Public revenues, according to estimates based on USVI fiscal data, were halved after the two hurricanes. The USVI economy has relied heavily on tourism and related business activity, which made it more vulnerable to the effects of hurricanes than jurisdictions with more diverse economies. The severity of damage from Irma and Maria, and the subsequent disruption of the USVI tourism industry, suggest that a full economic recovery could take years.", "Federal disaster assistance has included aid to public institutions, such as long-term loans to the USVI government and two hospitals; loans and grants to individuals and small businesses; and direct operations of the Federal Emergency Management Administration (FEMA), the U.S. Army Corps of Engineers, the U.S. Coast Guard, and other federal agencies. Funding for disaster relief has been augmented by supplemental appropriations. The extent of federal disaster assistance received by the USVI will depend, in part, on how funds provided in response to needs resulting from hurricanes and fires in 2017 are allocated among affected areas. The Bipartisan Budget Act of 2018 ( P.L. 115-123 ; \u00c2\u00a720301), enacted on February 9, 2018, included additional Medicaid funding for the USVI and Puerto Rico through September 30, 2019. The U.S. Department of Housing and Urban Development (HUD) allocated $774 million in mitigation funds (CDBG-MIT funds) to the U.S. Virgin Islands and put restrictions on their use."], "reports": {"section_title": "", "paragraphs": ["T his report provides an overview of economic and fiscal conditions in the U.S. Virgin Islands (USVI). The political status of the U.S. Virgin Islands and responses to Hurricanes Irma and Maria are not covered in depth here. Fiscal and economic challenges facing the USVI government raise several issues for Congress. First, Congress may choose to maintain oversight of federal policies that could affect the USVI's long-term fiscal stability. Second, Congress may consider further legislation that would extend or restructure long-range disaster assistance programs to mitigate those challenges and promote greater resiliency of infrastructure and public programs. Federal responses to the USVI's fiscal distress could conceivably affect municipal debt markets more broadly."], "subsections": [{"section_title": "Geography", "paragraphs": ["The U.S. Virgin Islands are located about 45 miles east of Puerto Rico and about 1,000 miles southeast of Miami, Florida. The three larger islands\u00e2\u0080\u0094St. Croix, St. Thomas, and St. John\u00e2\u0080\u0094are home to nearly all of the roughly 105,000 people living in the U.S. Virgin Islands. The USVI capital, Charlotte Amalie, is located on St. Thomas, which is the primary center for tourism, government, finance, trade, and commerce. The Virgin Islands National Park covers about two-thirds of the island of St. John, which is located to the east of St. Thomas. St. Croix\u00e2\u0080\u0094situated approximately 40 miles south of St. Thomas and St. John\u00e2\u0080\u0094is the agricultural and manufacturing center of the USVI. The U.S. Virgin Islands also includes a fourth smaller island\u00e2\u0080\u0094Water Island\u00e2\u0080\u0094as well as many other smaller islands and cays. The British Virgin Islands (BVI) are, by and large, east and slightly north of the U.S. Virgin Islands. The southern shore of Tortola, the largest island in BVI, is less than two miles north of the northern shore of St. John, USVI."], "subsections": [{"section_title": "Historical Background", "paragraphs": [], "subsections": [{"section_title": "Second Voyage of Christopher Columbus", "paragraphs": ["On his second voyage to the Caribbean in November 1493, Admiral Christopher Columbus and his crew reached the archipelago of the Lesser Antilles\u00e2\u0080\u0094the string of islands ranging southeast from Puerto Rico. As his ships sailed northwest toward Puerto Rico, they encountered one larger island, which Columbus named Santa Ursula, and saw to the north what they thought were at least 40-odd other islands, which were called \"las once mil V\u00c3\u00adrgenes.\" Santa Ursula, now known as St. Croix, was described as \"very high ground, most of which was bare, the likes of which no one had seen before or after.\" Over time those islands became known as the Virgin Islands.", "In the decades following Columbus's voyages, the Spanish crown had nearly sole control over all trade and navigation in the Caribbean. By the mid-1500s, merchants and privateers from France, England, and Holland moved into the region to trade with colonists who chafed at the high prices and narrow restrictions of Spanish imperial rules. Spanish galleons returning to Spain with goods and gold provided an additional motivation to privateers and pirates. The Spanish shifted much of their settlements and operations to the South American mainland and to the larger Caribbean islands, where resources were easier to exploit and defenses were easier to mount. The smaller islands to the east in the Lesser Antilles were thus largely left to others. Control of many of those islands, including the Virgin Islands, shifted back and forth among European powers, as peace treaties settled in Europe seldom applied in the New World."], "subsections": []}, {"section_title": "Danish Colonial Era", "paragraphs": ["In 1672, the Royal Danish West Indian Company ( Det Kongelige Octroyerede Danske Vestindiske Compagnie ) took control of St. Thomas and set up plantations. The company expanded to St. John (then St. Jan) in 1718 and then purchased St. Croix from France in 1733. Sugar production and export was the primary economic sector during the period of Danish colonial control, although cotton, tobacco, indigo, and other products were also exported. In 1754, the king of Denmark established a free trading policy, which encouraged commercial activity on St. Thomas, sidestepping restrictions imposed by the main European powers of the time. Economic conditions on those islands, however, slowed in the 1830s, and a slave revolt in 1848 led to the abolition of slavery. ", "After 1848, the Virgin Islands' economy slowed for a combination of reasons. Other Caribbean ports attracted more trade, steam-powered ships traveled more directly between North America and Europe, and the expansion of beet sugar production in Europe, Russia, and North America led to lower prices for the cane sugar industry."], "subsections": []}, {"section_title": "U.S. Acquisition and Administration", "paragraphs": ["In 1867, Secretary of State William Seward reached an agreement with Denmark to buy the islands. The Senate, however, declined to ratify the treaty. After other unsuccessful attempts in the first decade of the 20 th century, the U.S. government purchased the islands from Denmark in 1917, after a set of negotiations prompted by concerns that Germany might use the islands to attack American shipping. The U.S. government assumed control of the islands on March 31, 1917, just a week before the United States entered World War I. While the United States acquired the islands for strategic reasons, the islands have not generally served a strategic purpose beyond keeping them out of the control of potentially hostile powers. ", "Naval officers administered the islands after the United States took possession and made important improvements in public health, water supply, education, and social services. Efforts to advance economic development were less successful. In 1931, governance responsibilities were transferred to the U.S. Department of the Interior. In the 1930s, civilian administrators sought\u00e2\u0080\u0094largely unsuccessfully\u00e2\u0080\u0094to revive sugar production and convert failing plantations into smallholder homesteads. The diversion of labor to military projects during World War II led to further declines in agricultural production. After the end of Prohibition in 1933, however, rum distilling became a growing source of manufacturing employment, and taxes on rum have been an important revenue source."], "subsections": []}, {"section_title": "Post-World War II Economic Development", "paragraphs": ["Other types of manufacturing once employed significant numbers, but have declined in recent years. Several watch assembly plants started up in 1959, but the last one closed in 2015. A large bauxite processing plant was built on St. Croix in the early 1960s, but closed in 2000 after several ownership changes. Near that site, Hess Oil partnered with a Venezuelan oil company to build a major oil refinery. That refinery, known as HOVENSA, for a time was one of the largest in the world, but closed in 2012.", "Early efforts in the 1950s to promote tourism were another success, especially after the closing of Cuba to American tourism after the 1959 Cuban Revolution. Tourism remains the major employer and economic activity in the U.S. Virgin Islands. ", "The Revised Organic Act of 1954 (P.L. 83-517) included a provision to rebate, or \"cover over,\" federal excise taxes on goods produced in the Virgin Islands to the island's government. The cover over of federal taxes on rum has been an especially important revenue source."], "subsections": []}]}, {"section_title": "Current Structure of the Economy", "paragraphs": [], "subsections": [{"section_title": "Income Trends and Distribution", "paragraphs": ["Typical incomes in the USVI are lower than on the U.S. mainland and poverty rates are higher. "], "subsections": [{"section_title": "Household Incomes", "paragraphs": ["Median household income in the USVI in 2009, according to the U.S. Census Bureau, was $37,254, about 75% of the mainland estimate of $50,221. Demographic and economic data for U.S. territories are typically less extensive and reported less frequently than for states. Table 1 compares the distribution of household incomes in 2009 for the USVI with the U.S. total.", "The distribution of household income levels in the USVI is skewed toward lower income brackets compared to U.S. totals. For example, 13.5% of USVI households had incomes below $10,000 in 2009, as compared to 7.8% for the U.S. total."], "subsections": []}, {"section_title": "GDP per Capita and Distortions Due to Tax Avoidance", "paragraphs": ["Gross domestic product (GDP) per capita provides another measure of economy activity. GDP is defined as the value of goods and services produced in a given area during a year. While income produced in an area that is repatriated elsewhere is included in GDP, it is excluded from gross national product (GNP), which reflects incomes of area residents. For areas where flows of repatriated earnings are large, GDP may be a flawed measure of local incomes. ", "Data on such flows of repatriated earnings, which may result from tax avoidance or minimization strategies, are difficult to obtain. The European Union added the USVI to a list of \"non-cooperative tax jurisdictions\" in March 2018. The European Council, a body consisting of EU heads of government and senior EU officials, stated that jurisdictions added to the list \"failed to make commitments at a high political level in response to all of the EU's concerns.\" The USVI government called that decision \"unjustified.\" In October 2019, the European Council declined to remove the USVI from the list of noncooperative tax jurisdictions.", "With those caveats regarding GDP in mind, Figure 1 presents trends in per capita GDP from 2004 through 2015. Florida and Louisiana, which have both been affected by major hurricanes in that time period, are included for comparison. While USVI per capita GDP did not fall during the 2007-2009 Great Recession, it did drop sharply after the demise of the HOVENSA refinery. "], "subsections": []}]}, {"section_title": "Tourism", "paragraphs": ["In recent years, tourism and related trade has been the predominant component of the economy of the Virgin Islands. In years before Hurricanes Irma and Maria, about 1.2 million cruise passengers and about 400,000 airplane passengers arrived each year. Virgin Islands tourist destinations compete with many other Caribbean destinations. Much of the growth in Caribbean tourism has taken place in all-inclusive resorts that rely on low-wage labor, such as in the Dominican Republic. Many hotels and resorts were seriously damaged or destroyed in the September 2017 hurricanes. Employment and tourist arrival data, discussed below, suggest the tourism sector has started to rebound, although that process could take years to complete."], "subsections": []}, {"section_title": "Manufacturing", "paragraphs": ["Manufacturing, which had played a major role in the Virgin Islands since the 1960s, now plays a minor economic role aside from two rum distilleries, which enjoy extensive public subsidies. Slightly more than 600 people were employed in manufacturing in 2015, mostly in small firms."], "subsections": [{"section_title": "Rum", "paragraphs": ["The Cruzan distillery, which has a capacity to produce about 9 million proof gallons per year, claims a presence in the Virgin Islands since the mid-18 th century. Cruzan was sold to Fortune Brands in 2008, after several changes in ownership. The Diageo distillery, which can produce some 20 million proof gallons per year, was built as part of a 2008 agreement with the territorial government. Diageo is a British multinational corporation specializing in the marketing of alcoholic beverages, which previously operated a distillery in Puerto Rico. A separate agreement between Cruzan and the USVI government was negotiated in 2009. In 2012, the USVI government agreed to modify the Cruzan agreement to increase subsidies, subject to set sales and marketing expense benchmarks.", "The agreements with the Virgin Islands Government and Diageo and Fortune Brands included an estimated $3.7 billion in subsidies and tax exemptions over 30 years, provided through proceeds of bonds that securitized \"cover-over\" excise taxes on rum sales rebated from the U.S. government and local tax abatements. The agreements also committed the USVI government to provide ongoing production and marketing subsidies paid from cover-over revenues. The agreement bars the USVI government from seeking reductions in rum subsidies. As noted above, federal excise taxes on rum imported into the United States from the USVI and Puerto Rico (PR), or from anywhere else, are \"covered over\" to the PR and the USVI governments. "], "subsections": []}, {"section_title": "The HOVENSA Refinery and Limetree Bay", "paragraphs": ["The HOVENSA oil refinery, mentioned above, had been one of the USVI's largest employers, with about 1,200 workers and nearly 1,000 contractors. Since 1998, the refinery operated as a joint venture between Hess Oil and Petr\u00c3\u00b3leos de Venezuela, a petroleum company owned by the Venezuelan government. The refinery suddenly shut down in 2012 after running large losses. While mainland refineries had shifted to natural gas as an energy source, the HOVENSA facility relied on relatively expensive fuel oil. ", "HOVENSA filed for bankruptcy under chapter 11 of the Bankruptcy Code in September 2015. The USVI government received $220 million as part of the agreement to resolve HOVENSA's assets, which was used to cover the government's budget deficit for 2015. Limetree Bay purchased some HOVENSA facilities to build an oil storage facility that initially employed about 80 people and which later expanded to employ about 650 people. ", "A renovation of the HOVENSA refinery complex was reportedly three-quarters complete in late 2019, potentially allowing fuel deliveries in early 2020."], "subsections": []}]}, {"section_title": "Agriculture", "paragraphs": ["Over many decades, agriculture's role in the economy has dwindled to a marginal activity. Most of the island's food supply and essentially all of the molasses\u00e2\u0080\u0094a syrup extracted from sugar cane\u00e2\u0080\u0094used to produce rum is imported."], "subsections": []}, {"section_title": "Energy and Water40", "paragraphs": ["The high cost of electricity in the U.S. Virgin Islands is one factor that hinders economic development. Residential customers pay 40 cents per kilowatt/hour (kWh) or about three times the average cost on the mainland. Commercial electricity rates are approximately $0.47/kWh.", "Island power systems do not benefit from gas pipelines or electric grids that extend over large areas, thus face higher costs than mainland systems. U.S. Virgin Islands Water and Power Authority (VIWAPA) supplies electrical power and water. The bulk of power generation is fueled by oil and diesel, although initiatives to enable use of propane and natural gas have been under way. For instance, VIWAPA modified some electric generating units to allow them the option to use natural gas, propane, or fuel oil. Expanding the efficient use of renewable sources of electricity, such as wind and solar, may require upgrades in transmission and generation systems. In 2015, renewable sources made up 8% of VIWAPA's peak demand generating capacity."], "subsections": []}]}, {"section_title": "Public Finances", "paragraphs": [], "subsections": [{"section_title": "High Public Debt Levels Raise Concerns", "paragraphs": ["Fiscal challenges facing the USVI government have intensified in recent years. Several news reports in 2017 posed pointed questions about the sustainability of the islands' public debts, which total about $2 billion. Those debt levels, on a per capita or on a percentage of GDP basis, are extremely high compared to other subnational governments in the United States. In addition, the most recent actuarial analysis of public pensions found a net pension liability of about $4 billion. In 2017, the Government Accountability Office (GAO) found that \"more than a third of USVI's current bonded debt outstanding as of fiscal year 2015 was issued to fund government operating costs.\" A 2019 GAO report noted that the USVI government had been shut out of capital markets since 2017, which could hobble its ability to roll over maturing debt. The report also summarized concerns with the solvency of the public pension system, growth prospects, effects of 2017 changes in the federal tax law, and the uncertain status of federal Medicaid funding.", "Concerns about debt levels had led each of the three major credit ratings agencies to downgrade at least part of the islands' public debts. Others suggested that USVI's public debts would have to be restructured. In August 2017, then-Governor Mapp said that communications with credit ratings agencies had been suspended, which prompted those agencies to drop USVI's credit ratings. ", "The U.S. Virgin Islands and other U.S. territories are not covered by the provisions of the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA; P.L. 114-187 ). Nonetheless, some credit ratings agencies saw enactment of PROMESA as a sign that Congress and the President could enact future legislation to enable debt adjustments in other territories."], "subsections": []}, {"section_title": "USVI Fiscal Responses", "paragraphs": ["Like many state governments, USVI public revenues were severely affected by the 2007-2009 Great Recession. Tourism, the mainstay of the USVI economy, was affected. In turn, government revenues, typically closely tied to economic activity, also fell. In addition, rum subsidy payments doubled from 2006 to 2007 and 2008. As noted above, the closure of the HOVENSA refinery in 2012 resulted in hundreds of lost jobs and a significant contraction of the USVI tax base. ", "In recent years, the islands' government has run structural deficits and has used bond proceeds to cover shortfalls. Kenneth Mapp, who was inaugurated as governor in January 2015, had proposed various fiscal measures intended to reduce or eliminate those deficits. In August 2016, the islands' government took steps to issue bonds, which were to be used to cover financing shortfalls for its FY2017 budget. That issue was postponed until January 2017 and then cancelled. The loss of access to capital markets at reasonable rates left the islands' government with a narrow set of liquidity resources. ", "In January 2017, then-Governor Mapp proposed a series of measures intended to strengthen public finances, including certain tax increases, enhanced revenue collection measures, and reductions in public spending. A package of tax measures, including higher taxes on beer, liquor, sodas, and timeshare rentals, which were part of the governor's proposals, was enacted on March 22, 2017. GAO, in an analysis of debts of U.S. territories, expressed doubts that those fiscal measures would restore access to capital markets or address shortfalls in the funding of public pensions and other retirement benefits. ", "Then-Governor Mapp also had announced that a $40 million revenue anticipation note would soon be issued through Banco Popular, which he contended would provide the USVI government with liquidity through September 2017. It appears that issuance was also suspended. The form of USVI's public debt service, in which many funds are routed through escrow accounts before reaching government coffers, also limits options for USVI policymakers.", "Governor Albert Bryan Jr., who succeeded Mapp in January 2019, claimed to have stabilized government operations and finances in his first year in office, including by taking steps to reestablish relations with credit rating agencies and enhance transparency of public finances."], "subsections": []}]}, {"section_title": "Aftermath of Hurricanes Irma and Maria", "paragraphs": ["The USVI was hit by two powerful hurricanes in September 2017, which caused extensive damage from which island residents are continuing to recover. Hurricane Irma\u00e2\u0080\u0094shown in Figure 2 \u00e2\u0080\u0094was \"one of the strongest and costliest hurricanes on record in the Atlantic basin.\" Irma passed directly over St. Thomas and St. John on September 6, 2017, causing \"widespread catastrophic damage.\" ", "Two weeks later, on September 20, Hurricane Maria hit St. Croix, before continuing on to devastate Puerto Rico. Figure 3 shows paths and zones of extreme wind speeds for both hurricanes in the vicinity of USVI. In November 2017, the USVI government estimated that uninsured damage from the hurricanes would exceed $7.5 billion."], "subsections": [{"section_title": "Disaster Responses", "paragraphs": ["Disaster declarations following Hurricane Irma and Hurricane Maria enabled the USVI government and its residents to receive federal assistance through various provisions of the Stafford Act ( P.L. 93-288 , as amended). Those declarations authorized the Federal Emergency Management Agency (FEMA) to assist local and territory governments, certain private nonprofit organizations, and individuals through grants, loans, and direct aid. FEMA, the U.S. Corps of Engineers, and the U.S. Coast Guard, among other federal agencies, also directly supported disaster response and recovery efforts.", "Other forms of federal disaster assistance have included loans and grants to individuals and small businesses, including through the Small Business Administration disaster loan program. The USVI government and two hospital authorities received Community Disaster Loans (CDLs) on January 3, 2018. The USVI government CDL totaled $10 million with a term of 20 years. CDLs were designed to provide liquidity to local governments that have suffered revenue declines due to disasters. Estimates based on USVI fiscal data suggest that public revenues were halved after the two hurricanes."], "subsections": []}, {"section_title": "Disaster Funding", "paragraphs": ["Funding for disaster relief has been augmented by several supplemental appropriations. The extent of federal disaster assistance received by the USVI will depend, in part, on how funds provided in response to needs resulting from hurricanes and fires in 2017 are allocated among affected areas. ", "In the Bipartisan Budget Act of 2018 ( P.L. 115-123 ; \u00c2\u00a720301), enacted on February 9, 2018, Congress provided the USVI and Puerto Rico with additional Medicaid funding for the period January 1, 2018, through September 30, 2019. For the USVI Medicaid program, an additional $107 million was provided. Another $35.6 million would be available to the USVI subject to certain Medicaid program integrity and statistical reporting requirements. The federal medical assistance percentage (FMAP) was also raised from 55% to 100% for both the USVI and Puerto Rico Medicaid programs during that interval.", "On February 4, 2020, House Appropriations Chairwoman Nita M. Lowey introduced H.R. 5687 , an emergency supplemental appropriations bill. Title B of the measure includes provisions that would provide additional resources to territories, including the USVI, through support for child tax credits (and certain expansions of eligibility) and other tax credits, as well as a relaxation on limits on rum cover-over revenues directed to Puerto Rico and USVI. The House passed the measure on February 7, 2020, on a 237-161 vote. The Administration warned it would veto the measure."], "subsections": [{"section_title": "VIWAPA Financial Woes Hinder Recovery from Hurricane Damage", "paragraphs": ["Hurricanes Irma and Maria damaged an estimated 80% to 90% of VIWAPA's transmission and distribution lines, although power-generating plants were less affected. The U.S. Department of Energy (DOE) estimated that 93% of total USVI customers had their electric power restored by the end of January 2018. According to the U.S. Virgin Islands action plan submitted to and approved by HUD, the energy sector infrastructure needs as a result of the hurricanes totaled nearly $2.3 billion.", "The U.S. Department of Housing and Urban Development (HUD) allocated $67.7 million (approximately 3%) to the U.S. Virgin Islands from a $2 billion Community Development Block Grant-Disaster Recovery (CDBG-DR) appropriation included in the Bipartisan Budget Act of 2018 ( P.L. 115-123 ) \"to provide enhanced or improved electrical power systems\" for Puerto Rico and the USVI. Governor Bryan reportedly asked HUD to \"acknowledge that the Virgin Islands needs at least $350 million of these funds to make a meaningful impact in strengthening the grid and lowering the high cost of electricity in the Virgin Islands.\"", "On September 16, 2019, $774 million in mitigation funds (CDBG-MIT funds) were allocated to the U.S. Virgin Islands; however, HUD announced that ", "[T]he grantee is prohibited from using CDBG-MIT funds for mitigation activities to reduce the risk of disaster related damage to electric power systems until after HUD publishes the Federal Register notice governing the use of the $2 billion for enhanced or improved electrical power systems. This limitation includes a prohibition on the use of CDBG-MIT funds for mitigation activities carried out to meet the matching requirement, share, or contribution for any Federally-funded project that is providing funds for electrical power systems until HUD publishes the Federal Register notice governing the use of CDBG-DR funds to provide enhanced or improved electrical power systems.", "The prohibition on the use of CDBG-MIT funds combined with VIWAPA's cash flow challenges limits VIWAPA's ability to improve resiliency. Without sufficient available funds, VIWAPA is unable to meet federal funding matching requirements in order to make use of eligible mitigation funding from FEMA to permanently harden the electrical power systems. ", "The government of the U.S. Virgin Islands\u00e2\u0080\u0094VIWAPA's largest customer\u00e2\u0080\u0094has been slow in providing payment for services. The UVSI legislature, however, moved to appropriate $22.2 million for hospitals to pay outstanding obligations to VIWAPA, among other provisions.", "Throughout 2018 and 2019, USVI policymakers expressed concerns over VIWAPA's financial stability. For instance, Delegate Stacey Plaskett called on Governor Bryan and USVI Senate President Francis to declare a state of emergency in response to the territory's \"energy crisis.\""], "subsections": []}]}, {"section_title": "FY2019 Budget Proposals", "paragraphs": ["In his FY2019 budget proposals, Governor Mapp set forth plans to extend the solvency of the USVI public pension systems. According to those proposals, the projected insolvency of those plans would be postponed from 2024 to 2025. Additional measures, to be outlined in the future, were claimed to suffice to postpone insolvency for three additional years. The FY2019 budget proposals also called for a lifting of a hiring freeze. Additional revenues were expected from expanded federal reimbursement for health programs, along with recovery-related investment activity, although decreased tourist traffic is expected to keep accommodation tax and related collections well below prehurricane levels in FY2019."], "subsections": []}, {"section_title": "Economic Prospects", "paragraphs": ["The USVI economy has relied heavily on tourism and related business activity, which made it more vulnerable to the effects of hurricanes than jurisdictions with more diverse economies. "], "subsections": [{"section_title": "Employment Trends", "paragraphs": [" Figure 4 shows employment trends in the tourism-dependent leisure and hospitality sector, the territorial government, the manufacturing sector, and the construction sector. ", "Employment in the leisure and hospitality sector shows a steep decline after Hurricane Marilyn in 1995 and after Hurricanes Irma and Maria in September 2017, after which employment in that sector was halved. Leisure and hospitality employment took about six years to recover to pre-Marilyn levels. Increases in the construction sector offset about half of those losses in 1996 and 1997, presumably due to recovery and reconstruction work. As of December 2019, tourism sector employment has recovered somewhat, but remains well below pre-2017 levels.", "Construction employment also rose in 2018 and 2019, but that uptick appears much smaller than in the post-Marilyn time period. Moreover, the posthurricane increases in construction-related activity have been small relative to the loss of tourism employment after 2017.", "Employment in the USVI territorial government declined over the 2010-2014 period, but has remained relatively stable since then."], "subsections": []}, {"section_title": "Tourism Trends", "paragraphs": ["The severity of damage from Irma and Maria, and the subsequent disruption of the USVI tourism industry, suggest that a full economic recovery could take years. Many hotels have remained closed since the hurricanes, although some reopened in 2019. Cruise ship passenger arrivals fell from 1.8 million in calendar year (CY) 2016 to 1.3 million in 2017, but have rebounded somewhat. Air passenger arrivals fell from nearly 800,000 in 2016 to less than 500,000 in 2018. Air arrivals for the first three quarters of CY2019 ran 44% ahead of the same period in 2018. "], "subsections": []}, {"section_title": "Unemployment Claims", "paragraphs": ["The economic effects of Hurricanes Irma and Maria can also be seen in initial unemployment claims data, shown in Figure 5 . The post-Irma and Maria uptick in late 2017 is more than twice the size of the 2011-2012 upticks near the time of the closure of the HOVENSA refinery. ", "The New York Federal Reserve Bank compared the economic effects of Hurricanes Irma and Maria on the USVI and Puerto Rico, noting that the estimated percentage job loss following those hurricanes (-7.8%) was far greater than the percentage job losses in New York City (-3.3%) during the Great Recession.", "Researchers report that many young professionals and health care workers have left the USVI for positions on the mainland, which may complicate recovery efforts in the health care sector.", "Tracking the progress of USVI economic recovery is complicated as many federal statistical programs report fewer data series for U.S. territories than for states. The Virgin Islands Bureau of Economic Research (VIBER), however, reports regularly on economic, tourism, and population trends."], "subsections": []}]}]}, {"section_title": "Considerations for Congress", "paragraphs": ["The fiscal and economic challenges facing the USVI government raise several issues for Congress. First, Congress may consider further legislation that would extend or restructure long-range disaster assistance programs to mitigate those challenges and promote greater resiliency of infrastructure and public programs. ", "Second, if fiscal pressures on the USVI intensify, Congress might consider a framework similar to that established by the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA; P.L. 114-187 ). In the past, however, USVI policymakers opposed making PROMESA provisions available to other territories because of concerns about borrowing costs. At present, the USVI lacks access to the federal Bankruptcy Code or other processes for debt restructuring involving judicial processes.", "Third, Congress might consider proposals to support initiatives to lower energy costs for the USVI. Mainland electrical power generation, to a large extent, has shifted to using more natural gas as a fuel. Construction of a liquefied natural gas (LNG) import facility and accompanying generation plants could lead to lower energy prices and an enhanced capacity to employ renewable energy sources. Other innovative energy technologies might also be used to that end. While VIWAPA has taken some steps to modernize its generating units, some major investments may be required. For example, construction of a LNG facility and further conversions of generating units could lower electricity rates, but would require financial commitments that would likely challenge the fiscal capacity of the USVI government and VIWAPA. Moreover, LNG supply contracts typically extend over decades due to the scale of required investments, arrangements which could be difficult to negotiate given the USVI's fiscal situation. ", "Fourth, Congress may expand oversight of federal agencies that administer disaster assistance programs, including FEMA and HUD, to ensure the timely receipt of assistance by grantees. Several Members of Congress have expressed concerns that funds for federal disaster recovery efforts have been unduly delayed. Congress could also examine the interplay among federal agencies, federal rules and regulations that apply to disaster responses operations, and local governments and nonprofits in affected areas.", "Fifth, Congress may revisit the structure of the rum cover-over program to assess whether its current structure is appropriately fitted to public purposes. The contractual bar to USVI advocacy of changes in the cover-over program could require Congress to initiate any such alterations.", "Sixth, Congress may choose to promote economic and social development through a wide range of tax and social program rules, some of which treat USVI differently than states."], "subsections": []}]}]}}
{"id": "R45843", "title": "Federal Indian Law: Judicial Developments in the October 2018 Supreme Court Term", "released_date": "2019-07-29T00:00:00", "summary": ["Each term, the Supreme Court typically hears arguments in one or more cases concerning the rights and status of Indian tribes and their members. Prominent issues addressed by the Supreme Court in recent terms have included (1) tribes' civil jurisdiction over nonmembers, (2) the scope of tribal sovereign immunity, and (3) termination of Indian parents' rights in adoption cases.", "The October 2018 term likewise featured several Indian law issues: the Court heard arguments in three significant cases, each of which implicated the complex relationships among tribal, state, and federal laws. In Washington State Department of Licensing v. Cougar Den , the Court upheld a Washington Supreme Court decision permitting a tribe to import fuel without paying state fuel taxes. The right to travel on public highways guaranteed by an 1855 treaty, the Court ruled, included the right to transport goods for sale on the reservation without paying additional taxes to do so. In Herrera v. Wyoming , the Court determined that neither Wyoming's admission into the Union nor the designation of the Bighorn National Forest abrogated an earlier treaty preserving tribal hunting rights. Thus, a tribe member's conviction for exercising those hunting rights in violation of Wyoming state law could not stand. Finally, in Carpenter v. Murphy , the Court reviewed whether Congress disestablished the Muscogee (Creek) reservation more than a century ago, with potential consequences for Oklahoma's ability to prosecute major crimes in the eastern half of the state. However, the eight Justices considering this case have not yet reached a decision, and the case is scheduled to be reargued in the October 2019 Supreme Court term."], "reports": {"section_title": "", "paragraphs": ["E ach term, the Supreme Court typically hears arguments in one or more cases concerning the rights and status of Indian tribes and their members. Prominent issues addressed by the Sup reme Court in recent terms have included (1) tribes' civil jurisdiction over nonmembers, (2) the scope of tribal sovereign immunity, and (3) termination of Indian parents' rights in adoption cases. The October 2018 term likewise featured several Indian law issues: the Court heard arguments in three significant cases, each of which implicated the complex relationships among tribal, state, and federal laws.", "In Washington State Department of Licensing v. Cougar Den , the Court upheld a Washington Supreme Court decision permitting a tribe to import fuel without paying state fuel taxes. The right to travel on public highways guaranteed by an 1855 treaty, the Court ruled, included the right to transport goods for sale on the reservation without paying additional taxes to do so. In Herrera v. Wyoming , the Court determined that neither Wyoming's admission into the Union nor the designation of the Bighorn National Forest abrogated an earlier treaty preserving tribal hunting rights. Thus, a tribe member's conviction for exercising those hunting rights in violation of Wyoming state law could not stand. Finally, in Carpenter v. Murphy , the Court reviewed whether Congress disestablished the Muscogee (Creek) reservation more than a century ago, with potential consequences for Oklahoma's ability to prosecute major crimes in the eastern half of the state. However, the eight Justices considering this case have not yet reached a decision, and the case is scheduled to be reargued in the October 2019 Supreme Court term.", "This report discusses each of these three cases in turn, focusing on analyses of the Supreme Court's interpretive rubric for treaties and relevant legislation, statements about the scope of legislative authority and discussions of legislative intent, and possibilities for future congressional action."], "subsections": [{"section_title": "Washington State Department of Licensing v. Cougar\u00c2 Den", "paragraphs": ["On March 19, 2019, the Supreme Court upheld a 2017 Washington Supreme Court decision defending a right-to-travel provision in an 1855 treaty (1855 Yakama Treaty) between the United States and the Yakama tribe against a state attempt to impose a motor fuels tax on a Yakama member. The treaty guaranteed the Yakamas the \"right, in common with citizens of the United States, to travel upon all public highways.\" Cougar Den, Inc. (Cougar Den)\u00e2\u0080\u0094a business owned by a Yakama member\u00e2\u0080\u0094purchased and transported motor fuel into the state and resold it to on-reservation retailers. The Washington Supreme Court ruled that the treaty insulated Cougar Den from having to pay a Washington State motor fuels tax on that gasoline. The Supreme Court agreed, though in such a way that the limits of the right-to-travel provision in the 1855 Yakama Treaty may still not be perfectly clear. Nonetheless, this case could affect the interpretation of similar provisions in other treaties, and potentially impact state taxation of other activities both on- and off-reservation."], "subsections": [{"section_title": "Legal Backdrop: State Taxing Authority over Tribal Activity", "paragraphs": ["In general, states may tax off-reservation activities of Indian tribes unless an explicit federal law exempts those activities. In 1973, the Court decided Mescalero Apache Tribe v. Jones , holding that New Mexico could impose a gross receipts tax on a tribal ski resort operated on nonreservation land leased from the federal government. According to the Court in Mescalero , \"[a]bsent express federal law to the contrary, Indians going beyond reservation boundaries have generally been held subject to nondiscriminatory state law otherwise applicable to all citizens of the State.\"", "Although Cougar Den involved a state tax imposed on off-reservation activity similar to the tax the Court upheld in Mescalero , the case arose against a backdrop of states having difficulty collecting taxes on tribal retailers selling goods to non-Indians on Indian reservations, even where courts had upheld the legality of those taxes. Collecting such taxes without tribal cooperation can be challenging because tribal sovereign immunity may defeat suits against a tribe absent tribal waiver or congressional consent. For example, in Moe v. Confederated Salish and Kootenai Tribes , the Supreme Court held that a state could impose record-keeping requirements on tribal retailers to facilitate collecting state taxes from on-reservation cigarette sales to non-Indians. However, in Washington v . Confederated Tribes of Colville Reservation , the Court later held that tribal sovereign immunity barred a state's enforcement action to compel a tribe to remit such taxes. And when Oklahoma later argued in Oklahoma Tax Commission v. Citizen Band Potawatomi Indian Tribe of Oklahoma that \"decisions such as Moe and Colville give . . . [states] a right [to levy a tax] without a remedy [to collect the tax],\" the Court responded by suggesting that states could tax wholesalers, enter into agreements with tribes for collecting the taxes, or secure congressional legislation to require tribes to remit the taxes."], "subsections": []}, {"section_title": "Factual Background: Washington's Motor Fuels Tax and the 1855\u00c2 Yakama Treaty", "paragraphs": ["A Washington statute imposes a motor fuels tax upon licensed importers who bring large quantities of fuel into the state by way of ground transportation. As of 2018, all 24 Indian tribes in Washington, other than the Yakamas, had negotiated fuel tax agreements under which they would pay the motor fuels tax to the state. The question before the Supreme Court in Cougar Den , then, was whether the 1855 Yakama Treaty forbade a similar tax from being imposed on fuel importation activities by Yakama members, on account of that treaty's protection of tribal members' right to travel off-reservation.", "Article III of the 1855 Yakama Treaty contains two clauses. The first clause states that \"if necessary for the public convenience, roads may be run through the said reservation; and on the other hand, the right of way, with free access from the same to the nearest public highway, is secured to them.\" The second clause states that the Tribe also has \"the right, in common with citizens of the United States, to travel upon all public highways.\"", "Some special canons of construction apply when courts interpret Indian treaties. According to the Supreme Court, courts must \"give effect to the terms [of a treaty] as the Indians themselves would have understood them,\" considering \"the larger context that frames the [t]reaty, including 'the history of the treaty, the negotiations, and the practical construction adopted by the parties.'\" Partly because many such treaties (including the 1855 Yakama Treaty) were negotiated and drafted in a language other than the Indians' native language and often involved unequal bargaining power, the Supreme Court has stated that \"any doubtful expressions in [treaties] should be resolved in the Indians' favor.\" However, courts must still take care not to extend treaty language beyond what it was intended to cover. "], "subsections": []}, {"section_title": "Case Background: The Washington Supreme Court's Decision", "paragraphs": ["When considering whether the State of Washington could collect a motor fuels tax against Cougar Den, the Washington Supreme Court had to determine whether the right to travel conferred by the 1855 Yakama Treaty was implicated. Ultimately, a majority of that court held that it was: the State of Washington could not enforce its motor fuels tax against Yakama tribal members because that would infringe on the Tribe's treaty-protected right to travel. Specifically, the majority held that, \"in this case, it was impossible for Cougar Den to import fuel without using the highway.\" Under the majority's view, the motor fuels tax constituted an impermissible burden or condition on tribal members' use of the highways to transport their goods, which violated the treaty. In reaching this decision, the majority relied heavily on a decision rendered by the U.S. Court of Appeals for the Ninth Circuit in United States v. Smiskin , which held that a Washington State law prohibiting the transportation and possession of unstamped cigarettes without prior notice to the state impermissibly restricted the right to travel protected by the 1855 Yakama Treaty. The Washington Supreme Court, reviewing the motor fuels tax, interpreted Ninth Circuit precedent to mean that the 1855 Yakama Treaty provision applied to \"any trade, traveling, and importation that requires the use of public roads.\"", "By contrast, two dissenting state court justices read Ninth Circuit precedent narrowly. Because the fuel tax was directed against trade in a product, not the travel itself, the dissenting justices would have upheld the tax."], "subsections": []}, {"section_title": "The U.S. Supreme Court's Decision", "paragraphs": ["Washington appealed the Washington Supreme Court's decision to the U.S. Supreme Court, and the High Court granted review on June 25, 2018.", "In their arguments before the Court, the parties disagreed over the correct interpretation of the 1855 Yakama Treaty. Specifically, the parties disputed how the Yakama would have originally understood the right-to-travel provision. Citing another Ninth Circuit case, Cougar Den argued that the 1855 Yakama Treaty \"guarantees the Yakama Nation and its members the ' right to transport goods to market without restriction .'\" However, the Washington State taxing authority argued for a more literal and narrow interpretation of the treaty language, emphasizing that the right-to-travel provision contains no mention of taxes. In the state's view, because the fuel tax did not restrict tribe members' ability to travel on public highways, and because the 1855 Yakama Treaty \"says nothing about a tax exemption at all,\" the Treaty did not preempt the tax's applicability to tribe members.", "The Supreme Court handed down its decision on March 19, 2019. By a 5-to-4 vote, the Court affirmed the Washington Supreme Court's decision, thereby prohibiting Washington from assessing its motor fuels tax against Cougar Den. However, there was no majority opinion; though five Justices voted to affirm, Justices Sotomayor and Kagan joined an opinion by Justice Breyer, while Justice Ginsburg joined a separate opinion by Justice Gorsuch.", "Justice Breyer's opinion noted that the treaty was not written in the tribe's native language, which Justice Breyer declared \"put the Yakamas at a significant disadvantage.\" Justice Breyer contended that, based on precedent going back more than 100 years, courts interpreting an Indian treaty must \"see that the terms of the treaty are carried out, so far as possible, in accordance with the meaning they were understood to have by the tribal representatives\" at the time. Citing the historical record, Justice Breyer explained that the Yakamas would have understood the right to travel as including \"the right to travel with goods for purposes of trade.\" Accordingly, because \"to impose a tax upon traveling with certain goods burdens that travel,\" the motor fuels tax directly burdened Cougar Den's ability to travel with goods for purposes of trade, and thus impermissibly violated the 1855 Yakama Treaty. Justice Breyer also concluded that the tax at issue specifically burdened the type of travel the Yakamas had negotiated to protect: travel by public highway. (Washington's motor fuels tax was not assessed on distributors who imported fuel by pipeline or boat.)", "Justices Gorsuch, joined by Justice Ginsburg, took a somewhat shorter route to the same conclusion, noting \"unchallenged factual findings\" from an earlier federal district court case that the Yakamas \"understood the right-to-travel provision to provide them 'with the right to travel on all public highways without being subject to any licensing and permitting fees related to the exercise of that right while engaged in the transportation of tribal goods.'\" That factual finding, confirmed by a \"wealth of historical evidence,\" in their view required a ruling for the Yakamas. ", "While five Justices agreed that applying the fuel tax to Cougar Den would violate the 1855 Yakama Treaty, the Court's failure to render an opinion agreed upon by a majority of the Justices leaves some question as to how federal and state courts will construe and apply Cougar Den . To the extent that Justice Gorsuch's opinion rests on somewhat narrower grounds than Justice Breyer's, that may be deemed to be the controlling opinion of the Court. Because it relied on unchallenged evidence of the tribe's understanding of the right-to-travel provision, Justice Gorsuch's opinion leaves open the possibility that other, identical terms in other treaties could be interpreted differently, if there is different evidence about the relevant tribes' understanding.", "Chief Justice Roberts wrote an opinion on behalf of the four dissenting Justices, objecting that \"the mere fact that a state law has an effect on the Yakamas while they are exercising a treaty right does not establish that the law impermissibly burdens the right itself.\" The Chief Justice's dissent went on to express concern that the plurality and concurring opinions could, for example, foreclose the applicability of \"law[s] against possession of drugs or illegal firearms\" by tribe members on public highways, because tribe members could invoke the treaty-protected right to travel when traveling with such items. The plurality responded to this concern by emphasizing that it did not \"hold that the treaty deprives the State of the power to regulate to prevent danger to health or safety occasioned by a tribe member's exercise of treaty rights.\""], "subsections": []}, {"section_title": "Implications and Considerations for Congress", "paragraphs": ["The Court's decision in Cougar Den might prompt Congress to further consider the ability of states to enforce and collect valid state taxes from Indian tribes. Cougar Den involved a considerable amount of tax revenue; in December 2013, Washington assessed $3.6 million in taxes, penalties, and licensing fees against Cougar Den. And there are similar right-to-travel provisions in treaties with other tribes, including the Nez Perc\u00c3\u00a9 Indians of Idaho and the Flathead, Kootenay, and Upper Pend d'Oreilles Indians of Montana. These similarly worded treaties could give rise to future challenges to state taxing authority over tribe members. Moreover, Congress could choose to act in the event legislators believe that Chief Justice Roberts's fears about health and safety laws are well-founded. Because of Congress's plenary authority over Indian matters, only Congress, not a state, could act to limit or eliminate a right granted by treaty. However, if Congress chooses to do so, its intention must be \"clear and plain.\"", "Cougar Den also might prompt further reflection on the differences between state and federal tax exemptions for tribes. Relying on Supreme Court precedent upholding a tax exemption based on explicit language in the General Allotment Act, the Ninth Circuit, for example, has generally held that an exemption from a federal tax must be explicit. Accordingly, the Yakama tribe is currently not exempt from federal heavy vehicle and diesel fuel taxes or from the federal excise tax on manufactured tobacco products because the right-to-travel provision in the 1855 Yakama Treaty is not sufficiently explicit to exempt the tribe from federal taxes. Legislation could be drafted either to eliminate or to enshrine that different treatment."], "subsections": []}]}, {"section_title": "Herrera v. Wyoming", "paragraphs": ["In Herrera v. Wyoming , the Supreme Court resolved a disagreement about whether either Wyoming's admission into the Union or the later establishment of the Bighorn National Forest abrogated the Crow Tribe of Indians' treaty rights to hunt on \"unoccupied lands of the United States.\" The Court concluded that neither event categorically affected those treaty rights.", "This decision was especially notable because the Supreme Court formally repudiated its 1896 ruling in Ward v. Race Horse , which had held that Wyoming's admission into the Union effectively abrogated a similar hunting-rights provision in a treaty between the United States and another Indian tribe. Race Horse had already appeared to be in considerable tension with the Court's decision over a century later in Minnesota v. Mille Lacs Band of Chippewa Indians , when the Court declared that \"[t]reaty rights are not impliedly terminated upon statehood.\" However, it was not until Herrera that the tension was resolved; the Court stated that it was \"formaliz[ing] what is evident in Mille Lacs itself. While Race Horse 'was not expressly overruled' in Mille Lacs , 'it must be regarded as retaining no vitality' after that decision.\" This rejection of Race Horse undermined other cases relying on it, causing a domino effect that ultimately led the Supreme Court to reverse the Wyoming state court decisions that had declined to recognize the Crow Tribe's treaty hunting rights."], "subsections": [{"section_title": "Case Background: the Wyoming State Court Decisions", "paragraphs": ["The Herrera case arose after the petitioner, a Crow Tribe member, tracked several elk beyond the Crow reservation's Montana borders into the Bighorn National Forest in Wyoming. Herrera and his hunting companions eventually killed three elk, and Herrera was criminally charged by Wyoming with violating its state hunting laws.", "Herrera moved to dismiss the charges, arguing that he was exercising subsistence hunting rights long protected by the 1868 Treaty of Fort Laramie (1868 Treaty) between the Crow Tribe and the United States. In exchange for ceding much of the territory that would eventually become Wyoming to the United States, the Crow Tribe received a guarantee of \"the right to hunt on the unoccupied lands of the United States so long as game may be found thereon . . . .\" According to Herrera, this treaty provision provided him with permission to hunt off-reservation in the Bighorn National Forest and prevented Wyoming from going forward with his prosecution under state law. Wyoming disagreed, contending that the hunting rights conferred to Crow Tribe members under the 1868 Treaty were abrogated following Wyoming's 1890 admittance into the Union or, alternatively, the 1897 establishment of the Bighorn National Forest.", "Rejecting Herrera's claim of treaty protection, the trial court determined it was bound by a 1995 United States Court of Appeals for the Tenth Circuit (Tenth Circuit) decision in Crow Tribe of Indians v. Repsis . That decision held that the 1868 Treaty's hunting-rights provisions had been abrogated for the same reasons as the similarly worded treaty provisions in Race Horse . Alternatively, the Tenth Circuit concluded that the establishment of the Bighorn National Forest in 1897 rendered those lands \"occupied\" and therefore no longer subject to the access rights given to Crow tribal members by the 1868 Treaty.", "According to the Wyoming court, principles of collateral estoppel prevented Herrera from \"attempting to relitigate the validity of the off-reservation treaty hunting right that was previously held to be invalid\" by the Tenth Circuit. After Herrera was convicted and denied appeal in a higher Wyoming state court, he sought review in the U.S. Supreme Court, which granted his request."], "subsections": []}, {"section_title": "Legal Backdrop: Court Decisions Interpreting Statehood's Effects on Tribal Treaty Rights", "paragraphs": ["A key issue in Herrera concerned the interplay of the Court's prior decisions considering statehood's effect on the continuing viability of treaties between the United States and Indian tribes located within a newly acceded state's territorial boundaries. In Race Horse , the Court had taken the view that Congress's legislative action in admitting a state to the Union abrogated earlier treaties conferring tribal rights to nonreservation lands within the new state's territory. This decision was partly premised on the equal footing doctrine\u00e2\u0080\u0094the idea that newly admitted states must enjoy sovereignty equal to that of existing states.", "In Race Horse itself, the Court held that a hunting right in a Shoshone-Bannock treaty\u00e2\u0080\u0094a provision with language identical to the 1868 Treaty\u00e2\u0080\u0094violated the equal footing doctrine and had been abrogated by legislation admitting Wyoming to the Union. The Supreme Court reasoned that Wyoming's admission to the Union must have impliedly abrogated the treaty right, because \"all the states\" have the power \"to regulate the killing of game within their borders,\" and the language of the Shoshone-Bannock treaty would impermissibly limit Wyoming's power to do so relative to other states. In other words, the \"two facts\" of the treaty's hunting rights and of Wyoming's statehood were \"irreconcilable, in the sense that the two, under no reasonable hypothesis, [could] be construed as co-existing.\" The fact that Congress made no express statement abrogating the Shoshone-Bannock treaty rights did not change that reasoning. As a potentially alternative basis for its decision, the Court explained that because the treaty had been enacted while the land had territory status, it necessarily made only an \"essentially perishable . . . temporary and precarious\" promise, \"intended to be of a limited duration.\"", "The equal footing doctrine's primacy in federal Indian law was short-lived, however. In United States v. Winans , less than a decade after Race Horse , the Court upheld tribal fishing rights granted to the Yakama tribe under the 1855 Yakama Treaty. The Court specifically concluded that those treaty rights were not displaced by the State of Washington's admission into the Union. According to the Winans Court,", "The extinguishment of the Indian title, opening the land for settlement, and preparing the way for future states, were appropriate to the objects for which the United States held the territory. And surely it was within the competency of the [nation] to secure to the Indians such a remnant of the great rights they possessed as \"taking fish at all usual and accustomed places.\" Nor does it restrain the state unreasonably, if at all, in the regulation of the right.", "In short, just as Congress had the power to extinguish tribal title to the land, it had the power to reserve fishing rights to the tribes on nonreservation land\u00e2\u0080\u0094and respecting that preservation of rights was a reasonable restraint on, rather a dramatic curtailment of, state sovereignty.", "But Race Horse 's holding was not explicitly overruled by Winans , and roughly a century later, Wyoming charged another Crow Tribe member with illegally hunting elk in the Bighorn National Forest (in a case called Crow Tribe of Indians v. Repsis , which predated Herrera's case, but involved similar factual circumstances). The Crow Tribe sought a declaratory judgment in federal court, hoping to resecure the 1868 Treaty hunting and fishing rights. The Tenth Circuit ruled against the tribe, concluding that because the relevant provision of the 1868 Treaty was virtually identical to the one abrogated by the Supreme Court in Race Horse , the Race Horse decision mandated that the treaty rights be considered abrogated by statehood. In so doing, the Tenth Circuit also emphasized Race Horse 's conclusion that the 1868 Treaty granted only \"temporary and precarious\" rights, such that Congress could not have intended them to be binding on a later-created state.", "A few years after Repsis , the Supreme Court decided Minnesota v. Mille Lacs Band of Chippewa Indians , which involved fishing rights under an 1837 tribal treaty in Minnesota. There, the Court declined to apply Race Horse and rejected its reasoning, at least in substantial part. The earlier decision's equal-footing holding rested on a \"false premise,\" the Court said, and its language about \"temporary and precarious\" treaty rights was \"too broad to be useful.\" Noting that courts \"interpret Indian treaties to give effect to the terms as the Indians themselves would have understood them,\" the High Court explained that \"Congress may abrogate Indian treaty rights, but it must clearly express its intent to do so.\" Since there was no \"clear evidence\" of Congress's intent to abrogate the tribal fishing rights at issue, those rights simply were not abrogated. In the view of the Court, \"[t]reaty rights are not impliedly terminated upon statehood.\"", "Although highly critical of Race Horse , the Court majority in Mille Lacs did not expressly overrule the earlier decision (though Chief Justice Rehnquist, writing in dissent, accused the majority of overruling Race Horse \" sub silentio ,\" via \"a feat of jurisprudential legerdemain\")."], "subsections": []}, {"section_title": "The Herrera Decision: the Impact of Statehood", "paragraphs": ["Thus, when Herrera came before the Supreme Court, the question of whether Race Horse would affect the outcome was a point of disagreement between the parties. Herrera argued that \" Mille Lacs forecloses any suggestion that Wyoming's admission terminated the Tribe's treaty hunting rights.\" Wyoming disagreed, arguing that at least one aspect of Race Horse remained good law\u00e2\u0080\u0094namely, its recognition that rights conferred to tribal members by treaty may be only of a \"temporary and precarious nature,\" so that the \"the proper inquiry is whether Congress intended . . . [those] rights to be perpetual or to expire upon the happening of a clearly contemplated event, such as statehood.\" According to Wyoming, Mille Lacs did not disturb\u00e2\u0080\u0094and indeed, reaffirmed\u00e2\u0080\u0094this aspect of Race Horse , which allowed for the conclusion that statehood terminates such temporary rights.", "Ultimately, the Supreme Court rejected Wyoming's arguments by a 5-4 vote. Writing for the Court majority, Justice Sotomayor\u00e2\u0080\u0094joined by Justices Ginsburg, Breyer, Kagan, and Gorsuch\u00e2\u0080\u0094acknowledged that Race Horse \"relied on two lines of reasoning\"\u00e2\u0080\u0094namely the equal footing doctrine and the \"temporary and precarious\" nature of certain treaty rights. The Court determined that Mille Lacs had \"undercut both pillars of Race Horse 's reasoning,\" and \"methodically repudiated that decision's logic.\" \"[T]he crucial inquiry for treaty termination analysis\" established by Mille Lacs \"is whether Congress has expressly abrogated an Indian treaty right or whether a termination point identified in the treaty itself has been satisfied.\" Unless the legislation granting statehood \"demonstrates Congress's clear intent to abrogate a treaty\" or statehood is mentioned in the treaty itself as a termination point, \"[s]tatehood is irrelevant\" to treaty termination analysis.", "Applying the Mille Lacs test to Herrera's case thus involved two questions: (1) Did the Wyoming Statehood Act \"show that Congress intended to end the 1868 Treaty hunting right\"? and (2) Was there any evidence \"in the treaty itself that Congress intended the hunting right to expire at statehood\"? The Supreme Court concluded that the answer to both questions was \"No\"\u00e2\u0080\u0094there was \"simply . . . no evidence\" in either the Wyoming Statehood Act or in the treaty itself that Congress intended the Crow Tribe's hunting rights to end at statehood."], "subsections": []}, {"section_title": "A Procedural Matter: Issue Preclusion", "paragraphs": ["Herrera faced an additional procedural hurdle at the Supreme Court: the parties disagreed over whether he should even be legally allowed to raise his arguments in the first place. The Wyoming state courts had ruled that the Tenth Circuit's 1995 decision in Repsis barred Herrera from even being able to litigate the question of whether the Crow Tribe retained any off-reservation hunting rights under the 1868 Treaty. In short, they said that question had already been answered. Thus, much of the briefing at the Supreme Court focused on issue preclusion, a doctrine that prevents parties from resurrecting an issue already directly decided in a previous case. Both Herrera and the United States as amicus curiae argued that preclusion should not apply when there had been an intervening change in the law, like the Supreme Court's Mille Lacs decision. Wyoming, however, maintained that Mille Lacs had not overruled Race Horse in its entirety, and that at least one line of its reasoning survived: in Wyoming's view, issue preclusion should at least attach to the Tenth Circuit's finding in Repsis that the 1868 Treaty rights were only temporary . In other words, Wyoming argued that Herrera should not be permitted to relitigate the issue of whether Congress intended the 1868 Treaty's hunting rights to be \"temporary\" rights that expired after statehood because the Tenth Circuit had already definitively answered that question.", "For the same reasons that the Supreme Court disagreed that statehood had necessarily abrogated Herrera's treaty rights, it likewise rejected Wyoming's claim of issue preclusion. Mille Lacs constituted a \"change in law\" that justified \"an exception to preclusion in this case.\" \"At a minimum,\" the Court said, \"a repudiated decision does not retain preclusive force.\""], "subsections": []}, {"section_title": "The Herrera Decision: the Meaning of \"Unoccupied Land\"117", "paragraphs": ["Having decided that the 1868 Treaty's hunting rights provision remained in effect even after Wyoming statehood, the Court then needed to decide whether the Bighorn National Forest should be considered \"unoccupied\" land under the terms of the treaty. The Tenth Circuit in Repsis had concluded that the establishment of the national forest in 1897 rendered the land \"occupied\" by the federal government because it was \"no longer available for settlement,\" and the resources from the land could not be used \"without federal permission.\" Wyoming similarly argued that \"[c]reation of the Bighorn National Forest was an act of occupation, placing that land outside of the ambit of the Crow Treaty right\"; in the state's view, because the national forest \"is federal property, and the United States decides who may enter and what they may do,\" the national forest should constitute occupied land on which the 1868 Treaty would grant no special privileges. ", "On the other hand, Herrera contended that the text and historical record of the 1868 Treaty demonstrate an understanding by the parties that \"the term 'occupied' entailed actual, physical settlement of the land by non-Indian settlers.\" The United States, writing as amicus curiae, agreed. Herrera and the United States noted that, in other cases, the declaration of a national forest had led courts to declare the designated land \"open and unclaimed.\"", "The Supreme Court reiterated that provisions of treaties with tribes must be interpreted as they would naturally have been understood by the tribes at the time those treaties were executed. In this case, the Supreme Court concluded \"it is clear that the Crow Tribe would have understood the word 'unoccupied' to denote an area free of residence or settlement by non-Indians.\" That conclusion was based on analysis of the treaty's text, which used variations of the words \"occupy\" and \"settle\" at various points, and supported by both contemporaneous dictionary definitions and historical evidence from the time of the treaty negotiation and signing. Accordingly, \"President Cleveland's proclamation creating Bighorn National Forest did not 'occupy' that area within the treaty's meaning. To the contrary, the President 'reserved' the lands 'from entry or settlement.'\""], "subsections": []}, {"section_title": "The Herrera Decision: Dissent and Limitations", "paragraphs": ["The majority opinion in Herrera noted that its scope was limited in two distinct ways. First, the majority held only \"that Bighorn National Forest is not categorically occupied, not that all areas within the forest are unoccupied.\" This leaves open the possibility that some parts of the Bighorn National Forest contain enough indicia of settlement to be considered \"occupied,\" even though the rest of the forest is not\u00e2\u0080\u0094which would preclude exercise of Crow tribal hunting rights in those areas. Second, the Supreme Court declined to consider arguments that Wyoming could regulate the exercise of hunting rights to promote conservation purposes. Because those arguments were not considered by the state appellate court, the Supreme Court did \"not pass on the viability of those arguments\" in its opinion. That may leave open another avenue by which Wyoming could limit the exercise of tribal hunting rights within its borders.", "A dissent written by Justice Alito was joined by the remaining three members of the Court. The four dissenting Justices would have determined that the Tenth Circuit's decision in Repsis (\"holding that the hunting right conferred by [the 1868 Treaty] is no longer in force\") was still binding, such that \"no member of the Tribe will be able to assert the hunting right that the Court addresses.\" In other words, the dissent would have started with the parties' issue preclusion arguments, and would have determined that Herrera had no right to relitigate an issue that had already been settled by a court.", "More specifically, although the dissent expressed some doubt that Mille Lacs represented a sufficient change in the law to foreclose Repsis 's conclusion that Wyoming statehood abrogated the 1868 Treaty rights, it would not have reached that question. Instead, the dissent would have given preclusive effect to Repsis 's alternate legal conclusion, which it says existed independently of Race Horse \u00e2\u0080\u0094namely, that the Repsis court decided the Bighorn National Forest was not \"unoccupied\" within the treaty's meaning."], "subsections": []}, {"section_title": "Implications and Considerations for Congress", "paragraphs": ["Congress's plenary authority to govern interactions with Indian tribes remains clear. Congress may at any time expressly disavow any provision of the 1868 Treaty, or may plainly reaffirm its commitment to any Indian treaty that remains in effect. To the latter end, Congress could, if it wished, clarify that the Bighorn National Forest (or other national forests) should be treated as unoccupied lands for the purposes of construing Indian treaty rights. By contrast, Congress could also choose to broadly abrogate hunting and fishing rights in national forests or other areas, but Herrera reaffirms that if Congress does so, it must clearly state that intention."], "subsections": []}]}, {"section_title": "Carpenter v. Murphy", "paragraphs": ["In Carpenter v. Murphy , the Supreme Court is reviewing a decision by the U.S. Court of Appeals for the Tenth Circuit (Tenth Circuit) concerning whether Oklahoma could legally charge and convict Patrick Murphy, a member of the Muscogee (Creek) Nation who was convicted of killing a fellow tribe member. The validity of Murphy's murder conviction may turn on whether his crime was committed within the boundaries of the Muscogee (Creek) reservation\u00e2\u0080\u0094a reservation that Oklahoma says ceased to exist in the early 1900s. Although the Oklahoma state courts rejected Murphy's efforts to overturn his conviction, the Tenth Circuit concluded that the crime did occur on reservation land, and that Oklahoma thus lacked authority to prosecute Murphy.", "Although the Supreme Court heard oral arguments in Carpenter v. Murphy at the end of 2018, it ordered the case restored to the calendar and set for reargument in the October 2019 term. Whether the Court will ultimately agree with the Tenth Circuit's decision is uncertain, but if it does, the decision could have significant consequences beyond Murphy's case. The land where the crime occurred would then be \"Indian country\" under federal law, which Oklahoma says would significantly limit its criminal jurisdiction over offenses committed by Indians on such land. Such a decision could prompt additional litigation concerning the status of other tribal lands within Oklahoma."], "subsections": [{"section_title": "The Major Crimes Act and \"Indian Country\"", "paragraphs": ["The parties have asked the Supreme Court to decide whether the land that was historically designated as belonging to the Muscogee (Creek) Nation constitutes \"Indian country,\" and if so, whether Oklahoma has any criminal jurisdiction over crimes like Murphy's. The federal government (and Congress in particular) has long been recognized as having plenary authority over Indian affairs, so states generally cannot exercise criminal jurisdiction over Indians in \"Indian country\" without federal permission. A federal statute defines \"Indian country\" to mean (1) all land within an Indian reservation, (2) all dependent Indian communities, and (3) all Indian allotments that still have Indian titles. An area qualifies as Indian country if it fits within any of these three categories, meaning a formal designation of Indian lands as a \"reservation\" is not required .", "Federal law establishes parameters for when states may prosecute certain crimes committed within Indian country. Most relevant to this case, the Major Crimes Act reserves federal jurisdiction over certain serious crimes, like murder and kidnapping, when committed by an Indian within Indian country. Federal jurisdiction under the Major Crimes Act generally forecloses overlapping state (though not tribal) jurisdiction, though legislative exceptions permit some states to exercise jurisdiction over such crimes."], "subsections": []}, {"section_title": "The Tenth Circuit Decision", "paragraphs": ["The Supreme Court has explained that Congress alone has the power to change or erase reservation boundaries. Once land is designated as a reservation, it generally stays that way until Congress eliminates (\"disestablishes\") or reduces (\"diminishes\") it. Appealing his state murder conviction to the Tenth Circuit, Murphy contended that the Muscogee (Creek) reservation had never been disestablished and therefore constituted \"Indian country,\" precluding state jurisdiction over his offense. The Tenth Circuit agreed.", "In its decision, the Tenth Circuit briefly described the history of the Muscogee (Creek) reservation. In the 1820s, the federal government forcibly relocated the tribe's members (and members of several other tribes) to what is now present-day Oklahoma. As part of that relocation, the government signed a series of treaties with the Muscogee (Creek) Nation, ultimately giving the tribe a vast area of land roughly equivalent to present-day Oklahoma.", "That tract of land was later reduced. The final reduction occurred after the Civil War, when the Treaty of 1866 required the Muscogee (Creek) Nation to transfer the western half of its new lands back to the United States.", "Though the Muscogee (Creek) Nation later experienced many changes in its relationship with the federal government\u00e2\u0080\u0094most notably related to tribal governance and a push for individual ownership of the land\u00e2\u0080\u0094the boundaries of the Muscogee (Creek) land remained generally unchanged until at least the early 1900s. At that point, the \"unique history\" of Oklahoma began to transition toward statehood, effectively merging eastern Indian lands and western non-Indian lands into a single geographic entity.", "To determine whether Congress intended to disestablish the Muscogee (Creek) reservation land, the Tenth Circuit applied a three-step analysis employed in the Supreme Court's 1984 decision, Solem v. Bartlett . Under this framework, courts examine (1) the language of the governing federal statute; (2) the historical circumstances of the statute's enactment; and (3) subsequent events such as Congress's later treatment of an affected area. Importantly, the Solem framework instructs courts to resolve any uncertainty in favor of the tribes: if the evidence is not clear, courts \"are bound by our traditional solicitude for the Indian tribes to rule that diminishment did not take place and that the old reservation boundaries survived . . . .\" ", "Using this framework, the Tenth Circuit agreed with Murphy that his criminal conduct occurred in Indian country, and Oklahoma therefore lacked jurisdiction over it. Although Oklahoma referenced eight separate federal acts that it viewed as collectively disestablishing the Muscogee (Creek) reservation, the Tenth Circuit ruled that none of those statutes clearly referred to disestablishment, and in some instances reflected Congress's continued recognition of the reservation's borders. Oklahoma's evidence that Congress intended to change its governance over the Muscogee (Creek) reservation failed to convince the Tenth Circuit that Congress also intended to erase the reservation boundaries. Similarly, the Tenth Circuit concluded that events subsequent to legislation cited by Oklahoma insufficiently supported the argument that Congress intended the Muscogee (Creek) reservation to be disestablished. In sum, the Tenth Circuit did not find that Congress clearly intended to disestablish the Muscogee (Creek) reservation, so it concluded that Oklahoma lacked jurisdiction to convict Murphy for a murder occurring on those lands."], "subsections": []}, {"section_title": "Appeal to the Supreme Court", "paragraphs": ["Oklahoma petitioned for certiorari review of the Tenth Circuit's decision, which the Supreme Court granted on May 21, 2018. In its brief to the Court, Oklahoma claimed that no one has treated the relevant land like a reservation since Oklahoma became a state in 1906. It also argued that because Congress broke certain promises in the treaties that had established the reservation, Congress must have intended to disestablish it. According to Oklahoma, it \"is inconceivable that Congress created a new State by combining two territories while simultaneously dividing the jurisdiction of that new State straight down the middle by leaving the former Indian Territory as Indian country.\" In other words, in Oklahoma's characterization of the matter, Congress could not have intended the state to lack jurisdiction over major crimes in half its land mass. Finally, Oklahoma contended that the Solem framework should be inapplicable in the unique context of Oklahoma statehood.", "The federal government made similar arguments in a brief it filed in support of Oklahoma. However, the federal government additionally claimed that Congress had elsewhere granted Oklahoma broad criminal jurisdiction over Indian country, which it said should enable prosecution of cases like Murphy's\u00e2\u0080\u0094regardless of whether his crime was committed in Indian country. More specifically, the United States argued that Congress had eliminated tribal jurisdiction and evinced an intent to have all crimes prosecuted by the same entity (whether committed by or against a tribal member or not) throughout the territory that became Oklahoma; in the United States' view, that intent should not be \"implicitly\" repealed by later statutes like the Major Crimes Act."], "subsections": []}, {"section_title": "Supplemental Briefing Ordered by the Supreme Court", "paragraphs": ["Following oral argument, the Supreme Court ordered both Oklahoma and Murphy to address whether or not Oklahoma would have criminal jurisdiction over cases like Murphy's if the crimes were found to have been committed in Indian country. It also asked the parties to address whether a reservation could ever not qualify as Indian country. These questions might be relevant if, for example, the Court sought additional information to clarify whether it would need to find that the Muscogee (Creek) reservation had been disestablished in order to conclude that Oklahoma could exercise jurisdiction over Murphy. ", "In Murphy's supplemental brief, he began by stressing that Oklahoma had disavowed the argument that it could exercise criminal jurisdiction over him if the Muscogee (Creek) reservation endured. Murphy then argued that Congress has never given Oklahoma jurisdiction to prosecute crimes committed by Indians, and\u00e2\u0080\u0094anticipating the assertion that several statutes could be read together to implicitly accomplish that result\u00e2\u0080\u0094declared that \"when Congress transfers jurisdiction to States, its statutes are bell-clear.\" None of the statutes mentioned by the United States in its briefing, Murphy argued, do anything like clearly grant criminal jurisdiction over tribes and tribal members to the State of Oklahoma.", "Oklahoma adopted the United States' view that it had jurisdiction to prosecute crimes regardless of the Muscogee (Creek) land's status, based on a series of laws passed by Congress between 1897 and 1907. However, the state asked the Court not to \"leave open whether [Muscogee (Creek) and other historical territories] constitute Indian reservations today,\" arguing that such a decision \"risks undermining the convictions of many federal prisoners\" and \"may also undermine federal and tribal authority currently exercised on restricted allotments and trust lands.\"", "Both Murphy and Oklahoma answered the Court's second question in the negative: they agreed, under current law a federally established reservation always constitutes \"Indian country\" under the governing statute."], "subsections": []}, {"section_title": "Anticipating the U.S. Supreme Court's Decision", "paragraphs": ["The Supreme Court heard oral arguments in this case on November 27, 2018. Justice Gorsuch was not present at oral arguments and is not slated to participate in deciding the case\u00e2\u0080\u0094presumably because he participated in earlier discussions about this case while he was still a judge on the Tenth Circuit. A decision was expected by the end of the Supreme Court's 2018 term, but on June 27, 2019, the Court ordered this case restored to the calendar for reargument in the next term.", "If the Supreme Court reverses the Tenth Circuit and finds that the Muscogee (Creek) reservation was disestablished, Murphy's conviction and death sentence would be reinstated, and Oklahoma would presumably continue to prosecute cases like Murphy's. But if the Supreme Court agrees with Murphy and the Tenth Circuit that the Muscogee (Creek) reservation has not been disestablished, the decision's ramifications for federal, state, and tribal jurisdiction in the eastern half of Oklahoma might be significant, and could extend well beyond the Muscogee (Creek) reservation. In addition to the Muscogee (Creek) Nation, several other tribes were forcibly relocated to Oklahoma under similar circumstances and under the same or similar treaties. The parties in Murphy filed a joint appendix containing several historical maps depicting reservation boundaries in Oklahoma in the early 1900s. Oklahoma has argued that, if those statutes did not disestablish the Muscogee (Creek) reservation, similar arguments could be maintained with respect to other lands comprising most of eastern Oklahoma. If the Supreme Court agrees with the Tenth Circuit that Congress never disestablished reservations like the one in this case, Oklahoma argues that its ability to prosecute many crimes in the eastern part of the state would be significantly narrowed. According to Oklahoma and some amici, the Tenth Circuit's decision \"would create the largest Indian reservation in America today . . . . That revolutionary result would shock the 1.8 million residents of eastern Oklahoma who have universally understood that they reside on land regulated by state government, not by tribes.\" If a significant part of Oklahoma is Indian country, then the burden would shift to the federal and tribal governments to prosecute many offenses involving Indian offenders or victims \u00e2\u0080\u0094at least, absent other federal statutory authority allowing the state to prosecute.", "However, other amici have joined Murphy in arguing that the Tenth Circuit's decision should be upheld. Some, including the Muscogee (Creek) Nation, contend that recognition of the Muscogee (Creek) reservation's continued existence would leave intact most state and local functions on those lands. For example, the Muscogee (Creek) Nation argues that even on reservation land, state and local governments retain most civil jurisdiction, including taxing and zoning authority.", "The Supreme Court might also seek to avoid the question of whether the Muscogee (Creek) reservation still exists. For example, the Supreme Court could decide either to reassess the approach it endorsed in Solem , or\u00e2\u0080\u0094as suggested by Tenth Circuit Chief Judge Tim Tymkovich\u00e2\u0080\u0094conclude that the Solem framework is ill-suited to the unique circumstances surrounding Oklahoma's statehood. Alternatively, the Court could adopt the federal government's argument that Oklahoma had jurisdiction to prosecute Murphy because earlier statutes granted such jurisdiction, thereby rendering the Major Crimes Act inapplicable."], "subsections": []}, {"section_title": "Implications and Considerations for Congress", "paragraphs": ["Regardless of the Supreme Court's decision, the choice to disestablish a reservation still lies solely with Congress. If the Supreme Court agrees that the Muscogee (Creek) reservation still exists, a statute clearly disestablishing it would limit this case's applicability in the future. Congress could also pass a law expressly giving Oklahoma jurisdiction to prosecute major crimes in Indian country if the Supreme Court holds that no such law currently exists.", "If the Supreme Court disagrees with the Tenth Circuit and holds that the Muscogee (Creek) reservation no longer exists, Congress could\u00e2\u0080\u0094depending on the exact grounds of the ruling\u00e2\u0080\u0094countermand that decision by reestablishing or clarifying the continued existence of the Muscogee (Creek) reservation."], "subsections": []}]}]}}
{"id": "R46300", "title": "Adding Countries to the Visa Waiver Program: Effects on National Security and Tourism", "released_date": "2020-04-01T00:00:00", "summary": ["The Visa Waiver Program (VWP), which allows citizens of certain countries to visit the United States for up to three months without a visa, has two explicit missions: to enhance national security and to boost the U.S. travel and tourism sectors. On November 8, 2019, the United States designated Poland into the VWP, bringing the number of participating countries to 39. A concern for Congress is whether the VWP exposes the United States to security threats, despite implementation of strict security requirements over recent years. At the same time, because of longstanding congressional interest in promoting the U.S. travel and tourism sectors, many lawmakers support adding more countries to the VWP.", "A key goal of the VWP is to improve standards for aviation security, travel documents, and law enforcement in countries around the world. To qualify for the VWP, countries must issue electronic passports, report information on all lost and stolen passports to the United States through the International Criminal Police Organization (INTERPOL), and share information on travelers who may pose a terrorist or criminal threat. Every VWP traveler must obtain preclearance to board a flight to the United States through the Electronic System for Travel Authorization (ESTA). Supporters of the VWP see admission into the program as an incentive for foreign countries to increase their security infrastructure and information sharing with the United States. A competing view is that despite security improvements following the 2015 terrorist attacks in Europe, such as screening of passengers entering under the VWP based on past travel to a country known as a terrorist sanctuary, the program remains a national security vulnerability.", "Another objective of the VWP is to facilitate and encourage foreign business and leisure travel from high-volume and low-risk countries to the United States. In FY2018, 22.8 million nonimmigrant visitors\u00e2\u0080\u0094constituting nearly one-third of all visitor admissions to the United States\u00e2\u0080\u0094arrived through the VWP. Figures from U.S. Travel, the industry group representing travel and tourism organizations, show that nationals from VWP countries generated an estimated $190 billion in economic activity and supported close to 1 million jobs in the United States in 2017. In addition, the U.S. government's National Travel and Tourism Office (NTTO) reports that a record 80 million international travelers visited the United States in 2018, with the number falling slightly in 2019. The number of foreign visitor arrivals in 2019 indicated that the United States would likely fall short of the goal set by the federal government's travel and tourism strategy of attracting 100 million visitors annually by the end of 2021. The COVID-19 pandemic has sharply reduced foreign tourism in 2020 as countries have discouraged international travel and required arriving passengers to quarantine themselves for extended periods, probably putting the 2021 goal out of reach. Nonetheless, advocates for the U.S. travel and tourism industries argue that adding more countries to the VWP would further promote tourism, trade, and commerce by increasing the number of overseas visitors traveling to the United States.", "Activity in the 116 th Congress related to the VWP seeks to expand the number of countries by changing the qualification criteria or designating specific countries. Other bills would rename the VWP to \"Secure Travel Partnership\" to reflect one of its main goals of securing U.S. borders. Legislation in the 116 th Congress also addresses the ESTA fee paid by VWP applicants. In December 2019, Congress authorized the continued use of the ESTA fee to partially fund Brand USA, a national tourism promotion program, through September 30, 2027. Congress also raised the ESTA fee from $14 to $21 (Division I, Title 8 of P.L. 116-94 ). The effective date of the new ESTA fee has not yet been announced."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["The U.S. government's Visa Waiver Program (VWP) allows eligible nationals from 39 countries to enter the United States for stays of fewer than 90 days for tourism or business purposes without applying for a visa from a U.S. embassy or consulate (see Figure 1 ). Originally established in 1986 as a pilot program, the VWP was made permanent in 2000. VWP countries now account for the largest group of visitors to the United States other than travelers from neighboring Canada and Mexico. In FY2018, 22.8 million VWP visitors were admitted to the United States, the largest number of people ever to enter under the program in a single year, up almost 30% from 17.6 million in FY2008.", "Countries that want to join the VWP must meet strict criteria, including signing on to information-sharing agreements, issuing tamper-proof travel documents, and upholding security standards at their borders. Travelers from VWP countries are not automatically guaranteed admission into the United States. Every VWP traveler must obtain preclearance to board a flight or ship to the United States through the Electronic System for Travel Authorization (ESTA). This web-based application checks the traveler's information against relevant law enforcement and security databases and determines eligibility for travel under the VWP. In addition, as with all international travelers, Customs and Border Protection (CBP) officers may deny entry to a VWP traveler upon arrival.", "This report offers an overview of the VWP. It discusses the potential effects on national security and considers the likely economic effects on the U.S. travel and tourism industries if more countries were to be added to the program. The report also reviews legislative proposals in the 116 th Congress related to the expansion and implementation of the VWP, and legislation targeting U.S. travel promotion\u00e2\u0080\u0094\u00e2\u0080\u0094namely the Brand USA program, which is partially funded by ESTA. "], "subsections": []}, {"section_title": "Visa Waiver Program Designation", "paragraphs": ["The Department of Homeland Security (DHS), in consultation with the Department of State (DOS), has the authority to designate participants into the VWP. The Secretary of State must formally make the nomination; DHS then conducts a final review and certifies that the aspiring participant meets all the requirements. To be eligible, a country must comply with an extensive list of conditions specified in several different laws. It must", "offer reciprocal privileges to U.S. citizens; have had a nonimmigrant visitor visa refusal rate of less than 3% for the previous year or a lower average percentage over the previous two fiscal years; issue electronic, machine-readable passports that contain a biometric identifier (known as e-passports ); certify that it issues tamper-resistant, machine-readable visa documents that incorporate biometric identifiers, which are verifiable at the country's port of entry; certify that it has in place mechanisms to validate machine-readable passports and e-passports at each port of entry; enter into an agreement with the United States to report or make available through INTERPOL information about the theft or loss of passports no later than 24 hours after a theft or loss is reported to the VWP country; certify, to the maximum extent allowed under its laws, that it is screening each foreign national who is admitted or departs, using relevant INTERPOL databases and notices, or other means designated by the Secretary of Homeland Security (this requirement only applies to countries that have an international airport); accept the repatriation of any citizen, former citizen, or national against whom a final order of removal from the United States is issued no later than three weeks after the order is issued; enter into and fully implement an agreement with the United States to share information regarding whether a national traveling to the United States represents a threat to U.S. security or welfare; and be determined, by the Secretary of Homeland Security, in consultation with the Secretary of State, not to compromise the law enforcement or security interests of the United States by its inclusion in the program.", "As of March 2020, 31 European countries, 7 Asia-Pacific countries, and 1 country in South America are in the program (see Figure 1 )."], "subsections": [{"section_title": "Nonimmigrant Visitor Visa Refusal Rate Versus Overstay Rate", "paragraphs": ["One of the VWP criteria\u00e2\u0080\u0094the nonimmigrant, or temporary, visitor visa refusal rate\u00e2\u0080\u0094has been the subject of scrutiny by Congress. This rate represents the proportion of individuals whose applications for tourist or business visas have been rejected by U.S. consular officials in their home countries. When the VWP was conceived, some legislators argued that the number of nonimmigrants who overstay the terms of their entry under the VWP would be a better standard for future program participation, as the nonimmigrant visitor visa refusal rate is not based on the actual behavior of nonimmigrants. However, DHS is not able to calculate overstay rates accurately; because it relies on information from passenger manifests, persons entering by air or sea but exiting at a land port of entry may be mischaracterized as overstays.", "Advocates of expanding the VWP contend that the 3% nonimmigrant visitor visa refusal rate criterion, which has been a significant barrier to entry into the VWP, should be replaced with the overstay rate, or the refusal rate threshold should be raised and used in conjunction with the overstay rate.", "Some advocates have called for the return of the nonimmigrant visitor visa refusal rate waiver, which was available from October 2008 to July 2009. The waiver allowed DHS to admit into the VWP countries that had met all of the security requirements if they had a low overstay rate and a declining nonimmigrant visitor visa refusal rate that was below 10% in the previous fiscal year. Due to this waiver, eight countries that otherwise would not have qualified for the VWP were added in 2008. For current aspiring VWP countries, a complicating factor is that the Secretary of Homeland Security's authority to waive the nonimmigrant visitor visa refusal rate is suspended until the airline passenger exit system is able to match an alien's biometric information with relevant watchlists and manifest information .", "In FY2018, all the VWP countries had DHS-estimated overstay rates of less than 0.5% (Poland, which had not yet been admitted to the VWP, had a DHS-estimated overstay rate of less than 1%). The worldwide DHS-estimated overstay rate for non-VWP countries in FY2018 was 2%. Figure 2 shows the most recently available nonimmigrant visitor visa refusal rates and the DHS-estimated overstay rates for selected aspiring VWP countries. All of these countries (except Brazil) had a nonimmigrant visitor visa refusal rate of less than 10% in FY2019, and all of them had a DHS-estimated overstay rate of less than 2% in FY2018."], "subsections": []}]}, {"section_title": "Adding Countries to VWP", "paragraphs": ["Since the establishment of the VWP, the number of participating countries has been increased several times and two countries have been removed. The United Kingdom was the first country to be admitted, in July 1988, followed by Japan in December of the same year (see Figure 3 ). Six countries were added in 1989. An additional 13 countries were admitted in 1991, and another eight countries joined from 1993 to 1999. There was a gap until 2008, when another eight countries were admitted. In the past 10 years, Chile, Greece, Taiwan, and, most recently, Poland have been added. Adding countries to the VWP is done through bilateral negotiations, and membership is often perceived as evidence of close ties with the United\u00c2\u00a0States. Argentina and Uruguay are the only two countries that have been removed from the program, in 2002 and 2003, respectively."], "subsections": [{"section_title": "", "paragraphs": [], "subsections": []}, {"section_title": "Aspiring VWP Countries", "paragraphs": ["Since 2010, DHS has admitted four countries into the VWP ( Figure 3 ). Many other countries would like to join the program to make it easier for their nationals to travel to the United States. In 2005, the George W. Bush Administration began providing countries interested in joining the VWP with road maps to aid them in meeting the program's criteria. The original 13 aspiring countries were Bulgaria, Cyprus, Czech Republic, Estonia, Greece, Hungary, South Korea, Latvia, Lithuania, Malta, Poland, Romania, and Slovakia. Of these, 10 have since been admitted. This report examines a selected list of aspiring VWP countries: Argentina, Brazil, Bulgaria, Croatia, Cyprus, Israel, Romania, and Uruguay (see Figure 1 ). ", "Four currently aspiring countries\u00e2\u0080\u0094Bulgaria, Croatia, Cyprus, and Romania\u00e2\u0080\u0094are in the European Union (EU). They are the only EU countries not in the VWP. U.S. citizens are permitted to travel to all the EU member states for short-term business or tourism purposes without a visa, whereas citizens of the four EU countries outside the VWP need a visa to travel to the United States. The European Commission has pointed out that the United States is the only country on the EU's visa-free list that does not fully reciprocate, adding that \"visa reciprocity is a fundamental principle of the European Union's common visa policy.\" The European Union considered suspending its visa waiver for U.S. nationals in 2017, but decided not to do so. ", "Israel has also been vocal about wanting to enter the VWP, but it has faced challenges meeting certain criteria. For instance, Israel's Biometric Database Law prohibits sharing fingerprint data with foreign authorities, though reportedly the United States and Israel came to an agreement to share data for those with a criminal background. Another hurdle for Israel is that to become a VWP member, foreign countries must treat all American visa applicants equally; however, Israel has been accused of discriminating against Arab Americans. Moreover, Israel has yet to meet the 3% nonimmigrant visitor visa refusal rate criterion; its rate was 5.33% in FY2019. ", "Brazil is often included in reports about aspiring VWP countries. It has recently made changes to its visa policy for U.S. citizens. In June 2019, Brazil introduced visa-free entry for U.S. citizens and citizens of three other countries, reportedly to stimulate tourism. "], "subsections": []}, {"section_title": "Countries Removed from the VWP", "paragraphs": ["A country can be terminated from the program if the Secretary of Homeland Security, in consultation with the Secretary of State, determines that a country's participation in the VWP undermines U.S. law enforcement, including immigration enforcement.", "Argentina and Uruguay are former members of the VWP. Argentina joined in 1996, but the United States removed it in 2002 after poor economic conditions in the country led to an increase in the number of Argentine nationals entering the United States without visas and remaining illegally past the 90-day period of admission. Uruguay joined in 1999, but it was removed in 2003 because a recession led to an increasing number of Uruguayan citizens entering the United States under the VWP to live and work illegally."], "subsections": []}]}, {"section_title": "National Security", "paragraphs": ["National security is a key goal of the VWP. Over the years, Congress has continued to add security criteria for VWP participation. One of the VWP's most significant security additions was ESTA, which was put in place in 2009 and is administered by DHS. In addition, several laws require VWP partner countries to share information with the United States and to set standards for travel documentation. Nevertheless, debate remains as to whether the VWP sufficiently vets individual travelers prior to arrival at a U.S. port of entry. "], "subsections": [{"section_title": "Electronic System for Travel Authorization (ESTA)", "paragraphs": ["Before traveling to the United States, a VWP traveler must submit biographical information through DHS's ESTA. This web-based application checks the traveler's information against relevant law enforcement and security databases and determines eligibility for travel under the VWP. ESTA alerts the foreign national whether he or she has been approved to travel. If not approved, the individual must obtain a visa prior to coming to the United States. This normally involves making an appointment for an interview with a U.S. consular official, a process that could delay the individual's departure for the United States. ", "ESTA became fully operational for all VWP visitors traveling to the United States by airplane or cruise ship on January 12, 2009. Prior to the implementation of ESTA, the first time a foreign national traveling under the VWP to the United States was screened was after checking in for a flight to the United States at a foreign airport. Under the current system, at the time a foreign national submits an ESTA application (at least 72 hours before travel), he or she is screened against a number of security databases, including the Terrorist Screening Database; TECS (not an acronym), a system used by U.S. Customs and Border Protection officers to screen arriving travelers to the United States; the Automated Targeting System; and INTERPOL's Lost and Stolen Passport database. Appendix B offers an explanation of these systems and databases. ", "An ESTA authorization is generally valid for multiple entries over a period of two years. Throughout this period, the ESTA system continually vets approved individuals' information against these databases. DHS can immediately revoke an ESTA approval if new derogatory information is discovered. In addition, the validity period can be shortened at any time for any reason. ESTA only screens against biographical security databases; VWP travelers do not submit biometric information (e.g., fingerprints and photographs) until they reach a U.S. port of entry, at which point their biometrics are run through multiple security databases. ", "Notably, a determination under ESTA that a foreign national is eligible to travel to the United States does not constitute a determination that the individual is admissible. The foreign national may still be deemed inadmissible and denied entry by CBP inspectors upon arrival at a U.S. port of entry.", "Travelers who use ESTA pay a $14 fee, which was instituted in September 2010. The fee includes $4 to cover the costs of administering ESTA and $10 for the travel promotion fee established by Congress in the Travel Promotion Act of 2009. In December 2019, the Further Consolidated Appropriations Act of 2020 directed that the ESTA fee be raised to $21 (see section on \" The VWP and U.S. Travel Promotion Efforts \"). This fee increase has not been put into effect."], "subsections": []}, {"section_title": "Security Debate", "paragraphs": ["Although there tends to be agreement that the VWP benefits the U.S. economy by facilitating tourism ( see section on \" U.S. Travel and Tourism Economy \") , disagreement exists about VWP's effect on national security. The VWP contains provisions that affect national security at two levels: country-to-country security agreements and individual traveler security screening. "], "subsections": [{"section_title": "Country-to-Country Security Agreements", "paragraphs": ["To participate in the VWP, countries must agree to share extensive information with the United States about lost passports, known and suspected terrorists, and serious criminals. Since 2015, the Secretary of Homeland Security had been authorized to immediately suspend a country's participation in the VWP if the country fails to provide information related to security threats. ", "The VWP also sets standards for participating foreign countries' passports, visas, and border security. As previously mentioned, VWP countries must issue biometric e-passports and tamper-resistant, machine-readable visa documents. Furthermore, since December 2017, DHS requires VWP countries to use U.S. counterterrorism information to screen travelers crossing their borders and to implement certain aviation security measures. ", "Moreover, foreign countries' participation in the VWP allows the United States to monitor their border operations. Since 2002, DHS is statutorily obligated to assess and report on VWP countries' compliance with VWP criteria every two years. Thus, to remain in the program participating countries are subject to regular audits of their security operations, which include \"rigorous and thorough inspection of airports, seaports, land borders, and passport production/issuance facilities as well as continuous monitoring.\" According to DHS, \"no other program enables the U.S. Government to conduct such broad and consequential assessments of foreign partners' border security operations.\" ", "The possibility of joining the VWP is an incentive for aspiring VWP countries to share such information and improve their border security. According to DHS, \"many countries not in the VWP complete program requirements in the hope of joining the program.\" For participating countries that wish to remain in the VWP program, DHS contends that \"VWP requirements provide our allies with the impetus to implement security measures that can sometimes be politically challenging for them, like amending legislation and updating their data privacy frameworks.\""], "subsections": []}, {"section_title": "Individual VWP Traveler Screening", "paragraphs": ["The vetting of VWP travelers contains some features absent from the traditional screening required to receive a nonimmigrant visitor visa for business and tourist travel. As previously mentioned, ESTA screens the data of those authorized for VWP travel on a daily basis throughout ESTA's two-year validity period; new derogatory information could result in a denial of ESTA authorization. In contrast, many nonimmigrant visitor visas are valid for 10 years and are not continuously vetted. Moreover, travelers entering under the VWP must present e-passports, which tend to be more difficult to alter than other types of passports.", "VWP travelers do not undergo the same screening required of travelers from most countries to receive a nonimmigrant visitor visa, which typically includes a personal interview with a U.S. consular officer. As such, VWP travelers' first face-to-face encounter with U.S. officials could be at a port of entry. Additionally, ESTA is a name-based system and cannot be used to run checks against databases that use biometrics, such as the Automated Biometric Identification System and Next Generation Identification. However, when VWP travelers enter the United States, CBP takes their fingerprints and photographs and checks them against these biometric systems. Finally, visitor visa applicants are required to submit social media identifiers, but this is optional for VWP travelers. ", "Another concern, following a number of high-profile terrorist attacks in Europe in recent years perpetrated mainly by European citizens, has been the possible threat posed by nationals from VWP countries who are aligned with the Islamic State. A focus had been on radicalized citizens of VWP countries who could have fought in the Middle East for the Islamic State or other terrorist groups. Conceivably, these individuals may have been able to travel to the United States under the VWP if there was no derogatory information about them in U.S. biographic databases. In response, Congress passed the Visa Waiver Program Improvement and Terrorist Travel Prevention Act, enacted as part of the FY2016 Consolidated Appropriations Act. This makes citizens of VWP countries ineligible for admission to the United States under the VWP if they are dual nationals of the Democratic People's Republic of Korea, Iran, Iraq, Sudan, or Syria or had been present in any of those countries, or in Libya, Somalia, or Yemen, at any time on or after March 1, 2011 (with limited exceptions). These individuals can still apply for a visa to travel to the United States. ", "Another point of contention is whether the VWP threatens the United States' immigration enforcement interests. As of December 2017, VWP countries that have an overstay rate of over 2% must initiate a public information campaign to educate their citizens about the conditions for admission to the United States. If this does not reduce overstay violations, a country could be removed from the program, as occurred with Argentina and Uruguay in 2002 and 2003, respectively. "], "subsections": []}]}]}, {"section_title": "U.S. Travel and Tourism Economy", "paragraphs": ["A principal objective of the VWP is to boost the U.S. travel and tourism sectors by encouraging travel from high-volume and low-risk countries to the United States. The number of international visitors arriving in the United States totaled 79.3 million in 2019, down slightly from a record high of 79.7 million in 2018. Because of the sharp decline in international travel in the wake of the COVID-19 pandemic, many international flights have been cancelled and visitor volume is likely to fall sharply in 2020.", "In 2018, the travel and tourism sectors accounted for 2.9% of U.S. gross domestic product, a larger share than many other industries, including agriculture, mining, or utilities, and they directly and indirectly employed 9.2 million workers. ", "Every dollar international visitors spend in the United States counts as an export. Collectively, foreign visitors spent about $256 billion in 2018 on domestic passenger fares aboard U.S. airlines and on travel-related goods and services, which makes tourism the United States' single-largest services sector export. Every year since 1989, the U.S. travel and tourism industries have posted a trade surplus, which in 2018 was $69.6 billion. Travel- and tourism-related exports accounted for 31% of all U.S. services exports and 10% of total exports in 2018. ", "Each overseas visitor spends, on average, about $4,200 per trip in the United States on travel activities such as shopping, lodging, dining, and sightseeing. According to the Bureau of Economic Analysis (BEA), international travelers account for a disproportionate amount of all travel and tourism spending in the United States. One reason for this is that international visitors have relatively longer stays than domestic visitors, spending, on average, 18 nights in the United States. ", "Travelers from VWP countries are among the highest in spending and visitor volume (see Table 1 ). However, an increasing number of overseas visitors come from non-VWP countries, notably China, Venezuela, Brazil, and India. Combined, these four non-VWP countries accounted for nearly 6.7 million visitors to the United States in 2019, down 4% from a year earlier. Travelers from these countries spent more than $5,000 on average per trip during their visits to the United States, with visitors from China leading in country-level travel spending. Spending in the United States by visitors from large source markets has risen substantially in recent years, up 45% from China and 78% from India since 2013. "], "subsections": [{"section_title": "Global Competitiveness of the U.S. Travel and Tourism Sectors", "paragraphs": ["Although the number of foreign visitors to the United States has continued to rise, the U.S. share of total global tourism arrivals declined from 6.4% in 2015 to 5.7% in 2017, the most recent year for which statistics are available. One reason for this declining market share is that it is now much easier for travelers to visit many parts of the world, including Asia and Africa, compared to a few years ago. ", "In 2012, the Obama Administration established a Task Force on Travel and Competitiveness, which set a goal of welcoming 100 million international visitors in 2021. Among other things, the task force recommended expediting visa processing for tourists from certain emerging economies, such as China and Brazil, and adding countries to the VWP in order to encourage tourism. Before the advent of the global pandemic (COVID-19) in 2020, the U.S. government had forecasted that the volume of tourist arrivals would not meet the task force's goal, with the number of total international visitors to the United States expected to reach close to 82.9 million in 2021. It is too early to know what the repercussions of shutting down a significant share of overseas travel to the United States may mean for the U.S. travel and tourism industries. Current indications suggest that the stated goal in overseas travelers to the United States is beyond reach by 2021 as potential visitors modify their travel plans."], "subsections": []}, {"section_title": "Economic Impact of Visitors from VWP Countries", "paragraphs": ["Determining whether the VWP has directly led to increased travel to the United States is not straightforward because many factors affect international travel, including general economic conditions, currency exchange rates, and even the nature of bilateral relations. Nevertheless, the VWP could be a factor that has encouraged more visits to the United State because it arguably reduces uncertainty, inconvenience, and costs associated with a visa application. ", "Of the 37 nations in the VWP as of 2012, all but 10 recorded an increase in the volume of tourists and business visitors to the United States from FY2013 to FY2018. Three-fourths of the top 20 countries by number of VWP visitors recorded double-digit growth rates in VWP admissions over this period, including Taiwan, South Korea, Spain, and New Zealand, although the annual change for VWP countries has been uneven. Germany, Austria, Switzerland, and Japan are among the 20 VWP countries that posted drops in U.S. VWP admissions between FY2013 and FY2018 (see Table 2 ). "], "subsections": []}, {"section_title": "Economic Impact of Adding New Countries to the VWP", "paragraphs": ["U.S. Travel, an advocacy group for the travel industry, has produced several analyses of the effects of adding countries to the VWP. All of the organization's reports conclude that adding new countries to the program would yield positive results. For example, in a 2014 report U.S. Travel estimated that if Brazil, Bulgaria, Croatia, Israel, Poland, Romania, and Uruguay were included in the program, annual visitation from those countries would increase by more than 500,000, adding $5.3 billion per year to the U.S. economy and supporting 31,600 additional jobs in the United States. Likewise, an economic analysis of U.S. Department of Commerce data on travel and tourism from 1980 to 2013 found that the VWP had a \"meaningful impact driving increases in U.S. tourist volumes.\" In a 2019 report, U.S. Travel predicted that over the first three years of Poland's participation in the VWP, travel spending by Polish visitors to the United States would increase by $312 million, the number of Polish arrivals would rise by 97,000, and visitors from Poland would support 4,200 American jobs.", "Visitors from the four non-VWP EU countries (Bulgaria, Croatia, Cyprus, and Romania), who currently enter the United States on nonimmigrant visitor visas, accounted for approximately 1% of total EU visitor spending in the United States in 2018 (approximately $580 million). This seems to suggest that the overall economic effect of adding these four countries to the VWP would likely be relatively small. According to an estimate by U.S. Travel, the number of arrivals in the United States from these countries would increase by nearly 73,000 visitors at the end of the first three years after joining the VWP. In a separate report, U.S. Travel projected that if Romania were to become a VWP country, annual arrivals from the country would increase by 38,000 and bring $128 million in additional travel spending to the United States. Both reports were prepared before the COVID-19 pandemic interrupted international travel in 2020.", "According to figures from the Department of Commerce spending by Israeli visitors in 2018 in the United States on passenger fares and travel-related goods and services was nearly $1.8 billion. U.S. Travel estimated in 2019 that if Israel were admitted to the VWP, an additional 450,200 Israeli travelers would visit the United States over a three-year period, generating $1.2 billion in travel spending. ", "The U.S. travel and tourism industries support expanding the VWP to other countries, especially populous countries such as Brazil. Brazil was the fifth-largest tourism source market for the United States, with 2.1 million Brazilians visiting in 2018. As shown in Table 1 , average spending per Brazilian visitor to the United States was $5,200 in 2018, among the highest of all source countries. The number of visitors from Brazil is projected to reach 2.6 million by 2024 even if Brazil is not admitted to the VWP. In November 2019, the United States announced that Brazil will soon join the Global Entry program, which will reduce waiting time for approved Brazilian visitors arriving at U.S. airport immigration checkpoints. "], "subsections": []}, {"section_title": "The VWP and U.S. Travel Promotion Efforts", "paragraphs": ["The VWP is closely related to the promotion of foreign tourism to the United States. The United States no longer has a central agency to promote travel to it; the National Travel and Tourism Office (NTTO), within the International Trade Administration of the U.S. Department of Commerce, mainly provides official tourism statistics. Travel promotion is the responsibility of Brand USA (formally known as the Corporation for Travel Promotion), a nonprofit public-private entity that also is charged with communicating U.S. visa and entry policies to overseas visitors. Brand USA was established under the Travel Promotion Act of 2009 ( P.L. 111-145 ) and began operations in May 2011. In addition to private funding, since 2010 Brand USA has received $10 of the $14 fee paid by each prospective visitor from a VWP country who requests approval to travel to the United States through ESTA. In 2019, Congress approved raising the ESTA fee from $14 to $21, while reducing the amount available to Brand USA to $7 per traveler. Of the remainder, $4 will continue to go to CBP to cover the costs of administering ESTA, and $10 will be directed to the U.S. Treasury for the general fund. The effective date of the new ESTA fee has not yet been announced.", "Brand USA is not without controversy. The Trump Administration's FY2021 budget called for ending the federal grant that matches the private sector contributions to Brand USA and making the revenue available to the U.S. Treasury to reduce the federal deficit. Brand USA remains controversial among other travel and tourism stakeholders too, with some critics asserting that promotion of tourism should be left to the private sector. For example, Airlines for America, an airline industry group representing U.S. carriers, opposed Brand USA's reauthorization, asserting that ESTA funds would be better spent by CBP on border security, vetting travelers and refugees, and modernizing entry and exit processes. ", "In another effort to promote travel and tourism, the United States has indicated that it is considering rejoining the United Nations' World Tourism Organization (UNWTO), which was established in 1975 to promote tourism worldwide. The United States was one of its founding members, but withdrew in 1996 after Congress stopped funding the United States Travel and Tourism Administration. In June 2019, the Trump Administration announced that the United States may rejoin the UNWTO. The announcement met with some criticism, and the Administration has subsequently taken no action. Other countries with large travel and tourism sectors that are not members of the UNWTO include the United Kingdom, Canada, and Australia."], "subsections": []}]}, {"section_title": "Legislation in the 116th Congress", "paragraphs": ["Proposals introduced in the 116 th Congress would give DHS greater flexibility to admit countries into the VWP that do not meet the criteria discussed above. Representative Mike Quigley introduced the Jobs Originated through Launching Travel (JOLT) Act ( H.R. 2187 ) , which would reinstate DHS's authority to grant a waiver for the nonimmigrant visitor visa refusal rate. That bill would also change the name of the VWP to Secure Travel Partnership. H.R. 1996 , also introduced by Representative Quigley, would solely rename the VWP to Secure Travel Partnership. Representative Dan Lipinski introduced the Allied Nations Travel Modernization Act ( H.R. 2946 ), which would allow countries to be designated into the VWP if, instead of a low nonimmigrant visitor visa refusal rate, they have a low visa overstay rate and agree to spend 2% of their gross domestic product on defense; according to the sponsor, the bill was drafted \"to create an alternative pathway into the program for NATO nations like Poland.\" As noted above, Poland was recently designated into the VWP. In previous Congresses, numerous bills have been introduced to designate Israel and Hong Kong into the VWP.", "Senator John Cornyn introduced the Humanitarian Upgrades to Manage and Assist our Nation's Enforcement (HUMANE) Act of 2019 ( S. 1303 ); among other provisions, it seeks to deter VWP overstays by amending the Immigration and Nationality Act's terms and conditions of admission for VWP travelers, the VWP waiver of rights, and the detention and repatriation of visa waiver violators. ", "The 116 th Congress also addressed the spending of ESTA funds. Senator Mike Enzi introduced the Responsibly Enhancing America's Landscapes Act ( S. 2783 ), which would establish the National Park Service Legacy Restoration Fund to help with the backlog of maintenance projects in national parks. This fund would be paid for by increasing the ESTA fee by $16, along with an increase in nonimmigrant visitor visa fees by $25 and a park fee increase of $5. The Further Consolidated Appropriations Act of 2020 ( P.L. 116-94 ), which passed in December 2019, extended the authority for Brand USA to receive fees from the VWP through the end of September 2027 and raised the ESTA fee (as described in \" The VWP and U.S. Travel Promotion Efforts \" section above). The private sector still must provide at least $100 million per year in in-kind contributions and cash to the Brand USA program in order for it to receive these federal funds. ", "Appendix A. Temporary Visitors to the United States for Business or Pleasure from Selected Aspiring VWP Countries ", "Appendix B. Selected Immigration Inspections Databases and Systems"], "subsections": []}]}}
{"id": "R45924", "title": "U.S. Farm Income Outlook: August 2019 Forecast", "released_date": "2019-09-19T00:00:00", "summary": ["This report uses the U.S. Department of Agriculture's (USDA) farm income projections (as of August 30, 2019) and agricultural trade outlook update (as of August 29, 2019) to describe the U.S. farm economic outlook. According to USDA's Economic Research Service (ERS), national net farm income\u00e2\u0080\u0094a key indicator of U.S. farm well-being\u00e2\u0080\u0094is forecast at $88 billion in 2019, up $4 billion (+4.8%) from last year. However, the forecast rise in 2019 net farm income is largely the result of a 42.5% increase in government payments to the agricultural sector valued at $19.5\u00c2 billion (highest since 2005).", "USDA's support outlays forecast for 2019 include nearly $11 billion in direct payments made under trade assistance programs intended to help offset foreign trade retaliation against U.S. agricultural products, as well as payments under traditional farm programs. Without this federal support, net farm income would be lower, primarily due to the outlook for continued weak prices for most major crops. Commodity prices are under pressure from large planted acreage estimates of corn and soybeans in 2019, large carry-in stocks from a record soybean and near-record corn harvest in 2018, and diminished export prospects due to the ongoing trade dispute with China. Should these conditions persist into 2020, they would signal the potential for continued dependence on federal programs to sustain the U.S. agricultural sector in 2020.", "Since 2008, U.S. agricultural exports have accounted for a 20% share of U.S. farm and manufactured or processed agricultural sales. In 2018, total agricultural exports were estimated up 2% at $143.4 billion. However, abundant supplies in international markets, strong competition from major foreign competitors, and the ongoing U.S.-China trade dispute are expected to shift trade patterns and lower U.S. agricultural export prospects significantly (-6%) to a projected $134.5 billion in 2019.", "Farm asset value in 2019 is projected up from 2018 to $3.1 trillion (+2%). Farm asset values reflect farm investors' and lenders' expectations about long-term profitability of farm sector investments. U.S. farmland values are projected to rise 1.8% in 2019, similar to the increases of 1.9% in 2018 and 2.3% in 2017. Because they comprise such a large portion of the U.S. farm sector's asset base (83%), change in farmland values is a critical barometer of the farm sector's financial performance. However, another critical measure of the farm sector's well-being is aggregate farm debt, which is projected to be at a record $415.7 billion in 2019\u00e2\u0080\u0094up 3.4% from 2018. Both the debt-to-asset and the debt-to-equity ratios have risen for seven consecutive years, suggesting a weakening of the financial situation for the U.S. farm sector.", "At the farm household level, average farm household incomes have been well above average U.S. household incomes since the late 1990s. However, this advantage derives primarily from off-farm income as a share of farm household total income. Since 2014, over half of U.S. farm operations have had negative income from their agricultural operations. Furthermore, the farm household income advantage over the average U.S. household has narrowed in recent years. In 2014, the average farm household income (including off-farm income sources) was about 77% higher than the average U.S. household income. In 2017 (the last year with comparable data), that advantage was expected to decline to 30%."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["The U.S. farm sector is vast and varied. It encompasses production activities related to traditional field crops (such as corn, soybeans, wheat, and cotton) and livestock and poultry products (including meat, dairy, and eggs), as well as fruits, tree nuts, and vegetables. In addition, U.S. agricultural output includes greenhouse and nursery products, forest products, custom work, machine hire, and other farm-related activities. The intensity and economic importance of each of these activities, as well as their underlying market structure and production processes, vary regionally based on the agro-climatic setting, market conditions, and other factors. As a result, farm income and rural economic conditions may vary substantially across the United States. ", "Annual U.S. net farm income is the single most watched indicator of farm sector well-being, as it captures and reflects the entirety of economic activity across the range of production processes, input expenses, and marketing conditions that have prevailed during a specific time period. When national net farm income is reported together with a measure of the national farm debt-to-asset ratio, the two summary statistics provide a quick and widely referenced indicator of the economic well-being of the national farm economy."], "subsections": []}, {"section_title": "USDA's August 2019 Farm Income Forecast", "paragraphs": ["In the second of three official U.S. farm income outlook releases scheduled for 2019 (see shaded box below), ERS projects that U.S. net farm income will rise 4.8% in 2019 to $88.0 billion, up $4.0 billion from last year. Net cash income (calculated on a cash-flow basis) is also projected higher in 2019 (+7.2%) to $112.6 billion. The August 2019 net farm income forecast represents an increase from USDA's preliminary February 2019 forecast of $69.4 billion. ", "An increase in government support in 2019, projected at $19.5 billion and up 42.5% from 2018, is the principal driver behind the rise in net farm income. Support from traditional farm programs is expected to be bolstered by large direct government payments in response to trade retaliation under the escalating trade war with China. At a projected $19.5 billion in calendar 2019, direct government payments would represent 22.2% of net farm income\u00e2\u0080\u0094the largest share since 2006 when federal subsidies represented a 27.6% share. ", "The August forecast of $88 billion is just above (+0.9%) the 10-year average of $87.3 billion and represents continued agriculture-sector economic weakness since 2013's record high of $123.7 billion. "], "subsections": [{"section_title": "Highlights", "paragraphs": ["Both net cash income and net farm income achieved record highs in 2013 but fell to recent lows in 2016 ( Figure 1 ) before trending higher in each of the last three years 2017, 2018, and 2019. Commodity prices ( Figure A-1 to Figure A-4 ) have echoed the same pattern as farm income over the 2013-2019 period. When adjusted for inflation and represented in 2018 dollars ( Figure 2 ), the net farm income for 2019 is projected to be on par with the average of $86.8 billion for net farm income since 1940. After declining for four consecutive years, total production expenses for 2019 ( Figure 16 ), at $346.1 billion, are projected up slightly from 2018 (+0.4%), driven largely by higher costs for feed, labor, and property taxes. Global demand for U.S. agricultural exports ( Figure 20 ) is projected at $134.5 billion in 2019, down from 2018 (-6.2%), due largely to a decline in sales to China. Farm asset values and debt levels are projected to reach record levels in 2019\u00e2\u0080\u0094asset values at $3.1 trillion (+2.0%) and farm debt at $415.7 billion (+3.4%)\u00e2\u0080\u0094pushing the projected debt-to-asset ratio up to 13.5%, the highest level since 2003 ( Figure 26 )."], "subsections": []}, {"section_title": "Substantial Uncertainties Underpin the August 2019 Outlook", "paragraphs": ["Abundant domestic and international supplies of grains and oilseeds suggest a fifth straight year of relatively weak commodity prices in 2019 ( Figure A-1 through Figure A-4 , and Table A-4 ). However, considerable uncertainty remains concerning the eventual outcome of the 2019 growing season and the prospects for improved market conditions heading into 2020.", "As of early September, three major factors loom over U.S. agricultural markets and contribute to current uncertainty over both supply and demand prospects, as well as market prices:", "1. First, wet spring conditions led to unusual plantings delays for the corn and soybean crops. This means that crop development is behind normal across much of the major growing regions and that eventual yields will depend on beneficial fall weather to achieve full crop maturity. Also, the late crop development renders crop growth vulnerable to an early freeze in the fall. 2. Second, large domestic supplies of corn, soybeans, wheat, and cotton were carried over into 2019 ( Figure 6 ). Large corn and soybean stocks have kept pressure on commodity prices throughout the grain and feed complex in 2019. 3. Third, international trade disputes have led to declines in U.S. exports to China\u00e2\u0080\u0094a major market for U.S. agricultural products\u00e2\u0080\u0094and added to market uncertainty. In particular, the United States lost its preeminent market for soybeans\u00e2\u0080\u0094China. It is unclear how soon, if at all, the United States will achieve a resolution to its trade dispute with China or how international demand will evolve heading into 2020."], "subsections": [{"section_title": "Late-Planted Corn and Soybean Crops Are Behind Normal Development", "paragraphs": ["U.S. agricultural production activity got off to a very late start in 2019 due to prolonged cool, wet conditions throughout the major growing regions, particularly in states across the eastern Corn Belt. This resulted in record large prevented planting acres ( Figure 3 ) and delays in the planting of the corn and soybean crops ( Table 1 ), especially in Illinois, Michigan, Ohio, Wisconsin, and North and South Dakota. ", "As of August 22, 2019, U.S. farmers have reported to USDA that, of the cropland that they intended to plant this past spring, they were unable to plant 19.8 million acres due primarily to prolonged wet conditions that prevented field work. Such acres are referred to as \"prevent plant (PPL)\" acres. The previous record for total PPL acres was set in 2011 at 10.2 million acres. The 19.8 million PPL acres includes 11.4 million acres of corn and 4.5 million acres of soybeans\u00e2\u0080\u0094both establish new records by substantial margins. The previous record PPL for corn was 2.8 million acres in 2013, and for soybeans it was 2.1 million acres in 2015.", "In addition, a sizeable portion of the U.S. corn and soybean crops were planted later than usual. Traditionally, 96% of the U.S. corn crop is planted by June 2, but in 2019 by that date only 67% of the crop had been planted ( Table 1 ). Similarly, the U.S. soybean crop was planted with substantial delays. By June 16, only 67% of the U.S. soybean crop was planted, whereas an average of 93% of the crop has been planted by that date during the past five years. ", "These planting delays have important implications for crop development as they push both crops' growing cycle into hotter, drier periods of the summer than usual and increase the risk of plant growth being shut off by an early freeze. But planting delays also increase the complexity of producer decisionmaking by pushing the planting date into the crop insurance \"late planting period,\" when insurance coverage starts to decline with each successive day of delay ( Figure 4 ). ", "When the planting occurs after the crop insurance policy's \"final planting date,\" the \"late planting period\" comes into play. Producers must then decide whether to opt for \"prevented planting\" indemnity payments (valued at 35% of their crop insurance guarantee) or try to plant the crop under reduced insurance coverage with a heightened risk of reduced yields. Producer's choices were further complicated in 2019 by the Secretary of Agriculture's announcement on May 23 that only producers with planted acres would be eligible for \"trade damage\" assistance payments in 2019 under the Market Facilitation Program (MFP)."], "subsections": []}, {"section_title": "Large Corn and Soybean Stocks Continue to Dominate Commodity Markets", "paragraphs": ["Corn and soybeans are the two largest U.S. commercial crops in terms of both value and acreage. For the past several years, U.S. corn and soybean crops have experienced strong growth in both productivity and output, thus helping to build stockpiles at the end of the marketing year. This has been particularly true for soybean production, which has seen rapid growth in yield, acres planted, and stocks. U.S. soybean production has been expanding rapidly since 1990, largely at the expense of the wheat sector which has been steadily losing acreage over the past several decades ( Figure 5 ). This pattern reached a historic point in 2018 when, for the first time in history, U.S. soybean plantings (at 89.196 million acres) exceeded corn plantings (89.129 million acres).", "The strong soybean plantings in 2018, coupled with the second-highest yields on record (51.6 bushels/acres), produced a record U.S. soybean harvest of 4.5 billion bushels and record ending stocks (1 billion bushels or a 27.2% stocks-to-use ratio) that year. However, the record soybean harvest in 2018, combined with the sudden loss of the Chinese soybean market (as discussed in the \" Agricultural Trade Outlook \" section of this report) discouraged many producers from planting soybeans in 2019. This contributed to a drop off (-14%) in soybean planted acres.", "Most market watchers had expected to see a strong switch from soybean to corn acres in 2019 as a result of the record soybean stocks and weak prices related to the U.S.-China trade dispute. However, the wet spring made large corn plantings unlikely as corn yields tend to experience rapid deterioration when planted in June or later. Despite these indications, USDA's National Agricultural Statistics Service (NASS) released the results of its June acreage survey for corn planted acres at 91.7 million acres\u00e2\u0080\u0094well above market expectations. However, because the wet spring had caused widespread delayed planting, USDA announced that it would re-survey the 14 major corn-producing states. The updated survey results were released on August 12 and, at 90.0 million acres, confirmed higher-than-expected corn plantings.", "As a result, the outlook for the U.S. corn crop has been pressured by the large planted acreage estimate but filled with uncertainty over the eventual success of the crop considering that it is being grown under unusually delayed conditions. Corn ending stocks are projected to surpass 2 billion bushels for the fourth consecutive year. Strong domestic demand from the livestock sector coupled with a robust export outlook are expected to support the season average farm price for corn at $3.60/bushel in the 2019/20 marketing year, unchanged from the previous year.", "The outlook for the U.S. soybean crop is more certain: USDA projects a 19% drop in U.S. soybean production to 3.68 billion bushels. Despite the outlook for lower production in 2019, the record carry-over stocks from 2018, and the sudden loss of China as the principal buyer of U.S. soybeans in 2018, USDA projects lower soybean farm prices (-8%) at $8.40/bushel for the 2019/20 marketing year\u00e2\u0080\u0094the lowest farm price since 2006 ( Figure 6 ).", "Both wheat and upland cotton farm prices for 2019 are projected down slightly from 2018\u00e2\u0080\u0094primarily due to the outlook for continued abundant stocks as indicated by the stocks-to-use ratios."], "subsections": []}, {"section_title": "Diminished Trade Prospects Contribute to Market Uncertainty", "paragraphs": ["The United States is traditionally one of the world's leading exporters of corn, soybeans, and soybean products\u00e2\u0080\u0094vegetable oil and meal. During the recent five-year period from 2013/2014 to 2017/2018, the United States exported 49% of its soybean production and 15% of its corn crop. As a result, the export outlook for these two crops is critical to both farm sector profitability and regional economic activity across large swaths of the United States as well as in international markets. However, the tariff-related trade dispute between the United States and China (as well as several major trading partners) has resulted in lower purchases of U.S. agricultural products by China in 2018 and 2019 and has cast uncertainty over the outlook for the U.S. agricultural sector, including the corn and soybean markets."], "subsections": []}, {"section_title": "Livestock Outlook for 2019 and 2020", "paragraphs": ["Because the livestock sectors (particularly dairy and cattle, but hogs and poultry to a lesser degree) have longer biological lags and often require large capital investments up front, they are slower to adjust to changing market conditions than is the crop sector. As a result, USDA projects livestock and dairy production and prices an extra year into the future (compared with the crop sector) through 2020, and market participants consider this expanded outlook when deciding their market interactions\u00e2\u0080\u0094buy, sell, invest, etc. "], "subsections": [{"section_title": "Background on the U.S. Cattle-Beef Sector", "paragraphs": ["During the 2007-2014 period, high feed and forage prices plus widespread drought in the Southern Plains\u00e2\u0080\u0094the largest U.S. cattle production region\u00e2\u0080\u0094had resulted in an 8% contraction of the U.S. cattle inventory. Reduced beef supplies led to higher producer and consumer prices and record profitability among cow-calf producers in 2014. This was coupled with then-improved forage conditions, all of which helped to trigger the slow rebuilding phase in the cattle cycle that started in 2014 ( Figure 7 ). ", "The expansion continued through 2018, despite weakening profitability, primarily due to the lag in the biological response to the strong market price signals of late 2014. The cattle expansion appears to have levelled off in 2019 with the estimated cattle and calf population unchanged from a year earlier at 103 million. Another factor working against continued expansion in cattle numbers is that producers are now producing more beef with fewer cattle."], "subsections": []}, {"section_title": "Robust Production Growth Projected Across the Livestock Sector", "paragraphs": ["Similar to the cattle sector, U.S. hog and poultry flocks have been growing in recent years and are expected to continue to expand in 2019. For 2019, USDA projects production of beef (+0.6%), pork (+5.0%), broilers (+1.7%), and eggs (+2.3%) to expand modestly heading into 2020. This growth in protein production is expected to be followed by continued positive growth rates in 2020: beef (+1.9%), pork (+2.8%), broilers (+1.1%), and eggs (+0.9%). ", "A key uncertainty for the meat-producing sector is whether demand will expand rapidly enough to absorb the continued growth in output or whether surplus production will begin to pressure prices lower. USDA projects that combined domestic and export demand for 2019 will continue to grow for red meat (+1.7%) and poultry (+1.5%) but at slightly slower rates than projected meat production, thus contributing to 2019's outlook for lower prices and profit margins for livestock."], "subsections": []}, {"section_title": "Livestock-Price-to-Feed-Cost Margins Signal Profitability Outlook", "paragraphs": ["The changing conditions for the U.S. livestock sector may be tracked by the evolution of the ratios of livestock output prices to feed costs ( Figure 8 ). A higher ratio suggests greater profitability for producers. The cattle-, hog-, and broiler-to-feed margins have all exhibited significant volatility during the 2017-2019 period. The hog, milk, and cattle feed ratios have trended downward during 2018 and 2019, suggesting eroding profitability. The broiler-to-feed price ratio has shown more volatility compared with the other livestock sectors but has trended upward from mid-2018 into 2019. ", "While this result varies widely across the United States, many small or marginally profitable cattle, hog, and milk producers face continued financial difficulties. Continued production growth of between 1% and 4% for red meat and poultry suggests that prices are vulnerable to weakness in demand. In addition, both U.S. and global milk production are projected to continue growing in 2019. As a result, milk prices could come under further pressure in 2019, although USDA is currently projecting milk prices up slightly in 2019. The lower price outlook for cattle, hogs, and poultry is expected to persist through 2019 before turning upward in 2020 ( Table A-4 ). "], "subsections": []}]}]}, {"section_title": "Gross Cash Income Highlights", "paragraphs": ["Projected farm-sector revenue sources in 2019 include crop revenues (46% of sector revenues), livestock receipts (42%), government payments (5%), and other farm-related income (8%), including crop insurance indemnities, machine hire, and custom work. Total farm sector gross cash income for 2019 is projected to be up (+2.2%) to $425.3 billion, driven by increases in both direct government payments (+42.5%) and other farm-related income (+19.3). Cash receipts from crop receipts (-1.7%) and livestock product (+0.5%) are down (-0.6%) in the aggregate ( Figure 9 ). "], "subsections": [{"section_title": "Crop Receipts", "paragraphs": ["Total crop sales peaked in 2012 at $231.6 billion when a nationwide drought pushed commodity prices to record or near-record levels. In 2019, crop sales are projected at $193.7 billion, down 1.7% from 2018 ( Figure 10 ). Projections for 2019 and percentage changes from 2018 include ", "Feed crops\u00e2\u0080\u0094corn, barley, oats, sorghum, and hay: $56.3 billion (+0.4%); Oil crops\u00e2\u0080\u0094soybeans, peanuts, and other oilseeds: $36.3 billion (-14.0%); Fruits and nuts: $29.5 billion (+1.7%); Vegetables and melons: $19.6 billion (+6.0%); Food grains\u00e2\u0080\u0094wheat and rice: $12.3 billion (+6.5%); Cotton: $7.5 billion (-7.4%); and Other crops including tobacco, sugar, greenhouse, and nursery: $31.2 billion (+2.8%)."], "subsections": []}, {"section_title": "Livestock Receipts", "paragraphs": ["The livestock sector includes cattle, hogs, sheep, poultry and eggs, dairy, and other minor activities. Cash receipts for the livestock sector grew steadily from 2009 to 2014, when it peaked at a record $212.3 billion. However, the sector turned downward in 2015 (-10.7%) and again in 2016 (-14.1%), driven largely by projected year-over-year price declines across major livestock categories ( Table A-4 and Figure 12 ). ", "In 2017, livestock sector cash receipts recovered with year-to-year growth of 8.1% to $175.6 billion. In 2018, cash receipts increased slightly (+0.6%). In 2019, cash receipts are projected up 0.5% for the sector at $177.4 billion as cattle, hog, and dairy sales offset declines in poultry. Projections for 2019 (and percentage changes from 2018) include", "Cattle and calf sales: $67.3 billion (+0.3%); Poultry and egg sales: $38.9 billion (-15.8%); Dairy sales: valued at $39.7 billion (+12.7%); Hog sales: $24.5 billion (+16.2%); and Miscellaneous livestock: valued at $7.0 billion (+2.1%)."], "subsections": []}, {"section_title": "Government Payments", "paragraphs": ["Historically, government payments have included ", "Direct payments (decoupled payments based on historical planted acres), Price-contingent payments (program outlays linked to market conditions), Conservation payments (including the Conservation Reserve Program and other environmental-based outlays), Ad hoc and emergency disaster assistance payments (including emergency supplemental crop and livestock disaster payments and market loss assistance payments for relief of low commodity prices), and Other miscellaneous outlays (including market facilitation payments, cotton ginning cost-share, biomass crop assistance program, peanut quota buyout, milk income loss, tobacco transition, and other miscellaneous payments).", "Projected government payments of $19.5 billion in 2019 would be up 42.5% from 2018 and would be the largest taxpayer transfer to the agriculture sector (in absolute dollars) since 2005 ( Figure 14 and Table A-4 ). The surge in federal subsidies is driven by large \"trade-damage\" payments made under the MFP initiated by USDA in response to the U.S.-China trade dispute. MFP payments (reported to be $10.7 billion) in 2019 include outlays from the 2018 MFP program that were not received by producers until 2019, as well as expected payments under the first and second tranches of the 2019 MFP program. ", "USDA ad hoc disaster assistance is projected higher year-over-year at $1.7 billion (+87.1%). Payments under the Agricultural Risk Coverage and Price Loss Coverage programs are projected lower (-12.4%) in 2019 at a combined $2.8 billion compared with an estimated $3.2 billion in 2018 (see \"Price Contingent\" in Figure 14 ). ", "Conservation programs include all conservation programs operated by USDA's Farm Service Agency and the Natural Resources Conservation Service that provide direct payments to producers. Estimated conservation payments of $3.7 billion are forecast for 2019, down slightly (-8.4%) from $4.0 billion in 2018.", "Total government payments of $19.5 billion represents a 5% share of projected gross cash income of $425.3 billion in 2019. In contrast, government payments are expected to represent 22% of the projected net farm income of $88.0 billion. The importance of government payments as a percentage of net farm income varies nationally by crop and livestock sector and by region."], "subsections": []}, {"section_title": "Dairy Margin Coverage Program Outlook", "paragraphs": ["The 2018 farm bill ( P.L. 115-334 ) made several changes to the previous Margin Protection Program (MPP), including a new name\u00e2\u0080\u0094the Dairy Margin Coverage (DMC) program\u00e2\u0080\u0094and expanded margin coverage choices from the original range of $4.00-$8.00 per hundredweight (cwt.). Under the 2018 farm bill, milk producers have the option of covering the milk-to-feed margin at a $9.50/cwt. threshold on the first 5 million pounds of milk coverage under the program. ", "The DMC margin differs from the USDA-reported milk-to-feed ratio shown in Figure 8 but reflects the same market forces. As of August 2019, the formula-based milk-to-feed margin used to determine government payments was at $9.45/cwt., just below the newly instituted $9.50/cwt. payment threshold ( Figure 15 ), thus increasing the likelihood that DMC payments may be less available in the second half of 2019. In total, the DMC program is expected to make $600 million in payments in 2019, up from $250 million under the previous milk MPP in 2018."], "subsections": []}]}, {"section_title": "Production Expenses", "paragraphs": ["Total production expenses for 2019 for the U.S. agricultural sector are projected to be up slightly (+0.4%) from 2018 in nominal dollars at $346.1 billion ( Figure 16 ). Production expenses peaked in both nominal and inflation-adjusted dollars in 2014, then declined for five consecutive years in inflation-adjusted dollars. However, in nominal dollars production expenses are projected to turn upward in 2019\u00e2\u0080\u0094the first upward turn since 2014. ", "Production expenses affect crop and livestock farms differently. The principal expenses for livestock farms are feed costs, purchases of feeder animals and poultry, and hired labor. Feed costs, labor expenses, and property taxes are all projected up in 2019 ( Figure 17 ). In contrast, fuel, land rent, interest costs, and fertilizer costs\u00e2\u0080\u0094all major crop production expenses\u00e2\u0080\u0094are projected lower. ", "But how have production expenses moved relative to revenues? A comparison of the indexes of prices paid (an indicator of expenses) versus prices received (an indicator of revenues) reveals that the prices received index generally declined from 2014 through 2016, rebounded in 2017, then declined again in 2018 ( Figure 18 ). Farm input prices (as reflected by the prices paid index) showed a similar pattern but with a smaller decline from their 2014 peak and have climbed steadily since mid-2016, suggesting that farm sector profit margins have been squeezed since 2016."], "subsections": [{"section_title": "Cash Rental Rates", "paragraphs": ["Renting or leasing land is a way for young or beginning farmers to enter agriculture without incurring debt associated with land purchases. It is also a means for existing farm operations to adjust production more quickly in response to changing market and production conditions while avoiding risks associated with land ownership. The share of rented farmland varies widely by region and production activity. However, for some farms it constitutes an important component of farm operating expenses. Since 2002, about 39% of agricultural land used in U.S. farming operations has been rented. ", "The majority of rented land in farms is rented from non-operating landlords. Nationally in 2017, 29% of all land in farms was rented from someone other than a farm operator. Some farmland is rented from other farm operations\u00e2\u0080\u0094nationally about 8% of all land in farms in 2017 (the most recent year for which data are available)\u00e2\u0080\u0094and thus constitutes a source of income for some operator landlords. Total net rent to non-operator landlords is projected to be down (-2.1%) to $12.5 billion in 2019.", "Average cash rental rates for 2019 were up (+1.4%) year-over-year ($140 per acre versus $138 in 2018). National average rental rates\u00e2\u0080\u0094which for 2019 were set the preceding fall of 2018 or in early spring of 2019\u00e2\u0080\u0094dipped in 2016 but still reflect the high crop prices and large net returns of the preceding several years, especially the 2011-2014 period ( Figure 19 ). The national rental rate for cropland peaked at $144 per acre in 2015. "], "subsections": []}]}]}, {"section_title": "Agricultural Trade Outlook", "paragraphs": ["U.S. agricultural exports have been a major contributor to farm income, especially since 2005. As a result, the financial success of the U.S. agricultural sector is strongly linked to international demand for U.S. products. Because of this strong linkage, the downturn in U.S. agricultural exports that started in 2015 ( Figure 20 ) deepened the downturn in farm income that ran from 2013 through 2016 ( Figure 1 ). Since 2018, the U.S. agricultural sector's trade outlook has been vulnerable to several international trade disputes, particularly the ongoing dispute between the United States and China. A return to market-based farm income growth for the U.S. agricultural sector will likely necessitate improved international trade prospects."], "subsections": [{"section_title": "Key U.S. Agricultural Trade Highlights", "paragraphs": ["USDA projects U.S. agricultural exports at $134.5 billion in FY2019, down (-6.2%) from $143.4 billion in FY2018. Export data include processed and unprocessed agricultural products. This downturn masks larger country-level changes that have occurred as a result of ongoing trade disputes (as discussed below). In FY2019, U.S. agricultural imports are projected up at $129.3 billion (1.4%), and the resultant agricultural trade surplus of $5.2 billion would be the lowest since 2006.", "A substantial portion of the surge in U.S. agricultural exports that occurred between 2010 and 2014 was due to higher-priced grain and feed shipments, including record oilseed exports to China and growing animal product exports to East Asia. As commodity prices have leveled off, so too have export values (see the commodity price indexes in Figure A-1 and Figure A-2 ). In FY2017, the top three markets for U.S. agricultural exports were China, Canada, and Mexico, in that order. Together, these three countries accounted for 46% of total U.S. agricultural exports during the five-year period FY2014-FY2018 ( Figure 21 ). However, in FY2019 the combined share of U.S. exports taken by China, Canada, and Mexico is projected down to 38% largely due to lower exports to China. The ordering of the top markets in 2019 is projected to be Canada, Mexico, the European Union (EU), Japan, and China, as China is projected to decline as a destination for U.S. agricultural exports. From FY2014 through FY2017, China imported an average of $26.2 billion of U.S. agricultural products. However, USDA forecasts China's imports of U.S. agricultural products to decline to $20.5 billion in FY2018 and to $10.9 billion in FY2019 as a result of the U.S.-China trade dispute. The fourth- and fifth-largest U.S. export markets have traditionally been the EU and Japan, which accounted for a combined 17% of U.S. agricultural exports during the FY2014-FY2018 period. These two markets have shown limited growth in recent years when compared with the rest of the world. However, their combined share is projected to grow to 19% in FY2019 ( Figure 21 ). ", "The \"Rest of World\" (ROW) component of U.S. agricultural trade\u00e2\u0080\u0094South and Central America, the Middle East, Africa, and Southeast Asia\u00e2\u0080\u0094has shown strong import growth in recent years. ROW is expected to account for 43% of U.S. agricultural exports in FY2019. ROW import growth is being driven in part by both population and GDP growth but also from shifting trade patterns as some U.S. products previously targeting China have been diverted to new markets. Over the past four decades, U.S. agricultural exports have experienced fairly steady growth in shipments of high-value products\u00e2\u0080\u0094including horticultural products, livestock, poultry, and dairy. High-valued exports are forecast at $94.0 billion for a 69.9% share of U.S. agricultural exports in FY2019 ( Figure 22 ). In contrast, bulk commodity shipments (primarily wheat, rice, feed grains, soybeans, cotton, and unmanufactured tobacco) are forecast at a record low 30.1% share of total U.S. agricultural exports in FY2019 at $40.5 billion. This compares with an average share of over 60% during the 1970s and into the 1980s. As grain and oilseed prices decline, so will the bulk value share of U.S. exports."], "subsections": []}, {"section_title": "U.S. Farm and Manufactured Agricultural Product Export Shares", "paragraphs": ["The share of agricultural production (based on value) sold outside the country indicates the level of U.S. agriculture's dependence on foreign markets, as well as the overall market for U.S. agricultural products. ", "As a share of total farm and manufactured agricultural production, U.S. exports were estimated to account for 19.8% of the overall market for agricultural products from 2008 through 2016\u00e2\u0080\u0094the most recent data year for this calculation ( Figure 23 ). The export share of agricultural production varies by product category:", "At the upper end of the range for export shares, the bulk food grain export share has varied between 50% and 80% since 2008, while the oilseed export share has ranged between 47% and 58%. The mid-spectrum range of export shares includes the export share for fruit and tree nuts, which has ranged from 37% to 45%, while meat products have ranged from 27% to 41%. At the low end of the spectrum, the export share of vegetable and melon sales has ranged from 15% to 18%, the dairy products export share from 9% to 24%, and the agricultural-based beverage export share between 7% and 13%."], "subsections": []}]}, {"section_title": "Farm Asset Values and Debt", "paragraphs": ["The U.S. farm income and asset-value situation and outlook suggest a relatively stable financial position heading into 2019 for the agriculture sector as a whole\u00e2\u0080\u0094but with considerable uncertainty regarding the downward outlook for prices and market conditions for the sector and an increasing dependency on international markets to absorb domestic surpluses and on federal support to offset lost trade opportunities due to ongoing trade disputes.", "Farm asset values\u00e2\u0080\u0094which reflect farm investors' and lenders' expectations about long-term profitability of farm sector investments\u00e2\u0080\u0094are projected to be up 2.0% in 2019 to a nominal $3.1 trillion ( Table A-3 ). In inflation-adjusted terms (using 2018 dollars), farm asset values peaked in 2014 ( Figure 24 ).", "Nominally higher farm asset values are expected in 2019 due to increases in both real estate values (+2.0%) and nonreal-estate values (+2.1%). Real estate is projected to account for 83% of total farm sector asset value. Crop land values are closely linked to commodity prices. The leveling off of crop land values since 2015 reflects stagnant commodity prices ( Figure 25 ). For 2019, USDA forecasts that prices for most major commodities will decline from 2018\u00e2\u0080\u0094wheat, barley, soybeans, cotton, choice steers, broilers, and eggs lower; sorghum, oats, rice, and pork products higher ( Table A-4 ). However, these projections are subject to substantial uncertainty associated with international commodity markets. Total farm debt is forecast to rise to a record $415.7 billion in 2019 (+3.4%) ( Table A-3 ). Farm equity\u00e2\u0080\u0094or net worth, defined as asset value minus debt\u00e2\u0080\u0094is projected to be up slightly (+1.8%) at $2.7 trillion in 2019 ( Table A-3 ). The farm debt-to-asset ratio is forecast up in 2019 at 13.5%, the highest level since 2003 but still relatively low by historical standards ( Figure 26 )."], "subsections": []}, {"section_title": "Average Farm Household Income", "paragraphs": ["A farm can have both an on-farm and an off-farm component to its income statement and balance sheet of assets and debt. Thus, the well-being of farm operator households is not equivalent to the financial performance of the farm sector or of farm businesses because of the inclusion of nonfarm investments, jobs, and other links to the nonfarm economy. ", "Average farm household income (sum of on- and off-farm income) is projected at $116,060 in 2019 ( Table A-2 ), up 4.7% from 2018 but 13.5% below the record of $134,165 in 2014. About 17% ($20,075) of total farm household income is from farm production activities, and the remaining 83% ($95,985) is earned off the farm (including financial investments). The share of farm income derived from off-farm sources had increased steadily for decades but peaked at about 95% in 2000 ( Figure 27 ). Since 2014, over half of U.S. farm operations have had negative income from their agricultural operations. "], "subsections": [{"section_title": "Total vs. Farm Household Average Income", "paragraphs": ["Since the late 1990s, farm household incomes have surged ahead of average U.S. household incomes ( Figure 28 ). In 2017 (the last year for which comparable data were available), the average farm household income of $111,744 was about 30% higher than the average U.S. household income of $86,220 ( Table A-2 )."], "subsections": [{"section_title": "Appendix. Supporting Charts and Tables", "paragraphs": [" Figure A-1 to Figure A-4 present USDA data on monthly farm prices received for several major farm commodities\u00e2\u0080\u0094corn, soybeans, wheat, upland cotton, rice, milk, cattle, hogs, and chickens. The data are presented in an indexed format where monthly price data for year 2010 = 100 to facilitate comparisons.", "USDA Farm Income Data Tables", " Table A-1 to Table A-3 present aggregate farm income variables that summarize the financial situation of U.S. agriculture. In addition, Table A-4 presents the annual average farm price received for several major commodities, including the USDA forecast for the 2018-2019 marketing year."], "subsections": []}]}]}]}}
{"id": "R46328", "title": "Flood Risk Reduction from Natural and Nature-Based Features: Army Corps of Engineers Authorities", "released_date": "2020-04-27T00:00:00", "summary": ["The U.S. Army Corps of Engineers (USACE) is the primary federal agency involved in federal construction to help reduce community flood risk. Congressional direction on USACE flood risk reduction activities has evolved from primarily supporting levees, dams, and engineered dunes and beaches. Since 1974, Congress has required that USACE evaluate nonstructural alternatives, such as elevation of structures and acquisition of floodplain lands, during its planning of projects. Since the mid-2010s, Congress also has directed the consideration of natural and nature-based features (NNBFs). Examples of potential NNBFs for reducing flood risk include wetlands; oyster, mussel, and coral reefs; and the combination of these natural features with hard components, such as rock and concrete. Various factors are shaping how USACE is incorporating NNBFs into its flood risk reduction projects and post-flood repair activities.", "NNBFs in Flood Risk Reduction Projects", "Congress specifically included NNBFs as a planning requirement for USACE flood risk reduction projects in 2016. In 2018, Congress required that USACE feasibility reports for flood risk reduction projects consider using traditional and natural infrastructure, alone or in conjunction with each other. In recent feasibility reports, USACE primarily has proposed using NNBFs (other than engineered dunes and beaches) in combination with traditional structural measures rather than having the NNBFs as the primary means for reducing flood risk. To be recommended for congressional construction authorization, a USACE flood risk reduction project generally must have national flood risk reduction benefits that exceed the project's costs. Under current Administration guidance, USACE's evaluation of NNBFs is tailored to each project (i.e., it is case-by-case rather than standardized).", "NNBFs in Program to Repair Damaged Nonfederal Flood Control Works", "In 1996, Congress amended USACE's program to repair damage to certain nonfederal flood control works. Congress allowed for the program to fund nonstructural alternatives in lieu of USACE making repairs if a nonfederal entity requests and assumes responsibility for the nonstructural alternative. In 2016, Congress defined the program's nonstructural alternatives to include restoring and protecting natural resources (e.g., floodplains, wetlands, and coasts), if those alternatives reduce flood risk. In practice, the program continues to predominantly repair the damaged flood control works. That is, there remain a limited number of nonfederal entities pursuing nonstructural alternatives under this program.", "Identifying Challenges and Opportunities for NNBFs as Flood Risk Reduction Measures", "Quantifying the effectiveness and reliability of NNBFs as flood risk reduction measures in different environmental conditions and for different floods and storms is an area of ongoing research. In some circumstances, NNBFs may provide flood risk reduction and a suite of environmental and social benefits. In other applications, NNBFs may be unable to replicate the level of flood risk reduction provided by traditional structural and nonstructural measures. Congress may consider the following issues for NNBFs in USACE flood risk reduction activities: knowledge gaps in measuring the benefits and limitations of NNBFs and the research to fill these gaps; how USACE processes account for NNBFs' benefits, costs, and performance; and effects of agency practice, Administration guidance, and statutory authority on the consideration and adoption of NNBFs for flood risk reduction. Congress has requested two reports related to NNBFs from USACE. These reports, when available, may inform congressional deliberations on whether\u00e2\u0080\u0094and, if so, how\u00e2\u0080\u0094to support the use of NNBFs as part of USACE flood risk reduction efforts."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["Significant recent coastal and riverine flood events, as well as concerns about changing hydrologic conditions, have prompted interest in using a suite of approaches to reduce flood risk and improve flood resilience , which is the ability to adapt to, withstand, and rapidly recover from floods. Traditional options to reduce flood risk include constructing levees and dams. Some stakeholders and Members of Congress support protecting, restoring, and enhancing natural features and processes to reduce flood and storm damages. Examples include floodplains that can store excess water and coastal wetlands that may attenuate storm surge. ", "Congress has directed the U.S. Army Corps of Engineers (USACE)\u00e2\u0080\u0094the primary federal agency constructing projects to reduce flood risks\u00e2\u0080\u0094to evaluate the use of natural and nature-based features (NNBFs) when conducting its flood risk reduction activities along the nation's rivers and coasts. As part of a USACE authority, Congress defined a nature-based feature as \"a feature that is created by human design, engineering, and construction to provide risk reduction by acting in concert with natural processes.\" It defined a natural feature as a feature \"created through the action of physical, geological, biological, and chemical processes over time.\" ", "Although NNBFs may provide flood risk reduction and resilience benefits in some circumstances, they may be unable to replicate the risk reduction provided by traditional structural and nonstructural measures for some communities. How to effectively incorporate natural features and processes into planning of and investments in reliable flood risk management is an area of evolving policy and research. Part of the challenge is to identify where to use NNBFs and to determine how much flood risk reduction NNBFs can provided either on their own or in combination with structural and nonstructural measures. ", "Whether to adjust\u00e2\u0080\u0094and, if so, how\u00e2\u0080\u0094USACE's consideration and use of NNBFs for flood risk reduction is an ongoing policy issue. Although Congress has authorized consideration of NNBFs, examples of USACE using NNBFs in its flood risk reduction activities remain limited. In November 2019, the Subcommittee on Water Resources and Environment of the House Transportation and Infrastructure (T&I) Committee held a hearing as part of preparations for developing water resource authorization legislation. At the hearing, multiple witnesses referenced interest in facilitating the use of NNBFs for managing flood risks and improving resilience. Congress has requested various reports related to NNBFs, but the reports have not been delivered to the authorizing committees. When available, these reports may inform congressional deliberations on NNBFs as part of authorization and appropriations legislation.", "USACE considers NNBFs to include wetlands, such as salt marshes and certain submerged aquatic vegetation; oyster, mussel, and coral reefs; maritime forests/shrubs; and the combination of these natural features with engineered components, such as rock gabions (i.e., a basket or other container filled with rocks or other hard materials), stone toes (i.e., stones placed on the lower portion of an eroding streambank), and concrete reef balls (which are shown in Figure 1 along with other NNBFs). In some contexts, NNBFs that stabilize banks and shores also may be referred to as living shorelines . Efforts to enhance natural management of floodwaters often include attempts to restore disturbed natural features. For example, the ability of coastal mangroves, wetlands, and reefs to function as buffers of erosion or storm surge may be reduced if these features are degraded or improved if they are protected or restored. ", "This report introduces NNBFs in the context of USACE flood risk reduction activities. It first discusses how NNBFs relate to USACE authorities for structural and nonstructural measures. It next discusses the primary flood-related activities for which USACE has NNBF-related authority: (1) federal flood risk reduction projects and (2) a program for the repair of damaged nonfederal flood control works. The report then addresses challenges and opportunities for use and incorporation of NNBFs within USACE's flood risk reduction and resilience efforts. It concludes with questions pertinent to the future of use of NNBFs as part of USACE's flood risk reduction activities."], "subsections": []}, {"section_title": "Natural and Nature-Based Features (NNBFs) in the USACE Flood Risk Reduction Context", "paragraphs": [], "subsections": [{"section_title": "Evolution of the USACE Authorities", "paragraphs": ["USACE has been involved in efforts to reduce the nation's flood risk for over a century. The agency's early efforts involved building dams and levees along rivers. In the mid-20 th century, Congress began directing USACE involvement in coastal storm risk reduction projects, which have primarily consisted of engineered dunes and beaches, and in some instances, storm surge gates and levees. Congressional direction on USACE flood risk reduction activities has evolved to include authorities to use other means to reduce flood risk. Congress expanded USACE authorities related to nonstructural alternatives; then, starting in the mid-2010s, it directed the consideration of NNBFs.", "Since 1974, Congress has required that USACE evaluate nonstructural alternatives, such as elevation of structures and acquisition of floodplain lands, during its planning of flood risk reduction projects. Following widespread flooding in the Midwest in 1993, many experts encouraged USACE, other agencies, and policy decisionmakers to support greater use of nonstructural approaches to mitigate flooding. In 1996, Congress amended USACE's authority to repair damage to certain nonfederal flood control works to allow use of nonstructural alternatives in lieu of repairs. In 2016, in the Water Infrastructure Improvements for the Nation Act (WIIN Act; P.L. 114-322 ), Congress defined such nonstructural alternatives to the repair of nonfederal flood control works to include restoring and protecting natural resources (e.g., floodplains, wetlands, and coasts), if those alternatives reduce flood risk.", "Although nonstructural measures (including natural features as part of nonstructural measures) have been part of the discussion of and authorities for USACE flood risk reduction for decades, the focus on natural processes and use of terms such as NNBF or natural infrastructure are more recent developments. USACE began its Engineering With Nature initiative in 2010 to explore ways to align natural and engineering processes in USACE project planning. In 2015, USACE incorporated NNBF concepts into its North Atlantic Coast Comprehensive Study , which Congress required as part of the agency's response to Hurricane Sandy. In 2016 in the WIIN Act, Congress altered USACE authorities to specifically direct the agency to consider NNBFs in its planning of water resource projects. This was Congress's first use of the terms natural feature and nature-based featu res in USACE authorities. ", "In the WIIN Act, Congress directed USACE to evaluate NNBFs as part of the agency's planning of flood risk reduction and ecosystem restoration projects. Congress required that USACE consider each of the following: natural features; nature-based features; nonstructural measures; and structural measures. In 2018, Congress also required that USACE feasibility reports for flood risk reduction projects \"consider the use of both traditional and natural infrastructure alternatives, alone or in conjunction with each other, if those alternatives are practicable.\" "], "subsections": []}, {"section_title": "NNBFs in the Context of Nonstructural and Structural Authorities", "paragraphs": ["Congress has included references to nonstructural alternatives and measures in USACE authorities since at least 1974. Nonstructural measures generally are those that alter the human exposure or vulnerability to flooding with little effect on the characteristics of the flood (e.g., elevating a structure, floodproofing the lowest floor of a structure, or purchasing a structure for purposes of removing it which is referred to as a buyout ). S tructural measures are those that alter a flood's characteristics and reduce the probability of flooding at the location (e.g., a levee or berm that diverts flood water away from a community).", "Congress has not identified NNBFs as structural or nonstructural features for purposes of USACE planning of federal water resources projects and federal and nonfederal sharing of project costs. Current USACE practice considers measures that change the character of the flood as structural measures, which may include most NNBFs. However, in the agency's role in repairing nonfederally operated flood control works damaged by floods, Congress has included the following definition: ", "Nonstructural alternatives defined. - In this subsection, the term 'nonstructural alternatives' includes efforts to restore or protect natural resources, including streams, rivers, floodplains, wetlands, or coasts, if those efforts will reduce flood risk. ", "Therefore, some NNBFs may fall within Congress's definition of nonstructural alternatives for the repair program. ", "It is unclear if the classifications of NNBFs as structural or nonstructural are consistent across the two sets of USACE activities that may use NNBFs for flood risk reduction\u00e2\u0080\u0095the USACE repair program and USACE's planning of projects. For purposes of planning a USACE flood risk reduction project, an NNBF may be structural or nonstructural, depending on whether the NNBF affects the character of the flood. USACE considers most NNBFs to be structural measures because the NNBFs alter the flood hazard and are cost shared as structural measures (see \" Cost Sharing of USACE Flood Risk Reduction Measures \"). Nonstructural NNBFs could include the restoration or expansion of a floodplain through acquisition of structures and lands, especially when combined with an aquatic ecosystem restoration project.", "Engineered dunes and beaches also have a role in NNBF discussions. USACE considers engineered dunes and beaches as NNBFs. However, traditional engineered dunes and beaches and other types of NNBFs may not face the same challenges when it comes to being incorporated into USACE planning and construction as more novel NNBFs, such as living shorelines. USACE has more than half a century of involvement in constructing engineered dunes and beaches (sometimes referred to as dune-and-berm beach nourishment systems ) as components of coastal storm risk reduction projects. The agency has long-standing approaches for calculating the flood risk reduction benefits of engineered dunes and beaches, which is not the case for other NNBFs (see section entitled \" Evaluation of NNBFs' Benefits \"). In addition, unlike other NNBFs, engineered dunes and beaches often are not designed to rely primarily on natural processes (e.g., engineered dunes and beaches often require regular renourishment of sand to maintain storm damage reduction benefits). Additionally, while engineered dunes and beaches may support habitat for certain species, some researchers and stakeholders have raised concerns about the potential for environmental harm associated with some engineered dune and beach projects (see \" Incorporating More Natural Processes in Engineered Dunes and Beaches \" for further discussion). Where appropriate, this report differentiates between the more novel applications of NNBFs and the more traditional engineered dunes and beaches.", "Levee setbacks are an example of combining a structural element\u00e2\u0080\u0094the levee\u00e2\u0080\u0094with natural features\u00e2\u0080\u0095a wider floodplain\u00e2\u0080\u0094to reduce flood risk. USACE considers levee setbacks as structural alternatives for purposes of its projects and its repairs to certain damaged nonfederal levees because levees alter the extent of the flood hazard. The extent to which USACE would classify some levee setbacks as NNBFs (e.g., levee setbacks that augment natural storage and reduce peak flows) is unclear. Where appropriate, this report discusses levee setbacks activities that would include natural features and processes to reduce flood risks."], "subsections": []}]}, {"section_title": "USACE Projects and NNBFs", "paragraphs": ["Through the Engineering With Nature initiative and comprehensive studies such as the post-Hurricane Sandy North Atlantic Coast Comprehensive Study , USACE has identified ways in which NNBFs could be incorporated into flood risk reduction and resilience efforts. Incorporating NNBFs into USACE feasibility reports and their recommended plans for flood risk reduction is a step that would move NNBFs from concepts into potential USACE project features. Statutory direction in 2016 and 2018 requires that NNBFs be considered as part of feasibility studies and their reports. The discussion below provides examples of how USACE has incorporated NNBFs into completed feasibility reports and how NNBFs are evaluated and cost shared as part of USACE flood risk reduction projects."], "subsections": [{"section_title": "Evaluation of NNBFs in USACE Project Planning", "paragraphs": ["USACE has an extensive planning process for its flood risk reduction projects; part of the process consists of an evaluation of whether the project is economically justified as a federal investment. Generally, federal involvement in flood risk reduction projects is limited to projects that are determined to have national economic benefits exceeding their costs or to projects that address a public safety concern. As previously noted, Congress has required the evaluation of NNBFs as part of USACE flood risk reduction project planning. Under current Administration guidance, USACE's evaluation of NNBFs as part of a feasibility study is tailored to each project (i.e., it is not standardized but case-by-case)."], "subsections": [{"section_title": "Economic Justification for Flood Risk Reduction Investments", "paragraphs": ["The Principles and Guidelines (P&G) broadly guide the planning process and the decision criteria for identifying the recommended plan in a USACE feasibility report. The P&G indicate that USACE is to select the plan with the greatest net economic benefit consistent with protecting the environment (referred to as the national economic development plan , or NED plan), unless the Assistant Secretary of the Army for Civil Works (ASACW) grants an exception. The P&G have been in effect for USACE since 1983. For a discussion of the status of the P&G and a set of guidelines developed to replace the P&G, see the box titled \"Planning Guidance for Federal Water Resource Studies and Investments.\"", "According to the U.S. Government Accountability Office (GAO), the flood damage reduction of structures continues to dominate the evaluation of economics and the NED plan remains the main means for identifying the recommended plan for flood risk reduction alternatives. The effect is that most flood risk reduction projects are subject to a benefit-cost analysis. This means that for an NNBF to be found economically justified as a stand-alone flood risk reduction feature, the NNBF's effect on economic benefits (which for flood risk reduction projects is principally quantified as reduced flood damages to structures) would have to be quantified and found to exceed the cost of the NNBF. ", "Part of the attraction of NNBFs is that they may provide some risk reduction benefits without some of the costs of traditional structures. NNBFs, compared with structures such as storm surge gates, levees, or dams, may not require as much investment in long-term maintenance in order to continue their flood risk reduction functions. In addition, NNBFs generally would not require replacement or removal at the end of their use. The consistency with which USACE is incorporating these reduced costs into the comparison of NNBFs with other alternatives in feasibility reports is unclear. "], "subsections": []}, {"section_title": "Environmental and Social Benefits of NNBFs", "paragraphs": ["Another attraction of NNBFs is that they may support species habitat, water quality, or recreation, among other environmental and social benefits. Statute requires and the P&G and USACE planning guidance allow the agency's feasibility reports for flood risk reduction projects to include information on the environmental and other social benefits of NNBFs. Nonetheless, under the P&G, unless an exception is granted by the ASACW, USACE is directed to select the plan with the greatest net economic benefit consistent with protecting the environment (the NED plan) in its feasibility reports for flood risk reduction projects. For a discussion of how this approach to identifying recommended plans and evaluating the benefits of alternatives may be shaping the adoption of NNBFs, see the discussion under \" Evaluation of NNBFs' Benefits .\"", "The P&G have been the primary document guiding USACE planning and plan recommendations since 1983. In April 2020, the Administration described its plans to replace USACE's use of the P&G with new planning guidance. The new guidance is referred to as the Principles, Requirements, and Guidelines (PR&G) for federal water resource investments. Under the PR&G, USACE would strive to maximize public benefits relative to public costs. Public benefits encompass environmental, economic, and social goals, with no hierarchy among the three goals. In the interim, USACE continues to implement the P&G. For more details on the evolution of water resource planning guidance, see the text box titled \"Planning Guidance for Federal Water Resource Studies and Investments.\" "], "subsections": []}]}, {"section_title": "Examples of NNBFs in USACE Flood Risk Reduction Projects", "paragraphs": ["USACE is proposing using NNBFs (other than engineered dunes and beaches) often in combination with traditional structural measures. For example, the following USACE projects incorporate NNBFs as elements of broader flood risk reduction projects using structural elements. ", "New York's East Rockaway Inlet to Rockaway Inlet and Jamaica Bay Reformulation Project . The recommended plan includes NNBFs consisting of stones and larger rocks with associated vegetative planting to attenuate wave action and reduce erosion ( Figure 2 ) as part of traditional structural measures. The feasibility report indicates that the NNBF was evaluated based on its cost effectiveness, rather than a benefit-cost analysis. That is, the cost of the NNBF per linear foot was compared to the cost per linear foot of a floodwall. The entire recommended plan, which consists of various components in addition to the NNBFs, was subject to a benefit-cost analysis and was found to be economically justified. Virginia's Norfolk Coastal Storm Risk Management Project . The feasibility report recommends NNBFs in combination with traditional structural measures, such as storm surge barriers and pump stations, and nonstructural features, such as elevation, floodproofing, and buyout of structures ( Figure 3 ). The NNBFs include \"living shorelines to increase resiliency.\" According to the feasibility report, the recommended NNBFs are \"economically justified by their ability to reduce maintenance costs associated with structural features of the [recommended plan],\" as well as other benefits, such as recreation and education identified. A benefit-cost analysis was performed on the combined NNBFs and structural features, and the investment was found to be economically justified. ", "The above projects use NNBFs as support for traditional structural features or in combination with traditional structural features. USACE has proposed several projects where the key components are traditional engineered dunes and beaches, which USACE considers to be NNBFs. The Congressional Research Service (CRS) has not identified a final USACE feasibility report in which NNBFs other than engineered dunes and beaches are the dominant means to reduce flood risk."], "subsections": []}, {"section_title": "Cost Sharing of USACE Flood Risk Reduction Measures", "paragraphs": ["Congress has established that USACE involvement in a flood risk reduction project generally requires both congressional study authorization and congressional construction authorization. Congress also has established that the planning and construction costs for most USACE projects are shared with a nonfederal sponsor, such as a municipality or levee district for flood risk reduction projects. Table 1 provides information on the nonfederal cost shares for USACE flood risk reduction, coastal storm damage reduction, and ecosystem restoration projects. Information about ecosystem restoration projects is included in Table 1 because some USACE projects may have dual purposes of flood risk reduction and ecosystem restoration.", "Nonfederal project sponsors are generally required to provide all real estate interests needed for a flood risk reduction project, such as the land, easements, rights-of-way, relocations, and disposal (LERRD). The value of the LERRDs are applied toward the nonfederal cost share. At times, these real estate costs may exceed the standard minimum nonfederal cost share established by Congress for the USACE project type. As shown in Table 1 , Congress has established different means for addressing LERRD costs that exceed the required nonfederal contribution for structural features and for nonstructural features. ", "For some types of projects, Congress also has required that part of the nonfederal cost share must include a cash contribution, as shown in Table 1 . That is, the nonfederal share must consist of more than LERRDs and in-kind contributions. ", "For structural measures, Congress has generally established that the maximum nonfederal construction cost share is 50% if the nonfederal LEERDs exceed the 35% minimum. For nonstructural projects, if the nonfederal costs exceed 35%, the remainder of the costs are federal. Although Congress has established how costs of structural and nonstructural measures are to be shared, Congress has not enacted cost sharing that applies specifically to NNBFs. USACE considers most NNBFs to alter the flood hazard and treats those features as structural measures in its planning processes. Therefore, the cost-sharing requirements for structural measures apply to the use of most NNBFs, like those in the coastal storm risk reduction projects in Norfolk, VA, and East Rockaway Inlet to Rockaway Inlet and Jamaica Bay. Some stakeholders have expressed interest in having NNBFs be eligible for nonstructural cost sharing. ", "Congress has authorized numerous coastal storm damage reduction projects that use engineered dunes and beaches and the periodic renourishment of these features, which consists of multiple cycles of sand placement on beaches, dunes, or both. Statute allows for periodic nourishment over 50 years, with possibilities for extension, to be cost shared as shown in Table 1 . "], "subsections": []}]}, {"section_title": "NNBFs in Program to Repair Damaged Nonfederal Flood Control Works", "paragraphs": ["USACE is authorized to fund the repair of certain nonfederal flood control works (e.g., levees, dams) and federally constructed hurricane or shore protection projects that are damaged by factors other than ordinary water, wind, or wave action (e.g., storm surge rather than high tide). To receive this assistance, damaged flood control works must be eligible for and active in the agency's Rehabilitation and Inspection Program (often referred to as the USACE P.L. 84-99 program or RIP) and have been in an acceptable condition at the time of damage, as determined by regular USACE inspections. The P.L. 84-99 program does not fund repairs associated with regular operation, maintenance, repair, and rehabilitation. As of 2018, around 1,200 nonfederal entities operating roughly 2,000 levee systems participate in the P.L. 84-99 program, and the nonfederal levees in the P.L. 84-99 program cumulatively span nearly 10,000 miles. Congress funds the P.L. 84-99 program and USACE's flood-fighting efforts through the agency's Flood Control and Coastal Emergencies (FCCE) account. ", "In 1996, Congress amended the P.L. 84-99 program to authorize USACE to implement nonstructural alternatives for reducing flood risk\u00e2\u0080\u0094previously the authority was limited to the repair or restoration of the flood control structures. Congress made the nonstructural alternative authority available only if a nonfederal entity requests the nonstructural alternative. That is, USACE does not include nonstructural alternatives in its evaluation of repair alternatives unless requested to do so by the nonfederal sponsor.", "In 2014, Congress extended the nonstructural alternative option to authorized coastal storm damage reduction projects. In 2016, Congress defined the nonstructural alternative for the P.L. 84-99 program authority as including \"efforts to restore or protect natural resources, including streams, rivers, floodplains, wetlands, or coasts, if those efforts will reduce flood risk.\" Congress also required USACE to notify and consult with the nonfederal sponsor about \"the opportunity to request implementation of nonstructural alternatives to the repair or restoration of a flood control work\" under P.L. 84-99 program. Table 2 provides information on how USACE shares the costs for the program. Under the P.L. 84-99 program, the costs for all LERRDs are 100% nonfederal. Most repairs would require few or no new LERRDs. Nonstructural alternatives may require significant new LERRD acquisition by the nonfederal sponsor. Also, if a nonstructural alternative is pursued, USACE will provide no further flood-related assistance anywhere within the formerly protected area, except for rescue operations, with some exceptions. ", "For repairs under the P.L. 84-99 program, USACE primarily follows Engineer Regulation (ER) 500-1-1 from 2001, and updated agency policies for how to return coastal storm damage reduction projects to design levels of protection (e.g., how to reconstruct and renourish with sand and engineered dune and beach to the design level of protection). ER 500-1-1 includes nonstructural alternatives to repair, pursuant to the 1996 amendment to the repair authority, but, in practice, the P.L. 84-99 program appears to remain a \"repair-in-place\" program or for minor adjustments in levee alignments to avoid repeated erosive damage to a levee segment often referred to as scour . Repair-in-place planning often is more expeditious for USACE than the planning required for a nonstructural alternative. USACE does not appear to track the use of the nonstructural alternative authority within the P.L. 84-99 program. Selected uses of the nonstructural alternative authority include examples following the 1997 floods in California and the 2008 floods in the upper portion of the Mississippi River. ", "In the P.L. 84-99 program, USACE may setback a damaged levee segment; USACE considers the setback a structural realignment of the levee to restore the damaged levee system. USACE does not consider levee setbacks as nonstructural alternatives. Because levee setbacks are considered as structural realignments for the repair of the damaged levee, the levee setbacks as part of the P.L. 84-99 program are designed for purposes of the levee's functioning and integrity (e.g., to decrease scour) rather than to enhance floodplain capacity or reduce peak flows. If a nonfederal entity pursues a nonstructural alternative, such as the acquisition of floodplain lands, the nonfederal sponsor also may choose to setback the levee. It appears that USACE would consider the setback of the levee not as part of the nonstructural alternative but as a complementary investment by the nonfederal entity. ", "USACE and other federal agencies also may own and operate levees and other flood control projects. USACE is responsible for rebuilding flood-damaged levees that it operates. USACE has no authority to evaluate and implement nonstructural alternatives (or NNBFs) for congressionally authorized USACE-operated infrastructure."], "subsections": []}, {"section_title": "Challenges and Opportunities for NNBFs as Flood Risk Reduction Measures", "paragraphs": ["Some contend that traditional structural measures are institutionally easier for USACE to implement, which disadvantages use of NNBFs, especially in situations and contexts that favor expediency or are time-constrained. Although USACE has decades of experience planning and constructing structural levees and dams, and the authorities and policies to guide those measures, the agency's guidance and experience with NNBFs are less well-developed. For example, implementing NNBFs may require USACE to work with more federal and nonfederal agencies, landowners, and other stakeholders than the agency would with structural measures. Two factors that may shape the further adoption of NNBFs as part of USACE flood risk reduction activities are (1) the availability of information and evaluation procedures for using NNBFs as flood risk reduction measures and (2) the classification of some NNBFs as structural measures for flood risk management. Identifying whether and, if so, how to incorporate NNBF concepts more fully into USACE's engineered dunes and beaches presents another challenge."], "subsections": [{"section_title": "Evaluation of NNBFs' Benefits", "paragraphs": ["USACE's actions pursuant to congressional modifications to its NNBF authorities since the mid-2000s have led to the development of new procedures to evaluate the flood risk reduction benefits of NNBFs and to questions about what USACE is able to count as benefits. An attraction of NNBFs as flood risk reduction measures is that by using natural processes, NNBFs also may support species habitat, water quality, or pubic enjoyment, among other environmental and social benefits. Whether\u00e2\u0080\u0094and if so, how\u00e2\u0080\u0094to incorporate the environmental and social benefits of NNBFs into USACE decisionmaking remains an ongoing question. The discussion below first reviews the challenges related to evaluating the flood risk reduction benefits and then discusses the role of environmental and other social benefits in evaluating investments in NNBFs as flood risk reduction measures under the P&G. ", "Under the P&G, which USACE has followed since 1983, flood risk reduction projects\u00e2\u0080\u0094whether they use traditional structural measures, nonstructural measures, or NNBFs\u00e2\u0080\u0094are to be economically justified based on the NED benefits from the reduced flood risk. The P&G requires the selection of the NED plan for USACE flood risk reduction projects, unless a waiver is provided by the ASACW. The P&G allows for USACE to document the environmental and social benefits; however, these benefits are not explicitly included in the agency's identification of the recommended plan for a project. In April 2020, the Administration indicated that during 2020 it plans to develop documents required for USACE to replace its use of the P&G with the PR&G. Unlike the NED-focused decision criteria of the P&G, the PR&G would direct USACE to strive to maximize public benefits toward environmental, economic, and social goals relative to public costs. "], "subsections": [{"section_title": "Economic Benefits of NNBFs' Flood Risk Reduction", "paragraphs": ["In some circumstances, NNBFs may not be effective as flood risk reduction measures or provide the level of protection sought by a community. In circumstances where NNBFs may be able to reduce flood risk, NNBFs may be effective alone or in combination with traditional flood risk reduction measures. They also may assist with adjustments to changing hydrologic conditions (e.g., coastal wetlands adjustment to sea level rise) and provide a suite of environmental and social benefits (e.g., additional species habitat, water quality improvements, and recreation opportunities). ", "Stakeholders and others have noted that knowledge gaps may affect USACE's ability to support federal NNBF investments. For example, in 2019, GAO found ", "The Corps faces challenges in developing cost and benefit information for some types of natural infrastructure and has initiated some steps to address this. For example, a 2015 Corps report identified knowledge gaps in understanding how natural coastal infrastructure, such as wetlands may perform during coastal storms. These knowledge gaps make it challenging for the Corps to develop cost and benefit information for some natural infrastructure alternatives and compare them to other alternatives, such as those that use hard infrastructure. ", "For USACE, the procedures to evaluate the potential benefits, limitations, and economic costs of traditional flood risk reduction structures are developed and standardized through various procedures and models. As GAO identified, this is not the case for NNBFs. GAO's report indicated that USACE was developing a research strategy to address some of the knowledge gaps. Although USACE has not finalized the strategic research plan referenced by GAO, USACE has research activities directed toward improving understanding of NNBF performance, directly or indirectly. Several of these research programs are developing numerical and analytical tools that can estimate performance (e.g., reduced erosion, wave impacts, and flood/storm surge inundation) for NNBF so trade-offs can be estimated in the planning, design, and maintenance process in the future. In addition to USACE, other researchers are attempting to document NNBFs' flood risk reduction benefits, limitations, and costs. ", "Under the Administration's current guidance for the NNBF authority, the identification, evaluation, and justification of NNBF alternatives (other than engineered dunes and beaches) appears to remain a case-by-case process. Part of the challenge is how a feature's location may affect an NNBF's performance, which consequently may influence the NNBF's benefits and costs. Congress may consider how USACE's case-by-case approach to evaluating NNBFs may shape consideration and adoption of the features (e.g., adapting the NNBFs to local conditions) in a planning process that is constrained by time and funding. ", "Another challenge to valuing the flood risk reduction benefits of NNBFs may be NNBFs' dynamic nature as the result of their use of natural processes, as compared to traditional flood control structures. For example, NNBFs consisting of mangroves or other wetlands may shift their extent and location in response to changing conditions. Other NNBFs may change over time as the living components\u00e2\u0080\u0094such as vegetation or oyster reefs\u00e2\u0080\u0094mature or their area expands or contracts. Floods or storms may temporarily or permanently damage some NNBFs and lessen their role in reducing flood risks.", "USACE is participating in interagency and international efforts aiming to fill knowledge gaps and develop best practices and concepts for NNBFs and to understand their benefits and limitations. For example, USACE is leading an international effort to develop and publish international guidelines on NNBFs, as discussed in the box titled \"International and Interagency Efforts on Natural and Nature-Based Features.\" The extent to which the agency may be able to incorporate into its own planning some of the international guidance remains to be seen and may depend on the extent to which the guidance helps address questions of performance and economic benefits in various environmental and flood/storm conditions. "], "subsections": []}, {"section_title": "Environmental and Social Benefits of NNBFs", "paragraphs": ["As previously noted, USACE may document environmental and social benefits of NNBFs, but its decision criteria under the P&G for flood risk reduction project remains the NED plan. The PR&G-based planning process may require greater consideration of environmental and social benefits; the impact of those additional considerations on USACE's development and selection of plans that use NNBFs is unknown. The question of whether to incorporate, in the planning process and related decisions, certain environmental and social benefits and costs of flood risk reduction measures is a recent development in a long-standing debate on federal water resource investments. ", "USACE has adapted its project planning process before to meet changes in the agency's authorities. In the late 1990s, following Congress's enactment of various authorities for USACE ecosystem restoration projects, the agency developed procedures to evaluate ecosystem restoration investments (see box titled \"Evaluation of an Ecosystem Restoration Project\"). Whether and to what extent consideration of environmental and social benefits and costs of NNBFs, or for flood risk reduction projects more broadly, may be considered in the USACE planning and decision process is unclear.", "In addition to the use of NNBFs as part of USACE flood risk reduction activities, the agency, through its regulatory program, has authorized a general permit for the use of one NNBF type\u00e2\u0080\u0094coastal living shorelines. The permitted activities are not performed or funded by USACE; they are performed by the entities that apply for the permit, such as a town or a landowner. As more nonfederal entities use NNBFs such as living shorelines, USACE may draw additional knowledge, data, and experience from these nonfederal and non-USACE projects. For information on the living shoreline general permit, see the box titled \"Facilitating Approval of Natural and Nature-Based Features: Living Shoreline Nationwide Permit.\""], "subsections": []}]}, {"section_title": "NNBFs as Structural Measures in USACE Planning", "paragraphs": ["As previously noted, current USACE practice in the planning of flood risk reduction projects is to consider measures that change the character of the flood as structural measures, which may include most NNBFs. NNBFs classified as structural measures are cost shared differently than those classified as nonstructural measures. Some stakeholders have proposed that legislation require NNBFs to be cost shared as nonstructural measures regardless of the NNBFs' effect on the flood hazard. This would cap the nonfederal construction costs at 35% rather than up to 50% for structural measures, thereby shifting more of the NNBF costs to the federal government.", "Levee setbacks, although not generally categorized as NNBFs by USACE, illustrate some of the challenges for NNBFs that are classified as structural measures. Examples of USACE's use of setback levees as part of the agency's flood risk reduction projects remain limited. Many potential levee setback projects do not have a sufficient benefit-cost ratio to be an economically justified investment as a structural measure for flood risk reduction, in part because of the costs associated with the additional land and other real estate interests that would need to be acquired. Nonfederal project sponsors generally would be responsible for 100% of these LERRD costs.", "The designation of an NNBF as a structural measure could require the nonfederal sponsor to pay a greater share of the cost than if the NNBF were considered nonstructural (as shown in Table 1 ). Classification of an NNBF as a structural measure also results in a difference between the cost sharing for the NNBF and the cost sharing for nonstructural measures (e.g., elevating structure in the floodplain). "], "subsections": []}, {"section_title": "Incorporating More Natural Processes in Engineered Dunes and Beaches", "paragraphs": ["As discussed above, USACE has long-standing approaches for calculating the flood risk reduction benefits of engineered dunes and beaches. Traditional USACE engineered dunes and beaches may not face the same challenges of being incorporated into USACE planning and construction as other features that USACE classifies as NNBFs. Although traditional engineered dunes and beaches may have social benefits and provide habitats for some species, engineered dunes and beaches have been shown in some circumstances to have some negative effects. For example, the construction and replenishment of these features can disrupt existing biological communities, such as benthic, fish, and shorebird communities, at the project site and where the sand is sourced. The cumulative effect of the projects and resulting environmental changes remains poorly understood. USACE has taken some steps to address these effects (e.g., the agency considers the compatibility of some sand characteristics, and for some projects, it avoids nourishing during ecologically significant periods), but some suggest that engineered dunes and beaches could incorporate natural processes or elements with more environmental benefits. For example, some researchers have suggested leaving gaps in sand placement or nourishing smaller areas at a time to allow species to recolonize from the edges of the nourishment area. ", "Efforts to integrate resilience into approaches to flood risk reduction can raise questions about the role of traditional engineered dunes and beaches that rely heavily on regular renourishment through the engineered placement of sand on the beaches and dunes. NNBFs generally are intended to be developed by or to use natural processes. NNBFs are meant to be as self-sustaining as possible; that is, they are expected to recover, often without or with minimal human intervention, following a flood event. For example, natural dune and beach systems may experience large waves during storm events, which move sediment from the front of the beach (the foreshore) to the back of the beach system, effectively maintaining or raising the elevation behind the dune over time. The foreshore is built up by normal wave activity over time, thereby maintaining through natural processes the dune system, including its potential flood risk reduction benefits. Some dune and beach systems may recover quickly after a damaging storm; however, others may take decades to rebuild to previous heights and widths through natural processes. Conversely, engineered dunes are often built to not be overtopped and moved. Some engineered dunes also have cores or components that provide stability (e.g., synthetic membranes or clay) and may not allow for dune migration. To allow this natural movement to continue, some stakeholders have suggested that USACE consider constructing lower dunes and providing space behind dunes to accommodate sand movement. Other options may include designing dunes to be naturally shaped by the wind while decreasing overall sand loss by using features such as vegetation, screens made of natural materials, and variations in terrain elevation. Furthermore, dunes could be designed to specifically include habitat features, such as those that enable wetland development.", "Some stakeholders argue that USACE and its nonfederal partners could consider other ways to promote natural processes and their benefits into USACE coastal storm risk reduction projects, such as by allowing dune systems to spread out, limiting the raking or grading of incipient dunes, and restricting driving on the beach. These measures would allow dunes to widen or for additional dunes to form in front or behind the primary dune, providing some environmental and social benefits (e.g., greater protection for structures behind dunes and greater variety in available habitats) but could limit other social benefits (e.g., space for beach recreation).", "Although USACE has long-standing approaches for calculating the flood risk reduction benefits of engineered dunes and beaches, the agency's procedures for incorporating more natural processes and features (e.g., vegetation) into engineered dunes and beaches are being reconsidered in the context of the additional NNBF considerations. Incorporating more natural processes into engineered dunes and beaches may require additional efforts to secure the LERRDs for a dune that shifts. ", "Statute not only allows for federally cost-shared periodic nourishment of USACE-constructed dunes and beaches over 50 years but also provides for the possibility of extending renourishment for an additional 15 years. It is unclear if USACE's evaluations for extending a project's federally cost-shared renourishment timeframe consider the role of more natural processes and elements (e.g., vegetation) in future renourishments. It also remains unknown whether more natural processes would be considered a reformulation, requiring congressional authorization, rather than an administrative extension. Similarly, the extent to which P.L. 84-99 program-funded repairs of coastal storm protection projects have been used to incorporate more natural processes into the designs of engineered dunes and beaches remains unknown."], "subsections": []}]}, {"section_title": "Congressionally Directed Reports Related to NNBFs", "paragraphs": ["Congress has directed that the Administration produce two reports that may provide information on NNBFs to decisionmakers and planners. One report relates to how USACE complies with the WIIN Act requirement to evaluate NNBFs as part of USACE flood risk reduction projects. The other report focuses on USACE's authorities related to repair of nonfederal flood control works, including the use of the authority to support a nonstructural alternative in lieu of repairing the damage."], "subsections": [{"section_title": "Report on NNBFs in USACE Projects", "paragraphs": ["In 2016, Congress directed the Secretary of the Army to evaluate NNBFs, nonstructural features, and structural features in its planning of flood risk reduction projects and ecosystem restoration projects. At that time, Congress also required the Secretary of the Army to report on the statute's implementation to the House T&I Committee and Senate Committee on Environment and Public Works (Senate EPW) by February 1, 2020 (and 5 and 10 years thereafter). At a minimum, the report was to include ", "a description of the guidance or instructions issued, and other measures taken, by the Secretary and the Chief of Engineers to implement the requirement to evaluate NNBFs, nonstructural features, and structural features in the planning of flood risk reduction and ecosystem restoration projects; an assessment of the costs, benefits, impacts, and trade-offs associated with measures recommended by the Secretary for coastal risk reduction and the effectiveness of those measures; and a description of any statutory, fiscal, or regulatory barriers to the appropriate consideration and use of a full array of measures for coastal risk reduction. ", "The committees have not received the report as of April 2020; however, USACE indicates that it has initiated development of the report. USACE implementation guidance from 2017 and 2018 indicates that the agency was making efforts at that time to collect data for the report. "], "subsections": []}, {"section_title": "Report on NNBFs in Program to Repair Nonfederal Flood Control\u00c2 Works", "paragraphs": ["In June 2014, Congress required that the Secretary of the Army review the use and performance of the emergency authority for repairs of nonfederal flood control works. Congress required that a report on the findings of the review be delivered within 18 months to the House T&I Committee and Senate EPW Committee and for the report to be publicly available. USACE implementation guidance for the provision indicates that the agency would undertake the review when Congress provided funding for it. Congress has not yet funded the review. The Secretary is to, among other actions, ", "review and evaluate the historic and potential uses, and economic feasibility for the life of the project, of nonstructural alternatives, including natural features such as dunes, coastal wetlands, floodplains, marshes, and mangroves, to reduce the damage caused by floods, storm surges, winds, and other aspects of extreme weather events, and to increase the resiliency and long-term cost-effectiveness of water resources development projects. "], "subsections": []}]}, {"section_title": "Conclusion", "paragraphs": ["In 2010, USACE ramped up its efforts to identify opportunities to incorporate natural processes into its flood risk reduction activities with its Engineering With Nature initiative. Starting in the mid-2010s, Congress has authorized the consideration of NNBF alternatives in circumstances where NNBFs can reduce flood risk. The reliance on natural processes in NNBFs may provide flood resilience advantages compared with traditional structural measures or when used in combination with traditional structural measures. However, various challenges to the adoption of NNBFs as part of USACE projects remain.", "Among recently completed feasibility reports, USACE has recommended a few flood risk reduction projects that use NNBFs. Typically, the recommendation is to use the NNBFs in combination with structural measures if the combined alternative can be economically justified. ", "The limited use of NNBFs in USACE flood risk reduction activities to date is shaped by various factors ranging from what is known about NNBF performance to how NNBFs are evaluated. In some circumstances, NNBFs may not be able to provide levels of flood risk reduction similar to traditional structural and nonstructural measures. In other circumstances, NNBFs may be able to reduce flood risks, but the ability to quantify the effectiveness and reliability of NNBFs as flood risk reduction measures in different environmental conditions and for different flood and storm conditions remains limited. In circumstances where NNBFs may be effective alone or in combination with traditional flood risk reduction measures, they can provide a suite of environmental and social benefits. The extent to which USACE considers NNBFs' environmental and social benefits, as well as their flood risk reduction potential, in agency feasibility reports and their recommendations and in decisions on repairing damaged flood control works remains unclear. USACE's evaluations and recent applications of NNBFs have raised questions about how environmental and social benefits are considered in USACE planning and the potential opportunities and limitations for USACE's use of NNBFs. ", "Some questions related to NNBFs relevant to decisions about USACE authorities and policies include the following: ", "What are the remaining knowledge gaps regarding the benefits and limitations of NNBFs in flood risk reduction? What are the options for decisionmakers to direct USACE or other federal agencies to address these gaps or otherwise support research that addresses these gaps? What is the impact of current decisionmaking processes on the accounting of NNBFs' benefits, costs, and performance over time? How do statutes, Administration guidance, and agency practice create disincentives and incentives for NNBF adoption for USACE and nonfederal project sponsors?", "The congressionally directed reports discussed in the previous section may inform USACE decisionmakers' and planners' understanding of the circumstances in which use of NNBFs may be beneficial. They also may inform congressional deliberations on whether\u00e2\u0080\u0094and, if so, how\u00e2\u0080\u0094to support use of NNBFs as part of USACE flood risk reduction and resilience efforts. "], "subsections": []}]}}
{"id": "R45184", "title": "Teen Birth Trends: In Brief", "released_date": "2020-05-13T00:00:00", "summary": ["The Centers for Disease Control and Prevention (CDC), the federal government's lead public health agency, has identified teen pregnancy as a major public health issue because of its high cost for families of teenage parents and society more broadly. The CDC highlights that the teen pregnancy rate has decreased steadily, dropping below CDC's target goal of 30.3 per 1,000 females aged 15 to 17 by 2015; however, the CDC also raises the concern that the United States has one of the highest rates of teen births of all industrialized countries.", "This report discusses trends in teen birth rates\u00e2\u0080\u0094or the number of births per 1,000 females aged 15 to 19 each year\u00e2\u0080\u0094since the 1950s. The rate of teens births peaked in 1957 at 96.3. It then decreased in most years from the 1960s through the 1980s. From 1991 onward, the rate declined except in two years, 2006 and 2007. The greatest decline in teen birth rates has occurred in recent years. For example, from 2007 to 2018, the rate declined by approximately 58%. The 2018 teen birth rate of 17.4 was a historical low since CDC began collecting and reporting birth data in the 1940s.", "In nearly each year from 1991 through the recent period, the teen birth rate decreased for all racial and ethnic groups; however, the rates declined more for certain groups than others. While the birth rates for two groups (non-Hispanic blacks and Hispanics) declined more than the rate for white teens, their birth rates remained higher overall. In 2018, Hispanic (26.7), non-Hispanic black (26.2), and non-Hispanic American Indian/Alaska Native (29.4) teens had more than double the teen birth rate for non-Hispanic white (12.2) and non-Hispanic Asian or Pacific Islander (4.0) teens.", "Teen birth rates have varied considerably by state and territory. In 2018, the state with the lowest reported rate was Massachusetts (7.2); the state with the highest reported rate was Arkansas (30.4). Teen birth rates have declined in rural areas over time but remain relatively higher than rates in urban areas.", "Research suggests that multiple trends have led to lower U.S. teen pregnancy and birth rates. From the 1990s through 2007, the risk of teen pregnancy decreased primarily because of improved contraceptive use, including an increase in the use of certain contraception methods (e.g., condoms), an increase in the use of multiple methods of contraception, and substantial declines in foregoing the use of contraception altogether. Some of the risk of pregnancy decreased among younger teens because of decreased sexual activity. A primary factor for more recent declines in the risk of teen pregnancy has been the increasing use of contraceptives among sexually active teens. Broad economic and social variables may influence teen behaviors, such as whether they will abstain from sex or use contraceptives.", "Teen pregnancy has high costs for teen parents, their children, and society more generally. Teenage mothers and fathers tend to have less education and are more likely to live in poverty than their peers who are not parents. Moreover, lower levels of education reduce teen parents' potential for economic self-sufficiency. Some analysis has looked at these societal impacts and the benefits of avoiding pregnancy during the teen years.", "This report accompanies CRS Report R45183, Teen Pregnancy: Federal Prevention Programs , which discusses Congress's current approach of supporting programs that seek to prevent pregnancy among teens; and CRS In Focus IF10877, Federal Teen Pregnancy Prevention Programs , which includes summary information about the programs."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["This report provides context for Congress about the U.S. teen birth rate\u00e2\u0080\u0094or the number of births per 1,000 females aged 15 to 19 each year\u00e2\u0080\u0094and its changes since the 1950s. Over this period, the teen birth rate has generally been in decline. This decline has been most significant in recent years, with the rate reaching a record low in 2018. Multiple factors have likely contributed to the decrease, though the influence of any single factor is not fully known. Reduced teen sexual activity, particularly among younger adolescents, could be one explanation. Increases in use of contraceptives, including highly effective and multiple methods, among sexually active teens could be another. Other factors, such as broader social and economic trends, may also be at play. ", "Despite the decline in the teen birth rate, Congress continues to be interested in the issue of teen birth because of its high social and economic costs for both individual families and society more generally. Further, disparities persist in teen birth rates among racial and ethnic subgroups and across states. ", "This report accompanies CRS Report R45183, Teen Pregnancy: Federal Prevention Programs , which discusses Congress's current approach of supporting programs that seek to prevent pregnancy among teens. "], "subsections": []}, {"section_title": "Teen Births in the United States", "paragraphs": ["Data on births are distinct from data on pregnancies. The teen birth rate refers to the number of live births per 1,000 teen girls aged 15 through 19. The teen pregnancy rate includes the number of pregnancies per 1,000 teen girls aged 15 through 19, which encompasses live births, abortions, and fetal losses . Birth data account for nearly every birth in the United States, whereas pregnancy data are based on estimates of miscarriages and abortion numbers that draw on various reporting systems and surveys. The Centers for Disease Control and Prevention (CDC), the federal government's lead public health agency, reports birth data on an annual basis (most recently for 2018). The CDC and the Guttmacher Institute publish teen pregnancy rates. These rates are usually published a year or two after birth data because of the time required to incorporate data from the various data sources. ", "This report focuses on the teen birth rate. The CDC tracks birth rates by age and other characteristics of birth mothers. In 2018, there were approximately 3.8 million births in the United States. About 180,000 of these births (4.7%) were to teenagers aged 15 to 19. Figure 1 shows the U.S. teen birth rate from 1950 through 2018 (the rate excludes the territories). ", "The rate ticked up in the baby boom era of the 1950s, peaking in 1957 at 96.3. It then decreased in most years from the 1960s through the 1980s. From 1991 onward, the teen birth rate declined except in two years, 2006 and 2007. The rate dropped by 72% from 1991 (61.8) to 2018 (17.4). In other words, about 6% of teens aged 15 to 19 gave birth in 1991 compared to less than 2% in 2018. ", "The greatest decline in the teen birth rate occurred in recent years. For example, from 2007 to 2018, the rate declined by about 58%. The 2018 teen birth rate of 17.4 was a historical low since CDC began collecting and reporting birth data in the 1940s. The CDC began tracking subgroup data for teens in 1960, when the teen birth rate was highest for both teens aged 15 to 17 (43.9 per 1,000) and teens aged 18 to 19 (166.7 per 1,000). Figure 1 indicates that the birth rate was higher in each year for the older teens compared to the younger teens. The 2018 birth rates for 15- to 17-year-olds (7.2 per 1,000) and 18- to 19-year-olds (32.3 per 1,000) were the lowest on record. ", "Repeat teen births have also declined over time. CDC found the number of subsequent teen births among youth aged 15 to 19 declined nationally by nearly 54% from 2004 to 2015 (the most recent analysis available). The prevalence of teen births that were repeat births was highest among Hispanic youth, followed by non-Hispanic black and non-Hispanic white youth. Over this same period, the largest declines in the number of repeat births were among black teens (21.8%), followed by Hispanic (16.8%) and white (13.9%) teens. Teen mothers have also been less likely to be married than in previous years. In 2018, the birth rate for unmarried teens aged 15 to 19 was 16.0 per 1,000. This is compared to 31.0 per 1,000 in 2010.", "Despite the overall decline in the teen birth rate, the rates for certain racial and ethnic groups remain relatively high. Teen birth rates in 2018 varied based on race and ethnicity, with three groups\u00e2\u0080\u0094Hispanic (26.7), non-Hispanic black (26.2), and non-Hispanic American Indian/Alaska Native (29.4) teens\u00e2\u0080\u0094having more than double the teen birth rate for non-Hispanic white (12.2) and non-Hispanic Asian or Pacific Islander (4.0) teens. ", " Figure 2 shows the teen birth rate by race and Hispanic origin over three key years: 1991, when the teen birth rate started a long-term decline; 2007, the most recent year when the teen birth rate had ticked back up slightly; and 2018, the most recent year for which CDC compiled historical teen birth rate data by race and ethnicity. In nearly each year from 1991 through the recent period, the teen birth rate decreased for all racial and ethnic groups; however, the rates declined more for certain groups compared to others. From 2007 to 2018, birth rates fell by 55% for non-Hispanic white teens, 40% for non-Hispanic American Indian/Alaska Native teens, 58% for non-Hispanic black teens, 73% for non-Hispanic Asian/Pacific Islander teens, and 65% for Hispanic teens. While the birth rates for two groups (non-Hispanic black and Hispanic) had a greater decline than the rate for white teens, their birth rates remained higher.", "In 2018, the birth rate for teens aged 15 to 19 varied considerably by state and territory. The state with the lowest reported rate was Massachusetts (7.2); the state with the highest reported rate was Arkansas (30.4). ", "Figure 3 shows a map with 2018 teen births rates in four data categories for the 50 states, the District of Columbia, and three of the territories. Eighteen states had rates of less than 15 per 1,000 teens aged 15 to 19: California, Colorado, Connecticut, Maine, Maryland, Massachusetts, Minnesota, New Hampshire, New Jersey, New York, Oregon, Pennsylvania, Rhode Island, Utah, Vermont, Virginia, Washington, and Wisconsin. Ten states had the highest teen birth rates (25 or higher): Alabama, Arkansas, Kentucky, Louisiana, Mississippi, New Mexico, Oklahoma, Tennessee, Texas, and West Virginia. The rates for the territories ranged from 19.3 in Puerto Rico to 34.4 in Guam. From 2007 (when the birth rate last ticked up) to 2018, the teen birth rate decreased in each state or territory by between 19% and 67%. ", "Teen birth rates have also declined in rural areas over time but remain relatively higher than rates in urban areas.", "While the U.S. teen birth rate has decreased over time, it has been higher than that of most other industrialized countries. For comparison, the U.S. teen birth rate of 18.8 was about 50% higher than the rate of the United Kingdom, 12.6, in 2017 (based on the most recent international data available). The reasons for the high teen birth rate in the United States relative to other industrial countries have not been fully explored. Economic conditions and income inequality within and between countries may play a role. Further, the research literature, which is somewhat dated and limited, indicates that use of contraceptives among teens appears to be greater in other developed countries compared to the United States."], "subsections": []}, {"section_title": "Factors Likely Contributing to the Declining Risk of Teen Pregnancy", "paragraphs": ["Researchers suggest that multiple trends have driven down U.S. teen pregnancy and teen birth rates. They point to certain factors as the reason for declines over the 1990s through 2007. Research indicates that over this period, the risk of teen pregnancy decreased primarily because of improved contraceptive use, including an increase in the use of certain contraception methods (e.g., condoms), an increase in the use of multiple methods of contraception, and substantial declines in foregoing contraception. In addition, some of the risk of pregnancy decreased among younger teens, those ages 15 to 17, because of decreased sexual activity. A primary factor for more recent declines in the risk of teen pregnancy has also been the increasing use of contraceptives among sexually active teens. From 2007 through 2014, teens increased their contraceptive use, including the use of any method, the use of long-acting reversible contraceptives (LARCs; e.g., intrauterine devices, or IUDs, and birth control implants), and the use of the withdrawal method along with another method. ", "Broad economic and social variables may influence teen behaviors, such as whether they will abstain from sex or use contraceptives. Behavioral changes may have been driven by a confluence of factors, such as expanded educational and labor market opportunities for women and improvements in contraceptive technology. Some observers theorize that the long-term downward trend in teen birth rates is attributable to the recession that began in 2007. They contend that during economic downturns the decrease in teen births\u00e2\u0080\u0094like the decrease in overall births\u00e2\u0080\u0094is partly due to teenagers being more careful as they witness the economic difficulties faced by their families. Despite this rationale, the teen birth rate continued to diminish after the recession (as well as during periods of economic expansion in the 1990s). Another possible explanation for the decline is the role of social media and increased use of the internet in teens' knowledge about sex and birth control. One analysis found that there were more rapid declines in rates of teen childbearing in places where the MTV show 16 and Pregnant was more widely viewed. The study extrapolated that teens changed their behavior (e.g., increasing the use of contraceptives) after viewing the show. Still, teen birth rates declined even after ratings for the show peaked. ", "Some observers contend that teen pregnancy prevention programs, such as those supported with federal funding, could potentially play a role in the declining birth rate for teenagers. However, the extent to which these programs have caused a decline in the teen birth rate is not fully known. "], "subsections": []}, {"section_title": "Financial and Social Costs of Teen Births", "paragraphs": ["Teen pregnancy has high costs for the families of teen parents and society more generally. Teenage mothers and fathers tend to have less education and are more likely to live in poverty than their peers who are not teen parents. For example,", "nearly one-third of teen girls who have dropped out of high school cite pregnancy or parenthood as a reason, about 7 out of 10 teen mothers who have moved out of their family's household live below the poverty level, and more than 60% of teen mothers receive some type of public benefits within the first year after their children are born. ", "Lower levels of education reduce teen parents' potential for economic self-sufficiency. At the same time, being impoverished and having less education can also increase the likelihood of teens becoming pregnant in the first place. These poorer outcomes may be explained in part by underlying differences between those who give birth as teens and those who delay childbearing: teen mothers often come from more disadvantaged backgrounds (e.g., family more likely to receive public welfare benefits, parents have lower levels of education) than their counterparts who have children at a later age. In addition, teen sexual activity even among those who do not become pregnant can increase the risk of sexually transmitted infections (STIs), which can led to long-term health issues. Adolescents aged 15 to 19 have certain STIs at a rate that is among the highest of sexually active individuals.", "Further, teen childbearing can also affect the offspring of teen parents. Children of teenage mothers have poorer outcomes than children of mothers who give birth in their early 20s or later. They are generally more likely to (1) have chronic medical conditions, (2) use public health care, (3) have lower school readiness scores, (4) do poorly in school, (5) give birth during their teen years (females), and (6) be incarcerated (males). In addition to the consequences for teens and their families, teen childbearing has societal impacts. ", "One study examined these societal impacts, specifically estimating the cost savings to public programs that were associated with avoiding unintended pregnancies during the teen years. The Power to Decide did a simulation analysis to estimate the number of births to teenagers that had been averted due to the decrease in teen fertility rates from 1991 to 2015. The analysis then estimated total savings of $4.4 billion for this period, taking into consideration the cost savings to Medicaid that would have been associated with labor and delivery, postpartum care for the mother, and infant care; and receipt of Temporary Assistance for Needy Families (TANF), Supplemental Nutrition Assistance Program (SNAP), and Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) benefits. Additional research of decreased or delayed teenage pregnancy and childbearing could help to inform the impacts for teen parents, their children, and society more generally."], "subsections": [{"section_title": "Appendix. Additional Data on Teen Pregnancy", "paragraphs": [], "subsections": []}]}]}}
{"id": "R41510", "title": "Budget Enforcement Procedures: House Pay-As-You-Go (PAYGO) Rule", "released_date": "2019-08-12T00:00:00", "summary": ["The House pay-as-you-go (PAYGO) rule is generally intended to discourage or prevent Congress from taking certain legislative action that would increase the deficit. The rule requires that legislation affecting direct spending or revenues not increase the projected deficit over either a 6-year or an 11-year period. In effect, the rule requires that any legislation projected to increase direct spending or reduce revenues must be offset by equivalent amounts of direct spending cuts, revenue increases, or a combination of the two, over the two specified periods.", "The House PAYGO rule applies to legislation affecting direct spending and revenues . It does not apply to discretionary spending .", "This rule exempts provisions designated as an emergency from being counted in determining compliance with the PAYGO rule.", "First established at the beginning of the 110 th Congress, the House PAYGO rule was modified during the 111 th Congress: at the beginning of the 111 th Congress, as part of the opening-day rules package; and again in the second session of the 111 th Congress, as part of a special rule providing for the consideration of an unrelated measure. At the beginning of the 112 th Congress, it was replaced with the Cut-As-You-Go (CUTGO) rule, which focused exclusively on the mandatory spending effects of legislation, eliminating any revenue effects from the budgetary evaluation under the rule. Most recently, at the beginning of the 116 th Congress, the PAYGO rule was reinstituted, covering both direct spending and revenues, with certain modifications.", "The House PAYGO rule exists alongside similar PAYGO requirements in statute, but with some significant differences. The House rule (1) applies the PAYGO requirement during the consideration of legislation on the House floor, (2) applies generally to each measure individually, and (3) is enforced by a point of order on the House floor.", "The Statutory PAYGO Act, in contrast, (1) applies the requirement to legislation after it has been enacted, (2) applies to the net effect of all legislation enacted during a session of Congress, and (3) is enforced by sequestration\u00e2\u0080\u0094the cancellation of budgetary resources provided by laws affecting direct spending\u00e2\u0080\u0094to eliminate an increase in the deficit resulting from the enactment of legislation.", "This report updates the previous version (dated November 30, 2010) with descriptions of the changes instituted by the CUTGO rule, adopted at the beginning of the 112 th Congress, and the current PAYGO rule, adopted at the beginning of the 116 th Congress."], "reports": {"section_title": "", "paragraphs": ["T he House pay-as-you-go (PAYGO) rule is generally intended to discourage or prevent Congress from taking certain legislative action that would increase the deficit. It prohibits the consideration of direct spending and revenue legislation that is projected to increase the deficit over either a 6-year or an 11-year period. In effect, the rule requires legislation that includes provisions projected to increase direct spending or reduce revenues to also include offsetting provisions over the two specified periods.", "The House PAYGO rule was first established at the beginning of the 110 th Congress and modified in the 111 th Congress. It was replaced by the cut-as-you-go (CUTGO) rule, which applied only to direct spending legislation, at the beginning of the 112 th Congress. The PAYGO rule was reinstated, with modifications, replacing the CUTGO rule, at the beginning of the 116 th Congress.", "This report explains the House PAYGO rule's features, describes its legislative history, and discusses how it compares to statutory PAYGO requirements. It updates the previous version (dated November 30, 2010), largely with information about the CUTGO rule and the PAYGO rule, as adopted in the 116 th Congress.", "The full text of the House PAYGO rule is provided in the Appendix ."], "subsections": [{"section_title": "Features of the House PAYGO Rule", "paragraphs": ["The House PAYGO rule adopted for the 116 th Congress prohibits the consideration of legislation affecting direct spending and revenues that is projected to increase the deficit, or reduce the surplus, over either of two time periods: (1) the 6-year period consisting of the current fiscal year, the budget year, and the 4 ensuing fiscal years; or (2) the 11-year period consisting of the current year, the budget year, and the ensuing 9 fiscal years.", "The House PAYGO rule applies to legislation affecting direct spending and revenues . Direct spending, also referred to as mandatory spending, has two distinguishing features: (1) it is provided or controlled in authorizing legislation; and (2) it generally continues without any annual legislative action. Examples of programs funded through direct spending include Medicare, unemployment compensation, and federal retirement. Direct spending is within the jurisdiction of the respective authorizing committees.", "Revenues are the funds collected from the public primarily as a result of the federal government's exercise of its sovereign taxing power. They consist of receipts from individual income taxes, payroll taxes, corporate income taxes, excise taxes, duties, gifts, and miscellaneous receipts. Revenues are within the jurisdiction of the Committee on Ways and Means in the House.", "The House PAYGO rule does not apply to discretionary spending , which is provided and controlled through the annual appropriations process. Discretionary spending is not counted for purposes of determining whether legislation increases the deficit under the House PAYGO rule.", "The rule generally requires that each measure affecting direct spending and revenues not increase the deficit over either of the two time periods specified. That is, to comply with the rule, each measure that includes provisions projected to increase direct spending or reduce revenues must also include offsetting provisions projected to reduce direct spending, increase revenues, or both, by equivalent amounts. A projected deficit reduction resulting from a measure previously passed by the House, or one to be considered subsequently by the House, cannot be used to offset a deficit increase due to provisions in a measure currently under consideration.", "The rule provides one exception to this measure-by-measure application. Under clause 10(b) of House Rule XXI, savings from a previously passed measure may be included in determining a separate measure's PAYGO compliance if a special rule provides that the two measures are to be combined upon engrossment.", "The rule specifies that a determination of the effect of direct spending and revenue legislation on the deficit or surplus is to be based on estimates made by the Committee on the Budget relative to the Congressional Budget Office (CBO) baseline estimates. In producing its baseline estimates, CBO projects revenues, spending, and deficit or surplus levels under existing law (i.e., assuming no legislative changes). Under the rule, such baseline estimates are to be consistent with Section 257 of the Balanced Budget and Emergency Deficit Control Act of 1985, as amended.", "The House PAYGO rule does not apply to direct spending increases or revenue reductions that occur under existing law. That is, if direct spending increases because more individuals qualify for benefits under existing law, for example, any increase in the deficit is not counted for PAYGO purposes and is beyond the rule's control.", "The House PAYGO rule exempts provisions designated as an emergency from being counted in determining compliance with the rule. Under clause 10(c) of House Rule XXI, a determination as to whether legislation increases the deficit, or reduces the surplus, shall exclude any provision \"expressly designated as an emergency for the purposes of pay-as-you-go principles.\" If legislation contains such a designation, the chair must put the question of consideration to the full House prior to its consideration. That is, the House must vote on whether or not to consider the legislation, even though all or certain budgetary effects would be exempt from the House PAYGO rule. If the question is decided in the affirmative (by simple majority), the legislation may then be considered. Alternatively, if the question is decided in the negative, the legislation may not be considered.", "The House PAYGO rule is enforced by a point of order to prevent the consideration of legislation that does not meet the requirement. If legislation brought up on the House floor violates the rule (i.e., increases the deficit, or reduces the surplus, in either of the two fiscal-year periods), a Member may raise a point of order against it. If the point of order is sustained, the legislation may not be considered (in the case of an amendment, the amendment falls). The House rule, however, is not self-enforcing: a Member must raise the point of order to enforce it. In addition, the House rule may be waived by a special rule reported by the House Rules Committee and agreed to by the House by majority vote, by considering the legislation under the suspension of the rules procedures, or by unanimous consent.", "Finally, the House PAYGO rule, as part of the standing rules of the House, is effective for the current Congress for which it is adopted."], "subsections": []}, {"section_title": "Legislative History of the House PAYGO Rule", "paragraphs": ["The House PAYGO rule was first established at the beginning of the 110 th Congress. It was modified at the beginning of the 111 th Congress, as part of the opening-day rules package, and again in the second session of the 111 th Congress, as part of a special rule providing for the consideration of an unrelated measure. In addition, its application to certain legislation was modified during the first session of the 111 th Congress, as part of the FY2010 budget resolution ( S.Con.Res. 13 ). At the beginning of the 112 th Congress, it was replaced with the CUTGO rule, which focused exclusively on the mandatory spending effects of legislation, eliminating any revenue effects from the budgetary evaluation under the rule. Most recently, at the beginning of the 116 th Congress, the PAYGO rule was reinstituted, covering both mandatory spending and revenues, with certain modifications."], "subsections": [{"section_title": "Actions in the 110th Congress", "paragraphs": ["Even before the 110 th Congress began, the new Democratic leadership in both chambers indicated an intention to \"restore\" PAYGO rules. Accordingly, the House adopted its own PAYGO rule as part of its opening-day rules package.", "The original House PAYGO rule generally prohibited the consideration of legislation affecting direct spending and revenues that was projected to increase the deficit or reduce the surplus over a 6-year and an 11-year period. In this original form, as it does in its current form, the rule counted on-budget and off-budget entities (such as Social Security) in determining the effect on the deficit (referred to as the unified budget deficit ). The rule also directed the Budget Committee to use the following particular baseline estimates when determining the effect of legislation on the deficit:", "after the beginning of a new calendar year but before the consideration of a budget resolution, the Budget Committee was to use the most recent baseline estimates supplied by CBO; and after the consideration of the budget resolution, the Budget Committee was to use the most recent baseline estimates supplied by CBO used in considering the budget resolution. ", "Lastly, the original rule provided no explicit exemptions, such as adopted in the 116 th Congress."], "subsections": []}, {"section_title": "Actions in the 111th Congress", "paragraphs": ["At the beginning of the 111 th Congress, following the customary practice, the House adopted its rules by adopting the preceding Congress's rules, including the House PAYGO rule, with certain amendments.", "Three changes were made to the PAYGO rule. First, the rule was modified to require the Budget Committee to use baseline estimates supplied by CBO, replacing the particular baseline estimates specified in the original rule. Second, a provision was added to the rule to allow for an exception to its measure-by-measure application. Under this exception, which is still in the rule in the 116 th Congress, the budgetary effects of a House-passed bill may be used to determine compliance with the PAYGO requirement of a separate measure if a special rule provides that the two measures are to be combined upon engrossment. Lastly, the rule was amended to exempt provisions designated as an emergency and to provide for a question of consideration for legislation containing such a designation.", "Later in the 111 th Congress, during the second session, the House further amended clause 10 of Rule XXI generally to align the House PAYGO rule with the Statutory Pay-As-You-Go Act of 2010, which was enacted earlier in the year. The changes were included in Section 5 of H.Res. 1500 , a special rule providing for the consideration of an unrelated measure.", "The changes largely related to scoring issues\u00e2\u0080\u0094what budgetary effects would count and not count for purposes of determining if legislation increased the deficit (or reduced the surplus). First, the rule was amended to focus on the \"on-budget deficit,\" excluding any \"off-budget\" effects, such as those affecting the Social Security trust funds. Second, the rule was amended to require that determinations of the budgetary effects of legislation were consistent with the Statutory PAYGO Act. Specifically, the following scoring requirements were incorporated into the House PAYGO rule.", "Included in estimates:", "budgetary effects resulting from \"outyear modifications\" of direct spending laws contained in appropriations acts.", "Excluded from estimates:", "budgetary effects due to \"timing shifts\" from inside to outside the 11-year period covered by the PAYGO rule; and budgetary effects resulting from legislation extending current policy (referred to as \"adjustments for current policies\"), which were scheduled by statute to expire at the time, in four areas: (1) Medicare payments to physicians; (2) the estate and gift tax; (3) the alternative minimum tax (AMT); and (4) middle-class tax cuts."], "subsections": []}, {"section_title": "Actions in the 112th Congress", "paragraphs": ["At the beginning of the 112 th Congress, in adopting the rules of the House, the new Republican majority replaced the PAYGO rule with a new Cut-As-You-Go (CUTGO) rule. In general, the CUTGO rule focused on the net effect of new legislation on mandatory spending only, excluding any effects on revenues. Specifically, the rule prohibited the consideration of any legislation that would have the net effect of increasing mandatory spending over the same 6-year and 11-year periods as the previous PAYGO rule.", "Excluding the projected revenue effects had at least two implications: (1) the House could consider legislation reducing revenues, regardless of whether it would increase the projected deficit, without being vulnerable to a point of order under the rule; and (2) legislation projected to increase mandatory spending could not be offset by an increase in revenues, in order to comply with the rule.", "The CUTGO rule also did not continue the \"adjustments for current policies,\" as provided in the Statutory PAYGO Act. It is worth noting that these statutory adjustments were set to expire at the end of 2011 and were not extended beyond 2011. ", "Other than these changes, the CUTGO rule generally retained the procedures related to the operation of the previous PAYGO rule. For example, the budgetary effects designated as emergency requirements under the Statutory PAYGO Act were excluded and also required a vote on the question of consideration, as provided in the new PAYGO rule, as described above.", "The CUTGO rule was renewed, without change, in each subsequent Congress, through the 115 th Congress (i.e., through 2018)."], "subsections": []}, {"section_title": "Actions in the 116th Congress", "paragraphs": ["At the beginning of the 116 th Congress, in adopting the rules of the House, the new Democratic majority reinstituted the PAYGO rule, replacing the previous CUTGO rule. Most significantly, the PAYGO rule reincorporates the projected revenue effects of legislation into the evaluation of determining a violation. The new rule, however, is not exactly the same PAYGO rule that existed at the end of the 111 th Congress. In particular, unlike the previous PAYGO rule, it includes off-budget effects, such as those that affect the receipts and outlays of the Social Security trust funds.", "In general, other than these changes, the new House PAYGO rule retains the procedures related to the operation of the former CUTGO and PAYGO rules. For example, the new PAYGO rule continues to provide for combining the budgetary effects of two measures, under particular circumstances, and for excluding budgetary effects designated as an emergency, as described in the \" Features of the House PAYGO Rule ,\" section above."], "subsections": []}]}, {"section_title": "Comparison to Statutory PAYGO Requirements", "paragraphs": ["The House PAYGO rule exists alongside similar PAYGO requirements in statute. Like the House rule, the Statutory Pay-As-You-Go Act of 2010 (Title I of P.L. 111-139 , 124 Stat. 8-29), enacted on February 12, 2010, is intended to discourage or prevent Congress from taking certain legislative action that would increase the on-budget deficit. It generally requires that legislation affecting direct spending or revenues not increase the deficit over the 6-year and 11-year time periods, as in the House rule. Notably, the Statutory PAYGO Act relates only to the on-budget effects of legislation, excluding any off-budget effects, such as those affecting the Social Security trust funds.", "While the House PAYGO rule and the statutory requirements are similar, they are different in significant ways relating to when and how they are enforced. The House rule applies during the consideration of legislation on the House floor. That is, the House rule prohibits the consideration of the legislation on the House floor if it does not comply with the requirement. In addition, under the House PAYGO rule, each measure affecting direct spending and revenues must comply with the requirement, with the one exception of two measures combined upon engrossment, as explained above.", "The Statutory PAYGO Act, in contrast, applies the requirement to legislation after it has been enacted. Moreover, instead of requiring that each enacted bill not increase the deficit, the statutory rule requires that the net effect of all bills affecting direct spending and revenues (referred to as PAYGO legislation or PAYGO acts) enacted during a session of Congress not increase the deficit. That is, under the statutory rule, the net effect of all PAYGO acts enacted during a session of Congress must not increase the deficit over either a 5-year or a 10-year period. In other words, Congress can enact legislation increasing the deficit and still comply with the statutory rule as long as separate legislation offsetting such increases in the deficit is enacted during the same year.", "Reflecting the difference in when the PAYGO requirement is applied, the congressional and statutory rules also differ in how they are enforced. As noted above, the House PAYGO rule is enforced by a point of order to prevent the consideration of legislation that does not meet the requirement. In contrast, the statutory PAYGO rule is enforced by sequestration\u00e2\u0080\u0094the cancellation of budgetary resources provided by laws affecting direct spending\u00e2\u0080\u0094to eliminate an increase in the deficit resulting from the enactment of legislation. The former is an internal procedure of the House, whereas the latter involves actions taken by the President and the Office of Management and Budget.", "The statutory PAYGO rule provides that if the net effect of direct spending and revenue legislation enacted during a year increases the deficit (i.e., violates the PAYGO requirement), budgetary resources in certain direct spending programs are cut in order to eliminate the increase in the deficit. Specifically, the average budgetary effects (i.e., any increase or decrease in the deficit) over 5-year and 10-year periods of each PAYGO act are placed on 5-year and 10-year scorecards, respectively. The PAYGO requirement effectively is applied to the balances on each of these scorecards 14 days after Congress adjourns at the end of a session. If either scorecard shows a positive balance (referred to as a debit ) for the budget year, the President is required to issue a sequestration order cancelling budgetary resources in non-exempt direct spending programs sufficient to eliminate the balance (the larger balance if both scorecards show a positive balance).", "Finally, although the House PAYGO rule must be adopted anew at the beginning of each new Congress, the Statutory PAYGO Act does not include any expiration date."], "subsections": [{"section_title": "Appendix. Text of the House Pay-As-You-Go (PAYGO) Rule: Clause 10 of House Rule XXI (116th Congress)", "paragraphs": ["10. (a)(1) Except as provided in paragraphs (b) and (c), it shall not be in order to consider any bill, joint resolution, amendment, or conference report if the provisions of such measure affecting direct spending and revenues have the net effect of increasing the deficit or reducing the surplus for either the period comprising\u00e2\u0080\u0094", "(A) the current fiscal year, the budget year, and the four fiscal years following that budget year; or", "(B) the current fiscal year, the budget year, and the nine fiscal years following that budget year.", "(2) The effect of such measure on the deficit or surplus shall be determined on the basis of estimates made by the Committee on the Budget relative to baseline estimates supplied by the Congressional Budget Office consistent with section 257 of the Balanced Budget and Emergency Deficit Control Act of 1985.", "(b) If a bill, joint resolution, or amendment is considered pursuant to a special order of the House directing the Clerk to add as new matter at the end of such measure the provisions of a separate measure as passed by the House, the provisions of such separate measure as passed by the House shall be included in the evaluation under paragraph (a) of the bill, joint resolution, or amendment.", "(c)(1) Except as provided in subparagraph (2), the evaluation under paragraph (a) shall exclude a provision expressly designated as an emergency for purposes of pay-as-you-go principles in the case of a point of order under this clause against consideration of\u00e2\u0080\u0094", "(A) a bill or joint resolution;", "(B) an amendment made in order as original text by a special order of business;", "(C) a conference report; or", "(D) an amendment between the Houses.", "(2) In the case of an amendment (other than one specified in subparagraph (1)) to a bill or joint resolution, the evaluation under paragraph (a) shall give no cognizance to any designation of emergency.", "(3) If a bill, joint resolution, an amendment made in order as original text by a special order of business, a conference report, or an amendment between the Houses includes a provision expressly designated as an emergency for purposes of pay-as-you-go principles, the Chair shall put the question of consideration with respect thereto.", "(d) For the purpose of this clause, the terms \"budget year\" and \"current year\" have the meanings specified in section 250 of the Balanced Budget and Emergency Deficit Control Act of 1985, and the term \"direct spending\" has the meaning specified in such section 250 except that such term shall also include provisions in appropriations Acts that make outyear modifications to substantive law as described in section 3(4)(C) of the Statutory Pay-As-You-Go Act of 2010."], "subsections": []}]}]}}
{"id": "RL32048", "title": "Iran: Internal Politics and U.S. Policy and Options", "released_date": "2019-05-30T00:00:00", "summary": ["U.S.-Iran relations have been mostly adversarial\u2014but with varying degrees of intensity\u2014since the 1979 Islamic Revolution in Iran. Since then, U.S. officials have consistently identified Iran's support for militant Middle East groups as a significant threat to U.S. interests and allies, and Iran's nuclear program took precedence in U.S. policy after 2002 as that program advanced.", "In 2010, the Obama Administration led a campaign of broad international economic pressure on Iran to persuade it to agree to strict limits on the program\u2014an effort that contributed to the June 2013 election of the relatively moderate Hassan Rouhani as president of Iran and the July 2015 multilateral nuclear agreement\u2014the Joint Comprehensive Plan of Action (JCPOA). That agreement exchanged sanctions relief for limits on Iran's nuclear program, but did not contain binding limits on Iran's missile program or on its regional influence or human rights abuses.", "The Trump Administration cited the JCPOA's deficiencies in its May 8, 2018, announcement that the United States would exit the JCPOA and reimpose all U.S. secondary sanctions. The stated intent of that step, as well as subsequent actions such as the April 2019 designation of the Islamic Revolutionary Guard Corps (IRGC) as a foreign terrorist organization (FTO) and the May 2019 ending of sanctions exceptions for buyers of Iranian oil, is to apply \"maximum pressure\" on Iran to compel it to change its behavior, including negotiating a new JCPOA that takes into account the broad range of U.S. concerns. Included in these concerns is Iran's support for pro-Iranian regimes and armed factions. Iran has responded by abrogating some of its JCPOA commitments.", "Before and particularly during an escalation of U.S.-Iran tensions in May 2019, President Trump has indicated a willingness to meet with Iranian leaders. However, Administration statements and reports detail a long litany of objectionable behaviors that Iran must change for there to be any dramatic change in U.S.-Iran relations. Iranian leaders say they will not talk with the Administration unless and until it reenters the 2015 JCPOA.", "Some experts assert that the threat posed by Iran stems from the nature and ideology of Iran's regime, and that the underlying, if unstated, goal of Trump Administration policy is to bring about regime collapse. In the context of escalating U.S.-Iran tensions in May 2019, President Trump has specifically denied that this is his Administration's goal. Any U.S. regime change strategy presumably would take advantage of divisions and fissures within Iran, as well as evident popular unrest. In part as a response to repression as well as economic conditions, unrest erupts periodically, most recently during December 2017-January 2018, and sporadically since then, including in response to the regime's apparent mishandling of relief efforts for vast flooding in southwestern Iran. But the unrest evident to date is not at a level where it threatens the leadership's grip on power.", "U.S. pressure has widened leadership differences in Iran. Hassan Rouhani, who seeks to improve Iran's relations with the West, including the United States, won successive presidential elections in 2013 and 2017, and reformist and moderate candidates won overwhelmingly in concurrent municipal council elections in all the major cities. But hardliners continue to control the state institutions that maintain internal security in large part through suppression. And Iran's Supreme Leader, Grand Ayatollah Ali Khamene'i, is increasingly critical of Rouhani's commitment to the JCPOA in public statements.", "See also CRS Report R43333, Iran Nuclear Agreement and U.S. Exit, by Paul K. Kerr and Kenneth Katzman; CRS Report RS20871, Iran Sanctions, by Kenneth Katzman; CRS Report R44017, Iran's Foreign and Defense Policies, by Kenneth Katzman; and CRS In Focus IF11212, U.S.-Iran Tensions Escalate, by Kenneth Katzman."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Political History", "paragraphs": ["Iran is a country of nearly 80 million people, located in the heart of the Persian Gulf region. The United States was an ally of the late Shah of Iran, Mohammad Reza Pahlavi (\"the Shah\"), who ruled from 1941 until his ouster in February 1979. The Shah assumed the throne when Britain and Russia forced his father, Reza Shah Pahlavi (Reza Shah), from power because of his perceived alignment with Germany in World War II. Reza Shah had assumed power in 1921 when, as an officer in Iran's only military force, the Cossack Brigade (reflecting Russian influence in Iran in the early 20 th century), he launched a coup against the government of the Qajar Dynasty, which had ruled since 1794. Reza Shah was proclaimed Shah in 1925, founding the Pahlavi dynasty. The Qajar dynasty had been in decline for many years before Reza Shah's takeover. That dynasty's perceived manipulation by Britain and Russia had been one of the causes of the 1906 constitutionalist movement, which forced the Qajar dynasty to form Iran's first Majles (parliament) in August 1906 and promulgate a constitution in December 1906. Prior to the Qajars, what is now Iran was the center of several Persian empires and dynasties whose reach shrank steadily over time. After the 16 th century, Iranian empires lost control of Bahrain (1521), Baghdad (1638), the Caucasus (1828), western Afghanistan (1857), Baluchistan (1872), and what is now Turkmenistan (1894). Iran adopted Shiite Islam under the Safavid Dynasty (1500-1722), which ended a series of Turkic and Mongol conquests.", "The Shah was anti-Communist, and the United States viewed his government as a bulwark against the expansion of Soviet influence in the Persian Gulf and a counterweight to pro-Soviet Arab regimes and movements. Israel maintained a representative office in Iran during the Shah's time and the Shah supported a peaceful resolution of the Arab-Israeli dispute. In 1951, under pressure from nationalists in the Majles (parliament) who gained strength in the 1949 Majles elections, he appointed a popular nationalist parliamentarian, Dr. Mohammad Mossadeq, as prime minister. Mossadeq was widely considered left-leaning, and the United States was wary of his drive for nationalization of the oil industry, which had been controlled since 1913 by the Anglo-Persian Oil Company. His followers began an uprising in August 1953 when the Shah tried to dismiss him, and the Shah fled. The Shah was restored to power in a CIA-supported uprising that toppled Mossadeq (\"Operation Ajax\") on August 19, 1953.", "The Shah tried to modernize Iran and orient it toward the West, but in so doing he alienated the Shiite clergy and religious Iranians. He incurred broader resentment by using his SAVAK intelligence service to repress dissent. The Shah exiled Ayatollah Ruhollah Khomeini in 1964 because of Khomeini's active opposition to what he asserted were the Shah's anticlerical policies and forfeiture of Iran's sovereignty to the United States. Khomeini fled to and taught in Najaf, Iraq, a major Shiite theological center. In 1978, three years after the March 6, 1975, Algiers Accords between the Shah and Iraq's Baathist leaders that temporarily ended mutual hostile actions, Iraq expelled Khomeini to France, where he continued to agitate for revolution that would establish Islamic government in Iran. Mass demonstrations and guerrilla activity by pro-Khomeini forces caused the Shah's government to collapse. Khomeini returned from France on February 1, 1979, and, on February 11, 1979, he declared an Islamic Republic of Iran.", "Khomeini's concept of velayat-e-faqih (rule by a supreme Islamic jurisprudent, or \"Supreme Leader\") was enshrined in the constitution that was adopted in a public referendum in December 1979 (and amended in 1989). The constitution provided for the post of Supreme Leader of the Revolution. The regime based itself on strong opposition to Western influence, and relations between the United States and the Islamic Republic turned openly hostile after the November 4, 1979, seizure of the U.S. Embassy and its U.S. diplomats by pro-Khomeini radicals, which began the so-called hostage crisis that ended in January 1981 with the release of the hostages. Ayatollah Khomeini died on June 3, 1989, and was succeeded by Ayatollah Ali Khamene'i. ", "The regime faced serious unrest in its first few years, including a June 1981 bombing at the headquarters of the Islamic Republican Party (IRP) and the prime minister's office that killed several senior elected and clerical leaders, including then-Prime Minister Javad Bahonar, elected President Ali Raja'i, and IRP head and top Khomeini disciple Ayatollah Mohammad Hussein Beheshti. The regime used these events, along with the hostage crisis with the United States, to justify purging many of the secular, liberal, and left-wing personalities that had been prominent in the years just after the revolution. Examples included the regime's first Prime Minister Mehdi Bazargan; the pro-Moscow Tudeh Party (Communist); the People's Mojahedin Organization of Iran (PMOI, see below); and the first elected president, Abolhassan Bani Sadr. The regime was under economic and military threat during the 1980-1988 Iran-Iraq War. "], "subsections": []}, {"section_title": "Regime Structure, Stability, and Opposition", "paragraphs": ["Some experts attribute the acrimony that has characterized U.S.-Iran relations since the Islamic revolution to the structure of Iran's regime. Although there are some elected leadership posts and diversity of opinion, Iran's constitution\u2014adopted in public referenda in 1980 and again in 1989\u2014reserves paramount decisionmaking authority for a \"Supreme Leader\" (known in Iran as \"Leader of the Revolution\"). The President and the Majles (unicameral parliament) are directly elected, and since 2013, there have been elections for municipal councils that set local development priorities and select mayors. ", "Even within the unelected institutions, factional disputes between those who insist on ideological purity and those considered more pragmatic are evident. In part because of the preponderant political power of the clerics and the security services, the regime has faced repeated periodic unrest from minorities, intellectuals, students, labor groups, the poor, women, and members of Iran's minority groups. (Iran's demographics are depicted in a text box below.) ", "U.S. officials in successive Administrations have accused Iran's regime of widespread corruption, both within the government and among its pillars of support. In a speech on Iran on July 22, 2018, Secretary of State Michael Pompeo characterized Iran's government as \"something that resembles the mafia more than a government.\" He detailed allegations of the abuse of privileges enjoyed by Iran's leaders and supporting elites to enrich themselves and their supporters at the expense of the public good. The State Department's September 2018 \"Outlaw Regime\" report (p. 41) states that \"corruption and mismanagement at the highest levels of the Iranian regime have produced years of environmental exploitation and degradation throughout the country.\" "], "subsections": [{"section_title": "Unelected or Indirectly Elected Institutions: The Supreme Leader, Council of Guardians, and Expediency Council", "paragraphs": ["Iran's power structure consists of unelected or indirectly elected persons and institutions. "], "subsections": [{"section_title": "The Supreme Leader", "paragraphs": ["At the apex of the Islamic Republic's power structure is the \"Supreme Leader.\" He is chosen by an elected body\u2014the Assembly of Experts\u2014which also has the constitutional power to remove him, as well as to redraft Iran's constitution and submit it for approval in a national referendum. The Supreme Leader is required to be a senior Shia cleric. Upon Ayatollah Khomeini's death, the Assembly selected one of his disciples, Ayatollah Ali Khamene'i, as Supreme Leader. Although he has never had Khomeini's undisputed political or religious authority, the powers of the office ensure that Khamene'i is Iran's paramount leader. Under the constitution, the Supreme Leader is commander-in-chief of the armed forces, giving him the power to appoint commanders. ", "Khamene'i makes five out of the nine appointments to the country's highest national security body, the Supreme National Security Council (SNSC), including its top official, the secretary of the body. Khamene'i also has a representative of his office as one of the nine members, who typically are members of the regime's top military, foreign policy, and domestic security organizations. The Supreme Leader can remove an elected president, if the judiciary or the Majles (parliament) assert cause for removal. The Supreme Leader appoints half of the 12-member Council of Guardians , all members of the Expediency Council , and the judiciary head. "], "subsections": [{"section_title": "Succession to Khamene'i", "paragraphs": ["There is no announced successor to Khamene'i. The Assembly of Experts could conceivably use a constitutional provision to set up a three-person leadership council as successor rather than select one new Supreme Leader. Khamene'i reportedly favors as his successor Hojjat ol-Eslam Ibrahim Raisi, whom he appointed in March 2019 as new head of the judiciary, and in 2016 to head the powerful Shrine of Imam Reza (Astan-e Qods Razavi) in Mashhad, which controls vast property and many businesses in the province. Raisi is a hardliner who has served as state prosecutor and was allegedly involved in the 1988 massacre of prisoners and other acts of repression. The 2019 judiciary appointment suggests that Raisi's chances of becoming Supreme Leader were not necessarily diminished by his loss in the May 2017 presidential elections. ", "Still, the person Raisi replaced as judiciary chief, Ayatollah Sadeq Larijani, remains a succession candidate. Another contender is hardline Tehran Friday prayer leader Ayatollah Ahmad Khatemi, and some consider President Rouhani as a significant contender as well. "], "subsections": []}]}, {"section_title": "Council of Guardians and Expediency Council", "paragraphs": ["Two appointed councils play a major role on legislation, election candidate vetting, and policy. "], "subsections": [{"section_title": "Council of Guardians", "paragraphs": ["The 12-member Council of Guardians (COG) consists of six Islamic jurists appointed by the Supreme Leader and six lawyers selected by the judiciary and confirmed by the Majles . Each councilor serves a six-year term, staggered such that half the body turns over every three years. Currently headed by Ayatollah Ahmad Jannati, the conservative-controlled body reviews legislation to ensure it conforms to Islamic law. It also vets election candidates by evaluating their backgrounds according to constitutional requirements that each candidate demonstrate knowledge of Islam, loyalty to the Islamic system of government, and other criteria that are largely subjective. The COG also certifies election results. Municipal council candidates are vetted not by the COG but by local committees established by the Majles . "], "subsections": []}, {"section_title": "Expediency Council", "paragraphs": ["The Expediency Council was established in 1988 to resolve legislative disagreements between the Majles and the COG. It has since evolved into primarily a policy advisory body for the Supreme Leader. Its members serve five-year terms. Longtime regime stalwart Ayatollah Ali Akbar Hashemi-Rafsanjani was reappointed as its chairman in February 2007 and served in that position until his January 2017 death. In August 2017, the Supreme Leader named a new, expanded (from 42 to 45 members) Council, with former judiciary head Ayatollah Mahmoud Hashemi Shahroudi as chairman. Shahroudi passed away in December 2018 and Sadeq Larijani, who was then head of the judiciary, was appointed by the Supreme Leader as his replacement. President Hassan Rouhani and Majles Speaker Ali Larijani were not reappointed as Council members but attend the body's sessions in their official capacities. The council includes former president Ahmadinejad."], "subsections": []}]}, {"section_title": "Domestic Security Organs", "paragraphs": ["The leaders and senior officials of a variety of overlapping domestic security organizations form a parallel power structure that is largely under the direct control of the Supreme Leader in his capacity as Commander-in-Chief of the Armed Forces. State Department and other human reports on Iran repeatedly assert that internal security personnel are not held accountable for human rights abuses. The domestic security organs include the following:", "The Islamic Revolutionary Guard Corps (IRGC). The IRGC's domestic security role is generally implemented through the IRGC-led volunteer militia force called the Basij . The Basij is widely accused of arresting women who violate the regime's public dress codes and raiding Western-style parties in which alcohol, which is illegal in Iran, might be served. However, IRGC bases are often located in urban areas, giving the IRGC a capability to quickly intervene to suppress large antigovernment demonstrations. Law Enforcement Forces. This body is an amalgam of regular police, gendarmerie, and riot police that serve throughout the country. It is the regime's first \"line of defense\" in suppressing antiregime demonstrations or other unrest. Ministry of Interior. The ministry exercises civilian supervision of Iran's police and domestic security forces. The IRGC and Basij are generally outside ministry control. Ministry of Intelligence and Security (MOIS). Headed by Mahmoud Alavi, the MOIS conducts domestic surveillance to identify regime opponents and try to penetrate antiregime cells. The Ministry works closely with the IRGC and Basij . ", "Several of these organizations and their senior leaders or commanders are sanctioned by the United States for human rights abuses and other violations of U.S. Executive Orders. "], "subsections": []}]}, {"section_title": "Elected Institutions/Recent Elections", "paragraphs": ["Several major institutional positions are directly elected by the population, but international observers question the credibility of Iran's elections because of the role of the COG in vetting candidates and limiting the number and ideological diversity of the candidate field. Women can vote and run for most offices, and some women serve as mayors, but the COG interprets the Iranian constitution as prohibiting women from running for the office of president. Candidates for all offices must receive more than 50% of the vote, otherwise a runoff is held several weeks later.", "Another criticism of the political process in Iran is the relative absence of political parties; establishing a party requires the permission of the Interior Ministry under Article 10 of Iran's constitution. The standards to obtain approval are high: to date, numerous parties have filed for permission since the regime was founded, but only those considered loyal to the regime have been granted license to operate. Some have been licensed and then banned after their leaders opposed regime policies, such as the Islamic Iran Participation Front and Organization of Mojahedin of the Islamic Revolution, discussed in the text box below. "], "subsections": [{"section_title": "The Presidency", "paragraphs": ["The main directly elected institution is the presidency, which is formally and in practice subordinate to the Supreme Leader. Virtually every successive president has tried but failed to expand his authority relative to the Supreme Leader. Presidential authority, particularly on matters of national security, is also often circumscribed by key clerics and the generally hardline military and security organization called the Islamic Revolutionary Guard Corps (IRGC). But, the presidency is often the most influential economic policymaking position, as well as a source of patronage. The president appoints and supervises the cabinet, develops the budgets of cabinet departments, and imposes and collects taxes on corporations and other bodies. The presidency also runs oversight bodies such as the Anticorruption Headquarters and the General Inspection Organization, to which government officials are required to submit annual financial disclosures. ", "Prior to 1989, Iran had both an elected president and a prime minister selected by the elected Majles (parliament). However, the holders of the two positions were constantly in institutional conflict and a 1989 constitutional revision eliminated the prime ministership. Because Iran's presidents have sometimes asserted the powers of their institution against the office of the Supreme Leader itself, since October 2011, Khamene'i has periodically raised the possibility of eventually eliminating the post of president and restoring the post of prime minister . "], "subsections": []}, {"section_title": "The Majles", "paragraphs": ["Iran's Majles , or parliament, is a 290-seat, all-elected, unicameral body. There are five \"reserved seats\" for \"recognized\" minority communities\u2014Jews, Zoroastrians, and Christians (three seats of the five). The Majles votes on each nominee to a cabinet post, and drafts and acts on legislation. Among its main duties is to consider and enact a proposed national budget (which runs from March 21 to March 20 each year, coinciding with Nowruz). It legislates on domestic economic and social issues, and tends to defer to executive and security institutions on defense and foreign policy issues. It is constitutionally required to ratify major international agreements, and it ratified the JCPOA in October 2015. The ratification was affirmed by the COG. Women regularly run and some generally are elected; there is no \"quota\" for the number of women. Majles elections occur one year prior to the presidential elections; the latest were held on February 26, 2016."], "subsections": []}, {"section_title": "The Assembly of Experts", "paragraphs": ["A major but little publicized elected institution is the 88-seat Assembly of Experts. Akin to a standing electoral college, it is empowered to choose a new Supreme Leader upon the death of the incumbent, and it formally \"oversees\" the work of the Supreme Leader. The Assembly can replace him if necessary, although invoking that power would, in practice, most likely occur in the event of a severe health crisis. The Assembly is also empowered to amend the constitution. It generally meets two times a year.", "Elections to the Assembly are held every 8-10 years, conducted on a provincial basis. Assembly candidates must be able to interpret Islamic law. In March 2011, the aging compromise candidate Ayatollah Mohammad Reza Mahdavi-Kani was named chairman, but he died in 2014. His successor, Ayatollah Mohammad Yazdi, lost his seat in the Assembly of Experts election on February 26, 2016 (held concurrently with the Majles elections), and COG Chairman Ayatollah Ahmad Jannati was appointed concurrently as the Assembly chairman in May 2016. "], "subsections": []}, {"section_title": "Recent Elections", "paragraphs": ["Following the presidency regime stalwart Ali Akbar Hashemi-Rafsanjani during 1989-1997, a reformist, Mohammad Khatemi, won landslide victories in 1997 and 2001. However, hardliners marginalized him by the end of his term in 2005. Aided by widespread voiding of reformist candidacies by the COG, conservatives won a slim majority of the 290 Majles seats in the February 20, 2004, elections. In June 2005, the COG allowed eight candidates to compete (out of the 1,014 persons who filed), including Rafsanjani, Ali Larijani, IRGC stalwart Mohammad Baqer Qalibaf, and Tehran mayor Mahmoud Ahmadinejad. With reported tacit backing from Khamene'i, Ahmadinejad advanced to a runoff against Rafsanjani and then won by a 62% to 36% vote. Splits later erupted among hardliners, and pro-Ahmadinejad and pro-Khamene'i candidates competed against each other in the March 2008 Majles elections. ", "Disputed 2009 Election . Reformists sought to unseat Ahmadinejad in the June 12, 2009, presidential election by rallying to Mir Hossein Musavi, who served as prime minister during the 1980-1988 Iran-Iraq War and, to a lesser extent, former Majles speaker Mehdi Karrubi. Musavi's generally young, urban supporters used social media to organize large rallies in Tehran, but pro-Ahmadinejad rallies were large as well. Turnout was about 85%. The Interior Ministry pronounced Ahmadinejad the winner (63% of the vote) only two hours after the polls closed. Supporters of Musavi, who received the second-highest total (about 35% of the vote) immediately protested the results as fraudulent because of the hasty announcement of the results\u2014but some outside analysts said the results tracked preelection polls. Large antigovernment demonstrations occurred June 13-19, 2009. Security forces killed over 100 protesters (opposition figure\u2014Iran government figure was 27), including a 19-year-old woman, Neda Soltani, who became an icon of the uprising. ", "The opposition congealed into the \"Green Movement of Hope and Change.\" Some protests in December 2009 overwhelmed regime security forces in some parts of Tehran, but the movement's activity declined after the regime successfully suppressed its demonstration on the February 11, 2010, anniversary of the founding of the Islamic Republic. As unrest ebbed, Ahmadinejad promoted his loyalists and a nationalist version of Islam that limits clerical authority, bringing him into conflict with Supreme Leader Khamene'i. Amid that rift, in the March 2012 Majles elections, candidates supported by Khamene'i won 75% of the seats, weakening Ahmadinejad. Since leaving office in 2013, and despite being appointed by Khamene'i to the Expediency Council, Ahmadinejad has emerged as a regime critic. His following appears to be limited, and he has faced prosecutions of alleged corruption, meanwhile returning to his prior work as a professor of civil engineering. "], "subsections": [{"section_title": "June 2013 Election of Rouhani", "paragraphs": ["In the June 14, 2013, presidential elections, held concurrently with municipal elections, the major candidates included the following: ", "Several hardliners that included Qalibaf (see above); Khamene'i foreign policy advisor Velayati; and then-chief nuclear negotiator Seyed Jalilli. Former chief nuclear negotiator Hassan Rouhani, a moderate and Rafsanjani ally. The COG denial of Rafsanjani's candidacy, which shocked many Iranians because of Rafsanjani's prominent place in the regime, as well as the candidacy of an Ahmadinejad ally. ", "Green Movement supporters, who were first expected to boycott the vote, mobilized behind Rouhani after regime officials stressed that they were committed to a fair election. The vote produced a 70% turnout and a first-round victory for Rouhani, garnering about 50.7% of the 36 million votes cast. Hardliners generally garnered control of municipal councils in the major cities. Most prominent in Rouhani's first term cabinet were ", "Foreign Minister: Mohammad Javad Zarif, a former Ambassador to the United Nations in New York, who was assigned to serve concurrently as chief nuclear negotiator (a post traditionally held by the chairman of the Supreme National Security Council). In September 2013, Rouhani appointed senior IRGC leader and former Defense Minister Ali Shamkhani, who generally espouses more moderate views than his IRGC peers, to head that body. Oil Minister: Bijan Zanganeh, who served in the same post during the Khatemi presidency and attracted significant foreign investment to the sector. He replaced Rostam Qasemi, who was associated with the corporate arm of the IRGC. Defense Minister: Hosein Dehgan. An IRGC stalwart, he was an early organizer of the IRGC's Lebanon contingent that evolved into the IRGC-Qods Force. He also was IRGC Air Force commander and deputy Defense Minister. Justice Minister: Mostafa Pour-Mohammadi. As deputy intelligence minister in late 1980s, he was reportedly a decisionmaker in the 1988 mass executions of Iranian prisoners. He was interior minister under Ahmadinejad. In the 115 th Congress, H.Res. 188 would have condemned Iran for the massacre. "], "subsections": []}, {"section_title": "Majles and Assembly of Experts Elections in 2016", "paragraphs": ["On February 26, 2016, Iran held concurrent elections for the Majles and for the Assembly of Experts. A runoff round for 68 Majles seats was held on April 29. For the Majles, 6,200 candidates were approved, including 586 female candidates. Oversight bodies invalidated the candidacies of about 6,000, including all but 100 reformists. Still, pro-Rouhani candidates won 140 seats, close to a majority, and the number of hardliners in the body was reduced significantly. Independents, whose alignments vary by issue, hold about 50 seats. Seventeen women were elected\u2014the largest number since the revolution. The body reelected Ali Larijani as Speaker. ", "For the Assembly of Experts election, 161 candidates were approved out of 800 who applied to run. Reformists and pro-Rouhani candidates defeated two prominent hardliners\u2014the incumbent Assembly Chairman Mohammad Yazdi and Ayatollah Mohammad Taqi Mesbah-Yazdi. COG head Ayatollah Jannati retained his seat, but came in last for the 30 seats elected from Tehran Province. He was subsequently named chairman of the body."], "subsections": []}, {"section_title": "Presidential Election on May 19, 2017", "paragraphs": ["In the latest presidential election on May 19, 2017, Rouhani won a first-round victory with about 57% of the vote. He defeated a major figure, Hojjat ol-Eslam Ibrahim Raisi\u2014a close ally of Khamene'i. Even though other major hardliners had dropped out of the race to improve Raisi's chances, Raisi received only about 38% of the vote. ", "Municipal elections were held concurrently. After vetting by local committees established by the Majles , about 260,000 candidates competed for about 127,000 seats nationwide. More than 6% of the candidates were women. The alliance of reformists and moderate-conservatives won control of the municipal councils of Iran's largest cities, including all 21 seats on the Tehran municipal council. The term of the existing councils expired in September 2017 and a reformist official, Mohammad Ali Najafi, replaced Qalibaf as Tehran mayor. However, Najafi resigned in March 2018 after criticism from hardliners for his viewing of a dance performance by young girls during a celebration of a national holiday. The current mayor, selected in November 2018, is Pirouz Hanachi. "], "subsections": []}, {"section_title": "Second-Term Cabinet", "paragraphs": ["Rouhani was sworn into a second term in early August 2017. His second-term cabinet nominations retained most of the same officials in key posts, including Foreign Minister Zarif. Since the Trump Administration withdrew from the JCPOA in May 2018, hardliners have threatened to try to impeach Zarif for his role in negotiating that accord. In late February 2019, after being excluded from a leadership meeting with visiting President Bashar Al Asad of Syria, Zarif announced his resignation over the social media application Instagram. Rouhani did not accept the resignation and Zarif resumed his duties. ", "Key changes to the second-term cabinet include the following:", "Minister of Justice Seyed Alireza Avayee replaced Pour-Mohammadi. Formerly a state prosecutor, Avayee oversaw trials of protesters in the 2009 uprising and is subject to EU travel ban and asset freeze. Defense Minister Amir Hatami, a regular military officer, became the first non-IRGC Defense Minister in more than 20 years and the first regular military officer in that position. The cabinet has two women vice presidents, and one other woman as a member of the cabinet (but not heading any ministry). "], "subsections": []}, {"section_title": "Periodic Unrest Challenges Regime7", "paragraphs": ["In December 2017, significant unrest erupted in more than 80 cities, mostly over economic conditions, although demonstrations were smaller than the 2009-2010 protests. Protests initially cited economic concerns\u2014the high prices of staple foods\u2014but quickly evolved to expressions of opposition to Iran's leadership and the expenditure of resources on interventions throughout the Middle East. Some protesters were motivated by Rouhani's 2018-2019 budget proposals to increase funds for cleric-run businesses (\" bonyads \") and the IRGC, while cutting subsidies.", "Rouhani sought to defuse the unrest by acknowledging the right to protest and the legitimacy of some demonstrator grievances. Khamene'i at first attributed the unrest to covert action by Iran's foreign adversaries, particularly the United States, but he later acknowledged unspecified \"problems\" in the administration of justice. Security officers used force against protester violence in some cities, but experts say they generally exercised restraint. The government also temporarily shut down access to the social media site Instagram and a widely used messaging system called \"Telegram.\" Iranian official media reported that 25 were killed and nearly 4,000 were arrested during that period of unrest. ", "Since February 2018, some women have continued protesting the strict public dress code, and some have been detained. Small protests and other acts of defiance have continued since, including significant unrest in the Tehran bazaar in July 2018 in the context of shortages of some goods and shop closures due to the inability to price their goods for profit. Since September 2018, workers in various industries, including trucking and teaching, have conducted strikes to demand higher wages to help cope with rising prices. Rounds of nationwide teachers' strikes began in mid-February 2019. ", "In mid-2018, possibly to try to divert blame for Iran's economic situation, the regime established special \"anticorruption courts\" that have, in some cases, imposed the death penalty on businessmen accused of taking advantage of reimposed sanctions for personal profit. Iran also has used military action against armed factions that are based or have support outside Iran. ", "In early 2019, protests have taken place in southwestern Iran in response to the government's missteps in dealing with the effects of significant flooding in that area. The regime has tasked the leadership of the relief efforts to the IRGC and IRGC-QF, working with Iraqi Shia militias who are powerful on the Iraqi side of the border where the floods have taken place. ", "President Trump and other senior officials have supported protests by warning the regime against using force and vowing to hold officials responsible for harming protestors. The Administration also has requested U.N. Security Council meetings to consider Iran's crackdown on the unrest, although no formal U.N. action was taken. The Administration also imposed U.S. sanctions on identified regime officials and institutions responsible for abuses against protestors, including then-judiciary chief Sadeq Larijani, representing the highest-level Iranian official sanctioned by the United States to date. In the 115 th Congress, several resolutions supported the protestors, including H.Res. 676 (passed House January 9, 2018), S.Res. 367 , H.Res. 675 , and S.Res. 368 . "], "subsections": []}]}]}]}, {"section_title": "Human Rights Practices10", "paragraphs": ["U.S. State Department reports, including the Iran Action Group's September 2018 \"Outlaw Regime\" document, and reports from a U.N. Special Rapporteur, have long cited Iran for a wide range of abuses\u2014aside from its suppression of political opposition\u2014including escalating use of capital punishment, executions of minors, denial of fair public trial, harsh and life-threatening conditions in prison, and unlawful detention and torture. In a speech on Iran on July 22, 2018, Secretary of State Pompeo recited a litany of U.S. accusations of Iranian human rights abuses, and stated \"America is unafraid to expose human rights violations and support those who are being silenced.\" ", "State Department and U.N. Special Rapporteur reports have noted that the 2013 revisions to the Islamic Penal Code a nd the 2015 revisions to the Criminal Procedure Code made some reforms, including eliminating death sentences for children convicted of drug-related offenses and protecting the rights of the accused. A \"Citizen's Rights Charter,\" issued December 19, 2016, at least nominally protects free expression and is intended to raise public awareness of citizen rights. It also purportedly commits the government to implement the Charter's 120 articles. In August 2017, Rouhani appointed a woman, former vice president Shahindokht Molaverdi, to oversee implementation of the Charter. The State Department's human rights report for 2018 says that key Charter protections for individual rights of freedom to communicate and access information have not been implemented. ", "A U.N. Special Rapporteur on Iran human rights was reestablished in March 2011 by the U.N. Human Rights Council (22 to 7 vote), resuming work done by a Special Rapporteur on Iran human rights during 1988-2002. The Rapporteur appointed in 2016, Asma Jahangir, issued two Iran reports, the latest of which was dated August 14, 2017 (A/72/322), before passing away in February 2018. The special rapporteur mandate was extended on March 24, 2018 and British-Pakistani lawyer Javaid Rehman was appointed in July 2018. The U.N. General Assembly has insisted that Iran cooperate by allowing the Special Rapporteur to visit Iran, but Iran has instead only responded to Special Rapporteur inquiries through agreed \"special procedures.\" ", "Despite the criticism of its human rights record, on April 29, 2010, Iran acceded to the U.N. Commission on the Status of Women. It also sits on the boards of the U.N. Development Program (UNDP) and UNICEF. Iran's U.N. dues are about $9 million per year.", "Iran has an official body, the High Council for Human Rights, headed by former Foreign Minister Mohammad Javad Larijani (brother of the Majles speaker and the judiciary head). It generally defends the government's actions to outside bodies rather than oversees the government's human rights practices, but Larijani, according to the Special Rapporteur, has questioned the effectiveness of drug-related executions and other government policies. ", "As part of its efforts to try to compel Iran to improve its human rights practices, the United States has imposed sanctions on Iranian officials alleged to have committed human rights abuses, and on firms that help Iranian authorities censor or monitor the internet. Human rights-related sanctions are analyzed in significant detail in CRS Report RS20871, Iran Sanctions , by Kenneth Katzman. "], "subsections": []}, {"section_title": "U.S.-Iran Relations, U.S. Policy, and Options", "paragraphs": ["The February 11, 1979, fall of the Shah of Iran, who was a key U.S. ally, shattered U.S.-Iran relations. The Carter Administration's efforts to build a relationship with the new regime in Iran ended after the November 4, 1979, takeover of the U.S. Embassy in Tehran by radical pro-Khomeini \"Students in the Line of the Imam.\" The 66 U.S. diplomats there were held hostage for 444 days, and released pursuant to the January 20, 1981 \"Algiers Accords.\" Their release was completed minutes after President Reagan's inauguration on January 20, 1981. The United States broke relations with Iran on April 7, 1980, two weeks prior to a failed U.S. military attempt to rescue the hostages. ", "Iran has since then pursued policies that successive Administrations considered inimical to U.S. interests in the Near East region and beyond. Iran's authoritarian political system and human rights abuses have contributed to, but have not necessarily been central to, the U.S.-Iran rift, although some observers assert that Iran's behavior flows directly from the nature of its regime. ", "Iran has an interest section in Washington, DC, under the auspices of the Embassy of Pakistan, and staffed by Iranian Americans. The former Iranian Embassy closed in April 1980 when the two countries broke diplomatic relations, and remains under the control of the State Department. Iran's Mission to the United Nations in New York runs most of Iran's diplomacy inside the United States. The U.S. interests section in Tehran, under the auspices of the Embassy of Switzerland, has no American personnel. ", "The following sections analyze some key hallmarks of past U.S. policies toward Iran. "], "subsections": [{"section_title": "Reagan Administration: Iran Identified as Terrorism State Sponsor", "paragraphs": ["The Reagan Administration designated Iran a \"state sponsor of terrorism\" in January 1984\u2014a designation established by the Export Administration Act of 1979\u2014largely in response to Iran's backing for the October 1983 bombing of the Marine Barracks in Beirut. The Administration also \"tilted\" toward Iraq in the 1980-1988 Iran-Iraq War. During 1987-1988, U.S. naval forces fought several skirmishes with Iranian naval elements while protecting oil shipments transiting the Persian Gulf from Iranian mines and other attacks. On April 18, 1988, Iran lost one-quarter of its larger naval ships in an engagement with the U.S. Navy, including a frigate sunk. However, the Administration contradicted its efforts to favor Iraq's war effort by providing arms to Iran (\"TOW\" antitank weapons and I-Hawk air defense batteries) in exchange for Iran's help in the releasing of U.S. hostages held in Lebanon. On July 3, 1988, U.S. forces in the Gulf mistakenly shot down Iran Air Flight 655 over the Gulf, killing all 290 on board, contributing to Iran's decision to accept a cease-fire in the war with Iraq in August 1988. "], "subsections": []}, {"section_title": "George H. W. Bush Administration: \"Goodwill Begets Goodwill\"", "paragraphs": ["In his January 1989 inauguration speech, President George H.W. Bush, in stating that \"goodwill begets goodwill\" with respect to Iran, implied that U.S.-Iran relations could improve if Iran helped obtain the release of U.S. hostages held by Hezbollah in Lebanon. Iran's apparent assistance led to the release of all remaining U.S. hostages there by the end of December 1991. However, no U.S.-Iran thaw followed, possibly because Iran continued to back violent groups opposed to the U.S. push for Arab-Israeli peace that followed the 1991 U.S. liberation of Kuwait. "], "subsections": []}, {"section_title": "Clinton Administration: \"Dual Containment\"", "paragraphs": ["The Clinton Administration articulated a strategy of \"dual containment\" of Iran and Iraq\u2014an attempt to keep both countries simultaneously weak rather than alternately tilting to one or the other. In 1995-1996, the Administration and Congress banned U.S. trade and investment with Iran and imposed penalties on foreign investment in Iran's energy sector, in response to Iran's support for terrorist groups seeking to undermine the Israeli-Palestinian peace process. The election of the moderate Mohammad Khatemi as president in May 1997 precipitated a U.S. offer of direct dialogue, but Khatemi did not accept the offer. In June 1998, then-Secretary of State Madeleine Albright called for mutual confidence building measures that could lead to a \"road map\" for normalization. In a March 17, 2000, speech, the Secretary admitted past U.S. interference in Iran. "], "subsections": []}, {"section_title": "George W. Bush Administration: Iran Part of \"Axis of Evil\"", "paragraphs": ["In his January 2002 State of the Union message, President Bush named Iran as part of an \"axis of evil\" including Iraq and North Korea. However, the Administration enlisted Iran's diplomatic help in efforts to try to stabilize post-Taliban Afghanistan and post-Saddam Iraq. The Administration rebuffed a reported May 2003 Iranian overture transmitted by the Swiss Ambassador to Iran for an agreement on all major issues of mutual concern (\"grand bargain\" proposal). State Department officials disputed that the proposal was fully vetted within Iran's leadership. The Administration aided victims of the December 2003 earthquake in Bam, Iran, including through U.S. military deliveries into Iran. As Iran's nuclear program advanced, the Administration worked with several European countries to persuade Iran to agree to limit its nuclear program. President Bush's January 20, 2005, second inaugural address and his January 31, 2006, State of the Union message stated that the United States would be a close ally of a \"free and democratic\" Iran\u2014appearing to support regime change. "], "subsections": []}, {"section_title": "Obama Administration: Pressure, Engagement, and the JCPOA", "paragraphs": ["President Obama asserted that there was an opportunity to persuade Iran to limit its nuclear program through diplomacy and to potentially rebuild a U.S.-Iran relationship after decades of mutual animosity. The approach emerged in President Obama's first message to the Iranian people on the occasion of Nowruz (Persian New Year, March 21, 2009), in which he stated that the United States \"is now committed to diplomacy that addresses the full range of issues before us, and to pursuing constructive ties among the United States, Iran, and the international community.\" He referred to Iran as \"The Islamic Republic of Iran,\" appearing to reject a policy of regime change. The Administration reportedly also loosened restrictions on U.S. diplomats' meeting with their Iranian counterparts at international meetings. In a speech to the \"Muslim World\" in Cairo on June 4, 2009, President Obama acknowledged that the United States had played a role in the overthrow of Mossadeq and said that Iran had a right to peaceful nuclear power. In addition, President Obama exchanged several letters with Supreme Leader Khamene'i, reportedly expressing the Administration's support for engagement with Iran.", "In 2009, Iran's crackdown on the Green Movement uprising and its refusal to accept compromises to limit its nuclear program caused the Obama Administration to shift to a \"two track\" strategy: stronger economic pressure coupled with offers of negotiations that could produce sanctions relief. The sanctions imposed during 2010-2013 received broad international cooperation and caused economic difficulty in Iran, but the Administration also altered U.S. regulations to help Iranians circumvent their government's restrictions on internet usage. In early 2013, the Administration began direct but unpublicized talks with Iranian officials in the Sultanate of Oman to probe Iran's willingness to reach a comprehensive nuclear accord. The Administration also repeatedly stated that a military option is \"on the table.\"", "The election of Rouhani in June 2013 contributed to a U.S. shift to emphasizing diplomacy. President Obama, in his September 24, 2013 U.N. General Assembly speech, confirmed an exchange of letters with Rouhani stating U.S. willingness to resolve the nuclear issue peacefully and that the United States \"[is] not seeking regime change.\" The two presidents spoke by phone on September 27, 2013\u2014the first direct U.S.-Iran presidential contact since Iran's revolution. ", "After the JCPOA was finalized in July 2015, the United States and Iran held bilateral meetings at the margins of all nuclear talks and in other settings, covering regional and bilateral issues. President Obama expressed hope that the JCPOA would \"usher[] in a new era in U.S.-Iranian relations,\" while at the same time asserting that the JCPOA would benefit U.S. national security even without a broader rapprochement. President Obama met Foreign Minister Zarif at the September 2015 General Assembly session, but no contact was reported during the September 2016 U.N. General Assembly session. Still, the signs that U.S.-Iran relations could improve as a result of the JCPOA were mixed, including as discussed below. ", "Coinciding with Implementation Day of the JCPOA (January 16, 2016), the dual citizens held by Iran at that time were released and a long-standing Iranian claim for funds paid for undelivered military equipment from the Shah's era was settled\u2014resulting in $1.7 billion in cash payments (euros, Swiss francs, and other non-U.S. hard currencies) to Iran\u2014$400 million for the original DOD monies and $1.3 billion for an arbitrated amount of interest. Administration officials asserted that the nuclear diplomacy provided an opportunity to resolve these outstanding issues, but some Members of Congress criticized the simultaneity of the financial settlement as paying \"ransom\" to Iran. Obama Administration officials asserted that it had long been assumed that the United States would need to return monies to Iran for the undelivered military equipment and that the amount of interest agreed was likely less than what Iran might have been awarded by the U.S.-Iran Claims Tribunal. Iran subsequently jailed several other dual nationals (see box below). Iran continued to provide support to allies and proxies in the region, and it continued \"high speed intercepts\" of U.S. warships in the Persian Gulf. Iran conducted at least four ballistic missile tests from the time the JCPOA was finalized in 2015 until the end of the Obama Administration, which termed the tests \"defiant of\" or \"inconsistent with\" Resolution 2231. The tests prompted additional U.S. designations for sanctions of entities that support Iran's program. Iranian officials argued that new U.S. visa requirements in the FY2016 Consolidated Appropriations Act ( P.L. 114-113 ) would cause European businessmen to hesitate to travel to Iran and thereby limit Iran's economic reintegration. Then-Secretary of State Kerry wrote to Foreign Minister Zarif on December 19, 2015, that the United States would implement the provision so as to avoid interfering with \"legitimate business interests of Iran.\" In January 2016, Kerry worked with Zarif to achieve the rapid release of 10 U.S. Navy personnel who the IRGC took into custody when their two riverine crafts strayed into what Iran considers its territorial waters. There was no expansion of diplomatic representation such as the posting of U.S. nationals to staff the U.S. interests section in Tehran, nor did then-Secretary of State Kerry visit Iran. In 2014, Iran appointed one of those involved in the 1979 seizure of the U.S. embassy in Tehran\u2014Hamid Aboutalebi\u2014as ambassador to the United Nations. But, in April 2014, Congress passed S. 2195 ( P.L. 113-100 ), which gave the Administration authority to deny him a visa to take up his duties. The United States subsequently announced he would not be admitted. Iran replaced him with Gholam Ali Khoshroo, who studied in the United States and served in Khatemi's government. In May 2015, the two governments granted each other permission to move their respective interests sections to more spacious locations. Khoshroo was replaced in April 2019 by Majid Takht Ravanchi. "], "subsections": []}, {"section_title": "Trump Administration: Return to Hostility and \"Maximum Pressure\"", "paragraphs": ["The Trump Administration has shifted policy back to the pre-JCPOA stance, asserting that the JCPOA addressed only nuclear issues and hindered the U.S. ability to roll back Iran's \"malign\" regional activities or reduce its military and missile capabilities. Administration officials assert that Administration policy is to pressure Iran's economy to (1) compel it to renegotiate the JCPOA to address the broad range of U.S. concerns and (2) deny Iran the revenue to continue to develop its strategic capabilities or intervene throughout the region. Administration statements of opposition to how Iran is governed suggest that an element of the policy is to create enough economic difficulties to stoke unrest in Iran, possibly to the point where the regime collapses. ", "The policy, and elements of it, have been articulated as follows: ", "Citing Iran's arming of the Houthis in Yemen, on February 1, 2017, then-National Security Adviser Michael Flynn stated that Iran was \"officially on notice\" about its provocative behavior. In April 2017, the Administration announced a six-month Iran policy review based on the premise that the JCPOA \"only delays [Iran's] goal of becoming a nuclear state\" and had failed to curb Iran's objectionable regional behavior. During his May 20-24, 2017, visit to the region, President Trump told Arab leaders in Saudi Arabia that \"Until the Iranian regime is willing to be a partner for peace, all nations of conscience must work together to isolate Iran, deny it funding for terrorism, and pray for the day when the Iranian people have the just and righteous government they deserve.\" The following month, then-Secretary of State Tillerson testified that the Administration would work to support elements in Iran that would lead to a \"peaceful transition\" of Iran's government. On October 13, 2017, President Trump, citing the results of the policy review, stated that he would not certify Iranian JCPOA compliance (under the Iran Nuclear Agreement Review Act, INARA, P.L. 114-17 ), and that the United States would only stay in the accord if Congress and U.S. allies (1) address the expiration of JCPOA nuclear restrictions, (2) curb Iran's ballistic missile program, and (3) counter Iran's regional activities. The denial of certification under INARA triggered a 60-day period for Congress to take legislative action under expedited procedures to reimpose those sanctions that were lifted. Congress did not take such action. On January 12, 2018, the President announced that he would not continue to waive Iran sanctions at the next expiration deadline (May 12) unless the JCPOA's weaknesses were addressed by Congress and the European countries. "], "subsections": [{"section_title": "Withdrawal from the JCPOA and Subsequent Pressure Efforts", "paragraphs": ["On May 8, 2018, following visits to the United States by the leaders of France and Germany imploring the United States to remain in the JCPOA, President Trump announced that the United States would withdraw from the JCPOA and reimpose all U.S. secondary sanctions, with full effect as of November 5, 2018. Statements by President Trump and Secretary of State Pompeo have since articulated U.S. policy as follows: ", "On May 21, 2018, in his first speech as Secretary of State, Michael Pompeo announced a return to a U.S. strategy of pressuring Iran through sanctions and by working with allies against Iran's regional activities and proxies, as well as against its ballistic missile program, cyberattacks, and human rights abuses. He also expressed U.S. \"solidarity\" with the Iranian people. On July 22, 2018, in a speech to Iranian Americans at the Reagan Library in California, Secretary Pompeo recited a litany of Iranian human rights abuses, official corruption, and efforts to destabilize the region. The Secretary stated that \"I have a message for the people of Iran. The United States hears you; the United States supports you; the United States is with you.\" On July 23, 2018, following threats by Rouhani and other Iranian leaders to cut off the flow of oil through the Persian Gulf if Iran's oil exports are prevented by sanctions, President Trump posted the following on Twitter: \"To Iranian President Rouhani: NEVER, EVER THREATEN THE UNITED STATES AGAIN OR YOU WILL SUFFER CONSEQUENCES THE LIKES OF WHICH FEW THROUGHOUT HISTORY HAVE EVER SUFFERED BEFORE. WE ARE NO LONGER A COUNTRY THAT WILL STAND FOR YOUR DEMENTED WORDS OF VIOLENCE & DEATH. BE CAUTIOUS!\" The tweet suggested to some that the United States might be intent on military action against Iran. On August 16, 2018, Secretary Pompeo announced the creation of an \"Iran Action Group\" at the State Department responsible for coordinating the department's Iran-related activities. The group is headed by Brian Hook, who holds the title of \"Special Representative for Iran.\" In late September 2018, the group issued its \"Outlaw Regime\" report on Iran, in which Secretary of State Pompeo wrote in a preface that \"The policy President Trump has laid out comes to terms fully with fact that the Islamic Republic of Iran is not a normal state ... \" On October 3, 2018, the Administration abrogated the 1955 U.S.-Iran \"Treaty of Amity, Economic Relations, and Consular Rights.\" Iran's legal representatives had cited the treaty to earn a favorable October 2 judgment from the International Court of Justice demanding that the United States reverse some humanitarian-related sanctions on Iran. The treaty, which provides for freedom of commerce between the two countries and unfettered diplomatic exchange, has long been mooted by post-1979 developments in U.S.-Iran relations. The abrogation of the treaty did not affect the status of the interests sections in each others' countries. Illustrating the extent to which the Administration wants U.S. partners to adopt U.S. policy toward Iran, the Administration organized a ministerial meeting in Warsaw, Poland, during February 13-14, 2019, focused on Middle East issues and with particular focus on countering the threat posed by Iran. For further information, see CRS In Focus IF11132, Coalition-Building Against Iran , by Kenneth Katzman On April 8, 2019, the Administration designated the IRGC as a foreign terrorist organization (FTO), blaming it for involvement in multiple past acts of Iran-backed terrorism and anti-U.S. actions. For further information, see CRS Insight IN11093, Iran's Revolutionary Guard Named a Terrorist Organization , by Kenneth Katzman. On April 22, 2019, the Administration announced it would no longer provide exceptions to countries that pledged to reduce their purchases of Iranian oil under the FY2012 National Defense Authorization Act ( P.L. 112-81 ). For further information, see CRS Insight IN11108, Iran Oil Sanctions Exceptions Ended , by Kenneth Katzman. As of May 3, 2019, U.S.-Iran tensions escalated following intelligence reports that Iran and/or its allies and proxies might be preparing to attack U.S. forces or personnel in the region, and the United States deployed additional forces to the Gulf to deter such action. As tensions escalated, U.S. officials issued a variety of statements. For example, on May 20, 2019, President Trump posted the following on Twitter: \"If Iran wants to fight, that will be the official end of Iran. Never threaten the United States again!\" Yet, as May ended, President Trump and his senior aides and Cabinet officers all indicated that the United States did not seek war with Iran, did not seek to change Iran's regime, and welcomed talks to ease tensions and renegotiate a JCPOA. "], "subsections": []}]}]}, {"section_title": "Policy Elements and Options", "paragraphs": ["As have its predecessors, the Trump Administration has not publicly taken any policy option \"off the table.\" Some options, such as sanctions, are being emphasized, while others are being considered or threatened to varying degrees. "], "subsections": [{"section_title": "Engagement and Improved Bilateral Relations", "paragraphs": ["Successive Administrations have debated the degree to which to pursue engagement with Iran, and U.S. efforts to engage Iran sometimes have not coincided with Iranian leadership willingness to engage the United States. President Trump has publicly welcomed engagement with Iran's President Rouhani, but Administration officials have set strict conditions for any significant improvement in U.S.-Iran relations. Secretary of State Pompeo, in his May 21, 2018, speech referenced above, stipulated a list of 12 behavior changes by Iran that would be required for a normalization of U.S.-Iran relations and to be included in a revised JCPOA. Many of the demands\u2014such as ending support for Lebanese Hezbollah\u2014would strike at the core of Iran's revolution and are unlikely to be met by Iran under any circumstances.", "At a July 30, 2018, press conference, President Trump stated he would be willing to meet President Rouhani without conditions, presumably during the September 2018 General Assembly meetings in New York. Rouhani indicated that the U.S-Iran relationship was not conducive to such a meeting, and President Trump later stated he would not meet with Rouhani during the General Assembly meetings, even though President Rouhani is probably \"an absolutely lovely man.\" In December 2018, President Rouhani stated that the United States directly requested negotiations with Iran on eight occasions in 2017, and \"indirectly\" requested negotiations on three occasions in 2018. He said that Iran rebuffed these overtures. ", "Following the U.S. designation of the IRGC as an FTO and the denial of further sanctions exceptions for the purchases of Iranian oil, Foreign Minister Zarif appeared to raise the possibility for some U.S.-Iran talks on selected issues. At an April 24, 2019 research institute public meeting in New York, Zarif offered to negotiate an exchange of Iranians held in U.S. jails for some or all of the U.S.-Iran nationals held by Iran (see box above). ", "In the context of escalating U.S.-Iran tensions in May 2019, President Trump apparently sought to de-escalate by restating his interest in direct talks, stating the following on May 9, 2019: ", "What they [Iranian leaders] should be doing is calling me up, sitting down; we can make a deal, a fair deal ... but they should call, and if they do, we're open to talk to them. ", "In late May 2019, in the course of an official visit to Japan, President Trump said he would support Japanese Prime Minister Shinzo Abe's efforts to act as a mediator between the United States and Iran. Concurrently, Secretary Pompeo and other U.S. officials were in contact with leaders of Oman, Qatar, and Switzerland, apparently in an effort to explore the potential for talks with Iran. Possibly in connection, foreign ministers and other high-ranking diplomats from Iran and Oman, Qatar, and Kuwait exchanged visits. "], "subsections": []}, {"section_title": "Military Action", "paragraphs": ["Successive Administrations have sought to back up other policy options with a capability to use military force against Iran. Prior to the JCPOA, supporters of military action against Iran's nuclear program argued that such action could set back Iran's nuclear program substantially. A U.S. ground invasion to remove Iran's regime apparently has not been considered at any time. ", "The Obama Administration repeatedly stated that \"all options are on the table\" to prevent Iran from acquiring a nuclear weapon. However, the Obama Administration asserted that military action would set back Iran's nuclear advancement with far less certainty or duration than would a nuclear agreement. And Iranian retaliation could potentially escalate and expand throughout the region, reduce Iran's regional isolation, strengthen Iran's regime domestically, and raise oil prices. After the JCPOA was finalized, President Obama reiterated the availability of this option should Iran violate the agreement. Obama Administration officials articulated that U.S. military action against Iran might also be used if Iran attacked or prepared to attack U.S. allies or attempted to interrupt the free flow of oil or shipping in the Gulf or elsewhere. ", "The Trump Administration has similarly stated that \"all options are open,\" referring to military action. The Administration's pullout from the JCPOA was accompanied by threats to take unspecified action if Iran were to leave the accord and restart banned aspects of its nuclear program. In the context of significant U.S.-Iran tensions in May 2019 that resulted in added U.S. military deployments to the Gulf region, the Administration has reiterated threats to use force against Iran's nuclear program or if Iran were to attack U.S. forces or personnel in the region. Yet, as noted, President Trump has sought to de-escalate tensions and has told his top officials that the Administration does not want conflict with Iran. For more information on the potential for U.S. military action in the context of U.S.-Iran tensions, see CRS In Focus IF11212, U.S.-Iran Tensions Escalate , by Kenneth Katzman. ", "Whereas the United States has not initiated military action against Iranian or Iran-backed forces in Syria, the Administration has publicly supported Israel's frequent strikes on Iranian and Hezbollah infrastructure there. And, the U.S. Navy has conducted operations to interdict Iranian weapons shipments to the Houthi rebels in Yemen. For detailed information on U.S. military activity in the region that is, in whole or in part, directed against Iran and Iranian allies, see CRS Report R44017, Iran's Foreign and Defense Policies , by Kenneth Katzman. "], "subsections": [{"section_title": "Authorization for Force Issues", "paragraphs": ["With regard to presidential authorities, S.J.Res. 41 , which passed the Senate on September 22, 2012, in the 112 th Congress, rejects any U.S. policy that relies on \"containment\" of a potential nuclear Iran. No legislation has been enacted that would limit the President's authority to use military force against Iran, but neither has there been legislation authorizing the use of force against Iran. At a Senate Foreign Relations Committee hearing on April 10, 2019, Secretary of State Pompeo answered questions on whether the Administration considers the use of force against Iran as authorized, indicating that he would defer to Administration legal experts on that question. However, he indicated, in response to questions whether the 2001 authorization for force against Al Qaeda could apply to Iran, that Iran has harbored members of Al Qaeda."], "subsections": []}]}, {"section_title": "Economic Sanctions", "paragraphs": ["The U.S. withdrawal from the JCPOA and reimposition of all U.S. sanctions has major implications. The table below summarizes sanctions that have been used against Iran."], "subsections": []}, {"section_title": "Regime Change", "paragraphs": ["One recurring U.S. policy question has been whether the United States should support efforts within Iran to overthrow Iran's leadership. During the 2009 Green Movement uprising, the Obama Administration asserted that extensive U.S. support for the uprising would undermine the opposition's position in Iran. President Obama did, however, give some public support to the demonstrators, and his 2011 Nowruz (Persian New Year) address mentioned specific dissidents and said \"young people of Iran ... I want you to know that I am with you.\" However, in a September 24, 2013, General Assembly speech, President Obama explicitly stated that the United States does not seek to change Iran's regime.", "The Trump Administration\u2014in cited statements by Secretary Pompeo and other U.S. officials\u2014asserts that its policy is to change Iran's behavior, not to change its regime. However, the content of these and other statements by Administration officials, in particular Secretary Pompeo's speech to Iranian Americans at the Reagan Library on July 22, 2018, suggests support for a regime change outcome. In his speech on May 21, 2017, in Saudi Arabia, President Trump stated that his Administration is hoping that Iran's government will change to one that the Administration considers \"just and righteous.\" In testimony before two congressional committees in June 2017, then-Secretary of State Rex Tillerson said the Administration supports a \"philosophy of regime change\" for Iran (Senate Appropriations Committee) and that the Administration would \"work toward support of those elements inside of Iran that would lead to a peaceful transition of that government\" (House Foreign Affairs Committee). In his October 13, 2017, policy announcement on Iran, President Trump stated that ", "we stand in total solidarity with the Iranian regime's longest-suffering victims: its own people. The citizens of Iran have paid a heavy price for the violence and extremism of their leaders. The Iranian people long to\u2014and they just are longing, to reclaim their country's proud history, its culture, its civilization, its cooperation with its neighbors. ", "Subsequently, President Trump issued statements of support for the December 2017-January 2018 protests in Iran on Twitter and in other formats. In his May 8, 2018, announcement of a U.S. withdrawal from the JCPOA, President Trump stated", "Finally, I want to deliver a message to the long-suffering people of Iran. The people of America stand with you.... But the future of Iran belongs to its people. They are the rightful heirs to a rich culture and an ancient land, and they deserve a nation that does justice to their dreams, honor to their history and glory to God. ", "In his speech to the Heritage Foundation on May 21, 2018, Secretary of State Pompeo added that the United States expresses total solidarity with the Iranian people. In his Reagan Library speech on July 22, 2018, Pompeo recited a litany of Iranian regime human rights abuses and governmental corruption that called into question its legitimacy and, in several passages and answers to questions, clearly expressed the hope that the Iranian people will oust the current regime. The apparent support for a regime change policy was furthered by Secretary Pompeo's announcement during that speech that the Broadcasting Board of Governors is launching a new full-time Persian-language service for television, radio, digital, and social media to help \"ordinary Iranians inside of Iran and around the globe can know that America stands with them.\" ", "Yet, there were signs of a possible modification or shift, at least in tone, in the context of escalating U.S.-Iran tensions in May 2019 that some assessed as potentially leading to conflict. During his visit to Japan in late May, President Trump specifically ruled out a policy of regime change, stating the following on May 27:", "These are great people\u2014has a chance to be a great country with the same leadership. We are not looking for regime change. I just want to make that clear. We're looking for no nuclear weapons.", "At times, some in Congress have advocated that the United States adopt a formal policy of overthrow of the regime. In the 111 th Congress, one bill said that it should be U.S. policy to promote the overthrow of the regime (the Iran Democratic Transition Act, S. 3008 ). ", "Many of Iran's leaders, particularly Supreme Leader Khamene'i, continue to articulate a perception that the United States has never accepted the 1979 Islamic revolution. Khamene'i and other Iranian figures note that the United States provided funding to antiregime groups, mainly promonarchists, during the 1980s. "], "subsections": [{"section_title": "Democracy Promotion and Internet Freedom Efforts", "paragraphs": ["Successive Administrations and Congresses have sought to at least lay the groundwork for eventual regime change through \"democracy promotion\" programs and sanctions on Iranian human rights abuses. Legislation authorizing democracy promotion in Iran was enacted in the 109 th Congress. The Iran Freedom Support Act ( P.L. 109-293 , signed September 30, 2006) authorized funds (no specific dollar amount) for Iran democracy promotion. Several laws and Executive Orders issued since 2010 are intended to promote internet freedom, and the Administration has amended U.S.-Iran trade regulations to allow for the sale to Iranians of consumer electronics and software that help them communicate. Then-Under Secretary of State Wendy Sherman testified on October 14, 2011, that some of the democracy promotion funding for Iran was used to train Iranians to use technologies that circumvent regime internet censorship. ", "Many have argued that U.S. funding for such programs is counterproductive because the support has caused Iran to use the support as a justification to accuse the civil society activists of disloyalty. Some civil society activists have refused to participate in U.S.-funded programs, fearing arrest. The Obama Administration altered Iran democracy promotion programs somewhat toward working with Iranians inside Iran who are organized around apolitical issues such as health, education, science, and the environment. The State Department, which often uses appropriated funds to support prodemocracy programs run by organizations based in the United States and in Europe, refuses to name grantees for security reasons. The funds shown below have been obligated through DRL and the Bureau of Near Eastern Affairs in partnership with USAID. Some of the funds have also been used for cultural exchanges, public diplomacy, and broadcasting to Iran. A further indication of the sensitivity of specifying the use of the funds is that, since FY2010, funds have been provided for Iran civil society/democracy promotion as part of a broader \"Near East Regional Democracy programs\" (NERD). ", "Iran asserts that funding democracy promotion represents a violation of the 1981 \"Algiers Accords\" that settled the Iran hostage crisis and provide for noninterference in each other's internal affairs. The George W. Bush Administration asserted that open funding of Iranian prodemocracy activists (see below) was a stated effort to change regime behavior, not to overthrow the regime, although some saw the Bush Administration's efforts as a cover to achieve a regime change objective. "], "subsections": [{"section_title": "Broadcasting/Public Diplomacy Issues", "paragraphs": ["Another part of the democracy promotion effort has been the development of Iran-specific U.S. broadcasting services to Iran. Radio Farda (\"tomorrow,\" in Farsi) began under Radio Free Europe/Radio Liberty (RFE/RL), in partnership with the Voice of America (VOA), in 2002. The service was established as a successor to a smaller Iran broadcasting effort begun with an initial $4 million from the FY1998 Commerce/State/Justice appropriation ( P.L. 105-119 ). It was to be called Radio Free Iran but was never formally given that name by RFE/RL. Based in Prague, Radio Farda broadcasts 24 hours/day, and its budget is over $11 million per year. No U.S. assistance has been provided to Iranian exile-run stations. As noted above, Secretary Pompeo has announced a new Persian-language channel for Iranians through various media, but it is not clear whether this new service will augment existing programs or form an entirely new program. ", "VOA Persian Service. The VOA established a Persian-language service to Iran in July 2003. It consists of radio broadcasting (one hour a day of original programming); television (six hours a day of primetime programming, rebroadcast throughout a 24-hour period); and internet. The service has come been criticized by observers for losing much of its audience among young, educated, antiregime Iranians who are looking for signs of U.S. official support. The costs for the service are about $20 million per year."], "subsections": []}, {"section_title": "State Department Public Diplomacy Efforts", "paragraphs": ["The State Department has sought outreach to the Iranian population. In May 2003, the State Department added a Persian-language website to its list of foreign-language websites, under the authority of the Bureau of International Information Programs. The website was announced as a source of information about the United States and its policy toward Iran. In February 14, 2011, the State Department began Persian-language Twitter feeds in an effort to connect better with internet users in Iran. ", "Since 2006, the State Department has been increasing the presence of Persian-speaking U.S. diplomats in U.S. diplomatic missions around Iran, in part to help identify and facilitate Iranian participation in U.S. democracy-promotion programs. The Iran unit at the U.S. Consulate in Dubai has been enlarged significantly into a \"regional presence\" office, and \"Iran-watcher\" positions have been added to U.S. diplomatic facilities in Baku, Azerbaijan; Istanbul, Turkey; Frankfurt, Germany; London; and Ashkabad, Turkmenistan, all of which have large expatriate Iranian populations and/or proximity to Iran. "], "subsections": []}]}]}]}]}}
{"id": "R46200", "title": "Recent Slower Economic Growth in the United States: Policy Implications", "released_date": "2020-01-28T00:00:00", "summary": ["The current economic expansion is the longest in recorded U.S. history, but it has not been characterized by rapid economic growth. From the beginning of the current economic expansion in the third quarter of 2009 to the second quarter of 2017, this expansion had the lowest economic growth rate of any expansion since World War II, averaging 2.2%. For the next five quarters, growth accelerated to 3.1%. However, growth has slowed since, averaging 2.1% over the next four quarters beginning in the fourth quarter of 2018. The slower growth rate has been widespread, but has been particularly concentrated in business investment and exports. Private forecasters expect this slower pace to continue in 2020. A similar growth pattern has not been observed in labor markets, as monthly employment growth was only slightly lower in the slower-growth period than in the faster-growth period.", "A number of developments have influenced growth since 2017:", "Fiscal policy . The federal budget deficit rose from 3.5% of gross domestic product (GDP) in FY2017 to 3.9% in FY2018. Deficit-financed tax or spending policy changes stimulate overall economic activity in the short run, but stimulus fades over time. The deficit increased partly as a result of P.L. 115-97 , which cut taxes beginning in calendar year 2018, with the budgetary effects peaking in FY2019. Monetary policy. The Federal Reserve raised short-term interest rates gradually from a range of 0.25%-0.5% in December 2016 to a range of 2.25%-2.5% in December 2018. Higher interest rates reduce interest-sensitive spending, such as business investment and consumer durables. Rates were then cut in 2019 to a range of 1.5%-1.75%. Regulatory policy . The Administration reported that agencies have undertaken 393 deregulatory actions and 52 significant regulatory actions since FY2017, at a net benefit totaling $50.9 billion, based on agency estimates. Deregulatory actions that reduced costs for businesses could boost their output levels. Trade policy . Since 2017, the Administration has proposed a series of escalating tariffs and other import restrictions on major trading partners, such as China. In response, affected countries have often proposed retaliatory trade restrictions on U.S. exports. Trade restrictions have a mixed direct effect on growth through their impact on U.S. exports and imports. However, they are generally thought to have a negative indirect effect on growth through their impact on real income, financial conditions, and business investment. Stock market . Stock prices (as measured by the S&P 500 index) rose by 38% between November 4, 2016, and January 26, 2018, with little volatility by historical standards. Since then, volatility has risen. Favorable financial conditions make it easier for firms to finance investment and may lead asset holders to consume more through a wealth effect . Global growth . Global growth fell from 3.8% in 2017 to 3.6% in 2018 to a projected 3.0% in 2019. This reduces foreign demand for U.S. exports, all else equal.", "Over time, economists believe that the economy cannot grow faster than its trend or potential growth rate, which is determined by how quickly labor, the capital stock, and productivity grow. It appears that the growth rate has reverted to its trend growth rate since the fourth quarter of 20s18. Regulatory policy changes and fiscal stimulus may have contributed to the temporary increase in growth, but do not appear to have led to a permanent acceleration in trend growth.", "This slower rate of growth would be problematic if growth continued to decelerate toward zero, but most forecasters do not expect this to happen. On the contrary, this slower rate of growth could make a recession less likely because it reduces the probability that the economy will overheat, which has been the cause of some past recessions. It is unusual for fiscal and monetary policy to remain stimulative when the economy has fully recovered from a recession. As a result, there is less remaining headroom than usual for the Federal Reserve to reduce interest rates (monetary stimulus) or Congress to increase the deficit (fiscal stimulus) going forward. Policymakers face a choice between maintaining existing fiscal and monetary stimulus to maintain growth and removing stimulus so that there is more scope to employ stimulus in the next recession."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction: Recent Growth Trends", "paragraphs": ["Economic growth (the percentage change in real gross domestic product [GDP]) is a core measure of economic progress and well-being. Over time, the rates of job growth and average income growth closely track economic growth. ", "A notable feature of the current economic expansion, which started in June 2009 and is now the longest expansion on record, has been its relatively modest economic growth rate. Whereas growth has averaged 4.3% in the previous 10 economic expansions, it has averaged 2.3% in this expansion. Some analysts thought a turning point had been achieved when growth accelerated to 3.1% from the third quarter of 2017 through the third quarter of 2018. This was the second-fastest period of sustained growth achieved in this expansion, second only to the 3.8% growth achieved from the second quarter of 2014 through the second quarter of 2015. However, in both of those cases, growth slowed in the following quarters. It has averaged 2.1% over the next four quarters, from the fourth quarter of 2018 to the present\u00e2\u0080\u0094nearly identical to the growth rate in this expansion before the third quarter of 2017. Growth is volatile, difficult to measure, and revised several times after it is initially released. Nevertheless, the pace of activity appears to have noticeably slowed. Growth in three of the past four quarters was 2.1% or lower, and private forecasters expect this slower pace to continue in the fourth quarter of 2019 and through 2020. The slower growth has been widespread throughout the country. The only regions not affected by the slowdown were the Southwest, Rocky Mountains, and New England.", "Although economic growth has slowed recently, it has not been negative or close to zero in any quarter since the fourth quarter of 2015. (The lowest growth rate since then was 1.1% in the fourth quarter of 2018.) Thus, the recent story so far is one of a transition to a soft landing (a more moderate rate of growth), not a recession or cessation of growth. In fact, for reasons discussed in this report, it is more likely that the fast-growth period was the aberration. ", "Economic growth is only one measure of economic performance, and not all measures move in lockstep over short periods of time. The recent slowdown in economic growth was much more pronounced than the slowdown in employment growth\u00e2\u0080\u0094monthly job growth was only slightly lower (191,000) from October 2018 to November 2019 than from July 2017 to September 2018 (203,000). The average monthly job growth rate from October 2010 to the present has been 199,000. In other words, to date, the economic growth slowdown has not made employers significantly less willing to take on additional workers.", "Although it is not unusual for economic growth to rise and fall within an expansion, it is nevertheless potentially useful for Congress to consider the reasons why growth rose from the third quarter of 2017 through the third quarter of 2018 (hereinafter, the faster-growth period ) and declined since the fourth quarter of 2018 (hereinafter, the slower-growth period ) when considering policy options to address growth going forward. These periods are chosen because quarterly growth rates are closely clustered together within those two periods. This report analyzes the most commonly discussed reasons."], "subsections": []}, {"section_title": "Growth by Sector", "paragraphs": [" Table 1 breaks GDP down into its component parts to highlight where the growth slowdown has been concentrated. Comparing the faster-growth period from the third quarter of 2017 to the third quarter of 2018 with the slower-growth period from the fourth quarter of 2018 to the third quarter of 2019, the slowdown has been concentrated in fixed business investment spending (specifically, private structures and equipment) and exports. Investment spending on structures, which include office buildings, factories, and power and communication infrastructure, fell from a growth rate of 3.7% in the former period to a 6.5% contraction in the latter period. The decline in structures has been widespread, but has been particularly notable in the category of mining exploration, shafts, and wells\u00e2\u0080\u0094a category of spending that is highly sensitive to commodity prices. The slowdown in equipment spending has been most notable in transportation equipment. ", "Other components of GDP have not grown rapidly recently, but nevertheless do not explain the slowdown. Growth in personal consumption spending (specifically, services) has slowed, but by less than overall growth has slowed. Residential investment (new house construction) shrank by about 1% in both periods, having no effect on the overall difference between the two. Growth in government purchases was a little higher\u00e2\u0080\u0094thereby boosting growth\u00e2\u0080\u0094in the latter period. Import growth was lower in the latter period, which, in national accounting, increased growth."], "subsections": []}, {"section_title": "Actual Growth Rates and Potential Growth Rates", "paragraphs": ["Although growth fluctuates considerably from quarter to quarter, economists believe that the economy can grow no faster than its internal speed limit\u00e2\u0080\u0094called the potential or trend growth rate \u00e2\u0080\u0094over longer periods of time. Over shorter periods of time, the primary determinant of growth is the business cycle. The business cycle refers to the repeated pattern of recessions (contractions in economic activity) followed by (longer) expansions, which are then followed by another recession, and so on. Average growth over an entire business cycle of normal length would be expected to be close to the potential growth rate. After recessions, in which output has fallen considerably, there is scope for a period of rapid catch-up growth that brings unused labor and capital resources back into use. The current economic expansion is already the longest recorded expansion in U.S. history, so at this point it would not be expected that the economy could grow faster than its potential growth rate for a sustained period because there is no scope for catch-up growth\u00e2\u0080\u0094the economy's labor and capital inputs are close to fully employed. In these conditions, growth may temporarily exceed trend growth, but it would be expected to return to trend growth fairly quickly. At this point, the main debates are what the trend growth rate is and whether it can be raised through structural policy changes. ", "Growth can rise or fall over a period of time for cyclical or structural reasons. Cyclical contributions to growth are mainly demand driven\u00e2\u0080\u0094they are a function of how fast spending in the economy is growing. The government can temporarily influence spending through fiscal and monetary policy. Cyclical effects can have a large influence on growth over a few quarters, but are, by their nature, temporary. ", "Structural contributions to trend growth are mainly supply driven\u00e2\u0080\u0094they are a function of how quickly the labor force (both its quantity and quality), the capital stock, and productivity (i.e., how much output can be generated with a given set of inputs) are growing. The reason average growth has been low over the course of the expansion is because all three have grown at a slower pace compared to the 1950 to 2007 average, according to the Congressional Budget Office (CBO), as seen in Figure 1 . The labor force has grown more slowly because of the decline in labor force participation and the aging of the workforce, as the baby boomers have begun to transition to retirement. After stripping out cyclical factors, CBO projects that the labor force grew by 1.4% annually from 1950 to 2018, but will grow by 0.4% annually over the next 10 years\u00e2\u0080\u0094close to the 0.6% growth rate recorded from 2008 to 2018. Average productivity growth declined by more than one-half and investment growth fell by more than one-third in the 2008-2018 period compared to 1950-2007. The reasons for the slowdown in the growth of investment and productivity are less clear and more debated. ", "The recent faster-growth period was comparable to CBO's estimate of the trend growth rate from 1974 to 2001. If the faster-growth period was driven by an increase in trend growth, it could potentially continue indefinitely. CBO and other economic forecasters do not view this growth acceleration as having been driven by a structural acceleration in trend growth, however. CBO expects some improvement in productivity growth over the next 10 years, but projects that overall trend growth will continue to be held back by low growth in the labor force and capital stock. If CBO is correct, the current growth slowdown was inevitable at some point, as it represented growth reverting to trend. The next section describes some of the major economic developments since 2017 that might have boosted growth temporarily above trend, and some subsequent developments that may have contributed to the slowdown."], "subsections": []}, {"section_title": "Factors Affecting Growth Since 2017", "paragraphs": ["Several explanations have been offered as to why growth accelerated beginning in 2017, including fiscal stimulus, regulatory relief, favorable financial conditions, and higher consumer and business confidence. Although these explanations seem to match the growth acceleration well, they have more trouble explaining why growth subsequently slowed, and they do not always match the exact timing of the acceleration. ", "Several explanations have been offered for why growth decelerated beginning in 2018. The factors discussed below in more detail are a fading of fiscal stimulus, monetary policy tightening, trade policy uncertainty, and a slowdown in global growth. The timing of these factors does not match the timing of the slowdown precisely, which points to the possibility that a return to the trend growth rate was inevitable. The factors discussed below are not comprehensive; other factors that have likely contributed to slower growth in at least one quarter since the fourth quarter of 2018 include the FY2018 government shutdown, the rise in oil prices in 2018 (they have since declined), problems that slowed Boeing's production of the 737 MAX airplane, and the GM-United Auto Workers strike. However, these factors are not discussed at length because they were one-off occurrences that were temporary in nature and may have limited implications for policy going forward."], "subsections": [{"section_title": "Fiscal Policy", "paragraphs": ["Fiscal stimulus can boost aggregate demand (i.e., total spending) in the short run through higher government spending or lower taxes that are deficit financed. Increases in deficit-financed government spending on goods and services boost total spending in the economy directly because government spending is a component of GDP. Deficit-financed tax cuts increase total spending to the extent that they are spent by their recipients. The effect of fiscal stimulus on growth is temporary because, by nature, total spending cannot exceed total potential output for long\u00e2\u0080\u0094especially when the economy is already close to full employment, as it is today. In addition, certain types of tax cuts alter incentives to work, save, and invest. These changes could affect potential output ( supply-side effects ) in addition to total spending ( demand-side effects ).", "Policy changes on both the tax and spending sides of the budget enlarged the deficit in FY2018 relative to the current-law baseline for that year. Notably, the tax cuts in the 2017 act, P.L. 115-97 , began in calendar year 2018, with the budgetary effects peaking in FY2019. The Bipartisan Budget Act of 2018 ( P.L. 115-123 ) increased the Budget Control Act's ( P.L. 112-25 's) discretionary spending caps, and those increases\u00e2\u0080\u0094combined with increases in discretionary spending not subject to the caps\u00e2\u0080\u0094increased discretionary spending relative to the CBO baseline by $94 billion in FY2018. These discretionary spending changes provided fiscal stimulus compared to current law but not compared to recent policy\u00e2\u0080\u0094discretionary spending was a steady 6.2% of GDP in both FY2017 and FY2018. In other words, compared to the previous year, the legislative changes to boost discretionary spending prevented contractionary fiscal policy from occurring. Mandatory spending fell because spending on health programs and automatic stabilizers (benefits where spending levels are sensitive to economic conditions) grew more slowly in dollar terms than GDP. Statutory changes to mandatory spending levels in FY2018 were minimal, and thus were not responsible for the decline.", "CBO projected that the tax cuts would boost GDP growth relative to the baseline by 0.3 percentage points in both FY2018 and FY2019. This estimate included demand-side and supply-side effects. Thus, based on CBO's projections, the tax cuts can help explain why growth accelerated in the faster-growth period, but cannot explain why growth subsequently slowed, because fiscal stimulus from the tax cuts left growth unchanged in FY2019 from the previous year. Relative to the baseline, the boost to growth from the tax cuts is projected to gradually fade beginning in FY2020 and eventually reduce growth beginning in FY2025.", "The federal budget deficit rose from 3.5% of GDP in FY2017 to 3.9% of GDP in FY2018. The increase was caused by the decline in revenues from 17.2% of GDP in FY2017 to 16.5% of GDP in FY2018. By contrast, spending fell as a percentage of GDP between FY2017 and FY2018, which would reduce the deficit as a share of GDP, all else equal. ", "The federal budget deficit as a percentage of GDP rose in FY2019 from 3.9% to 4.5%, which would seem to indicate additional fiscal stimulus to the economy. However, a closer look at the data reveals that the stimulus is more limited than the increase in the deficit would indicate. Part of the increase in the deficit is attributable to a rise in mandatory spending and net interest payments as a share of GDP, but the increase is not caused by policy changes in either of these cases. Instead, spending in these categories increased as economic conditions and programs' take-up rates changed. Part of the increase in the deficit is attributable to a further decrease in revenues as a percentage of GDP, but this is also not due to additional policy changes. Instead, it is primarily because this was the first full fiscal year in which P.L. 115-97 's tax cuts were in place. The main fiscal stimulus was a small boost to discretionary spending, from 6.2% of GDP in FY2018 to 6.3% in FY2019.", "Fiscal stimulus works by changing policy to increase spending or reduce revenue from year to year. With policy changes having a modest effect on spending and revenue as a share of GDP, additional stimulus compared to the previous year was modest in FY2019. In other words, fiscal policy was not projected to cause growth to slow, but neither was it projected to provide a further boost to growth from what had been provided the previous year."], "subsections": []}, {"section_title": "Monetary Policy", "paragraphs": ["The Federal Reserve (Fed) can temporarily influence growth through its control of short-term interest rates. The Fed tightened monetary policy from December 2016 to December 2018, with short-term interest rates gradually increased from a range of 0.25%-0.5% to a range of 2.25%-2.5%. This reduced the amount of monetary stimulus that the Federal Reserve was providing to the economy in response to higher growth by decreasing demand for interest-sensitive goods and services, such as business investment and consumer durables. This tightening mostly occurred during the higher-growth period, but because monetary policy affects the economy with a lag, the full economic effects of this tightening were not felt until after the last rate increase in December 2018. ", "In 2019, the Fed changed course, reducing interest rates three times between August and October in response to slower growth and fears of a potential recession. After the last rate cut in October, interest rates were lower than the inflation rate again, marking a more stimulative (expansionary) course. Because of the lags in effectiveness, these reductions should provide a stimulative boost to the economy in the coming quarters. "], "subsections": []}, {"section_title": "Regulatory Relief", "paragraphs": ["Throughout the Trump Administration, agencies have emphasized regulatory relief for businesses through legislation and the rulemaking process. On January 30, 2017, the Administration issued an executive order that required all agencies to identify at least two existing regulations to be repealed for each new regulation they proposed. To support this executive order, the Office of Information and Regulatory Affairs (OIRA) has published regulatory reform reports each year. Although not all of the regulatory changes reported provide relief for business, these reports provide a comprehensive list of regulatory actions that increase costs (which they classify as regulatory actions ) or reduce costs (which they classify as deregulatory actions ) on net and an estimate of net cost savings since FY2017. The reports do not include agencies defined as independent in 44 U.S.C. \u00c2\u00a73502, however, so deregulatory actions by independent agencies that promulgate economic rules, such as financial regulators, are omitted. For this reason, the table undercounts total regulatory and deregulatory actions. As shown in Table 2 , agencies have undertaken 393 deregulatory actions and 52 significant regulatory actions since FY2017, at a net benefit totaling $50.9 billion, based on agency estimates.", "Quantitative estimates of how regulations affect economic growth vary widely, and a comprehensive tally is difficult because of differences in methodology between estimates and the possibility that separate regulations may have interactive effects when considered jointly. The $50.9 billion estimate in Table 2 is not an estimate of the effect on GDP. Regulatory changes can have a broad array of costs and benefits that can be assigned monetary values (subject to a high degree of uncertainty), but not all of those costs and benefits affect the production of goods and services. Examples include effects on health, safety, and the environment.", "The fact that deregulatory actions have continued at a similar pace in the slower-growth period suggests the limits that these actions may have on overall growth. Deregulatory actions that affect single industries (or a subset of firms within an industry) can be important for output growth within that industry, but any given industry individually makes up a small share of the overall economy. Moreover, regulatory changes are likely to have one-off effects on GDP growth (i.e., they raise the level of output once), as opposed to permanently increasing growth rates (which would require output to continually grow more rapidly each year in the future). In other words, companies may respond to a regulatory change that lowers their costs by boosting output, but once that transition is complete, output will likely stay at the higher level and growth will likely revert to its previous pace."], "subsections": []}, {"section_title": "Stock Market and the Wealth Effect", "paragraphs": ["The stock market's performance may have contributed to faster growth. The S&P 500 index (an index of large stock prices) rose by 38% between November 4, 2016, and January 26, 2018, with relatively little volatility by historical standards. ", "Higher equity prices can temporarily boost economic growth through their effects on companies and stockholders. When a stock rises in value, it improves the stock-issuing company's financial condition, which may induce more physical investment spending. As shown in Table 1 , business investment spending was noticeably higher in the faster-growth period than in the slower-growth period. For holders of stocks and other assets, a rise in their assets' value may also induce a wealth effect , whereby their consumption spending increases in response to their improved net worth. In terms of overall wealth, the ratio of household net worth to income is now higher than it was before the 2007-2009 financial crisis or the dotcom bubble, which burst in 2000. The exact size of the wealth effect is uncertain, however, because the direction of causation is unclear\u00e2\u0080\u0094using stock prices as an example, more consumption could raise the value of firms producing the goods and services being consumed or higher stock prices could induce stockholders to consume more.", "The period of faster economic growth outlasted the period of the stock market's best performance, but the stock market did not perform poorly after January 2018. The S&P 500's value in August 2019 was about the same as in January 2018, with significant volatility over that period, featuring several steep and sudden declines followed by rebounds. Since October 2019, the stock market has steadily risen again. "], "subsections": []}, {"section_title": "Consumer and Business Confidence", "paragraphs": ["Surveys on consumer sentiment showed an increase in confidence in December 2016\u00e2\u0080\u0094before growth accelerated. Confidence remained high through 2018, but was more volatile in 2019 (although it remained high compared to levels registered in the past two recessions). All else equal, higher consumer confidence may help explain why consumption growth was strong. ", "Business confidence was high in 2018, but volatile in 2017 and the first half of 2019 and lower in the second half of 2019, according to surveys. All else equal, greater business confidence may lead firms to hire more workers and undertake more physical investment spending. As shown in Table 1 , physical investment spending grew much more quickly in the faster-growth period than the slower-growth period. ", "In interpreting these developments, it is important to note that the direction of causation is unclear\u00e2\u0080\u0094greater consumer and business confidence may be a reaction to higher economic growth, rather than a driver of economic growth. "], "subsections": []}, {"section_title": "Trade Policy Uncertainty", "paragraphs": ["Since 2017, the Administration has proposed a series of escalating tariffs and other import restrictions on major trading partners, such as China and the European Union. In response, affected countries have often proposed retaliatory trade restrictions on U.S. exports. Collectively, these proposed and implemented trade restrictions have popularly been referred to as a trade war to denote the broader scope of trade restrictions undertaken compared to the past. This section considers the joint economic impact of restrictions on U.S. imports and retaliatory foreign restrictions on U.S. exports. ", "In the short term, changes in trade policy disrupt the production of goods and services that are exported or imported, or that rely on exports and imports as intermediate goods. In national accounting, exports are part of GDP and imports are subtracted from GDP (because they are not goods and services produced in the United States). Thus, trade restrictions negatively affect GDP through their effects on U.S. exports and U.S. goods reliant on imports, but positively affect GDP through their effects on U.S. imports and U.S. import-competing goods in the short run. The data bear this out: although many factors affect trade, export and import growth have both declined to close to zero since overall growth has slowed. Export growth fell from an average of 3.0% from the third quarter of 2017 to the third quarter of 2018 to 0.2% from the fourth quarter of 2018 to the third quarter of 2019, and import growth fell from an average of 5.0% to 0.9% over the same periods.", "Besides the direct mixed effect that trade restrictions have had on growth through their effect on exports and imports, they are viewed as having a negative indirect effect on growth through their effect on real income (because U.S. consumers face higher prices on imports, their overall purchasing power falls), financial conditions (if trade restrictions cause asset prices to fall or interest rates to rise), and business investment (because firms might hesitate to undertake large capital purchases if their business outlook is uncertain due to trade policy uncertainty). Although uncertainty is an inherently subjective measure, the International Monetary Fund (IMF) has attempted to quantify trade policy uncertainty, and finds that it was far higher in 2019 than at any point since the start of its index (1995). Finally, to the extent that trade uncertainty explains the appreciation of the dollar (discussed in the next section), this could partly or wholly offset any increase in net exports (exports less imports) that would be caused by U.S. tariffs.", "The trade dispute's precise effects on growth are uncertain because they mostly depend on second-order effects that are hard to measure, but they are generally thought to have been negative on net thus far. Goldman Sachs economists estimate that the trade dispute with China has reduced quarterly growth by between 0.2 and 0.4 percentage points each quarter from the second quarter of 2018 through the fourth quarter of 2019 (and could continue to reduce growth in future quarters, depending on what happens to trade policy in the future). They estimate that the trade restrictions' direct effects have positively affected growth, but that this has been more than offset by the negative indirect effects outlined above. CBO estimates that the direct effects of tariffs implemented to date will reduce the level of real GDP by 0.3% by 2020 (assuming the tariffs remain in place until then)\u00e2\u0080\u0094a somewhat smaller effect than Goldman Sachs estimated, partly because Goldman Sachs's estimate includes more recent trade policy developments. CBO projects the effect on GDP will wane over time, assuming the tariffs remain in place until 2029. The Organisation for Economic Co-operation and Development (OECD) estimates that trade restrictions, if unchanged, will reduce GDP growth by 0.5% by 2021.", "The timing of trade policy uncertainty's effects on business confidence and investment is hard to pinpoint, but the effects have likely increased over time. Announcements of trade policy changes began in the higher-growth period, but were phased in and ratcheted up over time. Further, confidence depends partly on how individuals believe the trade disputes will ultimately be resolved. Perceptions of whether trade disputes would be resolved or escalate are likely to have varied over time as U.S. and foreign policymakers' rhetoric on intentions and progress has fluctuated.", "One source of trade policy uncertainty was removed when the new U.S.-Mexico-Canada Agreement ( H.R. 5430 ) was signed into law, assuming all parties to the agreement ratify it. Other sources of uncertainty, such as trade relations with China, remain outstanding, albeit arguably diminished by the signing of the Phase 1 bilateral agreement on January 15, 2020. When the myriad of trade disputes are eventually resolved, uncertainty will no longer weigh on growth. However, if trade becomes radically more open or closed, that could affect long-term productivity, as it would affect the efficient use of economic resources through, respectively, more or less scope for comparative advantage."], "subsections": []}, {"section_title": "Slowdown in Global Growth and Strong Dollar", "paragraphs": ["According to the IMF, global growth fell from 3.8% in 2017 to 3.6% in 2018 to a projected 3.0% in 2019, which would be its slowest growth rate since the 2007-2009 financial crisis. It attributes half of the slowdown to the economic crises in Argentina, Iran, Turkey, and Venezuela, but the slowdown was widespread and included important U.S. trading partners such as the eurozone and China. For countries where exports are an important source of growth, such as China, trade policy uncertainty (discussed above) likely contributed to the slowdown. Slower global growth reduces demand for U.S. exports, which reduces U.S. growth, all else equal. As shown in Table 1 , U.S. export growth fell from an average of 3.0% from the third quarter of 2017 to the third quarter of 2018 to 0.2% from the fourth quarter of 2018 to the third quarter of 2019.", "U.S. interest rates have been higher than those of major trading partners for several years, and this difference widened during the period when the Fed was raising rates. Relatively higher economic growth and interest rates in the United States compared to the rest of the world contributed to a strengthening of the dollar exchange rate, as capital flowed into the United States to take advantage of relatively higher rates of return. When foreigners invest in U.S. assets, they must first buy U.S. dollars, which increases the value of the dollar, all else equal. In the flexible exchange rate era (beginning in the 1970s), the dollar's real value against a broad trade-weighted index reached its highest level since 2003 in December 2016, and it has remained relatively high since then. The mid-1980s and late 1990s were the only other periods when the dollar's value was comparably high. ", "Trade policy uncertainty may also help explain why the dollar has appreciated, although the direction of the exchange rate effect is uncertain, theoretically. Trade restrictions on U.S. imports reduce the relative demand for foreign currency, boosting the value of the dollar. However, retaliatory tariffs on U.S. exports reduce the relative demand for the U.S. dollar, potentially offsetting some or all of the upward pressure on the dollar. If tariffs reduce growth in importing countries relative to U.S. growth, this could further reduce the demand for their currency relative to the dollar. Finally, the dollar is traditionally a safe haven currency that investors flock to when uncertainty rises\u00e2\u0080\u0094even in cases where the uncertainty has emanated from the United States.", "When the dollar's value rises, U.S. exports are relatively more expensive in the rest of the world and U.S. imports are less expensive, all else equal. The fact that the dollar's value was high during the higher-growth period was largely a reflection of the strength of the U.S. economy, and one of the natural equilibration mechanisms that prevents economic overheating. A weaker dollar could potentially have supported growth through higher exports and lower imports during the slower-growth period, but this did not occur because growth in many major trading partners was relatively weaker than in the United States."], "subsections": []}]}, {"section_title": "Future Prospects and Policy Implications", "paragraphs": ["The consensus forecast is for the economy to continue growing at its recent moderate pace in the coming quarters. However, the current economic expansion is already the longest recorded expansion in U.S. history, so it is natural to wonder if the recent slowdown will turn into a recession in the near term. As noted above, the slowdown has returned the growth rate to the average for the overall expansion. A return to trend means growth has less room to decline in the future before it turns negative, which has been a feature of all previous recessions. Some recessions are caused by external shocks to the economy\u00e2\u0080\u0094idiosyncratic changes that reduce output, such as a spike in energy prices. Any given shock is less likely to result in negative growth if the economy is growing rapidly when the shock occurs than if it is growing slowly. However, a return to trend growth could counterintuitively make it less likely that the economy enters a recession because there is less of a risk that the economy will overheat. Some recessions are caused by the economy growing unsustainably quickly when it is already at full employment, which leads to higher inflation and, ultimately, a corrective crash in economic activity. By contrast, absent external shocks, growth at the trend rate could theoretically continue indefinitely. For this reason, fiscal and monetary stimulus may have helped prevent growth from slowing further in 2018, but additional stimulus to attempt to increase growth above trend could potentially be counterproductive.", "It is unusual for fiscal and monetary policy to still be easy (i.e., for the budget deficit to be high and interest rates to be low), as they are now, when the economy has already returned to full employment. Furthermore, growth during this expansion has been strong only during periods in which fiscal policy has been more stimulative. This raises questions about whether growth could remain sufficiently strong if fiscal and monetary stimulus were withdrawn\u00e2\u0080\u0094a problem that has not arisen in previous expansions since after the Great Depression, but one that many advanced economies have grappled with in this expansion.", "If growth were to slow further, the stimulus available to counteract it may be limited. As a result of fiscal and monetary policy remaining stimulative throughout the long economic expansion, policymakers have less headroom to respond to a future downturn. In the case of monetary policy, short-term interest rates are already relatively close to zero, limiting how much additional stimulus the Fed can provide through its conventional tool of cutting short-term rates. The Fed may find that this tool is quickly exhausted in the next recession, in which case it could be required to turn to unconventional tools such as large-scale asset purchases (popularly known as quantitative easing ) or negative interest rates to fight the recession. In the case of fiscal policy, the publicly held federal debt is the highest it has been as a share of GDP since World War II and is projected to continue to increase under current policy. The budget deficit is already larger than its historical average as a share of GDP and will automatically increase in a recession with no change in policy because of the budget's automatic stabilizers. Unprecedentedly high debt may make policymakers feel constrained to provide enough additional fiscal stimulus to counteract the recession. Or high debt may cause debt holders to refuse to finance enough stimulus, particularly because of the reliance on foreigners to finance the federal debt. Foreigners have held 40%-50% of the publicly held debt in recent decades.", "There are competing schools of thought on the best way to address this limited fiscal and monetary headroom. One school of thought argues for fiscal and monetary policy to be tightened now (by reducing deficits and raising interest rates, respectively) to gain additional headroom to be used in the next recession, and make it less likely that the economy will overheat at full employment. This strategy would be successful as long as the economy could withstand the withdrawal of stimulus and continue growing at a moderate pace. The other school of thought believes that fiscal and monetary stimulus should be used aggressively in response to any slowdown to avert a recession since the limited headroom would make a recession more likely to be deep and prolonged. This school of thought has been cited by Fed Chairman Jerome Powell as a justification for the Fed's decision to reduce interest rates three times in 2019. But this strategy could backfire if the economy nevertheless enters a recession at some point when headroom is still highly limited.", "Monetary and fiscal policy primarily influence short-term growth. Other policies can influence the long-term trend growth rate, but more indirectly, slowly, and imprecisely. Long-term growth is determined by growth in the labor force, changes in the quality of the labor force, growth in the capital stock, and productivity growth. Multiple policy areas influence each of those factors. For example, education and training influence the quality of the labor force; infrastructure spending contributes directly to the capital stock; health policy influences hours worked; and trade and technology policies influence productivity growth."], "subsections": []}]}}
{"id": "R46146", "title": "Campaign and Election Security Policy: Overview and Recent Developments for Congress", "released_date": "2020-01-02T00:00:00", "summary": ["In the United States, state, territorial, and local governments are responsible for most aspects of selecting and securing election systems and equipment. Foreign interference during the 2016 election cycle\u00e2\u0080\u0094and widely reported to be an ongoing threat\u00e2\u0080\u0094has renewed congressional attention to campaign and election security and raised new questions about the nature and extent of the federal government's role in this policy area.", "This report provides congressional readers with a resource for understanding campaign and election security policy. This includes discussion of the federal government's roles; state or territorial responsibilities for election administration and election security; an overview of potentially relevant federal statutes and agencies; and highlights of recent congressional policy debates. The report summarizes related legislation that has advanced beyond introduction during the 116 th Congress. It also poses questions for consideration as the House and Senate examine whether or how to pursue legislation, oversight, or appropriations.", "In the 116 th Congress, the FY2020 National Defense Authorization Act (NDAA; S. 1790 ; P.L. 116-92 ), enacted in December 2019, contains several provisions related to campaign and election security. Most provisions involve providing Congress or federal or state agencies with information about election interference. It also requires the Director of National Intelligence, in coordination with several other agencies, to develop a strategy for countering Russian cyberattacks against U.S. elections. In addition, the Consolidated Appropriations Act, 2020 ( P.L. 116-93 ; H.R. 1158 ), also enacted in December 2019, includes $425 million for payments to states, territories, and the District of Columbia to make general improvements to the administration of federal elections, including upgrades to election technology and security.", "As of this writing, 116 th Congress legislation that has advanced beyond introduction in at least one chamber includes H.R. 1 ; H.R. 753 ; H.R. 1158 ; H.R. 2500 ; H.R. 2722 ; H.R. 3351 ; H.R. 3494 ; H.R. 3501 ; H.R. 4617 ; H.R. 4782 ; H.R. 4990 ; S. 482 ; S. 1060 ; S. 1321 ; S. 1328 ; S. 1589 ; S. 1790 ; S. 1846 ; S. 2065 ; and S. 2524 . Other bills also could have implications for campaign and election security even though they do not specifically reference the topic (e.g., those addressing cybersecurity generally or voter access). Several congressional committees also have held legislative or oversight hearings on the topic.", "Federal statutes\u00e2\u0080\u0094such as the Help America Vote Act (HAVA); Federal Election Campaign Act (FECA); and the Voting Rights Act (VRA)\u00e2\u0080\u0094all contain provisions designed to make campaign finance, elections, or voting more secure. Several federal agencies are directly or indirectly involved in campaign and election security. These include, but are not limited to, the Department of Defense (DOD); Department of Homeland Security (DHS); Department of Justice (DOJ); Election Assistance Commission (EAC); and Federal Election Commission (FEC).", "Securing federal elections is a complex policy challenge that crosses disciplinary lines. Some of the factors shaping that complexity include divisions of authority between the federal and state (or territorial or local) governments; coordination among federal agencies, and communication with state agencies; funding; changing elections technology; and the different needs of different sectors, such as campaigns, administrators, and vendors.", "This report does not attempt to resolve ongoing policy debates about what campaign and election security should entail. The report cites other CRS products that contain additional discussion of some of the topics discussed herein. The report does not address constitutional or legal issues."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["Election security is one of the most prominent policy challenges facing Congress. A November 2019 warning from the heads of several federal agencies illustrates the interdisciplinary and ongoing nature of the threat to American elections. According to the joint statement, in the 2020 election cycle, \"Russia, China, Iran, and other foreign malicious actors all will seek to interfere in the voting process or influence voter perceptions. Adversaries may try to accomplish their goals through a variety of means, including social media campaigns, directing disinformation operations or conducting disruptive or destructive cyber-attacks on state and local infrastructure.\" ", "These are just the latest challenges in securing American elections. Traditionally, election administration emphasizes policy goals such as ensuring that all eligible voters, and only eligible voters, may register and cast ballots; that those ballots are counted properly; and that the voting public views that process as legitimate and transparent. Preserving election continuity is a chief concern. Election officials therefore have long prepared contingency plans that address various risks, such as equipment malfunctions, power outages, and natural disasters. ", "These traditional concerns remain, but have taken on new complexity amid foreign interference in U.S. elections. In addition to managing traditional security concerns about infrastructure and administrative processes (e.g., counting ballots), mitigating external threats to the accuracy of information voters receive, particularly from foreign sources, is a potential challenge for political campaigns, election administrators, and the public. ", "Addressing any one of these topics might involve multiple areas of public policy or law. Doing so also can involve complex practical challenges about which levels of government, or agencies, are best equipped or most appropriate to respond. How those entities can or should interact with political campaigns, the private sector, and voters, are also ongoing questions. Technical complexity in some areas, such as cybersecurity, and the federal structure of shared national, state or territorial, and local responsibility for administering federal elections make election security even more challenging. ", "Election security in general appears to be a shared policy goal, but debate exists in Congress about which policy issues and options to pursue. Debate over the scope of the federal government's role in election security shapes much of that debate. State, territorial, and local governments are responsible for most aspects of election administration, including security. ", "This report provides congressional readers with an overview that includes", "how campaign and election security has developed as a policy field; recent legislative activity, especially bills that have advanced beyond introduction; federal statutes and agencies that appear to be most relevant for campaign and election security; state, territorial, or local roles in administering elections, and federal support for those functions; and highlights of recent policy debates, and potential future questions for congressional consideration."], "subsections": [{"section_title": "Defining Election Security", "paragraphs": ["There is no single definition of \"election security,\" nor is there necessarily agreement on which topics should or should not be included in the policy debate. Broadly speaking, election security involves efforts to ensure fair, accurate, and safe elections. This can include a variety of activities that happen before, during, and after voters cast their ballots. ", "A narrow definition of election security might address only efforts to protect traditional election infrastructure, such as voter registration databases, voting machines, polling places, and election result tabulations. More expansive definitions might also address issues affecting candidates and campaigns. This includes, for example, regulating political advertising or fundraising; providing physical or cybersecurity assistance for campaigns; or combating disinformation or misinformation in the political debate.", "The policy debates discussed herein can affect different kinds of entities uniquely. ", "Perhaps most notably, security concerns affecting campaigns can differ from those for safeguarding elections and voting. Campaigns in the United States are about persuading voters in an effort to win elections. They are private, not governmental, operations and are subject to relatively little regulation beyond campaign finance policy. Elections are more highly regulated, although specific practices can vary, as their administration is primarily a state- or local-level responsibility. Provisions in state or local law, and, to a lesser degree, federal law, regulate how voters cast ballots and who may do so. Some security discussions include issues related to voter access, while others view access as a separate elections policy matter. This report briefly notes that access can be a component of campaign and election security policy debates, but the report does not otherwise address access issues. ", "This report does not attempt definitively to resolve ongoing policy debates about what campaign and election security entails or should entail, nor does it fully address all aspects of the policy issues discussed. Instead, it provides congressional readers with background information to consider that debate and decide whether or how to pursue legislation (including appropriations) or oversight. Because all the topics noted above\u00e2\u0080\u0094and others discussed throughout the report\u00e2\u0080\u0094have been components of the recent congressional debate over how to safeguard American campaigns, elections, and voting, this report uses the general term campaign and election security . "], "subsections": []}]}, {"section_title": "Scope of the Report", "paragraphs": ["This report discusses federal agencies, statutes, and policies designed to prevent or respond to deliberate domestic or foreign security threats to campaigns, elections, or voting. Concepts discussed in the report also have implications for some unintentional threats, such as natural disasters or other emergencies that could affect campaigns, elections, or voting. Legislation cited in the report contains specific references to campaign and election security. This includes bill text that uses variations of terms such as campaign , election , or vote near variations of the terms interference or security . Some readers might view areas addressed herein as more or less directly related to campaign or election security, and alternative methodologies could yield other bills or policy topics for consideration.", "The report does not include detailed attention to more traditional aspects of campaign finance, election administration, or voting, particularly voter mobilization. For example, the report discusses Help America Vote Act provisions that authorize funding states may use to help secure elections, but not provisions that authorize funding for the Election Assistance Commission generally. Similarly, the report briefly discusses Voting Rights Act provisions that prohibit voter intimidation, but it does not discuss other federal statutes enacted to make registration and voting easier. In addition, the report briefly notes lobbying statutes that might be relevant for regulating certain corporate or foreign activity related to U.S. election interference, but it does not substantially address lobbying as a policy area.", "The report emphasizes domestic implications of campaign and election security. This includes attention to protections for U.S. campaigns and elections from the effects of foreign disinformation and misinformation efforts. The Appendix at the end of this report includes sanctions or immigration legislation that specifically references interference in U.S. elections, and which has advanced beyond introduction during the 116 th Congress. However, foreign policy implications of such interference, or a discussion of offensive operations and tactics that the United States might or might not use against foreign adversaries, are otherwise beyond the scope of this report. ", "Because of the still-developing and complex policy challenges surrounding campaign and election security, other areas of law, policy, or practice might also be relevant but are not addressed here. The report references other CRS products that contain additional discussion of several such topics. The report does not provide legal or constitutional analysis. It also does not attempt to catalog all alleged or established instances of campaign and election interference or security concerns, or to independently evaluate allegations."], "subsections": []}, {"section_title": "Recent Legislative Activity", "paragraphs": ["Highlights of recent legislative activity include the following. Additional discussion appears throughout the report.", "The 115 th Congress (2017-2019) appropriated $380 million for FY2018 for improvements to the administration of federal elections, including upgrades to election technology and security. The 116 th Congress (2019-2021) appropriated $425 million for FY2020 in the consolidated appropriations bill ( H.R. 1158 ; P.L. 116-93 ) enacted in December 2019. The \" Funding for States After the 2016 Election Cycle \" section of this report contains additional detail. The 116 th Congress enacted S. 1790 ( P.L. 116-92 ), the FY2020 National Defense Authorization Act (NDAA), in December 2019. The legislation contains several provisions related to campaign and election security. ", " Table 1 below lists bills that have passed at least one chamber. The Appendix in this report briefly summarizes 116 th Congress legislation containing campaign and election security provisions that has advanced beyond introduction.", "In addition, during the 116 th Congress, committees in both chambers have held hearings on these and related campaign and election security topics. The Committee on House Administration and Senate Committee on Rules and Administration exercise primary jurisdiction over federal elections. Several other committees oversee related areas, such as intelligence or voting rights issues. Another CRS product contains additional discussion of committee roles in federal campaigns and elections generally."], "subsections": []}, {"section_title": "Development of Federal Role in Campaign and Election Security", "paragraphs": ["Foreign interference is only the highest-profile and latest campaign and election security policy challenge. Physical security, to protect voters, ballots, and vote counts, has been an ongoing concern. Specifically, in modern history, the federal government's first role in securing elections was primarily about access and voting rights. In 1965, Congress enacted the Voting Rights Act (VRA), which protects voters against race- or color-based discrimination in registration, redistricting, and voting. More explicitly related to security, the VRA prohibits intimidation, threats, or coercion in voting. Congress primarily tasked the U.S. Department of Justice (DOJ) with enforcing the statute and related criminal provisions. Federal law enforcement agencies, especially the Federal Bureau of Investigation (FBI), also support states and localities\u00e2\u0080\u0094which retain primary responsibility for election administration in the United States\u00e2\u0080\u0094in investigating election crimes and providing physical security at the polls. ", "The federal role in election administration expanded after the disputed 2000 presidential election. In response, Congress authorized federal funding for the states, the District of Columbia, and territories to make improvements to the administration of federal elections. It also created the Election Assistance Commission (EAC) to administer those funds. Congress charged the agency with overseeing a voluntary voting system testing and certification program, and providing states and localities with voluntary election administration guidance, research, and best practices. These developments notwithstanding, securing campaigns and elections historically was not a major policy topic at the federal level, as most security matters were reserved for state- or local-level policy. ", "The policy environment changed dramatically during the 2016 election cycle, when media reports and subsequent congressional and federal-agency investigations documented Russian government interference with that year's U.S. presidential election. According to Special Counsel Robert Mueller's report, these interference efforts targeted private technology firms that provide election-related software and hardware; state and local government entities; and a major political party and nominee.", "The investigations did not find that this activity was a determinative factor in the election outcome. However, the possibility of such activity, and of additional efforts to affect political attitudes or participation, remains. In July 2018 remarks at the Hudson Institute, then-Director of National Intelligence (DNI) Dan Coats, a former Senator, said that the Intelligence Community (IC) reported \"aggressive attempts to manipulate social media and to spread propaganda focused on hot-button issues that are intended to exacerbate socio-political divisions\" in elections. ", "To the extent that those efforts affect campaigns\u00e2\u0080\u0094including campaign security, or the information voters receive from campaigns\u00e2\u0080\u0094campaign finance policy and law could be relevant. The Federal Election Campaign Act (FECA) originated in the 1970s amid concerns about limiting domestic political corruption. The act also contains a wide-ranging prohibition on foreign-national involvement in federal, state, or local U.S. elections. These provisions, and disclosure and disclaimer requirements for all \"persons\" who raise or spend funds to influence federal elections, are key elements of regulating both domestic and foreign efforts to affect political fundraising, spending, and advertising. Political committees (campaigns, parties, and political action committees [PACs]) are responsible for their own security measures, although, as noted elsewhere in this report, federal agencies (or private-sector entities) provide assistance in some cases. ", "Today, election security is one of the most rapidly evolving policy issues facing Congress and the federal government. Both chambers have passed legislation on the topic during the 116 th Congress. Multiple House and Senate committees have held investigative and oversight hearings. Congress and the Obama and Trump Administrations have tasked federal agencies with new responsibilities for supporting states and thwarting future possible interference. The Intelligence Community has warned that countering foreign interference in U.S. elections \"will require a whole-of-society approach, including support from the private sector and the active engagement of an informed public.\" "], "subsections": []}, {"section_title": "Selected Federal Statutes", "paragraphs": ["The U.S. Constitution and federal statutes regulate the division of governmental responsibility for elections. No existing statute is devoted specifically to election security, although, as discussed below, some statutes address aspects of the topic. Most broadly, the Constitution's Elections Clause assigns states with setting the \"Times, Places and Manner\" for House and Senate elections, and also permits Congress to \"at any time \u00e2\u0080\u00a6 make or alter such Regulations.\" As discussed in the \" State and Local Role in Election Security \" section of this report, the federal government thus plays a largely supporting role in election administration generally, and in election security specifically. ", "Two election-specific statutes can be particularly important for campaign and election security. Relevant legislation typically proposes amending one or both. First, the Help America Vote Act (HAVA, 2002) is the only federal statute devoted to assisting states with election administration. Congress relied on HAVA to establish the Election Assistance Commission, provide for a voluntary federal voting system testing and certification program, and authorize federal funding states could use to help secure their elections. Second, FECA's disclaimer and disclosure provisions, and the prohibition on foreign national fundraising or spending in U.S. elections, can be particularly relevant for concerns about foreign interference in U.S. elections. Several other statutes could be relevant in specific cases. Table 2 below provides a brief summary. "], "subsections": []}, {"section_title": "Selected Federal Agencies", "paragraphs": ["No single federal agency has responsibility for providing election or campaign security. Only two federal agencies\u00e2\u0080\u0094the Election Assistance Commission (EAC) and the Federal Election Commission (FEC)\u00e2\u0080\u0094are devoted entirely to campaigns and elections. ", "The EAC administers congressionally appropriated federal funding, oversees a voluntary voting system testing and certification program, and provides voluntary election administration guidance, research, and best practices. The FEC is responsible for administration and civil enforcement of FECA. Other departments and agencies, primarily with responsibilities for other areas of public policy, support campaign and election security in specific cases. Some agency roles developed from a January 2017 \"critical infrastructure\" designation. Additional detail appears below.", "Additional information about agency roles appears below, and in the \" Coordination By and Among Selected Federal Agencies \" section of this report."], "subsections": [{"section_title": "Election Assistance Commission (EAC)", "paragraphs": ["The EAC is the only federal agency focused specifically on assisting states with election administration. Congress has charged the EAC with administering funding states may use to help secure their elections. ", "The EAC also provides states and localities with election administration assistance, adopting voluntary voting system guidelines (VVSG, discussed below), providing for systems to be tested to the VVSG, and certifying systems as meeting the guidelines. It also conducts research about state election administration and voting, and shares information about best practices. Although not mandated by Congress, the EAC also participates in activities related to the designation of election systems as critical infrastructure, such as serving on the Election Infrastructure Subsector Government Coordinating Council (EIS-GCC) and on the EIS-GCC executive committee. "], "subsections": []}, {"section_title": "Federal Election Commission (FEC)", "paragraphs": ["The FEC enforces civil compliance with FECA provisions and commission regulations regarding campaign finance. This includes activities related to fundraising, spending, advertising disclaimers, and financial disclosure reports. These provisions are relevant for some aspects of security affecting political candidates or campaigns, parties, political action committees (PACs), or other entities (e.g., independent spenders that are not political committees) that raise or spend funds to affect federal campaigns. The FEC does not regulate election administration or voting matters."], "subsections": []}, {"section_title": "Department of Homeland Security (DHS)", "paragraphs": ["DHS provides states and localities with assistance mitigating risks to their election systems, especially concerning cybersecurity. ", "DHS is the sector-specific agency (SSA) responsible for securing the election infrastructure subsector. Additional information appears later in this report. DHS's Cybersecurity and Infrastructure Security Agency (CISA) is responsible for most of the department's election security activities, including the Election Security Initiative (ESI). DHS protects major presidential candidates through the U.S. Secret Service (USSS). The Secret Service is also the lead security agency for \"national special security events\" (NSSEs), such as presidential nominating conventions."], "subsections": []}, {"section_title": "Department of Justice (DOJ)", "paragraphs": ["The Department of Justice enforces several federal statutes, discussed above, that could be relevant for campaign and election security. Within DOJ, the FBI is the lead federal law enforcement agency supporting state and local election administration, and is the lead federal agency in investigating and prosecuting foreign influence campaigns. "], "subsections": []}, {"section_title": "Intelligence Community (IC)", "paragraphs": ["Several agencies contribute to or produce intelligence about election security threats. For example, a declassified version of a January 2017 Intelligence Community Assessment (ICA) documenting Russian attempts to influence 2016-cycle U.S. elections contained information and analysis from the CIA, FBI, and NSA. The \" Coordination By and Among Selected Federal Agencies \" section below provides additional discussion of the IC campaign and election security roles. "], "subsections": []}, {"section_title": "Selected Other Federal Agencies", "paragraphs": ["The State Department's Global Engagement Center (GEC) is charged with coordinating federal efforts to counter foreign propaganda and disinformation efforts aimed at undermining U.S. national security interests. The GEC partners with other U.S. government agencies, including those within the State Department, at the Defense Department, and elsewhere. The Departments of Justice, State, and the Treasury all can be involved in administering sanctions for election interference. As noted previously, sanctions policy generally is beyond the scope of this report. Via the FY2020 NDAA bill ( S. 1790 ; P.L. 116-92 ), Congress assigned various agencies, especially DHS and the DNI, additional campaign and election security responsibilities. Most provisions involve providing Congress or federal or state agencies with information about election interference. The Appendix of this report provides additional detail. ", " Table 3 provides a brief overview of selected agency roles in campaign and election security."], "subsections": []}, {"section_title": "Coordination By and Among Selected Federal Agencies", "paragraphs": ["Because no single federal agency is solely responsible for campaign and election security\u00e2\u0080\u0094and because state and local governments have most practical responsibility for election security\u00e2\u0080\u0094coordination among agencies and governments is an ongoing congressional concern. Adding to the complexity of the election security challenge, government agencies, in some cases, both support and regulate private actors\u00e2\u0080\u0094such as political campaigns\u00e2\u0080\u0094and sometimes rely on those private entities to provide threat information. ", "Highlights of federal coordination issues appear below. Because some of these relationships appear to be in development, some information about agency coordination, or the lack thereof, remains unclear in the public record. Similarly, some information about coordination among intelligence-gathering agencies is publicly unavailable, beyond the scope of this report, or both. As such, other formal or information coordination among or by agencies likely occurs but is not reflected here. "], "subsections": [{"section_title": "Department of Homeland Security Coordination Roles", "paragraphs": ["DHS takes a lead role in coordinating the federal support for campaign and election security. Most of the DHS coordination role stems from a January 2017 \"critical infrastructure\" designation that treats election infrastructure as an essential service requiring federal support and protection. The designation established the Elections Infrastructure Subsector (EIS) within the Government Facilities Sector, which includes various government buildings and equipment.", "As a result of the critical infrastructure designation, DHS prioritizes support for the subsector, including to those state and local election jurisdictions that choose to accept such assistance. This includes sharing information about threats; and conducting cyber hygiene and risk and vulnerability assessments. The critical infrastructure designation applies to physical and technical resources related to elections, such as communications technology, voting equipment, and polling places. It does not apply to political campaigns. The designation does not give DHS regulatory authority over federal elections. ", "DHS serves as the Sector-Specific Agency (SSA) for the EIS. As SSA, the agency plays various coordinating roles among public and private entities, as highlighted below.", "As SSA, DHS coordinates information sharing among various governmental and nongovernmental entities (e.g., vendors) responsible for election administration. In this role, DHS also coordinates activities for the EIS Government Coordinating Council (GCC). The EIS-GCC includes representatives from DHS, EAC, and state and local governments. DHS also works with a Sector Coordinating Council (SCC), which consists of industry representatives (e.g., voting-machine manufacturers). DHS also funds the Elections Infrastructure Information Sharing and Analysis Center (EI-ISAC), a voluntary membership organization of state and local election jurisdictions run by the private Center for Internet Security. The EI-ISAC coordinates security information sharing among these entities."], "subsections": []}, {"section_title": "Election Assistance Commission Coordination Roles", "paragraphs": ["As the only federal agency devoted specifically to election administration, the EAC helps facilitate communication between state or local election administrators and other federal agencies, and vice versa. EAC commissioners serve on the EIS Government Coordinating Council (EIS-GCC), coordinated by DHS, and on the EIS-GCC executive committee."], "subsections": []}, {"section_title": "Intelligence Community Coordination Roles", "paragraphs": ["As noted previously, the IC includes more than a dozen agencies from throughout the federal government. Highlights of the IC role in coordination surrounding campaign and election security appear below.", "In July 2019, then-DNI Coats created an IC Election Threats Executive (ETE) position to serve as the DNI's principal elections adviser and to coordinate IC election security work. Coats also directed IC agencies to assign a senior executive to serve as the point-of-contact for that agency's election security work and to serve on a new IC Election Executive and Leadership Board. U.S. Cyber Command and the NSA monitors foreign threats to U.S. elections. This reportedly includes a recently established Election Security Group. In addition, the FY2020 NDAA bill requires the DNI to appoint a national counterintelligence officer within the National Counterintelligence and Security Center to coordinate election security counterintelligence, particularly regarding foreign interference and equipment issues. "], "subsections": []}, {"section_title": "Coordination Roles and Selected Other Federal Agencies", "paragraphs": ["In addition to coordination on IC threat assessments noted above, multiple federal agencies have collaborated on campaign and election security educational resources for political committees, election administrators, or voters. Agencies also have issued joint warnings. The State Department's Global Engagement Center (GEC) is charged with coordinating federal efforts to counter foreign propaganda and disinformation. The State Department also works with the Treasury Department and Justice Department to administer sanctions for election interference. "], "subsections": [{"section_title": "The FY2020 NDAA and Coordination Roles", "paragraphs": ["The FY2020 NDAA bill ( S. 1790 ; P.L. 116-92 ), enacted in December 2019, requires the DNI to \"develop a whole-of-government strategy for countering the threat of Russian cyberattacks and attempted cyberattacks against election systems and processes in the United States.\" Congress specified that the strategy should include protecting federal, state, and local election systems, voter registration databases, voting tabulation equipment, and systems for transmitting election results. Congress also required the DNI to develop the strategy \"in coordination\" with the Secretaries of Defense, Homeland Security, State, and the Treasury, and with the Directors of the CIA and FBI. "], "subsections": []}]}]}, {"section_title": "Federal Agency Roles and Campaign Security", "paragraphs": ["Perhaps because the 2017 critical infrastructure designation does not apply to political campaigns or other political committees, it appears that no federal agency has specific responsibility for coordinating security preparations for these entities. However, federal law enforcement agencies, particularly the FBI, can and do receive reports of, and investigate, suspected criminal activity. In preparation for the 2020 elections, the FBI also established a \"Protected Voices\" program that provides political campaigns, private companies, and individuals with information about how to guard against and respond to cyberattacks and foreign influence campaigns. In addition, DHS (CISA), the FBI, and ODNI have jointly briefed some 2020 federal political campaigns on security threats and best practices."], "subsections": []}]}, {"section_title": "Federal Election Security Guidance", "paragraphs": ["Federal election law takes a mostly voluntary approach to election security. Congress has set some security requirements for federal elections, such as directing election officials to provide a certain level of technological security for their HAVA-mandated computerized voter registration lists. Most election security standards are set at the state or local levels.", "Some examples of the voluntary election security guidance the federal government provides are the research, best practices, and technical assistance described in the \" Selected Federal Agencies \" section of this report. HAVA also charges the EAC\u00e2\u0080\u0094with assistance from the agency's advisory bodies and NIST\u00e2\u0080\u0094with developing voluntary voting system guidelines (VVSG), accrediting laboratories to test voting systems to the VVSG, and certifying systems as meeting the VVSG. The proposed update to the VVSG that was in development as of this writing (VVSG 2.0) includes some security-related principles and guidelines, such as ensuring that voting systems are auditable, limiting and logging access to voting systems, and preventing or detecting unauthorized physical access to voting system hardware.", "Participation in the federal voting system testing and certification program is voluntary under federal law. The testing and certification program covers the \"voting system\" as defined by HAVA, which does not include some components of the election system, such as voter registration databases and election night reporting systems. Changes to one part of a voting system, such as updating software to patch security vulnerabilities, might require recertification of the system under the policies in effect as of this writing, and updates to the VVSG require approval by a three-vote majority of the EAC's commissioners."], "subsections": []}, {"section_title": "Federal Funding for Securing Election Systems", "paragraphs": ["Congress has responded to the threats that emerged during the 2016 election cycle, discussed above, in part with funding. Since the 2016 elections, it has provided funding for helping secure election systems both to states, territories, and the District of Columbia (DC), and to federal agencies."], "subsections": [{"section_title": "Funding for States After the 2016 Election Cycle", "paragraphs": ["The Consolidated Appropriations Act, 2020 ( H.R. 1158 ; P.L. 116-93 ), and the Consolidated Appropriations Act, 2018 ( P.L. 115-141 ), included $425 million and $380 million, respectively, for payments under provisions of HAVA that authorize funding for general improvements to the administration of federal elections. The explanatory statements accompanying the bills listed the following election security-specific purposes as potential uses of the funds:", "replacing voting equipment that only records a voter's intent electronically with equipment that utilizes a voter-verified paper record; implementing a post-election audit system that provides a high level of confidence in the accuracy of the final vote tally; upgrading election-related computer systems to address cyber vulnerabilities identified through DHS or similar scans or assessments of existing election systems; facilitating cybersecurity training for the state chief election official's office and local election officials; implementing established cybersecurity best practices for election systems; and funding other activities that will improve the security of elections for federal office.", "The 50 states, DC, American Samoa, Guam, Puerto Rico, and the U.S. Virgin Islands were eligible for both FY2018 and FY2020 payments. The Commonwealth of the Northern Mariana Islands (CNMI) was eligible for FY2020 funding. Each recipient was guaranteed a minimum payment amount each year it was eligible\u00e2\u0080\u0094$3 million for each of the 50 states and DC and $600,000 per eligible territory\u00e2\u0080\u0094with the remainder of the appropriated funding distributed according to a formula based on voting-age population. Recipients are required to provide a 5% match for the FY2018 funds within two years of receiving a federal payment and a 20% match for the FY2020 funding.", "The EAC, which was charged with administering the payments, reported that all of the FY2018 funds were requested by July 16, 2018, and disbursed to the states by September 20, 2018. Each state has five years to spend the funds, according to the EAC, and must report on its spending each fiscal year. The EAC posts links to the states' reports\u00e2\u0080\u0094and spending plans\u00e2\u0080\u0094on its website and issues its own overview reports of state spending."], "subsections": []}, {"section_title": "Funding for Federal Agencies After the 2016 Election Cycle", "paragraphs": ["As noted in the \" Selected Federal Agencies \" section of this report, multiple federal agencies are involved in helping secure election systems. Congress has designated some of the funding it has appropriated to such agencies specifically for election system security. For example, following the designation of election systems as critical infrastructure in January 2017, the report language for DHS appropriations measures has specified funding for the department's election security initiative. The explanatory statement for the FY2018 spending bill also directed the FBI to use some of its funding to help counter threats to democratic institutions and processes.", "Agencies may also spend some of the funding they receive for more general purposes on activities related to election system security. The U.S. Department of Defense's (DOD's) Defense Advanced Research Projects Agency (DARPA) has provided funding under its System Security Integrated Through Hardware and Firmware (SSITH) program to advance development of a secure, open-source voting system, for example, and the EAC applies some of its operational funding to the federal voting system testing and certification program described in the \" Federal Election Security Guidance \" section of this report."], "subsections": []}]}, {"section_title": "State and Local Role in Election Security", "paragraphs": ["Some threats to U.S. elections\u00e2\u0080\u0094including both intentional interference efforts and the unintended threats posed by errors and natural disasters\u00e2\u0080\u0094involve the state and local systems used to administer elections. Other election security threats involve efforts to spread disinformation about elections or the integrity of the electoral process.", "States and localities may play a role in countering both types of threat. First, states and localities take the lead on defending their election systems. As noted previously, states and localities have primary responsibility for administering elections in the United States. The federal government has provided some funding and technical support to help them secure the systems they use to run elections, but states and localities have primary responsibility for ensuring that their systems are physically and technologically secure.", "That includes primary responsibility for funding election system security measures. Securing election systems may involve capital expenditures, such as replacing voting machines, that exceed funding provided by Congress. It may also involve ongoing costs\u00e2\u0080\u0094from identifying and addressing emerging security threats to renewing software licenses, paying election security staff, and conducting post-election audits\u00e2\u0080\u0094that extend beyond the period for which federal funding is available. Such expenses are covered, if they are covered, by states and localities.", "State and local responsibility for election system security also includes primary responsibility for making and implementing most decisions about how to secure election systems. Federal law sets some general standards for the administration of elections, such as the voter registration list digitization requirement noted in the \" Federal Election Security Guidance \" section of this report.", "States and localities decide\u00e2\u0080\u0094within the broad parameters set by such general standards\u00e2\u0080\u0094which election equipment and procedures to use and how to mitigate risks to them. They choose, for example,", "whether to use electronic devices to capture or count votes; whether, when, and how to conduct post-election audits; whether and how to set security standards for election equipment vendors; whether to have in-house security staff in local jurisdictions or rely on state or vendor IT support; which cybersecurity tools and procedures to use; whether and how to train election officials and poll workers on election security; how to secure election materials between elections and ensure a secure physical chain of custody on Election Day; and what cyber and physical security standards to set for election equipment.", "Second, states and localities can help combat disinformation or misinformation about elections or the integrity of the electoral process. They can, for example, ", "use official websites and social media accounts to share accurate information about elections or counter false information; and help educate the public about the steps they take to safeguard the electoral process. ", "States also can work through their professional associations\u00e2\u0080\u0094using initiatives such as a public education campaign launched by the National Association of Secretaries of State (NASS) in November 2019\u00e2\u0080\u0094to help direct voters to trustworthy sources of election information.", "These efforts might occur as part of or in parallel with responses to disinformation or misinformation by the federal government or private entities like social media companies. States might partner with social media companies to remove posts containing election disinformation, for example, or adopt disclosure requirements that supplement or override the companies' policies on digital political advertising."], "subsections": []}, {"section_title": "Selected Recent Policy Issues for Congress", "paragraphs": [" Table 4 below briefly summarizes selected policy issues and options that have shaped recent policy debates in Congress. In addition, the Appendix at the end of this report briefly summarizes legislation primarily devoted to campaign and election security that has advanced beyond introduction during the 116 th Congress. The table reflects recent policy debates, but is not intended to be exhaustive. Some observers might consider other issues not reflected here to be relevant for campaign and election security."], "subsections": []}, {"section_title": "Concluding Observations", "paragraphs": ["Campaign and election security are developing fields that cross policy and disciplinary boundaries. This complexity is reflected in the various statutes, agencies, and congressional committees that share responsibility for policymaking and administrative matters relevant for security U.S. campaigns and elections. Questions such as those that follow reflect themes discussed throughout this report. These and other questions could help congressional readers decide whether they want to maintain the status quo, appropriate funds, or pursue oversight or legislation.", "Federal R ole. A key question for Congress is whether, where, and how it chooses to be involved in campaign and election security. Most broadly, this potentially includes how to define this rapidly developing policy area, and in so doing, considering which issues are most appropriately addressed at the federal level versus at the state or local levels. This report has emphasized the federal role because those topics are most relevant for Congress. As the report also explains, states, localities, and territories are responsible for making many of their own election security decisions\u00e2\u0080\u0094just as political campaigns, parties, and PACs are responsible for their own security. Therefore, there are important debates about what campaign and election security includes that the federal government can influence, but that are primarily addressed below the federal level, in the private sector, or both. Examples include, but are not limited to, how election security might affect voter access, and vice versa; whether states require voter identification at the polls and whether or to what extent alleged vote fraud exists; how much and on what jurisdictions choose to spend available funds; and whether states, localities, or political campaigns and parties have sufficient resources to secure their elections or organizations. Communication. Does Congress want to encourage or require additional information sharing about campaign and election security matters between the federal government and nonfederal elections agencies? Similarly, do state, territorial, and local elections officials feel that they have or need clear points of contact within federal agencies, and do they know which agencies to contact in various circumstances? If it determines that the status quo is inadequate, does Congress want to encourage or require different reporting protocols, agency outreach, etc.? Coordination. Various agencies have reported to Congress that they have improved coordination among themselves, particularly through working groups or task forces. Less clear, at least from publicly available information, is specifically how such coordination works and whether current coordinating mechanisms are sufficient or whether agencies need additional resources or mechanisms to improve coordination. If it determines that the status quo is inadequate, does Congress want to exercise oversight in this area, provide additional information-sharing authorities, funding, etc., or does it consider current coordination authorities and mechanisms sufficient? Sectors. Much of the federal government's attention to campaign and election security appears to emphasize outreach to election administrators in states, territories, and localities. With respect to the private sector (such as political campaigns and equipment manufacturers), is federal agency support sufficient? To what extent are information-sharing practices among federal agencies and the private sector (or voters) similar to or different from those that shape communication between federal agencies and state, territorial, or local governments? If it determines that the status quo is inadequate, does Congress want to encourage or require additional federal agency support for nongovernmental entities in campaign and election security, or reporting requirements for those entities to the federal government? Voters. Some federal public education campaigns, such as those to counter disinformation in elections, are aimed at individual voters. Overall, however, much of the federal role in campaign and election security emphasizes communication among government agencies or, in some cases, the private sector. If it determines that the status quo is inadequate, does Congress want to task federal agencies\u00e2\u0080\u0094and if so, which ones\u00e2\u0080\u0094with additional responsibility for educating voters about campaign and election security; to provide funding for nongovernmental organizations to do so, etc.?", "The scope of potential campaign and election security threats, and the federal government's role in responding to those threats, has changed substantially in less than five years. The foreign interference revealed during the 2016 cycle\u00e2\u0080\u0094and widely reported to be an ongoing threat\u00e2\u0080\u0094has renewed congressional attention to campaign and election security and raised new questions. Whatever Congress determines about whether these or other questions are relevant for its consideration of campaign and election security policy, the issue is likely to remain prominent for the foreseeable future. "], "subsections": [{"section_title": "Appendix. Legislation Related to Campaign and Election Security That Has Advanced Beyond Introduction, 116th Congress", "paragraphs": [], "subsections": []}]}]}}
{"id": "R46003", "title": "Applicability of Federal Requirements to Selected Health Coverage Arrangements", "released_date": "2019-11-13T00:00:00", "summary": ["Federal health insurance requirements generally apply to health plans sold in the private health insurance market in the United States (i.e., individual coverage, small- and large-group coverage, and self-insured plans). However, not all private health coverage arrangements comply with these requirements. This includes exempted health coverage arrangements and noncompliant health coverage arrangements , as termed for purposes of this report. This report identifies and describes arrangements in these two categories. It is intended to help congressional policymakers better understand the scope of such arrangements available to individuals in the United States and to provide information about the limits of the application of federal health insurance requirements.", "The arrangements described in this report can be divided into two categories:", "Exempted Health Coverage Arrangements : Those that meet a federal definition of health insurance but are exempt from compliance with some or all applicable federal health insurance requirements. Such arrangements include the following:", "G roup health plans covering fewer than two current employees , including retiree-only plans , are exempt from all federal health insurance requirements. Health plans in their provision of excepted benefits (e.g., auto liability insurance, limited-scope dental and vision benefits, and specific disease coverage) are exempt from all federal health insurance requirements. S hort-term, limited-duration insurance (i.e., coverage generally sold in the individual market that must have a specified expiration date that is less than 12 months after the original effective date of the contract and that cannot be renewed or extended for longer than 36 months) is exempt from complying with all federal health insurance requirements. S tudent health insurance coverage (i.e., individual health insurance coverage that meets specified conditions and that may be provided only to students enrolled in an institution of higher education and their dependents) is exempt from complying with some federal health insurance requirements if such coverage is fully insured and is exempt from all federal health insurance requirements if the student health plan is self-insured. S elf-insured, nonfederal governmental plans (e.g., group health plans sponsored by states, counties, school districts, and municipalities) may elect to exempt the plan from some federal requirements. G randfathered plans (i.e., group health plans or health insurance coverage in which at least one individual was enrolled as of enactment of the Patient Protection and Affordable Care Act [ACA; P.L. 111-148 , as amended] and which have continued to meet specified conditions) are exempt from some federal requirements. T ransitional plans (i.e., individual and small-group market plans that meet certain requirements and are in states that have continuously opted to exempt them, per federal guidance) are exempt from some federal requirements.", "Noncompliant Health Coverage Arrangements : Those that the federal government has not explicitly exempted from compliance with federal health insurance requirements and that do not necessarily comply with those requirements. Such arrangements include the following:", "H ealth care sharing ministries (i.e., faith-based organizations that share resources for medical needs among their members) do not currently and have not historically complied with federal health insurance requirements. Certain types of f arm bureau coverage (i.e., health coverage offered by a farm bureau in the three states with a law that specifies that such coverage is not considered insurance and is not subject to the state's insurance laws) do not comply with federal health insurance requirements.", "The report includes a brief description of each arrangement, its status with respect to complying with federal health insurance requirements, and the history of its status. The report also includes information about whether and how the arrangements are subject to state regulatory authority. Where available, estimates of enrollment in an arrangement are provided."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["A majority of the population of the United States has private health insurance coverage (i.e., coverage not available through a public program, such as Medicare or Medicaid). In 2017, about 55% of the U.S. population had private group coverage (e.g., a health plan offered by an employer) and 13.5% had private individual coverage (e.g., a health plan offered through a health insurance exchange). In general, health plans sold in the private health insurance market must comply with state and federal health insurance requirements. The federal requirements relate to how coverage is offered and issued, the benefits it must cover, and how it is priced, among other issues. An example of a federal health insurance requirement is the prohibition of preexisting condition exclusions. ", "Although federal health insurance requirements generally apply to health plans sold in the private health insurance market, not all private health coverage arrangements comply with such requirements. This includes exempted health coverage arrangements and nonco mpliant health coverage arrangements , as termed for purposes of this report. This report identifies and describes arrangements within these two categories. The report is intended to help congressional policymakers better understand the scope of these health coverage arrangements that are available to individuals in the United States private health insurance markets and to provide information about the limitations of the application of federal health insurance requirements."], "subsections": [{"section_title": "Background", "paragraphs": ["The private health insurance market has different segments. Understanding these different segments is relevant to the application of state and federal health insurance requirements. ", "The individual health insurance market segment is where individuals and families buying insurance on their own (i.e., not through a plan sponsor) may purchase health plans. In the group health insurance market, a plan sponsor, typically an employer, offers coverage to a group (e.g., the employer's employees). The group market is divided into small- and large-group market segments. It is also categorized according to how the plan is insured. Group plans that are purchased by employers and other plan sponsors from state-licensed health insurance issuers and are offered to employees or other groups are referred to as fully insured plans. Employers or other plan sponsors that offer self - insur e d plans set aside funds to pay for health benefits directly, and they bear the risk of covering medical expenses generated by the individuals covered under the self-insured plan. ", "States are the primary regulators of the business of health insurance, as codified by the 1945 McCarran-Ferguson Act, and each state requires health insurance issuers to be licensed to sell plans in the state. Each state has a unique set of requirements that apply to state-licensed issuers and the plans they offer; these requirements are broad in scope and address a variety of issues, and often the requirements apply differently to the various market segments. In general, state oversight of health plans applies only to plans offered by state-licensed issuers. Because self-insured plans are financed directly by a plan sponsor, as opposed to a state-licensed insurer, such plans generally are not subject to state law. ", "The federal government also regulates state-licensed issuers and the plans they offer, as well as self-insured plans and their sponsors . Federal requirements can, but do not necessarily, apply uniformly to health plans offered in the aforementioned market segments\u00e2\u0080\u0094individual, small-group, and large-group markets\u00e2\u0080\u0094and to self-insured plans. For example, the requirement that plans cover preexisting health conditions applies uniformly; health plans offered in the individual, small-group, and large-group markets and self-insured plans must comply with the prohibition on excluding benefits based on health conditions for any individual. The requirement to cover a core package of 10 \"essential health benefits\" does not apply uniformly; it applies only to health plans offered in the individual and small-group markets.", "Federal health insurance requirements are codified in three statutes\u00e2\u0080\u0094Title XXVII of the Public Health Service Act (PHSA), Part 7 of the Employee Retirement Income Security Act of 1974 (ERISA), and Chapter 100 of the Internal Revenue Code (IRC). In general, federal standards establish a minimum level of requirements ( federal floor ) and states may impose additional requirements on issuers and the health plans they offer, provided the state requirements neither conflict with federal law nor prevent the implementation of federal health insurance requirements.", "Enforcement of the federal health insurance requirements generally involves both the federal and the state governments. States are the primary enforcers of private health insurance requirements, but the federal government assumes this responsibility if it is determined that a state has failed to \"substantially enforce\" the federal provisions, including if a state indicates that it lacks authority to enforce or is otherwise not taking enforcement actions."], "subsections": []}, {"section_title": "Applicability of Federal Health Insurance Requirements to Selected Health Coverage Arrangements", "paragraphs": ["Some health coverage arrangements that consumers may purchase to help them pay for health care services do not comply with some or all of the federal health insurance requirements codified in Title XXVII of the PHSA, Part 7 of ERISA, and Chapter 100 of the IRC. This report focuses on such arrangements ( Table 1 ). The health coverage arrangements listed in Table 1 can be divided into two categories:", "1. Exempted Health Coverage A rrangements : Those that meet a federal definition of health insurance but that are exempt from compliance with some or all applicable federal health insurance requirements. 2. Noncompliant Health Coverage A rrangements : Those that the federal government has not explicitly exempted from compliance with federal health insurance requirements and that do not necessarily comply with those requirements.", "The arrangements listed in Table 1 are summarized in the remainder of this report. Each summary includes a brief description of the arrangement, its status with respect to complying with federal health insurance requirements, and the history of its status. The summaries also include information about whether and how the arrangements are subject to state regulatory authority. Where available, estimates of enrollment in an arrangement are provided."], "subsections": []}]}, {"section_title": "Exempted Health Coverage Arrangements", "paragraphs": ["The arrangements discussed in this section have the following in common: they meet a federal definition of health insurance (i.e., they meet the federal definition of health insurance coverage or group health plan), but they are exempt from compliance with some or all applicable federal health insurance requirements. For most of the arrangements discussed in this section, the exemption is explicit in federal statute, regulations, or guidance (see Table 1 ). "], "subsections": [{"section_title": "Group Health Plans Covering Fewer Than Two Current Employees", "paragraphs": ["Both fully insured and self-insured group health plans covering fewer than two current employees are exempt from all federal health insurance requirements. This includes retiree-only plans , provided they cover fewer than two current employees. If retiree benefits are offered through the same plan offered to current employees (and there are two or more current employees enrolled in such plan), then the retiree benefits are not exempt from federal health insurance requirements. ", "The exemption was established in the Health Insurance Portability and Accountability Act (HIPAA; P.L. 104-191 ). HIPAA set forth parallel exemptions from federal health insurance requirements for group plans covering fewer than two current employees in Title XXVII of the PHSA, Part 7 of ERISA, and Chapter 100 of the IRC. After the Patient Protection and Affordable Care Act (ACA; P.L. 111-148 , as amended) amended, reorganized, and renumbered Title XXVII of the PHSA, the exemption that had been in the PHSA ceased to exist. However, in the preamble to an interim final rule implementing ACA provisions related to grandfathered plans (see \" Grandfathered Plans \" in this report), the Department of Health and Human Services (HHS) stated that it would not enforce HIPAA or ACA requirements with respect to group health plans covering fewer than two current employees, including retiree-only plans. HHS encouraged states not to enforce the requirements, either, and said the federal government would not cite states for failing to enforce in this situation. Given an Administration's authority to promulgate regulations and issue administrative guidance relating to federal health insurance standards, it is possible that an Administration may reconsider its position on enforcement, but no Administration has done so to date. ", "States may impose their own requirements on group health plans covering fewer than two current employees (including retiree-only plans), provided the plans are fully insured. States do not have the authority to regulate self-insured plans. ", "CRS did not find estimates of enrollment in group health plans covering fewer than two current employees. "], "subsections": []}, {"section_title": "Excepted Benefits", "paragraphs": ["In general, health plans in their provision of excepted benefits are exempt from all federal health insurance requirements. A diverse collection of insurance benefits can be considered excepted benefits, including auto liability insurance, limited-scope dental and vision benefits, benefits for long-term care, specific disease coverage, and supplemental Medicare plans (i.e., Medigap plans). Per federal statute, there are four categories of excepted benefits. One category is exempt from complying with all federal health insurance requirements in all circumstances; the other three categories are exempt from complying with all of the requirements only when specified conditions are met. (See Table 2 for details.)", "The exemption for excepted benefits and the conditions for exemption were established under HIPAA. HIPAA set forth parallel exemptions and conditions in Title XXVII of the PHSA, Part 7 of ERISA, and Chapter 100 of the IRC. Enactment of the ACA modified the PHSA exemption in such a way that some federal requirements would apply to excepted benefits under the PHSA. However, given that the ERISA and IRC exemptions for excepted benefits remained unchanged, HHS stated it would not enforce HIPAA or ACA requirements on excepted benefits and encouraged states not to enforce the requirements, either. ", "States may impose requirements on excepted benefits, provided the benefits are not self-insured. ", "CRS did not find estimates of enrollment in the various types of excepted benefit plans."], "subsections": []}, {"section_title": "Short-Term, Limited-Duration Insurance", "paragraphs": ["Short-term, limited-duration insurance (STLDI) is defined as health insurance coverage provided pursuant to a contract with a health insurance issuer that meets the following standards:", "the contract for the coverage must have a specified expiration date that is less than 12 months after the original effective date of the contract and cannot last longer than 36 months, taking into account renewals or extensions, and the contract and application materials must display a notice as specified in federal regulations indicating that the coverage does not have to comply with federal requirements.", "Additionally, the 36-month maximum duration is severable from the rest of the definition, meaning the definition would be operative even if the 36-month maximum duration were challenged in court and found invalid or unenforceable.", "The federal definition of STLDI has changed twice since it was established. STLDI was first defined in regulations issued in 1997. The term was redefined in regulations issued in 2016, and again in regulations issued in 2018. (See Table 3 for details.)", "Although the definition of STLDI has changed, the applicability of federal health insurance requirements to STLDI has remained the same. STLDI historically has not and currently does not have to comply with federal health insurance requirements. Although STLDI is health insurance coverage generally sold in the individual market, it is excluded from the federal definition of individual health insurance coverage. Per the preamble to the final rule on STLDI, this exclusion from the definition of individual health insurance coverage provides the basis of STLDI's exemption from federal health insurance requirements.", "State regulation of STLDI varies. Some states impose restrictions on STLDI that are more prohibitive than what is allowed under the federal definition. For example, 22 states (including the District of Columbia [DC]) impose expiration dates shorter than the 12 months allowed under federal law. States may opt to place additional restrictions on STLDI that are not addressed under federal law. For example, 34 states (including DC) require that individuals enrolled in STLDI have access to external appeals processes and 3 states restrict how issuers can vary rates for STLDI (e.g., Minnesota prohibits gender rating for STLDI policies). States also may ban the sale of STLDI in the state, as four states have done.", "The most recent change to the definition of STLDI has been in effect for less than a year, and enrollment data for the new policies are not yet available. For a discussion of projected estimates of enrollment in STLDI under the latest definition, see the final rule on STLDI."], "subsections": []}, {"section_title": "Student Health Insurance Coverage", "paragraphs": ["Student health insurance coverage is a type of individual health insurance coverage that may be provided only to students enrolled in an institution of higher education and their dependents. The coverage has to meet the following conditions: ", "it cannot be available to anyone other than a student in an institution of higher education and a student's dependent(s), it cannot condition eligibility for the coverage on any health status-related factor of a student or a student's dependent(s), and it must meet requirements imposed under state law.", "As a type of individual health insurance coverage, fully insured student health insurance coverage would be required to comply with federal health insurance requirements that apply to individual coverage. However, regulations provide that it is exempt from complying with specified requirements that otherwise apply to individual health insurance coverage. (See Table 4 for details.)", "Student health insurance coverage was defined and its exemption status was established through the rulemaking process in response to ACA Section 1560(c), which states, \"Nothing in this title (or an amendment made by this title) shall be construed to prohibit an institution of higher education (as such term is defined for purposes of the Higher Education Act of 1965) from offering a student health insurance plan, to the extent that such requirement is otherwise permitted under applicable Federal, State, or local law.\"", "In the preamble to the proposed rule on student health insurance coverage, HHS noted that it proposed to exempt student health insurance coverage from guaranteed issue and renewal, minimum actuarial value requirements, and the single risk pool requirement because it believed that having to comply with the requirements \"would effectively prohibit institutions of higher education from being able to offer these [student health insurance coverage] plans\" and doing so would not be in keeping with ACA Section 1560(c). These regulatory exemptions went into effect for student health insurance coverage beginning on or after July 1, 2012. The exemption from rate review requirements was established later and went into effect for student health insurance plans beginning on or after July 1, 2018. ", "HHS acknowledges that it does not have the authority to regulate self-insured student health plans, which means the federal health insurance requirements and the exemptions listed in Table 4 apply only to fully insured student plans. States, however, can regulate fully insured and self-insured student health plans. ", "According to data from the National Association of Insurance Commissioners, in 2017, there were about 1.1 million student health insurance policies written and nearly 1.3 million covered lives. "], "subsections": []}, {"section_title": "Self-Insured, Nonfederal Governmental Plans", "paragraphs": ["A nonfederal governmental plan is a governmental group health plan that is not sponsored by the federal government. Examples of entities that may sponsor nonfederal governmental plans are states, counties, school districts, and municipalities.", "Like private employers, sponsors of nonfederal governmental plans can choose to offer self-insured or fully insured plans. If a sponsor of a nonfederal governmental plan offers a self-insured plan, the sponsor may elect to exempt the plan from the specified federal requirements listed in Table 5 . The sponsor may choose to exempt the plan from some or all of the listed requirements. For example, a sponsor may elect to exempt its plan only from complying with the mental health parity requirement. ", "The exemption for self-insured, nonfederal governmental plans was established in the PHSA under HIPAA as an exemption from seven federal requirements. Because of how the ACA amended and reorganized the PHSA, the exemption was modified and, as of September 2010, self-insured, nonfederal governmental plans may opt out of only the four requirements listed in Table 5 . Because these plans are self-insured group health plans, states do not have the authority to regulate these plans. ", "According to an analysis of data published by the Center for Consumer Information & Insurance Oversight, as of June 21, 2019, at least 174 nonfederal governmental entities across 35 states have elected to exempt at least one self-insured plan they offer from one or more of the four requirements. Nearly all of the 174 entities offer at least one plan that is exempt from the mental health parity requirement; significantly fewer entities offer plans that are exempt from each of the other three requirements. About 11% of the 174 entities offer at least one plan that is exempt from all four requirements. ", "CRS did not find estimates of enrollment in self-insured, nonfederal governmental plans."], "subsections": []}, {"section_title": "Grandfathered Plans", "paragraphs": ["The ACA provided that group health plans and health insurance coverage in which at least one individual was enrolled as of enactment of the ACA (March 23, 2010) could be grandfathered . For as long as a plan maintains its grandfathered status, the plan is exempt from specified federal health insurance requirements established under the ACA. Since grandfathered plans existed as of March 23, 2010, they must comply with applicable federal health insurance requirements that were established prior to enactment of the ACA, as long as the prior requirements do not conflict with the ACA's grandfathered rules. For example, both grandfathered and non-grandfathered plans offered in the individual market must comply with federal health insurance requirements that applied to the individual market prior to enactment of the ACA. However, a grandfathered plan is required to comply with only some ACA requirements that apply to the individual market, whereas a non-grandfathered plan must comply with all such requirements. Table A-1 in the Appendix identifies which federal health insurance requirements apply to grandfathered plans.", "A plan can lose its grandfathered status. To maintain grandfathered status, a plan must continue to meet specified conditions and avoid making specified changes regarding employer contributions (where applicable), access to coverage, benefits, and cost sharing (e.g., changes in coinsurance requirements). A health plan offered in any market segment\u00e2\u0080\u0094individual, small group, large group, or self-insured\u00e2\u0080\u0094could be grandfathered. There is no time limitation on grandfathered status; as long as a plan avoids making the specified changes, it can remain a grandfathered plan. Once a plan has lost its grandfathered status, it cannot regain that status.", "Grandfathered plans generally are not available to new enrollees. Only individuals who have been continually covered and any new dependents can be covered under grandfathered plans in the individual market, and only individuals who have been continually covered, new dependents, and new employees can be covered under self-insured grandfathered plans and grandfathered plans offered in the group market.", "As of the date of this report, no repository for enrollment data for grandfathered plans was found, but the federal government has commented on enrollment. In October 2018, the Departments of HHS, Labor, and the Treasury commented that \"only a small number of individuals are currently enrolled in grandfathered individual health insurance coverage\" and \"the number of individuals with grandfathered individual health insurance coverage has declined each year since ... [the ACA] was enacted, and the already small number of individuals who have retained grandfathered coverage will continue to decline each year.\" In February 2019, the Departments issued a request for information on grandfathered group health plans and grandfathered group health insurance coverage. In the request, they noted the following: \"It is the Departments' understanding that the number of group health plans and group health insurance policies that are considered to be grandfathered has declined each year since the enactment of ... [the ACA], but many employers continue to maintain group health plans and coverage that have retained grandfathered status.\" Data from the Kaiser Family Foundation's annual surveys on employer-sponsored health benefits underscore the decline among grandfathered group plans. According to the surveys, the percentage of employers that offer at least one grandfathered plan declined from 72% in 2011 to 22% in 2019. The percentage of covered workers covered under a grandfathered plan declined from 56% in 2011 to 13% in 2019. ", "States may regulate grandfathered plans in the same way they regulate non-grandfathered plans\u00e2\u0080\u0094they may impose requirements on issuers of grandfathered plans and the plans themselves, provided the state requirements neither conflict with federal law nor prevent the implementation of federal health insurance requirements. States do not have the authority to regulate self-insured grandfathered plans."], "subsections": []}, {"section_title": "Transitional Plans", "paragraphs": ["The ACA included many new federal requirements that applied to health insurance coverage and the entities that offer such coverage. Some of the requirements were effective shortly after the ACA was enacted, but most became effective for plan years beginning on or after January 1, 2014. Many of the 2014 requirements applied to plans offered in the individual and small-group markets. ", "In the fall of 2013, issuers offering non-grandfathered individual and small-group plans began notifying their enrollees that their coverage would soon be canceled because the plans did not comply with the 2014 ACA requirements. If the individuals and employers enrolled wanted to continue to be covered in the individual or small-group market, they would have to find plans (offered by their current issuer or a different issuer) that complied with the 2014 ACA requirements.", "In response to the announced plan terminations, CMS issued guidance in November 2013 that established what are often referred to as transitional plans (or grandmothered plans). In the guidance, CMS stated it would not find individual and small-group market plans out of compliance with specified 2014 ACA requirements if the plans did not satisfy such requirements, provided the plans were renewed for plan years starting between January 1, 2014, and October 1, 2014. Pursuant to the guidance, state insurance commissioners could choose whether to enforce compliance with the specified 2014 ACA requirements in their individual and small-group markets. If state insurance commissioners chose not to enforce compliance in one or both of the markets, then issuers selling plans in the market(s) could choose to (but would not be required to) renew coverage for enrollees who otherwise would receive cancellation notices.", " Table A-1 in the Appendix identifies the ACA requirements with which transitional plans do and do not have to comply. Transitional plans must comply with federal health insurance requirements that went into effect prior to enactment of the ACA and all ACA requirements that went into effect prior to 2014. ", "Initially, the transitional plan guidance applied to plans that were renewed for plan years starting between January 1, 2014, and October 1, 2014. The transitional plan guidance has been extended multiple times (most recently on March 25, 2019); currently, states may allow issuers that have continually renewed transitional plans since 2014 to continue to cover individuals under transitional plans through 2020. ", "In states that allow transitional plans, issuers can choose to continue their transitional plans or not. Discontinued transitional plans cannot be revived. Transitional plans generally are not available to new enrollees. Only individuals who have been continually covered and any new dependents can be covered under transitional plans in the individual market, and only individuals who have been continually covered, new dependents, and new employees can be covered under transitional plans in the small-group market.", "Most states opted to allow transitional plans in both their individual and small-group markets when the policy was first established. Some states have changed their policies since then. In 2019, transitional plans are available in both the individual and small-group markets in 32 states; most of these states have indicated they will allow transitional plans to continue in their markets through 2020 under the recent federal extension. In four states, transitional plans are allowed in both markets, but issuers have stopped offering transitional plans in each state's individual market. Fifteen states (including DC) either never allowed or no longer allow transitional plans in the state.", "As of the date of this report, no repository of enrollment data for transitional plans could be found. Given that transitional plans, for the most part, may only be renewed by those currently involved and may not be sold to new consumers, enrollment in transitional plans likely has declined since the plans were established. "], "subsections": []}]}, {"section_title": "Noncompliant Health Coverage Arrangements", "paragraphs": ["The two health coverage arrangements discussed in this section have the following in common: the federal government has not explicitly exempted them from compliance with federal health insurance requirements, and they do not necessarily comply with those requirements. ", "The arrangements summarized in this section are just two examples that share the aforementioned characteristics. There may be other health coverage arrangements that share the same characteristics, but it is difficult to make a comprehensive list of such arrangements, given that one of their defining characteristics is that the federal government does not appear to have discussed their status with respect to the application of the federal health insurance requirements."], "subsections": [{"section_title": "Health Care Sharing Ministries", "paragraphs": ["A health care sharing ministry (HCSM) is a faith-based organization that shares resources for medical needs among its members. The idea of pooling financial resources for medical needs among a religious community has a long history in the United States. The idea originated with the Amish and Mennonites over a century ago, and other religious groups began offering HCSMs in the 1990s. In general, members of an HCSM are expected to follow a set of religious or ethical beliefs and regularly contribute a payment (e.g., monthly) to cover the medical expenses of other members. The contributions are distributed, either through the HCSM or via a member-to-member match, to members who need funds for health care costs. Members are often responsible for a portion of their health care costs prior to receiving funds from the HCSM, and most HCSMs exclude coverage of specified illnesses, care, or treatments. ", "HCSMs maintain that they are not providing insurance and do not guarantee payment for members' health care costs. However, the federal government does not appear to have defined HCSMs for regulatory or exemption purposes. HCSMs do not necessarily currently comply, and have not historically complied, with federal health insurance requirements. ", "States may choose whether and how to regulate HCSMs operating in their state. As of August 2018, 30 states had opted to explicitly exempt HCSMs from state insurance law (i.e., the HCSM does not have to comply with the state's body of insurance laws), provided the HCSM meets specified requirements. State HCSM requirements vary; examples of requirements include providing to consumers written disclaimers stating the HCSM is not an insurance company and having an annual audit. In the remaining 21 states (including DC), HCSMs have not been explicitly exempted from state insurance law; however, the lack of an explicit exemption does not necessarily mean that such states regulate HCSMs. ", "Regardless of whether a state has exempted an HCSM from its body of insurance laws, a state's role in regulating HCSMs is complex and varied. In states that exempt HCSMs from their insurance laws, state regulators are responsible for ensuring that HCSMs meet the requirements necessary to maintain their exemption and for taking action if they do not. In states that do not exempt HCSMs from their insurance laws, state regulators \"can investigate and, if sufficient evidence exists, regulate these plans as unauthorized insurers.\" In all states, regulators may have roles to play in \"investigating fraud, referring cases to the Attorney General's office, and assisting consumers who may have been harmed [by an HCSM].\"", "The Alliance of Health Care Sharing Ministries reports that there are 104 HCSMs in 29 states, and 7 of the 104 are open to new members. As of the date of this report, the alliance estimates enrollment in HCSMs at just under 970,000. "], "subsections": []}, {"section_title": "Farm Bureau Coverage", "paragraphs": ["The American Farm Bureau Federation is a national organization established in 1919 to advocate for the financial and political interests of farmers, ranchers, and others associated with agriculture. There are local farm bureau offices in all 50 states and in Puerto Rico (but not in DC). Membership in a local farm bureau is open to anyone who pays the membership fee, but typically membership is tiered, with members associated with agriculture having a status different from other members (e.g., agriculture-associated members may have voting rights in the organization, whereas other members may not). ", "Each state farm bureau provides member benefits. The benefits include discounts on a variety of products and services, such as hotel stays, farm equipment, and membership in air ambulance networks. Additionally, many state farm bureaus assist their members with obtaining insurance, including health insurance. The assistance with health insurance takes different forms. Many state farm bureaus have agents available to assist their members with finding and enrolling in a health plan; some state farm bureaus sponsor coverage that is available to their members; and at least one state farm bureau is divided in two parts, with one part being an insurance company that serves the farm bureau's members.", "As of the date of this report, three states\u00e2\u0080\u0094Iowa, Kansas, and Tennessee\u00e2\u0080\u0094have enacted laws that allow the farm bureaus in each state to offer a different type of health coverage arrangement. Each state allows the state's farm bureau to sponsor health benefits coverage that is not defined by the state as insurance and is not subject to the state's insurance laws, provided the coverage and the farm bureau comply with specified requirements. (See Table 6 for details.) Iowa and Kansas passed their laws recently\u00e2\u0080\u0094in 2018 and 2019, respectively\u00e2\u0080\u0094and Tennessee passed its law in 1993. The farm bureaus in Iowa and Tennessee currently offer such coverage; the Kansas Farm Bureau's coverage became available for purchase beginning October 1, 2019, with coverage starting as early as January 1, 2020.", "As explained above, the arrangements sponsored by farm bureaus in Iowa, Kansas, and Tennessee are not considered insurance in their respective states and do not have to comply with state requirements that apply to insurance. Additionally, farm bureau coverage in these three states does not necessarily comply with any federal health insurance requirements. However, the federal government does not appear to have defined such coverage for regulatory or exemption purposes.", "In 2017, about 23,000 individuals had Tennessee Farm Bureau coverage. Estimates for the Iowa Farm Bureau were not found. Kansas Farm Bureau estimates that 11,000-42,000 residents of Kansas will be covered by its health benefits coverage."], "subsections": [{"section_title": "Appendix. Applicability of Selected Federal Health Insurance Requirements to Grandfathered and Transitional Plans", "paragraphs": [" Table A-1 shows the applicability of selected federal health insurance requirements to grandfathered and transitional plans. Both types of plans are described in detail in this report; as a reminder, any type of plan could be grandfathered, but only fully insured small-group plans and individual-market plans could become transitional plans. ", "The check marks in the table indicate that the grandfathered or transitional plan must comply with the requirement. The term N.A. indicates that the requirement does not apply to the specified market segment, regardless of whether the plan is a grandfathered or transitional plan. The use of Exempt in the table indicates that the grandfathered or transitional plan is exempt from complying with the requirement. For example, the ACA's rate review requirement applies only to fully insured small-group plans and individual market plans. Grandfathered plans do not have to comply with the requirement, which is why the table indicates that grandfathered fully insured small-group plans and grandfathered individual plans are \"Exempt\" from the requirement. Transitional plans do have to comply with the requirement, which is why the table has check marks for these plans. The rate review requirement does not apply to fully insured large-group plans or self-insured plans; as such, the table indicates that the requirement is not applicable (N.A.) to grandfathered versions of these plans."], "subsections": []}]}]}]}}
{"id": "RS20871", "title": "Iran Sanctions", "released_date": "2019-05-21T00:00:00", "summary": ["Successive Administrations have used sanctions extensively to try to change Iran's behavior. Sanctions have had a substantial effect on Iran's economy but little, if any, observable effect on Iran's conventional defense programs or regional malign activities. During 2012-2015, when the global community was relatively united in pressuring Iran, Iran's economy shrank as its crude oil exports fell by more than 50%, and Iran had limited ability to utilize its $120 billion in assets held abroad.", "The 2015 multilateral nuclear accord (Joint Comprehensive Plan of Action, JCPOA) provided Iran broad relief through the waiving of relevant sanctions, revocation of relevant executive orders (E.O.s), and the lifting of U.N. and EU sanctions. Remaining in place were a general ban on U.S. trade with Iran and U.S. sanctions on Iran's support for regional governments and armed factions, its human rights abuses, its efforts to acquire missile and advanced conventional weapons capabilities, and the Islamic Revolutionary Guard Corps (IRGC). Under U.N. Security Council Resolution 2231, which enshrined the JCPOA, nonbinding U.N. restrictions on Iran's development of nuclear-capable ballistic missiles and a binding ban on its importation or exportation of arms remain in place for several years.", "JCPOA sanctions relief enabled Iran to increase its oil exports to nearly pre-sanctions levels, regain access to foreign exchange reserve funds and reintegrate into the international financial system, achieve about 7% yearly economic growth (2016-17), attract foreign investment, and buy new passenger aircraft. The sanctions relief contributed to Iranian President Hassan Rouhani's reelection in the May 19, 2017, vote. However, the economic rebound did not prevent sporadic unrest from erupting in December 2017. And, Iran has provided support for regional armed factions, developed ballistic missiles, and expanded its conventional weapons development programs during periods when international sanctions were in force, when they were suspended, and after U.S. sanctions were reimposed in late 2018.", "The Trump Administration has made sanctions central to efforts to apply \"maximum pressure\" on Iran's regime. On May 8, 2018, President Trump announced that the United States would no longer participate in the JCPOA and that all U.S. secondary sanctions would be reimposed by early November 2018. The reinstatement of U.S. sanctions has driven Iran's economy into mild recession as major companies exit the Iranian economy rather than risk being penalized by the United States. Iran's oil exports have decreased significantly, the value of Iran's currency has declined sharply, and unrest has continued, although not to the point where the regime is threatened. But, the European Union and other countries are trying to keep the economic benefits of the JCPOA flowing to Iran in order to persuade Iran to remain in the accord. To that end, in January 2019 the European countries created a trading mechanism (Special Purpose Vehicle) that presumably can increase trade with Iran by circumventing U.S. secondary sanctions. On November 5, 2018, the Administration granted 180-day \"Significant Reduction Exceptions\" (SREs) to eight countries\u2014enabling them to import Iranian oil without penalty as long as they continue to reduce purchases of Iranian oil. On April 22, 2019, the Administration announced it would not renew any SREs when they expire on May 2, 2019, instead seeking to drive Iran's oil exports as close to zero as possible. On May 3, 2019, the Administration ended some waivers for foreign governments to provide technical assistance to some JCPOA-permitted aspects of Iran's nuclear program. The economic difficulties and other U.S. pressure measures have prompted Iran to cease performing some of the nuclear commitments of the JCPOA.", "See also CRS Report R43333, Iran Nuclear Agreement and U.S. Exit, by Paul K. Kerr and Kenneth Katzman; and CRS Report R43311, Iran: U.S. Economic Sanctions and the Authority to Lift Restrictions, by Dianne E. Rennack."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Overview and Objectives", "paragraphs": ["Sanctions have been a significant component of U.S. Iran policy since Iran's 1979 Islamic Revolution that toppled the Shah of Iran, a U.S. ally. In the 1980s and 1990s, U.S. sanctions were intended to try to compel Iran to cease supporting acts of terrorism and to limit Iran's strategic power in the Middle East more generally. After the mid-2000s, U.S. and international sanctions focused largely on ensuring that Iran's nuclear program is for purely civilian uses. During 2010-2015, the international community cooperated closely with a U.S.-led and U.N.-authorized sanctions regime in pursuit of the goal of persuading Iran to agree to limits to its nuclear program. Still, sanctions against Iran have multiple objectives and address multiple perceived threats from Iran simultaneously. ", "This report analyzes U.S. and international sanctions against Iran. CRS has no way to independently corroborate whether any individual or other entity might be in violation of U.S. or international sanctions against Iran. The report tracks \"implementation\" of the various U.S. laws and executive orders as designations and imposition of sanctions. Some sanctions require the blocking of U.S.-based property of sanctioned entities. CRS has not obtained information from the executive branch indicating that such property has been blocked, and it is possible that sanctioned entities do not have any U.S. assets that could be blocked. ", "The sections below are grouped by function, in the chronological order in which these themes have emerged."], "subsections": []}, {"section_title": "Blocked Iranian Property and Assets", "paragraphs": [], "subsections": [{"section_title": "Post-JCPOA Status: Iranian Assets Still Frozen, but Some Issues Resolved", "paragraphs": ["U.S. sanctions on Iran were first imposed during the U.S.-Iran hostage crisis of 1979-1981, in the form of executive orders issued by President Jimmy Carter blocking nearly all Iranian assets held in the United States. These included E.O. 12170 of November 14, 1979, blocking all Iranian government property in the United States, and E.O 12205 (April 7, 1980) and E.O. 12211 (April 17, 1980) banning virtually all U.S. trade with Iran. The latter two Orders were issued just prior to the failed April 24-25, 1980, U.S. effort to rescue the U.S. Embassy hostages held by Iran. President Jimmy Carter also broke diplomatic relations with Iran on April 7, 1980. The trade-related Orders (12205 and 12211) were revoked by Executive Order 12282 of January 19, 1981, following the \"Algiers Accords\" that resolved the U.S.-Iran hostage crisis. Iranian assets still frozen are analyzed below."], "subsections": []}, {"section_title": "U.S.-Iran Claims Tribunal", "paragraphs": ["The Accords established a \"U.S.-Iran Claims Tribunal\" at the Hague that continues to arbitrate cases resulting from the 1980 break in relations and freezing of some of Iran's assets. All of the 4,700 private U.S. claims against Iran were resolved in the first 20 years of the Tribunal, resulting in $2.5 billion in awards to U.S. nationals and firms. ", "The major government-to-government cases involved Iranian claims for compensation for hundreds of foreign military sales (FMS) cases that were halted in concert with the rift in U.S.-Iran relations when the Shah's government fell in 1979. In 1991, the George H. W. Bush Administration paid $278 million from the Treasury Department Judgment Fund to settle FMS cases involving weapons Iran had received but which were in the United States undergoing repair and impounded when the Shah fell. ", "On January 17, 2016, (the day after the JCPOA took effect), the United States announced it had settled with Iran for FMS cases involving weaponry the Shah was paying for but that was not completed and delivered to Iran when the Shah fell. The Shah's government had deposited its payments into a DOD-managed \"Iran FMS Trust Fund,\" and, after 1990, the Fund had a balance of about $400 million. In 1990, $200 million was paid from the Fund to Iran to settle some FMS cases. Under the 2016 settlement, the United States sent Iran the $400 million balance in the Fund, plus $1.3 billion in accrued interest, paid from the Department of the Treasury's \"Judgment Fund.\" In order not to violate U.S. regulations barring direct U.S. dollar transfers to Iranian banks, the funds were remitted to Iran in late January and early February 2016 in foreign hard currency from the central banks of the Netherlands and of Switzerland. Some remaining claims involving the FMS program with Iran remain under arbitration at the Tribunal. "], "subsections": []}, {"section_title": "Other Iranian Assets Frozen", "paragraphs": ["Iranian assets in the United States are blocked under several provisions, including Executive Order 13599 of February 2010. The United States did not unblock any of these assets as a consequence of the JCPOA. ", "About $1.9 billion in blocked Iranian assets are bonds belonging to Iran's Central Bank, frozen in a Citibank account in New York belonging to Clearstream, a Luxembourg-based securities firm, in 2008. The funds were blocked on the grounds that Clearstream had improperly allowed those funds to access the U.S. financial system. Another $1.67 billion in principal and interest payments on that account were moved to Luxembourg and are not blocked. About $50 million of Iran's assets frozen in the United States consists of Iranian diplomatic property and accounts, including the former Iranian embassy in Washington, DC, and 10 other properties in several states, and related accounts. Among other frozen Iranian assets are real estate holdings of the Assa Company, a UK-chartered entity, which allegedly was maintaining the interests of Iran's Bank Melli in a 36-story office building in New York City and several other properties around the United States (in Texas, California, Virginia, Maryland, and other parts of New York City). An Iranian foundation, the Alavi Foundation, allegedly is an investor in the properties. The U.S. Attorney for the Southern District of New York blocked these properties in 2009. The Department of the Treasury report avoids valuing real estate holdings, but public sources assess these blocked real estate assets at nearly $1 billion. In June 2017, litigation won the U.S. government control over the New York City office building. "], "subsections": []}, {"section_title": "Use of Iranian Assets to Compensate U.S. Victims of Iranian Terrorism", "paragraphs": ["There are a total of about $46 billion in court awards that have been made to victims of Iranian terrorism. These include the families of the 241 U.S. soldiers killed in the October 23, 1983, bombing of the U.S. Marine barracks in Beirut. U.S. funds equivalent to the $400 million balance in the DOD account (see above) have been used to pay a small portion of these judgments. The Algiers Accords apparently precluded compensation for the 52 U.S. diplomats held hostage by Iran from November 1979 until January 1981. The FY2016 Consolidated Appropriation (Section 404 of P.L. 114-113 ) set up a mechanism for paying damages to the U.S. embassy hostages and other victims of state-sponsored terrorism using settlement payments paid by various banks for concealing Iran-related transactions, and proceeds from other Iranian frozen assets. ", "In April 2016, the U.S. Supreme Court determined the Central Bank assets, discussed above, could be used to pay the terrorism judgments, and the proceeds from the sale of the frozen real estate assets mentioned above will likely be distributed to victims of Iranian terrorism as well. On the other hand, in March 2018, the U.S. Supreme Court ruled that U.S. victims of an Iran-sponsored terrorist attack could not seize a collection of Persian antiquities on loan to a University of Chicago museum to satisfy a court judgment against Iran. ", "Other past financial disputes include the mistaken U.S. shoot-down on July 3, 1988, of an Iranian Airbus passenger jet (Iran Air flight 655), for which the United States paid Iran $61.8 million in compensation ($300,000 per wage-earning victim, $150,000 per non-wage earner) for the 248 Iranians killed. The United States did not compensate Iran for the airplane itself, although officials involved in the negotiations told CRS in November 2012 that the United States later arranged to provide a substitute used aircraft to Iran. ", "For more detail on how Iranian and other assets are used to compensate victims of Iranian terrorism, see CRS Report RL31258, Suits Against Terrorist States by\u00a0Victims\u00a0of\u00a0Terrorism , by Jennifer K. Elsea and CRS Legal Sidebar LSB10104, It Belongs in a Museum: Sovereign Immunity Shields Iranian Antiquities Even When It Does Not Protect Iran , by Stephen P. Mulligan."], "subsections": []}, {"section_title": "Executive Order 13599 Impounding Iran-Owned Assets", "paragraphs": [], "subsections": [{"section_title": "Post-JCPOA Status: Still in Effect", "paragraphs": ["Executive Order 13599, issued February 5, 2012, directs the blocking of U.S.-based assets of entities determined to be \"owned or controlled by the Iranian government.\" The order was issued to implement Section 1245 of the FY2012 National Defense Authorization Act ( P.L. 112-81 ) that imposed secondary U.S. sanctions on Iran's Central Bank. The Order requires that any U.S.-based assets of the Central Bank of Iran, or of any Iranian government-controlled entity, be blocked by U.S. banks. The order goes beyond the regulations issued pursuant to the 1995 imposition of the U.S. trade ban with Iran, in which U.S. banks are required to refuse such transactions but to return funds to Iran. Even before the issuance of the Order, and in order to implement the ban on U.S. trade with Iran (see below) successive Administrations had designated many entities as \"owned or controlled by the Government of Iran.\"", "Numerous designations have been made under Executive Order 13599, including the June 4, 2013, naming of 38 entities (mostly oil, petrochemical, and investment companies) that are components of an Iranian entity called the \"Execution of Imam Khomeini's Order\" (EIKO). EIKO was characterized by the Department of the Treasury as an Iranian leadership entity that controls \"massive off-the-books investments.\" ", "Implementation of the U.S. JCPOA Withdrawa l. To implement the JCPOA, many 13599-designated entities specified in the JCPOA (Attachment 3) were \"delisted\" from U.S. secondary sanctions (no longer considered \"Specially Designated Nationals,\" SDNs), and referred to as \"designees blocked solely pursuant to E.O 13599.\" That characterization permitted foreign entities to conduct transactions with the listed entities without U.S. sanctions penalty but continued to bar U.S. persons (or foreign entities owned or controlled by a U.S. person) from conducting transactions with these entities. Treasury Department announced on May 8, 2018, in concert with the U.S. withdrawal from the JCPOA, that almost all of the 13599-designated entities that were delisted as SDNs will be relisted as SDNs on November 5, 2018. That day, the Treasury Department updated the list of SDNs to reflect the redesignations.", "Civilian Nuclear Entity Exception . One notable exception to the relisting policy implemented in 2018 is the Atomic Energy Organization of Iran (AEOI). The entity, along with 23 of its subsidiaries, were redesignated under E.O. 13599 but not as entities subject to secondary sanctions under E.O. 13382. This U.S. listing decision was made in order to facilitate continued IAEA and EU and other country engagement with Iran's civilian nuclear program under the JCPOA. The May 2019 ending of some waivers for nuclear technical assistance to Iran modifies this stance somewhat (see subhead on waivers and exceptions under the JCPOA, below). "], "subsections": []}]}]}, {"section_title": "Sanctions for Iran's Support for Armed Factions and Terrorist Groups", "paragraphs": ["Most of the hostage crisis-related sanctions were lifted upon resolution of the crisis in 1981. The United States began imposing sanctions against Iran again in the mid-1980s for its support for regional groups committing acts of terrorism. The Secretary of State designated Iran a \"state sponsor of terrorism\" on January 23, 1984, following the October 23, 1983, bombing of the U.S. Marine barracks in Lebanon by elements that established Lebanese Hezbollah. This designation triggers substantial sanctions on any nation so designated. ", "None of the laws or Executive Orders in this section were waived or revoked to implement the JCPOA. No entities discussed in this section were \"delisted\" from sanctions under t he JCPOA. "], "subsections": [{"section_title": "Sanctions Triggered by Terrorism List Designation", "paragraphs": ["The U.S. naming of Iran as a \"state sponsor of terrorism\"\u2014commonly referred to as Iran's inclusion on the U.S. \"terrorism list\"\u2014triggers several sanctions. The designation is made under the authority of Section 6(j) of the Export Administration Act of 1979 ( P.L. 96-72 , as amended), sanctioning countries determined to have provided repeated support for acts of international terrorism. The sanctions triggered by Iran's state sponsor of terrorism designation are as follows: ", "Restrictions on sales of U.S. dual use items . The restriction\u2014a presumption of denial of any license applications to sell dual use items to Iran\u2014is required by the Export Administration Act, as continued by executive orders under the authority of the International Emergency Economic Powers Act, IEEPA. The restrictions are enforced through Export Administration Regulations (EARs) administered by the Bureau of Industry and Security (BIS) of the Commerce Department. Ban on direct U.S. financial assistance and arms sales to Iran . Section 620A of the Foreign Assistance Act, FAA (P.L. 87-95) and Section 40 of the Arms Export Control Act ( P.L. 95-92 , as amended), respectively, bar any U.S. foreign assistance to terrorism list countries. Included in the definition of foreign assistance are U.S. government loans, credits, credit insurance, and Ex-Im Bank loan guarantees. Successive foreign aid appropriations laws since the late 1980s have banned direct assistance to Iran, and with no waiver provisions. The FY2012 foreign operations appropriation (Section 7041(c)(2) of P.L. 112-74) banned the Ex-Im Bank from using funds appropriated in that Act to finance any entity sanctioned under the Iran Sanctions Act. The foreign aid provisions of the FY2019 Consolidated Appropriation (Section 7041) made that provision effective for FY2019. Requirement to oppose multilateral lending . U.S. officials are required to vote against multilateral lending to any terrorism list country by Section 1621 of the International Financial Institutions Act ( P.L. 95-118 , as amended [added by Section 327 of the Anti-Terrorism and Effective Death Penalty Act of 1996 ( P.L. 104-132 )]). Waiver authority is provided. Withholding of U.S. foreign assistance to countries that assist or sell arms to t errorism l ist c ountries . Under Sections 620G and 620H of the Foreign Assistance Act, as added by the Anti-Terrorism and Effective Death Penalty Act (Sections 325 and 326 of P.L. 104-132 ), the President is required to withhold foreign aid from any country that aids or sells arms to a terrorism list country. Waiver authority is provided. Section 321 of that act makes it a crime for a U.S. person to conduct financial transactions with terrorism list governments. Withholding of U.S. Aid to Organizations T hat Assist Iran . Section 307 of the FAA (added in 1985) names Iran as unable to benefit from U.S. contributions to international organizations, and require proportionate cuts if these institutions work in Iran. For example, if an international organization spends 3% of its budget for programs in Iran, then the United States is required to withhold 3% of its contribution to that international organization. No waiver is provided for."], "subsections": [{"section_title": "Exception for U.S. Humanitarian Aid", "paragraphs": ["The terrorism list designation, and other U.S. sanctions laws barring assistance to Iran, do not bar U.S. disaster aid. The United States donated $125,000, through relief agencies, to help victims of two earthquakes in Iran (February and May 1997); $350,000 worth of aid to the victims of a June 22, 2002, earthquake; and $5.7 million in assistance for victims of the December 2003 earthquake in Bam, Iran, which killed 40,000. The U.S. military flew 68,000 kilograms of supplies to Bam."], "subsections": []}]}, {"section_title": "Sanctions on States \"Not Cooperating\" Against Terrorism", "paragraphs": ["Section 330 of the Anti-Terrorism and Effective Death Penalty Act ( P.L. 104-132 ) added a Section 40A to the Arms Export Control Act that prohibits the sale or licensing of U.S. defense articles and services to any country designated (by each May 15) as \"not cooperating fully with U.S. anti-terrorism efforts.\" The President can waive the provision upon determination that a defense sale to a designated country is \"important to the national interests\" of the United States. ", "Every May since the enactment of this law, Iran has been designated as a country that is \"not fully cooperating\" with U.S. antiterrorism efforts. However, the effect of the designation is largely mooted by the many other authorities that prohibit U.S. defense sales to Iran. "], "subsections": []}, {"section_title": "Executive Order 13224 Sanctioning Terrorism-Supporting Entities", "paragraphs": ["Executive Order 13324 (September 23, 2001) mandates the freezing of the U.S.-based assets of and a ban on U.S. transactions with entities determined by the Administration to be supporting international terrorism. This order was issued two weeks after the September 11, 2001, attacks on the United States, under the authority of the IEEPA, the National Emergencies Act, the U.N. Participation Act of 1945, and Section 301 of the U.S. Code, initially targeting Al Qaeda. "], "subsections": [{"section_title": "Use of the Order to Target Iranian Arms Exports", "paragraphs": ["E.O. 13224 is not specific to Iran and does not explicitly target Iranian arms exports to movements, governments, or groups in the Middle East region. However, successive Administrations have used the Order\u2014and the orders discussed immediately below\u2014to sanction such Iranian activity by designating persons or entities that are involved in the delivery or receipt of such weapons shipments. Some persons and entities that have been sanctioned for such activity have been cited for supporting groups such as the Afghan Taliban organization and the Houthi rebels in Yemen, which are not named as terrorist groups by the United States. "], "subsections": []}, {"section_title": "Application of CAATSA to the Revolutionary Guard", "paragraphs": ["Section 105 of the Countering America's Adversaries through Sanctions Act (CAATSA, P.L. 115-44 , signed on August 2, 2017), mandates the imposition of E.O. 13324 penalties on the Islamic Revolutionary Guard Corps (IRGC) and its officials, agents, and affiliates by October 30, 2017 (90 days after enactment). The IRGC was named as a terrorism-supporting entity under E.O 13224 within that deadline. The Treasury Department made the designation of the IRGC as a terrorism-supporting entity under that E.O. on October 13, 2017."], "subsections": []}, {"section_title": "Implementation", "paragraphs": ["No entities designated under E.O. 13224 were delisted to implement the JCPOA. Additional Iran-related entities have been designated under the Order since JCPOA implementation, as shown in the tables at the end of this report."], "subsections": []}]}, {"section_title": "Foreign Terrorist Organization Designations", "paragraphs": ["Sanctions similar to those of E.O. 13224 are imposed on Iranian and Iran-linked entities through the State Department authority under Section 219 of the Immigration and Nationality Act (8.U.S.C. 1189) to designate an entity as a Foreign Terrorist Organization (FTO). In addition to the sanctions of E.O. 13224, any U.S. person (or person under U.S. jurisdiction) who \"knowingly provides material support or resources to an FTO, or attempts or conspires to do so\" is subject to fine or up to 20 years in prison. A bank that commits such a violation is subject to fines. ", "Implementation: The following organizations have been designated as FTOs for acts of terrorism on behalf of Iran or are organizations assessed as funded and supported by Iran:", "Islamic Revolutionary Guard Corps (IRGC). Designated April 8, 2019. See CRS Insight IN11093, Iran's Revolutionary Guard Named a Terrorist Organization , by Kenneth Katzman. On April 22, 2019, the State Department issued guidelines for implementing the IRGC FTO designation, indicating that it would not penalize routine diplomatic or humanitarian-related dealings with the IRGC by U.S. partner countries or nongovernmental entities. Lebanese HezbollahKata'ib Hezbollah . Iran-backed Iraqi Shi'a militia. Hamas . Sunni, Islamist Palestinian organization that essentially controls the Gaza Strip. Palestine Islamic Jihad . Small Sunni Islamist Palestinian militant group Al Aqsa Martyr's Brigade . Secular Palestinian militant group. Popular Front for the Liberation of Palestine-General Command (PFLP-GC). Leftwing secular Palestinian group based mainly in Syria. Al Ashtar Brigades . Bahrain militant opposition group "], "subsections": []}, {"section_title": "Other Sanctions on Iran's \"Malign\" Regional Activities", "paragraphs": ["Some sanctions have been imposed to try to curtail Iran's destabilizing influence in the region. "], "subsections": [{"section_title": "Executive Order 13438 on Threats to Iraq's Stability", "paragraphs": ["Issued on July 7, 2007, the order blocks U.S.-based property of persons who are determined by the Administration to \"have committed, or pose a significant risk of committing\" acts of violence that threaten the peace and stability of Iraq, or undermine efforts to promote economic reconstruction or political reform in Iraq. The Order extends to persons designated as materially assisting such designees. The Order was clearly directed at Iran for its provision of arms or funds to Shiite militias there. Persons sanctioned under the Order include IRGC-Qods Force officers, Iraqi Shiite militia-linked figures, and other entities. Some of these sanctioned entities worked to defeat the Islamic State in Iraq and are in prominent roles in Iraq's parliament and political structure. "], "subsections": []}, {"section_title": "Executive Order 13572 on Repression of the Syrian People.", "paragraphs": ["Issued on April 29, 2011, the order blocks the U.S.-based property of persons determined to be responsible for human rights abuses and repression of the Syrian people. The IRGC-Qods Force (IRGC-QF), IRGC-QF commanders, and others are sanctioned under this order. "], "subsections": []}, {"section_title": "The Hizballah International Financing Prevention Act (P.L. 114-102) and Hizballah International Financing Prevention Amendments Act of 2018 (S. 1595, P.L. 115-272).", "paragraphs": ["The latter Act was signed by President Trump on October 23, 2018the 25 th anniversary of the Marine barracks bombing in Beirut. The original law, modeled on the 2010 Comprehensive Iran Sanctions, Accountability, and Divestment Act (\"CISADA,\" see below), excludes from the U.S. financial system any bank that conducts transactions with Hezbollah or its affiliates or partners. The more recent law expands the authority of the original law by authorizing the blocking of U.S.-based property of and U.S. transactions with any \"agency or instrumentality of a foreign state\" that conducts joint operations with or provides financing or arms to Lebanese Hezbollah. These latter provisions clearly refer to Iran, but are largely redundant with other sanctions on Iran. "], "subsections": []}]}]}, {"section_title": "Ban on U.S. Trade and Investment with Iran", "paragraphs": [], "subsections": [{"section_title": "Status: Trade ban eased for JCPOA, but back in full effect on August 6, 2018", "paragraphs": ["In 1995, the Clinton Administration expanded U.S. sanctions against Iran by issuing Executive Order 12959 (May 6, 1995) banning U.S. trade with and investment in Iran. The order was issued under the authority primarily of the International Emergency Economic Powers Act (IEEPA, 50 U.S.C. 1701 et seq.), which gives the President wide powers to regulate commerce with a foreign country when a \"state of emergency\" is declared in relations with that country. E.O. 12959 superseded Executive Order 12957 (March 15, 1995) barring U.S. investment in Iran's energy sector, which accompanied President Clinton's declaration of a \"state of emergency\" with respect to Iran. Subsequently, E.O 13059 (August 19, 1997) added a prohibition on U.S. companies' knowingly exporting goods to a third country for incorporation into products destined for Iran. Each March since 1995, the U.S. Administration has renewed the \"state of emergency\" with respect to Iran. IEEPA gives the President the authority to alter regulations to license transactions with Iran\u2014regulations enumerated in Section 560 of the Code of Federal Regulations (Iranian Transactions Regulations, ITRs). ", "Section 103 of the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010 (CISADA, P.L. 111-195 ) codified the trade ban and reinstated the full ban on imports that had earlier been relaxed by April 2000 regulations. That relaxation allowed importation into the United States of Iranian nuts, fruit products (such as pomegranate juice), carpets, and caviar. U.S. imports from Iran after that time were negligible. Section 101 of the Iran Freedom Support Act ( P.L. 109-293 ) separately codified the ban on U.S. investment in Iran, but gives the President the authority to terminate this sanction with presidential notification to Congress of such decision 15 days in advance (or 3 days in advance if there are \"exigent circumstances\")."], "subsections": []}, {"section_title": "JCPOA-Related Easing and Reversal", "paragraphs": ["In accordance with the JCPOA, the ITRs were relaxed to allow U.S. importation of the Iranian luxury goods discussed above (carpets, caviar, nuts, etc.), but not to permit general U.S.-Iran trade. U.S. regulations were also altered to permit the sale of commercial aircraft to Iranian airlines that are not designated for sanctions. The modifications were made in the Departments of State and of the Treasury guidance issued on Implementation Day and since. In concert with the May 8, 2018, U.S. withdrawal from the JCPOA, the easing of the regulations to allow for importation of Iranian carpets and other luxury goods was reversed on August 6, 2018. "], "subsections": []}, {"section_title": "What U.S.-Iran Trade Is Allowed or Prohibited?", "paragraphs": ["The following provisions apply to the U.S. trade ban on Iran as specified in regulations (Iran Transaction Regulations, ITRs) written pursuant to the executive orders and laws discussed above and enumerated in regulations administered by the Office of Foreign Assets Control (OFAC) of the Department of the Treasury. ", "Oil Transactions . All U.S. transactions with Iran in energy products are banned. The 1995 trade ban (E.O. 12959) expanded a 1987 ban on imports from Iran that was imposed by Executive Order 12613 of October 29, 1987. The earlier import ban, authorized by Section 505 of the International Security and Development Cooperation Act of 1985 (22 U.S.C. 2349aa-9), barred the importation of Iranian oil into the United States but did not ban the trading of Iranian oil overseas. The 1995 ban prohibits that activity explicitly, but provides for U.S. companies to apply for licenses to conduct \"swaps\" of Caspian Sea oil with Iran. These swaps have been prohibited in practice; a Mobil Corporation application to do so was denied in April 1999, and no applications have been submitted since. The ITRs do not ban the importation, from foreign refiners, of gasoline or other energy products in which Iranian oil is mixed with oil from other producers . The product of a refinery in any country is considered to be a product of the country where that refinery is located, even if some Iran-origin crude oil is present. Transshipment and Brokering . The ITRs prohibit U.S. transshipment of prohibited goods across Iran, and ban any activities by U.S. persons to broker commercial transactions involving Iran. Iranian Luxury Goods . Pursuant to the JCPOA, Iranian luxury goods, such as carpets and caviar, could be imported into the United States after January 2016. This prohibition went back into effect on August 6, 2018 (90-day wind-down). Shipping Insurance . Obtaining shipping insurance is crucial to Iran's expansion of its oil and other exports. A pool of 13 major insurance organizations, called the International Group of P & I Clubs, dominates the shipping insurance industry and is based in New York. The U.S. presence of this pool renders it subject to the U.S. trade ban, which complicated Iran's ability to obtain reinsurance for Iran's shipping after Implementation Day. On January 16, 2017, the Obama Administration issued waivers of Sections 212 and 213 of the ITRSHRA to allow numerous such insurers to give Iranian ships insurance. However, this waiver ended on August 6, 2018 (90-day wind-down). Civilian Airline Sales . The ITRs have always permitted the licensing of goods related to the safe operation of civilian aircraft for sale to Iran (\u00a7560.528 of Title 31, C.F.R.), and spare parts sales have been licensed periodically. However, from June 2011 until Implementation Day, Iran's largest state-owned airline, Iran Air, was sanctioned under Executive Order 13382 (see below), rendering licensing of parts or repairs for that airline impermissible. Several other Iranian airlines were sanctioned under that Order and Executive Order 13224. In accordance with the JCPOA, the United States relaxed restrictions on to allow for the sale to Iran of finished commercial aircraft, including to Iran Air, which was \"delisted\" from sanctions. A March 2016 general license allowed for U.S. aircraft and parts suppliers to negotiate sales with Iranian airlines that are not sanctioned, and Boeing and Airbus subsequently concluded major sales to Iran Air. In keeping with the May 8, 2018, U.S. withdrawal from the JCPOA, preexisting licensing restrictions went back into effect on August 6, 2018, and the Boeing and Airbus licenses to sell aircraft to Iran were revoked. Sales of some aircraft spare parts (\"dual use items\") to Iran also require a waiver of the relevant provision of the Iran-Iraq Arms Non-Proliferation Act, discussed below. Personal Communications , Remittances , and Publishing . The ITRs permit personal communications (phone calls, emails) between the United States and Iran, personal remittances to Iran, and Americans to engage in publishing activities with entities in Iran (and Cuba and Sudan). Information Technology Equipment. CISADA exempts from the U.S. ban on exports to Iran information technology to support personal communications among the Iranian people and goods for supporting democracy in Iran. In May 2013, OFAC issued a general license for the exportation to Iran of goods (such as cell phones) and services, on a fee basis, that enhance the ability of the Iranian people to access communication technology. Food and Medical Exports. Since April 1999, sales to Iran by U.S. firms of food and medical products have been permitted, subject to OFAC stipulations. In October 2012, OFAC permitted the sale to Iran of specified medical products, such as scalpels, prosthetics, canes, burn dressings, and other products, that could be sold to Iran under \"general license\" (no specific license application required). This list of general license items list was expanded in 2013 and 2016 to include more sophisticated medical diagnostic machines and other medical equipment. Licenses for exports of medical products not on the general license list are routinely expedited for sale to Iran, according to OFAC. The regulations have a specific definition of \"food\" that can be licensed for sale to Iran, and that definition excludes alcohol, cigarettes, gum, or fertilizer. The definition addresses information in a 2010 article that OFAC had approved exports to Iran of condiments such as food additives and body-building supplements that have uses other than purely nutritive. Humanitarian and Related Services . Donations by U.S. residents directly to Iranians (such as packages of food, toys, clothes, etc.) are not prohibited, but donations through relief organizations broadly require those organizations' obtaining a specific OFAC license. On September 10, 2013, the Department of the Treasury eliminated licensing requirements for relief organizations to (1) provide to Iran services for health projects, disaster relief, wildlife conservation; (2) to conduct human rights projects there; or (3) undertake activities related to sports matches and events. The amendment also allowed importation from Iran of services related to sporting activities, including sponsorship of players, coaching, referees, and training. In some cases, such as the earthquake in Bam in 2003 and the earthquake in northwestern Iran in August 2012, OFAC has issued blanket temporary general licensing for relief organizations to work in Iran. Payment Methods, Trade Financing , and Financing Guarantees . U.S. importers are allowed to pay Iranian exporters, including with U.S. dollars. However, U.S. funds cannot go directly to Iranian banks, but must instead pass through third-country banks. In accordance with the ITRs' provisions that transactions that are incidental to an approved transaction are allowed, financing for approved transactions are normally approved, presumably in the form of a letter of credit from a non-Iranian bank. Title IX of the Trade Sanctions Reform and Export Enhancement Act of 2000 ( P.L. 106-387 ) bans the use of official credit guarantees (such as the Ex-Im Bank) for food and medical sales to Iran and other countries on the U.S. terrorism list, except Cuba, although allowing for a presidential waiver to permit such credit guarantees. The Ex-Im Bank is prohibited from guaranteeing any loans to Iran because of Iran's continued inclusion on the terrorism list, and the JCPOA did not commit the United States to provide credit guarantees for Iran. "], "subsections": []}, {"section_title": "Application to Foreign Subsidiaries of U.S. Firms", "paragraphs": ["The ITRs do not ban subsidiaries of U.S. firms from dealing with Iran, as long as the subsidiary is not \"controlled\" by the parent company. Most foreign subsidiaries are legally considered foreign persons subject to the laws of the country in which the subsidiaries are incorporated. Section 218 of the Iran Threat Reduction and Syrian Human Rights Act (ITRSHRA, P.L. 112-158 ) holds \"controlled\" foreign subsidiaries of U.S. companies to the same standards as U.S. parent firms, defining a controlled subsidiary as (1) one that is more than 50% owned by the U.S. parent; (2) one in which the parent firm holds a majority on the Board of Directors of the subsidiary; or (3) one in which the parent firm directs the operations of the subsidiary. There is no waiver provision. ", "JCPOA Regulations and Reversal. To implement the JCPOA, the United States licensed \"controlled\" foreign subsidiaries to conduct transactions with Iran that are permissible under JCPOA (almost all forms of civilian trade). The Obama Administration asserted that the President has authority under IEEPA to license transactions with Iran, the ITRSHRA notwithstanding. This was implemented with the Treasury Department's issuance of \"General License H: Authorizing Certain Transactions Relating to Foreign Entities Owned or Controlled by a United States Person.\" With the Trump Administration reimposition of sanctions, the licensing policy (\"Statement of Licensing Policy,\" SLP) returned to pre-JCPOA status on November 5, 2018. "], "subsections": []}]}, {"section_title": "Sanctions on Iran's Energy Sector", "paragraphs": [], "subsections": [{"section_title": "Status: Energy sanctions waived for JCPOA, back in effect November 5, 2018", "paragraphs": ["In 1996, Congress and the executive branch began a long process of pressuring Iran's vital energy sector in order to deny Iran the financial resources to support terrorist organizations and other armed factions or to further its nuclear and WMD programs. Iran's oil sector is as old as the petroleum industry itself (early 20 th century), and Iran's onshore oil fields are in need of substantial investment. Iran has 136.3 billion barrels of proven oil reserves, the third largest after Saudi Arabia and Canada. Iran has large natural gas resources (940 trillion cubic feet), exceeded only by Russia. However, Iran's gas export sector is still emerging\u2014most of Iran's gas is injected into its oil fields to boost their production. The energy sector still generates about 20% of Iran's GDP and as much as 30% of government revenue. "], "subsections": []}, {"section_title": "The Iran Sanctions Act (and Triggers added by other Laws)", "paragraphs": ["The Iran Sanctions Act (ISA) has been a pivotal component of U.S. sanctions against Iran's energy sector. Since its enactment in 1996, ISA's provisions have been expanded and extended to other Iranian industries. ISA sought to thwart Iran's 1995 opening of the sector to foreign investment in late 1995 through a \"buy-back\" program in which foreign firms gradually recoup their investments as oil and gas is produced. It was first enacted as the Iran and Libya Sanctions Act (ILSA, P.L. 104-172 , signed on August 5, 1996) but was later retitled the Iran Sanctions Act after it terminated with respect to Libya in 2006. ISA was the first major \"extra-territorial sanction\" on Iran\u2014a sanction that authorizes U.S. penalties against third country firms. "], "subsections": [{"section_title": "Key Sanctions \"Triggers\" Under ISA", "paragraphs": ["ISA consists of a number of \"triggers\"\u2014transactions with Iran that would be considered violations of ISA and could cause a firm or entity to be sanctioned under ISA's provisions. The triggers, as added by amendments over time, are detailed below:"], "subsections": [{"section_title": "Trigger 1 (Original Trigger): \"Investment\" To Develop Iran's Oil and Gas Fields", "paragraphs": ["The core trigger of ISA when first enacted was a requirement that the President sanction companies (entities, persons) that make an \"investment\" of more than $20 million in one year in Iran's energy sector. The definition of \"investment\" in ISA (\u00a714 [9]) includes not only equity and royalty arrangements but any contract that includes \"responsibility for the development of petroleum resources\" of Iran. The definition includes additions to existing investment (added by P.L. 107-24 ) and pipelines to or through Iran and contracts to lead the construction, upgrading, or expansions of energy projects (added by CISADA)."], "subsections": []}, {"section_title": "Trigger 2: Sales of WMD and Related Technologies, Advanced Conventional Weaponry, and Participation in Uranium Mining Ventures", "paragraphs": ["This provision of ISA was not waived under the JCPOA. ", "The Iran Freedom Support Act ( P.L. 109-293 , signed September 30, 2006) added Section 5(b)(1) of ISA, subjecting to ISA sanctions firms or persons determined to have sold to Iran (1) \"chemical, biological, or nuclear weapons or related technologies\" or (2) \"destabilizing numbers and types\" of advanced conventional weapons. Sanctions can be applied if the exporter knew (or had cause to know) that the end-user of the item was Iran. The definitions do not specifically include ballistic or cruise missiles, but those weapons could be considered \"related technologies\" or, potentially, a \"destabilizing number and type\" of advanced conventional weapon. ", "The Iran Threat Reduction and Syria Human Rights Act (ITRSHRA, P.L. 112-158 , signed August 10, 2012) created Section 5(b)(2) of ISA subjecting to sanctions entities determined by the Administration to participate in a joint venture with Iran relating to the mining, production, or transportation of uranium.", "Implementation: No ISA sanctions have been imposed on any entities under these provisions. "], "subsections": []}, {"section_title": "Trigger 3: Sales of Gasoline to Iran", "paragraphs": ["Section 102(a) of the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010 (CISADA, P.L. 111-195 , signed July 1, 2010) amended Section 5 of ISA to exploit Iran's dependency on imported gasoline (40% dependency at that time). It followed legislation such as P.L. 111-85 that prohibited the use of U.S. funds to fill the Strategic Petroleum Reserve with products from firms that sell gasoline to Iran; and P.L. 111-117 that denied Ex-Im Bank credits to any firm that sold gasoline or related equipment to Iran. The section subjects the following to sanctions: ", "Sales to Iran of over $1 million worth (or $5 million in a one year period) of gasoline and related aviation and other fuels. (Fuel oil, a petroleum by-product, is not included in the definition of refined petroleum.) Sales to Iran of equipment or services (same dollar threshold as above) which would help Iran make or import gasoline. Examples include equipment and services for Iran's oil refineries or port operations. "], "subsections": []}, {"section_title": "Trigger 4: Provision of Equipment or Services for Oil, Gas, and Petrochemicals Production", "paragraphs": ["Section 201 of the Iran Threat Reduction and Syria Human Rights Act of 2012 (ITRSHA, P.L. 112-158 , signed August 10, 2012) codified an Executive Order, 13590 (November 21, 2011), by adding Section 5(a)(5 and 6) to ISA sanctioning firms that ", "provide to Iran $1 million or more (or $5 million in a one-year period) worth of goods or services that Iran could use to maintain or enhance its oil and gas sector. This subjects to sanctions, for example, transactions with Iran by global oil services firms and the sale to Iran of energy industry equipment such as drills, pumps, vacuums, oil rigs, and like equipment. provide to Iran $250,000 (or $1 million in a one year period) worth of goods or services that Iran could use to maintain or expand its production of petrochemical products. This provision was not altered by the JPA. "], "subsections": []}, {"section_title": "Trigger 5: Transporting Iranian Crude Oil", "paragraphs": ["Section 201 of the ITRSHRA amends ISA by sanctioning entities the Administration determines ", "owned a vessel that was used to transport Iranian crude oil. The section also authorizes but does not require the President, subject to regulations, to prohibit a ship from putting to port in the United States for two years, if it is owned by a person sanctioned under this provision (adds Section 5[ a ][ 7 ] to ISA) . This sanction does not apply in cases of transporting oil to countries that have received exemptions under P.L. 112-81 (discussed below). participated in a joint oil and gas development venture with Iran, outside Iran, if that venture was established after January 1, 2002. The effective date exempts energy ventures in the Caspian Sea, such as the Shah Deniz oil field there (adds Section 5[ a ][ 4 ] to ISA ) . "], "subsections": []}, {"section_title": "Iran Threat Reduction and Syria Human Rights Act (ITRSHRA): ISA Sanctions for insuring Iranian oil entities, purchasing Iranian bonds, or engaging in transactions with the IRGC", "paragraphs": ["Separate provisions of the ITRSHR Act\u2014 which do not amend ISA \u2014 require the application of ISA sanctions (the same 5 out of 12 sanctions as required in ISA itself) on any entity that ", "provides insurance or reinsurance for the National Iranian Oil Company (NIOC) or the National Iranian Tanker Company (NITC) (Section 212). purchases or facilitates the issuance of sovereign debt of the government of Iran, including Iranian government bonds (Section 213). This sanction went back into effect on August 6, 2018 (90-day wind-down period). assists or engages in a significant transaction with the IRGC or any of its sanctioned entities or affiliates. (Section 302). This section of ITRSHRA was not waived to implement the JCPOA. ", "Implementation . Section 312 of ITRSHRA required an Administration determination, within 45 days of enactment (by September 24, 2012) whether NIOC and NITC are IRGC agents or affiliates. Such a determination would subject financial transactions with NIOC and NITC to sanctions under CISADA (prohibition on opening U.S.-based accounts). On September 24, 2012, the Department of the Treasury determined that NIOC and NITC are affiliates of the IRGC. On November 8, 2012, the Department of the Treasury named NIOC as a proliferation entity under Executive Order 13382\u2014a designation that, in accordance with Section 104 of CISADA, bars any foreign bank determined to have dealt directly with NIOC (including with a NIOC bank account in a foreign country) from opening or maintaining a U.S.-based account. ", "Sanctions on dealings with NIOC and NITC were waived in accordance with the interim nuclear deal and the JCPOA, and designations of these entities under Executive Order 13382 were rescinded in accordance with the JCPOA. These entities were \"relisted\" again on November 5, 2018. Some NIOC have partners and independent Iranian energy firms have not been designated, including: Iranian Offshore Oil Company; National Iranian Gas Export Co.; Petroleum Engineering and Development Co.; Pasargad Oil Co., Zagros Petrochem Co.; Sazeh Consultants; Qeshm Energy; and Sadid Industrial Group. "], "subsections": []}, {"section_title": "Executive Order 13622: Sanctions on the Purchase of Iranian Crude Oil and Petrochemical Products, and Dealings in Iranian Bank Notes", "paragraphs": ["Status: Revoked (by E.O. 13716) but will back into effect as stipulated below", "Executive Order 13622 (July 30, 2012) imposes specified sanctions on the ISA sanctions menu, and bars banks from the U.S. financial system, for the following activities ( E .O. 13622 d id not amend ISA itself ):", "the purchase of oil, other petroleum, or petrochemical products from Iran. Th e part of th is order pertaining to petrochemical purchases was suspended under the JPA. The wind-down period was 180 days (ending November 4, 2018). transactions with the National Iranian Oil Company (NIOC) or Naftiran Intertrade Company (NICO) (180-day wind-down period). E.O. 13622 also blocks U.S.-based property of entities determined to have assisted or provided goods or services to NIOC, NICO, the Central Bank of Iran (180-day wind-down period). assisted the government of Iran in the purchase of U.S. bank notes or precious metals, precious stones, or jewels. (The provision for precious stones or jewels was added to this Order by E.O. 16345 below.) (90-day wind-down period.) ", "E.O. 13622 sanctions do not apply if the parent country of the entity has received an oil importation exception under Section 1245 of P.L. 112-81 , discussed below. An exception also is provided for projects that bring gas from Azerbaijan to Europe and Turkey, if such project was initiated prior to the issuance of the Order. "], "subsections": []}]}, {"section_title": "Mandate and Time Frame to Investigate ISA Violations", "paragraphs": ["In the original version of ISA, there was no firm requirement, and no time limit, for the Administration to investigate potential violations and determine that a firm has violated ISA's provisions. The Iran Freedom Support Act ( P.L. 109-293 , signed September 30, 2006) added a provision calling for, but not requiring , a 180-day time limit for a violation determination. CISADA (Section 102[g][5]) mandated that the Administration begin an investigation of potential ISA violations when there is \"credible information\" about a potential violation, and made mandatory the 180-day time limit for a determination of violation. ", "The Iran Threat Reduction and Syria Human Rights Act ( P.L. 112-158 ) defines the \"credible information\" needed to begin an investigation of a violation to include a corporate announcement or corporate filing to its shareholders that it has undertaken transactions with Iran that are potentially sanctionable under ISA. It also says the President may (not mandatory) use as credible information reports from the Government Accountability Office and the Congressional Research Service. In addition, Section 219 of ITRSHRA requires that an investigation of an ISA violation begin if a company reports in its filings to the Securities and Exchange Commission (SEC) that it has knowingly engaged in activities that would violate ISA (or Section 104 of CISADA or transactions with entities designated under E.O 13224 or 13382, see below). "], "subsections": [{"section_title": "Oversight", "paragraphs": ["Several mechanisms for Congress to oversee whether the Administration is investigating ISA violations were added by ITRSHRA. Section 223 of that law required a Government Accountability Office report, within 120 days of enactment, and another such report a year later, on companies that have undertaken specified activities with Iran that might constitute violations of ISA. Section 224 amended a reporting requirement in Section 110(b) of CISADA by requiring an Administration report to Congress every 180 days on investment in Iran's energy sector, joint ventures with Iran, and estimates of Iran's imports and exports of petroleum products. The GAO reports have been issued; there is no information available on whether the required Administration reports have been issued as well."], "subsections": []}]}, {"section_title": "Interpretations of ISA and Related Laws", "paragraphs": ["The sections below provide information on how some key ISA provisions have been interpreted and implemented. "], "subsections": [{"section_title": "Application to Energy Pipelines", "paragraphs": ["ISA's definition of \"investment\" that is subject to sanctions has been consistently interpreted by successive Administrations to include construction of energy pipelines to or through Iran. Such pipelines are deemed to help Iran develop its petroleum (oil and natural gas) sector. This interpretation was reinforced by amendments to ISA in CISADA, which specifically included in the definition of petroleum resources \"products used to construct or maintain pipelines used to transport oil or liquefied natural gas.\" In March 2012, then-Secretary of State Clinton made clear that the Obama Administration interprets the provision to be applicable from the beginning of pipeline construction. "], "subsections": []}, {"section_title": "Application to Crude Oil Purchases", "paragraphs": ["The original version of ISA did not provide for sanctioning purchases of crude oil from Iran. However, subsequent laws and executive orders took that step. "], "subsections": []}, {"section_title": "Application to Purchases from Iran of Natural Gas", "paragraphs": ["The Iran Freedom and Counterproliferation Act (IFCA, discussed below) authorized sanctions on transactions with Iran's energy sector, but s pecifically exclude d from sanctions purchases of natural gas from Iran . But construction of gas pipelines involving Iran is subject to sanctions. "], "subsections": []}, {"section_title": "Exception for Shah Deniz and other Gas Export Projects", "paragraphs": ["The effective dates of U.S. sanctions laws and Orders exclude long-standing joint natural gas projects that involve some Iranian firms\u2014particularly the Shah Deniz natural gas field and related pipelines in the Caspian Sea. These projects involve a consortium in which Iran's Naftiran Intertrade Company (NICO) holds a passive 10% share, and includes BP, Azerbaijan's natural gas firm SOCAR, Russia's Lukoil, and other firms. NICO was sanctioned under ISA and other provisions (until JCPOA Implementation Day), but an OFAC factsheet of November 28, 2012, stated that the Shah Deniz consortium, as a whole, is not determined to be \"a person owned or controlled by\" the government of Iran and transactions with the consortium are permissible. "], "subsections": []}, {"section_title": "Application to Iranian Liquefied Natural Gas Development", "paragraphs": ["The original version of ISA did not apply to the development by Iran of a liquefied natural gas (LNG) export capability. Iran has no LNG export terminals, in part because the technology for such terminals is patented by U.S. firms and unavailable for sale to Iran. CISADA specifically included LNG in the ISA definition of petroleum resources and therefore made subject to sanctions LNG investment in Iran or supply of LNG tankers or pipelines to Iran."], "subsections": []}, {"section_title": "Application to Private Financing but Not Official Credit Guarantee Agencies", "paragraphs": ["The definitions of investment and other activity that can be sanctioned under ISA include financing for investment in Iran's energy sector, or for sales of gasoline and refinery-related equipment and services. Therefore, banks and other financial institutions that assist energy investment and refining and gasoline procurement activities could be sanctioned under ISA. ", "However, the definitions of financial institutions are interpreted not to apply to official credit guarantee agencies\u2014such as France's COFACE and Germany's Hermes. These credit guarantee agencies are arms of their parent governments, and ISA does not provide for sanctioning governments or their agencies. "], "subsections": []}]}, {"section_title": "Implementation of Energy-Related Iran Sanctions", "paragraphs": ["Entities sanctioned under the executive orders or laws cited in this section are listed in the tables at the end of this report. As noted, some of the Orders cited provide for blocking U.S.-based assets of the entities designated for sanctions. OFAC has not announced the blocking of any U.S.-based property of the sanctioned entities, likely indicating that those entities sanctioned do not have a presence in the United States. "], "subsections": []}]}, {"section_title": "Iran Oil Export Reduction Sanctions: Section 1245 of the FY2012 NDAA Sanctioning Transactions with Iran's Central Bank", "paragraphs": [], "subsections": [{"section_title": "Status: Back into effect November 5, 2018, and exceptions ended", "paragraphs": ["In 2011, Congress sought to reduce Iran's exportation of oil by imposing sanctions on the mechanisms that importers use to pay Iran for oil. The Obama Administration asserted that such legislation could lead to a rise in oil prices and harm U.S. relations with Iran's oil customers, and President Obama, in his signing statement on the bill, indicated he would implement the provision so as not to damage U.S. relations with partner countries.", "The law imposed penalties on transactions with Iran's Central Bank. Section 1245 of the FY2012 National Defense Authorization Act (NDAA, P.L. 112-81 , signed on December 31, 2011): ", "Requires the President to prevent a foreign bank from opening an account in the United States\u2014or impose strict limitations on existing U.S. accounts\u2014if that bank is determined to have conducted a \"significant financial transaction\" with Iran's Central Bank or with any sanctioned Iranian bank . The provision applies to a foreign central bank only if the transaction with Iran's Central Bank is for oil purchases. The provision went into effect after 180 days (June 28, 2012). Significant Reduction Ex c eption (SRE): The law provides incentive for Iran's oil buyers to cut purchases of Iranian oil by providing for an exception (exemption) for the banks of any country determined to have \" significantly reduced \" its purchases of oil from Iran. The banks of countries granted the SRE may continue to conduct all transactions with the Central Bank (not just for oil) or with any sanctioned Iranian bank. The SRE exception is reviewed every 180 days and, to maintain the exception, countries are required to reduce their oil buys from Iran, relative to the previous 180-day period. ITRSHRA amended Section 1245 such that any country that completely ceased purchasing oil from Iran entirely would retain an exception. The law lacks a precise definition of \"significant reduction\" of oil purchases, but the Obama Administration adopted a standard set in a January 2012 letter by several Senators to then-Treasury Secretary Geithner setting that definition at an 18% purchase reduction based on total paid for the Iranian oil (not just volume reduction). Sanctions on transactions for oil apply only if the President certifies to Congress every 90 days, based on a report by the Energy Information Administration, that the oil market is adequately supplied, and, an Administration determination every 180 days that there is a sufficient supply of oil worldwide to permit countries to reduce purchases from Iran. The required EIA reports and Administration determinations have been issued at the prescribed intervals, even during the period when the law was in a state of waiver. Hum anitarian Exception . Paragraph (2) of Section 1245 exempts transactions with Iran's Central Bank that are for \"the sale of agricultural commodities, food, medicine, or medical devices to Iran\" from sanctions."], "subsections": []}, {"section_title": "Implementation/SREs Issued and Ended", "paragraphs": ["The Obama and Trump Administration have implemented the FY2012 NDAA with an eye toward balancing the global oil market with the intended effects on Iran's economy and behavior. The table below on major Iranian oil customers indicates cuts made by major customers compared to 2011.", "In March 20, 2012, Japan received an SRE. In September 2012, following a July 2012 EU Iran oil embargo, 10 EU countries (Belgium, Czech Republic, France, Germany, Greece, Italy, the Netherlands, Poland, Spain, and Britain) received the SRE because they ended purchases pursuant to the EU Iran oil purchase embargo of July 1, 2012. Seventeen EU countries were not granted the SRE because they were not buying Iran's oil and could not \"significantly reduce\" buys from Iran. In December 2012, the following countries/jurisdictions received the SRE: China, India, Malaysia, South Africa, South Korea, Singapore, Sri Lanka, Turkey, and Taiwan. "], "subsections": [{"section_title": "Reactivation on November 5, 2018, and Exceptions Granted then Ended", "paragraphs": ["The January 2016 waivers issued to implement the JCPOA suspended the requirement for a country to cut oil purchases from Iran in order to maintain their exceptions, and Iran's historic oil customers quickly resumed buying Iranian oil. The provision went back into effect on November 5, 2018. On June 26, 2018, a senior State Department official, in a background briefing, stated that department officials, in meetings with officials of countries that import Iranian oil, were urging these countries to cease buying Iranian oil entirely, but Administration officials later indicated that requests for exceptions would be evaluated based on the ease of substituting for Iranian oil, country-specific needs, and the need for global oil market stability. ", "On November 5, 2018, in the first SRE grants available under reimposed U.S. sanctions, the following eight countries received the SRE: China, India, Italy, Greece, Japan, South Korea, Taiwan, and Turkey. The SREs expired on May 2, 2019. On April 22, 2019, the State Department announced that no more SREs would be granted after their expiration at 12:00 AM on May 2, 2019. The Administration indicated that the global oil market is well supplied enough to permit the decision, which is intended to \"apply maximum pressure on the Iranian regime until its leaders change their destructive behavior, respect the rights of the Iranian people, and return to the negotiating table.\" The announcement indicated that U.S. officials have had discussions with Saudi Arabia and the UAE to ensure that the global oil market remains well supplied. Left unclear is the extent to which, if at all, Iran's oil customers seek to continue importing Iranian oil and whether the Administration will penalize foreign banks for continuing transactions with Iran's Central Bank. "], "subsections": []}]}, {"section_title": "Iran Foreign Bank Account \"Restriction\" Provision", "paragraphs": [], "subsections": [{"section_title": "Status: Back in Effect on November 5, 2018", "paragraphs": ["The ability of Iran to repatriate hard currency\u2014U.S. dollars are the primary form of payment for oil\u2014to its Central Bank was impeded by a provision of the ITRSHRA which went into effect on February 6, 2013 (180 days after enactment). Section 504 of the ITRSHRA amended Section 1245 of the FY2012 NDAA (adding \"clause ii\" to Paragraph D[1]) by requiring that any funds paid to Iran as a result of exempted transactions (oil purchases, for example) be credited to an account located in the country with primary jurisdiction over the foreign bank making the transaction. ", "This provision essentially prevents Iran from repatriating to its Central Bank any hard currency Iran held in foreign banks around the world. Most of Iran's funds held abroad are in banks located in Iran's main oil customers. The provision largely compels Iran to buy the products of the oil customer countries. Some press reports refer to this arrangement as an \"escrow account,\" but State Department officials describe the arrangement as \"restricted\" accounts. "], "subsections": []}]}]}]}, {"section_title": "Sanctions on Auto Production and Minerals Sectors", "paragraphs": ["Successive Administrations have expanded sanctions, primarily by executive order, on several significant nonoil industries and sectors of Iran's economy. The targeted sectors include Iran's automotive production sector, which is Iran's second-largest industry (after energy), and its mineral exports, which account for about 10% of Iran's export earnings. "], "subsections": [{"section_title": "Executive Order 13645: Application of ISA and Other Sanctions to Iran's Automotive Sector, Rial Trading, and Precious Stones", "paragraphs": ["JCPOA Status: Revoked (by E.O 13716) but most provisions below went back into effect as of August 6, 2018 (90-day wind-down period).", "Executive Order 13645 of June 3, 2013 (effective July 1, 2013), contains the provisions below. (E.O. 13645 did not amend ISA itself.)", "Imposes specified ISA-related sanctions on firms that supply goods or services to Iran's automotive (cars, trucks, buses, motorcycles, and related parts) sector, and blocks foreign banks from the U.S. market if they finance transactions with Iran's automotive sector. (An executive order cannot amend a law, so the order does not amend ISA.) Blocks U.S.-based property and prohibits U.S. bank accounts for foreign banks that conduct transactions in Iran's currency, the rial , or hold rial accounts. This provision mostly affected banks in countries bordering or near Iran. The order applies also to \"a derivative, swap, future, forward, or other similar contract whose value is based on the exchange rate of the Iranian rial .\"\u00a0 If Iran implements plans to develop a digital currency, or cryptocurrency, backed by or tied to rials, it would appear that the Order also applies to that digital currency. Expands the application of Executive Order 13622 (above) to helping Iran acquire precious stones or jewels (see above). Blocks U.S.-based property of a person that conducts transactions with an Iranian entity listed as a Specially Designated National (SDN) or Blocked Person. SDNs to be \"relisted\" on November 5, 2018."], "subsections": []}, {"section_title": "Executive Order 13871 on Iran's Minerals and Metals Sectors", "paragraphs": ["On May 8, 2019, President Trump issued Executive Order 13871 sanctioning transactions with Iran's key minerals and industrial commodities. The White House announcement stated that Iran earns 10% of its total export revenues from sales of the minerals and metals sanctioned under the order. The order does the following: ", "blocks U.S.-based property of any entity that conducts a significant transaction for the \"sale, supply, or transfer to Iran\" of goods or services, or the transport or marketing, of the iron, steel, aluminum, and copper sectors of Iran; authorizes the Secretary of the Treasury to bar from the U.S. financial system any foreign bank that conducts or facilitates a financial transaction for steel, steel products, copper, or copper products from Iran; bars the entry into the United States of any person sanctioned under the order. "], "subsections": []}]}, {"section_title": "Sanctions on Weapons of Mass Destruction, Missiles, and Conventional Arms Transfers", "paragraphs": [], "subsections": [{"section_title": "Status: No sanctions in this section eased to implement JCPOA", "paragraphs": ["Several laws and executive orders seek to bar Iran from obtaining U.S. or other technology that can be used for weapons of mass destruction (WMD) programs. Sanctions on Iran's exportation of arms are discussed in the sections above on sanctions for Iran's support for terrorist groups. "], "subsections": []}, {"section_title": "Iran-Iraq Arms Nonproliferation Act and Iraq Sanctions Act", "paragraphs": ["The Iran-Iraq Arms Nonproliferation Act (Title XIV of the FY1993 National Defense Authorization Act, P.L. 102-484 , signed in October 1992) imposes a number of sanctions on foreign entities that supply Iran with WMD technology or \"destabilizing numbers and types of advanced conventional weapons.\" Advanced conventional weapons are defined as follows: ", "(1) such long-range precision-guided munitions, fuel air explosives, cruise missiles, low observability aircraft, other radar evading aircraft, advanced military aircraft, military satellites, electromagnetic weapons, and laser weapons as the President determines destabilize the military balance or enhance the offensive capabilities in destabilizing ways; ", "(2) such advanced command, control, and communications systems, electronic warfare systems, or intelligence collections systems as the President determines destabilize the military balance or enhance offensive capabilities in destabilizing ways; and", "(3) such other items or systems as the President may, by regulation, determine necessary for the purposes of this title. ", "The definition is generally understood to include technology used to develop ballistic missiles. ", "Sanctions to be i mposed : Sanctions imposed on violating entities include ", "a ban, for two years, on U.S. government procurement from the entity; a ban, for two years, on licensing U.S. exports to that entity; authority (but not a requirement) to ban U.S. imports from the entity.", "If the violator is determined to be a foreign country, sanctions to be imposed are ", "a one-year ban on U.S. assistance to that country; a one-year requirement that the United States vote against international lending to it; a one-year suspension of U.S. coproduction agreements with the country; a one-year suspension of technical exchanges with the country in military or dual use technology; a one-year ban on sales of U.S. arms to the country; an authorization to deny the country most-favored-nation trade status; and to ban U.S. trade with the country.", "Section 1603 of the act amended an earlier law, the Iraq Sanctions Act of 1990 (Section 586G(a) of P.L. 101-513 ), to provide for a \"presumption of denial\" for all dual use exports to Iran (including computer software). "], "subsections": [{"section_title": "Implementation", "paragraphs": ["A number of entities were sanctioned under the act in the 1990s, as shown in the tables at the end of this paper. None of the designations remain active, because the sanctions have limited duration. "], "subsections": []}]}, {"section_title": "Banning Aid to Countries that Aid or Arm Terrorism List States: Anti-Terrorism and Effective Death Penalty Act of 1996", "paragraphs": ["Another law reinforces the authority of the President to sanction governments that provide aid or sell arms to Iran (and other terrorism list countries). Under Sections 620G and 620H of the Foreign Assistance Act, as added by the Anti-Terrorism and Effective Death Penalty Act of 1996 (Sections 325 and 326 of P.L. 104-132 ), the President is required to withhold foreign aid from any country that provides to a terrorism list country financial assistance or arms. Waiver authority is provided. Section 321 of that act also makes it a criminal offense for U.S. persons to conduct financial transactions with terrorism list governments. ", "No foreign assistance cuts or other penalties under this law have been announced. "], "subsections": []}, {"section_title": "Proliferation-Related Provision of the Iran Sanctions Act", "paragraphs": ["As noted above, Section 5(b)(1) of ISA subjects to ISA sanctions firms or persons determined to have sold to Iran (1) technology useful for weapons of mass destruction (WMD) or (2) \"destabilizing numbers and types\" of advanced conventional weapons. This, and Section 5(b)(2) pertaining to joint ventures to mine uranium, are the only provisions of ISA that were not waived to implement the JCPOA. ", "As noted, no sanctions under this section have been imposed."], "subsections": []}, {"section_title": "Iran-North Korea-Syria Nonproliferation Act", "paragraphs": ["The Iran Nonproliferation Act ( P.L. 106-178 , signed in March 2000) is now called the Iran-North Korea-Syria Nonproliferation Act (INKSNA) after amendments applying its provisions to North Korea and to Syria. It authorizes sanctions\u2014for two years unless renewed\u2014on foreign persons (individuals or corporations, not governments) that are determined in a report by the Administration to have assisted Iran's WMD programs. Sanctions imposed include (1) a prohibition on U.S. exportation of arms and dual use items to the sanctioned entity; and (2) a ban on U.S. government procurement and of imports to the United States from the sanctioned entity under Executive Order 12938 (of November 14, 1994). INKSNA also banned U.S. extraordinary payments to the Russian Aviation and Space Agency in connection with the international space station unless the President certified that the agency had not transferred any WMD or missile technology to Iran within the year prior. "], "subsections": [{"section_title": "Implementation", "paragraphs": ["Entities that have been sanctioned under this law are listed in the tables at the end of the report. Designations more than two years old are no longer active. The JCPOA required the United States to suspend INKSNA sanctions against \"the acquisition of nuclear-related commodities and services for nuclear activities contemplated in the JCPOA,\" but no entities were \"delisted\" to implement the JCPOA. "], "subsections": []}]}, {"section_title": "Executive Order 13382 on Proliferation-Supporting Entities", "paragraphs": [], "subsections": [{"section_title": "Status: Order Remained in Force, but Numerous Entities \"Delisted\"", "paragraphs": ["Executive Order 13382 (June 28, 2005) allows the President to block the assets of proliferators of weapons of mass destruction (WMD) and their supporters under the authority granted by the International Emergency Economic Powers Act (IEEPA; 50 U.S.C. 1701 et seq.), the National Emergencies Act (50 U.S.C. 1601 et seq.), and Section 301 of Title 3, United States Code . ", "Implementation. The numerous entities sanctioned under the order for dealings with Iran are listed in the tables at the end of this report. Entities delisted and which were to be delisted in accordance with the JCPOA (in October 2023) are in italics and boldface type, respectively. All entities delisted to implement the JCPOA are to be relisted on November 5, 2018, according to the Treasury Department. "], "subsections": []}]}, {"section_title": "Arms Transfer and Missile Sanctions: The Countering America's Adversaries through Sanctions Act (CAATSA, P.L. 115-44)", "paragraphs": ["The CAATSA law, signed on August 2, 2017, mandates sanctions on arms sales to Iran and on entities that \"materially contribute\" to Iran's ballistic missile program. ", "Section 104 references implementation of E.O. 13382, which sanctions entities determined by the Administration to be assisting Iran's ballistic missile program. The section mandates that the Administration impose the same sanctions as in E.O. 13382 on any activity that materially contributes to Iran's ballistic missile program or any system capable of delivering WMD. The section also requires an Administration report every 180 days on persons (beginning on January 29, 2018) contributing to Iran's ballistic missile program in the preceding 180 days. Section 107 mandates imposition of sanctions (the same sanctions as those contained in E.O. 13382) on any person that the President determines has sold or transferred to or from Iran, or for the use in or benefit of Iran: the weapons systems specified as banned for transfer to or from Iran in U.N. Security Council Resolution 2231. These include most major combat systems such as tanks, armored vehicles, warships, missiles, combat aircraft, and attack helicopters. The provision goes somewhat beyond prior law that mandates sanctions mainly on sales to Iran of \"destabilizing numbers and types of advanced conventional weapons.\" The imposition of sanctions is not required if the President certifies that a weapons transfer is in the national security of the United States; that Iran no longer poses a significant threat to the United States or U.S. allies; and that the Iranian government no longer satisfies the requirements for designation as a state sponsor of terrorism. "], "subsections": []}, {"section_title": "Foreign Aid Restrictions for Named Suppliers of Iran", "paragraphs": ["Some past foreign aid appropriations have withheld U.S. assistance to the Russian Federation unless it terminates technical assistance to Iran's nuclear and ballistic missiles programs. The provision applied to the fiscal year for which foreign aid is appropriated. Because U.S. aid to Russia generally has not gone to the Russian government, little or no funding was withheld as a result of the provision. The JCPOA makes no reference to any U.S. commitments to waive this sanction or to request that Congress not enact such a provision. "], "subsections": []}, {"section_title": "Sanctions on \"Countries of Diversion Concern\"", "paragraphs": ["Title III of CISADA established authorities to sanction countries that allow U.S. technology that Iran could use in its nuclear and WMD programs to be re-exported or diverted to Iran. Section 303 of CISADA authorizes the President to designate a country as a \"Destination of Diversion Concern\" if that country allows substantial diversion of goods, services, or technologies characterized in Section 302 of that law to Iranian end-users or Iranian intermediaries. The technologies specified include any goods that could contribute to Iran's nuclear or WMD programs, as well as goods listed on various U.S. controlled-technology lists such as the Commerce Control List or Munitions List. For any country designated as a country of diversion concern, there would be prohibition of denial for licenses of U.S. exports to that country of the goods that were being re-exported or diverted to Iran. ", "Implementation : To date, no country has been designated a \"Country of Diversion Concern.\" Some countries adopted or enforced anti-proliferation laws apparently to avoid designation. "], "subsections": []}]}, {"section_title": "Financial/Banking Sanctions", "paragraphs": ["U.S. efforts to shut Iran out of the international banking system were a key component of the 2010-2016 international sanctions regime. "], "subsections": [{"section_title": "Targeted Financial Measures", "paragraphs": [], "subsections": [{"section_title": "Status: Initiative Suspended during JCPOA Implementation", "paragraphs": ["During 2006-2016, the Department of the Treasury used long-standing authorities to persuade foreign banks to cease dealing with Iran, in part by briefing them on Iran's use of the international financial system to fund terrorist groups and acquire weapons-related technology. According to a GAO report of February 2013, the Department of the Treasury made overtures to 145 banks in 60 countries, including several visits to banks and officials in the UAE, and convinced at least 80 foreign banks to cease handling financial transactions with Iranian banks. Upon implementation of the JCPOA, the Treasury Department largely dropped this initiative, and instead largely sought to encourage foreign banks to conduct normal transactions with Iran. "], "subsections": []}]}, {"section_title": "Ban on Iranian Access to the U.S. Financial System/Use of Dollars", "paragraphs": [], "subsections": [{"section_title": "Status: Remains in Force", "paragraphs": ["There is no blanket ban on foreign banks or persons paying Iran for goods using U.S. dollars. But, U.S. regulations (ITRs, C.F.R. Section 560.516) ban Iran from direct access to the U.S. financial system. The regulations allow U.S. banks to send funds (including U.S. dollars) to Iran for allowed (licensed) transactions. However, the U.S. dollars cannot be directly transferred to an Iranian bank, but must instead be channeled through an intermediary financial institution, such as a European bank. Section 560.510 specifically allows for U.S. payments to Iran to settle or pay judgments to Iran, such as those reached in connection with the U.S.-Iran Claims Tribunal, discussed above. However, the prohibition on dealing directly with Iranian banks still applies. ", "On November 6, 2008, the Department of the Treasury broadened restrictions on Iran's access to the U.S. financial system by barring U.S. banks from handling any transactions with foreign banks that are handling transactions on behalf of an Iranian bank (\"U-turn transactions\"). This means a foreign bank or person that pays Iran for goods in U.S. dollars cannot access the U.S. financial system (through a U.S. correspondent account, which most foreign banks have) to acquire dollars for any transaction involving Iran. This ban remained in effect under the JCPOA implementation, and Iran argued that these U.S. restrictions deter European and other banks from reentering the Iran market, as discussed later in this report. "], "subsections": []}, {"section_title": "Recent Developments", "paragraphs": ["Then-Treasury Secretary Lew in March and April 2016 suggested the Obama Administration was considering licensing transactions by foreign (non-Iranian) clearinghouses to acquire dollars that might facilitate transactions with Iran, without providing Iran with dollars directly. However, doing so was not required by the JCPOA and the Administration declined to take that step. Instead, the Obama Administration encouraged bankers to reenter the Iran market without fear of being sanctioned. The Trump Administration has not, at any time, expressed support for allowing Iran greater access to dollars. The reimposition of U.S. sanctions has further reduced the willingness and ability of foreign firms to use dollars in transactions with Iran."], "subsections": []}, {"section_title": "Punishments/Fines Implemented against Some Banks.", "paragraphs": ["The Department of the Treasury and other U.S. authorities has announced financial settlements (forfeiture of assets and imposition of fines) with various banks that have helped Iran (and other countries such as Sudan, Syria, and Cuba) access the U.S. financial system. The amounts were reportedly determined, at least in part, by the value, number, and duration of illicit transactions conducted, and the strength of the evidence collected by U.S. regulators. (As noted above, the FY2016 Consolidated Appropriation, P.L. 114-113 , provides for use of the proceeds of the settlements above to pay compensation to victims of Iranian terrorism.)"], "subsections": []}]}, {"section_title": "CISADA: Sanctioning Foreign Banks That Conduct Transactions with Sanctioned Iranian Entities", "paragraphs": [], "subsections": [{"section_title": "Status: Remained in force after JCPOA, but Iranian banks \"delisted.\" Delisted banks will be \"relisted\" as of November 5, 2018.", "paragraphs": ["Section 104 of CISADA requires the Secretary of the Treasury to forbid U.S. banks from opening new \"correspondent accounts\" or \"payable-through accounts\" (or force the cancellation of existing such accounts) for ", "any foreign bank that transactions business with an entity that is sanctioned by Executive Order 13224 or 13382 (terrorism and proliferation activities, respectively). These orders are discussed above. A full list of such entities is at the end of this report, and entities \"delisted\" are in italics. any foreign bank determined to have facilitated Iran's efforts to acquire WMD or delivery systems or provide support to groups named as Foreign Terrorist Organizations (FTOs) by the United States. any foreign bank that facilitates \"the activities of\" an entity designated under by U.N. Security Council resolutions that sanction Iran. any foreign bank that transacts business with the IRGC or any of its affiliates designated under any U.S. Iran-related executive order. any foreign bank that does business with Iran's energy, shipping, and shipbuilding sectors, including with NIOC, NITC, and IRISL. (This provision was contained in Section 1244(d) of the Iran Freedom and Counterproliferation Act, IFCA, discussed below, but d id not specifically amend CISADA . The provision was waived to implement the JCPOA. ", "One additional intent of the provision was to reduce the ability of Iran's pivotal import-export community (referred to in Iran as the \"bazaar merchants\" or \" bazaaris \") from obtaining \"letters of credit\" (trade financing) to buy or sell goods. The Department of the Treasury has authority to determine what constitutes a \"significant\" financial transaction. "], "subsections": []}, {"section_title": "Implementation of Section 104: Sanctions Imposed", "paragraphs": ["On July 31, 2012, the United States sanctioned the Bank of Kunlun in China and the Elaf Islamic Bank in Iraq under Section 104 of CISADA. On May 17, 2013, the Department of the Treasury lifted sanctions on Elaf Islamic Bank in Iraq, asserting that the bank had reduced its exposure to the Iranian financial sector and stopped providing services to the Export Development Bank of Iran. "], "subsections": []}]}, {"section_title": "Iran Designated a Money-Laundering Jurisdiction/FATF", "paragraphs": [], "subsections": [{"section_title": "Status: Central Bank Remained Designated Under this Section during JCPOA", "paragraphs": ["On November 21, 2011, the Obama Administration identified Iran as a \"jurisdiction of primary money laundering concern\" under Section 311 of the USA Patriot Act (31 U.S.C. 5318A), based on a determination that Iran's financial system, including the Central Bank, constitutes a threat to governments or financial institutions that do business with Iran's banks. The designation imposed additional requirements on U.S. banks to ensure against improper Iranian access to the U.S. financial system. ", "The Administration justified the designation as implementation of recommendations of the Financial Action Task Force (FATF)\u2014a multilateral standard-setting body for anti-money laundering and combating the financing of terrorism (AML/CFT). In 2016, the FATF characterized Iran as a \"high-risk and non-cooperative jurisdiction\" with respect to AMF/CFT issues. On June 24, 2016, the FATF welcomed an \"Action Plan\" filed by Iran to address its strategic AML/CFT deficiencies and decided to suspend, for one year, \"countermeasures\"\u2014mostly voluntary recommendations of increased due diligence with respect to Iran transactions\u2014pending an assessment of Iran's implementation of its Action Plan. The FATF continued the suspension of countermeasures in June and November 2017, and February 2018. ", "On October 19, 2018, the FATF stated that Iran had only acted on 9 out of 10 of its guidelines, and that Iran's Majles had not completed legislation to adopt international standards. The FATF continued to suspend countermeasures and gave Iran until February 2019 to fully accede to all FATF guidelines. On February 22, 2019, the FATF stated that countermeasures remained suspended but that \"If by June 2019, Iran does not enact the remaining legislation in line with FATF Standards, then the FATF will require increased supervisory examination for branches and subsidiaries of financial institutions based in Iran. The FATF also expects Iran to continue to progress with enabling regulations and other amendments.\" ", "On October 12, 2018, the Treasury Department Financial Crimes Enforcement Network (FINCEN) issued a warning to U.S. banks to guard against likely Iranian efforts to evade U.S. financial sanctions. Earlier, in January 1, 2013, OFAC issued an Advisory to highlight Iran's use of hawalas (traditional informal banking and money exchanges) in the Middle East and South Asia region to circumvent U.S. financial sanctions. Because the involvement of an Iranian client is often opaque, banks have sometimes inadvertently processed hawala transactions involving Iranians."], "subsections": []}]}, {"section_title": "Use of the SWIFT System", "paragraphs": ["Section 220 of the ITRSHRA required reports on electronic payments systems, such as the Brussels-based SWIFT (Society of Worldwide Interbank Financial Telecommunications), that do business with Iran. That law also authorizes\u2014but neither it nor any other U.S. law or executive order mandates\u2014sanctions against SWIFT or against electronic payments systems. Still, many transactions with Iran are subject to U.S. sanctions, no matter the payment mechanism. "], "subsections": []}]}, {"section_title": "Cross-Cutting Secondary Sanctions: The Iran Freedom and Counter-Proliferation Act (IFCA)", "paragraphs": [], "subsections": [{"section_title": "Status: Waived to implement JCPOA; will go back into effect as specified.", "paragraphs": ["The National Defense Authorization Act for FY2013 ( H.R. 4310 , P.L. 112-239 , signed January 2, 2013)\u2014Subtitle D, The Iran Freedom and Counter-Proliferation Act (IFCA), sanctions a wide swath of Iran's economy, touching several sectors. Its provisions on Iran's human rights record are discussed in the section on \" Measures to Sanction Human Rights Abuses and Promote\u00a0the\u00a0Opposition .\"", "Section 1244 of IFCA mandates the blocking of U.S.-based property of any entity (Iranian or non-Iranian) that provides goods, services, or other support to any Iranian entity designated by the Treasury Department as a \"specially designated national\" (SDN). The tables at the end of this report show that hundreds of Iranian entities are designated as SDNs under various executive orders. The Iranian entities designated for civilian economic activity were \"delisted\" to implement the JCPOA, but will be relisted on November 5, 2018. Section 1247 of IFCA prohibits from operating in the United States any bank that knowingly facilitates a financial transaction on behalf of an Iranian SDN. The section also specifically sanctions foreign banks that facilitate payment to Iran for natural gas unless the funds owed to Iran for the gas are placed in a local account. The section provides for a waiver for a period of 180 days. ", "Several sections of IFCA impose ISA sanctions on entities determined to have engaged in specified transactions below. ( The provision s apply ISA sanctions but do not amend ISA .) ", "Energy, Shipbuilding, and Shipping Sector . Section 1244 mandates 5 out of 12 ISA sanctions on entities that provide goods or services to Iran's energy, shipbuilding, and shipping sectors, or to port operations there\u2014or which provide insurance for such transactions. The sanctions d o not apply when such transactions involve d purchases of Iranian oil by countries that have exemptions under P.L. 112-81 , or to the purchase of natural gas from Iran . This section goes back into effect after a 180-day wind-down period (by November 4, 2018). Dealings in Precious Metals . Section 1245 imposes 5 out of 12 ISA sanctions on entities that provide precious metals to Iran (including gold) or semifinished metals or software for integrating industrial processes. The section affected foreign firms that transferred these items or other precious metals to Iran in exchange for\u00a0oil or any other product. There is no exception to this sanction for countries exempted under P.L. 112-81 . This section went back into effect after a 90-day wind-down period (August 6, 2018). Insurance for Related Activities . Section 1246 imposes 5 out of 12 ISA sanctions on entities that provide underwriting services, insurance, or reinsurance for any transactions sanctioned under any executive order on Iran, ISA, CISADA, the Iran Threat Reduction Act, INKSNA, other IFCA provisions, or any other Iran sanction, as well as to any Iranian SDN. ( There is no exception for countries exempted under P.L. 112-81 .) This provision goes back into effect after a 180-day wind-down period (by November 4, 2018). Exception for Afghanistan Reconstruction . Section 1244(f) of IFCA provides a sanctions exemption for transactions that provide reconstruction assistance for or further the economic development of Afghanistan. See JCPOA waivers below. "], "subsections": []}, {"section_title": "Implementation", "paragraphs": ["On August 29, 2014, the State Department sanctioned UAE-based Goldentex FZE in accordance with IFCA for providing support to Iran's shipping sector. It was \"delisted\" from sanctions on Implementation Day of the JCPOA. ", "On October 16, 2018, OFAC designated as terrorism-related entities several Iranian industrial companies on the grounds that they provide the Basij s ecurity force with revenue to support its operations in the Middle East. The designations, pursuant to E.O. 13224, mean that foreign firms that transact business with these Iranian industrial firms could be subject to U.S. sanctions under IFCA. The industrial firms\u2014which were not previously designated and were therefore not \"relisted\" as SDNs on November 5, 2018, were Technotar Engineering Company; Iran Tractor Manufacturing Company; Iran's Zinc Mines Development Company and several related zinc producers; and Esfahan Mobarakeh Steel Company, the largest steel producer in the Middle East. "], "subsections": []}, {"section_title": "Executive Order 13608 on Sanctions Evasion", "paragraphs": ["Executive Order 13608 of May 1, 2012, gives the Department of the Treasury the ability to identify and sanction (cutting them off from the U.S. market) foreign persons who help Iran (or Syria) evade U.S. and multilateral sanctions. ", "Several persons and entities have been designated for sanctions, as shown in the tables at the end of the report. "], "subsections": []}]}, {"section_title": "Sanctions on Iran's Cyber and Transnational Criminal Activities", "paragraphs": [], "subsections": [{"section_title": "Status: All in Force during JCPOA Period", "paragraphs": ["The Trump Administration appears to be making increasing use of executive orders issued during the Obama Administration to sanction Iranian entities determined to be engaged in malicious cyberactivities or in transnational crime. Iranian entities have attacked, or attempted to attack, using cyberactivity, infrastructure in the United States, Saudi Arabia, and elsewhere. Iran's ability to conduct cyberattacks appears to be growing. Separately, the Justice Department has prosecuted Iranian entities for such activity. The section below discusses Executive Order 13694 on malicious cyberactivities and Executive Order 13581 on transnational crime. "], "subsections": []}, {"section_title": "Executive Order 13694 (April 1, 2015)", "paragraphs": ["Executive Order 13694 blocks U.S.-based property of foreign entities determined to have engaged in cyber-enabled activities that (1) harm or compromise the provision of services by computers or computer networks supporting in the critical infrastructure sector; (2) compromise critical infrastructure; (3) disrupt computers or computer networks; or (4) cause misappropriation of funds, trade secrets, personal identifiers, or financial information for financial advantage or gain. "], "subsections": []}, {"section_title": "Executive Order 13581 (July 25, 2011)", "paragraphs": ["Executive Order 13581 blocks the U.S.-based property of entities determined (1) to be a foreign person that constitutes a significant transnational criminal organization; (2) to have materially assisted any person sanctioned under this order; or (3) to be owned or controlled by or to have acted on behalf of a person sanctioned under the order. "], "subsections": [{"section_title": "Implementation", "paragraphs": ["Iran-related entities sanctioned under the Orders are listed in the tables at the end of this report. "], "subsections": []}]}]}, {"section_title": "Divestment/State-Level Sanctions", "paragraphs": ["Some U.S. laws require or call for divestment of shares of firms that conduct certain transactions with Iran. A divestment-promotion provision was contained in CISADA, providing a \"safe harbor\" for investment managers who sell shares of firms that invest in Iran's energy sector at levels that would trigger U.S. sanctions under the Iran Sanctions Act. As noted above, Section 219 of the ITRSHRA of 2012 requires companies to reports to the Securities and Exchange Commission whether they or any corporate affiliate has engaged in any transactions with Iran that could trigger sanctions under ISA, CISADA, and E.O 13382 and 13224. ", "Implementation : Numerous states have adopted laws, regulations, and policies to divest from\u2014or avoid state government business with\u2014foreign companies that conduct certain transactions with Iran. The JCPOA requires the United States to work with state and local governments to ensure that state-level sanctions do not conflict with the sanctions relief provided by the federal government under the JCPOA. Most states that have adopted Iran sanctions continue to enforce those measures. "], "subsections": []}, {"section_title": "Sanctions and Sanctions Exemptions to Support Democratic Change/Civil Society in Iran", "paragraphs": [], "subsections": [{"section_title": "Post-JCPOA Status: Virtually All Sanctions in This Section Remain in Effect. No Entities \"Delisted.\"39", "paragraphs": ["A trend in U.S. policy and legislation since the June 12, 2009, election-related uprising in Iran has been to support the ability of the domestic opposition in Iran to communicate and to sanction Iranian officials that commit human rights abuses. Sanctions on the IRGC represent one facet of that trend because the IRGC is a key suppressive instrument. Individuals and entities designated under the executive orders and provisions discussed below are listed in the tables at the end of this report. For those provisions that ban visas to enter the United States, the State Department interprets the provisions to apply to all members of the designated entity. "], "subsections": []}, {"section_title": "Expanding Internet and Communications Freedoms", "paragraphs": ["Some laws and Administration action focus on expanding internet freedom in Iran or preventing the Iranian government from using the internet to identify opponents. Subtitle D of the FY2010 Defense Authorization Act ( P.L. 111-84 ), called the \"VOICE\" (Victims of Iranian Censorship) Act, contained several provisions to increase U.S. broadcasting to Iran and to identify (in a report to be submitted 180 days after enactment) companies that are selling Iran technology equipment that it can use to suppress or monitor the internet usage of Iranians. The act authorized funds to document Iranian human rights abuses since the June 2009 Iranian presidential election. Section 1241 required an Administration report by January 31, 2010, on U.S. enforcement of sanctions against Iran and the effect of those sanctions on Iran. "], "subsections": [{"section_title": "Countering Censorship of the Internet: CISADA, E.O. 13606, and E.O. 13628", "paragraphs": ["Section 106 of CISADA prohibits U.S. government contracts with foreign companies that sell technology that Iran could use to monitor or control Iranian usage of the internet. The provisions were directed, in part, against Nokia (Finland) and Siemens (Germany) for reportedly selling internet monitoring and censorship technology to Iran in 2008. The provision was derived from the Reduce Iranian Cyber-Suppression Act (111 th Congress, S. 1475 and H.R. 3284 ). On April 23, 2012, President Obama issued an executive order (13606) sanctioning persons who commit \"Grave Human Rights Abuses by the Governments of Iran and Syria via Information Technology (GHRAVITY).\" The order blocks the U.S.-based property and essentially bars U.S. entry and bans any U.S. trade with persons and entities listed in an Annex and persons or entities subsequently determined to be (1) operating any technology that allows the Iranian (or Syrian) government to disrupt, monitor, or track computer usage by citizens of those countries or assisting the two governments in such disruptions or monitoring; or (2) selling to Iran (or Syria) any technology that enables those governments to carry out such actions. Section 403 of the ITRSHRA sanctions (visa ban, U.S.-based property blocked) persons/firms determined to have engaged in censorship in Iran, limited access to media, or\u2014for example, a foreign satellite service provider\u2014supported Iranian government jamming or frequency manipulation. On October 9, 2012, the President issued Executive Order 13628 implementing Section 403 by blocking the property of persons/firms determined to have committed the censorship, limited free expression, or assisted in jamming communications. The order also specifies the sanctions authorities of the Department of State and of the Treasury."], "subsections": []}, {"section_title": "Laws and Actions to Promote Internet Communications by Iranians", "paragraphs": ["On March 8, 2010, OFAC amended the Iran Transactions Regulations to allow for a general license for providing free mass market software to Iranians. The ruling incorporated major features of the Iran Digital Empowerment Act ( H.R. 4301 in the 111 th Congress). The OFAC determination required a waiver of the provision of the Iran-Iraq Arms Nonproliferation Act (Section 1606 waiver provision) discussed above. Section 103(b)(2) of CISADA exempts from the U.S. export ban on Iran equipment to help Iranians communicate and use the internet. On March 20, 2012, the Department of the Treasury amended U.S.-Iran trade regulations to permit several additional types of software and information technology products to be exported to Iran under general license, provided the products were available at no cost to the user . The items included personal communications, personal data storage, browsers, plug-ins, document readers, and free mobile applications related to personal communications. On May 30, 2013, the Department of the Treasury amended the trade regulations further to allow for the sale, on a cash basis (no financing), to Iran of equipment that Iranians can use to communicate (e.g., cellphones, laptops, satellite internet, website hosting, and related products and services). "], "subsections": []}]}, {"section_title": "Measures to Sanction Human Rights Abuses and Promote the Opposition", "paragraphs": ["Some legislation has sought to sanction regime officials involved in suppressing the domestic opposition in Iran or in human rights abuses more generally. Much of this legislation centers on amendments to Section 105 of CISADA. ", "Sanctions against Iranian Human Rights Abusers. Section 105 of CISADA bans travel and freezes the U.S.-based assets of those Iranians determined to be human rights abusers. On September 29, 2010, pursuant to Section 105, President Obama issued Executive Order 13553 providing for CISADA sanctions against Iranians determined to be responsible for or complicit in post-2009 Iran election human rights abuses. Those sanctioned under the provisions are listed in the tables at the end of this report. Section 105 terminates if the President certifies to Congress that Iran has (1) unconditionally released all political prisoners detained in the aftermath of the June 2009 uprising; (2) ceased its practices of violence, unlawful detention, torture, and abuse of citizens who were engaged in peaceful protest; (3) fully investigated abuses of political activists that occurred after the uprising; and (4) committed to and is making progress toward establishing an independent judiciary and respecting human rights. Sanctions on Sales of Anti-Riot Equipment. Section 402 of the ITRSHRA amended Section 105 by adding provisions that sanction (visa ban, U.S. property blocked) any person or company that sells the Iranian government goods or technologies that it can use to commit human rights abuses against its people. Such goods include firearms, rubber bullets, police batons, chemical or pepper sprays, stun grenades, tear gas, water cannons, and like goods. In addition, ISA sanctions are to be imposed on any person determined to be selling such equipment to the IRGC. Sanctions a gainst Iranian Government Broadcasters /IRIB . Section 1248 of IFCA (Subtitle D of P.L. 112-239 ) mandates inclusion of the Islamic Republic of Iran Broadcasting (IRIB), the state broadcasting umbrella group, as a human rights abuser. IRIB was designated as an SDN on February 6, 2013, under E.O. 13628 for limiting free expression in Iran. On February 14, 2014, the State Department waived IFCA sanctions under Sections 1244, 1246, or 1247, on any entity that provides satellite connectivity services to IRIB. The waiver has been renewed each year since. Sanctions a gainst Iranian Profiteers . Section 1249 of IFCA amends Section 105 by imposing sanctions on any person determined to have engaged in corruption or to have diverted or misappropriated humanitarian goods or funds for such goods for the Iranian people. The measure is intended to sanction Iranian profiteers who are, for example, using official connections to corner the market for vital medicines. This provision, which remains in forces, essentially codifies a similar provision of Executive Order 13645. The Countering America's Adversaries through Sanctions Act (CAATSA, P.L. 115-44 ). Section 106 authorizes, but does not require, the imposition of the same sanctions as those prescribed in E.O. 13553 on persons responsible for extrajudicial killings, torture, or other gross violations of internationally recognized human rights against Iranians who seek to expose illegal activity by officials or to defend or promote human rights and freedoms in Iran. The persons to be sanctioned are those named in a report provided 90 days after CAATSA enactment (by October 31, 2017) and annually thereafter. The provision is similar to E.O. 13553 but, in contrast, applies broadly to Iranian human rights abuses and is not limited to abuses connected to suppressing the June 2009 uprising in Iran. Additional designations of Iranian human rights abusers under E.O. 13533 were made subsequent to the enactment of CAATSA and the October 31, 2017, CAATSA report deadline. Separate Visa Bans. On July 8, 2011, the State Department imposed visa restrictions on 50 Iranian officials for participating in political repression in Iran, but it did not name those banned on the grounds that visa records are confidential. The action was taken under the authorities of Section 212(a)(3)(C) of the Immigration and Nationality Act, which renders inadmissible to the United States a foreign person whose activities could have serious consequences for the United States. On May 30, 2013, the State Department announced it had imposed visa restrictions on an additional 60 Iranian officials on similar grounds. High Level Iranian Visits . There are certain exemptions in the case of high level Iranian visits to attend U.N. meetings in New York. The U.N. Participation Act (P.L. 79-264) provides for U.S. participation in the United Nations and as host nation of U.N. headquarters in New York, and visas are routinely issued to heads of state and their aides attending these meetings. In September 2012, the State Department refused visas for 20 members of Iranian President Ahmadinejad's traveling party on the grounds of past involvement in terrorism or human rights abuses. Still, in line with U.S. obligations under the act, then-President Ahmadinejad was allowed to fly to the United States on Iran Air, even though Iran Air was at the time a U.S.-sanctioned entity, and his plane reportedly was allowed to park at Andrews Air Force base. "], "subsections": []}]}, {"section_title": "U.N. Sanctions", "paragraphs": ["U.N. sanctions on Iran, enacted by the Security Council under Article 41 of Chapter VII of the U.N. Charter, applied to all U.N. member states. During 2006-2008, three U.N. Security Council resolutions\u20141737, 1747, and 1803\u2014imposed sanctions on Iran's nuclear program and weapons of mass destruction (WMD) infrastructure. Resolution 1929, adopted on June 9, 2010, was key for its assertion that major sectors of the Iranian economy support Iran's nuclear program\u2014giving U.N. member states authorization to sanction civilian sectors of Iran's economy. It also imposed strict limitations on Iran's development of ballistic missiles and imports and exports of arms. "], "subsections": [{"section_title": "Resolution 2231 and U.N. Sanctions Eased", "paragraphs": ["U.N. Security Council Resolution 2231 of July 20, 2015", "endorsed the JCPOA and superseded all prior Iran-related resolutions as of Implementation Day (January 16, 2016). lifted all U.N. sanctions discussed above. The Resolution did not continue the mandate of the \"the panel of experts\" and the panel ended its operations. \"calls on\" Iran not to develop ballistic missiles \"designed to be capable\" of delivering a nuclear weapon for a maximum of eight years from Adoption Day (October 18, 2015). The restriction expires on October 18, 2023. And, 2231 is far less restrictive on Iran's missile program than is Resolution 1929. No specific sanctions are mandated in the Resolution if Iran conducted missile tests inconsistent with the Resolution. The JCPOA did not impose any specific missile-related requirements. requires Security Council approval for Iran to export arms or to purchase any arms (major combat systems named in the Resolution) for a maximum of five years from Adoption Day (until October 18, 2020). The JCPOA does not impose arms requirements. ", "The U.S. withdrawal from the JCPOA did not change the status of Resolution 2231. "], "subsections": [{"section_title": "Iran Compliance Status", "paragraphs": ["U.N. and International Atomic Energy Agency reports since the JCPOA began implementation have stated that Iran is complying with its nuclear obligations under the JCPOA. That assessment was corroborated by U.S. intelligence leaders in January 29, 2019, testimony before the Senate Select Committee on Intelligence. ", "U.N. reports on Iranian compliance with Resolution 2231 have noted assertions by several U.N. Security Council members, including the United States, that Iranian missile tests have been inconsistent with the Resolution. U.S. officials have called some of Iran's launches of its Khorramshahr missile as violations of the Resolution. The reports required by Resolution 2231, as well as those required by other Resolutions pertaining to various regional crises, such as that in Yemen, also note apparent violations of the Resolution 2231 restrictions on Iran's exportation of arms. The Security Council is responsible for prescribing penalties on Iran for violations, and no U.N. Security Council actions have been taken against Iran for these violations to date. "], "subsections": []}, {"section_title": "U.N. List of Sanctioned Entities", "paragraphs": ["Under Paragraph 6(c) of Annex B of Resolution 2231, entities sanctioned by the previous Iran-related Resolutions would continue to be sanctioned for up to eight years from Adoption Day (until October 2023). An attachment to the Annex listed 36 entities for which this restriction would no longer apply (entities \"delisted\") as of Implementation Day. Most of the entities immediately delisted were persons and entities connected to permitted aspects of Iran's nuclear program and its civilian economy. According to press reports, two entities not on the attachment list, Bank Sepah and Bank Sepah International PLC, also were delisted on Implementation Day by separate Security Council action. Paragraph 6(c) provides for the Security Council to be able to delist a listed entity at any time, as well as to add new entities to the sanctions list. Delisted entities are in italics in the table of U.N.-listed sanctioned entities at the end of the report. "], "subsections": []}]}]}, {"section_title": "Sanctions Application under Nuclear Agreements", "paragraphs": ["The following sections discuss sanctions relief provided under the November 2013 interim nuclear agreement (JPA) and, particularly, the JCPOA. Later sections discuss the degree to which Iran is receiving the expected benefits of sanctions relief. "], "subsections": [{"section_title": "Sanctions Eased by the JPA", "paragraphs": ["U.S. officials said that the JPA provided \"limited, temporary, targeted, and reversible\" easing of international sanctions. Under the JPA (in effect January 20, 2014-January 16, 2016) ", "Iran's oil customers were not required reduce their oil purchases from Iran because waivers were issued for Section 1245(d)(1) of the National Defense Authorization Act for FY2012 ( P.L. 112-81 ) and Section 1244c(1) of IFCA. The Waivers of ITRSHRA and ISA provisions were issued to permit transactions with NIOC. The European Union amended its regulations to allow shipping insurers to provide insurance for ships carrying oil from Iran. A waiver of Section 1245(d)(1) of IFCA allowed Iran to receive directly $700 million per month in hard currency from oil sales and $65 million per month to make tuition payments for Iranian students abroad (paid directly to the schools). Executive Orders 13622 and 13645 and several provisions of U.S.-Iran trade regulations were suspended. Several sections of IFCA were waived to enable Iran to sell petrochemicals and trade in gold and other precious metals, and to conduct transactions with foreign firms involved in Iran's automotive manufacturing. Executive Order 13382 provisions and certain provisions of U.S.-Iran trade regulations were suspended for equipment sales to Iran Air. The United States licensed some safety-related repairs and inspections for certain Iranian airlines and issued a new \"Statement of Licensing Policy\" to enable U.S. aircraft manufacturers to sell equipment to Iranian airlines. The JPA required that the P5+1 \"not impose new nuclear-related sanctions ... to the extent permissible within their political systems.\" "], "subsections": []}, {"section_title": "Sanctions Easing under the JCPOA and U.S. Reimposition", "paragraphs": ["Under the JCPOA, sanctions relief occurred at Implementation Day (January 16, 2016), following IAEA certification that Iran had completed stipulated core nuclear tasks. U.S. secondary sanctions were waived or terminated, but most sanctions on direct U.S.-Iran trade. The secondary sanctions eased included (1) sanctions that limited Iran's exportation of oil and sanction foreign sales to Iran of gasoline and energy sector equipment, and which limit foreign investment in Iran's energy sector; (2) financial sector sanctions; and (3) sanctions on Iran's auto sector and trading in the rial . The EU lifted its ban on purchases of oil and gas from Iran; and Iranian banks were readmitted to the SWIFT electronic payments system. All U.N. sanctions were lifted. ", "All of the U.S. sanctions that were eased will go back into effect on November 4, 2018, in accordance with the May 8, 2018, announcement that the United States will cease participating in the JCPOA. The Administration has stated that the purpose of reimposing the sanctions is to deny Iran the revenue with which to conduct regional malign activities and advance its missile, nuclear, and conventional weapons programs. ", "The sanctions that went back into effect on August 7, 2018 (90-day wind-down period), are on", "the purchase or acquisition of U.S. bank notes by Iran; Iran's trade in gold and other precious metals; transactions in the Iranian rial ; activities relating to Iran's issuing of sovereign debt; transactions with Iran in graphite, aluminum, steel, coal, and industrial software; importation of Iranian luxury goods to the United States; and the sale to Iran of passenger aircraft (and aircraft with substantial U.S. content). ", "The sanctions that went back into effect on November 5, 2018, are on ", "petroleum-related transactions with Iran. port operators and energy, shipping, and shipbuilding sectors; and transactions by foreign banks with Iran's Central Banks (including the provision that restricts Iran's access to hard currency held in banks abroad)."], "subsections": [{"section_title": "U.S. Laws Waived and Executive Orders Terminated, and Reimposition52", "paragraphs": ["The laws below required waivers to implement U.S. commitments under the JCPOA, and all waivers were revoked in concert with the Trump Administration exit from the accord. All the provisions discussed below went back into effect on November 5, 2018. ", "Iran Sanctions Act . The blanket energy/economic-related provisions of the ISA of P.L. 104-172 , as amended. (Section 4(c)(1)(A) waiver provision.) The WMD-related provision of ISA was not waived. FY2012 NDAA . Section 1245(d) of the National Defense Authorization Act for FY2012 ( P.L. 112-81 ) imposes sanctions on foreign banks of countries that do not reduce Iran oil imports. Iran Threat Reduction and Syria Human Rights Act ( P.L. 112-158 ) . Sections 212 and 213\u2014the economy-related provisions of the act\u2014were waived. The human rights-related provisions of the law were not waived. Iran Freedom and Counter-proliferation Act . Sections 1244, 1245, 1246, and 1247 of the Iran Freedom and Counter-Proliferation Act (Subtitle D of P.L. 112-239 ). The core provision of CISADA ( P.L. 111-195 ) that sanctions foreign banks was not waived, but most listed Iranian banks were \"delisted\" to implement the JCPOA, thereby making this CISADA provision largely moot. The Administration relisted all delisted Iranian banks on November 5, 2018. Executive Orders: 13574, 13590, 13622, 13645, and Sections 5-7 and 15 of Executive Order 13628 were revoked outright by Executive Order 13716. The orders were reinstated on August 6, 2018, by Executive Order 13846. The United States \"delisted\" for sanctions the specified Iranian economic entities and personalities listed in Attachment III of the JCPOA, including the National Iranian Oil Company (NIOC), various Iranian banks, and many energy and shipping-related institutions. That step enabled foreign companies/banks to resume transactions with those entities without risking being penalized by the United States. The tables at the end of the report depict in italics those entities delisted. Entities that were to be delisted on \"Transition Day\" (October 2023) are in bold type. The Administration relisted these entities for secondary sanctions, with selected exceptions (such as the AEOI and 23 subsidiaries), on November 5, 2018. The continued de-listing of the nuclear entities was in order to allow European and other U.S. partners to continue providing civilian nuclear assistance to Iran as permitted under the JCPOA. The JCPOA required the U.S. Administration, by \"Transition Day,\" to request that Congress lift virtually all of the sanctions that were suspended under the JCPOA. No outcome of such a request is mandated. The JCPOA requires all U.N. sanctions to terminate after 10 years of adoption (\"Termination Day\"). The U.S.-related provisions are rendered moot by the U.S. exit from the JCPOA."], "subsections": [{"section_title": "Exceptions and Waivers Provided by the Trump Administration", "paragraphs": ["Even though it has reimposed all U.S. sanctions on Iran, the Trump Administration has issued some exceptions that are provided for under the various U.S. sanctions laws, including the following:", "As noted above, on November 5, 2018, eight countries were given the SRE to enable them to continue transactions with Iran's Central Bank and to purchase Iranian oil. At an April 10 hearing of the Senate Foreign Relations Committee, Secretary Pompeo appeared to indicate that the SREs would be renewed. However, on April 22 the Administration announced termination of the SREs as of their expiration on May 2, 2019. On May 3, the Administration ended some waivers under IFCA and various antiproliferation laws (discussed above) that allow international technical assistance to Iran's three nuclear sites permitted to operate under the JCPOA\u2014the Fordow facility, the Bushehr nuclear power reactor, and the Arak heavy water plant. The Administration ended the waiver that enabled Rosatom (Russia) to remove Iran's LEU that exceeds the 300kg allowed stockpile, and that allowed Iran to export heavy water that exceeded the limits on that product to Oman. The waiver limitations also will prohibit the expansion of the Bushehr reactor by any supplier. In response, President Rouhani announced that Iran would no longer abide by the JCPOA stockpile limits. The Administration waived Section 1247(e) of IFCA to enable Iraq to continue paying for purchases of natural gas from Iran. The waiver term for that section is up to 180 days, but the Administration has been providing the waiver for 90-day increments. The Administration has issued the permitted IFCA exception for Afghan reconstruction to enable India to continue work at Iran's Chahbahar Port. A U.S. State Department official told Afghan leaders in mid-May 2019 that the exception would continue. The Administration has renewed the licenses of certain firms to enable them to continue developing the Rhum gas field in the North Sea that Iran partly owns. "], "subsections": []}]}, {"section_title": "U.S. Sanctions that Remained in Place during JCPOA and Since", "paragraphs": ["The JCPOA did not commit the United States to suspend U.S. sanctions on Iran for terrorism or human rights abuses, on foreign arms sales to Iran or sales of proliferation-sensitive technology such as ballistic missile technology, or on U.S.-Iran direct trade (with the selected exceptions of the latter discussed above). The sanctions below remained in place during JCPOA implementation and remain in effect now: ", "E.O. 12959, the ban on U.S. trade with and investment in Iran; E.O. 13224 sanctioning terrorism entities, any sanctions related to Iran's designation as a state sponsor or terrorism, and any other terrorism-related sanctions. The JCPOA does not commit the United States to revoke Iran's placement on the terrorism list; E.O. 13382 sanctioning entities for proliferation; the Iran-Iraq Arms Non-Proliferation Act; the Iran-North Korea-Syria Non-Proliferation Act (INKSNA); the section of ISA that sanctions WMD- and arms-related transactions with Iran; E.O. 13438 on Iran's interference in Iraq and E.O. 13572 on repression in Syria; Executive Orders (E.O. 13606 and E.O. 13628) and the provisions of CISADA, ITRSHRA, and IFCA that pertain to human rights or democratic change in Iran; all sanctions on the IRGC, military, proliferation-related, and human rights- and terrorism-related entities, which were not \"delisted\" from sanctions; Treasury Department regulations barring Iran from access to the U.S. financial system. Foreign banks can pay Iran in dollars out of their existing dollar supply, and the Treasury Department revised its guidance in October 2016 to stress that such transactions are permitted. "], "subsections": [{"section_title": "Other Mechanisms to \"Snap-Back\" Sanctions on Iran", "paragraphs": ["Sanctions might have been reimposed by congressional action in accordance with President Trump's withholding of certification of Iranian compliance with the JCPOA. Such certification under the Iran Nuclear Agreement Review Act (INARA, P.L. 114-17 ), was withheld in October 2017 and January and April of 2018. Congress had the opportunity to act on legislation, under expedited procedures, to reimpose sanctions that were suspended. Congress did not take such action.", "Additionally, the JCPOA (paragraph 36 and 37) contains a mechanism for the \"snap back\" of U.N. sanctions if Iran does not satisfactorily resolve a compliance dispute. According to the JCPOA (and Resolution 2231), the United States (or any veto-wielding member of the U.N. Security Council) would be able to block a U.N. Security Council resolution that would continue the lifting of U.N. sanctions despite Iran's refusal to resolve the dispute. In that case \"... the provisions of the old U.N. Security Council resolutions would be reimposed, unless the U.N. Security Council decides otherwise.\" There are no indications that the Administration plans to try to snap back U.N. sanctions under this process. However, some observers maintain that the Administration assertions in 2019 that Iran was not forthcoming with the IAEA about its past nuclear weapons research could potentially indicate that the Administration will trigger the snap-back mechanism. "], "subsections": []}]}]}]}, {"section_title": "International Implementation and Compliance59", "paragraphs": ["During 2010-2016, converging international views on Iran produced global consensus to pressure Iran through sanctions. In addition to asserting that the international community needed to ensure that Iran did not develop a nuclear weapon, some countries joined the sanctions regime to head off unwanted U.S. or other military action against Iran. Some countries cooperated in order to preserve their close relationships with the United States. This section assesses international cooperation and compliance with U.S. sanctions, and cooperation with U.S. sanctions reimposed as a consequence of the May 8, 2018, U.S. exit from the JCPOA. All the JCPOA parties publicly opposed the U.S. decision to exit the JCPOA and have sought to stay engaged in the Iran market in order to continue to provide the JCPOA's economic benefits to Iran. ", "A comparison between U.S., U.N., and EU sanctions against Iran is contained in Table A-1 below. Broader issues of Iran's relations with the countries discussed in this section can be found in CRS Report R44017, Iran's Foreign and Defense Policies , by Kenneth Katzman."], "subsections": [{"section_title": "European Union (EU)", "paragraphs": ["After the passage of Resolution 1929 in June 2010, European Union (EU) sanctions on Iran became nearly as extensive as those of the United States\u2014a contrast from most of the 1990s, when the EU countries refused to join the 1995 U.S. trade and investment ban on Iran and (along with Japanese creditors) rescheduled $16 billion in Iranian debt bilaterally. In July 2002, Iran tapped international capital markets for the first time since the Islamic revolution, selling $500 million in bonds to European banks and, during 2002-2005, there were negotiations between the EU and Iran on a \"Trade and Cooperation Agreement\" (TCA) that would have lowered the tariffs or increased quotas for Iranian exports to the EU countries. ", "Under the JCPOA, EU sanctions, most of which were imposed in 2012, were lifted, including the following: ", "the ban on oil and gas imports from Iran. a ban on insurance for shipping oil or petrochemicals from Iran and a freeze on the assets of several Iranian firms involved in shipping. a ban on trade with Iran in gold, precious metals, diamonds, and petrochemicals. a freeze of the assets of Iran's Central Bank (except for approved civilian trade). a ban on transactions between European and all Iranian banks and on short-term export credits, guarantees, and insurance. a ban on exports to Iran of graphite, semi-finished metals such as aluminum and steel, industrial software, shipbuilding technology, oil storage capabilities, and flagging or classification services for Iranian tankers and cargo vessels. The cutoff of 14 EU-sanctioned Iranian banks from the Brussels-based SWIFT electronic payments system was lifted, and the Iranian banks resumed accessing the system in February 2016. A large number of entities that had been sanctioned by EU Council decisions and regulations over the years were \"delisted\" by the EU on Implementation Day. ", "The following EU sanctions have remained in place:", "an embargo on sales to Iran of arms, missile technology, other proliferation-sensitive items, and gear for internal repression. a ban on 84 Iranian persons and one entity\u2014all designated for human rights abuses or supporting terrorism\u2014from visiting EU countries, and a freeze on their EU-based assets (see Table C-1 below)."], "subsections": [{"section_title": "U.S. JCPOA Exit-Driven Divestment", "paragraphs": ["The EU countries have not reimposed sanctions on Iran and instead have sought to preserve the JCPOA by maintaining economic relations with Iran. However, to avoid risk to their positions in the large U.S. market, more than 100 companies\u2014mostly in Europe\u2014have left Iran since May 2018. In some cases, European companies have stopped doing business with Iran after being threatened with U.S. sanctions by U.S. diplomats. ", "Some of the 100+ European companies that have ended investments in or transactions with Iran to avoid reimposed U.S. sanctions include the following:", "Oil Importation. No EU state has bought Iranian oil since U.S. energy sanctions went back into effect in November 2018, even though Italy and Greece were given SRE sanctions exemptions from November 5, 2018, until May 2, 2019. Cars. Renault and Citroen of France suspended their post-JCPOA $1 billion investments in a joint venture with two Iranian firms to boost Renault's car production capacity in Iran to 350,000 cars per year. On August 6, 2018, Daimler (manufacturer of Mercedes Benz autos) announced it was suspending its activities in Iran. Volkswagen followed suit one month later. Buses. Scania of Sweden established a factory in Iran to supply the country with 1,350 buses, but it is not clear whether this venture is still operating. Other Industry . German industrial giant Siemens signed an agreement in March 2016 with Iranian firm Mapna to transfer technology to produce gas turbines in Iran, and other contracts to upgrade Iran's railways. Siemens said in late 2018 that it would pursue no new Iranian business. Italy's Danieli industrial conglomerates and Gruppo Ventura have exited the Iranian market. Banking . Several banks have announced since the U.S. JCPOA exit a cessation of transactions with Iran: DZ Bank and Allianz of Germany; Oberbank of Austria; and Banque Wormser Freres of France. In July 2018, at U.S. request, Germany's central bank (Deutsche Bundesbank) introduced a rule change that blocked Iran's withdrawal of $400 million in cash from the Europaische-Iranische Handlesbank (EIH). EIH is reportedly at least partly owned by Iran and has often partnered on transactions with the Bundesbank. (EIH was \"de-listed\" from sanctions by the United States to implement the JCPOA, but was relisted on November 5, 2018.) Energy. On energy issues: Total SA has exited a nearly $5 billion energy investment in South Pars gas field, and it is transferring its stake to its joint venture partner, China National Petroleum Corporation. As noted above, European countries have reduced their purchases of Iranian oil. OMV of Austria has announced it would halt energy development work. Norway's Saga Energy (Norway is not in the EU) signed a $3 billion deal to build solar power plants in Iran, and Italy's FS signed a $1.4 billion agreement to build a high speed railway between Qom and Arak. These deals are still active. Shipping. Hapag-Lloyd of Germany and Denmark's AP Moller-Maersk have ceased shipping services to Iran. Telecommunications. Germany telecommunications firm Deutsche Telekom announced in September 2018 that it would end its business in Iran. Flights. Although air service is not subject to U.S. sanctions per se, Air France and British Air announced in September 2018 that they would cease service to Iran due to lack of demand. Rhum Gas Field . One project, the Rhum gas field in the North Sea that is partly owned by Iranian Oil Company (a subsidiary of NIOC), has been able to continue operating. In part because the field supplies about 5% of Britain's demand for natural gas, in October 2018, the Trump Administration renewed the license of BP and Serica Energy to continue providing goods and services to the field, despite the Iranian involvement in the project. "], "subsections": []}, {"section_title": "European Counterefforts/Special Purpose Vehicle/INSTEX", "paragraphs": ["The EU countries, in an attempt to persuade Iran to continue to adhere to the JCPOA, have undertaken several steps that run counter to Trump Administration policy. On August 6, 2018, a 1996 EU \"blocking statute\" that seeks to protect EU firms from reimposed U.S. sanctions took effect. In September 2018, EU countries announced small amounts of development assistance to Iran, apparently in order to demonstrate that the EU is making good faith efforts to provide Iran the economic benefits of the JCPOA. ", "The EU subsequently designed a mechanism under which EU countries could continue to trade with Iran with relative immunity from U.S. sanctions. On September 25, 2018, Germany, France, and Britain, joined by Russia and China, as well as Iran, endorsed the creation of a \"special purpose vehicle\" (SPV)\u2014an entity that would facilitate trade without utilizing dollar-denominated transactions with Iran, and without exposure to the U.S. market. In a January 31, 2019, joint statement, France, Britain, and Germany announced the formal registration of the SPV, formally termed the Instrument for Supporting Trade Exchanges (INSTEX). It is based in France, with German governance, and financial support from the three governments. It will initially focus on the sectors most essential to Iran, including medicines, medical devices, and food, and perhaps eventually provide a platform for non-European countries to trade with Iran in oil and other products. The operation of INSTEX depended on Iran setting up a counterparty vehicle in Europe and, in April 2019, Iran set up that counterparty as the \"Special Trade and Finance Instrument\" (STFI). ", "Secretary of State Michael Pompeo denounced the plan as counterproductive, and Vice President Mike Pence, in mid-February 2019, criticized INSTEX as an outright attempt to undermine U.S. sanctions against Iran. Amid reported agitation among Iranian regime hardliners to exit the JCPOA because of the EU's failure to prevent harm to the Iranian economy, Iranian officials indicated the announcement represented a positive first step. Indicative of U.S. pressure on the EU not to begin INSTEX operations, on May 7, 2019, Treasury Department Under Secretary for Terrorism and Financial Intelligence Sigal Mandelker said that INSTEX is unlikely to fulfill EU pledges to prevent INSTEX from being used by Iran to launder money or fund terrorism. Mandelker's statement included an implicit threat to potentially sanction INSTEX or its counterparties. The U.S. concerns about INSTEX might be a product, at least in part, of the alleged involvement of sanctioned Iranian banks in Iran's STFI counterparty. "], "subsections": []}, {"section_title": "EU Antiterrorism and Anti-proliferation Actions", "paragraphs": ["While attempting to preserve civilian economic engagement with Iran, the European countries have sought to support U.S. efforts to counter Iran's terrorism and proliferation activities. ", "In December 2018, Albania expelled Iran's ambassador and one other Iranian diplomat for involvement in a terrorism plot that was thwarted. In January 2019, the EU added Iran's intelligence service (MOIS) and two intelligence operatives to its terrorism-related sanctions list in response to allegations of Iranian terrorism plotting in Europe. Germany followed that move by denying landing rights to Iran's Mahan Air, which the United States has designated as a terrorism supporting entity. "], "subsections": []}, {"section_title": "SWIFT Electronic Payments System", "paragraphs": ["The management of the Brussels-based Swift electronic payments system has sought to balance financial risks with the policies of the EU governments. In March 2012, SWIFT acceded to an EU request to expel sanctioned Iranian banks. Some Iranian banks were still able to conduct electronic transactions with the European Central Bank via the \"Target II\" system. EU diplomats indicated they would not comply with U.S. requests to ask SWIFT to expel Iranian banks again, and no EU request to SWIFT to again expel sanctioned Iranian banks was made. However, SWIFT is run by an independent board and seeks to avoid risk of U.S. penalties. In late 2018, the system again disconnected the Iranian banks that were \"relisted\" for U.S. sanctions as of November 5, 2018. "], "subsections": []}]}, {"section_title": "China and Russia", "paragraphs": ["Russia and China, two permanent members of the U.N. Security Council and parties to the JCPOA, historically have imposed only those sanctions required by Security Council resolutions. Both governments opposed the U.S. withdrawal from the JCPOA. Many observers expect that, because companies in both countries have limited U.S. exposure and are strongly influenced by their governments, much of Iran's trade and economic engagement will shift to China and Russia from EU countries, Japan, and South Korea. "], "subsections": [{"section_title": "Russia", "paragraphs": ["Increasingly close politically primarily on the issue of the conflict in Syria, Iran and Russia have discussed expanding energy and trade cooperation. The two countries reportedly agreed on broad energy development deals during President Putin's visit to Tehran in late October 2017, with an estimated investment value of up to $30 billion, although implementation remains uncertain. In December 2018, Iran signed a free trade deal with the Russia-led \"Eurasian Economic Union,\" suggesting Russian intent not to abide by reimposed U.S. sanctions on Iran. The revenues of Russia's Rosatam conglomerate are likely to be reduced as a consequence of the Trump Administration's May 2019 ending of waivers for some assistance to Iran's nuclear program. ", "In April 2015, Russia lifted its own restriction on delivering the S-300 air defense system that it sold Iran in 2007 but refused to deliver after Resolution 1929 was adopted\u2014even though that Resolution technically did not bar supply of that defensive system. In April 2016, Russia began delivering the five S-300 batteries. Iran's Defense Minister visited Russia in February 2016 to discuss possible future purchases of major combat systems. No sales have been announced. "], "subsections": []}, {"section_title": "China", "paragraphs": ["China is a major factor in the effectiveness of any sanctions regime on Iran because China is Iran's largest oil customer. During 2012-2016, China was instrumental in reducing Iran's total oil exports because it cut its buys from Iran to about 435,000 barrels per day from its 2011 average of 600,000 barrels per day. The State Department asserted that, because China was the largest buyer of Iranian oil, percentage cuts by China had a large impact in reducing Iran's oil sales by volume and China merited an SRE. After sanctions were lifted in early 2016, China increased its purchases of Iranian oil to levels that sometimes exceeded those of 2011. Several Chinese energy firms that invested in Iran's energy sector put those projects on hold in 2012, but resumed or considered resuming work after sanctions were eased in 2016. Chinese firms also took over some EU country energy investments that have been divested after the reimposition of U.S. sanctions. ", "Since the reimposition of U.S. sanctions, China appears to have reduced its oil imports from Iran somewhat (see Table 1 . The Administration gave China a SRE sanctions exception on November 5, 2018, in part to recognize import reductions but also possibly to avoid further complicating U.S. relations with China. However, China reportedly is continuing to import at least some Iranian oil despite the ending of the SRE as of May 2, 2019, in large part on the expectation that the Trump Administration will be hesitant to impose actual sanctions on Chinese banks for continuing to engage with Iran on oil payments. Prior to the expiration of the SREs, China had stockpiled 20 million barrels of Iranian oil at its Dalian port. ", "Sanctions have complicated Iran-China banking and trade relations. During 2012-2016, China settled much of its trade balance with Iran with goods rather than hard currency, which was highly favorable to China financially. Iran's automotive sector obtains a significant proportion of its parts from China, including from China-based Geelran and Chery companies, and Iran's auto parts imports from China often fluctuate depending on the availability of trade financing. Iran and China also have a separate escrow account to pay for China's infrastructure projects in Iran, such as the long Niayesh Tunnel, funded by about $20 billion of Iran's hard currency reserves. However, suggesting that reimposed U.S. sanctions have again complicated Iran-China banking relations, China's Kunlun Bank\u2014an affiliate of China's energy company CNPC and which was sanctioned under CISADA in 2012 as the main channel for money flows between the two countries\u2014reportedly stopped accepting Euro and then China currency-denominated payments from Iran in November 2018. Existing Iranian accounts at the bank presumably can still be used to pay for Iranian imports from China. ", "China's President Xi Jinping visited Iran and other Middle East countries in the immediate aftermath of the JCPOA, and he has stated that Iran is a vital link in an effort to extend its economic influence westward through its \"One Belt, One Road\" initiative. Chinese firms and entrepreneurs are integrating Iran into this vision by modernizing Iran's rail and other infrastructure, particularly where that infrastructure links to that of neighboring countries, including the Sultanate of Oman, funded by loans from China. Iran's place in this initiative offers China's government and firms incentive to avoid cooperating with U.S. sanctions. ", "In April 2018, the Commerce Department (Bureau of Industry and Security, BIS, which administers Export Administration Regulations) issued a denial of export privileges action against China-based ZTE Corporation and its affiliates. The action was taken on the grounds that ZTE did not uphold the terms of March 2017 settlement agreement with BIS over ZTE's shipment of prohibited U.S. telecommunications technology to Iran (and North Korea). On March 27, 2019, OFAC announced a $1.9 million settlement with a Chinese subsidiary of the U.S. Black and Decker tool company for unauthorized exports of tools and parts to Iran. "], "subsections": []}]}, {"section_title": "Japan/Korean Peninsula/Other East Asia", "paragraphs": ["During 2010-2016, Japan and South Korea enforced sanctions on Iran similar to those imposed by the United States and the EU. Both countries cut imports of Iranian oil sharply after 2011, and banks in the two countries restricted Iran's access to the foreign exchange assets Iran held in their banks. From 2016-2018, both countries increased importation of Iranian oil, and Iran has been able to access funds in banks in both countries. Japan exports to Iran significant amounts of chemical and rubber products, as well as consumer electronics. South Korean firms have been active in energy infrastructure construction in Iran, and its exports to Iran are mainly iron, steel, consumer electronics, and appliances\u2014meaning that South Korea could be affected significantly by the May 2019 executive order sanctioning transactions with Iran's minerals and metals sector. ", "Both countries\u2014and their companies\u2014have historically been unwilling to undertake transactions with Iran that could violate U.S. sanctions, and firms in both countries have said they will comply with reimposed U.S. sanctions. South Korea, in particular, sought Administration concurrence to continue to import Iranian condensates (a petroleum product sometimes considered as crude oil), on which South Korea depends. Both countries reduced their Iranian oil purchases to zero in October 2018 and both countries received SRE sanctions exceptions on November 5. Japan resumed some Iranian oil importation in early 2019, and South Korea has been purchasing about 200,000 barrels per day of Iranian condensates. Both countries are widely assessed as likely to cease energy transactions with Iran entirely as a result of the Administration's decision to end SREs as of May 2, 2019, and South Korea reportedly is seeking to replace Iranian condensates supplies with those of Qatar and Australia. ", "The following firms have announced their postures following the U.S. exit from the JCPOA:", "Daelim of South Korea terminated a $2 billion contract to expand an Iranian oil refinery. In late October, Hyundai cancelled a $500 million contract to build a petrochemical plant in Iran, citing \"financing difficulties.\" Car companies Mazda and Toyota of Japan and Hyundai of South Korea have suspended joint ventures to produce cars in Iran. Among banks, South Korea's Woori Bank and Industrial Bank of Korea have partly suspended transactions with Iran. Woori Bank reportedly is only using an Iran Central Bank account held there to process payments for South Korean humanitarian goods sold to Iran. Nomura Holdings of Japan has taken a similar position. The South Korean conglomerate POSCO withdrew from a 2016 deal to build a steel plant in Iran's free trade zone at the port of Chahbahar."], "subsections": [{"section_title": "North Korea", "paragraphs": ["North Korea, like Iran, has been subject to significant international sanctions. North Korea has never pledged to abide by international sanctions against Iran, and it reportedly cooperates with Iran on a wide range of WMD-related ventures, particularly the development of ballistic missiles. A portion of the oil that China buys from Iran (and from other suppliers) is reportedly sent to North Korea, but it is not known if North Korea buys any Iranian oil directly. The potential for North Korea to try to buy Iranian oil illicitly increased in the wake of the adoption in September 2017 of U.N. Security Council sanctions that limit North Korea's importation of oil, but there are no publicly known indications that it is doing so. While serving as Iran's president in 1989, the current Supreme Leader, Ayatollah Ali Khamene'i, visited North Korea. North Korea's titular head of state Kim Yong Nam attended President Rouhani's second inauguration in August 2017, and during his visit signed various technical cooperation agreements of unspecified scope."], "subsections": []}, {"section_title": "Taiwan", "paragraphs": ["Taiwan has generally been a small buyer of Iranian oil. It resumed imports of Iranian oil after sanctions were eased in 2016. Taiwan received an SRE as of November 5, 2018, but has bought no Iranian oil since late 2018. It is unlikely to resume any Iranian oil imports now that the SREs have ended as of May 2, 2019. "], "subsections": []}]}, {"section_title": "South Asia", "paragraphs": [], "subsections": [{"section_title": "India", "paragraphs": ["India cites U.N. Security Council resolutions on Iran as justification for its stances on trade with Iran. During 2011-2016, with U.N. sanctions in force, India's private sector assessed Iran as a \"controversial market\"\u2014a term describing markets that entail reputational and financial risks. India's central bank ceased using a Tehran-based regional body, the Asian Clearing Union, to handle transactions with Iran, and the two countries agreed to settle half of India's oil buys from Iran in India's currency, the rupee. Iran used the rupee accounts to buy India's wheat, pharmaceuticals, rice, sugar, soybeans, auto parts, and other products. ", "India reduced its imports of Iranian oil substantially after 2011, in the process incurring significant costs to retrofit refineries that were handling Iranian crude. However, after sanctions were eased in 2016, India's oil imports from Iran increased to as much as 800,000 bpd in July 2018\u2014well above 2011 levels. Indian firms resumed work that had been ended or slowed during 2012-2016. India also paid Iran the $6.5 billion it owed for oil purchased during 2012-2016.", "India's cooperation with reimposed U.S. sanctions is mixed because no U.N. sanctions have been reimposed. In June 2018, the two countries again agreed to use rupee accounts for their bilateral trade. Nonetheless, India's purchases of Iranian oil appear to have fallen from levels of most of 2018, but volumes remain substantial. India received the SRE exception on November 5, 2018. Because some Indian banks do not have or seek a presence in the United States, it was widely expected that India and Iran will work out alternative payment arrangements under which India will continue importing at least some Iranian oil despite the end of the SRE as of May 2, 2019. However, Indian officials said in early May 2019 that India would comply with U.S. sanctions and find alternative suppliers, although some industry sources indicate that Indian refiners might still be buying some Iranian oil as of mid-May 2019. ", "In 2015, India and Iran agreed that India would help develop Iran's Chahbahar port that would enable India to trade with Afghanistan unimpeded by Pakistan. With sanctions lifted, the project no longer entails risk to Indian firms involved. In May 2016, Indian Prime Minister Narendra Modi visited Iran and signed an agreement to invest $500 million to develop the port and related infrastructure. Construction at the port is proceeding. As noted above, the Administration has utilized the \"Afghanistan reconstruction\" exception under Section 1244(f) of IFCA to allow for firms to continue developing it. "], "subsections": []}, {"section_title": "Pakistan", "paragraphs": ["One test of Pakistan's compliance with sanctions was a pipeline project that would carry Iranian gas to Pakistan\u2014a project that U.S. officials on several occasions stated would be subject to ISA sanctions. Despite that threat, agreement on the $7 billion project was finalized on June 12, 2010, and construction was formally inaugurated in a ceremony attended by the Presidents of both countries on March 11, 2013. In line with an agreed completion date of mid-2014, Iran reportedly completed the pipeline on its side of the border. China's announcement in April 2015 of a $3\u00a0billion investment in the project seemed to remove financial hurdles to the line's completion, and the JCPOA removed sanctions impediments to the project. However, during President Hassan Rouhani's visit to Pakistan in March 2016, Pakistan still did not commit to complete the line, and observers note that there are few indications of progress on the project. In 2009, India dissociated itself from the project over concerns about the security of the pipeline, the location at which the gas would be transferred to India, pricing of the gas, and tariffs. "], "subsections": []}]}, {"section_title": "Turkey/South Caucasus", "paragraphs": ["Iran has substantial economic relations with Turkey and the countries of the South Caucasus. "], "subsections": [{"section_title": "Turkey", "paragraphs": ["Turkey buys about 40% of its oil from Iran, and bought about 6% of its total gas imports from Iran in 2017. Turkey reduced purchases of Iranian oil during 2012-2016, but its buys returned to 2011 levels after sanctions on Iran were eased in 2016. Turkey's leaders have said that the country will not cooperate with reimposed U.S. sanctions, but its oil import volumes from Iran have fallen since late 2018. Turkey received an SRE sanctions exemption on November 5, 2018, and its officials strongly indicated in late April 2019 that Turkey expected to receive another SRE as of the May 2, 2019, expiration. Turkey's insistence on being allowed to buy Iranian oil without fear of U.S. penalty\u2014as well as its overall dependence on Iranian oil\u2014might underpin a reported decision by Turkey to continue buying at least some Iranian oil despite the expiration of the SRE exception. ", "Turkey also is Iran's main gas customer via a pipeline built in 1997, which at first was used for a swap arrangement under which gas from Turkmenistan was exported to Turkey. Direct Iranian gas exports to Turkey through the line began in 2001 (with additional such exports through a second pipeline built in 2013), but no ISA sanctions were imposed on the grounds that the gas supplies were crucial to Turkey's energy security. Prior to the October 2012 EU ban on gas purchases from Iran, this pipeline was a conduit for Iranian gas exports to Europe (primarily Bulgaria and Greece). ", "Pre-JCPOA, in response to press reports that Turkey's Halkbank was settling Turkey's payments to Iran for energy with gold, U.S. officials testified on May 15, 2013, that the gold going from Turkey to Iran consists mainly of Iranian private citizens' purchases of Turkish gold to hedge against the value of the rial . A U.S. criminal case involved a dual Turkish-Iranian gold dealer, Reza Zarrab, arrested in the United States in 2016 for allegedly violating U.S. sanctions prohibiting helping Iran deal in precious metals. ", "Among past cases of possible Turkish violations of Iran sanctions, on November 7, 2016, the U.S. Attorney for New York's Southern District indicted several individuals for using money services businesses in Turkey and in the UAE for conspiring to conceal from U.S. banks transactions on behalf of and for the benefit of sanctioned Iranian entities, including Mahan Air. On January 6, 2014, the Commerce Department blocked a Turkey-based firm (3K Aviation Consulting and Logistics) from re-exporting two U.S.-made jet engines to Iran's Pouya Airline. "], "subsections": []}, {"section_title": "Caucasus and Caspian Sea", "paragraphs": ["The rich energy reserves of the Caspian Sea create challenges for U.S. efforts to deny Iran financial resources. The Clinton and George W. Bush Administrations cited potential ISA sanctions to deter oil pipeline routes involving Iran\u2014thereby successfully promoting an the alternate route from Azerbaijan (Baku) to Turkey (Ceyhan), which became operational in 2005. Section 6 of Executive Order 13622 exempts from sanctions any pipelines that bring gas from Azerbaijan to Europe and Turkey. ", "Agreements reached in 2018 between Russia and the Caspian Sea states on the legal division of the sea could spawn new energy development in the Caspian. Iran's energy firms will undoubtedly become partners in joint ventures to develop the Caspian's resources, and Iran's involvement in such projects will require the Administration to determine whether to impose sanctions. ", "Iran's relations with Azerbaijan\u2014even though that country is inhabited mostly by Shiite Muslims\u2014are hindered by substantial political and ideological differences. Iran and Azerbaijan have in recent years tried to downplay these differences for joint economic benefit, and they have been discussing joint energy and infrastructure projects among themselves and with other powers, including Russia. ", "Iran and Armenia\u2014Azerbaijan's adversary\u2014have long enjoyed extensive economic relations: Armenia is Iran's largest direct gas customer, after Turkey. In May 2009, Iran and Armenia inaugurated a natural gas pipeline between the two, built by Gazprom of Russia. No determination of ISA sanctions was issued. Armenia has said its banking controls are strong and that Iran is unable to process transactions illicitly through Armenia's banks. However, observers in the South Caucasus assert that Iran is using Armenian banks operating in the Armenia-occupied Nagorno-Karabakh territory to circumvent international financial sanctions. "], "subsections": []}]}, {"section_title": "Persian Gulf States and Iraq82", "paragraphs": ["The Gulf Cooperation Council states (GCC: Saudi Arabia, UAE, Qatar, Kuwait, Bahrain, and Oman) are oil exporters and close allies of the United States. As Iranian oil exports decreased after 2012, the Gulf states supplied the global oil market with additional oil. Since the U.S. exit from the JCPOA, U.S. officials have worked with Gulf oil exporters to ensure that the global oil market is well supplied even as Iranian oil exports fall. And the State Department's SRE announcement on April 22, 2019, indicated that the Administration is looking to Saudi Arabia and the UAE, in particular, to keep the global oil market well supplied after SREs end on May 2, 2019. Still, in order not to antagonize Iran, the Gulf countries maintain relatively normal trade with Iran. Some Gulf-based shipping companies, such as United Arab Shipping Company reportedly continued to pay port loading fees to such sanctioned IRGC-controlled port operators as Tidewater. ", "The UAE has attracted U.S. scrutiny because of the large presence of Iranian firms there, and several UAE-based firms have been sanctioned, as noted in the tables at the end of the report. U.S. officials praised the UAE's March 1, 2012, ban on transactions with Iran by Dubai-based Noor Islamic Bank, which Iran reportedly used to process oil payments. Some Iranian gas condensates (120,000 barrels per day) were imported by Emirates National Oil Company (ENOC) and refined mostly into jet fuel. Subsequent to the May 8, 2018, U.S. exit from the JCPOA, ENOC officials said they were trying to find alternative supplies of the hydrocarbon products it buys from Iran.", "Iran and several of the Gulf states have had discussions on various energy and related projects, but few have materialized because of broad regional disputes between Iran and the Gulf states. Kuwait and Iran have held talks on the construction of a 350-mile pipeline that would bring Iranian gas to Kuwait, but the project does not appear to be materializing. Bahrain's discussions of purchasing Iranian gas have floundered over sharp political differences. Qatar and Iran share the large gas field in the Gulf waters between them, and their economic relations have become closer in light of the isolation of Qatar by three of its GCC neighbors, Saudi Arabia, UAE, and Bahrain. The only GCC state that has moved forward with economic joint ventures with Iran is Oman, particularly in the development of Oman's priority project to expand its port at Al Duqm port, which Oman and Iran envision as a major hub for regional trade. In September 2015, the two countries also recommitted to a gas pipeline joint venture. ", "Omani banks, some of which operate in Iran, were used to implement some of the financial arrangements of the JPA and JCPOA. As a consequence, a total of $5.7 billion in Iranian funds had built up in Oman's Bank Muscat by the time of implementation of the JCPOA in January 2016. In its efforts to easily access these funds, Iran obtained from the Office of Foreign Assets Control (OFAC) of the Treasury Department a February 2016 special license to convert the funds (held as Omani rials) to dollars as a means of easily converting the funds into Euros. Iran ultimately used a different mechanism to access the funds as hard currency, but the special license issuance resulted in a May 2018 review by the majority of the Senate Permanent Subcommittee on Investigation to assess whether that license was consistent with U.S. regulations barring Iran access to the U.S. financial system. "], "subsections": [{"section_title": "Iraq", "paragraphs": ["Iraq's attempts to remain close to its influential neighbor, Iran, have complicated Iraq's efforts to rebuild its economy yet avoid running afoul of the United States and U.S. sanctions on Iran. As noted above, in 2012, the United States sanctioned an Iraqi bank that was a key channel for Iraqi payments to Iran, but lifted those sanctions when the bank reduced that business. Iraq presented the United States with a sanctions-related dilemma in July 2013, when it signed an agreement with Iran to buy 850 million cubic feet per day of natural gas through a joint pipeline that enters Iraq at Diyala province and would supply several power plants. No sanctions were imposed on the arrangement, which was agreed while applicable sanctions were in effect. In May 2015, the Treasury Department sanctioned Iraq's Al Naser Airlines for helping Mahan Air (sanctioned entity) acquire nine aircraft. ", "The Trump Administration reportedly is seeking to accommodate Iraq's need for Iranian electricity supplies and other economic interactions. As of October 2018, Iraq reportedly has discontinued crude oil swaps with Iran\u2014about 50,000 barrels per day\u2014in which Iranian oil flowed to the Kirkuk refinery and Iran supplied oil to Iraq's terminals in the Persian Gulf. ", "The Administration reportedly has given Iraq waiver permission\u2014apparently under Section 1247 of IFCA\u2014to buy the Iranian natural gas that runs Iraq's power plants. That section provides for waivers of up to 180 days, but press reports indicate that the Administration has limited the waiver period to 90-day increments to give Iraq time to line up alternative supplies and equipment to generate electricity. The latest waiver rollover was in March 2019 and extends until June 2019. Iranian arms exports to Shia militias in Iraq remain prohibited by Resolution 2231, but no U.N. sanctions on that activity have been imposed to date. "], "subsections": []}]}, {"section_title": "Syria and Lebanon", "paragraphs": ["Iran has extensive economic relations with both Syria and Lebanon, countries where Iran asserts that core interests are at stake. The compliance of Syrian or Lebanese banks and other institutions with international sanctions against Iran was limited even during 2012-2015. Iran reportedly uses banks in Lebanon to skirt financial sanctions, according to a wide range of observers, and these banks are among the conduits for Iran to provide financial assistance to Hezbollah as well as to the regime of Syrian President Bashar Al Assad. However, some reports indicate that sanctions on Iran are adversely affecting Hezbollah's finances to the point where the party has had to cut expenses, request donations, and delay or reduce payments to its fighters. ", "In January 2017, Iran and Syria signed a series of economic agreements giving Iranian firms increased access to Syria's mining, agriculture, and telecommunications sectors, as well as management of a Syrian port. "], "subsections": []}, {"section_title": "Africa and Latin America", "paragraphs": ["During the presidency of Ahmadinejad, Iran looked to several Latin American and African countries to try to circumvent international sanctions. For the most part, however, Iran's trade and other business dealings with these regions are apparently too modest to weaken the effect of international sanctions significantly. "], "subsections": []}, {"section_title": "World Bank and WTO", "paragraphs": ["The united approach to sanctions on Iran during 2010-2016 carried over to international lending to Iran. The United States representative to international financial institutions is required to vote against international lending, but that vote, although weighted, is not sufficient to block international lending. No new loans have been approved to Iran since 2005, including several environmental projects under the Bank's \"Global Environmental Facility\" (GEF). The initiative slated more than $7.5 million in loans for Iran to dispose of harmful chemicals. The 2016 lifting of sanctions increased international support for new international lending to Iran, but the U.S. exit from the JCPOA will likely lead to differences between the United States and other lenders over extending any new loans to Iran. ", "Earlier, in 1993, the United States voted its 16.5% share of the World Bank against loans to Iran of $460 million for electricity, health, and irrigation projects, but the loans were approved. To block that lending, the FY1994-FY1996 foreign aid appropriations ( P.L. 103-87 , P.L. 103-306 , and P.L. 104-107 ) cut the amount appropriated for the U.S. contribution to the bank by the amount of those loans, contributing to a temporary halt in new bank lending to Iran. But, in May 2000, the United States' allies outvoted the United States to approve $232 million in loans for health and sewage projects. During April 2003-May 2005, a total of $725 million in loans were approved for environmental management, housing reform, water and sanitation projects, and land management projects, in addition to $400 million in loans for earthquake relief."], "subsections": [{"section_title": "WTO Accession", "paragraphs": ["An issue related to sanctions is Iran's request to join the World Trade Organization (WTO). Iran began accession talks in 2006 after the George W. Bush Administration dropped its objection to Iran's application as part of an effort to incentivize Iran to reach an interim nuclear agreement. The lifting of sanctions presumably paves the way for talks to accelerate, but the accession process generally takes many years. Accession generally takes place by consensus of existing WTO members. Iran's accession might be complicated by the requirement that existing members trade with other members; as noted above, the U.S. ban on trade with Iran remains in force. The Trump Administration does not advocate Iran's admission to that convention."], "subsections": []}]}]}, {"section_title": "Effectiveness of Sanctions on Iranian Behavior", "paragraphs": ["It can be argued that the question \"are sanctions on Iran 'working'?\" should be assessed based on an analysis of the goals of the sanctions. The following sections try to assess the effectiveness of Iran sanctions according to a number of criteria. "], "subsections": [{"section_title": "Effect on Iran's Nuclear Program and Strategic Capabilities", "paragraphs": ["The international sanctions regime of 2011-2016 is widely credited with increasing Iran's willingness to accept restraints on its nuclear program, as stipulated in the JCPOA. Hassan Rouhani was elected president of Iran in June 2013 in part because of his stated commitment to achieving an easing of sanctions and ending Iran's international isolation. Still, as to the long-term effects of sanctions, the intelligence community assesses that it \"does not know\" whether Iran plans to eventually develop a nuclear weapon, and the JCPOA restrictions begin to expire in 2025. ", "Iran remained in the JCPOA despite the U.S. exit from it, but Rouhani has announced that, in response to the ending of U.S. nuclear waivers and other steps such as the FTO designation of the IRGC, Iran will cease abiding by JCPOA restrictions on stockpiles of low-enriched uranium and heavy water. Still, Iran has not withdrawn from the JCPOA outright. Yet, Iranian leaders have not, to date, taken up the Trump Administration's stated offer for negotiations on a new agreement that would cover not only Iran's nuclear program but also its missile program and its regional malign activities. Both President Trump and President Rouhani have publicly said they would accept bilateral talks without conditions, but both leaders generally indicate that the other's demands are too extensive to make such a meeting productive. ", "There is little evidence that even the strict sanctions of 2011-2016 slowed Iran's nuclear program or its missile program. And, even though U.S. and EU sanctions remain on Iran's missile programs, U.S. intelligence officials have testified that Iran continues to expand the scale, reach, and sophistication of its ballistic missile arsenal. Still, some U.S. officials have asserted that Iran's nuclear and missile programs might have advanced faster were sanctions not imposed.", "Sanctions have apparently prevented Iran from buying significant amounts of major combat systems since the early 1990s. Iran's indigenous arms industry has grown over the past two decades. U.S. intelligence directors testified in January 2019 that Iran continues to field increasingly lethal weapons systems, including more advanced naval mines and ballistic missiles, small submarines, armed UAVs (unmanned aerial vehicles), coastal defense cruise missile batteries, attack craft, and anti-ship ballistic missiles. Iran has been able to acquire some defensive systems that were not specifically banned by Resolution 2231; Russia delivered the S-300 air defense system in April 2016."], "subsections": []}, {"section_title": "Effects on Iran's Regional Influence", "paragraphs": ["Neither the imposition, lifting, nor reimposition of strict sanctions has appeared to affect Iran's regional behavior. Iran intervened extensively in Syria, Iraq, and Yemen during the 2012-2016 period when sanctions had a significant adverse effect on Iran's economy. Iran apparently is able to manufacture domestically much of the weaponry it supplies to its regional allies. Iran has remained engaged in these regional conflicts since sanctions were eased in early 2016. ", "On the other hand, press reports since March 2019 note that Iran has scaled back payments to Hezbollah and to various pro-Iranian fighters in Syria, perhaps as a reflection of Iranian financial difficulties. An alternate explanation is that Iran is adjusting its expenditures in the Syria conflict to the reduced activity on the battlefield there. The Administration points to reports of the reduced payments as evidence that its \"maximum pressure\" campaign on Iran is working.", "The Administration has asserted that the easing of sanctions during the period of U.S. implementation of the JCPOA (2016-2018) caused Iran to expand its regional activities. President Trump stated that Iran's defense budget had increased 40% during that time. He stated on August 6, 2018, that \"Since the deal [JCPOA] was reached, Iran's aggression has only increased. The regime has used the windfall of newly accessible funds it received under the JCPOA to build nuclear-capable missiles, fund terrorism, and fuel conflict across the Middle East and beyond.... The reimposition of nuclear-related sanctions through today's actions further intensifies pressure on Tehran to change its conduct.\" However, most outside Iran experts who assess Iran's regional activities asserted that Iran's regional activities were not facilitated by the easing of sanctions during that period, but instead increased because of the opportunities to expand its influence that were provided by Iran by the region's several conflicts. ", "In terms of congressional oversight, a provision of the FY2016 Consolidated Appropriation ( P.L. 114-113 ) required an Administration report to Congress on how Iran has used the financial benefits of sanctions relief. And, a provision of the Iran Nuclear Agreement Review Act ( P.L. 114-17 ) requires that a semiannual report on Iran's compliance with the JCPOA include information on any Iranian use of funds to support acts of terrorism. "], "subsections": []}, {"section_title": "Political Effects", "paragraphs": ["No U.S. Administration, including the Trump Administration, has asserted that sanctions on Iran are intended to bring about the change of Iran's regime, although some experts assert that this might be a desired Trump Administration goal. Iranians seeking reintegration with the international community and sanctions relief helped propel the relatively moderate Rouhani to election victories in both 2013 and 2017. Many Iranians cheered the finalization of the JCPOA on July 15, 2015, undoubtedly contributing to Supreme Leader Khamene'i's acceptance of the deal. Despite the Trump Administration's withdrawal from the JCPOA and its additional steps to pressure Iran in 2019, there does not appear to be an imminent political threat to Rouhani's grip on his office.", "Still, the IRGC and other hardliners control domestic security and the judiciary, and these factions have criticized Rouhani for remaining in the JCPOA despite the U.S. exit. In July 2018, the IRGC and Iran's parliament ( Majles ) called for cabinet changes to address economic mismanagement and, in September 2018, the Majles compelled Rouhani to be questioned about the economic situation. In July 2018, Rouhani replaced Iran's Central Bank governor as an apparent gesture to indicate responsiveness to economic concerns. In February 2019, apparently under pressure from hardliners, Foreign Minister Mohammad Javad Zarif announced his resignation, but Rouhani\u2014apparently as a challenge to the hardliners\u2014did not accept the resignation and reinstated him. ", "Some assert that the sanctions are sustaining the periodic unrest that has erupted in Iran since late 2017. In 2018 and thus far in 2019, labor strikes and unrest among women protesting the strict public dress code have continued, although not at a level that appears to threaten the regime. Other protests occurred over flooding in the southwest in March-April 2019, but again not to the level where the regime was threatened. Still, some protesters complain that the country's money is being spent on regional interventions rather than on the domestic economy. "], "subsections": []}, {"section_title": "Economic Effects", "paragraphs": ["The U.S. sanctions enacted since 2011, when fully implemented, take a substantial toll on Iran's economy. ", "GDP and Employment Trends . At the height of the sanctions regime in April 2015, then-Treasury Secretary Jacob Lew said that Iran's gross domestic product (GDP) was 15%-20% smaller than it would have been had global sanctions not been imposed in 2011. The unemployment rate rose to about 20% by 2014, and many Iranians worked unpaid or partially paid. In 2015, Iran's GDP was about $400 billion at the official exchange rate ($1.4 trillion if assessed on a purchasing power parity [PPP] basis). The 2016 lifting of sanctions enabled Iran to achieve 7% annual growth during 2016-2018. The reimposition of U.S. sanctions in mid-2018 caused Iran's GDP to decline 2% from March 2018 to March 2019, and it is projected to decline by more than 5% during March 2019-March 2020. Oil Exports . Global Iran sanctions (2011-2016) reduced Iran's crude oil sales about 60% from the 2.5 mbd level of 2011, causing Iran to lose over $160 billion in oil revenues during that time. The JCPOA sanctions relief enabled Iran to increase its oil exports to 2011 levels, but the reimposition of U.S. sanctions has driven Iran's oil exports to under 1 mbd as of the end of April 2019. The Trump Administration said in an April 2019 factsheet that the reimposition of sanctions since May 2018 has cost Iran $10 billion in lost oil revenues. The May 2019 end to SREs was an effort to cause Iran's oil exports to fall to zero, although results will depend on whether China, India, and Turkey continue buying Iran oil. Bankin g. Global banks mostly left the Iranian market after 2011 because of the international sanctions in force. Banks were hesitant to reenter the Iran market after the 2016 easing of sanctions because of (1) reported concerns that the United States might still sanction their transactions with Iran; (2) a lack of transparency in Iran's financial sector; (3) lingering concerns over past financial penalties for processing Iran-related transactions in the U.S. financial system; and (4) extra costs and procedures caused by the inability to process Iran-related transactions through the U.S. financial system and/or easily use dollars in Iran-related transactions. Those banks that did reenter the Iran market have, as a consequence of the U.S. exit from the JCPOA, stopped or limited their transactions with Iran. Shipping Insurance . Iran was able after 2016 to obtain shipping insurance as a result of U.S. waivers given to numerous insurers, as discussed above. However, as of August 7, 2018, U.S.-based shipping reinsurers no longer have active U.S. waivers, and Iran has been compelled to self-insure most of its shipments. Hard Currency A ccessib ility . The 2011-2016 sanctions regime prevented Iran from accessing the hard currency it was being paid for its oil. By January 2016, Iran's hard currency reserves held in foreign banks stood at about $115 billion. Iranian officials stated in February 2016 that sanctions relief had allowed them to access the funds, and it could move the funds via renewed access to the SWIFT electronic payments system. Of this amount, about $60 billion was due to creditors such as China ($20 billion) or to repay nonperforming loans extended to Iranian energy companies working in the Caspian and other areas in Iran's immediate neighborhood. After 2016, Iran kept most of its reserves abroad for cash management and to pay for imports, but Iran's foreign reserves are again restricted by reimposed U.S. sanctions. Currency Decline . Sanctions caused the value of the rial on unofficial markets to decline about 60% from January 2012 until the 2013, when the election of Rouhani stabilized the rial at about 35,000 to the dollar. The reimposition of U.S. sanctions in 2018 caused the rial 's value to plummet to 150,000 to the dollar by the November 5, 2018. The value later recovered somewhat to about 100,000 to one at the beginning of 2019. The downturn has made it difficult for Iranian merchants to import goods or properly price merchandise, and the government has banned the importation of 1,400 goods to preserve hard currency. Inflation . The drop in value of the currency caused inflation to accelerate during 2011-2013 to a rate of about 60%\u2014a higher figure than that acknowledged by Iran's Central Bank. As sanctions were eased, inflation slowed to the single digits by June 2016, meeting the Central Bank's stated goal. However, in 2017, the inflation rate reportedly increased back to double digits, and turmoil surrounding the possible U.S. exit from the JCPOA caused inflation to increase to about 15% by late June 2018. It increased significantly, to nearly 40%, by the end of 2018. Industrial/Auto Production and Sales . Iran's light-medium manufacturing sector was expanding prior to 2011, but its dependence on imported parts left the sector vulnerable to sanctions that reduced the availability of import financing. Iran's vehicle production fell by about 60% from 2011 to 2013. Press reports say that the auto sector, and manufacturing overall, rebounded since sanctions were lifted, but is declining again in light of the announced divestments by auto makers following the U.S. exit from the JCPOA. Researchers at Iran's parliament estimated in September 2018 that auto production would decline 45% by March 2019, and other industrial production would drop by 5%. U.S.-Iran Trade. U.S.-Iran trade remains negligible. In 2015, the last full year before JCPOA implementation, the United States sold $281 million in goods to Iran and imported $10 million worth of Iranian products. The slight relaxation of the U.S. import ban stemming from the JCPOA likely accounts for the significant increase in imports from Iran in 2016 to $86 million. U.S. imports from Iran were about $63 million in 2017 and about that same amount in 2018. U.S. exports to Iran remained low for all of 2016 and 2017 ($172 million and $137 million, respectively) but spiked to $440 million for 2018. "], "subsections": [{"section_title": "Iran's Economic Coping Strategies", "paragraphs": ["Iran had some success mitigating the economic effect of sanctions. These strategies will likely be used to try to cope with reimposed U.S. sanctions. ", "Export Diversification . Over the past 10 years, Iran has promoted sales of nonoil products such as minerals, cement, urea fertilizer, and other agricultural and basic industrial goods. Such \"nonoil\" exports now generate much of the revenue that funds Iran's imports. This diversification might have been a factor in the Trump Administration decision in May 2019 to sanction Iran's mineral and metals sector (see above). Even in the energy sector, Iran has promoted the sale of oil products such as petrochemicals and condensates, earning about $4.7 billion in revenue from that source by 2016. ", "Reallocation of Investment Funds and Import Substitution . Sanctions compelled some Iranian manufacturers to increase domestic production of some goods as substitutes for imports. This trend has been hailed by Iranian economists and Supreme Leader Khamene'i, who supports building a \"resistance economy\" that is less dependent on imports and foreign investment. ", "Partial Privatization/IRGC in the Economy . Over the past few years, portions of Iran's state-owned enterprises have been transferred to the control of quasi-governmental or partially private entities. Some of them are incorporated as holding companies, foundations, or investment groups. Based on data from the Iranian Privatization Organization, there are about 120 such entities that account for a significant proportion of Iran's GDP. Rouhani has sought to push the IRGC out of Iran's economy through divestment, to the extent possible. However, a substantial part of the economy remains controlled by government-linked conglomerates, including the IRGC. Although estimates vary widely, the IRGC's corporate affiliates are commonly assessed as controlling at least 20% of Iran's economy, although there is little available information on the degree of IRGC-affiliated ownership stakes.", "Subsidy Reductions . In 2007, the Ahmadinejad government began trying to wean the population off of generous subsidies by compensating families with cash payments of about $40 per month. Gasoline prices were raised to levels similar to those in other regional countries, and far above the subsidized price of 40 cents per gallon. Rouhani has continued to reduce subsidies, including by raising gasoline and staple food prices further and limiting the cash payments to only those families who could claim financial hardship. Rouhani also has improved collections of taxes and of price increases for electricity and natural gas utilities.", "Import Restrictions /Currency Controls . To conserve hard currency, Iran has at times reduced the supply of hard currency to importers of luxury goods, such as cars or cellphones, in order to maintain hard currency supplies to importers of essential goods. These restrictions eased after sanctions were lifted in 2016 but were reimposed in 2018 to deal with economic unrest and the falling value of the rial . "], "subsections": []}]}, {"section_title": "Effect on Energy Sector Development", "paragraphs": ["The Iran Sanctions Act (ISA) was enacted in large part to reduce Iran's oil and gas production capacity over the longer term by denying Iran the outside technology and investment to maintain or increase production. U.S. officials estimated in 2011 that Iran had lost $60 billion in investment in the sector as numerous major firms pulled out of Iran. Iran says it needs $130 billion-$145 billion in new investment by 2020 to keep oil production capacity from falling. Further development of the large South Pars gas field alone requires $100 billion. Table B-1 at the end of this report discusses various Iranian oil and gas fields and the fate of post-1999 investments in them. ", "During 2012-2016, there was little development activity at Iran's various oil and gas development sites, as energy firms sought to avoid sanctions. Some foreign investors resold their equity stakes to Iranian companies. However, the Iranian firms are not as technically capable as the international firms that have withdrawn. The lifting of sanctions in 2016 lured at least some foreign investors back into the sector, encouraged by Iran's more generous investment terms under a concept called the \"Iran Petroleum Contract.\" That contract gives investing companies the rights to a set percentage of Iran's oil reserves for 20-25 years. Iran signed a number of new agreements with international energy firms since mid-2016 but, as noted in the tables and other information above, major energy firms have begun to divest in response to the U.S. exit from the JCPOA. ", "Sanctions relief also opened opportunities for Iran to resume developing its gas sector. Iran has used its gas development primarily to reinject into its oil fields rather than to export. Iran exports about 3.6 trillion cubic feet of gas, primarily to Turkey and Armenia. Sanctions have rendered Iran unable to develop a liquefied natural gas (LNG) export business. However, it was reported in March 2017 that the Philippine National Oil Company is seeking to build a 2-million-ton LNG plant in Iran, suggesting that patent issues do not necessarily preclude Iran from pursuing LNG. ", "With respect to gasoline, the enactment of the CISADA law targeting sales of gasoline to Iran had a measurable effect. Several suppliers stopped selling gasoline to Iran once enactment appeared likely, and others ceased supplying Iran after enactment. Gasoline deliveries to Iran fell from about 120,000 barrels per day before CISADA to about 30,000 barrels per day immediately thereafter, although importation later increased to about 50,000 barrels per day. As a result, Iran expanded several of its refineries and, in 2017, Iranian officials said Iran had become largely self-sufficient in gasoline production. "], "subsections": []}, {"section_title": "Human Rights-Related Effects", "paragraphs": ["It is difficult to draw any direct relationship between sanctions and Iran's human rights practices. Recent human rights reports by the State Department and the U.N. Special Rapporteur on Iran's human rights practices assess that there was only modest improvement in some of Iran's practices in recent years, particularly relaxation of enforcement of the public dress code for women. The altered policies cannot necessarily be attributed to sanctions pressure or sanctions relief, although some might argue that sanctions-induced economic dissatisfaction emboldened Iranians to protest and to compel the government to relax some restrictions. ", "Since at least 2012, foreign firms have generally refrained from selling the Iranian government equipment to monitor or censor social media use. Such firms include German telecommunications firm Siemens, Chinese internet infrastructure firm Huawei, and South African firm MTN Group. In October 2012, Eutelsat, a significant provider of satellite service to Iran's state broadcasting establishment, ended that relationship after the EU sanctioned the then head of the Islamic Republic of Iran Broadcasting (IRIB), Ezzatollah Zarghami. However, the regime retains the ability to monitor and censor social media use."], "subsections": []}, {"section_title": "Humanitarian Effects", "paragraphs": ["During 2012-2016, sanctions produced significant humanitarian-related effects, particularly in limiting the population's ability to obtain expensive Western-made medicines, such as chemotherapy drugs. Some of the scarcity was caused by banks' refusal to finance such sales, even though doing so was not subject to any sanctions. Some observers say the Iranian government exaggerated reports of medicine shortages to generate opposition to the sanctions. Other accounts say that Iranians, particularly those with connections to the government, took advantage of medicine shortages by cornering the import market for key medicines. These shortages resurfaced in 2018 following the reimposition of sanctions by the Trump Administration. For example, reports indicate that the reimposition of U.S. sanctions may be inhibiting the flow of humanitarian goods to the Iranian people and reportedly contributing to shortages in medicine to treat ailments such as multiple sclerosis and cancer. Other reports indicate that Cargill, Bunge, and other global food traders have halted supplying Iran because of the absence of trade financing. And, Iranian officials and some international relief groups have complained that U.S. sanctions inhibited the ability to provide relief to flooding victims in southwestern Iran in March-April 2019. ", "EU officials have called on the United States to produce a \"white list\" that would \"give clear guidelines about what channels European banks and companies should follow to conduct legitimate [humanitarian] transactions with Iran without fear of future penalties.\" Iranian officials have also accused U.S. sanctions of hampering international relief efforts for victims of vast areas of flooding in southwestern Iran in the spring of 2019. ", "Other reports say that pollution in Tehran and other big cities is made worse by sanctions because Iran produces gasoline itself with methods that cause more impurities than imported gasoline. As noted above, Iran's efforts to deal with environmental hazards and problems might be hindered by denial of World Bank lending for that purpose. ", "In the aviation sector, some Iranian pilots complained publicly that U.S. sanctions caused Iran's passenger airline fleet to deteriorate to the point of jeopardizing safety. Since the U.S. trade ban was imposed in 1995, 1,700 passengers and crew of Iranian aircraft have been killed in air accidents, although it is not clear how many of the crashes, if any, were due to difficultly in acquiring U.S. spare parts. "], "subsections": [{"section_title": "Air Safety", "paragraphs": ["Sanctions relief ameliorated at least some of the humanitarian difficulties discussed above. In the aviation sector, several sales of passenger aircraft have been announced, and licensed by the Department of the Treasury, since Implementation Day. However, as noted, the licenses are being revoked and deliveries will not proceed beyond November 2018. ", "In February 2016, Iran Air\u2014which was delisted from U.S. sanctions as of Implementation Day\u2014announced it would purchase 118 Airbus commercial aircraft at an estimated value of $27 billion. Airbus received an OFAC license and three of the aircraft have been delivered. Airbus has said it will not deliver any more aircraft to Iran because its U.S. Treasury Department license is revoked. In December 2016, Boeing and Iran Air finalized an agreement for Boeing to sell the airline 80 passenger aircraft and lease 29 others. Boeing received a specific license for the transaction. The deal has a total estimated value of about $17 billion, with deliveries scheduled to start later in 2018. The Boeing sale is to include 30 of the 777 model. None were delivered, and Boeing cancelled planned deliveries to Iran after its export licenses were revoked. In April 2017, Iran's Aseman Airlines signed a tentative agreement to buy at least 30 Boeing MAX passenger aircraft. No U.S. license for this sale was announced prior to the U.S. exit from the JCPOA. The airline is owned by Iran's civil service pension fund but managed as a private company. In June 2017, Airbus agreed to tentative sales of 45 A320 aircraft to Iran's Airtour Airline, and of 28 A320 and A330 aircraft to Iran's Zagros Airlines. No U.S. license for the sale was announced prior to the U.S. exit from the JCPOA. ATR, owned by Airbus and Italy's Leonardo, sold 20 aircraft to Iran Air. It delivered eight aircraft by the time of the U.S. JCPOA exit. It reportedly has been given temporary U.S. Treasury Department licenses to deliver another five after the August 6, 2018, initial sanctions reimposition in which its U.S. export licenses were to be revoked. "], "subsections": []}]}]}, {"section_title": "Post-JCPOA Sanctions Legislation", "paragraphs": ["JCPOA oversight and implications, and broader issues of Iran's behavior have been the subject of legislation. "], "subsections": [{"section_title": "Key Legislation in the 114th Congress", "paragraphs": ["The JCPOA states that as long as Iran fully complies with the JCPOA, the sanctions that were suspended or lifted shall not be reimposed on other bases (such as terrorism or human rights). The Obama Administration stated that it would adhere to that provision but that some new sanctions that seek to limit Iran's military power, its human rights abuses, or its support for militant groups might not necessarily violate the JCPOA."], "subsections": [{"section_title": "Iran Nuclear Agreement Review Act (P.L. 114-17)", "paragraphs": ["The Iran Nuclear Agreement Review Act of 2015 (INARA, P.L. 114-17 ) provided for a 30- or 60-day congressional review period after which Congress could pass legislation to approve or to disapprove of the JCPOA, or do nothing. No such legislation of disapproval was enacted. ", "There are several certification and reporting requirements under INARA, although most of them clearly no longer apply as a result of the Trump Administration withdrawal: ", "Material Breach Report . The President must report a potentially significant Iranian breach of the agreement within 10 days of acquiring credible information of such. Within another 30 days, the President must determine whether this is a material breach and whether Iran has cured the breach. Certification Report . The President is required to certify, every 90 days, that Iran is \"transparently, verifiably, and fully implementing\" the agreement, and that Iran has not taken any action to advance a nuclear weapons program. The latest certification was submitted on July 17, 2017, and another one was due on October 15, 2017. On October 13, 2017, the Administration declined to make that certification, on the grounds that continued sanctions relief is not appropriate and proportionate to Iran's measures to terminate its illicit nuclear program (Section (d)(6)(iv)(I) of INARA). If a breach is reported, or if the President does not certify compliance, Congress may initiate within 60 days \"expedited consideration\" of legislation that would reimpose any Iran sanctions that the President had suspended through use of waiver or other authority. That 60-day period is to expire on December 12, 2017. Semiannual Report. INARA also requires an Administration report every 180 days on Iran's nuclear program, including not only Iran's compliance with its nuclear commitments but also whether Iranian banks are involved in terrorism financing; Iran's ballistic missile advances; and whether Iran continues to support terrorism. "], "subsections": []}, {"section_title": "Visa Restriction", "paragraphs": ["The FY2016 Consolidated Appropriation ( P.L. 114-113 ) contained a provision amending the Visa Waiver Program to require a visa to visit the United States for any person who has visited Iraq, Syria, or any terrorism list country (Iran and Sudan are the two aside from Syria still listed) in the previous five years. Iran argued that the provision represented a violation of at least the spirit of the JCPOA by potentially deterring European businessmen from visiting Iran. The Obama Administration issued a letter to Iran stating it would implement the provision in such a way as not to not impinge on sanctions relief, and allowances for Iranian students studying in the United States were made in the implementing regulations. Another provision of that law requires an Administration report to Congress on how Iran has used the benefits of sanctions relief. ", "President Trump has issued and amended executive orders that, in general, prohibit Iranian citizens (as well as citizens from several other countries) from entering the United States. This marked a significant additional restriction beyond the FY2016 Consolidated Appropriation. "], "subsections": []}, {"section_title": "Iran Sanctions Act Extension", "paragraphs": ["The 114 th Congress acted to prevent ISA from expiring in its entirety on December 31, 2016. The Iran Sanctions Extension Act ( H.R. 6297 ), which extended ISA until December 31, 2026, without any other changes, passed the House on November 15 by a vote of 419-1 and then passed the Senate by 99-0. President Obama allowed the bill to become law without signing it ( P.L. 114-277 ), even though the Administration considered it unnecessary because the President retains ample authority to reimpose sanctions on Iran. Iranian leaders called the extension a breach of the JCPOA, but the JCPOA's \"Joint Commission\" did not determine it breached the JCPOA. "], "subsections": []}, {"section_title": "Reporting Requirement on Iran Missile Launches", "paragraphs": ["The conference report on the FY2017 National Defense Authorization Act ( P.L. 114-328 ) contained a provision (Section 1226) requiring a quarterly report to Congress on Iran's missile launches the imposition of U.S. sanctions with respect to Iran's ballistic missile launches until December 31, 2019. The conference report on the FY2018 NDAA ( P.L. 115-91 ) extended that reporting requirement until December 31, 2022. The report is to include efforts to sanction entities or individuals that assist those missile launches."], "subsections": []}, {"section_title": "114th Congress Legislation Not Enacted", "paragraphs": ["The Iran Policy Oversight Act ( S. 2119 ) and the Iran Terror Finance Transparency Act ( H.R. 3662 ) contained a provision that would have added certification requirements for the Administration to remove designations of Iranian entities sanctioned. The House passed the latter bill but then vacated its vote. The IRGC Terrorist Designation Act ( H.R. 3646 / S. 2094 ) would have required a report on whether the IRGC meets the criteria for designation as a Foreign Terrorist Organization (FTO). The Obama Administration argued that the law that set up the FTO designations (Section 219 of the Immigration and Nationality Act [8 U.S.C. 1189]) applies such designations only to groups, rather than armed forces of a nation-state (which the IRGC is). The Prohibiting Assistance to Nuclear Iran Act ( H.R. 3273 ) would have prohibited the use of U.S. funds to provide technical assistance to Iran's nuclear program. The provision appeared to conflict with the provision of the JCPOA that calls on the P5+1 to engage in peaceful nuclear cooperation with Iran (Paragraph 32). The Justice for Victims of Iranian Terrorism Act ( H.R. 3457 / S. 2086 ) would have prohibited the President from waiving U.S. sanctions until Iran completed paying judgments issued for victims of Iranian or Iran-backed acts of terrorism. The House passed it on October 1, 2015, by a vote of 251-173, despite Obama Administration assertions that the bill would contradict the JCPOA. H.R. 3728 would have amended ITRSHRA to make mandatory (rather than voluntary) sanctions against electronic payments systems such as SWIFT if they were allowed to be used by Iran. The IRGC Sanctions Act ( H.R. 4257 ) would have required congressional action to approve an Administration request to remove a country from the terrorism list and would have required certification that any entity to be \"delisted\" from sanctions is not a member, agent, affiliate, or owned by the IRGC. The Iran Ballistic Missile Sanctions Act of 2016 ( S. 2725 ) would have required that specified sectors of Iran's economy (automotive, chemical, computer science, construction, electronic, energy metallurgy, mining, petrochemical, research, and telecommunications) be subject to U.S. sanctions, if those sectors were determined to provide support for Iran's ballistic missile program. A similar bill, H.R. 5631 , the Iran Accountability Act, which passed the House on July 14, 2016, by a vote of 246-179, would have removed some waiver authority for certain provisions of several Iran sanctions laws and required sanctions on sectors of Iran's civilian economy determined to have supported Iran's ballistic missile program. The latter provision, as did S.2725, appeared to contradict the JCPOA. In the 115 th Congress, S. 15 and key sections of S. 227 and H.R. 808 (Iran Nonnuclear Sanctions Act of 2017) mirror S. 2725 . H.R. 4992 , which passed the House on July 14, 2016, by a vote of 246-181, and the related Countering Iranian Threats Act of 2016 ( S. 3267 ), would have, among their central provisions, required foreign banks and dollar clearinghouses to receive a U.S. license for any dollar transactions involving Iran. The Obama Administration opposed the bill as a violation of the JCPOA. H.R. 5119 , which passed the House by a vote of 249-176, would have prohibited the U.S. government from buying additional heavy water from Iran and appeared intended to block additional U.S. purchases similar to one in April 2016 in which the United States bought 32 metric tons from Iran at a cost of about $8.6 million. Several bills and amendments in the 114 th Congress sought to block or impede the sale of the Boeing aircraft to Iran by preventing the licensing, financing, or Ex-Im Bank loan guarantees for the sale. These included H.R. 5715 , H.R. 5711 , and several amendments to the House version of the FY2017 Financial Services and General Government Appropriations Act ( H.R. 5485 ). That act passed the House on July 7, 2016, by a vote of 239-185, and H.R. 5711 passed by the House on November 17, 2016, by a vote of 243-174. The Obama Administration opposed the measures as JCPOA violations. "], "subsections": []}]}, {"section_title": "The Trump Administration and Major Iran Sanctions Legislation", "paragraphs": ["Even before the Trump Administration pulled the United States out of the JCPOA, Congress acted on or considered additional Iran sanctions legislation. The following Iran sanctions legislation was enacted or considered in the 115 th Congress."], "subsections": [{"section_title": "The Countering America's Adversaries through Sanctions Act of 2017 (CAATSA, P.L. 115-44)", "paragraphs": ["A bill, S. 722 , which initially contained only Iran-related sanctions, was reported out by the Senate Foreign Relations Committee on May 25, 2017. After incorporating an amendment adding sanctions on Russia, the bill was passed by the Senate on June 15, 2017, by a vote of 98-2. A companion measure, H.R. 3203 , was introduced in the House subsequent to the Senate passage of S. 722 , and contained Iran-related provisions virtually identical to the engrossed Senate version of S. 722 . Following a reported agreement among House and Senate leaders, H.R. 3364 , with additional sanctions provisions related to North Korea (and provisions on Iran remaining virtually unchanged from those of the engrossed S. 722 ), was introduced and passed both chambers by overwhelming margins. President Trump signed it into law on August 2, 2017 ( P.L. 115-44 ), accompanied by a signing statement expressing reservations about the degree to which provisions pertaining to Russia might conflict with the President's constitutional authority. ", "CAATSA's Iran-related provisions are analyzed above. Overall, CAATSA does not appear to conflict with the JCPOA insofar as it does not reimpose U.S. secondary sanctions on Iran's civilian economic sectors. The JCPOA did not require the United States to refrain from imposing additional sanctions\u2014as CAATSA does\u2014on Iranian proliferation, human rights abuses, terrorism, or the IRGC. Section 108 of CAATSA requires an Administration review of all designated entities to assess whether such entities are contributing to Iran's ballistic missile program or contributing to Iranian support for international terrorism. "], "subsections": []}, {"section_title": "Legislation in the 115th Congress Not Enacted", "paragraphs": ["H.R. 1698 . The Iran Ballistic Missiles and International Sanctions Enforcement Act, passed the House on October 26, 2017, by a vote of 423-2. It would have amended the remaining active (not waived) section of ISA (Section 5b) to clarify that assistance to Iran's ballistic missile program is included as subject to sanctions. The provision would have applied the sanctions to foreign governments determined to be assisting Iran's missile programs, and would have applied several ISA sanctions to foreign entities, including foreign governments, that sell to or import from Iran the major combat systems banned for sale to Iran in Security Council Resolution 2231. This represents a more specific list of banned items than the \"destabilizing numbers and types\" of weaponry the sale to Iran of which can be sanctioned under ISA and several other U.S. laws discussed above. H.R. 1638 . On November 14, 2017, the House Financial Services Committee ordered reported H.R. 1638 , the Iranian Leadership Asset Transparency Act, which would have required the Treasury Secretary to report to Congress on the assets and equity interests held by named Iranian persons, including the Supreme Leader, the President, various IRGC and other security commanders, and members of various leadership bodies. H.R. 4324 . The House Financial Services Committee also ordered reported on November 14, 2017, the Strengthening Oversight of Iran's Access to Finance Act. The bill would have required Administration reports on whether financing of Iranian commercial passenger aircraft purchases posed money-laundering or terrorism risks or benefited Iranian persons involved in Iranian proliferation or terrorism. Some argued that the bill might affect the willingness of the Treasury Department to license aircraft sales to Iran, and in so doing potentially breach the U.S. JCPOA commitment to sell such aircraft to Iran. Following President Trump's October 13, 2017, statement on Iran, then-Senate Foreign Relations Committee Chairman Bob Corker and Senator Tom Cotton released an outline of legislation that would reimpose waived U.S. sanctions if, at any time\u2014including after JCPOA restrictions expire\u2014Iran breaches JCPOA-stipulated restrictions. The bill draft, which was not introduced, included sanctions triggers based on Iranian missile developments. H.R. 5132 . The Iranian Revolutionary Guard Corps Economic Exclusion Act. This bill mandated Administration reports on whether specified categories of entities are owned or controlled by the IRGC, or conduct significant transactions with the IRGC. The bill defined an entity as owned or controlled by the IRGC even if the IRGC's ownership interest is less than 50%\u2014a lower standard than the usual practice in which ownership is defined as at least 50%. The bill would have required Administration investigation of several specified entities as potentially owned or controlled by the IRGC, including several telecommunications, mining, and machinery companies, and required a report on whether the Iran Airports Company violates E.O. 13224 by facilitating flight operations by Mahan Air, which is a designated SDN under E.O. 13224. Whereas the bill's provisions did not mandate any sanctions on entities characterized within, the bill appeared to establish a process under which the Administration could name as SDNs entities in Iran's civilian economic sectors, including civil aviation. H.R. 6751 . The Banking Transparency for Sanctioned Persons Act of 2018, would have required reporting to Congress on any license given to a bank to provide financial services to a state sponsor of terrorism. H.R. 4591 , S. 3431 , and H.R. 4238 . Several bills would have essentially codified Executive Order 13438 by requiring the blocking of U.S.-based property and preventing U.S. visas for persons determined to be threatening the stability of Iraq\u2014legislation apparently directed at Iran's Shiite militia allies in Iraq. The latter two bills specifically mentioned the Iraqi groups As'aib Ahl Al Haq and Harakat Hizballah Al Nujabi as entities that the Administration should so sanction. H.R. 4591 passed the House on November 27, 2018. "], "subsections": []}, {"section_title": "116th Congress", "paragraphs": ["Because the Trump Administration has exited the JCPOA, there is increased potential for the 116 th Congress to consider legislation that sanctions those Iranian economic sectors that could not be sanctioned under the JCPOA. As the 116 th Congress began work in 2019, press reports indicated that several Senators and at least one House Member planned to introduce legislation to greatly expand U.S. secondary sanctions on Iran's financial sector. Among the reported provisions were (1) mandatory imposition of sanctions on the SWIFT electronic payments system if it does not expel sanctioned Iranian banks from its network; (2) amending IFCA to sanction any significant transactions with Iran's financial sector (in addition to energy, shipping, and shipbuilding sectors in the current law); (3) requiring the Treasury Department to issue a final rule that would sanction any international transaction with Iran's Central Bank; and (4) sanctioning foreign persons that supply or provide other help to Iran's efforts to establish a digital currency. The following have been introduced:", "Several bills similar or virtually identical to those introduced previously have been introduced, imposing sanctions on Iranian proxies in Iraq and elsewhere. These bills include H.R. 361 , the Iranian Proxies Terrorist Sanctions Act of 2019, and H.R. 571 , the Preventing Destabilization of Iraq Act of 2019. The Iranian Revolutionary Guard Corps Exclusion Act ( S. 925 ), similar to H.R. 5132 in the 115 th Congress, has been introduced in the Senate. The Iran Ballistic Missiles and International Sanctions Enforcement Act ( H.R. 2118 ). The bill includes provisions similar to H.R. 1698 in the 115 th Congress (see above)."], "subsections": []}]}, {"section_title": "Other Possible U.S. and International Sanctions123", "paragraphs": ["There are a number of other possible sanctions that might receive consideration\u2014either in a global or multilateral framework. These possibilities are analyzed in CRS In Focus IF10801, Possible Additional Sanctions on Iran , by Kenneth Katzman. ", "Appendix A. Comparison Between U.S., U.N., and EU and Allied Country Sanctions (Prior to Implementation Day)", "Appendix B. Post-1999 Major Investments in\u00a0Iran's\u00a0Energy\u00a0Sector", "Appendix C. Entities Sanctioned Under U.N. Resolutions and EU Decisions", "Appendix D. Entities Sanctions Under U.S. Laws and Executive Orders"], "subsections": []}]}]}}
{"id": "R45952", "title": "U.S. Offshore Aquaculture Regulation and Development", "released_date": "2019-10-10T00:00:00", "summary": ["Regulatory uncertainty has been identified as one of the main barriers to offshore aquaculture development in the United States. Many industry observers have emphasized that congressional action may be necessary to provide statutory authority to develop aquaculture in offshore areas. Offshore aquaculture is generally defined as the rearing of marine organisms in ocean waters beyond significant coastal influence, primarily in the federal waters of the exclusive economic zone (EEZ). Establishing an offshore aquaculture operation is contingent on obtaining several federal permits and fulfilling a number of additional consultation and review requirements from different federal agencies responsible for various general authorities that apply to aquaculture. However, there is no explicit statutory authority for permitting and developing aquaculture in federal waters. The aquaculture permit and consultation process in federal waters has been described as complex, time consuming, and difficult to navigate.", "Supporters of aquaculture have asserted that development of the industry, especially in offshore areas, has significant potential to increase U.S. seafood production and provide economic opportunities for coastal communities. Currently, marine aquaculture facilities are located in nearshore state waters. Although there are some research-focused and proposed commercial offshore facilities, no commercial facilities are currently operating in U.S. federal waters. Aquaculture supporters note that the extensive U.S. coastline and adjacent U.S. ocean waters provide potential sites for offshore aquaculture development. They reason that by moving offshore, aquaculturalists can avoid many user conflicts they have encountered in inshore areas. Offshore areas also are considered to be less prone to pollution and fish diseases.", "Environmental organizations and fishermen generally have opposed development of offshore aquaculture. They assert that poorly regulated aquaculture development in inshore areas has degraded the environment and harmed wild fish populations and ecosystems. Those who oppose aquaculture development generally advocate for new authorities to regulate offshore aquaculture and to safeguard the environment and other uses of offshore waters. Some segments of the commercial fishing industry also have expressed concerns with potential development of aquaculture on fishing grounds and competition between cultured and wild products in domestic markets.", "Proponents of aquaculture counter that in many parts of the world a combination of farming experiences, technological advances, proper siting, and industry regulation has decreased environmental impacts and improved efficiency of marine aquaculture. They argue that many who oppose marine aquaculture lack an understanding of the benefits and risks of aquaculture and that opposition persists despite research that contradicts the extent or existence of these risks.", "Generally, the outcomes associated with aquaculture development depend on a variety of factors, such as the characteristics of aquaculture sites, species, technology, and facility management. Regardless of potential environmental harm, it remains to be seen whether moving to offshore areas would be profitable and if offshore aquaculture could compete with inshore aquaculture development and lower costs in other countries.", "Comprehensive offshore aquaculture bills were introduced in the 109 th , 110 th , 111 th , 112 th , and 115 th Congresses, but none were enacted. In the 115 th Congress, the Advancing the Quality and Understanding of American Aquaculture Act (AQUAA; S. 3138 and H.R. 6966 ) was introduced; AQUAA would have established a regulatory framework for aquaculture development in federal waters. It also would have provided National Oceanic and Atmospheric Administration (NOAA) Fisheries with the authority to issue aquaculture permits and coordinate with other federal agencies that have permitting and consultative responsibilities. Conversely, since the 109 th Congress, bills have been introduced that would constrain or prohibit the permitting of aquaculture in the EEZ. The Keep Finfish Free Act of 2019 ( H.R. 2467 ), introduced in the 116 th Congress, would prohibit the issuance of permits to conduct finfish aquaculture in the EEZ until a law is enacted that allows such action. It remains an open question whether legislation could be crafted that would provide the regulatory framework desired by potential commercial developers of offshore aquaculture and avoid or minimize risks of environmental harm to the satisfaction of those currently opposed to offshore aquaculture development."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["Offshore aquaculture is generally defined as the rearing of marine organisms in ocean waters beyond significant coastal influence, primarily in the federal waters of the exclusive economic zone (EEZ). Currently, marine aquaculture facilities are located in nearshore state waters, but no commercial facilities operate in U.S. federal waters. Some aquaculture advocates contend that developing such offshore aquaculture facilities could increase U.S. seafood production and provide economic opportunities for coastal communities; opponents counter that doing so could harm the environment and have negative impacts on other coastal activities, such as fishing.", "Offshore aquaculture development will likely depend on several interrelated legal and institutional requisites, such as establishing a regulatory framework, minimizing environmental harm, and developing the capacity to manage and support the industry. Regulatory uncertainty has been identified as one of the main barriers to developing offshore aquaculture in federal waters of the United States. According to the U.S. Commission on Ocean Policy, \"aquaculture operations in offshore waters lack a clear regulatory regime, and questions about exclusive access have created an environment of uncertainty that is detrimental to investment in the industry.\" Some observers have concluded that \"offshore aquaculture will not fully develop unless governments create a supportive political climate and resulting regulatory conditions.\" A framework also may be needed to assure environmentalists, fishermen, and other stakeholders that coastal and fisheries managers would have the authority to address potential threats to the environment and other impacts. ", "According to most observers, congressional action may be necessary to develop a comprehensive regulatory framework for offshore aquaculture. Comprehensive legislation has been introduced a number of times since the 109 th Congress, but none of the bills have been enacted. Controversy has stemmed from different perspectives of aquaculturalists, environmentalists, fishermen, and others. Some environmental organizations and fishermen have asserted that poorly regulated aquaculture development has degraded the environment and harmed wild fish populations and ecosystems. Some segments of the commercial fishing industry are opposed to marine aquaculture because of potential development on fishing grounds, environmental effects on fish populations, and competition of cultured products with wild products in domestic markets. Offshore aquaculture advocates counter that a combination of farming experiences, technological advances, proper siting, and industry regulation has decreased environmental impacts and improved the efficiency of marine aquaculture. It appears that renewed efforts have emerged in the 116 th Congress to meet current challenges by attempting to improve regulatory efficiency, minimize environmental degradation, and avoid impacts on existing ocean uses. ", "Additional related factors, such as technical advances, economic feasibility, and the level of government support, also are likely to affect future growth of the U.S. aquaculture industry. Although a regulatory framework appears to be necessary for establishing offshore aquaculture in federal waters, it may not be sufficient for significant development of the industry. Sometimes overlooked are the services that may be needed to establish a new industry, such as program administration, research, and other services (e.g., disaster assistance, insurance). Technical uncertainties related to harsher offshore environmental conditions and higher costs of operating farther from shore may slow extensive offshore development, especially in the immediate future. ", "This report examines issues and challenges related to the development of offshore aquaculture in federal waters. It introduces the topic with background information that covers aquaculture production and methods, federal agencies involved in aquaculture, and potential congressional interest in the topic. It then focuses on three of the main challenges faced by the industry, including the current regulatory framework, environmental concerns, and economic viability. The report concludes with issues related to regulatory and institutional development that have been identified by researchers and stakeholders, potential issues for Congress, and a summary of legislation that has been introduced in recent Congresses."], "subsections": []}, {"section_title": "Background", "paragraphs": [], "subsections": [{"section_title": "Seafood Production", "paragraphs": ["Global aquaculture production is nearly equal to the volume of seafood produced for human consumption by wild fisheries. From 1997 to 2016, world seafood production from wild sources (capture fisheries) leveled off at a range of 89 million metric tons (mmt) to 96 mmt. According to the United Nations Food and Agriculture Organization, further growth of global wild fisheries production is unlikely, because approximately 93% of marine stocks are now either fished unsustainably or fished at maximum sustainable levels. During the same period, world aquaculture production increased from 28.3 mmt to 80.0 mmt; it now makes up 47% of global fish production. It is likely that aquaculture production will continue to expand with advances in aquaculture technologies and the need to satisfy the demand of the world's growing population. Figure 1 illustrates the growth in global aquaculture production and relatively constant wild fisheries production. Nearly all of global marine aquaculture production is from inshore areas, such as estuaries and coastal areas, not from offshore areas. ", "Wild fisheries in the United States are limited by the productive capacity of U.S. waters. Most U.S. stocks are now fished at their maximum sustainable levels. However, unlike worldwide trends, U.S. aquaculture production has generally stagnated and makes up a relatively small portion of total U.S. seafood production. In 2016, the United States ranked fifth in global seafood production at 5.36 mmt; 0.44 mmt (8.2%) of this total was produced by aquaculture. Figure 2 illustrates the relatively constant domestic production of aquaculture and wild fisheries. Most U.S. aquaculture production consists of freshwater species, such as catfish, trout, and crawfish. Growth in U.S. seafood consumption has depended on imports, which provide approximately 80% to 90% of the seafood consumed in the United States. Approximately 50% of seafood imports, such as shrimp from Southeast Asia and salmon from Norway or Chile, are produced by aquaculture in ponds and nearshore areas. According to some observers, U.S. reliance on seafood imports will continue to increase without changes to current policies and regulatory obstacles that currently impede expansion of aquaculture."], "subsections": []}, {"section_title": "Aquaculture Overview", "paragraphs": ["Aquaculture is broadly defined as the propagation and rearing of aquatic species in controlled or selected environments. Aquaculture is difficult to characterize because of the diverse nature of facilities, methods, technologies, and species that are cultured. Organisms are cultured in freshwater environments, land-based closed systems, coastal and estuarine areas, and offshore areas. Often, hatcheries are used to spawn fish and shellfish to produce eggs that are hatched and grown to specific stages; these organisms are then transferred to facilities where they are grown to marketable size. ", "Aquaculture operations range from systems where there is only minimal control over the organism's environment to intensive operations where there is complete control at each stage of the organism's life history. For example, an intensive system would include freshwater species such as catfish that are often raised in shallow earthen ponds; production relies on control of inputs. Water, feed, and disease treatment are controlled to maximize growth while minimizing costs. Farming of finfish, such as salmon, also requires stocking at high densities and relies on extensive feeding. Commercial salmon aquaculture facilities often employ net pens ( Figure 3 ), which are moored to the bottom and located in protected inshore marine areas, such as bays and fjords.", "Bivalves such as oysters and clams are grown in estuaries and inshore areas, feeding on a diet of plankton and detritus that they filter from seawater. Bivalve aquaculture may employ varying degrees of control. In some cases, they are suspended on lines, in wire cages, and on rafts. Oyster larvae are grown in hatcheries and transferred to these structures as oyster spat or seed and grown to market size. Some oyster production is less intensive and depends on enhancement of the benthic (ocean bottom) environment by placing oyster shells on the bottom to facilitate attachment of wild oyster larvae. ", "In Alaska, hatcheries are used to enhance the production of salmon fry, which are released to the wild to feed and grow until they are caught by fishermen as adults. These programs are run as nonprofit cooperatives overseen by Alaska fishermen. Most states and the U.S. Fish and Wildlife Service run public stocking programs, which often address a variety of objectives such as enhancing recreational fisheries and restoring depleted populations. Each strategy requires different inputs and interacts with the environment to differing degrees. Nevertheless, a common factor is to control some aspect(s) of the organism's life to enhance survival and growth. ", "Over the last decade, catfish aquaculture has accounted for most food fish production by volume and revenue in the United States ( Table 1 ). However, catfish production has declined by nearly 44% over this period due to a variety of factors, including competition from Asian imports. For freshwater species, only crawfish production (78.0%) and revenue (66.2%) increased significantly. During the same period, production of salmon and oysters increased in both volume and revenue. Cultured oysters exhibited the largest increases in production (66.0%) and revenue (86.5%), which is likely related to greater demand for high quality raw oysters. However, except for cultured oysters, production of most domestic marine seafood products is from wild marine fisheries."], "subsections": []}, {"section_title": "Offshore Aquaculture", "paragraphs": ["As stated above, offshore aquaculture is the rearing of marine organisms in ocean waters beyond significant coastal influence, primarily in the federal waters of the EEZ. Aquaculturalists, the Department of Commerce, several task force and commission reports, and some academics have identified offshore aquaculture as a potential alternative to some land-based and nearshore aquaculture. Supporters of aquaculture have asserted that development of the industry, especially in offshore areas, has significant potential to increase U.S. seafood production and provide economic opportunities for coastal communities. The potential of offshore aquaculture in the United States is likely to differ by species, region, and technology.", "Despite plans for several offshore operations, no commercial offshore aquaculture facilities are currently operating in the U.S. EEZ. Some marine aquaculture facilities are located in nearshore state waters, however. In the future, inshore marine production is likely to be constrained by the availability of suitable sites, poor water quality, high coastal land values, and competition with other ocean uses. Potential aquaculture development in offshore areas has received increasing attention because of these limitations.", "The cost of working offshore may be greater than the costs of working in inshore and land-based areas, in part because offshore aquaculture in the EEZ would be subject to relatively high-energy offshore environments caused by high and variable winds and storms. However, research and technical advances have demonstrated that operating in these environments is feasible. Expansion of offshore aquaculture into clean, well-flushed waters appears to have nearly unlimited potential, although major technological and operational challenges remain. For example, further development will require structures and materials that will contain stocks under harsh oceanic conditions and keep costs low enough to remain profitable.", "It is likely that offshore aquaculture, at least initially, would employ species with established markets and production systems that are similar to those used in inshore areas. Examples of marine species that are candidates for offshore areas may include Atlantic salmon ( Salmo salar ), white sea bass ( Atractoscion nobils ), cobia ( Rachycentron canadum ), and blue mussel ( Mytilus edulis ). Currently, salmon net pen facilities operate in protected inshore waters of Maine and Washington. Several other net pen aquaculture facilities have operated in exposed state waters of Hawaii and Puerto Rico that have characteristics similar to those of offshore areas. Over the last two decades, permits have been issued to conduct research and limited commercial aquaculture in the EEZ. Recently, three mussel farms received permits from the U.S. Army Corps of Engineers (USACE) to operate in offshore waters. Several other ventures have been proposed; including proposals to operate commercial facilities in several regions. ", "Researchers are developing systems to adapt facilities used in inshore areas to the unique needs of offshore aquaculture. Offshore systems (e.g., submersible cages, net pens, longline arrays) may be free-floating, secured to a structure, moored to the ocean bottom, or towed by a vessel. Systems have been developed to overcome problems associated with harsh open ocean conditions, including submersible cage designs that do not deform under strong currents and waves, and single-point moorings. Cage-mounted autonomous feeding systems have been developed that can operate both at the surface and submerged. Other components under development include mechanized and remote systems that can be controlled from land-based facilities; for example, universities and private-sector research interests are developing automated buoys that can monitor the condition of stock and feed fish on a regular basis for weeks at a time."], "subsections": []}]}, {"section_title": "Federal Government Involvement in Aquaculture", "paragraphs": ["Federal aquaculture, regulation, research, and support are conducted by a number of federal agencies. Their roles vary widely depending on the agency's statutory responsibilities, which may be related directly or indirectly to aquaculture. Congress enacted the National Aquaculture Act of 1980 to encourage development of the aquaculture industry and coordinate federal activities. The act established the Subcommittee on Aquaculture (SCA) to provide opportunities to exchange information and enhance cooperation among federal agencies. SCA's main functions include the following:", "reviewing national needs for aquaculture research, technology transfer, and technology assistance programs; supporting coordination and communication among federal agencies engaged in the science, engineering, and technology of aquaculture; collecting and disseminating information on aquaculture; encouraging joint programs among federal agencies in areas of mutual interest relating to aquaculture; and recommending specific actions on issues, problems, plans, and programs in aquaculture. ", "SCA operates under the Committee on Environment of the National Science and Technology Council in the Executive Office of the President. SCA is chaired by the Secretary of Agriculture, in consultation with the Secretaries of Commerce and the Interior. In addition to the three main departments, SCA includes nine additional departments and agencies with an interest in aquaculture. SCA meets quarterly and has provided information on topics such as fish disease, aquaculture regulation, and other areas of interest.", "Most federal aquaculture activities and programs that are specific to aquaculture are carried out by the Department of the Interior (DOI), Department of Commerce (DOC), and the Department of Agriculture (USDA). Other federal agencies have roles that are indirectly related to aquaculture, such as regulatory programs that apply to a variety of aquatic or marine activities, including aquaculture. Examples include USACE for activities in navigable waters, the Environmental Protection Agency (EPA) for protection of environmental quality, and the Food and Drug Administration for regulation of drugs used to treat fish diseases. "], "subsections": [{"section_title": "U.S. Department of Agriculture", "paragraphs": ["USDA plays a lead role in support of freshwater aquaculture for species such as catfish that are raised on private property in fishponds. USDA is authorized to conduct cooperative research and extension: it funds five aquaculture regional research centers. Work at aquaculture centers complements other USDA research and education programs undertaken at state land-grant universities. The USDA National Agricultural Statistics Service periodically conducts the national aquaculture census and collects and publishes other related statistical information. The Animal and Plant Inspection Service provides animal health certifications for exports of live species and products; assistance for producers experiencing losses from predators; and veterinary biologics for preventing and treating animal diseases, including those affecting aquatic species. The Farm Service Agency administers farm lending programs, including ownership, operating, and emergency disaster loans. Under certain circumstances, aquaculture operations may be eligible for disaster assistance under the Noninsured Crop Disaster Assistance Program and the Emergency Assistance for Livestock, Honeybees, and Farm-Raised Fish Program. It appears that some of USDA's programs and experiences that focus on land-based agriculture, such as finance, research, disaster assistance, marketing, and extension, may be adapted and applied to marine aquaculture development. "], "subsections": []}, {"section_title": "Department of the Interior", "paragraphs": ["DOI's U.S. Fish and Wildlife Service (FWS) focuses on support of public efforts, such as stocking programs, that benefit recreational fishing of freshwater and anadromous species. FWS operates the National Fish Hatchery System, which consists of more than 60 facilities used to enhance fish stocks, restore fish populations, and mitigate fish losses. The system includes fish production and distribution facilities, fish health centers, fish passage facilities, and technology centers. FWS research programs indirectly benefit the private sector through research and applications that control fish disease and regulation of potentially invasive species. FWS and NMFS are responsible for regulating potential interactions between aquaculture activities and endangered species and marine mammals under the Endangered Species Act (ESA) and the Marine Mammal Protection Act (MMPA). "], "subsections": []}, {"section_title": "Department of Commerce", "paragraphs": ["The NMFS Office of Aquaculture in DOC focuses on regulatory, technical, and scientific services related to marine aquaculture. NOAA headquarters provides general direction for the program and coordinates with other NOAA offices, federal agencies, and the general public. The program includes five regional aquaculture coordinators, who coordinate regulatory and permitting activities, serve as liaisons with the state and local government and stockholders, and assist with grant management. Aquaculture in federal waters is regulated as a regional fishery under the Magnuson Stevens Fishery Conservation and Management Act (MSA). NOAA's efforts to regulate offshore aquaculture are discussed in the following section concerning federal agency regulatory responsibilities (see Current Regulatory Framework). ", "In October 2015, NOAA released its five-year strategic plan (2016-2020) for marine aquaculture. NOAA's vision is a \"robust U.S. marine aquaculture sector that creates jobs, provides sustainable seafood, and supports a healthy ocean.\" The plan provides a blueprint of NOAA's involvement in marine aquaculture, including program impact, goals and strategies, deliverables, and crosscutting strategies. To increase aquaculture production, the program's four main goals are to ", "develop coordinated, consistent, and efficient regulatory processes for the marine aquaculture sector; encourage environmentally responsible marine aquaculture using the best available science; develop technologies and provide extension services for the aquaculture sector; and improve public understanding of marine aquaculture.", "The plan also includes four crosscutting strategies to achieve these goals and objectives:", "strengthen government, academic, industry, and other partnerships; improve communications within NOAA; build agency infrastructure within NOAA; and develop sound and consistent management within NOAA. ", "Various NOAA programs may support aquaculture both directly and indirectly. The National Sea Grant Marine Aquaculture Grant Program is the only U.S. government grant program that funds marine aquaculture exclusively. These grants focus on industry challenges, such as improving aquaculture feeds, enhancing seafood safety and quality, refining culture methods, and diversifying aquaculture species. Other NOAA offices or programs that may contribute to or become involved in aquaculture development include inspections provided by the NOAA Seafood Inspection Program, research conducted at NOA A regional fisheries science centers, and awards funded by the Saltonstall-Kennedy Grant Program."], "subsections": []}]}, {"section_title": "Offshore Aquaculture Challenges", "paragraphs": ["A broad array of challenges is associated with offshore aquaculture development and expansion. These challenges pertain to evolving production technology, uncertain economic costs and benefits, and potential environmental and social impacts. Generalizations about how to address these challenges are difficult to make because of the variety of candidate species, different technologies, and potential scales of operation.", "Major categories of concerns related to offshore aquaculture development include (1) the legal and regulatory environment; (2) potential environmental harm; (3) economic, trade, and stakeholder concerns related to development of a new industry; and (4) business and institutional support."], "subsections": [{"section_title": "Current Regulatory Framework45", "paragraphs": ["One of the main issues associated with marine offshore aquaculture is the concept of ownership and individuals' rights to use the marine environment for economic gain (in contrast to, for example, the catfish industry, where fishponds are constructed and operated on private land). Some envision development and management as a partnership, where the government's role is one of both enabler and steward. This partnership could provide for property rights and regulatory clarity, certainty, and stability. For example, the government already provides specific rights to businesses that extract or use resources of the continental shelf, such as oil and gas and wind energy development. ", "Aquaculture regulation depends primarily on the geographic location and characteristics of aquaculture facilities. In state waters, in accordance with the federal Submerged Lands Act of 1953, coastal states exercise jurisdiction over an area extending 3 nautical miles (nm) from their officially recognized coast (or baseline ). States also have jurisdiction over internal waters, areas inside the baseline in bays and estuaries, such as the Chesapeake Bay or Puget Sound. States may impose restrictions or requirements as they see fit, subject to any applicable federal laws. If located in federal waters, in waters from 3 nm to 200 nm from the baseline, aquaculture facilities are regulated primarily by federal agencies under a number of federal statutes and regulatory requirements ( Figure 4 ). Some federal laws apply to marine aquaculture and waters of the United States generally and include facilities located in both state and federal marine waters.", "Currently, no single federal agency is authorized to approve or permit offshore aquaculture facilities in federal waters, generally the EEZ. USACE, NMFS (NOAA Fisheries), and EPA are separately authorized to regulate certain activities that are required to establish and operate aquaculture facilities. Federal agencies that issue permits are required to consult with other regulatory agencies concerning the potential effects of each application. The permitting process also involves consultation and other requirements that are incorporated into the review of these applications. The following sections summarize the required federal permits, consultation, and review requirements."], "subsections": [{"section_title": "Federal Permits to Conduct Aquaculture in the Federal Waters", "paragraphs": [], "subsections": [{"section_title": "Section 10 Permits", "paragraphs": ["Section 10 of the Rivers and Harbors Act of 1899 (hereinafter referred to as Section 10) prohibits the unauthorized obstruction or alteration of any navigable water of the United States. Authorization by the Secretary of the Army, through USACE, must be provided before construction is initiated. Construction may include any structure or work in or affecting the course, condition, or capacity of navigable waters, excavation or fill, including aquaculture facilities, in or over any navigable waters of the United States within 3 nm from shore. Because aquaculture facilities may be located in and may affect navigable waters, the developer of the facility may be required to obtain authorization from USACE under Section 10. USACE's role is to regulate the use of the navigable water (not to regulate aquaculture per se).", "The Outer Continental Shelf Lands Act extends USACE authority over all artificial islands and all installations and other devices permanently or temporarily attached to the seabed, which may be erected for the purpose of exploring for, developing, or producing resources. Therefore, a Section 10 permit is also required prior to construction or placement of installations\u00e2\u0080\u0094such as aquaculture facilities\u00e2\u0080\u0094in federal waters from the seaward limit of state waters to the seaward limit of the outer continental shelf. The decision to issue a permit is based on the effects on navigation and the proposed activity's probable impacts on the public interest. The public interest is assessed by comparing the benefits that may be expected to accrue from the proposed activity and the reasonably foreseeable harm that reflects the national concern for the protection and use of important resources. Offshore aquaculture permits would be required for structures such as cages, net pens, or lines that are anchored or attached to the sea floor. ", "Section 10 permit requirements for aquaculture development beyond 3 nm may differ from those within 3 nm, because installations or other devices that are not temporarily or permanently attached to the seabed do not appear to be included. Examples of facilities beyond 3 nm that may not require Section 10 permits include bottom shellfish culture or unmoored floating aquaculture facilities if they do not impede navigation."], "subsections": []}, {"section_title": "National Pollutant Discharge Elimination System Permit", "paragraphs": ["EPA protects water quality by regulating the discharges of pollutants into U.S. waters under the Clean Water Act (CWA). Under the CWA, a National Pollutant Discharge Elimination System (NPDES) permit is required to discharge pollutants from point sources into federal ocean waters. A point source is defined as \"any discernable, confined and discrete conveyance, including but not limited to any pipe, ditch, channel, tunnel, conduit, well, discrete fissure, container, rolling stock, concentrated animal feeding operation, or vessel or other floating craft, from which pollutants are or may be discharged.\" ", "Aquaculture facilities may discharge materials such as fecal matter; excess feed; antifoulants; and therapeutic agents, such as antibiotics. EPA currently regulates aquaculture facilities as a point source if the activity qualifies as a Concentrated Aquatic Animal Production (CAAP) facility; CAAPs are defined according to discharge frequency and production level or as designated by EPA on a case-by-case basis if they are significant contributors of pollution. Commercial scale aquaculture operations in federal waters would be likely to trigger the CAAPs threshold and require a NPDES permit."], "subsections": []}, {"section_title": "Fishing (Aquaculture) Permit", "paragraphs": ["NMFS is the only federal agency that claims explicit management authority over offshore aquaculture. Currently, NMFS manages federal fisheries under authority of the MSA. The MSA regulates fishing in the EEZ through development and implementation of federal fishery management plans (FMPs). The MSA \"does not expressly address whether aquaculture falls within the purview of the act.\" The MSA defines a fishery as \"one or more stocks of fish ... and any fishing for such stocks\" and fishing as the \"catching, taking, or harvesting of fish.\"", "The Magnuson-Stevens Act does not expressly address whether aquaculture falls within the purview of the Act. However, the Magnuson-Stevens Act's assertion of exclusive fishery management authority over all fish within the EEZ, its direction to fishery management councils to prepare fishery management plans for any \"fishery\" needing conservation and management, together with the statutory definitions of \"fishery\" and \"fishing,\" provide a sound basis for interpreting the Act as providing authority to regulate aquaculture in the EEZ. ", "Under the MSA's authority, several regional fishery management councils and NMFS have exercised regulatory oversight over offshore aquaculture. In some cases, NMFS authorized offshore aquaculture in federal waters for research and experimental purposes under an exempted fishing permit. These permits are of limited duration and not intended to apply to development of permanent commercial operations. ", "The Gulf of Mexico Fishery Management Council (GMFMC) has been particularly active on aquaculture issues. In 2009, an aquaculture FMP was approved by the GMFMC; NMFS issued its final rule to implement that FMP in 2016. The aquaculture plan establishes a regional permitting process for regulating aquaculture in the Gulf of Mexico EEZ. The regulations authorize permits for up to 20 facilities that are limited to combined total production of 64 million pounds annually of species that are native to the Gulf of Mexico. Applicants are required to acquire other federal permits before NMFS can issue a Gulf aquaculture permit. NMFS also has developed a memorandum of understanding to coordinate federal agency actions and outline the permitting responsibilities of each agency in the Gulf. ", "However, a recent legal decision has cast doubt on NMFS's authority to regulate aquaculture under the MSA. In Gulf Fisherman ' s Association v . National Marine Fisheries Service , the U.S. District Court for the Eastern District of Louisiana held that NMFS exceeded its authority under the MSA when it adopted a regulatory scheme for aquaculture operations in the Gulf of Mexico. The court found that the MSA's grant of authority to regulate \"fishing\" and \"harvesting\" did not include aquaculture, noting that \"[h]ad Congress intended to give [NMFS] the authority to create an entirely new regulatory permitting scheme for aquaculture operations, it would have said more than 'harvesting.' The MSA is a conservation statute, aimed at the conservation and management of natural resources. Fish farmed in aquaculture are neither 'found' off the coasts of the United States nor are they 'natural resources.'\" ", "Some are concerned that regional management of offshore aquaculture under the MSA may add another additional administrative requirements, especially if several regional fishery management councils develop their own, possibly contradictory, open ocean aquaculture management policies. Currently, commercial aquaculture is less likely to occur in federal waters under the jurisdiction of other regional fishery management councils because they have not prepared aquaculture FMPs or generic aquaculture amendments to the appropriate FMPs for species that could be cultured. In addition, it is unclear what regulatory authority NMFS and the regional councils might have over species, such as mussels, that are not managed under a federal FMP."], "subsections": []}]}, {"section_title": "Federal Consultation and Review Requirements", "paragraphs": ["Consultation and review requirements are often triggered by federal permitting programs. Some crosscutting environmental requirements are entirely procedural, because they require that the federal agency implement certain procedures to ensure the agency identifies and analyzes potential impacts the proposal would have on certain resources before deciding whether to issue the permit. Other environmental requirements may prohibit the agency from permitting the action, as proposed, unless the level of adverse impacts can be minimized or mitigated. "], "subsections": [{"section_title": "Coastal Zone Management Act", "paragraphs": ["Under Section 306 of the Coastal Zone Management Act (CZMA), states may develop and implement a coastal management program (CMP) pursuant to federal guidance. State CMPs \"describe the uses subject to the management program, the authorities and enforceable policies of the management program, the boundaries of the state's coastal zone, the organization of the management program, and related state coastal management concerns.\" ", "Arguably the main feature of the CZMA is federal consistency. Federal agency activities that have reasonably foreseeable effects on a state's coastal zone resources and uses should be consistent with the enforceable policies of the state's coastal management plan. Section 307 of the CZMA requires ", "any applicant for a required Federal license or permit to conduct an activity, in or outside of the coastal zone, affecting any land or water use or natural resource of the coastal zone of that state\" to \"provide in the application to the licensing or permitting agency a certification that the proposed activity complies with the enforceable policies of the state's approved program and that such activity will be conducted in a manner consistent with the program. ", "Enforceable policies are legally binding state policies, such as constitutional provisions, laws, regulations, land use plans, or judicial or administrative decisions. ", "Federal licensing and permitting (such as aquaculture permit requirements) is one of four general categories of federal activities that may be reviewed for consistency. The state lists federal licenses and permits that affect coastal uses and resources in its federally approved CMP. For listed activities, the applicant submits related data and information and a consistency certification that the proposed activity will be conducted in a manner consistent with the state's approved management program. For a listed activity outside the coastal zone (such as in federal waters), the state also must describe the geographic location or area in its CMP. ", "If a license, permit, or geographic location in federal waters is not listed in the state's CMP, the activity is treated as unlisted. To review an unlisted activity, the state notifies the applicant, federal agency, and NOAA Office of Coastal Management (OCM) that it intends to review the activity. OCM decides whether to approve the request, generally based on whether the activity will have reasonably foreseeable effects on the state's coastal zone. If approved, the consistency review proceeds as in the case of a listed activity. ", "The state may object to the applicant's consistency certification and stop the federal agency from authorizing the activity or issue a conditional concurrence to the applicant. The permit is issued for the activity if (1) the state concurs with the consistency determination; (2) the state fails to act, resulting in a presumption of consistency; or (3) the Secretary of Commerce overrules the state on appeal and concludes that the activity is consistent with CZMA objectives or is otherwise necessary for national security. In the vast majority of federal actions, states concur with the applicant's self-certification, often resolving any disputes collaboratively. "], "subsections": []}, {"section_title": "National Environmental Policy Act", "paragraphs": ["The National Environmental Policy Act (NEPA) requires federal agencies to consider the potential environmental consequences of proposed federal actions but does not compel agencies to choose a particular course of action. If an agency anticipates that an action would significantly affect the quality of the human environment, the agency must document its consideration of those impacts in an environmental impact statement (EIS). If the impacts are uncertain, an agency may prepare an environmental assessment (EA) to determine whether a finding of no significant impact could be made or whether an EIS is necessary. NEPA creates procedural requirements but does not mandate specific outcomes."], "subsections": []}, {"section_title": "Endangered Species Act and Marine Mammal Protection Act", "paragraphs": ["NMFS and FWS have responsibilities under the ESA and the MMPA to review project proposals that may affect marine mammals or threatened and endangered species. If issuance of a federal permit may adversely affect a species listed under the ESA, consultation may be required under Section 7 of the ESA. Through consultation with either FWS or NMFS, federal agencies must ensure that their actions are not likely to jeopardize the continued existence of any endangered or threatened species or adversely modify critical habitat. If the appropriate Secretary judges that the proposed activity jeopardizes the listed species or adversely modifies critical habitat, then the Secretary must suggest reasonable and prudent alternatives that would avoid harm to the species. If reasonable and prudent measures are adopted, the federal action is allowed to go forward. ", "The MMPA prohibits the harassment, hunting, capturing, killing (or taking ) of marine mammals without a permit from the Secretary of the Interior or the Secretary of Commerce. If marine mammals are likely to interact with aquaculture facilities and this interaction is likely to result in the taking of marine mammals, a marine mammal exemption would be required. To be eligible for an exemption, the aquaculture facility would need to obtain a Marine Mammal Authorization Program certificate from NMFS. "], "subsections": []}, {"section_title": "MSA Essential Fish Habitat", "paragraphs": ["The MSA also requires the federal permitting agency (e.g., USACE) for any aquaculture facility to consult with NMFS if the activity has the potential to harm essential fish habitat (EFH). EFH is designated for all marine species for which there is an FMP and may include habitat in both state and federal waters."], "subsections": []}, {"section_title": "National Marine Sanctuary Act", "paragraphs": ["NOAA manages national marine sanctuaries established under the National Marine Sanctuary Act (NMSA). Federal agencies are required to consult with the Secretary of Commerce when federal actions within or outside a national marine sanctuary, including activities that are authorized by licenses, leases, and permits, are likely to harm sanctuary resources. If the Secretary finds that the activity is likely to injure a sanctuary resource, the Secretary recommends reasonable and prudent measures that the federal agency can take to avoid harm to the sanctuary resource. If the measures are not followed and sanctuary resources are destroyed or injured, the NMSA requires the federal agency that issued the permit to restore or replace the damaged resources. "], "subsections": []}, {"section_title": "National Historic Preservation Act", "paragraphs": ["The National Historic Preservation Act (NHPA) is another procedural statute. Under Section 106 of NHPA, federal agencies must determine whether actions they may permit or license will have adverse effects on properties listed or eligible for listing in the National Register of Historic Places. Such sites could include shipwrecks, prehistoric sites, or other cultural resources. Federal agencies must determine whether such resources may be affected in consultation with state and/or tribal historic preservation officers. ."], "subsections": []}, {"section_title": "Fish and Wildlife Coordination Act", "paragraphs": ["The Fish and Wildlife Coordination Act requires federal agencies to consult with FWS, NMFS, and state wildlife agencies when activities that are authorized, permitted, or funded by the federal government affect, control, or modify waters of any stream or bodies of water. Consultation generally is incorporated into the process of complying with other federal permit requirements, such as the NEPA and CWA."], "subsections": []}]}, {"section_title": "Other Authorizations and Approvals", "paragraphs": ["The Coast Guard has authority to control private aids to navigation in U.S. waters. Regulations require structures such as aquaculture facilities be marked with lights and signals for protection of maritime navigation. To establish a private aid to navigation, the applicant would need formal authorization from the appropriate U.S. Coast Guard district. ", "The Bureau of Safety and Environmental Enforcement (BSEE) has regulatory responsibility for the offshore energy industry on the outer continental shelf. BSEE would review aquaculture applications and provide comments regarding potential conflicts, interactions, or effects on mineral exploration, development, and production operations. The Bureau of Ocean Energy Management (BOEM) manages development of the outer continental shelf energy and mineral resources. BOEM would require a right-of-use easement for any offshore aquaculture operations that uses or tethers to an existing oil and gas facility."], "subsections": []}]}, {"section_title": "Environmental Concerns", "paragraphs": ["One of the main features of many previous aquaculture bills has been consideration of environmental protection and monitoring of offshore aquaculture facilities. Critics of offshore aquaculture have expressed concern with potential environmental degradation and conflicts with existing uses of marine areas. They cite historic problems in inshore areas\u00e2\u0080\u0094such as escapes of cultured organisms, the introduction of disease and invasive species, pollution in areas adjacent to net pens, and habitat loss\u00e2\u0080\u0094which have created a negative perception of aquaculture. ", "Aquaculture supporters assert that those who oppose marine aquaculture lack an understanding of aquaculture's benefits and risks and that \"these perceptions persist despite significant scientific literature that contradicts the extent or existence of risk to the values that these groups want to protect.\" Supporters contend that, in many parts of the world, a combination of farming experiences, technological advances, proper siting, and industry regulation has decreased environmental impacts and improved efficiency of marine aquaculture. Some researchers suggest that by moving operations offshore and selecting appropriate sites, the remaining impacts can be further reduced. Others add that offshore waters would be less prone to environmental impacts than inshore waters because fish wastes and other pollutants would dissipate more rapidly in the deeper and better-flushed offshore areas. ", "A present lack of knowledge\u00e2\u0080\u0094owing to limited experience and few studies focusing specifically on offshore aquaculture\u00e2\u0080\u0094limits understanding of potential harm to the environment from offshore aquaculture. Most information has been collected from inshore areas, where salmon net pens and other types of aquaculture farms have been established. Some characteristics of inshore operations are similar to those that would be established offshore (e.g., both are open to the surrounding environment); however, other characteristics of offshore operations, such as offshore currents, wind and waves, water quality, and depth, are likely to differ from inshore areas. Generally, the outcomes associated with offshore aquaculture development depend on characteristics of aquaculture sites and how technology is employed and managed. ", "Over the years, researchers have identified several issues related to marine aquaculture and the use of net pens in inshore areas. These issues include water pollution from uneaten feed and waste products (including drugs, chemicals, and other inputs); habitat degradation, such as alteration of benthic habitat from settling wastes; sustainability of fish used in aquaculture feeds; use of antibiotics and other animal drugs; introduction of invasive species; escape of cultured organisms; and the spread of waterborne disease from cultured to wild fish. During the last two decades, technical advances and farming practices have reduced these impacts in nearshore areas. Existing laws and regulations also have established performance standards and addressed many of the potential adverse environmental effects of net pen aquaculture. "], "subsections": [{"section_title": "Fish Waste", "paragraphs": ["Fish feed is the main source of waste from aquaculture and contributes to most environmental impacts associated with aquaculture. The discharge of wastes, such as unused feed, and metabolic fish wastes, such as nitrogen (ammonia and urea), has been an ongoing concern because of potential effects on water quality and degradation of the seafloor environment under net pens. Treatment of effluent is not feasible because wastes are discharged directly into the ocean through net enclosures. Impacts on the environment depend on a variety of factors, such as feed quality, digestion and metabolism, feeding rate, biomass of fish, and species. Site characteristics such as cage design, depth, currents, existing water quality or nutrient levels, and benthic features also influence nutrient dispersion and impacts. ", "Impacts on water quality in the water column adjacent to net pens are often related to a combination of increases in nitrogen, phosphorus, lipids, and turbidity and depletion of oxygen. Eutrophication may occur when net pens are placed at high densities and flushing of semi-enclosed water bodies is poor. According to studies, aquaculture's contribution to nitrogen in areas adjacent to net pens ranged broadly from none to significant levels depending on a variety of factors, including environmental characteristics and species. In some cases, it appears that nutrients are flushed away from the immediate cage area to the surrounding water body. Management practices such as choosing sites with adequate current and depth are likely to improve circulation and dissipation of waste products. ", "Solid feed and fish waste descend through the water column and may accumulate on the bottom below and around aquaculture facilities. In some cases, wastes accumulate at rates greater than the assimilative capacity of the environment, and the increase of respiration from microbial decomposition decreases oxygen levels (hypoxia) and changes sediment chemistry. This may cause hypoxia in sediments and the water overlying the bottom, which may in turn affect the abundance and diversity of marine organisms in the area. Reviews have identified changes to sediment chemistry as one of the primary impacts of marine aquaculture in the United States. ", "Over the last several decades, harmful environmental impacts have been reduced because of advances in technology, improved facility siting, better feed management, and stricter regulatory requirements. Feed formulations have been modified to improve digestibility without losses in growth. When feed is more fully digested, the amount of waste (nutrient) outputs per unit of fish produced is reduced and fewer solid wastes and nutrients are released to the environment. Modifying feeding practices also has reduced the loss of uneaten food. Some facilities now use underwater devices to monitor feeding to avoid overfeeding and waste. Environmental monitoring also informs farmers and regulators of the need to leave a site fallow or to adjust feeding. ", "Some researchers and aquaculturalists have proposed the use of multi-tropic aquaculture by adding other organisms such as invertebrates and seaweeds to the aquaculture system. The system would mimic natural tropic relationships, where wastes from cultured organisms are food for other organisms, such as shellfish, and supply nutrients for seaweed. These additions could lessen environmental impacts from nutrients and increase the efficiency of feed utilization. ", "Proponents suggest that offshore aquaculture may produce fewer and less severe environmental impacts than those caused in nearshore areas. They hold that open ocean waters are normally nutrient deficient, and nutrients released from offshore aquaculture operations would likely dissipate. Critics question whether experiences with experimental facilities are relevant to future commercial operations, which may need to operate at larger scales to be profitable. Generally, environmental impacts are likely to vary depending on management and culture techniques, location, size and scale, and species."], "subsections": []}, {"section_title": "Fish Diseases", "paragraphs": ["Fish diseases are caused by bacteria, viruses, and parasites that commonly occur in wild populations. Aquaculture production is vulnerable to mortality associated with fish diseases, and serious losses have occurred. Disease outbreaks cost the global aquaculture industry an estimated $6 billion per year. Starting in 2007, the Chilean aquaculture industry suffered the worst disease outbreak ever observed in salmon aquaculture. The outbreak of infectious salmon anemia virus cost the industry 350,000-400,000 mt of production and $2 billion. ", "Net pens are open to the marine environment, so pathogens may pass freely as water moves through net pen enclosures. Cultured organisms are often more susceptible to diseases because fish are kept at higher densities, which increases the rate of contact among fish and may induce stress. Research suggests that fish pathogens may be transferred from farmed to wild fish and that non-native pathogens may be introduced when fish are moved from different areas. Some fish farmers counter that more disease problems originate in wild populations, where reservoirs of disease naturally exist and are subsequently transferred to cultured organisms.", "For example, some researchers have identified sea lice as a serious problem for Atlantic salmon farming because of lost production and the costs of disease management. Studies demonstrate that high host densities in net pens promote transmission and growth of the parasite. It has been hypothesized that sea lice may be spread from salmon in net pens to wild counterparts that are passing in adjacent waters. Some assert that sea lice have harmed wild salmon populations migrating near infested salmon farms. Studies have shown that transmission is initiated from wild to cultured fish, and then the lice are transmitted back to wild salmon hosts. The extent of the impact on wild salmon is a matter of debate, because many different factors affect salmon population abundance. However, a recent study concluded that \"Atlantic salmon populations are already under pressure from reductions in marine survival and the addition of significant lice-related mortality during the coastal stage of smolt out-migration could be critical.\" Sea lice control and prevention strategies have included the use of approved therapeutants (aquaculture drugs) and fallowing of sites between production cycles. "], "subsections": []}, {"section_title": "Drugs and Other Chemicals", "paragraphs": ["Various drugs have been used to treat and prevent the occurrence of disease, including disinfectants, such as hydrogen peroxide and malachite green; antibiotics, such as sulfonamides and tetracyclines; and anthelmintic agents, such as pyrethroid insecticides and avermectins. Antibiotics are used to control bacterial diseases and are sometimes introduced to cultured fish in their feed. Drugs also are used to aid in spawning, to treat infections, to remove parasites, and to sedate fish for transport or handling. Viral diseases are managed by monitoring and focusing on management practices, such as lowering stress, selecting organisms with greater resistance, and providing feed with proper nutrients. However, in some cases it is necessary to depopulate farms to stop the spread of the disease. ", "The Food and Drug Administration (FDA) is responsible for approving drugs used in aquaculture. The drug must be shown to be safe and effective for a specific use in a specific species. Only drugs approved by the FDA Center for Veterinary Medicine may be administered to aquatic animals. Drug withdrawal periods and testing are required to prevent the sale of fish that contain drug residues. The USDA Animal and Plant Health Inspection Service is responsible for controlling the spread of infectious diseases and requires an import permit and health certificate for certain fish species. Many states also have animal health regulations to prevent disease introductions and manage disease outbreaks. ", "Aquaculture drugs such as antibiotics that are used to treat marine finfish may be transferred to open water environments when unconsumed feed or fish wastes pass through net pen enclosures. Extensive use of these agents may result in the development and spread of bacteria that are resistant to antibiotics. The use of many of these drugs reportedly is declining, as vaccines eliminate the need to treat bacterial diseases with antibiotics and other drugs. Examples include salmon farming in Norway, where antibiotic use has decreased by 95%, and in Maine, where antibiotics are now rarely used. Proponents of offshore aquaculture suggest that, because of the more pristine and better oxygenated water conditions offshore as compared to many inshore areas, the occurrence of fish diseases could be lower for offshore aquaculture. "], "subsections": []}, {"section_title": "Escapes, Genetic Concerns, and Invasive Species", "paragraphs": ["The escape of organisms from aquaculture facilities, especially non-native species, is another environmental concern related to aquaculture. This issue might arise if genetically selected or non-native fish escape and persist in the wild. Historically, non-native species have been used in aquaculture, sometimes resulting in long-term environmental harm. For example, Asian carp such as silver, bighead, and grass carp were introduced to the United States from Asia to improve water quality of freshwater aquaculture ponds and waste treatment ponds. These species are now found in most of the Mississippi drainage area, and they have affected the basin's aquatic ecology and harmed species such as freshwater mussels and native fish.", "Genetic diversity could be affected if hatchery-raised fish spawn with wild conspecifics (wild fish of the same species). Interbreeding could result in the loss of fitness in the population due in part to the loss of genetic diversity. Genetic risks would depend on the number of escapes relative to the number of wild fish, the genetic differences between wild and escaped fish, and the ability of escaped fish to successfully spawn in the wild. There are also concerns that non-native fish could become established in the wild and compete with wild fish for food, habitat, mates, and other resources.", "Experiences with farmed Atlantic salmon may provide some insight regarding escape of farmed fish both within and outside their native ranges. Atlantic salmon have escaped from farms in the Pacific Northwest (outside their native range) and have been recaptured in Alaskan commercial fisheries. In 2017, over 100,000 Atlantic salmon escaped from facilities owned by Cook Aquaculture off Cypress Island, WA. Many of the escaped fish were recovered, and fishery managers assumed the remaining fish were unable to make the transition to a natural diet. In British Columbia, escaped Atlantic salmon have spawned and produced wild-spawned juvenile Atlantic salmon, but it is uncertain whether they have established self-reproducing breeding populations.", "Within the range of Atlantic salmon, farmed salmon have been found on spawning grounds during the period when wild Atlantic salmon spawning occurs. Domestication of farmed salmon has changed their genetic composition and reduced genetic variation. These changes have occurred because limited numbers of brood fish are used for spawning farmed fish and farmers select for specific traits. Much present-day farm production of Atlantic salmon is based on five Norwegian strains. Farmed and wild hybrids and backcrossing of hybrids in subsequent generations may change genetic variability and the frequency and type of alleles present in wild populations. The extent and nature of these changes to genetic variability may affect survival (fitness) of these populations. Changes in the genetic profiles of wild populations have been found in several rivers in Norway and Ireland, where interbreeding of wild and farmed fish is common. Large-scale experiments in Norway and Ireland show highly reduced survival and lifetime success rates of farmed and hybrid salmon compared to wild salmon. Some researchers have concluded that further measures are needed to reduce the escape of salmon from aquaculture farms and their spawning with wild populations.", "Researchers and managers have made several recommendations to decrease the risk of invasive species introductions and the loss of genetic diversity. There appears to be common agreement, as in the case of the Gulf of Mexico FMP, that only native species should be farmed. To decrease genetic risks associated with escapes, farmers might be required to use wild broodstock with a genetic makeup that is similar to local wild populations. However, by using this approach, farmers may forgo benefits of selective breeding. Another approach might involve the use of sterile fish created through techniques such as hybridization, chemical sterilization, polyploidy, and others. However, these methods are not always 100% effective and the approach may increase costs of production. "], "subsections": []}, {"section_title": "Interactions with Other Species", "paragraphs": ["Interactions between aquaculture operations and marine wildlife may occur when predators in search of food are attracted to aquaculture facilities or if aquaculture sites overlap with the ranges or migration of marine species. These interactions are common in Chile, British Columbia, and Norway, where marine mammals and birds often are attracted to salmon farms. Most interactions are seasonal and involve sea lions, seals, and otters, as well as seabirds such as sea gulls and cormorants. Predation can result in loss of fish, damage to equipment, and stress to fish. Deterrence measures seek to address these concerns; for example, predator nets may be placed outside the main net to stop marine mammals directly accessing the net pen. Some farms also install bird nets over net pens to protect fish from bird predation. When nonlethal measures fail, sea mammals are sometime culled. ", "Offshore facilities could affect some endangered species as they migrate or alter essential habitat for feeding, breeding, and nursing. Information on incidental entanglement and mortality is limited, because of the small number of facilities working in offshore areas. NOAA recently investigated longline aquaculture gear that might be used for mussel culture and found that interactions are rare. However, researchers questioned whether the small number of interactions indicates that this type of aquaculture is benign or is due to the failure to detect and report interactions. Minimizing impacts on protected species may require monitoring and research into natural interactions between predators and prey. Management strategies might involve preventive measures, such as spatial planning and aquaculture gear modifications. ", "Wild fish also are sometimes attracted to net pens to consume feed that has fallen through net pen enclosures. The attraction of wild fish may provide a benefit, because their consumption of feed may lessen environmental impacts such as the release of nutrients or deposits of feed near net pens. At the same time, it could have negative impacts, such as the transfer of diseases from farmed to wild fish or from wild to farmed fish. Impacts related to changes in wild fish physiology from the ingestion of feed and changes in the distribution of wild fish are unknown. "], "subsections": []}, {"section_title": "Aquaculture Feeds and Related Issues", "paragraphs": ["Fish feed is a critical input, because it must provide all of the essential nutrients and energy needed to meet the cultured organism's physiological requirements. The supply and use of aquaculture feed are directly related to the economic viability of aquaculture operations, fish growth and health, environmental quality, ecological concerns, and human nutritional benefits from aquaculture products. Fish meal and oil are used to produce feed for carnivorous species such as salmon, because these ingredients provide nutritional requirements that are similar to those found in the wild. Aquaculture feeds must have a composition that maintains growth and fish health while balancing the costs of feed components against the value of outputs associated with fish growth. Researchers note that future aquaculture production is likely to be constrained if feeds are limited to sources of fish meal and oil, which require wild fish production and fish processing wastes. Research efforts have focused on the use of fish meal and oil substitutes that are derived from terrestrial plants. Plant meal and oils now supply the bulk of feed ingredients, but they are not a perfect substitute and, in many cases, fish meal and oil are still an important component of most fish feeds. "], "subsections": [{"section_title": "Feed Production and Use", "paragraphs": ["Nutritional requirements and feed composition vary according to species, the life stage of the organism (e.g., larvae, fry, fingerlings, adults), and management objectives. Fish feeds are formulated to provide a mixture of ingredients, such as proteins, lipids, carbohydrates, vitamins, and minerals, which provide the greatest growth at the lowest cost. Historically, fish meal and oil have been principal ingredients of many aquaculture feeds, because these ingredients have been a cost-effective means of providing the nutritional requirements of many cultured species. Fish meal and oil are obtained from reduction fisheries that target small pelagic species such as anchovies, capelin, herring, and menhaden and from fish processing wastes of wild and aquaculture products. Reduction fisheries target species that are generally less valuable than those used for human consumption. The fish are heated and pressed to obtain fish oil and milled and dried to produce fish meal. Since 2006, the annual world supply of fish meal has ranged from 4.49 mmt to 5.86 mmt and the supply of fish oil has ranged from 0.86 mmt to 1.08 mmt. In 2016, the United States produced 253,600 metric tons (mt) of fish meal and 80,500 mt of fish oil, approximately 5% and 8% of global production, respectively. ", "Reduction fisheries supply approximately 70% of fish meal and fish oil, with the remainder obtained from fish processing wastes. In the last 20 years, global production of fish meal and oil has declined in part because of increasing use of fish from reduction fisheries for direct human consumption and tighter quotas and controls on unregulated fishing. The global decrease in total fish meal production has occurred despite increasing production of meal and oil from fish processing wastes. "], "subsections": []}, {"section_title": "Conversion of Aquaculture Feed to Fish Flesh", "paragraphs": ["Researchers have found that fish meal (protein) and fish oil (lipids) are important ingredients for fish growth. Most feeds are formulated to increase efficiency by using high-energy lipid to allow for greater conversion of dietary protein into fish muscle. In addition to fish protein and oil, fish feeds may include plant proteins, terrestrial animal protein, carbohydrates, moisture, ash, vitamins, and minerals. In comparison to other animals, fish are relatively efficient in converting fish feed to flesh. For example, feed conversion ratios for Atlantic salmon are approximately 1.15 (approximately 1.15 kilograms [kg] of dry feed are used to produce 1.0 kg of salmon flesh [wet]). In 2013, salmon fish feed used on Norwegian farms consisted of approximately 18% fish meal and 11% fish oil. ", "The amount of marine fish protein and oil needed to produce a unit measure of seafood such as salmon has been decreasing with the use of plant-based substitutes. The \"fish in fish out\" ratio is the amount of wild fish needed to produce the fish meal and fish oil required to produce one kilogram of farmed fish. The ratio of \"fish in to fish out\" varies according to the nutritional requirements of different species, with higher ratios for carnivorous fish such as eels (1.75) that are fed higher fish protein and fish oil diets and lower ratios for omnivorous fish such as tilapia (0.18). When aggregated across species, worldwide aquaculture is a net producer of fish protein, with estimates ranging from 0.22 kg to 0.5 kg of wild marine fish used to produce a kilogram of farmed seafood."], "subsections": []}, {"section_title": "Substitutes for Fish Meal and Oil", "paragraphs": ["Over the last two decades, research on fish dietary requirements has contributed to progress in developing substitutes for fish meal and oil from terrestrial plant ingredients and other potential sources, such as marine algae. This has led to reductions in the use of fish meal and oil as ingredients in fish food. Terrestrial plant meal and oils now supply the bulk of feed ingredients for most fish species. The focus of research has been on plant protein and oil sources such as soy, canola, sunflower, cottonseed, and others. For example, the Norwegian salmon industry has reduced the content of fish meal and oil in fish feed from over 60% to less than 25% by using plant proteins and oils.", "In spite of decreasing global production of fish oil and meal, use of plant-based substitutes has allowed production of feeds for all aquaculture to expand at 6% to 8% per year. Increasing demand and a limited supply of fish meal and oil have caused prices to triple for these ingredients in recent years. These price increases are likely to continue, because production is generally limited to supplies from wild sources. The cost of aquaculture feeds accounts for approximately 50% of net pen aquaculture operating costs. Limited wild supplies and rising feed costs have encouraged researchers and aquaculturalists to improve feeding techniques to reduce waste, modify feed formulations, use alternatives such as waste from fish-processing plants, and investigate new sources. Substitution has become more attractive, as the prices of fish meal and oil have risen faster than the prices of plant proteins and oils. Fish can be cultured with substitutes for fish meal and oil, but the commercial use of substitutes depend on whether the lower costs of the substitute can offset losses associated with lower growth rates, less disease resistance, and inferior nutritional value of aquaculture products.", "Although significant progress has been made in using plant protein and oil substitutes for fish feeds, there are still limitations to their use. In the near future, some fish meal and oil will still be needed in feed formulations. Plant meals are deficient in certain essential amino acids and contain fiber, carbohydrates, and certain antinutritional factors, which can adversely affect absorption, digestion, and growth. Nutritional quality of plant proteins can be improved through chemical and mechanical processing, which can reduce certain antinutrients and concentrate protein. Plant oils are an excellent source of energy, but they do not contain omega-3 fatty acids (eicosapentaenoic acid [EPA] and docosahexaenoic acid [DHA]). These fish oils have been found to improve immune responses and fish health generally. Fish species have differing tolerances to diets without certain fatty acids, which appear to be related to their natural diet. The use and substitution of plant protein and oils is likely to increase with further research into alternatives and as prices of fish meal and oil increase. "], "subsections": []}, {"section_title": "Fish Health", "paragraphs": ["Proper feed formulations also are essential to promote fish health and prevent disease outbreaks. When fish are farmed at high densities, good nutrition tends to reduce stress, decrease the incidence of disease, and boost immune systems. A deficiency in any required nutrient may impair health by affecting the organism's metabolism and increasing susceptibility to disease. Research has shown that the use of plant oils and the ratio of different fatty acids can affect the immune response in fish. Dietary additives of immunostimulants, probiotics, and prebiotics have been found to increase immunity, feed efficiency, and growth. An ongoing challenge is to improve knowledge and commercial application of feed formulations, especially for nutrimental requirements of newly domesticated species."], "subsections": []}, {"section_title": "Human Health and Preferences", "paragraphs": ["The human health benefits of seafood are widely recognized because fish species contain high-quality protein, oils, minerals, and vitamins. Some research has found that diets that include omega-3 fatty acids enhance early brain and eye development and reduce heart disease and cognitive decline later in life. Feeds with plant-based substitutes can affect the quality of seafood products because these alternatives lack the fatty acids that are beneficial to human health. Farmed fish products that have been fed plant substitutes for fish oil may have lower concentrations of beneficial fish oils in their flesh. Two potential ways to reduce the use of fish oils in feed while maintaining high levels of omega-3 fatty acids in fish are (1) to develop genetically modified plants, fungi, or microbes to produce DHA and EPA for use in fish feeds or (2) to grow fish on low fish oil diets in the beginning of the production cycle and boost the omega-3 fatty acids in fish diets to raise their levels at the end of the production cycle. ", "There also are growing public health concerns about persistent organic pollutants, such as polychlorinated biphenyls (PCBs), and inorganic contaminants, such as heavy metals, in farmed fish. The accumulation of contaminants varies by location and associated sources of pollutants. It can occur in both wild and farmed fish. Fish fed with fish meal and oils may accumulate contaminants from marine sources. Several studies have reported elevated levels of contaminants in feeds and farmed Atlantic salmon flesh. An advantage of using plant protein and oil is the potentially lower contaminant levels than those found in some wild seafood products. Several studies have found that replacing fish protein and oil with plant-derived material lowered the level of contaminants significantly. ", "Consumer perceptions of changes in the quality of fish raised with substitute feeds also may affect acceptance of aquaculture products. There are widely held beliefs regarding the composition and health benefits of farmed and wild fish. Studies have shown that there are differences in taste and texture of fish farmed with alternative proteins and oils, but consumer preference studies have yielded mixed results. Public perceptions of aquaculture products also include concerns with the use of therapeutants such as antibiotics and the crowding and industrial nature of fish farming."], "subsections": []}, {"section_title": "Sustainability Concerns", "paragraphs": ["Some stakeholders have described the use of fish meal and oils for aquaculture feeds as an issue related to the sustainability of forage species and marine ecosystems. More than 30% of global fish production and a large portion of fish meal and oil used for aquaculture feeds (75%) is derived from the harvest of forage species, such as herring, anchovies, capelin, and menhaden. Fatty acids are produced by marine algae (phytoplankton), consumed and concentrated in fish that consume algae, and transferred to organisms higher in the food chain that consume forage species. As stated earlier, forage species have a relatively low economic value, and most are not marketed for direct human consumption. However, their biomass is relatively large because they feed at somewhat low tropic levels, and they can be caught fairly easily in large volumes because they are schooling species. Forage species serve as prey for higher tropic level fish species such as tuna, cod, and striped bass, marine mammals, and marine birds. ", "Aquatic ecologists question whether aquaculture demand and increasing prices may encourage higher levels of fishing pressure and cause or continue overfishing of forage fish populations. Management of wild fish stocks is improving in many parts of the world, and many stocks are now considered to be well managed. However, some researchers have concluded that fishing for forage species should be limited to relatively low levels, because forage species are needed to support production of other marine species. Research using ecosystem models suggests that forage fish should be fished at lower rates to benefit the ecosystem rather than at rates that would provide long-term maximum yield. One report recommended that catch rates should be reduced by half and biomass of forage fish should be doubled. However, other researchers have questioned whether there is a strong connection between forage fish abundance and the abundance of their predators; they conclude that harvest policies for forage species need to be guided by a variety of factors that recognize the complexities of fisheries and ecosystems. "], "subsections": []}]}]}, {"section_title": "Economics, International Conditions, and Stakeholder Concerns", "paragraphs": ["Increasing demand for seafood, advances in aquaculture methods, and increases in global aquaculture production have led many observers to take an optimistic view of potential offshore aquaculture development in the United States. Nevertheless, the future of offshore development is uncertain because of the paucity of experiences in establishing and managing U.S. offshore aquaculture facilities. Greater regulatory certainty may encourage U.S. offshore development, but economic viability will determine whether the industry expands and produces significant quantities of seafood. ", "The viability of offshore aquaculture in the United States is likely to depend on future developments, such as further technical advances, economic conditions, and social and political acceptance. Another economic consideration for policymakers is how to integrate policies that recognize the potential costs (externalities) of environmental harm that may be caused by offshore aquaculture and are not captured by markets. In addition to economics, user conflicts and related political factors are likely to play a role in the potential development of an offshore industry. "], "subsections": [{"section_title": "Factors Related to the Economic Viability of Offshore Aquaculture", "paragraphs": ["The economic potential of offshore aquaculture will depend on the prices of seafood products and the cost to produce them. The following discussion identifies some of the factors that will determine whether offshore aquaculture may be profitable. "], "subsections": [{"section_title": "Demand", "paragraphs": ["The quantity demanded for an aquaculture product is a function of price\u00e2\u0080\u0094each point along the demand curve is the quantity that consumers are willing to buy at a specific price. Consumers are generally willing to buy less product at higher prices and more product for lower prices. A change in demand, a shift of the demand curve, depends on a variety of factors, such as changes in income, prices of substitutes (domestic wild fish) and complements, and consumer tastes and preferences. ", "Offshore aquaculture production will compete with a variety of other protein products, such as imported seafood; domestically produced wild fish; and agriculture sources such as chicken, pork, and beef. Generally, demand for seafood products is rising both globally and domestically because of increasing population levels and incomes. The health benefits of seafood are also influencing changes in consumer preferences, with general movement away from traditional protein sources such as beef. Other types of domestic marine aquaculture production, such as land-based and inshore aquaculture, may compete with offshore aquaculture, but currently these activities provide a relatively small portion of the seafood consumed in the United States. Domestic sources of seafood may increase marginally as some overfished stocks recover, but most domestic fisheries are already at or near their natural limits. ", "Some have reported that offshore aquaculture could produce a higher-quality product because of the constant flow of clean water through net pens. If it can be shown that offshore products contain fewer toxin residues or if offshore products can be raised without aquaculture drugs, these products may become more attractive to health-conscious consumers. The FDA Seafood Safety Program and the NOAA Seafood Inspection Program also may reassure U.S. consumers of the safety and quality of domestic seafood, including seafood produced by offshore aquaculture. These factors may allow offshore producers to differentiate their products and receive higher prices relative to imports or other domestic seafood, especially in niche markets. "], "subsections": []}, {"section_title": "Supply", "paragraphs": ["The amount of seafood that aquaculturalists will be willing to produce at a given price depends on production costs. Economic conditions determine the costs of labor, hatchery supplies for stocking, feed, maintenance, and other inputs. For most aquaculture operations, the bulk of costs are for feed and stocking of early life stages, such as finfish fingerlings or oyster seed. Fixed costs include equipment depreciation, insurance, taxes, and lease payments. Shifts in supply result from changes in input prices, which also may be affected by technology, weather conditions, and other influences. At the level of individual farms or facilities, most costs are not set and often depend on short-run and long-run choices of the aquaculturalist. For example, in the short run, the producer may change feed quality and quantity, harvest intervals, or stocking rates, while in the longer term she may change species, location, technology, and scale. ", "Costs to produce seafood in offshore aquaculture facilities are likely to be higher than costs in inshore areas, because of the need for more resilient cage materials and construction, shore-side infrastructure, specialized vessels, and automation of facility systems. The location of offshore aquaculture facilities also is likely to increase costs for fuel, monitoring, harvest, and security. According to the Food and Agriculture Organization, offshore facilities operating at distances of greater than 25 nm from shore are unlikely to be profitable, because costs increase with distance from shore. ", "Some have speculated that offshore facilities will need to take advantage of economies of scale because of the relatively high costs of transporting materials between inshore and offshore facilities. Operating large-scale operations will require new coastal facilities and networks to supply and transport feed, construction materials, fingerlings, and harvested fish. Logistics networks to supply these inputs would need to be developed in coastal areas, where \"working waterfronts\" are already threatened due to competing uses and the relatively high cost of coastal real estate. These startup costs may exclude smaller producers who may not have access to the capital and resources needed to establish large-scale operations. ", "Financial risk, generally the probability of losing money, is another factor that is related to potential viability of offshore aquaculture and may affect the availability of capital and insurance. Risk is defined as uncertain consequences, usually unfavorable outcomes, due to imperfect knowledge. Assessing risk for offshore aquaculture is complicated by different species, technologies, site characteristics, and the lack of experience working in offshore areas. Risks may be greater in offshore than inshore areas because of the threat of severe weather conditions and exposed offshore environments. Attracting investment may be difficult because offshore aquaculture is a new industry with limited experiences for investors to evaluate. As risk and uncertainty increase, generally, a greater revenue stream is required to justify the same level of investment. Known risks can be reduced by decreasing the probability of adverse outcomes, such as by using stronger materials to build more resilient structures. The cost of reducing risks must be weighed against the probability and magnitude of potential losses. ", "Another approach to reducing risk is through insurance. Insurance transfers risk from the producer to the insurance underwriter through payments of insurance premiums. The cost of insurance premiums may be higher for offshore than inshore areas because of greater uncertainty and potentially higher risks of losses for offshore facilities. "], "subsections": []}]}, {"section_title": "Private Benefits and Externalities", "paragraphs": ["The previous discussion of supply and demand considers private costs of production that are borne by the producer. Policymakers are concerned with a broader definition of costs that may affect individuals who are not involved in the aquaculture business\u00e2\u0080\u0094often referred to as externalities . Externalities are defined as spillover costs or benefits, which are unintended consequences or side effects associated with an economic activity. For example, commercial fishermen may be harmed by habitat degradation caused by pollution from aquaculture because of associated declines of wild populations. When externalities are not considered, markets become inefficient because more of a good or service is produced than when the externality is fully considered. ", "The recognition of externalities is another way in which policymakers can examine the tradeoffs related to the private benefits from aquaculture production and the environmental harm caused by the activity. In the case of offshore aquaculture, external costs may be associated with environmental harm from pollution, escaped organisms, disease transmission, and other effects. The existence of externalities means that policymakers may need to consider whether and to what degree the government should intervene to account for these costs. Intervention may involve regulatory measures that minimize externalities while maximizing benefits associated with the industry (e.g., fish production). Decisions related to site selection, technology, and facility operations are likely to be some of the main factors that determine the level of offshore aquaculture externalities. "], "subsections": []}, {"section_title": "International Factors and Domestic Experiences", "paragraphs": [], "subsections": [{"section_title": "Trade", "paragraphs": ["DOC has expressed concern with increasing U.S. imports of seafood products. According to NMFS, 80%-90% of the seafood consumed in the United States is imported. International trade in seafood has grown over the last several decades. The value of seafood trade is now more than twice the trade of meat and poultry combined. Relatively high-value seafood from wild fisheries and aquaculture dominates imports. In 2017, the United States imported approximately 2.7 mmt of edible seafood valued at $21.5 billion. After accounting for exports valued at $5.7 billion, the value of imports was $15.8 billion greater than exports of edible seafood products. Approximately half of seafood imports are cultured. The two main imported products are farmed shrimp and salmon. In 2017, shrimp accounted for $6.5 billion and salmon accounted for $3.5 billion of U.S. seafood imports. ", "Supporters of offshore aquaculture assert that development of offshore areas and associated increases in seafood production could reduce the U.S. deficit in seafood trade. The Department of Commerce Strategic Plan states that, \"a strong U.S. marine aquaculture industry will serve a key role in U.S. food security and improve our trade balance with other nations.\" ", "Some may counter that the seafood trade deficit is not a good reason to support development of the aquaculture industry. Cultured salmon and shrimp imports have lowered prices and, therefore, the profits of domestic wild fisheries and aquaculture producers, but U.S. consumers have benefited from lower salmon and shrimp prices. According to economic theory, countries gain from trade when they specialize in products that they are best at producing. If other countries have an absolute or comparative advantage in aquaculture, the United States would likely benefit from supporting other industries. Advocates of aquaculture note that the United States has advantages compared to other countries because of its extensive coastline and EEZ, skilled labor, technology, domestic feed production, stable government and economy, and large seafood market. Others counter that U.S. federal waters are exposed to high winds and wave action for large parts of the year, whereas other parts of the world have readily available inshore areas and calmer offshore waters that could be developed, as well as lower labor costs. ", "Overall operating costs and environmental standards for aquaculture in other countries are often lower than in the United States. Some have speculated that costs of inputs such as labor and less strict regulations provide producers outside the United States with an insurmountable competitive advantage. Other observers stress that costs may be lower in other countries, but if prices are high enough, U.S. producers may still be able to operate profitably. Domestic producers also have some advantages, such as a large and relatively wealthy market and lower shipping costs than those for imports. ", "The government sometimes provides government-sponsored trade protections such as tariffs or import quotas to new industries. Protection may be rationalized by an infant industry that claims it requires time to overcome short-term cost disadvantages. Cost disadvantages may be related to the need to become more efficient by constructing new facilities, training workers, and installing new equipment. In these cases, tariffs would act as a subsidy that increases the domestic price of the good. When the industry becomes more efficient, the tariff would expire. However, as the industry becomes larger and more politically powerful, it may become difficult to remove the tariff. "], "subsections": []}, {"section_title": "U.S. Experiences", "paragraphs": ["U.S. aquaculture production from inshore marine areas and freshwater ponds and raceways is small relative to global production levels. The bulk of U.S. aquaculture production is from freshwater catfish, crayfish, and trout. Catfish production increased from 62,256 mt in 1983 to its peak of 300,056 mt in 2003. Factors that have supported the industry's development include research and development, marketing efforts, industry leadership, and vertical integration. However, production decreased from 215,888 mt in 2009 to 145,230 mt in 2016. An increase of pangasius (an Asian catfish) and tilapia imports has contributed to lower prices, which have contributed to decisions by less profitable catfish farms to take acreage out of production. ", "Salmon is the only marine finfish with significant U.S. marine aquaculture production, but it has struggled to compete with relatively inexpensive imports from Norway, Chile, and Canada. These countries are endowed with protected coastal areas such as fjords or bays where net pens may be deployed. Although environmental regulations and limitations on inshore leases may have affected U.S. salmon aquaculture production, stagnant prices and competitive imports also appear to have played a role. There is room for expansion of inshore net pen salmon aquaculture in areas of Maine, Washington, and Alaska. However, many residents in these areas do not support establishing or expanding net pen aquaculture because of environmental concerns and potential impacts on existing fishing industries. The ban on finfish aquaculture in Alaska and regulatory constraints in other states reflect these concerns."], "subsections": []}, {"section_title": "Offshore Development in Other Countries", "paragraphs": ["Currently, nearly all worldwide marine aquaculture production is from relatively well-protected inshore waters. Countries in the forefront of efforts to move offshore have experience with inshore aquaculture and with aquaculture industries that are characterized by relatively large investments in vertically integrated firms. Norway and China are the two largest investors in offshore aquaculture development, but neither country has facilities that are operating commercially. Their efforts have focused on developing structures that can withstand harsh offshore conditions and operate at scales that may offset the higher costs of offshore areas as compared to inshore areas. ", "Norway's industry already has extensive experience with inshore salmon aquaculture industry and is a leader in developing technology needed to move farther offshore. Norway has granted development licenses in offshore waters, and Norwegian companies are experimenting with different offshore concepts. Although there has been significant investment in offshore aquaculture in Norway, it is unclear whether these concepts will be profitable. It appears that long-term business strategies are still focused on inshore waters. Offshore aquaculture facilities are also under development in other countries, including Mexico, Panama, and Turkey. ", "The characteristics of specific regions also may offer advantages, as some believe future development will occur in the calm water tropical belt between 10\u00c2\u00b0N and 10\u00c2\u00b0S. One former offshore aquaculture farmer believes future investment will focus on new species in tropical and subtropical regions. It appears that growth of marine aquaculture may take different approaches in different parts of the world, with further increases in production from proven nearshore areas and research and development of potential land-based and offshore areas. Generally, movement offshore is likely to occur if seafood demand continues to increase and suitable nearshore areas are occupied or constrained by other factors. "], "subsections": []}]}, {"section_title": "Stakeholder Concerns and Aquaculture Development", "paragraphs": ["Some stakeholders have expressed concerns about offshore aquaculture that include environmental degradation, competition for ocean space, and market interactions between wild fishery and aquaculture products. Historically, user conflicts associated with aquaculture have occurred in inshore areas where oceans activity and use are more intensive. For example, some fishermen oppose aquaculture and perceive it as competition that lowers prices and fishing revenues. Most interactions are characterized as conflicts, but in some cases synergistic relationships may emerge. ", "Environmental concerns have been among the most controversial elements of the aquaculture debate, including expansion of aquaculture into offshore waters. Generally, environmental and commercial fishing interests have been opposed to plans for offshore aquaculture development because of potential harm to marine resources. They have asserted that poorly regulated inshore aquaculture development has degraded the environment and harmed wild fish populations and ecosystems. Concerns identified by these stakeholders include pollution, the use of wild species for fishmeal, fish escapement, threat of disease and parasites, harm to marine wildlife, and general impacts on marine ecosystems. Most commercial fishing and environmental interests advocate a precautionary approach.", "Industry supporters and aquaculturalists respond that research, innovation, and management practices have reduced or eliminated environmental risks. Generally, aquaculturalists assert that many previous environmental concerns have been addressed and that long-term aquaculture production relies on maintaining a clean and productive environment, an objective that environmental and fishing industry advocates also hold. Some also view offshore aquaculture as an additional means to support the domestic seafood industry, which has decreasing levels of employment in many regions. Some have noted that synergistic effects might support infrastructure and services such as docks, cold storage, and processing facilities that benefit both wild fishing and aquaculture. ", "Seafood imports from aquaculture production have affected seafood markets and coastal communities, such as salmon fishermen in Alaska and shrimp fishermen in the Gulf of Mexico. Prices fell during the 1990s, as global salmon and shrimp aquaculture production and associated imports increased. This shift caused significant economic difficulties for Alaska salmon fishermen, processors, and communities. Wild salmon prices have recovered to some extent, likely due to growing consumer differentiation between wild and cultured products. Some have responded that competition will occur with or without domestic growth in aquaculture because imports of farmed products are likely to continue and grow. Other changes that have been attributed to aquaculture include accelerated globalization of the seafood industry, increased industry concentration and vertical integration, and introduction of new product forms. ", "Marine aquaculture, especially the offshore aquaculture industry, is a small and new industry with few committed supporters and relatively little money and political influence. One observer noted that, \"marine aquaculture will become politically stronger as it grows\u00e2\u0080\u0094but it is difficult to grow without becoming politically stronger.\" The industry also faces opposition from environmental and commercial fishing interests. Several developments will need to take place if offshore aquaculture can be expected to become established and grow into a viable commercial industry; these developments are discussed in the next section. "], "subsections": []}]}]}, {"section_title": "Institutional Needs and Industry Support", "paragraphs": [], "subsections": [{"section_title": "Regulatory Framework for Offshore Aquaculture", "paragraphs": ["Most stakeholders agree that a regulatory framework likely needs to be developed before establishing offshore aquaculture in U.S. federal waters. A potential framework would need to fulfill the government's public trust responsibilities while remaining flexible enough to take advantage of evolving technology and markets. Many of the basic elements of the framework would depend on legislation providing statutory authority and requirements for leasing offshore areas, agency leadership and interagency coordination, and environmental protection. A regulatory framework could provide the industry with clear and understandable requirements for aquaculture facilities while minimizing potential environmental harm. Supporters of offshore aquaculture have advocated for a permitting and consultation process that is more timely, efficient, and orderly than the existing process. Most also agree that the regulatory process should be transparent and support public involvement. "], "subsections": [{"section_title": "Lead Agency", "paragraphs": ["NMFS has been the lead federal agency for marine aquaculture in inshore areas and for the potential development of offshore aquaculture. According to a 2008 U.S. Government Accountability Office (GAO) study, \"there is no lead federal agency for regulating offshore aquaculture, and no comprehensive law that directly addresses how it should be administered, regulated, and monitored.\" Stakeholders also have supported NOAA's role in managing federal aquaculture research, including research and development of offshore aquaculture technologies.", "Since publication of the GAO report, NMFS has attempted to regulate offshore aquaculture under the MSA. A recent court decision, however, cast doubt on whether NOAA has the authority under MSA to regulate offshore aquaculture. Several studies have recommended that NOAA should be granted clear authority to regulate offshore aquaculture. They point out that NOAA already has authority to evaluate proposed marine activities and projects to ensure the protection of marine mammals, endangered species, and marine sanctuaries. Furthermore, NOAA is responsible for federal management of marine fisheries and essential fish habitat. "], "subsections": []}, {"section_title": "Permits and Leases", "paragraphs": ["One of the needs for offshore aquaculture development is permitting or leasing of discrete ocean areas. Within the EEZ, the United States has sovereign rights for the purpose of exploring, exploiting, conserving, and managing natural resources, whether living and nonliving, of the seabed and subsoil and superjacent waters. The federal government grants rights to develop specific areas for specific activities in the EEZ are granted. Currently, no permitting or leasing program is specific to offshore aquaculture and leases depend on permits and consultation requirements under different laws and agencies that apply to marine activities generally. ", "Observers generally agree that aquaculture developers will need assurances that they will have exclusive rights via leases or permits to use specific ocean areas for agreed-upon periods. A leasing system could provide aquaculturalists with clearly defined rights to ocean space including the water surface, water column, and ocean bottom. Other characteristics of a leasing system might include transferability of the lease or permit, which would allow the aquaculturalist to transfer the permit or lease and benefit from its sale or use. Stakeholders told GAO that clear rights to use specific ocean areas would be needed to obtain loans. Proponents of offshore aquaculture development stress that, without some form of long-term (at least 25 years) permitting or leasing, offshore aquaculture will have problems securing capital from traditional funding sources and obtaining suitable insurance on the capital investment and stock.", "The Gulf of Mexico Aquaculture Fishery Management Plan (Gulf FMP) provides a 10-year site permit and 5-year permit renewals. Aquaculture industry representatives have expressed concern that these intervals are too short because of the time it will take their businesses to become profitable. Environmentalists would prefer \"shorter timeframes to ensure more frequent reviews and closer scrutiny of environmental impacts during the lease or permit renewal process.\" In state waters, Maine grants 10-year leases for salmon net pen aquaculture. Hawaii grants 20-year leases for permits in its waters. ", "The public's primary concerns are likely to include minimizing harmful effects on environmental quality and conflicts among ocean uses. Most recognize that a leasing framework will require review of potential environmental impacts of offshore aquaculture. This review likely would require the preparation of a programmatic environmental impact statement (PEIS) with a follow-up site-specific environmental review before a facility might be established. A PEIS could review potential environmental impacts of offshore aquaculture over broad areas of the ocean. Aquaculturalists generally agree that this approach would be useful if it reduced the need for facility-specific reviews. ", "Some have suggested that permits should be issued on a case-by-case basis by determining whether a specific site is appropriate for the proposed aquaculture facility. Others oppose this approach, because it could lead to an approval process that is less consistent and it could make it more difficult for regulators to assess cumulative impacts of different facilities within a region. Still others have suggested that ocean planning should identify both appropriate and prohibited areas for aquaculture. Regulators could assess potential sites for permitting aquaculture before and independently of individual permit applications. Some believe that this would make permitting more predictable and consistent. For example, the likelihood of harm to marine mammals might be decreased by limiting permits for aquaculture facilities to areas with a low risk of interactions. However, some aquaculturalists question whether regulators will choose the most viable sites for aquaculture. "], "subsections": []}, {"section_title": "Conditions of Use", "paragraphs": ["A regulatory framework is likely to require specific conditions on the use of a site. These requirements likely will vary depending on the species and technology employed. Nevertheless, some basic requirements related to environmental quality, inspections, and other public concerns are likely to be common to many offshore aquaculture operations. The Gulf FMP includes specific requirements that could be applicable to managing offshore aquaculture in other regions. A partial list of operational requirements under the Gulf FMP includes the following:", "placing at least 25% of the facility in the water at the site within two years of issuance of the permit; marking each system placed in the water with an electronic locating device; obtaining juveniles for stocking from certified hatcheries within the United States; providing a health certificate prior to stocking fish at the aquaculture facility; complying with all FDA requirements when using drugs or other chemicals; monitoring and reporting environmental survey parameters consistent with NMFS guidelines, inspecting for interactions or entanglements of protected species; and allowing access to facilities to conduct inspections.", "Some have recommended requirements for aquaculture facility plans to address potential contingencies, such as fish escapes from aquaculture facilities. Some representatives of fishery management councils supported marking or tagging hatchery fish as a potential means of tracking escaped organisms. However, some have questioned whether the added costs of marking fish are warranted and contend that tagging requirements should depend on the level of associated risk to natural resources. ", "Monitoring could also be required to track interactions with marine life and other changes to the environment. State regulators in Maine and Washington have developed monitoring requirements for net pen salmon aquaculture, such as monitoring the benthic community under net pens. Both states also require notification of disease outbreaks and can require specific mitigation measures depending on the severity of the outbreak. Federal monitoring requirements could be informed by state experiences and modified as better information becomes available. The Gulf FMP includes reporting requirements for stocking, major escapement, pathogen episodes (disease), harvest, change of hatchery, marine mammal and sea bird entanglement, and other activities or events.", "Aquaculture facilities in offshore areas would occupy areas that may be used for other ocean uses, such as oil and gas development, wind and tidal energy, maritime transportation, and commercial and recreational fisheries. Some have recommended that \"development of a national aquaculture management framework must be considered within the context of overall ocean policy development, taking into account other traditional, existing, and proposed uses of the nation's ocean resources.\" If conflicts develop over access to particular areas, a process would need to be developed to identify suitable areas in federal waters for aquaculture development and/or to mediate disputes. For example, commercial and recreational fishermen may have concerns regarding access to areas they have fished historically and potential interactions of cultured and wild fish. Some ocean managers have suggested that overlaying maps of different jurisdictions, ocean uses, and conditions favorable to aquaculture would be useful in avoiding user conflicts. "], "subsections": []}, {"section_title": "Other Management Entities", "paragraphs": ["As a regulatory framework for offshore aquaculture is developed, it could be enhanced by improving coordination and cooperation among federal, state, territorial, and tribal entities. Existing groups, such as the Subcommittee on Aquaculture, have provided a means for communication among federal agencies that might be used to enhance federal coordination of offshore aquaculture development and management. ", "The fishery management councils established under the MSA likely would have a role in offshore aquaculture development. Each of the eight regional councils develops FMPs for wild marine fisheries within its particular region. These plans are then sent to NMFS for approval and implementation. Historically, fishery management councils have had a role in considering whether to support offshore aquaculture in federal waters. In addition to the Gulf of Mexico FMP for aquaculture, several exempted fishing permits were issued for limited periods to investigate potential aquaculture development in federal waters off New England. Potential interactions with wild fisheries and harm to essential fish habitat and wild fish populations are likely to be fishery management councils' main concerns.", "In addition to consultation requirements under the Coastal Zone Management Act, the state role in developing a regulatory framework for offshore aquaculture may deserve additional consideration. Some stakeholders support an opt-out provision allowing states to refuse development in federal waters adjacent to state waters. Others suggest that the opt-out provision should apply only within a certain distance of shore (such as 12 nm). In response to earlier proposed legislation, NOAA supported a 12 nm distance to provide states with a buffer zone and simplify the difficulties of projecting state boundaries out to 200 nm. Harmonizing aquaculture regulations with adjacent states could provide an advantage to future development, because states would be in a position to limit or promote offshore aquaculture development. "], "subsections": []}, {"section_title": "Federal Support for Offshore Aquaculture", "paragraphs": ["Some assert that federal government assistance would be needed to promote the initial development of a U.S. offshore aquaculture industry. Assistance could range from general support of research to direct support of industry needs, such as finance. One argument in support of government assistance is that, in comparison to relatively well-known agriculture sectors such as animal husbandry, there are more uncertainties associated with offshore aquaculture. With the exception of Atlantic salmon, culture of most marine finfish is still at a relatively early stage of development. Development of offshore aquaculture is likely to require new culture techniques for rearing species not presently cultured. For this reason, the U.S. Oceans Commission recommended more assistance for aquaculture generally and an active government role to foster industry development.", "Stakeholders identified federal research needs in four areas:", "developing fish feeds that do not rely on harvesting wild fish; developing best management practices; exploring how escaped offshore aquaculture-raised fish might impact wild fish populations; and developing strategies to breed and raise fish while effectively managing disease.", "In addition to improving culture techniques, further research of interactions between aquaculture and the environment and potential harm to specific species and ecosystems could inform decisions related to site selection and monitoring needs. ", "A remaining question is which agency or agencies will provide the support needed for offshore aquaculture development. Some may question whether NOAA has adequate institutional experience with aquaculture or whether additional resources are needed to provide adequate program management and services. Some NOAA programs support the fishing industry, but none focus specifically on offshore aquaculture. Similarly, USDA administers a number of programs that support agriculture in areas such as finance, research, extension, market development, and disaster assistance, but none are specifically focused on offshore aquaculture. Legislation in the 116 th Congress to support offshore aquaculture may address whether and how NOAA and/or USDA programs could be adapted to the needs of offshore aquaculture, which is the appropriate agency to manage specific programs, and what level of federal support is appropriate."], "subsections": []}]}]}, {"section_title": "Potential Issues for Congress", "paragraphs": ["Currently, development of offshore aquaculture appears unlikely because of regulatory, technical, and economic uncertainties. One of the main issues for Congress is whether legislation can be developed that could provide the industry with greater regulatory certainty while assuring other stakeholders that environmental quality can be maintained and other potential conflicts minimized. Research and development of inshore facilities have shown that offshore aquaculture is technically feasible but have not shown whether moving facilities to offshore areas would be profitable. It is likely that the investment required for commercial development of offshore aquaculture facilities will depend to some degree on greater regulatory certainty. For example, one business that was developing offshore aquaculture in Puerto Rico has moved its operations to Panama; according to the owner, U.S. regulations made expansion impossible.", "Aquaculturalists and investors are likely to require secure property or leasing rights and clear regulatory requirements before investing in large-scale operations. Stakeholders with concerns that aquaculture will degrade the environment also may need assurances that adequate regulation, inspections, and enforcement will be required features of a regulatory program. These concerns have been reflected in several aquaculture bills that would prohibit offshore development until comprehensive legislation is enacted. ", "Previous congressional actions, such as hearings and bills, have concentrated on several areas, which include", "providing institutional support for aquaculture, such as planning, research, and technology transfer; identifying a lead agency to administer and coordinate aquaculture development and regulation; establishing and streamlining permit and consultation requirements to improve the efficiency of the permitting process; developing processes to consult and communicate with other stakeholders to reduce user conflicts; and minimizing environmental harm and addressing environmental concerns through planning and monitoring.", "If aquaculture is developed in the EEZ, most stakeholders likely would agree that there is a need for better coordination, clear regulation, and focused agency leadership. Some assert that congressional action will be necessary to support both commercial development and environmental protection."], "subsections": []}, {"section_title": "Congressional Actions", "paragraphs": ["Congress has made several attempts to pass offshore aquaculture legislation, including bills in the 109 th , 110 th , 111 th , 112 th , and 115 th Congresses, but none of these bills were enacted. Bills also were introduced that would have prevented aquaculture development in federal waters until statutory authority for offshore aquaculture development is enacted. While many stakeholders continue to call for federal legislation, it has been difficult to find a common vision among them for future development of an offshore aquaculture industry. "], "subsections": [{"section_title": "116th Congress", "paragraphs": ["In the 116 th Congress, no comprehensive offshore aquaculture legislation has been introduced, but several bills have been introduced that are related to offshore aquaculture and aquaculture generally. The Keep Finfish Free Act of 2019 ( H.R. 2467 ) would prohibit the issuance of permits to conduct finfish aquaculture in the EEZ until a law is enacted that allows such action. The Commercial Fishing and Aquaculture Protection Act of 2019 ( S. 2209 ) would amend the MSA to provide assistance to eligible commercial fishermen and aquaculture producers. Assistance could be provided when an eligible loss occurs due to an algal bloom, freshwater intrusion, adverse weather, bird depredation, disease, or another condition determined by the Secretary of Commerce. Other bills include the Prevention of Escapement of Genetically Altered Salmon to the United States Act ( H.R. 1105 ) and the Shellfish Aquaculture Improvement Act of 2019 ( H.R. 2425 ). "], "subsections": []}, {"section_title": "115th Congress", "paragraphs": ["In the 115 th Congress, the Advancing the Quality and Understanding of American Aquaculture Act (AQUAA Act; S. 3138 and H.R. 6966 ) would have established a regulatory framework for aquaculture development in federal waters. The bills would have provided NMFS with the authority to issue aquaculture permits and to coordinate with other federal agencies that have permitting and consultative responsibilities. They also would have identified NOAA as the lead federal agency for providing information on federal permitting requirements in federal waters. ", "S. 3138 and H.R. 6966 would have required the Secretary of Commerce to develop programmatic environmental impact statements for areas determined to be favorable for marine aquaculture and compatible with other ocean uses. Section 9 of the bills stated that it would not supersede the requirements of the National Environmental Policy Act of 1969 (NEPA) and that individual projects may require additional review pursuant to NEPA. The bills would have required the Secretary of Commerce to consult with other federal agencies, coastal states, and fishery management councils to identify the environmental and management requirements and standards that apply to offshore aquaculture under existing federal and state laws. The bills also identified 10 standards that should be considered for offshore aquaculture and applied when issuing permits conducting programmatic environmental impact statements. These standards included other ocean uses, conservation and management of fisheries under the MSA, and minimizing adverse impacts on the marine environment, among others.", "S. 3138 and H.R. 6966 would have provided institutional support of offshore aquaculture by establishing the Office of Marine Aquaculture within NOAA. The Office of Marine Aquaculture would have been responsible for coordinating NOAA activities related to regulation, scientific research, outreach, and international issues. The Office of Marine Aquaculture would have replaced the current Office of Aquaculture, which conducts activities that are similar to those proposed by the bills. The bills also would have made NOAA the lead agency for establishing and coordinating a research and development aquaculture grant program ", "A bill was also introduced ( H.R. 223 ) that would have prohibited the issuance of permits to conduct finfish aquaculture in the EEZ except in accordance with a law authorizing such action. Similar bills also were introduced in earlier Congresses to stop offshore aquaculture development in the EEZ. "], "subsections": []}, {"section_title": "Congressional Actions Prior to the 115th Congress", "paragraphs": ["Offshore aquaculture bills also were introduced in the 109 th , 110 th , 111 th , and 112 th Congresses. Generally, these bills focused on establishing a regulatory framework to develop offshore aquaculture in federal waters of the EEZ. The bills varied to some degree on the balance between the potential rights and responsibilities of aquaculturalists, especially between aquaculture development and environmental protection. For example, S. 1195 (109 th Congress), and H.R. 2010 and S. 1609 (110 th Congress) would have supported production of food, encouraged development, established a permitting process, and promoted research and development of offshore aquaculture. In contrast, H.R. 4363 (111 th Congress) and H.R. 2373 (112 th Congress) would have focused to a greater degree on potential impacts of offshore aquaculture. These bills stressed elements such as determining appropriate locations, issuing regulations to prevent impacts on marine ecosystems and fisheries, and supporting research to guide precautionary development of offshore aquaculture. ", "Other bills that would have constrained offshore aquaculture development were introduced in the 108 th , 109 th , 110 th , 112 th , 113 th , and 114 th Congresses. Most of these bills would have prohibited the issuance of permits for marine aquaculture facilities in the EEZ until requirements for issuing aquaculture permits are enacted into law."], "subsections": []}]}, {"section_title": "Conclusion", "paragraphs": ["The United States is the largest importer of seafood products in the world, and nearly half of domestic seafood imports are produced by aquaculture. Aquaculture development and production in the United States have lagged behind other countries due to a variety of factors, such as relatively inexpensive imports, regulatory policies, user conflicts, and higher costs of production. Some have speculated that marine aquaculture facilities could be developed farther offshore in federal waters, where they would be subject to fewer user conflicts and have space to operate in relatively clean ocean waters. However, movement to offshore areas also would involve several significant challenges, such as establishing a regulatory framework, developing new technologies, and competing with other existing sources of seafood. ", "According to many stakeholders and researchers, the lack of a governance system for regulating offshore aquaculture hinders the industry's development in the United States. Development of marine offshore aquaculture would likely require a new regulatory framework for establishing offshore aquaculture in federal waters. A regulatory framework potentially could provide the industry with clear requirements for its development while minimizing potential environmental harm. It remains an open question whether legislation could be crafted to achieve a balance between providing the certainty sought by potential commercial developers of aquaculture and satisfying environmental and other concerns of stakeholders such as environmentalists and fishermen. ", "While a new regulatory framework potentially could provide greater certainty to offshore aquaculture developers, other challenges would remain. For example, offshore aquaculture may involve higher costs and greater risk of losses associated as compared to inshore operations. Lack of experience operating in offshore areas and limited knowledge of culture techniques for many candidate marine species contribute to the financial risk of offshore aquaculture. Some observers expect that offshore aquaculture may occur incrementally as inshore areas are developed and culture techniques are refined. Federal support may be needed for finance, research, extension, market development, and disaster assistance, similar to USDA support of agriculture."], "subsections": []}]}}
{"id": "R46246", "title": "The SALT Cap: Overview and Analysis", "released_date": "2020-03-06T00:00:00", "summary": ["Taxpayers who elect to itemize their deductions may reduce their federal income tax liability by claiming a deduction for certain state and local taxes paid, often called the \"SALT deduction.\" The 2017 tax revision (commonly referred to as the Tax Cuts and Jobs Act, TCJA; P.L. 115-97 ) made a number of changes to the SALT deduction. Most notably, the TCJA established a limit, or \"SALT cap,\" on the amounts claimed as SALT deductions for tax years 2018 through 2025. The SALT cap is $10,000 for single taxpayers and married couples filing jointly and $5,000 for married taxpayers filing separately.", "The changes enacted in the TCJA will considerably affect SALT deduction activity in the next several years. The increased value of the standard deduction (roughly doubling from its pre-TCJA value for tax years 2018 through 2025), along with the reduced availability of SALT and other itemized deductions, are projected to significantly reduce the number of SALT deduction claims made in those years. The Joint Committee on Taxation (JCT) projected that repealing that SALT cap for tax year 2019 would increase federal revenues by $77.4 billion.", "The SALT deduction reduces the cost of state and local government taxes to taxpayers because a portion of the taxes deducted is effectively paid for by the federal government. By reducing the deduction's value, the SALT cap therefore increases the cost to the taxpayer of state and local taxes. That may affect state and local tax and spending behavior, as any reduction in state and local revenues from increased sensitivity to SALT-eligible tax rates must be offset by reductions in outlays or increases in other revenue to maintain budget outcomes.", "The SALT cap's effect on the SALT deduction's value is in part a function of state and local tax policies. Nationwide, there is considerable variation in both the combined level of income and sales taxes levied by states and the property taxes and other charges levied by local governments. Differences in incomes and price levels that serve as the base for those taxes are another source of disparity in SALT cap exposure. Internal Revenue Service (IRS) data showed that in 2017, the average SALT deduction claimed in New York ($23,804) was more than four times the average in Alaska ($5,451).", "The SALT cap predominantly affects taxpayers with higher incomes. State and local tax payments tend to increase with income, both as a direct function of the income tax structure and because higher incomes lead to increased consumption and thus sales and property tax payments. Increased income, therefore, makes higher-income taxpayers more likely to make SALT-eligible tax payments in amounts exceeding the SALT cap value. The benefit of SALT deductions in terms of tax savings is also larger for taxpayers with higher incomes because a federal tax deduction's value is proportional to the taxpayer's marginal income tax rate. JCT projected that more than half of 2019 benefits for the SALT deduction will accrue to taxpayers with incomes exceeding $200,000.", "Several pieces of legislation introduced in the 116 th Congress would modify the SALT cap, including legislation that would (1) repeal the SALT cap entirely; (2) increase the SALT cap's value for all taxpayers; (3) increase the SALT cap's value for some taxpayers; (4) make the SALT cap permanent; and (5) repeal IRS regulations affecting SALT cap liability.", "Following enactment of the TCJA, several states proposed or passed legislation that provided possible avenues to reduce the SALT cap's effect on taxpayers without reducing their relevant state or local tax burdens. Subsequent guidance by the IRS, however, makes it unclear or unlikely that those laws will prevent taxpayers from experiencing the SALT cap's effects."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["Taxpayers who elect to itemize their deductions may reduce their federal income tax liability by claiming a deduction for certain state and local taxes paid, often called the \"SALT deduction.\" The 2017 tax revision (commonly referred to as the Tax Cuts and Jobs Act, TCJA; P.L. 115-97 ) established a temporary $10,000 limit, or \"SALT cap,\" on annual SALT deduction claims. By limiting the amount of the SALT deduction, the SALT cap increases the tax liability of certain taxpayers, which increases federal tax revenues relative to what otherwise would have been collected without a limitation in place. The SALT cap's effect on tax liability varies significantly with taxpayer income and with state and local tax rates. A number of bills introduced in the 116 th Congress would modify the SALT cap, and federal regulatory efforts responding to related state and local government activity are ongoing. This report discusses the SALT cap's features, analyzes its potential impact, and summarizes recent legislation and regulatory action to modify the cap."], "subsections": []}, {"section_title": "Cap Mechanics and Revenue Effects", "paragraphs": ["Under current law, taxpayers itemizing deductions (in lieu of claiming the standard deduction) may reduce their taxable income by claiming the SALT deduction for certain state and local taxes paid during the tax year. The state and local taxes eligible for the SALT deduction are income taxes, sales taxes (claimed in lieu of income taxes), personal property taxes, and certain real property taxes not paid in the carrying on of a trade or business.", "For taxpayers who would have itemized deductions without access to the SALT deduction, it generates tax savings equal to the amount deducted multiplied by the taxpayer's marginal income tax rate. For example, a taxpayer with $20,000 of eligible state and local taxes and a top marginal tax rate of 35% would save $7,000 from the SALT deduction (i.e., $20,000*0.35). For taxpayers who would have claimed the standard deduction without access to the SALT deduction, it generates tax savings equal to the difference between their tax liability if they had claimed the standard deduction and their total tax liability with itemized deductions (inclusive of the SALT deduction). (Throughout this report, the tax savings attributable to the SALT deduction is also referred to as the benefit from the deduction.)", "The TCJA established a temporary SALT cap for tax years 2018 through 2025. The SALT cap is set at $10,000 for single taxpayers or married couples filing jointly and $5,000 for married taxpayers filing separately. By limiting the SALT deduction available to certain taxpayers, the SALT cap decreases the tax savings associated with the deduction relative to prior law, thereby increasing federal revenues. ", "The TCJA also changed a number of tax code features (e.g., standard deduction amounts, marginal tax rates) that indirectly affect SALT deduction eligibility and the value of the tax savings it generates. The TCJA roughly doubled the standard deduction and limited other itemized deductions. The TCJA also prohibited SALT deduction claims on taxes paid on foreign real property for tax years 2018 through 2025. ", "The SALT cap, the increased value of the standard deduction, and other tax changes enacted by the TCJA have reduced the number of taxpayers claiming the SALT deduction and the total tax savings from those claims. Table 1 shows the most recent estimates of reductions in federal revenues attributable to the SALT deduction for FY2017, the last full year before enactment of P.L. 115-97 , and FY2019 through FY2023. Revenue losses from the SALT deduction in FY2017 ($100.9 billion) nearly equaled the total losses projected from FY2019 through FY2023 ($117.2 billion). The Joint Committee on Taxation (JCT) projects that 16.4 million taxpayers will claim a SALT deduction for tax year 2019, compared to 46.6 million taxpayers who the Internal Revenue Service (IRS) reported claiming the deduction in 2017.", "Recent research has estimated the SALT cap's effect on SALT deduction claims independent of other tax changes enacted through the TCJA. A 2019 Treasury Inspector General report examined the SALT cap's hypothetical effect had it been imposed in tax year 2017, prior to the other TCJA changes taking effect. The report found that the cap would have reduced SALT deduction benefits for 10.9 million taxpayers (about 25% of all households claiming the deduction) and reduced deduction amounts by $323 billion, or just over half of the actual amounts deducted in that year. In June 2019, JCT estimated that holding all other portions of the tax code constant, repealing the SALT cap for tax year 2018 would decrease FY2019 federal revenues by $77.4 billion."], "subsections": [{"section_title": "Effects on State and Local Governments", "paragraphs": ["The SALT deduction provides state and local governments with an increased ability to levy taxes by reducing the after-tax cost of state and local taxes to taxpayers. By limiting the deduction's benefits, the SALT cap increases the cost (or \"price\") of state and local taxes for affected taxpayers. For example, consider a taxpayer with itemized deductions, a 35% marginal tax rate, and $20,000 in eligible SALT payments. Without a SALT cap in place, the net price of those taxes for the taxpayer would be $13,000 (or $20,000*[1-0.35]), as the taxpayer can use all $20,000 of those tax payments to reduce federal tax liability. When a $10,000 SALT cap is imposed, the final price of those taxes rises to $16,500 (or $10,000 + [$10,000*(1-0.35)]). ", "The basic economic law of demand\u00e2\u0080\u0094there is an inverse relationship between the price of a good and the quantity demanded\u00e2\u0080\u0094suggests that by increasing the price of state and local taxes, a SALT cap would lead to a decline in demand for state and local government activity. The size of the decrease would be a function of the sensitivity of public desire for state and local services, paid for by taxes, to changes in the price of those services (i.e., the elasticity of demand). Research has found indications that state and local governments respond to federal tax changes with shifts in their own tax and spending practices. ", "Response to the SALT cap could be a function of its salience , that is, the public awareness of its effect on tax liability. SALT cap salience may depend on awareness of the state and local taxes themselves, which can vary significantly across tax system features. Salience for taxpayers who take the standard deduction, but who would be better off itemizing deductions if not for the SALT cap, may be particularly low, as the SALT cap's effects may not be apparent in tax filing software. Taxpayers could also have difficulty differentiating SALT cap-related liability changes from other changes enacted through the TCJA. ", "State and local governments are generally limited in their ability to respond to shifts in demand for government services with changes in fiscal outcomes (i.e., increased deficits or reduced surpluses). Unlike the federal government, which has no enforceable balanced-budget requirement, most state and local governments are statutorily required to balance operating revenues and operating expenses over a one-year or two-year period. Governments with a binding balanced-budget requirement would therefore need to match any reduction in SALT revenue resulting from the cap with a reduction in spending on services provided or increases in other revenue sources."], "subsections": []}]}, {"section_title": "Distributional Effects", "paragraphs": ["This section explores features of localities and households that are likely to influence the distribution and intensity of SALT cap effects on tax liability. The recent enactment and implementation of the SALT cap means that tax return data on its impact by state, locality, and income level are currently unavailable. However, analyzing the SALT deduction's distribution prior to the cap's imposition can provide insight into its likely impact. The data indicate that the SALT cap's effects will vary significantly across state and local jurisdictions and household income. "], "subsections": [{"section_title": "Distribution Across States and Congressional Districts", "paragraphs": ["The SALT cap's effect is in part a function of state and local tax policies. For example, greater effective rates levied on taxes that qualify for the deduction (income taxes, general sales taxes, real and personal property taxes) would increase the amount of SALT-eligible tax payments and therefore increase the probability that a taxpayer will have SALT deductions that exceed the cap. State and local tax rates could thus affect both the number of taxpayers with higher tax liability from the SALT cap (sometimes referred to as SALT cap exposure) and the amount of those increases (sometimes referred to as the SALT cap burden).", "Differences in local incomes and price levels are another determinant of the SALT cap's effect. Wages and prices are the bases against which state and local governments levy SALT-eligible income, sales, and property taxes. Consider two households that are in separate localities and have different incomes but the same tax rates and the same purchasing power. In other words, adjusting for their local price levels, each household is able to purchase the same sets of goods and services. Although each household faces the same set of purchasing options on the public and private markets, the household facing higher price levels is more likely to have SALT payments in excess of the SALT cap. ", "State and local governments raised a combined $1.30 trillion in individual income taxes, general sales taxes, and property taxes in 2017, an average of about $8,500 per federal income taxpayer. Those revenues are divided almost evenly between state governments ($667 billion in revenues), which collected the majority of the income and sales taxes, and local governments ($632 billion), which collected the majority of property taxes. There is considerable geographic variation in the rates at which taxes are levied and in the incomes and prices to which those taxes apply. ", " Figure 1 shows effective state and local tax rates for all SALT-eligible taxes in each state, calculated as the percentage of total adjusted gross income paid in-state and local general sales taxes, individual income taxes, and property taxes. In 2017, New York (17.2% effective tax rate), Washington, DC (16.9%), Hawaii (16.1%), Maine (15.0%), and Nebraska (14.2%) had the highest combined effective state and local tax rates. Delaware (6.8%), Alaska (7.6%), Florida (7.7%), New Hampshire (8.3%) and Tennessee (8.4%) had the lowest combined tax rates. All else equal, states with higher SALT-eligible effective tax rates are likely to experience greater SALT cap effects on tax liability than states with lower rates. ", " Figure 2 plots the average SALT deduction amount for each 2017 congressional district (districts are from the 115 th Congress). The districts with the 20 highest average SALT deductions are located in states with above-average effective tax rates in Figure 1 , including New York, California, Connecticut, and New Jersey. Nineteen of the districts with the 20 lowest average SALT deductions are located in Florida, Texas, Tennessee, Alabama, Nevada, Arizona, and Alaska, all states with below-average effective state and local tax rates. Figure 2 shows the potential significance of local tax and economic activity on the SALT cap's effects. ", " Figure 3 adds a layer of analysis by plotting two variables on each congressional district: (1) average adjusted gross income (AGI) of taxpayers and (2) average effective SALT rates. Each district categorized as having low effective SALT rates in Figure 3 had an average AGI below $75,000, and 13 of these districts had average AGI below $50,000. Nineteen of the 20 districts with the highest effective SALT rates had an average AGI above $100,000, and four of the top five districts had an average AGI above $200,000. The distribution of SALT deductions across household income is discussed further in the next section. Figure 3 demonstrates the importance of considering both tax rates and the tax base when examining potential SALT cap effects. "], "subsections": []}, {"section_title": "Distribution Across Income Levels", "paragraphs": ["As with other tax deductions, SALT deduction benefits accrue more for higher-income taxpayers than lower-income taxpayers. Two factors explain this pattern: (1) higher incomes directly lead to more state and local income taxes and are correlated with higher sales and property tax payments stemming from greater consumption; and (2) taxpayers with higher incomes are subject to higher marginal tax rates, so each dollar deducted from tax liability results in greater tax savings.", " Table 2 shows the JCT projections of SALT benefits by income class in tax years 2017 (the last year before the TCJA took effect) and 2019. Taxpayers with more than $100,000 of AGI received the vast majority of SALT benefits in both 2017 (93%) and 2019 (89%). Taxpayers with income between $50,000 and $200,000 received a larger share of total benefits in 2019 (44%) than 2017 (29%), whereas the opposite trend occurs for taxpayers with more than $200,000 (declining from 71% to 56%). Taxpayers with less than $50,000 received relatively little benefit from the SALT deduction in both years. ", "Data from Table 2 suggest that the SALT cap increased the federal tax burden of high-income taxpayers. This occurs because the SALT cap (1) reduced the number of taxpayers claiming the SALT deduction, who disproportionately fell in higher income classes; and (2) reduced SALT benefit levels of taxpayers with more than $10,000 in SALT payments, who were particularly likely to have high levels of income. JCT estimated that were the SALT cap eliminated in tax year 2019, more than half of the additional tax benefits would have been claimed by taxpayers with incomes exceeding $1 million. The SALT cap's total effect on the combined federal, state, and local tax burden across income levels will depend on the state and local government response to the SALT cap, which is uncertain. ", " Figure 4 plots the percentage of all tax returns, the percentage of returns claiming SALT deductions, and the percentage of SALT deduction amounts claimed across income levels in tax year 2017, the latest year for which data are available. (The amount of SALT deduction claimed reflects the dollars deducted and not the tax savings associated with the deduction.) Tax returns with AGI exceeding $1 million represented less than 1% of all tax returns, but claimed over 25% of all SALT deduction amounts. Tax returns with over $100,000 in AGI claimed more than 78% of the SALT deduction amounts claimed, while returns with AGI below $50,000 claimed less than 10% of that total.", "The composition of state and local taxes also affects the SALT cap's ultimate effect on taxpayers within a local jurisdiction. Table 3 illustrates how SALT cap burden distribution can differ when the composition of state and local taxes changes while holding total tax revenue constant. In both jurisdictions, total tax revenues are $44,000. In Jurisdiction I, relatively high income tax rates generate higher income tax payments, and the SALT cap burden falls on Tax Units A and B, the taxpayers with higher incomes. In Jurisdiction II, property tax rates are higher than income tax rates, and the SALT cap burden instead falls on Tax Units A and C, the taxpayers with high property values. More of the state and local tax revenue in Jurisdiction II is above the SALT cap, meaning that taxpayers in Jurisdiction II are able to deduct less in SALT deductions on their federal income tax returns. This analysis highlights the importance of state and local tax structure in determining the SALT cap's effect on taxpayer liability even when holding the average level of taxes constant."], "subsections": []}]}, {"section_title": "State Responses to the SALT Cap", "paragraphs": ["The state and local response to the SALT cap's effect has varied across municipalities. Certain governments in states with relatively high mean SALT deduction values (see Figure 1 ) have either enacted legislation that would appear to make tax changes to reduce the SALT cap's effect on their taxpayers or taken legal action against the federal government. Recent federal and legal responses to some of these actions suggest these efforts will likely be unsuccessful. State and local governments with relatively lower levels of SALT cap exposure have taken little to no action.", "Following enactment of the TCJA, several state governments made changes to their tax codes with the potential to lower their residents' SALT cap exposure. Certain states enacted laws that provided taxpayers a credit against state taxes for charitable donations to state entities, which would then be eligible for the federal charitable deduction under Section 170 of the Internal Revenue Code. The IRS has since issued a final ruling limiting the availability of Section 170 charitable deductions in such a way that would render the new charitable activity ineligible. A legislative proposal that would overturn IRS regulations, S.J.Res. 50 , was rejected by the Senate in October 2019.", "Some states have tried to use a \"pass-through work around\" to reduce the SALT cap's impact on some of their taxpayers with pass-through business income. Many types of businesses that do not pay corporate income taxes (including S corporations and partnerships) pass through income to their owners, who pay taxes on that income at the individual level. The SALT cap does not limit SALT deductions associated with the carrying on of a trade or business. Hence, taxpayers whose SALT tax payments are associated with pass-through business income may not be subject to the SALT cap in the same manner as other individual income tax payments. Certain state governments have adjusted for this activity by enacting laws that levy or raise taxes on the pass-through business entity itself that are offset (holding total tax rates constant) by tax reductions or tax credits applied to individual income liability for pass-through business members subject to the tax increase . The IRS has not issued guidance on the viability of such legislation or its effect on SALT cap exposure. ", "Several states also took legal action related to the SALT cap following enactment of the TCJA, filing suit against the U.S. government in July 2018 and challenging the cap's constitutionality. A September 2019 federal district court ruling upheld the SALT cap's constitutionality, asserting that it did not unconstitutionally penalize certain jurisdictions."], "subsections": []}, {"section_title": "Legislation in the 116th Congress", "paragraphs": ["Legislation introduced in the 116 th Congress would modify the SALT cap, including proposals that would (1) repeal the SALT cap entirely; (2) increase the SALT cap's value for all taxpayers; (3) increase the SALT cap's value for some taxpayers; (4) make the SALT cap permanent; and (5) repeal IRS regulations affecting SALT cap liability. Table 4 displays legislation in the 116 th Congress that would directly modify the SALT cap."], "subsections": []}]}}
{"id": "R46013", "title": "Impeachment and the Constitution", "released_date": "2019-11-20T00:00:00", "summary": ["The Constitution grants Congress authority to impeach and remove the President, Vice President, and other federal \"civil officers\" for \"Treason, Bribery, or other high Crimes and Misdemeanors.\" Impeachment is one of the various checks and balances created by the Constitution, a crucial tool for holding government officers accountable for violations of the law and abuse of power.", "Responsibility and authority to determine whether to impeach an individual rests in the hands of the House of Representatives. Should a simple majority of the House approve articles of impeachment, the matter is then presented to the Senate, to which the Constitution provides the sole power to try an impeachment. A conviction on any one of the articles of impeachment requires the support of a two-thirds majority of the Senators present and results in that individual's removal from office. The Senate also has discretion to vote to disqualify that official from holding a federal office in the future.", "The Constitution imposes several additional requirements on the impeachment process. When conducting an impeachment trial, Senators must be \"on oath or affirmation,\" and the right to a jury trial does not extend to impeachment proceedings. If the President is impeached and tried in the Senate, the Chief Justice of the United States presides at the trial. The Constitution bars the President from using the pardon power to shield individuals from impeachment or removal from office.", "Understanding the historical practices of Congress with regard to impeachment is central to fleshing out the meaning of the Constitution's impeachment clauses. While much of constitutional law is developed through jurisprudence analyzing the text of the Constitution and applying prior judicial precedents, the Constitution's meaning is also shaped by institutional practices and political norms. In fact, the power of impeachment is largely immune from judicial review, meaning that Congress's choices in this arena are unlikely to be overturned by the courts. For that reason, examining the history of actual impeachments is crucial to understanding the meaning of the Constitution's impeachment provisions.", "One major recurring question about the impeachment remedy is the definition of \"high Crimes and Misdemeanors.\" At least at the time of ratification of the Constitution, the phrase appears understood to have applied to uniquely \"political\" offenses, or misdeeds committed by public officials against the state. Such misconduct simply resists a full delineation, however, as the possible range of potential misdeeds in office cannot be determined in advance. Instead, the type of behavior that merits impeachment is worked out over time through the political process.", "While this report focuses on the constitutional considerations relevant to impeachment, there are various other important questions that arise in any impeachment proceeding. For a consideration of the legal issues surrounding access to information from the executive branch in an impeachment investigation, see CRS Report R45983, Congressional Access to Information in an Impeachment Investigation , by Todd Garvey. For discussion of the House procedures used in impeachment investigations, see CRS Report R45769, The Impeachment Process in the House of Representatives , by Elizabeth Rybicki and Michael Greene."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["The Constitution grants Congress authority to impeach and remove the President, Vice President, and other federal \"civil Officers\" for treason, bribery, or \"other high Crimes and Misdemeanors.\" Impeachment is one of the various checks and balances created by the Constitution, serving as a crucial tool for holding government officers accountable for abuse of power, corruption, and conduct considered incompatible with the nature of an individual's office. ", "Although the term impeachment is commonly used to refer to the removal of a government official from office, the impeachment process, as described in the Constitution, entails two distinct proceedings carried out by the separate houses of Congress. First, a simple majority of the House impeaches \u00e2\u0080\u0094or formally approves allegations of wrongdoing amounting to an impeachable offense. The second proceeding is an impeachment trial in the Senate. If the Senate votes to convict with a two-thirds majority, the official is removed from office. Following a conviction, the Senate also may vote to disqualify that official from holding a federal office in the future. The House has impeached nineteen individuals: fifteen federal judges, one Senator, one Cabinet member, and two Presidents. Of these, eight individuals\u00e2\u0080\u0094all federal judges\u00e2\u0080\u0094were convicted by the Senate.", "The Constitution imposes several requirements on the impeachment process. When conducting an impeachment trial, Senators must be \"on Oath or Affirmation,\" and the right to a jury trial does not extend to impeachment proceedings. If the President is impeached and tried in the Senate, the Chief Justice of the United States presides at the trial. Finally, the Constitution bars the President from using the pardon power to shield individuals from impeachment or removal from office.", "Understanding the historical practices of Congress on impeachment is central to fleshing out the meaning of the Constitution's impeachment clauses. While much of constitutional law is developed through jurisprudence analyzing the text of the Constitution and applying prior judicial precedents, the Constitution's meaning is also shaped by institutional practices and political norms. James Madison, for instance, argued that the meaning of certain provisions in the Constitution would be \"liquidated\" over time, or determined through a \"regular course of practice.\" Justice Joseph Story thought this principle applied to impeachment, noting that the Framers understood that the meaning of \"high Crimes and Misdemeanors\" constituting impeachable offenses would develop over time, much like the common law. Indeed, Justice Story believed it would be impossible to define precisely the full scope of political offenses that may constitute impeachable behavior in the future. Moreover, the power of impeachment is largely immune from judicial review, meaning that Congress's choices in this arena are unlikely to be overturned by the courts. For that reason, examining the history of actual impeachments is crucial to determining the meaning of the Constitution's impeachment provisions.", "Consistent with this backdrop, this report begins with an examination of the historical background on impeachment, including the perspective of the Framers as informed by English and colonial practice. It then turns to the unique constitutional roles of the House and Senate in the process, followed by a discussion of impeachment practices throughout the country's history. The report concludes by noting and exploring several recurring questions about impeachment, including legal considerations relevant to a Senate impeachment trial."], "subsections": []}, {"section_title": "Historical Background on Impeachment", "paragraphs": [], "subsections": [{"section_title": "English and Colonial Practice", "paragraphs": ["The concept of impeachment and the standard of \"high Crimes and Misdemeanors\" in the federal Constitution originate from English, colonial, and early state practice. During the struggle in England by Parliament to impose restraints on the Crown's powers, the House of Commons impeached and tried before the House of Lords ministers of the Crown and influential individuals\u00e2\u0080\u0094but not the Crown itself \u00e2\u0080\u0094who were often considered beyond the reach of the criminal courts. The tool was used by Parliament to police political offenses committed against the \"system of government.\" ", "Parliament used impeachment as a tool to punish political offenses that damaged the state or subverted the government, although impeachment was not limited to government ministers. At least by the second half of the seventeenth century, impeachment in England represented a remedy for \"misconduct in high places.\" The standard of high crimes and misdemeanors appeared to apply to, among other things, significant abuses of a government office, misapplication of funds, neglect of duty, corruption, abridgement of parliamentary rights, and betrayals of the public trust. Punishment for impeachment was not limited to removal from office, but could include a range of penalties upon conviction by the House of Lords, including imprisonment, fines, or even death. In the English experience, the standard of high crimes and misdemeanors appears to have addressed conduct involving an individual's abuse of power or office that damaged the state. ", "Inheriting the English practice, the American colonies adopted their own distinctive impeachment practices. These traditions extended into state constitutions established during the early years of the Republic. The colonies largely limited impeachment to officeholders based on misconduct committed in office, and the available punishment for impeachment was limited to removal from office. Likewise, many state constitutions adopted after the Declaration of Independence in 1776, but before the federal Constitution was ratified, incorporated impeachment provisions limiting impeachment to government officials and restricting the punishment for impeachment to removal from office with the possibility of future disqualification from office. At the state level, the body charged with trying an impeachment varied."], "subsections": []}, {"section_title": "Choices of the Framers: An \"Americanized\" Impeachment System", "paragraphs": ["The English and colonial history thus informed the Framers' consideration and adoption of impeachment procedures at the Constitutional Convention. In some ways, the Framers adopted the general framework of impeachment inherited from English practice. The English Parliamentary structure of a bicameral legislature\u00e2\u0080\u0094dividing the power of impeachment between the \"lower\" house, which impeached individuals, and an \"upper\" house, which tried them\u00e2\u0080\u0094was replicated in the federal system with the power to impeach given to the House of Representatives and the power to try impeachments assigned to the Senate. ", "Nonetheless, influenced by the impeachment experiences in the colonies, the Framers ultimately adopted an \"Americanized\" impeachment practice with a republican character distinct from English practice. The Framers' choices narrowed the scope of impeachable offenses and persons subject to impeachment as compared to English practice. For example, the Constitution established an impeachment mechanism exclusively geared toward holding public officials, including the President, accountable. This contrasted with the English practice of impeachment, which could extend to any individual save the Crown and was not limited to removal from office, but could lead to a variety of punishments. Likewise, the Framers adopted a requirement of a two-thirds majority vote for conviction on impeachment charges, shielding the process somewhat from naked partisan control. This too differed from the English practice, which allowed conviction on a simple majority vote. And in England, the Crown could pardon individuals following an impeachment conviction. In contrast, the Framers restricted the pardon power from being applied to impeachments, rendering the impeachment process essentially unchecked by the executive branch. Ultimately, the Framers' choices in crafting the Constitution's impeachment provisions provide Congress with a crucial check on the other branches of the federal government and inform the Constitution's separation of powers."], "subsections": [{"section_title": "Impeachment Trials", "paragraphs": ["The Framers also applied the lessons of English history and colonial practice in determini ng the structure and location of impeachment trials. As mentioned above, most of the American colonies and early state constitutions adopted their own impeachment procedures before the establishment of the federal Constitution, placing the power to try impeachments in various bodies. At the Constitutional Convention, the proper body to try impeachments posed a difficult question. Several proposals were considered that would have assigned responsibility for trying impeachments to different bodies, including the Supreme Court, a panel of state court judges, or a combination of these bodies. One objection to granting the Supreme Court authority to try impeachments was that Justices were to be appointed by the President, casting doubt on their ability to be independent in an impeachment trial of the President or another executive official. Further, a crucial legislative check in the Constitution's structure against the judicial branch is impeachment, as Article III judges cannot be removed by other means. To permit the judiciary to have the ultimate say in one of the most significant checks on its power would subvert the purpose of that important constitutional limitation. ", "Rather than allowing a coordinate branch to play a role in the impeachment process, the Framers decided that Congress alone would determine who is subject to impeachment. This framework guards against, in the words of Alexander Hamilton, \"a series of deliberate usurpations on the authority of the legislature\" by the judiciary. Likewise, the Framers' choice to place both the accusatory and adjudicatory aspects of impeachment in the legislature renders impeachment \"a bridle in the hands of the legislative body upon the executive\" branch. That said, the Framers' choice also imposed institutional constraints on the process. Dividing the power to impeach from the authority to try and convict guards against \"the danger of persecution from the prevalency of a fractious spirit in either\" body. ", "Finally, the Framers made one exception to the legislature's exclusive role in the impeachment process that promotes integrity in the proceedings. The Chief Justice of the United States presides at impeachment trials of the President of the United States. This provision ensures that a Vice President, in his usual capacity as Presiding Officer of the Senate, shall not preside over proceedings that could lead to his own elevation to the presidency, a particularly important concern at the time of the founding, when a President and Vice President could belong to rival parties."], "subsections": []}, {"section_title": "High Crimes and Misdemeanors", "paragraphs": ["The Framers narrowed the standard for impeachable conduct as compared to the English experience. While the English Parliament never formally defined the parameters of what counted as impeachable conduct, the Framers restricted impeachment to treason, bribery, and \"other high Crimes and Misdemeanors,\" the latter phrase a standard inherited from English practice. This standard applied to behavior found damaging to the state, including significant abuses of a government office or power, misapplication of funds, neglect of duty, corruption, abridgement of parliamentary rights, and betrayals of the public trust.", "The debates at the Constitutional Convention over what behavior should be subject to impeachment focused mainly on the President. In discussing whether the President should be removable by impeachment, Gouverneur Morris argued that the President should be removable through the impeachment process, noting concern that the President might \"be bribed by a greater interest to betray his trust,\" and pointed to the example of Charles II receiving a bribe from Louis XIV. ", "The adoption of the high crimes and misdemeanors standard during the Constitutional Convention reveals that the Framers did not envision impeachment as the proper remedy for simple policy disagreements with the President. During the debate, the Framers rejected a proposal to include\u00e2\u0080\u0094in addition to treason and bribery\u00e2\u0080\u0094\"maladministration\" as an impeachable offense, which would have presumably incorporated a broad range of common-law offenses. Although \"maladministration\" was a ground for impeachment in many state constitutions at the time of the Constitution's drafting, the Framers instead adopted the term \"high Crimes and Misdemeanors\" from English practice. James Madison objected to including \"maladministration\" as grounds for impeachment because such a vague standard would \"be equivalent to a tenure during pleasure of the Senate.\" The Convention voted to include \"high crimes and misdemeanors\" instead. Arguably, the Framers' rejection of such a broad term supports the view that congressional disagreement with a President's policy goals is not sufficient grounds for impeachment.", "Of particular importance to the understanding of high crimes and misdemeanors to the Framers was the roughly contemporaneous British impeachment proceedings of Warren Hastings, the governor general of India, which were transpiring at the time of the Constitution's formulation and ratification. Hastings was charged with high crimes and misdemeanors, which included corruption and abuse of power. At the Constitutional Convention, George Mason positively referenced the impeachment of Hastings. At that point in the Convention, a proposal to define impeachment as appropriate for treason and bribery was under consideration. George Mason objected, noting that treason would not cover the misconduct of Hastings. He also thought impeachment should extend to \"attempts to subvert the Constitution.\" Mason thus proposed that maladministration be included as an impeachable offense, although, as noted above, this was eventually rejected in favor of \"high Crimes and Misdemeanors.\"", "While evidence of precisely what conduct the Framers and ratifiers of the Constitution considered to constitute high crimes and misdemeanors is relatively sparse, the evidence available indicates that they considered impeachment to be an essential tool to hold government officers accountable for political crimes, or offenses against the state. James Madison considered it \"indispensable that some provision be made for defending the community against incapacity, negligence, or perfidy of the chief executive,\" as the President might \"pervert his administration into a scheme of peculation or oppression,\" or \"betray his trust to foreign powers.\" Alexander Hamilton, in explaining the Constitution's impeachment provisions, described impeachable offenses as arising from \"the misconduct of public men, or in other words, from the abuse or violation of some public trust.\" Such offenses were \" Political , as they relate chiefly to injuries done immediately to the society itself.\" These political offenses could take innumerable forms and simply could not be neatly delineated.", "At the North Carolina ratifying convention, James Iredell, later to serve as an Associate Justice of the Supreme Court, noted the difficulty in defining what constitutes an impeachable offense, beyond causing injury to the government. For him, impeachment was \"calculated to bring [offenders] to punishment for crime which is not easy to describe, but which every one must be convinced is a high crime and misdemeanor against government. . . . [T]he occasion for its exercise will arise from acts of great injury to the community.\" He thought the President would be impeachable for receiving a bribe or \"act[ing] from some corrupt motive or other,\" but not merely for \"want of judgment.\" Similarly, Samuel Johnston, then the governor of North Carolina and later the state's first Senator, thought impeachment was reserved for \"great misdemeanors against the public.\"", "At the Virginia ratifying convention, a number of individuals claimed that impeachable offenses were not limited to indictable crimes. For example, James Madison argued that were the President to assemble a minority of states in order to ratify a treaty at the expense of the other states, this would constitute an impeachable \"misdemeanor.\" And Virginia Governor Edmund Randolph, who would become the nation's first Attorney General, noted that impeachment was appropriate for a \"willful mistake of the heart,\" but not for incorrect opinions. Randolph also argued that impeachment was appropriate for a President's violation of the Foreign Emoluments Clause, which, he noted, guards against corruption.", "James Wilson, delegate to the Constitutional Convention and later a Supreme Court Justice, delivered talks at the College of Philadelphia on impeachment following the adoption of the federal Constitution. He claimed that impeachment was reserved to \"political crimes and misdemeanors, and to political punishments.\" He argued that, in the eyes of the Framers, impeachments did not come \"within the sphere of ordinary jurisprudence. They are founded on different principles; are governed by different maxims; and are directed to different objects.\" Thus, for Wilson, the impeachment and removal of an individual did not preclude a later trial and punishment for a criminal offense based on the same behavior. ", "Justice Joseph Story's writings on the Constitution echo the understanding that impeachment applied to political offenses. He noted that impeachment applied to those \"offences \u00e2\u0080\u00a6 committed by public men in violation of their public trust and duties,\" duties that are often \"political.\" And like Hamilton, Story considered the range of impeachable offenses \"so various in their character, and so indefinable in their actual involutions, that it is almost impossible to provide systematically for them by positive law.\"", "At the time of ratification of the Constitution, the phrase \"high crimes and misdemeanors\" thus appears understood to have applied to uniquely \"political\" offenses, or misdeeds committed by public officials against the state. Such offenses simply resist a full delineation, as the possible range of potential misdeeds in office cannot be determined in advance. Instead, the type of misconduct that merits impeachment is worked out over time through the political process. In the years following the Constitution's ratification, precisely what behavior constitutes a high crime or misdemeanor has thus been the subject of much debate."], "subsections": []}]}]}, {"section_title": "The Role of the House of Representatives", "paragraphs": ["The Constitution grants the sole power of impeachment to the House of Representatives. Generally speaking, the impeachment process has often been initiated in the House by a Member by resolution or declaration of a charge, although anyone\u00e2\u0080\u0094including House Members, a grand jury, or a state legislature\u00e2\u0080\u0094may request that the House investigate an individual for impeachment purposes. Indeed, in modern practice, many impeachments have been sparked by referrals from an external investigatory body. Beginning in the 1980s, the Judicial Conference has referred its findings to the House recommending an impeachment investigation into a number of federal judges who were eventually impeached. Similarly, in the impeachment of President Bill Clinton, an independent counsel\u00e2\u0080\u0094a temporary prosecutor given statutory independence and charged with investigating certain misconduct when approved by a judicial body \u00e2\u0080\u0094first conducted an investigation into a variety of alleged activities on the part of the President and his associates, and then delivered a report to the House detailing conduct that the independent counsel considered potentially impeachable. ", "Regardless of the source requesting an impeachment investigation, the House has sole discretion under the Constitution to begin any impeachment proceedings against an individual. In practice, impeachment investigations are often handled by an already existing or specially created subcommittee of the House Judiciary Committee. The scope of the investigation can vary. In some instances, an entirely independent investigation may be initiated by the House. In other cases, an impeachment investigation might rely on records delivered by outside entities, such as those delivered by the Judicial Conference or an independent counsel. Following this investigation, the full House may vote on the relevant impeachment articles. If articles of impeachment are approved, the House chooses managers to present the matter to the Senate. The Chairman of the House Managers then presents the articles of impeachment to the Senate and requests that the body order the appearance of the accused. The House Managers typically act as prosecutors in the Senate trial. ", "The House has impeached nineteen individuals: fifteen federal judges, one Senator, one Cabinet member, and two Presidents. The consensus reflected in these proceedings is that impeachment may serve as a means to address misconduct that does not necessarily give rise to criminal sanction. According to congressional sources, the types of conduct that constitute grounds for impeachment in the House appear to fall into three general categories: (1) improperly exceeding or abusing the powers of the office; (2) behavior incompatible with the function and purpose of the office; and (3) misusing the office for an improper purpose or for personal gain. Consistent with scholarship on the scope of impeachable offenses, congressional materials have cautioned that the grounds for impeachment \"do not all fit neatly and logically into categories\" because the remedy of impeachment is intended to \"reach a broad variety of conduct by officers that is both serious and incompatible with the duties of the office.\"", "While successful impeachments and convictions of federal officials represent some clear guideposts for what constitutes impeachable conduct, impeachment processes that do not result in a final vote for impeachment and removal also may influence the understanding of Congress, executive and judicial branch officials, and the public over what constitutes an impeachable offense. A prominent example involves the first noteworthy attempt at a presidential impeachment, aimed at John Tyler in 1842. At the time, the presidential practice had generally been to reserve vetoes for constitutional, rather than policy, disagreements with Congress. Following President Tyler's veto of a tariff bill on policy grounds, the House endorsed a select committee report condemning President Tyler and suggesting that he might be an appropriate subject for impeachment proceedings. The possibility apparently ended when the Whigs, who had led the movement to impeach, lost their House majority in the midterm elections. In the years following the aborted effort to impeach President Tyler, Presidents have routinely used their veto power for policy reasons. This practice is generally seen as an important separation of powers limitation on Congress's ability to pass laws rather than a potential ground for impeachment.", "Likewise, although President Richard Nixon resigned before impeachment proceedings were completed in the House, the approval of three articles of impeachment by the House Judiciary Committee against him may inform lawmakers' understanding of conduct that constitutes an impeachable offense. The approved impeachment articles included allegations that President Nixon obstructed justice by using the office of the presidency to impede the investigation into the break-in of the Democratic National Committee headquarters at the Watergate Hotel and Office Building and authorized a cover-up of the activities that were being investigated. President Nixon was alleged to have abused the power of his office by using federal agencies to punish political enemies and refusing to cooperate with the Judiciary Committee's investigation. While no impeachment vote was taken by the House, the Nixon experience nevertheless established what some would call the quintessential case for impeachment\u00e2\u0080\u0094a serious abuse of the office of the presidency that undermined the office's integrity.", "That said, one must be cautious in extrapolating wide-ranging lessons from the lack of impeachment proceedings in the House. Specific behavior not believed to constitute an impeachable offense in prior contexts might be considered impeachable in a different set of circumstances. Moreover, given the varied contextual permutations, the full scope of impeachable behavior resists specification, and historical precedent may not always serve as a useful guide to whether conduct is grounds for impeachment. For instance, no President has been impeached for abandoning the office and refusing to govern. That this event has not occurred, however, hardly proves that this behavior would not constitute an impeachable offense meriting removal from office."], "subsections": []}, {"section_title": "The Role of the Senate", "paragraphs": [], "subsections": [{"section_title": "Historical Practice", "paragraphs": ["The Constitution grants the Senate sole authority \"to try all impeachments.\" The Senate thus enjoys broad discretion in establishing procedures to be undertaken in an impeachment trial. For instance, in a lawsuit challenging the Senate's use of a trial committee to take and report evidence, the Supreme Court in Nixon v. United States unanimously ruled that the suit posed a nonjusticiable political question and was not subject to judicial resolution. The Court explained that the term \"try\" in the Constitution's provisions on impeachment was textually committed to the Senate for interpretation and lacked sufficient precision to enable a judicially manageable standard of review. In reaching this conclusion, the Court noted that the Constitution imposes three precise requirements for impeachment trials in the Senate: (1) Members must be under oath during the proceedings; (2) conviction requires a two-thirds vote; and (3) the Chief Justice must preside if the President is tried. Given these three clear requirements, the Court reasoned that the Framers \"did not intend to impose additional limitations on the form of the Senate proceedings by the use of the word 'try.'\" Thus, subject to these three clear requirements of the Constitution, the Senate enjoys substantial discretion in establishing its own procedures during impeachment trials.", "While the Senate determines for itself how to conduct impeachment proceedings, the nature and frequency of Senate impeachment trials largely hinge on the impeachment charges brought by the House. The House has impeached thirteen federal district judges, a judge on the Commerce Court, a Senator, a Supreme Court Justice, the secretary of an executive department, and two Presidents. But the Senate ultimately has only convicted and removed from office seven federal district judges and a Commerce Court judge. While this pattern obviously does not mean that Presidents or other civil officers are immune from removal based on impeachment, the Senate's acquittals may be considered to have precedential value when assessing whether particular conduct constitutes a removable offense. For instance, the first subject of an impeachment by the House involved a sitting U.S. Senator for allegedly conspiring to aid Great Britain's attempt to seize Spanish-controlled territory. The Senate voted to dismiss the charges in 1799, and no Member of Congress has been impeached since. The House also impeached Supreme Court Justice Samuel Chase, who was widely viewed by Jeffersonian Republicans as openly partisan for, among other things, misapplying the law. The Senate acquitted Justice Chase, establishing, at least for many, a general principle that impeachment is not an appropriate remedy for disagreement with a judge's judicial philosophy or decisions."], "subsections": []}, {"section_title": "Requirement of Oath or Affirmation", "paragraphs": ["The Constitution requires Senators sitting as an impeachment tribunal to take a special oath distinct from the oath of office that all Members of Congress must take. This requirement underscores the unique nature of the role the Senate plays in impeachment trials, at least in comparison to its normal deliberative functions. The Senate practice has been to require each Senator to swear or affirm that he will \"do impartial justice according to the Constitution and laws.\" The oath was originally adopted by the Senate before proceedings in the impeachment of Senator Blount in 1798 and has remained largely unchanged since. "], "subsections": []}, {"section_title": "Judgment in Cases of Impeachment", "paragraphs": ["While the Constitution authorizes the Senate, following an individual's conviction in an impeachment trial, to bar an individual from holding office in the future, the text of the Constitution does not make clear that a vote for disqualification from future office must be taken separately from the initial vote for conviction. Instead, the potential for a separate vote for disqualification has arisen through the historical practice of the Senate. The Senate did not choose to disqualify an impeached individual from holding future office until the Civil War era. Federal district judge West H. Humphreys took a position as a judge in the Confederate government but did not resign his seat in the U.S. government. The House impeached Humphreys in 1862. The Senate then voted unanimously to convict Judge Humphreys and separately voted to disqualify him from holding office in the future. Senate practice since the Humphreys case has been to require a simple majority vote to disqualify an individual from holding future office, rather than the supermajority required by the Constitution's text for removal, but it is unclear what justifies this result beyond historical practice. ", "The Constitution also distinguishes the impeachment remedy from the criminal process, providing that an individual removed from office following impeachment \"shall nevertheless be liable and subject to indictment.\" The Senate's power to convict and remove individuals from office, as well as to bar them from holding office in the future, thus does not overlap with criminal remedies for misconduct. Indeed, the unique nature of impeachment as a political remedy distinct from criminal proceedings ensures that \"the most powerful magistrates should be amenable to the law.\" Rather than helping police violations of strictly criminal activity, impeachment is a \"method of national inquest into the conduct of public men\" for \"the abuse or violation of some public trust.\" Impeachable offenses are those that \"relate chiefly to injuries done immediately to the society itself.\" Put another way, the purpose of impeachment is to protect the public interest, rather than impose a punitive measure on an individual. This distinction was highlighted in the impeachment trial of federal district judge Alcee Hastings. Judge Hastings had been indicted for a criminal offense, but was acquitted. In 1988, the House impeached Hastings for much of the same conduct for which he had been indicted. Judge Hastings argued that the impeachment proceedings constituted \"double jeopardy\" because of his previous acquittal in a criminal proceeding. The Senate rejected his motion to dismiss the articles against him. The Senate voted to convict and remove Judge Hastings on eight articles, but it did not disqualify him from holding office in the future. Judge Hastings was later elected to the House of Representatives."], "subsections": []}]}, {"section_title": "History of Impeachment in Congress", "paragraphs": ["The Constitution provides that the President, Vice President, and all civil officers are subject to impeachment for \"treason, bribery, or other high Crimes and Misdemeanors.\" The meaning of high crimes and misdemeanors, like the other provisions in the Constitution relevant to impeachment, is not primarily determined through the development of jurisprudence in the courts. Instead, the meaning of the Constitution's impeachment clauses is \"liquidated\" over time, or determined through historical practice. The Framers did not delineate with specificity the complete range of behavior that would merit impeachment, as the scope of possible \"offenses committed by federal officers are myriad and unpredictable.\" According to one scholar, impeachments are sometimes \"aimed at articulating, establishing, preserving, and protecting constitutional norms,\" or \"'constructing' constitutional meaning and practices.\" At times, impeachment might be used to reinforce an existing norm, indicating that certain behavior continues to constitute grounds for removal; in others, it may be used to establish a new norm, setting a marker that signifies what practices are impeachable for the future. Examining the history of impeachment in Congress can thus illuminate the constitutional meaning of impeachment, including when Congress has established or reaffirmed a particular norm."], "subsections": [{"section_title": "Early Historical Practices (1789\u00e2\u0080\u00931860)", "paragraphs": ["Congressional understanding of the scope of activities subject to impeachment and the potential persons who may be impeached was first put to the test during the Adams Administration. In 1797, letters sent to President Adams revealed a conspiracy by Senator William Blount\u00e2\u0080\u0094in violation of the U.S. government's policy of neutrality on the matter and the Neutrality Act \u00e2\u0080\u0094to organize a military expedition with the British to invade land in the American Southwest under Spanish control. The House voted to impeach Senator Blount on July 7, 1797, while the Senate voted to expel Senator William Blount the next day. Before impeaching Senator Blount, several House Members questioned whether Senators were \"civil officers\" subject to impeachment. But Samuel W. Dana of Connecticut argued that Members of Congress must be civil officers, because other provisions of the Constitution that mention offices appear to include holding legislative office. Despite already having voted to impeach Senator Blount, it was not until early in the next year that the House actually adopted specific articles of impeachment against him. ", "At the Senate impeachment trial in 1799, Blount's attorneys argued that impeachment was improper because Blount had already been expelled from his Senate seat and had not been charged with a crime. But the primary issue of debate was whether Members of Congress qualified as civil officers subject to impeachment. The House prosecutors argued that under the American system, as in England, virtually anyone was subject to impeachment. The defense responded that this broad interpretation of the impeachment power would enable Congress to impeach state officials as well as federal, upending the proper division of federal and state authorities in the young Republic. The Senate voted to defeat a resolution that declared Blount was a \"civil officer\" and therefore subject to impeachment. The Senate ultimately voted to dismiss the impeachment articles brought against Blount because it lacked jurisdiction over the matter, although the impeachment record does not reveal the precise basis for this conclusion. In any event, the House has not impeached a Member of Congress since. ", "The first federal official to be impeached and removed from office was John Pickering, a federal district judge. The election of President Thomas Jefferson in 1800, along with Jeffersonian Republican majorities in both Houses of Congress, signaled a shift from Federalist party control of government. Much of the federal judiciary at this early stage of the Republic were members of the Federalist party, and the new Jeffersonian Republican majority strongly opposed the Federalist-controlled courts. John Pickering was impeached by the House of Representatives in 1803 and convicted by the Senate on March 12, 1804. The circumstances of Judge Pickering's impeachment are somewhat unique as it appears that the judge had been mentally ill for some time, although the articles of impeachment did not address Pickering's mental faculties but instead accused him of drunkenness, blasphemy on the bench, and refusing to follow legal precedent. Judge Pickering did not appear at his trial, and Senator John Quincy Adams apparently served as a defense counsel. Following debate in a closed session, the Senate voted to permit evidence of Judge Pickering's insanity, drunkenness, and behavior on the bench. The Senate also rejected a resolution to disqualify three Senators, who were previously in the House and had voted to impeach Judge Pickering, from participating in the impeachment trial. The Senate voted to convict Judge Pickering guilty as charged, but the articles did not explicitly specify that any of Pickering's behavior constituted a high crime or misdemeanor. Objections to the framing of the question at issue caused several Senators to withdraw from the trial.", "On the same day the Senate convicted Judge Pickering, the House of Representatives impeached Supreme Court Justice Samuel Chase. Like the impeachment trial of Judge Pickering, the proceedings occurred following the election of President Thomas Jefferson and amid intense conflict between the Federalists and Jeffersonian Republicans. Justice Chase was viewed by Jeffersonian Republicans as openly partisan, and in fact the Justice openly campaigned for Federalist John Adams in the presidential election of 1800. Republicans also took issue with Justice Chase's aggressive approach to jury instructions in Sedition Act prosecutions. The eight articles of impeachment accused him of acting in an \"arbitrary, oppressive, and unjust\" manner at trial, misapplying the law, and expressing partisan political views to a grand jury. The Senate trial began on February 4, 1805. Both the House Managers and defense counsel for Justice Chase presented witnesses detailing the Justice's behavior. While some aspects of the dispute focused on whether Justice Chase took certain actions, the primary conflict centered on whether his behavior was impeachable. Before reaching a verdict, the Senate approved a motion from Senator James Bayard, a Federalist from Delaware, that the underlying question be whether Justice Chase was guilty of high crimes and misdemeanors, rather than guilty as charged. Of the eight articles, a majority of Senators voted to convict on three, while the remaining five did not muster a majority for conviction. But the Senate vote ultimately fell short of the necessary two-thirds majority to secure a conviction on any of the articles. ", "The trial raised several questions that have recurred throughout the history of impeachments. For example, is impeachment limited to criminal acts, or does it extend to noncriminal behavior? The opposing sides in the Chase case took differing views on this matter, as they would in later impeachments to come. Due in part to the charged political atmosphere of the historical context, the attempted impeachment of Justice Chase has also come to represent an important limit on the scope of the impeachment remedy. Commentators have interpreted the acquittal of Justice Chase as establishing that impeachment does not extend to congressional disagreement with a judge's opinions or judicial philosophy. At least some Senators who voted to acquit did not consider the alleged offenses as rising to the level of impeachable behavior. ", "By the time of the next impeachment in 1830, both houses of Congress were controlled by Jacksonian Democrats, and the federal courts were unpopular with Congress and the public. The House of Representatives impeached James Peck, a federal district judge, for abusing his judicial authority. The sole article accused the judge of holding an attorney in contempt for publishing an article critical of Peck and barring the attorney from practicing law for eighteen months. The context surrounding Judge Peck's actions involved disputes over French and Spanish land grant titles following the transfer of land in the Louisiana territory from French to U.S. control. Shortly after Missouri was admitted to the United States as part of the Missouri Compromise in 1821, Judge Peck decided a land rights case against the claimants in favor of the United States. The attorney for the plaintiffs wrote an article critical of the decision in a local paper. Judge Peck held the attorney in contempt, sentenced him to jail for twenty-four hours, and barred him from practicing law for eighteen months.", "The House impeached Judge Peck by a wide margin. Of central concern during the Senate trial were the limits of a judge's common law contempt power, a matter that appeared to be in dispute. The Senate ultimately acquitted Judge Peck, with roughly half of the Jacksonian Democrats voting against conviction. Shortly thereafter, Congress passed a law reforming and defining the scope of the judicial contempt power. ", "Finally, in the midst of the Civil War, federal district judge West H. Humphreys was appointed to a position as a judge in the Confederate government, but he did not resign as a U.S. federal judge. In 1862, the House impeached and the Senate convicted Judge Humphreys for joining the Confederate government and abandoning his position. As in the trial of Judge Pickering previously, Judge Humphreys did not attend the proceedings. Unlike in the case of Judge Pickering, however, no defense was offered in the impeachment trial of Judge Humphreys."], "subsections": []}, {"section_title": "Impeachment of Andrew Johnson", "paragraphs": ["The impeachment and trial of President Andrew Johnson took place in the shadow of the Civil War and the assassination of President Abraham Lincoln. President Johnson was a Democrat and former slave owner who was the only southern Senator to remain in his seat when the South seceded from the Union. President Lincoln, a Republican, appointed Johnson military governor of Tennessee in 1862, and Johnson was later selected as Lincoln's second-term running mate on a \"Union\" ticket. Given these unique circumstances, President Johnson lacked both a party and geographic power base when in office, which likely isolated him when he assumed the presidency following the assassination of President Lincoln. ", "The majority Republican Congress and President Johnson clashed over, among other things, Reconstruction policies implemented in the former slave states and control over officials in the executive branch. President Johnson vetoed twenty-one bills while in office, compared to thirty-six vetoes by all prior Presidents. Congress overrode fifteen of Johnson's vetoes, compared to just six with prior Presidents. On March 2, 1867, Congress reauthorized, over President Johnson's veto, the Tenure of Office Act, extending its protections for all officeholders. In essence, the Act provided that all federal officeholders subject to Senate confirmation could not be removed by the President except with Senate approval, although the reach of this requirement to officials appointed by a prior administration was unclear. Congressional Republicans apparently anticipated the possible impeachment of President Johnson when drafting the legislation; Republicans already knew of President Johnson's plans to fire Secretary of War Edwin Stanton, and the Act provided that a violation of its terms constituted a \"high misdemeanor.\"", "President Johnson then fired Secretary Stanton without the approval of the Senate. Importantly, his Cabinet unanimously agreed that the new restrictions on the President's removal power imposed by the Tenure of Office Act were unconstitutional. Shortly thereafter, on February 24, 1868, the House voted to impeach President Johnson. The impeachment articles adopted by the House against President Johnson included defying the Tenure of Office Act by removing Stanton from office and violating (and encouraging others to violate) the Army Appropriations Act. One article of impeachment also accused the President of making \"utterances, declarations, threats, and harangues\" against Congress.", "The Senate appointed a committee to recommend rules of procedure for the impeachment trial which then were adopted by the Senate, including a one-hour time limit for each side to debate questions of law that would arise during the trial. Chief Justice Salmon P. Chase presided over the trial and was sworn in by Associate Justice Samuel Nelson. During the swearing-in of the individual Senators, the body paused to debate whether Senator Benjamin Wade of Indiana, the president pro tempore of the Senate, was eligible to participate in the trial. Because the office of the Vice President was empty, under the laws of succession at that time Senator Wade would assume the presidency upon a conviction of President Johnson. Ultimately, the Senator who raised this point, Thomas Hendricks of Indiana, withdrew the issue and Senator Wade was sworn in.", "An important point of contention at the trial was whether the Tenure of Office Act protected Stanton at all because of his appointment by President Lincoln, rather than President Johnson. Counsel for President Johnson argued that impeachment for violating a statute whose meaning was unclear was inappropriate, and the statute barring removal of the Secretary of War was an unconstitutional intrusion into the President's authority under Article II.", "The Senate failed to convict President Johnson with a two-thirds majority by one vote on three articles, and it failed to vote on the remaining eight. But reports suggest that several Senators were prepared to acquit if their votes were needed. Seven Republicans voted to acquit; of those Senators, some thought it questionable whether the Tenure of Office Act applied to Stanton and believe it was improper to impeach a President for incorrectly interpreting an arguably ambiguous law. ", "The implications of the acquittal of President Johnson are difficult to encapsulate neatly. Some commentators have concluded that the failure to convict President Johnson coincides with a general understanding that while impeachment is appropriate for abuses of power or violations of the public trust, it does not pertain to political or policy disagreements with the President, no matter how weighty. Of course, it bears mention that by the time of the Senate trial Johnson was in the last year of his Presidency, was not going to receive a nomination for President by either major political party for the next term, and appears to have promised in private to appoint a replacement for Stanton that could be confirmable. More broadly, the Johnson impeachment also represented a larger struggle between Congress and the President over the scope of executive power, one that arguably reconstituted their respective roles following the Civil War presidency of Abraham Lincoln."], "subsections": []}, {"section_title": "Postbellum Practices (1865\u00e2\u0080\u00931900)", "paragraphs": ["The postbellum experience in American history saw a variety of government officials impeached on several different grounds. These examples provide important principles that guide the practice of impeachment through the present day. For example, the Senate has not always conducted a trial following an impeachment by the House. In 1873, the House impeached federal district judge Mark. H. Delahay for, among other things, drunkenness on and off the bench. The impeachment followed an investigation by a subcommittee of the House Judiciary Committee into his conduct. Following the House vote on impeachment, Judge Delahay resigned before written impeachment articles were drawn up, and the Senate did not hold a trial. The impeachment of Judge Delahay shows that the scope of impeachable behavior is not limited to strictly criminal behavior; Congress has been willing to impeach individuals for behavior that is not indictable, but still constitutes an abuse of an individual's power and duties.", "This period of American history was fraught with partisan conflict over Reconstruction. Besides President Johnson, a number of other individuals were investigated by Congress during this time for purposes of impeachment. For example, in 1873, the House voted to authorize the House Judiciary Committee to investigate the behavior of Edward H. Durrell, federal district judge for Louisiana. A majority of the House Judiciary Committee reported in favor of impeaching Judge Durell for corruption and usurpation of power, including interfering with the state's election. Judge Durrell resigned on December 1, 1874, and the House discontinued impeachment proceedings.", "The first and only time a Cabinet-level official was impeached occurred during the presidential administration of Ulysses S. Grant. Grant's Secretary of War, William W. Belknap, was impeached in 1876 for allegedly receiving payments in return for appointing an individual to maintain a trading post in Indian territory. Belknap resigned two hours before the House unanimously impeached him, but the Senate still conducted a trial in which Belknap was acquitted. During the trial, upon objection by Belknap's counsel that the Senate lacked jurisdiction because Belknap was now a private citizen, the Senate voted 37-29 in favor of jurisdiction. A majority of Senators voted to convict Belknap, but no article mustered a two-thirds majority, resulting in acquittal. A number of Senators voting to acquit indicated that they did so because the Senate lacked jurisdiction over an individual no longer in office. Notably, although bribery is explicitly included as an impeachable offense in the Constitution, the impeachment articles brought against Belknap instead charged his behavior as constituting high crimes and misdemeanors. Bribery was mentioned at the Senate trial, but it was not specifically referenced in the impeachment articles themselves."], "subsections": []}, {"section_title": "Early Twentieth Century Practices", "paragraphs": ["The twentieth century saw further development of the scope of conduct considered by Congress to be impeachable, including the extent to which noncriminal conduct can constitute impeachable behavior and the proper role of a federal judge. The question of judicial review of impeachments also received its first treatment in the federal courts.", "The question of whether Congress can designate particular behavior as a \"high crime or misdemeanor\" by statute arose in the impeachment of Charles Swayne, a federal district judge for the Northern District of Florida, during the first decade of the twentieth century. A federal statute provided that federal district judges live in their districts and that anyone violating this requirement was \"guilty of a high misdemeanor.\" Judge Swayne's impeachment originated from a resolution passed by the Florida legislature requesting the state's congressional delegation to recommend an investigation into his behavior. The procedures followed by the House in impeaching Judge Swayne were somewhat unique. First, the House referred the impeachment request to the Judiciary Committee for investigation. Following this investigation, the House voted to impeach Judge Swayne based on the report prepared by the committee. The committee was then tasked with preparing articles of impeachment to present to the Senate. The House then voted again on these individual articles, each of which received less support than the single prior impeachment vote had received. The impeachment articles accused Judge Swayne of a variety of offenses, including misusing the office, abusing the contempt power, and living outside his judicial district. At the trial in the Senate, Judge Swayne essentially admitted to certain accused behavior, although his attorneys did dispute the residency charge, and Swayne instead argued that his actions were not impeachable. The Senate vote failed to convict Judge Swayne on any of the charges brought by the House.", "The impeachability of certain noncriminal behavior for federal judges was firmly established by the impeachment of Judge Robert W. Archbald in 1912. Judge Archbald served as a federal district judge before being appointed to the short-lived U.S. Commerce Court, which was created to review decisions of the Interstate Commerce Commission. He was impeached by the House for behavior occurring both as a federal district judge and as a judge on the Commerce Court. The impeachment articles accused Judge Archbald of, among other things, using his position as a judge to generate profitable business deals with potential future litigants in his court. This behavior did not violate any criminal statute and did not appear to violate any laws regulating judges. Judge Archbald argued at trial that noncriminal conduct was not impeachable. The Senate voted to convict him on five articles and also voted to disqualify him from holding office in the future. Four of those articles centered on behavior that occurred while Judge Archbald sat on the Commerce Court, whereas the fifth described his conduct over the course of his career.", "In the 1920s, a series of corruption scandals swirled around the administration of President Warren G. Harding. Most prominently, the Teapot Dome Scandal, which involved the noncompetitive lease of government land to oil companies, implicated many government officials and led to resignations and the criminal conviction and incarceration of a Cabinet-level official. The Secretary of the Navy, at the time Edwin Denby, was entrusted with overseeing the development of oil reserves that had recently been located. The Secretary of the Interior, Albert Fall, convinced Denby that the Interior Department should assume responsibility for two of the reserve locations, including in Teapot Dome, Wyoming. Secretary Fall then leased the reserves to two of his friends, Harry F. Sinclair and Edward L. Doheny. Revelations of the lease without competitive bidding launched a lengthy congressional investigation that sparked the eventual criminal conviction of Fall for bribery and conspiracy and Sinclair for jury tampering. President Harding, however, died in 1923, before congressional hearings began. The affair also generated significant judicial decisions examining the scope of Congress's investigatory powers.", "One aspect of the controversy included an impeachment investigation into the decisions of then-Attorney General Harry M. Daugherty. In 1922, the House of Representatives referred a resolution to impeach Daugherty for a variety of activities, including his failure to prosecute those involved in the Teapot Dome Scandal, to the House Judiciary Committee. The House Judiciary Committee eventually found there was not sufficient evidence to impeach Daugherty. But in 1924, a Senate special committee was formed to investigate similar matters. That investigation spawned allegations of many improper activities in the Justice Department. Daugherty resigned on March 28, 1924.", "In 1926, federal district judge George W. English was impeached for a variety of alleged offenses, including (1) directing a U.S. marshal to gather a number of state and local officials into court in an imaginary case in which Judge English proceeded to denounce them; (2) threatening two members of the press with imprisonment without sufficient cause; and (3) showing favoritism to certain litigants before his court. Judge English resigned before a trial in the Senate occurred; and the Senate dismissed the charges without conducting a trial in his absence.", "Federal district judge Harold Louderback was impeached in 1933 for showing favoritism in the appointment of bankruptcy receivers, which were coveted positions following the stock market crash of 1929 and the ensuing Depression. The House authorized a subcommittee to investigate, which held hearings and recommended to the Judiciary Committee that Judge Louderback be impeached. The Judiciary Committee actually voted against recommending impeachment, urging censure of Judge Louderback instead, but permitted the minority report that favored impeachment to be reported to the House together with the majority report. The full House voted to impeach anyway, but the Senate failed to convict him.", "Shortly thereafter, the House impeached federal district judge Halsted L. Ritter for showing favoritism in and profiting from appointing receivers in bankruptcy proceedings; practicing law while a judge; and failing to fully report his income on his tax returns. The Senate acquitted Judge Ritter on each individual count alleging specific behavior, but convicted him on the final count which referenced the previous articles, and charged him with bringing his court into disrepute and undermining the public's confidence in the judiciary. ", "Congress's impeachment of Judge Ritter was the first to be challenged in court. Judge Ritter sued in the Federal Court of Claims seeking back pay, arguing that the charges brought against him were not impeachable under the Constitution and that the Senate improperly voted to acquit on six specific articles but to convict on a single omnibus article. In rejecting Judge Ritter's suit, the court held that the Senate has exclusive jurisdiction over impeachments and courts lack authority to review the Senate's verdict."], "subsections": []}, {"section_title": "Effort to Impeach President Richard Nixon", "paragraphs": ["The impeachment investigation and ensuing resignation of President Richard Nixon stands out as a profoundly important experience informing the standard for the impeachment of Presidents. Although President Nixon was never impeached by the House or subjected to a trial in the Senate, his conduct exemplifies for many authorities, scholars, and members of the public the quintessential case of impeachable behavior in a President. ", "Less than two years after a landslide reelection as President, Richard Nixon resigned following the House Judiciary Committee's adoption of three articles of impeachment against him. The circumstances surrounding the impeachment of President Nixon were sparked by the arrest of five men for breaking into the Democratic National Committee Headquarters at the Watergate Hotel and Office Building. The arrested men were employed by the committee to Re-Elect the President (CRP), a campaign organization formed to support President Nixon's reelection.", "In the early summer of 1973, Attorney General Elliot Richardson appointed Archibald Cox as a special prosecutor to investigate the connection between the five burglars and CRP. Likewise, the Senate Select Committee on Presidential Campaign Activities began its own investigation. After President Nixon fired various staffers allegedly involved in covering up the incident, he spoke on national television disclaiming knowledge of the cover-up. But the investigations uncovered evidence that President Nixon was involved, that he illegally harassed his enemies through, among other things, the use of tax audits, and that the men arrested for the Watergate break-in\u00e2\u0080\u0094the \"plumbers unit,\" because they were used to \"plug leaks\" considered damaging to the Nixon Administration\u00e2\u0080\u0094had committed burglaries before. Eventually a White House aide revealed that the President had a tape recording system in his office, raising the possibility that many of Nixon's conversations about the Watergate incident were recorded.", "The President refused to hand over such tapes to the special prosecutor or Congress. In his capacity as special prosecutor, Cox then subpoenaed tapes of conversations in the Oval Office on Saturday, October 20, 1973. This sparked the sequence of events commonly known as the Saturday Night Massacre. In response to the subpoena, President Nixon ordered Attorney General Elliot Richardson to fire Special Prosecutor Cox. Richardson refused and resigned. Nixon ordered Deputy Attorney General William D. Ruckelshaus to fire the special prosecutor, but Ruckelshaus also refused to do so and resigned. Solicitor General Robert Bork, in his capacity as Acting Attorney General, then fired the special prosecutor. Nixon eventually agreed to deliver some of the subpoenaed tapes to the judge supervising the grand jury. The Justice Department appointed Leon Jaworski to replace Cox as special prosecutor.", "The House Judiciary Committee began an official investigation of the Watergate issue and commenced impeachment hearings in April 1974. On March 1, 1974, a grand jury indicted seven individuals connected to the larger Watergate investigation and named the President as an unindicted coconspirator. On April 18, a subpoena was issued, upon the motion of the special prosecutor, by the United States District Court for the District of Columbia requiring the production of tapes and various items relating to meetings between the President and other individuals. Following a challenge to the subpoena in district court, the Supreme Court reviewed the case. On July 24, 1974, the Supreme Court affirmed the district court's order.", "In late July, following its investigation and hearings, the House Judiciary Committee voted to adopt three articles of impeachment against President Nixon. The first impeachment article alleged that the President obstructed justice by attempting to impede the investigation into the Watergate break-in. The second charged the President with abuse of power for using federal agencies to harass his political enemies and authorizing burglaries of private citizens who opposed the President. The third article accused the President of refusing to cooperate with the Judiciary Committee's investigation. ", "The committee considered but rejected two proposed articles of impeachment. The first rejected article accused the President of concealing from Congress the bombing operations in Cambodia during the Vietnam conflict. This article was rejected for two primary reasons: some Members thought (1) the President was performing his constitutional duty as Commander-in-Chief and (2) Congress was given sufficient notice of these operations. ", "The second rejected article concerned receiving compensation in the form of government expenditures at President Nixon's private properties in California and Florida\u00e2\u0080\u0094which allegedly constituted an emolument from the United States in violation of Article II, Section 1, Clause 7 of the Constitution\u00e2\u0080\u0094and tax evasion. Those Members opposed to the portion of the charge alleging receipt of federal funds argued that most of the President's expenditures were made pursuant to a request from the Secret Service; that there was no direct evidence the President knew at the time that the source of these funds was public, rather than private; and that this conduct failed to rise to the level of an impeachable offense. Some Members opposed to the tax evasion charge argued that the evidence was insufficient to impeach; others that tax fraud is not the type of behavior \"at which the remedy of impeachment is directed.\" ", "President Nixon resigned on August 9, 1974, before the full House voted on the articles. The lessons and standards established by the Nixon impeachment investigation and resignation are disputed. On the one hand, the behavior alleged in the approved articles against President Nixon is arguably a \"paradigmatic\" case of impeachment, constituting actions that are almost certainly impeachable conduct for the President. ", "On the other hand, the significance of the House Judiciary Committee's rejection of certain impeachment articles is unclear. In particular, whether conduct considered unrelated to the performance of official duties, such as the rejected article alleging tax evasion, can constitute an impeachable offense for the President is disputed. During the later impeachment of President Bill Clinton, for example, the majority and minority reports of the House Judiciary Committee on the committee's impeachment recommendation took different views on when conduct that might traditionally be viewed as private or unrelated to the functions of the presidency constitutes an impeachable offense. The House Judiciary Committee report that recommended articles of impeachment argued that perjury by the President was an impeachable offense, even if committed with regard to matters outside his official duties. In contrast, the minority views in the report argued that impeachment was reserved for \"conduct that constitutes an egregious abuse or subversion of the powers of the executive office.\" The minority noted that the Judiciary Committee had rejected an article of impeachment against President Nixon alleging that he committed tax fraud, mainly because that \"related to the President's private conduct, not to an abuse of his authority as President.\""], "subsections": []}, {"section_title": "Impeachment of President Bill Clinton", "paragraphs": ["The impeachment of President Bill Clinton stemmed from an investigation that originally centered on financial transactions occurring years before President Clinton took federal office. Attorney General Janet Reno appointed Robert Fiske Jr. as a special prosecutor in January 1994 to investigate the dealings of President Clinton and his wife with the \"Whitewater\" real estate development during the President's tenure as attorney general and then governor of Arkansas. ", "Following the reauthorization of the Independent Counsel Act in June, the Special Division of the United States Court of Appeals for the District of Columbia Circuit replaced Fiske in August with Independent Counsel Kenneth W. Starr, a former Solicitor General in the George H.W. Bush Administration and federal appellate judge. ", "During the Whitewater investigation, Paula Jones, an Arkansas state employee, filed a civil suit against President Clinton in May 1994 alleging that he sexually harassed her in 1991 while governor of Arkansas. Lawyers for Jones deposed President Clinton at the White House and asked questions about the President's relationship with staffers, including an intern named Monica Lewinsky. Independent Counsel Starr received information alleging that Lewinsky had tried to influence the testimony of a witness in the Jones litigation, along with tapes of recordings between Monica Lewinsky and former White House employee Linda Tripp. Tripp had recorded conversations between herself and Lewinsky about Lewinsky's relationship with the President and hope of obtaining a job outside the White House. Starr presented this information to Attorney General Reno. Reno petitioned the Special Division of the United States Court of Appeals for the District of Columbia Circuit to expand the independent counsel's jurisdiction, and the Special Division issued an order on January 16, 1998, permitting the expansion of Starr's investigation into President Clinton's response to the Paula Jones case. Over the course of the spring and summer a grand jury investigated whether President Clinton committed perjury in his response to the Jones suit and whether he obstructed justice by encouraging others to lie about his relationship with Lewinsky. President Clinton appeared by video before the grand jury and testified about the Lewinsky relationship. ", "Independent Counsel Starr referred his report to the House of Representatives on September 9, 1998, noting that under the independent counsel statute, his office was required to do so because President Clinton engaged in behavior that might constitute grounds for impeachment. The House then voted to open an impeachment investigation into President Clinton's behavior, released the Starr report publicly, and the House Judiciary Committee voted to release the tape of the President's grand jury testimony.", "Although the House Judiciary Committee had already conducted several hearings on the possibility of impeachment, the committee did not engage in an independent fact-finding investigation or call any live witnesses to testify about the President's conduct. Instead, the Judiciary Committee largely relied on the Starr report to inform the committee's own report recommending impeachment, released December 16, 1998. The committee report recommended impeachment of President Clinton on four counts. The first article alleged that President Clinton perjured himself when testifying to a criminal grand jury about his response to the Jones lawsuit and his relationship with Lewinsky. The second alleged that the President committed perjury during a deposition in the civil suit brought against him by Paula Jones. The third alleged that President Clinton obstructed justice in the suit brought against him by Jones and in the investigation by Independent Counsel Starr. The fourth alleged that the President abused his office by refusing to respond to certain requests for admission from Congress and making untruthful responses to Congress during the investigation into his behavior.", "On December 19, 1998, in a lame-duck session, the House voted to approve the first and third articles. After trial in the Senate, the President was acquitted on February 12, 1999. Statements of the Senators entered into the record on the impeachment reflect disagreement about what constitutes an impeachable offense for the President and whether Clinton's behavior rose to this level. For instance, Republican Senator Richard G. Lugar voted to convict on both articles, noting in his statement the gravity of the \"presidential misconduct at issue\" and arguing that the case was \"not about adultery.\" Instead, it centered on the obstruction of justice that occurred when the President \"lied to a federal grand jury and worked to induce others to give false testimony.\" For Senator Lugar, the President ultimately \"betrayed [the] trust\" of the nation through his actions and should be removed from office. In contrast, Republican Senator Olympia Snowe voted to acquit on both articles. In her statement, she admonished the President's \"lowly conduct,\" but concluded there was \"insufficient evidence of the requisite untruth and the requisite intent\" to establish perjury with regard to the concealment of his relationship with a subordinate; and the perjury charges regarding his relationship with a subordinate concerned statements that were largely \"ruled irrelevant and inadmissible in the underlying civil case\" which \"undermine[d] [their] materiality.\" She also stated that she thought one of the allegations in the second impeachment article had been proven\u00e2\u0080\u0094the President's attempt to influence the testimony of his personal assistant\u00e2\u0080\u0094but that the proper remedy for this was a criminal prosecution. Indeed, a number of Senators indicated that they did not consider the President's behavior to constitute an impeachable offense because the President's conduct was not of a distinctly public nature. For instance, Democratic Senator Byron L. Dorgan voted to acquit on both articles. He described Clinton's behavior as \"reprehensible,\" but concluded that it did not constitute \"a grave danger to the nation.\"", "The significance of the Clinton impeachment experience to informing the understanding of what constitutes an impeachable offense is thus open to debate. One might point to the impeachment articles recommended by the House Judiciary Committee, but not adopted by the full House, as concerning conduct insufficient to establish an impeachable offense. Specifically, the House declined to impeach President Clinton for his alleged perjury in a civil suit against him as well as for alleged untruthful statements made in response to congressional requests. Likewise, some scholars have pointed to the acquittal in the Senate of both impeachment articles brought by the House as evidence that the Clinton impeachment articles lacked merit or were adopted on purely partisan grounds. The statements of some Senators mentioned above, reasoning that Clinton's conduct did not qualify as an impeachable offense, may support arguments that impeachment is not an appropriate tool to address at least some sphere of conduct by a President not directly tied to his official duties. Even so, the failure to convict President Clinton might instead simply reflect the failure of the House Managers to prove their case, or simply bare political calculation by some Senators. Ultimately, the lessons of the Clinton impeachment experience will be revealed in the future practice of Congress when assessing whether similar conduct is impeachable if committed by future Presidents."], "subsections": []}, {"section_title": "Contemporary Judicial Impeachments", "paragraphs": ["Congress has impeached federal judges with comparatively greater frequency in recent decades, and some of these impeachments appear to augur important consequences for the practice in the future. In particular, within three years in the 1980s the House voted to impeach three federal judges, each occurring after a criminal prosecution of the judge. One impeached federal judge was not barred from future office and later was elected to serve in the House of Representatives, the body that had earlier impeached him. Another judge challenged the adequacy of his impeachment trial in a case that ultimately reached the Supreme Court, which ruled that the case was nonjusticiable. ", "The House of Representatives impeached federal district judge Harry E. Claiborne in 1986, following his criminal conviction and imprisonment for providing false statements on his tax returns. Despite his incarceration, Judge Claiborne did not resign his seat and continued to collect his judicial salary. The House unanimously voted in favor of four articles of impeachment against him. The first two articles against Judge Claiborne simply laid out the underlying behavior that had led to his criminal prosecution. The third article \"rest[ed] entirely on the conviction itself\" and stood for the principle that \"by conviction alone he is guilty of . . . 'high crimes' in office.\" The fourth alleged that Judge Claiborne's actions brought the \"judiciary into disrepute, thereby undermining public confidence in the integrity and impartiality of the administration of justice\" which amounted to a \"misdemeanor.\" ", "The Senate impeachment trial of Judge Claiborne was the first in which that body used a committee to take evidence. Rather than conducting a full trial with the entire Senate, the committee took testimony, received evidence, and voted on pretrial motions regarding evidence and discovery. The committee then reported a transcript of the proceedings to the full Senate, without recommending whether impeachment was warranted. The Senate voted to convict Judge Claiborne on the first, second, and fourth articles.", "In 1988, the House impeached a federal district judge who had been indicted for a criminal offense but was acquitted. Judge Alcee L. Hastings was acquitted in a criminal trial where he was accused of conspiracy and obstruction of justice for soliciting a bribe in return for reducing the sentences of two felons. After his acquittal, a judicial committee investigated the case and concluded that Judge Hastings's behavior might merit impeachment. The Judicial Conference (a national entity composed of federal judges that reviews investigations of judges and may refer recommendations to Congress) eventually referred the matter to the House of Representatives, noting that impeachment might be warranted. The House of Representatives approved seventeen impeachment articles against Judge Hastings, including for perjury, bribery, and conspiracy.", "Judge Hastings objected to the impeachment proceedings as \"double jeopardy\" because he had already been acquitted in a previous criminal proceeding. The Senate, however, rejected his motion to dismiss the articles against him. The Senate again used a trial committee to receive evidence. That body voted to convict and remove Judge Hastings on eight articles, but did not vote to disqualify him from holding future office. Judge Hastings was later elected to the House of Representatives.", "Before the trial of Judge Hastings even began in the Senate, the House impeached Judge Walter L. Nixon. Judge Nixon was convicted in a criminal trial of perjury to a grand jury and imprisoned. Following an investigation by the House Judiciary Committee's Subcommittee on Civil and Constitutional Rights, the Judiciary Committee reported a resolution to the full House recommending impeachment on three articles. The full House approved three articles of impeachment, the first two involving lying to a grand jury and the last for undermining the integrity of and bringing disrepute on the federal judicial system. The Senate convicted Judge Nixon on the first two articles but acquitted him on the third. ", "Judge Nixon challenged the Senate's use of a committee to receive evidence and conduct hearings. He sued in federal court arguing that the use of a committee, rather than the full Senate, to take evidence violated the Constitution's provision that the Senate \"try\" all impeachments. The Supreme Court ultimately rejected his challenge in Nixon v. United States , ruling that the issue was a nonjusticiable political question because the Constitution grants the power to try impeachments \"in the Senate and nowhere else\"; and the word \"try\" \"lacks sufficient precision to afford any judicially manageable standard of review of the Senate's actions. \" As a result of this decision, impeachment proceedings appear largely immune from judicial review.", "Two judges have been impeached in the twenty-first century. As with the three impeachments of judges in the 1980s, the first followed a criminal indictment. District Judge Samuel B. Kent pleaded guilty to obstruction of justice for lying to a judicial investigation into alleged sexual misconduct and was sentenced to thirty-three months in prison. The House impeached Judge Kent for sexually assaulting two court employees, obstructing the judicial investigation of his behavior, and making false and misleading statements to agents of the Federal Bureau of Investigation about the activity. Judge Kent resigned his office before a Senate trial. The Senate declined to conduct a trial following his resignation.", "Although the four previous impeachments of federal judges followed criminal proceedings, the most recent impeachment did not. In 2010, Judge G. Thomas Porteous Jr. was impeached for participating in a corrupt financial relationship with attorneys in a case before him, and engaging in a corrupt relationship with bail bondsmen whereby he received things of value in return for helping the bondsman develop corrupt relationships with state court judges. Judge Porteous was the first individual impeached by the House and convicted by the Senate based in part on conduct occurring before he began his tenure in federal office. The first and second articles of impeachment each alleged misconduct by Judge Porteous during both his state and federal judgeships. The fourth alleged that Judge Porteous made false statements to the Senate and FBI in connection with his nomination and confirmation to the U.S. District Court for the Eastern District of Louisiana.", "Judge Porteous's filings in answer to the articles of impeachment argued that conduct occurring before he was appointed to the federal bench cannot constitute impeachable behavior. The House Managers' replication, or reply to this argument, argued that Porteous's contention had no basis in the Constitution. On December 8, 2010, he was convicted on all four articles, removed from office, and disqualified from holding future federal offices. The first article, which included conduct occurring before he was a federal judge, was affirmed 96-0. The second article, approved 90-6, alleged that he lied to the Senate in his confirmation hearing to be a federal judge. A number of Senators explicitly adopted the reasoning supplied by expert witness testimony before the House that the crucial issue over the appropriateness of impeachment was not the timing of the misconduct, but \"whether Judge Porteous committed such misconduct and whether such misconduct demonstrates the lack of integrity and judgment that are required in order for him to continue to function\" in office.", "Senator Claire McCaskill explained in her statement entered in the Congressional Record that Judge Porteous's argument for an \"absolute, categorical rule that would preclude impeachment and removal for any pre-federal conduct\" should be rejected. \"That should not be the rule,\" she noted, \"any more than allowing impeachment for any pre-federal conduct that is entirely unrelated to the federal office.\" Senator Patrick Leahy agreed, noting that he \"reject[ed] any notion of impeachment immunity [for pre-federal behavior] if misconduct was hidden, or otherwise went undiscovered during the confirmation process, and it is relevant to a judge's ability to serve as an impartial arbiter.\""], "subsections": []}]}, {"section_title": "Recurring Questions About Impeachment", "paragraphs": [], "subsections": [{"section_title": "Who Counts as an Impeachable Officer?", "paragraphs": ["The Constitution explicitly makes \"[t]he President, Vice President and all civil Officers of the United States\" subject to impeachment and removal. Which officials are considered \"civil Officers of the United States\" for purposes of impeachment is a significant constitutional question that remains partly unresolved. Based on both the constitutional text and historical precedent, federal judges and Cabinet-level officials are \"civil Officers\" subject to impeachment, while military officers, state and local officials, purely private individuals, and Members of Congress likely are not. ", "A question that neither the Constitution nor historical practice has answered is whether Congress may impeach and remove lower-level, non-Cabinet executive branch officials. The Constitution does not define \"civil Officers of the United States.\" Nor do the debates at the Constitutional Convention provide significant evidence of which individuals (beyond the President and Vice President) the Framers intended to be impeachable. Impeachment precedents in both the House and Senate are of equally limited utility with respect to subordinate executive officials (i.e., executive branch officials other than the President and Vice President). In all of American history, only one such official has been impeached: Secretary of War William Belknap. Thus, while it seems that executive officials of the highest levels have been viewed as \"civil Officers,\" historical precedent provides no examples of the impeachment power being used against lower-level executive officials. One must therefore look to other sources for aid in determining precisely how far down the federal bureaucracy the impeachment power might reach. ", "The general purposes of impeachment may assist in interpreting the proper scope of \"civil Officers of the United States.\" The congressional power of impeachment constitutes an important aspect of the various checks and balances built into the Constitution to preserve the separation of powers. It is a tool, entrusted to the House and Senate alone, to remove government officials in the other branches of government, who either abuse their power or engage in conduct that warrants their dismissal from an office of public trust. At least one commentator has suggested that the Framers recognized, particularly for executive branch officials, that there would be times when it may not be in the President's interest to remove a \"favorite\" from office, even when that individual has violated the public trust. As such, the Framers \"dwelt repeatedly on the need of power to oust corrupt or oppressive ministers whom the President might seek to shelter.\" If the impeachment power were meant to ensure that Congress has the ability to impeach and remove corrupt officials that the President was unwilling to dismiss, it would seem arguable that the power should extend to officers exercising a degree of authority, the abuse of which would harm the separation of powers and good government. ", "The writings of early constitutional commentators also arguably suggest a broad interpretation of \"civil Officers of the United States.\" Joseph Story addressed the reach of the impeachment power in his influential Commentaries on the Constitution , asserting that \" all officers of the United states [] who hold their appointments under the national government, whether their duties are executive or judicial, in the highest or in the lowest departments of the government , with the exception of officers in the army and navy, are properly civil officers within the meaning of the constitution, and liable to impeachment.\" Similarly, William Rawle reasoned that \"civil Officers\" included \"[ a ] ll executive and judicial officers, from the President downwards , from the judges of the Supreme Court to those of the most inferior tribunals. . . .\" Consistent with the text of the Constitution, these early interpretations suggest the impeachment power was arguably intended to extend to \"all\" executive officers, and not just Cabinet-level officials and other executive officials at the highest levels.", "The meaning of \"officer of the United States\" under the impeachment provisions may be informed by other provisions of the Constitution that use the same phrase. Applying this contextual approach, the most thorough, and perhaps most helpful, judicial elucidation of the definition of \"Officers of the United States\" comes in the Constitution's Appointments Clause. Indeed, that provision, which establishes the methods by which \"Officers of the United States\" may be appointed, has generally been viewed as a useful guidepost in establishing the definition of \"civil Officers\" for purposes of impeachment.", "The Appointments Clause provides that the President", "shall nominate, and by and with the Advice and Consent of the Senate, shall appoint Ambassadors, other public Ministers and Consuls, Judges of the supreme Court, and all other Officers of the United States, whose Appointments are not herein otherwise provided for, and which shall be established by Law: but 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.", "In interpreting the Appointments Clause, the Court has distinguished \"Officers of the United States,\" whose appointment is subject to the requirements of the Clause, and non-officers, also known as employees, whose appointment is not. The amount of authority that an individual exercises will generally determine his classification as either an officer or employee. As established in Buckley v. Valeo , an officer is \"any appointee exercising significant authority pursuant to the laws of the United States,\" while employees are viewed as \"lesser functionaries subordinate to the officers of the United States,\" who do not exercise \"significant authority.\"", "The Supreme Court has further subdivided \"officers\" into two categories: principal officers, who may be appointed only by the President with the advice and consent of the Senate; and inferior officers, whose appointment Congress may vest \"in the President alone, in the Courts of Law, or in the Heads of Departments.\" The Court has acknowledged that its \"cases have not set forth an exclusive criterion for distinguishing between principal and inferior officers for Appointments Clause purposes.\" The clearest statement of the proper standard to be applied in differentiating between the two types of officers appears to have been made in Edmond v. United States when the Court noted that \"[g]enerally speaking, the term 'inferior officer' connotes a relationship with some higher ranking officer or officers below the President . . . [and] whose work is directed and supervised at some level by others who were appointed by presidential nomination with the advice and consent of the Senate. \" Thus, in analyzing whether one may be properly characterized as either an inferior or a principal officer, the Court's decisions appear to focus on the extent of the officer's discretion to make autonomous policy choices and the authority of other officials to supervise and to remove the officer.", "Using the principles established in the Court's Appointments Clause jurisprudence to interpret the scope of \"civil Officers\" for purposes of impeachment, it would appear that employees, as non-officers, would not be subject to impeachment. Thus, lesser functionaries\u00e2\u0080\u0094such as federal employees who belong to the civil service, do not exercise \"significant authority,\" and are not appointed by the President or an agency head\u00e2\u0080\u0094would not be subject to impeachment. At the opposite end of the spectrum, it would seem that any official who qualifies as a principal officer, including a head of an agency such as a Secretary, Administrator, or Commissioner, would be impeachable. ", "The remaining question is whether inferior officers, or those officers who exercise significant authority under the supervision of a principal officer, are subject to impeachment and removal. As noted above, an argument can be made from the text and purpose of the impeachment clauses, as well as early constitutional interpretations, that the impeachment power was intended to extend to \" all \" officers of the United States, and not just those in the highest levels of government. Any official exercising \"significant authority,\" including both principal and inferior officers, would therefore qualify as a \"civil Officer\" subject to impeachment. This view would permit Congress to impeach and remove any executive branch \"officer,\" including many deputy political appointees and certain administrative judges. ", "There is some historical evidence, however, to suggest that inferior officers were not meant to be subject to impeachment. For example, a delegate at the North Carolina ratifying convention asserted that \"[i]t appears to me . . . the most horrid ignorance to suppose that every officer, however trifling his office, is to be impeached for every petty offense . . . I hope every gentleman . . . must see plainly that impeachments cannot extend to inferior officers of the United States.\" Additionally, Governeur Morris, member of the Pennsylvania delegation to the Constitutional Convention, arguably implied that inferior officers would not be subject to impeachment in stating that \"certain great officers of State; a minister of finance, of war, of foreign affairs, etc. . . . will be amenable by impeachment to the public justice.\" ", "Despite this ongoing debate, the authority to resolve any ambiguity in the scope of \"civil Officers\" for purposes of impeachment lays initially with the House, in adopting articles of impeachment, and then with the Senate, in trying the officer. "], "subsections": []}, {"section_title": "Is Impeachment Limited to Criminal Acts?", "paragraphs": ["The Constitution describes the grounds of impeachment as \"Treason, Bribery, or other high Crimes and Misdemeanors.\" As discussed above, the meaning of \"high Crimes and Misdemeanors\" is not defined in the Constitution or in statute. ", "Some have argued that only criminal acts are impeachable offenses under the U.S. Constitution; impeachment is therefore inappropriate for noncriminal activity. In support of this assertion, one might note that the debate on impeachable offenses during the Constitutional Convention in 1787 shows that criminal conduct was encompassed in the \"high crimes and misdemeanors\" standard. ", "As noted above, the notion that only criminal conduct can constitute sufficient grounds for impeachment does not, however, track historical practice. A variety of congressional materials support the notion that impeachment applies to certain noncriminal misconduct. For example, House committee reports on potential grounds for impeachment have described the history of English impeachment as including noncriminal conduct and noted that this tradition was adopted by the Framers. In accordance with the understanding of \"high\" offenses in the English tradition, impeachable offenses under this view are \"constitutional wrongs that subvert the structure of government, or undermine the integrity of office and even the Constitution itself.\" \"[O]ther high crimes and misdemeanor[s]\" are not limited to indictable offenses, but apply to \"serious violations of the public trust.\" Congressional materials take the view that \"'Misdemeanor' . . . does not mean a minor criminal offense as the term is generally employed in the criminal law,\" but refers instead to the behavior of public officials. \"[H]igh Crimes and Misdemeanors\" may thus be characterized as \"misconduct that damages the state and the operations of governmental institutions.\" ", "According to congressional materials, the purposes underlying the impeachment process also reflect that noncriminal activity may constitute sufficient grounds for impeachment. The purpose of impeachment is not to inflict personal punishment for criminal activity. In fact, the Constitution explicitly makes clear that impeached individuals are not immunized from criminal liability once they are impeached for particular activity. Instead, impeachment is a \"remedial\" tool; it serves to effectively \"maintain constitutional government\" by removing individuals unfit for office. Grounds for impeachment include abuse of the particular powers of government office or a violation of the \"public trust\" \u00e2\u0080\u0094conduct that is unlikely to be barred by statute. ", "Congressional practice also supports this position. Many impeachments approved by the House of Representatives have included conduct that did not involve criminal activity. For example, in 1803, Judge John Pickering was impeached and convicted for, among other things, appearing on the bench \"in a state of total intoxication.\" In 1912, Judge Robert W. Archbald was impeached and convicted for abusing his position as a judge by inducing parties before him to enter financial transactions with him. In 1936, Judge Halstead Ritter was impeached and convicted for conduct that \"br[ought] his court into scandal and disrepute, to the prejudice of said court and public confidence in the administration of justice . . . and to the prejudice of public respect for and confidence in the Federal judiciary.\" And a number of judges were impeached for misusing their position for personal profit."], "subsections": []}, {"section_title": "Are the Standards for Impeachable Offenses the Same for Judges and Executive Branch Officials?", "paragraphs": ["Some have suggested that the standard for impeaching a federal judge differs from an executive branch official. While Article II, Section 1, of the Constitution specifies the grounds for the impeachment of civil officers as \"Treason, Bribery, or other high Crimes and Misdemeanors,\" Article III, Section 1, provides that federal judges \"hold their Offices during good Behaviour.\" One argument posits that these clauses should be read in conjunction, meaning that judges can be impeached and removed from office if they fail to exhibit good behavior or if they are guilty of \"treason, bribery, or other high Crimes and Misdemeanors.\" ", "But while one might find some support for the notion that the \"good behavior\" clause constitutes an additional ground for impeachment in early twentieth century practice, the \"modern view\" of Congress appears to be that the phrase \"good behavior\" simply designates judicial tenure. Under this reasoning, rather than functioning as a ground for impeachment, the \"good behavior\" phrase simply makes clear that federal judges retain their office for life unless they are removed through a proper constitutional mechanism. For example, a 1973 discussion of impeachment grounds released by the House Judiciary Committee reviewed the history of the phrase and concluded that the \"Constitutional Convention . . . quite clearly rejected\" a \"dual standard\" for judges and civil officers. The next year, the House Judiciary Committee's Impeachment Inquiry asked whether the \"good behavior\" clause provides another ground for impeachment of judges and concluded that \"[i]t does not.\" It emphasized that the House's impeachment of judges was \"consistent\" with impeachment of \"non-judicial officers.\" Finally, the House Report on the Impeachment of President Clinton affirmed this reading of the Constitution, stating that impeachable conduct for judges mirrored impeachable conduct for other civil officers in the government. The \"treason, bribery, and high Crimes and Misdemeanors\" clause thus serves as the sole standard for impeachable conduct for both executive branch officials and federal judges.", "Still, even if the \"good behavior\" clause does not delineate a standard for impeachment and removal for federal judges, as a practical matter, one might argue that the range of impeachable conduct differs between judges and executive branch officials because of the differing nature of each office. For example, one might argue that a federal judge could be impeached for perjury or fraud because of the importance of trustworthiness and impartiality to the judiciary, while the same behavior might not always constitute impeachable conduct for an executive branch official. But given the varied factors at issue\u00e2\u0080\u0094including political calculations, the relative paucity of impeachments of nonjudicial officers compared to judges, and the fact that a nonjudicial officer has never been convicted by the Senate\u00e2\u0080\u0094it is uncertain if conduct meriting impeachment and conviction for a judge would fail to qualify for a nonjudicial officer.", "The impeachment and acquittal of President Clinton highlights this difficulty. The House of Representatives impeached President Clinton for (1) providing perjurious and misleading testimony to a federal grand jury and (2) obstruction of justice in regards to a civil rights action against him. The House Judiciary Committee report that recommended articles of impeachment argued that perjury by the President was an impeachable offense, even if committed with regard to matters outside his official duties. The report rejected the notion that conduct such as perjury was \"more detrimental when committed by judges and therefore only impeachable when committed by judges.\" The report pointed to the impeachment of Judge Claiborne, who was impeached and convicted for falsifying his income tax returns\u00e2\u0080\u0094an act which \"betrayed the trust of the people of the United States and reduced confidence in the integrity and impartiality of the judiciary.\" While it is \"devastating\" for the judiciary when judges are perceived as dishonest, the report argued, perjury by the President is \"just as devastating to our system of government.\" And, the report continued, both Judge Claiborne and Judge Nixon were impeached and convicted for perjury and false statements in matters distinct from their official duties. Likewise, the report concluded that President Clinton's perjurious conduct, though seemingly falling outside his official duties as President, nonetheless constituted grounds for impeachment.", "In contrast, the minority views from the report opposing impeachment reasoned that \"not all impeachable offenses are crimes and not all crimes are impeachable offenses.\" The minority argued that the President is not impeachable for all potential crimes, no matter how minor; impeachment is reserved for \"conduct that constitutes an egregious abuse or subversion of the powers of the executive office.\" Examining the impeachment of President Andrew Johnson and the articles of impeachment drawn up for President Richard Nixon, the minority concluded that both were accused of committing \"public misconduct\" integral to their \"official duties.\" The minority noted that the Judiciary Committee had rejected an article of impeachment against President Nixon alleging that he committed tax fraud, primarily because that \"related to the President's private conduct, not to an abuse of his authority as President.\" ", "The minority did not explicitly claim that the grounds for impeachment might be different between federal judges and executive branch officials, but its reasoning at least hints in that direction. Its rejection of nonpublic behavior as sufficient grounds for impeachment of the President\u00e2\u0080\u0094including its example of tax fraud as nonpublic behavior that does not qualify\u00e2\u0080\u0094appears to conflict with the past impeachment and conviction of federal judges on just this basis. One reading of the minority's position is that certain behavior might be impeachable conduct for a federal judge, but not for the President. ", "While two articles of impeachment were approved by the House, the Senate acquitted President Clinton on both charges. Even so, generating firm conclusions from this result is difficult, as there may have been varying motivations for these votes. One possibility is that the acquittal occurred because some Senators\u00e2\u0080\u0094though agreeing that the conduct merited impeachment\u00e2\u0080\u0094thought the House Managers failed to prove their case. Another is that certain Senators disagreed that the behavior was impeachable at all. Yet another possibility is that neither ideological stance was considered and voting was conducted solely according to political calculations. "], "subsections": []}, {"section_title": "What Is the Constitutional Definition of Bribery?", "paragraphs": ["Civil officers are subject to impeachment for treason, bribery, or \"other high Crimes and Misdemeanors.\" Treason is defined in the constitutional text, but bribery is not. As this report has discussed, Congress has substantial discretion in determining what misconduct constitutes \"high Crimes and Misdemeanors\" meriting impeachment and removal for government officials. Likewise, Congress could presumably look to several different sources to inform its understanding of what behavior qualifies as bribery under the Constitution.", "One source might be the current federal criminal code. Under federal statute, it is a criminal offense for a public official to corruptly seek or receive bribes in return for official acts.", "Another might be the understanding of the crime of bribery at the nation's Founding. At the time of the Constitutional Convention, bribery was a common law crime, although its precise scope is somewhat difficult to determine. According to Blackstone, it included situations where a judge, or other person involved in the administration of justice, took \"any undue reward to influence his behavior in office.\" Though the scope of the crime of bribery was initially narrow, it appears to have expanded to include giving as well as receiving bribes, as well as attempted bribery in certain situations. Some commentators assert that, at the time of the Founding, the English and American common law definition of bribery had developed to apply not just to judges, but also to executive officers .", "No matter the precise scope of bribery in the common law courts, in Parliamentary practice it was understood to constitute an impeachable offense in England at the time of the nation's Founding. In 1624, the House of Commons impeached the Lord Treasurer (one of the King's ministers) for bribery. ", "Actual debate on the meaning of bribery at the Constitutional Convention was limited. As mentioned above, while discussing presidential impeachment, Gouverneur Morris asserted that the President should be subject to the impeachment process because he might \"be bribed by a greater interest to betray his trust,\" noting the example of Charles II receiving a bribe from Louis XIV. ", "The First Congress enacted a federal bribery statute for customs officers, which provided that those officers convicted of taking or receiving a bribe be fined and barred from holding office in the future, while the payer of a bribe would be fined as well . The same Congress passed another bribery statute that applied to anyone who \"directly or indirectly, give[s] any sum or sums of money, or any other bribe, present or reward, or any promise, contract, obligation or security, for the payment or delivery of any money, present or reward, or any other thing to obtain or procure the opinion, judgment or decree of any judge or judges of the United States\" as well as the judge who accepted the bribe. Other officers of the United States were added to the federal statute's provisions in 1853. And the states passed their own laws about the time of the Constitution's drafting that prohibited bribery and the closely related crime of extortion by state officers and judges. ", "A number of impeachments in the United States have charged individuals with misconduct that was viewed as bribery. In most of those instances, however, the specific articles of impeachment were framed as \"high crimes and misdemeanors\" or an \"impeachable offense.\" For instance, the House of Representatives approved articles of impeachment against then-Judge Hastings, including one for the \"impeachable offense\" of participating in a \"corrupt conspiracy to obtain $150,000 from defendants [in a case before him] in return for the imposition of [lighter] sentences.\" Although the article did not mention bribery, the Judiciary Committee report analyzing the article described Judge Hastings as participating in a \"bribery conspiracy\" or a \"bribery scheme.\" The Senate convicted Hastings on this article. Likewise, the first article of impeachment against Judge Porteous charged him with \"solicit[ing] and accept[ing] things of value\" from attorneys without disclosure and ruling in those clients favor. The second charged him with \"solicit[ing] and accept[ing] things of value . . . for his personal use and benefit, while at the same time taking official actions that benefitted\" a bail bondman and his sister. Neither article explicitly referenced bribery, but much like the Hastings impeachment, the Judiciary Committee report analyzing the articles alleged that Judge Porteous had participated in a \"bribery scheme.\" ", "In sum, the Framers provided that bribery was an impeachable offense for the President, Vice President, and other civil officers. At the time of the Constitution's drafting, bribery was a common law crime whose scope had expanded from its earlier roots. And Parliament had impeached ministers of the Crown for bribery. But the Framers did not adopt a formal definition of bribery in the Constitution, and the debates at the Constitutional Convention and during ratification do not clearly indicate the intended meaning of bribery for impeachment purposes. In any case, the practice of impeachment in the United States has tended to envelop charges of bribery within the broader standard of \"other high Crimes and Misdemeanors.\""], "subsections": []}, {"section_title": "Impeachment for Behavior Prior to Assuming Office", "paragraphs": ["Most impeachments have concerned behavior occurring while an individual is in a federal office. But some have addressed, at least in part, conduct before individuals assumed their positions. For example, in 1912, a resolution impeaching Judge Robert W. Archbald and setting forth thirteen articles of impeachment was reported out of the House Judiciary Committee and agreed to by the House. The Senate convicted Judge Archbald in January the next year. At the time that Judge Archbald was impeached by the House and tried by the Senate in the 62nd Congress, he was U.S. Circuit Judge for the Third Circuit and a designated judge of the U.S. Commerce Court. The articles of impeachment brought against him alleged misconduct in those positions as well as in his previous position as U.S. District Court Judge of the Middle District of Pennsylvania. Judge Archbald was convicted on four articles alleging misconduct in his then-current positions as a circuit judge and Commerce Court judge, and on a fifth article that alleged misuse of his office both in his then-current positions and in his previous position as U.S. District Judge. ", "While Judge Archbald was impeached and convicted in part for behavior occurring before he assumed his then-current position, that behavior occurred while he held a prior federal office. Judge G. Thomas Porteous, in contrast, is the first individual to be impeached by the House and convicted by the Senate based in part on conduct occurring before he began his tenure in federal office. Article II alleged misconduct beginning while Judge Porteous was a state court judge as well as misconduct while he was a federal judge. Article IV alleged that Judge Porteous made false statements to the Senate and FBI in connection with his nomination and confirmation to the U.S. District Court for the Eastern District of Louisiana. He was convicted on all four articles, removed from office, and disqualified from holding future federal offices.", "On the other hand, it does not appear that any President, Vice President, or other civil officer of the United States has been impeached by the House solely based on conduct occurring before he began his tenure in the office held at the time of the impeachment investigation, although the House has, on occasion, investigated such allegations."], "subsections": []}, {"section_title": "Impeachment After an Individual Leaves Office", "paragraphs": ["It appears that federal officials who have resigned have still been thought to be susceptible to impeachment and a ban on holding future office. Secretary of War William W. Belknap resigned hours before the House impeached him, but the Senate still conducted a trial in which Belknap was acquitted. During the trial, upon objection by Belknap's counsel that the Senate lacked jurisdiction because Belknap was now a private citizen, the Senate voted in favor of jurisdiction. ", "That said, the resignation of an official under investigation for impeachment often ends impeachment proceedings. For example, no impeachment vote was taken following President Richard Nixon's resignation after the House Judiciary Committee decided to report articles of impeachment to the House. And proceedings were ended following the resignation of Judges English, Delahay, and Kent."], "subsections": []}, {"section_title": "What Is the Standard of Proof in House and Senate Impeachment Proceedings?", "paragraphs": ["In the judicial system, the degree of certainty with which parties must prove their allegations through the production of evidence\u00e2\u0080\u0094what is known as the burden of persuasion or the standard of proof \u00e2\u0080\u0094varies depending on the type of proceeding. In a criminal trial, in which a defendant risks deprivation of life and liberty, the prosecutor's burden of proof is high. Each element of the offense must be proved \"beyond a reasonable doubt.\" In civil litigation between private parties, in which the potential harm to a defendant is less severe, the plaintiff's burden of proof is reduced. The allegations generally need only be proved by a \"preponderance of the evidence.\" An even more generous standard is used by federal grand juries, who may issue an indictment on a finding that there is \"probable cause\" to believe that a crime has occurred. In yet other settings, an intermediate standard of \"clear and convincing evidence\" is used. This burden is somewhere below \"reasonable doubt\" but higher than \"preponderance.\" ", "The Constitution establishes no clear standard of proof to be applied in the impeachment process. Neither has the House in its decision to impeach, nor the Senate in its decision to convict, chosen to establish (either by rule or precedent) a particular governing standard. The question has been repeatedly debated in both chambers, but ultimately individual Members have been free to use any standard they wish in deciding how to cast their respective votes. In short, when deciding questions of impeachment and removal, historical practice seems to indicate that Members need be convinced only to their own satisfaction. Moreover, even if the House or Senate chose to establish a governing standard of proof, it may be hard for such a rule to be enforced. "], "subsections": [{"section_title": "Standard of Proof in the House", "paragraphs": ["In the House, the debate over the standard of proof that should be applied in determining whether the evidence supports approval of articles of impeachment has generally focused on the lower end of the standards-of-proof spectrum. ", "Those who have argued for the most easily satisfied probable cause standard have often analogized the House's decision to impeach to that of a grand jury's decision to indict. Like a grand jury, the House's role is to ascertain whether sufficient evidence exists to charge an official with an impeachable offense, not to determine guilt. That role is reserved to the Senate, which may apply a different, potentially higher standard of proof. As such, it is argued that the House should apply a similar standard to what is applied by an investigating grand jury\u00e2\u0080\u0094a standard such as preponderance of the evidence or \"probable cause.\" This position was perhaps most clearly articulated during the Judiciary Committee's consideration of the impeachment of Judge Charles Swayne in 1904 by Representative Powers, who argued the following: ", "This House has no constitutional power to pass upon the question of the guilt or the innocent of the respondent. He is not on trial before us. We have no right to take from him the presumption of innocence which he enjoys under the law. All we have the right to do is to say whether there has been made out such probable cause of guilt as to entitle the American people to the right to have the case tried before the Senate of the United States.", "Those who have argued for the more demanding clear and convincing standard have often focused on the gravity of the impeachment process and its impact not only on the impeached official, but in the case of a presidential impeachment, on the entire executive branch. For example, during the House's consideration of articles of impeachment against President Clinton, the President's counsel asserted that the clear and convincing standard was \"commensurate with the gravity of impeachment.\" \"Lower standards,\" it was argued, \"are simply not demanding enough to justify the fateful step of an impeachment trial.\" ", "The House Judiciary Committee's report issued in connection with its approval of articles of impeachment against President Nixon displays the House's historical reluctance to impose any formalized burden of proof on Members. In describing the articles, the report noted that the committee had found \"clear and convincing evidence\" of the individual impeachable offenses, but did not explicitly contend that such a finding was required, or that \"clear and convincing\" should represent the governing standard of proof in House impeachments. The dissenting Members took a different approach, arguing that they were persuaded that the applicable standard for proof in House impeachments \"must be no less rigorous than proof by 'clear and convincing evidence.'\" Even so, the minority not only acknowledged that the House has never sought to \"fix by rule\" an applicable standard of proof, but also explicitly stated that they would not \"advocate such a rule.\" \"The question,\" the minority concluded, \"is properly left to the discretion of individual Members.\" "], "subsections": []}, {"section_title": "Standard of Proof in the Senate", "paragraphs": ["Much like Members of the House, Senators are not bound by any specific burden of proof in the trial of an impeached official. Counsel for the impeached official have generally argued that individual Senators should adopt the most demanding standard of \"beyond a reasonable doubt,\" while the House Managers have generally urged a lower standard. ", "The Constitution's use of words like \"try\" and \"convicted\" could be read to suggest an intent that the Senate adopt a criminal-like standard in impeachment trials. Counsel for President Clinton argued this position, at least with respect to presidential impeachments, asserting that the Constitution's phrasing \"strongly suggests that an impeachment trial is akin to a criminal proceeding and that the beyond-a-reasonable-doubt standard of criminal proceedings should be used.\" House Managers, on the other hand, have generally argued that use of the \"beyond reasonable doubt\" standard is inappropriate. They have noted that \"an impeachment trial is not a criminal trial,\" nor are the consequences of a conviction\u00e2\u0080\u0094which are limited to removal from office and possible disqualification from holding future federal office\u00e2\u0080\u0094criminal in nature. ", "The Senate's approach of ensuring that its Members retain the ability to make individualized decisions on the standard of proof necessary for conviction was perhaps best exhibited during the impeachment trial of Judge Claiborne. There, counsel for Judge Claiborne submitted a motion to establish \"beyond a reasonable doubt\" as the applicable standard of proof in the trial. The House Managers disagreed, arguing that standard was inappropriate, and that setting any standards would prevent individual members from exercising their own personal judgment. Judge Claiborne's motion was ultimately rejected by the Presiding Officer, who held that the standard of proof to be applied was left to the discretion of each individual Senator.", "This approach was affirmed in the Senate's most recent statement on the standard of proof in a Senate trial. During Judge Porteous's trial, the Senate trial committee referenced the resolution of the Claiborne motion, noting that the Senate had \"declin[ed] to establish an obligatory standard.\" Accordingly, the committee report concluded that \"Each Senator may, therefore, use the standard of proof that he or she feels is appropriate.\" ", "As such, rather than impose a specific standard of proof on its members, both the House and Senate have sought to ensure that individual Members remain free to make their own determinations, guided by their individual conscience and judgment, and their oath to do \"impartial justice.\" "], "subsections": []}]}, {"section_title": "What Are the Applicable Evidentiary Rules and Standards in a Senate Impeachment Trial?", "paragraphs": ["Like most aspects of the Senate impeachment trial, the body's approach to evidentiary questions is unique. The Senate has not bound itself to any specific controlling set of evidentiary rules. Instead, the admissibility of evidence is primarily based on Senate precedent, with objections first ruled on by the Presiding Officer, but ultimately settled by a majority vote of the Senate. ", "The present Senate Impeachment Rules provide a basic procedural framework for how evidentiary questions are to be handled. Under the Rules, objections to the admissibility of evidence \"may be made by the parties or their counsel.\" Those objections are directed to the Presiding Officer who \"may rule on all questions of evidence.\" That ruling is given effect unless challenged by an individual Senator. At that point, the Rules provide that the question be \"submitted to the Senate for decision without debate.\" ", "The Rules set the process by which evidentiary questions are to be decided, but provide only the most basic guidance on the substantive standards to be applied by either the Presiding Officer or individual Senators in making such decisions. The Rules state only that the Presiding Officer's authority to rule on questions of evidence includes, but is not limited to, \"questions of relevancy, materiality, and redundancy of evidence and incidental questions.\" Similarly, the Senate reserves the right to \"determine competency, relevancy, and materiality.\" The Rules therefore suggest only that evidence should meet basic relevancy requirements. ", "To the extent there are additional substantive standards for either the Presiding Officer or individual Senators to apply in making evidentiary determinations, they appear to derive primarily from Senate precedent. Evaluating and understanding those precedents, however, is difficult because evidentiary questions submitted to the Senate are generally made with no debate. As such, the historical record of Senate deliberations on evidentiary questions typically includes the final disposition of the question and perhaps only limited evidence of the particular reasoning that led to the Senate's decision. ", "Given the quasi-judicial aspects of the Senate trial, the parties have often used judicial evidentiary standards, including the Federal Rules of Evidence, to support their motions to either allow or exclude evidence. The Senate has generally been receptive to this approach and in fact arguably supported some adherence to judicial rules of evidence. But more recent trials have made clear that the Senate is \"not bound by the Federal Rules of Evidence, although those rules may provide some guidance. . . .\" Indeed, it has been argued that the Federal Rules of Evidence, which were designed to protect jurors from prejudicial evidence and to help them judge evidence, have little if any place in a Senate impeachment trial, where each individual Senator must weigh all relevant evidence as he or she deems fit. This approach is consistent with Chief Justice Rehnquist's ruling during the Clinton impeachment trial that the Senators should not be referred to as \"jurors\" because in an impeachment trial \"the Senate is not simply a jury. It is a court. . . .\" Accordingly, while judicial principles may guide the Senate, the body primarily \"determine[s] the admissibility of evidence by looking to Senate precedents rather than court decisions. A Senate vote is the ultimate authority for determining the admissibility of evidence.\"", "In the end, viewing House and Senate impeachment proceedings through the lens of established judicial constructs\u00e2\u0080\u0094including rules of procedure, evidence, and standards of proof\u00e2\u0080\u0094should be undertaken with caution. The impeachment process does not fit into existing judicial molds of either a criminal or civil proceeding. Indeed, it is not necessarily a judicial proceeding at all. It is instead an exceptional proceeding defined by its distinctive combination of judicial and legislative characteristics that has historically required a unique approach to procedural and evidentiary questions."], "subsections": []}, {"section_title": "Are Impeachment Proceedings Subject to Judicial Review?", "paragraphs": ["Impeachment proceedings have been challenged in federal court on a number of occasions. Perhaps most significantly, the Supreme Court has ruled that a challenge to the Senate's use of a trial committee to take evidence posed a nonjusticiable political question. In Nixon v. United States , Judge Walter L. Nixon had been convicted in a criminal trial on two counts of making false statements before a grand jury and was sent to prison. He refused, however, to resign and continued to receive his salary as a judge while in prison. The House of Representatives adopted articles of impeachment against the judge and presented the Senate with the articles. The Senate invoked Impeachment Rule XI, a Senate procedural rule which permits a committee to take evidence and testimony. After the committee completed its proceedings, it presented the full Senate with a transcript and report. Both sides presented briefs to the full Senate and delivered arguments, and the Senate then voted to convict and remove him from office. The judge then brought a suit arguing that the use of a committee to take evidence violated the Constitution's provision that the Senate \"try\" all impeachments.", "The Supreme Court noted that the Constitution grants \"the sole Power\" to try impeachments \"in the Senate and nowhere else\"; and the word \"try\" \"lacks sufficient precision to afford any judicially manageable standard of review of the Senate's actions.\" This constitutional grant of sole authority, the Court reasoned, meant that the \"Senate alone shall have authority to determine whether an individual should be acquitted or convicted.\" In addition, because impeachment functions as the \" only check on the Judicial Branch by the Legislature,\" the Court noted the important separation of powers concerns that would be implicated if the \"final reviewing authority with respect to impeachments [was placed] in the hands of the same body that the impeachment process is meant to regulate.\" Further, the Court explained that certain prudential considerations\u00e2\u0080\u0094\"the lack of finality and the difficulty of fashioning relief\"\u00e2\u0080\u0094weighed against adjudication of the case. Judicial review of impeachments could create considerable political uncertainty, if, for example, an impeached President sued for judicial review.", "The Court in Nixon was careful to distinguish the situation from Powell v. McC ormack , a case also involving congressional procedure where the Court declined to apply the political question doctrine. That case involved a challenge brought by a Member-elect of the House of Representatives, who had been excluded from his seat pursuant to a House Resolution. The precise issue in Powell was whether the judiciary could review a congressional decision that the plaintiff was \"unqualified\" to take his seat. That determination had turned, the Court explained, \"on whether the Constitution committed authority to the House to judge its Members' qualifications, and if so, the extent of that commitment.\" The Court noted that while Article I, Section 5, does provide that Congress shall determine the qualifications of its Members, Article I, Section 2, delineates the three requirements for House membership\u00e2\u0080\u0094Representatives must be at least twenty-five years old, have been U.S. citizens for at least seven years, and inhabit the states they represent. Therefore, the Powell Court concluded, the House's claim that it possessed unreviewable authority to determine the qualifications of its Members \"was defeated by . . . this separate provision specifying the only qualifications which might be imposed for House membership.\" In other words, finding that the House had unreviewable authority to decide its Members' qualifications would violate another provision of the Constitution. The Court therefore concluded in Powell that whether the three requirements in the Constitution were satisfied was textually committed to the House, \"but the decision as to what these qualifications consisted of was not.\" Applying the logic of Powell to the case at hand, the Nixon Court noted that here, in contrast, leaving the interpretation of the word \"try\" with the Senate did not violate any \"separate provision\" of the Constitution.", "In addition, several other aspects of the impeachment process have been challenged. Judge G. Thomas Porteous sued seeking to bar counsel for the Impeachment Task Force of the House Judiciary Committee from using sworn testimony the judge had provided under a grant of immunity. The impeachment proceedings were started after a judicial investigation of Judge Porteous for alleged corruption on the bench. During that investigation, Judge Porteous testified under oath to the Special Investigatory Committee under an order granting him immunity from that information being used against him in a criminal case. Before the U.S. District Court for the District of Columbia, Judge Porteous argued that the use of his immunized testimony during an impeachment proceeding violated his Fifth Amendment right not to be compelled to serve as a witness against himself. The court rejected his challenge, reasoning that because the use of the testimony for an impeachment proceeding fell within the legislative sphere, the Speech or Debate Clause prevented the court from ordering the committee staff members to refrain from using the testimony.", "Similarly, Judge Alcee L. Hastings sought to prevent the House Judiciary Committee from obtaining the records of a grand jury inquiry during the committee's impeachment investigation. Prior to the impeachment proceedings, although ultimately acquitted, Judge Hastings had been indicted by a federal grand jury for a conspiracy to commit bribery. Judge Hastings's argument was grounded in the separation of powers: he claimed that permitting disclosure of grand jury records for an impeachment investigation risked improperly allowing the executive and judicial branches to participate in the impeachment process\u00e2\u0080\u0094a tool reserved for the legislature. The U.S. Court of Appeals for the Eleventh Circuit, however, rejected this \"absolutist\" concept of the separation of powers and held that \"a merely generalized assertion of secrecy in grand jury materials must yield to a demonstrated, specific need for evidence in a pending impeachment investigation.\"", "The U.S. District Court for the District of Columbia initially threw out Judge Hastings's Senate impeachment conviction, because the Senate had tried his impeachment before a committee rather than the full Senate. The decision was vacated on appeal and remanded for reconsideration under Nixon v. United States . The district court then dismissed the suit because it presented a nonjusticiable political question."], "subsections": []}]}, {"section_title": "Conclusion", "paragraphs": ["Influenced by both English and colonial practice, the Framers of the Constitution crafted an Americanized impeachment remedy that ultimately holds government officers accountable for political offenses, or misdeeds committed by public officials against the state. The meaning of the Constitution's impeachment provisions has been worked out over time, informed by the historical practices of the House and Senate in pursuing impeachment for the misconduct of government officers. Impeachment is also generally immune from judicial review, meaning that Congress has substantial discretion in how it structures impeachment proceedings.", "The Constitution does not delineate the range of misconduct that qualifies as \"high Crimes and Misdemeanors,\" perhaps because the scope of possible offenses by government officers is impossible to delineate in advance. The history of impeachment in the United States shows that the remedy has generally applied against government officers for abuses of power, corruption, and conduct determined incompatible with an individual's office, but does not extend to strictly political or policy disagreements."], "subsections": []}]}}
{"id": "R45940", "title": "U.S. Farm Support: Compliance with WTO Commitments", "released_date": "2019-10-04T00:00:00", "summary": ["As a member of the World Trade Organization (WTO) agreements, the United States has committed to abide by WTO rules and disciplines, including those that govern domestic farm policy as spelled out in the Agreement on Agriculture (AoA). Since establishment of the WTO on January 1, 1995, the United States has complied with its WTO spending limits on market-distorting types of farm program outlays (referred to as amber box spending). However, the addition of large, new trade assistance payments to producers in 2018 and 2019, on top of existing farm program support, has raised concerns by some U.S. trading partners, as well as market watchers and policymakers, that U.S. domestic farm subsidy outlays might exceed the annual spending limit of $19.1 billion agreed to as part of U.S. commitments to WTO member countries. CRS analysis indicates that the United States probably did not violate its WTO spending limit in 2018 but could potentially exceed it in 2019.", "A farm support program can violate WTO commitments in two principal ways: first, by exceeding spending limits on certain market-distorting programs, and second, by generating distortions that spill over into the international marketplace and cause significant adverse effects. Program outlays are cumulative, and compliance with WTO commitments is based on annual aggregate spending levels. Under the WTO's AoA, total U.S. amber box outlays (that is, those outlays deemed market distorting) are limited to $19.1 billion annually, subject to de minimis exemptions. De minimis exemptions are spending that is sufficiently small (less than 5% of the value of production)\u00e2\u0080\u0094relative to either the value of a specific product or total production\u00e2\u0080\u0094to be deemed benign. Since 1995, the United States has apparently stayed within its amber box limits. However, U.S. compliance has hinged on judicious use of the de minimis exemptions in a number of years to exclude certain amber box spending from counting against the amber box limit. These exemptions have never been challenged by another WTO member.", "According to CRS analysis, projected U.S. amber box spending for 2018 (inclusive of $8.7 billion in product-specific outlays under the 2018 trade assistance package) could exceed $14 billion. This would be the largest U.S. amber box notification since 2001. However, despite its magnitude, it still would fit within the U.S. spending limit of $19.1 billion. A more ambiguous result is projected for 2019. The expansion of direct payments under a second trade assistance package to $14.5 billion in 2019 and their shift to a non-product-specific WTO classification\u00e2\u0080\u0094when combined with currently projected spending under other non-product-specific programs such as the Price Loss Coverage (PLC) and Agricultural Risk Coverage (ARC) programs\u00e2\u0080\u0094could push U.S. amber box outlays above $24 billion. This would be in excess of the U.S. amber box spending limit of $19.1 billion. However, this projection hinges on several as-yet-unknown factors, including market prices, output values, and program outlays under traditional countercyclical ARC and PLC programs. If the final price and revenue values are higher than currently projected, then program payments under ARC and PLC could be smaller than those used in this analysis. This could decrease both aggregate non-product-specific outlays and the possibility of exceeding the amber box spending limit.", "If cumulative payments in any year were to exceed the agreed-upon spending limit, then the United States would be in violation of its commitments and could be vulnerable to a challenge under the WTO's dispute settlement mechanism. Furthermore, to the extent that such program outlays might induce surplus production and depress market prices, they could also result in potential challenges under the WTO."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["The long-term objective of the World Trade Organization's (WTO's) Agreement on Agriculture (AoA) is to establish a fair and market-oriented agricultural trading system. The principal approach for achieving this goal is, first, to achieve specific binding commitments by all WTO members in each of the three pillars of agricultural trade policy reform\u00e2\u0080\u0094market access, domestic support, and export subsidies\u00e2\u0080\u0094and second, to provide for substantial progressive reductions in domestic agricultural support and border protection from foreign products.", "As a signatory member of the WTO agreements, the United States has committed to abide by WTO rules and disciplines, including those that govern domestic farm policy as spelled out in the AoA. Since the WTO was established on January 1, 1995, the United States has generally met its WTO commitments, including spending limits on market-distorting types of farm program outlays. "], "subsections": [{"section_title": "What Is the Issue?", "paragraphs": ["Direct payments to producers under U.S. farm support programs are cumulative, and compliance with WTO commitments is based on annual spending levels. The addition of large, ad hoc trade assistance payments to producers in 2018 and 2019, on top of existing farm program support, has raised concerns by some U.S. trading partners, as well as market watchers and policymakers, that U.S. domestic farm subsidy outlays in those two years might exceed the annual spending limit of $19.1 billion agreed to as part of U.S. commitments to the WTO."], "subsections": []}, {"section_title": "Report Objectives", "paragraphs": ["This report examines whether the United States might exceed its WTO spending limit. As background, this report briefly reviews the WTO rules and disciplines on farm program spending. Then, it reviews the types of U.S. farm programs that are subject to WTO disciplines\u00e2\u0080\u0094in particular, it focuses on programs that make direct payments to producers based on agricultural production activities. The review of farm programs includes a discussion of how U.S. compliance may be affected by changes made to U.S. farm programs under the 2018 farm bill (the Agricultural Improvement Act of 2018, P.L. 115-334 ), as well as by the two rounds of ad hoc direct payments made under the Market Facilitation Program initiated by the Secretary of Agriculture in 2018 and 2019 under other statutory authorities. ", "The nature and timing of U.S. farm support program outlays are discussed in the context of relevant WTO commitments\u00e2\u0080\u0094in particular, how different types of program outlays are notified to the WTO and how they might count against the aggregate U.S. spending limit. Finally, this report examines current projections about farm program outlays for 2018-2019 and assesses the possibility of whether U.S. farm program spending might exceed the $19.1 billion spending limit in those years."], "subsections": []}]}, {"section_title": "WTO Disciplines on Farm Program Spending", "paragraphs": ["Farm support programs can violate WTO commitments in two principal ways: first, by exceeding spending limits on certain market-distorting programs, or second, by generating market distortions that spill over into the international marketplace and cause significant adverse effects for other market participants. In general, U.S. farm support outlays should be evaluated against both of these criteria for a potential violation of WTO commitments. However, this report focuses on the first potential pathway for a violation: excessive spending. "], "subsections": [{"section_title": "AoA Defines Spending Disciplines", "paragraphs": ["WTO member nations have agreed to limit spending on their most market-distorting farm policies. The WTO's AoA spells out the rules for countries to determine whether their policies are potentially trade-distorting, how to calculate the costs of any distortion, and how to report those costs to the WTO in a public and transparent manner. (See the text box \"WTO Classification of Domestic Support\" below. More detail on WTO classifications of domestic support is provided in two appendices to this report: Appendix A , \"WTO Domestic Support Commitments,\" and Appendix B , \"U.S. Domestic Support Notifications.\")", "Domestic farm subsidies under the AoA are measured using a specially defined indicator, the \"Aggregate Measure of Support\" (AMS). AMS encompasses two types of support provided as a benefit to agricultural producers: product-specific support (that is, benefits linked to a specific commodity) and non-product-specific support (general benefits not linked to a specific commodity). This distinction is important for evaluating compliance, as discussed below. In addition, some types of programs are not subject to spending limits under WTO commitments.", "The United States, along with 27 other original members of the WTO, agreed to establish ceilings for their non-exempt AMS, referred to as the amber box. The U.S. ceiling for amber box spending has been fixed at $19.1 billion since 2000. If the United States were to exceed its WTO annual spending limit, then U.S. farm support programs could be vulnerable to challenge by another WTO member under the WTO's dispute settlement rules."], "subsections": []}, {"section_title": "Some Program Spending May Be Exempt from Disciplines", "paragraphs": ["Not all farm support program outlays count against amber box spending limits. Certain domestic support outlays may be exempt from counting against the amber box spending limit if they meet one of four possible conditions ( Appendix A ). First, if a program's outlays are considered to be minimally or non-trade distorting (in accordance with specific criteria listed in Annex 2 of the AoA), then they may qualify as green box programs and not be included in the AMS. Second, if program spending is market-distorting but has offsetting features that limit the production associated with support payments, then they may qualify as blue box programs and not be included in the AMS. Finally, if AMS outlays are sufficiently small relative to the value of the output\u00e2\u0080\u0094measured as a share of either product-specific or non-product-specific output\u00e2\u0080\u0094then they are not included in the amber box. In addition to these exemptions, the timing of outlays across crop, calendar, or marketing years may also influence the calculation of total AMS spending for any given year and help avoid exceeding the amber box spending limit during a particular time period. "], "subsections": []}]}, {"section_title": "U.S. Farm Support Programs", "paragraphs": ["The U.S. Department of Agriculture (USDA) implements four general types of farm programs that provide payments (classified as AMS) directly to individual producers:", "Traditional farm p rograms authorized under Title I of the 2018 farm bill ( P.L. 115-334 ). These include the Market Assistance Loan (MAL), Agricultural Risk Coverage (ARC), Price Loss Coverage (PLC), Dairy Margin Coverage (DMC), and sugar programs. Payments under these programs during crop years 2014-2018 were authorized by the 2014 farm bill ( P.L. 113-79 ). These programs were modified by the 2018 farm bill and include payments made for crop years 2019-2023. Because of the way their payments are triggered, outlays under the MAL, DMC, and sugar programs are notified as product-specific AMS, whereas ARC and PLC payments are notified as non-product-specific AMS. Permanent disaster assistance programs include the Livestock Forage Disaster Program (LFP), Livestock Indemnity Program (LIP), Tree Assistance Program (TAP), and Emergency Assistance for Livestock, Honeybees, and Farm-Raised Fish Program (ELAP). Payments under all of these permanent disaster assistance programs are coupled to producer choices and notified as product-specific AMS. The federal crop insurance program provides premium subsidies to producers. Premium subsidies are statutorily defined as a percentage of a policy's total premium, and premiums vary with insured units, coverage levels, and crop values. Since 2012, USDA has notified crop insurance premium subsidies to the WTO as product-specific AMS, since they are coupled to producer crop choices. A d hoc programs may be authorized by the Secretary of Agriculture, outside of Congress, using authority under the Commodity Credit Corporation (CCC) Charter Act to make payments in support of U.S. agriculture. Two such programs are the trade assistance programs of 2018 and 2019. USDA has not yet notified any trade assistance payments to the WTO, nor has USDA announced the WTO classification it intends to use for such payments.", "Payments under U.S. conservation programs are generally deemed non-market-distorting and are notified as green box, where they are not subject to any spending limit.", "The traditional revenue support programs, as well as the disaster assistance and ad hoc payment programs, are implemented by USDA's Farm Service Agency (FSA) using mandatory CCC funding. The federal crop insurance program is implemented by USDA's Risk Management Agency (RMA) using mandatory funding from the Federal Crop Insurance Corporation."], "subsections": [{"section_title": "Farm Program Changes Under the 2018 Farm Bill", "paragraphs": ["The United States has instituted several farm program changes since early 2018 that could bring increased scrutiny from other WTO members. With respect to the current incarnation of traditional farm support programs, most were established under previous farm bills. They were reauthorized by the 2018 farm bill but with some modifications that might alter their treatment under WTO disciplines. In general, the 2018 farm bill incrementally shifts farm safety net outlays away from decoupled programs and toward coupled (and more market-distorting) programs. This was done by raising support levels for certain existing coupled programs, removing several of the coupled programs from individual farm payment limit requirements, and expanding the potential pool of family-farm payment recipients, thus weakening payment limit restrictions. Similarly, federal crop insurance coverage was expanded under the 2018 farm bill, thus increasing the potential for greater premium subsidy outlays. "], "subsections": [{"section_title": "Coupled, Product-Specific Support Levels Raised for Selected Commodities", "paragraphs": ["The 2018 farm bill increased statutory, product-specific MAL rates for several program crops. MAL payments are coupled directly to actual harvested production (subject to a producer's participation choice). MAL payments may be triggered when the local market price for a MAL commodity falls below its statutory MAL rate. Raising the MAL loan rate has two effects: It increases the probability of triggering a coupled MAL payment when market prices are declining, but it decreases the maximum potential payment under the decoupled PLC program associated with that commodity. The potential for increased MAL payments has become more relevant under the 2018 farm bill, because all MAL benefits were removed from counting against annual USDA producer payment limits.", "Furthermore, the 2018 farm bill raised support levels for participating dairy producers under the DMC program. DMC payments are triggered when the monthly average of a formula-determined margin, between milk prices and feed costs per unit, falls below a producer-selected margin coverage level. DMC payments are made on a farm-level historical milk production base. Milk producers must participate in the DMC to be eligible for payments. Thus, DMC payments are treated as coupled. DMC, like its predecessor\u00e2\u0080\u0094the Margin Protection Program\u00e2\u0080\u0094operates without any limit on payments received.", "Coupled payments can influence producer production choices in favor of those farm activities expected to receive larger support payments. If such payments represent a significant share of a commodity's farm value and result in surplus production that moves into international markets, then they could attract the attention of competitor nations. Such spillovers, if measurably harmful to foreign export competitors or producers, could lead to challenges under the WTO's dispute settlement process. "], "subsections": []}, {"section_title": "Decoupled, Non-Product-Specific Support Potentially Expanded Under ARC and PLC", "paragraphs": ["Of the direct payment programs, the ARC and PLC programs are partially decoupled from producer behavior: Payments are made to a portion (85%) of historical base acres irrespective of current-year plantings. However, ARC and PLC payment calculations use current market-year prices to determine if a payment has been triggered, thus partially coupling them to market conditions. The partial decoupling of both ARC and PLC is in deference to WTO rules that view decoupled payments as less distorting of markets than coupled payments. Furthermore, ARC's use of a moving average formula based on historical prices and yields is also in response to a WTO panel finding (under dispute settlement) to consider market conditions in setting program support levels. In contrast, PLC's use of a statutorily fixed reference price ignores market conditions. Similarly, ARC's revenue formula uses the PLC reference price as a floor price. Thus, ARC only reflects market conditions when prices are above PLC reference prices. As a result, both ARC and PLC could be market distorting when market prices are below the statutory reference prices for prolonged periods. ", "By basing ARC and PLC payments on historical acres rather than current planted acres (i.e., current crop choices), the payments are partially decoupled, and USDA notified them as non-product-specific. As a result, ARC and PLC payments have been excluded from counting against amber box spending limits in the WTO since their origin in 2014 under the non-product-specific de minimis exclusion. "], "subsections": [{"section_title": "PLC Program Changes That Expand Potential Payments", "paragraphs": ["Two changes to the PLC program under the 2018 farm bill include the option for producers to update their program yields (used in the PLC payment formula) and an escalator provision that could potentially raise a covered commodity's effective reference price (used in both the PLC and ARC payment rate) by as much as 115% of the statutory PLC reference price based on 85% of the five-year Olympic average of farm prices. Both of these options would likely be used by producers only when they offer the potential to expand program payments."], "subsections": []}, {"section_title": "ARC Program Changes That Expand Potential Payments", "paragraphs": ["The 2018 farm bill also specifies several changes to the ARC program. Among the changes, ARC will use a trend-adjusted yield to calculate its revenue guarantee. In addition, the five-year Olympic average county yield calculations will increase the yield floor (substituted into the formula for each year where the actual county yield is lower) to 80%, up from 70%, of the transitional county yield. This yield calculation is used to calculate the ARC benchmark county revenue guarantee. Both of these yield modifications have the potential to raise ARC revenue guarantees for producers, thus increasing the potential for payments when actual current-year yields or prices turn downward."], "subsections": []}, {"section_title": "Joint ARC and PLC Changes", "paragraphs": ["The 2018 farm bill offers producers the option in 2019 of switching between ARC and PLC coverage, on a commodity-by-commodity basis, effective for both 2019 and 2020. Beginning in 2021, producers again have the option to switch between ARC and PLC but on an annual basis for each of 2021, 2022, and 2023. This flexibility could allow producers to benefit from current market information to select the program, ARC or PLC, that offers the greatest potential to make payments. Both ARC and PLC payments are subject to annual USDA farm payment limits under the 2018 farm bill (unchanged from the 2014 farm bill)."], "subsections": []}]}, {"section_title": "Several Product-Specific Payment Programs Exempted from Payment Limits", "paragraphs": ["In a change from previous farm policy, the 2018 farm bill removed several coupled, direct payment programs from annual farm payment limit requirements. These include benefits under MAL and the three permanent disaster assistance programs: LIP, TAP, and ELAP. DMC, like its predecessor\u00e2\u0080\u0094the Margin Protection Program\u00e2\u0080\u0094operates without any farm payment limit. All of these programs make product-specific amber box payments. The absence of a limit on benefits received by an individual farmer under these programs represents the potential for unlimited, fully coupled outlays that count against the U.S. amber box limit unless exempted under the PS de minimis exemption. ", "Higher DMC and MAL support levels increase the potential for higher program payments during a market downturn when prices are lower. Weak market conditions and relatively low commodity prices (below MAL loan rates) would be needed to trigger payments under MAL. DMC payments are triggered by weak farm milk prices relative to feed costs. In contrast, disaster payments are triggered by natural disasters or other qualifying perils occurring at the farm level."], "subsections": []}, {"section_title": "Potential Pool of Payment Beneficiaries Expanded", "paragraphs": ["The 2018 farm bill made no changes to the \"actively engaged in farming\" criteria used to determine whether an individual is eligible for farm program payments. However, it modified the criteria for farm program eligibility. The definition of family farm is expanded to include first cousins, nieces, and nephews, thus increasing the potential pool of individuals eligible for individual payment limits on family farming operations. With respect to payment limits and the adjusted gross income (AGI) criteria, the 2018 farm bill left both the payment limit of $125,000 per individual ($250,000 per married couple) and the AGI threshold of $900,000 unchanged. "], "subsections": []}, {"section_title": "Minor Increase to Sugar MAL Rate", "paragraphs": ["The U.S. sugar program does not rely on direct payments from USDA, and no changes were made to this status under the 2018 farm bill. Instead, USDA provides indirect price support via MAL loans to processors at statutorily fixed prices (which were raised 5% by the 2018 farm bill), while limiting both the amount of sugar supplied for food use in the U.S. market and the amount of sugar that may enter the United States under a series of tariff rate quotas. In its 2016 notification of domestic support to the WTO (the most recent notification year), USDA notified the implicit cost of the sugar program at $1.5 billion in market price support. The change in the sugar MAL rate is not expected to influence the United States' implicit sugar cost notification."], "subsections": []}, {"section_title": "Federal Crop Insurance Direct Support Expanded", "paragraphs": ["Federally subsidized crop insurance is available for over 100 agricultural commodities\u00e2\u0080\u0094including both program commodities and others. Federal crop insurance is permanently authorized by the Federal Crop Insurance Act (7 U.S.C. 1501 et seq. ) but is periodically modified by new farm legislation. The principal subsidy component of federal crop insurance is a premium subsidy that has paid for an average of 63% of the cost of buying crop insurance since 2014. ", "Premiums (and premium subsidies) vary with the type of policy, insured unit, and coverage level selected. Thus, both the premium and its subsidy component are coupled to producer behavior. In its annual notifications to the WTO of domestic support outlays, USDA has declared the premium subsidies as product-specific direct payments to producers (i.e., product-specific AMS). ", "The 2018 farm bill expanded the federally subsidized crop insurance program. In addition, the 2018 farm bill extended the authority for catastrophic policies to forage and grazing crops and grasses. It allows producers to purchase separate crop insurance policies for crops that can be both grazed and mechanically harvested on the same acres and to receive independent indemnities for each intended use. Annual USDA premium subsidies\u00e2\u0080\u0094which have averaged $6.2 billion per year since 2014\u00e2\u0080\u0094count against the U.S. amber box spending limit of $19.1 billion but are subject to potential exclusion at the commodity level under the product-specific de minimis exemption."], "subsections": []}]}, {"section_title": "Large Payments Expected Under Ad Hoc Trade Aid Programs", "paragraphs": ["During 2018 and 2019, the Secretary of Agriculture has used his authority under the CCC Charter Act to initiate two ad hoc trade assistance programs. USDA initiated the trade aid packages as part of the Administration's effort to provide short-term assistance to farmers in response to foreign trade retaliation targeting U.S. agricultural products. The first trade aid package was announced on July 24, 2018. It targeted production for selected agricultural commodities in 2018 and was valued at up to $12 billion. The second trade aid package was announced on May 23, 2019. It targeted production for an expanded list of commodities and was valued at up to an additional $16 billion. ", "According to USDA, the two trade aid packages are structured in a similar manner and include three principal components ( Table 1 ): ", "The Market F acilitation P rogram (MFP) provides direct payments to producers of certain USDA-specified commodities. MFP payments are administered by FSA. The Food P urchase and D istribution P rogram (FPDP) is intended to purchase unexpected surpluses of affected commodities such as fruits, nuts, rice, legumes, beef, pork, milk, and other specified products for redistribution through federal nutrition assistance programs. It is administered by USDA's Agricultural Marketing Service. The Agricultural Trade P romotion (ATP) program provides funding to assist in developing new export markets for affected U.S. farm products. It is administered by the USDA's Foreign Agriculture Service in conjunction with the private sector.", "The two years of trade assistance are valued at a combined $28 billion ( Table 1 ). The largest part of the aid is two years of MFP payments valued at a combined $24.5 billion.", "The United States has yet to notify spending to the WTO under any of the trade assistance programs, so the exact WTO spending classification is currently unknown. However, past practice can serve as a useful guide for the likely notification. ", "The FPDP and ATP programs for 2018 and 2019 are expected to be implemented in a similar manner during both years. USDA outlays under food purchase and distribution programs have historically been notified to the WTO as green box compliant and thus not subject to any spending limit. Trade promotion programs, such as ATP, are not notified under domestic support, because they do not involve direct payments to producers. Thus, the FPDP and ATP programs are not expected to affect the United States' ability to meet its WTO commitments. ", "However, the anticipated large outlays under the MFP programs have raised questions. Payments under the two MFP programs are structured differently during 2018 and 2019. As a result, they are likely to be notified under different WTO classifications. The specific manner of determining how payments are made to individual producers is likely to determine their WTO status."], "subsections": [{"section_title": "2018 MFP Payments Are Likely to Be Notified as Product-Specific AMS", "paragraphs": ["USDA's MFP payments for 2018 are based on each farm's harvested production of eligible crops during 2018 times a fixed per-unit payment rate. Payments to dairy are based on historical production, while hog payments use midyear inventory data. Under this specification, 2018 MFP payments are likely to be notified as coupled, product-specific AMS and count against the U.S. annual spending limit of $19.1 billion (unless they are exempted under the product-specific de minimis exemption).", "USDA initially announced potential 2018 MFP payments of up to $10 billion. As of August 22, 2019, USDA reported that $8.59 billion in MFP payments had already been distributed to producers, including $7.07 billion to soybean producers, $483 million to cotton, $245 million to sorghum, $241 million to wheat, $182 million to dairy, $156 million to hogs, $133 million to corn, $42 million to fresh sweet cherries, and $20 million to shelled almonds. These MFP payments have to be added to all other non-exempt, product-specific payments for each of these commodities and then be evaluated against their individual product-specific de minimis exemptions.", "Both MFP payment caps and AGI criteria are relevant. However, the FY2019 Supplemental Appropriations for Disaster Relief Act ( P.L. 116-20 ) altered the AGI requirement as it applies to MFP payments such that it may be waived if at least 75% of AGI is from farming, ranching, or forestry-related activities.", "To the extent that producers expect similar MFP payments to occur in future years, product-specific payments can become market distorting in favor of those commodities with higher per-unit payments and subject to potential WTO challenge. "], "subsections": []}, {"section_title": "2019 MFP Payments Are Likely to Be Notified as Non-Product-Specific AMS", "paragraphs": ["USDA is making MFP payments for the 2019 trade assistance program under a different formulation that avoids identifying payments with a specific crop. Instead, the underlying product-specific MFP payment rates are weighted at the county level by historical planted acres and yields to produce a single per-acre MFP payment rate for the entire county. This county-specific rate is then applied to each producer's total planted acres for all eligible commodities within that county, irrespective of the share of planted acres for any particular crop. Thus, payments are coupled to a producer's having planted at least one eligible commodity within the county, but they are independent of which commodity or commodities were planted. Under this specification, the 2019 MFP payments would appear to be coupled to planted acres\u00e2\u0080\u0094a producer has to plant an eligible crop to get a payment\u00e2\u0080\u0094but non-product-specific, thus possibly notifiable as non-product-specific AMS. "], "subsections": []}]}]}, {"section_title": "Will U.S. Farm Spending Comply with WTO Limits in 2018 and 2019?", "paragraphs": ["The United States has notified its farm program support outlays through the crop year 2016. Under a normal timeline, USDA would notify spending for the crop year 2017 in the fall of 2019. Notification of domestic support for crop year 2018 would not be expected before 2020. Similarly, notification of domestic support outlays for crop year 2019 is not expected before 2021. U.S. compliance with WTO spending limits for 2018 and 2019 cannot be definitively known until notifications for those crop years have been released. As a result, the delay in notification may inhibit or deter another WTO member from bringing a case, assuming that MFP payments are not extended beyond 2019.", "This section analyzes available data on U.S. farm program payments for crop years 2017, 2018, and 2019 to evaluate the potential for the United States to remain in compliance with its amber box spending limit of $19.1 billion, particularly with the addition of large MFP payments in 2018 and 2019. There are several questions that will largely determine whether the United States remains in compliance with its amber box spending limit. ", "1. How will USDA classify the MFP payments for 2018 and 2019 in its notifications to the WTO? 2. How will market conditions and commodity prices evolve in 2019 with respect to final crop values and product-specific de minimis exemptions? 3. What will be the final value of total U.S. farm output in 2019 for evaluating the 5% non-product-specific de minimis exemption threshold against total non-product-specific AMS outlays? 4. How will market conditions affect decoupled ARC and PLC payments and total non-product-specific outlays in 2019? 5. Will the U.S.-China trade dispute continue into 2020, and if so, will a third year of trade assistance be in the offing?", "In response to the first question, the 2018 MFP payments appear to be coupled, product-specific AMS, whereas 2019 MFP payments appear to be non-product-specific AMS. Thus, different de minimis exemptions will be important for these two programs when evaluating compliance in 2018 and 2019. "], "subsections": [{"section_title": "Sources for Farm Program Outlay Data for 2018 and 2019", "paragraphs": ["To conduct an analysis of the potential WTO compliance of U.S. farm program spending for 2017, 2018, and 2019, data are drawn from several sources. Whenever available, actual USDA program outlays are used. For example, FSA estimates DMC outlays for 2019 at approximately $300 million. Federal crop insurance premium subsidy outlays are available for the 2018 and 2019 crop years from USDA's RMA. When actual data are unavailable for any major farm program (most notably under ARC and PLC), then the projected spending data from the Congressional Budget Office (CBO) baseline for farm programs are used. Wherever values are not available from either USDA or CBO, then the 2017 value is repeated for 2018 and 2019.", "With respect to MFP program outlays, USDA has not released any official payment data on outlays under the 2018 or 2019 MFP programs, although some information has been released episodically to various news media (for example, see footnote 42 ). CRS relies on those media reports for information on 2018 MFP payments. Final MFP payments for 2018 are projected by CRS at $8.7 billion. The full $14.5 billion for 2019 MFP payments is incorporated into the WTO notification projection for 2019."], "subsections": []}, {"section_title": "Compliance Hinges on the Non-Product-Specific De Minimis Threshold", "paragraphs": ["According to this analysis, U.S. amber box spending for 2018, projected at over $14 billion, fits within the U.S. spending limit of $19.1 billion ( Table 2 ). However, if realized, this would be the largest U.S. amber box notification since 2001 ( Figure 1 ). Large product-specific outlays to soybeans (projected at $8.275 billion), wheat ($1.153 billion), cotton ($990 million), and peanuts ($231 million) in particular exceed their product-specific de minimis exemptions and contribute to the large amber box projection for 2018.", "A more uncertain result is found for 2019. The expansion of MFP payments to $14.5 billion in 2019, and their shift to a non-product-specific WTO classification, suggests that the United States may potentially approach or exceed its $19.1 billion amber box spending limit. In this analysis, U.S. compliance with WTO spending limits in 2019 depends on how eventual aggregate non-product-specific outlays compare with the final 5% non-product-specific de minimis threshold as evidenced by the two scenarios presented in Table 2 and discussed below. "], "subsections": [{"section_title": "Scenario 1: Non-Product-Specific Outlays Not Exempted Under De Minimis", "paragraphs": ["Under scenario 1, the value of total U.S. farm output for 2019 is projected at $378 billion ( Figure 1 ). This is roughly equivalent to a three-year average of $377.954 billion for crop years 2014-2016. If realized, the $378 billion in total farm output would yield a 5% non-product-specific de minimis threshold of $18.9 billion. Total non-product-specific outlays for 2019 are projected at $18.92 billion\u00e2\u0080\u0094just in excess of the non-product-specific de minimis exemption threshold. As a result, the full $18.92 billion of non-product-specific AMS would count against the amber box spending limit. When combined with the projected $5.119 billion in product-specific, non-exempt AMS outlays, total U.S. amber box outlays in 2019 would be a projected $24.039 billion\u00e2\u0080\u0094in excess of the $19.1 billion spending limit."], "subsections": []}, {"section_title": "Scenario 2: Non-Product-Specific Outlays Exempted Under De Minimis", "paragraphs": ["Under scenario 2, an entirely different result is produced with only a minor increase in the projected value of total U.S. farm output at $380 billion ( Figure 2 ), up $2 billion from scenario\u00c2\u00a01. The choice of $380 billion in the total output value in scenario 2 highlights the sensitivity between compliance and noncompliance based on a small (0.53%) change in total output value between the two scenarios. In this scenario, the 5% non-product-specific de minimis threshold is $19 billion, and the entire projected non-product-specific AMS total of $18.92 billion would be exempted from counting against the amber box spending limit. As a result, total U.S. amber box outlays under scenario 2 would be equal to the projected product-specific, non-exempt AMS total of $5.119 billion\u00e2\u0080\u0094within the amber box spending limit. "], "subsections": []}, {"section_title": "Other Potentially Influential Factors", "paragraphs": ["Other factors that could alter this analysis are the final realized 2019 market year average farm prices and county revenue values used to determine outlays for major program crops under the MAL, PLC, and ARC programs. Also, crop yields for corn and soybeans in 2019 are still uncertain due to the delayed planting and late crop progress in several important growing regions. Better-than-expected yields or higher-than-expected harvests could push market prices lower, whereas lower yield or harvest estimates could help to raise farm prices. Also, a continuation or possibly a deepening of the U.S.-China trade dispute could keep downward pressure on commodity markets. ", "If the final price and revenue values are lower than currently projected, then program payments under ARC and PLC could be larger than those used in this analysis. This could increase aggregate non-product-specific outlays and increase the possibility of exceeding the 2019 amber box spending limit. At the same time, lower market values, if realized, would contribute to a lower total valuation for U.S. farm output and a subsequent lower 5% non-product-specific de minimis threshold for aggregate non-product-specific outlays to surpass, thus affecting the potential non-product-specific de minimis exemption status. ", "In contrast, resolution of the U.S.-China trade dispute and an improved demand outlook could have the opposite effect of raising prices and commodity output values while lowering payments under countercyclical farm programs such as MAL, PLC, and ARC."], "subsections": []}]}]}, {"section_title": "Conclusion", "paragraphs": ["According to the scenarios developed in this analysis, including a projected set of market conditions, the United States may potentially exceed its cumulative amber box spending limit of $19.1 billion in 2019. Excessive amber box payments in 2019 could result from the addition of large MFP payments to the traditional decoupled revenue support programs ARC and PLC. ", "However, this analysis found that U.S. compliance with WTO amber box spending limits was very sensitive to a change in market conditions and market valuations. Noncompliance hinges on many key market factors that are currently unknown but would have to occur in such a manner as to broadly depress commodity prices through the 2019 marketing year (which extends through August 31, 2020, for corn and soybeans). Another crucial uncertainty is how the U.S.-China trade dispute\u00e2\u0080\u0094with its deleterious effects on U.S. agricultural markets\u00e2\u0080\u0094will evolve. Resolution of the U.S.-China trade dispute and an improved demand outlook could lead to higher commodity prices and output values while lowering payments under countercyclical farm programs such as MAL, PLC, and ARC. Such a turn of events could help facilitate U.S. compliance with its WTO spending limits.", "Appendix A. WTO Domestic Support Commitments", "WTO member nations have agreed to limit spending on their market-distorting farm policies. With respect to farm program outlays, the AoA spells out the rules for countries to determine whether their policies are potentially trade-distorting, how to calculate the costs of any distortion, and how to report those costs to the WTO in a public and transparent manner.", "Aggregate Measure of Support (AMS)", "Domestic support is measured in monetary terms and expressed as the AMS. Domestic support includes both direct and indirect support in favor of agricultural producers\u00e2\u0080\u0094in other words, it includes any government measure that benefits producers, including revenue support, input subsidies, and marketing-cost reductions. Domestic subsidies include both budgetary outlays and revenue forgone by governments. Such support is measured at both the national and subnational level (i.e., state, county, or other local level). Producer-paid fees are deducted from the AMS.", "Domestic support should be calculated as closely as practical to the point of first sale of the basic agricultural product concerned\u00e2\u0080\u0094preferably at the farm gate. Support measures directed at processors should be included to the extent that such measures benefit producers.", "AMS encompasses two types of support provided as a benefit to agricultural producers: product-specific support (that is, benefits linked to a specific commodity) and non-product-specific support (a general benefit not linked to a specific commodity). Certain AMS outlays may be exempt from counting against any WTO spending limit if they comply with criteria defined under either the green or blue box or if their sum is sufficiently small as to be deemed benign under the de minimis exemption. (Exemptions are described below.)", "Amber Box Outlays", "Non-exempt AMS outlays are referred to (or classified) as \"amber box\" spending and subject to a strict spending limit. Under WTO commitments, cumulative U.S. amber box outlays are limited to $19.1 billion annually.", "Goal of AMS Exemptions", "By leaving no constraint on green or blue box compliant spending, while imposing limits on amber box spending, the WTO's AoA classification structure encourages countries to design their domestic farm support programs to be more green and blue box compliant and less market-distorting.", "Green Box Exemptions", "Green box programs are minimally or non-trade-distorting and are not included in the AMS\u00e2\u0080\u0094thus they are not subject to any spending limits. Examples of green box programs include domestic food assistance programs, conservation and environmental programs, and general services such as research, inspection services, and extension activities. In its most recent notification to the WTO, the United States declared $119.5 billion in outlays for programs that met green box criteria during the 2016 crop year.", "A key to evaluating whether a program's annual outlays qualify for the green box exemption is to assess how payments are triggered. If payments are fully decoupled from producer behavior and market conditions and instead are based on some other independent criteria such as historical planted acres, then they could potentially be excluded from the AMS under the green box criteria. For example, Direct Payment outlays under the 1996, 2002, and 2008 farm bills were fully decoupled and thus exempted from the AMS under green box criteria. If, instead, payments are coupled to current producer behavior (such as planted acres or harvested output) or to market conditions (such as price movements or trade levels), then they likely are not eligible for exemption from the AMS under green box criteria. ", "Blue Box Exemptions", "Blue box programs are described as market-distorting but production-limiting. Blue box programs generally have a supply-control feature that partially offsets their trade-distorting effects. For example, payments may be based on either a fixed area or yield or a fixed number of livestock or are made on less than 85% of base production. As such, blue box programs are not included in the AMS\u00e2\u0080\u0094thus they are not subject to any spending limits. The United States has not notified any program spending under the blue box criteria since 1995.", "De Minimis Exemptions from AMS", "Programs outlays that fail to meet green or blue box criteria are part of the AMS. However, there are two additional exemptions that may prevent AMS outlays for certain programs from counting against the amber box spending limit. If AMS spending is sufficiently small (as described below), then it is deemed to be benign and excluded from counting under the AMS's amber box. There are two types of de minimis exemptions: product-specific and non-product-specific. ", "Product-specific outlays include all coupled outlays that are linked to the current planting or production of a specific commodity. Under the product-specific de minimis exemption, if total product-specific program outlays for a commodity are less than 5% of the value of production for that commodity, then such spending may be excluded from the country's AMS. Product-specific outlays are evaluated on a commodity-by-commodity basis against the 5% de minimis threshold.", "N on- product -specific outlays include all AMS outlays that are decoupled from the specific commodities that are actually produced but are coupled to a non-commodity-specific measure such as market conditions or national average prices. All non-commodity-specific AMS outlays are aggregated and evaluated against 5% of the total value of U.S. agricultural output.", "Coupled, Product-Specific Payments", "If the payment is based on the planted or harvested area or output of a specific commodity during the crop year, then program payments would be coupled directly to farmer behavior. Such payments would likely be notified as product-specific AMS spending and would count against the amber box ceiling. However, product-specific payments could potentially be excluded from counting against the AMS total by the product-specific de minimis exclusion\u00e2\u0080\u0094if they are less than 5% of the value of that specific commodity's output during that crop year. ", "Coupled or Partially Coupled, Non-Product-Specific Payments", "If the payment is based on a formula that pools the planted or harvested area or output of several commodities\u00e2\u0080\u0094for example, as a single county-level payment\u00e2\u0080\u0094but where the farmer need only have produced at least one of the pooled commodities to be eligible for the full county payment, then the payment could potentially be notified as coupled, non-product-specific AMS. Both ARC and PLC outlays on base acres are notified this way. However, ARC and PLC payments made on generic base under the 2014 farm bill were notified as commodity-specific payments, since the farmer had to plant the specific crop to receive a payment. ", "If the payment is based on a historical measure such as planted or harvested acres or output for some past period of time, but where some production of an eligible crop must occur during the current crop year to be eligible for a payment, then the payments would likely be notified as partially decoupled, non-product-specific payments.", "Annual Notification of Compliance", "To provide for monitoring and compliance of WTO policy commitments, each WTO member is expected to submit annual notification reports of domestic support program spending within the context of the agreed-to WTO commitments. However, there is no enforcement mechanism or penalty for late notifications.", "The annual period used by each WTO member\u00e2\u0080\u0094calendar, fiscal, or marketing year\u00e2\u0080\u0094is specified in the \"schedule of concessions\" (also referred to as the country schedule). The WTO's Committee on Agriculture reviews the annual notifications. However, the notification reports are public documents\u00e2\u0080\u0094they are posted online by the WTO where they are available for review (and possible challenge) by any other member or third party.", "Appendix B. U.S. Domestic Support Notifications", "The most recent U.S. notification to the WTO of domestic support outlays (made on October 31, 2018) is for the 2016 crop year. The majority of U.S. domestic agricultural program outlays have been categorized as indirect support that adhere to green box criteria ($119.5 billion) and thus have not been subject to any payment limit. In addition, the United States has traditionally relied on the de minimis exemptions to exempt substantial program outlays from counting against the amber box spending limit. ", "In 2016, the United States notified $16 billion in AMS outlays (prior to applying eligible exemptions), including $8.6 billion of product-specific spending and $7.4 billion of non-product-specific spending. However, the United States notified $12.2 billion in de minimis exemptions, thus reducing the original $16 billion AMS to just $3.8 billion in amber box spending to count against the $19.1 billion spending limit.", "With respect to the non-product-specific de minimis exemption, the total value of U.S. national agricultural output in 2016 was $355.5 billion. As a result, the 5% de minimis non-product-specific threshold was $17.8 billion. Since non-product-specific outlays of $7.4 billion were well below this threshold, they were exempted in total from counting against the amber box spending limit. ", "In addition, the United States notified $4.8 billion in product-specific de minimis exemptions. An example of a product-specific de minimis exemption is corn. In 2016, U.S. corn production was valued at $51.3 billion. Thus the product-specific 5% value threshold for corn was $2.565 billion. The United States notified $2.345 billion in AMS for corn in 2016, but since it was less than the 5% threshold, the entire amount was exempted from counting against the amber box limit. Similarly, product-specific exemptions for other crops made up the difference for the $4.8 billion in total product-specific exemptions.", "The De Minimis Exemption Aids U.S. Compliance", "Since 1995, the United States has stayed within its amber box spending limits ( Figure B-1 ), but this compliance has hinged on use of the de minimis exemptions in a number of years (e.g., 1999-2001 and 2005) to exclude substantial AMS spending from counting against the amber box limit. ", "Since the 2002 farm bill ( P.L. 107-171 ), the United States has designed several of its major farm revenue support programs to meet non-product-specific criteria. Since the non-product-specific de minimis exemption threshold is measured as a share of the total value of U.S. agricultural output, it is associated with a very large exemption threshold. From 2010 to 2016, the value of total U.S. agricultural output has averaged $376.8 billion, which implies an average non-product-specific 5% de minimis threshold of $18.8 billion.", "The manner by which the United States has notified its amber box outlays\u00e2\u0080\u0094that is, non-product-specific versus product-specific\u00e2\u0080\u0094has changed over the years (particularly for federal crop insurance subsidies) in such a way as to facilitate compliance with the amber box spending limit. Generally, non-product-specific de minimis exemptions are much larger than product-specific de minimis exemptions ( Figure B-1 ). Since 201 0, non-product-specific de minimis exclusions have averaged $4.8 billion annually, compared with average product-specific exclusions of $3.8 billion. ", "The largest non-product-specific exemption was reached in 2011, when $7.5 billion in net crop insurance indemnities was exempted. In 2011, U.S. agricultural output value was $380.8 billion, which, in turn, yielded a non-product-specific 5% value threshold of $19.0 billion. ", "Starting in 2012, USDA switched to notifying crop insurance premium subsidies for each individual insured commodity as product-specific. Since then, crop insurance premiums are evaluated at the individual crop level and eligible to be exempted under the product-specific de minimis exemption if they do not exceed 5% of the value of that commodity's output when combined with other PS outlays for that commodity. Since 2012, over $5 billion in product-specific crop insurance premium subsidies have been exempted each year.", "As a result of this crop insurance notification switch, coupled with relatively high farm prices during 2012 and 2013 that reduced payments on the non-product-specific revenue support programs, product-specific de minimis exemptions surpassed non-product-specific exemptions during those two years. Then, starting in 2014, under program changes authorized by the 2014 farm bill ( P.L. 113-79 ), the value of non-product-specific exemptions again surpassed product-specific exemptions. This was driven by large non-product-specific outlays under the new, decoupled revenue support programs ARC (which incorporated high farm prices into its payment formula) and PLC. Annual ARC and PLC outlays averaged a combined $6.7 billion during 2014-2016, including $4.7 billion for ARC and $2.0 billion for PLC."], "subsections": []}]}}
{"id": "R46335", "title": "Saltonstall-Kennedy Act: Background and Issues", "released_date": "2020-04-29T00:00:00", "summary": ["The Saltonstall-Kennedy (S-K) Act of 1954 (15 U.S.C. \u00c2\u00a7713c-3) established a program to provide financial support for research and development of commercial fisheries. The S-K Act created a fund (known as the S-K fund) that is financed by a permanent appropriation of a portion of import duties on marine products. S-K funds are distributed by the Secretary of Commerce as grants and cooperative agreements to address needs of the U.S. fishing industry, including but not limited to harvesting, processing, marketing, and associated infrastructure. However, Congress allocates most funding to the National Marine Fisheries Service (NMFS) to fund agency activities related to marine fisheries research and management. Some have questioned whether the allocation of S-K funds reflects the original intent of the S-K Act and whether the S-K Grant Program addresses the needs and priorities of the fishing industry.", "Since its creation, the S-K fund's authorizing language and priorities have evolved with changes to the fishing industry, new or amended federal laws governing fisheries management, and changing federal agency responsibilities. In 1980, the American Fisheries Promotion Act (AFPA) amended the S-K Act to authorize a competitive grant program, known as the Saltonstall-Kennedy Grant Program (S-K Grant Program) and the National Program to support fishing industry research and development projects. Both programs are administered by NMFS, part of the National Oceanic and Atmospheric Administration (NOAA). In the 1980s, the S-K Grant Program focused on fisheries development, but in subsequent years, as U.S. fisheries became fully or overexploited, priorities generally shifted to resource conservation and management. The S-K Grant Program has supported a variety of different projects, such as gear technology research, seafood marketing, aquaculture, and others.", "The S-K Grant Program is funded by a permanent appropriation of 30% of the previous calendar year's customs receipts from imports of fish and fish products. These funds are transferred into NOAA's Promote and Develop American Fisheries Products and Research Pertaining to American Fisheries Fund (P&D account). Transfers of revenue into the P&D account have grown steadily from $26.7 million in 1980 to $182.8 million in 2020. Congress subsequently transfers most funds into the Operations, Research, and Facilities (ORF) account within NOAA. Congress has directed NMFS to use funds allocated to the ORF account for specific activities including stock assessments, fishing information networks, survey and monitoring projects, cooperative research, and interjurisdictional fisheries. The remaining funds are available for supporting the annual competitive S-K Grant Program and in some cases the National Program.", "Since the early 1980s, Congress has transferred most P&D account funds into the ORF discretionary account, sometimes leaving little or no funding for the specified purposes of the S-K Act. Some critics have questioned whether funds from the P&D account could be used more effectively by targeting fishing industry needs, as Congress originally intended. For example, in the 112 th , 113 th , and 114 th Congresses, bills were introduced that would have used most S-K funds to establish a regional fisheries grant program. By contrast, some have expressed concerns that if significant funding is shifted away from NMFS fisheries management programs, additional funds would need to be appropriated or activities such as data collection and fish population assessments could be compromised. These NMFS activities provide information and analyses used to manage and conserve fish populations.", "Some also have questioned whether the S-K Grant Program could be modified to provide the fishing industry with more direct input into the S-K grant process. Currently, NMFS, in consultation with the fishing industry, identifies S-K Grant Program priorities and selects the recipients of S-K grants. Over the last several Congresses, bills have been introduced that would change the procedure for screening, evaluating, and awarding S-K grants. In the 116 th Congress, the American Fisheries Advisory Committee Act ( H.R. 1218 and S. 494 ) would establish an industry advisory committee to identify the needs of the fishing industry, develop requests for proposals, review grant applications, and select grant applications for approval. S. 494 was reported on August 16, 2019, by the Senate Committee on Commerce, Science, and Transportation; on September 18, 2019, H.R. 1218 was ordered to be reported by the House Committee on Natural Resources."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["The Saltonstall-Kennedy (S-K) Act of 1954 (15 U.S.C. \u00c2\u00a7713c-3) established a fund (known as the S-K fund) to support U.S. fisheries development and research. Funding originates from a transfer by the Secretary of Agriculture into the Promote and Develop American Fisheries Products and Research Pertaining to American Fisheries Fund (P&D account). The P&D account is administered by the National Marine Fisheries Service (NMFS) of the National Oceanic and Atmospheric Administration (NOAA) in the Department of Commerce. Transfers of revenue into the P&D account have grown steadily from $26.7 million in 1980 to $182.8 million in 2020. Currently, the bulk of P&D account revenue is transferred into the Operations, Research, and Faculties (ORF) account, which supports fisheries science and management administered by NMFS. The remaining funds support the Saltonstall-Kennedy Grant Program (S-K Grant Program) and sometimes the National Program, which focus on fishing industry research and development projects.", "Historically, the use of the S-K fund has evolved with changing fisheries management institutions and changing needs of U.S. fisheries. Congress is continuing to consider whether current funding from the P&D account meets the needs of U.S. fisheries and the U.S. fishing industry. Some have questioned whether the U.S. commercial fishing industry receives sufficient opportunities to provide input into the S-K competitive grant process. Due in part to what they perceive as a lack of industry input, some critics assert that NMFS has not distributed funding in accordance with the primary purposes of the S-K Act, such as supporting projects related to the marketing of fish. Another concern is the allocation of funds, and specifically whether there is a need for more financial support of S-K competitive grants than for funding NMFS fisheries science and management activities in the ORF account. However, if funding were reallocated to provide greater support of the S-K Grant Program, Congress may need to consider implications of the likely decrease in funds that would be transferred to ORF from the P&D account to support NMFS fishery research and management activities. Figure 1 summarizes the flow of funding from the P&D account into NOAA and the S-K program."], "subsections": []}, {"section_title": "The Saltonstall-Kennedy Act", "paragraphs": [], "subsections": [{"section_title": "Current Provisions", "paragraphs": ["The S-K Act requires the Secretary of Agriculture to transfer 30% of duties on marine products collected under the so-called Section 32 Program to the Secretary of Commerce. These funds are transferred into the P&D account and made available to NMFS. Currently, the uses of S-K funds as specified in 15 U.S.C. 713c-3 include the following:", "providing grants in support of fisheries research and development projects under subsection (c), implementing a national fisheries research and development program under subsection (d), implementing the Northwest Atlantic Ocean Fisheries Reinvestment Program, and funding the federal share of a fisheries capacity reduction fund. ", "The S-K Act requires the Secretary of Commerce to use no less than 60% of funds to make direct industry-assistance grants pursuant to subsection (c). Subsection (c) refers to topics that may be addressed by research and development grants, including but not limited to harvesting, processing, marketing, and associated infrastructures. Subsection (c) also identifies the terms and conditions of grant awards. ", "The S-K Act requires the balance of S-K funds to be allocated to finance NMFS activities that support development of U.S. fisheries pursuant to subsection (d). Subsection (d) refers to a national fisheries research and development program (including but not limited to harvesting, processing, marketing, and associated infrastructures), if not adequately covered by projects assisted under subsection (c) of this section or as the Secretary deems appropriate. "], "subsections": []}, {"section_title": "History of the Saltonstall-Kennedy Act", "paragraphs": ["In 1935, Congress passed legislation to provide financial support for domestic agricultural commodity markets. Section 32 of the Act of August 24, 1935, provided a permanent appropriation equal to 30% of gross receipts from all duties collected under customs laws. The act authorized the Secretary of Agriculture to use these funds to support exports and domestic consumption of agricultural commodities. The Act of August 11, 1939, authorized the Secretary of Agriculture to transfer up to $1.5 million from funds collected under Section 32 to support the fishing industry. Funds were transferred to the Federal Surplus Commodities Corporation to purchase and distribute surplus fishery products and to the Secretary of the Interior to promote markets for fishery products of domestic origin. Table 1 provides a history of legislative changes to the S-K Act.", "In 1954, the S-K Act amended the Act of August 11, 1939, to provide additional funding from Section 32 funds to support the U.S. fishing industry. The S-K Act authorized the transfer from the Secretary of Agriculture to the Secretary of the Interior, from the larger Section 32 account's funding, an amount equal to 30% of gross receipts from duties collected on fishery products. These funds were maintained in a separate account for use by the Secretary of the Interior to support the flow of fishery products in commerce, develop and increase markets for fishery products, and conduct research. Annual expenditures from the fund were limited to $3 million, and the balance of the fund was not allowed to exceed $5 million at the end of any year. In 1956, the S-K Act was amended to remove the limit on annual expenditures from the fund. The S-K Act also authorized the Secretary of the Interior to appoint a fishing industry advisory committee to provide guidance on the formulation of policy, rules, and regulations pertaining to requests for assistance, and other matters. ", "In 1976, the Fishery Conservation and Management Act (FCMA; P.L. 94-265 ) established a 200-nautical mile fishery conservation zone (FCZ) and brought marine fisheries within the FCZ under domestic control. Foreign fishing was allowed to continue in the FCZ, but the domestic fishing industry was granted priority fishing rights under the FCMA. In the following years, U.S. policy emphasized development of domestic fisheries and replacement of foreign fishing with domestic fishing in the FCZ. According to the Government Accountability Office, until 1979, NMFS used nearly all S-K funds to support fisheries management and development activities; it granted only small amounts to the fishing industry for development projects. In 1979, likely because of growing industry support of domestic fisheries development, NMFS made available approximately $5.3 million of S-K funds to regional fisheries development foundations, universities, private industry, and state and local governments.", "In 1980, Congress formally authorized the current competitive S-K Grant Program in Section 210 of the American Fisheries Promotion Act (AFPA; P.L. 96-561 ). The AFPA directed the Secretary of Commerce to use at least 50% of S-K funds for the S-K Grant Program and the balance of funds for a National Program. Both programs supported research and development efforts to address areas such as harvesting, processing, marketing, and related infrastructures. By 1980, the transfer from the U.S. Department of Agriculture (USDA) had grown to $26.7 million ( Table A-1 ). The AFPA also formally transferred responsibility for administering the fund from the Secretary of the Interior to the Secretary of Commerce. The House committee report accompanying the AFPA noted that the definition of fishery includes recreational fishing and that recreational projects would be eligible for grants. The AFPA also removed a section that established the S-K fishing industry advisory committee; the advisory committee had been previously terminated pursuant to the Federal Advisory Committee Act (P.L. 92-463). ", "In subsequent years, Congress made additional changes to the allocation and use of the S-K fund ( Table 1 ). The Highway Improvement Act of 1982 ( P.L. 97-424 ) increased the share of funds used for the competitive grant program from 50% to 60%. In the following years, potential uses of the fund were broadened to include the Fisheries Promotion Fund ( P.L. 99-659 ), the Northwest Atlantic Ocean Fisheries Reinvestment Fund ( P.L. 102-567 ), and the federal share of a fishing capacity reduction program ( P.L. 104-297 ). Congress established the Fisheries Promotion Fund to support domestic and international markets for domestically produced seafood. A portion of S-K funds was transferred to the fund from FY1987 to FY1991 for this purpose ( Table A-1 ). "], "subsections": []}, {"section_title": "Revenue", "paragraphs": ["The revenues that are transferred into the P&D account from USDA are derived from duties on fishery products, \"including fish, shellfish, mollusks, crustaceans, aquatic plants and animals, and any products thereof, including processed and manufactured products.\" The P&D account is a mandatory fund that requires no periodic reauthorization or appropriation. Transfers from USDA to NOAA's P&D account have steadily increased from $26.7 million in 1980 to $182.8 million in 2020 ( Figure 2 ). In CY2017, approximately 77% of revenues were from duties collected on imports of nonedible marine products, including jewelry, ink, various chemicals, and skins. The remaining 23% of revenues were from duties on imports of edible seafood products. Tariffs on edible fish products have been reduced or eliminated for many seafood products, and most remaining duties are collected on canned products such as tuna or processed products such as fish sticks. In CY2017, most duties were collected on imports from India ($89.9 million), China ($86.2 million), Thailand ($79.8 million), Italy ($53.2 million), and France ($36.2 million)."], "subsections": []}, {"section_title": "Use of Funds", "paragraphs": [], "subsections": [{"section_title": "Operations, Research, and Facilities Account", "paragraphs": ["Congress has allocated a growing portion of revenue in the P&D account to the ORF account rather than funding the S-K Grant Program as prescribed by the S-K Act. The transfer to the ORF account has ranged from $5 million, or 29% of the P&D account in 1979, to over $130 million in the five most recent years (FY2016-FY2020), which is more than 90% of the annual transfer into the P&D account ( Table 2 ). ORF funds are used \"to support fisheries research and management activities including the analysis and decision-making that supports ecosystem approaches to management.\" Often the allocation of most funds to the OFR account limits the funding that is available for the specified purposes of the S-K Act. ", "In the last three fiscal years (FY2018-FY2020), the NOAA budget request proposed that all P&D account funding be transferred to the ORF account in support of NMFS activities. However, the Consolidated and Further Continuing Appropriations Act, 2013 ( P.L. 113-6 ), restricted the use of P&D funds that are transferred into the ORF account. It limited this funding to fisheries activities related to cooperative research, annual stock assessments, survey and monitoring projects, interjurisdictional fisheries grants, and fish information networks. In subsequent years, agency budget requests have reflected this intent by identifying similar areas, and Congress has continued to include similar language in appropriations laws and accompanying Senate committee reports."], "subsections": []}, {"section_title": "Remaining Funding", "paragraphs": ["In most years, the majority of the funds that remain in the P&D account after the transfer into the ORF account have been used for the competitive S-K Grant Program as described in subsection (c) of the S-K Act and the National Program as described in subsection (d) ( Table 2 ). The amount of remaining funding for the S-K Grant Program has varied considerably from year to year, ranging from no funding in FY2011 and FY2012, when Congress did not leave any remaining funding for S-K program, to its highest level of $29.5 million in FY2009 ( Table 2 ). The S-K Act directs the Secretary of Commerce to use no less than 60% of funds for fisheries research and development grants pursuant to subsection (c). The Secretary also is required to use the remaining funds to finance NMFS activities directly related to U.S. fisheries development, as outlined in subsection (d). Since 1982, S-K grant funding has been less than 30% of total transfers from USDA, and it has been significantly lower in most years. In many years, Congress did not fund the National Program or provided a small portion of the remaining funds for that purpose. ", "Historically, financial support also was provided for the Fisheries Promotion Fund, which was funded between $750,000 and $3 million from FY1987 to FY1990. ( Table A-1 ). No funding has been provided for the Fisheries Promotion Fund since 1991. From FY2003 to FY2006, most funding remaining after the ORF transfer was used for congressionally directed projects that supported several regional seafood marketing initiatives ( Table A-1 ). Annual S-K reports and other sources indicate that S-K funds have not been used for either the Northwest Atlantic Ocean Fisheries Reinvestment fund or the fishing capacity reduction program. "], "subsections": []}, {"section_title": "Saltonstall-Kennedy Grant Program", "paragraphs": ["According to NMFS, the S-K program's general goals are to fund projects that address the needs of fishing communities, optimize economic benefits by building and maintaining sustainable fisheries, and increase other opportunities to keep working waterfronts viable. Historically, examples of areas funded by the S-K Grant Program have included enhancing markets for fishery products, examining fishery management options, and developing more efficient and selective fishing gear. Projects often have focused on both state and federal marine commercial fisheries, but other sectors\u00e2\u0080\u0094such as aquaculture and recreational fishing\u00e2\u0080\u0094also have been eligible for and received support. ", "NMFS solicits proposals as a federal funding opportunity on the federal grants website, which includes funding priorities, application requirements, and proposal evaluation criteria. Funding priorities are developed in coordination with regional fishery management councils, interstate fishery commissions, NMFS science centers, and NMFS regional offices. For example in 2020, S-K program priorities are seafood promotion, development, and marketing, and science or technology that promotes sustainable U.S. seafood production and harvesting.", "The review process includes (1) pre-proposal review, (2) technical review and ranking, (3) panel review and ranking, and (4) grant selection. Pre-proposals undergo an administrative review by NOAA staff, a review by subject matter experts, and S-K program evaluation. Full review includes administrative screening; technical review by federal, public, and private sector experts; and funding recommendations by program and NMFS leadership. NMFS also may solicit comments and evaluation from a constituent review panel composed of three or more representatives chosen by the NMFS assistant administrator of fisheries. ", "Funding of proposals is recommended by the S-K program manager; constituent panel ranking (if applicable); and input from NMFS regional directors, science center directors, and office directors. The agency selecting official, the NMFS assistant administrator, determines which proposals will be funded. The decision is based on the order of the proposals' ranking and other considerations, such as availability of funding, balance and distribution of funds, and duplication. Recently, NMFS has been considering whether the program and fishing industry would benefit from placing greater emphasis on monitoring approved projects and disseminating results. During 2019, feedback sessions were arranged with regional fishery management councils to solicit constituents' views on how to improve the dissemination and use of results from funded projects. "], "subsections": []}]}]}, {"section_title": "Issues for Congress", "paragraphs": ["Some fishing industry representatives have questioned whether the U.S. commercial fishing industry and fishing communities could benefit from greater direct support from S-K funding. Two of the main concerns have been whether the competitive grant process should include greater fishing industry input and whether a greater portion of P&D funds should be allocated to the annual S-K Grant Program. Some assert that NMFS decides by its own criteria which programs receive grants and that in some cases the fishing industry's priorities do not match those of NMFS. They contend that broader, more direct fishing industry participation is needed to inform the process of identifying the needs and priorities of grant funding. ", "Another concern has been whether a greater portion of P&D funding should be allocated to the S-K Grant Program. Some contend that Congress, as reflected in statute, intended to provide at least 60% of funds to the S-K Grant Program and remaining funding to the National Program for fishing industry research and development. However, shifting significant funding from current NMFS activities may prompt questions about whether additional discretionary funding would be forthcoming to support other NMFS functions, such as data collection and fish population assessments. "], "subsections": [{"section_title": "Congressional Actions", "paragraphs": [], "subsections": [{"section_title": "Funding Allocation", "paragraphs": ["Several bills were introduced during the 112 th , 113 th , and 114 th Congresses that would have significantly changed the allocation of P&D funding. Similar versions of the Fisheries Investment and Regulatory Relief Act in each of these Congresses would have allocated funding to fisheries management regions and would have established a regional fisheries grant program. Under these bills, each regional fishery management council would have established a fishery investment committee, which would focus resources on strengthening regional fisheries management. Each fishery investment committee would have ", "developed a regional fishery investment plan; reviewed grant applications and projects to implement regional fishery investment plans; and made recommendations on grant applications.", "The regional fishery investment plans would have identified research, conservation, and management needs, as well as corresponding actions to rebuild and maintain fish populations and associated fisheries. Each regional investment plan would have been required to include topics related to ", "supporting stock surveys, stock assessments, and cooperative fishery research; improving the collection and accuracy of recreational and commercial data; analyzing social and economic impacts of fishery management decisions; providing financial assistance and investment for fishermen and fishing communities; developing methods or technologies to improve the quality and value of landings; researching and developing conservation engineering technologies; and restoring and protecting fish habitat. ", "Investment plans would have been reviewed by the Secretary of Commerce to ensure consistency with the Magnuson-Stevens Fishery Conservation and Management Act (16 U.S.C. \u00c2\u00a7\u00c2\u00a71801 et seq.). Limited funding also would have been provided for administrative costs of the grant program and for the development and implementation of investment plans.", "Under these versions of the Fisheries Investment and Regulatory Relief Act, the Secretary of Commerce also would have established a regional fisheries grant program to provide funds to advance the regional priorities identified in the regional fishery investment plans. The Secretary would have awarded grants only to projects that would implement regional fishery investment plans and to projects recommended by respective regional fishery investment committees and approved by each regional fishery management council. The Secretary would have been required to allocate 70% of funds from the P&D account to the eight council regions. Half of this funding would have been allocated equally among the councils, and half would have been distributed according to the combined economic impact of recreational and commercial fisheries in each region. ", "The Secretary also would have been required to allocate 20% of funds for a national fisheries investment program that would support rebuilding and maintaining fish populations and promote sustainable fisheries. Funding would have been divided equally among five general areas: (1) regional fisheries commissions; (2) seafood promotion; (3) fisheries management; (4) fisheries disasters; and (5) other needs, including highly migratory species and international fisheries. Each of the bills would have limited the transfer of ORF funding from the P&D account to 10% of receipts. The legislation also included a provision to provide funding to review regulations and procedures used to implement management under the Magnuson-Stevens Fishery Conservation and Management Act and to make recommendations to streamline regulations and incorporate new information into the management process."], "subsections": []}, {"section_title": "Stopping the Transfer to the Operations, Research, and Facilities Account", "paragraphs": ["In the 114 th Congress, a section of the Magnuson-Stevens Fishery Conservation and Management Reauthorization Act of 2014 ( S. 2991 ) would have attempted to stop the transfer of P&D funds to the ORF account. According to Section 205 of S. 2991 , it would not be in order in the Senate or in the House of Representatives to consider any bill, resolution, amendment, or conference report that would reduce any amount in the fund (P&D account). This change in the Senate and House rules would have allowed any Senator or Representative to stop the transfer of P&D funds to the ORF discretionary account by making a point of order that a rule is being violated. No further action was taken following the introduction of S. 2991 . "], "subsections": []}]}, {"section_title": "American Fisheries Advisory Committee Act", "paragraphs": ["In the 116 th Congress, identical versions of the American Fisheries Advisory Committee Act ( S. 494 and H.R. 1218 ) were reported or ordered reported from the committees of jurisdiction in the Senate and the House. The bills would establish an American fisheries advisory committee and would change the process for awarding S-K competitive grants. The committee would ", "identify the needs of the seafood industry; develop requests for proposals; review grant applications; and select grant applications for approval.", "Currently, NMFS is responsible for these functions, and NMFS considers industry input during the selection process. Both bills also would expand the specified purposes of fisheries research and development projects by explicitly including projects that focus on fisheries science and recreational fishing.", "The committee would be composed of representatives from six geographic regions of the United States. The Secretary of Commerce would appoint three members from each region, including (1) an individual with experience as a seafood harvester or processor, (2) an individual with experience in recreational or commercial fishing or growing seafood, and (3) an individual who represents the fisheries science community or the relevant regional fishery management council. The Secretary also would appoint four at-large members, including (1) an individual who has experience in food distribution, marketing, retail, or service; (2) an individual with experience in the recreational fishing industry supply chain; (3) an individual with experience in the commercial fishing industry supply chain; and (4) an individual who is an employee of NMFS with expertise in fisheries research. The committee members would meet twice annually, and meetings would rotate among the six regions. ", "The Secretary of Commerce would identify three or more experts to undertake technical review of grant applications, which would occur prior to committee review. The Secretary also would be required to develop guidance related to technical review, including criteria for elimination of applications that fail to meet a minimum level of technical merit. A grant would not be approved unless the Secretary was satisfied with the applicant's technical and financial capability. Based on the committee's recommendations, the Secretary would evaluate the proposed project according to listed criteria and other criteria the Secretary may require. If the Secretary fails to provide funds to a grant selected by the committee, the Secretary would be required to send a written document to the committee justifying the decision. "], "subsections": [{"section_title": "Appendix. History of Financing Under the Saltonstall-Kennedy Act", "paragraphs": [], "subsections": []}]}]}]}}
{"id": "R46215", "title": "U.S. Bilateral International Family Planning and Reproductive Health Programs: Background and Selected Issues ", "released_date": "2020-02-06T00:00:00", "summary": ["U.S. international family planning activities stem from a provision of the Foreign Assistance Act of 1961 (Section 104, P.L. 87-195; as amended), which authorized research on family planning issues, among many other things. In 1965, Congress authorized the U.S. Agency for International Development (USAID) to create contraceptive distribution programs. Originally, international family planning programs focused on distributing contraceptives and related commodities. Over time, such programs evolved to also address reproductive health issues, such as female genital mutilation (FGM) and obstetric fistula prevention and care. The United States is the largest donor of international family planning and reproductive health (FP/RH) assistance, supporting programs in 40 countries and providing, in recent years, $575 million annually in bilateral aid for this purpose. USAID administers the majority of this funding, which Congress appropriates primarily through the Global Health Programs account in the annual State, Foreign Operations and Related Programs appropriation.", "Policy debates about U.S. bilateral foreign assistance for FP/RH activities have focused primarily on whether recipient organizations could repurpose those funds to indirectly support abortion, despite legislation barring the use of U.S. funds for such purposes. Other aspects of FP/RH programs, particularly those related to curbing child marriage and gender-based violence, have generally received broad based support.", "This report describes the background and history of U.S. bilateral international family planning and reproductive health programs, funding trends, and related policy debates, including", "the effects of the Mexico City Policy/Protecting Life in Global Health Assistance restrictions and other abortion, and involuntary sterilization related restrictions on voluntary family planning and reproductive health services supported by U.S. bilateral foreign assistance; appropriate funding levels for international family planning and reproductive health programs; the utility of more or less integration of family planning/reproductive health programs and maternal and child health funding and programs; and pending legislation focused on international family planning assistance.", "This report does not cover family planning assistance channeled through multilateral organizations, such as the U.N. Population Fund (UNFPA). It provides only limited discussion of legislative restrictions and executive branch policies related to international abortion, which are detailed in other CRS products. For information on legislative restrictions, U.S. domestic abortion laws, and U.S. global health assistance, including international family planning, see the following CRS products:", "CRS In Focus IF11013, Protecting Life in Global Health Assistance Policy , by Tiaji Salaam-Blyther and Sara M. Tharakan. CRS Report R41360, Abortion and Family Planning-Related Provisions in U.S. Foreign Assistance Law and Policy , by Luisa Blanchfield. CRS Report RL33467, Abortion: Judicial History and Legislative Response , by Jon O. Shimabukuro. CRS In Focus IF10131, U.S. Global Health Assistance: FY2017-FY2020 Request , by Tiaji Salaam-Blyther."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["Since the 1960s, Congress has passed measures to authorize and fund international family planning related activities that give partici pants access to a broad range of contraceptive methods and services. Such assistance is intended to support broader U.S. international development priorities, as stated in Section 104 of the Foreign Assistance Act of 1961, as amended (P.L. 87-195):", "The Congress recognizes that poor health conditions and uncontrolled population growth can vitiate otherwise successful development efforts. Large families in developing countries are the result of complex social and economic factors which change relatively slowly among the poor majority least affected by economic progress, as well as the result of a lack of effective birth control. Therefore, effective family planning depends upon economic and social change as well as the delivery of services and is often a matter of political and religious sensitivity. While every country has the right to determine its own policies with respect to population growth, voluntary population planning programs can make a substantial contribution to economic development, higher living standards, and improved health and nutrition.", "Section 104 goes on to authorize U.S. assistance to address the impact of population growth on development through family planning activities:", "In order to increase the opportunities and motivation for family planning and to reduce the rate of population growth, the President is authorized to furnish assistance, on such terms and conditions as he may determine, for voluntary population planning. In addition to the provision of family planning information and services, including also information and services which relate to and support natural family planning methods, and the conduct of directly relevant demographic research, population planning programs shall emphasize motivation for small families.", "According to the U.S. Agency for International Development (USAID), the primary federal agency charged with administering development assistance, family planning refers to \"services, policies, information, attitudes, practices, and commodities, including contraceptives, that give women, men, couples, and adolescents the ability to avoid unintended pregnancy and choose whether and/or when to have a child.\" Over time, family planning programs evolved beyond a strict focus on contraception to provide information and services on a wide range of issues that adversely affect sexual and reproductive health (e.g., female genital mutilation and cutting (FGM/C), obstetric fistula, and gender based violence (GBV)). This broader scope is reflected in the common categorization of these activities as reproductive health/family planning (RH/FP) assistance. Reproductive health refers to \"all matters relating to the reproductive processes, functions, and system at all stages of life.\"", "The United States is the largest country donor to international FP/RH programs, providing $575 million dollars annually in recent years. Although U.S. funding for FP/RH activities has been consistent for years, the programs remain a subject of intense congressional debate. While the law explicitly prohibits the use of funds to provide abortion or involuntary sterilization, some Members of Congress continue to express concern that FP/RH may indirectly support such activities as a result of funding fungibility. Other concerns relate to the cultural appropriateness of family planning activities and the relationship between FP/RH and broader global health and development assistance. ", "This report focuses on the scope and intended impact of U.S. bilateral international family planning programs administered by USAID. It does not comprehensively address related legislative restrictions (although a table listing such restrictions is provided in the Appendix), or discuss aid channeled through multilateral organizations, such as the U.N. Population Fund (UNFPA). "], "subsections": [{"section_title": "Family Planning: Key Issues", "paragraphs": ["International FP/RH programs aim to provide women with the information and services needed to make informed decisions regarding their contraceptive options and to ensure healthy reproductive systems and safe pregnancies. According to USAID, a key aspect of these programs is family planning, as some 885 million women worldwide would like to avoid or delay pregnancy. Of those women, 212.4 million (24%) lack access to FP/RH services. Supporters of FP/RH programs assert that access to such services is necessary for safe motherhood. They cite evidence that bearing children too close together, too early, or too late in life can threaten the health of the mother and her baby. In addition, lack of access to family planning services can have negative social and economic impacts that undermine broader global development goals. For example, some experts note that improving access to family planning services has been shown to have benefits for children's health, women's empowerment, and sustainable growth and development. ", "Critics of international family planning programming have expressed concern that despite existing restrictions, U.S. dollars could be used indirectly to support abortion or involuntary sterilization if implementing partners use U.S. funds for approved services, freeing up funding from other sources to support abortion or involuntary sterilization. Other detractors argue that U.S. foreign assistance for contraceptive provision is an inappropriate imposition on local cultural or religious norms, further asserting that abstinence education is a more effective form of family planning. Critics have also questioned the practice of allocating specific resources for FP/RH programs rather than allocating aid to broader women's health programs or for other development priorities that they argue would be a more effective use of U.S. funds. "], "subsections": []}, {"section_title": "Evolution of U.S. Policy and Programs", "paragraphs": ["Since U.S. bilateral FP/RH programs and policies were launched in 1965, they have evolved to reflect changes in global health priorities and emphasize the link between development and gender. The Foreign Assistance Act of 1961 (P.L. 87-195; as amended) first authorized research on family planning issues, among many other things, and in 1965 Congress authorized USAID to create contraceptive distribution programs through the Office of Population. Initial programs focused on procuring contraceptive supplies for distribution in developing countries. At the time, the rationale for these programs was that high birth rates \"significantly increase the cost and difficulty of achieving basic development objectives by imposing burdens on economies presently unable to provide sufficient goods and services for the growing population.\" From the 1970s through the 1990s, USAID expanded international family planning assistance to include programs on fertility, reproductive and women's health, and maternal and child health, ultimately reorganizing the program into an Office of Population and Reproductive Health (PRH). The expansion of activities reflected changing attitudes and development strategies. Concerns about managing population growth were largely supplanted by a focus on advancing women's status and enhancing their individual health and empowerment. USAID family planning activities continued to utilize a multipronged approach, entailing the provision of contraception while also addressing broader reproductive health concerns. "], "subsections": []}]}, {"section_title": "USAID Priorities and Key Programs", "paragraphs": ["USAID's FP/RH programs are administered through the Office of Population and Reproductive Health (PRH) within the agency's Global Health Bureau. PRH is responsible for setting technical and programmatic direction, providing technical leadership, and supporting field programming. USAID distributes FP/RH commodities (such as contraceptives) and related services primarily through contracts and grant agreements with nongovernmental organizations. The agency's technical and administrative staff oversee and monitor the work of implementing partners. ", "USAID FP/RH programming is organized around six priorities:", "1. Supporting healthy timing and spacing of pregnancy. 2. Advancing community-based delivery of FP/RH services, such as deploying front-line community health workers to disseminate commodities and information, and to arrange referrals. 3. Ensuring adequate supplies of contraceptives. 4. Providing non-coerced access to surgical sterilization and long-acting reversible contraceptives (LARCS), such as intrauterine devices and contraceptive implants. 5. Integrating FP/RH and HIV/AIDS programs to ensure that HIV-positive men and women have access to family planning information and services, for disease prevention and to prevent mother-to-child transmission of the virus. 6. Integrating FP/RH and maternal and child health (MCH) programs, specifically during the postpartum period, when there is considerable demand from new mothers for contraception to ensure pregnancy spacing.", "In addition to these priorities, USAID FP/RH programs may also focus on related policy areas, such as efforts to end child marriage, female genital mutilation and cutting, and gender-based violence; and related health goals, including the prevention of fistula."], "subsections": [{"section_title": "Programs and Activities", "paragraphs": ["USAID works with implementing partners to fund programs and provide technical assistance for the following family planning and reproductive health programs and activities:", "D elivery of FP/RH services . Examples include providing women with counseling to promote awareness of available contraceptives or other methods of birth control, or procedures at health facilities to insert Intrauterine Devices (IUDs) or other forms of Long Acting Reversible Contraceptives (LARCs). ", "Contraceptive supply and logistics \u00e2\u0080\u0094implementation and management of supply chains for contraceptives, including condoms. In FY2018, for example, USAID donated 28 million male condoms to developing countries through the agency's implementing partners. ", "Biomedical and social science research \u00e2\u0080\u0094the study of biomedical and social science evidence to identify best practices in programming and implementing family planning services. For example, USAID created Demographic and Health Surveys (DHS) and partnered with national governments and implementing partners to use the tool for conducting household- and facility-based surveys on health attitudes and behaviors in Africa, Asia, Latin America, the Caribbean, and Eastern Europe. ", "In addition, USAID provides direct technical assistance to foreign ministries of health and other partners, focusing on the following areas: ", "Performance and quality improvement \u00e2\u0080\u0094the use of data to improve both access to FP/RH services and their quality. For example, data from USAID-supported surveys are used to analyze women's use of family planning methods (e.g., effectiveness of contraceptive method, provider attitudes towards patients, or provider-patient interactions). ", "Health communication \u00e2\u0080\u0094the use of mass media, community-level, and interpersonal communication strategies to expand knowledge of contraception, healthy approaches to birth spacing, and sex education, as well as awareness and prevention of GBV, forced early and child marriage (FECM), and FGM/C. For example, USAID supports community health promoters and behavior change campaigns, to educate women and their families on a variety of issues such as access to reproductive health services, the importance of maternal and neonatal health provider check-ups, and the health and psychosocial risks of FGM/C to women and girls. ", "Policy analysis and planning \u00e2\u0080\u0094support for the development, implementation, and monitoring of policies and laws that affect FP/RH policies and programs, and women's health outcomes. For example, USAID supported a research project in Kenya which analyzed the country's evolving health policies (e.g., the National Population Policy for National Development and the Adolescent Reproductive Health and Development Policy) and contraceptive distribution programs, to evaluate impact on Kenya's total fertility rate and contraceptive prevalence rate. ", "Monitoring and evaluation (M&E) \u00e2\u0080\u0094the evaluation of programs to understand the content, quantity, and potential effects of services being provided with U.S. government assistance.", "Integration of FP/RH and MCH activities \u00e2\u0094\u0080 According to USAID, access to family planning services can prevent 30% of maternal deaths (or approximately 90,000 deaths annually). USAID implementing partners often provide integrated FP/RH and MCH services, where appropriate. Many experts recognize MCH programs as a natural entry point for promoting awareness of and access to family planning services, as in the post-natal period evidence suggests that women have an increased desire to plan or prevent future pregnancies. For example, a mother bringing her child to a routine vaccination appointment might also be able to receive maternal health services and counseling on contraceptive options. Fourteen USAID-supported countries highlight integration of FP/RH and MCH as an approach to community health service delivery in their national government policies. However, USAID MCH programs are funded separately from FP/RH programs, as there are also FP/RH programs that focus on issues outside the realm of MCH (e.g., programs addressing adolescent sexual and reproductive health, prevention of FECM, GBV, FGM/C and obstetric fistula). In India, for example, USAID FP/RH funds supported programs to provide counseling and referral of GBV survivors to service providers, such as psychosocial counselors."], "subsections": []}, {"section_title": "Countries Receiving USAID FP/RH Assistance", "paragraphs": ["In 2018, USAID supported bilateral family planning and reproductive health aid programs in more than 40 countries, including 24 \"priority\" countries, which are the focus of FP/RH programs and technical assistance and receive the majority of FP/RH funding. Most of these priority countries (23 of 24) are also categorized as MCH priority countries by USAID. To determine priority status, USAID evaluates which countries have ", "the highest need, based on the magnitude and severity of their neonatal and maternal death rates; demonstrated national commitment to achieving sustainable and efficient program outcomes; and the greatest potential to leverage U.S. government support. ", "USAID FP/RH priority countries are largely in Africa ( Figure 1 ). Compared with other developing nations and regions, Africa has the highest concentration of countries with low rates of modern contraceptive use and highest maternal mortality rates ( Table B-1 ). In 2018, the top three recipients of U.S. FP/RH assistance were Nigeria ($37 million), Uganda ($29 million), and Tanzania ($28 million).", "In 2018, USAID provided $2 million or less (per country) annually to support FP/RH programs in an additional 18 countries that were assessed to have a need for family planning services (e.g., Benin), and/or a strategic foreign policy interest to the United States (see Table B-2 ). For example, despite relatively low fertility and maternal death rates, Ukraine receives USAID FP/RH funds as part of a multifaceted approach to supporting Ukraine as a free and democratic state \"in the face of continued Russian aggression.\" "], "subsections": []}, {"section_title": "Criteria for Country \"Graduation\"", "paragraphs": ["USAID formalized a country graduation process for FP/RH assistance in 2006, to transition countries off of U.S. foreign assistance for FP/RH programs and prioritize countries when allocating funding. The graduation strategy also aligns with the agency's \"Journey to Self-Reliance,\" a policy framework established in 2018 to strengthen the ability of partner countries to support their own development agendas. Countries receiving family planning assistance may \"graduate\" once they have met certain criteria and a country program has achieved its stated goals. According to USAID, a country is eligible for graduation once it ", "reaches a modern contraceptive prevalence rate of at least 51%; and reaches a level of fertility at or below 3.1 children per woman.", "USAID also considers additional issues when evaluating a country's readiness for graduation. Countries who reach both criteria but lack the capacity to implement family planning programs or face other constraints may continue to receive assistance (e.g., India). USAID may also evaluate whether governments are allocating sufficient public funds for contraception procurement and whether their Ministries of Health demonstrate adequate capacity to manage the associated logistics and supply chain processes. Additional indicators considered for graduation include ", "at least 80% of the population can access at least three methods of FP; no more than 20% of FP products, services and programs offered in the public and private sectors are subsidized by USAID; and major service providers in all sectors (public, non-governmental, commercial) can meet and maintain standards of informed choice and quality of care.", "To date, USAID 25 countries have graduated, half of which are in Latin America and the Caribbean ( Table B-4 ). For example, Brazil graduated in 2000, after the government, non-governmental organizations, and the private sector invested substantially in family planning assistance, and as the country's Gross Domestic Product (GDP) increased. USAID partners worked to build capacity in Brazil's civil sector and Ministry of Health programs, by focusing on outreach, education, and improved access to care. According to USAID, \"the program worked with the government to reduce Brazil's legal obstacles and tariff barriers to the importation of medical equipment, foam, jellies, and oral contraceptives, as well as quality intrauterine devices and condoms not manufactured in Brazil.\" Perhaps reflecting these efforts, Brazil's contraceptive prevalence rate increased from 34% in 1970, to 72% in 2000. Other countries who were graduated (e.g., Mexico), demonstrated similar characteristics. ", "Once a country graduates, PRH evaluates where U.S. resources can best be reallocated based on need. In 2011, for example, USAID formed the Ouagadougou Partnership (named for the capital of Burkina Faso) with funding reallocated from graduated Latin American countries. This partnership\u00e2\u0080\u0094which also involves the government of France, the Bill and Melinda Gates Foundation, and the Hewlett Foundation\u00e2\u0080\u0094seeks to improve access to family planning services in francophone West Africa. ( Table B-3 ). "], "subsections": []}]}, {"section_title": "U.S. Funding", "paragraphs": ["Bilateral FP/RH assistance is funded through a variety of accounts in annual Department of State, Foreign Operations, and Related Programs (SFOPS) appropriations measures. The Global Health Programs (GHP) account is the funding channel for more than 90% of bilateral FP/RH aid while smaller amounts of bilateral FP/RH assistance are generally made available through other accounts. Department of State Economic Support Fund (ESF) monies are provided to select countries considered by the State Department to be politically and strategically important. In recent years, Pakistan, Afghanistan, and Jordan have received ESF funds for FP/RH activities. In FY2017, for example, Afghanistan, which is a USAID FP/RH priority country, received $20 million in bilateral family planning assistance, all of which was provided through the ESF.", "Over the past decade, enacted funding levels for bilateral international FP/RH aid have remained fairly consistent ( Figure 2 ). ", "Although congressionally enacted funding has been constant since 2011, the absence of foreign assistance authorization legislation in recent decades has made annual consideration of foreign aid appropriations the primary venue for debating international family planning and reproductive health policy. Controversies that are frequently debated as part of the appropriations process include ", "codification of the Mexico City Policy/Protecting Life in Global Health Assistance (MCP/PLGLHA), which is currently imposed through Executive Order (see \"Selected Issues for Congress\"); the effect that withholding U.S. dollars as a result of such restrictions could have on access to voluntary family planning and other health services in developing countries; and whether or not designating funding for contraceptive provision and family planning is the best approach to allocating global health funds.", "Members of Congress hold varied perspectives on these issues. Some Members have supported expanding access to FP/RH services, while others aim to increase restrictions on such services or reduce funding levels. in addition to these perennial concerns, debate in the 116 th Congress regarding FP/RH programs has addressed issues such as the role of faith-based contractors in USAID FP/RH programs, bias and discrimination against potential aid recipients, and language around sexual and reproductive health. In recent years, controversy has also arisen over how FP/RH services are described in government documents, though it remains unclear whether language changes have had any impact on actual service provision."], "subsections": []}, {"section_title": "Selected Issues for Congress", "paragraphs": ["When considering U.S. support for international family planning and reproductive health efforts, the 116 th Congress may focus on three key areas: restrictions under the MCP/PLGHA, funding levels in appropriations bills, and program reforms proposed in pending legislation. "], "subsections": [{"section_title": "Mexico City Policy/PLGHA", "paragraphs": ["The Mexico City Policy requires foreign nongovernmental organizations receiving USAID family planning assistance to certify that they will not perform or actively promote abortion as a method of family planning, even if such activities are conducted with non-U.S. funds. Since first applied in the Reagan Administration in 1984, the policy has been repeatedly lifted and reinstated through Executive Order. The policy was maintained by President George H.W. Bush and rescinded by President Clinton in 1993. It was then reinstated by President George W. Bush in 2001, who expanded the policy in 2003. President Obama rescinded the policy upon taking office in January 2009. The Trump Administration reinstated the policy, expanded it to include all U.S. global health assistance, and renamed it Protecting Life in Global Health Assistance (PLGHA). The Trump Administration uses the two policy names interchangeably, though the Mexico City Policy until now only applied to international family planning and reproductive health programs. When discussing the policy under the Trump Administration, this report uses MCP/PLGHA. ", "MCP/PLGHA has never been enacted through legislation, and advocates have long encouraged Congress to codify the policy, making it harder for future Administrations to revoke. Simultaneously, detractors of the policy have called for enactment of legislation that would prevent the current practice of Administrations imposing the policy through Executive Order. ", "Some international FP/RH program advocates suggest there are issues and confusion regarding compliance with the expansion of MCP to include all global health assistance. They assert that the policy has rendered programs cumbersome and ineffective due to administrative and operational burdens associated with ensuring compliance, which divert resources from the health workforce, health information systems, and service delivery. Some field reports indicate that individual providers may not be aware of the restrictions because MCP/PLGHA is \"embedded\" in funding agreements, similar to \"fine print,\" which can create barriers to care during a provider-patient interaction. Advocates of the expanded policy argue that it closes loopholes in the prior policy and does not cause an undue burden, asserting that the government must focus on compliance.", "In February 2018, the State Department released the findings of a six-month review of MCP/PLGHA. The State Department acknowledged the confusion the policy created, stated that the policy's impact on program effectiveness was minimal, and committed to conduct another review at the end of 2018. As of February 2020, the State Department had not announced plans for a second review. Congress could choose to mandate completion of the second review through legislation or examine the situation through oversight activities. "], "subsections": []}, {"section_title": "Setting Funding Levels for International FP/RH Programs", "paragraphs": ["In recent years, congressional debates regarding international FP/RH assistance have centered on where and how such funding should be spent. For FY2020, Congress appropriated $575 million to international family planning programs. Some advocates have argued that global FP/RH funding levels would need to be doubled in order to make family planning and reproductive services accessible to all women who currently want and lack access to them. Proponents say that consistently flat funding is equivalent to FP/RH spending cuts, and this undermines U.S. global development goals on maternal and child health. Advocates note that the U.S. government would need to invest $1.5 billion to meet its appropriate share of the burden for foreign assistance for FP/RH funding, and other donor countries cannot fill the gap. Opponents of the aid have questioned the extent of international demand for family planning services and have suggested that international family planning resources could be better used on other development activities. Further, opponents argue that international family planning services are controversial in some countries due to religious and moral beliefs, which, in their views, raises questions about whether increased donor funding would lead to increased use of contraceptives and reproductive health care services or to better maternal health outcomes. Some observers also question whether the programs have been efficient and cost-effective, given the scale of U.S. spending on bilateral family planning programs, compared to other types of U.S. assistance. While data appears to show positive program impact in some countries, the attribution of results specifically to U.S. programming can be debated given the many factors that influence contraceptive use, including social and economic change and the activities of other international donors. In this context, Congress may consider whether funding levels for bilateral international family planning assistance align with need and potential impact, as well as with U.S. strategic goals and foreign policy objectives. "], "subsections": []}, {"section_title": "Formal Integration of FP/RH and MCH Programs and Funding\u00c2 Streams", "paragraphs": ["Currently, though some U.S. international FP/RH and MCH programs may be integrated (e.g., both types of health services are provided together), most are not, due in part to separate line item funding in the annual Department of State, Foreign Operations, and Related Programs appropriations measures, separate funding entails separate program administration. Proponents of further program integration want to combine FP/RH and MCH services; they note that integration of these services has been shown to increase women's use of contraception, improve maternal health outcomes, and build health systems capacity. Integration of these funding streams may also provide more flexibility to implementing agencies to prioritize funding across a broader range of programs. ", "On the other hand, eliminating funding directives specific to FP/RH and MCH may also reduce congressional control over how funds are used. Furthermore, opponents note that respect for local cultural norms must be considered; in some contexts, service integration could be detrimental to MCH activities if they are associated with less socially acceptable family planning programs. Aid-recipient countries may also resist integration of these programs when separate government health units administer international FP/RH and MCH services and may fear losing prioritization and resources. Others have also raised concerns that embedding FP/RH programs in MCH services would limit USAID programs to address adolescent sexual and reproductive health, and prevent CEFM, GBV, and obstetric fistula - that are distinct from family planning. Congress may consider whether formally integrating FP/RH and MCH funding streams would be beneficial to program efficacy, or if existing appropriations and implementation mechanisms best further the stated objectives of U.S. international FP/RH and MCH programs. "], "subsections": []}, {"section_title": "Pending Legislation", "paragraphs": ["In addition to appropriations legislation, a few proposals specific to international FP/RH are pending in the 116 th Congress: ", "H.R. 661 , the Protecting Life in Global Health Assistance Act of 2019, which would amend the Foreign Assistance Act of 1961 (22 U.S.C. 2351). This legislation was introduced to codify the Trump Administration's expansion of the Mexico City Policy to include all global health assistance. It would \"prohibit U.S. assistance to foreign nonprofits, nongovernmental organizations, or quasi-autonomous organizations that promote or perform abortions, except in cases of rape or incest or where the mother's life is endangered.\" H.R. 1581 , the Reproductive Rights are Human Rights Act of 2019, and S. 707 , the corresponding Senate bill, would amend the Foreign Assistance Act of 1961 (22 U.S.C. 2351) to \"include in its annual reports on human rights in countries receiving U.S. development and security assistance a discussion of the status of reproductive rights in each country, including whether a country has adopted and enforced policies to:", "(1) promote access to contraception and accurate family planning information, ", "(2) provide services to ensure safe and healthy pregnancy and childbirth, ", "(3) expand or restrict access to safe abortion services, ", "(4) prevent maternal deaths, and ", "(5) prevent and treat sexually transmitted diseases.\"", "The bills would also require the reports to include data on maternal deaths and discrimination and violence against women and girls in health care settings, including the government's response to these actions. ", "Appendix A. Restrictions on U.S. Funding for Voluntary FP/RH Programs", "Appendix B. USAID FP/RH Priority Countries: Key\u00c2\u00a0Statistics, 2017"], "subsections": []}]}]}}
{"id": "R45937", "title": "Military Funding for Southwest Border Barriers", "released_date": "2019-09-27T00:00:00", "summary": ["The Department of Defense (DOD, or the Department) has played a prominent role in the Trump Administration's border security strategy because of controversies related to $13.3 billion in defense funding it has sought to use for border barrier construction projects not otherwise authorized by Congress. These defense funds would comprise a complex mix of DOD program savings and unobligated military construction funds from past years ($6.1 billion), as well as a request for new appropriations in FY2020 ($7.2 billion). An additional $2 billion in non-DOD appropriations are often cited as part of the Administration's overall border funding plan. These include $1.375 billion in previously enacted FY2019 Department of Homeland Security (DHS) appropriations, and $601 million in contributions from a Treasury Forfeiture Fund (TFF) that manages seized assets. Altogether, these defense and non-defense funds would total $15.3 billion, of which 87% would be DOD funds.", "President Donald Trump has consistently declared the deployment of fencing, walls, and other barriers along the U.S.-Mexico border a high priority, however, he has been unable to fully secure from Congress the total amount of funding he deems necessary for that purpose. On February 15, 2019, in part to gain access to such funding, the President declared a national emergency at the southern border that required use of the Armed Forces, an act that triggered statutes allowing the President to redirect national resources\u00e2\u0080\u0094including unobligated military construction funds\u00e2\u0080\u0094for purposes for which they were not originally appropriated by Congress. Concurrent with the declaration, the Administration released a fact sheet entitled, President Donald J. Trump's Border Security Victory ( hereafter referred to as the border security factsheet ) that described a plan for redirecting $6.1 billion in DOD funds to border barrier construction projects not authorized by Congress. An additional $601 million was included using TFFs. The plan invoked a mixture of emergency and nonemergency authorities that included:", "$2.5 billion in defense funds authorized by the (nonemergency) statute 10 U.S.C. 284 Support for counterdrug activities and activities to counter transnational organized crime; $3.6 billion in defense funds authorized by the emergency statute Title 10 U.S.C. 2808 Construction authority in the event of a declaration of war or national emergency; and $601 million in nondefense, nonemergency TFFs.", "Shortly after the release of the border security fact sheet , the DHS requested that DOD undertake 11 construction projects along the Southwest U.S.-Mexico border for execution under 10 U.S.C. 284 authority. Typically, such construction would be funded using congressionally provided appropriations from DHS's own budget. Nevertheless, citing the ongoing state of emergency, DOD agreed to undertake seven of the projects and, between March and May 2019, reprogrammed $2.5 billion in defense program savings over the objections of House congressional defense committees, a deviation from the Department's own regulations. Subsequent court injunctions temporarily prevented approximately half ($1.2 billion) of these appropriations from being fully obligated, and resulted in the suspension of contracts that had been quickly awarded following DOD's reprogramming actions. The U.S. Supreme Court lifted these injunctions on July 26, 2019, but there has been no final ruling in the case ( Sierra Club v. Tru mp) . It remains unclear how a potentially unfavorable ruling might affect construction completed during the ongoing litigation. In September, DOD officials stated that $1.9 billion of the 10 U.S.C. 284 funds have been obligated, with the remainder to be obligated by the end of the month.", "On September 3, 2019, the Secretary of Defense exercised his authority under the emergency statute 10 U.S.C. 2808 to defer approximately 127 authorized military construction projects ($3.6 billion) and redirect the funds to 11 border barrier projects identified by the DHS. Deferred military construction projects would be halted indefinitely (or terminated) unless Congress were to provide replenishing appropriations. Congressional critics of the Administration's border barrier funding plans have hesitated to reimburse DOD for transfer actions they opposed or expressly prohibited. Furthermore, in March 2019, as part of its annual budget submission to Congress, the Administration also requested an additional $7.2 billion in defense appropriations (not described by the February 2019 border security factsheet plan). DOD officials stated that half this amount ($3.6 billion) would be used to support new DHS border barrier projects which the Administration has not yet described. The other half ($3.6 billion) would replenish military construction projects deferred by DOD's earlier 10 U.S.C. 2808 transfer actions.", "There has been considerable congressional concern over the Administration's efforts to fund the construction of border barriers outside of the regular budgetary process. In broad terms, these concerns are related to the novel and unorthodox use of emergency authorities, and the possibility that the Administration's actions jeopardize congressional control of appropriations, thereby potentially violating the Constitution's separation of powers. At the interagency level, DOD's break from comity-based agreements with congressional defense committees on reprogramming actions has generated new legislative interest in limiting the Department's budgetary flexibility and applying sharper oversight. More narrowly, individual Members have voiced apprehensions that military construction projects in their states and districts have been jeopardized by DOD's emergency transfers.", "FY2020 defense authorization and appropriation bills currently under consideration (as of September 2019) include provisions that would constrain the Administration from fully executing its plan, though final versions have not yet been passed. In late July 2019, news outlets reported congressional leadership had come to an informal understanding as part of a settlement of the annual budget caps for FY2020 and FY2021 that would specifically prohibit legislative provisions limiting the use of transfer authority\u00e2\u0080\u0094a key part of the President's Border security factsheet plan\u00e2\u0080\u0094unless such language was adopted on a bipartisan basis.", "Ongoing litigation has generally slowed the execution of border barrier construction and imperiled large portions of the President's plan. Of the $6.7 billion in future DOD and Treasury Funds included in the border security factsheet , $2.1 billion (32%) has been obligated as of September 13, 2019. This includes $242 million in TFFs and $1.9 billion transferred from the defense Drug Interdiction and Counter-Drug Activities account."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["Funding for new border barrier construction became the focal point of a partial government shutdown that began on December 22, 2018, and lasted 34 days, the longest on record. Congress ultimately did not accept President Donald Trump's demand for $5.7 billion in new funding for the construction of a proposed border wall, providing instead $1.375 billion for additional pedestrian fencing as part of the Consolidated Appropriations Act of 2019 (CAA). ", "Unsatisfied with the negotiated agreement, the Trump Administration issued a Presidential Proclamation on February 15, 2019, declaring a national emergency at the southern border of the United States, a move that, among other things, allowed the President to invoke special authorities for redirecting military construction appropriations. ", "Concurrently, the White House released a plan for reprogramming or transferring $6.7 billion to southwest border barrier projects, of which $6.1 billion would come from unobligated Department of Defense (DOD or Department) appropriations. ", "Congress, noting the President's attempt to secure more funding than provided in the CAA, and concerned over a potential violation of its constitutional prerogatives to manage appropriations, acted quickly in an attempt to terminate the national emergency declaration. A joint resolution, H.J.Res. 46 , Relating to a national emergency declared by the President on February 15, 2019 , was passed by both houses on March 14, 2019, but was subsequently vetoed by the President one day later. On March 26, 2019, an attempt to override the veto fell short of the required two-thirds majority in the House by a vote of 248-181. In September 2019, Congress again attempted to terminate the state of national emergency with a joint resolution ( S.J.Res. 54 ) passed by both chambers. The legislation has yet to be considered by the President. The national emergency remains in effect. ", "This report outlines the Administration's FY2020 border barrier funding plans using defense funds, describes the various authorities involved, details the process for each budgetary action, indicates the status of appropriated funds, identifies recent congressional actions, and identifies potential issues for Congress. ", "The report does not include a comprehensive overview of DHS funding for border barriers, or describe that agency's FY2020 request for related projects. It also does not address the deployment and concomitant expense of mobilizing active and reserve military personnel for service on the border."], "subsections": []}, {"section_title": "The Trump Administration's FY2020 Funding Plan", "paragraphs": ["On February 15, 2019, President Trump issued a proclamation declaring a national emergency at the southern border that required use of the Armed Forces. Concurrent with the announcement, the White House released a Fact Sheet entitled, President Donald J. Trump's Border Security Victory (hereafter referred to as the border security factsheet ) that described steps the Administration intended to take in order to provide $6.7 billion in appropriations outside of the regular legislative process for new border barrier projects. Drawing on both emergency and nonemergency authorities, the Administration outlined a number of steps it stated would be \"used sequentially and as needed.\" ", "In March 2019, the Administration delivered its annual budget to Congress. The FY2020 proposal included an additional $7.2 billion in Army Overseas Contingency Operations (OCO) military construction funding, half of which ($3.6 billion) would replenish accounts affected by the Administration's b order security factsheet plan. The remainder, $3.6 billion, would fund future border barrier projects. According to Deputy Under Secretary of Defense (Comptroller) Elaine McCusker:", "We have $3.6 billion -- up to $3.6 billion to backfill any MILCON projects that we end up having to fund in '20 instead of '19. And then we also have $3.6 billion for potential new construction for the border, and the reason we've done this is to reflect the fact that we have a presidential priority that has a macro funding level and we want to help get to that funding level.", "Overall, funding actions the Administration described between February and March 2019 included a complex mixture of realigned DOD program savings and unobligated military construction funds from past years ($6.1 billion), as well as a request for new defense appropriations in FY2020 ($7.2 billion). ", "In its b order security factsheet plan, the Administration cited an additional $2 billion in non-DOD appropriations; $1.375 billion in previously enacted FY2019 Department of Homeland Security (DHS) appropriations (included in the CAA), and $601 million in contributions from a Treasury Forfeiture Fund (TFF) that manages seized assets. Altogether, these defense and non-defense funds would total $15.3 billion, of which 87% would be DOD funds.", "The Table 1 indicates all such actions."], "subsections": [{"section_title": "Status of Funds", "paragraphs": ["Of the $601 million in FY2019 Treasury Forfeiture Funds described in the Administration's plan, at least $242 million has been transferred for use by the U.S. Army Corps of Engineers (USACE). The Treasury Department has stated that it will transfer the remaining $359 million when additional funds become available. ", "Of the $2.5 billion the Administration has designated for transfer through the defense Drug Interdiction and Counterdrug Activities account (hereafter referred to as the defense Drug Interdiction account), $1.9 billion has been obligated. A substantial portion of the total amount, previously frozen by court injunctions, became available on July 26, 2019 when the U.S. Supreme Court struck down lower court injunctions. Since then, DOD border barrier construction has been allowed to proceed, though the courts have made no final ruling.", "After an extended review process, on September 3, 2019, the Secretary of Defense invoked the emergency construction statute 10 U.S.C. 2808 and directed the Department to transfer appropriations from 127 previously authorized military construction projects to eleven barrier projects identified by DHS. ", "The figure below illustrates the status of the Administration's border security factsheet plan as of September 2019. Of the $6.7 billion in newly introduced funds, approximately $2.1 billion has been obligated (or otherwise made available for obligation). For completeness, the figure also includes $1.375 billion in FY2019 DHS appropriations that were included in the President's Border security factsheet announcement, though these funds were previously enacted and do not represent a plan for future actions."], "subsections": []}]}, {"section_title": "Overview of DOD funds Available for Securing the Border", "paragraphs": ["Although the Secretary of the DHS is charged with preventing the entry of terrorists, securing the borders, and carrying out immigration enforcement functions, funding to carry out those missions may be supplemented in part by resources from other agencies. Within DHS, U.S. Customs and Border Protection (CBP), is chiefly responsible for securing the borders of the United States, preventing terrorists and their weapons from entering the country, and enforcing hundreds of U.S. trade and immigration laws. ", "Because border security lies primarily within the jurisdiction of DHS, Congress has not generally provided DOD with significant funds to address that mission. Congress has instead authorized the military to support DHS (or local authorities) in certain situations, such as to assist with drug interdiction or with terrorist incidents involving weapons of mass destruction. According to DOD officials: ", "Active-duty and National Guard personnel have supported Federal and State counterdrug activities (e.g., detection and monitoring of cross-border trafficking, aerial reconnaissance, transportation and communications support, and construction of fences and roads) beginning in the early 1990s. Most recently, U.S. Northern Command's Joint Task Force-North executed 53 counterdrug support missions in fiscal year (FY) 2017 and 23 missions in FY2018. When the Secretary of Defense approved the four border States' plans for drug interdiction and counterdrug activities, DoD committed $21 million in funds in FY2017 and $53 million in FY2018. ", "Congress has also permitted DOD special flexibility for undertaking military construction projects during periods of national crisis, such as when the President declares a national emergency. (The National Emergencies Act, or NEA, establishes procedures for how a President may declare a national emergency but does not explicitly define that term. ) Historically, emergency military construction has been used to support troops engaged in contingency operations overseas at locations that include Iraq and Afghanistan. "], "subsections": [{"section_title": "DOD Funding Available Without a Declaration of a National Emergency", "paragraphs": ["The Administration's plan would tap funds for border barriers using both statutory military construction authorities and non-statutory general transfer authorities. This section provides an overview of those available to the Administration (both invoked and not invoked). Later sections examine the Administration's use of specific authorities in depth."], "subsections": [{"section_title": "Statutes Permitting Military Construction", "paragraphs": ["Statutes that would authorize DOD to undertake military construction activities along the border but that would not require a Presidential declaration of a national emergency include the items below. ", "The Administration has invoked:", "10 U . S . C . 284 Support for counterdrug activities and activities to counter transnational organized crime . Upon request by qualifying entities, this statute authorizes DOD to reprogram funds to construct roads, fences, and lighting along international drug smuggling corridors in order to support law domestic (and foreign) law enforcement. The Department's activities are funded from a central transfer account called the Drug Interdiction and Counter-D rug Activities , which also receives direct annual appropriations. ", "The Administration has not invoked: ", "10 U . S . C . 2803 Emergency construction . This statute authorizes the Secretary of Defense, under conditions the Secretary determines to be vital to the national security or the protection of health, safety, or environmental quality, to obligate $50 million for military construction projects not otherwise authorized by law. This authority was not included in the Administration's Border security factsheet plan for wall funding."], "subsections": []}, {"section_title": "General and Special Transfer Authorities (Section 8005 and Section 9002)", "paragraphs": ["The Administration's use of the statute 10 U.S.C. 284 is predicated on accessing DOD funds made available by General Transfer Authority (GTA) transfers. GTA (sometimes colloquially referred to as Section 8005 , though the provision number may change ) , refers to the recurring provision in annual defense appropriations acts that set the maximum amount permitted for DOD's base reprogramming actions (usually around $4 billion). Section 9002 is the equivalent designation for war-related, Title IX Overseas Contingency Operations , funds (usually around $2 billion). Congress typically requires that reprogramming be undertaken within a specified timeframe (less than year) and meet the following additional criteria:", "That such authority to transfer may not be used unless for higher priority items, based on unforeseen military requirements, than those for which originally appropriated and in no case where the item for which funds are requested has been denied by the Congress.", "Congress has generally considered reprogramming authority provided to Executive branch departments and agencies to be a privilege. Though the constitution invests Congress with the \"powers of the purse,\" legislators typically provide executive branch agencies some limited flexibility to shift funds among various accounts in recognition of a complex budget execution process wherein estimated costs often vary based on unforeseen events. Such flexibility allows agencies to accommodate changing circumstances, while continuing to carry out the essential functions for the programs and activities for which funds have been provided.", "Congress can grant reprogramming and transfer authorities in a variety of forms. They may be statutory or non-statutory. Congress may establish a central transfer account for a special purpose, or alternately, apply a broader criteria that describe which funds may be exchanged, and in what specific circumstances. Historically, Congress has consistently provided some limit to the total amount of funds that may be used."], "subsections": []}]}, {"section_title": "DOD Funding Available With a Declaration of a National Emergency", "paragraphs": ["With the declaration of a national emergency, the President may invoke statutory authorities that allow DOD to fund military construction projects that support the national response. These authorities generally last only as long as the emergency is in effect (expiring immediately or within 180 days of termination). They include DOD military and civil works funds.", "In his February 2019 proclamation, the President invoked: ", "10 U.S.C. 2808 Construction authority in the event of a declaration of war or national emergency . This broad authority permits the Secretary of Defense to undertake military construction projects not otherwise authorized by law that may be necessary to support the use of the Armed Forces after the declaration of a national emergency . New projects are funded from the unobligated balances of existing ones, with no other upper limit on the overall total.", "In his February 2019 proclamation, the President did not invoke:", "33 U.S.C . 2293 Reprogramming during national emergencies . This statute permits the Secretary of the Army in the event of a declaration of war or a declaration of a national emergency that requires or may require use of the Armed Forces to terminate or defer Army civil works projects that the Secretary deems are nonessential to national defense, and apply the resources of the Department's civil works program to, \"authorized civil works, military construction, and civil defense projects that are essential to the national defense.\"", " Figure 2 summarizes the main points of each of the statutes listed above as they pertain to the use of military construction. "], "subsections": []}]}, {"section_title": "Use of Authorities to Fund Border Barrier Construction", "paragraphs": ["The following two subsections contain a detailed examination of DOD's proposed use of statutory and non-statutory authorities espoused in the Trump Administration border security factsheet . These include: 10 U.S.C. 2808, which would make $3.6 billion available, and; 10 U.S.C. 284, which would transfer $2.5 billion of defense program savings in concert with the non-statutory authority Section 8005 (General Transfer Authority). The final subsection addresses the use of Treasury Forfeiture Funds, which would provide $601 million for the Administration's border funding plan."], "subsections": [{"section_title": "10 U.S.C. 2808: Military Projects Deferred by Emergency Statute", "paragraphs": [], "subsections": [{"section_title": "Overview", "paragraphs": ["When the President declares a national emergency requiring the use of the Armed Forces and invokes the emergency statute 10 U.S.C. 2808, the Secretary of Defense is permitted to undertake military construction projects \"not otherwise authorized by law that are necessary to support such use of the armed forces.\" Such projects are funded using the unobligated appropriations of construction projects currently underway\u00e2\u0080\u0094 effectively deferring them until Congress provides replenishing appropriations. ", "On February 15, 2019, President Trump issued Proclamation 9844, Declaring a National Emergency Concerning the Southern Border of the United States , to address what he described as a long-standing and worsening problem of large-scale, unlawful migration through the southern border. The Proclamation asserted that the severity of the crisis justified use of the Armed Forces, and invoked 10 U.S.C. 2808, thus unlocking emergency construction authority.", "On September 3, 2019, the Secretary of Defense determined that 11 construction projects requested by DHS were necessary to support the use of the Armed Forces along the southern border, pursuant to 10 U.S.C. 2808.", "In a memorandum to the Department, the Secretary directed the DOD Comptroller to transfer $3.6 billion in unobligated military construction appropriations for the new construction, and urged the Secretary of Army to begin work expeditiously. The transfers indefinitely deferred 127 previously authorized military construction projects, roughly half of which were at overseas locations ($1.8 billion for 64 non-U.S. projects).", "Of the deferred military construction projects outside the United States, approximately 42% ($772 million; 21 projects) would have supported the European Deterrence Initiative (EDI), a program intended to increase the capability of U.S. forces in Europe against non-NATO regional adversaries. In public remarks to the media on September 5, 2019, Secretary of Defense Mark Esper suggested allies reimburse the United States for the funding shortfalls.", "Of deferred military construction projects within the United States (and associated territories), the largest share of funds would come from Puerto Rico ($403 million, or 23% of total) and, to a lesser extent, Guam ($257 million, or 15% of the total). ", "The Table 2 summarizes the total amount of deferred funds, grouped by U.S. State or affiliated territory.", "DOD has stated that it would make funds available to the Department of the Army for border barrier projects by prioritizing the deferral of $1.8 billion in non-U.S. projects . Funds associated with projects in the United States ($1.8 billion) would be made available at some later date. ", "DOD's action has attracted warnings from Members of Congress concerned over military construction projects that may be affected in their states and districts. Critics have also expressed concerns that the President's use of emergency powers could circumvent (or be perceived as circumventing) the congressional appropriations process. "], "subsections": []}, {"section_title": "DOD Imposed Non-Statutory Selection Criteria to Identify Project Funds as Sources for Potential Reprogramming", "paragraphs": ["DOD developed internal criteria not required by 10 U.S.C. 2808 that narrowed the pool of military construction projects eligible for deferment under the Administration's use of that statute. ", "In testimony before the Subcommittee on Military Construction, Veterans Affairs, and Related Agencies in February 2019, Assistant Secretary of Defense for Sustainment Robert McMahon explained the Department's reasoning for the additional guidelines:", "In order to protect military readiness, the projects that are most likely to be temporarily delayed include those that pose no or minimal operational or readiness risks if deferred, projects that were already scheduled to be awarded in the last six months of the fiscal year, and recapitalization projects of existing facilities that can be temporarily deferred for a period of months.", "The Department's internal criteria narrowed the scope of the project funding pool by applying the following selection criteria:", "No military construction projects would be considered that have already received a contract award; No military construction projects with FY2019 award dates would be considered; and No military housing, barracks, or dormitory projects would be considered.", "In official statements, DOD has said that if its FY2020 budget request for military construction is approved by Congress, it will use the funds provided to replenish funding for projects deferred in favor of newly funded border barrier construction.", "If the Department's FY2020 budget is enacted on time as requested, no military construction project used to source section 2808 projects would be delayed or cancelled.", "Nevertheless, projects deferred by use of the statute effectively remain underfunded (or unfunded) unless Congress enacts additional amounts to replenish the original appropriations. DOD has requested $3.6 billion in additional Army military construction funds as part of its FY2020 budget submission for this purpose. Congressional opponents have argued against replenishment and asserted that DOD transfers would be tantamount to cancelling\u00e2\u0080\u0094not deferring\u00e2\u0080\u0094 affected projects."], "subsections": []}, {"section_title": "DOD's Emergency Decision-making May Have Deviated from Precedent", "paragraphs": ["The current DOD decisionmaking process for construction in the event of a declaration national emergency appears to differ from the one described in the Department's Financial Management Regulation (FMR) and associated internal directives. The current process appears to have been driven by DHS requests, not generated internally by Military Departments in conjunction with Combatant Commanders (COCOMs)."], "subsections": [{"section_title": "DOD's Internal Process on Use of 10 U.S.C. 2808 Remains Unclear", "paragraphs": ["Though DOD has not fully disclosed internal deliberations related to its 10 U.S.C. 2808 funding decisions, an approximate chronology of events has emerged from court records, media reporting and official briefings. (See Appendix A for detailed chronology.)", "On February 18, 2019, then-Acting Secretary of Defense Patrick Shanahan requested DHS provide a prioritized list of construction projects that, according to its assessment, would improve the operational effectiveness of troops deployed to the border. DHS responded on March 20, 2019 with a prioritized list that included $5 billion in projects along 220 miles of both public and private U.S.-Mexico borderland.", "On April 11, 2019, then-Acting Secretary of Defense Shanahan directed the Chairman of the Joint Chiefs of Staff to provide a detailed evaluation of the DHS proposal by May 10th, 2019 and assess how the DHS-requested projects might support the mobilization of the Armed Forces to the southern border. Concurrently, the Acting Secretary instructed the DOD Comptroller and others to identify $3.6 billion in unobligated balances from existing military construction projects that might serve as a source of funding for border barriers. ", "On May 6, 2019, the Chairman of the Joint Chiefs of Staff submitted his final report, Assessment of Whether the Construction of Barriers at the Southern Border is Necessary to Support the Use of Armed Forces in Securing the Border , which concluded that all DHS-identified construction projects were necessary to support the use of the Armed Forces. The report's methodology was based, in part, on the assumption that any construction along the border would provide necessary support, wherever troops may (or may not) be deployed:", "In general, construction projects in one sector of the border have ripple effects across all other sectors. This recognition drives our conclusion that any border barrier construction supports the use of the armed forces on the border to some extent, regardless of where the construction occurs relative to the current location of DoD operations.", "On August 21, 2019, Kenneth Rapuano, Assistant Secretary of Defense, Homeland Defense & Global Security (ASD/HDGS), recommended the Secretary of Defense adopt an action plan that would execute 11 DHS identified projects and defer $3.6 billion in existing military construction. The Secretary of Defense approved all these recommendations on September 3, 2019."], "subsections": []}, {"section_title": "DOD Directives on Use of 10 U.S.C. 2808 Describe a Process that Originates with Combatant Commanders", "paragraphs": ["Historically, DOD has used 10 U.S.C. 2808 to fund projects at overseas locations for war related infrastructure. Requests for emergency construction projects originate with the Secretaries of the Military Departments and COCOMs, who together make a preliminary assessment on whether use of 10 U.S.C. 2808 authorities is warranted. For each emergency project, officials must provide detailed justification materials that analyze possible alternatives to use of the emergency authority, give a history of the request and rationale for why the project may not be deferred, and submit a cost estimate and timeline for completion. The Chairman of the Joint Chiefs of Staff (CJCS) is then required to certify any proposed projects are consistent with current theater basing plans and do not conflict with other operational priorities. ", "Having made these determinations, the Secretaries then forward their list of proposed emergency projects and detailed justification materials to the Under Secretary of Defense for Acquisition and Sustainment, or ASD (Sustainment). That office, in turn, provides the Secretary of Defense with its recommendations. ", "The Secretary makes a final decision on projects to be undertaken and notifies all appropriate defense committees of the pending action, as required by statute. Following this notification, the Office of the Under Secretary of Defense (Comptroller) (OUSD(C)) is permitted to issue funds for execution."], "subsections": []}]}]}, {"section_title": "10 U.S.C. 284: DOD Transferred Funds Over Congressional Objections in Contravention of DOD Directives", "paragraphs": [], "subsections": [{"section_title": "Overview", "paragraphs": ["To execute the plan described by the Administration's border security factsheet, DOD reprogrammed $2.5 billion from a variety of nondrug defense programs, through the Department's Drug Interdiction and Counterdrug Activities, and on to the U.S. Army Corps of Engineers, the federal agency that both DHS and DOD have asked to manage border barrier construction activities.", "This two-stage process\u00e2\u0080\u0094transferring funds into and out of the defense Drug Interdiction account\u00e2\u0080\u0094was permitted by multiple authorities: first by Section 8005 General Transfer Authority and Section 9002 Special Transfer Authority, and in the final stage by the statute 10 U.S.C. 284.", "By transferring funds from nondrug programs into the defense Drug Interdiction account, DOD was able to tap a larger pool of appropriations than might otherwise have been available by using the account's own funds. At the same time, the Drug Interdiction account's ongoing programs were safeguarded from diminishing transfers. DOD officials have stated they would not tap the account's own appropriations for wall-related projects:", "DOD will not use any DoD counter-narcotics funding for the drug-demand-reduction program, the National Guard counter-drug program, or the National Guard counter-drug schools program to provided support to DHS under 10 U.S.C. 284(b)(7).", "To accomplish the first stage of the $2.5 billion transfer process\u00e2\u0080\u0094transferring savings from nondrug programs to the defense Drug Interdiction account\u00e2\u0080\u0094DOD did not comply with internal regulations that require the Department to first seek congressional prior approval for general transfer authority (Section 8005) actions. ", "DOD's process for submitting prior-approval requests to congressional defense committees is a non-statutory requirement intended to preserve comity with legislators who set the Department's reprogramming thresholds each year. Disapproval by any one of the four committees terminates further action, according to DOD regulations, though the Department may request reconsideration or submit a modified request.", "On March 25, 2019, the Department notified the four congressional defense committees of its plan to transfer $1 billion, the first of several reprogramming actions. The House Armed Services and House Committee on Appropriations immediately denied the request. DOD nevertheless completed its transfer on March 26, 2019, for the first time overriding congressional disapprovals. The Department followed up with an additional reprogramming action of $1.5 billion, which it completed on May 9, 2019.", "How DOD Transferred $2.5 billion in Two Reprogramming Actions", "DOD's first reprogramming action occurred on March 25, 2019, and included $1 billion for construction of high priority projects in Yuma Sector Arizona (Projects 1 and 2) and El Paso Sector Texas (Project 1). All projects were to be managed by the U.S. Army Corps of Engineers. ", "The transfer of funds took place in two stages. In the first stage, the Department used General Transfer Authority (also known as Section 8005 authority) to shift $1 billion in Army military personnel program savings into the defense Drug Interdiction account. The funds consisted of:", "$812 million (81%) in excess appropriations due to a shortfall of 9,500 personnel from the Army's targeted end strength, and $188 million (19%) in program savings from several military benefits programs.", "In the second stage of the transfer action, the Department invoked 10 U.S.C. 284 to authorize moving the $1 billion into an Army Operation and Maintenance appropriation for use by the Army Corps of Engineers, which is responsible for managing all DOD approved border barrier projects.", "On May 9, 2019, DOD notified congressional defense committees of a second reprogramming action of $1.5 billion for four additional border barrier projects (El Centro California Project 1 and Tucson Sector Arizona Projects 1-3; see Appendix Table B-2 for complete list). Unlike the first action, the Department transferred both base and OCO funds: ", "Base: $818.5 million (55%) drawn from a variety of accounts, including research and development technologies to reduce the U.S. chemical stockpile ($252 million), recovered savings related to lower than expected contributions to the Thrift Savings Plan retirement ($224 million), and the cancellation of a National Security Space Launch mission ($210 million). Overseas Contingency Operations: $681.5 million (approximately 45%) drawn from funding for training of Afghan security forces and reimbursement to Pakistan for logistics support.", "Base and OCO reprogramming authorities are derived from separate provisions with nearly identical legislative language; for base Section 8005 of P.L. 115-245 and Section 1001 of P.L. 115-232 ; and for OCO Section 9002 of PL. 115-245 and Section 1512 of P.L. 115-232."], "subsections": []}]}, {"section_title": "DOD Has Undertaken Six Border Barrier Projects Requested by DHS Under 10 U.S.C. 284", "paragraphs": ["On February 25, 2019, DHS requested that DOD undertake 11 construction projects on the U.S.-Mexico southwest border in California, Arizona, and New Mexico. The projects involved construction or replacement of roads, lighting, and vehicle and pedestrian fencing along drug smuggling corridors that were also areas of high illegal entry. DHS stated the purpose:", "To support DHS's action under Section 102 of IIRIRA, DHS is requesting that DoD, pursuant to its authority under 10 U.S.C. \u00c2\u00a7 284(b)(7), assist with the construction of fences roads, and lighting within the Project Areas to block drug-smuggling corridors across the international boundary between the United States and Mexico. ", "DOD initially agreed to fund seven of the 11 projects in multiple funding tranches (described above). The Defense Department subsequently cancelled one of these projects (Yuma Sector Project 2), which was later funded using the emergency authority 10 U.S.C. 2808. All the projects were to be managed by the U.S. Army Corps of Engineers (USACE).", "DOD's first reprogramming funding tranche of $1 billion supported: Yuma Sector Arizona Projects 1 and 2, and El Paso Sector Texas Project 1. DOD's second funding tranche of $1.5 billion supported: El Centro California Project 1 and Tucson Sector Arizona Projects 1-3."], "subsections": [{"section_title": "Court Challenges Delayed Project Execution While Funds Expire September 30, 2019", "paragraphs": ["As of September 2019, DOD has obligated $1.9 billion of the $2.5 billion it reprogrammed for wall related construction under 10 U.S.C. 284. Until recently, operations were suspended due to multiple court injunctions in a legal case challenging DOD's reprogramming actions, Sierra Club v. Trump . The delays incurred additional costs as contractors that had received contract awards were compelled to idle their equipment and put laborers on standby. On July 26, 2019, the U.S. Supreme Court lifted all injunctions in the case, allowing construction to once again proceed. Nevertheless, the litigation remains unresolved. In the case of an unfavorable ruling, the government has suggested that it may be required to take down the new construction.", "DOD is under some pressure to complete the obligation of reprogrammed appropriations before funds are no longer available. Due to legislative language regarding the period of availability of transferred appropriations, all unobligated amounts expire at the end of the current fiscal year, on September 30, 2019, thus incentivizing quick action. Additionally, due to the complex funding structure of contracts under consideration, USACE requires some actions be taken within 100 days of the award date, according to Army officials:", "\u00e2\u0080\u00a6contracts require definitization not later than 100 days from the date of contract award\u00e2\u0080\u00a6If the Corps does not have sufficient time available prior to September 30, 2019, to definitize these contracts and thereby obligate the balance of the contract price, the remaining unobligated funds will become unavailable for obligation\u00e2\u0080\u00a6As a consequence, the Corps will be unable to complete the projects as planned, and the contracts will have to be significantly de-scoped or terminated."], "subsections": []}]}, {"section_title": "Treasury Forfeiture Funds (TFF) Available", "paragraphs": ["Established in 1992 for the purpose of managing cash and other resources seized as the result of civil or criminal asset forfeiture, the Treasury Forfeiture Funds (TFF) functions as a multi-Departmental source of funding for law enforcement interests of the Departments of the Treasury and Homeland Security. With executive authority to define what fits within this broadly defined purpose, the Administration determined that it could be a source of wall funding.", "The TFF is managed by the Treasury Executive Office of Asset Forfeiture (TEOAF), which makes budget authority available to other federal agencies or bureaus via interagency agreements, reimbursing them upon the receipt of spending invoices. Payments are limited by the total value of seized property. TEOAF's mission statement is:", "To affirmatively influence the consistent and strategic use of asset forfeiture by law enforcement bureaus that participate in the Treasury Forfeiture Fund (the Fund) to disrupt and dismantle criminal enterprises.", "On February 15, 2019, the Treasury Department notified congressional appropriators that it had approved a DHS request (submitted in December 2018) to provide a total of $601 million in TFF to the CBP for border security purposes. The first tranche of $242 million was made available to CBP for obligation on March 14, 2019. The second tranche of $359 million is expected to be made available at a later date, upon Treasury's receipt of additional anticipated forfeitures. All funds the TFF provides to U.S. Customs and Border Protection (CBP) may be used for various aspects of border security \u00e2\u0080\u0093not only the construction of a physical wall. "], "subsections": []}]}, {"section_title": "Congressional Actions", "paragraphs": ["Congressional response to the Administration's b order security factsheet plan has generally split by chamber, with the House Armed Services and Appropriations committees moving swiftly to pass legislative language that would block the President's actions and the Senate Armed Services and Appropriations committees expressing some support. ", "In late July 2019, news outlets reported congressional leadership had come to an informal understanding as part of a settlement of the annual budget caps for FY2020 and FY2021 that might exclude legislative language restricting the use of federal funds for border barriers from annual appropriations measures. The deal would specifically prohibit legislative provisions limiting the use of transfer authority\u00e2\u0080\u0094a key part of the President's Border security factsheet plan\u00e2\u0080\u0094unless such language was adopted on a bipartisan basis. The effect of such language is still unclear as is how it may otherwise be used to modify ongoing legislative activity."], "subsections": [{"section_title": "House Authorization", "paragraphs": ["The House-passed version of the FY2020 National Defense Authorization Act ( H.R. 2500 ) contains a number of provisions that if enacted would limit or prohibit the use of DOD funds for construction of border barriers. Furthermore, it provides no funding for the Administration's request for replenishment of defunded projects or for related future projects. The bill targets each stage of the Administration's funding plan:", "Transfer Authority . Section 1001 would sharply curtail the total amount of base funds that may be used for reprogrammed, reducing the limit to $1 billion (from $4.5 billion in FY2019). Section 151 2, the equivalent transfer authority used for war-related funds, would be reduced to $500 million (from $3.5 billion in FY2019). 10 U.S.C. 284 . Section 1011 would remove fence construction as a permitted type of support authorized under 10 U.S.C. 284 and would impose additional congressional notification requirements associated with use of the statutory authority. 10 U.S.C. 2808 . Section 2802 would limit the total amount of funds that could be used under 10 U.S.C. 2808 emergency authorities to $500 million if used for construction \"outside the United States,\" or $100 million if used for domestic construction projects. (Currently, transfers are only limited to the total amount of all unobligated military construction appropriations.) These changes would apply only to projects pursuant to a declared emergency and would not impact projects that support a declared war. General Prohibition . Section 1046 would prohibit the use of national defense funds appropriated between FY2015-FY2020 for the construction of any type of physical border barrier along the southern border. Section 2801 contains identical language that applies to military construction funds.", "On May 15, 2019, a group of legislators led by House Armed Services Committee members introduced H.R. 2762 , a bill that would modify 10 U.S.C. 2808 by imposing a $250 million cap on the total amount that could be used for emergency military construction projects in the event of a national emergency. Additionally, \"The bill would only allow money that cannot be spent for its intended purpose to be used for an emergency, would require additional information in a congressional notification, and delay the start of construction until after a waiting period following the notification going to Congress.\""], "subsections": []}, {"section_title": "Senate Authorizations", "paragraphs": ["The Senate passed version of the FY2020 National Defense Authorization Act ( S. 1790 ) would support the actions described in the President's Border security factsheet plan by providing $3.6 billion in military construction funds to replenish projects deferred by the Administration's use of 10 U.S.C. 2808 and avoiding large cuts to DOD reprogramming thresholds. However, the Senate bill would not authorize the additional $3.6 billion requested by the Administration for future border barrier projects.", "Transfer Authority . Section 1001 and Section 1522 provide $4 billion in general transfer authority\u00e2\u0080\u0094 a decrease of $0.5 billion from FY2019 authorized amounts\u00e2\u0080\u0094 and $2.5 billion in special transfer authority\u00e2\u0080\u0094 a decrease of $1 billion from FY2019 authorized amounts, respectively. 10 U.S.C. 2808 Replenishment funding. Section 2906 would provide $3.6 billion to replenish military construction projects affected by the use of 10 U.S.C. 2808 transfers, fulfilling the Administration's entire request for that purpose. Authorization for the transfer of these funds into the depleted accounts would terminate at the end of FY2020 (September 30, 2020)."], "subsections": []}, {"section_title": "House Appropriations", "paragraphs": ["The House has generally sought to limit the Administration's funding actions across multiple appropriations bills. In the first of two FY2020 appropriations minibus measures, the Labor, Health and Human Services, Education, Defense, State, Foreign Operations, and Energy and Water Development Appropriations Act, 2020 ( H.R. 2740 ), Division C (Department of Defense Appropriations, H.R. 2968 ) and Division E (Energy And Water Development And Related Agencies Appropriations Act, 2020, H.R. 2960 ) contained the following provisions that would affect the Administration's plan for funding border barrier construction:", "Transfer Authority. Section 8005 would limit general transfer authority of base funds to $1 billion (a reduction from $4 billion in FY2019 ) and require the Secretary of Defense and others to certify the transferred funds will be used for higher priority items. The Section 9002 special transfer authority for war funds would provide authority to transfer up to $500 million (a reduction from $2 billion in FY2019). 10 U.S.C. 284 . Though the legislation would provide $816.8 million for Drug Interdiction and Counterdrug Activities transfer account (for use under 10 U.S.C. 284), the bill prohibits use of any of those funds for construction of border barrier fencing, and further prohibits any transfer of these funds. General Prohibition. Section 8127 would broadly prohibit defense appropriations from being used for construction of a wall, fence, border barrier, or border security infrastructure along the southern border. U.S. Army Corps of Engineers. Section 108 of Division E would broadly prohibit USACE from using any civil works funds for border barrier construction:", "Notwithstanding any other provision of law, none of the funds made available by this Act or any other prior appropriations Acts for the Civil Works Program of the United States Corps of Engineers may be committed, obligated, expended, or otherwise used to design or construct a wall, fence, border barriers, or border security infrastructure along the southern border of the United States.", "The House passed the second of two FY2019 appropriations mini-buses, H.R. 3055 on June 25, 2019. It contains a number of limiting restrictions in Division D (Military Construction, Veterans Affairs, and Related Agencies Appropriations Act, 2020) that would interrupt the Administration's plans for funding border barriers. ", "Reprogramming Guidelines. Section 122 would require DOD to follow its own guidelines when reprogramming military construction funds, a directive that would make significant transfers contingent on congressional prior-approval. In committee language, the House cautioned DOD that \"reprogramming is a courtesy provided to DOD and can be taken away if the authority is abused\" and urged the Department to adhere to its own directives when seeking to reprogram funds. General Prohibition on Transfers. In committee language, the House underscored the absence of wall funding in the current appropriations language and its efforts to preserve previously appropriated projects from becoming a pool of funds for the Administration's efforts to construct border barriers.", "The Committee recommendation does not provide these requested funds. Also, the accompanying bill includes language that protects previously appropriated projects, as well as fiscal year 2020 projects included in this bill from being used as a source for wall funding.", "Prohibition on Design and Construction. Section 612 would prohibit the use of military construction appropriations provided in any act from FY2015-FY2020 to be used for the purpose of designing or constructing border barriers or access roads along the southern border. The provision uses the strongest possible legislative language by stating it would apply, \"notwithstanding any other provision of law.\"", "The House-passed Financial Services and General Government Appropriations Act, 2020 ( H.R. 3351 ) contains a provision (Section 126) that would bar the Administration's use of Treasury Forfeiture Funds for planning, designing, or executing any kind of barrier or road along the southwest border. If enacted, this language would likely prevent the use of $601 million funds approved by the Treasury Department for these purposes."], "subsections": []}, {"section_title": "Senate Appropriations", "paragraphs": ["On September 12, 2019, the Senate Committee on Appropriations reported the Defense Appropriations Act, 2020 ( S. 2474 , S.Rept. 116-103 ), which would retain transfer authorities at FY2019 levels ($4 billion for General Transfer Authority, or Section 8005; $2 billion for OCO related transfers) and contained no additional wall-related provisions. "], "subsections": []}]}, {"section_title": "Issues for Congress", "paragraphs": [], "subsections": [{"section_title": "Separation of Powers", "paragraphs": ["At the highest level, the President's statements regarding the use of emergency powers to supplement the congressional appropriations process have raised questions for some about the reach of the executive branch's lawful authority. ", "\"I could do the wall over a longer period of time. I didn't need to do this [national emergency]. But I would rather do it much faster.\" \u00e2\u0080\u0093 President Trump, February 15, 2019", "Critics also assert the President's actions risk violating the constitutional separation of powers. Article I, Section 9 of the U.S. Constitution states, \"No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by law.\" Supporters have argued the President has lawfully reallocated funds to address a national crisis. ", "On June 3, 2019, in a lawsuit brought by the House of Representatives that argued the Administration's actions to fund a border wall represented a breach of the Appropriations Clause of the Constitution, a federal judge ruled the legislature had no standing to sue.", "In the 116 th Congress, House authorizers and appropriators have inserted provisions into annual legislation that would broadly prohibit the use of defense funds for construction of a wall, fence, border barrier, or other security infrastructure along the southern border. Some of these prohibitions would appear to apply retroactively to all appropriations since FY2015."], "subsections": []}, {"section_title": "Section 8005 (and Related) Reprogramming Guidelines", "paragraphs": ["DOD's recent decision to undertake general and special reprogramming transfers (in conjunction with 10 U.S.C. 284), \"without regard to comity-based DOD policies that prescribe prior approval from congressional committees\" has introduced uncertainty into a historically uncontroversial process. For some, DOD's disregard for long-standing reprogramming agreements with congressional defense committees has signaled a challenge to the legislative branch's ability to conduct oversight of approximately $6 billion in annual defense appropriations. Consequently, the Department's actions have generated new congressional interest and actions (particularly in the House) that would sharply limit the annual budget flexibility provided to the Department in authorizations and appropriations acts.", "Others view DOD's recent reprogramming notifications in support of border wall construction as a justifiable anomaly in an otherwise unbroken agreement supported by the Department's own internal directives.", "In cases where DOD reprogramming actions do not reflect congressional intent (or adhere to DOD directives), Congress may consider what legislative recourse might be available to prohibit future violations. In some cases, decreasing the Department's budgetary flexibility may potentially undermine DOD's ability to effectively execute congressionally directed policies and programs."], "subsections": []}, {"section_title": "DOD's Emergency Military Construction Selection Criteria", "paragraphs": ["The emergency Military Construction statute (10 U.S.C. 2808) does not limit the types of military construction projects that may be deferred based on a set of criteria, including, for example, whether such delays will affect military readiness. Nevertheless, DOD has stated it will apply its own criteria to the 10 U.S.C. 2808 pool of eligible projects in order to preserve readiness. Congress may evaluate whether DOD's guidelines are sufficient and whether they serve as a sound basis for governing future decisions. ", "Appendix A. Selected Communications and Documents", "The tables below contains a chronology of selected communications, correspondence, and documents relevant to the use of 10 U.S.C. Section 2808 and Section 284, drawn primarily from court records. This section is intended to identify milestones in the decision-making process.", "Appendix B. 10 U.S.C. 284 Reprogramming Requests", "DOD has submitted two reprogramming notifications to defense committees transferring a total of $2.5 billion to the Drug Interdiction and Counterdrug Activities account. ", "The Department's first action, on March 25, 2019, used general transfer authority to reallocate $1 billion. Approximately 82% of this total was taken from the active duty army pay and allowances (for officers and enlisted personnel), savings realized from service recruiting shortfalls.", "DOD's second action, on May 9, 2019, used a mix of $818.465 million in general transfer authority (base) and $881.535 in special transfer authority (OCO); a total of $2.5 billion.", "In the table below, reprogramming actions that use special transfer authority are indicated parenthetically with the (OCO) designation. ", "Together, both reprograming actions reallocated $1.8 billion from base and $.7 billion from OCO defense funds. The majority of these funds were derived from Army personnel accounts and programs supporting the Afghanistan Security Forces. ", "The Department's two actions were sourced exclusively from appropriations that began in FY2019 and had a one- to three-year lifespan, or period of availability . ", "When these program savings were transferred to the Drug Interdiction and Counter-drug activities FY2019 appropriations, they became one-year appropriations. Following additional transfer actions, all appropriations were merged with an FY2019 Army Operations and Maintenance appropriations account, another one-year account.", "Appendix C. Wall Projects Requested by DHS Pursuant to 10 U.S.C. 284", "On February 25, 2019, DHS formally requested DOD support its ability to impede and deny illegal entry and drug smuggling activities along the southwest U.S.-Mexico border by assisting with the construction (or replacement) of fences, roads, and lighting. DHS summarized the work required:", "The new pedestrian fencing includes a Linear Ground Detection System, which is intended to, among other functions, alert Border Patrol agents when individuals attempt to damage, destroy or otherwise harm the barrier. The road construction includes the construction of new roads and the improvement of existing roads. The lighting that is requested has an imbedded camera that works in conjunction with the pedestrian fence. The lighting must be supported by grid power\u00e2\u0080\u00a6. DHS will provide DoD with more precise technical specifications as contract and project planning moves forward. ", "DHS requested DOD undertake a total of 11 projects on federal lands, which the agency identified by geographic location and unique numeric id. The Border Patrol divides responsibility for its operations along the Southwest border into nine geographic sectors. Four of these were included as part of the DHS request:", "Yuma Sector Arizona. Composed primarily of desert terrain with vast deserts, mountain ranges, and sand dunes, the area encompasses 126 miles of U.S.-Mexico borderland (181,670 square miles) between California and Arizona. DHS requested DOD undertake 36 miles of vehicle barrier replacement, 6 miles of pedestrian fencing, and lighting in this sector. El Paso Sector Texas. This sector covers the entire state of New Mexico and two counties in western Texas; 268 miles of U.S.-Mexico borderland (125,500 square miles). DHS requested 70 miles of vehicle barrier (with pedestrian fencing) and lighting in this sector. El Centro California . Located in Southern California, the sector is characterized primarily by agricultural lands, eastern desert areas (where summer temperatures can exceed 120 degrees), and western mountain ranges. The sector stretches for 71 miles along the U.S.-Mexico border. DHS requested DOD undertake a mix of projects along 15 miles in this sector (vehicle, pedestrian, and lighting). Tucson Sector Arizona. Encompassing nearly all of Arizona, this area\u00e2\u0080\u0094a particularly active one for illegal alien apprehension and marijuana seizures\u00e2\u0080\u0094covers 262 miles. DHS requested road construction, 86 miles of vehicle barrier (with pedestrian fencing), and lighting in this sector.", "Between March and April 2019, DOD approved seven of the eleven requested projects, funding them in two tranches. One of the approved projects, Yuma 2, was subsequently terminated due to contract complications. ", "In August 2019, DHS notified DOD of anticipated contract savings and requested surplus 10 U.S.C. 284 funds be applied to the execution of three additional projects (Yuma 3-5). After evaluating the request, DOD agreed to undertake a modified set of projects (Yuma 4-5, Tucson 4). In September, the Department terminated the new projects after new estimates revealed the anticipated contract savings would be insufficient to undertake additional construction.", "The list below shows projects initially requested by DHS and those added by DOD in subsequent modified requests. The geographic sector is indicated in the \"Project Name\" column, along with the project's numeric designation. Several projects not funded by the use of 10 U.S.C. 284 funds were later funded by 10 U.S.C. 2808. ", "For those approved for action by DOD, the funding tranche is also indicated. ", "In a letter to Acting DHS Secretary Kirstjen Nielsen, Acting Secretary of Defense Shanahan stated the U.S. Army Corps of Engineers would undertake the planning and construction of approved projects and, upon completion, would hand over custody of all new infrastructure to DHS. ", "Court Injunctions Temporarily Suspended Construction", "On May 24, 2019, the U.S. District Court for the Northern District of California issued a temporary injunction in Sierra Club v. Trump , barring use of DOD's first funding tranche of $1 billion. In compliance with the court's order, USACE immediately suspended ongoing operations for the two active border barrier projects. At the time of the suspension, $423,999,999 remained unobligated (of the original $1 billion):", "El Paso 1: An undefinitzed contract was awarded on April 9, 2019. At the time of the court's injunction, $389,999,999 remained unobligated. Yuma 1: An undefinitized contract was awarded on awarded May 15. At the time of the court's injunction, $35,000,000 remained unobligated. ", "On May 25, 2019, DOD executed a second reprogramming action of $1.5 billion. On June 28, 2019, the California district court issued a second injunction that prohibited DOD from using either of the two funding tranches ($2.5 billion total). Again, USACE project managers suspended ongoing operations.", "At the time of the new suspension, approximately $752,750,000 remained unobligated from the second funding tranche ($1.5 billion):", "Tucson Sector Projects 1-3: An undefinitzed contract was awarded on May 15, 2019. At the time of the court's injunction, $646,000,000 remained unobligated. El Centro Sector Project 1: An undefinitzed contract was awarded on May 15, 2019. At the time of the court's injunction, $106,750,000 remained unobligated.", "Project delays have resulted in some additional costs to the government. DOD financial regulations recognize contractors are entitled to compensation for unreasonable contract suspensions, since costs continue to be incurred by idling equipment, site security, contract labor, material storage, or market fluctuations. The government is charged additional penalties for late payment (3.625% per annum). In the event an active contract is terminated, DOD would be held responsible for compensating contractors for sunk costs.", "On July 26, 2019, the U.S. Supreme Court lifted the lower court injunctions, allowing construction to proceed.", "Appendix D. Wall Projects Requested by DHS Pursuant to 10 U.S.C. 2808", "On September 3, 2019, the Secretary of Defense, having determined that border barrier construction would serve as a \"force multiplier\" for reducing DHS's demand for DOD personnel and assets, directed the Acting Secretary of the Army to proceed with the construction of 11 border barrier projects. In a memorandum to the Department, the Secretary stated:", "Based on analysis and advice from the Chairman of the Joint Chiefs of Staff and input from the Commander. U.S. Army Corps of Engineers, the Department of Homeland Security (DHS), and the Department of the Interior and pursuant to the authority granted to me in Section 2808, I have determined that 11 military construction projects along the international border with Mexico with an estimated total cost of $3.6 billion, are necessary to support the use of the armed forces in connection with the national emergency. These projects will deter illegal entry, increase the vanishing time of those illegally crossing the border, and channel migrants to ports of entry. They will reduce the demand for DoD personnel and assets at the locations where the barriers are constructed and allow the redeployment of DoD personnel and assets to other high-traffic areas on the border without barriers. In short, these barriers will allow DoD to provide support to DHS more efficiently and effectively. In this respect, the contemplated construction projects are force multipliers. ", "Of the eleven projects DOD selected for execution, seven were located (in whole or in part) on land under the jurisdiction of the Department of the Interior (DOI) that required an administrative transfer to the Department of Defense before construction could proceed. On September 18, 2019, DOI issued Public Land Orders that temporarily transferred jurisdiction of land required for five of these projects for a period of three years. In the table below, DOI-transferred lands have been indicated with an asterisk (see column marked \"Jurisdiction\"). ", "Two of the eleven projects selected by DOD (El Centro 5 and Laredo 7) were located on non-public lands that will require either purchase or condemnation before construction may proceed. USACE representatives have stated that such a process would not be completed before April 2020. ", "The remaining two projects (Yuma 2 and Yuma 10/27), are located exclusively on the Barry M. Goldwater Range (BMGR), a military installation under the jurisdiction of the U.S. Navy where construction may begin immediately.", "The table below indicates the eleven projects DOD has agreed to fund using 10 U.S.C. 2808 funds, and describes the estimated cost of construction, the jurisdiction of associated lands, and a description of the parcel.", "Appendix E. Military Construction Projects Deferred Pursuant to 10 U.S.C. 2808", "On September 3, 2019, DOD delivered to congressional defense committees a list of ongoing military construction projects the Department had selected for deferral pursuant to 10 U.S.C. 2808. The list had been preceded by two additional notifications that identified potential military construction projects that might be affected by use of the statute. ", "The first of these three lists of military construction projects, delivered to defense committees in March 2019, identified all military construction projects that had not yet received contract awards\u00e2\u0080\u0094making them vulnerable for selection under 10 U.S.C. and the Department's independent internal criteria. A second list, which DOD delivered to defense committees in late May 2019, selectively updated the contract award dates of some military construction projects. The final list, comprised of approximately 127 projects ($3.6 billion), updated the contract award dates for six projects ($209 million) located outside of the United States, making them newly eligible for selection. Additionally, the Department's final list included one planning and design project ($13.6 million) not included in previous notifications. The table below summarizes this final list. "], "subsections": []}]}]}}
{"id": "R46097", "title": "Military Families and Intimate Partner Violence: Background and Issues for Congress", "released_date": "2019-12-04T00:00:00", "summary": ["Intimate partner violence (IPV) is a national public health issue. IPV is also a crime characterized by recidivism and escalation, meaning offenders are likely to be repeat abusers, and the intensity of the abuse or violence is likely to grow over time. Like the broader phenomenon of domestic violence and abuse, a subset of which includes IPV, associated physical and mental trauma for those who are victims of abuse, as well as for those minor children who witness the abuse, can have both immediate and long-term health effects and significant costs to society. When military servicemembers are involved as either victims or perpetrators of IPV, the consequences of IPV can also harm unit readiness.", "Congress has constitutional authority to fund, regulate, and oversee the Armed Forces, including the military justice system. Congress has used this authority in recent years to mandate domestic violence prevention and victim response policies, programs, and services. In addition, Congress has acted to improve accountability measures for military perpetrators through statutory changes to the Uniform Code of Military Justice (UCMJ).", "Within the Department of Defense (DOD), IPV may include domestic violence and domestic abuse. Domestic violence is defined as an offense with legal consequences under the U.S. Code , UCMJ, and State laws, while domestic abuse refers to a pattern of abusive behavior. Within DOD, the Family Advocacy Program (FAP) is responsible for clinical assessment, supportive services, and treatment in response to domestic abuse, child abuse, and neglect in military families. Military responses to incidents of IPV may involve military law enforcement, unit or installation commanders, and military health personnel. In some cases, military and civilian officials may coordinate additional responses to IPV.", "In FY2018, DOD reported 16,912 incidents of spouse and intimate partner abuse (the active servicemember population totals over 1.3 million). Roughly half (8,039) of these incident reports met the criteria for abuse under the DOD definition. Some of these incidents have severe consequences. In FY2018, there were 15 confirmed domestic abuse fatalities involving military personnel as perpetrators or victims; in three of the cases, the victims had reported prior incidents of abuse to FAP personnel.", "Congress has taken numerous actions over the past few decades to address risk factors for IPV among the servicemember population, to raise awareness, to protect victims, and to hold perpetrators accountable. More recently, in the 116 th Congress, lawmakers added a punitive article to the UCMJ specifically for domestic violence offenses (prior offenses had been prosecuted under the punitive article for assault). As Congress continues to consider policy issues related to IPV, areas for continued oversight include community coordination in prevention and response, coverage and access to military-sponsored victim services, the appropriateness of law enforcement response, data collection and federal reporting requirements, and other programs that can help mitigate risk factors for IPV."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["Domestic violence is a term often used to describe abuse of a spouse or child in the home. I ntimate partner violence (IPV) is a subset of domestic violence that is committed against a spouse, or current or former dating partner. IPV is treated as a public health issue and is monitored by the Centers for Disease Control and Prevention (CDC) at the national level. According to the CDC, approximately one in five women and one in seven men report having experienced severe physical violence from an intimate partner in their lifetime. In addition, crime statistics suggest that 16% of all U.S. homicide victims are killed by an intimate partner. Nearly half of female homicide victims are killed by a current or former male intimate partner. IPV criminal offenses are typically defined and prosecuted at the state level; however, federal law imposes penalties on some domestic violence offenders. Military IPV offenders may be prosecuted in civilian courts, but are also subject to punitive measures within the military justice system under Uniform Code of Military Justice (UCMJ) provisions.", "From a military effectiveness perspective, IPV may lead to productivity losses, degraded servicemember or unit readiness, and subsequent costs to the Department of Defense (DOD). When servicemembers are victims, associated mental and physical trauma may affect their ability to deploy or serve in worldwide assignments and can lead to capability gaps in units. In addition, qualified veterans who were victims of IPV may require additional care for co-morbid conditions through the Veterans' Health Administration (VHA). ", "Congress has constitutional authority to fund, regulate, and oversee the Armed Forces, including the military justice system. Congress has used this authority in recent years to mandate domestic violence prevention and victim response policies, programs, and services. As such, there is enduring congressional interest on domestic violence prevention and response, victim well-being, and perpetrator accountability.", "This report starts with an overview of IPV in the Armed Forces, including risk factors, prevalence, and concerns specific to military families and certain subgroups. The next section focuses on DOD prevention activities, including efforts to screen out high-risk individuals, increase awareness, and address relationship stresses before they escalate. This section is followed by a discussion of intervention activities implemented by clinical service providers, military commanders, and other stakeholders. The next section describes actions taken by DOD and the Congress to provide victim support, resources, and advocacy. Following that, the report touches on how military law enforcement organizations respond to and investigate allegations of domestic abuse and how offenders are held accountable under the military justice system. Finally, the report touches on some continuing issues for congressional oversight and action."], "subsections": []}, {"section_title": "Background", "paragraphs": ["Intimate partner violence (IPV) is a crime characterized by recidivism and escalation, meaning offenders are likely to be repeat abusers, and the intensity of the abuse or violence is likely to grow over time. IPV can harm victims in various ways, resulting in physical injury, mental health problems, and adverse pregnancy outcomes (e.g., low birth weight, preterm birth, and neonatal death). Many victims of IPV continue to struggle with stress and anxiety long after incidents occur. For example, national surveys have found that among victims of IPV, 41% of women and 10% of men have experienced symptoms of post-traumatic stress disorder (PTSD). ", "In addition, alleged perpetrators can face decreased productivity at work, loss of income, and incarceration. Domestic violence can also affect the behavior and well-being of subsequent generations. Research has shown that children who grow up in a home where IPV occurs are at higher risk for behavioral, cognitive, and emotional disorders. Relatedly, studies have indicated that perpetrators often have a history of experiencing abuse or witnessing abusive relationships within their families as a children or young adults. ", "Factors unique to military service may exacerbate risks for both perpetrators and victims of IPV. First, servicemembers and their families frequently move for various assignments. This separates individuals from natural support networks, which can heighten stress on intimate partnerships, including those involving caretakers, and lead to social isolation. Whereas a victim of domestic abuse might normally escape a situation by temporarily moving in with a local family member or trusted friend, this option may not be readily available, particularly for those located at overseas or remote installations. Similarly, difficulties in coping with frequent moves and other pressures associated with military service (e.g., a spouse's long hours, shift work, or unpredictable deployments) may contribute to marital conflict and instability (e.g., reunification cycles, separation, or divorce). In addition, frequent household moves may complicate the capacity of nonmilitary spouses to achieve full employment. Lack of financial independence and the threat of lost or reduced military benefits may serve as a disincentive for military spouse victims to seek help in cases of abuse. Finally, prior interpersonal trauma is also indicated as a risk factor for both perpetrators and victims. Some data suggest that women who have experienced abuse in childhood may be more likely to join the military to escape a violent or unstable home environment. ", "At the same time, some factors unique to military service may mitigate IPV incidence. For example, access to health care (TRICARE), stable pay and benefits, and the availability of installation-based family support services may help with financial stability and early intervention for at-risk couples. In addition, military servicemembers who are perpetrators of abuse may face more immediate or severe sanctions for IPV than their civilian counterparts (e.g., reductions in pay, loss of employment, and/or benefits). Military commanders have broad discretion to impose administrative remedies, penalties, or referrals for judicial action for abusers under their command (see section on \" Commander's Authority \"). In this way, military commanders can play an important role in IPV intervention, and in establishing a climate where victims feel safe to report and perpetrators are held accountable. "], "subsections": []}, {"section_title": "DOD Organization and Definitions", "paragraphs": ["Prior to 1980, the military services (Army, Navy, Air Force, and Marine Corps) conducted their own family advocacy programs, primarily under their respective military medical service programs. In response to a 1979 U.S. General Accounting Office (now called the U.S. Government Accountability Office) report that characterized military service family violence prevention programs as inconsistent and understaffed, DOD established the Military Family Resource Center (MFRC) as a three-year demonstration project through a DOD-subsidized grant from the Department of Health and Human Services (HHS). In 1981, Congress first appropriated funds for DOD family violence prevention and between 1981 and 1983, responsibility for total funding of the program transitioned to DOD's sole responsibility. During that time, DOD also published Directive 6400.1, establishing the Family Advocacy Program and an Advocacy Committee with representatives from the services and DOD. Given the success of the MFRC demonstration and DOD's interest in consolidating programs under a single secretariat, DOD transferred MFRC activities to the Office of the Deputy Assistant Secretary of Defense for Force Management and Personnel in August of 1985.", "The Military Family Act of 1985 formally established an Office of Family Policy under the Office of the Secretary of Defense to \"coordinate programs and activities of the military departments to the extent that they relate to military families.\" Congress later amended and codified the act under Chapter 88 of Title 10, U.S. Code , in 1995 as part of the National Defense Authorization Act (NDAA) for Fiscal Year 1996 and renamed the Office of Family Policy as the Office of Military Family Readiness Policy. Currently, this office falls under the purview of the Office of the Under Secretary of Defense (USD) for Personnel and Readiness (P&R). Within USD (P&R), the Deputy Assistant Secretary of Defense for Military Community and Family Policy has oversight responsibility for military family programs, including domestic violence prevention and response. The military services implement domestic violence prevention and response through the Family Advocacy Program (FAP). Military law enforcement activities fall under the purview of USD (P&R) and the Defense Human Resource Activity (DHRA), while central incident databases are housed in the Defense Manpower Data Center (DMDC), also under DHRA."], "subsections": [{"section_title": "Family Advocacy Program (FAP)", "paragraphs": ["Currently, the Family Advocacy Program (FAP) is the designated program within DOD and the services to address \"domestic abuse, child abuse and neglect, and\u00c2\u00a0 problematic sexual behavior \u00c2\u00a0in children and youth\" through prevention, awareness, treatment, and rehabilitation services. The military services implement the FAP. FAP managers also work in coordination with civilian agencies involved in domestic violence response. In 2016, Congress required the FAP to provide an annual report to Congress on child abuse and neglect and domestic abuse in military families. "], "subsections": [{"section_title": "Family Advocacy and Family Assistance Funding", "paragraphs": ["Family advocacy and family assistance programs are funded through annual appropriations as part of the Defense-wide Operation and Maintenance budget for DOD dependents education. DOD-requested FAP funds are directed to each of the military services to implement clinical intervention programs, \"in the areas of domestic abuse, intimate partner violence, child abuse and neglect, and problematic sexual behavior in children and youth.\" FAP funding also supports a DOD hotline for reporting allegations of child abuse, training for domestic violence responders and members of the chain of command, public awareness activities, support for obtaining civilian protection orders, and research on domestic violence prevention. According to DOD budget documents, defense-wide funding for family assistance supports", "programs and outreach services to include, but not limited to: the 1-800 Military OneSource call center; the Military and Family Life Counseling Program; financial outreach and non-medical counseling; Spouse Education and Career Opportunities; child care services; youth programs; morale, welfare and recreation programs and, support to the Guard and Reserve service members, their families, and survivors. Funding supports DoD-wide service delivery contracts to support all Active Duty, Guard, and Reserve Components.", "The total defense-wide funding request for family assistance and family advocacy for FY2020 was $877 million, an increase of 5.5% from the previous year (see Table 1 )."], "subsections": []}, {"section_title": "FAP Personnel and Accreditation", "paragraphs": ["DOD policy requires specific credentialing for those assigned as FAP managers, including a master's or doctoral level degree in the behavioral sciences from an accredited U.S. university or college, state licensure, and certain experience. Service Secretaries are also responsible for establishing criteria for other FAP personnel, and for annual accreditation and certification of installation FAPs. According to DOD, the FAP is supported by over 2,000 government and contracted personnel."], "subsections": []}]}, {"section_title": "Definitions", "paragraphs": ["The CDC uses the term intimate partner violence (IPV) to describe \"physical violence, sexual violence, stalking and psychological aggression (including coercive acts)\" by a current or former spouse or dating partner. DOD often refers to IPV as domestic violence or domestic abuse. Domestic violence is defined as an offense with legal consequences under the U.S. Code , the UCMJ, and state laws, while domestic abuse refers to a pattern of abusive behavior. DOD defines four types of abusive behavior: (1) physical abuse, (2) emotional abuse, (3) sexual abuse, and (4) neglect of spouse (see text box below on \"DOD Definitions of Domestic Abuse and Domestic Violence\").", "Under the DOD definition, a victim of domestic violence may be a current or former spouse, an intimate partner sharing a common domicile, or a person with whom the abuser shares a child. Under the CDC's definition, an intimate partner does not need to share a common domicile or child. DOD's narrower definition of what constitutes IPV correlates to victim and dependents' eligibility for certain benefits or services following an incident of reported abuse (see section below on \" Victim Support and Services \"). Sexual violence involving military personnel in which the offender and victim do not share a domicile, child, or other legal relationship (i.e., spouse or former spouse), is typically handled by DOD's Sexual Assault Prevention and Response (SAPR) program."], "subsections": []}]}, {"section_title": "Incident Data and Reporting", "paragraphs": ["DOD collects data on domestic abuse incidents through the FAP Central Registry, created by in 1994. In 1999, as part of the FY2000 NDAA, Congress explicitly mandated that DOD maintain a centralized database and collect annual reports from the Services on ", "(1) Each domestic violence incident reported to a commander, a law enforcement authority of the armed forces, or a family advocacy program of the Department of Defense.", "(2) The number of those incidents that involve evidence determined sufficient for supporting disciplinary action and for each such incident, a description of the substantiated allegation and the action taken by command authorities in the incident.", "(3) The number of those incidents that involve evidence determined insufficient for supporting disciplinary action and for each such case, a description of the allegation. ", "The military services collect data at the installation level. Each installation's FAP enters data into its respective service registry and then submits reports to the DMDC, which maintains the registry for all of DOD. Data elements include demographic information, individual identifiers (i.e., name and social security number), relationship indicators, incident details (e.g., location and date), and the type and severity of abuse. When an FAP office receives a report of domestic abuse, an incident determination committee (IDC) determines whether the incident \"met criteria\" to be submitted and tracked within the database. Incidents that do not meet the criteria for domestic abuse are also included in the database, but identifiable individual information is not tracked. DOD uses the aggregate data in this registry to produce annual reports to Congress, analyze the scope of abuse and trends, and support budget requests for domestic violence prevention resources. ", "The FAP Central Registry is not the only database that includes domestic violence information involving military servicemembers. DOD also maintains the Defense Incident-Based Reporting System (DIBRS) as a central repository at DMDC for criminal incident-based statistical data. DIBRS includes criminal activity related to domestic abuse, but would typically not capture cases without law enforcement involvement. (See section on \" Crime Reporting to National Databases \" for more detail.) While GAO has highlighted concerns about gaps and overlaps in these two databases (see text box below on \"GAO Reviews of DOD Domestic Violence Data Collection Efforts\"), DOD has resisted consolidating them, stating that", "DIBRS and the Services' FAP Central Registries, from which the DoD Central Registry contains limited data elements, serve fundamentally different purposes: law enforcement and clinical treatment, respectively. [\u00e2\u0080\u00a6] Using the FAP database for law enforcement data collection purposes will significantly degrade the perception of the FAP as a program that provides clinical assistance to troubled families.", "In some cases, the DOD's database for military sexual assault, the defense sexual assault incident database (DSAID) may also capture data on incidents of sexual abuse involving spouses or intimate partners. The prevalence of intimate partner sexual assault or stalking of servicemember victims may also be captured in DOD's annual workforce and gender relations (WGR) surveys. These surveys would not generally capture all types of domestic abuse, and surveys do not include military spouses. Therefore, while incidents of domestic abuse that are reported to FAP or other military officials are generally captured in the data, it is possible that the actual prevalence (including unreported incidents) within the military is higher than reported."], "subsections": [{"section_title": "What Proportion of the Military-Connected Population is Affected?", "paragraphs": ["The total active duty population is over 1.3 million, approximately 16% of whom are women. In addition, the total number of active duty military spouses is about 600,000, about 25% of which are age 25 or younger. Based on data collected by the services, there were 16,912 reported incidents of spouse and intimate partner abuse in FY2018. Of these, roughly half (8,039) of the reports met the criteria for abuse under DOD definitions, affecting 6,372 victims (see Figure 1 below). Physical abuse accounted for 73.7% of all met criteria incidents, followed by emotional abuse (22.6%). Sexual abuse and neglect accounted for a smaller proportion of domestic abuse incidents \u00e2\u0080\u0094 3.6% and 0.06% respectively. ", "There has been little change in the rate or number of reported incidents that met criteria for domestic abuse since FY2009. While the total number of incidents in FY2018 is 19% lower than the number of incidents at the most recent peak in FY2011, the total force size also shrank during that time. In fact, the rate of incidents that met criteria for spouse abuse has not varied significantly since FY2008. While there are no clear trends in the number of incident reports, there are some indications that the categories of abuse being reported may have changed over the past eight years. The number of reported domestic abuse incidents involving sexual abuse has generally increased incrementally since FY2009, when DOD added this as a category for reporting (there was a slight drop in reported incidents in FY2018). This change in reporting may be due to a number of factors, including an actual increase in these types of IPV; cultural shifts in the perception of sexual abuse within existing relationships; and greater general awareness of sexual violence, reporting avenues, and available resources among military servicemembers, military-connected intimate partners, and first responders."], "subsections": [{"section_title": "Victim Profile", "paragraphs": ["Victims of reported abuse are predominately (two-thirds) female. About half of the victims who report ed spouse abuse to DOD and two-thirds who report ed intimate partner abuse were members of the military at the time the abuse took place ( see Table 2 below ). In FY201 8 , DOD reported 15 domestic abuse fatalities ( 13 spouses and 2 intimate partners) . Of the fatalities, three victims had previously reported abuse to DOD's FAP and four of the perpetrators had been reported previously for at least one prior abuse offense. Nine of the offenders were civilians with military victims."], "subsections": []}, {"section_title": "Offender Profile", "paragraphs": ["Servicemembers account for a majority of reported offenders. In FY2018, 57% of the reported spouse-abuse offenders were servicemembers. DOD-reported female offenders were more likely to be civilians, and were the perpetrators in 40% of physical spouse abuse incidents (see Table 3 ). This percent of female physical abuse offenders reported by DOD is higher than the literature would predict for the general population. Multiple studies suggest that women are less likely to be the primary perpetrator of physical violence in a relationship and that when they use violence it is nearly always in response to physical violence by their partner. However, it is unclear from the data if physical abuse perpetrated by women is retaliatory. Sexual abuse cases were almost entirely perpetrated by men (96%) which is consistent with the research.", "Perpetration of IPV in military partnerships may be underrepresented in DOD incident data, particularly if the victims are civilians, unmarried to the perpetrator, or not residing on a military installation. Incidents that occur outside of a military installation are less likely to be witnessed by military first responders and unmarried civilian intimate partners of a servicemembers are typically ineligible to be treated at military treatment facilities (MTFs). Coordination between civilian and military officials for domestic violence reporting is discussed in later sections (see \" Confidentiality: Restricted and Unrestricted Reporting \" and \" Community Coordination \")."], "subsections": []}, {"section_title": "Younger Troops are at Higher Risk of Offending and Being Victimized", "paragraphs": ["National-level data suggest that intimate partner violence primarily begins at a young age: an estimated 71% of females and 58% of males reported having first experienced sexual violence, intimate partner physical violence, or stalking before the age of 25. In addition, approximately 23% of female victims reported having first experienced intimate partner violence before the age of 18. Similarly, rates of reported domestic abuse in the military are highest among junior enlisted (E-3 and below) families who are typically between the ages of 18 and 24. In FY2018, the rate of offenders in the grades of E-1 to E-3 was 15.1 per 1,000 married couples; in contrast to the overall rate of 5 per 1,000 married couples (see Figure 2 )."], "subsections": []}]}, {"section_title": "How does IPV in the Military Compare to the Civilian Population?", "paragraphs": ["A number of factors complicate comparisons of military and nonmilitary IPV datasets, particularly the infrequent reporting of national civilian data and differences between how DOD and federal nonmilitary data are reported, collected, and aggregated. For example, each state may have different laws and processes for recording IPV, whereas all military branches use a common IPV definition and process. In addition, military members and their spouses and partners are, on average, younger than the general population. Therefore, direct (unweighted) comparisons of incident rates at the national or local level should be interpreted with some caution.", "Some studies, nonetheless, have compared IPV prevalence data across military and civilian populations. Since 2010, the CDC has conducted the National Intimate Partner and Sexual Violence Survey (NISVS), which collects data from adult men and women on past-year and lifetime experiences of sexual violence, stalking, and intimate partner violence at the state and national levels. In 2010, CDC randomly sampled military women and wives of active duty members to compare IPV prevalence rates among civilians, military women and military spouses and generally found similar prevalence rates across the populations. Where there were differences, active duty women were generally found to have a decreased risk of IPV relative to the civilian population. Nevertheless, active duty women who were deployed in the previous three years were significantly more likely to have experienced physical and sexual IPV compared with those who had not deployed. "], "subsections": []}]}, {"section_title": "Prevention", "paragraphs": ["DOD has focused on a number of activities to prevent IPV and mitigate the escalation and repetition of violence or abuse following an initial offense. The CDC has identified several individual, relationship, community, and societal risk factors for domestic violence (see Appendix B ) . Some of these risk factors are inherent in the military environment. For example, youth is considered a risk factor, and the bulk of servicemembers are recruited and enlisted or appointed between the ages of 17-26. On the other hand, military protocols for entry screening, education and training, and support structures may provide protective factors and deterrence."], "subsections": [{"section_title": "Entry Screening", "paragraphs": ["DOD and the services use medical, cognitive, and other qualification standards to screen those seeking entry into the Armed Forces for IPV risk factors. For example, DOD medical standards generally prohibit enlistment or appointment of individuals with a history of personality or behavioral disorders. In addition, a history of drug or alcohol abuse can be a disqualifying factor. Past misconduct and criminal convictions can also disqualify individuals. ", "Those disqualified from service may request a conduct waiver, which typically requires specific information about the offense(s) and \"letters of recommendation from responsible community leaders, such as school officials, clergy, and law enforcement officials, attesting to the applicant's character or suitability.\" Convicted domestic violence offenders, on the other hand, are typically ineligible for conduct waivers, pursuant to the Lautenberg Amendment Gun Control Act of 1968. Domestic battery or other violent offenses committed without conviction may also be disqualifying.", "In recent years, as recruiting quantity targets have increased to force end-strength numbers, the Services, and particularly the Army, have increased the use of conduct, and other waivers. Some have questioned whether those with waivers for any kind of misconduct (e.g., drug, alcohol, or traffic violations) are at higher risk for misconduct offenses while serving in the military. One study of Army enlistments between 2003 and 2008 found that while those with conduct waivers for any reason did have higher rates of alcohol and drug-related offenses, the waivers were not significantly associated with substantiated incidents of domestic abuse. "], "subsections": []}, {"section_title": "Education, Training, and Awareness", "paragraphs": ["Prevention programs for domestic violence include education and training components, some of which are required in both law and policy. The FY2000 NDAA required DOD to establish a standard training curriculum for commanding officers on handling domestic violence cases. In a 2004 memorandum, the USD (P&R) also required specialized training for military chaplains on confronting a potential domestic violence situation.", "The Family Advocacy Program (FAP) is charged with promoting awareness of domestic abuse through education, training, and information dissemination. Training for commanders, troops, counselors, and health care personnel typically focuses on increasing awareness of IPV warning signs and appropriate responses. Training for troops might include workshops or briefings on healthy relationships and family resiliency. Generally, domestic violence prevention training is not mandatory and is not applied uniformly across and within the services. The military services have experimented with tailored education programs for higher-risk demographics. The Navy, for example, has initiated a series of workshops on relationship abuse awareness and prevention that targets junior enlisted members. DOD's Military Onesource website also offers a range of self-serve resources and tools to learn more about domestic violence."], "subsections": []}, {"section_title": "Military and Family Life Counseling", "paragraphs": ["Relationship stressors are indicated as risk factors for IPV. Part of DOD's prevention activities include no-cost, nonmedical, confidential counseling services for members and their families through the Military and Family Life Counseling (MFLC) program. These services are part of DOD's prevention activities and include relationship counseling, anger/conflict management, and deployment adjustment (i.e., separation and reintegration). DOD provides these services through a contractor to active and reserve personnel and their immediate families at over 200 military installations or in nearby civilian community centers worldwide. Family life counselors do not handle domestic abuse cases\u00e2\u0080\u0094these are typically referred to the FAP and medical providers, as required. Members and their spouses may also participate in other service-level programs, like chaplain-led marriage retreats or family resiliency workshops under their installation's family readiness program. While commanders or others may refer couples to these programs, participation in them is generally optional."], "subsections": []}]}, {"section_title": "Interventions", "paragraphs": ["While prevention activities generally target the entire population, interventions are targeted at high-risk couples or individuals, or provided after a first alleged offense. Interventions include removing individuals and family members from any immediate risk of harm, initiating an investigation, ensuring ongoing safety, and preventing future escalation or offender recidivism. Response to domestic abuse often involves coordination among military commanders, law enforcement officials, health care personnel, social workers, and legal representatives. DOD policies outline specific roles and responsibilities for each of these responders. The FY2019 NDAA required the establishment of multidisciplinary teams on military installations to enhance collaboration in response and management of domestic abuse cases. The law requires each team to include (1) one or more judge advocates, (2) personnel from military criminal investigation organizations (MCIOs), (3) mental health professionals, (4) family advocacy caseworkers, and (5) other personnel as appropriate."], "subsections": [{"section_title": "Clinical Interventions", "paragraphs": ["When an incident is reported to the FAP, a team assesses the situation and coordinates clinical case management, including treatment, rehabilitation, and ongoing monitoring and risk management. FAP employees are typically professional social workers. According to DOD, there are over 2,000 funded positions across the military departments for delivery of FAP services, including \"credentialed/licensed clinical providers, Domestic Abuse Victim Advocates, New Parent Support Home Visitors, and prevention staff.\""], "subsections": []}, {"section_title": "Military Protective Orders", "paragraphs": ["Once a servicemember has allegedly committed an act of domestic violence, and it is reported to the member's commander, the commander is responsible for holding the perpetrator accountable and taking actions to protect the victim. The commander may, for example, issue a military protective order (MPO) to help ensure the victim's safety. An MPO generally prohibits contact between the alleged offender and the domestic violence victim. A servicemember must obey an MPO at all times, whether inside or outside a military installation; violations may be subject to court martial or other punitive measures. The commanding officer may also restrict an accused servicemember to a ship or to his or her barracks to keep the parties separate. There may be some cases when the victim is a servicemember and the alleged abuser is a civilian. Commanders cannot issue an MPO for civilians, but may arrange for temporary housing on the installation for the servicemember victim and bar the accused civilian from installation access.", "While military commanders have a high degree of control over the activities on an installation, they typically lack jurisdiction over events in civilian communities. Approximately 63% of military personnel live in private housing located outside of a military installation. Because of this, coordination between military and civilian law enforcement authorities is often required to provide for victim safety. The FY2000 NDAA included a provision to create incentives for collaboration between military installations and civilian community organizations working to prevent and respond to domestic violence. In 2002, Congress required that civilian protection orders (CPOs) have full force and effect on military installations. This means that if a servicemember violates the terms of a CPO, he or she may be subject to disciplinary actions under the UCMJ, in the same way as if violating an MPO. Military commanders, by regulation, are also encouraged to issue an MPO to support an existing CPO, or to provide some protection to a victim while the victim pursues a CPO. MPOs are unenforceable by civilian law enforcement. In 2008, however, Congress required the commander of a military installation to notify civilian authorities when an MPO is issued, changed, or terminated with respect to individuals who live outside of the installation. Procedures for coordination and information-sharing between military and local officials are established through formal memoranda of understanding (MOUs). "], "subsections": []}, {"section_title": "Expedited Transfer and Administrative Reassignments", "paragraphs": ["In an effort to protect servicemembers reporting sex-related offenses from retaliation, Congress required in 2011 that DOD develop policies and procedures for consideration of station changes or unit transfers of active duty member victims who report sex-related offenses under the UCMJ. Per statute, an individual's commanding officer must approve or disapprove an application for transfer within 72 hours of submission. If the commander disapproves the transfer, the applicant may request review from the first general officer in the chain of command. The law requires a decision from the general officer within 72 hours of the submission of the request. Congress expanded the application of such transfer policies and procedures to cover military servicemembers who are victims of physical or sexual IPV through the FY2018 NDAA. The act specified that transfer policies and procedures are to be implemented once abuse has occurred, irrespective of whether the offender is a member of the Armed Forces. ", "In the FY2014 NDAA, Congress also added a provision that allows commanders and others with authority to reassign or remove from a position of authority individuals who are alleged to have committed or attempted sex-related offenses. The law is specific that reassignment action is \"not as a punitive measure, but solely for the purpose of maintaining good order and discipline within the member's unit.\" Advocates for this provision had argued that reassignment of the victim could be seen as penalizing the victim instead of the perpetrator. ", "Covered offenses under the expedited transfer (10 U.S.C. \u00c2\u00a7673) and administrative reassignment (10 U.S.C. \u00c2\u00a7674) authorities currently do not include the UCMJ offense for domestic violence, which was added in 2018 as part of the FY2019 NDAA (See section below on \" Domestic Violence Punitive Article \"). "], "subsections": []}]}, {"section_title": "Victim Support and Services", "paragraphs": ["In the past decade, DOD has developed methods for incident reporting, data collection, and analysis of IPV trends. There is some evidence to suggest, however, that the actual prevalence of domestic abuse in the military could be underreported. While DOD conducts annual surveys of servicemembers to determine the prevalence of sexual assault and harassment in the military, it does not conduct or report on similar surveys with the military spouse population or on the prevalence of non-sex-related abuse by intimate partners. Indeed, IPV prevalence can be difficult to measure, and within the academic literature there is a broad range of prevalence estimates for victimization and perpetration involving military servicemembers. One meta-analysis undertaken by the VA suggests that among active duty servicemembers, the 12-month prevalence of IPV perpetration was 22%, and victimization was 30%\u00e2\u0080\u0094rates higher than those of actual incident reports within DOD. Another (nonscientific) survey conducted by a military family advocacy group in 2017 found that 15% of the military and veteran family respondents did not feel physically safe in their relationship. Among those experiencing abuse, the survey found that \"87% of military spouse respondents did not report their physical abuse, citing their top two reasons for not reporting the abuse was that they felt it was not a big deal and they did not want to hurt their spouse or partner's career.\" ", "Intimate partner abuse for the perpetrator is often connected with coercive control and monitoring of the victim's activities (e.g., controlling phone or email passwords, and restricting bank account access), and thus some victims may be fearful of seeking help. Confidentiality concerns, financial dependency, and lack of support structures can all create barriers to reporting IPV. Congress and DOD have taken some actions to try to reduce these barriers, to encourage victims to report, and to increase access to victim support services."], "subsections": [{"section_title": "Confidentiality: Restricted and Unrestricted Reporting", "paragraphs": ["Responding to concerns from military family members about confidentiality in reporting incidents of domestic abuse, Congress required in 1999 that DOD establish policies and procedures, which provide \"maximum protection for the confidentiality of dependent communications\" with service providers, such as therapists, counselors, and advocates. DOD has since developed distinct reporting streams that can accommodate varying levels of confidentiality. In an unrestricted reporting scenario, domestic abuse is reported to law enforcement, FAP, or the chain of command. Such a report would typically set off a sequence of actions to include a criminal investigation of the alleged offender. In some cases, a victim may be hesitant to trigger these events but may want to access support services in a confidential manner. In recognition that some victims may be deterred from reporting based on confidentiality concern, DOD has established a restricted reporting option. With some exceptions, this reporting option allows victims to disclose information to a victim advocate, victim advocate supervisor, or healthcare provider without that information being disclosed to other authorities. The restricted reporting options allows the victim time to access medical care, counseling, and victim advocacy services while providing some time to consider relationship choices and next steps."], "subsections": []}, {"section_title": "Victim Advocacy Services", "paragraphs": ["In 2003, as part of the FY2004 NDAA, Congress called for the development of a Victim Advocate Protocol for victims of Domestic Violence. Among other things, the Protocol requires victims of domestic abuse be notified of victim advocacy services and be provided access to those services 24 hours a day (either in person or by phone). Victim advocates play a substantial role in supporting the victim following a domestic violence incident. They help victims and other at-risk family members by developing a safety plan, referring them to ongoing care through military or civilian providers, and providing information on other resources (e.g., chaplain or legal services, transitional compensation). Victim advocates can be DOD employees, military contractors, or other civilian providers. "], "subsections": []}, {"section_title": "Special Victims' Counsel/Victims' Legal Counsel", "paragraphs": ["A Special Victims' Counsel (SVC) or Victims' Legal Counsel (VLC) is a judge advocate or civilian attorney who satisfies special training requirements and is authorized to provide legal assistance to victims of sexual assault throughout the military justice process. Currently SVC/VLC services are not authorized for victims of domestic violence; however, recent legislative proposals have sought to expand such services to this population. A provision in the FY2019 NDAA required DOD to submit a report on feasibility and advisability of expanding SVC/VLC eligibility to victims of domestic violence and asked for an analysis of personnel authorizations with respect to the current case workload. DOD found that expanding this eligibility to domestic violence victims would \"significantly increase the caseload of SVC/VLC programs across the board.\" If SVC/VLC support were made available to victims of domestic violence, each of the military services \"would require additional SVC/VLC authorizations and sufficient time to train personnel to implement new mission requirements.\" "], "subsections": []}, {"section_title": "Transitional Compensation", "paragraphs": ["Some spouses are wholly or highly financially dependent on their military intimate partner, possibly discouraging some victims from reporting IPV. Therefore, the prospect of the member being incarcerated or discharged from the military can provide a disincentive for an abused spouse to seek help. In a 1993 House Armed Services hearing on Victims' Rights, the Ranking Member noted that \"with few exceptions, when a military member is incarcerated because of violence or abuse, the family is cut loose by DOD and left without medical coverage, without counseling, without housing, without the support of the military community.\"", "Congress sought to redress this disincentive to reporting through the FY1994 NDAA, which authorized the temporary provision of monetary benefits, called transitional compensation , to dependents of servicemembers or former servicemembers who were separated from the military due to IPV. One of the motivating arguments for establishing the transitional compensation benefit was that it could provide a measure of financial security to spouses or former spouses. The provision was codified in 10 U.S.C. \u00c2\u00a71059 and applies to cases involving members who, on or after November 30, 1993 are", "separated from active duty under a court-martial sentence resulting from a dependent-abuse offense, separated from active duty for administrative reasons if the basis for separation includes a dependent-abuse offense, or sentenced to forfeiture of all pay and allowances by a court-martial that has convicted the member of a dependent-abuse offense.", "Transitional compensation payments are exempt from federal taxation, provided at the dependency and indemnity compensation (DIC) rate, and authorized for at least 12 months but no more than 36 months . For individuals to be eligible, they must be current or former dependents of servicemembers, including spouses, former spouses, or dependent children. Intimate partners who are not or were never married to servicemembers are generally ineligible to receive compensation from DOD. While in receipt of transitional compensation, dependents are also entitled to military commissary and exchange benefits, and may receive dental and medical care, including mental health services, through military facilities as TRICARE beneficiaries."], "subsections": [{"section_title": "Forfeiture and/or Coordination of Benefits", "paragraphs": ["Recipients of transitional compensation benefits must certify eligibility on an annual basis to retain payments. In addition, payments will cease if the eligible spouse or former spouse ", "remarries, on the date of remarriage, cohabitates with the servicemember after punitive or other adverse action has been executed, or is found to have been an active participant in the conduct constituting the criminal offense, or actively aided or abetted the member in such conduct against a dependent child. ", "Payments may also cease if a court-martial sentence is remitted, set aside, or mitigated to a lesser punishment. Spouses or former spouses may not receive both transitional compensation and court-ordered payments of retired pay and must elect to receive one or the other of those benefits, if applicable."], "subsections": []}]}, {"section_title": "Access to Retired Pay and Benefits", "paragraphs": ["A military servicemember typically becomes eligible for a pension from the federal government after 20 years of service. Under the Uniformed Services Former Spouses Protection Act (USFSPA), up to 50% of the member's disposable military retired pay may be awarded by court order to a former spouse in a divorce settlement. In some cases, a member may be eligible for retired pay by virtue of longevity in service; however, punitive actions in response to member misconduct may terminate eligibility for retired pay. In 1992, Congress authorized the military departments to make court-ordered payments of an amount of disposable retired pay to abused spouses or former spouses in cases where the member has eligibility to receive retired pay terminated due to misconduct related to the abuse. So, for example, if a retired member, through court martial sentencing as a result of a domestic violence offense, becomes ineligible to receive retired pay, the Defense Finance and Accounting Service (DFAS) may still pay a court-ordered portion of what the member might otherwise be eligible for, to the member's spouse or former spouse. A spouse or former spouse, while receiving payments under this chapter, is also eligible to receive any other benefits a spouse or former spouse of a retired member may be entitled, including medical and dental care, commissary and exchange privileges, and the Survivor Benefit Plan."], "subsections": []}, {"section_title": "Emergency Housing and Accommodations", "paragraphs": ["In situations where a servicemember is the perpetrator of violence, the commanding officer may restrict that individual to the barracks, ship, or other installation housing and issue MPOs (as discussed in section \" Military Protective Orders \". The primary objective is typically to remove the offender from the home, to protect the victim. On the other hand, there may be scenarios where commanders have less control over housing of the perpetrator (e.g., in the case where the offender is a civilian living outside an installation). In such cases, DOD policies also require that victim advocates facilitate provision of shelter and safe housing resources for victims. According to the services, commanders typically draw on a number of housing options on the installation (e.g., temporary lodging) or in the local civilian community (e.g., shelters, hotels, etc.). "], "subsections": []}, {"section_title": "Relocation Benefits", "paragraphs": ["Military families move frequently to different assignments worldwide, often far away from family and support networks. Moving expenses for the family under a member's orders are paid by the Department of Defense. Generally, civilian spouses are only eligible for these benefits when the family moves together under the military sponsor's orders. For some abused spouses, it may be prohibitively expensive to independently execute a household move following a domestic abuse incident, particularly for those accompanying servicemembers stationed overseas. In 2003, as part of the FY2004 NDAA, Congress added a provision that allows for certain travel and transportation benefits for dependents who are victims of domestic abuse in the absence of military orders for a permanent change of station move. When relocation is advisable to ensure the safety of the victim, the Secretary of the military department concerned may authorize movement of household effects and baggage at the government's expense, plus travel per diem paid to the dependent. The authorization for these benefits allows for a move to an appropriate location in the United States or its possessions, or if the abused dependent is a foreign national, to their country of national origin."], "subsections": []}, {"section_title": "Federal Crime Victims Fund", "paragraphs": ["In 1984, the Crime Victims Fund (CVF, or the Fund) was established by the Victims of Crime Act (VOCA, P.L. 98-473 ) to provide funding for state victim compensation and assistance programs. The CVF does not receive appropriated funding. Rather, deposits to the CVF come from a number of sources including criminal fines, forfeited bail bonds, penalties, and special assessments collected by the U.S. Attorneys' Offices, federal courts, and the Federal Bureau of Prisons from offenders convicted of federal crimes. The largest source of deposits into the CVF is criminal fines. U.S. military servicemembers and their families are eligible for these victim assistance and compensation programs. ", "The Office for Victims of Crime (OVC) within the Department of Justice (DOJ) administers the CVF. As authorized by VOCA, the OVC awards CVF money through formula and discretionary grants to states, local units of government, individuals, and other entities. Grants are allocated according to VOCA statute, and most of the annual funding goes toward the two VOCA formula grants: the victim compensation formula grant and victim assistance programs. The grants are distributed to states and territories according to guidelines established by VOCA.", "Victim compensation formula grants may be used to reimburse crime victims for out-of-pocket expenses such as medical and mental health counseling expenses, lost wages, funeral and burial costs, and other costs (except property loss) authorized in a state's compensation statute. Victims are reimbursed for crime-related expenses that are not covered by other resources, such as private insurance. Since FY1999, medical and dental services have accounted for close to half of the total payout in annual compensation expenses. In FY2017, \"the vast majority of applications related to a victimization (52,461 or 96%) were related to domestic and family violence.\"", "Victim assistance formula grants support a number of services for crime victims, including the provision of information and referral services, crisis counseling, temporary housing, and criminal justice advocacy support. States are required to prioritize the following groups: (1) underserved populations of victims of violent crime, (2) victims of child abuse, (3) victims of sexual assault, and (4) victims of spouse abuse. States may not use federal funds to supplant state and local funds otherwise available for crime victim assistance. According to the OVC, victims of domestic violence make up the largest number of victims receiving services under the victim assistance formula grant program. In FY2017, over five million crime victims were served by these grants, 43% of whom were victims of domestic and/or family violence. "], "subsections": []}]}, {"section_title": "Military Law Enforcement Response", "paragraphs": ["DOD and the Services have a general framework under the UCMJ, and other laws, for responding to violent offenses. DOD domestic abuse policies superimpose specific requirements onto this framework. Among other things, DOD policy states commanders are required to respond to reports of domestic abuse in the same manner as they would to credible reports of any other crime and must ensure that military service offenders are held accountable for acts of domestic violence through appropriate disposition under the UCMJ. Similarly, law enforcement and military criminal investigation personnel are required to investigate reports of domestic violence and respond to them as they would to credible reports of any other crime.", "In 1993, as part of the FY1994 NDAA, Congress specified certain responsibilities for military law enforcement officials in response to domestic violence. In particular, the law requires that in cases where there is evidence of physical injury, or where a deadly weapon or dangerous instrument has been used, officials must report the incident within 24 hours to the appropriate commander and to a local FAP representative. Military law enforcement includes both installation law enforcement (ILE), MCIOs, and the Defense Criminal Investigative Service (DCIS), which is an arm of the DOD Inspector General. The term defense criminal investigative organization (DCIO) is used to describe the military criminal investigative organizations and DCIS. Current DOD policy requires that either a MCIO or another appropriate law enforcement organization investigate domestic violence and specifies that MCIOs are to investigate all unrestricted reports of domestic violence involving sexual assault or aggravated assault with grievous bodily harm. "], "subsections": [{"section_title": "DODIG Review of Law Enforcement Actions", "paragraphs": ["A 2019 report by the Department of Defense Inspector General (DODIG) found that law enforcement response actions were generally consistent with DOD policies; however, the DODIG noted DCIOs did not consistently comply with DOD policies when responding to nonsexual domestic violence incidents involving adult victims (see Table 5 ). In particular, the audit revealed that responders often did not have necessary equipment for collecting and preserving evidence and that incident reports did not get proper supervisory review. In 22% of the reviewed cases law enforcement failed to report the incident to the FAP and in 82% of those cases failed to submit criminal history data to the Defense Central Index of Investigations (DCII), the Federal Bureau of Investigation (FBI) Criminal Justice Information Services Division (CJIS), and the Defense Forensics Science Center. (See discussion below under \" Crime Reporting to National Databases .\") ", "In general, actions by the Navy Criminal Investigative Service (NCIS)\u00e2\u0080\u0094the only MCIO included in the IG report\u00e2\u0080\u0094were more likely to be in compliance than those by military law enforcement. In the report, the Army and the Air Force do not distinguish between ILEs and MCIOs, and relevant criminal investigation jurisdiction policies for these military services show that their MCIOs do not have responsibility for investigating domestic violence. Presumably, with the exception of the NCIS data, all other data in the table are based on ILE responses to domestic violence incidents. Among other things, the DOD IG found that military service law enforcement organizations, largely ILE, did not consistently comply with DOD policies when responding to nonsexual domestic violence incidents involving adult victims. The IG findings and the data in the table appear to suggest that ILE are less proficient at domestic violence responses and investigations, whereas an MCIO, using NCIS as the sole example, is more proficient at responding to them."], "subsections": []}, {"section_title": "Crime Reporting to National Databases", "paragraphs": ["Law and policy require military law enforcement to provide certain crime reports to DOD and national crime databases throughout a criminal investigation of a servicemember. The Services are required to maintain automated information systems that comply with the Defense Incident-Based Reporting System (DIBRS), which complies with the FBI National Law Enforcement Data Exchange (N-DEx) System. The FBI's N-DEx system is a repository of criminal justice records and data from law enforcement agencies in the United States and it is managed by the FBI's Criminal Justice Information Service (CJIS).", "DIBRS captures criminal incidents of domestic violence that are reported to law enforcement in compliance with the following laws ;", "The Uniform Federal Crime Reporting Act of 1988, The Victims' Rights and Restitution Act of 1990, The Lautenberg Amendment to the Gun Control Act, and The Jacob Wetterling, Megan Nicole Kanka, and Pam Lychner Sex Offender Registration and Notification Program.", "DIBRS data is subsequently reported to the Federal Bureau of Investigation's National Incident-Based Reporting System (NIBRS). As repository for federal and state crime activity, NIBRS data is used for analyzing crime trends and developing policy approaches to reduce criminal activity.", "Specific records of investigations are located in the Defense Central Index of Investigations (DCII), an automated central index that identifies investigations conducted by DOD investigative agencies. DCII is typically used by DOD security and investigative agencies and other federal agencies to determine security clearance status and the physical location of criminal and personnel security investigative files. ", "Per DOD policy for collating investigation data, MCIOs are responsible for", "Titling and indexing subjects of criminal investigations in the DCII when there is credible information that a subject of an investigation committed a criminal offense (under the UCMJ or any other federal criminal statute). Reporting disposition information within 15 days of final disposition of military judicial or nonjudicial proceedings; approval of a request for discharge, retirement, or resignation in lieu of court-martial; or, discharge resulting from anything other than honorable characterization of service based on investigations UCMJ violations. Submitting fingerprint cards and final disposition of investigations to the FBI CJIS regarding servicemembers investigated for violating an offense under the UCMJ, based on probable cause."], "subsections": []}]}, {"section_title": "Military Justice System", "paragraphs": ["While some domestic violence offenders in the military may be subject to local or host nation jurisdiction, active duty servicemembers worldwide may be held accountable for domestic violence offenses under the military justice system. The military justice system is established in Title 10 of the United States Code and is separate from and independent of the federal criminal justice system established in Title 28. Congress enacts this authority through the articles (statutes) that make up the UCMJ, under Chapter 47, of Title 10, U.S. Code . The President implements the UCMJ by executive order through the Manual for Courts-Martial (MCM). The MCM establishes detailed rules for administering justice. Among other things, The MCM contains the major components of military justice:", "Ju risdiction \u00e2\u0080\u0094Court-Martial Convening Authority for the three levels of courts-martial and the jurisdiction of each one (chapter II, part II, MCM). Criminal Procedure Code \u00e2\u0080\u0094Rules for Courts-martial provide for the administration of military justice (chapters III \u00e2\u0080\u0093 XIII, part II, MCM). Rules of Evidence \u00e2\u0080\u0094Military Rules or Evidence established the evidential procedure for judicial proceedings at a court-martial (part III, MCM). Criminal Code \u00e2\u0080\u0094Punitive Articles in the UCMJ criminalize specific conduct (part IV, MCM).", "The MCM also includes the procedure for nonjudicial punishment (NJP) and maximum punishment information for each punitive article."], "subsections": [{"section_title": "Commander's Authority", "paragraphs": ["The authority to prosecute or refer charges to court martial falls within the jurisdiction of a command and its commander. Commanders at every level are responsible for deciding whether to take action regarding misconduct occurring in a command over which they have authority. When addressing misconduct, a commander acts as an adjudicator of first instance to determine whether misconduct warrants disposition in a judicial, nonjudicial, or administrative process. A commander can also determine to take no action against an offender. These determinations are known as disposition decisions. They are made at the lowest level of command with direct authority over an offender, unless disposition authority is withheld by a higher-level commander.", "DOD requires all commanders to refer allegations of domestic violence by a victim, or credible reports of domestic violence by a third party, to an appropriate law enforcement organization. Law enforcement personnel must promptly complete a detailed written report of the investigation and forward it to the alleged offender's commander. The commander must then review the report and obtain advice from an appropriate legal officer before determining disposition."], "subsections": []}, {"section_title": "Court-Martial", "paragraphs": ["Upon review of the investigative report, the commander may refer the case to court-martial for trial. There are three courts-martial levels with jurisdiction over UCMJ offences. The first two levels\u00e2\u0080\u0094summary and special courts-martial\u00e2\u0080\u0094are courts of limited jurisdiction (minor and misdemeanor offenses). The third and highest level\u00e2\u0080\u0094general court-martial\u00e2\u0080\u0094is a court of general jurisdiction (felony offenses). A general court-marital can impose the maximum punishment prescribed for a crime in the UCMJ. A trial by general court-martial typically consists of a military judge, prosecutor, defense counsel, and members. The members are a panel of servicemembers who can render guilty or not guilty verdicts, like a civilian jury, and make sentencing decisions, unlike a civilian jury. "], "subsections": []}, {"section_title": "Domestic Violence Punitive Article", "paragraphs": ["The punitive articles in the UCMJ are the offenses that fall within the jurisdiction of a court-martial. Prior to 2019, domestic violence offenses were typically prosecuted under the general offense of assault under Article 128 (Assault). Congress amended the UCMJ in the National Defense Authorization Act for Fiscal Year 2019 by adding a specific punitive article for domestic violence\u00e2\u0080\u0094Article 128b\u00e2\u0080\u0094effective on January 1, 2019. This punitive article prescribes punishment, as a court-martial may direct, for any person subject to UCMJ jurisdiction who:", "(1) commits a violent offense against a spouse, an intimate partner, or an immediate family member of that person;", "(2) with intent to threaten or intimidate a spouse, an intimate partner, or an immediate family member of that person-", "(A) commits an offense under [the UCMJ] against any person; or", "(B) commits an offense under [the UCMJ] against any property, including an animal;", "(3) with intent to threaten or intimidate a spouse, an intimate partner, or an immediate family member of that person, violates a protection order;", "(4) with intent to commit a violent offense against a spouse, an intimate partner, or an immediate family member of that person, violates a protection order; or", "(5) assaults a spouse, an intimate partner, or an immediate family member of that person by strangling or suffocating;", "Article 128b generally requires a threat or violent offense or the specific act of strangulation or suffocation to trigger the UCMJ. Research has found that strangulation is an associated risk factor for intimate partner homicide of female victims. "], "subsections": []}, {"section_title": "Sentencing", "paragraphs": ["After a guilty verdict or plea, and without delay, a court-martial imposes a sentence that is within its authority and discretion. Specific punishments for UCMJ offenses tried by a court-martial are reprimand; forfeiture of pay and allowances; fine; reduction in pay grade; restriction to specified limits; hard labor without confinement; confinement; punitive separation; and death. A single punitive article can include a range of offenses from minor to serious; the maximum punishment increases as the severity of the offense increases.", "As noted above, domestic violence was previously included in the general assault article (Article 128) before it became a nominative offense under Article 128b. Punishment under Article 128 includes a maximum punishment as low as three months for simple assault and a maximum punishment as high as dishonorable or bad conduct discharge, total forfeitures, and 20 years' confinement, for assault with intent to commit specified offenses, such as murder, rape, and rape of a child. Domestic violence was distinguishable from other types of assault under Article 128 (Assault) by the greater severity of its punishment. DOD has not yet amended the most recent MCM issued in 2019 to include a maximum punishment for Article 128b (Domestic Violence), which became law around the time DOD issued the 2019 MCM. "], "subsections": []}, {"section_title": "Military Rules of Evidence", "paragraphs": ["The Military Rules of Evidence (MRE) are established by executive order as part of the Manual for Courts-Martial. They are analogous to civilian rules of evidence, particularly the Federal Rules of Evidence. There are two rules within the MRE that specifically apply to domestic violence (i.e., privileged conversations with victim advocates, and testimony of children who witness an event)."], "subsections": [{"section_title": "Victim Advocate\u00e2\u0080\u0094Victim Privilege", "paragraphs": ["A victim who has suffered direct physical or emotional harm as the result of a sexual or violent offense has a privilege to refuse to disclose, and to prevent any other person from disclosing, a confidential communication made between the alleged victim and a victim advocate, or between the alleged victim and DOD Safe Helpline staff. The communication must have been made for the purpose of facilitating advice or assistance to the victim. A victim advocate is a person, other than a trial counsel, any victims' counsel, law enforcement officer, or military criminal investigator in the case, who is appropriately designated as such."], "subsections": []}, {"section_title": "Remote Live Testimony of a Child", "paragraphs": ["If a child is a victim or witness of domestic violence, a military judge must allow remote live testimony if the judge finds on the record that", "It is necessary to protect the welfare of the particular child witness;", "The child witness would be traumatized, not by the courtroom generally, but by the presence of the accused; and,", "The emotional distress suffered by the child witness in the presence of the accused is more than slight.", "To make these findings a \"military judge may question the child in chambers, or at some comfortable place other than the courtroom, on the record for a reasonable period of time, in the presence of the child, a representative of the prosecution, a representative of the defense, and the child's attorney or guardian ad litem.\" Remote live testimony is not required if the accused voluntarily excludes himself or herself from the courtroom."], "subsections": []}]}]}, {"section_title": "Issues for Congress", "paragraphs": ["The consequences of intimate partner and domestic violence to servicemembers and families can be severe and even fatal. Congress has taken a number of actions over the past three decades to expand the provision of prevention and support responses, improve data collection and monitoring of IPV prevalence, deepen civilian and military collaboration on addressing and monitoring IPV, among other things. In the 116 th Congress, there have been several proposals to augment services for military-connected IPV victims. Nevertheless, recent reports and testimony have identified several ongoing issues for oversight. These include", "Community coordination, Coverage and access to victim services, Law enforcement response, Data collection federal reporting requirements , and Mitigating risk factors."], "subsections": [{"section_title": "Community Coordination", "paragraphs": ["In many IPV cases involving the military, the abused or the abuser is a civilian, and incidents happen both on and off military installations. The UCMJ applies worldwide to active duty servicemembers; however, local, state, and foreign governments (for members serving in foreign countries) may have overlapping jurisdiction for domestic violence response, investigation, and prosecution. Local law enforcement authorities may have different protocols for domestic violence response depending on the location. Domestic violence victim advocates have often asserted that insufficient coordination between military and state/local authorities threatens the safety of victims when they move between installations and the civilian community. DOD regulations require certain information to be shared between installation commanders and local authorities, but it is unclear if processes for information sharing are consistent across bases and if gaps are sufficiently addressed. For example, at a September 2019 House hearing, a representative of a victims' advocacy group noted that while CPOs are given full force and effect on military installations, victims may not know whom to notify on the installation that they have a CPO and that everyone involved needs clear registration procedures."], "subsections": []}, {"section_title": "Coverage and Access to Victim Services", "paragraphs": ["While there have been a number of efforts to improve and expand victim services, there may still be some barriers to coverage and access. A 2019 study based on interviews of FAP personnel found that there was variation in the services offered across services and installations with smaller installations sometimes lacking a full range of programs. The study also found that, on average, FAP offices are open five days a week for approximately 41 hours per week, with a small portion (3%) offering weekend hours. Some FAP personnel noted that these hours may make it difficult for working civilian spouses, or those in need of childcare, to be able to attend counseling appointments.", "In addition, some servicemembers and spouses may not be aware of their eligibility for services. In 2019 testimony to the House Armed Services Military Personnel Subcommittee, an IPV survivor noted that during the period of her abuse, she was not aware of the FAP or other services available to her. The 2019 FAP study also found that public awareness and outreach activities, \"are not a strong emphasis of [FAP] programming.\"", "In terms of coverage, some military-connected IPV victims may not be eligible for services under existing law and policy. For example, unmarried civilian intimate partners of a servicemember would not typically have access to military relationship counseling services, military health care, transitional monetary benefits, or other resources on the installation. In addition, due to the part-time nature of their work, members of the Reserve Component and intimate partners of members, may not have consistent access to installation resources and mental/behavioral health coverage. For example, the National Guard has reported that it does not offer a curriculum on Domestic Abuse Response and Intervention Training; rather, it relies on FAP services of its parent services (Army and Air Force) for members called to duty on federal orders.", "Finally, another aspect to consider is the period of transition during discharge or separation from the military. Military veterans, including retirees and their civilian spouses are generally not eligible for FAP services but may be eligible for some services through the VA. For example, he VA does offer some social work programs including the Veteran Health Administration's Intimate Partner Violence Assistance Program."], "subsections": []}, {"section_title": "Law Enforcement Response", "paragraphs": ["DODIG's 2019 findings of deficiencies in military law enforcement response to domestic violence incidents (as discussed in \" DODIG Review of Law Enforcement Actions \") suggest that further congressional oversight of DOD actions in this area could be warrented. DOD domestic violence policy requires the DODIG to develop relevant policy for MCIOs and to oversee their investigations of domestic violence, similar to DODIG responsibility for sexual assault investigations. Current DODIG policy assigns MCIOs responsibility for initiating a criminal investigation in response to all allegations of adult sexual assault, a serious offense under the UCMJ. That is, these investigations are not within the jurisdiction of installation law enforcement. There was no similar mandate for all allegations of domestic violence under Article 128 (Assault), with the exception of unrestricted reports of domestic violence involving sexual assault or aggravated assault with grievous bodily harm. If the maximum punishment of Article 128b were to be established at one year or more\u00e2\u0080\u0094a serious offense \u00e2\u0080\u0094such a move may preclude investigations by installation law enforcement investigators whose investigative jurisdiction is limited to minor offenses with punishment for a year or less. "], "subsections": []}, {"section_title": "Data Reporting", "paragraphs": ["Several DODIG and GAO reports have raised concerns with DOD data collection, management, and reporting to internal DOD and federal databases. The reliability of data can have implications for congressional oversight and funding, in terms of accurate estimates of the size and scope of IPV issues and identifying high-risk military populations for targeted programs. While DOD and the services have undertaken efforts to improve the quality and reliability of data, this is a potential area for continued oversight and audit. Questions also remain as to whether those responsible for entering data into the various systems (i.e., law enforcement, FAP personnel) are adequately trained on their statutory and regulatory obligations. Consideration may be given as to whether incident data accurately captures IPV that goes unreported to the FAP, or if further surveys or studies of the military spouse population are needed. In addition, proper entry of criminal data is necessary for adequate enforcement of other laws, for example, those prohibiting convicted IPV offenders from purchasing firearms."], "subsections": []}, {"section_title": "Mitigating Risk Factors", "paragraphs": ["Another way to address IPV prevention is to address risk factors. One method is through DOD programs and policies that help to improve family stability and resiliency and promote a positive and supportive command climate. From a broad perspective, any actions to reduce personnel tempo (PERSTEMPO), whether through fewer deployments, more time at home station between deployments, or through fewer unaccompanied assignments can help to reduce family stresses associated with departure and reintegration. Another option for reducing stress on military families is to manage permanent change of station (PCS) moves to extend time on station. Frequent moves can impair social support networks and have been found to have a negative impact on spousal employment and earnings. ", "While personnel management efforts could be made to reduce deployments and PCS moves, national security concerns may sometimes necessitate high PERSTEMPO. DOD and the services have several other programs to support families, for example, child and youth programs (e.g., subsidized child-care services), spouse employment assistance, and other family readiness services. In Congress's oversight and appropriations roles, one area of consideration is whether these programs are funded at appropriate levels given current or anticipated demands on military servicemembers.", "Finally, given the military commander's unique authority, the command climate he or she establishes within a unit is an important aspect of IPV prevention. DOD policies specify that military commanders have a duty for care not only of their troops, but also of the troop's families. Commanders may address issues among the troops through positive reinforcement of healthy relationships and attitudes or through punitive administrative actions. The CDC has identified problematic gender norms as a potential risk factor for IPV. Some reporting has identified prevailing negative stereotypes, attitudes, and memes directed at the military spouse community. Commanders can have significant influence on acceptable and unacceptable behavior in the workplace. ", "In addition, several abused spouses have testified that they felt their partner's commander did not provide adequate support, follow established procedures, or take complaints of abuse seriously. In cases where victims of IPV are servicemembers, there may also be concerns about retaliation from a commander or military peers for reporting or seeking help\u00e2\u0080\u0094particularly if the offending spouse is also a military servicemember. One response to this might be a survey of IPV victims to better understand their perceptions of command response and their experiences with other responders such as victim advocates and law enforcement or military justice personnel. Similar surveys have been done with victims of sexual assault. Options to remedy concerns about commander response may be to require higher-level review of IPV complaints, or to enhance protections from retaliation against those who report IPV. ", "Appendix A. Selected Legislation", "Appendix B. CDC Risk Factors for Intimate Partner Violence", "Individual Risk Factors", "Low self-esteem Low income Low academic achievement Young age Aggressive or delinquent behavior as a youth Heavy alcohol and drug use Depression Anger and hostility Antisocial personality traits Borderline personality traits Prior history of being physically abusive Having few friends and being isolated from other people Unemployment Emotional dependence and insecurity Belief in strict gender roles (e.g., male dominance and aggression in relationships) Desire for power and control in relationships Perpetrating psychological aggression Being a victim of physical or psychological abuse (consistently one of the strongest predictors of perpetration) History of experiencing poor parenting as a child History of experiencing physical discipline as a child", "Relationship Factors", "Marital conflict: fights, tension, and other struggles Marital instability: divorces or separations Dominance and control of the relationship by one partner over the other Economic stress Unhealthy family relationships and interactions", "Community Factors", "Poverty and associated factors (e.g., overcrowding) Low social capital: lack of institutions, relationships, and norms that shape a community's social interactions Weak community sanctions against IPV (e.g., unwillingness of neighbors to intervene in situations where they witness violence)", "Societal Factors", "Traditional gender norms (e.g., women should stay at home, not enter workforce, and be submissive; men support the family and make the decisions)", "Appendix C. Acronyms"], "subsections": []}]}]}}
{"id": "RL30788", "title": "Parliamentary Reference Sources: Senate", "released_date": "2019-05-28T00:00:00", "summary": ["The Senate's procedures are determined not only by its standing rules but also by standing orders, published precedents, committee rules, party conference rules, and informal practices. The Constitution and rulemaking statutes also impose procedural requirements on the Senate.", "Official parliamentary reference documents and other publications set forth the text of the various authorities or provide information about how and when they govern different procedural situations. Together, these sources establish the parameters by which the Senate conducts its business. They provide insight into the Senate's daily proceedings, which can be unpredictable. In order to understand Senate procedure, it is often necessary to consider more than one source of authority. For example, the Senate's standing rules provide for the presiding officer to recognize the first Senator who seeks recognition on the floor. By precedent, however, when several Senators seek recognition at the same time, the majority leader is recognized first, followed by the minority leader. This precedent may have consequences for action on the floor.", "This report reviews the coverage of Senate parliamentary reference sources and provides information about their availability to Senators and their staff. Among the resources presented in this report, four may prove especially useful to understand the Senate's daily order of business: the Senate Manual, Riddick's Senate Procedure, the rules of the Senate standing committees, and the publication of unanimous consent agreements.", "The Senate sets forth its chief procedural authorities in a Senate document called the Senate Manual (S.Doc. 113-1), a new edition of which appears periodically. The Manual contains the text of the Senate's standing rules, permanent standing orders, laws relating to the Senate, and the Constitution, all of which establish key Senate procedures. The most recent version of the Manual can be accessed online at govinfo.gov, a website of the Government Publishing Office (GPO) at https://www.govinfo.gov/content/pkg/SMAN-113/pdf/SMAN-113.pdf. It is also accessible via the Senate resources page of Congress.gov (a website of the Library of Congress) at https://www.congress.gov/resources/display/content/Senate.", "Riddick's Senate Procedure (S.Doc. 101-28) presents a catalog of Senate precedents arranged alphabetically on topics ranging from adjournment to recognition to voting. Summaries of the precedents are accompanied by citations to the page and date in the Congressional Record or the Senate Journal on which the precedent was established. Individual chapters of Riddick's Senate Procedure are available for download through govinfo.gov at https://www.govinfo.gov/app/details/GPO-RIDDICK-1992. A searchable version is also accessible via the Senate resources page of Congress.gov at https://www.congress.gov/resources/display/content/Senate.", "The Senate's standing rules require each standing committee to adopt its own rules of procedure. These rules may cover topics such as how subpoenas are issued. Each Congress, the Senate Committee on Rules and Administration prepares a compilation of these rules and other relevant committee materials, such as jurisdiction information, in a document titled Authority and Rules of Senate Committees. The most recent version (S.Doc. 115-4) is available via govinfo.gov at https://www.govinfo.gov/content/pkg/CDOC-115sdoc4/pdf/CDOC-115sdoc4.pdf.", "To facilitate the legislative process, the Senate often conducts its business through unanimous consent agreements that may schedule the time for taking up a measure or specify what motions are in order during its consideration. These can be found, via Congress.gov, in the Congressional Record (https://www.congress.gov/) and the Senate Calendar of Business or the Executive Calendar (https://www.congress.gov/resources/display/content/Calendars+and+Schedules)."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["The Senate's procedures are not based solely on its standing rules. Rather, the foundations of Senate procedure also include the body's standing orders, published precedents, rulemaking statutes, constitutional mandates, committee rules, party conference rules, and informal practices. ", "Various reference sources provide information about how and when these procedural authorities of the Senate govern specific parliamentary situations, and together, they establish the framework by which the Senate conducts its business. This report discusses the contents, format, and availability of reference sources that provide information about contemporary procedures in the Senate. The report covers official documents that set forth the Senate rules, precedents, or other sources of parliamentary authority, such as the Senate Manual , Riddick's Senate Procedure , and the rules adopted by Senate committees. The report also discusses publications on procedure from committees and offices of the Senate and the rules of the Senate's party conferences.", "Prior to describing the individual parliamentary reference sources, this report reviews some principles of Senate parliamentary procedure that are applicable when using and evaluating information from these sources.", "The report then covers the Senate's official parliamentary reference sources. These are documents that set forth authoritative statements of Senate rules, procedures, and precedents. Senators often cite these official sources when raising a point of order or defending against one. ", "Finally, the report reviews the rules of the party conferences, as well as a number of additional publications of committees and other offices of the Senate. Although these resources do not themselves constitute official parliamentary authorities of the Senate, they nevertheless provide background information on official parliamentary authorities.", "Text boxes throughout the report provide information on how to consult a source, or group of sources, with an emphasis on online access. This report aims to present access points to these reference sources that are relevant for Senators and congressional staff and does not present an exhaustive list of websites and other locations where these references can be found. ", "Two appendixes supplement the information on parliamentary reference sources provided throughout the report. Appendix A provides a selected list of CRS products on Senate procedure. An overview of the two primary websites through which many of the resources included in this report can be accessed is provided in Appendix B .", "This report assumes a basic familiarity with Senate procedures. Official guidance on Senate procedure is available from the Office of the Senate Parliamentarian. CRS staff can also assist with clarifying Senate rules and procedures."], "subsections": []}, {"section_title": "Principles of Senate Parliamentary Practice", "paragraphs": ["The Senate applies the regulations set forth in its various parliamentary authorities in accordance with several principles that remain generally applicable across the entire range of parliamentary situations. Among these principles may be listed the following: (1) Senate procedures derive from multiple sources; (2) the Senate has the constitutional power to make its own rules of procedure; (3) Senators must often initiate enforcement of their rules; (4) the Senate conducts much of its business by unanimous consent; (5) the Senate usually follows its precedents; and (6) the Senate adheres to many informal practices. Each of these principles is discussed below."], "subsections": [{"section_title": "Multiple Sources of Senate Procedure", "paragraphs": ["The standing rules of the Senate may be the most obvious source of Senate parliamentary procedure, but they are by no means the only one. Other sources of Senate procedures include:", "requirements imposed by the Constitution, standing orders of the Senate, precedents of the Senate, statutory provisions that establish procedural requirements, rules of procedure adopted by each committee, rules of the Senate's party conferences, procedural agreements entered into by unanimous consent, and informal practices that the Senate adheres to by custom.", "In order to answer a question about Senate procedure, it is often necessary to take account of several of these sources. For example, Rule XIX of the Senate's standing rules provides that \"the presiding officer shall recognize the Senator who shall first address him.\" When several Senators seek recognition at the same time, however, there is precedent that \"priority of recognition shall be accorded to the majority leader and minority leader, the majority manager and minority manager, in that order.\" This precedential principle can have consequences on the Senate floor. For example, it allows the majority leader the opportunity to be recognized to offer the debate-ending motion to table or to propose amendments. Familiarity with this Senate practice, and not the standing rule alone, is key to an understanding of how the Senate conducts its business. "], "subsections": []}, {"section_title": "Constitutional Rulemaking Authority of the Senate", "paragraphs": ["Article I of the Constitution gives the Senate the authority to determine its rules of procedure. There are two dimensions to the Senate's constitutional rulemaking authority. First, the Senate can decide what rules should govern its procedures. The Senate exercises this rulemaking power when it adopts an amendment to the standing rules, or creates a new standing rule, by majority vote. The Senate also uses its rulemaking power when it creates standing orders and when it enacts rulemaking provisions of statutes such as those included in the Congressional Budget and Impoundment Control Act of 1974. Standing orders and rulemaking provisions of law have the same standing and effect as the Senate's standing rules, because all are created through an exercise of the Senate's constitutional rulemaking authority. ", "The second dimension to the Senate's rulemaking authority is that the chamber can decide when its rules of procedure should not govern. In practical terms, this means the Senate can waive its rules by unanimous consent. Under a provision of Senate Rule V, the body can also suspend its rules by a two-thirds vote, although this course is procedurally difficult and rare. The Senate has no established means to supersede its rules by majority vote, an option that is available to the House through the adoption of a \"special rule.\" The Senate can achieve the effect of waiving a rule if a majority votes either to overrule a decision of the presiding officer to sustain a point of order or, instead, votes not to sustain a point of order that has been submitted to the Senate for decision. Action of this kind not only sets the rule aside for the immediate situation but also thereby establishes a precedent to govern subsequent rulings of the presiding officer regarding the meaning and applicability of that rule. "], "subsections": []}, {"section_title": "Enforcing the Senate Rules and Precedents", "paragraphs": ["The Senate's presiding officer (whether it is the Vice President or a Senator of the majority party) does not always call a violation of Senate rules to the chamber's attention. The Senate can violate its procedures unless a Senator, at the right moment, makes a point of order that the proposed action violates the standing rules, a constitutional provision, or another authoritative source of procedure (i.e., standing order, rulemaking statute, or unanimous consent agreement).", "When a point of order is raised, the presiding officer usually makes a ruling without debate. Under Rule XX, the presiding officer has the option of submitting \"any question of order for the decision of the Senate.\" This is rare but may occur if the existing rules and precedents do not speak clearly on the parliamentary question at hand.", "Any Senator can appeal the ruling of the presiding officer on a point of order. The Senate might then decide, usually by majority vote, to uphold or overturn the presiding officer's decision. This vote establishes a precedent that guides the presiding officer in deciding future questions of order unless this precedent is overturned by another decision of the Senate or by a rules change. Some rulemaking statutes require a supermajority vote to overturn on appeal the presiding officer's ruling on a point of order.", "Parliamentary actions taken on the basis of an informal practice, or pursuant to a rule of one of the Senate's party conferences, are not enforceable on the Senate floor. While informal practices and party conference rules can affect actions taken in Senate committee and the Senate floor, they are not invoked through an exercise of the Senate's constitutional rulemaking authority. Hence, they do not have the authority of Senate rules and procedures. Informal practices evolve over the years as custom and party conference rules are adopted and enforced by each party."], "subsections": []}, {"section_title": "The Senate's Reliance on Unanimous Consent", "paragraphs": ["The Senate's standing rules emphasize the rights of individual Senators, in particular by affording each Senator the right to debate at length and the right to offer amendments that are not relevant to the bill under consideration. It would be difficult for the Senate to act on legislation in a timely fashion if Senators always exercised these two powerful rights. For this and other reasons, the Senate often agrees, by unanimous consent, to operate outside its standing rules.", "In practice, Senate business is frequently conducted under unanimous consent (UC) agreements. UC agreements may be used to bring up a measure, establish how the measure will be considered on the floor, and control how the Senate will consider amendments.", "Given the fact that it takes only one Senator to object to a UC agreement, each agreement is carefully crafted by the majority leader in consultation with the minority leader, leaders of the committee with jurisdiction over the bill in question, and other Senators who express an interest in the legislation. The agreement is then orally propounded on the floor, usually by the majority leader, and takes effect if no Senator objects. ", "Once entered into, a UC agreement has the same authority as the Senate's standing rules and is enforceable on the Senate floor. Consent agreements have the effect of changing \"all Senate rules and precedents that are contrary to the terms of the agreement.\" Once entered into, UC agreements can be altered only by unanimous consent."], "subsections": []}, {"section_title": "The Importance of Precedents", "paragraphs": ["The published precedents of the Senate detail the ways in which the Senate has interpreted and applied its rules. The precedents both complement and supplement the rules of the Senate. As illustrated by the example of according priority recognition to the majority leader, it may be necessary to refer to the precedents for guidance on how the Senate's rules are to be understood. The brevity of the Senate's standing rules often makes the body's precedents particularly important as a determinant of proceedings.", "Precedents are analogous to case law in their effect. Just as attorneys in court will cite previous judicial decisions to support their arguments, Senators will cite precedents of the Senate to support a point of order, defend against one, or argue for or against an appeal of the presiding officer's ruling on a point of order. Similarly, the presiding officer will often support his or her ruling by citing the precedents. In this way, precedents influence the manner in which current Senate rules are applied by relating past decisions to the specific case before the chamber.", "Most precedents are established when the Senate votes on questions of order (i.e., on whether to uphold or overturn a ruling of the presiding officer or on a point of order that the presiding officer has submitted to the body) or when the presiding officer decides a question of order and the ruling is not appealed. Historically, the Senate follows such precedents until \"the Senate in its wisdom should reverse or modify that decision.\" Precedents can also be created when the presiding officer responds to a parliamentary inquiry.", "Precedents do not carry equal weight. Inasmuch as the Senate itself has the ultimate constitutional authority over its own rules, precedents reflecting the judgment of the full Senate are considered the most authoritative. Accordingly, precedents based on a vote of the Senate have more weight than those based on rulings of the presiding officer. Responses of the presiding officer to parliamentary inquiries have even less weight, because they are not subject to a process of appeal through which the full Senate could confirm or contest them. In addition, more recent precedents generally have greater weight than earlier ones, and a precedent that reflects an established pattern of rulings will have more weight than a precedent that is isolated in its effect. All precedents must also be evaluated in the historical context of the Senate's rules and practices at the time the precedents were established. Senators seeking precedents to support or rebut an argument may consult the Senate Parliamentarian's Office."], "subsections": []}, {"section_title": "The Senate's Unofficial Practices", "paragraphs": ["Some Senate procedural actions are based on unofficial practices that have evolved over the years and become accepted custom. These practices do not have the same standing as the chamber's rules, nor are they compiled in any written source of authority. Although these unofficial practices cannot be enforced on the Senate floor, many of them are well established and customarily followed. Some contemporary examples of unofficial practices include respecting \"holds\" that individual Senators sometimes place on consideration of specific measures and giving the majority leader or a designee the prerogative to offer motions to proceed to the consideration of a bill, recess, or adjourn."], "subsections": []}]}, {"section_title": "The Senate Manual and Authorities It Contains", "paragraphs": ["The Senate Manual compiles in a single document many of the chief official parliamentary authorities of the Senate. The publication, prepared under the auspices of the Senate Committee on Rules and Administration, appears periodically in a new edition as a Senate document. The current edition, which was issued in the 113 th Congress, contains the text of the following parliamentary authorities (the titles given are those found in the Manual ):", "Standing Rules of the Senate; Nonstatutory Standing Orders Not Embraced in the Rules, and Resolutions Affecting the Business of the Senate; Rules for Regulation of the Senate Wing of the U.S. Capitol and Senate Office Buildings; Rules of Procedure and Practice in the Senate When Sitting on Impeachment Trials; Cleaves' Manual of the Law and Practice in Regard to Conferences and Conference Reports ; General and Permanent Laws Relating to the U.S. Senate; and Constitution of the United States of America.", "The following sections of this part of the report discuss each of these authorities in more detail.", "The Manual contains a general table of contents and an index. Some of the respective components in the Manual have their own tables of contents and indices that provide additional details about that source. Individual provisions of each procedural authority are assigned section numbers that run throughout the Manual in a single sequence and always appear in bold type. The section numbers assigned to the standing rules correspond to the numbers of the rules themselves. For example, paragraph 2 of Senate Rule XXII, which sets forth the cloture rule, is found at section 22.2 of the Manual . The indices to the Manual direct readers to these section numbers. The indices indicate, for example, that the motion to adjourn is covered in Manual sections 6.4, 9, and 22.1. For this reason, the document is cited by section number rather than page number."], "subsections": [{"section_title": "Standing Rules of the Senate", "paragraphs": ["The Senate does not re-adopt its standing rules at the beginning of each new Congress but instead regards its rules as continuing in effect without need for re-adoption. The Senate follows this practice on grounds that it is a continuing body; only one-third of its membership enters on new terms of office after every biennial election, so a quorum is continuous. Changes to the standing rules are proposed in the form of Senate resolutions, which can be adopted by majority vote. At the start of the 116 th Congress, there were 44 standing rules of the Senate.", "The standing rules of the Senate are set forth at the beginning of the Manual . The standing rules appear with footnotes indicating amendments adopted since their last general revision in 1979. The footnotes cite the resolution adopted by the Senate to make the rules change. The Manual presents the standing rules with an itemized table of contents and a detailed, separate index."], "subsections": []}, {"section_title": "Permanent Standing Orders", "paragraphs": ["From time to time, the Senate adopts a resolution or agrees to a unanimous consent request to create a standing order of the Senate. A standing order, while not embraced in the standing rules, operates with the same authority as a standing rule and is enforceable on the Senate floor in the same way. A standing order remains in effect until repealed by the Senate unless otherwise specified in the order itself.", "The standing orders the Senate has created by adopting resolutions and that remain in effect are compiled in the Manual in sections 60-139. This is the only readily available compilation of permanent standing orders currently in effect. In addition to setting forth the text of these standing orders, the Manual provides (1) a heading stating the subject matter of each and (2) a citation to the Senate resolution(s) that created and amended it. Footnotes provide supplementary information, such as noting when references in the standing order (e.g., the name of a committee) were changed. "], "subsections": []}, {"section_title": "Laws Relating to the Senate", "paragraphs": ["The most voluminous component of the Manual presents a compilation of \"General and Permanent Laws Relating to the U.S. Senate.\" The statutory excerpts appear in their codified version (i.e., organized under the relevant title, chapter, and section of the United States Code ). The Manual provides a separate table of contents to the provisions included, but it sets forth the provisions themselves without citation or commentary.", "Although most of the selected provisions address the administration and operations of the Senate, some of them bear on questions related to Senate procedure, such as those concerning Senators' oaths of office, officers of the Senate, and investigative procedure in Senate committees. The compilation also includes \"rulemaking statutes,\" or statutory provisions that establish procedures for Senate action on specified measures. Rulemaking provisions of statute are discussed further in the section below on \" Rulemaking Statutes and Budget Resolutions .\""], "subsections": []}, {"section_title": "Constitution", "paragraphs": ["The U.S. Constitution imposes several procedural requirements on the Senate. For example, Article I, Section 5, requires the Senate to keep and publish an official Journal of its proceedings, requires a majority quorum to conduct business on the Senate floor, and mandates that a yea and nay vote take place upon the request of one-fifth of the Senators present. The Constitution also bestows certain exclusive powers on the Senate: Article II, Section 2, grants the Senate sole authority to provide advice and consent to treaties and executive nominations, and Article I, Section 3, gives the Senate the sole power to try all impeachments.", "The Manual presents the text of the Constitution and its amendments. The Manual places bold brackets around text that has been amended, and a citation directs readers to the Manual section containing the amendment. The Manual also provides historical footnotes about the ratification of the Constitution and each amendment, as well as a special index to the text."], "subsections": []}, {"section_title": "Additional Parliamentary Resources Included in the Manual", "paragraphs": [], "subsections": [{"section_title": "Rules for Regulation of the Senate Wing", "paragraphs": ["Senate Rule XXXIII authorizes the Senate Committee on Rules and Administration to make \"rules and regulations respecting such parts of the Capitol ... as are or may be set apart for the use of the Senate.\" The rule is framed to extend this authority to the entire Senate side of the Capitol complex and explicitly includes reference to the press galleries and their operation. Several of the regulations adopted by the Committee on Rules and Administration under this authority have a bearing on floor activity, including ones addressing (1) the floor duties of the secretaries for the majority and for the minority, (2) the system of \"legislative buzzers and signal lights,\" and (3) the \"use of display materials in the Senate chamber.\" "], "subsections": []}, {"section_title": "Rules for Impeachment Trials", "paragraphs": ["The Senate has adopted a special body of rules to govern its proceedings when sitting as a Court of Impeachment to try impeachments referred to it by the House of Representatives. The Senate treats these rules, like its standing rules, as remaining permanently in effect unless altered by action of the Senate. On occasion, the Senate has adopted amendments to these rules. "], "subsections": []}, {"section_title": "Cleaves' Manual on Conferences", "paragraphs": ["Cleaves' Manual presents a digest of the rules, precedents, and other provisions of parliamentary authorities governing Senate practice in relation to the functioning of conference committees and conference reports as they stood at the end of the 19 th century. Although rules and practices governing conferences to resolve legislative differences between the House and the Senate have since altered in many respects, and many of the precedents now applicable to conferences were established after Cleaves' Manual was prepared, many of the principles set forth in Cleaves' Manual still apply to current practice.", "As presented in the Senate Manual , Cleaves' Manual includes excerpts from the Manual of Parliamentary Practice prepared by Thomas Jefferson as Vice President at the turn of the 19 th century, as well as statements by other Vice Presidents and by Speakers, excerpts from Senate rules, statements of principles established by precedent, and explanatory notes. In addition, a section at the end sets forth forms for conference reports and joint explanatory statements."], "subsections": []}]}, {"section_title": "Annotated Excerpt from the Manual", "paragraphs": ["The page below displays an excerpt from the section of the Manual that presents the Constitution. The excerpt shows the format of the Manual , and the annotations explain some of the key features for using the reference, such as distinguishing between the Manual section numbers in bold text and the Manual page numbers at the bottom of the page."], "subsections": []}]}, {"section_title": "Other Official Senate Parliamentary Authorities", "paragraphs": [], "subsections": [{"section_title": "Riddick's Senate Procedure", "paragraphs": ["Riddick's Senate Procedure , often referred to simply as Riddick's , is the most comprehensive reference source covering Senate rules, precedents, and practices. Its principal purpose is to present a digest of precedents established in the Senate. The current edition, published in 1992, covers significant Senate precedents established from 1883 to 1992. It was written by Floyd M. Riddick, Parliamentarian of the Senate from 1964 to 1974, and Alan S. Frumin, Parliamentarian of the Senate from 1987 to 1995 and 2001 to 2012 and Parliamentarian Emeritus since 1997. ", "As implied by its full title, Riddick's Senate Procedure: Precedents and Practices presents Senate precedents as well as discussions of the customary practice of the Senate. It is organized around procedural topics, which are presented in alphabetical order. For each procedural topic, the volume first presents a summary of the general principles governing that topic followed by the text of relevant standing rules, constitutional provisions, or rulemaking provisions of statute. Summaries of the principles established by individual precedents are then presented under subject headings and subtopics organized in alphabetical order. For example, the topic \"Cloture Procedure\" has a subject heading \"Amendments After Cloture,\" which is further divided into 18 topics, such as \"Drafted Improperly\" and \"Filing of Amendments.\"", "Footnotes provide citations to the date, the Congress, and the session when each precedent was established and to the Congressional Record or Senate Journal pages where readers can locate the pertinent proceedings (e.g., \"July 28, 1916, 64-1, Record , pp. 11748-50\"). Footnote citations beginning with the word see indicate proceedings based on presiding officers' responses to parliamentary inquiries. Citations without see indicate precedents created by ruling of the presiding officers or by votes of the Senate.", "An appendix to Riddick's Senate Procedure contains sample floor dialogues showing the terminology that Senators and the presiding officer use in different parliamentary situations. Examples of established forms used in the Senate (e.g., for various types of conference reports, the motion to invoke cloture) are also provided. Useful supplementary information appears in brackets throughout the appendix. The appendix also has a separate index. ", "The publication's main index is useful for locating information on specific topics of Senate procedure. The table of contents lists only the main procedural topics covered in the book."], "subsections": []}, {"section_title": "Standing Orders by Unanimous Consent", "paragraphs": ["In addition to the standing orders created by resolution, the Senate also establishes standing orders by agreeing to unanimous consent requests. These agreements usually make these standing orders effective only for the duration of a Congress or some other limited period. The current Senate practice is to adopt an established package of these standing orders at the beginning of each successive Congress. Standing orders of this kind are not included in the Senate Manual but appear only in the Congressional Record on the day they are adopted. For example, on the first day of the 116 th Congress in 2019, the Senate adopted 11 unanimous consent agreements re-establishing standing orders from the previous Congress on topics such as the procedures for allowing Members' staff access to the Senate floor during the consideration of matters and when the Senate Ethics Committee is permitted to meet. "], "subsections": []}, {"section_title": "Unanimous Consent (UC) Agreements", "paragraphs": ["UC agreements also include orders that function as parliamentary authorities in the Senate. These consent agreements establish conditions for floor consideration of specified measures, which, in relation to those measures, override the regulations established by the standing rules and other Senate parliamentary authorities. Commonly, agreements of this kind may set the time for taking up or for voting on the measure, limit the time available for debate, or specify what amendments and other motions are in order.", "UC agreements constitute parliamentary authorities of the Senate because, once propounded and accepted on the Senate floor, they are enforced just as are the Senate's standing rules and other procedural authorities. UC agreements are propounded orally, and therefore, they are printed in the Congressional Record . Those that are accepted are printed at the front of the Senate's daily Calendar of Business and Executive Calendar until they are no longer in effect."], "subsections": []}, {"section_title": "Committee Rules of Procedure", "paragraphs": ["Rule XXVI, paragraph 2, of the Senate's standing rules requires that each standing committee adopt written rules of procedure and publish these rules in the Congressional Record not later than March 1 of the first session of each Congress. Committee rules cover important aspects of the committee stage of the legislative process, such as the procedures for preparing committee reports and issuing subpoenas, and committees are responsible for enforcing their own rules. Subcommittees may also have their own supplemental rules of procedure. Committee rules of procedure do not supersede those established by the standing rules of the Senate. ", "Each committee's rules appear in the Congressional Record on the day they are submitted for publication. Some committees also publish their rules in a committee print, or in the committee's interim or final \"Legislative Calendar,\" and many post them on their websites. In addition, the Senate Committee on Rules and Administration issues a document each Congress that compiles the rules of procedure adopted by all Senate committees. This document, Authority and Rules of Senate Committees , also presents the jurisdiction statement for each committee from Rule XXV of the Senate's standing rules as well as related information, such as provisions of public law affecting committee procedures."], "subsections": []}, {"section_title": "Rulemaking Statutes and Budget Resolutions", "paragraphs": ["The constitutional grant to each chamber of Congress of authority over its own rules permits the Senate to establish procedural regulations through simple resolutions, which are adopted by the Senate alone. In certain cases, the Senate institutes procedures through provisions included in statutory measures (bills and joint resolutions), which can become effective only through agreement between both houses and presentation to the President (or through concurrent resolutions, which require agreement between both houses). Given that these procedures are created through an exercise of each chamber's constitutional rulemaking authority, they have the same standing as Senate and House rules. A statute or concurrent resolution that contains \"rulemaking provisions,\" in this sense, often incorporates a section titled \"Exercise of Rulemaking Power.\" This section asserts the rulemaking authority of each chamber by declaring that the pertinent provisions \"shall be considered as part of the rules of each House\" and are subject to being changed \"in the same manner ... as in the case of any other rule of such House\"\u2014that is, for example, by adoption of a simple resolution of the Senate.", "In the Senate, statutory rulemaking provisions are principally of three kinds: (1) those derived from Legislative Reorganization Acts, (2) those establishing expedited procedures for consideration of specific classes of measures, and (3) those derived from the Congressional Budget Act and related statutes governing the budget process. In addition, provisions regulating action in the Senate (or House of Representatives, or both) in the congressional budget process may be contained in congressional budget resolutions, which are concurrent resolutions adopted pursuant to the Congressional Budget Act. "], "subsections": [{"section_title": "Legislative Reorganization Acts", "paragraphs": ["The Legislative Reorganization Act of 1946 (P.L. 79-601, 60 Stat. 812) and the Legislative Reorganization Act of 1970 (P.L. 91-510, 84 Stat. 1140) are important rulemaking statutes that affected legislative procedures. Many rulemaking provisions in these statutes were later incorporated into the Senate's standing rules, and some others appear in the compilation of Laws Relating to the Senate presented in the Senate Manual , as discussed earlier."], "subsections": []}, {"section_title": "Expedited Procedures", "paragraphs": ["The term rulemaking statute is most often used in connection with laws that include provisions specifying legislative procedures to be followed in the Senate or the House, or both, in connection with the consideration of a class of measure also specified by the statute. This type of rulemaking statute, commonly referred to as \"expedited procedures\" or \"fast track\" provisions, defines special procedures for congressional approval or disapproval of specified actions proposed to be taken by the executive branch or independent agencies. A well-known example includes the Congressional Review Act, which provides for special procedures Congress can use to overturn a rule issued by a federal agency. Some of these expedited procedures are listed in the Senate Manual section titled \"General and Permanent Laws Relating to the U.S. Senate.\""], "subsections": []}, {"section_title": "Budget Process Statutes", "paragraphs": ["Four of the most important rulemaking statutes define specific procedures for considering budgetary legislation: the Congressional Budget and Impoundment Control Act of 1974 (commonly known as the Congressional Budget Act), the Balanced Budget and Emergency Deficit Control Act (the \"Gramm-Rudman-Hollings Act\"), the Budget Enforcement Act of 1990, and the Budget Control Act of 2011. For example, Section 305(b) of the Congressional Budget Act defines Senate floor procedures for considering the congressional budget resolution. "], "subsections": []}, {"section_title": "Procedural Provisions in Budget Resolutions", "paragraphs": ["When adopted, the chief purpose of the concurrent resolution on the budget (provided for in the Congressional Budget Act) is to establish, between the House and the Senate, a budget plan for the fiscal year. The Senate has often included in this congressional budget resolution supplementary procedural regulations to govern subsequent action on spending bills or other budget-related measures. Many of these procedural provisions institute new points of order that, similar to those established by the Congressional Budget Act itself, are available against budgetary measures or provisions contained in these measures. For example, beginning in 1993, some budget resolutions have established \"pay-as-you-go\" (PAYGO) procedures for Senate consideration of legislation affecting direct spending and revenues. ", "The procedures established by these provisions may be made applicable only to budgetary action for the coming year or an established time period, but they may also be established as permanent procedures that are altered or abolished only by further action in a subsequent budget resolution. Procedures set forth in congressional budget resolutions are not comprehensively compiled in a single source and may best be identified by examining the texts of adopted congressional budget resolutions for successive years."], "subsections": []}]}]}, {"section_title": "Rules of Senate Party Conferences", "paragraphs": ["The rules of the conferences of the two parties in the Senate are not adopted by the Senate itself, and accordingly, they cannot be enforced on the Senate floor. Conference rules may nevertheless affect proceedings of the Senate, for they may cover topics such as the selection of party leaders, meetings of the conference, and limitations on committee assignments for conference members. The Senate Republican Conference adopted rules for the 116 th Congress that are available online."], "subsections": []}, {"section_title": "Publications of Senate Committees and Offices", "paragraphs": ["Some publications prepared by committees and offices of the Senate provide valuable information about Senate parliamentary procedure and practices. While these publications are not official parliamentary reference sources, they often make reference to official sources such as the Senate's standing rules and published precedents. "], "subsections": [{"section_title": "Electronic Senate Precedents", "paragraphs": ["Senators and their staff may access, via Webster (which is not available to the public), the Electronic Senate Precedents , a catalog of recent precedents compiled by the Office of the Parliamentarian. These unofficial documents, provided by the Office of the Secretary of the Senate, are updated periodically to reflect precedents on topics such as cloture and germaneness of amendments that were established after the publication of Riddick's Senate Procedure (1992). "], "subsections": []}, {"section_title": "A Compendium of Laws and Rules of the Congressional Budget Process", "paragraphs": ["A Compendium of Laws and Rules of the Congressional Budget Process , a print of the House Committee on the Budget, presents the text of the Congressional Budget and Impoundment Control Act of 1974, the Gramm-Rudman-Hollings Act, and additional information related to the budget making process, such as House and Senate rules affecting the budget process. Although this document was printed by the House Budget Committee, it presents valuable information related to the budgetary process in the Senate."], "subsections": []}, {"section_title": "Senate Cloture Rule", "paragraphs": ["Senate Cloture Rule , a print prepared for the Senate Committee on Rules and Administration by CRS, was last issued during the 112 th Congress (2011-12). The print covers the rule's history and application through its publication and may be useful to those wanting a more detailed knowledge of the cloture rule. Significantly, however, this print does not capture precedents established during the 113 th (2013-14) and 115 th (2017-18) Congresses that changed the vote thresholds for invoking cloture on various presidential nominations or the change to the post-cloture debate time established during the 116 th Congress. "], "subsections": []}, {"section_title": "Treaties and Other International Agreements", "paragraphs": ["Treaties and Other International Agreements: The Role of the United States Senate , was prepared as a print for the Senate Committee on Foreign Relations by CRS. The print provides detailed information about the Senate's advice and consent role, covers the procedures that govern all stages of Senate consideration of treaties and international agreements, and discusses congressional oversight of treaties and other international agreements. The latest edition (S.Prt. 106-71) appeared in the 106 th Congress."], "subsections": []}, {"section_title": "Enactment of a Law", "paragraphs": ["Enactment of a Law presents a concise summary of the legislative process. This document, prepared by Robert B. Dove, former Parliamentarian of the Senate, explains Senate floor procedures and the functions of the various Senate officials, such as the Secretary of the Senate, the Sergeant at Arms, and the Senate Parliamentarian. "], "subsections": []}, {"section_title": "How Our Laws Are Made", "paragraphs": ["How Our Laws Are Made , first published in 1953 by the House Committee on the Judiciary, provides a summary of the legislative process from the drafting of legislation to final approval and presidential action. While this document focuses on House procedures, it includes a review of Senate committee and floor procedures prepared by the Office of the Parliamentarian of the Senate. Although the document is intended for nonspecialists, its summary descriptions of House procedures serve as a useful reference source. ", "Appendix A. Selected CRS Products on Senate Procedure", "Most of these reports are available to congressional staff through the CRS home page at http://www.crs.gov . These reports may also be accessed through the Congressional Process, Administration, and Elections section of the CRS website at https://www.crs.gov/iap/congressional-process-administration-and-elections .", "CRS Report 98-853, The Amending Process in the Senate , by Christopher M. Davis.", "CRS Report R41003, Amendments Between the Houses: Procedural Options and Effects , by Elizabeth Rybicki.", "CRS Report RL30862, The Budget Reconciliation Process: The Senate's \"Byrd Rule , \" by Bill Heniff Jr. ", "CRS Report 96-708, Conference Committee and Related Procedures: An Introduction , by Elizabeth Rybicki. ", "CRS Report RL30360, Filibusters and Cloture in the Senate , by Valerie Heitshusen and Richard S. Beth.", "CRS Report 98-865, Flow of Business: A Typical Day on the Senate Floor , by Christopher M. Davis.", "CRS Report R43563, \"Holds\" in the Senate , by Mark J. Oleszek. ", "CRS Report RS20668, How Measures Are Brought to the Senate Floor: A Brief Introduction , by Christopher M. Davis.", "CRS Report 98-425, Invoking Cloture in the Senate , by Christopher M. Davis.", "CRS Report 96-548, The Legislative Process on the Senate Floor: An Introduction , by Valerie Heitshusen.", "CRS Report 98-306, Points of Order, Rulings, and Appeals in the Senate , by Valerie Heitshusen.", "CRS Report R42929, Procedures for Considering Changes in Senate Rules , by Richard S. Beth.", "CRS Report 98-696, Resolving Legislative Differences in Congress: Conference Committees and Amendments Between the Houses , by Elizabeth Rybicki.", "CRS Report RL33939, The Rise of Senate Unanimous Consent Agreements , by Walter J. Oleszek. ", "CRS Report RL31980, Senate Consideration of Presidential Nominations: Committee and Floor Procedure , by Elizabeth Rybicki.", "CRS Report 98-308, Senate Legislative Procedures: Published Sources of Information , by Christopher M. Davis. ", "CRS Report 98-311, Senate Rules Affecting Committees , by Valerie Heitshusen.", "CRS Report 96-452, Voting and Quorum Procedures in the Senate , coordinated by Elizabeth Rybicki. ", "Appendix B. Senate Parliamentary Reference Information Available Online", "The vast majority of the referenced links found throughout this report can be accessed through one of two \"gateway\" websites maintained by legislative branch organizations: Congress.gov (a website of the Library of Congress) and govinfo.gov (a website of GPO). Each of these sites provides an entry point for research into Senate procedures. The websites provided for the documents discussed in this report are current as of the report's publication date.", "Congress.gov", "http://www.congress.gov ", "Congress.gov is the official website for U.S. federal legislative information. The site is designed to provide access to accurate, timely, and complete legislative information for Members of Congress, legislative agencies, and the public. Congress.gov also contains information on topics such as nominations, public laws, communications, and treaties. It is presented by the Library of Congress using data from the Office of the Clerk of the U.S. House of Representatives, the Office of the Secretary of the Senate, GPO, Congressional Budget Office, and CRS.", "govinfo.gov", "https://www.govinfo.gov/ ", "Govinfo.gov is a service of the GPO. The website provides public access to official publications of the Congress."], "subsections": []}]}]}}
{"id": "RL34027", "title": "Honduras: Background and U.S. Relations", "released_date": "2019-05-30T00:00:00", "summary": ["Honduras, a Central American nation of 9.1 million people, has had close ties with the United States for many years. The country served as a base for U.S. operations designed to counter Soviet influence in Central America during the 1980s, and it continues to host a U.S. military presence and cooperate on antidrug efforts today. Trade and investment linkages are also long-standing and have grown stronger since the implementation of the Dominican Republic-Central America-United States Free Trade Agreement (CAFTA-DR) in 2006. In recent years, instability in Honduras\u2014including a 2009 coup and significant outflows of migrants and asylum-seekers since 2014\u2014has led U.S. policymakers to focus greater attention on conditions in the country and their implications for the United States.", "Domestic Situation", "President Juan Orlando Hern\u00e1ndez of the conservative National Party was inaugurated to a second four-year term in January 2018. He lacks legitimacy among many Hondurans, however, due to allegations that his 2017 reelection was unconstitutional and marred by fraud. Over the past five years, Honduras has made some progress in reducing violence and putting public finances on a more sustainable path. Anti-corruption efforts have also made some headway, largely as a result of cooperation between the Honduran public prosecutor's office and the Organization of American States-backed Mission to Support the Fight Against Corruption and Impunity in Honduras.", "Nevertheless, considerable challenges remain. Honduras continues to be one of the poorest countries in Latin America, with more than 67% of Hondurans living below the poverty line. It also remains one of the most violent countries in the world and continues to suffer from persistent human rights abuses and widespread impunity. Moreover, the country's tentative progress in combating corruption has generated a fierce backlash, calling into question the sustainability of those efforts.", "U.S. Policy", "In recent years, U.S. policy in Honduras has been guided by the U.S. Strategy for Engagement in Central America, a whole-of-government effort designed to promote economic prosperity, strengthen governance, and improve security in Honduras and the rest of the region. Congress has appropriated more than $2.6 billion for the strategy since FY2016, at least $431 million of which has been allocated to Honduras. Continued U.S. engagement in the region is uncertain, however, as the Trump Administration announced in March 2019 that it intends to end foreign assistance programs in Honduras, El Salvador, and Guatemala due to the continued northward flow of migrants and asylum-seekers to the United States.", "The 116th Congress could play an important role in shaping U.S. policy toward Honduras and the broader region. Several legislative initiatives that have been introduced\u2014including H.R. 2615, S. 1445, and H.R. 2836\u2014would authorize foreign assistance for certain activities in Central America. Congress will also consider FY2020 foreign aid appropriations. H.R. 2839 would appropriate $540.9 million for the Central America strategy, including at least $75 million for Honduras. That would be $96 million more than the Administration requested for Central America and about $9 million more than the Administration requested for Honduras. Other bills Congress may consider would tie U.S. security assistance to human rights conditions in Honduras (H.R. 1945), tie U.S. assistance to the number of unaccompanied Honduran children that arrive at the U.S. border (H.R. 2049), and expand in-country refugee processing in Honduras (H.R. 2347)."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["Honduras, a Central American nation of 9.1 million people, faces significant domestic challenges. Democratic institutions are fragile, current economic growth rates and social policies are insufficient to reduce widespread poverty, and the country continues to experience some of the highest violent crime rates in the world. These interrelated challenges have produced periodic instability in Honduras and have contributed to relatively high levels of displacement and emigration in recent years. Although the Honduran government has taken some steps intended to address these deep-seated issues, many analysts maintain that Honduras lacks the institutions and resources necessary to do so on its own.", "U.S. policymakers have devoted more attention to Honduras and its Central American neighbors since 2014, when large flows of migrants and asylum-seekers from the region began arriving at the U.S. border. In the aftermath of the crisis, the Obama Administration determined that it was \"in the national security interests of the United States\" to work with Central American governments to improve security, strengthen governance, and promote economic prosperity in the region. Accordingly, the Obama Administration launched a new, whole-of-government U.S. Strategy for Engagement in Central America and requested significant increases in foreign assistance to support its implementation.", "The Trump Administration initially maintained the Central America strategy while seeking to scale back the amount of foreign assistance provided to Honduras and its neighbors. Although assistance to the region has declined each year since FY2016, Congress has rejected many of the Administration's proposed cuts. It has appropriated more than $2.6 billion for Central America over the past four years, including at least $431 million for Honduras (see Table 1 ). In March 2019, however, the Trump Administration announced its intention to end U.S. foreign assistance to the \"Northern Triangle\" nations of Honduras, El Salvador, and Guatemala due to the continued northward flow of migrants and asylum-seekers from the region. It remains unclear how the Administration intends to implement this shift in policy or if it intends to amend its FY2020 budget request, which includes at least $65.8 million for Honduras.", "Some Members of Congress have objected to the Administration's abrupt decision to end foreign aid for Honduras and its neighbors. The 116 th Congress could play a crucial role in determining the direction of U.S. policy in the region as it considers FY2020 appropriations, foreign assistance authorizations, and other legislative initiatives. This report analyzes political, economic, and security conditions in Honduras. It also examines issues in U.S.-Honduran relations that have been of particular interest to many in Congress, including foreign assistance, migration, security cooperation, human rights, and trade and investment. "], "subsections": []}, {"section_title": "Politics and Governance", "paragraphs": ["Honduras has struggled with political instability and authoritarian governance for much of its history. The military traditionally has played an influential role in politics, most recently governing Honduras for most of the period between 1963 and 1982. The country's current constitution\u2014its 16 th since declaring independence from Spain in 1821\u2014was adopted as Honduras transitioned back to civilian rule. It establishes a representative democracy with a separation of powers among an executive branch led by the president, a legislative branch consisting of a 128-seat unicameral national congress, and a judicial branch headed by the supreme court. In practice, however, the legislative process tends to be executive-driven and the judiciary is often subject to intimidation, corruption, and politicization.", "Honduras's traditional two-party political system, dominated by the Liberal ( Partido Liberal , PL) and National ( Partido Nacional , PN) Parties, has fractured over the past decade. Both traditional parties are considered to be ideologically center-right, and political competition between them has generally been focused more on using the public sector for patronage than on implementing programmatic agendas. The leadership of both parties supported a 2009 coup, in which the military, backed by the supreme court and congress, detained then-President Manuel Zelaya and flew him into forced exile. Zelaya had been elected as a moderate member of the PL but alienated many within the political and economic elite by governing in a populist manner and calling for a constituent assembly to draft a new constitution. Many rank-and-file members of the PL abandoned the party in the aftermath of the coup and joined Zelaya upon his return from exile to launch a new left-of-center Liberty and Re-foundation ( Libertad y Refundaci\u00f3n , LIBRE) party. ", "The post-coup split among traditional supporters of the PL has benefitted the PN, which now has the largest political base in Honduras and has controlled the presidency and congress since 2010. Many analysts maintain that the PN has gradually eroded checks and balances to consolidate its influence over other government institutions and entrench itself in power. For example, in 2012, the PN-controlled congress, led by Juan Orlando Hern\u00e1ndez, replaced four supreme court justices who had struck down a pair of high-profile government initiatives. Although the Honduran minister of justice and human rights asserted that the move was illegal and violated the independence of the judiciary, it was never overturned. The justices who were installed in 2012 issued a ruling in 2015 that struck down the constitution's explicit ban on presidential reelection, allowing Hern\u00e1ndez, who had been elected president in 2013, to seek a second term. The PN has also manipulated appointments to other nominally independent institutions, such as the country's electoral oversight body. Given that Honduras continues to hold multiparty elections but falls short of democratic standards in several areas, Freedom House classifies the country as \"partly free,\" and the Varieties of Democracy Project classifies the country as an \"electoral autocracy.\""], "subsections": [{"section_title": "Hern\u00e1ndez Administration", "paragraphs": ["President Juan Orlando Hern\u00e1ndez of the PN was inaugurated to a second four-year term in January 2018. He lacks legitimacy among many Hondurans, however, due to his controversial reelection. As noted above, the Honduran constitution explicitly prohibits presidential reelection, but Hern\u00e1ndez was able to run for a second term as a result of a 2015 supreme court ruling issued by justices whose appointments Hern\u00e1ndez had orchestrated as the head of congress in 2012. The 2017 election was also plagued by an \"abundance of irregularities and deficiencies\" that led some international observers to question whether the official results, which gave Hern\u00e1ndez a narrow 42.9%-41.4% victory over Salvador Nasralla of the LIBRE-led \"Opposition Alliance against the Dictatorship,\" accurately reflected the will of the Honduran people. Both major opposition parties contested the results, and many Hondurans took to the streets to protest the alleged election fraud. At least 23 Hondurans were killed in post-election violence, at least 16 of whom were shot by Honduran security forces. ", "The United Nations sought to facilitate a national dialogue to promote societal reconciliation in the aftermath of the election. Individuals affiliated with the top three presidential candidates reportedly arrived at 169 areas of consensus related to human rights, electoral reforms, constitutional reforms, and the rule of law, but they were unable to conclude formal political agreements on most of those issues. Nevertheless, in January 2019, the Honduran congress approved a package of constitutional changes to partially reform the electoral process. The changes will restructure the national registry office, dissolve the country's existing electoral authority, and create two new institutions\u2014a national electoral council to organize and supervise electoral processes and an electoral justice court to settle electoral disputes. Although many analysts have recommended that Honduras depoliticize its electoral institutions, each of the agencies will consist of three primary officials, effectively allowing the PN, PL, and LIBRE to divide the positions among themselves as the PN and the PL have done historically.", "Over the past year and a half, Hern\u00e1ndez has largely maintained the business-friendly economic policies and hardline approach to security policy that he implemented during his first term (see \" Economic and Social Conditions \" and \" Security Conditions \" below). His PN, which holds 61 of the 128 seats in congress, has been able to control the legislative agenda with the ad-hoc support of several small parties. Most Hondurans are dissatisfied with status quo, however, as 86% of those surveyed in May 2019 asserted that the country is moving in the wrong direction. Unemployment is considered the top problem in the country, cited by 30% of those surveyed, followed by corruption (19%), poor health care (15%), insecurity (11%), drugs (9%), and the cost of living (8%). Hondurans have repeatedly taken to the streets to protest the Hern\u00e1ndez Administration's actions, and lack thereof, on those issues."], "subsections": []}, {"section_title": "Anti-Corruption Progress and Setbacks", "paragraphs": ["Corruption is widespread in Honduras, but the country has made some progress in combatting it since 2016 with the support of the OAS-backed Mission to Support the Fight against Corruption and Impunity in Honduras ( Misi\u00f3n de Apoyo Contra la Corrupci\u00f3n y la Impunidad en Honduras , MACCIH). Honduran civil society had carried out a series of mass demonstrations demanding the establishment of an international anti-corruption organization after Honduran authorities discovered that at least $300 million was embezzled from the Honduran social security institute during the PN administration of President Porfirio Lobo (2010-2014) and some of the stolen funds were used to fund Hern\u00e1ndez's 2013 election campaign. Hern\u00e1ndez was reluctant to create an independent organization with far-reaching authorities like the International Commission against Impunity in Guatemala (CICIG), which had helped bring down the Guatemalan president in 2015. Facing significant domestic and international pressure, however, he negotiated a more limited arrangement with the OAS. According to the agreement, signed in January 2016, the MACCIH is intended to support, strengthen, and collaborate with Honduran institutions to prevent, investigate, and punish acts of corruption. ", "The MACCIH initially focused on strengthening Honduras's anti-corruption legal framework. It secured congressional approval for new laws to create anti-corruption courts with nationwide jurisdiction and to regulate the financing of political campaigns. The Honduran congress repeatedly delayed and weakened the MACCIH's proposed reforms, however, hindering the mission's anti-corruption efforts. For example, prior to enactment of the law to establish anti-corruption courts with nationwide jurisdiction, the Honduran congress modified the measure by stripping the new judges of the authority to order asset forfeitures, stipulating that the new judges can hear only cases involving three or more people, and removing certain crimes\u2014including the embezzlement of public funds\u2014from the jurisdiction of the new courts. Other measures the MACCIH has proposed, such as an \"effective collaboration\" bill to encourage members of criminal networks to cooperate with officials in exchange for reduced sentences, have stalled in congress. Such plea-bargaining laws have proven crucial to anti-corruption investigations in other countries, such as the ongoing \"Car Wash\" ( Lava Jato ) probe in Brazil.", "MACCIH officials are also working alongside Honduras's Special Prosecution Unit to Fight Corruption-related Impunity ( Unidad Fiscal Especial Contra la Impunidad de la Corrupci\u00f3n , UFECIC) to jointly investigate and prosecute high-level corruption cases. To date, these integrated teams have presented 12 cases, uncovering corruption networks involved in activities ranging from using social assistance funds for personal expenses to awarding government contracts to narcotics traffickers in exchange for campaign contributions. Nearly 120 people are facing prosecution, including more than 70 cabinet ministers, legislators, and other government officials. However, the cases have been slow to move through the Honduran justice system: The first oral trial\u2014involving former First Lady Rosa Elena Bonilla de Lobo (2010-2014)\u2014began in March 2019.", "Honduran political and economic elites threatened by this tentative progress have sought to obstruct the MACCIH's efforts. In January 2018, for example, the Honduran congress passed a law that effectively blocked an investigation into legislators' mismanagement of public funds. Although the constitutional chamber of the supreme court overturned the law, the Honduran congress has continued to push forward similar measures. A new criminal code, which is to go into effect in November 2019, will reportedly reduce criminal penalties for narcotics trafficking, embezzlement, fraud, illicit enrichment, and abuse of authority, potentially allowing some corrupt officials to avoid serving any time in prison. Some analysts have also questioned the impartiality of judges presiding over the MACCIH-backed cases, several of whom have issued decisions in favor of those accused of corruption.", "The MACCIH's four-year mandate is scheduled to expire in January 2020. More than 61% of Hondurans would like the MACCIH to remain in Honduras, but the Hern\u00e1ndez Administration has expressed little interest in renewing the agreement. The U.S. government, which has provided crucial diplomatic and financial support for the MACCIH over the past three and a half years, has called for an extension of the mission's mandate. Many analysts assert that Honduran public prosecutors would struggle to continue their anti-corruption efforts without the MACCIH or another source of international assistance and political support."], "subsections": []}]}, {"section_title": "Economic and Social Conditions", "paragraphs": ["The Honduran economy is one of the least developed in Latin America. Historically, the country's economic performance closely tracked the prices of agricultural commodities, such as bananas and coffee. While agriculture remains important, accounting for 14% of gross domestic product (GDP) and nearly a third of total employment, the Honduran economy has diversified since the late 1980s. Successive Honduran administrations privatized state-owned enterprises, lowered taxes and tariffs, and offered incentives to attract foreign investment, spurring growth in the maquila (offshore assembly for reexport) sector\u2014particularly in the apparel, garment, and textile industries. Those policy changes also fostered the development of nontraditional agricultural exports, such as seafood and palm oil.", "President Hern\u00e1ndez's top economic policy priority upon taking office in 2014 was to put the government's finances on a more sustainable path. The nonfinancial public sector deficit had grown to 7.5% of GDP in 2013 as a result of weak tax collection, increased expenditures, and losses at state-owned enterprises. As the Honduran government struggled to obtain financing for its obligations, public employees and contractors occasionally went unpaid and basic government services were interrupted. In 2014, Hern\u00e1ndez negotiated a three-year agreement with the International Monetary Fund (IMF), under which the Honduran government agreed to reduce the deficit to 2% of GDP by 2017 and carry out structural reforms related to the electricity and telecommunications sectors, pension funds, public-private partnerships, and tax administration in exchange for access to $189 million in financing. The Hern\u00e1ndez Administration ultimately reduced the deficit to less than 1% of GDP in 2017 and adhered to most of its other commitments. In May 2019, the IMF and the Honduran government reached a staff-level agreement on a new two-year economic program that will give Honduras access to $311 million of financing.", "Hern\u00e1ndez has also sought to make Honduras more attractive to foreign investment. He contracted a global consulting firm to develop the five-year \"Honduras 20/20\" plan, which seeks to attract $13 billion of investment and generate 600,000 jobs in four priority sectors: tourism, textiles, intermediate manufacturing, and business services. To achieve the plan's objectives, the Honduran government has adopted a new business-friendly tax code, increased investments in infrastructure, and entered into a customs union with Guatemala and El Salvador. The Hern\u00e1ndez Administration is also moving forward with a controversial plan to establish \"Employment and Economic Development Zones\"\u2014specially designated areas where foreign investors are granted administrative autonomy to enact their own laws, set up their own judicial systems, and carry out other duties usually reserved for governments. Nevertheless, annual foreign direct investment inflows to Honduras fell from $1.4 billion in 2014 to $1.2 billion in 2018.", "The Honduran economy has expanded by an average of 3.9% annually over the past five years, but it is not generating sufficient employment to absorb the country's growing labor supply. In 2017, for example, the Honduran labor force increased by nearly 110,000 people, but only 8,500 jobs were created in the formal sector. The vast majority of new workers were left to work in the unregulated informal sector, without job protections or benefits, or seek opportunity elsewhere. Since nearly 40% of Hondurans are under the age of 19, the country's prime age working population is projected to continue growing for the next two decades. Without stronger job creation, Honduras may miss a key window of opportunity to boost economic growth. In 2018, nearly 20% of Hondurans were unemployed or underemployed, and another 49% of Hondurans worked full time for less than the minimum wage.", "Honduras's recent economic growth has also proven insufficient to reduce the country's high poverty rate. Some economic analysts argue that the Hern\u00e1ndez Administration's fiscal austerity policies have exacerbated the situation by increasing the government's dependence on regressive, indirect taxes while limiting public investment and social welfare expenditures. More than 67% of Hondurans live below the national poverty line. Conditions are particularly difficult in rural Honduras, where nearly 63% of the population lives in extreme poverty\u2014unable to satisfy their basic nutritional needs. In recent years, many rural communities have struggled to contend with a coffee fungus outbreak and a series of droughts that have destroyed crops and reduced agricultural production and employment. Households have reportedly been forced to engage in extreme coping strategies, such as taking on debt, selling off land, and migrating.", "Honduras's medium-term economic performance is expected to mirror the U.S. business cycle, as the United States remains Honduras's top export market and primary source of investment, tourism, and remittances. To boost the country's long-term growth potential, analysts maintain that Honduras will have to improve education and infrastructure and address entrenched social ills, such as widespread crime and corruption and high levels of poverty."], "subsections": []}, {"section_title": "Security Conditions", "paragraphs": ["Honduras struggles with high levels of crime and violence. A number of interrelated factors appear to contribute to the poor security situation. Widespread poverty, fragmented families, and a lack of education and employment opportunities leave many Honduran youth susceptible to recruitment by gangs such as the Mara Salvatrucha (MS-13) and Barrio 18 . These organizations engage in drug dealing and extortion, among other criminal activities, and appear to be responsible for a substantial portion of homicides and much of the crime that affects citizens on a day-to-day basis.", "Honduras also serves as a significant drug-trafficking corridor as a result of its location between cocaine-producing countries in South America and the major consumer market in the United States. Heavily armed and well-financed transnational criminal organizations have sought to secure control of Honduran territory by battling one another and local affiliates and seeking to intimidate and infiltrate Honduran institutions. Many of these groups have close ties to political and economic elites who rely upon illicit finances to fund their election campaigns and maintain or increase the market share of their businesses. In November 2018, for example, the U.S. Department of Justice charged Antonio \"Tony\" Hern\u00e1ndez\u2014a former member of congress and President Hern\u00e1ndez's brother, for allegedly engaging in large-scale drug trafficking (see \" Counternarcotics \" below). ", "Honduran security forces and justice-sector institutions have historically lacked the personnel, equipment, and training necessary to respond to criminal threats. They have also struggled with systemic corruption, with some sectors working on behalf of criminal organizations or private interests.", "President Hern\u00e1ndez campaigned on a hard-line security platform, repeatedly pledging to do whatever it takes to reduce crime and violence in Honduras. Upon taking office in 2014, he immediately ordered the security forces into the streets to conduct intensive patrols of high-crime neighborhoods. Among the units involved in the ongoing operation are two hybrid forces that Hern\u00e1ndez helped to establish while he was serving as the president of the Honduran congress: the military police force ( Polic\u00eda Militar de Orden P\u00fablico , PMOP), which is under the control of the ministry of defense, and a military-trained police unit known as the \"Tigers\" ( Tropa de Inteligencia y Grupos de Respuesta Especial de Seguri dad , TIGRES ). The PMOP has been implicated in numerous human rights abuses, including 13 of the 16 killings documented by the U.N. Office of the High Commissioner for Human Rights in the aftermath of the 2017 election. Human rights advocates have repeatedly called on the Hern\u00e1ndez Administration to withdraw the military from domestic law enforcement activities.", "Hern\u00e1ndez has also taken some steps to strengthen security and justice-sector institutions. He created a special police reform commission in April 2016 after press reports indicated that high-ranking police commanders had conspired with drug traffickers to assassinate two top Honduran antidrug officials in 2009 and 2011 and the head of the anti-money-laundering unit of the public prosecutor's office in 2013; other officials in the Honduran national police and security ministry reportedly covered up internal investigations of the crimes. Although previous attempts to reform the police force produced few results, the special commission dismissed more than 5,600 personnel, including half of the highest-ranked officers. It also proposed and won congressional approval for measures to restructure the national police force, increase police salaries, and implement new training and evaluation protocols. Public perceptions of the national police have yet to improve substantially, however, as fewer than 34% of Hondurans expressed confidence in the force in 2018.", "Honduras's investigative and prosecutorial capacity has improved in recent years, although impunity remains widespread. In 2015, the Honduran national police launched a new investigative division and the public prosecutor's office established a new criminal investigative agency. Both institutions have set up forensic laboratories and have begun to conduct more scientific investigations. The budget of the public prosecutor's office grew by more than 94% in nominal terms from 2014 to 2018, allowing Attorney General \u00d3scar Chinchilla to hire additional detectives, prosecutors, and other specialized personnel. Nevertheless, the public prosecutor's office accounted for less than 1.5% of the Honduran central government's expenditures in 2018 and remains overburdened. ", "These policies appear to have contributed to considerable improvements in security conditions over the past five years. Although the homicide rate remains high by global standards, it peaked at 86.5 murders per 100,000 residents in 2011 and fell to 41.3 murders per 100,000 residents in 2018 (see Figure 2 , below). Common crime also appears to have declined, with the percentage of Hondurans reporting they had been the victim of a crime in the past year falling from 20.5% in 2014 to 12.8% in 2018. Nevertheless, there continues to be a pervasive sense of insecurity in the country: 52% of Hondurans consider their cities unsafe, and nearly 88% consider the country unsafe."], "subsections": []}, {"section_title": "U.S.-Honduran Relations", "paragraphs": ["The United States has had close relations with Honduras over many years. The bilateral relationship was especially close in the 1980s, when Honduras returned to civilian rule and became the lynchpin for U.S. policy in Central America. The country served as a staging area for U.S.-supported raids into Nicaragua by the Contra forces attempting to overthrow the leftist Sandinista government and an outpost for U.S. military forces supporting the Salvadoran government's efforts to combat the Farabundo Mart\u00ed National Liberation Front insurgency. A U.S. military presence known as Joint Task Force Bravo has been stationed in Honduras since 1983. Economic linkages also intensified in the 1980s after Honduras became a beneficiary of the Caribbean Basin Initiative, which allowed for duty-free importation of Honduran goods into the United States. Economic ties have deepened since the entrance into force of the Dominican Republic-Central America-United States Free Trade Agreement (CAFTA-DR) in 2006.", "Relations between the United States and Honduras were strained during the country's 2009 political crisis. The Obama Administration condemned the coup and, over the course of the following months, leveled a series of diplomatic and economic sanctions designed to pressure Honduran officials to restore Zelaya to power. The Administration limited contact with the Honduran government, suspended some foreign assistance, minimized cooperation with the Honduran military, and revoked the visas of members and supporters of the interim government headed by Roberto Micheletti. In November 2009, the Administration shifted the emphasis of U.S. policy from reversing Zelaya's removal to ensuring the legitimacy of previously scheduled elections. Although some analysts argued that the policy shift allowed those behind the coup to consolidate their hold on power, Administration officials maintained that elections had become the only realistic way to bring an end to the political crisis.", "Current U.S. policy in Honduras is focused on strengthening democratic governance, including the promotion of human rights and the rule of law, enhancing economic prosperity, and improving the long-term security situation in the country, thereby mitigating potential challenges for the United States such as irregular migration and organized crime. To advance these objectives, the United States provides Honduras with substantial foreign assistance, maintains significant security and commercial ties, and engages on issues such as migration and human rights. Bilateral cooperation could be constrained, however, if the United States ends foreign assistance programs in the region, as announced by the Trump Administration (see \" Potential Termination of Assistance \" below)."], "subsections": [{"section_title": "Foreign Assistance", "paragraphs": ["The U.S. government has provided significant amounts of foreign assistance to Honduras over the years as a result of the country's long-standing development challenges and close relations with the United States. Aid levels were particularly high during the 1980s and early 1990s, as Honduras served as a base for U.S. operations in Central America. U.S. assistance to Honduras began to wane as the regional conflicts subsided, however, and has generally remained at lower levels since then, with a few exceptions, such as a spike following Hurricane Mitch in 1998 and again after the Millennium Challenge Corporation awarded Honduras a $215 million economic growth compact in 2005.", "Current assistance to Honduras is guided by the U.S. Strategy for Engagement in Central America, which is designed to promote economic prosperity, strengthen governance, and improve security in the region. The Obama Administration introduced the new strategy and sought to significantly increase assistance for Honduras and its neighbors following a 2014 surge in migration from Central America. Congress has appropriated more than $2.6 billion for the strategy through the State Department and the U.S. Agency for International Development (USAID) since FY2016. At least $431 million has been allocated to Honduras, either as bilateral assistance or through the Central America Regional Security Initiative (CARSI) (see Table 1 ).", "U.S. assistance funds a wide range of development activities in Honduras. These include good governance programs intended to strengthen institutions and encourage civil society engagement and oversight, agriculture programs intended to increase food security and rural income generation, education programs intended to improve the quality of the education system and increase access to formal schooling for at-risk youth, and economic reform programs intended to foster employment and income growth through competitive and inclusive markets. U.S. bilateral aid to Honduras also provides training and equipment for the Honduran military, while CARSI assistance supports law enforcement operations, justice-sector reform, and crime and violence prevention programs."], "subsections": [{"section_title": "FY2019 Appropriations Legislation", "paragraphs": ["In the Consolidated Appropriations Act, 2019 ( P.L. 116-6 ), Congress appropriated $527.6 million to continue implementing the U.S. Strategy for Engagement in Central America. The act gives the State Department significant flexibility in allocating assistance among the seven nations of the isthmus. The conference report ( H.Rept. 116-9 ) accompanying the act asserts that the Secretary of State should take into account the political will of Central American governments, including their commitment \"to reduce illegal migration and reduce corruption and impunity,\" when deciding where to allocate the funds. The only assistance specifically designated for Honduras is $5 million to support the MACCIH and $20 million that is to be split among the attorneys general offices of Honduras, El Salvador, and Guatemala.", "Like prior appropriations measures, the act places strict conditions on assistance to the Honduran government. It requires 50% of assistance for the central government of Honduras to be withheld until the Secretary of State certifies that the Honduran government is meeting 16 conditions. These include improving border security, combating corruption, countering gangs and organized crime, supporting programs to reduce poverty and promote equitable economic growth, protecting the right of political opposition parties and other members of civil society to operate without interference, and resolving commercial disputes."], "subsections": []}, {"section_title": "Potential Termination of Assistance", "paragraphs": ["The future of U.S. foreign aid programs in Honduras is uncertain. The Trump Administration announced in March 2019 that it intends to end all foreign assistance to the country (as well as El Salvador and Guatemala). The announcement came after more than a year of threats from President Trump to cut off assistance to the \"Northern Triangle\" nations of Central America due to the continued northward flow of migrants and asylum-seekers from the region (see \" Recent Flows of Migrants and Asylum-Seekers \" below). Although the Administration has yet to provide details of its plans, the decision appears to affect nearly all U.S. assistance appropriated for Honduras in FY2018. It remains unclear how the President's decision may affect assistance appropriated in other fiscal years or the Administration's FY2020 budget request, which includes $65.8 million for Honduras. The Honduran government reacted to the announcement by expressing irritation with the \"contradictory policies\" of the U.S. government, noting that President Hern\u00e1ndez had just hosted then-Secretary of Homeland Security Kirstjen Nielsen in Tegucigalpa, where they signed a new security cooperation agreement.", "Recent appropriations measures provide the President with significant discretion to cut some foreign assistance to the Northern Triangle. For example, Section 7045(a) of the Consolidated Appropriations Act, 2018 ( P.L. 115-141 ) requires the State Department to withhold 75% of assistance for the central governments of El Salvador, Guatemala, and Honduras until the Secretary of State certifies that those governments are addressing 16 congressional concerns. It also empowers the Secretary of State to suspend those funds and reprogram them elsewhere in Latin America and the Caribbean if he/she determines the governments have made \"insufficient progress.\" It appears as though the Administration could make additional cuts using the transfer and reprogramming authorities granted in annual appropriations legislation and the Foreign Assistance Act of 1961, as amended (22 U.S.C. \u00a72151 et seq. ). Administrations typically consult with the Appropriations Committees and provide detailed justifications prior to taking such actions.", "The 116 th Congress is considering authorization and appropriations measures that could increase congressional oversight over foreign assistance programs and direct additional aid to Honduras and its Central American neighbors. The United States-Northern Triangle Enhanced Engagement Act, H.R. 2615 (Engel), would authorize $577 million for the U.S. Strategy for Engagement in Central America in FY2020, including \"not less than\" $490 million for the Northern Triangle. The bill, which was passed unanimously by the House Foreign Affairs Committee on May 22, 2019, would direct U.S. agencies to carry out a variety of programs in the region, impose annual reporting requirements, and prohibit the Administration from reprogramming or transferring the funds for other purposes. The Central America Reform and Enforcement Act, S. 144 5 (Schumer), would authorize $1.5 million for the Central America strategy in FY2020 and prohibit the reprogramming of any assistance appropriated for the Northern Triangle nations since FY2016. The Department of State, Foreign Operations, and Related Programs Appropriations Act, 2020, H.R. 2839 (Lowey), would appropriate $540.9 million for the Central America strategy in FY2020, including at least $75 million for Honduras. The bill would also modify FY2017 ( P.L. 115-31 ), FY2018 ( P.L. 115-141 ), and FY2019 ( P.L. 116-6 ) appropriations legislation to strengthen the funding directives for aid to Central America."], "subsections": []}]}, {"section_title": "Migration Issues", "paragraphs": ["The United States and Honduras have strong migration ties. As of 2017, approximately 603,000 individuals born in Honduras resided in the United States, and an estimated 425,000 (70%) of them were in the country without authorization. Migration from Honduras to the United States has traditionally been driven by high levels of poverty and unemployment; however, the poor security situation in Honduras has increasingly played a role as well. According to a February 2019 poll, more than 40% of Hondurans have a family member who has emigrated in the past year. This could contribute to additional migration in the coming years, as those who leave Honduras may share their experiences and provide financial and logistical assistance to those who remain behind."], "subsections": [{"section_title": "Recent Flows of Migrants and Asylum-Seekers", "paragraphs": ["In recent years, there has been a significant increase in the number of Honduran migrants and asylum-seekers arriving at the U.S. border. U.S. apprehensions of Honduran nationals at the southwest border nearly tripled from about 30,350 in FY2012 to nearly 91,000 in FY2014. Although annual flows declined for a few years, more than 133,000 Hondurans were apprehended at the border through the first seven months of FY2019. The demographics of the Hondurans attempting to reach the United States have also changed significantly, with unaccompanied children and families\u2014many of whom have requested humanitarian protection\u2014accounting for 66% of those apprehended at the border over the past five and a half years (see Figure 3 below).", "Since 2014, the U.S. and Honduran governments have sought to deter migration in various ways. Both governments have run public-awareness campaigns to inform Hondurans about the potential dangers of unauthorized migration and to correct possible misperceptions about U.S. immigration policies. The Trump Administration has also sought to discourage migration with changes in asylum and immigration enforcement policies, such as the \"zero tolerance\" policy that reportedly resulted in more than 1,000 Honduran children being separated from their parents. Some analysts have questioned the effectiveness of such deterrence campaigns, with one recent study finding that Hondurans' \"views of the dangers of migration to the United states, or the likelihood of deportation, do not seem to influence their emigration plans in any meaningful way.\"", "The U.S. and Honduran governments are also working together to combat human smuggling. The U.S. Department of Homeland Security (DHS) has worked with the Honduran national police to establish two Transnational Criminal Investigative Units. In the first seven months of 2018, the units initiated 32 human trafficking and smuggling investigations, made 20 arrests, and conducted biometric vetting of nearly 2,700 Honduran and third-country migrants. DHS has provided additional support to the Honduran national police's Special Tactical Operations Group, which conducts checkpoints along the Guatemalan border and specializes in detecting and interdicting human smuggling operations.", "Moreover, both countries are implementing initiatives intended to address the root causes of emigration. President Hern\u00e1ndez joined with his counterparts in El Salvador and Guatemala to establish the Alliance for Prosperity in the Northern Triangle, which aims to foster economic growth, improve security conditions, strengthen government institutions, and increase opportunities for the region's citizens. The Honduran government has reportedly allocated nearly $2.9 billion to advance those objectives over the past three years. As noted above (see \" Foreign Assistance \"), the U.S. government has been supporting complementary efforts through the U.S. Strategy for Engagement in Central America, but the future of that initiative is uncertain.", "These programs may take several years to bear fruit, as research suggests the relationship between development and migration is complex. Numerous studies have found that economic development may increase outward migration initially by removing the financial barriers faced by households in poverty. Consequently, assistance programs that provide financial support or skills training without simultaneously ensuring the existence of local opportunities may end up intensifying rather than alleviating migration flows. There is some evidence that violence prevention programs may have a more immediate impact on migration trends by mitigating forced displacement."], "subsections": []}, {"section_title": "Deportations and Temporary Protected Status", "paragraphs": ["U.S. Immigration and Customs Enforcement (ICE) removed ( deported ) nearly 29,000 Hondurans from the United States in FY2018, making Honduras the third-largest recipient of deportees in the world behind Mexico and Guatemala. In addition to deportations from the United States, Honduras receives large numbers of deportees from Mexico, a transit country for Central American migrants bound for the United States. Honduran policymakers have expressed concerns about their country's ability to absorb the large volume of deportees, as it is often difficult for those returning to the country to find gainful employment, and deported criminals may exacerbate gang activity and crime. Since FY2014, the United States has provided at least $5.4 million to the International Organization for Migration to assist the Honduran government in improving its reception centers and services for repatriated migrants.", "Honduran leaders are also concerned about the potential economic impact of deportations because the Honduran economy is heavily dependent on the remittances of migrant workers abroad. In 2018, Honduras received nearly $4.8 billion (equivalent to 19.8% of GDP) in remittances. Given that remittances are the primary source of income for more than one-third of the Honduran households that receive them, a sharp reduction in remittances could have a dramatic effect on socioeconomic conditions in the country. According to the Honduran Central Bank, however, remittance levels have traditionally been more associated with the performance of the U.S. economy than the number of deportations from the United States.", "Nearly 81,000 Hondurans benefit from temporary protected status (TPS)\u2014a form of humanitarian relief that allows individuals who could otherwise be deported to stay in the United States. The United States first provided TPS to Hondurans in the aftermath of Hurricane Mitch, which killed nearly 5,700 people, displaced 1.1 million others, and produced more than $5 billion in damages in 1998. TPS for Honduras was extended 14 times before the Trump Administration announced the program's termination in May 2018. The Administration has given current beneficiaries, who have an estimated 53,500 U.S.-born children, until January 5, 2020 to seek an alternative lawful immigration status or depart from the United States. The termination decision is currently on hold, however, due to a court order.", "Then-Secretary of Homeland Security Kirstjen Nielsen asserted that the termination was required since \"the disruption of living conditions in Honduras from Hurricane Mitch that served as the basis for its TPS designation has ceased to a degree that it should no longer be regarded as substantial.\" Some analysts disagree; they argue that the Secretary's decision ignored ongoing economic, security, and governance challenges in Honduras and could undermine U.S. and Honduran efforts to address the root causes of irregular migration. In 2017, TPS beneficiaries sent an estimated $176 million in cash remittances to Honduras, which is roughly the same amount that the U.S. government provided to Honduras in foreign aid. Some Members of Congress have expressed concerns about the termination of TPS for Hondurans, and the 116 th Congress may consider measures such as the American Dream and Promise Act of 2019, H.R. 6 (Roybal-Allard), which would provide a path toward permanent resident status for some TPS holders."], "subsections": []}]}, {"section_title": "Security Cooperation", "paragraphs": ["The United States and Honduras have cooperated closely on security issues for many years. Honduras served as a base for U.S. operations designed to counter Soviet influence in Central America during the 1980s and has hosted a U.S. troop presence\u2014Joint Task Force Bravo\u2014ever since (see text box \"Joint Task Force Bravo\"). Current bilateral security efforts primarily focus on citizen safety and drug trafficking. "], "subsections": [{"section_title": "Citizen Safety", "paragraphs": ["As noted previously, Honduras faces significant security challenges (see \" Security Conditions \"). Many citizens contend with criminal threats on a daily basis, ranging from petty theft to extortion and forced gang recruitment. The U.S. government has sought to assist Honduras in addressing these challenges, often using funds appropriated through CARSI.", "USAID has used CARSI funds to implement a variety of crime- and violence-prevention programs. USAID interventions include primary prevention programs that work with communities to create safe spaces for families and young people, secondary prevention programs that identify the youth most at risk of engaging in violent behavior and provide them and their families with behavior-change counseling, and tertiary prevention programs that seek to reintegrate juvenile offenders into society. According to a 2014 impact evaluation, Honduran communities where USAID implemented crime- and violence-prevention programs reported 35% fewer robberies, 43% fewer murders, and 57% fewer extortion attempts than would have been expected based on trends in similar communities without a USAID presence.", "Other CARSI-funded efforts in Honduras are designed to support law enforcement and strengthen rule-of-law institutions. The State Department's Bureau of International Narcotics and Law Enforcement Affairs (INL) has established \"model police precincts,\" which are designed to build local confidence in law enforcement by converting police forces into more community-based, service-oriented organizations. INL has also supported efforts to purge the Honduran national police of corrupt officers, helped establish a criminal investigative school, and helped stand up the criminal investigation and forensic medicine directorates within the public prosecutor's office. The Federal Bureau of Investigation (FBI) leads a Transnational Anti-Gang Unit designed to interrupt criminal gang activity, including kidnappings and extortion. ", "Over the past few years, USAID and INL have integrated their respective prevention and law enforcement interventions as part of a \"place-based strategy\" that seeks to concentrate U.S. efforts within the most dangerous communities in Honduras."], "subsections": []}, {"section_title": "Counternarcotics", "paragraphs": ["Honduras is a major transshipment point for illicit narcotics as a result of its location between cocaine producers in South America and consumers in the United States. The Caribbean coastal region of the country is a primary landing point for both maritime and aerial traffickers due to its remote location, limited infrastructure, and lack of government presence. In 2017, the State Department estimated that three to four metric tons of cocaine transit through Honduras every month.", "The U.S. government has sought to strengthen counternarcotics cooperation with Honduras to reduce illicit flows through the country. Although the United States has not provided the Honduran government with any assistance that would support aerial interdiction since Honduras enacted an aerial intercept law in 2014, close bilateral cooperation has continued in several other areas. U.S. agencies, including the Drug Enforcement Administration (DEA), have used CARSI funds to establish and support specially vetted units and task forces designed to combat transnational criminal organizations. These units, which include U.S. advisers and selected members of the Honduran security forces, carry out complex investigations into drug trafficking, money laundering, and other transnational crime. ", "The U.S. Department of Defense (DOD) provides additional counternarcotics assistance to Honduras. This support includes equipment intended to extend the reach of Honduran security forces and enable them to better control their national territories. It also includes specialized training. For example, U.S. Special Operations Forces have helped finance and train the TIGRES unit of the Honduran national police, which has been employed as a counterdrug SWAT (Special Weapons and Tactics) team. DOD counternarcotics assistance to Honduras totaled nearly $12 million in FY2016 and $12.4 million in FY2017. DOD planned to provide Honduras with at least $5.7 million of assistance to support ground and maritime interdiction efforts in FY2018.", "As a result of this cooperation, U.S. and Honduran authorities have apprehended numerous high-level drug traffickers. At least 24 Hondurans have been extradited to the United States, and at least a dozen others have turned themselves in to U.S. authorities since 2014. Many of those now in U.S. custody had previously been designated by the U.S. Treasury Department's Office of Foreign Asset Control as Specially Designated Narcotics Traffickers pursuant to the Foreign Narcotics Kingpin Designation Act (codified at 21 U.S.C. \u00a7 1901 et seq. ), freezing their assets and prohibiting U.S. citizens from conducting financial or commercial transactions with them.", "Nevertheless, the State Department asserts that U.S. and Honduran counternarcotics efforts have \"not yet translated into significant increases in drug seizures or notable disruptions to drug trafficking organizations\" and that \"there is no concrete information to suggest the overall volume of illicit drugs being trafficked through Honduras has decreased.\" This lack of progress may be due to organized crime infiltrating Honduran government institutions. In September 2017, Fabio Lobo, the son of former President Porfirio Lobo (2010-2014), was sentenced to 24 years in prison for conspiring to import cocaine into the United States. According to the U.S. Department of Justice (DOJ), Fabio Lobo connected Honduran drug traffickers to corrupt politicians and security forces who provided protection and government contracts in exchange for bribes. DOJ has charged several current and former members of the Honduran congress, including Juan Antonio \"Tony\" Hern\u00e1ndez\u2014President Hern\u00e1ndez's brother, with similar offenses.", "Some observers have raised questions about the effectiveness of U.S. counternarcotics efforts and whether they contribute to human rights abuses. In April 2012, for example, the DEA and its vetted unit within the Honduran national police, with operational support from the State Department, initiated Operation Anvil, a 90-day pilot program intended to disrupt drug trafficking through Honduras. Three joint interdiction missions carried out as part of the operation ended with suspects being killed, including a May 2012 incident in which the vetted unit opened fire on a river taxi, killing four people and injuring four others. In May 2017, the State Department and DOJ Offices of Inspectors General released a joint report on the three deadly force incidents. They found that the DEA had not adequately planned for the operation, conducted a flawed review of the May 2012 incident, inappropriately withheld information from the U.S. ambassador, and provided inaccurate information to DOJ leadership and Congress. The report also noted that Honduran officers filed inaccurate reports about the three deadly force incidents and planted a gun at one of the crime scenes. Although DEA officials were aware of the inaccurate reports and planted weapon, they took no action."], "subsections": []}]}, {"section_title": "Human Rights Concerns", "paragraphs": ["In recent years, human rights organizations have alleged a wide range of abuses by Honduran security forces acting in their official capacities or on behalf of private interests or criminal organizations. In perhaps the most high-profile case, Berta C\u00e1ceres, an indigenous and environmental activist, was killed in March 2016, apparently as a result of her efforts to prevent the construction of a hydroelectric project. Seven men were convicted for their roles in the murder in November 2018, including a retired Honduran army lieutenant and an active-duty army major. Honduran authorities have also arrested the general manager of the firm responsible for the hydroelectric project, but C\u00e1ceres's family and other human rights advocates maintain that those who ordered and financed the murder remain at large. ", "Numerous similar attacks have been carried out against journalists and other human rights defenders, including leaders of Afro-descendent, indigenous, land rights, LGBT (lesbian, gay, bisexual, and transgender), and workers' organizations. The extent to which Honduran security forces have been involved is unclear, since \"the vast majority of murders and attacks targeting rights defenders go unpunished; if investigations are launched at all, they are inconclusive.\"", "The Honduran government has often attributed attacks against journalists, human rights defenders, and political and social activists to the country's high level of generalized violence and downplayed the possibility that the attacks may be related to the victims' work. Such attacks have persisted, however, even as annual homicides have fallen 48% from a peak of 7,172 in 2012 to 3,726 in 2017. According to the Honduran government's national commissioner for human rights, 33 journalists and social communicators were killed from 2014 to 2018, while 37 were killed from 2009 to 2013. Similarly, a coalition of domestic election observers documented 62 political killings during the 2017 electoral process, up from 48 in 2013.", "Human rights advocates have also criticized the Honduran government's \"practice of criminalizing journalists' professional activities and the activities of rights defenders.\" President Hern\u00e1ndez and high-ranking members of his administration have repeatedly dismissed protests and sought to justify repressive actions by the Honduran security forces by characterizing members of the political opposition and social movements as criminals, drug traffickers, and gang members. The Honduran government has also brought criminal charges, such as defamation and unlawful occupation of a premises, against journalists and human rights defenders \"as a deterrent that is intended to stop people from investigating abuses, irregularities or human rights violations.\" "], "subsections": [{"section_title": "U.S. Initiatives", "paragraphs": ["Human rights promotion has long been an objective of U.S. policy in Honduras, though some analysts argue that it has been subordinated to other U.S. interests, such as maintaining bilateral security cooperation. The U.S. Strategy for Engagement in Central America has 13 sub-objectives, one of which is ensuring that Central American governments uphold democratic values and practices, including respect for human rights. The Trump Administration, like the Obama Administration before it, has generally refrained from publically criticizing the Honduran government over human rights abuses but has sought to support Honduran efforts to improve the situation. For example, the U.S. and Honduran governments maintain a high-level bilateral human rights working group, which has met six times since it was launched in 2012. The most recent meeting, held in April 2018, focused on efforts to strengthen the Honduran government's human rights institutions, improve cooperation with international partners and civil society, foster citizen security, combat corruption and impunity, and address migration issues.", "The U.S. government has also allocated foreign assistance to promote human rights in Honduras, including about $9 million in FY2017 (the most recent year for which data is available). For example, USAID is working with Honduran government institutions and human rights organizations on the implementation of a 2015 law that created a protection mechanism for journalists, human rights defenders, and justice sector officials. Among other activities, U.S. assistance is supporting efforts to develop early warning systems, conduct risk analyses, and improve the processes for providing protective measures. As of November 2018, the protection mechanism was implementing protection measures for 124 human rights defenders, 31 journalists, 24 media workers, and 20 justice sector officials. The protective measures include self-protection trainings, psychosocial support, technological and infrastructure measures, police escorts, and temporary relocations and evacuations. Many human rights defenders do not trust the protection mechanism, however, due to its heavy reliance on the country's security forces, which continue to be viewed as the main perpetrators of human rights violations in Honduras.", "The U.S. government also supports efforts to strengthen the rule-of-law and reduce impunity in Honduras. USAID is providing assistance to the Honduran government and civil society organizations to support the development of more effective, transparent, and accountable judicial institutions, with a particular focus on guaranteeing equal access to justice for women, youth, LGBT individuals, and other victims of human rights abuses. INL also supports a variety rule-of-law initiatives, including a Violent Crimes Task Force that investigates attacks against journalists and activists. The task force, which includes vetted members of the Honduran national police, the public prosecutor's office, and U.S. advisers, reportedly arrested at least 42 people and obtained at least six convictions in 2018. "], "subsections": []}, {"section_title": "Human Rights Restrictions on Foreign Assistance", "paragraphs": ["The U.S. government has placed restrictions on some foreign assistance due to human rights concerns. Like all countries, Honduras is subject to legal provisions (codified at 22 U.S.C. \u00a7 2378d and 10 U.S.C. \u00a7 362 ) that require the State Department and the Department of Defense to vet foreign security forces and prohibit funding for any military or other security unit if there is credible evidence that it has committed \"a gross violation of human rights.\" In other cases, the U.S. government has chosen not to work with certain Honduran security forces as a matter of policy. For example, the United States has never provided assistance to the military police force, Some members of the Honduran military who have received U.S. training, however, have subsequently been assigned to the military police.", "Congress has placed additional restrictions on U.S. security assistance to Honduras over the past eight years. From FY2012 to FY2015, annual foreign aid appropriations measures required the State Department to withhold between 20% and 35% of aid for Honduran security forces until the Secretary of State could certify that certain human rights conditions were met. Since FY2016, annual appropriations measures have required the State Department to withhold 50% of aid for the central government of Honduras until the Secretary of State can certify that the Honduran government is addressing a variety of congressional concerns, including ", "investigating and prosecuting in the civilian justice system government personnel who are credibly alleged to have violated human rights; cooperating with commissions against corruption and impunity and with regional human rights entities; and protecting the right of political opposition parties and other members of civil society to operate without interference.", "The State Department certified that Honduras met the conditions necessary to release assistance every year from FY2012 through FY2017. It has yet to issue certifications for FY2018 or FY2019. ", "The 116 th Congress could consider legislative initiatives to place additional human rights restrictions on assistance to Honduras. The Berta C\u00e1ceres Human Rights in Honduras Act, H.R. 1945 (H. Johnson), would suspend all U.S. security assistance to Honduras and direct U.S. representatives at multilateral development banks to oppose all loans for Honduran security forces until the State Department certifies that Honduras has effectively investigated and prosecuted a series of human rights abuses, including the killing of Berta C\u00e1ceres, and satisfied several other conditions."], "subsections": []}]}, {"section_title": "Commercial Ties", "paragraphs": ["The United States and Honduras have maintained close commercial ties for many years. In 1984, Honduras became one of the first beneficiaries of the Caribbean Basin Initiative, a unilateral U.S. preferential trade arrangement providing duty-free importation for many goods from the region. In the late 1980s, Honduras benefitted from production-sharing arrangements with U.S. apparel companies for duty-free entry into the United States of certain apparel products assembled in Honduras. As a result, maquiladoras , or export-assembly companies, flourished. The passage of the Caribbean Basin Trade Partnership Act ( P.L. 106-200 ) in 2000, which provided Caribbean Basin nations with North America Free Trade Agreement (NAFTA)-like preferential tariff treatment, further boosted the maquila sector. ", "Commercial relations have expanded most recently as a result of the Dominican Republic-Central America-United States Free Trade Agreement (CAFTA-DR), which significantly liberalized trade in goods and services after entering into force in 2006. CAFTA-DR has eliminated tariffs on all consumer and industrial goods and is scheduled to phase out tariffs on nearly all agricultural products by 2020. Although U.S. Trade Representative Robert Lighthizer has asserted that CAFTA-DR and other trade arrangements throughout Latin America \"need to be modernized,\" the Trump Administration has not yet sought to renegotiate the agreement."], "subsections": [{"section_title": "Trade and Investment", "paragraphs": ["Despite a significant decline in bilateral trade in the aftermath of the global financial crisis, total merchandise trade between the United States and Honduras has increased 47% since 2005; U.S. exports to Honduras have grown by 72%, and U.S. imports from Honduras have grown by 25% (see Figure 4 below). Analysts had predicted that CAFTA-DR would lead to a relatively larger increase in U.S. exports because a large portion of imports from Honduras already entered the United States duty free prior to implementation of the agreement. The United States has run a trade surplus with Honduras since 2007.", "Total two-way trade amounted to $10.3 billion in 2018: $5.6 billion in U.S. exports to Honduras and $4.7 billion in U.S. imports from Honduras. Top U.S. exports to Honduras included textile and apparel inputs (such as yarns and fabrics), refined oil products, machinery, and cereals. Top U.S. imports from Honduras included apparel, insulated wire, bananas and other fruit, and coffee. The United States was Honduras's largest trading partner.", "U.S. foreign direct investment in Honduras has grown significantly since the implementation of CAFTA-DR. The total stock of U.S. foreign direct investment in the country amounted to $1.4 billion in 2017, an increase of 71% since 2005. More than 75% is invested in the manufacturing sector. According to the State Department, approximately 200 U.S. companies operate in Honduras. While relatively low labor costs, proximity to the U.S. market, and the large Caribbean port of Puerto Cort\u00e9s make Honduras attractive to investors, the country's investment climate is reportedly hampered by high levels of crime, weak institutions, corruption, low educational levels, and poor infrastructure."], "subsections": []}, {"section_title": "Labor Rights", "paragraphs": ["Some observers in the United States and Honduras have expressed concerns about the enforcement of the labor rights provisions of CAFTA-DR. In 2012, the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO) joined with 26 Honduran trade unions and civil society organizations to file a petition with the U.S. Department of Labor asserting that the Honduran government had failed to meet its obligations to effectively enforce its laws relating to freedom of association, the right to organize and bargain collectively, child labor, and the right to acceptable working conditions. It identified specific violations in the port, apparel, agriculture, and auto manufacturing sectors.", "After a nearly three-year investigation, the Department of Labor issued a public report in 2015 stating that it had found evidence of labor law violations in nearly all of the cases included in the petition. The report stated that the department \"has serious concerns regarding the protection of internationally recognized labor rights in Honduras, including concerns regarding the Government of Honduras's enforcement of its labor laws.\" It also noted that \"there has not yet been measurable systematic improvement in Honduras to address the concerns raised.\" In December 2015, U.S. and Honduran officials signed a monitoring and action plan designed to address the legal, institutional, and practical challenges to labor law enforcement in Honduras. ", "Although Honduras passed a comprehensive labor inspection law in 2017, enforcement reportedly remains inconsistent and ineffective. Anti-union discrimination also continues to be a \"serious problem,\" according to the U.S. State Department, with some employers harassing and threatening union leaders to undermine union operations. The Network against Anti-Union Violence in Honduras has documented at least 109 incidents of violence against labor activists since 2015, including seven murders and a forced disappearance. USAID is supporting a labor rights program that seeks to strengthen the Honduran government's ability to uphold labor rights and enhance Honduran civil society's capacity to advocate for labor rights and monitor compliance with labor legislation."], "subsections": []}]}]}, {"section_title": "Outlook", "paragraphs": ["Honduras has made uneven progress in addressing the country's considerable domestic challenges over the past five years. Public prosecutors have begun to combat high-level corruption with the support of the MACCIH, but their efforts have generated fierce backlash from political leaders and other sectors of the Honduran elite. The country's finances have improved, but living standards for most Hondurans remain poor. The homicide rate has been nearly cut in half, but human rights abuses persist and impunity remains widespread.", "Since launching the U.S. Strategy for Engagement in Central America, the United States has significantly increased foreign assistance to Honduras to strengthen government institutions, foster economic prosperity, and improve security in the country. It is too early to assess the impact of those efforts since much of the assistance only began to be delivered in 2017. Moreover, these are difficult and long-term endeavors, and significant improvements in living conditions in Honduras will likely require concerted efforts by the Honduran government and the international community over many years. U.S. policy is now uncertain as Congress has continued to appropriate funding to implement the U.S. Strategy for Engagement in Central America, but the Trump Administration has announced its intention to end some foreign assistance programs. In the absence of sustained support and engagement from the United States and other international partners, Honduras is likely to continue struggling with political and social instability, which, given the country's geographic proximity, is likely to affect the United States. "], "subsections": []}]}}
{"id": "R45914", "title": "K-12 Teacher Recruitment and Retention Policies in the Higher Education Act: In Brief", "released_date": "2019-09-04T00:00:00", "summary": ["The K-12 teacher workforce is relatively large\u00e2\u0080\u0094each year, about 4 million teachers are employed in U.S. elementary and secondary schools. Turnover in these schools is high relative to earlier periods\u00e2\u0080\u0094about 1 in 10 teachers left his or her job in 2018. This figure follows federal statistical trends that show a sizable growth in teacher attrition since the 1980s. Teacher shortages and high turnover raise a number of recruitment and retention issues that may be of interest to policymakers.", "One of the more difficult issues involves a debate between observers who are concerned about an overall teacher shortage, and others who see it largely as a distributional problem where some schools have a relative surplus of teachers while other schools struggle with a persistent, unmet demand for qualified teachers. Those in the former camp focus on policies that aim to improve the recruitment and retention in the teaching profession in general, while those in the latter camp focus on policies that target education funding to fill positions for certain hard-to- staff schools and/or subject areas.", "Current federal policy addresses recruitment and retention. The Higher Education Act (HEA) authorizes grant support to institutions that prepare K-12 teachers as well as financial aid to students interested in the teaching profession. Title II of the HEA authorizes grants for improving teacher education programs, strengthening teacher recruitment efforts, and providing training for prospective teachers. Title IV of the HEA authorizes Teacher Education Assistance for College and Higher Education (TEACH) Grants to encourage students to prepare for a career in teaching and student loan forgiveness for teachers that remain in the classroom over a number of years.", "The HEA was last comprehensively amended in 2008 by the Higher Education Opportunity Act (HEOA, P.L. 110-315 ). Congressional consideration of potentially reauthorizing the HEA is ongoing, including the introduction of numerous bills to amend the portions of current law that address teacher recruitment and retention. Issues that may arise as the reauthorization process unfolds include modifying the Title II grant partnership structure, targeting support to specific teacher shortage areas or non-instructional staff, expanding teacher preparation program accountability, reforming administration of the TEACH Grant program, and expanding or consolidating teacher loan forgiveness programs."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["The K-12 teacher workforce is relatively large\u00e2\u0080\u0094each year, nearly 4 million teachers are employed in U.S. elementary and secondary schools. Turnover in these schools is high relative to earlier periods\u00e2\u0080\u0094about 1 in 10 teachers left his or her job in 2018. This figure follows federal statistical trends that show a steady growth in teacher attrition since the 1980s. The problem of teacher turnover raises a number of recruitment and retention issues of interest to policymakers. The Higher Education Act (HEA) is the main federal law containing policies designed to address these issues. ", "Title II of the HEA authorizes grant support for schools that prepare new teachers. Title IV of the HEA authorizes financial support to encourage people to stay in the teaching profession in the form of loan forgiveness and other benefits. The HEA was last comprehensively amended in 2008 by the Higher Education Opportunity Act (HEOA, P.L. 110-315 ). Although the authorities have expired, the associated programs continue to receive appropriations. Congressional consideration of potentially reauthorizing the HEA is ongoing, with the introduction of numerous bills to amend current law and address teacher recruitment and retention.", "This report describes (1) the history of federal teacher recruitment and retention policy, (2) current policies in this area, and (3) related issues that may arise as Congress considers reauthorizing the HEA. "], "subsections": []}, {"section_title": "Legislative History6", "paragraphs": ["Teacher recruitment and retention have been the focus of federal policy since the HEA was first enacted in 1965. This section briefly describes the history of federal policy in this area."], "subsections": [{"section_title": "Teacher Corps and Teacher Centers", "paragraphs": ["The HEA was originally enacted by the 89 th Congress and signed into law on November 8, 1965 (P.L. 89-329). Title V authorized the Teacher Corps program, which recruited interns for teaching in high-poverty areas of the country. These interns, directed by experienced teachers, taught in participating K-12 schools while also taking higher education courses to secure teaching certificates. The program was initially funded in FY1966 and phased out in FY1981 under the Omnibus Budget Reconciliation Act of 1981 ( P.L. 97-35 ).", "In 1967, Title V became the Education Professions Development Act (EPDA, P.L. 90-35), which reauthorized the Teacher Corps program and authorized a number of new teacher development programs. Among these programs were efforts to attract low-income persons to teaching and a fellowship program for enhancing the skills of higher education faculty training elementary and secondary school teachers. In general, EPDA programs were funded beginning for FY1969 or FY1970. The Education Amendments of 1976 ( P.L. 94-482 ) repealed all of the EPDA with the exception of the Teacher Corps program.", "The Education Amendments of 1976 ( P.L. 94-482 ) renamed Title V as Teacher Corps and Teacher Training Programs, extended the Teacher Corps program authorization, and authorized a new Teacher Centers program. Teacher Centers, first funded for FY1978, were operated by local educational agencies (LEAs) or institutions of higher education (IHEs), and provided in-service training to the elementary and secondary school teaching force. The Omnibus Budget Reconciliation Act phased out the program in FY1981."], "subsections": []}, {"section_title": "Paul Douglas Teacher Scholarships and Christa McAuliffe Fellowships", "paragraphs": ["Initially enacted in 1984 under the Human Services Reauthorization Act ( P.L. 98-558 ), the Paul Douglas Teacher Scholarships provided annual $5,000 postsecondary education scholarships, for up to four years, to outstanding high school graduates (candidates in the top 10% of their high school graduating class, among other criteria). Recipients were required to teach for two years at the K-12 level for each year of scholarship assistance they received, an obligation that could be reduced by half for those teaching in geographic or subject areas that were experiencing shortages. Federal funds were allocated by formula to states. The Paul Douglas Teacher Scholarships were first funded for FY1986 and last funded for FY1995 (when the program authority was terminated).", "Also initially authorized under the Human Services Reauthorization Act, the National Talented Teacher Fellowships, later-renamed the Christa McAuliffe Fellowships, provided one-year awards to outstanding, experienced public and private elementary and secondary school teachers for sabbaticals. Following sabbaticals to develop innovative teaching projects, recipients had to return to their prior place of employment for two years. The federal appropriation was allocated by formula among the states. The Christa McAuliffe Fellowships were first funded for FY1987 and last funded for FY1995."], "subsections": []}, {"section_title": "Mid-Career Teacher Training and Minority Teacher Recruitment", "paragraphs": ["The Higher Education Amendments of 1986 ( P.L. 99-498 ) rewrote Title V as Educator Recruitment, Retention, and Development. These amendments not only extended and renamed the scholarship and fellowship programs enacted in 1984, but also added two new programs intended to recruit new teachers to the profession: Mid-Career Teacher Training and Minority Teacher Recruitment.", "Mid-Career Teacher Training provided grants to IHEs for the establishment of programs to prepare individuals leaving their current careers in order to teach. Eligibility was limited to individuals with a baccalaureate or advanced degree who had job experience in education-related fields. Two fields are specifically cited in the authorizing statute: preschool and early childhood education. IHEs were initially to receive a planning grant of not more than $100,000 to be used in the two fiscal years following selection; however, the program was funded for two years (FY1990 and FY1991).", "Minority Teacher Recruitment awarded grants to partnerships between an IHE and either a State Education Agency (SEA) or an LEA to recruit and train minority students, beginning with students in 7 th grade, to become teachers. The program also awarded grants to IHEs to improve teacher preparation programs and to support teacher placement in schools with high minority student enrollment. It was initially funded for FY1993 and received its last appropriation for FY1997."], "subsections": []}, {"section_title": "Teacher Quality Enhancement Program", "paragraphs": ["The Higher Education Amendments of 1998 established a new federal teacher program in Title II, the Teacher Quality Enhancement Grant program. Part A of Title II authorized three types of competitively awarded grants: State Grants, Partnership Grants, and Recruitment Grants. State Grants and Partnership Grants were each authorized to receive 45% of the appropriation for Title II-A and Recruitment Grants were allocated the remaining 10%. Funds for these grants were first appropriated for FY1999 and have been continued to the present day under new authority described below. State Grants and Partnership Grants funds were to be used for activities including the improvement of teacher pre-service preparation, accountability for teacher preparation programs, the reform of teacher certification requirements (including alternative routes to certification), and in-service professional development.", "Recruitment Grants funds were to be used for the recruitment of highly qualified teachers (Partnership Grants could also be used for this purpose). Specific recruitment activities described in Title II include teacher education scholarships, support services to help recipients complete postsecondary education, follow-up services during the first three years of teaching, and activities enabling high-need LEAs and schools to recruit highly qualified teachers. In 2008, HEA Title II-A was renamed the Teacher Quality Partnership program under amendments made by the HEOA, which remains current law."], "subsections": []}]}, {"section_title": "Current Programs", "paragraphs": ["The HEA, as amended by the HEOA, addresses current K-12 teacher issues through programs supporting the improvement of teacher preparation and recruitment. Title II of the HEA authorizes grants for improving teacher education programs, strengthening teacher recruitment efforts, and providing training for prospective teachers. This title also includes reporting requirements for states and IHEs regarding the quality of teacher education programs. Title IV of the HEA authorizes Teacher Education Assistance for College and Higher Education (TEACH) Grants to encourage more students to prepare for a career in teaching and student loan forgiveness for individuals teaching in certain high-need subjects. Teachers may also be eligible for loan relief through the Title IV Public Service Loan Forgiveness program."], "subsections": [{"section_title": "Teacher Quality Partnership Grants", "paragraphs": ["Title II, Part A of the HEA authorizes Teacher Quality Partnership (TQP) grants to improve the quality of teachers working in high-need schools and early childhood education programs by improving the preparation of teachers and enhancing professional development activities for them, holding teacher preparation programs accountable for preparing effective teachers, and recruiting highly qualified individuals into the teaching force. "], "subsections": [{"section_title": "Eligible Partnerships", "paragraphs": ["To be eligible, partnerships must include a high-need LEA; a high-need school or high-need early childhood education program (or a consortium of high-need schools or early childhood education programs served by the partner high-need LEA); a partner IHE; a school, department, or program of education within the partner IHE; and a school or department of arts and sciences within the partner IHE. The TQP statute requires that a high-need LEA must have either a high rate of out-of-field teachers or a high rate of teacher turnover and meet one of the following three criteria: ", "1. have at least 20% of its children served be from low-income families; 2. serve at least 10,000 children from low-income families; or 3. be eligible for one of the two Rural Education Achievement Programs. "], "subsections": []}, {"section_title": "Partnership Activities", "paragraphs": ["Partnership grant funds are authorized to be used for a Pre-Baccalaureate Preparation program, a Teacher Residency program, or both. Funds may also be used for a Leadership Development program, but only in addition to one of the other two programs. Activities authorized by the HEOA amendments are described below."], "subsections": [{"section_title": "Pre-Baccalaureate Preparation Program", "paragraphs": ["Grants are provided to implement a wide range of reforms in teacher preparation programs and, as applicable, preparation programs for early childhood educators. These reforms may include, among other things, implementing curriculum changes that improve, evaluate, and assess how well prospective teachers develop teaching skills; using teaching and learning research so that teachers implement research-based instructional practices and use data to improve classroom instruction; developing a high-quality and sustained pre-service clinical education program that includes high-quality mentoring or coaching; creating a high-quality induction program for new teachers; implementing initiatives that increase compensation for qualified early childhood educators who attain two-year and four-year degrees; developing and implementing high-quality professional development for teachers in the partner high-need LEAs; developing effective mechanisms, which may include alternative routes to state certification, to recruit qualified individuals into the teaching profession; and strengthening literacy teaching skills of prospective and new elementary and secondary school teachers."], "subsections": []}, {"section_title": "Teacher Residency Program", "paragraphs": ["Grants are provided to develop and implement teacher residency programs that are based on models of successful teaching residencies and that serve as a mechanism to prepare teachers for success in high-need schools and academic subjects. Grant funds must be used to support programs that provide, among other things, rigorous graduate-level course work to earn a master's degree while undertaking a guided teaching apprenticeship, learning opportunities alongside a trained and experienced mentor teacher, and clear criteria for selecting mentor teachers based on measures of teacher effectiveness. Programs must place graduates in targeted schools as a cohort in order to facilitate professional collaboration and provide to members of the cohort a one-year living stipend or salary, which must be repaid by any recipient who does not teach full-time for at least three years in a high-need school or subject area."], "subsections": []}, {"section_title": "Leadership Development Program", "paragraphs": ["Grants are provided to develop and implement effective school leadership programs to prepare individuals for careers as superintendents, principals, early childhood education program directors, or other school leaders. Such programs must promote strong leadership skills and techniques so that school leaders are able to create a school climate conducive to professional development for teachers, understand the teaching and assessment skills needed to support successful classroom instruction, use data to evaluate teacher instruction and drive teacher and student learning, manage resources and time to improve academic achievement, engage and involve parents and other community stakeholders, and understand how students learn and develop in order to increase academic achievement. Grant funds must also be used to develop a yearlong clinical education program, a mentoring and induction program, and programs to recruit qualified individuals to become school leaders."], "subsections": []}]}]}, {"section_title": "Enhancing Teacher Education Programs", "paragraphs": ["The HEOA amendments established five new programs in HEA, Title II, Part B, Enhancing Teacher Education: Subpart 1, Preparing Teachers for Digital Age Learners; Subpart 2, Hawkins Centers of Excellence; Subpart 3, Teach to Reach Grants; Subpart 4, Adjunct Teacher Corps; and Subpart 5, Graduate Fellowships to Prepare Faculty in High-Need Areas. None of these programs has received funding."], "subsections": []}, {"section_title": "TEACH Grants", "paragraphs": ["The College Cost Reduction and Access Act ( P.L. 110-84 ) established the TEACH Grants under Subpart 9 of HEA, Title VI-A to provide aid directly to postsecondary students who are training to become teachers. The program provides grants to cover the cost of attendance of up to $4,000 per year ($16,000 total) for bachelor's studies or $8,000 total for master's studies to students who commit to teaching high-need subjects in low-income schools after completing their postsecondary education. Both undergraduate and graduate students are eligible for the grants and must agree to serve as full-time mathematics, science, foreign language, bilingual education, special education, or reading teachers in low-income schools for at least four years within eight years of graduating. ", "Current teachers, retirees from other occupations, and those who became teachers through alternative certification routes are also eligible for TEACH Grants to help pay for the costs of obtaining graduate degrees. An individual who fails to complete the agreed-upon service in low-income schools and high-need subjects is required to pay back his or her TEACH Grant as an Unsubsidized Direct Loan, including interest from the day the grant was made."], "subsections": []}, {"section_title": "Debt Relief from Student Loans", "paragraphs": ["Relief from repayment obligations under federal student loan programs has been available to teachers since before enactment of the HEA. The National Defense Education Act of 1958 (NDEA, P.L. 85-864) included a loan forgiveness component of the National Defense Student Loan (NDSL) program that was intended to increase the number and quality of teachers in U.S. schools. The NDSL program was incorporated into the HEA through the Education Amendments of 1972 (P.L. 92-318) and was later renamed the Federal Perkins Loan Program by amendments made through the Higher Education Amendments of 1986 ( P.L. 99-498 ). Under current HEA provisions, qualified teachers may receive relief from up to 100% of their Perkins Loan balance, depending on years of service; although new Perkins Loans are no longer being made.", "Loan forgiveness for teachers was expanded to include loans made under the Federal Family Education Loan and Direct Loan programs by the Higher Education Amendments of 1998 ( P.L. 105-244 ). For individuals who teach for five years on a full-time basis in eligible low-income schools, up to $5,000 may be canceled. Forbearance is available to borrowers during their five years of qualified teaching. Only individuals who are new borrowers on or after October 1, 1998, are eligible for this loan forgiveness benefit. The Taxpayer-Teacher Protection Act of 2004 ( P.L. 108-409 ) increased the maximum amount of loan forgiveness to $17,500 for special education teachers and those teaching mathematics or science in secondary schools.", "Teachers may also qualify for student debt relief under the Public Service Loan Forgiveness (PSLF) program, enacted by the College Cost Reduction and Access Act of 2007 ( P.L. 110-84 ). Under the PSLF program, individuals may qualify to have the balance (principal and interest) of their Direct Loans forgiven if they have made 120 full, scheduled, monthly payments on those loans, according to certain repayment plans, while concurrently employed full-time in public service (which can include teaching). "], "subsections": []}]}, {"section_title": "HEA Reauthorization Issues", "paragraphs": ["The 116 th Congress is expected to consider reauthorizing the HEA. Thus far, numerous bills have been introduced to amend current law and address teacher recruitment and retention. This section discusses issues that may arise as the potential reauthorization process unfolds. The policy issues discussed here are based on existing and prior legislative proposals and are intended to provide some context for their consideration. These issues include modifying the Title II grant partnership structure, targeting support to specific teacher shortage areas or non-instructional staff, expanding teacher preparation program accountability requirements, reforming administration of the TEACH Grant program, and expanding or consolidating teacher loan forgiveness programs."], "subsections": [{"section_title": "Title II Grant Partnership Structure", "paragraphs": ["Currently, IHEs are a required partner in the TQP program and often serve as the sponsor of a partnership. With the rise of alternatives to traditional routes into the teaching profession, some proposals would eliminate the requirement that IHEs be a partner by allowing non-IHE-based teacher preparation providers to serve as TQP grantee sponsors as well. Current law defines a \"partner institution\" as a four-year IHE. Policymakers may consider amending this definition to allow two-year IHEs or other nonprofit teacher preparation programs to serve as a TQP partner institution or partnership sponsor. ", "To be a partner in a TQP grant, LEAs and schools must be designated as \"high-need\" according to definitions in Title II of the HEA. Those definitions attempt to direct support, in part, toward low-income LEAs and schools. Some feel the thresholds set by the HEA are too low and that funds should be reserved for very low-income LEAs and schools. "], "subsections": []}, {"section_title": "Targeting School Staff", "paragraphs": ["Current federal teacher recruitment and retention programs often direct support to certain instructional areas that are considered hard-to-staff, such as mathematics, science, and special education. Some feel these provisions should be broadened to include additional subject areas (e.g., English language learner instruction) or certain hard-to-staff schools (e.g., rural and/or Native American schools). Others have proposed that the targeted position types should be broadened to include non-instructional staff such as school counselors, librarians, literacy specialists, and coaches. There are also proposals focused on staff who serve in leadership roles (e.g., establishing principal residency programs similar to the current teacher residencies). Some have pushed for Title II amendments that would support teacher advancement into leadership through the creation of career ladders and incentives for master teachers. Still others would like to allow the Secretary to set aside Title II funds for a state grant for leadership training activities. "], "subsections": []}, {"section_title": "Preparation Program Accountability", "paragraphs": ["Under current HEA provisions, IHEs that operate teacher preparation programs are required to report information on their performance including pass rates and scaled scores on teacher certification exams. States are required to report these data in aggregate as well as the results of program evaluations and any programs designated as \"low-performing.\" Thirty states have never identified a program as low-performing and fewer than 3% of all programs nationwide have ever been identified as low-performing or at-risk of such designation.", "Some policymakers have argued that current accountability provisions are inadequate. Some have asserted that non-IHE-based programs in particular are not sufficiently scrutinized. Others think that all teacher preparation programs should be subject to outcome measures beyond passage of certification exams and that programs should be judged by their graduates' professional readiness, ability to find employment, and retention in teaching, as well as the performance of their students. "], "subsections": []}, {"section_title": "TEACH Grant Program Administration", "paragraphs": ["The TEACH Grant program has reportedly encountered significant administrative challenges and has been the subject of increasing congressional scrutiny. Changes that have been suggested to alleviate these issues include providing grant recipients additional time to complete the service requirement, the option to pay back part of their grant if they are unable to complete the service requirement in full, and a better process by which to appeal the conversion of their grant to a loan. ", "Some observers are concerned that students in the first year or two of college are not fully aware of what profession they want to go into, and they have advocated that TEACH Grants be made available to student in their junior and senior years of college and/or to master's degree candidates. Others have sought to limit TEACH Grants to programs with a proven ability to prepare individuals effectively for the teaching profession."], "subsections": []}, {"section_title": "Loan Forgiveness", "paragraphs": ["Teachers may access several separate loan relief options under current federal law. In many cases, these options serve similar purposes, but benefit requirements may conflict with or not complement one another (i.e., exercising eligibility for one program may nullify or forestall eligibility for another). The existence of multiple programs may lead to borrower confusion as well as administrative complexity. Policymakers might consider consolidating programs or targeting them to a narrower set of borrowers.", "Some argue that the requirements teachers must meet to qualify for loan relief are too difficult to understand and/or fulfill. These requirements caused the loan forgiveness programs to encounter administrative problems similar to those in the TEACH Grant program. Policymakers may consider whether to simplify these requirements to improve the effectiveness of loan forgiveness as a teacher retention tool."], "subsections": []}]}]}}
{"id": "R46366", "title": "Single-Employer Defined Benefit Pension Plans: Funding Relief and Modifications to Funding Rules", "released_date": "2020-05-20T00:00:00", "summary": ["To protect the interests of participants and beneficiaries in pension plans, Congress enacted the Employee Retirement Income Security Act of 1974 (ERISA; P.L. 93-406 ). ERISA specified funding rules for single-employer defined benefit (DB) pension plans, among other provisions. Single-employer DB pension plans are sponsored by one employer for the benefit of its employees. In DB pension plans, participants typically receive regular monthly benefit payments in retirement (which some refer to as a \"traditional\" pension). ERISA also authorized the creation of the Pension Benefit Guaranty Corporation (PBGC), which is a government corporation that insures private-sector pension benefits up to a specified maximum in the case of plan termination.", "Single-employer DB funding rules generally require several steps: calculating the value of benefits that a plan will pay in the future; determining how much a plan has set aside to pay those benefits; and determining how much, and the time period over which, an employer must contribute to the plan each year.", "Since ERISA, Congress has periodically modified funding rules for pension plans. The Pension Protection Act of 2006 (PPA; P.L. 109-280 ) outlined new pension funding standards for single-employer DB plans, among other requirements. PPA required that plans become 100% funded over time and outlined assumptions that pension plans must use to become fully funded. PPA also provided special rules for DB plans sponsored by certain employers, such as some airlines and defense contractors.", "Since PPA was enacted, legislation has further modified funding rules for single-employer DB plans for various reasons. At times, legislation has applied broadly to most private-sector DB plans; at other times, changes to funding rules have targeted plans sponsored by specific industries or types of employers.", "At times, legislation has provided funding relief , which are measures that lower employer contributions. In general, funding relief measures allow plans more time to make required payments by (1) modifying assumptions that affect the calculated value of pension benefits or (2) extending the time period to make up for plan losses.", "The adoption of a funding corridor for interest rates in the Moving Ahead for Progress in the 21 st Century Act (MAP-21; P.L. 112-141 ) marked a significant change to single-employer DB funding rules. DB plans calculate the present value of future benefits that will be owed using certain specified interest rates for discounting. In response to a period of low interest rates, MAP-21 established a process for determining minimum and maximum interest rates for discounting based on 25-year averages of historical corporate bond yields. As originally established, the funding corridor was scheduled to widen eventually, which, when applied to the specified interest rates, would have resulted in the use of lower interest rates to calculate DB pension obligations. Subsequent legislation delayed the date when the funding corridor is to begin widening. Under current law, the widening is scheduled to begin in 2021.", "Funding relief measures do not directly affect participants' benefits. However, they can result in pension plans having lower funding levels than they otherwise would at a point in time. Thus, funding relief can negatively affect PBGC's finances because it could take over a plan that has fewer assets than the plan otherwise would in the absence of funding relief. Funding relief can also affect PBGC's ability to pay non-guaranteed benefits, such as benefit increases implemented within five years prior to plan termination. On the other hand, funding relief can positively affect PBGC finances because greater DB plan underfunding results in higher variable-rate premiums (premiums based on the amount of plan underfunding) paid to PBGC by employers.", "This report provides (1) background on single-employer DB pension funding, (2) a discussion of funding rules under PPA, and (3) provisions since PPA that have provided funding relief or otherwise modified single-employer DB pension funding rules."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["A pension is a voluntary benefit offered by employers to assist employees in preparing for retirement. Pension plans may be classified according to whether they are (1) defined benefit (DB) or defined contribution (DC) plans and (2) sponsored by one or more than one employer. In DB plans, participants typically receive regular monthly benefit payments in retirement (which some refer to as a \"traditional\" pension). In DC plans, of which the 401(k) plan is the most common, participants have individual accounts that can provide a source of income in retirement. This report focuses on DB plans. ", "Pension plans are also classified by whether they are sponsored by one employer (single-employer plans) or by more than one employer (multiemployer and multiple-employer plans). Multiemployer pension plans are sponsored by more than one employer (often, though not required to be, in the same industry) and maintained as part of a collective bargaining agreement. Multiple-employer plans are sponsored by more than one employer but are not maintained as part of collective bargaining agreements. Multiple-employer plans follow the same funding rules as single-employer plans and are generally not reported separately. This report focuses on single-employer plans. Except where noted, references to single-employer plans in this report include multiple-employer plans.", "To protect the interests of pension plan participants and beneficiaries, Congress enacted the Employee Retirement Income Security Act of 1974 (ERISA; P.L. 93-406 ). The law is codified in the Internal Revenue Code (26 U.S.C.) and Labor Code (29 U.S.C.). ERISA sets standards that private-sector pension plans must follow with regard to plan participation (who must be covered); minimum vesting requirements (how long a person must work for an employer to be covered); fiduciary duties (how individuals who oversee the plan must behave); and plan funding (how much employers must set aside to pay for future benefits). In addition, ERISA established the Pension Benefit Guaranty Corporation (PBGC), which is a government corporation that insures DB pension plans covered by ERISA in the case of plan termination. ERISA covers only private-sector pension plans and plans established by nonprofit organizations. It exempts pension plans established by the federal, state, and local governments and by churches. The funding relief provisions discussed in this report generally apply only to plans covered by ERISA."], "subsections": []}, {"section_title": "Basics of Single-Employer Defined Benefit Pension Plan Funding", "paragraphs": ["Pension funding consists of several elements. These include the value of plan benefits that participants will receive in the current and in future years; the amount a plan has set aside to pay for these benefits; and the employer contributions required each year to ensure the plan has sufficient funds to pay benefits when participants retire. ", "The amount of a participant's benefit in a single-employer DB plan is based on a formula that typically uses a combination of length of service, accrual rate, and average of final years' salary. For example, a plan might specify that retirees receive an amount equal to 1.5% of their pay for each year of service, where the pay is the average of a worker's salary during his or her highest-paid five years.", "In general, ERISA requires DB plans to have enough assets set aside to pay the benefits owed to participants. For various reasons, plans may have less or more than this amount. Employers that sponsor DB plans are required to make annual contributions to their plans to ensure they ultimately reach that 100% funding goal."], "subsections": [{"section_title": "Typical Defined Benefit Plan Balance Sheet", "paragraphs": [" Figure 1 depicts a typical DB pension plan's balance sheet. It consists of (1) plan assets, which are the value of the investments made with accrued employer (and employee, if any) contributions to the plan, and (2) plan liabilities, which are the value of participants' benefits earned under the terms of the plan. Plan assets are invested in equities (such as publicly-traded stock), debt (such as the U.S. Treasury and corporate bonds), private equity, hedge funds, and real estate."], "subsections": [{"section_title": "Plan Assets", "paragraphs": ["Pension plans are required to report the value of plan assets using two methods: (1) market values (the value at which assets can be sold on a particular date) and (2) smoothed, or actuarial , values (the average of the past, and sometimes expected future, market values of each asset). Actuarial values are used to determine the 100% funding goal and any additional employer contributions necessary to achieve that goal. The smoothing of asset values prevents large swings in asset values and creates a more predictable funding environment for plan sponsors. ", "Some advocates of reporting market values note that smoothed values are often higher than market values (particularly during periods of market declines), which could overstate the financial health of some pension plans. Some advocates of smoothing argue that market values are useful only if a plan needs to know its liquidated value (e.g., if the plan had to pay all of its benefit obligations at one point in time), which is unlikely to be the case as most employers sponsoring pension plans are unlikely to enter bankruptcy. "], "subsections": []}, {"section_title": "Plan Liabilities", "paragraphs": ["A pension plan's benefits are a plan liability spread out over many years in the future. These future benefits are calculated and reported as present values (also called current values). Using a formula, benefits that are expected to be paid in a particular year in the future are calculated so they can be expressed as a present value. This process is called discounting , and it is the reverse of the process of compounding , which projects how much a current dollar amount will be worth at a point in the future. The formula by which future values are calculated as present values is shown in Figure 2 .", " Figure 3 shows a simplified example of a DB pension benefit calculation. In this example, it is assumed that at the beginning of year 1, the worker has already earned a benefit of $100 per year in retirement, which is expected to begin in year 5. Retirement is expected to last four years. Each of the payments is made at the beginning of the year and is discounted using the present value formula in Figure 2 and assuming an interest rate of 10%. In this example, the first benefit is received at the beginning of year 5, so that benefit payment is discounted over four years. The benefits for the following three years are also discounted to beginning of year 1 dollar amounts and are then summed, resulting in a benefit value of $238.16 at the beginning of year 1. ", "The calculated present value of the benefit payments depends on the year in which the benefit is calculated. For example, as a worker moves closer to the expected date of retirement and recalculates the present value of the benefit, the calculated value of the obligation increases. For example, when calculated at the beginning of year 2, the simplified pension benefit has a present value of $261.97 in year 2 dollars . When calculated at the beginning of year 3, the benefit has a present value of $288.17 in year 3 dollars ."], "subsections": []}, {"section_title": "Defined Benefit Plan Funding Ratio", "paragraphs": ["The DB plan funding ratio compares the value of a plan's assets with the present value of a plan's liabilities and is often used as an indicator of the financial health of a plan. The DB plan funding ratio is calculated as", "A funding ratio of 100% indicates that the DB plan has set aside enough funds to pay the present value of the plan's future benefit obligations. Funding ratios that are less than 100% indicate that the DB plan has not set aside enough to meet the calculated value of its future benefit obligations. Because benefit obligations are typically paid out over a period of 20 to 30 years, participants in even an underfunded plan will likely receive their promised benefits in the near term. However, if the underfunding persists without additional contributions or higher investment returns, plan participants in an underfunded plan might not receive 100% of their promised benefits in the future.", "Returning to the example above, setting aside $238.16 at the beginning of year 1 would fund the year 1 value of the benefit. At the beginning of year 2, the benefit has a recalculated value of $261.97 in year 2 dollars. Because $238.16 was set aside at the beginning of year 1\u00e2\u0080\u0094 and assuming no investment gains or losses and no additional pension benefits \u00e2\u0080\u0094an additional contribution of $23.81 ($261.97 - $238.16) is needed to fund the value of the benefit as calculated at the beginning of year 2. ", "Likewise, at the beginning of year 3, the benefit has a recalculated value of $288.17 in year 3 dollars. Because $238.16 was set aside at the beginning of year 1, and $23.81 more was contributed at the beginning of year 2\u00e2\u0080\u0094 and assuming no investment gains or losses and no additional pension benefits \u00e2\u0080\u0094an additional contribution of $26.20 ($288.17 - $261.97) is needed to fund the value of the benefit as calculated at the beginning of year 3. This discussion of the example in Figure 3 has reviewed the funding ratio and required payments for only the first three years displayed. In practice, the DB plan funding ratio would continue to be recalculated and payments necessary to satisfy any DB plan funding ratio shortfalls would continue to be required each year to ensure the DB plan funding obligation is fully satisfied. ", "The present value of a dollar amount is inversely related to the assumed interest rate. As the interest rate increases, present value decreases; as the interest rate decreases, present value increases. In the above example, if the interest rate is 15%, then the pension benefit has a value of $187.72 calculated at the beginning of year 1, $215.88 calculated at the beginning of year 2, and $248.26 calculated at the beginning of year 3.", "In this modification of the simplified example, with the only difference being a 15% interest rate, the pension benefit would be funded\u00e2\u0080\u0094 and assuming no investment gains or losses and no additional pension benefits \u00e2\u0080\u0094with contributions of $187.72 at the beginning of year 1; $215.88 - $187.72 = $28.16 at the beginning of year 2; and $248.26 - $215.88 = $32.38 at the beginning of year 3. This example shows payments for the first three years; in practice, contributions would continue until the obligation is fully satisfied.", "Note that the amounts of the yearly payments differ depending on the interest rate used. Compared with the payments in the 10% interest rate example, the initial payment in the 15% example is lower ($187.72 versus $238.16) but subsequent payments are higher (e.g., year 2 payments are $28.16 using the 15% interest rate and $23.81 using the 10% interest rate). Over time, the required payments in both cases\u00e2\u0080\u0094 assuming no investment gains or losses and no additional pension benefits \u00e2\u0080\u0094sum to the total benefits received in retirement. The interest rate used by single-employer DB plans is discussed later in this report."], "subsections": []}]}, {"section_title": "Annual Employer Contributions to Defined Benefit Plans", "paragraphs": ["ERISA sets out requirements for the minimum required contribution , which is amount of money that must be contributed each year to a DB pension plan. In general, the minimum required contribution is the sum of (1) the value of benefits earned by participants in the plan year (the target normal cost ), (2) installment payments resulting from plan underfunding in previous years (the shortfall amortization charge ), and (3) installment payments resulting from Internal Revenue Service- (IRS-) approved waived required contributions in previous years (the waiver amortization charge )."], "subsections": [{"section_title": "Target Normal Cost", "paragraphs": ["The target normal cost represents the value of pension benefits that are earned or accrued by employees in a plan year and the cost to administer these benefits (minus any mandatory employee contributions)."], "subsections": []}, {"section_title": "Amortization Charges", "paragraphs": ["A DB plan's funding can change in a given year as a result of changes to participants' benefits, employer contributions, and circumstances or events outside the plan's control. Plan underfunding could increase from events such as a decrease in plan assets due to declines in the stock market or an increase in plan liabilities due to decreases in interest rates. In order for a plan to remain fully funded, employers must increase their plan contributions to make up for losses that are outside the plan's control. Employers are not required to make up for the losses all at once. Rather, they may make installment payments to make up for plan losses over a number of years. ", "Plan underfunding is paid off in installment payments via amortization . The amortization period is the length of time over which a plan can spread the installment payments."], "subsections": [{"section_title": "Shortfall Amortization Charge", "paragraphs": ["A plan's funding target is the present value of all benefits earned by participants as of the beginning of the year. A plan's funding shortfall is the amount by which the funding target is greater than the value of plan assets. Various factors can cause funding shortfalls, such as investment losses and decrease in interest rates. In general, PPA required plan underfunding resulting from funding shortfalls to be amortized over a period of seven years. "], "subsections": []}, {"section_title": "Waiver Amortization Charge", "paragraphs": ["Employers that face a temporary substantial business hardship can apply to the IRS for a funding waiver. Missed minimum required contributions as a result of receiving an IRS funding waiver must be amortized over five years. The waiver amortization charge is the amount of a plan's installment payment that amortizes the missed contributions."], "subsections": []}]}]}, {"section_title": "Single-Employer Defined Benefit Pension Plan Data", "paragraphs": [" Table 1 provides data on single-employer DB pension plans. In 2018, there were over 23,000 of such plans with 26.2 million participants. ", "According to PBGC, 81.4% of plans (containing 95.2% of plan participants) were underfunded in 2016. The total amount of underfunding in these plans was $625.4 billion. In addition, 18.6% of plans (containing 4.8% of participants) were overfunded in 2016. The total amount of overfunding in these plans was $15.3 billion.", " Figure 4 shows the funding percentage of the 100 largest corporate DB pension plans from 2015 to 2020. The most recent data show that in February 2020, these plans had $1.6 trillion in assets and $1.9 trillion in projected benefit obligations. The funding percentage (assets as a percentage of benefit obligations) was 82.2%, and total underfunding was $0.3 trillion. "], "subsections": []}]}, {"section_title": "The Pension Protection Act of 2006", "paragraphs": ["The Pension Protection Act of 2006 (PPA; P.L. 109-280 ) was the most recent major legislation to affect pension plan funding. Among other provisions, PPA established new funding rules for single- and multiple-employer plans and required that plans become 100% funded over a certain time period. PPA specified interest rates and other actuarial assumptions that plans must use to calculate their funding targets and target normal costs. PPA gave plans three years to transition to the new funding requirements. PPA also created special rules for certain types of plans, including those sponsored by certain government contractors, commercial airlines, and rural cooperatives. "], "subsections": [{"section_title": "Pension Protection Act Interest Rates", "paragraphs": ["PPA specified that pension plans discount their future benefit obligations using three different interest rates. The rates, called segment rates, used in the calculation depend on the date on which benefit obligations are expected to be paid and the corresponding rates on the corporate bond yield curve. The segment rates are calculated as the average of the corporate bond yields within the segment for the preceding 24 months. The IRS publishes the segment rates on a monthly basis.", "The first segment is for benefits payable within five years. The first segment rate is calculated as the average of short-term bond yields (with a maturity less than five years) for the preceding 24 months. Likewise, the second and third segments are for benefits payable after 5 years to 20 years and after 20 years, respectively. The second and third segment rates are calculated similarly to the first segment rates, using bonds of appropriate maturities. "], "subsections": [{"section_title": "Pension Protection Act Amortization Periods", "paragraphs": ["PPA required that shortfall amortization charges (funding shortfalls as a result of, for example, investment losses) be amortized over seven years and waiver amortization charges (from missed required minimum contributions) be amortized over five years. Amortization payments include interest."], "subsections": []}]}, {"section_title": "Pension Protection Act Special Rules for Certain Plans", "paragraphs": ["PPA outlined special rules for certain pension plans. Some of the rules have expired; others have been extended or expanded by subsequent legislation. "], "subsections": [{"section_title": "Special Rules for Certain Commercial Airline Industry Plans", "paragraphs": ["PPA provided special funding rules for certain eligible plans maintained by (1) a commercial passenger airline or (2) an employer whose principal business is providing catering services to a commercial passenger airline. Eligible plans that met certain benefit accrual and benefit increase restrictions could (1) use a 17-year amortization period, instead of the seven years required by PPA, beginning in 2006 or 2007 and (2) use an 8.85% interest rate, instead of the required segment rates, for the purposes of valuing benefit obligations. Eligible plans that did not meet certain benefit accrual and benefit increase restrictions could choose to use a 10-year amortization period for the first taxable year, beginning in 2008."], "subsections": []}, {"section_title": "Special Rules for Certain Government Contractor Plans", "paragraphs": ["PPA delayed the date for certain government contractor plans to adopt the new funding rules to the 2011 plan year. Eligible plans were defense industry contractors whose primary source of revenue was derived from business performed under government contracts that exceeded $5 billion in the prior fiscal year. "], "subsections": []}, {"section_title": "Special Rules for Certain Pension Benefit Guaranty Corporation Settlement Plans", "paragraphs": ["PPA delayed the date for certain PBGC settlement plans to adopt the new funding rules to the 2014 plan year. Eligible plans were those in existence as of July 26, 2005, and (1) sponsored by an employer in bankruptcy proceedings giving rise to a claim of $150 million or less, and the sponsorship of which was assumed by another employer, or (2) that, by agreement with PBGC, were spun off from plans that were subsequently terminated by PBGC in involuntary terminations. "], "subsections": []}]}]}, {"section_title": "Funding Relief and Other Modifications for Single-Employer Plans", "paragraphs": ["Since PPA's enactment in 2006, Congress has modified funding rules for pension plans several times. Funding relief provisions have delayed the implementation dates of some PPA provisions, extended amortization periods, or changed interest rates. Some funding relief has been directed toward all single-employer DB plans; other modifications of funding rules have been targeted to specific types of pension plans, such as plans for certain cooperative and charitable organizations and for community newspapers.", "An extension of amortization periods allows plans a greater amount of time to pay off unfunded liabilities, meaning that plans can contribute less money per year over a greater number of years. ", "Changes in interest rates modify the timing of required employer contributions. As previously mentioned, a higher interest rate decreases the present value of plan liabilities, which means employers can contribute less today to fund a future benefit. The dollar amount of the benefit that a participant will receive in the future remains unchanged. Relative to a lower interest rate, a higher interest rate allows plans to contribute relatively smaller amounts in the near term but will have to be made up with higher contributions in the longer term. A lower interest rate does the opposite\u00e2\u0080\u0094it increases the present value of plan liabilities, requiring more employer contributions in the near term (and fewer in the long term)."], "subsections": [{"section_title": "Funding Relief and Other Modifications Since the Pension Protection Act", "paragraphs": ["The following sections describe funding relief provisions and other funding rule modifications in chronological order, where feasible, since PPA."], "subsections": [{"section_title": "Special Rules for Certain Plans in the Commercial Airline Industry", "paragraphs": ["The U.S. Troop Readiness, Veterans' Care, Katrina Recovery, and Iraq Accountability Appropriations Act, 2007 ( P.L. 110-28 ) provided funding relief for plans operated by certain commercial airlines and airline catering companies. As described above, PPA had extended the amortization period to either 10 or 17 years for these plans. P.L. 110-28 specified that eligible plans that had chosen the 10-year amortization period could use an interest rate of 8.25% for purposes of calculating the funding target for each of those 10 years. "], "subsections": []}, {"section_title": "Delay of Certain Pension Protection Act Rules", "paragraphs": ["The Worker, Retiree, and Employer Recovery Act of 2008 (WRERA; P.L. 110-458 ) delayed the implementation of the PPA transition rules, giving plans additional time to become fully funded (given the decline in asset values due to the 2007-2009 economic downturn)."], "subsections": []}, {"section_title": "Extended Amortization Periods", "paragraphs": ["The Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010 ( P.L. 111-192 ) allowed plans to amortize underfunding resulting from the 2007-2009 market downturn using one of two alternative amortization schedules. Pension plan sponsors could amortize their funding shortfalls over either (1) 9 years, with the first 2 years of payments consisting of interest only on the amortization charge and the next 7 years consisting of interest and principal, or (2) 15 years. Plan sponsors that chose one of these amortization schedules were required to make additional contributions to the plan if the plan sponsors paid excess compensation or declared extraordinary dividends, as defined in P.L. 111-192 ."], "subsections": []}, {"section_title": "Interest Rate Corridors", "paragraphs": ["The Moving Ahead for Progress in the 21 st Century Act (MAP-21; P.L. 112-141 ) established a funding corridor to provide minimum and maximum interest rates used in calculating plan liabilities. The minimum and maximum rates were initially calculated as 90% and 110%, respectively, of the average of corporate bond yields for the segment over the prior 25-year period. If the 24-month segment interest rate as calculated under PPA is below the minimum percentage of the funding corridor, the interest rate is adjusted upward to the minimum. If the 24-month segment interest rate is higher than the maximum, it is adjusted downward to the maximum. ", "MAP-21 adjusted the minimum and maximum percentages surrounding the baseline rate over time to become 70% and 130%, respectively, by 2016 (essentially widening the corridor). When interest rates increase (which occurs when the 24-month rate is adjusted upward to the minimum rate), the present value of future benefit obligations decreases, and required plan contributions decrease. When companies contribute less to their pension plan, lower plan contributions increase companies' taxable income, which results in increased Treasury revenue. ", "Since MAP-21, provisions in enacted legislation twice delayed the beginning of the widening of the funding corridor. First, the Highway and Transportation Funding Act of 2014 (HTF; P.L. 113-159 ) delayed the beginning of widening of the funding corridor until 2018. Later, the Bipartisan Budget Act of 2015 (BBA; P.L. 114-74 ) delayed it until 2021. Table 2 shows the applicable minimum and maximum percentages under MAP-21, HTF, and BBA.", " Figure 5 shows a hypothetical example of how segment rates are determined using the funding corridors. ", "The red line shows the average of a segment's interest rates for the prior 25 years. The yellow and gold lines indicate the minimum and maximum rates around the 25-year average under the MAP-21 provisions. The light green and dark green lines indicate the widening of the corridors around the 25-year average under the HTF provisions (starting in 2018). The light blue and dark blue lines are the minimum and maximum rates around the 25-year averages in current law, as passed in the BBA (starting in 2021).", "Because of the HTF and BBA extensions, the minimum and maximum corridors have remained at 90% and 110%, respectively, since 2012. ", "The following example demonstrates how segment rates are adjusted. ", "If Treasury determines that the segment rate is above the maximum segment rate\u00e2\u0080\u0094point (1) in Figure 5 \u00e2\u0080\u0094then Treasury adjusts the segment rate downward until it equals the proposed maximum segment rate. If Treasury determines that the segment rate is at or below the maximum segment rate and at or above the minimum segment rate\u00e2\u0080\u0094point (2) in Figure 5 \u00e2\u0080\u0094Treasury does not adjust the segment rates. If Treasury determines that the segment rate is below the minimum segment rate\u00e2\u0080\u0094point (3) in Figure 5 \u00e2\u0080\u0094then Treasury adjusts the interest rate upward until it equals the proposed minimum segment rate.", "For example, in April 2020, the first segment rate before adjustment was 2.68%. Adjusted for the 25-year average bond yields, the first segment rate was 3.64%."], "subsections": []}, {"section_title": "Special Rules for Certain Cooperative and Charity Pension Plans", "paragraphs": ["Congress has authorized special funding rules for plans sponsored by specific types of employers, such as rural cooperatives and certain charities. PPA delayed the implementation of funding rules for certain cooperatives. Subsequent legislation expanded this delayed effective date to certain charities. Later legislation modified funding rules for these plans, referred to as Cooperative and Small Employer Charity (CSEC) pension plans. With two exceptions, CSEC plans are multiple-employer pension plans established by eligible cooperatives and certain charitable organizations to provide retirement benefits for their employees. "], "subsections": [{"section_title": "Delay of PPA Funding Rules", "paragraphs": ["PPA provided a delayed effective date of January 1, 2017, for certain multiple-employer cooperative plans\u00e2\u0080\u0094such as pension plans for agriculture, electric, and telephone cooperatives\u00e2\u0080\u0094to adopt the new funding rules.", "The Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010 ( P.L. 111-192 ) extended PPA's delayed effective date to apply to certain charitable organizations' pension plans\u00e2\u0080\u0094multiple-employer plans whose employers are charitable organizations described in 26 USC \u00c2\u00a7501(c)(3)."], "subsections": []}, {"section_title": "Establishment of CSEC Funding Rules", "paragraphs": ["The Cooperative and Small Employer Charity Pension Flexibility Act of 2013 ( P.L. 113-97 ) established funding rules for and provided a definition of CSEC pension plans. Among other provisions, this act permanently exempted these plans from PPA's funding rules and outlined minimum funding standards for CSEC plans. Plans must indicate if they use the CSEC-specific funding rules in their required annual reporting to the Department of Labor (DOL). Table A-1 provides a list of CSEC plans and funded status in the 2017 plan year. "], "subsections": []}, {"section_title": "Expanded Definition of CSEC Plans in 2015", "paragraphs": ["Section 3 of Division P of the Consolidated and Further Continuing Appropriations Act, 2015 ( P.L. 113-235 ) expanded the definition of CSEC plans to include plans maintained by an employer that meet several criteria. It appears that the Boy Scouts of America Master Pension Trust is the only plan that meets these expanded criteria."], "subsections": []}, {"section_title": "Expanded Definition of CSEC Plans in 2020", "paragraphs": ["Section 3609 of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act; P.L. 116-136 ) applies CSEC funding rules to plans sponsored by certain charitable employers \"whose primary exempt purpose is providing services with respect to mothers and children,\" among other criteria. It appears that the pension plan sponsored by March of Dimes is the only plan that meets these expanded criteria. "], "subsections": []}]}, {"section_title": "Special Rules for Community Newspaper Plans", "paragraphs": ["Section 115 of the Setting Every Community up for Retirement Enhancement Act of 2019 (SECURE Act, enacted as Division O of the Further Consolidated Appropriations Act of 2020; P.L. 116-94 ) provided special funding rules for pension plans operated by certain community newspapers that had no benefit increases for participants after December 31, 2017. Community newspaper plans are those maintained by certain private community newspaper organizations that are family-controlled and have been in existence for 30 or more years. ", "For these plans, the SECURE Act", "increased the interest rate to 8%, and extended the amortization period from 7 to 30 years."], "subsections": []}, {"section_title": "Delayed Due Date for 2020 Plan Contributions", "paragraphs": ["Section 3608 of the CARES Act ( P.L. 116-136 ) allows contributions that are due in calendar year 2020 to be made, with interest, on January 1, 2021. Section 3608 also allows plans to use the funding percentage for the 2019 plan year, rather than the 2020 plan year (which would likely be lower), in determining whether plans must impose benefit restrictions. "], "subsections": []}]}, {"section_title": "Policy Considerations", "paragraphs": ["Policymakers and stakeholders might consider some of the policy implications of single-employer DB pension plan funding relief. The considerations include the rationale for providing relief, the effects of lower levels of plan assets on participant benefits and PBGC, and the effect on the federal budget. ", "Funding relief results in lower employer contributions to DB plans in the near term. Among the rationales for funding relief is that it allows employers the flexibility to use funds for other priorities (such as retaining or hiring employees). For example, 74 trade associations said in a 2009 letter to policymakers that, \"[P]roviding defined benefit funding relief is directly related to improving the economy and employment.\" On the other hand, some policymakers oppose funding relief to specific industries or companies because they provide \"a special-interest bailout\" and set both \"bad policy and bad precedent.\" ", "Some stakeholders have expressed concern that employers adopting funding relief measures might use the funds saved via reduced contributions for non-core business activities. For example, the Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010 ( P.L. 111-192 ) limited the ability of employers that adopted funding relief measures to provide excess employee compensation or extraordinary dividends. ", "Although employer contributions and plan assets are lower following funding relief, participants' benefits are not necessarily at risk\u00e2\u0080\u0094although they may be under certain circumstances.", "Participants in DB plans that receive funding relief remain entitled to their benefits; funding relief does not reduce these benefits. For employers that do not become bankrupt, modifying the timing of contributions generally would not be problematic\u00e2\u0080\u0094over time, the employer would need to make all required contributions for participants to receive their full benefits.", "However, in the case of employer bankruptcy, the timing of contributions may negatively affect both participants' benefits and PBGC. Participants with benefits greater than the PBGC maximum guarantee or with non-guaranteed benefits might see reduced benefits when PBGC becomes trustee of their plan. Following funding relief, there are fewer plan assets available from which to pay non-guaranteed benefits because funding relief lowers employer contributions to DB plans in the short term. In addition, PBGC receives fewer assets from the plans that it trustees, which harms its financial position. ", "ERISA requires PBGC to be self-supporting and receives no appropriations from general revenue. ERISA states that the \"United States is not liable for any obligation or liability incurred by the corporation.\" Increasingly large amounts of unfunded liabilities in terminated plans may burden PBGC's single-employer insurance program. Although PBGC ended FY2019 with a surplus of $8.6 billion, the effects of (1) the Coronavirus Disease 2019 (COVID-19) pandemic on the financial health of employers and (2) the market downturn in early 2020 on the value of DB plan assets will likely worsen the funding position of single-employer pension plans and PBGC's financial position. ", "Funding relief can result in short-term revenue for Treasury and PBGC. Because employer contributions to pension plans are generally tax deductible, decreasing a plan's required contributions for a year (either through increasing the interest rate or extending the amortization period) increases the plan's taxable income. Some stakeholders point out that because funding relief provides revenue to Treasury, it has been used for budgetary offsets without regard to the policy justifications. Funding relief can positively affect PBGC finances because greater DB plan underfunding results in higher variable-rate premiums (premiums based on the amount of plan underfunding) paid by employers to PBGC."], "subsections": [{"section_title": "Appendix. Data on CSEC Plans in 2017", "paragraphs": [" Table A-1 provides data on Cooperative and Small Employer Charity (CSEC) plans in the 2017 plan year (the most recent year for which complete data are available). In total, CSEC plans had about 239,000 participants, $19.6 billion in assets, and a total funding target of $20.7 billion in 2017. The largest plan by number of participants in 2017 was the Retirement Security Plan, which had assets of $8.6 billion and a total funding target of $9.2 billion in that year.", "To determine which plans use CSEC funding rules, the Congressional Research Service (CRS) analyzed public-use Form 5500 data from the Department of Labor (DOL) for the 2014 to 2017 plan years. 2014 is the first year that Form 5500 includes an option to indicate the use of CSEC funding rules (following P.L. 113-97 ), and 2017 is the most recent year for which complete data are available.", "Most private-sector pension plans are required to submit annual forms to the Internal Revenue Service (IRS), DOL, and the Pension Benefit Guaranty Corporation (PBGC). These forms generally include information about the plan, such as the number of participants, financial information, and the companies that provide services to the plan. In addition to Form 5500, pension plans are generally required to file information in specific schedules. For example, most single-employer and multiple-employer plans are required to file Schedule SB, which contains information specific to these plans. Each pension plan's Form 5500 and required schedules are available by search on DOL's website. Because data are self-reported, Table A-1 may not capture all plans that used CSEC funding rules or may include non-CSEC plans that erroneously identified as CSEC plans.", " Table A-1 provides data on private-sector defined benefit (DB) pension plans that indicated using CSEC funding rules on their 2014, 2015, 2016, or 2017 Schedule SB filings. Twenty-eight plans indicated using CSEC funding rules in multiple years. One plan, the Johns Hopkins Health System Corporation Plan, appeared to start using CSEC funding rules in 2017. Table A-1 provides the total number of participants, actuarial value of assets, total funding target, and funding target attainment percentage for the 29 plans (including the Johns Hopkins plan). ", "In addition to the Johns Hopkins plan, 10 plans indicated using CSEC funding rules in a single year but not in other years. An examination of individual plan filings from the Employee Benefits Security Administration (EBSA) showed that these plans did not use CSEC funding rules in the year they indicated having done so and are not included in this analysis. The Employee Benefit Plan of Jewish Community of Louisville, Inc., indicated using CSEC funding rules in 2014, 2015, and 2016, but a Form 5500 for the 2017 plan year is not available and is not included in Table A-1 . In 2016, this plan had 110 participants. "], "subsections": []}]}]}]}}
{"id": "R46303", "title": "Bureau of Reclamation: History, Authorities, and Issues for Congress", "released_date": "2020-04-03T00:00:00", "summary": ["The Bureau of Reclamation (Reclamation), an agency within the Department of the Interior (DOI), is responsible for the management and development of many of the large federal dams and water diversion structures in the 17 conterminous states west of the Mississippi River. Reclamation is the country's largest wholesaler of water and the country's second-largest producer of hydropower (behind the U.S. Army Corps of Engineers). Reclamation facilities store up to 140 million acre-feet of water, which serves more than 10 million acres of farmland and 31 million municipal and industrial customers. In addition to water supplies, Reclamation facilities provide flood control, recreation, and fish and wildlife benefits in many parts of the West.", "Congress created Reclamation in the Reclamation Act of 1902. The act authorized the Secretary of the Interior to construct irrigation works in western states to \"reclaim\" arid lands for agricultural purposes. Subsequent laws have built on and in some cases altered Reclamation's authorities, and Congress has authorized more than 180 individual R eclamation projects . Reclamation projects are unique in a number of ways. Among other things, these projects operate according to a beneficiary pays principle in which project beneficiaries must reimburse the government for their allocated share of project costs (some costs are considered federal in nature, with no reimbursement required). Reclamation projects also must obtain state water rights and operate according to state water law. As a result, state law and related considerations play a relatively large role in Reclamation project operations and management.", "The earliest Reclamation projects were single purpose and focused primarily on irrigation development. Later projects were larger and more complex, and they operated for multiple authorized purposes. Reclamation constructed its largest and most well-known projects (such as the California Central Valley Project, Hoover Dam, and Glen Canyon Dam on the Colorado River and Grand Coulee Dam and the Columbia River Basin Project in Washington) after the beginning of the Great Depression. Congress chose to fund most of these large projects through the General Fund of the Treasury rather than the Reclamation Fund, which Congress had established under the 1902 act to finance most Reclamation projects. A number of events precipitated the gradual slowdown of Reclamation's construction program beginning in the 1970s, and the bureau has constructed few new Reclamation projects (most of them smaller in scale) since that time.", "Reclamation has evolved considerably since its creation, and it remains an agency in transition. At Congress's direction, Reclamation has increasingly been involved in projects whose primary purpose is not reclaiming land for agricultural irrigation purposes. Some of Reclamation's new authorities include financial support for water reuse and recycling projects (i.e., the Title XVI Program), grants for water and energy conservation efforts (i.e., the WaterSMART Grants Program), and funding for rural water projects and water infrastructure associated with congressionally authorized Indian water rights settlements. How to balance new priorities with the upkeep of existing federal projects, and whether to facilitate new project development (and, if so, how), is a major consideration in discussions related to the bureau's future. These questions are particularly significant given Reclamation's nexus with state and local water resources development.", "Congress regularly considers legislation related to individual Reclamation projects, as well as broader questions related to Reclamation and its mission. Persistent and recurring drought in the West, along with the 2016 enactment of Reclamation's first significant new authority in decades for water storage project construction (Section 4007 of the Water Infrastructure Improvements for the Nation Act [WIIN Act; P.L. 114-322 ]), has increased attention on the bureau's future direction. Congress may consider a number of issues related to Reclamation, such as how (or if) the bureau should be involved in new water resource project construction, how to address aging federal water facilities, and the status of proposed and ongoing Indian water rights settlements, among other things."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["The Bureau of Reclamation (Reclamation), an agency within the Department of the Interior (DOI), is responsible for the management and development of many of the large federal dams and water diversion structures in the 17 conterminous U.S. states west of the Mississippi River. Reclamation and the U.S. Army Corps of Engineers (USACE) are the two principal federal agencies that own and operate water resources facilities. Reclamation is the country's largest wholesaler of water and the country's second-largest producer of hydropower (behind USACE). In addition to water supplies, Reclamation facilities provide flood control, recreation, and fish and wildlife benefits in many parts of the West.", "Congress has authorized more than 180 individual R eclamation projects . The goal of these projects was generally to \"reclaim\" arid western lands for irrigated agriculture and other types of development. Reclamation projects are unique in a number of ways. Among other things, these projects operate according to a beneficiary pays principle in which project beneficiaries must reimburse the government for their allocated share of project costs (some costs are considered federal in their nature, therefore no reimbursement is required). Most Reclamation projects also must obtain state water rights and operate in accordance with state law. ", "Reclamation has evolved over time, and it remains an agency in transition. Its earliest projects were single-purpose irrigation projects; later projects were more complex and served multiple authorized purposes. The bureau has constructed few new projects since the 1970s, but it has been increasingly involved in other project types (e.g., water reuse and recycling, water conservation, Indian water rights settlements, and rural water, among others). The primary purpose of most of these projects is not reclaiming land for agricultural purposes. How to balance these priorities with the upkeep of existing Reclamation projects, and whether to facilitate new project development (and, if so, how), has been of interest to Congress. ", "This report provides background on the Bureau of Reclamation, including its history and authorities. It also discusses selected issues before Congress, in particular those related to the bureau's most prominent areas of responsibility."], "subsections": []}, {"section_title": "Background: The Bureau of Reclamation and the Era of Large Federal Water Projects", "paragraphs": ["The Bureau of Reclamation has been an important entity in shaping federal development efforts in the western states and territories. Along with the USACE (whose founding dates to the Revolutionary War), it was one of two principal federal agencies involved in the majority of federally-sponsored water resources development in the 20 th century. The below sections discuss Reclamation's history and evolution as a federal agency. "], "subsections": [{"section_title": "Early History and the Reclamation Act of 1902", "paragraphs": ["The legislative history of the Bureau of Reclamation dates to the mid-19 th century enactments of the Homestead Act (1862) and the Desert Land Act (1877). In the Homestead Act, Congress allowed settlers in western states and territories to receive up to 160 acres of land free if they lived on the land for five years and made improvements to it. In an effort to further encourage settlement in the West, Congress amended the Homestead Act in the Desert Land Act to offer more acreage than was previously offered, at a reduced price, to individuals that agreed to reclaim a tract of desert land with irrigated agriculture. These efforts initially took the form of direct diversion from streams and other water bodies, but it soon became clear to planners that widespread settlement could be facilitated only through the development of large-scale irrigation infrastructure (e.g., water storage, conveyance, and pumping infrastructure). This realization led to a number of private and state-sponsored ventures throughout the West. The Carey Act of 1894 put official responsibility for overseeing irrigation development on the states and territories. However, many of these efforts failed due to lack of funds, inadequate engineering skill, or other factors. Thus, supporters of irrigated agriculture in the West turned to the federal government for financing and technical support.", "In the Reclamation Act of 1902 (the Reclamation Act), Congress for the first time approved federal efforts in the large-scale planning and construction of irrigation works for the storage, diversion, and development of waters in arid and semiarid western states. Under the act, federal Reclamation projects were funded by a newly established Reclamation Fund in the United States Treasury. Initially, the fund received receipts from the sale of federal land in the western United States, along with repayments by beneficiaries for Reclamation's construction costs for water projects. Authorized activities under the Reclamation Act were limited to 16 designated Reclamation s tates on lands west of the Mississippi River: Arizona, California, Colorado, Idaho, Kansas, Montana, Nebraska, Nevada, New Mexico, North Dakota, Oklahoma, Oregon, South Dakota, Utah, Washington, and Wyoming. A seventeenth Reclamation state, Texas, was added in 1906. ", "Under the Reclamation Act, Congress allotted settlers up to 160 acres of lands to be irrigated by a Reclamation project, provided the lands were reclaimed for agricultural purposes and water users repaid the federal government for project const ruction expenses and associated operations and maintenance (O&M) costs. Congress established a 10-year repayment period for Reclamation projects in the Reclamation Act and directed the payments into the Reclamation Fund for new and ongoing project investments by the bureau. Pursuant to r eclamation law (i.e., the body of federal law that informs the development and management of projects by the Bureau of Reclamation), interest payments were not required for the repayment of construction costs by agricultural beneficiaries.", "Another formative aspect of reclamation law under the 1902 act was a directive by Congress to defer to state law. Under Section 8 of the Reclamation Act, Congress stipulated: ", "Nothing in this Act shall be construed as affecting or intended to affect or to in any way interfere with the laws of any State or Territory relating to the control, appropriation, use, or distribution of water used in irrigation, or any vested right acquired thereunder.", "This requirement means that most Reclamation project water rights must be appropriated under state law and are subject to state adjudication and administration. As a practical matter, project-specific requirements may differ from state to state, and state water laws and regulations play a significant role in the operations and management of many Reclamation projects."], "subsections": []}, {"section_title": "The Reclamation Service and the Evolution of Reclamation Law", "paragraphs": ["The United States Reclamation Service (the precursor to the Bureau of Reclamation) was established within the U.S. Geological Survey (USGS) in July 1902. Initially, the Secretary of the Interior had the ability to expend funds on Reclamation projects as the Secretary saw fit based on the relevant investigations. From 1902 to 1907, Reclamation built about 30 projects in western states. In 1907, the Secretary separated the Reclamation Service from the USGS to create an independent bureau within the Department of the Interior. The Reclamation Service was formally renamed the Bureau of Reclamation in 1923.", "The earliest Reclamation projects were single purpose and focused primarily on irrigation development. Many projects encountered problems ; as a result, Congress eventually made a number of changes to Reclamation, including infusion of additional federal funds and revenue sources to the Reclamation Fund. Congress provided additional funds from the Treasury on multiple occasions, including $20 million in 1910 and $5 million in 1938. In the Reclamation Extension Act, enacted in 1914, Congress sought to prevent overspending on future projects by making expenditures from the Reclamation Fund subject to annual discretionary appropriations. Later, in 1924, a Fact Finders Report detailed a number of problems with early Reclamation projects; Congress enacted legislation later that year (popularly known as the \"Fact Finders Act\") that added additional requirements of both the bureau and potential contractors and made major changes to the Reclamation project development process. Congress also authorized new incidental purposes and other revenue sources for Reclamation projects ( Table 1 ). To shore up Reclamation Fund balances, Congress authorized revenues from the sales of Reclamation project water to land owners outside of project boundaries (authorized under the Warren Act of 1911), 40% of onshore royalties from mineral and natural resource leasing on public lands (authorized in 1920), and the full amount of Reclamation project hydropower revenues (authorized in 1938). ", "Over time, Congress also altered repayment terms and other associated requirements for Reclamation projects. The Reclamation Extension Act of 1914 extended the repayment period for Reclamation projects from 10 years to 20 years. Legislation enacted by Congress in 1926 further extended the repayment period to 40 years. Pursuant to the Reclamation Project Act of 1939, Congress authorized Reclamation to provide for relief of costs in excess of an irrigator's ability to pay (also known as irrigation assistance or aid to irrigation ) and provided that this assistance could be covered by a project's excess hydropower and/or M&I water sales revenues. That same act authorized water service contracts \u00e2\u0080\u0094a second type of short- or long-term water contract in addition to repayment contracts\u00e2\u0080\u0094for periods up to 40 years. Legislation enacted in 1946 and 1958 provided authorities for new projects to receive nonreimbursable federal credit for activities related to the preservation of fish and wildlife. In addition to these and other changes, in many cases Congress also has authorized unique project repayment terms or extensions applicable to specific Reclamation projects.", "Congress also passed legislation to support Reclamation project repairs and improvements. In 1949, Congress authorized rehabilitation and betterment improvements to be repaid in accordance with existing construction repayment schedules and authorized ability-to-pay adjustments for those improvements. Authorities enacted in 1955 and 1956 provided up to 50-year loans to irrigation districts for the construction of distribution systems on authorized Reclamation projects and projects similar to those of the reclamation program, respectively. ", "Most individual Reclamation projects were authorized in specific acts of Congress. Reclamation constructed many of its largest projects beginning in the Great Depression, with Congress directing that project financing be provided through the General Fund of the Treasury in lieu of the Reclamation Fund. The 1928 Boulder Canyon Act authorized the construction of Hoover Dam and the All-American Canal, and the Rivers and Harbors Act of 1937 authorized construction of the Central Valley Project (CVP) in California. Congress authorized other large Reclamation projects during and after World War II, such as the Columbia Basin Project (1943), the Pick-Sloan Missouri Basin Program (1944), and the Colorado River Storage Project (1956). The last major new Reclamation project construction authorization was the Colorado River Basin Project Act of 1968; among other things, this act authorized the Animas-La Plata Project and the Central Arizona Project (CAP). "], "subsections": []}, {"section_title": "Reclamation in Transition", "paragraphs": ["Numerous events precipitated a gradual slowdown of Reclamation's construction program in the 1970s and 1980s. Prior to this time, most Reclamation projects had been constructed with little or no environmental mitigation measures. New federal environmental requirements pursuant to the National Environmental Policy Act of 1969 and the Endangered Species Act of 1973 provided increased protections for the environment, while also increasing certain costs and administrative conditions associated with development of new Reclamation projects. At the same time, many of the prime project sites (in terms of development and storage capacity) throughout the West had been developed or designated for protection by that time. Where Reclamation pursued projects during this period, the projects were often rejected or significantly scaled back on economic and/or environmental grounds. The 1976 failure of Reclamation's Teton Dam in Idaho (which failed upon initial filling of the reservoir behind the dam) resulted in 11 fatalities and raised doubts among some as to the viability of large new federal dams and water storage projects. It also led to congressional enactment of the Reclamation Safety of Dams Act of 1978 ( P.L. 95-578 ), which authorized Reclamation to make dam safety modifications at its dams. ", "The Carter and Reagan Administrations both critically assessed USACE and Reclamation water resources projects. In 1977, the Carter Administration transmitted to Congress a \"Hit List\" of 19 water resource construction projects to be defunded, several of which were Reclamation projects. Congress eventually agreed to eliminate funding for only a few of these projects, but the Administration's initiation of such a proposal was at the time viewed as significant. ", "The Reagan Administration continued the trend of scaled-back construction requests. In 1988, it published a report, entitled Reclamation Faces the Future , which formally acknowledged a shift in the bureau's mission:", "The arid West essentially has been reclaimed. The major rivers have been harnessed and facilities are in place or are being completed to meet the most pressing current water demands and those of the immediate future.", "The Administration noted that no major project authorization legislation had been enacted since 1968 and that, \"Reclamation's future role will entail a shift in emphasis\u00e2\u0080\u0094an acknowledgment that past goals have been met even as new challenges are emerging.\" Reclamation stated that the focus of its program going forward would be operations and maintenance of existing projects, as well as other goals such as environmental enhancement and dam safety. ", "Congress framed its directions for Reclamation in the 1980s and 1990s in two pieces of legislation. First, in Title II of P.L. 97-293 , Congress enacted the Reclamation Reform Act of 1982 (RRA), which made major changes to reclamation law. It altered the ownership limitation of 160 acres under the 1902 Reclamation Act, as amended, expanding it to 960 acres. At the same time, it expanded the applicability of the acreage limitation to all operator-owned lands (i.e., the acreage limitation was applied to leased lands, which previously were not subject to the limitation) and introduced the concept of full-cost pricing for water delivered to any lands owned in excess of the new limits. The RRA had the general effect of making major changes to most Reclamation contracts. In some cases, the RRA changes increased costs to reclamation contractors by making it more difficult to irrigate more than 960 acres with federally subsidized project water. ", "In the Reclamation Projects Authorization and Adjustment Act of 1992 ( P.L. 102-575 ), Congress set a new course for Reclamation that realigned some of the bureau's priorities and attempted to further mitigate some projects' effects on the environment. Title XXXIV of that act, the Central Valley Project Improvement Act (CVPIA), made major changes to the management of Reclamation's largest project, the CVP in California. These changes generally benefited fish and wildlife, but they also resulted in less water delivered and higher water and power rates for CVP contractors; the changes were thus contentious. Congress included other significant changes in P.L. 102-575 , such as direction to operate Glen Canyon Dam (one of Reclamation's largest dams on the Colorado River) to protect and mitigate for adverse impacts to Grand Canyon National Park. In addition, Congress authorized a presidential review and report on federal activities in western states that directly or indirectly affect the use of surface or subsurface water resources. ", "Although construction of new traditional Reclamation projects generally has not occurred in recent years, Congress has approved other new Reclamation construction efforts since the 1970s. For instance, Congress approved Reclamation involvement in rural water projects and the construction of some new water infrastructure pursuant to congressionally approved water rights settlements with Indian tribes. Congress also authorized Reclamation to provide financial assistance to nonfederal entities for water conservation-related activities, including assistance for site-specific nonfederal water reuse and recycling project study and construction under P.L. 102-575 , as amended, and grant assistance for water and energy conservation projects under P.L. 111-11 . Several of these authorities were consolidated via Secretarial Order in 2010 into Reclamation's WaterSMART (Sustain and Manage America's Resources for Tomorrow) Program. Most recently, in the Water Infrastructure Improvements for the Nation Act (WIIN Act; P.L. 114-322 ), Congress provided Reclamation with its first significant new authorization for water storage project construction in more than three decades. That act authorized an alternative financing structure and process for building new or augmented federal and nonfederal water storage projects. "], "subsections": []}, {"section_title": "Reclamation Today: Organizational Structure, Infrastructure Assets", "paragraphs": ["Reclamation projects are spread out over six regions in the 17 western states ( Figure 1 ). The bureau is headed by the Commissioner of Reclamation, a Senate-confirmed presidential appointee that reports to the Assistant Secretary of the Interior for Water and Science. Reclamation's primary congressional authorizing committees are the House Natural Resources Committee and the Senate Energy and Natural Resources Committee. Congress typically funds Reclamation activities through discretionary appropriations to Reclamation in annual Energy and Water Development and Related Agencies appropriations bills.", "Reclamation estimated that the total replacement value of its water resource facilities was $99 billion as of 2015. These infrastructure assets include 491 dams (including 363 high and significant hazard dams), 338 reservoirs, and more than 8,000 miles of canals and other conveyance infrastructure, as well as 53 hydroelectric power plants. Reclamation's facilities have a collective storage capacity of 140 million acre-feet and serve one in every five farmers in the West. Several of Reclamation's dams and reservoirs are among the largest in the world. Grand Coulee Dam, on the Columbia River ( Figure 2 ), is the second largest concrete dam in the world (in terms of volume), and the largest hydropower producing dam in the United States; on the Colorado River, Hoover Dam and Glen Canyon Dam (the second and fourth tallest dams in the United States, respectively) impound Lake Mead and Lake Powell, the country's two largest reservoirs (in terms of storage capacity).", "In addition to the infrastructure it owns, Reclamation supports many nonfederally-owned and developed facilities, and it awards financial assistance for projects that provide benefits throughout the West. According to the Department of the Interior, in FY2017, Reclamation generated $63 billion in economic impacts, $45 billion of which was attributed to its role in irrigation production. In addition to the bureau's annual budget ($1.66 billion in enacted budget authority in FY2020), more than $800 million in activities is typically funded by water and power contractors for project operations, maintenance, and other related work.", "The remainder of this report discusses Reclamation's major project types and related issues for Congress."], "subsections": []}]}, {"section_title": "Reclamation Projects and Programs", "paragraphs": ["Reclamation's primary project types generally can be divided into the following areas: ", "\"traditional\" single purpose or multipurpose water supply projects; federal or nonfederal water storage projects under Section 4007 of the WIIN Act; dam safety modification projects; rural water projects; Indian water rights settlements; and grants for nonfederal projects that encourage investment in alternative water supplies (e.g., water reuse and recycling [Title XVI Program], water and energy efficiency [WaterSMART grants], and desalination). ", "Reclamation also possesses multiple other programmatic authorities that are beyond the scope of this report. Cost-share structures and authorities for some of these projects are summarized in Table 2 ."], "subsections": [{"section_title": "Traditional Reclamation Projects", "paragraphs": ["Reclamation owns about 180 \"traditional\" Reclamation projects in the 17 western states. As discussed above, the congressional authorization of individual Reclamation projects generally has occurred pursuant to the Reclamation Act of 1902 and amendatory laws. Development of these Reclamation projects has been limited to geographically specific congressional authorizations for projects. Reclamation projects generally share several characteristics:", "Geographically Specific Congressional Authorization . Most Reclamation projects are first authorized for study by Congress. Subsequently, Reclamation completes its studies and recommends project designs for congressional construction authorization. Typically, these authorizations are approved by the authorizing committees (i.e., the House Natural Resources Committee and the Senate Energy and Natural Resources Committee), which reference study documents and recommendations that were transmitted to Congress. Beneficiaries Pay. The federal government initially funds 100% of construction costs, to be repaid by beneficiaries (e.g., irrigation contractors, municipal governments) for their estimated share of a project's costs, generally over a 40 to 50 year term (but, in some cases, other repayment periods). In most cases, the federal government is not repaid for its full investment in these projects. Beneficiaries also are responsible for paying their share of project-level O&M expenses. Projects A re Federally Owned , B ut Non-Fed eral Entities O ften P lay a R ole in O&M . Reclamation projects are initially owned and operated by the federal government (these projects are generally referred to as reserved works ). Once construction costs have been repaid in full, responsibility for O&M of the project may be transferred to project beneficiaries (these projects are commonly known as transferred works ), but projects remain federally owned (and subject to federal oversight and regulation) unless Congress explicitly authorizes transfer of ownership. The process of divesting (i.e., transferring ownership) of qualifying assets to nonfederal users is known as title transfer . ", "Despite the overall drop-off in major construction project authorizations since the early 1970s, the approach of obtaining new or amended geographically specific congressional authorizations for Reclamation projects remained the norm as recently as 2010, when the Omnibus Lands Act of 2009 ( P.L. 111-11 ) was enacted. In part due to congressional earmark moratoriums dating to 2012, Congress has refrained from enacting site-specific authorization and appropriations for Reclamation projects since that time. However, Congress enacted a new process for approving and financing Reclamation water storage projects in Section 4007 of the WIIN Act."], "subsections": [{"section_title": "New Authority for Water Storage Projects: WIIN Act Section 4007", "paragraphs": ["Title II, Subtitle J of the WIIN Act included new authority under Section 4007 that authorizes federal support for new or expanded water storage projects, including projects constructed by nonfederal entities. In contrast to the traditional approach of 100% of costs funded up-front by the federal government (with beneficiaries responsible for repaying their share of project benefits), the WIIN Act authorized maximum federal support of 50% of total costs for certain approved federal water storage projects, as well as a maximum of 25% federal support for approved nonfederal surface and groundwater storage projects. Additionally, the act required the nonfederal shares for both types of financing to be provided up-front in order for federal support to be made available. Federal construction funding for these projects is contingent on a number of determinations, including that in return for the federal cost share, at least a proportionate share of the project benefits are found to be federal benefits. Thus, unlike traditional Reclamation projects, there is no expectation of repayment of the initial federal investment in these projects. ", "The authorization process for Section 4007 projects also differs from that traditionally used for other Reclamation projects. For a project to qualify for funding under the WIIN Act, Reclamation must find that project feasible, and the project must have a cost-sharing partner. In addition, Reclamation must recommend that project to Congress, and Congress must mention the project by name in enacted appropriations legislation. As a result, the process of funding Section 4007 is typically carried out in three steps: ", "1. Congress appropriates funding for Section 4007 projects to Reclamation. 2. Reclamation recommends specific projects to receive this funding. 3. Congress decides whether to refer to these projects by name in subsequent appropriations legislation, thereby providing formal approval for allocations and enabling project-level expenditures.", "Following initial appropriations for this authority in FY2017, Reclamation recommended seven projects to receive $33 million in FY2017 funding for WIIN Act Section 4007 projects in early 2018. Congress agreed to these recommendations in the FY2018 Energy and Water Development appropriations bill ( P.L. 115-141 ). In February 2019, Reclamation recommended another round of project-level allocations to receive $75 million in FY2017 and FY2018 appropriated funds. In enacted appropriations for FY2020, Congress agreed with all of the Administration's recommendations, with the exception of $57 million proposed for the Shasta Dam and Reservoir Enhancement Project. Thus, as of early 2020, Congress had appropriated $469 million for Section 4007 projects, but only $51 million of this funding had been released to specific projects. The remainder was awaiting further action by Reclamation and/or Congress. "], "subsections": []}, {"section_title": "Dam Safety Modifications61", "paragraphs": ["Reclamation's dam safety program, authorized by Reclamation Safety of Dams Act of 1978, as amended, provides for inspection and repairs to qualifying projects at Reclamation dams. Projects authorized under this authority have a different cost-share structure than that used for traditional Reclamation construction and rehabilitation projects (including initial construction of some dams). Reclamation first conducts dam safety inspections through the Safety Evaluation of Existing Dams program. Corrective actions, if necessary, are carried out through the Initiate Safety of Dams Corrective Action (ISCA) program. With ISCA appropriations, Reclamation funds modifications on priority structures based on an evolving identification of risks and needs.", "Based on amendments enacted in 1984 ( P.L. 98-404 ), Reclamation requires a 15% cost share from sponsors for dam safety modifications when modifications are based on new hydrologic or seismic data or changes in state-of-the-art design or construction criteria that are deemed necessary for safety purposes. In 2014, P.L. 114-113 amended the Reclamation Safety of Dams Act to increase Reclamation's authority, before needing congressional authorization to approve a modification project, from $1.25 million to $20 million. It also authorized the Secretary of the Interior to develop additional project benefits, through the construction of new or supplementary works on a project in conjunction with dam safety modifications, if such additional benefits are deemed necessary and in the interests of the United States and the project. Nonfederal and federal funding participants must agree to a cost share related to the additional project benefits."], "subsections": []}]}, {"section_title": "Other Project Types", "paragraphs": ["In addition to traditional Reclamation projects, Congress has authorized Reclamation to carry out other projects and programs. Some of these authorities are discussed below."], "subsections": [{"section_title": "Rural Water Projects", "paragraphs": ["Congress has authorized Reclamation to incorporate M&I water resource benefits into larger projects that serve various purposes (e.g., irrigation, power). Separate from these projects, Congress has expressly authorized Reclamation to undertake the design and construction of rural water supply projects intended to deliver potable water supplies to geographically specific rural areas and communities. ", "From 1980 through 2009, Congress specifically authorized Reclamation to undertake the design and construction, and sometimes the O&M, of specific projects intended to deliver potable water supplies to rural communities located in Reclamation states. Primarily, these projects were in North Dakota, South Dakota, Montana, and New Mexico. The rural communities include tribal reservations and nontribal rural communities with nonexistent, substandard, or declining water supply or water quality. Many rural water projects are large in geographic scope\u00e2\u0080\u0094taking water from one location, where it is available in quantity and quality, and moving it across large distances to tie to existing rural systems. Although M&I portions of Reclamation water supply facilities typically require 100% repayment with interest, Congress has authorized providing some or all federal funding for rural water projects on a nonreimbursable basis (i.e., a de facto grant). For example, the federal government pays up to 100% of the cost of tribal rural water supply projects, including O&M. For nontribal rural water supply projects, the federal cost share has averaged 75% to 80%.", "The Rural Water Supply Act of 2006 ( P.L. 109-451 ) created a structured program for developing and recommending rural water supply projects. This program was to replace the previous process of authorizing projects individually\u00e2\u0080\u0094often without the level of analysis and review (e.g., feasibility studies) consistent with Reclamation's other projects. Under the Rural Water Supply Program, Congress authorized Reclamation to work with rural communities and tribes to identify M&I water needs and options to address such needs through appraisal investigations and feasibility studies. Congress would then consider feasibility studies recommended by the Administration before authorizing specific project construction in legislation. Ultimately, Reclamation did not recommend and Congress did not authorize any project through this process, and the authority for the program expired in 2016. ", "Reclamation continues to construct rural water projects (and provide O&M assistance for some tribal components) that were initiated outside of the Rural Water Supply Program. In 2012, Reclamation developed prioritization criteria for budgeting these projects: inclusion of tribal components; amount of financial resources committed; urgency and severity of need; financial need and potential economic impact; regional and watershed approach; and meeting water, energy, and other priority objectives. Reclamation stated that the criteria are intended to reflect both the priorities identified in the statutes that authorized individual projects and the goals of the Rural Water Supply Act of 2006.", "As of early 2020, Reclamation reported that $1.3 billion was needed to complete construction of authorized, ongoing rural water projects. Enacted funding for rural water supply projects in FY2019 provided $132.7 million for six authorized rural water projects, which was $98.7 million above the FY2019 budget request. For FY2020, the Administration requested $27.8 million and Congress appropriated an additional $117.4 million above the request for Reclamation to allocate to ongoing rural water projects in a work plan for the enacted bill. "], "subsections": []}, {"section_title": "Indian Water Rights Settlements68", "paragraphs": ["Indian water rights are vested property rights and resources for which the United States has a trust responsibility. The Supreme Court first recognized Indian water rights in Winters v. United States in 1908. Under the Winters doctrine, when Congress reserves land (i.e., for an Indian reservation), Congress implicitly reserves water sufficient to fulfill the purpose of the reservation.", "Since the Winters decision, disputes have arisen between Indians asserting their water rights and non-Indian water users, particularly in the western United States. In that region, the establishment of Indian reservations (and, therefore, of Indian water rights) generally predated settlement by non-Indians and the related large-scale development by the federal government of water resources for non-Indian users. In most western states, water allocation takes place under a system of prior appropriation in which water is allocated to users based on the order water rights were acquired. Under the Winters doctrine and the western system of prior appropriation, the water rights of tribes often are senior to those of non-Indian water rights holders because Indian water rights generally date to the creation of the reservation. However, despite the priority of Indian reserved water rights, non-Indian populations frequently have greater access to and allocations of water through infrastructure. This discrepancy leads to disputes that typically have been litigated or, since the late 1970s, resolved by negotiated settlements (commonly referred to as Indian w ater r ights s ettlements ).", "Negotiated settlements often involve tradeoffs for tribes, water users, and governmental entities. In several cases, Congress authorized Reclamation to construct infrastructure to help provide tribes with wet water (i.e., access to actual water, rather than just water rights) that was finalized by parties in the negotiation and settlement process. Since the first settlement was enacted in 1978 (the Ak-Chin Water Rights Settlement, enacted in P.L. 95-328 ), Congress has enacted 32 settlements into law. Overall, 36 settlements have been federally approved (including those which were administratively approved), with total estimated federal costs in excess of $5.8 billion. Individual settlements have varied widely in their costs to the federal government, from no federal funding required to hundreds of millions of dollars in federal support.", "In 2010, Congress also authorized a new fund for Reclamation, the Reclamation Water Settlements Fund, under Title X of P.L. 111-11 . The fund may provide up to $120 million per year for authorized Indian water rights settlements, without further appropriations (i.e., mandatory funding), from FY2020 to FY2029. "], "subsections": []}, {"section_title": "WaterSMART Program and Other Related Projects", "paragraphs": ["Reclamation combines funding for multiple agency-wide programs promoting water conservation into a single program\u00e2\u0080\u0094the WaterSMART (Sustain and Manage American Resources for Tomorrow) program. The program is part of the Department of the Interior's focus on water conservation, reuse, and planning, and it is notable for its departure from Reclamation's traditional model of project-based funding. Within Reclamation, WaterSMART includes funding for the following six sub-programs: ", "WaterSMART Grants, which provide funding for water and energy efficiency projects, as well as water marketing strategy development; The Title XVI Water Reclamation and Reuse Program, which funds study and construction of authorized water recycling and reuse projects; The Drought Response Program, which provides assistance to water managers in developing and updating comprehensive drought plans, implementing drought resiliency projects, and undertaking emergency response actions; The Basin Studies Program, which evaluates water supply and demand in individual basins and identifies and implements strategies to address water supply and demand imbalances; The Cooperative Watershed Management Program, which funds projects by watershed groups that provide local solutions to address water management needs; and Water Conservation Field Services, which provides technical and financial assistance for the development of water conservation plans and design of water management improvements.", "Of these programs, the largest are WaterSMART Grants and the Title XVI Water Reclamation and Reuse Program, which received a total of $401 million and $579 million, respectively, in appropriations from FY2009 through FY2020. Congress authorized several of WaterSMART's sub-programs, including WaterSMART Grants, parts of the Drought Response Program, the Basin Studies Program, and the Cooperative Watershed Management Program, in Subtitle F of Title IX of the Omnibus Public Land Management Act of 2009 ( P.L. 111-11 ). Other WaterSMART sub-programs, such as Title XVI and the Water Conservation Field Services Program, were authorized prior to the 2010 establishment of WaterSMART. Most WaterSMART efforts require cost sharing of at least 50% to leverage nonfederal resources in addition to federal funding. Recent funding levels for the WaterSMART Program are shown below ( Figure 3 )."], "subsections": [{"section_title": "Section 4009 of the WIIN Act", "paragraphs": ["Section 4009 of the WIIN Act added new authorities for Reclamation to assist in the construction of desalination projects and made major changes to Reclamation's Title XVI Program. In Section 4009(a), Congress expanded Reclamation's role in desalination facilities (which had previously been limited to support for research and development) by authorizing the Secretary of the Interior to provide federal funding of up to 25% of the total cost of an eligible desalination project. The authority included public facilities for the desalination of seawater and/or brackish water. Prior to receiving this support, nonfederal parties must submit feasibility studies of individual projects to Reclamation for approval. For Title XVI projects, Congress authorized a similar process in Section 4009(c), whereby nonfederal studies of previously unauthorized Title XVI projects are submitted to Reclamation for review and potential approval for future federal funds (i.e., without project-specific authorization by Congress). Similar to the authorization and funding process for Section 4007 projects, Reclamation must recommend project-specific funding allocations for both categories of Section 4009 projects, and Congress provides final approval for these allocations by mentioning projects by name in enacted appropriations legislation. From FY2017 through FY2020, Congress appropriated a total of $42 million and $70 million for Section 4009(a) desalination and Section 4009(c) Title XVI projects, respectively."], "subsections": []}]}]}]}, {"section_title": "Selected Issues for Congress", "paragraphs": ["Congress regularly considers matters related to Reclamation. Persistent drought in parts of the West and the enactment of the WIIN Act's Sections 4007 and 4009 authorities, as well as other recent developments, such as the increasing surplus balances in the Reclamation Fund, have spurred broader congressional discussions of Reclamation's missions and its future role. In the 116 th Congress, two bills propose broad Reclamation policy changes: S. 1932 , the Drought Resiliency and Water Supply Infrastructure Act, and draft legislation (currently unnumbered) circulated for public comment by Representative Huffman. Numerous other bills target specific Reclamation programs, projects, or authorities for change. Some of the issues and legislation in this debate are discussed below. "], "subsections": [{"section_title": "Extension of WIIN Act Section 4007 Authority", "paragraphs": ["One overarching question for Reclamation is how (or if) the bureau should support the construction of new water supply infrastructure, in particular new surface water storage infrastructure. The last major Reclamation water storage project constructed was the Animas La Plata Project on the Colorado/New Mexico border; it was originally authorized under the Colorado River Basin Project Act of 1968 (P.L. 84-485) and constructed from 2002 to 2009. Outside of Indian water rights settlements and rural water projects, Congress generally has not authorized Reclamation to construct major new water storage projects in the last 30-40 years.", "The status of the Section 4007 water storage authorities enacted in the WIIN Act could be important in determining the bureau's future direction. When enacted, Section 4007 was the first new major water storage project construction authority in years. It was notable for its deference to nonfederal project sponsors to lead or contribute to activities traditionally led by the federal government. The process set up under Section 4007 was also notable for its departure from the traditional congressional approval process for Reclamation projects, in which Congress enacts project-specific authorizations.", "Although the financing structure for WIIN Act projects requires less of an overall federal investment than was necessary for many past Reclamation projects, the lower relative up-front federal subsidy also appears likely to shrink the pool of projects using these authorities compared with those that benefited from traditional Reclamation projects. Six of the nine water storage projects that were funded through early 2020 were located in California; two were located in Washington, and one was located in Idaho. That is, 3 of the 17 reclamation states appear likely to benefit from Section 4007 funding in the near term.", "Some members of Congress have proposed extending and/or amending the Section 4007 authority in the 116 th Congress. For instance, S. 1932 would extend that part of the WIIN Act for five years (through FY2025) and authorize $670 million for new ground and surface water storage projects under this section. Separately, a draft bill introduced by Representative Huffman would set up a new annual reporting process to inform congressional authorization deliberations for \"major\" federal projects, as well as nonfederal water storage projects. Under this legislation, certain nonfederal water storage projects (specifically, nonfederally sponsored projects costing less than $250 million) would not be subject to this reporting process and would not require explicit authorization by Congress. The legislation would increase the authorization of appropriations for Section 4007 storage projects to $750 million and extend this authority through FY2025.", "Supporters have advocated for continuing Section 4007 authority for several reasons. They argue that new construction will increase water availability in the West and help to address the water resource effects of climate change, and thus it warrants federal prioritization. They also note that significantly more funding is required to complete the projects that have initially received WIIN Act funds. Some oppose the extension of the Section 4007 authority and believe there should be little or no federal role in projects that otherwise would be the responsibility of nonfederal entities. Some opponents would prefer that Congress focus on promoting alternatives that are more environmentally friendly, such as water conservation and water reuse. ", "If Congress chooses to extend the WIIN Act Section 4007 authority, it would signal to some that Reclamation will continue to have an active role in new water development projects. At the same time, it might suggest that this role is likely to be more of a supporting capacity than has traditionally been the case. If Congress opts not to extend the authority, it may choose to focus on other Reclamation mission areas to reduce Reclamation involvement and continue to transition Reclamation projects and responsibilities to nonfederal users. Congress also might decide to complete some projects that have been initially funded through the WIIN Act on an ad hoc basis or to use other financing authorities to support new projects (see below section, \" Financing Infrastructure \")."], "subsections": []}, {"section_title": "Support for New Title XVI, Desalination Projects", "paragraphs": ["Title XVI has been a popular option for funding water reuse and recycling projects in the West since the first projects were authorized under that authority in 1992. In Section 4009 of the WIIN Act, Congress set up a process that allowed for the approval of the first large set of new Title XVI construction projects since 2010. In that same section, Congress also authorized federal support for nonfederal desalination projects at a similar level to that provided to Title XVI Projects (i.e., a 25% federal cost share), with projects to be approved through a similar reporting process. Reclamation published the first report under the Section 4009 authority in 2017, and Congress approved additional new projects via the WIIN Act reporting by Reclamation in 2018 and 2019. Similar to the authority for water storage projects under Section 4007, Section 4009 was notable for its deference to nonfederal interests; Section 4009 allows nonfederal entities to carry out studies and receive approval for federal support by Reclamation based on a limited set of criteria. Congress in turn may appropriate and approve the release of funding for individual projects after they have been recommended by Reclamation.", "In the 116 th Congress, several bills propose to extend Section 4009 of the WIIN Act. S. 1932 , for example, would authorize $160 million and $80 million in new funding for WIIN Act Title XVI and Desalination projects, respectively. Draft legislation introduced by Representative Huffman would authorize $500 million and $260 million for these projects, respectively. Both pieces of legislation would extend the Section 4009 authorities through 2024 and increase the per-project federal cap for newly funded Title XVI projects from $20 million to $30 million.", "Although some support Title XVI and/or desalination projects, others question whether they should be a priority of the bureau. Opponents sometimes point out that these projects largely benefit urban areas, in particular those in California. For their part, supporters note that by avoiding new consumptive uses of freshwater supplies, these projects have the potential to be more environmentally friendly than traditional water storage projects. They also add more relatively drought-resilient water supplies to many fast-growing areas of the West that also depend on water from traditional Reclamation projects. Although the cost-effectiveness of most water reuse and some desalination projects compares favorably with similarly located traditional water storage projects in terms of project yield per acre-foot, some projects may not be cost competitive."], "subsections": []}, {"section_title": "Aging Infrastructure", "paragraphs": ["Aging infrastructure represents a significant challenge for Reclamation. Most of the bureau's facilities are 60-100 years old, and the total replacement value of these facilities as of 2015 was estimated to be $99 billion. As these facilities age, the beneficiary-pays model poses a notable challenge for upkeep of Reclamation facilities. Most Reclamation contractors do not own the facilities from which they benefit and therefore may have difficulty financing their share of project repairs. Reclamation faces challenges not only in obtaining the requisite funding from Congress for aging infrastructure projects but also in structuring repayment requirements in a way that will not be overly burdensome for its contractors. Congress has expressed interest both in how Reclamation estimates and accounts for its infrastructure needs and in how it plans to address aging infrastructure in the future.", "Reclamation generally groups aging infrastructure and related needs into the overarching project category of m ajor r epair and r ehabilitation (MR&R). This category includes both dam safety needs and federal- and contractor-funded needs for upgrades to water and power infrastructure. In early 2020, Reclamation estimated that its five-year extraordinary maintenance and rehabilitation needs were $3.8 billion. This estimate includes dam safety appropriations and reserved works (both of which are funded via discretionary appropriations) and needs expected to be funded by water and power users and not by federal appropriations. Reclamation is also working on a broader strategy to estimate and account for its aging infrastructure needs, as required under the Reclamation Transparency Act, enacted in Subtitle G, Title VIII of P.L. 116-9 .", "It impossible to predict what portion of Reclamation's short- and long-term MR&R needs will go unmet. However, recent experience indicates that Reclamation will continue to request funding for a significant share of its MR&R needs, that unforeseen expenses are likely to arise, and that some contractors will have difficulty repaying their shares of some of these large rehabilitation expenses without federal aid. Some may question the prospect of additional federal spending for these projects and contractors. At the same time, infrastructure failures could pose a significant threat to the public in the form of physical and/or economic damages. ", "Recent Congresses have introduced proposals that would attempt to address Reclamation's aging infrastructure. In the 116 th Congress, both S. 2044 and H.R. 4659 would create a new account in the Treasury, to be known as the Aging Infrastructure Account, to receive appropriations for non-dam safety related extraordinary operations and maintenance work on reserved or transferred Reclamation projects, as well as repayment by users for these costs. Congress first authorized federal assistance for these costs under Sections 9603-9605 of P.L. 111-11 , but to date the bureau has not provided such assistance, in part due to lack of requests from users. Earlier in the 116 th Congress, Title VIII, Subtitle A of P.L. 116-9 authorized a new programmatic title transfer process, whereby Reclamation is able to transfer ownership for certain facilities that have been repaid, without additional approvals from Congress. By facilitating transfer of ownership to nonfederal users, some hope this authority will aid these same users in obtaining financing for infrastructure upgrades. "], "subsections": []}, {"section_title": "Indian Water Rights Settlements", "paragraphs": ["Indian water rights settlements have made up some of the largest new Reclamation project authorizations in recent years. Congress authorized nine new settlements from 2010 to 2016, and five of these settlements each authorized federal costs in excess of $100 million. The Reclamation Water Settlement Fund, a fund containing mandatory appropriations authorized by Congress in 2010, is expected to make available $120 million per year from FY2020 to FY2029 (to fund some of these costs). The remainder of funds needed to complete new and ongoing settlements is assumed to come from discretionary appropriations. ", "In the 116 th Congress, H.R. 1904 and S. 886 both would extend the aforementioned $120 million per year in mandatory funds for the Reclamation Water Rights Settlement Fund. H.R. 1904 would make these amounts available in perpetuity, whereas S. 886 would extend deposits to the fund through FY2039 (i.e., a 10-year extension) and would provide that the Secretary of the Interior may not expend more than $90 million per year on a single settlement. Congress may weigh whether mandatory funding is the preferred long-term approach for funding these settlements and, if so, which settlements should be prioritized for funding. Although some might view this funding as a responsibility of the federal government that will continue in perpetuity, others may prefer that congressional oversight for these settlements be maintained through the annual discretionary appropriations process.", "In addition to the status of the Reclamation Water Settlements Fund, Congress continues to consider major new and amended Indian water rights settlements that the Administration has negotiated. S. 3019 , the Montana Water Rights Protection Action, would authorize one of the largest Indian water rights settlements to date, the Confederated Salish and Kootenai Water Compact in Montana. Other legislation under consideration in the 116 th Congress would authorize new settlements with the Navajo Utah ( S. 644 , S. 1207 ) and the Hualapai Tribe of Arizona ( H.R. 2459 , S. 1277 ), as well as amendments to the 2010 Aamodt Settlement Litigation Act ( H.R. 3292 , S. 1875 ). Congress may debate the merits of each of these individual settlements, as well as the overall approach to authorizing new settlements."], "subsections": []}, {"section_title": "Financing Infrastructure Construction and Repairs", "paragraphs": ["Some in Congress have expressed interest in proposals to finance various priority Reclamation activities. In addition to regular funding through the annual discretionary appropriations process, some have proposed using additional Reclamation Fund revenues and \"alternative finance\" loan programs that would promote public-private-partnerships at Reclamation projects."], "subsections": [{"section_title": "Proposals to Use the Reclamation Fund", "paragraphs": ["A number of Members have introduced proposals to use additional funding from the Reclamation Fund to fund priority Reclamation activities. The Reclamation Fund typically has had less than half of its incoming receipts appropriated as spending in recent years ( Figure 4 ), largely due to an increase in receipts from energy and natural resource royalties on western lands. Proposals for dedicated funding from the Reclamation Fund have taken the form of both mandatory and discretionary funding in several areas, including new water storage, aging infrastructure, and construction of new rural water and Indian water rights settlements. ", "In the 116 th Congress, H.R. 2473 , the Securing Access for the Central Valley and Enhancing Water Resources Act (SAVE Act), proposes to annually redirect $300 million that otherwise would be credited to the Reclamation Fund, without further appropriation, from FY2030 to FY2060. This funding is to be made available for (1) authorized surface and groundwater storage projects, (2) authorized water reclamation and reuse projects, and (3) WaterSMART program water efficiency/conservation grants. Additionally, as noted, H.R. 1904 and S. 886 , both titled the Indian Water Rights Settlement Extension Act, would extend the $120 million per year in mandatory funding that was appropriated through FY2029 in P.L. 111-11 . Without this change, these funds accrue to the Reclamation Fund."], "subsections": []}, {"section_title": "Reclamation Infrastructure Finance and Innovation Act Proposals", "paragraphs": ["Members have put forward other proposals for financing water supply projects that do not involve the Reclamation Fund in recent years. Dating to the 113 th Congress, a number of bills have been proposed that would authorize Reclamation to provide financing and encourage public-private partnerships (sometimes referred to as alternative financing ) for western water resource infrastructure. These proposals\u00e2\u0080\u0094which typically are referred to as Reclamation Infrastructure Finance and Innovation Act (RIFIA) proposals\u00e2\u0080\u0094generally have been modeled after the Environmental Protection Agency's Water Infrastructure Finance and Innovation Act (WIFIA) authority, enacted in Section 5025 of the Water Resources Reform and Development Act of 2014 ( P.L. 113-121 ). They typically propose a cap on competitively awarded federal project financing (e.g., up to 49% of project costs may be financed) that must be repaid over time by project sponsors. The arrangement is seen as particularly advantageous in a federal legislative context, because WIFIA loans provide a large amount of credit assistance relative to the amount of budget authority required in annual discretionary appropriations. The current WIFIA authority authorizes a wide range of eligible projects, potentially including many of the water supply projects that would be most likely to pursue RIFIA financing. However, a separate RIFIA program would focus more exclusively on western water supply projects and thus potentially would avoid competition for financing with municipal water supply projects that have more established creditworthiness. In the 116 th Congress, both S. 1932 and H.R. 2473 would authorize pilot RIFIA programs for Reclamation. The bills would authorize $150 million for RIFIA expenses from FY2021 to FY2025. Depending on the credit subsidy cost assumed and assuming full appropriation and interest by borrowers, these funds could be leveraged into more than $1 billion in federal funding for projects."], "subsections": []}]}]}]}}
{"id": "R46322", "title": "SBA Women-Owned Small Business Federal Contracting Program", "released_date": "2020-05-11T00:00:00", "summary": ["The Small Business Administration's (SBA's) Women-Owned Small Business (WOSB) Federal Contracting Program is designed to provide greater access to federal contracting opportunities for WOSBs and economically disadvantaged women-owned small businesses (EDWOSBs). By doing so, the program aims to help federal agencies achieve their statutory goal of awarding 5% of their federal contracting dollars to WOSBs.", "Under this program, federal contracting officers may set aside federal contracts (or orders) for WOSBs (including EDWOSBs) in industries in which the SBA determines WOSBs are substantially underrepresented in federal procurement and for EDWOSBs exclusively in industries in which the SBA determines WOSBs are underrepresented in federal procurement. The SBA has identified 364 six-digit North American Industry Classification System (NAICS) industry codes (out of 1,023) in which federal agencies may set aside federal contracts exclusively for WOSBs (including EDWOSBs) and 80 six-digit NAICS industry codes (out of 1,023) that may be set aside exclusively for EDWOSBs.", "Federal agencies may also award sole source contracts to WOSBs and EDWOSBs in eligible industries under the following conditions: the contracting officer does not have a reasonable expectation that offers would be received by two or more eligible WOSBs and EDWOSBs; the award can be made at a fair and reasonable price; and the anticipated total value of the contract, including any options, is below $4 million ($6.5 million for manufacturing contracts).", "To participate in the program, WOSBs must", "be a small business (as defined by the SBA); be at least 51% unconditionally and directly owned and controlled by one or more women who are U.S. citizens; have women manage day-to-day operations and make long-term decisions; and be certified by a federal agency, a state government, the SBA, or a national certifying entity approved by the SBA.", "EDWOSBs must", "meet all the requirements of the WOSB contracting program; be owned and controlled by one or more women, each with a personal net worth less than $750,000; be owned and controlled by one or more women, each with $350,000 or less in adjusted gross income averaged over the previous three years; and be owned and controlled by one or more women, each\u00c2 having $6 million or less in personal assets (including business value and primary residence).", "The WOSB program's legislative history is a bit more complicated than other small business contracting programs, primarily due to the distinctions between WOSBs and EDWOSBs and among underrepresented, substantially underrepresented, and other NAICS codes. These distinctions were designed to shield the WOSB program from legal challenges related to the heightened level of legal scrutiny applied to contracting preferences after the Supreme Court's decision in Adarand Constructors, Inc. v. Pena (1995), which involved contracting preferences for small disadvantaged businesses. The Court found in that case that all racial classifications, whether imposed by federal, state, or local authorities, must pass strict scrutiny review.", "An unintended consequence of these distinctions has been the SBA's difficulty in defining these terms, which contributed to a 10-year delay in the program's implementation and may help to explain why it has taken the SBA nearly six years to implement its own WOSB certification process as required by P.L. 113-291 , the Carl Levin and Howard P. \"Buck\" McKeon National Defense Authorization Act for Fiscal Year 2015. That act also prohibited small businesses from self-certifying their eligibility for the WOSB program to ensure the program's contracts are awarded only to intended recipients. The SBA issued an Advance Notice of Proposed Rulemaking in the Federal Register on December 18, 2015, to solicit public comments on drafting a proposed rule to meet these requirements. The proposed rule was issued on May 14, 2019, and the final rule implementing the certification program and removing the self-certification option was issued on May 11, 2020. The final rule's effective date for the new WOSB certification process is October 15, 2020, nearly six years after these requirements were enacted on December 19, 2014."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["The Small Business Administration's (SBA's) Women-Owned Small Business (WOSB) Federal Contracting Program is one of several contracting programs Congress has approved to provide greater opportunities for small businesses to win federal contracts. Congress's interest in promoting small business contracting dates back to World War II and the outbreak of fighting in Korea. At that time, Congress found that thousands of small business concerns were being threatened by war-induced shortages of materials coupled with an inability to obtain defense contracts or financial assistance. In 1953, concerned that many small businesses might fail without government assistance, Congress passed, and President Dwight Eisenhower signed into law, the Small Business Act (P.L. 83-163). The act authorized the SBA. ", "The Small Business Act specifies that it is Congress's declared policy to promote the interests of small businesses to \"preserve free competitive enterprise.\" Congress indicated that one of the ways to preserve free competitive enterprise was to increase market competition by insuring that small businesses received a \"fair proportion\" of federal contracts and subcontracts.", "Since 1953, Congress has used its broad authority to impose requirements on the federal procurement process to help small businesses receive a fair proportion of federal contracts and subcontracts, primarily through the establishment of federal procurement goals and various contracting preferences\u00e2\u0080\u0094including restricted competitions (set-asides), sole source awards, and price evaluation adjustment/preference in unrestricted competitions\u00e2\u0080\u0094for small businesses. Congress has also authorized the following:", "government-wide and agency-specific goals for the percentage of federal contract and subcontract dollars awarded to small businesses generally and to specific types of small businesses, including at least 5% to WOSBs; an annual Small Business Goaling Report to measure progress in meeting these goals; a general requirement for federal agencies to reserve (set aside) contracts that have an anticipated value greater than the micro-purchase threshold (currently $10,000) but not greater than the simplified acquisition threshold (currently $250,000); and, under specified conditions, contracts that have an anticipated value greater than the simplified acquisition threshold exclusively for small businesses. A set-aside is a commonly used term to refer to a contract competition in which only small businesses, or specific types of small businesses, may compete; federal agencies to make sole source awards to small businesses when the award could not otherwise be made (e.g., only a single source is available, under urgent and compelling circumstances); federal agencies to set aside contracts for, or grant other contracting preference to, specific types of small businesses (e.g., Minority Small Business and Capital Ownership Development Program (known as the 8(a) program) small businesses, Historically Underutilized Business Zone (HUBZone) small businesses, WOSBs, and service-disabled veteran-owned small businesses (SDVOSBs)); and the SBA and other federal procurement officers to review and restructure proposed procurements to maximize opportunities for small business participation.", "Additional requirements are in place to maximize small business participation as prime contractors, subcontractors, and suppliers. For example, prior to issuing a solicitation, federal contracting officers must do the following, among other requirements:", "divide proposed acquisitions of supplies and services (except construction) into reasonably small lots to permit offers on quantities less than the total requirement; plan acquisitions such that, if practicable, more than one small business concern may perform the work, if the work exceeds the amount for which a surety may be guaranteed by the SBA against loss under 15 U.S.C. \u00c2\u00a7694b [generally $6.5 million, or $10 million if the contracting officer certifies that the higher amount is necessary]; encourage prime contractors to subcontract with small business concerns, primarily through the agency's role in negotiating an acceptable small business subcontracting plan with prime contractors on contracts anticipated to exceed $700,000 or $1.5 million for construction contracts; and under specified circumstances, provide a copy of the proposed acquisition package to an SBA procurement center representative (PCR) for his or her review, comment, and recommendation at least 30 days prior to the issuance of the solicitation. If the contracting officer rejects the PCR's recommendation, he or she must document the basis for the rejection and notify the PCR, who may appeal the rejection to the chief of the contracting office and, ultimately, to the agency head.", "This report focuses on the SBA's WOSB Federal Contracting Program, authorized by H.R. 5654 , the Small Business Reauthorization Act of 2000, and incorporated by reference in P.L. 106-554 , the Consolidated Appropriations Act, 2001. ", "The WOSB program is designed to help federal agencies achieve their statutory goal of awarding at least 5% of their federal contracting dollars to WOSBs (established by P.L. 103-355 , the Federal Acquisition Streamlining Act of 1994 (FASA)) by allowing federal contracting officers to", "set aside acquisitions exceeding the micro-purchase threshold (currently $10,000) for bidding by WOSBs (including economically disadvantaged WOSBs (EDWOSBs)) exclusively in industries in which WOSBs are substantially underrepresented, and set aside contracts for bidding by EDWOSBs exclusively in industries in which WOSBs are underrepresented.", "Congressional interest in the WOSB program has increased in recent years because the federal government has met the 5% procurement goal for WOSBs only once\u00e2\u0080\u0094in FY2015\u00e2\u0080\u0094since the goal was authorized in 1994, and implemented in FY1996 (see Table 1 ). ", "The data on WOSB federal contract awards suggest that federal procurement officers are using the WOSB program more often than in the past, but the amount of WOSB awarded contracts account for a relatively small portion of the total amount of contracts awarded to WOSBs. Most of the federal contracts awarded to WOSBs are awarded in full and open competition with other firms or with another small business preference, such as an 8(a) or HUBZone program preference. Relatively few federal contracts are awarded through the WOSB program (see Table 1 ).", "In addition, the Government Accountability Office (GAO) and the SBA's Office of Inspector General (OIG) have noted deficiencies in the SBA's implementation and oversight of the program. For example, the WOSB program was authorized on December 21, 2000. The SBA took nearly 10 years to issue a final rule for the program (on October 7, 2010) and another four months before the program actually went into effect (on February 4, 2011). The SBA attributed the delay primarily to its difficulty in identifying an appropriate methodology to determine \"the industries in which WOSBs are underrepresented with respect to federal procurement contracting.\" ", "P.L. 113-291 , the Carl Levin and Howard P. \"Buck\" McKeon National Defense Authorization Act for Fiscal Year 2015 (NDAA 2015), enacted on December 19, 2014, removed the ability of small businesses to self-certify their eligibility for the WOSB program as a means to ensure that the program's contracts are awarded only to intended recipients. NDAA 2015 also required the SBA to implement its own WOSB certification process. The SBA issued an Advance Notice of Proposed Rulemaking in the Federal Register on December 18, 2015, to solicit public comments on drafting a proposed rule to meet these requirements. The SBA did not issue the proposed rule until May 14, 2019. Comments on the proposed rule were to be submitted by July 15, 2019. The final rule implementing the certification program and removing the self-certification option was issued on May 11, 2020. The effective date for the new WOSB certification process is October 15, 2020, nearly six years after these requirements were enacted on December 19, 2014."], "subsections": []}, {"section_title": "The WOSB Program's Origins", "paragraphs": ["The following sections provide an overview of the history of small business contracting preferences, focusing on executive, legislative, and judicial actions that led to the creation of the WOSB program and influenced its structure."], "subsections": [{"section_title": "Federal Agency Small Business Procurement Goals and Executive Order 12138: A National Program for Women's Business Enterprise", "paragraphs": ["Since 1978, federal agency heads have been required to establish federal procurement goals, in consultation with the SBA, \"that realistically reflect the potential of small business concerns and small business concerns owned and controlled by socially and economically disadvantaged individuals\" to participate in federal procurement. These reports are submitted to Congress and are presently made available to the public on the General Services Administration's (GSA's) website. Initially, WOSB goals were not included. ", "On May 18, 1979, President Jimmy Carter issued Executive Order 12138, which established a national policy to promote women-owned business enterprises. Among other provisions, the executive order required federal agencies \"to take appropriate affirmative action in support of women's business enterprise,\" including promoting procurement opportunities and providing financial assistance and business-related management and training assistance.", "Under authority provided by Executive Order 12138, the SBA added WOSB procurement goals to the list of small business contracting goals it negotiated with federal agencies. At that time, WOSBs received about 0.2% of all federal contracts. By 1988, this percentage had grown, but to only 1% of all federal contracts.", "WOSB advocates argued that additional action was needed to help WOSBs win federal contracts because women-owned businesses are subject to \"age-old prejudice, discrimination, and exploitation,\" the \"promotion of women's business enterprise is simply not a high priority\" for federal agencies, and federal \"agency efforts in support of women's business enterprise have been weak and have produced little, if any measurable results.\" Their efforts led to P.L. 100-533 , the Women's Business Ownership Act of 1988.", "P.L. 100-533 provided the SBA statutory authorization to establish WOSB annual procurement goals with federal agencies. The act also extended the goaling requirement to include subcontracts, as well as prime contracts, and added WOSBs to the list of small business concerns to be identified in required small business subcontracting plans (at that time, small business subcontracting plans were required for prime contracts exceeding $500,000, or $1 million for the construction of any public facility)."], "subsections": []}, {"section_title": "Government-Wide Small Business Procurement Goals", "paragraphs": ["In a related development, P.L. 100-656 , the Business Opportunity Development Reform Act of 1988, authorized the President to annually establish government-wide minimum procurement goals for small businesses and small businesses owned and controlled by socially and economically disadvantaged individuals (SDBs). Congress required the government-wide minimum goal for small businesses to be \"not less than 20% [increased to 23% in 1997] of the total value of all prime contract awards for each fiscal year\" and \"not less than 5% of the total value of all prime contract and subcontract awards for each fiscal year\" for SDBs.", "Advocates for a WOSB government-wide procurement goal argued that women owned approximately one third of the nation's businesses but received \"a mere 1.3% of federal contracting dollars ... in FY1990.\" Their efforts led to P.L. 103-355 , FASA.", "FASA created a 5% procurement goal for WOSBs each fiscal year. The 5% goal was implemented by regulations effective in FY1996. ", "The conferees indicated in FASA's conference agreement that they did \"not intend to create a new set aside or program of restricted competition for a specific designated group, but rather to establish a target that will result in greater opportunities for women to compete for federal contracts.\" The conferees added that \"given the slow progress to date in reaching the current award levels, the conferees recognize that this goal may take some time to be reached.\"", "Subsequently, 3% procurement goals were created for HUBZone small businesses ( P.L. 105-135 , the HUBZone Act of 1997; Title VI of the Small Business Reauthorization Act of 1997) and SDVOSBs ( P.L. 106-50 , the Veterans Entrepreneurship and Small Business Development Act of 1999).", " Figure 1 shows the percentage of small business-eligible federal contracts awarded to small businesses, SDBs, WOSBs, SDVOSBs, and HUBZone small businesses from FY2005 through FY2018. As detailed in the figure's notes, the small business-eligible baseline excludes certain contracts that the SBA has determined do not realistically reflect the potential for small business participation in federal procurement. About 15% to 18% of all federal contracts are excluded in any given fiscal year. ", "The federal government has had difficulty meeting the WOSB and HUBZone small business procurement goals. As mentioned in Figure 1 's notes, the 5% procurement goal for WOSBs was achieved in only 1 of the 14 fiscal years (FY2015) reported in the figure. The 3% procurement goal for HUBZone small businesses was not achieved in any of the 14 fiscal years. In contrast, the 23% procurement goal for all types of small businesses was achieved in 8 of the 14 fiscal years reported in the figure (FY2005, FY2008, and FY2013-FY2018), including the past 6 fiscal years. The 5% procurement goal for SDBs was achieved in each of the 14 fiscal years. The 3% procurement goal for SDVOSBs was achieved in 7 of the 14 fiscal years (FY2012-FY2018), including the last 7 fiscal years."], "subsections": []}, {"section_title": "WOSB Set-Asides", "paragraphs": ["As shown in Table 1 , FASA conferees' prediction that it may take some time to reach the 5% goal was confirmed. The amount and percentage of federal contracts awarded to WOSBs increased slowly following the establishment of the 5% goal (implemented in FY1996). ", "Frustrated by the relatively slow progress toward meeting the 5% goal, WOSB advocates began to lobby for additional actions, including the establishment of a federal contracting set-aside program for WOSBs. As mentioned, a set-aside is a commonly used term to refer to a contract competition in which only small businesses, or specific types of small businesses, may compete. ", "WOSB advocates noted that other small businesses were provided contracting preferences. For example, at that time, SDBs were eligible for contract set-asides and a price evaluation adjustment of up to 10% in full and open competition in specified federal agencies, including the Department of Defense (DOD); participants in the SBA's 8(a) program were (and still are) eligible for both contract set-asides and sole source awards; and HUBZone small businesses were (and still are) eligible for contract set-asides, sole source awards, and a price evaluation adjustment of up to 10% in full and open competition above the simplified acquisition threshold.", "As a first step toward the enactment of a WOSB set-aside contracting program, P.L. 106-165 , the Women's Business Centers Sustainability Act of 1999, required GAO to review the federal government's efforts to meet the 5% goal for WOSBs and to identify any measures that could improve the federal government's performance in increasing WOSB contracting opportunities. GAO issued its report on February 16, 2001: ", "Among the government contracting officials with whom we spoke, there was general agreement on several suggestions for improving the environment for contracting with WOSBs and increasing federal contracting with WOSBs. They suggested creating a contract program targeting WOSBs, focusing and coordinating federal agencies' WOSB outreach activities, promoting contracting with WOSBs through agency incentive and recognition programs, including WOSBs in agency mentor-prot\u00c3\u00a9g\u00c3\u00a9 programs, providing more information to WOSBs about participation in teaming arrangements, and providing expanded contract financing.", "By the time the GAO report was published, legislation had been enacted ( H.R. 5654 , the Small Business Reauthorization Act of 2000, incorporated by reference in P.L. 106-554 , the Consolidated Appropriations Act, 2001) to authorize the WOSB program. As mentioned, the WOSB program provides greater access to federal contracting opportunities for WOSBs by providing federal contracting officers authority to set aside contracts for WOSBs (including EDWOSBs) exclusively in industries in which WOSBs are substantially underrepresented, and to set aside contracts for EDWOSBs exclusively in industries in which WOSBs are underrepresented."], "subsections": []}, {"section_title": "A Targeted Approach to Avoid Legal Challenges", "paragraphs": ["Congressional efforts to promote WOSB set-asides were complicated by Supreme Court decisions on legal challenges of contracting preferences for minority contractors, including City of Richmond v. J.A. Croson Co . (1989) (finding unconstitutional a municipal ordinance that required the city's prime contractors to award at least 30% of the value of each contract to minority subcontractors) and Adarand Constructors, Inc. v. Pena (1995) (finding that all racial classifications, whether imposed by federal, state, or local authorities, must pass strict scrutiny review). ", "The Adarand Constructors, Inc. v. Pena case involved a challenge to federal subcontracting preferences for SDBs. The plaintiff claimed that contracting preferences based on race violate the equal protection component of the Fifth Amendment's Due Process Clause. The Supreme Court ruled that all racial classifications, whether imposed by federal, state, or local authorities, must pass strict scrutiny review (i.e., they must serve a compelling government interest and must be narrowly tailored to further that interest). Following the Adarand decision, the federal government reexamined how it implemented \"affirmative action\" programs, including certain procurement preference programs.", "When developing the WOSB set-aside program, its advocates were aware that the WOSB program would be subject to a heightened standard of judicial review given the Supreme Court's ruling that all racial classifications must serve a compelling government interest and be narrowly tailored. In the House report accompanying H.R. 4897 , the Equity in Contracting for Women Act of 2000 (which was incorporated into H.R. 5654 , the Small Business Reauthorization Act of 2000), advocates argued that a set aside program was needed (compelling interest) because of the slow progress in meeting the 5% procurement goal for WOSBs. The report noted that \"the drive for efficiency in procurement often places Congressionally-mandated contracting goals for small businesses in general, and women-owned small businesses in particular, in jeopardy.\" The report also noted that contract bundling (the consolidation of smaller contract requirements into larger contracts) and the increased use of the Federal Supply Schedules increase \"the efficiency of government procurements ... [but] also may perpetuate the use of well-known firms that are not women-owned businesses.\" As a result,", "the Committee believes that the goals expressed in FASA and reaffirmed in the Executive Order [Executive Order 13,157, issued on May 23, 2000 by President Clinton, reaffirming the Administration's support for increasing contracting opportunities for WOSBs] will not be achieved without the use of some mandatory tool which enables contracting officers to identify WOSBs and establish competition among those businesses for the provision of goods and services. ", "The House report also argued that the bill was narrowly tailored because it did not establish sole source authority for WOSBs and limited WOSB set-asides to industries in which WOSBs are underrepresented in obtaining federal contracts. "], "subsections": []}]}, {"section_title": "WOSB Program Requirements", "paragraphs": ["The Consolidated Appropriations Act, 2001 ( P.L. 106-554 ) specified that federal contracting officers could not set aside contracts for WOSBs or EDWOSBs unless (1) they had a reasonable expectation that two or more eligible business concerns would submit offers for the contract, (2) the anticipated award price of the contract (including options) does not exceed $5 million for manufacturing contracts and $3 million for all other contracts, and (3) the contract award can be made at a fair and reasonable price. ", "In 2011, the set-aside award caps were increased to $6.5 million for manufacturing contracts and $4 million for all other contracts to account for inflation. In 2013, P.L. 112-239 , the National Defense Authorization Act for Fiscal Year 2013, removed the caps. "], "subsections": [{"section_title": "Eligibility Requirements", "paragraphs": ["The Consolidated Appropriations Act, 2001 ( P.L. 106-554 ) also specified recipient eligibility requirements (see below) and required the SBA to conduct a study to identify industries in which WOSBs are underrepresented (and, by inference, substantially underrepresented) with respect to federal procurement contracting. In addition, the SBA had to develop criteria to define an EDWOSB because the act did not define economic disadvantage. The WOSB program could not begin until those determinations were made.", "To participate in the program, the act specified that WOSBs must", "be a small business (as defined by the SBA); be at least 51% unconditionally and directly owned and controlled by one or more women who are U.S. citizens; have women manage day-to-day operations and make long-term decisions; and be certified by a federal agency, a state government, the SBA, or a national certifying entity approved by the SBA or self-certify their eligibility to the federal contracting officer with adequate documentation according to standards established by the SBA. "], "subsections": []}, {"section_title": "Certification", "paragraphs": ["As mentioned, P.L. 113-291 (NDAA 2015), among other provisions, removed the ability of small businesses to self-certify their eligibility for the WOSB program as a means to ensure that the program's contracts are awarded only to intended recipients. The act also required the SBA to implement its own certification process for WOSBs. The SBA announced in the Federal Register that it will implement its own certification process for the WOSB program and remove the ability of small businesses to self-certify their eligibility for the WOSB program on October 15, 2020.", "In the meantime, WOSBs and EDWOSBs must be either self-certified or third-party certified to participate in the WOSB program. Self-certification requires the business to provide certification information annually through the SBA's certification web page (certify.SBA.gov) and have an up-to-date profile on the System for Award Management (SAM) website (sam.gov) indicating that the business is small and is interested in participating in the WOSB program. Self-certification is free. ", "In addition, in 2011, the SBA approved four organizations to provide third-party certification (typically involving a fee): El Paso Hispanic Chamber of Commerce, National Women Business Owners Corporation, U.S. Women's Chamber of Commerce, and Women's Business Enterprise National Council. Third-party certification will continue to be an option.", "Effective October 15, 2020, WOSBs and EDWOSBS that are not certified will not be eligible to participate in the WOSB program. Other women-owned small businesses may continue to self-certify their status as a WOSB, receive contract awards outside of the WOSB program, and count toward an agency's 5% procurement goal."], "subsections": []}, {"section_title": "Defining Economic Disadvantage", "paragraphs": ["EDWOSBs must meet all WOSB contracting program requirements and be economically disadvantaged, which, as presently defined by the SBA, means that they must be", "owned and controlled by one or more women, each with a personal net worth less than $750,000; owned and controlled by one or more women, each with $350,000 or less in adjusted gross income averaged over the previous three years; and owned and controlled by one or more women, each\u00c2\u00a0with $6 million or less in personal assets.", "The SBA defined economic disadvantage using its experience with the 8(a) program as a guide (i.e., reviewing the owner's income, personal net worth, and the fair market value of her total assets).", "As of May 11, 2020, there were 65,903 WOSBs and 24,370 EDWOSBs registered in the SBA's online database."], "subsections": []}]}, {"section_title": "The 10-Year Delay in WOSB's Implementation", "paragraphs": ["As mentioned, the WOSB program's implementation was delayed for over 10 years, primarily due to the SBA's difficulty in identifying an appropriate methodology to determine \"the industries in which WOSBs are underrepresented (and, by inference, substantially underrepresented) with respect to federal procurement contracting.\" ", "The SBA completed a draft of the legislatively mandated study of underrepresented (and, by inference, substantially underrepresented) NAICS industrial codes in September 2001, using internal resources. The SBA then submitted proposed regulations to implement the WOSB program to the Office of Management and Budget (OMB), which is required by law to review all draft regulations before publication within 90 days of their submission to OMB. However, the SBA withdrew the regulations on April 24, 2002, before the review was complete \"because the SBA Administrator had concerns about the content and constitutionality of its draft industry study and believed that it needed to contract with the National Academy of Science (NAS) to review the draft industry study and recommend any changes the NAS believed were necessary.\" The SBA awarded a contract to NAS in late 2003 to conduct the study. ", "NAS completed its analysis and issued a report on the SBA's study on March 11, 2005. The report indicated that the SBA asked NAS to conduct the review \"because of the history of legal challenges to race- and gender-conscious contracting programs at the federal and local levels.\" ", "NAS concluded that the SBA's study was \"problematic in several respects, including that the documentation of data sources and estimation methods is inadequate for evaluation purposes.\" NAS made several recommendations for a new study, including that the SBA use more current data, different industry classifications, and consistent monetary and numeric utilization measures to provide more complete documentation of data and methods. The SBA later characterized NAS's analysis as indicating that the SBA study was \"fatally flawed.\" In response to that finding, the SBA issued a solicitation in October 2005, seeking a private contractor to perform a revised study. In February 2006, a contract was awarded to the Kaufman-RAND Institute for Entrepreneurship Public Policy (RAND). The RAND study was published in April 2007. ", "The RAND report noted that underrepresentation is typically referred to as a disparity ratio, a measure comparing the use of firms of a particular type (in this case, WOSBs) in a particular NAICS code to their availability for such contracts in that NAICS code. A disparity of 1.0 suggests that firms of a particular type are awarded contracts in the same proportion as their representation in that industry (there is no disparity). A disparity ratio less than 1.0 suggests that the firms are underrepresented in federal contracting in that NAICS code. A ratio greater than 1.0 suggests that the firms are overrepresented. ", "RAND identified 28 different approaches to determine underrepresentation and substantial underrepresentation of WOSBs in federal procurement, each of which yielded a different result. After examining each approach's benefits and deficiencies, the SBA defined underrepresentation as industries having a disparity ratio between 0.5 and 0.8, where the ratio represents the WOSB share of federal prime contract dollars divided by the WOSB share of total business receipts within a given NAICS code. Substantial underrepresentation was defined as industries with a disparity ratio between 0.0 and 0.5. ", "Using that methodology, the SBA identified 83 four-digit NAICS industry groups in its final rule implementing the WOSB program (October 7, 2010, effective February 4, 2011): ", "45 four-digit NAICS industry groups in which WOSBs are underrepresented (225 out of the 1,057 six-digit NAICS industry codes at that time were made eligible for EDWOSB set-asides only), and 38 four-digit NAICS industry groups in which WOSBs are substantially underrepresented (171 out of the 1,057 six-digit NAICS industry codes at that time were made eligible for WOSB (including EDWOSB) set-asides)."], "subsections": []}, {"section_title": "Mandated Updates of Underrepresented and Substantially Underrepresented NAICS Codes", "paragraphs": ["In 2014, Congress passed legislation ( P.L. 113-291 ) requiring the SBA to update the list of underrepresented and substantially underrepresented NAICS codes by January 2, 2016, and then conduct a new study and update the NAICS codes every five years thereafter. The SBA asked the Department of Commerce's Office of the Chief Economist (OCE) for assistance in conducting a new study. ", "The OCE examined the odds of women-owned businesses winning a federal prime contract relative to otherwise similar firms in FY2013 and FY2014 in each of the four-digit NAICS code industry groups, controlling for the firm's size and age, legal form of organization, level of government security clearance, past federal prime contracting performance ratings, and membership in various categories of firms having federal government-wide procurement goals. OCE found that women-owned businesses were less likely to win federal contracts in 254 of the 304 industry groups in the study, and women-owned businesses in 109 of the 304 industry groups had statistically significant lower odds of winning federal contracts than otherwise similar businesses not owned by women at the 95% confidence level. ", "Based on the OCE study, the SBA increased the number of underrepresented and substantially underrepresented four-digit NAICS codes from 83 to 113, effective March 3, 2016 (21 in which WOSBs are underrepresented (EDWOSB set-asides only) and 92 in which WOSBs are substantially underrepresented (WOSB and EDWOSB set-asides).", "OMB updates the NAICS every five years. In response to OMB's release of NAICS 2017, which replaced NAICS 2012, the SBA reduced the number of underrepresented and substantially underrepresented four-digit NAICS codes from 113 to 112, effective October 1, 2017. The reduction took place because NAICS 2017 merged two four-digit NAICS industry groups that affected the WOSB program. The merger also resulted in the number of four-digit NAICS industry groups in which WOSBs are substantially underrepresented (WOSB and EDWOSB set-asides) to fall from 92 to 91. Overall, WOSB set-asides may be provided to WOSBs (including EDWOSBs) in 364 (out of 1,023) six-digit NAICS industry codes and to EDWOSBs exclusively in 80 (out of 1,023) six-digit NAICS industry codes."], "subsections": []}, {"section_title": "Sole Source Award Authority", "paragraphs": ["P.L. 113-291 (NDAA 2015), enacted in 2014, provides federal agencies authority to award sole source contracts to WOSBs (including EDWOSBs) eligible under the WOSB program if", "the contract is assigned a NAICS code in which the SBA has determined that WOSBs are substantially underrepresented in federal procurement; the contracting officer does not have a reasonable expectation that offers would be received from two or more WOSBs (including EDWOSBs); and the anticipated total value of the contract, including any options, is below $4 million ($6.5 million for manufacturing contracts).", "NDAA 2015 also provides federal agencies authority to award sole source contracts exclusively to EDWOSBs eligible under the WOSB program if", "the contract is assigned a NAICS code in which SBA has determined that WOSB concerns are underrepresented in federal procurement; the contracting officer does not have a reasonable expectation that offers would be received from two or more EDWOSB concerns; and the anticipated total value of the contract, including any options, is below $4 million ($6.5 million for manufacturing contracts).", "Expanding the WOSB program to include sole source contracts was designed, along with WOSB set-asides, to help federal agencies achieve their statutory goal of awarding at least 5% of their federal contracting dollars to WOSBs. The SBA published a final rule expanding the WOSB program to include sole source awards on September 14, 2015 (effective October 14, 2015). "], "subsections": []}, {"section_title": "Current Administrative Issues", "paragraphs": ["Both GAO and the SBA's OIG have issued reports and audits of the WOSB program that have been critical of the SBA's implementation and oversight of the program. For example, GAO has criticized the SBA for delays in implementing the WOSB program and, in 2019, reported that the SBA had not fully addressed WOSB program oversight deficiencies, first identified by GAO in 2014, related to third-party certifiers, the procedures used to conduct annual eligibility examinations of WOSBs, and \"reviews of individual businesses found to be ineligible to better understand the cause of the high rate of ineligibility in annual reviews and determine what actions are needed to address the causes.\" GAO argued that ", "the deficiencies in SBA's oversight of the WOSB program limit SBA's ability to identify potential fraud risks and develop any additional control activities to address these risks. As a result, the program continues to be exposed to the risks of ineligible businesses receiving set-aside contracts. ", "In addition, GAO noted that, from April 2011 through June 2018, about 3.5% of WOSB set-aside contracts were awarded for ineligible goods or services [NAICS codes]. ", "In 2015, the SBA's OIG analyzed 34 WOSB program awards made between October 1, 2013, and June 30, 2014, (17 WOSB set-aside awards totaling $6.6 million and 17 EDWOSB set-aside awards totaling $7.9 million) and found \"15 of the 34 set-aside awards were made without meeting the WOSB program's requirements,\" and these awards totaled approximately $7.1 million. Specifically, 10 of the 34 WOSB program set-aside awards were made \"for work that was not eligible to be set aside for the program\" and 9 of the 34 awards went to firms that did not have any documentation in the WOSB program's repository, including 7 of the 17 WOSB set-aside awards, or 41%, and 2 of the 17 EDWOSB set-aside awards, or 12%.\" The SBA OIG found that \"this occurred because agencies' contracting officers did not comply with the regulations prior to awarding these awards and SBA did not provide enough outreach or training to adequately inform them of their responsibilities and the program's requirements.\"", "In a related development, in 2018, the SBA's OIG analyzed 56 WOSB sole source contracts awarded between January 1, 2016, and April 30, 2017, and found that 50 of the 56 contracts, totaling approximately $52.2 million, were made \"without having the necessary documentation to determine eligibility\" of the award recipients. Examples of missing documentation included WOSB and EDWOSB self-certifications, articles of incorporation, birth certificates, and financial information. "], "subsections": []}, {"section_title": "Current Oversight and Legislative Issues", "paragraphs": ["The SBA's WOSB program is likely to be of continued interest to Congress during the remainder of the 116 th Congress. Issues of particular interest to Congress may include congressional oversight of the SBA's implementation of the WOSB program's certification procedures; congressional oversight of the SBA's training of federal procurement officers to ensure that WOSB awards are made only to eligible firms in eligible industries; the performance of federal agencies in achieving the 5% procurement goal for WOSBs; and the WOSB program's efficacy in helping to meet the 5% goal.", "As shown in Table 1 , federal procurement officers' use of the WOSB program has increased from about $21 million in FY2011 to $893 million in FY2018, with most of that increase resulting from rising use of WOSB set-asides (from $15 million in FY2011 to $742 million in FY2018). Although WOSB program usage is increasing, WOSB set-asides and sole source awards continue to account for a relatively small portion of the federal contracts awarded to WOSBs. Although the WOSB program has been operational since 2011, many federal agencies have little experience with the program. ", "For example, in FY2018, about 63% of the federal contracts awarded to WOSBs were awarded in full and open competition with other firms, about 33% were awarded with another small business preference (such as the 8(a) and HUBZone programs), and about 4% were awarded with a WOSB preference. ", "Also, GAO found that from the third quarter of FY2011 through the third quarter of FY2018, six federal agencies accounted for nearly 83% of the contract amount awarded under the WOSB program: DOD (48.6%), Department of Homeland Security (DHS) (12.4%), Department of Commerce (8.0%), Department of Agriculture (6.3%), Department of Health and Human Services (4.0%), and GSA (4.0%). All other federal agencies accounted for 16.8%. ", "GAO conducted an audit of the WOSB program from October 2017 to March 2019. As part of the audit, GAO interviewed 14 stakeholder groups (staff from DHS, DOD, and GSA, eight contracting officers within these agencies, and three WOSB third-party certifiers) to obtain their views on WOSB program usage. The stakeholder groups identified several positive aspects about the WOSB program, including that it provided WOSBs greater opportunities to win federal contracts, and that the SBA had several initiatives underway to help improve collaboration between federal agencies and the small business community. The stakeholders also identified several impediments that limited the WOSB program's use by federal contracting officers, including the following:", "Sole S ource A uthority R ules .", "Executing sole source authority under the WOSB program is difficult for contracting officers because rules for sole source authority under the WOSB program are different from those under SBA programs.... For example, the FAR's [Federal Acquisition Regulation] requirement that contracting officers must justify, in writing, why they do not expect other WOSBs or EDWOSBs to submit offers on a contract is stricter under the WOSB program that it is for the 8(a) program.", "Industry Restrict i ons .", "13 of the 14 stakeholder groups ... commented on the requirement that WOSB program set-asides be awarded within certain industries, represented by NAICS codes. For example, two third-party certifiers ... recommended that the NAICS codes be expanded or eliminated to provide greater opportunities for WOSBs to win contracts under the program.", "Eligibility Documentation Requirements .", "7 of the 14 stakeholder groups discussed the requirement for the contracting officer to review program eligibility documentation and how this requirement affects their decision to use the program. ", "For example, staff from one contracting office said that using the 8(a) or HUBZone programs is easier because 8(a) and HUBZone applicants are already certified by the SBA; therefore, the additional step to verify documentation for eligibility is not needed.... GSA officials noted that eliminating the need for contracting officers to take additional steps to review eligibility documentation for WOSB-program set-asides could create more opportunities for WOSBs by reducing burdens on contracting officers. ", "Need for A dditional G uidance .", "13 of the 14 stakeholder groups discussed guidance available to federal contracting officers under the WOSB program. For example, two third-party certifiers identified the need for additional training and guidance for federal contracting officers, and staff from two federal contracting offices said that the last time that they had received training on the WOSB program was in 2011, when the program was first implemented. ", "In a related development, the House passed legislation ( H.R. 190 , the Expanding Contracting Opportunities for Small Businesses Act of 2019) which would, among other provisions, eliminate the inclusion of option periods in the award price for sole source contracts awarded to qualified HUBZone small businesses, SDBs, SDVOSBs, and WOSBs (including EDWOSBs). This provision would increase the number of contracts available for sole source awards to these recipients because the option years would not count toward the statutory caps on sole source awards (the WOSB caps are currently $6.5 million for manufacturing contracts and $4 million for other contracts). The bill would also increase the WOSB sole source cap to $7 million for manufacturing contracts to align them with the $7 million cap for the HUBZone and 8(a) program small businesses. ", "Also, some WOSB advocates have suggested that the WOSB program should be amended to (1) eliminate the distinction and disparate treatment of WOSBs and EDWOSBs when awarding contracts, and/or (2) allow set-asides and sole source awards to WOSBs (including EDWOSBs) in all NAICS industry codes regardless of WOSB representation, as is the case for other small business preference programs. Both legislative options could lead to an increase in the amount of contracts awarded to WOSBs. In the first instance, WOSBs would be eligible for set-asides and sole source awards in both underrepresented and substantially underrepresented NAICS codes, instead of just substantially underrepresented NAICS codes. In the latter instance, WOSBs and EDWOSBs would be eligible for set-asides and sole source awards in all NAICS industry codes, not just underrepresented or substantially underrepresented NAICS industry codes.", "As mentioned in the \"A Targeted Approach to Avoid Legal Challenges\" section, one of the reasons the WOSB program provides disparate treatment to WOSBs and EDWOSBs, and makes distinctions among underrepresented, substantially underrepresented, and other NAICS industry codes was to address the heightened level of legal scrutiny related to contracting preferences following the Supreme Court's decision in Adarand Constructors, Inc. v. Pena . The Supreme Court ruled that all racial classifications, whether imposed by federal, state, or local authorities, must pass strict scrutiny review (i.e., they must serve a compelling government interest and must be narrowly tailored to further that interest). Although the WOSB program is not based on racial classifications, it was expected to receive a heightened level of judicial scrutiny. As such, it lead the WOSB program's advocates to create these distinctions in an effort to shield it from legal challenges."], "subsections": []}, {"section_title": "Concluding Observations", "paragraphs": ["As mentioned in the \" Introduction ,\" the WOSB program is one of several contracting programs that Congress has approved to provide greater opportunities for small businesses to win federal contracts. Its legislative history is a bit more complicated than others, primarily due to the distinctions between WOSBs and EDWOSBs and among underrepresented, substantially underrepresented, and other NAICS codes. These distinctions, and the SBA's difficulty in defining them, led to the 10-year delay in the program's implementation and may also help to explain why the SBA's implementation of the SBA's certification program was delayed nearly six years. ", "The SBA's implementation of the WOSB program is likely to remain a priority for congressional oversight during the 116 th Congress, as is federal agency use of the program. As mentioned, the federal government has met the 5% procurement goal for WOSBs only once (in FY2015) since the goal was authorized in 1994, and implemented in FY1996.", "Also, the data on WOSB federal contract awards suggest that federal procurement officers are using the WOSB program more often than in the past, but the program accounts for a relatively small portion of WOSB contracts. Most of the federal contracts awarded to WOSBs are awarded in full and open competition with other firms or with another small business preference program (such as the 8(a) and HUBZone programs). Relatively few federal contracts are awarded through the WOSB program. Determining why this is the case, and if anything can, or should be done to address this, is likely to be of continuing congressional interest. "], "subsections": []}]}}
{"id": "R45917", "title": "Federal and State Regulation of Student Loan Servicers: A Legal Overview", "released_date": "2019-09-17T00:00:00", "summary": ["As the federal government's role in the student loan industry has expanded over time, the United States has contracted with student loan servicers to help it administer its growing student loan portfolio. These servicers perform a variety of functions, including (1) communicating with borrowers regarding repayment; (2) disclosing information about student loan terms to borrowers; (3) applying payments to outstanding loan balances; (4) processing applications for enrollment in repayment plans; and (5) processing requests for loan forbearance and deferment. Several federal statutes and regulations\u00e2\u0080\u0094along with an array of contractual provisions\u00e2\u0080\u0094may affect how these servicers conduct these various functions on the government's behalf with respect to federal student loans.", "Some allege that the existing scheme of federal regulation has not deterred servicers from engaging in various forms of alleged misconduct. According to critics, servicers of federal student loans have engaged in several undesirable behaviors, such as (1) steering borrowers experiencing financial hardship toward forbearance instead of repayment plans that would be more beneficial; (2) neglecting to inform borrowers of the consequences of failing to promptly submit certain required information; (3) misinforming borrowers on their eligibility for loan forgiveness; and (4) misallocating or misapplying loan payments. The servicers deny these allegations.", "Federal laws governing higher education do not authorize borrowers who have allegedly been harmed by servicer misconduct to directly pursue litigation against servicers. Instead, existing law places the primary burden of policing federal student loan servicers upon the federal government. Some commentators disagree, however, over whether the U.S. Department of Education (ED) has exercised sufficient oversight over the servicers with which it contracts. Observers have also disagreed over the extent to which other federal agencies, such as the Consumer Financial Protection Bureau (CFPB), should participate in the regulation of federal student loan servicers.", "At the same time, more and more states have enacted legislation specifically targeted at student loan servicers. While the specifics of these laws vary from state to state, many purport to impose legal requirements upon servicers of federal student loans that go beyond those imposed by federal law, such as supervision by a state ombudsperson or mandatory licensing. Furthermore, in addition to new laws specifically aimed at servicers, state attorneys general and borrowers alike have invoked existing state consumer protection statutes and common law causes of action against servicers in civil litigation. These burgeoning disputes between servicers on the one hand and states and borrowers on the other have raised legal questions regarding how existing federal law interacts with the growing body of state servicing regulations. ED has taken the position that federal law \"preempts\"\u00e2\u0080\u0094that is, displaces\u00e2\u0080\u0094state laws purporting to regulate servicers of federal student loans. While some courts have agreed with ED's conclusions on preemption, the bulk of courts have reached the opposite conclusion that states retain a role in regulating student loan servicing.", "This ongoing legal debate has significant legal consequences. On the one hand, if federal law preempts state servicing regulations, servicers will be subject to a single uniform national standard and will not need to expend resources to comply with each jurisdiction's state-specific regulatory regime. On the other hand, allowing states to enact and enforce their own servicing laws could fill regulatory gaps where\u00e2\u0080\u0094at least in the view of some critics\u00e2\u0080\u0094existing federal regulation has not ensured that servicers perform their duties with sufficient regard for borrowers' interests. Preserving a regulatory role for the states could also enable each state to experiment with novel regulatory schemes. Given these legal consequences, several Members and committees of the 116th Congress have expressed interest both in the federal regulation of servicers generally and the preemptive scope of that regulation."], "reports": {"section_title": "", "paragraphs": ["T he United States has created vast federal loan programs offering to millions of students alternatives to private educational loans . According to the U.S. Department of Education's (ED's) Office of Federal Student Aid (FSA), nearly 43 million borrowers owed money on federal student loans as of the second quarter of 2019, and the total amount of outstanding federal student loan debt currently exceeds $1.4 trillion\u00e2\u0080\u0094a figure that has nearly tripled since 2007. In recent years, a significant number of these borrowers have experienced difficulty repaying their student loans. Moreover, borrowers who lack financial experience may need guidance to navigate the student loan repayment process, which some borrowers find daunting or confusing. Student loan servicers \u00e2\u0080\u0094with whom the United States has contracted to assist with the administration of its sizable student loan portfolio \u00e2\u0080\u0094are a key source of guidance and assistance for borrowers struggling to understand and repay their federal student loans. Under its contract with the federal government, a servicer may be responsible for (among other things)", "communicating with borrowers regarding repayment; disclosing information about student loan terms to borrowers; applying payments to outstanding loan balances; processing applications for enrollment in repayment plans; processing applications for loan forgiveness or discharge; and processing requests for loan forbearance or deferment. ", "Some maintain that at least some of these federal student loan servicers have engaged in various forms of undesirable conduct, such as steering borrowers away from beneficial repayment options or providing inaccurate or incomplete information. Representatives from the servicing industry deny these accusations.", "These allegations of servicer misconduct have drawn the attention of both federal and state policymakers. At least two congressional subcommittees have conducted hearings on student loan servicing within the past few months , and the House Committee on Financial Services conducted another hearing on the topic on September 10, 2019. Additionally, several state legislatures have enacted new laws to regulate student loan servicers within the past few years. A number of state attorneys general and individual borrowers have also tried to pursue civil litigation against servicers of federal student loans based on alleged violations of state statutory and common law.", "The states' involvement has raised questions involving the appropriate interaction between federal and state law, as well as the respective roles of the federal and state governments with respect to regulating student loan servicers. Significantly, ED has taken the position that the existing regime of federal regulation of student loan servicers leaves no room for state regulation on the topic. While some courts have agreed with this position, others have concluded that current federal law permits the state to regulate servicers with whom the federal government contracts.", "This report analyzes the regulation of servicers of federal student loans. After providing necessary background information regarding the federal student loan programs, the report describes federal law governing student loan servicers. The report then discusses how some states and borrowers have tried to enact or enforce state laws to regulate servicers of federal student loans. Then, the report analyzes the legal issues implicated by the interaction of federal and state servicing laws, including whether (and, if so, to what extent) federal servicing regulation preempts the states from creating or enforcing servicing laws of their own. The report concludes by identifying relevant legal considerations for Congress."], "subsections": [{"section_title": "Background on the Federal Student Loan Programs", "paragraphs": ["The federal government's roles with respect to the operation, supervision, and administration of federal student loan programs have evolved over time. Around the turn of the millennium, for instance, most (though not all) federal student loans were issued under the now-discontinued Federal Family Education Loan Program (FFELP), under which private lenders extended loans to borrowers that the federal government guaranteed against the risk of loss. Although the federal government set the terms and conditions of FFELP loans and subsidized the FFELP program, various entities other than the federal government also helped operate the FFELP. For example, private lenders (or third parties with which those lenders contracted) bore the responsibility of servicing FFELP loans.", "Several recent developments, however, have shifted the federal government's role in the student loan system. In 2008, for instance, Congress enacted the Ensuring Continued Access to Student Loan Act (ECASLA), which authorized ED to purchase outstanding FFELP loans from private lenders. Thus, for the nearly 4 million loans that ED purchased from private lenders under ECASLA, \"the federal government is now the 'lender.'\" Then, in 2010, Congress enacted the Student Aid and Fiscal Responsibility Act (SAFRA), which, among other things, terminated the authority to make new FFELP loans. As a result of SAFRA, the United States now issues most new federal student loans through the Federal Direct Loan Program (FDLP), under which the government itself\u00e2\u0080\u0094rather than a private lender\u00e2\u0080\u0094extends loans directly to students. These developments have thereby expanded the federal government's direct involvement in the student loan industry, which in turn has prompted the United States to rely increasingly on servicers to administer aspects of the federal student loan programs."], "subsections": []}, {"section_title": "Federal Laws and Contractual Requirements Governing Student Loan Servicers", "paragraphs": ["A variety of federal statutes and regulations\u00e2\u0080\u0094as well as contractual provisions\u00e2\u0080\u0094bear on the servicing of federal student loans."], "subsections": [{"section_title": "Statutory Provisions", "paragraphs": ["One such statute is Title IV of the Higher Education Act of 1965 (HEA), which (among other things) establishes programs to provide financial assistance to postsecondary students, including the FDLP. Title IV also governs loans issued under the now-discontinued FFELP that remain outstanding.", "Title IV contains several provisions that pertain to student loan servicing. The first such provision is 20 U.S.C. \u00c2\u00a7 1082, which applies to FFELP loans. 20 U.S.C. \u00c2\u00a7 1082(a)(1), for instance, empowers the Secretary of Education (Secretary) to \"prescribe . . . regulations applicable to third party servicers,\" \"including regulations concerning financial responsibility standards for, and the assessment of liabilities for program violations against, such servicers.\" Section 1082(a)(1) explicitly specifies, however, that \"in no case shall damages be assessed against the United States for the actions or inactions of such servicers.\" Section 1082( l )(1) in turn requires the Secretary to promulgate regulations \"prescrib[ing] standardized forms and procedures regarding .\u00c2\u00a0.\u00c2\u00a0. [student loan] servicing.\" In addition, Section 1082(p) requires certain officers, directors, employees, and consultants of student loan servicing agencies to submit reports to the Secretary disclosing potential financial conflicts of interest.", "Another provision, 20 U.S.C. \u00c2\u00a7 1087f, applies to FDLP loans. Section 1087f(a)(1) directs the Secretary to award federal loan servicing contracts to eligible servicers \"to the extent practicable.\" The Secretary may enter into servicing contracts only with \"entities which the Secretary determines are qualified to provide such services\" that possess \"extensive and relevant experience and demonstrated effectiveness.\" Additionally, \"[i]n awarding such contracts, the Secretary\" must \"ensure that such services . . . are provided at competitive prices.\"", "Yet another provision that has been particularly critical to the current legal debate over student loan servicing regulations is 20 U.S.C. \u00c2\u00a7 1098g's express preemption provision, which states that \"[l]oans made, insured, or guaranteed pursuant to a program authorized by Title IV of the [HEA] shall not be subject to any disclosure requirements of any State law.\" As explained below, courts have reached divergent conclusions regarding the significance of this statutory provision."], "subsections": []}, {"section_title": "Regulations", "paragraphs": [], "subsections": [{"section_title": "Regulations Specifically Governing Loan Servicing", "paragraphs": ["ED has promulgated several servicing-related regulations under its rulemaking authority under Title IV of the HEA. Nearly all of these regulations are codified in Part 682 of Title 34 of the Code of Federal Regulations, which governs FFELP loans rather than FDLP loans. 34 C.F.R. \u00c2\u00a7\u00c2\u00a0682.203(a), for instance, contemplates that an FFELP lender \"may contract or otherwise delegate the performance of its functions under\" governing federal law \"to a servicing agency,\" but emphasizes that doing so \"does not relieve the . . . lender . . . of its duty to comply with\" all applicable statutes and regulations. 34 C.F.R. \u00c2\u00a7 682.208 in turn prescribes actions that a servicer must take when servicing an FFELP loan, including \"responding to borrower inquiries, establishing the terms of repayment, and reporting a borrower's enrollment and loan status information.\" Similarly, 34 C.F.R. \u00c2\u00a7 682.416 establishes administrative responsibility and financial responsibility standards that third-party servicers of FFELP loans must satisfy. In addition, 34 C.F.R. \u00c2\u00a7 682.416(e) imposes auditing requirements on servicers of FFELP loans. Should a servicer violate any of the federal requirements that apply to it, Subpart G of Part 682 establishes a variety of procedures for addressing those violations, including administrative proceedings to limit, suspend, or terminate the servicer's eligibility to enter into servicing contracts.", "It is unclear whether\u00e2\u0080\u0094and, if so, to what extent\u00e2\u0080\u0094these FFELP loan servicing regulations apply to servicers of FDLP loans. Section 1087e(a)(1) of the HEA provides that, with certain exceptions, FDLP loans \"shall have the same terms, conditions, and benefits\" as FFELP loans. At least one court has therefore concluded that Section 1087e(a)(1) embodies a general congressional preference that FDLP and FFELP loans be governed by the same legal standards. The few judicial opinions interpreting Section 1087e(a)(1) do not conclusively resolve, however, whether FFELP regulations governing third-party servicers qualify as \"terms, conditions, and benefits\" of FFELP loans that would apply equally to FDLP servicers. Furthermore, courts considering whether FFELP regulations apply to FDLP loans outside the loan-servicing context have reached divergent conclusions. Nor do the portions of the servicing contracts that FSA has posted on its website specify whether servicers of FDLP loans must follow the FFELP servicing regulations. It is possible, however, that ED may nonetheless demand or expect its FDLP servicers to comply with some or all of the FFELP servicing standards. Moreover, some servicers have implicitly suggested in litigation briefs that at least some of the FFELP servicing regulations apply to FDLP servicers."], "subsections": []}, {"section_title": "General Regulatory Duties That ED Has Delegated to Servicers", "paragraphs": ["In addition to regulations that directly concern loan servicing, ED has also promulgated regulations establishing various responsibilities that the Secretary must fulfill, which the Secretary has in turn delegated to servicers. 34 C.F.R. \u00c2\u00a7 685.221(e)(3), for instance, requires the Secretary to \"notif[y] the borrower in writing of\" the requirement to regularly submit income recertification information to remain eligible to participate in an income-driven repayment (IDR) plan, which this report details below. ED has delegated that notification responsibility to servicers with which it contracts."], "subsections": []}]}, {"section_title": "Servicer Contracts with the Federal Government", "paragraphs": ["Pursuant its authority to enter into servicing contracts, ED has contracted with multiple entities to service federal student loans. These contracts govern many details of those servicers' operations, including financial reporting, transaction management, internal controls, accounting, and security. The servicing contracts also contain several mechanisms that ED may invoke against servicers that violate applicable federal requirements, including (1) ordering the noncompliant servicer \"to return any fees that [it] billed to [ED] from the time of noncompliance\" or (2) \"reallocating new loan volume to other servicers or transferring all or part of the noncompliant servicer's current loan volume to another servicer until the noncompliant servicer comes back into compliance.\" Interested parties disagree, however, whether ED uses these contractual provisions with sufficient frequency and diligence to effectively punish and deter servicer misconduct."], "subsections": []}, {"section_title": "Role of the Consumer Financial Protection Bureau", "paragraphs": ["In addition to ED's own oversight of its servicing relationships, the Consumer Financial Protection Bureau (CFPB) is another federal agency that possesses certain authorities as to federal student loan servicers. Pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act, the CFPB may exercise supervisory authority over certain nonbank \"larger participants\" in consumer financial product or service markets that it chooses to define by rule. In 2013, the CFPB exercised this authority to define larger participants in the student loan servicing market. Pursuant to the rule, the CFPB has supervisory authority over student loan servicers servicing more than 1 million accounts. The purposes of CFPB supervision include assessing compliance with consumer financial protection laws and detecting risks to consumers and consumer financial markets. By statute, the CFPB may conduct examinations as well as request information from supervised entities. In addition to its supervisory authority, the CFPB may bring enforcement actions against student loan servicers. In January 2017, for instance, the CFPB sued one of the largest federal student loan servicers, Navient Corporation. As of the date of this report, the case currently remains pending.", "Notably, questions have arisen regarding the relationship between the CFPB and ED. In the early 2010s, the two agencies entered into Memoranda of Understanding (MOUs) (1) providing for interagency sharing of information pertaining to, among other things, complaints about student loan servicers and (2) coordinating supervisory and oversight activities pertaining to student loans. However, ED terminated these MOUs in 2017. Among its reasons for terminating the MOUs, ED asserted that the CFPB had \"unilaterally expand[ed] its oversight role to include the Department's contracted federal loan servicers\" in derogation of ED's claimed \"full oversight responsibility for federal student loans.\" The CFPB further represented to Congress in April 2019 that \"student loan servicers have declined to produce information requested by the [CFPB] for supervisory examinations related to\" FDLP and FFELP loans since 2017."], "subsections": []}]}, {"section_title": "Allegations of Servicer Misconduct", "paragraphs": ["As described below, some claim that the aforementioned federal requirements and oversight mechanisms have not deterred federal student loan servicers from engaging in misconduct."], "subsections": [{"section_title": "Forbearance Steering", "paragraphs": ["Some, for instance, have accused federal student loan servicers of steering borrowers toward forbearance when participating in an IDR plan would be more beneficial for the borrower. Forbearance is a way for a borrower who encounters short-term financial hardship to obtain temporary relief from his obligation to repay a federal student loan. Forbearance allows the borrower to either", "temporarily cease making student loan payments; temporarily make smaller student loan payments; or extend the deadline by which the borrower must make payments.", "Interest, however, typically continues to accrue on the loan during the forbearance period, which is then capitalized\u00e2\u0080\u0094that is, added to the loan principal \u00e2\u0080\u0094when the forbearance period concludes. Thus, for borrowers experiencing long -term financial hardship, this interest accrual and capitalization may render forbearance less advantageous than participation in an IDR plan, the latter of which allows borrowers to make reduced monthly payments based on their income and offers them the prospect of obtaining loan forgiveness after making such payments over a specified period of years.", "Some allege that certain servicers have systematically encouraged borrowers to enter into forbearance rather than participate in IDR plans that would be more advantageous for the borrower. According to critics, servicers have a financial incentive to steer borrowers into forbearance because enrolling a borrower in an IDR plan requires the servicer to expend more resources than steering the borrower toward forbearance. Representatives from the servicing industry, however, deny that servicers engage in forbearance steering and assert that servicers in fact earn less money when borrowers enter forbearance."], "subsections": []}, {"section_title": "Income Recertification", "paragraphs": ["Some have also accused servicers of failing to provide critical information to student loan borrowers regarding the income recertification process a borrower must complete to remain in an IDR plan. Because, as noted above, a borrower's monthly payments under an IDR plan depend on the borrower's income, borrowers enrolled in IDR plans must recertify their income and family size each year. A borrower who does not comply with this annual recertification requirement may experience an increase in both his monthly loan payments and his total loan balance. Critics have accused some servicers of failing to \"advise borrowers of the negative consequences of failing to submit timely, complete, and correct recertifications to renew borrowers' IDR plans.\""], "subsections": []}, {"section_title": "Loan Forgiveness Eligibility", "paragraphs": ["Some borrowers also allege that federal student loan servicers misinformed them about their eligibility for loan forgiveness under federal law. Subject to various conditions, the Public Service Loan Forgiveness (PSLF) program affords loan forgiveness to borrowers who make 10 years of monthly loan payments while employed in a public service job. Critically, however, only loans issued under the FDLP qualify for the PSLF program. Some borrowers claim that they relied to their detriment on their servicers' representations that they qualified for forgiveness under the PSLF program, only to later learn that they were in fact ineligible because their student loans were non-FDLP loans, such as FFELP loans."], "subsections": []}]}, {"section_title": "State Laws Regulating Servicers of Federal Student Loans", "paragraphs": ["Significantly, the HEA does not provide litigants with a private right of action\u00e2\u0080\u0094that is, the HEA does not authorize borrowers to directly pursue civil litigation against servicers of federal student loans. Instead, only the Secretary may enforce the HEA. States, however, have developed their own laws empowering entities other than the federal government\u00e2\u0080\u0094such as state officials or individual borrowers\u00e2\u0080\u0094to pursue legal action against servicers. These state laws fall into two broad categories: (1) statutes that specifically target servicers for regulation and (2) statutes and common law causes of action that apply more generally to a broad range of entities, including servicers of federal student loans."], "subsections": [{"section_title": "State Laws Governing Student Loan Servicers Specifically", "paragraphs": ["First, several states have recently enacted legislation that specifically imposes legal requirements on federal student loan servicers beyond what federal law requires. Because the specifics of each statute vary from state to state, the following subsections of this report survey the most significant similarities and differences between the various state servicing laws.", "Some state servicing statutes, for instance, prohibit student loan servicers from operating within the state's boundaries unless they maintain an active servicing license issued by the state. A servicer that operates in one of these states without a license is subject to monetary penalties. These statutes also typically provide that the state may revoke a servicer's license\u00e2\u0080\u0094and thereby preclude the servicer from servicing loans within the state\u00e2\u0080\u0094if the servicer engages in specified acts of misconduct. For example, the District of Columbia's servicer licensing statute states that the Commissioner of the District of Columbia Department of Insurance, Securities, and Banking \"may revoke\" a student loan servicing license \"if, after notice and a hearing, the Commissioner finds that the licensee has\" \"[d]emonstrated incompetency or untrustworthiness to act as a licensee\" or \"[c]ommitted any fraudulent acts, engaged in any dishonest activities, or made any misrepresentation in any business transaction.\" Notably, some of these state licensing statutes contain provisions that appear intended to mitigate potential interference with the federal government and the servicers with which it contracts. For example, New York's servicing statute, which becomes effective on October 9, 2019, will provide that entities hired by ED to service federal student loans will automatically be deemed licensed to service those loans, without the need to submit a license application and otherwise meet the prerequisites for licensure. However, the New York statute will still require federal student loan servicers to comply with many of the statute's other requirements. Several other states, including Colorado and Maine, have likewise enacted similar laws allowing for automatic licensure for federal student loan servicers.", "Some state statutes designate a student loan ombudsperson to conduct oversight of servicers' operations, review and attempt to resolve borrowers' complaints about student loan servicers, and otherwise assist and educate borrowers with the loan servicing process. Some of these statutes contemplate that if the ombudsperson discovers that a servicer is engaging in unlawful conduct, he may refer that servicer to the responsible state agency for civil enforcement proceedings or even criminal prosecution.", "In response to allegations that some federal student loan servicers have steered borrowers toward forbearance instead of an IDR program, some states have also enacted laws requiring servicers to evaluate the borrower's eligibility for IDR plans before placing the borrower in forbearance. Relatedly, at least one state prohibits servicers \"from implementing any compensation plan that has the intended or actual effect of incentivizing a repayment specialist to violate\" applicable servicing regulations \"or any other measure that encourages undue haste or lack of quality.\"", "Similarly, in response to allegations that servicers have failed to provide borrowers with key information about income recertification, at least one state requires servicers to \"disclose the date that a borrower's [IDR] plan certification will expire and the consequences to the borrower for failing to recertify by the date, including the new repayment amount.\"", "A few state statutes also attempt to address concerns that some servicers have misinformed borrowers regarding their eligibility for loan forgiveness programs, such as the PSLF. The State of Washington, for instance, makes it unlawful to \"[m]isrepresent or omit any material information\" about \"the availability of loan discharge or forgiveness options.\"", "A number of states have also enacted statutory provisions to regulate various other aspects of servicers' operations. For instance, some state statutes purport to require servicers to acknowledge and respond to borrower complaints and requests within a specified time frame. Several statutes also impose recordkeeping or annual reporting requirements upon servicers. Additionally, some laws require servicers to inform the borrower if the identity or address of the party to whom the borrower must send payments or communications changes.", "There are a host of different remedies for violating state servicing laws. Some states, for instance, have authorized borrowers to pursue a private cause of action against a servicer who violates the state's servicing laws. A Maine statute that becomes effective January 1, 2020, for example, will authorize borrowers to recover compensatory, treble, and punitive damages\u00e2\u0080\u0094as well as costs and attorney's fees\u00e2\u0080\u0094from servicers who violate the statute's prohibitions. As an alternative to enforcement by private litigants, some state statutes authorize the government to (1) levy fines or penalties against servicers who commit specified acts or omissions or (2) sue servicers who violate the state's servicing laws. Some state servicing statutes explicitly contemplate enforcement by both individual borrowers and the state government alike.", "Whereas the aforementioned provisions impose servicing requirements that go beyond federal law, some state statutes also incorporate existing federal servicing standards by reference and thereby provide state law remedies for alleged violations of federal requirements. A Connecticut statute, for instance, provides that in addition to complying with all requirements imposed by Connecticut law, a student loan servicer must also \"comply with all applicable federal laws and regulations relating to student loan servicing.\" \"[A] violation of any such federal law or regulation shall be deemed a violation of\" Connecticut law \"and a basis upon which the [Connecticut Banking Commissioner] may take enforcement action\" against a noncompliant servicer."], "subsections": []}, {"section_title": "State Laws of General Applicability", "paragraphs": ["In addition to these statutes that specifically purport to regulate student loan servicers, servicers may also be bound by a state's laws of general applicability. For example, many states have enacted consumer protection statutes that purport to apply to various entities and prohibit an array of activities that state legislatures have deemed deceptive or unfair to consumers. As explained below, some borrowers and states have invoked these consumer protection statutes in civil lawsuits against servicers challenging various forms of alleged misconduct. Additionally, state courts typically recognize common law causes of action for acts like fraud, negligent or fraudulent misrepresentation, breach of fiduciary duty, negligence, unjust enrichment, tortious interference, and breach of contract. Some borrowers have likewise invoked (or tried to invoke) these common law doctrines against servicers allegedly engaged in misconduct."], "subsections": []}, {"section_title": "Preemption and the Interaction of Federal and State Servicing Laws", "paragraphs": ["With both federal and state laws coexisting in the realm of federal student loan servicing regulations, questions of federal preemption\u00e2\u0080\u0094that is, questions regarding whether federal law in a given area displaces or overrides state laws in that area\u00e2\u0080\u0094have arisen."], "subsections": [{"section_title": "Federal Preemption", "paragraphs": ["Under case law interpreting the Constitution's Supremacy Clause, federal law can preempt conflicting state law in two central ways. First, statutory language that express ly addresses the scope of a law's preemptive effect, such as the express preemption clause in 20 U.S.C. \u00c2\u00a7\u00c2\u00a01098g, may be the basis to conclude that Congress intended federal law to supersede certain state laws. Second, even if a statute is silent as to Congress's preemptive intent, implied preemption principles can also displace state law. A statute can implicitly preempt state law where (1) the scheme of federal regulation is so pervasive, or the federal interest is so dominant, that it can be presumed that Congress intended to supplant all state laws in a particular area (also known as \"field preemption\"); or (2) the state law conflicts with federal law by either making it impossible to simultaneously comply with both laws or by frustrating the purposes and objectives of the federal law (also known as \"conflict preemption\"). For each type of preemption, congressional intent is the touchstone of courts' analyses. Influencing the preemption analysis, courts have, at times, employed a \"presumption against preemption,\" meaning that they begin with an assumption that Congress did not intend to displace state law, particularly in areas falling within the traditional police powers of the states."], "subsections": []}, {"section_title": "ED's Interpretation", "paragraphs": ["Invoking several of these principles of federal preemption, in March 2018 ED announced its own position on the issue\u00e2\u0080\u0094that is, that federal law preempts a wide range of state laws that regulate federal student loan servicers. Significantly, ED did not promulgate this interpretation through notice-and-comment rulemaking; it instead published its interpretation in the Federal Register as an informal guidance document. Among other things, the ED interpretation claims that federal law displaces", "state laws that \"impose regulatory requirements on servicing,\" such as laws that \"impose deadlines on servicers for responding to borrower inquiries\" or \"require specific procedures to resolve borrower disputes\"; state regulations \"requiring licensure of servicers\" of certain federal student loans; and state requirements concerning what servicers must disclose to borrowers.", "ED appears to ground its interpretation in several preemption theories, including conflict preemption (i.e., that state servicing laws allegedly impede Congress's objective of establishing uniform federal loan servicing standards) and field preemption (i.e., that existing federal regulation is comprehensive and adequate, leaving no role for additional state regulation). ED also relies on express preemption principles, arguing that 20 U.S.C. \u00c2\u00a7 1098g's preemption provision\u00e2\u0080\u0094stating that \"[l]oans made, insured, or guaranteed pursuant to a program authorized by Title IV of the [HEA] shall not be subject to any disclosure requirements of any State law\"\u00e2\u0080\u0094broadly bars states from imposing disclosure requirements. ED \"interprets the term 'disclosure requirements' under section 1098g . . . to encompass\" not only written disclosures, but also \"informal or non-written communications to borrowers.\" In addition to issuing this interpretation, ED has also submitted filings in several cases , asking courts to dismiss lawsuits against student loan servicers on preemption grounds or otherwise narrow or invalidate state regulations."], "subsections": []}, {"section_title": "Recent Litigation", "paragraphs": ["ED's interpretation and its litigation position have fueled the debate between states and plaintiff borrowers on one side\u00e2\u0080\u0094who claim that state servicing statutes may harmoniously exist alongside federal laws and policies\u00e2\u0080\u0094and ED and federal student loan servicers on the other, who claim that those state regulations irreconcilably conflict with supreme federal law. Federal courts addressing these disputes, as discussed below, have analyzed the applicability of field preemption, conflict preemption, and express preemption to state student loan servicing laws and state law claims against federal student loan servicers. In doing so, the courts have afforded varying levels of weight to ED's interpretation in conducting their preemption analyses."], "subsections": [{"section_title": "Field Preemption", "paragraphs": ["Courts have somewhat readily concluded that the HEA does not occupy the field of federal student loan servicing regulation. As an initial matter, several federal appellate courts over the past 25 years\u00e2\u0080\u0094in analyzing different legal contexts in the realm of higher education\u00e2\u0080\u0094have held that the HEA does not have field preemptive effect more generally. For example, in one such case involving state law negligence claims against national school accrediting agencies (which ED approves pursuant to the HEA), the Ninth Circuit concluded that Congress, in enacting the HEA, \"expected state law to operate in much of the field in which it was legislating.\" Although courts have recognized that the HEA is comprehensive, they have also noted that a regulatory regime's comprehensiveness on its own does not necessarily result in field preemption. Moreover, courts have observed that scattered throughout the HEA are several express preemption provisions, which explicitly foreclose certain state laws\u00e2\u0080\u0094such as state usury, garnishment, and, with respect to Section 1098g, disclosure laws. Such explicit preemption provisions, courts have reasoned, would not be necessary if Congress had intended to simply supplant all state laws.", "When it comes to student loan servicing specifically, courts have uniformly rejected the argument that in the HEA Congress intended for federal regulation of federal student loan servicers to be an exclusive field. The HEA provides ED with the authority to contract with student loan servicers and to \"establish minimum standards\" governing those servicers' management and accountability. The district court in Student Loan Servicing Alliance v. District of Columbia , for example, concluded that this language merely sets a federal regulatory \"floor,\" without foreclosing supplemental regulation from the states. The servicers in Student Loan Servicing Alliance further raised the argument that the federal government has a dominant interest in regulating federal student loan servicing that would merit field preemption\u00e2\u0080\u0094particularly because, with the discontinuation of the FFELP, the federal government now makes over 90% of new student loans through the FDLP. The servicers argued, accordingly, that the federal government has a unique interest in protecting its rights under its servicing contracts for these loans. However, in weighing the federal interests against the \"compelling\" interest of states in protecting their consumers, the Student Loan Servicing Alliance court concluded that the federal interest was not dominant enough to preclude state regulation."], "subsections": []}, {"section_title": "Conflict Preemption", "paragraphs": ["Although field preemption arguments have not thus far posed a hurdle to state student loan servicing regulation, the federal district court in Student Loan Servicing Alliance recently invalidated significant portions of the District of Columbia's student loan servicing law under conflict preemption principles. In its student loan servicing law passed in 2016, the District of Columbia (DC) required student loan servicers to obtain a license from DC and adhere to other substantive regulations and standards of conduct. While one of the primary points raised in ED's Interpretation, as discussed above, was that this type of state licensing scheme conflicted with federal law, the court determined that it did not have to give ED's Interpretation any deference. Rather, the court concluded that the ED Interpretation consisted of informal agency guidance that was insufficiently \"thorough, consistent, and persuasive.\"", "Yet, in performing its own independent analysis, the district court still held that DC's licensing scheme posed an obstacle to the federal law's underlying purpose by undermining ED's authority\u00e2\u0080\u0094provided for in the HEA\u00e2\u0080\u0094to select servicers for federal student loans. The court relied on a line of prior federal cases arising in different legal contexts that preempted state laws' impeding the federal government's ability to contract. The court reasoned that the DC law did so by effectively \"second-guess ing \" the federal government's decisions to contract with a given loan servicer. The court's reasoning applied to FDLP loans and government-owned FFELP loans (e.g., those that ED purchased under ECASLA) , for which ED makes servicer contracting decisions under the HEA. The court held, however, that federal law did not preempt state regulations of servicers of outstanding commercial FFELP loans, where private lenders own and decide whether to contract with student loan servicers and the federal government acts merely as a reinsurer or a guarantor.", "Beyond the Student Loan Servicing Alliance case and its preemption of DC's licensing requirement for federal student loan servicers, however, courts have generally declined to find conflict preemption in suits brought against servicers for misrepresentations under state laws of general applicability. The main argument that federal student loan servicers have raised in this context is that plaintiffs' ability to sue under state law poses an obstacle to the HEA's objective of providing uniformity in federal student loan servicing regulation, subjecting servicers instead to actions under the laws of 50 different states and DC. However, uniformity is not a stated goal of the HEA. While certain cases have concluded that uniformity is one of the statute's purposes (albeit in arguably distinguishable contexts), other courts have declined to reach that result. Courts have also reasoned that even if uniformity were an objective of the HEA, it does not follow that enforcing state laws prohibiting deceptive conduct would serve as an obstacle to uniformity in the HEA's standards because \"uniformity in setting . . . standard parameters for the federal student loan programs is not harmed by prohibiting unfair or deceptive conduct in operating those programs. Moreover, as several courts have noted, a broad reading of servicers' uniformity argument would in effect be akin to a finding of HEA field preemption, which courts have consistently declined to recognize.", "Courts have also considered whether the Supreme Court's holding in Boyle v. United Technologies Corp . prevents the states from regulating activities that servicers perform under contracts with the federal government. Boyle held that plaintiffs could not pursue state law claims against federal contractors when allowing such claims to proceed would either create \"a 'significant conflict'\" with \"an identifiable 'federal policy or interest'\" or \"'frustrate specific objectives' of federal legislation.\" In the 2019 case of Nelson v. Great Lakes Educational Loan Services, Inc. , for example, the Seventh Circuit determined\u00e2\u0080\u0094albeit with little elaboration\u00e2\u0080\u0094that allowing a borrower to pursue state law misrepresentation claims against a servicer would not impermissibly conflict with federal interests or objectives."], "subsections": []}, {"section_title": "Express Preemption", "paragraphs": ["Express preemption arguments in recent federal student loan servicing cases have centered on the preemption clause in Section 1098g of the HEA. Specifically, courts have grappled with whether the preemptive language in Section 1098g\u00e2\u0080\u0094which prohibits states from imposing \"disclosure requirements\" regarding federal student loans\u00e2\u0080\u0094precludes suits against servicers brought under state law for misrepresentations or misleading communications made to federal student loan borrowers.", "Allegations in this category of lawsuits primarily include forbearance steering and misstatements regarding loan forgiveness eligibility, with the allegedly false or misleading statements in many cases being made over the telephone by the servicers' call center representatives. Specifically, some plaintiffs claim that they were \"steered\" toward placing their loans into forbearance rather than being informed of other options or enrolled in an IDR plan that may have been more beneficial in the long term\u00e2\u0080\u0094alleging that forbearance was simply a faster and less burdensome process for the servicer. Other plaintiffs recount, for example, being assured that they were on track to benefit from the PSLF program when that was not the case, thereby preventing them from taking remedial measures. Plaintiffs in these lawsuits\u00e2\u0080\u0094which have included both federal student loan borrowers and state attorneys general\u00e2\u0080\u0094have brought state law tort claims or claims under state consumer protection statutes of general applicability. The main question at issue has been whether enforcing the state's law would require the servicers in these cases to make additional or different \"disclosures\" under Section 1098g.", "Most federal courts considering this question in cases based on these types of allegations have held that Section 1098g does not preempt state law. These courts have allowed the students' lawsuits to proceed, viewing their claims as involving affirmative misrepresentations or otherwise deceptive conduct, which the courts distinguished from the mere failure to provide \"disclosures\" under Section 1098g. For example, in Pennsylvania v. Navient Corp. , a federal district court in Pennsylvania ruled that the HEA did not preempt the plaintiff's state law claims regarding forbearance steering. The court reasoned that the defendant's argument went \"too far\" by framing the plaintiff's claim as one for lack of disclosure, rather than a claim concerning unfair and deceptive conduct subject to the state consumer protection statute.", "A federal district court in Florida in Lawson-Ross v. Great Lakes Higher Education Corp. , however, reached a different conclusion as to express preemption in 2018. The Lawson-Ross plaintiffs alleged that the defendant servicer falsely assured them that they were on track to benefit from PSLF (when they were not in fact eligible for the program), in violation of a Florida consumer protection statute and several state common law duties. The court concluded, however, that federal regulations already prescribe the information that must be provided to federal student loan borrowers, so that the plaintiffs' state law claims would essentially impose additional disclosure requirements on the servicer. Even though the plaintiffs argued that they alleged that the servicer had made an affirmative misrepresentation , the court construed the plaintiffs' claim as one for the servicer's failure to disclose accurate information regarding plaintiffs' eligibility, which it held to be impermissible under Section 1098g. In reaching its conclusion, the Lawson-Ross court afforded Skidmore deference to ED's interpretation after concluding that ED's views on the preemptive effect of federal law were \"well-reasoned and sensible.\"", "The Lawson-Ross court, and servicers arguing for preemption in similar cases, also relied for support on a 2010 case from the Ninth Circuit called Chae v. SLM Corp oration . In Chae , students sued a federal student loan servicer challenging certain methods it used to calculate interest, late fees, and repayment dates, claiming that these servicing practices rendered their billing statements, coupon books, and loan applications misleading in violation of a state consumer protection law. The court reasoned that Section 1098g preempted the action, stating that \"[a]t bottom, the plaintiffs' misrepresentation claims are improper-disclosure claims\" and that \"[i]n this context, the state-law prohibition on misrepresenting a business practice 'is merely the converse' of a state-law requirement that alternative disclosures be made.\" While the Lawson-Ross court extended Chae 's logic to servicers' oral misrepresentations about PSLF eligibility, other courts have distinguished Chae , noting, for example, that Chae involved allegations concerning the misleading nature of written account statements and coupon books (i.e., \"highly prescribed standardized forms\"), rather than the \"affirmative misconduct\" and types of misleading communications involved in forbearance steering or PSLF allegations.", "The landscape of decisions concerning Section 1098g's preemptive scope is subject to change as further appellate courts begin to address the issue. Notably, appeals in t he Pennsylvania and Lawson-Ross cases are pending. Moreover, the Nelson case, decided by the Seventh Circuit, may be appealed to the U.S. Supreme Court."], "subsections": []}]}]}]}, {"section_title": "Considerations for Congress", "paragraphs": ["Legal debates over the preemptive effect of federal law\u00e2\u0080\u0094both within the student loan servicing context and without\u00e2\u0080\u0094implicate a variety of considerations. On the one hand, replacing state law with a single uniform national standard can sometimes be advantageous. When each state remains free to enact its own laws on a given topic, the requirements of those laws may differ\u00e2\u0080\u0094perhaps irreconcilably\u00e2\u0080\u0094from jurisdiction to jurisdiction. Preempting those state laws can thereby release regulated parties from the \"administrative and financial burden[s]\" of learning and complying with the \"laws of 50 States.\" Moreover, freeing federal contractors from the burden of complying with state laws could mitigate the risk of state intrusions upon federal prerogatives. On the other hand, however, when federal law does not go far enough in policing a particular industry, preemption can prevent the states from filling those regulatory gaps with their own laws. Preempting state law may also deprive the states of opportunities to experiment with novel methods of regulating particular industries and behaviors, which might ultimately prove more effective than methods devised by the federal government.", "Depending on how Congress weighs these competing considerations, it may enact legislation clarifying or modifying the preemptive effect of federal law in the student loan servicing context. For example, a section of the PROSPER Act introduced in the 115th Congress, if enacted, would have provided that the servicing of student loans under Title IV of the HEA would \"not be subject to any law or other requirement of any State or political subdivision of a State with respect to\"", "\"disclosure requirements\"; \"requirements or restrictions on the content, time, quantity, or frequency of communications with borrowers, endorsers, or references with respect to such loans\"; or \"any other requirement relating to the servicing . . . of a loan made\" under Title IV of the HEA.", "Alternatively, if Congress instead intends to limit the preemptive scope of federal law, it could enact a savings clause specifying that federal law does not preempt any state law that imposes more restrictive requirements on federal student loan servicers than federal statutes and regulations. For instance, one section of the Student Loan Borrower Bill of Rights (S. 1354, 116th Cong.)\u00e2\u0080\u0094which, among other things, proposes to subject servicers to more expansive federal regulation\u00e2\u0080\u0094explicitly would not \"preempt any provision of State law regarding postsecondary education loans where the State law provides stronger consumer protections.\"", "If Congress ultimately decides to displace state servicing laws, it may consider preempting state law either narrowly or broadly. For instance, a federal statute that displaces state servicing regulations could expressly preempt all state laws that implicate the servicing of federal student loans in any fashion, or it could preempt only specified categories of state statutes (such as servicer licensing requirements) and thereby preserve some regulatory role for the states.", "Instead of expressly specifying the preemptive effect and scope of federal laws pertaining to federal student loan servicing, Congress could implicitly preempt state laws by changing the substantive standards governing servicers. Several Members of the 116th Congress have introduced legislation that, if enacted, would clarify or broaden servicers' duties and responsibilities under federal law or subject servicers to increased levels of federal oversight. Depending on their content and scope, new federal laws governing the conduct, obligations, and oversight of federal loan servicers could raise legal questions regarding (1) how those federal standards interact with state servicing laws and (2) the respective roles of federal and state law in regulating federal student loan servicers. The preemptive effect that courts will provide to a given federal law largely depends on the specific statutory text that Congress enacts.", "One other substantive change that could affect the preemptive scope of federal law is altering how the HEA is enforced. As discussed, the HEA does not presently create a private right of action; instead, the HEA contemplates that ED alone will enforce the statute's mandates. As noted above, however, some observers claim that ED has not diligently policed the servicers with whom it contracts. If Congress agrees with that assessment, it could expressly empower other entities\u00e2\u0080\u0094such as states, individual borrowers, or other federal agencies like the CFPB\u00e2\u0080\u0094to wield a greater level of enforcement authority over federal student loan servicers. For instance, granting borrowers or states a private right of action under federal law against contractors that violate federal servicing standards could provide an additional means to deter, correct, and punish alleged servicer misconduct. That said, subjecting servicers to litigation and regulation by multiple entities could increase federal contractors' costs. Rendering servicers answerable to multiple stakeholders\u00e2\u0080\u0094be they federal agencies, states, or individual borrowers\u00e2\u0080\u0094might also undermine the uniformity that some have argued is a central goal of federal student loan servicer regulation, which could in turn undercut arguments that preemption is necessary to preserve the federal government's predominant role in regulating its contractors.", "Several bills pending in the 116th Congress propose to subject servicers to increased litigation or regulation by entities other than ED. Section 3 o f the Student Loan Borrower Bill of Rights, for example, would allow individuals to sue federal student loan servicers under the Truth in Lending Act's private right of action provision. By contrast, the CFPB Student Loan Integrity and Transparency Act of 2019 (H.R. 2833, 116th Cong.) would (among other things) (1) require federal student loan servicers to provide the CFPB with any information requested by specified CFPB officials and (2) reinstate the aforementioned MOUs between ED and the CFPB that ED terminated in 2017.", "Unless and until Congress specifies the intended preemptive effect of federal servicing laws, however, legal questions regarding preemption in the loan servicing context will be left to the courts to resolve. Depending on their content, the courts' rulings may affect the uniformity of servicing regulations across jurisdictions and the degree and type of oversight to which federal student loan servicers are subject."], "subsections": []}]}}
{"id": "R46305", "title": "DHS Budget Request Analysis: FY2021", "released_date": "2020-04-01T00:00:00", "summary": ["On February 10, 2020, the Donald J. Trump Administration released their budget request for FY2021, including a $75.84 billion budget request for the Department of Homeland Security (DHS).", "DHS is the third largest agency in the federal government in terms of personnel. The appropriations bill that funds it\u00e2\u0080\u0094providing $70 billion in FY2020\u00e2\u0080\u0094is the seventh largest of the twelve annual funding measures developed by the appropriations committees, and is the only appropriations bill that funds a single agency in its entirety and nothing else.", "This report provides an overview of the FY2021 budget request for the Department of Homeland Security. It provides a component-level overview of the appropriations sought in the FY2021 budget request, putting the requested appropriations in the context of the FY2020 requested and enacted level of appropriations, and noting the primary drivers of changes from the FY2020 enacted level.", "The FY2021 budget request represents the fourth detailed budget proposed by the Trump Administration. It is the earliest release of a budget request by the Trump Administration, and comes 52 days after the enactment of the FY2020 consolidated appropriations measures\u00e2\u0080\u0094the longest such gap since the release of the FY2017 request (53 days), and the first since then to include prior-year enacted funding levels as a comparative baseline.", "Some of the major drivers of change in the FY2021 request include", "A $3 billion reduction in border barrier funding through U.S. Customs and Border Protection (CBP) compared to the FY2020 request; A $2.4 billion reduction from the enacted level of funding due to the proposed move of the U.S. Secret Service to the Department of the Treasury; A $709 million increase in requested Transportation Security Administration (TSA) fee revenues; A $9 billion reduction in disaster relief funding through the Federal Emergency Management Agency (FEMA) compared to the FY2020 request; A $986 million increase from the FY2020 requested level for the U.S. Coast Guard\u00e2\u0080\u0094proposing funding $129 million above the enacted level; A $1.1 billion increase from the FY2020 requested level for Immigration and Customs Enforcement\u00e2\u0080\u0094$2 billion (24%) more than enacted in FY2020; and A $456 million increase for the Transportation Security Administration's budget from the FY2020 requested level\u00e2\u0080\u0094proposing funding $59 million below the enacted level.", "Six of the seven smallest components by gross budget authority saw their budget requests reduced by at least 5% from the enacted level, and four of those components saw reductions of more than 10%.", "This report will not be updated."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["The Department of Homeland Security (DHS) is the third largest agency in the federal government in terms of personnel. The appropriations bill that funds it\u00e2\u0080\u0094providing $70 billion in FY2020\u00e2\u0080\u0094is the seventh largest of the 12 annual funding measures developed by the appropriations committees, and is the only appropriations bill that funds a single agency in its entirety and nothing else.", "This report provides an overview of the FY2021 budget request for the Department of Homeland Security. It provides a component-level overview of the appropriations sought in the FY2021 budget request, putting the requested appropriations in the context of the FY2020 requested and enacted level of appropriations, and noting some of the larger changes in this proposal from those baselines."], "subsections": [{"section_title": "Data Sources and Caveats", "paragraphs": ["To ensure consistency of methodology, the analysis in this report is based on Office of Management and Budget (OMB) data as presented in the FY2020 and FY2021 Budget in Brief for DHS, with supporting information from the DHS congressional budget justifications for FY2021, except where noted. Most other CRS reports rely on Congressional Budget Office (CBO) data, which was not available at the time of publication at a similar level of granularity. Numbers expressed in billions are rounded to the nearest hundredth ($10 million), while numbers expressed in millions are rounded to the nearest million. ", "None of the FY2020 requested or enacted levels in this bill include supplemental appropriations requested and provided in the wake of the COVID-19 pandemic, as the intent is to analyze the FY2021 annual appropriations request in comparison to the preceding request and ensuing annual appropriation."], "subsections": []}]}, {"section_title": "Structure of the DHS Budget", "paragraphs": [], "subsections": [{"section_title": "FY2021 Context", "paragraphs": ["The FY2021 budget request represents the fourth detailed budget proposed by the administration of President Donald J. Trump. It is the earliest release of a budget request by the Trump Administration, and comes 52 days after the enactment of the FY2020 consolidated appropriations measures\u00e2\u0080\u0094the longest such gap since the release of the FY2017 request (53 days), and the first since then to include prior-year enacted funding levels as a comparative baseline. This allows for easier analysis of the request compared to current funding.", "The budget for DHS includes a variety of discretionary and mandatory budget authority. Aside from standard discretionary spending, some of the discretionary spending in the bill is offset by collections of fees, reducing the net effect on the general fund of the Treasury. Some discretionary budget authority is specially designated under the Budget Control Act (BCA), adjusting the statutory limits on discretionary spending to accommodate it. DHS also draws resources from fee revenues and other collections included in the mandatory budget, which are not usually referenced in annual appropriations legislation. However, some mandatory spending items still require an appropriation because there is no dedicated source of funding to meet the government's obligations established in law\u00e2\u0080\u0094e.g., U.S. Coast Guard (USCG) retirement accounts. Figure 1 shows a breakdown of these different categories from the FY2021 budget request.", "Congress and the Administration may differ on how funding for the department is structured; frequently, administrations of both parties have suggested paying for certain activities with fee increases that would require legislative approval. If fees are not increased, additional discretionary appropriations must be provided to fund the planned activities. ", " Figure 2 compares the structure of the FY2021 budget request to its enacted FY2020 equivalent, as well as the FY2020 request. Significant differences include", "In budget authority from discretionary appropriations, a $3 billion reduction in border barrier funding through U.S. Customs and Border Protection (CBP) compared to the FY2020 request; and a $2.4 billion reduction from the enacted level of funding due to the proposed move of the U.S. Secret Service to the Department of the Treasury. In fee-funded discretionary budget authority, a $709 million increase in requested Transportation Security Administration (TSA) fee revenues; and In discretionary budget authority covered by adjustments under the BCA, a $9 billion reduction in disaster relief funding through the Federal Emergency Management Agency (FEMA) compared to the FY2020 request."], "subsections": []}, {"section_title": "Appropriations Analysis", "paragraphs": [], "subsections": [{"section_title": "Comparing the FY2021 Request to Prior-Year Levels", "paragraphs": [" Table 1 presents for comparison the requested gross budget authority controlled in appropriations legislation for FY2021 for each DHS component, as well as the level requested and enacted for FY2020. This is essentially composed of the first four elements in Figure 1 and Figure 2 . ", "Four analytical columns on the right side of the table provide comparisons of the FY2021 requested funding levels with the FY2020 requested and enacted levels, indicating dollar and percentage change. Components are listed in order of their total FY2020 enacted gross budget authority. Indented and italicized lines beneath the Coast Guard and Federal Emergency Management Agency entries show the portion of the above amount covered by adjustments for disaster relief and overseas contingency operations, provided for under the BCA. The funding levels in Table 1 include the effects of all elements of the budget tracked in the detail tables accompanying annual appropriations for DHS, except rescissions of prior-year appropriations. While this table compares data developed with the Congressional Budget Office (CBO) scoring methodology and the Office of Management and Budget (OMB) scoring methodology, most of the data compared is identical. Most of the $40 million in scoring differences identified by OMB is the result of $34 million differences in the treatment of fees, transfers and rounding within the CBP budget, with the remainder being the result of differences in rounding across the DHS funding structure.", " Table 1 illuminates several shifts within the FY2021 DHS budget request that are not apparent in top-line analysis:", "a $986 million increase from the FY2020 requested level for the U.S. Coast Guard; a $1.1 billion increase from the FY2020 requested level for Immigration and Customs Enforcement\u00e2\u0080\u0094$2 billion (24%) more than enacted in FY2020; a $456 million increase for the Transportation Security Administration's budget from the FY2020 requested level; and a proposed transfer of the Federal Protective Service from the Cybersecurity and Infrastructure Security Agency to the Management Directorate during the FY2020 process, shifting almost $1.6 billion between the components.", " Table 1 also illuminates budgetary pressure on DHS's smaller headquarters and support components. With one exception\u00e2\u0080\u0094Analysis and Operations\u00e2\u0080\u0094the seven smallest components by gross budget authority saw their budget requests reduced by at least 5% from the enacted level, and four of those components saw reductions of more than 10%."], "subsections": []}, {"section_title": "Common DHS Appropriation Types", "paragraphs": ["Under the Common Appropriations Structure (CAS) first implemented with the FY2017 DHS annual appropriation, most DHS discretionary appropriations were rearranged into four uniform categories:", "Operations and Support\u00e2\u0080\u0094generally personnel and operational costs (all components have this); Procurement, Construction, and Improvements\u00e2\u0080\u0094generally acquisition and construction (many components have this); Research and Development (TSA, USCG, USSS, CISA, S&T, and CWMD have this in the FY2021 budget request); and Federal Assistance (only FEMA and CWMD have this in the FY2021 budget request).", "FEMA's Disaster Relief Fund is a unique discretionary appropriation which was preserved separately, in part due to the history of the high level of public and congressional interest in that particular structure. ", "The use of the CAS structure allows a quick survey of the level of departmental investment in these broad categories of spending through the appropriations process. A visual representation of this new structure follows in Figure 3 . On the left are the five appropriations categories of the CAS with a black bar representing the requested FY2021 funding levels requested for DHS for each. A sixth catch-all category is included for budget authority associated with the legislation that does not fit the CAS categories. Colored lines flow to the DHS components listed on the right, showing the amount of funding provided through each category to each component. "], "subsections": []}, {"section_title": "Staffing", "paragraphs": ["The Operations and Support appropriation for each component pays for most DHS staffing. Table 2 analyzes changes to DHS staffing, as illuminated by the request's information on positions and full-time equivalents (FTEs) for each component. Appropriations legislation does not explicitly set these levels, so the information is drawn from budget request documents alone. ", "The first data column indicates the number of positions requested for each component in the FY2021 budget request. The next four columns show the difference between the FY2021 request and the Administration's previous request\u00e2\u0080\u0094expressed numerically, then as a percentage\u00e2\u0080\u0094and then shows the same comparison with the FY2020 enacted number of positions as interpreted by the Administration. Another data column shows the number of FTEs, followed by four more analytical columns showing the same comparisons as were run for positions."], "subsections": []}]}]}, {"section_title": "Overview of Component-Level Changes", "paragraphs": ["The following summaries of the budget requests for DHS components are drawn from a survey of the DHS FY2021 B udget in Brief and the budget justifications for each component. Each begins with a graphic outlining the appropriations requested and enacted for the components in FY2020 and FY2021, followed by some observations on the factors that contribute to the illustrated structure. The appropriations request includes all funding provided through the appropriations measure, regardless of how it is scored: it does not include most mandatory spending, such as programs paid for directly by collected fees that have appropriations in permanent law.", "Each component has an Operations and Support appropriation, which includes discretionary funding for pay. A 3.1% civilian pay increase was adopted for 2020, and a 1.0% civilian pay increase has been proposed by the Administration for 2021. Descriptions of each Operations and Support appropriation note the impact of these pay increases and associated increases to component retirement contributions to better illuminate the changes in the level of other operational funding."], "subsections": [{"section_title": "Law Enforcement Operational Components (Title II)", "paragraphs": [], "subsections": [{"section_title": "Customs and Border Protection (CBP)", "paragraphs": ["The Administration's $15.60 billion appropriations request for CBP was $724 million (4.9%) above the FY2020 enacted level, and $2.55 billion (14.1%) below the level of appropriations originally requested for FY2020. The request includes", "$252 million more than enacted for Operations and Support, largely driven by $414 million for pay and retirement cost increases. $161 million was requested for 750 additional border patrol agents and 126 support staff. No additional appropriations were requested for new CBP Officers, who staff ports of entry. $21 million was requested for 300 Border Patrol Processing Coordinators, who are intended to take over non-law enforcement duties currently performed by Border Patrol Agents. The request for Operations and Support includes a new $7 million item for the Southwest Border Wall System Program, intended to maintain newly constructed barriers. $377 million more than enacted for Procurement, Construction, and Improvements. The $2.06 billion request for Border Security Assets and Infrastructure is $552 million more than enacted in annual appropriations for FY2020, and $3.12 billion less than requested in FY2020. The primary driver of this change from the FY2020 request is a reduction of $3.04 billion in construction funding for the border wall system. While the FY2020 Budget-in-Brief cites $182 million for facilities improvements and various investments for technology, aircraft, and vehicles, appropriations not for border barriers were reduced from the FY2020 enacted level of $529 million to $281 million in the request."], "subsections": []}, {"section_title": "Immigration and Customs Enforcement (ICE)", "paragraphs": ["The Administration's $9.93 billion appropriations request for ICE was $1.85 billion (22.9%) above the FY2020 enacted level, and $1.15 billion (13.0%) above the level of appropriations originally requested for FY2020. The request includes", "$1.79 billion more than enacted for Operations and Support, largely driven by a 4,636 position (22%) increase requested in personnel funded through appropriations. This increase would include 2,844 law enforcement officers and 1,792 support staff. While all of the primary programs under ICE would receive additional staff, Enforcement and Removal Operations (ERO) would receive 2,792 positions, a 34% increase above the current enacted level (8,201). Homeland Security Investigations (HSI) would receive 1,053 additional personnel, a 12% increase above the current enacted level (8,784). $220 million (12.3%) of the requested increase in Operations and Support appropriations is for pay and retirement increases. $58 million more than enacted for Procurement, Construction, and Improvements. This is $26 million more than the request for FY2020, growth largely driven by a nearly $14 million increase above the FY2020 requested level for Operational Communications and Information Technology. Also included in the Administration's request was $112 million in fee funding from the Immigration Examinations Fee Account\u00e2\u0080\u0094similar to a proposal not approved by Congress for FY2020\u00e2\u0080\u0094which would fund 936 current personnel."], "subsections": []}, {"section_title": "Transportation Security Administration (TSA)", "paragraphs": ["The Administration's $4.09 billion net appropriations request for TSA was $890 million (17.9%) below the FY2020 enacted level, and $175 million (4.5%) above the level of appropriations originally requested for FY2020. With the resources from offsetting fees included, the gross discretionary total is for a request of $7.63 billion, $181 million (2.3%) below the FY2020 enacted level, and $334 million (4.6%) above the FY2020 requested level. The request includes", "$820 million (16.9%) less than enacted in FY2020 for Operations and Support appropriations, compensated for in large part by $709 million in proposed increases to offsetting collections. Operations and Support cost increases within this amount include $251 million for paying increased pay and retirement costs. $77 million (69.7%) less in discretionary appropriations than enacted in FY2020 for Procurement, Construction, and Improvements; $129 million less in discretionary appropriations than was requested for FY2020. $250 million continues to be provided in mandatory appropriations from the Aviation Security Capital Fund as it has since FY2004. $7 million (28.9%) more than enacted in FY2020 for Research and Development appropriations, on the basis of $8 million for two new projects to improve threat detection at TSA checkpoints."], "subsections": []}, {"section_title": "U.S. Coast Guard (USCG)", "paragraphs": ["The Administration's $12.11 billion appropriations request for USCG was $139 million (1.2%) above the FY2020 enacted level, and $986 million (8.9%) above the level of appropriations originally requested for FY2020. The request included", "$196 million (2.4%) more than enacted in FY2020 for Operations and Support, $164 million of which is for pay and retirement increases, and increases to allowances for military personnel. For the first time in many years, the costs of Overseas Contingency Operations (OCO) were proposed for inclusion in the base discretionary appropriation for Operations and Support, without designation to adjust the discretionary budget limits to accommodate it. The OCO proposal was for $215 million in FY2021, up $25 million from the FY2020 enacted level. The budget request also included more than $30 million in increases for cyber operations. $135 million (7.6%) less than enacted for Procurement, Construction, and Improvements. Reductions of $130 million (80.7%) for the National Security Cutter program and $240 million (92.3%) for the Fast Response Cutter program were offset by increases of $234 million (75%) for the Offshore Patrol Cutter program and $420 million (311%) for the Polar Security Cutter program, as part of a net increase of $286 million (28.8%) for USCG vessels procurement. $351 million (69.6%) less than enacted was requested for USCG aircraft procurement. $13 million (18.6%) less than enacted was requested for other acquisition programs, and $58 million (28.3%) less than enacted for Shore Facilities and Aids to Navigation. Less than $1 million (6.6%) more than enacted was requested for Research and Development."], "subsections": []}, {"section_title": "U.S. Secret Service (USSS)", "paragraphs": ["The Administration's budget request envisions moving the USSS to the Department of the Treasury. However, the budget is still structured as it would be in DHS, and the numbers are provided here for analytical purposes. ", "The $2.36 billion appropriations request for USSS was $55 million (2.3%) below the FY2020 enacted level, and $52 million (2.2%) above the level of appropriations originally requested for FY2020. The request included", "$26 million (1.1%) less than enacted for Operations and Support, despite $71 million being added for the costs of pay and retirement increases. The primary driver of the decrease was the anticipated reduction of $86 million in costs from the conclusion of the 2020 presidential election cycle. $20 million for 119 additional personnel and $20 million in transition costs for the proposed transition of the USSS back to Treasury also are included in the request. $29 million (42.8%) less than enacted in FY2020 for Procurement, Construction, and Improvements, and less than $1 million (4.2%) less than enacted for Research and Development. "], "subsections": []}]}, {"section_title": "Incident Response and Recovery Operational Components (Title III)", "paragraphs": [], "subsections": [{"section_title": "Cybersecurity and Infrastructure Security Agency (CISA)", "paragraphs": ["The Administration's $1.76 billion appropriations request for CISA was $258 million (12.8%) below the FY2020 enacted level, and $150 million (9.3%) above the level of net appropriations originally requested for FY2020. The request included", "$128 million (8.2%) less than enacted in FY2020 for Operations and Support, despite $28 million being added for the costs of pay and retirement increases. The reduction is largely driven by the proposal to convert the Chemical Facility Anti-Terrorism and Safety program to a voluntary initiative, reducing program costs by $68 million, and a $34 million reduction in Threat Analysis and Response. $121 million (27.9%) less than enacted in FY2020 for Procurement, Construction, and Improvements, largely driven by a $114 million reduction in Cybersecurity Assets and Infrastructure, $75 million of which is to the National Cybersecurity Protection System. $8 million (55.4%) less than enacted in FY2020 for Research and Development, due to reductions in funding for the Technology Development and Deployment Program and National Infrastructure Simulation and Analysis Center."], "subsections": []}, {"section_title": "Federal Emergency Management Agency (FEMA)", "paragraphs": ["The Administration's $9.36 billion appropriations request for FEMA was $12.92 billion (58.0%) below the FY2020 enacted level, and $8.65 billion (48.0%) below the level of appropriations originally requested for FY2020. The primary driver of this change is a $12.29 billion reduction from the enacted level for the costs of major disasters (a large portion of the resources in the Disaster Relief Fund). If this reduction is set aside, the request is a $628 million reduction from the FY2020 enacted level, and a $364 million increase from the FY2020 request. The request includes", "$32 million (2.9%) more than enacted for Operations and Support, $32 million of which is for pay and retirement increases (the combination of other increases and decreases in the account has a net zero effect); $47 million (35.1%) less than enacted for Procurement, Construction, and Improvements, largely due to lower requests for grants management modernization, Mount Weather facilities, and the Center for Domestic Preparedness; $696 million (21.9%) less than enacted for Federal Assistance, largely due to reduction in preparedness grants, the Flood Hazard Mapping and Risk Analysis Program, and elimination of the Emergency Food and Shelter Program; and $12.21 billion (68.4%) less than enacted for the Disaster Relief Fund (DRF). The request for the portion of the DRF that covers major disasters dropped from an enacted level of $17.35 billion to $5.06 billion, a request that is based on the average of the last 10 years obligations for major disasters costing less than $500 million (termed \"non-catastrophic disasters\"), and spending plans for past disasters costing FEMA more than $500 million (termed \"catastrophic disasters\"). The portion of the DRF that covers emergencies and other activities increased $82 million (16.1%) to $521 million, largely on the basis of an increase in the 10-year average of those costs, and $15 million for real estate needs associated with FEMA's Recovery Service Centers. "], "subsections": []}]}, {"section_title": "Support Components (Title IV)", "paragraphs": [], "subsections": [{"section_title": "U.S. Citizenship and Immigration Services (USCIS)", "paragraphs": ["The Administration's $119 million appropriations request for USCIS was $14 million (10.4%) below the FY2020 enacted level, and $3 million (2.4%) below the level of appropriations originally requested for FY2020. The request includes", "$4 million (3.0%) less for Operations and Support than enacted in FY2020, and $3 million (2.4%) less than requested\u00e2\u0080\u0094$2 million in increased pay raise and retirement costs were offset by reduced costs for rent and efficiencies through modernization efforts. The request does not include an appropriations request for Federal Assistance, which received $10 million in the FY2020 enacted DHS appropriations bill for Citizenship and Integration Grants, which the Administration proposes funding through Immigration Examinations Fee revenues. Less than 3% of the USCIS budget is appropriated. The budget request projects more than $4.9 billion in mandatory spending for USCIS\u00e2\u0080\u009497% of its total budget\u00e2\u0080\u0094will be supported by fees in FY2021, up $213 million (4.5%) from FY2020 levels. This overall structure is similar to last year's request."], "subsections": []}, {"section_title": "Federal Law Enforcement Training Centers (FLETC)", "paragraphs": ["The Administration's $331 million appropriations request for FLETC was $20 million (5.6%) below the FY2020 enacted level, and $19 million (5.5%) below the level of appropriations originally requested for FY2020. FLETC also anticipates receiving $211 million (up $25 million, or 13.4%) in reimbursements for training and facilities use from those it serves. The request includes", "$12 million (4.3%) more than was enacted in FY2020 for Operations and Support, $7 million of which is for increased pay and retirement costs; $32 million (55.3%) less than was enacted in FY2020 for Procurement, Construction, and Improvements, due to completion of funding for projects in the FY2020 enacted appropriation. The FY2021 budget includes $26 million for the purchase of two dorms it currently leases."], "subsections": []}, {"section_title": "Science and Technology Directorate (S&T)", "paragraphs": ["The Administration's $644 million appropriations request for the S&T Directorate was $94 million (12.7%) below the FY2020 enacted level, and $62 million (10.6%) above the level of appropriations originally requested for FY2020. The request includes", "$30 million (9.6%) less than the enacted level for the Operations and Support appropriation, largely due to a $35 million (24.6%) reduction in mission support activities; Only $3 million of the Operations and Support request is for pay and retirement cost increases. $19 million in the Procurement, Construction, and Improvements appropriation (which had no funding requested or provided in FY2020) for costs associated with the closure and sale of the Plum Island Animal Disease Center; and $82 million (19.5%) less than enacted for the Research and Development appropriation, due to a $64 million (16.6%) reduction in in-house research activities and a $19 million (46.3%) reduction in university-based research."], "subsections": []}, {"section_title": "Countering Weapons of Mass Destruction Office (CWMD)", "paragraphs": ["The Administration's $377 million appropriations request for CWMD was $55 million (12.8%) below the FY2020 enacted level, and $46 million (10.9%) below the level of appropriations originally requested for FY2020. The request includes", "$7 million (3.7%) less than the enacted level for the Operations and Support appropriation, $40 million (18.7%) less than was requested for FY2020; This reduction is driven by a $5 million (40.7%) reduction in funding for the National Biosurveillance Integration Center's biosurveillance and early warning support on biological attacks and emerging pandemics, and an almost $3 million reduction in technical forensics operational readiness, which the request says is being funded by the National Nuclear Security Administration. $1 million (0.4%) was requested for covering the increased pay and retirement costs. $32 million (26.5%) less than the enacted level for the Procurement, Construction, and Improvements appropriation, largely driven by reductions to the Radiation Portal Monitor Replacement Program ($46 million, 68.1%) and Common Viewer program ($8 million, zeroed out); $11 million (15.9%) less than the enacted level for the Research and Development appropriation, largely driven by a $7 million reduction in Technical Forensics and a $9 million (27.3%) reduction in detection capability activity; and $6 million (9.3%) less than the enacted level for the Federal Assistance appropriation, largely due to an $11 million (44.6%) reduction in funding for the Securing the Cities program. "], "subsections": []}]}, {"section_title": "Headquarters Components (Title I)", "paragraphs": [], "subsections": [{"section_title": "Office of the Secretary and Executive Management (OSEM)", "paragraphs": ["The Administration's $150 million appropriations request for OSEM was $28 million (15.9%) below the FY2020 enacted level, and $9 million (6.4%) above the level of appropriations originally requested for FY2020. The request includes", "$18 million (10.9%) less than enacted level for the Operations and Support appropriation, largely driven by a $15 million (25.9%) reduction in operations and engagement activities. The request included $5 million to pay for increased salary and retirement costs. $10 million less than the enacted level for the Federal Assistance program, as the targeted violence grants funded in this component in FY2020 are funded in the FEMA request for FY2021."], "subsections": []}, {"section_title": "Departmental Management Directorate (MD)", "paragraphs": ["The Administration's $1.76 billion appropriations request for MD was $198 million (12.7%) above the FY2020 enacted level, and $204 million (13.1%) above the level of appropriations originally requested for FY2020. The request includes", "$220 million (18.6%) more than was enacted in FY2020 for the Operations and Support appropriation, $186 million of which is net transfers as a result of DHS transitioning away from using a working capital fund; Also included in this appropriations request is a $13 million increase to cover increased pay and retirement costs. Of the remaining changes, most of the net increase is due to investments in information technology and cybersecurity. $22 million (5.7%) less than was enacted in FY2020 for the Procurement, Construction, and Improvement appropriation. Of the $359 million requested, over $200 million was for investments in DHS headquarters facilities, including St. Elizabeths; Mount Weather; and consolidation of headquarters leases."], "subsections": []}, {"section_title": "Analysis and Operations (A&O)", "paragraphs": ["The Administration's $313 million appropriations request for A&O was $28 million (10.0%) above the FY2020 enacted level, and $36 million (13.0%) above the level of appropriations originally requested for FY2020. Most of the details of the A&O budget request are classified. However, the request included a $6 million increase to cover increases in pay and retirement costs."], "subsections": []}, {"section_title": "Office of Inspector General (OIG)", "paragraphs": ["The Administration's $178 million appropriations request for the OIG was $12 million (6.5%) below the FY2020 enacted level, and $8 million (4.5%) above the level of appropriations originally requested for FY2020. ", "$5 million in additional funding is requested to cover increased pay and retirement costs. The budget request includes a reduction of more than $15 million (16.5%) in OIG audits and investigations. The budget justification notes that the OIG submitted a funding request of $196 million, which the OIG states \"is essential to sustain FY 2020 operations into FY 2021 at the FY 2020 appropriated level and maintain oversight capacity commensurate with the Department's growth in several high-risk areas, including frontline security and infrastructure along the southern border, cybersecurity defenses, major acquisitions and investments, and accelerated hiring of law enforcement personnel.\""], "subsections": []}]}, {"section_title": "Administrative and General Provisions", "paragraphs": [], "subsections": [{"section_title": "Administrative Provisions", "paragraphs": ["Administrative provisions are included at the end of each title of the DHS appropriations bill and generally provide direction to a single component within that title. In the FY2021 budget request, the Administration proposed a number of changes from the FY2020 enacted DHS appropriations measure, including", "Deleting \u00c2\u00a7106, which established the Ombudsman for Immigration Detention.", "Adding a new section related to the proposed transfer of the Secret Service to the Department of the Treasury, which would allow for funds from the DHS OIG to be transferred to the Treasury OIG.", "Deleting \u00c2\u00a7207-\u00c2\u00a7212, which", "barred any new land border crossing fees; required an expenditure plan be submitted to Congress for the CBP Procurement, Construction, and Improvements appropriation before any of that appropriation could be obligated; constrained the use of the CBP Procurement, Construction, and Improvements appropriation, including limiting the types and locations of border barriers that could be constructed and requiring reporting to the appropriations committees on (1) the plans for barrier construction, (2) changes in barrier construction priorities, and (3) consultation with affected local communities, as well as an annual update to risk-based plan for improving border security; barred construction of barriers in certain locations; required statutory authorization for reducing vetting operations at the CBP's National Targeting Center; and directed certain CBP Operations and Support appropriations to humanitarian needs at the border and addressing health, life, and safety issues at Border Patrol facilities. Deleting \u00c2\u00a7216, which barred DHS from detaining or removing a sponsor, potential sponsor or the family member of sponsor or potential sponsor of an unaccompanied alien child on the basis of information from the Department of Health and Human Services, unless a background check reveals certain felony convictions or association with prostitution or child labor violators; Deleting \u00c2\u00a7227, which provided flexibility in allocating Coast Guard Overseas Contingency Operations funding; Deleting \u00c2\u00a7229, which bars the use of funds to conduct or implement an A-76 competition for privatizing activities at the National Vessel Documentation Center; Deleting \u00c2\u00a7231-\u00c2\u00a7232, which were changes to permanent law (and thus no longer required inclusion in the bill) that allowed for continued death gratuity payments for the USCG if appropriated funding was unavailable for obligation; and categorized amounts credited to the Coast Guard Housing Fund as offsetting receipts. Deleting \u00c2\u00a7233-\u00c2\u00a7236, which allowed the Secret Service to obligate funds in advance of reimbursement by other federal agencies for training expenses; barred the Secret Service from protecting agency heads other than the secretary of DHS, unless an agreement is reached with DHS to do so on a reimbursable basis; allowed the Secret Service to reprogram up to $15 million in its Operation and Support appropriation; and allowed flexibility for Secret Service employees on protective missions to pay for travel without regard to limitations on costs, with prior notification to the appropriations committees. Adding \u00c2\u00a7308, which requires a 25% nonfederal contribution for projects funded under the State Homeland Security Grant Program, Urban Area Security Initiative, Public Transportation Security Assistance, Railroad Security Assistance, and Over-the-Road Bus Security Assistance programs\u00e2\u0080\u0094currently there is no such cost share; and Adding \u00c2\u00a7309, which would allow a transfer 1% of funding provided for the State Homeland Security Grant Program and Urban Area Security Initiative to FEMA Operations and Support for evaluations of the effectiveness of those programs."], "subsections": []}, {"section_title": "General Provisions", "paragraphs": ["General provisions are included in the last title of the DHS appropriations bill and generally provide direction to the entire department. They include rescissions or additional budget authority in some cases. In the FY2021 budget request, the Administration proposed relatively few substantive changes to the general provisions enacted in the FY2020 bill. They sought to:", "Remove \u00c2\u00a7530, which provided $41 million for reimbursement of extraordinary law enforcement costs for protecting the residence of the President; Remove \u00c2\u00a7532, which required that DHS allow Members of Congress and their designated staff access to DHS facilities housing aliens for oversight purposes; and Remove \u00c2\u00a7537-\u00c2\u00a7540, which rescinded prior year appropriations from various accounts."], "subsections": [{"section_title": "Appendix.", "paragraphs": [], "subsections": []}]}]}]}]}}
{"id": "R43287", "title": "Columbia River Treaty Review", "released_date": "2019-05-21T00:00:00", "summary": ["The Columbia River Treaty (CRT, or Treaty) is an international agreement between the United States and Canada for the cooperative development and operation of the water resources of the Columbia River Basin to provide for flood control and power. The Treaty was the result of more than 20 years of negotiations between the two countries and was ratified in 1961. Implementation began in 1964.", "The Treaty provided for the construction and operation of three dams in Canada and one dam in the United States whose reservoir extends into Canada. Together, these dams more than doubled the amount of reservoir storage available in the basin and provided significant flood protection benefits. In exchange for these benefits, the United States agreed to provide Canada with lump-sum cash payments and a portion of downstream hydropower benefits that are attributable to Canadian operations under the CRT, known as the \"Canadian Entitlement.\" Some have estimated the Canadian Entitlement to be worth as much as $335 million annually.", "The CRT has no specific end date, and most of its provisions would continue indefinitely without action by the United States or Canada. Beginning in September 2024, either nation can terminate most provisions of the Treaty with at least 10 years' written notice (i.e., starting as early as 2014). To date, neither country has given notice of termination, but both countries have indicated a preliminary interest in modification of the treaty. If the CRT is not terminated or modified, most of its provisions would continue, with the exception of its flood control provisions (which are scheduled to transition automatically to \"called-upon\" operations at that time, meaning the United States would request and compensate Canada for flood control operations as necessary).", "Perspectives on the CRT and its review vary. Some believe the Treaty should include stronger provisions related to tribal resources and flows for fisheries that are not in the Treaty; others disagree and focus on the perceived need to adjust the Canadian Entitlement to reflect actual hydropower benefits. The U.S. Army Corps of Engineers and the Bonneville Power Administration, in their joint role as the U.S. Entity overseeing the Treaty, undertook a review of the CRT from 2009 to 2013. Based on studies and stakeholder input, they provided a Regional Recommendation to the State Department in December 2013. They recommended continuing the Treaty with certain modifications, including rebalancing the CRT's hydropower provisions, further delineating called-upon flood control operations after 2024, and incorporating into the Treaty flows to benefit Columbia River fisheries. For its part, the Canadian Entity (the Province of British Columbia) released in March 2013 a recommendation to continue the CRT with modifications \"within the Treaty framework.\" It disputed several assumptions in the U.S. Entity's review process.", "Following a two-year federal interagency review of the U.S. Regional Recommendation, the U.S. State Department finalized its negotiating parameters and authorized talks with Canada in October 2016. Between May 2018 and May 2019, U.S. and Canadian negotiating teams held six rounds of negotiations. Additional negotiations are expected in 2019.", "If the executive branch comes to an agreement regarding modification of the CRT, the Senate may be asked to weigh in on future versions of the Treaty pursuant to its constitutional role to provide advice and consent. Both houses have also weighed in on CRT-related activities through their oversight roles."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["The Columbia River Treaty (CRT, or Treaty), signed in 1961, is an international agreement between the United States and Canada for the cooperative development and operation of the water resources of the Columbia River Basin for the benefit of flood control and power. Precipitated by several flooding events in the basin (including a major flood in the Northwest in 1948), the CRT was the result of more than 20 years of negotiations seeking a joint resolution to address flooding and plan for development of the basin's water resources. The Treaty provided for 15.5 million acre-feet of additional storage in Canada through the construction of four dams (three in Canada, one in the United States). This storage, along with agreed-upon operating plans, provides flood control, hydropower, and other downstream benefits. In exchange for these benefits, the United States agreed to provide Canada with lump-sum cash payments and a portion of hydropower benefits, known as the \"Canadian Entitlement.\"", "Implementation of the CRT began in 1964. The Treaty has no specific end date, and most of its provisions would continue indefinitely without action by the U.S. or Canadian Entities. However, beginning in September 2024, either nation can terminate most provisions of the Treaty with a minimum of 10 years' written notice (i.e., notice could have been provided as early as 2014). The U.S. Army Corps of Engineers (Corps) and the Bonneville Power Administration (BPA), in their designated role as the \"U.S. Entity,\" undertook a review of the Treaty beginning in 2011. Based on studies and additional stakeholder input, the U.S. Entity made its recommendation to the U.S. Department of State in December 2013. If the Treaty is not terminated or modified, most of its current provisions would continue, with the notable exception of flood control operations, which are scheduled to end in 2024 and transition to \"called-upon\" operations.", "Perspectives on the CRT and its review vary. Some believe that the Treaty should continue but be altered to include, for example, guarantees related to tribal resources and fisheries flows that were not included in the original Treaty. Others believe that the Canadian Entitlement should be adjusted to more equitably share actual hydropower benefits, or even be eliminated entirely. For its part, Canada has stated that without the Canadian Entitlement (or with alterations that would decrease its share of these revenues), it sees no reason for the Treaty to continue. The final Regional Recommendation to the Department of State, coordinated by the U.S. Entity, was to continue the Treaty post-2024, but with modifications. The State Department has since finalized its proposed negotiating parameters, although they are not available to the public. The Canadian recommendation, finalized in March 2013, also favored continuing the treaty, but with modifications \"within the Treaty framework,\" some of which were considerably different than those recommended by the United States.", "The executive branch, through the State Department, is responsible for negotiations related to the CRT. However, the Senate, through its constitutional role to provide advice and consent, has the power to approve, by a two-thirds vote, treaties negotiated by the executive branch. Changes to the CRT may or may not trigger such a vote; in any case, the Senate may choose to review any changes to the CRT. In addition, both houses of Congress may choose to weigh in on Treaty review activities by the U.S. Entity through their respective oversight powers.", "This report provides a brief overview of the Columbia River Treaty review. It includes background on the history of the basin and consideration of the treaty, as well as a brief summary of studies and analyses of the Columbia River Treaty review process to date. "], "subsections": []}, {"section_title": "History and Background", "paragraphs": ["The Columbia River is the predominant river in the Pacific Northwest and is one of the largest in the United States in terms of volume flowing to the ocean. The Columbia River Basin receives water that drains from approximately 259,500 square miles in the northwestern United States and southwestern Canada, including parts of British Columbia in Canada, and four U.S. states: Montana, Idaho, Oregon, and Washington. The basin is unique among large river basins in the United States because of its high annual runoff, limited amount of storage (in the U.S. portion of the basin), and extreme variation in flow levels. The basin has the second-largest runoff in the United States in terms of average flows (275,000 cubic feet per second), and approximately 60% of this runoff occurs in May, June, and July. While only about 15% of the river basin's surface area is in Canada, the Canadian portion of the basin accounts for a considerably larger share of the basin's average annual runoff volume. ", "The Columbia River is the largest hydropower-producing river system in the United States. Federal development of the river's hydropower capacity dates to 1932, when the federal government initiated construction of dams of the Columbia River and its tributaries. In total, 31 federal dams within the Columbia River Basin are owned and operated by the U.S. Army Corps of Engineers (Corps) and the U.S. Bureau of Reclamation (part of the Department of the Interior), and additional dams are owned by nonfederal entities. Power from federal dams on the Columbia River and its tributaries (collectively known as the Federal Columbia River Power System, FCRPS) is marketed by the Bonneville Power Administration (BPA), part of the Department of Energy. Other than the largest of these facilities, Grand Coulee (which has some storage capacity), most of these facilities on the main stem of the river in the United States have limited reservoir storage and are managed as \"run of the river\" for hydropower, flood control, and navigation. Figure 1 , below, provides an overview of the basin, including dam ownership. Figure 2 shows the relative storage capacity of these dams.", "The basin is also important habitat for a number of fish species. Economically important species in the region include steelhead trout; chinook, coho, chum, and sockeye salmon; and other species. These fish are important to commercial and sport anglers as well as Native American tribes in the region. The basin also provides habitat for several threatened and endangered species listed under the Endangered Species Act (ESA, 16 U.S.C. \u00a7\u00a71531-1543); requirements under this law are an important factor in the operation of the FCRPS. ", "Other major uses of the basin's waters include navigation, irrigation, recreation, and water supply. Four federal dams on the river's mainstem have navigation locks which allow for barge traffic to transport bulk commodities that are important to regional and national economies. Due to this infrastructure, the Columbia River is navigable up to 465 miles upstream from the Pacific Ocean. Six percent of the basin's water is diverted for irrigated agriculture, and is particularly important in eastern Washington, northeastern Oregon, and southern Idaho. Basin waters are also diverted for other water supply purposes, and the rivers and reservoirs of the basin are important for recreational users. All of these users have an interest in management of basin water supplies. ", "The negotiation and ratification of the CRT were precipitated by several events in the basin. Most notably, a major flood event in the Northwest in 1948, the Vanport flood, caused significant damage throughout the basin and served as the impetus for negotiations between the United States and Canada, including studies by the International Joint Commission (IJC). Initially, following the flood, the United States had proposed in 1951 to build Libby Dam in Montana (which would flood 42 miles into Canada). Canada was opposed to this solution, and as a response proposed to divert as much as 15.5 million acre feet from the Columbia River for its own purposes. Based on a number of technical studies, the IJC recommended a compromise, which included development of upriver storage in Canada to help regulate flows on the Columbia River, including those for flood control and hydropower generation. ", "The CRT was signed in 1961 but was not fully ratified by both countries (and therefore did not go into effect) until 1964. Implementation of the Treaty occurs through the U.S. Entity (BPA and the Northwestern Division of the Corps, jointly) and the Canadian Entity (the British Columbia Hydro and Power Authority, or BC Hydro). The Treaty provided for the construction of 15.5 million acre-feet (Maf) of additional storage in Canada through the construction of three dams: Duncan (completed in 1968), Hugh Keenleyside, or Arrow (completed in 1969), and Mica (completed in 1973). Construction of Libby Dam in Montana, whose reservoir backs 42 miles into Canada, was completed in 1973. Together, the four dams more than doubled the amount of reservoir storage available in the basin before construction began, providing for significant new flood protection and power benefits throughout the basin (see Figure 2 ). The CRT also required that the United States and Canada prepare an \"Assured Operating Plan\" (to meet flood control and power objectives) for the operation of Canadian storage six years in advance of each operating year. Along with \"Detailed Operating Plans,\" which may also be developed to produce more advantageous results for both U.S. and Canadian operating entities, these plans govern project operations under the Treaty. ", "Under the CRT, the United States gained operational benefits in the form of flexible storage and reliable operations in Canada that provide for flood control and hydropower generation. In exchange, Canada (through the Canadian Entity) receives lump-sum payments from the United States for flood control benefits through 2024, as well as a portion of annual hydropower benefits from the operation of Canadian Treaty storage. In exchange for the assured use of 8.45 Maf annually of Canadian storage, the United States paid $64.4 million to Canada for flood control benefits as the three Canadian dams became operational. Under the CRT, Canada is also entitled to half of the estimated increase in downstream hydropower generated at U.S. dams. Canada initially sold this electricity (known as the \"Canadian Entitlement\") to a consortium of U.S. utilities for $254 million over a 30-year term (1973-2003). Currently, the United States delivers the Canadian Entitlement directly to Canada through BPA's Northern Intertie. The value of the Canadian Entitlement has been estimated by the U.S. Entity to be worth between $229 million and $335 million annually, depending on a number of assumptions.", "Several notable changes to Columbia River operations, since ratification of the CRT, factor into current negotiations. Most notably, declining populations of salmon and steelhead in the Columbia and Snake Rivers led to listings under the Endangered Species Act (ESA, 16 U.S.C. \u00a7\u00a71531-1543) beginning in 1991. These listings have resulted in steps to improve salmon and steelhead habitat in the United States, including operational changes (e.g., augmented spring and summer flows) and mitigation actions (e.g., construction of fish passage facilities). For more information on these listings and related federal actions, see CRS Report R40169, Endangered Species Act Litigation Regarding Columbia Basin Salmon and Steelhead , by Stephen P. Mulligan and Harold F. Upton."], "subsections": []}, {"section_title": "Columbia River Treaty Review", "paragraphs": ["The CRT has no specific end date, and most of its provisions, except those related to flood control operations, would continue indefinitely without action by the United States or Canada. However, beginning in September 2024, either nation can terminate most provisions of the Treaty with a minimum of 10 years' written notice (i.e., notice could have been given as early as 2014). The Corps and the BPA, in their role as the U.S. Entity, undertook a review of the Treaty and delivered a final recommendation to the Department of State in December 2013. ", "If the Treaty is not terminated or modified, most of its provisions would continue, with the notable exception of flood control operations. Assured annual flood control operations under the Treaty are scheduled to end in 2024, independent of a decision on Treaty termination. Flood control provided by the Canadian projects is expected to transition to \"called-upon\" operations at this time. Under called-upon operations, the United States would be allowed to request alterations to Canadian operations as necessary for flood control, and Canada would be responsible for making these changes. In exchange, the United States would pay for operating costs and economic losses in Canada due to the changed operation."], "subsections": [{"section_title": "Technical Studies", "paragraphs": ["As noted above, the U.S. Entity undertook a series of studies and reports to inform the parties who are reviewing the CRT (this process is also known as \"Treaty review\"). The U.S. Entity undertook its studies with significant input from a sovereign review team (SRT), a group of regional representatives with whom the U.S. Entity has worked to develop its recommendation on the future of the Treaty. The SRT is made up of representatives of the 4 Northwest states, 15 tribal governments, and 11 federal agencies. In collaboration with the SRT, the U.S. Entity has also conducted stakeholder outreach so as to provide for additional input from other interests in developing a recommendation.", "The U.S. Entity conducted its technical studies in three iterations. Iteration 1 focused on physical effects of system operations (i.e., effects on hydropower production, etc., not the effects on ecology), and modeled both current and future scenarios. Iterations 2 and 3 included additional analysis of various scenarios, such as modeling effects on fish and wildlife habitat and species. Since Treaty review began, the U.S. Entity has also produced a number of summary reports and fact sheets on Treaty review and potential future scenarios."], "subsections": []}, {"section_title": "Treaty Review Regional Recommendations", "paragraphs": ["On June 27, 2013, the U.S. Entity shared an initial working draft of its recommendation with the Department of State for comments. On September 20, 2013, the Entity released its Draft Regional Recommendation for additional review and comment through October 25, 2013. The final Regional Recommendation was delivered to the Department of State in December 13, 2013. The recommendation, which reflects U.S. Entity study results as well as stakeholder comments, is to modify the Treaty post-2024. The executive branch, through the State Department, will make the final determination on those changes to the Treaty that are in the national interest and will conduct any negotiations with Canada related to the future of the CRT. This process may involve additional coordination with the U.S. Entity and regional stakeholders.", "In its Regional Recommendation, the U.S. Entity notes that the Treaty provides benefits to both countries, but recommends that it be modernized so as to \"[ensure] a more resilient and healthy ecosystem-based function throughout the Columbia River Basin while maintaining an acceptable level of flood risk and preserving reliable and economic hydropower benefits.\" The recommendation included nine \"general principles\" for future negotiations, as well as several specific recommendations related to alterations of the existing Treaty. ", "Some of the notable recommendations for modifications to the Treaty include providing stream flows to promote populations of anadromous and resident fish, including expansion of present CRT agreements to further augment flows for spring and summer (with these flows coming from reduced fall and winter drafts\u2014also known as drawdowns\u2014in Canadian reservoirs) and development of a joint program for fish passage. Other recommendations include minimizing adverse effects on tribal resources (and addressing them under the FCRPS Cultural Resources Program); incorporating a dry-year strategy; rebalancing the power benefits between the two countries; and implementing post-2024 CRT flood risk management, including effective use and called-upon flood storage, through a coordinated operation plan and definition of \"reasonable compensation\" for Canada. Finally, the recommendation also suggests that, following negotiations with Canada over the CRT, the Administration should review membership of the U.S. Entity. "], "subsections": []}, {"section_title": "Status of Treaty Negotiations", "paragraphs": ["On October 7, 2016, the State Department finalized U.S. negotiating parameters for the CRT and formally authorized talks with Canada through the State Department Circular 175 Procedure. The document, which is not available to the public, was the culmination of a two-year interagency review process, which itself built on the Regional Recommendation for Treaty modification. After finalizing its negotiating parameters, the United States requested engagement with the Canadian Foreign Ministry. ", "Negotiations between the U.S. and Canadian negotiating teams formally began on May 29-30, 2018. Through May 2019, six \"rounds\" of negotiations had been held, with the next round scheduled for June 19-20, 2019, in Washington, DC. According to the State Department, the U.S. negotiating position is being guided by the U.S. Entity's Regional Recommendation and includes participation on the negotiating team by the Department of State, BPA, the Corps, the Department of the Interior, and the National Oceanic and Atmospheric Administration. The State Department and the Province of British Columbia have also convened town halls and community meetings to discuss the status of negotiations with the public."], "subsections": []}]}, {"section_title": "Perspectives on Columbia River Treaty Review", "paragraphs": ["Various perspectives on the Columbia River Treaty and the review process have been represented in studies, meetings, and other public forums that have been conducted since Treaty review began. The Regional Recommendation represents the views of the U.S. Entity and the SRT, as well as many of the stakeholders who have weighed in through meetings and the public comment process. However, the Regional Recommendation does not represent the final U.S. approach to Treaty review. The executive branch, through the State Department, will handle those negotiations. ", "To date, the primary Canadian perspectives provided on Treaty review have been centrally coordinated by the British Columbia (BC) provincial government, and BC announced its own decision on March 13, 2014. BC recommends continuing the Treaty, but seeking modifications within the existing framework. A summary of the perspectives of the U.S. Entity, U.S. stakeholders, and BC is provided below. "], "subsections": [{"section_title": "U.S. Entity and Stakeholders", "paragraphs": ["To date, studies by the U.S. Entity have generally concluded that although the CRT has been mutually beneficial to the United States and Canada, not all benefits have been shared equitably, and the Treaty should be \"modernized.\" Studies by the U.S. Entity concluded that under a scenario where the Treaty continues, both governments would continue to benefit from assured operating plans that provide for predictable power and flood control benefits, among other things. These same studies generally found that without the CRT, Canada would be able to operate its dams for its own benefit (except for called-upon flood storage, which would still be an obligation regardless of termination). This could make U.S. hydropower generation more difficult to control and predict, and could also result in species impacts if advantageous flows are not agreed upon ahead of time. Despite this unpredictability, the United States would gain some advantages from Treaty termination. Studies by the U.S. Entity have concluded that a relatively large financial benefit for the United States would likely result from terminating the Treaty (and eliminating the Canadian Entitlement), while Canada would likely see reduced financial benefits from hydropower generation under a scenario that abolishes the Canadian Entitlement. However, rather than recommend termination, the U.S. Entity has recommended modification of the Treaty, including a \"rebalanced\" Canadian Entitlement and assurances for flows to improve ecosystems, among other things.", "While most stakeholders acknowledge benefits of the CRT, several groups and individuals submitted comments criticizing the Regional Recommendation and/or its earlier drafts. Based on these comments, major areas of debate can generally be divided into three categories: how to handle the Canadian Entitlement, how (or whether) to incorporate flows to benefit fisheries into the current coequal Treaty goals of hydropower and flood control, and specifics related to future called-upon flood management operations."], "subsections": [{"section_title": "Status of the Canadian Entitlement", "paragraphs": ["The status of the Canadian Entitlement to one-half of the hydropower contributed by its dam operations has been a matter of contention, especially among power interests. The final Regional Recommendation calls for \"rebalancing\" of the Canadian Entitlement, without specifics as to what extent it should be rebalanced. While power interests have generally stopped short of calling for termination of the CRT, they criticized the lack of specifics in earlier drafts of the recommendation, and emphasized their view that the single biggest shortcoming of the CRT is that hydropower benefits have not been shared equally. In their public comments, many power interests noted that the Canadian Entitlement should be revised to provide a more equitable methodology for dividing hydropower generation benefits between the countries. Some of these groups believe that because more than half of the actual generation under Treaty-related operations is being returned to British Columbia, the current Canadian Entitlement deprives U.S. power customers of low-cost power, effectively increasing electricity rates in the Northwest. Some suggest that the status of the Canadian Entitlement, rather than ecosystem flows (discussed below), should be the focus of Treaty modernization."], "subsections": []}, {"section_title": "Flows to Improve Ecosystems as a New Treaty Purpose", "paragraphs": ["Perhaps the most controversial aspect of the Treaty review stems from the fact that the 1964 Treaty did not include fisheries or ecosystem flows along with the Treaty's other primary purposes of flood control and hydropower. Subsequent to the Treaty's ratification, Canada and the United States agreed under the Treaty's Detailed Operating Plans to maintain an additional 1 million acre-feet of storage at Canadian dams for flows to improve fisheries. As noted above, the U.S. Entity has recommended that a new Treaty take into account ecosystem flows and include as part of the U.S. Entity a federal fisheries representative. ", "While tribal and environmental groups have generally agreed that provisions for ecosystem-based functions should be incorporated into the agreement, some also have argued that the proposed recommendations for Treaty modifications did not go far enough in providing for these purposes. They have called for the ecosystem function to be explicitly added as a third purpose of the Treaty, to be treated coequally with hydropower production and flood risk management. Interests have argued that the Regional Recommendation's approach (which mentions the ecosystem function but does not call for it to be treated as a coequal purpose) would effectively subordinate these changes to the other two purposes. They acknowledge that adding the ecosystem function as a coequal purpose would likely entail operational changes on the Columbia River in both countries beyond those currently provided for under the ESA, for example. One of the primary goals of these changes would be augmented flows for fisheries in spring and summer months and during water shortages.", "Conversely, some power interests (including some BPA customers) are concerned with the approach in the Regional Recommendation for the opposite reason: they think that the recommendation embodies more accommodations for ecosystem flows than should be provided. Thus, they oppose efforts to add ecosystem purposes as a stated coequal purpose of the Treaty. In the comment process, some stakeholders noted that ecosystem flows are already prioritized in both countries through major operational changes that have been required since the Treaty was ratified. In addition to recent increases in storage for fisheries flows, they point to the listings of salmon and steelhead on the Columbia and Snake Rivers under the ESA, along with related operational changes and mitigation, as having benefited fisheries. They also note that BPA's power customers already make significant contributions to mitigation through power rates, which have been estimated by some to provide more than $250 million per year to improve fish and wildlife flows. Finally, some have expressed concern with potentially inherent contradictions between the maintenance of existing hydropower operations under the Treaty and expanded spring and summer flows to benefit fisheries. They believe that further operational changes of this type will be damaging to the Northwest economy and to ratepayers."], "subsections": []}, {"section_title": "Uncertainties Related to \"Called-Upon\" Flood Control", "paragraphs": ["A final area of concern in the Treaty review process has been the future approach to \"called-upon\" flood control operations. The Regional Recommendation suggests that modifications to the CRT should include a coordinated operation plan and definition of \"reasonable compensation\" for Canada for called-upon flood control. Details related to these operations, in particular who will pay Canada for U.S. benefits and under what circumstances these operations would be required, are noted to be necessary by both sides. These details will need to be defined as part of the ongoing negotiations (either in modifications to the Treaty or in future operating plans). During the Treaty review process, many regional entities (including states, power ratepayers, and other regional stakeholders) have focused on the recommendation's uncertainty regarding payments for these benefits. They have argued that the federal government (rather than ratepayers or other regional beneficiaries) should be responsible for paying these costs. For its part, the U.S. Entity has not taken a formal position on who should pay for these benefits, and has instead focused on estimating flood risk and potential operational needs. These estimates have been a matter of disagreement with Canada (see below section, \" Canadian Perspectives on CRT Review \")."], "subsections": []}]}, {"section_title": "Canadian Perspectives on CRT Review", "paragraphs": ["Canada, represented by the Canadian Department of Foreign Affairs, Trade, and Development, has the constitutional authority to negotiate international treaties. However the Canadian Entity, the Province of British Columbia (BC), has been the primary entity engaged in Treaty review to date. BC initiated studies to synthesize its perspective on the Treaty beginning in 2011. These studies resulted in a decision, finalized in March 2013, to continue the Treaty while \"seeking improvements within the existing Treaty framework.\" The principles outlined by BC include, among other things, specific requirements and expectations for called-upon flood control operations and a formal statement of the province's belief that the Canadian Entitlement does not account for the full \"range\" of benefits accruing to the United States and the impacts on British Columbia. The principles also acknowledge that the potential for ecosystem-based improvements \"inside and outside the treaty\" is an important consideration for the Treaty, but contend that management of salmon populations (including restoration of habitat) is not a Treaty issue per se. Some of the primary differences between the two countries are explained further below. ", "Over the course of its review, British Columbia documented its disagreement with several of the review findings by the U.S. Entity. It argued that, in contrast to the claims of many U.S. interests, the United States actually benefits from the CRT more than Canada. In particular, Canada disagreed with some of the U.S. Entity findings and recommendations pertaining to flood control, hydropower, and ecosystem flows. For instance, Canada noted its disagreement with the U.S. Entity's previous findings related to flood control benefits and expected operations. It argued that the United States has saved billions of dollars as a result of Canadian storage over the life of the Treaty, and that an agreed-upon operational plan for flood control storage similar to the current approach would be preferable to both entities in lieu of the scheduled transition to called-upon flood control operations in 2024. In particular, Canada has disagreed with the U.S. Entity's projections of the need and cost for called-upon flood control after 2024, including the expected runoff \"trigger\" for called-upon Canadian flood storage. In essence, Canada has argued that smaller U.S. reservoirs which are not currently used for flood control are actually able to provide flood storage, and would be responsible for doing so under the Treaty's requirement that \"effective use\" be made of U.S. storage before called-upon storage is required (generally the United States has not assumed this would be the case). Canada argues that these new operations would result in forgone benefits to the United States associated with hydropower generation and fisheries, among other things, and thus called-upon operations may not be as cost-effective as some in the United States have projected. The Canadian Entity estimates that, for power production alone, called-upon operations would result in $40 million to $150 million per year in lost benefits to the United States. In contrast, using its own assumptions, the U.S. Entity has previously estimated costs of between $4 million and $34 million per request for called-upon flood control, but has not projected the same level of losses to U.S. generating capacity. ", "Canada has also argued that the Canadian Entitlement is more equitable than previous analysis by the U.S. Entity suggested, and thus that it should remain in place. In its report on U.S. benefits, the Canadian Entity noted that it would see no reason for the Treaty to continue or be renegotiated without the Canadian Entitlement. Among other things, Canada has argued that the reliability of operations provided for under the Treaty allows for generation that is worth more to the United States than the Canadian Entitlement. The Canadian Entity also noted that if the Treaty were terminated, the lack of reliable expectations for Canadian flow would constrain U.S. hydropower benefits. As previously noted, the U.S. Entity has projected that under a Treaty termination scenario, the United States would gain significant revenue while Canadian net revenues would be expected to decrease, largely due to the termination of the Canadian Entitlement. "], "subsections": []}]}, {"section_title": "The Role of Congress in Treaty Review", "paragraphs": ["The President, through the National Security Council, determines the negotiating position on the CRT, and the State Department is responsible for conducting negotiations related to the Treaty. However, Congress is also involved in this process. The Constitution gives the Senate the power to approve, by a two-thirds vote, treaties negotiated by the executive branch. The Senate does not ratify treaties; instead it takes up a resolution of ratification, by which the Senate may formally provide its advice and consent on the ratification process. The Senate is not required to provide an up or down vote on a resolution of ratification, nor are treaties required to be resubmitted after each Congress. ", "In the case of the CRT, as the Treaty has been previously negotiated and ratified, the Senate would take up a resolution of ratification if the United States and Canada agree to Treaty modifications and the executive branch submits the modification to the Senate for review (if the Treaty is continued without modification or terminated, there would be no advice and consent role unless there was a new Treaty that needs to be ratified). ", "Both the House and the Senate have also weighed in on Treaty review in their oversight capacities. Additionally, the Northwest delegation (including all 26 lawmakers representing Idaho, Montana, Oregon, and Washington) sent letters to President Obama in 2014 and 2015 expressing concerns with the perceived slow pace of the Interagency Policy Committee review process. In April 2015, lawmakers expressed a collective desire to finalize an Administration position and begin negotiations with Canada in 2015. On June 21, 2017, a bipartisan group of seven House Members from Washington and Oregon wrote to President Trump requesting prompt commencement of CRT negotiations."], "subsections": []}]}}
{"id": "R45745", "title": "Transatlantic Relations: U.S. Interests and Key Issues", "released_date": "2019-05-31T00:00:00", "summary": ["For the past 70 years, the United States has been instrumental in leading and promoting a strong U.S.-European partnership. Often termed the transatlantic relationship, this partnership has been grounded in the U.S.-led post-World War II order based on alliances with like-minded democratic countries and a shared U.S.-European commitment to free markets and an open international trading system. Transatlantic relations encompass the North Atlantic Treaty Organization (NATO), the European Union (EU), close U.S. bilateral ties with most countries in Western and Central Europe, and a massive, interdependent trade and investment partnership. Despite periodic U.S.-European tensions, successive U.S. Administrations and many Members of Congress have supported the broad transatlantic relationship, viewing it as enhancing U.S. security and stability and magnifying U.S. global influence and financial clout.", "Transatlantic Relations and the Trump Administration", "The transatlantic relationship currently faces significant challenges. President Trump and some members of his Administration have questioned the strategic value and utility of NATO to the United States, and they have expressed considerable skepticism about the fundamental worth of the EU and the multilateral trading system. President Trump repeatedly has voiced concern that the United States bears an undue share of the transatlantic security burden and that EU trade policies are unfair to U.S. workers and businesses. U.S.-European policy divisions have emerged on a wide range of regional and global issues, from certain aspects of relations with Russia and China, to policies on Iran, Syria, arms control, and climate change, among others. The United Kingdom's pending departure from the EU (\"Brexit\") also could have implications for U.S. security and economic interests in Europe.", "The Trump Administration asserts that its policies toward Europe seek to bolster the transatlantic relationship by ensuring that European allies and friends are equipped to work with the United States in confronting the challenges posed by an increasingly competitive world. Administration officials maintain that the U.S. commitment to NATO and European security remains steadfast; President Trump has backed new NATO initiatives to deter Russian aggression and increased U.S. troop deployments in Europe. The Administration also contends that it is committed to working with the EU to resolve trade and tariff disputes, as signaled by its intention to launch new U.S.-EU trade negotiations. Supporters credit President Trump's approach toward Europe with strengthening NATO and compelling the EU to address U.S. trade concerns.", "Critics argue that the Administration's policies are endangering decades of U.S.-European cooperation that have advanced key U.S. geostrategic and economic interests. Some analysts suggest that current U.S.-European divisions are detrimental to transatlantic cohesion and represent a win for potential adversaries such as Russia and China. Many European leaders worry about potential U.S. global disengagement, and some argue that Europe must be better prepared to address both regional and international challenges on its own.", "Congressional Interests", "The implications of Trump Administration policies toward Europe and the extent to which the transatlantic relationship contributes to promoting U.S. security and prosperity may be of interest to the 116th Congress. Broad bipartisan support exists in Congress for NATO, and many Members of Congress view the EU as an important U.S. partner, especially given extensive U.S.-EU trade and investment ties. At the same time, some Members have long advocated for greater European burdensharing in NATO, or may oppose European or EU policies on certain foreign policy or trade issues. Areas for potential congressional oversight include the future U.S. role in NATO, as well as prospects for U.S.-European cooperation on common challenges such as managing a resurgent Russia and an increasingly competitive China. Based on its constitutional role over tariffs and foreign commerce, Congress has a direct interest in monitoring proposed new U.S.-EU trade agreement negotiations. In addition, Congress may consider how the Administration's trade and tariff policies could affect the U.S.-EU economic relationship. Also see CRS Report R45652, Assessing NATO's Value, by Paul Belkin; CRS Report R44249, The European Union: Ongoing Challenges and Future Prospects, by Kristin Archick; and CRS In Focus IF11209, Proposed U.S.-EU Trade Agreement Negotiations, by Shayerah Ilias Akhtar, Andres B. Schwarzenberg, and Ren\u00e9e Johnson."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "A Relationship in Flux?", "paragraphs": [], "subsections": [{"section_title": "Long-Standing U.S. and Congressional Engagement", "paragraphs": ["Since the end of the Second World War, successive U.S. Administrations and many Members of Congress have supported a close U.S. partnership with Europe. Often termed the transatlantic relationship , this partnership encompasses the North Atlantic Treaty Organization (NATO), of which the United States is a founding member, and extensive political and economic ties with the European Union (EU) and most countries in Western and Central Europe. The United States has been instrumental in building and leading the transatlantic relationship, viewing it as a key pillar of U.S. national security and economic policy for the past 70 years.", "The United States spearheaded the formation of NATO in 1949 to foster transatlantic security and collective defense in Europe. Since the early1950s, U.S. policymakers also supported the European integration project that would evolve into the modern-day EU as a way to promote political reconciliation (especially between France and Germany), encourage economic recovery, and entrench democratic systems and free markets. During the Cold War, U.S. officials regarded both NATO and the European integration project as central to deterring the Soviet threat. After the Cold War, U.S. support was crucial to NATO and EU enlargement. Today, European membership in the two organizations largely overlaps; 22 countries currently belong to both (see Figure 1 ). The United States and Europe also have cooperated in establishing and sustaining an open, rules-based international trading system that underpins the global economic order and contributes to U.S. and European wealth and prosperity.", "Congress has been actively engaged in oversight of U.S. policy toward Europe and has played a key role in shaping the transatlantic partnership. After the end of the Cold War, many Members of Congress encouraged NATO's evolution\u2014arguing that to remain relevant, NATO must be prepared to confront security threats outside of alliance territory\u2014and were strong advocates for both NATO and EU enlargement to the former communist countries of Central and Eastern Europe. The U.S. and European economies are deeply intertwined through trade and investment linkages that support jobs on both sides of the Atlantic. Many Members of Congress thus have a keen interest in monitoring efforts to deepen transatlantic economic ties, such as through potential further trade liberalization, regulatory cooperation, and addressing trade frictions. At the same time, various Members have expressed concern for years about European allies' military dependence on the United States and some Members may oppose European policies on certain foreign policy or economic issues."], "subsections": []}, {"section_title": "The Trump Administration and Heightened Tensions", "paragraphs": ["Over the decades, U.S-European relations have experienced numerous ups and downs and have been tested by periods of political tension, various trade disputes, and changes in the security landscape. However, no U.S. president has questioned the fundamental tenets of the transatlantic security and economic architecture to the same extent as President Trump. Many European policymakers and analysts are critical of President Trump's reported transactional view of the NATO alliance, what some view as his singular focus on European defense spending as the measure of the alliance's worth, and his seeming hostility toward the EU, whose trade practices he has argued are unfair and detrimental to U.S. economic interests. Many in Europe also are concerned by what they view as protectionist U.S. trade policies, including the imposition of steel and aluminum tariffs and potential auto tariffs. U.S.-European policy divisions have emerged on a range of other issues as well, including arms control and nonproliferation, China, Iran, Syria, the Middle East peace process, climate change, and the role of international organizations such as the United Nations and the World Trade Organization (WTO).", "The Trump Administration contends that its policies toward Europe seek to shore up and preserve a strong transatlantic partnership to better address common challenges in what it views as an increasingly competitive world. The Administration asserts that it is committed to NATO and its collective defense clause (Article 5), has backed NATO efforts to deter Russia, and is seeking to address barriers to trade with the EU through proposed new trade negotiations. Supporters argue that President Trump's approach has led to increased European defense spending and greater European willingness to address inequities in U.S-European trade relations.", "Nevertheless, U.S.-European relations face significant strain. European policymakers continue to struggle with what they view as a lack of consistency in U.S. policies, especially given conflicting Administration statements about NATO and the EU. Some in Europe appear increasingly anxious about whether the United States will remain a credible and reliable partner."], "subsections": []}, {"section_title": "A Challenging Political Context and Shifting Policy Priorities", "paragraphs": ["European concerns about potential shifts in U.S. foreign, security, and trade policies come amid a range of other difficult issues confronting Europe. These include the United Kingdom's pending departure from the EU (known as \"Brexit\"), increased support for populist, anti-establishment political parties, rule of law concerns in several countries (including Poland, Hungary, and Romania), sluggish growth and persistently high unemployment in key European economies (such as France, Italy, and Spain), ongoing pressures related to migration, a continued terrorism threat, a resurgent Russia, and a competitive China. The EU in particular is struggling with questions about its future shape and role on the world stage. In light of Europe's various internal preoccupations, some in the United States harbor concerns about the ability of European allies in NATO, or the EU as a whole, to serve as robust and effective partners for the United States in managing common international and regional challenges.", "Meanwhile, the United States faces deep divisions on numerous political, social, and economic issues, as well as anti-establishment sentiments and concerns about globalization and immigration among some segments of the U.S. public. A number of analysts suggest that President Trump's \"America First\" foreign policy signals a U.S. shift away from international cooperation and toward a more isolationist United States. Experts point out that until the 20 th century, U.S. foreign policy was based largely on the imperative of staying out of foreign entanglements. Some contend that \"the trend toward an America First approach has been growing since the end of the Cold War\" and that the post-World War II \"consensus about America's role as upholder of global security has collapsed\" among both Democrats and Republicans. Such possible shifts could have lasting implications for transatlantic relations and the post-World War II U.S.-led global order.", "In addition, both the United States and Europe face generational and demographic changes. For younger Americans and Europeans, World War II and the Cold War are far in the past. Some observers posit that younger policymakers and publics may not share the same conviction as previous generations about the need for a close and stable transatlantic relationship."], "subsections": []}]}, {"section_title": "The Transatlantic Partnership and U.S. Interests4", "paragraphs": ["Despite periodic difficulties over the years in the transatlantic relationship, U.S. and European policymakers alike have valued a close transatlantic partnership as serving their respective geostrategic and economic interests. U.S. policymakers, including past presidents and many Members of Congress, have articulated a range of benefits to the United States of strong U.S.-European ties, including the following:", "U.S. leadership of NATO and U.S. support for the European integration project have been crucial to maintaining peace and stability on the European continent and stymieing big-power competition that cost over 500,000 American lives in two world wars. NATO and the EU are cornerstones of the broader U.S.-led international order created in the aftermath of World War II. U.S. engagement in Europe has helped to foster democratic and prosperous European allies and friends that frequently support U.S. foreign and economic policy preferences and bolster the credibility of U.S. global leadership, including in multilateral institutions such as the United Nations and the WTO. U.S. engagement in Europe helps limit Russian, Chinese, or other potentially malign influences in the region. The two sides of the Atlantic face a range of common international challenges\u2014from countering terrorism and cybercrime to managing instability in the Middle East\u2014and share similar values and policy outlooks. Neither side can adequately address such diverse global concerns alone, and the United States and Europe have a demonstrated track record of cooperation. U.S. and European policymakers have developed trust and well-honed habits of political, military, and intelligence cooperation over decades. These dynamics are unique in international relations and cannot be easily or quickly replicated elsewhere (particularly with countries that do not share the same U.S. commitment to democracy, human rights, and the rule of law). The United States and Europe share a substantial and mutually beneficial economic relationship that is highly integrated and interdependent. This economic relationship substantially contributes to economic growth and employment on both sides of the Atlantic. The EU accounts for about one-fifth of U.S. total trade in goods and services, and the United States and the EU are each other's largest source and destination for foreign direct investment (FDI). The transatlantic economy generates over $5 trillion per year in foreign affiliate sales and directly employs about 9 million workers on both sides of the Atlantic (and possibly up to 16 million people when indirect employment is included). Together, the United States and Europe have created and maintained the current rules-based international trading system that has contributed to U.S. (and European) wealth and prosperity. The combined U.S. and EU economies account for 46% of global gross domestic product (GDP) and over half of global FDI. Together, this provides the United States and Europe with significant economic clout that has enabled the two sides of the Atlantic to take the lead in setting global rules and standards.", "At times, U.S. officials and analysts have expressed frustration with certain aspects of the transatlantic relationship. Previous U.S. administrations and many Members of Congress have criticized what they viewed as insufficient European defense spending and have questioned the costs of the U.S. military presence in Europe (especially after the Cold War). U.S. policymakers have long-standing concerns about some EU regulatory barriers to trade. In addition, observers point out that the EU lacks a single voice on many foreign policy issues, which may complicate or prevent U.S.-EU cooperation. Some in the United States have argued that maintaining a close U.S.-European partnership necessitates compromise and may slow U.S. decisionmaking. ", "Meanwhile, some European officials periodically complain about U.S. dominance of the relationship and a frequent U.S. expectation of automatic European support, especially in international or multilateral forums. Those with this view contend that although the United States has long urged Europe to \"do more\" in addressing challenges both within and outside of Europe, the United States often fails to grant European allies in NATO, or the EU as an institution, an equal say in transatlantic policymaking. In the past, some European leaders\u2014particularly in France\u2014have aspired to build up the EU as a global power in part to check U.S. influence. Most European governments, however, have not supported developing the EU as a counterweight to the United States. Regardless of these occasional U.S. and European irritations with each other, the transatlantic partnership has remained grounded broadly in the premise that its benefits outweigh the negatives for both sides of the Atlantic."], "subsections": []}, {"section_title": "NATO6", "paragraphs": ["The United States was the driving proponent of NATO's creation in 1949 and has been the alliance's undisputed leader as it has evolved from a regionally focused collective defense organization of 12 members to a globally engaged security organization of 29 members. Successive U.S. Administrations have viewed U.S. leadership of NATO as a cornerstone of U.S. national security strategy, bringing benefits ranging from peace and stability in Europe to the political and military support of 28 allies, including many of the world's most advanced militaries. NATO proponents in the United States point out that U.S. leadership of NATO has allowed the United States to station U.S. forces, including nuclear weapons, in Europe at bases that enable quicker air, sea, and land access to other locations of strategic importance, including the Middle East and Africa. They underscore that NATO also provides an unrivaled platform for constructing and operating international military coalitions with an integrated command structure that is unprecedented in terms of size, scale, and complexity.", "For almost as long as NATO has been in existence, it has faced criticism. One long-standing concern of U.S. critics, including President Trump and some Members of Congress, is that the comparatively low levels of defense spending by some European allies and their reliance on U.S. security guarantees have fostered an imbalanced \"burdensharing\" arrangement by which the United States carries an outsize share of the responsibility for European security. President Trump has repeatedly expressed these sentiments in suggesting that NATO is a \"bad deal\" for the United States. Although U.S. leaders have long called for increased allied defense spending, none are seen to have done so as stridently as President Trump or to link these calls so openly to the U.S. commitment to NATO and a broader questioning of the alliance's value and utility (see text box below). Administration supporters, including some Members of Congress, argue that President Trump's forceful statements have succeeded in securing defense spending increases across the alliance that were not forthcoming under his predecessors.", "Trump Administration officials stress that U.S. policy toward NATO continues to be driven by a steadfast commitment to European security and stability. The Administration's 2017 National Security Strategy and 2018 National Defense Strategy articulate that the United States remains committed to NATO's foundational Article 5 collective defense clause. (President Trump has proclaimed his support for Article 5 as well.) U.S. strategy documents also underscore that the Administration continues to view NATO as crucial to deterring Russia. The Administration has requested significant increases in funding for U.S. military deployments in Europe under the European Deterrence Initiative (EDI) . The United States currently leads a battalion of about 1,100 NATO troops deployed to Poland and deploys a U.S. Army Brigade Combat Team of about 3,300 troops on continuous rotation in NATO's eastern member states.", "Despite stated U.S. policy, some European allies express unease about President Trump's commitment to NATO, especially amid reports that the President has considered withdrawing the United States from the alliance. European allies refute past statements by President Trump that NATO is obsolete and take issue with the President's claims that European countries have taken advantage of the United States by not spending enough on their own defense. Since the end of the Cold War, NATO allies and partner countries have contributed to a range of NATO-led military operations across the globe, including in the Western Balkans, Afghanistan, the Mediterranean Sea, the Middle East, and Eastern Europe.", "European allies also stress that the first and only time NATO invoked Article 5 was in solidarity with the United States after the September 11, 2001, terrorist attacks. Subsequently, Canada and the European allies joined the United States to lead military operations in Afghanistan, the longest and most expansive operation in NATO's history. Many in Europe and Canada view their contributions in Afghanistan as an unparalleled demonstration of solidarity with the United States and a testament to the value they can provide in achieving shared security objectives. As of early 2019, almost one-third of the fatalities suffered by coalition forces in Afghanistan have been from NATO members and partner countries other than the United States. In 2011, the high point of the NATO mission in Afghanistan, about 40,000 of the 130,000 troops deployed to the mission were from non-U.S. NATO countries and partners.", "NATO also continues to face a number of political and military challenges. Key among these is managing a resurgent Russia. Allied discussions over NATO's strategic posture have exposed divergent views over the threat posed by Russia (see \" Key Foreign Policy and Security Challenges \" for more information). Differences also exist among the allies over the appropriate role for NATO in addressing the wide-ranging security challenges emanating from the Middle East and North Africa. NATO continues to grapple with significant disparities in allied military capabilities, especially between the United States and the other allies. In most, if not all, NATO military interventions, European allies and Canada have depended on the United States to provide key capabilities such as air- and sea-lift, refueling, and intelligence, surveillance, and reconnaissance (ISR). In addition, a number of European policymakers and outside analysts contend that President Trump's negative rhetoric about NATO is damaging alliance cohesion and raising questions about future U.S. leadership of the alliance (see \" U.S. Policy Considerations and Future Prospects \" below)."], "subsections": []}, {"section_title": "The European Union11", "paragraphs": ["Since May 1950\u2014when President Harry Truman first offered U.S. support for the European Coal and Steel Community, regarded as the initial step on the decades-long path toward building the EU\u2014the United States has championed the European integration project. Supporters of the EU integration project contend that it largely succeeded in fulfilling core U.S. post-World War II-goals in Europe of promoting peace and prosperity and deterring the Soviet Union. After the Cold War, the United States strongly backed EU enlargement to the former communist countries of Central and Eastern Europe, viewing it as essential to extending stability, democracy, and the rule of law throughout the region, preventing a strategic vacuum, and firmly entrenching these countries in Euro-Atlantic institutions and the U.S.-led liberal international order. The United States and many Members of Congress traditionally have supported the EU membership aspirations of Turkey and the Western Balkan states for similar reasons.", "Over the past 25 years, as the EU has expanded and evolved, U.S.-EU political and economic relations have deepened. Despite some acute differences (including the 2003 war in Iraq), the United States has looked to the EU for partnership on foreign policy and security concerns worldwide. Although EU decisionmaking is sometimes slower than many U.S. policymakers would prefer and agreement among EU member states proves elusive at times, U.S. officials generally have regarded cooperation with the EU\u2014where possible\u2014as serving to bolster U.S. positions and enhance the prospects of achieving U.S. objectives. The United States and the EU have promoted peace and stability in various regions and countries (including the Balkans, Afghanistan, and Africa), jointly imposed sanctions on Russia for its aggression in Ukraine, enhanced law enforcement and counterterrorism cooperation, worked together to contain Iran's nuclear ambitions, and sought to tackle cross-border challenges such as cybersecurity and climate change. Historically, U.S.-EU cooperation has been a driving force behind efforts to liberalize world trade and ensure the stability of international financial markets.", "EU officials have been surprised by what they regard as President Trump's largely negative opinion of the bloc and key member states such as Germany. President Trump has supported the UK's decision to leave the EU and has expressed doubts about the EU's future viability. President Trump has called the EU a \"foe\" for \"what they do to us in trade,\" although he also noted, \"that doesn't mean they are bad \u2026 it means that they are competitive.\" At the same time, the EU is concerned by the Administration's trade policies, especially the imposition of steel and aluminum tariffs and potential auto tariffs. Many in the EU question whether the United States will continue to be a reliable partner for the EU in setting global trade rules and standards and sustaining the multilateral trading system. (See \" Trade and Economic Issues \" for more information.)", "Some commentators suggest that the Trump Administration largely views the EU through an economic prism and is less inclined to regard the EU as an important political and security partner. Various observers speculate that unlike past Administrations, the Trump Administration might be indifferent to the EU's collapse if it allowed the United States to negotiate bilateral trade deals with individual member states that it believes would better serve U.S. interests. President Trump (and some Members of Congress) have expressed keen interest in concluding a free trade agreement (FTA) with the United Kingdom following its expected withdrawal from the EU (see \" Possible Implications of Brexit \").", "Many analysts suggest that President Trump's critical views of the EU are shaped by a preference for working bilaterally with nation-states rather than in international or multilateral forums. In a December 2018 speech in Brussels, Belgium, U.S. Secretary of State Mike Pompeo asserted that \"the European Union and its predecessors have delivered a great deal of prosperity to the entire continent\" and that \"we [the United States] benefit enormously from your success,\" but he also criticized multilateralism and asked, \"Is the EU ensuring that the interests of countries and their citizens are placed before those of bureaucrats here in Brussels?\". Secretary Pompeo's comments were widely interpreted as an implicit rebuke of the EU. Others point out that the Trump Administration is not the first U.S. Administration to be skeptical of multilateral institutions or to be charged with preferring unilateral action. This was a key European criticism of the George W. Bush Administration as well.", "In addition, many in the EU are uneasy with elements of the Trump Administration's \"America First\" foreign policy. Several Administration decisions have put the United States into direct conflict with the EU and experts suggest they could endanger U.S.-EU political cooperation. These include, in particular, the Trump Administration's decisions to withdraw from the 2015 multilateral nuclear deal with Iran and the Paris Agreement on climate change (see \" Key Foreign Policy and Security Challenges \" for more information). EU officials also view the Administration's recognition of Jerusalem as Israel's capital as undermining prospects for resolving the Israeli-Palestinian conflict.", "At the same time, Administration officials contend that certain EU policies are damaging relations with the United States. Among other issues, such officials express frustration with the EU's refusal to discuss agricultural products in planned U.S.-EU trade negotiations, and they argue that that the EU does not sufficiently understand the extent of the threat posed by Iran. Some U.S. policymakers voice concern that renewed EU defense initiatives could compete with NATO. In 2017, 25 EU members launched a new EU defense pact (known as Permanent Structured Cooperation, or PESCO) aimed at enhancing European military capabilities and bolstering the EU's Common Security and Defense Policy (CSDP). Previous U.S. Administrations have been anxious about CSDP's potential implications for NATO. The EU has bristled at the Trump Administration's criticisms, however, given its strident calls for greater European defense spending and burdensharing in NATO, as well as Administration suggestions that PESCO could become a \"protectionist vehicle for the EU\" that impedes U.S.-European defense industrial cooperation and U.S. defense sales to Europe.", "U.S. officials note that there have always been disagreements between the United States and the EU, and they argue that fears of a demise in relations are largely overblown. At the same time, some U.S. policymakers and analysts suggest that the multiple challenges currently facing the EU could have negative implications for the EU's ability to be a robust, effective U.S. partner. Those with this view note that internal preoccupations (ranging from Brexit to migration to voter disenchantment with traditionally pro-EU establishment parties) could prevent the EU from focusing on key U.S. priorities, such as Russian aggression in Ukraine, a more assertive China, instability in the Middle East and North Africa, the ongoing conflict in Syria, and the continued terrorism threat. Others point out that despite the string of recent EU crises over the past few years, the EU has survived and the bloc has continued to work with the United States on numerous regional and international issues."], "subsections": []}, {"section_title": "Possible Implications of Brexit18", "paragraphs": ["In a 2016 referendum, UK voters favored leaving the EU by 52% to 48%. In March 2017, the UK government officially notified the EU of its intention to withdraw, triggering a two-year period for the UK and the EU to conclude complex withdrawal negotiations. Since the 2016 referendum, the UK has remained divided on what type of Brexit it wants. UK Prime Minister Theresa May's government largely pursued a \"hard\" Brexit that would keep the UK outside the EU's single market and customs union, thus allowing the UK to negotiate its own trade deals with other countries. Since January 2019, the UK Parliament has rejected the withdrawal agreement negotiated with the EU three times; a key sticking point has been the \"backstop\" to resolve the Irish border question and protect the Northern Ireland peace process. As the result of a six-month extension offered by EU leaders on April 10 (at an emergency European Council summit), the UK is scheduled to exit the EU by October 31, 2019, at the latest.", "Since deciding to leave the EU, the UK has sought to reinforce its close ties with the United States and to reaffirm its position as a leading country in NATO. The UK is likely to remain a strong U.S. partner, and Brexit is unlikely to cause a dramatic makeover in most aspects of the U.S.-UK relationship. Analysts believe that close U.S.-UK cooperation will continue for the foreseeable future in areas such as counterterrorism, intelligence, economic issues, and the future of NATO, as well as on numerous global and regional security challenges. UK officials have emphasized that Brexit does not entail a turn toward isolationism and that the UK intends to remain a global leader in international diplomacy, security issues, trade and finance, and development aid.", "President Trump has expressed repeated support for Brexit. In October 2018, the Trump Administration notified Congress of its intent to launch U.S.-UK trade negotiations once the UK ceases to be a member of the EU, and many Members of Congress appear receptive to a U.S.-UK FTA in the future. At the same time, some in Congress are concerned that Brexit might negatively affect the Northern Ireland peace process. In London in April 2019, House Speaker Nancy Pelosi asserted that there would be \"no chance whatsoever\" for a U.S.-UK FTA should Brexit weaken the 1998 peace accord that ended Northern Ireland's 30-year sectarian conflict.", "Beyond the U.S.-UK bilateral relationship, Brexit could have a substantial impact on certain U.S. strategic interests, especially in relation to Europe more broadly and future developments in the EU. The UK is the EU's second-largest economy and a key diplomatic and military power within the EU. Moreover, the UK is often regarded as the closest U.S. partner in the EU, a partner that commonly shares U.S. views on foreign policy, trade, and regulatory issues. Some observers suggest that the United States is losing its best advocate within the EU for policies that bolster U.S. goals and protect U.S. interests. Others contend that the United States has close bilateral ties with most EU countries, shares common political and economic preferences with many of them, and as such, the UK's departure will not significantly alter U.S.-EU relations.", "Some U.S. officials have conveyed concerns that the UK's withdrawal could make the EU a less capable and less reliable partner for the United States given the UK's diplomatic, military, and economic clout. The UK has served as a key driver of certain EU initiatives, especially EU enlargement (including to Turkey) and efforts to develop stronger EU foreign and defense policies. In addition, as the UK is a leading voice for robust EU sanctions against Russia in response to Russia's annexation of Ukraine's Crimea and aggression in eastern Ukraine, some observers suggest that the departure of the UK could shift the debate in the EU about the duration and severity of EU sanctions.", "More broadly, U.S. officials have long urged the EU to move beyond what is often perceived as a predominantly inward focus on treaties and institutions, in order to concentrate more effort and resources toward addressing a wide range of shared external challenges (such as terrorism and instability to Europe's south and east). Some observers note that Brexit has produced another prolonged bout of internal preoccupation within the EU and has consumed a considerable degree of UK and EU time and personnel resources in the process. At the working level, EU officials are losing British personnel with significant technical expertise and negotiating prowess on issues such as sanctions or dealing with countries like Russia and Iran.", "On the other hand, some analysts have suggested that Brexit could ultimately lead to a more like-minded EU, able to pursue deeper integration without UK opposition (the UK traditionally served as a brake on certain EU integration efforts). For example, Brexit could allow the EU to move ahead more easily with undertaking military integration projects under the EU Common Security and Defense Policy. However, as discussed above, Trump Administration officials express a degree of concern about PESCO, the EU's new defense pact, and some worry that without UK leadership, CSDP and PESCO could evolve in ways that may infringe upon NATO's primary role in European security in the longer term."], "subsections": []}, {"section_title": "Key Foreign Policy and Security Challenges", "paragraphs": ["The United States and Europe face numerous common foreign policy and security challenges. The Trump Administration maintains that its policy choices display strong U.S. leadership and seek to bolster both U.S. and European security. Administration officials also argue that they remain ready to work with Europe on many of these common challenges."], "subsections": [{"section_title": "Russia21", "paragraphs": ["U.S.-European cooperation has been viewed as crucial to managing a more assertive Russia and preventing Russia from driving a wedge between the two sides of the Atlantic. The imposition of sanctions on Russia in response to its aggression in Ukraine is cited as a key example of a policy that has benefited from U.S.-EU coordination given the EU's more extensive economic ties with Russia. The EU has welcomed congressional efforts since the start of the Trump Administration to maintain U.S. sanctions on Russia, despite concerns that certain provisions in the Countering Russian Influence in Europe and Eurasia Act (CRIEEA) of 2017 ( P.L. 115-44 , Countering America's Adversaries Through Sanctions Act [CAATSA], Title II) could negatively affect EU business and energy interests.", "Although some Europeans remain wary about President Trump's expressed interest in improving U.S.-Russian relations, U.S. and European policies toward Russia remain broadly aligned. As noted above, the Trump Administration has endorsed new NATO initiatives to deter Russian aggression and increased the U.S. military footprint in Europe. The United States has continued to support and impose sanctions on Russia for its actions in Ukraine and other malign activities (including Russia's March 2018 chemical weapons attack in the United Kingdom on former Russian intelligence officer and UK citizen Sergei Skripal and his daughter). The United States and many European countries share similar concerns about Russian cyber activities and influence operations and have sought to work together in various forums to share best practices on countermeasures.", "At the same time, some policymakers and analysts express concern about the effectiveness and sustainability of NATO efforts to deter Russia and the use of sanctions as a long-term policy option. Some allies, including Poland and the Baltic States, have urged a more robust allied military presence in Central and Eastern Europe and strongly support maintaining pressure on Russia through sanctions. Others, including leaders in Germany and Italy, have stressed the importance of a dual-track approach to Russia that complements deterrence with dialogue.", "A key U.S.-European friction point is the Nord Stream 2 gas pipeline project that would increase the amount of Russian gas delivered to Germany and other parts of Europe via the Baltic Sea. The Trump Administration and many Members of Congress object to Nord Stream 2 because they believe it will increase European energy dependence on Russia and undercut Ukraine (the pipeline would bypass the country, thereby denying Ukraine transit fees and possibly loosening constraints on Russian policy toward Ukraine). Many in the EU share these concerns, including Poland and other Central European countries, as well as the European Commission (the EU's executive body). Germany, Austria, and other supporters view Nord Stream 2 primarily as a commercial project and argue that it will help increase the supply of gas to Europe."], "subsections": []}, {"section_title": "Arms Control and the INF Treaty23", "paragraphs": ["Most European NATO allies, as well as the EU, have long regarded the Intermediate-Range Nuclear Forces (INF) Treaty as a key pillar of the European security architecture. On February 1, 2019, the Trump Administration announced it was suspending U.S. participation in the INF Treaty and would withdraw the United States in six months (in accordance with the terms of the treaty). European leaders largely agree with the U.S. assessment that Russia is violating the INF Treaty, and NATO leaders have announced that they \"fully support\" the U.S. decision.", "At the same time, European officials remain deeply concerned that the U.S. suspension and expected withdrawal from the INF Treaty could spark a new arms race and harm European security. Subsequent to the U.S. decision, Russian President Vladimir Putin announced that Russia also would suspend participation in the INF Treaty. Moreover, Putin indicated that Russia would begin work on developing new nuclear-capable missiles in light of the treaty's collapse. Many European officials appear troubled by the U.S. decision because they contend that the United States has not presented a clear way forward. Some worry that should the United States seek to field U.S. missiles in Europe in the future, this could create divisions within NATO and be detrimental to alliance cohesion. They add that tensions linked to the planned U.S. withdrawal from the INF Treaty could negatively affect possible efforts to renew the 2010 New Strategic Arms Reduction Treaty (known as New START) with Russia, which is set to expire in 2021."], "subsections": []}, {"section_title": "China26", "paragraphs": ["As expressed in the December 2017 U.S. National Security Strategy , U.S. officials have grown increasingly concerned that \"China is gaining a strategic foothold in Europe by expanding its unfair trade practices and investing in key industries, sensitive technologies, and infrastructure.\" Chinese investment in the EU reportedly has increased from approximately $700 million annually prior to 2008 to $30 billion in 2017. Such investment spans sectors including energy, transport, communications, media, insurance, financial services, and industrial technology.", "The Trump Administration and many Members of Congress have been alarmed in particular by some European governments' interest in contracting with Chinese telecommunications company Huawei to build out at least parts of their fifth generation (or 5G) wireless networks. U.S. officials have warned European allies and partners that using Huawei or other Chinese 5G equipment could impede intelligence-sharing with the United States due to fears of compromised network security. Although some allies, such as the UK and Germany, have said they would not prevent Chinese companies from bidding on 5G contracts, they have stressed that they would not contract with any companies that do not meet their stringent national security requirements.", "In addition to concerns about intellectual property theft and illicit data collection or spying, some analysts worry that Chinese economic influence could translate into leverage over European countries. Such leverage could push some European governments to align their foreign policy positions with China or otherwise validate policies of the Chinese government, and possibly prevent the EU from speaking with one voice on China. Some experts suggest that smaller EU countries, as well as less prosperous non-EU Balkan countries, are relatively vulnerable to this type of leverage, although large EU countries also could be susceptible. As evidence, many note Italy's decision to join China's Belt and Road Initiative (BRI), China's state-run initiative to deepen Chinese investment and infrastructure links across Asia, Africa, Latin America, and Europe. The Trump Administration reportedly lobbied Italy against joining the BRI.", "Despite U.S. concerns about China's growing footprint in Europe, Administration officials appear hopeful that the United States and Europe can work together to meet the various security and economic issues posed by a rising China. Over the past year, EU members France and Germany have backed efforts by the European Commission to develop more stringent requirements to regulate Chinese investment in Europe. In a March 2019 joint position paper on China, the European Commission and the EU's High Representative for Foreign Affairs and Security Policy characterized China in part as an \"economic competitor in the pursuit of technological leadership, and a systemic rival promoting alternative models of governance.\"", "In a February 2019 interview, U.S. Ambassador to the EU Gordon Sondland called on the United States and the EU to \"combine our mutual energies \u2026 to meet China and check China in multiple respects: economically, from an intelligence standpoint, militarily.\" Some analysts, however, are skeptical about the extent to which U.S.-European cooperation toward China is possible. Those with this view note the disparities in U.S. and European security interests vis-\u00e0-vis China and apparent U.S. inclinations to view China as an economic rival to a greater extent than many European governments."], "subsections": []}, {"section_title": "Iran34", "paragraphs": ["Many European governments and the EU are alarmed by rising tensions between the United States and Iran, which they fear could lead to military confrontation. Differences over Iran have strained U.S.-European relations considerably during the Trump Administration. The EU opposes the Administration's decision to withdraw from the 2015 nuclear deal with Iran (the Joint Comprehensive Plan of Action, or JCPOA). The EU worked closely with the Obama Administration to negotiate the JCPOA and considers it to be a major foreign policy achievement that has prevented Iran from developing nuclear weapons. Many analysts assert that the EU's adoption of strict sanctions against Iran between 2010 and 2012, including a full embargo on oil purchases, brought U.S. and European approaches on Iran into alignment. They credit this combined U.S.-EU economic pressure as key to forcing Iran into the negotiations that produced the JCPOA.", "The Trump Administration contends that the JCPOA has only served to embolden Iran and has urged the EU to join the United States in abandoning the JCPOA and reimposing sanctions on Iran. The EU shares other U.S. concerns about Iran, including those related to Iran's ongoing ballistic missile program and support for terrorism, but the EU asserts that such issues should be addressed separately from the JCPOA. The EU also contends that the U.S. decision to unilaterally withdraw from the JCPOA could destabilize the region and worries that the reimposition of U.S. sanctions on Iran could threaten EU business interests.", "The EU remains committed to the JCPOA and has sought to work with Iran and other signatories to prevent its collapse. In January 2019, France, Germany, and the UK launched the Instrument in Support of Trade Exchanges (INSTEX), a special-purpose vehicle (SPV) designed to enable trade in humanitarian items (including food, medicine, and medical devices) that are generally exempt from sanctions (although INSTEX might eventually provide a platform to trade with Iran in oil and other products). Some in the EU, however, fear that Iran's commitment to the JCPOA may be weakening amid Iran's announcement in early May 2019 that it would no longer abide by JCPOA restrictions on stockpiles of low-enriched uranium and heavy water. The EU continues to urge Iran not to withdraw from the JCPOA completely."], "subsections": []}, {"section_title": "Syria35", "paragraphs": ["Many European governments were alarmed by President Trump's announcement in December 2018 that the United States would withdraw its entire 2,000-strong force in Syria fighting the Islamic State terrorist organization (also known as ISIS or ISIL). Most European countries have supported the U.S.-led international coalition to defeat the Islamic State since 2014. Although President Trump's decision to withdraw U.S. forces was based on his view that the Islamic State was largely defeated, the United States reportedly did not consult with its European partners on its military plans. The apparent lack of consultations has raised concerns about a breakdown in U.S.-European cooperation and potential negative consequences for transatlantic cohesion.", "News reports suggest that U.S. officials urged the UK and France to keep their ground forces in Syria following the expected U.S. departure and called for European countries to deploy an \"observer\" force to patrol a \"safe zone\" on the Syrian side of the border with Turkey. The UK and France reportedly declined these requests, and other European governments did not appear eager to assume the risks of a Syria operation in the absence of U.S. forces. The United States has since announced that it will keep a residual force of around 400 troops in Syria in an apparent effort to encourage a continued European presence, but it remains uncertain whether European governments will agree to this approach."], "subsections": []}, {"section_title": "Afghanistan37", "paragraphs": ["In December 2018, news outlets reported that the Trump Administration was considering substantially reducing the U.S. troop presence in Afghanistan. European allies, who have served with the United States and NATO in Afghanistan since 2001, reacted to these reports with surprise and concern. Although the Administration has begun negotiations with the Taliban on ending the conflict in Afghanistan, U.S. officials denied a possible drawdown in U.S. forces. European officials asserted that any future reduction in U.S. troops in Afghanistan must be carried out in close coordination with the allies.", "Some experts have questioned the viability of NATO's Afghanistan mission without continued U.S. participation at current levels. Subsequent press reports indicate that the U.S. Defense Department has begun discussions with European allies on future military plans for Afghanistan. European military involvement in Afghanistan has faced relatively consistent public opposition in many European countries. As such, observers suggest that allies could be receptive to winding down NATO's mission in Afghanistan in tandem with the United States. At the same time, some European officials reportedly object to being left out of peace talks with the Taliban, given allied military contributions as well as considerable European development assistance to Afghanistan."], "subsections": []}, {"section_title": "Counterterrorism40", "paragraphs": ["Since 2001, the United States has enhanced counterterrorism and homeland security cooperation with European governments and the EU. The United States and the EU have concluded several agreements in this area, including accords to improve shipping container security, share airline passenger data, and track terrorist financing. U.S. and European officials alike regard such cooperation as crucial to fighting terrorism on both sides of the Atlantic. In recent years, the United States and Europe have focused on combating the Islamic State and the foreign fighter phenomenon. Like its predecessors, the Trump Administration appears to value such cooperation. ", "Recently, some European governments and the EU have bristled at President Trump's call for European countries to repatriate European fighters and sympathizers captured by U.S.-backed forces in Syria and Iraq or risk their release as the United States prepares to withdraw its forces from Syria. Many European governments have been grappling with how to deal with returning Islamic State fighters and their families, but some are hesitant to assume the associated security risks of bringing such citizens home. Amid broader tensions, some analysts worry about fissures developing between the United States and Europe on counterterrorism strategies and tactics."], "subsections": []}, {"section_title": "Climate Change42", "paragraphs": ["The EU reacted with dismay to President Trump's announcement in June 2017 that the United States would withdraw from the 2015 multilateral Paris Agreement aimed at reducing greenhouse gas emissions and combating climate change (the U.S. withdrawal is due to take effect in November 2020). The EU had worked closely with the former Obama Administration to negotiate the 2015 accord. In announcing his decision, President Trump asserted that the Paris Agreement disadvantages U.S. businesses and workers, but he also indicated that he would be open to negotiating a \"better\" deal. The EU rejects any renegotiation of the Paris Agreement, and EU officials have vowed to work with U.S. business leaders and state governments that remain committed to implementing the accord's provisions.", "Analysts suggest that the Trump Administration's decision to withdraw from the Paris Agreement has spurred the EU to assume even greater stewardship of the accord. In February 2018, the EU asserted that it would not conclude FTAs with countries that do not ratify the Paris Agreement, creating another potential friction point in U.S.-EU trade discussions. The EU continues to voice support for other international partners\u2014especially developing countries\u2014in meeting their commitments to the Paris Agreement and has intensified cooperation with China in particular. At the same time, observers point out that some EU countries are facing challenges in meeting their existing targets to reduce greenhouse gas emissions and efforts to formalize more ambitious EU emissions reduction goals have encountered a degree of resistance within the EU."], "subsections": []}]}, {"section_title": "Trade and Economic Issues46", "paragraphs": [], "subsections": [{"section_title": "Current Trade and Investment Ties", "paragraphs": ["The United States and the EU are each other's largest trade and investment partners. Total U.S.-EU trade in merchandise and services reached $1.3 trillion in 2018 ( Figure 2 ). Investment ties, including affiliate presence and intra-company trade, are even more significant given their size and interdependent nature. In 2017, the stock of transatlantic foreign direct investment (FDI) totaled over $5 trillion ( Figure 3 ); the EU accounts for over half of both FDI in the United States and U.S. direct investment abroad.", "While the transatlantic economy is highly integrated, it still faces tariffs and nontariff barriers to trade and investment. U.S. and EU tariffs are low on average, though tariffs are high on some sensitive products. Regulatory differences and other nontariff barriers also may raise the costs of U.S.-EU trade and investment. Over the years, the United States and the EU have sought to further liberalize trade ties, enhance regulatory cooperation, and work together on international economic issues of joint interest and concern, for instance, regarding China's trading practices.", "Although U.S.-EU trade and economic frictions emerge periodically, tensions are currently heightened under the Trump Administration's trade policy, which has given priority to reducing U.S. bilateral trade deficits, utilizing unilateral tariff measures under U.S. trade laws, and applying a critical view of the U.S. role in international economic cooperation. EU officials are troubled in particular by the Trump Administration's skepticism of the WTO, and they are concerned that it reflects a broader U.S. shift away from international cooperation. At the same time, many WTO members, including the United States and EU, are engaged in active discussions on aspects of potential reform to the WTO, including changes to its dispute settlement system. Meanwhile, the United States continues to monitor developments on a wide range of EU trade and other policies, such as on data protection, digital trade, and penalties for corporate tax avoidance, some of which the United States sees as trade barriers."], "subsections": []}, {"section_title": "Trade Disputes", "paragraphs": ["The Trump Administration blames \"unfair\" trade practices by the EU, and particularly Germany, for the U.S. merchandise trade deficit with the EU. In 2018, the United States had an overall $110 billion deficit in merchandise and services trade with the EU, as the deficit in merchandise trade ($170 billion) outweighed the surplus for trade in services ($60 billion).", "President Trump has criticized in particular the U.S.-EU imbalance on auto trade, flagging the EU 10% tariff and U.S. 2.5% tariff on cars\u2014though the U.S. tariff rate for trucks is higher (25% versus 22% in the EU). The role of \"unfair\" trade practices as a driver of trade deficits is contested. EU leaders maintain that the U.S.-EU trade relationship is fair and mutually beneficial given the U.S. services surplus and the higher profits earned by U.S. companies doing business in Europe. In 2016, affiliates of U.S. multinational enterprises (MNEs) in Europe had $2.8 trillion in sales, while affiliates of European MNEs in the United States had $2.2 trillion in sales.", "On June 1, 2018, President Trump imposed tariffs of 25% and 10% on certain steel and aluminum imports, respectively, under Section 232 of the Trade Expansion Act of 1962, after Department of Commerce investigations found that current imports threaten to impair U.S. national security. The EU, which represented 22% of U.S. steel imports and 9% of U.S. aluminum imports in 2018, received an initial temporary exemption from the tariffs, but unlike some other trading partners, it was unable to negotiate a permanent tariff exemption in exchange for an alternative quota arrangement. Most European leaders view the imposition of the steel and aluminum tariffs on the EU as baseless given close U.S.-EU political and security ties. The EU response to the U.S. tariffs has been multifaceted. Among other measures, the EU has imposed retaliatory tariffs against selected U.S. products, including, for example, Kentucky bourbon and Harley-Davidson motorcycles. Both sides are now pursuing cases in the WTO on the measures.", "The Section 232 investigation of automobiles and parts has further strained relations, and its outcome could be highly significant to proposed new U.S.-EU trade negotiations (see below). Motor vehicles are a leading U.S. import from the EU, and some EU auto companies have manufacturing facilities in the United States. On May 17, 2019, President Trump announced that the Section 232 auto investigation found that U.S. imports of motor vehicles and parts threaten to impair U.S. national security. Although this finding allows the President to impose unilateral import restrictions such as tariffs, the President decided initially to seek a negotiated solution and directed the U.S. Trade Representative (USTR) to resolve this threatened impairment through negotiating agreements with the EU, Japan, and any other country that the USTR deems appropriate. The USTR must update the President on the progress of the negotiations within 180 days.", "Frictions also may rise with new developments in the protracted U.S.-EU \"Boeing-Airbus\" cases in WTO dispute settlement; each side has long complained about subsidies imposed by the other to its domestic civil aircraft industry. In April 2019, the United States and EU announced preliminary lists of their traded goods on which they propose to impose countermeasure tariffs of $11.2 billion and $12 billion, respectively, to compensate for harm they claim that the other's subsidies have caused. A final WTO assessment is expected this summer on the countermeasure value amounts that each side is entitled to impose. Although the Boeing-Airbus cases have been in WTO litigation for 14 years, the current environment raises questions about potential tit-for-tat retaliation."], "subsections": []}, {"section_title": "Proposed New Trade Negotiations", "paragraphs": ["On October 16, 2018, the Trump Administration notified Congress under Trade Promotion Authority (TPA) of new U.S. trade agreement negotiations with the EU to seek a \"fairer, more balanced\" relationship. Prior U.S.-EU negotiations on a Transatlantic Trade and Investment Partnership (T-TIP) stalled after 15 rounds under the Obama Administration. The proposed new talks follow the July 2018 U.S.-EU Joint Statement that aimed to de-escalate current trade tensions (agreed between President Trump and European Commission President Jean-Claude Juncker). The new talks have not started formally yet.", "U.S.-EU disagreement over the scope of the new talks has cast uncertainty over their outlook. U.S. negotiating objectives aim to address tariffs and nontariff barriers for goods, services, agriculture, government procurement, intellectual property rights, investment, and other areas, including new issues such as digital trade. The United States may seek to negotiate in stages. The EU, which insists on not negotiating \"with a gun to our head,\" seeks limited negotiations to defuse tensions and avoid the pitfalls of the wide-ranging T-TIP negotiations. EU negotiating directives authorize the European Commission to eliminate tariffs on industrial products (but specifically exclude agriculture) and address regulatory nontariff barriers in a conformity assessment agreement to make it easier for companies to prove their products meet EU and U.S. technical requirements while maintain a high level of protection in the EU.", "The EU claims it is adhering to commitments made in the Joint Statement, in which the two sides announced plans to launch negotiations to eliminate tariffs, nontariff barriers, and subsidies on \"non-auto industrial goods,\" as well as to boost trade specifically in services, chemicals, pharmaceuticals, medical products, and U.S. soybeans. In the Joint Statement, the United States and EU also committed to: enhancing their strategic cooperation on energy to boost the EU's purchase of U.S. liquefied natural gas (LNG) to diversify its energy supply, launching a dialogue on standards and regulations to reduce exporting barriers and costs, and working with \"like-minded partners\" to address unfair trade practices and WTO reform. Although the two sides have not started the new trade negotiations formally, the EU notes progress in advancing some of the other commitments from the Joint Statement\u2014for instance, the rise in EU imports of soybeans and LNG from the United States. U.S.-EU regulatory cooperation also is ongoing for such sectors as pharmaceuticals, medical products, and chemicals.", "A key feature of the proposed negotiations is their potential role in defusing current U.S.-EU trade tensions. Although the two sides agreed in the Joint Statement not to escalate tariffs while negotiations are active and to examine the Section 232 steel and aluminum tariffs, President Trump has threatened the EU repeatedly with tariffs, including over its exclusion of agriculture. The EU asserts it will stop negotiating if the United States applies new Section 232 tariffs, and it may stop negotiating if subject to new trade restrictions under other U.S. trade laws.", "A path forward on the negotiations appears unclear due to a number of factors. Differences on the scope, especially on agriculture, could thwart the negotiations before they even start formally. Many in Congress and in the U.S. agricultural sector oppose excluding agriculture from the negotiations, viewing the negotiations as an opportunity to address key U.S. concerns about barriers to accessing European agricultural markets. For the EU, agriculture is a sensitive issue, stemming in part from commercial and cultural practices often enshrined in EU laws and regulations, which also often differ from those of the United States. If formal negotiations start, a narrow agreement could lead to some \"wins\" and facilitate further negotiations, but such an agreement may be limited to trade liberalization across a few sectors. Yet, T-TIP shows the challenges of negotiating a more comprehensive FTA. Potential Section 232 auto tariffs, while possibly preserving U.S. negotiating leverage, loom large over the negotiations in how they could affect EU willingness to engage.", "The priority that each side gives to the negotiations also is an open question, given ongoing EU-UK negotiations over Brexit and the proposed U.S.-UK FTA negotiations\u2014contingent upon the UK regaining a national trade policy after it withdraws from the EU. Concluding even limited U.S.-EU trade negotiations likely will take time, and the EU approval process may be lengthy, given the role of the European Parliament and member states. If a U.S.-EU trade agreement is concluded, it is unclear if, on the U.S. side, it would meet congressional expectations or TPA requirements. On the EU side, complexities include Brexit, which would remove the UK's leading voice on trade liberalization from the EU. France opposes the U.S.-EU talks due to the U.S. position on global efforts to address climate change.", "Successful negotiations, however defined, could help resolve the current standoff over tariffs; moreover, they could rebuild trust and reinforce trade ties amid shifts in U.S. trade policy approaches under the Trump Administration and transformations to the EU post-Brexit. In addition, while an FTA could be commercially significant in improving the competitiveness of U.S. and EU businesses in each other's market, it also could be strategically significant for the United States and EU in jointly shaping global \"rules of the road\" on new trade issues and in addressing issues of mutual concern (e.g., regarding China's trade practices). However, if the talks fail, trade tensions could escalate. Some transatlantic observers fear a continuation of tit-for-tat tariff escalation. Alternatively, the two sides may explore other avenues for engagement, such as enhanced regulatory cooperation and sectoral agreements."], "subsections": []}]}, {"section_title": "Implications for the United States", "paragraphs": [], "subsections": [{"section_title": "U.S. Policy Considerations and Future Prospects", "paragraphs": ["For the past 70 years, the transatlantic relationship has been grounded in a commitment to the post-World War II order based on alliances with like-minded democratic partners. U.S. support for a strong partnership with Europe has been premised largely on the belief that U.S. leadership of NATO and close U.S.-EU ties promote U.S. security and stability and magnify U.S. global influence and financial clout. Despite periodic U.S.-European tensions over the decades and changes in the security environment since the end of the Cold War, most experts judge that the transatlantic partnership continues to advance U.S. strategic and economic interests.", "The Trump Administration's 2017 National Security Strategy reiterates the long-standing view that \"the United States is safer when Europe is prosperous and stable, and can help defend our shared interests and ideals.\" The Administration argues, however, that Europe is not prepared to address what it sees as growing great power competition. President Trump's calls for NATO allies to spend more on defense and shoulder more of the security burden reflect this worldview, as well as his commitment to ensure that U.S allies do not \"take advantage of their friendship with the United States, both in military protection and trade.\"", "Some commentators maintain that President Trump has asked legitimate questions about whether there is sufficient burdensharing within NATO given current threats and Europe's relatively weak military capabilities. Some analysts suggest that President Trump has succeeded more than past U.S. presidents in demanding that European allies increase defense budgets. Administration supporters also credit President Trump with compelling the EU to address U.S. trade concerns, and they welcomed provisions in the July 2018 U.S.-EU Joint Statement aimed at boosting EU purchases of soybeans and LNG.", "Many U.S. officials and some outside experts downplay concerns about a dwindling U.S. commitment to the transatlantic partnership. They point out that there has been continuity in many U.S. policies toward Europe. The Trump Administration has sought to bolster NATO efforts to deter Russia and supported Montenegro's accession to NATO (in 2017), as well as the signing of North Macedonia's NATO accession protocol in February 2019 following the resolution of its name dispute with Greece. As noted previously, the United States has sought to work with the EU on de-escalating tensions over trade and tariffs. Furthermore, U.S. officials contend that the United States hopes to cooperate with European allies and partners in tackling global foreign policy and security issues. Secretary of State Pompeo has urged European governments to work with the United States to confront common challenges posed by Russia, China, and Iran (among others) and to reform international institutions such as United Nations and the WTO.", "Critics contend, however, that the Trump Administration's policies and rhetoric toward NATO, the EU, and some key allies are damaging the transatlantic partnership, undermining the trust and confidence upon which it ultimately rests, and creating significant uncertainty about the U.S. commitment to European security and U.S.-EU cooperation. European officials and analysts have been relieved that President Trump has voiced support for NATO and Article 5, but some suggest that by tying the U.S. commitment to NATO to increases in allied defense spending, President Trump is harming the credibility of the U.S. security guarantee. This, in turn, could weaken U.S. leadership of the alliance and embolden Russia.", "Many observers assert that President Trump's seemingly transactional view of NATO and the broader U.S.-European relationship is detrimental to transatlantic cohesion. Following the September 11, 2001, terrorist attacks on the United States, NATO invoked Article 5 and European allies fought and died with U.S. forces in Afghanistan. Some analysts suggest that European support for the U.S. and NATO missions in Afghanistan is driven more by the desire to stand as allies with the United States, and less by the view that instability in Afghanistan poses a significant threat to their own security. Experts increasingly question whether the allies will follow where the United States leads in the future. As a prime example of diminished cohesion, many point to current European reluctance to keep forces in Syria to guard against an Islamic State resurgence after the expected U.S. troop withdrawal. Such U.S.-European divisions are widely considered a win for Russia, both in terms of undermining the transatlantic partnership and consolidating Russia's influence in Syria.", "Some European leaders worry about potential U.S. global disengagement and argue that Europe must be better prepared to address both regional and international challenges on its own. Many observers view EU efforts over the past few years to conclude trade agreements with other countries and regions (including Canada, Japan, and Latin America) and to enhance defense cooperation as aimed, in part, at reducing European dependence on the United States. Some analysts suggest that recent calls by French President Emmanuel Macron for a \"European army\" seek to underscore the need to boost European military capabilities in the face of growing uncertainty about the future U.S. role in the world. German Chancellor Angela Merkel subsequently supported Macron's position on developing a European army, although she noted that it should seek to complement, not compete with, NATO.", "Others contend that the transatlantic partnership will endure. Europe remains largely dependent on the U.S. security guarantee, and the magnitude of U.S.-EU trade and investment ties will continue to bind together the two sides of the Atlantic. Those with this view also point out that the United States and Europe continue to share broadly similar values and policy outlooks and have few other partners of comparable size and influence elsewhere in the world. Some observers note that European allies have sought to respond constructively to President Trump's criticisms of NATO. Many experts believe that despite U.S.-EU tensions on certain policy issues, the EU will seek to work with the Trump Administration where possible and will aim to preserve political, security, and economic relations with the United States for the long term. The EU continues to cooperate with the United States on issues of common interest and concern, such as countering terrorism, promoting cybersecurity, and reforming the WTO, and plans to negotiate a new trade agreement with the United States (although formal negotiations have yet to begin)."], "subsections": []}, {"section_title": "Issues for Congress", "paragraphs": ["Many Members of Congress regard a strong, close transatlantic partnership as crucial to U.S. national security and economic interests. In February 2019, Speaker Pelosi led a congressional delegation to Europe and asserted that the visit sought to reaffirm \"our commitment to the transatlantic alliance, our commitment to NATO and respect for the European Union.\" In the 115 th Congress, hearings addressed a wide range of current European issues\u2014from Brexit to EU policy toward Russia to European migration issues. In the 116 th Congress, several hearings focused on NATO ahead of its 70 th anniversary in April 2019, and on the broader transatlantic relationship under the Trump Administration.", "Broad bipartisan support exists in Congress for NATO. While many Members of Congress have criticized specific developments within NATO\u2014regarding burdensharing, for example\u2014Congress as a whole has long backed NATO and U.S. leadership of the alliance. During the Trump Administration, expressions of congressional support have been viewed at times as an effort to reassure allies troubled by President Trump's criticisms of the alliance. ", "During the Trump Administration, both chambers of Congress have passed legislation expressly reaffirming U.S. support for NATO, including legislation passed by the House in January 2019 ( H.R. 676 ) seeking to limit the president's ability to withdraw from NATO unilaterally. Legislation similar to H.R. 676 has been introduced in the Senate ( S.J.Res. 4 and S. 482 ). Some analysts viewed the bipartisan House-Senate invitation to NATO Secretary General Jens Stoltenberg to address a joint session of Congress in April 2019 as an additional demonstration of NATO's importance to Congress.", "Many Members of Congress also have considered the EU to be vital to European peace and prosperity, and thus serving U.S. interests. In the 115 th and 116 th Congresses, some House and Senate Members have sought to reassure EU officials and member state governments of continued U.S. support for the EU, in part through visits to Brussels and key European capitals, the reestablishment of the EU Caucus in the House, and continued House participation in the Transatlantic Legislators' Dialogue (TLD) with the European Parliament. In early 2019, some Members of Congress urged the Trump Administration to reinstate the status of the EU's diplomatic mission to the United States as equivalent to that of a national mission after the State Department downgraded it in late 2018 to that of an international organization (which has protocol implications).", "Congress traditionally has viewed U.S.-European trade and investment relations as being largely mutually beneficial. H.Res. 810, introduced in April 2018 by Representative William Keating, would have reaffirmed the importance of U.S.-EU trade and investment ties to the economic and national security interests of the United States. Some Members have expressed varying degrees of concern about the Trump Administration's imposition of tariffs on steel and aluminum imports from the EU and other U.S. trading partners. This concern could prompt legislative debate over modifying the President's delegated authority under Section 232 (see, for example, S. 3013 ).", "At the same time, some Members of Congress share the Administration's critical views on certain European foreign and economic policies. Like the Administration, many Members are concerned about European defense spending levels and have long objected to any EU initiatives to build European defense capabilities that could ultimately compete with NATO. Some Members are wary about what they view as growing Chinese influence in Europe, and troubled by potential European efforts to protect business interests from potential U.S. secondary sanctions on Iran or Russia. Considerable congressional opposition exists to projects such as the Nord Stream 2 natural gas pipeline, which many Members believe would increase European dependence on Russian gas. Some Members agree with the Administration that any new U.S.-EU trade talks must include agriculture.", "Members of Congress may wish to assess the extent to which the transatlantic relationship contributes to promoting U.S. strategic and economic interests, and the implications of the Administration's policies on the U.S.-European partnership in the short and long term. Deliberation may include the following potential issues:", "NATO. Congress may wish to examine the future of the alliance further. This could entail evaluating the current state of alliance cohesion, the extent of burdensharing within the alliance and how best to measure allied contributions, possible future threats facing NATO and whether NATO is equipped to manage such challenges, and NATO's costs and benefits for the United States. U.S.-EU Economic Relations. Based on its constitutional role over tariffs and foreign commerce, Congress has a direct interest in monitoring and shaping the proposed new U.S.-EU trade agreement negotiations, and it could consider implementing legislation for a potential final trade agreement under Trade Promotion Authority. Congress may be interested in the implications of Administration trade and tariff policies and the extent to which EU retaliatory tariffs and potential U.S. auto tariffs could affect U.S.-EU trade and investment ties. Members of Congress also may wish to consider the extent to which U.S.-EU cooperation on trade issues could help address issues of mutual concern, such as with respect to China's trading practices or the development of globally-relevant rules on trade. Future o f the EU . The EU is contending with numerous internal and external challenges. The EU also faces leadership changes, with a new European Parliament elected in May 2019 and a new European Commission and President of the European Council due to take office in late 2019. Congress may wish to examine whether and how such issues could affect the EU's future development and U.S.-EU cooperation. Brexit. Congress may wish to consider Brexit's implications for U.S.-UK and U.S.-EU relations, as well as for NATO and the Northern Ireland peace process. Congress may also examine possible options and prospects for a future U.S.-UK trade agreement following Brexit. Russia. Prospects for further U.S.-European cooperation on Russia, especially in the context of deliberations on imposing additional sanctions or employing other foreign policy tools to address concerns about Russia's activities, may be of interest to Congress. European vulnerabilities to hostile Russian measures and the degree to which Russia could benefit from transatlantic divisions may be issues for congressional oversight. China . Amid concerns on both sides of the Atlantic about China's growing global influence, Congress may wish to assess where U.S. and European policies converge and diverge with respect to China and possibilities for future U.S.-European cooperation in managing the rise of China."], "subsections": []}]}]}}
{"id": "R43744", "title": "Monuments and Memorials Authorized Under the Commemorative Works Act in the District of Columbia: Current Development of In-Progress and Lapsed Works", "released_date": "2019-05-23T00:00:00", "summary": ["Under the Commemorative Works Act (CWA) of 1986, Congress may authorize commemorative works to be placed in the District of Columbia or its environs. Once a commemorative work has been authorized, Congress continues to be responsible for statutorily designating a memorial site location.", "This report provides a status update on 12 in-progress memorials and 6 memorials with lapsed authorizations. For each monument or memorial, the report provides a rationale for the work as expressed in the Congressional Record or a House or Senate committee report; its statutory authority; the group or groups sponsoring the commemoration; and the memorial's location (or proposed location), if known. A picture or rendering of each work is also included, when available.", "For more information on the Commemorative Works Act, see CRS Report R41658, Commemorative Works in the District of Columbia: Background and Practice, by Jacob R. Straus; CRS Report R43241, Monuments and Memorials in the District of Columbia: Analysis and Options for Proposed Exemptions to the Commemorative Works Act, by Jacob R. Straus; and CRS Report R43743, Monuments and Memorials Authorized and Completed Under the Commemorative Works Act in the District of Columbia, by Jacob R. Straus."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["Since November 1986, the Commemorative Works Act (CWA) has provided the legal framework for the placement of commemorative works in the District of Columbia. The CWA was enacted to establish a statutory process for ensuring \"that future commemorative works in areas administered by the National Park Service (NPS) and the General Services Administration (GSA) in the District of Columbia and its environs (1) are appropriately designed, constructed, and located and (2) reflect a consensus of the lasting significance of the subjects involved.\" Areas administered by other agencies are not subject to the CWA. Responsibility for overseeing the design, construction, and maintenance of such works was delegated to the Secretary of the Interior or the Administrator of the GSA, the National Capital Planning Commission (NCPC), and the U.S. Commission of Fine Arts (CFA). Additionally, the CWA restricts placement of commemorative works to certain areas of the District of Columbia based on the subject's historic importance.", "Pursuant to the CWA, locating a commemorative work on federally owned and administered land in the District of Columbia requires the federal government to maintain the memorial unless otherwise stipulated in the enabling legislation. In some cases, however, authorized memorials are ultimately sited on land that falls outside of CWA jurisdiction and outside the boundaries of the District of Columbia and its environs. For example, the Air Force Memorial was authorized by Congress for placement on land owned and administered by either NPS or GSA in the District of Columbia. Memorial organizers, however, chose a site near the Pentagon in Arlington, VA, that is owned and administered by the Department of Defense. Consequently, the Department of Defense, not the NPS or GSA, is responsible for maintenance. ", "This report highlights in-progress works and memorials with lapsed authorizations since the passage of the CWA in 1986. The report provides information\u2014located within text boxes for easy reference\u2014on the statute(s) authorizing the work; the sponsor organization; statutory legislative extensions, if any; and the memorial's location or proposed location, if known. A picture or rendering of each work is also included, when available."], "subsections": []}, {"section_title": "Commemorative Works Areas of the District of Columbia", "paragraphs": ["The CWA divides areas administered by the NPS and the GSA in the District of Columbia and its environs into three sections for the placement of memorials: the Reserve, Area I, and Area II. For each area, the standards for memorial placement are specified in law, and congressional approval of monument location is required."], "subsections": [{"section_title": "Reserve", "paragraphs": ["The Reserve was created in November 2003, by P.L. 108-126 , to prohibit the addition of future memorials in an area defined as \"the great cross-axis of the Mall, which generally extends from the United States Capitol to the Lincoln Memorial, and from the White House to the Jefferson Memorial .\" Under the act, this area is considered \"a substantially completed work of civic art. \" Within this area, \"to preserve the integrity of the Mall \u2026 the siting of new commemorative works is prohibited. \" "], "subsections": []}, {"section_title": "Area I", "paragraphs": ["Created as part of the original CWA in 1986, Area I is reserved for commemorative works of \"preeminent historical and lasting significance to the United States. \" Area I is roughly bounded by the West Front of the Capitol; Pennsylvania Avenue NW (between 1 st and 15 th Streets NW); Lafayette Square; 17 th Street NW (between H Street and Constitution Avenue); Constitution Avenue NW (between 17 th and 23 rd Streets); the John F. Kennedy Center for the Performing Arts waterfront area; Theodore Roosevelt Island; National Park Service land in Virginia surrounding the George Washington Memorial Parkway; the 14 th Street Bridge area; and Maryland Avenue SW, from Maine Avenue SW, to Independence Avenue SW, at the U.S. Botanic Garden."], "subsections": []}, {"section_title": "Area II", "paragraphs": ["Also created as part of the original CWA statute, Area II is reserved for \"subjects of lasting historical significance to the American people. \" Area II encompasses all sections of the District of Columbia and its environs not part of the Reserve or Area I."], "subsections": []}]}, {"section_title": "Factors Potentially Influencing Commemorative Works' Completion", "paragraphs": ["Of the 37 commemorative works authorized for placement in the District of Columbia since 1986, 19 (51%) have been completed and dedicated, 12 (32%) are in progress, and 6 (16%) have lapsed authorizations. Several factors may affect a memorial foundation's ability to complete a memorial. These include settling on a desired site location, getting design approval, and raising the funds necessary to design and build a commemorative work."], "subsections": [{"section_title": "Site Location", "paragraphs": ["Choosing a memorial site location is one of the biggest tasks for all authorized sponsor groups. Many groups want locations on or near the National Mall. The creation of the Reserve in 2003, however, makes placement of a future memorial on the National Mall difficult. Subsequently, many sponsor groups attempt to locate sites as close to the National Mall as possible in order to ensure that visitors have easy access to the memorial. For example, the Dwight D. Eisenhower Memorial is to be located on land directly south of the Smithsonian National Air and Space Museum, thus providing a prominent\u2014just off the Mall\u2014location.", "Likewise, the foundation previously authorized to construct a memorial to honor John Adams and his family's legacy evaluated site locations as close to the National Mall as possible."], "subsections": []}, {"section_title": "Design Approval", "paragraphs": ["In 1986, as part of the CWA, Congress authorized the NCPC and the CFA to approve memorial designs. The NCPC and the CFA were tasked with carrying out the goals of the CWA, which are", "(1) to preserve the integrity of the comprehensive design of the L'Enfant and McMillan plans for the Nation's Capital; (2) to ensure the continued public use and enjoyment of open space in the District of Columbia and its environs, and to encourage the location of commemorative works within the urban fabric of the District of Columbia; (3) to preserve, protect, and maintain the limited amount of open space available to residents of, and visitors to, the Nation's Capital; and (4) to ensure that future commemorative works in areas administered by the National Park Service and the Administrator of General Services in the District of Columbia and its environs are \u2026 appropriately designed, constructed, and located; and \u2026 reflect a consensus of lasting national significance of the subjects involved.", "In some instances, sponsor groups have difficulty creating a memorial vision that meets the specifications of the NCPC, CFA, and the National Capital Memorial Advisory Commission (NCMAC). In these cases, groups will often have to present multiple designs to these bodies before getting final design approval. For example, the Eisenhower Memorial Commission has presented variations on the design for the Eisenhower Memorial to the NCPC multiple times. In all instances, the NCPC gave feedback to the memorial design team and asked them to continue work to comply with NCPC guidelines for memorial construction."], "subsections": []}, {"section_title": "Fundraising", "paragraphs": ["Perhaps the most challenging step in the commemorative works process for many sponsor groups is raising the necessary funds to design and build a commemorative work. Although most sponsor groups do not anticipate fundraising difficulties, some groups have experienced challenges. Failure to raise the necessary funds can be used as a reason not to extend a memorial's authorization beyond the initial seven-year period. In some cases, even though the CWA generally prohibits the use of federal funds for memorial design and construction, Congress has authorized appropriations to aid sponsor groups in their fundraising efforts. For example, in 2005, Congress appropriated $10 million to the Secretary of the Interior \"for necessary expenses for the Memorial to Martin Luther King, Jr.\" The appropriation was designated as matching funds, making them available only after being matched by nonfederal contributions.", "Since the enactment of the Commemorative Works Act in 1986, 37 memorials and monuments have been authorized by statute. On a yearly basis, however, legislation is pending before Congress to consider a wide range of additional commemorative works. Pursuant to the CWA, future commemorative works will continue to be considered according to congressional guidelines. If new commemorative works are authorized or currently authorized commemorative works are completed, this report will be updated accordingly."], "subsections": []}]}, {"section_title": "Authorized Commemorative Works", "paragraphs": ["Since the passage of the Commemorative Works Act (CWA) in 1986, Congress has authorized 37 commemorative works to be placed in the District of Columbia or its environs; 32 of these have been sited on land governed by the CWA. Of these works, 12 are in progress and 6 have lapsed authorizations. Table 1 lists commemorative works authorized by Congress since 1986 that are in progress or whose authorization has lapsed."], "subsections": []}, {"section_title": "In-Progress Commemorative Works", "paragraphs": ["Currently, 12 commemorative works are in various stages of development. These include the following:", "In-Progress Memorials", "Dwight D. Eisenhower Memorial; ", "Memorials Being Designed", "Slaves and Free Black Persons Who Served in the Revolutionary War Memorial;", "Memorials Being Planned with a Site Location", "World War II Prayer plaque,", "World War I Memorial,", "Korean War Memorial Wall of Remembrance,", "Second Division Memorial modifications, ", "Desert Storm and Desert Shield Memorial, and", "Peace Corps Memorial;", "Memorials Being Planned and Evaluating Site Locations", "Gold Star Mothers Memorial, ", "John Adams and his Family's Legacy Memorial, ", "Global War on Terrorism Memorial, and", "Emergency Medical Services Memorial."], "subsections": [{"section_title": "Memorials Under Construction", "paragraphs": ["Currently, one memorial authorized pursuant to the CWA is under construction\u2014the Dwight D. Eisenhower Memorial, which broke ground on November 2, 2017. The most recently dedicated memorial was the Victims of the Ukrainian Manmade Famine of 1932-1933 Memorial."], "subsections": [{"section_title": "Dwight D. Eisenhower", "paragraphs": ["In October 1999, Congress created a federal commission to \"consider and formulate plans for ... a permanent memorial to Dwight D. Eisenhower, including its nature, design, construction, and location.\" In January 2002, Congress amended the initial statute to formally authorize the commission to create a memorial. In remarks during debate on additional amendments to the commission's statute in 2007, Representative Dennis Moore summarized Eisenhower's life and contributions to the United States:", "I am particularly proud to claim one of the greatest 20 th -century Americans as a fellow Kansan. He ranks as one of the preeminent figures in the global history of the 20 th century. Dwight Eisenhower spent his entire life in public service. His most well-known contributions include serving as Supreme Commander of the Allied Expeditionary Forces in World War II and as 34 th President of the United States, but Eisenhower also served as the first commander of NATO and as President of Columbia University. Dramatic changes occurred in America during his lifetime, many of which he participated in and influenced through his extraordinary leadership as President. Although Ike grew up before automobiles existed, he created the Interstate Highway System and took America into space. He created NASA, the Department of Health, Education, and Welfare, and the Federal Aviation Administration. He added Hawaii and Alaska to the United States and ended the Korean War. President Eisenhower desegregated the District of Columbia and sent federal troops into Little Rock, Arkansas, to enforce school integration. He defused international crises and inaugurated the national security policies that guided the nation for the next three decades, leading to the peaceful end of the Cold War. A career soldier, Eisenhower championed peace, freedom, justice and security, and as President he stressed the interdependence of those goals. He spent a lifetime fulfilling his duty to his country, always remembering to ask what's best for America.", "The memorial is to be located at Maryland Avenue and Independence Avenue, SW, between the National Air and Space Museum and the Lyndon B. Johnson Department of Education building. It is designed by architect Frank Gehry. On September 20, 2017, the CFA reviewed and approved the final design for the Eisenhower Memorial. On October 5, 2017, NCPC also approved the final memorial design. On November 2, 2017, a groundbreaking ceremony was held for the memorial.", " Figure 1 shows the final design for the Dwight D. Eisenhower Memorial as approved by NCPC and CFA. The Eisenhower Memorial is currently under construction."], "subsections": []}]}, {"section_title": "Memorials Being Designed", "paragraphs": [], "subsections": [{"section_title": "World War II D-Day Prayer", "paragraphs": ["In June 2014, Congress authorized the placement of a plaque containing President Franklin D. Roosevelt's D-Day prayer at the \"area of the World War II Memorial in the District of Columbia.... \" During debate on the bill in the 112 th Congress ( H.R. 2070 ), Representative Bill Johnson summarized why he believed the prayer should be added to the World War II Memorial.", "This legislation directs the Secretary of the Interior to install at the World War II Memorial a suitable plaque or an inscription with the words that President Franklin Roosevelt prayed with the Nation on the morning of the D-day invasion. This prayer, which has been entitled \"Let Our Hearts Be Stout,'' gave solace, comfort and strength to our Nation and our brave warriors as we fought against tyranny and oppression. The memorial was built to honor the 16 million who served in the Armed Forces of the United States during World War II and the more than 400,000 who died during the war ... I have no doubt that the prayer should be included among the tributes to the Greatest Generation memorialized on the National Mall, and I strongly urge all of my colleagues to support this legislation.", "The prayer plaque is to be located at the \"Circle of Remembrance\" on the northwest side of the World War II Memorial. The NCPC and the CFA both favor an \"asymmetrical\" design for the prayer plaque. Figure 2 shows the proposed location of the plaque at the Circle of Remembrance."], "subsections": []}, {"section_title": "Slaves and Free Black Persons Who Served in the Revolutionary War", "paragraphs": ["In December 2012, as part of the National Defense Authorization Act for Fiscal Year 2013, Congress authorized the National Mall Liberty Fund DC to establish a commemorative work \"to honor the more than 5,000 courageous slaves and free Black persons who served as soldiers and sailors or provided civilian assistance during the American Revolution.\" Additionally, P.L. 112-239 repealed a 1986 authorization to the Black Revolutionary War Patriots Foundation to establish a commemorative work for black Revolutionary War veterans. ", "In remarks introducing the 1986 legislation, Representative Mary Rose Oakar summarized the need, from her perspective, for a memorial to black Revolutionary War veterans:", "Mr. Speaker, as early as 1652 blacks were fighting as members of the Militia in Colonial America, thus beginning their history of achievement and heroism for our country. Yet, history books in American schools have for the most part omitted the contributions of black soldiers since the Revolutionary War, to our most recent conflict in Vietnam.", "This memorial to these black Americans is a small tribute to their bravery and valor, an important part of the founding of our country.", "Following its initial authorization in 1986, Congress approved the memorial's location in Area I on land that became part of the Reserve in 2003. Following the site designation, the memorial was reauthorized three times. Pursuant to P.L. 106-442 , the Black Revolutionary War Patriots Foundation's authorization for the memorial expired in 2005.", "In the Senate report accompanying the 2012 authorization ( S. 883 , 112 th Congress), the Senate Committee on Energy and Natural Resources summarized the importance of reauthorizing the memorial with a new sponsor.", "In 1986, Congress authorized the Black Revolutionary War Patriots Memorial Foundation to establish the Black Revolutionary War Patriots Memorial to honor the 5,000 courageous slaves and free Black persons who served as soldiers or provided civilian assistance during the American Revolution ( P.L. 99-558 ). ", "In 1987 Congress enacted a second law, P.L. 100-265 , authorizing placement of that memorial within the monumental core area as it was then defined by the Commemorative Works Act. In 1988, the National Park Service, the Commission of Fine Arts, and the National Capital Planning Commission approved a site in Constitution Gardens for the Black Revolutionary War Patriots Memorial and, in 1996, approved the final design. Despite four extensions of the memorial's legislative authorization over 21 years, the Foundation was unable to raise sufficient funds for construction, the authority (and associated site and design approvals) finally lapsed in October 2005, and the Foundation disbanded with numerous outstanding debts and unpaid creditors. ", "S. 883 would authorize another nonprofit organization, the National Mall Liberty Fund D.C., to construct a commemorative work honoring the same individuals as proposed by the Black Revolutionary War Patriots Memorial Foundation, subject to the requirements of the Commemorative Works Act.", "On September 26, 2014, President Obama signed H.J.Res. 120 to provide the memorial with a location in Area I. The sponsor group publicly expressed interest in three sites: the National Mall at 14 th Street and Independence Avenue, NW; Freedom Plaza; and Virginia Avenue and 19 th Streets, NW, with a strong preference for the National Mall site, which is currently under the jurisdiction of the U.S. Department of Agriculture. In the 114 th Congress (2015-2016), legislation was introduced to designate the Secretary of Agriculture as the officer \"responsible for the consideration of the site and design proposals and the submission of such proposals on behalf of the sponsor to the Commission of Fine Arts and the National Capital Planning Commission\" in order to apply the CWA to the memorial. No further action was taken on the measure. Figure 3 shows a memorial concept design."], "subsections": []}, {"section_title": "World War I Memorial", "paragraphs": ["In December 2014, as part of the FY2015 National Defense Authorization Act, Congress re-designated Pershing Park in the District of Columbia as \"a World War I Memorial,\" and authorized the World War I Centennial Commission to \"enhance the General Pershing Commemorative Work by constructing ... appropriate sculptural and other commemorative elements, including landscaping, to further honor the service of members of the United States Armed Forces in World War I.\" Pershing Park is located between E Street and Pennsylvania Avenue and 14 th and 15 th Streets, NW. Currently, the park contains a statue of General John J. Pershing. ", "On January 26, 2016, the World War I Centennial Commission announced the winner of its design competition. Titled \"The Weight of Sacrifice,\" the winning design envisions an \"allegorical idea that public space and public freedom are hard won through the great sacrifices of countless individuals in the pursuit of liberty.\" On February 7, 2019, the commission presented the latest version of its design to the NCPC, and on May 16, 2019, to the CFA. Previously, a ceremonial groundbreaking for the memorial was held on November 9, 2017. Figure 4 shows a revised concept design for the World War I Memorial."], "subsections": []}, {"section_title": "Korean War Memorial Wall of Remembrance", "paragraphs": ["In October 2016, Congress authorized a wall of remembrance, which \"shall include a list of names of members of the Armed Forces of the United States who died in the Korean War\" to be added to the Korean War Memorial in the District of Columbia. The wall of remembrance is to be located \"at the site of the Korean War Veterans Memorial.\" During debate on the bill ( H.R. 1475 , 114 th Congress) in the House, Representative Sam Johnson summarized why he believed it was important to add a wall of remembrance to the Korean War Veterans Memorial.", "My fellow Korean war veterans and I believe that the magnitude of this enormous sacrifice is not yet fully conveyed by the memorial in Washington, DC.... Similar to the Vietnam Veterans Memorial Wall, the Korean War Veterans Memorial Wall of Remembrance would eternally honor the brave Americans who gave their lives in defense of freedom during the Korean War. It would list their names as a visual record of their sacrifice.", " Figure 5 shows the concept design for the Korean War Memorial Wall of Remembrance."], "subsections": []}, {"section_title": "Second Division Memorial Bench Additions", "paragraphs": ["On March 23, 2018, as part of the Consolidated Appropriations Act, 2018 ( P.L. 115-141 ), modifications to the Second Division Memorial were authorized. The Second Division Memorial was initially dedicated on July 18, 1936, to commemorate the division's World War I casualties, and \"two wings were dedicated on June 20, 1962, with significant battles of World War II inscribed on the west and of the Korean War on the east.\" P.L. 115-141 authorizes the placement of \"additional commemorative elements or engravings on the raised platform or stone work of the existing Second Division Memorial ... to further honor the members of the Second Infantry Division who have given their lives in service to the United States.\" Figure 6 shows the current design of the Second Division Memorial."], "subsections": []}, {"section_title": "Desert Storm and Desert Shield", "paragraphs": ["In December 2014, as part of the FY2015 National Defense Authorization Act, Congress authorized the National Desert Storm Memorial Association to establish a National Desert Storm and Desert Shield Memorial in the District of Columbia to \"commemorate and honor those who, as a member of the Armed forces, served on active duty in support of Operation Desert Storm or Operation Desert Shield.\" During debate on the House version of the bill ( H.R. 503 ), Representative Doc Hastings, chair of the House Natural Resources Committee, summarized the need for a memorial:", "Over 600,000 American servicemen deployed for Operations Desert Storm and Desert Shield and successfully led a coalition of over 30 countries to evict an invading army to secure the independence of Kuwait. ", "This memorial will recognize their success, but it will also serve as a commemoration of those nearly 300 Americans who made the ultimate sacrifice on our behalf.", "On March 31, 2017, President Trump signed S.J.Res. 1 to provide the memorial with a location in Area I. The memorial will be located at the southwest corner of Constitution Avenue, NW, and 23 rd Street, NW. Figure 7 shows a rendering for the National Desert Storm Veteran's War Memorial."], "subsections": []}, {"section_title": "Peace Corps", "paragraphs": ["In January 2014, Congress authorized the Peace Corps Memorial Foundation to establish a commemorative work in the District of Columbia to \"commemorate the mission of the Peace Corps and the ideals on which the Peace Corps was founded.\" During House debate on the bill ( S. 230 ), Representative Ra\u00fal Grijalva, ranking member of the House Natural Resources Committee, Subcommittee on Public Lands and Environmental Regulations, summarized his understanding of the aims of the Peace Corps Memorial:", "Last November, we marked the 50 th anniversary of President Kennedy's tragic assassination. Losing President Kennedy left a lasting scar on the American psyche, but his legacy lives on through his words and ideas, including the establishment of the Peace Corps, an institution that has sent over 200,000 Americans to 139 countries in its 52-year history. ", "S. 230 authorizes construction of a memorial to commemorate the mission of the Peace Corps and the values on which it was founded. I cannot think of a better way to celebrate President Kennedy's legacy and the tremendous accomplishments of the Peace Corps. ", "With the passage of S. 230 , we will be sending a worthwhile bill to the President's desk. I am glad we have been able to put our differences aside and pass such a meaningful bill in the first few weeks of the new year.", "To be located between 1 st Street, NW, Louisiana Avenue, NW, and C Street, NW, in the District of Columbia, the Peace Corps Memorial Foundation presented its design concept to the CFA and NCPC in early 2019. In March 2019, the CFA approved the memorial's concept design with comments to be addressed as the design moves forward toward a final design. In May 2019, the NCPC stated \"that the proposed concept design does not adequately embrace the site's strengths or adequately respond to these challenges, particularly as they relate to visual resources, visitor use and experience, or natural resources.\" Figure 8 shows the concept design for the Peace Corps Memorial as presented to CFA and NCPC."], "subsections": []}]}, {"section_title": "Site Locations to Be Determined", "paragraphs": [], "subsections": [{"section_title": "John Adams and His Family's Legacy", "paragraphs": ["In November 2001, Congress authorized the Adams Memorial Foundation to \"establish a commemorative work on Federal land in the District of Columbia and its environs to honor former President John Adams, along with his wife Abigail Adams and former President John Quincy Adams, and the family's legacy of public service.\" In remarks during debate on the bill ( H.R. 1668 , 107 th Congress), Representative Joel Hefley summarized the importance of the Adams family to American history:", "Perhaps no American family has contributed as profoundly to public service as the family that gave the Nation its second President, John Adams; his wife, Abigail Adams; and their son, our sixth President, John Quincy Adams, who was also, by the way, a member of this body. The family's legacy was far reaching, continuing with John Quincy Adams's son, Charles Francis Adams, who was also a member of this body and an ambassador to England during the Civil War; and his son, Henry Adams, an eminent writer and scholar, and it goes on and on.", "In March 2019, as part of the enactment of the John D. Dingell, Jr. Conservation, Management, and Recreation Act, Congress created the Adams Memorial Commission. The Adams Memorial Commission replaces the Adams Memorial Foundation as the memorial's sponsor. Moving forward, the commission will be responsible for all aspects of the memorial's siting, design, and construction.", "Previously, in December 2013, the Adams Memorial Foundation's authorization expired. Prior to its lapse of authorization, the Adams Memorial Foundation was working with the NCMAC on the potential recommendation of Area I. While the commission had not endorsed any particular site location, it had recommended that the foundation continue its examination of numerous sites in the District of Columbia in order to find a suitable location."], "subsections": []}, {"section_title": "Gold Star Mothers", "paragraphs": ["In December 2012, as part of the National Defense Authorization Act for Fiscal Year 2013, Congress authorized the Gold Star Mothers National Monument Foundation to establish a commemorative work to \"commemorate the sacrifices made by mothers, and made by their sons and daughters who as members of the Armed Forces make the ultimate sacrifice, in defense of the United States.\" In testimony before the House Committee on Natural Resources Subcommittee on National Parks, Forests, and Public Lands, the legislation's ( H.R. 1980 ) sponsor, Representative Jon Runyan, explained why he thought a memorial to Gold Star Mothers was needed:", "During World War I, mothers of sons and daughters who served in the Armed Forces displayed flags bearing a blue star to represent pride in their sons or daughters and their hope that they would return home safely. ", "For more than 650,000 of these brave mothers, that hope was shattered, and their children never returned home. Afterwards many of them began displaying flags bearing gold stars to represent the sacrifice that their sons and daughters made in heroic service to our country. Over the years the gold star has come to represent a child who was killed while serving in the Armed Forces, during either war or peacetime.", "In December 2013, the Gold Star Mothers National Monument Foundation presented its site analysis to the National Capital Memorial Advisory Commission. In that informational presentation, they expressed a preference for a site location adjacent to Arlington National Cemetery. In January 2015, the NCPC expressed support for a site next to the Arlington National Cemetery Visitor's Center on Memorial Drive, and the CFA approved that site location. Figure 9 shows the Gold Star Mothers National Monument Foundation's concept design. "], "subsections": []}, {"section_title": "Global War on Terrorism Memorial", "paragraphs": ["In August 2017, Congress authorized the Global War on Terrorism Memorial Foundation to establish a commemorative work in the District of Columbia to \"commemorative and honor the members of the Armed Forces that served on active duty in support of the Global War on Terrorism.\" During debate on the bill ( H.R. 873 ) in the House, Representative Tom McClintock, chair of the Federal Lands Subcommittee of the House Committee on Natural Resources, stated why a memorial to the Global War on Terrorism is important, despite a statutory prohibition against war memorials for ongoing conflicts.", "The Commemorative Works Act requires that a war be ended for at least 10 years before planning can commence on a national memorial. There is good reason for this requirement: it gives history the insight to place the war in an historic context and to begin to fully appreciate its full significance to our country and future generations.", "But the war on terrorism has been fought in a decidedly different way than our past wars. We are now approaching the 16 th anniversary of the attack on New York and Washington. The veterans who sacrificed so much to keep that war away from our shores deserve some tangible and lasting tribute to their patriotism and altruism while they, their families, and their fellow countrymen can know it. The Gold Star families of our fallen heroes for whom the war will never end deserve some assurance that their sons and daughters will never be forgotten by a grateful Nation.", "We should remember that many of our Nation's heroes from World War II never lived to see the completion of the World War II Memorial, which was completed 59 years after the end of that conflict.", "For these reasons, this measure suspends the 10-year period in current law. It doesn't repeal it. It merely sets it aside for the unique circumstances of the current war on terrorism."], "subsections": []}, {"section_title": "Emergency Medical Services Memorial", "paragraphs": ["In October 2018, Congress authorized the National Emergency Medical Services Memorial Foundation to establish a commemorative work in the District of Columbia to \"commemorate the commitment and service represented by emergency medical services.\" During House debate on the bill ( H.R. 1037 ), Representative Tom McClintock, chair of the Federal Lands Subcommittee of the House Committee on Natural Resources, stated why he considered a memorial to the emergency medical services providers to be important:", "Mr. Speaker, each year 850,000 EMS providers answer more than 30 million calls to serve 22 million patients in need at a moment's notice and without reservation. For these heroes who serve on the front lines of medicine, sacrifice is a part of their calling. EMTs and paramedics have a rate of injury that is about three times the national average for all occupations, and some pay the ultimate price in the service of helping others.", "The men and women of the emergency medical services profession face danger every day to save lives and help their neighbors in crisis. They respond to incidents ranging from a single person's medical emergency to natural and manmade disasters, including terrorist attacks. But while their first responder peers in law enforcement and firefighting have been honored with national memorials, EMS providers have not."], "subsections": []}]}]}, {"section_title": "Commemorative Works with Lapsed Authorizations", "paragraphs": ["Since 1986, six commemorative works authorized by Congress were not completed in the time allowed by the Commemorative Works Act and were not granted subsequent extensions by Congress. These memorials were to be constructed to honor Thomas Paine, Benjamin Banneker, Frederick Douglass, Brigadier General Francis Marion, to create a National Peace Garden, and to build a Vietnam Veterans Visitor Center. The following section describes the initial authorization for each of these memorials and congressional extensions of memorial authorization, if appropriate."], "subsections": [{"section_title": "National Peace Garden", "paragraphs": ["In June 1987, Congress authorized the Director of the National Park Service to enter into an agreement with the Peace Garden Project to \"construct a garden to be known as the 'Peace Garden' on a site on Federal land in the District of Columbia to honor the commitment of the people of the United States to world peace.\" In remarks during debate on the bill ( H.R. 191 , 100 th Congress), Representative Steny Hoyer summarized the need for a memorial to peace:", "No one or nation can ever doubt the commitment of the American people to protecting our freedoms when threatened by foreign aggressors. Our Nation's Capital rightfully honors our heroic defenders of freedom\u2014Americans who served their country courageously, gallantly, and at great risk to their lives.", "Our citizens have also exhibited an equal commitment for world peace and international law and justice. The creation of a Peace Garden is an appropriate symbol of our efforts to continuing to seek peaceful resolution of world conflict and the institution of the rule of law.", "Certainly, this century has been one of bloodiest and most violent in man's history. We have seen countless battles, wars, rebellions, massacres, and civil and international strife of all kinds\u2014continuing examples of man's inhumanity toward his fellow man.", "At the same time, against this terrible backdrop, there have been encouraging strides toward world peace. As we honor those who have made sacrifices in war, through monuments, so, too, should we honor them by striving to ensure that the world they have left us will be a peaceful one. A garden would be a living monument to our efforts.", "In 1988, a site was approved for the Peace Garden at Hains Point in Southwest Washington, DC. Since its initial authorization in 1987, the National Peace Garden was reauthorized twice. The authorization expired on June 30, 2002."], "subsections": []}, {"section_title": "Thomas Paine", "paragraphs": ["In October 1992, Congress authorized the Thomas Paine National Historical Association to establish a memorial to honor Revolutionary War patriot Thomas Paine. In remarks summarizing the need for a memorial to Thomas Paine, Representative William Lacy Clay stated:", "Thomas Paine's writings were a catalyst of the American Revolution. His insistence upon the right to resist arbitrary rule has inspired oppressed peoples worldwide, just as it continues to inspire us. It is time that a grateful nation gives him a permanent place of honor in the capital of the country he helped build.", "Since its initial authorization in 1992, the authorization for the Thomas Paine memorial was extended once. Authorization for the memorial expired on December 31, 2003."], "subsections": []}, {"section_title": "Benjamin Banneker", "paragraphs": ["In November 1998, Congress authorized the Washington Interdependence Council of the District of Columbia to establish a memorial to \"honor and commemorate the accomplishments of Mr. Benjamin Banneker.\" Adopted as part of a larger bill to create a national heritage area in Michigan, the authorization for the Benjamin Banneker Memorial passed the House and Senate without debate and by voice vote in October. In 2001, the National Park Service reported that the memorial was to be sited on the L'Enfant Promenade in Southwest Washington and be under the jurisdiction of the District of Columbia. ", "Since its initial authorization, the Washington Interdependence Council has not been granted an extension to its original authorization, which expired in 2005. A bill ( S. 3886 ) was introduced in the 111 th Congress (2009-2010) to reauthorize a Benjamin Banneker Memorial. S. 3886 was referred to the Senate Committee on Energy and Natural Resources, but no further action was taken."], "subsections": []}, {"section_title": "Frederick Douglass", "paragraphs": ["In November 2000, Congress authorized the Frederick Douglass Gardens, Inc., \"to establish a memorial and gardens on lands under the administrative jurisdiction of the Secretary of the Interior in the District of Columbia or its environs in honor and commemoration of Frederick Douglass.\" During debate, Representative James Hansen provided a summary of why a memorial to Frederick Douglass was important:", "Mr. Speaker, Frederick Douglass was one of the most prominent leaders of the 19 th century abolitionist movement. Born into slavery in eastern Maryland in 1818, Douglass escaped to the North as a young man where he became a world-renowned defender of human rights and eloquent orator, and later a Federal ambassador and advisor to several Presidents. Frederick Douglass was a powerful voice for human rights during the important period of American history, and is still revered today for his contributions against racial injustice.", "Early in 2001, the Frederick Douglass Memorial Gardens, Inc., expressed its preference for a site location near the Douglass Memorial Bridge in Southeast Washington, but no further action was taken by Congress to approve the site location. The Frederick Douglass Memorial's authorization expired in 2008. One attempt was made to reauthorize a Frederick Douglass Memorial during the 110 th Congress (2007-2008), but the bill was not reported by the House Committee on Natural Resources."], "subsections": []}, {"section_title": "Brigadier General Francis Marion", "paragraphs": ["In May 2008, Congress authorized the Marion Park Project to establish a commemorative work to honor Brigadier General Francis Marion. In testimony before the Senate Committee on Energy and Natural Resources, Subcommittee on National Parks, Daniel N. Wenk, deputy director for operations, National Park Service, supported the enactment of legislation authorizing a Brigadier General Francis Marion Memorial and explained why such a memorial meets criteria for commemoration in the District of Columbia.", "Brigadier General Francis Marion commanded the Williamsburg Militia Revolutionary force in South Carolina and was instrumental in delaying the advance of British forces by leading his troops in disrupting supply lines. He is credited for inventing and applying innovative battle tactics in this effort, keys to an ultimate victory for the American Colonies in the Revolutionary War. Additionally Brigadier General Marion's troops are believed to have been the first racially integrated force fighting for the United States.", "The Marion Park Project identified its preferred site location for the memorial at Marion Park in southeast Washington, DC. In December 2014, the National Capital Planning Commission expressed its support for the Marion Park site. Since its initial authorization, the Marion Memorial was reauthorized once. Authorization for the memorial expired on May 8, 2018."], "subsections": []}, {"section_title": "Vietnam Veterans Memorial Visitors Center", "paragraphs": ["In November 2003, Congress authorized the Vietnam Veterans Memorial Fund to create a visitor center at the Vietnam Veterans Memorial to \"better inform and educate the public about the Vietnam Veterans Memorial and the Vietnam War.\" In the House report accompanying the legislation ( H.R. 1442 , 108 th Congress), the Committee on Resources summarized the need for a visitor center at the Vietnam Veterans Memorial:", "Since its dedication in 1982, the Vietnam Veterans Memorial, known to many as simply \"The Wall,\" has done much to heal the nation's wounds after the bitterly divisive experience of the Vietnam War. For those who served, that year marked a sea change in the country's view of the Vietnam veteran. Americans began to understand and respect the Vietnam veterans' service and sacrifice. Today, over 4.4 million people visit The Wall every year\u2014making it the most visited Memorial in the Nation's Capital. Today, most visitors to The Wall were not alive during the \"Vietnam Era.\" Many veterans' organizations and many others believe today's visitor is shortchanged in his/her experience. Many leave The Wall not fully understanding its message. To that end, a visitor center would provide an educational experience for visitors by facilitating self-guided tours, collecting and displaying remembrances of those whose names are inscribed on the Memorial, and displaying exhibits discussing the history of the Memorial and the Vietnam War. The visitor's center would eventually replace a 168-foot National Park Service kiosk currently at the site.", "The visitor center was to be constructed underground and located across the street from the Vietnam Veterans Memorial and the Lincoln Memorial. In 2015, the NCPC and CFA approved the visitor center's design. On September 21, 2018, the Vietnam Veterans Memorial Fund announced their intenti on not to seek an extension to its authorization to build the visitor center, which expired on November 17, 2018. At that time, legislation had been introduced, but not considered, to extend the fund's authorization into 2022. Previously, the fund had received two statutory extensions. "], "subsections": []}]}]}}
{"id": "R46118", "title": "The SBA Pre-Disaster Loan Pilot Program: Considerations for Congress and Policy Options", "released_date": "2019-12-17T00:00:00", "summary": ["For nearly a century, Congress has contemplated how to help businesses repair and rebuild after a disaster. Congress has also expressed interest in helping businesses use mitigation measures to protect their investments from future incidents. Mitigation activities entail identifying risks and hazards and taking measures to either substantially reduce or eliminate the impact of an incident. As described in this report, mitigation measures primarily take place during the recovery phase of a disaster. Currently, only damaged businesses in declared disaster areas are eligible for disaster loans. Businesses seeking mitigation assistance before a disaster strikes, however, must look to other sources for the assistance.", "Congress experimented with business pre-disaster mitigation (PDM) through a pilot program operated by the Small Business Administration (SBA) from FY2000 to FY2006. Though Congress authorized appropriations of $15 million each fiscal year to carry out the SBA PDM pilot program, four businesses obtained pre-disaster mitigation loans, totaling just over $100,000.", "Although the federal government has traditionally favored a post-disaster approach to mitigation, there are indications suggesting congressional interest in pre-disaster mitigation has increased in recent years, partly as a result of recent and recurring large-scale disasters, including hurricanes Katrina, Harvey, Irma, Maria, and Michael. This is evidenced by enactment of the Disaster Recovery Reform Act of 2018 (DRRA, Division D of P.L. 115-254 ), which made substantial reforms to pre-disaster mitigation. The renewed focus on pre-disaster mitigation has also led to discussions about reauthorizing the SBA PDM pilot program.", "This report describes the underlying rationale for post-disaster and pre-disaster mitigation and provides an overview of the SBA PDM loan pilot program, including its past performance and potential reasons why so few businesses participated in the pilot program. These potential reasons include (1) the fact that the pilot program was tied to FEMA programs, which delayed the program's implementation; (2) limitations on business eligibility for SBA PDM loans; and (3) the fact that businesses may not have been aware that the SBA was offering pre-disaster mitigation loans. This report also provides an overview of various policy options should Congress decide to reauthorize the SBA PDM pilot program, including considerations that may help increase business participation. These policy options include decoupling the SBA PDM disaster loan pilot program from FEMA programs and examining the most effective forms of outreach and advertising. Congress could also consider restructuring the current SBA Disaster Loan Program to allow businesses to apply a greater percentage of their disaster loan towards mitigation, and may consider investigating ways to help businesses develop continuity and disaster response plans. Congress could also consider providing PDM loans to homeowners so they can protect their homes before a disaster strikes."], "reports": {"section_title": "", "paragraphs": ["S ince the U.S. Small Business Administration's (SBA's) creation in 1953, the SBA Disaster Loan Program has provided low-interest disaster loans to businesses to help them repair, rebuild, and recover from federally declared disasters. SBA business disaster loans fall into two categories: (1) Economic Injury Disaster Loans (EIDL), and (2) business physical disaster loans. ", "EIDLs provide up to $2 million for working capital to help small businesses meet financial obligations and operating expenses that could have been met had the disaster not occurred. Loan amounts for EIDLs are based on actual economic injury and financial needs, regardless of whether the business suffered any property damage. ", "Business physical disaster loans provide up to $2 million to businesses of all sizes to repair or replace damaged physical property, including machinery, equipment, fixtures, inventory, and leasehold improvements that are not covered by insurance. In addition to repairing and replacing damaged physical property, a portion of the loans can also be applied toward mitigation measures, including grading or contouring land, installing sewer backflow valves, relocating or elevating utilities or mechanical equipment, building retaining walls, and building safe rooms or similar structures designed to protect occupants from natural disasters. The limits on post-disaster mitigation loans are the lesser of either the measure or 20% of the verified loss. ", "An important aspect of the SBA Disaster Loan Program is that a business must already be damaged and be located in a federally declared disaster area to apply a portion of its disaster loan toward mitigation measures. As will be discussed in this report, Congress experimented with business pre-disaster mitigation (PDM) through a pilot program operated by the SBA from FY2000 to FY2006.", "Providing mitigation assistance to businesses after a disaster is arguably consistent with the mitigation policies of other federal programs. For example, the Federal Emergency Management Agency (FEMA) provides both pre-disaster and post-disaster mitigation grants to states and localities, but post-disaster mitigation grants are substantially larger than pre-disaster grants. For example, from FY2014 to FY2018, $3.35 billion was spent on post-disaster mitigation grants through FEMA's Hazard Mitigation Grant Program (HMGP) and Fire Management Assistance Grants (FMAGs). In contrast, during the same period, $430 million was spent on FEMA's Pre-Disaster Mitigation (PDM) program (see Figure 1 ). ", "Figure 1. FEMA Pre-Disaster Mitigation Funding and Post-Disaster Mitigation\u00c2\u00a0FundingFY2014-FY2018Source: Data obtained from FEMA, Data Feeds, https://www.fema.gov/data-feeds. Notes: PDM denotes FEMA's Pre-Disaster Mitigation Program. HMGP denotes FEMA's Hazard Mitigation Grant Program. FMA denotes fire management assistance provided by FEMA's Fire Management Assistance Grants.", "Funding for pre-disaster mitigation, however, may increase with the enactment of the Disaster Recovery Reform Act of 2018 (DRRA, Division D of P.L. 115-254 ). Section 1234 of DRRA authorized the National Public Infrastructure Pre-Disaster Mitigation Fund (NPIPDM), which allows the President to set aside 6% from the Disaster Relief F und (DRF) with respect to each declared major disaster under the Robert T. Stafford Disaster Relief and Emergency Assistance Act (Stafford Act, P.L. 93-288 , as amended; 42 U.S.C. \u00c2\u00a7\u00c2\u00a75121 et seq.). This 6% \"set aside\" is the aggregate amount funded by the following sections of the Stafford Act:", "403 (essential assistance); 406 (repair, restoration, and replacement of damaged facilities); 407 (debris removal); 408 (federal assistance to individuals and households); 410 (unemployment assistance); 416 (crisis counseling assistance and training); and 428 (public assistance program alternative procedures).", "Although post-disaster and pre-disaster mitigation are not mutually exclusive, there are reasons why one may be favored over the other. The following section provides the underlying rationale for the two approaches to mitigation. "], "subsections": [{"section_title": "Rationale for Post-Disaster vs. Pre-Disaster Mitigation", "paragraphs": ["Over the years, scholars, researchers, and policymakers have debated whether mitigation is more effective before or after an incident. The following sections list the rationales for each approach."], "subsections": [{"section_title": "Post-Disaster Mitigation", "paragraphs": ["The underlying rationales for providing post-disaster mitigation include", "incidents such as floods and hurricanes are known to recur in the same areas. Post-disaster mitigation targets those areas to protect them from future disasters; post-disaster mitigation helps ensure that the opportunity to take mitigation measures to reduce the loss of life and property from disasters is not lost during the reconstruction process following a disaster; the recovery phase of an incident may be the most ideal time to introduce new structural changes because damaged structures are already in the process of being replaced and rebuilt; post-disaster mitigation can be used to support a \"build back better\" approach to avoid or reduce future disaster damages; providing mitigation funding after an incident is programmatically easier to administer because the grants are concomitant with a federally declared incident. In contrast, pre-disaster projects have generally been awarded on a competitive basis\u00e2\u0080\u0094each application must be scrutinized and prioritized over other applications; and policymakers may find it difficult to justify or defend expenditures for incidents that may not occur for long periods of time (or never occur). This may be particularly true during periods of heightened concern over the federal budget. "], "subsections": []}, {"section_title": "Pre-Disaster Mitigation", "paragraphs": ["Others may argue that mitigation is more effective when implemented before rather than after an incident. The rationales for pre-disaster mitigation include", "post-disaster mitigation may fail to address vulnerable areas that have not had a major disaster declaration; and studies indicate that mitigation can significantly reduce recovery costs. For example, a study published by the National Institute of Building Sciences found that for every $1 that FEMA spent on mitigation grants, there is a $6 dollar return of avoided losses in the future. Those savings, however, cannot be calculated until there are subsequent disasters."], "subsections": []}]}, {"section_title": "SBA Pre-Disaster Mitigation Loan Pilot Program", "paragraphs": ["Based on findings similar to the one issued by the National Institute of Building Sciences, Congress in 1999 passed P.L. 106-24 which amended the Small Business Act to include a Pre-Disaster Mitigation (PDM) pilot program. The program authorized SBA to make low-interest (4% or less) fixed-rate loans of no more than $50,000 per year to small businesses to implement mitigation measures designed to protect small businesses from future disaster-related damage. Section 1(a) of P.L. 106-24 authorized the SBA", "during fiscal years 2000 through 2004, to establish a predisaster mitigation program to make such loans (either directly or in cooperation with banks or other lending institutions through agreements to participate on an immediate or deferred (guaranteed) basis), as the Administrator may determine to be necessary or appropriate, to enable small businesses to use mitigation techniques in support of a formal mitigation program established by the Federal Emergency Management Agency, except that no loan or guarantee may be extended to a small business under this subparagraph unless the Administration finds that the small business is otherwise unable to obtain credit for the purposes described in this subparagraph.", "The SBA PDM pilot program was developed in support of \"Project Impact,\" a new FEMA mitigation program that emphasized disaster prevention rather than solely relying on response and recovery activities. Similarly, SBA PDM loans were intended to lessen or prevent future damages to businesses. According to the House report on H.R. 818 (the companion bill to S. 388 , which became P.L. 106-24 ) ", "The cost of disaster assistance has risen over the past several years due to increases in construction and other costs. By implementing a program to help small businesses use techniques that would lessen damage in the event of natural disasters the possibility exists to save millions of dollars in potential losses.", "The report also stated that", "the Administrator of the Small Business Administration, testified concerning the SBA's request for $934 million dollars in disaster loans for anticipated damage in the coming year. She also discussed FEMA and SBA's current efforts at mitigation and stated that FEMA estimates a $2 saving for every $1 spent on mitigation. The Administrator expressed strong support for H.R. 818 .", "Section 1(c) of P.L. 106-24 required the SBA Administrator to submit a report to Congress on the effectiveness of the pilot program. The report required information and analysis on ", "the areas served under the pilot program; the number and dollar value of loans made under the pilot program; the estimated savings to the federal government resulting from the pilot program; and other relevant information as the Administrator determines to be appropriate for evaluating the pilot program.", "Congress initially authorized appropriations of $15 million each fiscal year to carry out the PDM pilot program for FY2000 through FY2004. Congress later extended the program until the end of FY2006 and authorized an additional $15 million for the program in FY2005 and $15 million in FY2006. Since its expiration at the end of FY2006, many Members have discussed the possibility of reauthorizing the PDM pilot program. "], "subsections": [{"section_title": "SBA PDM Pilot Program Performance", "paragraphs": ["According to SBA, four loans were approved during the SBA PDM pilot program, with a total gross approval amount of $101,400 (a small fraction compared to the $105 million Congress authorized to be appropriated to the program over the seven-year period of its existence). Two of the loans defaulted and the other two loans (amounting to $52,400) were repaid in full.", "As mentioned previously, Section 1(c) of P.L. 106-24 required the SBA Administrator to submit a report to Congress on the effectiveness of the pilot program, including the areas served and dollar amounts provided under the program, estimated savings resulting from the SBA PDM pilot program, and other relevant information. A CRS search of databases could not locate the required report on the effectiveness of the pilot program and the SBA could not verify whether the report was ever submitted.", "The following sections describe the possible reasons for the lack of participation in the SBA PDM pilot program."], "subsections": []}, {"section_title": "Challenges to the Success of the SBA PDM Pilot Program", "paragraphs": ["The limited number of businesses that participated in the SBA PDM pilot program may be attributable to its alignment with FEMA programs . Aligning the two programs m ay have (1) limited the time frame to obtain a PDM loan, and (2) limited the number of businesses eligible for PDM loans . Additionally, businesses may not have been aware that pre-disaster loans were being made available through the SBA PDM pilot program."], "subsections": [{"section_title": "Limited Time Frame", "paragraphs": ["The SBA PDM pilot loan program was created in conjunction with FEMA's pre-disaster mitigation program, dubbed Project Impact. Because the two programs were aligned, the time frame in which businesses could apply for PDM loans was limited by a series of delays in the implementation of the FEMA program. That may help explain, in part, why so few businesses obtained SBA PDM loans. ", "According to SBA, the PDM program rules were effective as of October 1, 1999. However, communities could not apply to be accepted as a pre-disaster mitigation eligible community because FEMA had not yet implemented Project Impact. Project Impact's implementation was further delayed \"pending appropriations in the FY2002 Departments of Veterans Affairs, Housing and Urban Development and Independent Agencies Appropriations Act.\" On November 26, 2001, the appropriations act provided $25 million to FEMA for its pre-disaster mitigation grant program. Upon receiving the appropriation, FEMA decided to reevaluate and revamp Project Impact before its full implementation\u00e2\u0080\u0094further delaying the program. Once Project Impact was implemented, SBA revised rules (some in response to FEMA comments) concerning the SBA PDM pilot program before it was put into effect (see Appendix for additional information on both Project Impact and the SBA PDM pilot program). ", "The sequence of events described above shortened the timeframe for applying for PDM loans. A CRS search of the Federal Register indicates that PDM loans first became available July 16, 2003. "], "subsections": []}, {"section_title": "Limited Number of Eligible Applicants", "paragraphs": ["The Project Impact requirement significantly reduced the number of businesses eligible for the SBA PDM pilot program. The SBA PDM pilot program was intended to complement Project Impact by participating in the \"whole of community approach\" to disaster mitigation; SBA PDM loan eligibility was contingent on whether the business was located in a Project Impact community. The Project Impact requirement may have unintentionally limited the number of businesses eligible for PDM disaster loans. As demonstrated in Figure 2 , few communities participated in the Project Impact program. There may have been businesses in \"non-Project Impact\" areas that wanted SBA PDM loans but were ineligible because of the Project Impact requirement.", "Further limiting participation, businesses that were in Project Impact communities but not in a Special Flood Hazard Area (SFHA) were not eligible for an SBA PDM loan if it was for flood prevention measures. ", "Finally, though the SBA PDM loan pilot program continued until FY2006, Project Impact was replaced by the Pre-Disaster Mitigation (PDM) program in FY2002. According to then-FEMA Director Joe M. Allbaugh:", "I want to take the \"concept\" of Project Impact and fold it in to the program of mitigation. Project Impact is not mitigation. It is an initiative to get \"consumer buy-in.\" In many communities it became the catch-phrase to get local leaders together to look at ways to do mitigation.", "The PDM program does not designate participating communities. Rather, state and local governments submit mitigation planning and project applications to FEMA. Once FEMA reviews the application for eligibility and completeness, FEMA makes funding decisions \"based on the agency's priorities for the most effective use of grant funds and the availability of funds posted in the Notice of Funds Opportunity announcement.\" ", "Eligibility requirements for the SBA PDM loan pilot program were not changed to reflect the new FEMA PDM program. It is unclear what effect this may have had on the SBA PDM loan pilot program. "], "subsections": []}, {"section_title": "Outreach and Notifications", "paragraphs": ["As mentioned previously, SBA published notices in the Federal Register announcing the availability of pre-disaster mitigation loans. The notice designated a 30-day application filing period with a specific opening date and filing deadline, as well as the locations for obtaining and filling applications. In addition to the Federal Register notification, SBA coordinated with FEMA to issue press releases to inform potential applicants of the loan program. It is unclear, however, how effective these efforts were at letting businesses know PDM loans were available."], "subsections": []}]}]}, {"section_title": "Considerations for Congress and Policy Options", "paragraphs": [], "subsections": [{"section_title": "Reauthorizing the SBA PDM Pilot Program", "paragraphs": ["The following considerations may help increase business participation should Congress decide to reauthorize the SBA PDM pilot program. ", "First, implementation delays and eligibility restrictions, such as the ones described above, may not be an issue if Congress reauthorized the SBA PDM pilot program, because the pilot would no longer need to be tied to Project Impact. If Congress should desire that the program align with or support FEMA mitigation efforts, Congress may consider tying a reauthorized SBA PDM loan program to FEMA's Pre-Disaster Mitigation program, or, instead, making them available to all small U.S. domestic businesses.", "Second, if the SBA PDM pilot program were to be reauthorized, one option available to address outreach would be to require SBA to spend a portion of the PDM loan appropriation money on outreach, including advertising to educate businesses on the importance of mitigation to protect their investment from being damaged or destroyed by a disaster, and to help businesses become aware that PDM loans are available. Additionally, SBA could be required to provide information to Congress concerning its efforts to make businesses aware of the program, including where they could apply for a PDM loan. ", "Further, as mentioned previously, Section 1(c) of P.L. 106-24 required the SBA Administrator to submit a report to Congress on the effectiveness of the pilot program. The report required information and analysis on: ", "the areas served under the pilot program; the number and dollar value of loans made under the pilot program; the estimated savings to the federal government resulting from the pilot program; and other relevant information as the Administrator determines to be appropriate for evaluating the pilot program.", "If Congress reauthorized the SBA PDM pilot program, it could consider requiring SBA to provide similar information. Additionally, Congress could tie the report to appropriations to communicate legislative intent to carry out the reporting measure once it becomes law. Although report language itself is not law and thus not binding in the same manner as language in statute, agencies usually seek to comply with the directives contained therein. According to one congressional scholar, \"the criticisms and suggestions carried in the reports accompanying each bill are expected to influence the subsequent behavior of the agency. Committee reports are not the law, but it is expected that they be regarded almost as seriously.\""], "subsections": []}, {"section_title": "Restructuring Existing Business Physical Disaster Loans", "paragraphs": ["As mentioned previously, the limits on post-disaster mitigation loans are the lesser of either the measure or 20% of the verified loss. If Congress wanted to encourage mitigation, one option would be to consider increasing this percentage to a higher amount in addition to, or instead of, reauthorizing the SBA PDM loan program. Congress could also consider doing the same for home physical disaster loans."], "subsections": []}, {"section_title": "Assistance with Continuity and Disaster Response Plans", "paragraphs": ["Research indicates that many businesses do not have contingency or disaster recovery plans. For example, a survey of Certified Public Accounting (CPA) firms located on Staten Island, NY, indicated that 7% of the respondents had a formal continuity or disaster recovery plan in place prior to Hurricane Sandy. The survey found that nearly 42% of those firms that had a formal continuity or disaster recovery plan admitted that they never tested their plan. Approximately 40% had an informal plan that had been discussed but not documented. More than half of the responding firms did not have a contingency or disaster recovery plan. Of those that did not have any type of a plan, 60% thought the plans were unnecessary and 20% said that establishing a plan was too time-consuming. ", "Congress could investigate methods that would incentivize businesses to develop contingency and disaster recovery plans. This could be done through new programs or through existing ones, such as FEMA's Ready Business Program or through SBA's emergency preparedness efforts. The Ready Business Program is designed to help businesses plan and prepare for disasters by providing businesses various online toolkits that can help them identify their risks and develop a plan to address those risks. The SBA provides a range of resources to help businesses develop plans to protect employees, reduce the financial impact of a disaster, and reopen the business more quickly."], "subsections": []}, {"section_title": "Pre-Disaster Mitigation Loans for Homeowners", "paragraphs": ["In addition to disaster loans for businesses, SBA also provides disaster loans to homeowners. In fact, roughly 80% of SBA disaster assistance goes to individuals and households rather than businesses. Homeowners located in a declared disaster area (and in contiguous counties) may apply to SBA for loans up to $200,000 to help repair and rebuild their primary residence. Similar to businesses, only damaged homes in declared disaster areas are eligible for disaster loans. According to regulations 20% \"of the verified loss (not including refinancing or malfeasance), before deduction of compensation from other sources, up to a maximum of $200,000 for post-disaster mitigation.\" Homeowners seeking mitigation assistance before a disaster strikes, however, must look to other sources for the assistance.", "In addition to mitigation measures, such as retrofitting structures, contouring land, and relocating utilities, Section 4 of the Recovery Improvements for Small Entities After Disaster Act of 2015 (RISE Act, P.L. 115-88 ) allows homeowners to use a portion of their physical damage disaster loans for the construction of safe rooms or similar storm shelters designed to protect property and occupants from tornadoes or other natural disasters. Some homeowners may wish to build a safe room or storm shelter before a disaster. If that is the case, they may be interested in a pre-disaster mitigation loan to fund its construction. Homeowners may also be interested in other pre-disaster mitigation measures. The SBA PDM pilot program, however, only provided pre-disaster loans to businesses. If reauthorized, Congress could consider expanding the program by making pre-disaster loans available to homeowners. In addition to making the program available to homeowners, Congress could consider making home pre-disaster mitigation loans contingent on homeowners insurance. This could help protect the home from future disasters and have the additional benefit of making sure that the homeowner has adequate insurance to repair and rebuild their home without additional federal assistance."], "subsections": []}]}, {"section_title": "Concluding Observations", "paragraphs": ["For nearly a century, Congress has contemplated how to help businesses repair and rebuild after a disaster and protect their investments from future incidents. Though businesses can use a portion of their SBA disaster loans for mitigation measures, critics might question why only damaged businesses are eligible for disaster loans. The SBA's PDM pilot program addressed this criticism, but the program had few participants. As described in this report, the lack of participation could have been a result of its alignment with FEMA programs related to delays in the implementation of FEMA's Project Impact, eligibility limitations, and the number of businesses that were aware that the program was available. If Congress were to reauthorize the SBA PDM pilot program, among the policy options available are decoupling the PDM loan program from FEMA programs and requiring enhanced advertising and outreach efforts. Another option would be to restructure business physical disaster loans so that a greater portion of the loan can be used for mitigation. Finally, Congress could examine methods that would help businesses develop business continuity and disaster response plans. ", "Businesses may be more receptive to pre-disaster mitigation loans as a result of the large-scale disasters that have occurred since 2005. Prior to Hurricane Katrina, the salience of disaster issues generally, and mitigation specifically, may have been on the periphery of business concerns. While there were some large-scale disasters, the scope of those disasters tended to be regional rather than national. Furthermore, the focus of emergency management during that time was arguably more oriented toward terrorism concerns resulting from the 9/11 attacks. Consequently, the need to mitigate against future disasters may have been just one concern coequal with other, competing concerns. The policy environment may have changed as a result of hurricanes Katrina, Harvey, Irma, Maria, and Michael. These disasters, in addition to increasing concerns about the impact of climate change on the frequency and severity of disasters, may make businesses more amenable to the idea of pre-disaster mitigation loans to protect their investment from future disasters."], "subsections": [{"section_title": "Appendix. Project Impact and SBA PDM Pilot Loan Program Information", "paragraphs": ["Project Impact", "P.L. 104-204 established a mitigation program (which FEMA named Project Impact) to help communities make mitigation investments prior to disasters to reduce their vulnerability to future disasters. The program was based on a \"whole of community\" approach involving all sectors of the nation. According to the House report on the bill:", "The conferees agree that up to $5,000,000 of the amount provided for pre-disaster mitigation is available immediately to fund up to seven pilot projects approved by the Director of FEMA. Prior to the expenditure of the remaining funds for any specific pre-disaster mitigation program or project, the conferees direct that the appropriate level of funding be used by the Agency to conduct a formal needs-based analysis and cost/benefit study of all of the various mitigation alternatives. The results of these analyses and studies, along with any relevant information learned from the aforementioned seven pilot projects, shall be incorporated into a comprehensive, long-term National Pre-disaster Mitigation Plan. The plan should be developed, independently peer-reviewed, and submitted to the Committees on Appropriations not later than March 31, 1998. FEMA is directed to involve in this planning effort participants which shall include, but are not limited to, representatives of FEMA and other federal agencies, state and local governments, industry, universities, professional societies, the National Academy of Sciences, The Partnership for Natural Disaster Reduction, and [Centers for Protection Against Natural Disasters] CPAND. The conferees intend that none of the remaining funds provided herein be obligated until the plan has been completed and submitted as outlined above. The conferees note that this approach is intended to be the foundation for providing the best and most cost-effective solution to reduce the tremendous human and financial costs associated with natural disasters.", "Project Impact was designed to serve as a model for promoting mainstream emergency management and mitigation practices into every community in America. The program asked communities to identify risks and establish plans to reduce those risks. It also asked communities to establish partnerships with community stakeholders, including the business sector.", "Primary Tenets of Project Impact", "mitigation is a local issue that is best addressed through local partnerships involving the government, business, and citizens; the participation of the private sector is essential because disasters threaten the economic and commercial growth of communities; and mitigation consists of long-term efforts and requires long-investments.", "Methodology", "members of the community, including elected officials, local, state, and federal disaster personnel, business representatives, environmental groups, and citizens, joined together to form a Disaster Resistant Community Planning Committee that (1) examined risks hazards and identified vulnerabilities to them; (2) prioritized risk reduction actions based on the hazard identification and vulnerability assessment; and (3) communicated its findings and mitigation plan to other community leaders and residents.", "Project Impact Grants", "Project Impact grants were largely used to fund planning and outreach activities. The Project Impact grants could be used to fund costs associated with", "logistics and meetings, staff support, and travel to meetings with the community or to FEMA Project Impact meetings; training including costs to train state officials supporting Project Impact and to develop training packages for state and local officials; travel of local community officials to other communities, state meetings, or national conferences at state request to share Project Impact information; state costs in information development and dissemination to support Project Impact; and expert, short-term technical assistance support to Project Impact communities.", "According to a Government Accountability Office (GAO) report, state and local officials said that Project Impact has been successful in increasing awareness of and community support for mitigation efforts due to its funding of these types of activities. The same GAO report stated ", "During fiscal years 1997 through 2001, Project Impact provided a total of $77 million to communities within every state and certain U.S. territories. Unlike the HMGP, the amount of Project Impact funding available to communities within a state was not predicated upon the occurrence of a disaster; in fact, the program was structured so that under its funding formula, communities in every state participated in the program. By 2001, there were nearly 250 communities participating in the program, with Project Impact communities receiving grants between $60,000 and $1,000,000. Appendix III lists Project Impact grants by year and community. While states selected which communities received Project Impact grants, communities were responsible for selecting the mitigation measures to fund with these grants. Similar to the HMGP, however, communities were required to provide 25 percent of the costs for the mitigation measures.", "The George W. Bush Administration eliminated Project Impact from the FY2002 budget and FEMA rebranded Project Impact as the Pre-Disaster Mitigation (PDM) program. The PDM program retained some of Project Impact's themes, but placed the responsibility on the governor of each state to suggest up to five communities to be considered for pre-disaster mitigation assistance. While the governor nominated potential grantees, FEMA made the final selections. In addition, under the statute, FEMA had the discretion under \"extraordinary circumstances\" to award a grant to a local government that had not been recommended by a governor. ", "SBA PDM Pilot Loan Program", "Loan Application", "SBA published notices in the Federal Register announcing the availability of pre-disaster mitigation loans in 2003. The notice designated a 30-day application filing period with specific opening dates and filing deadlines, as well as the locations for obtaining and filing applications. In additional to the Federal Register notification, SBA coordinated with FEMA to issue press releases to inform potential applicants of the loan program. ", "Businesses were required to submit a Pre-Disaster Mitigation Small Business Loan Application to SBA during the filing period. Applications had to include a written statement from the state or local coordinator confirming that the mitigation project was (1) located in a Project Impact community, and (2) in accordance with the specific priorities and goals of the community participating in the pre-disaster mitigation community. The completed application served as the loan request. Loans were provided on a first-come, first-served basis until SBA allocated all program funds.", "If SBA declined a loan request, SBA notified the business in writing with the rationale for the denial. SBA also advised the business of the procedures to request reconsideration of the decision. ", "Loan Terms", "The SBA PDM pilot program provided businesses up to $50,000 per fiscal year to finance mitigation measures to protect commercial property, leasehold improvements, or contents from disaster-related damages that could occur in the future. Mitigation loans could also be used to relocate the business. Interest rates for the loans had a statutory ceiling set at 4% per annum.", "Loan Eligibility", "Businesses applying for SBA PDM loans had to meet certain criteria to be eligible for mitigation loans. Two, in particular, were designed to tie the SBA PDM pilot program to FEMA programs. First, as already noted, the business had to be located in a participating Project Impact community; and, second, if the mitigation measures were designed specifically to protect against flooding, the business had to be located in a Special Flood Hazard Area (SFHA). ", "Additional criteria for loan eligibility required that", "the business and its affiliates lack the financial resources to fund the mitigation measures without undue hardship; the business be a small business as defined by SBA regulations; the business be in operation in the same location for at least one year; and the mitigation loan had to be used for the protection of a building leased primarily for commercial rather than residential purposes, if the business leased out real property. ", "Businesses were not eligible for the SBA PDM Loan Program if the business: ", "was primarily engaged in political or lobbying activities; derived more than one-third of its revenues from legal gambling activities; or owners were incarcerated, on parole, or on probation."], "subsections": []}]}]}}
{"id": "R46319", "title": "Novel Coronavirus 2019 (COVID-19): Q&A on Global Implications and Responses", "released_date": "2020-05-14T00:00:00", "summary": ["In December 2019, hospitals in the city of Wuhan in China's Hubei Province began seeing cases of pneumonia of unknown origin. Chinese health authorities ultimately connected the condition, later named coronavirus disease 2019 (COVID-19), to a previously unidentified strain of coronavirus. The disease has spread to almost every country in the world, including the United States. WHO declared the outbreak a Public Health Emergency of International Concern on January 30, 2020; raised its global risk assessment to \"Very High\" on February 28; and labeled the outbreak a \"pandemic\" on March 11. In using the term pandemic, WHO Director-General Tedros Adhanom Ghebreyesus cited COVID-19's \"alarming levels of spread and severity\" and governments' \"alarming levels of inaction.\" As of May 14, 2020, WHO had reported more than 4.2 million COVID-19 cases, including almost 300,000 deaths, of which more than 40% of all cases and 55% of all deaths were identified in Europe, and more than 30% of all cases and nearly 30% of all deaths were identified in the United States. Members of Congress have demonstrated strong interest in ending the pandemic domestically and globally. To date, Members have introduced dozens of pieces of legislation on international aspects of the pandemic (see the Appendix ).", "Individual countries are carrying out not only domestic but also international efforts to control the COVID-19 pandemic, with the WHO issuing guidance, coordinating some international research and related findings, and coordinating health aid in low-resource settings. Countries are following (to varying degrees) WHO policy guidance on COVID-19 response and are leveraging information shared by WHO to refine national COVID-19 plans. The United Nations (U.N.) Office for the Coordination of Humanitarian Affairs (UNOCHA) is requesting almost $7 billion to support COVID-19 efforts by several U.N. entities. International financial institutions (IFIs), including the International Monetary Fund (IMF), the World Bank, and the regional development banks, are mobilizing their financial resources to support countries grappling with the COVID-19 pandemic. The IMF has announced it is ready to tap its total lending capacity, about $1 trillion, to support governments responding to COVID-19. The World Bank can mobilize about $150 billion over the next 15 months, and the regional development banks are also preparing new programs and redirecting existing programs to help countries respond to the economic ramifications of COVID-19.", "On January 29, 2020, President Donald Trump announced the formation of the President's Coronavirus Task Force, led by the Department of Health and Human Services (HHS) and coordinated by the White House National Security Council (NSC). On February 27, the President appointed Vice President Michael Pence as the Administration's COVID-19 task force leader, and the Vice President subsequently appointed the President's Emergency Plan for AIDS Relief (PEPFAR) Ambassador Deborah Birx as the \"White House Coronavirus Response Coordinator.\" On March 6, 2020, the President signed into law the Coronavirus Preparedness and Response Supplemental Appropriations Act of 2020, P.L. 116-123 , which provides $8.3 billion for domestic and international COVID-19 response. The Act includes $300 million to continue the U.S. Centers for Disease Control and Prevention's (CDC) global health security programs and a total of $1.25 billion for the U.S. Agency for International Development (USAID) and Department of State. Of those funds, $985 million is designated for foreign assistance accounts, including $435 million specifically for Global Health Programs. On March 27, 2020, President Trump signed the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), P.L. 116-136 , which contains emergency funding for U.S. international COVID-19 responses, including $258 million to USAID through the International Disaster Assistance (IDA) account and $350 million to the State Department through the Migration and Refugee Assistance (MRA) account ( P.L. 116-127 ).", "The pandemic presents major consequences for foreign aid, global health, diplomatic relations, the global economy, and global security. Regarding foreign aid, Congress may wish to consider how the pandemic might reshape pre-existing U.S. aid priorities\u00e2\u0080\u0094and how it may affect the ability of U.S. personnel to implement and oversee programs in the field. The pandemic is also raising questions about deportation and sanction policies, particularly regarding Latin America and the Caribbean and Iran. In the 116 th Congress, Members have introduced legislation to respond to the COVID-19 pandemic in particular and to address global pandemic preparedness in general. This report focuses on global implications of and responses to the COVID-19 pandemic, and is organized into four broad parts that answer common questions regarding: (1) the disease and its global prevalence, (2) country and regional responses, (3) global economic and trade implications, and (4) issues that Congress might consider. For information on domestic COVID-19 cases and related responses, see CRS Insight IN11253, Domestic Public Health Response to COVID-19: Current Status and Resources Guide , by Kavya Sekar and Ada S. Cornell."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["In December 2019, a new disease, later called COVID-19, emerged in China and quickly spread around the world. The disease presents major consequences for global health, foreign relations, the global economy, and global security. International institutions and country governments are taking a variety of responses to address these challenges. In the 116 th Congress, Members have introduced legislation to respond to COVID-19 in particular and to address global pandemic preparedness in general that are now occurring on a global scale. This report focuses on global implications of and responses to the COVID-19 pandemic, and is organized into four broad parts that answer common questions regarding: (1) the disease and its global prevalence, (2) country and regional responses, (3) global economic and trade implications, and (4) issues that Congress might consider. For information on domestic COVID-19 cases and related responses, see CRS Insight IN11253, Domestic Public Health Response to COVID-19: Current Status and Resources Guide , by Kavya Sekar and Ada S. Cornell."], "subsections": [{"section_title": "What are coronaviruses and what is COVID-19?1", "paragraphs": ["Coronaviruses that typically infect humans are common pathogens, which can cause mild illnesses with symptoms similar to the common cold, or severe illness, potentially resulting in death of the victim. Prior to COVID-19, two \"novel\" coronaviruses (i.e., coronaviruses newly recognized to infect humans) have caused serious illness and death in large populations, namely severe acute respiratory syndrome (SARS) in 2002-2003 and Middle East Respiratory Syndrome (MERS), which was first identified in 2012 and continues to have sporadic transmission from animals to people with limited human-to-human spread. ", "The origin of COVID-19 is unknown, although genetic analysis suggests an animal source. The World Health Organization (WHO) first learned of pneumonia cases from unknown causes in Wuhan, China, on December 31, 2019. In the first days of January 2020, Chinese scientists isolated a previously unknown coronavirus in the patients, and on January 11, Chinese scientists shared its genetic sequence with the international community. (See CRS Report R46354, COVID-19 and China: A Chronology of Events (December 2019-January 2020) , by Susan V. Lawrence.) The virus is now present in most countries ( Figure 1 ). For the purposes of this report, CRS refers to COVID-19 as the virus and the syndrome people often develop when infected."], "subsections": []}, {"section_title": "How is COVID-19 transmitted?5", "paragraphs": ["Health officials and researchers are still learning about COVID-19. According to the U.S. Centers for Disease Control and Prevention (CDC), the virus is thought to spread mainly from person-to-person between individuals who are in close contact with each other (less than six feet), through respiratory droplets produced when an infected person coughs or sneezes. Health officials and researchers are still determining the virus's incubation period, or time between infection and onset of symptoms. CDC is using 14 days as the outer bound for the incubation period, meaning that the agency expects someone who has been infected to show symptoms within that period. ", "The CDC has confirmed that asymptomatic cases (infected individuals who do not have symptoms) can transmit the virus, though \"their role in transmission is not yet known.\" A study of the 3,711 passengers on the Diamond Princess cruise ship found that 712 people (19.2% of the cruise ship passengers) tested positive for COVID-19. Almost half (331) of the positive cases were asymptomatic at the time of testing. "], "subsections": []}, {"section_title": "What are global COVID-19 case fatality and hospitalization rates?9", "paragraphs": ["The COVID-19 case fatality rate is difficult to determine; milder cases are not being diagnosed, death is delayed, and wide disparities exist in case detection worldwide. In addition, the case fatality rate in any given context may depend on a number of factors including the demographics of the population, density of the area, and the quality and availability of health care services. Scientists are using different methods to estimate case fatality and estimates range. One study of those diagnosed with COVID-19 estimated case fatality rates for Wuhan, China and other parts of China at 1.4% and 0.85%, respectively. Another estimated 3.6% within China and 1.5% outside the country, with a third recommending using a range of 0.2%-3.0%. ", "Current data suggest the elderly and those with preexisting medical conditions (including asthma, high blood pressure, heart disease, cancer, and diabetes) are more likely to become severely sickened by COVID-19. One study in China showed that 80% of those killed by the virus were older than 60 years and 81% of surveyed COVID-19 cases were mild. Another study showed that 87% of all hospitalized COVID-19 patients in China were aged between 30 and 79 years, though the study did not further disaggregate the data by age. Whereas the CDC found that the elderly had higher death rates, more than half (55%) of reported COVID-19 hospitalizations between February 12 and March 16, 2020, were of individuals younger than 65 years ( Figure 2 )."], "subsections": []}, {"section_title": "Where are COVID-19 cases concentrated?16", "paragraphs": ["As of May 13, 2020, national governments reported to the WHO more than 4 million cases of COVID-19 and almost 300,000 related deaths worldwide. Ten countries accounted for over 70% of all reported cases and almost 80% of all reported deaths ( Table 1 ). The pandemic epicenter has shifted from China and Asia to the United States and Europe. China and Belgium are no longer among the 10 countries with the highest number of deaths, and Russia and Brazil joined the ranks. Almost 90% of all reported cases were identified in the WHO Americas and Europe regions ( Table 2 ). Cases are continuing to rise in the Americas, where 88% of all cases were found in the United States (74%), Brazil (9%), and Canada (4%). In Europe, the cases are more widely distributed, and seven countries comprise 77% of all cases: Russia (14%), Spain (13%), United Kingdom (13%), Italy (12%), Germany (10%), Turkey (8%) and France (8%). "], "subsections": []}]}, {"section_title": "COVID-19 Responses of International Institutions", "paragraphs": ["Individual countries carry out both domestic and international efforts to control the COVID-19 pandemic, with the WHO issuing guidance, coordinating some international research and related findings, and coordinating health aid in low-resource settings. Countries follow (to varying degrees) WHO policy guidance on COVID-19 response and leverage information shared by WHO to refine national COVID-19 plans. The United Nations (U.N.) Office for the Coordination of Humanitarian Affairs (UNOCHA) is requesting $6.7 billion to support COVID-19 efforts by several U.N. entities (see \" Multilateral Technical Assistance \" section). "], "subsections": [{"section_title": "International Health Regulations19", "paragraphs": [], "subsections": [{"section_title": "What rules guide COVID-19 responses worldwide?", "paragraphs": ["WHO is the U.N. agency responsible for setting norms and rules on global health matters, including on pandemic response. The organization also develops and provides tools, guidance and training protocols. In 1969, the World Health Assembly (WHA)\u00e2\u0080\u0094the governing body of WHO\u00e2\u0080\u0094adopted the International Health Regulations (IHR) to stop the spread of six diseases through quarantine and other infectious disease control measures. The WHA has amended the IHR several times, most recently in 2005. The 2005 edition, known as IHR (2005), provided expanded means for controlling infectious disease outbreaks beyond quarantine. The regulations include a code of conduct for notification of and responses to disease outbreaks with pandemic potential, and carry the expectation that countries (and their territories) will build the capacity, where lacking, to comply with IHR (2005). The regulations mandate that WHO Member States", "build and maintain public health capacities for disease surveillance and response; provide or facilitate technical assistance to help low-resource countries develop and maintain public health capacities; notify WHO of any event that may constitute a Public Health Emergency of International Concern (PHEIC) and respond to requests for verification of information regarding such event; and follow WHO recommendations concerning public health responses to the relevant PHEIC.", "Per reporting requirements of the IHR (2005), China and other countries are monitoring and reporting COVID-19 cases to WHO. Observers are debating the extent to which China is fully complying with IHR (2005) reporting rules (see \" Asia \" and the Appendix )."], "subsections": []}, {"section_title": "How does WHO respond to countries that do not comply with IHR (2005)?", "paragraphs": ["IHR (2005) does not have an enforcement mechanism. WHO asserts that \"peer pressure and public knowledge\" are the \"best incentives for compliance.\" Consequences that WHO purports non-compliant countries might face include a tarnished international image, increased morbidity and mortality of affected populations, travel and trade restrictions imposed by other countries, economic and social disruption, and public outrage. ", "China's response to the COVID-19 outbreak may deepen debates about the need for an IHR enforcement mechanism. On one hand, questions about the timeliness of China's reporting of the COVID-19 outbreak and questions about China's transparency thereafter might bolster arguments in favor of an enforcement mechanism. On the other hand, some have questioned whether the WHA would vote to abdicate some of its sovereignty to provide WHO enforcement authority."], "subsections": []}, {"section_title": "How does the Global Health Security Agenda (GHSA) relate to IHR (2005) and pandemic preparedness?", "paragraphs": ["IHR (2005) came into force in 2007, with signatory countries committing to comply by 2012. In 2012, only 20% of countries reported to the WHO that they had developed IHR (2005) core capacities, and many observers asserted the regulations needed a funding mechanism to help resource-constrained countries with compliance. In 2014, the WHO launched the Global Health Security Agenda (GHSA) as a five-year (2014-2018) multilateral effort to accelerate IHR (2005) implementation, particularly in resource-poor countries lacking the capacity to adhere to the regulations. The GHSA appeared to advance global pandemic preparedness capacity; more than 70% of surveyed countries reported in 2017 being prepared to address a global pandemic. Regional disparities persisted, however; about 55% of surveyed countries in the WHO Africa region reported being prepared for a pandemic, compared to almost 90% of countries surveyed in the WHO Western Pacific region. In 2017, participating countries agreed to extend the GHSA through 2024. For more information on the GHSA, see CRS In Focus IF11461, The Global Health Security Agenda (GHSA): 2020-2024 , by Tiaji Salaam-Blyther."], "subsections": []}]}, {"section_title": "Multilateral Technical Assistance", "paragraphs": [], "subsections": [{"section_title": "What is WHO doing to respond to the COVID-19 pandemic?23", "paragraphs": ["In February 2020, WHO released a $675 million Strategic Preparedness and Response Plan for February through April 2020. WHO aims to provide international coordination and operational support, bolster country readiness and response capacity\u00e2\u0080\u0094particularly in low-resource countries\u00e2\u0080\u0094and accelerate research and innovation. As of May 8, private donors and 26 countries have contributed $536.5 million towards the plan, including $30.3 million from the United States. Countries have pledged an additional $198.5 million towards the plan. As of April 22, WHO has used the funds to ", "purchase and ship personal protective equipment (PPE) to 133 countries, including 2,566,880 surgical masks and masks, 1,641,900 boxes of gloves, 184,478 gowns, 29,873 goggles, and 79,426 face shields; supply 1,500,000 diagnostic kits to 126 countries; develop online COVID-19 training courses in 13 languages; and enroll more than 100 countries in WHO-coordinated trials to accelerate identification of an effective vaccine and treatment, which include 1,200 patients, 144 studies, and 6 candidate vaccines in clinical evaluation and 77 in preclinical evaluation.", "In April 2020, the WHO issued an updated plan that provided guidance for countries preparing for a phased transition from widespread transmission to a steady state of low-level or no transmission, among other things. The update did not include a request for additional funds. ", "Also in April 2020, the WHO hosted a virtual event with the President of France, the President of the European Commission, and the Bill & Melinda Gates Foundation where heads of state, the G20 President, the African Union Commission Chairperson, the U.N. Secretary General and leaders from a variety of nongovernmental organizations, including Gavi, the Vaccine Alliance, and the Coalition for Epidemic Preparedness and Innovation (CEPI), pledged their commitment to the Access to COVID-19 Tools (ACT Accelerator). The participants, and other partners who have since joined the effort, committed to \"work towards equitable global access\" to COVID-19 countermeasures (including vaccines and therapies). A pledging conference, hosted by the European Union (EU), took place on May 4 to support the effort. As of May 6, donors have pledged $7.4 billion for the ACT Accelerator and other global COVID-19 responses. The United States neither participated in the launch nor provided funding for the ACT Accelerator. ", "Debates about whether health commodities are a public good are long-standing and have intensified in recent years. For decades, countries have willingly donated virus samples to the WHO for international research. During a 2005-2007 H5N1 avian flu outbreak, however, Indonesia refused to share samples of the virus, asserting that companies were selling patented vaccines created from the donated samples at a price Indonesians could not afford. The WHO and its Member States, through the WHA, have not yet developed an agreement that satisfies poor countries concerned about affordability and wealthier countries (where most global pharmaceutical companies are based) concerned about recapturing research and development costs. The WHO has sought to negotiate prepurchasing agreement during each major outbreak since the H5N1 debacle. French officials, for example, have characterized any COVID-19 commodity that might be developed as a \"public good,\" and they have criticized statements by a French pharmaceutical company on committing to provide the U.S. government first access to a COVID-19 vaccine that the company produces. The WHO has established the Solidarity Trial to coordinate international COVID-19-related research and development. Participating parties, including countries, pharmaceutical companies, and nongovernmental organizations, agree to openly share virus information and commodities developed with donated specimens. The EU and its Member States, and nine other countries, have drafted a resolution to be considered at the upcoming World Health Assembly on a unified international COVID-19 response, including on \"the need for all countries to have unhindered timely access to quality, safe, efficacious and affordable diagnostics, therapeutics, medicines and vaccines ... for the COVID-19 response.\" "], "subsections": []}, {"section_title": "How are international financial institutions responding to COVID-19?32", "paragraphs": ["The international financial institutions (IFIs), including the International Monetary Fund (IMF), the World Bank, and specialized multilateral development banks (MDBs), are mobilizing unprecedented levels of financial resources to support countries grappling with the health and economic effects of the COVID-19 pandemic. About 100 countries\u00e2\u0080\u0094more than half of the IMF's membership\u00e2\u0080\u0094have requested IMF loans, and the IMF has announced it is ready to tap its total lending capacity, about $1 trillion, to support governments responding to COVID-19. In April 2020, the World Bank pledged to mobilize about $160 billion through 2021, and other multilateral development banks committed about $80 billion over the same time period. MDB support is expected to cover a wide range of activities, including strengthening health services and primary health care, bolstering disease monitoring and reporting, training front-line health workers, encouraging community engagement to maintain public trust, and improving access to treatment for the poorest patients. In addition, at the urging of the IMF and the World Bank, the G-20 countries in coordination with private creditors have agreed to suspend debt payments for low-income countries through the end of 2020. ", "Policymakers are discussing a number of policy actions to further bolster the IFI response to the COVID-19 pandemic. Examples include changing IFI policies to allow more flexibility in providing financial assistance, pursuing policies at the IMF to increase member states' foreign reserves, and providing debt relief to low-income countries. Some of these policy proposals would require congressional legislation. Through the stimulus legislation ( P.L. 116-136 ), Congress accelerated authorizations requested by the Administration in the FY2021 budget for the IMF, two lending facilities at the World Bank, and two lending facilities at the African Development Bank."], "subsections": []}, {"section_title": "What is the U.N. humanitarian response to the COVID-19 pandemic?36", "paragraphs": ["Outside of the WHO, other U.N. entities and their implementing partners are considering how to maintain ongoing humanitarian operations while preparing for COVID-19 cases should they arise. On March 17, 2020, the International Organization for Migration (IOM) and the U.N. High Commissioner for Refugees (UNHCR) announced they were suspending global resettlement travel for refugees due to the COVID-19 travel bans. Cessation of resettlement may reinforce population density in refugee camps and other settlements, which might further complicate efforts to address COVID-19 outbreaks in such settings. ", "Many experts agree that even prior to the COVID-19 pandemic, the scope of current global humanitarian crises was unprecedented. The U.N. Office for the Coordination of Humanitarian Affairs (UNOCHA) estimated that in 2020, nearly 168 million people in 53 countries would require humanitarian assistance and protection due to armed conflict, widespread or indiscriminate violence, and/or human rights violations. The 2020 U.N. global humanitarian annual appeal totaled an all-time high of more than $28.8 billion, excluding COVID-19 responses. The appeal also focused on the needs of displaced populations, which numbered more than 70 million people, including 25.9 million refugees, 41.3 million internally displaced persons (IDPs) and 3.5 million asylum seekers. In addition, natural disasters are also key drivers of displacement each year. ", "Humanitarian experts agree that the conditions in which vulnerable, displaced populations live make them particularly susceptible to COVID-19 spread and present significant challenges to response and containment. Overcrowded living spaces and insufficient hygiene and sanitation facilities make conditions conducive to contagion. In many situations, disease control recommendations are not practical. Space is not available to create isolation and \"social-distancing,\" for example, and limited access to clean water and sanitation make regular and sustained handwashing difficult. In addition, low or middle-income countries that are likely to struggle to respond effectively to the pandemic host 85% of refugees worldwide. So far, relatively few COVID-19 cases have been reported among the displaced and those affected by conflict or natural disasters, although there is a widespread lack of testing.", "On March 25, 2020, the United Nations launched a $2.01 billion global appeal for the COVID-19 pandemic response to \"fight the virus in the world's poorest countries, and address the needs of the most vulnerable people\" through the end of the year. According to the United Nations, as of early May, donors had so far provided $923 million toward the initial appeal and contributed $608 million outside the plan. On May 7, 2020, the United Nations announced it had tripled the appeal to $6.7 million and expanded its coverage to 63 countries as it became clear that COVID-19's \"most devastating and destabilizing effects will be felt in the world's poorest countries.\" While the United Nations does not expect the pandemic to peak in the world's poorest countries for another three to six months, already there are reports of \"incomes plummeting and jobs disappearing, food supplies falling and prices soaring, and children missing vaccinations and meals.\" The updated plan brings together humanitarian appeals from other U.N. agencies in an effort to coordinate emergency health and humanitarian responses (see Table 3 ).", "UNOCHA will coordinate the U.N.-wide response, but most of the activities will be carried out by specific U.N. entities, non-governmental organizations, and other implementing partners. U.N. guidance for scaling up responses in refugee and IDP settings includes addressing mental health and psychological aspects, adjusting food distribution, and developing prevention and control mechanisms in schools. Some experts recommend incorporating COVID-19 responses within existing humanitarian programs to ensure continuity of operations and to protect aid personnel while facilitating their access in areas where travel has been restricted."], "subsections": []}]}]}, {"section_title": "U.S. Support for International Responses", "paragraphs": ["On January 29, 2020, President Donald Trump announced the formation of the President's Coronavirus Task Force, led by the Department of Health and Human Services (HHS) and coordinated by the White House National Security Council (NSC). On February 27, the President appointed Vice President Michael Pence as the Administration's COVID-19 task force leader, and the Vice President subsequently appointed the head of the President's Emergency Plan for AIDS Relief (PEPFAR), Ambassador Deborah Birx, as the White House Coronavirus Response Coordinator. International COVID-19 response efforts carried out by U.S. federal government departments and agencies, including those in the Task Force, are described below."], "subsections": [{"section_title": "Emergency Appropriations for International Responses58", "paragraphs": ["On March 6, 2020, the President signed into law P.L. 116-123 , Coronavirus Preparedness and Response Supplemental Appropriations Act of 2020 , which provides $8.3 billion for domestic and international COVID-19 response. The Act includes $300 million to continue the CDC's global health security programs and a total of $1.25 billion for the U.S. Agency for International Development (USAID) and Department of State. USAID- and Department of State-administered aid includes the following:", "Global Health Programs (GHP). $435 million for global health responses (see \" U.S. Agency for International Development (USAID) \"), including $200 million for USAID's Emergency Reserve Fund (ERF). International Disaster Assistance (IDA). $300 million for relief and recovery efforts in the wake of the COVID-19 pandemic. Economic Support Fund (ESF). $250 million to address COVID-19-related \"economic, security, and stabilization requirements.\" ", "The Act also provides $1 million to the USAID Office of Inspector General to support oversight of COVID-19-related aid programming. ", "On March 27, 2020, President Trump signed P.L. 116-136 , Coronavirus Aid, Relief, and Economic Security Act , which contains emergency funding for U.S. international COVID-19 responses, including the following:", "International Disaster Assistance (IDA). $258 million to \"prevent, prepare for, and respond\" to COVID-19. Migration and Refugee Assistance (MRA). $350 million to the State Department-administered MRA account to \"prevent, prepare for, and respond\" to COVID-19."], "subsections": []}, {"section_title": "U.S. Department of State61", "paragraphs": [], "subsections": [{"section_title": "How does the State Department help American citizens abroad?", "paragraphs": ["Section 43 of the State Department Basic Authorities Act of 1956 (P.L. 84-885; hereinafter, the Basic Authorities Act) requires the State Department to serve as a clearinghouse of information on any major disaster or incident that affects the health and safety of U.S. citizens abroad. The department implements this statutory responsibility through its Consular Information Program (CIP), which provides a range of products, including but not limited to country-specific information web pages, Travel Advisories, Alerts, and Worldwide Cautions. Travel Advisories range from Level 1 (Exercise Normal Precautions) to Level 4 (Do Not Travel). ", "On March 31, 2020, the State Department issued an updated Level 4 Global Health Advisory advising U.S. citizens to avoid all international travel due to the global impact of COVID-19. Level 4 Travel Advisories do not constitute a travel ban. Instead, they advise U.S. citizens not to travel because of life threatening risks and, in some cases, limited U.S. government capability to provide assistance to U.S. citizens. The State Department's Level 4 Global Health Advisory notes that because the State Department has authorized the departure of U.S. personnel abroad who are \"at higher risk of a poor outcome if exposed to COVID-19,\" U.S. embassies and consulates may have more limited capacity to provide services to U.S. citizens abroad.", "CIP products are posted online and disseminated to U.S. citizens who have registered to receive such communications through the Smart Traveler Enrollment Program (STEP). The Assistant Secretary for Consular Affairs is responsible for supervising and managing the CIP. State Department regulations provide that when health concerns rise to the level of posing a significant threat to U.S. citizens, the State Department will publish a web page describing the health-related threat and resources. The Bureau of Consular Affairs has developed such a web page for the COVID-19 pandemic. Additionally, the State Department has created a website providing COVID-19-related information and resources for every country in the world. Furthermore, on March 24, 2020, the State Department began publishing a daily COVID-19 newsletter, developed for Members of Congress and congressional staff, intended to \"dispel rumor, combat misinformation, and answer any outstanding questions regarding the Department's overseas crisis response efforts.\""], "subsections": []}, {"section_title": "What are the authorities and funding for the State Department to carry out overseas evacuations?", "paragraphs": ["The Omnibus Diplomatic Security and Antiterrorism Act of 1986 ( P.L. 99-399 ) authorizes the Secretary of State to carry out overseas evacuations. Section 103 of this law requires the Secretary to \"develop and implement policies and programs to provide for the safe and efficient evacuation of United States Government personnel, dependents, and private United States citizens when their lives are endangered.\" In addition, the Basic Authorities Act authorizes the Secretary to make expenditures for overseas evacuations. Section 4 of this law authorizes both expenditures for the evacuation of \"United States Government employees and their dependents\" and \"private United States citizens or third-country nationals, on a reimbursable basis to the maximum extent practicable,\" leaving American citizens or third-country nationals generally responsible for the cost of evacuation, although emergency financial assistance may be available for destitute evacuees. Furthermore, the Basic Authorities Act limits the scope of repayment to \"a reasonable commercial air fare immediately prior to the events giving rise to the evacuation.\"", "In practice, even when the State Department advises private U.S. citizens to leave a country, it will advise them to evacuate using existing commercial transportation options whenever possible. This is reflected in the State Department's current Level 4 Global Health Advisory, which states that \"[i]n countries where commercial departure options remain available, U.S. citizens who live in the United States should arrange for immediate return.\" In more rare circumstances, when the local transportation infrastructure is compromised, the State Department will arrange chartered or non-commercial transportation for U.S. citizens to evacuate to a safe location determined by the department. Following the outbreak of COVID-19, the State Department has made such arrangements for thousands of U.S. citizens throughout the world, initially those in Wuhan, China and, shortly thereafter, U.S. citizen passengers who were quarantined on the Diamond Princess cruise ship in Yokohama, Japan. As demand for repatriation surged, the State Department leveraged new options to evacuate U.S. citizens, including \"commercial rescue flights.\" To facilitate these flights, the department worked with the airline industry to help them secure the needed clearances to carry out evacuation flights in high-demand countries. The State Department said that these flights enabled it to focus its own resources to send chartered flights where \"airspace, border closures, and internal curfews have been the most severe.\" While evacuations are still ongoing, the department estimated in late April that around 40% of U.S. citizens who were evacuated for reasons related to COVID-19 returned to the United States on commercial rescue flights. ", "Congress authorizes funding for the evacuation-related activities through the Emergencies in the Diplomatic and Consular Service (EDCS) account, which is part of the annual Department of State, Foreign Operations, and Related Programs (SFOPS) appropriation. For FY2020, Congress appropriated $7.9 million for this account. Congress typically funds this account through no-year appropriations, thereby authorizing the State Department to indefinitely retain funds. The State Department is able to further fund emergency evacuations using transfer authorities provided by Congress. In recent SFOPS appropriations, for example, Congress has authorized the State Department to transfer and merge funds appropriated to the Diplomatic Programs, Embassy Security, Construction, and Maintenance, and EDCS accounts for emergency P.L. 116-123 , evacuations. \u00c2\u00a0", "In addition to the funds and transfer authorities provided in annual appropriations legislation, Congress appropriated an additional $588 million for State Department operations (including $264 million appropriated through P.L. 116-123 and $324 million appropriated through P.L. 116-136 ) to \"prevent, prepare for, and respond to coronavirus,\" including by carrying out evacuations. P.L. 116-123 also increased the amount of funding the State Department is authorized to transfer from the Diplomatic Programs account to the EDCS account for emergency evacuations during FY2020 from $10 million to $100 million."], "subsections": []}, {"section_title": "How many evacuations have been carried out due to the COVID-19 pandemic?", "paragraphs": ["The State Department began arranging evacuations of U.S. government personnel and private U.S. citizens in response to the COVID-19 pandemic on January 28, 2020, when the department started evacuating over 800 American citizens from Wuhan, China. An additional 300 American citizens who were passengers aboard the Diamond Princess cruise ship were subsequently evacuated in February. When COVID-19 continued to spread and was declared a global pandemic by WHO, the State Department accelerated its efforts to evacuate Americans amid actions by countries to close their borders and implement mandatory travel restrictions. On March 19, 2020, the State Department established a repatriation task force to coordinate and support these efforts. As of May 11, 2020, the State Department had coordinated the repatriation of more than 85,000 Americans on 886 flights. The State Department's current Level 4 Global Health Advisory warns that while the department is \"making every effort to assist U.S. citizens overseas who wish to return to the United States, funds \"may become more limited or even unavailable.\" Some Members of Congress have applauded the State Department's efforts to scale up consular assistance to U.S. citizens abroad during the COVID-19 pandemic. Other Members have expressed concern that as COVID-19 spread worldwide, the State Department was slow to communicate with and provide options to Americans abroad seeking repatriation."], "subsections": []}]}, {"section_title": "U.S. Agency for International Development (USAID)85", "paragraphs": [], "subsections": [{"section_title": "Where is USAID providing COVID-19 assistance?", "paragraphs": ["USAID is providing assistance to more than 100 affected and at-risk developing countries facing the threat of COVID-19. USAID identified these countries through a combination of the following criteria: ", "trend of increasing confirmed cases of COVID-19, especially with evidence of local transmission; imported cases with high risk for local transmission due to connectivity to a hotspot; low scores on the Global Health Security Index classification of health systems and on the Global Health Security Agenda Joint External Evaluation, which measures compliance with IHR (2005); other vulnerabilities (unstable political situation, displaced populations); and the existence of other U.S. global health programs that could be leveraged. ", "USAID is also providing funding to multilateral organizations, including the WHO, UNICEF, and the International Federation of the Red Cross and Red Crescent Societies for COVID-19 assistance, and to facilitate coordination with other donors."], "subsections": []}, {"section_title": "What type of assistance does USAID provide for COVID-19 control?", "paragraphs": ["On February 7, 2020, USAID committed $99 million from the Emergency Reserve Fund (ERF) for Contagious Infectious Diseases. USAID received $986 million from the first emergency supplemental appropriation and an additional $353 million from the second. Examples of activities to which USAID resources will be programed include ", "assisting target countries to prepare their laboratories for COVID-19 testing, implementing a public-health emergency plan for points of entry, activating case-finding and event-based surveillance for influenza-like illnesses, training and equipping rapid-response teams, investigating cases and tracing the contacts of infected persons, and adapting health worker training materials for COVID-19. ", "As of May 1, 2020, USAID pledged to provide $653 million for international COVID-19 response, $215 million of which has been obligated. The pledged amounts include $99 million from the ERF, $100 million from the Global Health Programs (GHP) account, $300 million in humanitarian assistance from the International Disease Assistance (IDA) account, and $153 million from the Economic Support Fund (ESF). "], "subsections": []}, {"section_title": "How do USAID COVID-19 responses relate to regular pandemic preparedness activities?", "paragraphs": ["Congress appropriates funds for USAID global health security and pandemic preparedness activities through annual State, Foreign Operations, and Related Programs appropriations ( Table 4 ). From FY2009 through FY2019, the bulk of USAID's pandemic preparedness activities have been implemented through the Emerging Pandemic Threats (EPT) program. Those efforts comprised USAID's contribution towards advancing the Global Health Security Agenda (see \" International Health Regulations \") and are being leveraged for COVID-19 responses worldwide. Key related activities include", "strengthening surveillance systems to detect and report disease transmission; upgrading veterinary and other national laboratories; strengthening programs to combat antimicrobial resistance (AMR) in the public health and animal-health sectors; training community health volunteers in epidemic control and designing community-preparedness plans; conducting simulation exercises to prepare for future outbreaks; and establishing or strengthening emergency supply-chain programs specially designed to deliver critically needed commodities (e.g., personal protective equipment) to affected communities during outbreaks.", "The PREDICT project was a key part of the EPT program. According to USAID, the second phase of the project, PREDICT-2 (2015-2019), helped nearly 30 countries detect and discover viruses with pandemic potential. The project has", "detected more than 1,100 unique viruses, 931 of which were novel viruses (such as Ebola and coronaviruses); sampled over 163,000 animals and people; and provided $207 million from 2009 through 2019.", "USAID has responded to 42 outbreaks through PREDICT-2, which ended in March 2020 (following a three-month extension). In May 2020, USAID announced that it will use the lessons learned through PREDICT to inform its new STOP Spillover project. The STOP Spillover project is aimed at building capacity in partner countries to stop the spillover of zoonotic diseases into humans. USAID aims to \"award the STOP Spillover project by the end of September 2020, through a competitive process, as PREDICT sunsets as scheduled.\""], "subsections": []}]}, {"section_title": "U.S. Centers for Disease Control and Prevention (CDC)90", "paragraphs": [], "subsections": [{"section_title": "What role is CDC playing in international COVID-19 responses?", "paragraphs": ["CDC has staff stationed in more than 60 countries who have been providing technical support, where relevant, and is receptive to bilateral requests for assistance or requests\u00c2\u00a0for assistance through the Global Outbreak Alert and Response Network (GOARN). CDC is working with WHO and other partners, including USAID and the Department of State, to assess needs and accelerate COVID-19 control, particularly by helping countries to implement WHO recommendations related to the diagnosis and care of patients, tracking the epidemic, and identifying people who might have COVID-19. ", "Through supplemental appropriations ( P.L. 116-123 ), Congress provided CDC $300 million for global disease detection and emergency response. CDC plans to obligate $150 million of the funds by the end of FY2020. Related efforts will focus on ", "disease surveillance, laboratory diagnostics, infection prevention and control, border health and community mitigation, and vaccine preparedness and disease prevention. ", "CDC is reportedly working closely with USAID and Department of State to ensure a coordinated U.S. government approach to the COVID-19 pandemic. CDC is prioritizing countries based on ", "the current status of COVID-19 in country and future trajectory of its spread; the ability to effectively implement activities given CDC presence, capacity and partnerships in the country; and the capacity to provide support to other countries in the region.", "CDC staff are working with colleagues in partner countries to conduct investigations that will help inform COVID-19 response efforts. "], "subsections": []}, {"section_title": "How do CDC COVID-19 responses relate to regular pandemic preparedness activities?", "paragraphs": ["Through the Global Health Protection line item of annual Labor-HHS appropriations, CDC works to enhance public health capacity abroad and improve global health security, particularly through GHSA ( Table 5 ). CDC works to bolster global health security and pandemic preparedness in 19 countries by focusing on enhancing the core foundations of what CDC views as strong public health systems\u00e2\u0080\u0094comprehensive disease surveillance and integrated laboratory systems, a strong public health workforce, and capable emergency management structures. ", "Programs within CDC's global health security portfolio include the following:", "The Field Epidemiology Training Program (FETP) trains a global workforce of field epidemiologists to increase countries' ability to detect and respond to disease threats, address the global shortage of skilled epidemiologists, and deepen relationships between CDC and other countries. Over 70 countries have participated in FETP with more than 10,000 graduates. National Public Health Institutes (NPHI) help more than 26 partner countries carry out essential public health functions and ensure accountability for public health resources. The program focuses on improving the collection and use of public health data, as well as the development, implementation, and monitoring of public health programs. Global Rapid Response Team (GRRT) is a team of public health experts who remain ready to deploy for supporting emergency response and helping partner countries achieve core global health capabilities. The GRRT focuses on field-based logistics, communications, and management operations. Since the GRRT's inception, more than 500 CDC staff have provided over 30,000 person-days of response support. From January through March 2020, CDC staff has completed more than 100 deployments for COVID-19 response. Core and surge members support domestic deployments to quarantine stations and repatriation sites, international deployments, WHO and country office operations, and the Emergency Operations Center in Atlanta. The Public Health Emergency Management (PHEM) program trains public health professionals affiliated with international ministries of health on emergency management and exposes them to the CDC Public Health Emergency Operations Center. To date, the program has graduated 142 fellows from 37 countries (plus the African Union). "], "subsections": []}]}, {"section_title": "U.S. Department of Defense (DOD)", "paragraphs": [], "subsections": [{"section_title": "What is the DOD global COVID-19 response?91", "paragraphs": ["DOD is conducting medical surveillance for COVID-19 worldwide. Related activities entail daily monitoring of reported cases, including persons under investigation (PUI), confirmed cases, and locations of such individuals, as well as surveillance for COVID-19 at China's southern border. DOD is supporting the U.S. CDC with additional laboratory capabilities. The DOD Laboratory Network, which includes military facilities in the United States and in certain overseas locations, has made available to interagency network laboratories its \"detection and characterization capabilities \u00e2\u0080\u00a6 to support COVID-19-related activities across the globe.\" The Secretary of Defense also has directed geographic combatant commanders to \"execute their pandemic plans in response to the [COVID-19] outbreak.\" "], "subsections": []}, {"section_title": "Emergency Appropriations for DOD Responses98", "paragraphs": ["The Families First Coronavirus Response Act ( P.L. 116-127 ) became law on March 18, 2020. Title II of Division A of the act included $82 million for the Defense Health Program to waive all TRICARE cost-sharing requirements related to COVID-19. ", "The Coronavirus Aid, Relief, and Economic Security Act (CARES Act; P.L. 116-136 ) became law on March 27, 2020. Title III of Division B of the act included $10.5 billion in emergency funding for DOD. Of the $10.5 billion, $4.9 billion (47%) is for the Defense Health Program (DHP), according to the bill text . The DHP funding included $1.8 billion for patient care and procurement of medical and protective equipment; $1.6 billion to increase capacity in military treatment facilities; $1.1 billion for private-sector care; and $415 million to develop vaccines and to procure diagnostic tests, according to a summary released by the Senate Appropriations Committee. H.R. 748 also provided", "$2.5 billion for the defense industrial base, including $1.5 billion in defense working capital funds and $1 billion in Defense Production Act purchases; $1.9 billion in operations and maintenance (O&M) funding for the Services, in part to support deployment of the hospital ships USNS COMFORT and USNS MERCY to ease civilian hospital demand by caring for non-COVID patients; and $1.2 billion in military personnel (MILPERS) funding for Army and Air National Guard personnel deployments.", "DOD has not detailed how much of the emergency funding may be used to support international activities related to COVID-19, though DOD has stated it is working with the Department of Health and Human Services and the Department of State to provide support in dealing with the pandemic. As part of missions that began in March, Air National Guard C-17 cargo aircraft have transported hundreds of thousands of coronavirus testing swabs from Italy to the United States. The swabs have been distributed to medical facilities around the country at the direction of the Department of Health and Human Services."], "subsections": []}, {"section_title": "To what extent is COVID-19 affecting United States security personnel?104", "paragraphs": ["The degree to which U.S. security operations around the world may be affected due to personnel becoming infected has yet to be determined. Numerous media reports suggest that various parts of the U.S. military have seen a significant number of servicemembers contract or die from COVID-19 related symptoms. Citing operational security concerns, on March 30, 2020 the Department of Defense (DOD) directed military service commanders not to share the number of personnel affected by the COVID-19. In justifying this policy the DOD stated, \"We will not report the aggregate number of individual service member cases at individual unit, base or Combatant Commands.\u00c2\u00a0We will continue to do our best to balance transparency in this crisis with operational security.\" Also, as of April 1, 2020, reportedly the Department of Homeland Security had nearly 9,000 employees whose exposure to COVID-19 that has taken them out of the workforce, and deployed U.S. Naval vessels, such as the USS Theodore Roosevelt, have had their operational effectiveness called into question."], "subsections": []}]}]}, {"section_title": "Regional Implications of and Responses to the COVID-19 Pandemic", "paragraphs": [], "subsections": [{"section_title": "Asia", "paragraphs": [], "subsections": [{"section_title": "What are the implications for U.S.-China relations?109", "paragraphs": ["U.S.-China relations were fraught well before the outbreak of COVID-19, with the two governments engaging in a bitter trade war, competing for influence around the globe, and clashing over such issues as their activities in the South China Sea, China's human rights record, and China's Belt and Road Initiative. The pandemic appears to have increased the acrimony. On February 3, when the COVID-19 outbreak was at its peak in China, a spokesperson for China's Foreign Ministry blasted the United States for its response to the crisis there. \"The U.S. government hasn't provided any substantive assistance to us, but it was the first to evacuate personnel from its consulate in Wuhan, the first to suggest partial withdrawal of its embassy staff, and the first to impose a travel ban on Chinese travelers,\" the spokesperson charged. \"What it has done could only create and spread fear.\" Days later, Secretary of State Michael R. Pompeo announced the United States would make available up to $100 million in existing funds \"to assist China and other impacted countries,\" and that the State Department had facilitated the delivery to China of 17.8 tons of personal protection equipment and medical supplies donated by the private sector.", "As COVID-19 transmission has accelerated in the United States, the Trump Administration has stepped up criticism of China's early response to the outbreak. Secretary Pompeo told an interviewer on March 24, \"unfortunately, the Chinese Communist Party covered this up and delayed its response in a way that has truly put thousands of lives at risk.\" Spokespeople for the State Department and China's Foreign Ministry have traded COVID-19-related accusations on Twitter. On March 12, a Chinese spokesperson tweeted, \"It might be US army who brought the epidemic to Wuhan.\" Secretary Pompeo accused China of waging a disinformation campaign \"designed to shift responsibility,\" and President Trump for several days referred to COVID-19 as \"the Chinese virus.\" ", "On April 17, in announcing his decision to withhold U.S. funding from the World Health Organization, President Trump accused the multilateral institution of having \"pushed China's misinformation about the virus, saying it was not communicable and there was no need for travel bans.\" Administration officials have also repeatedly suggested that a Chinese research institution may have been the source of the virus. On April 30, 2020, when asked if he had seen anything \"that gives you a high degree of confidence that the Wuhan Institute of Virology was the origin of the virus,\" the President replied, \"Yes, I have.\" The same day, the Office of the Director of National Intelligence stated that the intelligence community would continue efforts \"to determine whether the outbreak began through contact with infected animals or if it was the result of an accident at a laboratory in Wuhan,\" indicating continuing uncertainties about the virus's origin. ", "China has pushed back against U.S. allegations, including in a \"Reality Check\" document tweeted by a Chinese Foreign Ministry spokesperson responding to 24 U.S. allegations, which the spokesperson calls \"lies.\" (The document argues, for example, that the Wuhan Institute of Virology \"does not have the capability to design and synthesize a new coronavirus, and there is no evidence of pathogen leaks or staff infections in the Institute.\") Chinese spokespeople have gone on the offensive in criticizing the U.S. response to COVID-19 and have doubled down on spreading a conspiracy theory that the virus could have originated in the United States. On May 8, a Chinese Foreign Ministry spokesperson tweeted, \"The #US keeps calling for transparency & investigation. Why not open up Fort Detrick & other bio-labs for international review? Why not invite #WHO & int'l experts to the U.S. to look into #COVID19 source & response?\"", "Some U.S.-based analysts have expressed alarm about the downward spiral in bilateral relations. Some see neither the United States nor China helping to coordinate a global response to the pandemic, and argue, \"U.S.-China strategic competition is giving way to a kind of 'managed enmity' that is disrupting the world and forestalling the prospect of transnational responses to transnational threats.\" Others suggest, \"There will be time later to assess the early mistakes of China and others in greater detail, but the virus is out there now and we should be tackling it together.\" Some have called for cooperation in vaccine development and distribution, and in addressing the economic crisis the virus is causing in the developing world.\" ", "Writing in The Washington Post , China's Ambassador to the United States suggested on May 5 that China would still be open to cooperation. \"Blaming China will not end this pandemic,\" he wrote. \"On the contrary, the mind-set risks decoupling China and the United States and hurting our efforts to fight the disease, our coordination to reignite the global economy, our ability to conquer other challenges and our prospects of a better future.\" In a May 14, 2020, Fox News interview, President Trump said, however, that he had no desire to speak to China's leader Xi Jinping. He suggested that to punish China, \"we could cut off the whole relationship.\" Apparently referring to the U.S. trade deficit with China, which was $378.6 billion in 2019, the President added, \"You'd save $500 billion if you cut off the whole relationship.\"", "Several Members of Congress have introduced legislation criticizing China's response to the COVID-19 pandemic (see Appendix )."], "subsections": []}, {"section_title": "What are the implications in Southeast Asia?125", "paragraphs": ["Southeast Asia was one of the first regions to experience COVID-19 infections and the outbreak could have broad social, political, and economic implications in the months ahead and possibly years ahead. The region's countries are deeply tied together through trade and the movement of labor, links that could be reshaped if the outbreak leads to broad policy changes. Their economies have already been affected by disruptions to these links, and broad economic networks and supply chains could be reshaped if the outbreak leads to broad policy changes.", "As an example, Malaysia banned overseas travel on March 18, affecting approximately 300,000 Malaysians who work in neighboring Singapore. Malaysia, however, changed tack on April 14 and allowed Malaysians in Singapore to return if they agreed to be tested and placed in quarantine. In Singapore, widespread outbreaks among migrant laborers, mostly from South Asia, who live in crowded dormitories, have led to the region's largest number of COVID-19 infections.", "Other regional issues include the following:", "Indonesia and the Philippines, the region's two most populous nations, appear to be experiencing widening outbreaks and may have a significantly larger COVID-19 case count than their public health systems are able to detect and address. Malaysia and Thailand, which have undergone substantial political turmoil in recent years, have relatively new governments that could face legitimacy questions based on their responses to the pandemic and as their economies begin the process of opening. Some nations, including the Philippines and Cambodia, have taken actions that raise concerns about human rights and freedoms. Philippine President Rodrigo Duterte has imposed strict lockdown measures that one U.N. official criticized as \"highly militarized,\" and these measures have resulted in more than 120,000 arrests, disproportionally affecting poor urban residents. Human rights groups have criticized a draft emergency order by Cambodia's government that would give it greater control over traditional and social media. Some of the region's poorest countries, including Burma and Laos, have reported relatively few COVID-19 cases, highlighting questions about transparency in nations that may be particularly vulnerable given their underdeveloped health systems.", "Much of the Southeast Asian diplomatic calendar, which drives regional cooperation on a wide range of issues including trade and public health, has been cancelled or has moved to virtual meetings. The International Institute for Strategic Studies (IISS) has cancelled this year's iteration of its annual Shangri-la Dialogue, slated for June 5-7, after consultations with the government of Singapore."], "subsections": []}, {"section_title": "What are the implications in Central Asia?131", "paragraphs": ["In Central Asia, the economic impacts of the pandemic may affect the roles of Russia and China in the region. Given disruptions to trade and cross-border movement, the pandemic could reverse recent progress on regional connectivity, a U.S. policy priority in Central Asia. The COVID-19 pandemic is placing significant economic pressure on Central Asian countries due to declines in domestic economic activity, economic disruptions in China and Russia, and the fall in hydrocarbon prices. China has cut the volume of natural gas imports from Central Asia due to falling demand, and analysts speculate that Chinese investment in the region may also shrink. Turkmenistan sends almost all of its gas exports to China and is particularly vulnerable, as the Turkmen government uses gas exports to service billions of dollars of Chinese loans. The economic impact of the pandemic will likely interrupt the flow of remittances from Russia, where millions of Kyrgyz, Tajik, and Uzbek citizens work as labor migrants, accounting for significant percentages of their countries' GDPs. ", "Some measures implemented to combat the spread of COVID-19 could provide governments in the region with the means to suppress political and media freedoms. Human Rights Watch has stated that Central Asian governments are failing to uphold their human rights obligations by limiting access to information and arbitrarily enforcing pandemic-related restrictions. In Kazakhstan, authorities have detained government critics and journalists on suspicion of \"disseminating knowingly false information during a state of emergency,\" a charge that can be punished by up to seven years in prison. Kyrgyz authorities restricted the ability of independent media outlets to report for over a month using provisions in the country's state of emergency. The government of Tajikistan has been suppressing information on the pandemic, refusing to answer media questions and blocking a website that crowdsources information on COVID-19 fatalities in the country. "], "subsections": []}, {"section_title": "What are the implications in South Asia?134", "paragraphs": ["The seven countries of South Asia are home to about 1.8 billion people, nearly one-quarter of the world's population. In most South Asian countries, per capita spending on health care is relatively low and medical resources and capacities are limited. Dense populations and lack of hygiene are facilitating factors for pandemics, and with medical equipment needed to address the crisis in short supply, South Asia nations are likely to face serious risk. As of May 1, 2020, the United States had provided nearly $6 million in health assistance to help India slow the spread of COVID-19 and nearly $15 million to assist Pakistan's response.", "The COVID-19 crisis has put a broad hold on activities related to U.S.-India and regional multilateral security cooperation, as well as delayed sensitive negotiations on U.S.-India trade disputes. The postponement of a planned March visit to New Delhi by Secretary of Defense Mark Esper had led to worries by some of inertia in bilateral defense relations. With India and Pakistan still engaged in a deep-rooted militarized rivalry, any generalized South Asian crisis, especially in the disputed region of Kashmir, could lead to societal breakdowns and/or open interstate conflict between these two nuclear-armed countries.", "India. Several U.S. and Indian firms are cooperating on research for a coronavirus vaccine. India is home to several major vaccine manufacturers and is the world's leading producer of hydrocholoquine, an anti-malarial drug President Trump has touted as a potential treatment for COVID-19. In April, the U.S. President suggested that the United States might retaliate against India if New Delhi bans export of the drug and fails to fulfill an existing large-scale U.S. purchase order. India has agreed to allow limited exports.", "The COVID-19 crisis has led to more acute questioning of the political leadership in India, where since last year Prime Minister Narendra Modi has faced mass protests over new citizenship laws and persecution of Muslims. Reports indicate that the health pandemic is fueling greater oppression and persecution of Indian Muslims, with that community coming under blame for the pandemic from some quarters. Accusations also have arisen that the New Delhi government is using the pandemic as a cover for increased efforts to limit press freedoms. India's Jammu and Kashmir territory\u00e2\u0080\u0094which came under a strict security lockdown in August 2019 and lost statehood in November\u00e2\u0080\u0094reportedly faces a \"double lockdown\" with the pandemic and resulting severe physical and psychological hardships. The New Delhi government may be using the pandemic as cover to further consolidate its grip on the disputed Kashmir Valley. ", "In Pakistan , Prime Minister Imran Khan was already dealing with widespread disaffection related to his government's performance and legitimacy. In late March, the powerful military \"stepped in and sidelined\" the civilian leadership after the Khan government's national pandemic response was criticized for perceived indecisiveness. By some accounts, the Pakistan government has also \"caved in to the demands of clerics\" regarding lockdown regulations. ", "In Bangladesh , social distancing is difficult for many living in densely populated areas. In addition, over 1 million displaced Rohingya reside in overcrowded and unsanitary camps along Bangladesh's border with Burma. Of these Rohingya, approximately 630,000 live in the Kutupalong camp, which may be the world's largest refugee camp. The population density in the camps\u00e2\u0080\u0094104,000 people per square mile in Kutupalong\u00e2\u0080\u0094poses challenges for social distancing, quarantine, and isolation. Any COVID-19 transmission in the camps would likely quickly overwhelm medical facilities and services, and because of the camps' porous perimeters, risk spreading into neighboring Bangladeshi towns and villages. Bangladesh reportedly quarantined a number of Rohingya on Bhansan Char island to prevent the spread of COVID-19."], "subsections": []}, {"section_title": "What are the implications in Australia and New Zealand?145", "paragraphs": ["In both Australia and New Zealand, relations with China have been further strained by the COVID-19 pandemic. In April 2020, Australia expressed its support for an international investigation into the origins and spread of the pandemic, a call that raised sensitivities in the PRC. China's Ambassador Cheng Jingye in an Australian newspaper interview warned \"that pursuing an inquiry could spark a Chinese consumer boycott.\" Opposition Foreign Affairs spokesperson Penny Wong has signaled Labor's support of the government on the issue. In the view of one commentator, such attempts at \"intimidation\" and \"economic coercion\" make it \"now plain for all to see that the CCP is waging political war on Australia, using trade as a weapon. This is Australia's moment of clarity.\"", "In May, China berated New Zealand for supporting Taiwan's participation at the World Health Organization. New Zealand Foreign Minister Winston Peters stated, \"[w] e have to stand up for ourselves\" when asked about China's response to New Zealand's position on Taiwan."], "subsections": []}, {"section_title": "What are the implications for U.S. withdrawal from Afghanistan?151", "paragraphs": ["The presence and spread of COVID-19 in Afghanistan is adding new confusion to the Afghan peace process, already complicated by an extended political crisis in Kabul. The February 29, 2020 agreement signed by U.S. and Taliban negotiators commits the United States to withdraw about 3,500 of the 12,000 troops it has in Afghanistan by mid-June 2020 (with commensurate drawdowns of international forces). There have since been conflicting reports about how the COVID-19 pandemic is impacting that timeline. Most notably, the United States announced on March 18 that it is pausing the movement of personnel into and out of theater due to concerns about COVID-19. More recent reports indicate that the withdrawal is proceeding apace, if not ahead of schedule, and NBC News reported in April 2020 that President Trump has called for further accelerating the withdrawal of U.S. troops out of Afghanistan because of the pandemic. The U.S.-Taliban agreement also called for negotiations between the Taliban and Afghan government representatives to begin by March 10, but thus far no formal negotiations have taken place or been scheduled. Some limited engagements were held over Skype, due to the pandemic, but talks are chiefly held up by a disputed prisoner exchange.", "Further spread of COVID-19 in Afghanistan could present opportunities for compromise and intra-Afghan cooperation. For example, Afghan government representatives have expressed support for Taliban efforts to combat the virus in areas they control. In addition, while the Taliban have reportedly targeted health workers in the past, a Taliban spokesman announced that the group \"assures all international health organizations and WHO of its readiness to cooperate and coordinate with them in combatting\" COVID-19, a commitment they appear to have upheld. At the same time, some observers dismiss the Taliban's response as a propagandistic attempt to undermine the legitimacy of the Afghan government, and charge that the Taliban's dramatic escalation of violence since February 2019 is the main factor impeding the country's response to the pandemic. Afghanistan may be at particularly high risk of a widespread COVID-19 outbreak, due in part to its weak public health infrastructure and its porous border with Iran, a regional epicenter of the pandemic where up to three million Afghan refugees live. More than 277,000 Afghans have returned to Afghanistan from Iran since January 1, 2020."], "subsections": []}, {"section_title": "What COVID-19 containment lessons could be learned from Asia?", "paragraphs": ["Asian governments outside mainland China were the first to deal with COVID-19. Five jurisdictions, in particular, have received wide praise for their COVID-19 control approaches: Taiwan, Hong Kong, South Korea, Australia, and New Zealand. Singapore was also praised for its initial actions to control the virus, although a large \"second wave\" of infections has pointed to vulnerabilities that even jurisdictions perceived as well-run still face. All of these jurisdictions have drawn on their experiences in addressing previous public health emergencies, including outbreaks caused by SARS, swine and avian flu, and MERS. Those experiences fostered bureaucratic and public attentiveness to public health challenges and prompted governments to develop active protocols for screening, testing, isolating infected individuals, and tracing their contacts. Prior experience may also have conditioned people in those places to follow standard infection control measures (frequent hand-washing, mask-wearing, and social distancing) and to more readily accept quarantines and movement restrictions. Some of these jurisdictions have begun the process of loosening restrictions related to COVID-19, which may provide lessons for the United States and others.", "Taiwan. Taiwan (which officially calls itself the Republic of China, or ROC), is located just 81 miles off the coast of mainland China. On December 31, 2019, the same day China notified the WHO China Office of pneumonia cases of unknown origin, Taiwan officials had begun to board planes arriving from Wuhan to evaluate passengers who had fever or pneumonia symptoms. Travel alerts, routine passenger screenings, and directives to self-quarantine soon followed, and by early February, Taiwan barred residents of mainland China from entry. Taiwan also extended indefinitely a suspension of cross-Strait flights from all but five airports in mainland China, previously set to expire at the end of April. On January 20, Taiwan both confirmed its first COVID-19 case and activated a Central Epidemic Command Center (CECC) to lead and coordinate the government's response to the COVID-19 crisis. The CECC is part of the National Health Command Center, a 24/7 central command headquarters created in 2004 following the SARS outbreak. The government also integrated its national health insurance, customs, and immigration databases to facilitate case identification and tracking. The concentration of public health expertise among Taiwan's top leaders likely contributed to the government's attentive response. Taiwan's vice president, vice president-elect, vice premier, and minister of health are all public health experts. ", "The government has also issued strict and transparent guidance to contain the spread of the virus, which its citizens largely appear to have followed. Taiwan has tested widely for the virus, including mandatory tests for certain groups and tests for patients with respiratory illnesses that tested negative for the flu. Directives to conduct \"self-health management\" or self-quarantine have been enforced by harnessing cellphone location data and punishing violators with steep fines. The government's daily press conferences and frequent broadcasts of public service announcements have heightened public awareness and facilitated compliance with best practices. Taiwan also created informational apps, to help citizens track the spread of the virus and locate supplies of masks. In February and March, the government announced economic relief and stabilization measures, including approximately USD$2 billion to assist Taiwan industries affected by the outbreak, and payments totaling $465 to individuals who were quarantined or providing care for the quarantined. ", "Hong Kong. Initially, the government of Hong Kong, a Special Administrative Region (HKSAR) of the People's Republic of China, resisted taking aggressive measures to prevent a COVID-19 outbreak. Public criticism of what many considered an insufficient and inconsistent initial response appears to have contributed to the government's subsequent decision to act. A newly formed union of doctors and nurses working for the Hong Kong Hospital Authority held a strike on February 3, 2020, demanding the HKSAR government close the city's border with mainland China, for example. The HKSAR government closed all but two of the land crossings with mainland China the next day. The government implemented a mandatory 14-day quarantine for all arrivals to Hong Kong on March 17, 2020, which remains in effect. The HKSAR government has also indefinitely closed Hong Kong's borders to all non-resident arrivals (except people from Mainland China, Macau and Taiwan who have not been to another country in the previous 14 days). The government has also developed an extensive range of public service announcements, web pages, and other modes of informing the public about COVID-19. ", "Although the HKSAR government may have hesitated, Hong Kong's public quickly adopted social distancing and anti-contamination behaviors developed during previous viral outbreaks. Similarly, medical professionals quickly implemented anti-viral protocols. ", "After 14 days without a confirmed local case of contagion and only a few \"imported cases,\" on May 5, 2020, the HKSAR government began to selectively relax its restrictions, reopening government offices and selective businesses while maintaining the requirement to wear masks in public and prohibiting gatherings of more than eight people. The same day, it also announced that it would provide every Hong Kong resident with a free reusable face mask that complies with the American Society for Testing & Materials F2100 Level 1 Standard in terms of particle and bacterial filtration efficiency. The HKSAR government, however, also noted that restrictions may be reinstated if there is an increase in local cases.", "Singapore. Singapore, a Southeast Asian city-state of 5.7 million people, has offered lessons perceived as both positive and cautionary in its handling of the pandemic. Singapore was one of the first nations outside China to report COVID-19 cases, with its first infection reported on January 23. Public health experts have praised Singapore's rapid early actions, including extensive monitoring of cases and their contacts, temperature checks at building entrances, and clear public messaging. Singapore health officials conducted detailed interviews of affected individuals, requiring those who had come into contact with them to quarantine themselves. The Health Ministry developed the capacity to test more than 2,000 individuals a day. Individuals who come within two meters of an infected individual or spend 30 minutes with one are required to undergo testing and to quarantine or be placed under observation. Individuals found to have misled health officials are subject to criminal penalties including fines and the threat of imprisonment. The Health Ministry issues daily updates on individual cases and the numbers of people under care or protective quarantine, including details of where each individual who has tested positive lives.", "Despite its early successes curbing the spread, Singapore has experienced a significant \"second wave\" of cases, leading authorities to close schools and most businesses, steps that they had avoided earlier. Many of the new cases have come from crowded quarters where migrant workers live, and the expansion has left Singapore with Southeast Asia's largest number of COVID-19 infections, as of May 11.", "South Korea. After cases were confirmed in South Korea in late January, authorities pursued an aggressive testing regimen and public communication strategy. South Korea describes its strategy as the three \"T\"s: tracking, testing, and treatment. By early May, the number of new cases per day had fallen to 6.4. As of early May, nearly 660,000 citizens had been tested for the virus \u00e2\u0080\u0094the highest rate of testing per capita in the world\u00e2\u0080\u0094at over 600 sites, including pop-up facilities and drive-through sites. Results are generally provided within 24 hours. The case fatality ratio (1.64% as of March 30) has also been low, which health officials attribute to early detection and treatment, as well as universal health care. As of early May, South Korea has been able to stabilize the outbreak without lockdowns or wholesale travel bans, in part, experts argue, by being transparent and disseminating information about the virus' spread, including possible infections at the neighborhood level. President Moon Jae-in has stepped aside to allow national health officials to take the lead in delivering twice-daily messages to the public. After MERS killed 38 people in 2015, South Korea reformed its health policy by granting the government greater powers to monitor and track individual patients and to allow private companies to rapidly produce tests. Shortly after the COVID-19 outbreak hit, authorities were able to test 10,000 patients daily. Authorities can now test over 20,000 patients per day. ", "Australia . Observers believe that Australia's mitigation efforts (including self-isolation, movement restrictions, a two-week quarantine for those entering the country), the public's general adherence to rules, and widespread testing and tracing of contacts may be responsible for a relatively successful effort to contain the pandemic in Australia. Australia reportedly has one of the highest per capita testing rates in the world. In April 2020, the Australian government launched \"Covidsafe,\" an application that traces every person running it with other application users that have tested positive for COVID-19. Using Bluetooth, the app records others that have been within 1.5 meters for 15 minutes or more who also have the app. Within three days of its release, 3 million Australian had reportedly signed up for the app. ", "New Zealand . New Zealand confirmed its first case of coronavirus on February 28, 2020. The late date of the first outbreak, New Zealand's relative isolation, swift early response, and widespread testing all appear to have helped New Zealand to effectively deal with the virus. On March 14, with only six confirmed COVID-19 cases in the country, Prime Minister Jacinda Ardern announced that all entering New Zealand would have to self-isolate for two weeks and that the existing travel ban for those coming from China and Iran would remain in place. From March 19, the New Zealand border has been closed to almost all travelers, with only New Zealand citizens, residents, and their immediate families allowed to enter the country. This was a significant move for the country, which has an estimated 4 million international visitors a year, and where tourism accounted for approximately 5.8% of GDP for the year ending March 2019. Since April 9, arrivals have been placed in \"managed isolation facilities,\" and those deemed to be high risk have been placed in quarantine facilities. ", "New Zealand has moved from lockdown to an easing of restrictions in a relatively short period of time. Prime Minister Ardern announced on March 23 that New Zealand would enter a level 4 lockdown on March 25, when it had less than 150 cases. New Zealand then moved to alert level 3 on April 27. It subsequently moved to alert level 2 on May 13, under which most businesses will be open, tertiary education will open, travel between regions of the country, and gatherings up to 10 people will be allowed. Border controls and physical distancing requirements will remain, wide scale testing will continue, and those unwell or who have been in contact with the sick will be isolated. New Zealand and Australia have reached an agreement to lift travel restrictions between their two countries and establish a Trans-Tasman COVID Safe Zone, or travel bubble, as soon as it is safe to do so."], "subsections": []}]}, {"section_title": "Europe208", "paragraphs": [], "subsections": [{"section_title": "How are European governments and the European Union (EU) responding?", "paragraphs": ["On March 13, 2020, WHO officials characterized Europe as the new global epicenter of the COVID-19 pandemic, noting that more cases were being reported each day in Europe than were reported in China at the height of its epidemic. As of May 15, about 1.2 million infections and nearly 155,000 deaths had been reported across the 27-member European Union (EU) and United Kingdom (UK). Italy, Spain, and the UK have been particularly hard hit, but infection rates grew across Europe throughout the month of March. Ukraine, Russia, and other parts of the former Soviet Union also reported a growing number of new COVID-19 cases. ", "Since mid-April, a growing number of European governments have expressed cautious optimism that their countries have passed the peak of the crisis. Many European countries, including France, Germany, Italy, and Spain, have announced and begun to implement staged \"re-opening\" plans, slowly rolling back some of the \"lockdown\" measures implemented in March. Government officials caution, however, that reopening measures are strictly conditions-based and could be halted if infection rates grow.", "European leaders have characterized the pandemic as Europe's biggest challenge since the Second World War, with potentially severe economic consequences and far-reaching social and political implications beyond the public health impact. European governments and the EU are enacting an array of policy responses. Authorities in most European countries initially imposed strict limitations on the movement of people and are undertaking significant fiscal and monetary measures. Key measures taken in Europe to combat the pandemic include the following:", "Initial \" l ock downs\" t ransitioning to c autious r eopening . On March 9, Italy became the first country to impose a nationwide quarantine, prohibiting \"non-essential\" movement within the country and closing all non-essential businesses; France, Germany, the United Kingdom, and others followed with similar restrictions. Almost all European countries closed schools and some types of businesses and have restricted public gatherings to varying degrees. Numerous European governments mobilized their military forces to assist response efforts, including constructing makeshift hospitals. In some countries, government authorities scaled back public transportation and introduced curfews. In mid-April, some European countries began announcing plans for a gradual reopening of their societies and economies in the coming months, but the pace of reopening measures vary across Europe, and leaders caution that such measures would be contingent on a clear reduction in infection rates. European governments have generally stressed the importance of a staged approach to reopening, allowing for regional differences depending on regional infection rates and hospital and testing capacity. They also have sought to implement widespread testing and contact tracing capacity. Economic stimulus . Many analysts predict that the COVID-19 pandemic could cause a financial crisis in Europe that might be several times worse than the 2008 global recession. European governments and the EU have announced an array of measures to mitigate a severe economic downturn. Measures include loan programs and credit guarantees for companies, income subsidies for affected workers, tax deferrals, and debt repayment deferments. On May 14, the Italian government announced a \u00e2\u0082\u00ac55 billion (about $60 billion) stimulus plan. In France, President Emmanuel Macron has pledged to provide unlimited budgetary support to companies and workers, which the government says could cost upward of \u00e2\u0082\u00ac45 billion ($48 billion). Germany has announced direct fiscal support of \u00e2\u0082\u00ac236 billion (about $256 billion) and a \u00e2\u0082\u00ac500 billion ($536 billion) loan program. Other countries have announced similar relief measures.", "On March 18, the European Central Bank, which manages the EU's common currency (the euro), announced a Pandemic Emergency Purchase Program (PEPP) of about \u00e2\u0082\u00ac750 billion ($803 billion) aimed at calming markets and stemming a debt crisis in the Eurozone (the 19 EU member states that use the euro as their currency). On April 9, Eurozone leaders agreed to a new financial assistance package of at least \u00e2\u0082\u00ac540 billion (roughly $590 billion). This package includes access to credit lines through the European Stability Mechanism (ESM, the Eurozone's \"bail-out\" fund) worth approximately \u00e2\u0082\u00ac240 billion ($261 billion) for health-related costs, establishment of a European Investment Bank fund to back up to \u00e2\u0082\u00ac200 billion ($219 billion) in loans for businesses, and a \u00e2\u0082\u00ac100 billion ($110 billion) unemployment benefit support plan. Reaching consensus on this financial package was contentious and exposed divisions among EU member states. The package does not include establishing common EU debt instruments (or \"corona bonds\")\u00e2\u0080\u0094one of the most controversial proposals supported by hardest-hit countries such as Italy, Spain, and France\u00e2\u0080\u0094but EU leaders will likely continue to discuss this option and other potential economic measures. ", "Border closures . Numerous European governments have enacted national border controls and some have restricted entry only to national citizens. These measures have complicated efforts to maintain the free movement of goods, services, and people (key elements of the EU's single market) on which the EU's highly integrated economy depends. National border controls and closures within the EU's internal border-free Schengen Area \u00e2\u0080\u0094in which individuals may travel without passport checks among 22 EU member states and four non-EU countries\u00e2\u0080\u0094resulted in long delays at several borders. On March 16, 2020, EU leaders agreed to implement a temporary ban on \"non-essential travel\" into the EU and the Schengen Area for most foreign nationals from outside countries (including the United States), partly in an effort to preserve freedom of movement within the EU. This ban on nonessential travel into the EU and the Schengen Area is expected to remain in place until at least June 15. Many analysts contend that the disparate national reactions to the COVID-19 pandemic are endangering the EU's single market and Schengen system, with possible long-term implications for the EU's future."], "subsections": []}, {"section_title": "How is the pandemic affecting U.S.-European relations?", "paragraphs": ["Managing the spread of COVID-19 has added new tensions to already strained U.S.-European relations. The EU\u00e2\u0080\u0094a frequent target of criticism from President Trump\u00e2\u0080\u0094expressed dismay with the announcement from the Trump Administration on March 11, 2020 of a travel ban on foreign nationals arriving in the United States from the Schengen Area. In a joint statement on March 12, EU leaders noted that COVID-19 was a global crisis that \"requires cooperation rather than unilateral action\" and expressed disapproval that the U.S. travel ban was imposed \"without consultation.\" U.S. officials countered that the travel ban decision had to be taken quickly and was based on the WHO's assessment of sustained transmission in the Schengen Area. The Trump Administration subsequently extended the travel ban beyond the Schengen Area to the UK and Ireland. Nevertheless, some analysts on both sides of the Atlantic asserted that the U.S. travel ban was scapegoating the EU, threatened future U.S.-EU relations, and imperiled broader U.S.-European political and security alliances. ", "Some European leaders and EU officials also object to certain elements of the U.S. international response to the COVID-19 pandemic. Many European policymakers have criticized President Trump's decision to halt U.S. funding to the WHO pending a review of its role in allegedly mismanaging the pandemic response. EU officials have expressed concern that U.S. economic sanctions are blocking humanitarian supplies for hard-hit countries such as Iran and Venezuela. Some European officials, including in Germany and France, have complained about U.S. efforts to outbid them in the global marketplace for facemasks and other critical medical equipment. Some critics have also bemoaned the lack of coordinated U.S.-European leadership in mobilizing a global response to control the pandemic and address its wider societal and economic consequences. "], "subsections": []}]}, {"section_title": "Africa220", "paragraphs": [], "subsections": [{"section_title": "How are African governments responding?", "paragraphs": ["As of May 12, 2020, all countries in sub-Saharan Africa (\"Africa\") except Lesotho had confirmed COVID-19-cases. South Africa had 11,000-plus cases, 25% of Africa's total. Most early cases were imported, notably from Europe, or linked to such cases. Africa's known COVID-19 caseloads have lagged those of more developed countries, and Africa's per capita incidence of COVID-19 remains very low in global comparison. Most countries in Africa, however, now have confirmed local COVID-19 transmission chains, and in some countries cases are surging. ", "Prevention and mitigation strategies vary considerably in the region. Many governments have sought to increase COVID-19 testing capacity (though some have inadequate access to testing supplies), and to isolate confirmed and presumptive infected persons and trace their contacts. Many have improved their capacities in these areas since the start of the pandemic (see next section), in some cases building on lessons from past Ebola virus outbreak responses. Many African health systems, however, have limited capacities. Per capita ratios of doctors and health workers, rates of health spending, and hospital beds are some of the lowest globally, and supplies of healthcare goods (e.g., drugs, ventilators, and oxygen supplies) are low. Socioeconomic challenges also hinder prevention measures centering on hygiene (e.g., handwashing) and social distancing. Many Africans lack access to clean water or sanitation facilities, and live in high-density areas (e.g., informal urban settlements or displaced person camps). COVID-19 co-morbidity with other diseases widespread in the region (e.g., HIV and malaria) and/or chronic health problems (e.g., diabetes and malnutrition ) may increase the risk from COVID-19 in Africa.", "Most countries have launched public outreach campaigns centered on personal hygiene promotion, the use of facial masks, and social or physical distancing. Residential lockdowns, business restrictions, prohibitions on large gatherings, and school and university closures have been common. Some countries, however, have implemented only some of these various responses, or implemented them in limited geographic areas. Governments in multiple countries have authorized restrictive measures under pandemic national states of disaster or emergency. In several countries, security forces enforcing lockdowns and other restrictions have violated human rights, at times in the face of social unrest over the effects of these restrictive measures. In some countries, observers fear that incumbent regimes may use their emergency authorities to extend their powers or time in office, or, as some have, to restrict press freedoms or opposition activity. ", "Given that many Africans make a precarious hand-to-mouth living in the informal sector, lockdowns have caused intense economic pain in the region, and governments have been eager to permit normal commercial activity to resume. A number of African governments began easing restrictive measures in late April, though in some countries, a spike in COVID-19 cases has accompanied or followed such actions. ", "Experts are concerned that the pandemic's broader economic impacts could be particularly devastating in Africa, where many countries rely on tourism and/or commodity exports, notably to China. Both tourism and exports have declined sharply due to COVID-19-linked interruptions and declines in world economic activity, trade, and travel. In food import-dependent countries, food insecurity may also increase, due to these factors as well as lock-down linked restrictions. Remittances from abroad also have dropped. Africa's heavy reliance on imports of consumer and industrial goods from China may also suffer, alongside business sectors tied to these imports (e.g., digital technology and local retail sectors). Exports of mined and energy commodities, which comprise roughly 75% of African exports by value, may be particularly hard-hit. Africa's oil export-dependent countries may face a double threat: a global oil price collapse initially driven by a now-ended price war among selected producers and an ongoing collapse in global oil demand. African airlines also are suffering steep losses. Multiple central banks have acted to increase economy-wide liquidity and many governments are making resource reallocations or are slated to receive international assistance to finance COVID-19 responses. "], "subsections": []}, {"section_title": "How is the Africa CDC responding?", "paragraphs": ["The African Union (AU) Africa Centres for Disease Control and Prevention (Africa CDC), at times in partnership with the WHO and other international actors, is helping African governments to enhance the capacity of their public health systems to detect and respond to COVID-19. Africa CDC support has centered on training personnel on disease detection and surveillance at national laboratories and ports of entry, providing COVID-19 test kits and other health commodities (e.g., personal protection equipment or PPE), and other health response capacity-building. The Africa CDC has provided COVID-19 detection training to at least 40 country labs, almost all of which are now able to independently test for the disease. These labs are supported by a regional COVID-19 specimen referral and verification system comprising expert labs in Senegal and South Africa, with ten more planned region-wide. The Africa CDC also has created a regional COVID-19 task force under a regional response plan, has activated its Emergency Operations Center and Incident Management System, and is aiding information sharing among AU member states. The Africa CDC also has trained epidemiologists in disease event tracking and risk analysis, including through its Regional Collaborating Centres (RCCs), and is providing COVID-19 medical and technical advice and pandemic briefings to AU member states. "], "subsections": []}]}, {"section_title": "Middle East and North Africa235", "paragraphs": [], "subsections": [{"section_title": "How are Middle Eastern and North African governments responding?", "paragraphs": ["As of May 2020, all 17 countries in the Middle East and North Africa region, in addition to the Palestinian territories, had confirmed local transmission of COVID-19. Iran was an early epicenter of the pandemic; as of May, Iranian cases represent roughly 40% of all confirmed cases in the region. The six Arab Gulf states also have emerged as a focal point; as of May these states (combined) also represent nearly 40% of the region's confirmed cases. Observers and U.S. government officials have expressed concern that some states have sought to downplay the extent of the spread of the virus in their countries. Many countries in the region also lack the capability to conduct comprehensive testing. ", "Starting in March, many countries suspended international and domestic passenger flights, closed land and sea crossings with neighboring states, imposed curfews, and closed commercial, educational, and religious sites. Some governments also passed emergency legislation and expanded surveillance as part of their response to the pandemic. In some cases, observers argued that these measures may have been designed in part to suppress political opposition. ", "In Egypt, parliament expanded the country's emergency law; Human Rights Watch warned that most of the new authorities granted to the government are unrelated to public health issues. In Algeria, the government of recently elected President Abdelmadjid Tebboune banned all public gatherings of more than two people, including protest rallies, which had been held weekly for political reforms since February 2019. In Israel, the government approved temporary emergency regulations for security officials to monitor COVID-19 patients and potential victims via their mobile phones. ", "Economies in the region have been hard hit by the collapse in global energy prices and tourism. As in other regions, government efforts to contain the spread of the virus have also involved the suspension of most public commerce and trade, resulting in a severe blow to economic activity that is expected to generate increased unemployment. In April, the IMF projected that the region comprising the Middle East, North Africa, Afghanistan, and Pakistan would contract by 3.1% in 2020, with oil exporters in the region contracting by 4.2%. Rising unemployment, particularly concentrated among the youth, could have implications for political stability in the region. A prolonged global economic slowdown associated with COVID-19 also could dampen global demand for oil and natural gas resources exported from countries in the Middle East and North Africa for a prolonged period, with corresponding diminishing effects on export revenues and the fiscal health of some regional governments. ", "Starting in late April, some countries began lifting some internal restrictions on movement and commercial activity\u00e2\u0080\u0094including Tunisia, where nationwide lockdown measures appeared to contribute to a drop in new confirmed cases\u00e2\u0080\u0094and Lebanon, where cases appeared to spike following the easing of restrictions. The WHO Eastern Mediterranean Regional (EMR) office warned, \"Without careful planning, and in the absence of scaled up public health and clinical care capacities, [a] premature lifting of physical distancing measures is likely to lead to an uncontrolled resurgence in COVID\u00e2\u0080\u009119 transmission and an amplified second wave of cases.\"", "The WHO has highlighted the particular risks posed by the spread of the virus to states such as Syria, Libya, and Yemen, noting that years of conflict, natural disasters, and previous outbreaks", "have left these countries with weakened health systems, shortages in health workers, and limited access to even the most basic medical care services. Millions of already vulnerable people in these countries are also more prone to infectious diseases due to overcrowded living conditions, weakened immunity due to years of food insecurity, and insufficient treatment for other underlying medical conditions. Many of these countries are also politically fragmented, resulting in limited humanitarian access to populations in some areas, and challenges in the sharing of information between controlling parties and WHO in a timely and transparent manner.", "In addition, other areas of elevated risk in the region include the following:", "The Gaza Strip . The Hamas-controlled Gaza Strip has reported 20 COVID-19 cases as of May 11, and officials from international organizations have voiced concerns about a possible outbreak given the acute humanitarian challenges in Gaza. The densely populated territory of nearly 2 million Palestinians has a weak health infrastructure and many other challenges related to sanitation and hygiene. On May 8, the U.N. Relief and Works Agency for Palestine Refugees in the Near East (UNRWA) updated an emergency flash appeal from $14 million to $93.4 million to prepare and respond to COVID-19-related needs for Palestinian refugees in Gaza, the West Bank, Jordan, Lebanon, and Syria through July 2020. The Trump Administration stopped U.S. contributions to UNRWA in 2018 and all bilateral aid to the West Bank and Gaza in 2019. For FY2020, Congress appropriated $75 million from the Economic Support Fund for humanitarian and development purposes in the West Bank and Gaza, and some Members of Congress have called for the Administration to obligate some of this assistance for Gaza. The Hajj (Saudi Arabia) . Each year, millions of Muslims travel to Saudi Arabia for a religious pilgrimage to Mecca. This journey, known as the Hajj , is a pillar of the Islamic faith. Saudi authorities have invested considerable attention and resources to averting infectious disease outbreaks during the Hajj , having faced 2009 H1N1 Pandemic, SARS, and MERS. In February 2020, Saudi leaders suspended umrah pilgrimage visits to the kingdom (which can be done at any time of year in contrast to the Hajj ) and limited access to holy sites in Mecca and Medina. In late March, Saudi officials asked Muslims to delay making Hajj travel plans until the effects of the pandemic were clearer. It remains to be seen whether the Hajj pilgrimage will go forward as scheduled in July and August 2020. U.S. Military Facilities . The United States maintains a significant military presence in the region, and has partnered closely with local forces. U.S. forces remain in Iraq and are consolidating base locations. U.S. training of Iraqi military personnel has been suspended due to COVID-19 risks, and U.S. officials stated in late March that future training would use \"fewer bases with fewer people.\""], "subsections": []}, {"section_title": "What are the implications for U.S.-Iran policy?", "paragraphs": ["The spread of COVID-19 in Iran has raised questions about the possible effects of U.S. sanctions on Iran's response capacity. The Trump Administration's policy of \"maximum pressure\" on Iran imposes economic sanctions on every sector of Iran's economy. Iranian officials and some global health officials assert that the U.S. sanctions are weakening Iran's ability to contain the virus by reducing the availability of medical equipment. Sales to Iran of humanitarian items, including medicine and medical equipment, are generally exempt from U.S. sanctions. The reluctance of banks worldwide, however, to finance any transactions involving Iran, fearing penalties by the United States for sanctions violations, has reportedly affected Iran's ability to import all types of goods, including those that are exempt from sanctions. As the disease spread in Iran in February 2020, the United States has offered Iran an unspecified amount of assistance to help it deal with the outbreak, but Iran's government has refused the aid. In early March 2020, U.S. officials issued guidance indicating that transactions involving Iran's foreign exchange assets held abroad, when used to buy humanitarian items, would not face U.S. sanctions. However, the Administration opposes Iran's request for a $5 billion loan from the International Monetary Fund (IMF) that Iran says it needs to cope with the COVID-19 crisis; the Administration asserts that Iran has ample amounts of funds for medical imports and would use the loan proceeds to support pro-Iranian armed factions in various countries. Under the IMF's voting rules, the U.S. voting power is not sufficient to unilaterally veto specific IMF program requests, even though the United States has the largest share at the IMF and can veto major policy decisions at the IMF. Although over the past two decades Congress has supported increased sanctions on Iran, some Members of Congress have called on the Administration to relax sanctions on Iran, at least temporarily, to help Iran deal with the COVID-19 pandemic and thereby help curb the disease's broader spread."], "subsections": []}]}, {"section_title": "Canada, Latin America, and the Caribbean256", "paragraphs": [], "subsections": [{"section_title": "How is the Canadian government responding?", "paragraphs": ["Canada's federal, provincial, and territorial governments have worked closely together to manage the country's response to the COVID-19 pandemic. While the federal government has provided broad public health guidelines intended to slow the spread of the virus, provincial and territorial governments have implemented varying measures in accordance with local conditions. As of early May 2020, all of the provinces had developed phased reopening plans, and some had begun loosening restrictions on certain business, education, and recreational activities while maintaining physical distancing guidelines. ", "The federal, provincial, and territorial governments also have cooperated on efforts to secure personal protective equipment, testing materials, and other medical supplies. Nevertheless, provincial health services, which administer the Canadian health system, reportedly have experienced some shortages. Prime Minister Justin Trudeau has acknowledged that Canada's National Emergency Strategic Stockpile did not have sufficient supplies prior to the pandemic, but federal officials maintain that they have been able to fulfill every request for personal protective equipment received from the provinces.", "Prime Minister Trudeau has worked with the Canadian Parliament to enact a series of measures intended to mitigate the economic impact of the pandemic. As of late April 2020, their announced assistance measures amounted to an estimated C$146 billion ($104 billion)\u00e2\u0080\u0094equivalent to about 7% of Canada's projected gross domestic product (GDP) for 2020. These include a new Canada Emergency Response Benefit that provides C$2,000 ($1,424) every 4 weeks for up to 16 weeks for workers who have lost their incomes due to COVID-19, and a new Canada Emergency Wage Subsidy that covers 75% of employees' wages, up to C$847 ($603) per week, for up to 12 weeks. Prime Minister Trudeau has signaled his intention to extend such programs as necessary. To provide additional support to the economy and financial system, the Bank of Canada cut its benchmark interest rate from 1.75% to 0.25%, and launched its first-ever quantitative easing program to purchase government and commercial debt. Canada's Parliamentary Budget Officer forecasts that the country's real GDP will contract by 12% in 2020, but expects an economic recovery to begin in the second half of the year.", "The Canadian and U.S. governments have coordinated decisions concerning their shared border. On March 21, they closed the border to all nonessential travel. Although the closure initially was to last 30 days, both governments agreed to extend it until May 21. The Canadian government reportedly has requested that the closure remain in place until June 21; several provincial governments are opposed to a quick reopening of the border given the scope of the COVID-19 outbreak in the United States. The Canadian and U.S. governments generally have prioritized keeping the border open to trade. In April 2020, however, the Trump Administration invoked the Defense Production Act of 1950 (50 U.S.C. \u00c2\u00a7\u00c2\u00a74501 et seq.) to restrict certain medical exports. Prime Minister Trudeau urged the United States not to interrupt the flow of essential goods and services, and the Administration ultimately exempted Canada from the export restrictions."], "subsections": []}, {"section_title": "How are Latin American and Caribbean governments responding?", "paragraphs": ["The ability of countries in Latin America and the Caribbean to mitigate a COVID-19 outbreak varies across the region, and responses have been diverse. The pandemic appears to have arrived in Latin American and the Caribbean later than many other regions and has yet to peak. A 2019 Global Health Security Index included Brazil, Argentina, Chile, and Mexico among countries most prepared for a pandemic, and considered Venezuela, Honduras, Jamaica, the Bahamas, Haiti, Guyana, Belize, and Guatemala to be among the least prepared. Although all countries in the region aspire to universal health coverage, many lack sufficient doctors, hospitals, medical supplies and other critical infrastructure, and face challenges of inequality and economic fragility as they grapple with the pandemic. ", "The patchwork of response efforts across 33 countries, including a cautious lifting of control measures in some countries in May 2020, has relied on incomplete data to guide policy since most countries have not conducted widespread testing. In Mexico, Brazil, and Nicaragua, where presidents have downplayed the threat of the pandemic, many analysts suggest the actual level of infection is essentially unknown, with some independent estimates suggesting it is a magnitude higher than what health authorities have reported. The information available suggests some countries are suffering severe outbreaks, while others, such as Paraguay, appear to have relatively few cases. ", "According to several observers, the region's vulnerability is heightened by diminished health spending and low government capacity, following several years of economic stagnation. Venezuela is of particular concern since protracted political and economic crises had already weakened its health system. An estimated 4.8 million Venezuelans have fled the country, and new immigration controls by neighboring countries are unlikely to stop Venezuelans from crossing the region's porous borders.", "As the most urbanized region in the world, Latin American and the Caribbean nations face challenges enforcing social distancing by quarantine and curfew. In some cities, such as Guayaquil, Ecuador, outbreaks have already overwhelmed medical systems. In rural areas, and urban slums, there is limited access to clean water and sewage treatment and minimal health infrastructure. Indigenous communities, Afro-descendants, migrants, refugees, and internally displaced persons often face formidable barriers to health care. Quarantine restrictions in some cases have created a dangerous rise in hunger and desperation since a large proportion of the population depends on daily earnings, often through informal employment, to make ends meet. ", "Many governments have taken extraordinary measures to respond to the pandemic. Some have been accused of abuses of power and violations of human rights for arresting and imprisoning quarantine violators, harshly treating prison uprisings and jailed gang members (notably in El Salvador), and delaying elections. Many governments also have begun to implement far-reaching economic support measures, although their fiscal capacities to support businesses and bolster social safety nets varies considerably. The IMF estimates the region's economic growth will contract this year by 5.2%. "], "subsections": []}]}]}, {"section_title": "International Economic and Supply Chain Issues274", "paragraphs": [], "subsections": [{"section_title": "What are the implications of the pandemic in China's economy?", "paragraphs": ["COVID-19 emerged amidst an economic downturn in China with officials navigating U.S.-China bilateral tariffs, working to curb consumer inflation (due in part to domestic pork shortages resulting from African swine fever), and moving to rein in government spending and shadow lending. COVID-19 containment measures significantly slowed economic activity in China, and halted production almost entirely in some areas of the country, particularly Hubei province. In early February, China's central bank pumped $57 billion into the banking system, capped banks' interest rates on loans for major firms, and extended deadlines for banks to curb shadow lending. China's central bank is seeking to stabilize China's currency and shore up liquidity in China's banking system, which remains the primary channel through which the government is providing business relief. Despite these measures, China experienced a 6.8% contraction in GDP growth in the first quarter of 2020, the first GDP contraction recorded in China since China's National Bureau of Statistics began releasing quarterly GDP figures in 1992. ", "Many firms in China are still struggling to return to full capacity as some restrictions on travel and distribution of goods and workers remain and additional reported pockets of outbreaks continue in different parts of China. In addition, COVID-19's global spread has led to a sharp global economic downturn and reduced global demand for Chinese exports. China's recovery is also constrained by a contraction in global transportation and logistics and tourism and services trade.", "The economic impact of COVID-19 has also raised questions about the capacity of the United States and China to implement the Phase One Trade Agreement signed in January 2020, which commits China to purchasing $200 billion in additional exports over the next two years. Recent analysis of both U.S. and Chinese first quarter trade data indicates that China is not on track to meet its purchase commitments\u00e2\u0080\u0094according to U.S. trade data, China's imports of agricultural products, a major component of the purchase agreements, grew by a modest 3.2%, while China's imports of U.S. manufactured goods and energy shrank. Reports in China's state media have suggested that some elements of China's leadership might be considering invalidating and renegotiating the phase one agreement."], "subsections": []}, {"section_title": "How is COVID-19 affecting the global economy and financial markets?", "paragraphs": ["A growing list of economic indicators makes it clear that the viral outbreak is negatively affecting global economic growth on a scale that has not been experienced since at least the global financial crisis of 2008-2009. Global trade and GDP are forecast to decline sharply through at least the first half of 2020. The global pandemic is affecting a broad swath of international economic and trade activities, from services generally to tourism and medical supplies, global value chains, financial markets, and a range of social activities, to name a few. The health and economic crises could have a particularly negative impact on developing economies that are constrained by limited financial resources and where health systems could quickly become overloaded. ", "The economic situation remains highly fluid. Labeling the projected decline in global economic activity as the Great Lockdown, the IMF forecasted on April 14, 2020 that the global economy could decline by 3.0% in 2020, before growing by 5.8% in 2021, constituting the \"worst recession since the Great Depression, surpassing that seen during the global financial crisis a decade ago.\" Estimates by the Organization for Economic Cooperation and Development (OECD) indicate the virus could trim global economic growth by as much as 2.0% per month if current conditions persist, or 24% on an annual basis. Global trade could also fall by 13% to 32%, depending on the depth and extent of the global economic downturn. Increasing rates of unemployment are raising the prospects of wide-spread social unrest and demonstrations in developed economies where lost incomes and health insurance are threatening living standards and in developing economies where populations reportedly are growing concerned over access to basic necessities and the prospects of rising levels of poverty.", "Over the seven-week period from mid-March to early May 2020, more than 33 million Americans filed for unemployment insurance. On May 8, 2020, the Bureau of Labor Statistics (BLS) reported that 20 million Americans lost their jobs in April 2020, pushing the total number of unemployed Americans to 23 million and raising the unemployment rate to 14.7%, the highest since the Great Depression of the 1930s. The report indicated that all major industry sectors experienced job losses, with the heaviest losses in the leisure and hospitality industries. Preliminary data indicate that U.S. GDP in the first quarter 2020 fell by 4.8% at an annual rate, the largest quarterly decline in GDP since the fourth quarter of 2008 during the global financial crisis. The U.S. economy is projected to contract by 5.9%, about twice the rate of decline experienced in 2009 during the financial crisis. The forecast assumes that the pandemic fades in the second half of 2020 and that the containment measures can be reversed. ", "The IMF also argues that recovery of the global economy could be weaker than projected as a result of lingering uncertainty about possible contagion, lack of investor and consumer confidence, and permanent closure of businesses and shifts in the behavior of firms and households. Global trade, measured by trade volumes, slowed in the last quarter of 2019 and was expected to decline further in 2020, as a result of weaker global economic activity associated with the pandemic. ", "Uncertainty about the length and depth of pandemic-related economic effects and the effectiveness of pandemic control measures are shaping perceptions of risk and volatility in financial markets and corporations. Financial markets worldwide, particularly in the United States, Asia, and Europe, are volatile as investors are concerned that the virus is creating a global crisis that could be prolonged and expansive. Similar to the 2008-2009 global financial crisis, central banks are rapidly becoming the lender of last resort and are attempting to address financial market volatility. Developments continue to evolve rapidly and the market dynamics have led some observers to question if these events mark the beginning of a full-scale global financial crisis.", "Financial market dislocation can potentially increase liquidity constraints and credit market tightening, as firms hoard cash, with negative effects on economic growth. In some financial markets, fund managers have started selling government securities to increase their cash reserves, pushing down government bond prices. Financial markets are also responding to increased government bond issuances in the United States and Europe to fund COVID-19-related spending, further increasing government debt."], "subsections": []}, {"section_title": "How is COVID-19 affecting U.S. medical supply chains? 287", "paragraphs": ["COVID-19 has revealed U.S. and global supply chain vulnerabilities across a range of sectors, particularly PPE, which relies directly on China-based manufacturing. During the 2002-2003 SARS outbreak, China accounted for 8% of global manufacturing exports; in 2018, China was the source of approximately 19% of global manufacturing exports, including intermediate goods vital to global manufacturing supply chains. ", "An area of particular concern to Congress in the current environment is U.S. shortages of medical supplies\u00e2\u0080\u0094including personal protective equipment (PPE) and pharmaceuticals\u00e2\u0080\u0094as the United States steps up efforts to contain COVID-19 with limited domestic stockpiles and insufficient U.S. industrial capacity. Because of China's role as a global supplier of PPE, medical devices, antibiotics, and active pharmaceutical ingredients (API), reduced exports from China have led to shortages of critical medical supplies in the United States. According to China Customs data, in 2019 China exported $9.8 billion in medical supplies and $7.4 billion in organic chemicals\u00e2\u0080\u0094a figure that includes active pharmaceutical ingredients and antibiotics\u00e2\u0080\u0094to the United States. While there are no internationally agreed guidelines and standards for classifying these products, U.S. imports of pharmaceuticals, medical equipment and products, and related supplies are estimated to have been approximately $20.7 billion (or 9.2% of U.S. imports), according to CRS calculations using official U.S. data. ", "In early February 2020, the Chinese government nationalized control of the production and distribution of medical supplies in China, directing all production for domestic use. The Chinese government also directed the national bureaucracy, local governments, and Chinese industry to secure supplies from the global market. This effort likely exacerbated medical supply shortages in the United States and other countries, particularly in the absence of domestic emergency measures that might have locked in domestic contracts, facilitated an earlier start to alternative points of production, and restricted exports of key medical supplies. In addition to formal and informal PPE export restrictions that China reportedly has placed on domestic producers of PPE, several prominent U.S. companies with PPE production capacity located in China, including 3M, have indicated they do not have PRC government authorization to export. As China's manufacturing sector recovers while the United States and other countries are grappling with COVID-19, the Chinese government may selectively release some medical supplies for overseas delivery. Those decisions are likely to be driven, at least in part, by political calculations, as has been the case with many countries around the world. "], "subsections": []}]}, {"section_title": "Issues for Congress295", "paragraphs": ["The COVID-19 pandemic has raised questions about domestic and international preparedness and the appropriate responses to pandemic control. Although the United States has long-supported the delivery of PPE through its international pandemic preparedness programs, this practice has come into question while the numbers of COVID-19 cases and deaths climb in the United States. As of April 15, 2020, the United States had the highest number of COVID-19 cases and deaths worldwide, accounting for roughly 30% of all COVID-19 cases globally. In March, some Members of Congress began questioning the delivery of PPE by USAID to foreign countries while some governors and mayors reported shortages of the commodities. ", "The United States provides annual funding for foreign assistance, approximately $20 billion of which is administered by USAID each year. USAID programs operate in more than 120 countries worldwide and are intended to meet specific development objectives. In many of these countries, widespread poverty, weak public institutions, and diverse pre-existing governance challenges are likely to be exacerbated by the pandemic. To preserve these investments and past policy progress, protect U.S. foreign policy interests in the region, save lives, and help combat the negative socioeconomic effects of the pandemic in the region, Congress may seek to address additional help aid recipients might request to control the pandemic and its effects. ", "Congress might also consider how the pandemic may affect partner governments' absorption capacities, and the manner and degree to which U.S. assistance may complement or coincide with nationally-determined pandemic responses. Congress may also wish to consider how responding to the challenges created by the pandemic may reshape pre-existing U.S. aid priorities\u00e2\u0080\u0094and how it may affect the ability of U.S. personnel to implement and oversee programs in the field. Relatedly, Congress may wish to ensure that U.S. responses are robustly coordinated with those of other donor governments and multilateral functional agencies\u00e2\u0080\u0094and to ensure that such efforts are transparent and cost-effective, and that donor assistance is complementary and non-duplicative.", "The pandemic is also having other effects on foreign affairs that Congress might consider. Some have questioned, for example, how U.S. immigration policy might impact COVID-pandemic control efforts. Some Members of Congress and officials representing Latin American and Caribbean governments have expressed concern that COVID-19-related screening procedures for deportations are not sufficient to prevent the importation of COVID-19 cases from the United States and have asked the U.S. Immigration and Customs Enforcement (ICE) to suspend deportations. A number of people deported from the United States to Latin America have reportedly tested positive with COVID-19 or have reportedly been exposed to someone with COVID-19. Other Members of Congress continue to support the Administration's border policies, which the Administration maintains are conducted in a manner that accounts for the dangers of COVID-19.", "Congress continues to debate the extent to which the United States should contribute to multilateral organizations for COVID-19 control. Some Members, for example, are arguing for withholding contributions to the WHO, while others are urging the Administration to pay outstanding assessments to the organization and support ongoing WHO COVID-19 efforts. "], "subsections": [{"section_title": "Appendix. Supplemental Information", "paragraphs": ["Selected Legislation Introduced or Enacted in the 116 th Congress Related to International COVID-19 Incidence or International Pandemic Preparedness", "H.Res. 962 , Expressing support for assisting East African countries afflicted by the plague of desert locusts . Referred to the House Committee on Foreign Affairs on May 8, 2020. ", "S. 3669 , A bill to respond to the global COVID-19 pandemic, and for other purposes . Referred to the Senate Committee on Foreign Relations on May 7, 2020.", "S.Res. 567 , A resolution commending career professionals at the Department of State for their extensive efforts to repatriate United States citizens and legal permanent residents during the COVID-19 pandemic . Referred to the Senate Committee on Foreign Relations on May 7, 2020. ", "S. 3600 , Li Wenliang Global Public Health Accountability Act of 2020 . Referred to the Senate Committee on Foreign Relations on May 5, 2020.", "S. 3598 , Repatriation Reimbursement Act . Referred to the Senate Committee on Commerce, Science, and Transportation on May 4, 2020.", "S. 3592 , Stop COVID Act of 2020 . Referred to the Senate Committee on the Judiciary on May 4, 2020.", "S. 3588 , Justice for Victims of Coronavirus Act . Referred to the Senate Committee on Foreign Relations on May 4, 2020.", "S.Res. 556 , A resolution designating May 1, 2020, as the \"United States Foreign Service Day\" in recognition of the men and women who have served, or are presently serving, in the Foreign Service of the United States, and honoring the members of the Foreign Service who have given their lives in the line of duty . Referred to the Senate Committee on the Judiciary on May 4, 2020.", "H.R. 6657 , WUHAN Rescissions Act . Referred to the House Committee on Appropriations on May 1, 2020.", "H.R. 6665 , To direct the Secretary of State, in consultation with the Secretary of Health and Human Services, to submit a report on the actions of the World Health Organization to address the spread of the virus responsible for COVID-19, and for other purposes . Referred to the House Committee on Foreign Affairs on May 1, 2020.", "H.Res. 944 , Expressing the sense of the House of Representatives that the People ' s Republic of China should be held accountable for its handling of COVID-19 . Referred to the House Committee on Foreign Affairs on April 28, 2020.", "H.R. 6610 , Director of Pandemic and Biodefense Preparedness and Response Act . Referred to the House Committee on Energy and Commerce, and in addition to the House Committees on Transportation and Infrastructure, Armed Services, Foreign Affairs, and Intelligence (Permanent Select), for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned on April 23, 2020. Referred to the Subcommittee on Economic Development, Public Buildings, and Emergency Management by the Committee on Transportation and Infrastructure on April 24, 2020.", "H.R. 6599 , COVID Research Act of 2020 . Referred to the Committee on Energy and Commerce, and in addition to the Committee on Science, Space, and Technology, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned on April 23, 2020.", "H.R. 6598 , SOS ACT Act . Referred to the Committee on Financial Services, and in addition to the Committee on Foreign Affairs, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned on April 23, 2020.", "H.Res. 940 , Recognizing the commencement of Ramadan, the Muslim holy month of fasting and spiritual renewal, and commending Muslims in the United States and throughout the world for their faith . Referred to the House Committee on Foreign Affairs on April 23, 2020.", "H.Res. 939 , Supporting the World Bank Group to lead a worldwide COVID-19 economic recovery effort . Referred to the House Committee on Financial Service on April 23, 2020.", "H.R. 6595 , Expanding Vital American Citizen Services Overseas (EVACS) Act of 2020 . Referred to the House Committee on Foreign Affairs on April 22, 2020.", "H.R. 6541 , PPE Act of 2020 . Referred to the Committee on Energy and Commerce, and in addition to the Committee on Financial Services, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned on April 17, 2020.", "H.R. 6531 , Medical Supplies for Pandemics Act of 2020 . Referred to the House Committee on Energy and Commerce on April 17, 2020.", "H.R. 6524 , Compensation for the Victims of State Misrepresentations to the World Health Organization Act of 2020 . Referred to the House Committee on the Judiciary on April 17, 2020.", "H.R. 6522 , PPP Expansion Act of 2020 . Referred to the House Committee on Small Business on April 17, 2020.", "H.R. 6519 , Holding the Chinese Communist Party Accountable for Infecting Americans Act of 2020 . Referred to the House Committee on the Judiciary on April 17, 2020.", "H.Con.Res. 97 , Establishing the Joint Select Committee on the Events and Activities Surrounding China ' s Handling of the 2019 Novel Coronavirus . Referred to the House Committee on Rules on April 17, 2020.", "H.R. 6504 , To direct the Secretary of Health and Human Services, acting through the Director of the Centers for Disease Control and Prevention, to develop a plan to improve surveillance with respect to diseases that are viral pandemic threats, and for other purposes . Referred to the House Committee on Energy and Commerce on April 14, 2020.", "H.Res. 922 , Expressing the sense of the House of Representatives that all nations should permanently close live wildlife markets and that the People ' s Republic of China should cease spreading disinformation regarding the origins of coronavirus . Referred to the House Committee on Foreign Affairs, and in addition to the House Committees on Natural Resources, Agriculture, and Energy and Commerce on April 14, 2020.", "H.R. 6500 , To reduce Federal spending and fund the acquisition of unexpired personal protective equipment (including face masks) for the strategic national stockpile by terminating taxpayer financing of Presidential election campaigns . Referred to the House Committee on Ways and Means, and in addition to the Committee on House Administration, on April 14, 2020. ", "H.R. 6481 , To rescind the appropriation made for migration and refugee assistance in the Coronavirus Aid, Relief, and Economic Security Act and redirect the funds to U.S. Customs and Border Protection and U.S. Immigration and Customs Enforcement . Referred to the House Committee on Appropriations on April 10, 2020.", "H.R. 6480 , To require the President, after the World Health Organization declares a global pandemic, to report to the Congress on the status of Federal planning to respond to the pandemic . Referred to the House Committee on Energy and Commerce, and in addition to the Committee on Financial Services on April 10, 2020.", "H.Res. 919 , Condemning the United Nations ' decision to appoint China a seat on its Human Rights Council . Referred to the House Committee on Foreign Affairs on April 10, 2020. ", "H.R. 2166 , Global Health Security Act of 2019 . Directs the President to create the Global Health Security Agenda Interagency Review Council to implement the Global Health Security Agenda, an initiative launched by nearly 30 nations to address global infectious disease threats. Ordered to be reported on March 4, 2020, and introduced in the House on April 9, 2020.", "H.Res. 917 , Expressing the sense of the House of Representatives that the United States should withhold the contribution of Federal funds to the World Health Organization until Director-General Tedros Ghebreyesus resigns and an international commission to investigate the World Health Organization is established . Referred to the House Committee on Foreign Affairs on April 7, 2020.", "H.R. 6471 , To posthumously award a Congressional Gold Medal to Dr. Li Wenliang, in recognition of his efforts to save lives by drawing awareness to COVID-19 and his call for transparency in China . Referred to the House Committee on Financial Services, and in addition to the Committee on House Administration on April 7, 2020. ", "H.R. 6429 , To establish in the Legislative Branch a National Commission on the Coronavirus Disease 201 9 Pandemic in the United States . Referred to the House Subcommittee on Economic Development, Public Buildings, and Emergency Management on April 6, 2020. ", "H.R. 6440 , To establish the National Commission on the COVID-19 Pandemic . Referred to the House Committee on Energy and Commerce on April 3, 2020. ", "P.L. 116-136 , Coronavirus Aid, Relief, and Economic Security Act or the CARES Act . Enacted H.R. 748 on March 27, 2020.", "H.R. 6410 , To direct the President to use authority under the Defense Production Act of 1950 to ensure an adequate supply of equipment necessary for limiting the spread of COVID-19 . Referred to the House Committee on Financial Services on March 27, 2020. ", "H.R. 6398 , To provide for the expedited procurement of equipment needed to combat COVID-19 under the Defense Production Act of 1950 . Referred to the House Subcommittee on Economic Development, Public Buildings, and Emergency Management on March 27, 2020. ", "H.R. 6406 , To require personal protective equipment to be included in the strategic national stockpile, and to require the Federal Government to procure such equipment from United States sources, and for other purposes . Referred to the Subcommittee on Economic Development, Public Buildings, and Emergency Management on March 27, 2020. ", "H.R. 6405 , To direct the President, in consultation with the Secretary of the Treasury, to develop and carry out a strategy to seek reimbursement from the People's Republic of China of funds made available by the United States Government to address the Coronavirus Disease 2019 (COVID-19) . Referred to the House Committee on Foreign Affairs on March 26, 2020. ", "S. 3586 , Eliminating Leftover Expenses for Campaigns from Taxpayers (ELECT) Act of 2020 . Referred to the Senate Committee on Finance on March 25, 2020.", "H.R. 6390 , To require the President to use authorities under the Defense Production Act of 1950 to require emergency production of medical equipment to address the COVID-19 outbreak . Referred to the House Committee on Financial Services on March 25, 2020. ", "H.R. 6393 , To require the Secretary of Defense to submit to Congress a report on the reliance by the Department of Defense on imports of certain pharmaceutical products made in part or in whole in certain countries, to establish postmarket reporting requirements for pharmaceuticals, and for other purposes . Referred to the House Committee on Ways and Means, and in addition to the House Committees on Armed Services, Oversight and Reform, and Energy and Commerce on March 25, 2020. As of April 15, 2020, no text of the bill was available. ", "S.Res. 552 , A resolution supporting an international investigation into the handling by the Government of the People's Republic of China of COVID-19 and the impact of handling COVID-19 in that manner on the people of the United States and other nations . Referred to the Senate Committee on Foreign Relations on March 24, 2020.", "H.Res. 907 and S.Res. 553 , Expressing the sense of the House of Representatives that the Government of the People's Republic of China made multiple, serious mistakes in the early stages of the COVID-19 outbreak that heightened the severity and spread of the ongoing COVID-19 pandemic, which include the Chinese Government's intentional spread of misinformation to downplay the risks of the virus, a refusal to cooperate with international health authorities, internal censorship of doctors and journalists, and malicious disregard for the health of ethnic minorities . Referred to the House Committee on Foreign Affairs on March 24, 2020.", "S. 3573 , American-Made Protection for Healthcare Workers and First Responders Act . Referred to the Senate Committee on Health, Education, Labor, and Pensions on March 24, 2020. ", "S. 3570 , A bill to provide for the expedited procurement of equipment needed to combat COVID-19 under the Defense Production Act of 1950 . Referred to the Senate Committee on Banking, Housing, and Urban Affairs on March 23, 2020.", "S. 3568 , Medical Supply Chain Emergency Act of 2020 . Referred to the Senate Committee on Banking, Housing, and Urban Affairs on March 23, 2020. ", "H.R. 6379 , Take Responsibility for Workers and Families Act, Referred to the House Committee on Appropriations , and in addition to the House Committees on the Budget, and Ways and Means on March 23, 2020. ", "H.R. 6373 , To increase the amount available under the Defense Production Act of 1950 to respond to the coronavirus epidemic, and for other purposes . Referred to the House Committee on Financial Services on March 23, 2020. ", "H.R. 6371 , To amend the Securities Exchange Act of 1934 to require issuers to disclose risks related to global pandemics, and for other purposes . Referred to the House Committee on Financial Services on March 23, 2020. ", "H.R. 6319 , To establish a Congressional COVID-19 Aid Oversight Panel, to authorize the Special Inspector General for the Troubled Asset Relief Program to coordinate audits and investigations in connection with the receipt of Federal aid related to COVID-19, and for other purposes . Referred to the House Committee on Financial Services on March 23, 2020. ", "H.Res. 906 , Calling on the President to invoke the Defense Production Act to respond to COVID-19 . Referred to the House Committee on Financial Services on March 23, 2020. ", "S. 3548 , Coronavirus Aid, Relief, and Economic Security Act or the CARES Act . Referred to the Senate Committee on Finance on March 21, 2020.", "H.R. 6310 , To require the Secretary of Defense to make testing for the coronavirus disease 19 available to all members of the Armed Forces deployed to an area in which the United States Central Command has responsibility . Referred to the House Committee on Armed Services, March 19, 2020.", "H.R. 6482 , A bill to require the Secretary of Health and Human Services to maintain a list of the country of origin of all drugs marketed in the United States, to ban the use of Federal funds for the purchase of drugs manufactured in China, and for other purposes . Referred to the Senate Committee on Finance on March 19, 2020.", "S. 3538 , Strengthening America ' s Supply Chain and National Security Act . Referred to the Senate Committee on Finance, March 19, 2020. ", "S. 3537 , Protecting Our Pharmaceutical Supply Chain from China Act of 2020 . Referred to the Senate Committee on Finance, March 19, 2020.", "S.Res. 547 , A resolution encouraging the President to use authorities provided by the Defense Production Act of 1950 to scale up the national response to the coronavirus crisis . Referred to the Senate Committee on Banking, Housing, and Urban Affairs, March 18, 2020. ", "S. 3530 , A bill to amend the National Security Act of 1947 to require the President to designate an employee of the National Security Council to be responsible for pandemic prevention and response, and for other purposes. Referred to the Senate Committee on Homeland Security and Governmental Affairs on March 18, 2020.", "S. 3507 , A bill to require the Secretary of Defense to make testing for the coronavirus disease 19 available to all members of the Armed Forces deployed to an area in which the United States Central Command has responsibility. Referred to the Senate Committee on Armed Services on March 17, 2020.", "S. 3510 , A bill to transfer all border wall funding to the Department of Health and Human Services and USAID to combat coronavirus. Referred to the Committee on Homeland Security and Government Affairs on March 17, 2020.", "H.R. 6288 , Responsibly Responding to Pandemics Act . Referred to the House Subcommittee on Economic Development, Public Buildings, and Emergency Management, March 16, 2016. ", "H.R. 6205 , Assistance for Workers Harmed by COVID-19 Act . Amends the Trade Act of 1974 to provide adjustment assistance to certain workers adversely affected by disruptions in global supply chains from COVID\u00e2\u0080\u009319, and for other purposes. Referred to the House Committee on Ways and Means on March 11, 2020.", "P.L. 116-123 , Coronavirus Preparedness and Response Supplemental Appropriations Act, 2020. Provides $7.8 billion in supplemental appropriations to aid in domestic and global COVID-19 preparedness and response activities, including $6.5 billion for the Department of Health and Human Services (HHS), $0.02 billion for the Small Business Administration and $1.3 billion for foreign operations activities provided across several agencies and funding mechanisms. Parts of the HHS amounts are to be made available for international activities. Enacted H.R. 6074 on March 6, 2020. ", "S.Amdt. 1506 , To rescind unobligated balances for certain international programs to offset the amounts appropriated in this bill to respond to the coronavirus outbreak. Motion to table the amendment was agreed to in the Senate on March 5, 2020. ", "S.Res. 497 , A resolution commemorating the life of Dr. Li Wenliang and calling for transparency and cooperation from the Government of the People's Republic of China and the Communist Party . Agreed to in the Senate on March 3, 2020 without amendment and an amended preamble by unanimous consent.", "H.R. 6070 , Border Health Security Act of 2020 . To establish grant programs to improve the health of border area residents and for all hazards preparedness in the border area including bioterrorism, infectious disease, and noncommunicable emerging threats, and for other purposes. Referred to the House Committee on Energy and Commerce and Committee on Foreign Affairs on March 3, 2020.", "S.Res. 511 , A resolution supporting the role of the United States in helping save the lives of children and protecting the health of people in developing countries with vaccines and immunization through GAVI, the Vaccine Alliance . Referred to the Senate Committee on Foreign Relations, February 27, 2020. ", "S.Res. 505 , A resolution expressing the sense of the Senate that the United States will continue to provide support to international partners to help prevent and stop the spread of coronavirus. Referred to the Senate Committee on Foreign Relations on February 13, 2020. ", "H.R. 2166 and S. 3302 , Global Health Security Act of 2020 . Establishes a Special Advisor for Global Health Security within the Executive Office of the President to coordinate U.S. government global health security activities, convene and chair a Global Health Security Interagency Review Council, and submit a biannual report to Congress on related activities, among other things. Referred to the Senate Committee on Foreign Relations on February 13, 2020. ", "H.R. 5730 , National Strategy for Pandemic Influenza Update Act . To direct the Homeland Security Council and the National Security Council, in consultation with Federal departments and agencies responsible for biodefense, to update the National Strategy for Pandemic Influenza, and for other purposes. Referred to the House Committees on Energy and Commerce, Armed Services, Foreign Affairs, Intelligence, and Agriculture on January 30, 2020. ", "P.L. 116-22 , Pandemic and All-Hazards Preparedness and Advancing Innovation Act of 2019 . To advance research and development of innovative tools to improve pandemic preparedness, including directing the Secretary of Health and Human Services to submit a report to the Senate Committee on Health, Education, Labor, and Pensions and the House Committee on Energy and Commerce on U.S. efforts to coordinate with other countries and international partners during recent public health emergencies with respect to the research and advanced research on, and development of, qualified pandemic or epidemic products. Enacted S. 1379 on June 24, 2019.", "H.R. 269 , Pandemic and All-Hazards Preparedness and Advancing Innovation Act of 2019 . Related to S. 1379, which became P.L. 116-22 . Placed on Senate Legislative Calendar under General Orders, January 10, 2019. "], "subsections": []}]}]}}
{"id": "R45826", "title": "Congressional Commissions: Funding and Expenditures", "released_date": "2019-07-24T00:00:00", "summary": ["Congressional commissions have been established for a variety of purposes, and can help serve a critical role by informing Congress, providing expert advice on complex or controversial issues, and generating policy recommendations. In general, commissions hold hearings, conduct research, analyze data, and/or make field visits as they carry out their duties. Most complete their work by delivering their findings, recommendations, or advice in the form of a written report to Congress. For example, the National Commission on Terrorist Attacks Upon the United States (the 9/11 Commission) was created to \"examine and report upon the facts and causes relating to the terrorist attacks of September 11, 2001,\" and to \"investigate and report to the President and Congress on its findings, conclusions, and recommendations for corrective measures that can be taken to prevent acts of terrorism,\" among other duties. The commission ultimately submitted a final report to Congress and the President containing its findings and conclusions, along with 48 policy recommendations.", "A variety of factors c an contribute to the overall cost of a commission. For instance, many commissions hire paid staff, and are often able to request detailees from federal agencies, hire consultants, and obtain administrative support from one or more federal agencies on a reimbursable basis. Additionally, most commissions reimburse the travel expenditures of commissioners and staff, and some compensate commission members. The duration of a commission may also significantly affect its cost; past congressional commissions have been designed to last anywhere from several months to several years.", "Using a dataset of congressional commissions that were established from the 101 st Congress (1989-1990) through the 115 th Congress (2017-2018), this report analyzes methods used to fund 153 congressional commissions. Additionally, this report analyzes actual amounts provided for commissions in appropriations acts, and expenditure patterns of congressional commissions for which data are readily available because they appear in the Federal Advisory Committee Act (FACA) database.", "When specifying how a commission is funded, most commission statutes either authorize appropriations for commission expenses, authorize the use of funds from other appropriations or accounts, or direct that private donations be the sole source of funding for the commission. Most statutes establishing noncommemorative commissions\u00e2\u0080\u0094commissions that are generally designed to conduct a study, investigate an event, and/or make policy recommendations\u00e2\u0080\u0094either authorize appropriations for commission expenses, or authorize the use of funds from other appropriations or accounts. By contrast, statutes establishing commemorative commissions\u00e2\u0080\u0094commissions designed to celebrate an individual, group, or event\u00e2\u0080\u0094typically authorize appropriations, and/or provide the commission the authority to receive donations, including donations of money, property, and volunteer services.", "Although commission statutes typically specify a method by which the commission will be funded, most do not actually provide funds for the commission; funds may be provided in annual appropriations acts, or by other means. Actual funding levels appropriated for past congressional commissions vary from several hundred thousand dollars to several million dollars. No single data source comprehensively documents commission funding or expenditures.", "Among those congressional commissions whose expenditures are reported in the FACA database, the total amount reportedly spent by any individual commission ranges from several hundred thousand dollars to over $13 million. Payments to federal staff and consultants frequently comprise a significant portion of commission expenditures. Many commissions also incur travel expenses, payments to commission members, and other expenses.", "For an overview of congressional commissions, see CRS Report R40076, Congressional Commissions: Overview, Structure, and Legislative Considerations , by Jacob R. Straus. For additional information on the design of congressional commissions, see CRS Report R45328, Designing Congressional Commissions: Background and Considerations for Congress , by William T. Egar. For additional information on commemorative commissions, see CRS Report R41425, Commemorative Commissions: Overview, Structure, and Funding , by Jacob R. Straus. For additional information on commission membership structures, see CRS Report RL33313, Congressional Membership and Appointment Authority to Advisory Commissions, Boards, and Groups , by Jacob R. Straus and William T. Egar."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["Congress establishes advisory commissions for a variety of purposes. These include informing Congress, providing expert advice on complex or controversial issues, and generating policy recommendations. To aid Congress, commissions are generally authorized to hold hearings, conduct research, analyze data, and/or make field visits as they carry out their duties. Most complete their work by delivering their findings, recommendations, or advice in the form of a written report to Congress. For example, the National Commission on Terrorist Attacks Upon the United States (the 9/11 Commission) was created to \"examine and report upon the facts and causes relating to the terrorist attacks of September 11, 2001,\" and to \"investigate and report to the President and Congress on its findings, conclusions, and recommendations for corrective measures that can be taken to prevent acts of terrorism.\" The commission ultimately submitted a final report to Congress and the President containing its findings and conclusions, along with 48 policy recommendations. Commissions also may be established to help commemorate an individual, group, or event.", "Commissions generally require funding to help meet their statutory goals. When designing a commission, therefore, policymakers may wish to consider both how the commission will be funded, as well as how much funding the commission will be authorized to receive. ", "How commissions are funded and the amounts that they receive vary considerably. Several factors can contribute to overall commission costs. These factors might include hiring staff, contracting with outside consultants, and engaging administrative support, among others. Additionally, most commissions reimburse the travel expenditures of commissioners and staff, and some compensate their members. The duration of a commission can also significantly affect its cost; past congressional commissions have been designed to last anywhere from several months to several years.", "This report analyzes methods used to fund past congressional commissions; amounts provided for commissions in appropriations acts; and how selected commissions have utilized provided funds."], "subsections": []}, {"section_title": "Congressional Commissions: Funding Mechanisms, Appropriations, and Expenditure Patterns", "paragraphs": [], "subsections": [{"section_title": "Identifying Congressional Commissions", "paragraphs": ["While no formal definition exists, for the purposes of this report a congressional commission is defined as a multimember independent entity that", "is established by Congress; exists temporarily; serves in an advisory capacity; is appointed in part or whole by Members of Congress; and reports to Congress.", "This definition differentiates a congressional commission from a presidential commission, an executive branch commission, or other bodies with \"commission\" in their names, while including most entities that fulfill the role commonly associated with commissions: studying policy problems or organizing commemorative activities, and reporting findings to Congress.", "To identify congressional commissions, CRS searched Congress.gov for terms and phrases related to commissions within the text of laws enacted between the 101 st (1989-1990) and 115 th (2017-2018) Congresses. Each piece of legislation returned was examined to determine if (1) the legislation established a commission, and (2) the commission met the five criteria outlined above. If the commission met the criteria, its name, public law number, Statutes-at-Large citation, date of enactment, and other information were recorded. This approach identified 153 congressional commissions established by statute between 1989 and 2018. ", "For each commission identified, CRS analyzed the commission's statute to assess whether the law authorized the appropriation of funds. This approach captures only the funding method provided in the commission's original legislation. If a commission's statute was amended by subsequent legislation, that amendment is not reflected in this report."], "subsections": [{"section_title": "Commission Types: Commemorative and Noncommemorative", "paragraphs": ["Congressional commissions may be established for a variety of purposes. In general, commissions generally fall into one of two broad categories: commemorative and noncommemorative commissions. ", "Noncommemorative commissions typically conduct studies, perform investigations, and/or provide expert advice on public policy issues. Such commissions have been created to investigate the September 11 attacks, examine the causes of the financial crisis, develop recommendations to prevent the proliferation of weapons of mass destruction, and to review advances in artificial intelligence, among many other issues. The majority of commissions identified (134 of 153, or approximately 88%) are noncommemorative in nature.", "A smaller number of congressional commissions identified (19 of 153, or approximately 12%) have been created to oversee the commemoration of a person, group, or event. Commemorative commissions often \"coordinate celebrations, scholarly events, public gatherings, and other activities, often to coincide with a milestone or event.\"", "Although commemorative and noncommemorative commissions generally share many of the same structural features, the scope and nature of the duties assigned often differ considerably in ways that may affect the amount of funding that Congress may wish to provide. For example, a commission created to investigate a national emergency may require a different length of time, or different levels of staff and other resources to satisfactorily accomplish its duties than a commission designed to commemorate an event. Accordingly, figures contained in this report on commission funding mechanisms and authorized or appropriated levels are broken out separately for commemorative and noncommemorative commissions."], "subsections": []}]}, {"section_title": "Funding Mechanisms Specified in Authorizing Statutes", "paragraphs": ["Congressional commissions have been funded in a variety of ways. Commissions generally receive specific authorizations of appropriations, receive funding from a federal agency, or rely on private donations. Some commissions are funded in multiple ways. For example, certain commissions are authorized to receive both appropriations and private donations. ", "Of the 153 commissions identified, the majority of commission statutes (118, or approximately 77%) state how the commission shall be funded. When establishing how a commission is to be funded, such statutes generally either", "authorize appropriations to be provided in separate legislation for commission expenses; provide that commission expenses shall be paid from appropriations otherwise available to a department or agency official; or direct that the commission should be funded solely by private donations.", " Table 1 shows the number and percentage of commissions falling into each category, broken down by commission type. Each category is discussed in more detail below, along with examples of statutory language.", "Commission statutes that prescribe a funding mechanism may vary substantially in the level of detail provided. For example, some statutes specify a dollar amount that is authorized to be appropriated in separate legislation or otherwise made available to the commission; others may identify a source of funding without specifying a dollar value. Similarly, some statutes limit the time period during which funds may be made available to a commission, while others do not."], "subsections": [{"section_title": "Authorization of Appropriations", "paragraphs": ["Sixty-four of 153 commission statutes identified (approximately 42%) authorized appropriations for commission expenses. Of these, a majority authorized a specific dollar amount, while a smaller number authorized \"such sums\" as may be necessary. Provisions authorizing appropriations were included for a slightly larger percentage of noncommemorative commissions (approximately 43%) than for commemorative commissions (approximately 37%). Authorizations of appropriations do not themselves provide funds for commissions; funding may be provided in appropriations acts.", "Some statutes identify specific fiscal years in which appropriations were authorized, and others do not. For example, the statute creating the Antitrust Modernization Commission stated that \"[t]here is authorized to be appropriated $4,000,000 to carry out this subtitle.\" By contrast, the statute creating the Census Monitoring Board provided that \"[t]here is authorized to be appropriated $4,000,000 for each of fiscal years 1998 through 2001 to carry out this section.\" "], "subsections": []}, {"section_title": "Authorize Use of Otherwise Appropriated Funds", "paragraphs": ["Some commission statutes authorize the use of otherwise appropriated funds for commission expenses. Most often, such statutes either authorize the use of funds appropriated for a particular agency, or instruct a specified agency official to make funds available for commission expenses. A smaller number explicitly authorize a transfer to the commission of funds from a particular account. As shown in Table 1 , this approach is relatively common among noncommemorative commissions, but less common among commemorative commissions.", "As with commission statutes that authorize appropriations, these statutes may or may not identify a specific dollar amount that will be provided for the commission. Statutes that do specify a dollar amount for commission expenses may further specify that \"up to\" or \"not more than\" a particular amount be made available. For example, the John S. McCain National Defense Authorization Act for Fiscal Year 2019 created the National Security Commission on Artificial Intelligence, and specified that up to $10 million be provided to the commission from amounts authorized to be appropriated for the Department of Defense:", "(d) FUNDING.\u00e2\u0080\u0094Of the amounts authorized to be appropriated by this Act for fiscal year 2019 for the Department of Defense, not more than $10,000,000 shall be made available to the Commission to carry out its duties under this subtitle. Funds made available to the Commission under the preceding sentence shall remain available until expended.", "By contrast, the legislation creating the Veterans' Disability Benefits Commission directed the Secretary of Veterans Affairs to make funds available for commission expenses, but did not identify a dollar figure. The statute read:", "(a) IN GENERAL.\u00e2\u0080\u0094The Secretary of Veterans Affairs shall, upon the request of the chairman of the commission, make available to the commission such amounts as the commission may require to carry out its duties under this title."], "subsections": []}, {"section_title": "Donated Funds", "paragraphs": ["Some commissions are expected to operate using nonappropriated funds and so are authorized to receive private donations. This approach is more common among commemorative commissions. For example, the act establishing the 400 Years of African-American History Commission authorized the commission to \"solicit, accept, use, and dispose of gifts, bequests, or devises of money or other property,\" to accept and use voluntary and uncompensated services, and provided that \"[a]ll expenditures of the Commission shall be made solely from donated funds.\" Similarly, the act creating the Ronald Reagan Centennial Commission provided the commission with the authority to accept and use gifts of money, services, and property, and further stated that \"[n]o Federal funds may be obligated to carry out this Act.\"", "Commissions are often authorized to accept and use donations, including donations of money, property, volunteer service, and other items, even when private monetary donations are not the sole source of a commission's funding. P.L. 102-343 , for example, provided the Thomas Jefferson Commemoration Commission the authority to accept and use donated funds to carry out the commission's duties; it also authorized the appropriation of $312,500 over two fiscal years for commission expenses. The authority to receive donations may also be provided to commissions to facilitate their commemorative functions. For example, the Benjamin Franklin Tercentenary Commission was authorized to accept and use donations of \"money, personal services, and real or personal property related to Benjamin Franklin on the occasion of the tercentenary of his birth.\""], "subsections": []}]}, {"section_title": "Appropriations for Congressional Commissions", "paragraphs": ["Although statutes establishing commissions typically specify a method by which the commission is to be funded, most do not themselves provide funds for the commission. A statute that authorizes appropriations for a commission, for example, might be followed by an appropriations act that provides funding for the commission. For other commissions, there may be an authorization of appropriations, but an appropriation may not subsequently be made.", "Actual funding levels provided for congressional commissions have ranged from several hundred thousand dollars to several million dollars. A commission's need for funds may depend on such factors as the commission's scope and duties, staff compensation, payments to consultants, administrative support, travel expenses, and commissioner compensation, among others. The availability of funding and other resources may affect a commission's ability to satisfactorily accomplish its duties. Accordingly, funding levels for previous commissions may be of interest to policymakers and staff. ", "As commissions have been funded in a variety of ways, no single data source comprehensively documents the amounts made available to commissions. To better understand the range of funding levels provided to past congressional commissions, this section provides data on amounts specified in appropriations acts for commission expenses."], "subsections": [{"section_title": "Methodology", "paragraphs": ["As discussed previously, many commission statutes authorize appropriations for commission expenses. To identify any actual appropriations made for congressional commissions, CRS searched for the name of each of the 153 identified commissions within the text of appropriations acts enacted since the 101 st Congress. Each identified appropriations act was analyzed to determine whether the bill provided some specified dollar amount for an identified commission. When identified, each dollar amount associated with the commission was recorded, in addition to the public law number and fiscal year of the relevant appropriations act."], "subsections": [{"section_title": "Data Limitations", "paragraphs": ["Although CRS was able to identify a number of appropriations made for commissions, there are several limitations to the data and subsequent interpretations. As a result, the amounts listed may in some cases be an approximation of the amount received by the commission, rather than a precise amount. These limitations include the following:", "Amounts identified for commissions in appropriations acts do not necessarily reflect the total amount available for any particular commission. Some commissions may be funded through a combination of appropriations and other sources. For example, the Thomas Jefferson Commemoration Commission was provided the authority to receive donations of money and volunteer services to carry out its functions, and was also provided funds in two subsequent appropriations acts. As discussed previously, commissions have been funded in a variety of ways, including appropriations, private donations, authorization of the use of funds within a lump-sum provided for an account, and the transfer or reprogramming of appropriated funds. The data presented below on amounts contained in appropriations acts should not be considered exhaustive of all funding received by congressional commissions over time, as commissions that did not receive a specific appropriation will necessarily be excluded. Committee reports that accompany appropriations bills may provide details regarding committee expectations about how certain appropriated funds are to be spent. Because this search was conducted within the text of appropriations acts, directions for commission appropriations within committee reports are not included. When making amounts available to commissions, appropriations acts may cite the statute creating the commission rather than the name of the commission. For example, P.L. 105-78 directed that \"$900,000 shall be for carrying out section 4021 of Public Law 105-33.\" Section 4021 of P.L. 105-33 established the National Bipartisan Commission on the Future of Medicare. Because CRS's search was conducted using the name of the commission, similar results may be excluded. Along similar lines, continuing resolutions generally provide funding to continue governmental activities without explicitly referencing specific activities by name. Because CRS's search was conducted using the name of the commission, any amounts made available to commissions by continuing resolutions may be omitted. In some cases, an appropriations act may place a maximum on the level of funding available. For example, the Departments of Labor, Health and Human Services, and Education, and Related Agencies Appropriations Act for FY1994 provided that, of funds appropriated for a particular account, \"not more than $1,800,000\" be made available for expenses of the Commission on the Social Security \"Notch\" Issue. In such cases, the amount of funding ultimately received by the commission may be less than the specified amount."], "subsections": []}]}, {"section_title": "Data", "paragraphs": [" Table 2 and Table 3 display data on amounts specified in appropriations acts for noncommemorative and commemorative commissions, respectively. For commissions where amounts in appropriations bills were identified, each table contains the name of the commission and a citation to the public law that created it, as well as the dollar amount identified. For every dollar amount, the fiscal year and public law number of the relevant appropriations act are included. Amounts are provided in both nominal as well as constant 2019 dollars. Any identifiable rescissions of commission funding contained in appropriations acts are shown in parentheses.", "As shown in Table 2 and Table 3 below, amounts made available to commissions vary widely. Some commissions receive a single appropriation; others receive multiple appropriations over several fiscal years. Amounts provided range from several hundred thousand dollars to several million dollars, and may or may not be equal to any amounts explicitly authorized to be appropriated for commission expenses in the commission's original authorizing statute. "], "subsections": []}]}, {"section_title": "Analysis of Expenditures, Selected Commissions", "paragraphs": ["Generally, a commission may utilize its funds to pay commissioners and staff, hire consultants, and reimburse travel expenses, in addition to other administrative costs. Understanding how commissions utilize funds may be of interest to policymakers wishing to design new commissions or oversee existing commissions.", "As with commission funding, no single data source contains comprehensive information on commission expenditures. Congress has required some commissions to periodically submit financial reports that detail commission expenditures, but for most identified congressional commissions, expenditure data are not publicly available. ", "To better understand how commissions have used funds provided to them, this report analyzes data for the subset of congressional commissions that reported their expenditures in the Federal Advisory Committee Act (FACA) database."], "subsections": [{"section_title": "Methodology", "paragraphs": ["FACA requires formal reporting, administration, and oversight procedures for committees or commissions advising the executive branch. Whether FACA requirements apply to a particular advisory commission may depend on a number of factors, including whether most appointments to the commission are made by members of the legislative or the executive branch, and to which branch of government the commission must issue its report, findings, or recommendations. Although many congressional commissions are exempt from FACA, some are subject to FACA and report their expenditures to the General Services Administration (GSA).", "GSA collects and reports advisory commission operational data, including information on commission expenditures, in the FACA database. Within the FACA database, CRS searched for the name of the 153 congressional commissions identified to locate commissions that reported expenditures. Twenty of 153 identified commissions appeared in the database and reported expenditures during one or more fiscal years. ", "FACA committees report their expenditures across several categories, including personnel costs, travel and per diem costs, and \"other\" costs. Personnel and travel costs are both further disaggregated by whether those costs were attributable to federal commission members, nonfederal commission members, federal staff, or consultants. CRS calculated the total reported expenditures of each commission, as well as the percentage of commission expenditures attributable to commissioner pay; staff pay; consultant pay; total travel and per diem expenses of all members, staff, and consultants; and \"other\" expenses."], "subsections": [{"section_title": "Data Limitations", "paragraphs": ["Congressional commissions that are subject to FACA and appear in the FACA database may differ from commissions that are not subject to FACA in ways that might affect their overall costs and expenditure patterns. Consequently, figures on cost and expenditures presented below may not be representative of costs and expenditures of all congressional commissions. The accuracy and completeness of expenditure data contained in the FACA database have not been independently verified by CRS."], "subsections": []}]}, {"section_title": "Data", "paragraphs": [" Table 4 contains data on the reported expenditures of 20 congressional commissions that appeared in the FACA database. Specifically, Table 4 contains the commission name and statute establishing the commission; fiscal years during which the commission reported expenditures; the total amount spent, in both nominal and constant 2019 dollars; and the percentage of reported expenditures attributable to commissioner pay, federal staff pay, consultant pay, travel and per diem expenditures, and other expenditures.", "The total amount spent by the selected commissions varied from a low of $286,851 to a high of $13,855,998 (between $388,480 and $17,117,361 in constant 2019 dollars). Among the commissions analyzed, expenditures on federal staff and consultant pay often constituted a significant portion of reported spending; expenditures attributable to federal staff and consultant pay constituted a majority of spending for more than half of the commissions identified. Total travel and per diem expenditures ranged from a low of approximately 2% to a high of approximately 34% of commission spending.", "Many congressional commissions do not compensate their members. Consistent with this finding, many commissions listed in Table 4 report zero expenditures on the pay of federal and nonfederal commission members. Among commissions that report payments to members, these payments constituted as much as approximately 29% of commission spending, though most constituted less than 10%. "], "subsections": []}]}]}, {"section_title": "Concluding Remarks", "paragraphs": ["Congressional commissions have been established for a variety of purposes, and can help serve a critical role by informing Congress, providing expert advice on complex or controversial issues, generating policy recommendations, or organizing commemorative activities. These commissions have been funded in a variety of ways, and their total cost has varied considerably. The cost of any particular commission may depend on its scope, duties, and duration, among other factors, and the degree to which it can satisfactorily accomplish its duties may depend in part on the resources made available to it. ", "No single data source comprehensively documents either the funds made available for congressional commissions, or how commissions have utilized the funds available to them. More complete and reliable data on commission funding and expenditure patterns may benefit policymakers who wish to use such data to guide the creation of future commissions, or to facilitate the oversight of such entities. ", "If Congress wished to systematize the collection of information on commission funding or expenditures, a number of options are available. Congress has on several occasions required commissions to submit periodic financial reports that detail any income and expenditures. Similar approaches that require commissions to submit periodic financial reports, to include funding and expenditure data within the commission's final report, or otherwise make financial data publicly available, may assist Congress in keeping informed of commission operations and ensure that a commission is utilizing its resources in a desired manner. On the other hand, such reporting requirements may place additional burdens on limited commission time and resources."], "subsections": []}]}}
{"id": "R45342", "title": "Central Valley Project: Issues and Legislation", "released_date": "2019-05-23T00:00:00", "summary": ["The Central Valley Project (CVP), a federal water project owned and operated by the U.S. Bureau of Reclamation (Reclamation), is one of the world's largest water supply projects. The CVP covers approximately 400 miles in California, from Redding to Bakersfield, and draws from two large river basins: the Sacramento and the San Joaquin. It is composed of 20 dams and reservoirs and numerous pieces of water storage and conveyance infrastructure. In an average year, the CVP delivers more than 7 million acre-feet of water to support irrigated agriculture, municipalities, and fish and wildlife needs, among other purposes. About 75% of CVP water is used for agricultural irrigation, including 7 of California's top 10 agricultural counties. The CVP is operated jointly with the State Water Project (SWP), which provides much of its water to municipal users in Southern California.", "CVP water is delivered to users that have contracts with Reclamation. These contractors receive varying levels of priority for water deliveries based on several factors, including hydrology, water rights, prior agreements with Reclamation, and regulatory requirements. The Sacramento and San Joaquin Rivers' confluence with the San Francisco Bay (Bay-Delta or Delta) is a hub for CVP water deliveries; many CVP contractors south of the Delta receive water that is \"exported\" from north of the Delta.", "Development of the CVP resulted in significant changes to the area's natural hydrology. However, construction of most CVP facilities predated major federal natural resources and environmental protection laws. Much of the current debate related to the CVP revolves around how to deal with changes to the hydrologic system that were not significantly mitigated for when the project was constructed. Thus, multiple ongoing efforts to protect species and restore habitat have been authorized and are incorporated into project operations.", "Congress has engaged in CVP issues through oversight and at times legislation, including provisions in the 2016 Water Infrastructure Improvements for the Nation (WIIN Act; P.L. 114-322) that, among other things, authorized changes to operations in an attempt to provide for delivery of more water under certain circumstances. Although some stakeholders are interested in further operational changes to enhance CVP water deliveries, others are focused on the environmental impacts of operations.", "Various state and federal proposals are currently under consideration and have generated controversy for their potential to affect CVP operations and allocations. In late 2018, the State of California finalized revisions to its Bay-Delta Water Quality Control Plan. These changes would require that more flows from the San Joaquin and Sacramento Rivers reach the Bay-Delta for water quality and fish and wildlife enhancement (and thus would further restrict water supplies for other users). The changes have generally been opposed by the Trump Administration. At the same time, the Trump Administration is pursuing efforts to increase CVP water supplies for users, including changes to CVP operations under an October 2018 White House memorandum on western water supplies. Efforts to add or supplement CVP storage and conveyance also are being considered: The state is proposing a new water conveyance project (known as the California WaterFix) that would bypass the Bay-Delta and, under certain conditions, increase exports from north to south for some users. Additionally, new storage projects are under study by federal and state entities; these projects would aim to increase CVP and/or SWP water supplies.", "In the 116th Congress, legislators may consider bills and conduct oversight on efforts to increase CVP water exports compared to current baselines. Congress is considering whether to approve funding for new water storage projects, and also may consider legislation to extend or amend previously enacted CVP authorities (e.g., WIIN Act authorities that are expiring or have exceeded their appropriations ceiling)."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["The Bureau of Reclamation (Reclamation), part of the Department of the Interior (DOI), operates the multipurpose federal Central Valley Project (CVP) in California, one of the world's largest water storage and conveyance systems. The CVP runs approximately 400 miles in California, from Redding to Bakersfield ( Figure 1 ). It 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 provides water to selected state and federal wildlife refuges, as well as to some municipal and industrial (M&I) water users. ", "This report provides information on 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 selected issues for Congress related to the CVP."], "subsections": []}, {"section_title": "Recent Developments", "paragraphs": ["The drought of 2012-2016, widely considered to be among California's most severe droughts in recent history, resulted in major reductions to CVP contractor allocations and economic and environmental impacts throughout the state. These impacts were of interest to Congress, which oversees federal operation of the CVP. Although the drought ended with the wet winter of 2017, many of the water supply controversies associated with the CVP predated those water shortages and remain unresolved. Absent major changes to existing hydrologic, legislative, and regulatory baselines, most agree that at least some water users are likely to face ongoing constraints to their water supplies. Due to the limited water supplies available, proposed changes to the current operations and allocation system are controversial.", "As a result of the scarcity of water in the West and the importance of federal water infrastructure to the region, western water issues are regularly of interest to many lawmakers. Legislation enacted in the 114 th Congress (Title II of the Water Infrastructure Improvements for the Nation [WIIN] Act; P.L. 114-322 ) included several CVP-related sections. These provisions directed pumping to \"maximize\" water supplies for the CVP (including pumping or \"exports\" to CVP water users south of the Sacramento and San Joaquin Rivers' confluence with the San Francisco Bay, known as the Bay-Delta or Delta ) in accordance with applicable biological opinions (BiOps) for project operations. They also allowed for increased pumping during certain storm events generating high flows, authorized actions to facilitate water transfers, and established a new standard for measuring the effects of water operations on species. In addition to operational provisions, the WIIN Act authorized funding for construction of new federal and nonfederal water storage projects. CVP projects are among the most likely recipients of this funding.", "Due to increased precipitation and disagreements with the state, among other factors, the WIIN Act's CVP operational authorities did not yield significant new water exports south of the Delta in 2017 and 2018. However, the authorities may be more significant in years of limited precipitation and thus may yield increased supplies in the future. Although use of the new operational authorities was limited, Reclamation received funding for WIIN Act-authorized water storage project design and construction in FY2017-FY2019; a significant amount of this funding has gone to CVP-related projects. ", "Several state and federal proposals are also currently under consideration and have generated controversy for their potential to significantly alter CVP operations. In mid-2018, the State of California proposed revisions to its Bay-Delta Water Quality Control Plan. These changes would require that more flows from the San Joaquin and Sacramento Rivers reach the California Bay-Delta for water quality and fish and wildlife enhancement (and would thus further restrict water supplies for other users). At the same time, the Trump Administration is exploring options to increase CVP water supplies for users."], "subsections": []}, {"section_title": "Background", "paragraphs": ["California's Central Valley encompasses almost 20,000 square miles in the center of the state ( Figure 1 ). It is bound by the Cascade Range to the north, the Sierra Nevada to the east, the Tehachapi Mountains to the south, and the Coast Ranges and San Francisco Bay to the west. The northern third of the valley is drained by the Sacramento River, and the southern two-thirds of the valley are drained by the San Joaquin River. Historically, this area was home to significant fish and wildlife populations. ", "The CVP originally was conceived as a state project; the state studied the project as early as 1921, and the California state legislature formally authorized it for construction in 1933. After it became clear that the state was unable to finance the project, the federal government (through the U.S. Army Corps of Engineers, or USACE) assumed control of the CVP as a public works construction project authority provided under the Rivers and Harbors Act of 1935. The Franklin D. Roosevelt Administration subsequently transferred the project to Reclamation. Construction on the first unit of the CVP (Contra Costa Canal) began in October 1937, with water first delivered in 1940. Additional CVP units were completed and came online over time, and some USACE-constructed units also have been incorporated into the project. The New Melones Unit was the last unit of the CVP to come online; it was completed in 1978 and began operations in 1979.", "The CVP made significant changes to California's natural hydrology to develop water supplies for irrigated agriculture, municipalities, and hydropower, among other things. Most of the CVP's major units, however, predated major federal natural resources and environmental protection laws such as the Endangered Species Act (ESA; 87 Stat. 884. 16 U.S.C. \u00a7\u00a71531-1544) and the National Environmental Policy Act (NEPA; 42 U.S.C. \u00a7\u00a74321 et seq), among others. Thus, much of the current debate surrounding the project revolves around how to address the project's changes to California's hydrologic system that were not major considerations when it was constructed.", "Today, CVP water serves a variety of different purposes for both human uses and fish and wildlife needs. The CVP provides a major source of support for California agriculture, which is first in the nation in terms of farm receipts. CVP water supplies irrigate more than 3 million acres of land in central California and support 7 of California's top 10 agricultural counties. In addition, CVP M&I water provides supplies for approximately 2.5 million people per year. CVP operations also are critical for hydropower, recreation, and fish and wildlife protection. In addition to fisheries habitat, CVP flows support wetlands, which provide habitat for migrating birds. "], "subsections": [{"section_title": "Overview of the CVP and California Water Infrastructure", "paragraphs": ["The CVP ( Figure 1 ) is made up of 20 dams and reservoirs, 11 power plants, and 500 miles of canals, as well as numerous other conduits, tunnels, and storage and distribution facilities. In an average year, it delivers approximately 5 million acre-feet (AF) of water to farms (including some of the nation's most valuable farmland); 600,000 AF to M&I users; 410,000 AF to wildlife refuges; and 800,000 AF for other fish and wildlife needs, among other purposes. A separate major project owned and operated by the State of California, the State Water Project (SWP), draws water from many of the same sources as the CVP and coordinates its operations with the CVP under several agreements. In contrast to the CVP, the SWP delivers about 70% of its water to urban users (including water for approximately 25 million users in the San Francisco Bay, Central Valley, and Southern California); the remaining 30% is used for irrigation.", "At their confluence, the Sacramento and San Joaquin Rivers flow into the San Francisco Bay (the Bay-Delta, or Delta). Operation of the CVP and SWP occurs through the storage, pumping, and conveyance of significant volumes of water from both river basins (as well as trans-basin diversions from the Trinity River Basin in Northern California) for delivery to users. Federal and state pumping facilities in the Delta near Tracy, CA, export water from Northern California to Central and Southern California and are a hub for CVP operations and related debates. In the context of these controversies, north of Delta (NOD) and south of Delta (SOD) are important categorical distinctions for water users.", "CVP storage is spread throughout Northern and Central California. The largest CVP storage facility is Shasta Dam and Reservoir in Northern California ( Figure 2 ), which has a capacity of 4.5 million AF. Other major storage facilities, from north to south, include Trinity Dam and Reservoir (2.4 million AF), Folsom Dam and Reservoir (977,000 AF), New Melones Dam and Reservoir (2.4 million AF), Friant Dam and Reservoir (520,000 AF), and San Luis Dam and Reservoir (1.8 million AF of storage, of which half is federal and half is nonfederal). ", "The CVP also includes numerous water conveyance facilities, the longest of which are the Delta-Mendota Canal (which runs for 117 miles from the federally operated Bill Jones pumping plant in the Bay-Delta to the San Joaquin River near Madera) and the Friant-Kern Canal (which runs 152 miles from Friant Dam to the Kern River near Bakersfield). ", "Non-CVP water storage and infrastructure also is spread throughout the Central Valley and in some cases is integrated with CVP operations. Major non-CVP storage infrastructure in the Central Valley includes multiple storage projects that are part of the SWP (the largest of which is Oroville Dam and Reservoir in Northern California), as well as private storage facilities (e.g., Don Pedro and Exchequer Dams and Reservoirs) and local government-owned dams and infrastructure (e.g., O'Shaughnessy Dam and Hetch-Hetchy Reservoir and Aqueduct, which are owned by the San Francisco Public Utilities Commission). ", "In addition to its importance for agricultural water supplies, California's Central Valley also provides valuable wetland habitat for migratory birds and other species. As such, it is home to multiple state, federal, and private wildlife refuges north and south of the Delta. Nineteen of these refuges (including 12 refuges within the National Wildlife Refuge system, 6 State Wildlife Areas/Units, and 1 privately managed complex) provide managed wetland habitat that receives water from the CVP and other sources. Five of these units are located in the Sacramento River Basin (i.e., North of the Delta), 12 are in the San Joaquin River Basin, and the remaining 2 are in the Tulare Lake Basin. "], "subsections": []}, {"section_title": "Central Valley Project Water Contractors and Allocations", "paragraphs": ["In normal years, snowpack accounts for approximately 30% of California's water supplies and is an important factor in determining CVP and SWP allocations. Water from snowpack typically melts in the spring and early summer, and it is stored and made available to meet water needs throughout the state in the summer and fall. By late winter, the state's water supply outlook typically is sufficient for Reclamation to issue the amount of water it expects to deliver to its contractors. At that time, Reclamation announces estimated deliveries for its 250 CVP water contractors in the upcoming water year. ", "More than 9.5 million AF of water per year is potentially available from the CVP for delivery based on contracts between Reclamation and CVP contractors. However, most CVP water contracts provide exceptions for Reclamation to reduce water deliveries due to hydrologic conditions and other conditions outside Reclamation's control. As a result of these stipulations, Reclamation regularly makes cutbacks to actual CVP water deliveries to contractors due to drought and other factors. ", "Even under normal hydrological circumstances, the CVP often delivers much less than the maximum contracted amount of water; since the early 1980s, an average of about 7 million AF of water has been made available to CVP contractors annually (including 5 million AF to agricultural contractors). However, during drought years deliveries may be significantly less. In the extremely dry water years of 2012-2015, CVP annual deliveries averaged approximately 3.45 million AF.", "CVP contractors receive varying levels of priority for water deliveries based on their water rights and other related factors, and some of the largest and most prominent water contractors have a relatively low allocation priority. Major groups of CVP contractors include water rights contractors (i.e., senior water rights holders such as the Sacramento River Settlement and San Joaquin River Exchange Contractors, see box below), North and South of Delta water service contractors, and Central Valley refuge water contractors. The relative locations for these groups are shown in Figure 1 .", "The largest contract holders of CVP water by percentage of total contracted amounts are Sacramento River Settlement Contractors, located on the Sacramento River. The second-largest group are SOD water service contractors (including Westlands Water District, the CVP's largest contractor), located in the area south of the Delta. Other major contractors include San Joaquin River Exchange Contractors, located west of the San Joaquin River and Friant Division contractors, located on the east side of the San Joaquin Valley. Central Valley refuges and several smaller contractor groups (e.g., Eastside Contracts, In-Delta-Contra Costa Contracts, and SOD Settlement Contracts) also factor into CVP water allocation discussions. Figure 3 depicts an approximate division of maximum available CVP water deliveries pursuant to contracts with Reclamation. The largest contractor groups and their relative delivery priority are discussed in more detail in the Appendix to this report."], "subsections": [{"section_title": "CVP Allocations", "paragraphs": ["Reclamation provided its allocations for the 2019 water year in a series of announcements in early 2019. As was the case in 2018, over the course of the spring Reclamation increased its allocations for some contractors from initially announced levels. ", "Most CVP contractor groups were allocated 100% of their maximum contracted amounts in 2019. One major exception is SOD agricultural water service contractors, who were allocated 70% of their contracted supplies. Prior to receiving a full allocation in 2017, the last time these contractors received a 100% allocation was 2006. They have received their full contract allocations only four times since 1990."], "subsections": []}]}, {"section_title": "State Water Project Allocations", "paragraphs": ["The other major water project serving California, the SWP, is operated by California's Department of Water Resources (DWR). The SWP primarily provides water to M&I users and some agricultural users, and it integrates its operations with the CVP. Similar to the CVP, the SWP has considerably more contracted supplies than it typically makes available in its deliveries. SWP contracted entitlements are 4.17 million AF, but average annual deliveries are typically considerably less than that amount.", "SWP water deliveries were at their lowest point in 2014 and 2015, and they were significantly higher in the wet year of 2017. SWP water supply allocations for water years 2012-2019 are shown in Table 2 . "], "subsections": []}, {"section_title": "Combined CVP/SWP Operations", "paragraphs": ["The CVP and SWP are operated in conjunction under the 1986 Coordinated Operations Agreement (COA), which was executed pursuant to P.L. 99-546 . COA defines the rights and responsibilities of the CVP and SWP with respect to in-basin water needs and provides a mechanism to account for those rights and responsibilities. Despite several prior efforts to review and update the agreement to reflect major changes over time (e.g., water delivery reductions pursuant to the Central Valley Project Improvement Act, the Endangered Species Act requirements, and new Delta Water Quality Standards, among other things), the 1986 agreement remains in place. ", "Combined CVP and SWP exports (i.e., water transferred from north to south of the Delta) is of interest to many observers because it reflects trends over time in the transfer of water from north to south (i.e., exports ) by the two projects, in particular through pumping. Exports of the CVP and SWP, as well as total combined exports since 1978, have varied over time ( Figure 4 ). Most recently, combined exports dropped significantly during the 2012-2016 drought but have rebounded since 2016. Prior to the drought, overall export levels had increased over time, having averaged more from 2001 to 2011 than over any previous 10-year period. The 6.42 million AF of combined exports in 2017 was the second most on record, behind 6.59 million AF in 2011. ", "Over time, CVP exports have decreased on average, whereas SWP exports have increased. Additionally, exports for agricultural purposes have declined as a subset of total exports, in part due to those exports being made available for other purposes (e.g., fish and wildlife). ", "Previously, some observers argued that CVP obligations under COA were no longer proportional to water supplies that the CVP receives from the Delta, thus the agreement should be renegotiated. Dating to 2015, Reclamation and DWR conducted a mutual review of COA but reportedly were unable to agree on revisions. On August 17, 2018, Reclamation provided a Notice of Negotiations to DWR. ", "Following negotiations in the fall of 2018, Reclamation and DWR agreed to an addendum to COA in December 2018. Whereas the original 1986 agreement included a fixed ratio of 75% CVP/25% SWP for the sharing of regulatory requirements associated with storage withdrawals for Sacramento Valley in-basin uses (e.g., curtailments for water quality and species uses), the revised addendum adjusted the ratio of sharing percentages based on water year types ( Table 3 ). ", "The 2018 addendum also adjusted the sharing of export capacity under constrained conditions. Whereas under the 1986 COA, export capacity was shared 50/50 between the CVP and the SWP, under the revised COA the split is to be 60% CVP/40% SWP during excess conditions, and 65% CVP/35% SWP during balanced conditions. Finally, the state also agreed in the 2018 revisions to transport up to 195,000 AF of CVP water through the California Aqueduct, during certain conditions."], "subsections": []}]}, {"section_title": "Constraints on CVP Deliveries", "paragraphs": ["Concerns over CVP water supply deliveries persist in part because even in years with high levels of precipitation and runoff, some contractors (in particular SOD water service contractors) have regularly received allocations of less than 100% of their contract supplies. Allocations for some users have declined over time; additional environmental requirements in recent decades have reduced water deliveries for human uses. Coupled with reduced water supplies available in drought years, some have increasingly focused on what can be done to increase water supplies for users. At the same time, others that depend on or advocate for the health of the San Francisco Bay and its tributaries, including fishing and environmental groups and water users throughout Northern California, have argued for maintaining or increasing existing environmental protections (the latter of which likely would further constrain CVP exports). ", "Hydrology and state water rights are the two primary drivers of CVP allocations. However, at least three other regulatory factors affect the timing and amount of water available for delivery to CVP contractors and are regularly the subject of controversy:", "State water quality requirements pursuant to state and the federal water quality laws (including the Clean Water Act [CWA, 33 U.S.C. \u00a7\u00a71251-138]); Regulations and court orders pertaining to implementation of the federal Endangered Species Act (ESA, 87 Stat. 884. 16 U.S.C. \u00a7\u00a71531-1544); and Implementation of the Central Valley Project Improvement Act (CVPIA; P.L. 102-575 ).", "Each of these factors is discussed in more detail below. "], "subsections": [{"section_title": "Water Quality Requirements: Bay-Delta Water Quality Control Plan", "paragraphs": ["California sets water quality standards and issues permits for the discharge of pollutants in compliance with the federal CWA, enacted in 1972. Through the Porter-Cologne Act (a state law), California implements federal CWA requirements and authorizes the State Water Resources Control Board (State Water Board) to adopt water quality control plans, or basin plans. The CVP and the SWP affect water quality in the Bay-Delta depending on how much freshwater the projects release into the area as \"unimpaired flows\" (thereby affecting area salinity levels). ", "The first Water Quality Control Plan for the Bay-Delta (Bay-Delta Plan) was issued by the State Water Board in 1978. Since then, there have been three substantive updates to the plan\u2014in 1991, 1995, and 2006. The plans generally have required the SWP and CVP to meet certain water quality and flow objectives in the Delta to maintain desired salinity levels for in-Delta diversions (e.g., water quality levels for in-Delta water supplies) and fish and wildlife, among other things. These objectives often affect the amount and timing of water available to be pumped, or exported, from the Delta and thus at times result in reduced Delta exports to CVP and SWP water users south of the Delta. The Bay-Delta Plan is currently implemented through the State Water Board's Decision 1641 (or D-1641), which was issued in 1999 and placed responsibility for plan implementation on the state's largest two water rights holders, Reclamation and the California DWR. ", "Pumping restrictions to meet state-set water quality levels\u2014particularly increases in salinity levels\u2014can sometimes be significant. However, the relative magnitude of these effects varies depending on hydrology. For instance, Reclamation estimated that in 2014, water quality restrictions accounted for 176,300 AF of the reduction in pumping from the long-term average for CVP exports. In 2016, Reclamation estimated that D-1641 requirements accounted for 114,500 AF in reductions from the long-term export average. "], "subsections": [{"section_title": "Bay-Delta Plan Update", "paragraphs": ["In mid-2018, the State Water Board released the final draft of the update to the 2006 Bay Delta Plan (i.e., the Bay-Delta Plan Update) for the Lower San Joaquin River and Southern Delta. It also announced further progress on related efforts under the update for flow requirements on the Sacramento River and its tributaries. The Bay-Delta Plan Update requires additional flows to the ocean (generally referred to in these documents as \"unimpaired flows\") from the San Joaquin River and its tributaries (i.e., the Stanislaus, Tuolumne, and Merced Rivers). Under the proposal, the unimpaired flow requirement for the San Joaquin River would be 40% (within a range of 30%-50%); average unimpaired flows currently range from 21% to 40%. The state estimates that the updated version of the plan would reduce water available for human use from the San Joaquin River and its tributaries by between 7% and 23%, on average (depending on the water year type), but it could reduce these water supplies by as much as 38% during critically dry years. ", "A more detailed plan for the Sacramento River and its tributaries also is expected in the future. A preliminary framework released by the state in July 2018 proposed a potential requirement of 55% unimpaired flows from the Sacramento River (within a range of 45% to 65%). According to the State Water Board, if the plan updates for the San Joaquin and Sacramento Rivers are finalized and water users do not enter into voluntary agreements to implement them, the board could take actions to require their implementation, such as promulgation of regulations and conditioning of water rights. ", "Reclamation and its contractors likely would play key roles in implementing any update to the Bay-Delta Plan, as they do in implementing the current plan under D-1641. Pursuant to Section 8 of the Reclamation Act of 1902, Reclamation generally defers to state water law in carrying out its authorities, but the proposed Bay Delta Plan Update has generated controversy. In a July 2018 letter to the State Water Board, the Commissioner of Reclamation opposed the proposed standards for the San Joaquin River, arguing that meeting them would necessitate decreased water in storage at New Melones Reservoir of approximately 315,000 AF per year (a higher amount than estimated by the State Water Board). Reclamation argued that such a change would be contrary to the CVP prioritization scheme as established by Congress. ", "On December 12, 2018, the State Water Board approved the Bay Delta Plan Update in Resolution 1018-0059. According to the state, the plan establishes a \"starting point\" for increased river flows but also makes allowances for reduced river flows on tributaries where stakeholders have reached voluntary agreements to pursue both flow and \"non-flow\" measures. The conditions in the Bay-Delta Plan Update would be implemented through water rights conditions imposed by the State Water Board; these conditions are to be implemented no later than 2022. ", "On March 28, 2019, the Department of Justice and DOI filed civil actions in federal and state court against the State Water Board for failing to comply with the California Environmental Quality Act. "], "subsections": []}]}, {"section_title": "Endangered Species Act", "paragraphs": ["Several species that have been listed under the federal ESA are affected by the operations of the CVP and the SWP. One species, the Delta smelt, is a small pelagic fish that is susceptible to entrainment in CVP and SWP pumps in the Delta; it was listed as threatened under ESA in 1993. Surveys of Delta smelt in 2017 found two adult smelt, the lowest catch in the history of the survey. These results were despite the relatively wet winter of 2017, which is a concern for many stakeholders because low population sizes of Delta smelt could result in greater restrictions on water flowing to users. It also raises larger concerns about the overall health and resilience of the Bay-Delta ecosystem. In addition to Delta smelt, multiple anadromous salmonid species are listed under ESA, including the endangered Sacramento River winter-run Chinook salmon, the threatened Central Valley spring-run Chinook salmon, the threatened Central Valley steelhead, threatened Southern Oregon/Northern California Coast coho salmon, and the threatened Central California Coast steelhead.", "Federal agencies consult with the U.S. Fish and Wildlife Service (FWS) in DOI or the Department of Commerce's (DOC's) National Marine Fisheries Service (NMFS) to determine if a federal project or action might jeopardize the continued existence of a species listed under ESA or adversely modify its habitat. If an effect is possible, formal consultation is started and usually concludes with the appropriate service issuing a BiOp on the potential harm the project poses and, if necessary, issuing reasonable and prudent measures to reduce the harm. ", "FWS and NMFS each have issued federal BiOps on the coordinated operation of the CVP and the SWP. In addition, both agencies have undertaken formal consultation on proposed changes in the operations and have concluded that the changes, including increased pumping from the Delta, would jeopardize the continued existence of several species protected under ESA. To avoid such jeopardy, the FWS and NMFS BiOps have included Reasonable and Prudent Alternatives (RPAs) for project operations. ", "CVP and SWP BiOps have been challenged and revised over time. Until 2004, a 1993 winter-run Chinook salmon BiOp and a 1995 Delta smelt BiOp (as amended) governed Delta exports for federal ESA purposes. In 2004, a proposed change in coordinated operation of the SWP and CVP (including increased Delta exports), known as OCAP (Operations Criteria and Plan) resulted in the development of new BiOps. Environmental groups challenged the agencies' 2004 BiOps; this challenge resulted in the development of new BiOps by the FWS and NMFS in 2008 and 2009, respectively. These BiOps placed additional restrictions on the amount of water exported via SWP and CVP Delta pumps and other limitations on pumping and release of stored water. The CVP and SWP currently are operated in accordance with these BiOps, both of which concluded that the coordinated long-term operation of the CVP and SWP, as proposed in Reclamation's 2008 Biological Assessment, was likely to jeopardize the continued existence of listed species and destroy or adversely modify designated critical habitat. Both BiOps included RPAs designed to allow the CVP and SWP to continue operating without causing jeopardy to listed species or destruction or adverse modification to designated critical habitat. Reclamation accepted and then began project operations consistent with the FWS and NMFS RPAs, which continue to govern operations. ", "The exact magnitude of reductions in pumping due to ESA restrictions compared to the aforementioned water quality restrictions has varied considerably over time. In absolute terms, ESA-driven reductions typically are greater in wet years than in dry years, but the proportion of ESA reductions relative to deliveries is not necessarily constant and depends on numerous factors. For instance, Reclamation estimated that ESA restrictions accounted for a reduction in deliveries of 62,000 AF from the long-term average for CVP deliveries in 2014 and 144,800 AF of CVP delivery reductions in 2015 (both years were extremely dry). In 2016, ESA reductions accounted for a much larger amount (528,000 AF) in a wet year, when more water is delivered. Some scientists estimate that flows used to protect all species listed under ESA accounted for approximately 6.5% of the total Delta outflow from 2011 to 2016. ", "During the 2012-2016 drought, implementation of the RPAs (which generally limit pumping under specific circumstances and call for water releases from key reservoirs to support listed species) was modified due to temporary urgency change orders (TUCs). These TUCs, issued by the State Water Resources Control Board in 2014 and again in 2015, were deemed consistent with the existing BiOps by NMFS and FWS. Such changes allowed more water to be pumped during certain periods based on real-time monitoring of species and water conditions. DWR estimates that approximately 400,000 AF of water was made available in 2014 for export due to these orders. ", "In August 2016, Reclamation and DWR requested reinitiation of consultation on long-term, system-wide operations of the CVP and the SWP based on new information related to multiple years of drought, species decline, and related data. In December 2017, the Trump Administration gave formal notice of its intent to prepare an environmental impact statement analyzing potential long-term modifications to the coordinated operations of the CVP and the SWP. According to the notice, the actions under consideration will include those with the potential to \"maximize\" water and power supplies for users and that modify existing regulatory requirements, among other things. The effort is widely viewed as an initial step toward potential long-term changes to CVP operations and existing BiOp requirements. ", "The Biological Assessment (BA) proposing changes for the operation of the CVP and SWP was sent to FWS and NMFS by Reclamation on January 31, 2019. The BA discusses the operational changes proposed by Reclamation and mitigation factors to address listed species. The changes reflect provisions in the WIIN Act and efforts to maximize water supplies for users. The BA also states that nonoperational activities will be implemented to augment and bolster listed fish populations. These activities include habitat restoration and introducing hatchery-bred Delta smelt. Operational changes include increasing flows to take into account additional water from winter storms and increasing base flows when storage levels are higher. ", "The Trump Administration also has indicated its intent to expedite other regulatory changes under ESA. On October 19, 2018, President Trump issued a memorandum that directed DOI and DOC to identify water infrastructure projects in California for which they have responsibilities under ESA. Per the memorandum, the agencies are to identify regulations and procedures that burden the projects and develop a plan to \"suspend, revise, or rescind\" those regulations. The White House memorandum also directed that the aforementioned joint BiOps be completed by June 15, 2019."], "subsections": []}, {"section_title": "Central Valley Project Improvement Act", "paragraphs": ["In an effort to mitigate many of the environmental effects of the CVP, Congress in 1992 passed the CVPIA as Title 34 of P.L. 102-575 . The act made major changes to the management of the CVP. Among other things, it formally established fish and wildlife purposes as an official project purpose of the CVP and called for a number of actions to protect, restore, and enhance these resources. Overall, the CVPIA's provisions resulted in a combination of decreased water availability and increased costs for agricultural and M&I contractors, along with new water and funding sources to restore fish and wildlife. Thus, the law remains a source of tension, and some would prefer to see it repealed in part or in full. ", "Some of the CVPIA's most prominent changes to the CVP included directives to", "double certain anadromous fish populations by 2002 (which did occur); allocate 800,000 AF of \"(b)(2)\" CVP yield (600,000 AF in drought years) to fish and wildlife purposes; provide water supplies (in the form of \"Level 2\" and \"Level 4\" supplies) for 19 designated Central Valley wildlife refuges; establish a fund, the Central Valley Project Restoration Fund (CVPRF), to be financed by water and power users for habitat restoration and land and water acquisitions.", "Pursuant to prior court rulings since enactment of the legislation, CVPIA (b)(2) allocations may be used to meet other state and federal requirements that reduce exports or require an increase from baseline reservoir releases. Thus, in a given year, the aforementioned export reductions due to state water quality and federal ESA restrictions are counted and reported on annually as (b)(2) water, and in some cases overlap with other stated purposes of CVPIA (e.g., anadromous fish restoration). The exact makeup of (b)(2) water in a given year typically varies. For example, in 2014 (a critically dry year), out of a total of 402,000 AF of (b)(2) water, 176,300 AF (44%) was attributed to export reductions for Bay-Delta Plan water quality requirements. Remaining (b)(2) water was comprised of a combination of reservoir releases classified as CVPIA anadromous fish restoration and NMFS BiOp compliance purposes (163,500 AF) and export reductions under the 2009 salmonid BiOp (62,200 AF). In 2016 (a wet year), 793,000 AF of (b)(2) water included 528,000 AF (66%) of export pumping reductions under FWS and NMFS BiOps and 114,500 AF (14%) for Bay-Delta Plan requirements. The remaining water was accounted for as reservoir releases for the anadromous fish restoration programs, the NMFS BiOp, and the Bay-Delta Plan."], "subsections": []}]}, {"section_title": "Ecosystem Restoration Efforts", "paragraphs": ["Development of the CVP made significant changes to California's natural hydrology. In addition to the aforementioned CVPIA efforts to address some of these impacts, three ongoing, congressionally authorized restoration initiatives also factor into federal activities associated with the CVP:", "The Trinity River Restoration Program (TRRP), administered by Reclamation, attempts to mitigate impacts and restore fisheries impacted by construction of the Trinity River Division of the CVP. The San Joaquin River Restoration Program (SJRRP) is an ongoing effort to implement a congressionally enacted settlement to restore fisheries in the San Joaquin River. The California Bay-Delta Restoration Program aims to restore and protect areas within the Bay-Delta that are affected by the CVP and other activities. ", "In addition to their habitat restoration activities, both the TRRP and the SJRRP involve the maintenance of instream flow levels that use water that was at one time diverted for other uses. Each effort is discussed briefly below."], "subsections": [{"section_title": "Trinity River Restoration Program", "paragraphs": ["TRRP\u2014administered by DOI\u2014aims to mitigate impacts of the Trinity Division of the CVP and restore fisheries to their levels prior to the Bureau of Reclamation's construction of this division in 1955. The Trinity Division primarily consists of two dams (Trinity and Lewiston Dams), related power facilities, and a series of tunnels (including the 10.7-mile tunnel Clear Creek Tunnel) that divert water from the Trinity River Basin to the Sacramento River Basin and Whiskeytown Reservoir. Diversion of Trinity River water (which originally required that a minimum of 120,000 AF be reserved for Trinity River flows) resulted in the near drying of the Trinity River in some years, thereby damaging spawning habitat and severely depleting salmon stocks. ", "Efforts to mitigate the effects of the Trinity Division date back to the early 1980s, when DOI initiated efforts to study the issue and increase Trinity River flows for fisheries. Congress authorized legislation in 1984 ( P.L. 98-541 ) and in 1992 ( P.L. 102-575 ) providing for restoration activities and construction of a fish hatchery, and directed that 340,000 AF per year be reserved for Trinity River flows (a significant increase from the original amount). Congress also mandated completion of a flow evaluation study, which was formalized in a 2000 record of decision (ROD) that called for additional water for instream flows, river channel restoration, and watershed rehabilitation. ", "The 2000 ROD forms the basis for TRRP. The flow releases outlined in that document have in some years been supplemented to protect fish health in the river, and these increases have been controversial among some water users. From FY2013 to FY2018, TRRP was funded at approximately $12 million per year in discretionary appropriations from Reclamation's Fish and Wildlife Management and Development activity."], "subsections": []}, {"section_title": "San Joaquin River Restoration Program", "paragraphs": ["Historically, the San Joaquin River supported large Chinook salmon populations. After the Bureau of Reclamation completed Friant Dam on the San Joaquin River in the late 1940s, much of the river's water was diverted for agricultural uses and approximately 60 miles of the river became dry in most years. These conditions made it impossible to support Chinook salmon populations upstream of the Merced River confluence. ", "In 1988, a coalition of environmental, conservation, and fishing groups advocating for river restoration to support Chinook salmon recovery sued the Bureau of Reclamation. A U.S. District Court judge eventually ruled that operation of Friant Dam was violating state law because of its destruction of downstream fisheries. Faced with mounting legal fees, considerable uncertainty, and the possibility of dramatic cuts to water diversions, the parties agreed to negotiate a settlement instead of proceeding to trial on a remedy regarding the court's ruling. This settlement was agreed to in 2006 and enacted by Congress in 2010 (Title X of P.L. 111-11 ). ", "The settlement agreement and its implementing legislation form the basis for the SJRRP, which requires new releases of CVP water from Friant Dam to restore fisheries (including salmon fisheries) in the San Joaquin River below Friant Dam (which forms Millerton Lake) to the confluence with the Merced River (i.e., 60 miles). The SJRRP also requires efforts to mitigate water supply delivery losses due to these releases, among other things. In combination with the new releases, the settlement's goals are to be achieved through a combination of channel and structural modifications along the San Joaquin River and the reintroduction of Chinook salmon ( Figure 5 ). These activities are funded in part by federal discretionary appropriations and in part by repayment and surcharges paid by CVP Friant water users that are redirected toward the SJRRP in P.L. 111-11 .", "Because increased water flows for restoring fisheries (known as restoration flows ) would reduce CVP diversions of water for off-stream purposes, such as irrigation, hydropower, and M&I uses, the settlement and its implementation have been controversial. The quantity of water used for restoration flows and the quantity by which water deliveries would be reduced are related, but the relationship is not necessarily one-for-one, due to flood flows in some years and other mitigating factors. Under the settlement agreement, no water would be released for restoration purposes in the driest of years; thus, the agreement would not reduce deliveries to Friant contractors in those years. Additionally, in some years, the restoration flows released in late winter and early spring may free up space for additional runoff storage in Millerton Lake, potentially minimizing reductions in deliveries later in the year\u2014assuming Millerton Lake storage is replenished. Consequently, how deliveries to Friant water contractors may be reduced in any given year is likely to depend on many factors. Regardless of the specifics of how much water may be released for fisheries restoration vis-\u00e0-vis diverted for off-stream purposes, the SJRRP will impact existing surface and groundwater supplies in and around the Friant Division service area and affect local economies. SJRRP construction activities are in the early stages, but planning efforts have targeted a completion date of 2024 for the first stage of construction efforts. "], "subsections": []}, {"section_title": "CALFED Bay-Delta Restoration Program", "paragraphs": ["The Bay-Delta Restoration Program is a cooperative effort among the federal government, the State of California, local governments, and water users to proactively address the water management and aquatic ecosystem needs of California's Central Valley. The CALFED Bay-Delta Restoration Act ( P.L. 108-361 ), enacted in 2004, provided new and expanded federal authorities for six agencies related to the 2000 ROD for the CALFED Bay-Delta Program's Programmatic Environmental Impact Statement. These authorities were extended through FY2019 under the WIIN Act. The interim action plan for CALFED has four objectives: a renewed federal-state partnership, smarter water supply and use, habitat restoration, and drought and floodplain management. ", "From FY2013 to FY2018, Reclamation funded its Bay-Delta restoration activities at approximately $37 million per year; the majority of this funding has gone for projects to address the degraded Bay-Delta ecosystem and includes federal activities under California WaterFix (see below section, \" California WaterFix \"). Other agencies receiving funding to carry out authorities under CALFED include DOI's U.S. Fish and Wildlife Service and U.S. Geological Survey; the Department of Agriculture's Natural Resources Conservation Service; the Department of Defense's Army Corps of Engineers; the Department of Commerce's National Oceanic and Atmospheric Administration; and the Environmental Protection Agency. Similar to Reclamation, these agencies report on CALFED expenditures that involve a combination of activities under \"base\" authorities and new authorities that were provided under the CALFED authorizing legislation. The annual CALFED crosscut budget records the funding for CALFED across all federal agencies. The budget generally is included in the Administration's budget request and contains CALFED programs, their authority, and requested funding. For FY2019, the Administration requested $474 million for CALFED activities. This figure is an increase from the FY2018 enacted level of $415 million. "], "subsections": []}]}, {"section_title": "New Storage and Conveyance", "paragraphs": ["Reductions in available water deliveries due to hydrological and regulatory factors have caused some stakeholders, legislators, and state and federal government officials to look at other methods of augmenting water supplies. In particular, proposals to build new or augmented CVP and/or SWP water storage projects have been of interest to some policymakers. Additionally, the State of California is pursuing a major water conveyance project, the California WaterFix, with a nexus to CVP operations."], "subsections": [{"section_title": "New and Augmented Water Storage Projects", "paragraphs": ["The aforementioned CALFED legislation ( P.L. 108-361 ) also authorized the study of several new or augmented CVP storage projects throughout the Central Valley that have been ongoing for a number of years. These studies include Shasta Lake Water Resources Investigation, North of the Delta Offstream Storage Investigation (also known as Sites Reservoir), In-Delta Storage, Los Vaqueros Reservoir Expansion, and Upper San Joaquin River/Temperance Flat Storage Investigation ( Figure 6 ). Although the recommendations of these studies normally would be subject to congressional approval, Section 4007 of the WIIN Act authorized $335 million in Reclamation financial support for new or expanded federal and nonfederal water storage projects and provided that these projects could be deemed authorized, subject to a finding by the Administration that individual projects met certain criteria. ", "In 2018 reporting to Congress, Reclamation recommended an initial list of seven projects that it concluded met the WIIN Act criteria. The projects were allocated $33.3 million in FY2017 funding that was previously appropriated for WIIN Act Section 4007 projects. Congress approved the funding allocations for these projects in enacted appropriations for FY2018 ( P.L. 115-141 ). Four of the projects receiving FY2017 funds ($28.05 million) were CALFED studies that would address water availability in the CVP:", "Shasta Dam and Reservoir Enlargement Project ($20 million for design and preconstruction); North-of-Delta Off-Stream Storage Investigation/Sites Reservoir Storage Project ($4.35 million for feasibility study); Upper San Joaquin River Basin Storage Investigation ($1.5 million for feasibility study); and Friant-Kern Canal Subsidence Challenges Project ($2.2 million for feasibility study).", "The enacted FY2018 Energy and Water appropriations bill further stipulated that $134 million of the amount set aside for additional water conservation and delivery projects be provided for Section 4007 WIIN Act storage projects (i.e., similar direction as FY2017). The enacted FY2019 bill set aside another $134 million for these purposes. Future reporting and appropriations legislation is expected to propose allocation of this and any other applicable funding. Congress also may consider additional directives for these and other efforts to address water supplies in the CVP, including approval of physical construction for one or more of these projects.", "Funding by the State of California also may influence the viability and timing of construction for some of the proposed projects. For example, in June 2018, the state announced significant bond funding for Sites Reservoir ($1.008 billion), as well as other projects. "], "subsections": []}, {"section_title": "California WaterFix", "paragraphs": ["In addition to water storage, some have advocated for a more flexible water conveyance system for CVP and SWP water. An alternative was the California WaterFix, a project initiated by the State of California in 2015 to address some of the water conveyance and ecosystem issues in the Bay-Delta. The objective of this project was to divert water from the Sacramento River, north of the Bay-Delta, into twin tunnels running south along the eastern portion of the Bay-Delta and emptying into existing pumps that feed water into the CVP and SWP. In the spring of 2019, Governor Newsom of California canceled the plans for this project and introduced an alternative plan for conveying water through the Delta. ", "DWR is creating plans to construct a single tunnel to convey water from the Sacramento River to the existing pumps in the Bay-Delta. DWR's stated reasons for supporting this approach are to protect water supplies from sea-level rise, saltwater intrusion, and earthquakes. The new plan is expected to take a \"portfolio\" approach that focuses on a number of interrelated efforts to make water supplies climate resilient. This approach includ es actions such as strengthening levees, protecting Delta water quality, and recharging groundwater, according to DWR. This project will require a new environmental review process for federal and state permits. It is being led by the Delta Conveyance Design and Construction Authority, a joint powers authority created by public water agencies to oversee the design and construction of the new conveyance system. DWR is expected to oversee the planning effort. The cost of the project is anticipated to be largely paid by public water agencies. The federal government's role in this project beyond evaluating permit applications and maintaining related CVP operations has not been defined. "], "subsections": []}]}, {"section_title": "Congressional Interest", "paragraphs": ["Congress plays a role in CVP water management and previously has attempted to make available additional water supplies in the region by facilitating efforts such as water banking, water transfers, and construction of new and augmented storage. In 2016, Congress enacted provisions aiming to benefit the CVP and the SWP, including major operational changes in the WIIN Act and additional appropriations for western drought response and new water storage that have benefited (or are expected to benefit) the CVP. Congress also continues to consider legislation that would further alter CVP operational authorities and responsibilities related to individual units of the project. The below section discusses some of the main issues related to the CVP that may receive attention by Congress."], "subsections": [{"section_title": "CVP Operational Authorities Under the WIIN Act72", "paragraphs": ["Title II, Subtitle J of the WIIN Act (enacted in December 2016) included multiple provisions related to the Bureau of Reclamation's operations of the CVP. Most of the WIIN Act's operational provisions are set to expire in 2021 (five years after the bill's enactment). In addition to overseeing the implementation of these operational provisions, Congress may also consider their amendment, extension, or repeal. ", "The WIIN Act directed Reclamation to \"maximize\" CVP pumping (in accordance with applicable BiOps), allowed for increased pumping during certain temporary storm events, and authorized expedited reviews of water transfers, among other things. The WIIN Act also established a new standard for measuring the effects of water operations on species listed as endangered or threatened under the ESA, allowing most of the bill's actions to go forward unless they are determined to cause additional adverse effects on listed species beyond the range of the effects anticipated to occur for the duration of the species BiOp. ", "Although the WIIN Act included some provisions from legislation that had been proposed dating back to the 112 th Congress, many of the controversial provisions from prior bills were not included in the act. Supporters of WIIN Act operational changes contended that these changes had the potential to make additional water available 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, some changes authorized under the WIIN Act were implemented during the winter of 2017-2018. In particular, communication and transparency were reportedly increased for some operational decisions, allowing for reduced or rescheduled pumping restrictions. Additionally, as of spring 2018, WIIN Act allowances relaxed restrictions on inflow-to-export ratios related to the voluntary sale, transfer, or exchange of water that were used to affect a transfer resulting in additional exports of 50,000-60,000 AF. ", "Reclamation has noted that hydrology has affected its ability to implement some of the act's provisions. Many of the WIIN Act changes have the potential to make their greatest impact during drought years. At the same time, some federal operational changes pursuant to the WIIN Act reportedly were proposed but were deemed incompatible with state requirements. Despite these limitations, WIIN Act authorities are likely to continue as a topic of congressional interest."], "subsections": [{"section_title": "Other Proposed Changes to CVP Operations", "paragraphs": ["Previous Congresses have considered legislation that proposed additional changes to CVP operations. For instance, in the 115 th Congress, H.R. 23 , the Gaining Responsibility on Water Act (GROW Act), incorporated a number of provisions that were included in previous California drought legislation in the 112 th , 113 th , and 114 th Congresses but were not enacted in the WIIN Act. Generally speaking, the GROW Act included provisions that would have loosened some environmental protections and restrictions that are imposed under the CVPIA, ESA, CWA, and SJRRP, and had the potential to increase exports under some scenarios. This legislation was not enacted.", "In addition to legislation proposing operational changes, the Administration has indicated its intent to propose administrative changes to CVP operations, including through reinitiation of consultation on long-term, system-wide operations of the CVP and SWP (see earlier section, \" Endangered Species Act \"). A 2018 White House memorandum directed DOC and DOI to finalize their new BiOps for the coordinated operation of the CVP and SWP by June 15, 2019, and to \"suspend, revise, or rescind\" regulations that unduly burden the project. It is unclear how the latter process might unfold or what particular regulations will be addressed. "], "subsections": []}]}, {"section_title": "New Water Storage Projects", "paragraphs": ["As previously noted, Reclamation and the State of California have funded the study of new water storage projects in recent years, and future appropriations legislation and reporting may provide additional direction for these and other efforts to develop new water supplies for the CVP. As such, Congress may consider oversight, authorization, and/or funding for these projects. Some projects, such as the Shasta Dam and Reservoir Enlargement Project, have the potential to augment CVP water supplies but also have generated controversy for their potential to conflict with the intent of certain state laws. Although Reclamation has indicated its interest in pursuing the Shasta Dam raise project, the state has opposed the project under Governor Jerry Brown's Administration, and it is unclear how such a project might proceed absent state regulatory approvals and financial support. As previously noted, in early 2018, Reclamation proposed and Congress agreed to $20 million in design and preconstruction funding for the project. An additional $75 million was recommended by the Trump Administration in February 2019.", "In addition to the Shasta Dam and Reservoir Enlargement Project, Congress approved Reclamation-recommended study funding for Sites Reservoir/North of Delta Offstream Storage (NODOS), Upper San Joaquin River Basin Storage Investigation, and the Friant-Kern Canal Subsidence Challenges Project. Overall, from FY2017 to FY2019 Congress provided Reclamation with $335 million for new water storage projects authorized under Section 4007 of the WIIN Act. A significant share of this total is expected to be used on CVP and related water storage projects in California. Once the appropriations ceiling for these projects has been reached, funding for storage projects under Section 4007 would need to be extended by Congress before projects could proceed further.", "Legislation in the 116 th Congress has proposed to expedite certain water storage studies in the Central Valley, and could also provide mandatory funding for their eventual construction. For instance, Section 5 of H.R. 2473 would direct the Secretary to complete, as soon as practicable, the ongoing feasibility studies associated with Sites Reservoir, Del Puerto Canyon Reservoir, Los Vaqueros Reservoir, and San Luis Reservoir. Section 2 of the same legislation would authorize $100 million per year for fiscal years 2030 to 2060, without further appropriation (i.e., mandatory funding) for new Reclamation surface or groundwater storage projects. "], "subsections": []}]}, {"section_title": "Conclusion", "paragraphs": ["The CVP is one of the largest and most complex water storage and conveyance projects in the world. Congress has regularly expressed interest in CVP operations and allocations, in particular pumping in the Bay-Delta. In addition to ongoing oversight of project operations and previously enacted authorities, a number of developing issues and proposals related to the CVP have been of interest to congressional decisionmakers. These include study and approval of new water storage and conveyance projects, updates to the state's Bay-Delta Water Quality Plan, and a multipronged effort by the Trump Administration to make available more water for CVP water contractors, in particular those south of the Delta. Future drought or other stressors on California water supplies are likely to further magnify these issues."], "subsections": [{"section_title": "Appendix. CVP Water Contractors", "paragraphs": ["The below sections provide a brief discussion some of the major contractor groups and individual contractors served by the CVP. ", "Sacramento River Settlement Contractors and San Joaquin River Exchange Contractors (Water Rights Contractors)", "CVP water generally is made available for delivery first to those contractors north and south of the Delta with water rights that predate construction of the CVP: the Sacramento River Settlement Contractors and the San Joaquin River Exchange Contractors. (These contractors are sometimes referred to collectively as water rights contractors .) Water rights contractors typically receive 100% of their contracted amounts in most water year types. During water shortages, their annual maximum entitlement may be reduced, but not by more than 25%. ", "Sacramento River Settlement Contractors include the 145 contractors (both individuals and districts) that diverted natural flows from the Sacramento River prior to the CVP's construction and executed a settlement agreement with Reclamation that provided for negotiated allocation of water rights. Reclamation entered into this agreement in exchange for these contractors withdrawing their protests related to Reclamation's application for water rights for the CVP. ", "The San Joaquin River Exchange Contractors are four irrigation districts that agreed to \"exchange\" exercising their water rights to divert water on the San Joaquin and Kings Rivers for guaranteed water deliveries from the CVP (typically in the form of deliveries from the Delta-Mendota Canal and waters north of the Delta). During all years except for when critical conditions are declared, Reclamation is responsible for delivering 840,000 AF of \"substitute\" water to these users (i.e., water from north of the Delta as a substitute for San Joaquin River water). In the event that Reclamation is unable to make its contracted deliveries, these Exchange Contractors have the right to divert water directly from the San Joaquin River, which may reduce water available for other San Joaquin River water service contactors. ", "Friant Division Contractors", "CVP's Friant Division contractors receive water stored behind Friant Dam (completed in 1944) in Millerton Lake. This water is delivered through the Friant-Kern and Madera Canals. The 32 Friant Division contractors, who irrigate roughly 1 million acres on the San Joaquin River, are contracted to receive two \"classes\" of water: Class 1 water is the first 800,000 AF available for delivery; Class 2 water is the next 1.4 million AF available for delivery. Some districts receive water from both classes. Generally, Class 2 waters are released as \"uncontrolled flows\" (i.e., for flood control concerns), and may not necessarily be scheduled at a contractor's convenience. ", "Deliveries to the Friant Division are affected by a 2009 congressionally enacted settlement stemming from Friant Dam's effects on the San Joaquin River. The settlement requires reductions in deliveries to Friant users for protection of fish and wildlife purposes. In some years, some of these \"restorations flows\" have been made available to contractors for delivery as Class 2 water.", "Unlike most other CVP contractors, Friant Division contractors have converted their water service contracts to repayment contracts and have repaid their capital obligation to the federal government for the development of their facilities. In years in which Reclamation is unable to make contracted deliveries to Exchange Contractors, these contractors can make a \"call\" on water in the San Joaquin River, thereby requiring releases from Friant Dam that otherwise would go to Friant contractors.", "South-of-Delta (SOD) Water Service Contractors: Westlands Water District", "As shown in Figure 3 , SOD water service contractors account for a large amount (2.09 million AF, or 22.1%) of the CVP's contracted water. The largest of these contractors is Westlands Water District, which consists of 700 farms covering more than 600,000 acres in Fresno and Kings Counties. In geographic terms, Westlands is the largest agricultural water district in the United States; its lands are valuable and productive, producing more than $1 billion of food and fiber annually. Westlands' maximum contracted CVP water is in excess of 1.2 million AF, an amount that makes up more than half of the total amount of SOD CVP water service contracts and significantly exceeds any other individual CVP contactor. However, due to a number of factors, Westlands often receives considerably less water on average than it did historically.", "Westlands has been prominently involved in a number of policy debates, including proposals to alter environmental requirements to increase pumping south of the Delta. Westlands also is involved in a major proposed settlement with Reclamation, the San Luis Drainage Settlement. The settlement would, among other things, forgive Westlands' share of federal CVP repayment responsibilities in exchange for relieving the federal government of its responsibility to construct drainage facilities to deal with toxic runoff associated with naturally occurring metals in area soils. ", "Central Valley Wildlife Refuges", "The 20,000 square mile California Central Valley provides valuable wetland habitat for migratory birds and other species. As such, it is the home to multiple state and federally-designated wildlife refuges north and south of the Delta. These refuges provide managed wetland habitat that receives water from the CVP and other sources.", "The Central Valley Project Improvement Act (CVPIA; P.L. 102-575 ), enacted in 1992, sought to improve conditions for fish and wildlife in these areas by providing them coequal priority with other project purposes. CVPIA also authorized a Refuge Water Supply Program to acquire approximately 555,000 AF annually in water supplies for 19 Central Valley refuges administered by three managing agencies: California Department of Fish and Wildlife, U.S. Fish and Wildlife Service, and Grassland Water District (a private landowner). Pursuant to CVPIA, Reclamation entered into long-term water supply contracts with the managing agencies to provide these supplies. ", "Authorized refuge water supply under CVPIA is divided into two categories: Level 2 and Level 4 supplies. Level 2 supplies (approximately 422,251 AF, except in critically dry years, when the allocation is reduced to 75%) are the historical average of water deliveries to the refuges prior to enactment of CVPIA. Reclamation is obligated to acquire and deliver this water under CVPIA, and costs are 100% reimbursable by CVP contractors through a fund established by the act, the Central Valley Project Restoration Fund (CVPRF; see previous section, \" Central Valley Project Improvement Act \"). Level 4 supplies (approximately 133,264 AF) are the additional increment of water beyond Level 2 supplies for optimal wetland habitat development. This water must be acquired by Reclamation through voluntary measures and is funded as a 75% federal cost (through the CVPRF) and 25% state cost. ", "In most cases, the Level 2 requirement is met; however, Level 4 supplies have not always been provided in full for a number of reasons, including a dearth of supplies due to costs in excess of available CVPRF funding and a lack of willing sellers. In recent years, costs for the Refuge Water Supply Program (i.e., the costs for both Level 2 and Level 4 water) have ranged from $11 million to $20 million."], "subsections": []}]}]}}
{"id": "R46221", "title": "Drug Pricing and Pharmaceutical Patenting Practices", "released_date": "2020-02-11T00:00:00", "summary": ["Intellectual property (IP) rights in pharmaceuticals are typically justified as necessary to allow manufacturers to recoup their substantial investments in research, development, and regulatory approval. IP law provides exclusive rights in a particular invention or product for a certain time period, potentially enabling the rights holder (e.g., a brand-name drug manufacturer) to charge higher-than-competitive prices. If rights holders are able to charge such prices, they have an incentive to lengthen the period of exclusive rights as much as possible. Indeed, some commentators allege that pharmaceutical manufacturers have engaged in patenting practices that unduly extend the period of exclusivity. These critics argue that these patenting practices are used to keep drug prices high, without any benefit for consumers or innovation. Criticisms center on four such practices:", "\" E vergreening \" : So-called patent \"evergreening\" is the practice of filing for new patents on secondary features of a particular product as earlier patents expire, thereby extending patent exclusivity past the original twenty-year term. Later-filed patents may delay or prevent entry by competitors, thereby allowing the brand-name drug manufacturer (the brand) to continue charging high prices. \" Product Hopping \" : Generic drug manufacturers allege that as patents on a particular product expire, brand manufacturers may attempt to introduce and switch the market to a new, similar product covered by a later-expiring patent\u00e2\u0080\u0094a process known as \"product hopping\" or \"product switching.\" This practice takes two forms: a \"hard switch,\" where the older product is removed from the market, and a \"soft switch,\" where the older product is kept on the market with the new product. In either case, the brand will focus its marketing on the new product in order to limit the market for any generic versions of the old product. \" Patent Thickets \" : Generic and biosimilar companies also allege that the brands create \"patent thickets\" by filing numerous patents on the same product. These thickets allegedly prevent generics from entering the market due to the risk of infringement and the high cost of patent litigation. \" Pay-for-D elay \" Settlements : Litigation often results when a generic or biosimilar manufacturer attempts to enter the market with a less expensive version of a branded pharmaceutical. Core issues usually include whether the brand's patents are valid, and whether the generic or biosimilar product infringes those patents. Rather than litigate these issues to judgment, however, the parties will often settle. Such settlements may involve the brand paying the generic or biosimilar to stay out of the market\u00e2\u0080\u0094referred to as \"reverse payment\" or \"pay-for-delay\" settlements. These settlements are allegedly anticompetitive because they allow the brand to continue to charge high prices without risking invalidation of its patent, thus unjustifiably benefiting the settling companies at the expense of the consumer.", "Drug manufacturers respond that their patenting practices protect new, innovative inventions, as Congress intended when it created the patent system. In their view, the terms for these practices are unfairly pejorative, or, at most, describe outlier behavior by a few companies. Defenders of these patenting practices reject their characterization as anticompetitive and emphasize that strong patent rights are needed to encourage innovation and life-saving research and development efforts.", "In recent years, some commentators and Members of Congress have proposed patent reforms that seek to limit or curtail these patenting practices, which some perceive as contributing to high prices for pharmaceutical products. Such proposals aim, for example, to reduce the impact of later-filed patents (e.g., TERM Act of 2019, H.R. 3199 , and REMEDY Act, S. 1209 / H.R. 3812 ); to encourage challenges to pharmaceutical patents (e.g., Second Look at Drugs Patents Act of 2019, S. 1617 ); to make product hopping an antitrust violation in certain circumstances (e.g., Affordable Prescriptions for Patients Act of 2019, S. 1416 ); to facilitate generic market entry (e.g., Orange Book Transparency Act of 2019, H.R. 1503 ); to increase transparency as to the patents that cover biological products (e.g., Purple Book Continuity Act of 2019, H.R. 1520 , and Biologic Patent Transparency Act, S. 659 ); and to reform pay-for-delay settlements (e.g., Preserve Access to Affordable Generics and Biosimilars Act, S. 64 / H.R. 2375 )."], "reports": {"section_title": "", "paragraphs": ["O ne of the basic rationales underlying the grant of patent rights is that such rights provide an incentive for inventors to innovate. Part of the bargain, however, is that those rights will expire after a defined time period. This principle appears in the U.S. Constitution, which empowers Congress \"[t]o promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.\" Congress has also enacted this principle into law: a patent on a new invention will generally expire twenty years after the corresponding patent application was filed.", "Intellectual property (IP) rights, including patent rights, are generally considered to play an essential role in encouraging the research and development (R&D) necessary to create new pharmaceutical products. Because these periods of exclusivity can allow the patent holder, such as a drug manufacturer, to charge higher-than-competitive prices, the patent holder has an incentive to prolong the period of exclusivity, such as by filing for additional patents to cover a product. In the pharmaceutical context, critics argue that some brand-name drug and biological product manufacturers (the brands) use patenting strategies to \"game[] the patent system\" to maximize profits and forestall competition from generic drug or biosimilar manufacturers (the generics). Others reject this charge, contending that these practices are a legitimate use of the patent system and are necessary to incentivize the billions of dollars in R&D that lead to new, life-saving drugs.", "This report discusses four pharmaceutical patenting practices commentators have criticized:", "\"Evergreening\" : Commentators allege that some pharmaceutical companies obtain new patents to cover a product as older patents expire to extend the period of exclusivity without significant benefits for consumers. \"Product Hopping\" : Commentators also contend that as patents on a product expire, pharmaceutical companies will attempt to switch the market to a slightly different product covered by a later-expiring patent, \"hopping\" from one product to the next. \"Patent Thickets\" : Commentators further argue that pharmaceutical companies have allegedly surrounded their products with many overlapping patents on a single product. Critics allege that these patent \"thickets\" may deter potential competitors even if the patents are weak or invalid, due to the time, expense, and uncertainty of challenging a significant number of patents. \"Pay-for-Delay\" Settlements : Brand and generic pharmaceutical companies will often settle litigation that results when a generic seeks to enter the market to compete with the patented branded product. Certain settlement agreements involve the transfer of value from the brand to the generic in return for the generic delaying its market entry. Such \"pay-for-delay\" or \"reverse payment\" settlements are characterized as anticompetitive because they may delay the entry of cheaper generic drugs into the market, thereby allowing the brand to maintain its exclusivity period on a patent that otherwise may have been invalidated, to the benefit of the settling companies but at the expense of consumers.", "These practices take place against a backdrop of a broader public policy debate over drug pricing. The Department of Health and Human Services (HHS) has found that national spending on pharmaceutical products has risen in recent years and predicted that these expenditures will continue to rise faster than overall healthcare spending. Commentators acknowledge that factors other than IP rights contribute to the price consumers pay for prescription drugs and biological products (biologics), including consumer demand, manufacturing costs, R&D costs, the terms and structure of private health insurance, and the involvement of government insurance programs such as Medicaid . Nevertheless, pharmaceutical products are often protected by IP rights . Some studies have shown that IP rights are among the most important factors driving high drug prices.", "As these pharmaceutical patenting practices may affect drug prices, they have attracted congressional interest. Several legislative proposals seek to curtail these patenting practices by reducing their effectiveness or outlawing them entirely. Proponents see such legislation as a potential way to lower pharmaceutical prices.", "This report explains these allegedly anticompetitive patenting practices and reviews a number of proposals to reform them. First, this report provides a brief legal background, including the basics of Food and Drug Administration (FDA) law, patent law, antitrust law, and the interaction between patent rights and FDA approval of pharmaceutical products. This report next overviews the patenting practices that some pharmaceutical companies have allegedly used to extend their effective periods of patent protection. Finally, this report details a number of proposals aimed at reforming or limiting such practices."], "subsections": [{"section_title": "Legal Background", "paragraphs": [], "subsections": [{"section_title": "FDA Regulation of Pharmaceutical Products", "paragraphs": ["FDA must approve new drugs and biologics prior to their marketing in interstate commerce. The FDA regulatory processes for drugs and biologics are similar, broadly speaking, but also distinct in certain aspects."], "subsections": [{"section_title": "New and Generic Drug Approval", "paragraphs": ["FDA approves new drugs through the new drug application (NDA) process. To obtain approval, the manufacturer must submit an NDA that demonstrates, among other things, that the drug is safe and effective for its intended use. The manufacturer must provide to FDA clinical data establishing the new drug's safety and effectiveness. The studies necessary to establish safety and efficacy are often expensive and lengthy; in 2015 to 2016, the median cost of a single clinical trial was $19 million, and in one instance was $347 million. The average cost to develop a new drug has been generally estimated to be between $1 billion to $3 billion, and the average time for FDA approval is over twelve years.", "To encourage competition and lower drug prices through generic drug entry, the Hatch-Waxman Act of 1984 (Hatch-Waxman) created a streamlined approval process for generic drugs. Rather than file an NDA, Hatch-Waxman allows generics to file an abbreviated new drug application (ANDA) that relies on FDA's prior approval of another drug with the same active ingredient (the \"reference listed drug\" or RLD) to establish that the generic drug is safe and effective. The generic may thus forgo conducting lengthy and expensive clinical trials by instead demonstrating that the generic drug is pharmaceutically equivalent and bioequivalent to the RLD."], "subsections": []}, {"section_title": "Biological Products and Biosimilar Licensure", "paragraphs": ["Like drugs, biologics are products intended for use in the prevention and treatment of human disease. Biologics are distinct from drugs, however, in that they are derived from biological material, such as a virus or blood component. Biological products \"are generally large, complex molecules\" that \"may be produced through biotechnology in a living system, such as a microorganism, plant cell, or animal cell.\"", "A biologic may only be marketed in the United States after its manufacturer submits and FDA approves a biologics license application (BLA). To approve a BLA, FDA must determine that the biologic is \"safe, pure, and potent,\" and that the production and distribution process \"meets standards designed to assure that the biological product continues to be safe, pure, and potent.\"", "Like Hatch-Waxman, the Biologics Price Competition and Innovation Act of 2009 (BPCIA) sets out an abbreviated approval process to encourage early market entry of biologics that are sufficiently similar to an already approved biological product (the \"reference product\"). A biological product is sufficiently similar to an approved biologic if it is \"biosimilar\" to (or interchangeable with) the reference product. To show biosimilarity, the manufacturer must submit, among other things, data demonstrating that its product is \"highly similar to the reference product notwithstanding minor differences in clinically inactive components\" with no \"clinically meaningful differences\" between the two products \"in terms of the safety, purity, and potency of the product.\"", "To balance the interest in competition\u00e2\u0080\u0094which the abbreviated approval pathways aim to encourage\u00e2\u0080\u0094with the countervailing interest in encouraging innovation, federal law also establishes periods of regulatory exclusivity that limit FDA's ability to approve generic drugs and biosimilars under certain circumstances. These exclusivities generally aim to encourage new drug or biologic applicants to undertake the expense of generating clinical data and other information needed to support an NDA or BLA. Other exclusivities are designed to encourage generic or biosimilar (follow-on product) manufacturers to submit abbreviated applications as soon as permissible."], "subsections": []}]}, {"section_title": "Patent Law", "paragraphs": ["Patents, which are available for a wide variety of technologies beyond pharmaceuticals, grant the patent holder the right to exclude others from making, using, selling, or importing a patented invention within the United States for a defined term of years. A person who makes, uses, sells, or imports a patented invention without permission from the patent holder during this period infringes the patent and is potentially liable for monetary damages and subject to other legal remedies.", "Patents are generally justified on the basis that temporary exclusive rights are necessary to provide incentives for inventors to create new and useful technological innovations. This rationale maintains that absent legal protections, competitors could freely copy inventions once marketed, denying the original creators the ability to recoup their investments in time and effort, and reducing the incentive to create in the first place. Patent incentives are said to be particularly necessary for products like pharmaceuticals, which are costly to develop, but easily copied once marketed.", "Because patents grant a temporary and limited \"monopoly\" to the patent holder, they may lead to increased prices for goods or services that the patent covers. The existence of a patent on a particular manufacturing process, for example, generally means that only the patent holder (and persons licensed by the patent holder) can use that patented process until the patent expires. In some circumstances, this legal exclusivity may allow the patent holder (or her licensees) to charge higher-than-competitive prices for goods made with the patented process, as a monopolist would, because the patent effectively shields the patentee from competition.", "Patents are obtained by formally filing a patent application with the U.S. Patent and Trademark Office (PTO), initiating a process called patent prosecution. A PTO patent examiner will evaluate the patent application to ensure it meets all the applicable legal requirements to merit the grant of a patent. In addition to requirements regarding the technical disclosure of the invention, the claimed invention must be (1)\u00c2\u00a0new, (2)\u00c2\u00a0useful, (3)\u00c2\u00a0nonobvious, and (4)\u00c2\u00a0directed to patentable subject matter.", "If the PTO issues (i.e., grants) a patent, its term typically expires twenty years from the patent application's filing date. This twenty-year term may be extended in certain circumstances. For example, the patent term may be adjusted to account for excessive delays in patent examination at the PTO. In the pharmaceutical context, patents claiming a drug product or medical device (or a method of using or manufacturing the same) may be extended for up to five years to account for delays in obtaining regulatory approval from FDA, if certain statutory conditions are met.", "Patent rights are generally independent and distinct from the regulatory exclusivities administered by FDA. Patent rights granted by the PTO are based primarily on the technological novelty of the claimed invention, while regulatory exclusivities granted by FDA result from the completion of FDA's regulatory process for particular pharmaceutical products meeting certain criteria.", "Patents are not self-enforcing. That is, to obtain relief from infringement, the patent holder generally must sue the alleged infringer in court. If such a lawsuit succeeds, the patent holder may obtain monetary damages and, in certain cases, an injunction, which is a court order that prohibits the defendant from infringing the patent in the future. Patents thus provide a negative right to prevent another person from practicing (i.e., making, using, selling, or importing) the claimed invention. Patents do not themselves, however, provide the patent holder any affirmative right to practice the invention. In the pharmaceutical context, this principle means that even if a drug or biologic manufacturer has a patent on a particular product (or inventions related to making or using that product), it still cannot market that product without FDA approval."], "subsections": []}, {"section_title": "Types of Pharmaceutical Patents", "paragraphs": ["If a person is the first to synthesize a particular chemical believed to be useful for the treatment of human disease, she may file for a patent on that chemical itself, and\u00e2\u0080\u0094presuming that the application meets all requirements for patentability\u00e2\u0080\u0094the PTO will grant the patent. Patents on a pharmaceutical product's active ingredient (sometimes called \"primary patents\" ) may be of particular value to the manufacturer because these patents are usually difficult to \"invent around\" (i.e., develop a competing product that does not infringe the patent). However, primary patents are hardly the only patents that cover pharmaceuticals, and are not necessarily the most important to manufacturers as a practical matter. Indeed, for biologics, if the active ingredient is naturally occurring, it may not be legally possible to patent an unaltered form of the biologic itself because it constitutes patent-ineligible subject matter.", "Pharmaceutical patents may cover many different features of a drug or biologic beyond a claim on the active ingredient itself. Such \"secondary patents\" may claim, among other things", "1. formulations of the drug or biologic (e.g., an administrable form or dosage); 2. methods of using the pharmaceutical (e.g., an indication or use for treating a particular disease); 3. methods of manufacturing the pharmaceutical product or manufacturing technologies used to make the pharmaceutical; 4. methods of administrating the pharmaceutical or technologies used to administer the pharmaceutical; or 5. other chemicals related to the active ingredient, such as crystalline forms, polymorphs, intermediaries, salts, and metabolites.", "Like other inventions, for an inventor to receive a patent on any of these innovations, it must be new, useful, nonobvious, and sufficiently described in the patent application.", "In addition, if a person invents an improvement on any of these technologies\u00e2\u0080\u0094for example, a new formulation of the drug, a new use, a different manufacturing process, etc.\u00e2\u0080\u0094then the inventor can file for a patent on that improvement, which receives its own patent term. Although the term \"improvement patent\" is traditionally used, it is a somewhat misleading phrase, as the new version need not be \"better\" to be patentable. Rather, the improvement must simply be new and nonobvious \u00e2\u0080\u0094that is, \"more than the predictable use of prior art elements according to their established functions.\" Any person wishing to practice the improved form of the invention will need permission from both the holder of the patent on the original technology and the holder of the improvement patent (who need not be the same entity), if neither patent has yet expired. If the original patent has expired but the improvement patent has not, patent law does not impede any person from making and using the original, unimproved version."], "subsections": []}, {"section_title": "Patent Dispute Procedures for Generic Drugs and Biosimilars", "paragraphs": ["Federal law contains specialized procedures for certain pharmaceutical patent disputes, with the general goal of encouraging early resolution of disputes relating to generic and biosimilar market entry. The act of applying with FDA for approval of a generic drug or biosimilar triggers these procedures. Under certain circumstances, patent law treats the filing of such FDA applications as an \"artificial\" act of patent infringement, allowing for the resolution of patent disputes before the generic or biosimilar product is marketed to the public. These procedures can affect whether and when a generic drug or biosimilar can be marketed and, as a result, determine when a brand-name product becomes subject to direct competition. The procedures differ depending on whether the pharmaceutical is regulated as a drug or as a biologic.", "The Hatch-Waxman Act governs the approval process for small-molecule drugs. Under Hatch-Waxman, a drug manufacturer must list in its NDA any patent claiming the drug that is the subject of the application or a method of using that drug. FDA includes these patents in its list of approved products known as the Orange Book . When a generic manufacturer files an ANDA, it must provide a certification for each patent listed in the Orange Book with respect to the referenced drug. In particular, with some exceptions, the generic applicant must provide one of four certifications under the following paragraphs: (I)\u00c2\u00a0there is no patent information listed; (II)\u00c2\u00a0the patent has expired; (III)\u00c2\u00a0the date the patent will expire; or (IV)\u00c2\u00a0the patent is invalid and/or not infringed by the generic applicant.", "Paragraph (I) and (II) certifications do not affect FDA's ability to approve the ANDA. If the generic applicant makes a Paragraph (III) certification, however, FDA may not approve the ANDA until the patent at issue has expired. A Paragraph (IV) certification triggers Hatch-Waxman's specialized patent dispute procedures, often resulting in litigation. First, the generic applicant must give notice of the ANDA and the Paragraph (IV) certification to the patentee and NDA holder. The patent holder then has forty-five days to sue the generic applicant. If she does file suit, FDA generally cannot approve the ANDA for thirty months while the parties litigate the patent dispute\u00e2\u0080\u0094a period often referred to as the \"thirty-month stay.\" As an incentive for a generic to enter the market, Hatch-Waxman also provides 180 days of marketing exclusivity to the first generic to make a Paragraph (IV) certification.", "A different patent dispute resolution scheme, governed by the BPCIA, applies to biologics and biosimilars. Under the BPCIA, regulatory approval of biologics is not directly contingent on resolution of patent disputes. Moreover, in contrast to the Hatch-Waxman approach, patent information need not be listed as part of the original BLA. As a result, no patent information is currently listed in the Purple Book , FDA's lis t of approved biological products (i.e., the biologics analogue of the Orange Book ). Accordingly, patent disputes involving biosimilars may be resolved through the BPCIA's \"patent dance,\" \"a carefully calibrated scheme for preparing to adjudicate, and then adjudicating, claims of infringement.\" The first step in the patent dance process is triggered when, not later than twenty days after FDA accepts a biosimilar application, the applicant provides the application to the reference product sponsor, along with information on how the biosimilar is manufactured. \"These disclosures enable the [reference product] sponsor to evaluate the biosimilar for possible infringement of patents it holds on the reference product (i.e., the corresponding biologic).\" The biosimilar applicant and reference product sponsor then engage in a series of information exchanges regarding the patents that each party believes are relevant, as well as the parties' positions as to the validity and infringement of the patents. Depending on the extent of their participation in this information exchange, each party may have the opportunity to litigate the patents at the conclusion of the patent dance, or later on, when the biosimilar is marketed. Injunctive relief to compel the biosimilar applicant to engage in the patent dance is unavailable under federal law."], "subsections": []}, {"section_title": "Antitrust Law", "paragraphs": ["Some of the patenting practices described below have been challenged under the federal antitrust laws; thus, background on this area is helpful in understanding those challenges. The Supreme Court has stated that the \"primary purpose of the antitrust laws\" is to protect and promote competition \"from which lower prices can later result.\" To this end, antitrust law generally aims to \"prohibit .\u00c2\u00a0.\u00c2\u00a0. anticompetitive conduct and mergers that enable firms to exercise market power.\" The Sherman Antitrust Act of 1890 (the Sherman Act) \"contains two main substantive provisions that prohibit agreements in restraint of trade and monopolization, respectively.\" Certain pharmaceutical patenting practices have been challenged under each of these two sections."], "subsections": [{"section_title": "Section 1 of the Sherman Act", "paragraphs": ["Section 1 of the Sherman Act bars \"[e]very contract, combination .\u00c2\u00a0.\u00c2\u00a0.\u00c2\u00a0, or conspiracy, in restraint of trade or commerce.\" Although that language appears to sweep broadly, the Supreme Court has interpreted Section 1 to only bar unreasonable restraints on trade. In evaluating the reasonableness of contractual restraints on trade under Section 1, courts have found that \"some agreements and practices are invalid per se, while others are illegal only as applied to particular situations.\" Unless the agreement falls within a per se illegal category, courts generally apply a \"rule-of-reason\" analysis to determine whether a restraint on trade is reasonable.", "Per Se Illegal. Certain agreements are considered per se illegal \"without regard to a consideration of their reasonableness\" \"because the probability that these practices are anticompetitive is so high.\" Only restraints that \"have manifestly anticompetitive effects\" and lack \"any redeeming virtue\" are held to be per se illegal. Examples of per se illegal restraints include agreements for horizontal price fixing, market allocations, and output limitations. To prevail on a claim of a per se illegal agreement, the plaintiff need only demonstrate that the agreement in question falls in one of the per se categories; in other words, \"liability attaches without need for proof of power, intent or impact.\"", "The Rule - of - Reason Analysis. Challenged restraints that are not in the per se illegal category are generally analyzed under the rule-of-reason approach. While the Supreme Court has not developed a canonical framework to guide this totality-of-the-circumstances reasonableness inquiry, most courts take a similar approach in resolving rule-of-reason cases. Under this burden-shifting approach, a Section 1 plaintiff has the initial burden of demonstrating that a challenged restraint has anticompetitive effects in a \"properly defined product\" and geographic market\u00e2\u0080\u0094that is, that the restraint causes higher prices, reduced output, or diminished quality in the relevant market. If the plaintiff succeeds in making this showing, the burden then shifts to the defendant to rebut the plaintiff's evidence with a procompetitive justification for the challenged practice. For example, if a Section 1 plaintiff alleges that the challenged restraint produces higher prices, the defendant might attempt to contest that allegation or show that any price increases are offset by improvements in its products or services. If the defendant cannot produce such a justification, the plaintiff may prevail. However, if the defendant adequately demonstrates a procompetitive justification, the burden then shifts back to the plaintiff to show either (1) that the restraint's anticompetitive effects outweigh its procompetitive effects or (2) that the restraint's procompetitive effects could be achieved in a manner that is less restrictive of competition.", "Quick Look Analysis. In certain instances, courts may use \"something of a sliding scale in appraising reasonableness,\" applying a more abbreviated rule-of-reason analysis to an agreement, referred to as a \"quick look.\" In identifying this intermediate standard of review, the Supreme Court explained that, because \"[t]here is always something of a sliding scale in appraising reasonableness,\" the \"quality of proof required\" to establish a Section 1 violation \"should vary with the circumstances.\" As a result, the Court has concluded that in certain cases\u00e2\u0080\u0094specifically, those in which \"no elaborate industry analysis is required to demonstrate the anticompetitive character\" of a challenged agreement\u00e2\u0080\u0094plaintiffs can establish a prima facie case that an agreement is anticompetitive without presenting the sort of market power evidence traditionally required at the first step of the rule-of-reason analysis.", "While there is no universally accepted \"quick look\" framework, several courts of appeals have endorsed a modified burden-shifting approach in \"quick look\" cases. Under this approach, if a Section 1 plaintiff can establish that a challenged restraint is obviously likely to harm consumers, the restraint is deemed \"inherently suspect,\" and therefore presumptively anticompetitive. A defendant can rebut this presumption by presenting \"plausible reasons\" why the challenged practice \"may not be expected to have adverse consequences in the context of the particular market in question,\" or why the practice is \"likely to have beneficial effects for consumers.\" If the defendant fails to offer such reasons, the plaintiff prevails. However, if the defendant offers such an explanation, the plaintiff must address the justification by either\u00c2\u00a0explaining \"why it can confidently conclude, without adducing evidence, that the restraint very likely harmed consumers\" or providing \"sufficient evidence to show that anticompetitive effects are in fact likely.\" If the plaintiff succeeds in making either showing, \"the evidentiary burden shifts to the defendant to show the restraint in fact does not harm consumers or has 'procompetitive virtues' that outweigh its burden upon consumers.\" However, if the plaintiff fails to rebut the defendant's initial justification, its challenge is assessed under a full rule-of-reason framework."], "subsections": []}, {"section_title": "Section 2 of the Sherman Act", "paragraphs": ["Section 2 of the Sherman Act makes it unlawful to monopolize, attempt to monopolize, or conspire to monopolize \"any part of the trade or commerce among the several States, or with foreign nations.\" Despite the facially broad language of Section 2, the Supreme Court has clarified that monopolization is only illegal if \"it is accompanied by an element of anticompetitive conduct .\" It is not illegal to possess monopoly power that is the result of, for example, \"a superior product, business acumen, or historic accident.\" Thus, establishing a Section 2 violation requires proving that the defendant \"possessed monopoly power in the relevant market\" and\u00c2\u00a0acquired or maintained that power using anticompetitive conduct. Courts generally analyze whether conduct is anticompetitive (i.e., step two of the analysis) using a rule-of-reason approach."], "subsections": []}, {"section_title": "Enforcement", "paragraphs": ["Federal antitrust laws are primarily enforced through three mechanisms: (1)\u00c2\u00a0enforcement actions brought by the U.S. Department of Justice's Antitrust Division, (2)\u00c2\u00a0enforcement actions brought by the Federal Trade Commission (FTC), or (3)\u00c2\u00a0lawsuits brought by a private party or by a state attorney general on behalf of a private party. In particular, Section 5 of the FTC Act gives the FTC authority to combat \"[u]nfair methods of competition\" generally, which includes violations of the Sherman Act.", "FTC enforcement typically begins with a confidential investigation into the relevant conduct. A company may resolve the investigation by entering into a consent order agreeing to stop or to address the potentially anticompetitive practices. If the FTC and the company do not reach a consent order, the FTC may begin an administrative proceeding or may seek relief in the federal courts. The administrative proceeding is similar to a court proceeding, but is overseen by an administrative law judge (ALJ). If the ALJ finds that there has been a violation, the FTC may issue a cease-and-desist order. The ALJ's decision is appealable to the full FTC, then to a U.S. Court of Appeals and, finally, to the Supreme Court."], "subsections": []}]}]}, {"section_title": "Pharmaceutical Patenting Practices", "paragraphs": ["Patent holders generally seek to use their rights to the fullest extent permitted by law, regardless of their patent's technological field. From the patent holders' perspective, the practices described below are appropriate uses of the legal rights granted by their patents, which were obtained only after a rigorous examination process that demonstrated compliance with the patentability requirements. Critics, however, view these practices as harmful strategies that exploit the patent system in ways that Congress did not intend."], "subsections": [{"section_title": "\"Evergreening\"", "paragraphs": [], "subsections": [{"section_title": "Definition", "paragraphs": ["Evergreening, also known as patent \"layering\" or \"life-cycle management,\" is a practice by which drug innovators allegedly seek \"to prolong their effective periods of patent protection [through] strategies that add new patents to their quivers as old ones expire.\" As discussed above, because different aspects of pharmaceutical products (and improvements thereon) are patentable, dozens of different patents can protect a single pharmaceutical product. The average number of patents per drug has been steadily rising since Hatch-Waxman was enacted in 1984. On average, there are 2.7 patents listed for each product listed in the Orange Book . Particularly profitable products, however, are usually protected by many more patents. One recent study of the top twelve drugs by gross U.S. revenue found that pharmaceutical manufacturers obtained an average of seventy-one patents on each of these drugs. For example, this study found that Celgene, the maker of the top-selling plasma cell myeloma drug Revlimid, filed 106 U.S. patent applications covering that product, resulting in ninety-six issued patents. The study also found that the price of Revlimid increased by 79% since 2012."], "subsections": []}, {"section_title": "Debate", "paragraphs": ["Because later-filed patents often claim aspects of the drug other than its active ingredient, these patents are sometimes called \"secondary\" patents. Critics of evergreening maintain that, by obtaining secondary patents on improvements or ancillary aspects of a pharmaceutical product, manufacturers effectively extend patent protection beyond the term set by Congress. In doing so, according to these critics, secondary patents unfairly shield a pharmaceutical product from generic or biosimilar competition, thereby resulting in higher drug prices. In the view of evergreening critics, moreover, many of these secondary patents are of questionable validity. While secondary patents tend to be challenged more frequently and more successfully than patents covering a pharmaceutical's active ingredient, the combination of secondary patents and a strong primary patent creates a barrier to generic entry because a generic manufacturer may delay or simply decline entry when faced with the prospect of defeating both patents. According to Bloomberg Law , in 2017 the cost of litigating a Hatch-Waxman lawsuit was $1.8 million in cases involving over $25 million in risk. Commentators have suggested that these costs can be compounded when there are several patents at issue, even if those patents are comparably weaker. Thus, even when a product is protected by comparably weak patents, critics of evergreening argue that the costs of invalidating those patents strengthen the branded products's position in the market and can lengthen its effective period of exclusivity.", "Defenders of evergreening respond that the term is \"inherently pejorative\" because it creates the impression that pharmaceutical companies are exploiting the patent system. Defenders contend that there is nothing inherently suspect about secondary patents, which must meet the same requirements for patentability and pass through the same examination procedures as any other patent. Indeed, those requirements bar a secondary patent on an obvious variation of the primary patent or on another product or invention already available to the public. \"[I]t is often the case,\" defenders contend, \"that the value of a follow-on patent is comparable to, or even might exceed, that of a primary patent.\" One example arguably supporting this view is the drug Evista (raloxifine). Evista was \"initially studied as a potential treatment for breast cancer\" but, in 1997, FDA approved the drug for the prevention of osteoporosis. At that time, there were only a few years left on Evista's initial patent, which was filed in 1983. If the brand could not patent the new use (i.e., for prevention of osteoporosis), one commentator has argued that insufficient incentives would have existed to make the investment in R&D necessary to bring the drug to market.", "Defenders also argue that the ability to receive a patent on a later-developed formulation provides a significant incentive to address problems with the original formulation. For example, the original formulation of Lumigan, which is used to treat glaucoma, resulted, at times, in sufficiently severe red eye that patients would discontinue its use. Researchers subsequently developed an improved formulation with significantly decreased risk of this side effect. Defenders of secondary patents contend that without the possibility of patent protection, there would have been little incentive to perform this sort of research due to the significant costs involved. ", "Secondary patents are also defended on the grounds of being necessary to recoup development costs. A recent study found that even though the patent term is generally twenty years, delays in PTO and FDA approval can decrease the nominal Orange Book patent term to 15.9 years, and generic competition can result in an effective market exclusivity of only 12.2 years. This effective market exclusivity is less than the sixteen years that one commentator suggests is necessary to recoup the brand's fixed costs for research, development, and clinical testing.", "Moreover, as secondary patents tend to be improvements to primary patents, brands argue that they are necessarily narrower than those primary patents. Thus, brands argue that when the primary patent expires, any other company\u00e2\u0080\u0094including a generic\u00e2\u0080\u0094may enter the market and produce the invention covered by that primary patent, assuming that the generic can design around any unexpired secondary patents. Doctors and patients can then decide whether the benefit conferred by a product covered by a secondary patent is worth the increased cost over the generic version of the product formerly covered by the primary patent.", "Finally, defenders also note that recent congressional action has decreased the cost of challenging patents, decreasing the impact of these later-filed \"evergreening\" patents. In 2011, Congress enacted the America Invents Act (AIA), which created a number of proceedings for reviewing a patent's validity after it is granted. One such proceeding is inter partes review (IPR), a PTO procedure that was implemented to \"improv[e] patent quality and provide a more efficient system for challenging patents that should not have issued; and reducing unwarranted litigation costs.\" Generally, any person who is not a patent's owner may file a petition for IPR beginning nine months after the patent issues. The PTO then decides whether to initiate review of the patent. If review is initiated, then the patent challenger must prove that the patent is invalid by a preponderance of the evidence \u00e2\u0080\u0094a lower requirement than the clear-and-convincing-evidence standard used when challenging the patent in court. The statute requires that the PTO's final decision be issued not more than one year after the decision to institute review. The median cost for litigating an IPR to that final decision is $324,000. Thus, IPR provides a relatively fast and relatively inexpensive method to challenge issued patents, particularly when compared to litigating in the courts."], "subsections": []}, {"section_title": "Current Law", "paragraphs": ["No statute currently specifically forbids evergreening. Instead, substantive patent law, particularly the law of obviousness, provides limits on whether the PTO may grant later-filed patents. Specifically, a patent may not be granted if \"the differences between the claimed invention and the prior art are such that the claimed invention as a whole would have been obvious\" before the patent application was filed. The Supreme Court has not articulated a specific test for whether an invention would have been obvious, instead preferring a flexible approach that takes the facts and circumstances of the state of the art into account. The Court has identified, however, some situations in which an invention likely would have been obvious. For example, if the invention involves \"the simple substitution of one known element for another or the mere application of a known technique to a piece of prior art ready for the improvement,\" the invention likely would have been obvious. At bottom, if the invention is \"a predictable variation\" of what came before, then the law of obviousness \"likely bars its patentability.\"", "Other doctrines also affect the viability of later-filed patents. Because the patent statute limits a person to \" a patent\" for a new invention, a single patentee may not obtain a later patent that covers the exact same invention as an earlier patent. This doctrine is referred to as \"statutory double patenting\" because it derives from the patent statute and prevents patenting of the same invention twice by the same inventor. The courts have extended double patenting to bar an inventor from patenting obvious variations of his earlier patents as well. This second form of double patenting, referred to as \"obviousness-type double patenting,\" prohibits a later patent that is not \"patentability distinct\" from an earlier commonly owned patent. In other words, the doctrine bars a patent owner from receiving a patent on an obvious variation of one of its earlier-filed patents. A patentee may overcome the obviousness-type double patenting issue, however, by using a \"terminal disclaimer\"\u00e2\u0080\u0094that is, by disclaiming any portion of the later patent's term after the expiration of the earlier patent."], "subsections": []}]}, {"section_title": "\"Product Hopping\"", "paragraphs": [], "subsections": [{"section_title": "Definition", "paragraphs": ["Critics of current pharmaceutical patent practices have observed that patent evergreening can be used in conjunction with a practice they call \"product hopping.\" Product hopping is the process by which a brand, as the patents on an older branded drug are expiring, uses its current dominant market position to switch doctors, pharmacists, and consumers to a newer version of the same (or similar) drug with later-expiring patents. In other words, the brand forces a \"hop\" from one product to another. The new version of the product may be, for example, an extended release form or new dosage (e.g., moving from twice-a-day to once-a-day), a different route of administration (e.g., moving from capsules to tablets, or tablets to film strips), or a chemical change (e.g., moving to a different enantiomer). The switch to the new version may be accompanied by a marketing campaign or discounts and rebates to encourage doctors, insurers, and patients to switch to the new version; in some cases, production of the older version may even be discontinued.", "Product hopping tends to take one of two forms: a \"hard switch,\" where the brand removes the original product from the market, and a \"soft switch,\" where the brand leaves the original product on the market. The case of Abbott Laboratories v. Teva Pharmaceuticals USA, Inc. provides an example of a hard switch. That case involved Abbott's changes to its drug TriCor, which was used to treat cholesterol and triglycerides. Abbott allegedly lowered the strength of the drug, switched it from a capsule to a tablet, stopped selling capsules, bought back supplies of capsules from pharmacies, and marked capsules as \"obsolete\" in the national drug database. Once generics developed equivalents for the reformulation, Abbott allegedly again lowered the strength of the drug, stopped selling the original tablets, and again changed the code for the old tablets to \"obsolete.\"", "A soft switch allegedly occurred in Schneiderman v. Actavis PLC . There, Actavis produced Namenda IR (IR), a twice-daily drug designed to treat Alzheimer's disease. As the patents on IR neared expiration and generics prepared to enter the market, Actavis introduced a once-daily version of the drug, Namenda XR (XR), and allegedly attempted to induce doctors and patients to switch from IR to XR. Although the generic versions would have been substitutable for IR, the differences is dosing (10 mg in IR and 28 mg in XR) meant that the generic versions would not be substitutable for the new XR product. Initially, both IR and XR were on the market together. During that time, Actavis allegedly stopped marketing IR and \"spent substantial sums of money promoting XR to doctors, caregivers, patients, and pharmacists.\" Actavis also sold XR at a discount, making it much less expensive than IR, and issued rebates to ensure that patients did not have to pay higher copayments for XR than IR. When it appeared that the soft switch would only convert 30% of IR users to XR, Actavis allegedly implemented a hard switch by announcing that it would discontinue IR and attempting to stop Medicare health plans from covering IR."], "subsections": []}, {"section_title": "Debate", "paragraphs": ["Critics of product hopping deride it as an anticompetitive practice that inhibits the entry of generic and biosimilar competitors, allowing the brand to maintain its dominant market position (and higher prices) without substantial benefits for consumers. In particular, critics contend that by shifting product demand from the previous product to a new product, the market for a generic form of the previous version dissipates by the time the generic can enter the market.", "All fifty states have enacted drug product selection (DPS) laws, which aim to lower consumer prices by allowing, and sometimes even requiring, pharmacists to fill a prescription written for a brand-name drug with a generic version of that drug. Typically, however, pharmacists may only substitute a generic drug for a branded drug if the generic version is \"AB-rated\" by FDA. To receive an AB rating, the generic must be therapeutically equivalent to the branded drug, which means it must have the same active ingredient, form, dosage, strength, and safety and efficacy profile. The generic must also be bioequivalent\u00e2\u0080\u0094in other words, the rate and extent of absorption of the generic cannot significantly differ from that of the brand drug. Thus, if the brand's new version of a drug, for example, changes the form of the drug (e.g., capsule to tablet) or the dosage of the active ingredient (e.g., 10 mg to 12 mg) from the older version, the generic product may not receive the AB rating required to be substitutable by pharmacists. Even if the generic is eventually able to obtain an AB rating to allow substitution, that process may take years to achieve. Thus, the \"hop\" to a new product can prevent automatic substitution with a generic product, thereby giving the brand an additional period during which it is substantially unaffected by generic competition.", "Defenders of product hopping respond that manufacturers have legitimate reasons to create new patented products and encourage doctors to prescribe the new product instead of an old product for which there is generic competition. One commentator has argued that patent law encourages brands to create new drugs or switch to new versions of drugs because they receive an exclusive period during which they may charge higher prices. That period is critical, it is argued, to recoup the estimated $2.6 billion average cost of bringing a new drug to market\u00e2\u0080\u0094compared to the $1 million to $2 million to bring a new generic product to market. Once a branded drug's patents expire, however, the brand will lose 80% to 90% of its sales to generic drugs. Thus, according to one commentator, brands have little incentive to keep marketing a product that is subject to generic competition; doing so would arguably transfer approximately 80% of the sales to their generic competitors. That is, even if the brand succeeds in convincing a doctor to prescribe the old product, DPS laws would allow a pharmacist to substitute a generic product instead. Given these economic realities, defenders argue that the brand would be effectively paying to market its competitors' products. Accordingly, it is argued that product hopping aims at maximizing profits for the brand (which can be used for additional R&D) and preventing free-riding by generics, not at preventing competition.", "Commentators also respond that generic manufacturers could reduce the impact of product hopping by marketing their own products. In that view, generic manufacturers choose to rely on DPS laws for sales. Instead, one commentator argues, the generic companies could promote their own products in the same way that brand manufacturers do. In any event, patients and doctors can arguably choose to use the generic version of the old product if the brand's new product is not worth the cost."], "subsections": []}, {"section_title": "Current Law", "paragraphs": ["There is no existing statute specifically prohibiting product hopping. Those practices, however, have been challenged under the antitrust laws as anticompetitive attempts to maintain a monopoly in violation of Section 2 of the Sherman Act. Schneiderman provides one example. In that case, the U.S. Court of Appeals for the Second Circuit (Second Circuit) held that the soft switch, described above, was not sufficiently anticompetitive to violate Section 2. Specifically, the court determined that as long as Actavis continued to sell both XR and IR, with generic IR drugs on the market, \"patients and doctors could evaluate the products and their generics on the merits in furtherance of competitive objectives.\" The Second Circuit further held that once Actavis implemented a hard switch by withdrawing IR, it \"crosse[d] the line from persuasion to coercion\" and therefore violated Section 2. The court next determined that Actavis's purported procompetitive justifications for the hard switch were pretextual because the hard switch was an attempt to impede generic competition and, in any event, the procompetitive benefits were outweighed by anticompetitive harms. Accordingly, the court affirmed the district court's grant of an injunction requiring Actavis to make IR \"available on the same terms and conditions\" as before the hard switch."], "subsections": []}]}, {"section_title": "\"Patent Thickets\"", "paragraphs": [], "subsections": [{"section_title": "Definition", "paragraphs": ["Critics have argued that pharmaceutical manufacturers develop \"patent thickets\" to protect their products. This term is used in two slightly different ways, both relating to products covered by a high number of patents. First, a patent thicket may describe the situation in which multiple parties have overlapping patent rights on one product, such that a \"potential manufacturer must negotiate licenses with each patent owner in order to bring a product to market without infringing.\" Patent thickets, in this sense, raise concerns about inefficient exploitation of a technology because the multiplicity of patent owners increases transaction costs and creates coordination challenges. Second, the term may be used in a different sense to describe an incumbent manufacturer's practice of amassing a large number of patents relating to a single product, with the intent of intimidating competitors from entering the market, or to make it too costly and risky to do so."], "subsections": []}, {"section_title": "Debate", "paragraphs": ["Commentators have observed that it is generally not unusual for a single product to be protected by multiple patents. For example, it has been estimated that a single smartphone may be protected by as many as 250,000 patents. Even the individual technologies in the phone may be covered by many patents. For example, Bluetooth 3.0 incorporates \"contributions of more than 30,000 patent holders,\" and more than 800 patent holders contributed to the micro SD removable memory storage card. Unlike pharmaceuticals, however, the patents on products like semiconductors or smartphones are typically not all owned by the same entity, and thus are examples of the first type of patent thicket (i.e., one in which multiple parties have overlapping patent rights on one product). Commentators contend that patent thickets on such technologies generally do not confer the same market power as a patent portfolio on a new pharmaceutical owned by a single drug manufacturer.", "In the pharmaceutical context, concerns about patent thickets have mainly been raised with regard to the second type of patent thicket and, in particular, with regard to biologics. This may be, at least in part, because those pharmaceuticals are derived from living cells or other biological material. Naturally occurring source material is generally not eligible for patenting under Section 101 of the Patent Act, but methods for transforming that source material into a biological product generally are patentable. Manufacturing a pharmaceutical using living cells is often complicated, offering more opportunities for patenting relative to chemically synthesizing small-molecule drugs. As changes are implemented to either the biologic product or its manufacturing process throughout the original patent term, those changes can be claimed as inventions and used to extend the effective patent protection. For example, a company producing a biologic could attempt to patent the use of a different medium for cell growth or an adjustment to the dosing.", "The patent portfolio that covers Humira, pharmaceutical manufacturer AbbVie's flagship biologic, has been characterized as an example of the second type of patent thicket. Critics contend that this patent portfolio has helped keep Humira competitors off the market for an extended time period. One study found that AbbVie filed 247 patent applications on various aspects of Humira, resulting in 132 issued patents. The Biosimiliars Council alleges that AbbVie filed seventy-five patents relating to Humira in the three years before biosimilar competition was set to begin, extending nominal patent protection through 2034. The council alleges that it will cost \"roughly $3 million per patent\" to challenge the Humira patents.", "In August 2017, just before biosimilar manufacturer Boehringer received FDA approval to launch its Humira biosimilar in the United States, AbbVie filed a lawsuit alleging that the biosimilar would infringe 1,600 claims across 74 of AbbVie's patents. Boehringer settled the lawsuit earlier this year, citing \"the inherent unpredictability of litigation, [and] the substantial costs of what would have been a long and complicated legal process and ongoing distraction to our business.\" AbbVie has similarly settled litigation with the other potential manufacturers of Humira biosimilars. Although the primary patent on Humira expired in 2016, no biosimilars will enter the U.S. market until January 31, 2023, at the earliest. The alleged patent thicket surrounding Humira has been the subject of litigation on other bases, including under the antitrust laws. In March 2019, a welfare fund filed an antitrust suit against AbbVie alleging that its patent thicket approach unreasonably restrained competition in violation of Sections 1 and 2 of the Sherman Act, and seeking billions of dollars in damages when AbbVie doubled the cost of Humira. Also in March, the mayor and city council of Baltimore, MD, brought a class action lawsuit alleging that, absent AbbVie's conduct, biosimilars of Humira could have been available in the United States as early as 2016. Other similar lawsuits have been filed, although none is aimed at invalidating AbbVie's patents. The lawsuits currently remain pending.", "Critics have voiced concerns that other drug manufacturers may attempt to amass similar patent portfolios on their biologics as those covering Humira, thereby postponing biosimilar competition from entering the market. Johnson & Johnson, for example, protects its Remicade product with more than one hundred patents. Biogen/Genentech similarly protects its cancer treatment Rituxin with what some could characterize as a patent thicket. Rituxin was the subject of 204 patent applications and ninety-four issued patents, potentially resulting in forty-seven years blocking competition. Indeed, the success of the patent thicketing strategy has led to speculation that other companies will follow suit.", "Defenders of this patenting practice raise similar arguments as those in support of evergreening: that the patents on these products represent innovation that the patent laws were designed to incentivize, and that each patent has passed through the rigorous examination process and been determined to be novel and nonobvious. For example, AbbVie has stated that Humira \"represents true innovation in the field of biologics,\" warranting protection through various patents. Other experts note that \"[t]here's nothing unusual about the multilayered way AbbVie has sought to patent and protect Humira,\" and that patent thickets simply \"tak[e] advantage of existing law.\" Accordingly, companies with patents relating to numerous aspects of their products likely view each patent as protecting significant patentable innovations of the sort that the patent system is designed to incentivize.", "Indeed, experts note that creating a biologic like Humira \"isn't easy work.\" Scientists must genetically engineer a cell line to secrete large amounts of the biologic, purify the results, and modify dosages for different diseases, among other \"incremental tweaks.\" Each of those steps in the process brings challenges that may require innovative solutions, and those solutions may be the subject of patents. As AbbVie's CEO noted, the Humira \"patent portfolio evolved as [AbbVie] discovered and learned new things about Humira.\" Thus, defenders view this practice as a legitimate method of protecting the different aspects of their innovations."], "subsections": []}, {"section_title": "Current Law", "paragraphs": ["No statute specifically forbids patent thickets. As with evergreening, substantive patent law (including the nonobviousness requirement and prohibition on double patenting) provides some of the primary restrictions on patent thickets. In other words, the ability to receive secondary patents is limited by the rule that new patents cannot be an obvious variation on the prior art or on the patentee's own prior patents. On the other hand, obviousness-type double patenting restrictions may have less impact on patent thickets than on evergreening due to the availability of terminal disclaimers. As explained supra , a patentee may overcome obviousness-type double patenting issues by disclaiming any portion of the later patent's term after the expiration of the earlier patent. Because the alleged goal of evergreening is to extend the exclusivity period for as long as possible, there is little incentive to file a terminal disclaimer. By contrast, the purported goal of a patent thicket is to accumulate a large number of patents protecting a single product, a goal that would be unaffected by terminal disclaimers. Thus, restrictions on obviousness-type double patenting have a lesser impact on preventing patent thickets, as compared to preventing evergreening."], "subsections": []}]}, {"section_title": "\"Pay-for-Delay\" Settlements", "paragraphs": [], "subsections": [{"section_title": "Definition", "paragraphs": ["As described above, patent litigation can result when generic drug and biosimilar manufacturers seek to market a drug or biologic before patent rights on the branded version expire by challenging the validity of the brand-name companies' patents and/or their applicability to the follow-on product. Some brand-name companies resolve or settle such litigation through settlement agreements with the generic manufacturer whereby the brand-name company pays the generic manufacturer a sum of money (or other compensation) in return for the generic manufacturer agreeing to delay market entry. This practice, referred to as \"reverse payment settlements\" or \"pay-for-delay settlements,\" allows the brand-name company to (1)\u00c2\u00a0avoid the risk that its patents will be invalidated, (2)\u00c2\u00a0delay the market entry of generic competition, and (3)\u00c2\u00a0effectively extend its exclusive right to market the listed drug. Because these agreements terminate the litigation, the questions of patent validity and infringement remain open.", "Pay-for-delay settlements are not limited to cash payments from the brand to the generic. The U.S. Court of Appeals for the Third Circuit (Third Circuit) recently addressed such a settlement involving Wyeth, Inc.'s branded depression treatment drug, Effexor XR. In that case, the plaintiffs alleged that Wyeth and generic manufacturer Teva Pharmaceutical Industries Ltd. (Teva) reached an anticompetitive pay-for-delay settlement. This agreement is an example of the varied facts that result in such settlements.", "Teva filed an ANDA for a generic version of Effexor XR, and Wyeth sued for patent infringement. According to the plaintiffs (a class of direct purchasers of Effexor XR), an unfavorable preliminary ruling caused Wyeth to fear that it would lose the litigation, allowing generic manufacturers to enter the Effexor XR market. Accordingly, Wyeth and Teva entered into a settlement in which", "the parties agreed to vacate the unfavorable preliminary ruling; Teva agreed not to enter the market with its Effexor XR generic until approximately five years after the agreement (nearly seven years before Wyeth's patents expired); Wyeth agreed not to market a competing \"authorized generic\" during Teva's 180-day exclusivity period; Wyeth agreed to permit Teva to sell a generic version of another product, Effexor IR, before the original patent on Effexor expired and without a Wyeth-authorized generic; and Teva agreed to pay royalties to Wyeth on its sales of both generic versions of Effexor.", "Pursuant to a consent decree, Wyeth and Teva submitted the agreement to the FTC. The FTC did not object to the agreement. Notably, unlike Actavis , in this case Wyeth did not pay money directly to Teva. Instead, Wyeth's agreement not to market an authorized generic during Teva's 180-day exclusivity period would cause Teva to reap increased sales during that period. In other words, although Wyeth did not directly pay Teva to stay off of the market, the agreement ensured that Teva would receive compensation in other ways."], "subsections": []}, {"section_title": "Debate", "paragraphs": ["The FTC and others have alleged that pay-for-delay settlements \"have significant adverse effects on competition\" in violation of antitrust laws, including Section 1 of the Sherman Act and Section 5 of the FTC Act. When evaluating agreements for potential antitrust violations, the court focuses its inquiry on \"form[ing] a judgment about the competitive significance of the [settlement] .\u00c2\u00a0.\u00c2\u00a0. 'based either (1) on the nature or character of the contracts, or (2) on surrounding circumstances giving rise to the inference or presumption that they were intended to restrain trade and enhance prices.'\" The Supreme Court has recognized that \"reverse payment settlements .\u00c2\u00a0.\u00c2\u00a0. can sometimes violate the antitrust laws,\" and courts have allowed antitrust litigation challenging certain reverse payment settlements to proceed under existing law.", "Defenders of such agreements contend there are significant benefits from pay-for-delay settlements. For example, AbbVie has settled suits with each of the companies that sought to introduce biosimilars to Humira. Even while accusing AbbVie of \"patent abuses\" relating to Humira, the Biosimilars Council has touted using settlements between brands and biosimilars to resolve patent thickets. The council contends that the Humira settlements are \"pro-consumer\" because, although biosimilar market entry will be delayed until seven years after the primary patent on Humira has expired, entry will still occur before several of the secondary patents covering Humira will expire. As the Supreme Court has recognized, pay-for-delay settlements may provide significant procompetitive benefits, and whether a particular settlement is procompetitive or anticompetitive will depend on a number of factors that vary from case to case."], "subsections": []}, {"section_title": "Current Law", "paragraphs": ["In Actavis v. FTC , the Supreme Court held that the rule of reason is the appropriate level of analysis in challenges to pay-for-delay agreements. Although the Court recognized the potential for such agreements to have anticompetitive effects, it acknowledged that \"offsetting or redeeming virtues are sometimes present.\" Such justifications might include \"traditional settlement considerations, such as avoided litigation costs or fair value for services.\" Accordingly, the FTC (or other plaintiffs) has to prove fully the anticompetitive effects of a particular agreement before the burden shifts to the defendant.", "The Third Circuit case involving Wyeth provides an example of the current analysis. Although the FTC did not object to the agreement, purchasers of Effexor XR filed a class action lawsuit against Wyeth and Teva alleging, inter alia, that the settlement agreement was an unlawful restraint of trade under Section 1 of the Sherman Act. The Third Circuit concluded that the plaintiffs had plausibly alleged an anticompetitive pay-for-delay settlement. The court determined that Wyeth's agreement not to manufacture a competing generic product during Teva's 180-day exclusivity period was an adequate allegation of a sufficiently large payment because it ensured that Teva would be the only generic product on the market, and thus Teva would receive all generic Effexor XR sales during that period. Moreover, the court concluded that the payment could not be justified as a simple effort to avoid the costs of litigation. Accordingly, the court determined that the plaintiffs had adequately alleged that the agreement between Wyeth and Teva was the kind of pay-for-delay agreement forbade by the Supreme Court in Actavis ."], "subsections": []}]}, {"section_title": "Combinations of Practices", "paragraphs": ["Although this report has described the various patenting practices in isolation, they can be used concurrently. For example, product hopping can be combined with pay-for-delay settlements to delay generic entry while the brand switches the market to a new product. A manufacturer considering product hopping will often be more successful in preventing competition from the generic if it can convert the market to the new product before the generic enters the market. In one case, the brand estimated that it would sell ten times more tablets if it could switch doctors to the new product before the generic entered the market.", "One example of a drug manufacturer allegedly combining product hopping and pay-for-delay settlements to prevent competition for its product involves Cephalon, maker of the branded sleep disorder medication Provigil. Between its secondary patent and a period of regulatory exclusivity, protection of Provigil expired in April 2015. Due to the narrowness of the secondary patent, however, the generic companies planned to enter the market with noninfringing products in 2006. Cephalon estimated that, once the generic versions entered the market, there would be a 75% to 90% price reduction in Provigil, reducing revenues by more than $400 million in the first year alone. In 2006, Cephalon attempted to move the market to a new product, Nuvigil, which was patent-protected until 2023. But because FDA had not yet approved Nuvigil in late 2005, Cephalon settled its patent lawsuits with the generics, paying them more than $200 million to delay market entry until 2012.", "Although Cephalon argued its settlement would allow generic versions of Provigil to enter the market three years before the expiration of the Provigil secondary patent in 2015, following the settlement, Cephalon increased the price of Provigil and stopped marketing it. At the same time, Cephalon promoted Nuvigil both through its sales force and by discounting its price. Because of the pay-for-delay settlement, Cephalon had three years to switch the market to Nuvigil before generic entry in 2012, rather than have Provigil compete with the generics in 2006. Thus, Cephalon combined product hopping with pay-for-delay settlements to prolong its period of exclusivity. "], "subsections": []}]}, {"section_title": "Selected Proposals for Addressing Pharmaceutical Patenting Practices", "paragraphs": ["Pharmaceutical patenting practices have attracted significant interest from both commentators and Congress. This section of the report reviews several proposals, from both legislation and the academic literature, that seek to reduce or eliminate these patenting practices. This review is not intended to be comprehensive, nor does it evaluate the merits of these proposals. Instead, the proposals are reviewed as representative examples of the various types of legal changes under consideration.", "As discussed above, patenting practices are only one factor that may contribute to consumer prices in the highly complex pharmaceutical market. Thus, the discussed proposals relating to patenting practices are one potential method to reduce drug prices. Numerous legislative proposals intended to reduce drug prices exist, but because these proposals relate only indirectly to pharmaceutical patenting practices, they are outside the scope of this report."], "subsections": [{"section_title": "Limiting Evergreening", "paragraphs": ["Proposals targeting evergreening primarily aim to make it harder for companies to receive later-filed or secondary patents, reduce the impact of later-filed patents, or incentivize challenges to patents."], "subsections": [{"section_title": "Increasing Examination Resources", "paragraphs": ["Several commentators have proposed that increasing patent examination resources could reduce the number of arguably weaker later-filed patents. These commentators contend that patent examiners \"often do not have enough time or resources to investigate whether a patent application is truly inventive.\" In these commentators' view, allocating more resources to the PTO would potentially prevent low-quality patents from issuing in the first place, thus preventing the need for accused infringers to spend time and resources defending against infringement or attempting to invalidate such patents. Although one commentator notes that \"most patents are not economically significant,\" he also recognizes that the PTO \"is not well positioned to identify which patents are important and which are worthless.\""], "subsections": []}, {"section_title": "Enhancing Patentability Standards", "paragraphs": ["Some proposals aim to reduce evergreening by making it more difficult for later-filed applications to meet the requirements for patentability. For example, one commentator has suggested raising the substantive patentability requirements for later-filed or secondary patents. Specifically, the commentator suggests amending the patent statute to require that an application for a patent on a secondary invention \"demonstrate through clear and convincing evidence in the written description that such invention has increased efficacy as compared to the original.\" The proposal defines \"increased efficacy\" as \"a proven improvement in the mechanism of action, as disclosed in the patent claims,\" and \"mechanism of action\" as \"the process by which a drug functions to produce a therapeutic effect, as disclosed in the patent claims.\" In the commentator's view, this would reduce evergreening by requiring that the secondary patent actually improve the manner in which the pharmaceutical product operates, and thus incentivize pharmaceutical companies to create new drugs, \"rather than creating minor changes that prolong the time they can profit off monopolies at the expense of patients.\" At least one other country has adopted a similar standard: Under Indian law a patent may not issue on \"a new form of a known substance which does not result in enhancement of the known efficacy of that substance.\""], "subsections": []}, {"section_title": "Reducing the Impact of Later-Filed Patents", "paragraphs": ["The Terminating the Extension of Rights Misappropriated (TERM) Act of 2019 is one example of a legislative proposal to curtail patent evergreening by reducing the impact of later-filed patents. If enacted, it would establish a presumption that, in patent challenges under Hatch-Waxman or BPCIA procedures, the patentee \"disclaimed the patent term for each of the listed patents after the date on which the term of the first patent expires.\" In effect, this presumption would mean that later-expiring patents listed in the Orange Book (or provided during the BPCIA's \"patent dance\") would, as a default, be treated as expiring on the date when the earliest-expiring patent on the drug or biologic expires. However, the patentee would be able to overcome this presumption by affirmatively demonstrating with a preponderance of the evidence that the later-expiring patents on the drug or biologic claim \"patentably distinct inventions.\" Because the law of double patenting already requires later-expiring patents to cover patentably distinct inventions to be valid, the TERM Act's legal effect would be to place the burden of proving patent validity on the patentee for certain later-expiring pharmaceutical patents. Under current law, patents are presumed valid in a judicial proceeding unless the challenger proves patent invalidity by clear and convincing evidence.", "The TERM Act would also require the PTO to determine if changes to patent examination practice may be necessary. Specifically, the Act would require the PTO to review the agency's patent examination procedures to determine whether the PTO is using the best practices to avoid the issuance of duplicative patents relating to the same drug or biologic. The bill would also require the PTO to determine the need for new practices or procedures to (1)\u00c2\u00a0improve examination of patents relating to the same drug or biological product and (2)\u00c2\u00a0reduce the issuance of patents that \"improperly extend the term of exclusivity.\" Finally, the Act would require the PTO to submit a report to the House Committee on the Judiciary containing its findings and recommendations.", "The Reforming Evergreening and Manipulation that Extends Drug Years Act (REMEDY) Act, like the TERM Act, seeks to curb evergreening by reducing the benefit of later-filed patents. Under the REMEDY Act, a generic's filing of a Paragraph (IV) certification in an ANDA would only trigger Hatch-Waxman's thirty-month stay if the patent claims a \"drug substance\"\u00e2\u0080\u0094that is, the drug's active ingredient. The stay would not be available for a patent that claims only a \"drug product or method of use for a drug,\" unless the patent also claims the drug substance itself. In that case, the bill would allow FDA to approve the generic product immediately, without waiting for the litigation to determine the validity of the nondrug substance patents. This approach is aimed at allowing the generic to enter the market more quickly by limiting the grounds under which a brand can receive a thirty-month stay of FDA approval. The Act would also require that patents canceled by the PTO be removed from the Orange Book . The bill would also clarify that challenging a patent that is later struck from the Orange Book would not affect the first-generic-filer 180-day exclusivity period."], "subsections": []}, {"section_title": "Encouraging Patent Challenges", "paragraphs": ["Other anti-evergreening proposals aim to incentivize challenges to pharmaceutical patents after those patents issue. For example, the Second Look at Drugs Patents Act of 2019 (SLDPA) would encourage administrative challenges to patents added to the Orange Book . Under the SLDPA, unlike current law, a brand would be required to notify the PTO that it was adding patents to the Orange Book . After receiving that notification, the PTO would need to publish a notice regarding each patent and request that any eligible person file an IPR challenging that patent. Such patents would be \"provisionally\" included in the Orange Book until either the PTO confirmed the relevant patents' patentability or until certain time has passed without any challenge to the patents (300 days if the patent had issued when FDA approved the relevant drug, or fifteen months if the patent issued after approval). If any patent claims are canceled as a result of an IPR, the bill would require the brand to submit a request that the patent be removed from the Orange Book (if all claims are canceled) or that the canceled claims be removed from the Orange Book . Taken together, the SLDPA would provide notice regarding particular patents that generics may want to challenge and would encourage such challenges.", "As another method of encouraging patent challenges, one commentator has proposed that Congress require the PTO to implement an \"Invalidity Challenge Reimbursement Program\" (ICR program) that would require the PTO to reimburse \"petition fees, reasonable attorney fees, and related expenses incurred by accused infringers who have prevailed in a post-issuance proceeding\" at the PTO \"by invalidating at least one patent claim.\" The proposal envisions that such a program could be paid for by the PTO charging an \"ICR fee\" on each patent in force. As their costs would be reimbursed if they are successful, the commentator contends that this system would provide greater incentives to encourage an accused infringer to challenge a weak patent. Moreover, the commentator notes that the PTO is currently generally unaffected when it issues a low-quality patent. In the commentator's view, requiring the PTO to reimburse successful challenges to patents may create an incentive for the PTO to examine applications more carefully before issuing patents."], "subsections": []}]}, {"section_title": "Addressing Product Hopping and Patent Thickets", "paragraphs": ["Some bills aim to curtail certain pharmaceutical patenting practices directly. One such proposal is the Affordable Prescriptions for Patients Act of 2019 (APPA), which would make product hopping an antitrust violation and would set a limit on the number of certain patents that could be asserted in biologics litigation.", "The first portion of the bill addresses product hopping. It would amend the FTC Act to define when product hopping constitutes a violation of the federal antitrust laws. The bill would allow the FTC to prove a prima facie case of product hopping by showing that a manufacturer had engaged in either a \"hard switch\" or a \"soft switch\" during a certain period. Specifically, the manufacturer would have to engage in a switch between when the manufacturer first received notice that an applicant submitted an ANDA or biosimilar license for a particular product and 180 days after the generic drug or biosimilar product is first marketed.", "The APPA defines a \"hard switch\" in two ways. The first definition would prevent a manufacturer from requesting that FDA withdraw approval for a listed product and then marketing a \"follow-on product\" (i.e., a new version of the drug). Accordingly, the bill would alter current law, under which a brand manufacturer can freely ask FDA to withdraw approval for one of its products, possibly preventing a generic from marketing a competing product due to the lack of a reference product. The APPA's second definition of a hard switch would prevent a manufacturer from marketing or selling a follow-on product after withdrawing, intending to withdraw, discontinuing the manufacture of, or destroying a product to impede competition from a generic. The bill would therefore change current law, which generally allows manufacturers to take those actions to reduce the supply or desirability of an older product. Commentators have argued that such practices encourage patients to use the new follow-on product, reducing demand for the original product and the opportunity for competition from any potential generic for the original product.", "The bill's definition of a soft switch aims to capture other forms of product hopping that impede competition. Under the proposed language, a soft switch occurs when a manufacturer markets or sells a follow-on product and takes actions to impede competition for a generic product or a biosimilar version of the manufacturer's product.", "The bill would also allow the manufacturer to rebut a prima facie case of product hopping. First, a manufacturer would be able to justify its conduct by first establishing that it would have taken the same actions even if a generic had already entered the market. For a hard switch, the manufacturer must also establish either (1) the actions that it took related to safety risks to patients of the original product; or (2) if it withdrew, intended to withdraw, discontinued the manufacture of, or destroyed a product, that there was a supply disruption that was outside the control of the manufacturer. For a soft switch, the manufacturer must establish that it had \"legitimate pro-competitive reasons, apart from the financial effects of reduced competition, to take the action.\"", "The APPA would also make two changes aimed at reducing the impact of patent thickets for biological products. First, the bill would broaden the types of patents that a brand biologic manufacturer could assert in premarketing litigation by extending the list of \"artificial\" acts of infringement under 35 U.S.C. \u00c2\u00a7\u00c2\u00a0271(e) to include patents claiming methods or products used to manufacture a biological product. Second, the APPA would limit the number of certain patents that the brand could assert in litigation. Specifically, the brand would be limited to asserting at most twenty patents that (1)\u00c2\u00a0claim the biologic or method or product used in the manufacture of a biologic, (2)\u00c2\u00a0were listed during the patent dance, and (3)\u00c2\u00a0were filed more than four years after approval of the reference product or include a claim to a manufacturing process not used by the brand. Certain later-issued patents (i.e., those that issued after the brand provided its initial list to the biosimilar manufacturer during the patent dance) would be even further limited. The APPA would nonetheless authorize a court to increase how many patents the brand can assert if done so promptly and if such an increase is in the interest of justice or for good cause."], "subsections": []}, {"section_title": "Limiting the Availability of Hatch-Waxman's Thirty-Month Stay", "paragraphs": ["A number of bills, such as the Orange Book Transparency Act of 2019 (OBTA), would change the patent listing requirements for the Orange Book . Under current law, the brand must include any patent that claims the drug or a method of using the drug. FDA regulations specify that \"drug substance (active ingredient) patents, drug product (formulation and composition) patents, and method-of-use patents\" must be listed in the Orange Book , whereas \"[p]rocess patents, patents claiming packaging, patents claiming metabolites, and patents claiming intermediates\" shall not be submitted to FDA.", "The OBTA would clarify the types of patents that may be listed in the Orange Book , only allowing listing of patents that (1)\u00c2\u00a0claim methods of using a drug or (2)\u00c2\u00a0claim the drug and are a drug substance (active ingredient) or drug product (formulation) patent. Limiting the types of patents that may be listed would limit the availability of the thirty-month stay of FDA approval of a generic because the stay is available only if the brand sues on one of the patents for which the generic made a Paragraph (IV) certification. Moreover, the OBTA would require FDA to list in the Orange Book each applicable regulatory exclusivity period for each drug. Finally, the bill would require the Government Accountability Office to submit a report to Congress detailing the types of patents included in the Orange Book , to include data on certain drug patents."], "subsections": []}, {"section_title": "Increasing Biologic Patent Transparency", "paragraphs": ["Other bills would focus on increasing transparency to combat patent thickets and facilitate generic or biosimilar entry. The Purple Book Continuity Act of 2019 (PBCA) would require a BLA holder to provide to FDA, and FDA to publish in the Purple Book , any patents the brand provides to the biosimilar company during the patent dance. Further, the bill would require FDA to revise the Purple Book every thirty days to include (1) any new biologics that FDA licensed during that period and (2) information on patents that BLA holders provided to FDA during that period. The PBCA would also require FDA to list any exclusivity period that applies to each listed biologic, information that is not always currently included in the Purple Book . Moreover, the brand must notify FDA if any biologic license was withdrawn or suspended for safety reasons, and FDA would, in turn, have to remove that product from the Purple Book for the relevant period. By including the patents associated with a particular biologic, supporters of this approach argue that biosimilar manufacturers will be better able to evaluate the relevant patents before market entry. PBCA further directs the Secretary of HHS to conduct a study regarding the type of information that should be included in the Purple Book , and transmit the results to Congress.", "The Biologic Patent Transparency Act (BPTA) similarly would require patent information to be listed in the Purple Book , and would require the Purple Book more generally to be published in \"a single, easily searchable, list.\" However, the BPTA's listing requirement is somewhat broader than the PBCA, including any patent that the brand \"believes a claim of patent infringement could reasonably be asserted by the holder\" (and not just patents provided during the patent dance) to be listed in the Purple Book . Much like the PBCA, the BPTA would also require FDA to update the Purple Book every thirty days. The bill would further bar the brand from bringing an action for infringement of a patent that should have been, but was not, included in the Purple Book ."], "subsections": []}, {"section_title": "Reforming Pay-for-Delay Settlements", "paragraphs": ["The Preserve Access to Affordable Generics and Biosimilars Act (PAAGBA) seeks to limit the ability of brands to pay generic or biosimilar manufacturers to delay their market entry. To this end, PAAGBA creates a presumption of illegality for certain patent settlement agreements, moving away from a rule-of-reason analysis. The proposed legislation would amend the FTC Act to specifically authorize the FTC to initiate enforcement proceedings against parties to \"any agreement resolving or settling, on a final or interim basis, a patent infringement claim, in connection with the sale of a drug product or biological product.\" Such agreements would be presumed to have anticompetitive effects if the brand agrees to provide the generic with \"anything of value,\" including monetary payments or distribution licenses, in exchange for the generic agreeing \"to limit or forego research, development, manufacturing, marketing, or sales\" of the generic product \"for any period of time.\" The presumption would not attach, however, to agreements where the only compensation given to the generic is the right to market the product before relevant patents or exclusivities expire, reasonable litigation expenses, or a covenant not to sue for infringement.", "PAAGBA would not make agreements that fit its definitions per se illegal. The parties to the agreement could overcome the presumption of anticompetitive effect with \"clear and convincing evidence\" that (1) the agreement provides compensation \"solely for other goods or services\" from the generic company or (2) the agreement's \"procompetitive benefits .\u00c2\u00a0.\u00c2\u00a0. outweigh the anticompetitive effects.\" In evaluating this evidence, the fact finder cannot presume that entry would only have occurred after the expiration of the patent or statutory exclusivity. It also cannot presume that allowing entry into the market before the patent or statutory exclusivity period expires is necessarily procompetitive.", "If the FTC proves that parties to an agreement violated these provisions, PAAGBA would provide for assessment of a civil monetary penalty against each violating party. The civil penalty must be \"sufficient to deter violations,\" but no more than three times the value that the respective violating party gained from the agreement. If the brand did not gain demonstrable value from the agreement, the value the generic received would be used to calculate the penalty. In calculating the penalty for a particular party, an FTC ALJ would consider \"the nature, circumstances, extent, and gravity of violation\"; the agreement's impact on commerce; and the culpability, history of violations, ability to pay, ability to continue doing business, and profits or compensation gained by all parties. Any penalties assessed would be in addition to, rather than in lieu of, any penalties imposed by other federal law. The FTC would also be able to seek injunctions and other equitable relief, including cease-and-desist orders. In addition, an ANDA filer that was party to such an agreement would forfeit its 180-day exclusivity awarded for challenging a patent using a Paragraph (IV) certification."], "subsections": []}]}]}}
{"id": "R46316", "title": "Health Care Provisions in the Families First Coronavirus Response Act, P.L. 116-127", "released_date": "2020-04-17T00:00:00", "summary": ["The global pandemic of Coronavirus Disease 2019 (COVID-19) is affecting communities around the world and throughout the United States, with case counts growing daily. Containment and mitigation efforts by federal, state, and local governments have been undertaken to \"flatten the curve\"\u00e2\u0080\u0094that is, to slow widespread transmission that could overwhelm the nation's health care system.", "The Families First Coronavirus Response Act (FFCRA, P.L. 116-127 ) was enacted on March 18, 2020. It is the second of three comprehensive laws enacted in March specifically to support the response to the pandemic.", "The FFCRA, among other things, increases appropriations to the Department of Defense, the Indian Health Service, the Department of Health and Human Services Public Health and Social Services Emergency Fund, and the Veterans Health Administration for testing and ancillary services associated with the SARS-Co V-2 virus, that virus that causes COVID-19 disease. Beginning on the date of enactment through any portion of the COVID-19 public health emergency (declared pursuant to Section 319 of the Public Health Service Act), the FFCRA provides payment for or requires coverage of testing for the COVID-19 virus, and items and services associated with such testing, such as supplies and office visits, without any cost sharing, for individuals who are covered under Medicare, including Medicare Advantage, traditional Medicaid, CHIP, TRICARE, Veterans healthcare, the Federal Employees Health Benefits (FEHB) Program, most types of private health insurance plans, the Indian Health Service, and individuals who are uninsured (as defined under FFCRA). It prohibits private health insurance plans and Medicare Advantage plans from employing utilization management tools, such as prior authorization, for the COVID-19 test, or the visit to furnish it.", "In addition, FFCRA provides for an increase to all states, the District of Columbia, and territories in the share of Medicaid expenditures financed by the federal government, subject to specific requirements. It provides additional Medicaid funding to territories. FFCRA modifies requirements related to waiving certain Medicare telehealth restrictions during the emergency. Finally, FFCRA waives liability, with a narrow exception, for manufacturers, distributors, or providers of specified respiratory protective devices used for COVID-19 response."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["The global pandemic of Coronavirus Disease 2019 (COVID-19) is affecting communities around the world and throughout the United States, with case counts growing daily. Containment and mitigation efforts by federal, state, and local governments have been undertaken to \"flatten the curve\"\u00e2\u0080\u0094that is, to slow widespread transmission that could overwhelm the nation's health care system.", "The Families First Coronavirus Response Act (FFCRA, P.L. 116-127 ) is the second of three comprehensive laws enacted specifically to support the response to the pandemic. The first law, the Coronavirus Preparedness and Response Supplemental Appropriations Act, 2020 ( P.L. 116-123 ), enacted on March 6, 2020, provides roughly $7.8 billion in discretionary supplemental appropriations to the Department of Health and Human Services (HHS), the Department of State, and the Small Business Administration. The law also authorizes the HHS Secretary to temporarily waive certain telehealth restrictions to make telehealth services more available during the emergency. The third law, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act, P.L. 116-136 ), was enacted on March 27, 2020. In addition to a number of economic stimulus and other provisions, the CARES Act provides payment for or requires coverage of a COVID-19 vaccine, when available, for federal health care payment and services programs and most private health insurance plans; it also provides appropriations to continue support for federal, state, and local public health efforts, and for federal purchase of COVID-19 vaccines. The act also appropriates a $100 billion \"Provider Relief Fund\" to assist health care facilities and providers facing revenue losses and uncompensated care as a result of the pandemic.", "This CRS report describes the health provisions included in FFCRA as of the date of enactment, including relevant background information. Other divisions in the law contain provisions regarding HHS social services programs, federal nutrition programs, and other matters that are not within the scope of this CRS report. Other CRS reports summarize the Coronavirus Preparedness and Response Supplemental Appropriations Act, 2020, and the CARES Act, and will link to this report as they become available. Some provisions described in this report have been amended by the CARES Act, and in such cases, footnotes reference the relevant CRS expert who can answer questions about the amendments. This report will not otherwise be updated or changed to reflect subsequent congressional or administrative action related to the FFCRA health provisions. The Appendix contains a list of CRS experts for follow-up on further developments."], "subsections": []}, {"section_title": "FFCRA Overview", "paragraphs": [], "subsections": [{"section_title": "Legislative History6", "paragraphs": ["On March 14, 2020, the House amended and passed H.R. 6201 , the Families First Coronavirus Response Act, by a vote of 363-40. The House considered the measure under the suspension of the rules procedure, a process that allows for expedited consideration of measures that enjoy overwhelming support. The measure had been introduced on March 11, 2020, and referred to the Committee on Appropriations as the primary committee, as well as to the Committee on the Budget and the Committee on Ways and Means. The committees took no formal action on the legislation; the suspension of the rules procedure allows the House to take up a measure (even one in committee), amend it, and pass it, all with a single vote. To suspend the rules and pass the bill requires the support of two-thirds of those voting.", "On March 16, 2020, the House (by unanimous consent) considered and agreed to a resolution (H.Res. 904) that directed the Clerk to make changes to the legislation when preparing the final, official version of the House-passed bill. The process of preparing this version is called \"engrossment.\" The engrossed version was sent to the Senate. The Senate considered the bill under the terms of a unanimous consent agreement that allowed for the consideration of three amendments and required the support of 60 Senators to approve any amendment and for final passage of the bill. The Senate did not agree to any of the amendments but passed the bill, 90-8, on March 18, 2020. The President signed the bill into law the same day. It became P.L. 116-127 . "], "subsections": []}, {"section_title": "Provisions in Brief", "paragraphs": ["The Families First Coronavirus Response Act, among other things, increases appropriations to the Department of Defense, Indian Health Service (IHS), HHS, and Veterans Health Administration for testing and ancillary services associated with the SARS-CoV-2 virus, or COVID-19. ", "Through several provisions in FFCRA Divisions A and F, the act provides payment for or requires coverage of testing for the COVID-19 virus, along with items and services associated with such testing, such as supplies and office visits, without any cost sharing, for individuals who are covered under Medicare, including Medicare Advantage, traditional Medicaid, the State Children's Health Insurance Program (CHIP), TRICARE, Veterans health care, the Federal Employees Health Benefits (FEHB) Program, most types of private health insurance plans, the IHS, and for individuals who are uninsured (as defined under FFCRA). These coverage provisions are effective beginning on the date of enactment through any portion of the COVID-19 public health emergency (declared pursuant to Section 319 of the Public Health Service Act). The FFCRA prohibits private health insurance plans and Medicare Advantage plans from employing utilization management tools, such as prior authorization, for the COVID-19 test, or the visit to furnish it. FFCRA provides for an increase to all states, the District of Columbia, and territories in the share of Medicaid expenditures financed by the federal government, subject to specific requirements. It provides additional Medicaid funding to territories. FFCRA modifies requirements related to waiving certain Medicare telehealth restrictions during the emergency. Finally, it waives liability, with a narrow exception, for manufacturers, distributors, or providers of specified respiratory protective devices used for COVID-19 response.", "The Congressional Budget Office and the Joint Committee on Taxation provided a preliminary estimate of the budget effects of the Families First Coronavirus Response Act. Overall, the act is estimated to increase discretionary spending by $2.4 billion from emergency supplemental appropriations, to increase mandatory outlays by $95 billion, and to decrease revenues by $94 billion. These estimates are based on assumptions about the severity and duration of the pandemic, and they may vary substantially from final estimates to be provided later this year. Discretionary spending totals and CBO's estimates of mandatory outlays for health care programs in Division F are provided in the \" Summaries of Provisions \" section. "], "subsections": []}, {"section_title": "Key Definitions", "paragraphs": ["Several key terms are referred to repeatedly throughout this report: emergency period, COVID-19 testing and testing-related items and services, and uninsured individuals. This section provides the technical definitions for those terms. "], "subsections": [{"section_title": "Duration of Emergency Period", "paragraphs": ["Several provisions in Division F define the effective period of the authorized activity as \"the emergency period defined in paragraph (1)(B) of section 1135(g),\" or comparable construction, referring to a paragraph in Section 1135 of the Social Security Act (SSA). Section 1135 allows the Secretary of Health and Human Services (HHS Secretary) to waive specified requirements and regulations to ensure that health care items and services are available to enrollees in the Medicare, Medicaid, and CHIP programs during emergencies. Paragraph (1)(B) of SSA Section 1135(g) refers to \"the public health emergency declared with respect to the COVID-19 outbreak by the Secretary on January 31, 2020, pursuant to section 319 of the Public Health Service Act [PHSA].\" Hence, the referenced emergency period in provisions in Division F is the period during which this particular Section 319 public health emergency declaration \u00e2\u0080\u0094whether initial or renewed\u00e2\u0080\u0094is in effect. ", "However, while most Division F provisions are effective during any portion of the emergency period described above, those provisions bec a me effective as of the date of enactment of FFCRA , March 18, 2020, even though the emergency period began earlier. Division F provisions with different effective dates are so noted in the descriptions of the sections below."], "subsections": []}, {"section_title": "Definitions of COVID-19 Testing and Related Services", "paragraphs": ["Through several provisions in FFCRA Divisions A and F, the act provides payment for or requires coverage of testing for the COVID-19 virus, and items and services associated with such testing, such as supplies and office visits, without cost sharing. These coverage requirements apply to individuals who are covered under Medicare, traditional Medicaid, CHIP, TRICARE, Veterans health care, FEHB, the IHS, most types of private health insurance plans, and individuals who are uninsured (as defined below). "], "subsections": [{"section_title": "COVID-19 Testing", "paragraphs": ["Provisions in Division F refer to COVID-19 testing in several ways:", "\"In vitro diagnostic products (as defined in section 809.3(a) of title 21, Code of Federal Regulations) for the detection of SARS-CoV-2 or the diagnosis of the virus that causes COVID-19 that are approved, cleared, or authorized under section 510(k), 513, 515 or 564 of the Federal Food, Drug, and Cosmetic Act [FFDCA]\"; \"COVID-19 related items and services\"; \"in vitro diagnostic products\"; \"clinical diagnostic lab tests\"; and \"any COVID-19 related items and services.\"", "COVID- 19 stands for Coronavirus Disease 2019, the name of the pandemic disease. SARS-CoV- 2 is the scientific name of the virus that causes COVID-19. Diagnostic testing identifies the presence of the virus, which, in conjunction with clinical signs and symptoms, informs the diagnosis of COVID-19. ", "In Vitro Diagnostics (IVDs) are medical devices used in the laboratory analysis of human samples, including commercial test products and instruments used in testing. IVDs may be used in a variety of settings, including a clinical laboratory, a physician's office, or in the home. IVDs are defined in FDA regulation as a specific subset of devices that include \"reagents, instruments, and systems intended for use in the diagnosis of disease or other conditions ... in order to cure, mitigate, treat, or prevent disease ... [s]uch products are intended for use in the collection, preparation, and examination of specimens taken from the human body.\" As indicated by this definition, an IVD may be either a complete test or a component of a test, and in either case, the IVD comes under FDA's regulatory purview. FDA premarket review of IVDs may include Premarket Approval (PMA); notification and clearance (510(k)); authorization pursuant to de novo classification; or authorization for use in an emergency pursuant to an Emergency Use Authorization (EUA) based on circumstances (e.g., a public health emergency determination) and the risk the device poses.", "Although the terms and definitions used to refer to COVID-19 testing vary throughout FFCRA, they do not necessarily reflect actual differences in the types of tests and ancillary services that are or must be covered. Some of these definitions and terms were amended in the CARES Act. In summarizing FFCRA provisions in this CRS Report, mention of any of these definitions of a COVID-19 test, as described above, is referred to as \" COVID-19 testing .\""], "subsections": []}, {"section_title": "Testing-Related Items and Services", "paragraphs": ["Sections in FFCRA Divisions A and F that refer to COVID-19 testing generally also refer to health care items and services furnished in relation to testing, such as supplies and office visits, although definitions vary. FFCRA Section 6001(a)(2) defines these ancillary services, in the context of private health insurance coverage, as ", "[i]tems and services furnished to an individual during health care provider office visits (which term in this paragraph includes in-person visits and telehealth visits), urgent care center visits, and emergency room visits that result in an order for or administration of an in vitro diagnostic product described in paragraph (1), but only to the extent such items and services relate to the furnishing or administration of such product or to the evaluation of such individual for purposes of determining the need of such individual for such product.", "This definition could encompass additional diagnostic testing associated with the visit, which may include additional laboratory tests and imaging studies. However, it would not encompass treatment for COVID-19 illnesses . See the \" Section 6001. Coverage of Testing for COVID-19 \" section below regarding enforcement and implementation of this section's provisions."], "subsections": []}, {"section_title": "Applicable References", "paragraphs": ["Provisions in Division F that use language discussed above, comparable construction, or cross-reference, are as follows:", "Section 6001(a)(1)-(2), regarding specified types of private health insurance coverage. Section 6004(a)(1)(C), which amends SSA Section 1905(a)(3) regarding Medicaid medical assistance, and Section 6004(a)(2), which amends SSA Sections 1916 and 1916A regarding Medicaid cost-sharing. Both provisions refer to SSA Section 1905(a)(3), as amended. Section 6004(b)(1), which amends SSA Section 2103(c), regarding CHIP child coverage, and Section 6004(b)(2), which amends SSA Section 2112(b)(4), regarding CHIP pregnant women coverage. Both provisions reference SSA Section 1905(a)(3), as amended. Section 6006, regarding TRICARE, veterans health care, and federal civilian employee health coverage (FEHB), each referencing FFCRA Section 6001(a)(1)-(2). Section 6007, regarding IHS referencing FFCRA Section 6001(a)(1)-(2).", "In addition, appropriations provided in FFCRA Division A to the Defense Health Program, Veterans Health Administration, IHS, and the HHS Public Health and Social Services Emergency Fund are to be used, in whole or in part, to pay for COVID-19 testing and related services, with reference to Section 6001(a) of the act. However, Division F sections pertaining to Medicare, Medicare Advantage, and the Medicaid and CHIP programs do not reference FFCRA Section 6001(a)(1)-(2) with respect to the definition of COVID-19 tests, administration of the tests, or related items and services, but rather amend the Social Security Act directly to require coverage of these things."], "subsections": []}]}, {"section_title": "Definition of the Uninsured", "paragraphs": ["Two provisions in FFCRA facilitate access to COVID-19 testing for \"uninsured individuals\": Division A, Title V, and Division F, Section 6004. Title V provides funding to the National Medical Disaster System (NDMS) that can be used to reimburse health care providers for costs related to COVID-19 testing for uninsured individuals, as defined in that section (and as explained below). Section 6004 provides states an option to use Medicaid as a vehicle to provide COVID-19 testing without cost to uninsured individuals, as defined in that section. The respective definitions of uninsured individuals are similar but not identical. ", "In Title V, \"uninsured individual\" means an individual who is not enrolled in coverage in any of the following three categories: ", "A federal health care program, as defined: This includes but is not limited to Medicare, Medicaid, CHIP, TRICARE, and the VA health care system. Most types of private health insurance plans: This includes individual health insurance coverage and group plans, whether fully insured or self-insured. The explanation of these coverage types and the applicability of Section 6001 to them also apply to this provision. The Federal Employees Health Benefits ( FEHB ) Program: See the \" Section 6006. Application with Respect to TRICARE, Coverage for Veterans, and Coverage for Federal Civilians \" section below for background on FEHB.", "In other words, individuals enrolled in coverage in one of these three categories are considered insured and are not eligible for the testing assistance described in Title V. Note that individuals with certain types of private coverage may be considered uninsured, due to the coverage definitions cited. The definition of individual health insurance coverage does not include a type of coverage called short-term, limited duration insurance (STLDI) (see \" Section 6001. Coverage of Testing for COVID-19 \"). Thus, individuals with STLDI appear to be considered uninsured for the purpose of eligibility for assistance under Title V.", "Section 6004 includes additional groups in the definition of \"uninsured individual\" that applies under such sections. Specifically, for the purposes of Section 6004, uninsured individuals are defined as those who are not enrolled in (1) a federal health care program, as defined; (2) a specified type of private health insurance plan; or (3) FEHB. Such individuals are also not Medicaid-eligible under one of Medicaid's mandatory eligibility pathways (e.g., the poverty-related pregnant women and child pathways, or the Medicaid expansion pathway under the Patient Protection and Affordable Care Act [ACA; P.L. 111-148 , as amended]). The first three categories are defined and referenced the same way in Section 6004 as they are in Title V, although wording and punctuation differ slightly. See the discussion of Section 6004 in this report for more information about the additional criteria related to COVID-19 testing without cost-sharing under Medicaid. "], "subsections": []}]}]}, {"section_title": "Summaries of Provisions", "paragraphs": [], "subsections": [{"section_title": "Division A\u00e2\u0080\u0094Second Coronavirus Preparedness and Response Supplemental Appropriations Act, 2020", "paragraphs": ["This section describes the health care-related supplemental appropriations in FFCRA Division A for the Defense Health Program, the Veterans Health Administration, and HHS accounts, and applicable general provisions. All such appropriations are designated as an emergency requirement and, as a result, are not constrained by the statutory discretionary spending limits (often referred to as budget caps). "], "subsections": [{"section_title": "Title II: Department of Defense, Defense Health Program", "paragraphs": ["The Defense Health Program (DHP) is an account in the Department of Defense budget that funds various functions of the Military Health System. These functions include the provision of health care services, certain medical readiness activities, expeditionary medical capabilities, education and training programs, medical research, management and headquarters activities, facilities sustainment, procurement, and civilian personnel. For FY2020, Congress appropriated $34.4 billion to the DHP.", "FFCRA appropriates an additional $82 million to the DHP for COVID-19 testing, administration of the test, and related items and services outlined in FFCRA Section 6006(a). (For a summary of this section, see \" Definitions of COVID-19 Testing and Related Services \" and \" Section 6006. Application with Respect to TRICARE, Coverage for Veterans, and Coverage for Federal Civilians .\") The additional funds are designated as emergency spending and are to remain available until September 30, 2022. "], "subsections": []}, {"section_title": "Title IV: Department of Health and Human Services, Indian Health Service", "paragraphs": ["The IHS within HHS is the lead federal agency charged with improving the health of American Indians and Alaska Natives. In FY2019, IHS provided health care to approximately 2.6 million eligible American Indians/Alaska Natives. IHS's FY2020 appropriation was $6.1 billion, with $4.3 billion appropriated to the Indian Health Services account, which supports the provision of clinical services and public health activities. The services provided at IHS facilities vary, with some facilities providing inpatient services, laboratory testing services, and emergency care, while others focus on outpatient primary care services. IHS does not offer a standard benefit package, nor is it required to cover certain services within its facilities or when it authorizes payment for services to its beneficiaries outside of the IHS system (see \" Section 6007. Coverage of Testing for COVID-19 at No Cost Sharing for Indians Receiving Purchased/Referred Care \").", "FFCRA appropriates an additional $64 million for COVID-19 testing, administration of the test, and related items and services as specified in FFCRA Section 6007. (See \" Definitions of COVID-19 Testing and Related Services \" and \" Section 6007. Coverage of Testing for COVID-19 at No Cost Sharing for Indians Receiving Purchased/Referred Care .\") The section also specifies that the additional funds are to be allocated at the discretion of the IHS director. The additional funds are designated as emergency spending and are to remain available until September 30, 2022. "], "subsections": []}, {"section_title": "Title V. Department of Health and Human Services, Public Health and Social Services Emergency Fund", "paragraphs": ["There is no federal assistance program designed purposefully to pay the uncompensated costs of health care for the uninsured and underinsured necessitated by a public health emergency or disaster. In general, there has been no consensus that doing so should be a federal responsibility. Nonetheless, Congress has provided appropriations for several limited mechanisms to address uncompensated health care costs in response to previous incidents. The health care needs of uninsured and underinsured individuals and the financial pressures many individuals and their health care providers are facing during the COVID-19 outbreak have spurred congressional interest in these approaches. Among other forms of assistance, the CARES Act ( P.L. 116-136 ) appropriates a $100 billion \"Provider Relief Fund\" to assist health care facilities and providers facing revenue losses and uncompensated care as a result of the pandemic.", "FFCRA uses the National Disaster Medical System (NDMS) Definitive Care Reimbursement Program as the mechanism for federal payment for COVID-19 testing and related services for uninsured individuals. Historically, NDMS has paid for health care items and services at between 100% and 110% of the applicable Medicare rate, and the Centers for Medicare & Medicaid Services (CMS) has processed payments. ", "To fund this approach, FFCRA provides $1 billion to the Public Health and Social Services Emergency Fund (PHSSEF), an account used in appropriations acts to provide the HHS Secretary with one-time or emergency funding, as well as annual funding for the office of the HHS Assistance Secretary for Preparedness and Response (ASPR). Covered COVID-19 testing, administration of the test, and related services are as defined in Subsection 6001(a) of the act. (See \" Definitions of COVID-19 Testing and Related Services .\") An uninsured individual is defined, for purposes of this section, as someone who is not enrolled in (1) a federal health care program, as defined; (2) a specified type of private health insurance plan; or (3) FEHB. (See \" Definition of the Uninsured \" for more information.) The additional funds are designated as emergency spending and are to remain available until expended."], "subsections": []}, {"section_title": "Title VI. Department of Veterans Affairs, Veterans Health Administration", "paragraphs": ["The Veterans Health Administration (VHA) of the Department of Veterans' Affairs (VA) provides health care to eligible veterans and their dependents who meet certain criteria as authorized by law. The VHA is funded through five appropriations accounts: (1) medical services, (2) medical community care, (3) medical support and compliance, (4) medical facilities, and (5) medical and prosthetic research. The first four accounts provide funding for medical care for veterans. ", "FFCRA provides $60 million in supplemental appropriations for FY2020 to the VHA\u00e2\u0080\u0094$30 million for medical services and $30 million for medical community care\u00e2\u0080\u0094for COVID-19 testing, administration of the test, and related items and services for visits for veterans. (See \" Definitions of COVID-19 Testing and Related Services \" and \" Veterans .\") The additional funds are designated as emergency spending and are to remain available until September 30, 2022."], "subsections": []}, {"section_title": "Title VII. General Provisions, Division A", "paragraphs": ["This title provides a reporting requirement (Section 1701) which states that each amount appropriated or made available by Division A is in addition to amounts otherwise appropriated for the fiscal year involved (Section 1703), and that unless otherwise provided, appropriations in Division A are not available for obligation beyond FY2020 (Section 1704).", "Title VII also includes Section 1702. This section was repealed in its entirety by Section 18115 of the CARES Act ( P.L. 116-136 ), which replaced it with a requirement for all laboratories carrying out COVID-19 testing to report testing data to HHS, as specified. An explanation of the repealed provision is provided here, for completeness."], "subsections": []}, {"section_title": "Section 1702: Repealed", "paragraphs": ["Generally, laboratories report testing results for specified diseases and conditions (called notifiable conditions ) directly to state or territorial (jurisdictional) health departments, pursuant to requirements in jurisdictional law. Through its National Notifiable Diseases Surveillance System (NNDSS), the HHS Centers for Disease Control and Prevention (CDC) works with jurisdictions and the Council of State and Territorial Epidemiologists (CSTE) to track national notifiable conditions, mostly infectious diseases and some noninfectious conditions (e.g., lead poisoning). Usually, such data are provided to CDC voluntarily. COVID-19 is a reportable disease in all reporting jurisdictions, and CDC receives data on COVID-19 cases and laboratory test results through NNDSS from all jurisdictions, as well as directly from some commercial laboratories. In addition, the FDA often includes, as a condition of an Emergency Use Authorization (EUA), the requirement that laboratories carrying out the EUA test comply with all relevant state and local reporting requirements.", "FFCRA Section 1702 would have required all states and local governments receiving funding under Division A to report real-time and aggregated data on both testing (tests performed) and test results to the respective State Emergency Operations Center. These data would then have been transmitted to the CDC. "], "subsections": []}]}, {"section_title": "Division F\u00e2\u0080\u0094Health Provisions", "paragraphs": ["This section describes all of the provisions included in FFCRA Division F. Some provisions described below have been amended by the CARES Act ; in such cases, foot n otes reference the relevant CRS expert who can answer questions about the amendment s . In some cases, the amendments made by the CARES Act are substantial, in which case, the footnote may also provide a brief description of the amendment . "], "subsections": [{"section_title": "Section 6001. Coverage of Testing for COVID-19", "paragraphs": ["Private health insurance is the predominant source of health insurance coverage in the United States. In general, consumers may obtain individual health insurance coverage directly from an insurer, or they may enroll in a group health plan through their employer or another sponsor . Group health plan sponsors may finance coverage themselves (self-insure) or purchase (fully insured) coverage from an insurer. ", "Covered benefits and consumer costs may vary by plan, subject to applicable federal and state requirements. The federal government may regulate all the coverage types noted above, and states may regulate all but self-insured group plans. Federal and state requirements may vary by coverage type. Some federal requirements apply to all coverage types noted above, while other federal requirements only apply to certain coverage types. ", "Prior to the enactment of FFCRA, there were no federal requirements specifically mandating private health insurance coverage of items or services related to COVID-19 testing. In recent weeks, some states have announced relevant coverage requirements, and some insurers have clarified or expanded their policies to include relevant coverage. ", "FFCRA newly requires most private health insurance plans to cover COVID-19 testing, administration of the test, and related items and services (see \" Definitions of COVID-19 Testing and Related Services \"). The coverage must be provided without consumer cost-sharing, including deductibles, copayments, or coinsurance. Prior authorization or other utilization management requirements are prohibited.", "These requirements apply to individual health insurance coverage and to group plans, whether fully insured or self-insured. This includes plans sold on and off the individual and small group exchanges. Per the definition of individual health insurance coverage cited in the act, the requirements do not apply to short-term, limited-duration plans. ", "The requirements do apply to grandfathered plans , which are individual or group plans in which at least one individual was enrolled as of enactment of the ACA (March 23, 2010), and that continue to meet certain criteria. Plans that maintain their grandfathered status are exempt from some federal requirements, but FFCRA specifies that Section 6001 applies to them. ", "The coverage requirements in this act apply only to the specified items and services that are furnished during the emergency period described in the act (see \" Duration of Emergency Period \"), as of the date of enactment (March 18, 2020).", "Subsection (b) states that the Secretaries of HHS, Labor, and the Treasury are required to enforce this section's provisions as if the provisions were incorporated into the PHSA, Employee Retirement Income Security Act (ERISA), and Internal Revenue Code (IRC), respectively. Subsection (c) states that those Secretaries also have authority to implement the provisions of this section \"through sub-regulatory guidance, program instruction, or otherwise.\"", "CBO preliminarily estimates that Section 6001 will decrease federal revenues by $4 million and increase federal outlays by $7 million over the FY2020\u00e2\u0080\u0093FY2022 period."], "subsections": []}, {"section_title": "Section 6002. Waiving Cost Sharing Under the Medicare Program for Certain Visits Relating to Testing for COVID-19", "paragraphs": ["Medicare Part B covers physicians' services, outpatient hospital services, durable medical equipment, and other medical services. Most physicians, providers, and practitioners are subject to limits on amounts they can bill beneficiaries for covered services, and they can bill the beneficiary for only the 20% coinsurance of the Medicare payment rate plus any unmet deductible. Part B also covers outpatient clinical laboratory tests provided by Medicare-participating laboratories, such as certain blood tests, urinalysis, and some screening tests, including the test for the coronavirus that causes COVID-19. These services may be furnished by labs located in hospitals and physician offices, as well as by independent labs. Beneficiaries have no coinsurance, co-payments, or deductibles for covered clinical lab services. ", "FFCRA eliminates the Medicare Part B beneficiary cost-sharing for provider visits during which a coronavirus diagnostic test is administered or ordered during the emergency period (see \" Duration of Emergency Period \"). Beneficiaries are not responsible for any coinsurance payments or deductibles for any specified COVID-19 testing-related service, defined as a medical visit that falls within the evaluation and management service codes for the following categories: office and other outpatient services; hospital observation services; emergency department services; nursing facility services; domiciliary, rest home, or custodial care services; home services; or online digital evaluation and management services. ", "The elimination of beneficiary cost-sharing for COVID-19 testing-related services applies to Medicare payment under the hospital outpatient prospective payment system, the physician fee schedule, the prospective payment system for federally qualified health centers, the outpatient hospital system payment system, and the rural health clinic services payment system. The HHS Secretary is to provide appropriate claims coding modifiers to identify the services for which beneficiary cost-sharing is waived. The HHS Secretary is allowed to implement this section by program instruction or otherwise.", "CBO preliminarily estimates that enacting Sections 6002 and 6003 will increase direct spending by $6.7 billion over the FY2020-FY2022 period."], "subsections": []}, {"section_title": "Section 6003. Coverage of Testing for COVID-10 at No Cost Sharing Under the Medicare Advantage Program", "paragraphs": ["Medicare Advantage (MA) is an alternative way for Medicare beneficiaries to receive covered benefits. Under MA, private health plans are paid a per-person monthly amount to provide all Medicare-covered benefits (except hospice) to beneficiaries who enroll in their plan. In general, cost sharing (copayments and coinsurance) under an MA plan must be actuarially equivalent to cost sharing under original Medicare, but cost sharing for a specific item or service may vary from amounts required under original Medicare. Private plans may use different techniques to influence the medical care used by enrollees, such as requiring enrollees to receive a referral to see specialists, or requiring prior approval or authorization from the plan before a service will be paid for.", "FFCRA requires MA plans to cover COVID-19 testing, the administration of the test, and related items and services during the emergency period (see the sections \" Definitions of COVID-19 Testing and Related Services \" and \" Duration of Emergency Period \"). Plans are prohibited from charging cost sharing for those items and services, and are prohibited from using prior authorization or other utilization management techniques, with respect to the coverage of the test or ancillary services. The HHS Secretary is allowed to implement this section by program instruction or otherwise.", "CBO preliminarily estimates that enacting Sections 6002 and 6003 will increase direct federal spending by $6.7 billion over the FY2020-FY2022 period."], "subsections": []}, {"section_title": "Section 6004. Coverage at No Cost Sharing Under Medicaid and CHIP", "paragraphs": [], "subsections": [{"section_title": "Medicaid Background", "paragraphs": ["Medicaid is a federal-state program that finances the delivery of primary and acute medical services, as well as long-term services and supports, to a diverse low-income population. Medicaid is financed jointly by the federal government and the states.", "States must follow broad federal rules to receive federal matching funds, but they have flexibility to design their own versions of Medicaid within the federal statute's basic framework. This flexibility results in variability across state Medicaid programs.", "Medicaid coverage includes a variety of primary and acute-care services, as well as long-term services and supports (LTSS). Not all Medicaid enrollees have access to the same set of services. An enrollee's eligibility pathway determines the available services within a benefit package. ", "Most Medicaid beneficiaries receive services in the form of what is called traditional Medicaid. In general, under traditional Medicaid coverage, state Medicaid programs must cover specific required services listed in statute (e.g., inpatient and outpatient hospital services, physician's services, or laboratory and x-ray services) and may elect to cover certain optional services (e.g., prescription drugs, case management, or physical therapy services). Under alternative benefit plans (ABPs), by contrast, states must provide comprehensive benefit coverage that is based on a coverage benchmark rather than a list of discrete items and services, as under traditional Medicaid. Coverage under an ABP must include at least the essential health benefits (EHBs) that most plans in the private health insurance market are required to furnish. States that choose to implement the ACA Medicaid expansion are required to provide ABP coverage to the individuals eligible for Medicaid through the expansion (with exceptions for selected special-needs subgroups), and are permitted to extend such coverage to other groups.", "Beneficiary cost sharing (e.g., premiums and co-payments) is limited under the Medicaid program. States can require certain beneficiaries to share in the cost of Medicaid services, but there are limits on (1) the amounts that states can impose, (2) the beneficiary groups that can be required to pay, and (3) the services for which cost sharing can be charged. "], "subsections": []}, {"section_title": "CHIP Background", "paragraphs": ["The State Children's Health Insurance Program (CHIP) is a federal-state program that provides health coverage to uninsured children and certain pregnant women with annual family income too high to qualify for Medicaid. CHIP is jointly financed by the federal government and states, and is administered by the states. Like Medicaid, the federal government sets basic requirements for CHIP, but states have the flexibility to design their own version of CHIP within the federal government's framework. As a result, CHIP programs vary significantly from state to state.", "States may design their CHIP programs as (1) a CHIP Medicaid expansion, (2) a separate CHIP program, or (3) a combination approach, where the state operates a CHIP Medicaid expansion and one or more separate CHIP programs concurrently.", "CHIP benefit coverage and cost-sharing rules depend on program design. CHIP Medicaid expansions must follow the federal Medicaid rules for benefits and cost sharing. For separate CHIP programs, the benefits are permitted to look more like private health insurance, and states may impose cost sharing, such as premiums or enrollment fees, with a maximum allowable amount that is tied to annual family income. Regardless of the choice of program design, all states must cover emergency services, well-baby and well-child care including age-appropriate immunizations, and dental services."], "subsections": []}, {"section_title": "FFCRA Provision", "paragraphs": ["FFCRA adds COVID-19 testing and related services the list of Medicaid mandatory services under traditional Medicaid benefits for the period beginning March 18, 2020, through the duration of the public health emergency as declared by the HHS Secretary pursuant to Section 319 of the PHSA (see the sections \" Definitions of COVID-19 Testing and Related Services \" and \" Duration of Emergency Period \"). States and territories are prohibited from charging beneficiary cost sharing for such testing, or for testing-related state plan services furnished during this period. ", "FFCRA also permits states to extend COVID-19 testing, testing-related state plan services, testing-related visit and the administration of the testing without cost sharing (as referenced earlier in this provision) to uninsured individuals during the specified public health emergency period. For the purposes of this provision, uninsured individuals are defined as those who are not Medicaid-eligible under one of Medicaid's mandatory eligibility pathways (e.g., the poverty-related pregnant women and child pathways, or the ACA Medicaid expansion pathway), and who are not enrolled in (1) a federal health care program (e.g., Medicare, Medicaid, CHIP, or TRICARE); (2) a specified type of private health insurance plan (e.g., individual health insurance coverage and group plans, whether fully insured or self-insured); or (3) FEHB (see \" Definition of the Uninsured \"). The law provides 100% federal medical assistance percentage (FMAP or federal matching rate) for medical assistance and administrative costs associated with uninsured individuals who are eligible for Medicaid under this provision.", "The law also requires CHIP programs (regardless of program design) to cover COVID-19 testing for CHIP enrollees for the period beginning March 18, 2020, through the duration of the public health emergency period as specified (see the sections \" Definitions of COVID-19 Testing and Related Services \" and \" Duration of Emergency Period \"). States are prohibited from charging beneficiary cost sharing for such testing, or for testing-related visits furnished to CHIP enrollees during this period. ", "CBO preliminarily estimates that Section 6004 will increase direct federal spending by a total of $1.9 billion in FY2020 and FY2021."], "subsections": []}]}, {"section_title": "Section 6005. Treatment of Personal Respiratory Protective Devices as Covered Countermeasures", "paragraphs": ["In 2005 Congress passed the Public Readiness and Emergency Preparedness Act (PREP Act), which authorizes the federal government to waive liability (except for willful misconduct) for manufacturers, distributors, and providers of medical countermeasures, such as drugs and medical supplies, that are needed to respond to a public health emergency. The act also authorizes the federal government to establish a program to compensate eligible individuals who suffer injuries from administration or use of products covered by the PREP Act's immunity provisions. ", "FFCRA explicitly adds to the list of PREP Act-covered countermeasures any personal respiratory protective device that is (1) approved by the National Institute for Occupational Safety and Health (NIOSH); (2) subject to an emergency use authorization (EUA); and (3) used for the COVID-19 response, retroactive from January 27, 2020, and through October 1, 2024. The CARES Act, Section 3103, amends this provision to define a covered personal respiratory protective device as one that \"is approved by [NIOSH], and that the Secretary determines to be a priority for use during a public health emergency declared under section 319.\" This amendment removes the requirement for an FDA authorization and extends PREP Act authority to these devices during both the COVID-19 emergency period and any future public health emergencies declared pursuant to PHSA Section 319.", "CBO did not provide an estimate of this provision."], "subsections": []}, {"section_title": "Section 6006. Application with Respect to TRICARE, Coverage for Veterans, and Coverage for Federal Civilians", "paragraphs": [], "subsections": [{"section_title": "TRICARE", "paragraphs": ["Under Chapter 55 of Title 10, U.S. Code , the Department of Defense administers a statutory health entitlement to approximately 9.5 million beneficiaries (i.e., servicemembers, military retirees, and family members). These entitlements are delivered through the Military Health System (MHS), which offers health care services in military hospitals and clinics\u00e2\u0080\u0094known as military treatment facilities\u00e2\u0080\u0094and through civilian health care providers participating in TRICARE. With the exception of active duty servicemembers, MHS beneficiaries may have a choice of TRICARE plan options depending on their status and geographic location. Each plan option has different beneficiary cost-sharing features, including annual enrollment fees, deductibles, copayments, and an annual catastrophic cap. ", "FFCRA requires the Secretary of Defense to waive any TRICARE cost-sharing requirements related to COVID-19 testing, administration of the test, and related items and services provided during an associated health care office, urgent care, or emergency department visits during the emergency period (see the sections \" Definitions of COVID-19 Testing and Related Services \" and \" Duration of Emergency Period \")."], "subsections": []}, {"section_title": "Veterans", "paragraphs": ["All veterans enrolled in the VA health care system are eligible for a standard medical package that includes laboratory services. Currently, some veterans are required to pay copayments for medical services and outpatient medications related to the treatment of a nonservice-connected condition. Any health service or medication provided in connection to the treatment of a service-connected condition or disability is always furnished without cost sharing. In addition, the VA does not charge copayments for preventive screenings, such as those for infectious diseases; cancers; heart and vascular diseases; mental health conditions and substance abuse; metabolic, obstetric, and gynecological conditions; and vision disorders, as well as regular recommended immunizations. Generally, laboratory services are also expressly exempt from copayment requirements.", "FFCRA requires the VA Secretary to waive any copayment or other cost-sharing requirements related to COVID-19 testing, administration of the test, and related items and services for visits during the emergency period (see the sections \" Definitions of COVID-19 Testing and Related Services \" and \" Duration of Emergency Period \"). "], "subsections": []}, {"section_title": "Federal Civilians", "paragraphs": ["The FEHB Program provides health insurance to federal employees, retirees, and their dependents. Cost-sharing requirements (e.g., deductibles, co-payments, and coinsurance amounts) vary by plans participating in the FEHB Program. For some services, such as the preventive care services outlined in the ACA, plans are not allowed to impose cost sharing.", "FFCRA requires that no federal civil servants enrolled in a health benefits plan or FEHB enrollees may be required to pay a copayment or other cost sharing related to COVID-19 testing, administration of the test, related items and services for visits during the emergency period (see the sections \" Definitions of COVID-19 Testing and Related Services \" and \" Duration of Emergency Period \"). "], "subsections": []}]}, {"section_title": "Section 6007. Coverage of Testing for COVID-19 at No Cost Sharing for Indians Receiving Purchased/Referred Care", "paragraphs": ["IHS provides health care to eligible American Indians/Alaska Natives either directly or through facilities and programs operated by Indian tribes or tribal organizations through self-determination contracts and self-governance compacts authorized in the Indian Self-Determination and Education Assistance Act (ISDEAA). IHS also provides services to urban Indians through grants or contracts to Urban Indian Organizations (UIOs). The services provided vary by facility, and IHS does not offer a standard benefit package, nor is it required to cover certain services that its beneficiaries may receive at facilities outside of IHS. When services are not available at an IHS facility, the IHS facilities may authorize payment through the Purchased Referred Care Program (PRC). Generally, PRC requires prior approval except in cases of emergency. PRC funds are limited, and as such, not all PRC claims are authorized and PRC is not available to UIOs. To be authorized, claims must meet medical priority levels, individuals must not be eligible for another source of coverage (e.g., Medicaid or private health insurance), and individuals must live in certain geographic areas.", "FFCRA requires IHS to pay for the cost of COVID-19 testing and related items and services, as described in Section 6001(a), without any cost-sharing requirements, from the date of enactment (i.e., March 18, 2020) throughout the emergency period (see the sections \" Definitions of COVID-19 Testing and Related Services \" and \" Duration of Emergency Period \"). This requirement applies to any Indian receiving services through the IHS including through UIOs. It also specifies that the requirement to waive cost-sharing requirements applies regardless of whether the testing and related services were authorized through PRC."], "subsections": []}, {"section_title": "Section 6008. Temporary Increase of Medicaid FMAP", "paragraphs": ["Medicaid is jointly financed by the federal government and the states. The federal government's share of a state's expenditures for most Medicaid services is called the federal medical assistance percentage (FMAP) rate, which varies by state and is designed so that the federal government pays a larger portion of Medicaid costs in states with lower per capita incomes relative to the national average (and vice versa for states with higher per capita incomes). Exceptions to the regular FMAP rate have been made for certain states, situations, populations, providers, and services.", "In the past, there were two temporary FMAP exceptions to provide states with fiscal relief due to recessions. They were provided through the Jobs and Growth Tax Relief Reconciliation Act of 2003 (JRTRRA, P.L. 108-27 ) and the American Recovery and Reinvestment Act of 2009 (ARRA, P.L. 111-5 ). To be eligible for both of these temporary FMAP increases, states had to abide by some requirements. These requirements varied in the two FMAP increases, but for both increases, states were required to maintain Medicaid \"eligibility standards, methodologies, and procedures\" and ensure that local governments did not pay a larger percentage of the state's nonfederal Medicaid expenditures than otherwise would have been required.", "FFCRA provides an increase to the FMAP rate for all states, the District of Columbia, and the territories of 6.2 percentage points for each calendar quarter occurring during the period beginning on the first day of the emergency period (i.e., January 1, 2020) and ending on the last day of the calendar quarter in which the last day of the public health emergency period ends (see \" Duration of Emergency Period \").", "States, the District of Columbia, and the territories will not receive this FMAP rate increase if (1) the state's Medicaid \"eligibility standards, methodologies, or procedures\" are more restrictive than what was in effect on January 1, 2020; (2) the amount of premiums imposed by the state exceeds the amount as of January 1, 2020; (3) the state does not maintain eligibility for individuals enrolled in Medicaid on the date of enactment (i.e., March 18, 2020) or for individuals who enroll during the emergency period through the end of the month in which the emergency period ends (unless the individual requests a voluntary termination of eligibility or the individual ceases to be a resident of the state); or (4) the state does not provide coverage (without the imposition of cost sharing) for any testing services and treatments for COVID-19 (including vaccines, specialized equipment, and therapies).", "FFCRA adds another condition for the FMAP rate increase. Specifically, states, the District of Columbia, and the territories cannot require local governments to fund a larger percentage of the state's nonfederal Medicaid expenditures for the Medicaid state plan or Medicaid disproportionate share hospital (DSH) payments than what was required on March 11, 2020.", "CBO preliminarily estimates that Section 6008 will increase direct spending by about $50.0 billion over the FY2020-FY2022 period."], "subsections": []}, {"section_title": "Section 6009. Increase in Medicaid Allotments for Territories", "paragraphs": ["Medicaid financing for the territories (i.e., America Samoa, Commonwealth of the Northern Mariana Islands, Guam, Puerto Rico, and the U.S. Virgin Islands) is different than the financing for the 50 states and the District of Columbia. Federal Medicaid funding to the states and the District of Columbia is open-ended, but the Medicaid programs in the territories are subject to annual federal capped funding.", "Federal Medicaid funding for the territories comes from different sources. The permanent source of federal Medicaid funding for the territories is the annual capped funding. Currently, the Medicaid annual capped funding for the territories is supplemented by additional funding for FY2020 and FY2021 that was provided through the Further Consolidated Appropriations Act, 2020 ( P.L. 116-94 ). ", "FFCRA increases the additional funding available for each territory for FY2020 and FY2021. The aggregate additional funding for the territories increases from $3.0 billion to $3.1 billion for FY2020 and $3.1 billion to $3.2 billion for FY2021.", "CBO preliminarily estimates that Section 6009 increases the allotment amount, and thus direct spending, by $204 million over the FY2020-FY2021 period."], "subsections": []}, {"section_title": "Section 6010. Clarification Relating to Secretarial Authority Regarding Medicare Telehealth Services Furnished During COVID-19 Emergency Periods", "paragraphs": ["Medicare coverage under Part B (fee-for-service) for telehealth services is defined under SSA Sec. 1834(m), which places certain conditions on such care including who can furnish and be paid for the service, where the patient is located (the originating site), where the physician is located (the distant site), and the types of services that are covered. Recent legislation has modified some of the conditions under which telehealth services may be furnished under Medicare. The Coronavirus Preparedness and Response Supplemental Appropriations Act ( P.L. 116-123 ), Division B, Sec. 102, added certain Medicare telehealth restrictions to the list of applicable conditions for which the Secretary could temporarily waive or modify program requirements or regulations during the COVID-19 emergency period. (See \" Duration of Emergency Period \".) The provision also defined a qualified telehealth provider, requiring a prior relationship within the past three years between the patient and the provider under Medicare.", "FFCRA expands the definition of a qualified provider to include those who had provider-patient relationships within the past three years outside of Medicare."], "subsections": [{"section_title": "Appendix. CRS Experts and Contact Information", "paragraphs": ["Below is a list of the health care provisions in FFCRA with the name and contact information for the CRS expert on that provision. In some cases, more than one expert contributed to a section, in which case their topics of expertise are also included. "], "subsections": []}]}]}]}]}}
{"id": "95-1013", "title": "Bahrain: Unrest, Security, and U.S. Policy", "released_date": "2019-05-23T00:00:00", "summary": ["An uprising against Bahrain's Al Khalifa ruling family that began on February 14, 2011, has subsided, but punishments of oppositionists and periodic demonstrations continue. The mostly Shia opposition to the Sunni-minority-led regime has not achieved its goal of establishing a constitutional monarchy, but the unrest has compelled the ruling family to undertake some modest reforms. Elections for a legislative body, held most recently in 2018, were marred by the banning of opposition political societies and allegations of gerrymandering to prevent opposition victories, but observers praised the newly elected lower house of the Assembly for naming a woman as its speaker. The mainstream opposition uses peaceful forms of dissent, but small factions, reportedly backed by Iran, have conducted some attacks on security officials.", "The Bahrain government's repression has presented a policy dilemma for the United States because Bahrain is a longtime ally that is pivotal to maintaining Persian Gulf security. The country has hosted a U.S. naval command headquarters for the Gulf region since 1948; the United States and Bahrain have had a formal Defense Cooperation Agreement (DCA) since 1991; and Bahrain was designated by the United States as a \"major non-NATO ally\" in 2002. There are over 7,000 U.S. forces, mostly Navy, in Bahrain. Bahrain relies on U.S.-made arms, but, because of the government's use of force against protesters, the Obama Administration held up some new weapons sales to Bahrain and curtailed U.S. assistance to Bahrain's internal security organizations. In 2014, Bahrain joined the U.S.-led coalition against the Islamic State and flew strikes against the group's fighters in Syria that year. Bahrain supports a U.S.-backed concept for a broad Arab coalition to counter Iran, the \"Middle East Strategic Alliance.\"", "The Trump Administration has prioritized countering Iran and addressing other regional security issues, aligning the Administration closely with Bahrain's leadership on that issue. In keeping with that approach, the Administration lifted the previous administration's conditionality on major arms sales to Bahrain's military and has corroborated Bahrain leadership assertions that Iran is providing material support to violent opposition factions in Bahrain. Critics of the policy assert that the Administration is downplaying human rights concerns in the interests of countering Iran.", "Within the Gulf Cooperation Council alliance (GCC: Saudi Arabia, Kuwait, UAE, Bahrain, Qatar, and Oman), Bahrain generally supports Saudi policies. In March 2015, it joined Saudi Arabia-led military action to try to restore the government of Yemen that was ousted by Iran-backed Houthi rebels. In June 2017, it joined a Saudi and UAE move to isolate Qatar for its purported support for Muslim Brotherhood-linked Islamist movements, accusing Qatar of hosting Bahraini dissidents and of allying with Iran.", "Bahrain has fewer financial resources than do most of the other GCC states and has not succeeded in significantly improving the living standards of the Shia majority. The unrest has, in turn, strained Bahrain's economy by driving away foreign investment. In October 2018, three GCC states assembled an aid package of $10 billion to reduce the strain on Bahrain's budget. Bahrain's small oil exports emanate primarily from an oil field in Saudi Arabia that the Saudi government has set aside for Bahrain's use, although a major new oil and gas discovery off Bahrain's coast was reported in early 2018. In 2004, the United States and Bahrain signed a free trade agreement (FTA); legislation implementing it was signed January 11, 2006 (P.L. 109-169). Some U.S. labor organizations assert that Bahrain's arrests of dissenting workers should void the FTA."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "The Political Structure, Reform, and Human Rights1", "paragraphs": ["The site of the ancient Bronze Age civilization of Dilmun, Bahrain was a trade hub linking Mesopotamia and the Indus valley until a drop in trade from India caused the Dilmun civilization to decline around 2,000 B.C. The inhabitants of Bahrain converted to Islam in the 7 th century. Bahrain subsequently fell under the control of Islamic caliphates based in Damascus, then Baghdad, and later Persian, Omani, and Portuguese forces. ", "The Al Khalifa family, which is Sunni Muslim and generally not as religiously conservative as the leaders of neighboring Saudi Arabia, has ruled Bahrain since 1783. That year, the family, a branch of the Bani Utbah tribe, left the Saudi peninsula and captured a Persian garrison controlling the island. In 1830, the ruling family signed a treaty establishing Bahrain as a protectorate of Britain, which was then the dominant power in the Persian Gulf. In the 1930s, Reza Shah Pahlavi of Iran unsuccessfully sought to deny Bahrain the right to grant oil concessions to the United States and Britain. As Britain reduced its military presence in the Gulf in 1968, Bahrain and the other smaller Persian Gulf emirates (principalities) sought a permanent status. A 1970 U.N. survey (some refer to it as a \"referendum\") determined that Bahrain's inhabitants did not want to join with Iran, a finding that was endorsed by U.N. Security Council Resolution 278 and recognized formally by Iran's parliament. Bahrain negotiated with eight other Persian Gulf emirates during 1970-1971 on federating with them, but Bahrain and Qatar each decided to become independent, and Bahrain became independent on August 15, 1971. The seven other emirates formed the United Arab Emirates (UAE)."], "subsections": [{"section_title": "The Ruling Family and Its Dynamics", "paragraphs": ["Bahrain is led by King Hamad bin Isa Al Khalifa (69 years old, born January 1950), who succeeded his father, Shaykh Isa bin Salman Al Khalifa, upon his death in 1999. Educated at Sandhurst Military Academy in Britain, King Hamad was previously commander of the Bahraini Defense Forces (BDF). The king is considered to be a proponent of accommodation with Bahrain's Shias, who constitute a majority of the citizenry but many of whom have long asserted they are treated as \"second class citizens,\" deprived of political power and of a fair share of the nation's economic wealth. About 25% of the citizen population is age 14 or younger. ", "Within the upper echelons of the ruling family, the most active proponent of accommodation with the Shia opposition is the king's son and designated successor, the U.S.- and U.K.-educated Crown Prince Shaykh Salman bin Hamad, who is about 50 years old. He and his allies, including Deputy Prime Minister Muhammad bin Mubarak Al Khalifa and Foreign Minister Khalid bin Ahmad bin Muhammad Al Khalifa, assert that further reforms could calm Bahrain's internal strife. The Crown Prince and his faction were strengthened by his appointment in 2013 to a newly created position of First Deputy Prime Minister, staffed with young, well-educated reformists. A younger son of the king, Shaykh Nasser bin Hamad Al Khalifa, who is about 35 years old, could potentially succeed King Hamad should Salman step aside. The Crown Prince's wife, Shaykha Hala, passed away in June 2018. ", "The \"anti-reform\" faction\u2014who assert that concessions to the Shia majority cause it to increase its political demands\u2014is led by the King's uncle (the brother of the late Amir Isa), Prime Minister Khalifa bin Salman Al Khalifa, who has been in position since Bahrain's independence in 1971. He is about 82 years old but still active, and the King is likely unwilling to risk unrest within the ruling family by removing him. The Prime Minister's allies include Minister of the Royal Court Khalid bin Ahmad bin Salman Al Khalifa and his brother, BDF Commander Khalifa bin Ahmad Al Khalifa. These brothers are known as \"Khawalids,\" hailing from a branch of the ruling family traced to a Khalid bin Ali Al Khalifa, with like-minded allies throughout the security and intelligence services and the judiciary. In September 2013, Bahrain appointed BDF Lieutenant Colonel Abdullah bin Muhammad bin Rashid Al Khalifa as Ambassador to the United States. "], "subsections": []}, {"section_title": "Executive and Legislative Powers", "paragraphs": ["The king, working through the Prime Minister and the cabinet, has broad powers, including appointing all ministers and judges and amending the constitution. Al Khalifa family members hold 12 out of 26 cabinet posts, including the ministries of defense, interior (internal security), and foreign affairs. Typical Bahrain cabinets include five or six Shia ministers. ", "Upon taking office in 1999, Hamad assumed the title of king\u2014a title that implies more accountability than the former title \"Amir.\" A public referendum on February 14, 2001 adopted a \"National Action Charter,\" provisions of which were incorporated into a new constitution issued by the King in 2002. However, many Shias and reform-minded Sunnis criticized the government for not putting the new constitution to a public ratification vote and for deviating from the 1973 constitution by establishing an all-appointed Shura (consultative) Council of equal size (40 seats each) of the elected Council of Representatives (COR). Together, these bodies constitute the National Assembly. The government has tended to appoint generally more educated, pro-Western, and progovernment members to the Shura Council. There is no quota for women in the body. ", "The Assembly only partially checks government power, despite constitutional amendments of May 2012 that gave the body greater authority. The amendments declared the elected COR as the presiding chamber of the Assembly, enhancing its authority on issues on which the two chambers disagree. The National Assembly does not have the power to confirm individual cabinet appointments, but as of 2012, it has had the power to reject the government's four-year work plan\u2014and therefore the whole cabinet. The COR has always had the power to remove individual ministers through a vote of no-confidence (by two-thirds majority). The COR can also, by a two-thirds majority, declare \"non-cooperation\" with the Prime Minister, but the king rules on whether to dismiss the Prime Minister or disband the COR. Either chamber of the National Assembly can originate legislation but enactment into law requires concurrence by the King. Prior to the May 2012 constitutional amendments, only the COR could originate legislation. The king's \"veto\" can be overridden by a two-thirds majority vote of both chambers. A 2012 decree gives the National Assembly the ability to recommend constitutional amendments, which are vetted by a \"Legislation and Legal Opinion Commission\" before consideration by the king. ", "The adoption of the National Charter and other early reforms instituted by King Hamad, although still short of the Shia majority's expectations, were more extensive than those made by his father, Amir Isa. Amir Isa's most significant reform was his establishment in late 1992 of a 30-member all-appointed Consultative Council, whose mandate was limited to commenting on government-proposed laws. In June 1996, he expanded it to 40 members. However, that body did not satisfy broad demands for the restoration of the elected national assembly that was established under the 1973 constitution but abolished in August 1975 because of Sunni-Shia tensions. Amir Isa's refusal to restore an elected Assembly was at least partly responsible for sparking daily Shia-led antigovernment violence during 1994-1998. "], "subsections": []}, {"section_title": "Political Groups and Elections", "paragraphs": ["COR elections have been held every four years since 2002, each time generating substantial tension over perceived government efforts to deny Shias a majority in the COR. The Shia opposition has sought, unsuccessfully to date, to establish election processes and district boundaries that would allow them to translate their numbers into political strength. If no candidate in a district wins more than 50% in the first round, a runoff is held one week later.", "Political parties are banned, but factions organize as functionally equivalent \"political societies\":", "Wifaq (Accord National Islamic Society) is the most prominent Shia political society. Its officials have, at times, engaged with the government in and outside of formal \"national dialogues\" since the 2011 uprising began. Wifaq' s leaders are Secretary-General and Shia cleric Shaykh Ali al-Salman and his deputy Khalil al-Marzuq. Shaykh Salman remains jailed. Another top figure in the faction is the 79-year-old Shia cleric Isa Qasim, whose citizenship was revoked on June 20, 2016. In 2016, Bahraini courts approved government requests to dissolve Wifaq entirely and to seize and auction off its assets. W if aq allies include the National Democratic Action Society, the National Democratic Assembly, the Democratic Progressive Tribune, and Al Ekhaa. Al Haq (Movement of Freedom and Democracy), a small Shia faction, is outlawed because of its calls for outright change of regime and has boycotted all the COR elections. Its key leaders, Dr. Abduljalil Alsingace and Hassan Mushaima, have been imprisoned since the uprising. The Bahrain Islamic Action Society and Amal. Two other small Shia factions linked to the the Islamic Front for the Liberation of Bahrain (IFLB) - a party linked to alleged Iran-backed plots to overthrow Bahrain's government in the 1980s and 1990s \u2013 are outlawed. Amal's leader, Shaykh Muhammad Ali al-Mafoodh, has been in prison since 2011. Waad (\"promise\") is a secular opposition group that includes both Sunnis and Shias. Its former leader, Ibrahim Sharif, has been repeatedly arrested, released, and rearrested. Its current leader is Sami Fuad Sayedi. On May 31, 2017, the High Civil Court approved a government request to dissolve it. Sunni Islamist s . Among the prominent Sunni factions are Minbar (Arabic for \"platform\"), an offshoot of the Muslim Brotherhood, and Al Asala , which is a harder-line \"Salafist\" political society. Smaller Sunni Islamist factions include Al Saff , the Islamic Shura Society , and the Al Wasat Al Arabi Islamic Society . In June 2011, a non-Islamist, generally progovernment Sunni political coalition\u2014the National Unity Assembly (NUA) \u2014 was formed as a response to the uprising. "], "subsections": [{"section_title": "Pre-uprising Elections", "paragraphs": ["In several elections held during 2002-2010, which are generally held in the fall of the year they are held, tensions between the Shia majority and the regime escalated. ", "October 2002 . In the first elections under the 2002 constitution, Wifaq and other Shia political groups boycotted on the grounds that establishing an elected COR and an appointed Shura Council of the same size diluted popular will. There were 170 candidates, including 8 women. Sunnis won two-thirds of the 40 COR seats, and none of the women was elected. November 2006. Sunni-Shia tensions escalated in advance of the COR and municipal elections amid a government adviser's revelations that the government had adjusted election districts to favor Sunni candidates and had issued passports to Sunnis to increase the Sunni vote. Wifaq participated, helping lift turnout to 72%, and the faction won 17 seats (virtually all it contested) to become the largest COR bloc. Sunnis won the remaining 23 seats, of which eight were secular and 15 were Islamists. One woman, who ran unopposed, was elected (out of 18 women candidates). The King appointed a Shura Council with 20 Shias, 19 Sunnis, one Christian, and nine women. A Wifaq supporter was subsequently appointed minister of state for foreign affairs. October 2010 . Even though oppositionists again accused the government of gerrymandering to favor Sunnis, and despite the arrest of 23 Shia leaders a month before the election, Wifaq participated. Of the 200 candidates, six were women. Turnout was about 67%. The election increased Wifaq's representation to 18 seats, reduced Sunni Islamists to five seats from 15; and greatly increased the number of Sunni independents to 17 seats (from nine). The one female incumbent was reelected. The king reappointed 30 of the 40 Shura Council incumbents. Of the total membership, 19 were Shias, including the speaker. Four were women, of which one was Jewish and one was Christian. "], "subsections": []}]}, {"section_title": "2011 Uprising: Origin, Developments, and Prognosis", "paragraphs": ["The aspirations of Bahraini Shias were demonstrated as unsatisfied when a major uprising began on February 14, 2011, following the toppling of Egypt's President Hosni Mubarak. After a few days of confrontations with security forces, mostly Shia demonstrators converged on the interior of a major traffic circle (\"Pearl Roundabout\"). The unrest escalated on February 17-18, 2011, when security forces using rubber bullets and tear gas killed four demonstrators. All 18 Wifaq deputies in the COR resigned. Following large demonstrations in late February, the Crown Prince invited protester representatives to formal dialogue, many demonstrators were released, and two Al Khalifa family members were dropped from the cabinet. In March 2011, the Crown Prince advanced a \"seven principles\" proposal for a national dialogue that would agree on a \"parliament with full authority\"; a \"government that meets the will of the people\"; fair voting districts; and several other measures. Protest leaders welcomed dialogue but asserted that the seven principles fell short of their demands for a constitutional monarchy in which the Prime Minister and cabinet are selected by the fully elected parliament. They also demanded ending gerrymandering of election districts to favor Sunnis, and more jobs and economic opportunities\u2014demands encapsulated in the October 2011 \"Manama Document\" unveiled by W ifaq and Waad . ", "On March 13, 2011, protesters blockaded the financial district of Manama, triggering the Gulf Cooperation Council (GCC: Saudi Arabia, Kuwait, Bahrain, UAE, Qatar, and Oman) to send forces into Bahrain on March 14, 2011. The GCC's joint Peninsula Shield force, including 1,200 Saudi armored forces and 600 UAE police, took up positions at key locations and Kuwait sent naval forces to help secure Bahrain's maritime borders. On March 15, the King declared a three-month state of emergency. GCC-backed security forces cleared demonstrators from Pearl Roundabout and demolished the Pearl Monument on March 18. The king ended the state of emergency as of June 1, and the vast bulk of the GCC force departed in June 2011, with some UAE police and other GCC forces remaining. "], "subsections": [{"section_title": "Bahrain Independent Commission of Inquiry (BICI)", "paragraphs": ["On June 29, 2011, as a gesture toward the opposition and international critics, the king named a five-person \"Bahrain Independent Commission of Inquiry\" (BICI), headed by international legal expert Dr. Cherif Bassiouni, to investigate the government response to the unrest\u2014and not the broader sources of the unrest. The 500+ page BICI report, released on November 23, 2011, provided support for the narratives of both sides as well as recommendations. It stated that", "there was \"systematic\" and \"deliberate\" use of excessive force, including torture and forced confessions, against protesters; the opposition increased its demands as the uprising progressed; and the government did not provide evidence to link Iran to the unrest.", "The report contained 26 recommendations to hold accountable those government personnel responsible for abuses during the uprising. King Hamad promised full implementation of all recommendations. On November 26, 2011, the king established a 19-member National Commission to oversee implementation of the recommendations, chaired by the Shura Council Chairman (a Shia). A \"Follow-Up Unit\" was established by the Ministry of Justice. "], "subsections": [{"section_title": "Assessments of Compliance with the BICI Recommendations", "paragraphs": ["Bahrain Government . Bahrain officials assert that the government has fully implemented the vast majority of the 26 BICI recommendations. However, other assessments broadly agree that Bahrain has only partially implemented those recommendations that address prevention of torture, provision of legal counsel, allowing free access to media, holding security officials accountable, or integrating Shias into the security services. There appears to be consensus that the government has rebuilt almost all of the 53 Shia religious sites demolished in 2011. ", "State Department . The FY2013 defense authorization act ( P.L. 112-239 ) directed the Secretary of State to report to Congress on Bahrain's implementation of the BICI recommendations, as did the FY2016 Consolidated Appropriation ( P.L. 114-113 ). The latest such report, dated June 21, 2016, indicated that Bahrain's government had: ", "made the office of the inspector general of the Ministry of Interior independent of the ministry's hierarchy; stripped the Bahrain National Security Agency (BNSA) of arrest powers through an amendment to the 2002 decree establishing that agency; provided compensation and other remedies for families of the deceased victims of the government's response to the unrest. About $26 million was budgeted by the government to provide the compensation; ensured that dismissed employees were not dismissed because of the exercise of their right to freedom of expression, association, or assembly. This assessment was based on data that almost all of 2,700+ workers who had been fired for participating in the unrest had been rehired; and developed programs to promote religious, political, and other forms of tolerance and promotion of human rights and the rule of law.", "The report recommended that the government needs to allow oversight agencies greater independence, and implement recommendations on freedom of expression. ", "Outside Assessments . Reports and testimony by the staff of the Project on Middle East Democracy (POMED) have asserted that the government has fully implemented only three BICI recommendations, partially implemented about half of them, and not implemented at all at least six. The group characterized the June 2016 State Department report referenced above as \"a real effort to pull punches and avoid clear evaluations of progress, in order to avoid antagonizing the Bahraini government.\" A November 2015 report by Americans for Democracy and Human Rights in Bahrain asserted that the government had only fully implemented two of the BICI recommendations, and that that the issues that caused the uprising had not been addressed.", "BICI-Related U.S. Legislation . In the 114 th Congress, S. 2009 and H.R. 3445 would have prohibited specific U.S. weapons and crowd control equipment sales to Bahrain (tear gas, small arms, light weapons and ammunitions for same, Humvees, and \"other\" crowd control items) until the State Department certified that Bahrain has fully implemented all BICI recommendations. A Senate-passed State Department authorization bill, S. 1635 , would have required another State Department assessment of implementation of the BICI recommendations, and the effect of such findings on the U.S. defense posture in the Gulf. The provision was not included in P.L. 114-323 . "], "subsections": []}]}, {"section_title": "The \"National Dialogue\" Process", "paragraphs": ["The BICI process created conditions for a government-opposition \"National Dialogue\" process, which was inaugurated on July 2, 2011. Chaired by the COR speaker, about 300 delegates participated, of which 40-50 were members of the Shia opposition (including five W ifaq members). The weeks-long dialogue addressed political, economic, social, and human rights issues, but the detention of senior oppositionists caused Wifaq to exit the talks on July 18, 2011. The dialogue concluded with the following consensus recommendations, which were endorsed by the government on July 29, 2011: ", "an elected parliament (lower house) with expanded powers, including to confirm a nominated cabinet. In addition, the overall chairmanship of the National Assembly should be exercised by the elected COR, not the Shura Council; a government \"reflecting the will of the people\"; \"fairly\" demarcated electoral boundaries; reworking of laws on naturalization and citizenship; combating financial and administrative corruption; and efforts to reduce sectarian divisions. ", "Despite the opposition's assertions that the consensus dialogue recommendations did not resolve core issues, the National Assembly adopted significant elements of them in January 2012 and the King signed them into law on May 3, 2012, as constitutional amendments that", "imposed limitations on the power of the king to appoint the members of the Shura Council, and a requirement that he consult the heads of the two chambers of the National Assembly before dissolving the COR; gave either chamber of the National Assembly the ability to draft legislation or constitutional amendments; changed the overall chair of the National Assembly to the speaker of the elected COR instead of the chairman of the Shura Council; and gave the COR the ability to veto the government's four-year work plan\u2014essentially an ability to veto the nomination of the entire cabinet. This was an expansion of previous powers to vote no confidence against individual ministers. ", "Second National Dialogue . In January 2013, Wifaq and five allied parties accepted the King's call to restart political dialogue. The second dialogue began on February 10, 2013, consisting of twice per week meetings attended by the Minister of Justice (an Al Khalifa family member) and two other ministers, eight opposition representatives ( Wifaq and allied parties), eight representatives of progovernment organizations, and five members of the National Assembly. The talks quickly stalled over opposition insistence that consensus recommendations be put to a public referendum, while the government insisted that agreements be enacted by the National Assembly. The opposition also demanded that the dialogue include representatives of the King rather than ministers. In September 2013, the opposition began boycotting the talks, citing the arrest of Wifaq 's deputy chief, and the dialogue was suspended on January 8, 2014. ", "The Crown Prince sought to revive negotiations by meeting with Wifaq leaders in January 2014, despite the fact that the two top leaders were charged for their roles in the uprising. The meeting addressed Wifaq 's demand that political dialogue be conducted with senior Al Khalifa members. In September 2014, the Crown Prince issued a five-point \"framework\" for a new dialogue including (1) redefining electoral districts; (2) revising the process for appointing the Shura Council; (3) giving the elected COR new powers to approve or reject the formation of a new cabinet; (4) having international organizations work Bahrain's judiciary; and (5) introducing new codes of conduct for security forces. Opposition political societies rejected the proposals as not satisfying a core demand for the selection of a prime minister by an elected COR, and no further national dialogue has convened to date. "], "subsections": []}, {"section_title": "Current Situation, Post-Uprising Elections, and Prospects", "paragraphs": ["Unrest continues, although at far less intensity than in 2011, and observers have accused the government of backsliding in its implementation of the BICI recommendations and other human rights reforms. In 2017, the King signed a National Assembly bill amending the constitution to allow military courts the right to try civilians accused of terrorism, and the government returned arrest powers to the BNSA (see above). As noted below, the government also has stepped up citizenship revocations and expulsions and continues to incarcerate opposition leaders. Each February 14 anniversary of the uprising has been marked by demonstrations.", "The government and the opposition have, at times, discussed confidence-building measures such as appointments of oppositionists to the cabinet. The King appears to have ruled out replacing the Prime Minister even though some oppositionists have suggested they would accept a more moderate ruling family member or a Sunni non-royal in that role. Hardline Sunnis within and outside the government, reportedly with the support of Saudi officials, continue to urge the ruling family to refuse compromise."], "subsections": [{"section_title": "COR Elections in 2014", "paragraphs": ["In an effort to present an image of \"normalization\" of the domestic political situation, the government urged the opposition to participate in the November 22, 2014, COR election. However, the government reduced the number of electoral districts to four, from five, further reducing the chances that Shias would win a majority of COR seats. Wifaq and its allies boycotted, reducing the turnout to about 50% (Bahrain official figures). There was little violence.", "The seats were mostly won by independent candidates, suggesting that voters sought to reduce polarization. Only three candidates of the Sunni Islamist political societies won, and none of the 10 pro-government Al Fatih coalition candidates was elected. The 14 Shias elected were independents, and Shias were the deputy COR speaker and the chairman of the Shura Council. "], "subsections": []}, {"section_title": "COR Elections in 2018", "paragraphs": ["Observers sought to gauge the state of Bahrain's politics from the 2018 COR elections, held on November 24, 2018, with a runoff on December 1, 2018, Municipal council elections were held concurrently. The elections produced significant tensions, and the outcome was widely derided by Bahraini oppositionists and regional and international observers as neither free nor fair. ", "In May 2018, the National Assembly enacted legislation banning dissolved political societies ( Wifaq and Waad ) from participating, and the government decreed that no members of banned parties could run. Yet, in part to try to instill legitimacy to the elections, the government reportedly encouraged Shias to compete as independents. Wifaq members boycotted the vote, but a small Wifaq ally, the Democratic Progressive Tribute, participated. Several Sunni groupings, including the National Unity Assembly (NUA, see above), Minbar, and Asala, competed in order not to cede representation to independent Sunnis. One liberal political society composed of both Shias and Sunnis, the National Action Charter Society ( Mithaq) , competed as well.", "The final list of candidates included 293 persons, of whom 41 were women\u2014the highest number of women candidates in any Bahrain COR elections. There were 137 candidates for the 30 seats on Bahrain's three municipal councils, of which eight candidates were women. Only nine COR seats were decided on November 24, including victories by two women. Also undecided were 23 municipal council seats. Final results awaited a runoff for the 31 undecided seats (no candidate received a majority) on December 1. The government claimed turnout was very high at 67%, but oppositionists\u2014who widely derided the election as a sham and urged a broad boycott\u2014claimed turnout was only about 30%. ", "Following the December 1 runoff, the government noted that five political societies participated but that 85% of the seats were won by independents. Government officials noted that only five incumbents retained their seats, and that the victories by six women was the highest ever. No breakdown by sect was announced, but the Wi faq boycott virtually ensured that Sunnis constitute a CoR majority. The new COR voted its first female speaker, Fawzia Zainal. Bahrain observers report that the Shia deputy speaker, Abdunabi Salman, is serving as an unofficial envoy to the Shia community, aggregating its grievances and attempting to redress them. A Shura Council was appointed in early December, with roughly the same sect and gender composition as recent Shuras, but the King excluded members of political societies from membership. "], "subsections": []}, {"section_title": "Violent Underground Groups Cloud Outlook", "paragraphs": ["Aggravating government-opposition tensions is the activity of apparently small but violent underground groups that have periodically attacked security forces with bombs and improvised explosive devices (IEDs). These groups have not targeted civilians, although on at least one occasion civilians have been killed or injured. In April 2015, the government arrested 29 persons for a December 2014 bombing that wounded several police officers. On December 25, 2017, six Bahraini Shias were sentenced to death for allegedly forming a terrorist cell and plotting to assassinate a senior Bahrain military official. On January 1, 2017, 10 detainees who had been convicted of militant activities such as those discussed above broke out of Bahrain's Jaw prison with the help of attackers outside the jail. According to the State Department international terrorism report for 2017, \"Terrorist activity in Bahrain increased in 2017,\" citing Shia militant attacks that the report says killed four police officers in 2017. Mainstream opposition factions deny any connection to underground violent groups, the most active include the following: ", "Al Ashtar Brigades (AAB) . This group, the most well-known of the underground groups, issued its first public statement in April 2013. It has claimed responsibility for about 20 bombings against security personnel, including a March 2014 attack that killed three police officers, including a UAE officer. In January 2017, the government executed three Shias for that attack\u2014the first executions since the 2011 uprising began. On March 17, 2017, the Trump Administration designated two Ashtar Brigades members, one of which is Iran-based, as Specially Designated Global Terrorists (SDGTs) under Executive Order 13224, which blocks U.S.-based property of entities that conduct terrorism. On July 10, 2018, the State Department named the Al Ashtar Brigades as a Foreign Terrorist Organization (FTO) under Section 219 of the Immigration and Nationality Act. The group was also named as an SDGT under E.O. 13224. On August 13, 2018, the Trump Administration designated Qassim Abdullah Ali Ahmad, a purported Al Ashtar leader, as an SDGT. The \"14 February Coalition\" (named for the anniversary of the Bahrain uprising) claims inspiration from antiregime protesters in Egypt in the uprising there in 2011. The group claimed responsibility for an April 14, 2013, explosion in the Financial Harbour district. In September 2013, 50 Shias were sentenced to up to 15 years in prison for alleged involvement in the group. On November 10, 2017, militants allegedly from the group attacked a key pipeline that supplies Saudi oil to the Bahrain Petroleum Company refinery in Sitra, Bahrain. Others: Other groups, using the names Bahrain Liberation Movement, al-Wafaa , the Resistance Brigades, the Mukhtar Brigades, the Basta organization, and the Imam Army, are offshoots of the Al Ashtar Brigades, or separate small cells. In March 2018, authorities arrested 116 persons allegedly part of an armed network supported by the IRGC-QF. In late September 2018, the government charged 169 persons with forming a \"Bahrain Hezbollah\"\u2014a Bahrain version of Lebanese Hezbollah\u2014with Iranian backing. On May 6, 2019, Bahrain's Court of Cassation sentenced 19 al-Wafaa activists varying jail terms for maintaining links to Iran's Islamic Revolutionary Guard Corps (IRGC) and Lebanese Hezbollah. ", "Oppositionists accuse the government of exaggerating Iran's support for these violent groups, but the State Department reports that some Bahraini groups are working with the Islamic Revolutionary Guard Corps-Qods Force (IRGC-QF), which reportedly supplies the militants with weapons. In late 2016, Bahraini authorities uncovered a large warehouse containing equipment, apparently supplied by Iran, suitable to constructing \"explosively-forced projectiles\" (EFPs) such as those Iran-backed Shia militias used against U.S. armor in Iraq during 2004-2011. No EFPs have actually been used in Bahrain, to date. "], "subsections": []}]}, {"section_title": "U.S. Posture on the Uprising", "paragraphs": ["The United States has repeatedly urged Bahraini authorities not to use force against protesters and to release jailed opposition leaders, but has not at any time called for the Al Khalifa regime to step down, asserting that the government has tried to address many opposition grievances. High-level U.S. engagement with Bahraini leaders has continued and no sanctions have been imposed on any Bahraini officials. The Obama Administration withheld or conditioned some arms sales to Bahrain, but U.S. military cooperation with Bahrain continued without interruption. In a September 21, 2011, speech to the U.N. General Assembly, President Obama said the following:", "In Bahrain, steps have been taken toward reform and accountability. We're pleased with that, but more is required. America is a close friend of Bahrain, and we will continue to call on the government and the main opposition bloc\u2014the Wifaq \u2014to pursue a meaningful dialogue that brings peaceful change that is responsive to the people. We believe the patriotism that binds Bahrainis together must be more powerful than the sectarian forces that would tear them apart. It will be hard, but it is possible.", "Then-Secretary of State Kerry stated upon the July 17, 2016, dissolution of Wifaq that ", "This ruling is the latest in a series of disconcerting steps in Bahrain.... These actions are inconsistent with U.S. interests and strain our partnership with Bahrain.... We call on the Government of Bahrain to reverse these and other recent measures, return urgently to the path of reconciliation, and work collectively to address the aspirations of all Bahrainis.", "Critics said that the Obama Administration was insufficiently critical of Bahrain's leaders, citing then-Secretary of State Clinton's comments in Bahrain on December 3, 2010, referring to the October 2010 elections, saying \"I am impressed by the commitment that the government has to the democratic path that Bahrain is walking on.... \" On July 7, 2014, the government ordered then-Assistant Secretary of State for Democracy, Human Rights, and Labor (DRL) Tom Malinowski out of Bahrain for meeting with Wifaq leader Shaykh Salman. Then-Secretary Kerry, in a phone call to Bahrain's Foreign Minister, called that expulsion \"unacceptable.\" A July 18, 2014, letter to King Hamad, signed by 18 Members of the House of Representatives, called on the king to invite Assistant Secretary Malinowski back. Bahrain reversed its position, and he and Assistant Secretary of State for the Near East Anne Patterson visited Bahrain in December 2014. "], "subsections": [{"section_title": "Trump Administration Policy", "paragraphs": ["As part of its stated goal of pressuring Iran, the Trump Administration has downplayed U.S. concerns about Bahrain's human rights record, dropped conditions on the approval of new sales to Bahrain's military, and imposed new U.S. sanctions on Bahrain militant groups (discussed above). In May 2017, during his visit to the region, President Trump assured King Hamad that U.S.-Bahrain relations would be free of the \"strain\" that characterized U.S.-Bahrain relations on human rights issues during the Obama Administration. Crown Prince Salman visited Washington, DC, in November 2017 and discussed with President Trump a wide range of regional and bilateral issues, including defense and economic relations. ", "In 2017, the State Department criticized the dissolution of Waad as unhelpful to political reconciliation. Yet, Secretary of State Michael Pompeo was criticized by some U.S. human rights organizations for not publicly raising human rights issues during his January 2019 visit to Bahrain and meeting with King Hamad; the trip was part of a visit to the GCC states to promote unity among them and their cooperation with the United States against Iran. Bahrain opposition figures have expressed concerns that the policy could cause the opposition to draw closer to Iran. "], "subsections": []}, {"section_title": "U.S. Programs to Promote Political Reform/Civil Society", "paragraphs": ["The United States has funded programs to accelerate political reform in Bahrain and empower its political societies since long before the uprising. The \"Middle East Partnership Initiative (MEPI)\" began funding prodemocracy programs in Bahrain in 2003, including for an American Bar Association (ABA) program to support the Ministry of Justice's Judicial and Legal Studies Institute (JLSI) specialized training for judges, lawyers, law schools, and Bahrain's bar association. The ABA also provided technical assistance to help Bahrain implement the BICI recommendations, including legislation on fair trial standards. MEPI funds are also used to train Bahraini journalists. The National Democratic Institute (NDI) had received some U.S. funds for its programs to enhance the capabilities of Bahrain's National Assembly. For example, in FY2016, the United States provided about $350,000 for democracy and human rights promotion programs in Bahrain, of which about $250,000 was provided through NDI. "], "subsections": []}]}]}, {"section_title": "Other Human Rights Issues35", "paragraphs": ["The bulk of worldwide criticism of Bahrain's human rights practices focuses on the government response to the unrest, including relative lack of accountability of security forces, suppression of free expression, and treatment of prisoners. The government, as have several of the other Gulf states, has increasingly used laws allowing jail sentences for \"insulting the king\" to silence opponents. However, State Department human rights reports and outside assessments note additional problems that might be unrelated to the unrest. ", "Several organizations are chartered as human rights groups, although the government characterizes most of them and their leaders as advocates for or members of the opposition. The most prominent are the Bahrain Human Rights Society (the primary licensed human rights organization), the Bahrain Transparency Society, and the Bahrain Center for Human Rights (BCHR, a U.S. grantee in FY2016) and the Bahrain Youth Society for Human Rights (BYSHR), which was officially dissolved but remains active informally. Some of the leaders of these organizations have been repeatedly arrested. ", "In 2013, in line with the BICI report, the king issued a decree reestablishing the \"National Institution for Human Rights\" (NIHR) to investigate human rights violations. It issues annual reports. In October 2016, King Hamad issued a decree enhancing the NIHR's powers, including the ability to make unannounced visits to detention centers and to request formal responses by the various ministries to NIHR recommendations. There is also a quasigovernmental Commission on Prisoner and Detainee Rights (PDRC). ", "Bahrain has drawn increasing attention from U.N. human rights bodies and other governments. Each March since the uprising began, the U.N. Human Rights Council has issued statements condemning the government's human rights abuses. The United States, Britain, and eight other EU countries have sometimes opposed these statements on the grounds that the government has sought to address international concerns on this issue. Opposition activists reportedly have requested the appointment of a U.N. Special Rapporteur on human rights in Bahrain and the establishment of a formal U.N. office in Bahrain that would monitor human rights practices there. These steps have not been taken. Bahrain has often denied entry to international human rights researchers and activists, including from U.S. organizations such as Human Rights Watch. "], "subsections": [{"section_title": "Women's Rights", "paragraphs": ["Experts and other observers have long perceived Bahrain as advancing women's rights. The Council of Ministers (cabinet) regularly has at least one, and often several, female ministers. The number of women in the National Assembly is provided in Table 1 and, as noted, the CoR elected its first female CoR speaker after the 2018 elections. Still, traditional customs and some laws tend to limit women's rights in practice. Women can drive, own and inherit property, and initiate divorce cases, but religious courts may refuse a woman's divorce request. A woman cannot transmit nationality to her spouse or children. Some prominent Bahraini women, backed by the wife of the King and the \"Supreme Council for Women,\" have campaigned for a codified family law. Other women's rights organizations in Bahrain include the Bahrain Women's Union, the Bahrain Women's Association, and the Young Ladies Association."], "subsections": []}, {"section_title": "Religious Freedom37", "paragraphs": ["The State Department's recent reports on international religious freedom focus extensively on abuses related to the unrest, asserting that the government discriminates against the Shia majority and Shia clergy. In 2014, the Ministry of Justice and Islamic Affairs, which regulates Islamic affairs, dissolved the Islamic Ulema Council, the main assembly of Shia clerics in Bahrain, for allegedly engaging in illegal political activity. A Court of Cassation upheld that dissolution in April 2015. In June 2016, the king signed an amendment to a 2005 law regulating political societies, banning persons who are active in religious positions from engaging in political activities\u2014an amendment that appeared to be an effort to further weaken Wifaq . On the other hand, the government does offer some financing for Shia seminaries ( hawzas ). ", "In July 2017, Bahrain became the first country in the region to enact a unified personal status law, covering both Shias and Sunnis, and thereby weakening the power of religious courts to regulate matters such as marriage and divorce. The law was enacted despite opposition from Shia legislators who argue that only senior Shia clerics, such as Iraq-based Grand Ayatollah Ali al-Sistani, have the authority to legislate on such matters. ", "According to the recent State Department reports, the government allows freedom of worship for Christians, Jews, and Hindus although the constitution declares Islam the official religion. Non-Muslim groups must register with the Ministry of Social Development to operate and Muslim groups must register with the Ministry of Justice and Islamic Affairs. There are 19 registered non-Muslim religious groups and institutions, including Christian churches of a wide variety of denominations, and Hindu and Sikh groups. The government donated land for the Roman Catholic Vicariate of Northern Arabia to relocate from Kuwait to Bahrain. A small Jewish community of about 36-40 persons\u2014mostly from families of Iraqi Jews who settled in Bahrain in the 19 th century\u2014remains in Bahrain, and apparently does not face any harassment or other difficulty. Some of Bahrain's Jews came from southern Iran. ", "Members of the Baha'i faith, which is declared blasphemous in Iran and Afghanistan, have been discriminated against in Bahrain. However, members of that community can worship openly. "], "subsections": []}, {"section_title": "Human Trafficking and Labor Rights", "paragraphs": ["Bahrain remains a destination country for migrant workers from South and East Asia, as well as some countries in Africa. Domestic workers are highly vulnerable to forced labor and sexual exploitation because they are largely unprotected under the labor law. The State Department's \"Trafficking in Persons Report\" for 2018 upgraded Bahrain to \"Tier 1,\" from the \"Tier 2\" rating it had for the three previous years. The upgrade was based on an assessment that the government had made \"key achievements\" on this issue in the reporting period, including the first ever conviction of a national for forced labor and the first ever conviction of a complicit government official. In 2014, the Obama Administration waived a mandatory downgrade for Bahrain to Tier 3 after it was assessed for three consecutive years as \"Tier 2: Watch List.\" Bahrain subsequently was assessed as making notable progress on the issue. ", "Regarding the related issue of labor rights, U.S. government reports credit Bahrain with significant labor reforms, particularly a 2002 law granting workers, including noncitizens, the right to form and join unions. The law holds that the right to strike is a legitimate means for workers to defend their rights and interests, but that right is restricted for workers in the oil and gas, education, and health sectors. There are about 50 trade unions in Bahrain, but all unions must join the General Federation of Bahrain Trade Unions (GFBTU). The GFBTU has many Shia members, and during the height of the unrest in 2011, the federation called at least two general strikes to protest use of force against demonstrators. During March-May 2011, employers dismissed almost 5,500 workers from both the private and public sectors, including 25% of the country's union leadership. The government claims that virtually all were subsequently rehired. The State Department has asserted that the government made efforts in 2015 to reinstate workers dismissed or suspended during the period of high unrest. Some U.S. MEPI funds (see above) have been used for AFL-CIO projects with Bahraini labor organizations.", "The architect of some recent labor reforms is the Labor Market Regulatory Authority (LMRA), which is separate from and considered more forward looking than the Ministry of Labor and Social Development. The LMRA has made strides to dismantle the \"sponsorship system\" that prohibited workers from changing jobs, and has helped institute requirements that every expatriate worker must be provided with health insurance. The LMRA has also instituted public awareness campaigns against trafficking in persons and has established a publicly funded \"labor fund\" to upgrade worker skill levels. Still, the slow payment of wages led hundreds of expatriate workers to protest on several occasions during the year. After mediation by the Ministry of Labor, all back wages were paid by the end of 2018, according to the State Department. "], "subsections": []}, {"section_title": "Torture", "paragraphs": ["Well before the 2011 uprising, Human Rights Watch and other groups asserted that Bahraini authorities were practicing torture, allegations that continue today, including in the State Department human rights report for 2017. A May 13, 2011, hearing of the Tom Lantos Human Rights Commission asserted that torture was being used regularly on those (mostly Shias) arrested in the unrest. The State Department human rights report for 2011 said there were numerous reports of torture during the state of emergency (March-June 2011). Since 2013, the government has not facilitated visits by the U.N. Special Rapporteur on Torture and Other Cruel, Inhuman or Degrading Treatment or Punishment. "], "subsections": []}]}]}, {"section_title": "U.S.-Bahrain Relations43", "paragraphs": ["U.S.-Bahrain ties are long-standing and have deepened over the past several decades. The American Mission Hospital was established in 1903 as the first hospital in what is now Bahrain. A U.S. Embassy opened in Manama, Bahrain's capital, immediately after Bahrain became independent. Hundreds of Bahraini students come to the United States each year to study. The bilateral security relationship dates to the end of World War II, well before Bahrain's independence, and remains central to the U.S. ability to address regional threats such as those posed by Iran and by terrorist movements. There are about 7,000 U.S. military personnel deployed in Bahrain, mostly Navy, implementing various missions discussed below, including against the Islamic State. Bahrain signed a formal Defense Cooperation Agreement (DCA) with the United States in 1991. ", "In March 2018, then-Secretary of Defense James Mattis met with King Hamad and Crown Prince Salman in Bahrain and expressed \"appreciation for Bahrain's continued support of the U.S. military presence in the Kingdom since shortly after World War II.\" Secretary of State Pompeo made similar comments after his January 11, 2019 meeting with King Hamad.", "As a GCC member, Bahrain also engages in substantial defense cooperation with other GCC states. Bahrain also has formal relations with NATO under a 2004 NATO-GCC \"Istanbul Cooperation Initiative\"(ICI). As do the other GCC members in that forum (Kuwait, UAE, and Qatar), Bahrain has opened a diplomatic mission at NATO headquarters in Brussels. ", "The U.S. Ambassador to Bahrain is Justin Siberell, a career diplomat."], "subsections": [{"section_title": "U.S. Naval Headquarters and Other Facilities", "paragraphs": ["The cornerstone of U.S.-Bahrain defense relations is U.S. access to Bahrain's naval facilities. The the United States has had a U.S. naval command presence in Bahrain since 1948: MIDEASTFOR (U.S. Middle East Force); its successor, NAVCENT (naval component of U.S. Central Command); and the U.S. Fifth Fleet (reconstituted in June 1995), have been headquartered at a sprawling facility called \"Naval Support Activity (NSA)-Bahrain.\" It is also home to U.S. Marine Forces Central Command, Destroyer Squadron Fifty, and three Combined Maritime Forces. The \"on-shore\" U.S. command presence in Bahrain was established after the 1991 U.S.-led war against Iraq; prior to that, the U.S. naval headquarters in Bahrain was on a command ship docked and technically \"off shore.\" ", "Some smaller U.S. ships, such as minesweepers, are home-ported there, but the Fifth Fleet consists mostly of ships that are sent to the region on six or seven-month deployments. In 2012-13, the U.S. Navy added to the force homeported there by doubling the number of minesweepers homeported there to eight, sending additional mine-hunting helicopters, and adding five coastal patrol ships. ", "NSA-Bahrain coordinates the operations of over 20 U.S. and allied warships in Combined Task Force (CTF) 151 and 152 that seek to interdict the movement of terrorists, pirates, arms, or weapons of mass destruction (WMD)-related technology and narcotics across the Arabian Sea. Bahrain has taken several turns commanding CTF-152, and it has led an antipiracy task force in Gulf/Arabian Sea waters\u2014operations that are offshoots of Operation Enduring Freedom (OEF) that ousted the Taliban from power in Afghanistan in 2001. The coalition conducts periodic naval exercises, such as mine-sweeping drills, intended at least in part to signal resolve to Iran \u2013 and U.S.-GCC naval patrols are being increased as U.S.-Iran tensions increased in May 2019. ", "To further develop the NSA-Bahrain, the U.S. military implemented a $580 million military construction program that ran from 2010 until the end of 2017. The latest construction doubled the size of the facility (to over 150 acres) by integrating the decommissioned Mina (port) Al Salman Pier, leased by the Navy under a 2008 agreement, and added buildings for administration, maintenance, housing, warehousing, and dining. The expansion supports the deployment of additional U.S. coastal patrol ships and the Navy's new littoral combat ship, and the docking of larger U.S. ships. The expansion has also allowed for infrastructure for families of U.S. military personnel, including schools for young children. The United States has spent over $2 billion to improve the facility. ", "Alternatives? Some urge the United States to examine alternatives to NSA-Bahrain on the grounds that the unrest in Bahrain poses threats to U.S. personnel deployed there, or that the Al Khalifa government could fall. The U.S. military has, through social media and other directives, instructed its personnel in Bahrain to avoid any areas where demonstrations are taking place. The enacted FY2016 National Defense Authorization Act did not contain a provision of an earlier version ( H.R. 1735 ) to mandate a Defense Department report on alternative locations for the NSA-Bahrain. But, the Defense Department reportedly has done such contingency planning; that assessment has not been released. Still, continued U.SW. military construction to enhance the NSA would indicate that the Administration has no plans to relocate the facility in the near future. ", "Should there be a decision to relocate the NSA, potential alternatives could include Qatar's New Doha Port, Kuwait's Shuaiba port, and the UAE's Jebel Ali. All three are close U.S. allies, but none has stated a position on whether it would be willing to host such a facility. The alternatives do not provide large U.S. ships with the ease of docking access that Bahrain does, and many of the alternatives share facilities with commercial operations. "], "subsections": [{"section_title": "Other Facilities Used by U.S. and Allied Forces", "paragraphs": ["A separate deep water port in Bahrain, Khalifa bin Salman Port, is one of the few facilities in the Gulf that can accommodate U.S. aircraft carriers and amphibious ships. An aircraft carrier group and surface combatants generally operating in and around the Persian Gulf.", "In December 2014, Bahrain agreed to allow Britain to establish a naval base in part of the Mina Al Salman pier, and facilities there have been improved to allow Britain's Royal Navy to plan, store equipment, and house military personnel at the location. Also in December 2014, the GCC announced it would establish a joint naval force based in Bahrain to cooperate with the United States and other navies.", "Shaykh Isa Air Base, improved with about $45 million in U.S. funds, hosts a variety of U.S. aircraft, including F-16s, F-18s, and P-3 surveillance aircraft. About $19 million was spent to construct a U.S. Special Operations Forces facility there."], "subsections": []}]}, {"section_title": "Defense Cooperation Agreement (DCA) and Major Non-NATO Ally Designation", "paragraphs": ["Bahrain was part of the U.S.-led allied coalition that ousted Iraq from Kuwait in 1991, hosting 17,500 U.S. troops and 250 U.S. combat aircraft that participated in the 1991 \"Desert Storm\" offensive against Iraqi forces. Bahraini pilots flew strikes during the war, and Iraq fired nine Scud missiles at Bahrain, of which three hit facilities there. ", "After that war, Bahrain and the United States institutionalized the defense relationship by signing a Defense Cooperation Agreement (DCA) on October 28, 1991, for an initial period of 10 years. It remains in effect. The pact reportedly gives the United States access to Bahrain's air bases, enables the United States to preposition strategic materiel (mostly U.S. Air Force munitions), requires consultations with Bahrain if its security is threatened, and provides for joint exercises and U.S. training of Bahraini forces. It reportedly includes a \"Status of Forces Agreement\" (SOFA) under which U.S. military personnel serving in Bahrain operate under U.S. law. ", "The DCA was the framework for Bahrain's participation in efforts to contain Iraq during the 1990s. Bahrain hosted the U.S.-led Multinational Interdiction Force (MIF) that enforced a U.N. embargo on Iraq during 1991-2003. Bahrain also hosted the U.N. Special Commission (UNSCOM) inspection mission that worked to dismantle Iraq's weapons of mass destruction. ", "U.S. pilots flew combat missions from Bahrain in both Operation Enduring Freedom (OEF) in Afghanistan (after the September 11, 2001, attacks) and Operation Iraqi Freedom (OIF) to oust Saddam Hussein (March 2003). During both operations, Bahrain also deployed its U.S.-supplied frigate warship (the Subha ) to help protect U.S. ships, and it sent ground and air assets to Kuwait in support of OIF. Bahrain and UAE have been the only GCC states to deploy forces to Afghanistan; Bahrain deployed 100 police officers to Afghanistan during 2009-2014. "], "subsections": [{"section_title": "Major Non-NATO Ally Designation", "paragraphs": ["In March 2002, President George W. Bush designated Bahrain a \"major non-NATO ally\" (MNNA) in Presidential Determination 2002-10. The designation qualifies Bahrain to purchase certain U.S. arms, receive excess defense articles (EDA), and engage in defense research cooperation with the United States for which it would not otherwise be eligible."], "subsections": []}]}, {"section_title": "U.S. Security Assistance and Arms Transfers", "paragraphs": ["Bahrain's small annual government budget allows for only modest amounts of national funds to be used for purchases of major combat systems. The United States provides a small amount of military assistance that goes toward Bahrain's arms buys from the United States, in order to enhance Bahrain's ability to participate in regional security missions. The government's response to the political unrest caused the Obama Administration to put on hold sales to Bahrain of arms that could easily be used against protesters, primarily those used by the Interior Ministry, as well as to hold up or condition the sale of combat systems such as combat aircraft. The Trump Administration has maintained restrictions on sales of equipment that could be used against protesters, while dropping conditions or holds on sales of most major combat systems. "], "subsections": [{"section_title": "Assistance to the Bahrain Defense Forces/Ministry of Defense", "paragraphs": ["The main recipient of U.S. military assistance is the Bahrain Defense Force (BDF)\u2014Bahrain's regular military force\u2014which totals about 8,000 active duty personnel, of which 2,000 are Bahraini Air Force and Navy personnel. There are another 2,000 personnel in Bahrain's National Guard\u2014a unit that is separate from both the BDF and the Ministry of Interior. The BDF, as well as Bahrain's police forces, are run by Sunni Bahrainis, but supplement their ranks with unknown percentages of paid recruits from Sunni Muslim neighboring countries, including Pakistan, Yemen, Jordan, and elsewhere. Some human rights groups say that BDF equipment, such as Cobra helicopters, has been used against protesters. ", "Most U.S. military assistance to Bahrain is in the form of Foreign Military Financing (FMF), used to help Bahrain buy and maintain U.S.-origin weapons, to enhance interoperability with U.S. forces as well as with other GCC forces, to augment Bahrain's air defenses, and to improve counterterrorism capabilities. In recent years, some FMF funds have been used to build up Bahrain's Special Operations forces and to help the BDF use its U.S.-made Blackhawk helicopters. The Defense Department estimates that about 50% of Bahrain's forces are fully capable of integrating into a U.S.-led coalition.", "The United States has reduced FMF to Bahrain since the unrest began, in part to try to compel the government to undertake political reforms. The Obama Administration's FY2012 aid request, made at the start of the unrest, included $25 million in FMF for Bahrain, but only $10 million was provided. FMF amounts provided or requested since are depicted in the table below. FY2017 funds were used to support Bahrain's maritime security capacity by assisting the Bahrain Coast Guard and upgrading the Coast Surveillance System that reportedly provides Bahrain and the U.S. Navy a 360-degree field of vision. ", "Some funds are provided under \"Section 1206\" of the National Defense Authorization Act of 2006, P.L. 109-163 . Five Section 1206 programs spanning 2006-2015\u2014totaling almost $65 million\u2014were used to provide coast patrol boats, equip and train Bahrain's special forces and coastal surveillance sites, and fund biometric equipment to help Bahrain detect movement of international terrorists through its territory. "], "subsections": [{"section_title": "Excess Defense Articles (EDA)", "paragraphs": ["The BDF is eligible to receive grant \"excess defense articles\" (EDA), and it has received over $400 million worth of EDA since the program began for Bahrain in 1993. In June 1995, the United States provided 50 M-60A3 tanks to Bahrain as a \"no cost\" five-year lease. Bahrain later received title to the equipment. In July 1997, the United States transferred the FFG-7 \"Perry class\" frigate Subha (see above) as EDA. The Obama Administration supported providing another frigate (an \"extended deck frigate\") as EDA because the Subha is approaching the end of its service life, but Bahrain decided instead to devote U.S. military aid to maintaining the Subha . The transfer of frigate-sized ships as EDA requires legislative enactment. "], "subsections": []}, {"section_title": "International Military Education and Training Funds (IMET)", "paragraphs": ["As noted in Table 4 , small amounts of International Military Education and Training funds (IMET) are provided to Bahrain to inculcate principles of civilian control of the military, democracy, and interoperability with U.S. forces. Approximately 100 BDF students attend U.S. military schools each year through the IMET program. A roughly equal number train in the United States under the U.S. Foreign Military Sales program (using FMF). Amounts provided are shown in the table below. "], "subsections": []}, {"section_title": "Major Foreign Military Sales (FMS)", "paragraphs": ["About 85% of Bahrain's defense equipment is of U.S.-origin, as discussed below. ", "F-16s and other U.S.-made Aircraft . Since 1998, Bahrain has purchased 22 U.S.-made F-16 Block 40 aircraft. In 2016, Bahrain requested up to 19 new production F-16Vs, with an estimated value of nearly $4 billion. The Obama Administration notified the sale to Congress with the condition that it would not finalize approval until Bahrain improves its human rights record. The Trump Administration dropped that condition, asserting that maintaining the conditionality is not the optimum way to influence Bahrain's policy on its domestic unrest. On September 8, 2017, the Administration notified Congress of a potential sale of 19 F-16Vs at an estimated value of $2.785 billion, and of an upgrade of Bahrain's existing F-16 Block 40s to the F-16V configuration, at an estimated cost of $1.082 billion. The sale process was far along enough to avoid then-Senate Foreign Relations Committee Chairman Bob Corker's July 2017 restriction on providing informal concurrence to arms sales to the GCC states\u2014a restriction dropped by then-Chairman Corker on February 8, 2018. ", "Air-to-Air Missiles. In 1999 and 2009, the United States sold Bahrain Advanced Medium-Range Air-to-Air Missiles (AMRAAMs) to arm the F-16s. In 2012, the Obama Administration approved a sale of additional AMRAAMs. On May 3, 2019, the State Department approved a possible sale of a large variety of munitions, including AMRAAMs and large bombs (GBUs), for its F-16 fleet, at an estimate dvalue of $750 million. A resolution of disapproval for the sale, S.J.Res. 20, was introduced on May 13. ", "Anti-Armor Missiles/Rockets . An August 2000 sale of 30 Army Tactical Missile Systems (ATACMs, a system of short-range ballistic missiles fired from a multiple rocket launcher), valued at about $70 million, included an agreement for joint U.S.-Bahraini control of the weapon. That arrangement sought to allay U.S. congressional concerns about possible U.S. promotion of regional missile proliferation. On September 28, 2018, the State Department approved a potential sales to Bahrain of 110 ATACM missiles and 720 Guided Multiple Launch Rocket System rockets, with a total estimated value of $300 million. A joint resolution, S.J.Res. 65 , was introduced to block the proposed sale, on the grounds that arms sales contributes to Bahrain's participation in the Arab coalition in Yemen (see below). The Senate voted on November 15, 2018 not to advance the resolution (by a vote of 77-21). Stingers. Section 581 of the FY1990 foreign operations appropriation act ( P.L. 101-167 ) made Bahrain the only Gulf state eligible to receive the Stinger shoulder-fired anti-aircraft missile, and the United States has sold Bahrain about 70 Stingers since 1990. (This authorization has been repeated subsequently.) Humvees and TOWs. In September 2011, the Obama Administration announced a sale to the BDF and National Guard of 44 \"Humvee\" (M115A1B2) armored vehicles and several hundred TOW missiles of various models, including 50 \"bunker busters,\" with an estimated total value of $53 million. State Department officials said the sale would not violate the intent of the \"Leahy amendment,\" a provision of U.S. law that forbids U.S. sales of equipment to security units that have committed human rights abuses. Two joint resolutions introduced in the 112 th Congress ( S.J.Res. 28 and H.J.Res. 80 ) would have prohibited the sale unless the Administration certified that Bahrain is rectifying alleged abuses. In January 2012, the Obama Administration put the sale on hold, but in June 2015, the State Department announced that the sale would proceed because the government had \"made some meaningful progress on human rights reforms and reconciliation.\" Separately, on September 8, 2017, the Trump Administration notified Congress of a potential sale of 221 TOW missiles of various types, with an estimated valued of $27 million. Maritime Defense Equipment and Spare Parts . In May 2012, in conjunction with a visit to Washington, DC, by Bahrain's Crown Prince, the Administration announced the release of additional U.S. arms for the BDF, Bahrain's Coast Guard (a Ministry of Interior-controlled force), and the National Guard, stating that the weaponry was not suited for use against protesters and supported Bahrain's maritime defense. The Administration gave examples of weapons approved for sale to Bahrain: (1) the Perry-class frigate, as EDA, discussed above, but later mooted; and (2) harbor security boats for the Bahrain Coast Guard, as EDA. No legislation to block the sale was enacted. Separately, on September 8, 2017, the Trump Administration notified Congress of a potential sale of two 35-Meter Fast Patrol Boats, at an estimated cost of $60 million. Bahrain is also upgrading six naval vessels under a $70 million contract with Italy's Leonardo firm. Attack Helicopters . On April 27, 2018, the Defense Department notified Congress that the State Department had approved a potential sale to Bahrain of up to 12 AH-1Z (\"Cobra\") attack helicopters and associated munitions to the Royal Bahrain Air Force. The estimated value of the sale is $911 million. ", "Missile Defense . U.S.-made Patriot missile defense batteries are deployed in Bahrain. However, Bahrain's limited budget largely precludes it from any major role in the U.S. effort to forge a coordinated missile defense for the Gulf. Still, on May 3, 2019, the State Dept. approved a potential sale to Bahrain of the Patriot Advanced Capability-3 (PAC-3) missile defense system with an estimated value of $2.5 billion. S.J.Res. 20, referenced above, would also disapprove that sale. "], "subsections": []}]}, {"section_title": "Russia Purchases", "paragraphs": ["Bahrain has sought to diversify its arms supplies somewhat, particularly from Russia, probably in recognition of Russia's role in Syria and the broader region. In 2016, Bahrain took delivery of about 250 Kornet anti-tank systems. In 2017, Bahrain military officials stated they were in discussions to possibly purchase the Russian S-400 missile defense system. Purchases from Russia, particularly the S-400, could trigger U.S. consideration of sanctioning Bahrain's cooperation with Russia's defense sector under authorities in the Countering America's Adversaries through Terrorism Act (CAATSA, P.L. 115-44 ). "], "subsections": []}]}, {"section_title": "Counterterrorism Cooperation/Ministry of Interior70", "paragraphs": ["Bahrain is assessed by U.S. reports and officials as facing a terrorist threat from Iran-backed groups, discussed above, as well as Sunni jihadist groups such as the Islamic State. Bahrain has convicted and stripped the citizenship of some Bahrainis accused of supporting the Islamic State. On June 23, 2016, Bahraini courts sentenced 24 supporters of the Islamic State for plots in Bahrain, including attacks on Shias. No Islamic State terrorist attacks have been reported in Bahrain. Critics assert that the security services use antiterrorism laws and operations to suppress Shia dissidents, even those who do not use violence.", "The United States cooperates with Bahrain's Interior Ministry on counterterrorism issues, although U.S. cooperation with the ministry has been limited since 2011 because of the ministry's role in internal security. The ministry has retained a reputation among the Shia population for brutality, despite the departure in the late 1990s of security services chief Ian Henderson, a former British colonial-era commander known for favoring brutal tactics. The February 2014 expulsion of Malinowski led the Obama Administration to suspend most cooperation with the Ministry, but some U.S. cooperation with it resumed later in 2014 after Bahrain joined the anti-Islamic State coalition. The Trump Administration has retained restrictions on working with the Ministry and on selling it arms, according to September 12, 2017, testimony by Ambassador Justin Siberell during his confirmation hearing. "], "subsections": [{"section_title": "Arms Sales to the MOI/Bahrain Coast Guard", "paragraphs": ["Sales of U.S.-made small arms such as those sold to the Interior Ministry are generally commercial sales, licensed by State Department, with Defense Department concurrence. In May 2012, the State Department put \"on hold\" license requests for sales to Bahrain of small arms, light weapons, and ammunition \u2014all of which could potentially be used against protesters. Apparently referencing Bahrain, the FY2014 Consolidated Appropriation Act ( P.L. 113-76 ) prohibited use of U.S. funds for \"tear gas, small arms, light weapons, ammunition, or other items for crowd control purposes for foreign security forces that use excessive force to repress peaceful expression, association, or assembly in countries undergoing democratic transition.\" The Trump Administration has maintained the hold on new sales of U.S. arms and equipment to MOI forces. ", "Bahrain's Coast Guard. This force, which is under the Ministry of Interior, polices Bahrain's waterways and contributes to the multilateral mission to monitor and interdict the seaborne movement of terrorists and weapons. U.S. restrictions on support for the Ministry of Interior forces have generally not applied to the Bahrain Coast Guard. "], "subsections": []}, {"section_title": "U.S. Training/NADR Funding", "paragraphs": ["The United States provides assistance to the MOI primarily through programs funded by Nonproliferation, Antiterrorism, Demining and Related Programs (NADR) funds, to help the MOI confront violent extremists and terrorist groups. U.S. officials assert that a general lack of training and antiquated investigative methods had slowed the MOI Police Force's progress on counterterrorism and criminal investigations. The ministry's role in putting down unrest prompted an Obama Administration \"review\" of the use of NADR-ATA (Antiterrorism Assistance) funding for the ministry to ensure that none of the funding was used against protestors. The State Department report on international terrorism for 2014 stated that the \"Leahy Law\" requirement to vet Bahrain personnel participating in ATA programs prompted the cancellation of planned ATA courses for Bahrain in 2015. However, that report for 2015 stated that one ATA-related course took place that year; the report for 2016 and 2017 did not mention any courses in those years. ", "The Trump Administration provided about $400,000 in NADR funds for FY2018 and requested an equivalent amount for FY2019 to train MOI personnel in investigative techniques, with a human rights focus, and to help MOI personnel respond to terrorist's use of explosives. Some NADR-ATA funds have previously been used to augment Bahrain's ability to protect U.S. diplomatic and military facilities in Bahrain. "], "subsections": []}, {"section_title": "Countering Terrorism Financing and Violent Extremism", "paragraphs": ["Bahrain has been a regional leader in countering terrorism financing since well before the Islamic State organization emerged as a threat. Bahrain has hosted the Middle East and North Africa Financial Action Task Force (MENA/FATF) secretariat. Bahrain's financial intelligence unit is a member of the Egmont Group. Bahrain's banks cooperate with U.S. efforts against terrorism financing and money laundering. In 2013, the government amended the Charity Fundraising Law of 1956 to increase terrorism financing monitoring and penalties. In October 2017, King Hamad issued a series of decreases mandating extensive prison sentences and financial penalties on persons found guilty of raising funds for groups engaged in terrorist activities in Bahrain or internationally. ", "In April 2015, Bahrain hosted the 8 th European Union-GCC Workshop on Combating Terrorist Financing, and Bahrain is a member of the U.S.-led anti-Islamic State coalition's Counter-ISIS Finance Group. In 2015, Bahrain hosted a workshop focused on preventing the abuse of the charitable sector to fund terrorism, and a U.S.-GCC anti-Hezbollah workshop in 2016. In 2017, Bahrain jointed the U.S.-GCC Terrorist Financial Targeting Center, which coordinates GCC counterterrorism financing efforts. In October 2017, in concert with that Center, Bahrain imposed sanctions on persons and entities linked to the Islamic State and Al Qaeda in the Arabian Peninsula (AQAO). However, in part due to the intra-GCC dispute discussed below, Bahrain did not allow a Qatari representative to participate in a MENA/FATF meeting in Manama. ", "Countering Violent Extremism . Bahrain's Ministry of Justice and Islamic Affairs heads the country's efforts to counter radicalization. It has organized regular workshops for clerics and speakers from both the Sunni and Shia sects. The ministry also reviews schools' Islamic studies curricula to evaluate interpretations of religious texts. In 2016, the country drafted a National Countering Violent Extremism strategy. "], "subsections": []}]}]}, {"section_title": "Foreign Policy Issues", "paragraphs": ["Bahrain's foreign policy is similar to several other GCC states, particularly on Iran. "], "subsections": [{"section_title": "Relations with other GCC States", "paragraphs": ["Bahrain is politically closest to Saudi Arabia, as demonstrated by the Saudi-led GCC intervention to help the government suppress the uprising in 2011, and Bahrain's joining of the June 2017 Saudi-led move to isolate Qatar. That dispute remains unresolved, and it threatens to undermine the Trump Administration's reported plan to forge a \"Middle East Strategic Alliance\" (MESA) consisting of the GCC and other Sunni Arab states against Iran. Secretary of State Pompeo's January 2019 visit to the GCC states, including Bahrain, was intended in part to forge GCC unity against Iran, as well as reassure the Gulf states of the U.S. commitment to Gulf security. The MESA reportedly is to be formally launched at a planned U.S.-GCC summit, but that meeting has been repeatedly postponed due to the lack of resolution of the intra-GCC rift. On May 6, 2019, Bahrain's Prime Minister spoke with Qatar's Amir to convey Ramadan greetings, while denying that the call was intended as a gesture suggesting imminent resolution of the intra-GCC dispute. ", "Many Saudis visit Bahrain to enjoy the relatively more liberal social atmosphere there, using a causeway constructed in 1986 that links Bahrain to the eastern provinces of Saudi Arabia, where most of the kingdom's Shias (about 10% of the population) live. King Hamad's fifth son, Khalid bin Hamad, married a daughter of the late Saudi King Abdullah in 2011. In May 2012, Saudi Arabia and Bahrain announced a proposal to form a political and military union among the GCC states (\"Riyadh Declaration\"), but opposition by the other four GCC states caused it to languish. ", "Bahrain is also politically close to Kuwait, in part because of historic ties between their two royal families. Both royal families hail from the Anizah tribe that settled in Bahrain and Kuwait. Kuwait has sometimes sought to mediate the Bahrain political crisis, but Shias in Kuwait have expressed resentment at what they say is the Kuwait ruling family's alignment with the Al Khalifa regime. Kuwait, as noted, joined the GCC intervention in Bahrain in 2011 and has financially aided Bahrain. In October 2018, Kuwait, Saudi Arabia, and UAE announced a $10 billion aid package to stabilize Bahrain's budget and finances. ", "Perhaps in part explaining why Bahrain joined the June 2017 Saudi-led move against Qatar, Bahrain's relations with Qatar have frequently been fraught with disputes. The two had a long-standing territorial dispute over the Hawar Islands and other lands, which had roots in the 18 th century, when the ruling families of both countries controlled parts of the Arabian peninsula. In 1991, five years after clashes in which Qatar landed military personnel on a Bahrain-constructed man-made reef (Fasht al-Dibal) and took some Bahrainis prisoner, Bahrain and Qatar agreed to abandon fruitless Saudi mediation efforts and refer the issue to the International Court of Justice (ICJ). The ICJ ruled on March 16, 2001, in favor of Bahrain on the central dispute over the Hawar Islands but awarded to Qatar the Fasht al-Dibal reef and the town of Zubara on the Qatari mainland, where some members of the Al Khalifa family were long buried. Two smaller islands, Janan and Hadd Janan, were ruled not part of the Hawar Islands group and were also awarded to Qatar. Qatar expressed disappointment over the ruling but accepted it as binding. ", "Not only has Bahrain backed the 2017 Saudi-led isolation of Qatar, but Bahrain joined the earlier Saudi Arabia and UAE withdrawal of their ambassadors from Qatar in 2014. That disagreement centered on Qatar's support for Muslim Brotherhood-affiliated opposition movements in several Middle Eastern countries, which Qatar views as a constructive Islamist movement but which Saudi Arabia and the UAE consider a terrorist organization. The earlier dispute eased in November 2014 with the return of GCC ambassadors to Doha. "], "subsections": []}, {"section_title": "Iran", "paragraphs": ["Bahrain has long blamed Iran for encouraging Bahrain's Shia opposition to rebel and for supplying the violent Shia opposition with arms and explosives. In December 1981, and then again in June 1996, Bahrain publicly accused Iran of trying to organize a coup by pro-Iranian Bahraini Shias. In September 2018, Bahrain's government came close to reviving such accusations against Iran with the charging of 169 persons for allegedly forming \"Bahrain Hezbollah\" with the backing of the IRGC-QF. ", "Bahrain's leaders cite Iranian statements as evidence that Iran seeks to promote the overthrow of the government. In June 2016, Supreme Leader Ayatollah Ali Khamene'i called the revocation \"blatant foolishness and insanity\" that would mean \"removing a barrier between fiery Bahrain youths and the state.\" As noted above, the Trump Administration has firmly backed the government view that Iran is arming Shia militants in Bahrain. ", "Bahrain backed Saudi Arabia in its January 2016 dispute with Iran in which Iranian protesters attacked two Saudi diplomatic facilities in Iran in response to the Saudi execution of dissident Shia cleric Nimr al-Baqr Al Nimr. As did Saudi Arabia, Bahrain broke diplomatic relations with Iran, going beyond a 2011-2012 cycle of tensions in which Iran and Bahrain withdrew their ambassadors. In March 2016, the GCC states declared Lebanese Hezbollah, a key Iran ally, a terrorist organization and discouraged or banned their citizens from visiting Lebanon. Bahrain simultaneously closed Future Bank, a Bahrain bank formed and owned by two major Iranian banks (Bank Saderat and Bank Melli). Earlier, in 2013, Bahrain declared Hezbollah a terrorist organization, accusing it of helping a Shia-led \"insurgency\" in Bahrain. Bahrain's arrests of Shias it accuses of linkages to the IRGC-QF and Hezbollah are noted above. ", "On Iran nuclear issues, Bahrain has expressed support for Iran's right to civilian nuclear power, but it said that \"when it comes to taking that [nuclear] power, to developing it into a cycle for weapon grade, that is something that we can never accept, and we can never live with in this region.\" It publicly supported the 2010-2016 global economic pressure on Iran to compel it to limit its nuclear program. Bahrain abandoned a 2007 agreement - reached after a visit to Bahrain by then-President of Iran Mahmoud Ahmadinejaded - to buy, for 25 years, 1.2 billion cubic feet per day of Iranian gas via a planned undersea pipeline and for Bahrain to invest $4 billion to develop the source of the gas - Phases 15 and 16 of Iran's South Pars gas field. At the same time, Bahrain maintains relatively normal trade with Iran. Bahrain did not take immediate action to close Iran-linked Future Bank or the Iran Insurance Company until 2016, long after Future Bank was sanctioned by the United States in 2008 under Executive Order 13382 (anti-proliferation). By the time Bahrain closed that Bank in February 2016, the United States had already lifted sanctions on it in accordance with the nuclear agreement (Joint Comprehensive Plan of Action, JCPOA). ", "As did the other GCC states, Bahrain expressed initial concern that the JCPOA represented a U.S. acceptance of an enhanced regional role for Iran. King Hamad scuttled plans to attend the U.S.-GCC summit at Camp David during May 13-14, 2015\u2014a meeting intended to soothe GCC concerns about an Iran nuclear deal\u2014and sent the Crown Prince instead. Bahrain joined the GCC in eventually supporting the JCPOA while calling for increased vigilance against Iran's \"destabilizing regional activities.\" Yet, Bahrain's leaders publicly supported the May 2018 Trump Administration withdrawal from the JCPOA.", "Bahrain's animosity toward Iran also stems from issues that predate the formation of the Islamic Republic in 1979. In 2009, an advisor to Iran's Supreme Leader, referred to Bahrain as Iran's 14 th province, reviving Bahrain's long-standing concerns that Iran would again challenge its sovereignty. Persian officials contested Bahrain's sovereignty repeatedly during the 19 th and 20 th centuries, including in 1957, when a bill was submitted to the Iranian Majlis (legislature) to make Bahrain a province of Iran. Bahrain considers the independence issue closed: when Iran reasserted its claim to Bahrain in 1970, prior to the end of British rule in Bahrain, the U.N. Secretary-General dispatched a representative to determine the views of Bahrainis, who found that the island's residents overwhelmingly favored independence from all outside powers, including Iran. The findings were endorsed by U.N. Security Council Resolution 278 and Iran's Majlis ratified them. "], "subsections": []}, {"section_title": "Iraq/Syria/Islamic State Organization", "paragraphs": ["Bahrain backed the U.S.-led 2003 overthrow of Iraq's Saddam Hussein, but Bahrain's relations with the post-Saddam Iraq deteriorated after 2005 as the Shia-dominated Iraqi government marginalized Sunni leaders. Some Shia Iraqi leaders expressed support for the 2011 Bahrain uprising. Bahrain did not contribute financially to Iraq reconstruction, but it participated in the \"Expanded Neighbors of Iraq\" regional dialogue on Iraq that ended in 2008, and it posted its first post-Saddam ambassador to Iraq in October 2008. Bahrain sent a low-level delegation to the March 27-29, 2012, Arab League summit in Baghdad. ", "Similarly, Bahrain and the other GCC states blamed Syrian President Bashar Al Assad for authoritarian policies that alienated Syria's Sunni Arab majority and fueled support for the Islamic State. In 2011, Bahrain and most of the other GCC states (except Oman) closed their embassies in Damascus and voted to suspend Syria's membership in the Arab League. Bahrain's government did not, by any account, provide funding or weaponry to any Syrian rebel groups. Apparently recognizing that Assad is prevailing in the civil war, in late December 2018, Bahrain re-opened its embassy in Damascus, as did the UAE. ", "Asserting that the Islamic State poses a regional threat, on September 22, 2014, Bahrain and the other GCC states joined the U.S.-led anti-Islamic State coalition. Bahrain conducted air strikes against Islamic State positions in Syria, as did several other GCC states, but the State Department's report on terrorism for 2016 stated that Bahrain \"has not contributed substantively to coalition [anti-ISIS] military efforts since 2014.\" None of the GCC states engaged in anti-Islamic State air operations in Iraq, on the grounds that the Shia-dominated Iraqi government is aligned with Iran. "], "subsections": []}, {"section_title": "Yemen", "paragraphs": ["Bahrain joined the GCC diplomatic efforts to persuade Yemen's President Ali Abdullah Saleh to cede power to a transition process in 2012. In 2015, Zaidi Shia \"Houthi\" militia rebels, backed to some degree by Iran, took control of the capital, Sanaa, and forced President Abdu Rabbu Mansur Al Hadi into exile. In March 2015, Saudi Arabia assembled a coalition of Arab states, including Bahrain and all the other GCC countries except Oman, to combat the Houthis in an effort to achieve a restoration of the Hadi government. Bahrain has conducted air strikes and contributed some ground forces to the effort. At least eight members of the BDF have been killed in the engagement, to date, and a Bahraini Air Force F-16 crashed in Yemen-related operations on December 30, 2015. The pilot survived. Air Vice Marshall Hamad bin Abdullah al Khalifah, head of the Royal Bahrain Air Force (RBAF), stated in February 2019 that RBAF F-16s had conducted over 3,500 sorties since the beginning of the campaign in March 2015."], "subsections": []}, {"section_title": "Israeli-Palestinian Dispute", "paragraphs": ["On the Israeli-Palestinian dispute, Bahraini leaders have long tended toward engagement with Israel while also supporting Palestinian aspirations. In a July 2009 op-ed, Crown Prince Salman called on the Arab states to do more to communicate to the Israeli people ideas for peaceful resolution of the dispute. In October 2009, Bahrain's then-foreign minister called for direct talks with Israel and in September 2017, King Hamad called for the Arab states to forge direct ties to Israel and an end to the Arab boycott of Israel. Following the October 2018 visit of Israeli Prime Minister Benjamin Netanyahu to Oman, Israel's Minister of Economy, Eli Cohen, received an invitation to visit Bahrain. Subsequently, in December 2017 a cross-sectarian Bahraini group visited Israel, and low profile Israeli delegations have attended conferences in Manama. Still, many Bahrainis, including in the National Assembly, oppose engaging Israel and it was this public pressure that caused the cancellation of a large Israeli delegation to a business conference in April 2019. The commitment of the Bahrain government to engagement undoubtedly contributed to a Trump Administration to promote the economic component of its Israeli-Palestinian peace plan in Bahrain in June 2019. ", "Still, Bahrain supports the efforts of Palestinian Authority President Mahmoud Abbas to obtain U.N. recognition for a State of Palestine. Bahraini leaders publicly criticized the announcement by President Trump on December 6, 2017, recognizing Jerusalem as Israel's capital as an obstacle to forging an Israeli-Palestinian peace. ", "Earlier, Bahrain participated in the 1990-1996 multilateral Arab-Israeli talks, and it hosted a session on the environment (October 1994). In September 1994, all GCC states ceased enforcing secondary and tertiary boycotts of Israel, but Bahrain did not join Oman and Qatar in exchanging trade offices with Israel. In conjunction with the U.S.-Bahrain FTA, Bahrain dropped the primary boycott and closed boycott-related offices in Bahrain. "], "subsections": []}]}, {"section_title": "Economic Issues", "paragraphs": ["Bahrain's economy has been affected by the domestic unrest and by the decline in oil prices during 2014-2018. Hydrocarbons still account for about 80% of government revenues, mostly from oil exports from a field that Saudi Arabia shares equally with Bahrain, the Abu Safa field, which produces 300,000 barrels per day. Bahrain's oil and gas reserves are the lowest of the GCC states, estimated respectively at 210 million barrels of oil and 5.3 trillion cubic feet of gas. However, Bahrain's energy export potential might be revived if Bahrain's 2018 discovery of a shale oil field containing an estimated 80 billion barrels of shale oil proves commercially viable. ", "The decline in oil prices from 2014 levels has caused Bahrain to cut subsidies of some fuels and some foodstuffs. The financial difficulties have also contributed to a lack of implementation of government promises to provide more low-income housing (presumably for Shias, who tend to be among the poorer Bahrainis). To try to diversify, Bahrain is investing in its banking and financial services sectors (about 25.5% of GDP combined). To help Bahrain cope with its budgetary difficulties, Saudi Arabia, Kuwait, and the UAE announced in early October 2018 a $10 billion aid package. A comprehensive assessment of Bahrain's economy is provided in Economist Intelligence Unit country reports."], "subsections": [{"section_title": "U.S.-Bahrain Economic Relations", "paragraphs": ["U.S.-Bahrain economic relations have expanded, even though the United States buys virtually no oil from Bahrain. The major U.S. import from the country is aluminum: that product and other manufacturing account for the existence in Bahrain of a vibrant middle and working class, which consists mostly of Shia Bahrainis. About 180 U.S. companies do business in Bahrain. In concert with Crown Prince Salman's visit to Washington, DC, in November 2017, Bahrain-based companies in several sectors signed trade deals with U.S. based firms, including a memorandum of understanding between Aluminum Bahrain (Alba) and General Electric. More than 200 American companies operate in Bahrain, and Amazon Web Services is slated to open its first regional headquarters in Bahrain.", "To encourage reform and signal U.S. appreciation, the United States and Bahrain signed an FTA on September 14, 2004. Implementing legislation was signed January 11, 2006 ( P.L. 109-169 ). However, in light of the unrest, the AFL-CIO has urged the United States to void the FTA on the grounds that Bahrain is preventing free association of workers and abridging their rights. In 2005, total bilateral trade was about $780 million, and, as depicted in the table below, U.S.-Bahrain trade has more than doubled since the U.S.-Bahrain FTA to about $2 billion in 2017. ", "Some U.S. funds have been used to provide assistance to Bahrain for purposes that are not purely security related. In 2010, MEPI supported the signing of a Memorandum of Understanding between the Small Business Administration and Bahrain's Ministry of Industry and Commerce to support small and medium enterprises in Bahrain. MEPI funds have also been used to fund U.S. Department of Commerce programs (\"Commercial Law Development Program\") to provide Bahrain with technical assistance in support of trade liberalization and economic diversification, including modernization of the country's commercial laws and regulations. "], "subsections": []}]}]}}
{"id": "R46142", "title": "The Power of Congress and the Executive to Exclude Aliens: Constitutional Principles", "released_date": "2019-12-30T00:00:00", "summary": ["Supreme Court precedent establishes that inherent principles of sovereignty give Congress \"plenary power\" to regulate immigration. The core of this power\u00e2\u0080\u0094the part that has proven most impervious to judicial review\u00e2\u0080\u0094is the authority to determine which non-U.S. nationals (aliens) may enter the United States and under what conditions. The Court has also established that the executive branch, when enforcing the laws concerning alien entry, has broad authority to do so mostly free from judicial oversight.", "Two principles frame the scope of the political branches' power to exclude aliens. First, nonresident aliens abroad generally cannot challenge exclusion decisions because they do not have constitutional rights with respect to entry and cannot obtain judicial review of the statutory basis for their exclusion unless Congress provides otherwise. Second, even when the exclusion of a nonresident alien burdens the constitutional rights of a U.S. citizen, the government need only satisfy a \"highly constrained\" judicial inquiry to prevail against the citizen's constitutional challenge.", "The Supreme Court developed the first principle\u00e2\u0080\u0094that nonresident aliens generally cannot challenge exclusion decisions\u00e2\u0080\u0094in a line of late 19th to mid-20th century exclusion cases. These cases culminated in the 1950 decision United States ex rel. Knauff v. Shaughnessy , in which the Court declared that \"it is not within the province of any court, unless expressly authorized by law, to review the determination of the political branch of the Government to exclude a given alien.\" This rule forms the basis of the doctrine of consular nonreviewability, which in almost all circumstances bars nonresident aliens abroad from challenging visa denials by U.S. consular officers. But the rule set forth in Knauff applies with less force to decisions to exclude aliens arriving at the border. Aliens at the cusp of entry into the United States may be detained by immigration authorities pending their removal. Their cases can trigger habeas corpus proceedings for that reason and may also implicate complex statutory frameworks on judicial review.", "The second principle, concerning exclusion decisions that burden the rights of U.S. citizens, has been the primary subject of the Supreme Court's modern exclusion jurisprudence. In four cases since 1972\u00e2\u0080\u0094 Kleindienst v. Mandel , Fiallo v. Bell , the splintered Kerry v. Din , and Trump v. Hawaii \u00e2\u0080\u0094the Court has recognized that U.S. citizens who claim that the exclusion of aliens violated the citizens' constitutional rights may obtain judicial review of the exclusion decisions. Yet the standard of review that the Court applies to such claims is so deferential to the government as to all but foreclose U.S. citizens' constitutional challenges. In the most recent case, Trump v. Hawaii , the Court applied a \"highly constrained\" level of review to uphold a broad executive exclusion policy notwithstanding some evidence that the purpose of the policy was to exclude Muslims.", "The Mandel line of cases reaffirms the unique scope of Congress's power to legislate for the exclusion of aliens. Exclusion statutes draw minimal judicial scrutiny even when they classify people by disfavored criteria, such as gender or legitimacy. With respect to the executive power, the cases reaffirm generally that, in the absence of statutory provisions to the contrary, courts play almost no role in overseeing the application of admission and exclusion laws to nonresident aliens abroad. However, the cases leave some questions about executive exclusion power unresolved, including whether the Executive has inherent, constitutional power to exclude aliens and whether U.S. citizens may bring statutory challenges against executive decisions to exclude aliens abroad."], "reports": {"section_title": "", "paragraphs": ["U nder long-standing Supreme Court precedent, Congress has \"plenary power\" to regulate immigration. This power, according to the Court, is the most complete that Congress possesses. It allows Congress to make laws concerning non-U.S. nationals (aliens) that would be unconstitutional if applied to citizens. And while the immigration power has proven less than absolute when directed at aliens already physically present within the United States, the Supreme Court has interpreted the power to apply with most force to the admission and exclusion of nonresident aliens. The Court has upheld or shown approval of laws excluding aliens on the basis of ethnicity, gender and legitimacy, and political belief. It has also upheld an executive exclusion policy that was premised on a broad statutory delegation of authority, even though some evidence considered by the Court tended to show that religious hostility may have prompted the policy. Outside of the immigration context, in contrast, laws and policies that discriminate on such bases are almost always struck down as unconstitutional. To date, the only judicially recognized limit on Congress's power to exclude aliens concerns lawful permanent residents (LPRs): they, unlike nonresident aliens, generally cannot be denied entry without a fair hearing as to their admissibility. ", "The plenary power doctrine has roots in the Chinese Exclusion Case of 1889, which upheld a federal statute that provided for the exclusion of Chinese laborers. Some jurists and commentators have criticized the Chinese Exclusion Case for indulging antiquated notions of race. More generally, many legal scholars contend that the plenary power doctrine lacks a coherent rationale and that it is an anachronism that predates modern individual rights jurisprudence. Yet the Supreme Court continues to employ the doctrine. Some commentators have argued that the Court is in the process of narrowing the parameters of the doctrine's applicability, but they find support for this argument mainly in cases outside the exclusion context. In the exclusion context, the Court's 2018 decision in Trump v. Hawaii reaffirms the exceptional scope of the plenary power doctrine.", "Congress's plenary power to regulate the entry of aliens rests at least in part on implied constitutional authority. The Constitution itself does not mention immigration. It does not expressly confer upon any of the three branches of government the power to control the flow of foreign nationals into the United States or to regulate their presence once here. To be sure, parts of the Constitution address related subjects. The Supreme Court has sometimes relied upon Congress's enumerated powers over naturalization and foreign commerce, and to a lesser extent upon the Executive's implied Article II foreign affairs power, as sources of federal immigration power. Significantly, however, the Court has also consistently attributed the immigration power to the federal government's inherent sovereign authority to control its borders and its relations with foreign nations. It is this inherent sovereign power, according to the Court, that gives Congress essentially unfettered authority to restrict the entry of nonresident aliens. The Court has determined that the executive branch, by extension, possesses unusually broad authority to enforce laws pertaining to alien entry, and to do so under a level of judicial review much more limited than that which would apply outside of the exclusion context. ", "Recent events have generated congressional interest in the constitutional division of responsibilities between Congress and the Executive in establishing and enforcing policies for the exclusion of aliens. Through three iterative executive actions in 2017, commonly known as the \"Travel Ban,\" the President provided for the exclusion of broad categories of nationals of specified countries, most of which were predominantly Muslim. These executive actions relied primarily upon a delegation of authority in the Immigration and Nationality Act (INA) allowing the President, by way of proclamation, to exclude \"any aliens\" or \"any class of aliens\" whose entry he determines would be \"detrimental to the interests of the United States.\" In June 2018, the Supreme Court upheld the third iteration of the Travel Ban as likely lawful, rejecting claims that it was motivated by unconstitutional religious discrimination and that it exceeded the President's authority under the INA. Since that decision, some Members of Congress have proposed curtailing executive authority to craft exclusion policy or subjecting executive exclusion decisions and policies to more stringent judicial review. ", "This report provides an overview of the legislative and executive powers to exclude aliens. First, the report discusses a gatekeeping legal principle that frames those powers: nonresident aliens outside the United States cannot challenge their exclusion from the country in federal court because Congress has not expressly authorized such challenges. But aliens at the threshold of entry have more access to judicial review of exclusion decisions, compared to aliens abroad, because of statutory provisions and other considerations. Next, the report analyzes the extent to which the constitutional and statutory rights of U.S. citizens limit the exclusion power. Specifically, the report examines a line of Supreme Court precedent, starting with Kleindienst v. Mandel and ending with Trump v. Hawaii , that makes a highly curtailed form of judicial review available to U.S. citizens who claim that the exclusion of one or more aliens abroad violates the U.S. citizens' constitutional rights. The report concludes by analyzing the implications of these cases for the scope of the congressional power to legislate for the exclusion of aliens and, separately, for the scope of the executive power to take action to exclude aliens. "], "subsections": [{"section_title": "Knauff and the General Rule Against Judicial Review of Exclusion Decisions", "paragraphs": ["As discussed later, Supreme Court case law on the exclusion of aliens has come to focus upon whether the rights of U.S. citizens limit the government's power to exclude. The case law arrived at this issue, however, only after the Supreme Court developed an underlying principle: nonresident aliens outside the United States do not have constitutional rights with respect to entry. Further, any statutory provisions that govern the admission of nonresident aliens do not permit judicial review unless Congress \"expressly authorize[s]\" such review, something that federal courts generally conclude Congress has not done. Put differently, Congress's plenary power over immigration includes not merely the power to set rules as to which aliens may enter the country and under what conditions, but also the power to have such rules \"enforced exclusively through executive officers, without judicial intervention\" unless Congress provides otherwise. Because Congress has not provided otherwise, judicial review of decisions to exclude aliens abroad is generally unavailable. ", "The Supreme Court developed these general principles against judicial review of exclusion decisions in a series of cases between the late 19th and mid-20th centuries about aliens denied admission after arriving by sea. In one illustrative early case, the 1895 decision Lem Moon Sing v. United States , a Chinese national contended that immigration officers improperly denied him admission under the Chinese exclusion laws. Those laws barred the entry of Chinese laborers, but the Chinese national described himself as a merchant and argued that the laws therefore did not apply to him. As a consequence of his exclusion, he was detained by the steamship company.", "The Supreme Court recognized that the professed merchant could challenge the legality of his detention through a petition for habeas corpus. This procedural right ultimately proved hollow, however, because the Court held that it could not review the immigration officials' determination that the petitioner fell within the scope of the provision excluding Chinese laborers. The Court explained that Congress had precluded such review by providing in statute that the decisions of immigration officers to deny admission to aliens under the Chinese exclusion acts \"shall be final, unless reversed on appeal to the secretary of the treasury.\" In other words, the statute allowed only the Secretary of the Treasury to review exclusion decisions under the acts. Accordingly, the Court limited its consideration of the habeas petition to the narrow question of whether the immigration officers who excluded the professed merchant had authority to make exclusion and admission decisions under the statutes (in other words, whether the officers had jurisdiction). Determining that the immigration officers did have such statutory authority, the Court rejected the habeas petition without reviewing the petitioner's contention that he was in fact a merchant, not a laborer. To review that contention, the Court reasoned, would \"defeat the manifest purpose of congress in committing to subordinate immigration officers . . . exclusive authority to determine whether a particular alien seeking admission into this country belongs to the class entitled by some law or treaty to come into the country.\"", "The Court saw no constitutional problem in Congress's assignment of final authority over exclusion decisions to executive officials. The Court considered it a settled proposition that, because aliens lack constitutional rights with respect to entry, exclusion decisions \"could be constitutionally committed for final determination to subordinate immigration or other executive officers . . . thereby excluding judicial interference so long as such officers acted within the authority conferred upon them by congress.\"", "Two major Supreme Court decisions from the 1950s appeared to transform the principle from Lem Moon Sing and earlier cases\u00e2\u0080\u0094that Congress may bar judicial review of exclusion decisions affirmatively\u00e2\u0080\u0094into a presumption that judicial review of exclusion decisions is barred unless Congress expressly provides otherwise. First, in the 1950 case United States ex rel. Knauff v. Shaughnessy , the Court declared itself powerless to review an executive branch decision to exclude the German bride of a U.S. World War II veteran, even though executive officials failed to explain the exclusion beyond stating that the woman's entry would have been \"prejudicial.\" The Court reiterated that aliens do not have constitutional rights with respect to entry and reasoned that, as a consequence, \"[w]hatever the procedure authorized by Congress is, it is due process as far as an alien denied entry is concerned.\" In what would become an oft-cited sentence, the Court also announced the presumption against judicial review of exclusion decisions: \"it is not within the province of any court, unless expressly authorized by law , to review the determination of the political branch of the Government to exclude a given alien.\" Next, in the 1953 case Shaughnessy v. Mezei , the Court refused to question the Executive's undisclosed reasons for denying entry to an essentially stateless alien returning to the United States after a prior period of residence, even though the exclusion relegated the stateless alien to potentially indefinite detention on Ellis Island. The Mezei Court cited Knauff for the proposition that federal courts may not review exclusion decisions \"unless expressly authorized by law,\" and the Court held that the Attorney General's decision to exclude Mezei and detain him as a consequence of that exclusion was \"final and conclusive.\" ", "The issue of detention complicated the Knauff and Mezei cases. Because the aliens in both cases suffered detention as a result of their exclusion, they filed petitions for habeas corpus challenging the legality of their detention. And in both cases, in accord with Lem Moon Sing and other early precedents, and notwithstanding the Court's declaration in Knauff and Mezei that judicial review of the exclusion decisions was unavailable, the Court conducted a limited inquiry into whether the governing statutes empowered the Attorney General to exclude the aliens without a hearing. As explained further below, in the immigration context, the Supreme Court does not construe a general bar on judicial review to preclude habeas corpus review, although the proper scope of habeas review in cases concerning the exclusion of arriving aliens remains unclear. In any event, even though the Knauff and Mezei Courts conducted a limited habeas inquiry into the Attorney General's statutory authority to exclude aliens without a hearing, federal courts often cite the cases (and especially Knauff ) for the proposition that courts may not review exclusion decisions unless Congress expressly provides otherwise. ", "Many scholars criticize Knauff and Mezei as incorrectly decided. The aspect of Mezei that upholds as constitutional the indefinite detention of an arriving alien, in particular, is controversial and has been limited by some lower federal courts to apply only in cases that implicate national security. The Supreme Court, however, has cited Knauff and earlier exclusion cases for the proposition that excluded nonresident aliens do not have grounds to challenge their exclusion in federal court. Under current law, this proposition forms the basis for the doctrine of consular nonreviewability, which bars judicial review in almost all circumstances of the denial of visas to aliens abroad. The general principle against judicial review of exclusion decisions applies with less force to executive decisions to exclude aliens arriving in the United States, even though the rule arose from cases about such aliens. The general principles that govern reviewability of both of these two categories of exclusion decisions\u00e2\u0080\u0094(1) visa denials and other exclusion decisions concerning aliens located abroad; and (2) decisions to deny entry to aliens arriving at U.S. borders or ports of entry\u00e2\u0080\u0094are discussed below. "], "subsections": [{"section_title": "Nonresident Aliens Located Abroad: Consular Nonreviewability", "paragraphs": ["The doctrine of consular nonreviewability precludes judicial review of challenges brought by nonresident aliens located abroad against visa denials and also possibly against other actions by executive branch officials to deny them admission. Under the doctrine, the millions of nonresident aliens denied visas each year at U.S. consulates abroad cannot themselves challenge their visa denials in federal court on statutory or constitutional grounds. The doctrine may also bar U.S. citizens, LPRs, and U.S. entities from challenging the exclusion of a nonresident alien abroad on statutory grounds (as opposed to constitutional grounds), although the Supreme Court has not decided this issue. The general unavailability of judicial review of visa denials under the doctrine means that U.S. consular officers (the officials who adjudicate visas abroad) have considerable power to make final decisions about visa applications. Table 1 provides an overview of the types of claims to which the doctrine of consular nonreviewability applies. "], "subsections": [{"section_title": "Legal Basis for Consular Nonreviewability", "paragraphs": ["Much controversy surrounds the doctrine of consular nonreviewability. Some scholars argue that it lacks a compelling foundation in law. No statute speaks expressly to the issue of whether visa decisions should be subject to judicial review. Even so, lower federal courts recognize the doctrine with apparent uniformity (although some have recognized exceptions to it, as discussed in the next subsection). ", "As authority for the doctrine, courts often cite Knauff and the other Supreme Court cases referenced above concerning the denial of admission to aliens arriving by sea. In particular, the consular nonreviewability cases cite these Supreme Court precedents for the proposition that Congress's plenary immigration power includes the power to have statutes governing the admission of aliens \"enforced exclusively through executive officers, without judicial intervention\" and that \"it is not within the province of any court, unless expressly authorized by law, to review the determination of the political branch of the Government to exclude a given alien.\" Thus, the reasoning that supports lower court applications of the doctrine appears to be that Congress has not expressly authorized judicial review of visa denials. Because the doctrine has its basis in Knauff and the presumption against judicial review of exclusion decisions, it does not apply to the decisions of domestic immigration authorities to deny immigration benefits, unless perhaps those decisions underlie eventual visa denials or otherwise work to exclude aliens located abroad. ", "Some federal courts have sought to reconcile the doctrine of consular nonreviewability with the provisions governing judicial review of final agency action set forth in the Administrative Procedure Act (APA). The APA establishes a \"strong presumption\" that the actions of federal agencies\u00e2\u0080\u0094including the Department of State\u00e2\u0080\u0094are subject to judicial review. Yet, according to these courts, Congress enacted the APA against the backdrop of already-existing consular nonreviewability jurisprudence and without expressly overruling that jurisprudence by providing for review of consular decisions. On this basis, these courts have concluded that the doctrine of consular nonreviewability constitutes a preexisting limitation on judicial review that the APA preserves through its stipulation, in 5 U.S.C. \u00c2\u00a7\u00e2\u0080\u00af702(1), that nothing in the statute \"affects other limitations on judicial review.\" In other words, the APA preserves consular nonreviewability as an exception to the general rule that judicial review is available for agency action. ", "Although the doctrine of consular nonreviewability is well established, it remains true that no statute expressly bars judicial review of visa denials abroad. For this reason, courts generally hold that the doctrine \"supplies a rule of decision, not a constraint on the subject matter jurisdiction of the federal courts.\" The legislative history of the original Immigration and Nationality Act of 1952 indicates that Congress considered and rejected the idea of creating within the Department of State a system of administrative appeals for visa denials, and the current version of the INA bars the Secretary of State from overturning visa decisions. But Congress has not legislated affirmatively to shield visa decisions from judicial review. The doctrine of consular nonreviewability is therefore premised upon the absence of any specific statutory authorization for the review of visa denials, not upon an explicit statutory prohibition on such review."], "subsections": []}, {"section_title": "Exceptions to Consular Nonreviewability", "paragraphs": ["Supreme Court case law qualifies the doctrine of consular nonreviewability in one important respect discussed at length later in this report: if a U.S. citizen challenges the exclusion of a nonresident alien abroad on the ground that the exclusion violates the citizen's constitutional rights, then, under the rule of Kleindienst v. Mandel and later cases, courts \"engage[] in a circumscribed judicial inquiry\" of the constitutional claim. Mandel recognized that U.S. citizens may have constitutional rights that bear upon the entry of nonresident aliens, even though nonresident aliens themselves do not have such rights. As such, the case law of multiple federal circuit courts of appeals establishes that \"a U.S. citizen raising a constitutional challenge to the denial of a visa is entitled to a limited judicial inquiry regarding the reason for the decision.\" This is the only exception to consular nonreviewability that federal courts have recognized uniformly. As explained later in the section on the Mandel line of cases, it allows challengers only exceedingly slim prospects of obtaining relief from a visa denial. Lower federal courts have split over whether U.S. citizens may also challenge visa denials on statutory grounds.", "Some lower federal courts have recognized other exceptions to consular nonreviewability's bar on judicial review of decisions to exclude aliens abroad. For instance, at least one federal circuit court decision extends the Mandel principle to allow a limited level of judicial review of a constitutional challenge brought directly by an excluded nonresident alien (rather than a U.S. citizen) against the denial of a visa. This extension, however, seems at odds with Mandel itself, which concluded that a nonresident alien who was denied the statutory waivers needed to secure a visa \"had no constitutional right of entry,\" and that limited judicial review was therefore available only because of constitutional claims brought by U.S. citizens against the alien's exclusion. Other federal appellate court decisions make clear that review of visa denials under Mandel is available only for claims brought by U.S. citizens. ", "In another non-uniformly recognized exception, a line of decisions by the U.S. Court of Appeals for the Ninth Circuit allows nonresident aliens to challenge a consular officer's failure to act upon a visa application (as opposed to the denial of an application). The supporting rationale is that the Mandamus Act supplies a basis for judicial review where an official fails to take a legally required action, such as the adjudication of a visa application, even if the APA does not. This exception to the rule of consular nonreviewability is not as well established as the exception allowing for limited review of constitutional claims brought against visa denials by U.S. citizens. Federal district courts outside the Ninth Circuit have split over whether to recognize the exception. However, as discussed in the next section, in cases not specifically concerning the adjudication of visas, other courts have recognized that the Mandamus Act creates an exception to the presumption against judicial review of decisions to exclude aliens abroad.", "Other federal district court opinions may suggest further exceptions to consular nonreviewability that have yet to gain uniform recognition, such as an exception allowing visa applicants to challenge the validity of generally applicable statutes, regulations, or policies that govern their applications. Nonetheless, the review available under Mandel for constitutional challenges brought by U.S. citizens remains the only exception to consular nonreviewability grounded in Supreme Court case law and universally recognized by lower federal courts."], "subsections": []}, {"section_title": "Nonresident Aliens Abroad Who Seek Entry to Remedy Prior Violations of Constitutional or Statutory Rights", "paragraphs": ["Other cases concerning aliens abroad that implicate the presumption against judicial review of exclusion decisions and the doctrine of consular nonreviewability address the following question: may a federal court order the executive branch to grant entry to a nonresident alien located abroad in order to remedy violations of constitutional or statutory rights that the alien suffered while in the United States or while detained by the United States? The Seventh and Ninth Circuits have both answered in the affirmative. The D.C. Circuit, however, has held that Knauff bars courts from ordering the executive branch to grant entry to an alien unless a statutory provision authorizes courts to do so.", "The Ninth Circuit held that a federal district court has authority to order the executive branch to parole aliens whom it removed in violation of due process back into the country to attend fair removal proceedings. \"Without a provision requiring the government to admit individual [aliens] into the United States so that they may attend the hearings to which they are entitled,\" the court reasoned, the determination that their removal proceedings violated due process \"would be virtually meaningless.\" In other words, the only way to remedy the constitutional violation was to order the government to grant the aliens reentry. In a recent district court case that relied on the Ninth Circuit decision, the district court reasoned that ordering the government to grant reentry to aliens who were removed in violation of law did not contravene the political branches' broad authority over exclusion decisions because the remedy formed part of the review that Congress authorized courts to conduct of removal orders under the INA. ", "The Seventh Circuit reached a broader holding in a different context. The case, Samirah v. Holder , concerned an alien who had overstayed his nonimmigrant visa but who had applied for LPR status (through a process called \"adjustment of status\"). When his mother fell ill in Jordan, the alien received a grant of advance parole from the Department of Homeland Security (DHS) so that he could visit her without abandoning his application for adjustment and with some assurance that he would be able to return to the United States to pursue the application. But while the alien was abroad, DHS revoked his advance parole and did not allow him to board a connecting flight back to the United States. Reviewing the alien's application for a writ of mandamus ordering executive branch officials to grant him reentry, the Seventh Circuit reasoned that DHS had used the advance parole as \"a trap\u00e2\u0080\u0094a device for luring a nonlawful resident out of the United States so that he can be permanently excluded from this country.\" The circuit court held that DHS's parole regulation unambiguously granted the plaintiff a right to reenter the country to continue pursuing his pending application for adjustment of status and that the court could enforce that right through mandamus. Further, the circuit court reasoned that the Supreme Court's holding in Knauff \u00e2\u0080\u0094that \"it is not within the province of any court,\u00c2\u00a0unless expressly authorized by law , \u00c2\u00a0to review the determination of the political branch of the Government to exclude a given alien\"\u00e2\u0080\u0094does not apply in instances where a statute or regulation grants an excluded alien a right to physical presence in the United States. Put differently, where a nonresident alien abroad \"has a right, conferred by a regulation the validity of which is conceded all around, to be in this country,\" Knauff and the doctrine of consular nonreviewability do not bar a court from ordering executive branch officials to grant the alien entry. The Court did not clarify, however, whether the alien's right to be in the United States under the parole regulation also constituted an \"express[] authoriz[ation]\" of judicial review , within the meaning of Knauff , of the alien's exclusion. The Supreme Court, for its part, has held at least once that the potential existence of a right to entry does not give rise to judicial review of an alien's exclusion. ", "A D.C. Circuit decision stands in tension with the Seventh and Ninth Circuit cases. In Kiyemba v. Obama , the D.C. Circuit held that it did not possess authority to order executive branch officials to grant entry into the United States to seventeen Chinese nationals detained without sufficient evidence as enemy combatants in Guantanamo Bay. The aliens feared that they would face persecution in China and requested entry and release into the United States, at least until authorities could locate an appropriate third country to accept them, but executive branch officials denied their request and continued to hold the aliens at Guantanamo Bay while pursuing resettlement options through diplomacy. Although the illegality of the aliens' detention was undisputed, the D.C. Circuit held that it could not order the government to release the aliens into the United States. The circuit court cited Knauff , Mezei , and other exclusion cases for the principle that the political branches have \"exclusive power . . . to decide which aliens may, and which aliens may not, enter the United States,\" and reasoned that this principle barred it from granting the requested relief. The \"critical question\" under Knauff , the circuit court reasoned, was whether any law \"expressly authorized\" courts \"to set aside the decision of the Executive Branch and to order the[] aliens brought to the United States.\" The Court concluded that the aliens did not have due process rights and that no other \"statute or treaty\" authorized it to override the executive branch's decision not to grant the aliens entry to the United States. As such, the rule that \"in the United States, who can come in and on what terms is the exclusive province of the political branches\" foreclosed the aliens' claims for relief.", "In conclusion, the Seventh and Ninth Circuit cases suggest that the doctrine of consular nonreviewability does not bar federal courts from ordering executive branch officials to grant entry to nonresident aliens abroad for the purpose of remedying constitutional, statutory, or regulatory violations that the aliens suffered in the United States. However, the cases may not fully explain how such judicial authority to order a nonresident alien's entry comports with Knauff and the principles underlying the doctrine of consular nonreviewability. The D.C. Circuit opinion, in contrast, appears to stand for the proposition that Knauff allows federal courts no authority to order the entry of a nonresident alien located outside the United States, unless a statute expressly authorizes such relief. "], "subsections": []}]}, {"section_title": "Aliens Excluded at the Border or Port of Entry", "paragraphs": ["Under current law, the general rule against challenges to denials of entry appears less relevant in the context of arriving aliens at the threshold of entry, notwithstanding the rule's provenance in Knauff and other cases about such aliens. Unlike in the visa context, it is not rare for federal courts to review and even strike down executive exclusion decisions and policies concerning aliens arriving at the border. At least three interrelated considerations contribute to the diminished relevance of the rule against challenges to exclusion decisions in arriving alien cases."], "subsections": [{"section_title": "Detention and Other Consequences of Exclusion", "paragraphs": ["First, decisions to exclude arriving aliens, unlike decisions to exclude aliens abroad, typically result in detention. Although nonresident aliens do not have constitutional rights with respect to entry , they may enjoy some protection from burdensome enforcement measures, such as prolonged detention, that sometimes flow from denial of entry. Recall, for example, the 1953 Mezei case mentioned above, where the Supreme Court denied relief to a stateless alien whose exclusion left him detained on Ellis Island without prospects for release. Unlike cases about aliens denied visas abroad, Mezei raised not only the question of whether the alien had grounds to challenge his exclusion from the United States, but also whether the government could keep him in detention on Ellis Island as a consequence of the exclusion decision. The majority answered this second question in the affirmative, reasoning that Mezei's lack of constitutional rights with respect to entry, and Congress's decision not to provide him with any judicially enforceable statutory rights to entry, foreclosed his challenge to the detention that resulted from his exclusion. In dissent, Justice Jackson made a famous retort: ", "Because the respondent has no right of entry, does it follow that he has no rights at all? Does the power to exclude mean that exclusion may be continued or effectuated by any means which happen to seem appropriate to the authorities? It would effectuate [an alien's] exclusion to eject him bodily into the sea or set him adrift in a rowboat. ", "In more recent cases, the Supreme Court has hesitated to rely on Mezei for the proposition that the federal government has the constitutional power to subject arriving aliens to prolonged detention in order to carry out their exclusion. Some lower courts have gone further and held that arriving aliens have due process rights that offer some protection against unreasonably prolonged detention, reasoning that Mezei applies only in cases that implicate specific national security concerns. The Supreme Court has yet to resolve the issue. As such, the extent to which aliens arriving at the border enjoy constitutional protections against prolonged detention or other enforcement measures connected to the denial of entry is a disputed issue. And while the law remains clear on the point that arriving nonresident aliens do not have constitutional rights with respect to entry itself, the proposition that they may have constitutional rights against detention or other enforcement measures that implicate fundamental rights often leads to judicial review of issues arising from their exclusion."], "subsections": []}, {"section_title": "Habeas Corpus Review", "paragraphs": ["Second, also because of the detention issue, arriving alien cases may trigger some level of habeas corpus review. Knauff and Mezei establish that no judicial review is available for exclusion decisions unless a statute expressly authorizes such review. But at the same time, the cases confirm an arguably countervailing proposition: that arriving aliens who suffer detention as a consequence of exclusion may challenge their exclusion in habeas corpus proceedings. Thus, in Knauff , the Court disavowed judicial review but still considered and rejected the excluded alien's argument that the applicable statutes required the Attorney General to conduct a hearing on her admissibility and that an executive branch regulation providing to the contrary was \"unreasonable.\" Similarly, in Mezei , the Court's habeas review included an assessment that the exclusion of the stateless alien in that case without a hearing conformed to the procedural requirements of the immigration statutes. As the Court has noted elsewhere, \"[i]n the immigration context, 'judicial review' and 'habeas corpus' have historically distinct meanings.\" The Court has held in the deportation context that the preclusion of judicial review does not bar habeas corpus proceedings. Knauff , Mezei , and earlier exclusion cases suggest that the same principle applies in the exclusion context: the cases declare that judicial review is unavailable for challenges to exclusion decisions, but they nonetheless engage in some review of executive jurisdiction and procedure under the rubric of habeas corpus. ", "The scope of federal court review in habeas corpus proceedings of a decision to exclude an alien appears extremely limited, although its exact contours remain unclear (as does the question whether such proceedings are constitutionally required). The habeas review that the Court conducted in Knauff and Mezei did not reach the merits of the exclusion decisions. In Knauff , the Court declined to review the Attorney General's determination that the German war bride's entry would be \"prejudicial.\" Similarly, in Mezei , the Court held that it could not review the Attorney General's undisclosed reasons for excluding the stateless alien. As such, one might read Knauff and Mezei to mean that courts reviewing exclusion decisions in habeas proceedings (1) may review pure questions of law, such as whether immigration officials had jurisdiction to enforce the relevant exclusion statutes and whether the statute authorized them to forgo a hearing, but (2) may not review the basis for the officials' determination that the statutes require the aliens' exclusion. ", "Other cases complicate this picture, however. In at least one early habeas case that the Supreme Court has not overruled, the Court reviewed and reversed the determination of immigration officers that a group of arriving aliens was subject to exclusion under the immigration statutes. One federal circuit court has interpreted Supreme Court case law to suggest that \"the Suspension Clause requires review of legal and mixed questions of law and fact related to removal orders, including expedited removal orders.\"", "The proper reach of a habeas court's review of the exclusion of an arriving alien thus remains unsettled, although the Supreme Court is scheduled to consider this issue in 2020. Regardless, the availability of any level of habeas review in arriving alien cases means that, in practice, the general rule against judicial review of exclusion decisions applies with less force in this context than in the context of visa denials or other decisions to exclude aliens located abroad , where the lack of detention makes habeas unavailable. "], "subsections": []}, {"section_title": "INA Framework for Judicial Review of Removal Orders", "paragraphs": ["Third and finally, Congress has established a limited framework in the INA for the review of orders of removal against arriving nonresident aliens. The INA sets forth two primary procedures by which DHS officials may remove aliens arriving in the United States. These procedures are expedited removal, a streamlined process that contemplates removal without a hearing before an immigration judge, and formal removal, a more traditional proceeding in which an immigration judge determines whether to order the alien's removal. The INA specifies the limited circumstances in which an alien ordered removed under these procedures may obtain judicial review. The INA also expressly bars or limits judicial review of a range of executive branch actions and determinations connected to the removal process. This INA scheme of limitations on judicial review purports to bar review of expedited removal orders in most circumstances, but it may not bar review of some executive branch exclusion policies that bear upon the expedited removal process (such as, for example, executive policies that restrict asylum eligibility for some aliens arriving at the border who are subject to expedited removal procedures). ", "These INA provisions concerning the reviewability of removal orders appear to have replaced the Knauff presumption\u00e2\u0080\u0094that judicial review of exclusion decisions is unavailable \"unless expressly authorized by law\"\u00e2\u0080\u0094as the touchstone for whether executive decisions or policies for the exclusion of arriving nonresident aliens are subject to judicial review. When the INA expressly authorizes judicial review of orders or policies for the removal of arriving aliens, federal courts engage in such review. More broadly, however, federal courts have also shown a willingness to review statutory challenges to exclusion decisions or policies concerning aliens at the threshold of entry so long as the INA does not expressly bar such review (even if it does not expressly authorize review). This situation typically arises in cases where arriving aliens or their advocates challenge an executive branch exclusion policy under the APA.", "How judicial review in such exclusion cases\u00e2\u0080\u0094where the INA neither expressly authorizes nor bars review\u00e2\u0080\u0094comports with the Knauff presumption remains largely unexplained in the case law. Yet the Supreme Court has on at least one occasion allowed for judicial review of inadmissibility determinations of arriving aliens on the ground that Congress had not expressly barred such review: in the 1956 case Brownwell v. We Shung , the Court held that arriving aliens could challenge inadmissibility determinations through declaratory judgment actions because the relevant statute\u00e2\u0080\u0094a prior version of the INA that Congress later amended in disapproval of the Supreme Court decision\u00e2\u0080\u0094did not bar such actions. This decision appeared to disregard the presumption against judicial review of exclusion determinations established in Knauff and earlier exclusion cases, although the We Shung Court did not address this point. The underlying implication of We Shung , and of the more recent lower court decisions reviewing statutory challenges to executive branch policies concerning the exclusion of arriving aliens, may be that the INA's judicial review framework for orders of removal occupies the territory that the Knauff presumption against judicial review once occupied and therefore replaces the Knauff presumption as the law governing the availability of judicial review in arriving alien exclusion cases. ", "To recap: the current case law generally provides that statutory challenges to the exclusion of arriving aliens are reviewable unless a statute expressly bars such judicial review. However, the case law does not thoroughly reconcile this approach with the Knauff presumption that there should be no review of an exclusion determination unless the review is expressly authorized in statute."], "subsections": []}]}, {"section_title": "Conclusion Concerning General Rule Against Judicial Review of Exclusion Decisions", "paragraphs": ["The line of Supreme Court exclusion jurisprudence culminating in Knauff and Mezei establishes that courts may not review challenges to the exclusion of nonresident aliens unless Congress expressly provides for such review. In the context of aliens located abroad, this jurisprudence has developed into the rule of consular nonreviewability, which bars judicial review in most circumstances of visa refusals and other decisions to exclude nonresident aliens abroad. In the context of arriving aliens, however, the Knauff presumption against judicial review of exclusion decisions appears to have been mostly overshadowed by constitutional issues concerning enforcement measures related to the denial of entry, the potential availability of some level of habeas review, and the framework of INA provisions governing judicial review of removal orders."], "subsections": []}]}, {"section_title": "Claims by U.S. Citizens Against an Alien's Exclusion", "paragraphs": ["Even as applied to aliens abroad, the rule against nonresident alien challenges to denials of entry has a major limitation: the rule only clearly forecloses challenges brought by nonresident aliens themselves. Thus, if a U.S. citizen claims that the exclusion of an alien violated the U.S. citizen's constitutional rights, the rule against alien challenges does not apply with its full force. ", "Cases that invoke this limitation account for the entirety of the Supreme Court's modern exclusion jurisprudence. The Court has not considered a nonresident alien's own challenge to a denial of entry in decades. The question about the extent to which U.S. citizens can challenge an alien's exclusion, on the other hand, has occupied the Court in four important cases since 1972: Kleindienst v. Mandel , Fiallo v. Bell , the splintered Kerry v. Din , and Trump v. Hawaii . Under the rule that these cases establish, the government need satisfy only a \"highly constrained\" judicial inquiry into whether the exclusion \"had a justification independent of unconstitutional grounds\" in order to prevail against an American citizen's claim that the exclusion violated his or her constitutional rights. This is an extremely limited level of judicial review under which the government has always prevailed before the Supreme Court."], "subsections": [{"section_title": "Mandel and the Narrow Review of Exclusion Decisions", "paragraphs": ["In 1972, the Court confronted a case in which a group of American professors claimed that the exclusion of a Belgian intellectual, Ernest Mandel, violated the American professors'\u00e2\u0080\u0094and not Mandel's\u00e2\u0080\u0094First Amendment rights. The professors had invited Mandel to speak at their universities. A provision of the INA rendered him ineligible for a visa because of his communist political beliefs. A separate provision authorized the Attorney General to waive Mandel's ineligibility upon a recommendation from the Department of State, but the Attorney General declined to do so. The case produced a standard of review for claims that the exclusion of an alien violates an American citizen's constitutional rights:", "[P]lenary congressional power to make policies and rules for exclusion of aliens has long been firmly established . . . . We hold that when the Executive exercises [a delegation of this power] negatively on the basis of a facially legitimate and bona fide reason , the courts will neither look behind the exercise of that discretion, nor test it by balancing its justification against the First Amendment interests of those who seek personal communication with the applicant.", "Applying this \"facially legitimate and bona fide\" test, the Court upheld Mandel's exclusion on the basis of the government's explanation that it denied the waiver because Mandel had abused visas in the past. The American professors and two dissenting Justices pointed to indications of pretext and argued that Mandel had actually been excluded because of his communist ideas. Nonetheless, the majority refused to \"look behind\" the government's justification to determine whether any evidence supported it. In other words, the Court accepted at face value the government's explanation for why it denied Mandel permission to enter.", "The \"facially legitimate and bona fide\" standard resolved what the Court saw as the major dilemma that the dispute over Mandel's visa posed for the bedrock principles of its immigration jurisprudence. Unlike Mandel himself and the unadmitted aliens from prior exclusion cases, the American professors stated a compelling First Amendment claim based on their \"right to receive information\" from the Belgian intellectual. But for the Court to grant relief on that claim, or even to grant full consideration of the claim, would have undermined Congress's plenary power to exclude aliens by interjecting the courts into the exclusion process. After all, many other exclusions of aliens for communist ideology could also have implicated the rights of U.S. citizens who sought to \"meet and speak with\" the excluded aliens. The \"facially legitimate\" standard protected the plenary power against dilution by limiting the reach of the American professors' claim. Under the standard, the professors were not entitled to balance their First Amendment rights against the government's exclusion power; they were entitled only to a constitutionally valid statement as to why the government exercised the exclusion power. Significantly, the Court left open the question whether the American professors' rights entitled them to even that much. Although the government proffered a \"facially legitimate and bona fide\" justification for Mandel's exclusion, the Court declined to say whether the government would have prevailed even if it had offered \"no justification whatsoever.\""], "subsections": []}, {"section_title": "Subsequent Applications of Mandel: Fiallo, Din, and Trump v. Hawaii", "paragraphs": ["The Court has followed Mandel in three subsequent exclusion cases. The first of these cases, Fiallo v. Bell , concerned the constitutionality of a statute; the second, Kerry v. Din , concerned the Executive's application of a statute in an individual visa case; and the third, Trump v. Hawaii , concerned the Executive's invocation of statutory authority to exclude a broad class of aliens by presidential proclamation. All three cases reinforce the notion of the government's plenary power to exclude aliens even in the face of constitutional challenges brought by U.S. citizens. The second and third cases, however, indicate that a different standard of review than Mandel 's \"facially legitimate and bona fide\" test may apply when challengers present extrinsic evidence of an unconstitutional justification for an executive exclusion decision or policy. The Supreme Court has assumed without definitively holding that, in such cases, reviewing courts may consider the extrinsic evidence to determine whether the exclusion decision or policy \"can reasonably be understood to result from a justification independent of unconstitutional grounds.\""], "subsections": [{"section_title": "Fiallo v. Bell", "paragraphs": ["In Fiallo v. Bell , the Court upheld a provision of the INA that classified people by gender and legitimacy. The statute granted special immigration preferences to the children and parents of U.S. citizens and LPRs, unless the parent-child relationship at issue was that of a father and his illegitimate child. Two U.S. citizens and two LPRs claimed that the restriction violated their equal protection rights by disqualifying their children or fathers from the preferences. Despite the \"double-barreled discrimination\" on the face of the statute, the Court upheld it as a valid exercise of Congress's \"exceptionally broad power to determine which classes of aliens may lawfully enter the country.\" Although it relied on Mandel , the Fiallo Court did not identify a concrete \"facially legitimate or bona fide\" justification for the statute. Instead, the Court surmised that a desire to combat visa fraud or to emphasize close family ties may have motivated Congress to impose the gender and legitimacy restrictions. Similar to the analysis in Mandel , the Fiallo Court justified its limited review of the facially discriminatory statute as a way to prevent the assertion of U.S. citizen rights from undermining the sovereign prerogative to exclude aliens."], "subsections": []}, {"section_title": "Kerry v. Din", "paragraphs": ["In Kerry v. Din , the Court considered a U.S. citizen's claim that the Department of State violated her due process rights by denying her husband's visa application without sufficient explanation. The Department indicated that it denied the visa under a terrorism-related ineligibility but did not disclose the factual basis of its decision. The Court rejected the claim by a vote of 5 to 4 and without a majority opinion. Justice Scalia, writing for a plurality of three Justices, did not reach the Mandel analysis because he concluded that Din did not have a protected liberty interest under the Due Process Clause in her husband's ability to immigrate. But Justice Kennedy, in a concurring opinion for himself and Justice Alito, which some lower courts view as the controlling opinion in the case, assumed without deciding that the visa denial implicated due process rights but rejected the claim under the \"facially legitimate and bona fide reason\" test. ", "Justice Kennedy's concurring opinion made two significant statements about how Mandel works in application. First, the government may satisfy the \"facially legitimate and bona fide reason\" standard by citing the statutory provision under which it has excluded the alien. Such a citation fulfills the \"facially legitimate\" prong by grounding the exclusion decision in legislative criteria enacted under Congress's \"plenary power\" to restrict the entry of aliens, and the citation also, by itself, suffices to \"indicate[] [that the government] relied upon a bona fide factual basis\" for the exclusion. Thus, because the government stated that it denied Din's husband's visa application under the terrorism-related ineligibility, it provided an adequate justification under Mandel even though it did not disclose the factual findings that triggered the ineligibility. Pointing to the statute suffices. ", "Second, however, Justice Kennedy indicated that his interpretation of the \"bona fide\" prong might be susceptible to a caveat in some cases:", "Absent an affirmative showing of bad faith on the part of the consular officer who denied Berashk [Din's husband] a visa\u00e2\u0080\u0094which Din has not plausibly alleged with sufficient particularity\u00e2\u0080\u0094 Mandel instructs us not to \"look behind\" the Government's exclusion of Berashk for additional factual details beyond what its express reliance on [the terrorism-related ineligibility] encompassed.", "In other words, under Justice Kennedy's reading of the Mandel standard, courts will assume that the government has a valid basis for excluding an alien under a given statute\u00e2\u0080\u0094 unless an affirmative showing suggests otherwise. In Din , the facts did not suggest bad faith, because Din's own complaint revealed a connection between the statutory ineligibility and her husband's case. Justice Kennedy therefore had no occasion to apply the caveat, and the opinion did not clarify what kind of \"affirmative showing\" would trigger it. Nonetheless, Justice Kennedy's concept of a bad faith exception to Mandel 's rule against judicial scrutiny of the government's underlying factual basis for an exclusion decision became a prominent issue in the Supreme Court's most recent exclusion case, Trump v. Hawaii . "], "subsections": []}, {"section_title": "Trump v. Hawaii", "paragraphs": ["Most recently, in Trump v. Hawaii , the Court rejected a challenge brought by U.S. citizens, the state of Hawaii, and other U.S.-based plaintiffs against a presidential proclamation that provided for the indefinite exclusion of broad categories of nonresident aliens from seven countries, subject to some waivers and exemptions. Five of the seven countries covered by the proclamation were Muslim-majority countries. The proclamation, like two earlier executive orders that imposed entry restrictions of a similar nature, became known colloquially as the \"Travel Ban\" or \"Muslim Ban.\" ", "As statutory authority for the proclamation, the President relied primarily upon INA \u00c2\u00a7 212(f). That statute grants the President power \"to suspend the entry of all aliens or any class of aliens\" whose entry he \"finds . . . would be detrimental to the interests of the United States.\" In the proclamation, the President concluded that the entry of the specified categories of nationals from the seven countries would have been \"detrimental\" to the United States because, based on the results of a multiagency review, the countries did not adequately facilitate the vetting of their nationals for security threats or because conditions in the countries posed particular risks to national security. Thus, the stated purpose of the proclamation was to protect national security by excluding aliens who could not be properly vetted due to the practices of their governments or the conditions in their countries. The challengers contended, however, that the actual purpose of the proclamation was to exclude Muslims from the United States. They based this argument primarily upon extrinsic evidence\u00e2\u0080\u0094that is, evidence outside of the four corners of the proclamation\u00e2\u0080\u0094including statements that the President had made as a candidate calling for a \"total and complete shutdown of Muslims entering the United States.\"", "The challengers argued that the proclamation was illegal on statutory and constitutional grounds. With respect to statute, the challengers contended that INA \u00c2\u00a7 212(f) conferred upon the President only a \"residual power to temporarily halt the entry of a discrete group of aliens engaged in harmful conduct\" and therefore did not authorize the proclamation's indefinite exclusion of nationals of seven countries. The challengers also made other statutory arguments, including that the proclamation did not make sufficient findings that the entry of the excluded aliens would be \"detrimental to the interests of the United States,\" as the language of \u00c2\u00a7 212(f) requires. With respect to the constitutional ground, the challengers argued that the proclamation violated the Establishment Clause because, based on the extrinsic evidence, the President issued the proclamation for the actual purpose of excluding Muslims from the United States. As such, according to plaintiffs, the proclamation ran afoul of the \"clearest command\" of the Establishment Clause: \"that one religious denomination cannot be officially preferred over another.\"", "A five-Justice majority of the Supreme Court rejected all of these challenges in an opinion by Chief Justice Roberts that generally reaffirmed the unique breadth of the political branches' power to admit or exclude aliens. On the statutory claims, the Court declined to decide whether the doctrine of consular nonreviewability barred judicial review of the U.S. plaintiffs' arguments that the proclamation violated \u00c2\u00a7 212(f) and other provisions of the INA. The Court instead held that the proclamation did not violate the INA because \u00c2\u00a7 212(f) \"exudes deference to the President\" and grants him \"'ample power' to impose entry restrictions in addition to those elsewhere enumerated in the INA,\" even restrictions as broad as those in the proclamation. The Court also reasoned that the \"deference traditionally accorded the President\" in national security and immigration matters means that courts must not conduct a \"searching inquiry\" into the basis of the President's determination under \u00c2\u00a7 212(f) that the entry of certain aliens would be \"detrimental to the interests of the United States.\" The Court suggested that such a presidential determination might not be subject to judicial review at all\u00e2\u0080\u0094calling the premise for such review \"questionable\"\u00e2\u0080\u0094but ultimately held that, \"even assuming some form of review [was] appropriate,\" the findings in the proclamation about the results of the multiagency review of vetting practices satisfied \u00c2\u00a7 212(f)'s requirements. In short, although the Court reviewed the statutory claims against the proclamation, it rejected those claims by holding that Congress has delegated extraordinary power to the President to exclude aliens and that the President's decisions to employ this power warrant deference. ", "On the constitutional issue, the Court reiterated the holdings in Mandel and Fiallo that matters concerning the admission or exclusion of aliens are \"'largely immune from judicial control'\" and are subject only to \"highly constrained\" judicial inquiry when exclusion \"allegedly burdens the constitutional rights of a U.S. citizen.\" Interestingly, however, the Court did not decide whether the limitations on the scope of this inquiry barred consideration of extrinsic evidence of the proclamation's purpose. Much of the litigation in the lower courts had turned on this issue. A majority of judges on the U.S. Court of Appeals for the Fourth Circuit, citing Justice Kennedy's concurrence in Din , had relied on the campaign statements and other extrinsic evidence of anti-Muslim animus to hold that the proclamation likely violated the First Amendment. Dissenting Fourth Circuit judges had reasoned that Mandel and the other exclusion cases prohibited consideration of the extrinsic evidence. The Supreme Court, instead of resolving this disagreement, assumed without deciding that consideration of the extrinsic evidence was appropriate in connection with a rational basis inquiry:", "A\u00c2\u00a0conventional application of\u00c2\u00a0. . . [the] facially legitimate and bona fide [test] would put an end to our review. But the Government has suggested that it may be appropriate here for the inquiry to extend beyond the facial neutrality of the order. For our purposes today, we assume that we may look behind the face of the Proclamation to the extent of applying rational basis review. That standard of review considers whether the entry policy is plausibly related to the Government's stated objective to protect the country and improve\u00c2\u00a0vetting processes. As a result, we may consider plaintiffs' extrinsic evidence, but will uphold the policy so long as it can reasonably be understood to result from a justification independent of unconstitutional grounds.", "In other words, the Court concluded that, even if plaintiffs' evidence of anti-Muslim animus warranted expansion of the scope of judicial review beyond the four corners of the proclamation itself, the appropriate inquiry remained extremely limited: whether the proclamation was rationally related to the national security concerns it articulated. And that rational basis inquiry, the Court explained, is one that the government \"hardly ever\" loses unless the laws at issue lack any purpose other than a \"'bare . . . desire to harm a politically unpopular group.'\" Applying this forgiving standard, the Court held that the proclamation satisfied it mainly because agency findings about deficient information-sharing by the governments of the seven covered countries established a \"legitimate grounding in national security concerns, quite apart from any religious hostility.\"", "In the principal dissent, Justice Sotomayor argued that the majority failed to provide \"explanation or precedential support\" for limiting its analysis to rational basis review after deciding to go beyond the \"facially legitimate and bona fide reason\" inquiry. In Justice Sotomayor's view, the Court's Establishment Clause jurisprudence required the Court to strike down the proclamation because a \"reasonable observer\" familiar with the evidence would have concluded that the proclamation sought to exclude Muslims. She also reasoned that, even if rational basis review were the correct standard, the proclamation failed to satisfy it because the President's statements were \"overwhelming . . . evidence of anti-Muslim animus\" that made it impossible to conclude that the proclamation had a legitimate basis in national security concerns. Finally, Justice Sotomayor criticized the majority for, in her view, tolerating invidious religious discrimination \"in the name of a superficial claim of national security.\" She compared the majority decision to Korematsu v. United States , a case that upheld as constitutional the compulsory internment of all persons of Japanese ancestry in the United States (including U.S. citizens) in concentration camps during World War II. (The majority responded that unlike the exclusion order in Korematsu the proclamation did not engage in express, invidious discrimination against U.S. citizens and that, as such, \" Korematsu has nothing to do with this case.\" The majority also took the occasion to overrule Korematsu \u00e2\u0080\u0094which had long been considered bad law but which the Supreme Court had never expressly overruled\u00e2\u0080\u0094calling it \"gravely wrong the day it was decided.\" )", "In conclusion, Trump v. Hawaii leaves some questions unresolved about how the Mandel test works in practice, but Trump v. Hawaii leaves no uncertainty on one point: Mandel and its progeny permit courts to conduct only a vanishingly limited review of executive decisions to exclude aliens abroad. The Court did not decide whether U.S. citizens may challenge exclusion decisions on statutory grounds or whether, and in what circumstances, courts may consider extrinsic evidence of the government's purpose for an exclusion decision or policy. Yet the majority opinion reaffirms that the standard of review that applies to constitutional claims brought by U.S. citizens against the exclusion of aliens abroad is a \"highly constrained\" one that favors the government heavily, even when extrinsic evidence suggests that the Executive may have acted for an unconstitutional purpose."], "subsections": []}]}]}, {"section_title": "Implications of Supreme Court Jurisprudence for the Scope of Congressional Power", "paragraphs": ["The Mandel line of cases embraces the broad view of congressional power over the admission and exclusion of aliens that the Supreme Court established in Knauff and earlier precedent, although the cases do leave some uncertainty about the outer edges of the congressional power. ", "Mandel and Din appeared to take the absoluteness of Congress's exclusion power as a given. In Din , Justice Kennedy grounded his conclusion\u00e2\u0080\u0094that a visa denial withstands constitutional attack so long as the government ties the exclusion to a statutory provision\u00e2\u0080\u0094on the premise that Congress can impose whatever limitations it sees fit on alien entry. In other words, because Congress's limitations are valid per se , executive enforcement of those limitations is also valid. Mandel makes the same point, albeit mainly through omission. Recall that the case concerned application of an INA provision that rendered the Belgian academic ineligible for a visa because he held communist political beliefs. The Court acknowledged that the statute triggered First Amendment concerns by limiting, based on political belief, U.S. citizens' audience with foreign nationals. But the Court did not assess whether the statute violated the First Amendment. Rather, the Court accepted without significant analysis that Congress had the power to impose such an idea-based entry limitation. As a result, the Mandel decision considered only the First Amendment implications of the Attorney General's refusal to waive Mandel's communism-based ineligibility, not the statutory premise of the ineligibility. ", "The untested assumption underlying Mandel and Din \u00e2\u0080\u0094that Congress's immigration power encompasses the power to exclude based on any criteria whatsoever, including political belief\u00e2\u0080\u0094raises a fundamental question about the nature of the plenary power. Often, the Supreme Court has described the power as one that triggers judicial deference , meaning that courts may conduct only a limited inquiry when considering the constitutionality of an exercise of the immigration power. But the plenary power doctrine, as some scholars have noted, can be understood another way, one that perhaps makes more sense of Mandel : the \"plenary\" refers to the scope of the power itself, in substance, and not to its immunity from judicial review. The congressional power to admit or exclude aliens is so complete, this theory goes, as to override the constitutional limitations that typically constrain legislative action. For example, the power overrides the First Amendment principles that would invalidate legislation that expressly provides for unfavorable treatment based on political belief in almost any other context. ", "Aspects of Fiallo , however, arguably do not support this concept of a substantively limitless congressional power to regulate alien entry. Unlike Mandel and Din , which examined the Executive's application and implementation of authority delegated by statute, Fiallo squarely considered the constitutionality of a statute itself. And while Fiallo 's outcome (upholding an immigration law that discriminated by gender and legitimacy) aligns with the concept of an unbridled legislative power, the Court's reasoning wavered between statements suggesting that the legislative power might have limits and statements describing the power as absolute. The lack of clarity in the opinion seemed to stem from the awkwardness of applying Mandel \u00e2\u0080\u0094which fashioned a rule for review of executive action (the \"facially legitimate and bona fide\" test)\u00e2\u0080\u0094in a case reviewing legislative action. Ultimately, the Fiallo Court cited the Mandel test as an analogue but did not actually apply the test. Rather, the Court upheld the statute at issue under something that looked like a version of rational basis review, one in which a hypothetical justification suffices to sustain the statute. While extremely deferential, this version of rational basis review implies an underlying constitutional limitation against legislative unreasonableness, at least in theory. In other words, an even-handed reading of Fiallo suggests that statutes regulating the admission of aliens must at least be reasonable. ", "Some scholars have argued that Fiallo was incorrectly decided and that stricter constitutional scrutiny should apply to admission and exclusion laws that classify aliens by factors such as race, religion, and gender. To date, this argument does not find support in Supreme Court precedent, particularly not after the Court relied on Fiallo in Trump v. Hawaii to describe the breadth of the political branches' exclusion power. To be sure, the Supreme Court has made clear that Congress cannot deny certain rights to aliens subject to criminal or deportation proceedings within the United States, and that the federal government cannot deny some procedural protections to LPRs returning from brief trips from abroad. But the Court has never suggested that laws regulating the admission of non-LPR aliens trigger anything more than the deferential rational basis review that it applied to the gender-based immigration preferences statute at issue in Fiallo . In other words, the Court has never called Fiallo into question. ", "In one recent case, Sessions v. Morales-Santana , the Supreme Court applied heightened constitutional scrutiny to strike down a derivative citizenship statute that, much like the statute in Fiallo , used gender classifications. However, the Morales-Santana Court distinguished Fiallo and the plenary power doctrine by noting that the statute before it concerned citizenship, not immigration. Accordingly, Morales-Santana does not appear to portend imminent reconsideration of Fiallo . The term after Morales-Santana , the Court applied rational basis review in Trump v. Hawaii to an executive exclusion policy that was based on a statutory delegation of authority, suggesting that nothing more than rational basis review could apply to an exclusion statute itself. ", "To summarize, dicta in two of the exclusion cases that decided challenges to executive action, Mandel and Din , give the impression of a substantively absolute congressional power to control the entry of aliens. But courts have generally interpreted Fiallo , which concerned a direct challenge to a law regulating alien admission and exclusion, to mean that such laws must at least survive a review for reasonableness. To date, the Supreme Court has not heeded calls by some scholars and litigants for more exacting review of laws regulating alien entry. "], "subsections": []}, {"section_title": "Implications of Supreme Court Jurisprudence for the Scope of Executive Power", "paragraphs": ["Mandel , Din , and Trump v. Hawaii trace the contours of the Executive's exclusion power. As described above, Mandel 's \"facially legitimate and bona fide reason\" test governs claims that an exclusion decision or policy violates a U.S. citizen's constitutional rights. The Executive satisfies the test by identifying the statutory basis for the exclusion. Where the U.S. citizen challenger proffers extrinsic evidence that the Executive acted with an unconstitutional purpose, it might be proper for a reviewing court to consider that evidence, but only as part of a rational basis inquiry under which the exclusion decision or policy must be upheld if \"it can reasonably be understood to result from a justification independent of unconstitutional grounds.\" ", "However, the cases do not resolve definitively at least three issues about the executive power. These issues, discussed below, are (1) whether the Executive possesses inherent exclusion power, as opposed to solely statutory-based power; (2) the extent to which U.S. persons or entities may challenge an alien's exclusion on statutory grounds; and (3) the extent to which the Constitution limits the Executive's application of broad delegations of congressional power to make exclusion determinations. "], "subsections": [{"section_title": "Source of Executive Power", "paragraphs": ["The Supreme Court's exclusion cases generally indicate that the authority to exclude aliens reaches the Executive through congressional delegation. The cases generally assign the constitutional power to regulate immigration to Congress and imply that an executive exclusion decision or policy must have a basis in statute. Mandel , Din , and Trump v. Hawaii illustrate this implied point: even though all three cases considered the constitutionality of executive action, the Court focused its analysis in each case on a statutory source of authority for the executive action. For instance, in Trump v. Hawaii , the Court analyzed whether the \"Travel Ban\" order fit within the President's authority under INA \u00c2\u00a7 212(f) to \"suspend the entry of all aliens or any class of aliens.\" Trump v. Hawaii and the Court's other exclusion cases proceed on the assumption that executive action to exclude aliens requires statutory authorization.", "An opposing view held by at least one current Supreme Court Justice posits that the Executive has \" inherent authority to exclude aliens from the country.\" Under this view, Congress does not have authority to constrain executive exclusion decisions. This view arguably finds some support in Supreme Court immigration jurisprudence. Many of the cases, for example, do not distinguish between Congress and the Executive when discussing the constitutional power to regulate immigration, suggesting that the two branches could share the power. Furthermore, at least one pre- Mandel Supreme Court decision states expressly that the Executive possesses inherent authority to exclude aliens. The case makes this statement, however, only to rebuff a challenge to the constitutionality of congressional delegations of immigration authority to executive agencies. In other words, the case states that the Executive has inherent exclusion authority only to explain why Congress may delegate exclusion authority to the Executive, not to establish that the Executive may exclude aliens absent statutory authority. The case goes on to acknowledge that, notwithstanding any inherent executive authority, in immigration matters the Executive typically acts upon congressional direction.", "The text of the Constitution itself does not resolve whether the Executive has a constitutional power to exclude aliens that is independent of statutory authorization. Because the federal government's immigration power rests at least in part upon an \"inherent power as a sovereign\" not enumerated in the Constitution, courts cannot determine who owns the power by reading Article I or Article II. Neither does Supreme Court precedent resolve the issue definitively. In one 1915 case, Gegiow v. Uhl , the Court held that an executive exclusion decision violated the governing statute. That holding implies that legislative restrictions on such decisions are constitutionally valid. But that brief decision did not discuss the concept of inherent executive authority over immigration, and more recent exclusion cases have not decided the issue because they have resolved statutory challenges by holding that the executive action at issue complied with the relevant statutes. ", "On balance, the weight of authority favors the view that the power to exclude aliens belongs primarily to Congress, at least in the first instance. The idea that the Executive could exclude aliens in contravention of a statute\u00e2\u0080\u0094or, to a lesser extent, without statutory authorization\u00e2\u0080\u0094would challenge separation of powers principles and does not find support even in the one Supreme Court opinion that expressly endorses the concept of an inherent executive immigration power. The idea of an extra-statutory executive exclusion power would also undermine basic features of the Court's exclusion jurisprudence, such as the long-standing rule that a court reviewing the exclusion of an arriving alien in habeas corpus proceedings must ascertain whether immigration officers had statutory authorization to make the exclusion determination. ", "The point remains, however, that the Court has not established clearly that the Executive may not exclude aliens in contravention of a statute or without statutory authorization. This lack of definitive precedent on the issue may result from Congress's extremely broad delegation of exclusion authority to the Executive, most notably in INA \u00c2\u00a7 212(f), and from the limited judicial review available for executive enforcement of exclusion statutes. Finally, a specific aside about the field of diplomacy: because the Reception Clause of the Constitution grants the President the exclusive power to \"receive Ambassadors and other public Ministers,\" it seems more than plausible that a President could override a statute at least when making decisions about the admission or exclusion of foreign diplomats."], "subsections": []}, {"section_title": "Statutory Challenges to Executive Decisions to Exclude Aliens", "paragraphs": ["Because executive exclusion power appears to derive primarily from statute, executive exclusion decisions or policies are susceptible in theory to attack on the ground that they violate the governing statutes. In Trump v. Hawaii , for instance, the Supreme Court analyzed and rejected arguments that the \"Travel Ban\" exclusion policy violated provisions of the INA. But the Court declined to resolve a threshold question about such challenges: whether they are barred by the doctrine of consular nonreviewability, which, as discussed above, forms part of the general rule against judicial review of exclusion decisions. Specifically, consular nonreviewability prohibits judicial review of a visa denial unless the denial burdens the constitutional rights of a U.S. citizen, in which case the deferential standard of review under the Mandel line of cases applies to the constitutional claim. The Mandel Court, in recognizing for the first time that U.S. citizens could challenge exclusion decisions despite the bar against such suits when brought by aliens, spoke narrowly of constitutional claims by U.S. citizens. Trump v. Hawaii reasoned that the statutory claims at issue there failed on the merits even if they were subject to judicial review, and the Court therefore declined to answer whether the Mandel exception also encompasses statutory claims brought by U.S. citizens against the exclusion of aliens abroad.", "At least two federal circuit courts have held that the doctrine of consular nonreviewability bars U.S. citizen challenges to visa denials on statutory grounds, at least when the citizen does not also state constitutional claims. These courts reasoned that permitting review of purely statutory claims would \"convert[] consular nonreviewability into consular reviewability\" and \"eclipse the Mandel exception\" by subjecting statutory claims to a more exacting level of review under the APA than constitutional claims receive under the \"highly constrained\" review that applies under the Mandel line of cases. ", "On the other hand, in two other cases involving a combination of statutory and constitutional claims brought by U.S. citizens against visa denials, courts in the First Circuit and D.C. Circuit reviewed the statutory claims and rejected or called into question the visa denials on statutory grounds. One of these decisions concluded that the statutory claims were reviewable because, among other rationales, the canon of constitutional avoidance required the court to construe the relevant statutes before considering whether the Executive's application of the statutes violated the Constitution. In both cases, the courts analyzed the statutory claims without deferring to the government's determination that the INA required the denial of the visa applications at issue. As a result, the cases scrutinized the government's justifications for excluding aliens much more closely than the Supreme Court analyzed the constitutional claims in Trump v. Hawaii , Mandel , and Din . It was the Ninth Circuit's disagreement with this framework endorsed by the First and D.C. Circuits\u00e2\u0080\u0094that statutory challenges to visa denials should draw stricter review than constitutional challenges\u00e2\u0080\u0094that led it, among other reasons, to hold in a pure statutory case that consular nonreviewability bars statutory claims. ", "The Supreme Court has on at least two occasions rejected statutory challenges brought by U.S. citizens or organizations against the exclusion of aliens abroad without deciding whether such challenges are subject to judicial review. As already mentioned, in Trump v. Hawaii , the Court acknowledged but did not decide the reviewability question in a case that involved a combination of statutory and constitutional claims brought by U.S. citizens and other U.S. parties. In the 1993 case Sale v. Haitian Centers Council , the Court considered and ultimately rejected statutory challenges to the U.S. Coast Guard's interdiction and forced return of Haitian migrants trying to reach the United States by sea. Specifically, the Court analyzed and rejected the argument that the interdictions violated an INA provision requiring immigration authorities to determine whether aliens would suffer persecution in a particular country before returning them to that country. The Sale Court did not address the consular nonreviewability issue, even though the government argued it, but instead seemed to assume without discussion that the statutory challenges to the interdictions and forced returns were reviewable. The only clear holding about consular nonreviewability that arises from Hawaii and Sale is that the doctrine does not deprive federal courts of subject matter jurisdiction over statutory challenges brought by U.S. citizens against the exclusion of aliens abroad, even though the doctrine might supply a rule of decision requiring courts to reject such statutory challenges without reviewing their merits. ", "In summary, federal appellate courts have held that the doctrine of consular nonreviewability bars exclusively statutory challenges brought by U.S. citizens against the executive branch decisions to exclude aliens abroad, but not where the citizens also press constitutional challenges. The Supreme Court has not resolved the issue, but the Court reviewed statutory challenges that were combined with constitutional challenges in Trump v. Hawaii and reviewed exclusively statutory challenges in Sale . "], "subsections": [{"section_title": "Exclusions Based on Broad Delegations of Congressional Power", "paragraphs": ["Justice Kennedy concluded in Din that the plenary nature of Congress's power to exclude aliens means that an executive exclusion decision for a statutory reason is facially legitimate and bona fide. But what about where Congress transfers its exclusion power to the Executive with few limiting criteria? What constitutional restrictions does the Executive face in that scenario? ", "Trump v. Hawaii indicates that the Executive, at least in theory, must comply with constitutional guarantees when exercising power delegated from Congress to create exclusion policies. Even though the Court in that case engaged in only a \"highly constrained\" level of judicial review, it stated that the purpose of the review was to determine whether the challenged exclusion policy could \"reasonably be understood to result from a justification independent of unconstitutional grounds.\" Presumably, if the Court had concluded that the \"Travel Ban\" proclamation was \"'inexplicable by anything other than [anti-Muslim] animus,'\" it would have struck down the proclamation for violating the Establishment Clause. ", "Although the proposition that constitutional guarantees restrict executive exercises of exclusion authority may seem unremarkable, the Court actually avoided deciding this issue in Mandel . The relevant statute in that case gave the Attorney General broad discretion to waive the communism-based ground for exclusion. The parties and the Court assumed that Congress had the authority to exclude communists based on their political ideas. The executive branch argued that it, too, could exercise congressionally delegated exclusion authority to deny entry based on political belief or for \"any reason or no reason.\" The Mandel Court, in adopting the \"facially legitimate and bona fide\" standard, avoided addressing this contention. The Court reasoned that it did not have to decide whether the government could deny an inadmissibility waiver for \"any reason or no reason\" because the government had in fact supplied a reason for denying Mandel's waiver\u00e2\u0080\u0094his alleged prior visa abuse\u00e2\u0080\u0094\"and that reason was facially legitimate and bona fide.\" Thus, Mandel left open the possibility that the First Amendment could limit the executive branch's, but not Congress's, power to exclude based on political belief, but the Court did not decide the issue. After Trump v. Hawaii , however, it seems relatively clear that executive exclusion policies must find support in justifications that are \"independent of unconstitutional grounds,\" even though courts will apply only a \"narrow standard of review\" to assess those justifications. In other words, constitutional guarantees might not restrict Congress's exercise of the exclusion power, but they apparently do restrict the Executive's exercise of exclusion power delegated to it by Congress."], "subsections": []}]}]}, {"section_title": "Conclusion", "paragraphs": ["The Supreme Court has consistently reaffirmed that legislative and executive decisions to exclude aliens abroad are \"'largely immune from judicial control.'\" The doctrine of consular nonreviewability bars judicial review of decisions to exclude aliens abroad in most circumstances. And even where such decisions burden the constitutional rights of U.S. citizens, the Mandel line of cases stands for the proposition that federal courts must grant the decisions a level of deference so substantial that it mostly assures government victory over any challenges. Notably, however, Supreme Court precedent mainly describes the deference due to executive exclusion decisions as an issue within Congress's control. The doctrine of consular nonreviewability and the Mandel line of cases take their cue from legislative inaction: because Congress has not said that courts may review executive decisions to exclude aliens abroad, courts mostly do not conduct such review or (where constitutional claims of U.S. citizens are at stake) conduct only an extremely limited form of review. Ultimately, the cases indicate that Congress has authority to expand review through affirmative legislation. "], "subsections": []}]}}
{"id": "R46183", "title": "The National Bioengineered Food Disclosure Standard: Overview and Select Considerations", "released_date": "2020-02-07T00:00:00", "summary": ["In July 2016, Congress enacted P.L. 114-216 (2016 Act), comprehensive legislation to govern the labeling of bioengineered foods. The 2016 Act required the U.S. Department of Agriculture (USDA) to establish the National Bioengineered Food Disclosure Standard ( the Standard ) . The Standard regulates labeling of bioengineered foods, a term defined in the 2016 Act. The act does not address or define other terms that some members of the public might associate with bioengineered foods, such as genetically engineered (GE), genetically modified , and genetically modified organism (GMO). The Standard guides the mandatory labeling of foods to indicate the presence of GE ingredients. As such, foods meeting requirements identified in the Standard must bear a bioengineered disclosure. Implementation began on January 1, 2020, and mandatory compliance begins on January 1, 2022.", "The Standard provides details under the three key issues of applicability, disclosure options, and administrative provisions:", "Applicability discusses the definition of bioengineered food and the USDA-maintained List of Bioengineered Foods (List). The Standard applies to foods that are or may be derived from bioengineered ingredients, with some exclusions and exemptions. It does not apply to refined products, such as oils or sugars, that derive from GE plants but no longer contain detectable modified deoxyribonucleic acid (DNA). Many groups interpret the Standard as not applying to foods derived from gene editing and other new technologies that do not use recombinant DNA. The Standard exempts from disclosure foods served in restaurants. Some have endorsed such exclusions and exemptions, and others have criticized them. Disclosure Options outlines acceptable disclosure options for regulated entities, as well as additional options available for specific entities and types of food packages. Most regulated entities may disclose by text, symbol (pictured above), electronic or digital link, or text message. In some cases, a telephone number or website address may be acceptable. Some groups have praised the flexibility that this range of options provides regulated entities, while others have criticized these options as confusing. Administrative Provisions reviews compliance dates, recordkeeping requirements, and enforcement mechanisms, which include audits, examinations, hearings, and release of public findings. The 2016 Act provided few enforcement mechanisms to promote compliance. The Standard establishes how USDA may investigate accusations of non-compliance and how it may publicly release its findings.", "The Standard does not affect how foods derived from biotechnology are regulated for safety and approval for human consumption. The Coordinated Framework for Regulation of Biotechnology , a policy the White House issued in 1986, continues to govern how federal agencies, including USDA, evaluate and approve products developed using modern biotechnology. More generally, USDA and the U.S. Food and Drug Administration (FDA) continue to ensure that foods sold in the United States are safe and properly labeled.", "USDA's Agricultural Marketing Service (AMS) developed the Standard within a broader societal context. Before the 2016 Act, some members of the public had demanded mandatory labeling of the presence of GE ingredients in foods, based on the consumer's right to know. Other members of the public had opposed any GE labeling because of the scientific consensus that GE foods are safe to eat and concern that labeling may introduce unwarranted doubts about food safety. Before the 2016 Act, several states had enacted GE labeling laws, creating concerns among industry and consumer groups. In response, Congress debated this and other federal GE labeling legislation. GE labeling programs may be voluntary or mandatory and may indicate the presence or absence of GE ingredients. Several voluntary labeling programs predate the Standard's mandatory labeling requirements. Public and private programs for the voluntary labeling of foods continue to indicate the absence of GE ingredients in foods. These include the Non-GMO Project and the USDA National Organic Program.", "Future considerations for Congress may include ongoing questions consumers may have concerning what it means for a food to be labeled as bioengineered , how regulated entities will respond to the Standard's new requirements, how USDA will implement its responsibilities under the Standard, potential market impacts as demand for GE versus non-GE foods may change, and how the Standard aligns with international labeling requirements. Congress may choose to monitor implementation of the new Standard in accordance with its oversight responsibilities."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["The United States has been a global leader in developing advanced genetic technologies and applying them to crops and livestock. Federal regulators first approved a genetically engineered (GE) food, the Flavr Savr tomato, for sale in 1994. As additional GE crops gained federal approval, farmers rapidly adopted them. Today, about 90% of canola, corn, cotton, soybean, and sugarbeet acres in the United States are planted with GE varieties. GE foods predominantly enter commerce as processed foods and food ingredients (e.g., soybean oil, corn syrup, and sugar). Some members of the public seek to avoid consuming GE foods, as advances in biotechnology have outpaced their acceptance.", "In July 2016, Congress enacted P.L. 114-216 (the 2016 Act), requiring the U.S. Department of Agriculture (USDA) to establish a National Bioengineered Food Disclosure Standard (the Standard) within two years. The 2016 Act followed decades of societal debate about genetic engineering, and it marked the first time that the federal government would require the disclosure of GE foods to consumers. (The 2016 Act defined these as bioengineered foods .) With the 2016 Act, the United States joined more than 60 countries that require some form of GE labeling , or on-package disclosure of GE foods or food ingredients.", "The Standard provides a mandatory national standard for disclosure of the presence of bioengineered foods and food ingredients to consumers. It details who is responsible for making disclosures, what they must look like, and when they are and are not required. The Standard provides U.S. food manufacturers, importers, and retailers with a voluntary compliance period and a mandatory compliance deadline. The more than 126,000 comments that USDA received during the rulemaking process demonstrate significant public interest in its formulation. USDA released the final rule in December 2018, and phased implementation began in January 2020.", "Stakeholder reactions to the final Standard have been mixed. Several organizations immediately criticized the final rule, while others supported it. The Organic Trade Association (OTA), the Center for Food Safety (CFS), the Non-GMO Project, and the Institute for Agriculture and Trade Policy (IATP) each released statements with critical comments. OTA remarked that it is \"deeply disappointed in the U.S. Department of Agriculture's final GMO labeling rule and calls on companies to voluntarily act on their own to provide full disclosures on their food products about GMO content.\" CFS stated that \"the USDA has betrayed the public trust by denying Americans the right to know how their food is produce[d].\" The Non-GMO Project commented that it \"is disappointed by the content of the final rule, which jeopardizes GMO transparency for Americans.\" IATP stated that \"unfortunately, the final rule fails to fix the most egregious provisions of the draft rule and is practically useless in conveying accurate information about food ingredients to consumers while they are shopping.\" ", "In contrast, the National Corn Growers Association (NCGA), the American Soybean Association (ASA), and the Food Marketing Institute (FMI) provided supportive comments. NCGA commented that \"America's corn farmers need a consistent, transparent system to provide consumers with information without stigmatizing important, safe technology. Thus, we are pleased with the issuance of these rules and look forward to reviewing the details in the coming days.\" ASA stated, \"we believe that it allows transparency for consumers while following the intent of Congress that only food that contains modified genetic material be required to be labeled bioengineered under the law, with food companies having the option of providing additional information if they choose.\" FMI stated, \"the rule provides a consistent way to provide transparency regarding the foods we sell and allow[s] our customers across the country the means to learn more about grocery products containing bioengineered ingredients.\"", "This report provides background information on agricultural biotechnology; reviews major provisions of the Standard (related to applicability, disclosure options, and administrative provisions); and concludes with potential considerations for Congress. The Appendix provides definitions of select scientific and related terms used in this report."], "subsections": [{"section_title": "Agricultural Biotechnology Background", "paragraphs": ["People have been changing plants, animals, and other edible organisms since before agriculture began more than 10,000 years ago. Before people planted crops and raised farm animals, hunting and gathering changed the genetic composition of species. The pace of these changes accelerated with the onset of agriculture. Selective breeding helped create and improve agricultural varieties to meet farmer and consumer needs. Conventional (traditional) breeding created hybrid varieties with enhanced size, growth rate, and other valuable characteristics. Since the mid-20 th century, laboratory-based breeding techniques have further strengthened the ability to modify agricultural varieties. In recent decades, genetic engineering has allowed for increasingly specific genetic manipulation. These techniques can change plants and animals in ways that, with conventional breeding, would not be possible or could take decades to achieve. ", "The public has come to recognize plants and animals altered through modern biotechnology and genetic engineering as genetically modified organisms (GMOs) . Scientific and federal government experts identify the term g enetically modified as more general than genetically engineered , and as such genetically modified may include conventional breeding. In this report, genetic engineering refers to genetic modification techniques other than conventional breeding. ", "The Standard addresses food labeling, and it does not change how foods derived from biotechnology are regulated for safety and approval for human or animal consumption. The federal government's 1986 Coordinated Framework for Regulation of Biotechnology (the Coordinated Framework) governs how USDA, the U.S. Food and Drug Administration (FDA), and the U.S. Environmental Protection Agency (EPA) apply existing statutes to evaluate biotechnology products. USDA regulates plants under the Plant Protection Act (7 U.S.C. \u00c2\u00a77701 et seq.). FDA regulates food, animal feed additives, and human and animal drugs, primarily under the Federal Food, Drug, and Cosmetic Act (21 U.S.C. \u00c2\u00a7301 et seq.) and the Public Health Service Act (42 U.S.C. \u00c2\u00a7201 et seq.). EPA registers and approves the use of pesticides, including those incorporated into plants through biotechnology, under the Federal Insecticide, Fungicide and Rodenticide Act (7 U.S.C. \u00c2\u00a7136 et seq.). A key principle of the Coordinated Framework is to regulate products according to their characteristics and unique features rather than the processes used to develop them.", "More generally, FDA and the USDA Animal and Plant Health Inspection Service (APHIS) have responsibilities for assuring that foods sold in the United States are safe, with respect to human and agricultural health, and properly labeled. FDA released a policy statement on GE foods in 1992, indicating that in most cases they are \"substantially similar\" to non-GE foods and do not require additional regulation or labeling beyond what is required for comparable non-GE foods. A legal decision in 2000 upheld this policy. FDA requires labeling of GE foods that (1) have nutritional characteristics that differ from comparable non-GE foods, (2) contain GE material from known allergenic sources, or (3) have elevated levels of toxic compounds. This labeling is not required to indicate the GE status of the food.", "APHIS reviews GE organisms on the basis of whether they pose plant pest risks to agriculture. In 2019, the agency issued a proposed rule to exempt several categories of GE plants from review, citing 30 years of evidence indicating that \"genetically engineering a plant with a plant pest as a vector, vector agent, or donor does not in and of itself result in a GE plant that presents a plant pest risk.\" The proposed rule further stated that new GE technologies, such as gene editing, do not engage with plant pests in any way."], "subsections": []}]}, {"section_title": "The National Bioengineered Food Disclosure Standard", "paragraphs": ["The Standard provides a mandatory national standard for disclosure of the presence of bioengineered foods and food ingredients to consumers. It provides U.S. food manufacturers, importers, and retailers with a voluntary compliance period and a mandatory compliance deadline.", "Following enactment of the 2016 Act, USDA delegated development and implementation of the Standard to the USDA Agricultural Marketing Service (AMS), which oversees many other USDA food-labeling programs, including mandatory Country of Origin Labeling (COOL), the voluntary National Organic Program (NOP), and the voluntary Process Verified Program (PVP). AMS developed the Standard through federal rulemaking, and issued the final rule in December 2018. The final rule defines key terms and interprets issues arising from the 2016 Act. The text box below includes terms defined in the Standard.", "The Standard identifies regulated entities as the food manufacturers, importers, and retailers responsible for making disclosures under the Standard. All regulated entities must comply with the Standard by January 1, 2022, although disclosures may begin during the voluntary compliance period, which started on January 1, 2020.", "As required for economically significant regulations, AMS prepared and published a regulatory impact analysis (RIA) of the Standard. The RIA estimates that implementation will cost between $570 million and $3.9 billion in the first year, and between $52 million and $118 million in each following year. It attributes most first year costs to those incurred by manufacturers analyzing the applicability of the rule and their compliance with the rule ($401 million to $3.1 billion). After the first year, the RIA attributes most ongoing costs to regulated entities avoiding mandatory disclosures by verifying that foods are not subject to the Standard ($0 to $59 million) and replacing bioengineered ingredients with non-bioengineered ingredients ($41 million to $44 million). The RIA estimates annual financial benefits of $190 million to $565 million, mostly attributed to costs avoided: the costs of complying with a patchwork of state laws, which are avoided and by implementation of the federal Standard. The RIA does not anticipate that the new Standard will provide any benefits to human health or the environment.", "Key provisions of the Standard, along with associated issues raised by stakeholders, are identified below within three categories: (1) applicability, (2) disclosure options, and (3) administrative provisions. Many components of the Standard remain controversial. Public reactions are discussed after each category."], "subsections": [{"section_title": "Applicability", "paragraphs": ["The Standard addresses its applicability to specific types of foods and types of entities involved in the manufacture, sale, and distribution of food. These issues were debated in policy discussions about GE food labeling, and they range from how the Standard defines a bioengineered food to which entities must comply with the Standard and which are exempt."], "subsections": [{"section_title": "Bioengineered Food Definition and Exclusions", "paragraphs": ["The 2016 Act defined bioengineering , with respect to food, as a food \"(A) that contains genetic material that has been modified through in vitro recombinant deoxyribonucleic acid (DNA) techniques; and (B) for which the modification could not otherwise be obtained through conventional breeding or found in nature.\" It did not identify any specific technologies that would meet the definition of bioengineering . The 2016 Act specified that bioengineering referred to foods \"intended for human consumption,\" and the act left open the possibility that USDA could use additional similar terms in the Standard. ", "When issuing the Standard, USDA added detail to some statutory definitions and did not provide explicit definition of some other terms. While the Standard builds on the definition of bioengineering by describing the applicability of term, it does not define component parts of the definition, including conventional breeding or found in nature . Nor does it specify whether foods developed through specific technologies, such as gene editing, require disclosure to consumers. The Standard requires use of the term bioengineering rather than similar terms, such as genetic engineering , genetically modified , or GMO .", "The final rule sets boundaries for the foods that require disclosure. Based on the definition of bioengineering in the 2016 Act, AMS determined that certain products that derive from GE sources do not require labeling. The Standard identifies these exclusions in its definition of bioengineered food . They include animal feed, which is not considered food because it is not intended for human consumption; foods in which modified DNA is not detectable (e.g., refined oils and sugars); and incidental additives, as described in 21 C.F.R. 101.100(a)(3). The Standard expressly exempts other foods and substances described below. The text box at the end of this section summarizes exclusions and exemptions from the Standard."], "subsections": []}, {"section_title": "Exemptions", "paragraphs": ["The Standard identifies five exemptions from disclosure. The 2016 Act explicitly identified two of these: food served at restaurants or similar retail food establishments, and food produced by very small food manufacturers. The act called for the Standard to set a third exemption: foods containing an amount of a bioengineered substance below a certain threshold. The final two exemptions are for foods derived from animals solely because they consumed bioengineered feed, and food certified under the USDA National Organic Program (NOP). "], "subsections": [{"section_title": "Food Served in a Restaurant or Similar Retail Food Establishment", "paragraphs": ["The 2016 Act exempts from disclosure food served in a restaurant or similar retail food establishment . The Standard defines this term as follows:", "A cafeteria, lunch room, food stand, food truck, transportation carrier (such as a train or airplane), saloon, tavern, bar, lounge, other similar establishment operated as an enterprise engaged in the business of selling prepared food to the public, or salad bars, delicatessens, and other food enterprises located within retail establishments that provide ready-to-eat foods that are consumed either on or outside of the retailer's premises."], "subsections": []}, {"section_title": "Very Small Food Manufacturers", "paragraphs": ["The 2016 Act exempts from disclosure food produced by a very small food manufacturer . The Standard defines this term as \"any food manufacturer with annual receipts of less than $2,500,000.\""], "subsections": []}, {"section_title": "Foods with Unintentional Bioengineered Ingredients Under a Presence Threshold", "paragraphs": ["The 2016 Act called for USDA to \"determine the amounts of a bioengineered substance that may be present in food, as appropriate, in order for the food to be a bioengineered food.\" The Standard exempts \"food in which no ingredient intentionally contains a bioengineered (BE) substance, with an allowance for inadvertent or technically unavoidable BE presence of up to five percent (5%) for each ingredient.\""], "subsections": []}, {"section_title": "Foods Derived from Animals That Consumed Bioengineered Feed", "paragraphs": ["The 2016 Act specified that the Standard should not consider food derived from animals to be bioengineered food solely because those animals consumed bioengineered feed. The Standard exempts such foods. Food products such as meat, eggs, or milk derived from animals that consumed bioengineered feed do not require disclosure solely because the animals consumed bioengineered feed."], "subsections": []}, {"section_title": "Foods Certified Under NOP", "paragraphs": ["The 2016 Act specified that NOP certification \"shall be considered sufficient to make a claim regarding the absence of bioengineering in the food, such as 'not bioengineered,' 'non-GMO,' or another similar claim.\" The Standard explicitly exempts foods certified under NOP. NOP is a voluntary food labeling program managed by AMS and operated as a public-private partnership. NOP certifies that agricultural products have been produced using approved organic methods listed in statute. Among NOP's diverse criteria, genetic engineering is an excluded method: NOP-certified products may not be produced or handled with genetic engineering. Thus, such products are not bioengineered and are exempted from the Standard. "], "subsections": []}]}, {"section_title": "List of Bioengineered Foods", "paragraphs": ["The 2016 Act directed USDA to establish \"such requirements and procedures as the Secretary [of Agriculture] determines necessary to carry out the standard.\" During rulemaking, AMS requested public comment on the utility of maintaining a list of potentially regulated foods, for entities to consult when determining whether a food is subject to disclosure. The final Standard includes a List of Bioengineered Foods (the List), that identifies foods that are available in a bioengineered form. While there are bioengineered and non-bioengineered versions of all foods on the List, only the bioengineered versions may require disclosure. The final rule details how AMS considered including on the List, but ultimately did not include, enzymes, yeasts, and other microorganisms produced in controlled environments. The rule states that regulated entities would need to make determinations on whether these substances require recordkeeping or disclosure on a case-by-case basis.", "AMS also publishes the List and associated details on its website. Beginning in early 2020, AMS plans to update the List annually, with associated opportunities for public comment. AMS plans to notify the public of the review via the Federal Register and the AMS website. If needed, AMS plans to update the List through the federal rulemaking process. See the text box below for foods on the List as of January 2020."], "subsections": []}, {"section_title": "Public Response to Applicability Provisions of the Standard", "paragraphs": ["The Standard's definition of bioengineered food , and what it applies to, remains controversial. Some areas of disagreement among stakeholders include the use of bioengineered rather than alternative terms, the definition's treatment of gene editing and new genetic technologies, the definition's treatment of refined food products, and the disclosure threshold for inadvertent or technically unavoidable presence of GE ingredients. Some farmer and industry groups have praised the Standard, contending that it provides consumers and regulated entities with needed consistency and transparency. Some advocates of stricter GE labeling argue that it is too permissive because many foods they consider genetically engineered do not require disclosure. These issues are addressed below.", "Alternative terms. The terminology used in the Standard has been a point of contention. While USDA had statutory authority to use alternative terms to bioengineered , it did not do so . Some stakeholder groups argue that most consumers are unfamiliar with the term bioengineered . They assert that using other terms, such as GMO , genetically modifi ed organism , or genetically engineered , would be less confusing for consumers. Other groups contend that the Standard's language is precise.", "Gene editing and n ew genetic technologies. The Standard's definition of bioengineered food does not identify specific technologies used to create such foods. AMS states that the Standard's definition \"focuses primarily on the products of technology, not the technology itself.\" During rulemaking, some stakeholders had called for the Standard to explicitly address the status of foods derived from new genetic technologies that may not meet the statutory definition of bioengineering . For example, foods derived from gene editing may not meet the statutory definition of bioengineering if (a) they do not contain recombinant DNA or (b) AMS considers that that their modifications could be achieved through conventional breeding or found in nature. Other new genetic technologies may arise that do not meet the Standard's definition of bioengineering for these or other reasons.", "Because the Standard does not address specific technologies, consumers and regulated entities may lack clarity about whether or not foods derived from new genetic technologies must be disclosed under the Standard. In the absence of this information, many have interpreted the bioengineering definition as broadly excluding foods derived from gene editing. Under this interpretation, gene-edited foods would not require disclosure. Other interpretations of the Standard simply note that the final rule does not explicitly address gene editing or other new genetic technologies. Advocates of stricter GE labeling requirements contend that even though gene-edited foods seem to be excluded from the Standard's definition of bio engineering , such foods meet the common understanding of genetic engineering and therefore should be required to bear disclosures.", "R efined foods exclusion. The Standard excludes refined food products that do not contain detectable amounts of modified DNA from required disclosure. Food without detectable modified genetic material does not meet the statutory definition of bioengineered . Examples include soybean oil, canola oil, and refined sugar. The Standard does not require regulated entities to test every product for the presence of detectable modified genetic material. Rather, manufacturers, importers, and retailers can demonstrate the absence of modified genetic material with records of a validated refining process. Some groups that favor a more expansive definition of bioengineered foods argue that consumers want to know whether the foods they eat derive from GE plants and animals, and thus the Standard should have required disclosures for these refined foods. In contrast, some industry groups, including the Consumer Brands Association (formerly the Grocery Manufacturers Association), commended the Standard for providing regulated entities with the option to voluntarily disclose such foods if desired.", "Disclosure threshold. The Standard does not require disclosures for foods with up to 5% presence, per ingredient, of unintentional or technically unavoidable bioengineered substances. In comparison, the European Union applies a threshold of 0.9% per ingredient, and Australia and New Zealand use a threshold of 1% per ingredient. Foods in Japan must be labeled if a GE ingredient is among the top three ingredients and accounts for more 5% of the total product by weight. AMS selected the 5% threshold for the Standard to \"appropriately balance providing disclosure to consumers with the realities of the food supply chain.\" Some advocates of stricter GE labeling, such as OTA, argue that the threshold in the Standard is too high and is \"inconsistent with accepted private standards, most of our major global trading partners and unacceptable to consumers.\""], "subsections": []}]}, {"section_title": "Disclosure Options", "paragraphs": ["The Standard identifies permissible options for on-package disclosure of bioengineered foods. All disclosures must be \"of sufficient size and clarity to appear prominently and conspicuously on the label, making it likely to be read and understood by the consumer under ordinary shopping conditions.\" Regulated entities must place the disclosure in one of three places: within the information panel close to details about the manufacturer, on the principle display panel, or on another panel the consumer is likely to see. In most cases, only one form of disclosure is required per package. Some disclosure options are available to all regulated entities for required disclosures (text, symbol, electronic or digital link, and/or text message), while others are available only to small food manufacturers (telephone number or website address) or in cases of voluntary disclosure (voluntary version of the BE disclosure symbol). Each option is described below."], "subsections": [{"section_title": "Standard Disclosure Options", "paragraphs": ["The 2016 Act specified that the Standard should provide several types of disclosure options. The final rule gives additional detail to their implementation.", "Text. \"Bioengineered food\" is the required text to disclose foods for which all ingredients either meet the definition of bioengineered food or lack records that indicate whether or not they are bioengineered. \"Contains a bioengineered food ingredient\" is the text required to disclose multi-ingredient foods for which some ingredients are not bioengineered while others are bioengineered or are of undetermined status. For foods distributed solely within a U.S. territory where the predominant language is not English, the appropriate text disclosure may be displayed in the territory's predominant language.", "Symbol. Regulated entities may use color or black-and-white versions of the disclosure symbols shown in Figure 1 . The symbol that incorporates the word bioengineered is for products that require disclosure. The symbol that incorporates the phrase derived from bioengineering may be placed voluntarily on packages of food that do not meet the bioengineered food definition but contain food that is derived from bioengineered food (such as refined foods without detectable modified DNA). Disclosures must not be false or misleading. Entities that are exempt from mandatory disclosure (e.g., very small food manufacturers and restaurants) may make voluntary disclosures using the appropriate symbol.", "Electronic or digital link . Entities may disclose bioengineered food via electronic or digital links, which are codes that consumers can scan to access more information. Current examples include Quick Response (QR) codes and digital watermarks that consumers may scan with a smart phone or in-store scanner. The code may embed product information or a link to a website with this information presented on the first webpage. The 2016 Act and the Standard require that any electronic or digital link disclosure on a package must be accompanied by the text \"Scan here for more food information\" or equivalent language consistent with technological changes. They also require that such disclosures be accompanied by a telephone number that consumers may call to receive additional information.", "Providing disclosure via these technologies was among the most controversial aspects of the 2016 Act. In the 2016 Act, Congress required USDA to solicit public comment and conduct a study to determine if electronic or digital links would provide consumers with sufficient access to information while shopping. If USDA were to determine that these disclosure methods were insufficient in this regard, then the Standard would need to provide additional disclosure options.", "AMS contracted with Deloitte Consulting to conduct the study. The resulting report identified several challenges that would need to be overcome for consumers to access information through digital or electronic link disclosures. AMS determined that the Deloitte study indicated that electronic and digital links would not provide consumers with sufficient access to this information. ", "Text message . In response to public comments and the results of the Deloitte study, the Standard adopts disclosure by text message as an option in addition to those identified in the 2016 Act. Regulated entities choosing this option must include a clear statement on the food package describing how to receive a text message. "], "subsections": []}, {"section_title": "Disclosure Options for Small Food Manufacturers", "paragraphs": ["The Standard defines a small food manufacturer as one with annual receipts of between $2.5 million and $10 million. As directed in the 2016 Act, the Standard allows small food manufacturers to select from additional disclosure options. These consist of providing a telephone number or an internet website address to allow consumers to access more information. Such disclosures must be accompanied by the text \"Call [number] for more food information\" or \"Visit [Uniform Resource Locator of the website] for more food information.\""], "subsections": []}, {"section_title": "Alternative Disclosure Options for Specific Circumstances", "paragraphs": ["The Standard specifies additional considerations for small and very small packages as well as food sold in bulk containers. The additional disclosure options for small packages mirror the standard options but allow for abbreviated on-package text: \"Scan for info,\" \"Text [number] for info,\" and \"Call [number] for info.\" For very small packages, regulated entities may use a label's preexisting telephone number or website address in lieu of other disclosures. Retailers are responsible for disclosures for food sold in bulk containers (e.g., display case, bin, carton, and barrel), and they must use the primary disclosure options."], "subsections": []}, {"section_title": "Voluntary Disclosure", "paragraphs": ["The Standard allows for voluntary disclosure in some cases. Exempt entities (very small food manufacturers and restaurants and similar retail food establishments) may voluntarily disclose bioengineered foods and food ingredients using any of the options provided. Additionally, the Standard permits both regulated and exempt entities to voluntarily disclose foods that do not require mandatory disclosure. Such foods include refined foods that derive from bioengineered foods but do not have detectable modified DNA. Voluntary disclosures should indicate that ingredients are \"derived from bioengineering\" rather than \"bioengineered.\" The Standard does not permit voluntary disclosure in most other circumstances."], "subsections": []}, {"section_title": "Public Response to Disclosure Options of the Standard", "paragraphs": ["During the rulemaking process for the Standard, some advocates for strict GE labeling provisions were seeking a single, easily identifiable, on-package disclosure. These respondents have criticized the disclosure options in the Standard as confusing and uninformative. In contrast, some other groups sought flexible disclosure options that regulated entities could adapt easily to different circumstances. Such industry groups have supported the disclosure options in the Standard as informative and flexible enough for manufacturers to meet. ", "Among critics, the Organic Trade Association (OTA) argued that the Standard does not provide for meaningful disclosure. It stated that the Standard \"allows for the option of digital/electronic disclosures rather than requiring on-pack plain English text disclosure\" and that the \"stylized GMO symbol with a four-pointed starburst does not reflect a neutral symbol as Congress intended and is misleading.\" The Center for Food Safety (CFS) found that \"both disclosure methods [electronic and digital disclosure], as well as 800 numbers, are unwieldy, time-consuming, and clearly designed to inhibit rather than facilitate access to GE content information.\" ", "The International Dairy Foods Association (IDFA) provided a mixed reaction, approving of some aspects of the Standard while further stating, \"the rule does not provide the level of transparency IDFA and consumers were hoping for.\" Among other perceived limitations, IDFA added that the Standard does not require disclosure of highly refined ingredients deriving from GE foods, although it allows for voluntary disclosure of these products.", "Among supporters of the Standard, the Food Marketing Institute and the National Corn Growers Association welcomed the disclosure consistency that the Standard provides. ", "The Standard's inclusion of a voluntary disclosure option elicited mixed responses. While the Consumer Brands Association praised this option, the Center for Science in the Public Interest (CSPI) commented that voluntary disclosure could introduce confusion. CSPI identified the potential for consumers to encounter a single type of product, derived from bioengineering, that one company chose to voluntarily disclose and another company did not. OTA called on food companies to voluntarily disclose all foods produced with genetic engineering."], "subsections": []}]}, {"section_title": "Administrative Provisions", "paragraphs": ["Stakeholders have also focused on the administrative provisions of the Standard. Key administrative issues include the speed at which regulated entities must comply with the Standard, recordkeeping requirements and burdens, and the enforceability of the Standard. These topics are addressed below."], "subsections": [{"section_title": "Compliance Deadline", "paragraphs": ["The 2016 Act did not specify compliance dates for the Standard. The final rule allows for phased implementation before requiring all regulated entities to comply with the Standard (see Table 1 ). It sets January 1, 2020, as the date on which most regulated entities may begin implementation. Small food manufacturers have an additional year to begin implementation, with a start date of January 1, 2021. All regulated entities must fully comply with the Standard by January 1, 2022. "], "subsections": []}, {"section_title": "Recordkeeping", "paragraphs": ["In the RIA, AMS commented that it provides the List of Bioengineered Foods to \"simplify and minimize analysis and recordkeeping burden on regulated entities.\" The Standard requires regulated entities that sell foods on the List, including both bioengineered and non-bioengineered versions, to maintain records documenting whether or not those foods or their ingredients are bioengineered. The Standard does not require potentially regulated entities to maintain records for foods that are not on the List unless they know that a food is bioengineered. This situation could occur if AMS has not yet identified the food as commercially available and has not yet added the food to the List. In such cases, the entity must disclose the food and must maintain records.", "Regulated entities may determine what records to keep and how to manage them, as long as they contain sufficient detail for AMS to understand and audit them under the Standard. Entities must maintain these records for two years after sale or distribution of the food."], "subsections": []}, {"section_title": "Enforcement", "paragraphs": ["Failure to make a required disclosure is prohibited under the 2016 Act. However, the act limited the scope of potential enforcement mechanisms and remained silent on others. The 2016 Act explicitly prohibited USDA from recalling food for known or suspected violations of the Standard. It did not address or authorize potential civil penalties for violations. The act allowed USDA to enforce compliance through records audits, examinations, hearings, and public disclosure of findings. ", "The Standard identifies procedures for carrying out these enforcement mechanisms. AMS does not continuously and proactively verify compliance with the Standard. Rather, the Standard creates a mechanism for the public to file statements or complaints to the AMS Administrator about possible violations of the Standard, and it outlines how AMS may respond to these written statements or complaints. If AMS determines that a complaint warrants further investigation, AMS may audit or examine the records of the entity responsible for disclosure and make its findings available to the entity. The entity may then request a hearing if it objects to the findings. The Standard allows for AMS to revise the findings if warranted and provides that AMS will make the final results of the investigation publicly available."], "subsections": []}, {"section_title": "Public Response to Administrative Provisions of the Standard", "paragraphs": ["While most stakeholder responses to the final Standard have focused on applicability and disclosure options, some interested groups have commented on its administrative provisions. Before release of the Standard, advocates of strict GE labeling had called for an early start to the mandatory compliance period. However, some industry groups supported the delay of mandatory compliance, citing the need to allow sufficient time for regulated entities to adjust labels and recordkeeping procedures. Echoing comments that AMS received during the federal rulemaking process, some critics of the Standard have continued to assert that its enforcement mechanisms are weak."], "subsections": []}]}]}, {"section_title": "Other GE Labeling Approaches", "paragraphs": ["The National Bioengineered Food Disclosure Standard was developed within a broader societal context. State-level approaches to GE labeling predated the federal 2016 Act. These were driven by public interest in knowing the GE status of their foods. In addition, some private and federal voluntary labeling programs that provide information on the GE status of foods are expected to continue after implementation of the Standard. "], "subsections": [{"section_title": "Public Opinion and State-Level GE Labeling Before the Standard", "paragraphs": ["When foods containing GE ingredients were first introduced in the 1990s, some members of the public called for banning them based on concerns about potential harm to human health. Research has repeatedly found no difference between foods developed with and without genetic engineering, in terms of the health and safety of the people consuming them.", "Even so, some consumers remain concerned about genetic engineering, citing health, personal preference, religious, economic system, and other objections. Moving on from calls to ban GE foods for human health reasons, many consumers began to demand a government role in making GE foods easily identifiable via GE labeling. Before establishment of the Standard, some surveys reported that the majority of consumers wanted GE foods to be labeled. Various proposed GE labeling laws and initiatives at the state and federal levels provided for mandatory or voluntary labeling. Mandatory labeling requires companies to disclose the presence of GE ingredients. Voluntary labeling can allow companies to certify the absence of GE ingredients (as discussed in \" Continuing Voluntary Labeling Programs and GE-Absence Claims \") or to disclose the presence of GE ingredients.", "The 2016 Act preempted state laws and initiatives and instituted mandatory labeling of the presence of GE ingredients in foods. In the years preceding the introduction and passage of the 2016 Act, state laws and ballot initiatives on GE labeling began to proliferate. In 2014, Vermont became the first state to enact a mandatory GE labeling law, with an effective date of July 1, 2016. Other states enacted similar laws, while others still considered similar legislation or voted on state ballot initiatives. Michigan and North Dakota enacted legislation urging the U.S. Congress to pass a uniform GE labeling standard. ", "Most GE labeling proponents strongly supported mandatory labeling standards, citing consumers' right to know, even if safety were not an issue. Some GE labeling opponents argued that no scientific basis existed for requiring mandatory GE labeling, and that such labeling may unnecessarily introduce doubt about the quality or safety of labeled foods and could cause costly and unnecessary market disruption. Before the 2016 Act, some GE labeling proponents and opponents called for a federal law to preempt development of an uncertain and confusing patchwork of state laws with different GE labeling requirements.", "In the absence of federal legislation in 2015, USDA experimented with adapting an existing voluntary USDA labeling program to meet consumer and producer interests in GE labeling. That year, AMS used its Process Verified Program (PVP) to certify the absence of GE ingredients in food products from a single company, which had requested this service. Some anticipated that this would lead to a voluntary USDA program to certify the absence of GE ingredients in foods. GE-labeling proponents responded that, although this would be a step in the right direction, a voluntary program would fail to meet consumer demands, and only mandatory labeling would do so. This application of PVP to certify the absence of GE ingredients in foods did not expand beyond a single company. "], "subsections": []}, {"section_title": "Continuing Voluntary Labeling Programs and GE-Absence Claims", "paragraphs": ["Voluntary labeling programs that identify the absence of GE ingredients predate legislation to require mandatory labels on foods that contain GE ingredients. On-package symbols from these private and public-private programs indicate to consumers that foods do not contain GE ingredients. They may either make a direct GE-absence claim (certifying that the food does not contain GE ingredients) or indicate that the food was produced with processes that do not include genetic engineering (e.g., certified organic production methods). Food producers and manufacturers may choose to opt into these programs and to bear associated costs. ", "One example is the Non-GMO Project, which a non-profit organization manages to provide third-party verification for processed foods that do not contain GE ingredients. Companies sign agreements with the Non-GMO Project to have their processes reviewed and to have any high-risk products tested by third-party laboratories. Once the Non-GMO Project verifies a company's processes and products, the company can display the Non-GMO Project Verified symbol on its food packaging. This symbol on food packaging makes a GE-absence claim.", "Another example is the USDA National Organic Program (NOP), a public-private program for voluntary labeling that, among other things, indicates the absence of GE ingredients. NOP, which is administered by AMS, certifies that agricultural products have been produced using approved organic methods listed in statute. Genetic engineering is an excluded method: NOP-certified products may not be produced or handled with genetic engineering. The NOP symbol indicates that a food meets diverse criteria, including production methods that exclude genetic engineering. ", "These voluntary labeling programs are expected to continue after implementation of the Standard. They differ from the Standard's voluntary disclosure option , which permits voluntary disclosure of foods that derive from bioengineering yet no longer have the characteristics of bioengineered foods, and is discussed in this report's section on \" Voluntary Disclosure .\" The voluntary labeling programs provide opportunities to identify foods that affirmatively do not derive from bioengineering. The Standard does not address GE-absence claims, and the final rule states that FDA (and the USDA Food Safety and Inspection Service, depending on the food at issue) \"retain authority over absence claims.\" "], "subsections": []}]}, {"section_title": "Select Considerations for Congress", "paragraphs": ["Implementation of the Standard over the next two years and beyond will affect consumers, regulated entities, and AMS. Many potential issues arising from the Standard will become clear only as implementation continues. The below text summarizes potential and stated concerns related to applicability, disclosure options, administrative provisions, and other issues. Congress may choose to monitor the new Standard's implementation in accordance with its oversight responsibilities.", "A key question for Congress is whether AMS's implementation of the 2016 Act meets congressional intent regarding the scope of applicability and the degree of disclosure required. In the final rule, AMS asserted that it balanced flexibility for regulated entities and information to consumers regarding the bioengineered status of their foods. Stakeholders who question AMS's decisions in the rulemaking process, as described above, may question the extent to which AMS's implementation aligns with congressional intent.", "Applicability. Groups that have criticized the definition of bioengineered in the 2016 Act may call on Congress to amend the definition to include highly refined products derived from GE organisms and/or include products that do not meet the current definition, such as those derived from gene editing and other new technologies. Other interested groups may continue to advocate for a definition that restricts the number and types of foods to which the definition applies. ", "AMS has committed to maintaining and updating the List through annual public reviews, and on an interim basis as needed. Such reviews can provide opportunities to add to the List any bioengineered food products that have entered commerce. Additionally, during these reviews, stakeholders with differing views may encourage the agency to adopt either a more expansive or a more restrictive listing of bioengineered foods. ", "Disclosure. Another issue in the context of disclosure is the degree of familiarity with the required labels that consumers may have. Consumers unfamiliar with the term bioengineered may have questions about what this means on foods bearing disclosure. Public reaction to implementation of the various types of disclosure may generate calls for these options to be revised based on their success or failure to provide consumers with easily accessible and useful information. ", "Administrative provisions. An issue for potential consideration is the extent to which additional federal resources will be required to implement the Standard in both the voluntary and mandatory compliance periods. In its regulatory impact analysis (RIA), AMS broadly estimated that it may need $2 million annually to implement the Standard, without differentiating potential expenses during the voluntary and mandatory compliance periods. AMS proposed that it would use such funds to update the List; conduct audits and hearings; manage complaints and inquiries; and provide training, education, outreach and programmatic support. ", "AMS may need to assign staff and develop new processes to implement the Standard's provisions related to audits, examinations, hearings, and publications of findings. Congress may be asked to consider allocating new resources to support continued implementation of the new Standard. ", "In addition, Congress may assess the cost and administrative overhead that regulated entities expend to identify and maintain records on foods subject to disclosure and to adjust labels on food packaging. Estimates for administrative costs to regulated entities, which AMS presents in its RIA, range from a lower bound of $459 million to an upper bound of nearly $3.6 billion for the first year. AMS anticipates that these costs will greatly reduce in subsequent years as potentially regulated entities replace bioengineered ingredients with non-bioengineered ingredients. ", "Regarding enforcement, the rule largely relies on a public notification mechanism to influence the compliance of regulated entities and correct violations of the Standard. Stakeholders may or may not view this mechanism as successful, depending on the extent and frequency of any such violations. Interested parties may petition Congress to strengthen existing enforcement mechanisms or identify new ones to enhance compliance with the new Standard.", "Market demand for bioengineered versus non-bioengineered products . In the RIA, AMS indicates that it cannot accurately predict how consumers will react to bioengineered disclosures on food labels. Consumers may avoid foods labeled as bioengineered, they may prefer them, or such labels may make no difference to consumer purchasing behaviors. In the RIA, AMS assumes that manufacturers will avoid labeling 20% of their products as bioengineered, by replacing bioengineered with non-bioengineered ingredients, due to potential consumer reactions. AMS selected 20% for purposes of estimating costs and benefits in the RIA following consideration of existing studies and surveys of consumer behavior and consideration of the requirements of the Standard. Depending on how consumers respond, implementation of the Standard may influence manufacturer and retailer demand for bioengineered and non-bioengineered foods. Congress may respond to stakeholder concerns about any market shifts resulting from the Standard. ", "Interactions with international trade. Unexpected issues may arise as implementation begins. For example, AMS states that it does not expect the Standard to impact foreign trade. However, it also notes that the USDA Foreign Agriculture Service is prepared to work closely with foreign countries that export food and agricultural products to the United States, to facilitate their understanding of the Standard. If trade issues arise, Congress may choose to address harmonization of labeling requirements with foreign trading partners by amending applicability, disclosure, or administrative requirements in the 2016 Act, or by other means."], "subsections": [{"section_title": "Appendix. Glossary of Select Scientific and Related Terms", "paragraphs": ["Many terms are used when describing human alterations of plants and animals over time. Unless otherwise noted, the definitions in this glossary derive from USDA's online Agricultural Biotechnology Glossary and are used for the purposes of this report. ", "Agricultural b iotechnology. A range of tools, including traditional breeding techniques, that alter living organisms, or parts of organisms, to make or modify products; improve plants or animals; or develop microorganisms for specific agricultural uses. Modern biotechnology today includes the tools of genetic engineering.", "Conventional breeding. Undefined in USDA's Agricultural Biotechnology Glossar y. USDA defines the similar term, traditional breeding , as \"modification of plants and animals through selective breeding. Practices used in traditional plant breeding may include aspects of biotechnology such as tissue culture and mutational breeding.\"", "Gene editing. A technique that allows researchers to alter the DNA of organisms to insert, delete, or modify a gene or gene sequences to silence, enhance, or otherwise change an organism's specific genetic characteristics.", "GE labeling. On-package disclosure of genetically engineered foods or food ingredients.", "Genetically engineered (GE) . Produced through genetic engineering.", "Genetic engineering. Manipulation of an organism's genes by introducing, eliminating or rearranging specific genes using the methods of modern molecular biology, particularly those techniques referred to as recombinant DNA techniques.", "Genetic modification. The production of heritable improvements in plants or animals for specific uses, via either genetic engineering or other more traditional methods. Some countries other than the United States use this term to refer specifically to genetic engineering.", "Genetically modified organism ( GMO). An organism produced through genetic modification.", "Recombinant DNA. A molecule of DNA formed by joining different DNA segments using recombinant DNA technology.", "Recombinant DNA technology. Procedures used to join together DNA segments in a cell-free system (e.g., in a test tube outside living cells or organisms). Under appropriate conditions, a recombinant DNA molecule can be introduced into a cell and copy itself (replicate), either as an independent entity (autonomously) or as an integral part of a cellular chromosome.", "Selective breeding . Making deliberate crosses or matings of organisms so the offspring will have particular desired characteristics derived from one or both of the parents.", "Transgenic organism. An organism resulting from the insertion of genetic material from another organism using recombinant DNA techniques.", "Variety. A subdivision of a species for taxonomic classification also referred to as a \"cultivar.\" A variety is a group of individual plants that is uniform, stable, and distinct genetically from other groups of individuals in the same species."], "subsections": []}]}]}}
{"id": "R46288", "title": "Occupational Safety and Health Administration (OSHA): Emergency Temporary Standards (ETS) and COVID-19", "released_date": "2020-05-19T00:00:00", "summary": ["The Occupational Safety and Health Administration (OSHA) does not currently have a specific standard that protects healthcare or other workers from airborne or aerosol transmission of disease or diseases transmitted by airborne droplets. Some in Congress, and some groups representing healthcare, meat and poultry processing, and other workers, are calling on OSHA to promulgate an emergency temporary standard (ETS) to protect workers from exposure to SARS-Cov-2, the virus that causes Coronavirus Disease 2019 (COVID-19). The Occupational Safety and Health Act of 1970 (OSH Act) gives OSHA the ability to promulgate an ETS that would remain in effect for up to six months without going through the normal review and comment process of rulemaking. OSHA, however, has rarely used this authority in the past\u00e2\u0080\u0094not since the courts struck down its ETS on asbestos in 1983.", "The California Division of Occupational Safety and Health (Cal/OSHA), which operates California's state occupational safety and health plan, has had an aerosol transmissible disease (ATD) standard since 2009. This standard includes, among other provisions, the requirement that employers provide covered employees with respirators, rather than surgical masks, when these workers interact with ATDs, such as known or suspected COVID-19 cases. Also, according to the Cal/OSHA ATD standard, certain procedures require the use of powered air purifying respirators (PAPR). Both OSHA and Cal/OSHA have issued enforcement guidance to address situations when the shortage of respirators may impede an employer's ability to comply with existing standards.", "H.R. 6139 , the COVID-19 Health Care Worker Protection Act of 2020, would require OSHA to promulgate an ETS on COVID-19 that incorporates both the Cal/OSHA ATD standard and the Centers for Disease Control and Prevention's (CDC's) 2007 guidelines on occupational exposure to infectious agents in healthcare settings. The CDC's 2007 guidelines generally require stricter controls than its interim guidance on COVID-19 exposure. The provisions of H.R. 6139 were incorporated into the version of H.R. 6201 , the Families First Coronavirus Response Act, as introduced in the House. However, the OSHA ETS provisions were not included in the version of legislation that passed the House and the Senate and was signed into law as P.L. 116-127 .", "H.R. 6379 , as introduced in the House, also includes a requirement for an OSHA ETS and permanent standard to address COVID-19 exposure, with similar provisions in S. 3584 . H.R. 6559 includes the requirements for an ETS and permanent standard, clarifies the requirement that employers must report work-related COVID-19 cases, and expands protections for whistleblowers. The provisions of H.R. 6559 were included in H.R. 6800 , the Health and Economic Recovery Omnibus Emergency Solutions Act (HEROES Act) passed by the House on May 15, 2020.", "A group representing hospitals claims that because SARS-Cov-2 is primarily transmitted by airborne droplets and surface contacts, surgical masks are sufficient protection for workers coming into routine contact with COVID-19 cases, and that the shortage of respirators may adversely impact some hospitals' patient capacities if stricter requirements to provide personal protective equipment (PPE) to employees were to be enacted."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Occupational Safety and Health Administration Standards", "paragraphs": ["Section 6 of the Occupational Safety and Health Act of 1970 (OSH Act) grants the Occupational Safety and Health Administration (OSHA) of the Department of Labor (DOL) the authority to promulgate, modify, or revoke occupational safety and health standards that apply to private sector employers, the United States Postal Service, and the federal government as an employer. In addition, Section 5(a)(1) of the OSH Act, commonly referred to as the General Duty Clause, requires that all employers under OSHA's jurisdiction provide workplaces free of \"recognized hazards that are causing or are likely to cause death or serious physical harm\" to their employees. OSHA has the authority to enforce employer compliance with its standards and with the General Duty Clause through the issuance of abatement orders, citations, and civil monetary penalties. The OSH Act does not cover state or local government agencies or units. Thus, certain entities that may be affected by Coronavirus Disease 2019 (COVID-19), such as state and local government hospitals, local fire departments and emergency medical services, state prisons and county jails, and public schools, are not covered by the OSH Act or subject to OSHA regulation or enforcement."], "subsections": [{"section_title": "State Plans", "paragraphs": ["Section 18 of the OSH Act authorizes states to establish their own occupational safety and health plans and preempt standards established and enforced by OSHA. OSHA must approve state plans if they are \"at least as effective\" as OSHA's standards and enforcement. If a state adopts a state plan, it also must cover state and local government entities not covered by OSHA. Currently, 21 states and Puerto Rico have state plans that cover all employers, and 5 states and the U.S. Virgin Islands have state plans that cover only state and local government employers not covered by the OSH Act. In the remaining states, state and local government employers are not covered by OSHA standards or enforcement. State plans may incorporate OSHA standards by reference, or states may adopt their own standards that are at least as effective as OSHA's standards. "], "subsections": []}, {"section_title": "Promulgation of OSHA Standards", "paragraphs": ["OSHA may promulgate occupational safety and health standards on its own initiative or in response to petitions submitted to the agency by various government agencies, the public, or employer and employee groups. OSHA is not required, however, to respond to a petition for a standard or to promulgate a standard in response to a petition. OSHA may also consult with one of the two statutory standing advisory committees\u00e2\u0080\u0094the National Advisory Committee on Occupational Safety and Health (NACOSH) or the Advisory Committee on Construction Safety and Health (ACCSH)\u00e2\u0080\u0094or an ad-hoc advisory committee for assistance in developing a standard. "], "subsections": [{"section_title": "Notice and Comment", "paragraphs": ["OSHA's rulemaking process for the promulgation of standards is largely governed by the provisions of the Administrative Procedure Act (APA) and Section 6(b) of the OSH Act. Under the APA informal rulemaking process, federal agencies, including OSHA, are required to provide notice of proposed rules through the publication of a Notice of Proposed Rulemaking in the Federal Register and provide the public a period of time to provide comments on the proposed rules. ", "Section 7(b) of the OSH Act mirrors the APA in that it requires notice and comment in the rulemaking process. After publishing a proposed standard, the public must be given a period of at least 30 days to provide comments. In addition, any person may submit written objections to the proposed standard and may request a public hearing on the standard. "], "subsections": [{"section_title": "Statement of Reasons", "paragraphs": ["Section 6(e) of the OSH Act requires OSHA to publish in the Federal Register a statement of the reasons the agency is taking action whenever it promulgates a standard, conducts other rulemaking, or takes certain additional actions, including issuing an order, compromising on a penalty amount, or settling an issued penalty. "], "subsections": []}, {"section_title": "Other Relevant Laws and Executive Order 12866", "paragraphs": ["In addition to the APA and OSH Act, other federal laws that generally apply to OSHA rulemaking include the Paperwork Reduction Act, Regulatory Flexibility Act, Congressional Review Act, Information Quality Act, and Small Business Regulatory Enforcement Fairness Act (SBREFA). Also, Executive Order 12866, issued by President Clinton in 1993, requires agencies to submit certain regulatory actions to the Office of Management and Budget (OMB) and Office of Information and Regulatory Affairs (OIRA) for review before promulgation."], "subsections": []}]}, {"section_title": "OSHA Rulemaking Timeline", "paragraphs": ["OSHA rulemaking for new standards has historically been a relatively time-consuming process. In 2012, at the request of Congress, the Government Accountability Office (GAO) reviewed 59 significant OSHA standards promulgated between 1981 (after the enactments of the Paperwork Reduction Act and Regulatory Flexibility Act) and 2010. For these standards, OSHA's average time between beginning formal consideration of the standard\u00e2\u0080\u0094either through publishing a Request for Information or Advanced Notice of Proposed Rulemaking in the Federal Register or placing the rulemaking on its semiannual regulatory agenda\u00e2\u0080\u0094and promulgation of the standard was 93 months (7 years, 9 months). Once the Notice of Proposed Rulemaking was published for these 59 standards, the average time until promulgation of the standard was 39 months (3 years, 3 months). ", "In 2012, OSHA's Directorate of Standards and Guidance published a flowchart of the OSHA rulemaking process on the agency's website. This flowchart includes estimated duration ranges for a variety of rulemaking actions, beginning with pre-rule activities\u00e2\u0080\u0094such as developing the idea for the standard and meeting with stakeholders\u00e2\u0080\u0094and ending with promulgation of the standard. The flowchart also includes an estimated duration range for post-promulgation activities, such as judicial review. The estimated time from the start of preliminary rulemaking to the promulgation of a standard ranges from 52 months (4 years, 4 months) to 138 months (11 years, 6 months). After a Notice of Proposed Rulemaking is published in the Federal Register, the estimated length of time until the standard is promulgated ranges from 26 months (2 years, 2 months) to 63 months (5 years, 3 months). ", "Table 1 provides OSHA's estimated timelines for six major pre-rulemaking and rulemaking activities leading to the promulgation of a standard."], "subsections": []}]}, {"section_title": "Judicial Review", "paragraphs": ["Both the APA and the OSH Act provide for judicial review of OSHA standards. Section 7(f) of the OSH Act provides that any person who is \"adversely affected\" by a standard may file, within 60 days of its promulgation, a petition challenging the standard with the U.S. Court of Appeals for the circuit in which the person lives or maintains his or her principal place of business. A petition for judicial review does not automatically stay the implementation or enforcement of the standard. However, the court may order such a stay. OSHA estimates that post-promulgation activities, including judicial review, can take between 4 and 12 months after the standard is promulgated."], "subsections": []}, {"section_title": "Emergency Temporary Standards", "paragraphs": ["Section 6(c) of the OSH Act provides the authority for OSHA to issue an Emergency Temporary Standard (ETS) without having to go through the normal rulemaking process. OSHA may promulgate an ETS without supplying any notice or opportunity for public comment or public hearings. An ETS is immediately effective upon publication in the Federal Register . Upon promulgation of an ETS, OSHA is required to begin the full rulemaking process for a permanent standard with the ETS serving as the proposed standard for this rulemaking. An ETS is valid until superseded by a permanent standard, which OSHA must promulgate within six months of publishing the ETS in the Federal Register . An ETS must include a statement of reasons for the action in the same manner as required for a permanent standard. State plans are required to adopt or adhere to an ETS, although the OSH Act is not clear on how quickly a state plan must come into compliance with an ETS."], "subsections": [{"section_title": "ETS Requirements", "paragraphs": ["Section 6(c)(1) of the OSH Act requires that both of the following determinations be made in order for OSHA to promulgate an ETS:", "that employees are exposed to grave danger from exposure to substances or agents determined to be toxic or physically harmful or from new hazards, and that such emergency standard is necessary to protect employees from such danger."], "subsections": [{"section_title": "Grave Danger Determination", "paragraphs": ["The term grave danger , used in the first mandatory determination for an ETS, is not defined in statute or regulation. The legislative history demonstrates the intent of Congress that the ETS process \"not be utilized to circumvent the regular standard-setting process,\" but the history is unclear as to how Congress intended the term grave danger to be defined. ", "In addition, although the federal courts have ruled on challenges to previous ETS promulgations, the courts have provided no clear guidance as to what constitutes a grave danger. In 1984, the U.S. Court of Appeals for the Fifth Circuit in Asbestos Info. Ass'n v. OSHA issued a stay and invalidated OSHA's November 1983 ETS lowering the permissible exposure limit for asbestos in the workplace. In its decision, the court stated that \"gravity of danger is a policy decision committed to OSHA, not to the courts.\" The court, however, ultimately rejected the ETS, in part on the grounds that OSHA did not provide sufficient support for its claim that 80 workers would ultimately die because of exposures to asbestos during the six-month life of the ETS."], "subsections": []}, {"section_title": "Necessity Determination", "paragraphs": ["In addition to addressing a grave danger to employees, an ETS must also be necessary to protect employees from that danger. In Asbestos Info. Ass'n , the court invalidated the asbestos ETS for the additional reason that OSHA had not demonstrated the necessity of the ETS. The court cited, among other factors, the duplication between the respirator requirements of the ETS and OSHA's existing standards requiring respirator use. The court dismissed OSHA's argument that the ETS was necessary because the agency felt that the existing respiratory standards were \"unenforceable absent actual monitoring to show that ambient asbestos particles are so far above the permissible limit that respirators are necessary to bring employees' exposure within the PEL of 2.0 f/cc.\" The court determined that \"fear of a successful judicial challenge to enforcement of OSHA's permanent standard regarding respirator use hardly justifies resort to the most dramatic weapon in OSHA's enforcement arsenal.\" ", "Although OSHA has not promulgated an ETS since the 1983 asbestos standard, it has since determined the necessity of an ETS. In 2006, the agency considered a petition from the United Food and Commercial Workers (UFCW) and International Brotherhood of Teamsters (IBT) for an ETS on diacetyl. The UFCW and IBT petitioned OSHA for the ETS after the National Institute for Occupational Safety and Health (NIOSH) and other researchers found that airborne exposure to diacetyl, then commonly used as an artificial butter flavoring in microwave popcorn and a flavoring in other food and beverage products, was linked to the lung disease bronchiolitis obliterans , now commonly referred to as \"popcorn lung.\" According to GAO's 2012 report on OSHA's standard-setting processes, OSHA informed GAO that although the agency may have been able to issue an ETS based on the grave danger posed by diacetyl, the actions taken by the food and beverage industries, including reducing or removing diacetyl from products, made it less likely that the necessity requirement could be met. "], "subsections": []}]}, {"section_title": "ETS Duration", "paragraphs": ["Section 6(c)(2) of the OSH Act provides that an ETS is effective until superseded by a permanent standard promulgated pursuant to the normal rulemaking provisions of the OSH Act. Section 6(c)(3) of the OSH Act requires OSHA to promulgate a permanent standard within six months of promulgating the ETS. As shown earlier in this report, six months is well outside of historical and currently expected time frames for developing and promulgating a standard under the notice and comment provisions of the APA and OSH Act, as well as under other relevant federal laws and executive orders. This dichotomy between the statutory mandate to promulgate a standard and the timelines that, based on historical precedent, other provisions in the OSH Act might realistically require for such promulgation raises the question of whether or not OSHA could extend an ETS's duration without going through the normal rulemaking process. The statute and legislative history do not clearly address this question.", "OSHA has used its ETS authority sparingly in its history and not since the asbestos ETS promulgated in 1983. As shown in Table A-1 in the Appendix, of the nine times OSHA has issued an ETS, the courts have fully vacated or stayed the ETS in four cases and partially vacated the ETS in one case. Of the five cases that were not challenged or that were fully or partially upheld by the courts, OSHA issued a permanent standard either within the six months required by the statute or within several months of the six-month period and always within one year of the promulgation of the ETS. Each of these cases, however, occurred before 1980, when a combination of additional federal laws and court decisions added additional procedural requirements to the OSHA rulemaking process. OSHA did not attempt to extend the ETS's expiration date in any of these cases.", "Although the courts have not ruled directly on an attempt by OSHA to solely extend the life of an ETS, in 1974, the U.S. Court Appeals for the Fifth Circuit held in Florida Peach Growers Ass ' n v. United States Department of Labor that OSHA was within its authority to amend an ETS without going through the normal rulemaking process. The court stated that \"it is inconceivable that Congress, having granted the Secretary the authority to react quickly in fast-breaking emergency situations, intended to limit his ability to react to developments subsequent to his initial response.\" The court also recognized the difficulty OSHA may have in promulgating a standard within six months due to the notice and comment requirements of the OSH Act, stating that in the case of OSHA seeking to amend an ETS to expand its focus, \"adherence to subsection (b) procedures would not be in the best interest of employees, whom the Act is designed to protect. Such lengthy procedures could all too easily consume all of the temporary standard's six months life\""], "subsections": []}]}]}, {"section_title": "OSHA Standards Related to COVID-19", "paragraphs": [], "subsections": [{"section_title": "Current OSHA Standards", "paragraphs": ["Currently, no OSHA standard directly covers exposure to airborne or aerosol diseases in the workplace. As a result, OSHA is limited in its ability to enforce protections for healthcare and other workers who may be exposed to SARS-Cov-2, the virus that causes COVID-19. ", "OSHA may enforce the General Duty Clause in the absence of a standard, if it can be determined that an employer has failed to provide a worksite free of \"recognized hazards\" that are \"causing or are likely to cause death or serious physical harm\" to workers. In addition, OSHA's standards for the use of personal protective equipment (PPE) may apply in cases in which workers require eye, face, hand, or respiratory protection against COVID-19 exposure. "], "subsections": []}, {"section_title": "OSHA Respiratory Protection Standard", "paragraphs": [], "subsections": [{"section_title": "National Institute for Occupational Safety and Health Certification", "paragraphs": ["The OSHA respiratory protection standard requires the use of respirators certified by NIOSH in cases in which engineering controls, such as ventilation or enclosure of hazards, are insufficient to protect workers from breathing contaminated air. Surgical masks, procedure masks, and dust masks are not considered respirators. NIOSH certifies respirators pursuant to federal regulations. For nonpowered respirators, such as filtering face piece respirators commonly used in healthcare and construction, NIOSH classifies respirators based on their efficiency at filtering airborne particles and their ability to protect against oil particles. Under the NIOSH classification system, the letter (N, R, or P) indicates the level of oil protection as follows: N\u00e2\u0080\u0094no oil protection; R\u00e2\u0080\u0094oil resistant; and P\u00e2\u0080\u0094oil proof. The number following the letter indicates the efficiency rating of the respirator as follows: 95\u00e2\u0080\u0094filters 95% of airborne particles; 97\u00e2\u0080\u0094filters 97% of airborne particles; and 100\u00e2\u0080\u0094filters 99.7% of airborne particles. Thus an N95 respirator, the most common type, is one that does not protect against oil particles and filters out 95% of airborne particles. An R or P respirator can be used in place of an N respirator. ", "A respirator that is past its manufacturer-designated shelf life is no longer considered to be certified by NIOSH. However, in response to potential shortages in respirators, NIOSH has tested and approved certain models of respirators for certified use beyond their manufacturer-designated shelf lives.", "Respirators designed for certain medical and surgical uses are subject to both certification by NIOSH (for oil protection and efficiency) and regulation by the Food and Drug Administration (FDA) as medical devices. In general, respirators with exhalation valves cannot be used in surgical and certain medical settings because, although the presence of an exhalation valve does not affect the respirator's protection afforded the user, it may allow unfiltered air from the user into a sterile field. On March 2, 2020, FDA issued an Emergency Use Authorization (EUA) to approve for use in medical settings certain NIOSH-certified respirators not previously regulated by FDA."], "subsections": [{"section_title": "CDC Interim Guidance on Respiratory Protection", "paragraphs": ["On March 10, 2020, the Centers for Disease Control and Prevention (CDC) updated its interim guidance for the protection of healthcare workers against exposure to COVID-19 to permit healthcare workers caring for known or suspected COVID-19 cases to use \"facemasks\" when respirators are not available or are in limited supply. This differs from the CDC's 2007 guidelines for control of infectious agents in healthcare settings, which required the use of respirators for treatment of known or suspected cases. CDC states that respirators should be prioritized for use in medical procedures likely to generate respiratory aerosols. Before this interim guidance was released, Representative Bobby Scott, Chairman of the House Committee on Education and Labor, and Representative Alma Adams, Chair of the Subcommittee on Workforce Protections, sent a letter to Secretary of Health and Human Services (HHS) Alex M. Azar II expressing their opposition to this change in the interim standard. "], "subsections": []}]}, {"section_title": "Medical Evaluation and Fit Testing", "paragraphs": ["The OSHA respiratory protection standard requires that the employer provide a medical evaluation to the employee to determine if the employee is physiologically able to use a respirator. This medical evaluation must be completed before any fit testing. For respirators designed to fit tightly against the face, the specific type and model of respirator that an employee is to use must be fit tested in accordance with the procedures provided in Appendix A of the OSHA respiratory protection standard to ensure there is a complete seal around the respirator when worn. Once an employee has been fit tested for a respirator, he or she is required to be fit tested annually or whenever the model of respirator, but not the actual respirator itself, is changed. Each time an individual uses a respirator, he or she is required to perform a check of the seal of the respirator to his or her face in accordance with the procedures provided in Appendix B of the standard. On March 14, 2020, OSHA issued guidance permitting employers to suspend annual fit testing of respirators for employees that have already been fit tested on the same model respirator. "], "subsections": []}, {"section_title": "Temporary OSHA Enforcement Guidance on the Respiratory Protection Standard", "paragraphs": ["In response to shortages of respirators and other PPE during the national response to the COVID-19 pandemic, OSHA has issued three sets of temporary enforcement guidance to permit the following exceptions to the respiratory protection standard:", "1. Employers may suspend annual fit testing of respirators for employees that have already been fit tested on the same model respirator; 2. Employers may permit the use of expired respirators and the extended use or reuse of respirators, provided the respirator maintains its structural integrity and is not damaged, soiled, or contaminated (e.g., with blood, oil, or paint); and 3. Employers may permit the use of respirators not certified by NIOSH, but approved under standards used by the following countries or jurisdictions, in accordance with the protection equivalency tables provided in Appendices A and B of the enforcement guidance document: Australia, Brazil, European Union, Japan, Mexico, People's Republic of China, and Republic of Korea."], "subsections": []}]}, {"section_title": "Cal/OSHA Aerosol Transmissible Disease Standard", "paragraphs": ["Although no OSHA standard specifically covers aerosol or airborne disease transmission, the California Division of Occupational Safety and Health (Cal/OSHA), under its state plan, promulgated its aerosol transmissible disease (ATD) standard in 2009. The ATD standard covers most healthcare workers, laboratory workers, as well as workers in correctional facilities, homeless shelters, and drug treatment programs. Under the ATD standard, SARS-Cov-2, the virus that causes COVID-19, is classified as a disease or pathogen requiring airborne isolation. This classification subjects the virus to stricter control standards than diseases requiring only droplet precautions, such as seasonal influenza. The key requirements of the ATD standard include", "written ATD exposure control plan and procedures, training of all employees on COVID-19 exposure, use of PPE, and procedures if exposed to COVID-19, engineering and work practice controls to control COVID-19 exposure, including the use of airborne isolation rooms, provision of medical services to employees, including removal of exposed employees, specific requirements for laboratory workers, and PPE requirements."], "subsections": [{"section_title": "Cal/OSHA Aerosol Transmissible Disease PPE Requirements", "paragraphs": ["The Cal/OSHA ATD standard requires that employers provide employees PPE, including gloves, gowns or coveralls, eye protection, and respirators certified by NIOSH at least at the N95 level whenever workers", "enter or work in an airborne isolation room or area with a case or suspected case; are present during procedures or services on a case or suspected case; repair, replace, or maintain air systems or equipment that may contain pathogens; decontaminate an area that is or was occupied by a case or suspected case; are present during aerosol generating procedures on cadavers of cases or suspected cases; transport a case or suspected case within a facility or within a vehicle when the patient is not masked; and are working with a viable virus in the laboratory.", "In addition, a powered air purifying respirator (PAPR) with a high-efficiency particulate air (HEPA) filter must be used whenever a worker performs a high- hazard procedure on a known or suspected COVID-19 case. High-hazard procedures are those in which \"the potential for being exposed to aerosol transmissible pathogens is increased due to the reasonably anticipated generation of aerosolized pathogens\"\u00e2\u0080\u0094they include intubation, airway suction, and caring for patients on positive pressure ventilation. Emergency medical services (EMS) workers may use N100, R100, or P100 respirators in place of PAPRs. "], "subsections": [{"section_title": "Cal/OSHA Interim Guidance on COVID-19", "paragraphs": ["Cal/OSHA has issued interim guidance in response to shortages of respirators in the state due to the COVID-19 pandemic response. Under this interim guidance, if the supply of N95 respirators or PAPRs are insufficient to meet current or anticipated needs, surgical masks may be used for low-hazard patient contacts that would otherwise require the use of respirators, and respirators may be used for high-hazard procedures that would otherwise require the use of PAPRs."], "subsections": []}]}, {"section_title": "OSHA Infectious Disease Standard Rulemaking", "paragraphs": ["In 2010, OSHA published a Request for Information in the Federal Register seeking public comments on strategies to control exposure to infectious diseases in healthcare workplaces. After collecting public comments and holding public meetings, OSHA completed the SBREFA process in 2014. Since then, however, no public actions have occurred on this rulemaking; since spring 2017, this rulemaking has been listed as a \"long-term action\" in DOL's semiannual regulatory agenda."], "subsections": []}]}]}, {"section_title": "Congressional Activity to Require an OSHA Emergency Temporary Standard on\u00c2 COVID-19", "paragraphs": ["On March 5, 2020, Representative Scott, chairman of the House Committee on Education and Labor, and Representative Adams, chair of the Subcommittee on Workforce Protections, sent a letter to Secretary of Labor Eugene Scalia calling on OSHA to promulgate an ETS to address COVID-19 exposure among healthcare workers. This letter followed a January 2020 letter requesting that OSHA reopen its rulemaking on the infectious disease standard and begin to formulate for possible future promulgation an ETS to address COVID-19 exposure. Senator Patty Murray, ranking member of the Senate Committee on Health, Education, Labor, and Pensions and a group of Democratic Senators sent a similar letter to the Secretary of Labor calling for an OSHA ETS.", "In addition, in March 2020, David Michaels, who served as the Assistant Secretary of Labor for Occupational Safety and Health during the Obama Administration, wrote an op-ed in The Atlantic calling on OSHA to promulgate a COVID-19 ETS. On March 6, 2020, the AFL-CIO and 22 other unions petitioned OSHA for an ETS on COVID-19 that would cover all workers with potential exposures. National Nurses United submitted a similar petition requesting that OSHA promulgate an ETS based largely on the Cal/OSHA ATD standard. On May 4, 2020, the Center for Food Safety and Food Chain Workers Alliance submitted a petition requesting that OSHA promulgate an ETS to protect meat and poultry processing workers from COVID-19 exposure in the workplace. On May 18, 2020, the AFL-CIO petitioned the U.S. Court of Appeals for the D.C. Circuit for a writ of mandamus to compel OSHA to promulgate a COVID-19 ETS."], "subsections": [{"section_title": "H.R. 6139, the COVID-19 Health Care Worker Protection Act of\u00c2 2020", "paragraphs": ["On March 9, 2020, Representative Scott introduced H.R. 6139 , the COVID-19 Health Care Worker Protection Act of 2020. This bill would require OSHA to promulgate a COVID-19 ETS within one month of enactment. The ETS would be required to cover healthcare workers and any workers in sectors determined by the CDC or OSHA to be at an elevated risk of COVID-19 exposure. The ETS would be required to include an exposure control plan provision and be, at a minimum, based on CDC's 2007 guidance and any updates to this guidance. The ETS would also be required to provide no less protection than any state standard on novel pathogens, thus requiring OSHA to include the elements of the Cal/OSHA ATD standard in this ETS. Title II of the bill would provide that hospitals and skilled nursing facilities that receive Medicare funding and that are owned by state or local government units and not subject to state plans would be required to comply with the ETS. "], "subsections": []}, {"section_title": "P.L. 116-127, the Families First Coronavirus Response Act", "paragraphs": ["The provisions of H.R. 6139 were included as Division C of H.R. 6201 , the Families First Coronavirus Response Act, as introduced in the House. The American Hospital Association (AHA) issued an alert to its members expressing its opposition to the OSHA ETS provisions in the bill. Specifically, the AHA opposed the requirement that the ETS be based on the CDC's 2007 guidance. The AHA stated that unlike severe acute respiratory syndrome (SARS), which was transmitted through the air, COVID-19 transmission is through droplets and surface contacts. Thus, the requirement of the 2007 CDC guidance that N95 respirators, rather than surgical masks, be used for patient contact is not necessary to protect healthcare workers from COVID-19, and the use of surgical masks is consistent with World Health Organization guidance. The AHA also claimed that shortages of available respirators could reduce the capacity of hospitals to treat COVID-19 patients, due to a lack of respirators for staff. The OSHA ETS provisions were not included in the version of the legislation that was passed by the House and the Senate and signed into law as P.L. 116-127 . "], "subsections": []}, {"section_title": "H.R. 6379, the Take Responsibility for Workers and Families Act", "paragraphs": ["Division D of H.R. 6379 , the Take Responsibility for Workers and Families Act, as introduced in the House on March 23, 2020, includes the requirement that OSHA promulgate an ETS on COVID-19 within seven days of enactment and a permanent COVID-19 standard within 24 months of enactment to cover healthcare workers, firefighters and emergency response workers, and workers in other occupations that CDC or OSHA determines to have an elevated risk of COVID-19 exposure. Division D of H.R. 6379 would amend the OSH Act, for the purposes of the ETS only, such that state and local government employers in states without state plans would be covered by the ETS. The provisions of Division D of H.R. 6379 were also included in S. 3584 , the COVID\u00e2\u0080\u009319 Workers First Protection Act of 2020, as introduced in the Senate.", "This legislation would specifically provide that the ETS would remain in force until the permanent standard is promulgated and explicitly exempts the ETS from the Regulatory Flexibility Act, Paperwork Reduction Act, and Executive Order 12866. OSHA would be granted enforcement discretion in cases in which it is not feasible for an employer to fully comply with the ETS (such as a case in which PPE is unavailable) if the employer is exercising due diligence to comply and implementing alternative means to protect employees. ", "Like the provisions in H.R. 6139 and the version of H.R. 6201 introduced in the House, this ETS and permanent standard would be required to include an exposure control plan and provide no less protection than any state standard on novel pathogens, thus requiring OSHA to include the elements of the Cal/OSHA ATD standard in this ETS and permanent standard. Although the ETS provisions in H.R. 6139 and H.R. 6201 required that the ETS be based on the 2007 CDC guidance, specific reference to the 2007 guidance is not included in this legislation. Rather, the ETS and permanent standard would have to incorporate, as appropriate, \"guidelines issued by the Centers for Disease Control and Prevention, and the National Institute for Occupational Safety and Health, which are designed to prevent the transmission of infectious agents in healthcare settings\" and scientific research on novel pathogens. ", "States with occupational safety and health plans would be required to adopt the ETS, or their own ETSs at least as effective as the ETS, within 14 days of the legislation's enactment. "], "subsections": []}, {"section_title": "H.R. 6559, the COVID-19 Every Worker Protection Act of 2020", "paragraphs": ["H.R. 6559 , the COVID-19 Every Worker Protection Act of 2020, was introduced in the House by Representative Scott on April 21, 2020. This legislation includes the ETS and permanent standard provisions of Division D of H.R. 6379 and S. 3584 and would require that these standards cover healthcare workers, emergency medical responders, and \"other employees at occupational risk\" of COVID-19 exposure. This legislation also adds two provisions that clarify the requirements for employers to record work-related COVID-19 infections and strengthen the protections against retaliation and discrimination offered to whistleblowers. "], "subsections": [{"section_title": "COVID-19 Recordkeeping", "paragraphs": ["Sections 8(c) and 24(a) of the OSH Act require employers to maintain records of occupational injuries and illnesses in accordance with OSHA regulations. OSHA's reporting and recordkeeping regulations require that employers with 10 or more employees must keep records of work-related injuries and illnesses that result in lost work time for employees or that require medical care beyond first aid. Employers must also report to OSHA, within 8 hours, any workplace fatality, and within 24 hours, any injury or illness that results in in-patient hospitalization, amputation, or loss of an eye. Employers in certain industries determined by OSHA to have lower occupational safety and health hazards are listed in the regulations as being exempt from the recordkeeping requirements but not the requirement to report serious injuries, illnesses, and deaths to OSHA. Offices of physicians, dentists, other health practitioners, and outpatient medical clinics are included in the industries that are exempt from the recordkeeping requirements.", "OSHA regulations require the employer to determine if an employee's injury or illness is related to his or her work and thus subject to the recordkeeping requirements. The regulations provide a presumption that an injury or illness that occurs in the workplace is work-related and recordable, unless one of the exemptions provided in the regulations applies. One of the listed exemptions is as follows:", "The illness is the common cold or flu (Note: contagious diseases such as tuberculosis, brucellosis, hepatitis A, or plague are considered work-related if the employee is infected at work).", "Because of the nature of COVID-19 transmission, which can occur in the community as well as the workplace, it can be difficult to determine the exact source of any person's COVID-19 transmission. This may make it difficult for employers to determine if an employee's COVID-19 is subject to the recordkeeping requirements. ", "On April 10, 2020, OSHA issued enforcement guidance on how cases of COVID-19 should be treated under the recordkeeping requirements. This guidance states that COVID-19 cases are recordable if they are work-related.", "Under this guidance, employers in the following industry groups must fully comply with the recordkeeping regulations, including the requirement to determine if COVID-19 cases are work-related:", "healthcare; emergency response, including firefighting, emergency medical services, and law enforcement; and correctional institutions.", "For all other employers, however, OSHA will only require employers to determine if COVID-19 cases are work-related and subject to the recordkeeping requirements if the following two conditions are met:", "1. There is objective evidence that a COVID-19 case may be work-related. This could include, for example, a number of cases developing among workers who work closely together without an alternative explanation; and 2. The evidence of work-relatedness was reasonably available to the employer. For purposes of this guidance, examples of reasonably available evidence include information given to the employer by employees, as well as information that an employer learns regarding its employees' health and safety in the ordinary course of managing its business and employees.", "H.R. 6559 would require that the ETS and permanent standard established pursuant to the legislation include the requirement for the recording and reporting of all COVID-19 cases in accordance with OSHA regulations in place at the time of enactment. By referencing the regulations in place rather than the guidance, this provision would serve to supersede OSHA's guidance and apply the requirement to determine the work-relatedness of COVID-19 cases to all employers covered by the recordkeeping regulations."], "subsections": []}, {"section_title": "Whistleblower Protections", "paragraphs": ["Section 11(c) of the OSH Act prohibits any person from retaliating or discriminating against any employee who exercises certain rights provided by the OSH Act. Commonly referred to as the whistleblower protection provision, this provision protects any employee who takes any of the following actions:", "files a complaint with OSHA related to a violation of the OSH Act; causes an OSHA proceeding, such as an investigation, to be instituted; testifies or is about to testify in any OSHA proceeding; and exercises on his or her own behalf, or on behalf of others, any other rights afforded by the OSH Act.", "Other rights afforded by the OSH Act that are covered by the whistleblower protection provision include the right to inform the employer about unsafe work conditions; the right to access material safety data sheets or other information required to be made available by the employer; and the right to report a work-related injury, illness, or death to OSHA. In limited cases, the employee has the right to refuse to work if conditions reasonably present a risk of serious injury or death and there is not sufficient time to eliminate the danger through other means. ", "H.R. 6559 would require that the ETS and permanent standard promulgated pursuant to the legislation expand the protections for whistleblowers. The following additional activities taken by employees would grant them protection from retaliation and discrimination from employers and agents of employers:", "reporting to the employer; a local, state, or federal agency; or the media; or on a social media platform; the following: a violation of the ETS or permanent standard promulgated pursuant to the legislation; a violation of the infectious disease control plan required by the ETS or permanent standard; or a good-faith concern about an infectious disease hazard in the workplace; seeking assistance from the employer or a local, state, or federal agency with such a report; and using personally supplied PPE with a higher level of protection than offered by the employer."], "subsections": []}]}, {"section_title": "H.R. 6800, the Health and Economic Recovery Omnibus Emergency Solutions Act (HEROES Act)", "paragraphs": ["The provisions of H.R. 6559 , including the provisions relating to recordkeeping and whistleblower protections, were included as Title III of Division L of H.R. 6800 , the Health and Economic Recovery Omnibus Emergency Solutions Act (HEROES Act). H.R. 6800 was passed by the House on May 1 5, 2020. "], "subsections": [{"section_title": "Appendix.", "paragraphs": [], "subsections": []}]}]}]}}
{"id": "R46290", "title": "Overview of FY2021 Appropriations for Commerce, Justice, Science, and Related Agencies (CJS)", "released_date": "2020-03-24T00:00:00", "summary": ["This report describes actions taken to provide FY2021 appropriations for Commerce, Justice, Science, and Related Agencies (CJS) accounts. The annual CJS appropriations act provides funding for the Department of Commerce, which includes bureaus and offices such as the Census Bureau, the U.S. Patent and Trademark Office, the National Oceanic and Atmospheric Administration, and the National Institute of Standards and Technology; the Department of Justice (DOJ), which includes agencies such as the Federal Bureau of Investigation, the Bureau of Prisons, the U.S. Marshals, the Drug Enforcement Administration, and the U.S. Attorneys; the National Aeronautics and Space Administration (NASA); the National Science Foundation (NSF); and several related agencies such as the Legal Services Corporation (LSC) and the Equal Employment Opportunity Commission.", "The Administration requests $74.849 billion for CJS for FY2021, which is $4.910 billion (-6.2%) less than the $79.759 billion appropriated for CJS for FY2020. The Administration's request includes $8.318 billion for the Department of Commerce, $32.964 billion for the Department of Justice, $32.994 billion for specified science agencies, and $574 million for the related agencies. The Administration's FY2021 budget proposes reduced funding for the Department of Commerce, NSF, and most of the related agencies, and increased funding for DOJ and NASA. The proposed reduction in overall funding for CJS is partially the result of a proposed $5.886 billion (-77.9%) decrease in funding for the Census Bureau, which, in keeping with past precedent, receives less funding in the fiscal year after conducting the decennial census. The FY2021 budget request for CJS also includes reductions to several other CJS accounts along with proposals to eliminate several CJS agencies and programs, including the Economic Development Administration, the Community Oriented Policing Services Office, NASA's STEM Engagement Office (formerly the Office of Education), and the LSC."], "reports": {"section_title": "", "paragraphs": ["T his report describes actions taken to provide FY2021 appropriations for Commerce, Justice, Science, and Related Agencies (CJS) accounts.", "The dollar amounts in this report reflect only new appropriations made available at the start of the fiscal year. Therefore, the amounts do not include any rescissions of unobligated or deobligated balances that may be counted as offsets to newly enacted appropriations, nor do they include any scorekeeping adjustments (e.g., the budgetary effects of provisions limiting the availability of the balance in the Crime Victims Fund). In the text of the report, appropriations are rounded to the nearest million. However, percentage changes are calculated using whole, not rounded, numbers, meaning that in some instances there may be small differences between the actual percentage change and the percentage change that would be calculated by using the rounded amounts discussed in the report."], "subsections": [{"section_title": "Overview of CJS", "paragraphs": ["The annual CJS appropriations act provides funding for the Departments of Commerce and Justice, select science agencies, and several related agencies. Appropriations for the Department of Commerce include funding for bureaus and offices such as the Census Bureau, the U.S. Patent and Trademark Office, the National Oceanic and Atmospheric Administration, and the National Institute of Standards and Technology. Appropriations for the Department of Justice (DOJ) provide funding for agencies such as the Federal Bureau of Investigation; the Bureau of Prisons; the U.S. Marshals; the Drug Enforcement Administration; and the Bureau of Alcohol, Tobacco, Firearms, and Explosives, along with funding for a variety of public safety-related grant programs for state, local, and tribal governments. The vast majority of funding for the science agencies goes to the National Aeronautics and Space Administration and the National Science Foundation. The annual appropriation for the related agencies includes funding for agencies such as the Legal Services Corporation and the Equal Employment Opportunity Commission."], "subsections": [{"section_title": "Department of Commerce", "paragraphs": ["The mission of the Department of Commerce is to \"create the conditions for economic growth and opportunity.\" The department promotes \"job creation and economic growth by ensuring fair and reciprocal trade, providing the data necessary to support commerce and constitutional democracy, and fostering innovation by setting standards and conducting foundational research and development.\" It has wide-ranging responsibilities including trade, economic development, technology, entrepreneurship and business development, monitoring the environment, forecasting weather, managing marine resources, and statistical research and analysis. The department pursues and implements policies that affect trade and economic development by working to open new markets for U.S. goods and services and promoting pro-growth business policies. It also invests in research and development to foster innovation.", "The agencies within the Department of Commerce, and their responsibilities, include the following:", "International Trade Administration (ITA) seeks to strengthen the international competitiveness of U.S. industry, promote trade and investment, and ensure fair trade and compliance with trade laws and agreements; Bureau of Industry and Security (BIS) works to ensure an effective export control and treaty compliance system and promote continued U.S. leadership in strategic technologies by maintaining and strengthening adaptable, efficient, and effective export controls and treaty compliance systems, along with active leadership and involvement in international export control regimes; Economic Development Administration (EDA) promotes innovation and competitiveness, preparing American regions for growth and success in the worldwide economy; Minority Business Development Agency (MBDA) promotes the growth of minority owned businesses through the mobilization and advancement of public and private sector programs, policy, and research; Bureau of Economic Analysis (BEA) is a federal statistical agency that promotes a better understanding of the U.S. economy by providing timely, relevant, and accurate economic accounts data in an objective and cost-effective manner; Census Bureau is a federal statistical agency that measures and disseminates information about the U.S. economy, society, and institutions, which fosters economic growth, advances scientific understanding, and facilitates informed decisions; National Telecommunications and Information Administration (NTIA) advises the President on communications and information policy; United States Patent and Trademark Office (USPTO) fosters innovation, competitiveness, and economic growth domestically and abroad by providing high-quality and timely examination of patent and trademark applications, guiding domestic and international intellectual property (IP) policy, and delivering IP information and education worldwide; National Institute of Standards and Technology (NIST) promotes U.S. innovation and industrial competitiveness by advancing measurement science, standards, and technology in ways that enhance economic security and improve quality of life ; and National Oceanic and Atmospheric Administration (NOAA) provides daily weather forecasts, severe storm warnings, climate monitoring, fisheries management, coastal restoration, and support of marine commerce."], "subsections": []}, {"section_title": "Department of Justice", "paragraphs": ["DOJ's mission is to \"enforce the law and defend the interests of the United States according to the law; to ensure public safety against threats foreign and domestic; to provide federal leadership in preventing and controlling crime; to seek just punishment for those guilty of unlawful behavior; and to ensure fair and impartial administration of justice for all Americans.\" DOJ also provides legal advice and opinions, upon request, to the President and executive branch department heads. ", "The major DOJ offices and agencies, and their functions, are described below:", "Office of the United States Attorneys prosecutes violations of federal criminal laws, represents the federal government in civil actions, and initiates proceedings for the collection of fines, penalties, and forfeitures owed to the United States; United States Marshals Service (USMS) provides security for the federal judiciary, protects witnesses, executes warrants and court orders, manages seized assets, detains and transports alleged and convicted offenders, and apprehends fugitives; Federal Bureau of Investigation (FBI) investigates violations of federal criminal law; helps protect the United States against terrorism and hostile intelligence efforts; provides assistance to other federal, state, and local law enforcement agencies; and shares jurisdiction with the Drug Enforcement Administration for the investigation of federal drug violations; Drug Enforcement Administration (DEA) investigates federal drug law violations; coordinates its efforts with other federal, state, and local law enforcement agencies; develops and maintains drug intelligence systems; regulates the manufacture, distribution, and dispensing of legitimate controlled substances; and conducts joint intelligence-gathering activities with foreign governments; Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) enforces federal law related to the manufacture, importation, and distribution of alcohol, tobacco, firearms, and explosives; Federal Prison System ( Bureau of Prisons; BOP ) houses offenders sentenced to a term of incarceration for a federal crime and provides for the operation and maintenance of the federal prison system; Office on Violence Against Women (OVW) provides federal leadership in developing the nation's capacity to reduce violence against women and administer justice for and strengthen services to victims of domestic violence, dating violence, sexual assault, and stalking; Office of Justice Programs (OJP) manages and coordinates the activities of the Bureau of Justice Assistance; Bureau of Justice Statistics; National Institute of Justice; Office of Juvenile Justice and Delinquency Prevention; Office of Sex Offender Sentencing, Monitoring, Apprehending, Registering, and Tracking; and Office of Victims of Crime; and Community Oriented Policing Services (COPS) advances the practice of community policing by the nation's state, local, territorial, and tribal law enforcement agencies through information and grant resources."], "subsections": []}, {"section_title": "Science Offices and Agencies", "paragraphs": ["The science offices and agencies support research and development and related activities across a wide variety of federal missions, including national competitiveness, space exploration, and fundamental discovery."], "subsections": [{"section_title": "Office of Science and Technology Policy", "paragraphs": ["The primary function of the Office of Science and Technology Policy (OSTP) is to provide the President and others within the Executive Office of the President with advice on the scientific, engineering, and technological aspects of issues that require the attention of the federal government. The OSTP director also manages the National Science and Technology Council, which coordinates science and technology policy across the executive branch of the federal government, and cochairs the President's Council of Advisors on Science and Technology, a council of external advisors that provides advice to the President on matters related to science and technology policy."], "subsections": []}, {"section_title": "The National Space Council", "paragraphs": ["The National Space Council, in the Executive Office of the President, is a coordinating body for U.S. space policy. Chaired by the Vice President, it consists of the Secretaries of State, Defense, Commerce, Transportation, and Homeland Security; the Administrator of NASA; and other senior officials. The council was first established in 1988 through P.L. 100-685 . The council ceased operations in 1993, and was reestablished by the Trump Administration in June 2017."], "subsections": []}, {"section_title": "National Science Foundation", "paragraphs": ["The National Science Foundation (NSF) supports basic research and education in the nonmedical sciences and engineering. The foundation was established as an independent federal agency \"to promote the progress of science; to advance the national health, prosperity, and welfare; to secure the national defense; and for other purposes.\" The NSF is a primary source of federal support for U.S. university research in the nonmedical sciences and engineering. It is also responsible for significant shares of the federal science, technology, engineering, and mathematics (STEM) education program portfolio and federal STEM student aid and support."], "subsections": []}, {"section_title": "National Aeronautics and Space Administration", "paragraphs": ["The National Aeronautics and Space Administration (NASA) was created to conduct civilian space and aeronautics activities. It has four mission directorates. The Human Exploration and Operations Mission Directorate is responsible for human spaceflight activities, including the International Space Station and development efforts for future crewed spacecraft. The Science Mission Directorate manages robotic science missions, such as the Hubble Space Telescope, the Mars rover Curiosity, and satellites for Earth science research. The Space Technology Mission Directorate develops new technologies for use in future space missions, such as advanced propulsion and laser communications. The Aeronautics Research Mission Directorate conducts research and development on aircraft and aviation systems. In addition, NASA's Office of STEM Engagement (formerly the Office of Education) manages education programs for schoolchildren, college and university students, and the general public."], "subsections": []}]}, {"section_title": "Related Agencies", "paragraphs": ["The annual CJS appropriations act includes funding for several related agencies: ", "U.S. Commission on Civil Rights informs the development of national civil rights policy and enhances enforcement of federal civil rights laws; Equal Employment Opportunity Commission is responsible for enforcing federal laws that make it illegal to discriminate against a job applicant or an employee because of the person's race, color, religion, sex (including pregnancy, gender identity, and sexual orientation), national origin, age (40 or older), disability, or genetic information; International Trade Commission investigates the effects of dumped and subsidized imports on domestic industries and conducts global safeguard investigations, adjudicates cases involving imports that allegedly infringe intellectual property rights, and serves as a resource for trade data and other trade policy-related information; Legal Services Corporation (LSC) is a federally funded nonprofit corporation that provides financial support for civil legal aid to low-income Americans; Marine Mammal Commission works for the conservation of marine mammals by providing science-based oversight of domestic and international policies and actions of federal agencies with a mandate to address human effects on marine mammals and their ecosystems; Office of the U.S. Trade Representative is responsible for developing and coordinating U.S. international trade, commodity, and direct investment policy, and overseeing negotiations with other countries; and State Justice Institute is a federally funded nonprofit corporation that awards grants to improve the quality of justice in state courts and foster innovative, efficient solutions to common issues faced by all courts."], "subsections": []}]}, {"section_title": "The Administration's FY2021 Budget Request", "paragraphs": ["The Administration's FY2021 budget request for CJS is $74.849 billion, which is $4.910 billion (-6.2%) less than the $79.759 billion appropriated for CJS for FY2020 (see Table 1 ). The Administration's FY2021 request includes the following: ", "$8.318 billion for the Department of Commerce, which is $6.903 billion (-45.4%) less than the $15.221 billion provided for FY2020; $32.964 billion for the Department of Justice, which is $358 million (1.1%) more than the $32.605 billion provided for FY2020; $32.994 billion for the science agencies, which is $2.080 billion (6.7%) more than the $30.915 billion provided for FY2020; and $574 million for the related agencies, which is $445 million (-43.7%) less than the $1.019 billion provided for FY2020. ", "The decrease in funding for the Department of Commerce is largely the result of a proposed $5.886 billion (-77.9%) decrease in funding for the Census Bureau. For the past several fiscal years, Congress has increased funding for the Census Bureau to help build capacity for conducting the decennial 2020 Census. In keeping with past precedent, funding for the Census Bureau peaks in the year in which the decennial census is conducted and it decreases sharply in the following year (see the discussion on historical funding for CJS, below). However, the proposed reduction in funding for the Department of Commerce is not only the result of reduced funding for the Census Bureau. The Administration also proposes shuttering the EDA (though the Administration requests some funding to help provide for an orderly closeout of the EDA's operations) and eliminating NIST's Manufacturing Extension Partnership and NOAA's Pacific Coastal Salmon Recovery Fund. In addition, the Administration proposes reducing funding for several other Department of Commerce accounts, including the following:", "the International Trade Administration (-$36 million, -7.0%); NIST's Scientific and Technical Research and Services account (-$102 million, -13.5%); NIST's Industrial Technology Services account (-$137 million, -84.4%); NOAA's Operations, Research, and Facilities account (-$599 million, -15.9%); and NOAA's Procurement, Acquisition, and Facilities account (-$64 million, -4.2%).", "The Administration also proposes a $32 million (-75.5%) reduction for the Minority Business Development Administration. It proposes changing the agency's focus to being a policy office that concentrates on advocating for the minority business community as a whole rather than supporting individual minority business enterprises.", "The Administration's FY2021 budget includes a proposal to establish a Federal Capital Revolving Fund, which would be administered by the General Services Administration (GSA). The Administration proposes to transfer $294 million from the proposed fund to NIST's Construction of Research Facilities account for renovating NIST's Building 1 in Boulder, CO, which would be repaid by NIST from future appropriations at $20 million per year for 15 years.", "While the Administration proposes increased funding for most DOJ offices and agencies, the budget request would reduce funding for the FBI (-$152 million, -1.5%) and BOP (-$67 million, -0.9%), though these reductions are the result of proposals for reduced funding for construction-related accounts. The Administration proposes reducing funding for two grant-related DOJ accounts, State and Local Law Enforcement Assistance (-$381 million, -20.1%) and Juvenile Justice Programs (-$93 million, -28.9%). The Administration also proposes to eliminate the COPS program as a separate account in DOJ and requests funding for COPS-related programs under the State and Local Law Enforcement Assistance account. The Administration proposes eliminating the Community Relations Service and moving its functions to DOJ's Civil Rights Division.", "The Administration's FY2021 budget request would add two new accounts to DOJ. First, the Administration proposes moving funding for the High Intensity Drug Trafficking Areas (HIDTA) program to the DEA. Currently, HIDTA funding is administered by the Office of National Drug Control Policy. In addition, the Administration proposes adding a Construction account for ATF. The Administration requested this funding so the ATF can consolidate its laboratory facilities in Walnut Creek, CA and Atlanta, GA.", "The annual CJS appropriations act traditionally includes an obligation cap of funds expended from the Crime Victims Fund (CVF). The Administration's FY2021 budget does not include a proposed obligation cap for the CVF. Rather, the Administration proposes a new $2.300 billion annual mandatory appropriation for crime victims programs. Within this amount, $499 million would be for the OVW, $10 million would be for oversight of Office for Victims of Crime (OVC) programs by the Office of the Inspector General, $12 million would be for developing innovative crime victims services initiatives, and a set-aside of up to $115 million would be for tribal victims assistance grants. From the remaining amount, OVC would provide formula and nonformula grants to the states to support crime victim compensation and victims services programs. Under the Administration's proposal, the amount of the mandatory appropriation would decrease if the balance on the CVF falls below $5.000 billion in future fiscal years. ", "Also, the Administration's budget includes a proposal to transfer primary jurisdiction over federal tobacco and alcohol anti-smuggling laws from the ATF to the Department of the Treasury's Tax and Trade Bureau.", "The Administration's budget request includes increased funding for NASA, but the Administration does propose reduced funding for the Science account (-$832 million, -11.7%) and eliminating the Office of STEM Engagement (formerly the Office of Education). The Administration also proposes renaming three of NASA's accounts: the Space Technology account would be changed to the Exploration Technology account, the Exploration account would be changed to the Deep Space Exploration Systems account, and the Space Operations account would be changed to the Low Earth Orbit and Spaceflight Operations account. Like the Administration's FY2020 budget, the FY2021 budget proposal does not appear to include a realignment of items that would be funded from these accounts, which is what the Administration proposed in its FY2019 budget request. ", "The FY2021 budget request includes reduced funding for NSF (-$537 million, -6.5%), which includes proposed reductions for the Research and Related Activities (-$524 million, -7.8%), Major Research Equipment and Facilities Construction (-$13 million, -5.5%), and Education and Human Resources (-$9 million, -1.0%) accounts. The proposed reductions are partially offset by proposed increases for the Agency Operations and Award Management (+$9 million, +2.6%) and Office of the Inspector General (+$1 million, +8.2%) accounts.", "The Administration requests reduced funding for most of the related agencies, which includes a proposal to close the LSC, though it requests some funding to help provide for an orderly closeout of the LSC's operations.", " Table 1 outlines the FY2020 funding and the Administration's FY2021 request for the Department of Commerce, the Department of Justice, the science agencies, and the related agencies."], "subsections": []}, {"section_title": "Historical Funding for CJS", "paragraphs": [" Figure 1 shows the total CJS funding for FY2010-FY2020, in both nominal and inflation-adjusted dollars (more-detailed historical appropriations data can be found in Table 2 ). The data show that in FY2020 nominal funding for CJS reached its highest level since FY2010, though in inflation-adjusted terms, funding for FY2020 was lower than it was in FY2010.", "There is a cyclical nature to total nominal funding for CJS because of appropriations for the Census Bureau to administer decennial censuses. Overall funding for CJS traditionally starts to increase a few years before the decennial census, peaks in the fiscal year in which the census is conducted, and then declines immediately thereafter. Figure 1 shows how total funding for CJS decreased after the 2010 Census and started to ramp up again as the Census Bureau prepared to conduct the 2020 Census.", "Increased funding for CJS also coincides with increases to the discretionary budget caps under the Budget Control Act of 2011 (BCA, P.L. 112-25 ). The BCA put into effect statutory limits on discretionary spending for FY2012-FY2021. Under the act, discretionary spending limits were scheduled to be adjusted downward each fiscal year until FY2021. However, legislation was enacted that increased discretionary spending caps for FY2014 to FY2021. A sequestration of discretionary funding, ordered pursuant to the BCA, cut $2.973 billion out of the total amount Congress and the President provided for CJS for FY2013. Since then, funding for CJS has increased as more discretionary funding has been allowed under the BCA. ", " Figure 2 shows total CJS funding for FY2010-FY2020 by major component (i.e., the Department of Commerce, DOJ, NASA, and the NSF). Although decreased appropriations for the Department of Commerce (-47.4%) from FY2010 to FY2013, during years immediately following the 2010 Census, mostly explain the overall decrease in CJS appropriations during this time, cuts in funding for DOJ (-8.7%) and NASA (-9.8%) also contributed. Funding for NSF held relatively steady from FY2010 to FY2013.", "Overall CJS funding has increased since FY2014, and this is partially explained by more funding for the Department of Commerce to help the Census Bureau prepare for the 2020 Census. While funding for the Department of Commerce decreased from FY2018 to FY2019, it was partly a function of the department receiving $1.000 billion in emergency supplemental funding for FY2018. If supplemental funding is excluded, appropriations for the Department of Commerce increased 2.5% from FY2018 to FY2019. ", "While increased funding for the Department of Commerce partially explains the overall increase in funding for CJS since FY2014, there have also been steady increases in funding for DOJ (+17.6%), NASA (+28.2%), and NSF (+12.6%), as higher discretionary spending caps have been used to provide additional funding to these agencies. "], "subsections": []}]}}
{"id": "R45968", "title": "Limits on TRICARE for Reservists: Frequently Asked Questions", "released_date": "2019-10-17T00:00:00", "summary": ["Between 2001 and 2007, more than 575,000 members of the reserve components were ordered to active duty in support of ongoing military operations, including major combat operations in Afghanistan (Operation Enduring Freedom), Iraq (Operation Iraqi Freedom). While on active duty, reservists and their family members have access to a wide range of health care services administered by the Department of Defense's (DOD) Military Health System (MHS). However, prior to 2005, chapter 55 of Title 10, U.S. Code, authorized little to no DOD health care services to nonactivated reservists or their family members.", "In 2005, Congress began examining initial impacts of frequent mobilizations on reservists, their families, and their employers. Soon after, Congress enacted a series of new or expanded health care, transitional, and other personnel benefits to mitigate certain effects associated with reserve mobilizations. Two health care programs tailored for reservists were established:", "TRICARE Reserve Select (TRS)\u00e2\u0080\u0094a premium-based health plan option available to qualified members of the Selected Reserve and their family members; and TRICARE Retired Reserve (TRR)\u00e2\u0080\u0094a premium-based health plan option available to so-called gray area reservists\u00e2\u0080\u0094those who have retired but are too young to draw retired pay\u00e2\u0080\u0094and their family members.", "Section 701 of the Ronald W. Reagan National Defense Authorization (NDAA) Act of Fiscal Year 2005 ( P.L. 108-375 ) established TRS. Initially, TRS eligibility was limited to certain reservists who had served on continuous active duty in support of a contingency operation and signed a military service obligation agreement. Section 706 of the John Warner NDAA for FY2007 ( P.L. 109-364 ) revised TRS by removing certain restrictions and expanding eligibility. The law also added a prohibition on members of the Selected Reserve and their family members from being eligible for TRS if they are also eligible for the Federal Employee Health Benefits (FEHB) program. Section 705 of the NDAA for FY2010 ( P.L. 111-84 ) established TRR, which also prohibits retired reservists and their families from participating, if they are also eligible for the FEHB program. Both reserve plans mirror the benefits and cost sharing requirements established for TRICARE Select, a health plan option available to family members of active duty servicemembers and certain military retirees.", "Congress has not explicitly addressed why the prohibition on TRS or TRR for FEHB-eligible reservists and their family members was established. Nevertheless, observers have noted several considerations in removing the statutory prohibition, including:", "potential impacts to the FEHB health insurance risk-pools; potential cost implications to federal mandatory and discretionary spending; and continuity of care for reservists transitioning between active and reserve status.", "While Congress has considered various proposals to remove the statutory prohibitions on TRS or TRR eligibility, none have been enacted."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Background", "paragraphs": ["The Department of Defense (DOD) operates a Military Health System (MHS) that delivers certain health entitlements under Chapter 55 of Title 10, U.S. Code. The Defense Health Agency (DHA)\u00e2\u0080\u0094a component of the MHS\u00e2\u0080\u0094administers the TRICARE program, which offers health care services to approximately 9.5 million beneficiaries, composed of military personnel, retirees, and their families. Beneficiaries may receive health care services in DOD-operated hospitals and clinics\u00e2\u0080\u0094known as military treatment facilities (MTFs)\u00e2\u0080\u0094or through participating civilian health care providers. DOD operates 723 MTFs in the United States and in overseas locations. Each MTF provides a range of clinical services depending on its size, mission, and level of capabilities. Only active duty servicemembers are entitled to care in any MTF. Dependents and retirees may receive care on a space-available basis that takes into account patient capacity, beneficiary category (e.g., servicemember, family member, retiree), and enrollment status.", "When care is not available at an MTF, beneficiaries may receive care from a civilian health care provider who participates in TRICARE. The three main health plan options offered to eligible beneficiaries include TRICARE Prime, TRICARE Select, and TRICARE for Life. ", "TRICARE also offers premium-based health plan options for certain beneficiaries, such as qualified members of the Selected Reserve, retired reservists, young adults, and transitioning servicemembers. Other TRICARE benefits include a pharmacy program, optional dental plans, and a vision plan for certain beneficiaries.", "This report answers frequently asked questions about TRICARE health plan options tailored for certain reservists, retired reservists, and their families (i.e., TRICARE Reserve Select and TRICARE Retired Reserve) and certain statutory prohibitions that limit their participation in the plans."], "subsections": []}, {"section_title": "Questions and Answers", "paragraphs": [], "subsections": [{"section_title": "1. What is TRICARE Reserve Select and TRICARE Retired Reserve?", "paragraphs": ["TRICARE Reserve Select (TRS) is a premium-based health plan available worldwide for some members of the Selected Reserve and their families. TRS was established by Section 701 of the Ronald W. Reagan National Defense Authorization Act (NDAA) of Fiscal Year 2005 ( P.L. 108-375 ). TRICARE Retired Reserve (TRR) is a premium-based health plan available worldwide for qualified retired members of the reserve components. TRR was established by Section 705 of the NDAA for FY2010 ( P.L. 111-84 ) as a TRICARE coverage option for so-called gray area reservists, defined as those who have retired but are too young to draw retired pay. ", "The plans are similar to TRICARE Select (i.e., preferred provider option), which feature monthly premiums, annual deductibles, and fixed co-pays when receiving care from a network provider or paying a percentage of the allowable charge when receiving care from a TRICARE-authorized, nonnetwork provider. Eligible beneficiaries residing outside of the United States are also eligible for TRS and TRR; however, the availability of network providers may be limited based on geographic location.", "By law, the Department of Defense (DOD) is required to subsidize the cost of TRS. Servicemembers pay 28% of the cost of the program in the form of premiums. For TRR, enrollees pay the full cost of the calculated premium as determined by the Secretary of Defense. DOD does not subsidize the program costs for TRR. DOD annually updates the premiums for each program on an \"appropriate actuarial basis.\" Monthly TRS and TRR premiums for calendar years 2019 and 2020 are listed in Table 1 .", "DOD reports that at the end of FY2018, 383,683 beneficiaries were covered by TRS and 9,019 beneficiaries were covered by TRR."], "subsections": []}, {"section_title": "2. Who qualifies for TRS, and what are the statutory prohibitions on TRICARE Reserve Select eligibility for certain members of the reserve components?", "paragraphs": ["Members of the Selected Reserve (i.e., drilling reservists) and their families qualify for TRS if the following criteria are met:", "the reservist is not on active duty orders; the reservist or their family members are not covered under the Transitional Assistance Management Program; and the reservist or their family members are not eligible for the Federal Employee Health Benefits (FEHB) program.", "Prior to 2006, TRS availability was limited to members of the Selected Reserve (including family members) after serving on continuous active duty in support of a contingency operation for 90 or more days and signing an agreement to continue serving in the Selected Reserve for one or more years. TRS coverage was also limited to the lesser of:", "one year (in cases where an activated reservist does not continuously serve on active duty for at least 90 days due to an \"injury, illness, or disease incurred or aggravated while deployed\"); one year for each consecutive period of 90 days of continuous active duty service; or the number of years agreed upon in the military service obligation agreement.", "Section 706 of the John Warner NDAA for FY2007 ( P.L. 109-364 ) amended 10 U.S.C. \u00c2\u00a71076d to expand TRS eligibility, including removal of the military service obligation agreement, active duty service length, and period of coverage requirements. In revising TRS, the law also added a prohibition on members of the Selected Reserve and their family members from being eligible for TRS if they are also eligible for, or enrolled in, \"a health benefits plan under Chapter 89 of Title 5,\" U.S. Code. This health benefit plan is known as the FEHB program. "], "subsections": []}, {"section_title": "3. Who is eligible for TRR, and what are the statutory prohibitions on TRICARE Retired Reserve eligibility for qualified retired reservists?", "paragraphs": ["Retired members of the reserve components and their family members qualify for TRR if the following criteria are met:", "the retiree is qualified for non-regular retirement under chapter 1223 of Title 10, U.S. Code; the retiree is under age 60; and the retiree or their family members are not eligible for the FEHB program.", "P.L. 111-84 , which established TRR, incorporated a similar prohibition on qualified retired members of the reserve components and their family members from being eligible for TRR if they are eligible for the FEHB program. For example, a reservist or qualified retired reservist who is also a civil service or U.S. Postal Service (USPS) employee, annuitant, or family member that is eligible for the FEHB program is barred from enrolling in TRS or TRR. This restriction does not apply to other TRICARE programs for which reservists or retired reservists may also be eligible under other criteria (e.g., TRICARE Prime, TRICARE Select, TRICARE for Life, TRICARE Dental Program, or the Transition Assistance Management Program)."], "subsections": []}, {"section_title": "4. How many beneficiaries do the TRS eligibility restrictions affect?", "paragraphs": ["In 2019, the Congressional Budget Office (CBO) estimated approximately 110,000 members of the Selected Reserve are prohibited from enrolling in TRS because they are eligible for FEHB. This represents approximately 13.7% of the total Selected Reserve force. CBO also estimated that about \"one third would enroll in TRS if given the opportunity.\" Neither DOD nor CBO has published any similar estimates for TRR."], "subsections": []}, {"section_title": "5. Why did Congress enact these statutory prohibitions?", "paragraphs": ["The congressional record, the committee and conference reports accompanying the enacting and amending legislation for TRS and TRR, do not articulate why the prohibitions are in place. Nevertheless, observers have speculated that the prohibition may be related to potential increases in mandatory or discretionary costs associated with certain risk-pool adjustments to FEHB and expansion of the TRICARE program. ", "As the House of Representatives considered the FY2007 NDAA, as reported by the House Armed Services Committee, the Office of Management and Budget issued a Statement of Administration Policy (SAP) that expressed cost concerns with the proposal to expand to TRS. The SAP noted:", "\u00e2\u0080\u00a6 the Administration strongly opposes Section 709, which expands TRICARE eligibility to all Selected Reserve members and their families and dramatically worsens the fiscal situation by increasing the government subsidy for non-mobilized reservists and their families at an estimated cost of $400 million in FY 2007 and $3.6 billion from FY 2007 through FY 2011. By FY 2011, it is estimated that the annual cost for this expanded benefit will reach $1.2 billion. It is critical for Congress to eliminate these unfunded expansions and work with the Administration to place the system on a sound fiscal foundation."], "subsections": []}, {"section_title": "6. What health insurance options are available to those prohibited from enrolling in TRS or TRR?", "paragraphs": ["Reservists, qualified retired reservists, or their family members subject to the statutory prohibitions may obtain health insurance coverage, if eligible, through any of the following health insurance options:", "FEHB; Medicaid; private individual health insurance; or employer-sponsored insurance (e.g., personally or as offered through a spouse's employer).", "Reservists serving in a federal active duty status for greater than 30 days are eligible to participate in TRICARE programs for active duty servicemembers, including TRICARE Prime. "], "subsections": []}, {"section_title": "7. What are the premium rates for the FEHB program?", "paragraphs": ["The FEHB program establishes several premium rates based on geographic location, coverage option, and federal employee category. The monthly average premium rates (non-USPS employee and annuitant) for calendar year 2019 are listed in Table 2 . "], "subsections": []}, {"section_title": "8. What are the potential implications of extending TRS or TRR eligibility to all members of the Selected Reserve and qualified retired reservists?", "paragraphs": [], "subsections": [{"section_title": "Parity in TRS or TRR Eligibility for Reservists", "paragraphs": ["Reservists who are eligible for FEHB, for any reason, are disqualified from participation in TRS or TRR. Reservists not employed by the federal government (and not eligible for FEHB) may participate in TRS or TRR. ", "Certain military service organizations (MSOs) perceive and advocate that the removal of the statutory prohibition for TRS or TRR would create equality among all members of the Selected Reserves or qualified retired reservists. These advocacy groups also note that in doing so, all members of the Selected Reserves would be able to access TRS as a \"more affordable option\" than FEHB, which has higher premiums and cost shares. ", "In a 2018 report to Congress on reserve component health care, DOD states that reservists have \"expressed strong feelings of discontent with the law that disqualifies Selected Reserve members from purchasing TRICARE Reserve Select (TRS) for themselves or for family members if they are eligible for, or enrolled in, the FEHB program.\" DOD also noted in its report that reservists \"would like Congress to repeal the FEHB exclusion and DOD fully supports its repeal;\" however, DOD made no recommendation concerning this issue at the time it produced the report nor has it any time since."], "subsections": []}, {"section_title": "Cost Implications", "paragraphs": ["While expanding TRS or TRR eligibility would have certain cost implications for DOD, there are also cost considerations for other federal agencies that fund FEHB benefits for their respective federal employees. In June 2019, CBO published a cost estimate of a proposal to remove the TRS prohibition starting in 2030\u00e2\u0080\u0094Section 703 of the FY2020 NDAA ( H.R. 2500 ; as reported by the House Armed Services Committee). Overall, there would be an estimated savings to the federal government. However, given certain statutory or House pay-as-you-go (PAYGO) rules, increases in mandatory spending must be offset by \"direct spending cuts, revenue increases, or a combination of the two,\" rather than by savings in discretionary spending. CBO estimates that expanding TRS eligibility would produce an increase in mandatory costs, noting that:", "Because members of the Selected Reserve are younger and healthier than the average federal employee, reservists and their family members who discontinue FEHB coverage would cause an increase in premiums for all remaining FEHB beneficiaries, including federal retirees and active postal employees, whose premiums are paid from mandatory accounts. When implemented, CBO estimates this section would increase direct spending by about $40 million each year beginning in 2030.", "Concurrently, CBO also estimates there would also be savings in discretionary spending, greater than the increase in mandatory costs: ", "On net, CBO estimates section 703 would eventually reduce discretionary costs to the government by about $250 million per year beginning in 2030 because the cost of TRS is less than the government's share of the premium for FEHB. Section 703 would also affect spending for other FEHB beneficiaries."], "subsections": []}, {"section_title": "Beneficiary Satisfaction", "paragraphs": ["DOD asserts that reservists and their spouses \"show satisfaction with the TRICARE program in general, and TRS in particular.\" Beneficiaries enrolled in TRS are reportedly satisfied with their TRICARE plan and the quality of health care provided. For example, DOD observed in the 2014 Survey of Reserve Component Spouse s that 48% found \"no difference\" between TRS and civilian health insurance plans. DOD also observed that 32% of survey participants believed that TRS provides \"better\" or \"much better\" health care than civilian health plans. Similar results can be found in certain MSO-conducted surveys of beneficiaries. ", "While many TRS enrollees express a general satisfaction with their TRICARE plan, some beneficiaries have described certain challenges, such as:", "difficulty in finding health care providers and facilities that accept TRICARE; maintaining continuity of care for a family member when a reservist is activated and ordered to active duty; and having to reenroll in TRS after a reservist transitions from active duty to the Selected Reserve. "], "subsections": []}]}, {"section_title": "9. Has Congress previously considered extending TRS or TRR eligibility?", "paragraphs": ["Since the creation of TRS and TRR, Congress has considered a number of proposals to eliminate the statutory prohibitions described above (see Table 3 ). To date, none of the proposals have been enacted."], "subsections": []}]}]}}
{"id": "R46334", "title": "Selected Health Provisions in Title III of the CARES Act (P.L. 116-136)", "released_date": "2020-04-29T00:00:00", "summary": ["The global pandemic of Coronavirus Disease 2019 (COVID-19) is affecting communities around the world and throughout the United States, with the number of confirmed cases and fatalities growing daily. Containment and mitigation efforts by U.S. federal, state, and local governments have been undertaken to \"flatten the curve\"\u00e2\u0080\u0094that is, to slow the widespread transmission that could overwhelm the nation's health care system.", "The Coronavirus Aid, Relief, and Economic Security Act (CARES Act, P.L. 116-136 ) was enacted on March 27, 2020. It is the third comprehensive law enacted in 2020 to address the pandemic. In addition to a number of broad health care provisions, the CARES Act provides additional supplemental appropriations to support federal response efforts and authorizes a number of economic stimulus measures, among other things.", "This report describes the majority of health-related sections in Division A, Title III, of the CARES Act, \"Supporting America's Health Care System in the Fight Against the Coronavirus.\" Relevant background is provided for context. Specifically, this report describes provisions regarding, among other things, the following:", "The availability of medical countermeasures (MCMs)\u00e2\u0080\u0094drugs, tests, treatments, medical devices, and supplies such as personal protective equipment (PPE)\u00e2\u0080\u0094including research and development; product regulation by the Food and Drug Administration (FDA); the Strategic National Stockpile (SNS); and other supply chain matters. The health workforce, including telehealth programs, the rural health care system, and the Commissioned Corps of the U.S. Public Health Service (USPHS). Additional workforce provisions described in this report include reauthorization and extension of appropriations for existing HHS health workforce programs, and liability limitation. Provisions addressed at the Medicare and Medicaid programs and on private health insurance plans that temporarily require, or increase payment for, telehealth services and specified services related to COVID-19 testing, diagnosis, or treatment. A newly established FDA authority for over-the-counter (OTC) drug review.", "This report does not address education or labor provisions in Subtitle B or C in Part IV of Title III, or provisions in Subtitle E of Part IV of Title III, \"Health and Human Services Extenders,\" which are described in other CRS reports. The report also does not include Division B of the act, which provides emergency supplemental appropriations for the COVID-19 response.", "The Appendix catalogues deadlines, effective dates, and reporting requirements for provisions described in the report.", "This report is intended to reflect the CARES Act at enactment (i.e., March 27, 2020). It does not track the law's implementation or funding and will not be updated."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["The global pandemic of Coronavirus Disease 2019 (COVID-19) is affecting communities around the world and throughout the United States, with the number of confirmed cases and fatalities growing daily. Containment and mitigation efforts by U.S. federal, state, and local governments have been undertaken to \"flatten the curve\"\u00e2\u0080\u0094that is, to slow the widespread transmission that could overwhelm the nation's health care system.", "The Coronavirus Aid, Relief, and Economic Security Act (CARES Act, P.L. 116-136 ) was enacted on March 27, 2020. It is the third comprehensive law to address the pandemic. In addition to its health provisions, the CARES Act provides additional supplemental appropriations to support federal response efforts and authorizes a number of economic stimulus measures, among other things. ", "The CARES Act follows two other laws that made supplemental appropriations and amended health care financing and public health authorities to respond to the pandemic. The first, the Coronavirus Preparedness and Response Supplemental Appropriations Act, 2020 ( P.L. 116-123 ), enacted on March 6, 2020, provides roughly $7.8 billion in discretionary supplemental appropriations to the Department of Health and Human Services (HHS), the Department of State, and the Small Business Administration. This act also waives certain telehealth restrictions to make telehealth services more available during the emergency. The second, the Families First Coronavirus Response Act (FFCRA, P.L. 116-127 ), enacted on March 18, 2020, provides authority, funding, and/or requirements to cover COVID-19 testing and related services under federal programs, many private health insurance plans, and for the uninsured (as defined in the act). Among other provisions, it temporarily increases the federal share of Medicaid assistance to states, provides additional Medicaid assistance to territories, and waives liability and establishes injury compensation for certain respiratory protection devices."], "subsections": [{"section_title": "A Snapshot of CARES Act Health Provisions", "paragraphs": ["Medical supply shortages. The COVID-19 pandemic has affected the medical product supply chain both globally and domestically, resulting in widespread shortages of medical countermeasures (MCMs) and other critical medical supplies. MCMs are medical products that may be used to treat, prevent, or diagnose conditions associated with emerging infectious diseases or chemical, biological, radiological, or nuclear threats. Examples of MCMs include biologics (e.g., vaccines), drugs (e.g., antivirals), and devices (e.g., diagnostic tests and personal protective equipment, or PPE).", "The CARES Act includes several provisions to address such shortages, including expanding reporting requirements for firms that experience interruptions in drug and device manufacturing; explicitly requiring that the Strategic National Stockpile (SNS) contain PPE, ancillary medical supplies, and other applicable supplies; and extending liability protections for certain respiratory protective devices used during emergencies. The CARES Act also requires a study of U.S. dependence on critical drugs and medical devices imported from or manufactured in other countries.", "Vaccine access and cost. A vaccine(s) for the COVID-19 virus, if and when it becomes available, will be provided or required to be covered without cost-sharing to patients and beneficiaries of federal health programs and most private health insurance enrollees, pursuant to numerous provisions in Division A, Title III, of the CARES Act. The CARES Act does not explicitly address vaccine access for the uninsured. However, with available appropriations and preexisting authorities, the HHS Secretary could assist safety net providers (e.g., health centers), health departments, and other entities in furnishing vaccines to this population. ", "The medical workforce. The CARES Act makes a number of changes to health workforce programs. Some changes aim to extend the services available during the COVID-19 period and beyond, particularly for rural or otherwise underserved populations. For example, the CARES Act confers medical malpractice liability on health professionals who choose to volunteer during the emergency period and amends the program rules for the National Health Service Corps (NHSC) program to permit individuals to volunteer during the emergency period. The CARES Act also reauthorizes a number of health workforce programs that had been considered for reauthorization during the 116 th Congress, but prior to the CARES Act no reauthorization of these programs was enacted. ", "Marketing of over-the-counter drugs. The CARES Act establishes a new process for the marketing of certain over-the-counter (OTC) drugs, including hand sanitizer and sunscreen. Specifically, Title III replaces the current OTC drug monograph rulemaking process with an administrative order process\u00e2\u0080\u0094a less burdensome alternative. It also provides an expedited process for removing from the market certain OTC drugs that pose a public health hazard and for requiring certain safety labeling changes. The CARES Act provides an incentive\u00e2\u0080\u009418 months of marketing exclusivity\u00e2\u0080\u0094to firms that make certain changes to previously marketed OTC drugs and creates a new user fee program to fund FDA's OTC monograph drug activities. "], "subsections": []}, {"section_title": "Report Contents", "paragraphs": ["This report describes the majority of health-related sections in Division A, Title III of the CARES Act, \"Supporting America's Health Care System in the Fight Against the Coronavirus.\" Relevant background is provided for context. Specifically, this report describes provisions regarding, among other things the following: ", "The medical countermeasures (MCMs)\u00e2\u0080\u0094drugs, tests, treatments, medical devices, and supplies such as PPE\u00e2\u0080\u0094including research and development; product regulation by the Food and Drug Administration (FDA); the strategic national stockpile (SNS); and other supply chain matters. The health workforce, including telehealth programs, the rural health care system, and the Commissioned Corps of the U.S. Public Health Service (USPHS). Additional workforce provisions described in this report include reauthorization and extension of appropriations for existing Health and Human Services (HHS) health workforce programs, and liability limitation. Provisions addressed at the Medicare and Medicaid programs and on private health insurance plans to temporarily require, or increase payment for, telehealth services and specified services related to COVID-19 testing, diagnosis, or treatment. A newly established FDA authority for OTC drug review.", "This report does not address education or labor provisions in Subtitle B or C in Part IV of Title III, or provisions in Subtitle E of Part IV of Title III, \"Health and Human Services Extenders,\" which are described in another CRS report. The report also does not include Division B of the act, which provides emergency supplemental appropriations for the COVID-19 response. Division B includes additional funding for numerous HHS public health and social services activities, and a $100 billion fund to reimburse eligible health care providers for health care-related expenses or lost revenues attributable to COVID-19. This report concludes with an Appendix that catalogues deadlines, effective dates, and reporting requirements for provisions described in the report. ", "The report does not discuss cost estimates for specific provisions; however, the Congressional Budget Office (CBO) and the Joint Committee on Taxation (JCT) provided a preliminary estimate of the budget effects of the CARES Act. Overall, the act is estimated to increase federal deficits by $1.8 trillion over the 2020-2030 period. This estimate breaks down these budgetary effects into three categories: a $988 billion increase in mandatory outlays; a $446 billion decrease in revenues; and a $326 billion increase in discretionary outlays from supplemental appropriations. The estimates that CBO generated for health programs in Title III include programs in Subtitle E of Part IV of Title III, \"Health and Human Services Extenders,\" which are not discussed in this report. Among the provisions discussed in this report, JCT estimates that Section 3702, which expands the products that are eligible for tax-advantaged distributions from health savings accounts (HSAs), health flexible spending arrangements (FSAs), and other similar tax-advantaged savings arrangements, will reduce revenues by $9 billion over a ten-year period from 2020-2030. CBO also estimated the costs of a number of Medicare payment changes included in CARES Sections 3701-3715. These provisions generally increase the amount that Medicare will reimburse for services; as such, CBO estimates that they will increase Medicare spending from 2020-2030. CBO also noted that some provisions\u00e2\u0080\u0094e.g., the requirement for Medicare to cover the costs of vaccines for COVID-19\u00e2\u0080\u0094cannot be estimated because no such vaccine has been developed at this time. In general, these CBO estimates are based on assumptions about the severity and duration of the pandemic, and they may vary substantially from final estimates to be provided later this year. ", "This report is intended to reflect the CARES Act at enactment (i.e., March 27, 2020). It does not track the law's implementation or funding and will not be updated. This report is one of a number of CRS reports related to COVID-19; additional CRS products on COVID-19 are available at https://www.crs.gov/resources/coronavirus-disease-2019 . "], "subsections": []}, {"section_title": "Definitions, Abbreviations, and Acronyms", "paragraphs": [], "subsections": [{"section_title": "\"Section 319\" Public Health Emergency", "paragraphs": ["Numerous provisions in the CARES Act refer to the Public Health Emergency declaration made pursuant to Section 319 of the Public Health Service Act (PHSA). The \"Section 319\" authority allows the HHS Secretary to carry out a specified set of actions to address public health emergencies, such as expediting or waiving certain administrative requirements that would otherwise apply to federal activities or federally administered grants. Some provisions refer to \"the emergency period declared under section 319\" or similar construction, meaning the time during which a Section 319 declaration is in effect. The declaration for COVID-19 was made on January 31, 2020, retroactive to January 27, 2020. It is in effect for 90 days and is expected to be renewed and remain in effect for the duration of the response.", "Several provisions in Title III, Subtitle D, regarding health care financing and amending the Social Security Act (SSA), refer to \"the emergency period described in section 1135(g)(1)(B)\" or comparable construction. Section 1135 allows the HHS Secretary, under certain conditions, to waive specified requirements and regulations to ensure that health care items and services are available to enrollees in the Medicare, Medicaid, and State Children's Health Insurance Program (CHIP) programs during emergencies. Paragraph (1)(B) of SSA Section 1135(g) refers specifically to \"the public health emergency declared with respect to the COVID-19 outbreak by the Secretary on January 31, 2020, pursuant to section 319 of the [PHSA],\" and any renewal of such declaration. Hence, these references to SSA Section 1135(g)(1)(B) simply mean the period during which the Section 319 public health emergency declaration for COVID-19\u00e2\u0080\u0094whether initial or renewed\u00e2\u0080\u0094is in effect."], "subsections": []}, {"section_title": "Additional Definitions and Acronyms", "paragraphs": ["Throughout this report, unless otherwise stated, the \"Secretary\" means the HHS Secretary. Mentions of \"this section\" refer to matters addressed under that specific section of the CARES Act. This report uses a number of acronyms, listed in the table below. "], "subsections": []}]}]}, {"section_title": "CARES Act Health Provisions in Title III", "paragraphs": [], "subsections": [{"section_title": "Subtitle A\u00e2\u0080\u0094Health Provisions", "paragraphs": [], "subsections": [{"section_title": "Part I\u00e2\u0080\u0094Addressing Supply Shortages\u00e2\u0080\u0094Subpart A\u00e2\u0080\u0094Medical Product Supplies", "paragraphs": ["The COVID-19 pandemic has affected the medical product supply chain both globally and domestically. Domestically, the pandemic has highlighted existing limitations in the U.S. medical product supply chain, including lack of transparency regarding where specific medical products and their components are manufactured and heavy reliance on foreign countries for drugs and medical devices. Perhaps most salient has been the impact of COVID-19 on the availability of PPE, such as respirators for health care personnel, and other respiratory devices, such as ventilators for patients. Although the federal government and states generally have stockpiles of PPE and ventilators to distribute during public health emergencies, stockpiled quantities have been insufficient to meet current needs. FDA, with other agencies, has taken various steps to prevent and mitigate shortages of critical PPE and respiratory devices, for example, by waiving certain regulatory requirements and by enabling access to respirators and other medical devices that have not received agency clearance prior to marketing."], "subsections": [{"section_title": "Section 3101. National Academies Report on America's Medical Product Supply Chain Security", "paragraphs": ["Background ", "The extent to which the United States relies on other countries for medical products is not completely known, but available data suggest a heavy reliance. According to FDA, as of August 2019, 72% of facilities that manufacture active pharmaceutical ingredients (APIs) and 53% of facilities manufacturing finished drugs for the U.S. market are located outside of the United States. FDA is unable to determine the volume of APIs that a specific country manufactures for the domestic or global market. The 2019 annual report from the U.S.-China Economic and Security Review Commission states that the United States sources 80% of its APIs from foreign countries and has identified China as the world's largest producer of APIs. Recent reports have identified limitations in FDA's ability to oversee foreign drug manufacturing facilities and have indicated that FDA inspections of these facilities have decreased since 2016. The COVID-19 pandemic has further restricted FDA's ability to oversee the increasingly globalized medical product supply chain, causing FDA to postpone most foreign facility inspections until at least May 2020.", "Provision", "Section 3101 requires the Secretary, within 60 days of enactment, to enter into an agreement with the National Academies of Science, Engineering, and Medicine (NASEM) to examine and report, \"in a manner that does not compromise national security,\" on the security of the U.S. medical product supply chain. The report must assess and evaluate U.S. dependence on critical drugs and devices from other countries; provide recommendations (e.g., a plan to improve resiliency of the supply chain); and address any supply vulnerabilities or potential disruptions that would significantly affect or pose a threat to public health or national security, as appropriate. In conducting the study and developing the report, NASEM must consider input from federal departments and agencies and consult with stakeholders through public meetings and other forms of engagement. "], "subsections": []}, {"section_title": "Section 3102. Requiring the Strategic National Stockpile to Include Certain Types of Medical Supplies", "paragraphs": ["Background ", "The federal government maintains a supply of medicine and medical supplies to respond to a public health emergency severe enough to deplete local supplies (e.g., hurricane, infectious disease outbreak, or terrorist attack). This supply, known as the Strategic National Stockpile (SNS), includes antibiotics, intravenous fluids, and other medical supplies such as PPE and ventilators. In addition, the SNS contains certain medicines, such as anthrax and smallpox vaccines and treatments that may not be otherwise available for public use. In 2019, HHS stated the SNS contained approximately $8 billion worth of supplies. In FY2018, management of the SNS transferred from the Centers for Disease Control and Prevention (CDC) to the Assistant Secretary for Preparedness and Response (ASPR). ", "Provision ", "This section amends PHSA Section 319F-2(a)(1) to require the Secretary to maintain a stockpile of \"drugs, vaccines and other biological products, medical devices, and other supplies.\" This act further defines \"other supplies\" as \"including PPE, ancillary medical supplies, and other applicable supplies required for the administration of drugs, vaccines and other biological products, medical devices, and diagnostic tests in the stockpile.\" Some of these types of supplies, such as PPE, were included in the stockpile even before enactment of this clarifying language. "], "subsections": []}, {"section_title": "Section 3103. Treatment of Respiratory Protective Devices as Covered Countermeasures", "paragraphs": ["Background ", "In 2005 Congress passed the Public Readiness and Emergency Preparedness Act (PREP Act, P.L. 109-417 ), which authorizes the federal government to waive liability (except for willful misconduct) for manufacturers, distributors, and providers of MCMs, such as drugs and medical supplies, needed to respond to a public health emergency. The act also authorizes the federal government to establish a program to compensate eligible individuals who suffer injuries from administration or use of products covered by the PREP Act's immunity provisions. Section 6005 of FFCRA ( P.L. 116-127 ) explicitly added personal respiratory protective devices used for the COVID-19 response to the list of countermeasures covered by the PREP Act. ", "Provision", "Section 3103 amends PHSA Section 317F-3 to change the definition of such covered devices to apply more broadly, to \"a respiratory protective device that is approved by the National Institute for Occupational Safety and Health (NIOSH) under part 84 of title 42, Code of Federal Regulations (or any successor regulations), and that the Secretary determines to be a priority for use during a public health emergency declared under [PHSA] section 319.\""], "subsections": []}]}, {"section_title": "Subpart B\u00e2\u0080\u0094Mitigating Emergency Drug Shortages", "paragraphs": ["Background ", "Drug shortages have remained a serious and persistent public health concern, despite the prevention and mitigation efforts of Congress, FDA, and the private sector. Causes of drug shortages include manufacturing and quality issues, lack of transparency in the supply chain, and business decisions made by individual firms (e.g., low profit margins leading to market exit). The Federal Food Drug and Cosmetic Act (FFDCA) and FDA regulations require manufacturers of certain drugs to submit to FDA specified information related to product shortages. In addition, the FFDCA and FDA regulations allow FDA to take action to mitigate or prevent shortages and require FDA to make public certain information about drug shortages. More specifically, FFDCA Section 506C(a) requires that the manufacturer of a drug that is life-supporting, life-sustaining, or intended for use in the prevention or treatment of a debilitating disease or condition notify the Secretary (FDA by delegation of authority) of any permanent discontinuance or interruption in the manufacture of the drug that is likely to disrupt its U.S. supply. The notification must include the reasons for the interruption or discontinuance. FFDCA Section 506C(g) allows FDA, based on notifications received pursuant to Section 506C(a), to expedite facility inspections and review of supplements to new drug applications (NDAs), abbreviated NDAs (ANDAs), and supplements to ANDAs that could help mitigate or prevent a drug shortage. FFDCA Section 506E requires FDA to maintain a public, up-to-date list of drugs that are in shortage. The list must include the name of the drug in shortage, the name of the manufacturer, and, as determined by FDA, the estimated duration of and reason for the shortage.", "Persons that engage in the \"manufacture, preparation, propagation, compounding or processing\" of a drug must register their facility with FDA. FFDCA Section 510(j) requires that at the time of registration, such persons must file a list of all drugs being \"manufactured, prepared, propagated, compounded or processed\" for commercial distribution. ", "Facilities registered with FDA are subject to inspection by the agency. FFDCA Section 704(b) requires that after a facility has been inspected, the inspector must provide a report, in writing, to the person in charge of that facility detailing the observations that led the inspector to determine that a product made in that facility may be adulterated. A copy of this report also must be sent to FDA. "], "subsections": [{"section_title": "Section 3111. Prioritize Reviews of Drug Applications; Incentives", "paragraphs": ["Section 3111 amends FFDCA Section 506C(g) to require \u00e2\u0080\u0094rather than allow as was the case prior to the CARES Act\u00e2\u0080\u0094FDA to prioritize and expedite\u00e2\u0080\u0094rather than expedite as prior to CARES\u00e2\u0080\u0094facility inspections and review of ANDAs and supplements to NDAs and ANDAs that could help mitigate or prevent a drug shortage. "], "subsections": []}, {"section_title": "Section 3112. Additional Manufacturer Reporting Requirements in Response to Drug Shortages", "paragraphs": ["Section 3112(a) amends FFDCA Section 506C(a) to extend notification requirements to the manufacturer of any drug \"that is critical to the public health during a public health emergency declared by the Secretary\" under PHSA Section 319. It also requires a manufacturer to notify FDA of any permanent discontinuance or interruption in the manufacture of an API\u00e2\u0080\u0094not just the finished drug\u00e2\u0080\u0094that is likely to lead to a meaningful disruption in the supply of the API of such drug. The notification must include, in addition to the reasons for the drug's discontinuance or interruption, as applicable, information about the source of the API and alternative sources, as well as whether any associated device used in the preparation or administration of the drug has contributed to the shortage, among other information.", "Section 3112(b) amends FFDCA Section 506C to add a new subsection (j). New FFDCA Section 506C(j) requires the manufacturer of a drug, API, or associated medical device subject to the notification requirements under FFDCA Section 506C(a), as amended, to develop, maintain, and implement a redundancy risk management plan, as appropriate. Such plan should identify and evaluate risks to the supply of the drug, as applicable, for each facility in which the drug or API is manufactured. The plan is subject to inspection and copying by the Secretary.", "Section 3112 (c) amends FFDCA Section 506E to require the Secretary, not later than 180 days after enactment and every 90 days thereafter, to transmit to the Centers for Medicare & Medicaid Services (CMS) a report regarding the drugs on the current drug shortage list. ", "Section 3112 (d) amends FFDCA Section 704(b) to require that following the inspection of a facility manufacturing a drug at risk of shortage or with limited competition, a copy of the inspection report be sent \"promptly\" to all appropriate FDA offices with expertise in drug shortages. Specifically, this requirement applies to the inspection of a facility manufacturing a drug\u00e2\u0080\u0094approved under an NDA or ANDA\u00e2\u0080\u0094for which a notification has been submitted under FFDCA Section 506C(a) (regarding an interruption in manufacturing or discontinuance), a drug that has been on the shortage list under FFDCA Section 506E in the past five years, or a drug with no blocking patents or exclusivities for which there are not more than three approved drugs listed in the Orange Book. ", "Section 3112(e) amends FFDCA Section 510(j) to require each drug manufacturer that registers with FDA to report annually to the Secretary for each listed drug \"the amount that was manufactured, prepared, propagated, compounded, or processed by such person for commercial distribution.\" The Secretary may require this information to be submitted in electronic format, may require that this information be submitted at the time a public health emergency is declared under PHSA Section 319, and may exempt certain biologics from these reporting requirements if the Secretary determines it is not necessary to protect the public health."], "subsections": []}]}, {"section_title": "Subpart C\u00e2\u0080\u0094Preventing Medical Device Shortages", "paragraphs": [], "subsections": [{"section_title": "Section 3121. Discontinuance or Interruption in the Production of Medical\u00c2 Devices", "paragraphs": ["Background ", "FDA regulates the safety and effectiveness of medical devices in the United States. All medical device manufacturers are required to register their establishments with FDA, and such establishments are subject to inspections by FDA personnel or representatives. In addition, most medical devices are required to be reviewed by the agency prior to marketing; such premarket review mechanisms include premarket notification (510(k)), premarket approval, de novo classification request, and humanitarian device exemption, among others. ", "Prior to the COVID-19 outbreak, concerns arose about potential medical device shortages due to the closure of ethylene oxide sterilization facilities that were not in compliance with U.S. Environmental Protection Agency (EPA) standards. In contrast to the agency's authority to compel manufacturers of certain drugs to report discontinuances or interruptions in production, FDA did not have such authority for medical devices prior to the CARES Act. Rather, FDA relied on manufacturers to voluntarily report such information to the agency. In its FY2021 Congressional Justification, FDA requested additional authority to \"require firms to notify FDA of an anticipated significant interruption in the supply of an essential device; require all manufacturers of devices determined to be essential to periodically provide FDA with information about the manufacturing capacity of the essential device(s) they manufacture; and authorize the temporary importation of devices whose risks presented when patients and healthcare providers lack access to critically important medical devices outweigh compliance with U.S. regulatory standards.\"", "Legislation introduced in the 116 th Congress would provide FDA with additional authority to mitigate potential device shortages, generally through adding required reporting requirements on device manufacturers and allowing for expedited premarket review and inspections in certain cases of shortage. However, some bills propose providing FDA with more authority than others, such as those allowing for importation of unapproved devices in the case of a device shortage.", "Provision", "Section 3121 creates a new FFDCA Section 506J, which requires medical device manufacturers to report to FDA during or prior to a public health emergency any permanent discontinuance of production, or interruption in production, likely to lead to a meaningful disruption in supply of a medical device, including the reasons for the discontinuance or interruption. Medical device manufacturers are required to report this information to FDA at least six months prior to occurrence, or as soon as is practical. In turn, FDA is required to make such information public to appropriate organizations (e.g., physicians, supply chain partners) unless such a disclosure would adversely affect the public's health. If a manufacturer fails to submit information about discontinuances or interruptions, FDA is required to submit a letter to the manufacturer documenting this failure. The manufacturer is required to respond with reasons for noncompliance, as well as with information on interruptions or discontinuances as originally required, within 30 days. FDA would make such information public within 45 days of receipt but is not able to disclose to the public any information considered confidential or a trade secret.", "New FFDCA Section 506J also requires FDA to establish and maintain a device shortage list that includes, among other things, the category or name of the device in shortage and, as determined by FDA, the reason(s) for the shortage (e.g., demand increase for the device) and the expected duration of the shortage. Such information must be made public, except if such information is considered confidential, a trade secret, or determined by FDA to be harmful to the public's health (e.g., increases the possibility of hoarding). Finally, new FFDCA Section 506J requires FDA to expedite premarket review and facility inspections of medical devices considered to be, or likely to be, in shortage and defines the terms \"meaningful disruption\" and \"shortage.\""], "subsections": []}]}, {"section_title": "Part II\u00e2\u0080\u0094Access to Health Care for COVID-19 Patients", "paragraphs": [], "subsections": []}, {"section_title": "Subpart A\u00e2\u0080\u0094Coverage of Testing and Preventive Services", "paragraphs": ["This subpart includes three provisions related to coverage of COVID-19 tests and subsequent vaccines that may be developed to prevent COVID-19. They primarily address private health insurance coverage, including insurer payments to providers who furnish the test. One provision expands the FFCRA definition of testing that must be covered without cost-sharing by most private health insurance plans, and by other public and private health coverage programs and plans that reference the FFCRA definition."], "subsections": [{"section_title": "Section 3201. Coverage of Diagnostic Testing for COVID-19", "paragraphs": ["Background ", "Through multiple provisions in Divisions A and F, FFCRA provides payment for or requires coverage of testing for the COVID-19 virus, and items and services associated with such testing, without any cost-sharing. Several of these provisions refer to a definition for COVID-19 testing established in FFCRA Section 6001(a)(1), which defines such tests to include in vitro diagnostics (IVDs), as defined in FDA regulation, that detect the SARS-CoV-2 virus or diagnose COVID-19 and that have received either 510(k) clearance, premarket approval, authorization pursuant to de novo classification, or emergency use authorization (EUA) for marketing. ", "This definition is used or cross-referenced in the following provisions providing payment for or requiring coverage of testing for the COVID-19 virus: (1) Section 6001(a)(1)-(2), with respect to specified types of private health insurance coverage; (2) Section 6006, with respect to TRICARE, veterans' health care, and federal civilian employee health coverage (Federal Employees Health Benefits Program or FEHBP); and (3) Section 6007, with respect to the Indian Health Service (IHS). In addition, appropriations provided in FFCRA Division A to the Defense Health Program, Veterans Health Administrations, IHS, and Public Health and Social Services Emergency Fund are to be used, in whole or in part, to pay for COVID-19 testing and related services, with reference to FFRCA Section 6001(a)(1). ", "On March 16, 2020, FDA updated guidance relating to COVID-19 diagnostic tests during the public health emergency. In this guidance, the agency detailed four policies, whereby manufacturers or laboratories could develop, use, or market laboratory-developed tests or test kits for COVID-19. Two of these policies allowed for laboratories and test kit manufacturers to begin using or distributing their tests prior to receiving an EUA from the agency, as long as they submitted an EUA application within 15 business days of beginning clinical testing or distribution of the test kit and notified the agency that the test was in use. Therefore, tests and test kits would be in clinical use without having been granted an EUA (or 510(k) clearance, de novo authorization, or premarket approval). In addition, the agency outlined a policy allowing states to authorize laboratories within their state to carry out testing without FDA involvement; therefore, these tests would also be in clinical use without authorization from the FDA (or 510(k) clearance, de novo authorization, or premarket approval). Therefore, pursuant to the FDA's updated March 16 guidance, some tests in clinical use would fall outside the definition at FFCRA Section 6001(a)(1) and may not be included in the above-referenced provisions' requirements providing payment for or requiring coverage of testing for the COVID-19 virus.", "Provision", "Section 3201 amended FFCRA Section 6001(a)(1) to include those IVDs (1) that have received either 510(k) clearance, premarket approval, authorization pursuant to de novo classification, or an EUA; (2) where the developer has requested, or intends to request, an EUA; (3) that are developed in and authorized by a state that has notified the Secretary of its intention to review tests intended to diagnose COVID\u00e2\u0080\u009319; and (4) that are determined appropriate through guidance by the Secretary. "], "subsections": []}, {"section_title": "Section 3202. Pricing of Diagnostic Testing", "paragraphs": ["Background ", "FFCRA Section 6001 created a requirement for most private health insurance plans to cover specified COVID-19 testing and testing-related items and services. The coverage must be provided without consumer cost-sharing, including deductibles, copayments, or coinsurance. This coverage requirement applies to the specified items and services that are furnished during the COVID-19 public health emergency described in FFCRA. The provision did not address the reimbursement amount that a provider must receive from a health plan for furnishing COVID-19 testing. ", "In private health insurance, the amount paid for covered items and services is generally contingent upon whether a consumer's health plan has negotiated with a provider to enter into a contract. The contract between the health plan and the provider generally specifies the total amount that a provider may receive for furnishing particular items or services to that health plan's enrollees. A provider that enters into a contract with a health plan is considered to be part of the health plan's network, otherwise referred to as being in-network. ", "A provider that does not enter into a contract with a health plan is considered out-of-network and as such there is no negotiated rate between the provider and the health plan. In situations involving services provided by an out-of-network provider, the amount that a provider will receive from a health plan depends on whether the health plan covers out-of-network services. In situations where health plans do not cover out-of-network services, the health plan will not pay any amount to a provider for services provided to an enrollee of the health plan. In situations where plans do cover out-of-network services, as there is no negotiated rate between health plans and out-of-network providers, health plans will use their own methodologies for calculating how much they will pay out-of-network providers for services. ", "Provision", "Section 3202 establishes a methodology for determining the amount that a health plan must reimburse a provider for the COVID-19 testing, and testing-related items and services that are required to be covered under FFCRA Section 6001(as amended). If a health plan had a negotiated rate with a provider prior to the declaration of the COVID-19 public health emergency declared under PHSA Section 319, then the health plan must apply that negotiated rate throughout the period of the COVID-19 public health emergency. If a health plan did not have a negotiated rate with a provider prior to the emergency declaration, then the health plan must either reimburse the provider an amount that equals the cash price for the COVID-19 testing, as listed on the provider's public website, or the health plan and provider may negotiate a rate that is less than the cash price. ", "During the period of the COVID-19 public health emergency, providers of COVID-19 diagnostic testing must make public the cash price for the COVID-19 test on the provider's public website. ", "The Secretary may impose a civil monetary penalty on a provider of COVID-19 diagnostic testing that is not in compliance with the requirement to post the cash price for the COVID-19 testing and has not completed a corrective action plan to comply with the requirement. The amount of the civil monetary penalty may not exceed $300 per day that the violation is ongoing. "], "subsections": []}, {"section_title": "Section 3203. Rapid Coverage of Preventive Services and Vaccines for\u00c2 Coronavirus", "paragraphs": ["Background ", "PHSA Section 2713 and accompanying regulations require most private health insurance plans to cover, without cost-sharing, specified types of clinical preventive services. These include any preventive service recommended with an A or B rating by the United States Preventive Services Task Force (USPSTF), or any immunization with a recommendation by the Advisory Committee on Immunization Practices (ACIP), adopted by CDC, for routine use for a given individual. These coverage requirements apply no sooner than one year after a recommendation is published.", "Requirements of Section 2713 apply to individual health insurance coverage and to small- and large-group plans, whether fully insured or self-insured. The requirements do not apply to grandfathered individual or group plans, or to short-term, limited duration insurance (STLDI). By regulation, plans are generally not required to cover preventive services furnished out-of-network. Cost-sharing for office visits associated with a furnished preventive service may or may not be allowed, as specified in regulation.", "Provision", "Section 3203 requires specified plans \u00e2\u0080\u0094 the same types of plans as those subject to PHSA Section 2713\u00e2\u0080\u0094to cover a COVID-19 vaccine and potentially other COVID-19 preventive services, as recommended by ACIP or USPSTF, respectively. This coverage must be provided without cost-sharing. Section 3203 also applies an expedited effective date for coverage of 15 business days after an applicable ACIP or USPSTF recommendation is published. Otherwise, requirements of Section 3203 mirror existing requirements under PHSA Section 2713."], "subsections": []}]}, {"section_title": "Subpart B\u00e2\u0080\u0094Support for Health Care Providers", "paragraphs": ["This subpart includes provisions that aim to extend the services available during the COVID-19 period and beyond, particularly for rural or otherwise underserved populations. The subpart includes additional appropriations for health centers that provide care to populations that are underserved or are located in underserved areas. Other provisions relate directly to health care providers; for example, by conferring medical malpractice liability on health professionals who choose to volunteer during the emergency period, by amending program rules for the NHSC program to permit individuals to volunteer during the emergency period, and by clarifying aspects of the USPHS Ready Reserve Corps program. The Ready Reserve Corps is composed of reserve officers serving in other roles who would be subject to intermittent involuntary deployment (\"call up\") to bolster the available workforce for public health emergency missions. Finally, the subpart reauthorizes and amends existing programs related to supporting rural health care providers and encouraging the use of telehealth to expand access to care. "], "subsections": [{"section_title": "Section 3211. Supplemental Awards for Health Centers", "paragraphs": ["Background ", "The federal health center program, authorized by PHSA Section 330 and administered by the Health Resources and Services Administration (HRSA), provides grants to not-for-profit organizations or state and local government entities to operate outpatient health centers. Participation in the program requires grantees to provide care regardless of a patient's ability to pay, and grant funding is provided to support this care. These centers are also required to be located in medically underserved areas (MUAs) or to provide care to a population that is designated as underserved. Health centers are part of the health care safety net, and they have been used as a way to fund safety net providers during prior disasters, when additional funds were appropriated to make awards to existing grantees to respond to an emerging need. In FY2020, health centers received a combination of discretionary and mandatory funding, which together provided more than $5.6 billion to support the program. Health centers also received additional funds in P.L. 116-123 , Coronavirus Preparedness and Response Supplemental Appropriations Act, 2020, the first law to respond to COVID-19. That law provided the program with an additional $100 million. These funds were awarded via formula to supplement existing health center funding. ", "Provision", "This section appropriates $1.32 billion in supplemental funding for health centers for FY2020 for the detection of the COVID-19 virus, or prevention, diagnosis, and treatment of COVID-19 illnesses. The section also applies the limits on using these funds for abortion that were included in Further Consolidated Appropriations Act, 2020 ( P.L. 116-94 ), which provided FY2020 appropriations for HHS, among other agencies. "], "subsections": []}, {"section_title": "Section 3212. Telehealth Network and Telehealth Resource Centers Grant\u00c2 Programs", "paragraphs": ["Background ", "PHSA Section 333(I) authorizes two telehealth programs that were authorized at \"such sums as may be necessary\" through FY2006. Both programs have been funded since that time, despite the lapsed authorization of appropriation. The programs are administered by HRSA. The first program, authorized in PHSA Section 333I(d)(1), is the Telehealth Network Grant Program (TNGP). This program aims to demonstrate how telehealth technologies can be used through telehealth networks for medically underserved populations who live in rural areas, frontier communities, and MUAs. Prior to passage of the CARES Act, only nonprofit entities were eligible to apply for TNGP grants; however, prior law permitted both nonprofit and for-profit organizations to participate in the grantees' telehealth networks. The second program is the Telehealth Resource Centers (TRC) Program. This program aims to coordinate telehealth organizations that serve rural and underserved communities throughout the country, by providing technical assistance to those organizations through national and regional TRCs. FY2020 appropriations report language provides $28.5 million to HRSA's overarching Telehealth Program, which includes both of these programs. ", "Provision", "This section amends PHSA Section 330I to make changes to both the TNGP and the TRC programs. It makes the following changes: ", "(1) The Telehealth Network Grant Program (TNGP)", "Grants. Section 3212 amends PHSA Section 330I by replacing the HRSA Administrator's Director's authority to award grants to eligible grantees to demonstrate how telehealth technologies can be used through telehealth networks, with the authority to award grants to evidence-based projects that utilize telehealth technologies through telehealth networks. The purpose of the TNGP now includes improving access to and quality of health care services for the TNGP patient population. Grantees may no longer use TNGP funds to expand health care provider training or for decision-making purposes. ", "Grant period. Section 3212 allows the HRSA Administrator to extend the period of performance for the TNGP from four years to five years. This section also makes administrative changes to the statutory requirements on telehealth networks, including the nature of entities and composition of telehealth networks. This section removes the statutory requirements that grantees of TNGP be nonprofit entities and that telehealth networks be composed in a certain manner. ", "Applications. Grant applicants are now required to describe within their applications how the applicants' proposed TNGP projects will, among other things, improve access and quality of the health care services that patients will receive. Prior to passage of the CARES Act, this provision was optional. ", "Terms , conditions , maximum amount of assistance. Section 3212 removes the statutory requirements that the Secretary has to establish the terms and conditions of the TNGP, as well as the maximum amounts awarded to each TNGP recipient for each fiscal year. This section removes the federal mandate that required the Secretary to publish, through HRSA, a notice of application requirements for the TNGP program for each fiscal year. ", "Preferences. The Secretary is required to also give preference to eligible entities that develop plans for or establish telehealth networks that provide mental health care services, public health care services, long-term care, home care, preventive care, case management services, or prenatal care for high-risk pregnancies. This section also expands preference to eligible entities that propose projects that promote local and regional connectivity within areas, communities, and populations served. The Secretary, however, may no longer give preference to applicants that demonstrate integration of health care information into TNGP projects.", "Distribution of funds. The HRSA Administrator no longer has to ensure that the total amount of funds awarded in a given fiscal year is not less than the total amount awarded for projects in FY2001. The HRSA Administrator must continue to ensure that no less than 50% of funds are awarded to TNGP projects in rural areas. ", "Use of funds. Grantees no longer have the authority to use TNGP funds to purchase certain equipment. Grantees are prohibited from purchasing computer hardware and software, audio and video equipment, computer network equipment, interactive equipment, and data terminal equipment. However, grantees may continue to purchase equipment that furthers the objectives of the TNGP, such as to expand access to health care services. ", "Prohibited uses of funds. TNGP grantees are prohibited from using more than 20% of total grant funds to purchase or lease equipment. Under prior law, grantees were allowed to use no more than 40% of total grant funds. Section 3212 also removes the examples of transmission equipment from the list of items that TNGP funds cannot be used to purchase. ", "Report and regulations . The section requires the Secretary to submit a report, to specified congressional committees, that describes the activities and outcomes of the TNGP, no later than March 27, 2024, and every five years thereafter. The Secretary is no longer required to issue regulations specifying the definition of frontier area.", "(2) The Telehealth Resource Centers (TRC) Program ", "Grants and eligibility . Section 3212 amends PHSA Section 330I by replacing the HRSA Administrator's authority to award grants for projects to demonstrate how telehealth technologies can be used in certain areas and communities, with the authority to award grants to support initiatives that utilize telehealth technologies. The CARES Act removes the program's authority to establish new TRCs, which essentially makes the current TRCs permanent recipients of federal funds under the program and does not allow for other entities to participate as TRCs. The section also permits the HRSA Administrator to extend the period of performance for the TRC program from four years to five years. Section 3212 removes the statutory requirement that grantees of the TRC program be nonprofit entities. ", "Terms , conditions , maximum amount of assistance. Section 3212 removes the statutory requirement that the Secretary has to establish the terms and conditions of the TRC program, as well as the maximum amount awarded to each TRC program recipient for each fiscal year. This section no longer requires the Secretary to publish, through HRSA, a notice of application requirements for the TRC program for each fiscal year. ", "Preferences. The section requires the Secretary to also give preference to eligible entities with successful records in delivering health care services to rural areas, MUAs, and medically underserved populations. ", "Use of funds. The section specifies that grantees no longer have the authority to use TRC program funds to foster certain telehealth activities. It also prohibits grantees from using funds to foster the use of telehealth technologies to provide health care information. However, grantees may continue to foster the use of telehealth technologies to educate health care providers and consumers in an effective manner. ", "Report and regulations . The section requires the Secretary to submit a report, to specified congressional committees, on the activities and outcomes of the TRC program, no later than March 27, 2024, and every five years thereafter. (This report need not to be a separate report from that required of the TNGP.) The Secretary is no longer required to issue regulations specifying the definition of frontier area. ", "Authorization of appropriations. The section authorizes an appropriation of $29 million for each of FY2021 through FY2025."], "subsections": []}, {"section_title": "Section 3213. Rural Health Care Services Outreach, Rural Health Network Development, and Small Health Care Provider Quality Improvement Grant Programs", "paragraphs": ["Background ", "PHSA Section 330A authorizes three grant programs supporting rural health care providers: the rural health care services outreach grants, the rural health network development grants, and the small health care provider quality improvement grants. These programs are administered by HRSA's Federal Office of Rural Health Policy (FORHP). In each case, grants are available to nonprofit or governmental health entities for a period of three years. The Rural Health Network Development program also permits additional one-year planning grants. Funds for the program had been authorized at $45 million annually through FY2012, and required a one-time report to Congress that was required at the end of FY2005. Despite the lapsed authorizations of appropriations, these programs have continued to be funded in recent years. Most recently, the programs received an appropriation of $79.5 million in FY2020.", "Provision", "This section makes a number of technical corrections to PHSA Section 330A. It also replaces language related to essential health services to make reference to basic health services, extends the duration of Rural Health Care Service Outreach grants and Rural Health Network Development grants from three to five years, and expands eligibility for the programs to any rural health entity (prior eligibility was limited to rural public or nonprofit health entities). The section also eliminates the one-year planning grants from the Rural Health Network Development program and extends the grant period of the Small Health Care Quality Improvement grants from three to five years. Finally, the section requires a report, to be delivered to specified congressional committees, on these grant programs, not later than four years after enactment and every five years thereafter, and authorizes an appropriation of $79.5 million for each of FY2020 through FY2025. No additional funding for FY2020 is appropriated in this provision. "], "subsections": []}, {"section_title": "Section 3214. United States Public Health Service Modernization", "paragraphs": ["Background ", "The USPHS Commissioned Corps is a branch of the U.S. uniformed services, but it is not one of the armed services. The Corps is based in HHS under the authority of the U.S. Surgeon General (SG). USPHS-commissioned officers are physicians, nurses, pharmacists, engineers, and other public health professionals who serve in federal agencies, or as detailees to state or international agencies, to support a variety of public health activities. ACA (the Patient Protection and Affordable Care Act, P.L. 111-148 , as amended), Section 5210, authorized a USPHS Ready Reserve Corps\u00e2\u0080\u0094reserve officers serving in other roles who would be subject to intermittent involuntary deployment (\"call up\") to bolster the available workforce public health emergency missions. HHS had not received an appropriation for this purpose and had not established a Ready Reserve Corps. It has been reported that the ACA authority did not fully authorize this action, and legislation ( S. 2629 , the United States Public Health Service Modernization Act of 2019) was introduced to address this.", "Provision", "Section 3214 enacts the language of S. 2629 , making several technical and substantive amendments to PHSA Title II to clarify provisions regarding deployment readiness, retirement, compensation, and other matters as they would affect the Ready Reserve Corps. "], "subsections": []}, {"section_title": "Section 3215. Limitation on Liability for Volunteer Health Care Professionals During COVID-19 Emergency Response", "paragraphs": ["Background ", "In 1997, Congress enacted the Volunteer Protection Act of 1997 (VPA; P.L. 105-19 ). This act provides that a volunteer at a nonprofit organization or governmental entity is not liable for the harm he or she causes by an act (or an act of omission) on behalf of the organization, provided the following: (1) the volunteer was, among other things, properly licensed, certified, or authorized for the activities in a state, if applicable; (2) the volunteer was acting within the scope of his or her responsibilities in the organization at the time of the act (or act of omission); and (3) the harm was not caused by \"willful or criminal misconduct, gross negligence, reckless misconduct, or a conscious, flagrant indifference to the rights or safety of the individual harmed by the volunteer.\" The law does not convey liability protections in certain instances (e.g., when misconduct is a criminal act or when the defendant acted under the influence of drugs or alcohol), and the law specifies how it interacts with relevant state law. This law was not specific to health professionals in a volunteer capacity but, rather, covered all types of volunteers. ", "Provision", "This section limits the medical malpractice liability of health professionals who volunteer during the COVID-19 emergency. Specifically, it limits the liability under federal and state law for any harm caused by an act or omission while providing health services during the emergency, provided that the health services are within the scope of the health professional's license registration, or certification, and that the health professional acted in good faith. The section specifies that health professionals do not have liability protections in situations where harm was caused by \"willful or criminal misconduct, gross negligence, reckless misconduct, or a conscious flagrant indifference to the rights or safety of the individual harmed by the health care professional,\" or when services were provided by a health professional who was under the influence of drugs or alcohol. The section specifies that it preempts state or local laws that are inconsistent with this section, unless those laws provide great liability protections, and specifies that the liability protections are in addition to those provided under the VPA. Finally, the section defines relevant terms and specifies that this provision is effective at enactment and will remain in effect for the length of the public health emergency declared by the Secretary under PHSA Section 319, declared by the Secretary on January 30, 2020. "], "subsections": []}, {"section_title": "Section 3216. Flexibility for Members of National Health Service Corps During Emergency Period", "paragraphs": ["Background ", "The federal government supports a number of health workforce programs administered by HRSA. Among the largest of these programs is the NHSC, which provides scholarships and loan repayment to health care providers in exchange for a two-year or more service commitment in a health professional shortage area (HPSA). The program is authorized in PHSA Sections 332-338I. PHSA Section 333 specifies the types of health care facilities and the conditions they must meet to receive NHSC personnel. Generally, these are outpatient health facilities in HPSAs. ", "Provision", "This section specifies that for the duration of the public health emergency declared under PHSA Section 319 for the COVID-19 response, the Secretary may waive the requirements in PHSA Section 333 in order to assign NHSC members to voluntarily provide health services to respond to the emergency. The provision allows NHSC members to volunteer services for the number of hours that the Secretary determines appropriate. The provision further specifies that NHSC members must be assigned voluntarily, that the assignment site must be in reasonable proximity to the NHSC corps member's original practice site, and that these hours are to count toward fulfilling their NHSC service commitment. "], "subsections": []}]}, {"section_title": "Subpart C\u00e2\u0080\u0094Miscellaneous Provisions", "paragraphs": [], "subsections": [{"section_title": "Section 3221. Confidentiality and Disclosure of Records Relating to Substance Use Disorder", "paragraphs": ["Background", "Generally, the privacy of health information is governed by the HIPAA (Health Insurance Portability and Accountability Act of 1996, P.L. 104-191 , as amended) Privacy Rule, which establishes requirements for covered entities' (health care plans, providers, and clearinghouses) and their business associates' use and disclosure of protected health information (PHI). All health information is generally treated similarly under the HIPAA Privacy Rule, with certain exceptions in place relating to the use and disclosure of psychotherapy notes. In contrast, stricter federal privacy requirements at PHSA Section 543\u00e2\u0080\u0094requirements promulgated in and commonly known as the \"Part 2\" rule\u00e2\u0080\u0094apply to individually identifiable patient information received or acquired by federally assisted substance use disorder programs. Specifically, the Part 2 rule governs any information that would identify a patient as having or having had a substance use disorder, and that is obtained or maintained by a federally assisted substance use disorder program for the purpose of treating a substance use disorder, making a diagnosis for that treatment, or making a referral for that treatment. Part 2 requirements apply to an individual or entity (other than a general medical facility) that is federally assisted and provides\u00e2\u0080\u0094and holds itself out as providing\u00e2\u0080\u0094diagnosis, treatment, or referral for treatment of substance use disorders. \"Federally assisted programs\" include programs that are carried out in whole or in part by the federal government or supported by federal funds.", "The Part 2 rule strictly regulates the disclosure and redisclosure of patient identifying information held by Part 2 programs. The rule allows disclosure of this information only either (1) with written patient consent or (2) pursuant to exceptions in statute or regulation (e.g., for a medical emergency, for research). A general authorization for the release of medical information does not satisfy the rule's requirement for written consent, although a general designation in consent is allowed in cases where a class of participants may receive and redisclose amongst themselves Part 2 information if there exists a treatment relationship. Further, the rule strictly prohibits the subsequent redisclosure of information received from a Part 2 program without consent from the patient, and a notification clearly prohibiting this redisclosure by the receiving entity travels with any disclosed Part 2 information. Under PHSA Section 543(f), any person who violates any provision of the section or any regulation issued pursuant to the section shall be fined in accordance with Title 18 of the U.S. Code .", "Provision ", "Section 3221 amends PHSA Section 543 to allow for, pursuant to written consent, the use or disclosure of covered records by a covered entity, business associate, or a Part 2 program for purposes of treatment, payment, and health care operations as permitted by the HIPAA Privacy Rule. In addition, the section allows information disclosed pursuant to this exception to be subsequently redisclosed in accordance with the HIPAA Privacy Rule. It further allows the disclosure of deidentified records to public health authorities, without written consent, if the information meets the deidentification standards in the HIPAA Privacy Rule. ", "Section 3221 applies the penalties under SSA Sections 1176 and 1177 for violations of PHSA Section 543, as specified. It also prohibits discrimination against an individual on the basis of information received pursuant to an inadvertent or intentional disclosure of covered records, or information contained in covered records, in multiple instances (e.g., employment, access to courts). The section applies the HIPAA breach notification requirements to a program or activity under PHSA Section 543 in case of a breach of records. Section 3221 requires the Secretary to revise regulations as necessary such that changes in the section apply with respect to uses and disclosures of covered records occurring on or after the date that is 12 months after enactment. It also requires the Secretary, not later than one year after enactment and in consultation with appropriate legal, clinical, privacy, and civil rights experts, to update the notice of privacy practices requirement in the HIPAA Privacy Rule to require covered entities and entities creating or maintaining covered records to provide notice, in plain language, of privacy practices regarding those records. The section also establishes that nothing in the act shall be construed to limit (1) the right of an individual to request a restriction on the use or disclosure of a record under PHSA Section 543 for purposes of treatment, payment, or health care operations, and (2) the choice of a covered entity to obtain consent to use or disclose a covered record for purposes of treatment, health care operations, or payment."], "subsections": []}, {"section_title": "Section 3222. Nutrition Services", "paragraphs": ["Background ", "The OAA (Older Americans Act, P.L. 89-73, as amended; 42 U.S.C. \u00c2\u00a7\u00c2\u00a7 3001 et seq.) Nutrition Services Program provides grants to states and U.S. territories under Title III of the act to support congregate nutrition services (i.e., meals served at group sites such as senior centers, community centers, schools, churches, and senior housing complexes) and home-delivered nutrition programs for individuals aged 60 and older. The Nutrition Services Program is designed to address problems of food insecurity, promote socialization, and promote the health and well-being of older persons through nutrition and nutrition-related services. The program is administered by the Administration for Community Living (ACL) under HHS. States and territories receive separate funding allotments for each program based on a statutory funding formula. Under OAA, states and U.S. territories have authority to transfer up to 40% of their allotments between congregate and home-delivered nutrition services and can request waivers to transfer up to 10% of additional funding between these programs. In addition, OAA provides states authority to transfer up to 30% of program funding from the Supportive Services Program to the Nutrition Services Program.", "Nutrition services providers are required to offer at least one meal per day, five or more days per week (except in rural areas, where the provision of meals may be less frequent). The meals must comply with the Dietary Guidelines for Americans published by the Secretary of HHS and the Secretary of Agriculture. Providers must serve meals that meet specified minimum amounts for the daily recommended dietary reference intakes (DRIs) established by the Food and Nutrition Board of the National Academies of Sciences, Engineering, and Medicine based on the number of meals served by the project each day. With respect to home-delivered nutrition programs, individuals aged 60 or older and their spouses (regardless of age) may participate in the home-delivered nutrition program. Persons aged 60 or over who are frail, homebound by reason of illness or disability, or otherwise isolated, are also prioritized for OAA Title III services. Services may be available to individuals under age 60 with disabilities if they reside at home with the older individual. Service eligibility is determined by the states and local Area Agencies on Aging (AAA); however, according to the ACL, entities may waive any eligibility requirements they have established for home-delivered meals in response to the COVID-19 pandemic.", "Provision", "During any portion of the COVID-19 public health emergency declared under PHSA Section 319, the section sets forth additional transfer authority between OAA nutrition programs, clarifies participant requirements for home-delivered meals, and authorizes the Assistant Secretary for Aging to waive certain dietary requirements for nutrition services. Specifically, the HHS Secretary is required to allow a state agency or an AAA to transfer up to 100% of the funds appropriated and received for congregate and home-delivered nutrition between these two programs, for such use as the state or area considers appropriate to meet service needs without prior approval. For purposes of state agencies' determining the delivery of nutrition services, the provision requires the same meaning to be given to individuals who are unable to obtain nutrition because they are practicing social distancing due to the emergency as is given to an individual who is homebound because of illness. And, to facilitate implementation of nutrition services programs, the Assistant Secretary is authorized to waive compliance with the Dietary Guidelines for Americans and the specified minimum amounts for the daily recommended DRI requirements. The provision defines the terms ''Assistant Secretary,'' ''Secretary,'' ''State agency,'' and ''area agency on aging'' to have the same meanings as under OAA Section 102."], "subsections": []}, {"section_title": "Section 3223. Continuity of Service and Opportunities for Participants in Community Service Activities Under Title V of the Older Americans Act", "paragraphs": ["Background ", "OAA Title V establishes the Community Service Employment for Older Americans program (CSEOA), sometimes referred to as the Senior Community Service Employment Program (SCSEP). CSEOA promotes part-time employment opportunities in community service activities for unemployed low-income persons aged 55 and older and who have poor employment prospects. The Title V program is administered by the Department of Labor's (DOL's) Employment and Training Administration. DOL allocates Title V funds for grants based on a statutory funding formula to state agencies in all 50 states, the District of Columbia, Puerto Rico, and the U.S. territories, and to national organizations. Program participants work part-time in community service jobs, including employment at schools, libraries, social service organizations, and senior-serving organizations. Program participants earn the higher of minimum wage or the typical wage for the job in which they are employed. An individual may typically participate in the program for a cumulative total of no more than 48 months.", "Provision", "Due to the effects of the COVID-19 public health emergency declared under PHSA Section 319, this section specifies additional flexibility for the Secretary of Labor with respect to administration and implementation of the CSEOA program. Specifically, it authorizes the Secretary to allow individuals participating in OAA Title V projects as of March 1, 2020, to extend their participation for a period that exceeds 48 months in the aggregate, as determined by the Secretary. It authorizes the Secretary to increase the average participation cap for grantees of 27 months for eligible individuals to a cap the Secretary determines is appropriate. And it authorizes the Secretary to increase the amount available to pay the authorized administrative costs for a project, which is currently 13.5% of the grant amount, to not exceed 20% of the grant amount, if the Secretary determines that such increase is necessary to adequately respond to additional administrative needs. "], "subsections": []}, {"section_title": "Section 3224. Guidance on Protected Health Information", "paragraphs": ["Background ", "The HIPAA Privacy Rule governs covered entities' (health care plans, providers, and clearinghouses) and their business associates' use and disclosure of PHI. In addition, it establishes strong individual rights of access to an individual's own PHI. PHI is defined as individually identifiable health information created or received by a covered entity that is transmitted by electronic media, maintained in electronic media, or transmitted or maintained in any other form or medium. The rule sets forth multiple situations in which covered entities may permissibly use or disclose PHI without written authorization, while generally all other uses and disclosures of PHI (i.e., those that are not expressly permitted under the rule) require an individual's prior written authorization. Broadly, covered entities may share PHI between and among themselves for the purposes of treatment, payment, or health care operations, with few restrictions and, specifically, without the individual's authorization. The Privacy Rule also recognizes that PHI may be useful or necessary in circumstances besides health care treatment and payment for a given individual or general health care operations, or entirely unrelated to health care or the health care system. For this reason, the rule lists a number of \"national priority purposes\" for which covered entities may disclose PHI without an individual's authorization or opportunity to agree or object. Examples of these include disclosures for public health activities, health oversight, and pursuant to a requirement in law (e.g., state law).", "In response to the COVID-19 pandemic, the Office of Civil Rights (OCR)/HHS has issued guidance relating to the disclosure of PHI to first responders and law enforcement, as well as on telemedicine and the HIPAA Privacy Rule. OCR has also released several notifications of exercise of enforcement discretion during the COVID-19 public health emergency, specifically with respect to use and disclosure of PHI by business associates (BAs); the operation of Community-Based Testing Sites during the COVID-19 public health emergency; and the provision of care using telehealth. In addition, under authorities in SSA Section 1135 and the Project Bioshield Act ( P.L. 108-276 ), the Secretary has the authority to waive sanctions and penalties for certain HIPAA Privacy Rule violations during certain emergency periods. These have been waived. The specific HIPAA Privacy Rule requirements for which penalties may be waived are as follows: (1) the requirement to distribute a notice of privacy practices (45 C.F.R. \u00c2\u00a7164.520); (2) the patient's right to request certain privacy restrictions (45 C.F.R. \u00c2\u00a7164.522(a)); (3) the patient's right to request confidential communications (45 C.F.R. \u00c2\u00a7164.522(b)); (4) the requirement to honor a request to opt out of a facility directory (45 C.F.R. \u00c2\u00a7164.510(a)); and (5) the requirement to obtain agreement to share information with family and friends involved in a patient's care (45 C.F.R. \u00c2\u00a7164.510(b)). These waivers apply only (1) in the emergency area identified in the public health emergency declaration and for the duration of the emergency, (2) to those hospitals that have a disaster plan; and (3) for the first 72 hours after the hospital's plan has been initiated.", "Provision", "Section 3224 requires the Secretary, not later than 180 days after enactment, to issue guidance on the sharing of patients' PHI (as defined at 45 C.F.R. \u00c2\u00a7106.103) during emergency declarations and determinations, with respect to COVID-19, pursuant to PHSA Section 319, Section 501(b) of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (Stafford Act), and the National Emergencies Act. The section requires the guidance to address compliance with the HIPAA Privacy Rule and applicable policies, including any policies that may come into effect during these emergencies. "], "subsections": []}, {"section_title": "Section 3225. Reauthorization of Healthy Start Program", "paragraphs": ["Background ", "The Healthy Start Program (Healthy Start), which is authorized in PHSA Section 330H and administered by HRSA, is a competitive grant program. The program enables eligible public or private entities, community-based organizations, faith-based organizations, and Indian or tribal organizations to propose and administer innovative, community-based ways to decrease U.S. infant mortality rates (IMRs), improve perinatal and maternal health outcomes, and reduce ethnic and racial health disparities in perinatal health. ( I nfant mortality refers to the death of an infant before his or her first birthday. An infant mortality rate refers to the comparison of the number of infant deaths against 1,000 live births in a given year.) Healthy Start participants consist of women, men, infants, children, and involved parties such as family members. The program requires participants to reside in communities with IMRs that are at least 1.5 times greater than the U.S. IMR and/or have high rates of adverse perinatal outcomes such as preterm births and maternal deaths. The program's authorization of appropriations, which expired in 2013, was \"the amount authorized for the preceding fiscal year increased by the percentage increase in the Consumer Price Index (CPI) for all urban consumers for such year.\"", "Provision", "Purpose and considerations in making grants. Section 3225 amends PHSA Section 330H by expanding the Healthy Start project areas to those with increasing IMRs that are above the U.S. IMR. Section 3225 removes the mandate that required applicants to include consumers of project services as participants in community-based consortiums. The Secretary instead must require applicants to include state substance abuse agencies, participants, and former participants of project areas as participants in community-based consortiums.", "The Secretary, when considering grant awards, is required to consider factors that contribute to infant mortality, including poor birth outcomes (e.g., low birthweight and preterm birth) and social determinants of health. In addition, the Secretary must consider factors such as applicants' collaboration with the local community in developing Healthy Start projects and applicants' use and collection of data demonstrating the program's effectiveness in decreasing IMRs and improving perinatal outcomes. ", "Coordination. Section 3225 makes conforming changes and moves the current language in subsection (c) to a new paragraph (1) and adds a new paragraph (2), under subsection (c). The new paragraph (2) requires the Secretary to ensure the Healthy Start program coordinates with similar programs and activities administered by HHS that aim to reduce IMRs and improve infant and perinatal health outcomes. ", "Funding. The section authorizes an appropriation of $125.5 million for each of FY2021-FY2025, eliminates the CPI requirement, and authorizes the Secretary to reserve 1% of appropriated funds to evaluate Healthy Start projects. Section 3225 expands the Secretary's use of the reserved funds to evaluate information related to, among other things, progress made toward meeting program metrics or health outcomes on reducing IMRs, improving perinatal outcomes, and diminishing health disparities.", "GAO report. Section 3225 makes conforming changes and adds a new subsection (f). The new subsection requires the Government Accountability Office (GAO) to conduct an independent evaluation of Healthy Start and to submit a report to appropriate congressional committees, no later than March 27, 2024. The section specifies that the evaluation must include a determination of whether Healthy Start projects have been effective in reducing the health disparity in health care outcomes between the general population group and racial and minority population groups, where applicable and appropriate. The report must also contain a review, an assessment, and recommendations on, among other topics, HRSA's allocation of funding to urban and rural areas and progress towards meeting the evaluation criteria for programs that increase and decrease IMRs, improve and adversely affect perinatal outcomes, and affect disparities in infant mortality and perinatal health outcomes."], "subsections": []}, {"section_title": "Section 3226. Importance of the Blood Supply", "paragraphs": ["Background ", "The nation's blood supply is largely managed by a network of independent blood centers and the American Red Cross, with some oversight from HHS. These organizations collect blood product donations (e.g., whole blood, platelets) from individuals through scheduled appointments, walk-in appointments, and blood drives.", "The COVID-19 pandemic poses significant challenges for the United States' blood supply. Mitigation strategies to prevent the spread of COVID-19, such as closures of schools and workplaces, have led to blood drive cancellations, resulting in a critical blood supply shortage. In addition, individuals are reluctant to schedule blood donations while advised to social distance from others. ", "Provision", "This section requires the Secretary to carry out a national campaign to improve awareness of, and support outreach to the public and health care providers about, the importance and safety of blood donation and the need for donations for the blood supply. The section requires the Secretary to consult with heads of relevant federal agencies (including FDA, CDC, and National Institutes of Health [NIH]), accrediting bodies, and representative organizations to carry out the campaign. In addition, the Secretary is authorized to enter into contracts with public or private nonprofit entities to carry out the campaign.", "The section requires the Secretary to submit a report to specified congressional committees, not later than two years from enactment that (1) describes the activities carried out, (2) describes trends in blood supply donations, and (3) evaluates the impact of the public awareness campaign."], "subsections": []}]}, {"section_title": "Part III\u00e2\u0080\u0094Innovation", "paragraphs": ["This part adds two new authorities to the broad body of law that provides incentives for medical product research and development. "], "subsections": [{"section_title": "Section 3301. Removing the Cap on OTA During Public Health Emergencies", "paragraphs": ["Background ", "The Biomedical Advanced Research and Development Authority (BARDA) supports the clinical research and development, regulatory approval, and procurement of new MCMs (e.g., vaccines, treatments, and diagnostics) planned for use in public health emergencies. In addition to grants, contracts, and cooperative agreements, the PHSA permits BARDA to enter into \"other transactions,\" which are exempt from many statutory provisions and procurement regulations. In February 2020, BARDA announced it was using its other transaction authority (OTA) to expand existing relationships with private partners to speed the development of COVID-19 countermeasures. In general, such transactions above $100 million require a written determination \"by the Assistant Secretary for Financial Resources, that the use of such authority is essential to promoting the success of the project.\" ", "Provision", "Section 3301 amends PHSA Section 319L in a number of ways that appear to be somewhat ambiguous, but the intent seems to be to waive the requirement for a written determination for transactions above $100 million during a public health emergency declared under PHSA Section 319. Transactions made under this provision would not be terminated solely due to the expiration of the public health emergency. The Secretary is required to report the use of this provision to specified congressional committees after the public health emergency ends."], "subsections": []}, {"section_title": "Section 3302. Priority Zoonotic Animal Drugs", "paragraphs": ["Background ", "A zoonotic disease is an infectious disease that is transmissible between humans and nonhuman animals. Many emerging infections that have caused significant outbreaks among humans, are believed to have arisen from animal-to-human transmission. Drugs to treat animals are evaluated for approval by FDA. An animal origin for the COVID-19 virus is considered likely but unproven.", "Provision", "Section 3302 adds a new Section 512A to the FFDCA regarding Priority Zoonotic Animal Drugs. It requires the Secretary, upon an applying drug sponsor's request, to expedite the development and review of a new animal drug \"if preliminary clinical evidence indicates that the new animal drug, alone or in combination with 1 or more other animal drugs, has the potential to prevent or treat a zoonotic disease in animals, including a vector borne-disease, that has the potential to cause serious adverse health consequences for, or serious or life-threatening diseases in, humans.\" The request may be made upon, or any time after, the opening of an investigational new animal drug file or filing of an application for approval, and the Secretary shall act on such request within 60 days. Actions that may be used to expedite review include expanded consultations and guidance regarding novel designs or drug development tools to make clinical trials more efficient. "], "subsections": []}]}, {"section_title": "Part IV\u00e2\u0080\u0094Health Care Workforce", "paragraphs": ["PHSA Title VII authorizes a number of programs to support the health workforce. These include scholarships, loans, and academic programs that seek to diversify the workforce, train primary care providers, and increase the number of geriatric health care providers, among other things. PHSA Title VIII authorizes similar programs to support the nursing workforce.", "Many of Title VII and Title VIII programs were most recently reauthorized in Title V of the ACA, which made program changes, added new programs, and generally provided authorizations of appropriations through either FY2013 or FY2014. Although authorizations of appropriations for most Title VII and Title VIII have lapsed, a number of these programs have continued to receive appropriations through HRSA's Bureau of the Health Care Workforce. These programs have also been considered for reauthorization in the 116 th Congress, where bills would typically provide a five-year authorization of appropriations at the amounts provided in the most recent fiscal year. For example, S. 2997 , Title VII Health Care Workforce Reauthorization Act of 2019, would have reauthorized a number of Title VII programs for five years, and would have authorized funding at FY2019 funding levels. Much of S. 2997 was included in Sections 3401-3403 of the CARES Act, generally with funding amounts reflective of FY2020 appropriations and with a five-year authorization that begins in FY2021. Similarly, S. 1399 , Title VIII Nursing Workforce Reauthorization Act of 2019, would have reauthorized a number of Title VIII programs for five years, and would have authorized funding at FY2019 funding levels. Much of what was included in S. 1399 was enacted in Section 3404 of the CARES Act, with funding amounts reflective of FY2020 appropriations and with a five-year authorization that begins in FY2021. "], "subsections": [{"section_title": "Section 3401. Reauthorization of Health Professions Workforce Programs", "paragraphs": ["Background ", "PHSA Title VII authorizes a number of programs to support the health workforce. Though authorizations of appropriations for most Title VII programs have lapsed, several programs have received appropriations in recent years. The relevant Title VII programs (with their FY2020 appropriation level, if appropriate) are summarized below. The summary also notes other relevant PHSA Title VII advisory groups amended by this section. ", "Centers of Excellence (Section 736) supports centers that seek to recruit, retain, and train underrepresented minorities in the health professions. The program received an appropriation of $23.711 million in FY2020. ", "Health Professions Training for Diversity (Section 740) authorizes appropriations for a number of diversity-related training programs. Subsection (a) authorizes appropriations for scholarships for disadvantaged students (PHSA \u00c2\u00a7737), which received an appropriation of $51.47 million in FY2020; subsection (b) authorizes appropriations for loan repayment and fellowships for minority health professional faculty (PHSA \u00c2\u00a7738), which received an appropriation of $1.19 million in FY2020; subsection (c) authorizes appropriations for the Health Careers Opportunity Program (PHSA \u00c2\u00a7739), which provides grants for programs that provide health career training to individuals from disadvantaged backgrounds. This program received an appropriation of $15 million in FY2020, and subsection (d) required a report on diversity in the health professions that was due not later than six months after enactment. ", "Primary Care Training and Enhancement (Section 747) authorizes grant programs to support primary care medicine and physician assistant training. The program received an appropriation of $48.925 million in FY2020. ", "Training in General, Pediatric, and Public Health Dentistry (PHSA Section 748) authorizes grants to support dentists and dental hygienist training. The program received an appropriation of $28 million in FY2020. ", "Advisory Committee on Training in Primary Care Medicine and Dentistry (Section 749) authorizes the advisory committee that provides oversight over PHSA Section 747 and Section 748 programs. Authorizations of appropriations for those programs are contained in their respective authorizing provisions. Section 749 was renumbered in the ACA, but its language was not amended at that time. ", "Area Health Education Centers (Section 751) authorizes grants for centers at medical or nursing schools that provide training for students from underserved backgrounds or in underserved (often rural) areas. This program received $41.25 million in FY2020. ", "Quentin N. Burdick Program for Rural Interdisciplinary Training (Section 754) provided grants for interdisciplinary rural-focused health workforce training projects. This program has not been funded in the past decade and does not have a current authorization of appropriations. ", "Allied Health and Other Disciplines (Section 755) authorizes grants to support allied health professionals. This program has not been funded in recent years. ", "Health Workforce Information and Analysis (Section 761) established HRSA's National Center for Health Workforce Analysis and authorizes grant programs to support state, local, and longitudinal workforce analyses. This program received an appropriation of $5.663 million in FY2020. ", "The C ouncil on Graduate Medical Education (COGME; Section 762) analyzes and reports to relevant congressional committees on issues related to the physician workforce, training, and the financing of training. The committee is authorized in Section 762, which lays out the committee membership and its reporting requirements. The section also specifies that the committee was to sunset in 2003; however, language in appropriations laws have waived this sunset date. ", "Public Health Training Centers (Section 766) authorizes grants at public health schools to train public health professionals in health promotion and preventive medicine, among other things. This program receives its authorizations of appropriation in PHSA Section 770(a). ", "Authorization of Appropriations (Section 770) authorizes appropriations for the group of public health workforce programs authorized in PHSA Sections 765-770. Public health workforce programs received an appropriation of $17 million in FY2020. ", "Pediatric Subspecialty Loan Repayment Program (Section 775) authorizes loan repayment to specific pediatric subspecialists (including behavioral health specialists) in exchange for a service requirement in underserved areas. This program was created in the ACA but has never been funded or implemented. ", "Provision", "This section extends authorizations of appropriations for a number of sections in PHSA Title VII. In each case, appropriations are authorized for each of FY2021-FY2025. The section reauthorizes the health workforce diversity programs as follows: ", "$23.711 million for PHSA Section 736, $51.470 million PHSA Section 740(a), $1.19 million for PHSA Section 740(b), and $15 million for PHSA Section 740(c). ", "The section also amends the date of a report on diversity in the health professions required in PHSA Section 740(d) to require that the report is due to the appropriate congressional committees not later than September 30, 2025, and every five years thereafter. ", "The section also amends and extends the authorizations of appropriations for a number of programs related to primary care medical and dental training, as specified below. ", "The section amends PHSA Section 747, which authorizes training programs for primary care physicians and physician assistants. The section makes the following changes: (1) removes reference to demonstration projects in grants related to innovative care models; (2) amends granting priorities to permit the Secretary to give preference to qualified applicants that train residents in rural areas, including for Tribes or Tribal Organizations that are located in rural areas; (3) changes references from \"substance-related disorders\" to \"substance use disorders;\" and (4) authorizes an appropriation of $48.294 million annually for each of FY2021-FY2025. The section amends PHSA Section 748, which authorizes training programs for general, pediatric, and public health dentists and dental hygienists; it changes references from \"substance-related disorders\" to \"substance use disorders\" and authorizes an appropriation of $28.531 million for each of FY2021-FY2025. The section amends PHSA Section 749(d), which authorizes the Advisory Committee on Training in Primary Care Medicine and Dentistry, to update references to congressional committees to reflect the current committee names. The section amends PHSA Section 751, which authorizes the Area Health Education Center program, to authorize an appropriation of $41.25 million for each of FY2021-FY2025. The section amends PHSA Section 754, which authorizes the Quentin N. Burdick Program for Rural Interdisciplinary Training, to revise language related to using grant funds by replacing \"new and innovate\" with \"innovative or evidence-based.\" The section amends in PHSA Section 755, which authorizes grants for training in Allied Health and Other Disciplines to replace language related to the elderly with reference to \"geriatric populations or for maternal and child health.\" The section amends PHSA Section 761, which authorized Health Workforce Information and Analysis, to authorize to be appropriated $5.663 million annually for each of FY2021-FY2025. The section amends PHSA Section 762 (COGME) to update references to congressional committees to reflect the current committee names; change language from the Health Care Financing Administration to CMS; make conforming changes; add the HRSA Administrator to the council; delete language related to reports required at COGME's outset and the council's termination; and add new reporting requirement dates. Specifically, it requires a report to be delivered to specified congressional committees not later than September 30, 2023, and not less than every five years thereafter. The section amends PHSA Section 766 (Public Health Training Centers) to delete language related to Healthy People 2000 and to add language related to rural areas. The section amends PHSA Section 770 (Authorization of Appropriations), which authorizes appropriations for Public Health Workforce Programs, to authorize $17 million to be appropriated for each of FY2021-FY2025. The section amends PHSA Section 775 (Loan Repayment for Pediatric Subspecialists) to authorize such sums as may be necessary for each of FY2021-FY2025. "], "subsections": []}, {"section_title": "Section 3402. Health Workforce Coordination", "paragraphs": ["Background ", "HRSA administers a number of health workforce programs through its Bureau of Health Workforce. A number of these programs also have advisory committees that advise HRSA and Congress about specific programs (e.g., the Advisory Committee on Training in Primary Care Medicine and Dentistry provides oversight of programs authorized in Sections 747 and 748 related to primary care medicine and dental training). Each of these advisory groups has a specific charge or scope, and their work is generally not coordinated. For example, although COGME evaluates graduate medical education (GME) policy, the bulk of GME funding is from CMS, while the relevant advisory group is administered through HRSA. Experts have recommended the need for more coordinated GME and overall health workforce policy as a way to better focus federal health workforce investments across the federal government.", "Provision", "This section requires the Secretary, in consultation with the Advisory Committee on Training in Primary Care Medicine and Dentistry and the COGME, to develop a comprehensive plan that coordinates HHS's health care workforce development programs. The plan must include certain specified elements such as performance measures, as specified; gap analyses and plans to rectify these gaps; and barriers to implementing strategies to rectify the identified gaps. It also requires the Secretary to coordinate with other federal agencies and departments that administer relevant education and training programs. The purpose of such coordination is to evaluate whether these programs are meeting U.S. health workforce needs and identify opportunities to improve information collected to better inform program improvements. Finally, the section requires the Secretary to submit a report describing the comprehensive health workforce plan and its implementation to specified congressional committees no later than two years after enactment. "], "subsections": []}, {"section_title": "Section 3403. Education and Training Relating to Geriatrics", "paragraphs": ["Background ", "PHSA Section 753 authorizes a number of geriatric workforce programs. Separately, PHSA Section 865 authorizes similar geriatric workforce programs focused on nurses, because nurses are generally not eligible for programs in Title VII. Beginning in FY2015, HRSA opted to consolidate and administer these geriatric workforce programs together and has since supported two training programs: the Geriatrics Workforce Enhancement Program (GWEP) and the Geriatrics Academic Career Awards (GACA). GWEP provides grants to create training programs that focus on training inter-professional teams to increase geriatric competence among primary care and other types of health care providers. GACA makes awards to institutions on behalf of junior (non-tenured) faculty to support the career development of academic geriatricians in medicine, pharmacy, nursing, social work, and other health professions. The expectation is that GACA award recipients will provide inter-professional clinical training and become leaders in academic geriatrics.", "PHSA Section 753 was most recently reauthorized in the ACA, which added a number of new subsections within the section that authorized new geriatric training programs. These new programs were never implemented. Appropriations were authorized through FY2014, with the exception of the Geriatric Career Incentive Award program, which had been authorized through FY2013. Despite the lapsed authorization of appropriations, these programs have been funded in recent years; most recently they received $40.737 million in FY2020. ", "Provision", "This section replaces PHSA Section 753 with a new PHSA Section 753, \"Education and Training Related to Geriatrics.\" The new section codifies two existing geriatric workforce training programs: (1) GWEP and (2) GACA. It deletes existing unfunded geriatric training programs. ", "The section, in new subsection (a) requires the Secretary to award grants, contracts, or cooperative agreements to specified health professional schools, including schools of allied health, nursing schools, and programs that focus on geriatric education, to establish GWEPs. It specifies the GWEP requirements that include health trainee support, and an emphasis on patient and family engagement and primary care integration. The section also specifies the activities that GWEP programs are authorized to provide, including specific types of training and Alzheimer's disease education. The section specifies that GWEP grants may not be awarded for more than five years; that applicants must submit an application, as specified; and that the Secretary is required to use certain awarding priorities but may also take into account specified awarding considerations. Finally, with regard to the GWEP program, the section specifies grantee reporting requirements, requires the Secretary to report to specified congressional committees not later than four years after the enactment of Title VII Health Care Workforce Reauthorization Act of 2019 and every five years thereafter, and requires that the report be made publicly available. ", "New PHSA Section 753(b) establishes the GACA grant program where grants are awarded to eligible entities to support their geriatric careers. The section defines the entities eligible for GACA awards, including nursing schools and the health professionals who are eligible to receive support. The section also specifies that academics must be junior non-tenured faculty at the time the award is made, but that they remain eligible for the award if they receive tenure during the award period. The section specifies the application requirements and the assurances regarding service requirements that the application must contain. It specifies that, when making awards, the Secretary is required to ensure a geographical distribution among award recipients, including among rural MUAs. The section also specifies that grants must be a minimum of $75,000 in FY2021, to increase annually by the CPI thereafter; that award periods may not exceed five years; and the service requirement that awardees must fulfill as a condition of receiving an award. ", "Finally, for both GWEP and GACA, the section waives certain awarding preferences that otherwise apply to Title VII grants, and it authorizes to be appropriated $40.737 million for each of FY2021-FY2025. "], "subsections": []}, {"section_title": "Section 3404. Nursing Workforce Development", "paragraphs": ["Background ", "PHSA Title VIII authorizes a number of nursing workforce programs. Part A provides general provisions of the title, including definitions and entities eligible for the grants made available under the title. Part B authorizes grant programs to support advance practice nurses, including nurse practitioners, nurse anesthetists, and nurse midwives. Part C authorizes grant programs that seek to increase nursing workforce diversity, and Part D authorizes grant programs that aim to strengthen the nursing workforce and improve nursing practice. This effort includes programs that seek to expand the nursing career ladder whereby individuals in lower skilled health professions receive training and education to advance in the nursing field (e.g., from a nursing assistant to a registered nurse). Finally, Part E establishes the nursing student loan program. These programs were most recently reauthorized in the ACA, with authorizations of appropriations through FY2013 or FY2014. Despite the lapsed authorization, these programs have been funded in recent years. Specifically, in FY2020, they received an appropriation of $260 million.", "Provision", "This section reauthorizes programs in PHSA Title VIII in subsection (a), while subsection (b) requires a GAO report on nursing loan programs. ", "General Provision s . Subsection (a) makes the following changes to Title VIII. It adds nurse-managed health clinics to the definition of entities eligible for grants authorized in Title VIII; adds new language to applications (in Section 802), to use of funds (in Section 803), and to provisions that are generally applicable to Title VIII (Section 806). Specifically, the subsection adds new language that grants should be awarded to address national nursing needs, as specified; to require new information from grantees; and to add new language requiring a biennial report that includes certain specified elements to be delivered not later than September 30, 2020, to specified congressional committees. The subsection also makes a number of changes to Section 811 (grants for advance education nursing grants) to replace language that references master's level nurses to graduate level nurses, to change language referencing clinical nurse leaders to nurse administrators, and to add that clinical nurse specialist programs, as specified, are eligible for grants under this section. ", "Nurse Education, Quality, and Retention Grants . The subsection amends Section 831 to rename the section \"Nurse Education, Quality, and Retention Grants.\" It also amends the description of practice priority groups and retention priority areas within the nursing career ladder by adding language, that among other things, specifies that grants help individuals, including health aides or community health practitioners certified under the IHS Community Health Aide Program, enter the nursing career ladder. It adds language to Section 831 specifying that grants may be used to develop and implement fellowship and residency programs and to encourage the mentoring and development of nursing specialties. It also deletes subsection (e), referring to grant awards preferences in prior years, and (h), which had authorized appropriations from FY2010-FY2014, and renumbers the subsection accordingly. The subsection also amends the reporting requirements in Section 831 to require the Secretary to submit a report on the grants in this section as part of a larger report required under Section 806, and expands the entities eligible for grants under this section to add, in addition to nursing schools, health care facilities, Federally Qualified Health Centers (FQHCs), nurse-managed health clinics, and a partnership of such a school and facility.", "Deletions . The subsection deletes PHSA Section 831A (Nurse Retention Grants), because grants for this purpose are now included in the amended PHSA Section 831. It then amends PHSA Section 846 (Loan Repayment and Scholarship Program) to permit individuals to fulfill their service commitment and for-profit health facilities, to make language gender neutral, and to remove the sections authorization of appropriation and make reference to an amount allocated under PHSA Section 871(b). The section also deletes the separate authorization of appropriations from PHSA Section 846A (Nurse Faculty Loans) and Section 847 (Eligible Individual Student Loan Repayment); adds language referencing clinical nurse specialists to PHSA Section 851 (National Advisory Council on Nurse Education and Practice); amends the committees that the council is required to report to update to current committee names; and amends language related to amounts available to fund the council's activities. The section also deletes PHSA Section 861 (Public Service Announcements) and PHSA Section 862 (State and Local Public Service Announcements). ", "Appropriation Changes . Finally, the subsection amends Section 871, which authorizes appropriations for the title to authorize $137.837 million for each of FY2021-FY2025 to carry out Parts B, C, and D of Title VIII and to authorize $117.135 million for each of FY2021-FY2025 to carry out Part E (Student Loan Funds). ", "Subsection (b) of the provision requires a GAO report that evaluates nurse loan repayment programs, as specified, to be delivered to specified congressional committees, no later than 18 months after enactment. "], "subsections": []}]}]}, {"section_title": "Subtitle D\u00e2\u0080\u0094Finance Committee", "paragraphs": ["Subtitle D makes a series of changes in the Medicare and Medicaid programs in response to the COVID-19 public health emergency declared by the Secretary. The Medicare provisions increase certain payments to providers, including hospitals; expand the use of allowable telehealth services; make any potential COVID-19 vaccine available under Medicare Part B without cost-sharing; and relax certain program requirements to make it easier for Medicare patients to obtain certain services. The provisions also address cost-sharing to states for Medicaid services."], "subsections": [{"section_title": "Section 3701. Exemption for Telehealth Services", "paragraphs": ["Background ", "A health savings account (HSA) is a tax-advantaged account that individuals can use to pay for unreimbursed medical expenses (e.g., deductibles, co-payments, coinsurance, and services not covered by insurance).", "Individuals are eligible to establish and contribute to an HSA if they have coverage under an HSA-qualified high-deductible health plan (HDHP), do not have disqualifying coverage, and cannot be claimed as a dependent on another person's tax return.", "To be considered an HSA-qualified HDHP, a health plan must meet several criteria: (1) it must have a deductible above a certain minimum level, (2) it must limit out-of-pocket expenditures for covered benefits to no more than a certain maximum level, and (3) it can cover only preventive care services before the deductible is met. ", "For example, if a health plan satisfies the first two of the aforementioned criteria and provides coverage for preventive care services and prescription drugs before the deductible is met, that health plan would not be considered an HSA-qualified HDHP because it provides prescription drug benefits before the deductible is met.", "Disqualifying coverage is generally considered any other health coverage that is not an HSA-qualified HDHP or that provides coverage for any benefit that is covered under their HSA-qualified HDHP.", "Provision", "Section 3701 amends Internal Revenue Code (IRC) Section 223(c) for plan years beginning on or before December 31, 2021, to allow HSA-qualified HDHPs to provide \"telehealth and other remote care services\" before the deductible is met and still be considered an HSA-qualified HDHP.", "For plan years beginning on or before December 31, 2021, Section 3701 provides that telehealth and other remote care would not be considered disqualifying coverage that would prevent an otherwise eligible individual from being considered HSA-eligible.", "These provisions were effective upon the date of enactment (i.e., March 27, 2020)."], "subsections": []}, {"section_title": "Section 3702. Inclusion of Certain Over-The-Counter Medical Products as Qualified Medical Expenses", "paragraphs": ["Background ", "There are four categories of health-related tax-advantaged accounts/arrangements: HSAs, Archer medical savings accounts (Archer MSAs), flexible spending arrangements (FSAs), and health reimbursement arrangements (HRAs). Distributions from HSAs and Archer MSAs and reimbursements from FSAs and HRAs that are used to pay for qualified medical expenses are not taxed.", "Each account/arrangement category has a different set of medical expenses that would be considered a qualified medical expense, but all accounts/arrangements generally consider, at a minimum, the following as qualified medical expenses: the costs of diagnosis, cure, mitigation, treatment, or prevention of disease and the costs for treatments affecting any part of the body; the amounts paid for transportation to receive medical care; and qualified long-term care services. ", "Most recently, OTC medicines and drugs (other than insulin) were not considered a qualified medical expense for any account/arrangement category unless an individual received a corresponding prescription for each non-prescribed expense.", "Provision", "Section 3702 amends Sections 106, 220(d)(2)(A), and 223(d)(2) of the IRC to allow OTC medicines and drugs (without a prescription) and menstrual care products to be considered qualified medical expenses for HSAs, Archer MSAs, FSAs, and HRAs. This change in the definition of qualified medical expenses applies to amounts paid or expenses incurred after December 31, 2019."], "subsections": []}, {"section_title": "Section 3703. Increasing Medicare Telehealth Flexibilities During Emergency\u00c2 Period", "paragraphs": ["Background ", "Medicare coverage under Part B (fee-for-service) for telehealth services is defined under SSA Section 1834(m), which places certain conditions on such care, including who can furnish and be paid for the service, where the patient is located (the originating site), where the physician is located (the distant site), and the types of services that are covered. Recent legislation has modified some of the conditions under which telehealth services may be furnished under Medicare. The Coronavirus Preparedness and Response Supplemental Appropriations Act ( P.L. 116-123 ) Division B, Section 102, added certain Medicare telehealth restrictions to the list of applicable conditions for which the Secretary could temporarily waive or modify program requirements or regulations during the COVID-19 emergency. The provision also defined a qualified telehealth provider, requiring a prior relationship within the past three years between the patient and the provider under Medicare. Subsequently, FFCRA Division F, Section 6010, expanded the definition of a qualified provider to include those who had provider-patient relationships within the past three years outside of Medicare. ", "Provision", "Section 3703 removes the list of telehealth restrictions the Secretary was allowed to waive under P.L. 116-123 and broadens the Secretary's authority to temporarily waive any of the SSA Section 1834(m) telehealth requirements. The provision also removes the definition of a \"qualified provider\" for telehealth services during the COVID-19 emergency period pursuant to SSA Section 1135. The provision strikes the specific subsection added under P.L. 116-123 related to telephone use, such that the waiver authority applies more broadly to include \"a telehealth service [\u00e2\u0080\u00a6] furnished in any emergency area (or portion of such an area) during any portion of any emergency period to an individual.\" In addition, removing the \"qualified provider\" definition eliminates the requirement of a prior relationship between the patient and the provider for telehealth services to be delivered and covered under the COVID-19 emergency declaration."], "subsections": []}, {"section_title": "Section 3704. Enhancing Medicare Telehealth Services for Federally Qualified Health Centers and Rural Health Clinics During Emergency Period", "paragraphs": ["Background ", "Under current law, FQHCs and rural health clinics (RHCs) are allowed to be originating sites for covered telehealth services (sites where a patient is located) but are not allowed to be distant sites, where physicians may provide telehealth services to eligible patients at other locations (originating sites). Generally, both FQHC and RHCs are not paid under the Medicare physician fee schedule (MPFS). Rather, FQHCs are paid through an FQHC-specific prospective payment system (PPS), while RHCs are reimbursed as an all-inclusive rate for the services they provide. ", "Provision", "Section 3704 allows FQHCs and RHCs to serve as distant sites for the furnishing of telehealth services to telehealth-eligible individuals during the emergency period. The Secretary is required to develop and implement, through program instruction or otherwise, payment methods for this purpose that apply to FQHCs and RHCs serving as a distant sites that furnish telehealth services to eligible telehealth individuals during such an emergency period. Such services are to be paid similar to the national average amount for comparable telehealth services under the MPFS. The costs associated with this care are not to be included when calculating the payments for the FQHC PPS or the RHC all-inclusive rates, under current law. "], "subsections": []}, {"section_title": "Section 3705. Temporary Waiver of Requirement for Face-To-Face Visits Between Home Dialysis Patients and Physicians", "paragraphs": ["Background ", "Medicare is the main source of health care coverage for Americans with end-stage renal disease (ESRD). Individuals with ESRD have substantial and permanent loss of kidney function and require either a regular course of dialysis (a process that removes harmful waste products from an individual's bloodstream) or a kidney transplant to survive. Medicare covers beneficiaries aged 65 and older who have ESRD, as well as qualified individuals with ESRD who are under the age of 65. ", "Medicare ESRD benefits include thrice-weekly dialysis treatment and coverage for kidney transplants. CMS pays physicians, typically nephrologists, and other practitioners a monthly per-patient rate for most dialysis-related services. Physicians and practitioners managing ESRD patients who perform home-based dialysis are paid a single monthly rate based on the ESRD beneficiary's age. A physician or practitioner is required to have at least one face-to-face visit with a home dialysis patient each month.", "As part of the Bipartisan Budget Act of 2018 (BBA 2018; P.L. 115-123 ), Congress expanded the use of telehealth services for ESRD patients undergoing home dialysis. Starting in 2019, ESRD beneficiaries who use home dialysis have been allowed to receive monthly face-to-face clinical assessments via telehealth services, so long as the beneficiaries receive a face-to-face assessment without the use of telehealth (1) at least monthly for the initial three months of home dialysis, and (2) after the initial three months, at least once every three consecutive months.", "Provision", "Section 3705 amends SSA Section 1881(b)(3)(B) to allow the Secretary to waive the requirement that to receive telehealth services, a Medicare ESRD beneficiary undergoing home dialysis receive a face-to-face clinical assessment from a practitioner monthly during the initial three months of home dialysis and once every three months thereafter. The requirement may be waived for the period that the COVID-19 emergency is in effect."], "subsections": []}, {"section_title": "Section 3706. Use of Telehealth to Conduct Face-To-Face Encounter Prior to Recertification of Eligibility for Hospice Care During Emergency Period", "paragraphs": ["Background ", "The Medicare hospice benefit provides coverage for certain services provided to Medicare beneficiaries with a life expectancy of six months or less. Such services must be rendered by Medicare-certified hospices, which are either public agencies or private organizations primarily engaged in providing hospice services.", "Although beneficiaries who elect hospice care may disenroll from the hospice benefit at any time, the benefit is administratively structured by \"periods\": specifically, two 90-day periods and an unlimited number of subsequent 60-day periods. For hospice care to be covered under Medicare, an initial certification of a terminal illness must be obtained by the hospice at the beginning of the first 90-day period of care. The initial certification requires signed declarative statements attesting to the presence of a terminal illness by the hospice physician and the beneficiary's attending physician, if the individual has designated one. For each subsequent period of hospice care, recertification of the beneficiary's terminal illness is required only by the hospice physician. Since the beginning of 2011, part of the recertification process to determine continued eligibility has included a mandatory face-to-face encounter with the beneficiary by the hospice physician or nurse practitioner.", "Provision", "Section 3706 amends SSA Section 1814(a)(7)(D)(i) to provide that, as determined appropriate by the Secretary, a hospice physician or nurse practitioner may conduct a face-to-face encounter for continued eligibility purposes via telehealth during a period that the COVID-19 emergency is in effect. "], "subsections": []}, {"section_title": "Section 3707. Encouraging Use of Telecommunications Systems for Home Health Services Furnished During Emergency Period", "paragraphs": ["Background ", "Medicare covers visits by participating home health agencies for beneficiaries who (1) are confined to home and (2) need either skilled nursing care on an intermittent basis, physical therapy, or speech language therapy. As required by SSA Section 1895, home health agencies are paid for services under a home health PPS based on 30-day episodes of care. Generally, the home health PPS consists of a nationwide payment amount that is subject to adjustments for the expected care needs of a beneficiary (i.e., case-mix) and differences in local wages. Further payment adjustments are made in certain situations, including a low-utilization payment adjustment (LUPA) for episodes of care with few home visits.", "Under SSA Section 1895, home health agencies are not precluded from adopting telemedicine or other technologies, but such services are not permitted to serve as a substitute for visits paid under the home health PPS. Accordingly, federal regulations define a home health visit as an episode of personal contact. As such, telemedicine services are not accounted for in the home health PPS, nor do providers receive direct payment for telemedicine services generally. ", "Although there is no direct payment for home health services provided through remote technologies, regulations in 42 C.F.R. Part 409.46 designate remote patient monitoring as a service with costs that may be reported as administrative if remote patient monitoring is used to augment the care planning process. Remote patient monitoring is defined in regulations as the collection of patient health information that is digitally stored or transmitted by the patient and/or caregiver to the home health agency. CMS allows home health agencies to include the costs of remote patient monitoring as an allowable administrative cost.", "Provision", "Section 3707 requires the Secretary to consider how HHS can encourage the use of telemedicine by home health agencies with respect to home health services provided to Medicare beneficiaries during the period that the COVID-19 emergency is in effect. Specifically, the Secretary is required to consider ways to encourage the use of telecommunications systems, including for remote patient monitoring, and other communications or monitoring services. Use of new technologies must be consistent with the plan of care for beneficiaries. As part of this consideration, the Secretary may clarify guidance and conduct outreach, as appropriate."], "subsections": []}, {"section_title": "Section 3708. Improving Care Planning for Medicare Home Health Services", "paragraphs": ["Background ", "Medicare covers certain home health services under both Parts A and B. Special eligibility requirements and benefit limits exist for home health services furnished under Part A to beneficiaries who are enrolled in both Parts A and B. For such beneficiaries, Part A pays for only \"postinstitutional\" home health services, provided for up to 100 visits during a \"spell of illness,\" which is a period that extends 14 days after a discharge from a skilled nursing facility or a hospital following a minimum stay of three consecutive days. Part B covers any medically necessary home health services that exceed the 100-visit limit, as well as medically necessary home health services that do not qualify as \"postinstitutional.\"", "For beneficiaries enrolled in only Part A or Part B, the requirements described above do not apply. Part A or Part B, as applicable, covers all medically necessary episodes of home health care without a visit limit, regardless of whether the episode of care follows a hospitalization. Whether a beneficiary is enrolled in Part A only, Part B only, or in both, the scope of the Medicare home health benefit is the same. Medicare's payments to home health agencies are calculated using the same methods, and beneficiaries have no cost-sharing. ", "As required under SSA Sections 1814 and 1835 (for Parts A and Part B, respectively), for a beneficiary to receive home health services under Medicare, certain eligibility requirements must be certified by a physician, including a face-to-face encounter performed by a physician or a specified medical professional working in collaboration with, or under the supervision of, the physician, as applicable. For a beneficiary to be eligible for coverage, the physician certifies that home health services are required because the beneficiary, under the care of the physician, is (1) confined to the home and (2) in need of either skilled nursing care on an intermittent basis, physical therapy, or speech language therapy. After this eligibility is established, the eligibility period may be continued for homebound beneficiaries with a certified continuing need for occupational therapy services. ", "A physician is prohibited from certifying home health eligibility if he or she has a significant ownership interest in, or a significant financial or contractual relationship with, the home health agency in which the services are to be provided. These conditions are delineated in federal regulations and include an authorized exception for instances in which there is a solitary community home health agency.", "BBA 2018, Section 51002, amended SSA Sections 1814 and 1835 to expand the scope of supporting documentation the Secretary may use to document Medicare eligibility for home health services. Under the BBA changes, in addition to using a physician's medical record or a record compiled by an acute/post-acute facility, the Secretary may also use a home health agency's medical record as appropriate to the case involved.", "Provision", "Section 3708 amends SSA Section 1814(a)(2)(C) and Section 1835(a)(2)(A) to allow, no later than six months after enactment, a nurse practitioner, clinical nurse specialist, or physician assistant to certify the eligibility requirements for Medicare home health services under Parts A and B, respectively. Section 3708 further allows a nurse practitioner, clinical nurse specialist, or physician assistant to conduct the required face-to-face encounter that is part of the certification process. ", "Section 3708 also amends SSA Sections 1814 and 1835 to prohibit such professionals with a significant financial stake in a home health agency from certifying beneficiary eligibility when that agency is the entity providing the necessary services. However, the same exemption exists as the one pertaining to certifying physicians: the prohibition is waived if the servicing entity is the sole community home health agency. Further, Section 3708 conforms to language in the BBA 2018 to allow the Secretary to use a home health agency's medical record, in addition to a medical record compiled by medical professionals with certification authority, to document eligibility as appropriate to a specific case.", "Section 3708 also amends SSA Sections 1861 and 1895 to ensure that the general definitions of home health services, coverage, and payment system encompass and conform with current statutory language referencing the medical professionals to whom certification authority is extended. In addition, amendments made under Section 3708 are applied under SSA Title XIX (Medicaid) in the same manner and to the same extent such requirements apply to Medicare under SSA Title XVIII or regulations promulgated thereunder.", "No later than six months after enactment, the Secretary is required to implement regulations relevant to application of the amendments. If necessary, the Secretary must produce an interim final rule to comply with the required six-month effective date."], "subsections": []}, {"section_title": "Section 3709. Adjustment of Sequestration", "paragraphs": ["Background ", "The Budget Control Act of 2011 (BCA; P.L. 112-25 ) provided for increases in the debt limit and established procedures designed to reduce the federal budget deficit, including the creation of the Joint Select Committee on Deficit Reduction. The failure of the Joint Committee to propose deficit reduction legislation that was subsequently enacted into law by its mandated deadline triggered automatic spending reductions, including the \"sequestration\" (i.e., across-the-board reductions) of mandatory spending in FY2013 through FY2021. Subsequent legislation extended the sequestration of mandatory spending through FY2029. Medicare benefits are funded through mandatory spending and are subject to reductions under such sequestration. ", "Section 256(d) of the Balanced Budget and Emergency Deficit Control Act of 1985 (BBEDCA; P.L. 99-177 ) contains special rules for the Medicare program in the event of a sequestration. Among other things, it specifies that for Medicare, sequestration is to begin the month after the annual sequestration order has been issued and to continue for one calendar year. Subsequent sequestration orders begin the first month after the previous order ends. Therefore, as the initial sequestration order was issued March 1, 2013, Medicare sequestration began April 1, 2013, and was (most recently) scheduled to continue through March 31, 2030.", "Under a BCA mandatory sequestration order, Medicare benefit payments cannot be reduced by more than 2%. Since April 1, 2013, Medicare benefit-related payments, which include payments to health care providers, Medicare Advantage (MA), and Part D plans, have been subject to 2% reductions. ", "Provision", "This provision waives the application of sequestration to the Medicare program for the period May 1, 2020, through December 31, 2020. ", "This provision also extends the sequestration of mandatory spending for an additional year, through FY2030. (For Medicare, this means that sequestration will continue through March 31, 2031.) "], "subsections": []}, {"section_title": "Section 3710. Medicare Hospital Inpatient Prospective Payment System Add-On Payment for COVID-19 Patients During Emergency Period", "paragraphs": ["Background ", "Medicare pays most acute care hospitals under the inpatient prospective payment system (IPPS). The IPPS payment is a predetermined, fixed amount for most services provided to a Medicare beneficiary during an inpatient hospital stay. The bundled, fixed, per-discharge portion of the IPPS is referred to as the IPPS base amount. The total IPPS payment is the base amount, adjusted by a number of factors. These adjustments generally include such things as the geographic location of the hospital, the complexity of the patient's condition, and a hospital's teaching status, among others. One of the adjustments is a payment weight associated with the Medicare severity-diagnosis related group (MS-DRG) to which a patient is assigned. This weight reflects the average cost of patients in a specific MS-DRG relative to the average cost across all MS-DRGs due to differences in the severity of patients' conditions. In FY2020, there are 759 MS-DRGs (i.e., codes). The MS-DRG weights are recalibrated annually, generally effective October 1 of each year. The recalibrations are done in a budget-neutral manner. ", "Provision", "Section 3710 amends SSA Section 1886(d)(4)(C) to require the Secretary to increase the MS-DRG weight that would otherwise apply for a COVID-19-related Medicare discharge by 20% during the COVID-19 emergency period. IPPS payment increases associated with this provision are not to be included in applying budget neutrality. The Secretary is not required to use notice and comment to implement this provision; it may be done through program instruction or otherwise. A state that has a Section 1115A waiver of all or part of SSA Section 1886 to test alternative payment and delivery models through the Center for Medicare & Medicaid Innovation is not precluded from implementing a similar payment adjustment. "], "subsections": []}, {"section_title": "Section 3711. Increasing Access to Post-Acute Care During Emergency Period", "paragraphs": ["Background ", "Medicare pays for intensive inpatient rehabilitation services\u00e2\u0080\u0094physical, occupational, or speech therapy that is generally required after illness, injury or surgery\u00e2\u0080\u0094under the Inpatient Rehabilitation Facility (IRF) prospective payment system (IRF PPS). The IRF PPS payment is a predetermined, fixed amount per discharge. To receive the IRF PPS payment, the rehabilitation hospital, or a rehabilitation unit within another provider type, must meet IRF requirements specified in regulation. Medicare covers IRF services for patients who, among other requirements, can reasonably be expected to actively participate in, and benefit from, intensive rehabilitation therapy. Intensive rehabilitation therapy is specified in regulation as occurring either 3 hours a day at least five days per week, or 15 hours within a consecutive seven-day period. ", "Medicare also pays for extended periods of inpatient hospital care for chronic critical illness under the long-term care hospital inpatient prospective payment system (LTCH PPS). The LTCH PPS payment is a predetermined, fixed amount per discharge, and it is generally greater than the IPPS amount. Specifically, LTCHs are paid under the LTCH PPS if a Medicare beneficiary either (1) had a prior three-day intensive-care-unit stay at a hospital paid under the IPPS immediately preceding the LTCH stay, or (2) is assigned to an LTCH PPS case-mix group that is based on the receipt of ventilator services for at least 96 hours, and had a prior hospital stay at a hospital paid under the IPPS immediately preceding the LTCH stay. LTCH discharges occurring in FY2020, and subsequent fiscal years that do not meet the aforementioned criteria are paid a site-neutral payment rate similar to the IPPS amount. Also, an LTCH must have no more than 50% of its Medicare discharges paid at the site-neutral rate to continue to receive the LTCH PPS payment amount for LTCH-eligible cases. ", "Provision", "Section 3711(a) waives the Medicare IRF rule that patients must reasonably be expected to participate in, and benefit from, at least 15 hours of therapy per week, during the COVID-19 emergency period. Section 3711(b) waives the site-neutral payment requirement for COVID-19-related LTCH discharges so that all these discharges will be paid under the LTCH PPS, and it waives the 50% requirement during the during the COVID-19 emergency period. "], "subsections": []}, {"section_title": "Section 3712. Revising Payment Rates for Durable Medical Equipment Under the Medicare Program Through Duration of Emergency Period", "paragraphs": ["Background ", "Medicare Part B covers a wide variety of medical equipment and devices under the heading of durable medical equipment (DME), or prosthetics and orthotics (PO) if the products are medically necessary and prescribed by a physician. Examples of DME include hospital beds, blood glucose monitors, and ventilators. Prosthetics and orthotics include artificial limbs and back and knee braces. The DMEPOS benefit also includes related supplies (S), such as drugs and biologics that are necessary for the effective use of a product.", "Except in competitive bidding areas, Medicare pays for most DMEPOS based on fee schedules, which are statutory formulas for determining prices of items. Medicare pays 80% of the lower of a supplier's charge for an item or a fee schedule amount. A beneficiary is responsible for the remaining 20%. In general, fee schedule amounts are updated each year, by inflation and a measure of economy-wide productivity. ", "In addition, since 2016, Medicare fee schedule rates that apply outside of competitive bidding areas for certain DMEPOS have been reduced based on price information collected from the competitive bidding program. (Prices for DMEPOS under competitive bidding are generally lower than the fee schedule rates.) The fee schedule reductions were phased in during 2016, meaning that during that year, 50% of the Medicare payment rate was based on the unadjusted (higher) fee schedule amount, and 50% was based on the (lower) rate fully adjusted with information from competitive bidding. The phase-in was complete by January 2017, at which time fee schedules were based entirely on the adjustment with information from competitive bidding. In response to concerns that the adjusted rates were too low, the Secretary, in June 2018, again applied a phase-in methodology for rural and noncontiguous areas , meaning that in these areas the fee schedule was no longer fully adjusted by competitive bidding data, but instead went back to a 50/50 blend of rates based on both (higher) unadjusted fee schedule rates and (lower) rates fully adjusted by competitive bidding information. ", "As such, two different fee schedules apply to DMEPOS products outside of competitive bidding areas, depending on an area's rural/urban designation and whether an area is part of the contiguous United States. First, in rural or noncontiguous areas, the fee schedule is a 50/50 blend: 50% from the unadjusted fee schedule and 50% from the fee schedule adjusted to account for lower price information from competitive bidding (i.e., the phase-in methodology). Second, in areas that are not rural or noncontiguous (i.e., nonrural and contiguous), the fee schedules are fully adjusted by information from the competitive bidding program. In both cases, CMS regulations specify that this methodology applies from June 1, 2018, through December 31, 2020. ", "Provision", "Section 3712 of the CARES Act extends the 50/50 blended DMEPOS payment rate provided in rural or noncontiguous areas through the duration of the COVID-19 emergency period, if the emergency period lasts longer than December 31, 2020. ", "Section 3712 also increases the DMEPOS payment rate for items provided in areas other than rural areas and noncontiguous areas for the duration of the COVID-19 emergency period. Items and services furnished in these areas on or after the date that is 30 days after the enactment of the CARES Act (i.e., April 26, 2020) would be reimbursed under a fee schedule that is equal to a 75/25 blend, where 75% of the fee schedule is fully adjusted by competitive bidding rates, and 25% is based on unadjusted (higher) fee schedule amounts. "], "subsections": []}, {"section_title": "Section 3713. Coverage of the COVID-19 Vaccine Under Part B of the Medicare Program Without Any Cost-Sharing", "paragraphs": ["Background ", "Medicare Part B specifically covers the following vaccines: influenza virus (flu), pneumococcal pneumonia (pneumonia), hepatitis B virus (HBV) for beneficiaries at high or intermediate risk, and other vaccines directly related to treatment of an injury or direct exposure to a disease or condition. Otherwise, Medicare Part B does not cover preventive vaccines. If a vaccine is provided by a Medicare-participating practitioner, there is no cost-sharing for Medicare beneficiaries for the flu, HBV, or pneumonia vaccine ingredient or the vaccine administration. However, Medicare Part B cost-sharing applies (20% of the Medicare approved amount plus an annual deductible) for vaccines administered to treat an injury or direct exposure to a disease or condition. ", "Medicare Part C (MA) plans generally are required to cover the same services as original Medicare, Parts A and B. As a result, MA plans are required to cover, without beneficiary cost-sharing, the flu, HBV, and pneumonia vaccines. MA plans may cover without beneficiary cost-sharing vaccines directly related to treatment of an injury or direct exposure to a disease or condition and other vaccines. MA enrollee cost-sharing for vaccines not covered by Medicare Part B may vary depending on the plan and the vaccine, because they may be covered as supplemental benefits. ", "Provision", "Section 3713 amended SSA Section 1861(s)(10)(A) and SSA Section 1852(a)(1)(B) to require Medicare Part B and MA plans to cover a COVID-19 vaccine and its administration without beneficiary cost-sharing, including waiving applicable annual deductibles. This section was effective upon enactment (i.e., March 27, 2020) and is applicable to a COVID-19 vaccine on the date it is licensed by FDA. The Secretary is authorized to implement Section 3713 through program instructions or otherwise. "], "subsections": []}, {"section_title": "Section 3714. Requiring Medicare Prescription Drug Plans and MA-PD Plans to Allow During the COVID-19 Emergency Period for Fills and Refills of Covered Part D Drugs for Up to a 3-Month Supply", "paragraphs": ["Background ", "Medicare Part D is a voluntary outpatient prescription drug benefit. Enrollees purchase Part D prescription drug plans from private insurers, known as plan sponsors. To participate in the Part D program, plan sponsors must meet a series of requirements, including (1) providing an adequate formulary, or list of covered drugs, and (2) providing a sufficient network of contracted pharmacies that dispense prescriptions for set reimbursement. Federal law also requires that Part D sponsors provide enrollees with \"adequate emergency access\" to needed drugs. Under longstanding CMS guidance, plan sponsors have some latitude in deciding how to comply with the emergency access provisions. In general, however, CMS expects plan sponsors to limit pharmacy edits (i.e., dispensing restrictions) that prevent enrollees from seeking early prescription refills in the case of a federally declared disaster or a public health emergency that is reasonably expected to disrupt access. ", "In a March 10, 2020, memo to Part D sponsors, CMS reiterated its emergency access guidelines and outlined options for responding to the COVID-19 emergency. In the memo, CMS specified actions that Part D sponsors may or must take:", "Sponsors may relax \"refill-too-soon\" edits on prescriptions if circumstances are reasonably expected to result in a disruption in access. Sponsors have discretion regarding how to relax the edits, so long as enrollees have access to Part D drugs at the point-of-sale (i.e., a retail pharmacy). Sponsors may allow an enrollee to obtain the maximum extended-day supply available under his or her plan, if the prescription is requested and available. Sponsors must ensure that an enrollee has adequate access to covered drugs at a pharmacy located out of the enrollee's regular pharmacy network. The requirement would apply in cases where an enrollee could not reasonably be expected to obtain the drugs at a network pharmacy. Enrollees would still be responsible for required cost-sharing and possible additional charges (i.e., the out-of-network pharmacy's usual and customary charge for the drugs). Sponsors may relax plan-imposed policies that could discourage certain types of prescription delivery, such as mail or home delivery, if a disaster or emergency makes it difficult for enrollees to get to a retail pharmacy, or when enrollees are prohibited from going to a retail pharmacy (such as in a quarantine situation). Sponsors may waive requirements that enrollees receive prior authorization before filling a prescription for drugs used to treat or prevent COVID-19, if or when such drugs are identified. Any plan waivers would be provided to enrollees uniformly.", "Part D plan sponsors also operate drug management programs for beneficiaries deemed to be at risk of misusing or abusing frequently abused drugs. Sponsors may place additional controls on pharmacy dispensing to such individuals, including placing limits on the number of providers allowed to write prescriptions for at-risk enrollees and limiting the number of pharmacies allowed to dispense drugs to such enrollees. Under CMS regulations, at-risk enrollees must have reasonable access to prescriptions in case of natural disasters or similar situations.", "Provision", "Section 3714 amends SSA 1860D\u00e2\u0080\u00934(b) to require Part D sponsors to provide extended dispensing to enrollees during the COVID-19 emergency period. Under the provision, Part D sponsors must allow an enrollee to have access to up to a 90-day fill or refill of a prescription. Plan sponsors cannot deny such prescriptions based on existing plan cost and utilization management requirements that limit dispensing of particular drugs, except for restrictions based on drug safety. The Secretary may implement the provision by program instruction or otherwise. "], "subsections": []}, {"section_title": "Section 3715. Providing Home and Community-Based Services in Acute Care\u00c2 Hospitals", "paragraphs": ["Background ", "Medicaid home and community-based services (HCBS) include coverage of specific benefits such as case management, personal care, homemaker, respite care, and adult day health care, among other services. Medicaid HCBS are authorized under the Medicaid state plan, which is the contract a state makes with the federal government to administer its Medicaid program, subject to CMS approval. These HCBS state plan authorities include optional services that states may choose to provide under the SSA Section 1915(i) HCBS State Plan Option, the SSA Section 1915(k) Community First Choice State Plan Option, and SSA Section 1915(j) Self-Directed Personal Care Assistance Services. Medicaid HCBS are also authorized through waiver programs that permit states to disregard certain Medicaid requirements under the state plan in the provision of waiver services, also subject to CMS approval. Medicaid HCBS waiver authorities include SSA Section 1915(c) HCBS waivers, SSA Section 1915(d) HCBS waivers for the elderly, and SSA Section 1115 research and demonstration waivers.", "SSA Section 1902(h) states that nothing in Title XIX (Medicaid) should be construed as authorizing the Secretary to limit the amount of payment that may be made under a Medicaid state plan for home and community care.", "Provision", "Section 3715 amends SSA Section 1902(h) by adding a new paragraph (1) to specify that the limit on the amount of payment under a Medicaid state plan for home and community care applies to certain statutory authorities for providing Medicaid HCBS under state plan services authorized under SSA Section 1915(i), Section 1915(j), and Section 1915(k), as well as waiver authorities under Section 1915(c), Section 1915(d), and Section 1115.", "The provision adds a new paragraph (2), which states that nothing in SSA Titles XI (General Provisions), XVIII (Medicare), or XIX (Medicaid) shall be construed as prohibiting receipt of any care or services specified in paragraph (1) in an acute care hospital that are identified in an individual's person-centered service plan (or comparable plan of care); provided to meet needs of the individual that are not met through the provision of hospital services; not a substitute for services that the hospital is obligated to provide through its conditions of participation or under federal or state law, or under another applicable requirement; and designed to ensure smooth transitions between acute care settings and home and community-based settings, and to preserve the individual's functional abilities."], "subsections": []}, {"section_title": "Section 3716. Clarification Regarding Uninsured Individuals", "paragraphs": ["Background", "FFCRA Section 6004 permits state Medicaid programs to extend time-limited COVID-19 testing (as specified under that law's new Medicaid mandatory service category) without cost-sharing to uninsured individuals. For the purposes of this provision, FFCRA Section 6004 defines uninsured individuals as those who are not Medicaid eligible under one of Medicaid's mandatory eligibility pathways (e.g., the poverty-related pregnant women and child pathways, or the ACA Medicaid expansion pathway), and are not enrolled in (1) a federal health program (e.g., Medicare, Medicaid, CHIP, or TRICARE); (2) a specified type of private health insurance plan (e.g., individual health insurance coverage, group health insurance coverage, or a group health plan); or (3) an FEHBP. FFCRA provides a 100% federal medical assistance percentage (FMAP or federal matching rate) for medical assistance and administrative costs associated with uninsured individuals who are eligible for Medicaid under this provision.", "Provision", "Section 3716 of the CARES Act amends the definition of uninsured individuals under FFCRA Section 6004 for the purposes of determining Medicaid eligibility for the state plan option to allow for time-limited COVID-19 testing (as specified under the new Medicaid mandatory service category) without cost-sharing. Under the CARES Act, uninsured individuals will also include those (1) who would be eligible for Medicaid via the ACA Medicaid expansion pathway in states that have not adopted this eligibility pathway (i.e., non-ACA Medicaid expansion states), and (2) certain specified Medicaid enrollees who, by virtue of their Medicaid eligibility pathway, are entitled to limited Medicaid benefits, including ", "low-income tuberculosis-infected individuals who are entitled to services related to the tuberculosis infection, women needing treatment for breast or cervical cancer, individuals eligible only for family planning services and supplies, individuals eligible through the Medically Needy pathway whose coverage does not meet minimum essential health coverage, and certain low-income pregnant woman who are entitled to limited pregnancy-related services."], "subsections": []}, {"section_title": "Section 3717. Clarification Regarding Coverage of COVID-19 Testing Products", "paragraphs": ["Background ", "FFCRA Section 6004 added FDA-approved tests and testing-related state plan services for the COVID-19 virus without cost-sharing, as defined in Section 6004 to the list of Medicaid mandatory services under traditional Medicaid benefits. States and territories are required to offer services under this new mandatory benefit for the period beginning March 18, 2020, through the duration of the public health emergency, as declared by the Secretary pursuant to PHSA Section 319. During the specified public health emergency period, Section 6004 of FFCRA also permits state Medicaid programs to extend FDA-approved COVID-19 testing (and testing-related state plan services) to uninsured individuals without cost-sharing, as defined in Section 6004 and requires CHIP programs to cover FDA-approved COVID-19 testing and the administration of such testing without cost-sharing for CHIP enrollees.", "Section 6004 also amended SSA Section 1905(a)(3) to define applicable tests to include IVDs, as defined in FDA regulation, that detect SARS-CoV-2 or diagnose COVID-19 and that had received either 510(k) clearance, premarket approval, authorization pursuant to de novo classification, or emergency use authorization (EUA) for marketing.", "Provision", "The CARES Act modifies the definition of COVID-19 tests covered under Medicaid and CHIP for the specified public health emergency period. Specifically, Section 3717 amends SSA Section 1905(a)(3)(B), as added by FFCRA Section 6004, to remove language requiring FDA approval, clearance, or authorization for covered tests. Under this modified definition, tests are defined simply as IVDs, as defined in FDA regulation, that detect SARS-CoV-2 or diagnose COVID-19. IVDs are defined in FDA regulation as a specific subset of devices that include \"reagents, instruments, and systems intended for use in the diagnosis of disease or other conditions ... in order to cure, mitigate, treat, or prevent disease ... [s]uch products are intended for use in the collection, preparation, and examination of specimens taken from the human body.\" "], "subsections": []}, {"section_title": "Section 3718. Amendments Relating to Reporting Requirements With Respect to Clinical Diagnostic Laboratory Tests", "paragraphs": ["Background ", "Outpatient clinical laboratory services are paid under the Medicare Clinical Laboratory Fee Schedule (CLFS). Previously, CLFS payment rates were based on historical laboratory charges. The Protecting Access to Medicare Act (PAMA, P.L. 113-93 ) established a new method for determining clinical laboratory payments beginning in 2018, with Medicare CLFS payment rates based on reported private insurance payment amounts. ", "Per PAMA, CMS was to collect data from clinical laboratories (aside from advanced diagnostic laboratory tests, for which PAMA also altered payment, coding, and coverage) about private payer payment rates beginning in 2016. The new payment system was to be phased in from 2017 through 2022; during the phase-in period, payment could not be reduced, compared with the amount of the payment in the preceding year, by more than a statutorily specified limit. For each year 2017-2019, the CLFS payment reduction limit was to be 10%, and for each year 2020-2022, the payment reduction limit was to be 15%. Beginning in 2018, CMS set CLFS rates based on the weighted median of private payer rates for each laboratory service, collected from applicable laboratories. These CLFS payment rates are national and do not vary based on geography. ", "Section 105 of the Further Consolidated Appropriations Act of 2020 ( P.L. 116-94 ) modified the schedule for implementing the new CLFS payment system and reporting requirements. A period during which there would be no reporting required from diagnostic laboratories was established, from January 1, 2020, through December 31, 2020. The first required reporting period would begin January 1, 2021, and end March 31, 2021, with subsequent reporting periods required every three years thereafter. The phase-in schedule was modified so that the payment reduction limit was to be 10% for each year from 2017 through 2020, with the limit to be 15% from 2021 through 2023.", "Provision", "Section 3718 further delays the reporting requirements under the new CLFS payment methodology and makes additional revisions to the payment reduction limits during the phase-in schedule. The provision would extend the initial period during which no reporting is required from the period beginning January 1, 2021, through December 31, 2021, with the first required reporting period to begin on January 1, 2022, and end March 31, 2022. Subsequent required reporting periods would occur every three years thereafter. For 2021, there would be no payment reduction (i.e., 0% limit) during the phase-in of the private payer rate implementation schedule; the payment reduction limit would be 15% for 2022 through 2024, when the private payer rate is to be fully implemented. "], "subsections": []}, {"section_title": "Section 3719. Expansion of the Medicare Hospital Accelerated Payment Program During the COVID-19 Public Health Emergency", "paragraphs": ["Background ", "SSA Section 1815 permits the Secretary to make accelerated payments to an IPPS hospital and to a Puerto Rico IPPS hospital that experiences significant cash flow problems. Cash flow problems must arise out of one or more of the following: (1) a delay in Medicare payments, (2) exceptional situations beyond a hospital's control that result in delayed billing, or (3) highly exceptional situations where the Secretary deems an accelerated payment is appropriate. The amount of the accelerated payment may not exceed 70% of the estimated unbilled charges or unpaid bills (less deductibles and coinsurance). An accelerated payment must be paid-in-full within 90 days after such payment is made. If an accelerated payment is not paid in full within 90 days, CMS is authorized to withhold Medicare payments until the accelerated payment is repaid. Accelerated payments must be requested by a hospital, and those requests are reviewed and approved by the appropriate CMS regional office. ", "Provision", "Section 3719 amends SSA Section 1815 to expand eligibility for accelerated payments to Critical Access Hospitals (CAHs), pediatric hospitals, and IPPS-exempt cancer hospitals located in one of the 50 states or the District of Columbia, during the COVID-19 emergency period. The expansion of accelerated payments made under this provision is subject to appropriate safeguards against fraud, waste, and abuse. In addition, upon the request of a hospital that is eligible for accelerated payment under this provision, the Secretary may implement the following amendments during the designated public health emergency period: make accelerated payments on a periodic or lump sum basis; increase payments by an amount up to 100% of the estimated unbilled charges or unpaid bills or 125% for CAHs; and specify that the accelerated payments can cover up to a six-month period of unbilled charges or unpaid bills. The Secretary is required to extend the recoupment period up to 120 days upon request of the hospital. Also upon request, a hospital is allowed no less than 12 months from the date of the first accelerated payment to pay in full any outstanding balance. The Secretary may implement this provision through program instruction or otherwise. "], "subsections": []}, {"section_title": "Section 3720. Delaying Requirements for Enhanced FMAP to Enable State Legislation Necessary for Compliance", "paragraphs": ["Background ", "Medicaid is jointly financed by the federal government and the states. The federal government's share of a state's expenditures for most Medicaid services is called the FMAP rate, which varies by state and is designed so that the federal government pays a larger portion of Medicaid costs in states with lower per capita incomes relative to the national average (and vice versa for states with higher per capita incomes). Exceptions to the regular FMAP rate have been made for certain states, situations, populations, providers, and services.", "In the past, two temporary FMAP exceptions were available to provide states with fiscal relief due to recessions. They were provided through the Jobs and Growth Tax Relief Reconciliation Act of 2003 ( P.L. 108-27 ) and the American Recovery and Reinvestment Act of 2009 ( P.L. 111-5 ). To be eligible for both of these temporary FMAP increases, states had to abide by some requirements. These requirements varied in the two FMAP increases, but for both increases, states were required to maintain Medicaid \"eligibility standards, methodologies, and procedures\" and to ensure that local governments did not pay a larger percentage of the state's nonfederal Medicaid expenditures than would have been required otherwise.", "Section 6008 of FFCRA provides an increase to the FMAP rate for all states, the District of Columbia, and the territories of 6.2 percentage points for each calendar quarter occurring during the period beginning on the first day of the public health emergency period (i.e., January 1, 2020) and ending on the last day of the calendar quarter in which the last day of the public health emergency period ends.", "States, the District of Columbia, and the territories will not receive this FMAP rate increase if (1) the Medicaid \"eligibility standards, methodologies, or procedures\" are more restrictive than what was in effect on January 1, 2020; (2) the amount of premiums imposed by the state exceeds the amount as of January 1, 2020; (3) eligibility is not maintained for individuals enrolled in Medicaid on the date of FFCRA enactment (i.e., March 18, 2020) or for individuals who enroll during the public health emergency period through the end of the month in which the public health emergency period ends (unless the individual requests a voluntary termination of eligibility or the individual ceases to be a resident of the state); or (4) the state does not provide coverage (without the imposition of cost-sharing) for any testing services and treatments for COVID-19 (including vaccines, specialized equipment, and therapies).", "Section 6008 of FFCRA also modifies SSA Section 1905(cc) to add another condition for the FMAP rate increase. Specifically, states, the District of Columbia, and the territories cannot require local governments to fund a larger percentage of the state's nonfederal Medicaid expenditures for the Medicaid state plan or Medicaid disproportionate share hospital payments than what was required on March 11, 2020.", "Provision", "Section 3720 of the CARES Act amends Section 6008 of FFCRA to delay the application of the requirement that a state cannot receive the increased FMAP rate if the amount of premiums imposed by the state is higher than the amount imposed as of January 1, 2020. Specifically, the application of the premium requirement is delayed for 30 days after March 18, 2020 (i.e., the date of enactment for FFCRA). Effectively, a state will be eligible for the FFCRA FMAP increase through April 17, 2020, if the amount of premiums imposed by the state exceeds the amount imposed as of January 1, 2020, as long as the premiums were in effect on the date of enactment for FFCRA. In order to receive the FMAP increase, a state still needs to be in compliance with all of the other requirements listed in FFCRA."], "subsections": []}]}, {"section_title": "Subtitle F\u00e2\u0080\u0094Over-the-Counter Drugs", "paragraphs": [], "subsections": [{"section_title": "Part I\u00e2\u0080\u0094OTC Drug Review", "paragraphs": ["Background ", "FDA regulates the safety and effectiveness of nonprescription or OTC drugs sold in the United States. Examples of OTC drugs include hand sanitizer, sunscreen, and certain analgesics. To market an OTC drug, a company may follow one of two pathways. First, a company may submit an NDA to FDA for approval. Second, a company may use the OTC drug monograph process. A monograph establishes conditions\u00e2\u0080\u0094active ingredient(s) and related conditions (e.g., dosage level, combination of active ingredients, labeled indications, warnings and adequate directions for use)\u00e2\u0080\u0094under which an OTC drug in a given therapeutic category (e.g., sunscreen, antacid) is considered generally recognized as safe and effective (GRASE) for use. If an OTC drug product complies with a monograph, it does not need FDA approval of its NDA prior to marketing. Prior to enactment of the CARES Act, monographs were established and amended through rulemaking. FDA assesses monograph compliance as part of its inspection process.", "The OTC drug monograph program\u00e2\u0080\u0094established in 1972\u00e2\u0080\u0094was intended to provide an efficient mechanism through which OTC drugs could be marketed without individual FDA evaluation and approval. However, the program has been met with several challenges. For example, some monographs remain unfinalized, so there are OTC drugs on the market without final safety and effectiveness determinations. There are also perceived limitations to the industry's ability to propose innovations to currently marketed OTC drugs without submitting an NDA, and FDA has stated that it has limited resources to support OTC monograph activities."], "subsections": [{"section_title": "Section 3851. Regulation of Certain Nonprescription Drugs that Are Marketed Without an Approved Drug Application", "paragraphs": ["Provision", "Section 3851 establishes a new FFDCA Section 505G, which replaces the current OTC drug monograph rulemaking process with the administrative order process\u00e2\u0080\u0094a less burdensome alternative. This new process allows FDA, on its own initiative or upon request, to issue an administrative order (rather than a rule) determining that a drug, or class or combination of drugs, is GRASE or not GRASE. Certain monograph changes (e.g., new active ingredient, new indication) that are industry-requested and subject to a final administrative order are eligible for 18 months of marketing exclusivity. New FFDCA Section 505G, among other things, also (1) requires that certain OTC drugs be marketed only pursuant to FDA approval via an NDA; (2) creates an expedited process for the issuance of administrative orders in certain circumstances (i.e., public health hazard, safety labeling changes); (3) provides for circumstances under which minor changes in dosage form can be made without a new administrative order; (4) requires FDA to publish on its website information related to final interim and administrative orders, develop guidance, and establish meeting procedures; and (5) requires GAO to conduct a study on the impact of the 18-month marketing exclusivity period for certain eligible OTC drugs. "], "subsections": []}, {"section_title": "Section 3852. Misbranding", "paragraphs": ["Section 3852 amends FFDCA Section 502 to deem a drug misbranded if it is an OTC monograph drug that is subject to new FFDCA Section 505G, is not the subject of an approved NDA or ANDA, and does not comply with the requirements in FFDCA Section 505G. This provision also deems a drug misbranded if it is \"manufactured, prepared, propagated, compounded, or processed\" in a facility for which OTC monograph user fees have not been paid. "], "subsections": []}, {"section_title": "Section 3853. Drugs Excluded from the Over-The-Counter Drug Review", "paragraphs": ["Section 3853 states that nothing in this act (or the amendments made by it) applies to any OTC drug excluded by FDA from the OTC Drug Review in accordance with the statement set out at 37 FR 9466 published on May 11, 1972."], "subsections": []}, {"section_title": "Section 3854. Treatment of Sunscreen Innovation Act", "paragraphs": ["Background ", "Some industry stakeholders and members of Congress perceived FDA to be delaying consumer access to new sunscreens that were not originally included in the OTC Drug Review, and in November 2014, the Sunscreen Innovation Act (SIA; P.L. 113-195 ) was enacted. The SIA\u00e2\u0080\u0094codified in FFDCA Chapter V Subchapter I\u00e2\u0080\u0094created a new pathway for establishing whether certain OTC sunscreen active ingredients (i.e., those marketed in the United States after 1972 or those without any U.S. marketing experience) are GRASE. The SIA requires FDA to make GRASE determinations in the form of administrative orders (first proposed orders and then final orders) rather than through rulemaking, among other things. FDA has not yet approved any submissions for new sunscreen through the SIA process, requesting that sponsors submit additional safety and effectiveness data.", "Provision", "Section 3854 allows the sponsor of an OTC sunscreen active ingredient that is subject to a proposed sunscreen order under the SIA to elect to transition into the review process under new FFDCA Section 505G. The sponsor must notify FDA of such decision within 180 days of enactment, as specified. Otherwise, the order must continue to be reviewed under the SIA. Final sunscreen orders issued under the SIA are deemed final administrative orders under FFDCA Section 505G. Certain final sunscreen orders issued under new FFDCA Section 505G are eligible for 18 months of marketing exclusivity. Section 3854(b)(4) adds new FFDCA Section 586H, which sunsets FFDCA Chapter V Subchapter I (added by the SIA) at the end of FY2022."], "subsections": []}, {"section_title": "Section 3855. Annual Update to Congress on Appropriate Pediatric Indication for Certain OTC Cough and Cold Drugs", "paragraphs": ["Background ", "Between 2004 and 2005, more than 1,500 children under two years of age were treated in U.S. emergency departments for adverse events associated with cough and cold medications. Concerns also arose regarding the use of these products in children under six years of age. In October 2007, FDA convened the Joint Meeting of the Nonprescription Drugs Advisory Committee and the Pediatric Advisory Committee \"to discuss the safety and efficacy of [OTC] cough and cold products marketed for pediatric use.\" The committees determined that the available published studies did not demonstrate that OTC monograph cough and cold products marketed for pediatric use were effective in children and recommended additional studies and labeling changes. To date, FDA has not amended the monograph for these products in 21 C.F.R. Part 341 to reflect the committee recommendations. Absent rulemaking, FDA has issued several consumer updates warning of potential harms associated with the use of certain cough and cold drug products in children. Manufacturers voluntarily removed OTC infant cough and cold products intended for children under two years of age and voluntarily updated product labeling to include the warning \"do not use in children under 4 years of age.\" However, such labeling changes are not required by FDA under the cough and cold monograph, and in order for FDA to require such labeling for these products, the agency would have to amend the monograph.", "Provision ", "Section 3855 requires that, not later than one year after enactment and annually thereafter until FDA completes its evaluation, the Secretary submits to the Senate HELP and House Energy and Commerce committees a letter describing FDA's progress in (1) evaluating the cough and cold monograph under 21 C.F.R. Part 341 with respect to children under age six and (2) as appropriate, revising the monograph to address children under age six, through the administrative order process under new FFDCA Section 505G(b)."], "subsections": []}]}, {"section_title": "Part II\u00e2\u0080\u0094User Fees", "paragraphs": [], "subsections": [{"section_title": "Section 3862. Fees Relating to Over-The-Counter Drugs", "paragraphs": ["Background ", "Historically, OTC drug monograph activities have been funded solely by discretionary appropriations from the General Fund of the Treasury. This funding method is in contrast to FDA's prescription drug activities, which are funded by a combination of discretionary appropriations and industry-paid user fees. This is because in 1992, the Prescription Drug User Fee Act (PDUFA) gave FDA the authority to collect fees from the pharmaceutical industry and use the revenue to support \"the process for the review of human drug applications.\" PDUFA connected the user fees to performance goals that were negotiated between FDA and industry. The five-year PDUFA authority has been renewed on five subsequent occasions, and user fee authorities have been added for medical devices, animal drugs, tobacco products, and other FDA-regulated products and activities. These fee authorities\u00e2\u0080\u0094codified in FFDCA Chapter VII, Subchapter C\u00e2\u0080\u0094allow the Secretary, acting through the FDA Commissioner, to assess, collect, and spend user fees paid from regulated entities for specified FDA activities.", "Provision", "Section 3862 creates in FFDCA Chapter VII, a new Part 10\u00e2\u0080\u0094\"Fees Relating to Over-The-Counter Drugs\"\u00e2\u0080\u0094and the following new FFDCA sections: Section 744L (\"Definitions\"), Section 744M (\"Authority to Assess and Use OTC Monograph Fees\"), and Section 744N (\"Reauthorization; Reporting Requirements\"). New FFDCA Section 744M establishes a legal framework for the Secretary, beginning with FY2021, to assess and collect facility fees and monograph order request fees to support FDA's OTC monograph drug activities (e.g., review of order requests, inspections). Fees may be collected and spent only to the extent and in the amount provided in advance in appropriations acts (with an exception for the first year of the program), may remain available until expended, and may be transferred as specified for monograph drug activities only. This user fee program is authorized through FY2025. New FFDCA Section 744N requires the Secretary to submit annual performance and fiscal reports on user fee collection and spending to the Senate HELP and House Energy and Commerce committees. The performance and fiscal reports must be made publicly available on FDA's website. New FFDCA Section 744N also specifies the process for reauthorization of the user fee program, requiring the Secretary to consult with stakeholders on recommendations for future monograph activities and to transmit the recommendations to Congress no later than January 15, 2025."], "subsections": [{"section_title": "Appendix. Health Provisions in Title III of the CARES Act: Implementation Dates, Reporting Requirements, and Deadlines", "paragraphs": ["The table below includes relevant provisions (listed in order number) that include an effective date, a required report, or an explicit sunset date. The table does not include every provision described in this report, nor does it include required internal reports (i.e., reports required by grantees); it includes only reports that must be made public or be delivered to Congress. This CRS report reflects the CARES Act at enactment and will not be track actions pursuant to these deadlines, nor will this report be updated."], "subsections": []}]}]}]}]}]}}
{"id": "R46113", "title": "Department of Homeland Security Appropriations: FY2020", "released_date": "2020-01-21T00:00:00", "summary": ["This report provides an overview and analysis of FY2020 appropriations for the Department of Homeland Security (DHS). The primary focus of this report is on the funding provided to DHS through the appropriations process. It includes an Appendix with definitions of key budget terms used throughout the suite of Congressional Research Service reports on DHS appropriations. It also directs the reader to other reports providing context for specific component appropriations.", "As part of an overall DHS budget that the Office of Management and Budget (OMB) estimated to be $92.08 billion, the Trump Administration requested $51.68 billion in adjusted net discretionary budget authority through the appropriations process for DHS for FY2020. The request amounted to a $2.27 billion (4.6%) increase from the $49.41 billion in annual appropriations enacted for FY2019 through the Department of Homeland Security Appropriations Act, 2019 ( P.L. 116-6 , Division A).", "The Administration also requested discretionary funding that does not count against discretionary spending limits and is not reflected in the adjusted net discretionary budget authority total. The Administration requested an additional $14.08 billion for the Federal Emergency Management Agency (FEMA) in disaster relief funding, as defined by the Budget Control Act ( P.L. 112-25 ; BCA), and in the budget request for the Department of Defense (DOD), $190 million in Overseas Contingency Operations designated funding (OCO) for the Coast Guard to be transferred from the Operations and Maintenance budget of the U.S. Navy.", "On June 11, 2019, the House Appropriations Committee marked up H.R. 3931 , its version of the Department of Homeland Security Appropriations Act, 2020. H.Rept. 116-180 was filed July 24, 2019. Committee-reported H.R. 3931 included $52.80 billion in adjusted net discretionary budget authority, according to the Congressional Budget Office's initial score of the bill. This was $1.12 billion (2.2%) above the level requested by the Administration, and $3.39 billion (6.9%) above the enacted annual level for FY2019. Much of this increase was due to the addition of several immigration-related policy provisions in the full committee markup, which added more than $3.0 billion to the score of the bill, putting the bill over its subcommittee allocation (CBO later revised the scoring of those provisions to $1.9 billion in a separate letter on September 10, 2019).", "On September 26, 2019, the Senate Appropriations Committee marked up S. 2582 , its version of the Department of Homeland Security Appropriations Act, 2020. S.Rept. 116-125 was filed the same day. Committee-reported S. 2582 included $53.18 billion in adjusted net discretionary budget authority. This was $1.50 billion (2.9%) above the level requested by the Administration, and $3.77 billion (7.6%) above the enacted annual level for FY2019. Much of this latter increase was due to the inclusion of $5 billion in funding for border barrier construction as opposed to $1.38 billion in the FY2019 act. Both the House and Senate appropriations committees recommended more discretionary funding for the Coast Guard, Transportation Security Administration, and FEMA than had been requested by the Administration.", "No annual appropriations for FY2020 had been enacted as FY2019 was drawing to a close, so a continuing resolution was enacted ( P.L. 116-59 ) on September 27, 2019. It temporarily extended funding at the FY2019 rate for operations through November 21 for most DHS programs (see limited exceptions in the Department of Homeland Security section of CRS Report R45982, Overview of Continuing Appropriations for FY2020 (P.L. 116-59) ). This CR was subsequently extended through December 20.", "Annual appropriations for DHS were enacted on December 20, 2019, in P.L. 116-93 , Division D. The act included $50.47 billion in adjusted net discretionary budget authority. This was $1.22 billion (2.4%) below the level requested by the Administration, and $1.06 billion (2.1%) above the enacted annual level for FY2019. The FY2020 DHS Appropriations Act included $17.35 billion for the Federal Emergency Management Agency (FEMA) in disaster relief funding, as defined by the BCA, and $190 million in OCO funding for the Coast Guard rather than as a transfer from the Navy.", "This report will be updated as events warrant."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["This report describes and analyzes annual appropriations for the Department of Homeland Security (DHS) for FY2020. It compares the enacted FY2019 appropriations for DHS, the Donald J. Trump Administration's FY2020 budget request, and the appropriations measures developed and ultimately enacted in response to it. This report identifies additional informational resources, reports, and products on DHS appropriations that provide context for the discussion. A list of Congressional Research Service (CRS) policy experts with whom congressional clients may consult on specific topics may be found in CRS Report R42638, Appropriations: CRS Experts . ", "The suite of CRS reports on homeland security appropriations tracks legislative action and congressional issues related to DHS appropriations, with particular attention paid to discretionary funding amounts. These reports do not provide in-depth analysis of specific issues related to mandatory funding\u00e2\u0080\u0094such as retirement pay\u00e2\u0080\u0094nor do they systematically follow other legislation related to the authorizing or amending of DHS programs, activities, or fee revenues.", "Discussion of appropriations legislation involves a variety of specialized budgetary concepts. The Appendix to this report explains several of these concepts, including budget authority, obligations, outlays, discretionary and mandatory spending, offsetting collections, allocations, and adjustments to the discretionary spending caps under the Budget Control Act (BCA; P.L. 112-25 ). A more complete discussion of those terms and the appropriations process in general can be found in CRS Report R42388, The Congressional Appropriations Process: An Introduction , coordinated by James V. Saturno, and the Government Accountability Office's A Glossary of Terms Used in the Federal Budget Process ."], "subsections": [{"section_title": "Note on Data and Citations", "paragraphs": ["All amounts contained in CRS reports on homeland security appropriations represent budget authority. For precision in percentages and totals, all calculations in these reports use unrounded data, which are presented in each report's tables. Amounts in narrative discussions may be rounded to the nearest million (or 10 million, in the case of numbers larger than 1 billion), unless noted otherwise. ", "Data used in this report for FY2019 annual appropriations are derived from the conference report accompanying P.L. 116-6 , the Consolidated Appropriations Act, 2019. Division A of P.L. 116-6 is the Department of Homeland Security Appropriations Act, 2019. FY2019 supplemental appropriations data are drawn directly from two enacted measures: P.L. 116-20 , the Additional Supplemental Appropriations Act, 2019, which included funding for response and recovery from a range of natural disasters; and P.L. 116-26 , the Emergency Supplemental Appropriations for Humanitarian Assistance and Security at the Southern Border Act, 2019, which included funding for security and humanitarian needs at the U.S.-Mexico border. Data for the FY2020 requested levels and House Appropriations Committee-recommended levels of annual appropriations are drawn from H.Rept. 116-180 , which accompanied H.R. 3931 . Data for the Senate Appropriations Committee-recommended levels of annual appropriations are drawn from S.Rept. 116-125 , which accompanied S. 2582 . Data for the FY2020 enacted levels are drawn from the explanatory statement accompanying P.L. 116-93 , Division D of which is the FY2020 Department of Homeland Security Appropriations Act.", "Scoring methodology is consistent across this report, relying on data provided by the Appropriations Committees that has been developed with Congressional Budget Office (CBO) methodology. CRS does not attempt to compare this data with Office of Management and Budget (OMB) data because technical scoring differences at times do not allow precise comparisons. ", "Note: Previous CRS reports on DHS appropriations at times used OMB data on mandatory spending for the Federal Emergency Management Agency and the U.S. Secret Service that was not listed in appropriations committee documentation\u00e2\u0080\u0094for consistency, OMB data on mandatory spending is no longer included in this report."], "subsections": []}]}, {"section_title": "Legislative Action on FY2020 DHS Appropriations", "paragraphs": ["This section provides an overview of the legislative process thus far for appropriations for the Department of Homeland Security for FY2020, from the Administration's initial request, through enactment of annual appropriations in Division D of P.L. 116-93 ."], "subsections": [{"section_title": "Annual Appropriations", "paragraphs": [], "subsections": [{"section_title": "Trump Administration FY2020 Request", "paragraphs": ["On March 18, 2019, the Trump Administration released its detailed budget request for FY2020. A lapse in FY2019 annual appropriations from December 22, 2018, until January 25, 2019, delayed the full budget proposal's release past the first Monday in February, the deadline outlined in the Budget Act of 1974. ", "The Trump Administration requested $51.68 billion in adjusted net discretionary budget authority for DHS for FY2020, as part of an overall budget that the Office of Management and Budget estimated to be $92.08 billion (including fees, trust funds, and other funding that is not annually appropriated or does not score against discretionary budget limits). The request amounted to a $2.27 billion (4.6%) increase from the $49.41 billion in annual net discretionary budget authority in appropriations enacted for FY2019 through the Department of Homeland Security Appropriations Act, 2019 ( P.L. 116-6 , Division A).", "The Trump Administration also requested discretionary funding that does not count against discretionary spending limits set by the Budget Control Act (BCA; P.L. 112-25 ) for two DHS components and is not reflected in the above totals. The Administration requested an additional $14.08 billion for the Federal Emergency Management Agency (FEMA) in disaster relief funding, as defined by the BCA, and in the budget request for the Department of Defense, $190 million in Overseas Contingency Operations/Global War on Terror designated funding (OCO), to be transferred to the Coast Guard from the Navy. "], "subsections": []}, {"section_title": "House Committee Action", "paragraphs": ["On June 11, 2019, the House Appropriations Committee marked up H.R. 3931 , the Department of Homeland Security Appropriations Act, 2020. H.Rept. 116-180 was filed on July 24, 2019. As reported by the committee, H.R. 3931 included $52.80 billion in adjusted net discretionary budget authority. This was $1.12 billion (2.2%) above the level requested by the Administration, and $3.39 billion (6.9%) above the enacted level of annual appropriations for FY2019. ", "The House committee bill included $14.08 billion in disaster relief-designated funding, reflecting the level in the Administration's modified request, and the House Appropriations Committee-reported Defense Appropriations bill included OCO funding to be transferred to the Coast Guard. As a result of amendments adopted in full committee markup, the initial CBO scoring of the bill exceeded the subcommittee allocation by more than $3 billion. (CBO later revised the scoring of those provisions to $1.9 billion.)"], "subsections": []}, {"section_title": "Senate Committee Action", "paragraphs": ["On September 26, 2019, the Senate Appropriations Committee marked up S. 2582 , its version of the Department of Homeland Security Appropriations Act, 2020. S.Rept. 116-125 was filed the same day. As reported by the committee, S. 2582 included $53.18 billion in adjusted net discretionary budget authority. This was $1.50 billion (2.9%) above the level requested by the Administration, and $3.77 billion (7.6%) above the enacted annual level for FY2019. Much of this latter increase was due to the inclusion of $5 billion in funding for border barrier construction as opposed to $1.38 billion in the FY2019 act. Both the House and Senate committees included more discretionary funding for the Coast Guard, Transportation Security Administration, and FEMA than had been requested by the Administration.", "The Senate committee bill also included $17.35 billion of disaster relief-designated funding\u00e2\u0080\u0094$3.28 billion (23.3%) more than the Administration's modified request\u00e2\u0080\u0094and $190 million in OCO-designated funding for the Coast Guard."], "subsections": []}, {"section_title": "Continuing Resolution", "paragraphs": ["No annual appropriations for FY2020 had been enacted by late September as FY2019 was drawing to a close, so on September 27, 2019, Congress passed a continuing resolution (CR) ( P.L. 116-59 ), temporarily extending funding at the FY2019 rate for operations through November 21. This CR was subsequently extended through December 20.", "P.L. 116-59 included four provisions specifically addressing needs of DHS under a CR:", "Section 132 provides a special apportionment of CR funds to cover Secret Service expenses related to the FY2020 presidential campaign; Section 133 allows for an accelerated rate of apportionment for the Disaster Relief Fund (DRF) to ensure that the programs it funds can be carried out; Section 134 extends the authorization for the National Flood Insurance Program to issue new policies; and Section 135 allows funds to be allocated in accordance with a planned restructuring of some DHS management activities.", "In addition, Section 101(6) extends by reference some immigration provisions that have been linked to the appropriations cycle.", "For further information on the FY2020 continuing resolutions, see CRS Report R45982, Overview of Continuing Appropriations for FY2020 (P.L. 116-59) ."], "subsections": []}, {"section_title": "Enactment", "paragraphs": ["On December 16, 2019, the text and explanatory statements for two consolidated appropriations bills were released on the House Rules Committee website. One, which used H.R. 1158 as a legislative shell, included four appropriations measures, including the FY2020 DHS annual appropriations measure as Division D. Division D included $50.47 billion in adjusted net discretionary budget authority. This was $1.22 billion (2.4%) below the level requested by the Administration, and $1.06 billion (2.1%) above the enacted annual level for FY2019. The act included $17.35 billion for the Federal Emergency Management Agency (FEMA) in disaster relief funding, as defined by the Budget Control Act ( P.L. 112-25 ; BCA), and $190 million in Overseas Contingency Operations designated funding (OCO) in an appropriation to the Coast Guard.", "The House passed the measure by a vote of 280-138 on December 17, and the Senate did so by a vote of 81-11 on December 19. The bill was signed into law of December 20, 2019, and enacted as P.L. 116-93 ."], "subsections": []}]}]}, {"section_title": "Summary of DHS Appropriations", "paragraphs": ["Generally, the homeland security appropriations bill includes all annual appropriations provided for DHS, allocating resources to every departmental component. Discretionary appropriations provide roughly two-thirds to three-fourths of the annual funding for DHS operations, depending how one accounts for disaster relief spending and funding for OCO. The remainder of the budget is a mix of fee revenues, trust funds, and mandatory spending.", "Annual appropriations measures for DHS typically have been organized into five titles. The first four are thematic groupings of components, while the fifth provides general direction to the department, and sometimes includes provisions providing additional budget authority. "], "subsections": [{"section_title": "The DHS Common Appropriations Structure (CAS)", "paragraphs": ["When DHS was established in 2003, components of other agencies were brought together over a matter of months, in the midst of ongoing budget cycles. Rather than developing a new structure of appropriations for the entire department, Congress and the Administration continued to provide resources through existing account structures when possible. ", "At the direction of Congress, in 2014 DHS began to work on a new Common Appropriations Structure (CAS), which would standardize the format of DHS appropriations across components. In an interim report in 2015, DHS noted that operating with \"over 70 different appropriations and over 100 Programs, Projects, and Activities ... has contributed to a lack of transparency, inhibited comparisons between programs, and complicated spending decisions and other managerial decision-making.\"", "After several years of work and negotiations with Congress, DHS made its first budget request in the CAS for FY2017, and implemented it while operating under a CR in October 2016. Under the CAS, legacy appropriations structures were largely converted to a four-category structure:", "1. Operations and Support , which covers operating salaries and expenses; 2. Procurement , Construction, and Improvements , which funds planning, operational development, engineering, purchase, and deployment of assets to support component missions; 3. Research and Development , which provides resources needed to identify, explore, and demonstrate new technologies and capabilities to support component missions; and 4. Federal Assistance , which supports grant funding managed by DHS components.", "All components have an Operations and Support (O&S) appropriation. All operational components and some support and headquarters components have a Procurement, Construction, and Improvements (PC&I) appropriation. Research and Development (R&D) appropriations are even less common, and only FEMA, the Countering Weapons of Mass Destruction Office (CWMD), and U.S. Citizenship and Immigration Services (USCIS) have federal assistance appropriations. ", "Even with the implementation of the CAS structure, some appropriations are not included in those four categories:", "Federal Protective Service: The Federal Protective Service, which has been a part of several different components of DHS, does not have an appropriation of an explicit amount. Rather, the appropriations measure has language directing that funds credited to the FPS account may be spent by FPS to carry out its mission. It therefore has a net-zero impact on the total net discretionary spending in the bill. USCG's Retired Pay: The Coast Guard's Retired Pay appropriation supports the costs of the USCG retired personnel entitlements, including pensions, Survivor Benefits Plans, and medical care of retired USCG personnel and their dependents. This appropriation is categorized as appropriated mandatory spending: while the U.S. government has a legal obligation to make these payments, there is no permanent statutory mechanism in place to provide the funds. Because the government is required to make these payments, the Retired Pay appropriation does not count against the discretionary allocation of the bill. FEMA's Disaster Relief Fund: The Federal Emergency Management Agency (FEMA) receives a separate appropriation for its activities authorized under the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. \u00c2\u00a75121 et seq.). This allows for more consistent tracking of FEMA's disaster assistance spending over time, and ensures more transparency into the availability of funds for disaster assistance versus FEMA's other grant activities, which are funded through the Federal Assistance appropriation. FEMA's National Flood Insurance Fund: The National Flood Insurance Program is largely mandatory spending. However, some program functions, including mission support, floodplain management, and flood mapping, are paid for through discretionary appropriations. Certain other program costs are paid for by fees collected by the government, which requires appropriations language to allow those resources to be spent. These include: Operating expenses and salaries and expenses associated with flood insurance operations; Commissions and taxes of agents; Interest on borrowings from the Treasury; and Flood mitigation actions and flood mitigation assistance."], "subsections": [{"section_title": "Administrative and General Provisions", "paragraphs": ["Prior to the FY2017 act, the provisos accompanying many appropriations included directions to components or specific conditions on how the budget authority it provided could be used. Similarly, general provisions provided directions or conditions to one or more components. In the FY2017 act, a number of these provisions within appropriations and component-specific general provisions were grouped at the ends of the titles where their targeted components are funded, and identified as \"administrative provisions.\" This practice has continued in subsequent years.", "This report tracks changes in administrative and general provisions compared to the baseline of the prior year's enacted measure, noting provisions dropped, added, and modified. These changes from the baseline may take place for a variety of reasons. Due to the passage of time or enactment of permanent legislation, a provision may require adjustment or lose its relevance. Other provisions are the priority of members in one chamber or another, and as the enacted bill represents a compromise between those positions, the bills developed by a one chamber may not necessarily reflect the other chamber's priorities."], "subsections": []}]}, {"section_title": "DHS Appropriations: Summary by Component Type", "paragraphs": ["The following sections of the report discuss the appropriations provided for the department by type of component. It groups the 15 components of DHS into the following structure: ", "Law Enforcement Operational Components (funded in Title II) U.S. Customs and Border Protection Immigration and Customs Enforcement Transportation Security Administration U.S. Coast Guard U.S. Secret Service Incident Response and Recovery Operational Components (Title III) Cybersecurity and Infrastructure Security Agency Federal Emergency Management Agency Support Components (Title IV) U.S. Citizenship and Immigration Services Federal Law Enforcement Training Center Science and Technology Directorate Countering Weapons of Mass Destruction Office Headquarters Components (Title I) Office of the Secretary and Executive Management Departmental Management Directorate Analysis and Operations Office of Inspector General", "Each group's and component's role is briefly described below, and their FY2019 enacted and FY2020 requested, recommended, and enacted appropriations are presented in tables arranged by grouped components. After each funding table, a brief analysis of selected administrative provisions for that group is provided."], "subsections": [{"section_title": "Law Enforcement Operational Components", "paragraphs": ["Funding for law enforcement operational components is generally provided in Title II of the annual DHS appropriations act. This is the largest title of the bill, although not all of DHS's largest components are included in it."], "subsections": [{"section_title": "Components and Missions", "paragraphs": ["U.S. Customs and Border Protection (CBP) : CBP is responsible for securing America's borders, coastlines, and ports of entry, preventing the illegal entry of persons and goods while facilitating lawful travel, trade, and immigration.", "Immigration and Customs Enforcement (ICE): ICE is the principal criminal investigative agency within DHS, and is charged with preventing terrorism and combating the illegal movement of people and goods.", "Transportation Security Administration (TSA): TSA provides security for the U.S. transportation system while ensuring the free and secure movement of people and goods.", "U.S. Coast Guard (USCG): The USCG is the principal federal agency responsible for maritime safety, security, and environmental stewardship in U.S. ports and inland waterways. The USCG is a hybrid of a law enforcement agency, regulatory agency, and first responder, as well as being a component of DHS, the intelligence community, and of the U.S. Armed Forces.", "U.S. Secret Service (USSS): The USSS is responsible for protecting the President, the Vice-President, their families and residences, past Presidents and their spouses, national and world leaders visiting the United States, designated buildings (including the White House and Vice President's Residence), and special events of national significance. The USSS also investigates and enforces laws related to counterfeiting and certain financial crimes.", " Table 1 includes a breakdown of budgetary resources provided to these components controlled through appropriations legislation. "], "subsections": []}, {"section_title": "Administrative Provisions", "paragraphs": ["H.R. 3931 as reported by the House Appropriations Committee had 31 administrative provisions for Title II, 21 of which were unchanged from FY2019. The House committee bill dropped eight provisions which were in the FY2019 act, including", "Section 208 , which allowed ICE to reprogram funding to maintain detention of aliens that were prioritized for removal; Section 214 , which mandated TSA continue to monitor airport exit lanes; Section 223 , which allowed USCG to allocate its OCO funding within the Operations and Support appropriation; Section 225 , which authorized a TSA pilot program for screening services at locations other than primary passenger terminals; Section 227 , which requires the USCG maintain the mission and staffing of its Operations Systems Center; Section 228 , which prohibited competitions to privatize activities of the USCG National Vessel Documentation Center; Section 229 , which allowed funds in the bill to alter activities of the USCG Civil Engineering program, but not reduce them; and Section 232 , which required DHS collaboration with local governments on siting border barriers within their jurisdictions.", "Three previously carried administrative provisions were modified, and seven new provisions were added.", "S. 2582 as reported by the Senate Appropriations Committee, had 33 administrative provisions in Title II. Only one provision was dropped from the FY2019 act\u00e2\u0080\u0094Section 225, described above. One previously carried provision was modified and three new provisions were added. ", "P.L. 116-93 , Div. D, includes 36 administrative provisions in Title II. Sections 225 and 232 from the FY2019 act were dropped, four provisions were modified, and six new administrative provisions were included.", "Modified administrative provisions are outlined in Table 2 , while new administrative provisions proposed or included by the appropriations committees are outlined in Table 3 ."], "subsections": []}]}, {"section_title": "Incident Response and Recovery Operational Components", "paragraphs": ["Funding for operational components which are focused on incident response and recovery is generally found in Title III of the annual DHS appropriations act. It includes funding for FEMA, which has the largest budget of any DHS component\u00e2\u0080\u0094an appropriated budget largely driven by disaster programs authorized under the Stafford Act, and an overall budget which also includes non-appropriated funding for the National Flood Insurance Program. Title III also includes funding for the newly restructured Cybersecurity and Infrastructure Security Agency (CISA), formerly the National Protection and Programs Directorate. The reorganization included a shift of the Federal Protective Service from CISA to the Management Directorate, reducing the gross budgetary resources in this title."], "subsections": [{"section_title": "Components and Missions", "paragraphs": ["Cybersecurity and Infrastructure Security Agency (CISA): Formerly known as the National Protection and Programs Directorate (NPPD), CISA promotes information sharing to build resilience and mitigate risk from cyber and physical threats to infrastructure, and leads cross-government cybersecurity initiatives.", "Federal Emergency Management Agency (FEMA): FEMA leads the federal government's efforts to reduce the loss of life and property and protect the United States from all hazards, including natural disasters, acts of terrorism, and other disasters through a risk-based, comprehensive emergency management system of preparedness, protection, response, recovery, and mitigation.", " Table 4 includes a breakdown of budgetary resources for these components controlled through appropriations legislation. As some annually appropriated resources were provided for FEMA from outside Title III in FY2019, by transfer and by appropriation, a separate line is included for FEMA showing a total for what is provided solely within Title III, then the non-Title III funding, followed by the total annual appropriation for FEMA. The table only reflects the impact of transfers in the discretionary funding and budgetary resource totals."], "subsections": []}, {"section_title": "Administrative Provisions", "paragraphs": ["H.R. 3931 as reported by the House Appropriations Committee had eight administrative provisions in Title III, five of which were unchanged from FY2019. Two provisions were dropped from the FY2019 act: Section 301, which required a report on revised methods to assess and allocate costs for countermeasures used by the Federal Protective Service; and Section 309, which raised the federal share of costs for essential assistance and debris removal for wildfire major disasters declared in calendar year 2018 from 75% to 90%. Two previously carried administrative provisions were modified, and one new provision was added, which would allow governors to resubmit and FEMA to reconsider requests for Stafford Act individual assistance for certain disasters. ", "S. 2582 as reported by the Senate Appropriations Committee had six administrative provisions in Title III. The Senate Appropriations Committee chose to drop three administrative provisions from this title that were included in the FY2019 act\u00e2\u0080\u0094the two described above, and Section 307, which provided certain waivers for SAFER Act grants. No previously carried provisions were substantively modified and no new provisions were added. ", "P.L. 116-93, Div. D, includes seven administrative provisions in Title III. Sections 301 and 309 from the FY2019 act as described above were dropped, two provisions were modified, and the new provision proposed in the House Appropriations Committee bill was not included.", "Modified administrative provisions are tracked in Table 5 ."], "subsections": []}]}, {"section_title": "Support Components", "paragraphs": ["Funding for support components is generally found in Title IV of the annual DHS appropriations bill. The relatively small size of some of these appropriations makes changes in their funding appear more significant if expressed on a percentage basis."], "subsections": [{"section_title": "Components and Missions", "paragraphs": ["U.S. Citizenship and Immigration Services (USCIS): USCIS administers U.S. immigration laws that govern temporary admission and permanent immigration to the United States.", "Federal Law Enforcement Training Center (FLETC): FLETC is a technical training school for law enforcement professionals, meeting the basic and specialized training needs of approximately 100 federal agencies, as well as state and local organizations.", "Science and Technology Directorate (S&T): S&T leads and coordinates research, development, testing, and evaluation work for DHS, and supports departmental acquisitions.", "Countering Weapons of Mass Destruction Office (CWMD): CWMD leads DHS's efforts to develop and enhance programs and capabilities that defend against weapons of mass destruction, and includes the Department's Chief Medical Officer, who serves as the principal advisor to DHS leadership on medical and public health issues.", " Table 6 includes a breakdown of budgetary resources provided to these components controlled through appropriations legislation."], "subsections": []}, {"section_title": "Administrative Provisions", "paragraphs": ["H.R. 3931 as reported by the House Appropriations Committee included eight administrative provisions in Title IV, six of which were unchanged from FY2019. It dropped two: Section 402, which barred USCIS from providing immigration benefits unless it had received a background check that did not preclude providing such a benefit; and Section 408, which provided budgetary flexibility to support the transfer of the National Bio- and Agrodefense Facility to the U.S. Department of Agriculture. H.R. 3931 included two new provisions. ", "S. 2582 as reported by the Senate Appropriations Committee had nine administrative provisions in Title IV. The Senate Appropriations Committee chose to drop one provision from this title that was included in the FY2019 act\u00e2\u0080\u0094Section 408, described above. No previously carried provisions were substantively modified and two new provisions were added. ", "P.L. 116-93 , Div. D, includes seven administrative provisions in Title IV. Sections 402 and 408 from the FY2019 act as described above were dropped. One new provision was added.", "New administrative provisions proposed or included by the appropriations committees are outlined in Table 7 ."], "subsections": []}]}, {"section_title": "Headquarters Components", "paragraphs": ["Funding for headquarters components is traditionally found in Title I of the annual DHS appropriations act, although some initiatives have been funded in the past through general provisions. "], "subsections": [{"section_title": "Components and Missions", "paragraphs": ["Office of the Secretary and Executive Management (OSEM): OSEM provides central leadership, management, direction and oversight for all DHS components.", "Departmental Management Directorate (DM): DM provides DHS-wide mission support services. ", "Analysis and Operations (A&O): A&O covers two separate offices:", "The Office of Intelligence and Analysis (I&A), which integrates and shares intelligence with DHS components and stakeholders to allow them to identify, mitigate, and respond to threats; and the Office of Operations Coordination (OPS), which provides operations coordination, information sharing, and the common operating picture for DHS, and helps ensure DHS continuity and resilience. ", "Office of Inspector General (OIG): The OIG is an independent, objective audit, inspection, and investigative body that reports to the Secretary and to Congress on DHS efficiency and effectiveness, and works to prevent waste, fraud, and abuse.", " Table 8 provides a breakdown of the budgetary resources provided to these components controlled through appropriations legislation. As resources were requested or provided for the Management Directorate from outside Title I, separate lines are included for each of those components showing a total for what is provided solely within Title I, then the individual items funded outside the title, followed by the total annual appropriation for the components. The table only reflects the impact of transfers in the discretionary funding and budgetary resource totals."], "subsections": []}, {"section_title": "Administrative Provisions", "paragraphs": ["The title funding DHS headquarters components in H.R. 3931 (Title I) had five administrative provisions, three of which are unchanged from FY2019. Two administrative provisions were dropped: Section 101, a requirement for a monthly budget and staffing report; and Section 106, a reporting requirement on visa overstay data. One previously carried administrative provision was modified to bar the use of Treasury Forfeiture Fund resources to build border security infrastructure. One new provision was added in the House bill, to create an Immigration Detention Ombudsman. ", "Senate Appropriations Committee-reported S. 2582 had six administrative provisions in Title I. The Senate Appropriations Committee retained all six previously enacted provisions without substantive modifications, and no new provisions were added. ", "P.L. 116-93 , Div. D, includes seven administrative provisions in Title I. No provisions were dropped. The new provision proposed in the House Appropriations Committee bill creating the Immigration Detention Ombudsman was included with minor modifications."], "subsections": []}]}, {"section_title": "General Provisions", "paragraphs": ["As noted earlier, the fifth title of the annual DHS appropriations act contains general provisions, the impact of which may reach across the government, apply to the entire department, affect multiple components, or focus on a single activity. Most general provisions remain functionally unchanged from year to year, providing guidance to DHS or structure to DHS appropriations with little more than updates to effective dates or amounts.", "The FY2019 DHS appropriations act included 40 such general provisions. H.R. 3931 , as reported by the House Appropriations Committee, carried 36 such provisions, including four added to the committee's initial draft in full committee markup. Four of the 36 were modified versions of FY2019 general provisions providing policy direction, while four were new. Six provisions carried in the FY2019 act were not retained in House committee version of H.R. 3931 :", "Section 516 , which restricted transfer or release of detainees from Guantanamo Bay;", "Section 518 , which restricted the use of funds in the bill to hire unauthorized workers;", "Section 521 , which provided funding for financial systems modernization activities;", "Section 522 , which required reductions in administrative spending from certain accounts;", "Section 536 , which barred the use of funds to implement the Arms Trade Treaty prior to its ratification; and", "Section 537 , which required the Administration to provide a list of spending cuts as alternatives to proposed fee increases that had not been authorized before the beginning of the budget year.", "S. 2582 , as reported by the Senate Appropriations Committee, had 36 general provisions in Title V, 32 of which were unchanged from FY2019. One provision was added, and one was modified. Three provisions carried in the FY2019 act that reduced budget authority available to DHS were modified in the Senate committee's bill: the DHS-wide reduction in total Operations and Support appropriations (originally Section 522, now Section 521), and rescissions of prior-year appropriations (originally Section 538 and 539, now Section 536). Three other provisions carried in the FY2019 act were dropped:", "Section 521 , which provided $51 million for DHS financial systems modernization; Section 531 , which provided $41 million in grants for local law enforcement costs for Presidential protection; and Section 535 , which prohibited using funds for a Principal Federal Official during a declared Stafford Act major disaster or emergency, with certain exceptions. ", "P.L. 116-93 , Div. D, included 40 general provisions in Title V. Two provisions were dropped from the FY2019 DHS Appropriations Act\u00e2\u0080\u0094Sections 521 and 522 described above. No new policy-related general provisions were added, although the last four general provisions provided rescissions of various types:", "Section 537 rescinds $233 million in emergency designated supplemental appropriations for CBP from P.L. 116-26 , which are reappropriated in Title II of this act; Section 538 rescinds $202 million in unobligated balances from across DHS; Section 539 rescinds almost $19 million in lapsed balances; Section 540 rescinds $300 million in unobligated balances from the Disaster Relief Fund.", "Modified and new policy-related general provisions are outlined in Table 9 and Table 10 , respectively."], "subsections": [{"section_title": "Spending Provisions", "paragraphs": ["Some general provisions have a direct impact on the amount of funding in the bill. In FY2019, funding was included in Title V for the Financial Systems Modernization initiative and a grant program for Presidential Residence Protection costs. In this report, Financial Systems Modernization is listed with headquarters components, and it is managed by the DHS Office of the Chief Information Officer. Presidential Residence Protection Cost grants are listed with FEMA, as they manage the distribution of those funds. While H.R. 3931 included funding for Presidential Residence Protection Cost Grants, it did not include separate funding for Financial Systems Modernization. S. 2582 included no additional appropriations for any DHS activities in Title V. P.L. 116-93 , Div. D, included $41 million for Presidential Residence Protection Cost Grants in Title V.", "In addition to provisions appropriating additional resources, rescissions of prior-year appropriations\u00e2\u0080\u0094cancellations of budget authority\u00e2\u0080\u0094that reduce the net funding level in the bill are found in this title. For FY2019, Division A of P.L. 116-6 included $303 million in rescissions and a provision directing that $300 million of DRF unobligated balances be used to offset new DRF appropriations. For FY2020, the Administration proposed rescinding $250 million in prior-year funding from the portion of the DRF not dedicated to the costs of major disasters. ", "Section 536 of H.R. 3931 included $657 million in rescissions from other appropriations. The largest of these comes from CBP's PC&I appropriation for FY2019, reducing it by $601 million\u00e2\u0080\u0094the amount transferred to it from the Treasury's Asset Forfeiture Fund by the Trump Administration for construction of border security infrastructure. ", "S. 2582 included $62 million of provisions that reduced the score of the bill, the largest being a $33 million reduction in administrative costs to be made by DHS from certain operations and support appropriations. ", "P.L. 116-93 , Div. D, included $754 million in rescissions, including $300 million in rescissions from unobligated balances in the DRF, and $233 million in emergency-designated rescissions from CBP appropriations as part of redirecting funds provided in P.L. 116-26 for humanitarian care, critical life and safety improvements to CBP facilities, and electronic health records."], "subsections": []}]}]}]}, {"section_title": "For Further Information", "paragraphs": ["For additional perspectives on FY2020 DHS appropriations, see the following:", "CRS Report R45972, Comparing DHS Component Funding, FY2020: In Brief ; CRS Report R44604, Trends in the Timing and Size of DHS Appropriations: In Brief ; and CRS Report R44052, DHS Budget v. DHS Appropriations: Fact Sheet .", "Congressional clients also may wish to consult CRS's experts directly. Table 11 lists CRS analysts and specialists who have expertise in policy areas linked to DHS appropriations."], "subsections": [{"section_title": "Appendix. Appropriations Terms and Concepts", "paragraphs": ["Budget Authority, Obligations, and Outlays", "Federal government spending involves a multistep process that begins with the enactment of budget authority by Congress. Federal agencies then obligate funds from enacted budget authority to pay for their activities. Finally, payments are made to liquidate those obligations; the actual payment amounts are reflected in the budget as outlays.", "Budget authority is established through appropriations acts or direct spending legislation and determines the amounts that are available for federal agencies to spend. The Antideficiency Act prohibits federal agencies from obligating more funds than the budget authority enacted by Congress. Budget authority also may be indefinite in amount, as when Congress enacts appropriations providing \"such sums as may be necessary\" to complete a project or purpose. Budget authority may be available on a one-year, multiyear, or no-year basis. One-year budget authority is available for obligation only during a specific fiscal year; any unobligated funds at the end of that year are no longer available for spending. Multiyear budget authority specifies a range of time during which funds may be obligated for spending, and no-year budget authority is available for obligation for an indefinite period of time.", "Obligations are incurred when federal agencies employ personnel, enter into contracts, receive services, and engage in similar transactions in a given fiscal year\u00e2\u0080\u0094which create a legal requirement for the government to pay. Outlays are the funds that are actually spent during the fiscal year. Because multiyear and no-year budget authorities may be obligated over a number of years, outlays do not always match the budget authority enacted in a given year. Additionally, budget authority may be obligated in one fiscal year but spent in a future fiscal year, especially with certain contracts.", "In sum, budget authority allows federal agencies to incur obligations and authorizes payments, or outlays, to be made from the Treasury. Discretionary funded agencies and programs, and appropriated entitlement programs, are funded each year in appropriations acts.", "Discretionary and Mandatory Spending", "Gross budget authority , or the total funds available for spending by a federal agency, may be composed of discretionary and mandatory spending. Discretionary spending is not mandated by existing law and is thus appropriated yearly by Congress through appropriations acts. The Budget Enforcement Act of 1990 defines discretionary appropriations as budget authority provided in annual appropriations acts and the outlays derived from that authority, but it excludes appropriations for entitlements. Mandatory spending , also known as direct spending , consists of budget authority and resulting outlays provided in laws other than appropriations acts and is typically not appropriated each year. Some mandatory entitlement programs, however, must be appropriated each year and are included in appropriations acts. Within DHS, Coast Guard retirement pay is an example of appropriated mandatory spending.", "Offsetting Collections", "Offsetting funds are collected by the federal government, either from government accounts or the public, as part of a business-type transaction such as collection of a fee. These funds are not considered federal revenue. Instead, they are counted as negative outlays. DHS net discretionary budget authority , or the total funds appropriated by Congress each year, is composed of discretionary spending minus any fee or fund collections that offset discretionary spending.", "Some collections offset a portion of an agency's discretionary budget authority. Other collections offset an agency's mandatory spending. These mandatory spending elements are typically entitlement programs under which individuals, businesses, or units of government that meet the requirements or qualifications established by law are entitled to receive certain payments if they establish eligibility. The DHS budget features two mandatory entitlement programs: the Secret Service and the Coast Guard retired pay accounts (pensions). Some entitlements are funded by permanent appropriations, and others are funded by annual appropriations. Secret Service retirement pay is a permanent appropriation and, as such, is not annually appropriated. In contrast, Coast Guard retirement pay is annually appropriated. In addition to these entitlements, the DHS budget contains offsetting Trust and Public Enterprise Funds. These funds are not appropriated by Congress. They are available for obligation and included in the President's budget to calculate the gross budget authority.", "302(a) and 302(b) Allocations", "In general practice, the maximum budget authority for annual appropriations (including DHS) is determined through a two-stage congressional budget process. In the first stage, Congress sets overall spending totals in the annual concurrent resolution on the budget. Subsequently, these totals are allocated among the congressional committees, usually through the statement of managers for the conference report on the budget resolution. These amounts are known as the 302(a) allocations . They include discretionary totals available to the Committees on Appropriations for enactment in annual appropriations bills through the subcommittees responsible for the development of the bills.", "In the second stage of the process, the appropriations committees allocate the 302(a) discretionary funds among their subcommittees for each of the appropriations bills. These amounts are known as the 302(b) allocations . These allocations must add up to no more than the 302(a) discretionary allocation and form the basis for enforcing budget discipline, since any bill reported with a total above the ceiling is subject to a point of order. The 302(b) allocations may be adjusted during the year by the respective appropriations committee issuing a report delineating the revised suballocations as the various appropriations bills progress toward final enactment. ", " Table A-1 shows comparable figures for the 302(b) allocation for FY2020, based on the adjusted net discretionary budget authority included in Division A of P.L. 116-6 , the President's request for FY2020, and the House and Senate subcommittee allocations for the Homeland Security appropriations bill for FY2020. ", "A series of amendments were offered and adopted in the House full committee markup of the FY2020 DHS appropriations bill that, according to CBO, put the bill $3.066 billion over its 302(b) discretionary allocation. This scoring was later revised to $1.9 billion. These provisions were not included in the final FY2020 DHS annual appropriations act.", "The Budget Control Act, Discretionary Spending Caps, and Adjustments", "The Budget Control Act established enforceable discretionary limits, or caps, for defense and nondefense spending for each fiscal year from FY2012 through FY2021. Subsequent legislation, including the Bipartisan Budget Acts of 2013, 2015, 2018, and 2019, amended those caps. Most of the budget for DHS is considered nondefense spending. ", "In addition, the Budget Control Act allows for adjustments that would raise the statutory caps to cover funding for overseas contingency operations/Global War on Terror, emergency spending, and, to a limited extent, disaster relief and appropriations for continuing disability reviews and control of health care fraud and abuse. ", "Three of the four justifications outlined in the Budget Control Act for adjusting the caps on discretionary budget authority have played a role in DHS's appropriations process. Two of these\u00e2\u0080\u0094emergency spending and overseas contingency operations/Global War on Terror\u00e2\u0080\u0094are not limited.", "The third justification\u00e2\u0080\u0094disaster relief\u00e2\u0080\u0094is limited. Under the Budget Control Act, the allowable adjustment for disaster relief was determined by the Office of Management and Budget (OMB), using the following formula until FY2019:", "Limit on disaster relief cap adjustment for the fiscal year = Rolling average of the disaster relief spending over the last ten fiscal years (throwing out the high and low years) + the unused amount of the potential adjustment for disaster relief from the previous fiscal year.", "The Bipartisan Budget Act of 2018 amended the above formula, increasing the allowable size of the adjustment by adding 5% of the amount of emergency-designated funding for major disasters under the Stafford Act, calculated by OMB as $6.296 billion. The act also extended the availability of unused adjustment capacity indefinitely, rather than having it only carry over for one year. ", "In August 2019, OMB released a sequestration preview report for FY2020 that provided a preview estimate of the allowable adjustment for FY2020 of $17.5 billion \u00e2\u0080\u0094the second-largest allowable adjustment for disaster relief in the history of the mechanism. That estimate is the sum of:", "the 10-year average, dropping the high and low years ($7.9 billion); 5% of the emergency-designated Stafford Act spending since 2012 ($6.6 billion); and carryover from the previous year ($3.0 billion). ", "The final allowable adjustment for FY2020 may still differ from this estimate."], "subsections": []}]}]}}
{"id": "R46243", "title": "Individual Tax Provisions (\u201cTax Extenders\u201d) Expiring in 2020: In Brief", "released_date": "2020-05-20T00:00:00", "summary": ["Six temporary individual income tax provisions were extended or reinstated by the Further Consolidated Appropriations Act, 2020 ( P.L. 116-94 ). In the past, Congress has regularly acted to extend expired or expiring temporary tax provisions. These provisions are often referred to as \"tax extenders.\" Of the six provisions that were extended through 2020, three had expired in 2017 and were extended retroactively. They are", "the tax exclusion for canceled mortgage debt, the mortgage insurance premium deduction, and the above-the-line deduction for qualified tuition and related expenses.", "Two of the tax provisions extended through 2020 are health related. The first of these provisions was scheduled to expire at the end of 2019. The second had expired at the end of 2018, and thus was extended retroactively. They are", "the health coverage tax credit, and the 7.5% floor for the medical expense deduction.", "A sixth provision, the exclusion from gross income for volunteer firefighters and emergency responders, which had expired in 2010, was reinstated and expanded for one year, through 2020. This report provides background information on individual income tax provisions that will expire in 2020. For other reports related to extenders, see", "CRS Report R45347, Tax Provisions That Expired in 2017 (\"Tax Extenders\") , by Molly F. Sherlock; CRS Report R44990, Energy Tax Provisions That Expired in 2017 (\"Tax Extenders\") , by Molly F. Sherlock, Donald J. Marples, and Margot L. Crandall-Hollick; and CRS Report R46271, Business Tax Provisions Expiring in 2020, 2021, and 2022 (\"Tax Extenders\") , coordinated by Molly F. Sherlock."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["In the past, Congress has regularly acted to extend expired or expiring temporary tax provisions. Collectively, these temporary tax provisions are often referred to as \"tax extenders.\" There are 33 temporary tax provisions scheduled to expire at the end of 2020. This report discusses six provisions related to the individual income tax: (1) the tax exclusion for canceled mortgage debt, (2) mortgage insurance premium deductibility, (3) the above-the-line deduction for qualified tuition and related expenses, (4) the credit for health insurance costs of eligible individuals, (5) the medical expense deduction adjusted gross income (AGI) floor of 7.5%, and (6) the exclusion for income of certain state and local tax rebates and reimbursement for volunteer firefighters and emergency medical responders.", "These six provisions were extended through 2020 in the Further Consolidated Appropriations Act, 2020 ( P.L. 116-94 ). The first three provisions had expired at the end of 2017 and have been included in recent tax extenders legislation. Two provisions are housing related. The provision allowing homeowners to deduct mortgage insurance premiums was first enacted in 2006 (effective for 2007). The provision allowing qualified canceled mortgage debt income associated with a primary residence to be excluded from income was first enacted in 2007. Both provisions were temporary when first enacted, but in recent years have been extended as part of tax extenders legislation. The above-the-line deduction for qualified tuition and related expenses was first added as a temporary provision in the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA; P.L. 107-16 ), and has regularly been extended since.", "The Further Consolidated Appropriations Act, 2020, also extended through 2020 individual provisions that expired in 2019 and 2018. The credit for health insurance costs of eligible individuals (also known as the health coverage tax credit [HCTC]) was scheduled to expire after 2019, whereas the medical expense deduction adjusted gross income (AGI) floor of 7.5% had expired at the end of 2018. The act also reinstated for one year, and expanded, a provision allowing for the exclusion from income of certain state and local tax rebates and reimbursement for volunteer firefighters and emergency medical responders that had expired in 2010. ", "The three provisions that expired in 2018, 2019, or 2010 were not in the previous tax extenders legislation. The health coverage tax credit, which applied to recipients of trade adjustment assistance, among others, was last extended through 2019 by the Trade Preferences Extension Act of 2015 ( P.L. 114-27 ). The 7.5% floor for itemized deductions for medical expenses was provided through 2018 by the 2017 tax revision ( P.L. 115-97 , commonly known as the Tax Cuts and Jobs Act). The exclusion of reimbursements for volunteer firefighters and emergency medical respondents was originally enacted in the Mortgage Forgiveness Debt Relief Act of 2007 ( P.L. 110-142 ).", "In recent years, Congress has chosen to extend most, if not all, recently expired or expiring provisions as part of tax extenders legislation. The most recent tax extenders package is in the Taxpayer Certainty and Disaster Tax Relief Act of 2019, Division Q of the Further Consolidated Appropriations Act, 2020 ( P.L. 116-94 ). The temporary reinstatement of the exclusion for volunteer firefighters and emergency medical responders was in a different part of the act, Division O, the Setting Every Community Up for Retirement Enhancement (\"SECURE\") Act of 2019. ", "The estimated cost of the extensions of temporary individual tax provisions enacted in the Further Consolidated Appropriations Act, 2020 ( P.L. 116-94 ) is provided in Table 1 . As described above, the first three provisions had expired at the end of 2017. Thus, they were extended for three years (with two years of the three-year extension being retroactive). The 7.5% medical expense deduction floor had expired at the end of 2018, meaning that one year of the two-year extension was retroactive. The health care tax credit was scheduled to expire at the end of 2019, and was extended for one year. The provision for volunteer firefighters and emergency medical responders is scheduled to be effective for one year (2020). "], "subsections": []}, {"section_title": "Tax Exclusion for Canceled Mortgage Debt2", "paragraphs": ["Historically, when all or part of a taxpayer's mortgage debt has been forgiven, the amount canceled has been included in the taxpayer's gross income. This income is typically referred to as canceled mortgage debt income. Canceled (or forgiven) mortgage debt is common with a short sale, in which a homeowner agrees to sell a house and transfer the proceeds to the lender in exchange for the lender relieving the homeowner from repaying any debt in excess of the sale proceeds. For example, in a short sale, a homeowner with a $300,000 mortgage may be able to sell the house for $250,000. The lender would receive the $250,000 from the home sale and forgive the remaining $50,000 in mortgage debt. Lenders report the canceled debt to the Internal Revenue Service (IRS) using Form 1099-C. A copy of the 1099-C is also sent to the borrower, who in general must include the amount listed in his or her gross income in the year of discharge.", "To understand why forgiven debt has historically been taxable, it may be helpful to explain why it is viewed as income from an economic perspective. Income is a measure of the increase in an individual's purchasing power over a designated period of time. When individuals experience a reduction in their debts, their purchasing power has increased (because they no longer have to make payments). Effectively, their disposable income has increased. From an economic standpoint, it is irrelevant whether a person's debt was reduced via a direct transfer of money to the borrower (e.g., wage income) that was then used to pay down the debt, or whether it was reduced because the lender forgave a portion of the outstanding balance. Both have the same effect, and thus both are subject to taxation.", "The Mortgage Forgiveness Debt Relief Act of 2007 ( P.L. 110-142 ), signed into law on December 20, 2007, temporarily excluded qualified canceled mortgage debt income that is associated with a primary residence from taxation. Thus, the act allowed taxpayers who did not qualify for one of several existing exceptions to exclude canceled mortgage debt from gross income. The provision was originally effective for debt discharged before January 1, 2010. Since then, the provision has regularly been extended as part of the tax extenders. The exclusion was most recently extended through December 31, 2020, in the Taxpayer Certainty and Disaster Tax Relief Act of 2019, enacted as Division Q of the Further Consolidated Appropriations Act, 2020 ( P.L. 116-94 ).", "The rationales for extending the exclusion are to minimize hardship for households in distress and lessen the risk that nontax homeowner retention efforts are thwarted by tax policy. The exclusion's supporters may also argue that extending the exclusion would continue to assist the recoveries of the housing market and overall economy. The exclusion's opponents may argue that extending the provision would make debt forgiveness more attractive for homeowners, which could encourage homeowners to be less responsible about fulfilling debt obligations. Some may also view the exclusion as unfair because its benefits depend on whether a homeowner is able to negotiate a debt cancelation, the taxpayer's income tax bracket, and whether the taxpayer retains ownership of the house following the debt cancellation. "], "subsections": []}, {"section_title": "Mortgage Insurance Premium Deductibility5", "paragraphs": ["Traditionally, homeowners who itemize their tax deductions have been able to deduct the interest paid on their mortgages, as well as any property taxes they pay. Beginning in 2007, homeowners could also deduct qualifying mortgage insurance premiums as a result of the Tax Relief and Health Care Act of 2006 ( P.L. 109-432 ). Specifically, homeowners could effectively treat qualifying mortgage insurance premiums as mortgage interest, thus making the premiums deductible if the homeowner itemized, and if the homeowner's adjusted gross income was below a certain threshold ($55,000 for single, and $110,000 for married filing jointly). Originally, the deduction was only to be available for 2007, but it was extended several times. The deduction was extended through December 31, 2020, in the Taxpayer Certainty and Disaster Tax Relief Act of 2019, enacted as Division Q of the Further Consolidated Appropriations Act, 2020 ( P.L. 116-94 ).", "Taxpayers of all ages may be less likely to claim the mortgage insurance premium deduction compared to prior periods because other provisions of the 2017 tax revision, including a higher standard deduction (in part as a trade-off for elimination of personal exemptions) and a cap on the deduction of state and local taxes, reduced the expected number of itemizers (projected to fall from about one-third of individual income tax returns to 11%). ", "A justification for allowing the deduction of mortgage insurance premiums is that it helps to promote homeownership and, relatedly, the recovery of the housing market following the December 2007-June 2009 Great Recession. Homeownership is often argued to bestow certain benefits to society, such as higher property values, lower crime, and higher civic participation. Homeownership may also promote a more even distribution of income and wealth, as well as establish greater individual financial security. Furthermore, homeownership may have a positive effect on living conditions, which can lead to a healthier population. ", "With regard to the first justification, it is not clear that the deduction for mortgage insurance premiums affects the homeownership rate. Economists have identified the high transaction costs associated with a home purchase\u00e2\u0080\u0094mostly resulting from the down payment requirement, but also from closing costs\u00e2\u0080\u0094as the primary barrier to homeownership. The ability to deduct insurance premiums does not lower this barrier\u00e2\u0080\u0094most lenders will require mortgage insurance if the borrower's down payment is less than 20% regardless of whether the premiums are deductible. The deduction may allow buyers to borrow more, however, because they can deduct the higher associated premiums and therefore afford a higher housing payment. ", "Concerning the second justification, it is also not clear that the deduction for mortgage insurance premiums is still needed to assist in the housing market's recovery. Based on the S&P CoreLogic Case-Shiller U.S. National Composite Index, home prices have generally increased since the bottom of the market following the Great Recession. In addition, the available housing inventory is now slightly below its historical level. Both of these indicators suggest that the market is stronger than when the provision was enacted. ", "Economists have noted that owner-occupied housing is already heavily subsidized via tax and nontax programs. To the degree that owner-occupied housing is oversubsidized, it could be argued that extending the deduction for mortgage insurance premiums would lead to a greater misallocation of resources that are directed toward the housing industry. "], "subsections": []}, {"section_title": "Above-the-Line Deduction for Qualified Tuition and Related Expenses10", "paragraphs": ["This provision allows taxpayers to deduct up to $4,000 of qualified tuition and related expenses for postsecondary education (both undergraduate and graduate) from their gross income. Expenses that qualify for this deduction include tuition payments and any fees required for enrollment at an eligible education institution. Other expenses, including room and board expenses, are generally not qualifying expenses for this deduction. The deduction is \"above-the-line,\" that is, it is not restricted to itemizers. ", "Individuals who could be claimed as dependents, married persons filing separately, and nonresident aliens who do not elect to be treated as resident aliens do not qualify for the deduction, in part to avoid multiple claims on a single set of expenses. ", "The amount that can be claimed for the deduction is generally reduced by any tax-free assistance, if that assistance can be used to pay for expenses that qualify for the deduction. Tax-free assistance includes tax-free grants and scholarships (including Pell Grants), employer-provided educational assistance, and veterans' educational assistance.", "The maximum deduction taxpayers can claim depends on their income level. Taxpayers can deduct up to", "$4,000 if their income is $65,000 or less ($130,000 or less if married filing jointly); or $2,000 if their income is between $65,000 and $80,000 ($130,000 and $160,000 if married filing jointly).", "Taxpayers with income above $80,000 ($160,000 for married joint filers) are ineligible for the deduction. These income limits are not adjusted for inflation.", "The above-the-line deduction for qualified tuition and related expenses was enacted temporarily by the Economic Growth and Tax Relief Reconciliation Act of 2001 ( P.L. 107-16 ). It has been extended a number of times. Most recently, the deduction was extended through December 31, 2020, in the Taxpayer Certainty and Disaster Tax Relief Act of 2019, enacted as Division Q of the Further Consolidated Appropriations Act, 2020 ( P.L. 116-94 ).", "One criticism of education tax benefits is that the taxpayer is faced with a confusing choice of deductions and credits and tax-favored education savings plans, and that these benefits should be consolidated. Some tax reform proposals have consolidated these benefits into a single education credit.", "Taxpayers may claim the tuition and fees deduction instead of education tax credits for the same student. These credits include permanent tax credits: the American Opportunity Tax Credit (AOTC) and Lifetime Learning Credit. The AOTC is directed at undergraduate education and is limited to the first four years of postsecondary education. The Lifetime Learning Credit (20% of up to $10,000) is not limited in years of coverage. These credits are generally more advantageous than the deduction, except for higher-income taxpayers, in part because the credits are phased out at lower levels of income than the deduction. For example, for single taxpayers, the Lifetime Learning Credit begins phasing out at $59,000 for 2020.", "The deduction benefits taxpayers according to their marginal tax rate. Students usually have relatively low incomes, but they may be part of families in higher tax brackets. The maximum amount of deductible expenses limits the tax benefit's impact on individuals attending schools with comparatively high tuitions and fees. Because the income limits are not adjusted for inflation, the deduction might be available to fewer taxpayers over time if extended in its current form.", "The distribution of the deduction in Table 2 indicates that some of the benefit is concentrated in the income range where the Lifetime Learning Credit has phased out, but also that significant deductions are claimed at lower income levels. Because the Lifetime Learning Credit is preferable to the deduction at lower income levels, it seems likely that confusion about the education benefits may have caused taxpayers not to choose the optimal education benefit. "], "subsections": []}, {"section_title": "Credit for Health Insurance Costs of Eligible\u00c2 Individuals16", "paragraphs": ["The credit for health insurance costs of eligible individuals, commonly known as the health coverage tax credit (HCTC), reduces the cost of qualified health insurance for eligible individuals. To be eligible to claim the HCTC, taxpayers must be (1) an eligible trade adjustment assistance (TAA) recipient; (2) an eligible alternative TAA recipient or reemployment TAA recipient; or (3) an eligible Pension Benefit Guaranty Corporation (PBGC) pension recipient. Additionally, an individual is not eligible for the HCTC if they have access to \"other specified coverage,\" which includes coverage for which an employer (or former employer) incurs 50% of the cost as well as Medicare, Medicaid, the Children's Health Insurance Programs, and other federal and military health or medical benefit plans. ", "Under this provision, eligible taxpayers are allowed a refundable tax credit for 72.5% of the premiums they pay for qualified health insurance for themselves and their family members. Eligible taxpayers with qualified health insurance may claim the tax credit (1) when tax returns are filed or (2) as advance payments, on a monthly basis, throughout the year. This latter option helps taxpayers pay for health plan premiums as they become due. The credit is not available for months beginning on or after January 1, 2021.", "The HCTC was originally authorized by the Trade Act of 2002 ( P.L. 107-210 ). The credit has been extended and modified several times. Extensions or modifications have been made in trade adjustment assistance legislation as well as tax extenders legislation. The Trade Preferences Extension Act of 2015 ( P.L. 114-27 ) extended the HCTC through December 31, 2019, and also made changes to address the interaction between the HCTC and the premium tax credit established under the Patient Protection and Affordable Care Act ( P.L. 111-148 , as amended). The credit was extended through December 31, 2020, in the Taxpayer Certainty and Disaster Tax Relief Act of 2019, enacted as Division Q of the Further Consolidated Appropriations Act, 2020 ( P.L. 116-94 )."], "subsections": []}, {"section_title": "Medical Expense Deduction Adjusted Gross Income (AGI) Floor of 7.5%21", "paragraphs": ["Individuals are allowed to deduct unreimbursed medical expenses above a specific income threshold if they itemize their deductions. Prior to 2013, these deductions were allowed only for amounts in excess of 7.5% of income. Expenses reimbursed by an employer or insurance company are not eligible for deduction.", "The Patient Protection and Affordable Care Act ( P.L. 111-148 , as amended) increased the floor for individuals claiming the itemized deduction for medical expenses from 7.5% to 10% of adjusted gross income (AGI). The higher floor went into effect for taxpayers under age 65 beginning for the 2013 tax year. Individuals 65 or older, however, were still able to claim the deduction under the lower, 7.5% floor for tax years 2013 through 2016. The 2017 tax revision ( P.L. 115-97 ) temporarily allowed all taxpayers (not just those aged 65 or older) to claim the deduction subject to the 7.5% floor for the 2017-2018 tax years. The Taxpayer Certainty and Disaster Tax Relief Act of 2019, enacted as Division Q of the Further Consolidated Appropriations Act, 2020 ( P.L. 116-94 ), extends the 7.5% floor for all taxpayers through 2020. After 2020, under current law, the floor is scheduled to increase to 10% of AGI for all taxpayers. ", "A complicated set of rules governs the expenses eligible for the deduction. Generally speaking, these expenses include amounts paid by the taxpayer on behalf of himself or herself, his or her spouse, and eligible dependents for the following purposes: (1) health insurance premiums (including employee payments for employer-sponsored health plans, Medicare Part B premiums, and other self-paid premiums); (2) diagnosis, treatment, mitigation, or prevention of disease, or for the purpose of affecting any structure or function of the body, including dental care; (3) prescription drugs and insulin (but not over-the-counter medicines); (4) transportation primarily for and essential to medical care; and (5) lodging away from home primarily for and essential to medical care, up to $50 per night for each individual.", "The current lower floor is for all taxpayers, and future extensions, if any, could make the lower floor general, or limit it to taxpayers 65 and over. Based on a 2011 special study of deductions by age, 58% of dollars deducted were by those 65 and over, who made up 39% of taxpayers claiming the deduction. ", "Taxpayers of all ages may be less likely to claim the medical expense deduction compared to prior periods because, as mentioned previously, other provisions of the 2017 tax revision, including a higher standard deduction (in part as a trade-off for elimination of personal exemptions) and a cap on the deduction of state and local taxes, reduced the expected number of itemizers (projected to fall from about one-third of taxpayers to 11%). These provisions are slated to expire after 2025, but are in place for the next few years. The likelihood of itemizing generally increases with income. However, the AGI floor for the medical expenses deduction reduces the likelihood that very high-income individuals would claim the deduction. For all taxpayers, medical expenses alone might not make it worthwhile to itemize unless they can also claim other itemized deductions (e.g., home mortgage interest or state and local taxes). "], "subsections": []}, {"section_title": "Benefits for Volunteer Firefighters and Emergency Medical Responders28", "paragraphs": ["The Mortgage Forgiveness Debt Relief Act of 2007 ( P.L. 110-142 ) provided an exclusion from gross income of certain benefits for members of qualified voluntary emergency response organizations. These payments include the forgiveness or rebate of state and local income and property taxes or payments by states or their political subdivisions to reimburse for expenses. The exclusion was limited to $30 a month. The provision disallowed any itemized deductions for the state and local taxes otherwise excluded.", "This provision was enacted after a 2002 IRS decision that a reduction in property taxes for volunteers who are emergency responders was includible in gross income. ", "The provision was temporary, effective from the date of enactment (December 20, 2007) through 2010. The provision was allowed to expire as scheduled.", "The SECURE Act of 2019, enacted as Division O of the Further Consolidated Appropriations Act, 2020 ( P.L. 116-94 ), reinstated the provision for 2020 and increased the amount to $50 a month.", "The reinstated provision is likely to have a wider scope than it previously did because of the reduction in the number of itemizers due to provisions of the 2017 tax act ( P.L. 115-97 ), which is expected to reduce the share of itemizers, previously about one-third of taxpayers, to an estimated 11%."], "subsections": []}]}}
{"id": "R45928", "title": "The Federal Contraceptive Coverage Requirement: Past and Pending Legal Challenges", "released_date": "2020-04-28T00:00:00", "summary": ["When Congress enacted the Patient Protection and Affordable Care Act (ACA) in 2010, it required employment-based health plans and health insurance issuers to cover certain preventive health services without cost sharing. Those services, because of agency guidelines and rules, would soon include contraception for women. The \"contraceptive coverage requirement,\" or \"contraceptive mandate\" as it came to be known, was heavily litigated in the years to follow, and exemptions from the requirement are currently the subject of a pending Supreme Court case.", "The various legal challenges to the contraceptive coverage requirement primarily concerned (1)\u00c2 what types of employers and institutions should be exempt from the requirement based on their religious or moral objections to contraception; (2)\u00c2 what procedures the government can require for an entity to invoke a religious-based accommodation; and (3) how much authority federal agencies have to create exceptions to the coverage requirement. As originally formulated, only houses of worship and similar entities were exempt from the requirement, but the government later added an accommodation process for certain religious nonprofit organizations. On June 30, 2014, the Supreme Court held in Burwell v. Hobby Lobby Stores, Inc. that the contraceptive coverage requirement violated federal law insofar as it did not also accommodate the religious objections of closely held, for-profit corporations. The law at issue in that case\u00e2\u0080\u0094the Religious Freedom Restoration Act of 1993 (RFRA)\u00e2\u0080\u0094prohibits the federal government from \"substantially burden[ing] a person's exercise of religion\" except under narrow circumstances.", "Since Hobby Lobby , the agencies tasked with implementing the ACA have faced numerous hurdles in their attempts to accommodate the interests of sincere objectors while minimizing disruptions to the provision of cost-free contraceptive coverage to women. The lower courts split on whether the accommodation process\u00e2\u0080\u0094which required eligible objecting entities to notify their insurers or the government that they qualified for an exemption\u00e2\u0080\u0094substantially burdened the objectors' exercise of religion. Initially, most circuit courts rejected the view that such an accommodation triggered, facilitated, or otherwise made objectors complicit in the provision of coverage, denying their RFRA claims. After consolidating some of these cases for review, the Supreme Court ultimately vacated and remanded the decisions when the government and the objecting parties suggested that a solution might be reached so that the objectors' insurers could provide the required coverage without notice from the objecting parties.", "Following a change in presidential administration, the implementing agencies reevaluated and reversed their position on the legality of the then-existing accommodation process, concluding that it violated RFRA when applied to certain entities. The agencies opted to automatically exempt most nongovernmental entities that objected to providing coverage for some or all forms of contraception on religious or moral grounds. These expanded exemptions sparked a new round of litigation based on claims that the agencies exceeded their authority under the ACA or violated federal requirements for promulgating new rules. Federal courts, including the U.S. Court of Appeals for the Third Circuit, preliminarily enjoined the government from implementing the expanded exemptions. The Supreme Court is slated to hear arguments on the Third Circuit's decision in May in Little Sisters of the Poor v. Pennsylvania . Meanwhile, the government is largely precluded from relying on the prior accommodation process as a result of a nationwide injunction issued by a federal district court.", "Little Sisters of the Poor marks the fourth Supreme Court term in six years in which the Court has granted certiorari in a dispute about the federal contraceptive coverage requirement. During that time period, the Executive Departments promulgated six different rules concerning the requirement, a change in presidential administration marked a turning point in the Departments' RFRA calculus, and the Supreme Court underwent its own changes with the appointment of two new Justices. A Supreme Court decision in Little Sisters of the Poor could inform Congress's next steps with regard to the contraceptive coverage requirement. From a legal perspective, Congress has several options for clarifying the requirement's scope, including through amendments to the ACA and RFRA. An opinion in Little Sisters may also provide additional direction to lawmakers and federal agencies asked to accommodate the religious and moral beliefs of regulated entities when enacting or implementing laws of broader applicability."], "reports": {"section_title": "", "paragraphs": ["W hen Congress enacted the Patient Protection and Affordable Care Act (ACA) in 2010, it required employment-based health plans and health insurance issuers to cover certain preventive health services without cost sharing. Those services, because of agency guidelines and rules, would soon include contraception for women. The federal contraceptive coverage requirement\u00e2\u0080\u0094sometimes called the \"contraceptive mandate\" \u00e2\u0080\u0094has generated significant public policy and legal debates. Proponents of the requirement have stressed a need to make contraception more widely accessible and affordable to promote women's health and equality. Opponents have centrally raised religious freedom\u00e2\u0080\u0093based objections to paying for or otherwise having a role in the provision of coverage for some or all forms of contraception. The Supreme Court first took up a challenge to the contraceptive coverage requirement in 2014 in Burwell v. Hobby Lobby Stores, Inc. In Hobby Lobby , the Court held that the requirement did not properly accommodate the religious objections of closely held corporations. ", "After Hobby Lobby , legal challenges to the contraceptive coverage requirement continued. The lower federal courts divided over the legality of an accommodation process instituted in 2013 that shifted the responsibility to provide coverage from an objecting employer to its insurer once the employer certified its religious objections. In 2017, citing the uncertain legal footing of that accommodation, the Trump Administration decided to automatically exempt most nongovernmental entities from the coverage requirement based on their religious or moral objections. However, more than 15 states filed or joined lawsuits challenging the expanded exemptions. Federal courts, including the U.S. Court of Appeals for the Third Circuit, have preliminarily enjoined the government from implementing the expanded exemptions while those challenges proceed. The Supreme Court has agreed to review the Third Circuit's decision. The case, Little Sisters of the Poor v. Pennsylvania , is scheduled for argument in May, paving the way for a decision in summer 2020. Meanwhile, the government is largely precluded from relying on the prior accommodation process as a result of a federal district court's injunction. ", "This report begins by explaining the statutory and regulatory framework for the federal contraceptive coverage requirement. It then recaps the Supreme Court's decision in Hobby Lobby before discussing the agency actions taken in response to that decision and subsequent Supreme Court rulings and executive action. Next, the report discusses significant pending legal challenges to the coverage exemptions and accommodations, including the Supreme Court case, Little Sisters of the Poor . The report concludes with some considerations for Congress, including the broader legal questions that could be answered in Little Sisters of the Poor and options that federal lawmakers have proposed related to the contraceptive coverage requirement."], "subsections": [{"section_title": "The Contraceptive Coverage Requirement", "paragraphs": ["The federal contraceptive coverage requirement stems from the Patient Protection and Affordable Care Act but was developed and modified by subsequent agency guidelines and rules. Before the ACA, various federal and state requirements dictated whether a health plan needed to cover contraceptive services. Although more than half of the states required plans covering prescription drugs to include contraception, access was typically subject to cost-sharing requirements. The scope of religious exemptions from these state requirements varied. Moreover, each state's law extended \"only to insurance plans that [were] sold to employers and individuals in [that] state.\" It did not apply to self-insured employer-sponsored health plans (also known as self-funded plans) in which nearly 60% of covered workers were enrolled. Self-insured plans are governed by the Employee Retirement Income Security Act of 1974 (ERISA), a federal law that generally did not require coverage for specific preventive services before the ACA. Nevertheless, whether as a matter of law or industry practice, \"most private insurance and federally funded insurance programs\" offered some form of insurance coverage for contraception before the federal contraceptive coverage requirement.", "With the enactment of the ACA, Congress required certain employment-based health plans and health insurance issuers (insurers) to cover various preventive health services without cost sharing. One ACA provision specifically requires coverage \"with respect to women\" for \"preventive care and screenings . . . as provided for in comprehensive guidelines supported by the Health Resources and Services Administration [(HRSA)]\" within the U.S. Department of Health and Human Services (HHS). To implement this requirement, HHS commissioned a study by the Institute of Medicine (IOM) \"to review what preventive services are necessary for women's health and well-being.\" In its final report, the IOM recommended that HRSA consider including the \"full range of Food and Drug Administration [(FDA)]-approved contraceptive methods, sterilization procedures, and patient education and counseling for women with reproductive capacity.\" Among other reasons, IOM concluded that \"[s]ystematic evidence reviews and other peer-reviewed studies provide evidence that contraception and contraceptive counseling are effective at reducing unintended pregnancies,\" which HHS had identified as a specific national health goal. HRSA adopted the IOM's recommendation, including in HRSA's 2011 Women's Preventive Services Guidelines (HRSA guidelines) \"all\" FDA-approved contraception \"as prescribed.\" ", "The HRSA guidelines applied to plan years beginning on or after August\u00c2\u00a01, 2012. However, they exempted certain \"religious employers\"\u00e2\u0080\u0094houses of worship and certain related entities that primarily employed and served persons who shared their religious tenets. In 2012, HHS announced a temporary \"safe harbor\" from government enforcement of the coverage requirement for certain nonexempt, nonprofit organizations with religious objections to covering some or all forms of contraception. Subsequent rules called such nonprofits \"eligible organizations.\" ", "On July 2, 2013, following a notice and comment period, HHS, the Department of Labor (DOL), and the Department of the Treasury (the Departments) jointly issued a final rule (2013 Rule) to \"simplify and clarify the religious employer exemption\" and \"establish accommodations\" for eligible organizations. The rule continued to authorize HRSA to provide an automatic exemption to the coverage requirement for houses of worship. However, it no longer required those employers to have \"the inculcation of religious values\" as their purpose or to \"primarily\" employ and serve \"persons who share [their] religious tenets\" to qualify for the exemption. ", "The 2013 Rule also established an accommodation process for \"eligible organizations\" \u00e2\u0080\u0094essentially, nonprofit, religious organizations with religious objections to some or all forms of contraception. The accommodation also extended to student health plans arranged by eligible institutions of higher education. Eligible organizations could comply with the contraceptive coverage requirement by completing a self-certification form provided by HHS and DOL and sending copies of this form to their insurers or third-party administrators (TPAs), as applicable. For insured plans, the rule required the issuers, upon receipt of a certification, to \"[e]xpressly exclude contraceptive coverage\" (or the subset of objected-to methods) from the applicable plans but separately pay for any required, excluded contraceptive services for the enrolled individuals and their beneficiaries. For self-insured plans, the rule stated that the TPA, upon receipt of a certification, would become the \"plan administrator\" for contraceptive benefits under ERISA and responsible for providing contraceptive coverage. In addition, the certification provided to the TPA would become \"an instrument under which the plan is operated.\" The rule required the insurer or TPA, rather than the objecting organization, to notify plan participants that separate payments would be made for contraception and that the organization would not be administering or funding such coverage."], "subsections": []}, {"section_title": "RFRA and the Hobby Lobby Decision", "paragraphs": ["Numerous organizations filed lawsuits challenging the contraceptive coverage requirement and the accommodation process. Among other claims, these plaintiffs argued that the requirement violated the Religious Freedom Restoration Act of 1993 (RFRA). RFRA is a federal statute enacted in response to Employment Division v. Smith , a 1990 Supreme Court decision holding that the Free Exercise Clause of the First Amendment does not require the government to exempt religious objectors from generally applicable laws. Except under narrow circumstances, RFRA prohibits the federal government from \"substantially burden[ing] a person's exercise of religion even if the burden results from a rule of general applicability.\" RFRA allows such a burden only if the government shows that applying the burden to the person (1) furthers \"a compelling governmental interest\"; and (2) \"is the least restrictive means\" of furthering that interest. This \"strict scrutiny\" standard, particularly the \"least restrictive means\" requirement, is \"exceptionally demanding.\" Thus, in challenges by religious objectors to the application of generally applicable laws, RFRA extends \"far beyond\" what the \"Court has held is constitutionally required.\" ", "The initial challenges to the contraceptive coverage requirement centered on two emerging issues: (1)\u00c2\u00a0whether for-profit corporations were \"persons\" protected by RFRA; and (2)\u00c2\u00a0whether requiring employers to cover contraception to which they objected on religious grounds violated RFRA. The Supreme Court took up both issues as they related to closely held corporations in Burwell v. Hobby Lobby Stores, Inc . , issuing a decision on June 30, 2014. ", "The challengers in Hobby Lobby , which included the owners of the \"nationwide chain\" of arts-and-crafts stores of the same name, objected to providing health insurance coverage for four of the 20 FDA-approved methods of contraception included in the coverage requirement. In their view, \"life begins at conception\" and \"facilitat[ing] access\" to methods of contraception that \"may operate after the fertilization of an egg\" would violate their religious beliefs. The challengers argued that requiring them to provide insurance coverage for such contraception violated RFRA. ", "The Supreme Court held that Hobby Lobby, though a corporation, was a \"person\" covered by RFRA. Although RFRA itself did not define \"person,\" the first section of the U.S. Code , commonly known as the Dictionary Act, defined the term to include \"corporations\" for the purpose of \"determining the meaning of any Act of Congress, unless the context indicates otherwise.\" The Court reasoned that \"nothing in RFRA\" suggested a meaning other than the Dictionary Act definition. Specifically, the majority rejected HHS's argument that for-profit corporations could not \"exercise\" religion, reasoning that they could do so through \"[b]usiness practices that are compelled or limited by the tenets of a religious doctrine.\" ", "The Court then proceeded to analyze whether the contraceptive coverage requirement \"substantially burden[ed]\" the challengers' exercise of religion. The Court accepted their argument that providing coverage for certain forms of contraception would violate their sincerely held religious beliefs because it might enable or facilitate the \"destruction of an embryo.\" According to the majority, \"federal courts have no business addressing\" whether \"the religious belief asserted in a RFRA case is reasonable.\" The more limited judicial role, the Court said, is to determine whether the \"line drawn\" by the religious objectors \"reflects 'an honest conviction.'\" Because no party disputed the sincerity of the employers' convictions, the Court focused its inquiry on whether the burden imposed by the coverage requirement was substantial. The Court concluded that it was, because the requirement would force the challengers to either violate their religious beliefs or face \"severe\" economic consequences. ", "The Court next considered whether the contraceptive coverage requirement nonetheless satisfied RFRA's strict scrutiny standard. The Court assumed, for purposes of its analysis, that applying the coverage requirement to petitioners served a \"compelling governmental interest\" in \"guaranteeing cost-free access to the four challenged contraceptive methods.\" However, the Court concluded that the least restrictive means standard was not satisfied because HHS had \"at its disposal\" the accommodation process it provided to nonprofit organizations with religious objections which, in the Court's view, did not \"impinge on\" the challengers' religious beliefs and \"serve[d] HHS's stated interests equally well.\" Accordingly, the Court held that applying the contraceptive coverage requirement to closely held corporations violated RFRA. ", "On July 14, 2015, the Departments finalized a rule in response to the Hobby Lobby decision that extended the accommodation previously reserved for religious nonprofits to for-profit entities that are \"not publicly traded, [are] majority-owned by a relatively small number of individuals, and object[] to providing contraceptive coverage based on [their] owners' religious beliefs.\" "], "subsections": []}, {"section_title": "Legal Challenges to the Accommodation Process and Agency Responses", "paragraphs": ["When the Court handed down its decision in Hobby Lobby , a separate line of legal challenges to the contraceptive coverage requirement involving the accommodation process remained unresolved by the High Court. In one such case, a Christian college argued that the process, which required objecting entities to submit a certification form called EBSA Form 700 to their insurers or TPAs, itself burdened its exercise of religion in violation of RFRA and the First Amendment. The college believed that submitting the required form would \"make it morally complicit in the wrongful destruction of human life.\"", "As shown in Figure 1 , EBSA Form 700 had two pages: the first required the organization to certify compliance with the criteria for obtaining the accommodation and the second contained a notice to TPAs.", "After a federal district court denied the college's motion to preliminarily enjoin the enforcement of the contraceptive coverage requirement, the college sought emergency relief from the Supreme Court. On July 3, 2014, three days after deciding Hobby Lobby , the Supreme Court ruled that while the college's case was on appeal to the Seventh Circuit, the college did not need to comply with the contraceptive coverage requirement or complete EBSA Form 700 so long as it \"inform[ed] the Secretary of Health and Human Services in writing that it is a non-profit organization that holds itself out as religious and has religious objections to providing coverage for contraceptive services.\"", "On August 27, 2014, \"consistent with the Wheaton order,\" HHS issued an interim rule that provided eligible organizations an alternative to EBSA Form 700. Pursuant to this rule, organizations could opt to notify HHS, rather than their insurers or TPAs, of their eligibility for the exemption and their objections to providing coverage for some or all forms of FDA-approved contraception. This option (the \"alternative notice process\") required organizations to provide HHS with their insurers' or TPAs' names and contact information. After receiving the notice, those Departments would send a \"separate notification\" to each issuer or TPA, which, for self-insured plans, would designate the TPA as the plan administrator and constitute \"an instrument under which the plan is operated.\" The model notice that HHS issued with the interim rule appears in Figure 2 .", "After these changes in the law, the Seventh Circuit affirmed the district court's decision to deny the college a preliminary injunction. The appellate court reasoned that the college did not have to provide certain forms of contraception in its student benefit plans so long as it notified either its TPA or the government of its objection to providing that coverage. Although the government would designate the college's preexisting TPA to provide the required coverage, the court reasoned that the plan instrument became the \"government's plan\" rather than the college's plan. The court also rejected the college's argument that complying with the accommodation process would render it \"complicit\" in providing the contraception to which it objected. Writing for the court, Judge Richard Posner reasoned that \"it is the law , not any action on the part of the college,\" that requires the TPA to provide coverage once the college has registered its objection. Accordingly, the court concluded that the college was unlikely to prevail on its RFRA claim. ", "The Seventh Circuit was not the only appellate court to uphold the accommodation process amid requests for injunctive relief. Appellate courts in eight circuits in total concluded (at least as a preliminary matter while litigation proceeded on the merits) that the process did not impose a substantial burden on the challengers' exercise of religion. They rejected the view that providing notice to insurers or TPAs, or to HHS, \"triggered\" the provision of contraception, making the plaintiffs partially responsible for an act that violated their beliefs. Like the Seventh Circuit, they reasoned that the ACA, not the transmission of EBSA Form 700 or the notice to HHS, was the reason the applicable plans provided coverage for contraception without cost sharing. Some appellate judges dissented from their panel's decision or a denial of rehearing by the full circuit court, including now\u00e2\u0080\u0093Supreme Court Justices Neil Gorsuch and Brett Kavanaugh.", "The Eighth Circuit was the first appellate court to hold that the accommodation process violated RFRA. In that case, the district court had preliminarily enjoined the government from enforcing the contraceptive coverage requirement against two nonprofit employers that offered self-insured plans. The Eighth Circuit read Hobby Lobby to require it to \"accept [the plaintiffs'] assertion that self-certification under the accommodation process\u00e2\u0080\u0094using either [EBSA] Form 700 or HHS Notice\u00e2\u0080\u0094would violate their sincerely held religious beliefs.\" And it reasoned that providing the notice resulted in the provision of contraceptive coverage even if the plaintiffs did not have to arrange for or subsidize that coverage. The court then concluded that the process was not the least-restrictive means of serving the government's interest in providing women with access to cost-free contraception. In particular, it observed that the government could require objecting organizations to notify HHS of their objections without providing \"the detailed information and updates\" required under the alternative notice process. The court also found that the government failed to demonstrate why it could not reimburse employees for their purchase of contraceptives directly or pursue other ways to make contraception more widely available. ", "After the Eighth Circuit rendered its decision but before the government sought the Supreme Court's review, the Supreme Court consolidated and granted certiorari in seven other cases involving RFRA challenges to the accommodation process under the caption Zubik v. Burwell . However, on May\u00c2\u00a016, 2016, the Supreme Court vacated the Zubik decisions and remanded the cases to the circuit courts in light of the \"significantly clarified view of the parties.\" The Court explained that in response to its request for additional briefing after oral argument, the government confirmed that \"contraceptive coverage could be provided to petitioners' employees, through petitioners' insurance companies\" without requiring the petitioners to notify their insurers or HHS in the manner previously required. The petitioners, in turn, confirmed that an insurer's independent provision of contraceptive coverage to the petitioners' employees would not burden the petitioners' religious exercise. The Court instructed the appellate courts on remand to afford the parties \"an opportunity to arrive at an approach going forward that accommodates petitioners' religious exercise while at the same time ensuring that women covered by petitioners' health plans 'receive full and equal health coverage, including contraceptive coverage.'\" It also enjoined the government from taxing or penalizing the petitioners based on a failure to provide notice, reasoning that the petitioners apprised the government of their religious objections through the litigation itself. The Court expressly declined to opine on whether the existing accommodation process substantially burdened the petitioners' religious exercise or nonetheless complied with RFRA's strict scrutiny standard. "], "subsections": []}, {"section_title": "Executive Action After Zubik", "paragraphs": ["Following the Supreme Court's remand, the executive branch took additional actions on the contraceptive coverage requirement. The Departments solicited and reviewed public comments on options to further revise the process. However, as of January 9, 2017, the Departments had not identified a \"feasible approach . . . [to] resolve the concerns of religious objectors, while still ensuring that the affected women receive full and equal health coverage, including contraceptive coverage.\" At that time, the Departments maintained that the existing accommodation process was \"consistent with RFRA.\"", "Following a change in presidential administrations, on May 4, 2017, President Donald J. Trump issued an executive order directing the Departments to \"consider issuing amended regulations, consistent with applicable law, to address conscience-based objections to the preventive-care mandate promulgated under [42 U.S.C. \u00c2\u00a7] 300gg-13(a)(4)\"\u00e2\u0080\u0094the ACA provision that refers specifically to preventive care for women and pursuant to which HRSA included contraceptive coverage. ", "On October 6, 2017, the Departments reversed their position on the legality of the accommodation process and issued two interim final rules (IFRs) that made that process \"optional.\" The first rule (the Religious Exemption IFR) expanded the automatic exemption formerly available only to houses of worship and related entities to include any nongovernmental organization that objected to providing or arranging coverage for some or all contraceptives based on \"sincerely held religious beliefs.\" The second rule (the Moral Exemption IFR) extended the same exemption to certain nongovernmental organizations whose objections were based on \"sincerely held moral convictions,\" rather than religious beliefs. Pursuant to these rules, \"an eligible organization [that] pursue[d] the optional accommodation process through the EBSA Form 700 or other specified notice to HHS\" would \"voluntarily shift[] an obligation to provide separate but seamless contraceptive coverage to its issuer or [TPA].\" However, if an employer or institution chose to rely on the automatic exemption rather than the accommodation process, neither the objecting entity nor its insurer or TPA would need to provide coverage for the objected-to contraceptive methods. The Departments also added an \"individual exemption\" that allowed willing employers and issuers, both governmental and nongovernmental, to provide alternative policies or contracts that did not offer contraceptive coverage to individual enrollees who objected to such coverage based on sincerely held religious beliefs or moral convictions. ", "The Departments estimated that the Religious Exemption IFR \"would affect the contraceptive costs of approximately 31,700 women\" based on information derived from the litigating positions of various objecting entities and notices the agency received pursuant to the previous accommodation process. They further estimated that the total costs potentially transferred to those affected women would amount to \"approximately $18.5 million.\" However, to \"account for uncertainty\" in its estimate, the agencies also examined the \"possible upper bound economic impact\" of the Religious Exemption IFR. Applying a different methodology, the Departments arrived at a figure of approximately 120,000 women, with potential transfer costs totaling $63.8 million. The Departments projected a smaller effect with respect to the Moral Exemption IFR, estimating that it could affect the contraceptive costs of 15 women, an aggregate effect of approximately $8,760.", "The Departments finalized the Religious and Moral Exemption IFRs on November 15, 2018, with effective dates of January 14, 2019 (collectively, the 2019 Final Rules). The 2019 Final Rules amended the regulatory text \"to clarify the intended scope of the language\" but retained the substance of the IFRs. The Departments increased their upper-bound estimate of the number of women that the expanded Religious Exemption could affect from 120,000 women to 126,400 women, yielding potential transfer costs of $67.3 million."], "subsections": []}, {"section_title": "Little Sisters of the Poor and Other Pending Legal Challenges", "paragraphs": ["The expanded exemptions generated a new set of legal challenges from states concerned with the fiscal burdens of the revised rules and the Departments' authority to promulgate them. In addition, some private parties (including a nationwide class of employers) successfully obtained injunctions against enforcement of the prior accommodation process after the government stopped defending the process on RFRA grounds. This section discusses some of the key pending legal challenges, beginning with a summary of the procedural history and arguments before the Supreme Court in Little Sisters of the Poor v. Pennsylvania ."], "subsections": [{"section_title": "Little Sisters of the Poor v. Pennsylvania", "paragraphs": ["In late 2018, Pennsylvania and New Jersey asked a federal court to block the 2019 Final Rules, alleging, among other claims, that the rules (1)\u00c2\u00a0\"failed to comply with the notice-and-comment procedures\" required by the Administrative Procedure Act (APA) and (2) were \"'arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law' in violation of the [APA's] substantive provisions.\" The U.S. District Court for the Eastern District of Pennsylvania ruled that the states were \"likely to succeed\" on both of their APA claims and preliminarily enjoined the rules on a nationwide basis.", "On appeal, the Third Circuit affirmed the district court's decision. The appellate court ruled that the Departments committed a procedural APA violation in issuing the IFRs by \"dispensing with\" the statute's notice and comment requirement without \"good cause.\" In the court's view, the Departments' solicitation of comments before issuing the Final Rules did not remedy this defect because the agency's action did not give the public a \"meaningful opportunity\" to comment on the rules during their formulation, or demonstrate that the agency showed \"any real open-mindedness\" to amending the IFRs. ", "The court next considered whether the 2019 Final Rules were \"arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law\"\u00e2\u0080\u0094grounds for a reviewing court to \"set aside\" the rules under the APA. The Third Circuit concluded that the ACA did not authorize the Departments to \"exempt actors\" from the preventive services requirement. Reciting the statutory language, the court observed that group health plans and insurers \"shall\" cover \"such additional preventive care . . . as provided for in comprehensive guidelines supported by [HRSA].\" The appellate court reasoned that the \"authority to issue 'comprehensive guidelines' concerns the type of services that are to be provided and does not provide authority to undermine Congress's directive\"\u00e2\u0080\u0094expressed with the command shall \u00e2\u0080\u0094\"concerning who must provide coverage for these services.\" ", "The Third Circuit also disagreed with the Departments' argument that the expanded Religious Exemption in the 2019 Final Rules was necessary to bring the contraceptive coverage requirement into compliance with RFRA. Recognizing that RFRA authorized courts to determine, through \"individualized adjudication,\" whether a particular law burdens a person's religious exercise, the court concluded that it need not defer to the Departments' assessment of the necessity of a broader religious exemption. Additionally, the court concluded that RFRA could not have required the expanded exemption because the prior accommodation process itself complied with RFRA. And the Third Circuit reasoned that making compliance with the accommodation process optional for religious objectors \"would impose an undue burden on nonbeneficiaries\u00e2\u0080\u0094the female employees who will lose coverage for contraceptive care.\"", "Finally, the circuit court upheld the district court's decision to issue a nationwide preliminary injunction. The court reasoned that the injunction would ensure that the \"likely\" unlawful 2019 Final Rules would not take effect in some states only to be invalidated in full after further judicial proceedings. The court also concluded that a nationwide remedy was \"necessary to provide the States complete relief,\" because individuals may reside or attend college in Pennsylvania or New Jersey but obtain their health insurance from an employer-sponsored or a parent's plan in a state that was not part of the lawsuit. If those individuals lost contraceptive coverage on an out-of-state plan, they might turn to state-sponsored services in Pennsylvania or New Jersey, placing fiscal burdens on those states. ", "Two parties filed petitions for certiorari with the Supreme Court seeking to appeal the Third Circuit's ruling: the federal government and the Little Sisters of the Poor Saints Peter and Paul Home (Little Sisters), a religious nonprofit organization that was permitted to intervene in the litigation in defense of the interim final rules, but later denied standing to challenge the 2019 Final Rules on appeal. On January\u00c2\u00a017, 2020, the Supreme Court granted both petitions and consolidated the appeals. Over 50 amicus briefs have been filed by organizations, individuals, states, and localities. Some Members of Congress have also filed briefs in opposition to or support of the Third Circuit's ruling.", "While the case raises a number of legal issues, the central question presented in Little Sisters of the Poor is whether the Departments \"had statutory authority under the ACA and [RFRA] to expand the conscience exemption\" to the contraceptive coverage requirement through the 2019 Final Rules. The federal government advances three main arguments in defense of its substantive authority to issue the rules. First, the government argues that HRSA has \"ample authority to develop guidelines\" for women's preventive services \"that account for sincere conscience-based objections\" because, among other reasons, ACA's \"plain text\" requires coverage \"' as provided for in comprehensive guidelines supported by [HRSA].'\" Second, the government contends that RFRA required it to extend automatic exemptions to \"certain employers with conscientious objections\" because the prior accommodation process, which may have sufficed for Hobby Lobby, did \"not eliminate the substantial burden\" that the coverage requirement placed on those employers. Third, the government argues that RFRA authorizes, even if it does not require, the expanded Religious Exemption because it applies to \"the implementation\" of \"all Federal law.\" In support of its interests, Little Sisters argues that in light of the \"substantial burden\" mandatory contraceptive coverage places on religious exercise recognized in Hobby Lobby , the government was \"duty-bound to change its rules and stop forcing religious objectors to comply via the accommodation.\" Little Sisters described the certification process as \"the stingiest of accommodations\" that amounted to \"merely another means of complying with the contraceptive mandate.\" The state-respondents ask the Supreme Court to affirm the Third Circuit's ruling. They frame the case as more than a dispute over \"the appropriate balance between the health and autonomy of women and the religious and moral views of their employers,\" because it concerns \"the power of federal agencies to resolve such questions by relying on power never explicitly granted by Congress nor recognized by the courts.\" The states argue, inter alia , that Congress, through the ACA, \"delegated HRSA authority to oversee guidelines defining what preventive services for women must be covered, not who must cover them.\" In the states' view, \"RFRA does not grant federal agencies broad rulemaking authority to create exemptions from mandatory laws absent a violation,\" which was not present under the prior regulatory framework because \"the accommodation 'effectively exempt[s]' an employer.\" And they remind the Court that \"[n]o party claims that RFRA authorizes the moral rule\" and its exemption."], "subsections": []}, {"section_title": "Challenges by Other States", "paragraphs": ["Pennsylvania and New Jersey were not the only states to challenge the expanded exemptions. A lawsuit by the Commonwealth of Massachusetts to block the enforcement of the interim rules\u00e2\u0080\u0094and later the final rules\u00e2\u0080\u0094was initially barred on standing grounds. But on May 2, 2019, the First Circuit reversed the district court's ruling, holding that Massachusetts had shown an \"imminent\" fiscal harm \"fairly traceable\" to the expanded exemptions, sufficient to confer standing. The appellate court remanded the case to the district court to consider the Commonwealth's substantive arguments that the 2019 Final Rules violated the APA, the First Amendment's Establishment Clause, and the \"equal protection guarantee\" of the Fifth Amendment's Due Process Clause. The parties' motions for summary judgment\u00e2\u0080\u0094asking the court for a ruling on the legal issues prior to (and ultimately instead of) a trial\u00e2\u0080\u0094were pending before the district court when the parties and the court agreed to stay the proceedings in light of a potential Supreme Court ruling in Little Sisters of the Poor .", "An action in the U.S. District Court for the Northern District of California proceeded alongside the Pennsylvania and Massachusetts cases. In 2018, 14 states moved to enjoin enforcement preliminarily of the 2019 Final Rules. A subset of these states had already obtained a nationwide injunction against enforcement of the IFRs, which the Ninth Circuit then modified to apply only in the states that were plaintiffs in the action. In renewing their challenge to the 2019 Final Rules, the states advanced APA, Establishment Clause, and Equal Protection Clause claims similar to the Massachusetts action. As with its first ruling on the IFRs, the district court decided the motion for injunctive relief on statutory grounds. The court concluded that the final rules likely violated the APA because they were \"not in accordance with\" the ACA and were not required, and potentially not even authorized, by RFRA. Rather than issue a nationwide injunction, this time the court issued a preliminary injunction against enforcement in the plaintiff states alone. ", "On appeal, the Ninth Circuit ruled that \"the district court did not err in concluding that the agencies likely lacked statutory authority under the ACA to issue the final rules,\" engaging in a textual analysis similar to the Third Circuit's in the Pennsylvania action. The appellate court also shared the district court's reservations that RFRA did not permit, let alone require, the Religious Exemption, citing three reasons. First, RFRA does not explicitly \"delegate[] to any government agency the authority to determine violations and to issue rules addressing alleged violations.\" Second, the Religious Exemption \"contradicts congressional intent that all women have access to appropriate preventative care.\" And third, a \"blanket exemption for self-certifying religious objectors\" was \"at odds with the careful, individualized, and searching review mandate[d] by RFRA.\" While the Ninth Circuit affirmed the district court's decision, it emphasized that its \"disposition [was] only preliminary,\" preserving \"the status quo until the district court renders judgment on the merits based on a fully developed record.\""], "subsections": []}, {"section_title": "DeOtte v. Azar", "paragraphs": ["While the Pennsylvania and California actions resulted in preliminary injunctions against the 2019 Final Rules, the Departments are also enjoined from enforcing the prior accommodation process in key respects as a result of a nationwide injunction issued by the U.S. District Court for the Northern District of Texas. In DeOtte v. Azar , the court certified two classes of objectors to the contraceptive coverage requirements. The \"Employer Class\" consisted of the following:", "Every current and future employer in the United States that objects, based on its sincerely held religious beliefs, to establishing, maintaining, providing, offering, or arranging for: (i)\u00c2\u00a0coverage or payments for some or all contraceptive services; or (ii) a plan, issuer, or third-party administrator that provides or arranges for such coverage or payments.", "The \"Individual Class\" consisted of the following:", "All current and future individuals in the United States who: (1) object to coverage or payments for some or all contraceptive services based on sincerely held religious beliefs; and (2) would be willing to purchase or obtain health insurance that excludes coverage or payments for some or all contraceptive services from a health insurance issuer, or from a plan sponsor of a group plan, who is willing to offer a separate benefit package option, or a separate policy, certificate, or contract of insurance that excludes coverage or payments for some or all contraceptive services.", "The court granted these classes summary judgment on their RFRA claims. Similar to the Eighth Circuit's pre- Zubik reasoning, the district court concluded with respect to the Employer Class that the court could not question the lead plaintiff's position \"that the act of executing the accommodation forms is itself immoral.\" As for the Individual Class, the court accepted the plaintiffs' argument that purchasing plans that cover certain forms of contraception substantially burdens their religious exercise because it makes them \"complicit\" in the provision of contraception to which they object. Having found that the requirement imposed a substantial burden on these groups, the court then concluded that the requirement was insufficiently tailored. It reasoned that \"[i]f the Government has a compelling interest in ensuring access to free contraception, it has ample options at its disposal that do not involve conscripting religious employers\" or requiring the participation of objecting employees.", "The district court permanently enjoined the government from enforcing the contraceptive coverage requirement against any member of the Employer Class to the extent of its objection. It further enjoined the government from preventing a \"willing\" employer or insurer from offering Individual Class members plans that do not include contraceptive coverage. In its final order specifying the terms of its nationwide, permanent injunction, the court included a \"safe harbor\" allowing the Departments to (1)\u00c2\u00a0ask employers or individuals whether they are sincere religious objectors; (2)\u00c2\u00a0enforce the contraceptive coverage requirement with respect to employers or individuals who \"admit\" they are not sincere religious objectors; and (3)\u00c2\u00a0seek a declaration from the court that an employer or individual falls outside the certified classes if the government \"reasonably and in good faith doubt[s] the sincerity of that employer or individual's asserted religious objections.\" Before entering final judgment, the district court denied the State of Nevada's motion to intervene (supported by 22 additional states) in the litigation. Nevada appealed that denial and the court's injunction to the Fifth Circuit, which has stayed the appeal pending a decision in Little Sisters of the Poor . "], "subsections": []}]}, {"section_title": "Considerations for Congress", "paragraphs": ["Although the contraceptive coverage requirement remains in effect, the injunctions discussed above leave its implementation and enforcement in an uncertain posture. In combination, these rulings affect the regulatory frameworks that existed both before and after the promulgation of the expanded exemptions. The injunctions entered in the Pennsylvania and California actions do not bar entities that qualified for an exemption or an accommodation before the Religious or Moral Exemption IFRs from availing themselves of those options. Accordingly, it appears that (1)\u00c2\u00a0qualifying institutions (e.g., houses of worship) can still invoke the exemption for religious employers; and (2)\u00c2\u00a0\"eligible organizations\"\u00e2\u0080\u0094including closely held corporations as defined in the 2015 rule\u00e2\u0080\u0094can still use the accommodation process. However, as a result of the injunctions entered in DeOtte and other cases concerning the accommodation, the government is more limited in its ability to enforce the requirement against entities that choose not to notify their insurers or HHS of their objections. For example, regardless of an entity's compliance with the accommodation process, the government may not enforce the requirement against employers that object to providing or arranging for contraceptive coverage based on sincerely held religious beliefs, at least to the extent of those employers' objections. And the government may not prevent employers or insurers from offering plans without contraceptive coverage to individuals who oppose that coverage based on sincere religious beliefs. ", "A Supreme Court decision in Little Sisters of the Poor could clarify the validity of the 2019 Final Rules and the scope of the exemptions going forward. A ruling affirming the nationwide injunction or remanding with instructions to issue a narrower preliminary injunction would likely result in invalidation of the 2019 Final Rules in at least some states, which could prompt the Department to issue new regulations or guidance. In contrast, a ruling reversing the Third Circuit's decision and holding that the 2019 Final Rules do not violate the APA could pave the way for the expanded exemptions to take effect, leaving the question of further amendments to the federal contraceptive coverage requirement to the Departments and to Congress.", "The litigation from Hobby Lobby to Little Sisters of the Poor reflects an ongoing public policy debate over the extent to which the government should accommodate entities with religious or moral objections to contraception, particularly when those accommodations may compromise their employees' or students' access to the full range of contraceptive services covered for other women. As a legal matter, a Little Sisters of the Poor decision could help to clarify whether RFRA allows or requires federal agencies to exempt entities from generally applicable laws that the agencies conclude will burden the religious exercise of those groups. The decision could also clarify whether, in making this determination, agencies may or must account for the interests of third parties, such as the women who otherwise would receive contraceptive coverage under the ACA. Other issues, such as the Departments' authority to exempt objecting universities or employers from\u00e2\u0080\u0094in the words of one court\u00e2\u0080\u0094\"existing and future \" contraceptive coverage requirements through private settlement agreements, allegedly without the involvement of students or employees, may be the next phase of litigation. ", "Amicus briefs filed by some Members of Congress in Little Sisters of the Poor highlight differing views of what RFRA requires of federal agencies. In a brief filed by 161 Members of Congress, the amici argue that RFRA \"is far more than a backward-facing statute enacted to address prior wrongs,\" setting \"forth an affirmative mandate that, when carrying out official duties, each member of the federal government (including federal administrative agencies) ' shall not substantially burden a person's exercise of religion,' absent a compelling interest and use of the least restrictive means.\" In contrast, a group of 186 Members of Congress argue that \"RFRA did not, and was not intended to, grant authority to federal agencies to craft exemptions to laws enacted by Congress\u00e2\u0080\u0094and thereby to negate Congress's own legislative intent.\" That brief further maintains that RFRA was not \"intended to allow some individuals' religious liberties (or agencies' own perceptions about those religious liberties) to be used as a sword to limit the rights of others.\"", "Because Little Sisters of the Poor involves a statutory rather than a constitutional challenge to the 2019 Final Rules, the Court's ruling is unlikely to preclude Congress from amending the coverage requirement, its exemptions, or RFRA itself, if Congress disagrees with the Court's decision. Individual Members of Congress have proposed a number of approaches over the years that would recalibrate the legal framework for contraceptive coverage, including those that would have the government take a more active role in facilitating access to contraception and others that would attempt to clarify the responsibilities of the government in accommodating those with genuine religious objections to a coverage requirement. Some lawmakers have proposed amendments to the ACA's preventive services coverage requirements \"with respect to women\" to explicitly require coverage of contraception. For example, a bill introduced in the last Congress would have amended the preventive services requirement in subsection (a)(4) to include \"contraceptive care,\" including \"the full range of [FDA-approved] female-controlled contraceptive methods\" and \"instruction in fertility awareness-based methods . . . for women desiring an alternative method.\" Other proposals, including a bill introduced in the 116th Congress, would direct the Departments to include certain forms of contraception at the regulatory level. ", "In general, legislation specifying that contraception is among the required preventive health services may help tip the scales on the government interest prong of the RFRA analysis toward a compelling interest in providing cost-free coverage for contraception through employer-sponsored health plans. In Hobby Lobby , the Supreme Court assumed that the government had a compelling interest in \"guaranteeing cost-free access\" to the objected-to contraceptive methods. However, the majority noted that \"there are features of ACA that support\" the opposing view, in particular, the inapplicability of the requirement to grandfathered plans. The Departments went a step further in the 2019 Final Rules, suggesting that the government did not have a compelling interest in contraceptive coverage because Congress left the decision of whether to include it to the agencies. Codifying the requirement may respond to arguments of this nature. However, proposals to expand contraceptive coverage, standing alone, could still be susceptible to challenge by religious objectors who might still assert that laws mandating coverage\u00e2\u0080\u0094even if they include some exemptions\u00e2\u0080\u0094impose a substantial burden on their religious exercise and are not narrowly tailored under RFRA. ", "RFRA applies by default to all federal statutes adopted after its enactment (November 16, 1993) \"unless such law explicitly excludes such application by reference to this Act.\" Some legislation concerning contraception includes language excepting those provisions from RFRA or excluding RFRA claims. A pair of bills introduced in the wake of Hobby Lobby would have prohibited an \"employer that establishes or maintains a group health plan for its employees\" from \"deny[ing] coverage of a specific health care item or service . . . where the coverage of such item or service is required under any provision of Federal law or the regulations promulgated thereunder,\" notwithstanding RFRA. Lawmakers have also proposed amendments to RFRA itself. Similar bills introduced in both chambers this Congress would provide that RFRA's strict scrutiny standard does not apply to certain types of laws, including \"any provision of law or its implementation that provides for or requires . . . access to, . . . referrals for, provision of, or coverage for, any health care item or service.\" ", "Laws that make RFRA inapplicable to the contraceptive coverage requirement would not foreclose challenges based on the Free Exercise Clause. However, as previously noted, Free Exercise claims are potentially subject to a less stringent standard of review than RFRA-based objections because of the Supreme Court's holding in Employment Division v. Smith that the Free Exercise Clause typically does not require the government to provide religious-based exemptions to generally applicable laws.", "Other approaches to contraceptive coverage have focused on accommodating the interests of religious objectors. Some courts and objecting employers have suggested that Congress could avoid or minimize burdens on religious objectors by funding separate contraceptive coverage or expanding access to programs that provide free contraception instead of requiring employers to provide this coverage. Along these lines, the Departments separately issued a rule authorizing the directors of federally funded family planning projects to extend contraceptive services to some women whose employers do not provide coverage for such services because of a religious or moral exemption. While the efficacy of such proposals in maintaining or increasing access to contraception is beyond the scope of this report, alternatives that do not involve requiring private parties to provide contraceptive coverage or otherwise take an action that results in the provision of coverage by a third party could reduce the potential for both RFRA and Free Exercise challenges.", "Other proposals seek to codify exemptions to the contraceptive coverage requirement for entities with religious or moral objections. For example, the Religious Liberty Protection Act of 2014 would have prohibited HHS from \"implement[ing] or enforc[ing]\" any rule that \"relates to requiring any individual or entity to provide coverage of sterilization or contraceptive services to which the individual or entity is opposed on the basis of religious belief.\" That bill also would have included a \"special rule\" in the ACA stating that a \"health plan shall not be considered to have failed to provide\" the required preventive health services \"on the basis that the plan does not provide (or pay for) coverage of sterilization or contraceptive services because\u00e2\u0080\u0094(A) providing (or paying for) such coverage is contrary to the religious or moral beliefs of the sponsor, issuer, or other entity offering the plan; or (B) such coverage, in the case of individual coverage, is contrary to the religious or moral beliefs of the purchaser or beneficiary of the coverage.\" Enacting statutory exemptions to the contraceptive coverage requirement might avoid future litigation over the Departments' authority under the ACA to create categorical exemptions. In addition, broader exemptions could reduce the potential for RFRA or Free Exercise challenges. At the same time, they could increase the prospect of Establishment Clause challenges like those brought in response to the expanded exemptions in the 2019 Final Rules. While the Supreme Court has said that \"there is room for play in the joints\" between the Free Exercise Clause and the Establishment Clause, it remains to be seen whether broad accommodations like the Religious Exemption and the Moral Exemption fit comfortably in that space. ", "Little Sisters of the Poor marks the fourth Supreme Court term in six years in which the Court has granted certiorari in a dispute about the federal contraceptive coverage requirement. During that time period, the Departments promulgated six different rules concerning the requirement, a change in presidential administration marked a turning point in the Departments' RFRA calculus, and the Supreme Court underwent its own changes with the appointment of two new Justices. While the Court has the next opportunity to weigh in on the coverage requirement in Little Sisters of the Poor , Congress and the executive branch continue to have a role in defining the interests at stake and the balance to be achieved in the years ahead."], "subsections": []}]}}
{"id": "R46189", "title": "FDA Regulation of Cannabidiol (CBD) Consumer Products: Overview and Considerations for Congress", "released_date": "2020-01-21T00:00:00", "summary": ["Cannabidiol (CBD), a compound in the Cannabis sativa plant, has been promoted as a treatment for a range of conditions, including epileptic seizures, post-traumatic stress disorder, anxiety, inflammation, and sleeplessness. However, limited scientific evidence is available to substantiate or disprove the efficacy of CBD in treating these conditions. In the United States, CBD is marketed in food and beverages, dietary supplements, cosmetics, and tobacco products such as electronic nicotine delivery systems (ENDS)\u00e2\u0080\u0094products that are primarily regulated by the Food and Drug Administration (FDA) under the Federal Food, Drug, and Cosmetic Act (FFDCA, 21 U.S.C. \u00c2\u00a7\u00c2\u00a7301 et seq.). CBD is also the active ingredient in Epidiolex, an FDA-approved pharmaceutical drug.", "The Regulation of Marijuana and Hemp", "CBD is derived from the Cannabis sativa plant (commonly referred to as cannabis), which includes both hemp and marijuana. Marijuana is a Schedule I controlled substance under the Controlled Substances Act (CSA, 21 U.S.C. \u00c2\u00a7\u00c2\u00a7802 et seq.) and is regulated by the Drug Enforcement Administration (DEA). Schedule I substances are subject to the most severe CSA restrictions and penalties. Except for purposes of federally approved research, it is a federal crime to grow, sell, or possess marijuana.", "Until December 2018, hemp was included in the CSA definition of marijuana and was thus subject to the same restrictions. Legislative changes enacted as part of the 2018 farm bill (Agriculture Improvement Act of 2018, P.L. 115-334 ) removed longstanding federal restrictions on the cultivation of hemp. No longer subject to regulation and oversight as a controlled substance by DEA, hemp production is now subject to regulation and oversight as an agricultural commodity by the U.S. Department of Agriculture (USDA). The 2018 farm bill expanded the statutory definition of what constitutes hemp to include \"all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers,\" as long as it contains no more than a 0.3% concentration of delta-9 tetrahydrocannabinol (THC; 7 U.S.C. \u00c2\u00a71639o). All non-hemp cannabis and cannabis derivatives\u00e2\u0080\u0094including marijuana-derived CBD\u00e2\u0080\u0094are considered to be marijuana under the CSA and remain regulated by DEA.", "Production and Marketing of Hemp Products", "Legislative changes related to hemp enacted as part of the 2018 farm bill were widely expected to generate additional market opportunities for the U.S. hemp market. However, the farm bill explicitly preserved FDA's authority under the FFDCA and Section 351 of the Public Health Service Act (PHSA, 42 U.S.C. \u00c2\u00a7262), including for hemp-derived products. Following enactment of the farm bill, in a December 2018 statement, FDA stated that it is \"unlawful under the [FFDCA] to introduce food containing added CBD or THC into interstate commerce, or to market CBD or THC products as, or in, dietary supplements, regardless of whether the substances are hemp-derived.\" The agency has maintained this view in subsequent communications.", "Despite FDA's determination, CBD continues to be widely marketed and sold in both food and dietary supplements in the United States. To date, FDA has generally prioritized enforcement against companies and products that pose the greatest risk to consumers\u00e2\u0080\u0094for example, CBD products claiming to treat Alzheimer's or stop cancer cell growth.", "In 2014, total U.S. CBD sales were a reported $108 million. In 2018, more than 1,000 companies produced and marketed CBD for the U.S. market, and U.S. CBD sales were estimated at $534 million, according to the Hemp Business Journal . That dollar amount is projected to exceed $1 billion in 2020 and to reach nearly $2 billion in 2022. This amount includes sales from hemp-derived CBD, marijuana-derived CBD (currently a Schedule I controlled substance), and pharmaceutical CBD (currently only Epidiolex).", "Congressional Interest", "Congress has expressed concern about the proliferation of CBD products marketed in violation of federal law and has called on FDA to provide guidance on lawful pathways for marketing hemp-derived CBD in food and dietary supplements. In absence of a regulatory framework for hemp-derived CBD, in the explanatory statement accompanying the FY2020 enacted appropriation, Congress directed FDA to issue a policy of enforcement discretion with respect to CBD products that meet the statutory definition of hemp. In addition to the activities directed in the explanatory statement, Congress could also take further legislative action in the future, such as requiring FDA to issue a regulation, under its FFDCA authorities, expressly permitting CBD that meets the definition of hemp to be used as a food additive or dietary supplement. Congress also could amend the FFDCA provisions that FDA has identified as restricting marketing of CBD in food and dietary supplements. In determining whether a legislative approach is appropriate, Congress may consider the potential for adverse health effects and other unintended consequences."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Background", "paragraphs": ["Cannabidiol (CBD) , a compound in the Cannabis sativa plant , has been promoted as a treatment for a range of conditions, including epileptic seizures, post-traumatic stress disorder, anxiety, inflammation, and sleeplessness . However, limited scientific evidence exists to substantiate or disprove the efficacy of CBD in treating these conditions . In the United States, CBD is being marketed in food and beverages, dietary supplements, cosmetics , and tobacco products such as electronic nicotine delivery systems (ENDS , the overarching term encompassing electronic cigarettes) \u00e2\u0080\u0094products that are primarily regulated by the Food and Drug Administration (FDA) under the Federal Food, Drug, and Cosmetic Act (FFDCA). CBD is also the active ingredient in Epidiolex , an FDA-approved pharmaceutical drug used to treat seizures associated with two rare and severe forms of epilepsy .", "CBD is derived from the Cannabis sativa plant (commonly referred to as cannabis), which includes both hemp and marijuana (defined further below). CBD and tetrahydrocannabinol (THC) are thought to be the most abundant cannabinoids in the cannabis plant and are among the most researched cannabinoids for their potential medical value. THC\u00e2\u0080\u0094a psychoactive compound\u00e2\u0080\u0094is found at high levels in m arijuana and low levels in hemp (see Figure 1 ). ", "CBD, on the other hand, is generally considered to be nonpsychoactive and may be derived from either hemp or marijuana. As described below, this distinction is relevant for purposes of oversight by the Drug Enforcement Administration (DEA), but generally not for FDA oversight. FDA has stated that it \"treats products containing cannabis or cannabis-derived compounds as it does any other FDA-regulated products\u00e2\u0080\u0094meaning they're subject to the same authorities and requirements as FDA-regulated products containing any other [non-cannabis] substance. This is true regardless of whether the cannabis or cannabis-derived compounds are classified as hemp under [7 U.S.C. Section 1639o] as amended by the 2018 [f]arm [b]ill.\" In contrast, the DEA does not regulate cannabis or cannabis-derived compounds that meet the statutory definition of hemp.", "Botanically, marijuana and hemp are from the same species of plant, Cannabis sativa , but from different varieties or cultivars. Marijuana and hemp have separate definitions in U.S. law and are subject to different statutory and regulatory requirements.", "M arijuana (as defined in statute) generally refers to the cultivated plant used as a psychotropic drug, either for medicinal or recreational purposes. Marijuana is a Schedule I controlled substance under the Controlled Substances Act (CSA) and is regulated by DEA. Schedule I substances are subject to the most severe CSA restrictions and penalties; with exceptions for federally approved research, it is a federal crime to grow, sell, or possess the drug. Thus, under the CSA, the unauthorized manufacture, distribution, dispensation, and possession of marijuana and its derivatives (including marijuana-derived CBD) are prohibited.", "Hemp (as defined in statute separately from marijuana), on the other hand, may be legally cultivated under federal law, subject to oversight by the U.S. Department of Agriculture (USDA). Hemp is generally grown for use in the production of a wide range of products, including foods and beverages, personal care products, dietary supplements, fabrics and textiles, paper, construction materials, and other manufactured and industrial goods (see Figure 2 ). ", "Until December 2018, hemp was included in the CSA definition of marijuana and was thus subject to the same restrictions as marijuana. The Agriculture Improvement Act of 2018 (2018 farm bill; P.L. 115-334 ) removed hemp and its derivatives (including hemp-derived CBD) from the CSA definition of marijuana. As a result, hemp is no longer subject to regulation and oversight as a controlled substance by DEA. Instead, hemp production is now subject to regulation and oversight as an agricultural commodity by USDA. CBD and CBD-related products that do not meet the statutory definition of hemp (in 7 U.S.C. \u00c2\u00a71639o) continue to be prohibited (aside from lawful use for research purposes) under the CSA and remain regulated by DEA.", "Changes enacted in the 2018 farm bill related to hemp were expected by many to generate additional market opportunities for hemp-derived consumer products such as hemp-derived CBD. However, the farm bill also explicitly preserved FDA's authorities under the FFDCA and Section 351 of the Public Health Service Act, including for hemp-derived products. As mentioned above, cannabis and cannabis-derived FDA-regulated products are subject to the same authorities and requirements as FDA-regulated products\u00e2\u0080\u0094including pharmaceutical drugs, food, dietary supplements, and cosmetics\u00e2\u0080\u0094containing any other substance (whether cannabis-derived or otherwise). As described below, FDA has determined that it is unlawful to introduce food containing added CBD into interstate commerce, or to market CBD as or in dietary supplements. FDA has not made similar determinations for other FDA-regulated product categories (pharmaceutical drugs, cosmetics, and tobacco products). "], "subsections": []}, {"section_title": "FDA Regulation of CBD Products", "paragraphs": ["In the United States, CBD is the active ingredient in the prescription drug Epidiolex. CBD is also being marketed in food and beverages, dietary supplements, cosmetics, and tobacco products such as ENDS. Each of these product types is governed by different statutory and regulatory requirements, primarily administered by FDA. The agency also shares regulatory authority with other entities; for example, the Alcohol and Tobacco Tax and Trade Bureau (TTB), with regard to alcoholic beverages, and the Federal Trade Commission (FTC), with regard to the advertising and promotion of certain CBD products. This section provides an overview of how FDA regulates drugs, food, dietary supplements, cosmetics, and tobacco products, and the applicability of those requirements to products that contain CBD. Table 1 summarizes selected regulatory requirements by CBD product type. "], "subsections": [{"section_title": "Pharmaceutical Drugs", "paragraphs": ["FDA, under the FFDCA, regulates the safety and effectiveness of prescription and nonprescription (over-the-counter, or OTC) drugs sold in the United States. Prescription drugs require health practitioner supervision to be considered safe for use\u00e2\u0080\u0094due to drug toxicity, potential harmful effect, or method of use\u00e2\u0080\u0094and may be dispensed only pursuant to a prescription. In contrast, OTC drugs may be used without a prescriber's authorization, provided they have an acceptable safety margin, low potential for misuse or abuse, and are adequately labeled so that consumers can self-diagnose the condition, self-select the medication, and self-manage the condition. The statutory definition of the term drug includes \"articles (other than food) intended to affect the structure or any function of the body of man or other animals\" and \"articles intended for use in the diagnosis, cure, mitigation, treatment, or prevention of disease in man or other animals.\" In general, a new drug may not be introduced into interstate commerce without FDA approval. ", "For purposes of new drug approval, except under very limited circumstances, FDA requires data from clinical trials to provide evidence of a drug's safety and effectiveness. Before testing in humans\u00e2\u0080\u0094called clinical testing\u00e2\u0080\u0094the drug's sponsor (usually its manufacturer) must file an investigational new drug (IND) application with FDA. Once a manufacturer completes clinical trials, it submits the results of those investigations, along with other information, to FDA in a new drug application (NDA). In reviewing an NDA, FDA considers whether the drug is safe and effective for its intended use; whether the proposed labeling is appropriate; and whether the methods used to manufacture the drug and the controls used to maintain the drug's quality are adequate to preserve the drug's identity, strength, quality, and purity. The NDA process can be used to obtain approval of both prescription and OTC drugs. If a sponsor wants to transfer an approved drug from prescription to OTC status (called an Rx-to-OTC switch), the sponsor must submit to FDA an NDA (or a supplement to an NDA) providing data to support the switch. As part of an NDA for an OTC drug, FDA may require the sponsor to conduct label comprehension studies assessing the extent to which consumers understand the information in the proposed labeling. FDA also may recommend that the sponsor conduct self-selection studies to assess whether consumers can appropriately self-select a drug based on the information on the labeling. ", "In June 2018, FDA approved an NDA for the prescription drug Epidiolex, submitted by GW Pharmaceuticals, for the treatment of seizures associated with Lennox-Gastaut syndrome and Dravet syndrome in patients two years old and older. The active ingredient in Epidiolex is CBD, although its mechanism of action\u00e2\u0080\u0094that is, the mechanism by which it exerts its anticonvulsant effects\u00e2\u0080\u0094is not known. FDA approved Epidiolex in June 2018; at that time, the drug contained a chemical constituent of marijuana (CBD) that was considered a Schedule I controlled substance. Therefore, it could not be marketed unless rescheduled by the DEA. Upon FDA approval, Epidiolex no longer met the criteria for placement in Schedule I, as it now had an accepted medical use in the United States. On September 28, 2018, based on a recommendation from FDA, DEA issued an order placing FDA-approved drugs that contain cannabis-derived CBD and no more than 0.1% THC in Schedule V. Epidiolex is available by prescription and only at specialty pharmacies. It is the first (and only) pharmaceutical formulation of highly purified, plant-derived CBD available in the United States. Because Epidiolex is designated as an orphan drug (i.e., a drug that treats a rare disease or condition), it was awarded seven years of marketing exclusivity upon approval. This means that FDA cannot approve an NDA for the same drug\u00e2\u0080\u0094in this case, one that has CBD as its active ingredient\u00e2\u0080\u0094for the same disease or condition (i.e., for the treatment of seizures associated with Lennox-Gastaut syndrome or Dravet syndrome in patients two years old and older) for seven years, with limited exceptions."], "subsections": []}, {"section_title": "Foods and Food Additives", "paragraphs": ["The FFDCA defines food to mean \"(1) articles used for food or drink for man or other animals, (2) chewing gum, and (3) articles used for components of any such article.\" FDA's Center for Food Safety and Applied Nutrition (CFSAN) is responsible for oversight of human food, while FDA's Center for Veterinary Medicine (CVM) is responsible for oversight of animal food (feed). The FFDCA requires that all human and animal foods are safe to eat, produced in compliance with current good manufacturing practices (CGMPS), contain no harmful substances, and are truthfully labeled, among other things. Generally, food intended for human or animal consumption is not approved by FDA prior to marketing. However, any substance added to food is a food additive, subject to premarket review and approval by FDA. An exception to this is if a substance is generally recognized as safe (i.e., GRAS) under the conditions of its intended use, among qualified experts, or unless the use of the substance is otherwise excepted from the definition of a food additive. To obtain approval of a substance as a food additive, a person may submit to FDA a food additive petition, which proposes the issuance of a regulation prescribing the conditions under which the additive may be safely used. Food additives are approved for specific uses (e.g., to improve taste, texture, or appearance; to improve or maintain nutritional value; or to maintain or improve safety and freshness). If FDA determines, after reviewing the data submitted in a petition, that a proposed use of a food additive is safe, the agency issues a regulation authorizing that specific use of the substance. ", "The use of a food substance may be determined to be GRAS either through scientific procedures or, for a substance used in food before 1958, through scientific procedures or experience based on common use in food. FDA established a voluntary GRAS notification process that permits any person to notify the agency of a conclusion that a substance is GRAS under the conditions of its intended use in human food. A substance is considered GRAS on the basis of common knowledge about its safety for its intended use, and the data and information relied upon for the GRAS substance must be generally available . This is in contrast to the data and information used to support a food additive petition, which are generally privately held and submitted to FDA for evaluation. Additional information about the food additive petition process and submission of GRAS notifications is available in Appendix A .", "Under the FFDCA, it is unlawful to introduce into interstate commerce a food (human or animal) to which a drug has been added\u00e2\u0080\u0094either an approved drug or a drug for which substantial clinical investigations have been instituted and made public. There are several exceptions to this: (1) if the drug was marketed in food before it was approved as a drug or before clinical drug investigations were instituted; (2) if the Secretary has issued a regulation, after notice and comment, approving the use of such drug in the food; (3) if the use of the drug in the food is to enhance the safety of the food and not to have independent biological or therapeutic effects on humans, and the use is in conformity with specified requirements; or (4) if the drug is a new animal drug whose use is not unsafe under FFDCA Section 512. FDA has concluded, based on available evidence, that none of these are the case for CBD, and because CBD is an active ingredient in an approved drug, FDA has taken the position that it is unlawful to introduce into interstate commerce food containing added CBD (i.e., to use CBD as a food additive). ", "However, according to FDA, cannabis-derived ingredients that do not contain CBD (or THC) may fall outside the scope of this prohibition. Foods containing parts of the hemp plant that include only trace amounts of CBD (e.g., hemp seed and ingredients derived from hemp seed) may be lawfully marketed under certain circumstances\u00e2\u0080\u0094pursuant to FDA approval as a food additive or a GRAS determination. In December 2018, FDA announced that it had completed its evaluation of three GRAS notices related to hemp seed-derived ingredients (i.e., hulled hemp seeds, hemp seed protein, and hemp seed oil). FDA had no questions regarding the company's conclusion that the use of such products as described in the notices is safe. Thus, FDA allowed them to be marketed in human foods\u00e2\u0080\u0094without food additive approval\u00e2\u0080\u0094for the uses specified in the GRAS notices, provided they comply with all other applicable requirements. Intended uses of the hemp seed-derived ingredients include adding them as a source of protein, carbohydrates, oil, and other nutrients to beverages (e.g., smoothies, protein drinks, and plant-based alternatives to dairy products), as well as to soups, dressings, baked goods, snacks, and nutrition bars.", "While FDA has determined that it is unlawful to introduce into interstate commerce food to which CBD has been added, independent of CBD's status as a drug ingredient, CBD has not been approved as a food additive. FDA also has determined that \"[b]ased on a lack of scientific information supporting the safety of CBD in food \u00e2\u0080\u00a6 it cannot conclude that CBD is [GRAS] among qualified experts for its use in human or animal food.\" "], "subsections": [{"section_title": "Animal Food and Feed Considerations", "paragraphs": ["As previously noted, the FFDCA definition of food includes animal food. Similar to food intended for human consumption, animal food is not subject to premarket approval by FDA unless it meets the definition of a food additive. In that case, it would be subject to the premarket requirements for food additives (or GRAS exemption). Depending on the claims made, certain animal feed/food may meet the FFDCA definition of a drug . Like human drugs, animal drugs require FDA approval prior to marketing. In some cases, animal food may be considered both a food and a drug simultaneously. Although premarket approval by FDA is not required for most animal food (excluding animal drugs), other federal and state rules govern their manufacture and sale. These include, for example, labeling requirements and ingredient definitions. ", "As previously noted, it is a prohibited act, with certain exceptions, under the FFDCA to introduce into interstate commerce animal food to which a drug has been added\u00e2\u0080\u0094either an approved drug or a drug for which substantial clinical investigations have been instituted and made public. Some cannabis-derived ingredients that do not contain CBD or contain only trace amounts of CBD (e.g., hemp seed and ingredients derived from hemp seed) may fall outside the scope of this prohibition and may be lawfully marketed pursuant to FDA approval as a food additive or a GRAS determination. However, to date, FDA has not approved any food additive petitions or evaluated any GRAS notices related to use of hemp seed and hemp-seed derived ingredients in animal food. In addition, as previously mentioned, FDA has stated that \"[b]ased on a lack of scientific information supporting the safety of CBD in food \u00e2\u0080\u00a6 it cannot conclude that CBD is [GRAS] among qualified experts for its use in human or animal food.\" ", "While FDA is the primary federal agency responsible for regulating the safety of food, the agency works with states and the Association of American Feed Control Officials (AAFCO) in the implementation of uniform policies for regulating the use of animal food products. For example, FDA provides scientific and technical assistance to the AAFCO ingredient Definition Request Process, the purpose of which is to \"identify the safety, utility, and identity of ingredients used in animal feed.\" CVM recognizes ingredients listed in the Official Publication of the AAFCO as being acceptable for use in animal food. According to FDA, \"there are no approved food additive petitions or ingredient definitions listed in the AAFCO OP for any substances derived from hemp, and we are unaware of any GRAS conclusions regarding the use of any substances derived from hemp in animal food.\" AAFCO has issued guidelines on hemp in animal food, which are generally consistent with FDA's policy. The guidelines also note that, based on discussions with FDA and the hemp industry,", "materials and products that are CBD-infused need to be treated as drugs because the intended uses are largely associated with drug claims. This means that parts of the hemp plant will not be appropriate for approval as an animal feed ingredient. As such, products that contain CBD as a feed ingredient could be labeled adulterated or misbranded and be subject to regulatory actions by state agencies."], "subsections": []}]}, {"section_title": "Dietary Supplements", "paragraphs": ["A dietary supplement is defined as a product (other than tobacco) that", "is intended to supplement the diet; is intended to be taken by mouth as a pill, capsule, powder, tablet, or liquid; and contains one or more of the following dietary ingredients: vitamins, minerals, herbs or other botanicals, amino acids, and other substances or their constituents.", "Dietary supplements are generally regulated as food under the FFDCA and, as such, are not subject to premarket approval. Dietary supplements must comply with FDA's regulations prescribing CGMPs related to manufacturing, packaging, labeling, or holding dietary supplements to ensure their quality. A dietary supplement may not claim to diagnose, cure, mitigate, treat, or prevent a specific disease or class of diseases. ", "FDA does not evaluate the safety and effectiveness of dietary supplements prior to marketing; however, supplements are subject to various statutory and regulatory requirements. Among other things, a firm that seeks to market a dietary supplement containing a new dietary ingredient (NDI) must notify FDA at least 75 days prior to marketing. The manufacturer or distributor of the dietary supplement that contains an NDI subject to the notification requirements may not market the supplement until 75 days after the filing date. An NDI is defined as a dietary ingredient that was not marketed as a dietary supplement in the United States before October 15, 1994. An exception to the NDI notification requirement is if the dietary ingredient was \"present in the food supply as an article used for food in a form in which the food has not been chemically altered.\" In this case, the dietary ingredient would still be considered an NDI because it was not marketed prior to October 15, 1994, but it would be exempt from the notification requirement. An NDI notification must include a \"history of use or other evidence of safety establishing that the dietary ingredient, when used under the conditions recommended or suggested in the labeling of the dietary supplement, will reasonably be expected to be safe,\" along with other information. FDA acknowledges receipt of the NDI notification and notifies the submitter of the date of receipt, which is also the NDI notification filing date. FDA must keep the information in the NDI notification confidential for the first 90 days after receiving it. If the manufacturer or distributor submits additional information in support of the NDI notification, FDA may reset the 75-day period and assign a new filing date. FDA does not approve NDI notifications. Instead, the agency generally issues one of four response letters: (1) a letter of acknowledgment without objection; (2) a letter listing deficiencies that make the notification incomplete; (3) an objection letter raising safety concerns based on information in the notification or identifying gaps in the history of use or other evidence of safety; or (4) a letter raising other regulatory issues with the NDI or dietary supplement (e.g., the NDI or supplement is excluded from the definition of a dietary supplement).", "Under the FFDCA, an article that is an active ingredient in an approved drug, or that has been authorized for investigation as a new drug and for which the existence of such clinical investigations has been made public, is excluded from the definition of a dietary supplement and may not be marketed as such. An exception to this is if FDA issues a regulation finding that the use of such substance in a dietary supplement is lawful. An article that is approved as a drug or being investigated as a drug may be marketed in or as a dietary supplement if it was marketed as a dietary supplement or as a food prior to approval or clinical investigation (before the IND became effective). According to FDA, CBD is an active ingredient in an FDA-approved drug (i.e., Epidiolex), and it was authorized for investigation as a new drug for which substantial clinical investigations had been instituted and made public before its marketing as a dietary supplement. As such, FDA has determined that CBD may not be sold as a dietary supplement unless FDA promulgates regulations concluding otherwise, regardless of whether the CBD is hemp-derived or marijuana-derived. FDA has issued several public statements maintaining that it is unlawful to market CBD as, or in, dietary supplements. ", "FDA may issue a regulation, after notice and comment, creating an exception that allows CBD to be marketed as a dietary supplement. Such a regulation may be requested by an interested person through the filing of a citizen petition. If an interested party has evidence challenging FDA's conclusion excluding CBD from the dietary supplement definition, the party may submit to FDA a citizen petition asking the agency to issue a regulation, subject to notice and comment, finding that the ingredient, when used as or in a dietary supplement, would be lawful. To date, FDA has not issued such a regulation for any substance (whether cannabis-derived or not) that is an active ingredient in an approved drug or is authorized for investigation as a new drug. If FDA were to issue a regulation allowing CBD to be marketed as a dietary supplement, that product likely would be expected to comply with the various requirements governing lawful marketing of supplements, including compliance with CGMPs and NDI notification. Despite FDA's determination that marketing CBD as a dietary supplement is unlawful, these products remain on the market. ", "On November 14, 2019, the Consumer Healthcare Products Association (CHPA) submitted a citizen petition to FDA, asking the agency to \"exercise its statutory authority and discretion to engage in rulemaking that establishes a regulatory pathway to legally market dietary supplements containing [CBD] derived from hemp (as defined in 7 U.S.C. \u00c2\u00a71639o(1))\" and to require that manufacturers of CBD-containing dietary supplements submit NDI notifications. It is unclear whether other citizen petitions have been submitted to FDA requesting that it issue a regulation allowing CBD to be marketed as a dietary supplement."], "subsections": []}, {"section_title": "Cosmetics and Personal Care Products", "paragraphs": ["The FFDCA defines cosmetics as \"(1) articles intended to be rubbed, poured, sprinkled, or sprayed on, introduced into, or otherwise applied to the human body or any part thereof for cleansing, beautifying, promoting attractiveness, or altering the appearance and (2) articles intended for use as a component of any such articles; except that such term shall not include soap.\" FDA has the authority to take certain enforcement action against adulterated or misbranded cosmetics. A cosmetic is deemed adulterated if, among other things, it contains a poisonous or deleterious substance, or if it has been made or held in unsanitary conditions. A cosmetic is deemed misbranded if, among other things, \"its labeling is false or misleading in any particular,\" or if the label lacks required information. In addition, if a product makes therapeutic claims (i.e., that its intended use is the cure, mitigation, treatment, or prevention of a disease), FDA generally considers that product to be a drug (or a drug-cosmetic) and subject to the FFDCA drug requirements. If a company has not obtained approval of a new drug prior to marketing, it is in violation of the FFDCA. For example, in October 2019, FDA sent a warning letter to a manufacturer marketing a CBD body butter with therapeutic claims. ", "However, FDA's authority over cosmetic products is generally more limited than for the other products that the agency regulates. FDA does not have the authority to conduct premarket review of cosmetic ingredients, nor can FDA require cosmetics manufacturers to submit data substantiating the safety of their cosmetics. While FDA regulations prohibit or restrict the use of certain ingredients in cosmetics, the regulations do not apply to any cannabis or cannabis-derived ingredients (e.g., CBD).", "Legislation has been introduced in the 116 th Congress that would expand FDA's authority to regulate cosmetic products and would require a safety review of certain ingredients, among other things. If CBD were included in such a review and found to be unsafe for use in cosmetics, that finding would likely affect whether CBD could be marketed in cosmetics."], "subsections": []}, {"section_title": "Tobacco Products", "paragraphs": ["FDA regulates the manufacture, marketing, and distribution of tobacco products, per its authorities in the FFDCA, as amended by the Family Smoking Prevention and Tobacco Control Act of 2009 (TCA; P.L. 111-31 ). A tobacco product is defined as \"any product made or derived from tobacco that is intended for human consumption, including any component, part, or accessory of a tobacco product (except for raw materials other than tobacco used in manufacturing a component, part, or accessory of a tobacco product)\" that is not a drug, device, or drug-device combination product. Nicotine is an addictive chemical compound present in the tobacco plant. Tobacco products\u00e2\u0080\u0094including cigarettes, cigars, smokeless tobacco, hookah tobacco, and most ENDS\u00e2\u0080\u0094contain nicotine. Tobacco-derived nicotine (as well as any other tobacco-derived compound) meets the statutory definition of a tobacco product.", "In 2016, FDA promulgated regulations (known as the deeming rule ) that extend authority over all products meeting the definition of a tobacco product that were not already subject to the FFDCA, including ENDS. In the deeming rule, FDA clarified its authority to regulate all components and parts associated with ENDS, including e-liquids. E-liquids, which can include nicotine, flavorings, and other ingredients, are heated in ENDS to create a vapor that a user inhales. If an e-liquid contains CBD and makes therapeutic claims, it may be considered an unapproved drug and may be in violation of the FFDCA. In addition, if an e-liquid contains any tobacco-derived compound (e.g., nicotine) and CBD, but does not make therapeutic claims for CBD, the product may still meet the statutory definition of a tobacco product because it includes tobacco-derived compounds. In such case, the product may be subject to FDA's tobacco regulatory authorities, although the product might not receive marketing authorization if it is determined that allowing the product to be marketed would not be appropriate for the protection of public health. However, if the e-liquid contains CBD only, with no tobacco-derived compounds, and does not make therapeutic claims, FDA's enforcement options might be limited. In this case, it would be unclear whether the product meets the statutory definition of a tobacco product and is therefore subject to FDA's tobacco regulatory authorities. FDA has stated that it intends to make a determination about regulating such products as tobacco products on a case-by-case basis."], "subsections": []}, {"section_title": "Alcohol Beverage Products", "paragraphs": ["While TTB is the primary federal regulator of alcoholic beverages, FDA plays a role in determining what ingredients may be used in the production of alcoholic beverages. In general, before a hemp ingredient may be used in the production of an alcohol beverage product\u00e2\u0080\u0094whether it be a distilled spirit, wine, or beer\u00e2\u0080\u0094the producer may be required to request formula approval from TTB. Requirements are outlined in the Federal Alcohol Administration Act (27 U.S.C. \u00c2\u00a7201 et seq.) and in regulation. For distilled spirits, for example, an approved formula is required to \"blend, mix, purify, refine, compound, or treat spirits in a manner which results in a change of character, composition, class or type of the spirits;\" any change in an approved formula requires a new filing. For wine, formula approval is required for \"special natural wine, agricultural wine, and other than standard wine (except distilling material or vinegar stock).\" For beer, formula approval is required for any fermented product that \"is not generally recognized as a traditional process in the production of a fermented beverage designated as 'beer,' 'ale,' 'porter,' 'stout,' 'lager,' or 'malt liquor'\" or to which certain ingredients are added. Specific labeling requirements also apply, and generally require prior approval. In addition, regarding interstate and foreign commerce in spirits, wine, and beer, it is unlawful for businesses to operate without a permit. Certain states and local jurisdictions might also have their own alcohol product prohibitions and production requirements, as well as restrictions on interstate commerce.", "TTB's current policy is that the agency \"will not approve any formulas for alcohol beverages that contain ingredients that are controlled substances under the CSA\" (e.g., marijuana or marijuana-derived CBD). With regard to CBD derived from hemp, TTB is in the process of updating its guidance on the use of hemp ingredients to reflect changes in the 2018 farm bill. TTB also states that it consults with FDA on ingredient safety issues and, in some cases, may \"require formula applicants to obtain documentation from FDA indicating that the proposed use of an ingredient in an alcohol beverage would not violate [FFDCA].\" Thus, in general, TTB treats hemp-derived ingredients for alcohol beverage products as any other product ingredient. As such, any ingredients added to alcohol beverage products must be either an FDA-approved food additive or determined to be GRAS. As aforementioned, to date, FDA has evaluated GRAS determinations for three different hemp seed-derived ingredients that do not contain CBD, although allowed uses do not include addition to alcoholic beverages. With regard to CBD, FDA has determined that it is unlawful to introduce into interstate commerce food to which certain drug ingredients (e.g., CBD) have been added. Additionally, independent of CBD's status as a drug ingredient, CBD has not been approved as a food additive, and FDA has determined that \"[b]ased on a lack of scientific information supporting the safety of CBD in food \u00e2\u0080\u00a6 it cannot conclude that CBD is [GRAS] among qualified experts for its use in human or animal food.\" ", "Formulations seeking approval to use other types of hemp extracts as an ingredient\u00e2\u0080\u0094including but not limited to CBD\u00e2\u0080\u0094would likely not be approved by TTB, since these extracts have not been authorized for use in food by FDA. "], "subsections": []}]}, {"section_title": "Therapeutic Uses of CBD and Research\u00c2 Considerations", "paragraphs": ["Cannabinoids such THC and CBD interact with specific cell receptors in the brain and throughout the body to produce their intended effects. Although THC activates certain receptors that then produce euphoric or intoxicating effects, CBD has low affinity for those same receptors and therefore does not produce intoxicating effects. This property may make CBD an attractive compound for drug developers. In addition, preclinical (e.g., animal model) research suggests that CBD may interact with other brain-signaling systems that can produce therapeutic effects, such as the reduction of seizures, pain, and anxiety. ", "The therapeutic benefits, or underlying mechanism of action for therapeutic benefits, of CBD remain uncertain, even in CBD-containing drugs that have been approved by regulatory agencies. For example, in the United States, GW Pharmaceuticals' Epidiolex (CBD) is approved for the treatment of seizures associated with two rare and severe forms of epilepsy. However, according to the drug's labeling, the mechanism by which the drug exerts its anticonvulsant effects is not known. In addition, while not yet approved in the United States, GW Pharmaceuticals' drug Sativex (nabiximols)\u00e2\u0080\u0094a cannabis extract spray containing a 1:1 ratio of CBD and delta-9 THC\u00e2\u0080\u0094has regulatory approval in more than 25 countries for the treatment of spasticity (muscle stiffness/spasm) due to multiple sclerosis (MS). In Canada, Sativex has conditional marketing authorization as an adjunctive treatment for neuropathic pain in adult patients with MS and \"as adjunctive analgesic [pain relieving] treatment in adult patients with advanced cancer who experience moderate to severe pain during the highest tolerated dose of strong opioid therapy for persistent background pain.\" However, Phase III clinical trials previously conducted by GW Pharmaceuticals found that Sativex failed to show superiority over placebo in treating the pain of patients with advanced cancer who experience inadequate analgesia during optimized chronic opioid therapy. Furthermore, while CBD is predicted to have anti-inflammatory properties, which may play a role in its analgesic effects, preliminary evidence suggests that the analgesia is mediated by THC, and the extent to which CBD contributes to those therapeutic effects is unclear. ", "CBD is the subject of numerous ongoing randomized controlled trials (RCTs). As of December 2019, a database maintained by the National Library of Medicine (NLM) at the National Institutes of Health (NIH) lists numerous domestic and international ongoing RCTs involving cannabinoids\u00e2\u0080\u0094including CBD\u00e2\u0080\u0094as a treatment for a variety of conditions, including chronic pain, tremors associated with Parkinson's disease, and anxiety. GW Pharmaceuticals is also studying CBD and CBD variants in clinical trials for autism and schizophrenia. Other pharmaceutical manufacturers are conducting clinical trials with CBD and its variants for other indications, including severe acne and graft-versus-host disease (GVHD). However, until such studies are completed, conclusive evidence supporting the use of CBD to treat various health conditions is limited.", "In February 2017, the National Academies of Sciences, Engineering, and Medicine (NASEM) published a comprehensive review of fair- and good-quality systematic reviews of literature and high-quality primary research on cannabis and cannabinoids. NASEM did not make specific comparisons between cannabinoids derived from hemp versus marijuana, or between cannabinoids from low versus high THC strains of marijuana. However, for CBD or CBD-enriched cannabis specifically, the report noted research gaps among existing literature in treating numerous conditions, including cancer in general, chemotherapy-induced nausea, epilepsy, and post-traumatic stress disorder (PTSD), among other conditions. Nonetheless, CBD is promoted as treatment for a range of conditions, including PTSD, anxiety, inflammation, and sleeplessness\u00e2\u0080\u0094despite limited scientific evidence substantiating or disproving these claims.", "These research gaps can be attributed, in part, to the status of marijuana as a Schedule I controlled substance under the CSA. Individuals who seek to conduct research on any controlled substance must do so in accordance with the CSA and other federal laws. DEA research requirements are more stringent for Schedule I and Schedule II substances than for substances in Schedules III-V. For example, for Schedule I substances such as marijuana, even if practitioners have a DEA registration for a substance in Schedules II-V, they must obtain a separate DEA registration for researching a Schedule I substance. In addition, due to its Schedule I status, the DEA strictly limits the quantity of marijuana manufactured each year. These requirements can prolong the process of acquiring marijuana (including marijuana-derived CBD) for research. As mentioned previously, the 2018 farm bill removed hemp and hemp derivatives (including hemp-derived CBD) from the CSA definition of marijuana, making them no longer subject to regulation and oversight as a controlled substance by DEA. DEA has confirmed that a DEA registration is no longer required to grow or research hemp plants and CBD preparations that meet the statutory definition of hemp . However, CBD preparations containing above the 0.3% delta-9 THC level (i.e., meeting the statutory definition of marijuana) continue to be subject to Schedule I CSA requirements. As a result, conducting research on these substances may continue to be a challenge."], "subsections": []}, {"section_title": "Considerations for Congress: Marketing of CBD", "paragraphs": [], "subsections": [{"section_title": "What Are the Circumstances Under Which FDA-Regulated Products Containing CBD Can Be Marketed\u00c2 Currently?", "paragraphs": ["As mentioned previously, FDA has determined that at this time, CBD cannot be added to any food that is sold in interstate commerce and that CBD cannot be marketed as a dietary supplement. Although FDA could issue a regulation allowing CBD to be added to food or allowing its use in dietary supplements, the agency has never issued such a regulation for any substance (whether cannabis-derived or not) that is an approved drug or authorized for investigation as a new drug. Although FDA has determined that CBD (and THC) may not be added to food or marketed as a dietary supplement, the agency has not made this same determination for other compounds derived from cannabis, although those compounds may be subject to DEA restrictions; FDA's determination is specific to CBD and THC because both are active ingredients in FDA-approved drugs. FDA also has not determined that CBD may not be added to cosmetics; however, if a CBD-containing cosmetic product makes therapeutic claims (e.g., that it is intended to diagnose, treat, cure, mitigate, or prevent a disease), FDA would likely consider the product to be a drug subject to the new drug approval requirements. ", "CBD may be lawfully marketed as a drug, pursuant to FDA approval, and in compliance with applicable statutory and regulatory requirements. If a firm seeks to market CBD as a treatment or an otherwise therapeutic product, the firm generally would need to obtain premarket approval from FDA via the new drug approval pathway. To date, FDA has approved one CBD-containing drug, Epidiolex, which is available by prescription for the treatment of seizures associated with Lennox-Gastaut syndrome or Dravet syndrome in patients two years old and older. Epidiolex is marketed by GW Pharmaceuticals. ", "On May 31, 2019, FDA held a public hearing \"to obtain scientific data and information about the safety, manufacturing, product quality, marketing, labeling, and sale of products containing cannabis or cannabis-derived compounds.\" Prior to the hearing, FDA had opened a docket to which interested stakeholders could submit a request for FDA to review scientific data and information about products containing cannabis or cannabis-derived compounds. Although FDA has maintained that it is unlawful to add CBD to food or to market CBD as a dietary supplement, CBD continues to be marketed in violation of this determination. The agency has generally prioritized enforcement against companies and products that pose the greatest risk to consumers\u00e2\u0080\u0094for example, products making claims that CBD can treat Alzheimer's or stop cancer cell growth. FDA has said that it \"does not have a policy of enforcement discretion with respect to any CBD products,\" although this is expected to change in light of language included in the explanatory statement accompanying the FY2020 enacted appropriation (see \" What Could Congress Do to Allow CBD to Be Marketed as a Food Additive or Dietary Supplement? \"). ", "Some industry stakeholders are recommending that, absent an FDA regulatory framework for CBD products, manufacturers and marketers of dietary supplements or foods that contain hemp or CBD comply with federal regulations for supplements and food in the interim to help ensure the quality of these CBD products. Such compliance would include facility registration, adherence to CGMPs, and meeting labeling requirements. In an effort to establish industry-wide standards, one organization has established its own third-party certification program designed for hemp food, dietary supplements, and cosmetic companies. This certification program is independent of federal requirements, and FDA has not validated or verified any third-party certification program for hemp. "], "subsections": []}, {"section_title": "What Is the Current State of the CBD Market?", "paragraphs": ["At the retail level, consumer products labeled as containing CBD are being marketed and sold in food and beverages, cosmetics and personal care products, certain tobacco products, and dietary supplements\u00e2\u0080\u0094despite FDA's position that CBD may not be sold in food and beverages or dietary supplements. CBD-containing products that claim to meet the definition of hemp are sold through specialty retailers, such as natural/organic grocery stores, tobacco (or smoke) shops, yoga studios, and farmers' markets; through direct-to-consumer and online sales; from herbal practitioners; and by large retailers such as CVS and Walgreens. ", "Although some industry analysts foresee a strong market for marijuana-derived CBD, it remains prohibited (aside for lawful research purposes) under the CSA if the product does not meet the statutory definition of hemp in 7 U.S.C. \u00c2\u00a71639o. The DEA has confirmed that a DEA registration is not required to grow or research hemp plants and CBD preparations that meet the statutory definition of hemp. Despite the federal prohibition on growing, selling, or possessing marijuana, marijuana-derived CBD products that have not been approved by FDA have been made available in states where medical and/or recreational cannabis is legal under state law, in violation of federal law. Depending on where a CBD product is manufactured and sold, it may primarily be produced using only drug-grade cannabis and marketed as a medicinal or therapeutic product, in violation of FDA requirements. To date, most of the CBD products sold in states where medical and/or recreational cannabis is legal do not meet the statutory definition of hemp. Typically, these products contain 0.45% to 1.5% THC, with some products containing up to 9% THC\u00e2\u0080\u0094levels that could result in psychoactive effects by the user. ", "In 2018, CBD sales in the United States were estimated at $534 million, according to the Hemp Business Journal . This amount includes sales from hemp-derived CBD products, marijuana-derived CBD products (currently a Schedule I controlled substance), and the FDA-approved drug Epidiolex. In 2018, more than 1,000 companies were producing and marketing CBD products for the U.S. market. Since 2014, when total CBD sales were a reported $108 million, U.S. sales of CBD have risen fivefold ( Figure 3 ). In 2018, hemp- and marijuana-derived CBD sales were $240 million and $264 million, respectively, while sales of Epidiolex were estimated at $30 million ( Figure 3 ).", "Current projections of U.S. sales of CBD indicate expected growth over the next few years. Such sales are expected to exceed $1 billion in 2020 and reach nearly $2 billion in 2022, roughly split between the three markets (hemp-derived, marijuana-derived, and pharmaceutical CBD; see Figure 3 ). Others forecast sales well beyond these levels, with some predicting that sales of hemp-derived CBD will eventually dominate the cannabis market, since hemp-derived CBD does not tend to carry the stigma associated with marijuana. An ATKearney survey shows that U.S. consumers, regardless of age, strongly believe that cannabis can \"offer wellness and therapeutic benefits,\" ranging from 74% to 83% of those surveyed across all age demographics. Some global markets where cannabis is legal are already reporting product shortages of CBD medicinal cannabis products. In the United States, growth in CBD sales is expected despite continued regulatory and legal uncertainty, given continued FDA, DEA, and state and local restrictions. "], "subsections": []}, {"section_title": "What Could Congress Do to Allow CBD to Be Marketed as a Food Additive or Dietary Supplement?", "paragraphs": ["Despite FDA's current determination that CBD cannot be marketed as a food additive or a dietary supplement, these products continue to be sold. In response, some members of Congress have expressed support for a regulatory framework for hemp-derived CBD in certain FDA-regulated consumer products. In absence of a regulatory framework for hemp-derived CBD products, Congress has directed FDA to issue a policy of enforcement discretion with respect to CBD products that meet the statutory definition of hemp that also come under FDA jurisdiction. More specifically, the explanatory statement accompanying the enacted FY2020 appropriation states that", "[t]he agreement includes $2,000,000 for research, policy evaluation, market surveillance, issuance of an enforcement discretion policy, and appropriate regulatory activities with respect to products under the jurisdiction of the FDA which contain CBD and meet the definition of hemp, as set forth in section 297A of the Agricultural Marketing Act of 1946 (7 U.S.C. 16390). Within 60 days of enactment of this Act, the FDA shall provide the Committees with a report regarding the agency's progress toward obtaining and analyzing data to help determine a policy of enforcement discretion and the process in which CBD meeting the definition of hemp will be evaluated for use in products. The FDA is further directed to perform a sampling study of the current CBD marketplace to determine the extent to which products are mislabeled or adulterated and report to the Committees within 180 days of enactment of this Act. ", "The statement does not explicitly require FDA to set a safe level or threshold for CBD in consumer products. However, the activities conducted pursuant to this directive may inform the establishment of such a level in the future. In addition to the activities directed in the explanatory statement, Congress also could take further legislative action, such as requiring FDA to issue a regulation, under its FFDCA authorities, expressly permitting CBD that meets the definition of hemp to be used as a food additive or dietary supplement. For example, such a regulation could prescribe the conditions under which CBD may be safely used as a food additive (e.g., to add flavor or nutritional value to food, in specified quantities, subject to specified labeling requirements). However, because FDA has never before issued such a regulation allowing an approved drug or a substance authorized for investigation as a new drug to be a food additive or added to a dietary supplement, it is not clear what such a regulation would look like. ", "Congress also could consider amending the FFDCA provisions that FDA has identified as restricting marketing of CBD in food and dietary supplements. For example, Congress could exclude from these provisions CBD that meets the statutory definition of hemp. However, even if the marketing of CBD-containing products were no longer restricted by these provisions, CBD-containing products may still be subject to other FFDCA requirements. For example, to lawfully market a CBD product as a dietary supplement, a firm may need to submit an NDI notification to FDA, in addition to meeting other statutory and regulatory requirements for supplements. To lawfully market CBD as a food additive, a firm would be expected to either obtain approval via a food additive petition or pursuant to a GRAS determination. As FDA has said that the agency \"is not aware of any basis to conclude that CBD is GRAS among qualified experts for its use in human or animal food,\" a food additive petition may be necessary.", "As mentioned above, food and dietary supplements are not evaluated by FDA for safety and effectiveness prior to marketing. Given this fact, in determining whether a legislative approach is appropriate, Congress may consider the potential for adverse health effects and other unintended consequences. For example, clinical trials to support the approval of Epidiolex demonstrated the potential for liver injury at certain doses, and CBD may interact with other drugs or dietary supplements. Other concerns include the potential dosing and cumulative effects of exposure to CBD from multiple sources (e.g., food, supplements, and cosmetics); whether there are populations for whom CBD is not appropriate (e.g., pregnant or lactating women); and whether allowing CBD to be marketed as a supplement or food additive could undermine incentives for conducting clinical trials and obtaining evidence of safety and effectiveness to support drug approval. ", "FDA's position with respect to the status of CBD impacts other agencies' and regulatory bodies' policies and guidance. For example, TTB consults with FDA on alcohol ingredient safety issues and generally requires that any ingredient added to alcohol beverages must be either an FDA-approved food additive or determined to be GRAS. CBD is not an approved food additive nor has it been found to be GRAS for use in alcohol or otherwise. It remains to be seen whether TTB would allow CBD that meets the definition of hemp to be added to alcoholic beverages if FDA issues a policy of enforcement discretion as directed by the explanatory statement accompanying the FY2020 enacted appropriation. Similarly, the AAFCO has issued guidelines on hemp in animal food, which are generally consistent with FDA's policy. A new policy of enforcement discretion issued pursuant to the language in the explanatory statement may affect AAFCO's guidelines. Additionally, in May 2019, the U.S. Patent and Trademark Office (USPTO) issued guidance that limits trademark registrations for CBD products. USPTO's guidance describes how it would review marks for cannabis and cannabis-related goods and services, and clarifies that compliance with federal law is a condition of federal trademark registration, regardless of the legality of the activities under state law. It further states that a \"determination of whether commerce involving cannabis and cannabis-related goods and services is lawful requires consultation of several different federal laws,\" including the CSA, FFDCA, and the 2018 farm bill ( P.L. 115-334 ). Therefore, \"registration of marks for foods, beverages, dietary supplements, or pet treats containing CBD will still be refused as unlawful under the FDCA, even if derived from hemp, as such goods may not be introduced lawfully into interstate commerce.\" Some claim that because the guidance does not specifically address cosmetic products, this could suggest that federal USPTO registration could be possible for such products; however, they also assert that USPTO is looking to FDA to further clarify conditions under which CBD foods, beverages, dietary supplements or pet treats may be lawfully marketed.", "Appendix A. Food Additive Petition Process and GRAS Notification Submission", "Food Additive Petition Process", "FDA has determined that CBD cannot be added to any food that is sold in interstate commerce. FDA is authorized to issue a regulation, after notice and comment, approving the use of a drug (e.g., CBD) as a food additive, although the agency has never done so for any substance. The FFDCA does not specify a process for FDA to issue such a regulation, other than that it must be after notice and comment. ", "In regard to the process for food additive approval, FDA is authorized to \"by order establish a regulation\" that prescribes the conditions under which a food additive may be safely used. The issuance of such regulation may be proposed by FDA on its own initiative or by an interested person via submission of a food additive petition. A food additive petition must include, in addition to any explanatory or supporting data, the following information:", "the name and all pertinent information relating to the food additive, including its chemical identity and composition (if possible); a statement of the conditions of its proposed use, including directions, recommendations, and suggestions, and the proposed labeling; \"all relevant data bearing on the physical or other technical effect such additive is intended to produce, and the quantity of such additive required to produce such effect\"; a description of methods for determining the quantity of such additive in or on food, and any substance formed in or on food, because of its use; and full reports of safety investigations, including the methods and controls used in conducting such investigations. ", "FDA may request that the petitioner also provide information about the manufacturing methods, facilities, and controls, as well as samples of the food additive (or articles used as its components) and samples \"of the food in or on which the additive is proposed to be used.\" Additional requirements are specified in FDA regulations. Within 30 days of the petition filing date, FDA must publish notice in the Federal Register of the regulation proposed by the petitioner. Within 90 days of petition filing, FDA must issue either an order denying the petition or an order establishing a regulation prescribing the conditions under which the food additive may be used safely (e.g., particular foods in which it may be used, maximum quantity, labeling and directions). This 90-day period may be extended by FDA, as specified. FDA may not issue such a regulation if a fair evaluation of the data \"fails to establish that the proposed use of the food additive, under the conditions of use to be specified in the regulation, will be safe,\" subject to specified limitations, or if a fair evaluation of the data \"shows that the proposed use of the additive would promote deception of the consumer in violation of [the FFDCA] or would otherwise result in adulteration or in misbranding of food.\" FDA is authorized to fix a \"tolerance limitation\" if necessary to ensure safe use of the additive. In considering whether the use of a food additive is safe, FDA must consider, among other relevant factors, the probable consumption of the additive and cumulative effect in the diet. Any person adversely affected by such order may file objections with FDA and request a public hearing and may file for judicial review, as specified. Food additive regulations may be amended or repealed. An interested person may, for example, submit a food additive petition requesting issuance of a regulation allowing a new use of a previously approved additive. ", "If a food additive is already subject to an FDA regulation for the proposed intended use, it does not require premarket approval via a petition. Instead, that food additive may be marketed by complying with the applicable food additive regulation. ", "GRAS Notice Submission", "Any person may submit a notice to FDA expressing the view that a substance is GRAS and not subject to the premarket review requirements for food additives under FFDCA Section 409. A GRAS notice has seven parts, each of which must be included in a submission to FDA. If one of the seven parts of a GRAS notice is omitted, the submission must explain why that part does not apply. The seven parts of a GRAS notice are as follows:", "1. signed statements and certification; 2. identity, method of manufacture, specifications, and physical or technical effect; 3. dietary exposure; 4. self-limiting levels of use; 5. experience based on common use in food before 1958; 6. narrative; and 7. a list of supporting data and information in the GRAS notice.", "FDA evaluates the submission to determine whether to file it and then informs the submitter of the agency's decision. If FDA decides to file the GRAS notice, the agency sends a letter to the submitter with the filing date. The regulations do not specify a filing deadline for FDA. The regulations do state that FDA is required to respond to a GRAS notice within 180 days of filing. FDA may extend that timeframe by 90 days as needed. Filed GRAS notices are made public by FDA.", "Appendix B. Abbreviations Used in this Report"], "subsections": []}]}]}}
{"id": "R46110", "title": "Defining Active Ingredient: The U.S. Food and Drug Administration\u2019s Legal Interpretation of Regulatory Exclusivities", "released_date": "2019-12-10T00:00:00", "summary": ["Whether many provisions of the Federal Food, Drug, and Cosmetic Act (FD&C Act) apply to a particular drug product turns in part on the novelty of the \"active ingredient\" of the drug in question. In particular, the Food and Drug Administration (FDA) must assess the novelty of the active ingredient in a new drug, comparing it to a previously approved drug's active ingredient to determine whether the new drug qualifies for the five-year \"new chemical entity\" (NCE) exclusivity. FDA generally cannot accept new drug applications that refer to a drug with NCE exclusivity (i.e., rely on its clinical data and FDA's approval of the drug) for five years. Companies that receive approval for drugs with new active ingredients generally enjoy a competitive advantage in the market while the exclusivity is in effect\u00e2\u0080\u0094and after, depending how long it takes for generic versions to receive approval once applications can be submitted.", "Comparing active ingredients can be technically quite complicated. For instance, compounds in a final drug product may convert to other compounds through chemical reactions inside the body before arriving at the site of the therapeutic effect. In addition, related but distinct drug molecules may be clinically indistinguishable or convert into the same pharmacologically or physiologically active component inside the body. Alternatively, two drug molecules with the same core compound may have different compounds appended to them by either covalent or noncovalent bonds. For example, replacing a hydrogen atom in an acid molecule with \"a metal or its equivalent\" forms a salt, while replacing the hydrogen atom with \"an organic radical\" forms an ester. These derivatives may or may not vary from each other in clinically significant ways. This raises the question of which derivative(s), if any, should be considered to be the same active ingredient as the core or base molecule. Generally, a more expansive interpretation of phrase \"active ingredient,\" that is, one that considers more types of derivatives to be the same active ingredient, reduces the number of drugs eligible for NCE regulatory exclusivity by expanding the drug ingredients considered previously approved, which allows for earlier introduction of generic versions of those drugs.", "Historically, for the exclusivity provisions, FDA has interpreted \"active ingredient\" to mean \"active moiety,\" as defined by FDA regulations. FDA generally defines active moiety as the core molecule or ion of a drug (i.e., the drug molecule without certain appendages) that is \"responsible for the physiological or pharmacological action of a drug substance.\" FDA's interpretation has generated disputes between FDA and pharmaceutical companies, as FDA's approach tends to exclude some drugs from being afforded five-year NCE exclusivity under the FD&C Act. In 2015, a federal district court rejected FDA's interpretation as inconsistent with the statutory language, though it did not explicitly invalidate FDA's regulations.", "In the 116th Congress, legislation has been introduced that would generally codify FDA's current approach to evaluating NCE exclusivity and extend that approach to certain other provisions under the FD&C Act. This proposed legislation would moot questions about the validity of FDA's interpretation and clarify when chemical entities are sufficiently similar to be considered identical for purposes of drug approval and exclusivity."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["Whether many provisions of the Federal Food, Drug, and Cosmetic Act (FD&C Act) apply to a particular drug product turns in part on the novelty of the \"active ingredient\" of the drug in question. In particular, the Food and Drug Administration (FDA) must assess the novelty of the active ingredient in a new drug, comparing it to a previously approved drug's active ingredient to determine whether the new drug qualifies for the five-year \"new chemical entity\" (NCE) exclusivity. FDA generally cannot accept new drug applications or abbreviated new drug applications that refer to a drug with NCE exclusivity (i.e., rely on its clinical data and FDA's approval of the drug) for five years. Companies that receive approval for drugs with new active ingredients generally enjoy a competitive advantage in the market while the exclusivity is in effect until generic drugs enter the market. Given how expensive it can be to bring a new drug to market, when Congress passed the Hatch-Waxman Amendments in 1984 to allow an abbreviated pathway for approval of generic drugs, it also created NCE exclusivity to reward innovators of new pharmaceutical products with an opportunity to recoup their investment.", "To determine whether FD&C Act provisions that depend in part on the drug's \"active ingredient\" apply, FDA must evaluate the \"active ingredient(s)\" of both the drug under review and any previously approved drug that may contain the same active ingredient. This process can be technically quite complicated. For instance, compounds in a final drug product may convert to other compounds through chemical reactions inside the body before arriving at the site of the therapeutic effect, and related but distinct drug molecules may be clinically indistinguishable or convert into the same pharmacologically or physiologically active component inside the body. This phenomenon raises the question of which molecule\u00e2\u0080\u0094the one existing before or after ingestion\u00e2\u0080\u0094should be the relevant molecule for purposes of determining active ingredient. ", "Alternatively, two drug molecules with the same core compound may have different compounds appended to them by either covalent (i.e., shared electrons) or noncovalent (i.e., no shared electrons) bonds. For example, replacing a hydrogen atom in an acid molecule with \"a metal or its equivalent\" forms a salt, whereas replacing the hydrogen atom with \"an organic radical\" forms an ester. These derivatives may or may not vary from each other in clinically significant ways, raising the question of which derivative(s), if any, should be considered as the same active ingredient as the core or base molecule. Generally, a more expansive interpretation of the phrase \"active ingredient,\" that is, one that considers more types of derivatives to be the same active ingredient, reduces the number of drugs eligible for NCE regulatory exclusivity by expanding the drug ingredients considered previously approved, which, in turn, allows for earlier introduction of generic versions of those drugs. ", "As discussed in more detail below, historically, for purposes of the exclusivity provisions, FDA has interpreted \"active ingredient,\" as the term appears in statute, to mean \"active moiety,\" as defined by FDA regulations. FDA generally defines active moiety as the core molecule or ion of a drug (i.e., the drug molecule without certain appendages) that is \"responsible for the physiological or pharmacological action of a drug substance.\" FDA's interpretation has generated disputes between FDA and pharmaceutical companies, as FDA's approach tends to exclude some drugs from being afforded five-year NCE exclusivity under the FD&C Act. In 2015, a federal district court rejected FDA's interpretation as inconsistent with the statutory language, though it did not explicitly invalidate FDA's regulations. ", "This report discusses FDA's interpretation of the FD&C Act as referring to active moieties, judicial review of FDA's interpretation, and how FDA's rationale has changed over time. In the 116th Congress, legislation has been introduced that would generally codify FDA's current approach to evaluating NCE exclusivity and extend that approach to other provisions under the FD&C Act that include the phrase \"active ingredient (including any ester or salt of the active ingredient).\" "], "subsections": []}, {"section_title": "FDA Interpretation of Active Ingredient", "paragraphs": ["Multiple provisions of the FD&C Act use the phrase \"active ingredient (including any ester or salt of the active ingredient).\" Among them are a provision for five-year exclusivity to drugs approved under a new drug application (NDA) with active ingredients that FDA has not previously approved, a provision for three-year exclusivity for drugs with the same active ingredient as previously approved drugs that required additional clinical studies for approval due to other changes, and provisions authorizing priority review vouchers for certain types of drugs. In the context of the five-year-exclusivity, which FDA has coined \"new chemical entity\" or NCE exclusivity, FDA interprets the term \"active ingredient\" to mean \"active moiety.\" FDA reasons that this definition, which allows a wider range of molecules to be considered previously approved, is warranted in the new drug context to encourage innovation by ensuring that a new drug is truly innovative. This interpretation of \"active ingredient\" in the NCE exclusivity context has been the subject of a decades-long debate.", "The statutory provision on NCE exclusivity states, in relevant part,", "If an application submitted under subsection (b) of this section for a drug, no active ingredient (including any ester or salt of the active ingredient) of which has been approved in any other application under subsection (b) of this section, is approved . . . no application may be submitted under this subsection which refers to the drug for which the subsection (b) application was submitted before the expiration of five years from the date of approval of the application under subsection (b) of this section . . . .", "Disputes over how FDA should interpret this provision have centered on the meaning of the phrase \"active ingredient (including any ester or salt of the active ingredient).\" The FD&C Act does not define the term \"active ingredient.\" Rather than define \"active ingredient\" for purposes of the exclusivity provisions, FDA examines the relevant drugs' active moieties. Specifically, FDA defines NCE exclusivity in its regulations as \"a drug that contains no active moiety that has been approved by FDA in any other application submitted under section 505(b) of the act.\" The various other exclusivity regulations also refer to active moieties. ", "FDA defines \"active moiety\" in its regulations as follows:", "Active moiety is the molecule or ion, excluding those appended portions of the molecule that cause the drug to be an ester, salt (including a salt with hydrogen or coordination bonds), or other noncovalent derivative (such as a complex, chelate, or clathrate) of the molecule, responsible for the physiological or pharmacological action of the drug substance. ", "As one court put it, \"[f]or salts, esters, and noncovalent derivatives, a molecule's 'active moiety' can be thought of as its core; salt, ester and noncovalent derivative versions of the same basic molecule have different appendages, but they share the same active moiety.\" Put another way, because these specified derivatives would be considered to have the same \"active moiety,\" if FDA approves a drug containing any one of the specified derivatives as the active ingredient, a later approved drug containing another form of a specified derivative or even the core molecule would not be entitled to NCE exclusivity. For instance, if Drug A contains as its active ingredient a salt , ester , or other noncovalent derivative of a molecule that FDA previously approved as part of Drug B, Drug A would not be entitled to NCE exclusivity because FDA had previously approved that active moiety. Similarly, if Drug B contains as its active ingredient a salt derivative of a molecule, and Drug A contains that same molecule or an ester derivative of that molecule and is approved after Drug B, Drug A would not be entitled to NCE exclusivity. In contrast, if Drug A contained as its active ingredient a non-ester covalent derivative of a molecule that FDA previously approved in Drug B, Drug A could be considered to have a new active moiety and be eligible for NCE exclusivity if other relevant conditions are met. If a drug molecule is converted to a different but related compound after ingestion, the relevant molecule for determining active moiety is the compound in the final drug product before the drug is ingested."], "subsections": []}, {"section_title": "Challenges to FDA's Approach", "paragraphs": ["In the NCE exclusivity context, FDA's interpretation of \"active ingredient\" as \"active moiety,\" as well as its definition of \"active moiety,\" have both been subject to dispute. Challenges to FDA's approach to NCE exclusivity have generally addressed two questions:", "1. Whether FDA may permissibly interpret the phrase \"no active ingredient (including any ester or salt of the active ingredient) of which has been approved\" as \"a drug that contains no active moiety that has been approved.\" 2. Whether FDA has correctly defined \"active moiety,\" including whether FDA may permissibly deny exclusivity for\u00e2\u0080\u0094in addition to \"salts and esters,\" which appear in the statute\u00e2\u0080\u0094other noncovalent derivatives of the underlying drug molecule. "], "subsections": [{"section_title": "FDA's Interpretation of the Exclusivity Provision", "paragraphs": ["Proposed Rule. In 1989, in its implementing regulations for the Hatch-Waxman Amendments, FDA first interpreted the FD&C Act's exclusivity provisions to distinguish between NCEs, which are entitled to a five-year term of regulatory exclusivity, and previously approved active ingredients, which are entitled to three years of regulatory exclusivity, based on active moieties. To support its interpretation in the proposed rule, the agency relied on the statutory text, FDA's preexisting classification scheme for drugs that included a \"new molecular entity\" class based on active moieties, and the legislative history of the Hatch-Waxman Amendments. FDA reasoned that \"Congress was aware of FDA's classification scheme\" when it passed the Hatch-Waxman Amendments, including FDA's \"longstanding interpretation of the term 'new molecular entity' [as] a compound containing an entirely new active moiety.\" In support of its definition of active moiety, which includes other noncovalent derivatives of a drug molecule in addition to the drug molecule itself and its salt and esters, FDA reasoned that Congress \"did not intend to confer significant periods of exclusivity on minor variations of previously approved chemical compounds.\" FDA did not specifically identify which part of the statutory phrase \"an active ingredient (including any ester or salt of the active ingredient)\" it had determined to be ambiguous when adopting the interpretation of \"active moiety.\" ", "Initial Litigation Rejecting FDA Approach . Between FDA's proposed rule in 1989 and its final rule in 1994 implementing the exclusivity regulations, two cases addressed the agency's interpretation of the phrase \"active ingredient (including any ester or salt of the active ingredient)\" to mean active moiety. In Abbott Laboratories v. Young , the U.S. Court of Appeals for the D.C. Circuit (D.C. Circuit) considered FDA's denial of 10-year exclusivity for Depakote, an anticonvulsant seizure medication that used divalproex sodium as its active ingredient. FDA based its decision on findings that (1)\u00c2\u00a0divalproex sodium is a salt of valproic acid that converts into valproic acid in the body, and (2)\u00c2\u00a0the agency previously approved valproic acid as the active ingredient in Depakene. The court determined that the FD&C Act's use of the phrase \" the active ingredient\" is ambiguous, as it could refer to the active ingredient in the original approved drug or in the later approved drug. However, the D.C. Circuit rejected FDA's reliance on the term \"including\" to justify using its definition of active moiety, which extends beyond salts and esters of the active ingredient to other noncovalent derivative molecules, as \" linguistically infeasible.\" Specially, the court concluded that Congress used the term \"including\" in the provision at issue not to provide examples of molecular derivatives undeserving of regulatory exclusivity but to extend the covered active ingredients to the two particular derivatives\u00e2\u0080\u0094esters and salts. Upon concluding that the statute is ambiguous and that FDA failed to provide a reasonable construction, the D.C. Circuit remanded the case to FDA for further actions.", "Around the same time, the U.S. Court of Appeals for the Federal Circuit (Federal Circuit) considered the U.S. Patent and Trademark Office's (USPTO's) denial of Glaxo's request for a patent-term extension for its patent claiming cefuroxime axetil, the active ingredient in Ceftin tablets. The Hatch-Waxman Amendments require the USPTO to extend the terms of a patent claiming a product or a method of using or manufacturing a product when (1) the product is \"subject to a regulatory review period\" (e.g., the FDA drug approval process) and (2) the permission to market the product following the regulatory review (e.g., FDA approval of the drug) is the \"first permitted commercial marketing or use of the product .\" In turn, the statute defines \"product\" to mean \"the active ingredient of a new drug . . . including any ester or salt of the active ingredient.\" Interpreting the product as the active moiety, the USPTO found that cefuroxime (an acid) rather than cefuroxime axetil (an ester of cefuroxime) was the active moiety in Ceftin. Because FDA had previously approved two drugs with cefuroxime salts as active ingredients, the USPTO determined that FDA's approval of Ceftin was not the \"first permitted commercial marketing or use of the product\" and denied the patent-term extension. ", "The Federal Circuit held that the USPTO's denial of the patent term extension was contrary to law, affirming the district court's judgment. In contrast to the D.C. Circuit, which viewed the relevant statutory language as ambiguous, the Federal Circuit held that the terms in the phrase \"active ingredient of a new drug . . . including any ester or salt of the active ingredient\" all have a plain meaning. The court determined\u00e2\u0080\u0094without discussing its reasoning in any detail\u00e2\u0080\u0094that the USPTO's interpretation was inconsistent with the plain meaning of these terms. While acknowledging that legislative history can reveal \"a clearly expressed legislative intention contrary to the statutory language,\" it identified no such support for the USPTO's interpretation here. Because the court found there was no clear legislative intent that the phrase be interpreted to refer to variations on the approved active ingredients beyond that product's ester or salt, an extension of the term for the patent claiming cefuroxime axetil was warranted because FDA had not approved that drug product or an ester or salt of it. While the appellate court did not elaborate on how it arrived at its interpretation, the district court had included more detail on the plain meaning of the operative statutory phrase, concluding that cefuroxime\u00e2\u0080\u0094the acid from which cefuroxime axetil is derived\u00e2\u0080\u0094could not be an \"active ingredient\" of Ceftin because it was not an ingredient , as that term is commonly understood because it did not appear in the Ceftin tablets in that form. ", "Final Rule. In the wake of these rulings, public comments to FDA's proposed rule contended that Abbott Laboratories and Glaxo Operations rejected the agency's proposed interpretation of the NCE exclusivity provision, particularly its reliance on the phrase active moieties. Nonetheless, when FDA finalized its NCE exclusivity regulations in 1994, the agency included its proposed definition of \"active moiety,\" but modified its justification. Rather than interpreting the parenthetical phrase (i.e., \"(including any ester or salt of the active ingredient)\") \"broadly to include all active ingredients that are different but contain the same active moiety,\" which the D.C. Circuit in Abbott Laboratories had rejected as \"linguistically impermissible,\" the agency concluded that the term \" active ingredient,\" as used in the relevant provision, means active moiety. FDA did not, however, directly address the Federal Circuit's opinion. ", "FDA also disagreed with comments objecting to its inclusion of other noncovalent derivatives in the definition of \"active moiety,\" meaning that such derivatives would not receive NCE exclusivity. The agency reaffirmed that it \"does not believe that providing exclusivity for . . . noncovalent derivatives of a previously approved active moiety would be consistent with the statutory intent\" because such derivatives \"generally do[] not affect the active moiety of a drug product.\" FDA accordingly enacted the definition of active moiety as proposed.", "D.C. Circuit Upholds FDA Use of Pre-Ingestion Rather than Post-Ingestion to Interpret Active Ingredient . In 2010, in Actavis Elizabeth LLC v. FDA , the D.C. Circuit revisited FDA's interpretation of \"active ingredient,\" nearly two decades after the agency finalized its regulations in 1994. That opinion focused specifically on the term \"active ingredient\" in the context of whether the relevant molecule should be considered prior to its ingestion in the human body (i.e., the compound in the final drug product pre-ingestion) or after ingestion where the compound may convert to another related compound (e.g., from an ester to an acid) that is responsible for the drug's therapeutic effects (i.e., post-ingestion). A generic manufacturer challenged FDA's award of NCE exclusivity for Vyvanse, a drug that treats attention deficit hyperactivity disorder. Vyvanse's active ingredient is lisdexamfetamine dimesylate, a salt of lisdexamfetamine, meaning that lisdexamfetamine is the active moiety under FDA regulations. Lisdexamfetamine uses an amide bond (a type of covalent bond involving nitrogen) to connect a portion of lysine, a common amino acid, with dextroamphetamine. Once in the body, a chemical reaction converts lisdexamfetamine to dextroamphetamine. FDA had approved drugs with dextroamphetamine but had not yet approved drugs with lisdexamfetamine. ", "Actavis, a generic manufacturer seeking to market a generic version of Vyvanse, alleged that because dextroamphetamine is responsible for the therapeutic effect inside the body and FDA had previously approved drugs with dextroamphetamine, Vyvanse had no right to NCE exclusivity. Focusing on the term \"active,\" Actavis contended that \"active ingredient\" necessarily must refer to \"the drug molecule that reaches the 'site' of the drug's action\" because that is the part of the drug responsible for its \"activity,\" which Activis argued meant the therapeutic effect. ", "The court rejected Actavis's arguments. First, the court observed that the FD&C Act does not define the term \"active ingredient\" and that the statute's legislative history \"is silent on what determines novelty\" for NCE exclusivity. The court also concluded that the statute's structure and purpose did not preclude FDA's interpretation. Accordingly, the court held that (1) \"active ingredient\" is ambiguous as to whether it referred to the pre-ingestion or post-ingestion molecule, and (2) FDA's interpretation of \"active ingredient\" to refer to the pre-ingestion molecule is reasonable. ", "The court further affirmed FDA's choice of a bright-line distinction between noncovalent derivatives (which do not receive NCE exclusivity) and non-ester covalent derivatives (which can receive NCE exclusivity and was at issue for Vyvance). While the D.C. Circuit acknowledged that some noncovalent bonds might alter a drug's properties and some covalent bonds might not, the court deferred to FDA's explanation that \"its policy is based in part on the 'difficulty in determining precisely which molecule, or portion of a molecule, is responsible for a drug's effects.'\" The court did not, however, directly address FDA's use of the term \"active moiety,\" its inclusion of the other noncovalent derivatives in the definition, or the interaction between FDA's definition of active moiety and the statutory parenthetical. ", "District Court Rejects FDA Interpretation of Active Ingredient as Active Moiety. Five years later, in Amarin Pharmaceuticals Ireland Ltd. v. FDA , a federal district court in the District of Columbia expressly considered FDA's interpretation of \"active ingredient\" to mean \"active moiety,\" as defined in its regulations. Amarin had obtained FDA approval for Vascepa , whose active ingredient is icosapent ethyl, the ethyl ester of eicosapentaenoic acid (EPA), a type of omega-3 fatty acid. But FDA denied Amarin's request for NCE exclusivity for Vascepa because it had previously approved Lovaza, a drug whose active ingredient is \"a mixture that is primarily composed of seven kinds of omega-3 fatty acid ethyl esters\" including the ester of EPA. When FDA approved Lovaza, it considered the mixture as a whole the \"active ingredient,\" and it later denied a petition from Lovaza's sponsor requesting FDA to recharacterize Lovaza as having multiple active ingredients on the grounds that \"the Lovaza mixture has not been 'fully characterized.'\" In other words, in approving Lovaza, FDA did not specifically approve an ester of EPA (or any other component omega-3 fatty acid ethyl esters) as an active ingredient. But when evaluating Vascepa's eligibility for NCE exclusivity, FDA relied on new studies to find that EPA was an active moiety of Lovaza and that, accordingly, FDA had previously approved Vascepa's active moiety.", "Rather than recognize multiple active ingredients in Vascepa, FDA provided a new interpretation framework for certain mixtures to treat them as having one active ingredient but multiple active moieties . In its decision letter to Amarin, FDA acknowledged that the agency had previously taken an inconsistent approach to identifying the active ingredients and active moieties for naturally derived mixtures, such as Lovaza, when evaluating NCE exclusivity. FDA \"explained that, although they are often conflated, it is important to distinguish between the meaning of the terms active ingredient and active moiety.\" And that while \"the distinction between active moiety and active ingredient[] generally is negligible\" for \"drugs that are composed of a single, well-characterized molecule,\" \"the distinction between active ingredient and active moiety . . . becomes crucial\" \"[f]or naturally derived mixtures comprising multiple molecules.\" ", "Critically, the agency distinguished between (1) \"poorly characterized\" and (2) \"well-characterized mixtures\" based on how difficult it is \"'to determine with any certainty . . . which molecules in the mixture are consistently present or potentially are responsible for the physiological or pharmacological activity of the drug.'\" For poorly characterized mixtures, FDA stated that it had \"of necessity\" treated the whole mixture as both the active ingredient and the active moiety. However, for well-characterized mixtures, FDA outlined \"a three-part 'framework' 'for identifying the active moiety or moieties of such mixtures.'\" FDA would consider component parts of well-characterized mixtures to be previously approved active moieties if", "1. specific molecules in the mixture have been identified; 2. those specific molecules are \"consistently present in the mixture\"; and 3. those molecules are \"responsible at least in part for the physiological or pharmacological action of the mixture, based on a finding that they make a meaningful contribution to the activity of the mixture.\"", "In effect, for single-molecule and poorly characterized drugs, FDA would apply a one-to-one approach between the active ingredient and active moiety, but for well-characterized mixtures, it would apply a one-to-many approach: one active ingredient with multiple active moieties.", "The district court set aside FDA's decision denying NCE exclusivity for Vascepa based on its interpretation of \"active ingredient\" to mean \"active moiety\". The court first relied on the canon against surplusage, finding that FDA's interpretation of the term \"active ingredient\" \"would render the parenthetical clause in the exclusivity provisions either redundant or incomprehensible.\" By defining active moiety to exclude \"those appended portions of the molecule that cause the drug to be an ester, salt . . . or other noncovalent derivative,\" the court concluded that FDA rendered the statutory parenthetical \"(including any ester or salt of the active ingredient)\" either unnecessary or incomprehensible. The court reasoned that FDA in effect read the parenthetical out of the statute by inserting \"active moiety\" in place of \"active ingredient,\" violating the canon against surplusage that assumes Congress does not include unnecessary language in a statute.", "The court then used the presumption of consistent usage to reject FDA's view of active ingredient as synonymous with active moiety. Significantly, FDA only interpreted active ingredient to mean active moiety with respect to the FD&C Act's exclusivity provisions , relying on alternative interpretations of \"active ingredient\" elsewhere in the statute, such as, perhaps most notably, the provision allowing sponsors to submit abbreviated NDAs for generic drugs with the same active ingredient as an approved drug. FDA argued that it was justified in adopting different interpretations of the same phrase in different parts of the statute because the provisions had different statutory purposes. The agency contended that because the abbreviated NDA process focuses on safety and efficacy, a narrower range of molecules should be considered identical to previously approved drugs to ensure that FDA conducts a full review for safety and efficacy of any drugs that may clinically differ from previously approved drugs. In contrast, FDA argued that the exclusivity provisions aim to encourage innovation, requiring a wider range of molecules to be considered previously approved to ensure the new drug is truly innovative. While acknowledging that \"the presumption of consistent usage is not unrebuttable,\" the court considered FDA's justifications for the differing interpretations of active ingredient unpersuasive. The court observed that Congress passed both provisions at the same time in the same part of the same statute, that the abbreviated NDA provisions and exclusivity provisions were two sides of the same coin intended to balance competition and innovation, and that Congress included the parenthetical \"including any ester or salt of the active ingredient\" in the exclusivity provision but not the abbreviated NDA provision, thus already distinguishing between the two provisions. ", "Finally, the court determined that FDA's use of active moiety was inconsistent with the statutory requirement that the active ingredient \"has been approved.\" It noted that FDA approves active ingredients, not active moieties, and that under FDA's proposed framework it would not even determine the relevant active moiety under another drug applied for exclusivity. Accordingly, an active moiety would never have previously been approved. ", "Rejecting each of FDA's arguments and concluding FDA's interpretation invalid on multiple grounds, the court set aside the specific administrative decision being challenged in that case\u00e2\u0080\u0094that is, FDA's exclusivity determination for Vascepa\u00e2\u0080\u0094and remanded to FDA. The court did not, however, explicitly invalidate or set aside FDA's implementing regulations. FDA regulations therefore remain in place, but with questions looming as to their validity and defensibility."], "subsections": []}, {"section_title": "FDA's Definition of Active Moiety", "paragraphs": ["Beyond whether FDA can interpret the phrase \"active ingredient\" in the FD&C Act's exclusivity provisions to mean active moiety, how FDA has defined \"active moiety\" has also been the subject of legal challenges. The statutory parenthetical includes esters and salts of an active ingredient as the same active ingredient for determining exclusivity, meaning that an ester and salt of an active ingredient is ineligible for exclusivity. FDA's definition of active moiety extends beyond those two derivatives, however, to also include molecules with other noncovalent appendages . At the same time, the agency excludes from its definition of active moiety molecules with appendages attached through non-ester covalent bonds, meaning that drug molecules that differ from previously approved drugs based on such appendages would be eligible for NCE exclusivity. Brand name manufacturers have challenged including other noncovalent derivatives, which limits the availability of NCE exclusivity, while generic manufacturers have challenged excluding non-ester covalent derivatives, which expands the availability of NCE exclusivity. ", "Other Derivatives with Noncovalent Bonds. As discussed above, Abbott Laboratories v. Young also addressed FDA's inclusion of other noncovalent derivative forms of the molecule in addition to salts and esters, which the statute explicitly includes. At the time, FDA relied on a broad interpretation of the word \"including\" to justify examining the base molecule without salts, esters, or any other component connected by noncovalent bonds. The agency viewed the term \"including\" as providing examples of molecules that would be considered minor modifications that do not merit five-year NCE exclusivity, rather than an exhaustive list. While the Abbott Laboratories court considered FDA's approach defensible on policy grounds, it considered the agency's approach \"linguistically infeasible.\" It stated that it \"cannot agree with [FDA's] unconvincing attempts to employ the 'including' clause to cover all possible permutations of active ingredient,\" distinguishing the NCE exclusivity \"including\" clause \"from instances where an 'including' clause is designed to merely illustrate a few examples of the general category.\" Rather than provide its own interpretation, however, the court remanded the decision to FDA. ", "FDA subsequently modified its interpretation of the statutory language in its 1994 final regulations. Rather than interpret the parenthetical phrase, the agency concluded that the term \"active ingredient\" means \"active moiety,\" as defined in its regulations. In so doing, FDA reaffirmed its view that allowing NCE exclusivity for other noncovalent derivatives would be inconsistent with statutory intent. ", "In 2015, as explained above, Amarin Pharmaceuticals Ireland Ltd. v. FDA rejected FDA's revised interpretation. However, because the court only set aside the challenged agency action at issue in that case without invalidating FDA regulations, FDA regulations remain in force with its original definition of \"active moiety.\" ", "Derivatives with Non-Ester Covalent Bonds. As discussed above, in Actavis Elizabeth LLC v. FDA , the D.C. Circuit upheld FDA's decision to exclude derivatives with different covalent bonds from its definition of active moiety. Unlike noncovalent bonds, covalent bonds entail the sharing of electrons between molecules, which tends to create a stronger bond. The court held that FDA's policy was reasonably \"based on its view that drug derivatives containing non-ester covalent bonds are, on the whole, distinct from other types of derivative drugs such that the former are uniquely deserving of 'new chemical entity' status and the resulting five-year exclusivity.\" In particular, the court pointed to a 1989 response letter from FDA to a citizen petition. In that letter, the agency explained that \"even minor covalent structure changes are capable of producing not only major changes in the activity of the drug but changes that are not readily predicted.\" Nonetheless, FDA observed that \"the formation of a salt . . . or of an ester, is not intended to, and generally cannot, alter the basic pharmacologic or toxicologic properties of the molecule.\" Accordingly, without holding directly on whether FDA reasonably included other noncovalent derivatives in its active moiety definition, the court held that FDA's exclusion of non-ester covalent derivatives was reasonable. "], "subsections": []}]}, {"section_title": "Legislative Proposals in the 116th Congress", "paragraphs": ["Against this backdrop of decades of complex litigation over FDA's interpretation of active ingredient, three bills have been introduced in the 116th Congress that address this issue. Each proposed legislation would generally (1) codify FDA's interpretation that eligibility for NCE exclusivity should be based on the drug's active moiety and (2) incorporate FDA's definition of active moiety by reference. Specifically, the proposed legislation would do so by replacing the entire phrase \"active ingredient (including any ester or salt of the active ingredient)\" with \"active moiety (as defined by the Secretary in section 314.3 of title 21, Code of Federal Regulations (or any successor regulations))\" wherever it is found, except for a few provisions that expired in 1984. This change would be made to several FD&C Act provisions, including the NCE exclusivity provision, three-year exclusivity for other changes, and provisions providing priority review vouchers for tropical disease treatments, rare pediatric disease treatments, and countermeasures for agents that threaten national security. ", "Adopting this interpretation would resolve certain legal uncertainties under current case law. In Amarin Pharmaceuticals v. FDA , the court rejected FDA's interpretation but did not explicitly invalidate FDA's regulations. Though it left FDA's interpretation in place, the court's decision left uncertain FDA's ability to defend its interpretation going forward. The proposed legislation would address those questions by adopting FDA's interpretation. ", "The proposed legislation would also resolve the questions that have been raised as to whether FDA's decision to include other noncovalent derivative forms of the molecule in its definition of active moiety, but not other covalent derivatives, accords with congressional intent and a justifiable distinction. The proposed legislation would both adopt FDA's current approach, by incorporating FDA's current definition, and allow FDA to modify its approach going forward as its understanding changed, by including any successor regulations. In effect, the proposed legislation would commit the decision as to which molecules should be deemed effectively the same and therefore not innovative enough to merit NCE exclusivity to FDA's judgment."], "subsections": []}]}}
{"id": "R46116", "title": "Surprise Billing in Private Health Insurance: Overview and Federal Policy Considerations", "released_date": "2019-12-12T00:00:00", "summary": ["In response to individuals receiving large, unexpected medical bills for out-of-network care, Congress has recently been considering legislation to address surprise billing. As the term is currently being discussed, s urprise billing typically refers to situations where consumers are unknowingly, and potentially unavoidably, treated by providers outside of the consumers' health insurance plan networks and, as a result, unexpectedly receive larger bills than they would have received if the providers had been in the plan networks. In the 116 th Congress, federal proposals have sought to address surprise billing in the context of two types of situations: (1) where an individual receives emergency services from an out-of-network provider and (2) where an individual receives services from an out-of-network provider that is working at an in-network facility.", "Although no federal requirements directly address surprise billing, at least half of the states have implemented policies to address surprise billing in some capacity. However, the state laws are limited in application, as certain types of plans, such as self-funded plans offered by employers, are exempt from state insurance regulation. State policies to address surprise billing vary in terms of the types of consumer financial protections provided (e.g., consumer balance billing limitations) and the related requirements on insurers and providers to establish such protections. Among states that offer similar types of consumer protections, policies may vary in their application and may differ according to the types of situations addressed (e.g., emergency services, out-of-network care at an in-network facility), the types of plans addressed (e.g., HMO, PPO), and the methods used to determine insurer payments to providers for such services (e.g., benchmark, arbitration).", "Similar to many state laws, recent federal legislative proposals related to surprise billing typically seek to address the financial relationships between insurers, providers, and consumers. They do so by establishing new requirements on insurers, providers, or both to create a degree of consumer protection related to reducing patient financial responsibilities with respect to some types of out-of-network care.", "In addition to including language that limits consumer cost sharing in surprise billing situations, the federal proposals typically include language that specifies the methods by which insurers determine payment to providers for the services being addressed in the bill (since solely reducing consumer financial liability in such situations would reduce the total amount providers receive for their services). When combined with balance billing prohibitions, this type of requirement effectively results in what the insurer and provider recognize as the total payment for out-of-network care.", "To date, federal proposals are largely aligned in how they would address consumer protections in surprise billing situations. However, the proposals differ in how they would address total payment for specified services furnished by out-of-network providers.", "Federal proposals generally have focused on at least one of two methods to determine insurers' financial responsibility: (1) selecting a benchmark provider payment rate that serves as the basis for determining specific amounts that insurers must pay providers, net of consumer cost sharing or (2) establishing an alternative dispute resolution process, such as arbitration, with provider payment determined by a neutral third party.", "This report discusses selected policy issues that Congress may want to consider as it assesses surprise billing proposals. The report concludes by providing an overview of how surprise billing proposals may affect some combination of insurers, providers, and consumers. An Appendix table compares two federal proposals that have gone through committee markup procedures: Title I of S. 1895 (Alexander), which went through a Senate Committee on Health, Education, Labor, and Pensions (HELP) markup session on June 26, 2019, and Title IV of the amendment in the nature of a substitute (ANS) to H.R. 2328 , which went through a markup session held by the House Committee on Energy and Commerce on July 17, 2019."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Surprise Billing", "paragraphs": ["As the term is currently being discussed, surprise billing typically refers to situations where a consumer is unknowingly, and potentially unavoidably, treated by a provider outside of the consumer's health insurance plan network and, as a result, unexpectedly receives a larger bill than he or she would have received if the provider had been in the plan network. ", "Most recently, in federal policy discussions, surprise billing has commonly been discussed in the context of two situations: (1) where an individual receives emergency services from an out-of-network provider and (2) where a consumer receives nonemergency services from an out-of-network provider who is working in an in-network facility. However, surprise billing may occur in other situations (e.g., ground ambulance and air ambulance services) where consumers are unknowingly and unavoidably treated by an out-of-network provider.", "As these situations imply, surprise billing is rooted in most private insurers' use of provider networks. Therefore, this report begins with a discussion of the relationship between provider network status and private health insurance billing before discussing existing federal and state requirements around surprise billing. ", "This report then discusses various policy issues that Congress may want to consider when assessing surprise billing proposals. Such policy topics include what plan types should be addressed; what types of services or provider types should be addressed; what types of consumer protections should be established; what requirements (including financial requirements) should be placed on insurers, providers, or both; how these policies will be enforced; and what is the role of the state. The list of topics discussed in this report is not exhaustive but should touch on many aspects of the surprise billing proposals currently under consideration. ", "The report also briefly discusses potential impacts of the various surprise billing approaches. It then concludes with an Appendix table comparing two federal proposals that have gone through committee markup procedures. Specifically, the proposals included in the appendix are Title I of S. 1895 (Alexander), which went through a Senate Committee Health, Education, Labor, and Pensions (HELP) markup session on June 26, 2019, and Title IV of the amendment in the nature of a substitute (ANS) to H.R. 2328 , which went through a markup session held by the House Committee on Energy and Commerce on July 17, 2019. As of the date of this report, no other proposals have been approved through committee markup or gone further in the legislative-making process."], "subsections": [{"section_title": "Private Health Insurance Billing Overview", "paragraphs": ["The charges and payments for health care items or services under private health insurance are often the result of the contractual relationships between consumers, insurers, and providers for a given health plan.", "Health care providers establish dollar amounts for the services they furnish; such amounts are referred to as charges and reflect what providers think they should be paid. However, the actual amounts that a provider is paid for furnishing services vary and may not be equal to the provider-established charges. The amounts a provider receives for furnished services, and how the payment is divided between the insurer and the consumer, can vary due to a number of factors, including (but not limited to) whether a given provider has negotiated a payment amount with a given insurer, whether an insurer pays for services provided by out-of-network providers, enrollee cost-sharing requirements, whether a provider can bill the consumer for an additional amount above the amounts paid by the consumer (in the form of cost sharing), and the insurer. ", " Figure 1 highlights the effects of the aforementioned distinctions. The following sections discuss them in the context of in-network and out-of-network billing."], "subsections": [{"section_title": "In-Network Coverage", "paragraphs": ["Under private insurance, the amount paid for a covered item or service is often contingent upon whether a consumer's insurer has contracted with the provider. Insurers typically negotiate and establish separate contracts with hospitals, physicians, physician organizations (such as group practices and physician management firms), and other types of providers. For each provider where such a contract exists with a particular insurer, that provider is then generally considered to be a part of that insurer's provider network (i.e., that provider is considered in network ).", "The contents of contracts between insurers and providers vary and typically are the result of negotiations between providers and insurers; however, these contracts generally specify the amounts that providers are to receive for providing in-network services to consumers (i.e., negotiated amounts ). Negotiated amounts typically are lower than what providers would otherwise charge, had they not contracted with an insurer.", "When an in-network provider furnishes a service to a consumer, the insurer and consumer typically will share the responsibility of paying the provider the negotiated amount established in the contract. The consumer's portion of the negotiated amount is determined in accordance with the cost-sharing requirements of the consumer's health plan (e.g., deductibles, co-payments, coinsurance, and out-of-pocket limits; see Figure 1 ). Consumers who receive covered services from in-network providers generally have lower cost-sharing requirements than consumers who receive the same services out of network.", "Generally, in-network providers are contractually prohibited from billing consumers for any additional amounts above the negotiated amount (i.e., balance bill)."], "subsections": []}, {"section_title": "Out-Of-Network Coverage", "paragraphs": ["In instances where a contract between an insurer and provider does not exist, the provider is considered out of network. The total costs for services furnished by an out-of-network provider, and who pays for such services, depend on a number of factors; one key factor is whether the plan covers out-of-network services in the first place. ", "Generally, point of service plans and preferred provider organization (PPO) plans cover out-of-network services, whereas exclusive provider organization plans and health maintenance organization (HMO) plans generally only cover services by providers within the plan's network (except in an emergency). "], "subsections": [{"section_title": "Insurer Pays for Out-Of-Network Services", "paragraphs": ["In instances where an insurer pays some amount toward out-of-network services, both the consumer and the insurer contribute some amount to the provider, with the consumer's amount determined in accordance with the plan's cost-sharing requirements. Consumer cost-sharing requirements for services provided by an out-of-network provider may be separate from (and are typically larger than) cost-sharing requirements for the same services provided by an in-network provider. For example, a plan may have different deductibles for in-network and out-of-network services.", " Table 1 provides an example of how cost-sharing requirements may differ for in-network and out-of-network services.", "Although cost-sharing requirements will indicate how the cost for the service is shared between an insurer and a consumer, the insurer needs to determine the total amount that cost-sharing requirements will be based on (since there are no negotiated amounts established in contracts between out-of-network providers and insurers). The amount ultimately determined by the insurer is often referred to as the total allowed amount and does not necessarily match the negotiated amount insurers may have contracted with other providers or the provider charge amount for that service. If a total allowed amount is larger than a negotiated rate, then the consumer's payment for out-of-network services could be larger than a corresponding payment for in-network services because of increased cost sharing, as per the terms of the plan and the fact that the total cost of services on which consumer cost sharing is based is larger.", "Insurers have their own methodologies for calculating the total allowed amount. They may do so by incorporating the usual, customary, and reasonable rate (UCR), which is the amount paid for services in a geographic area based on what providers in the area usually charge for the same or similar medical services.", "If an out-of-network provider's total charge for a service exceeds the total allowed amount (and if allowed under state law), the provider may directly bill (i.e., balance bill ) a consumer for the amount of that difference (sometimes referred to as the excess charge ; see Figure 1 ). The consumer would therefore be responsible for paying amounts associated with any cost-sharing requirements and the balance bill. ", "The provider is responsible for collecting any balance bill amounts; from an administrative standpoint, it is considered more difficult to collect these balance bill amounts than to collect payments from insurers. In some instances, providers may ultimately settle with balance-billed consumers for amounts that are less than the total balance bill. ", "There are no federal restrictions on providers balance billing consumers with private health coverage. "], "subsections": []}, {"section_title": "Insurer Does Not Pay for Out-of-Network Services", "paragraphs": ["If the insurer pays only for in-network services, the consumer is responsible for paying the entire bill for out-of-network services (represented in Figure 1 as \"Out-of-Network Services Not Covered Under Plan\"). Although the consumer pays the provider in this instance, the consumer costs are not technically cost sharing (since the insurer is not sharing costs with the consumer), nor are they the balance remaining after the provider receives certain payments. Therefore, this report refers to these costs as other c onsumer c osts .", "Similar to balance bills, providers are responsible for collecting these other consumer costs and ultimately may decide to settle with the consumer for amounts that are less than the initial provider charges."], "subsections": []}]}]}]}, {"section_title": "Existing Requirements Addressing Surprise Billing", "paragraphs": [], "subsections": [{"section_title": "Federal Requirements", "paragraphs": ["Currently, no federal private health insurance requirements address surprise billing; however, federal requirements do address related issues. The Affordable Care Act (ACA; P.L. 111-148 , as amended) established requirements regarding consumer cost sharing for, and plan coverage of, out-of-network emergency services and consumer cost-sharing requirements for ancillary provider services furnished at in-network facilities."], "subsections": [{"section_title": "Emergency Services", "paragraphs": ["As a result of the ACA, if a self-insured plan or a fully insured large-group plan, small-group plan, or individual-market plan covers services in a hospital emergency department, the plan is required to cover emergency services irrespective of the provider's contractual status with the plan. In other words, insurers of plans that cover in-network emergency services are effectively required under the ACA to contribute some amount to a provider that furnishes out-of-network emergency services to an enrolled consumer, even if the insurer otherwise would not contribute any amount for services furnished by other types of out-of-network providers. ", "More specifically, insurers are required to recognize the greatest of the following three payment standards as the total allowed amount for emergency services: (1) the median amount the insurer has negotiated with in-network providers for the furnished service; (2) the usual, customary, and reasonable amount the insurer pays out-of-network providers for the furnished service; or (3) the amount that would be paid under Medicare for the furnished service. (Insurers may recognize another amount as the total allowed amount provided such amount is larger than all three of the aforementioned amounts.) After determining the appropriate total allowed amount, the insurer and the consumer each will pay the provider a portion of the total allowed amount, according to the cost-sharing requirements of the consumer's plan.", "The ACA requirement also addressed a consumer's payment responsibility vis-\u00c3\u00a0-vis her health plan for out-of-network emergency care. Specifically, when a consumer receives emergency services from an out-of-network provider, the ACA limits a consumer's cost sharing, expressed as co-payment amount or coinsurance rate, to the in-network amount or rate of the consumer's health plan. In other words, if a consumer receives out-of-network emergency services and is enrolled in a plan that has a 15% coinsurance rate for in-network services and a 30% coinsurance rate for out-of-network services, the consumer will be responsible for 15% of the total allowed amount for the out-of-network care.", "The requirement does not address the plan deductible or out-of-pocket limits. Therefore, if a plan has separate deductibles and out-of-pocket limits for in-network and out-of-network services, then the plan may require that consumer payments for out-of-network emergency services be applied to these out-of-network amounts. As a result, although a consumer would be subject to in-network co-payment amounts or coinsurance rates, the consumer may still be responsible for greater cost sharing than if the payments for the services were applied to the in-network deductible and out-of-pocket limit.", "The requirement does not limit a provider from balance billing the consumer after receiving consumer cost-sharing and insurer payment amounts."], "subsections": []}, {"section_title": "Ancillary Provider Services", "paragraphs": ["Individual-market and small-group plans must adhere to network adequacy standards in order to be sold on an exchange. As part of these standards, plans with provider networks must count consumer cost sharing for an essential health benefit furnished by an out-of-network ancillary provider at an in-network facility toward the consumer's in-network out-of-pocket maximum, unless the plan provides a notice to the consumer prior to the furnishing of such services."], "subsections": []}]}, {"section_title": "State Requirements", "paragraphs": ["Although there are no federal requirements that directly address surprise billing, at least half of states have implemented policies to address some form of surprise billing. As of July 2019, 26 states had addressed surprise billing for emergency department services and 19 states had addressed surprise billing for nonemergency care at in-network hospitals. State policies to address surprise bill vary and, as a result, have created different sets of requirements on insurers and providers to establish different sets of protections for consumers. However, state surprise billing laws are consistent in that they do not apply requirements to self-insured plans (see text box below).", "Multiple research organizations have highlighted the differences among state policies. They have shown whether state surprise billing policies (1) determine the amounts or methodologies by which providers are paid by insurers and consumers for specified out-of-network services; (2) include transparency standards for providers and insurers (e.g., notification requirements on providers or requirements on insurers with respect to provider directory maintenance), (3) address different types of provider settings and services, and (4) address different types of plans (i.e., HMO or PPO).", "The National Academy of State Health Policy (NASHP) examined the differences between the eight states with surprise billing laws. As an example of the variance between states, NASHP indicated that the eight states varied in terms of how the total allowable amount is set under the laws. Further, two states set payment standards based on a greater of multiple benchmark rates, one state sets payment standards based on a lesser of multiple benchmark rates, one state sets payment standards based on the commercially reasonable value , one state sets payment standards based on the rates set under a regulatory authority within the state, and four states create a dispute-resolution process to resolve surprise balance bills.", "In addition to the often-discussed out-of-network emergency services provided in facilities and services provided by out-of-network providers at in-network facilities, some states have attempted to regulate ground and air ambulance surprise billing, albeit to a lesser extent. Although states have attempted to regulate air ambulances, they have been limited in their ability to do so as a result of the Airline Deregulation Act of 1978 ( P.L. 95-504 ), which preempts state regulation of payment rates for certain air transportation carriers (including air ambulances)."], "subsections": []}]}, {"section_title": "Policy Considerations", "paragraphs": ["Federal surprise billing proposals, like state laws, typically seek to address the current financial relationships between insurers, providers, and consumers for certain services. In doing so, the proposals generally would establish new requirements on insurers, providers, or both in specified billing situations to create a degree of consumer protection.", "As an example, requirements on insurers may address how the insurer pays for specified services or what consumer cost-sharing requirements would be under specified plans. Requirements on providers may address the extent to which providers may balance bill consumers. Requirements on both entities may establish the terms under which insurers and providers participate in alternative dispute resolution processes (e.g., arbitration) to determine the amount providers are paid by insurers and consumers for surprise bills.", "Surprise billing can be addressed in a variety of ways, and the following sections discuss questions policymakers may want to consider when evaluating these different approaches. The following policy discussions are examples of the types of questions policymakers may want to consider when evaluating surprise billing proposals and should not be treated as an exhaustive list.", "Furthermore, due to the development, introduction, and modification of numerous federal proposals on this topic during the 116 th Congress, the policy discussions in this section of the report generally do not include specific references to any current or historical federal proposals. The report references state surprise billing laws to provide examples and context, but such references should not be considered comprehensive references of all applicable state laws.", "Although specific federal policies are not explicitly discussed in this section of the report, the report concludes with an Appendix that provides side-by-side summaries of the two surprise billing proposals from the 116 th Congress that have passed through committee markups, both as part of larger bills. Specifically, the proposals included in the appendix are Title I of S. 1895 (Alexander), which went through a Senate Committee on Health, Education, Labor, and Pensions (HELP) markup session on June 26, 2019, and Title IV of the amendment in the nature of a substitute (ANS) to H.R. 2328 , which went through a markup session held by the House Committee on Energy and Commerce on July 17, 2019."], "subsections": [{"section_title": "What Plan Types Could Be Addressed?", "paragraphs": ["Federal private health insurance requirements generally vary based on the segment of the private health insurance market in which the plan is sold (individual, small group, large group, and self-insured). Some requirements apply to all market segments, whereas others apply only to selected market segments. For example, plans offered in the individual and small-group markets must comply with the federal requirement to cover the essential health benefits; however, plans offered in the large-group market and self-insured plans do not have to comply with this requirement.", "States, in their capacity as the primary regulators of health insurance plans, can regulate fully insured plans in the individual, small-group, and large-group markets. States are not able to directly apply surprise billing requirements to self-insured plans, but certain state requirements may affect state residents enrolled in a self-insured plan. For example, at least one state (New Jersey) has allowed self-insuring entities to opt in to surprise billing requirements.", "Relatedly, state requirements on providers may affect consumers with self-insured coverage. For example, New York established an arbitration process for certain surprise billing situations, which applied to providers and fully insured plans. This arbitration process did not apply to self-insured plans. However, results from a National Bureau of Economic Research working paper suggest the policy affected consumers with both fully insured and self-insured plans. The authors hypothesized that because most providers were unaware of whether the consumer's plan was fully insured or self-insured, providers billed amounts that were \"likely chosen to reflect the possibility of arbitration.\" ", "In light of this example, to the extent that a federal proposal would establish requirements on providers for consumers enrolled in plans in a specific market segment (e.g., only self-insured plans), providers may need to develop processes to determine whether a consumer has such a plan, as this information is not necessarily available to the provider when services are furnished. Broadly applying a provider requirement so that it addresses consumers enrolled in all types of health plans would minimize the potential that consumers inadvertently receive a surprise bill. Many federal proposals would be broadly applicable to self-insured and fully insured individual, small-group, and large-group private health insurance plans, though there has been some variance with respect to certain types of plans (e.g., Federal Employees Health Benefits [FEHB] Program plans). "], "subsections": []}, {"section_title": "What Types of Services or Provider Types Could Be Addressed?", "paragraphs": ["Federal surprise billing proposals from the 116 th Congress have commonly focused on variants of two different types of services: (1) where an individual receives emergency services from an out-of-network provider and (2) where an individual receives services from an out-of-network provider that is working at an in-network facility. ", "For context on the prevalence of surprise billing, a recent study estimated that 20% of hospital inpatient admissions from an emergency department, 14% of outpatient visits to an emergency department, and 9% of elective inpatient admissions in 2014 were likely to produce surprise medical bills (i.e., were \"cases in which one or more providers were out of network and the patient was likely to be unaware of the provider's status or unable to choose an in-network provider for care instead\"). Another study found that the prevalence of similarly defined \"surprise\" out-of-network billing increased for emergency department visits and inpatient admissions between 2010 and 2016.", "Researchers have suggested that surprise billing tends to occur around these particular types of services due to a unique set of market forces that differentiate these services from how other services function within the provider-insurer-consumer relationship. ", "Many providers decide to join an insurer's network (thereby accepting a lower negotiated rate for services) knowing that by doing so, the insurer will steer their enrollees toward in-network providers. Insurers steer their enrollees toward in-network providers by limiting plan coverage to in-network providers only or providing more generous coverage for in-network providers as compared with other out-of-network providers (i.e., reduced cost sharing). This approach effectively disincentives consumers from seeking out-of-network care in most situations.", "However, in the aforementioned billing situations, consumers are not necessarily able to choose an in-network provider. For example, a consumer may be unconscious due to a medical emergency and unable to decide whether he or she wants to be seen by an in-network or out-of-network emergency provider. In this instance, the consumer may be taken to the nearest hospital emergency department (without consideration of network status of the hospital and/or the emergency department providers within the hospital). As another example, consumers may be able to select or seek out a particular in-network hospital or in-network surgeon for a specific procedure, but the consumers are unlikely to be able to select every provider participating in that specific procedure. This is especially true if the consumer is unaware of the need for additional assistance when he or she arranges the procedure.", "Considering this, certain emergency and ancillary providers may have fewer incentives to join the network of a health insurer, since they are more likely to receive constant demand for their services regardless of network status and consumer choice. Instead, these provider types may find it more beneficial to stay out of network in order to be able to charge more for their services than the negotiated rate they would accept had they been considered in network.", "However, surprise billing is not limited to the aforementioned situations. It can occur in other situations (e.g., ambulance services or in situations where an in-network physician sends a consumer's lab test to an out-of-network lab). ", "Some federal surprise billing proposals address air ambulance services, albeit fewer than address emergency services and services provided by out-of-network providers at in-network facilities. Air ambulances are similar to the previously discussed situations in that consumers often are not able to choose an in-network air ambulance due to the urgency associated with the request for services. In addition, the \"relative rarity and high prices charged [by air ambulance providers] reduces the incentives of both air ambulance providers and insurers to enter into contracts with agreed-upon payment rates.\" For context, the Government Accountability Office found, as a result of its analysis of FAIR Health claims data, that 69% of air ambulance transports for privately insured consumers were out of network. ", "In conclusion, surprise billing proposals may address one or multiple different types of situations. To the extent that the proposals address multiple situations, they may treat such situations similarly or may apply different types of requirements to each situation."], "subsections": []}, {"section_title": "How Could a Proposal Address Consumer Protections?", "paragraphs": ["In surprise billing situations, the consumer is typically the one being surprised. Correspondingly, proposals seeking to address surprise billing situations generally include provisions that would establish consumer protections. ", "Most federal surprise billing proposals from the 116 th Congress generally address consumer financial liabilities in these situations. Generally, they do so by tying consumer cost sharing (in some capacity) to what cost sharing would be had specified services been provided in network and by limiting the extent to which consumers can be balance billed for specified services. ", "In addition, some federal proposals incorporate various requirements designed to inform consumers so they can make more informed choices about seeing in-network or out-of-network providers. In current federal proposals, this has most commonly taken the form of consumer notification requirements, which are designed to inform the consumer, prior to receiving out-of-network services, that he or she might be seen by an out-of-network provider (among other pieces of information). Some federal proposals link such notification requirements with consumer financial protections, so that the consumer financial protections would not apply in instances where notification requirements were satisfied (e.g., a consumer may be balanced billed only if the provider satisfied consumer notification requirements).", "The aforementioned financial protections and notification requirements typically are established by creating requirements on insurers, providers, or both. They may take a variety of forms, as discussed in the subsequent sections. "], "subsections": [{"section_title": "What Could Be the Consumer's Financial Responsibility in Surprise Billing Situations?", "paragraphs": ["As stated in the \" Private Health Insurance Billing Overview \" section, privately insured consumers may be liable for three types of consumer financial responsibilities when receiving services: cost sharing, balance bills, and other consumer costs. In out-of-network situations, consumers with plans that cover out-of-network benefits would potentially be responsible for consumer cost sharing and balance bills, whereas consumers with plans that do not cover out-of-network benefits would be responsible for other consumer costs.", "Surprise billing requirements may address any combination of these three consumer financial responsibilities (cost sharing, balance billing, and other consumer costs), which would have direct implications on the total amount that consumers pay, and the total amount that providers receive as payment, for these services. Cost-sharing and balance billing requirements would affect those consumers with plans that cover services provided by out-of-network providers, whereas other consumer cost requirements would affect insured consumers with plans that do not cover services provided by out-of-network providers. The following sections discuss how surprise billing requirements associated with each of these financial responsibilities may be structured. "], "subsections": [{"section_title": "Cost Sharing", "paragraphs": ["Consumer cost sharing for specified out-of-network services could be limited by defining, through requirements on plans, consumer cost-sharing rates for out-of-network services. Most federal proposals generally include cost-sharing requirements that tie cost sharing (in some capacity) to corresponding in-network requirements. One study of state-level surprise billing laws indicated that state-level laws generally included similar cost-sharing requirements. Although it has been common to tie out-of-network cost sharing to in-network requirements (e.g., the same co-payment amount or the same coinsurance percentage) for certain services, cost sharing could be tied to any rate or amount.", "Cost-sharing requirements do not need to apply to deductibles, coinsurance rates, co-payment amounts, and out-of-pocket limits. For example, under current federal law, when a consumer receives emergency care from an out-of-network provider, the cost-sharing requirement, expressed as a co-payment or coinsurance rate, is limited to the in-network amount or rate of the consumer's health plan. Cost sharing does not address the plan deductible or out-of-pocket maximum. Therefore, under this requirement, insurers may apply out-of-network deductibles and out-of-pocket maximums for emergency services if such cost-sharing requirements generally apply to out-of-network benefits, which could increase the amount owed by the consumer as compared with a requirement that aligned the deductible, co-payment amount, coinsurance rate, and out-of-pocket limit. ", "Cost-sharing requirements do not necessarily specify the total dollar amount that a consumer pays for out-of-network services. For example, coinsurance is based on a percentage of the amount recognized by the insurer as the total cost of care. Therefore, the total cost-sharing dollar amount a consumer ultimately pays for care also may be influenced by any provisions that establish methodologies for determining the total cost of care for specified surprise billing situations."], "subsections": []}, {"section_title": "Balance Billing", "paragraphs": ["Establishing limitations on cost-sharing requirements alone does not prohibit or limit the extent to which a consumer may be balance billed (in instances where the plan covers out-of-network services). Therefore, if policymakers were interested in defining the extent to which a provider may balance bill a consumer (if at all), such language also would need to be included. Requirements that insulate consumers from balance billing may be placed on providers or insurers. For example, language may explicitly prohibit, fine, or limit the extent to which a provider can directly balance bill a consumer. By contrast, language may require insurers to \"hold the consumer harmless\" and pay the provider \"their billed charges or some lower amount that is acceptable to the provider.\" From the consumer's perspective, both types of requirements would have similar effects, in that both requirements would result in the consumer only being responsible for paying the cost sharing associated with the service.", "According to one study of state-level surprise billing laws, 28 states had incorporated provisions (as of July 31, 2019) that insulated consumers from certain balance bills through requirements on insurers, providers, or both."], "subsections": []}, {"section_title": "Other Consumer Costs", "paragraphs": ["Surprise billing proposals may be structured so that consumers with a plan that does not cover out-of-network services (e.g., HMO) are treated differently in surprise billing situations than consumers with plans that do cover out-of-network services (e.g., PPO). For example, a surprise billing proposal may be structured so it applies only to consumers with plans that cover out-of-network benefits (i.e., it would not address other consumer cost situations). In other words, this type of policy could reduce a consumer's financial liabilities in surprise billing situations if the consumer were enrolled in a plan with out-of-network benefits, but it would not address the consumer's financial liabilities if the consumer were enrolled in a plan that does not cover out-of-network benefits.", "Alternatively, proposals may define the financial liability individuals face for receiving out-of-network care while enrolled in a plan that does not cover out-of-network benefits. Such requirements would effectively define the other consumer cost (i.e., the total cost of care) and could incorporate similar methodologies used in other surprise billing laws (e.g., benchmark). Without any additional requirements, the consumer would still be responsible for the entire other consumer cost.", "Proposals also could include provisions that require insurers to cover a portion of the other consumer cost, effectively requiring the consumer's plan to cover that particular benefit. This could occur because of language that explicitly requires plans to cover a particular benefit or defines the amount that a plan must contribute for specified services.", "To date, many federal surprise billing proposals have addressed other consumer costs by requiring insurers to cover a portion of such costs. Many federal proposals have done this by making surprise billing provisions that limit consumer costs in surprise billing situations to a specified amount (e.g., in-network cost sharing) and require insurers to contribute some amount to providers applicable to all plans, irrespective of whether a plan would cover such out-of-network service. "], "subsections": []}]}, {"section_title": "What Kind of Information Could Be Provided to the Consumer Prior to the Receipt of Services?", "paragraphs": ["Because surprise billing may occur when a consumer is unknowingly treated by a provider outside of the consumer's health insurance plan's network, surprise billing proposals may include a variety of requirements that would seek to provide consumers with more information about the providers in their network and/or the care they are to receive in order to make an informed decision about their medical care providers. Such requirements alone would not eliminate surprise billing but could reduce the prevalence of unexpected out-of-network use, which in turn would decrease the prevalence of surprise billing. ", "The effectiveness of such provisions in reducing surprise billing is tied to the extent to which consumers can use the new information to decide whether to receive services from an out-of-network provider (e.g., consider information utilization in emergency situations)."], "subsections": [{"section_title": "Notification", "paragraphs": ["In the surprise billing context, consumer notifications typically are discussed as a way to provide various pieces of information (e.g., about provider network status and estimates of related financial responsibilities) to consumers prior to the receipt of services so consumers can make informed decisions about their medical care providers. This type of requirement can apply to insurers, providers, or both.", "If considering a notification requirement, policymakers may want to identify what information should be included within a notification requirement. For example, the notification may be structured to include the provider's and/or facility's network status, the estimated costs of the services, the provider's ability to bill the consumer for amounts other than plan cost-sharing amounts, or any other piece of information that policymakers feel needs to be provided to consumers. In addition, policymakers may want to address who is responsible for providing the notice to the consumer (i.e., insurer or provider), when the notice must be provided to the consumer, and if and when the consumer must provide consent to the notice.", "Notice requirements should account for any limitations on the types of services and settings that would be subject to such requirement and the consumer's ability to use (and, where applicable, consent to) such information (e.g., emergency situations or complications mid-procedure). Furthermore, any notification requirement should account for whether the insurer or provider subject to the notification requirement has access to the information that is required to be included in the notice.", "A notification requirement may be coupled with consumer financial liability protections. For example, some federal proposals apply consumer financial liability protections in some surprise billing situations (e.g., non-emergent care) only when a provider does not adhere to a corresponding notification requirement."], "subsections": []}, {"section_title": "Provider Directories", "paragraphs": ["Provider directories contain information for consumers regarding the providers and facilities that are in a plan network. Provider directory requirements may fall on insurers and providers. Insurers typically are responsible for developing and maintaining the directory; however, the information used to populate the provider directory typically comes from the providers.", "If considering provider directory requirements, policymakers may want to identify what information is included in the directory, how the information is made available to the consumer (e.g., posted on a website), and how often the directory needs to be updated or verified.", "A provider directory requirement may be coupled with consumer financial liability protections. In these instances, policymakers may consider how financial liability protections would interact with provider directory requirements. For example, financial liability protections could be limited to situations where a consumer receives services from a provider based on incorrect provider directory information."], "subsections": []}]}]}, {"section_title": "What Types of Requirements Could Be Placed on Insurers, Providers, or Both?", "paragraphs": ["In considering surprise billing proposals, there has been debate around how to shield consumers from receiving unexpected and likely large bills from out-of-network providers that the consumer did not have the opportunity to choose while balancing the impact of establishing a method for ensuring payment for those services. Proposals to address surprise billing situations have generally sought to address the lack of a contractual relationship between insurers and out-of-network providers by establishing standards for determining the total provider payment and the insurer payment net of specified consumer cost sharing. Other methods have sought to create network requirements that would reduce the probability that a consumer would be treated by an out-of-network provider at an in-network facility.", "The following sections will discuss these different types of requirements."], "subsections": [{"section_title": "How Could a Proposal Address Insurer and Provider Financial Responsibilities in Surprise Billing Situations?", "paragraphs": ["As discussed in the \" Private Health Insurance Billing Overview \" section, in general, payment for out-of-network services depends on whether the plan covers out-of-network benefits. Regardless of whether or not a plan provides out-of-network benefits, there is no contract establishing a set payment rate between an insurer and an out-of-network provider. If an insurer provides out-of-network benefits, the insurer determines the amount it will pay and the provider can balance bill consumers. If an insurer provides no out-of-network benefits, the insurer will not pay anything toward the out-of-network service. Both scenarios are subject to state and federal law that may define the amount insurers pay out-of-network providers in certain situations (e.g., federal requirements related to emergency services, state surprise billing laws).\u00c2\u00a0", "Most federal proposals in the 116 th Congress to address surprise billing situations include provisions establishing methodologies for determining how much insurers must pay out-of-network providers in specified surprise billing situations. To date, proposals have focused on two main methods for determining the financial responsibility of insurers. One approach has been to select a benchmark payment rate that would serve as the basis for determining a final payment amount that a provider must be paid for a service. The other approach has been to establish an alternative dispute resolution process, such as arbitration, with provider payment determined by a neutral third party. The final payment amount determined by either approach may affect consumer cost sharing to varying degrees based on a consumer's plan. For example, under a plan that has a coinsurance to determine a consumer's cost sharing for a service, rather than a co-payment, the amount that the consumer would be responsible for would depend on the final payment rate for a service. ", "In addition to discussing the benchmark and arbitration approaches, this section includes a discussion on using a bundled payment approach . In this approach, an insurer makes one payment (net of cost sharing) to a facility, and that facility then is responsible for paying providers practicing within the facility. Following that discussion will be a section on the possibility of establishing network requirements to address surprise billing situations, including network matching.", "When considering a proposal that establishes a method for determining payment rates, policymakers may want to consider a number of factors; these factors include, but are not limited to, the potential effects on the financial viability of providers and the financial impact on health insurers, which in turn may affect health insurance premiums. This may include consideration of the cost and burden associated with establishing payment rates and the predictability of each method for determining payment rates. In addition, policymakers may want to consider the extent to which these payment models would apply uniformly to all types of plans, services, and/or providers. The various options all have trade-offs, and the relative effect of a given proposal on providers and insurers might vary depending on the local health care market structure. A full assessment of the different choices is beyond the scope of the report. ", "Policy solutions for surprise billing situations that involve setting out-of-network payment rates may have secondary effects that result from potential changes in relative leverage between insurers and providers. For example, a proposal that would establish higher out-of-network rates than in-network rates previously agreed upon between providers and insurers for certain services may encourage some providers to go out of network or remain out of network to obtain the higher rate. This may lead insurers to raise in-network rates for these services to incentivize providers to join networks. If this response subsequently leads to higher average in-network rates as well as out-of-network rates (along with increased out-of-network coverage), then it may result in higher premiums in the market. Conversely, if the proposal lowers out-of-network payment rates below in-network rates previously agreed upon between providers and insurers, the proposal may increase the amount of leverage insurers have when negotiating with providers for network inclusion, creating downward pressure on in-network payment rates."], "subsections": [{"section_title": "Benchmark Approach", "paragraphs": ["Federal surprise billing proposals that use a benchmark approach involve tying payment to a reference price, such as Medicare rates or market-based private health insurer rates. A benchmark-based surprise billing proposal would be structured to specify one or more benchmarks and a methodology for calculating a final payment rate."], "subsections": []}, {"section_title": "Medicare as a Benchmark", "paragraphs": ["Some recent federal proposals would require insurers to pay an out-of-network provider a rate tied to the payment for that service under Medicare. Studies have shown that Medicare rates for physician services provided by specialists most often involved in surprise billing situations (e.g., pathology, anesthesiology, radiology) generally are lower than commercial rates paid by insurers in the private health insurance markets. Policymakers seeking to adjust for the differences between Medicare and commercial rates may structure payment as a percentage of Medicare rates. For example, some surprise billing state laws establish private health insurance rates for certain services at Medicare plus an added percentage. "], "subsections": []}, {"section_title": "Market-Based Benchmark", "paragraphs": ["As compared with a Medicare benchmark approach, a market-based benchmark approach may raise different questions that need to be considered in order to determine the most appropriate reference price on which to base payment. Determining the market data that will provide the foundation for a benchmark for out-of-network payment rates is critical, as the effect may go beyond setting out-of-network payment rates. The distribution of data, which can vary, may have an anchoring effect on the negotiation of in-network payment rates. For example, a proposal that relies on a benchmark that would result in out-of-network payment rates below current in-network payment rates for some providers may shift the negotiating leverage in favor of insurers, which may then use the threat of the lower out-of-network rate to negotiate lower in-network rates. If a proposal results in higher out-of-network payment rates than in-network payment rates for some providers, the leverage to negotiate will shift toward providers, who may demand higher in-network payment rates. ", "Policymakers may need to decide whether to base the benchmark on provider charges or insurer payment rates. Provider charges are the amounts that providers charge a consumer and/or insurer for a furnished service. These amounts generally will be higher than the negotiated amounts, because they do not include any discount negotiated between insurers and providers. There are no federal proposals that rely on provider charges as a benchmark for setting payment for services provided by out-of-network providers. There are federal proposals using a benchmark approach that rely on private insurer in-network payment rates. ", "Insurer payment rates could be specified as an insurer's usual, customary, and reasonable (UCR) rates or as an insurer's in-network contracted rates. UCR rates are a method that insurers use to determine payment to providers for out-of-network services if a plan provides out-of-network benefits. Insurers have discretion over how UCR rates are calculated, and such determinations vary from insurer to insurer. In-network contracted rates are the payment rates determined either through negotiation between insurers and providers for in-network services or based on a fee schedule developed by an insurer; a provider must agree to this fee schedule for inclusion in the insurer's network. ", "Once policymakers establish whether a proposal uses provider charges or insurer payment rates, they may specify a methodology for determining the final payment rate. For example, a policy proposal may specify a mean, a median, a percentage, or a percentile of the benchmark rate. The most appropriate metric will depend on the underlying distribution of the benchmark data being used and how the resulting payment rate compares with current in-network and out-of-network rates.", "To the extent that a benchmark is based on market-based rates, policymakers may want to consider whether to limit the rates included in the benchmark to a specific geographic area to account for the variations in the underlying cost of health care services in different communities. However, a geographic region that is too large may not account for the discrepancies between markets within the region\u00e2\u0080\u0094for example, rural and urban health care costs\u00e2\u0080\u0094and a geographic region that is too small may result in situations where only one particular provider or insurer is included.", "Policymakers also may want to consider whether to set a benchmark based on current payment data or on historical payment rates combined with an inflation factor. Using historical rates may mitigate potential fluctuations in in-network rates in response to implementing a surprise billing approach, including changes in network strategies by insurers or providers looking to influence future payments. However, using historical rates may not, depending on the data used, account for material changes in a local health care market (e.g., changes in technology, market consolidation, etc.).", "Finally, there may be situations in which an insurer does not have the appropriate data to determine payment rates under a market-based benchmark. For example, an insurer that is a new entrant to a market will not have established in-network payment rates for past years. In such a case, the new entrant may have to rely on public or privately run databases that aggregate payment rate data of other insurers in a market to determine an average in-network rate for a particular provider type in a particular geographic area. Given such a situation, policymakers may want to consider whether to specify a source of data, whether public or private, for reference prices an insurer may use to calculate payment rates or a set of standards for databases that an insurer may use to establish payment rates. The quality and breadth of the data may affect the degree to which reference prices accurately represent the market and population. Currently, there is no universal source of data for all market types and insurers. Some states operate all-payer claims databases (APCDs); of the states that have APCDs, a subset of the APCDs are voluntary initiatives that may not collect data from all insurers in the state. However, state APCDs cannot require the collection of data from self-insured group health plans. "], "subsections": []}, {"section_title": "Multiple Benchmarks", "paragraphs": ["Proposals may specify multiple benchmarks. In these types of proposals, multiple benchmarks may be used to establish guardrails (i.e., a floor or a ceiling) to counterbalance the potential anchoring effects of a single benchmark discussed earlier. ", "There are different methodologies for determining which benchmark would apply in a surprise billing situation. The methodology may involve choosing whether the payment should be based on the greatest or least among the various benchmarks. If using a greatest of approach, then the insurer would be responsible for paying a rate to a provider based on the benchmark that results in the highest payment rate among the various specified benchmarks. A least of approach would make an insurer responsible for paying a provider a payment rate that is based on the benchmark that results in the lowest payment rate among the various specified benchmarks. For example, an insurer may be required to pay a provider a percentile of UCR or, at a minimum, a percentage of Medicare."], "subsections": []}, {"section_title": "Alternative Dispute Resolution", "paragraphs": ["Some federal surprise billing proposals from the 116 th Congress have considered an alternative dispute resolution process, such as arbitration. In an arbitration model, the provider and the insurer would submit proposals for payment amounts to a neutral third party. The third party would then determine, on a case-by-case basis, the total amount to be paid to the provider, which would include the insurer payment and the consumer cost sharing. The cost-sharing parameters would be determined under the proposal, not by the arbitrator, and would depend on the cost-sharing structure of the consumer's health plan. However, the rate set by the arbitrator can affect the amount paid by the consumer. The arbitration model might provide more flexibility than the benchmark in that payment would not be fixed based on a reference price. However, it might involve more administrative costs to determine payment rates on a case-by-case basis and would provide less predictability regarding payment rates for out-of-network services.", "As arbitration relies on a third party to decide payment, proposals typically establish criteria for determining who may act as an arbitrator. Criteria may include a conflict-of-interest standard to ensure the third party does not have an interest in the process's outcome. ", "Policymakers also may want to consider whether to establish standards for when insurers or providers may elect arbitration. Standards may be structured to require a minimum amount of time after a provider has billed for a service before either the provider or the insurer may seek arbitration to settle a payment dispute. This approach would afford providers and insurers an opportunity to negotiate a payment rate. ", "In addition to a time requirement, policymakers seeking to limit resources expended on arbitration may consider establishing a threshold requirement to prohibit providers and insurers from seeking arbitration for charges under a certain dollar amount. If a proposal does not include a threshold requirement, then providers and insurers would be able to seek arbitration for any surprise billing payment dispute. The requirement may be structured to provide a specific amount, which may include a method for adjusting the amount year to year to account for inflation. Alternatively, policymakers could choose to provide authority to agencies to establish a method for determining the threshold amount.", "If a threshold requirement is set in a way that prohibits parties from seeking arbitration below a certain dollar amount, then policymakers may want to consider how to address payment for amounts under the threshold. A proposal could be structured to require insurers to pay any charges under the threshold amount, or a benchmark, as described earlier, could be used on a limited basis for any charged amounts under the threshold. ", "Once it is determined who may seek arbitration for a surprise billing dispute, policymakers may want to consider how to structure the arbitration process, including how an arbitrator decides payment. One possible approach, taken by the state of New York, would be to institute a baseball-style arbitration process in which each party submits its best and final offer to the arbitrator, who then decides which offer to accept as the final payment rate. Another possibility would be to provide the arbitrator with the flexibility to decide a final payment rate that may differ from the proposals submitted by the parties to the arbitration. Regardless of the flexibility given to the arbitrator, policymakers may want to consider specifying factors that the arbitrator should take into account when making a final decision."], "subsections": []}, {"section_title": "Hybrid Approach", "paragraphs": ["It is possible to combine the benchmark and arbitration approaches. For example, in response to stakeholder concerns regarding the use of particular methods for determining final payment amounts, some states and one federal proposal pair the use of a benchmark with the option of arbitration if either party is not satisfied with the payment rate established by the benchmark. Another hybrid approach could involve establishing an arbitration process in which the arbitrator picks one amount from a list of benchmarks to establish a final payment rate. "], "subsections": []}, {"section_title": "Bundled Payment Approach", "paragraphs": ["Some researchers have proposed a bundled payment approach as an alternative to establishing how much an insurer must pay directly to an out-of-network provider. Instead of regulating the relationship between an insurer and the out-of-network provider, a bundled payment approach would focus on the insurer and the facility in which the service was provided. An insurer would make one payment to the facility, after which the facility would be responsible for paying providers for services provided in the facility. Instituting a bundled payment would shift the onus from the out-of-network provider to the facility to negotiate with the insurer for a bundled rate. It would then be the facility's responsibility to negotiate with the providers for payment of services provided within the facility. Currently, no federal proposals or state laws use a bundled payment approach to address surprise billing. "], "subsections": []}]}, {"section_title": "How Could a Proposal Address Network Requirements?", "paragraphs": ["An alternative to focusing on payment for out-of-network services would be to reduce the probability that consumers would inadvertently receive care from out-of-network providers. An alternative to setting a benchmark or establishing an arbitration process would be to set network requirements. "], "subsections": [{"section_title": "Network Adequacy Requirements", "paragraphs": ["Network adequacy is a measure of a plan's ability to provide access to a sufficient number of in-network providers, including primary care and specialists. In the individual and small-group markets, states have been the primary regulator of plan networks and have network adequacy standards for most health insurance plans. The ACA created a federal network adequacy standard. However, the federal government defers to states to enforce network adequacy standards. Self-insured plans are not subject to network adequacy standards. ", "Instituting stricter network adequacy standards (i.e., requiring plan networks to include a larger number of providers of varying types) may not address all surprise billing situations. Unless network adequacy standards require all providers to be in network, they do not guarantee that insurers will contract with every provider that a consumer may see, especially in situations where a consumer travels outside the plan's service area. "], "subsections": []}, {"section_title": "Network Matching", "paragraphs": ["Some researchers have proposed another network-based approach, referred to as network matching , which would involve the creation of an in-network guarantee to address surprise billing situations in which consumers receive care from out-of-network providers in in-network facilities. An in-network guarantee would ensure that a facility and the providers practicing in that facility contract with the same insurers to be included in the same networks. However, surprise bills might still occur in the case of emergency services, when consumers may not have the option to choose an in-network facility, especially when a consumer travels outside the service area of his or her health plan. No current federal proposals or state laws use a network matching approach to address surprise billing. ", "An in-network guarantee could be structured in a few ways. Policymakers could create an in-network guarantee that applies to insurers and would prohibit insurers from contracting with a facility unless the facility guaranteed that all providers practicing in the facility would contract to be in the same networks as the facility. ", "Another way to structure an in-network guarantee would be to prohibit the insurer from paying out-of-network providers for any services provided to the consumer in an in-network facility. When paired with a prohibition on balance billing, a provider that was previously not incentivized to be in network because of the possibility of higher out-of-network payments might be incentivized to negotiate with an insurer to be included in plan networks to obtain payment beyond consumer cost sharing. "], "subsections": []}]}]}, {"section_title": "How Could Surprise Billing Requirements Be Enforced?", "paragraphs": ["To the extent a surprise billing proposal imposes any prohibitions or affirmative obligations on the insurer, the provider, or both, a question remains as to how to enforce any such limits or requirements. The current legal framework for enforcing discrete requirements for insurers and providers may be a template for Congress to consider when drafting surprise billing legislation. Potential enforcement mechanisms include authorizing the Secretary of Health and Human Services (HHS) and/or the Secretary of Labor\u00e2\u0080\u0094depending on the plan type \u00e2\u0080\u0094to bring enforcement actions or allowing private entities to seek a right of action in a court against a regulated entity. An enforcement scheme also may attach specified statutory penalties to a violation of the statute. Depending on whether a surprise billing proposal amends an existing statute, these options may be included as the principal enforcement mechanism or could be added to supplement any existing enforcement schemes. "], "subsections": [{"section_title": "Current Enforcement Mechanisms on Private Health Insurance Issuers", "paragraphs": ["A number of federal surprise billing proposals would amend provisions (including the emergency services provision) under Part A of Title XXVII of the Public Health Service Act (PHSA). This part of the PHSA, as amended by the ACA, was incorporated by reference into Part 7 of the Employee Retirement Income Security Act (ERISA) and Chapter 100 of the Internal Revenue Code (IRC). As a result, these three statutes' existing enforcement mechanisms may be relevant to any additional prohibitions or requirements added to Part A of Title XXVIII of the PHSA by a surprise billing proposal. Existing enforcement provisions under these statutes currently apply only to insurers and not to providers. "], "subsections": [{"section_title": "Public Health Service Act", "paragraphs": ["In general, the existing enforcement provisions for Title XXVII of the PHSA's requirements apply to health insurance issuers in the group and individual markets and to self-funded nonfederal governmental group plans. With respect to health insurance issuers, states are the primary enforcers of the PHSA's requirements. If the HHS Secretary determines that a state has failed to substantially enforce a provision of Title XXVII of the PHSA with respect to health insurance issuers in the state, or if a state informs the Secretary that it lacks the authority or ability to enforce certain PHSA requirements, the Secretary is responsible for enforcing these provisions. In the event that federal enforcement is needed, the HHS Secretary may impose a civil monetary penalty on insurance issuers that fail to comply with the PHSA requirements. The maximum penalty imposed under PHSA is $100 per day for each individual with respect to which such a failure occurs, but the Secretary has the discretion to waive part or all of the penalty if the failure is due to \"reasonable cause\" and the penalty would be excessive."], "subsections": []}, {"section_title": "Employee Retirement Income Security Act", "paragraphs": ["Part 7 of ERISA currently includes various requirements for (1)\u00c2\u00a0group health plans, which generally consist of both insured and self-insured plans providing medical care that an employer establishes or maintains, and (2) health insurance issuers offering group health insurance coverage. ERISA provides two general enforcement mechanisms for these requirements. First, the Secretary of Labor may initiate a civil action against group health plans of employers that violate ERISA, but the Secretary may not enforce ERISA's requirements against health insurance issuers. Second, Section 502(a) of ERISA authorizes a participant or beneficiary of a plan to initiate certain civil actions against group health plans and health insurance issuers. Plan beneficiaries may, for instance, bring actions against the plans to recover or clarify their benefits under the terms of the plans."], "subsections": []}, {"section_title": "Internal Revenue Code", "paragraphs": ["In general, the group health provisions in Chapter 100 of the IRC apply to all group health plans (including church plans), but they do not apply to governmental plans and health insurance issuers. Under the IRC, the group health plan requirements are enforced through the imposition of an excise tax. Failure to comply with an IRC requirement generally would subject a group health plan to a tax of $100 for each day in the noncompliance period with respect to each individual to whom such failure relates. Limitations on a tax may be applicable under certain circumstances (e.g., if the person otherwise liable for such tax did not know, and exercising reasonable diligence would not have known, that such violation existed). Failure to pay the applicable excise tax may result in further penalties, and a dispute regarding any penalty liabilities may be resolved by a proceeding before a U.S. district court or the Court of Federal Claims. "], "subsections": []}]}, {"section_title": "Current Enforcement Mechanisms on Providers", "paragraphs": ["As noted above, the PHSA, ERISA, and IRC currently do not include enforcement provisions that apply to providers; instead, the applicable statutes impose requirements on only the relevant group health plans and health insurance issuers. Indeed, because the regulation of medical providers is traditionally within the province of the states, federal law has generally limited its role in regulating providers to specified circumstances. To the extent any federal requirements are imposed on providers, the requirements generally are enforced through provisions specific to the applicable regulatory framework. The enforcement provisions applicable to federal health care programs (including Medicare and Medicaid), for instance, authorize the HHS Secretary to initiate enforcement proceedings against any person (including a health care provider) for certain specified violations, including the submission of improperly filed claims and the improper offer or acceptance of payments to reduce the provision of health services. Violators may be subject to civil penalties, be excluded from further participation in federal health programs, or both. Thus, to the extent a surprise billing proposal would impose specific limits or requirements directly on providers, policymakers may want to consider enforcement provisions specific to those regulatory requirements.", "Consistent with this approach, many federal surprise billing proposals to date\u00e2\u0080\u0094particularly if they would amend Part A of Title XXVII of the PHSA\u00e2\u0080\u0094include enforcement provisions that would apply specifically to providers in this context. The proposals generally would limit the application of these enforcement provisions to providers who have not been subject to an enforcement action under applicable state law."], "subsections": []}]}, {"section_title": "How Could a Federal Surprise Billing Proposal Interact with State Surprise Billing Laws?", "paragraphs": ["As discussed in the \" State Requirements \" section of this report, many states have enacted laws that address surprise billing in various situations and incorporate different policies discussed throughout this report. Given the likely overlap between state laws and any potential federal laws, policymakers may want to consider how federal surprise billing policies should interact with related state laws. In other words, policymakers may want to determine which laws are applicable in situations addressed by both federal and state laws. They may opt to have federal law defer to state law, have federal law preempt state law, or some combination thereof. To date, many federal proposals have included language that would maintain state surprise billing laws and would apply federal law only in instances where states do not have such laws.", "In the event that a federal surprise billing law would provide deference to state surprise billing laws, it may be worth considering how such deference would be provided. For example, a federal proposal that addresses ambulances may be drafted so that federal law does not apply in any state with any type of surprise billing law, regardless of whether such state law addresses ambulances. As mentioned earlier in this report, state surprise billing laws have varied in their application to different situations and/or providers, and some states have only applied surprise billing laws and regulations to a narrow set of situations. For example, surprise billing protections in Arizona, Massachusetts, Missouri, New Hampshire, and Oregon apply only for emergency services provided by an out-of-network provider at in an in-network hospital. Therefore, this type of federal ambulance surprise billing law would not apply in those states.", "It is also possible that a federal surprise billing law would apply only to services, situations, and plans that have not been addressed by state surprise billing laws (or have been addressed in a manner that does not satisfy criteria included within such proposal). This type of policy would likely result in multiple different ways to handle surprise billing situations within a state. For example, fully insured plans could be subject to state laws and self-insured plans could be subject to federal laws. As a result, enrollees of different types of plans may have different protections in surprise billing situations. The extent of the aforementioned discrepancy would correspond to the extent to which state residents are enrolled in a self-insured plan. For reference, in 2017, Hawaii had the lowest percentage of private sector employees enrolled in a self-insured plan at an employer offering health insurance coverage (31.2%) and Wyoming had the highest percentage (72.4%). The national average was 59.4% in 2017.", "This difference can also be highlighted in the context of the interactions between surprise billing protections in Arizona, Massachusetts, Missouri, New Hampshire, and Oregon, which apply only for emergency services provided by an out-of-network provider at in an in-network hospital, and a hypothetical federal policy that applies to emergency services generally and provides deference to state laws. In this example, state law would apply to emergency services provided by an out-of-network provider at an in-network hospital and federal law would apply to emergency services provided by an out-of-network provider at an out-of-network hospital.", "Considering that a surprise billing federal policy would affect insurers, providers, or both and could alter these parties' incentives to enter into network agreements together (see \" Potential Policy Impacts \"), the combination of a federal policy with varying state policies would likely result in a unique set of incentives for insurers and providers within each state.", "By contrast, a federal surprise billing law may be structured so that state deference is not provided. Under this type of proposal, a federal surprise billing law would be uniformly applicable to all states, regardless of previous state surprise billing legislative action.", "In addition to considering the relationship between state and federal surprise billing laws, policymakers may want to incorporate policies that provide states with opportunities to tailor a federal proposal. For example, a federal policy could allow states to select the benchmark parameter used for plan payments out of a list included in the federal policy, or a federal policy could allow states to further determine the information included in a notification requirement. Such provisions would provide states with the ability to determine how best to incorporate federal policies given the relationship structure between insurers, providers, and consumers within that state."], "subsections": []}]}, {"section_title": "Potential Policy Impacts", "paragraphs": ["Since policy decisions rarely occur in a vacuum, many of the aforementioned policy considerations directly affect one (or multiple) aspects of the billing process.", "These impacts can be considered narrowly, by looking at how specific actors (i.e., insurers, providers, and consumers) may respond to such policy considerations. For example, consider the effects of a federal policy that (1) establishes a benchmark reimbursement rate that is lower than what insurers currently typically pay out-of-network providers for a specific service provided to consumers and (2) prohibits balance billing.", "From the insurer's perspective, an insurer may decide to lower premiums for plans that cover out-of-network benefits if its net payments to providers decrease after adjusting for any changes in consumer cost sharing under the policy. Relatedly, to the extent that such policy requires insurers to cover a portion of other consumer costs for specific services, insurers may choose to increase premiums on plans that do not cover out-of-network benefits to cover these additional costs.", "From the provider perspective, impacted out-of-network providers may see a reduction in revenue from the lower payment rate and the prohibition on balance billing consumers for those services. The provider also may see a reduction in the administrative costs associated with being an out-of-network provider (e.g., costs associated with communicating with and collecting payments from numerous consumers and/or insurers, costs associated with failure to collect payments from consumers). Depending on the extent to which the provider is affected, the provider may respond to this example federal policy by adjusting the prices of other services not affected by the policy or adjusting what services are offered.", "A different surprise billing policy that would establish an arbitration process could create greater administrative costs for insurers and providers. These costs could subsequently be incorporated into premium prices or provider charges for services.", "Policy impacts also can be considered more generally by identifying how these policies could alter the relationships between insurers, providers, and consumers. For example, policies that require insurers to pay providers specified amounts for out-of-network services might affect contract negotiations between insurers and providers. ", "If a proposal required insurers to pay out-of-network providers their median in-network rate for services, insurers might be incentivized to reduce rates for those providers earning above the median amount or be less likely to contract with such providers during subsequent contract negotiations. If insurers did not contract with such providers, the provider would be considered out of network and the plan would pay providers the plan's median rate for services included in the surprise billing proposal. Inversely, providers earning below the median rate might be likely to demand increased payment rates or to consider dropping out of the network, the latter of which would result in those providers also being paid at a plan's median rate. Together, if insurers and providers responded accordingly, a plan's payment rates for the specified services included in a surprise billing proposal would move to the median rates for both in-network and out-of-network providers. ", "If a proposal required insurers to pay out-of-network providers based on an arbitration model (i.e., dispute resolution process), then some providers that furnish specialized services or work on complex cases might be more likely to demand increased payment rates. This could occur because these providers would otherwise be more likely to receive results that are more favorable as an out-of-network provider participating in an arbitration process that considers the extent of the provider's expertise and the complexity of each case.", "The Congressional Budget Office (CBO) estimated the net effects of these types of policies on insurance premiums and the related effects on the federal budget in its scoring of two surprise billing bills from the 116 th Congress ( S. 1895 and H.R. 2328 , which are compared in the Appendix ).", "As implied by the policy impacts of these types of proposals on premiums, different policies also could have varying effects on national health expenditures. For example, the surprise billing proposal that required insurers to pay out-of-network providers their median in-network rate for services likely would reduce the aggregate dollar amount of private health insurance spending on out-of-network care relative to current law. This shift likely would occur even if consumers utilized the same amount of services, because \"median rates are generally lower than the current overall average rates.\" Future health expenditures also could grow slower than what is expected under current law if such a benchmark were indexed to an inflationary rate that is generally smaller than the rate of growth for provider rates. Relative to a benchmark-type policy that is tied to median in-network rates, an arbitration model policy likely would result in greater heath expenditures because arbitration would likely affect the negotiation of in-network rates. The potential threat of arbitration may afford certain providers increased leverage during the negotiation of in-network rates. However, the total effect of such policies on national health expenditures would be contingent upon the percentage of expenditures affected by the federal policies.", "The discussion of the aforementioned policies should not be interpreted as likely effects of all benchmark or all arbitration type policies. For example, a benchmark rate set at median rates would have different effects than a benchmark rate set at billed charges.", "Although comprehensive studies of state surprise billing laws are limited, there is anecdotal evidence of the impacts of such laws. For example, the effects of implementing a payment methodology were anecdotally evident in California, where a law required insurers to pay certain out-of-network providers the greater of the average contracted rate or an amount equal to 125% of the Medicare fee-for-service (FFS) rate. As a result, at least some insurers took the position that \"providers should either accept a lower contract rate or not contract and, potentially, receive only 125% of Medicare FFS rates.\"", "A related example involves insurer responses to a Colorado surprise billing law that required insurers to pay the in-network payment rates for services furnished to enrollees of managed care plans by out-of-network providers at in-network facilities. A subsequent state survey of insurers regarding the implementation of the surprise billing law highlighted that certain insurers felt that \"out-of-network providers [were] encouraged not to join networks because they will receive in-network payment regardless\" and \"hospital-based physicians had greater leverage when negotiating contracts with managed care plans.\"", "The Colorado law did not affect all insurers equally. Of the 52 insurers that issued managed care plans in the private health insurance market during the evaluation period and provided responses to the survey, 7 carriers reported that the law had a positive effect on network adequacy, 20 carriers indicated no change, 21 carriers indicated a negative effect, and 4 carriers indicated insufficient experience and time to evaluate the change.", "Relatedly, New York implemented an arbitration-type surprise billing law (independent dispute resolution, or IDR) for emergency physician services and other specified non-emergency services. From 2015 to 2018, different provider types participated in the IDR process differently. For example, plastic surgery providers submitted 40% of emergency service IDR disputes and neurosurgery providers submitted 31% of the specified non-emergency service IDR disputes.", "The Colorado and New York examples highlight the likelihood that a federal surprise billing policy will affect individual actors within a market differently, which is the result of existing dynamics between insurers and providers within each specific market (e.g., market concentration and network participation). CBO accounted for this effect in its scoring of the two bills from the 116 th Congress. This idea is further compounded by the fact that each state has its own set of regulations (potentially including surprise billing laws). Therefore, the effects of federal surprise billing proposals also will have varying impacts on insurers and providers across states."], "subsections": [{"section_title": "Appendix. Side-by-Side Comparison of Selected Federal Surprise Billing Provisions", "paragraphs": ["This appendix provides a side-by-side comparison of surprise billing provisions included within two federal bills that have gone through markup procedures. Specifically, the sections of the bills included in the appendix are Title I of S. 1895 (Alexander), which went through a Senate Committee on Health, Education, Labor, and Pensions markup session on June 26, 2019, and Title IV of the amendment in the nature of a substitute (ANS) to H.R. 2328 , which went through a markup session held by the House Committee on Energy and Commerce on July 17, 2019.", "The language from each bill summarized in this appendix addresses multiple medical billing situations, such as services furnished at an in-network facility by out-of-network providers, services related to an emergency medical condition, and/or air ambulance services. As each bill addresses more than one type of situation, this appendix refers to different situations as scenarios . For each proposal, different scenarios are identified numerically in the \"Applicable Health Services and Providers\" row. Where applicable, each subsequent cell under a given proposal refers back to the terminology used in the \"Applicable Health Services and Providers\" row to indicate how a given requirement in the proposal applies to each scenario addressed within that specific proposal. In some instances, the requirement may apply solely to one scenario, apply differently across multiple scenarios, or apply similarly to all scenarios. ", "As an example, Title I of S. 1895 (Alexander) includes provisions regarding six scenarios, including (1) emergency services provided by an out-of-network provider at an emergency department of a hospital or freestanding emergency room and (2) ancillary services performed by an out-of-network provider at an in-network facility if such services would have been covered had they been provided in network. In the \"Applicable Health Services and Providers\" row for the Title I of S. 1895 (Alexander) column, these scenarios are identified as Scenario 1 and Scenario 2 , respectively (with additional scenarios listed accordingly). Subsequently throughout the Title I of S. 1895 (Alexander) column, each reference to Scenario 1 discusses how that particular requirement would apply to emergency services provided by an out-of-network provider at an emergency department of a hospital or freestanding emergency room.", "Consumer costs for the services addressed within each of the proposals are discussed in the \"Consumer Cost-Sharing\" and \"Other Consumer Costs\" rows; a distinction that incorporates (1) the aforementioned discussion (highlighted in Figure 1 ) around whether a plan does or does not cover services provided by an out-of-network provider that would have been covered if provided by an in-network provider and (2) whether a particular service is a covered benefit under the plan irrespective of the network status of the provider (i.e., whether the service is considered an excluded service).", "When reading the appendix table, if the same language is used across the bills for a given feature, it means the bills have language that is identical or substantively similar. However, there may be underlying differences between the bills. For example, both bills create limits on consumer cost-sharing requirements, but the actual requirements that would be affected (e.g., deductible, co-payment) may vary between the bills, depending on how cost sharing is defined in either that bill itself or the amending statute (for bill language that does not include a definition of the term). This appendix table focuses on, and incorporates, language as included and defined in the aforementioned bills. It does not compare or analyze differences between the bill languages as a result of underlying statutory differences.", "Each bill summary is based on a review of the provisions as drafted. If a given proposal lacks specificity or includes inconsistencies, no assumptions were made to fill in gaps or resolve any discrepancies.", "Finally, the table does not address drafting errors or other technical issues within the proposals (unless such errors required an interpretation to incorporate bill text into the table). The table also does not address policy implications or identify potential unintended consequences."], "subsections": []}]}]}}
{"id": "R45800", "title": "The Federal Role in Historic Preservation: An Overview", "released_date": "2020-04-07T00:00:00", "summary": ["During the 20 th century, Congress passed several laws that established a framework for federal historic preservation activities. The most comprehensive of these statutes is the National Historic Preservation Act of 1966 (NHPA; P.L. 89-665). NHPA created a grant program for state historic preservation, established the federal National Register of Historic Places (NRHP) and the procedures by which historic properties are placed on the Register, funded the National Trust for Historic Preservation (NTHP), established the Advisory Council on Historic Preservation (ACHP), and designated a process for federal agencies to follow when their projects may affect a historic property (known as the Section 106 process). Congress also has amended and expanded NHPA multiple times since its passage, most recently in 2016.", "In addition, Congress often considers bills to designate specific properties or areas as historically important, under various designations. These designations include national monuments, national historical parks, national historic sites, national historic landmarks, and properties listed on the NRHP, to name a few. Such historic designations may bring few management changes to a site or may involve significant changes, depending on the individual designating laws and/or general authorities that may apply to a type of designation. Some historic designations are applied to federally owned lands (including lands already under federal administration and those that the designating law may authorize for federal acquisition), but many federal designations are conferred on lands that remain nonfederally owned and managed.", "Because of these various legislative and oversight activities, historic preservation is of perennial interest to Congress. For example, some Members of Congress support proposals to eliminate a federal government role in financing historic preservation programs, leaving such programs to be sustained by other levels of government or by private support. Others state that a federal role in supporting historic preservation should be maintained or expanded. In particular, lawmakers and administrations pay significant attention to funding levels for various historic preservation programs that are subject to the annual appropriations process.", "The Historic Preservation Fund (HPF) is the primary source of funding for federal preservation. Appropriations for the HPF totaled $118.7 million in FY2020 ( P.L. 116-94 ), a nearly 16% increase from the FY2019 appropriation (excluding emergency supplemental funding) and a roughly $86 million increase over the FY2020 Administration request. For FY2021, the Trump Administration requests a roughly 66% reduction in funding for the HPF compared with FY2020 levels. This request includes no fiscal support for many of the federal grant programs available to states, tribes, local governments, and nonprofit organizations for historic preservation."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["Historic preservation is the practice of protecting and preserving sites, structures, objects, landscapes, and other cultural resources of historical significance. Various federal, state, and local government programs, as well as privately funded activities, support historic preservation in the United States. This report provides an overview of the federal role in historic preservation, including background and funding information for some of the major preservation programs authorized by Congress. In addition to establishing national policies governing historic preservation, Congress considers the federal government's role in financing many of these programs through the annual appropriations process. Some programs also periodically come before Congress for reauthorization.", "As a result, issues related to historic preservation are of perennial interest to Congress. Some Members of Congress support proposals to eliminate the federal role in historic preservation, leaving such programs to be sustained by other levels of government or by private support. Other Members feel federal support for historic preservation should be maintained or increased. The heavy toll of recent natural disasters such as Hurricanes Harvey and Irma on historic resources has contributed to increased support for incorporating preservation needs in federal disaster relief planning and aid. ", "This report includes a summary of the federal government's role in historic preservation activities, from its early efforts in the late 1890s to today. The report contains a list of many of the federal grant programs funded through the annual appropriations process (see Appendix ). It also includes overviews of historic preservation grants for tribal historic preservation, African American civil rights, historically black colleges and universities (HBCUs), Japanese American confinement sites (JACS), Native American Graves Protection and Repatriation Act (NAGPRA) programs, the Save America's Treasures grant program, and the American Battlefield Protection Program (ABPP). The appendix includes eligibility requirements, matching fund guidelines, and statutory authorization for each program. It also includes an overview of federal funding for historic preservation activities from FY2016 to FY2020, along with requested totals for FY2021. Finally, the report outlines some potential issues facing the 116 th Congress in determining whether and how to address historic preservation needs at the federal level."], "subsections": []}, {"section_title": "Background on Federal Historic Preservation Legislation", "paragraphs": ["The federal role in historic preservation was limited for much of the country's early history, with no formal federal policy in place. The two most significant early efforts at federal historic preservation came in the 1890s. First, Congress passed laws intended to protect ancient Puebloan sites in the American Southwest. Soon thereafter, Congress acquired thousands of acres of private land to establish five Civil War national battlefield parks to be administered by the Department of War. These two distinct federal efforts\u00e2\u0080\u0094commemorating very different moments in American history\u00e2\u0080\u0094are often marked as the genesis of the United States' federal preservation program. In the 20 th century, a legislative campaign for a comprehensive historic preservation policy bolstered these efforts."], "subsections": [{"section_title": "Antiquities Act of 19065", "paragraphs": ["The Antiquities Act of 1906 provided the executive branch with authority to identify and protect cultural resources on federal lands in an expeditious manner. Prior to its passage, federal law provided no means to preserve national cultural and historic resources that had not received specific legislative authorization from Congress. The Antiquities Act authorized the President to proclaim national monuments on federal lands that contain \"historic landmarks, historic and prehistoric structures, and other objects of historic or scientific interest.\" The law also established guidelines around the future excavation of objects of antiquity found on land owned or controlled by the federal government. Since its passage in 1906, the Antiquities Act has been used to create more than 150 national monuments. "], "subsections": []}, {"section_title": "Historic Sites Act of 1935", "paragraphs": ["With the passage of the Historic Sites Act of 1935, Congress established a national policy on historic preservation. The act outlined a policy to \"preserve for public use historic sites, buildings, and objects of national significance for the inspiration and benefit of the people of the United States\" while also providing the Secretary of the Interior the authority to develop a program aimed at identifying and evaluating cultural resources. It placed the primary responsibility for administering federal historic preservation activities with the National Park Service (NPS). Efforts to survey and evaluate cultural resources of national historical significance eventually led to the designation of national historic landmarks (NHLs)\u00e2\u0080\u0094a federal recognition for historic properties that exists today. (See \" National Historic Landmarks Program \" section for more information on NHL designation.) "], "subsections": []}, {"section_title": "National Historic Preservation Act of 1966", "paragraphs": ["In the aftermath of World War II, the United States saw an unprecedented transformation of the natural and built environment, thanks in part to a rapid growth in federal infrastructure projects. The construction of interstate highways, urban renewal projects, and large-scale development led to the destruction of numerous historic buildings, archaeological sites, and cultural resources not previously protected under the Historic Sites Act of 1935. In response, President Lyndon B. Johnson convened a special committee on historic preservation in 1965. The following year, the committee released its report, With Heritage So Rich , which called for a comprehensive national historic preservation program. The same year, Congress passed the National Historic Preservation Act of 1966 (NHPA), which incorporated nearly every major recommendation included in the report.", "Broader than its two predecessors, NHPA is the most comprehensive piece of legislation addressing federal historic preservation. Among its many provisions, the law established the National Register of Historic Places and the procedures by which historic properties are placed on the register, funded the National Trust for Historic Preservation, created a grant program for state and tribal historic preservation, required federal agencies to manage and preserve their historic properties, and created a process for federal agencies to follow when their projects may affect a historic property. Congress has amended and expanded NHPA multiple times since its passage, most recently in 2016."], "subsections": []}]}, {"section_title": "Selected Historic Preservation Programs and Entities", "paragraphs": ["Various federal programs and federally established entities support historic preservation across the United States. Many of these programs and entities were established in NHPA and its subsequent amendments; however, Congress has authorized through separate legislation several other programs that also support activities related to historic preservation. Although it is beyond the scope of this report to discuss all federal programs and entities that support historic preservation, selected major programs and entities are highlighted."], "subsections": [{"section_title": "Advisory Council on Historic Preservation", "paragraphs": ["Created by NHPA, the Advisory Council on Historic Preservation (ACHP) is an independent agency consisting of federal, state, and tribal government members, as well as experts in historic preservation and members of the public. ACHP oversees the Section 106 review process, a process federal agencies must follow when their projects may affect a historic property. Federal agencies are required to review the potential impacts of their actions on historic sites, a process that is to be concluded before federal funding is provided or a federal license is issued. Section 106 applies only to federal or \"federally assisted\" undertakings, such as those receiving federal funding or a federal permit. As an independent agency, ACHP receives funding as part of the \"Related Agencies\" portion of the annual Department of the Interior, Environment, and Related Agencies appropriations bill."], "subsections": []}, {"section_title": "Historic Preservation Fund", "paragraphs": ["The Historic Preservation Fund (HPF) is the primary source of funding for federal preservation awards to states, tribes, local governments, and nonprofit organizations. Although federal funding for historic preservation was available under the 1966 NHPA and subsequent amendments in 1970 and 1973, Congress did not officially establish the HPF to carry out the activities specified in NHPA until 1976. The HPF is funded through revenue generated by outer continental shelf mineral receipts, and it has been periodically reauthorized by Congress. Most recently, in 2016, Congress authorized the HPF to receive deposits of $150 million annually through FY2023. The funding is available only to the extent appropriated by Congress in discretionary appropriations laws. Since the HPF's establishment, Congress has never appropriated the full $150 million for the fund in a single fiscal year. ", "The HPF funds historic preservation activities in two ways: (1) formula-based apportionment grants and (2) competitive grant programs. Most HPF appropriated funds are used to provide formula-based matching grants-in-aid to state historic preservation offices (SHPOs) and tribal historic preservation offices (THPOs) and sub-grants to certified local governments (CLGs). Congress also has provided appropriations for additional competitive grant programs that fund specific historic preservation activities. The Appendix to this report provides an overview of the various grant programs that have been funded through the HPF, eligibility requirements, and program goals. "], "subsections": [{"section_title": "State Historic Preservation Office Program", "paragraphs": ["HPF grants are awarded annually to SHPOs of the 50 states plus the District of Columbia and the territories. SHPOs are appointed officials responsible for administering and managing federal funds to conduct historic preservation activities. These activities may include surveys and inventories, nominations to the National Register of Historic Places, preservation education, architectural planning, historic structure reports, community preservation planning, and physical preservation of historic buildings, among others.", "States conducting these activities are statutorily required to provide a 40% match to the funds provided by the HPF. Guidelines allow each state the flexibility to design and shape its historic preservation program as long as the program meets the overall responsibilities outlined by NHPA. Typically, SHPOs do not use these funds to issue sub-grants to other entities for individual historic preservation projects; rather, SHPOs generally use these funds for their own operational and administrative costs, as well as programmatic activities (listed above) carried out directly by the SHPO. Under federal regulations, at least 10% of the allocations to SHPOs are sub-granted to assist CLGs with local preservation needs (see \" Certified Local Government Program \" below). Congress appropriated $49.7 million in FY2019 and $52.7 million in FY2020 for SHPO grants-in-aid."], "subsections": []}, {"section_title": "Tribal Historic Preservation Office Program", "paragraphs": ["Since 1996, NPS has awarded annual formula-based grants to Tribal Historic Preservation Offices (THPOs). Eligibility for grants under the THPO grant program is limited to federally recognized tribes that have signed agreements with NPS designating them as having an approved THPO. To become an approved THPO, a tribe submits a request to assume responsibilities from the SHPO and provides a program plan demonstrating how SHPO duties will be conducted. Once a program plan is completed and approved, an agreement between the tribe and the Secretary of the Interior is executed and the THPO becomes eligible for HPF grant support.", "Similar to SHPO grants, the THPO grant program requires at least a 40% nonfederal match. Activities funded through the program include staff salaries, archeological and architectural surveys, review and compliance activities, comprehensive preservation studies, National Register nominations, educational programs, and other preservation-related activities. Grants are not awarded competitively but instead are determined according to a formula in consultation with tribes. Congress appropriated $11.7 million in FY2019 and $13.7 million in FY2020 for THPO grants-in-aid."], "subsections": []}, {"section_title": "Certified Local Government Program", "paragraphs": ["NHPA requires that at least 10% of the annual HPF funding provided to each SHPO be sub-granted to local government entities known as certified local governments (CLGs). A CLG is a unit of local (town, city, or county) government that has undergone a certification process administered by NPS and the respective state SHPO, involving demonstration of a commitment to historic preservation. Under this certification process, local governments must meet NPS guidelines that include the establishment of a \"qualified\" historic preservation commission, inventory maintenance and surveys of local historic resources, and enforcement of state or local historic preservation laws, as well as additional requirements that may be established at the state level.", "Although CLGs receive at least 10% of the total annual apportionment from their respective SHPOs, states may provide more than the required minimum 10% pass-through should they choose to do so. States typically award grants to individual CLGs through a competitive application process established by the SHPO."], "subsections": []}]}, {"section_title": "National Register of Historic Places", "paragraphs": ["The National Register of Historic Places (or National Register) stands as the United States' \"official list\" of properties significant in \"American history, architecture, archeology, engineering and culture.\" The National Register is maintained by the Department of the Interior (DOI) and in particular by NPS under the authority of NHPA, as amended. NHPA requires the Secretary of the Interior to maintain the register, develop guidelines and regulations for nominations, consider appeals, make determinations of eligibility of properties, and make the National Register accessible to the public. NPS has developed standards and guidelines to help federal, state, and local governments prepare nominations for the register.", "SHPOs, THPOs, or federal historic preservation offices typically coordinate nominations for the National Register. Property owners, historical societies, preservation organizations, government agencies, and other interested parties work through these offices to determine whether a given property meets the requisite criteria for listing, at which point a completed nomination and recommendation are submitted to NPS for review. NPS is to decide whether a property should be listed within 45 days after receiving a completed nomination. Benefits of listing on the National Register include honorary designation, access to federal preservation grant funds for planning and rehabilitation activities, possible tax benefits, and required application of Section 106 review should a federal or federally assisted action affect the property. Listing of a property places no restrictions on what nonfederal owners may do with their property, up to and including destruction of the property. Under federal regulations, should a property no longer meet the criteria for listing, the property shall be removed from the National Register. Currently, more than 94,000 properties are listed on the National Register."], "subsections": []}, {"section_title": "National Historic Landmarks Program", "paragraphs": ["The National Historic Landmarks (NHL) program\u00e2\u0080\u0094like the National Register\u00e2\u0080\u0094is a federal recognition program administered by NPS. The agency is responsible for overseeing the nomination process for new NHLs and providing technical assistance to existing landmarks. NHLs are places of national significance to the history of the United States (as opposed to National Register properties, which, according to NPS, \"are primarily of state and local significance\"). The Historic Sites Act of 1935 created the NHL program, and the National Historic Preservation Act Amendments of 1980 clarified the role of NPS as the entity responsible for overseeing the designation of NHLs. All NHLs are also listed in the National Register. Funding for the NHL program falls under the National Register program, and NHLs are eligible for federal investment tax credits, technical assistance, and consideration in federal undertakings, similar to other properties on the National Register. With regard to federal undertakings, however, NHLs have a higher standard for protection than properties listed on the National Register. Whereas Section 106 of NHPA, applicable to properties on the National Register, requires only that agencies \"take into account\" the effects of an undertaking on historic properties, Section 110(f) of the law, applicable to NHLs, requires that agencies \"to the maximum extent possible undertake such planning and actions as may be necessary to minimize harm to the landmark.\""], "subsections": []}, {"section_title": "National Trust for Historic Preservation", "paragraphs": ["Congress chartered the National Trust for Historic Preservation (or National Trust) in 1949. It is a private nonprofit corporation, responsible for encouraging the protection and preservation of historic American sites, buildings, and objects that are significant to the cultural heritage of the United States. The trust provides technical and educational services, promotes historic preservation activities, and administers several historic preservation grant programs.", "Congress authorized federal funding for the National Trust in the NHPA of 1966. Federal funding for the trust largely continued until FY1996, at which point the Interior Appropriations bill conference report stated that the managers agreed \"to a 3-year period of transition for the National Trust for Historic Preservation to replace federal funds with private funding.\" From FY1998 through FY2001, there was no federal funding for the National Trust. In FY2002, Congress appropriated from the HPF $2.5 million to use as an endowment to maintain and preserve National Trust historic properties. In FY2003, Congress appropriated an additional $2.0 million from the HPF for the endowment, and added $0.5 million more in FY2004. In FY2005, Congress stopped funding the National Trust, and currently the organization's funding comes largely from private donations."], "subsections": []}, {"section_title": "Federal Historic Preservation Tax Incentives Program", "paragraphs": ["In 1976, Congress passed the Tax Reform Act, which provided tax incentives for owners of historic structures to consider rehabilitation and preservation over demolition. Some argued that the law prior to 1976 encouraged the demolition and redevelopment of historic properties over their preservation. ", "Since then, tax law has continued to evolve into what is now the Federal Historic Preservation Tax Incentives program, which includes historic tax credits (HTCs) administered by the Internal Revenue Service (IRS) and NPS in partnership with SHPOs. The HTC program encourages private investment in historic preservation and rehabilitation initiatives by providing a 20% federal tax credit to property owners who undertake substantial rehabilitation of a certified historic structure, while maintaining its historic character. Eligible buildings include those listed on the National Register of Historic Places, or architecturally contributing to a National Register district, that are rehabilitated for income-producing purposes. The program previously included a separate 10% rehabilitation credit for the rehabilitation of nonhistoric, nonresidential buildings built before 1936; however, the 2017 tax revision repealed this credit. Since 1976, over 44,000 projects have been completed under the program, with more than $96 billion leveraged in private investment for the rehabilitation of historic properties."], "subsections": []}, {"section_title": "National Heritage Areas Program50", "paragraphs": ["Since 1984, Congress has designated 55 national heritage areas (NHAs) to recognize and assist efforts to protect, commemorate, and promote natural, cultural, historic, and recreational resources that form distinctive landscapes. NHAs are partnerships among NPS, states, and local communities, in which NPS supports state and local conservation through federal recognition, seed money, and technical assistance. Congress has established heritage areas for lands that are regarded as distinctive because of their resources, their built environment, and the culture and history associated with the land and its residents. In a majority of cases, NHAs have had a fundamental economic activity as their foundation, such as agriculture, water transportation, or industrial development.", "No comprehensive statute establishes criteria for designating NHAs or provides standards for their funding and management. Rather, particulars for each area are provided in the area's enabling legislation. Congress designates a management entity, usually nonfederal, to coordinate the work of the partners.\u00c2\u00a0NHAs are not part of the National Park System, in which lands are primarily federally owned and managed."], "subsections": []}, {"section_title": "Historic Federal Property Disposal Programs52", "paragraphs": ["Real property disposal is the process by which federal agencies identify and then transfer, donate, or sell real property they no longer need. The federal government has several programs that enable state, county, and local governments, as well as nonprofit organizations, to acquire at no cost properties deemed excess to the needs of a federal agency. Two programs in particular address the disposal of historic properties under federal ownership: the Historic Surplus Property Program and the National Historic Lighthouse Preservation Act Program."], "subsections": [{"section_title": "Historic Surplus Property Program", "paragraphs": ["The NPS Historic Surplus Property Program is administered in partnership with the General Services Administration (GSA) and was authorized under the Federal Property and Administrative Services Act of 1949, as amended. When federally owned historic buildings are no longer needed by their respective agencies, the GSA declares the buildings to be surplus. Applicants interested in obtaining these properties\u00e2\u0080\u0094which must be listed, or eligible for listing, in the National Register\u00e2\u0080\u0094submit an application to the GSA. Eligible applicants include state and public agencies, tribal entities, and nonprofit organizations. NPS then makes a formal recommendation to the GSA (or the Department of Defense, in the case of military properties) to effect the transfer of property. Once conveyed, a property must be managed and maintained in accordance with the terms of the transfer and the Secretary of the Interior's Standards for Rehabilitation."], "subsections": []}, {"section_title": "National Historic Lighthouse Preservation Act Program", "paragraphs": ["The NPS also administers a program to oversee the transfer of surplus historic lighthouses under federal ownership. Federal lighthouses and light stations were previously transferred to eligible entities through the Historic Surplus Property Program. In 2000, however, Congress passed the National Historic Lighthouse Preservation Act (NHLPA), an amendment to NHPA. The NHLPA provides a mechanism for the U.S. Coast Guard (USCG) to dispose of historic lighthouses that are listed, or determined eligible for listing, in the National Register. Similarly to other historic federal properties deemed to be excess, the NHLPA directs the USCG to issue a R eport of E xcess for historic light stations to the GSA, which then releases a notice of availability. At this point, interested parties looking to acquire the light station in question\u00e2\u0080\u0094at no cost\u00e2\u0080\u0094work with NPS to submit a formal application, which is then reviewed by an internal NPS review committee that makes a recommendation to the Secretary of the Interior and the GSA Administrator. If there are no interested parties\u00e2\u0080\u0094or if no applicant meets the requirements set forth by the review committee\u00e2\u0080\u0094the property is offered for sale by competitive bid or auction."], "subsections": []}]}, {"section_title": "National Historic Networks", "paragraphs": ["Congress occasionally has passed legislation authorizing NPS to establish national networks aimed at coordinating the preservation and education efforts of various places, museums, and interpretive programs associated with specific historical moments or movements in U.S. history. To date, Congress has authorized the establishment of three such networks: the National Underground Railroad Network to Freedom ( P.L. 105-203 ), the African American Civil Rights Network ( P.L. 115-104 ), and the Reconstruction Era National Historic Network ( P.L. 116-9 ). Legislation in the 116 th Congress ( H.R. 1179 and S. 2827 ) would establish a fourth network, the African-American Burial Grounds Network. These laws have provided that network sites can include federal, state, local, and privately owned properties, although inclusion in the network requires consent from property owners. Congress has authorized the Secretary of the Interior to produce and disseminate educational materials and provide technical assistance to network sites, and to develop an official symbol or logo for use across the network. "], "subsections": []}]}, {"section_title": "Federal Historic Preservation Grant Programs", "paragraphs": ["The federal government currently supports historic preservation through a variety of grant programs. The largest source of funding for federal historic preservation programs is the HPF, which currently funds state, tribal, and local historic preservation, African American civil rights grant programs, grants to underrepresented communities, tribal heritage grants, the Save America's Treasures program, disaster recovery grants, historic revitalization grants, and grants to historically black colleges and universities (HBCUs). ", "Several other historic preservation grant programs are funded through annual appropriations under other NPS and non-NPS accounts rather than through the HPF. These programs include grants for Japanese American confinement sites, Native American grave protection and repatriation, and preservation and acquisition grants for American battlefields. For a complete list of these programs and their guidelines, refer to the Appendix ."], "subsections": []}, {"section_title": "National Historic Designations", "paragraphs": [" Table 1 , below, compares selected designations used by Congress and the executive branch for historic properties and sites. The table provides information on the entity that confers each designation (e.g., Congress, the President, the Interior or Agriculture Secretary); statutory authorities for the designation; the agency or agencies that administer each type of area (also noting designations for which the area typically is under nonfederal management); selected characteristics of the areas; and examples of each type of area. Designations for nonfederally owned and managed sites are listed according to the agency with administrative responsibility for the designation (e.g., responsibility for evaluating site qualifications and providing technical and/or financial assistance to designated sites)."], "subsections": []}, {"section_title": "Federal Funding for Historic Preservation", "paragraphs": ["The federal government supports historic preservation through direct appropriations for federally protected sites and grants to nonfederal entities. Grant funding is typically provided to NPS-administered accounts within the annual Interior, Environment, and Related Agencies Appropriations bill. These accounts provide technical and financial assistance to state, local, and tribal governments, educational institutions, and nonprofit organizations with the goal of protecting cultural resources and promoting historic preservation activities across the United States. The majority of the funding is split between two NPS accounts: the HPF account, the primary source of funding for federal historic preservation programs, and the National Recreation and Preservation (NR&P) account, which provides funding for a variety of other congressionally authorized grant programs. Funding for historic preservation programs is not limited to these two accounts, however, nor does Congress exclusively fund grant programs as part of the Interior appropriations bill. Table 2 and Table 3 provide FY2016-FY2020 appropriations figures and the FY2021 budget request for programs funded as part of the HPF and NR&P accounts."], "subsections": [{"section_title": "HPF Appropriations: FY2016-FY2020 and FY2021 Request", "paragraphs": ["In 2016, Congress reauthorized deposits of $150 million annually into the HPF for FY2017 through FY2023. Congress has never appropriated the full $150 million for the HPF since its establishment; however, regular appropriations to NPS's HPF account increased each year from FY2016 to FY2020. The FY2021 budget justification for NPS requests $40.7 million for HPF\u00e2\u0080\u0094a roughly 66% reduction in funding from FY2020 enacted amounts. This request would provide funding only for the core grant-in-aid programs to SHPOs ($26.9 million) and THPOs ($5.7 million), as well as $8 million for grants to HBCUs. It would not provide funding for additional competitive or non-formula-based grant programs."], "subsections": []}, {"section_title": "National Recreation and Preservation Appropriations: FY2016-FY2020 and FY2021 Request", "paragraphs": ["In addition to grant funds through the HPF account, Congress provides funding to other NPS-administered historic preservation grant programs under the National Recreation and Preservation (NR&P) account. This account provides for a broad range of activities related to historic and cultural preservation, as well as programs for recreational activities, natural resource conservation, environmental compliance, operations of the Office of International Affairs, and national heritage areas. Administration of grants funded through the NR&P account and HPF grant administration are included within the NR&P account under the \"Cultural Programs\" line item and the sub-activity \"Grants Administration.\" Congress appropriates direct funding for NPS-administered grant programs under the Cultural Programs line item. The Administration requested $33.9 million for NR&P in FY2021\u00e2\u0080\u0094a roughly 52% reduction from FY2020 enacted amounts. "], "subsections": []}]}, {"section_title": "Selected Issues for the 116th Congress", "paragraphs": ["Historic preservation programs are of perennial interest to Congress and have been the subject of congressional oversight and legislation in the 116 th Congress. Some Members of Congress support proposals to eliminate a federal government role in both administering and financing historic preservation programs, leaving such programs to be sustained by other levels of government or by private support. Others feel that a federal role in supporting historic preservation should be maintained or expanded. Similarly, some advocates believe there may be an inherent or increased tension between preservationist goals and federally controlled or licensed infrastructure projects. ", "The majority of federal grant programs for historic preservation receive funding through the annual appropriations process. Members of Congress as well as both current and past Administrations have expressed various opinions as to how federal funding for these programs should be allocated and at what levels. Both the FY2020 and the FY2021 budget requests from NPS would have significantly reduced funding for the HPF and would provide no funding for African American civil rights grant programs, grants to underrepresented communities, the Save America's Treasures program, or historic revitalization grants. ", "In response to the FY2020 budget proposal, the House Subcommittee on National Parks, Forests, and Public Lands of the Committee on Natural Resources held oversight hearings in April 2019 on the spending priorities and mission of NPS. During these hearings, some Members expressed concern that the proposed reduction in grant funding would impact the ability of communities to protect and maintain culturally and historically important resources. Others\u00e2\u0080\u0094including witnesses from NPS\u00e2\u0080\u0094expressed the position that \"core\" NPS priorities such as infrastructure and the NPS maintenance backlog should take priority over historic preservation when considering the appropriation of federal funds.", "Other issues Congress may consider are specific to NHPA and current historic preservation laws and regulations. For instance, some have argued that the \"stop, look, and listen\" approach under Section 106 of NHPA does not provide adequate protection for historic resources, since the law only establishes a procedural requirement for federal agencies. According to a study commissioned by the National Trust for Historic Preservation in 2010, NPS reported to Congress that only 2% of all SHPO reviews for Section 106 compliance included findings of adverse effects to historic properties. For those undertakings that are deemed to have an adverse effect on a given historic property, the agency in question is only required to consider these effects\u00e2\u0080\u0094with no explicit legal mandate requiring them to address these potential impacts. In other words, although agencies are compelled to consult with the SHPO/THPO to develop solutions to mitigate effects, agency officials are not required to pursue the solutions, regardless of any adverse effects. As a result, some preservation advocates have charged that NHPA fails in its purported mission to protect cultural and historic sites.", "Others suggest that Section 106 compliance results in unnecessary and costly delays and have suggested that in some cases, opponents of specific federal projects may invoke Section 106 procedural steps in the hopes of delaying approval for a project\u00e2\u0080\u0094sometimes to the point of impacting a project's feasibility. Although federal regulations provide certain ways for agencies to tailor the Section 106 process to their needs, some stakeholders have asserted that these options are time-consuming to implement and not flexible enough for undertakings that involve new or emerging technologies. Multiple bills have been introduced to exempt or limit NHPA reviews for certain projects, such as rail and transit infrastructure projects and Federal Communications Commission construction projects for communications facilities following a major disaster.", "Many of the programs that directly or indirectly support historic preservation also have received attention in recent years. For example, in 2013, the Federal Railroad Administration published a study that concluded \"there is no consistent approach on how to address the National Register eligibility of railroad corridors.\" Although federal regulations outline the criteria for inclusion of a property on the National Register, the report states that inconsistent standards still abound, due to the multitude of entities conducting National Register evaluations. Another program of congressional interest has been the National Heritage Areas program. Legislation has been introduced in recent Congresses to establish a National Heritage Areas System governing the designation, management, and funding of NHAs, to replace the stand-alone approach currently in place. Additionally, some Members\u00e2\u0080\u0094as well as past and current Administrations\u00e2\u0080\u0094have expressed interest in ensuring that NHAs eventually become financially self-sufficient and in limiting the federal funding for long-standing areas.", "In addition, Congress often considers bills to designate specific properties or areas as historically important, under various designations. For example, in the 116 th Congress, P.L. 116-9 included provisions that designated three new historical sites as units of the National Park System and six new national heritage areas, as well as stand-alone provisions that recognized the historical importance of sites across the United States. Although many of the programs described in this report provide for properties to receive historical designation administratively, Congress has at times conferred individual designations in law. Certain programs or designations require congressional action to establish new areas or to designate properties as historically significant."], "subsections": [{"section_title": "Appendix. Selected Federal Grant Programs for Historic Preservation", "paragraphs": [" Table A-1 is an overview of selected federal historic preservation grant programs. This overview focuses on programs with the primary mission of historic preservation and is not a complete representation of all federal grant programs that support historic preservation activities. Most of the programs listed here are subject to annual appropriations and therefore may not be currently funded, despite some programs having congressional authorization to administer grants. Programs authorized or funded in FY2020 for the first time may not be listed below. For example, as part of the FY2020 funding bill ( P.L. 116-94 ), Congress provided funding for a new civil rights grant program that would preserve and highlight the sites and stories associated with women, American Latino, Native American, Alaska Native, Native Hawaiian, and LGBTQ Americans. NPS has not yet published eligibility requirements or program guidelines. P.L. 116-94 also authorized two new grant programs as part of the American Battlefield Protection Program (ABPP): a battlefield interpretation modernization grant program and a battlefield restoration grant program. As these new programs have yet to receive appropriations from Congress, they are not listed below."], "subsections": []}]}]}}
{"id": "R46108", "title": "Demand for Broadband in Rural Areas: Implications for Universal Access", "released_date": "2019-12-09T00:00:00", "summary": ["As of 2019, over 20 million Americans\u00e2\u0080\u0094predominantly those living in rural areas\u00e2\u0080\u0094lacked access to high speed broadband service according to the Federal Communications Commission (FCC). Federal subsidies underwritten by taxpayer funds and long-distance telephone subscriber fees have injected billions of dollars into rural broadband markets over the past decade\u00e2\u0080\u0094mostly on the supply side in the form of grants, loans, and direct support to broadband providers.", "Yet, adoption rates have leveled off after more than a decade of rapid growth, even as broadband providers have extended service to remote and hard-to-serve areas. The overall share of U.S. adults using the internet has not grown significantly since 2013, according to the Pew Research Center\u00e2\u0080\u0094a trend reflected in rural broadband subscription rates, which continue to lag significantly behind rates in urban areas.", "Observers note that weak demand in nascent broadband markets makes it more difficult for federal agencies to elicit private-sector program participation and investment in high-cost, high-risk rural areas. Even in subsidized markets, broadband infrastructure buildout ultimately rests on business decisions made in the private sector. On average, rural areas are less wealthy than urbanized areas, and have older populations with lower educational attainment\u00e2\u0080\u0094factors which negatively correlate with demand for broadband service. Related barriers to adoption, such as lower perceived value, affordability, computer ownership, and computer literacy, have persisted over many years.", "Markets tend to be highly localized. Those with favorable geography and demographic profiles often have higher demand, and thus present relatively attractive investment opportunities, for broadband providers. However, the federal government has found it difficult to incentivize sustained private-sector investment in more isolated and sparsely populated locales where it is clear that new or upgraded service will be costly to provide, and may fail to attract a large number of new paying subscribers.", "Overall, current federal spending on affordability and adoption programs amounts to less than one-quarter of total spending for rural broadband expansion. The FCC's Lifeline program reduces monthly subscription costs for qualifying low-income households, but enrollment rates are comparatively low. No major federal programs currently support consumer outreach and education, although certain federal grants may use funds for related activities. Other programs to support broadband buildout to schools, clinics, and other community institutions have improved access for residents of rural areas, but it is not clear that these programs have affected overall market demand.", "Broadband advocates frequently identify broadband enabled services like telemedicine and precision agriculture as potential demand drivers. However, lower rates of health insurance coverage in rural areas and certain state regulations limiting Medicaid reimbursement for telemedicine services may depress demand growth and private sector investment in broadband. Likewise, high up-front costs and unfamiliarity have hindered adoption of precision agriculture technology by small producers in isolated rural areas.", "Federal broadband programs have generally been agnostic to the demand side of rural broadband markets, based on the implicit assumption that demand for broadband service will quickly emerge as broadband providers extend new or upgraded service to these locales. Program rules typically require broadband providers to extend service availability to a certain area within a certain timeframe, but they generally do not require them to achieve specific market development goals for adoption and usage. The FCC has expressed concern that some subsidized providers may lack incentive to develop markets in their service areas.", "Options for congressional consideration include measures to address obstacles to adoption and additional incentives for private sector investment in the rural broadband sector. These may include expansion of end-user subsidies, both within the broadband sector and other sectors that utilize broadband-enabled technologies. Congress may also consider measures to encourage broadband providers to increase investment in persistently underserved rural areas and more aggressively develop nascent broadband markets. These may include adjustment to subsidy rates and program rules, including introduction of adoption milestones for subsidy recipients. Additionally, Congress may consider measures to increase education and outreach."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["Congress has a long-standing interest in ensuring access to broadband internet service in rural areas. Federal subsidies underwritten by taxes and long-distance telephone subscriber fees have injected billions of dollars into rural broadband markets over a period of decades\u00e2\u0080\u0094mostly on the supply side\u00e2\u0080\u0094in the form of grants, loans, and direct support to broadband providers. As of 2019, more than 20 million Americans still lacked broadband access.", "According to many stakeholders and policy experts, federal spending on broadband expansion has not adequately accounted for local conditions in rural areas that depress effective demand for broadband. Lower demand in rural areas may discourage private-sector investment and reduce the effectiveness of federal efforts to expand and improve broadband service.", "According to the authors of a 2015 study on rural broadband expansion, \"While the vast majority of federal programs dealing with broadband have focused on the provision of infrastructure, many economists and others involved in the debate have argued that the emphasis should instead be on increasing demand in the areas that are lagging behind.\" The study found that rural households' broadband adoption rate lagged that of urban households by 12-13 percentage points and that while 38% of the rural-urban \"broadband gap\" in 2011 was attributable to lack of necessary infrastructure, 52% was attributable to lower adoption rates. ", "\"Implicit in many supply-side arguments is an assumption that demand-side issues will resolve themselves once there is ample supply of cheap and ultra-fast broadband,\" wrote the directors of the Advanced Communications Law & Policy Institute (ACLP) in a public comment to the Commerce Department's Broadband Opportunity Council in 2015. \"Though appealing, this reductive cause\u00e2\u0080\u0090and\u00e2\u0080\u0090effect has been questioned by social scientists, researchers, practitioners, and others who have worked to identify and better understand the complex mechanics associated with broadband adoption across key demographics and in key sectors.\"", "The geographic and demographic distribution of rural broadband demand is uneven. There is unmet demand in some rural areas. In others, even where there is access, that may not translate into widespread adoption. Observers cite a range of factors. On average, rural areas are less wealthy than urbanized areas, and have older populations with lower educational attainment\u00e2\u0080\u0094factors which negatively correlate with demand for broadband service. Related barriers to adoption, such as lower perceived value, affordability, computer ownership, and computer literacy, have persisted over many years. Rural areas with relatively favorable geography and demographics may attract significant investment in broadband service, but even subsidies may fail to spur buildout in less-attractive rural markets. ", "This report complements separate CRS analyses of major federal subsidy programs on the supply side of the market by providing an analysis of demand-side issues at the nexus of infrastructure buildout and adoption. It focuses exclusively on demand for fixed broadband among rural households and small businesses. It does not address the role of schools, healthcare facilities, public libraries, and other \"community anchor institutions\" as end users of broadband. However, it does include discussion of the role schools and libraries play as providers of broadband service and training to rural residents who may lack home access to the internet, and how this may affect overall household adoption behavior. It also includes discussion of broadband-enabled services, such as telemedicine and precision agriculture, which may incentivize more rural households and small businesses to adopt broadband service.", "The report begins with a discussion of the rural broadband market\u00e2\u0080\u0094specifically, the characteristics of demand in rural households and small businesses, and how these affect private-sector infrastructure investments. It then provides a survey of federal broadband programs and policies designed to spur broadband buildout and adoption, with a discussion of how demand-side issues may impede achievement of these goals. It concludes with a discussion of selected options for Congress."], "subsections": []}, {"section_title": "The Rural Broadband Market", "paragraphs": ["According to the U.S. Census Bureau, 60 million Americans, or 19.3% of the total population, live in rural areas, defined as \"all population, housing, and territory not included within an urbanized area or urban cluster.\" As of 2010, urbanized areas and urban clusters occupied about 3% of the U.S. land mass, yet contained more than 80% of the U.S. population. As a result, fixed broadband network infrastructure, which largely relies on wireline connections to the physical addresses of subscribers, is geographically concentrated. ", "Urban areas have benefited from this concentration, especially areas with favorable geographic locations and economic conditions. For example, the City of Huntington Beach, CA, charges broadband providers rent for access to its utility poles\u00e2\u0080\u0094$2,000 per pole per year\u00e2\u0080\u0094and leases access to city-owned fiber-optic cable (fiber) infrastructure. \"We continue to have a lot of carriers wanting to site on our poles in our downtown area which is next to the beach,\" a city official said during a 2019 webinar, noting that other, less favorably located cities had not been able to duplicate Huntington Beach's development model. \"[An] inland city is not going to get what we get here on the coast.\" ", "In contrast, in many rural areas, the cost of providing broadband service may approach\u00e2\u0080\u0094or even exceed\u00e2\u0080\u0094the predicted return on investment. Broadband providers may not be willing to serve these areas without support from direct government subsidies, grants, or loans. Local conditions in rural areas vary widely, though. Some rural markets may be relatively attractive on commercial terms, because of unique characteristics such as the presence of post-secondary educational institutions or tourism attractions, relatively high levels of economic development and educational attainment, favorable demographics, or proximity to urban areas. Other rural markets that lack these characteristics are likely to be less commercially attractive. ", "Long-term demographic trends suggest a growing bifurcation of the rural broadband market. According to a 2018 U.S. Department of Agriculture (USDA) analysis, rural areas have witnessed \"declining unemployment, rising incomes, and declining poverty,\" as well as more favorable net migration rates since 2013. However, the analysis also found that \"people moving to rural areas tend to persistently favor more densely settled rural areas with attractive scenic qualities, or those near large cities. Fewer are moving to sparsely settled, less scenic, and more remote locations, which compounds economic development challenges in those areas.\" ", "For reasons that will be explained in more detail below, household and small business demand for broadband service is likely to be impacted in rural areas by demographic trends, geography, and economic context. As a result, these factors affect the infrastructure investment behavior of broadband providers, raising policy questions about the appropriate level of federal assistance and how it can be distributed most effectively and efficiently.", "The next three sections of this report discuss the adoption of broadband service by rural households and rural small businesses and the implications of market demand for private-sector investment in rural broadband infrastructure."], "subsections": [{"section_title": "Valuation of Broadband Service by Rural Households", "paragraphs": ["Adoption rates for broadband service are highly dependent on the valuation that households and small businesses place on internet access. Studies suggest that on average, valuation of internet access\u00e2\u0080\u0094measured as willingness to pay for broadband service\u00e2\u0080\u0094is lower for rural households than for urban households. Knowledge of computers, computer ownership, and perceived relevance of the internet\u00e2\u0080\u0094all of which affect consumer valuation\u00e2\u0080\u0094tend to be lower among older, less educated, and less wealthy households. Because rural households tend to be older, less educated, and less wealthy than their urban counterparts, their willingness to pay for broadband also tends to be lower.", "Not all households are the same, of course. A substantial number of low-income households do not subscribe to broadband service even when it is offered to them at no cost, indicating a valuation of zero. At the same time, many reports indicate that some rural residents are willing go to extensive lengths to access the internet for tasks they view as essential, even if broadband service is not available at their home or business. The relatively lower proportion of potential subscribers in rural areas who are both highly motivated to adopt broadband and are able to pay for it complicates the business case. ", "A 2010 study, based on a report commissioned by the Federal Communications Commission (FCC), found that survey respondents were, on average, willing to pay an extra $45 per month for \"fast\" speeds adequate for music, photo sharing, and videos. However, on average, respondents were only willing to pay an extra $48\u00e2\u0080\u0094a difference of $3\u00e2\u0080\u0094for \"very fast\" speeds adequate for gaming, large file transfers, and high-definition movies. Households that already had relatively high speed broadband were generally willing to pay more than average for very fast service. ", "While consumer expectations have certainly evolved over the past decade, the 2010 study's findings are broadly consistent with those of subsequent studies: most consumers, regardless of where they reside, value basic internet access at speeds adequate for everyday use, but only a relative few are willing to pay substantially more for very high speeds. Members of the latter group generally have higher levels of broadband connectivity than others, and belong to relatively wealthier, better-educated demographic groups. ", "The FCC sponsored a series of field experiments, beginning in 2012, to gain better understanding of broadband demand among low-income households. The goal of these experiments was to inform administration of the federal Lifeline program, which subsidizes voice and broadband service charges for qualifying low-income consumers. ", "A 2015 report on a field experiment conducted in West Virginia and eastern Ohio found that Lifeline-eligible non-subscribers in that region were overwhelmingly willing to pay $3 more per month to move from bottom-tier speeds (1 megabits-per-second (Mbps), offered at $31.99 per month) to moderate broadband speeds (6 Mbps, offered at $34.99 per month). However, only one out of 118 participants was willing to pay $44.99 per month\u00e2\u0080\u0094an extra $10\u00e2\u0080\u0094to double their maximum download speed from 6 to 12 Mbps. ", "The Lifeline program itself has long been undersubscribed, despite the fact that it frequently reduces consumer out-of-pocket costs to zero (see text box above, \"Why Is the Lifeline Program Undersubscribed?\"). ", "A 2014 study, based on a survey funded by the Department of Commerce of 15,000 non-adopting households at all income levels, found that approximately two-thirds of respondents would not consider adopting broadband at any price, and that non-adopters were disproportionately rural (36% of non-adopters lived in rural areas, as compared to 19.3% of all Americans). The remaining one-third of respondents voiced interest in broadband adoption. Rural respondents were more likely to belong to this group than their urban counterparts, despite making up a disproportionately large share of non-adopters overall. These respondents most commonly identified price and availability as the main barriers to adoption. The study authors estimated that achieving a 10% increase in subscribership among members of the group who reported price as a factor in their decision would require an average price decrease of 15%. ", "A 2012 study of broadband usage among Kentucky farmers broadly tracks with other studies that show a higher propensity for broadband adoption among younger, better educated, higher earning, business-oriented households with experience using the internet, regardless of location. The study found that a representative 45-year-old producer earning more than $50,000 on a 750 acre farm, who had experience using the internet but did not have broadband access, was willing to pay $171.42 as a hypothetical one-time property tax payment to support buildout of the necessary local infrastructure to provide broadband access to area farms. On the other end of the spectrum, a representative 63-year-old producer with a 250 acre farm earning less than $50,000, who had not subscribed to broadband service even when it was available, was willing to pay a one-time payment of just 20 cents to support broadband infrastructure improvements. The average age of survey respondents was 59.2 years. ", "The Kentucky Department of Agriculture reported in 2019 that the demographic profile of Kentucky farmers is shifting, including a larger number of younger producers. This demographic shift may lead to increased demand for broadband service expansion and improvements in the rural areas of Kentucky where it is most pronounced. Given that demographic trends vary at the local level, though, they will likely not affect broadband market development equally in all parts of the state. "], "subsections": []}, {"section_title": "Valuation of Broadband Service by Rural Small Businesses", "paragraphs": ["Small businesses are generally more likely than residential households to regard broadband internet access as essential. However, within the small business sector there are significant differences in willingness to pay for any given level of service. Businesses with relatively modest data requirements may elect not to upgrade to a higher tier of service if the expected productivity benefits are less than the expected subscription and equipment upgrade costs. ", "A 2010 study sponsored by the Small Business Administration (SBA), in fulfilment of requirements of the Broadband Data Improvement Act ( P.L. 110-385 ), found that \"broadband is central to U.S. small businesses in ways that it is not to individuals. The small business broadband adoption rate has increased to 90% as of the date of this survey (April 2010), compared to 74% of adults with broadband access in their homes.... \" Surveys conducted for the SBA study showed that both rural and urban respondents viewed high-speed internet \"as an essential service\" that enabled them to \"achieve strategic goals, improve competitiveness and efficiency, reach customers, and interact with vendors.\" However, the study found that non-agricultural rural businesses were significantly less likely to have their own website than their urban counterparts were. Likewise, they were less likely to be willing to pay substantially more for improved service, even though the study found that they rated the quality of service in rural areas lower than respondents in urban areas did. Most rural businesses surveyed indicated that they were not willing to pay 10% more for significantly improved service.", "Studies that are more recent have made similar findings. Although basic access to the internet in rural areas is much more widespread than it was a decade ago, usage practices of many small businesses do not appear to have changed significantly. Most appear to value basic internet access to support a few essential low-bandwidth functions, such as making the name and location of the business available on internet searches, but proportionately fewer appear to demand high-bandwidth advanced business applications. ", "For example, a 2017 study comparing selected rural and urban areas of North Carolina found that many small rural businesses have no web presence beyond a listing in Google search results, and that more than half of those businesses that did have a web page used it solely to provide basic information about the business. \"Overall, small rural businesses are not using internet-based technology to support their businesses. While they may have broadband access, their use of websites, e-commerce and social media is limited, and it is significantly lower than small urban businesses,\" the study authors wrote. Apparently, small businesses find internet access useful, but many do not use applications requiring high bandwidth.", "It is not clear from these results what immediate benefits would be provided to non-intensive business users in remote rural areas by improvements in broadband service speed and quality. However, broadband advocacy groups have suggested that emerging new applications and encouraging small businesses to adopt more sophisticated web development strategies may increase demand for improved service over time.", "Other studies indicate that the type and location of business activity may have a significant influence on demand for higher-speed broadband. The businesses covered in the North Carolina study were, by and large, small retail establishments in isolated rural areas. Businesses in \"intermediate\" exurban locales that work in healthcare or knowledge-intensive sectors are more likely to use high-bandwidth applications, according to one study. For example, a survey of local businesses by the Central Coast Broadband Consortium, a nonprofit representing independent broadband providers serving the greater Monterey Bay area, found that business respondents had significant data and file transfer needs. The area surveyed includes many sparsely populated rural areas with difficult terrain, but it is also home to significant tourist destinations, large agriculture enterprises, and a University of California campus, and its northern boundary extends to the exurbs of San Jose, one of the most highly developed technology hubs in the nation. "], "subsections": []}, {"section_title": "Market Demand and Private-Sector Investment", "paragraphs": ["Observers often comment that rural broadband markets are hyper-local\u00e2\u0080\u0094that is, that conditions affecting broadband deployment and adoption vary widely from one area to the next. Historically, investments in broadband infrastructure have tended to cluster in areas with lower risk and potentially higher returns. Broadband providers may view investment in rural markets with little history of internet usage as a high-risk endeavor. Subsidies may lower financial risk to broadband providers, but do not change their basic preference for low-risk, high-return projects, which guides private sector investment in expansion of broadband service.", "In a 2019 report, Merit Network, Inc., a nonprofit corporation owned and governed by Michigan's public universities, highlighted the business challenges faced by broadband providers in nascent rural broadband markets. According to the report, \"Despite the significant qualitative benefits that a broadband project may bring, depending on the method of financing, it is critical to accurately estimate adoption rates and build a solid financial model to ensure that adequate revenue will be achieved to repay any loan obligations, maintain ongoing operations and fund depreciation of capital equipment.\"", "\"Even if rural areas are profitable for telecommunications companies, urban areas offer still higher returns on investment. This makes rural areas less attractive markets and perpetuates the urban focus of market decisions,\" according to the authors of one academic study. \"The market for telecommunications shows that a free-market rationale can ensure an efficient use of limited resources, i.e. using the resources for profitable markets in high-density areas, but it cannot ensure an equal delivery of services in all areas, leaving the rural underserved.\"", "A 2019 report from the Arkansas governor's office stated that low broadband adoption rates \"have consistently been a primary barrier to investment by the provider community.\" Noting that age affects adoption rates, the report concluded that \"increased adoption within [the older] demographic has the potential to strengthen the business case for broadband deployment.\" The Arkansas report also highlighted low statewide enrollment in the Lifeline program as a barrier to investment. The FCC estimates that the Lifeline enrollment rate was 18% for Arkansas in 2018. The Arkansas report found that \"raising adoption rates [of the Lifeline program] could also strengthen the business case for private companies to invest in broadband infrastructure, resulting in better internet access for both poor and non-poor Arkansans.... \"", "Studies elsewhere have found a similar relationship between demand and investment. For example, in a 2015 report on its broadband expansion projects, the Appalachian Regional Commission, which serves 13 Appalachian states, found that \"broadband internet service providers [are] less likely to provide services in sparsely populated areas because it initially has a lower return on investment and is less cost-effective.\" "], "subsections": []}]}, {"section_title": "Federal Programs and Policies", "paragraphs": ["Federal programs and policies play a significant role in the development of rural broadband markets, given their often-challenging economics. In 2018, USDA and the FCC spent a combined $9.1 billion on broadband programs, largely in rural areas (see Figure 1 ). The following four sections discuss the major USDA and FCC broadband programs, rural considerations for the FCC's broadband speed benchmarks, demand factors in awarding federal funds for broadband infrastructure buildout, and selected federal broadband adoption programs that may influence rural demand."], "subsections": [{"section_title": "Major USDA and FCC Broadband Programs", "paragraphs": ["There are two major sources of federal funding for broadband in rural areas: the broadband and telecommunications programs of the USDA's Rural Utilities Service (RUS) and the Universal Service Fund (USF) programs of the FCC. Most of these programs focus on the supply side, targeting infrastructure deployment, but they also include some affordability initiatives that offer limited discounts on broadband subscription costs to low-income households, certain rural healthcare providers, and schools."], "subsections": [{"section_title": "Rural Utilities Service Programs34", "paragraphs": ["The RUS houses three ongoing assistance programs exclusively dedicated to financing broadband deployment: the Rural Broadband Access Loan and Loan Guarantee Program, the Community Connect Grant Program, and the ReConnect Program. The primary legislative authority for the Rural Broadband Access Loan and Loan Guarantee Program, and the Community Connect Grant Program, derives from the Rural Electrification Act of 1936, which Congress subsequently amended in various farm bills to support broadband buildout in rural areas. ", "Section 6103 of the Farm Security and Rural Investment Act of 2002 ( P.L. 107-171 ) amended the Rural Electrification Act of 1936 to authorize the Rural Broadband Access Loan and Loan Guarantee Program to provide funds for the costs of the construction, improvement, and acquisition of facilities and equipment for broadband service in eligible rural communities. The 2018 farm bill ( P.L. 115-334 , Agriculture Improvement Act of 2018) authorized a grant component\u00e2\u0080\u0094the Community Connect program\u00e2\u0080\u0094in combination with the broadband loan program. This provision increased the annual authorization level from $25 million to $350 million, raising the proposed service area eligibility threshold of unserved households from 15% to 50% for broadband loans; authorizing grants, loans, and loan guarantees for middle mile infrastructure; directing improved federal agency broadband program coordination; and providing eligible applicants with technical assistance and training to prepare applications. ", "Congress authorized the ReConnect Program separately through the annual appropriations process, funding it at $600 million through the Consolidated Appropriations Act of 2018 ( P.L. 115-141 ). The ReConnect Program includes both loans and grants to promote broadband deployment in rural areas where 90% of households do not have sufficient access to broadband at 10 Mbps/1 Mbps. ", "Two additional programs also support broadband deployment in rural areas. The Telecommunications Infrastructure Loan and Loan Guarantee Program (previously the Telephone Loan Program) is similar in purpose to the Rural Broadband Access Loan and Loan Guarantee Program, but eligibility requirements are tailored to support deployment in areas with extremely low population densities. Distance Learning and Telemedicine (DLT) grants\u00e2\u0080\u0094while not principally supporting connectivity\u00e2\u0080\u0094fund equipment and software that operate via telecommunications to rural end-users of telemedicine and distance learning applications.", "Congress funds RUS programs through annual appropriations. For FY2019, the Consolidated Appropriations Act, 2019 ( P.L. 116-6 ) provided $5.83 million to subsidize a Rural Broadband Access loan level of $29.851 million; $30 million for Community Connect broadband grants; $550 million for the ReConnect Program (in addition to $600 million provided for that program in FY2018); $1.725 million to subsidize a total loan level of $690 million for the Telecommunications Infrastructure Loan and Loan Guarantee Program; and $47 million for DLT grants."], "subsections": []}, {"section_title": "Universal Service Fund Programs37", "paragraphs": ["The FCC established the USF in 1997 to meet objectives and principles established by the Telecommunications Act of 1996 ( P.L. 104-104 ). The Universal Service Administrative Company (USAC), an independent not-for-profit organization, administers the USF under FCC direction. USF programs are not funded via annual appropriations, but rather from fees the FCC receives from telecommunications carriers that provide interstate service. The FCC has discretion to spend these fees without congressional appropriations. ", "FCC supply-side support for broadband infrastructure, primarily through the USF High Cost program, totaled nearly $14 billion from FY2016 through FY2018. The High Cost program includes several funds that support broadband infrastructure deployment and provide ongoing subsidies to keep the operation of telecommunications and broadband networks in high cost areas economically viable for broadband providers. These providers must meet deployment benchmarks and offer service at rates reasonably comparable with those offered in urban areas. The subsidy indirectly benefits households and businesses in cases where there is a significant urban-rural price differential by making below-market subscription rates available. The other USF programs are the Lifeline program, which directly supports low-income households by subsidizing affordable or no-cost monthly broadband plans, and the Schools and Libraries program and Rural Health Care program, which pay for local network equipment purchases and some broadband subscription costs for eligible schools, libraries, and health care facilities."], "subsections": []}, {"section_title": "Broadband Provider Discretion", "paragraphs": ["Broadband providers have wide discretion in how\u00e2\u0080\u0094and whether\u00e2\u0080\u0094they choose to participate in these programs. Although the federal government imposes certain conditions on its subsidies, grants, and loans to broadband providers, it does not make participation compulsory. Even in subsidized markets, broadband provider investment behavior is conditioned to a greater or lesser degree by demand, predicted adoption rates, and anticipated return on investment. The federal government may\u00e2\u0080\u0094within the existing legislative framework\u00e2\u0080\u0094adjust the structure and funding levels of its major funding programs to encourage private-sector investment in rural areas that supports its policy goals. "], "subsections": []}]}, {"section_title": "FCC Service Benchmarks and Market Demand for Higher Speeds", "paragraphs": ["The FCC changes its definition of broadband service as technologies, user expectations, and markets evolve. It reviews its data speed benchmarks on an annual basis, and its decisions have regulatory implications that may affect private-sector investment decisions in rural areas. The degree to which these benchmarks should be aspirational or reflect current market demand is a topic of frequent debate in policy circles. Assessment of demand and its likely development over time informs many of these debates.", "Section 706 of the Telecommunications Act of 1996 ( P.L. 104-104 ; the Telecommunications Act) requires the FCC to report yearly on whether \"advanced telecommunications capability is being deployed to all Americans in a reasonable and timely fashion.\" The act does not specifically define advanced telecommunications capability, delegating this determination to the FCC. It directs the FCC to \"take immediate action to accelerate deployment of such capability by removing barriers to infrastructure investment and by promoting competition in the telecommunications market\" if its determination is negative. ", "Since 1999, there have been 11 Section 706 reports, each providing a snapshot and assessment of broadband deployment. As part of this assessment, and to help determine whether broadband is being deployed in \"a reasonable and timely fashion,\" the FCC has established minimum data speeds that qualify as broadband service for the purposes of the Section 706 determination. In 2015, citing changing broadband usage patterns and multiple devices using broadband within single households, the FCC raised its minimum fixed broadband benchmark speed from 4 megabits-per-second (Mbps) (download)/1 Mbps (upload) to 25 Mbps/3 Mbps.", "The 25/3 Mbps threshold is meaningful in both technical and policy terms, because the legacy copper-based connections utilized by some broadband providers would likely require significant upgrades in order to meet higher thresholds. While fiber-based \"middle-mile\" cable has been broadly deployed over the last two decades, \"fiber-to-the-home\" installations that enable faster speeds are much less widespread, especially in remote rural areas.", "Increases in minimum speed thresholds have frequently engendered policy debates about the regulatory role of the FCC and how best to allocate limited resources for broadband expansion. Stakeholders in both the public and private sectors have frequently raised the issue of market demand for improved service when justifying their positions on the FCC's annual Section 706 determinations. ", "During the Obama Administration, FCC leadership justified increases in service speed thresholds as necessary to ensure that broadband infrastructure kept pace with changes in consumer behavior and the increasing number of bandwidth-hungry electronic devices and applications. \"Application and service providers, consumers, and the broadband providers are all pointing to 25/3 as the new standard,\" wrote then-Chairman Tom Wheeler when commenting on the agency's 2015 progress report. \"Content providers are increasingly offering high-quality video online, which uses a lot of bandwidth and could use a lot more as 4K video emerges.\"", "Opponents argued that demand does not justify investments in faster service that requires costly fiber-optic installations. Two FCC commissioners then serving released dissenting statements, citing tepid demand for faster broadband service as a reason to refrain from mandating higher speeds. Some criticized the FCC for subsidizing infrastructure buildout under one standard, which was then superseded by a new higher standard\u00e2\u0080\u0094in effect designating newly built-out areas as unserved. Commissioner Ajit Pai wrote, \"The driving factor in defining broadband should be consumer preference.... 71% of consumers who can purchase fixed 25 Mbps service\u00e2\u0080\u0094over 70 million households\u00e2\u0080\u0094choose not to.\"", "As FCC Chairman since 2017, Pai has retained the 25/3 Mbps standard as sufficient to meet the Telecommunications Act requirement for the FCC to ensure availability of advanced telecommunications capabilities. In public comments submitted for the 2019 FCC progress report, some large broadband providers and associated trade and public policy groups expressed concerns that any increase of speed requirements beyond the existing 25/3 Mbps standard would impose unnecessary burdens on providers based on predicted cost and market demand. \"The Commission should not change benchmarks based on aspirations that do not reflect widespread consumer demand and that are not grounded in the text of Section 706,\" wrote the Free State Foundation. \"Instead, Section 706 implies a realistic analysis that takes stock of actual market data regarding deployment of infrastructure and the availability of advanced capabilities that a substantial majority or at least an early majority of consumers subscribe to.\"", "By contrast, rural co-ops and other independent broadband providers have tended to argue (directly or through trade associations) for a higher speed benchmark, which would lead to federal subsidization of higher-speed service. In a 2018 letter to a Member of Congress, the manager of an Iowa electric co-op wrote, \"Broadband systems funded with limited federal funds should meet the growing speed and data consumption needs of today and into the future.... [Congress] should recognize that in today's 21 st century economy, broadband systems built to 10/1 or slower speeds cannot support a modern household much less attract and retain new businesses.\" ", "Trade organizations with memberships that include a cross-section of companies by size, corporate structure, and technology type have generally avoided discussing speed benchmarks in their submitted comments, focusing instead on other issues, such as substitutability of mobile broadband for fixed broadband. ", "FCC data released as part of the 2019 progress report indicated that 25.3% of households in the nation's least rural counties where service was available had adopted 100/10 Mbps broadband\u00e2\u0080\u0094more than double the 9.9% adoption rate in the nation's most rural counties (see Figure 2 ). The same data indicated higher overall adoption of the current standard of 25/3 Mbps, with a 57.7% adoption in the least rural counties and 23.1% in the most rural.", "Some recent state and regional reports have questioned whether market demand justifies government-subsidized investment in higher speed broadband in all cases. \"There is an ongoing, multifaceted debate about whether, where, and when the performance advantages of fiber justify the investment in upgrading communications networks,\" according to the Arkansas Development Finance Authority. \"Most uses of the internet today do not require the capacity and speed that fiber internet offers, and internet service providers who deploy fiber don't necessarily experience strong demand for the upgraded service.\" According to an April 2019 report from the Southeastern Indiana Regional Planning Commission, \"Some providers argue that even when broadband is available, customers do not subscribe as expected.\" The authors argued for energetic measures to promote broadband affordability and adoption as a remedy."], "subsections": []}, {"section_title": "Federal Programs' Consideration of Market Demand When Awarding Funds for Broadband Infrastructure Buildout", "paragraphs": ["The primary purpose of the RUS and USF High Cost programs is to support expansion of broadband availability in unserved or underserved areas, rather than to promote broadband adoption. Funding under these programs has typically been awarded based on ISP commitments to making a certain level of service available to a certain number of eligible households and businesses within a certain period of time. However, there are some important differences. ", "The RUS programs include loans, which recipients must repay. Applicants for funding under the Rural Broadband Access Loan program are required to complete and submit a financial forecast to demonstrate that they can repay the loan, and that the proposed project \"is financially feasible and sustainable.\" The forecast must include\u00e2\u0080\u0094with few exceptions\u00e2\u0080\u0094a market survey that describes service packages and rates, and provides the number of existing and proposed subscribers. This requirement may incentivize recipients to encourage adoption in their service areas in order to increase revenues that they can then use for loan repayment. At the same time, it may also deter providers from accepting loans to serve areas where the business case for deployment is particularly difficult. ", "Perhaps because of disincentives for investment in unattractive markets, RUS selection criteria and loan terms prioritize buildout to unserved or underserved areas over subscription rates or other business performance metrics. According to the application guide, \"Priority must be given to applicants that propose to offer broadband service to the greatest proportion of households that, prior to the provision of the broadband service, had no incumbent service provider.\" Program administrators prioritize projects according to four tiers, which range from 25% to 100% of households unserved. The standard loan term is 3 years, but applicants can request up to a 35-year repayment term and a principal deferral period of up to 4 years if at least 50% of the households in the proposed service area are unserved.", "The RUS ReConnect program has similar goals, but also includes grants and loan-grant combinations. Applicants can likewise request more generous loan terms if they plan to serve a Substantially Underserved Trust Area (typically tribal lands), and their application may be granted priority status. Reviewers score applications against evaluation criteria using a points-based system. They award points for population density (less dense areas receiving preference), number of farms served, number of businesses served, number of educational facilities served, performance of the offered services, and other criteria. Neither projected business performance metrics nor adoption rates are included in the evaluation criteria. ", "Under the High Cost program, federal subsidies are premised on the absence of a business case for broadband expansion. In announcing the latest proposed round of support, known as the Rural Digital Opportunity Fund (RDOF), the FCC stated that it would prioritize buildout in areas where \"there is currently no private sector business case to deploy broadband without assistance.\" USF programs only require that participating broadband providers advertise the availability of broadband service within their service areas, and that the broadband provider be able to provide service at rates \"reasonably comparable to rates offered in urban areas\" to any area household within 10 business days if requested to do so. Census blocks\u00e2\u0080\u0094the administrative-territorial unit used by the FCC to measure broadband coverage\u00e2\u0080\u0094are considered served if a local broadband provider meets these conditions. As with the RUS programs, the High Cost program has prioritized buildout and higher broadband performance over adoption. Phase I of the proposed RDOF program would prioritize support to broadband providers that serve \"completely unserved areas\" at higher data speeds, higher usage allowances, and lower latency, but sets no specific adoption benchmarks.", "The FCC expressed concerns in its RDOF proposal that recipients of support might lack any incentive to aggressively market their services or otherwise stimulate demand beyond relatively low-cost high-return areas, and might even take measures to limit subscription in order to protect profits. ", "Since [RDOF] support may require certain providers to offer much higher data caps than they do to [non-RDOF] subscribers and price the services similarly, such providers may have an incentive to limit [RDOF] subscribers to sell their capacity to more profitable [non-RDOF] subscribers. Spectrum-based providers that do not have a network sufficient to serve most locations in a geographic area would also have an incentive to limit subscription if expanding capacity would be less profitable than limiting subscription and collecting [RDOF] subsidies based purely on deployment. Even wireline bidders may lack the proper incentives to serve additional customers in some areas, given that it may not be profitable without a per-subscriber payment to run wires from the street to the customer location and install customer premises equipment. ", "Having expressed these concerns, the FCC put forward a proposal to introduce subscribership milestones for RDOF recipients. It requested comment on several different implementation options. One proposal would offer a baseline level of support to broadband providers and then add per-subscriber payments. Another would withhold a certain percentage of support if broadband providers failed to meet subscription milestones, although it raised the question of what milestones were appropriate given \"the unique challenges of serving rural areas.\" Eliciting private sector participation in rural broadband programs appears to be a concern for the FCC, just as it is for USDA. In its last round of USF funding support, FCC increased the term of support to broadband providers from 5 years to 10 years in order to gain \"robust participation\" in the program. "], "subsections": []}, {"section_title": "Federal Programs That May Stimulate Broadband Demand", "paragraphs": ["A number of federal programs may stimulate demand for broadband in underserved areas, though this is not always their primary purpose. Such programs include end-user subsidies to reduce out-of-pocket costs for subscribers; education and outreach activities to promote digital awareness and skills; infrastructure-oriented programs that support community anchor institutions such as schools and libraries; and infrastructure-oriented programs supporting specific applications, such as telemedicine and precision agriculture. This section presents a non-exhaustive summary of these programs."], "subsections": [{"section_title": "End-User Subsidies", "paragraphs": ["The FCC's Lifeline program is the only major federal broadband program that directly targets broadband adoption by residential subscribers. It targets households earning less than 135% of the federal poverty level. Program enrollment rates vary widely by state, with a nationwide average of 28% of eligible beneficiaries. The program subsidizes enrollees to cover the recurring monthly service charges associated with broadband subscribership. Support is not given directly to the subscriber but to the subscriber-selected service provider. Although stimulating broadband demand is not an explicit purpose of the Lifeline program, expansion of Lifeline enrollment may improve the business case for broadband deployment in rural areas, which on average have a disproportionately high number of low-income residents. ", "In many cases, facilities-based telecommunications providers sell excess capacity in areas they already serve to resellers, who then rebrand the service and market low-cost plans to eligible Lifeline beneficiaries. In 2017, the FCC proposed changes to the Lifeline program that would bar resellers from participation. Some in Congress claimed that these changes would reduce enrollment by 70% from current levels. ", "In a further action, the proposed FCC update to Lifeline minimum service standards for 2019 raised concerns in some quarters that low-income subscribers would be priced out of the market by required upgrades. In a letter to the FCC, NTCA\u00e2\u0080\u0094The Rural Broadband Association wrote that unless the FCC requirement is waived, \"current Lifeline subscribers to fixed broadband service will be forced to upgrade to a higher speed tier than they may need, want, or have the ability to afford\u00e2\u0080\u0094resulting in either stretched consumer budgets or the potential for price-sensitive customers to cease buying broadband altogether.\" The FCC stated that the increase was required under provisions of the 2016 Lifeline Order. In its November 2019 decision, the FCC retained the existing subsidy level for broadband service and increased the monthly data minimums from 2 gigabytes to 3 gigabytes\u00e2\u0080\u0094a reduction from the 8.75 gigabyte minimum originally proposed. "], "subsections": []}, {"section_title": "Outreach and Education Programs", "paragraphs": ["The federal government has supported numerous broadband-related outreach and education activities over the years, typically as part of broad-ranging development grant programs focused primarily on housing and education. Agencies providing grant support of this type include the Departments of Education, Housing and Urban Development, and Commerce, as well as the National Science Foundation and several regional development commissions. ", "The Broadband Technology Opportunities Program (BTOP) is an exception to this pattern, as it includes dedicated funding for broadband adoption programs. The American Recovery and Reinvestment Act of 2009 ( P.L. 111-5 ) provided approximately $4 billion for BTOP, to be administered by the National Telecommunications and Information Agency (NTIA, an agency of the Department of Commerce) as a program including broadband infrastructure grants, grants for expanding public computer capacity, and grants to encourage sustainable adoption of broadband service. As of August 2015, BTOP had awarded $3.48 billion for infrastructure buildout, $201 million for public computer centers, and $250.7 million for sustainable broadband adoption. Most BTOP funds have been expended, but NTIA continues to monitor existing grants.", "A 2015 Government Accountability Office (GAO) report found that affordability, lack of perceived relevance, and lack of computer skills are the \"principal barriers\" to broadband adoption. It identified outreach and training, along with discounts, as \"key approaches\" to addressing those barriers. Regarding BTOP, it noted, \"NTIA compiled and published self-reported information from its BTOP grantees about best practices, but has not assessed the effectiveness of these approaches in addressing adoption barriers.\" In a response to the GAO, the Deputy Secretary of Commerce wrote that grant recipients were individually responsible for program design and assessments of program effectiveness."], "subsections": []}, {"section_title": "Support to Community Anchor Institutions", "paragraphs": ["The FCC's E-Rate (Schools and Libraries) Program under the USF provides discounts of up to 90% for broadband to and within public and private elementary and secondary schools and public libraries in both rural and nonrural areas. Some have suggested that broadband non-adopters may be more likely to subscribe to at-home service if they gain experience using the internet and become more aware of the benefits it can provide in finding employment, accessing educational resources, and interacting with government agencies, among other uses. However, a 2015 study found that \"counties with libraries that aggressively increased their number of Internet-accessible computers between 2008 and 2012 did not see measurably higher increases in their rates of residential broadband adoption.\" "], "subsections": []}, {"section_title": "Telemedicine and Telehealth", "paragraphs": ["The USDA's Distance Learning and Telemedicine (DLT) grants fund end-user equipment and broadband facilities to help rural communities use telecommunications to \"link teachers and medical service providers in one area to students and patients in another.\" DLT grants serve as initial capital for purchasing equipment and software that operate via telecommunications to rural end-users of telemedicine and distance learning. Eligible applicants include most entities in rural areas that provide education or health care through telecommunications, including most state and local governmental entities, federally recognized tribes, nonprofits, for-profit businesses, and consortia of eligible entities.", "The FCC Rural Health Care Program provides similar benefits to eligible public and nonprofit health care providers in rural areas. Additionally, providers may receive a 65% discount on the costs of broadband service (if available) or a discount equal to the urban-rural broadband service price differential. This program does not address the issue of household connectivity with providers. ", "The effect that support for the emerging telehealth sector has on rural demand for broadband service is unclear. Rural counties with the least access to medical care typically also have the least access to broadband internet. The demographic profiles typical of these locations are associated with both lower broadband adoption and lower rates of health insurance coverage, so broadband buildout there might or might not lead to substantially greater telehealth use.", "A 2018 USDA study on rural telehealth, conducted by the agency's Economic Research Service, found that rural residents were significantly less likely to use telehealth services than urban residents were, even when broadband availability was not a factor. The study measured usage across three categories: online health research; online health maintenance; and online health monitoring. According to the study, a usage gap between rural and urban patients existed across all three categories.", "Usage rates appeared to track closely with cost. The highest usage rates were for online health research that costs little and can be conducted anywhere that has basic internet access. According to the study, \"Lack of Internet service in the home, whether by choice or due to lack of availability, did not deter everyone from conducting online health research.\" The study also found that existing rural connectivity was sufficient for most health maintenance activities, but \"the issue of acceptance and/or remuneration levels by the health insurance industry and government health support programs\u00e2\u0080\u0094and not technology\u00e2\u0080\u0094[was] cited as an impediment to implementation.\" Online health monitoring\u00e2\u0080\u0094the most expensive telehealth service category\u00e2\u0080\u0094was also the least used. \"As online monitoring was costly, the results largely reflect who had or did not have health insurance.\" ", "Some industry groups have argued that subsidized buildout of higher speed broadband will enable the use of new applications, which may promote telehealth use. NTCA, which represents rural broadband providers, commented in 2019, \"The capabilities and promise of telemedicine are as unlimited as other applications and technology that are evolving to take full advantage of broadband capabilities.\" These may include use of virtual and augmented reality applications, embedded devices, and wearables, technologies that depend on high-speed fiber-based broadband networks, according to NTCA. ", "Likewise, some advocacy groups and researchers highlight regulatory issues, such as varying state regulations for Medicaid reimbursement, which they claim may hinder development of the market for telehealth services. "], "subsections": []}, {"section_title": "Precision Agriculture", "paragraphs": ["Section 12511 of the Agriculture Improvement Act of 2018, commonly known as the 2018 farm bill ( P.L. 115-334 ), established the Task Force for Reviewing the Connectivity and Technology Needs of Precision Agriculture in the United States. The FCC announced the creation of this congressionally mandated task force on June 17, 2019. The task force plans to \"develop policy recommendations to promote the rapid, expanded deployment of broadband Internet access service on unserved agricultural land,\" in consultation with the Secretary of Agriculture. However, the USDA has noted that adoption of precision agriculture methods by the farm community \"has been hesitant and weak,\" especially among smaller producers, because of concerns over upfront costs, uncertain economic returns, and technological complexity. In addition to the interagency task force, the 2018 farm bill authorizes several initiatives to fund research and development on precision agriculture. It also modifies prioritization criteria for USDA broadband loans and grants to include precision agriculture activities. However, these provisions do not directly address end-user affordability issues. "], "subsections": []}]}]}, {"section_title": "Options for Congress", "paragraphs": ["Promoting universal access to broadband has generally enjoyed wide bipartisan support in Congress. Despite federal support for broadband infrastructure buildout, however, adoption continues to lag in rural areas, even where the infrastructure exists and service is available. In turn, low adoption rates may lower the private sector's incentive to invest in nascent rural broadband markets, despite federal subsidies for high-cost service. This section highlights selected options Congress could consider as it addresses rural broadband demand issues."], "subsections": [{"section_title": "Oversight or Legislation Addressing the Lifeline Program", "paragraphs": ["In the Lifeline program, intended to address broadband affordability for low-income households, FCC changes to provider eligibility rules and minimum service requirements have prompted considerable debate (see \" End-User Subsidies \"). The FCC has wide latitude to set program rules, subject to the established rulemaking process. Congress might continue its oversight of that rulemaking process or might choose in some cases to direct FCC actions through legislation. Issues of potential interest include", "beneficiary eligibility requirements, beneficiary eligibility verification procedures, the level of the benefit (currently $9.25 per household, with additional benefits for beneficiaries who reside on tribal lands), ISP eligibility requirements, ISP minimum service requirements, and how oversight authorities are shared between the federal government and the states. "], "subsections": []}, {"section_title": "Research on How the Costs of Broadband-Enabled Services Affect Rural Broadband Demand", "paragraphs": ["In addition to the direct cost of broadband connectivity, cost barriers may reduce the attractiveness of broadband-related services that might otherwise stimulate rural broadband demand. For example, access to affordable health insurance may be one factor affecting the affordability, and hence adoption, of telehealth services (see \" Telemedicine and Telehealth \"). Similarly, the upfront costs of sensors and other technology may be slowing the adoption of precision agriculture practices (see \" Precision Agriculture \"). Congress might consider mandating further research on the extent to which these factors influence broadband demand, and how such barriers could be overcome."], "subsections": []}, {"section_title": "Broadband-Focused Education and Outreach Grants", "paragraphs": ["With the exception of BTOP, most federal support for broadband-related education and outreach activities has been through housing and education grant programs that include internet and computer skills among numerous other eligible funding categories (see \" Outreach and Education Programs \"). Grant recipients typically expend the majority of funds on the non-broadband-related categories, which may be considered more central to housing development and education goals. Congress might consider whether a focused grant program or programs specifically designated for support of broadband-enabled applications would be more effective, and if so, how lessons from BTOP might be applied to program design and implementation.", "In addition to general internet and computer skills, Congress might consider including broadband-enabled applications in such an education and outreach program. Rural adoption of precision agriculture practices may be stymied if the benefits are not fully understood or if familiarity with the technology is lacking. Rural small businesses often do not make full use of broadband technology, even when adequate connectivity is available (see \" Valuation of Broadband Service \"). Even farmers and small rural business owners who can afford broadband service might benefit from education on the use of web-based applications to improve their operations or on how to calculate long-term benefits more accurately. Rural use of telehealth services might increase if potential users were more aware of the health and convenience benefits offered by emerging applications."], "subsections": []}, {"section_title": "Incentivizing Adoption via the Terms of Federal Infrastructure Buildout Programs", "paragraphs": ["The RUS and USF programs that support broadband infrastructure buildout (see \" Major USDA and FCC Broadband Programs \") rely on private-sector broadband providers for on-the-ground deployment. Therefore, the conditions of federal support need to be sufficiently attractive in business terms to elicit participation from the private sector. At the same time, taxpayer or ratepayer value-for-money is also a policy concern that becomes especially salient if wide scale broadband adoption does not follow subsidized buildout. ", "Under current RUS program rules, award recipients must demonstrate the economic viability of proposed projects. However, scoring criteria heavily favor applicants proposing to build out infrastructure in the most remote, underserved areas, which are least likely to present a strong business case. Some in Congress have expressed concern about RUS loan subscription rates (see \" Federal Programs' Consideration of Market Demand When Awarding Funds for Broadband Infrastructure Buildout \"). Through legislation or enhanced oversight of RUS program rules, Congress might seek to change end-user subsidy programs to improve the business case for buildout projects, or to adjust program rules in other ways to mitigate disincentives for investment. ", "Under current USF program rules, participating broadband providers have limited responsibility to develop the demand side of local broadband markets. They are only responsible for ensuring availability of service at a given speed and latency benchmark, and advertising it within a designated service area. There is no other requirement for broadband providers to develop their subscriber base or otherwise promote adoption. The FCC included requests for comments on this issue in its 2019 proposal for the RDOF program. Congress might consider legislation or oversight to effect changes in program rules that would incentivize ISP investments in broadband adoption. For example, under current FCC rules, the term of support for High Cost program subsidies is 10 years; Congress might consider directing the FCC to lengthen or shorten this term to adjust ISP business incentives."], "subsections": []}, {"section_title": "Oversight of FCC Section 706 Process", "paragraphs": ["Finally, broadband speed benchmarks and other service quality metrics are frequently debated as part of the congressionally mandated requirement for the FCC to assess deployment of communications technology under Section 706 of the Telecommunications Act (see \" FCC Service Benchmarks and Market Demand for Higher Speeds \"). Higher service quality requirements may boost American technological leadership and ensure that citizens can use high-bandwidth internet applications, but they may also impose costs on broadband providers and lead to higher costs for customers\u00e2\u0080\u0094pricing some of them out of the market. Congress may consider the costs and benefits of proposed service requirements, and how such requirements might affect rural broadband adoption, when exercising oversight of the FCC's Section 706 responsibilities. "], "subsections": []}]}]}}
{"id": "R46306", "title": "Direct Federal Support of Individuals Pursuing Training and Education in Non-degree Programs", "released_date": "2020-04-03T00:00:00", "summary": ["Recent Administrations and Congress have demonstrated bipartisan support for increasing federal assistance to individuals pursuing training and education in postsecondary non-degree programs, sometimes referred to as short -term programs . Non-degree programs are postsecondary training and education programs that are most often shorter in duration than a bachelor's or associate's degree program. They generally provide work-based learning or educational instruction to individuals who are beyond the typical age for secondary education to prepare them for a particular occupation. Examples of support have included proposals to expand existing federal programs, create new programs, and improve coordination between existing programs. This report provides an overview of existing federal programs and benefits that support individuals pursuing training and education in non-degree programs.", "A prominent argument for supporting individuals pursuing training and education in non-degree programs is that there is a substantial employer need for individuals with some postsecondary credentials but no degree. In 2018, approximately 72% of jobs in the national economy were in occupations for which the typical entry-level education is less than an associate's degree. Just over 6% explicitly required a non-degree credential, but these credentials could prepare individuals for many jobs that do not require a bachelor's or higher level degree. Mean annual wages for individuals whose highest educational attainment is high school completion are similar to those for individuals with a non-degree credential. Earnings for individuals with only non-degree credentials vary based on differences in occupational field, program duration, and type of educational institution attended.", "Several federal programs provide direct financial support to or on behalf of students to enable them to pursue training and postsecondary education in non-degree instructional and work-based learning programs. None of these federal programs or benefits that provide such support focus exclusively on promoting non-degree program pursuits. The federal programs include the following:", "Title I of the Workforce Innovation and Opportunity Act (WIOA; P.L. 113-128 ) is the primary federal workforce development statute. The program relies on state and local workforce development boards to enter into contracts with training and education program providers and oversee the quality of the providers. Title IV of the Higher Education Act of 1965 (HEA; P.L. 89-329), as amended, authorizes grant and loan programs that provide financial assistance to higher education students. Non-degree program quality assessment is handled by state authorizers, accrediting agencies, and in some instances through Department of Education certification. Education tax benefits, administered by the Internal Revenue Service (IRS), partially offset some of the costs of higher education for eligible taxpayers. Many education tax benefits are only available to individuals enrolled in a degree program, but three education tax benefits can also be claimed for postsecondary non-degree programs: the Lifetime Learning Credit, the Exclusion for Employer Provided Educational Assistance, and tax-advantaged 529 plan education savings accounts. The Post-9/11 GI Bill and Veteran Employment Through Technology Education Courses (VET TEC) were originally intended to help veterans enter the civilian workforce. Post-9/11 GI Bill program quality is primarily overseen by state agencies under contract with the Department of Veterans Affairs. VET TEC program quality is assured by withholding 50% of tuition and fees from providers until participants are employed. Supplemental Nutrition Assistance Program (SNAP) Employment & Training (E&T) provides eligible low-income households with employment and education services. E&T funding is administered by state agencies through contracted providers, which receive funds to cover education and other program costs. The Temporary Assistance for Needy Families (TANF) block grant is best known for providing monthly cash assistance to needy families with children but may be used to support subsidized employment, on-the-job training, and training and education programs."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["In recent years, policymakers, industry stakeholders, and educational institutions have shown an interest in the federal government increasing financial support to individuals who pursue training and postsecondary education in non-degree instructional and work-based learning programs. These are instructional or work-based programs designed primarily for individuals beyond high school age and for which a degree is not conferred upon completion. Such programs include, but are not limited to, apprenticeships (e.g., masonry), college certificate programs (e.g., medical billing), and courses that lead to professional certificates or licensure (e.g., Microsoft certifications). By some accounts, there already is, and will continue to be, demand for workers to fill jobs that do not require a college degree but do require training or postsecondary education (e.g., skilled electrical work, health care support services). In addition, there is some evidence that the percentage of jobs requiring more than a high school diploma but not a degree is increasing. Although the federal government annually makes available over $100 billion in direct financial aid to individuals pursuing postsecondary education, the overwhelming majority of those funds are not available to a significant proportion of the individuals pursuing training and education through postsecondary non-degree programs. As some traditional colleges experience declining enrollment, some schools have shown an interest in creative approaches to increasing enrollment and maintaining revenues, including reaching out to adults who want to pursue completion of short programs that allow quick reentry into the workforce and/or increase earnings. Given the purported demand for workers with certain postsecondary non-degree credentials, Congress may consider viable options for providing direct federal support to students pursuing the completion of non-degree programs.", "Several proposals have surfaced recently that would increase direct federal support to students pursuing training and education in non-degree (short-term) programs. From 2011 to 2017, the Department of Education (ED) experimented with allowing Pell Grants to be received for short-term non-degree postsecondary education programs. In October 2019, the House Committee on Education and Labor ordered reported the College Affordability Act ( H.R. 4674 ), which would comprehensively reauthorize the Higher Education Act (HEA) and would expand the types of non-degree programs eligible for Pell Grants. In 2018, the President's Council of Economic Advisers presented options for bringing 25- to 64-year-olds back into the workforce with the skills required in the changing economy in an effort to increase the rate of economic growth. These included providing unemployment insurance benefits for individuals while training, providing Pell Grants for some short-term training programs, and developing a new comprehensive program for retraining displaced workers. The President's FY2021 budget request for ED proposed expanding Pell Grants to short-term programs that are not currently Pell-eligible. Several education and business organizations have supported extending Pell Grants, and occasionally Direct Loans, to programs that are shorter in duration than those that are currently eligible. ", "Some stakeholders, however, express concerns about promoting non-degree programs and increasing financial support for students pursuing them. There is concern that some non-degree programs do not increase the employment or earnings of completers compared to individuals whose highest level of education is high school completion. Some concerns focus on how the federal government would ensure the quality of the programs. Other concerns focus on potentially high federal costs associated with supporting the programs, the potential need for student supports and business coordination, and the possibility of perpetuating income inequalities by fostering lower income students to pursue non-degree programs that lead to lower income professions. Some have raised questions about the demonstrated diminishing labor market returns over time for some technical non-degree programs, including apprenticeships. Additionally, some non-degree educational programs intended to prepare individuals for a specific occupation are neither required by nor necessarily preferred by employers, although the programs may be of a high quality. ", "In light of evidence of employers increasingly relying on degrees when establishing hiring requirements, non-degree credential holders may have more difficulties in securing employment over the long term. In addition, adults with degrees currently employed in positions that do not require a degree may be crowding non-degree holders out of some occupations. In 2018, for instance, 28% of employment was in occupations that typically require a degree for entry-level positions, while 42% of the population aged 18 and over had a degree. ", "This report provides an overview of existing federal programs and benefits that support individuals engaged in the pursuit of training and education in non-degree instructional and work-based learning programs. It informs consideration of additional or revised policy approaches aiming to support pursuit of training and education through non-degree programs. The report begins with a brief description of employer demand for individuals who have completed non-degree programs. This is followed by a discussion of the landscape and key characteristics of non-degree programs, from those offered through work-based learning to those offered through more formal instructional means. The report concludes with a detailed description of six federal programs and three tax benefits that currently provide direct financial support to students pursuing training and postsecondary education in non-degree instructional and work-based learning programs. Each program and benefit description highlights potential gaps and limitations in the scope and extent to which the program or benefit supports individuals pursuing non-degree programs, as well as student eligibility requirements and federal administration and oversight. "], "subsections": []}, {"section_title": "Labor Market for Non-degree Programs", "paragraphs": ["Key stimuli for promoting financial support for individuals pursuing training and postsecondary education in non-degree programs include that the unfulfilled employer/business need for individuals with non-degree credentials is impeding, and/or will impede, economic growth; and that an individual's attainment of a non-degree postsecondary credential provides a worthwhile payoff. This section of the report provides data on the proportion of total employment and mean wages earned in occupations by typical entry-level education requirements. This discussion provides a sense of the market for non-degree credentials. It does not offer a comprehensive exposition of labor market returns and social impacts of increased non-degree program completion.", "In May 2018, approximately 6.2% of jobs in the national economy were in occupations for which the typical entry-level education requirement was a non-degree postsecondary credential ( Table 1 ). The Department of Labor's (DOL's) Bureau of Labor Statistics (BLS) assigns a typical entry-level education requirement\u00e2\u0080\u0094the typical education level most workers need to enter an occupation\u00e2\u0080\u0094for occupations that it tracks. ", " Table 1 also presents the mean annual wages for occupations by typical entry-level education required. Mean annual wages for occupations that, at entry, require a high school diploma or its equivalent, some college but no degree, or a non-degree credential are all similar. While Table 1 shows differences in mean annual wages across education categories, these wages do not capture differences within the categories, which in many cases may include sizeable earnings differentials. For example, some research has found earnings premiums for individuals attaining long-term certificates, certificates in technical (e.g., electronics) and health fields, certificates in the field in which the individual works, and certificates from community colleges. "], "subsections": []}, {"section_title": "Non-degree Programs", "paragraphs": ["Postsecondary non-degree programs provide training and education primarily to individuals who are beyond the typical age for secondary education. Most, but not all, non-degree programs are intended to prepare individuals for a particular occupation. Non-degree programs may be described by various classifications. One commonly used classification scheme delineates programs primarily provided by educational institutions (non-degree instructional) and by employers (work-based learning), although some programs include both instructional training and work-based learning. "], "subsections": [{"section_title": "Non-degree Instructional Programs", "paragraphs": ["In general, postsecondary non-degree instructional programs are a combination of postsecondary courses or a postsecondary curriculum that fulfills an educational or professional objective, but for which a student does not earn a degree upon completion. ", "Non-degree instructional programs prepare individuals for a wide variety of specialized jobs and more general employment. Upon completion of a non-degree instructional program, individuals receive a postsecondary educational certificate, which is a credential awarded by an educational institution based on the completion of a postsecondary instructional program, including coursework, assessment, or other performance evaluations. Individuals pursue non-degree programs for various reasons, including to expand knowledge and skills, to prepare for further education, to prepare for employment, to sustain employment, and when seeking promotion. ", "For purposes of this report, non-degree instructional programs exclude those that lead to postbaccalaureate certificates and exclude transfer programs . Typically, transfer programs do not award a certificate or degree, but provide education for at least two academic years and are acceptable for full credit toward a bachelor's degree. ", "Non-degree instructional programs should not be confused with certifications and licenses, which are occupational credentials awarded by entities that assess whether individuals have met established occupational standards or requirements. Licenses are required to practice in some occupations. Certifications show that an individual has attained competency in an occupation. Some certifications and licenses require the completion of a non-degree instructional (or degree) program."], "subsections": [{"section_title": "Non-degree Instructional Program Providers", "paragraphs": ["A diverse set of entities offer non-degree instructional programs. Traditional postsecondary educational institutions\u00e2\u0080\u0094colleges and universities\u00e2\u0080\u0094offer non-degree instructional programs, as do trade, vocational, and technical schools. In fall 2018, almost 3,000 institutions of higher education enrolled nearly1.9 million non-degree seeking undergraduate students. Other entities also offer such programs, including businesses; professional organizations; trade unions; nonprofit organizations; federal, state, and local governments; museums; bootcamps; hospitals; and the military. One study estimated that there were over 4,500 for-profit non-traditional postsecondary educational institutions enrolling almost 670,000 students in academic year (AY) 2009-2010. "], "subsections": []}, {"section_title": "Duration, Structure, and Cost of Programs", "paragraphs": ["Non-degree instructional programs vary considerably in length and duration. Programs may require a few days or more than two years to complete. Generally, the length is related to curriculum requirements, industry expectations, and the breadth and complexity of skills that the program is intended to instill. The length of the program may also be affected by federal, state, and private entities that require a minimum number of educational hours to be eligible for employment, or for certification or licensing. The overall program duration may be broken up if it is designed in stackable units. A single educational program aligned to a career path may be redesigned into a sequence of independent programs (stackable units). ", "Programs are offered in classrooms, online, by correspondence, with cooperative elements, or through a combination of methods. ", "Generally, students must fund or find funding for the cost of a program, and, if applicable, for related living expenses and lost wages for foregone employment. Program cost varies by length, program resource requirements, and provider. For example, for the most heavily enrolled programs in AY2018-2019, the average published cost for tuition and fees was over $9,000 at public less-than-two-year colleges and approximately $15,000 at private less-than-two-year colleges."], "subsections": []}, {"section_title": "Credit and Noncredit Programs", "paragraphs": ["In non-degree instructional programs, a dichotomy exists between programs made up of credit course(s) and those structured as a series of noncredit courses. However, courses in the same field of study with the same vocational objective and industry recognition may be offered for credit at one institution and noncredit at another, or even within the same institution.", "Generally speaking, individuals who successfully complete credit courses and programs earn credits that may be transferred or used as currency toward the completion of other credit programs (either at the conferring school or at another school). All degree programs are credit programs. Credit programs are most often approved by an accrediting entity and may have more stringent student entrance or prerequisite requirements. Credit programs may lead to a variety of vocations.", "Although noncredit programs may offer continuing education units (CEUs) or vocational certificates to program completers, the programs do not proffer these students currency toward the pursuit of credit programs or noncredit programs in other fields. The advantage of noncredit programs is that they often are less expensive for students and educational institutions, cover a broader range of topics, and can be modified more quickly to be attentive to industry and student needs. Noncredit programs may satisfy career entry requirements; may include adult basic education (ABE) and English as a second language (ESL) instruction; may provide personal enrichment; and may be customized training. Based on 2007-2013 enrollment information from nine colleges in one state community college system, approximately 38% of enrollments were in noncredit courses: vocational (18%), ABE (9%), ESL (7%), and general educational development (GED) (4%)."], "subsections": []}, {"section_title": "Participation Data", "paragraphs": ["National level data on the universe of non-degree instructional programs, enrollment, and completions are incomplete. Some states and the federal government do not collect data on noncredit programs. A 2016 nationwide survey found that 8% of adults aged 16-65 and not enrolled in high school had a postsecondary certificate, although some of these certificates may be postgraduate. The subset of educational institutions participating in the HEA Title IV federal student aid programs (see the \" HEA Title IV Federal Student Aid \" section below) awarded almost 1 million for-credit non-degree undergraduate credentials and approximately 3 million undergraduate degrees in AY2017-2018."], "subsections": []}]}, {"section_title": "Work-Based Learning Programs", "paragraphs": ["The term work-based learning refers to a range of training and educational activities that are intended to impart general or specific workplace skills to individuals through time spent at an employer's worksite or a simulated work location. The terms defined in Table 2 are examples of common types of work-based learning in the federal context. Work-based learning is a broad term and may occur at multiple points in a career path and in multiple forms, ranging from career exploration for youth to highly specialized technical training for incumbent workers. Activities considered to be work-based learning include, but are not limited to, on-the-job training (OJT), apprenticeships, summer job experiences, internships, externships, residencies, cooperative programs (co-ops), and paid or unpaid work experiences. Programs that provide wages or remuneration are often referred to as earn and learn programs ."], "subsections": [{"section_title": "Registered Apprenticeship (RA)", "paragraphs": ["RA programs are a distinctive form of work-based learning because of their DOL oversight. RA programs are registered with DOL or a DOL-approved state agency if they meet standards delineated in federal regulations. Among the requirements, a registration application must include a work process schedule, which outlines the major competencies of the occupation and how a combination of OJT and/or related instruction will lead to the worker demonstrating proficiency in those competencies. Once a program is registered, the registration agency must review the program no less than once every five years to ensure that it remains in compliance with the required standards. If the program demonstrates a \"persistent and significant failure to perform successfully,\" the program may be deregistered."], "subsections": []}, {"section_title": "Providers", "paragraphs": ["Because work-based learning encompasses such a broad range of training activities, it is possible for multiple types of entities or individuals to offer such learning experiences. Work-based learning experiences may be provided by employers (either formally or informally), labor unions, external training providers, educational institutions providing work-relevant instruction, or partnerships of these entities."], "subsections": []}, {"section_title": "Structure, Duration, and Cost of Programs", "paragraphs": ["Work-based learning is generally structured to meet the needs of the employer, potential employer, or trainee. For example, summer internships may offer three to four months of informal training opportunities. Conversely, a summer internship may offer a formal curriculum covering specified procedures or tasks through iterative task-based coaching/instruction. ", "RA programs require at least 2,000 hours of supervised OJT and range in duration from one to six years, but most RA programs are four years in duration. Some RA programs take a time-based approach through which an apprentice learns and obtains skills by completing a specified number of hours of OJT. Other programs take a competency-based approach in which skill attainment is verified by the apprentice demonstrating proficiency in the skill learned. Programs may also be constructed as hybrid programs that combine aspects of the time-based and competency-based approaches. All RA program designs must include related instruction to supplement OJT. ", "The costs of work-based learning programs are primarily borne by the provider, but the trainee may be required to cover his/her living costs. Program costs may include the lost work time of experienced employees, fees for contracted trainers, and trainee wages. As the work-based learning progresses, some portion of the program costs may be offset by the trainee's increased productivity. In some cases, trainees may be required to pay for related instruction or other costs. Work-based learners who do not receive remuneration or receive nominal remuneration must provide for their own transportation, room, and board while also potentially forgoing the opportunity to earn wages from other paid employment."], "subsections": []}, {"section_title": "Participation Data", "paragraphs": ["The data on work-based or employer provided training are not extensive. The data sets that do exist often differ in methodology, timeframe, and purpose. For example, some surveys look only at firms with 50 or more employees, while others are part of larger household surveys not designed around employer provided training questions. A summary of four different government surveys related to employer provided training in the 1990s concluded that while most establishments offer some training (formal or informal), the percentage of workers receiving training ranged from 16% to 70%.", "A 2016 nationwide survey found that 21% of adults aged 16-65 had completed a work-based learning program, although not all of these programs were intended to prepare individuals for a particular occupation or field of work. Among adults aged 16-65, the most common work-based learning programs completed were in healthcare and teaching. ", "With respect to RA, DOL reported approximately 633,000 active apprentices in about 25,000 active programs in FY2019. In the same year, about 81,000 apprentices completed a program. The construction industry currently accounts for the largest share of apprenticeships, though they are available in other industries such as manufacturing and transportation. "], "subsections": []}]}]}, {"section_title": "Federal Programs and Benefits", "paragraphs": ["The federal government provides direct financial support to individuals pursuing training and education that might better prepare them for entry into the workforce and that might help them realize their potential. None of the federal programs or benefits that provide such support focus exclusively on promoting training or education through the pursuit of non-degree programs. With that caveat in mind, federal programs are described below in an order that generally attempts to correspond to their relevance to supporting the pursuit of training or education through non-degree programs. The design and implementation of the federal programs and benefits are notably different in several aspects including, but not limited to, the choice and monitoring of non-degree programs.", "The primary benefit programs are the Workforce Innovation and Opportunity Act (WIOA) Title I program, the federal student aid programs, federal tax benefits, and veterans educational assistance. WIOA Title I, administered by the Department of Labor (DOL), is intended to encourage general workforce development and may be used to directly subsidize training costs of individuals who pursue training and education. The federal student aid programs, authorized under Title IV of the Higher Education Act (HEA) and administered by the Department of Education, provide grants and loans to students to aid them in accessing and completing postsecondary education programs. The Internal Revenue Service (IRS) administers the Internal Revenue Code, which, among other things, provides certain tax benefits as a strategy for post-education financial support. Educational assistance administered by the Department of Veterans Affairs (VA), specifically the Post-9/11 GI Bill and Veteran Employment Through Technology Education Courses (VET TEC), are programs designed to provide direct financial support to students that allows them to pursue a wide variety of educational and training programs. ", "Two programs that augment the basic living supports for needy families with some training and education assistance are also discussed in this report. Supplemental Nutrition Assistance Program (SNAP) Employment & Training (E&T), administered by the Department of Agriculture (USDA), provides training and education opportunities to individuals with a high risk for educational failure. Temporary Assistance for Needy Families (TANF), administered by the Department of Health and Human Services (HHS), provides flexibility to states to use TANF funds for activities that would develop a more highly skilled workforce through training and education. ", "The subsequent sections of this report describe these prominent federal programs that can be used to support students in non-degree programs. The sections are organized to focus on key program design elements and highlight differences among the programs. Table 3 highlights a few program characteristics that help to delineate key differences."], "subsections": [{"section_title": "WIOA Contracts and Individual Training Accounts (ITAs) (DOL)", "paragraphs": ["Title I of the Workforce Innovation and Opportunity Act (WIOA; P.L. 113-128 ) is the primary federal workforce development legislation and is intended to bring about increased coordination among federal workforce development and related programs. WIOA Title I is administered by DOL and funded through discretionary appropriations. Services authorized under WIOA are intended to:", "increase the employment, retention, and earnings of participants, and increase attainment of recognized postsecondary credentials by participants, and as a result, improve the quality of the workforce, reduce welfare dependency, increase economic self-sufficiency, meet the skill requirements of employers, and enhance the productivity and competitiveness of the Nation.", "The Adult and Dislocated Worker Employment and Training Activities program under WIOA Title I provides formula grants to states, which in turn allocate the majority of those funds to local Workforce Development Boards (WDBs). At the local level, funds are required to be used for five main purposes: establishing a One-Stop delivery system, providing career services, providing training services, establishing relationships with employers, and developing industry or sector partnerships.", "As part of its service delivery model, WIOA provides consumer choice to participants. The program for adult and dislocated worker participants in WIOA is structured around two main levels of services: career services and training. On an operational level, career services are categorized as basic and individualized . Basic services include assistance such as labor market information and job postings, while individualized services include assistance such as skills assessment and case management. "], "subsections": [{"section_title": "Eligibility of Non-degree Programs", "paragraphs": ["Eligible WIOA participants may pursue training and education at the eligible training provider (ETP) of their choice. A state Eligible Training Provider List (ETPL) identifies choices to customers who are accessing WIOA services. Generally, ETPs include the following:", "institutions of higher education that are eligible to participate in the HEA Title IV federal student aid programs and offer programs leading to a recognized postsecondary credential, entities that provide RA, or other public or private training providers.", "Allowable training activities that may be supported with WIOA Title I funds are non-degree and degree instructional programs and certain types of work-based learning, including OJT, RA, customized training, and incumbent worker training. Training must be for occupations that are in demand in the local area or region, are in demand in an area to which the trainee is willing to relocate, or are deemed (by the local WDB) to have \"high potential for sustained demand or growth in the local area.\" In addition, the implementing regulations for WIOA specify that a program of training services provided by an ETP is one or more courses or classes or a structured regimen that leads to the following:", "an industry-recognized certificate or a certificate of completion of an RA, a license recognized by the state or federal government, an associate or baccalaureate degree, a secondary school diploma or equivalent, employment, or measurable skill gains toward a credential.", "Local areas under WIOA may reserve up to 20% of combined adult and dislocated worker funds for incumbent worker training."], "subsections": []}, {"section_title": "Participant Eligibility for Training", "paragraphs": ["The workforce development system designed by WIOA is premised on universal access, such that an adult age 18 or older who is a citizen or noncitizen authorized to work in the United States does not need to meet any qualifying characteristics in order to receive career services. While basic career services are available to all adults, individualized career services are to be provided as appropriate to help individuals obtain and retain employment. Under WIOA, service at one level is not a prerequisite for service at the next level.", "To be eligible to receive training, an individual must", "be unlikely or unable to obtain or retain employment that leads to economic self-sufficiency, be in need of training services to obtain or retain employment that leads to economic self-sufficiency, have the skills and qualifications to participate successfully in training, select a training service linked to an occupation in the local area (or be willing to relocate to another area where the occupation is in demand), and be unable to obtain other grant assistance (e.g., Pell Grants) for the training services.", "These determinations are made by a One-Stop operator through an interview, evaluation, or assessment, which can include a recent evaluation or assessment conducted pursuant to another education or training program. Local WDBs designate colleges and universities, private organizations, and government agencies as One-Stop operators that assess and evaluate individuals and decide which individuals to provide with access to training services.", "Of funds allocated to a local area for adult employment and training activities, priority for career and training services is to be given to recipients of public assistance, other low-income individuals, and individuals who are basic skills deficient. It is left to the discretion of the local WDB, in consultation with the state's governor, to determine how to allocate funds among these priority groups."], "subsections": []}, {"section_title": "Basic Benefit Payment Structure", "paragraphs": ["Under WIOA, training is allowed through ITAs or through contracts for services. While ITAs are the primary vehicle, contracts may be used in certain circumstances. WIOA also permits funds to be used for supportive services (e.g., child care and transportation) and \"needs-related payments\" necessary to enable an individual to participate in training.", "When an individual is determined by a One-Stop operator to be eligible to receive training services, that individual, in consultation with the One-Stop operator, may choose training services from the ETPL. At that point, an ITA is established, from which payment is made to the ETP, not to the individual, for training services. Local WDBs have the authority to set limits on the type and duration of training and may choose to set limits on the amount of an ITA, based on individual circumstances or on an across-the-board level. WIOA participants who are in receipt of an ITA may use ITA funds to support non-degree instructional and degree programs and the related instruction portion of an RA. In addition, local WDBs are also authorized to provide supportive services, including transportation, child care, dependent care, housing, and needs-related payments necessary to enable an individual to participate in training.", "While training is typically carried out through the ITA model, local WDBs may provide training through a contract for services, which may include various forms of work-based learning. The contract is an agreement between a local WDB and an employer or RA sponsor for occupational training for a WIOA participant in exchange for reimbursement from the WDB. A contract for services may be used if", "the consumer choice requirements of WIOA are met; the services are OJT, RA, customized training, incumbent worker training, or transitional employment; the local WDB determines there is an insufficient number of training providers in a local area to meet the ITA requirements; the local WDB determines there is a local training program of demonstrated effectiveness to serve individuals with barriers to employment; the local WDB determines that it is most appropriate to contract training services to train multiple individuals in in-demand occupations or industry sectors; or the training service is a pay-for-performance contract.", "For example, through a contract, a local WDB may reimburse an OJT provider (employer) for up to 50% of the wage rate of a participant (reimbursement rates may be 75% in limited circumstances). State and local WDBs may also enter into contracts with RA sponsors to reimburse the sponsors for up to 75% of an apprentice's wages. Notably, reimbursement for wages is supported by a contract, not an ITA."], "subsections": []}, {"section_title": "Basic Administrative Structure", "paragraphs": ["As noted, states are responsible for developing the ETPL. Local WDBs and One-Stop operators administer the training programs and payments to training providers. Thus, administrative structures and procedures vary by state."], "subsections": []}, {"section_title": "Quality Assurance Mechanisms", "paragraphs": ["Quality assurance of training providers is established through both initial and continued provider eligibility processes. The governor and the state WDB in each state are responsible for establishing criteria and procedures for eligible providers of training services to receive funding in the local workforce investment areas. RA programs are automatically eligible to be included on the state ETPL. Non-RA training providers not previously eligible under WIOA or its predecessor law must apply to the governor and the local WDB (according to a procedure established by the governor) for initial eligibility of one fiscal year. ", "To maintain continued eligibility, existing training providers must follow procedures established by the governor and implemented by the local WDB and submit WIOA-specified information. WIOA provides general requirements while allowing local WDBs discretion on specific factors. For example, while WIOA indicates that OJT contracts should be limited in duration, as appropriate to the occupation, the training content, and the participant's prior work experience and service strategy, the exact length of the OJT contract is determined by the local WDB. Similarly, WIOA requires that in determining employer eligibility to receive WIOA incumbent worker training funding, a local WDB must consider the characteristics of individuals in the program and the relationship of the training to the competitiveness of the individual and the employer without establishing quantifiable targets."], "subsections": []}, {"section_title": "Measures of Program Performance", "paragraphs": ["WIOA requires ETPs and states to report measures of program participation and outcomes. Notably, RA programs are not required to submit ETP performance report information.", "To be considered for continued eligibility, providers must submit to the governor every two years the following performance and cost information for participants receiving training under WIOA Title I:", "the percentage of program participants in unsubsidized employment in the second and fourth quarters after program exit; median earnings of program participants who are in unsubsidized employment during the second quarter after program exit; the percentage of program participants who obtain a recognized postsecondary credential, or secondary school diploma or equivalent, during participation or within one year of program exit; information on the type of recognized postsecondary credentials received by program participants; information on the cost of attendance, including tuition and fees, for program participants; and information on program completion rates for program participants.", "In addition, the governor may require additional, specific performance information deemed necessary to determine continued eligibility.", "States are required to publish and disseminate annual ETP performance reports. The reports must include the following information with respect to each program of study eligible to receive WIOA funds, disaggregated by the type of entity that provided the training, during the most recent program year and the three preceding program years:", "the total number of participants who received training services through a WIOA Title I program, the total number of participants who exited from training services, and the average cost per participant for the participants who received training services.", "In addition, the ETP performance reports must include the number of participants with barriers to employment served by the WIOA Title I programs, disaggregated by each program of study eligible to receive WIOA funds and each subpopulation of such individuals, and by race, ethnicity, sex, and age."], "subsections": []}, {"section_title": "Program Participation", "paragraphs": ["The first WIOA ETP performance report is not yet available, but some participation data are available. Within the WIOA-authorized forms of work-based learning, the most recent data available (2017) indicate 955,094 adult participants and 469,572 dislocated worker participants. The majority of participants are age 30 and over (67% of adults and 82% of dislocated workers) and unemployed or have received a layoff notice (82% of adults and 92% of dislocated workers). While many participants had no postsecondary education experience (59% of adults and 47% of dislocated workers), a notable 22% of adults and 34% of dislocated workers had a degree. ", " Table 4 shows usage of training services among program exiters in program year 2018. Fewer than 20% of WIOA Title I participants engage in work-based learning provided under contract. The majority, over 66%, of trainees pursue skills training or upgrading through non-degree instructional and degree programs with ITAs. The most popular occupations pursued by adults through training were healthcare, transportation and material moving, and production. The most popular occupations pursued by dislocated workers were transportation and material moving, computer and mathematical, office and administrative support, and management."], "subsections": []}, {"section_title": "Program Limitations", "paragraphs": ["WIOA Title I currently supports adult entry or reentry into the workforce primarily by providing career services, but short-term training and education are also provided. The program assumes that many participants only need career services. Support for non-degree training and education pursuits could be bolstered by the following:", "increasing focus of One-Stop operators to increase access to non-degree training; additional funding could be dedicated to wage reimbursement and/or ITAs to ensure the availability of career services; the 20% limit on incumbent training could be relaxed to ensure current workers remain employed despite changing skill requirements, and the restriction on recipients of training services being able to obtain other grant assistance (e.g., Pell Grants) could be eliminated to allow programs to supplement one another. Non-degree program quality may vary given state and local flexibility in developing the ETPL."], "subsections": []}]}, {"section_title": "HEA Title IV Federal Student Aid (ED)", "paragraphs": ["Title IV of the Higher Education Act (HEA; P.L. 89-329, as amended), authorizes programs that provide financial assistance to students to promote access to, affordability, and completion of higher education at certain institutions of higher education (IHEs). The programs are administered by the Department of Education. Grants are available to qualified, financially needy students, and loans are available to qualified borrowers (both students and parents of dependent students). The primary types of Title IV aid are Federal Pell Grants and federal student loans made through the William D. Ford Federal Direct Loan (Direct Loan) program. The Pell Grant and Direct Loan programs are designed to provide portable aid (i.e., the availability of aid follows students to the eligible postsecondary education institutions in which they choose to enroll). Title IV also authorizes other aid programs that are relatively smaller in scale and thus are not discussed in this report. ", "Pell Grants and Direct Loan program loans are available to all eligible individuals regardless of congressional appropriations. The Direct Loan program is a mandatory entitlement program for budgetary purposes. As a mandatory entitlement, all eligible individuals have access to borrow in accordance with program rules, and the requisite budget authority is available. The Pell Grant program is often referred to as a quasi-entitlement because eligible students receive the Pell Grant award to which they are entitled regardless of discretionary appropriations levels."], "subsections": [{"section_title": "Eligibility of Non-degree Programs", "paragraphs": ["Pell Grants and Direct Loans may be used to pursue Title IV-eligible programs of study, which include non-degree instructional and degree programs and some work-based learning. Title IV-eligible programs must be offered by Title IV-participating IHEs. To be eligible, programs and Title IV-participating IHEs must meet a variety of criteria, including quality assurance (see the \" Quality Assurance Mechanisms \" section). Title IV-participating IHEs are classified as public IHEs, private nonprofit IHEs, proprietary (private for-profit) IHEs, and public and private nonprofit postsecondary vocational institutions. ", "Non-degree programs must meet several eligibility requirements. For example, in general, the Title IV-eligible non-degree instructional program and the Title IV-eligible portion of work-based learning must lead to a certificate or other recognized non-degree credential (e.g., diploma or license). Also, Title IV aid is generally not available for noncredit programs or portions of programs for which a defined number of credit or clock hours is not associated. For instructional and work-based learning programs measured in clock hours, the OJT portion of work-based learning must be offered under the supervision of an IHE. If a portion of the OJT is offered by an entity under contract with an IHE, such portion must be less than 50% of the program.", "In general, non-degree programs are subject to specific durational requirements, including weeks of instructional time and number of credit or clock hours. For Pell Grants, the non-degree programs offered by public and private nonprofit postsecondary vocational institutions and proprietary institutions must either be", "at least 15 weeks of instructional time and at least one of the following: 600 clock hours, 16 semester hours, or 24 quarter hours; or at least 10 weeks of instructional time and at least one of the following: 300 clock hours, 8 semester hours, or 12 quarter hours. ", "For the Direct Loan program, non-degree programs offered by public and private nonprofit postsecondary vocational institutions and proprietary institutions must be at least 10 weeks of instructional time and 300-599 clock hours. In addition, students must be enrolled in an eligible program of study on at least a half-time basis to borrow through the Direct Loan program. See the text box below for information on an ED experiment with shorter duration programs.", "Non-degree programs at public and private nonprofit IHEs that are at least one academic year in length and lead to a certificate or other recognized non-degree credential are eligible for both the Pell Grant and Direct Loan programs, without regard to any of the above-specified durational requirements."], "subsections": []}, {"section_title": "Participant Eligibility", "paragraphs": ["For a student to be eligible to receive Title IV funds for his or her higher education, he or she must be enrolled (or accepted for enrollment) in a Title IV-eligible program. In addition, among other criteria, a student must", "be a U.S. citizen, national, legal permanent resident, or other specified eligible noncitizen; and have a high school diploma (or equivalent, such as a general educational development [GED] certificate) or meet other relevant criteria.", "Individuals must also meet program-specific eligibility criteria to receive Pell Grants or Direct Loan program loans."], "subsections": [{"section_title": "Pell Grant Program-Specific Eligibility Criteria", "paragraphs": ["To receive Pell Grants, students must meet program-specific criteria that include the following:", "being enrolled in an undergraduate program, not having completed the curriculum requirements of a bachelor's degree, and demonstrating financial need (primarily individuals from families in the two lowest income quintiles as determined under the program's award rules). ", "All recipients are subject to a cumulative lifetime eligibility cap on Pell Grant aid of 12 full-time semesters (or the equivalent). "], "subsections": []}, {"section_title": "Direct Loan Program-Specific Eligibility Criteria", "paragraphs": ["To receive Direct Loan program loans, students must meet program-specific criteria that include being enrolled on at least a half-time basis. Students (or their parents in the case of PLUS Loans to parents borrowing on behalf of a dependent child) may need to meet additional eligibility criteria to qualify for specific Direct Loan program loan types. The primary loans are the following: ", "Direct Subsidized 83 Loans for undergraduate students with demonstrated financial need, Direct Unsubsidized Loans for any student regardless of financial need, and PLUS Loans for parents of dependent undergraduate students and graduate and professional students regardless of financial need.", "Individuals who are new borrowers on or after July 1, 2013, may only borrow Direct Subsidized Loans for a period of time not to exceed 150% of the published length of their academic program."], "subsections": []}]}, {"section_title": "Basic Benefit Payment Structure", "paragraphs": ["In general, the amount of Title IV aid for which a student is eligible is guided by statutory award rules. Aggregate Title IV aid and other aid (e.g., institutional aid) typically cannot exceed a student's cost of attendance (COA). The COA is an institutionally determined measure of a student's educational expenses for the period of enrollment and generally includes items such as tuition and fees; an allowance for books and supplies; and, as applicable, an allowance for room and board. The COA may also include transportation costs and dependent care expenses.", "An important feature of the Pell Grant award rules is that the grant is determined without consideration of any other financial assistance a student may be eligible to receive or may be receiving. Annual appropriations acts and the HEA establish the total maximum Pell Grant award amount that a student may receive in an academic year. For award year (AY) 2020-2021, the maximum Pell Grant award that an eligible individual enrolled full-time for a 26-30 week academic year may receive will be $6,345. The amount may be reduced based on the student's COA, financial need, enrollment rate, or program duration. Pell Grant awards used to pursue non-degree programs are generally subject to income taxation; whereas Pell Grant awards used to pursue degree programs are only subject to income taxation if used for purposes other than tuition and fees.", "Direct Loan program award rules vary by type of loan borrowed. In addition, numerous other factors could affect the type and amount of aid awarded. However, some generally applicable rules apply to the Direct Loan program. Other types of financial assistance awarded to the student must be taken into account when awarding Direct Loan program loans. Also, an individual cannot be awarded a Direct Subsidized Loan or Direct Unsubsidized Loan in an amount that exceeds statutory annual and aggregate award limits, which are determined based on an individual's dependency status and class level. For example, a dependent undergraduate student may borrow up to $5,500 in Direct Subsidized Loans and Direct Unsubsidized Loans for his or her first year, while an independent undergraduate student may borrow up to $9,500 in such loans in his or her first year. The annual maximum loan amount an undergraduate student may receive is prorated when the borrower is enrolled in a program that is shorter than a full academic year."], "subsections": []}, {"section_title": "Basic Administrative Structure", "paragraphs": ["ED's Office of Federal Student Aid (FSA) is the primary entity responsible for administering the Title IV aid programs. The administrative tasks associated with the programs are completed by a number of actors (e.g., FSA, IHEs), depending on the function.", "FSA undertakes many high-level functions in Title IV program administration. These include, but are not limited to, contracting for the operation and maintenance of systems to process aid; providing customer service, training, and user support for the administration of the programs; and ensuring integrity of the programs.", "IHEs complete many of the day-to-day functions associated with awarding and disbursing Title IV aid to students. ED makes funds available to IHEs so that they can disburse awards to students. IHE functions include verifying a student's eligibility to receive the aid, calculating aid amounts, disbursing aid funds, and managing program funds at the institutional level. In addition, under the Pell Grant program ED pays participating IHEs an administrative cost allowance."], "subsections": []}, {"section_title": "Quality Assurance Mechanisms", "paragraphs": ["Several HEA provisions intended to ensure the quality of Title IV-eligible programs and Title IV-participating IHEs have been enacted to protect students and taxpayers. The program integrity triad\u00e2\u0080\u0094state authorization, accreditation, and ED certification\u00e2\u0080\u0094is the foundation of these provisions and is intended to provide a balance in the Title IV eligibility requirements. State authorization is intended to provide consumer protection, accreditation is intended to provide quality assurance, and ED certification is intended to provide direct oversight of compliance in the Title IV programs. In addition to the requirements of the program integrity triad, non-degree programs may be required to meet gainful employment requirements. The following subsections briefly describe each piece of the triad and the gainful employment requirements as they relate to Title IV-eligible programs."], "subsections": [{"section_title": "State Authorization", "paragraphs": ["An IHE must be authorized to provide a postsecondary education within the state in which it is located to participate in the Title IV programs, which includes complying with any applicable state approval or licensure requirements. State approval and licensure requirements vary appreciably among the states. For instance, some states approve IHEs and their individual educational programs, while other states only require approval of an IHE as a whole. The degree to which a state evaluates an individual educational program may also vary by state. For example, states variously evaluate program curricula, program objectives, projected enrollment, student outcome measurements (e.g., completion and placement rates), and justification of program need (e.g., industry demand or consumer interest). In addition, some states require programmatic accreditation (discussed below) or separate approval by another state agency (e.g., a professional licensing agency)."], "subsections": []}, {"section_title": "Accreditation100", "paragraphs": ["To participate in Title IV programs, an IHE must be accredited by an accrediting agency recognized by ED as a reliable authority of the quality of the education being offered. Accrediting agencies are private associations of member educational institutions or industry associations that undertake quality review of educational institutions and/or programs.", "In general, an IHE need only be accredited by a regional or national accreditor to participate in Title IV programs. The regional or national accreditor must evaluate whether the IHE meets accrediting agency-prescribed criteria. Although these criteria vary among the agencies, ED-recognized accrediting agencies must regularly evaluate statutorily specified areas, including an IHE's faculty, curricula, facilities, student support services, and success with respect to student achievement in relation to the institution's mission. Within these broadly outlined criteria, accrediting agencies have discretion as to the precise evaluation measures. Regional and national accreditors evaluate an IHE's performance on the whole, but may choose to evaluate a sample of programs.", "An educational program does not need to be accredited by a programmatic accrediting agency for Title IV purposes. However, an IHE may seek programmatic accreditation to satisfy employer and some occupational licensure requirements. To gain programmatic accreditation, an educational program offered by an IHE is evaluated on established standards for the particular field of study, such as whether the curriculum meets professional guidelines. "], "subsections": []}, {"section_title": "ED Certification", "paragraphs": ["When an IHE seeks to participate in Title IV programs, it must apply for certification from ED. During this process, ED evaluates whether the IHE meets Title IV participation requirements. ED reviews each educational program to determine whether it satisfies eligibility requirements. For example, the eligibility requirements include the aforementioned durational requirements; and 300-599 clock-hour programs that may be eligible to participate in the Direct Loan program must, among other requirements, have verifiable completion and placement rates of at least 70%.", "If an IHE wants to add a new educational program to its Title IV eligibility, it generally may self-certify to ED that the new program is Title IV eligible or, for new 300-599 clock-hour programs, submit an application to ED for approval. "], "subsections": []}, {"section_title": "Gainful Employment (GE)106", "paragraphs": ["The HEA specifies that most non-degree programs must prepare students for \"gainful employment in a recognized occupation.\" Regulations promulgated in 2014 (2014 GE regulations) defined the term gainful employment in a recognized occupation , but they were rescinded in 2019. The 2014 GE regulations were intended to serve as a proxy measure for programmatic quality by establishing debt-to-earnings (D/E) rates that programs were required to meet. The rationale behind the rule was that if an educational program is of sufficient quality, then it will lead to earnings that will enable students to repay the student loans they borrowed for enrollment in the program.", "Under the GE framework, each program subject to the GE rules must meet two D/E rates. Programs that fail to meet minimum standards in multiple years will be ineligible for Title IV participation for three years. No program has yet been subject to loss of Title IV eligibility under the requirements. In addition, the education programs subject to GE rules must meet third-party standards such as being approved by an ED-recognized accrediting agency, being recognized by the relevant state agency, being programmatically accredited (if required by a federal entity or state agency in the state in which the IHE is located or otherwise seeks state approval), and meeting any applicable educational prerequisites for professional licensure or certification in the state in which the IHE is located."], "subsections": []}]}, {"section_title": "Measures of Program Performance", "paragraphs": ["The HEA does not define measures of performance for the Title IV programs. The HEA does require that Title IV participating IHEs and ED report information on enrollment, certificates and degrees conferred, student charges, and other information that may be of interest to prospective and current students and policymakers. "], "subsections": []}, {"section_title": "Program Participation", "paragraphs": ["ED collects data annually on Title IV non-degree instructional for-credit programs. Table 5 shows the total number of non-degree instructional for-credit programs and credentials and the percentage of non-degree instructional for-credit programs and awards by institutional sector in AY2017-2018. Of the 6,418 Title IV-participating IHEs, 4,618 offered non-degree for-credit programs. Approximately half of Title IV-eligible non-degree for-credit programs are offered by private for-profit IHEs, while more than two-thirds of non-degree for-credit credentials from Title IV-eligible programs are awarded by public IHEs.", "In AY2015-2016, approximately 765,000 Pell Grant recipients pursued non-degree credit programs and received about $2.7 billion in Pell Grant awards\u00e2\u0080\u0094roughly 10% of the total number of recipients and dollar amount of awards. Also in AY2015-2016, approximately 10% of undergraduates who borrowed a Direct Loan were pursuing certificate programs."], "subsections": []}, {"section_title": "Program Limitations", "paragraphs": ["Support for non-degree programs is limited in several ways: ", "Title IV aid is only available to support individuals pursuing credit programs of a statutorily specified duration at Title IV-participating IHEs. Support for work-based learning is limited to programs or portions of programs that lead to a certificate or degree and that are offered by Title IV-participating IHEs. ", "Some students who may choose to pursue training or education via non-degree programs will not be eligible. These include ", "students who do not have a high school diploma (or equivalent) or who are not enrolled in a career pathway program; with respect to Pell Grants, students who have a bachelor's degree; and with respect to the Direct Loan program, students enrolled less than half-time. ", "Non-degree program quality may vary. It is primarily assessed through the program integrity triad, since the 2014 GE rules have been rescinded. State authorizers and accreditors have some flexibility in determining and applying criteria to assess quality. ", "Few reports have examined state authorization requirements in general, or as they relate to program quality in particular. However, those that have done so identify the variation among state authorization requirements as an impediment and a complicating factor in assessing institutional experiences with state authorization. They note that an individual state's history, resources, and priorities may affect the extent to which the state chooses to take a more active or passive role in some areas, such as evaluating non-degree programs. Despite difficulties in assessing state authorization requirements, researchers have pointed to the following as potential weaknesses in at least some states' authorization requirements: ", "concerns that the oversight of some state boards may be impaired by potential conflicts of interest, overrepresentation of special interests, or a sense of being beholden to IHEs; input requirements (e.g., faculty members' qualifications, facilities and equipment used in the instructional process) may impede innovative education models; elongated timeframes to receive state authorization, which may be a result of a complex regulatory state process or a lack of state resources; conflicts across state laws in instances where an institution offers educational programming in multiple states; and despite the fact that many states require institutions to report on student outcomes, few states may actually make authorization renewal decisions based on those outcomes.", "A 2014 GAO report identified some of the strengths and weaknesses of the accreditation system as it relates to program quality. One strength is that institutional accreditors tailor their expert peer reviews depending on the school type and mission. In addition, programmatic accreditation is specifically aligned to the particular field or type of program. Potential weaknesses identified by GAO include conflicting interests between IHEs and the IHE-funded accreditors, the insufficiency of accreditor capacity and resources, the inability of experts to assess innovative modes of education (e.g., competency-based education), and the difficulty in defining and measuring academic quality."], "subsections": []}]}, {"section_title": "Tax Benefits (IRS)122", "paragraphs": ["Education tax benefits, administered by the Internal Revenue Service, partially offset some of the costs of higher education for eligible taxpayers. They differ from other benefits in several ways. First, unlike many benefits programs, education tax benefits tend to provide the greatest advantage to upper middle income taxpayers. Second, unlike traditional financial aid, which is used to pay for education expenses around the time the education is received, taxpayers claim education tax benefits when they file their federal income tax return. Hence, taxpayers receive a tax benefit only after they have already paid for their education expenses, sometimes many months after the expense is incurred. ", "Many education tax benefits are only available to individuals enrolled in a degree program. However, some education tax benefits do have eligibility rules that are broad enough to include individuals enrolled in non-degree programs. ", "In contrast to most other federal education programs, the education tax benefits discussed in this report reduce federal revenues rather than increase outlays. Hence, education tax benefits are considered a type of \"spending through the tax code\" that is not subject to annual appropriations. Any persons that meet the requirements for these benefits can receive them (generally when they file their federal income tax return). Education tax benefits may encourage overconsumption of education or subsidize education that would have taken place without these tax incentives.", "Taxpayers in non-degree programs may currently be eligible for the following:", "The Lifetime Learning Credit, which reduces a taxpayer's income tax liability and provides financial assistance to taxpayers (or their family members) who are pursuing education. The Lifetime Learning Credit is a nonrefundable tax credit for 20% of the first $10,000 in qualifying expenses. The credit phases out for taxpayers above certain income thresholds. Employer Provided Educational Assistance, which excludes eligible employer provided educational costs from the taxpayer's taxable income. 529 accounts, which are intended to help families save for future educational expenses."], "subsections": [{"section_title": "Eligibility of Non-degree Programs", "paragraphs": ["The Lifetime Learning Credit and 529 accounts may be used for eligible education expenses associated with pursuing non-degree programs at Title IV-eligible IHEs. A broader range of non-degree programs may be eligible for employer provided educational assistance."], "subsections": [{"section_title": "The Lifetime Learning Credit (LLC)", "paragraphs": ["Qualified education expenses used to calculate the amount of the credit are defined as tuition and related expenses required for enrollment in a course at a Title IV-eligible IHE. Related expenses are amounts that are required for enrollment, including books, supplies, and equipment, but do not include living expenses or other expenses that are not required for enrollment. These expenses must be reduced by any amount of tax-free educational assistance used to pay for qualified educational assistance (including employer provided educational assistance and tax-free distributions from 529 accounts). For the purposes of the LLC, a course can either be part of a post-secondary degree program or be a course to help the student acquire or improve job skills (e.g., part of a non-degree program)."], "subsections": []}, {"section_title": "Employer Provided Educational Assistance", "paragraphs": ["Employer provided educational assistance can be used for tuition, fees, books, supplies, and equipment associated with any form of instruction or training that improves or develops the recipient's skills. According to IRS Publication 970, \"the payments don't have to be for work-related courses or courses that are part of a degree program.\" For example, an employer could pay up to $5,250 of the tuition costs of an employee's course to improve his or her skills. This amount would not be included in the employee's wage income. In addition, the statute does not state that the institution providing the program must be a Title IV-eligible IHE. "], "subsections": []}, {"section_title": "529 Accounts", "paragraphs": ["Tax-free withdrawals from 529 accounts are allowed for qualified expenses, which include tuition and required fees, room and board, books, supplies, equipment, and, for special needs beneficiaries, additional expenses at a Title IV-eligible IHE. Those expenses do not need to be associated with a degree program."], "subsections": []}]}, {"section_title": "Participant Eligibility for Training", "paragraphs": ["Eligibility for training depends on factors outside of the tax code. Whether the training qualifies for tax incentives is a different question. To qualify for tax benefits, participants must either file a federal income tax return or be claimed as a dependent or spouse on one."], "subsections": [{"section_title": "The Lifetime Learning Credit (LLC)", "paragraphs": ["Taxpayers can claim the credit for qualified education expenses paid for themselves, their spouses, or their dependent children. Taxpayers cannot claim the credit if they file as married filing separately, if they (or their spouses if filing jointly) are nonresident aliens, or if their income is $68,000 or more ($136,000 or more if married filing jointly). "], "subsections": []}, {"section_title": "Employer Provided Educational Assistance", "paragraphs": ["Participants can only use this tax benefit if their employer offers an educational assistance program."], "subsections": []}, {"section_title": "529 Accounts", "paragraphs": ["Beneficiaries of a 529 account are designated at the time of its establishment. Amounts in a 529 account may also be transferred to another 529 account established for certain relatives of designated beneficiaries. "], "subsections": []}]}, {"section_title": "Basic Benefit Payment Structure", "paragraphs": ["Individuals apply for the LLC when they file their federal income tax return after incurring qualified educational expenses. Qualified educational expenses paid from a 529 account or through an employer are tax-free."], "subsections": [{"section_title": "The Lifetime Learning Credit (LLC)", "paragraphs": ["The LLC is calculated as 20% of the first $10,000 of qualified education expenses, yielding a maximum credit of $2,000 per taxpayer. The maximum credit amount phases out for taxpayers with income between $58,000 and $68,000 ($116,000 and $136,000 for married joint filers) in 2019. Because the credit is nonrefundable, the amount of the credit that the taxpayer receives cannot by definition exceed the taxpayer's federal income tax liability. Hence, if a taxpayer has little to no federal income tax liability (e.g., they are low-income), they will generally receive little if any benefit from a non-refundable tax credit like the LLC. "], "subsections": []}, {"section_title": "Employer Provided Educational Assistance", "paragraphs": ["Employers may choose to provide their employees with up to $5,250 in tax-free tuition assistance per year under an employer sponsored educational assistance program. The assistance is not included in the employees' wages and is not subject to federal income taxes, nor is it subject to payroll taxes."], "subsections": []}, {"section_title": "529 Accounts", "paragraphs": ["Taxpayers can withdraw funds from their 529 accounts tax-free and use the distribution to pay for qualifying education expenses associated with non-degree programs, subject to restrictions of the individual plans. (In practice, many taxpayers establish 529 plans for children. However, these taxpayers are allowed under the statute to transfer some or all of the child's 529 account balance into the 529 account of certain relatives of the child tax-free. ) "], "subsections": []}]}, {"section_title": "Basic Administration", "paragraphs": ["The IRS primarily relies on taxpayers, employers, and states to ensure proper administration of the benefits, although the IRS may audit taxpayers to ensure compliance."], "subsections": [{"section_title": "The Lifetime Learning Credit (LLC)", "paragraphs": ["Taxpayers effectively apply for the LLC by filing their federal income tax return (Form 1040) and IRS Form 8863 (related to claiming education tax credits). These forms, and their associated instructions, describe eligibility rules and help taxpayers calculate the amount of the credit. Taxpayers do not explicitly need to list the course or program of study they are enrolled in when applying for the LLC on their federal income tax return, although they are asked to provide information about the educational institution on Form 8863. "], "subsections": []}, {"section_title": "Employer Provided Educational Assistance", "paragraphs": ["To qualify as an educational assistance program, an employer's plan must be in written form and must meet certain other requirements. According to regulation, \"it is not required that a program be funded or that the employer apply to the IRS for a determination that the plan is a qualified program. However, under IRC Section 601.201 (relating to rulings and determination letters), an employer may request that the IRS determine whether a plan is a qualified program.\" In addition, a program cannot discriminate in favor of employees who are officers, shareholders, self-employed, or highly compensated (although such employees can be eligible for these benefits along with other employees). Employees eligible to participate in the program must be given reasonable notice of its terms and availability. "], "subsections": []}, {"section_title": "529 Accounts", "paragraphs": ["Generally, states sponsor 529 plans, and individuals can establish accounts in a given plan for a designated beneficiary. When a taxpayer withdraws an amount from a 529 plan, the 529 program is to provide the taxpayer with a Form 1099-Q, which will show the total amount withdrawn and the breakdown between investment growth (\"earnings\") and the original investment (\"basis\"). If taxpayers apply any of this withdrawal to a non-eligible expense, they are required to include a portion of the withdrawal on their federal income tax returns, and hence, it may be subject to taxation. Unless audited, a taxpayer does not have to document how they have spent their withdrawals (e.g., the kind of program). In 2018, approximately 0.5% of taxpayers were audited. "], "subsections": []}]}, {"section_title": "Quality Assurance Mechanisms", "paragraphs": ["Outside of the eligibility rules discussed above, the Internal Revenue Code (IRC) does not have rules regarding the quality of training and education programs for which a tax benefit is claimed."], "subsections": []}, {"section_title": "Measures of Program Performance", "paragraphs": ["The IRS does not publish, nor is it required to collect or publish, any measures of a non-degree program's performance. "], "subsections": []}, {"section_title": "Program Participation", "paragraphs": ["IRS data on these education tax benefits are limited."], "subsections": [{"section_title": "The Lifetime Learning Credit (LLC)", "paragraphs": ["IRS data indicate that in 2015, approximately 2.5 million taxpayers claimed approximately $2.1 billion of the LLC, for an average credit of $830 per taxpayer. These data indicate that approximately half of all LLC dollars were claimed by taxpayers with adjusted gross income (AGI) between $50,000 and $200,000. Taxpayers with AGI below $15,000 or more than $200,000 generally did not claim the LLC, due to its nonrefundability and phase-out, respectively. To date, no studies have evaluated the impact of the LLC on enrollment in non-degree programs or its effectiveness in helping non-degree candidates improve their job skills."], "subsections": []}, {"section_title": "Employer Provided Educational Assistance", "paragraphs": ["Administrative data from the IRS on the exclusion of employer provided educational assistance are unavailable. To date, no studies have evaluated the impact of employer provided educational assistance on enrollment in non-degree programs or its effectiveness in helping non-degree candidates improve their job skills."], "subsections": []}, {"section_title": "529 Accounts", "paragraphs": ["Administrative data from the IRS on 529 plans are unavailable. Survey data analyzed by GAO indicate that relatively few families have established these accounts, and that those who do tend to have greater assets and income than those who do not establish the accounts. CRS has not identified any studies that have evaluated the impact of 529 plans on enrollment in non-degree programs or their effectiveness in helping non-degree candidates improve their job skills."], "subsections": []}]}, {"section_title": "Program Limitations", "paragraphs": ["Most research regarding education tax benefits broadly have found little effect on increasing enrollment. This research highlights some limitations with education tax benefits that may be applicable to non-degree programs. First, education tax benefits, when received many months after expenses are incurred, may provide limited assistance to students who cannot afford upfront education costs. Second, as GAO has highlighted, there are a variety of different education benefits and it may be confusing for taxpayers to determine what benefit they are eligible for, and which benefits provide the largest tax savings. Finally, the education tax benefits discussed in this report only benefit taxpayers with income tax liabilities, which excludes many low-income taxpayers who have little to no income tax liabilities."], "subsections": []}]}, {"section_title": "Veterans Education Programs (Post-9/11 GI Bill\u00c2\u00ae and VET TEC) (VA)", "paragraphs": ["Veterans education programs (GI Bills) were originally intended to help former servicemembers adjust to civilian life by providing for the \"reintegration of the discharged soldier, sailor, and marine into the civilian economy in the most prompt and adequate manner.\" Over the years, the benefits have been renewed and revised to also compensate for compulsory service, encourage voluntary service, avoid veteran unemployment, provide equitable benefits to all who served, and promote military retention. The pilot Veteran Employment Through Technology Education Courses (VET TEC) and its predecessor are an alternative approach that incentivizes training providers for program completion and employment. VET TEC is not a GI Bill. The GI Bills and VET TEC provide financial assistance to students whose eligibility is based on a qualifying individual's service in the uniformed services while such students are enrolled in approved programs of education, which include training programs.", "The GI Bills and VET TEC are administered primarily by the Department of Veterans Affairs. The GI Bills are appropriated entitlements funded with mandatory spending. Appropriated entitlement spending is funded, but not controlled, in annual appropriations acts. VET TEC is funded by a limited allocation from GI Bill appropriations. ", "The remainder of this section describes the Post-9/11 GI Bill and VET TEC. The Post-9/11 GI Bill has represented approximately 80% or more of total GI Bill participation and spending in each year since FY2013. "], "subsections": [{"section_title": "Eligibility of Non-degree Programs", "paragraphs": ["While the majority of Post-9/11 GI Bill benefits are used to support education through degree pursuit, they are also used to support students pursuing training and education through approved work-based learning and non-degree instructional programs at a variety of training establishments and educational institutions. Non-degree programs include credit and noncredit instructional programs, courses that prepare individuals for assessments to further their education or career (e.g., Advanced Placement [AP] exams or real estate licensing exams), OJT, apprenticeships, and courses that lead to a predetermined educational, vocational, or professional objective ( Table 6 ). The variety of eligible programs was intended to provide eligible individuals with the maximum choice in training and education options. ", "VET TEC benefits are only available for the pursuit of non-degree high-technology programs of education at contracted training providers that enter into a Program Participation Agreement (PPA) with the VA. A high-technology program of education provides instruction in computer programming, computer software, media application, data processing, or information science. The training providers must meet several criteria including, but not limited to, not offering degrees and not charging tuition and fees that exceed annual VA caps."], "subsections": []}, {"section_title": "Participant Eligibility for Training", "paragraphs": ["Post-9/11 GI Bill benefits are available to eligible servicemembers and veterans and their family members. The program is not open to the general public and is not based on family income levels. A servicemember or veteran must meet qualifying active duty service requirements in the uniformed services and either continue on active duty or meet specified discharge/release requirements. An eligible servicemember may transfer benefits to family members. The spouse and children of a servicemember who dies in the line of duty while serving on active duty as a member of the Armed Forces are also eligible. ", "To be eligible for VET TEC, an individual must be a GI Bill-eligible veteran enrolled full-time in a VET TEC-eligible program. VET TEC participants may or may not be recipients of GI Bill benefits."], "subsections": []}, {"section_title": "Basic Benefit Payment Structure", "paragraphs": ["Both the Post-9/11 GI Bill and VET TEC provide living stipend payments directly to participants and payments to providers for direct program costs. Program costs are paid by the Post-9/11 GI Bill concurrent with program pursuit, while VET TEC pays costs during and after pursuit. In addition to payments, eligible individuals may apply for personalized counseling to help guide their career paths, ensure the most effective use of their VA benefits, and help them achieve their goals."], "subsections": [{"section_title": "Post-9/11 GI Bill", "paragraphs": ["The Post-9/11 GI Bill provides eligible persons an entitlement to educational assistance payments over a period of 36 months (or its equivalent in part-time educational assistance). In cases where a veteran transfers all or a portion of the benefits, transferors and transferees must share the 36 months of entitlement. ", "Under the Post-9/11 GI Bill, several types of benefit payments are available. The amount of each payment and eligibility for the payments depends on an individual's benefit level; the type of training or education program pursued; the rate of enrollment or pursuit; actual charges, and when relevant, in-state tuition charges; the location of the training or education; and the mode of education delivery. An individual's benefit level is based on their aggregate length of qualifying active duty service or other eligibility characteristics. While an individual is enrolled in a program of education or pursuing training, an educational institution may receive payments for tuition and fee charges, and the individual may receive a monthly housing allowance, a books and supplies stipend, tutorial assistance, and additional monthly payments. Individuals are reimbursed for fees charged for taking approved tests.", "As an illustration in AY2019-2020, a veteran enrolled in an educational program at a hypothetical private educational institution may receive up to $24,476.79 in tuition and fees, but no more than the actual tuition and fee charges; between approximately $800 and $4,300 monthly for housing, depending on location; and up to $1,000 for books and supplies. Veterans pursuing OJT or apprenticeship receive a progressively decreasing housing allowance that is intended to partially offset scheduled wage increases associated with the OJT or apprenticeship, and may not receive a tuition benefit if no tuition is charged by the sponsoring employer or instructional provider. "], "subsections": []}, {"section_title": "VET TEC", "paragraphs": ["Under VET TEC, payments are provided to veterans and training providers. While enrolled full-time, veterans receive a monthly housing allowance that is similar to the Post-9/11 GI Bill housing allowance. The VA reimburses the qualified training provider for the cost of tuition and other fees for the program. The VA pays 25% of the cost upon initial enrollment of an eligible veteran, 25% upon program completion, and 50% upon employment of the completer in a suitable field. Training providers cannot charge tuition and fees to the VET TEC participant directly. "], "subsections": []}]}, {"section_title": "Basic Administrative Structure", "paragraphs": ["Potential participants apply to the VA to ensure eligibility for either the Post-9/11 GI Bill or VET TEC. Eligible individuals may then enroll in or enter into a training agreement for approved programs. Educational institutions and training establishments certify the expected and actual enrollment and pursuit of eligible individuals to the VA. Certifications of individual enrollment and pursuit are made at regular intervals and when there are changes to what was previously certified. The VA verifies eligibility, calculates payment amounts, and distributes payments to eligible individuals and educational institutions. "], "subsections": []}, {"section_title": "Quality Assurance Mechanisms", "paragraphs": ["Program quality for GI Bill-approved programs is primarily determined by semi-independent state approving agencies (SAAs), but the VA also has oversight obligations. Program quality for VET TEC programs relies heavily on participant employment outcomes."], "subsections": [{"section_title": "Post-9/11 GI Bill157", "paragraphs": ["While the VA primarily relies on SAAs for initial approval of programs of education, the VA and SAAs share responsibility for ongoing oversight. The VA contracts (or enters into agreement) with each SAA to provide approval, oversight, and other related activities to ensure the quality of programs of education and proper administration of GI Bill benefits. Statutory and regulatory provisions and policy have established standards for the programs of education, educational institutions, and training establishments.", "The quality standards apply to each program of education. Many standards were established in response to reports of poor quality or incidences of abuse. Four prominent standards apply to the quality of most programs: program objective, independent study (e.g., online) restrictions, the 85-15 rule, and contractual arrangement restrictions. The program objective may not be avocational, recreational, or personal development. Independent study programs must be accredited by an ED-recognized accrediting agency and must lead to a degree or certificate that meets additional statutorily specified criteria. Under the 85-15 rule, no more than 85% of students enrolled in a program of education may have tuition, fees, or other charges covered by institutional aid or by a GI Bill. For programs offered in part or exclusively through contractual agreements, the contracted courses must be independently approved for GI Bill purposes. ", "Besides the standards that apply to most programs of education, there are additional requirements depending on the type of program. For example, non-degree programs must be offered in facilities with adequate space and equipment, taught by instructors with adequate education and qualifications, and follow curricula with recognized accepted standards. Programs designed to prepare individuals for state licensure or certification or for an occupation requiring state board approval must meet the relevant instructional requirements.", "Programs of education that have not been approved or certified as meeting quality educational criteria by another government agency are required to meet various standards and criteria in addition to the aforementioned standards. Non-degree programs that have been approved by other government agencies are Federal Aviation Administration (FAA) approved flight training programs, DOL Registered Apprenticeships, and state-approved apprenticeships. The standards include, but are not limited to, having faculty with adequate qualifications and having a curriculum that is similar to other institutions, or meeting licensure, certification, or board standards. "], "subsections": []}, {"section_title": "VET TEC158", "paragraphs": ["The VA is the sole arbiter in determining if a facility is eligible for VET TEC. The payment structure and several key elements of the PPA are designed to ensure program quality and value. The payment structure, as described earlier, reimburses training providers when veterans complete the program and when they find meaningful employment . Meaningful employment means employment occurring within 180 days of program completion and using the skills of the completed program for self-employment, promotion, or new employment. ", "Key quality-related requirements within the VET TEC PPA require that training providers be licensed or approved by the required federal, state, or municipal agencies and meet the 85-15 rule. The PPA further requires that the VET TEC-eligible programs not be self-paced."], "subsections": []}]}, {"section_title": "Measures of Program Performance", "paragraphs": ["As of 2013, the VA is required to report annually on the number of credit hours, certificates, degrees, and other qualifications earned by Post-9/11 GI Bill participants. The requirement was initiated to determine whether the program effectively prepares eligible individuals for the future. ", "The VET TEC program performance measures are the program admittance rate, job placement and retention rates for program completers, the percentage of program completers employed less than six months in the field of study, the percentage of program completers employed at least six months in the field of study, median annual salary for employed program completers, and transfer rates to other academic or vocational programs."], "subsections": []}, {"section_title": "Program Participation", "paragraphs": ["Although GI Bill participant pursuit of training and education through non-degree programs is low, many educational institutions and training providers that do not offer degrees are approved for GI Bill purposes. Approximately 9% of GI Bill participants pursued an educational certificate in 2013, compared to 81% who pursued a degree. In FY2018, approximately 0.4% of Post-9/11 GI Bill participants were pursuing OJT or an apprenticeship. Of the educational institution and training establishment locations that offered programs approved for GI Bill purposes, almost 500 flight school locations, over 18,000 school locations, and over 9,000 OJT/apprenticeship locations did not award any degrees, based on data from December 2019. Of the over 18,000 school locations, 37% were private for-profit, 37% were public, and 27% were private nonprofit schools. The most popular certificates completed by Post-9/11 GI Bill participants in AY2018-2019 were in welding; information technology; heating, ventilation, and air conditioning; health care; and gunsmithing.", "Based on July 1, 2019, data following the February 2019 VET TEC launch, there were five approved training providers and eight participants."], "subsections": []}, {"section_title": "Program Limitations", "paragraphs": ["Program eligibility is limited to individuals who have served in the uniformed services and their family members.", "Some recent examinations of the program have found that program quality oversight may be compromised by the oversight process described above. A 2018 GAO report indicated that SAA funding, the scope and focus of oversight actions, and the process for choosing institutions to audit may limit the ability to adequately conduct thorough oversight. A 2018 VA OIG report found that SAAs lacked adequate controls to review all statutory approval standards, including, in particular, potentially deceptive advertising or program modifications. "], "subsections": []}]}, {"section_title": "Supplemental Nutrition Assistance Program (SNAP) Employment & Training (E&T) (USDA)170", "paragraphs": ["SNAP (formerly known as the Food Stamp Program), is administered by the Department of Agriculture and provides eligible low-income households with benefits redeemable for eligible foods at authorized retailers. The vast majority of federal funding for SNAP is for the food benefits themselves, but the federal government provides other SNAP funding as well. For example, states receive SNAP Employment & Training (E&T) funding to provide employment and education services for SNAP participants; this education is sometimes provided through non-degree programs. ", "First established by Congress in 1987 (then called Food Stamp Employment & Training (FSET)), the statutory purpose of SNAP E&T is to assist members of households participating in SNAP in \"gaining skills, training, work, or experience that will increase their ability to obtain regular employment and meet state or local workforce needs.\" Congress also established SNAP E&T as a way to meet the SNAP's work-related requirements; generally, nondisabled adults ages 18 to 59 are subject to these requirements. ", "Each state agency responsible for administering SNAP is required to implement a SNAP E&T program. States have the option to make their SNAP E&T programs mandatory or voluntary. That is, the state may choose to (1) make participation in E&T a condition of receiving SNAP benefits (mandatory) or (2) offer E&T but not require participation (voluntary). According to FY2017 USDA Food and Nutrition Service (USDA-FNS) data, the majority (35 of 53) state agencies operate voluntary E&T programs. A state's E&T program must include one or more of the following components: job search programs, job search training, workfare (work-for-benefits), work experience (may include OJT or apprenticeships), education, self-employment training, WIOA (i.e., job training services that are managed by agencies under WIOA), and programs to improve job retention. ", "SNAP E&T funding includes several streams of mandatory funding: nearly $124 million is available without a state match, and then an open-ended federal match is available for states' administrative expenses and states' reimbursements for dependent care and transportation. Total E&T funding each year varies, depending on states' use of open-ended matching funding. ", "Since October 2015, USDA-FNS, in partnership with Seattle Jobs Initiative (SJI), has been operating SNAP to Skills , a SNAP E&T capacity-building project USDA describes as addressing the need for education beyond high school. The project is \"designed to provide states the technical assistance, tools, and resources they need to build more effective and job-driven SNAP E&T programs.\" SNAP to Skills provides enhanced technical assistance to 10 states, but reaches additional states with tools, resources, and a SNAP E&T learning academy. ", "Statutory provisions require some integration between the WIOA Title I program and SNAP E&T. The SNAP E&T program must be delivered through the statewide workforce development system, unless the component is not available locally through such a system. While SNAP E&T recipients can receive services through WIOA One-Stop centers, SNAP staff have experience addressing the unique challenges of E&T recipients, such as low basic skills, housing instability, and mental health issues."], "subsections": [{"section_title": "Eligibility of Non-degree Programs", "paragraphs": ["A state's available services and programs vary. SNAP E&T programs can provide certain education activities, as specified in federal regulations:", "Educational programs or activities to improve basic skills or otherwise improve employability including educational programs determined by the State agency to expand the job search abilities or employability of those subject to the program. Allowable educational activities may include, but are not limited to, high school or equivalent educational programs, remedial education programs to achieve a basic literacy level, and instructional programs in English as a second language. Only educational components that directly enhance the employability of the participants are allowable. A direct link between the education and job-readiness must be established for a component to be approved.", "SNAP E&T education activities must have a direct link to employment and help SNAP participants move promptly into employment. Some states do offer and fund SNAP participants' pursuit of education and training via non-degree programs. According to FY2017 data, the most common education activities offered are vocational training and basic education.", "SNAP E&T may also provide actual work experience or training. Apprenticeships and subsidized employment are allowable, as are unpaid internships."], "subsections": []}, {"section_title": "Participant Eligibility for Training", "paragraphs": ["SNAP E&T serves those SNAP participants who are subject to the program's general work requirements, but some states may target their services to a subset of this population. To participate in SNAP, households must be income-eligible and meet certain other nonfinancial rules such as citizenship and work requirements. To be financially eligible, household gross monthly income (all income as defined by SNAP law) must be at or below 130% of the federal poverty level, and household net monthly income (SNAP-specified deductions are subtracted) must be at or below 100% of the federal poverty level. Under certain state options, the threshold may be as high as 200% of the federal poverty line. ", "Under current law for SNAP participation, general work requirements or work registration requirements are in place. That is, non-disabled adults who are not working are required to register for work, accept a job if offered one, and not reduce their work below 30 hours per week. This work registrant population is the eligible population for SNAP E&T programs, but states may design their E&T programs to focus on a subset of this population. States may also choose to make E&T mandatory for this population or a subset of it. ", "The process by which SNAP agencies or third-party partners assign or refer an individual for particular E&T programs or services varies. USDA guidance requires state agencies to assess participants to determine the most effective E&T component(s) for that participant; guidance suggests a range of assessment tools. The 2018 farm bill ( P.L. 115-334 , enacted December 2018) now requires all states to include \"case management services such as comprehensive intake assessments, individualized service plans, progress monitoring, or coordination with services providers.\"", "In general, E&T funds cannot be used to serve Temporary Assistance for Needy Families cash assistance recipients (see the \" Temporary Assistance for Needy Families (TANF) (HHS) \" section for more information).", "Some individuals enrolled half-time or more in an IHE are ineligible for SNAP. Such individuals may be eligible if assigned or placed in the IHE through a specified program, including a WIOA Title I program or SNAP E&T."], "subsections": []}, {"section_title": "Basic Benefit Payment Structure", "paragraphs": ["SNAP provides food assistance, while SNAP E&T provides educational programs and funds some associated costs. SNAP E&T funds may be used to cover the costs of education, develop a program component, or pay for the costs associated with an education program. Associated costs may include dependent care and transportation. Most E&T funding does not go directly to program participants but rather is administered by state agencies and contracted programs. It is common for states to contract for specific education programs or to work through partnerships. ", "USDA-FNS presents third-party partnerships as a model for developing, implementing, and growing a SNAP E&T program. Through such partnerships, states work with a third party such as a community college. The third party provides a financial or in-kind contribution to the program. Upon invoicing, the state draws down federal funds to reimburse the partners. The federal funds may be 100% funding or a 50% match depending on the funding stream.", "For Pell Grant-eligible students, the Pell Grant must be the first payer of college expenses. The first payer indicates that the Pell Grant amount would be based on full college expenses, whereas the E&T benefit would be based on the college expenses not covered by the Pell Grant.", "Associated expenses supported by E&T must be reasonable and necessary. Before using E&T funds for tuition, the state must first explore other funding sources, such as education grants (but not loans).", "W orkforce partnerships were added to the E&T program by the 2018 farm bill. Workforce partners may include private employers, nonprofit organizations providing services relating to workforce development, and training providers identified on WIOA ETPLs. The workforce partners provide training, work, or experience. ", "As mentioned above, work components may include OJT and apprenticeships. "], "subsections": []}, {"section_title": "Basic Administrative Structure", "paragraphs": ["Each SNAP E&T program is designed by the state within a federal framework of rules and is subject to USDA-FNS approval. Statute and regulation set out requirements for states' E&T plans. State programs can and do vary greatly in their capacity and services offered. Per changes made by the 2018 farm bill, the programs must be implemented in consultation with the state workforce development board (WDB) or private employers or employer organizations (See the \" WIOA Contracts and Individual Training Accounts (ITAs) (DOL) \" section for state WDBs' responsibilities under WIOA Title I). ", "SNAP E&T participants generally learn of the available programs and services through the SNAP state agency or referrals to partner agencies. "], "subsections": []}, {"section_title": "Quality Assurance Mechanisms", "paragraphs": ["States typically monitor and assess provider and program quality, though USDA-FNS has increasingly provided technical assistance and resources to help them do so. "], "subsections": []}, {"section_title": "Measures of Program Performance", "paragraphs": ["The 2014 farm bill (Agricultural Act of 2014; P.L. 113-79 ) required USDA to establish a performance indicators reporting process. USDA has finalized the regulation implementing this reporting, and the first annual report was due in January 2018. As of the date of this report, USDA has not published a compilation or information based on the reports. The national reporting measures are", "unsubsidized employment in the second quarter after completion of participation in SNAP E&T; median quarterly wages in the second quarter after completion of participation in SNAP E&T; unsubsidized employment in the fourth quarter after completion of participation in SNAP E&T; and completion of an educational, training, work experience, or OJT component."], "subsections": []}, {"section_title": "Program Participation", "paragraphs": ["The majority of SNAP E&T participants were provided services other than education. According to USDA-FNS FY2016 data, the most recent available, 38 of 53 SNAP state agencies provided an education component in their E&T program, and the states served almost 70,000 SNAP participants in the education components of their programs. FY2016 SNAP E&T participation data on all participants (not necessarily education component participants) by state show that some states served fewer than 100 participants, while other states served nearly 100,000."], "subsections": []}, {"section_title": "Program Limitations", "paragraphs": ["There are a few limitations to SNAP E&T. First, it is more common for SNAP E&T participants to participate in job search or other non-education components; fewer than 10% of participants receive education. Second, information is not available on the quality of educational programs or work experience. A forthcoming evaluation on the 2014 farm bill pilot projects may inform future guidance and policymaking. In addition, subsequent employment outcomes are not available. Finally, wages earned through SNAP E&T may increase household income, and thus may reduce eligibility for SNAP and SNAP E&T."], "subsections": []}]}, {"section_title": "Temporary Assistance for Needy Families (TANF) (HHS)206", "paragraphs": ["The Temporary Assistance for Needy Families block grant has the statutory purpose of increasing state flexibility to (1) provide assistance to needy families with children so that children can live in their own homes or in the homes of relatives; (2) end the dependence of needy parents on government benefits by promoting work, job preparation, and marriage; (3) reduce out-of-wedlock pregnancies; and (4) promote the formation and maintenance of two-parent families. States may expend their TANF block grants (and associated state funds) in any manner \"reasonably calculated\" to achieve TANF's statutory purpose. ", "TANF is administered HHS. Under federal budget rules, TANF is a mandatory spending program. ", "TANF is not a dedicated education and/or training program, but a broad-purpose block grant that gives states permission to spend funds on a wide range of benefits, services, and activities. TANF is best known for providing monthly assistance to needy families with children, primarily headed by single mothers, to help meet their basic needs. This assistance is usually in the form of cash, but may also be paid as a voucher or to a third party to meet a basic need. TANF funds may also be used to support subsidized employment, OJT, and training and education programs; however, this is a subset of the types of activities that TANF may fund.", "Several states have used TANF funds to support career pathways . According to HHS, \"a career pathway provides access to interconnected education programs and support services for students and workers to help them advance in their chosen career paths to jobs with family-sustaining wages.\" One state program includes coordinators who are paid with TANF funds but are employed at a community college and serve as case managers, recruiting students and ensuring they have access to support services. The program also makes use of college work-study jobs. "], "subsections": [{"section_title": "Eligibility of Non-degree Programs", "paragraphs": ["TANF has no rules limiting the types of training and education programs that are eligible, though there are limits on how much training and education may be counted toward meeting its performance measure (see the \" Measures of Program Performance \" section). Therefore, the state may decide what kinds of vocational educational training are eligible."], "subsections": []}, {"section_title": "Participant Eligibility for Training", "paragraphs": ["TANF funds must be used for low-income families with children; thus, parents or other caretakers of children would be eligible for training and education. Financial eligibility rules are set by the state in which the family resides, and there is a significant amount of variation among them. According to HHS data, \"in 2015, over one-third of adult TANF assistance recipients (38.6%) had less than a high school education, and more than half (53.9%) had no further education beyond high school completion (or its equivalent).\""], "subsections": []}, {"section_title": "Basic Benefit Payment Structure", "paragraphs": ["TANF helps fund state assistance programs for needy families with children. Funds are provided to the states, which then provide assistance to families. The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 ( P.L. 104-193 ), which created TANF, requires that funds be spent as determined by state legislatures. States determine eligibility rules and benefit amounts for these programs. They also determine what activities to require of adult recipients of assistance. There is no federal requirement to provide different benefit amounts depending upon whether adult recipients are in training and education, but benefits must be reduced or ended if recipients refuse to participate in required activities that may include training and education. (States may create \"good cause\" and other exceptions for which the sanction for failure to participate in required activities may be waived.) ", "TANF also provides funding for a wide range of benefits and support services other than cash assistance, and some low-income parents who do not receive cash assistance are served by TANF funds. Support services may include, but are not limited to, advising, career planning, and employment services."], "subsections": []}, {"section_title": "Basic Administrative Structure", "paragraphs": ["Benefits and services are delivered at the state and local level. States decide which participants get which services. State TANF programs sometimes refer assistance recipients to a WIOA One Stop Center for education or employment. Other states choose to operate employment and training services for TANF recipients separately from the WIOA system."], "subsections": []}, {"section_title": "Quality Assurance Mechanisms", "paragraphs": ["There are no federal rules regarding the quality of training and education programs, though states might establish such rules. "], "subsections": []}, {"section_title": "Measures of Program Performance", "paragraphs": ["The minimum work participation rate (WPR) is TANF's sole performance measure. TANF requires each state to meet a performance standard that requires a minimum percentage of its assistance caseload to either be working or engaged in activities. The rules for what counts as engagement limits training and education: \"vocational educational training\" is limited to 12 months in a lifetime; obtaining a GED is either not countable toward the standard or counted only if an individual is in another activity more closely related to work for a minimum number of hours per week. States may also meet their minimum work participation rate in whole or in part through reducing the cash assistance caseload."], "subsections": []}, {"section_title": "Program Participation and Outcomes", "paragraphs": ["Little program-wide data exists on TANF participation in training and education and the subsequent outcomes."], "subsections": []}, {"section_title": "Program Limitations", "paragraphs": ["Child care and educational preparation may limit a large proportion of TANF recipients from taking advantage of and succeeding in non-degree programs. Most TANF assistance adults are single mothers with young children. States may use TANF funds to assist parents with child care. The TANF cash assistance caseload is significantly disadvantaged in terms of education.", "The choice of non-degree programs may be limited:", "The 12-month lifetime limit on vocational educational training limits the types of training that TANF recipients can pursue. An individual in an apprenticeship program may exceed the income eligibility threshold for receiving assistance. ", "In addition, the quality of training and education programs is unknown."], "subsections": []}]}]}]}}
{"id": "R45827", "title": "State and Local Financing of Public Schools", "released_date": "2019-08-26T00:00:00", "summary": ["The funding of public elementary and secondary schools in the United States involves a combination of local, state, and federal government revenues, in proportions that vary substantially both across and within states. According to the most recent data, state governments provide 47.0% of these revenues, local governments provide 44.8%, and the federal government provides 8.3%. Over the last several decades, the share of public elementary and secondary education revenues provided by state governments has increased, the share provided by local governments has decreased, and the federal share has varied within a range of 6.0% to 12.7%. The primary source of local revenues for public elementary and secondary education is the property tax, while state revenues are raised from a variety of sources, primarily personal and corporate income and retail sales taxes, a variety of \"excise\" taxes such as those on tobacco products and alcoholic beverages, and lotteries in several states.", "All states (but not the District of Columbia) provide a share of the total revenues available for public elementary and secondary education. This state share varies widely, from approximately 25% in Illinois to almost 90% in Hawaii and Vermont. The programs through which state funds are provided to local educational agencies (LEAs) for public elementary and secondary education have traditionally been categorized into five types: (1) Foundation Programs, (2) Full State Funding Programs, (3) Flat Grants, (4) District Power Equalizing, and (5) Categorical Grants. Of these, Foundation Programs are most common, although many states use a combination of program types.", "A goal of all of the various types of state school finance programs is to provide at least some limited degree of \"equalization\" of spending and resources, and/or local ability to raise funds, for public elementary and secondary education across all of the LEAs in the state. Such programs often establish target levels of funding \"per pupil.\" The \"pupil\" counts involved in these programs may simply be based on total student enrollment as of some point in time, or they may be a \"weighted\" count of students, taking into account variations in a number of categories\u00e2\u0080\u0094special pupil needs (e.g., disabilities, low family income, limited proficiency in English), grade levels, specific educational programs (e.g., career and technical education), or geographic considerations (e.g., student population sparsity or local variation in costs of providing education).", "After state funds reach LEAs, they are combined with locally raised funds to provide educational resources to students in individual schools. Under the traditional, and still most common, method of allocating resources within LEAs, there are no specific budgets for individual schools. Available state and local funds are managed centrally, by LEA staff, and various resources\u00e2\u0080\u0094facilities, teachers, support staff, school administrators, instructional equipment, etc.\u00e2\u0080\u0094are assigned to individual schools. In contrast, a number of LEAs have in recent years applied the weighted student funding concept to developing and implementing individual school budgets.", "The federal Elementary and Secondary Education Act (ESEA) includes one program (Title I-A) and one secretarial authority (Title I-E) that incorporate elements of the equalization and weighted student funding strategies used by states and LEAs. Two of the four ESEA Title I-A allocation formulas employ pupil weighting concepts in the allocation of funds to states and LEAs, and one of those formulas also takes into consideration disparities in expenditures per pupil among each state's LEAs in calculating grants. The ESEA Title I-E authority allows the Secretary of Education to enter into a demonstration agreement with LEAs that are using or agree to implement weighted student funding systems to establish budgets for, and allocate funds to, individual schools.", "A separate development relevant to many aspects of public elementary and secondary education finance has been increasing interest in the collection and reporting of school-level finance data for public schools. While historically there have not been comprehensive state or federal efforts to calculate or report on specific budgets or expenditure levels for individual public schools, federal efforts to require and support the reporting of such information have expanded rapidly in recent years."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["The funding of public elementary and secondary schools in the United States involves a combination of local, state, and federal government revenues. State and local governments generally provide over 90% of the revenue available for public elementary and secondary education on an annual basis, with the federal government providing the remainder. As such, there is consistent congressional interest in understanding how the majority of available funds are provided to local educational agencies (LEAs) and, ultimately, to public schools. This report intends to provide context for consideration of the comparatively small but important role of the federal assistance programs in financing public education, discuss some of the ways that state and local finance policies and practices intersect with federal involvement, and explain selected key concepts in this field. ", "The report provides a basic overview of the mechanisms used by states and LEAs to fund public education and an introduction to core school finance concepts. It begins with an examination of the sources of funding for public elementary and secondary education and how these funding sources vary by state and over time. It then considers how states and LEAs raise revenue for public education through different types of taxes, including property taxes. ", "The report then focuses on state school finance programs, the varieties of policies under which states provide funds to LEAs, and the local units of government that administer public K-12 education. This includes an examination of the key concept of \"equalization\" in state school finance programs. School finance programs often incorporate state-level weighted student funding programs, under which additional funds are provided to LEAs for the education of students with certain high-cost needs (e.g., associated with low family income or student disabilities) or who are in high-cost educational programs (such as technical education). ", "The next section of the report considers LEA programs to finance individual public schools. This is followed by a discussion of aspects of the largest federal K-12 education aid program, Title I-A of the Elementary and Secondary Education Act (ESEA), that incorporate a state school finance equity factor or weighted student funding components. In addition, a new ESEA Title I-E, as most recently comprehensively amended by the Every Student Succeeds Act (ESSA; P.L. 114-95 ), authorizes the Secretary of Education to provide participating LEAs with flexibility to consolidate eligible federal funds with state and local funding for individual public schools to create a \"single school funding system based on weighted per-pupil allocations for low-income and otherwise disadvantaged students.\"", "The report concludes with a review of recent efforts to collect and report data on the level of expenditures per pupil at individual public schools within LEAs, a topic that has garnered increasing interest among policymakers in recent years."], "subsections": []}, {"section_title": "Percentage Shares of Revenues for Public Elementary and Secondary Education by Government Level", "paragraphs": ["The funding of public elementary and secondary schools in the United States involves a combination of local, state, and federal government revenues, in proportions that vary substantially both across and within states. Overall, a total of $678.4 billion in revenues was devoted to public elementary and secondary education in the 2015-16 school year (the latest year for which detailed data on revenues by source are available). State governments provided $318.6 billion (47.0%) of these revenues, local governments provided $303.8 billion (44.8%), and the federal government provided $56.0 billion (8.3%). ", "Over the last several decades, the share of public elementary and secondary education revenues provided by state governments has increased, the share provided by local governments has decreased, and the federal share has varied within a range of 6.0% to 12.7%. The federal share peaked in the recessionary period of 2009-2011, and has declined thereafter. Table 1 provides the local, state, and federal shares for selected years over the 50-year period from 1965-1966 to 2015-2016.", "There is substantial variation among the states with respect to the shares of public elementary and secondary education revenues provided by state, local, and federal governments ( Table 2 ). For example, Hawaii, with a statewide system of public elementary and secondary education and no LEAs, provides virtually no local government revenues; almost 90% of funding comes from the state government. At the other end of this spectrum, the District of Columbia, which has no state government, provides approximately 90% of revenues from local sources. The other states fall between these two extremes of providing all or almost all of the nonfederal revenue from either state or local sources. Illinois has the lowest state share of revenues (24.1%) and the highest local share (67.4%) of the 50 states. "], "subsections": []}, {"section_title": "Sources of State and Local Government Revenues Used for Public Elementary and Secondary Education", "paragraphs": ["Revenues are raised at the state and local levels to support public elementary and secondary education. Local revenues may be raised directly by an LEA itself (fiscally independent LEAs), or be raised and provided to an LEA by a general purpose unit of local government, such as a county or city (fiscally dependent LEAs). The primary source of local revenues for public elementary and secondary education is the property tax. This tax is primarily applied to real property (residences, commercial buildings, etc.), and in some cases to vehicles or boats. According to data from the U.S. Census Bureau for 2016, 72.0% of all local government tax revenues were from property taxes, 17.4% were from sales taxes, 6.0% were from individual and corporate income taxes, and the remaining 4.6% came from motor vehicle and other miscellaneous taxes. ", "The property tax is an annual percentage of the assessed value of residential and commercial \"real\" property (i.e., buildings and land) and, in some localities, \"personal\" property (i.e., automobiles, other vehicles, and occasionally other items such as livestock). The property tax rate unit is often referred to as a \"mill\" or one-thousandth of the assessed value of the property. Because almost three-quarters of all local government revenues come from property taxes, variations in the value of such real or personal property relative to the number of school-age children in a locality is usually the primary cause of local variations in capacity to raise revenues per pupil for public elementary and secondary education. Beyond differences in taxable property per pupil, localities in many states are able to select their local property tax rate, at least within a limited range, and may choose to tax themselves at higher rates than other localities in the same state.", "State revenues for public elementary and secondary education are raised from a variety of sources, primarily personal and corporate income and retail sales taxes, \"excise\" taxes such as those on tobacco products and alcoholic beverages, plus lotteries in several states. According to data from the U.S. Census Bureau for 2016, 47.8% of all state government tax revenues were derived from sales taxes, 42.2% were from individual and corporate income taxes, 1.7% were from property taxes, and the remaining 8.3% came from motor vehicle and other miscellaneous taxes."], "subsections": []}, {"section_title": "State School Finance Programs", "paragraphs": ["As depicted in Table 2 , all states (but not the District of Columbia) provide a share of the total revenues available for public elementary and secondary education. This state share varies widely, from approximately 25% in Illinois to almost 90% in Hawaii and Vermont. Starting in the early 20 th century, all states began to establish public elementary and secondary finance programs in order to diminish somewhat the high degree of inequality in revenues per pupil that would result if funding were based only on local taxable resources and the willingness of local citizens to tax themselves. ", "The primary policies under which states allocate these revenues among their LEAs have been catalogued and categorized by school finance analysts on several occasions in recent decades. For several years, the U.S. Department of Education's National Center for Education Statistics (NCES) financed and supported a joint effort with the American Education Finance Association and the National Education Association to compile detailed information on the characteristics of state school finance programs. However, the most recent of these publications was released in 2001, was based on the 1998-1999 school year, and has not been updated.", "Since the publication of the last NCES catalog of state school finance programs, individual education policy analysts have coordinated efforts to update at least some of the information. For example, annual updates of key school finance policies for each state have recently been published by Professor Deborah Verstegen of the University of Nevada at Reno. Note that while those organizing and compiling the surveys of state school finance programs provide guidance intended to elicit consistent responses from the states, responses are generally prepared by different individuals in each state who may not describe various policies using the same terminology or focus.", "The programs through which state funds are provided to LEAs for public elementary and secondary education have traditionally been categorized by those involved in the compilations discussed above and other education finance analysts into five types of programs: (1) Foundation Programs, (2) Full State Funding Programs, (3) Flat Grants, (4) District Power Equalizing, and (5) Categorical Grants. In many cases, states often have elements of two or more of these types of programs in their school finance policies. Precise counts of how many states have finance programs in each of these categories vary\u00e2\u0080\u0094due to differences in the time at which analyses are conducted combined with the evolution of state policies over time, as well as variations of interpretation by individuals in each state responding to state policy surveys, among other factors. Nevertheless, there is general agreement that the first of these types of state school finance programs, typically referred to as Foundation Programs, is much more common than the other four types, and may be found to some degree in as many as 80% of the states. "], "subsections": [{"section_title": "Foundation Programs", "paragraphs": ["Foundation Programs began to come into existence in the 1930s. A typical Foundation Program includes required local tax effort, state equalization aid, and local leeway funds. Under a Foundation Program, the state establishes an annual target level of funding per pupil applicable to all of the state's LEAs. As is discussed further below, the pupil count may be undifferentiated, or may be weighted to take into consideration a variety of pupil characteristics (such as grade level, type of educational program, special educational needs such as disabilities, low family income, or English Learner (EL) status) and sometimes estimated differences in the costs of providing education services in different localities. The funding target is most often (and historically) conceptualized as a \"minimum\" level of funding per pupil, or in some cases more recently as a level of funding necessary to provide an \"adequate\" educational program. In any case, Foundation Programs are designed to guarantee a \"base\" level of funding, not to achieve absolute fiscal equality among the LEAs of a state. The state target level of funding per pupil is likely to be influenced by budgetary and other political considerations. The state pays each LEA a percentage of this assumed total that varies inversely with local taxable property wealth per pupil, or some other measure of local capacity to raise revenues. The state percentage is higher for LEAs with low fiscal capacity per pupil, and lower for those with high fiscal capacity per pupil. ", "Foundation Programs vary in their provisions regarding local tax rates. In most states with Foundation Programs, the state specifies at least a minimum rate at which localities must tax themselves. In other states, a local tax rate is assumed in the calculation of the Foundation Program's state share, based on the difference between the assumed total expenditure level and the state percentage of this, but localities are not actually required to tax themselves at this rate. In addition, LEAs might be allowed to raise local tax rates beyond the level required under state law, at least to a limited extent, but will not receive any state supplementation of the additional funds raised. These are commonly referred to as \"leeway funds,\" as LEAs have the leeway to choose a local tax rate higher than the standard level established under state law. Thus, a Foundation Program equalizes funding per pupil (however \"pupil\" may be defined) but only up to a target level, with LEAs often free to raise additional funds (not matched by the state) if they wish. Many states also combine Foundation Programs with one or more of the additional types of programs discussed below (except for Full State Funding) in a tiered or layered funding system. "], "subsections": []}, {"section_title": "Full State Funding Programs", "paragraphs": ["Full State Funding is only found in Hawaii. Under such a policy there are virtually no local revenues. States such as Vermont and New Mexico come close to this category through programs that involve very limited local funding sources. "], "subsections": []}, {"section_title": "Flat Grants", "paragraphs": ["Flat Grants are historically important, having been a dominant form of state aid in the early part of the 20 th century. While the role of Flat Grants as the primary form of state aid for public elementary and secondary education has almost disappeared, they are included as a supplement to Foundation Programs or other programs in a number of states. As the name implies, this type of program provides grants of an equal amount per pupil to all LEAs in a state, regardless of the level of taxable property wealth in those localities or specific pupil characteristics. "], "subsections": []}, {"section_title": "District Power Equalizing", "paragraphs": ["Usually called District Power Equalizing , this program type focuses specifically on equalizing the ability of different LEAs in a state to raise revenues from their available taxable property. These policies establish a minimum level of revenue that may be raised for each unit of local tax rate. For example, a state policy might set a standard that at least $1,000 per enrolled student be generated for each 5 mills of local property tax rate. If a locality cannot raise the standard level of funding per unit of tax rate, due to insufficient taxable property in the LEA, then state funds would be provided to make up the difference (often limited to a specified maximum local tax rate). ", "In other words, this program type provides for a minimum guaranteed tax base for public elementary and secondary education in the state. It is often said that District Power Equalizing focuses on equity for taxpayers, while frequently allowing substantial variation in local tax rates and thereby in total state and local funding per pupil, depending on local preferences. Reportedly, fewer states than in the past currently rely primarily on this type of program, though several still incorporate it as part of a multifaceted state school finance system (i.e., in conjunction with Foundation Programs, etc.)."], "subsections": []}, {"section_title": "Categorical Grants", "paragraphs": ["While apparently no state relies totally on Categorical Grants, many states use them in combination with the program types discussed above. Categorical Grants provide funding based on the number of students with specific needs (students with disabilities or limited English proficiency, from low-income families, etc.) or in particular educational programs (career and technical programs, etc.). States may allow such funding to be treated as general aid by LEAs, or they may require that funds be used to serve the specific students upon whom the grants are based. ", "At the federal level, the largest federal programs of aid to public elementary and secondary education are Categorical Grants. These include ESEA Title I, Part A, under which funds for the education of disadvantaged children are allocated primarily on the basis of estimates of the number of school-age children in low-income families."], "subsections": []}, {"section_title": "Categorization of State Finance Programs", "paragraphs": ["As mentioned above, it is difficult to place all states neatly into one of the five aforementioned categories based on current and consistent data and terminology. Nevertheless, one relatively recent effort to do so categorized 37 states as relying primarily on Foundation Programs, 1 state as using Full State Funding, 1 state as relying primarily on Flat Grants, 2 states as relying primarily on District Power Equalizing, and the remaining 9 states as employing combinations of these types of state school finance programs. Another effort to place states in school finance program groups was published in 2003, and was based on the NCES compilation of state programs for 1998-1999. This analysis placed 35 states in the Foundation Program category, 1 state in the Full State Funding category, 2 states in the Flat Grants category, and 6 states in the District Power Equalizing category, with the remaining 6 states using combinations of these types of programs. A more recent effort to categorize state school finance programs found that \"approximately 80%\" of all states use Foundation Programs, 1 provides Full State Funding (though a few others approach this), 1 relies primarily on Flat Grants, and 2 rely primarily on District Power Equalizing, but that increasingly many states combine two or more of these program types in a tiered funding system. Finally, in August 2019, the Education Commission of the States (ECS) published data indicating that 36 states rely primarily on a Foundation model of K-12 education finance, while 8 states rely primarily on a \"Resource Allocation\" model, 3 states rely on a hybrid of Foundation and Resource Allocation models, 1 state relies on a hybrid of a Foundation Model and a Hold Harmless policy, and the final 2 states rely on \"Other\" models of school finance. "], "subsections": []}]}, {"section_title": "School Finance \"Equalization\"", "paragraphs": ["A goal of all of the various types of state school finance programs is to provide at least some limited degree of \"equalization\" of spending and resources and/or local ability to raise funds for public elementary and secondary education across all of the LEAs in the state. School finance equalization would seem to imply \"equal spending per pupil\" among a state's LEAs. However, the meanings of both \"equal\" and \"per pupil\" may vary widely. Relatively few observers advocate absolute equality of dollars spent on behalf of every pupil in the state. Almost all state school finance programs allow for some level of spending differences based on local willingness to pay for public elementary and secondary education, differences in the costs of educating various categories of high-need pupils, or differences in the costs of providing education services in different geographic areas. ", "State school finance programs frequently account for certain types of pupils whose education imposes higher than average costs on LEAs, which might include pupils with disabilities, from low-income families and/or living in areas with high concentrations of poverty, with limited proficiency in the English language, or living in sparsely populated areas. Analysts of school finance programs sometimes use the term \"horizontal equity\" to refer to equal funding on behalf of similar pupils in different LEAs across a state, and \"vertical equity\" to refer to different levels of funding on behalf of pupils with different levels of need. If a state school finance program provides more funds on behalf of high-cost pupils than other pupils in an effort to provide vertical equity, and if the distribution of these pupils is uneven across the state's LEAs, then the state's school finance system might be considered by many analysts to be equalized yet have significant differences in spending per enrolled pupil overall.", "Regardless of how one adjusts for the distribution of different types of pupils, there are two basic ways in which school finance equalization has been defined. By far the most common method is based on equalization of the level of revenues or expenditures per pupil, however \"pupil\" might be defined. The other, somewhat less common, method focuses on equalizing the amount of funds per pupil that each LEA could raise per unit of local tax rate. The first method would equalize actual amounts of funds available, while the second would equalize local ability to raise revenues. These two basic concepts of equalization are reflected in many of the state school finance programs discussed above. Foundation Programs often incorporate provisions to provide higher amounts per pupil on behalf of one or more categories of high-need pupils, and Categorical Grants often provide increased funds to serve specific high-need pupil groups. In contrast, District Power Equalizing programs focus on equalizing the funds that could be raised per unit of local tax rate."], "subsections": [{"section_title": "Examples of Relevant School Finance Court Cases", "paragraphs": ["Beginning in the early 1970s, equalization of resources for public elementary and secondary education across the LEAs in each state has been the topic of a variety of state and, to a much lesser extent, federal court cases. In 1971, in the case of Serrano v. Priest , the California State Supreme Court ruled that the quality of a child's education should not depend on the taxable property wealth of the locality in which her or his family resides. This was the first of an ongoing series of cases brought in state courts, based on state statutory law and state constitutions. ", "At the federal level, the U.S. Supreme Court decided in 1973, in the case of San Antonio Independent School District v. Rodriguez, that differences in local expenditures per pupil within a state did not violate the U.S. Constitution, as long as these differences were the result of state actions intended to meet a public purpose, such as increased local control of education that might accompany substantial reliance on local revenue sources. Following this decision, the issue of school finance equalization has been addressed primarily in state courts, based on state constitutional provisions, rather than federal courts. "], "subsections": []}, {"section_title": "Weighted Student Funding in State School Finance Programs", "paragraphs": ["In the discussion of state school finance programs above, it was stated that such programs often establish target levels of funding \"per pupil.\" The \"pupil\" counts involved in these programs may simply be based on total student enrollment as of some point in time, or they may be a \"weighted\" count of students, taking into account variations in a number of categories\u00e2\u0080\u0094special pupil needs (e.g., disabilities, low family income, limited proficiency in English), grade levels, specific educational programs (e.g., career and technical education), or geographic considerations (e.g., student population sparsity or local variation in costs of providing education). ", "As noted earlier, existing surveys of state school finance programs, which rely on different respondents in each state, vary in the level of detail and use of terminology in describing the programs in each state. Nevertheless, a review of the individual state entries in a recent survey is an instructive indication of the extent to which weighted student counts are used to determine funding levels under current state programs. It shows that at least 32 states used some degree of weighting of the pupil counts used to calculate state aid to LEAs. Most of these states have policies that assign numeric weights to different categories of pupils, while in other states the school finance program specifies different target dollar amounts for specific categories of pupils, which is mathematically equivalent to assigning weights.", "Another study of the extent to which states use pupil weighting in their school finance programs was published in August 2019 by ECS. These data include fewer categories of pupil weights in state school finance programs than the aforementioned study. Overall, based on this study, 42 states, the District of Columbia, and Puerto Rico used weights for at least one pupil category.", "The number of states reported in these two recent studies as applying weights to different pupil categories in their school finance programs is summarized in Table 3 . Pupil weighting categories for which no data are provided in the third column of this table were not included in the ECS study. It should be noted that the Verstegen study was based on survey data collected from state departments of education on state school finance policies that were in effect during the 2017-2018 school year. The study did not include the District of Columbia or Puerto Rico. The ECS study relied on relevant state statutory language, regulations, and guidance that was in effect as of July 1, 2019, in the 50 states, the District of Columbia, and Puerto Rico.", "As detailed in Table 3 , according to both studies states most often add funding weights for pupils who are English learners, have low family income, or have disabilities. States often employ multiple weights for pupils with specific types of disabilities (i.e., higher weights are assigned as the level of disability increases), and sometimes increase low family income weights for pupils in LEAs or schools with high concentrations of low-income pupils (i.e., higher weights are assigned as the concentration of children from low-income families increases). States that do not employ pupil weights in their primary funding formulas sometimes provide extra funding for high-need pupils through separate Categorical Grants.", "Many states also adjust pupil weights for those in selected grade levels, geographic areas, or programs. Weights are often higher for pupils in the earliest grades or in grades 9-12, though policies vary widely, and a few states prioritize other grade levels such as 7-9. The population sparsity weights recognize the diseconomies of scale in areas with especially small LEAs or schools. The career and technical education weights recognize the extra costs of these types of programs.", "For example, the state of Oregon bases allocations under its primary school finance formula on a weighted count of students in average daily membership (enrollment) in each of the state's LEAs, which is referred to as the average daily membership weighted (ADMw) count. This policy applies additional weights to counts of students who are English learners; students who are pregnant or are in parenting programs; students with disabilities; students in low-income families; foster, neglected, or delinquent students; and students in remote or small schools.", "Another source of information on the extent to which weighted student funding and related concepts are employed in state school finance programs is the Edunomics Lab at Georgetown University. This organization compiles information on the share of state elementary and secondary education funds that various states allocate via primary state aid formulas incorporating weighted student funding, which it also refers to as the \"student based allocation.\" The Edunomics Lab has reported that 20 states allocated 33% or more of their state aid funds through a weighted student funding formula during at least some part of the period from FY2014 to FY2019."], "subsections": []}]}, {"section_title": "LEA Programs to Finance Public Schools", "paragraphs": ["As seen above, the concept of pupil weighting is often applied in determining funding levels for LEAs under state school finance programs. After state funds reach LEAs, they are combined with locally raised funds to provide educational resources to students in individual schools. LEAs may also use weighted student funding formulas to allocate funds to individual public schools, but more often they use other funding strategies. This section of the report provides an overview of conventional intra-LEA budgeting policies and the use of weighted student funding policies by LEAs."], "subsections": [{"section_title": "Conventional Intra-LEA Budgeting Policies", "paragraphs": ["Under the traditional, and still most common, method of allocating resources within LEAs, there are no specific budgets for individual schools. Available state and local funds are managed centrally, by LEA staff, and various resources\u00e2\u0080\u0094facilities, teachers, support staff, school administrators, instructional equipment, etc.\u00e2\u0080\u0094are assigned to individual schools. In this process, LEA staff typically apply LEA-wide standards such as pupil-teacher ratios or numbers of various categories of administrative and support staff to schools of specific enrollment sizes and grade levels. While levels of expenditures per pupil may be determined for individual schools under these budgetary systems, they are calculated \"after the fact,\" based on whatever staff and other resources have been assigned to the school. And while standard ratios of pupils per teacher or other resource measures may be applied LEA-wide in these situations, substantial variations in the amounts actually spent on teachers and other resources in each school can result from systematic variations in teacher seniority and other factors. These variations might be masked by local policies to apply average salaries, rather than specific actual salaries, in school accounting systems. Further, under traditional school budgeting policies there is little or no immediate or direct adjustment of resources or spending when students transfer from one school to another. "], "subsections": []}, {"section_title": "Weighted Student Funding Concept Applied to Intra-LEA Budgeting for\u00c2 Schools", "paragraphs": ["In contrast to traditional, fully centralized budgeting and accounting policies for public schools within LEAs, a number of LEAs have in recent years applied the weighted student funding concept to developing and implementing individual school budgets. These policies are not currently applied to any federal program funds and are applied only to a portion of the state and local revenues received by these LEAs, as they continue to centrally administer and budget for various activities such as school facility construction, operations and maintenance, employee benefits, transportation, food services, and many administrative functions . The LEAs develop school budgets for teachers, support staff, and at least some other resources on the basis of weighted counts of the students currently enrolled in each school, and adjust these budgets when students transfer from one school to another. ", "CRS is not aware of any comprehensive listing of all the LEAs that are currently implementing weighted student funding policies for intra-LEA allocations to schools. However, the Edunomics Lab compiles data on such LEAs, and it has identified several relatively large urban LEAs that allocated between 21% and 89% of their funds to schools through weighted student funding formulas in FY2017 and/or FY2018. These are Baltimore City, Boston, Chicago, Cleveland, Denver, Douglas County (Colorado), Houston, Indianapolis, Jefferson County (Colorado), Metro Nashville, Milwaukee, New York City, Newark, Norwalk (Connecticut), Orleans Parish, Prince George's County (Maryland), and San Francisco. This is not an exhaustive list of LEAs employing weighted student funding for schools, especially with respect to smaller LEAs, but it may be considered to be illustrative of the current extent of the practice.", "For example, the Boston public school system allocates funds to individual public schools on the basis of weighted student counts that vary by grade level, pupils with disabilities (multiple categories), ELs, pupils with low family income, and pupils in career and technical education programs. According to Boston Public Schools, the use of weighted student funding promotes the school system's goals of equity, empowerment for school-level staff, innovation by individual schools, accountability, and transparency regarding the level of funding available to each school. ", "Advocates for weighted student funding policies within LEAs argue that they promote equity by explicitly connecting funding levels with the distribution of high-need pupils, as defined by the LEA, resulting in higher state and local funding in schools with higher proportions of these pupils. Advocates also argue that transparency is enhanced when school budgets reflect funds actually spent at each individual school. They further argue that weighted student funding of schools enhances school choice and school-based management practices, where applicable, and promotes flexibility in resource use by schools. However, the use of weighted student funding within LEAs is a relatively new practice in most cases, and comprehensive research on its effects is not yet available. "], "subsections": []}]}, {"section_title": "Use of Equalization Strategies and Weighted Student Funding in ESEA", "paragraphs": ["The ESEA includes one program and one secretarial authority that incorporate elements of the equalization and weighted student funding strategies used by states and LEAs. The Title I-A program authorizes federal aid to LEAs for the education of disadvantaged children. Title I-A grants provide supplementary educational and related services to low-achieving and other students attending elementary and secondary schools with relatively high concentrations of students from low-income families. It is also the largest ESEA program ($15.9 billion), accounting for over 60% of all ESEA funds in FY2019 ($25.2 billion). The formulas used to determine grants to LEAs under Title I-A include both an equity component and weighted student funding elements. Title I-E provides the Secretary of Education (the Secretary) with authority to provide LEAs with flexibility to consolidate eligible federal funds with state and local funding to create a \"single school funding system based on weighted per-pupil allocations for low-income and otherwise disadvantaged students.\" Both ESEA Title I-A and Title I-E are discussed below."], "subsections": [{"section_title": "Title I-A", "paragraphs": ["Under the ESEA Title I-A program, different portions of each year's appropriation for grants to LEAs are allocated under one of four different formulas\u00e2\u0080\u0094Basic Grant, Concentration Grant, Targeted Grant, and Education Finance Incentive Grant (EFIG). For each formula, a maximum grant is calculated by multiplying a \"formula child count,\" consisting primarily of estimated numbers of school-age children in low-income families, by an \"expenditure factor\" based on state average per pupil expenditures for public K-12 education. For some formulas, additional factors are multiplied by the formula child count and expenditure factor. These maximum grants are then reduced to equal the level of available appropriations for each formula, taking into account a variety of state and LEA minimum grant and \"hold harmless\" provisions. ", "The formula child population used to determine Title I-A grants for the 50 states, the District of Columbia, and Puerto Rico consists of children ages 5 to 17 (1) in low-income families, according to estimates for LEAs from the Census Bureau's Small Area Income and Poverty Estimates (SAIPE) program; (2) in institutions for neglected or delinquent children or in foster homes; and (3) in families receiving Temporary Assistance for Needy Families (TANF) payments in excess of the poverty income level for a family of four persons. Children in low-income families account for about 97% of the total formula child count, so the other formula population categories are of limited significance overall. Each element of the formula child count is updated annually. In general, LEAs must have a minimum number of formula children and/or a minimum formula child rate to be eligible to receive a grant under a specific Title I-A formula.", "Among the four Title I-A formulas, the EFIG formula contains an equity factor as well as a weighted student funding component. The Targeted Grant formula also contains a weighted student funding component. Both types of funding factors are discussed below."], "subsections": [{"section_title": "Equity Factor", "paragraphs": ["Under the EFIG formula, a measure of the equity of state school finance programs plays a role in the determination of the level of funds each state receives. More specifically, Title I-A grants under the EFIG formula are made to states on the basis of their formula children, an expenditure factor based on state average per pupil expenditures for public elementary and secondary education, an effort factor based on average per pupil expenditure for public elementary and secondary education relative to personal income per capita for each state compared to the nation as a whole, and an equity factor based on variations in average per pupil expenditure among the LEAs in each state. Thus, state total grants under the EFIG formula are based on each state's share, compared to the national total, of a population factor multiplied by an expenditure factor, an effort factor, and an equity factor, adjusted by a state minimum grant provision. ", "The equity factor is based on a measure of the average disparity in expenditures per pupil among the LEAs of a state called the coefficient of variation (CV). The CV is expressed as a decimal proportion of the state average per pupil expenditure. In the CV calculations for this formula, an extra weight (1.4 vs. 1.0) is applied to estimated counts of children from low-income families. The effect is that grants would be maximized for a state where LEA-level expenditures per pupil from a low-income family are 40% higher than expenditures per pupil from a non-low-income family. Typical state equity factors range from 0.00 (for the single-LEA jurisdictions of Hawaii, Puerto Rico, and the District of Columbia, where by definition there is no variation among LEAs), to approximately 0.30 for a state with high levels of variation in expenditures per pupil among its LEAs. The equity factors for most states fall into the 0.10-0.20 range. In calculating grants, the equity factor is subtracted from 1.30 to determine a multiplier to be used in calculating state grants. As a result, the lower a state's expenditure disparities among its LEAs are, the lower its CV and equity factor will be, and the higher its multiplier and its grant under the EFIG formula will be. Conversely, the greater a state's expenditure disparities among its LEAs are, the higher its CV and equity factor will be, and the lower its multiplier and its grant under the EFIG formula will be. Of the $15.9 billion appropriated for Title I-A for FY2019, EFIG received $4.0 billion (25.3% of total Title I-A funding) for the 2019-2020 school year. "], "subsections": []}, {"section_title": "Weighted Student Funding", "paragraphs": ["The EFIG formula also employs a weighted student funding concept in the allocation of grants to states. In the calculation of the formula's equity factor, state and local funds per pupil are calculated using a greater weight for students from low-income families (1.4) than for other students (1.0). As a result, a state where greater state and local funds are available for the education of students from low-income families than for other pupils would have a numerically low equity factor and ultimately higher grants under the EFIG formula. ", "The weighted student concept is also employed in the Title I-A Targeted Grant formula and in an additional way in the intrastate allocation of EFIG formula funds to LEAs within states. As with the EFIG formula, the Targeted Grant formula received $4.0 billion (25.3% of total Title I-A funding) for the 2019-20 school year. Under the Targeted Grant formula, as well as the intrastate allocation of funds under the EFIG formula, formula child counts and formula child rates are assigned weights, with higher weights applied as the formula child count or rate increases in an LEA. The higher the formula child count or rate is, the higher the grants per formula child an LEA would receive will be. ", "Under the Targeted Grant formula, one set of weighting factors is applied to all LEAs based on formula child counts and one set is applied to all LEAs based on formula child rates. In contrast, under the EFIG formula three sets of weights are used for weighting formula child counts and three sets are used for the weighting of formula child rates. The set of weights used under the EFIG formula depends on the value of each state's equity factor (described above), with lower weights applied to LEA grant calculations in states that have a lower equity factor (i.e., relatively low disparities in expenditures per pupil among the state's LEAs) and higher weights applied to LEA grant calculations in states that have a higher equity factor (i.e., relatively high disparities in expenditures per pupil among the state's LEAs). In determining LEA grants under both the Targeted and EFIG formulas, the higher of the two weighted student counts (one calculated based on formula child counts and one calculated based on formula child weights) is used in calculating grants for each LEA."], "subsections": []}]}, {"section_title": "Title I-E", "paragraphs": ["The Title I-E authority allows the Secretary to enter into a demonstration agreement with LEAs that are using or agree to implement weighted student funding systems to establish budgets for, and allocate funds to, individual public schools. In order to enter into a local flexibility demonstration agreement under the Title I-E authority, each LEA must have a weighted student funding system that meets specific requirements. The LEA's system must use weights or allocation amounts that provide \"substantially more funding\" than is allocated to other students to English learners (ELs), students from low-income families, and students with any other characteristic related to educational disadvantage that is selected by the LEA. The system must also ensure that each high-poverty school receives in the first year of the demonstration agreement more per-pupil funding for low-income students than was received for low-income students from federal, state, and local sources in the year prior to entering into the agreement, and at least as much per-pupil funding for ELs as was received for ELs from federal, state, and local sources in the year prior to entering into the agreement. ", "The weighted student funding system must include all school-level actual personnel expenditures for instructional staff, including staff salary differentials for years of employment, and actual nonpersonnel expenditures in the LEA's calculation of eligible federal funds and state and local funds to be allocated to the school level. It must also allocate a \"significant portion of funds,\" including state and local funds and eligible federal funds, to the school level based on the number of students in a school and an LEA-developed formula that determines per-pupil weighted amounts. In addition, the percentage of state and local funds and eligible federal funds allocated through the LEA's weighted student funding system must be sufficient to carry out the purposes and requirements of the demonstration agreement.", "Eligible federal funds that may be consolidated in an LEA's weighted student funding system include, for example, those available under ESEA Title I-A (Education for the Disadvantaged), Supporting Effective Instruction (Title II-A), English Language Acquisition (Title III-A), and Student Support and Academic Enrichment (Title IV-A). No non-ESEA funds (e.g., funds available under the Individuals with Disabilities Education Act or the Perkins Career and Technical Education Act) are considered eligible funds for purposes of consolidation. Once eligible federal funds are consolidated in a participating LEA's weighted student funding system, these funds are treated the same way as the state and local funds. There are no required uses associated with the eligible federal funds provided that the expenditures are \"reasonable and necessary\" and the purposes of the eligible federal programs for which funds have been consolidated are met."], "subsections": []}]}, {"section_title": "Recent Efforts to Collect and Publish School-Level Financial Data", "paragraphs": ["A separate development relevant to the adoption of weighted student funding by some LEAs has been increasing interest in the collection and reporting of school-level finance data for public schools. While historically there have not been comprehensive state or federal efforts to calculate or report on specific budgets or expenditure levels for individual public schools, federal efforts to require and support the reporting of such information have expanded rapidly in recent years. The availability of school-level financial data, based on standard concepts applied consistently nationwide, could be especially helpful in the administration of a key fiscal accountability requirement of the ESEA Title I-A program, as discussed below. Such data could also inform state and local level consideration of equity among schools and groups of students, and increase transparency regarding budgeting and financial decisions by LEAs.", "One factor that may help explain this increasing attention is the \"comparability\" requirement associated with the ESEA Title I-A program. This is a requirement that services provided with state and local funds in schools participating in Title I-A must be comparable to those in non-Title I-A schools within the same LEA. If all of an LEA's schools participate in Title I-A, then services funded from state and local revenues must be \"substantially comparable\" in each school within the LEA. The Title I-A comparability requirement is intended to ensure that state and local funds are used to provide a comparable level of services in Title I-A schools compared with non-Title I-A schools prior to the receipt of Title I-A funds.", "Comparability is measured only with respect to the public schools within the same LEA, not statewide. It is designed to ensure that federal Title I-A funds provide a net increase in funding for Title I-A schools compared to non-Title I-A schools, and do not simply replace state and local funds that would, in the absence of Title I-A, be provided to the Title I-A schools. In demonstrating comparability, LEAs are prohibited from using staff salary differentials for years of employment in determining expenditures per pupil from state and local funds or instructional salaries per pupil from state and local funds. That is, actual staff salaries are not used in comparability determinations. In recent years, there has been renewed attention to the extent to which the comparability requirement is being enforced, and to the nature and quality of school-level expenditure data used to determine compliance.", "More broadly, a number of other federal requirements and research efforts have reflected this increased interest in school-level finance data collection and reporting. The American Recovery and Reinvestment Act of 2009 (ARRA; P.L. 111-5 , Title VIII) included a one-time requirement for states to compile and report expenditures for all public schools for the 2008-2009 school year. States were required to report total personnel salaries for all school-level instructional and support staff; salaries specifically for instructional staff; salaries specifically for teachers; and nonpersonnel expenditures, if available. ED provided guidelines on the specific types of expenditures that states and LEAs should include in their reports. States and LEAs were asked to report school-level expenditures from state and local funds only, and to exclude expenditures for special education, adult education, school nutrition programs, summer school, preschool, and employee benefits. All expenditure data was to be reported based on actual expenditures, including those for staff salaries. ", "A study of the implementation of the Title I-A comparability requirement that was based on the data collection required by the ARRA determined that within LEAs that had both Title I-A and non-Title I-A schools, \"more than 40 percent of Title I schools had lower personnel expenditures per pupil than did non-Title I schools at the same grade level.\" For example, at the elementary school level 46% of Title I-A schools had state and local personnel expenditures per pupil that were below the average for non-Title I-A schools in the same LEA, while 54% exceeded the average for non-Title I-A schools in the same district. Title I-A middle schools and high schools were marginally less likely to have below-average per-pupil personnel expenditures (42% and 45%, respectively) compared to non-Title I-A schools in the same LEA. Across all levels of elementary and secondary education, 48% of Title I-A schools were not receiving the same level of per-pupil state and local personnel expenditures as non-Title I-A schools in the same LEA. While this does not represent a violation of the Title I-A comparability requirements, which are not based on actual personnel expenditures, it is an indication that a sizable group of Title I-A schools may not actually be as equally resourced as non-Title I-A schools prior to the receipt of Title I-A funds. In discussing this study, ED stated that, \"[t]raditional district allocation methods have been shown to create significant funding disparities between Title I and non-Title I schools.\"", "Separately, ED's Office for Civil Rights began to collect selected school-level expenditure data starting with the 2009-2010 school year. These data are captured every second year as part of the ongoing Civil Rights Data Collection, and include total personnel salaries; salaries specifically for teachers, instructional aides, support services staff, and school administrators; and nonpersonnel expenditures. All expenditure data must be based on actual expenditures. Unlike data collected under the ARRA (discussed above) and ESEA (discussed below) requirements, these data are collected directly from schools and LEAs, not states.", "In spring 2014, the Office of Management and Budget (OMB) and ED's Office of Planning, Evaluation, and Policy Development (OPEPD) requested that ED's National Center for Education Statistics (NCES) develop a school-level finance data collection, as such a collection had not been developed on a comprehensive, annual basis. In response, NCES launched pilot efforts to expand ongoing surveys of state and LEA finances to include school-level financial data as well. Beginning with the 2013-2014 school year, NCES conducted a pilot School-Level Finance Survey (SLFS) to evaluate the feasibility of collecting school-level finance data in conjunction with the School District Finance Survey and National Public Education Financial Survey for states and LEAs, jointly conducted by NCES and the Census Bureau. Twelve states participated in this pilot survey for the 2013-2014 school year, and 17 states for 2014-2015 (although only 15 states provided data deemed to be usable by NCES). Based on pilot survey results for the 2014-15 school year, NCES determined that (1) approximately one-half of the participating states were able to report complete personnel and/or nonpersonnel data for at least 95% of their public schools, (2) SLFS data are generally consistent with data reported in other school finance surveys, (3) the development of standardized protocols \"enhances the efficiency of reporting school-level finance data, (4) there remain \"numerous inherent challenges in collecting school-level finance data,\" (5) and, nevertheless, \"the feasibility of collecting and reporting school-level finance data of reasonable quality is relatively high.\" ", "A major concern regarding school-level expenditure surveys is achieving consistency among the states on what kinds on expenditures to include or exclude. The SLFS currently includes 15 unique expenditure items covering a wide variety of personnel expenditures (6 items), including salaries, as well as nonpersonnel expenditures (9 items), such as educational technology. Excluded from these items are employee benefits and services provided centrally by LEAs such as transportation, capital spending, food services, central administration, and building operations and maintenance. Data for each of the 15 expenditure items were collected two ways: (1) without additional exclusions (other than the aforementioned exclusions), and (2) with additional exclusions for expenditures paid from most federal funds, expenditures for prekindergarten, and expenditures for special education. ", "Beginning with the 2015-2016 school year, the SLFS was opened to all states on a voluntary basis. Beginning with the 2017-2018 school year data collection, NCES began collecting complete operational expenditure data. NCES noted that \"[c]omplete, accurate, and comparable school-level finance data across states will take time and effort to achieve.\" However, NCES also noted that recent ESEA school-level finance reporting requirements (discussed below), further development of standardized internal protocols for school-level finance accounting, and continued SEA collaboration with NCES and the Census Bureau on the SLFS data collection should result in improved school-level finance data.", "Further, as mentioned above, the ESSA amended ESEA Title I-A to require participating states to include in school report cards data on expenditures at each public school. These report cards are to include \"the per-pupil expenditures of Federal, State, and local funds, including actual personnel expenditures and actual nonpersonnel expenditures of Federal, State, and local funds, disaggregated by source of funds, for each local educational agency and each school in the State for the preceding fiscal year\" (Section 1111(h)(1)(C)(x)). States are currently beginning to report expenditure data in response to this requirement."], "subsections": [{"section_title": "Appendix. Glossary of Acronyms", "paragraphs": ["ARRA: American Recovery and Reinvestment Act ( P.L. 111-5 )", "CV: Coefficient of variation", "ED: U.S. Department of Education", "EFIG: Education Finance Incentive Grant ", "EL: English Learner", "ESEA: Elementary and Secondary Education Act", "ESSA: Every Student Succeeds Act ( P.L. 114-95 )", "LEA: Local educational agency", "NCES: National Center for Education Statistics (ED)", "OMB: Office of Management and Budget", "OPEPD: Office of Planning, Evaluation, and Policy Development (ED)", "SAIPE: Small Area Income and Poverty Estimates", "SEA: State educational agency", "SLFS: School-Level Finance Survey", "TANF: Temporary Assistance for Needy Families"], "subsections": []}]}]}}
{"id": "R46143", "title": "The Office of Federal Student Aid as a Performance-Based Organization", "released_date": "2019-12-30T00:00:00", "summary": ["The Office of Federal Student Aid (FSA), within the U.S. Department of Education (ED), is established as a performance-based organization (PBO) pursuant to Section 141 of the Higher Education Act (HEA). FSA is a discrete management unit \"responsible for managing the administrative and oversight functions supporting\" the HEA Title IV federal student aid programs, including the Pell Grant and the Direct Loan programs. As such, it is the largest provider of postsecondary student financial aid in the nation. In FY2019, FSA oversaw the provision of approximately $130.4 billion in Title IV aid to approximately 11.0 million students attending approximately 6,000 participating institutions of higher education (IHEs). In addition, in FY2019, FSA managed a student loan portfolio encompassing approximately 45 million borrowers with outstanding federal student loans totaling about $1.5 trillion.", "Among other functions, FSA", "develops and maintains the Free Application for Federal Student Aid (FAFSA); obtains funds from the Department of the Treasury to make aid available to students; contracts with numerous third parties to provide goods and services related to Title IV administration, such as student loan servicing; provides oversight of the numerous third parties (e.g., contracted student loan servicers and IHEs) that play a role in administering the Title IV programs; and provides information to third-party stakeholders\u00e2\u0080\u0094such as students, the public, and Congress\u00e2\u0080\u0094regarding Title IV program operations and performance.", "Responsibility for developing and promulgating policy and regulations relating to the Title IV programs, however, remains with the Secretary of Education.", "Congress established FSA's PBO structure under the Higher Education Amendments of 1998 ( P.L. 105-244 ) in response to a belief in Congress and ED that the Title IV student aid programs were \"severe[ly]\" mismanaged and that ED was in need of restructuring to improve federal student aid delivery. In general, PBOs are intended to be business-like, results-driven organizations that have clear objectives and measureable goals designed to improve an agency's performance and transparency. PBO leaders are to be held professionally accountable for meeting organization goals, with continued tenure and a portion of compensation linked to these measures of success. In exchange, PBOs and their leaders are granted greater discretion to deviate from certain government-wide management processes and to operate more like private-sector companies.", "Specific to FSA's structure as a PBO, the HEA vests management of FSA in a chief operating officer (COO) who is appointed based on demonstrated ability and without regard to political affiliation. Each year, the COO and the Secretary must agree on and publicly make available a five-year performance plan for FSA that establishes measurable goals and objectives addressing a variety of statutory specifications, such as FSA's responsibilities in improving customer service to stakeholders and reducing costs of administering the Title IV student aid programs. The COO is required to annually submit to Congress a report on FSA's performance. In addition, each year the COO and the Secretary, and the COO and FSA senior managers, enter into performance agreements that set forth measurable organizational and individual goals. The COO and senior managers are eligible to receive bonus compensation based on an evaluation of work performed relative to the annual goals specified in their annual performance agreements. The HEA provides FSA with some flexibilities with regard to traditional federal rules around hiring, compensation, and procurement.", "Since FSA's creation as a PBO, it has experienced some notable successes, including the Title IV aid programs' removal from the Government Accountability Office's High Risk List in 2005, the transition to 100% direct lending under the Direct Loan program, and implementation of the Internal Revenue Service (IRS) Data Retrieval Tool.", "Since FSA's establishment, the programs it administers have grown substantially larger, and the federal student aid programs and benefits have become substantially more complex to administer (e.g., with the addition of numerous loan forgiveness and income-driven repayment plans). In recent years, particularly over the last decade, several issues have arisen related to FSA's Title IV program administration. In broad terms, they pertain to oversight of entities participating in and helping with administration of Title IV programs, transparency, and accountability to certain stakeholders and consumers (i.e., aid recipients).", "Oversight issues relate to FSA's oversight of IHEs participating in the Title IV loan programs. Criticisms have focused on FSA's assessment of the well-being of IHEs and ability to proactively mitigate risk in the Title IV programs. Other concerns relate to FSA's oversight of its contracted student loan services, including its monitoring of such entities and the accountability of servicers to FSA in certain areas of their performance. Concerns have also been raised about the shortage of operational guidance FSA has provided to loan servicers to enable them to ensure they are meeting Title IV statutory and regulatory requirements and to assist borrowers in navigating the aid programs.", "Transparency issues relate to the extent to which FSA makes available information about the Title IV programs' performance and operations to relevant parties. Congress, other entities with oversight responsibilities, and other federal agencies sometimes have imperfect information on Title IV program performance and operations, which can make it difficult to make informed, well-honed policy or enforcement decisions. In addition, consumers may be faced with incomplete information on the Title IV programs and the IHEs that participate in such programs, which may make it difficult to make informed college-going and financial decisions.", "Stakeholder and borrower accountability issues include the extent to which FSA is fulfilling its statutory mandate to consult with relevant stakeholders in developing performance plans and annual reports and whether FSA is leveraging information garnered from stakeholder interactions to make program administration improvements. They also relate to whether FSA is sufficiently responsive to customer needs, especially given that FSA administers programs for which, arguably, there are no comparable competitors.", "As Congress contemplates the reauthorizations of the HEA, it might consider whether any adjustments should be made to address any of these issues and, if so, the extent to which any efforts to address issues might involve or affect FSA's PBO function and structure."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["The Office of Federal Student Aid (FSA) within the U.S. Department of Education (ED) is the primary entity responsible for the administration and oversight of the federal student aid programs authorized under Title IV of the Higher Education Act of 1965, as amended (HEA; P.L. 89-329, as amended). As such, FSA is the largest provider of postsecondary student financial aid in the nation, performing functions that are akin to those of large banks, to which it has sometimes been compared. In FY2019, FSA oversaw the provision of $130.4 billion in Title IV aid to 11.0 million students attending approximately 6,000 participating institutions of higher education (IHEs). In addition, in FY2019, FSA managed a student loan portfolio encompassing 45 million borrowers with outstanding federal student loans totaling about $1.5 trillion. ", "FSA is a performance-based organization (PBO) pursuant to Section 141 of the HEA. Conceptually, PBOs are intended to be results-driven organizations that have clear objectives and measurable goals designed to improve an agency's performance and transparency. PBOs are led by chief executives who are personally accountable for meeting measurable goals within the organization. In exchange, PBOs are granted greater discretion than other government agencies to operate more like private-sector companies, with more control over the budget, personnel decisions, and procurement. FSA was established under the Higher Education Amendments of 1998 ( P.L. 105-244 ) as the federal government's first PBO. This was done in response to the belief that ED needed restructuring to improve federal student aid delivery. ", "In recent years, FSA has come under scrutiny for its oversight of IHEs participating in the student aid programs and contracted student loan servicers, its perceived lack of transparency to stakeholders, and its accountability to and engagement with stakeholders. This report provides information about the structure and organization of FSA, the nature of the work it performs, and its characteristics as a PBO. Additionally, the report attempts to synthesize some challenges experienced by FSA that have received considerable attention in recent years. There has been considerable interest in this set of issues from the 116 th Congress. As Congress contemplates the reauthorization of the HEA, it might examine some of the issues raised by these critiques and the way FSA's organization as a PBO may affect congressional goals and policies.", "This report begins by discussing the HEA provisions that distinguish FSA from other types of federal agencies. This is followed by a discussion of the legislative history of the creation of FSA as a PBO and of HEA Title IV programmatic changes that may affect its operations. Next, the report describes the current operations and structure of FSA. Finally, it discusses several issues related to FSA's operations and how they may relate to its structure as a PBO. The issues presented have received recent congressional and stakeholder attention and have been identified in reviews of FSA's operations. There have been numerous recent reports that have examined aspects of FSA's operations. Appendix A provides a bibliography of recent Government Accountability Office (GAO) and ED Office of Inspector General (IG) reports relating to FSA's operations. Appendix B provides a list of selected acronyms used in this report."], "subsections": []}, {"section_title": "FSA as a PBO: Distinctions from Most Agencies", "paragraphs": ["Federal programs are usually carried out by or through agencies that are established in statute, with structural refinements established through directives issued by the agency head. Over time, Congress has created governmental and quasi-governmental entities with varying characteristics to address diverse needs in different contexts. Most federal agencies in the executive branch, however, are designed to be directly or indirectly accountable to the President. Furthermore, most federal agencies must comply with general management laws regarding financial management, procurement, information management, personnel, and other administrative practices.", "As a PBO, FSA has organizational features that are distinct from most other departmental subunits in the executive branch of the federal government. As the name suggests, PBOs are designed to have a greater focus on results\u00e2\u0080\u0094outcomes rather than outputs. To this end, they are required to have clear objectives and measurable goals. PBO leaders are to be held professionally accountable for meeting measurable goals within the organization, with continued tenure and a portion of compensation linked to these measures of success. In exchange, these organizations and leaders are granted greater discretion to deviate from certain government-wide management processes and to operate more like private-sector companies. ", "Key statutorily established features of FSA include, among others, the appointment and compensation arrangements for its chief operating officer (COO) and other senior managers, exemptions from certain government-wide personnel and procurement requirements, and greater independence from political pressure in the exercise of its functions."], "subsections": [{"section_title": "FSA Leadership", "paragraphs": ["Most high-level subunits within departments are led by political appointees who are appointed by the President or the Secretary and serve at their pleasure for an indefinite term. Political appointments are not subject to the same requirements as career appointments to the Senior Executive Service (SES) or appointments to the competitive service. Depending on the authority used to make a political appointment, compensation will usually be determined by the Executive Schedule, the SES pay system, or the General Schedule. Consistent with the PBO framework, the HEA contains provisions aimed to enable FSA to attract leadership with demonstrated ability and expertise, incentivize leadership to meet performance goals, and shield FSA leadership from political pressures. ", "FSA is led by a COO, whom the Secretary of Education appoints for a term of three to five years. The appointment is to be made based on \"demonstrated management ability and expertise in information technology (IT), including experience with financial systems, and without regard to political affiliation or activity.\" The COO's work and priorities are governed by a performance agreement with the Secretary that includes measurable organizational and individual goals. The COO may be reappointed to additional terms of three to five years if her or his performance is satisfactory. ", "The HEA also specifies the manner in which a COO may be removed: ", "REMOVAL.\u00e2\u0080\u0094The Chief Operating Officer may be removed by\u00e2\u0080\u0094", "(A) the President; or", "(B) the Secretary, for misconduct or failure to meet performance goals set forth in the performance agreement in paragraph (4).", "The President or Secretary shall communicate the reasons for any such removal to the authorizing committees.", "The law appears to authorize the President to remove the COO at will. In addition, the Secretary may remove the COO \"for misconduct or failure to meet performance goals set forth in the performance agreement.\" Either the President or the Secretary must provide their reasons for removal to the authorizing congressional committees. ", "The COO's compensation includes basic pay, which is tied to the pay levels of the SES, and an annual bonus not to exceed 50% of the basic pay. ", "The senior managers of FSA are appointed by the COO without regard for the competitive service appointment provisions of Title 5 of the U.S. Code . The work and priorities of these senior officials are governed by annual performance agreements with the COO that include measurable organizational and individual goals. Senior managers serve at the pleasure of the COO or, in the event that the COO position is vacant, the Secretary. As is the case for the COO, the compensation of senior managers includes basic pay, which is tied to the pay levels of the SES, and an annual bonus. The total annual compensation of a manager may not exceed 125% of the maximum basic pay for the SES pay system. "], "subsections": []}, {"section_title": "FSA Personnel Flexibilities", "paragraphs": ["Unless otherwise specified in law, executive branch employment is governed by the civil service laws of Title 5 of the U.S. Code . Consistent with the PBO framework, HEA includes provisions that give FSA more flexibility in the staffing, classification, and pay of its employees. The statute stipulates that FSA shall not be subject to any cap on the number or grade of its employees. FSA and the Office of Personnel Management (OPM) are directed to jointly develop and implement personnel flexibilities that are consistent with Title 5 of the U.S. Code . In addition, the COO is authorized to establish technical and professional positions that are not subject to the provisions of Title 5 pertaining to competitive service appointments. The HEA provision places covered positions in the excepted service, under which FSA could use alternative hiring procedures that relax the traditional competitive hiring procedures in Title 5 (such as application of veterans' preference, public notice, and/or modified qualification standards). FSA is directed to develop a performance management system consistent with Title 5 that establishes goals or objectives for employees. "], "subsections": []}, {"section_title": "FSA Procurement Flexibilities", "paragraphs": ["When executive branch agencies need to acquire goods or services to carry out their functions, they are required to comply with the Federal Acquisition Regulation (FAR) and applicable procurement statutes. The PBO procurement provisions of HEA are consistent with this overarching requirement while also permitting certain flexibilities. They state, \"Except as provided in this section, the PBO shall abide by all applicable Federal procurement laws and regulations when procuring property and services.\" ", "The procurement flexibilities provided to the PBO include, for example, those related to the use of experts and consultants. Whereas agencies are generally constrained in obtaining such services by limitations and conditions of Title 5 of the U.S. Code \u00e2\u0080\u0094such as requirements for a specific appropriation or other statutory authorization and for reporting to OPM on such actions\u00e2\u0080\u0094the PBO may obtain such services without regard to this provision. ", "In another example of procurement flexibility, HEA provides the PBO with authority to \"use a two-phase process for selecting a source for a procurement of property or services.\" In such a process, an agency first issues a general solicitation and then issues a second solicitation with more specific requirements to a limited group of vendors from among respondents to the first solicitation. In contrast, the FAR provides for the use of this authority under limited circumstances. ", "In a final example, the circumstances and criteria under which the PBO may pursue a procurement with only one company differ from those followed by most agencies. Whereas in most instances the FAR allows \"sole-source\" procurement only where the needed services or supplies are available from only one responsible source and no other substitute will meet the agency's needs, FSA may use \"single source\" procurement to obtain certain systems where multiple vendors could supply the product but one vendor is \"the most advantageous source for purposes of the award.\""], "subsections": []}, {"section_title": "FSA Independence", "paragraphs": ["As noted above, most high-level subunits within departments are led by political appointees who serve at the pleasure of, and under the direction of, the Secretary. In some cases, however, subunits are statutorily structured to have some independence from political leadership. A variety of structural mechanisms in different combinations have been used over time to establish such independence. Consequently, agencies vary in their level of structural independence from political leadership. In addition, notwithstanding these structural features, a specific leader of such a departmental subunit might elect to adhere to the Secretary's agenda for other political or policy reasons.", "Although HEA explicitly states that FSA is subject to the direction of the Secretary, the agency is afforded a greater level of independence from political leadership than most departmental subunits in the executive branch. This is due to HEA provisions that pertain to the appointment and removal of the FSA COO, as well as those that stipulate FSA's independence in carrying out certain functions. As noted above, the COO's appointment is to be made for a three- to five-year term on the basis of specified abilities, expertise, and experience \"without regard to political affiliation or activity.\" Although the COO may be removed from office before the end of a term, the statute includes atypical specifications of the circumstances and manner in which this may occur. The statute also specifies that FSA \"shall exercise independent control of its budget allocations and expenditures, personnel decisions and processes, procurements, and other administrative and management functions.\" Although this authority is subject to the direction of the Secretary, it is not a common specification for a departmental subunit."], "subsections": []}]}, {"section_title": "Establishment of a PBO to Administer Federal Student Aid", "paragraphs": ["FSA was established as the federal government's first PBO in 1998. When Congress established this structure, it departed from conventional organizational arrangements that were then in use within the federal government. The PBO model was drawn from government innovations in Great Britain in the 1980s and 1990s. It was then developed and promoted for American governmental use by the National Partnership for Reinventing Government (NPR), a major Clinton Administration governmental reform initiative. The Administration's rollout of the PBO touted the model's potential benefits and portrayed it as a commonsense development in the effort to streamline the federal government and make it more responsive to its \"customers.\"", "The NPR initiative, led by Vice President Al Gore, aimed to improve federal government performance by reorganizing agencies and processes to be guided by market principles and incentives. NPR's first report put forth hundreds of recommendations. These recommendations were intended to lead to better government service delivery and greater \"customer\" satisfaction. In general, this would be accomplished through the streamlining of personnel practices, procurement, and other government operations; improvement of management tools and incentives; and promotion of efficiency and economy in administration.", "Administration-endorsed PBO-related legislation was introduced in late 1995, but it was not until early 1996 that the Vice President introduced the PBO concept as a major new focus of the ongoing NPR. The aim was to improve government service delivery by implementing certain functions through the use of business-like practices and incentive structures. Agencies reorganized as PBOs would be freed from adherence to certain procurement and civil service laws and would, at the same time, develop systems of performance incentives and accountability for results. In advocating for the creation of federal PBOs, Vice President Gore stated:", "Government agencies need to change their incentives and internal cultures to shift from a focus on process to a focus on customers and achieving results. They need to become more responsive to citizens, yet account for program costs and safeguard broader public interests. This can be done by creating performance-based organizations (PBOs) that set forth clear measures of performance, hold the head of the organization clearly accountable for achieving results, and grant the head of the organization authority to deviate from governmentwide rules if this is needed to achieve agreed-upon results. PBOs involve structural changes as well as changes in incentives affecting federal employees.", "The NPR identified seven candidates for conversion, but none has been formally converted into a PBO. However, one of the entities targeted for conversion, the Patent and Trademark Office, was statutorily reorganized and given many PBO-like structural characteristics. Because it has these features, some observers have referred to it as a PBO. Though not contemplated as a potential PBO within the scope of the initial NPR list, FSA represented the first organization aligned with the PBO framework outlined in the NPR. In addition to FSA, one other entity\u00e2\u0080\u0094the Air Traffic Organization of the Federal Aviation Administration\u00e2\u0080\u0094has been explicitly established as a PBO in statute."], "subsections": [{"section_title": "Legislation to Establish a PBO to Administer Federal Student Aid", "paragraphs": ["Prior to the establishment of FSA, federal student loan programs were administered by the Office of Student Financial Assistance Programs (SFAP), a unit within ED's Office of Postsecondary Education (OPE). As discussed below, in the mid-1990s, leadership of these programs had temporarily become divided between SFAP and a unit in the Secretary's office that had been established for the purpose of accelerating the implementation of the Direct Loan program.", "Although the Higher Education Amendments of 1998 ( P.L. 105-244 ) established FSA's PBO structure, interest in converting SFAP into a PBO seems to have arisen as early as 1996 amid growing concerns within Congress and ED that the student financial aid programs were \"severe[ly]\" mismanaged. The model was attractive to some congressional advocates of SFAP reform, as it appeared that its design features might address some of the agency's perceived problems while maintaining the financial assistance function within ED. Moreover, it appears that the possibility of establishing a PBO within ED to implement these programs was under consideration by the Secretary prior to Vice President Gore's introduction of the new organizational model in 1996, which, as described earlier, did not include SFAP as a candidate for conversion into a PBO.", "As the Clinton Administration was introducing the PBO model, congressional committees were monitoring and expressing concern about difficulties in the management of the student financial aid programs at ED. At a July 1996 hearing, ED's IG reported on a number of difficulties at ED, including program leadership being divided between OPE and the Senior Advisor to the Secretary for Direct Lending, poor coordination and communication between these offices, poor OPE staff morale, and a shortage of employees qualified in IT and financial analysis. Related problems included an interruption in efforts to improve the existing Federal Family Education Loan program, growth in the backlog of institutional cohort default rate appeals, confusion in the student loan community about where to find help for technical questions, concerns about the monitoring of financial statements and the procurement of needed IT, and difficulties with the processing the Free Application for Federal Student Aid (FAFSA). ", "In a February 12, 1996, memorandum, the Secretary reportedly expressed an interest in establishing SFAP as a PBO. ED's IG testified in July of that year that such a transition appeared to be premature but that certain changes\u00e2\u0080\u0094such as leadership from a highly qualified chief executive officer to provide a stable, long-term leadership and consistency of purpose and a significant, focused reengineering effort\u00e2\u0080\u0094could be made to SFAP to prepare it for such a transition.", "In May 1997, the Advisory Committee on Student Financial Assistance (ACSFA) reported that implementation of financial aid programs was plagued by staff without the necessary experience, outdated computer systems and \"a web of large, uncoordinated, uncompetitive contracts which fail to deliver on time and produce unacceptable cost overruns.\" ACSFA recommended restructuring the delivery of federal student aid under a PBO and reengineering Title IV systems and contracts, two processes the committee asserted were closely linked. ", "During a July 1997 hearing, the Assistant Secretary heading OPE testified that the Administration was reviewing the PBO model among several different organizational modifications that might improve management of federal student assistance programs. By March 1998, the Secretary was voicing his support specifically for the PBO approach, stating that such a conversion would enhance ED's flexibility with regard to potential management and procurement reforms and allow it to more efficiently deliver student aid yet also hold it accountable for results and allow the Secretary to maintain control of policy.", "In September 1997, the chair and ranking member of the House Committee on Education and the Workforce subcommittee with jurisdiction over higher education policy introduced a standalone bill to establish a PBO within ED to manage the information systems associated with Title IV programs. In his introductory remarks, the chair noted problems with federal student aid information systems and financial statements before asserting, \"A customer-focused, performance-based organization within the Department, run by an experienced Chief Operating Officer, can take the steps necessary to properly reengineer the current systems and contracts.\" Provisions from this bill were included in the HEA reauthorization bill as reported by the committee in April 1998. ", "The Senate Committee on Labor and Human Resources reported out its main bill for HEA reauthorization in May 1998. This bill included provisions that were \"developed in cooperation with the administration\" to establish a federal student aid-related PBO in ED. The role of the PBO that would have been established by this legislation was arguably broader than that in the House committee-reported measure. The PBO established in the House bill would have been \"a discrete management unit responsible for managing the information systems supporting\" Title IV programs, whereas the Senate bill would have empowered the PBO \"to administer various functions relating to student financial assistance programs authorized under\" Title IV.", "Text from the committee reports concerning the PBO sections of the reauthorization legislation provides a snapshot of the committees' perceptions about the management of financial aid distribution programs by ED at the time. Report language also laid out the committees' intentions for and expectations of this change in organizational structure and management paradigm.", "Both the House and Senate committees of jurisdiction appeared to be concerned with perceived management problems at ED. The House Committee on Education and the Workforce discussed the prevalence and persistence of IT problems and their apparent impact on the ability of ED to deliver student aid economically, effectively, and efficiently. Specifically, the committee noted ED's limited progress in integrating numerous data systems despite legislative mandates; the tripling over five years of ED's budget for student aid information systems; and the fact that even with significant expenditures, student aid systems required dozens of paper forms and experienced \"needless\" process delays and breakdowns.", "The Senate Committee on Labor and Human Resources described a more general and overlapping set of issues related to the need to improve the administration of Title IV aid and problems regarding the Direct Loan Consolidation program, the printing of the FAFSA, and reports that ED was falling significantly behind in its efforts to become Year 2000 compliant.", "Both the House and Senate committees intended for the establishment of a PBO organizational structure to address the management problems they had identified. For example, the House Committee on Education and the Workforce noted that the purposes of the proposed change were to increase effectiveness, economy, and efficiency by giving administrators greater management flexibility while requiring greater accountability for results. The committee also expected that a PBO structure would accomplish the following aims that were specifically delineated in the HEA: ", "Improve service to program participants, Reduce the costs of administering the programs, Increase accountability, Provide greater flexibility in management and administration of the programs, and Integrate the information systems that support the federal student aid programs.", "In doing so, the committee stated:", "The Committee firmly believes that a customer-based, Performance-Based Organization within the Department, operated by an experienced Chief Operating Officer can take the necessary steps to properly reengineer the current systems and contracts\u00e2\u0080\u00a6. The Committee also believes the creation of a PBO will result in a more efficient, effective, less expensive and less bureaucratic financial aid delivery system. The end result should be a system that is easy for students and parents to use and one that ensures that students have the information they need to select the education that is best for them\u00e2\u0080\u0094all while ensuring that taxpayer funds are being used efficiently and effectively.", "The Senate Committee on Labor and Human Resources also identified its goal for the change, although it did so more generally. The committee also noted its effort to divide policy functions, which were to be retained by OPE, from operational functions, which were to be carried out by the new PBO:", "The goal of the performance-based organization has been, and remains, to improve the delivery of student financial aid to students and their families. In order to accomplish this, the committee has attempted to identify the functions performed by the Office of Postsecondary Education and segregate those that are essentially policy functions that must be retained by OPE from those that are administrative and that may appropriately be handled by the performance-based organization. The PBO will be responsible for administration of the information and financial systems that support student financial assistance programs as well as any additional functions that the Secretary determines are necessary or appropriate to improve the delivery of student aid.", "Both the Senate- and House-passed bills would have established a new PBO vested with responsibilities related to federal student aid delivery. Specific differences between the competing versions regarding the new entity's authority, purposes, functions, relationship with ED, and other organizational features were ironed out through a conference process that yielded a consensus measure. Resolution of the PBO-related differences does not appear to have been a sticking point in the conference process. The conference report was agreed to by the two chambers and President Clinton signed the Higher Education Amendments of 1998 into law on October 7, 1998."], "subsections": []}, {"section_title": "2008 Higher Education Act PBO Amendments", "paragraphs": ["In 2008, the Higher Education Opportunity Act (HEOA; P.L. 110-315 ) amended the HEA PBO provisions. The report of the Senate Committee on Health, Education, Labor and Pensions noted its general approval, at that time, of the PBO as implemented:", "The committee applauds the efforts since the last reauthorization to implement the PBO. Schools and individuals have benefited from improved efficiency in originating, servicing and processing grant and loan aid. The ombudsman has provided needed guidance to students struggling to navigate the complex system. There is strong support for continuation of these efforts to make further progress in the delivery of student financial aid. ", "In line with this assessment, the 2008 amendments appear to have clarified and expanded FSA's role in the administration of Title IV programs. They changed the characterization of the PBO's functions from \"operational\" to \"administrative and oversight,\" seemingly broadening the mandate of the agency. In addition, whereas the previous provisions vested the PBO with responsibility for administration of the information and financial systems supporting Title IV programs, the 2008 amendments enlarged the scope of responsibilities beyond this specified support function to administration of \"the Federal student financial assistance programs authorized under title IV.\" The HEOA also amended FSA's personnel and procurement flexibility provisions, as discussed below. "], "subsections": []}]}, {"section_title": "Changes to Title IV Aid Affecting FSA's Operations", "paragraphs": ["Since FSA's inception, both statutory and regulatory changes have been made to the Title IV student aid programs. These changes may have had an effect on FSA's operations. ", "At the time of FSA's formation in 1998, HEA Title IV authorized and ED administered two primary federal student loan programs: the Federal Family Education Loan (FFEL) program and the Direct Loan program. These two programs provided borrowers with loans for postsecondary education with substantially similar terms and conditions as one another, but each program had significantly different administrative structures. Private lenders originated FFEL program loans, and either they or secondary market loan purchasers (who bought loans from originating lenders) were responsible for completing many loan servicing tasks, including working with postsecondary institutions to track students' enrollment and loan eligibility status, billing borrowers, and conducting initial collection services if a loan became delinquent. Additionally, under the FFEL program, state and nonprofit guaranty agencies received federal funds to administer many aspects of the program, such as providing technical assistance to IHEs and lenders, providing credit and loan rehabilitation counseling to borrowers, and performing collections work.", "Under the Direct Loan program, the federal government essentially serves as the \"banker\" by providing loans to students and their families using federal capital. ED assumes the primary role in administering the Direct Loan program (described below), including providing technical assistance to IHEs, contracting with loan servicers to perform day-to-day administrative tasks, providing loan counseling to borrowers, and initiating collections work. ", "In May 2008, in response to concerns about the continued availability of FFEL program loans due to several FFEL program lenders curtailing or ceasing their participation in the program, the Ensuring Continued Access to Student Loans Act of 2008 ( P.L. 110-227 ) granted ED the temporary authority to purchase student loans made under the FFEL program. In October 2008, P.L. 110-350 extended this authority through July 1, 2010. After purchasing loans made under the FFEL program, control of loan servicing was transferred to ED. In 2009, the SAFRA Act ( P.L. 111-152 , Title II) terminated the authority to make new loans under the FFEL program after June 30, 2010. Since July 1, 2010, the Direct Loan program has been the primary federal student loan program, although many FFEL program loans remain outstanding, and FFEL program lenders and guaranty agencies remain responsible for administering several aspects of those programs. ", "These changes have vested FSA with a larger scope of responsibility than Congress might have originally contemplated when it authorized FSA's PBO structure, as FSA became responsible for administering a larger share of the federal student loan programs (in terms of loan volume and individual borrowers associated with these changes) than for which it had previously been responsible under the FFEL program. ", "Moreover, the switch to almost 100% direct lending in 2010 had the effect of fundamentally altering the federal student loan marketplace. During the roughly 15-year period that the two programs operated concurrently, IHEs and borrowers were provided the opportunity to \"shop around.\" That is, IHEs chose whether to apply to participate in the FFEL program or Direct Loan program, and the caliber of administrative and servicing work available within the respective loan programs may have been a factor in those decisions. Additionally, schools opting to participate in the FFEL program usually compiled preferred lender lists that they shared with students. Again, assessments of the caliber of administrative and servicing work provided through differing lenders likely factored into the selection of lenders for such lists. Borrowers attending FFEL program participating IHEs were free to select among an array of lenders, including but not limited to those on the preferred lender lists. There were opportunities available for IHEs and for borrowers who were dissatisfied with customer service to pursue other options. The competition that existed within the FFEL program and across the loan programs provided incentives for those involved in administrative and servicing work to provide enhanced customer service. By transitioning to a single model of federal student lending (the Direct Loan program) under which a single entity (the federal government) both makes and is responsible for administering loans, the federal student loan marketplace transitioned from one with some built-in incentives to provide enhanced customer service to one in which there may be less incentive to do so.", "Several other changes in the Title IV aid programs since FSA's creation as a PBO may have also had the effect of increasing the scope and complexity of FSA's administrative functions. These include but are not limited to the following: ", "increases in the amount and type of aid benefits available to students, including extension of PLUS Loan availability to graduate and professional students under the Deficit Reduction Act of 2005 ( P.L. 109-171 ) and the authorization of the TEACH Grant program under the College Costs Reduction and Access Act of 2007 ( P.L. 110-84 ); authorization and implementation of myriad income-driven loan repayment plans that allow borrowers to make monthly payments in amounts indexed to their adjusted gross income; increased complexity of aid benefits, including establishment of a 6% interest rate cap on federal student loans during military service under the Servicemembers Civil Relief Act ( P.L. 108-189 ), the Public Service Loan Forgiveness (PSLF) program under the College Costs Reduction and Access Act, cumulative lifetime maximums on certain students' eligibility to receive Pell Grants established under the HEOA and amended under the Consolidated Appropriations Act, 2012 ( P.L. 112-74 ), and limitations placed on certain borrower's eligibility to borrow Direct Subsidized Loans established under the Moving Ahead for Progress in the 21 st Century Act ( P.L. 112-141 ); and changes made to aid administration, including the process to receive a discharge of federal student loans after a determination that a borrower is totally and permanently disabled as established under the HEOA and implemented via subsequent regulatory changes, the requirement that ED (via FSA) contract with not-for-profit loan servicers under the SAFRA Act, and regulatory changes to borrower defense to repayment discharge procedures. "], "subsections": []}, {"section_title": "FSA Functions and Structure", "paragraphs": ["Section 141 of the HEA tasks FSA with managing administration and oversight of the Title IV federal student aid programs. Among other functions, FSA develops and maintains the FAFSA; obtains student aid funds from the Treasury and makes them available for disbursement to students; contracts with third parties that perform myriad administrative tasks associated with the Title IV programs (e.g., loan servicing); provides information on the Title IV programs to students, Title IV participants (e.g., IHEs), Congress, and other stakeholders; and provides oversight of Title IV program participants, including IHEs and the third-party loan servicers with which it contracts. ", "The HEA specifically establishes two roles within FSA\u00e2\u0080\u0094the COO and the Student Loan Ombudsman\u00e2\u0080\u0094to carry out FSA's functions, but much of FSA's organizational structure has been established through administrative action by the COO. In addition, many outside entities may have an interest in or have asserted a role over aspects of the federal student aid programs. Thus, in coordination with ED, FSA maintains relationships with outside stakeholders, executive branch entities, and Congress. FSA also maintains relationships with offices within ED at large."], "subsections": [{"section_title": "Statutorily Specified FSA Functions", "paragraphs": ["HEA Section 141 specifies several high-level aspects of aid administration for which FSA is responsible. These include the following:", "The administrative, accounting, and financial management functions for the Title IV aid programs, including collection, processing, and transmission of data to students, IHEs, and other authorized stakeholders; development of specifications for software and procurement of systems to support Title IV aid administration; acquisitions of all hardware and software and procurement and management of all IT contracts to support Title IV aid administration; contracting for information and financial systems to support Title IV aid administration; providing customer service, training, and user support related to Title IV aid administration; and ensuring the integrity of the Title IV aid programs. Development, in consultation with the Secretary, of FSA's annual budget.", "The Secretary may delegate additional functions to FSA as necessary or appropriate to achieve FSA's purposes. FSA is given control of its budget allocations and expenditures, procurements, personnel decisions and processes, and other administrative and management functions but remains subject to the direction of the Secretary.", "The HEA specifies that the Secretary \"shall maintain responsibility for the development and promulgation of policy and regulations\" related to Title IV aid. In doing so, the HEA requires the Secretary to \"request the advice of, and work in cooperation with\" FSA.", "To fulfill its statutory responsibilities, FSA undertakes many discrete tasks (discussed below)."], "subsections": [{"section_title": "Awarding, Disbursing, and Servicing Aid", "paragraphs": ["Students wishing to receive Title IV student aid must annually apply for assistance using the FAFSA, which is developed and maintained by FSA in accordance with specifications set forth in the HEA. After a student submits the FAFSA, an automated system contracted by FSA processes the FAFSA, and then IHEs (or the third-party servicers with which they contract) use information from it to calculate the amount of aid for which a student is eligible. FSA obtains funds from the Treasury and makes them available to IHEs, which in turn disburse those funds to students. ", "Once a grant is disbursed, in many cases administrative functions are significantly decreased. However, FSA may be required to implement and/or oversee administrative functions after a grant has been disbursed. For instance, if an individual receives a Pell Grant in excess of the amount for which he or she is eligible, he or she may be required to return a portion to FSA. ", "Once a Direct Loan program loan is disbursed, FSA assigns it to a contracted loan servicer. Loan servicers perform a variety of administrative functions such as collecting payments and performing delinquency prevention activities. FSA may, if necessary, assign a defaulted loan to a contracted private collection agency (PCA), which attempts to recover payment on defaulted loans from borrowers. FSA may also use other options to collect on defaulted Direct Loans, including referring a borrower's account to the Treasury Offset Program."], "subsections": []}, {"section_title": "Contracting", "paragraphs": ["In FY2018, FSA maintained major contracts with approximately 20 vendors, totaling about $1.1 billion. (These contracts constituted approximately 63% of appropriations provided for student aid administration in general in FY2018. ) Services for which FSA maintains contracts include servicing of Direct Loans and ED-held FFEL program loans and Perkins Loans, collection of defaulted Direct Loans and ED-held FFEL program loans and Perkins Loans, and IT infrastructure to support myriad tasks such as the processing of submitted FAFSAs. FSA also has a contract for the National Student Loan Data System (NSLDS), which is a central database for student aid. NSLDS maintains detailed administrative data to track Title IV grants and loans throughout their lifecycle and support Title IV administrative functions such as verifying a student's Title IV eligibility."], "subsections": []}, {"section_title": "Information and Assistance to Third-Party Stakeholders", "paragraphs": ["Numerous individuals and entities have a stake in the Title IV federal student aid programs and rely on FSA to provide timely and accurate information regarding the programs. Students, their families, and borrowers rely on FSA to provide information and assistance throughout the entire financial aid process. IHEs and FSA's third-party contractors rely on communications and assistance from FSA to administer various aspects of the aid programs. Members of Congress and the general public rely on FSA for information about the performance of the Title IV aid programs.", "FSA operates several websites that enable stakeholders to access relevant information about program operations. FSA maintains the website www.studentaid.gov , which is FSA's \"primary online portal for customers\" and the 'Information for Financial Aid Professionals' website, which consolidates guidance and resources related to Title IV administration for use by the entire financial aid community. ", "FSA also operates several repositories of Title IV program data to enable it and stakeholders to access information about the programs and their performance. HEA Section 485B tasks ED with development of the NSLDS. FSA has primary responsibility for administration of the NSLDS and has contracted with a third party to operate it. FSA also maintains the Data Center\u00e2\u0080\u0094a centralized, publicly available source for selected administrative data and other information related to the Title IV programs. The Title IV program data on FSA's Data Center are often derived from NSLDS. In addition, FSA operates the Enterprise Data Warehouse Analytics, which contains data from multiple FSA data sources, such as NSLDS. It provides FSA with analytic tools to provide \"quick and accurate access to inform internal and external data requests\" and is often used to provide Title IV program data and analysis to internal stakeholders such as ED's Budget Office and to external stakeholders such as congressional requesters, other federal agencies, and the public.", "FSA also makes its statutorily required annual report to Congress publically available. Finally, the Ombudsman Group \u00e2\u0080\u0094a subunit within FSA\u00e2\u0080\u0094provides students and aid recipients with a single point of entry (the Feedback and Dispute Management System) to provide feedback or to file complaints and disputes about the Title IV programs. "], "subsections": []}, {"section_title": "Oversight", "paragraphs": ["FSA has a large oversight role in ensuring that various Title IV program participants comply with Title IV program requirements. Both statute and regulations prescribe many aspects of the Title IV programs, including student aid program terms and conditions and requirements IHEs must meet to participate in the programs. IHEs and third-party contractors play a significant role in ensuring that the Title IV programs are administered properly. In addition, some Title IV programs (e.g., the campus-based aid programs ) vest a larger share of administrative functions with IHEs, while others (e.g., the FFEL program) vest additional administrative functions with outside entities such as guaranty agencies. "], "subsections": [{"section_title": "IHEs and Their Third-Party Servicers", "paragraphs": ["FSA's oversight of IHEs relates largely to ensuring that they meet eligibility requirements to participate in the Title IV programs and that they (and any third-party servicers with which they may contract) properly administer the Title IV programs. FSA certifies an IHE's eligibility to participate in the Title IV programs and recertifies its eligibility thereafter. FSA verifies each IHE's accreditation status and whether the IHE is legally authorized to operate within a state. FSA also evaluates an IHE's financial responsibility and administrative capability to administer the Title IV programs.", "After an IHE is certified to participate in the Title IV programs, FSA ensures that it is conforming to eligibility and administrative requirements. FSA does this by performing program reviews and by reviewing required IHE compliance audits and financial statement audits conducted by third-party auditors. FSA reviews the IHE's required third-party compliance and financial statement audits and attempts to resolve issues with them. During a program review, FSA evaluates an IHE's compliance with Title IV requirements. Review priority is given to certain IHEs specified in statute (e.g., those IHEs with high cohort default rates).", "FSA has the authority to impose sanctions and corrective actions on IHEs and their third-party servicers. Examples include imposing fines, imposing specific conditions or restrictions related to administration of Title IV funds, and terminating Title IV participation. "], "subsections": []}, {"section_title": "FSA Contractors", "paragraphs": ["FSA's oversight of its third-party contractors generally consists of ensuring that they fulfill the terms and conditions of their contracts with FSA. In general, federal agencies, including FSA, have a number of tools to help ensure a contractor adequately performs a contract. Examples include requiring corrective action, using performance-based incentives, and terminating the contract. FSA contracts with numerous third-parties for a variety of goods and services related to administration of the Title IV programs, including student loan servicers and PCAs.", "In FY2019, FSA contracted with 12 student loan servicers to perform a variety of tasks largely related to the Direct Loan program. FSA uses performance-based incentives to encourage loan servicers to meet desired results (e.g., ensuring borrowers are in current repayment status and meeting customer service satisfaction goals). It does so by basing the number of borrower loan accounts allocated and compensation levels on servicers' ability to meet stated goals. In addition, FSA issues guidance to loan servicers to assist them in day-to-day operations and conducts monitoring activities, such as completing annual compliance audits and assessing borrower-servicer interactions.", "FSA also contracts with numerous PCAs to attempt to collect the $140.3 billion in defaulted loans of 7.2 million borrowers. Similar to its oversight of loan servicers, FSA uses performance-based incentives to meet desired goals. PCA compensation is based on a PCA's overall performance. Previously awarded contracts have based borrower account allocation on PCA performance. However, current PCA contracts with FSA are not readily available for review, and it is unknown how future PCA contracts might be structured. In addition, FSA issues guidance to PCAs to assist them in day-to-day operations and conducts monitoring activities, such as assessing PCAs' interactions with borrowers."], "subsections": []}, {"section_title": "Entities Engaged in Selected Title IV Programs", "paragraphs": ["For FFEL program loans not held by ED, guaranty agencies administer many aspects of the program, such as providing default aversion assistance to FFEL program lenders and services related to the federal loan guarantee. In the campus-based programs, IHEs perform many of the administrative functions described earlier in this section (e.g., award disbursement and loan servicing) and are also afforded some discretion in determining the mix and amount of campus-based aid funds awarded to students. FSA oversees these entities in their fulfillment of these functions."], "subsections": []}]}]}, {"section_title": "Selected FSA Statistics", "paragraphs": ["As described above, the scope of FSA's operations covers many activities and responsibilities. Selected statistics and additional information provide insight into the scale of FSA's operations. Table 1 presents information on funds obligated for student aid administration. Table 2 presents data on full-time equivalent (FTE) employment for federal student aid administration. Table 3 presents selected trends relevant to student aid administration. ", "To provide context and a sense of scale, in relation to ED as a whole, nearly every year since ED's creation as a Cabinet-level department (October 1979), functions currently under FSA have accounted for the majority of ED spending (including both Title IV aid disbursements and aid administration expenses). Moreover, while the number of FTE staff at ED has declined since FY1981, the number of FTEs at FSA has generally increased over time. In FY2016, FSA accounted for about one-third of ED's FTEs. It is estimated that the largest share of staff being supported through student aid administration funding are staff supported through loan servicing contracts (discussed below)."], "subsections": [{"section_title": "Funding for Federal Student Aid Administration", "paragraphs": ["There are two broad categories of funding obligations for federal student aid administration: (1) salaries and expenses and (2) student loan servicing. Table 1 presents annual funding obligated for federal student aid for FY2009-FY2019. Over this period of time, obligations for federal student aid administration increased from $754 million in FY2009 to $1.7 billion in FY2019. Obligations for student aid administration have increased by 47% since FY2011 (the first full fiscal year in which no new FFEL program loans were made). Beginning with FY2016, obligations for loan servicing have constituted the majority of student aid administration costs."], "subsections": []}, {"section_title": "FTE Employment for Federal Student Aid Administration", "paragraphs": ["Figures on FTE employment for FY2009-FY2019 for federal student aid administration are presented in Table 2 . The number of FTE employees working on federal student aid administration has risen from 1,058 in FY2009 to 1,480 in FY2019, a 40% increase. Other offices within ED besides FSA also perform student-aid related administrative activities. In addition, a number of contractor staff (e.g., loan servicing staff) provide outsourced business operations for student aid administration. For example, FSA reported that approximately 12,000 contracted staff augmented its FTE employees in FY2016."], "subsections": []}, {"section_title": "Trends Relevant to Federal Student Aid Administration", "paragraphs": ["Over the past several years, the workload of FSA has increased considerably. Table 3 provides information related to FSA's workload, including the number of FAFSAs processed, the number of students receiving aid, the total dollar amount of federal student aid provided through the Title IV federal student aid programs, the total number of federal student loan recipients who have outstanding balances, and the total dollar amount of principal and interest outstanding. ", "As shown in Table 3 , the number of individuals receiving Title IV aid and the number of FAFSAs processed peaked in FY2011 and FY2012, respectively. However, the total number of federal student loan recipients with outstanding loan balances and the total dollar amount of principal and interest outstanding increased substantially over the period examined and increased year-over-year for each complete fiscal year under review."], "subsections": []}]}, {"section_title": "FSA Structure", "paragraphs": ["Section 141 of the HEA establishes FSA's PBO structure as a discrete management unit within ED and subject to the direction of the Secretary in the exercise of its functions. FSA operates under the coordination of the Office of the Under Secretary, which is the office within ED that coordinates policies and programs related to postsecondary education, as well as vocational and adult education. Although the HEA specifically establishes two roles within FSA (the COO and the student loan ombudsman), much of FSA's organizational structure and leadership arrangements have been established through administrative action by the COO, subject to the direction of the Secretary. In addition, FSA interacts with various other offices within ED to facilitate the implementation of ED policies in aid administration. "], "subsections": [{"section_title": "Statutorily Mandated Roles", "paragraphs": ["FSA is composed of numerous offices, each responsible for varying aspects of Title IV student aid administration. Two FSA roles are specifically mandated by the HEA: the chief operating officer and the student loan ombudsman. These offices have been charged with carrying out both statutory and administratively delegated functions, as discussed below."], "subsections": [{"section_title": "Chief Operating Officer (COO)", "paragraphs": ["The HEA assigns several responsibilities to FSA's COO. The Secretary has delegated additional responsibilities to the COO. In practice, while responsibilities are assigned or delegated to the COO, individual employees or offices within FSA may perform the day-to-day tasks associated with fulfilling those responsibilities. ", "HEA Section 141(d) vests management of FSA in a COO and mandates several of the COO's activities and responsibilities. Annually, the COO and the Secretary must publically make available a five-year performance plan for FSA that establishes measurable goals and objectives for FSA. In developing the plan, the Secretary and the COO are to consult with stakeholders such as students, IHEs, and Congress.", "The COO is required annually to submit to Congress a report on FSA's performance that is to include, among other items, (1) an independent financial audit, (2) the results achieved during the year relative to the performance plan goals, (3) the evaluation of the COO and senior managers, and (4) recommendations for legislative and regulatory changes to improve administration of the Title IV student aid programs. In preparing the report, the COO is to establish appropriate ways to consult with stakeholders, including students and IHEs. FSA states that the Annual Report satisfies these responsibilities.", "HEA Section 142 authorizes the COO, subject to the authority of the Secretary, to procure property and services to perform its functions. In practice, while the Secretary is considered ED's senior procurement official, it appears that FSA typically has significant autonomy in its contracting functions. ", "The HEA specifies that the Secretary maintains responsibility for the development and promulgation of policy and regulations related to Title IV aid. However, in developing and promulgating Title IV student aid policies and regulations, the Secretary is required to request the advice of and work in cooperation with the COO. FSA's Policy Liaison and Implementation Staff (PLIS) is the office within FSA that consults with the Secretary on Title IV student aid policies and regulations. Among other functions, PLIS implements policy (and supports FSA staff in implementing policy) developed by ED through the Office of the Secretary, the Office of the Under Secretary, and OPE. PLIS also works with the Office of the Under Secretary to ", "formulate policy recommendations and identify policy issues affecting the Title IV student aid programs; provide advice on regulations, policies, administrative policy guidance, and procedures; prepare preliminary drafts of subregulatory guidance for consideration by ED and draft policy electronic announcements for review by FSA staff; and design, manage, and monitor the Experimental Sites Initiative.", "Finally, the HEA specifies that the COO is to disseminate information to stakeholders on the student loan ombudsman (described below).", "The Secretary may delegate additional functions to the COO (and FSA in general) to achieve FSA's purposes. Authorities that the Secretary has delegated to the COO include, but are not limited to,", "authority to take certain personnel actions, such as carrying out reductions-in-force for FSA in coordination with ED, approving telework agreements, and handling FSA employee grievances; programmatic authorities related to Title IV programs, such as awarding certain formula grants (e.g., awarding campus-based funds to IHEs) and entering into agreements with entities outside of ED (e.g., IHEs or other federal agencies); authority to compromise, waive, and write-off certain claims against individuals under Title IV programs, such as waiving or writing off the collection of current or defaulted federal student loans; authority to develop, implement, and manage an Employee Personnel Security Program and a Contractor Personnel Security Program in accordance with established ED directives and guidance. "], "subsections": []}, {"section_title": "Student Loan Ombudsman", "paragraphs": ["HEA Section 141(f) specifies that the COO, in consultation with the Secretary, shall appoint an ombudsman \"to provide timely assistance to borrowers of loans made, insured, or guaranteed under Title IV.\" Specifically, the ombudsman is to (1) review and attempt to informally resolve borrower disputes with Title IV loan program participants and (2) compile and analyze data on borrower complaints and make recommendations. Each year, the ombudsman is to submit to the COO (for inclusion in the COO's annual report) a report describing the ombudsman's activities and effectiveness during the preceding year. ", "FSA's Ombudsman Group is the specific office tasked with fulfilling the HEA Section 141 requirements for a student loan ombudsman. The Ombudsman Group also administers FSA's comprehensive informal complaint resolution and customer inquiry/case resolution processes related to all Title IV student aid programs, not just those related to student loans, although the most frequent types of cases received by the Ombudsman Group relate to student loans. Addressing customer cases regarding non-loan Title IV student aid programs is not part of the ombudsman's specific statutory mandate."], "subsections": []}]}, {"section_title": "FSA's Relationship with Other Actors", "paragraphs": ["Many tasks related to student aid are vested (either through statute or secretarial authority) with other ED offices, and other executive branch entities may have an interest in or jurisdiction over aspects of federal student aid. In addition, FSA is subject to congressional direction (e.g., via amendments to the HEA or appropriations laws) and oversight. As such, FSA may have occasion to interact and maintain relationships with numerous outside stakeholders. "], "subsections": [{"section_title": "ED's Office of the Secretary", "paragraphs": ["The Secretary \"is responsible for the overall direction, supervision, and coordination of all activities of [ED] and is the principal adviser to the President on Federal policies, programs, and activities related to education in the United States.\" The Office of the Secretary directly oversees the Office of the Under Secretary (which, in turn, oversees FSA). In addition, the Office of the Secretary oversees several other entities that interact with FSA on a regular basis:", "The Office of the Inspector General is responsible for \"identifying waste, fraud, abuse, and criminal activity involving ED funds, programs, and operations.\" To this end, it conducts independent audits and reviews of ED programs, including the Title IV student aid programs and FSA's operations. The Office of General Counsel (OGC) is responsible for providing \"legal assistance to the Secretary concerning the programs and policies of the Department.\" OGC also provides legal assistance to other ED offices, including FSA. Among other services, OGC provides legal advice, litigation services, legislative services (e.g., drafts legislative proposals), and assistance in drafting subregulatory guidance. The Office of Budget Service has the lead responsibility for, among other functions, ED's budget, budget and related legislative policies for ED programs, and the review and analysis of ED program operations, including budget and policy implementation. It develops cost estimates for the Title IV student aid programs and maintains computer models to estimate such costs, coordinates methodology and data with FSA and OPE, and liaises with FSA other ED offices to analyze data sources and assumptions for the student aid cost estimation models."], "subsections": []}, {"section_title": "ED's Office of the Under Secretary", "paragraphs": ["The Office of the Under Secretary oversees policies, programs, and activities related to vocational and adult education, postsecondary education, college grant aid, and federal student loans. The Under Secretary directs and coordinates policies, programs, and activities related to postsecondary education and federal student aid. The Under Secretary also supervises FSA, which administers federal student aid, and OPE, which provides overall direction, coordination, and leadership on matters related to postsecondary education. The Under Secretary serves as the principal advisor to the Secretary on postsecondary education. ", "As previously described, HEA Section 141 specifies that the Secretary maintains responsibility for the development and promulgation of policy and regulations related to Title IV aid but must coordinate with FSA. With Under Secretary oversight, OPE fulfills the policy development and promulgation role for the Secretary. OPE develops both regulations and subregulatory guidance for the Title IV student aid programs (e.g., Dear Colleague letters to financial aid professionals). In doing so, OPE liaises with FSA's PLIS (and other offices such as OGC) in the development, implementation, and dissemination of Title IV student aid policy."], "subsections": []}, {"section_title": "Other Executive Branch Entities", "paragraphs": ["Other executive branch entities may have some level of authority over or interest in aspects of federal student aid programs. As such, ED and FSA may maintain relationships with these entities to help ensure proper functioning of the aid programs. Based on its functions, FSA likely, at least in part, has played a role in these partnerships even when ED may be officially responsible. ", "Executive branch entities with which ED and FSA may maintain relationships to help ensure proper functioning of the aid programs include the following:", "Department of the Treasury . FSA obtains funds from Treasury to make available to students in the form of federal student aid. FSA may refer a borrower's defaulted loan to the Treasury Offset Program for offset of certain benefits such as federal income tax refunds and Social Security benefits. Moreover, while the Debt Collections Improvement Act generally requires federal agencies to transfer nontax debts that are 180 days or more delinquent to Treasury's Fiscal Service for centralized debt collection (referred to as cross-servicing), since 2001, the Secretary of the Treasury has granted FSA a permanent exemption from this requirement. Thus, FSA is responsible for collecting delinquent and defaulted federal student loan debt assigned to or held by ED. The act also authorizes the Secretary of the Treasury to exempt certain classes of debt from cross-servicing. Since 2005, debts that are being collected through administrative wage garnishment and meet certain conditions have been exempted from cross-servicing. Consumer Financial Protection Bureau (CFPB) : The CFPB has asserted a role in ensuring compliance with consumer protection laws that may apply to federal student loans. For example, the CFPB has brought lawsuits against some FSA-contracted federal student loan servicers for consumer compliance violations relating to federal student loan servicing. CFPB also maintains resources for both federal student loan and private education loan borrowers and fields complaints from student loan borrowers. The CFBP and ED participated in an interagency task force to help ensure sufficient oversight of proprietary IHEs. However, it appears that the CFPB and ED may no longer be working together as closely as they previously had been. For example, in 2017, ED terminated its memoranda of understanding with the CFPB to share data and information relating to the student loan servicing market, stating that the CFPB violated the terms of the memoranda. Department of Justic e (DOJ) : DOJ may play a role in law enforcement related to federal student loans, including, through U.S. Attorneys' offices, prosecuting violations of federal criminal laws and representing the federal government in civil proceedings. For instance, FSA may refer a defaulted federal student loan borrower's account to DOJ for civil litigation against the borrower. In addition, DOJ may file lawsuits against federal student loan program participants, such as contracted student loan servicers, for failure to comply with federal statutes related to student loans and individuals for acts of fraud. ", "Other executive branch entities with which ED and FSA may interact include the Federal Trade Commission, the Internal Revenue Service (IRS), the Department of Veterans Affairs, and the Social Security Administration.", "In processing the FAFSA, FSA's Central Processing System matches student provided information against other federal entities' databases to confirm elements of each student's aid eligibility. In total, the Central Processing System performs matches against databases maintained by the Department of Defense, DOJ, the Social Security Administration, the Department of Veterans Affairs, the Department of Homeland Security, and the Selective Service System. In addition, FSA's systems interface with the IRS Data Retrieval Tool, which links students', students' spouses, and parents' IRS tax information to the FAFSA and/or the income verification component of applying for and recertifying information for the various income-driven repayment plans.", "To initiate and/or maintain these relationships, ED and FSA may enter into formal agreements (e.g., memoranda of understanding) with the relevant federal entity or maintain a less formal interagency relationship."], "subsections": []}, {"section_title": "Congress", "paragraphs": ["Congress may guide and affect the way FSA operationalizes and manages the day-to-day functions of the federal student aid programs. First, Congress and the President may enact laws that impact or amend federal student aid programs or FSA itself. For example, Congress could amend the HEA Sections 141-143, which relate specifically to FSA as a PBO, or the Title IV student aid programs in general. In addition, during the appropriations process, Congress determines discretionary funding levels for FSA activities. In some instances, Congress may include stipulations or directives regarding the use of these funds. ", "Second, Congress exercises oversight of FSA. This oversight may include requiring FSA or ED representatives to testify before Congress, requiring or requesting FSA to report additional information regarding its operations, and requesting that GAO or the IG conduct an in-depth investigation of FSA. Congress has exercised its oversight authority regarding Title IV aid administration numerous times in recent years."], "subsections": []}]}, {"section_title": "FSA's Performance under Five-Year Performance Plan", "paragraphs": ["The COO is required to annually report to Congress on FSA's progress in achieving its goals and objectives described in its five-year performance plan (also known as the strategic plan). Among other items, the performance plan is to address FSA's responsibilities in improving service to stakeholders, reducing costs of administering the Title IV student aid programs, improving and integrating the systems that support the student aid programs, and other areas identified by the Secretary. The Secretary and FSA, in consultation with stakeholders, develop the strategic objectives described in FSA's five-year performance plan. As part of the plan, FSA develops the metrics by which its performance under these strategic objectives are measured. FSA also sets its specific annual goals for meeting each metric. In doing so, most of its annual goals are based on FSA's performance under the metric in the prior year. ", " Table 4 presents information on FSA's performance for each metric under its strategic objectives as set forth in its Strategic Plan: FY2015-19 for FY2016-FY2019. For each metric, FSA's goal and actual performance are presented. The text for FSA's actual performance under each measurement indicates whether FSA met its goal in the given year. Bolded text indicates that FSA did not achieve its goal, while regular text indicates that FSA did achieve its goal.", "In general, over the four fiscal years examined, FSA met most of its goals. FSA consistently met its goals relating to usership of its online resources (customer visits to studentaid.gov and social media channel subscribership), persistence among first-time filing aid recipients, percentage of contract dollars competed by FSA, and collection rate. In addition, it consistently met both of its goals under Strategic Goal C\u00e2\u0080\u0094improving operational efficiency and flexibility\u00e2\u0080\u0094which included goals on aid delivery cost per application and percentage of outstanding Direct Loans in current repayment status. For many instances in which FSA did not meet its goals, in the following year, FSA downwardly adjusted its goal under the relevant metric. For those instances in which FSA met its goal, whether it subsequently adjusted the goals in the following year varied."], "subsections": []}]}]}, {"section_title": "Assessments of FSA as a PBO", "paragraphs": ["Close observers assessed FSA's progress in addressing the congressionally identified issues that prompted FSA's establishment as a PBO in 1998.", "Immediately following the enactment of the HEA provisions establishing a PBO, ACSFA acknowledged the difficulty of simultaneously undertaking a major reorganization and system modernization. ACSFA noted the commitment and energy of the first permanent COO and praised \"his willingness to communicate with the higher education community\" as well as his early senior personnel choices. ", "ACSFA also criticized the priorities of the new unit as well as its adherence to the congressional intent behind, and the requirements of, the new statute. Among other concerns, it noted that", "ED appeared to be transplanting the organizational arrangements of SFAP (FSA's predecessor), as an office of OPE, into a new PBO that reported directly to the Secretary without making more fundamental changes to its management and organizational structure; ED was failing to \"adequately separate policy making and regulatory responsibilities of OPE and operations responsibilities of the PBO as intended by Congress;\" and rather than \"directing its attention and scarce resources toward solving its basic systems, data, and contract problems, the PBO appear[ed] to be \u00e2\u0080\u00a6 concentrating on the twin objectives of improving day-to-day customer service and providing students web access to their data through 'a single federal point of contact' for all financial aid transactions.\"", "In 2002, ACSFA reported, among other findings, that some progress had been made on transferring policymaking functions to OPE but that \"functions related to institutional eligibility and guarantor and lender oversight\" remained within the purview of FSA. ASFCA called for the transfer of these functions to OPE, with OPE consulting with FSA to ensure that proposed federal aid policies supported FSA operations. ACSFA also reported that FSA was strengthening the capacity of its management, systems, and operations staff while reducing its reliance on contractors and recommended FSA continue to do so. In addition, it expressed concern that minimal progress had been made on systems integration. ACSFA called for ED to \"incorporate specific integration goals and schedules into its strategic and tactical plans and quicken the overall pace of data and systems integration as a means of reducing cost and increasing efficiency.\"", "By 2001, FSA had developed an organizational performance plan identifying three strategic goals: increase customer satisfaction, increase employee satisfaction, and reduce unit costs. However, ED's IG and GAO noted that it did not clearly address some of the new office's statutory purposes that had been identified during the HEA reauthorization process. For example, both entities found that the performance plan did not sufficiently address the means by which systems integration would be accomplished, nor did it include any objective measures of forward movement in that area. Both ED's IG and GAO recommended that FSA establish clear goals, strategies, and performance measures related to systems integration. FSA disagreed with the IG's recommendation, reasoning that the agency could not achieve its three stated goals without systems integration. In a response to the GAO recommendation, which came later, however, ED's Deputy Secretary agreed with the recommendation, committing to directing that FSA's performance plan \"be revised to establish measurable goals and milestones for systems integration efforts to provide both direction to FSA and enhance its accountability.\"", "The GAO report also assessed the progress FSA had made in measuring and achieving its three strategic goals. It noted that FSA had made measurable progress in the general improvement of customer and employee satisfaction\u00e2\u0080\u0094two of its three strategic goals. With regard to its third goal (reduce unit costs), GAO found that the indicator FSA used to measure unit cost was deficient.", "GAO also noted that the relationship between FSA and ED was still evolving:", "Education continues to take steps to clarify FSA's level of independence and its relationship with other Education offices\u00e2\u0080\u00a6. With the arrival of the current administration \u00e2\u0080\u00a6 Education established special interim operating procedures for all department units, including FSA, that were intended to ensure that personnel and financial resources are managed effectively and efficiently throughout the department.\u00e2\u0080\u00a6 Education now provides greater direction and oversight of FSA than was provided previously. Education is currently reviewing FSA's role and responsibilities as part of the departmentwide management planning effort. The results \u00e2\u0080\u00a6 will be used to guide future decisions concerning FSA's level of independence and its relationship to other department offices.", "In 2005, GAO removed the Title IV federal student aid programs from its High Risk List. The student aid programs had been on GAO's High Risk List since the list's inception in 1990. In removing the Title IV student aid programs from the list, GAO found that while FSA still needed to take additional steps to fully address some of its recommendations, overall, management of the programs had improved enough to warrant removal from the High Risk List. In removing the student aid programs from its High Risk List, GAO cited many factors, including FSA's", "\"sustained improvements to address financial mismanagement and internal control weaknesses,\" receipt of an unqualified or \"clean\" opinion on its financial statements for FY2002-FY2004, actions to ensure that aid was not being awarded to ineligible students, actions to \"integrat[e] its many disparate information systems,\" steps to reduce student loan default rates, and steps to address its \"human capital challenges.\"", "In more recent years, FSA has been praised for its handling of the transition to 100% direct lending under the Direct Loan program and for other improvements to the administration of the Title IV aid programs, such as implementation of the IRS Data Retrieval Tool to allow students and their parents to import their federal income tax data directly into their FAFSA. Some more recent GAO and IG reports have noted cases in which FSA met its objectives. ", "Some sizable issues have also been identified in GAO and IG reports, by some Members of Congress, and by other stakeholders. For example, FSA's oversight of its contracted loan servicers has come under scrutiny from Congress, ED's IG, GAO, and the CFPB. Seemingly large deficiencies in ED's implementation of and communication with borrowers about of the PSLF program have been identified by GAO and have garnered congressional interest as well. Concerns have also been raised over FSA's ability to identify and address poorly performing IHEs or those that may be at risk of closure. These more recent issues are discussed in more detail below."], "subsections": []}, {"section_title": "Current Issues", "paragraphs": ["ED's federal student aid operations were statutorily reorganized into a PBO with the hope of addressing significant management problems, including limited progress in integrating numerous data systems, student aid delivery delays and breakdowns, and infighting over student aid delivery turf among ED's senior managers. In this context, the then-untried PBO model seemed promising: It was built on the idea that business-like performance incentives and management flexibility would motivate and permit the organization and its leaders to provide economical, efficient, and effective service to student aid recipients. The organization would be given a higher-than-typical level of independence from political leadership and direction on operational processes in return for accountability for results, as measured by performance agreements and assessments. Potential concerns about independent policymaking by a PBO's leaders could be allayed by separating the policymaking functions from the operational functions. The former would remain accountable to Administration leadership, and the latter would be vested in the semi-independent PBO. While the establishment of FSA as a PBO seems to have addressed at least some of the congressional concerns prompting its establishment, new issues have arisen in recent years, and some of the previously cited issues that led to the adoption of a PBO approach may yet remain unresolved.", "Federal oversight entities and other outside observers have raised issues pertaining to FSA, including those relating to oversight, transparency, and accountability. As these issues receive continued attention, and as Congress contemplates the reauthorization of the HEA, this final section of the report highlights some of the issues relating to FSA's operations that have garnered attention over the past several years. Issues highlighted and options for addressing them have, for the most part, been gathered from reports from GAO, ED's IG, and outside organizations. CRS has identified some of the options available to address these issues. ", "In some instances, documents referenced here refer to ED and/or the Secretary of Education and not specifically to FSA and/or its COO. However, based on its functions, FSA is likely pertinent to the topics being addressed. Where possible, CRS has indicated in footnotes where a cited source refers to ED more generally and CRS has inferred that FSA has some responsibility for a function or activity being discussed. "], "subsections": [{"section_title": "Oversight Functions", "paragraphs": ["HEA Section 141 specifies that one of FSA's functions as a PBO is to ensure the integrity of the federal student aid programs. Thus, FSA is tasked with overseeing a variety of entities that play a role in administration of the Title IV student aid programs. FSA's oversight of IHEs and contracted loan servicers has been criticized in recent years. Some criticisms have focused on perceived deficiencies in FSA's assessment of IHEs, its ability to proactively mitigate risk in the Title IV programs, and its ability to resolve issues at IHEs in a timely manner. ", "Similarly, FSA has experienced difficulties in its monitoring of loan servicers. Some of these difficulties seem to have stemmed from FSA providing incomplete or fragmented guidance to loan servicers, which have impeded their efforts to comply with requirements for servicing federally held loans and to assist borrowers in navigating the aid programs. The oversight issues introduced here are explored in greater depth below.", "Should any congressional action be taken to address these issues, Congress might consider whether or how it should specify desired outcomes and actions taken by FSA. There may be tradeoffs between meeting congressional goals and shoring up current perceived oversight deficiencies and enabling FSA to operate independently and with flexibility to address difficult or novel issues. Consideration might also be given to the apparent difficulties in separating operational functions delegated to FSA from policymaking retained by ED."], "subsections": [{"section_title": "IHE Oversight", "paragraphs": ["FSA oversees, through enforcement activities, IHE compliance in meeting requirements to participate in the Title IV aid programs. These requirements are intended to ensure that IHEs provide sufficient educational quality, provide a level of consumer protection, and ensure administrative and fiscal integrity of Title IV programs at IHEs. Through oversight of the IHEs participating in the Title IV student aid programs, FSA is able to identify instances of noncompliance and take appropriate action, such as sanctioning IHEs or providing assistance to IHEs to come into compliance\u00e2\u0080\u0094both tools that can help mitigate student and taxpayer risk. ", "Interest in the issue of FSA's oversight of IHEs has arisen, at least in part, due to the prominent closures of several large multi-campus IHEs in recent years, affecting thousands of students. In response to these closures, GAO and ED's IG have launched several investigations and have found that FSA staff do not always follow internal procedures for institutional review and that some internal procedures did not have controls in place to prevent IHEs from manipulating Title IV participation requirements. These frailties could result in failure to identify IHEs that are not complying with Title IV requirements or that are at risk of abruptly closing. ", "For example, one IG report found that FSA did not conduct IHE program reviews in accordance with its own internal procedures, which could lead to \"limited assurance that program reviews are appropriately identifying and reporting all instance of noncompliance.\" The IG noted that FSA staff did not consistently complete and maintain required program review forms, adequately document institutional fiscal testing requirements relating to Title IV aid disbursement at IHEs, or obtain all required information for review of an IHE's distance education programs. Perhaps relatedly, some FSA staff reported feeling \"overwhelmed\" with the amount of work they were required to perform in the time allotted, and some of their managers believed that allotted time may be inadequate to complete some more complex program reviews, which could have been contributing factors to FSA not consistently conducting program reviews according to procedures. ", "In another report, the IG found that FSA needed to improve internal processes to help it identify IHEs that may be at risk of an abrupt closure. Specifically, the IG found that FSA did not act in a timely manner to resolve Corinthian College's (a large IHE that abruptly closed in 2015) failing composite score appeal, nor did it promptly require Corinthian College to post a letter of credit upon finding that the school's composite score was failing. The IG asserted that such weaknesses may enable some IHEs to avoid FSA sanctions or additional oversight, which in turn may result in a greater risk of harm to students (e.g., enrollment in an IHE that may be at risk of a precipitous closure) and loss of taxpayer funds (e.g., the cost of student loan discharges due to the IHE's closure). The IG also found that FSA had taken some steps to implement new tools and processes to help identify IHEs at risk of closure, such as participating in OPE efforts to enhance information sharing between ED and an IHE's accreditor and creating an enforcement office responsible for investigating complaints made against IHEs. It appears that the enforcement office has since been largely disbanded. However, it is possible that subsequent steps may have been taken to strengthen monitoring and response practices.", "Ensuring IHEs compliance with Title IV requirements arguably addresses one of the HEA-specified functions of FSA as a PBO: ensuring integrity of the Title IV aid programs. It also arguably addresses FSA's strategic goal to \" proactively manage the student aid portfolio and mitigate risk ,\" which FSA describes as aimed to \"strengthen FSA's role in working to ensure protection of customers and holding stakeholders accountable for their actions.\" Under the two metrics FSA has identified as measures of its performance under this goal, FSA has had mixed success (see Table 4 ). However, neither metric seems to directly address IHE oversight and accountability in the Title IV aid programs."], "subsections": []}, {"section_title": "Loan Servicer Oversight", "paragraphs": ["FSA-contracted loan servicers are tasked with various day-to-day administrative tasks associated with federal student loans and some other forms of student aid. FSA's oversight of loan servicers generally consists of ensuring that the loan servicers are meeting federal requirements for student loans (e.g., ensuring that borrowers' interest rates are correctly calculated) and fulfilling the terms and conditions of their contracts with FSA and providing guidance to loan servicers to enable them to meet such standards. Oversight of contracted loan servicers can help FSA mitigate risks in the Title IV program and enable it to help ensure the provision of effective customer service to students and their families.", "In recent years, issues associated with federal student loan servicing have received considerable attention. For instance, some have alleged that some loan servicers have engaged in undesirable conduct, such as steering borrowers away from more beneficial loan repayment options or providing inaccurate or incomplete information to borrowers. Still others have detailed borrowers' experiencing problems when seeking to have loan servicers resolve servicing errors, identified issues with loan payment processing that may cause problems for borrowers seeking to repay their loans, and identified issues with respect to the implementation of specific loan terms and conditions such as the PSLF program. ", "Concerns raised about loan servicing have focused in particular on whether FSA is sufficiently reviewing, monitoring, and holding loan servicers accountable. GAO has reported that FSA's monitoring of loan servicers' interaction with borrowers may be insufficient to ensure that servicers are providing accurate information and quality customer service to borrowers. For instance, GAO found that FSA primarily monitored inbound calls from borrowers to loan servicers, which constitute a small percentage of the calls loan servicers participate in. Thus, GAO opined that \"FSA may not be focusing its call monitoring on the most frequent and critical types of calls.\" GAO also found that FSA's call monitoring was poorly documented and its tracking of borrower complaints was disjointed, with complaints being tracked across multiple systems. While some of these issues have seemingly been resolved, it is unclear whether others have been resolved. Without a systematic approach to reviewing loan servicer interactions with borrowers, it may be difficult for FSA to target oversight of its loan servicers and improve its services to student loan borrowers.", "More recently, ED's IG found that while FSA regularly identifies instances of servicer noncompliance with federal servicing requirements, FSA neither tracked instances of noncompliance that were remedied by loan servicers nor analyzed information relating to the noncompliance. Moreover, the IG found that FSA rarely used available tools to hold loan servicers accountable, nor did FSA incorporate a performance metric relating to servicer compliance into the otherwise performance-driven terms of its contracts with loan servicers. Finally, the IG found that FSA employees did not always follow internal policy when evaluating interactions between servicers' representatives and borrowers. These issues may make it difficult for FSA to identify recurring issues in loan servicing, mitigate the risk of potential harm to borrowers for loan servicer noncompliance, and hold loan servicers accountable for poor servicing. ", "A difficulty loan servicers may face in complying with requirements for servicing federally held students loans is the fragmented and incomplete guidance for a complex student loan system provided to them from FSA. GAO has found that FSA may provide insufficient guidance to servicers regarding certain aspects of loan administration, such as how to apply borrower over- or under-payments to an account balance. Moreover, when FSA does provide guidance, it may not consistently share that information with all loan servicers or all relevant individuals. Such gaps in authoritative guidance to loan servicers may create a risk of inconsistent interpretations of law and procedures, which could lead to inefficiencies in federal student loan administration and could negatively affect borrowers' abilities to use the features of their loan terms and conditions. To help address these concerns, Treasury has recommended, and Congress has previously directed, FSA to publish a common loan servicing policies and procedures manual. However, it appears that FSA has not published such a manual.", "Another difficulty loan servicers face is that federal student loan terms and conditions have become increasingly more complex over the years. This may contribute to some of the problems loan servicers have in administering them. For example, FSA recently stated that it, along with its loan servicers, is working to enhance communications with borrowers regarding the PSLF program's requirements but acknowledged that the program is fundamentally complex and that FSA does not have the authority to change congressionally mandated PSLF eligibility requirements. Thus, while there are likely instances in which FSA oversight of loan servicers could be strengthened to ensure that borrowers receive the loan benefits to which they are entitled, there may also be inherent difficulties in administering the loan programs themselves, which might be addressed with policy changes to the programs.", "Ensuring loan servicer compliance with Title IV and contract requirements arguably addresses one of the HEA-specified functions of FSA as a PBO\u00e2\u0080\u0094ensuring integrity of the Title IV aid programs\u00e2\u0080\u0094and FSA's strategic goal to \" proactively manage the student aid portfolio and mitigate risk .\" Under the two metrics FSA has identified as measures of its performance under this goal, FSA has had mixed results (see Table 4 ). While some of the metrics FSA has identified under this performance goal seem intended to address loan servicing practices, the extent to which they may do so is unclear. For instance, it is unclear whether the metrics used to assess the efficacy of FSA directly gauge the accuracy and completeness of information provided by their contracted loan services."], "subsections": []}, {"section_title": "Discussion of Issues in Oversight and the PBO Structure", "paragraphs": ["In determining the desired level of oversight of IHEs and loan servicers, Congress might consider whether to specify desired outcomes and actions to be taken by FSA. While FSA is tasked with the day-to-day functions of administering the Title IV programs, Congress can guide and affect these efforts in a variety of ways, including amending the portions of the HEA that relate to FSA's functions, providing stipulations regarding the use of annual appropriations, exercising oversight of FSA through mechanisms such as congressional hearings, further emphasizing the importance of stakeholder input (discussed below in the section entitled \"Stakeholder Accountability\"), or statutorily specifying more goals and performance metrics for FSA. ", "Some of these changes might involve tradeoffs between improving perceived oversight deficiencies and enabling FSA to operate independently and with flexibility to address difficult or novel issues. To the degree that additional statutorily specified direction might stipulate the way in which FSA is to conduct day-to-day operations, there may be potential for it to be in tension with the goal of accountability for results, as opposed to processes, that is key to the PBO model. Arguably, such action might also impair the agency's ability to make business-like operational decisions based on nonpolitical considerations rather than responsiveness to political leaders.", "The choice of the PBO model was predicated on the idea that ED's political leadership would retain policymaking functions and that the PBO's role would be limited to operational functions. Seemingly, ED and FSA have made organizational adjustments\u00e2\u0080\u0094such as FSA's Office of Policy Liaison and Implementation Staff, which consults with the Secretary on the development and promulgation of Title IV student aid policies and regulations\u00e2\u0080\u0094that allow for FSA input into the formal policymaking process that is at least nominally under the authority of ED.", "A different kind of policymaking\u00e2\u0080\u0094that which occurs as a byproduct of implementation\u00e2\u0080\u0094is a long noted facet of public administration that might prove more difficult to address. Issues around loan servicing illustrate how it may be difficult to completely remove policymaking from the operational functions delegated to FSA. For example, Congress sets the terms and conditions of federal student loans in general, and ED may add precision to them, while FSA designs and enforces contracts for loan servicers to administer the loan programs. However, a program's administration may shape how policies work in real life. For instance, some have observed that the payment structure of loan servicing contracts established by FSA may incentivize loan servicers to encourage borrowers to pursue one loan benefit (e.g., forbearance ) over another (e.g., income-based repayment), which may contradict ED's policy preferences. Although such policymaking through implementation probably can be reduced by limiting the scope of discretion in a delegated authority or by increasing oversight of the agency's activities, these steps might reduce agency efficiency and hinder the effectiveness of the PBO model."], "subsections": []}]}, {"section_title": "Transparency", "paragraphs": ["Numerous outside parties have a stake in the aid programs and rely on FSA to provide timely and accurate information about them. Criticisms have been raised that FSA may lack sufficient transparency regarding Title IV program operations. Congress and other entities with oversight responsibilities (e.g., the CFPB) sometimes seem to have incomplete or imperfect information on Title IV program performance and operations, which may make it difficult to make informed, well-honed policy or enforcement decisions. ", "Many consumers are also seemingly have incomplete or imperfect consumer information on the Title IV programs and Title IV participation, which may make it difficult for them to make informed college-going and financial decisions. ", "Some have called on FSA to publicly release a variety of data and to enhance communications regarding such information. It does not appear that FSA's PBO model would necessarily hinder transparency, nor would increasing transparency appear to be directly at odds with the model's design. However, there may be some tradeoffs between increasing transparency and maintaining the effectiveness of the PBO's business-like design, which was specifically intended to shield Title IV aid administration, at least in part, from political pressures and increase efficiency within the aid programs. Additionally, FSA must grapple with privacy requirements when contemplating the potential release of, and how to appropriately make available, many types of data in its possession. "], "subsections": [{"section_title": "Information for Policymakers and Stakeholders", "paragraphs": ["Congress and other policymakers have an interest in understanding how the Title IV federal student aid programs operate and the outcomes associated with those programs, as the dollar amount of federal student aid awarded and number of aid recipients represents a large federal investment. In FY2019, FSA provided approximately $130.4 billion in Title IV aid to approximately 11.0 million students, and FSA managed a student loan portfolio encompassing approximately 45 million borrowers with outstanding federal student loans totaling about $1.5 trillion.", "Concerns have been raised that FSA may not provide access to information that may enable stakeholders to make informed policy recommendations and decisions. Some have noted that while FSA possesses large quantities of student-level records that measure grant and loan receipt, postsecondary education completion status, and loan repayment, FSA has \"often been less than responsive to requests for data and research that would benefit the rest of the nation.\" Even when information on Title IV program performance is made available, some have found it to be insufficient. For example, ED's IG recently found that while FSA has provided, through its Data Center, information on the loan portfolio that was formerly unavailable, it does not include other potentially relevant information, such as more detailed information on costs to the federal government associated with the income-driven repayment plans and loan forgiveness programs\u00e2\u0080\u0094two loan features that are increasingly being used by borrowers and garnering attention\u00e2\u0080\u0094that could assist policymakers and the public understand the future impact of those loan terms.", "At least one federal entity has seemingly been unable to carry out some of its duties due to a perceived lack of transparency from FSA. The CFPB has indicated that recent FSA guidance to its contracted loan servicers regarding the release of certain student loan records may be hampering CFPB's ability to conduct supervisory examinations of them to ensure that they are in compliance with federal consumer protection law. The guidance prohibits loan servicers from responding directly to information requests by third parties, including regulators such as the CFPB, and specifies that, pursuant to the Privacy Act of 1974, third-party requests should be made directly to ED. ", "Providing requested information to stakeholders arguably aligns with at least one of FSA's strategic goals: \" Foster trust and collaboration among stakeholders .\" Based on the three performance metrics FSA has identified as measures of its performance under this goal, FSA has seemingly generally succeeded in fulfilling this goal in recent years (see Table 4 ). However, generally speaking, the performance metrics do not appear to encompass the provision of timely and useful information to stakeholders. Moreover, it is unclear how some of the three performance metrics (e.g., collection rate) address the strategic goal in general. The metric \" Ease of doing business with FSA \" seems most relevant to the quality and timeliness of its efforts to meet the information needs of the stakeholders discussed here. However, it is not clear that this metric is constructed in a manner that would capture the extent to which FSA's efforts are successful in meeting the information needs of policymaking and oversight entities who presumably constitute high-priority stakeholders."], "subsections": []}, {"section_title": "Information for Members of the Public", "paragraphs": ["Members of the general public\u00e2\u0080\u0094particularly those who need or may need student aid\u00e2\u0080\u0094may have an interest in understanding how the Title IV programs operate and the outcomes associated with those programs. Their interests may relate to having access to information that allows them to make informed college-going and financial decisions and understanding potential financial risks associated with those decisions. ", "Concerns have been raised that FSA may not be releasing some information relating to IHEs' performance in meeting Title IV institutional eligibility requirements that may be indicators of an IHE's educational quality or financial stability and may be of use to consumers when deciding in which IHEs to enroll. In one report, GAO found that while FSA publicly discloses information on some IHEs' financial composite scores (an indicator of an IHE's financial stability), it did not publicly disclose all IHEs' composite scores. Since the report's publication, FSA has taken some steps to enhance the availability and usefulness of publicly available composite score information. However, \"without complete and transparent data on schools' financial conditions,\" which may include aspects other than an IHE's composite scores, \"it may be difficult for students to make informed decisions as to whether a school is a safe investment of their time and money.\" ", "Concerns have also been raised that FSA may not consistently provide information on federal student aid terms and conditions that may enable recipients to make sound financial decisions. ", "GAO has found that while FSA makes available detailed information about loan terms and conditions, borrowers must often actively seek out the information. Moreover, FSA often relies on its loan servicers to communicate loan terms and conditions to borrowers, but there may be inconsistencies among loan servicers in the information they provide to borrowers. ", "Communications about program requirements among borrowers, FSA, and loan servicers may also be imperfect. Inconsistent and/or imperfect information about program terms may lead to borrowers' being unaware of or confused about program requirements, which may put them at risk of making suboptimal financial decisions, some of which may lead to financial distress such as loan delinquency or default. FSA has taken steps to increase borrower awareness of some loan terms and conditions. However, all communication issues may not be fully resolved. In response to some of these concerns, Congress has on occasion directed FSA to perform customer outreach.", "Providing complete and accurate information to customers arguably addresses some of the HEA-specified purposes of FSA as a PBO: \"to improve service to students and other participants in the student financial assistance programs authorized under title IV, including making those programs more understandable to students and their parents.\" It also arguably aligns with FSA's strategic goal of \" i mprov[ing] quality of service for customers across the entire student aid life cycle .\" Under the five metrics FSA has identified as measures of its performance under this goal, FSA has seemingly generally succeeded in fulfilling this goal in recent years (see Table 4 ). However, concerns over communications with customers remain. "], "subsections": []}, {"section_title": "Discussion of Issues in Transparency and the PBO Structure", "paragraphs": ["Some have suggested that FSA's independence and leadership by non-political appointees enable it to be unresponsive to requests for information from Congress, political and career staff within ED, and outside stakeholders. They point out that the COO is accountable to the Secretary on the basis of measurable organizational and individual performance goals, arguably rendering removal by the Secretary or the President more difficult politically. With better access to information, it is argued, researchers and policymakers could more readily judge policies and federal investments. However, other factors, such as compliance with other federal statutes (e.g., ED's interpretation of its responsibilities under the Privacy Act of 1974), may hinder FSA's responsiveness to information requests.", "Increasing access to Title IV program performance and operations information might detract from or improve the effectiveness of the PBO's business-like design features. Sharing such information generally entails the ongoing development of information-sharing policies and procedures. Staff hours would be needed to carry out functions associated with the dissemination process, which could result in reduced economy and efficiency in addressing the PBO's statutory purposes\u00e2\u0080\u0094which do not explicitly include data sharing. Furthermore, it could increase scrutiny and evaluation of the agency's operational processes rather than the results by which PBO performance is to be measured. On the other hand, the sharing of such information could improve the ability of stakeholders to assess the results of FSA's work, perhaps using different measures of performance, and hence address accountability for results beyond the specific targets identified by FSA."], "subsections": []}]}, {"section_title": "Stakeholder Accountability", "paragraphs": ["Section 141 of the HEA mandates that FSA develop five-year performance plans and annual reports. In doing so, FSA is to engage with relevant stakeholders, which may enable it to glean new information about program performance, leverage that information to create efficiencies, and provide a level of accountability to stakeholders in its operations. In addition, the COO and senior managers are to enter into annual performance agreements that set forth measurable organizational and individual goals. The awarding of annual performance bonuses is tied to meeting these goals. Each of these provisions is intended to provide a layer of accountability to stakeholders, including students, borrowers, IHEs, FFEL program lenders and guaranty agencies, contracted student loan servicers, Congress, and other parties that may have an interest in federal student aid.", "Concerns about accountability relate to whether FSA is fulfilling its statutory mandate to consult with such stakeholders in developing performance plans and annual reports and whether FSA is leveraging information garnered from stakeholder interactions to make improvements. They also relate to whether FSA is sufficiently responsive to customer needs. Consideration might be given to whether improvement of performance agreements and measures and more meaningful use of stakeholder feedback may streamline operations at FSA and/or improve customer service to students and other aid participants\u00e2\u0080\u0094two statutorily specified purposes of establishing FSA as a PBO. Criticisms in this area raise questions about the effectiveness of the PBO's statutory performance planning and measurement mechanisms. Consideration might be given to amending these provisions.", "At least one stakeholder organization, representing student aid administrators, has reported that while FSA may reach out to stakeholders for input in developing its performance plans and annual reports, the engagement may be only perfunctory in nature and may not provide stakeholders a meaningful opportunity to provide potentially useful feedback to FSA to enable it to fulfill its functions. The same stakeholder organization has also asserted that performance metrics developed by FSA and ED are vague or inappropriate. GAO has raised concerns regarding how FSA communicates with aid recipients and whether it leverages information from customer interactions to make program improvements. ", "Assertions of a lack of engagement with stakeholders and meaningful assessment of FSA's performance raise concerns about whether statutory mandates are being adhered to and whether FSA is sufficiently attuned to outside views to effectively and efficiently administer a program in which many actors are engaged. They also raise concerns about whether FSA is sufficiently accountable to those stakeholders.", "The extent to which FSA engages with and leverages information from student aid recipients and organizations who represent them may affect students and their families. They may be limited in their ability to shop around for postsecondary financial assistance, as Title IV student aid makes up approximately half of the financial assistance available to postsecondary students. ", "Moreover, student loan borrowers often have even fewer options regarding choosing loan products to finance their postsecondary education, as private lenders are often unwilling to provide loans to individuals who may have limited creditworthiness, whereas Title IV student loans are generally made without regard to creditworthiness. In those instances where private education loans are made, they often do not contain the same favorable terms and conditions (e.g., availability of loan forgiveness programs) as Title IV student loans. It might be argued that because FSA has no comparable competitors, it may have less motivation to seek or respond to customer feedback to improve services. ", "Arguably, the criticisms of FSA discussed above expose a potential flaw in the PBO model as implemented under the HEA. The ED Secretary and the FSA COO have a joint responsibility to set (in consultation with stakeholders) and measure organizational performance. They each have an incentive (as leaders of ED and FSA, respectively) to show continuous improvement in FSA performance. This incentive might affect the degree to which stakeholder input is incorporated into the process as well as the specificity and nature of the goals and measures adopted. Vague goals and measures with seemingly perfunctory stakeholder feedback processes could mask performance problems that might exist.", "Some potential changes in this area could maintain FSA as a PBO but also modify statutory provisions related to accountability and stakeholder input. Improvement of performance agreements and measures would seemingly be in line with the PBO model's results orientation. For example, Congress might more specifically identify in statute the domains and metrics to be used in establishing annual performance plans and evaluating agency performance. Such provisions have been enacted in other contexts, such as the performance accountability system that was established by the Workforce Innovation and Opportunity Act. Similarly, more meaningful incorporation of certain types of stakeholder feedback into the performance plan and evaluation process would seemingly be consistent with the PBO model. Potential approaches to emphasizing the importance of stakeholder input during this planning and assessment might include specifying in statute a more formal input process. For example, Congress has directed state agencies to solicit written comments from the public and to respond to such comments in writing when establishing career and technical education performance standards.", "Appendix A. Selected Bibliography", "The following appendix provides a bibliography of selected reports authored by ED's OIG and GAO that address FSA and its operations and that have been published since January 1, 2014. Sources listed in the bibliography largely relate to FSA but may also include information and findings relating to other ED offices, such as OPE. In some instances, sources refer to ED and/or the Secretary of Education and not specifically to FSA and/or its COO. CRS is including these documents in this bibliography as, given FSA's functions, some of the information in these reports likely relate to FSA. For each category, reports are presented in reverse chronological order.", "U.S. Department of Education, Office of Inspector General", "Federal Student Aid's Oversight of Schools' Compliance with Satisfactory Academic Progress Regulations , July 17, 2019.", "Federal Student Aid's Process to Select Free Application for Federal Student Aid Data Elements and Students for Verification , April 26, 2019.", "Federal Student Aid: Additional Actions Needed to Mitigate the Risk of Servicer Noncompliance with Requirements for Servicing Federally Held Student Loans , February 12, 2019.", "Federal Student Aid: Efforts to Implement Enterprise Risk Management Have Not Included All Elements of Effective Risk Management , July 24, 2018.", "Federal Student Aid's Contractor Personnel Security Clearance Process , April 17, 2018.", "The Department's Communication Regarding the Costs of Income-Driven Repayment Plans and Loan Forgiveness Programs , January 31, 2018.", "Federal Student Aid's Borrower Defense to Repayment Loan Discharge Process , December 8, 2017.", "Federal Student Aid's Processes for Identifying At-Risk Title IV Schools and Mitigating Potential Harm to Students and Taxpayers , February 24, 2017.", "Misuse of FSA ID and the Personal Authentication Service , September 26, 2016.", "FSA Oversight of the Development and Enhancement of Information Technology Products, June 30, 2016.", "Kathleen Tighe, ED Inspector General, \"Servicemembers Civil Relief Act,\" letter to Senators Patty Murray, Elizabeth Warren, and Richard Blumenthal, February 29, 2016. ", "Functionality of the Debt Management Collection System 2 , November 5, 2015.", "Federal Student Aid's Oversight of Schools Participating in the Title IV Programs , September 29, 2015.", "Review of Debt Management Collection System 2 (DMCS2) Implementation , August 24, 2015.", "Audit of the Followup Process for External Audits in Federal Student Aid , June 17, 2015.", "Pell Grant Lifetime Eligibility Limit , March 31, 2015.", "Federal Student Aid's Oversight of Schools' Compliance with the Incentive Compensation Ban , March 24, 2015.", "The U.S. Department of Education's Administration of Student Loan Debt and Repayment , December 11, 2014.", "Oversight of Guaranty Agencies During the Phase-Out of the Federal Family Education Loan Program , September 29, 2014.", "Review of Federal Student Aid's Oversight and Monitoring of Private Collection Agency and Guaranty Agency Security Controls , September 22, 2014.", "Handling of Borrower Complaints Against Private Collection Agencies , July 11, 2014.", "Third-Party Servicer Use of Debit Cards to Deliver Title IV Funds , March 10, 2014.", "Review of Federal Student Aid's Plans for Schools Closures by a For-Profit Entity , February 28, 2014.", "Title IV of the Higher Education Act Programs: Additional Safeguards Are Needed to Help Mitigate the Risks That Are Unique to the Distance Education Environment , February 21, 2014.", "U.S. Government Accountability Office", "Public Service Loan Forgiveness: Improving the Temporary Expanded Process Could Help Reduce Borrower Confusion , GAO-19-595, September 5, 2019.", "Federal Student Loans: Education Needs to Verify Borrowers' Information for Income-Driven Repayment Plans , GAO-19-347, June 25, 2019.", "Priority Open Recommendations: Department of Education , April 9, 2019.", "Cybersecurity: Office of Federal Student Aid Should Take Additional Steps to Oversee Non-School Partners' Protection of Borrower Information , GAO-18-518, September 17, 2018.", "Public Service Loan Forgiveness: Education Needs to Provide Better Information for the Loan Servicer and Borrowers , GAO-18-547, September 5, 2018.", "Federal Student Loans: Further Action Needed to Implement Recommendations on Oversight of Loan Servicers , GAO-18-587R, July 27, 2018.", "Federal Student Aid: Education's Postsecondary School Certification Process , GAO-18-481, July 17, 2018.", "Federal Student Loans: Actions Needed to Improve Oversight of Schools' Default Rates , GAO-18-163, April 26, 2018.", "Federal Student Aid: Better Program Management and Oversight of Postsecondary Schools Needed to Protect Student Information , GAO-18-121, November 27, 2017 (reissued December 4, 2017).", "Higher Education: Education Should Address Oversight and Communication Gaps in Its Monitoring of the Financial Condition of Schools , GAO-17-555, August 21, 2017.", "Student Loans: Oversight of Servicemembers' Interest Rate Cap Could be Strengthened , GAO-17-4, November 15, 2016.", "Federal Student Loans: Education could Improve Direct Loan Program Customer Service and Oversight , GAO-16-523, May 16, 2016.", "Federal Student Loans: Key Weaknesses Limit Education's Management of Contractors , GAO-16-196T, November 18, 2015.", "Federal Student Loans: Education Could Do More to Help Ensure Borrowers Are Aware of Repayment and Forgiveness Options , GAO-15-663, August 25, 2015.", "Higher Education: Better Management of Federal Grant and Loan Forgiveness Programs for Teachers Needed to Improve Participant Outcomes , GAO-15-314, February 24, 2015.", "Higher Education: Education Should Strengthen Oversight of Schools and Accreditors , GAO-15-59, December 22, 2014 (reissued January 22, 2015).", "Federal Student Loans: Better Oversight Could Improve Defaulted Loan Rehabilitation , GAO-14-256, March 6, 2014.", "Appendix B. Selected Acronyms Used in This Report"], "subsections": []}]}]}}
{"id": "R45828", "title": "Overview of Recent Administrative Reforms of Fannie Mae and Freddie Mac", "released_date": "2019-07-25T00:00:00", "summary": ["Congress chartered Fannie Mae and Freddie Mac, also known collectively as the government-sponsored enterprises (GSEs), to promote homeownership for underserved groups and locations by providing liquidity to the secondary mortgage market. The GSEs specifically facilitate financing for single-family residential mortgages and multifamily (apartment and condominium) construction. After purchasing pools of single-family 30-year fixed rate mortgages, the GSEs retain the credit (default) risks from the whole mortgages and subsequently issue mortgage-backed securities (MBSs), which are bond-like securities. Investors who purchase MBSs are guaranteed a return on their initial principal and interest, but they assume prepayment risk, which is the risk that borrowers prepay their mortgages ahead of schedule. In contrast to the original mortgages (with both credit and prepayment risks attached), the MBSs are relatively more liquid, meaning they can be exchanged for cash more quickly with little change in their quoted prices. If institutional investors from around the globe are willing to hold liquid MBSs, then additional funds are channeled to the nation's mortgage market (particularly to support 30-year fixed rate mortgages). National mortgage rates tend to fall as the supply of funds in this market increases, making homeownership more affordable.", "The Federal Housing Finance Agency (FHFA), an independent federal government agency created by the Housing Economic and Recovery Act of 2008 (HERA; P.L. 110-289 ), is the GSE's primary supervisor. FHFA regulates the GSEs for prudential safety and soundness and to ensure that they meet their affordable housing mission goals. In September 2008, the GSEs experienced losses that exceeded their statutory minimum capital requirement levels as a result of above-normal mortgage defaults. The GSEs also experienced losses following spikes in short-term borrowing rates that occurred while they were funding long-term assets held in their portfolios. The GSEs subsequently were placed under conservatorship, and the FHFA currently has the powers of management, boards, and shareholders until the GSEs' financial safety and soundness can be restored. In addition, the U.S. Treasury is providing financial support through the Senior Preferred Stock Purchase Agreements (PSPAs) program, which requires the GSEs to pay dividends to Treasury rather than private shareholders while they are under conservatorship.", "Congressional interest in the GSEs has continued since conservatorship. First, the final costs to the U.S. Treasury (and, by proxy, to U.S. taxpayers) of providing financial support to the GSEs are unknown. Furthermore, the GSEs' future viability could affect the availability of single-family 30-year fixed rate mortgage loan products. Although these mortgage products are arguably popular with borrowers, private lenders may be reluctant to retain in portfolio and fund relatively less liquid mortgages\u00e2\u0080\u0094with both credit and prepayment risks attached\u00e2\u0080\u0094for several decades. Congressional interest has been reflected by various draft proposals, bills, and oversight hearings on housing finance reform. During the 116 th Congress, the Senate Committee on Banking, Housing, and Urban Affairs released a proposal that would likely affect the GSEs' role in the housing finance system. President Donald J. Trump also released a memorandum directing federal agencies to develop a plan to reform the housing finance system, which includes ending the conservatorships.", "The FHFA's initiatives have focused primarily on managing the GSEs' liquidity, operational, and credit risks. The FHFA has directed the GSEs to standardize numerous processes to foster greater liquidity in the market for their MBSs. The standardization initiatives may also reduce operational risks, particularly risks associated with data breaches and other technology disruptions. The GSEs are also being required to share more of the credit risk linked to their single-family mortgage purchases with the private sector.", "The GSEs still face future challenges. For example, recent FHFA initiatives require the GSEs to harmonize their business models, including certain borrower risk characteristics that are eligible for securitization. The GSEs' ability to satisfy their affordable housing goals, therefore, might depend upon the extent to which borrowers with risk characteristics deemed eligible for securitization overlap with those who traditionally face greater difficulty accessing credit. In addition, the GSEs' securitization activities may depend upon certain legal protections that loan originators receive when their mortgages are sold to the GSEs. These protections are granted under what is referred to as the GSE patch, which expires on January 10, 2021. It is unclear how the secondary-market participants\u00e2\u0080\u0094the loan originators, the GSEs, and investors in the MBSs issued by the GSEs\u00e2\u0080\u0094will respond if the GSE patch expires."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["Congress chartered Fannie Mae and Freddie Mac, also known collectively as the government-sponsored enterprises (GSEs), to promote homeownership by providing liquidity to the secondary markets for single-family residential mortgages and multifamily (apartment and condominium) construction. Guaranteeing single-family residential mortgages is their core business activity, but it comes with risks. The GSEs retain the credit (default) risks from the mortgages they purchase from loan originators and subsequently issue mortgage-backed securities (MBSs), which are bond-like securities. Investors who purchase the MBSs are guaranteed to get their initial principal investment returned, but they assume the risk that borrowers may choose to repay their mortgages ahead of schedule, known as prepayment risk. The MBSs are considered more liquid (in comparison to the original mortgages with both attached risks) because they may be traded or sold for cash more quickly. If investors are willing to hold MBSs, then more private-sector funds become available for relatively less liquid mortgages\u00e2\u0080\u0094particularly 30-year fixed-rate mortgages. National mortgage rates tend to fall as the supply of funds in this market increases, making homeownership more affordable. ", "The Federal Housing Finance Agency (FHFA), an independent federal government agency created by the Housing and Economic Recovery Act of 2008 (HERA; P.L. 110-289 ), is the GSEs' primary supervisor. FHFA regulates the GSEs for prudential safety and soundness and ensure they meet their affordable housing mission goals. In September 2008, the GSEs experienced losses that exceeded their statutory minimum capital requirement levels due to the high rate of mortgage defaults. The GSEs also experienced losses following spikes in short-term borrowing rates that occurred while they were funding long-term assets held in their portfolios. The GSEs subsequently agreed to be placed under conservatorship. Until the GSEs' financial safety and soundness can be restored, the FHFA has the powers of management, boards, and shareholders. The FHFA established three conservatorship performance goals designed to restore confidence in the GSEs and restore them to a safe and solvent condition: ", "1. The GSEs must promote a well-functioning national housing finance market while operating in a financially safe and sound manner. 2. Credit or default risk to U.S. taxpayers should be reduced by increasing private capital's role in the mortgage market. 3. The GSEs must construct a contemporary single\u00e2\u0080\u0090family securitization infrastructure for their use and other private mortgage securitizers.", "In addition, the Senior Preferred Stock Purchase Agreements (PSPAs) stipulate the conditions under which the U.S. Treasury will provide financial support to the GSEs while they are under conservatorship. The PSPAs require the GSEs to pay dividends to Treasury rather than private shareholders while they are under conservatorship. The PSPAs also require the GSEs to reduce the size of their lending portfolios to $250 billion.", "Since they entered conservatorship, congressional interest in the GSEs has continued due to uncertainty in the housing, mortgage, and financial market. For example, the final amount and duration of financial support that Treasury will eventually provide the GSEs is difficult to predict at present. Furthermore, reforming or replacing the GSEs might affect the availability of single-family 30-year fixed-rate mortgage loan products. This mortgage product is arguably popular with borrowers, but private lenders may be reluctant to retain them in their lending portfolios because they are relatively less liquid mortgages\u00e2\u0080\u0094with both credit and prepayment risks attached\u00e2\u0080\u0094and may last for several decades. Congressional interest has been reflected by various draft proposals, bills, and oversight hearings on housing finance reform. During the 116 th Congress, the U.S. Senate Committee on Banking, Housing, and Urban Affairs released a proposal that would affect the GSEs' role in the housing finance system. President Donald J. Trump also released a memorandum directing federal agencies to develop a plan to reform the housing finance system, which includes ending the conservatorships.", "This report first describes Fannie Mae's and Freddie Mac's activities and mission. It then summarizes the progress made to date on FHFA's initiatives, focusing primarily on the management of the GSEs' credit and liquidity risks. The FHFA has directed the GSEs to share more of the credit risk linked to their single-family mortgage purchases with the private sector to reduce potential risks that would be borne by U.S. taxpayers. The GSEs must also standardize numerous processes to foster greater liquidity in the market for their MBSs. This report concludes with a discussion of the policy implications of GSE challenges while they are under conservatorship. For example, recent FHFA initiatives require the GSEs to harmonize their business models, including certain borrower risk characteristics that are eligible for securitization. The GSEs' ability to satisfy their affordable housing goals, therefore, might depend upon the extent to which borrowers with risk characteristics deemed eligible for securitization overlap with those who traditionally face greater difficulty accessing mortgage credit. In addition, the GSEs' ability to purchase and securitize mortgages may depend upon certain legal protections that loan originators receive when their mortgages are sold to the GSEs. The regulation, which is known as the GSE patch (or QM patch), expires on January 10, 2021, and it is difficult to predict how secondary-market participants\u00e2\u0080\u0094loan originators, the GSEs, and investors\u00e2\u0080\u0094will respond if it expires as scheduled. "], "subsections": []}, {"section_title": "The GSEs' Secondary Mortgage Market Intermediation Activities", "paragraphs": ["Borrowers obtain their mortgages from loan originators in the primary market; loan originations may be bought and sold in the secondary market. By law, the GSEs cannot originate mortgages directly to borrowers in the primary market. Instead, the GSEs operate in the secondary mortgage market, interacting with loan originators (that sell mortgages to the GSEs) and investors (that purchase the GSEs' debt and MBS issuances). ", "The GSEs purchase conforming mortgages , single-family mortgages that meet certain eligibility criteria based on size and creditworthiness, from loan originators. The GSEs use two methods to acquire conforming mortgages. A GSE may pay cash directly from its cash window to a loan originator for delivery of a small number of mortgages. Alternatively, the GSEs may enter into a swap agreement with a loan originator to purchase a large number (pool) of mortgages. In exchange for a pool(s), the purchasing GSE delivers one (or more) MBS that is linked to the MBS trust that will hold the mortgages. An MBS trust is a legal entity established to hold pools of conforming mortgage loans; the streams of principal and interest are deposited as borrowers repay their mortgages. ", "The GSEs issue MBSs to investors. MBSs are essentially derivative products that contain one, rather than both, of the financial risks attached to the original mortgages that the GSE purchased. Investors that purchase an MBS receive a coupon , which is the yield composed of the principal and interest repayments from borrowers whose mortgages are held in MBS trusts. However, various fees are subtracted before the coupons are paid to investors. For example, a designated mortgage servicer retains a fee to collect borrowers' regular payments, resolves borrower delinquency and default problems, and disburses payments to the GSEs (which subsequently disburse payments to MBS investors). Other fees related to the home purchase (e.g., settlement costs) that borrowers may have chosen not to pay upfront may also be subtracted. Simply put, the coupon is the rate of return net of fees that an investor receives for purchasing or investing in an MBS.", "The GSEs, like banks, are financial intermediaries that match mortgage borrowers with ultimate lenders. Under a traditional banking model, banks borrow funds from their depositors and use the funds to originate longer-term consumer and business loans. Consumers and businesses pay higher interest rates to banks for these longer-term loans than the banks pay to their depositors for successive sequences of relatively lower-rate loans (e.g., recurring deposits) for shorter periods of time. L ending spreads are the difference between lending at higher rates (revenues) and borrowing at successive sequences of shorter rates (costs). A bank can retain all of the profits generated by its lending spreads if the entire lending process and associated financial risks are retained on its balance sheet.", "Similar to banks, the GSEs create profitable lending spreads to finance assets retained in their lending portfolios (on-balance sheet) and the conforming mortgages held in the MBS trusts (off-balance sheet). The GSEs issue to investors debt securities, referred to as unsecured debentures , with shorter maturities relative to the longer-term assets retained in portfolio. By borrowing via successive sequences of lower-rate debentures, the GSEs create portfolio lending spreads. In addition, the GSEs fund mortgages held in the MBS trusts. Rather than issuing debentures, the GSEs fund the MBS trusts via issuing MBSs in the to-be-announced (TBA) market. When issuing MBSs, however, the GSEs act more like monoline bond insurers, meaning they retain credit risk and transfer prepayment risk to private investors. These concepts, which are key to understanding the GSEs' securitization activities, are described in detail in the sections below."], "subsections": [{"section_title": "Retention of Mortgage Credit Risk, Transfer of Prepayment Risk", "paragraphs": ["Another important fee, the guarantee fee (g-fee) , is deducted from the streams of principal and interest payments before an MBS investor receives a coupon payment. The g-fee compensates the GSEs for retaining credit risk , the risk that borrowers might default or fail to repay their mortgage loan obligations. Although the g-fee is typically charged to loan originators (and frequently passed onto borrowers), the benefit of the mortgage insurance accrues to MBS investors. Should a delinquency or default occur, the GSEs guarantee timely payment of the coupon (net of fees) to MBS investors. After a borrower defaults, the applicable GSE purchases the defaulted mortgage (for the amount of the remaining balance owed) out of the MBS trust. The purchase effectively reimburses the associated MBS trust and, therefore, prevents MBS investors from losing their initial principal investments. The MBS coupon is subsequently adjusted for the reduced stream of interest payments, thus making it appear to investors that mortgage obligations have been repaid ahead of schedule (rather than defaulted).", "The other key mortgage risk, prepayment risk , is transferred from the GSEs to MBS investors. Prepayment risk is the risk that borrowers will repay their mortgages ahead of schedule, resulting in lenders earning less interest revenue than initially anticipated. For example, if mortgage rates decline, some borrowers may repay their existing mortgages early by refinancing (replacing) them into new mortgages with lower rates. Borrowers also prepay their mortgages when they move. In this case, the GSEs pass on the principal repayment but reduce the investors' MBS coupons by the amount of interest forgone.", "In sum, the GSEs' securitization process entails detaching two mortgage risks into separate components. The GSEs retain the default risk component for a g-fee and transfer the prepayment risk component to MBS investors. For this reason, MBSs are considered derivative securities because they contain only one of the risks linked to the original underlying mortgages held in the MBS trusts."], "subsections": []}, {"section_title": "Liquidity Risk in the Markets for MBSs", "paragraphs": ["Many types of bonds and derivatives trade directly (via broker-dealers) between two parties in what are referred to as over-the-counter (OTC) market transactions. Bonds generally trade infrequently, and the trade sizes vary, which may cause valuation (pricing) challenges\u00e2\u0080\u0094sometimes leading investors and market-makers to perceive that the bonds may be illiquid . Illiquid securities cannot easily be converted into cash or traded within a reasonable time, that is, without affecting their quoted prices. Investors arguably might offer (bid) \"too much\" to buy or sell (ask) for a price \"too low\" when trading illiquid securities. Consequently, investors require additional compensation, referred to as a liquidity premium , to buy or sell illiquid securities. Widening bid-ask spreads might signal the emergence of a liquidity premium being incorporated in securities prices.", "After being issued in the TBA market, the GSEs' MBSs trade in the OTC market and are considered to be almost as liquid as the U.S. Treasury bond market. Prior to conservatorship, the GSEs could actively trade their own MBSs to facilitate market liquidity. By conducting market trades when the bid-ask spreads for MBS widened, the GSEs could abate rising liquidity premiums and reduce mortgage costs for borrowers. Persistent liquidity premiums could result in higher mortgage rates for borrowers if investors demand greater compensation to account for the risk of selling their MBSs in the future for a price presumed to be too low. Furthermore, the TBA market is a forward market, meaning MBSs are purchased in advance of a specific future date. Investors wanting to hedge against adverse interest rate movements prior to delivery of their MBS purchases would, therefore, pay higher costs to cover the possibility of liquidity premiums emerging before the settlement date. Investors' larger hedging costs could also be passed on to borrowers wanting to lock in interest rates for a period of time prior to closing on their mortgages. Hence, high-volume trading by the GSEs facilitated narrower bid-ask MBS spreads in both the TBA and OTC markets. (The GSEs held their own MBSs to show incentive alignment with investors, meaning the GSEs were willing to hold the same risks that they were selling.) ", "The current $250 billion cap on the GSEs' lending portfolios (resulting from the PSPAs) may limit their ability to buy and sell MBSs at the volumes necessary to influence market pricing. Although the Federal Reserve has purchased large amounts of the GSEs' MBS while carrying out its lender-of-last-resort responsibilities, it has largely retained them in its portfolio rather than actively trading them. Hence, less active trading of MBSs by the GSEs and more holding (rather than actively trading) of MBSs by the Federal Reserve might explain any declines in market liquidity. "], "subsections": []}]}, {"section_title": "FHFA's Initiatives for the GSEs Under Conservatorship", "paragraphs": ["Since conservatorship, the FHFA has focused primarily on (1) the credit risks retained by the GSEs (posing a direct risk to U.S. taxpayers) and (2) the liquidity of their MBS issuances. The FHFA has released various versions of strategic plans and performance goals to inform the public. This section highlights FHFA initiatives that focus on those specific risks."], "subsections": [{"section_title": "Initiatives Regarding the GSEs' Credit Risks", "paragraphs": ["As previously mentioned, the PSPAs require the GSEs to pay dividends to the U.S. Treasury in exchange for its financial support while they are under conservatorship. The PSPAs also require the GSEs to reduce taxpayers' credit risk. The FHFA has subsequently required the GSEs to increase the private sector's role in credit risk sharing. The various programs to facilitate these objectives are discussed in this section."], "subsections": [{"section_title": "Loan-to-Value Requirements for Borrowers", "paragraphs": ["By statute, additional credit enhancements (discussed in the next paragraph) are required if the GSEs purchase mortgages with a loan-to-value (LTV) above 80% such that the mortgage balance exceeds 20% of the residential property value. If a borrower defaults, the GSE generally recovers losses by foreclosing (repossessing) and then liquidating (selling) the property. The 80% LTV requirement ensures that a property would need to sell for at least 80% of its original value for the GSE to recover enough proceeds to cover the remaining mortgage balance. ", "Borrowers lacking sufficient funds to make a 20% downpayment have alternative options. One option is to purchase private mortgage insurance (PMI), an insurance policy that would assume the first 20% of losses associated with a mortgage default. In this case, the FHFA currently requires the GSEs to pay PMI initially and be reimbursed later by borrowers via interest rate adjustments on their loans. The GSEs currently contract with a limited group of private mortgage insurers that accept the GSEs' underwriting standards, thereby streamlining the process to obtain PMI. Fannie Mae calls its program Enterprise-Paid Mortgage Insurance (EPMI) Option and Freddie Mac calls its program Integrated Mortgage Insurance (IMAGIN). By doing business with a select group of PMI providers, the GSEs (and FHFA) can closely monitor their financial health and ensure their ability to pay any PMI claims after borrower defaults, thus reducing counterparty risk."], "subsections": []}, {"section_title": "Guarantee Fees", "paragraphs": ["The GSEs can generate revenues to cover potential credit losses by increasing g-fees, thus mitigating losses to taxpayers. The GSEs have two types of g-fees. First, the upfront g-fee is determined by the borrower's risk characteristics (e.g., credit score, loan-to-value ratio). Second, the ongoing g-fee, which is collected each month over the life of the loan, is determined by the product type (e.g., fixed rate, adjustable). In December 2011, Congress directed the FHFA to increase the ongoing g-fees for all loans by 10 basis points. The increase took effect on December 1, 2012, for loans exchanged for MBSs. (A single basis point is equal to 1/100 of a percent; 100 basis points is 1%.) The FHFA also increased g-fees in 2013. In 2017, FHFA reported that the average guarantee fee of 56 basis points was unchanged from 2016."], "subsections": []}, {"section_title": "Credit Risk Transfer Programs", "paragraphs": ["In July 2013, the GSEs initiated new credit risk transfer (CRT) programs to share a portion of the credit risk linked to their guaranteed single-family mortgages with the private sector. Both GSEs now offer another separate set of CRT financial instruments that are linked only to the credit risk of the mortgages held in the MBS trusts. Investors preferring exposure only to mortgage prepayment risk may continue to purchase MBSs; however, the private sector may now purchase CRT issuances, which function similarly to MBSs, to earn revenue in exchange for assuming exposure to the credit risk.", "Fannie Mae's CRT instruments are known as Connecticut Avenue Securities (CAS); Freddie Mac's CRT instruments are known as Structural Agency Credit Risk (STACR). The GSEs transfer the credit risk linked to mortgages with LTVs greater than 60% (or borrowers with 40% or less in accumulated home equity, making them more vulnerable to the possibility of owing more than the initial value of their homes if housing market prices were to fall) to investors. After defaults occur, the GSEs write down the coupons paid to CRT investors (similar to writing down the coupons on MBSs after prepayments occur). The GSEs retain the credit risk for mortgages with lower LTVs (or borrowers with 41% or more in accumulated home equity such that their outstanding balances are significantly below the value of their residential properties), which are less likely to default.", "Sharing risk at both the front end (before the mortgages are purchased) via the PMI programs and the back end (after the mortgages are purchased) via the CRT programs has reduced the federal government's exposure to mortgage credit risk. The CRT programs have grown rapidly, arguably filling the gap left by the private-label mortgage-backed securities market that existed prior to 2008. Nevertheless, the Congressional Budget Office reports that the GSEs' CRT transactions have not necessarily reduced taxpayers' costs. The GSEs pay more to the private sector to assume credit risk relative to what they collect in g-fees from borrowers, and the g-fees have not been raised to cover the additional costs."], "subsections": []}, {"section_title": "Proposed Capital Framework", "paragraphs": ["Although the exact definition of capital for financial firms is determined by law and regulation, it generally refers to common or preferred equity (as a percentage of assets), which can absorb financial losses. The FHFA suspended the GSEs' capital requirements during conservatorship, as required by the PSPAs with Treasury. The GSEs can pay dividends only to the Treasury as opposed to private shareholders while they are under conservatorship. The FHFA has solicited feedback on how to establish a prospective capital framework for the GSEs (see text box below) that would allow them to continue operating after an event similar to the recent financial crisis. ", "The statutory minimum leverage (unweighted) capital requirement, specified in the Federal Housing Enterprises Safety and Soundness Act of 1992, is equal to 2.5% of on-balance sheet (portfolio) assets and 0.45% of off-balance sheet (MBS trust) obligations. HERA, however, gave FHFA the authority to increase capital standards above the statutory minimum as necessary. Given the deteriorated financial conditions that caused the GSEs to be placed in conservatorship, FHFA's proposed capital framework would result in higher capital requirements."], "subsections": []}]}, {"section_title": "Standardization Initiatives to Foster MBS Liquidity", "paragraphs": ["The FHFA has introduced initiatives to standardize many aspects of the GSEs' operations, which include their mortgage data collection processes, securitization processes, mortgage servicing policies (e.g., resolving delinquencies), and MBS issuances. Such standardization arguably increases transparency, reduces the length of the single-family mortgage origination and securitization processes, and ultimately increases the liquidity and uniform pricing of the GSEs' MBS and CRT issuances."], "subsections": [{"section_title": "Mortgage Data Standardization", "paragraphs": ["The FHFA's mortgage data standardization initiative requires the GSEs to support standardizing the single-family mortgage data information used by the industry. Data collected on loan applications, property appraisals, loan closings, and disclosures are the focus of the standardization efforts. "], "subsections": []}, {"section_title": "The Common Securitization Platform", "paragraphs": ["In 2012, FHFA determined that both technology platforms the GSEs used to securitize (the process of transferring the underlying mortgage payments into MBSs) were \"antiquated and inflexible.\" Rather than updating two separate systems, the FHFA required the GSEs to jointly develop a new platform to facilitate the various tasks associated with their securitization processes. The GSEs entered into a joint venture, the Common Securitization Solutions (CSS), which operates the Common Securitization Platform (CSP). The GSEs continue to acquire mortgages from originators; establish separate loss-mitigation practices for delinquent and defaulted mortgages for their mortgage servicers to follow; choose the underlying mortgages for placement in each MBS trust; and guarantee the credit risk linked to the MBS trusts they individually create. The CSS, however, acts as a technology service provider for the GSEs."], "subsections": []}, {"section_title": "The Uniform MBS Single Security Initiative", "paragraphs": ["In the TBA market, a loan originator selling mortgages to the GSEs would contract to deliver mortgages in exchange for an MBS at a specified future date. Specifically, the MBS buyer (loan originator) and MBS seller (one of the GSEs) negotiate in advance for future delivery and settlement date. The buyer and seller agree on six general features that the MBS should have: the issuer, maturity, coupon rate, sale price, approximate face value, and settlement date. The exact features of the securities to be delivered are disclosed to the participants two days prior to settlement. ", "MBSs that meet the required criteria can be delivered as long as the underlying MBS pools are fungible , that is, sufficiently interchangeable with other MBSs. Because the MBS issuer is one of the trading features, MBSs have generally been fungible only with other MBSs issued by the same GSE. Fannie Mae-issued MBSs and Freddie Mac-issued MBSs have not previously been interchangeable, and their MBSs do not trade at identical prices despite the fact that the GSEs have essentially the same federal charters and business (securitization) models. ", "Freddie Mac's MBSs have been frequently traded at lower prices than Fannie Mae's. Following declines in mortgage rates that prompt borrowers to refinance, the mortgage pools underlying Freddie Mac's MBSs historically have had faster prepayment rates (relative to Fannie Mae's MBSs). Faster prepayment translates into higher prepayment risk for Freddie Mac MBS investors, which would explain trading at lower prices. The persistent price difference led to an exploitable arbitrage opportunity, particularly for large originators that sell loans via swap agreements. By entering into a swap agreement with Fannie Mae, a large mortgage originator would immediately acquire a higher-priced MBS that could subsequently be sold in the OTC market. Freddie Mac could respond by lowering its g-fees, thereby slightly increasing its MBS coupons relative to Fannie Mae's MBS coupons to remain somewhat competitive. Besides the persistent pricing differential, Freddie Mac's MBS issuances were approximately 70% of Fannie Mae's MBS issuances, and Freddie Mac's MBSs accounted for only 9% of total trading activity in 2014. Hence, the pricing differential between the GSEs' MBSs\u00e2\u0080\u0094especially while they are under conservatorship\u00e2\u0080\u0094is arguably transformed into a taxpayer subsidy for the larger loan originators.", "Under the single security initiative, the FHFA has directed the GSEs to align their key contractual and business practices by acquiring mortgages with similar prepayment speeds along with other features. The GSEs may continue to separately purchase conforming mortgages and guarantee the credit risks linked to the MBS trusts they create. Nevertheless, harmonizing the financial characteristics of their mortgage purchases would allow the GSEs' MBS trusts to generate similar cash-flow predictability and prepayment speeds, thus facilitating the creation of uniform and fungible securities when issued through the CSP. The GSEs would be required to align their prepayment speeds such that they do not constitute a material misalignment, or a divergence by more than 2% over a three-month interval.", "Rather than separate MBS issuances (i.e., Fannie Mae's mortgage-backed security and Freddie Mac's participation certificates), the FHFA has directed the GSEs (via the CSP) to issue one common security, the uniform mortgage-backed security (UMBSs). (Private-sector guarantors would also be able to use the CSP to issue fungible UMBSs.) The FHFA argues that a combined market for the GSEs' UMBSs would enhance market liquidity and mitigate the rise of market liquidity premiums; the pricing differential would also be eliminated. FHFA will monitor both GSEs to ensure that their underwriting policies remain intact to avoid material misalignment that compromises UMBS fungibility. UMBS issuances began on June 3, 2019."], "subsections": []}]}]}, {"section_title": "Selected Policy Implications", "paragraphs": ["Congress established the GSEs with a public policy mission that includes a variety of ways to support affordable housing. Following the Great Recession, Congress also established a macroprudential economic policy tool in the form of new mortgage market underwriting requirements to mitigate a systemic risk event. Given these broader public policy objectives, this section discusses selected challenges for the GSEs while they are under conservatorship."], "subsections": [{"section_title": "Efforts to Support Broader Access to Mortgage Credit", "paragraphs": ["The GSEs have statutory single- and multi-family goals along with other requirements designed to promote affordable housing. The affordable housing goals, duty to serve goals, and cash contributions make up the three sets of requirements:", "1. The GSEs must satisfy specified housing goals that require them to purchase certain percentages of mortgages for families with very low incomes (at or below 50% of area median family income) and extremely low incomes (at or below 30% of area median family income). 2. HERA created a duty to serve for underserved markets, specifically manufactured housing, rural housing, and affordable housing preservation. The FHFA requires the GSEs to develop their own duty to serve plans to encourage lenders to increase their lending in these areas. 3. HERA requires the GSEs to contribute to the Housing Trust Fund (HTF) and the Capital Magnet Fund (CMF). The HTF funds states and state-designated entities for eligible activities that primarily support affordable rental housing for extremely low- and very low-income families, including homeless families. The CMF awards competitive grants to financial institutions designated as Community Development Financial Institutions and qualified nonprofit housing organizations for which the development or management of affordable housing is one of their principal purposes. The GSEs must set aside 4.2 basis points (0.042%) of the unpaid principal balance of mortgages purchased in a year for these funds.", "Achieving the affordable housing mission has been difficult for the GSEs while they are under conservatorship. For one reason, FHFA suspended the requirement that the GSEs make contributions to the HTF and the CMF between 2008 and 2014. The requirement was reinstated in 2015. Another factor may be that the PSPAs caps of $250 billion on both of the GSEs' portfolios potentially limit the amount of mortgages with nonstandardized characteristics they can purchase. The GSEs retained portfolios consist primarily of (1) mortgages in the pipeline to be securitized, (2) non-performing mortgages that may receive loss-mitigation, and (3) mortgages that support affordable housing mission goals. The PSPA caps and changing mortgage market conditions may prompt the GSEs to be more deliberate when allocating their portfolios for certain purposes.", "Under the current standardization initiatives, some mortgage purchases made to support the GSEs' affordable mission goals might not be securitized if they lack, for example, the prepayment characteristics required to be securitized into a UMBS. Hence, the standardization initiatives would not adversely affect low- and moderate-income borrowers whose prepayment speeds can be securitized into UMBSs; however, borrowers with prepayments speeds not acceptable for UMBS securitization could pay more for mortgages if the GSEs' portfolios are being used primarily as securitization pipelines for acceptable mortgages and operating closer to their PSPA caps while the GSEs are under conservatorship."], "subsections": []}, {"section_title": "The GSE Patch/QM Patch and Possible Implications for CRT", "paragraphs": ["On January 10, 2013, the Consumer Financial Protection Bureau (CFPB) released a final rule implementing the ability-to-repay (ATR) requirement of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act; P.L. 111-203 ); the rule took effect on January 10, 2014. The Dodd-Frank Act requires lenders to verify a borrower's ATR with documentation. The final rule provides multiple ways for a loan originator to comply, one of which is by originating a qualified mortgage (QM). If a loan meets certain underwriting and product-feature requirements, it receives QM status; the lender receives a presumption of ATR compliance for legal purposes. Specifically, QM loans provide safe harbor legal protection, meaning that a borrower would not be able to assert that the originator (and any subsequent secondary-market purchaser) failed to comply with any of the required underwriting criteria.", "Limiting the borrower's debt-to-income (DTI) ratio to 43% is one of the underwriting requirements for a loan to receive QM status. If, however, a loan's DTI exceeds 43%, it may still receive QM status if another federal agency that insures mortgage credit risk is willing to guarantee it. The QM patch allows the GSEs and other federal agencies to operate under their own QM rules for seven years (until January 10, 2021) or until the GSEs exit conservatorship, whichever is sooner. Consequently, the Federal Housing Administration, U.S. Department of Veterans Affairs, and United States Department of Agriculture did not adopt a 43% DTI requirement for the mortgages they guarantee. Instead, these agencies adopted their own QM definitions, which included the exclusion of product features they considered would impede repayment from borrowers they predominantly serve\u00e2\u0080\u0094but they did not limit DTIs to 43%. Furthermore, the CFPB's QM rule created an exemption from the 43% DTI cap for mortgages eligible for purchase by the GSEs. Hence, loan originations either acquired by the GSEs while they are under conservatorship (or until January 10, 2021) or guaranteed by other federal agencies receive QM status. ", "Since 2007, the private-label securitizations market has diminished whereas the roles of GSEs and federal agencies that guarantee or issue residential mortgage loans have increased in importance. One reason might be related to the legal protections linked to QM loan originations. Many originators have limited themselves to making only QM loans to avoid exposure to potential liability and litigation risks. Although they may be willing to assume customary lending risks, such as credit and prepayment, financial institutions historically have been less willing to originate mortgage loans with attached compliance or legal risks. For example, since the passage of the 1994 Home Ownership Equity Protection Act (HOEPA), mortgage originations covered by the law make up a small share of the mortgage market and are concentrated among very few lenders. HOEPA lending declined markedly after new regulations were implemented to amend the definition of a high-cost mortgage to cover more types of loans. After the passage of the Georgia Anti-Predatory Lending Act of 2002, the GSEs announced that they would no longer purchase mortgages originated in the state of Georgia to avoid the legal risk of assignee liability. Likewise, many mortgage originators have reportedly limited themselves to making QM safe harbor loans.", "If the QM patch expires in January 2021 as currently scheduled (or the GSEs are no longer in conservatorship), it is unclear whether the GSEs would purchase non-QM loans in the future. Because the GSEs currently purchase loans that meet the QM standards, questions that pertain to the legal liabilities of the GSEs (and holders of GSE issuances) if they were to purchase non-QM loans are largely unknown at this time. If the GSEs did limit their non-QM purchases, some borrowers could find it more difficult to access mortgage credit and others could experience an increase in the cost of obtaining a mortgage. Furthermore, the MBS and CRT financial market conditions, in terms of demand, supply, and liquidity, could exhibit greater volatility after January 2021 if the patch expires."], "subsections": []}]}]}}
{"id": "R45781", "title": "Health Care-Related Expiring Provisions of the 116th Congress, First Session", "released_date": "2019-06-21T00:00:00", "summary": ["This report describes selected health care-related provisions that are scheduled to expire during the first session of the116 th Congress (i.e., during calendar year [CY] 2019). For purposes of this report, expiring provisions are defined as portions of law that are time-limited and will lapse once a statutory deadline is reached absent further legislative action. The expiring provisions included in this report are those related to Medicare, Medicaid, State Children's Health Insurance Program (CHIP), and private health insurance programs and activities. The report also includes health care-related provisions that were enacted in the Patient Protection and Affordable Care Act (ACA; P.L. 111-148 ) or last extended under the Bipartisan Budget Act of 2018 (BBA 2018; P.L. 115-123 ). In addition, this report describes health care-related provisions within the same scope that expired during the 115 th Congress (i.e., during CY2017 or CY2018). Although the Congressional Research Service (CRS) has attempted to be comprehensive, it cannot guarantee that every relevant provision is included here.", "This report generally focuses on two types of health care-related provisions within the scope discussed above. The first type of provision provides or controls mandatory spending, meaning that it provides temporary funding, temporary increases or decreases in funding (e.g., Medicare provider bonus payments), or temporary special protections that may result in changes in funding levels (e.g., Medicare funding provisions that establish a floor). The second type of provision defines the authority of government agencies or other entities to act, usually by authorizing a policy, project, or activity. Such provisions also may temporarily delay the implementation of a regulation, requirement, or deadline, or establish a moratorium on a particular activity. Expiring health care provisions that are predominantly associated with discretionary spending activities\u00e2\u0080\u0094such as discretionary authorizations of appropriations and authorities for discretionary user fees\u00e2\u0080\u0094are excluded from this report.", "Certain types of provisions with expiration dates that otherwise would meet the criteria set forth above are excluded from this report. Some of these provisions are excluded because they are transitional or routine in nature or have been superseded by congressional action that otherwise modifies the intent of the expiring provision. For example, statutorily required Medicare payment rate reductions and payment rate re-basings that are implemented over a specified time period are not considered to require legislative attention and are excluded.", "The report provides tables listing the relevant provisions that are scheduled to expire in 2019 and that expired in 2018 or 2017. The report then describes each listed provision, including a legislative history. An appendix lists relevant demonstration projects and pilot programs that are scheduled to expire in 2019 or that expired in 2018 or 2017."], "reports": {"section_title": "", "paragraphs": ["T his report describes selected health care-related provisions that are scheduled to expire during the first session of the 116 th Congress (i.e., during calendar year [CY] 2019). For purposes of this report, expiring provisions are defined as portions of law that are time-limited and will lapse once a statutory deadline is reached, absent further legislative action. The expiring provisions included in this report are those related to Medicare, Medicaid, State Children's Health Insurance Program (CHIP), and private health insurance programs and activities. The report also includes health care-related provisions that were enacted in the Patient Protection and Affordable Care Act (ACA; P.L. 111-148 ) or last extended under the Bipartisan Budget Act of 2018 (BBA 2018; P.L. 115-123 ). In addition, this report describes health care-related provisions within the same scope that expired during the 115 th Congress (i.e., during CY2017 or CY2018). Although the Congressional Research Service (CRS) has attempted to be comprehensive, it cannot guarantee that every relevant provision is included here.", "This report generally focuses on two types of health care-related provisions within the scope discussed above. The first type of provision provides or controls mandatory spending, meaning that it provides temporary funding, temporary increases or decreases in funding (e.g., Medicare provider bonus payments), or temporary special protections that may result in changes in funding levels (e.g., Medicare funding provisions that establish a floor). Mandatory spending is controlled by authorization acts; discretionary spending is controlled by appropriations acts. The second type of provision defines the authority of government agencies or other entities to act, usually by authorizing a policy, project, or activity. Such provisions also may temporarily delay the implementation of a regulation, requirement, or deadline, or establish a moratorium on a particular activity. Expiring health care provisions that are predominantly associated with discretionary spending activities\u00e2\u0080\u0094such as discretionary authorizations of appropriations and authorities for discretionary user fees\u00e2\u0080\u0094are excluded from this report.", "Certain types of provisions with expiration dates that otherwise would meet the criteria set forth above are excluded from this report. Some of these provisions are excluded because they are transitional or routine in nature or have been superseded by congressional action that otherwise modifies the intent of the expiring provision. For example, statutorily required Medicare payment rate reductions and payment rate re-basings that are implemented over a specified time period are not considered to require legislative attention and are excluded.", "The report is organized as follows: Table 1 lists the relevant provisions that are scheduled to expire in 2019. Table 2 lists the relevant provisions that expired during 2018 or 2017. The provisions in each table are organized by expiration date and applicable health care-related program. ", "The report then describes each listed provision, including a legislative history. The summaries are grouped by provisions that are scheduled to expire in 2019 followed by those that expired in 2018 or 2017. Appendix A lists demonstration projects and pilot programs that are scheduled to expire in 2019 or that expired in 2018 or 2017 and are related to Medicare, Medicaid, CHIP, and private health insurance programs and activities or other health care-related provisions that were enacted in the ACA or last extended under the BBA 2018. Appendix B lists all laws that created, modified, or extended the health care-related expiring provisions described in this report. Appendix C lists abbreviations used in the report."], "subsections": [{"section_title": "CY2019 Expiring Provisions", "paragraphs": [], "subsections": [{"section_title": "Social Security Act (SSA) Title V: Sexual Risk Avoidance Education Program and Personal Responsibility Education Program", "paragraphs": [], "subsections": [{"section_title": "Family-to-Family Health Information Centers (SSA\u00c2 \u00c2\u00a7501(c); 42\u00c2 U.S.C.\u00c2 \u00c2\u00a7701(c)(1)(A)(iii))6", "paragraphs": [], "subsections": [{"section_title": "Background", "paragraphs": ["The Family-to-Family Health Information Centers program funds family-staffed and family-run centers in the 50 states, the District of Columbia, the territories, and through a tribal organization. The Family-to-Family Health Information Centers provide information, education, technical assistance, and peer support to families of children (including youth) with special health care needs and health professionals who serve such families. They also assist in ensuring that families and health professionals are partners in decision-making at all levels of care and service delivery. This program is administered by the Health Resources and Services Administration (HRSA). "], "subsections": []}, {"section_title": "Relevant Legislation", "paragraphs": ["The Deficit Reduction Act of 2005 (DRA; P.L. 109-171 ), Section 6064, established the Family-to-Family Health Information Centers program in the 50 states and the District of Columbia and provided $3 million for FY2007, $4 million for FY2008, and $5 million for FY2009. ACA , Section 5507, provided $5 million for each of FY2009 through FY2012. The A merican Taxpayer Relief Act of 2012 (ATRA; P.L. 112-240 ), Section 624, provided $5 million for FY2013. The Pathway for SGR (Sustainable Growth Rate) Reform Act of 2013 (PSRA; P.L. 113-67 , Division B), Section 1203, provided $2.5 million for October 1, 2013, through March 31, 2014. The Protecting Access to Medicare Act of 2014 (PAMA; P.L. 113-93 ), Section 207, provided $2.5 million for the remainder of FY2014 (from April 1, 2014, to September 30, 2014) and provided $2.5 million for the first half of FY2015 (October 1, 2014, through March 31, 2015). The Medicare Access and CHIP Reauthorization Act of 2015 (MACRA; P.L. 114-10 ), S ection 216 , struck the partial funding provided in PAMA and provided full-year funding of $5 million for FY2015. It also provided $5 million for each of FY2016 and FY2017. BBA 2018 , Section 50501 , expanded the program to require that centers be developed in all of the territories and for at least one Indian tribe. It also provided $6 million for each of FY2018 and FY2019. "], "subsections": []}, {"section_title": "Current Status", "paragraphs": ["Appropriated funds to create or maintain Family-to-Family Health Information Centers have been enacted for FY2019, but under current law no new funding will be available for FY2020 or subsequent fiscal years. "], "subsections": []}]}, {"section_title": "Sexual Risk Avoidance Education Program (SSA\u00c2 \u00c2\u00a7510; 42 U.S.C.\u00c2 \u00c2\u00a7710)", "paragraphs": [], "subsections": [{"section_title": "Background", "paragraphs": ["The Title V Sexual Risk Avoidance Education (SRAE) program, formerly known as the Abstinence Education Grants program, provides funding for education to adolescents aged 10 to 20 exclusively on abstaining from sexual activity outside of marriage. Funding is provided primarily via formula grants. The 50 states, District of Columbia, and the territories are eligible to apply for funds. Jurisdictions request Title V SRAE funds as part of their request for Maternal and Child Health Block Grant funds authorized in SSA Section 501. Funds are allocated to jurisdictions based on their relative shares of low-income children. Funding is also available for eligible entities (not defined in statute) in jurisdictions that do not apply for funding. "], "subsections": []}, {"section_title": "Relevant Legislation", "paragraphs": ["The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA; P.L. 104-193 ), Section 912 , established the Abstinence Education Grants program and provided $50 million for each of FY1998 through FY2002. The Welfare Reform Extension Act of 2003 (WREA 2003; P.L. 108-40 ), Section 6, provided $50 million for FY2003. P.L. 108-89 , Section 101 , provided funding through March 31, 2014 in the manner authorized for FY2002 (i.e., $50 million, but proportionally provided for the first two quarters of FY2004). The Welfare Reform Extension Act of 2004 (WREA 2004, P.L. 108-210 ), Section 2 , provided funding through June 30, 2004 in the manner authorized for FY2002. P.L. 108-262 , Section 2 , provided funding through September 30, 2004 in the manner authorized for FY2002. P.L. 108-308 , Section 2 , provided funding through March 31, 2005 in the manner authorized for FY2004. The Welfare Reform Extension Act of 2005 (WREA 2005, P.L. 109-4 ), Section 2, provided funding through June 30, 2005 in the manner authorized for FY2004. P.L. 109-19 , Section 2 , provided funding through September 30, 2005 in the manner authorized for FY2004. P.L. 109-91 , Section 102 , provided funding through December 31, 2005 in the manner authorized for FY2005. The Tax Relief and Health Care Act of 2006 (TRHCA; P.L. 109-432 ), Section 401 , provided funding through June 30, 2007 in the manner authorized for FY2006. P.L. 110-48 , Section 1 , provided funding through September 30, 2007 in the manner authorized for FY2006. P.L. 110-90 , Section 2 , provided funding through December 31, 2007 in the manner authorized for FY2007. The Medicare, Medicaid, and SCHIP Extension Act of 2007 (MMSEA; P.L. 110-173 ), S ection 202 , provided funding through June 30, 2008 in the manner authorized for FY2007. The Medicare Improvements for Patients and Providers Act of 2008 (MIPPA, P.L. 110-275 ), Section 201 , provided funding through June 30, 2009 in the manner authorized for FY2007. ACA, Section 2954, provided $50 million for each of FY2010 through FY2014. PAMA, Section 205 , provided $50 million for FY2015. MACRA, Section 214 , provided $75 million for each of FY2016 and FY2017. BBA 2018, Section 50502 , renamed the program and provided $75 million for each of FY2018 and FY2019. "], "subsections": []}, {"section_title": "Current Status", "paragraphs": ["Appropriated funds for the Title V SRAE program have been enacted for FY2019, but under current law no new funding will be available for FY2020 or subsequent fiscal years. "], "subsections": []}]}, {"section_title": "Personal Responsibility Education Program (SSA\u00c2 \u00c2\u00a7513; 42\u00c2 U.S.C.\u00c2 \u00c2\u00a7713(f))", "paragraphs": [], "subsections": [{"section_title": "Background", "paragraphs": ["The Personal Responsibility Education Program (PREP) takes a broad approach to teen pregnancy prevention that targets adolescents aged 10 to 20 and pregnant and parenting youth under the age of 21. Education services can address abstinence and/or contraceptives to prevent pregnancy and sexually transmitted infections. PREP includes four types of grants: (1) State PREP grants, (2) Competitive PREP grants, (3) Tribal PREP, and (4) PREP\u00e2\u0080\u0093Innovative Strategies (PREIS). A majority of PREP funding is allocated to states and territories via the State PREP grant. The 50 states, District of Columbia, and the territories are eligible for funding. Funds are allocated by formula based on the proportion of youth aged 10 to 20 in each jurisdiction relative to other jurisdictions."], "subsections": []}, {"section_title": "Relevant Legislation", "paragraphs": ["ACA, Section 2953 , established PREP and provided $75 million annually from FY2010 through FY2014. PAMA, Section 206 , provided $75 million for FY2015. MACRA, Section 215 , provided $75 million for each of FY2016 and FY2017. BBA 2018, Section 50503 , provided $75 million for each of FY2018 and FY2019. "], "subsections": []}, {"section_title": "Current Status", "paragraphs": ["Appropriated funds for PREP have been enacted for FY2019, but under current law no new funding will be available for FY2020 or subsequent fiscal years. "], "subsections": []}]}]}, {"section_title": "SSA Title VXIII: Medicare", "paragraphs": [], "subsections": [{"section_title": "Temporary Extension of Long-Term Care Hospital (LTCH) Site Neutral Payment Policy Transition Period (SSA\u00c2 \u00c2\u00a71886(m)(6)(B)(i); 42\u00c2 U.S.C.\u00c2 \u00c2\u00a71395ww(m)(6)(B)(i))", "paragraphs": [], "subsections": [{"section_title": "Background", "paragraphs": ["Medicare pays LTCHs for certain inpatient hospital care under the LTCH prospective payment system (LTCH PPS), which is typically higher than payments for inpatient hospital care under the inpatient prospective payment system (IPPS). PSRA amended the law so that the LTCH PPS payment is no longer available for all LTCH discharges but instead is available only for those LTCH discharges that met specific clinical criteria. Specifically, LTCHs are paid under the LTCH PPS if a Medicare beneficiary either (1) had a prior three-day intensive-care-unit stay at a hospital paid under the IPPS immediately preceding the LTCH stay or (2) is assigned to an LTCH PPS case-mix group that is based on the receipt of ventilator services for at least 96 hours and had a prior hospital stay at a hospital paid under the IPPS immediately preceding the LTCH stay. Discharges involving patients who have a principal diagnosis relating to a psychiatric diagnosis or rehabilitation do not qualify for the LTCH PPS rate. (Subsequent legislation provided for other criteria to temporarily receive payment under the LTCH PPS. See sections \" Temporary Exception for Certain Spinal Cord Conditions from Application of the Medicare LTCH Site Neutral Payment for Certain LTCHs (SSA\u00c2\u00a0\u00c2\u00a71886(m)(6)(F); 42\u00c2\u00a0U.S.C.\u00c2\u00a0\u00c2\u00a71395ww(m)(6)(F)) \" and \" Temporary Exception for Certain Severe Wound Discharges from Application of the Medicare Site Neutral Payment for Certain Long Term Care Hospitals (SSA\u00c2\u00a0\u00c2\u00a71886(m)(6)(E) and (G); 42\u00c2\u00a0U.S.C.\u00c2\u00a0\u00c2\u00a71395ww(m)(6)(E) and (G)) \" below.)", "For LTCH discharges that did not qualify for the LTCH PPS based on these clinical criteria, a \"site neutral payment rate\" similar to the PPS for inpatient acute care hospitals (IPPS) was to be phased-in. The site neutral rate is defined as the lower of an \"IPPS-comparable\" per diem amount, as defined in regulations, or the estimated cost of the services involved."], "subsections": []}, {"section_title": "Relevant Legislation", "paragraphs": ["PSRA, Section 1206(a), established patient criteria for payment under the LTCH PPS and a site-neutral payment rate for LTCH patients who do not meet these criteria. During a phase-in period for discharges in cost-reporting periods beginning in FY2016 and FY2017, LTCHs received a blended payment amount based on 50% of what the LTCH would have been reimbursed under the LTCH PPS rate and 50% of the site neutral payment rate. For cost-reporting periods beginning in FY2018 and subsequent years, the LTCH was to receive the site neutral payment rate. BBA 2018, Section 51005 , extended the transition period to site neutral Medicare payments for LTCH patients who do not meet the patient criteria for an additional two years, to include discharges in cost-reporting periods beginning during FY2018 and FY2019. During this period, LTCHs continue to receive the 50/50 blended payment for discharges that do not meet certain LTCH PPS criteria."], "subsections": []}, {"section_title": "Current Status", "paragraphs": ["The extended transition period to site neutral payments during which LTCHs receive a blended payment for discharges that do not meet the patient criteria expires for discharges occurring in cost-reporting periods beginning during FY2020 and subsequent years."], "subsections": []}]}, {"section_title": "Temporary Exception for Certain Spinal Cord Conditions from Application of the Medicare LTCH Site Neutral Payment for Certain LTCHs (SSA\u00c2 \u00c2\u00a71886(m)(6)(F); 42\u00c2 U.S.C.\u00c2 \u00c2\u00a71395ww(m)(6)(F))", "paragraphs": [], "subsections": [{"section_title": "Background", "paragraphs": ["Medicare pays LTCHs for inpatient hospital care under the LTCH PPS, which is typically higher than payments for inpatient hospital care under the IPPS. Effective for cost-reporting periods beginning in FY2016, LTCHS are paid the LTCH PPS rate for patients that meet one of the following two criteria: (1) had a prior three-day intensive-care-unit stay at a hospital paid under the IPPS immediately preceding the LTCH stay or (2) is assigned to an LTCH PPS case-mix group that is based on the receipt of ventilator services for at least 96 hours and had a prior hospital stay at a hospital paid under the IPPS immediately preceding the LTCH stay. Discharges involving patients who have a principal diagnosis relating to a psychiatric diagnosis or rehabilitation do not qualify for the LTCH PPS rate. For LTCH discharges that did not qualify for the LTCH PPS based on these criteria, a site neutral payment rate is being phased-in for cost-reporting periods beginning FY2016 through FY2019. Subsequent legislation provided for other criteria to temporarily receive payment under the LTCH PPS. See section \" Temporary Extension of Long-Term Care Hospital (LTCH) Site Neutral Payment Policy Transition Period (SSA\u00c2\u00a0\u00c2\u00a71886(m)(6)(B)(i); 42\u00c2\u00a0U.S.C.\u00c2\u00a0\u00c2\u00a71395ww(m)(6)(B)(i)) \" for details related to site neutral payment."], "subsections": []}, {"section_title": "Relevant Legislation", "paragraphs": ["The 21 st Century Cures Act ( Cures Act ; P.L. 114-255 ) , Division C, Section 15009 established an additional temporary criterion for payment under the LTCH PPS related to certain spinal cord conditions for discharges occurring in cost-reporting periods FY2018 and FY2019. Specifically, the LTCH PPS rate would apply to an LTCH discharge if all of the following are met: (1) the LTCH was a not-for-profit on June 1, 2014; (2) at least 50% of the LTCH's CY2013 LTCH PPS-paid discharges were classified under LTCH diagnosis related groups (DRGs) associated with catastrophic spinal cord injuries, acquired brain injury, or other paralyzing neuromuscular conditions; and (3) the LTCH during FY2014 discharged patients (including Medicare beneficiaries and others) who had been admitted from at least 20 of the 50 states, as determined by the Secretary of Health and Human Services (HHS) based on a patient's state of residency."], "subsections": []}, {"section_title": "Current Status", "paragraphs": ["The authority for the temporary criterion related to certain spinal cord conditions to receive payment under the LTCH PPS expires for discharges occurring in cost reporting periods beginning during FY2020 and subsequent years."], "subsections": []}]}, {"section_title": "Funding for Implementation of Section 101 of MACRA (MACRA\u00c2 Section\u00c2 101(c)(3))", "paragraphs": [], "subsections": [{"section_title": "Background", "paragraphs": ["Section 101 of MACRA made fundamental changes to the way Medicare payments to physicians are determined and how they are updated. To implement the payment modifications in Section 101 of MACRA, the law authorized the transfer of $80 million from the Supplementary Medical Insurance (SMI) Trust Fund for each fiscal year beginning with FY2015 and ending with FY2019. The amounts transferred are to be available until expended."], "subsections": []}, {"section_title": "Relevant Legislation", "paragraphs": ["MACRA , Section 101 , provided for the transfer of $80 million, for each of FY2015 through FY2019, from the Medicare SMI Trust Fund."], "subsections": []}, {"section_title": "Current Status", "paragraphs": ["Appropriated funds to support the activities under this subsection have not been enacted for FY2020 or subsequent fiscal years."], "subsections": []}]}, {"section_title": "Priorities and Funding for Measure Development (SSA \u00c2\u00a71848(s); 42\u00c2 U.S.C.\u00c2 \u00c2\u00a71395w-4(s))", "paragraphs": [], "subsections": [{"section_title": "Background", "paragraphs": ["SSA Section 1848(s) required the HHS Secretary to develop a plan for the development of quality measures for use in the Merit-based Incentive Payment System program, which is to be updated as needed. The subsection also requires the Secretary to enter into contracts or other arrangements to develop, improve, update, or expand quality measures, in accordance with the plan. In entering into contracts, the Secretary must give priority to developing measures of outcomes, patient experience of care, and care coordination, among other things. The HHS Secretary, through the Center for Medicare & Medicaid Services (CMS), annually reports on the progress made in developing quality measures under this subsection. "], "subsections": []}, {"section_title": "Relevant Legislation", "paragraphs": ["MACRA, Section 102 , provided for the transfer of $15 million, for each of FY2015 through FY2019, from the Medicare SMI Trust Fund."], "subsections": []}, {"section_title": "Current Status", "paragraphs": ["Appropriated funds to support the activities under this subsection have not been enacted for FY2020 or subsequent fiscal years. However, funds appropriated prior to FY2020 are available for obligation through the end of FY2022."], "subsections": []}]}, {"section_title": "Contract with a Consensus-Based Entity Regarding Performance Measurement (SSA\u00c2 \u00c2\u00a71890(d); 42\u00c2 U.S.C.\u00c2 \u00c2\u00a71395aaa)", "paragraphs": [], "subsections": [{"section_title": "Background", "paragraphs": ["Under SSA Section 1890, the HHS Secretary is required to have a contract with a consensus-based entity (e.g., National Quality Forum, or NQF) to carry out specified duties related to performance improvement and measurement. These duties include, among others, priority setting, measure endorsement, measure maintenance, and annual reporting to Congress."], "subsections": []}, {"section_title": "Relevant Legislation", "paragraphs": ["MIPPA, Section 183 , transferred, from the Medicare hospital insurance (HI) and SMI Trust Funds, a total of $10 million for each of FY2009 through FY2012 to carry out the activities under SSA Section 1890. ATRA, Section 609(a) , provides $10 million for FY2013 and modified the duties of the consensus-based entity. PSRA, Section 1109 , required that transferred funding remain available until expended. PAMA, Section 109 , transferred $5 million for the remainder of FY2014 (from April 1, 2014, to September 30, 2014) and $15 million for the first six months of FY2015 (from October 1, 2014, to March 31, 2015) to carry out both SSA Section 1890 and SSA Section 1890A(a)-(d); funds were required to remain available until expended. MACRA, Section 207 , transferred $30 million for each of FY2015 through FY2017 to carry out both SSA Section 1890 and SSA Section 1890A(a)-(d). The funding provided under MACRA for FY2015 effectively replaced the funding provided under PAMA for that year; therefore, the total funding for FY2015 was $30 million. Funds were required to remain available until expended. BBA 2018, Section 50206 , transferred $7.5 million from the Medicare HI and SMI Trust Funds for each of FY2018 and FY2019 to carry out both Section 1890 and SSA Section 1890A(a)-(d). The section also added new HHS reporting requirements and modified existing NQF reporting requirements to specify use of funding, among other things. Amounts transferred for each of FY2018 and FY2019 are in addition to any unobligated balances that remained from prior years' transfers."], "subsections": []}, {"section_title": "Current Status", "paragraphs": ["Appropriated funds to support the contract with the consensus-based entity from SSA Section 1890 have not been enacted for FY2020 or subsequent fiscal years. However, funds appropriated prior to FY2020 are available for obligation until expended. "], "subsections": []}]}, {"section_title": "Quality Measure Selection (SSA\u00c2 \u00c2\u00a71890A; 42\u00c2 U.S.C.\u00c2 \u00c2\u00a71395aaa-1)", "paragraphs": [], "subsections": [{"section_title": "Background", "paragraphs": ["SSA Section 1890A requires the HHS Secretary to establish a pre-rulemaking process to select quality measures for use in the Medicare program. As part of this process, the Secretary makes available to the public measures under consideration for use in Medicare quality programs and broadly disseminates the quality measures that are selected to be used, while the consensus-based entity with a contract (NQF) gathers multi-stakeholder input and annually transmits that input to the Secretary. NQF fulfills this requirement through its Measure Applications Partnership (MAP), an entity that convenes multi-stakeholder groups to provide input into the selection of quality measures for use in Medicare and other federal programs. MAP publishes annual reports with recommendations for selection of quality measures in February of each year, with the first report published in February 2012. "], "subsections": []}, {"section_title": "Relevant Legislation", "paragraphs": ["ACA, Section 3014(c) , transferred a total of $20 million from the Medicare HI and SMI Trust Funds for each of FY2010 through FY2014 to carry out SSA Section 1890A(a)-(d) (and the amendments made to SSA Section 1890(b) by ACA Section 3014(a)). PAMA, Section 109 , transferred $5 million for the remainder of FY2014 (from April 1, 2014, to September 30, 2014) and $15 million for the first six months of FY2015 (from October 1, 2014, to March 31, 2015) to carry out both SSA Section 1890 and SSA Section 1890A(a)-(d); funds were required to remain available until expended. MACRA, Section 207 , transferred $30 million for each of FY2015 through FY2017 to carry out both SSA Section 1890 and SSA Section 1890A(a)-(d). The funding provided under MACRA for FY2015 replaced the funding provided under PAMA for that year; therefore, the total funding for FY2015 was $30 million. BBA 2018, Section 50206 , transferred $7.5 million for each of FY2018 and FY2019 to carry out both Section 1890 and SSA Section 1890A(a)-(d). The section also added new HHS reporting requirements and modified existing NQF reporting requirements to specify use of funding, among other things. Amounts transferred for each of FY2018 and FY2019 are in addition to any unobligated balances that remained from prior years' transfers."], "subsections": []}, {"section_title": "Current Status", "paragraphs": ["Appropriated funds to carry out the measure selection activities from SSA Section 1890A(a)-(d) have not been enacted for FY2020 or subsequent fiscal years. However, funds appropriated prior to FY2020 are available for obligation until expended. "], "subsections": []}]}, {"section_title": "Floor on Work Geographic Practice Cost Indices (SSA\u00c2 \u00c2\u00a71848(e)(1); 42\u00c2 U.S.C.\u00c2 \u00c2\u00a71395w-4(e)(1)(E))", "paragraphs": [], "subsections": [{"section_title": "Background", "paragraphs": ["Payments under the Medicare physician fee schedule (MPFS) are adjusted geographically for three factors to reflect differences in the cost of resources needed to produce physician services: physician work, practice expense, and medical malpractice insurance. The geographic adjustments are indices\u00e2\u0080\u0094known as Geographic Practice Cost Indices (GPCIs)\u00e2\u0080\u0094that reflect how each area compares to the national average in a \"market basket\" of goods. A value of 1.00 represents the average across all areas. These indices are used in the calculation of the payment rate under the MPFS. Several laws have established a minimum value of 1.00 (floor) for the physician work GPCI for localities where the work GPCI was less than 1.00."], "subsections": []}, {"section_title": "Relevant Legislation", "paragraphs": ["Medicare Prescription Drug, Improvement, and Modernization Act of 2003 ( M MA , P.L. 108-173 ), Section 412, provided for an increase in the work geographic index to 1.0 (floor) for any locality for which the work geographic index was less than 1.0 for services furnished from January 1, 2004, through December 31, 2006. TRHCA , Section 102 , extended the floor through December 31, 2007. MMSEA , Section 103, extended the floor through June 30, 2008. MIPPA , Section 134, extended the floor through December 31, 2009. In addition, beginning January 1, 2009, MIPAA set the work geographic index for Alaska to 1.5 if the index otherwise would be less than 1.5; no expiration was set for this modification. ACA , Section 3102, extended the floor through December 31, 2010. Medicare and Medicaid Extenders Act of 2010 ( MMEA , P.L. 111-309 ) , Section 103, extended the floor through December 31, 2011. Temporary Payroll Tax Cut Continuation Act of 2011 ( TPTCCA , P.L. 112-78 ) , Section 303, extended the floor through February 29, 2012. Middle Class Tax Relief and Job Creation Act of 2012 (MCTRJCA, P.L. 112-96 ) , Section 3004, extended the floor through December 31, 2012, and required the Medicare Payment Advisory Commission ( MedPAC) to report on whether any work geographic adjustment to the MPFS is appropriate, what that level of adjustment should be (if appropriate), and where the adjustment should be applied. The report also was required to assess the impact of such an adjustment, including how it would affect access to care. ATRA , Section 602, extended the floor through December 31, 2013. PAMA , Section 102, extended the floor through March 31, 2015. MACRA , Section 201, extended the floor through December 31, 2017. BBA 2018 , Section 50201, extended the floor through December 31, 2019."], "subsections": []}, {"section_title": "Current Status", "paragraphs": ["The authority for the MPFS GPCI floor will expire after December 31, 2019."], "subsections": []}]}, {"section_title": "Transitional Payment Rules for Certain Radiation Therapy Services (SSA \u00c2\u00a71848(b)(11); 42\u00c2 U.S.C.\u00c2 \u00c2\u00a71395w-4(b)(11))", "paragraphs": [], "subsections": [{"section_title": "Background", "paragraphs": ["Currently, Medicare payments for services of physicians and certain non-physician practitioners, including radiation therapy services, are made on the basis of a fee schedule. ", "To set payment rates under the MPFS, relative values units (RVUs) are assigned to each of more than 7,000 service codes that reflect physician work (i.e., the time, skill, and intensity it takes to provide the service), practice expenses, and malpractice costs. The relative value for a service compares the relative work and other inputs involved in performing one service with the inputs involved in providing other physicians' services. The relative values are adjusted for geographic variation in input costs. The adjusted relative values are then converted into a dollar payment amount by a conversion factor.", "CMS, which is responsible for maintaining and updating the fee schedule, continually modifies and refines the methodology for estimating RVUs. CMS is required to review the RVUs no less than every five years; the ACA added the requirement that the HHS Secretary periodically identify physician services as being potentially misvalued, and make appropriate adjustments to the relative values of such services under the Medicare physician fee schedule. ", "In determining adjustments to RVUs used as the basis for calculating Medicare physician reimbursement under the fee schedule, the HHS Secretary has authority, under previously existing law and as augmented by the ACA, to adjust the number of RVUs for any service code to take into account changes in medical practice, coding changes, new data on relative value components, or the addition of new procedures. ", "Under the potentially misvalued codes authority, certain radiation therapy codes were identified as being potentially misvalued in 2015. However, because of concerns that the existing code set did not accurately reflect the radiation therapy treatments identified, CMS created several new codes during the transition toward an episodic alternative payment model. "], "subsections": []}, {"section_title": "Relevant Legislation", "paragraphs": ["Patient Access and Medicare Protection Act (PAMPA ; P.L. 114-115 ) required CMS to apply the same code definitions, work RVUs, and direct inputs for the practice expense RVUs in CY2017 and CY2018 as applied in 2016 for these transition codes, effectively keeping the payments for these services unchanged, subject to the annual update factor. PAMPA exempted these radiation therapy and related imaging services from being considered as potentially misvalued services under CMS's misvalued codes initiative for CY2017 and CY2018. PAMPA also instructed the HHS Secretary to report to Congress on the development of an episodic alternative payment model under the Medicare program for radiation therapy services furnished in non-facility settings. BBA 2018 Section 51009, extended the restrictions through CY2019."], "subsections": []}, {"section_title": "Current Status", "paragraphs": ["The payment restrictions expire after December 31, 2019."], "subsections": []}]}]}, {"section_title": "Other Medicare Provisions", "paragraphs": [], "subsections": [{"section_title": "Outreach and Assistance for Low-Income Programs (MIPPA \u00c2\u00a7119; 42\u00c2 U.S.C.\u00c2 \u00c2\u00a71395b-3\u00c2 note)", "paragraphs": [], "subsections": [{"section_title": "Background", "paragraphs": ["The Administration for Community Living (ACL) administers federal grant programs that fund outreach and assistance to older adults, individuals with disabilities, and their caregivers in accessing various health and social services. Funding for these programs is provided through discretionary budget authority in annual appropriations to the following entities:", "State Health Insurance Assistance Programs (SHIPs): programs that provide outreach, counseling, and information assistance to Medicare beneficiaries and their families and caregivers on Medicare and other health insurance issues. Area Agencies on Aging (AAA): state-designated public or private nonprofit agencies that address the needs and concerns of older adults at the regional or local levels. AAAs plan, develop, coordinate, and deliver a wide range of home and community-based services. Most AAAs are direct providers of information and referral assistance programs. Aging and Disability Resource Centers (ADRCs): programs in local communities that assist older adults, individuals with disabilities, and caregivers in accessing the full range of long-term services and supports options, including available public programs and private payment options.", "The National Center for Benefits and Outreach Enrollment assists organizations to enroll older adults and individuals with disabilities into benefit programs that they may be eligible for, such as Medicare, Medicaid, the Supplemental Security Income (SSI) program, and the Supplemental Nutrition Assistance Program (SNAP), among others.", "In addition to discretionary funding for these programs, beginning in FY2009, MIPPA provided funding for specific outreach and assistance activities to Medicare beneficiaries. This mandatory funding was extended multiple times, most recently in BBA 2018 through FY2019, and provided for outreach and assistance to low-income Medicare beneficiaries including those who may be eligible for the Low-Income Subsidy program, Medicare Savings Program (MSP), and the Medicare Part D Prescription Drug Program. The HHS Secretary is required to transfer specified amounts for MIPPA program activities from the Medicare Trust Funds. ", "BBA 2018 also requires ACL to electronically post on its website by April 1, 2019, and biennially thereafter, the following information with respect to SHIP state grants: (1) the amount of federal funding provided to each state and the amount of federal funding provided by each state to each entity and (2) other program information, as specified by the HHS Secretary. Publicly reported information must be presented by state as well as by entity receiving funds from the state."], "subsections": []}, {"section_title": "Relevant Legislation", "paragraphs": ["MIPPA , Section 119, authorized and provided a total of $25 million for FY2009 to fund low-income Medicare beneficiary outreach and education activities through SHIPs, AAAs, ADRCs, and coordination efforts to inform older Americans about benefits available under federal and state programs. ACA , Section 3306, extended authority for these programs and provided a total of $45 million for FY2010 through FY2012 in the following amounts: SHIPs, $15 million; AAAs, $15 million; ADRCs, $10 million; and the contract with the National Center for Benefits and Outreach Enrollment, $5 million. ATRA , Section 610, extended authority for these programs through FY2013 and provided a total of $25 million in the following amounts: SHIPs, $7.5 million; AAAs, $7.5 million; ADRCs, $5 million; and the contract with the National Center for Benefits and Outreach Enrollment, $5 million. PSRA , Section 1110, extended authority for these programs through the second quarter of FY2014 and provided funds at FY2013 levels ($25 million) for the first two quarters of FY2014 (through March 31, 2014). PAMA , Section 110, extended authority for these programs through the second quarter of FY2015 (through March 31, 2015). For FY2014, PAMA provided a total of $25 million at the following FY2013 funding levels: SHIPs, $7.5 million; AAAs, $7.5 million; ADRCs, $5.0 million; and the contract with the National Center for Benefits and Outreach Enrollment, $5.0 million. In addition, PAMA provided funds at FY2014 levels for the first two quarters of FY2015 (through March 31, 2015). MACRA , Section 208, extended authority for these programs through September 30, 2017. For FY2015, MACRA provided funding at the previous year's level of $25 million in the following amounts: SHIPs, $7.5 million; AAAs, $7.5 million; ADRCs, $5 million; and the contract with the National Center for Benefits and Outreach Enrollment, $5 million. For FY2016 and FY2017, MACRA provided $37.5 million annually, a $12.5 million per year increase from FY2015 funding levels, in the following amounts: SHIPs, $13 million; AAAs, $7.5 million; ADRCs, $5 million; and the contract with the National Center for Benefits and Outreach Enrollment, $12 million. BBA 2018, Section 50207, extended authority for these programs through September 30, 2019. For FY2018 and FY2019, BBA 2018 provides funding at the FY2017 funding level of $37.5 million annually in the following amounts: SHIPs, $13 million; AAAs, $7.5 million; ADRCs, $5 million; and the contract with the National Center for Benefits and Outreach Enrollment, $12 million."], "subsections": []}, {"section_title": "Current Status", "paragraphs": ["Funding authorized under BBA 2018 for low-income outreach and assistance programs will expire after September 30, 2019. However, funds appropriated will be available for obligation until expended."], "subsections": []}]}, {"section_title": "Patient-Centered Outcomes Research Trust Fund (IRC \u00c2\u00a79511 and \u00c2\u00a7\u00c2\u00a74375-4377, SSA \u00c2\u00a71183); 26 U.S.C. \u00c2\u00a79511; 26 U.S.C. \u00c2\u00a7\u00c2\u00a74375-4377; 42 U.S.C. \u00c2\u00a71320e-2", "paragraphs": [], "subsections": [{"section_title": "Background", "paragraphs": ["SSA Section 1181 establishes the Patient-Centered Outcomes Research Institute (PCORI), which is responsible for coordinating and supporting comparative clinical effectiveness research. PCORI has entered into contracts with federal agencies, as well as with academic and private sector research entities for both the management of funding and conduct of research. PHSA Section 937 requires the Agency for Healthcare Research and Quality (AHRQ) to broadly disseminate research findings that are published by PCORI and other government-funded comparative effectiveness research entities. ", "IRC Section 9511 establishes the \"Patient-Centered Outcomes Research Trust Fund\" (PCORTF) to support the activities of PCORI and to fund activities under PHSA Section 937. It provides annual funding to the PCORTF over the period FY2010-FY2019 from the following three sources: (1) annual appropriations, (2) fees on health insurance and self-insured plans, and (3) transfers from the Medicare HI and SMI Trust Funds. SSA Section 1183 provides for the transfer of the required funds from the Medicare Trust Funds. Transfers to PCORTF from the Medicare HI and SMI Trust Funds are calculated based on the number of individuals entitled to benefits under Medicare Part A or enrolled in Medicare Part B. IRC Sections 4375-4377 impose the referenced fees on applicable health insurance policies and self-insured health plans and describe the method for their calculation. ", "For each of FY2011 through FY2019, IRC Section 9511 requires 80% of the PCORTF funds to be made available to PCORI, and the remaining 20% of funds to be transferred to the HHS Secretary for carrying out PHSA Section 937. Of the total amount transferred to HHS, 80% is to be distributed to AHRQ, with the remainder going to the Office of the Secretary (OS)/HHS."], "subsections": []}, {"section_title": "Relevant Legislation", "paragraphs": ["ACA, Section 6301(e), provided the following amounts to the PCORTF: (1) $10 million for FY2010, (2) $50 million for FY2011, and (3) $150 million for each of FY2012 through FY2019. In addition, for each of FY2013 through FY2019, the section provided an amount equivalent to the net revenues from a new fee that the law imposed on health insurance policies and self-insured plans. For policy/plan years ending during FY2013, the fee equals $1 multiplied by the average number of covered lives. For policy/plan years ending during each subsequent fiscal year through FY2019, the fee equals $2 multiplied by the average number of covered lives. Finally, the section (in addition to ACA Section 6301(d)) provided for transfers to PCORTF from the Medicare Part A and Part B trust funds; these are generally calculated by multiplying the average number of individuals entitled to benefits under Medicare Part A, or enrolled in Medicare Part B, by $1 (for FY2013) or by $2 (for each of FY2014 through FY2019)."], "subsections": []}, {"section_title": "Current Status", "paragraphs": ["Appropriated funds to PCORTF have not been enacted for FY2020 or subsequent fiscal years. Funds transferred to the HHS Secretary under IRC Section 9511 remain available until expended. No amounts shall be available for expenditure from the PCORTF after September 30, 2019, and any amounts in the Trust Fund after such date shall be transferred to the general fund of the Treasury."], "subsections": []}]}]}, {"section_title": "SSA Title XIX: Medicaid", "paragraphs": [], "subsections": [{"section_title": "Protection for Recipients of Home and Community-Based Services Against Spouse Impoverishment (SSA \u00c2\u00a71924; 42 U.S.C. 1296r-5)", "paragraphs": [], "subsections": [{"section_title": "Background", "paragraphs": ["When determining financial eligibility for Medicaid-covered long-term services and supports (LTSS), there are specific rules under SSA Section 1924 for the treatment of a married couple's assets when one spouse needs long-term care provided in an institution, such as a nursing home. Commonly referred to as \"spousal impoverishment rules,\" these rules attempt to equitably allocate income and assets to each spouse when determining Medicaid financial eligibility and are intended to prevent the impoverishment of the non-Medicaid spouse. For example, spousal impoverishment rules require state Medicaid programs to exempt all of a non-Medicaid spouse's income in his or her name from being considered available to the Medicaid spouse. Joint income of the couple is divided in half between the spouses, and the Medicaid spouse can transfer income to bring the non-Medicaid spouse up to certain income thresholds. Assets of the couple, regardless whose name they are in, are combined and then split in half. The non-Medicaid spouse can retain assets up to an asset threshold determined by the state within certain statutory parameters. Prior to enactment of the ACA, spousal impoverishment rules applied only in situations where the Medicaid participant was receiving LTSS in an institution. States had the option to extend these protections to certain home and community-based services (HCBS) participants under a Section 1915(c) waiver program.", "Beginning January 1, 2014, ACA Section 2404 temporarily substituted the definition of \"institutionalized spouse\" under SSA Section 1924(h)(1) to include application of these spousal impoverishment protections to all married individuals who are eligible for HCBS authorized under certain specified authorities. Thus, beginning January 1, 2014, for a five-year time period, the ACA required states to apply the spousal impoverishment rules to all married individuals who are eligible for HCBS under these specified authorities, not just those receiving institutional care. This modified definition expired on December 31, 2018. The 116 th Congress extended the authority for these protections and included a provision regarding state flexibility in the application of income or asset disregards for married individuals receiving certain HCBS."], "subsections": []}, {"section_title": "Relevant Legislation", "paragraphs": ["ACA, Section 2404, required states to extend spousal impoverishment rules to certain beneficiaries receiving HCBS for a five-year period beginning on January 1, 2014. The Medicaid Extenders Act of 2019 ( P.L. 116-3 ) , Section 3 , extended this provision through March 31, 2019. The Medicaid Services Investment and Accountability Act of 2019 ( P.L. 116-16 ) , Section 2, further extends this provision through September 30, 2019."], "subsections": []}, {"section_title": "Current Status", "paragraphs": ["The authority for the extension of spousal impoverishment protections for certain Medicaid HCBS recipients will expire after September 30, 2019."], "subsections": []}]}, {"section_title": "Additional Medicaid Funding for the Territories (SSA\u00c2 \u00c2\u00a71108; 42 U.S.C.\u00c2 \u00c2\u00a71308)", "paragraphs": [], "subsections": [{"section_title": "Background", "paragraphs": ["Medicaid financing for the territories (i.e., America Samoa, Commonwealth of the Northern Mariana Islands, Guam, Puerto Rico, and the U.S. Virgin Islands) is different than the financing for the 50 states and the District of Columbia. Federal Medicaid funding to the states and the District of Columbia is open-ended, but the Medicaid programs in the territories are subject to annual federal capped funding.", "The federal Medicaid funding for the territories comes from a few different sources. The permanent source of federal Medicaid funding for the territories is the annual capped funding. Since July 1, 2011, Medicaid funding for the territories has been supplemented by a few additional funding sources available for a limited time provided through the ACA; the Consolidated Appropriations Act, 2017 ( P.L. 115-31 ) ; and BBA 2018. Prior to the availability of these additional Medicaid funding sources, all five territories typically exhausted their federal Medicaid funding prior to the end of the fiscal year."], "subsections": []}, {"section_title": "Relevant Legislation", "paragraphs": ["ACA, Section 2005, as modified by Section 10201, provided $6.3 billion in additional federal Medicaid funding to the territories available between July 1, 2011, and September 30, 2019. ACA, Section 1323, provided $1.0 billion in additional federal Medicaid funding to the territories that did not establish health insurance exchanges. This funding is available January 1, 2014, through December 31, 2019. The Consolidated Appropriations Act, 2017 Division M, Title II , provided an additional $295.9 million in federal Medicaid funding to Puerto Rico available through September 30, 2019. BBA 2018 , Division B, Subdivision 2, Title III , increased the federal Medicaid funding for Puerto Rico by $3.6 billion and the U.S. Virgin Islands by $106.9 million. This funding may be further increased by $1.2 billion for Puerto Rico and $35.6 million for U.S. Virgin Islands if certain conditions are met. This funding is available January 1, 2018, through September 30, 2019."], "subsections": []}, {"section_title": "Current Status", "paragraphs": ["The $6.3 billion in additional Medicaid federal funding under ACA Section 2005 as modified and the additional funding provided to Puerto Rico and the U.S. Virgin Islands under the Consolidated Appropriations Act, 2017 and the BBA 2018 expire after September 30, 2019, and the $1.0 billion in ACA Section 1323 funding expires after December 31, 2019."], "subsections": []}]}]}, {"section_title": "Public Health Service Act (PHSA) CY2019 Expiring\u00c2 Provisions", "paragraphs": [], "subsections": [{"section_title": "Community Health Center Fund (PHSA\u00c2 \u00c2\u00a7330; 42\u00c2 U.S.C.\u00c2 \u00c2\u00a7254b-2(b)(1))", "paragraphs": [], "subsections": [{"section_title": "Background", "paragraphs": ["The Community Health Center Fund (CHCF) provided mandatory funding for federal health centers authorized in PHSA Section 330. These centers are located in medically underserved areas and provide primary care, dental care, and other health and supportive services to individuals regardless of their ability to pay. The mandatory CHCF appropriations are provided in addition to discretionary funding for the program; however, the CHCF comprised more than 70% of health center programs' appropriations in FY2019. "], "subsections": []}, {"section_title": "Relevant Legislation", "paragraphs": ["ACA, Section 10503 , established the CHCF and provided a total of $9.5 billion to the fund annually from FY2011 through FY2015, as follows: $1 billion for FY2011, $1.2 billion for FY2012, $1.5 billion for FY2013, $2.2 billion for FY2014, and $3.6 billion for FY2015. The ACA also provided $1.5 billion for health center construction and renovation for the period FY2011 through FY2015. MACRA, Section 221 , provided $3.6 billion for each of FY2016 and FY2017 to the CHCF. An Act to amend the Homeland Security Act of 2002 to require the Secretary of Homeland Security to issue Department of Homeland Security-wide guidance and develop training programs as part of the Department of Homeland Security Blue Campaign, and for other purposes ( P.L. 115-96 ), Section 3101(a), provided $550 million for the first and second quarters of FY2018 to the CHCF. BBA 2018 , Section 50901 , made a number of changes to the health center program replaced language that had provided two quarters of funding and provided $3.8 billion to the CHCF in FY2018 and $4.0 billion in FY2019."], "subsections": []}, {"section_title": "Current Status", "paragraphs": ["Appropriated funds for CHCF have been enacted for FY2019, but under current law no new funding is provided for FY2020 or subsequent fiscal years. Any unused portion of grants awarded for a given fiscal year prior to October 1, 2019, remains available until expended. "], "subsections": []}]}, {"section_title": "Special Diabetes Programs (PHSA\u00c2 \u00c2\u00a7\u00c2\u00a7330B and 330C; 42\u00c2 U.S.C.\u00c2 \u00c2\u00a7\u00c2\u00a7254c-2(b) and 254c-3(b))", "paragraphs": [], "subsections": [{"section_title": "Background", "paragraphs": ["The Special Diabetes Program for Type I Diabetes (PHSA Section 330B) provides funding for the National Institutes of Health to award grants for research into the prevention and cure of Type I diabetes. The Special Diabetes Program for Indians (PHSA Section 330C) provides funding for the Indian Health Service (IHS) to award grants for services related to the prevention and treatment of diabetes for American Indians and Alaska Natives who receive services at IHS-funded facilities. "], "subsections": []}, {"section_title": "Relevant Legislation", "paragraphs": ["The Balanced Budget Act of 1997 (BBA 97; P.L. 105-33 ), Sections 4921 and 4922 , established the two special diabetes programs and transferred $30 million annually from CHIP funds to each program from FY1998 through FY2002. The Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 (BIPA 2000; P.L. 106-554 ), Section 931 , increased each program's annual appropriations to $70 million for FY2001 through FY2002 and provided $100 million for FY2003. P.L. 107-360 , Section 1 , increased each program's annual appropriations to $150 million and provided funds from FY2004 through FY2008. MMSEA, Section 302 , provided $150 million through FY2009. MIPPA, Section 303, provided $150 million through FY2011. MMEA, Section 112 , provided $150 million through FY2013. ATRA, Section 625 , provided $150 million through FY2014. PAMA, Section 204 , provided of $150 million through FY2015. MACRA, Section 213 , provided $150 million through FY2017. Disaster Tax Relief and Airport and Airway Extension Act of 2017 ( P.L. 115-63 ), Section 301(b) , provided $37.5 million for first quarter of FY2018 for the Special Diabetes Program for Indians (Note: it did not provide funding for the Special Diabetes Program for Type I Diabetes.) P.L. 115-96 , S ection 3102 , provided $37.5 million for the second quarter for the Special Diabetes Program for Indians and provided $37.5 million for the first and second quarters of FY2018 for the Special Diabetes Program for Type I Diabetes. BBA 2018, Section 50902 , replaced language that had provided funding for the first and second quarters of FY2018 to provide $150 million for each program in FY2018 and FY2019. "], "subsections": []}, {"section_title": "Current Status", "paragraphs": ["Appropriated funds for the two special diabetes programs have been enacted for FY2019, but under current law no new funding is provided for FY2020 or subsequent fiscal years. Any unused portion of grants awarded for a given fiscal year prior to October 1, 2019, remains available until expended."], "subsections": []}]}, {"section_title": "National Health Service Corps Appropriations (PHSA\u00c2 \u00c2\u00a7338H; 42\u00c2 U.S.C.\u00c2 \u00c2\u00a7254b-2(b)(2))", "paragraphs": [], "subsections": [{"section_title": "Background", "paragraphs": ["The National Health Service Corps (NHSC) provides scholarships and loan repayments to certain health professionals in exchange for providing care in a health professional shortage area for a period of time that varies based on the length of the scholarship or the number of years of loan repayment received. The NHSC receives mandatory funding from the CHCF through PHSA Title III. The NHSC also received discretionary appropriations in FY2011. Between FY2012 and FY2017, the program did not receive discretionary appropriations. Beginning in FY2018 and continuing in FY2019, the program received discretionary appropriations, primarily to expand the number and type of substance abuse providers participating in the NHSC. The mandatory funding from the CHCF represents more nearly three-quarters of the program's funding in both FY2018 and FY2019. "], "subsections": []}, {"section_title": "Relevant Legislation", "paragraphs": ["ACA, Section 10503 , funded $1.5 billion to support the NHSC annually from FY2011 through FY2015, as follows: $290 million for FY2011, $295 million for FY2012, $300 million for FY2013, $305 million for FY2014, and $310 million for FY2015. Funds are to remain available until expended. MACRA, Section 221 , funded $310 million for each of FY2016 and FY2017 for the NHSC. P.L. 115-96 , Section 3101(b) , funded $65 million for the first and second quarters of FY2018 for the NHSC. BBA 2018 , Section 50901(c) , replaced language that had provided two-quarters of funding and funded $310 million for each of FY2018 and FY2019 for the NHSC. "], "subsections": []}, {"section_title": "Current Status", "paragraphs": ["Appropriated funds for CHCF funds have been enacted for FY2019, but under current law no new funding is provided for FY2020 or subsequent fiscal years. Any unused portion of grants awarded for a given fiscal year prior to October 1, 2019, remains available until expended. "], "subsections": []}]}, {"section_title": "Teaching Health Centers (PHSA\u00c2 \u00c2\u00a7340H; 42\u00c2 U.S.C.\u00c2 \u00c2\u00a7256h)", "paragraphs": [], "subsections": [{"section_title": "Background", "paragraphs": ["The Teaching Health Center program provides direct and indirect graduate medical education (GME) payments to support medical and dental residents training at qualified teaching health centers (i.e., outpatient health care facilities that provide care to underserved patients)."], "subsections": []}, {"section_title": "Relevant Legislation", "paragraphs": ["ACA , Section 5508(a) , established the Teaching Health Center program and provided $230 million for direct and indirect GME payments for the period of FY2011 through FY2015. MACRA, Section 221 , provided $60 million for each of FY2016 and FY2017 for direct and indirect GME payments for teaching health centers. Disaster Tax Relief and Airport and Airway Extension Act of 2017 , Section 301(a) , provided $15 million for the first quarter of FY2018 for direct and indirect GME payments for teaching health centers. P.L. 115-96 , Section 3101(c) , struck the first quarter of funding and provided $30 million for the first and second quarters of FY2018 for direct and indirect GME payments for teaching health centers. It also limited the amount of funding that could be used for administrative purposes. BBA 2018 , Section 50901(d) , made a number of changes to the Teaching Health Center program and replaced language that had provided two-quarters of funding and provided $126.5 million for each of FY2018 and FY2019 for direct and indirect GME payments for teaching health centers. "], "subsections": []}, {"section_title": "Current Status", "paragraphs": ["Appropriated funds for Teaching Health Center GME payments have been enacted for FY2019. Under current law no new funding is provided for FY2020 or subsequent fiscal years. "], "subsections": []}]}]}]}, {"section_title": "Other CY2019 Expiring Provisions", "paragraphs": [], "subsections": [{"section_title": "Pregnancy Assistance Fund (ACA \u00c2\u00a710212; 42 U.S.C. \u00c2\u00a718201-18204)", "paragraphs": ["The Pregnancy Assistance Fund (PAF) program seeks to improve the educational, health, and social outcomes of vulnerable individuals who are expectant or new parents and their children. PAF funding is awarded competitively to the 50 states, District of Columbia, the territories, and tribal entities that apply successfully. The grantees may use the funds for providing subgrants to community service providers and selected other entities that provide services during the prenatal and postnatal periods. Grantees may also provide, in partnership with the state attorney general's office, certain legal and other services for women who experience domestic violence, sexual assault, or stalking while they are pregnant or parenting an infant. Further, grant funds can be used to support public awareness efforts about PAF services for the expectant and parenting population. "], "subsections": [{"section_title": "Relevant Legislation", "paragraphs": ["ACA, Section 10212 , established the PAF program and provided $25 million for each of FY2010 through FY2019. "], "subsections": []}, {"section_title": "Current Status", "paragraphs": ["Appropriated funds for the PAF program funds have been enacted for FY2019, but under current law no new funding will be available for FY2020 or subsequent fiscal years."], "subsections": []}]}, {"section_title": "Health Coverage Tax Credit (IRC\u00c2 \u00c2\u00a735; 26 U.S.C.\u00c2 \u00c2\u00a735)", "paragraphs": [], "subsections": [{"section_title": "Background", "paragraphs": ["The Health Coverage Tax Credit (HCTC) subsidizes 72.5% of the cost of qualified health insurance for eligible taxpayers and their family members. Potential eligibility for the HCTC is limited to two groups of taxpayers. One group is composed of individuals eligible for Trade Adjustment Assistance (TAA) allowances because they experienced qualifying job losses. The other group consists of individuals whose defined-benefit pension plans were taken over by the Pension Benefit Guaranty Corporation because of financial difficulties. HCTC-eligible individuals are allowed to receive the tax credit only if they either cannot enroll in certain other health coverage (e.g., Medicaid) or are not eligible for other specified coverage (e.g., Medicare Part A). To claim the HCTC, eligible taxpayers must have qualified health insurance (specific categories of coverage, as specified in statute). The credit is financed through a permanent appropriation under 31 U.S.C. \u00c2\u00a71324(b)(2); therefore, the financing of the HCTC is not subject to the annual appropriations process."], "subsections": []}, {"section_title": "Relevant Legislation", "paragraphs": ["The T rade Act of 2002 ( P.L. 107-210 ), Section s 2 01-203, authorized the Health Coverage Tax Credit, specified the eligibility criteria for claiming the credit, and made conforming amendment to the U.S. Code for purposes of financing the credit. The American Recovery and Reinvestment Act of 2009 ( ARRA , P.L. 111-5 ), Part VI: TAA Health Coverage Improvement Act of 2009 expanded eligibility for and subsidy of the HCTC including retroactive amendments, and provided $80 million for FY2009 and FY2010 to implement the enacted changes to the HCTC. The Trade Adjustment Assistance Extension Act of 2011 ( P.L. 112-40 ), Section 241 , established a sunset date of before January 1, 2014. The T rade Preferences Extension Act of 2015 ( P.L. 114-27 ), Section 407 , retroactively reauthorized the HCTC and established a new sunset date of before January 1, 2020."], "subsections": []}, {"section_title": "Current Status", "paragraphs": ["Authorization for the HCTC is scheduled to expire after December 31, 2019. "], "subsections": []}]}, {"section_title": "Annual Fee on Health Insurance Providers (ACA\u00c2 \u00c2\u00a79010)", "paragraphs": [], "subsections": [{"section_title": "Background", "paragraphs": ["An annual fee is imposed on certain health insurance issuers. The aggregate fee is set at $8.0 billion in CY2014, $11.3 billion in CY2015 and CY2016, $13.9 billion in CY2017, and $14.3 billion in CY2018. After CY2018, the fee is indexed to the annual rate of U.S. premium growth. The fee is based on net health care premiums written by covered issuers during the year prior to the year in which payment is due. Each year, the Internal Revenue Service calculates the fee on covered issuers based on (1) their net premiums written in the previous calendar year as a share of total net premiums written by all covered issuers and (2) their dollar value of business. Covered issuers are not subject to the fee on their first $25 million of net premiums written. The fee is imposed on 50% of net premiums above $25 million and up to $50 million and on 100% of net premiums in excess of $50 million."], "subsections": []}, {"section_title": "Relevant Legislation", "paragraphs": ["ACA , Section 9010 , established the annual fee on certain health insurance issuers. The fee became effective for CY2014. The C onsolidated A ppropriations A ct , 20 16 ( P.L. 114-113 ), Division P, Title II, Section 201 , suspended collection of the fee for CY2017. Making further continuing appropriations for the fiscal year ending September 30, 2018, and for other purposes ( P.L. 115-120 ), Section 4003, suspended collection of the fee for CY2019."], "subsections": []}, {"section_title": "Current Status", "paragraphs": ["The moratorium on the collection of the fee is to end after CY2019, meaning covered entities are scheduled to be subject to the fee again beginning in CY2020."], "subsections": []}]}, {"section_title": "Excise Tax on Medical Device Manufacturers (26\u00c2 U.S.C.\u00c2 \u00c2\u00a74191)", "paragraphs": [], "subsections": [{"section_title": "Background", "paragraphs": ["An excise tax is imposed on the sale of certain medical devices. For the purposes of the tax, a \"medical device\" is defined by the Federal Food, Drug, and Cosmetic Act (21 U.S.C. \u00c2\u00a7321(h)) and pertains to devices \"intended for humans.\" Congress exempted eyeglasses, contact lenses, and hearing aids from the tax and any other medical device determined by the Secretary of the Treasury to be of the type that is \"generally purchased by the general public at retail for individual use.\" The tax is equal to 2.3% of the device's sales price and generally is imposed on the manufacturer or importer of the device. "], "subsections": []}, {"section_title": "Relevant Legislation", "paragraphs": ["The Health Care and Education Reconciliation Act of 2010 (HCERA; P.L. 111-152 ), Section 1405 , created the excise tax on medical device manufacturers starting in CY2013. The C onsolidated A ppropriations A ct , 20 16 , Division Q, Title I, Subtitle C, Part 2, Section 174 , suspended imposition of the tax for CY2016 and CY2017. Making further continuing appropriations for the fiscal year ending September 30, 2018, and for other purposes ( P.L. 115-120 ), Section 4001, extended the suspension of the imposition of the tax for CY2018 and CY2019."], "subsections": []}, {"section_title": "Current Status", "paragraphs": ["The suspension of the tax is to end after CY2019, meaning the tax is to apply to sales of medical devices again beginning in CY2020."], "subsections": []}]}]}, {"section_title": "CY2017 and CY2018 Expired Provisions", "paragraphs": [], "subsections": [{"section_title": "SSA Title XVIII: Medicare", "paragraphs": [], "subsections": [{"section_title": "Temporary Exception for Certain Severe Wound Discharges from Application of the Medicare Site Neutral Payment for Certain Long Term Care Hospitals (SSA\u00c2 \u00c2\u00a71886(m)(6)(E) and (G); 42\u00c2 U.S.C.\u00c2 \u00c2\u00a71395ww(m)(6)(E) and (G))", "paragraphs": [], "subsections": [{"section_title": "Background", "paragraphs": ["Medicare pays LTCHs for inpatient hospital care under the LTCH PPS, which is typically higher than payments for inpatient hospital care under the IPPS. Effective for cost-reporting periods beginning in FY2016, LTCHS are paid the LTCH PPS rate for patients that meet one of the following two criteria: (1) had a prior three-day intensive-care-unit stay at a hospital paid under the IPPS immediately preceding the LTCH stay or (2) is assigned to an LTCH PPS case-mix group that is based on the receipt of ventilator services for at least 96 hours and had a prior hospital stay at a hospital paid under the IPPS immediately preceding the LTCH stay. Discharges involving patients who have a principal diagnosis relating to a psychiatric diagnosis or rehabilitation do not qualify for the LTCH PPS rate. For LTCH discharges that did not qualify for the LTCH PPS based on these criteria, a site neutral payment rate is being phased-in for cost-reporting periods beginning FY2016 through FY2019. Subsequent legislation provided for other criteria to temporarily receive payment under the LTCH PPS. See section \" Temporary Extension of Long-Term Care Hospital (LTCH) Site Neutral Payment Policy Transition Period (SSA\u00c2\u00a0\u00c2\u00a71886(m)(6)(B)(i); 42\u00c2\u00a0U.S.C.\u00c2\u00a0\u00c2\u00a71395ww(m)(6)(B)(i)) \" for details related to site neutral payment."], "subsections": []}, {"section_title": "Relevant Legislation", "paragraphs": ["The C onsolidated A ppropriations A ct , 20 16 , Division H, Title II, Section 231 , provided an additional temporary criterion for payment under the LTCH PPS for discharges before January 1, 2017. Specifically, the LTCH PPS rate would apply to an LTCH discharge if all three of the following are satisfied: (1) the LTCH is a grandfathered hospital-within-hospital; (2) the LTCH is located in a rural area; and (3) the patient discharged has a severe wound\u00e2\u0080\u0094defined as a stage 3 or 4 wound, unstageable wound, nonhealing surgical wound, infected wound, fistula, osteomyelitis, or wound with morbid obesity. Cures Act, Division C, Section 15 0 10 , reinstated, after a lapse period and with some modifications, the temporary criterion for payment under the LTCH PPS related to certain spinal cord conditions for discharges occurring in cost-reporting period beginning during FY2018. The reinstated temporary criterion, similar to the Consolidated Appropriations Act of 2016 criterion, applies only to a grandfathered hospital-within-hospital. It eliminates the requirement from Consolidated Appropriations Act of 2016 that an LTCH be located in a rural area and narrows the definition of a severe wound that was used in Consolidated Appropriations Act of 2016. In addition, unlike the Consolidated Appropriations Act of 2016 criterion, only discharges associated with diagnosis-related groups relating to cellulitis or osteomyelitis are eligible for the reinstated temporary criterion."], "subsections": []}, {"section_title": "Current Status", "paragraphs": ["The temporary criterion for certain severe wound discharges for payment under the LTCH PPS expired for discharges in cost-reporting periods beginning during FY2019 and subsequent years."], "subsections": []}]}, {"section_title": "Exclusion of ASC Physicians from the Medicare Meaningful Use Payment Adjustment (SSA \u00c2\u00a71848(a)(7)(D); 42 U.S.C. \u00c2\u00a71395w\u00e2\u0080\u00934(a)(7)(D))", "paragraphs": [], "subsections": [{"section_title": "Background", "paragraphs": ["Congress has passed several bills to promote the widespread adoption of health information technology (HIT) and to support the electronic sharing of clinical data among hospitals, physicians, and other health care stakeholders. HIT encompasses interoperable electronic health records (EHRs)\u00e2\u0080\u0094including computerized systems to order tests and medications, and support systems to aid clinical decision making\u00e2\u0080\u0094and the development of a national health information network to permit the secure exchange of electronic health information among providers."], "subsections": []}, {"section_title": "Relevant Legislation", "paragraphs": ["ARRA , Section 4101, which incorporated the Health Information Technology for Economic and Clinical Health Act (HITECH), authorized Medicare and Medicaid incentive payments to acute-care hospitals and physicians who attest to being meaningful users of certified EHR technology. The law instructed the HHS Secretary to make the measures of \"meaningful use\" more stringent over time, which CMS has done in stages. Beginning in CY2015, hospitals and physicians that were or are not meaningful EHR users are subject to a Medicare payment adjustment (i.e., penalty) unless they qualify for a hardship exception. Cures Act, Section 16003, exempted physicians who furnish \"substantially all\" of their services to patients in ambulatory surgery centers from a meaningful use payment penalty in CY2017 and CY2018 because physicians who provide services to beneficiaries in ASCs faced additional difficulties in meeting some of the meaningful use criteria."], "subsections": []}, {"section_title": "Current Status", "paragraphs": ["The exemption as specified in the Cures Act expired December 31, 2018. Current law states that this exemption is to sunset \"as of the first year that begins more than 3 years after the date on which the Secretary determines, through notice and comment rulemaking, that certified EHR technology applicable to the ambulatory surgical center setting is available.\" This has yet to occur."], "subsections": []}]}, {"section_title": "Delay in Authority to Terminate Contracts for Medicare Advantage (MA) Plans Failing to Achieve Minimum Quality Ratings (SSA\u00c2 \u00c2\u00a71857; 42 U.S.C.\u00c2 \u00c2\u00a71395w-27)", "paragraphs": [], "subsections": [{"section_title": "Background", "paragraphs": ["Under Medicare Advantage (Medicare Part C, or MA) CMS pays private health plans a per-enrollee amount to provide all Medicare-covered benefits (except hospice) to beneficiaries who enroll in their plan. SSA Section 1853(o)(4) requires the HHS Secretary to use a five-star quality rating system to adjust maximum possible payments to high-performing MA plans. High star quality also results in an increase in an MA organization's rebate if its contract bid is less than the maximum amount that Medicare will pay. In addition, the five-star quality ratings are publicly reported and can be used by beneficiaries when considering which MA, Part D, or Medicare Advantage-Prescription Drug (MA-PD) plan to enroll in.", "The Social Security Act authorizes the HHS Secretary to terminate a contract with an MA organization or a Perscription Drug Plan (PDP) if the HHS Secretary determines that the MA organization or PDP has failed substantially to carry out the contract, is carrying out the contract in a manner inconsistent with the efficient and effective administration of the Medicare program, or no longer meets the applicable Medicare program conditions. CMS amended its regulations in 2012 to include a ground for contract termination relating to an MA organization's or a PDP's rating under the five-star system. Specifically, under the regulation, CMS may terminate a contract with an MA organization or a PDP if the plan receives a \"summary plan rating of less than 3 stars for 3 consecutive contract years.\" The regulation applies to plan ratings issued by CMS after September 1, 2012. CMS has terminated some MA organizations' contracts on this basis. "], "subsections": []}, {"section_title": "Relevant Legislation", "paragraphs": ["Cures Act, Division C, Section 17001: through the end of plan year 2018, the HHS Secretary is prohibited from terminating an MA organization's contract (or Part D contract) solely because the contract failed to achieve a minimum quality rating under the five-star rating system. "], "subsections": []}, {"section_title": "Current Status", "paragraphs": ["The HHS Secretary has the authority to terminate an organization's MA or Part D contract based solely on the organization's receipt of a Part C or Part D summary rating of less than three stars for three consecutive contract years. The Secretary issued a memorandum to MA plans indicating that the first star rating released after December 2018 is the first that could count toward termination. Star ratings are released in the fall of one year, displayed for beneficiary use the next year, and then used for payment purposes the following year. As such, the CY2020 rates (released fall CY2019 and used for payment purposes in CY2021) are the first that could apply toward potential termination. The soonest possible effective date for a CMS termination of an MA contract under this policy would be December 31, 2022."], "subsections": []}]}]}, {"section_title": "Other Medicare Provisions", "paragraphs": [], "subsections": [{"section_title": "Delay in Applying the 25% Patient Threshold Payment Adjustment for Long-Term Care Hospitals (MMSEA\u00c2 \u00c2\u00a7114(c); 42\u00c2 U.S.C.\u00c2 \u00c2\u00a71395ww\u00c2 note)", "paragraphs": [], "subsections": [{"section_title": "Background", "paragraphs": ["LTCHs generally treat patients who have been discharged from acute-care hospitals but require prolonged inpatient hospital care due to their medical conditions. LTCH patients have an average length of inpatient stay longer than 25 days. LTCHs can be (1) freestanding\u00e2\u0080\u0094a hospital generally not integrated with any other hospital; (2) co-located with another hospital, either located in the same building as another hospital or in a separate building on the hospital's campus; or (3) a satellite facility of an LTCH\u00e2\u0080\u0094a separately located facility (which may be co-located with another hospital) that operates as part of the LTCH. ", "Beginning in FY2005, CMS implemented a new Medicare payment regulation for LTCHs that are co-located with other hospitals and LTCH satellite facilities to limit inappropriate patient shifting driven by financial rather than clinical considerations. Under the new policy, if such an LTCH received more than 25% of its Medicare patients from any single referring hospital, the LTCH is paid the lower of the LTCH PPS or the IPPS payment for discharges that exceeded the threshold. Beginning in FY2008, CMS expanded the 25% patient threshold adjustment policy to include all LTCHs. "], "subsections": []}, {"section_title": "Relevant Legislation", "paragraphs": ["MMSEA , Section 114(c)(1) , delayed the application of CMS's 25% patient threshold adjustment for freestanding LTCHs and \"grandfathered hospitals-within-hospitals\" LTCHs for three years from the enactment of MMSEA (December 29, 2007). MMSEA Section 114(c)(2) delayed the application of CMS's 25% patient threshold adjustment for LTCHs or satellite facilities co-located with another hospital if (1) LTCHs or satellite facilities located in a rural area or co-located with an urban single or Metropolitan Statistical Area (MSA) dominant hospital receive no more than 75% of their Medicare inpatients from such co-located hospitals or (2) other LTCHs or satellite facilities co-located with another hospital receive no more than 50% of their Medicare inpatients from such co-located hospitals. ARRA, Section 4302(a) , modified the beginning of the delays in MMSEA Sections 114(c)(1) and 114(c)(2) from the date of enactment of MMSEA (December 29, 2007) to July 1, 2007. This section also modified the end date for the delay under MMSEA Section 114(c)(2) (LTCHs co-located with another hospital) from three years from the date of enactment to three years from October 1, 2007 (or July 1, 2007, in the case of a satellite facility described in 42 C.F.R. \u00c2\u00a7412.22(h)(3)(i)). In addition, ARRA Section 4302(a) modified the delay under MMSEA Section 114(c)(1) to include LTCHs or satellite facilities that, as of the date of enactment under MMSEA, were co-located with a provider-based off-campus location of an IPPS hospital that did not provide services payable under the IPPS at the off-campus location. ACA , Section 3106 , extended the delay of the 25% patient threshold adjustment two additional years. PSRA, Section 1206(b)(1) , extended the delay of the 25% patient threshold adjustment four additional years to expire after June 30, 2016 (or after September 30, 2016, for certain LTCHs co-located with another hospital). Cures Act, Division C, Section 15006 , delayed the 25% patient threshold adjustment for discharges occurring October 1, 2016, through September 30, 2017. This provision reinstated the PSRA delay that expired after June 30, 2016 (and extended the PSRA delay that expired after September 30, 2016, for certain LTCHs co-located with another hospital). "], "subsections": []}, {"section_title": "Current Status", "paragraphs": ["The statutory delay in CMS applying the 25% patient threshold adjustment to LTCHs expired after September 30, 2017. However, the HHS Secretary extended the delay through FY2018 and eliminated it beginning FY2019 through rulemaking. "], "subsections": []}]}, {"section_title": "Long-Term Care Hospital Moratoria (MMSEA\u00c2 \u00c2\u00a7114(d); 42\u00c2 U.S.C.\u00c2 \u00c2\u00a71395ww\u00c2 note)", "paragraphs": [], "subsections": [{"section_title": "Background", "paragraphs": ["Under Medicare, LTCHs were exempt from the IPPS when it was established in 1983. Instead, LTCHs were paid on a reasonable-cost basis subject to certain limits established by the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA; P.L. 97-248 ). Under the Balanced Budget Refinement Act of 1999 (BBRA 99; P.L. 106-113 ), the LTCH PPS was established, which provides a per-discharge payment based on the average costs and patient mix of LTCHs. The LTCH PPS typically provides higher Medicare payment rates for inpatient hospital care than the IPPS.", "The rapid increase in both the number of LTCHs and LTCH payments led to enactment of a temporary moratorium on the development of new LTCHs and a moratorium on new LTCH beds, with certain exceptions. "], "subsections": []}, {"section_title": "Relevant Legislation", "paragraphs": ["MMSEA , Section 114(d) , established a three-year moratorium from the date of enactment (December 29, 2007) on the development of new LTCHs, with exceptions for (1) LTCHs that began their qualifying period for Medicare reimbursement before the enactment of MMSEA; (2) LTCHs that had a binding written agreement before the enactment of MMSEA for the actual construction, renovation, lease, or demolition of an LTCH, and had expended at least 10% of the estimated cost of the project (or $2.5 million, if less); and (3) LTCHs that had obtained an approved certificate of need in a state where one is required on or before the date of enactment of MMSEA. MMSEA Section 114(d) also established a three-year moratorium from the date of enactment (December 29, 2007) on the increase in beds in existing LTCHs, with exceptions for (1) LTCHs located in a state where there is only one other LTCH and (2) LTCHs that request an increase in beds following the closure or decrease in the number of beds of another LTCH in the state. ARRA, Section 4302 , amended the three-year moratorium on the increase in beds in existing LTCHs by providing an exception to LTCHs that had obtained a certificate of need for such an increase in LTCH beds on or after April 1, 2005, and before the enactment of MMSEA. ACA , Section 3106(b) , extended the moratoria established under MMSEA an additional two years (expiring after December 29, 2012). PSRA, Section 1206(b)(2) , reinstated the moratoria under MMSEA beginning January 1, 2015, and expiring after September 30, 2017; however, PSRA did not allow any exceptions to the reinstated moratoria. PAMA , Section 112(b) , amended the moratoria reinstated by PSRA to begin with enactment of PSRA (December 26, 2013) rather than January 1, 2015. Further, this section provided the same exceptions on the development of new LTCHs that had been provided under MMSEA but did not provide exceptions for the increase in LTCH beds. Cures Act, Division C, Section 15004 , reinstated the exception to the moratorium on the increase in LTCH beds effective as if it had been enacted by PAMA, April 1, 2014, to coincide with the previously reinstated exception for new LTCHs. "], "subsections": []}, {"section_title": "Current Status", "paragraphs": ["The moratorium on the development of new LTCHs and on the increase of beds in existing LTCHs expired as of September 30, 2017."], "subsections": []}]}, {"section_title": "Extension of Enforcement Instruction on Supervision Requirements for Outpatient Therapeutic Services in Critical Access and Small Rural Hospitals", "paragraphs": [], "subsections": [{"section_title": "Background", "paragraphs": ["The 2009 Outpatient Prospective Payment System (OPPS) final rule required that therapeutic hospital outpatient services be furnished under the direct supervision of a physician. However, beginning in CY2010, CMS instructed its contractors not to evaluate or enforce the supervision requirements for therapeutic services provided to outpatients in critical access hospitals (CAHs). CMS extended this non-enforcement instruction for CY2011 and expanded it to include small rural hospitals with 100 or fewer beds. Subsequently, CMS extended the instruction for CY2012 and CY2013, The non-enforcement instruction has been extended several more times through legislation and rules."], "subsections": []}, {"section_title": "Relevant Legislation", "paragraphs": ["An Act to Provide for the Extension of the Enforcement Instruction on Supervision Requirements for Outpatient Therapeutic Services in Critical Access and Small Rural Hospitals Through 2014 ( P.L. 113-198 ), required the HHS Secretary to extend the non-enforcement instruction through CY2014. An Act to Provide for the Extension of the Enforcement Instruction on Supervision Requirements for Outpatient Therapeutic Services in Critical Access and Small Rural Hospitals Through 2015 ( P.L. 114-112 ) , required the HHS Secretary to extend the non-enforcement instruction through CY2015. Cures Act , Section 16004 , extended the non-enforcement instruction through CY2016. BBA 2018 , Section 51007, extended the non-enforcement instruction through CY2017 retroactively."], "subsections": []}, {"section_title": "Current Status", "paragraphs": ["Although the non-enforcement instruction has statutorily expired, the CY2018 OPPS/ Ambulatory Surgery Center (ASC) final rule with comment period re-established the non-enforcement policy beginning on January 1, 2018, and extended the instruction through December 31, 2019.", "Appendix A. Demonstration Projects and Pilot Programs", "This appendix lists selected health care-related demonstration projects and pilot programs that are scheduled to expire during the first session of the 116 th Congress (i.e., during calendar year [CY] 2019). The expiring demonstration projects and pilot programs listed below have portions of law that are time-limited and will lapse once a statutory deadline is reached, absent further legislative action. The expiring demonstration projects and pilot programs included here are those related to Medicare, Medicaid, the State Children's Health Insurance Program (CHIP), and private health insurance programs and activities. This appendix also includes other health care-related demonstration projects and pilot programs that were enacted in the Patient Protection and Affordable Care Act (ACA; P.L. 111-148 ) or last extended under the Bipartisan Budget Act of 2018 (BBA 2018; P.L. 115-123 ). In addition, this appendix lists health care-related demonstration projects and pilot programs within the same scope that expired during the 115 th Congress (i.e., during CY2017 or CY2018). ", "Although CRS has attempted to be comprehensive, it cannot guarantee that every relevant demonstration project and pilot program is included here.", " Table A-1 , lists the relevant demonstration projects and pilot programs that are scheduled to expire in 2019. Table A-2 lists the relevant provisions that expired during 2018 or 2017.", "Appendix B. Laws That Created, Modified, or Extended Current Health Care-Related Expiring\u00c2\u00a0Provisions", "Appendix C. List of Abbreviations", "AAA: Area Agencies on Aging", "ACA: Patient Protection and Affordable Care Act ( P.L. 111-148 , as amended) ", "ACF: Administration for Children and Families", "ACL: Administration for Community Living", "ADRC: Aging and Disability Resource Center", "AHRQ: Agency for Healthcare Research and Quality", "ARRA: American Recovery and Reinvestment Act of 2009 ( P.L. 111-5 )", "ASC: Ambulatory Surgery Center", "ATRA: American Taxpayer Relief Act of 2012 ( P.L. 112-240 )", "BBA 13: Bipartisan Budget Act of 2013 ( P.L. 113-67 , Division A) ", "BBA 97: Balanced Budget Act of 1997 ( P.L. 105-33 )", "BBA 2018 : Bipartisan Budget Act of 2018", "BBRA 99: Balanced Budget Refinement Act of 1999 ( P.L. 106-113 )", "BIPA 2000 : Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 ( P.L. 106-554 )", "CAH: Critical access hospital", "CHCF: Community Health Center Fund", "CHIP: State Children's Health Insurance Program", "CHIPRA: Children's Health Insurance Program Reauthorization Act ( P.L. 111-3 )", "CMS: Centers for Medicare & Medicaid Services", "CPI-U: Consumer Price Index for All Urban Consumers", "CRS: Congressional Research Service", "CY: Calendar year", "DME: Durable medical equipment", "DRA: Deficit Reduction Act of 2005 ( P.L. 109-171 )", "DSH: Disproportionate share hospital", "E-FMAP: Enhanced federal medical assistance percentage", "EHR: Electronic health record", "FMAP: Federal medical assistance percentage", "FY: Fiscal year", "GAO: Government Accountability Office", "GME: Graduate medical education", "GPCI: Geographic Practice Cost Index", "HCERA: Health Care and Education Reconciliation Act of 2010 ( P.L. 111-152 )", "HCFAC: Health Care Fraud and Abuse Control", "HH: Home health", "HHS: Department of Health and Human Services", "HI: Hospital Insurance", "HIPAA: Health Insurance Portability and Protection Act of 1996 ( P.L. 104-191 )", "HIT : Health information technology", "HITECH: Health Information Technology for Economic and Clinical Health Act", "HPOG: Health Profession Opportunity Grants", "HRSA: Health Resources and Services Administration", "IHS: Indian Health Service", "IPPS: Medicare Inpatient Prospective Payment System", "LTCH: Long-term care hospital", "LTCH PPS: Long-term care hospital prospective payment system", "LTSS: Long-term services and supports", "MA: Medicare Advantage", "MA-PD: Medicare Advantage-Prescription Drug", "MACRA: Medicare Access and CHIP Reauthorization Act of 2015 ( P.L. 114-10 )", "MAP: Measure Applications Partnership", "MCTRJCA: Middle Class Tax Relief and Job Creation Act of 2012 ( P.L. 112-96 )", "MEDH: Medicare-dependent hospital", "MedPAC: Medicare Payment Advisory Commission ", "MIECHV: Maternal, Infant, and Early Childhood Home Visiting", "MIP: Medicare Integrity Program", "MIPPA: Medicare Improvements for Patients and Providers Act of 2008 ( P.L. 110-275 )", "MMA: Medicare Prescription Drug, Improvement, and Modernization Act of 2003 ( P.L. 108-173 )", "MMEA: Medicare and Medicaid Extenders Act of 2010 ( P.L. 111-309 )", "MMSEA: Medicare, Medicaid and SCHIP Extension Act of 2007 ( P.L. 110-173 )", "MPFS: Medicare physician fee schedule", "MSA : Metropolitan Statistical Area", "NHSC: National Health Service Corps", "NQF: National Quality Forum", "OBRA 90: Omnibus Budget Reconciliation Act of 1990 ( P.L. 101-508 )", "OPPS: Outpatient Prospective Payment System", "PAMA: Protecting Access to Medicare Act of 2014 ( P.L. 113-93 )", "PAMPA: Patient Access and Medicare Protection Act ( P.L. 114-115 )", "PCORI: Patient-Centered Outcomes Research Institute", "P CORTF: Patient-Centered Outcomes Research Trust Fund", "PDP: Prescription Drug Plan", "PHSA: Public Health Service Act", "PPS: Prospective payment system", "PQMP: Pediatric Quality Measures Program", "PREP: Personal Responsibility Education Program", "PRWORA: Personal Responsibility and Work Opportunity Reconciliation Act of 1996 ( P.L. 104-193 )", "PSRA: Pathway for SGR Reform Act of 2013 ( P.L. 113-67 , Division B)", "RVU: Relative value unit", "SGR: Sustainable Growth Rate", "SHIP: State Health Insurance Assistance Program", "SMI: Supplementary Medical Insurance", "SNAP: Supplemental Nutrition Assistance Program", "SSA: Social Security Act", "SRAE: Sexual Risk Avoidance Education", "SSI: Supplemental Security Income", "TAA: Trade Adjustment Assistance", "TANF: State Temporary Assistance for Needy Families", "TEFRA: Tax Equity and Fiscal Responsibility Act of 1982 ( P.L. 97-248 )", "TPL: Third-party liability", "TPTCCA: Temporary Payroll Tax Cut Continuation Act of 2011( P.L. 112-78 )", "TRHCA: Tax Relief and Health Care Act of 2006 ( P.L. 109-432 )", "U.S.C.: U.S. Code", "WREA 2003: Welfare Reform Extension Act of 2003 ( P.L. 108-40 )", "WREA 2004: Welfare Reform Extension Act of 2004 ( P.L. 108-210 )", "WREA 2005: Welfare Reform Extension Act of 2005 ( P.L. 109-4 )"], "subsections": []}]}]}]}]}}
{"id": "R45989", "title": "Community Bank Leverage Ratio (CBLR): Background and Analysis of Bank Data", "released_date": "2020-05-11T00:00:00", "summary": ["Capital allows banks to withstand losses (to a point) without failing, and regulators require banks to hold certain minimum amounts. These requirements are generally expressed as ratios between balance sheet items, and banks (particularly small banks) indicate that reporting those ratios can be difficult. Capital ratios fall into one of two main types\u00e2\u0080\u0094simpler leverage ratio s and more complex risk-weighted ratio s . A leverage ratio treats all assets the same, whereas a risk-weighted ratio assigns assets a risk weight to account for the likelihood of losses.", "In response to concerns that small banks faced unnecessarily burdensome capital requirements, Congress mandated further tailoring of capital rules in Section 201 of the Economic Growth, Regulatory Relief, and Consumer Protection Act of 2018 ( P.L. 115-174 ) and created the Community Bank Leverage Ratio (CBLR). Under the provision, a bank with less than $10 billion in assets that meets certain risk-profile criteria will have the option to meet a CBLR requirement instead of the existing, more complex risk-weighted requirements. Because most small banks currently hold enough capital to meet the CBLR option, Section 201 will allow many small banks to opt out of requirements to meet and report more complex ratios.", "Questions related to how much riskier bank portfolios will be if they are only subject to a leverage ratio (rather than a combination of leverage and risk-based ratios) and how high the threshold must be to mitigate those risks are matters of debate. Section 201 grants the federal bank regulatory agencies\u00e2\u0080\u0094the Federal Reserve (the Fed), the Office of the Comptroller of the Currency (OCC), and the Federal Deposit Insurance Corporation (FDIC)\u00e2\u0080\u0094discretion over certain aspects of CBLR implementation, including setting the exact ratio; the provision mandated a range between 8% and 10%. In November 2018, the regulators proposed 9%, arguing this threshold supports safety and stability while providing regulatory relief to small banks. Bank proponents criticized this decision and advocated an 8% threshold, arguing that 9% is too high and withholds the exemption's benefits from banks with appropriately small risks. Despite the criticism, the bank regulators announced in a joint press release on October 29, 2019, they had finalized the rule with a 9% threshold. Responding to the coronavirus pandemic, Congress mandated in the Coronavirus Aid, Relief, and Economic Security Act (CARES Act; P.L. 116-136 ) that the ratio be temporarily lowered to 8% until the earlier of (1) the date the public health emergency ends, or (2) the end of 2020, so that banks have more leeway to deal with the pandemic's impact. In rulemaking implementing that provision, the regulators set the ratio for 2021 at 8.5% before raising it back to 9% on January 1, 2022.", "Of the 5,352 FDIC-insured depository institutions in the United States at the end of the second quarter of 2019, the Congressional Research Service (CRS) estimates that 5,078 (about 95%) would have met the size and risk-profile criteria necessary to qualify for the CBLR option. Under the regulator-set risk-profile criteria, nonqualifying banks were on average larger, had larger off-balance-sheet exposures, and had risk-based capital ratios that are about a quarter lower than qualifying banks.", "Of the 5,078 banks that would have qualified based on size and risk criteria, CRS estimates 4,440 (or 83% of all U.S. banks) exceeded a 9% threshold and would have been eligible to enter the CBLR regime. An additional 515 banks (9.6%) exceeded an 8% threshold. Thus, the difference between setting the ratio at 8% or 9% could, depending on perspective, potentially have provided appropriate regulatory relief to, or removed important safeguards from, about 10% of the nation's banks, which collectively held about 2% of total U.S. banking industry assets. Banks that would have been CBLR compliant at a 9% threshold were similar in size, activities, and off-balance-sheet exposures to 8% threshold banks, but the latter group's risk-based ratios were about half the level of the former's. However, when banks with CBLRs between 9% and 10% are compared to banks with CBLRs between 8% and 9%, the difference in risk-based ratios becomes much less pronounced."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["Holding capital enables banks to absorb unexpected losses (up to a point) without failing. To improve individual bank safety and soundness and financial system stability, bank regulators have implemented a number of regulations requiring banks to hold minimum levels of capital. These minimums, expressed as ratios between various balance sheet items, are called capital ratio requirements . Although capital ratio requirements can generate the benefits of safety and stability, they impose certain costs, including potentially reducing credit availability and raising credit prices. Given these characteristics, how capital ratio requirements should be calibrated and applied is subject to debate.", "Capital ratios fall into one of two main types\u00e2\u0080\u0094a leverage ratio or a risk-weighted ratio . A leverage ratio treats all assets the same, requiring banks to hold the same amount of capital against the asset regardless of how risky each asset is. A risk-weighted ratio assigns a risk weight\u00e2\u0080\u0094a number based on the asset's riskiness that the asset value is multiplied by\u00e2\u0080\u0094to account for the fact that some assets are more likely to lose value than others. Riskier assets receive a higher risk weight, which requires banks to hold more capital to meet the ratio requirement, thus better enabling them to absorb losses.", "One question within the broader debate over bank regulation is what capital ratio requirements relatively small, safe banks should face. In general, policymakers conceptually agree that small, safe banks\u00e2\u0080\u0094which have fewer resources to devote to compliance and individually pose less risk to the financial system\u00e2\u0080\u0094should face a simpler, less costly regulatory regime. Accordingly, bank regulators have imposed higher thresholds and more complex rules on the largest banks for a number of years. However, some industry observers have argued for further tailoring for smaller banks.", "In response to concerns that small banks faced unnecessarily burdensome capital requirements, Congress mandated further tailoring of capital rules in Section 201 of P.L. 115-174 , the Economic Growth, Regulatory Relief, and Consumer Protection Act of 2018 (EGRRCPA). Section 201 created the Community Bank Leverage Ratio (CBLR), a relatively simple ratio to calculate. Under this provision, a bank with less than $10 billion in assets that meets certain risk-profile criteria set by bank regulators will have the option to exceed a single CBLR threshold instead of being required to exceed several existing, more complex minimum ratios. The CBLR is set at a relatively high level compared to the existing minimum ratio requirements. Banks that exceed the CBLR are to be considered (1) in compliance with all risk-based capital ratios and (2) well capitalized for other regulatory considerations. Because small banks typically hold amounts of capital well above the required minimums, the CBLR option will allow many small banks to opt out of requirements to meet and report more complex ratios.", "Section 201 grants the federal bank regulatory agencies\u00e2\u0080\u0094the Federal Reserve (the Fed), the Office of the Comptroller of the Currency (OCC), and the Federal Deposit Insurance Corporation (FDIC) (hereinafter collectively referred to as \"the bank regulators\")\u00e2\u0080\u0094discretion over certain aspects of CBLR implementation, including setting the exact ratio, as the statute mandates a range between 8% and 10%. In November 2018, the regulators proposed 9%. The banking industry and certain policymakers criticized this decision, arguing that the threshold would be too high. Despite the criticism, the bank regulators issued a joint press release on October 29, 2019, announcing they had finalized the rule with a 9% threshold.", "On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act; P.L. 116-136 ) was enacted in an effort to mitigate the adverse effects of the Coronavirus Disease 2019 (COVID-19) pandemic. Section 4012 of the law temporarily lowered the CBLR to 8% until the earlier of (1) the date the public health emergency ends, or (2) the end of 2020. In the rulemaking implementing this provision, the regulators lowered the ratio to 8% until the end of 2020, and chose to raise the ratio first to 8.5% in 2021, before returning it to 9% on January 1, 2022.", "This report examines capital ratios generally, as well as the capital ratio regime that was in place before EGRRCPA's enactment and will continue to be in place for banks that do not qualify for or do not elect to exercise the CBLR option. It then describes Section 201 of EGRRCPA, the regulation implemented pursuant to that provision, and the ensuing debate surrounding this implementation. The report then describes the temporary lowering of the threshold pursuant to the CARES Act. Lastly, this report presents estimates on the number and characteristics of banks that would have qualified under the rule given their pre-implementation balance sheets and estimates those banks' CBLRs in the pre-implementation time period. This provides context on the number of banks potentially affected by CBLR implementation."], "subsections": []}, {"section_title": "Background on Capital Requirements", "paragraphs": ["A bank's balance sheet is divided into assets, liabilities, and capital. Assets are largely the value of loans owed to the bank and securities owned by the bank. To make loans and buy securities, a bank secures funding by either incurring liabilities or raising capital. A bank's liabilities are largely the value of deposits and debt the bank owes depositors and creditors. Banks raise capital through various methods, including issuing equity to shareholders or issuing special types of bonds that can be converted into equity. Importantly, many types of capital\u00e2\u0080\u0094unlike liabilities\u00e2\u0080\u0094may not contractually require the bank to make payouts of specified amounts. ", "Banks make profits in part because many of their assets are generally riskier, longer-term, and more illiquid than their liabilities, which allows them to earn more interest on their assets than they pay on their liabilities. The practice is usually profitable, but it exposes banks to risks that can lead to failure. When defaults on a bank's assets increase, the money coming into the bank decreases. However, the bank generally remains obligated to make payouts on its liabilities. Capital, though, enables the bank to absorb losses. When money coming in decreases, the bank's payouts on capital can be reduced, delayed, or cancelled. Thus, capital allows banks to continue to meet their rigid liability obligations and avoid failure even after experiencing unanticipated losses on assets. For this reason, regulators require banks to hold a minimum level of capital, expressed as ratios between items on bank balance sheets."], "subsections": [{"section_title": "Generally Applicable Requirements (Without CBLR Option)", "paragraphs": ["Banks have been subject to capital ratio requirements for decades. U.S. bank regulators first established explicit numerical ratio requirements in 1981. In 1988, they adopted the Basel Capital Accords proposed by the Basel Committee on Banking Supervision (BCBS)\u00e2\u0080\u0094an international group of bank regulators that sets international standards\u00e2\u0080\u0094which were the precursor to the ratio requirement regime used in the United States today. Those requirements\u00e2\u0080\u0094now known as \"Basel I\"\u00e2\u0080\u0094were revised in 2004, establishing the \"Basel II\" requirements that were in effect at the onset of the financial crisis in 2008. In 2010, the BCBS agreed to more stringent \"Basel III\" standards. Pursuant to this accord, U.S. regulators finalized new capital requirements in 2013. ", "Banks are required to satisfy several different capital ratio requirements. A detailed examination of how these ratios are calculated is beyond the scope of this report. ( Figure 1 provides a highly simplified, hypothetical example.) The following sections examine the mix of leverage and risk-weighted ratio requirements in effect prior to CBLR's implementation to enable comparison between regulatory regimes. "], "subsections": [{"section_title": "Leverage Ratio Requirements", "paragraphs": ["Most banks are required to meet a 4% minimum leverage ratio. In addition, to be considered well capitalized for other regulatory purposes\u00e2\u0080\u0094for example, being exempt from interest-rate and brokered-deposit restrictions\u00e2\u0080\u0094banks must meet a 5% leverage ratio. Furthermore, 15 large and complex U.S. banks classified as advanced approaches banks must maintain a minimum 3% supplementary leverage ratio (SLR) that uses an exposure measure that includes both balance sheet assets and certain other exposures to losses that do not appear on the balance sheet. Finally, a subset of eight of the largest and most complex U.S. banks classified as globally systemically important banks (G-SIBs) must meet an enhanced SLR (eSLR) requirement of 5% at the holding-company level to avoid capital-distribution restrictions, and 6% at the depository level to be considered well capitalized. "], "subsections": []}, {"section_title": "Risk-Weighted Ratio Requirements", "paragraphs": ["The required risk-weighted ratios depend on bank size and capital quality (some types of capital are considered less effective at absorbing losses than other types, and thus considered lower quality). Most banks are required to meet a 4.5% risk-weighted ratio for the highest-quality capital and ratios of 6% and 8% for lower-quality capital types. To be considered well capitalized for purposes of interest-rate and brokered-deposit restriction exemptions (among other regulatory considerations), a bank's ratios must be 2% above the minimums (i.e., 6.5%, 8%, and 10%, respectively). In addition, banks must have an additional 2.5% of high-quality capital on top of the minimum levels (7%, 8.5%, and 10.5%, respectively) as part of a capital conservation buffer in order to avoid restrictions on capital distributions, such as dividend payments. Advanced approaches banks are subject to a 0%-2.5% countercyclical buffer that the Fed can deploy if credit conditions warrant increasing capital (the buffer is currently 0% and has been so since its implementation). Finally, the G-SIBs are subject to an additional capital surcharge of between 1% and 4.5% based on the institution's systemic importance."], "subsections": []}]}, {"section_title": "Effects of Capital Ratio Requirements", "paragraphs": ["Whether the generally applicable capital requirements' (i.e., the requirements facing all banks prior to the implementation of the CBLR) potential benefits\u00e2\u0080\u0094such as increased bank safety and financial system stability\u00e2\u0080\u0094are appropriately balanced against the potential costs of reduced credit availability is a debated issue. Capital is typically a more expensive source of funding for banks than liabilities. In addition, calculating and reporting the ratios requires banks to devote resources\u00e2\u0080\u0094such as employee time and purchases of specialized software\u00e2\u0080\u0094to regulatory compliance. Thus, requiring banks to hold higher levels of capital and meet certain ratios imposes costs. This could lead banks to reduce the amount of credit available or raise credit prices."], "subsections": []}, {"section_title": "Leverage Ratio and Risk-Based Ratios: Relative Strengths and Weaknesses", "paragraphs": ["Leverage ratios and risk-based ratios each have potential strengths and weaknesses. Because the CBLR exempts certain banks from risk-weighted ratio requirements and allows them to use a single leverage ratio, bank regulators will likely consider those relative strengths and weaknesses in determining which banks should have the CBLR option. ", "Riskier assets generally offer greater rates of return to compensate investors for bearing more risk. Thus, without risk weighting banks have an incentive to hold riskier assets because the same amount of capital must be held against risky and safe assets. In addition, a leverage ratio alone may not fully reflect a bank's riskiness because a bank with a high concentration of very risky assets could have a similar ratio to a bank with a high concentration of very safe assets. Risk weighting can address these issues, because the bank is required to hold more capital against risky assets than against safe ones (and no capital against the safest assets, such as cash and U.S. Treasuries).", "However, risk weighting presents its own challenges. Risk weights assigned to particular asset classes could inaccurately estimate some assets' true risks, especially because they cannot be adjusted as quickly as asset risk might change. Banks may have an incentive to overly invest in assets with risk weights that are set too low (because they would receive a riskier asset's high potential rate of return, but have to hold only enough capital to protect against a safer asset's losses), or inversely to underinvest in assets with risks weights that are set too high. Some observers believe that the risk weights in place prior to the 2007-2009 financial crisis were poorly calibrated and \"encouraged financial firms to crowd into\" risky assets, exacerbating the downturn. For example, banks held highly rated mortgage-backed securities (MBSs) before the crisis, in part because those assets offered a higher rate of return than other assets with the same risk weight. MBSs then suffered unexpectedly large losses during the crisis.", "Another criticism is that the risk-weighted system involves needless complexity and is an example of regulator micromanagement. The complexity could benefit the largest banks, which have the resources to absorb the added regulatory cost, compared with small banks that could find compliance costs more burdensome. Thus, critics argue, small banks should be subject to a simpler system to avoid giving large banks a competitive advantage."], "subsections": []}]}, {"section_title": "Section 201 of P.L. 115-174", "paragraphs": ["In response to concerns about the generally applicable capital ratio requirements' effects on small banks, Congress mandated in Section 201 of EGRRCPA that certain qualifying banks that exceed a non-risk-weighted Community Bank Leverage Ratio (CBLR) be considered in compliance with all risked-weighted capital ratios and well capitalized for other regulatory purposes. The provision defined qualifying banks as those with less than $10 billion in assets, but also authorized the federal bank regulators to disqualify banks based on \"risk profile, which shall be based on consideration of\u00e2\u0080\u0094(i) off-balance sheet exposures; (ii) trading assets and liabilities; (iii) total notional derivatives exposures; and (iv) such other factors as the appropriate Federal banking agencies determine appropriate.\" This report refers to banks that meet these criteria as CBLR - qualifying banks . Section 201 also directed federal bank regulators to set a threshold ratio of capital to unweighted assets at between 8% and 10% (as discussed in the \" Generally Applicable Requirements (Without CBLR Option) \" section, the current minimum leverage ratio is 4% and the threshold to be considered well capitalized is 5%). This report refers to qualifying banks that would exceed the threshold as CBLR - compliant banks.", "Although the act specified in statute one qualifying criterion (less than $10 billion in assets) and established a range within which the CBLR must be set (8% to 10%), it granted the regulators discretion in certain aspects, including setting other qualifying criteria and the exact level within the 8%-10% range.", "Under Section 201, qualifying banks that meet size and risk criteria would fall into one of two groups with respect to the CBLR threshold when the new regulation goes into effect. The CBLR-compliant banks (i.e., those above the threshold) would have the option to enter the CBLR regime, and be considered in compliance with all risk-based capital ratio minimums and well capitalized for other regulatory purposes. This would free those banks from costs associated with meeting risk-based minimums and reporting their ratios (a quarterly exercise requiring bank resources). Most small banks hold enough capital to exceed the threshold, and thus will be provided this regulatory relief without having to raise extra capital. Banks that meet the size and risk-profile criteria (i.e., CBLR-qualifying banks) but whose capital holdings are below the CBLR threshold can remain in the preexisting capital regime (no banks are required to meet the CBLR), or can choose to raise capital or otherwise change their balance sheet composition in order to become CBLR compliant."], "subsections": []}, {"section_title": "Regulatory Implementation", "paragraphs": ["On November 21, 2018, the bank regulators announced they were inviting public comment on a proposed CBLR rulemaking. The proposal included the statutorily mandated qualifying criterion that only banks with less than $10 billion in assets would be eligible. In addition, the regulators used the authority granted by Section 201 to exclude banks based on risk-profile characteristics by including a number of additional qualifying criteria that limited banks' trading activity and off-balance-sheet exposures. On the question of where within the 8% to 10% range to set the CBLR threshold, the regulators chose 9%, arguing that this level supports the \"goals of reducing regulatory burden for community banking organizations and retaining safety and soundness in the banking system.\" ", "The banking industry criticized aspects of the rule. For example, an industry group representing community banks indicated it was \"disappointed that regulators have proposed capital standards that are higher than necessary\" and \"supports an 8% community bank leverage ratio.\" In its comment letter, the group noted that an 8% threshold \"would calibrate the CBLR closer to the current risk-based capital requirements ... [and] put the ratio closer to the current 5% leverage requirement.\"", "Despite the criticism, the bank regulators issued a joint press release on October 29, 2019, announcing they had finalized the rule with a 9% threshold. The rule went into effect on January 1, 2020."], "subsections": []}, {"section_title": "Section 4012 of the CARES Act (P.L. 116-136)", "paragraphs": ["When borrowers miss payments on loans at an unanticipated high rate, banks incur losses and potentially must write down the value of their capital, reducing their capital ratios. To halt or slow the decline and stay above regulatory thresholds, banks may respond by halting or slowing the growth of assets by making fewer loans. If the missed payments are the result of widespread economic distress, this reduction in credit availability may exacerbate the downturn.", "The COVID-19 pandemic caused widespread economic disruption as millions of businesses shut down and unemployment soared. To mitigate the pandemic's economic effects, among its other adverse effects, Congress passed the CARES Act ( P.L. 116-136 ). Section 4012 of the CARES Act temporarily lowers the CBLR to give qualifying banks using this capital measure more leeway to continue lending and stay above the threshold as the pandemic's economic effects unfold. The provision directs regulators to lower the CBLR to 8% and to give banks that fall below that level a reasonable grace period to come back into compliance with the CBLR. This mandate expires the earlier of (1) the date the public health emergency ends or (2) the end of 2020. In the rulemaking implementing this provision, the regulators lowered the ratio to 8% until the end of 2020, and chose to raise the ratio first to 8.5% in 2021, before returning it to 9% on January 1, 2022."], "subsections": []}, {"section_title": "Analysis: Banks, Qualifying Criteria, and CBLR-Compliant Thresholds", "paragraphs": ["Outside of bank policy circles and absent context, debating whether a threshold ratio of capital to unweighted assets is best set at 8% or 9% may seem inconsequential. However, hundreds of banks can be affected by just fractions of a percentage point. This section provides estimates of how many depositories would, as of June 30, 2019, likely fall above or below the CBLR threshold if set at 9% or 8%. Those estimates at the state level are provided in Appendix A . This section also includes statistics on certain characteristics of banks that meet or do not meet various CBLR criteria.", "The estimates presented here are based on Congressional Research Service (CRS) analysis of (1) data provided by FDIC-insured depository institutions (insured depository institutions can be either banks or savings associations, but will be referred to as \"banks\") on their Consolidated Statement on Condition and Income, known as the call report , for the second quarter of 2019; and (2) information found in the CBLR notice of proposed rulemaking published in the Federal Register . CRS could not find in the call report some data points necessary to provide a definitive list of and exact statistics on which banks would and would not qualify and be CBLR compliant. Thus, the CRS list of qualifying and compliant banks and the calculation of every bank's current CBLR may not exactly match the eventual actual numbers. A more detailed description of CRS methodology is provided in Appendix B .", "CRS began with all 5,352 banks that filed call reports for the second quarter of 2019, and first filtered out those with $10 billion or more in assets (see Figure 2 ). Based on that criterion, 141 banks would not have qualified and 5,211 would have if they met the risk-profile criteria.", "Those 5,211 were then checked against the risk profile-based criteria, and 5,078 were found to qualify. This high rate of qualification is not entirely surprising at the depository level, because small banks are generally unlikely to engage intensely enough in the activities and products included in the risk criteria to exceed the allowable threshold.", "Of the 5,078 qualifying banks, 4,440 had CBLRs above 9% and thus would have been CBLR compliant. Of the remainder (638 banks), 515 banks had CBLRs between 8% and 9%, and thus would have been compliant if the CBLR threshold level was 8%.", " Table 1 compares the averages of certain balance-sheet values and ratios at qualifying and nonqualifying banks. Total assets measures bank size. Loans as a percentage of total assets and deposits as a percentage of total liabilities measure how concentrated a bank is in traditional, core banking activities, while trading assets and liabilities as a percentage of total assets measure how active it is in noncore activities. Off-balance-sheet exposures as a percentage of total assets measures bank risk that is not reflected on the balance sheet. Recall from \" Risk-Weighted Ratio Requirements \" that banks must meet three different minimum risk-weighted requirements that differ in the types of capital used to calculate the ratio. The types of capital they use are categorized as common equity Tier 1 (CET1), Tier 1, and total capital. Tier 1 capital is what is used to calculate the generally applicable leverage ratio in place before the CBLR. CET1 is the most loss-absorbing category of capital and allows the fewest capital types of the three. Tier 1 includes additional items not allowable in CET1. Total capital is the most inclusive, allowing certain Tier 2 capital items not allowable in Tier 1. The average of these ratios is presented to give an indication of how well capitalized banks were, as measured by the existing capital regime.", "Banks that would not have qualified for the CBLR under the regulator-set risk-profile criteria were on average almost twice as large as qualifying banks ($1.05 billion vs. $542 million), but were still mostly relatively small banks. In addition, nonqualifying banks' concentrations in lending, deposit taking, and trading were not substantively different from qualifying banks'. However, their off-balance-sheet exposures and capital levels notably differed. ", "Nonqualifying banks had significantly more off-balance-sheet exposures as a percentage of total assets\u00e2\u0080\u009437% on average, compared to an average of 8.5% at qualifying banks. (A difference is expected, as this characteristic is a risk-profile criterion for qualification. However, the large disparity and the fact that both groups are quite far from the allowable 25% threshold are notable). Furthermore, nonqualifying banks' average risk-based capital ratios were lower than qualifying banks' levels by about a quarter. These latter two differences indicate that regulators set the risk-profile criteria in a way that would disqualify banks with large off-balance-sheet exposures that are relatively thinly capitalized when the risk of their assets is taken into account. Arguably, this would mean that giving those banks the ability to opt out of risk-based requirements could expose them and the banking system to unacceptably high failure risks.", " Table 2 compares banks that would have exceeded the 9% CBLR threshold, those that would have only met the threshold if it was set at 8%, and those that would not have met any threshold allowable given the Section 201 mandated range (i.e., 8%-10%). When banks compliant at a 9% threshold are compared to those compliant at the 8% threshold, there is a great deal of similarity in size, activities, and off-balance-sheet exposure. However, the 8% banks' risk-based capital ratios were lower by about half when compared to the 9% banks. In this way, banks compliant at 8% were quite similar to the banks that would not have qualified at the 8% level. These capital characteristics may have been a factor in regulators deciding not to allow these banks to opt out of risk-based capital requirements.", "It is also instructive to compare banks with CBLRs between 9% and 10% and those with CBLRs between 8% and 9%. In Table 2 , the average risk-based ratios of banks with CBLRs greater than 9% were boosted by banks that held very high levels of capital. Since the regulatory agencies cannot set the threshold above 10%, banks with such CBLRs are not at issue in the implementation. Rather, the agencies have determined that banks with CBLRs between 9% and 10% should be able to benefit from the CBLR regime, whereas 8%-9% banks should not. Table 3 shows that the risked-based differences between 9%-10% banks and 8%-9% banks were not as pronounced as when all CBLR compliant banks are the point of comparison. Instead, the increases in the various risked-based measures closely reflect the 1% increase in the CBLR."], "subsections": []}, {"section_title": "Key Findings", "paragraphs": ["CRS estimates that of the 5,352 U.S. depositories, 5,078 (95% of all banks) would have been CBLR compliant provided their capital exceeds the 9% threshold set by regulators. Of those, about 4,440 (83% of all banks) currently exceed that threshold. Regulators are statutorily authorized to set the threshold as low as 8%. If they did so, about 515 additional qualifying banks (10% of all banks) would have exceeded the threshold, and thus been eligible for exemption from risk-based ratio compliance. Under the risk-profile criteria set by regulators, nonqualifying banks were on average larger (though still relatively small by industry standards), had significantly larger off-balance-sheet exposures, and held about a quarter less capital than qualifying banks, as measured by risk-based ratios. Banks that would have been CBLR compliant at a 9% threshold were similar in size, activities, and off-balance-sheet exposures to 8% threshold banks. However, the latter group held about half the risk-based capital that the former did. The difference in risk-based measures between 9%-10% CBLR banks and 8%-9% CBLR banks was not as pronounced. The 1 percentage point increase in the CBLR threshold is more or less reflected in the difference in the risk-based measures.", "Appendix A. Qualifying Banks by CBLR and State ", "Appendix B. Methodology", "To produce the statistics and estimates presented in this report, CRS used (1) information from the bank regulator Notice of Proposed Rulemaking: Regulatory Capital Rule: Capital Simplification for Qualifying Community Banking Organizations , published in the Federal Register on February 8, 2019; and (2) data from Consolidated Reports on Condition and Income as of June 30, 2019, which was downloaded from the Federal Financial Institution Examination Council bulk data download website on September 14, 2019.", "In the proposed rule notice, bank regulators provided this proposed format for reporting the CBLR, which indicates which measures the regulators were intending to use for qualifying criteria and to calculate the CBLR:", "The estimates in this report may differ from the actual numbers due to two challenges with data availability. ", "First, exactly how deferred tax assets are counted in the proposals and what deductions from those figures would be permitted differ from the deferred tax asset values banks entered at call report Schedule RC-R, Part I, line 8. However, CRS was unable to locate the exact data identified in the proposal, and so used the deferred tax asset value available in the call report as a proxy. CRS judged that using this proxy was unlikely to cause the estimated bank counts and statistics presented in this report to differ substantively from the actual figures, because the vast majority of qualifying banks reported little or no deferred tax assets. Nevertheless, the difference could cause a bank near the 25% DTA-to-assets qualifying threshold to be erroneously classified as qualifying or nonqualifying. In addition, using this proxy could cause the CBLRs estimated for this report to be slightly different from certain banks' actual CBLRs.", "Second, while CRS was able to locate values in the call report data for a number of off-balance-sheet exposures identified in the proposal, it was not able to locate others. The exposures included in the proposal are", "the unused portions of commitments (except for unconditionally cancellable commitments); self-liquidating, trade-related contingent items that arise from the movement of goods, transaction-related contingent items (i.e., performance bond, bid bonds and warranties); sold credit protection in the form of guarantees and credit derivatives; credit enhancing representations and guarantees; off-balance sheet securitization exposures; letters of credit; forward agreements that are not derivatives contracts; and securities lending and borrowing transactions.", "CRS used the following values banks entered in call reports: (1) Schedule RC-L, lines 1a, 1b, 1c(1)-(2), 1d, and 1e as \"unused portions of commitments\"; (2) Schedule RC-R, Part II, line 19, Column A as \"unconditionally cancellable commitments\"; (3) Schedule RC-L lines 7a(1)-(4) Column A as \"sold credit protection in the form of guarantees and credit derivatives\"; (4) Schedule RC-R, Part II, line 10, Column A as \"off balance sheet securitization exposures\"; (5) Schedule RC-L line 2, 3, and 4 as \"letters of credit\"; and (6) Schedule RC-L, line 6a and 6b as \"securities lending and borrowing transactions.\" ", "CRS was unable to locate values for (1) \"trade self-liquidating, trade-related contingent items that arise from the movement of goods\"; (2) \"transaction-related contingent items\"; (3) \"credit enhancing representations and guarantees\"; and (4) \"forward agreements that are not derivatives contracts.\"", "Thus, the CRS-calculated off-balance-sheet exposures used for this report are underestimates for banks that had any of the latter set of exposures. CRS judges that the number of banks that have these exposures and for which the underestimation is the difference between falling above or below the 25% off-balance-sheet exposures to total assets threshold is likely relatively small. Nevertheless, by omitting the latter set of exposures, the CRS estimate of qualifying banks may be an overcount. ", "To calculate the CBLRs, CRS used the following calculations and call report items (the item number is an identifying number assigned to each line item in the call report data set): "], "subsections": []}]}}
{"id": "R46107", "title": "FY2020 National Defense Authorization Act: Selected Military Personnel Issues", "released_date": "2020-02-25T00:00:00", "summary": ["Each year, the National Defense Authorization Act (NDAA) provides authorization of appropriations for a range of Department of Defense (DOD) and national security programs and related activities. New or clarified defense policies, organizational reform, and directed reports to Congress are often included. For FY2020, the NDAA ( P.L. 116-92 ) addresses or attempts to resolve high-profile military personnel issues. Some are required annual authorizations (e.g., end-strengths); some are updates or modifications to existing programs; and some are issues identified in certain military personnel programs.", "In the FY2020 NDAA, Congress authorized end-strengths identical to the Administration's FY2020 budget proposal. The authorized active duty end-strength increased by about 1% to 1,339,500. The authorized Selected Reserves end-strength decreased by about 2% to 807,800. A 3.1% increase in basic military pay took effect on January 1, 2020. This increase is identical to the Administration's FY2020 budget proposal and equal to the automatic annual adjustment amount directed by statutory formula (37 U.S.C. \u00c2\u00a71009).", "Congress also directed modifications to several existing personnel programs, including", "extension of DOD Morale, Welfare, and Recreation (MWR) privileges to Foreign Service Officers on mandatory home leave; repeal of the Survivor Benefit Plan (SBP) and Veterans Affairs' Dependency and Indemnity Compensation (DIC) offset requirement (i.e., the wi dows' tax ); modification of DOD workplace and command climate surveys to include questions relating to experiences with supremacist activity, extremist activity, or racism; expansion of Special Victim Counsel services for victims of domestic violence; prohibition of gender-segregated Marine Corps recruit training; expansion of spouse employment and education programs, including reimbursement for relicensing costs associated with military relocations; clarified roles and responsibilities for senior military medical leaders assigned to the Defense Health Agency or a service medical department; and medical documentation and tracking requirements for servicemembers or family members exposed to certain environmental or occupational hazards (e.g., lead, open air burn pits, blast pressure).", "As part of the oversight process, several provisions address selected congressional items of interest, including", "DOD review of service records of certain World War I veterans for potential eligibility for a posthumously awarded Medal of Honor; a process for former servicemembers to appeal decisions issued by a Board of Correction of Military Records or a Discharge Review Board; a feasibility study on the creation of a database to track domestic violence military protective orders and reporting to the National Instant Criminal Background Check System; transparency on military medical malpractice, including the ability for servicemembers to file administrative claims against the United States; and limitations on the reduction of military medical personnel."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["Each year, the House and Senate armed services committees take up national defense authorization bills. The House of Representatives passed its version of the National Defense Authorization Act for Fiscal Year 2020 (NDAA; H.R. 2500 ) on July 12, 2019. The Senate passed its version of the NDAA ( S. 1790 ) on June 27, 2019. These bills contain numerous provisions that affect military personnel, retirees, and their family members. Provisions in one version may not be included in the other, may be treated differently, or may be identical to those in the other versions. Following passage of each chamber's bill, a conference committee typically convenes to resolve the differences between the respective chambers' versions of the bill. The House passed the FY2020 NDAA conference report on December 11, 2019, and the Senate passed the report on December 17, 2019. On December 20, 2019, President Donald J. Trump signed the bill into law ( P.L. 116-92 ).", "This report highlights selected personnel-related issues that may generate high levels of congressional and constituent interest. Related CRS products are identified in each section to provide more detailed background information and analysis of the issues. For each issue, a CRS analyst is identified.", "Some issues discussed in this report were previously addressed in the FY2019 NDAA ( P.L. 115-232 ) and discussed in CRS Report R45343, FY2019 National Defense Authorization Act: Selected Military Personnel Issues , by Bryce H. P. Mendez et al., or other reports. Issues that were considered previously are designated with an asterisk in the relevant section titles of this report."], "subsections": []}, {"section_title": "*Active Component End-Strength", "paragraphs": ["Background: The authorized active duty end-strengths for FY2001, enacted in the year prior to the September 11 terrorist attacks, were as follows: Army (480,000), Navy (372,642), Marine Corps (172,600), and Air Force (357,000). Over the next decade, in response to the demands of wars in Afghanistan and Iraq, Congress substantially increased the authorized personnel strength of the Army and Marine Corps. Congress began reversing those increases in light of the withdrawal of most U.S. forces from Iraq in 2011, the drawdown of U.S. forces in Afghanistan beginning in 2012, and budgetary constraints. Congress halted further reductions in Army and Marine Corps end-strength in FY2017, providing slight end-strength increases for both Services that year. In FY2018 and FY2019, Congress again provided slight end-strength increases for the Marine Corps, while providing a more substantial increase for the Army. However, the Army did not reach its authorized end-strength of 483,500 in FY2018 or its authorized end-strength of 487,500 in FY2019, primarily due to missing enlisted recruiting goals. End-strength for the Air Force generally declined from 2004 to 2015, but increased from 2016 to 2019. End-strength for the Navy declined from 2002 to 2012, increased in 2013 and remained essentially stable through 2017; it increased again in 2018 and 2019. ", "Authorized end-strengths for FY2019 and FY2020 are shown in Figure 1 .", "Discussion: In comparison to FY2019 authorized end-strengths, the Administration's FY2020 budget proposed a decrease for the Army (-7,500) and increases for the Navy (+5,100), Marine Corps (+100) and Air Force (+3,700). The administration's proposed decrease for the Army reflects the challenges the Army is facing in recruiting a sufficient number of new enlisted personnel to expand its force. As stated in the Army's military personnel budget justification document, \"Given the FY 2018 end strength outcome and a challenging labor market for military recruiting, the Army Active Component has decided to pursue a new end strength growth ramp. The Army has shifted to a more modest end strength growth ramp of 2,000 Soldiers per year, with end strength targets of 478,000 in FY 2019 and 480,000 in FY 2020. Beyond FY 2019, the steady 2,000 Solider per year growth increases Active Army end strength while maintaining existing high quality standards.\" ", "Section 401 of the enacted bill approved end-strengths identical to the Administration request.", "References: Previously discussed in CRS Report R45343, FY2019 National Defense Authorization Act: Selected Military Personnel Issues , by Bryce H. P. Mendez et al. and similar reports from earlier years. Enacted figures found in P.L. 115-232 .", "CRS Point of Contact: Lawrence Kapp."], "subsections": []}, {"section_title": "*Selected Reserve End-Strength", "paragraphs": ["Background: The authorized Selected Reserve end-strengths for FY2001, enacted the year prior to the September 11 terrorist attacks, were: Army National Guard (350,526), Army Reserve (205,300), Navy Reserve (88,900), Marine Corps Reserve (39,558), Air National Guard (108,022), Air Force Reserve (74,358), and Coast Guard Reserve (8,000). The overall authorized end-strength of the Selected Reserves has declined by about 6% over the past 18 years (874,664 in FY2001 versus 824,700 in FY2019). During this period, the overall decline is mostly attributed to reductions in Navy Reserve strength (-29,800). There were also smaller reductions in the authorized strength for the Army National Guard (-7,026), Army Reserve (-5,800), Marine Corps Reserve (-1,058), Air National Guard (-922), Air Force Reserve (-4,358), and Coast Guard Reserve (-1,000).", "Authorized end-strengths for FY2019 and FY2020 are shown in Figure 2 .", "Discussion: Relative to FY2019 authorized end-strengths, the Administration's FY2020 budget proposed decreases in the Army National Guard (-7,500), Army Reserve (-10,000), and Navy Reserve (-100), increases for the Air National Guard (+600) and Air Force Reserve (+100), and no change for the Marine Corps Reserve and Coast Guard Reserve. The Administration's proposed decrease for the Army National Guard and the Army Reserve reflected the challenges those reserve components have had in meeting their authorized strength. According to the Army National Guard (ARNG) FY2020 military personnel budget justification document: ", "The ARNG fell short of the FY 2018 National Defense Authorization Act (NDAA) Congressionally authorized End Strength 343,500 by 8,296 Soldiers due to recruiting challenges, too few accessions, and to cover increased attrition losses in FY2018\u00e2\u0080\u00a6The ARNG began addressing these issues and challenges in FY 2018 by ramping up the recruiting force, incentives programs, bonuses, and marketing efforts. While these efforts are expected to result in additional accessions in FY 2019, they will not be enough to meet the FY 2019 NDAA authorized End Strength of 343,500. The newly hired force will reach full production levels by end of the FY 2019 in order to meet the required accessions mission and a projected end strength of 336,000 in FY 2020 and continue the projected ramp to an end strength of 338,000 by the end of FY 2024.", "Similarly, the Army Reserve FY2020 Military Personnel budget justification document stated:", "In FY 2018, the Army Reserve fell short of its end strength objective by 10,689 Soldiers due to a challenging recruiting and retention environment\u00e2\u0080\u00a6Prior to the FY 2020 President's Budget request, the Army Reserve recognized it would not meet its FY 2019 end strength goal of 199,500 and subsequently reduced its goal to a more achievable end strength of 189,250. The Army Reserve continues to set conditions for a successful and productive recruiting and retention environment in support of achieving an end strength of 189,250 by the end of FY 2019 and sustaining that level through FY 2020.", "Section 411 of the enacted bill approved end-strengths identical to the Administration request.", "References: Previously discussed in CRS Report R45343, FY2019 National Defense Authorization Act: Selected Military Personnel Issues , by Bryce H. P. Mendez et al. and similar reports from earlier years. For more on the Reserve Component see CRS Report RL30802, Reserve Component Personnel Issues: Questions and Answers , by Lawrence Kapp and Barbara Salazar Torreon, and CRS In Focus IF10540, Defense Primer: Reserve Forces , by Lawrence Kapp.", "CRS Point of Contact: Lawrence Kapp."], "subsections": []}, {"section_title": "Access to Reproductive Health Services", "paragraphs": ["Background: In general, the Department of Defense (DOD) offers certain reproductive health services in DOD-operated hospitals and clinics\u00e2\u0080\u0094known as military treatment facilities (MTFs)\u00e2\u0080\u0094or through civilian health care providers participating in TRICARE. Reproductive health services typically include counseling, therapy, or treatment for male or female conditions affecting \"fertility, overall health, and a person's ability to enjoy a sexual relationship.\" ", "With regard to contraceptive services, DOD policy requires that all eligible beneficiaries have access to \"comprehensive contraceptive counseling and the full range of contraceptive methods.\" The policy also requires that DOD provide contraceptive services when \"feasible and medically appropriate,\" such as during:", "a health care visit before or during deployment; enlisted or officer training; annual well woman exams and reproductive health screenings; physical exams; or when referred after a periodic health assessment.", "With regard to fertility services, DOD offers:", "diagnostic services (e.g., hormone evaluation and semen analysis); diagnosis and treatment of illness or injury to the male or female reproductive system; care for physically caused erectile dysfunction; genetic testing; certain prescription fertility drugs; and certain assisted reproductive services for \"seriously or severely ill/injured\" active duty servicemembers. ", "Active duty military personnel generally incur no out-of-pocket costs for DOD health care services. If a servicemember receives reproductive health services that are not directly provided, referred by a DOD or TRICARE provider, or otherwise covered by DOD, then they may be required to pay for those services. Other DOD beneficiaries may be subject to cost-sharing based on their TRICARE health plan, beneficiary category, and type of medical service received. ", "Discussion: Currently, DOD offers comprehensive contraceptive counseling and a range of contraceptive methods. However, non-active duty beneficiaries may be subject to certain cost-sharing requirements depending on the type of contraceptive service rendered, the accompanying procedures or follow-up evaluations that may be clinically necessary, or health care provider nonparticipation in the TRICARE network. Other reproductive health services, such as cryopreservation of human gametes (i.e., sperm or eggs), are generally not offered or covered by TRICARE unless narrow criteria are met.", "While there are no provisions in the enacted bill relating to access to reproductive health services, the committee report ( S.Rept. 116-48 ) accompanying the Senate bill ( S. 1790 ) includes a similar reporting requirement as House Section 728. The committee report directs DOD to \"conduct a study on the incidence of infertility among members of the Armed Forces\" and provide a report to the House and Senate armed services committees by June 1, 2020. The study is to include the following elements:", "number of servicemembers diagnosed with a common cause of infertility; number of servicemembers whose infertility has no known cause; incidence of miscarriage among female servicemembers; infertility rates of female servicemembers, as compared to their civilian counterparts; demographic information on infertile servicemembers and potential hazardous environmental exposures during service; availability of infertility services for servicemembers who desire such treatment, including waitlist times at MTFs offering reproductive health services; criteria used by the military services to determine service-connection for infertility; and DOD policies for ensuring geographic stability for servicemembers receiving treatment for infertility.", "Not adopted were provisions to expand TRICARE coverage of specific reproductive health services to certain eligible beneficiaries.", "References: CRS In Focus IF11109, Defense Health Primer: Contraceptive Services , by Bryce H. P. Mendez.", "CRS Point of Contact: Bryce H.P. Mendez."], "subsections": []}, {"section_title": "*Administration of the Military Health System", "paragraphs": ["Background: DOD operates a health care delivery system that serves approximately 9.5 million beneficiaries. The Military Health System (MHS) administers the TRICARE program, which offers health care services at military treatment facilities (MTFs) or through participating civilian health care providers. Historically, the military services have administered the MTFs, while the Defense Health Agency (DHA) administered the private sector care program of TRICARE. DHA is a combat support agency that enables the Army, Navy, and Air Force medical services to provide a medically ready force and ready medical force to combatant commands in both peacetime and wartime.", "In 2016, Congress found that the organizational structure of the MHS could be streamlined to sustain the \"medical readiness of the Armed Forces, improve beneficiaries' access to care and the experience of care, improve health outcomes, and lower the total management cost.\" Section 702 of the FY2017 NDAA ( P.L. 114-328 ) directed significant reform to the MHS and administration of MTFs by October 1, 2018. Reforms include:", "transfer of administration and management of MTFs from each respective service surgeon general to the DHA Director; reorganization of DHA's internal structure; and redesignation of the service surgeons general as principal advisors for their respective military service, and as service chief medical advisor to the DHA.", "In June 2018, DOD submitted its implementation plan to Congress. The implementation plan details how DOD is to reform the MHS to a \"streamlined organizational model that standardizes the delivery of care across the MHS with less overhead, more timely policymaking, and a transparent process for oversight and measurement of performance.\" Congress later revised the MHS reform mandate by further clarifying certain tasks relating to the transfer of MTFs, the roles and responsibilities of the DHA and the service surgeons general, and by extending the deadline for implementing reform efforts to September 30, 2021. DOD later revised its plan to accelerate certain tasks.", "On October 1, 2019, the military services transferred the administration and management of their U.S.-based MTFs to the DHA. The military services are to continue to administer their overseas MTFs until transfer to the DHA in 2020\u00e2\u0080\u00932021. ", "Discussion: The enacted bill includes a number of provisions clarifying certain responsibilities for DHA and other medical entities with service-specific responsibilities, such as administering and managing MTFs, providing health service support to combatant commanders, performing medical research, recruiting and retaining medical personnel, and establishing military-civilian partnerships. ", "Organizational Management . Section 711 of the enacted bill amends 10 U.S.C. \u00c2\u00a71073c to clarify the qualifications of the DHA assistant director and the deputy assistant directors, and allow DOD to reassign certain civil service employees from a military department to a DOD component, or vice-versa. The provision also adds the following to DHA's existing roles and responsibilities:", "provision of health care; clinical privileging and quality of care programs; MTF capacities to support clinical currency and readiness standards; and coordination with the military services for joint staffing.", "Section 712 of the enacted bill clarifies the roles and responsibilities of the service surgeons general, to include:", "support to combatant commanders for operational and deployment requirements; support to DHA by assigning military medical personnel to MTFs; development of combat medical capabilities; and medical readiness of the Armed Forces.", "In 2018, Congress directed DOD to consolidate most of its medical research programs under the DHA. While the military services are to retain certain medical research responsibilities, the DHA is to be responsible for coordinating all research, development, test, and evaluation (RDT&E) funds appropriated to the defense health program (DHP), including the congressionally-directed medical research programs (CDMRP). The U.S. Army Medical Research and Materiel Command (USAMRMC) administers the CDMRP and executes a variety of RDT&E funds appropriated to the Department of the Army, DHP, and other DOD-wide operation and maintenance accounts. USAMRMC executes most of the annual DHP RDT&E. In FY2017, USAMRMC executed approximately 76% ($377.5 million) of the total DHP RDT&E funds. As of June 1, 2019, USAMRMC restructured and realigned its responsibilities under two separate DOD entities: the DHA and Army Futures Command. Depending on the research mission (DHP requirements vs. service-specific requirements), USAMRMC resources were also reallocated accordingly. ", "Section 737 of the enacted bill directs the Secretary of Defense to retain certain manpower and funding resources with USAMRMC. The provision requires USAMRMC manpower and funding to be at a baseline of no less than \"the level of such resources as of the date of the enactment of this Act until September 30, 2022.\" On October 1, 2022, DOD is to: (1) transfer USAMRMC resources programmed to the Army's research, development, test, and evaluation account to the DHP; and (2) maintain USAMRMC as a \"Center of Excellence for Biomedical Research, Development and Acquisition Management.\"", "Military Medical Personnel . DOD's budget request for FY2020 includes a proposal to reduce its active duty medical force by 13% (14,707 personnel) in order to maintain a workforce that is \"appropriately sized and shaped to meet the National Defense Strategy requirements and allow the MHS to optimize operational training and beneficiary care delivery.\" Compared to FY2019 levels, the Army would have the largest reduction in medical forces (-16%), followed by the Air Force (-15%), and the Navy (-7%). DOD's initial plan to implement these reductions include: (1) transferring positions (also known as billets) from the MHS to new health service support positions in deployable or warfighting units, military service headquarters, or combatant commands; (2) transferring billets from the MHS to the military departments for repurposing as nonmedical assets; and (3) converting certain military billets to civilian billets.", "Section 719 of the enacted bill limits DOD actions to reduce or realign its active duty medical force until certain internal reviews, analyses, measurements, and outreach actions are conducted within 180 days of enactment and at least 90 days after a report to the House and Senate armed services committee on such actions have been provided. The report is to include also the department's plan to reduce or realign its military medical force. In addition, the provision contains certain exceptions that allow DOD to proceed with reducing or realigning certain positions. The exceptions are:", "administrative billets assigned to a service medical department that has been vacant since at least October 1, 2018; nonclinical billets that were identified in the President's FY2020 budget submission and not to exceed a total of 1,700; and service medical department billets solely assigned to a headquarters office and not dually assigned to support a deployable medical unit.", "Civilian Partnerships . The MHS states that its \"success depends on building strong partnerships with the civilian health care sector.\" As a high-priority initiative, the MHS maintains numerous partnerships with civilian health care organizations, academic institutions, and research entities to enhance or supplement military medical readiness and deliver the health entitlements authorized in chapter 55 of Title 10, U.S. Code. Section 740 of the enacted bill authorizes DOD to conduct a pilot program to improve medical surge capabilities of the National Disaster Medical System and interoperability with certain civilian health care organizations and other federal agencies. If exercised by the Secretary of Defense, pilot program sites are to be located \"in the vicinity of major aeromedical and other transport hubs and logistics centers of the Department of Defense.\" ", "Section 751 of the enacted bill directs DOD to study existing military-civilian integrated health delivery systems and the activities conducted that promote value-based care, measurable health outcomes, patient safety, access to care, critical wartime readiness skills, and cost. The provision requires DOD to submit a report to the House and Senate armed services committees, within 180 days of enactment, on the study's findings and a plan for further development of military-civilian health partnerships. ", "References: Previously discussed in CRS Report R45343, FY2019 National Defense Authorization Act: Selected Military Personnel Issues , by Bryce H. P. Mendez et al.; CRS In Focus IF11273, Military Health System Reform , by Bryce H. P. Mendez; CRS Report WPD00010, Military Health System Reform , by Bryce H. P. Mendez; CRS Insight IN11115, DOD's Proposal to Reduce Military Medical End Strength , by Bryce H. P. Mendez; and CRS Report R45399, Military Medical Care: Frequently Asked Questions , by Bryce H. P. Mendez.", "CRS Point of Contact: Bryce H.P. Mendez."], "subsections": []}, {"section_title": "Boards of Correction of Military Records & Discharge Review Board Matters", "paragraphs": ["Background: The characterization of service when a servicemember is discharged, as well as awards received and length of service, may affect eligibility for certain veterans' benefits, employment opportunities, and some government programs. If a servicemember believes a service record's information is incorrect or the servicemember alleges an injustice, two statutorily established entities exist for addressing these matters: a board of correction of military records (BCMR) and a discharge review board (DRB). Each armed service has a BCMR and DRB.", "A BCMR provides an administrative process for military personnel to request record corrections and payment of monetary claims associated with a record correction. An applicant to a BCMR must request a record correction within three years of discovering an alleged error or injustice. ", "A DRB provides an administrative process for former servicemembers to request changes to the reason for discharge or the characterization of service when discharged, but any monetary claim associated with a change must be presented to a BCMR. An application for review must be made to A DRB within 15 years of the discharge. A subsequent change in service policy has no effect on a preceding discharge unless the new policy is retroactive or materially different in a way that would substantially enhance a servicemember's rights and likely invalidate the reason for discharge or characterization of service. ", "Statute requires a DRB to give liberal consideration to an application in which post-traumatic stress syndrome (PTSD), traumatic brain injury (TBI), or mental health conditions typically associated with combat operations may have been a factor in the discharge decision. The liberal consideration requirement equally applies to discharge reviews in which sexual assault or harassment caused PTSD, TBI, or mental health conditions that may have been a factor in the basis for the discharge decision. ", "Discussion: The enacted bill includes 6 out of 13 proposed provisions discussed above: three addressing the oversight and operations of a DRB and BCMR; two addressing PTSD, TBI, or other trauma mental health conditions; and one addressing separations for homosexual conduct.", "Oversight and Operations. Section 522 of the enacted bill reduces the number of required DRB members from five to three. If overall service review agency personnel requirements remain unchanged, reducing the number of DRB members and reallocating the previously required fourth and fifth members to new DRBs could presumably increase the number of DRBs available. Section 523 of the enacted bill creates a new entity, and capacity, for discharge review appeals and new reporting requirements for discharge review appeals data. The provision includes a Senate amendment that requires the Secretary of Defense to establish the appeals process based on certain parameters. Section 524 of the enacted bill amends 10 U.S.C. \u00c2\u00a71559 to extend previously authorized restrictions on reducing personnel levels at service review agencies until December 31, 2025. The provision also requires each Service Secretary to report to Congress his or her plan to reduce application backlogs and maintain personnel resources at a review agency.", "Post-Traumatic Stress Disorder (PTSD), Traumatic Brain Injury (TBI), or Other Trauma Mental Health Conditions. Section 521 of the enacted bill requires a DRB or BCMR to obtain a medical opinion from specified health care professionals on two types of cases. For cases based in whole or in part on PTSD or TBI related to combat, a BCMR or DRB is required to seek advice and counsel from a psychiatrist, psychologist, or social worker with training in PTSD, TBI, or other trauma treatment. For cases based in whole or in part on PTSD or TBI related to sexual trauma, intimate partner violence, or spousal abuse, a DRB or BCMR is required to seek advice and counsel from a psychiatrist, psychologist, or social worker with training PTSD, TBI, or other trauma treatment for these types of cases. Section 525 of the enacted bill amends statutorily mandated training for BCMR and DRB members to include curricula on sexual trauma, intimate partner violence, spousal abuse, and the various responses to these events.", "Separations for Homosexual Conduct. Section 527 of the enacted bill removes the presumption of administrative regularity that a previous discharge for homosexual conduct was correct and proper. Eliminating this presumption relieves the applicant of the burden to show by substantial evidence that a discharge was not correct or not proper. This provision allows a DRB to review and change, upon request and if found appropriate, the characterization of service for a servicemember originally discharged based on sexual orientation. If an application for review of a discharge based on sexual orientation is denied, the provision establishes a discretionary appeal process consistent with existing DRB procedures.", "References: CRS Report R43928, Veterans' Benefits: The Impact of Military Discharges on Basic Eligibility , by Sidath Viranga Panangala .", "CRS Point of Contact: Alan Ott. "], "subsections": []}, {"section_title": "*Defense Commissary System", "paragraphs": ["Background: Over the past several decades, Congress has been concerned with improving the Defense Commissary Agency (DeCA) system, mandating 12 reports or studies between 1989 and 2015 that considered the idea of consolidating the three military exchanges and the commissary agency. Recent reform proposals have sought to reduce DeCA's reliance on appropriated funds without compromising patrons' commissary benefits or reducing the revenue generated by DOD's military exchanges, which are nonappropriated fund (NAF) entities that fund morale, welfare, and recreation (MWR) facilities on military installations. However, 10 U.S.C. \u00c2\u00a72482 prohibits the Defense Department from undertaking consolidation without new legislation. Section 627 of the FY2019 NDAA ( P.L. 115-232 ) required the Secretary of Defense to conduct a study to determine the feasibility of consolidating commissaries and military exchange entities into a single defense resale system. ", "The study, The Department of Defense Report on the Development of a Single Defense Resale System , April 29, 2019, concluded that the benefits of consolidating DeCA and the military exchanges into one defense resale entity far outweighed the costs. This DOD study \"projected net savings of approximately $700M\u00e2\u0080\u0093$1.3B of combined appropriated and nonappropriated funding over a five-year span, and recurring annual savings between $400M-$700M thereafter.\" Opponents of consolidation maintain that DOD is moving forward without considering the risk that consolidation could cost more than anticipated and fail to result in projected savings in operational costs. This could result in higher prices for patrons and curtail support for MWR programs. In the FY2019 NDAA, Congress authorized $1.3 billion for DeCA to operate 236 commissary stores on military installations worldwide, employing a workforce of over 12,500 civilian full-time equivalents (FTE). ", "Discussion: Section 633 of the enacted bill adopts House Section 631. The enacted provision requires the Government Accountability Office (GAO) to review DOD's business case analysis (pricing, sales, measuring customer savings, timetable for consolidation, etc.) before merging the various resale entities into a single entity. Elements of the GAO report is to include data on the financial viability of a single defense resale entity and the ability of commissaries and exchanges to support MWR programs after consolidation. The enacted provision directs that GAO provide an interim report no later than March 1, 2020, and a final report no later than June 1, 2020. The Senate-passed bill had no similar provision.", "Section 632 of the House-passed bill would have required a report to Congress by the Defense Secretary regarding the management practices of military commissaries and exchanges no later than 180 days after enactment. This report would have included \"a cost-benefit analysis with the goals of reducing the costs of operating military commissaries and exchanges by $2,000,000,000 during fiscal years 2020 through 2024\" while not raising costs for patrons. The Senate-passed bill had no similar provision. Section 632 was not adopted in the enacted bill.", "Section 641 of the enacted bill adopts House Section 634. The enacted provision amends section 1065 of Title 10, U.S. Code, to extend MWR privileges to Foreign Service Officers on mandatory home leave by permitting the use of military lodging effective January 1, 2020. The Senate-passed bill had no similar provision.", "Section 631 of the enacted bill adopts Senate Section 641. The enacted provision requires the Under Secretary of Defense for Personnel and Readiness (USD[P&R]) to coordinate with the DOD Chief Management Officer to maintain oversight of the business transformation efforts. This provision also requires a DOD executive resale board to advise the USD(P&R) on the implementation of sustainable, complementary operations of the defense commissary system and the exchange stores system. The enacted provision also requires DOD to \"field new technologies and best business practices for information technology for the defense resale system\" and \"implement cutting-edge marketing and advertising opportunities.\" This provision also amends Section 2483(b) of Title 10, U.S. Code, to allow DOD to include advertising commissary sales on materials available within commissary stores and at other on-base locations in the operating expenses of defense commissaries.", "Section 642 of the Senate-passed bill would have amended section 2483(c) of Title 10, U.S. Code, to authorize fees collected by DeCA on services provided to secondary patron groups (like DOD contactors) to offset commissary operating costs. The enacted bill did not adopt this provision. ", "Section 632 of the enacted bill adopts Senate Section 643. The enacted provision requires commissary stores to procure locally sourced products such as dairy products, fruits, and vegetables as available while maintaining mandated patron savings. The House-passed bill had no similar provision.", "References: CRS Report R45343, FY2019 National Defense Authorization Act: Selected Military Personnel Issues , section on \"Defense Commissary System\" and similar reports from earlier years; and CRS In Focus IF11089, Defense Primer: Military Commissaries and Exchanges , by Kristy N. Kamarck and Barbara Salazar Torreon.", "CRS Point of Contact: Barbara Salazar Torreon."], "subsections": []}, {"section_title": "Diversity and Inclusion", "paragraphs": ["Background: Throughout the history of the Armed Forces, Congress has used its constitutional authority to establish criteria and standards for individuals to be recruited, advance through promotion, and be separated or retired from military service. DOD and Congress have established some of these criteria through policy and law based on demographic characteristics such as race, sex, and sexual orientation. In the past few decades there have been rapid changes to certain laws and policies regarding diversity, inclusion, and equal opportunity \u00e2\u0080\u0093 in particular authorizing women to serve in combat arms occupational specialties and the inclusion of lesbian, gay, bisexual, and transgender (LGBT) individuals. Some of these changes remain contentious and face continuing legal challenges. ", "Discussion: In the FY2009 NDAA ( P.L. 110-417 ), Congress authorized the creation of the Military Leadership Diversity Commission (MLDC). Following that effort, in 2012, DOD developed and issued a five-year Diversity and Inclusion Strategic Plan . In 2013, as part of the FY2013 NDAA ( P.L. 112-239 ), Congress required DOD to develop and implement a plan regarding diversity in military leadership. The House bill includes several provisions that would address diversity and inclusion, while the Senate bill has none. Section 526 of the House bill would require DOD to design and implement a five-year strategic plan that is consistent with the 2018 National Military Strategy beginning on January 1, 2020. Section 529 of the enacted bill adopts the House provision and requires DOD to implement the new strategic plan within one year of enactment. ", "Existing law requires DOD to conduct surveys on racial and gender issues. Section 594 of the House bill would require that workplace and equal opportunity, command climate, and workplace and gender relations (WGR) surveys ask respondents whether they have ever experienced supremacist activity, extremist activity, racism, or anti-Semitism.\u00c2\u00a0A modified provision was adopted in the enacted bill, which requires questions be included in appropriate surveys on whether respondents experienced, witnessed, or reported extremist activity. The enacted provision does not define extremist activity or specify the frequency for such survey questions. ", "DOD has recently initiated a number of shifts in policy with regard to individuals who identify as transgender. Current policy, which went into effect on April 12, 2019, disqualifies any individual from appointment, enlistment, or induction into the service if they have a history of cross-sex hormone therapy or sex reassignment or genital reconstruction surgery. The policy also disqualifies individuals with a history of gender dysphoria unless they were stable in their biological sex\u00c2\u00a0for 36 consecutive months prior to applying for admission into the Armed Forces. However, the policy allows for transgender persons to \"seek waivers or exceptions to these or any other standards, requirements, or policies on the same terms as any other person.\" Those individuals in the service who initially seek military medical care after the effective date of the policy may receive counseling for gender dysphoria and may be retained without a waiver if (1) a military medical provider has determined that gender transition\u00c2\u00a0is not medically necessary to protect the health of the individual; and (2) the member is willing and able to adhere to all applicable standards associated with his or her biological sex. Section 597 of the House bill would have required DOD to submit an annual report on the number of servicemembers who sought a waiver prior to accession or while in service on the basis of a transgender-related condition. Section 596 of the enacted bill adopts the House provision and includes clarifying language as to how data elements should be reported. It also requires DOD to protect personally identifiable and health information of members. This reporting requirement expires in 2023. In addition, the conference report accompanying the enacted bill states,", "In determining whether an applicant with a disqualifying diagnosis of gender dysphoria or history of gender transition treatment or surgery merits a waiver to permit his or her service in the military, the conferees encourage Service-designated waiver authorities to consider such a waiver under the same circumstances as they would for an applicant who is not transgender, but has been diagnosed with analogous conditions or received analogous treatments, presuming the individual meets all other standards for accession.", "Entry into the Armed Forces by enlistment or appointment (officers) requires applicants to meet certain physical, medical, mental, and moral standards. While some of these standards are specified in law (e.g., 10 U.S.C. \u00c2\u00a7504), DOD and the Services generally establish these standards through policy and regulation. The Services may require additional qualification standards for entry into certain military occupational specialties (e.g., pilots, special operations forces). By law, qualification standards for military career designators are required to be gender-neutral. Section 530B would require that service entry standards account only for the ability of an individual to meet gender-neutral occupational standards and could not include any criteria relating to the \"race, color, national origin, religion, or sex (including gender identity or sexual orientation) of an individual.\" This provision was not adopted. ", "Women were historically prohibited from serving in certain combat roles by law and policy until December 3, 2015, when the Secretary of Defense opened all combat roles to women who can meet gender-neutral standards. Entry level and occupational-specific training has been gender integrated across the military services, with the exception of Marine Corps basic training (boot camp). In 2019, the Marines graduated the first gender-integrated boot camp class at Marine Recruit Depot Parris Island in South Carolina. In a statement to Congress, Lieutenant General David Berger noted that there were no significant variations in the performance of gender-integrated units relative to gender-segregated units. Section 561 of the House bill would prohibit gender segregated Marine Corps recruit training at Marine Corps Recruit Depot Parris Island no later than five years after the date of enactment, and at Marine Corps Recruit Depot San Diego no later than eight years after the date of enactment. Section 565 of the enacted bill adopts this provision.", "In addition, section 1099I would require the Armed Forces components to share lessons learned and best practices on the progress of their gender integration implementation plans as recommended by the Defense Advisory Committee on Women in the Services (DACOWITS). Finally, section 1099J would require the military departments to examine successful strategies for recruitment and retention of women in foreign militaries, as recommended by DACOWITS. The final bill did not adopt either of these provisions (sections 1099I and 1099J).", "References: CRS Report R44321, Diversity, Inclusion, and Equal Opportunity in the Armed Services: Background and Issues for Congress , by Kristy N. Kamarck , and CRS Insight IN11086, Military Personnel and Extremism: Law, Policy, and Considerations for Congress , by Kristy N. Kamarck. CRS In Focus IF11147, Defense Primer: Active Duty Enlisted Recruiting , by Lawrence Kapp.", "CRS Point s of Contact : Kristy N. Kamarck."], "subsections": []}, {"section_title": "*Domestic Violence and Child Abuse", "paragraphs": ["Background : The Family Advocacy Program (FAP) is the congressionally-mandated program within DOD devoted to \"clinical assessment, supportive services, and treatment in response to domestic abuse and child abuse and neglect in military families.\" As required by law, the FAP provides an annual report to Congress on child abuse and neglect and domestic abuse in military families. Approximately half of military servicemembers are married and there are approximately 1.6 million dependent children across the active and reserve components. According to DOD statistics, in FY2018, the rate of reported child abuse or neglect in military homes was 13.9 per 1,000 children, an increase from the previous year's rate of 13.7 per 1,000 children. There were 26 child abuse-related fatalities, relative to 17 fatalities in FY2017. The rate of reported spousal abuse in FY2018 was 24.3 per 1,000 military couples, a decrease from the FY2017 rate of 24.5 per 1,000 couples \u00e2\u0080\u0093 with 13 spouse abuse fatalities recorded. Since FY2006, DOD has been collecting data on unmarried intimate partner abuse. In FY2018, there were 1,024 incidents of intimate partner abuse that met criteria involving 822 victims and 2 fatalities. ", "Discussion: A special victim counsel (SVC) is a judge advocate or civilian attorney who satisfies special training requirements and provides legal assistance to victims of sexual assault throughout the military justice process. Section 542 of the House bill and Section 541 of the Senate bill would expand SVC staffing and authorize SVC services for military-connected victims of domestic violence. The Administration has opposed this measure, stating that it would \"decrease access for sexual assault victims to Special Victims' Counsels (SVCs)/Victims' Legal Counsels (VLCs), exacerbate already high caseloads for SVC/VLCs, and impose an unfunded mandate.\" The enacted bill adopts the Senate provision with an amendment that would require counsel to receive specialized domestic violence legal training, serve for a minimum of two years, and be supported by sufficiently trained paralegals. DOD is required to provide a report on planned implementation no later than 120 days after enactment.", "Transitional compensation is a monetary benefit authorized under 10 U.S.C. \u00c2\u00a71059 for dependent family members of servicemembers or of former servicemembers who are separated from the military due to dependent-abuse offenses. One of the motivating arguments for establishing the transitional compensation benefit is that it provides a measure of financial security to spouses or former spouses. Eligible recipients receive monthly payments for no less than 12 months and no more than 36 months at the same rate as dependency and indemnity compensation (DIC). While in receipt of transitional compensation, dependents are also entitled to military commissary and exchange benefits, and may receive dental and medical care, including mental health services, through military facilities as TRICARE beneficiaries. Section 621 of the House bill and Section 601 of the Senate bill are similar provisions that would expand the authority of the Secretary concerned to grant exceptional transitional compensation in an expedited fashion. This would allow dependents who are victims of abuse to start receiving compensation while the offending servicemember is still on active duty and as early as the date that an administrative separation is initiated by a commander. In addition, the House Report directs DOD to provide a comprehensive review and assessment of the transitional compensation program. Section 621 of the enacted bill adopts this provision.", "When a servicemember has allegedly committed an act of domestic violence, a commander can issue a military protective order (MPO) to a servicemember that prohibits contact between the alleged offender and the domestic violence victim. A servicemember must obey an MPO at all times, whether inside or outside a military installation, or may be subject to court martial or other punitive measures. By law, a military installation commander is required to notify civilian authorities when an MPO is issued, changed, and terminated with respect to individuals who live outside of the installation. House Section 543 would amend 10 U.S.C. \u00c2\u00a71567a to require notification of civilian authorities no later than seven days after issuing an order, regardless of whether the member resides on the installation. The provision would also require commanders to notify the receiving command in the case of a transfer of an individual who has been issued an MPO. DOD would also be required to track and report the number of orders reported to civilian authorities annually. Section 543 of the enacted bill adopts the House provision and requires annual reports through 2025.", "While MPOs are typically not enforceable by civilian authorities, a civil protection order (CPO), by law, has full force and effect on military installations. House Section 544 and Senate Section 556 would require DOD to establish policies and procedures for registering CPOs with military installation authorities. Section 550A of the enacted bill adopts this provision.", "House Section 550F would codify an existing DOD policy to report to the National Instant Criminal Background Check System (NICS) servicemembers who are prohibited from purchasing firearms due to a domestic violence conviction in a military court. This section would also require DOD to study the feasibility of creating a database of military protective orders issued in response to domestic violence and the feasibility for reporting such MPOs to NICS. Section 550E of the enacted bill adopts the House provision, but removes the section that would amend the National Instant Criminal Background Check System Improvement Amendments Act of 2007 (34 U.S.C. \u00c2\u00a740911(b)) with respect to DOD reporting. It also expands the matters to be explored in the feasibility report.", "References: For information on Special Victims' Counsel and Military Protective Orders, see CRS Report R44944, Military Sexual Assault: A Framework for Congressional Oversight , by Kristy N. Kamarck and Barbara Salazar Torreon.", "CRS Point of Contact : Kristy N. Kamarck and Alan Ott."], "subsections": []}, {"section_title": "*Medal of Honor", "paragraphs": ["Background: The Medal of Honor (MoH) is the highest award for valor \"above and beyond the call of duty\" that may be bestowed on a U.S. servicemember. In recent years, the MoH review process has been criticized by some as being lengthy and bureaucratic, which may have led to some records being lost and conclusions drawn based on competing eyewitness and forensic evidence. Reluctance on the part of reviewing officials to award the MoH retroactively or to upgrade other awards is generally based on concern for maintaining the integrity of the award and the awards process. This reluctance has led many observers to believe that the system of awarding the MoH is overly restrictive and that certain individuals are denied earned medals. As a result, DOD periodically reviews inquiries by Members of Congress and reevaluates its historical records. Systematic reviews began in the 1990s for World War II records when African-American units remained segregated and whose valorous unit and individuals' actions, along with others, may have been overlooked. That effort resulted in more than 100 soldiers receiving the MoH, the majority of which were posthumously awarded. On January 6, 2016, DOD announced the results of its year-long review of military awards and decorations. This included review of the timeliness of the MoH process and review by all the military departments of the Distinguished Service Cross, Navy Cross, Air Force Cross, and Silver Star Medal recommendations since September 11, 2001, for actions in Iraq and Afghanistan. Subsequently, the MoH was awarded to the first living recipient from the Iraq War, Army Staff Sgt. David Bellavia, on June 25, 2019.", "Discussion: Section 583 of the House-passed bill would require DOD to review the service records of certain servicemembers who fought in World War I (WWI) to determine whether they should be posthumously awarded the MoH. Specifically, the provision would require record reviews of certain African-American, Asian-American, Hispanic-American, Jewish-American, and Native-American veterans who were recommended for the MoH or who were the recipients of the Distinguished Service Cross, Navy Cross, or French Croix de Guerre with Palm. Four soldiers, one Hispanic-American (Private David Barkley Cantu) and three Jewish-American veterans (First Sergeant Sydney Gumpertz, First Sergeant Benjamin Kaufman, and Sergeant William Sawelson), were awarded Medals of Honor at the conclusion of WWI. ", "In 1991, President George H.W. Bush awarded the MoH posthumously to Corporal Freddie Stowers, who became the first African-American recipient from WWI after the Army's review of his military records. Later, the FY2015 NDAA ( P.L. 113-291 ) authorized posthumous award of the MoH to Private Henry Johnson, an African-American veteran, and Sgt. William Shemin, a Jewish-American veteran, for valor during WWI. Proponents of the Pentagon review in Section 583 point to similar reviews for minority groups who served in other conflicts from World War II to the present. Some were later awarded the MoH, the majority of which were posthumously awarded. According to the Congressional Budget Office (CBO), \"a remote possibility exists\" that one of the veterans honored under Section 583 could have a surviving widow who could potentially receive expanded health benefits or increased survivor benefits. Section 584 of the enacted bill adopts this section. If a Secretary concerned determines, based upon the review under that the award of the MoH to a certain World War I veteran is warranted, such Secretary shall submit to the President a recommendation that the President award the MoH to that veteran. This review shall terminate not later than five years after the date of the enactment of this Act.", "Section 584 of the House-passed bill would have waived the time limitation and authorize the posthumous award of the MoH to Army Sergeant First Class (SFC) Alwyn Cashe for acts of valor in Samarra, Iraq, during Operation Iraqi Freedom. SFC Cashe led recovery efforts and refused medical treatment until his men were evacuated to safety after an improvised explosive device struck their vehicle and caught fire. Cashe's actions saved the lives of six of his soldiers. He later succumbed to his wounds. This provision was not adopted in the enacted bill.", "Section 1099L of the House-passed bill would have allowed the nation to honor the last surviving MoH recipient of WWII by permitting the individual to lie in honor in the Capitol rotunda upon death. This provision was not adopted in the enacted bill.", "Section 585 of the Senate-passed bill would have waived the time limitation in section 7274 of title 10, United States Code, and authorize the award of the MoH to Army Major John J. Duffy for acts of valor in Vietnam on April 14 and 15, 1972, for which he was previously awarded the Distinguished Service Cross. Section 583 in the enacted bill adopts this section waiving the time limitation so that the President may award the Medal of Honor under section 7271 of title 10 U.S. Code to John J. Duffy for the acts of valor in Vietnam.", "References: Previously discussed in the \"Medal of Honor\" section of CRS Report R44577, FY2017 National Defense Authorization Act: Selected Military Personnel Issues , by Kristy N. Kamarck et al. and similar reports from earlier years; CRS Report 95-519, Medal of Honor: History and Issues , by Barbara Salazar Torreon; and the Congressional Budget Office, Cost Estimates for H.R. 2500 , National Defense Authorization Act for Fiscal Year 2020, June 19, 2019.", "CRS Point of Contact: Barbara Salazar Torreon."], "subsections": []}, {"section_title": "Military Family Issues", "paragraphs": ["Background: Approximately 2.1 million members of the Armed Forces across the active and reserve components have an additional 2.7 million \"dependent\" family members (spouses and/or children). Slightly over 40% of servicemembers have children and approximately 50% are married. The military provides a number of quality of life programs and services for military families as part of a servicemember's total compensation and benefit package. These include family life, career, and financial counseling, childcare services and support, and other MWR activities. The general motivation for providing these benefits is to improve the recruitment, retention, and readiness of military servicemembers. ", "Discussion: Spouse Employment and Education. Section 1784 of Title 10, U.S. Code , requires the President to order such measures as necessary to increase employment opportunities for military spouses. Active duty servicemembers conduct frequent moves to military installations across the globe. For working spouses, this sometimes requires them to establish employment in a new state that has different occupational licensing requirements than their previous state. The FY2018 NDAA ( P.L. 115-91 \u00c2\u00a7556) authorized the reimbursement of certain relicensing costs up to $500 for military spouses following a permanent change of station from one state to another with an end date of December 31, 2022. Section 628 of the House bill would have raised the maximum reimbursement to $1,000 and would require the Secretary of Defense to perform an analysis of whether that amount is sufficient to cover average costs. Section 576 of the Senate bill would not have raised the maximum reimbursement amount; however, it would extend the authority to December 31, 2024. Section 577 of the enacted bill adopts the House provision and extends the authorization for this benefit to December 31, 2024. ", "Both bills also had similar provisions (House Section 524 and Senate Section 577) that sought to improve interstate license portability through DOD funding support for the development of interstate compacts. Both bills would have capped funding support for each compact at $1 million, while the Senate bill would have capped the total program funding at $4 million. Section 575 of the enacted bill adopts the House provision with an amendment that would require the Secretary of Defense to enter into a cooperative agreement with the Council of State Governments to assist with the funding and development.", "DOD's My Career Advancement Account Scholarship Program (MyCAA), launched in 2007, currently provides eligible military spouses up to $4,000 in financial assistance to pursue a license, certification, or associate's degree in a portable career field. Eligible spouses are those married to military servicemembers on active duty in pay grades E-1 to E-5, W-1 to W-2 and O-1 to O-2. During the pilot phase of the program, the benefit was offered to all spouses and funds were also available for a broader range of degrees and certifications, including bachelor's and advanced degrees. However, due to concerns about rising costs and enrollment requests, DOD has since reduced the maximum benefit amount (from $6,000 to $4000), limited eligibility to spouses of junior servicemembers, and restricted the types of degrees and career fields that were eligible for funding.", "Section 623 of the House bill would have allowed continued eligibility for spouses when the member is promoted above those pay grades after the spouse has begun a course of instruction. Section 580B of the House bill would have expanded the qualifying degrees and certifications to include non-portable career fields and occupations. Finally, Section 580C would have expanded the eligible population to all enlisted spouses and would also have provided eligibility for Coast Guard spouses to participate in the DOD program. The enacted bill adopts all three of these House provisions, expanding eligibility for more military spouses and a broader range of certifications.", "Parents and Children. DOD operates the largest employer-sponsored childcare program in the United States, serving approximately 200,000 children of uniformed servicemembers and DOD civilians, and employing over 23,000 childcare workers. DOD offers subsidized programs on and off military installations for children from birth through 12 years, including care on a full-day, part-day, short-term, or intermittent basis. Title 10 U.S.C. \u00c2\u00a71798 authorizes fee assistance for civilian childcare services. Section 625 of the House bill would have specifically authorized fee assistance for survivors of members of the Armed Forces who die \"in line of duty while on active duty, active duty for training, or inactive duty for training.'' DOD policy currently authorizes childcare for \"surviving spouses of military members who died from a combat related incident.\" Section 624 of the enacted bill amends the House provision to only authorize fee assistance for survivors of those who die \"in combat-related incidents in the line of duty.\" ", "Section 629 of the House bill and Section 578 of the Senate bill would have expanded and attempted to clarify hiring authorities for military childcare workers. The House provision would also have required an assessment and report from DOD on the adequacy of the maximum fee assistance subsidy, the accessibility of childcare and spouse employment websites, and the capacity needs of installation-based childcare facilities. Finally, the same section sought to improve portability of background checks for childcare workers. It is common for military spouses to be employed as childcare workers, and frequent moves may require them to reapply and resubmit background check material at a new facility. Section 580 of the enacted bill adopts the House provision and includes language clarifying the direct hire authority for DOD childcare development centers to include family childcare coordinator services and school age childcare coordinator services.", "References: CRS Report R45288, Military Child Development Program: Background and Issues , by Kristy N. Kamarck. ", "CRS Points of Contact: Kristy N. Kamarck."], "subsections": []}, {"section_title": "Military Medical Malpractice", "paragraphs": ["Background: DOD employs physicians and other medical personnel to deliver health care services to servicemembers in military treatment facilities (MTFs). Occasionally, however, patient safety events do occur and providers commit medical malpractice by rendering health care in a negligent fashion, resulting in the servicemember's injury or death. In the civilian health care market, a victim of medical malpractice may potentially obtain recourse by pursuing litigation against the negligent provider and/or his employer. A servicemember injured as a result of malpractice committed by an MTF health care provider, however, may encounter significant obstacles if attempting to sue the United States. ", "In general, the Federal Tort Claims Act (FTCA) permits private parties to pursue certain tort claims (e.g., medical malpractice) against the United States. However, in 1950, the U.S. Supreme Court in the case of Feres v. United States recognized an implicit exception to the FTCA\u00e2\u0080\u0093that the federal government is immunized from liability \"for injuries to servicemen where the injuries arise out of or are in the course of activity incident to service.\" This exception to tort liability is known as the Feres doctrine. Many lower federal courts have concluded that Feres generally prohibits military servicemembers from asserting malpractice claims against the United States based on the negligent actions of health care providers employed by the military.", "Over the past decade, Congress has held multiple hearings to assess whether to modify the Feres doctrine to allow servicemembers to pursue medical malpractice litigation against the United States. Congress has also considered several proposals to amend the FTCA to allow these tort claims.", "Discussion: The enacted bill does not abrogate the Feres doctrine, nor does it amend the FTCA to provide servicemembers the ability to litigate certain medical malpractice claims against the United States. Instead, enacted provisions focus on establishing an administrative claims process to compensate injured servicemembers and on conducting oversight of the Defense Department's clinical quality assurance program. ", "Section 731 of the enacted bill authorizes the Secretary of Defense to \"allow, settle, and pay a claim against the United States for personal injury or death incident to the service of a member of the uniformed services that was caused by the medical malpractice of the Department of Defense health care provider.\" Under the provision, the Defense Secretary may establish an administrative claims process for servicemembers who have been injured or died as a result of medical malpractice committed by an MTF provider. ", "Only an injured servicemember, or an authorized representative of a deceased or incapacitated servicemember, may file a claim within two years after a malpractice incident (three years if filed in calendar year 2020). For a substantiated claim, DOD may issue financial compensation, up to $100,000. If referred by the Defense Secretary, the Secretary of the Treasury may issue additional compensation in excess of $100,000. Within 180 days after enactment, the Defense Secretary is required to brief the House and Senate armed services committees on the status of developing and implementing the regulations for this authority. ", "Typically, DOD conducts prospective, ongoing, and retrospective monitoring and assessment of its health care services through its Medical Quality Assurance (MQA) programs and clinical quality management activities. The Defense Health Agency and the Service medical departments administer these programs and activities, which are intended to \"ensure quality in healthcare throughout the MHS.\" Section 747 of the enacted bill directs GAO to assess the effectiveness of DOD's quality assurance program, including the use and monitoring of the National Practitioner Data Bank when hiring, retaining, and documenting adverse actions taken against DOD health care providers. GAO is to report their findings to the House and Senate armed services committees no later than January 1, 2021.", "References: CRS In Focus IF11102, Military Medical Malpractice and the Feres Doctrine , by Bryce H. P. Mendez and Kevin M. Lewis; and CRS Legal Sidebar LSB10305, The Feres Doctrine: Congress, the Courts, and Military Servicemember Lawsuits Against the United States , by Kevin M. Lewis. ", "CRS Point of Contact: Bryce H.P. Mendez."], "subsections": []}, {"section_title": "*Military Pay Raise", "paragraphs": ["Background: Congress has a long-standing congressional interest in military pay raises, as they relate to the overall cost of military personnel and to recruitment and retention of high-quality personnel to serve in the all-volunteer military. Section 1009 of Title 37, U.S. Code, codifies the formula for an automatic annual increase in basic pay that is indexed to the annual increase in the Employment Cost Index (ECI). The statutory formula stipulates that the increase in basic pay for 2020 will be 3.1% unless either (1) Congress passes a law to provide otherwise; or (2) the President specifies an alternative pay adjustment under subsection (e) of 37 U.S.C. \u00c2\u00a71009. Increases in basic pay are typically effective at the start of the calendar year, rather than the fiscal year.", "The FY2020 President's Budget requested a 3.1% military pay raise, equal to the statutory formula.", "Discussion: The House bill would have included two provisions that would address the military pay raise. Section 606 would have directed a 3.1% increase in basic pay. Section 607 would have directed that the statutory formula of 37 U.S.C. \u00c2\u00a71009 go into effect, also resulting in a 3.1% increase in basic pay, even if the President were to specify an alternate adjustment. The Senate bill did not contain a provision specifying an increase in basic pay; it would have left the 3.1% automatic adjustment provided by 37 U.S.C. \u00c2\u00a71009 in place. Section 609 of P.L. 116-92 specified a 3.1% increase in basic pay.", "References: For an explanation of the pay raise process and historical increases, see CRS In Focus IF10260, Defense Primer: Military Pay Raise , by Lawrence Kapp. Previously discussed in CRS Report R45343, FY2019 National Defense Authorization Act: Selected Military Personnel Issues , by Bryce H. P. Mendez et al. and similar reports from earlier years.", "CRS Point of Contact: Lawrence Kapp."], "subsections": []}, {"section_title": "Military Retirement and Survivor Benefits", "paragraphs": ["Background: The military retirement system is a funded, noncontributory system that provides a monthly annuity after 20 qualifying years of service, or upon qualifying for a disability retirement. As of January 1, 2018, those joining the military and those who opted into the Blended Retirement System also receive a defined contribution from the federal government into the Thrift Savings Plan (TSP). Military retirees and their dependents are also eligible for other DOD benefits, including commissary and exchange shopping privileges, medical benefits, and space-available travel on military aircraft. Surviving spouses and other eligible beneficiaries may be eligible to receive a portion of the servicemember's retired pay after the member's death in retirement (if enrolled) or while on active duty (automatic eligibility). This benefit is called the Survivor Benefit Plan (SBP). In addition, military retirees and their dependents may be eligible for benefits from the VA, including Dependency and Indemnity Compensation (DIC), a monthly payment to beneficiaries whose spouse's death was related to a service-connected injury or condition.", "Discussion: Military retirees are paid from the Military Retirement Fund (MRF). Under the accrual accounting system, the DOD budget for each fiscal year includes a contribution to the MRF as a percentage of basic pay in the amount needed to cover future retirement costs. This percentage\u00e2\u0080\u0093called the normal cost percentage (NCP) \u00e2\u0080\u0093is determined by an independent, presidentially appointed, DOD Retirement Board of Actuaries. Estimated future retirement costs are modeled based on the past rates at which active duty military personnel stayed in the service until retirement and on assumptions regarding the overall U.S. economy, including interest rates, inflation rates, and military pay levels. ", "Currently, the DOD Actuary calculates separate NCPs for the active and reserve components; however, by law the Actuary applies a single NCP across all of the military services. The conference report ( H.Rept. 115-404 ) accompanying FY2018 NDAA ( P.L. 115-91 ) contained a provision asking the GAO to evaluate whether the current method used to calculate DOD retirement contributions reflects estimated service retirement costs, and what effects, if any may result from calculating a separate NCP for each of the Services. The GAO's December 2018 report found that, due to differing continuation rates among the Services, \"the mandated single, aggregate contribution rate does not reflect service specific retirement costs.\" In particular, the analysis found that the probability of reaching 20 years of service was more than 3 times higher for the Air Force than the Marine Corps. ", "Section 631 of the Senate bill would have changed how military retirement contributions are calculated, by requiring separate NCPs for each of the Services and components. Some analysts who have studied the issue have argued that this change would improve resource allocation efficiency, manpower decision-making, and accuracy in budget estimates at the service level. On the other hand, the GAO report notes that military service officials stated that their \"workforce decision making processes would not change.\" Section 655 of the enacted bill does not change the funding process, but requires the Secretary of Defense to deliver an implementation plan to the House and Senate armed services committees by April 1, 2020. DOD's plan would assume that the change in funding process would commence in FY2025. ", "Following the death of a servicemember, certain beneficiaries may be eligible for survivor benefits from both DOD (SBP) and the VA (DIC). However, by law, surviving spouses who receive both annuities must have their SBP payments reduced by the amount of DIC they receive. This offset has sometimes been referred to as a\u00c2\u00a0 widows' tax . The FY2018 NDAA ( P.L. 115-91 ) permanently authorized a payment called the called the Special Survivor Indemnity Allowance (SSIA) to such surviving spouses, to offset that reduction. The SSIA payment is adjusted annually to account for cost-of-living increases. In the past, to avoid the offset, some survivors have used the authority under 10 U.S.C. \u00c2\u00a71448(d)(2) to transfer the SBP benefit to dependent children. Section 630A of the House bill would have repealed the offset as well as the authority to provide the annuity to dependent children. Surviving spouses who had transferred the benefit would not have been able to have their eligibility for the benefit restored. Retroactive payments would not be authorized under this provision. SBP is also paid from the MRF. CBO estimates that the repeal would increase federal spending by $5.7 billion over a period of 10 years. Approximately 65,000 surviving beneficiaries are eligible to receive both SBP and DIC. Section 622 of the enacted bill phases out the requirement for an SBP-DIC offset over a period of three years, and repeals the optional SBP annuity for dependent children.", "References: CRS Report RL34751, Military Retirement: Background and Recent Developments , by Kristy N. Kamarck . CRS Report R45325, Military Survivor Benefit Plan: Background and Issues for Congress , by Kristy N. Kamarck and Barbara Salazar Torreon , CRS Insight IN11112, The Kiddie Tax and Military Survivors' Benefits , by Sean Lowry and Kristy N. Kamarck , CRS Report R40757, Veterans' Benefits: Dependency and Indemnity Compensation (DIC) for Survivors , by Scott D. Szymendera. CRS Legal Sidebar LSB10316, FY2020 NDAA Analysis: Elimination of Benefits Offset for Surviving Spouses and Related Legal Issues , by Mainon A. Schwartz.", "CRS Point of Contact : Kristy N. Kamarck."], "subsections": []}, {"section_title": "*Military Sexual Assault and Sexual Harassment", "paragraphs": ["Background: Over the past decade, the issues of sexual assault and sexual harassment in the military have generated sustained congressional and media attention. Congress has required additional study, data collection, and reporting to determine the scope of the issue, expand protections and support services for victims, make substantial changes to the military justice system, and take other actions to enhance sexual assault prevention and response. Sexual assault and related sex offenses are crimes under the Uniform Code of Military Justice (UCMJ) and are prosecutable by court-martial. DOD's Sexual Assault Prevention and Response Office (SAPRO) oversees sexual assault policy and produces an annual report on sexual assault estimated prevalence rates and actual reporting. In FY2018, estimated sexual assault prevalence rates across DOD's active duty population were 6.2% for women and 0.7% for men. These estimated prevalence rates were higher for active duty women than the FY2016 of 4.3% while the rate for men remained close to the FY2016 rate of 0.6%.", "Discussion: The following discussion is split into four topic areas:", "Reporting and Accountability; Prevention and Response; Victim Services and Support; and Military Justice and Investigations.", "In March 2019, following a Senate Armed Services Committee hearing, the Acting Secretary of Defense established the Sexual Assault Accountability and Investigation Task Force (SAAITF). This task force made several recommendations for legislative action, some of which are reflected in sections of the House and Senate bills.", "Reporting and Accountability . Several provisions in the House and Senate bills would have offered support to congressional oversight. In the FY2015 NDAA, Congress called for the establishment of a 20-member Defense Advisory Committee on Investigation, Prosecution, and Defense of Sexual Assault in the Armed Forces (DAC-IPAD). The committee was established in 2016 and has since produced several studies. Section 548 of the House bill and Section 533 of the Senate bill would have extended the term of the DAC-IPAD for an additional five years. The House provision would have also expanded the scope of the committee's research to include exploring the feasibility of incorporating restorative justice models into the UCMJ. Section 535 of the enacted bill adopts the Senate provision and expands the scope of research as proposed in the House bill.", "Section 535 of the Senate bill would have required the committee to review and assess the relationship between race and ethnicity and the investigation, prosecution, and defense of sexual assault. In May 2019, the GAO reported that \"Blacks, Hispanics, and male servicemembers were more likely than Whites and female servicemembers to be the subjects of recorded investigations in all of the military services, and were more likely to be tried in general and special courts-martial.\" GAO also reported that differences in how the Services record information on race and ethnicity make it difficult to identify disparities. Section 540A of the House bill would have required DOD to conduct a review of racial, ethnic, and gender disparities across the entire military justice system (see also the \" Diversity and Inclusion \" section of this report). Section 540I of the enacted bill adopts the House provision and requires the DAC-IPAD to conduct the review for each fiscal year in which the committee assesses completed court-martial cases.", "Both bills (House Section 549 and Senate Section 534) would have required the Secretary of Defense to establish a 20-member \"Defense Advisory Committee for the Prevention of Sexual Misconduct\" with expertise in areas such as organizational culture, suicide prevention, implementation science, and the continuum of harm. This provision was adopted in the enacted bill. Section 540M of the enacted bill adopts a Senate provision requiring a GAO report on Armed Forces implementation of statutory requirements for sexual assault for FY2004\u00e2\u0080\u0093FY2019.", "Prevention and Response. Section 521 of the Senate bill would have required the Secretary of Defense and Secretaries of the military departments to promulgate policies \"to reinvigorate the prevention of sexual assault involving members of the Armed Forces.\" Elements of the required policy would include, (1) education and training on the prevention of sexual assault; (2) promoting healthy relationships; (3) empowering and enhancing the role of noncommissioned officers in the prevention of sexual assault (4) fostering social courage to promote interventions to prevent sexual assault; (5) addressing behaviors across the continuum of harm; (6) countering alcohol abuse, including binge drinking; and (7) other matters as the Secretary of Defense deems appropriate. The enacted bill adopts this provision.", "Senate Section 530 and House Section 550O would have ensured that Catch a Serial Offender (CATCH) Program information is not subject to Freedom of Information Act (FOIA) requests. According to SAPRO, \"CATCH allows sexual assault victims (Service members and adult dependents) to discover if the suspect in their restricted report may have also assaulted another person (a \"match\" in the CATCH website), and, having that knowledge, decide whether to convert their restricted report to unrestricted to initiate an investigation of the serial offender suspect.\" A sexual assault victim may submit a confidential restricted report and receive counseling and other services without notifying his or her commander or military investigative authorities. The report may later be converted to an unrestricted report , which does initiate an investigation. Section 530 would ensure that restricted reports to, or by the CATCH program, would not affect the report's status as restricted and thus would maintain victim confidentiality. Section 530 of the enacted bill adopts the Senate provision.", "Victim Services and Support . Both bills included provisions that would have expanded or enhanced the Special Victim Counsel (SVC) program. An SVC is a judge advocate or civilian attorney who meets special training requirements and provides legal assistance to victims of sexual assault throughout the military justice process. Based on victim surveys, there is substantial confidence and satisfaction with SVC services and support. Sections 541 and 542 of the Senate bill would expand SVC services to include cases of retaliation and would authorize services for military-affiliated victims of domestic violence when resources are available. House Section 542 would also expand SVC services to victims of domestic violence, establish minimum staffing levels, and require the creation of SVC paralegal positions. Sections 541 and 548 of the enacted bill adopt the Senate provisions and includes an amendment requiring specialized training in domestic violence for specified legal counsel and a report to Congress on resources needed to carry out the program. ", "Both House and Senate bills would have also ensured that an SVC would be made available to a requesting victim within a certain amount of time\u00e2\u0080\u009348 hours in the House bill (Section 550A), and 72 hours in the Senate version (Section 543). Section 542 of the enacted bill adopts the Senate provision for a 72-hour window. Finally, similar provisions in both bills (House Section 550C and Senate Section 544) would have required SVC training on state-specific criminal justice matters. Section 550C of the enacted bill adopts the House provision and adds \"protective orders\" to the list of topics for training.", "Another aspect of victim protection and support that appeared in both bills is the requirement for development of a safe to report policy (House Section 550 and Senate Sections 527 and 528). This policy, which has been implemented in some form at the military service academies, is intended to remove disincentives for alleged victims to report sexual assault incidents by protecting cadets and midshipmen from punishment for minor collateral misconduct violations that might be uncovered during an investigation. In response to the House provision, the Administration stated that such a policy \"would provide blanket immunity [to the alleged victim] and might have the effect of undermining the validity of a victim's allegations. Specifically, under this provision, victims might be subjected to allegations that the report was made merely to escape disciplinary or punitive action.\" It is not clear from existing data how prevalent it is for misconduct investigations to lead to sexual assault allegations or vice versa. However, survey data suggests that collateral misconduct may reduce reporting of sexual assault. According to active duty survey data for 2018, 34% of women and 26% of men who experienced a sexual assault did not report the assault because they \"thought they might get in trouble for something they had done or would get labeled a troublemaker.\" The final bill did not adopt the safe to report provision.", "Section 558 of the House bill would have required the Secretary of Defense to draft regulations on the consideration of a transfer of a military service academy student who is the victim of a sexual assault or related offense to another service academy. Section 555 of the enacted bill adopts the House provision and includes an amendment expanding options available to include enrollment in a Senior Reserve Officer Training Corps (SROTC) program. Regular active duty members who are victims of sexual assault have the ability to request a permanent change of station, or a change of unit or duty assignment at the same installation; however, there are generally no regulations that provide for transfer to another service (e.g., from the Navy to the Army). Service academy cadets and midshipmen may be offered the opportunity to change units (i.e., companies or squadrons) within the same academy; however, cross-service transfers are rare. The military service academies all have similar entry requirements based on physical, mental and moral standards; however, there are certain curriculum and military education requirements that are specific to the individual academies for each academic year and summer training period. As such, considerations for transfer may include the ability of the individual to qualify under another academy's standards and complete all requirements for commissioning within the four-year program, or the necessity of waivers for certain requirements . ", "Finally, Section 550P in the House bill and Section 531 in the Senate bill would have addressed continued confidentiality of restricted reports if a sexual assault allegation is inadvertently disclosed to a third party who would normally be a mandatory reporter (e.g., commanding officers, supervisors, and law enforcement). Mandatory reporters are individuals who, when they receive information that a sexual assault has occurred, must report that information to military criminal investigative services. The enacted bill adopts the Senate provision.", "Military Justice and Investigations . Several provisions in the House and Senate bills sought to make changes to how disposition decisions are made in sex-related cases for military service academies and the total force. Section 538 of the House bill would have established a four-year pilot program at the military service academies, This pilot would have required the Secretary of Defense to establish an Office of the Chief Prosecutor, at the grade of O-7 or above, for the independent review and disposition of certain sex-related ( special victim ) offenses. Those who argue for taking decision-making outside of the chain of command contend that independent prosecutors are better equipped to make disposition decisions and that such an endeavor could improve victim confidence in the investigative and judicial process. For the 2017\u00e2\u0080\u00932018 academic program year at the service academies, there were 67 unrestricted reports alleging sexual assault by or against cadets, midshipmen, or prep school students, and 55 investigations initiated during the APY. The Administration opposed this pilot program contending that it would, \"outsource authority for discipline,\" and \"undermines commander accountability and the chain of command relationship.\" The provision was not adopted.", "Since 2012, DOD policy has required that all unrestricted reports of adult sexual assault offenses be reviewed by a special court-martial convening authority (SPCMCA) for the initial disposition decision. Section 522 of the Senate bill would codify the requirement that only a SPCMCA in the grade of O-6 or above may have disposition authority for certain sex-related offenses. In addition, it would require that only a SPCMCA or higher in the victim's chain of command may make disposition decisions with regard to any collateral misconduct by the victim. This provision was not adopted. ", "House Section 540 and Senate Section 523 were similar provisions that would require training for those responsible for the disposition of sexual assault cases on the exercise of such authority. Section 540C of the House bill and Section 525 of the Senate bill would have required uniform training for commanders on their role in each stage of the military justice system with regard to sexual assault cases. The enacted bill adopted these provisions.", "Section 539 of the House bill would have required that commanders take timely disposition action on nonprosecutable sex-related offenses, following a determination that there is insufficient evidence to support prosecution for a sex-related offense in a general or special court-martial. Under this provision, a commanding officer would receive the investigative materials within seven days of the nonprosecutable determination and would be required to take other judicial, nonjudicial, or administrative action on the case within 90 days. The Administration objects to this provision on the basis that it could be inconsistent with statutory requirements for higher-level review of certain non-referral dispositions and that the 90-day deadline could potentially immunize misconduct if command action is not taken within that timeframe. Section 540C of the enacted bill adopts the House provision with an amendment requiring a policy to ensure the timely disposition of alleged sex-related offenses that a court-martial convening authority has declined to refer for trial by a general or special court-martial, due to a determination that there is insufficient evidence to support prosecution.", "Several provisions in the bills also addressed victim consultation and notifications during investigative and judicial processes. Section 550B of the House bill and Section 526 of the Senate bill were identical provisions that would have require commanders to notify victims on a monthly basis on any final determinations (i.e., administrative, nonjudicial punishment, or no further action) made with respect to a case that is not referred to court-martial. The enacted bill adopted this provision. ", "The FY2015 NDAA ( P.L. 113-291 \u00c2\u00a7524) required that DOD officials ask victims about their preference regarding the prosecution venue\u00e2\u0080\u0093whether they prefer prosecution by court-martial or in a civilian court of jurisdiction. A March 2019 report by the DOD Inspector General found that in approximately 27% of the cases reviewed, victims were denied the opportunity to state their preference. In the remaining cases there was insufficient documentation to ascertain whether the victims were consulted as required by law. Sections 534 and 547 of the House bill and Section 524 of the Senate bill included provisions that would have required documentation of the consultation with the victim on the prosecution venue. Section 538 of the enacted bill adopts House provision 534 and requires implementation no later than 180 days after enactment.", "An April 2019 report by DOD's SAAITF recommended making sexual harassment a criminal offense for uniformed personnel by adding a specific punitive article to the UCMJ, to \"make a strong military-wide statement about the seriousness of these behaviors and the military's zero tolerance policy for them.\" Section 529 of the Senate bill would have require DOD to submit a report within 180 days of enactment on recommended legislative and administrative actions required to establish a separate punitive article for sexual harassment in the UCMJ. Section 540E of the enacted bill adopts the Senate provision.", "References: See also CRS Report R44944, Military Sexual Assault: A Framework for Congressional Oversight , by Kristy N. Kamarck and Barbara Salazar Torreon, Previously discussed in CRS Report R45343, FY2019 National Defense Authorization Act: Selected Military Personnel Issues , by Bryce H. P. Mendez et al. and similar reports from earlier years.", "CRS Point of Contact : Kristy N. Kamarck and Alan Ott."], "subsections": []}, {"section_title": "Screening and Testing for Environmental and Occupational Exposures", "paragraphs": ["Background: In general, DOD policies require the protection of military and civilian personnel from accidental death, injury, or occupational illness. DOD's occupational and environmental health programs typically require military and civilian personnel to receive occupation- or mission-specific exposure or injury prevention education, operational risk management training, personal protective equipment, exposure assessments, and medical prophylactics or treatment, if necessary. ", "DOD policies also require exposure assessments and screenings for certain hazardous substances or potentially harmful environments, such as lead, hexavalent chromium, cadmium, open air burn pits, radiation, blast pressure injuries, and noise. DOD primarily documents exposures in the Defense Occupational and Environmental Health Readiness System (DOEHRS), an electronic \"information management system for longitudinal exposure recordkeeping and reporting.\" DOD epidemiologists, public health practitioners, and occupational safety experts use DOEHRS data to conduct medical surveillance, inform future prevention measures, and develop improved personnel protective equipment. DOD medical personnel can use DOEHRS data when evaluating, diagnosing, or treating patients exposed to a hazardous substance or environment. In addition to DOEHRS, DOD can also document certain exposures in legacy electronic health record systems, paper medical records, or the individual longitudinal exposure record (ILER). The VA also utilizes DOD's exposure data when considering presumptive service connection for a veteran's claim for disability compensation, or providing ongoing medical care. ", "While DOD's occupational and environmental health programs screen, document, and track servicemember or civilian employee exposure to certain substances, all potentially hazardous substances are not covered under these programs. ", "Discussion: The enacted bill include provisions that address DOD's requirements and processes for documenting and conducting medical surveillance on certain at-risk individuals or those exposed to certain hazards. ", "General Exposure Documentation and Tracking. Section 705 of the enacted bill amends 10 U.S.C. \u00c2\u00a71074f to include additional requirements for DOD to \"record any exposure to occupational and environmental health risks\" during the course of a servicemembers' deployment and make such information available to other DOD health care providers conducting post-deployment medical examinations or reassessments. The bill also requires DOD health care providers to: (1) use standardized questions when assessing for deployment-related exposures, (2) include detailed diagnosis codes in a servicemember's medical record, and (3) have access to information contained in the Airborne and Open Burn Pit Registry (i.e., Burn Pit Registry).", "Lead Exposure. Section 703 of the enacted bill adopts Senate Section 703, which requires DOD to offer lead level screening and testing to potentially exposed children. DOD is to implement this requirement by establishing clinical practice guidelines that take into account recommendations published by the U.S. Centers for Disease Control and Prevention (CDC) on lead level screening and testing in children. The provision directs the sharing of test results with the child's parent or guardian. Test results with \"abnormal\" or \"elevated\" blood lead levels are to be disclosed to the local health department, or the CDC and an \"appropriate authority\" of the host nation, if residing overseas. DOD is required to report to Congress, by January 1, 2021, the number of children screened, found to have elevated blood lead levels, and provided treatment for lead poisoning. The provision also tasks GAO to report to Congress on the effectiveness of DOD's lead screening, testing, and treatment program for children. ", "Not adopted was House Section 710, which would have authorized $5 million in the Defense Health Program account to fund lead level screening and testing for children through an offset reduction to the Army procurement account for Wheeled and Tracked Combat Vehicles.", "Burn Pit & Airborne Hazards Exposure. Section 704 of the enacted bill directs DOD to assess servicemembers for exposure to open burn pits or other toxic airborne hazards. The provision requires exposure assessments during the annual periodic health assessment, separation history and physical examination, and deployment health assessments. DOD is also required to enroll exposed servicemembers in the Burn Pit Registry and share its assessment findings with the VA.", "PFAS Exposure. Section 707 of the enacted bill directs DOD to assess its firefighters, during their annual physical examination, for exposure to PFAS. The assessment requirement is to take effect on October 1, 2020.", "Blast Pressure Exposure. Section 717 of the enacted bill adopts House Section 716. The provision directs DOD to document in a servicemember's medical record, information on blast pressure exposure that results in a \"concussive event or injury that requires a military acute concussive evaluation.\" Section 742 of the enacted bill modifies the requirement for a longitudinal medical study on blast pressure exposure in servicemembers, as directed by Section 734 of the FY2018 NDAA ( P.L. 115-91 ). The modification requires DOD to assess the feasibility of uploading its blast pressure exposure data into DOEHRS or other tracking systems, as well as data interoperability with MHS Genesis.", "References: CRS Report R45986, Federal Role in Responding to Potential Risks of Per- and Polyfluoroalkyl Substances (PFAS) , coordinated by David M. Bearden, and CRS Report RS21688, Lead-Based Paint Poisoning Prevention: Summary of Federal Mandates and Financial Assistance for Reducing Hazards in Housing , by Jerry H. Yen.", "CRS Point of Contact: Bryce H.P. Mendez."], "subsections": []}]}}
{"id": "R46270", "title": "Global Economic Effects of COVID-19", "released_date": "2020-05-15T00:00:00", "summary": ["Since the COVID-19 outbreak was first diagnosed, it has spread to over 190 countries and all U.S. states. The pandemic is having a noticeable impact on global economic growth. Estimates so far indicate the virus could trim global economic growth by as much as 2.0% per month if current conditions persist and raise the risks of a global economic recession similar in magnitude to that experienced during the Great Depression of the 1930s. Global trade could also fall by 13% to 32%, depending on the depth and extent of the global economic downturn. The full impact will not be known until the effects of the pandemic peak. This report provides an overview of the global economic costs to date and the response by governments and international institutions to address these effects."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Overview", "paragraphs": ["The World Health Organization (WHO) first declared COVID-19 a world health emergency in January 2020. Since the virus was first diagnosed in Wuhan, China, it has been detected in over 190 countries and all U.S. states. In early March, the focal point of infections shifted from China to Europe, especially Italy, but by April 2020, the focus shifted to the United States, where the number of infections was accelerating. The infection has sickened more than 4.5 million people, about one-third in the United States, with thousands of fatalities. More than 80 countries have closed their borders to arrivals from countries with infections, ordered businesses to close, instructed their populations to self-quarantine, and closed schools to an estimated 1.5 billion children. ", "Over the eight-week period from mid-March to mid-May 2020, more than 36.5 million Americans filed for unemployment insurance. On May 8, 2020, the Bureau of Labor Statistics (BLS) reported that 20 million Americans lost their jobs in April 2020, pushing the total number of unemployed Americans to 23 million, out of a total civilian labor force of 156 million. The increase pushed the national unemployment rate to 14.7%, the highest since the Great Depression of the 1930s. Preliminary data also indicate that U.S. GDP fell by 4.8% in the first quarter of 2020, the largest quarterly decline in GDP since the fourth quarter of 2008 during the global financial crisis. ", "In Europe, over 30 million people in Germany, France, the UK, Spain, and Italy have applied for state support of their wages, while first quarter 2020 data indicate that the Eurozone economy contracted by 3.8% at an annual rate, the largest quarterly decline since the series started in 1995. The European Commission released its economic forecast on May 6, 2020, which projects that EU economic growth in 2020 will contract by 7.4% and only partially recover in 2021. Foreign investors have pulled an estimated $26 billion out of developing Asian economies and more than $16 billion out of India, increasing concerns of a major economic recession in Asia. Some estimates indicate that 29 million people in Latin America could fall into poverty, reversing a decade of efforts to narrow income inequality. ", "The pandemic crisis is challenging governments to implement monetary and fiscal policies that support credit markets and sustain economic activity, while they are implementing policies to develop vaccines and safeguard their citizens. In doing so, however, differences in policy approaches are straining relations between countries that promote nationalism and those that argue for a coordinated international response. Differences in policies are also straining relations between developed and developing economies and between northern and southern members of the Eurozone, challenging alliances, and raising questions about the future of global leadership.", "After a delayed response, central banks and monetary authorities are engaging in an ongoing series of interventions in financial markets and national governments are announcing fiscal policy initiatives to stimulate their economies. International organizations are also taking steps to provide loans and other financial assistance to countries in need. These and other actions have been labeled \"unprecedented,\" a term that has been used frequently to describe the pandemic and the policy responses. ", "As one measure of the global fiscal and monetary responses, the International Monetary Fund (IMF) estimated that government spending and revenue measures to sustain economic activity adopted through mid-April 2020 amounted to $3.3 trillion and that loans, equity injections and guarantees totaled an additional $4.5 trillion. The IMF also estimates that the increase in borrowing by governments globally will rise from 3.7% of global gross domestic product (GDP) in 2019 to 9.9% in 2020, as indicated in Figure 1 . Among developed economies, the fiscal balance to GDP ratio is projected to rise from 3.0% in 2019 to 10.7% in 2020; the ratio for the United States is projected to rise from 5.8% to 15.7%. According to the IMF, France, Germany, Italy, Japan, and the United Kingdom have each announced public sector support measures totaling more than 10% of their annual GDP. For developing economies, the fiscal balance to GDP ratio is projected to rise from 4.8% to 9.1%, significantly increasing their debt burden and raising prospects of defaults or debt rescheduling. According to some estimates, the most fiscally vulnerable countries are: Argentina, Venezuela, Lebanon, Jordan, Iran, Zambia, Zimbabwe, and South Africa.", "Among central banks, the Federal Reserve has taken extraordinary steps not experienced since the 2008-2009 global financial crisis to address the growing economic effects of COVID-19. The U.S. Congress also has approved historic fiscal spending packages. In other countries, central banks have lowered interest rates and reserve requirements, announced new financing facilities, relaxed capital buffers and, in some cases, countercyclical capital buffers, adopted after the 2008-2009 financial crisis, potentially freeing up an estimated $5 trillion in funds. Capital buffers were raised after the financial crisis to assist banks in absorbing losses and staying solvent during financial crises. In some cases, governments have directed banks to freeze dividend payments and halt pay bonuses. ", "On March 11, the WHO announced that the outbreak was officially a pandemic, the highest level of health emergency. A growing list of economic indicators makes it clear that the outbreak is negatively affecting global economic growth on a scale that has not been experienced since at least the global financial crisis of 2008-2009. Global trade and GDP are forecast to decline sharply at least through the first half of 2020. The global pandemic is affecting a broad swath of international economic and trade activities, from services generally to tourism and hospitality, medical supplies and other global value chains, consumer electronics, and financial markets to energy, transportation, food, and a range of social activities, to name a few. The health and economic crises could have a particularly negative impact on the economies of developing countries that are constrained by limited financial resources and where health systems could quickly become overloaded. ", "Without a clear understanding of when the global health and economic effects may peak and a greater understanding of the impact on economies, forecasts must necessarily be considered preliminary. Similarly, estimates of when any recovery might begin and the speed of the recovery are speculative. Efforts to reduce social interaction to contain the spread of the virus are disrupting the daily lives of most Americans and adding to the economic costs. Increasing rates of unemployment are raising the prospects of wide-spread social unrest and demonstrations in developed economies where lost incomes and health insurance are threatening living standards and in developing economies where populations reportedly are growing concerned over access to basic necessities and the prospects of rising levels of poverty. U.N. Secretary General Antonio Guterres argued in a video conference before the U.N. Security Council on April 10, 2020, that the ", "pandemic also poses a significant threat to the maintenance of international peace and security\u00e2\u0080\u0094potentially leading to an increase in social unrest and violence that would greatly undermine our ability to fight the disease."], "subsections": []}, {"section_title": "Economic Forecasts", "paragraphs": [], "subsections": [{"section_title": "Global Growth", "paragraphs": ["The economic situation remains highly fluid. Uncertainty about the length and depth of the health crisis-related economic effects are fueling perceptions of risk and volatility in financial markets and corporate decision-making. In addition, uncertainties concerning the global pandemic and the effectiveness of public policies intended to curtail its spread are adding to market volatility. In a growing number of cases, corporations are postponing investment decisions, laying off workers who previously had been furloughed, and in some cases filing for bankruptcy. Compounding the economic situation is a historic drop in the price of crude oil that reflects the global decline in economic activity and prospects for disinflation, while also contributing to the decline of the global economy through various channels. On April 29, 2020, Federal Reserve Chairman Jay Powell stated that the Federal Reserve would use its \"full range of tools\" to support economic activity as the U.S. economic growth rate dropped 4.8% at an annual rate in the first quarter of 2020. In assessing the state of the U.S. economy, the Federal Open Market Committee released a statement indicating that, \"The ongoing public health crisis will weigh heavily on economic activity, employment, and inflation in the near term, and poses considerable risks to the economic outlook over the medium term.\"", "The Organization for Economic Cooperation and Development (OECD) on March 2, 2020, lowered its forecast of global economic growth by 0.5% for 2020 from 2.9% to 2.4%, based on the assumption that the economic effects of the virus would peak in the first quarter of 2020 (see Table 1 ). However, the OECD estimated that if the economic effects of the virus did not peak in the first quarter, which is now apparent that it did not, global economic growth would increase by 1.5% in 2020. That forecast now seems to have been highly optimistic. ", "On March 23, 2020, OECD Secretary General Angel Gurria stated that", "The sheer magnitude of the current shock introduces an unprecedented complexity to economic forecasting. The OECD Interim Economic Outlook, released on March 2, 2020, made a first attempt to take stock of the likely impact of COVID-19 on global growth, but it now looks like we have already moved well beyond even the more severe scenario envisaged then\u00e2\u0080\u00a6. [T]he pandemic has also set in motion a major economic crisis that will burden our societies for years to come.", "On March 26, 2020, the OECD revised its global economic forecast based on the mounting effects of the pandemic and measures governments have adopted to contain the spread of the virus. According to the updated estimate, the current containment measures could reduce global GDP by 2.0% per month, or an annualized rate of 24%, approaching the level of economic contraction not experienced since the Great Depression of the 1930s. The OECD estimates in Table 1 will be revised when the OECD releases updated country-specific data.", "Labeling the projected decline in global economic activity as the \"Great Lockdown,\" the IMF released an updated forecast on April 14, 2020. The IMF concluded that the global economy would experience its \"worst recession since the Great Depression, surpassing that seen during the global financial crisis a decade ago.\" In addition, the IMF estimated that the global economy could decline by 3.0% in 2020, before growing by 5.8% in 2021; global trade is projected to fall in 2020 by 11.0% and oil prices are projected to fall by 42%, also shown in Table 1 . This forecast assumes that the pandemic fades in the second half of 2020 and that the containment measures can be reversed quickly. The IMF also stated that many countries are facing a multi-layered crisis that includes a health crisis, a domestic economic crisis, falling external demand, capital outflows, and a collapse in commodity prices. In combination, these various effects are interacting in ways that make forecasting difficult. ", "Advanced economies as a group are forecast to experience an economic contraction in 2020 of 7.8% of GDP, with the U.S. economy projected by the IMF to decline by 5.9%, about twice the rate of decline experienced in 2009 during the financial crisis, as indicated in Figure 2 . The rate of economic growth in the Euro area is projected to decline by 7.5% of GDP. Most developing and emerging economies are projected to experience a decline in the rate of economic growth of 2.0%, reflecting tightening global financial conditions and falling global trade and commodity prices. In contrast, China, India, and Indonesia are projected to experience small, but positive rates of economic growth in 2020. The IMF also argues that recovery of the global economy could be weaker than projected as a result of: lingering uncertainty about possible contagion, lack of confidence, and permanent closure of businesses and shifts in the behavior of firms and households.", "As a result of the various challenges, the IMF qualified its forecast by arguing that", "A partial recovery is projected for 2021, with above trend growth rates, but the level of GDP will remain below the pre-virus trend, with considerable uncertainty about the strength of the rebound. Much worse growth outcomes are possible and maybe even likely. This would follow if the pandemic and containment measures last longer, emerging and developing economies are even more severely hit, tight financial conditions persist, or if widespread scarring effects emerge due to firm closures and extended unemployment.", "Before the COVID-19 outbreak, the global economy was struggling to regain a broad-based recovery as a result of the lingering impact of growing trade protectionism, trade disputes among major trading partners, falling commodity and energy prices, and economic uncertainties in Europe over the impact of the UK withdrawal from the European Union. Individually, each of these issues presented a solvable challenge for the global economy. Collectively, however, the issues weakened the global economy and reduced the available policy flexibility of many national leaders, especially among the leading developed economies. In this environment, COVID-19 could have an outsized impact. While the level of economic effects will eventually become clearer, the response to the pandemic could have a significant and enduring impact on the way businesses organize their work forces, global supply chains, and how governments respond to a global health crisis. ", "The OECD estimates that increased direct and indirect economic costs through global supply chains, reduced demand for goods and services, and declines in tourism and business travel mean that, \"the adverse consequences of these developments for other countries (non-OECD) are significant.\" Global trade, measured by trade volumes, slowed in the last quarter of 2019 and had been expected to decline further in 2020, as a result of weaker global economic activity associated with the pandemic, which is negatively affecting economic activity in various sectors, including airlines, hospitality, ports, and the shipping industry. ", "According to the OECD's updated forecast", "The greatest impact of the containment restrictions will be on retail and wholesale trade, and in professional and real estate services, although there are notable differences between countries. Business closures could reduce economic output in advanced and major emerging economies by 15% or more; other emerging economies could experience a decline in output of 25%. Countries dependent on tourism could be affected more severely, while countries with large agricultural and mining sectors could experience less severe effects. Economic effects likely will vary across countries reflecting differences in the timing and degree of containment measures. ", "In addition, the OECD argues that China's emergence as a global economic actor marks a significant departure from previous global health episodes. China's growth, in combination with globalization and the interconnected nature of economies through capital flows, supply chains, and foreign investment, magnify the cost of containing the spread of the virus through quarantines and restrictions on labor mobility and travel. China's global economic role and globalization mean that trade is playing a role in spreading the economic effects of COVID-19. More broadly, the economic effects of the pandemic are being spread through three trade channels: (1) directly through supply chains as reduced economic activity is spread from intermediate goods producers to finished goods producers; (2) as a result of a drop overall in economic activity, which reduces demand for goods in general, including imports; and (3) through reduced trade with commodity exporters that supply producers, which, in turn, reduces their imports and negatively affects trade and economic activity of exporters."], "subsections": []}, {"section_title": "Global Trade", "paragraphs": ["According to an April 8, 2020, forecast by the World Trade Organization (WTO), global trade volumes are projected to decline between 13% and 32% in 2020 as a result of the economic impact of COVID-19, as indicated in Table 2 . The WTO argues that the wide range in the forecast represents the high degree of uncertainty concerning the length and economic impact of the pandemic and that the actual economic outcome could be outside this range, either higher or lower. The WTO's more optimistic scenario assumes that trade volumes recover quickly in the second half of 2020 to their pre-pandemic trend, or that the global economy experiences a V-shaped recovery. The more pessimistic scenario assumes a partial recovery that lasts into 2021, or that global economic activity experiences more of a U-shaped recovery. The WTO concludes, however, that the impact on global trade volumes could exceed the drop in global trade during the height of the 2008-2009 financial crisis. ", "The estimates indicate that all geographic regions will experience a double-digit drop in trade volumes, except for \"other regions,\" which consists of Africa, the Middle East, and the Commonwealth of Independent States. North America and Asia could experience the steepest declines in export volumes. The forecast also projects that sectors with extensive value chains, such as automobile products and electronics, could experience the steepest declines. Although services are not included in the WTO forecast, this segment of the economy could experience the largest disruption as a consequence of restrictions on travel and transport and the closure of retail and hospitality establishments. Such services as information technology, however, are growing to satisfy the demand of employees who are working from home."], "subsections": []}]}, {"section_title": "Economic Policy Challenges", "paragraphs": ["The challenge for policymakers has been one of implementing targeted policies that address what had been expected to be short-term problems without creating distortions in economies that can outlast the impact of the virus itself. Policymakers, however, are being overwhelmed by the quickly changing nature of the global health crisis that appears to be turning into a global trade and economic crisis whose effects on the global economy are escalating. As the economic effects of the pandemic grow, policymakers are giving more weight to policies that address the immediate economic effects at the expense of longer-term considerations such as debt accumulation. Initially, many policymakers had felt constrained in their ability to respond to the crisis as a result of limited flexibility for monetary and fiscal support within conventional standards, given the broad-based synchronized slowdown in global economic growth, especially in manufacturing and trade that had developed prior to the viral outbreak. The pandemic is also affecting global politics as world leaders are cancelling international meetings, competing for medical supplies, and some nations reportedly are stoking conspiracy theories that shift blame to other countries.", "Initially, the economic effects of the virus were expected to be short-term supply issues as factory output fell because workers were quarantined to reduce the spread of the virus through social interaction. The drop in economic activity, initially in China, has had international repercussions as firms experienced delays in supplies of intermediate and finished goods through supply chains. Concerns are growing, however, that virus-related supply shocks are creating more prolonged and wide-ranging demand shocks as reduced activity by consumers and businesses leads to a lower rate of economic growth. As demand shocks unfold, businesses experience reduced activity and profits and potentially escalating and binding credit and liquidity constraints. While manufacturing firms are experiencing supply chain shocks, reduced consumer activity through social distancing is affecting the services sector of the economy, which accounts for two-thirds of annual U.S. economic output. In this environment, manufacturing and service firms have tended to hoard cash, which affects market liquidity. In response, central banks have lowered interest rates where possible and expanded lending facilities to provide liquidity to financial markets and to firms potentially facing insolvency.", "The longer the economic effects persist, the greater the economic impacts are likely to be as the effects are spread through trade and financial linkages to an ever-broadening group of countries, firms and households. These growing economic effects potentially increase liquidity constraints and credit market tightening in global financial markets as firms hoard cash, with negative fallout effects on economic growth. At the same time, financial markets are factoring in an increase in government bond issuance in the United States, Europe, and elsewhere as government debt levels are set to rise to meet spending obligations during an expected economic recession and increased fiscal spending to fight the effects of COVID-19. Unlike the 2008-2009 financial crisis, reduced demand by consumers, labor market issues, and a reduced level of activity among businesses, rather than risky trading by global banks, has led to corporate credit issues and potential insolvency. These market dynamics have led some observers to question if these events mark the beginning of a full-scale global financial crisis.", "Liquidity and credit market issues present policymakers with a different set of challenges than addressing supply-side constraints. As a result, the focus of government policy has expanded from a health crisis to macroeconomic and financial market issues that are being addressed through a combination of monetary, fiscal, and other policies, including border closures, quarantines, and restrictions on social interactions. Essentially, while businesses are attempting to address worker and output issues at the firm level, national leaders are attempting to implement fiscal policies to prevent economic growth from falling sharply by assisting workers and businesses that are facing financial strains, and central bankers are adjusting monetary policies to address mounting credit market issues. ", "In the initial stages of the health crisis, households did not experience the same kind of wealth losses they saw during the 2008-2009 financial crisis when the value of their primary residence dropped sharply. However, with unemployment numbers rising rapidly, job losses could result in defaults on mortgages and delinquencies on rent payments, unless financial institutions provide loan forbearance or there is a mechanism to provide financial assistance. In turn, mortgage defaults could negatively affect the market for mortgage-backed securities, the availability of funds for mortgages, and negatively affect the overall rate of economic growth. Losses in the value of most equity markets in the U.S., Asia, and Europe could also affect household wealth, especially that of retirees living on a fixed income and others who own equities. Investors that trade in mortgage-backed securities reportedly have been reducing their holdings while the Federal Reserve has been attempting to support the market. In the current environment, even traditional policy tools, such as monetary accommodation, apparently have not been processed by markets in a traditional manner, with equity market indices displaying heightened, rather than lower, levels of uncertainty following the Federal Reserve's cut in interest rates. Such volatility is adding to uncertainties about what governments can do to address weaknesses in the global economy. "], "subsections": []}, {"section_title": "Economic Developments", "paragraphs": ["Between late February and early May, 2020, financial markets from the United States to Asia and Europe have been whipsawed as investors have grown concerned that COVID-19 would create a global economic and financial crisis with few metrics to indicate how prolonged and extensive the economic effects may be. Investors have searched for safe-haven investments, such as the benchmark U.S. Treasury 10-year security, which experienced a historic drop in yield to below 1% on March 3, 2020. In response to concerns that the global economy was in a freefall, the Federal Reserve lowered key interest rates on March 3, 2020, to shore up economic activity, while the Bank of Japan engaged in asset purchases to provide short-term liquidity to Japanese banks; Japan's government indicated it would also assist workers with wage subsidies. The Bank of Canada also lowered its key interest rate. The International Monetary Fund (IMF) announced that it was making about $50 billion available through emergency financing facilities for low-income and emerging market countries and through funds available in its Catastrophe Containment and Relief Trust (CCRT).", "Reflecting investors' uncertainties, the Dow Jones Industrial Average (DJIA) lost about one-third of its value between February 14, 2020, and March 23, 2020, as indicated in Figure 3 . Expectations that the U.S. Congress would adopt a $2.0 trillion spending package moved the DJIA up by more than 11% on March 24, 2020. From March 23 to April 15, the DJIA moved higher by18%, paring its initial losses by half. Since then, the DJIA has moved erratically as investors have weighed news about the human cost and economic impact of the pandemic and the prospects of various medical treatments. For some policymakers, the drop in equity prices has raised concerns that foreign investors might attempt to exploit the situation by increasing their purchases of firms in sectors considered important to national security. For instance, Ursula von der Leyen, president of the European Commission, urged EU members to better screen foreign investments, especially in areas such as health, medical research, and critical infrastructure.", "Similar to the 2008-2009 global financial crisis, central banks have implemented a series of monetary operations to provide liquidity to their economies. These actions, however, initially were not viewed entirely positively by all financial market participants who questioned the use of policy tools by central banks that are similar to those employed during the 2008-2009 financial crisis, despite the fact that the current and previous crisis are fundamentally different in origin. During the previous financial crisis, central banks intervened to restart credit and spending by banks that had engaged in risky assets. In the current environment, central banks are attempting to address financial market volatility and prevent large-scale corporate insolvencies that reflect the underlying economic uncertainty caused by the pandemic. ", "Similar to conditions during the 2008-2009 financial crisis, the dollar has emerged as the preferred currency by investors, reinforcing its role as the dominant global reserve currency. As indicated in Figure 4 , the dollar appreciated more than 3.0% during the period between March 3 and March 13, 2020, reflecting increased international demand for the dollar and dollar-denominated assets. Since the highs reached on March 23, the dollar has given up some of its value against other currencies, but has remained about 10% higher than it was at the beginning of the year. According to a recent survey by the Bank for International Settlements (BIS), the dollar accounts for 88% of global foreign exchange market turnover and is key in funding an array of financial transactions, including serving as an invoicing currency to facilitate international trade. It also accounts for two-thirds of central bank foreign exchange holdings, half of non-U.S. banks foreign currency deposits, and two-thirds of non-U.S. corporate borrowings from banks and the corporate bond market. As a result, disruptions in the smooth functioning of the global dollar market can have wide-ranging repercussions on international trade and financial transactions. ", "The international role of the dollar also increases pressure on the Federal Reserve essentially to assume the lead role as the global lender of last resort. Reminiscent of the financial crisis, the global economy has experienced a period of dollar shortage, requiring the Federal Reserve to take numerous steps to ensure the supply of dollars to the U.S. and global economies, including activating existing currency swap arrangements, establishing such arrangements with additional central banks, and creating new financial facilities to provide liquidity to central banks and monetary authorities. Typically, banks lend long-term and borrow short-term and can only borrow from their home central bank. In turn, central banks can only provide liquidity in their own currency. Consequently, a bank can become illiquid in a panic, meaning it cannot borrow in private markets to meet short-term cash flow needs. Swap lines are designed to allow foreign central banks the funds necessary to provide needed liquidity to their country's banks in dollars. "], "subsections": [{"section_title": "March 2020", "paragraphs": ["The yield on U.S. Treasury securities dropped to historic levels on March 6, 2020, and March 9, 2020, as investors continued to move out of stocks and into Treasury securities and other sovereign bonds, including UK and German bonds, due in part to concerns over the impact the pandemic would have on economic growth and expectations the Federal Reserve and other central banks would lower short-term interest rates. On March 5, the U.S. Congress passed a $8 billion spending bill to provide assistance for health care, sick leave, small business loans, and international assistance. At the same time, commodity prices dropped sharply as a result of reduced economic activity and disagreements among oil producers over production cuts in crude oil and lower global demand for commodities, including crude oil. ", "The drop in some commodity prices raised concerns about corporate profits and led some investors to sell equities and buy sovereign bonds. In overnight trading in various sessions between March 8, and March 24, U.S. stock market indexes moved sharply (both higher and lower), triggering automatic circuit breakers designed to halt trading if the indexes rise or fall by more than 5% when markets are closed and 7% when markets are open. By early April, the global mining industry had reduced production by an estimated 20% in response to falling demand and labor quarantines and as a strategy for raising prices. ", "Ahead of a March 12, 2020, scheduled meeting of the European Central Bank (ECB), the German central bank (Deutsche Bundesbank) announced a package of measures to provide liquidity support to German businesses and financial support for public infrastructure projects. At the same time, the Fed announced that it was expanding its repo market transactions (in the repurchase market, investors borrow cash for short periods in exchange for high-quality collateral like Treasury securities) after stock market indexes fell sharply, government bond yields fell to record lows (reflecting increased demand), and demand for corporate bonds fell. Together these developments raised concerns for some analysts that instability in stock markets could threaten global financial conditions. ", "On March 11, as the WHO designated COVID-19 a pandemic, governments and central banks adopted additional monetary and fiscal policies to address the growing economic impact. European Central Bank (ECB) President-designate Christine Lagarde in a conference call to EU leaders warned that without coordinated action, Europe could face a recession similar to the 2008-2009 financial crisis. The Bank of England lowered its key interest rate, reduced capital buffers for UK banks, and provided a funding program for small and medium businesses. The UK Chancellor of the Exchequer also proposed a budget that would appropriate \u00c2\u00a330 billion (about $35 billion) for fiscal stimulus spending, including funds for sick pay for workers, guarantees for loans to small businesses, and cuts in business taxes. The European Commission announced a \u00e2\u0082\u00ac25 billion (about $28 billion) investment fund to assist EU countries and the Federal Reserve announced that it would expand its repo market purchases to provide larger and longer-term funding to provide added liquidity to financial markets. ", "President Trump imposed restrictions on travel from Europe to the United States on March 12, 2020, surprising European leaders and adding to financial market volatility. At its March 12 meeting, the ECB announced \u00e2\u0082\u00ac27 billion (about $30 billion) in stimulus funding, combining measures to expand low-cost loans to Eurozone banks and small and medium-sized businesses and implement an asset purchase program to provide liquidity to firms. Germany indicated that it would provide tax breaks for businesses and \"unlimited\" loans to affected businesses. The ECB's Largarde roiled markets by stating that it was not the ECB's job to \"close the spread\" between Italian and German government bond yields (a key risk indicator for Italy), a comment reportedly interpreted as an indicator the ECB was preparing to abandon its support for Italy, a notion that was denied by the ECB. The Fed also announced that it would further increase its lending in the repo market and its purchases of Treasury securities to provide liquidity. As a result of tight market conditions for corporate bonds, firms turned to their revolving lines of credit with banks to build up their cash reserves. The price of bank shares fell, reflecting sales by investors who reportedly had grown concerned that banks would experience a rise in loan defaults. Despite the various actions, the DJIA fell by nearly 10% on March 12, recording the worst one-day drop since 1987. Between February 14 and March 12, the DJIA fell by more than 8,000 points, or 28% of its value. Credit rating agencies began reassessing corporate credit risk, including the risk of firms that had been considered stable. ", "On March 13, President Trump declared a national emergency, potentially releasing $50 billion in disaster relief funds to state and local governments. The announcement moved financial markets sharply higher, with the DJIA rising 10%. Financial markets also reportedly moved higher on expectations the Fed would lower interest rates. House Democrats and President Trump agreed to a $2 trillion spending package to provide paid sick leave, unemployment insurance, food stamps, support for small businesses, and other measures. The EU indicated that it would relax budget rules that restrict deficit spending by EU members. In other actions, the People's Bank of China cut its reserve requirements for Chinese banks, potentially easing borrowing costs for firms and adding $79 billion in funds to stimulate the Chinese economy; Norway's central bank reduced its key interest rate; the Bank of Japan acquired billions of dollars of government securities (thereby increasing liquidity); and the Reserve Bank of Australia injected nearly $6 billion into its financial system. The Bank of Canada also lowered its overnight bank lending rate.", "The Federal Reserve lowered its key interest rate to near zero on March 15, 2020, arguing that the pandemic had \"harmed communities and disrupted economic activity in many countries, including the United States\" and that it was prepared to use its \"full range of tools.\" It also announced an additional $700 billion in asset purchases, including Treasury securities and mortgage-backed securities, expanded repurchase operations, activated dollar swap lines with Canada, Japan, Europe, the UK, and Switzerland, opened its discount window to commercial banks to ease household and business lending, and urged banks to use their capital and liquidity buffers to support lending. ", "Despite the Fed's actions the previous day to lower interest rates, interest rates in the U.S. commercial paper market, where corporations raise cash by selling short-term debt, rose on March 16, 2020, to their highest levels since the 2008-2009 financial crisis, prompting investors to call on the Federal Reserve to intervene. The DJIA dropped nearly 3,000 points, or about 13%. Most automobile manufacturers announced major declines in sales and production; similarly, most airlines reported they faced major cutbacks in flights and employee layoffs due to diminished economic activity. Economic data from China indicated the economy would slow markedly in the first quarter of 2020, potentially greater than that experienced during the global financial crisis. The Bank of Japan announced that it would double its purchases of exchange traded funds and the G-7 countries issued a joint statement promising \"a strongly coordinated international approach,\" although no specific actions were mentioned. The IMF issued a statement indicating its support for additional fiscal and monetary actions by governments and that the IMF \"stands ready to mobilize its $1 trillion lending capacity to help its membership.\" The World Bank also promised an additional $14 billion to assist governments and companies address the pandemic.", "Following the drop in equity market indexes the previous day, the Federal Reserve unveiled a number of facilities on March 17, 2020, in some cases reviving actions it had not taken since the financial crisis. It announced that it would allow the 24 primary dealers in Treasury securities to borrow cash collateralized against some stocks, municipal debt, and higher-rated corporate bonds; revive a facility to buy commercial paper; and provide additional funding for the overnight repo market. The UK government proposed government-backed loans to support business; a three-month moratorium on mortgage payments for homeowners; a new lending facility with the Bank of England to provide low-cost commercial paper to support lending; and loans for businesses.", "In an emergency session on March 18, the ECB announced a temporary, non-standard asset purchase program, the Pandemic Emergency Purchase Program (PEPP), to acquire an additional \u00e2\u0082\u00ac750 billion (over $820 billion) in public and private sector bonds to counter the risks posed by the pandemic crisis (as of May 5, the ECB had purchased about $180 billion in securities). The ECB also broadened the types of assets it would accept as collateral to include non-financial commercial paper, eased collateral standards for banks, and waived restrictions on acquiring Greek government debt. The program was expected to end no later than yearend 2020.", "The Federal Reserve broadened its central bank dollar swap lines to include Brazil, Mexico, Australia, Denmark, Norway, and Sweden. Automobile manufacturers announced they were suspending production at an estimated 100 plants across North America, following similar plant closures in Europe. Major U.S. banks announced a moratorium on share repurchases, or stock buy-backs, denying equity markets a major source of support and potentially amplifying market volatility. During the week, more than 22 central banks in emerging economies, including Brazil, Turkey, and Vietnam, lowered their key interest rates.", "By March 19, 2020, investors were selling sovereign and other bonds as firms and other financial institutions attempted to increase their cash holdings, although actions central banks took during the week appeared to calm financial markets. Compared to previous financial market dislocations in which stock market values declined while bond prices rose, stock and bond values fell at the same time in March 2020 as investors reportedly adopted a \"sell everything\" mentality to build up cash reserves. Senate Republicans introduced the Coronavirus Aid, Relief, and Economic Security Act to provide $2 trillion in spending to support the U.S. economy.", "By the close of trading on March 20, the DJIA index had fallen by 17% from March 13. At the same time, the dollar continued to gain in value against other major currencies and the price of Brent crude oil dropped close to $20 per barrel on March 20, as indicated in Figure 5 . The Federal Reserve announced that it would expand a facility to support the municipal bond market. Britain's Finance Minister announced an \"unprecedented\" fiscal package to pay up to 80% of an employee's wages and deferring value added taxes by businesses. The ECB's Largarde justified actions by the Bank during the week to provide liquidity by arguing that the \"coronavirus pandemic is a public health emergency unprecedented in recent history.\" Market indexes fell again on March 23 as the Senate debated the parameters of a new spending bill to support the economy. Oil prices also continued to fall as oil producers appeared to be in a standoff over cuts to production.", "Financial markets continued to fall on March 23, 2020, as market indexes reached their lowest point since the start of the pandemic crisis. The Federal Reserve announced a number of new facilities to provide an unlimited expansion in bond buying programs. The measures included additional purchases of Treasury and mortgage-backed securities; additional funding for employers, consumers, and businesses; establishing the Primary Market Corporate Credit Facility (PMCCF) to support issuing new bonds and loans and the Secondary Market Corporate Credit Facility (SMCCF) to provide liquidity for outstanding corporate bonds; establishing the Term Asset-Backed Securities Loan Facility (TALF), to support credit to consumers and businesses; expanding the Money Market Mutual Fund Liquidity Facility (MMLF) to provide credit to municipalities; and expanding the Commercial Paper Funding Facility (CPFF) to facilitate the flow of credit to municipalities. The OECD released a statement encouraging its members to support \"immediate, large-scale and coordinated actions.\" These actions included (1) more international cooperation to address the health crisis; (2) coordinated government actions to increase spending to support health care, individuals, and firms; (3) coordinated central bank action to supervise and regulate financial markets; and (4) policies directed at restoring confidence. ", "Reacting to the Fed's announcement, the DJIA closed up 11% on March 24, marking one of the sharpest reversals in the market index since February 2020. European markets, however, did not follow U.S. market indexes as various indicators signaled a decline in business activity in the Eurozone that was greater than that during the financial crisis and indicated the growing potential for a severe economic recession. U.S. financial markets were buoyed on March 25 and 26 over passage in Congress of a $2.2 trillion economic stimulus package. ", "On March 27, leaders of the G-20 countries announced through a video conference they had agreed to inject $5 trillion into the global economy and to do \"whatever it takes to overcome the pandemic.\" Also at the meeting, the OECD offered an updated forecast of the viral infection, which projected that the global economy could shrink by as much as 2% a month. Nine Eurozone countries, including France, Italy, and Spain called on the ECB to consider issuing \"coronabonds,\" a common European debt instrument to assist Eurozone countries in fighting COVID-19. The ECB announced that it was removing self-imposed limits that it had followed in previous asset purchase programs that restricted its purchases of any one country's bonds. Japan announced that it would adopt an emergency spending package worth $238 billion, or equivalent to 10% of the country's annual GDP. Despite the various actions, global financial markets turned down March 27 (the DJIA dropped by 900 points) reportedly over volatility in oil markets and concerns that the economic effects of the COVID-19 pandemic were worsening. ", "By March 30, central banks in developing countries from Poland, Columbia, South Africa, the Philippines, Brazil, and the Czech Republic reportedly had begun adopting monetary policies similar to that of the Federal Reserve to stimulate their economies. In commodity markets, Brent crude oil prices continued to fall, reaching a low of $22.76. Strong global demand for dollars continued to put upward pressure on the international value of the dollar. In response, the Federal Reserve introduced a new temporary facility that would work with its swap lines to allow central banks and international monetary authorities to enter into repurchase agreements with the Fed. From mid-March to mid-April, U.S. workers' claims for unemployment benefits reached over 17 million as firms faced a collapse in demand and requirements for employees to self-quarantine caused them to begin furloughing or laying off employees. Financial markets began to recover somewhat in early April in response to the accumulated monetary and fiscal policy initiatives, but remained volatile as a result of uncertainty over efforts to reach an output agreement among oil producers and the continued impact of the viral health effects. "], "subsections": []}, {"section_title": "April 2020", "paragraphs": ["The Federal Reserve announced on April 8 that it was establishing a facility to fund small businesses through the Paycheck Protection Program. Japan also announced that it was preparing to declare areas around Tokyo to be in a state of emergency and that it would adopt a $989 billion funding package. ", "On April 9, OPEC and Russia reportedly agreed to cut oil production by 10 million barrels per day. On April 15, G-20 finance ministers and central bank governors announced their support for the proposed agreement by Saudi Arabia and Russia to reduce oil production. They also announced an agreement to freeze government loan payments until the end of the year to help low-income developing countries address the pandemic and asked international financial institutions to do likewise. G-7 finance ministers and central bank governors agreed to support the G-20 proposal to suspend debt payments by developing countries. Eurozone finance ministers announced a \u00e2\u0082\u00ac500 billion (about $550 billion) emergency spending package to support governments, businesses, and workers. Reportedly, the measure will provide funds to the European Stability Mechanism, the European Investment Bank, and for unemployment insurance. ", "In other policy areas, the IMF announced that it was doubling its emergency lending capability to $100 billion, in response to requests from more than 90 countries for assistance. The Bank of England announced that it would take the unprecedented move of temporarily directly financing UK government emergency spending needs through monetary measures rather than through the typical method of issuing securities to fight the effects of COVID-19. Secretary-General of the United Nations Guterres declared on April 9, 2020, before the United Nations Security Council that the pandemic poses a significant threat to the maintenance of international peace and security and outlined eight specific risks, including the erosion of trust in public institutions, increased risks from terrorism and bioterrorism, and worsening existing human rights abuses. ", "Federal Reserve Chairman Jerome Powell, stating that the U.S. economy was deteriorating \"with alarming speed,\" announced on April 10 that the Fed would provide an additional $2.3 trillion in loans, including a new financial facility to assist firms by acquiring shares in exchange traded funds that own the debt of lower-rated, riskier firms that are among the most exposed to deteriorating economic conditions associated with COVID-19 and low oil prices. On April 16, the U.S. Labor Department reported that 5.2 million Americans filed for unemployment insurance during the previous week, raising the total claims since mid-March to over 22 million. According to Chinese official statistics, the Chinese economy shrank by 6.8% on an annual basis during the first quarter of 2020, reportedly the first such contraction in 40 years. ", "Financial market indicators rose on April 17, reportedly on an upbeat sentiment that actions taken by the Federal Reserve and other central banks would stabilize conditions in the corporate credit market. The price of futures contracts for oil delivery in May 2020 for the U.S. West Texas Intermediate (WTI) fell to $18 per barrel, the lowest it had been since 2002, reportedly reflecting rising inventories and low global demand. Leaders of emerging economies in Latin America and Africa argued that the G-20 call for suspension of interest payments fell short of what is needed. National leaders from Columbia, Brazil, Mexico, and Chile encouraged the World Bank, the InterAmerican Development Bank and the IMF to double their net lending to Latin America, arguing that, \"The Covid-19 pandemic is a shock of unprecedented magnitude, uncertain duration and catastrophic consequences that, if not properly addressed, could lead to one of the most tragic episodes in the history of Latin America and the Caribbean.\"", "On April 19, 2020, the price of oil fell to its lowest level in two decades, reportedly reflecting a significant drop in global demand for energy and rising inventories. Some Eurozone members reportedly argued for the ECB to create a Eurozone \"bad bank\" to remove billions of euros in non-performing debts from banks' balance sheets to provide more capacity for Eurozone banks at a potentially critical time when banks could see an increase in non-performing loans. The World Bank confirmed that its \"pandemic bonds\" would pay out $133 billion to the poorest countries affected by the pandemic. ", "On April 21, 2020, Agricultural Ministers of the G-20 countries released a joint statement that supported measures to \"ensure the health, safety, welfare, and mobility of workers in agriculture and throughout the food supply chain.\" The joint statement also indicated that the G-20 countries would adopt measures that are \"targeted, proportionate, transparent, and temporary, and that they do not create unnecessary barriers to trade or disruption to global food supply chains.\" The statement also indicated that the G-20 would, \"guard against any unjustified restrictive measures that could lead to excessive food price volatility in international markets and threaten the food security and nutrition of large proportions of the world population, especially the most vulnerable living in environments of low food security.\"", "On April 23, 2020, the House passed H.R. 266 ( P.L. 116-139 ), the Paycheck Protection Program and Health Care Enhancement Act, following similar actions by the Senate the previous day. The measure will provide $484 billion for small business loans, health care providers, and COVID-19 testing. The U.S. Labor Department reported that 4.4 million Americans filed for unemployment insurance in the previous week, raising the total that have applied to over 26 million. Indicators of manufacturing and services activity in Europe dropped to their lowest level since 1990, reflecting the impact of the pandemic on the European economy. The Bank of England indicated that it would quadruple its borrowing over the second quarter of 2020, reflecting a contraction in the UK economy, lower tax revenues, and increased financial demands to support fiscal policy measures to fight the pandemic. The Saudi Presidency of the G-20 called on international organizations on April 24, 2020, to fund an emergency response to the pandemic. The Bank of Japan announced on April 27, 2020, that it would purchase unlimited amounts of government bonds and quadruple its purchases of corporate debt to keep interest rates low and stimulate the Japanese economy.", "At its April 29, 2020, scheduled meeting, the U.S. Federal Open Market Committee left its main interest rates unchanged, but reiterated its commitment to use \"its full range of tools to support the U.S. economy.\" The policy statement concluded that, \"The ongoing public health crisis will weigh heavily on economic activity, employment, and inflation in the near term, and poses considerable risks to the economic outlook over the medium term.\" The Federal Reserve also announced a change in its eligibility requirements for a $500 billion lending program for municipalities. The statement followed the release of the preliminary estimate of U.S. first quarter GDP, which indicated that the economy had contracted by an annualized rate of 4.8%. ", "On April 30, 2020, the Department of Labor released its weekly data on applications for unemployment insurance, which indicated that an additional 3.8 million people had filed for unemployment insurance during the week, raising the total number who have applied to 30 million. The Federal Reserve also announced an expansion in its medium-size business loan program by allowing firms with up to 15,000 employees or with revenues up to $5 billion to access a new $600 billion program. In addition, the Fed lowered the minimum loan amount for small businesses and announced a loan program to assist riskier businesses. At the same time, the ECB expanded a record low-interest rate loan program for Eurozone banks to support economic activity, while warning that the Eurozone economy could contract between 5% and 12% in 2020 as it faces, \"an economic contraction of a magnitude and speed that are unprecedented in peacetime.\" The ECB also announced a new non-targeted low-interest rate pandemic emergency longer-term refinancing operation (PELTROs) to complement its Pandemic Emergency Refinance Operations announced in March. House Speaker Pelosi stated that House Democrats were considering a $1 trillion spending bill to support state and local governments. In a development that seemed incongruous with the broader economic situation, between April 1, 2020, and April 30, 2020, the DJIA rose more than 3,400 points, or 16%, marking the strongest monthly increase since 1987."], "subsections": []}, {"section_title": "May 2020", "paragraphs": ["On May 5, 2020, Germany's Constitutional court issued a ruling that could prevent the German central bank, the Bundesbank, from making additional bond purchases under the Pandemic Emergency Purchase Program (PEPP). The ECB's program is intended to ease borrowing costs across the Eurozone to stimulate economic growth. ", "The U.S. Census Bureau reported on May 5 that U.S. exports and import fell in March; exports fell by a greater amount than imports, thereby increasing the monthly U.S. goods and services trade deficit. The trade balance for March was -$44.5 billion, an increase of about $4.6 billion over the trade deficit in February. The decline in export and import values reflected lower imports and exports of both goods and services.", "On May 6, 2020, the European Commission released its economic forecast, which indicated that economic activity in the EU would decline by 7.4% in 2020 as a result of measures to contain the pandemic. The Commission forecast that economic growth would advance by 6.0% in 2021, assuming the containment measures can be lifted gradually, the viral effects remain contained, and that the fiscal and monetary measures implemented by the EU members are effective in blunting the negative effects on economies. On May 7, the Labor Department announced that 3.2 million Americans had filed for unemployment insurance during the week, raising the total that had filed over the previous seven weeks to 33 million.", "On May 8, the U.S. Department of Labor announced that 20.5 million Americans had lost their jobs in April, pushing the national unemployment rate to 14.5%. Despite the rise in the unemployment rate, the DJIA rose by 2.0%, reportedly based on optimism that the monetary policy actions the Federal Reserve, the ECB, and the Bank of Japan have taken to support financial markets and optimism that the health crisis is ebbing. ", "On May 12, House Democrats proposed a $3 trillion supplemental spending bill to provide additional financial resources to state and local governments and for other purposes. On May 13, the UK Office of National Statistics reported that UK GDP contracted by 2.0% in the first quarter, the largest decline in the UK's GDP since 2008 with all major economic sector affected. On May 14, the U.S. Department of Labor announced that an additional 3.0 million Americans had filed for unemployment insurance during the previous week, increasing the total number filing for unemployment insurance over the previous eight weeks to 36 million."], "subsections": []}]}, {"section_title": "Policy Responses", "paragraphs": ["In response to growing concerns over the global economic impact of the pandemic, G-7 finance ministers and central bankers released a statement on March 3, 2020, indicating they will \"use all appropriate policy tools\" to sustain economic growth. The Finance Ministers also pledged fiscal support to ensure health systems can sustain efforts to fight the outbreak. In most cases, however, countries have pursued their own divergent strategies, in some cases including banning exports of medical equipment. Following the G-7 statement, the U.S. Federal Reserve (Fed) lowered its federal funds rate by 50 basis points, or 0.5%, to a range of 1.0% to 1.25% due to concerns about the \"evolving risks to economic activity of the COVID-19.\" At the time, the cut was the largest one-time reduction in the interest rate by the Fed since the global financial crisis. ", "After a delayed response, other central banks have begun to follow the actions of the G-7 countries. Most central banks have lowered interest rates and acted to increase liquidity in their financial systems through a combination of measures, including lowering capital buffers and reserve requirements, creating temporary lending facilities for banks and businesses, and easing loan terms. In addition, national governments have adopted various fiscal measures to sustain economic activity. In general, these measures include making payments directly to households, temporarily deferring tax payments, extending unemployment insurance, and increasing guarantees and loans to businesses.", "See the Appendix to this report for detailed information about the policy actions by individual governments. "], "subsections": [{"section_title": "The United States", "paragraphs": ["Recognizing the growing impact the pandemic is having on financial markets and economic growth, the Federal Reserve (Fed) has taken a number of steps to promote economic and financial stability involving the Fed's monetary policy and \"lender of last resort\" roles. Some of these actions are intended to stimulate economic activity by reducing interest rates and others are intended to provide liquidity to financial markets so that firms have access to needed funding. In announcing its decisions, the Fed indicated that \"[t]he COVID-19 outbreak has harmed communities and disrupted economic activity in many countries, including the United States. Global financial conditions have also been significantly affected. \" On March 31, 2020, the Trump Administration announced that it was suspending for 90 days tariffs it had placed on imports of apparel and light trucks from China, but not on other consumer goods and metals.", "In a speech on May 13, Federal Reserve Chairman Jerome Powell stated that the Federal Reserve's analysis indicated that of individuals working in February, \"almost 40 percent of those in households making less than $40,000 a year had lost a job in March.\" Chairman Powell also indicated that given the extraordinary nature of the current economic downturn that the Fed would, \"continue to use our tools to their fullest until the crisis has passed and the economic recovery is well under way.\" In characterizing the current challenges, Powell stated", "The overall policy response to date has provided a measure of relief and stability, and will provide some support to the recovery when it comes. But the coronavirus crisis raises longer-term concerns as well. The record shows that deeper and longer recessions can leave behind lasting damage to the productive capacity of the economy. Avoidable household and business insolvencies can weigh on growth for years to come. Long stretches of unemployment can damage or end workers' careers as their skills lose value and professional networks dry up, and leave families in greater debt. The loss of thousands of small- and medium-sized businesses across the country would destroy the life's work and family legacy of many business and community leaders and limit the strength of the recovery when it comes. These businesses are a principal source of job creation\u00e2\u0080\u0094something we will sorely need as people seek to return to work. A prolonged recession and weak recovery could also discourage business investment and expansion, further limiting the resurgence of jobs as well as the growth of capital stock and the pace of technological advancement. The result could be an extended period of low productivity growth and stagnant incomes.", "On April 29, the Bureau of Economic Analysis released first quarter U.S. GDP data indicating that the U.S. economy had contracted by 4.8% at an annual rate, as indicated in Figure 6 . A decline in economic activity of 30% or more was recorded in motor vehicles and parts, recreation, food services and accommodation and transportation sectors, reflecting the quarantine measures adopted across the country. In contrast to the other sectors of the economy, food and beverage consumption increased by 25% as a result of the switch by individuals from eating at restaurants and other commercial food service establishments to preparing and eating food at home.", "On May 5, 2020, the U.S. Census Bureau reported an increase in the overall U.S. trade deficit on a month-to-month basis of $4.5 billion, reflecting lower amounts of exports and imports of both goods and services. Exports and imports of both goods and services fell from the previous month, although the deficit in goods trade imports increased from $61 billion in February to $65.6 billion in March; the surplus in services trade fell from $21.23 billion to $21.18 billion.", "On May 8, the Department of Labor reported that the U.S. non-farm unemployment rate in April increased by 20 million, raising the total number of unemployed Americans to 23 million, or an unemployment rate of 14% of a total civilian labor force of 156 million. The unemployment rate does not include approximately 10 million workers who are involuntarily working part-time and another 9 million individuals seeking employment. As indicated in Figure 7 , the number of unemployed individuals increased the most in the leisure and hospitality sector, reflecting national quarantining policies to reduce the spread of COVID-19 through social contact. The employment losses were widely spread across the economy, affecting every non-farm sector and all labor groups."], "subsections": [{"section_title": "Monetary Policy124", "paragraphs": [], "subsections": [{"section_title": "Forward Guidance", "paragraphs": ["Forward guidance refers to Fed public communications on its future plans for short-term interest rates, and it took many forms following the 2008 financial crisis. As monetary policy returned to normal in recent years, forward guidance was phased out. It is being used again today. For example, when the Fed reduced short-term rates to zero on March 15, it announced that it \"expects to maintain this target range until it is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals.\""], "subsections": []}, {"section_title": "Quantitative Easing", "paragraphs": ["Large-scale asset purchases, popularly referred to as quantitative easing or QE , were also used during the financial crisis. Under QE, the Fed expanded its balance sheet by purchasing securities. Three rounds of QE from 2009 to 2014 increased the Fed's securities holdings by $3.7 trillion.", "On March 23, the Fed announced that it would increase its purchases of Treasury securities and mortgage-backed securities (MBS)\u00e2\u0080\u0094including commercial MBS\u00e2\u0080\u0094issued by government agencies or government-sponsored enterprises to \"the amounts needed to support smooth market functioning and effective transmission of monetary policy.... \" These would be undertaken at the unprecedented rate of up to $125 billion daily during the week of March 23. As a result, the value of the Fed's balance sheet is projected to exceed its post-financial crisis peak of $4.5 trillion. One notable difference from previous rounds of QE is that the Fed is purchasing securities of different maturities, so the effect likely will not be concentrated on long-term rates."], "subsections": []}, {"section_title": "Actions to Provide Liquidity", "paragraphs": [], "subsections": []}, {"section_title": "Reserve Requirements", "paragraphs": ["On March 15, the Fed announced that it was reducing reserve requirements\u00e2\u0080\u0094the amount of vault cash or deposits at the Fed that banks must hold against deposits\u00e2\u0080\u0094to zero for the first time ever. As the Fed noted in its announcement, because bank reserves are currently so abundant, reserve requirements \"do not play a significant role\" in monetary policy. "], "subsections": []}, {"section_title": "Term Repos", "paragraphs": ["The Fed can temporarily provide liquidity to financial markets by lending cash through repurchase agreements (repos) with primary dealers (i.e., large government securities dealers who are market makers). Before the financial crisis, this was the Fed's routine method for targeting the federal funds rate. Following the financial crisis, the Fed's large balance sheet meant that repos were no longer needed, until they were revived in September 2019. On March 12, the Fed announced it would offer a three-month repo of $500 billion and a one-month repo of $500 billion on a weekly basis through the end of the month in addition to the shorter-term repos it had already been offering. These repos would be larger and longer than those offered since September. On March 31, the Fed announced the Foreign and International Monetary Authorities (FIMA) Repo Facility, which works like the foreign repo pool in reverse. This facility allows foreign central banks to convert their U.S. Treasury holdings into U.S. dollars on an overnight basis. The Fed will charge a (typically) above market interest rate of 0.25 percentage points above the interest rate paid on bank reserves. The facility is intended to work in tandem with currency swap lines to provide additional dollars to meet global demand and is available to a broader group of central banks than the swap lines. "], "subsections": []}, {"section_title": "Discount Window", "paragraphs": ["In its March 15 announcement, the Fed encouraged banks (insured depository institutions) to borrow from the Fed's discount window to meet their liquidity needs. This is the Fed's traditional tool in its \"lender of last resort\" function. The Fed also encouraged banks to use intraday credit available through the Fed's payment systems as a source of liquidity."], "subsections": []}, {"section_title": "Foreign Central Bank Swap Lines", "paragraphs": ["Both domestic and foreign commercial banks rely on short-term borrowing markets to access U.S. dollars needed to fund their operations and meet their cash flow needs. But in an environment of strained liquidity, only banks operating in the United States can access the discount window. Therefore, the Fed has standing \"swap lines\" with major foreign central banks to provide central banks with U.S. dollar funding that they can in turn lend to private banks in their jurisdictions. On March 15, the Fed reduced the cost of using those swap lines and on March 19 it extended swap lines to nine more central banks. On March 31, 2020, the Fed set up a new temporary facility to work in tandem with the swap lines to provide additional dollars to meet global demand. The new facility allows central banks and international monetary authorities to exchange their U.S. Treasury securities held with the Federal Reserve for U.S. dollars, which can then be made available to institutions in their jurisdictions."], "subsections": []}, {"section_title": "Emergency Credit Facilities for the Nonbank Financial System", "paragraphs": ["In 2008, the Fed created a series of emergency credit facilities to support liquidity in the nonbank financial system. This extended the Fed's traditional role as lender of last resort from the banking system to the overall financial system for the first time since the Great Depression. To create these facilities, the Fed relied on its emergency lending authority (Section 13(3) of the Federal Reserve Act). To date, the Fed has created six facilities\u00e2\u0080\u0094some new, and some reviving 2008 facilities\u00e2\u0080\u0094in response to COVID-19.", "On March 17, the Fed revived the commercial paper funding facility to purchase commercial paper, which is an important source of short-term funding for financial firms, nonfinancial firms, and asset-backed securities (ABS). Like banks, primary dealers are heavily reliant on short-term lending markets in their role as securities market makers. Unlike banks, they cannot access the discount window. On March 17, the Fed revived the primary dealer credit facility, which is akin to a discount window for primary dealers. Like the discount window, it provides short-term, fully collateralized loans to primary dealers. On March 19, the Fed created the Money Market Mutual Fund Liquidity Facility (MMLF), similar to a facility created during the 2008 financial crisis. The MMLF makes loans to financial institutions to purchase assets that money market funds are selling to meet redemptions. On March 23, the Fed created two facilities to support corporate bond markets\u00e2\u0080\u0094the Primary Market Corporate Credit Facility to purchase newly issued corporate debt and the Secondary Market Corporate Credit Facility to purchase existing corporate debt on secondary markets. On March 23, the Fed revived the Term Asset-Backed Securities Loan Facility to make nonrecourse loans to private investors to purchase ABS backed by various nonmortgage consumer loans. On April 6, the Fed announced the Payroll Protection Program Lending Facility (PPPLF) to provide credit to depository institutions (e.g., banks) making loans under the CARES Act ( H.R. 748 / P.L. 116-136 ) Payroll Protection Program . Because banks are not required to hold capital against these loans, this facility increases lending capacity for banks facing high demand to originate these loans. The PPP provides low-cost loans to small businesses to pay employees. These loans do not pose credit risk to the Fed because they are guaranteed by the Small Business Administration. On April 9, the Fed announced the Main Street Lending Program (MSLP), which purchases loans from depository institutions to businesses with up to 10,000 employees or up to $2.5 billion in revenues. The loans to businesses would defer principal and interest repayment for one year, and the businesses would have to make a \"reasonable effort\" to retain employees. On April 9, the Fed announced the Municipal Liquidity Facility (MLF) to purchase state and municipal debt in response to higher yields and reduced liquidity in that market. The facility will only purchase debt of larger counties and cities.", "Many of these facilities are structured as special purpose vehicles controlled by the Fed because of restrictions on the types of securities that the Fed can purchase. Although there were no losses from these facilities during the financial crisis, assets of the Treasury's Exchange Stabilization Fund have been pledged to backstop any losses on several of the facilities today."], "subsections": []}]}, {"section_title": "Fiscal Policy", "paragraphs": ["In terms of a fiscal stimulus, Congress adopted H.R. 6074 on March 5, 2020 ( P.L. 116-123 ), to appropriate $8.3 billion in emergency funding to support efforts to fight COVID-19; President Trump signed the measure on March 6, 2020. President Trump also signed on March 18, H.R. 6201 ( P.L. 116-127 ), the Families First COVID-19 Response Act, that provides paid sick leave and free COVID-19 testing, expands food assistance and unemployment benefits, and requires employers to provide additional protections for health care workers. Other countries have indicated they will also provide assistance to workers and to some businesses. Congress also is considering other possible measures, including contingency plans for agencies to implement offsite telework for employees, financial assistance to the shale oil industry, a reduction in the payroll tax, and extended of the tax filing deadline. President Trump has taken additional actions, including", "Announcing on March 11, 2020, restrictions on all travel from Europe to the United States for 30 days, directing the Small Business Administration (SBA) to offer low-interest loans to small businesses, and directing the Treasury Department to defer tax payments penalty-free for affected businesses. Declaring on March 13, a state of emergency that frees up disaster relief funding to assist state and local governments to address the effects of the pandemic. The President also announced additional testing for the virus, a website to help individuals identify symptoms, increased oil purchases for the Strategic Oil Reserve, and a waiver on interest payments on student loans. Invoking on March 18, 2020, the Defense Production Act (DPA) that gives him the authority to require some U.S. businesses to increase production of medical equipment and supplies that are in short supply.", "On March 25, 2020, the Senate adopted the COVID-19 Aid, Relief, and Economic Security Act ( S. 3548 ) to formally implement President Trump's proposal by providing direct payments to taxpayers, loans and guarantees to airlines and other industries, and assistance for small businesses, actions similar to those of various foreign governments. The House adopted the measure as H.R. 748 on March 27, and President Trump signed the measure ( P.L. 116-136 ) on March 27. The law", "Provides funding for\u00c2\u00a0$1,200 tax rebates to individuals, with additional $500 payments per qualifying child. The rebate begins phasing out when incomes exceed $75,000 (or $150,000 for joint filers). Assists small businesses by providing funding for, forgivable bridge loans; and additional funding for grants and technical assistance; authorizes emergency loans to distressed businesses, including air carriers, and suspends certain aviation excise taxes. Creates a $367 billion loan program for small businesses, establishes a $500 billion lending fund for industries, cities and states, a $150 billion for state and local stimulus funds, and $130 billion for hospitals. Increases unemployment insurance benefits, expands eligibility and offer workers an additional $600 a week for four month, in addition to state unemployment programs. Establishes special rules for certain tax-favored withdrawals from retirement plans; delays due dates for employer payroll taxes and estimated tax payments for corporations; and revises other provisions, including those related to losses, charitable deductions, and business interest. Provides additional funding for the prevention, diagnosis, and treatment of COVID-19; limits liability for volunteer health care professionals; prioritizes Food and Drug Administration (FDA) review of certain drugs; allows emergency use of certain diagnostic tests that\u00c2\u00a0are not approved by the FDA; expands health-insurance coverage for diagnostic testing and requires coverage for preventative services and vaccines; and revises other provisions, including those regarding the medical supply chain, the national stockpile, the health care workforce, the Healthy Start program, telehealth services, nutrition services, Medicare, and Medicaid. Temporarily suspends payments for federal student loans and revises provisions related to campus-based aid, supplemental educational-opportunity grants, federal work-study, subsidized loans, Pell grants, and foreign institutions. Authorizes the Department of the Treasury\u00c2\u00a0temporarily to guarantee money-market funds.", "On April 23, 2020, the House passed H.R. 266 ( P.L. 116-139 ), the Paycheck Protection Program and Health Care Enhancement Act, following similar actions by the Senate the previous day. The measure provides $484 billion for small business loans, health care providers, and COVID-19 testing. In particular, the law", "Provides additional lending authority for certain Small Business Administration (SBA) programs in response to COVID-19 increases the authority for (1) the Paycheck Protection Program, under which the SBA may guarantee certain loans to small businesses during the COVID-19 pandemic; and (2) advances on emergency economic injury disaster loans made in response to COVID-19. The division also expands eligibility for such disaster loans and advances to include agricultural enterprises. Provides $100 billion in FY2020 supplemental appropriations to HHS for the Public Health and Social Services Emergency Fund, including $75 billion to reimburse health care providers for health care related expenses or lost revenues that are attributable to the coronavirus outbreak; and $25 billion for expenses to research, develop, validate, manufacture, purchase, administer, and expand capacity for COVID-19 tests to effectively monitor and suppress COVID-19. Allocates specified portions of the $25 billion for COVID-19 testing to states, localities, territories, and tribes; the Centers for Diseases Control and Prevention; the National Institutes of Health; the Biomedical Advanced Research and Development Authority; the Food and Drug Administration; community health centers; rural health clinics; and testing for the uninsured.", "On May 12, House Democrats proposed a $3 trillion supplemental spending bill to provide additional financial resources to state and local governments. The bill reportedly would also", "Appropriate $200 billion in hazard pay to essential workers. Extend additional payments to individuals, for nutrition and housing assistance, and provide funding for additional testing and contact tracing. Restore the tax deduction for state and local taxes.", "For additional information about the impact of COVID-19 on the U.S. economy see CRS Insight IN11235, COVID-19: Potential Economic Effects . "], "subsections": []}]}, {"section_title": "Europe", "paragraphs": ["To date, European countries have not displayed a synchronized policy response similar to the one they developed during the 2008-2009 global financial crisis. Instead, they have used a combination of national fiscal policies and bond buying by the ECB to address the economic impact of the pandemic. Individual countries have adopted quarantines and required business closures, travel and border restrictions, tax holidays for businesses, extensions of certain payments and loan guarantees, and subsidies for workers and businesses. The European Commission has advocated for greater coordination among the EU members in developing and implementing monetary and fiscal policies to address the economic fallout from the viral pandemic. ", "In its May 2020 economic forecast, the European Commission forecasted that EU GDP in 2020 would fall by 7.4% and the unemployment rate would rise to 9.0%, as indicated in Table 3 . The Commission stated that, \"Given the severity of this unprecedented worldwide shock, it is now quite clear that the EU has entered the deepest economic recession in its history.\" In addition, the Commission forecasted that EU GDP would rise rapidly in 2021, although not fast enough to erase all the 2020 decline, but would exhibit a distinct \"V\" shaped recession and recovery. Greece, Spain, France, and Italy are forecasted to experience the largest declines in GDP in 2020 as a result of their dependence on tourism, which is expected to experience a slow economic recovery. Germany and other Northern European countries are projected to experience a more modest decline in economic activity. Some analysts argue that this disparity in economic effects may complicate efforts to coordinate economic policies. To address the crisis, the Commission argued that, \"[t]he risk\u00e2\u0080\u00a6.is that the crisis will lead to severe distortions within the Single Market and to entrenched economic, financial and social divergences between euro area Member States that could ultimately threaten the stability of the Economic and Monetary Union.\" ", "Pandemic-related economic effects reportedly are having a significant impact on business activity in Europe, with some indexes falling farther then they had during the height of the financial crisis and others indicating that Europe may well experience a deep economic recession in 2020. France, Germany, Italy, Spain, and the UK reported steep drops in industrial activity in March 2020. EU countries have issued travel warnings, banning all but essential travel across borders, raising concerns that even much-needed medical supplies could stall at borders affected by traffic backups. The travel bans and border closures reportedly are causing shortages of farm laborers in Germany, the UK, and Spain, which has caused growers to attempt to recruit students and workers laid off because of the pandemic.", "In previous actions, the European Commission had announced that it was relaxing rules on government debt to allow countries more flexibility in using fiscal policies. Also, the European Central Bank (ECB) announced that it was ready to take \"appropriate and targeted measures,\" if needed. France, Italy, Spain and six other Eurozone countries have argued for creating a \"coronabond,\" a joint common European debt instrument. Similar attempts to create a common Eurozone-wide debt instrument have been opposed by Germany and the Netherland, among other Eurozone members. With interest rates already low, however, it indicated that it would expand its program of providing loans to EU banks, or buying debt from EU firms, and possibly lowering its deposit rate further into negative territory in an attempt to shore up the Euro's exchange rate. ECB President-designate Christine Lagarde called on EU leaders to take more urgent action to avoid the spread of COVID-19 from triggering a serious economic slowdown. The European Commission indicated that it was creating a $30 billion investment fund to address COVID-19 issues. In other actions", "On March 12, 2020, the ECB decided to (1) expand its longer-term refinance operations (LTRO) to provide low-cost loans to Eurozone banks to increase bank liquidity; (2) extend targeted longer-term refinance operations (TLTRO) to provide loans at below-market rates to businesses, especially small and medium-sized businesses, directly affected by COVID-19; (3) provide an additional \u00e2\u0082\u00ac120 billion (about $130 billion) for the Bank's asset purchase program to provide liquidity to firms that was in addition to \u00e2\u0082\u00ac20 billion a month it previously had committed to purchasing. On March 13, 2020, financial market regulators in the UK, Italy, and Spain intervened in stock and bond markets to stabilize prices after historic swings in indexes on March 12, 2020. In addition, the ECB announced that it would do more to assist financial markets in distress, including altering self-imposed rules on purchases of sovereign debt. Germany's Economic Minister announced on March 13, 2020, that Germany would provide unlimited loans to businesses experiencing negative economic activity (initially providing $555 billion), tax breaks for businesses, and export credits and guarantees. On March 18, the ECB indicated that it would: create a \u00e2\u0082\u00ac750 billion (about $800 billion) Pandemic Emergency Purchase Program to purchase public and private securities; expand the securities it will purchase to include nonfinancial commercial paper; and ease some collateral standards. In announcing the program, President-designate Lagarde indicated that the ECB would, \"do everything necessary.\" In creating the program, the ECB removed or significantly loosened almost all constraints that applied to previous asset-purchase programs, including a self-imposed limit of buying no more than one-third of any one country's eligible bonds, a move that was expected to benefit Italy. The ECB also indicated that it would make available up to \u00e2\u0082\u00ac3 trillion in liquidity through refinancing operations. Britain ($400 billion) and France ($50 billion) also announced plans to increase spending to blunt the economic effects of the virus. Recent forecasts indicate that the economic effect of COVID-19 could push the Eurozone into an economic recession in 2020. On March 23, 2020, Germany announced that it would adopt a \u00e2\u0082\u00ac750 billion (over $800 billion) package in economic stimulus funding. On April 15, Eurozone finance ministers announced a \u00e2\u0082\u00ac500 billion (about $550 billion) emergency spending package to support governments, businesses, and workers and will provide funds to the European Stability Mechanism, the European Investment Bank, and for unemployment insurance.", "On May 5, 2020, Germany's Constitutional Court issued a ruling challenging the legality of a bond-buying program conducted by the ECB since 2015, the Public Sector Purchase Program (PSPP). In its ruling, the court directed the German government to request clarification from the ECB about various aspects of the PSPP program that the court argued might exceed the ECB's legal mandate. The German government has not yet indicated how it will formally respond to the ruling, but many analysts contend that the ruling\u00e2\u0080\u0094and the challenge to the authority of the ECB and the European Court of Justice\u00e2\u0080\u0094could have far-reaching implications for future ECB activities. This could potentially include challenges to the ECB's Pandemic Emergency Purchase Program (PEPP) initiated in March. The PEPP is a temporary program that authorizes the ECB to acquire up to \u00e2\u0082\u00ac750 billion (about $820 billion) in private and public sector securities to address the economic effects of the pandemic crisis.", "The German court's ruling has heightened tensions between the court and the European Court of Justice. Following the 2008-2009 financial crisis and the subsequent Eurozone financial crisis, the ECB launched four asset purchase programs in 2014 to provide assistance to financially strapped Eurozone governments and to sustain financial liquidity in Eurozone banks. Those programs included the Corporate Sector Purchase Program (CSPP), the Public Sector Purchase Program (PSPP), the Asset-Backed Securities Purchase Program (ABSPP), and the Third Covered Bond Purchase Program (CBPP3). The programs operated from 2014 to 2018; the PSPP was restarted in November 2019. As of May 8, the PSPP program held \u00e2\u0082\u00ac2.2 trillion (about $2.5 trillion) with another \u00e2\u0082\u00ac600 billion (about $700 billion) held under other asset purchase programs. Various groups in Germany challenged the legality of the ECB bond-buying programs before the German Constitutional Court arguing that the programs exceeded the ECB's legal mandate. In turn, the German court referred the case to the European Court of Justice, which ruled in December 2019 that the ECB's actions were fully within the ECB's authority.", "In the German Constitutional Court's May 5 ruling, the German judges characterized the ECJ's ruling as \"incomprehensible,\" and directly challenged the ECB and the European Court of Justice and the primacy of the European Court of Justice ruling over national law. The German justices argued that the ECB had exceeded its authority by not fully evaluating the economic costs and benefits of previous bond-buying activities, including the impact on national budgets, property values, stock markets, life insurance and other economic effects. The German court also argued that the ECB's lack of a strategy for reducing its holdings of sovereign debt of Eurozone members increased risks for national governments that back up the ECB, and it challenged the ECB's strategy for reducing its holdings of sovereign debt. "], "subsections": []}, {"section_title": "The United Kingdom", "paragraphs": ["The United Kingdom has taken a number of steps to support economic activity. These steps are expected to limit the damage to the UK economy. The Bank of England (BOE) forecasted in May 2020 that the UK economy would contract by 30% in the first half of 2020, but then rebound sharply in the second half of the year, exhibiting a \"V\" shaped recovery. The Bank of England has announced a number of policy initiatives including", "On March 11, the BOE adopted a package of four measures to deal with any economic disruptions associated with COVID-19. The measures included an unscheduled cut in the benchmark interest rate by 50 basis points (0.5%) to a historic low of 0.25%; the reintroduction of the Term Funding Scheme for Small and Medium-sized Enterprises (TFSME) that provides banks with over $110 billion for loans at low interest rates; a lowering of banks' countercyclical capital buffer from 1% to zero, which is estimated to support over $200 billion of bank lending to businesses; and a freeze in banks' dividend payments. On March 15, the BOE reinstituted U.S. dollar swap lines with the Federal Reserve. On March 17, the BOE and the UK Treasury introduced the COVID Corporate Financing Facility (CCFF) to provide assistance to UK firms to bridge through Covid-19-related disruptions to their cash flow. On March 19, during a Special Monetary Policy Meeting, the Bank of England reduced its main interest rate to 0.1%, increased the size of its TFSME fund, and increased the stock of asset purchases by \u00c2\u00a3200 billion to a total of \u00c2\u00a3645 billion financed by issuing UK government bonds and some additional non-financial investment-grade corporate bonds. On March 20, the BOE participated in an internationally coordinated central bank expansion of liquidity through U.S. standing dollar liquidity swap line arrangements. On March, the BOE activated the Contingent Term Repo Facility (CTRF). On April 6, announced the activation of the TFSME ahead of schedule. On April 23, the Bank of England indicated it would quadruple its borrowing over the second quarter of 2020, reflecting a contraction in the UK economy, lower tax revenues, and increased financial demands to support fiscal policy measures. ", "In terms of fiscal policy, UK Chancellor of the Exchequer Rishi Sunak proposed a national budget on March 11, 2020, that included nearly $3.5 billion in fiscal spending to counter adverse economic effects of the pandemic and increased in statutory sick leave by about $2.5 billion in funds to small and medium businesses to provide up to 14 days of sick leave for affected employees. The plan provides affected workers up to 80% of their salary, or up to \u00c2\u00a32,500 a month (about $2,800) if they are laid off. Some estimates indicate that UK spending to support its economy could rise to about $60 billion in 2020. Identified as the Coronavirus Job Retention Scheme (CJRS), the program was backdated to start on March 1 and had been expected to run through May, but was extended to expire the end of June 2020. Prime Minister Johnson also announced that all pubs, caf\u00c3\u00a9s, restaurants, theatres, cinemas, nightclubs, gyms and leisure centers would be closed. Part of the fiscal spending package includes open-ended funding for the National Health Service (NHS), $6 billion in emergency funds to the NHS, $600 million hardship fund to assist vulnerable people, and tax cuts and tax holidays for small businesses in certain affected sectors. "], "subsections": []}, {"section_title": "Japan", "paragraphs": ["The Bank of Japan, with already-low interest rates, injected $4.6 billion in liquidity into Japanese banks to provide short-term loans for purchases of corporate bonds and commercial paper and twice that amount into exchange traded funds to aid Japanese businesses. The Japanese government also pledged to provide wage subsidies for parents forced to take time off due to school closures. On March 24, 2020, Japan announced that the Summer Olympics set to take place in Tokyo would be postponed by a year, delaying an expected boost to the Japanese economy that was expected from the event. Japan reportedly is considering an emergency fiscal package of about $515 billion, roughly equivalent to 10% of Japan's annual gross domestic product (GDP). On April 27, 2020, the Bank of Japan announced it would purchase unlimited amounts of government bonds and quadruple its purchases of corporate debt to keep interest rates low and stimulate the Japanese economy."], "subsections": []}, {"section_title": "China", "paragraphs": ["According to a recent CRS In Focus, China's economic growth could go negative in the first quarter of 2020 and fall below 5% for the year, with more serious effects if the outbreak continues. In early February, China's central bank pumped $57 billion into the banking system, capped banks' interest rates on loans for major firms, and extended deadlines for banks to curb shadow lending. The central bank has been setting the reference rate for China's currency stronger than its official close rate to keep it stable. On March 13, 2020, The People's Bank of China announced that it would provide $78.8 billion in funding, primarily to small businesses, by reducing bank's reserve requirements.", "The International Monetary Fund (IMF) is providing funding to poor and emerging market economies that are short on financial resources. If the economic effects of the virus persist, countries may need to be proactive in coordinating fiscal and monetary policy responses, similar to actions taken by of the G-20 following the 2008-2009 global financial crisis. "], "subsections": []}]}, {"section_title": "Multilateral Response", "paragraphs": [], "subsections": [{"section_title": "International Monetary Fund", "paragraphs": ["The IMF initially announced that it was making available about $50 billion for the global crisis response. Following a G20 ministerial call on March 23, IMF Managing Director Kristalina Georgieva announced that the Fund is ready to deploy all of its $1 trillion capacity. The Fund is also exploring options to quickly raise financing foremost of which is finalizing agreement on a 2019 agreement to renew and augment the IMF's New Arrangements to Borrow (NAB), a credit line that augments IMF quota resources. Other options to increase IMF resources include a new allocation of special drawing rights (SDRs), sale of IMF gold holdings, selling IMF bonds, developing an expanded network of central bank swap arrangements centered at the IMF.", "For low-income countries, the IMF is providing rapid-disbursing emergency financing of up to $10 billion (50% of quota of eligible members) that can be accessed without a full-fledged IMF program. Other IMF members can access emergency financing through the Fund's Rapid Financing Instrument (RFI). This facility could provide about $40 billion for emerging markets facing fiscal pressures from COVID-19. Separate from these resources, the IMF has a Catastrophe Containment and Relief Trust (CCRT), which provides eligible countries with up-front grants for relief on IMF debt service falling due. The CCRT was used during the 2014 Ebola outbreak, but is now underfunded, according to IMF Managing Director Georgieva with just over $200 million available against possible needs of over $1 billion. On March 11, 2020, the United Kingdom announced that it will contribute \u00c2\u00a3150 million (about $170 million) to the CCRT. To date, the United States has not contributed to the CCRT."], "subsections": []}, {"section_title": "World Bank and Regional Development Banks", "paragraphs": ["The World Bank announced on March 2 that it is making up to $12 billion in financing ($8 billion of which is new) immediately available to help impacted developing countries. This support comprises up to $2.7 billion in new financing from the International Bank for Reconstruction and Development (IBRD), the World Bank's market-rate lending facility for middle-income developing countries, and $1.3 billion from the International Development Association (IDA), the World Bank's concessional facility for low-income countries. In addition, the Bank is reprioritizing $2 billion of the Bank's existing portfolio. The International Finance Corporation (IFC), the Bank's private-sector lending arm is making available up to $6 billion. According to the Bank, support will cover a wide range of activities, including strengthening health services and primary health care, bolstering disease monitoring and reporting, training front line health workers, encouraging community engagement to maintain public trust, and improving access to treatment for the poorest patients.", "Several years ago, the World Bank introduced pandemic bonds, a novel form of catastrophe financing. The Bank sold two classes of bonds worth $320 million in a program designed to provide financing to developing countries facing an acute epidemic crisis if certain triggers are met. Once these conditions are met, bondholders no longer receive interest payments on their investments, the money is no longer repaid in full, and funds are used to support the particular crisis. In the case of COVID-19, for the bonds to be triggered, the epidemic must be continuing to grow 12 weeks after the first day of the outbreak. Critics have raised a range of concerns about the bonds, arguing that the terms are too restrictive and that the length of time needs to be shortened before triggering the bonds. Others stress that the proposal remains valid \u00e2\u0080\u0093 shifting the cost of pandemic assistance from governments to the private sector, especially in light of the failure of past efforts to rally donor support to establish multilateral pandemic funds.", "The Asian Development Bank (ADB) has approved a total of $4 million to help developing countries in Asia and the Pacific. Of the total, $2 million is for improving the immediate response capacity in Cambodia, China, Laos, Myanmar, Thailand, and Vietnam; $2 million will be available to all ADB developing member countries in updating and implementing their pandemic response plans. The ADB also provided a private sector loan of up to $18.6 million to Wuhan-based Jointown Pharmaceutical Group Co. Ltd. to enhance the distribution and supply of essential medicines and protective equipment."], "subsections": []}, {"section_title": "International Economic Cooperation", "paragraphs": ["On March 16, 2020, the leaders of the G-7 countries (Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States) held an emergency summit by teleconference to discuss and coordinate their policy responses to the economic fallout from the global spread of COVID-19. In the joint statement released by the G-7 leaders after the emergency teleconference summit, the leaders stressed they are committed to doing \"whatever is necessary to ensure a strong global response through closer cooperation and enhanced cooperation of efforts.\" The countries pledged to coordinate research efforts, increase the availability of medical equipment; mobilize \"the full range\" of policy instruments, including monetary and fiscal measures as well as targeted actions, to support workers, companies, and sectors most affected by the spread of COVID-19; task the finance ministers to coordinate on a weekly basis, and direct the IMF and the World Bank Group, as well as other international organizations, to support countries worldwide as part of a coordinated global response. ", "Saudi Arabia, the 2020 chair of the G-20, called an emergency G-20 summit on March 25 to discuss a response to the pandemic. The G-20 is a broader group of economies, including the G-7 countries and several major emerging markets. During the global financial crisis, world leaders decided that henceforth the G-20 would be the premiere forum for international economic cooperation. Some analysts have been surprised that the G-7 has been in front of the G-20 in responding to COVID-19, while other analysts have questioned whether the larger size and diversity of economies in the G-20 can make coordination more difficult.", "Analysts are hopeful that the recent G-7 summit, and a G-20 summit, will mark a shift towards greater international cooperation at the highest (leader) levels in combatting the economic fallout from the spread of COVID-19. An emergency meeting of G-7 finance ministers on March 3, 2020, fell short of the aggressive and concrete coordinated action that investors and economists had been hoping for, and U.S. and European stock markets fell after the meeting. More generally, governments have been divided over the appropriate response and in some cases have acted unilaterally, particularly when closing borders and imposing export restrictions on medical equipment and medicine. Some experts argue that a large, early, and coordinated response is needed to address the economic fallout from COVID-19, but several concerns loom about the G-20's ability to deliver. Their concerns focus on the Trump Administration's prioritization of an \"America First\" foreign policy over one committed to multilateralism; the 2020 chair of the G-20, Saudi Arabia, is embroiled in its own domestic political issues and oil price war; and U.S.-China tensions make G-20 consensus more difficult.", "Meanwhile, international organizations including the IMF and multilateral development banks, have tried to forge ahead with economic support given their current resources. Additionally, the Financial Stability Board (FSB), an international body including the United States that monitors the global financial system and makes regulations to ensure stability, released a statement on March 20, 2020, that its members are actively cooperating to maintain financial stability during market stress related to COVID-19. The FSB is encouraging governments to use flexibility within existing international standards to provide continued access to funding for market participants and for businesses and households facing temporary difficulties from COVID-19, while noting that many FSB members have already taken action to release available capital and liquidity buffers. "], "subsections": []}]}, {"section_title": "Estimated Effects on Developed and Major Economies", "paragraphs": ["Among most developed and major developing economies, economic growth at the beginning of 2020 was tepid, but still was estimated to be positive. Countries highly dependent on trade\u00e2\u0080\u0094Canada, Germany, Italy, Japan, Mexico, and South Korea\u00e2\u0080\u0094and commodity exporters are now projected to be the most negatively affected by the slowdown in economic activity associated with the virus. In addition, travel bans and quarantines are taking a heavy economic toll on a broad range of countries. The OECD notes that production declines in China have spillover effects around the world given China's role in producing computers, electronics, pharmaceuticals and transport equipment, and as a primary source of demand for many commodities. Across Asia, some forecasters argue that recent data indicate that Japan, South Korea, Thailand, the Philippines, Indonesia, Malaysia, and Vietnam could experience an economic recession in 2020.", "In early January 2020, before the COVID-19 outbreak, economic growth in developing economies as a whole was projected by the International Monetary Fund (IMF) to be slightly more positive than in 2019. This outlook was based on progress being made in U.S.-China trade talks that were expected to roll back some tariffs and an increase in India's rate of growth. Growth rates in Latin America and the Middle East were also projected to be positive in 2020. These projections likely will be revised downward due to the slowdown in global trade associated with COVID-19, lower energy and commodity prices, an increase in the foreign exchange value of the dollar, and other secondary effects that could curtail growth. Commodity exporting countries, in particular, likely will experience a greater slowdown in growth than forecasted in earlier projections as a result of a slowdown on trade with China and lower commodity prices."], "subsections": []}, {"section_title": "Emerging Markets", "paragraphs": ["The combined impact of COVID-19, an increase in the value of the dollar, and an oil price war between Saudi Arabia and Russia are hitting developing and emerging economies hard. Not all of these countries have the resources or policy flexibility to respond effectively. According to figures compiled by the Institute for International Finance (IIF), cumulative capital outflows from developing countries since January 2020 are double the level experienced during the 2008/2009 crisis and substantially higher than recent market events ( Figure 8 ).", "The impact of the price war and lower energy demand associated with a COVID-19-related economic slowdown is especially hard on oil and gas exporters, some of whose currencies are at record lows ( Figure 9 ). Oil importers, such as South Africa and Turkey, have also been hit hard; South Africa's rand has fallen 18% against the dollar since the beginning of 2020 and the Turkish lira has lost 8.5%. Some economists are concerned that the depreciation in currencies could lead to rising rates of inflation by pushing up the prices of imports and negatively economic growth rates in 2020.", "Depending on individual levels of foreign exchange reserves and the duration of the capital flow slowdown, some countries may have sufficient buffers to weather the slowdown, while others will likely need to make some form of current account adjustment (reduce spending, raise taxes, etc.). Several countries, such as Iran and Venezuela, have already asked the IMF for financial assistance and others are likely to follow. (Venezuela's request was quickly rebuffed due to disagreement among the IMF membership over who is recognized as Venezuela's legitimate leader: Nicol\u00c3\u00a1s Maduro or Juan Guaid\u00c3\u00b3. )"], "subsections": []}, {"section_title": "International Economic Cooperation", "paragraphs": ["Initial efforts at coordinating the economic response to the COVID-19 pandemic across countries have been uneven. Governments are divided over the appropriate response and in some cases have acted unilaterally, particularly when closing borders and imposing export restrictions on medical equipment and medicine. An emergency meeting of G-7 (Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States) finance ministers on March 3, 2020, fell short of the aggressive and concrete coordinated action that investors and economists had been hoping for, and U.S. and European stock markets fell sharply after the meeting. However, on March 16, 2020, the leaders of the G-7 countries held an emergency summit by teleconference to discuss and coordinate their policy responses to the economic fallout from the global spread of COVID-19. In the joint statement released by the G-7 leaders after the emergency teleconference summit, the leaders stressed they are committed to doing \"whatever is necessary to ensure a strong global response through closer cooperation and enhanced cooperation of efforts.\" The countries pledged to coordinate research efforts, increase the availability of medical equipment; mobilize \"the full range\" of policy instruments, including monetary and fiscal measures, as well as targeted actions to support workers, companies, and sectors most affected by the spread of COVID-19; task the finance ministers to coordinate on a weekly basis, and direct the IMF and the World Bank Group, as well as other international organizations, to support countries worldwide as part of a coordinated global response. G-7 coordination has not been without problems, however, including disagreement among G-7 foreign affairs ministers about how to refer to the virus (coronavirus or the \"Wuhan virus\") and concerns about collaboration on vaccine research.", "The G-20, which has a broader membership of major advanced and emerging-market economies representing 85% of world GDP, was slower to respond to the pandemic. Even though G-20 coordination is widely viewed as critical in the response to the global financial crisis of 2008-2009, several factors may have complicated G-20 coordination in the current context: the Trump Administration's prioritization of an \"America First\" foreign policy over one committed to multilateralism; the 2020 chair of the G-20, Saudi Arabia, is embroiled in its own domestic political issues and oil price war; and U.S.-China tensions make G-20 consensus more difficult. The G-20 held a summit by teleconference on March 26, 2020, but the resulting communique was criticized for failing to include concrete action items beyond what national governments were already doing. However, G-20 coordination appears to be gaining momentum, most notably with the G-20 agreement on debt relief for low-income countries (see \" Looming Debt Crises and Debt Relief Efforts \").", "Meanwhile, international organizations including the IMF and multilateral development banks, have tried to forge ahead with economic support given their current resources. Additionally, the Financial Stability Board (FSB), an international body including the United States that monitors the global financial system and makes regulations to ensure stability, released a statement on March 20, 2020, that its members are actively cooperating to maintain financial stability during market stress related to COVID-19. The FSB is encouraging governments to use flexibility within existing international standards to provide continued access to funding for market participants and for businesses and households facing temporary difficulties from COVID-19, while noting that many FSB members have already taken action to release available capital and liquidity buffers."], "subsections": []}, {"section_title": "Looming Debt Crises and Debt Relief Efforts", "paragraphs": ["COVID-19 could trigger a wave of defaults around the world. In Q3 2019\u00e2\u0080\u0094before the outbreak of COVID-19\u00e2\u0080\u0094global debt levels reached an all-time high of nearly $253 trillion, about 320% of global GDP. About 70% of global debt is held by advanced economies and about 30% is held by emerging markets. Globally, most debt is held by nonfinancial corporations (29%), governments (27%) and financial corporations (24%), followed by households (19%). Debt in emerging markets has nearly doubled since 2010, primarily driven by borrowing from state-owned enterprises.", "High debt levels make borrowers vulnerable to shocks that disrupt revenue and inflows of new financing. The disruption in economic activity associated with COVID-19 is a wide-scale exogenous shock that will make it significantly more difficult for many private borrowers (corporations and households) and public borrowers (governments) around the world to repay their debts. COVID-19 has hit the revenue of corporations in a range of industries: factories are ceasing production, brick-and-mortar retail stores and restaurants are closing, commodity prices have plunged (Bloomberg commodity price index\u00e2\u0080\u0094a basket of oil, metals, and food prices\u00e2\u0080\u0094has dropped 27% since the start of the year and is now at its lowest level since 1986), and overseas and in some cases domestic travel is being curtailed. ", "Households are facing a rapid increase in unemployment and, in many developing countries, a decline in remittances. With fewer resources, corporations and households may default on their debts, absent government intervention. These defaults will result in a decline in bank assets, making it difficult for banks to extend new loans during the crisis or, more severely, creating solvency problems for banks. Meanwhile, many governments are dramatically increasing spending to combat the pandemic, and are likely to face sharp reductions in revenue, putting pressure on public finances and raising the likelihood of sovereign (government) defaults. Debt dynamics are particularly problematic in emerging economies, where debt obligations denominated in foreign currencies (usually U.S. dollars). Many emerging market currencies have depreciated since the outbreak of the pandemic, raising the value of their debts in terms of local currency.", "Governments will face difficult choices if there is a widespread wave of defaults. Most governments have signaled a commitment to or already implemented policies to support those economically impacted by the pandemic. These governments face decisions about the type of assistance to provide (loans versus direct payments), the amount of assistance to provide, how to allocate rescue funds, and what conditions if any to attach to funds. Governments have undertaken extraordinary fiscal and monetary measures to combat the crisis. However, developing countries that are constrained by limited financial resources and where health systems could quickly become overloaded are particularly vulnerable. ", "In terms of defaults by governments (sovereign defaults), emergency assistance is generally provided by the IMF, and sometimes paired with additional rescue funds from other governments on a bilateral basis. The IMF and other potential donor countries will need to consider whether the IMF has adequate resources to respond to the crisis, how to allocate funding if the demand for funding exceeds the amount available, what conditions should be attached to rescue funding, and whether IMF programs should be paired with a restructuring of the government's debt (\"burden sharing\" with private investors).", "International efforts are underway to help the most vulnerable developing countries grapple with debt pressures. In mid-April 2020, the IMF tapped its Catastrophe Containment and Relief Trust (CRRT), funded by donor countries, to provide grants to cover the debt payments of 25 poor and vulnerable countries to the IMF for six months. The IMF hopes that additional donor contributions will allow this debt service relief to be extended for two years. Additionally, the G-20 finance ministers agreed to suspend debt service payments for the world's poorest countries through the end of 2020. The Institute for International Economics, which represents 450 banks, hedge funds, and other global financial funds, also announced that private creditors will join the debt relief effort on a voluntary basis. This debt standstill will free up more than $20 billion for these countries to spend on improving their health systems and fighting the pandemic. Private sector commitments were critical for official creditors, so that developing countries could redirect funds to improving health systems rather than repaying private creditors."], "subsections": []}, {"section_title": "Other Affected Sectors", "paragraphs": ["Public concerns over the spread of the virus have led to self-quarantines, reductions in airline and cruise liner travel, the closing of such institutions as the Louvre, and the rescheduling of theatrical releases of movies, including the sequel in the iconic James Bond series (titled, \"No Time to Die\"). School closures are affecting 1.5 billion children worldwide, challenging parental leave policies. Other countries are limiting the size of public gatherings.", "Some businesses are considering new approaches to managing their workforces and work methods. These techniques build on, or in some places replace, such standard techniques as self-quarantines and travel bans. Some firms are adopting an open-leave policy to ensure employees receive sick pay if they are, or suspect they are, infected. Other firms are adopting paid sick leave policies to encourage sick employees to stay home and are adopting remote working policies. Microsoft and Amazon have instructed all of their Seattle-based employees to work from home until the end of March 2020.", "The drop in business and tourist travel is causing a sharp drop in scheduled airline flights by as much as 10%; airlines are estimating they could lose $113 billion in 2020 (an estimate that could prove optimistic given the Trump Administration's announced restrictions on flights from Europe to the United States and the growing list of countries that are similarly restricting flights), while airports in Europe estimate they could lose $4.3 billion in revenue due to fewer flights. Industry experts estimate that many airlines will be in bankruptcy by May 2020 under current conditions as a result of travel restrictions imposed by a growing number of countries. The loss of Chinese tourists is another economic blow to countries in Asia and elsewhere that have benefitted from the growing market for Chinese tourists and the stimulus such tourism has provided.", "The decline in industrial activity has reduced demand for energy products such as crude oil, causing prices to drop sharply, which negatively affects energy producers, renewable energy producers, and electric vehicle manufacturers, but generally is positive for consumers and businesses. Saudi Arabia is pushing other OPEC (Organization of the Petroleum Exporting Countries) members collectively to reduce output by 1.5 million barrels a day to raise market prices. U.S. shale oil producers, who are not represented by OPEC, support the move to raise prices. An unwillingness by Russia to agree to output reductions added to other downward pressures on oil prices and caused Saudi Arabia to engage in a price war with Russia that has driven oil prices below $25 per barrel at times, half the estimated $50 per barrel break-even point for most oil producing countries. Rising oil supplies and falling demand are combining to create an estimated surplus of 25 million barrels a day and could soon overwhelm storage capacity and challenge the viability of U.S. shale oil production. In 2019, low energy prices combined with high debt levels reportedly caused U.S. energy producers to reduce their spending on capital equipment, reduced their profits and, in some cases, led to bankruptcies. Reportedly, in late 2019 and early 2020, bond and equity investors, as well as banks, reduced their lending to shale oil producers and other energy producers that typically use oil and gas reserves as collateral.", "Disruptions to industrial activity in China reportedly are causing delays in shipments of computers, cell phones, toys, and medical equipment. Factory output in China, the United States, Japan, and South Korea all declined in the first months of 2020. Reduced Chinese agricultural exports, including to Japan, are leading to shortages in some commodities. In addition, numerous auto producers are facing shortages in parts and other supplies that have been sourced in China. Reductions in international trade have also affected ocean freight prices. Some freight companies argue that they could be forced to shutter if prices do not rebound quickly. Disruptions in the movements of goods and people reportedly are causing some companies to reassess how international they want their supply chains to be. According to some estimates, nearly every member of the Fortune 1000 is being affected by disruptions in production in China."], "subsections": []}, {"section_title": "Conclusions", "paragraphs": ["The quickly evolving nature of the COVID-19 crisis creates a number of issues that make it difficult to estimate the full cost to global economic activity. These issues include, but are not limited to", "How long will the crisis last? How many workers will be affected both temporarily and permanently? How many countries will be infected and how much economic activity will be reduced? When will the economic effects peak? How much economic activity will be lost as a result of the viral outbreak? What are the most effective monetary and fiscal policies at the national and global level to address the crisis? What temporary and permanent effects will the crisis have on how businesses organize their work forces? Many of the public health measures taken by countries such as Italy, Taiwan, South Korea, Hong Kong, and China have sharply impacted their economies (with plant closures, travel restrictions, and so forth). How are the tradeoffs between public health and the economic impact of policies to contain the spread of the virus being weighed? "], "subsections": [{"section_title": "Appendix. Table A-1. Select Measures Implemented and Announced by Major Economies in Response to COVID-19", "paragraphs": [], "subsections": []}]}, {"section_title": "International Economic Cooperation", "paragraphs": ["Initial efforts at coordinating the economic response to the COVID-19 pandemic across countries have been uneven. Governments are divided over the appropriate response and in some cases have acted unilaterally, particularly when closing borders and imposing export restrictions on medical equipment and medicine. An emergency meeting of G-7 (Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States) finance ministers on March 3, 2020, fell short of the aggressive and concrete coordinated action that investors and economists had been hoping for, and U.S. and European stock markets fell sharply after the meeting. However, on March 16, 2020, the leaders of the G-7 countries held an emergency summit by teleconference to discuss and coordinate their policy responses to the economic fallout from the global spread of COVID-19. In the joint statement released by the G-7 leaders after the emergency teleconference summit, the leaders stressed they are committed to doing \"whatever is necessary to ensure a strong global response through closer cooperation and enhanced cooperation of efforts.\" The countries pledged to coordinate research efforts, increase the availability of medical equipment; mobilize \"the full range\" of policy instruments, including monetary and fiscal measures, as well as targeted actions to support workers, companies, and sectors most affected by the spread of COVID-19; task the finance ministers to coordinate on a weekly basis, and direct the IMF and the World Bank Group, as well as other international organizations, to support countries worldwide as part of a coordinated global response. G-7 coordination has not been without problems, however, including disagreement among G-7 foreign affairs ministers about how to refer to the virus (coronavirus or the \"Wuhan virus\") and concerns about collaboration on vaccine research.", "The G-20, which has a broader membership of major advanced and emerging-market economies representing 85% of world GDP, was slower to respond to the pandemic. Even though G-20 coordination is widely viewed as critical in the response to the global financial crisis of 2008-2009, several factors may have complicated G-20 coordination in the current context: the Trump Administration's prioritization of an \"America First\" foreign policy over one committed to multilateralism; the 2020 chair of the G-20, Saudi Arabia, is embroiled in its own domestic political issues and oil price war; and U.S.-China tensions make G-20 consensus more difficult. The G-20 held a summit by teleconference on March 26, 2020, but the resulting communique was criticized for failing to include concrete action items beyond what national governments were already doing. However, G-20 coordination appears to be gaining momentum, most notably with the G-20 agreement on debt relief for low-income countries (see \" Looming Debt Crises and Debt Relief Efforts \").", "Meanwhile, international organizations including the IMF and multilateral development banks, have tried to forge ahead with economic support given their current resources. Additionally, the Financial Stability Board (FSB), an international body including the United States that monitors the global financial system and makes regulations to ensure stability, released a statement on March 20, 2020, that its members are actively cooperating to maintain financial stability during market stress related to COVID-19. The FSB is encouraging governments to use flexibility within existing international standards to provide continued access to funding for market participants and for businesses and households facing temporary difficulties from COVID-19, while noting that many FSB members have already taken action to release available capital and liquidity buffers."], "subsections": []}, {"section_title": "Looming Debt Crises and Debt Relief Efforts", "paragraphs": ["COVID-19 could trigger a wave of defaults around the world. In Q3 2019\u00e2\u0080\u0094before the outbreak of COVID-19\u00e2\u0080\u0094global debt levels reached an all-time high of nearly $253 trillion, about 320% of global GDP. About 70% of global debt is held by advanced economies and about 30% is held by emerging markets. Globally, most debt is held by nonfinancial corporations (29%), governments (27%) and financial corporations (24%), followed by households (19%). Debt in emerging markets has nearly doubled since 2010, primarily driven by borrowing from state-owned enterprises.", "High debt levels make borrowers vulnerable to shocks that disrupt revenue and inflows of new financing. The disruption in economic activity associated with COVID-19 is a wide-scale exogenous shock that will make it significantly more difficult for many private borrowers (corporations and households) and public borrowers (governments) around the world to repay their debts. COVID-19 has hit the revenue of corporations in a range of industries: factories are ceasing production, brick-and-mortar retail stores and restaurants are closing, commodity prices have plunged (Bloomberg commodity price index\u00e2\u0080\u0094a basket of oil, metals, and food prices\u00e2\u0080\u0094has dropped 27% since the start of the year and is now at its lowest level since 1986), and overseas and in some cases domestic travel is being curtailed. ", "Households are facing a rapid increase in unemployment and, in many developing countries, a decline in remittances. With fewer resources, corporations and households may default on their debts, absent government intervention. These defaults will result in a decline in bank assets, making it difficult for banks to extend new loans during the crisis or, more severely, creating solvency problems for banks. Meanwhile, many governments are dramatically increasing spending to combat the pandemic, and are likely to face sharp reductions in revenue, putting pressure on public finances and raising the likelihood of sovereign (government) defaults. Debt dynamics are particularly problematic in emerging economies, where debt obligations denominated in foreign currencies (usually U.S. dollars). Many emerging market currencies have depreciated since the outbreak of the pandemic, raising the value of their debts in terms of local currency.", "Governments will face difficult choices if there is a widespread wave of defaults. Most governments have signaled a commitment to or already implemented policies to support those economically impacted by the pandemic. These governments face decisions about the type of assistance to provide (loans versus direct payments), the amount of assistance to provide, how to allocate rescue funds, and what conditions if any to attach to funds. Governments have undertaken extraordinary fiscal and monetary measures to combat the crisis. However, developing countries that are constrained by limited financial resources and where health systems could quickly become overloaded are particularly vulnerable. ", "In terms of defaults by governments (sovereign defaults), emergency assistance is generally provided by the IMF, and sometimes paired with additional rescue funds from other governments on a bilateral basis. The IMF and other potential donor countries will need to consider whether the IMF has adequate resources to respond to the crisis, how to allocate funding if the demand for funding exceeds the amount available, what conditions should be attached to rescue funding, and whether IMF programs should be paired with a restructuring of the government's debt (\"burden sharing\" with private investors).", "International efforts are underway to help the most vulnerable developing countries grapple with debt pressures. In mid-April 2020, the IMF tapped its Catastrophe Containment and Relief Trust (CRRT), funded by donor countries, to provide grants to cover the debt payments of 25 poor and vulnerable countries to the IMF for six months. The IMF hopes that additional donor contributions will allow this debt service relief to be extended for two years. Additionally, the G-20 finance ministers agreed to suspend debt service payments for the world's poorest countries through the end of 2020. The Institute for International Economics, which represents 450 banks, hedge funds, and other global financial funds, also announced that private creditors will join the debt relief effort on a voluntary basis. This debt standstill will free up more than $20 billion for these countries to spend on improving their health systems and fighting the pandemic. Private sector commitments were critical for official creditors, so that developing countries could redirect funds to improving health systems rather than repaying private creditors."], "subsections": []}]}}
{"id": "R45875", "title": "Interior, Environment, and Related Agencies: Overview of FY2020 Appropriations", "released_date": "2019-11-21T00:00:00", "summary": ["The Interior, Environment, and Related Agencies appropriations bill contains funding for more than 30 agencies and entities. They include most of the Department of the Interior (DOI) as well as agencies within other departments, such as the Forest Service within the Department of Agriculture and the Indian Health Service within the Department of Health and Human Services. The bill also provides funding for the Environmental Protection Agency (EPA), arts and cultural agencies, and other organizations and entities. Issues for Congress include determining the amount, terms, and conditions of funding for agencies and programs.", "Currently, Interior, Environment, and Related Agencies generally are receiving appropriations at the FY2019 level (in Division E of P.L. 116-6 ). Continuing appropriations are being provided because no regular appropriations were provided before the start of the 2020 fiscal year (on October 1, 2019). Division A of P.L. 116-59 provided continuing appropriations through November 21, 2019. The House and Senate passed a measure extending continuing appropriations through December 20, 2019, unless full-year appropriations are enacted sooner. The President signed that measure on November 21, 2019.", "For FY2020, President Trump requested $32.47 billion for Interior, Environment, and Related Agencies, including $2.25 billion for DOI and Forest Service wildfire suppression under a discretionary cap adjustment. For the 10 major DOI agencies in Title I of the bill, the request was $11.75 billion, or 36.2% of the $32.47 billion total requested. For EPA, funded in Title II of the bill, the request was $6.22 billion, or 19.2% of the total. For the 23 agencies and other entities currently funded in Title III of the bill, the request was $14.50 billion, or 44.7% of the total.", "The President's FY2020 request would be $3.14 billion (8.8%) lower than the FY2019 regular enacted appropriation of $35.61 billion (in P.L. 116-6 , Division E), and $4.72 billion (12.7%) lower than the FY2019 total appropriation of $37.19 billion, which included $1.58 billion in emergency supplemental appropriations for disaster relief (in P.L. 116-20 , Title VII). (See the figure below.)", "On June 25, 2019, the House passed H.R. 3055 with $39.59 billion (in Division C) in FY2020 appropriations for agencies in the Interior bill. This total included $2.25 billion for wildfire suppression under the cap adjustment, as requested by the President. The FY2020 House-passed total would be $2.40 billion (6.4%) higher than the FY2019 total of $37.19 billion in regular and emergency appropriations, and $3.98 billion (11.2%) higher than the FY2019 total of $35.61 billion in regular appropriations. It would also be $7.12 billion (21.9%) higher than the President's FY2020 request of $32.47 billion and $1.48 billion (3.9%) higher than the FY2020 Senate-passed amount of $38.11 billion.", "On October 31, 2019, the Senate passed H.R. 3055 with $38.11 billion (in Division C) for agencies in the Interior bill. This total included $2.25 billion for wildfire suppression under the cap adjustment. The FY2020 Senate-passed total would be $918.8 million (2.5%) higher than the FY2019 total of $37.19 billion in regular and emergency appropriations, $2.50 billion (7.0%) higher than the FY2019 total of $35.61 billion in regular appropriations, and $5.64 billion (17.4%) higher than the FY2020 President's request of $32.47 billion. However, the Senate-passed amount would be $1.48 billion (3.7%) lower than the FY2020 House-passed amount of $39.59 billion.", "For individual agencies and programs in the bill, there are many differences among the funding levels enacted for FY2019 and those requested by the President for FY2020, approved by the House for FY2020, and approved by the Senate for FY2020. This report highlights funding for selected agencies and programs that have been among the many of interest to Congress, stakeholders, and the public. They include the Bureau of Land Management, EPA, U.S. Fish and Wildlife Service, Forest Service, Indian Affairs, Indian Health Service, Land and Water Conservation Fund, National Park Service, Payments in Lieu of Taxes Program, Reorganization of DOI, Smithsonian Institution, U.S. Geological Survey, and Wildland Fire Management."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["This report focuses on FY2020 discretionary appropriations for Interior, Environment, and Related Agencies. At issue for Congress are determining the amount of funding for agencies and programs in the bill, and the terms and conditions of such funding. ", "Currently, Interior, Environment, and Related Agencies generally are receiving appropriations at the FY2019 level (in Division E of P.L. 116-6 ). Continuing appropriations are being provided because no regular appropriations were provided before the start of the 2020 fiscal year (on October 1, 2019). Division A of P.L. 116-59 provided continuing appropriations through November 21, 2019. The House and Senate passed a measure ( H.R. 3055 ) extending continuing appropriations through December 20, 2019, unless full-year appropriations are enacted sooner. The President signed that measure on November 21, 2019. ", "For FY2020, President Trump sought $32.47 billion for agencies in the Interior bill, including $2.25 billion for wildfire suppression under a discretionary cap adjustment. The House included FY2020 appropriations for Interior, Environment, and Related Agencies in Division C of H.R. 3055 , as passed on June 25, 2019. The measure contained a total of $39.59 billion, including $2.25 billion for wildfire suppression under the discretionary cap adjustment. In earlier action, on June 3, 2019, the House Appropriations Committee reported H.R. 3052 (accompanied by H.Rept. 116-100 ). Similar to H.R. 3055 as passed by the House, H.R. 3052 also contained a total of $39.59 billion, including $2.25 billion for wildfire suppression under the discretionary cap adjustment. ", "The Senate included FY2020 appropriations for Interior, Environment, and Related Agencies in Division C of H.R. 3055 , as passed on October 31, 2019. The measure contained a total of $38.11 billion, including $2.25 billion for wildfire suppression under the cap adjustment. In earlier action, on September 26, 2019, the Senate Appropriations Committee reported S. 2580 (accompanied by S.Rept. 116-123 ). Similar to H.R. 3055 as passed by the Senate, S. 2580 also contained a total of $38.11 billion, including $2.25 billion for wildfire suppression under the discretionary cap adjustment.", "This report first presents a short overview of the agencies and other entities funded in the bill. It then describes the appropriations requested by President Trump for FY2020 for Interior, Environment, and Related Agencies. Next, it briefly compares the total appropriations enacted for FY2019, requested by the President for FY2020, passed by the House for FY2020, and passed by the Senate for FY2020. Finally, this report compares funding enacted for FY2019, requested by the Administration for FY2020, passed by the House for FY2020, and passed by the Senate for FY2020 for selected agencies and issues that have been among those of particular interest to Congress. They include the Bureau of Land Management, Environmental Protection Agency (EPA), U.S. Fish and Wildlife Service, Forest Service, Indian Affairs, Indian Health Service, Land and Water Conservation Fund, National Park Service, Payments in Lieu of Taxes Program, Reorganization of the Department of the Interior, Smithsonian Institution, U.S. Geological Survey, and Wildland Fire Management. This report will be revised to reflect further congressional action on FY2020 Interior appropriations.", "Appropriations are complex. Budget justifications for some agencies are large, often a few hundred pages long, and contain numerous funding, programmatic, and legislative changes for congressional consideration. Further, appropriations laws provide funds for numerous accounts, activities, and subactivities, and the accompanying explanatory statements provide additional directives and other important information. This report does not provide in-depth information at the account and subaccount levels, nor does it generally detail budgetary reorganizations or legislative changes enacted in law or proposed for FY2020. For information on a particular agency or on individual accounts, programs, or activities administered by a particular agency, contact the key policy staff listed at the end of this report. In addition, for selected reports related to appropriations for Interior, Environment, and Related Agencies, such as individual agencies (e.g., National Park Service) or cross-cutting programs (e.g., Wildland Fire Management), see the \"Interior & Environment Appropriations\" subissue under the \"Appropriations\" Issue Area page on the Congressional Research Service (CRS) website."], "subsections": []}, {"section_title": "Overview of Interior, Environment, and Related\u00c2 Agencies", "paragraphs": ["The annual Interior, Environment, and Related Agencies appropriations bill includes funding and other provisions for agencies and programs in three federal departments and for numerous related agencies. The Interior bill typically contains three primary appropriations titles and a fourth title with general provisions. Title I provides funding for most Department of the Interior (DOI) agencies, many of which manage land and other natural resource or regulatory programs. Title I also typically includes general provisions related to DOI agencies. Title II contains appropriations and administrative provisions for EPA. Title III, Related Agencies, currently funds 23 agencies in other departments, such as the Forest Service in the Department of Agriculture and the Indian Health Service in the Department of Health and Human Services; arts and cultural agencies, including the Smithsonian Institution; and various other organizations and entities. Title III also contains administrative provisions for some agencies funded therein. A fourth title of the bill, General Provisions, typically contains additional guidance and direction for agencies in the bill. In addition, in the FY2019 appropriations law, Title IV also included appropriations for EPA. Selected major agencies in the Interior bill are briefly described below."], "subsections": [{"section_title": "Title I. Department of the Interior7", "paragraphs": ["DOI's mission is to conserve and manage the nation's natural resources and cultural heritage; provide scientific and other information about those resources and natural hazards; and exercise trust responsibilities and other commitments to American Indians, Alaska Natives, and affiliated island communities. There are eight DOI agencies and two other broad accounts funded in the Interior bill that carry out this mission. Hereinafter, these agencies and broad accounts are referred to collectively as the 10 DOI \"agencies.\" Not including the two broad accounts, the DOI agencies funded in the Interior bill include the following:", "The Bureau of Land Management administers about 246 million acres of public land, mostly in the West, for diverse uses such as energy and mineral development, livestock grazing, recreation, and preservation. The agency also is responsible for more than 700 million acres of federal onshore subsurface mineral estate throughout the nation and supervises the mineral operations on about 60 million acres of Indian trust lands. The U.S. F ish and Wildlife Service administers 89 million acres of federal land within the National Wildlife Refuge System and other areas, including 77 million acres in Alaska. It also manages several large marine refuges and marine national monuments, sometimes jointly with other federal agencies. In addition, the U.S. Fish and Wildlife Service, together with the National Marine Fisheries Service (Department of Commerce), is responsible for implementing the Endangered Species Act (16 U.S.C. \u00c2\u00a7\u00c2\u00a71531 et seq.); promoting wildlife habitat; enforcing federal wildlife laws; supporting wildlife and ecosystem science; conserving migratory birds; administering grants to aid state fish and wildlife programs; and coordinating with state, international, and other federal agencies on fish and wildlife issues. The National Park Service administers 80 million acres of federal land within the National Park System, including 419 separate units in the 50 states, District of Columbia, and U.S. territories. Roughly two-thirds of the system's lands are in Alaska. The National Park Service has a dual mission\u00e2\u0080\u0094to preserve unique resources and to provide for their enjoyment by the public. The agency also supports and promotes some resource conservation activities outside the National Park System through grant and technical assistance programs and cooperation with partners. The U.S. Geological Survey is a science agency that provides physical and biological information related to geological resources; natural hazards; climate and land use change; and energy, mineral, water, and biological sciences and resources. In addition, it is the federal government's principal civilian mapping agency (e.g., topographical and geological mapping) and a primary source of data on the quality of the nation's water resources (e.g., streamgaging). The Bureau of Ocean Energy Management manages development of the nation's offshore conventional and renewable energy resources in the Atlantic, the Pacific, the Gulf of Mexico, and the Arctic. These resources are located in areas covering approximately 1.7 billion acres located beyond state waters, mostly in the Alaska region (more than 1 billion acres) but also off all coastal states. The Bureau of Safety and Environmental Enforcement provides regulatory and safety oversight for resource development in the outer continental shelf. Among its responsibilities are oil and gas permitting, facility inspections, environmental compliance, and oil spill response planning. The Office of Surface Mining Reclamation and Enforcement works with states and tribes to reclaim abandoned coal mining sites. The agency also regulates active coal mining sites to minimize environmental impacts during mining and to reclaim affected lands and waters after mining. Indian Affairs agencies provide and fund a variety of services to federally recognized American Indian and Alaska Native tribes and their members. Historically, these agencies have taken the lead in federal dealings with tribes. The Bureau of Indian Education funds an elementary and secondary school system, institutions of higher education, and other educational programs. The Bureau of Indian Affairs is responsible for programs that include government operations, courts, law enforcement, fire protection, social programs, roads, economic development, employment assistance, housing repair, irrigation, dams, Indian rights protection, implementation of land and water settlements, and management of trust assets (real estate and natural resources)."], "subsections": []}, {"section_title": "Title II. Environmental Protection Agency", "paragraphs": ["EPA has no organic statute establishing an overall mission; rather, the agency administers various environmental statutes, which have an express or general objective to protect human health and the environment. Primary responsibilities include the implementation of federal statutes regulating air quality, water quality, drinking water safety, pesticides, toxic substances, management and disposal of solid and hazardous wastes, and cleanup of environmental contamination. EPA also awards grants to assist states and local governments in implementing federal law and complying with federal requirements to control pollution. The agency also administers programs that provide financial assistance for public wastewater and drinking water infrastructure projects."], "subsections": []}, {"section_title": "Title III. Related Agencies", "paragraphs": ["Title III of the Interior bill currently funds 23 agencies, organizations, and other entities, which are collectively referred to hereinafter as the \"Related Agencies.\" Among the Related Agencies funded in the Interior bill, roughly 95% of the funding is typically provided to the following: ", "The Forest Service in the Department of Agriculture manages 193 million acres of federal land within the National Forest System\u00e2\u0080\u0094consisting of national forests, national grasslands, and other areas\u00e2\u0080\u0094in 43 states, the Commonwealth of Puerto Rico, and the Virgin Islands. It also provides technical and financial assistance to states, tribes, and private forest landowners and conducts research on sustaining forest resources for future generations. The Indian Health Service in the Department of Health and Human Services provides medical and environmental health services for approximately 2.6 million American Indians and Alaska Natives. Health care is provided through a system of facilities and programs operated by the agency, tribes and tribal organizations, and urban Indian organizations. The agency operates 25 hospitals, 50 health centers, 26 health stations, and 2 school health centers. Tribes and tribal organizations, through Indian Health Service contracts and compacts, operate another 22 hospitals, 280 health centers, 62 health stations, 134 Alaska Native village clinics, and 6 school health centers. The Smithsonian Institution is a museum and research complex consisting of 19 museums and galleries, the National Zoological Park (\"National Zoo\"), and 9 research facilities throughout the United States and around the world. Established by federal legislation in 1846 with the acceptance of a trust donation by the institution's namesake benefactor, the Smithsonian is funded by both federal appropriations and a private trust. The National Endowment for the Arts and the National Endowment for the Humanities make up the National Foundation on the Arts and the Humanities. The National Endowment for the Arts is a major federal source of support for all arts disciplines. Since 1965, it has awarded more than 145,000 grants, which have been distributed to all states. The National Endowment for the Humanities generally supports grants for humanities education, research, preservation, and public humanities programs; creation of regional humanities centers; and development of humanities programs under the jurisdiction of state humanities councils. Since 1965, it has awarded approximately 63,000 grants. It also supports a Challenge Grant program to stimulate and match private donations in support of humanities institutions."], "subsections": []}]}, {"section_title": "FY2020 Appropriations", "paragraphs": [], "subsections": [{"section_title": "Components of President Trump's Request", "paragraphs": ["For FY2020, President Trump requested $32.47 billion for the more than 30 agencies and entities in the Interior, Environment, and Related Agencies appropriations bill. This total included $2.25 billion for certain wildfire suppression activities under an adjustment to discretionary spending limits for FY2020. Budget authority designated for those activities would cause the spending limits to be adjusted, making it effectively not subject to the limits. ", "For the 10 major DOI agencies in Title I of the bill, the request was $11.75 billion, or 36.2% of the $32.47 billion total requested. For EPA, funded in Title II of the bill, the request was $6.22 billion, or 19.2% of the total. For the 23 agencies and other entities currently funded in Title III of the bill, the request was $14.50 billion, or 44.7% of the total.", "Appropriations for agencies vary widely for reasons relating to the number, breadth, and complexity of agency responsibilities; alternative sources of funding (e.g., mandatory appropriations); and Administration and congressional priorities, among other factors. Thus, although the President's FY2020 request covered more than 30 agencies, funding for a small subset of these agencies accounted for most of the total. For example, the requested appropriations for three agencies\u00e2\u0080\u0094EPA, Forest Service, and Indian Health Service\u00e2\u0080\u0094were more than half (59.2%) of the total request. Further, more than three-quarters (76.2%) of the request was for these three agencies and two others, National Park Service and Indian Affairs. ", "For DOI agencies, the FY2020 requests ranged from $121.7 million for the Office of Surface Mining Reclamation and Enforcement to $2.77 billion for Indian Affairs. The requests for 5 of the 10 agencies exceeded $1 billion. Nearly half (47.0%) of the $11.75 billion requested for DOI agencies was for two agencies\u00e2\u0080\u0094Indian Affairs ($2.77 billion) and the National Park Service ($2.74 billion). ", "For Related Agencies in Title III, the requested funding levels exhibited even more variation. The President sought amounts ranging from no funding for two entities\u00e2\u0080\u0094grants under National Capital Arts and Cultural Affairs and the Women's Suffrage Centennial Commission\u00e2\u0080\u0094to $7.09 billion for the Forest Service. The Indian Health Service, with a request of $5.91 billion, was the only other agency in Title III for which the President requested more than $1 billion. The next-largest request was for the Smithsonian Institution, at $978.3 million. By contrast, the other 20 Title III entities each had requests of $154.1 million or less, including 12 with requests of less than $11 million each. ", " Figure 2 identifies the share of the President's FY2020 request for particular agencies in the Interior bill. "], "subsections": []}, {"section_title": "Overview of FY2020 Requested, House-Passed, and Senate-Passed Appropriations Compared with FY2019 Enacted Appropriations", "paragraphs": ["For FY2019, the total enacted appropriation for Interior, Environment, and Related Agencies was $37.19 billion. This total included $35.61 billion in regular appropriations and $1.58 billion in emergency supplemental appropriations for disaster relief. The disaster relief monies were provided to several agencies for various purposes. The FY2019 appropriation did not include a discretionary cap adjustment for wildfire suppression. ", "As noted, for FY2020, the President sought $32.47 billion for agencies in the Interior bill, including $2.25 billion for wildfire suppression under a discretionary cap adjustment. The President's FY2020 request would be $3.14 billion (8.8%) lower than the FY2019 regular enacted appropriation of $35.61 billion and $4.72 billion (12.7%) lower than the FY2019 total appropriation of $37.19 billion. ", "On June 25, 2019, the House passed H.R. 3055 with $39.59 billion (in Division C) for agencies in the Interior bill. This total included $2.25 billion for wildfire suppression under the cap adjustment. The FY2020 House-passed total is higher than the FY2019 enacted total, the FY2020 requested amount, and the FY2020 Senate-passed level. Specifically, the House-passed amount is", "$2.40 billion (6.4%) higher than the FY2019 total of $37.19 billion in regular and emergency appropriations, $3.98 billion (11.2%) higher than the FY2019 total of $35.61 billion in regular appropriations, $7.12 billion (21.9%) higher than the FY2020 President's request of $32.47 billion, and $1.48 billion (3.9%) higher than the FY2020 Senate-passed amount of $38.11 billion. ", "On October 31, 2019, the Senate passed H.R. 3055 with $38.11 billion (in Division C) for agencies in the Interior bill. This total included $2.25 billion for wildfire suppression under the cap adjustment. The FY2020 Senate-passed total is higher than the FY2019 enacted total and the FY2020 requested amount but lower than the House-passed level. Specifically, the Senate-passed amount is", "$918.8 million (2.5%) higher than the FY2019 total of $37.19 billion in regular and emergency appropriations, $2.50 billion (7.0%) higher than the FY2019 total of $35.61 billion in regular appropriations, $5.64 billion (17.4%) higher than the FY2020 President's request of $32.47 billion, and $1.48 billion (3.7%) lower than the FY2020 House-passed amount of $39.59 billion. ", " Figure 3 depicts the FY2019 enacted regular and emergency supplemental appropriations, the FY2020 appropriations requested by the President, the FY2020 appropriations passed by the House in H.R. 3055 , and the FY2020 appropriations passed by the Senate in H.R. 3055 . It shows the appropriations contained in each of the three main appropriations titles of the Interior bill\u00e2\u0080\u0094Title I (DOI), Title II (EPA), and Title III (Related Agencies). For FY2019 enacted appropriations, it also depicts the appropriations for EPA in the general provisions in Title IV and the emergency supplemental appropriations for several agencies for disaster relief. Table 1 , at the end of this report, lists the appropriations for each agency that were enacted for FY2019, requested by the President for FY2020, passed by the House for FY2020 in H.R. 3055 , and passed by the Senate for FY2020 in H.R. 3055 . "], "subsections": []}, {"section_title": "Selected Agencies and Programs28", "paragraphs": ["There are many differences among the FY2019 enacted appropriations and the FY2020 funding requested by the President, passed by the House, and passed by the Senate. Selected agencies and programs are highlighted below, among the many of interest to Members of Congress, stakeholders, and the public. For the selected agencies and programs, the discussions below briefly compare FY2019 total funding (regular and supplemental) with FY2020 levels requested by the Administration, approved by the House in H.R. 3055 , and approved by the Senate in H.R. 3055. Excluding FY2019 emergency supplemental appropriations would result in different comparisons for some of the agencies and programs covered below."], "subsections": [{"section_title": "Bureau of Land Management", "paragraphs": ["The Administration sought $1.19 billion for the Bureau of Land Management (BLM) for FY2020, a decrease of 11.8% from the FY2019 appropriation ($1.35 billion). The request contained lower funding for the main BLM account, Management of Lands and Resources, and for many programs within the account, including rangeland management, wildlife and aquatic habitat management, resource management planning, and deferred maintenance. However, the Administration requested increases for some programs within the account, including management of coal and renewable energy. The Administration did not seek funding for new land acquisition by BLM (from the Land and Water Conservation Fund [LWCF]), and it proposed an overall rescission to the Land Acquisition account for an account total of -$10.0 million. Other accounts would receive level funding under the Administration's request, including management of Oregon and California Grant Lands. For this account, the President also proposed a budget restructuring. ", "The House-passed bill contained $1.41 billion in BLM appropriations; this would be an increase of 4.9% over FY2019. It would increase funding for the Management of Lands and Resources account and for many programs within the account, such as wild horse and burro management and wildlife and aquatic habitat management. The measure also contained additional appropriations for other accounts relative to FY2019, such as Land Acquisition and Oregon and California Grant Lands. The House did not support the budget restructuring for the latter account as proposed in the President's FY2020 request. ", "With $1.40 billion in FY2020 appropriations, the Senate-passed bill would increase BLM appropriations 4.0% over the FY2019 level. The Senate-passed measure included additional appropriations for the Management of Lands and Resources account and generally would provide level or increased funding for programs within the account. The largest increase within the account ($35.0 million, 43%) would be for wild horse and burro management. For other accounts, the Senate-passed bill generally contained funding level or nearly level to the FY2019 enacted appropriation. The Senate did not support the budget restructuring for the Oregon and California Grant Lands account, as proposed in the President's FY2020 request. "], "subsections": []}, {"section_title": "Environmental Protection Agency31", "paragraphs": ["For FY2019, EPA received $8.06 billion in Title II of the regular appropriations law and another $791.0 million in Title IV of that law, for an FY2019 regular appropriation of $8.85 billion. In addition, EPA received $414.0 million in emergency supplemental appropriations for FY2019, resulting in an FY2019 total appropriation of $9.26 billion. ", "Relative to total FY2019 appropriations of $9.26 billion, EPA would receive a decrease (32.8%) for FY2020 under the Administration's request of $6.22 billion. The request contained lower funding for most accounts, among them Science and Technology; Environmental Programs and Management (including geographic programs); and State and Tribal Assistance Grants (STAG), including for categorical grants and capitalization grants to states for wastewater infrastructure projects through the Clean Water State Revolving Fund (SRF) and for drinking water infrastructure grants to states through the Drinking Water SRF. Only the Buildings and Facilities account would receive an increase under the President's request. ", "EPA would receive $9.53 billion for FY2020 under the House-passed bill, an increase (2.9%) relative to total FY2019 appropriations. Most accounts would receive additional funds over FY2019 total appropriations. However, the STAG account and the Water Infrastructure Finance and Innovation Program would receive less funding under the House-passed bill. ", "The Senate-passed bill contained $9.01 billion for EPA for FY2020, a decrease (2.7%) from the FY2019 total appropriation. Relative to FY2019 total appropriations, some accounts would remain level (e.g., Buildings and Facilities), others would increase (e.g., Environmental Programs and Management), and still others would decrease (e.g., State and Tribal Assistance Grants)."], "subsections": []}, {"section_title": "U.S. Fish and Wildlife Service", "paragraphs": ["For the U.S. Fish and Wildlife Service (FWS), the Administration proposed $1.33 billion for FY2020, a reduction of 20.0% from the FY2019 level ($1.66 billion). The Administration sought to reduce funding for all FWS accounts, for instance for Construction (by 88.5%) and Land Acquisition (by 93.0%, with no new acquisitions funded from LWCF). The Resource Management account would be reduced overall (by 2.7%), but the President proposed increases for some programs, including the National Wildlife Refuge System. Citing \"higher priorities,\" the Administration proposed eliminating discretionary appropriations for two FWS accounts\u00e2\u0080\u0094the Cooperative Endangered Species Conservation Fund and the National Wildlife Refuge Fund. ", "The House-passed bill would reduce FWS funding by 0.5% relative to the FY2019 enacted appropriation, with Construction reduced as under the President's proposal. However, the measure would increase funding for several accounts. They included Resource Management, with additional funds for ecological services and the National Wildlife Refuge System, among other programs; the Cooperative Endangered Species Conservation Fund; and Land Acquisition. The House-passed bill also would retain level funding for the National Wildlife Refuge Fund.", "The Senate-passed bill would reduce FWS funding by 1.8% from the FY2019 enacted level. Some accounts would decrease, including Construction, Land Acquisition, and the Cooperative Endangered Species Conservation Fund. Other accounts would increase, including Resource Management, with additional funds for fish and aquatic conservation and the National Wildlife Refuge System, among other programs. The bill would provide level funding for one account\u00e2\u0080\u0094the National Wildlife Refuge Fund. "], "subsections": []}, {"section_title": "Forest Service", "paragraphs": ["For FY2020, the Administration requested $7.09 billion (2.1% more) for the Forest Service (FS) than was enacted for FY2019 ($6.94 billion). Within the overall increase, the President proposed higher funding (15.4%) for Wildland Fire Management, including $1.95 billion under a discretionary cap adjustment for wildfire suppression, as noted. The President sought reduced funding for all other FS accounts, including 47.5% less for State and Private Forestry, 15.4% less for Forest and Rangeland Research, and 5.4% less for the National Forest System. The Administration also sought to eliminate funding for some accounts and programs, including Land Acquisition (from LWCF), the Collaborative Forest Landscape Restoration Fund, and certain cooperative forestry programs such as Forest Legacy. ", "For FY2020, the House-passed bill would provide an increase for FS of 10.1% over FY2019. The measure contained $921.8 million in a new account\u00e2\u0080\u0094Forest Service Operations\u00e2\u0080\u0094for costs of administrative support functions, including salaries and expenses of employees, leases for buildings and sites where support functions occur, utilities and telecommunications, business services, and information technology. The House Appropriations Committee recommended this new account to eliminate the use of \"cost pools\" for these support functions. The six major FS accounts would be correspondingly reduced in FY2020 to exclude costs of support functions, as shown in the committee's report. In part because of the proposed new account, the House-passed bill reflects reductions for FY2020 for three of the major FS accounts (Forest and Rangeland Research, National Forest System, and Capital Improvement and Maintenance). However, the appropriation for each of these three accounts, together with funding for related administrative support purposes in the new account, would appear to total more than the FY2019 appropriation for each major account.", "The Senate-passed bill would provide FS with an increase of 7.6% over FY2019. The measure contained a new Forest Service Operations account, similar to the House-passed bill, but with $953.8 million. The Senate Appropriations Committee supported this new account for certain costs of salaries and expenses, including those funded by \"cost pools,\" to increase transparency and efficiency of agency spending by distinguishing salaries and expenses from other project costs. Other FS accounts would be reduced in FY2020 to exclude costs of support functions captured by the new account, as reflected in the committee's report. In part because of the proposed new account, the Senate-passed bill reflects reductions for several FS accounts from FY2019 levels."], "subsections": []}, {"section_title": "Indian Affairs", "paragraphs": ["For several years, instructions accompanying annual appropriations acts had encouraged the Secretary of the Interior to consolidate Indian education functions within the Bureau of Indian Education (BIE) and present such reorganization in the subsequent fiscal year budget request. For FY2020, the Administration proposed funding the BIE independently from the Bureau of Indian Affairs (BIA), and submitted a separate budget justification for each bureau. In FY2019 (and earlier years), Indian education was funded in an account with other Indian programs. In proposing a separate budget structure for BIE, the Administration sought to \"strengthen BIE as an independent bureau with a separate budget structure to advance ongoing BIE reforms to improve learning and student outcomes\" and to reduce overlapping functions between BIA and BIE to \"better deliver services to schools, maximize efficiency, and build capacity within BIE.\" ", "The Administration's proposed budget restructuring makes comparisons with FY2019 somewhat challenging. The combined FY2020 request of $2.77 billion for both bureaus was 9.9% less than the FY2019 enacted amount ($3.08 billion). Many Indian programs would be funded at lower levels, including human services and natural resources management, although some would be funded at higher levels, such as self-governance compacts. Construction (including construction of educational facilities) was the largest dollar decrease in the budget request ($231.4 million less); funding for education programs also would decline. ", "The House-passed measure supported the Administration's request to establish and fund the BIE separately from the BIA. The House-passed measure contained an overall increase of 14.0% relative to FY2019 funding for Indian Affairs. Many programs and activities would be funded at higher levels as compared with FY2019 enacted amounts, including tribal government, natural resources management, and public safety and justice. Construction (including construction of educational facilities) was the largest dollar increase in the House-passed measure ($174.5 million more), and funding for education programs also would increase. ", "The Senate-passed measure also supported the Administration's request to establish and fund the BIE separately from the BIA. The Senate Appropriations Committee expressed support for this separation \"in order to improve the quality of education offered to address the performance gap of student's education at BIE-funded schools.\" The bill would provide an overall increase of 1.6% over FY2019 funding for Indian Affairs. Many programs and activities would be funded at levels similar to FY2019 enacted amounts, including Indian education. However, some programs would receive additional funds, such as contract support costs (to pay tribes for services provided) and self-governance compacts. Other activities would receive lower funding, such as Indian land and water claim settlements and services under the Indian child welfare act. "], "subsections": []}, {"section_title": "Indian Health Service", "paragraphs": ["Under the Administration's FY2020 request, the Indian Health Service (IHS) would receive $5.91 billion, 1.8% more than the FY2019 appropriation ($5.80 billion). While various programs would receive additional funds, the largest dollar increase would be for hospital and health clinics ($215.9 million). The increase for hospital and health clinics included $25.0 million for an initiative seeking to end the Hepatitis C and HIV/AIDS \"epidemic in Indian Country\" and $25.0 million for adoption and implementation of a new electronic health record system to improve disease management, patient outcomes, opioid tracking, and other aspects of healthcare. Other programs would be reduced under the Administration's request. For example, the Administration proposed no funding for health education, citing other priorities; cutting funding for the construction of health care facilities (31.9%); and reducing appropriations for community health representatives (61.8%) to begin phasing out the program and replacing it with a National Community Health Aide Program. Funding for contract support costs, which helps tribes pay the costs of administering IHS-funded programs, would be nearly level, reflecting IHS's estimated need at the time of the FY2020 budget submission. ", "The House-passed bill for FY2020 contained an increase of 9.3% over FY2019 appropriations for IHS. The measure included relatively stable or higher funding for most activities. Activities that would receive additional appropriations included clinical services, with the largest dollar increase for hospital and health clinics ($273.2 million, 12.7%), including $25.0 million for the Administration's initiative to end the Hepatitis C and HIV/AIDS epidemic. Other programs that would receive increases included alcohol and substance abuse, urban Indian health services, and Indian health professions. The Indian Health Facilities account would increase by 9.7%, with the largest increase for construction of health care facilities. The House bill retained essentially level funding for health education and community health representatives. As under the President's request, funding for contract support costs would be nearly level, and $25.0 million was included for an electronic health record system. ", "The FY2020 Senate-passed measure contained an increase of 4.1% over FY2019 enacted appropriations. The measure included relatively stable or higher funding for most activities. Clinical services would receive additional funds, with the largest dollar increase for hospital and health clinics ($192.4 million, 9.0%). The Indian Health Facilities account also would be funded over the FY2019 level, with a 2.7% increase. As under the President's request, funding for contract support costs would be nearly level. The Senate bill also retained essentially level funding for health education and community health representatives and would provide $3.0 million for an electronic health record system. "], "subsections": []}, {"section_title": "Land and Water Conservation Fund", "paragraphs": ["LWCF has funded land acquisition for the four main federal land management agencies, a matching grant program to states to support outdoor recreation, and other purposes. For FY2019, a total of $435.0 million was appropriated from the LWCF. For FY2020, the Administration did not seek discretionary appropriations for most programs that received appropriations from the LWCF in FY2019. Further, the Administration proposed an overall rescission to LWCF, for a program total of -$23.5 million due to cancelation of prior-year funds for some program components. In support of this reduction, the President cited higher priorities, a need to focus resources on maintaining existing federal lands rather than acquiring additional ones, and a desire to shift funding for the state grant program to mandatory appropriations, among other reasons. ", "The House-passed bill contained a total of $524.0 million in appropriations from the LWCF, a 20.4% increase over FY2019 total LWCF appropriations. The measure included increases for each of the three main activities for which the LWCF has been used\u00e2\u0080\u0094land acquisition, the state outdoor recreation grant program, and other purposes. The Senate-passed bill, including $29.0 million in rescissions of prior year funding, would provide total appropriations from the LWCF of about $436 million. The FY2020 Senate level would be roughly level with the FY2019 enacted appropriation."], "subsections": []}, {"section_title": "National Park Service", "paragraphs": ["For FY2020, the Administration requested $2.74 billion, 18.2% less for the National Park Service (NPS) than the total enacted for FY2019 ($3.35 billion). Within the overall reduction, the President proposed cuts for each NPS account, including the Operation of the National Park System, Construction, and the Historic Preservation Fund, as well as many programs. The President proposed the elimination of discretionary funding for some programs, including grants for National Heritage Areas, grants to states for outdoor recreation, line item acquisitions by the NPS (through LWCF), and the Centennial Challenge Program (a matching grant program to encourage donations). ", "The House and Senate approved relatively level funding for FY2020, with a 0.3% increase in the House-passed bill and a 0.1% increase in the Senate-passed bill over the FY2019 enacted appropriation. Both bills included increases for some accounts and programs but decreases for others. As examples, the bills contained increased funds for the Operation of the National Park System, for programs including resource stewardship, park protection, and facility operations and maintenance, though the House-passed measure had higher funding for the account overall and for each of these three programs. Both bills also contained additional funds for Land Acquisition, for activities including grants to states for outdoor recreation and line item acquisitions by the NPS. In contrast, the House- and Senate-passed measures contained lower than the FY2019 total appropriations for Construction and for the Historic Preservation Fund, for instance. Both bills also retained funding for grants for National Heritage Areas and partnerships under the Centennial Challenge Program. "], "subsections": []}, {"section_title": "Payments in Lieu of Taxes", "paragraphs": ["The President's FY2020 request of $465.0 million would reduce (9.7%) the Payments in Lieu of Taxes Program (PILT) from the FY2019 level ($515.1 million). In the FY2020 budget justification, the Administration asserted that the requested level supports \"this important program while balancing Departmental funding priorities in a constrained budget environment. ", "For FY2020, the House- and Senate-passed bills would provide for the full statutory funding level, estimated to be $500.0 million, according to the House and Senate Appropriations Committees. PILT compensates counties and local governments for nontaxable lands within their jurisdictions. The authorized level for the program is calculated under a formula that considers various factors and varies from year to year. "], "subsections": []}, {"section_title": "Reorganization of DOI", "paragraphs": ["For FY2020, the Administration requested a total of $25.3 million for reorganization of four DOI agencies funded in the Interior bill, namely BLM, FWS, NPS, and the U.S. Geological Survey (USGS). The request would be a 79.4% increase over the FY2019 appropriation ($14.1 million) for reorganization of these agencies and Indian Affairs. Under the FY2020 request, the funds would be used for costs to agencies of transitioning to a new unified regional structure, relocating certain staff and functions, and integrating business operations. ", "The House-passed bill did not specify funding for reorganization. In its report on FY2020 legislation, the House Appropriations Committee stated that its recommended funding did not \"provide funds requested within the Department's bureaus for the Department Wide Reorganization.\" The committee expressed an understanding that DOI had not obligated FY2019 funding or provided to the committee information that had been requested related to the reorganization plan and costs. The Senate-passed bill did not make explicit the extent to which funds were included for DOI reorganization."], "subsections": []}, {"section_title": "Smithsonian Institution", "paragraphs": ["For FY2020, the Smithsonian Institution (SI) would receive $978.3 million under the Administration's request, a decrease of 6.2% relative to FY2019 enacted appropriations ($1.04 billion). However, the request contained funding at or near the FY2019 level for most SI museums and research institutes (with a 0.9% increase for these entities). It also included additional funds (3.5%) for facilities services, which encompasses maintenance, operation, security, and support. In contrast, the request would decrease (27.8%) the Facilities Capital account, which includes planning, design, and revitalization of facilities. Revitalization involves \"making major repairs or replacing declining or failed infrastructure to address the problems of advanced deterioration,\" according to the SI. Major revitalization projects that would be funded under the President's request involve the National Air and Space Museum (part of a multiyear, multiphase renovation), the National Zoo, and the Hirshhorn Museum and Sculpture Garden, among others.", "The House approved an increase (2.7%) for SI, with funding at or higher than the FY2019 level for most SI museums and research institutes (with a 3.4% increase for these entities). The House bill also included an additional 29.4% for facilities services, with most of the additional funding directed towards maintenance. The House approved a decrease of 27.8% for the Facilities Capital account, as requested by the Administration.", "The Senate-passed bill contained an increase (0.4%) for SI, with funding at or near the FY2019 level for most SI museums and research institutes (with a 0.5% increase for these entities). For facilities services, the measure included an increase of 2.6%. The Senate would decrease the Facilities Capital account (2.3%) from the FY2019 level. However, the Senate included more funding in the account for revitalization of the National Air and Space Museum than had been requested by the President or approved by the House for FY2020. "], "subsections": []}, {"section_title": "U.S. Geological Survey", "paragraphs": ["The USGS would receive $983.5 million under the Administration's FY2020 request, a decrease of 21.9% relative to its total FY2019 appropriations of $1.26 billion. It is difficult to compare FY2019 enacted and FY2020 requested funding for the agency's eight major activities. This is in part because the Administration proposed a budget restructuring that would reduce USGS budget activities from eight to seven, by eliminating the land resources mission area. The proposed restructuring also would reorganize some programs under the remaining activities. Goals include consolidating similar programs, improving communication, and enhancing integration of information, among others.", "The House approved a reduction of 1.8% for USGS for FY2020. Within the overall reduction were decreases from the FY2019 level for four of the major activities, among them natural hazards and facilities. However, the House approved increases for the other four major activities, including land resources and core science systems. The House did not adopt the Administration's proposed budget restructuring. The House Committee on Appropriations contended that it \"reduces program and funding transparency.\"", "The FY2020 Senate-passed bill contained a 3.9% decrease for USGS relative to FY2019 enacted appropriations. The Senate adopted the Administration's proposed budget restructuring. This makes it difficult to compare the FY2020 Senate-passed appropriations and FY2019 enacted appropriations for major activities. For instance, the Senate's 88.0% increase for core science systems was largely due to the transfer in of funding for national land imaging, which includes the Landsat satellite program. In FY2019, national land imaging was funded under the land resources activity, which would be abolished under the restructuring proposed by the President and supported by the Senate. "], "subsections": []}, {"section_title": "Wildland Fire Management76", "paragraphs": ["For FY2020, the Administration proposed $6.05 billion in appropriations for Wildland Fire Management (WFM) of DOI and FS, including $2.25 billion under a discretionary cap adjustment for wildfire suppression. Of the $2.25 billion, the cap adjustment would allow for $300.0 million for DOI and $1.95 billion for FS. No similar cap adjustment was in effect for FY2019. The President's request would be a 15.4% increase over the total FY2019 enacted level for DOI and FS ($5.24 billion). More specifically, the FY2020 request would increase appropriations by 29.6% for DOI and by 12.3% for FS, primarily for wildfire suppression.", "Both the House- and Senate-passed totals included $2.25 billion under a discretionary cap adjustment, as requested by the President. It is difficult to make comparisons between appropriations for Wildland Fire Management in FY2019 and appropriations for FY2020 in the House- and Senate-passed bills. This is because the FY2020 House- and Senate-passed amounts for Wildland Fire Management do not include FS appropriations for certain administrative support functions that were included in the FY2019 enacted level (and in the FY2020 President's request for Wildland Fire Management.) "], "subsections": []}]}]}]}}
{"id": "R45982", "title": "Overview of Continuing Appropriations for FY2020 (P.L. 116-59)", "released_date": "2019-10-24T00:00:00", "summary": ["This report provides an analysis of the continuing appropriations provisions for FY2020 included in Division A (Continuing Appropriations Act, 2020) of H.R. 4378 . The legislation also included a separate Division B (Health and Human Services Extenders and Other Matters), which extended multiple federal health care programs that were otherwise set to expire September 30, 2019, and provided for some adjustments to additional health programs. This report examines only Division A, the continuing resolution (CR) portion of the legislation. On September 27, 2019, the President signed H.R. 4378 into law ( P.L. 116-59 ).", "Division A of H.R. 4378 was termed a CR because it provided temporary authority for federal agencies and programs to continue spending in FY2020 in the same manner as a resolution enacted separately for that purpose. It provides temporary funding for the programs and activities covered by all 12 of the regular appropriations bills, since none of them had been enacted prior to the start of FY2020. These provisions provide continuing budget authority for projects and activities funded in FY2019 by that fiscal year's applicable appropriations acts, with some exceptions. It includes both budget authority that is subject to the statutory discretionary spending limits on defense and nondefense spending and also budget authority that is effectively exempt from those limits, such as that designated for \"Overseas Contingency Operations/Global War on Terrorism.\"", "Funding under the terms of the CR is effective October 1, 2019, through November 21, 2019\u00e2\u0080\u0094roughly the first seven weeks of the fiscal year.", "The CR generally provides budget authority for FY2020 for most projects and activities at the rate at which they were funded during FY2019. Although it is effective only through November 21, the cost estimate prepared by the Congressional Budget Office (CBO) provides an annualized projection of the discretionary budget authority provided in the measure. As provided in P.L. 116-59 , the amount subject to the statutory discretionary spending limits is approximately $1.253 trillion. When spending that is effectively not subject to those limits (Overseas Contingency Operations, disaster relief, emergency requirements, and program integrity adjustments) is also included, the CBO estimate is $1.345 trillion.", "CRs frequently include provisions that are specific to certain agencies, accounts, or programs. These include provisions that designate exceptions to the general funding rate formula or otherwise single out a program, activity, or purpose for which any referenced funding is extended (typically referred to as \"anomalies\"), as well as provisions that have the effect of creating new law or changing existing law (including the renewal of expiring provisions of law). The CR includes a number of such provisions, each of which is briefly summarized in this report. CRS appropriations experts for each of these provisions are indicated in the accompanying footnotes and Table 1 . Congressional clients may also access CRS Report R42638, Appropriations: CRS Experts .", "For general information on the content of CRs and historical data on CRs enacted between FY1977 and FY2019, see CRS Report R42647, Continuing Resolutions: Overview of Components and Practices ."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["Congress uses an annual appropriations process to fund discretionary spending, which supports the projects and activities of most federal government agencies. This process anticipates the enactment of 12 regular appropriations bills each fiscal year. If regular appropriations are not enacted prior to the start of the fiscal year (October 1), continuing appropriations may be used to provide temporary funding until the consideration of annual appropriations measures is completed.", "Continuing appropriations acts are often referred to as \"continuing resolutions\" (CRs), because historically they have been enacted in the form of a joint resolution. CRs also contain numerous provisions that may operate as limitations or restrictions to preserve Congress's prerogative to make funding decisions once final bills are agreed to. Numerous exceptions (or anomalies) are also often included in CRs to provide changes to funding rates, or for other purposes, to address special circumstances that may result with only temporary funding. Other rescissions or cancellations of discretionary budget authority may also be included in CRs.", "CRs may be enacted for a period of days, weeks, or months. If any of the 12 regular appropriations bills are still not enacted by the time that the first CR for a fiscal year expires, further extensions might be enacted until all regular appropriations bills have been completed or the fiscal year ends.", "None of the FY2020 regular appropriations bills was enacted prior to the start of the new fiscal year on October 1, 2019. On September 18, 2019, H.R. 4378 was introduced in the House to provide continuing appropriations for projects and activities covered by all 12 of the regular annual appropriations bills from the beginning of the fiscal year through November 21, 2019 (Division A). The legislation also included a separate Division B to extend authorization for multiple federal health care programs. The House passed the legislation on September 19, 2019, by a vote of 301-123. The Senate subsequently passed the legislation by a vote of 81-16 on September 26, 2019. On September 27, 2019, the President signed H.R. 4378 into law ( P.L. 116-59 ).", "This report provides an analysis of the continuing appropriations provisions included in the CR ( H.R. 4378 , Division A). The first two sections summarize the overall funding provided (\"Coverage, Duration, and Rate\") and budget enforcement issues associated with the statutory discretionary spending limits (\"The CR and the Statutory Discretionary Spending Limits\"). The third section of this report provides short summaries of the provisions that are agency-, account-, or program-specific. These summaries are organized by appropriations act title. In some instances, background information about the history of those appropriations, and how they operate under a CR, is provided."], "subsections": []}, {"section_title": "Coverage, Duration, and Rate", "paragraphs": ["Three components of a CR generally establish the purpose, duration, and amount of funds provided by the act:", "1. A CR's \"coverage\" relates to the purposes for which funds are provided. The projects and activities funded by a CR are typically specified with reference to regular (and, occasionally, supplemental) appropriations acts from the previous fiscal year. When a CR refers to one of those appropriations acts and provides funds for the projects and activities included in such an act, the CR is often referred to as \"covering\" that act. 2. The \"duration\" of a CR refers to the period of time for which budget authority is provided for covered activities. 3. CRs usually fund projects and activities using a \"rate for operations\" or \"funding rate\" to provide budget authority at a restricted level but do not prescribe a specified dollar amount. The funding rate for a project or activity is based on the total amount of budget authority that would be available annually for that project or activity under the referenced appropriations acts and is prorated based on the fraction of a year for which the CR is in effect, but it may also be affected by other factors that can have an effect on spending patterns over the course of a fiscal year."], "subsections": [{"section_title": "Coverage", "paragraphs": ["H.R. 4378 (\u00c2\u00a7101) covers all 12 of the regular annual appropriations bills by generally providing continuing budget authority for FY2020 through November 21, 2019, for projects and activities funded in FY2019.", "Budget authority is provided by the CR under the same terms and conditions as the referenced FY2019 appropriations acts (\u00c2\u00a7103). Effectively, this requirement extends many of the provisions in the FY2019 acts that stipulated or limited agency authorities during FY2019. In addition, in general, none of the funds are to be used to initiate or resume an activity for which budget authority was not available in FY2019 (\u00c2\u00a7104). Such provisions, as well as many of the other provisions discussed in the sections below, may protect Congress's constitutional authority to provide annual funding in the manner it chooses in whatever final appropriations measures may be enacted.", "Statutory limits on discretionary spending are in effect for FY2020, as adjusted by the Bipartisan Budget Act of 2019 (BBA 2019; P.L. 116-37 ). The CR includes both budget authority that is subject to those limits and also budget authority that is effectively exempt from those limits\u00e2\u0080\u0094including that designated or otherwise provided as \"Overseas Contingency Operations/Global War on Terrorism\" (OCO/GWOT) or \"emergency requirements,\" as well as limited amounts that may be designated as \"disaster relief or \"program integrity initiatives.\" Amounts previously receiving an OCO/GWOT, emergency, or disaster relief designation for FY2019 continue to receive this designation through the length of the CR (\u00c2\u00a7114)."], "subsections": []}, {"section_title": "Duration", "paragraphs": ["Section 101 provides that funding in the CR is effective through November 21, 2019\u00e2\u0080\u0094roughly a seven-week period of funding. The CR provides that, in general, budget authority for some or all projects and activities could be superseded by the enactment of the applicable regular appropriations act or another CR prior to November 21. For projects and activities funded in the CR that a subsequent appropriations act does not fund, budget authority would immediately cease upon such enactment, even if enactment occurs prior to November 21. However, the CR provides some exceptions to this. For instance, the OCO/GWOT designations (\u00c2\u00a7114) are specified to remain in effect through November 21. Similarly, an anomaly affecting the Ukraine Security Assistance Initiative is specified to remain in effect until September 30, 2020."], "subsections": []}, {"section_title": "Rate", "paragraphs": ["In general, the CR provides budget authority at levels provided in FY2019 appropriations acts for the duration of the CR (through November 21). The rate is based on the actual amounts made available in FY2019. A few exceptions, however, to this continued rate of operations are specified in Section 101. These adjustments are in addition to any additional exceptions specified in the various anomalies also included in later sections of the CR. For instance, five agencies are affected by variations to this general rate, including the U.S. Department of Agriculture's (USDA) Rural Water and Waste Disposal Direct Loan Program, the Department of Justice's Assets Forfeiture Fund, the Bureau of Reclamation's Upper Colorado River Basin Fund, immigration authorizations affecting the Department of Homeland Security, and the Department of State's funding for Ebola. In addition, for entitlement and other mandatory spending provided in regular appropriations acts, funding is provided at the rate sufficient to maintain program levels under current law as provided in Section 111(a)."], "subsections": []}]}, {"section_title": "The CR and the Statutory Discretionary Spending Limits", "paragraphs": [], "subsections": [{"section_title": "Background", "paragraphs": ["Appropriations for FY2020 are subject to statutory discretionary spending limits on categories of spending designated as \"defense\" and \"nondefense\" spending pursuant to the Budget Control Act of 2011 (BCA), as modified by BBA 2019. The defense category includes all discretionary spending under budget function 050 (defense), and the nondefense category includes discretionary spending in the other budget functions. If discretionary spending is enacted in excess of a statutory limit in either category, the BCA requires the level of spending to be brought into conformance through \"sequestration,\" which involves primarily across-the-board cuts to non-exempt spending in the category of the limit that was breached (i.e., defense or nondefense). Once discretionary spending is enacted, the Office of Management and Budget (OMB) evaluates that spending relative to the spending limits and determines whether sequestration is necessary. For FY2020 discretionary spending, the first such evaluation (and any necessary enforcement) is to occur within 15 calendar days after the 2019 congressional session adjourns sine die . For any FY2020 discretionary spending that becomes law after the session ends, the OMB evaluation and any enforcement of the limits would occur 15 days after enactment."], "subsections": []}, {"section_title": "FY2020", "paragraphs": ["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 annualized amount for discretionary budget authority for regular appropriations subject to the BCA limits (including projects and activities funded at the rate for operations and anomalies) is $648.452 billion for defense, which is about $18 billion below the defense limit of $666.5 billion, and $604.669 for nondefense, which is about $17 billion below the nondefense limit of $621.5 billion for FY2020.", "H.R. 4378 specified that each amount incorporated in the legislation by reference, which was previously designated as OCO/GWOT or disaster relief and not subject to the discretionary spending caps, retains that same designation (\u00c2\u00a7114). Thus when spending effectively not subject to those limits\u00e2\u0080\u0094because it was designated or otherwise provided as OCO/GWOT, disaster relief, emergency requirement, or a program integrity adjustment\u00e2\u0080\u0094is included, CBO estimates total annualized budget authority in the CR of $1.345 trillion, which is below the BBA 2019 agreement of $1.370 trillion."], "subsections": []}]}, {"section_title": "Agency-, Account-, and Program-Specific Provisions", "paragraphs": ["CRs lasting multiple weeks or longer usually include provisions that are specific to certain agencies, accounts, or programs. These provisions are generally of two types. First, certain provisions designate exceptions to the formula and purpose for which any referenced funding is extended. These are often referred to as \"anomalies.\" They often address specific issues or circumstances that may result from the extension of only current rates of funding. Second, certain provisions may have the effect of creating new law or changing existing law. Most often, these provisions are used to renew expiring provisions of law or extend the scope of certain existing statutory requirements. Substantive provisions that establish major new policies have also been included on occasion. Unless otherwise indicated, such provisions are temporary in nature and expire when the CR expires.", "These anomalies and provisions that change law may be included at the request of the President. Congress could accept, reject, or modify such proposals in the course of drafting and considering CRs. In addition, Congress may identify or initiate any other anomalies and provisions changing law that it seeks to include in the CR.", "This section of the report summarizes provisions in H.R. 4378 that are agency-, account-, or program-specific. They are alphabetically organized by appropriations act title for 11 of the 12 regular appropriations acts covered in Section 101. (There are no anomalies concerning items funded in the Legislative Branch Appropriations Act.) The summaries generally provide brief explanations of the provisions. In some cases they include additional information, such as whether a provision was requested by the President or included in prior year CRs. For additional information on specific provisions in the CR, congressional clients may contact the CRS appropriations experts, as noted in the accompanying footnote."], "subsections": [{"section_title": "Agriculture, Rural Development, Food and Drug Administration, and Related Agencies15", "paragraphs": [], "subsections": [{"section_title": "Section 101(1)\u00e2\u0080\u0094Rural Water and Waste Disposal Direct Loan Program16", "paragraphs": ["This section authorizes USDA to spend appropriated funds in the Rural Water and Waste Disposal Program Account on the cost of direct loans, in addition to the costs of loan guarantees and grants that were authorized in FY2019. In FY2019, direct loans did not require budget authority because the program had a negative subsidy rate (i.e., the cost of providing loans was less than estimated repayments and fees). For FY2020, OMB estimates that the direct loan program will have a positive subsidy rate."], "subsections": []}, {"section_title": "Section 116\u00e2\u0080\u0094Disaster Assistance for Sugar Beet Processors17", "paragraphs": ["This section amends the list of eligible losses that may be covered under the Additional Supplemental Appropriations for Disaster Relief Act of FY2019 ( P.L. 116-20 , Title I) to include payments to cooperative processors for reduced sugar beet quantity and quality. The FY2019 supplemental provided $3 billion to cover agricultural production losses in 2018 and 2019 from natural disasters."], "subsections": []}, {"section_title": "Section 117\u00e2\u0080\u0094Specialty Crop Research Initiative19", "paragraphs": ["This section allows USDA to waive the non-federal matching funds requirement for grants made under the Specialty Crop Research Initiative (7 U.S.C. \u00c2\u00a77632(g)(3)). The matching funds provision was added in the 2018 farm bill ( P.L. 115-334 )."], "subsections": []}, {"section_title": "Section 118\u00e2\u0080\u0094Summer Food for Children Demonstrations Projects20", "paragraphs": ["This section allocates funding for the USDA Food and Nutrition Service summer food for children demonstration projects at a rate that ensures that the projects can fully operate by May 2020 (prior to summer meal service, which typically starts in June). Similar provisions have been part of previous CRs. These projects, which include the Summer Electronic Benefit Transfer demonstration, have operated in selected states since FY2010."], "subsections": []}, {"section_title": "Section 119\u00e2\u0080\u0094Commodity Credit Corporation (CCC)22", "paragraphs": ["This section allows CCC to receive its appropriation to reimburse the Treasury for a line of credit about a month earlier than usual prior to a customary final report and audit. Many farm bill payments to farmers are due in October 2019, including to USDA's plan to make supplemental payments under a trade assistance program. Without the anomaly, CCC might have exhausted its $30 billion line of credit in October or November before the audit is completed, which could suspend payments. This provision was part of a CR in FY2019. In addition, the measure requires USDA to submit a report to Congress by October 31, 2019, with various disaggregated details about Market Facilitation Program payments, trade damages, and whether commodities were purchased from foreign-owned companies under the program."], "subsections": []}, {"section_title": "Section 120\u00e2\u0080\u0094Hemp Production Program25", "paragraphs": ["This section provides $16.5 million on an annualized basis to the USDA Agricultural Marketing Service to implement the Hemp Production Program ( P.L. 115-334 , \u00c2\u00a710113), which was created in the 2018 farm bill."], "subsections": []}]}, {"section_title": "Commerce, Justice, Science, and Related Agencies", "paragraphs": [], "subsections": [{"section_title": "Section 101(2)\u00e2\u0080\u0094Assets Forfeiture Fund27", "paragraphs": ["In addition to allowing the agencies funded through the annual CJS appropriations act to continue operations at the FY2019-enacted level, Section 101 states that the $674.0 million rescission on the Assets Forfeiture Fund that was enacted as a part of the Consolidated Appropriations Act, 2019 ( P.L. 116-6 ), will not be in effect for the duration of the CR. The Administration requested this anomaly because the rescission would limit the operations of the Department of Justice's Assets Forfeiture program, including equitable sharing payments made to state and local law enforcement for participating in operations that led to forfeited assets."], "subsections": []}, {"section_title": "Section 121\u00e2\u0080\u0094U.S. International Trade Commission28", "paragraphs": ["This section allows the U.S. International Trade Commission to apportion funding at a rate necessary to meet the commission's responsibilities under the American Manufacturing Competitiveness Act of 2016 ( P.L. 114-159 )."], "subsections": []}, {"section_title": "Section 122\u00e2\u0080\u0094Bureau of the Census30", "paragraphs": ["This section allows the Census Bureau to draw on money from the Periodic Censuses and Programs account\u00e2\u0080\u0094which includes the decennial census and other major programs such as the economic census, the census of governments, and intercensal demographic estimates, together with geographic and data-processing support\u00e2\u0080\u0094at the rate necessary to maintain the schedule and deliver the required data according to the statutory deadlines in the 2020 Decennial Census Program."], "subsections": []}]}, {"section_title": "Department of Defense", "paragraphs": [], "subsections": [{"section_title": "Section 102\u00e2\u0080\u0094Prohibition on 'New Starts' and Increasing Production Rates31", "paragraphs": ["Section 102 is similar to provisions typically included in CRs in previous years. The provision prohibits the Department of Defense (DOD) from funding either so-called new starts\u00e2\u0080\u0094that is, procurement or research and development of a major program for which funding was not provided in FY2019\u00e2\u0080\u0094or acceleration of rate of production for any major program for which FY2019 procurement funding was provided."], "subsections": []}, {"section_title": "Section 123\u00e2\u0080\u0094Advance Billing Exemption for Background Investigations32", "paragraphs": ["Section 123 authorizes the DOD to exceed the $1 billion limit on advance billing \"for background investigation services and related services\" purchased from activities financed using working capital funds. A working capital fund is a type of revolving fund intended to operate as a self-supporting entity to fund business-like activities. The provision is intended to enable DOD to conduct background investigations with minimal interruptions. According to information OMB sent to lawmakers, the Defense Counterintelligence and Security Agency Working Capital Fund, which was scheduled to begin operations October 1, 2019, plans to bill customers prior to completing background investigations and \"is likely to exceed $1 billion in advanced billing in FY2020.\""], "subsections": []}, {"section_title": "Section 124\u00e2\u0080\u0094Ukraine Security Assistance Initiative35", "paragraphs": ["Section 124 appropriates funding for the Ukraine Security Assistance Initiative. The initiative is intended to \"increase Ukraine's ability to defend against further aggression by theater adversaries or their proxies by providing support for ongoing training and advisory programs and equipment to enhance Ukraine's command and control; situational awareness systems; secure communications; military mobility; night vision; military medical treatment; maritime and border security operations; and defensive weapons systems,\" according to DOD. In August 2019, news organizations reported that the Trump Administration withheld funding for the initiative. The department expected to obligate all but approximately $30 million of the $250 million in FY2019 appropriations for the initiative by the end of the fiscal year. Section 124(a) rescinds unobligated FY2019 funds for the initiative. Section 124(b) appropriates an FY2020 amount equal to the unobligated FY2019 funds\u00e2\u0080\u0094in addition to the amount otherwise provided for the initiative, at a rate for operations, by the continuing resolution."], "subsections": []}]}, {"section_title": "Energy and Water Development and Related Agencies", "paragraphs": [], "subsections": [{"section_title": "Section 125\u00e2\u0080\u0094Colorado River Basins Power Marketing Fund39", "paragraphs": ["Section 125 provides that for the duration of the CR, no funding may be transferred from the Western Area Power Administration's (WAPA) Colorado River Basins Power Marketing Fund to the General Fund of the Treasury. Due to a scorekeeping adjustment by the Trump Administration, the historically common practice of transferring funds from WAPA's Colorado River Basins Power Marketing Fund (which receives revenues from hydropower sales in the Colorado River Basin) to the Bureau of Reclamation's Upper Colorado River Basin Fund (which funds environmental mitigation responsibilities associated with the Colorado River Storage Project, among other things) has not been executed in recent years. Instead, these WAPA funds have been transferred to the General Fund of the Treasury. Congress has opposed the change and attempted to counteract it in appropriations legislation through additional appropriations to the Upper Colorado River Basin Fund and restrictions on WAPA transfers to the General Fund."], "subsections": []}, {"section_title": "Section 126\u00e2\u0080\u0094Calfed Bay-Delta Act Extension41", "paragraphs": ["Section 126 extends the authority for the Bureau of Reclamation to conduct activities under the Calfed Bay-Delta Authorization Act ( P.L. 108-361 , 118 Stat. 1681) from the end of FY2019 to the date of the CR's expiration. This authority allows the Bureau of Reclamation to undertake activities related to formulating a long-term comprehensive plan to restore the ecological health and improve the water management of California's Bay-Delta system. Activities under this authority include long-term levee protection, water quality, ecosystem restoration, water use efficiency, and water-supply-related studies and projects."], "subsections": []}]}, {"section_title": "Financial Services and General Government42", "paragraphs": [], "subsections": [{"section_title": "Section 127\u00e2\u0080\u0094Committee on Foreign Investment in the United States43", "paragraphs": ["This section provides $15 million in appropriations for the Committee on Foreign Investment in the United States (CFIUS) Fund. This fund was created in P.L. 115-232 , which authorized $20 million for FY2019-FY2023. Prior to this, CFIUS was not provided a separate appropriation within the Department of the Treasury."], "subsections": []}, {"section_title": "Section 128\u00e2\u0080\u0094District of Columbia45", "paragraphs": ["This section grants congressional approval for DC officials to expend locally raised funds for purposes made available under P.L. 116-6 (Consolidated Appropriations Act, 2019) at a rate set forth in the Fiscal Year 2020 Local Budget Act of 2019 (D.C. Act 23-78). DC political leaders have consistently expressed concern that passage of the appropriations act for the District (in which Congress approves the city's budget) has too often been delayed until well after the start of the District's fiscal year, hindering their ability to manage the District's financial affairs and negatively affecting the delivery of public services."], "subsections": []}, {"section_title": "Section 129\u00e2\u0080\u0094Office of Personnel Management46", "paragraphs": ["This section provides an additional $48 million to the Office of Personnel Management's (OPM) Salaries and Expenses account for administrative expenses for 2019. Of this amount, $29,760,000 is to be transferred from trust funds. Such amounts may be apportioned up to the rate for operations necessary to maintain OPM's operations. OPM previously reported to Congress that the agency would experience a budget shortfall exacerbated by the transfer of the National Background Investigations Bureau from OPM to DOD."], "subsections": []}, {"section_title": "Section 130\u00e2\u0080\u0094Small Business Administration (SBA)47", "paragraphs": ["This section provides an additional $99 million for the Small Business Administration (SBA) 7(a) loan guaranty program. The 7(a) loan guarantees are one of SBA's primary programs, providing loans to small businesses that might not otherwise find financing. The funding under the CR may be apportioned at the rate necessary to meet demand."], "subsections": []}, {"section_title": "Section 131\u00e2\u0080\u0094SBA Disaster Loan Program49", "paragraphs": ["This section provides additional funding for SBA disaster loans at a rate of $177 million, with $167 million of this for administrative expenses to carry out the direct loan program and $151 million of this directed to major disasters. This funding is to be considered designated for disaster relief under the Balanced Budget and Emergency Deficit Control Act of 1985 ( P.L. 99-177 )."], "subsections": []}]}, {"section_title": "Department of Homeland Security (DHS)51", "paragraphs": [], "subsections": [{"section_title": "Section 101(6)\u00e2\u0080\u0094Immigration Authorization Extensions52", "paragraphs": ["The funding baseline for DHS in H.R. 4378 was the rate of allowable spending and authorities in two separate parts of P.L. 116-6 : Division A, which is the FY2019 DHS appropriations act, and Title I of Division H, which is a series of immigration authorization extensions. These immigration authorization extensions have been carried as anomalies in past CRs, extended by including them as general provisions in the DHS appropriations act (and thus carried forward automatically by the CR, which extends authorities provided in the act), or included in a separate \"Immigration Extensions\" title in consolidated appropriations legislation and extending that by direct reference in Section 101 of the CR. While the procedural form has varied, the immigration authorization extensions referenced in H.R. 4378 include four that have been extended since FY2016:", "Extension of authority for pilot programs for employment eligibility confirmation; Extension of religious worker visa program; Extension of rural medical worker immigration authority; and Extension of investor visa program.", "The reference also includes a fifth extension\u00e2\u0080\u0094an increase in the annual cap on H-2B visas, which has been extended through CRs since FY2018. It is the only one of these provisions included in the House Committee-reported version of the FY2020 DHS appropriations act ( H.R. 3931 , \u00c2\u00a7532)."], "subsections": []}, {"section_title": "Section 132\u00e2\u0080\u0094Special Apportionment, Secret Service53", "paragraphs": ["H.R. 4378 includes faster apportionment for the Secret Service \"to support hiring and operations required for protective activities associated with the 2020 presidential election campaign.\" The Administration requested a provision with broader authority.", "A similar provision in a FY2015 CR provided authority for faster apportionment for what was then the Secret Service's \"Salaries and Expenses\" appropriation to cover presidential candidate nominee protection."], "subsections": []}, {"section_title": "Section 133\u00e2\u0080\u0094FEMA Disaster Relief Fund56", "paragraphs": ["The Administration requested an accelerated rate of apportionment for the Disaster Relief Fund (DRF) to ensure that Stafford Act programs can be carried out. While the Administration stated, \"Without the anomaly, the amounts automatically apportioned would impede comprehensive [DRF] response and recovery activities during the period of the CR should a catastrophic event be declared,\" the side of the DRF that funds major disaster costs is historically flush.", "Similar provisions were included in both the FY2018 CR ( P.L. 115-56 , Division D, \u00c2\u00a7129) and the first FY2019 CR ( P.L. 115-245 , Division C, \u00c2\u00a7124)."], "subsections": []}, {"section_title": "Section 134\u00e2\u0080\u0094National Flood Insurance Program57", "paragraphs": ["The Administration requested an extension of the National Flood Insurance Program (NFIP) as part of the CR. Authority to issue new policies for the NFIP would have expired on September 30, 2019, in the absence of an extension either as a part of this vehicle or on its own. H.R. 4378 extends the program's authorization for the length of the CR.", "CRs have been a vehicle for extending NFIP authorization as far back as FY1998 ( P.L. 105-46 , \u00c2\u00a7118), although the legislative language has taken different forms. More recently, a short-term reauthorization of the NFIP was carried in the first FY2018 CR ( P.L. 115-56 , Division D, \u00c2\u00a7130). The second CR for FY2019 ( P.L. 115-298 , which added a new Section 136 to P.L. 115-245 , Division C) also extended the authorization. In both cases, the extension was limited to the duration of the CR."], "subsections": []}, {"section_title": "Section 135\u00e2\u0080\u0094Restructuring of the Working Capital Fund60", "paragraphs": ["CRs normally require funds to be apportioned and obligated in the same manner as was the case in the prior annual appropriation. In this case, DHS appropriations is to follow the terms and conditions of P.L. 116-6 , Division A\u00e2\u0080\u0094the FY2019 DHS appropriations act.", "The Administration, however, proposed a restructuring of some accounts in its FY2020 budget request and asked for authority to act as if those changes had been approved by Congress so that if they are approved, manual administrative adjustments to obligations and disbursements would not be required. Section 135 allows apportionment for these specified accounts to occur consistent with the FY2020 budget request.", "The first FY2018 CR ( P.L. 115-56 , Division D, \u00c2\u00a7125) and FY2019 CR ( P.L. 115-245 , Division C, \u00c2\u00a7128) each carried an almost identical provision requested by the Administration."], "subsections": []}]}, {"section_title": "Interior, Environment, and Related Agencies", "paragraphs": [], "subsections": [{"section_title": "Section 136\u00e2\u0080\u0094Indian Health Service61", "paragraphs": ["This provision authorizes the apportionment of appropriations that are provided by the CR of up to $18.4 billion for the Indian Health Services (IHS) account and $631,000 for the Indian Health Facilities account to staff and operate IHS facilities that were or will be opened, renovated, or expanded during either FY2019 or FY2020. The provision allows for higher rates of funding than would otherwise be provided under the CR to operate and provide health services at these newly renovated or constructed health facilities, as new or expanded facilities may need additional resources for operations (e.g., to hire staff and obtain equipment)."], "subsections": []}]}, {"section_title": "Departments of Labor, Health and Human Services, and Education, and Related Agencies", "paragraphs": [], "subsections": [{"section_title": "Section 137\u00e2\u0080\u0094Strategic National Stockpile62", "paragraphs": ["Section 137 states that amounts obligated for the Centers for Disease Control and Prevention (CDC) Public Health Preparedness and Response budget line and the Public Health and Social Services Emergency Fund (PHSSEF) budget line for the Department of Health and Human Services' (HHS) Office of the Secretary (OS) may be obligated in the account and budget structure and under authorities and conditions set forth in the House-passed Labor, Health and Human Services, and Education, Defense, State, Foreign Operations, and Energy and Water Development Appropriations Act, 2020 ( H.R. 2740 , Division A). This provision would account for the Trump Administration's intradepartmental transfer of the Strategic National Stockpile (SNS) from CDC to the Assistant Secretary of Preparedness and Response in HHS OS in FY2019. The SNS provides select medicines and medical supplies during public health emergencies that overwhelm local availability. H.R. 2740 would provide SNS funding to the HHS OS PHSSEF budget line rather than the CDC Public Health Preparedness and Response budget line (where funds were allocated in previous fiscal years). The report accompanying H.R. 2740 ( H.Rept. 116-62 ) provides the following explanation of congressional intent in the context of that legislative proposal with regard to the SNS and associated policy issues: \"The Committee expects that CDC will continue its significant role in providing scientific expertise in decision-making related to procurement of countermeasures, and maintaining strong relationships with State and local public health departments to facilitate efficient deployment of countermeasures in public health emergencies.\""], "subsections": []}, {"section_title": "Section 138\u00e2\u0080\u0094Ebola Transfer Authority65", "paragraphs": ["Section 138 authorizes the transfer to the CDC of up to $20 million for Ebola preparedness and response activities from the Infectious Disease Rapid Response Reserve Fund. This fund was established by Section 231 of the Department of Defense and Labor, Health and Human Services, and Education Appropriations Act, 2019 and Continuing Appropriations Act, 2019 ( P.L. 115-245 ), which included $50 million to support activities \"to prevent, prepare for, or respond to an infectious disease emergency.\" The funds were to remain available until expended and are available to be used only for an infectious disease emergency that (1) is declared by the Secretary of Health and Human Services; or (2) as determined by the Secretary, has significant potential to occur imminently and, on occurrence, potential to affect national security or the health and security of United States citizens, domestically or internationally. This anomaly makes up to $20 million in unobligated reserve funds available without requiring the Secretary to declare the ongoing Ebola outbreak in the Democratic Republic of the Congo a threat to national security or to U.S. citizens. On July 17, 2019, the World Health Organization declared that the ongoing Ebola outbreak was a Public Health Emergency of International Concern (PHEIC)."], "subsections": []}, {"section_title": "Section 139\u00e2\u0080\u0094National Advisory Committee on Institutional Quality and Integrity68", "paragraphs": ["Section 139 extends the duration of the National Advisory Committee on Institutional Quality and Integrity (NACIQI) through November 21, 2019. NACIQI is a committee tasked with assessing the process of accreditation and the institutional eligibility and certification of institutions of higher education to participate in federal student aid programs authorized under Title IV of the Higher Education Act of 1965. Section 114(f) of the act provides that NACIQI shall terminate on September 30, 2019.", "Section 422 of the General Education Provisions Act (GEPA) generally provides an automatic one-year extension of the authorization of appropriations for, or the duration of, programs administered by the Department of Education. This automatic extension would occur only if Congress and the President\u00e2\u0080\u0094in the regular session that ends prior to the beginning of the terminal fiscal year of authorization or duration of an applicable program\u00e2\u0080\u0094do not enact legislation extending the program. GEPA Section 422 also explicitly states that the automatic one-year extension does not apply to the authorization of appropriations for, or the duration of, committees that are required by statute to terminate on a specific date. Thus, the automatic one-year extension does not apply to NACIQI, and NACIQI would have terminated on September 30, 2019, had it not been extended."], "subsections": []}]}, {"section_title": "Military Construction, Veterans Affairs, and Related Agencies", "paragraphs": [], "subsections": [{"section_title": "Section 140\u00e2\u0080\u0094Blue Water Navy Vietnam Veterans71", "paragraphs": ["Section 140 of the CR allows the Department of Veterans Affairs (VA) to use funds in both the Veterans Benefits Administration, General Operating Expenses account and the Departmental Administration, Information Technology Systems account at a higher apportionment rate. This higher rate is provided to allow the VA to begin implementing provisions of the Blue Water Navy Vietnam Veterans Act of 2019 ( P.L. 116-23 )."], "subsections": []}]}, {"section_title": "State, Foreign Operations, and Related Programs", "paragraphs": [], "subsections": [{"section_title": "Section 101(11)\u00e2\u0080\u0094Exclusion of Provision on Unobligated Ebola Funding73", "paragraphs": ["Section 101(11) of the CR extends the authorities of the Department of State, Foreign Operations, and Related Programs Appropriations Act, 2019 (Division F of P.L. 116-6 ), to November 21, 2019, with the exception of Section 7058(d) of that law. That section authorized the repurposing of unobligated emergency funds appropriated in FY2015 to address the Ebola outbreak to instead build partner country capacity to prevent, detect, and respond to infectious disease outbreaks and to support an Emergency Reserve Fund. Removing the authorization to repurpose funds may be to ensure emergency funds remain available to respond to the ongoing Ebola outbreak in the Democratic Republic of the Congo (see Section 138)."], "subsections": []}, {"section_title": "Section 141\u00e2\u0080\u0094Export-Import Bank74", "paragraphs": ["Section 141 extends the authority of the Export-Import Bank, which would otherwise have expired on September 30, 2019, to November 21, 2019."], "subsections": []}, {"section_title": "Section 142\u00e2\u0080\u0094Commission on International Religious Freedom75", "paragraphs": ["Section 142 extends the authority of the Commission on International Religious Freedom, which would otherwise have expired on September 30, 2019, to November 21, 2019."], "subsections": []}]}, {"section_title": "Departments of Transportation, Housing and Urban Development, and Related Agencies", "paragraphs": [], "subsections": [{"section_title": "Section 143\u00e2\u0080\u0094Federal Transit Administration, Capital Investment Grants76", "paragraphs": ["This provision is intended to ensure that applicants for the Federal Transit Administration's (FTA) FY2018 capital investment grants\u00e2\u0080\u0094which have been allocated funding but have not yet been able to satisfy the requirements for FTA to obligate the funding to them\u00e2\u0080\u0094do not have their allocated funding redistributed to other applicants if they cannot satisfy the requirements for FTA to obligate the money to them by December 31, 2019. These FTA grants typically have a three-year window of availability. The provision in P.L. 115-141 was added with the intent to ensure that the Trump Administration's FTA did not excessively delay providing the transit grants to applicants."], "subsections": []}, {"section_title": "Section 144\u00e2\u0080\u0094Mass Transit Account, Highway Trust Fund77", "paragraphs": ["This provision avoids a situation in which FTA capital investment grants to transit agencies would be reduced due to a reduction in the appropriated level resulting from the application of IRS provision: Section 9503(e)(4) . Similar language is in the House-passed Commerce, Justice, Science, Agriculture, Rural Development, Food and Drug Administration, Interior, Environment, Military Construction, Veterans Affairs, Transportation, and Housing and Urban Development Appropriations Act, 2020 ( H.R. 3055 , \u00c2\u00a7164(1))."], "subsections": []}, {"section_title": "Section 145\u00e2\u0080\u0094Housing for the Elderly78", "paragraphs": ["This section allows amounts made available in the Housing for the Elderly account to be apportioned at a rate necessary to allow the Department of Housing and Urban Development to maintain rental assistance contracts that are coming up for renewal or require additional funding in order to continue to subsidize the rents of low-income elderly residents of Section 202 properties."], "subsections": []}]}, {"section_title": "Other Provisions", "paragraphs": [], "subsections": [{"section_title": "Sections 108 and 112\u00e2\u0080\u0094Apportionment", "paragraphs": ["Section 108 provides daily spending rate flexibility to agencies by waiving time limitations. Section 112 allows that the apportionment rate may avoid furloughs, which is consistent with past appropriations acts. These provisions have been included in past CRs."], "subsections": []}, {"section_title": "Section 111(b)\u00e2\u0080\u0094Mandatory Payments", "paragraphs": ["Section 111(b) authorizes obligations for mandatory payments due \"on or about\" the first day of any month that begins between October 1, 2019, and 30 days after the CR is set to expire (i.e., through December 21, 2019, but effectively until December 1, 2019). Programs impacted include the funds for payments through the Supplemental Nutrition Assistance Program (SNAP). These payments, while mandatory spending, are appropriated each year to USDA through the regular appropriations process. This provision has been included in past CRs."], "subsections": []}]}]}]}}
{"id": "R46197", "title": "The Washington Post\u2019s \u201cAfghanistan Papers\u201d and U.S. Policy: Main Points and Possible Questions for Congress", "released_date": "2020-01-28T00:00:00", "summary": ["On December 9, 2019, the Washington Post published a series of documents termed \"the Afghanistan Papers.\" The Papers comprise two sets of documents: about 1,900 pages of notes and transcripts of interviews with more than 400 U.S. and other policymakers that were carried out between 2014 and 2018 by the Special Inspector General for Afghanistan Reconstruction (SIGAR), and approximately 190 short memos (referred to as \"snowflakes\") from former Secretary of Defense Donald Rumsfeld, dating from 2001 to 2004. The documents, and the Washington Post stories that accompany them, suggest that U.S. policies in Afghanistan often were poorly planned, resourced, and/or executed. These apparent shortcomings contributed to several outcomes that either were difficult to assess or did not fulfill stated U.S. objectives. Key themes of the SIGAR interviews include", "N egative effects of U.S. funding. The most frequently discussed subject in the SIGAR interviews was (a) the large sum of U.S. money ($132 billion in development assistance since 2001) that poured into Afghanistan and (b) the extent to which much of it was reportedly wasted, stolen, exacerbated existing problems, or created new ones, particularly corruption. Unclear U.S. g oals . Many of the interviewees argued that, from the beginning, the U.S. engagement in Afghanistan, supported by the money noted above, lacked a clear goal. Competing p riorities . The proliferation of U.S. goals in Afghanistan led to another complication: U.S. actions to achieve some of these objectives seemed to undermine others. Organizational confusion and competition. While U.S. efforts in Afghanistan were dominated by the Department of Defense, given the wide array of U.S. interests in Afghanistan, U.S. policy formulation and execution required input from many federal departments and agencies. The problems associated with trying to coordinate among all of these entities was a consistent theme. Lack of e xpertise . Multiple SIGAR interviewees criticized U.S. policies that they claimed failed to generate relevant expertise within the U.S. government or even disincentivized the creation or application of that expertise in Afghanistan. Disorganized m ulti national coalition . Many of the SIGAR interviewees who worked on coordinating U.S. and international efforts discussed what they saw as a disorganized system. Iraq as a distraction. U.S. officials who were working on Afghanistan in the first decade of the war held a nearly universal judgment, in SIGAR interviews, that the U.S. invasion of Iraq in March 2003 distracted U.S. attention and diverted U.S. financial and other resources. Pakistan 's support for the Taliban . A number of interviewees, particularly senior U.S. officials, attributed the Taliban's resurgence, and the failure of the U.S. to solidify gains in Afghanistan, to material support for the group from, and its safe havens in, Pakistan. Other voices: U.S. efforts as relatively successful. Some of the officials interviewed by SIGAR lauded arguable gains made and facilitated by the international community's work in Afghanistan since 2001, a perspective not generally included in the Washington Post stories.", "The documents, released at a time when the United States is engaged in talks with the Taliban aimed at ending the 18-year U.S. military presence in the country, have attracted significant attention. Some Members of Congress have called for further investigation into U.S. policy in Afghanistan. However, there is debate over how revelatory the SIGAR interviews are: policymakers and outside analysts disagree about whether they contain new and relevant information and, if so, how the information should affect U.S. policy in Afghanistan going forward."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "\"The Afghanistan Papers\"", "paragraphs": ["On December 9, 2019, the Washington Post published a series of documents termed \"the Afghanistan Papers\" (herineafter \"the Papers\"). The Papers comprise two sets of documents:", "Notes and transcripts of interviews with more than 400 U.S. and other policymakers conducted between 2014 and 2018 by the Special Inspector General for Afghanistan Reconstruction (SIGAR), and Approximately 190 short memos (referred to as \"snowflakes\") from former Secretary of Defense Donald Rumsfeld, dating from 2001 to 2004. ", "The Washington Post contends that \"the Lessons Learned interviews broadly resemble the Pentagon Papers, the Defense Department's top-secret history of the Vietnam War,\" although the SIGAR interviews and Pentagon Papers differ in several key ways. Perhaps most importantly, the Pentagon Papers were a contemporaneous recounting of the Vietnam War based mostly on classified material from the Office of the Secretary of Defense; the SIGAR Lessons Learned documents are unclassified records of interviews with a wide array of policymakers carried out as many as 15 years after the events described. ", "The documents, and the Washington Post stories that accompany them, suggest that U.S. policies in Afghanistan often were poorly planned, resourced, and/or executed. These apparent shortcomings contributed to several outcomes that either were difficult to assess or did not fulfill stated U.S. objectives. The documents, released at a time when the United States is engaged in talks with the Taliban aimed at ending the 18-year U.S. military presence in the country, have attracted attention, and some Members of Congress have called for further investigation into U.S. policy in Afghanistan. However, there is debate over how revelatory the SIGAR interviews are, with some analysts contending that the information they contain was available at the time and remains so today (see \" Reactions to \"the Afghanistan Papers\" below). "], "subsections": [{"section_title": "SIGAR \"Lessons Learned\" Interviews", "paragraphs": ["SIGAR, an independent investigative body created by Congress in 2008, conducted interviews with hundreds of U.S. and other policymakers as part of a lessons learned project, a self-assigned effort to \"identify and preserve lessons from the U.S. reconstruction experience in Afghanistan, and to make recommendations to Congress and executive agencies on ways to improve our efforts in current and future operations.\" Since 2015, SIGAR has published seven lessons learned reports on topics such as corruption, counternarcotics, and U.S. efforts to reintegrate ex-combatants. ", "The Washington Post obtained the interview notes and transcripts after submitting a series of Freedom of Information Act (FOIA) requests beginning in August 2016. In response to an October 2017 lawsuit against SIGAR filed by the newspaper, SIGAR released the first document, a 10-page 2015 interview with Michael Flynn (who had served in several senior military capacities in Afghanistan). SIGAR subsequently released other requested documents to the Washington Post . After federal agencies reviewed the documents to determine whether they contained classified material, the final batch of interviews was delivered in August 2019. ", "In total, SIGAR conducted 428 interviews with U.S., European, and Afghan officials. Sixty-two interviewees are identified while 366 are redacted; the Washington Post has sued SIGAR to disclose those names because, it argues, \"the public has a right to know which officials criticized the war.\" SIGAR contends that those individuals should be seen as whistleblowers and may face professional or other harm if their identities are made public. As of January 2020, a decision from the U.S. District Court in Washington, DC, remains pending."], "subsections": [{"section_title": "Main Themes", "paragraphs": ["In reviewing the Papers, which total roughly 2,000 pages and evade simple characterization, several key themes emerge, as outlined below. Dates in parentheses or noted in the text indicate when the interview was conducted. Quotes in this report, unless noted in the text as direct quotes from transcripts, are from SIGAR notes of interviews; CRS cannot independently verify or otherwise characterize the documents and the interviews the documents purport to describe. At least four of the named interviewees have contested the views attributed to them by SIGAR."], "subsections": []}, {"section_title": "Negative Effects of U.S. Funding", "paragraphs": ["The most frequently discussed subject in the SIGAR interviews was (a) the large sum of U.S. money ($132 billion in development assistance since 2001) that poured into Afghanistan and (b) the extent to which much of it was reportedly wasted, stolen, exacerbated existing problems, or created new ones.", "Nearly every SIGAR interviewee who discussed the issue argued that Afghanistan, one of the world's poorest and least developed countries in 2001, was unable to make use of the amount of financial resources that the U.S. and its international partners channeled into the country. Variations of the phrase \"absorptive capacity\" were repeated throughout the SIGAR interviews. One unnamed national security official offered some specificity, saying that Ashraf Ghani, then the Afghan Finance Minister and now President, had said in 2002 that \"the Afghan capacity to absorb money was $2 billion a year, max. Everything else was wasted money\" (October 1, 2014). The United States alone has contributed over $7 billion a year on average since 2001.", "In answering why the United States delivered so much money into Afghanistan, many interviewees pointed to U.S. domestic politics. One U.S. Agency for International Development (USAID) official said, \"How much money was put into political, military, and development [aid] became a proxy for our commitment\" (December 9, 2015). This was largely driven by executive branch agencies, according to one unnamed official, who observed that the U.S. Office of Management and Budget (OMB) proposed reductions between 2005 and 2007 because money from previous years remained unspent (April 13, 2015). However, other policymakers rejected these reductions, arguing that \"the political signal by a budget reduction at [a] turning point in the war effort would adversely affect overall messaging and indirectly reconstruction efforts on the ground. The articulation of goals for the purpose of budgeting and programming was largely secondary to the political implications of budgeting.\"", "However, some of those interviewed by SIGAR faulted Congress, not executive branch agencies, for wasteful spending. The same USAID official quoted above (December 9, 2015) said, \"The Hill was complicit. They gave more money than was requested. Every year they asked why we weren't doing our jobs, but they gave the same amount of money or more.\" Douglas Lute, the Deputy National Security Advisor for Iraq and Afghanistan under President George W. Bush and President Obama, noted that Congress was subject to the same kinds of political pressures that drove executive branch officials to push for higher budgets in the absence of evidence that the funds would be effective:", "In terms of appropriations, Congress appropriated what the administration asked for.... The thought is that if we don't spend, [the Government Accountability Office] or committees on the Hill will stop us from getting more funding. This leads to spend, spend, spend. The reason this is happening: no one is paying attention in an interagency sense to resources.... We were also pouring money into huge infrastructure projects to obligate money that was appropriated to show we could spend it. And we were building infrastructure in ways that Afghanistan could never sustain or even use in some cases.", "This approach to resource allocation extended down the chain of command, according to some interview subjects. An unnamed U.S. Army civil affairs officer said that costs kept rising because \"We had no reason to negotiate or hold contractors' feet to the fire because the money kept coming no matter what.... We didn't get credit for saving money; in fact, we got credit for spending it\" (July 12, 2016). Another said (on June 27, 2016) that because he or she was not given guidance on how to measure the impact of certain projects, \"dollar figures were always the metric. No one said that money spent should be our metric, but without guidance, it was the only metric we could use.... We did not stop and look back at what happened and whether it was effective. The emphasis was on completing more projects.\"", "What was the impact of this flow of money on Afghanistan itself? Nearly all SIGAR interviewees contended that U.S. funding improved conditions in the country with regard to health, education, and other human development indicators, at least partly given the low level of the country's development in 2001 (see \" Other Voices: U.S. Efforts as Relatively Successful \" below). However, some positive assessments were qualified: one unnamed Afghan official said that \"Yes, we have made gains, and generally speaking, life is better for people.\" However, he or she goes on to ask, \"When we compare the gains to the resources, were the gains enough? No. ... Were the gains that were made sustainable? No. Most of the gains remain fragile\" (October 21, 2015).", "For some interviewees, this influx of money also created or exacerbated problems. One of the problems most often raised was the money's apparent role in helping drive corruption, which continues to undermine the very Afghan state that the funds were intended to support. Andrew Wilder, the Vice President of Asia Programs at the United States Institute of Peace, said in his SIGAR interview that, \"Giving Afghans so much money actually delegitimized the government, which was either perceived to become more corrupt or actually became more corrupt as a result, and favored specific communities at the expense of others\" (January 25, 2017).", "Beyond the possibility for Afghans to redirect U.S. aid flows for political purposes, several interviewees argued that U.S. assistance had a structural bias that created perverse incentives for Afghans. Former Afghan deputy cabinet minister Tariq Esmati said (on December 12, 2016) that \"all the attention was to the insecure districts. And the districts that were relatively secure also became insecure in order to get some programs.\" One USAID official put it more bluntly: development programs targeted \"worse case scenarios and [the] most insecure areas\" which \"rewarded bad behavior. Governors in [more secure areas] would come to Kabul and ask, \"what do I have to do to get love from [the] Americans, blow some shit up?\" (November 18, 2016). ", "In many cases, interviewees pointed to the grant contracting system to explain why so much money was wasted and to argue that few of the benefits were actually reaped by Afghans themselves. A senior U.S. official said (on December 11, 2015) ", "We would buy American products, American grain, American consultants, American security experts, and they would implement our aid programs\u00e2\u0080\u00a6. The Afghans used to tell me that somewhere between 10-20% actually shows up in Afghanistan, and less than 10% ever gets to a village. So you [the United States] tell us [the Afghans] that you just spent a billion dollars as we see $50 million worth of roads. You [the United States] hire a big contractor and inside the beltway consultant, who then hires 15 subcontractors. The first guy takes 20%, then next level takes 20% who would go hire a bunch of expensive American experts to do [for 10 times the price] what Afghan diaspora refugees or Indian experts could do.... [These Americans we hire] travel to Afghanistan first class or at least business class with five security guys each.... The money you spend doesn't get to the village, doesn't really help the Afghan government.", "Beyond the practical effect of enabling corruption, some interviewees argued that ready U.S. money warped Afghan political culture (from a July 31, 2015, interview with a U.N. official): ", "Afghan perceptions of the US were shaped by the Emergency Loya Jirga and Constitutional Loya Jirga [consultative assemblies held in 2002-2003].... Religious leaders were approached [and they] received nice packages from the US in return for accepting certain measures on women, human rights. The perception that was started in that period: If you were going to vote for a position that the [U.S. government] favored, you'd be stupid to not get a package for doing it. So that even those in favor would ask for compensation.... So from the beginning, their experience with democracy was one in which money was deeply embedded."], "subsections": []}, {"section_title": "Unclear U.S. Goals", "paragraphs": ["Many of the interviewees argued that, from the beginning, the U.S. engagement in Afghanistan, supported by the flow of money noted above, lacked a clear goal. One unnamed former National Security Council (NSC) staffer said, \"I don't think we had an end state in mind. We kept planning; conditions kept changing. We were solving problems but there was no end state vision that you could point to\" (January 5, 2015). ", "According to many respondents, lack of clarity was a product of how many objectives the U.S. had in Afghanistan. One USAID official (May 18, 2015) described U.S. policy as having \"a present under the Christmas tree for everyone. By the time you were finished you had so many priorities and aspirations it was like no strategy at all. If you have 50 priorities then you don't have any priorities at all.\" This confusion reportedly extended even into specific areas of U.S. policy. An unnamed former United Nations official said in a June 1, 2015, interview that \"on reconstruction, there was not a clear understanding of what we were trying to achieve; [there were] no clear objectives.\" On counternarcotics (CN), a former State Department official said that it was \"unclear what the goal of CN was\" (June 29, 2015)."], "subsections": []}, {"section_title": "Competing Priorities", "paragraphs": ["The proliferation of U.S. goals in Afghanistan apparently led to another complication: U.S. actions to achieve some of these objectives undermined others. Interviewees repeatedly discussed this dynamic, particularly when referring to the U.S. project as being divided into military and nonmilitary lines of effort. According to interviewees, when U.S. security interests clashed with interests less directly tied to security, the former almost always prevailed. ", "The two areas that the interviews identified as particularly compromised, given an emphasis on security or other issues, were counternarcotics and anti-corruption. A State Department counternarcotics contractor told SIGAR on September 16, 2016, that \"To the best of my knowledge chief of mission [in the U.S. embassy] never carried [the] message about CN to [the] Afghan government. Attitude was 'got so much else on my plate I have no time to deal with drugs.'\" A senior U.S. official put it simply: \"They [the United States] would payoff \u00e2\u0080\u00a6 local leaders to not fight them and would turn away when local leaders grew poppy\" (March 29, 2016). ", "On anti-corruption, the contrast may have been even clearer: a USAID official said that the view of senior U.S. officials was \"Be patient, we can get back to corruption. We have higher priorities on getting the bad guys\" (August 24, 2015). In July 2015, a Treasury Department official attributed the U.S. \"failure to be more aggressive\" on prosecuting those responsible for the 2010 collapse of Kabul Bank (KB) to the higher importance placed on security objectives: \"Petraeus made the point that yes KB is bad, but we're fighting a war here, there are bigger issues at stake.\" Sometimes even U.S. counternarcotics and anti-corruption goals, which appeared symbiotic according to some interviewees, were at odds: a former U.S. defense official said on May 17, 2016, that U.S. payments to governors to reduce poppy cultivation actually \"undermined good governance. People saw us as complicit working with corrupt governors to take out opposition\" when those governors targeted the opium cultivation of their political opponents but left alone opium cultivation of their allies. ", "Some U.S. officials argued that these contradictions were unavoidable, and that the United States had no choice but to pursue security interests over other, and by definition secondary, objectives. A former U.S. official at the U.S. Embassy said (on May 31, 2015) of the U.S. decision to partner with warlords with records of corruption or human rights abuses, \"I'm not so sure we should have done it any differently. These 'warlords' equaled the ground force that just defeated the Taliban and al Qaeda\u00e2\u0080\u0094on the ground with US SOF [Special Operations Forces]. ... [T]hese weren't just random bandits running around.\""], "subsections": []}, {"section_title": "Organizational Confusion and Competition", "paragraphs": ["While U.S. efforts in Afghanistan were dominated by the Department of Defense, given the wide array of U.S. interests in Afghanistan, U.S. policy formulation and execution required input from many federal departments and agencies. The problems associated with trying to coordinate among all of these entities, and with the complex series of bureaucratic structures erected to facilitate that coordination, were another consistent theme of the SIGAR interviews. ", "By most accounts, interagency coordination was a consistent problem that various structures failed to solve. The performance of the Washington, D.C.-based Afghanistan Interagency Operation Group (AOIG), which was created in 2003, was co-chaired by the Department of State and National Security Council, and met weekly, generally received favorable reviews from interviewees. The State Department's Coordinator for Reconstruction and Stabilization (SCRS), on the other hand, attracted particular criticism: various officials stated that it was \"expensive and time-consuming ... initially structured to fail and at the end it only made life horrible for everybody else\" (June 25, 2015) and \"failed at the operation level\" (July 10, 2015). The State Department's Special Representative for Afghanistan and Pakistan (SRAP), established in 2009 and closed in 2017, also generally was criticized. One typical critique, from an unnamed State Department official in a December 10, 2014, interview, said that \"the model is not sustainable. Desk officers are supposed to develop regional experience throughout their career so they have a couple of languages and they continually rotate back to their area or region of specialization.... The SRAP set up created parallel structures.\" ", "Anti-corruption, counternarcotics, and other mission priorities rarely fit neatly under one agency or department's purview. The wide range of actors with equities in programs in these areas arguably bred not just confusion but competition. One former development contractor said about counternarcotics (interview on June 8, 2016) that there was \"nobody really in charge, no one on top of the heap and saying to everyone this is what you need to do. Competitive personalities [were] not concerned about what makes sense but could they build their career.\" That competition, in turn, also presented opportunities for Afghans to exploit. An unnamed former US ambassador described for SIGAR interviewers on December 14, 2015, that \"[former Afghan president Hamid] Karzai was trying to figure out how to manipulate the U.S., manipulating different U.S. agencies against one another for leverage. \u00e2\u0080\u00a6 The mission starts to lose coherence; you have agencies snapping at each other' s ankles [italics original].\"", "Surveying the numerous problems of interagency coordination, Marin Strmecki, Secretary of Defense Rumsfeld's special advisor on Afghanistan, recommended (interview on October 19, 2015) a more unified command structure:", "When we operate in something like [Afghanistan], there needs to be unity of command, not unity of effort. So if it is a situation [where] there is a lot of lead flying in the air, it makes sense for the general of whatever task force that is deployed to be in charge of both the military and civilian elements. So the ambassador would essentially be his chief political officer. He should be able to give orders to that chief political officer just as he would another subordinate. Similarly, if it is more a stabilization operations and there is not as much lead flying in the air, the military should be put under the ambassador\u00e2\u0080\u00a6. Our current system works if you are lucky and you get a Khalilzad and Barno or a Petraeus and Crocker, where for some reason they all agree on the priorities and work well together. They are in sync. That is basically luck."], "subsections": []}, {"section_title": "Lack of Expertise", "paragraphs": ["Multiple SIGAR interviewees criticized U.S. policies that they claimed either failed to generate relevant expertise within the U.S. government or even disincentivized the creation or application of that expertise in Afghanistan. For instance, regional subject matter expertise was a frequently cited problem. A number of interviewees criticized the United States for not training U.S. staff in local languages. Without knowledge of these languages, U.S. officials were reportedly less able to learn from, build trust with, or effectively partner with Afghan counterparts. Former director of intelligence for the NATO-led military effort Michael Flynn said that", "when we get to Afghanistan [in 2009], there is only one officer on the ISAF staff that could speak Dari \u00e2\u0080\u00a6 but he was only there briefly. The Air Force pulled him out in like July and sent him to Japan.... [W]e laughed about it because this is how insane this [system] is.... Even today, we are still in Afghanistan and you go tell me how many actual U.S. members of the military or policy [community], or from State who speak Dari or Pashto. That is a shame and that is a policy decision.", "The most commonly cited problem, regardless of the interviewee's national origin, position in government, or time of service in Afghanistan, was the loss of expertise and trust brought about by short-term deployments. A commonly repeated theme, as one U.S. official put it (April 12, 2016), was that the U.S. did not have one \"14 year engagement, [but] had 14 1-year engagements.\" Numerous interviewees described the problems created by short tours as the greatest detriment to U.S. policy success: ", "\"At the strategic level, the single most disabling factor was our failure to maintain long-term leadership at the Embassy and at our military commands. We should have someone in the job for 3 to 5 years for continuity\" (former U.S. official at the embassy in Kabul, May 31, 2015). \"If you take away one thing, the one year rotation for USAID, DOS [Department of States] and DOD [Department of Defense] personnel is the biggest obstacle to success and the biggest single factor in our failure\" (former USAID official David Marsden, December 3, 2015). \"Biggest problem was turnover of people \u00e2\u0080\u00a6 the result is no institutional memory\" (June 27, 2016).", "The interview records suggest that there was no consensus on how to solve this problem. One proffered solution was higher pay for government employees deployed to Afghanistan: Strmecki said in his interview that talented staff leave \"the government for our contractors and NGOs and our other implementing partners because [they] pay them so much more.\" However, one unnamed legal advisor who worked in Kabul said (on October 30, 2017) higher pay for some U.S. positions meant that those who filled the jobs \"had very little understanding of the culture\u00e2\u0080\u0094they came in because the salary was lucrative.... [T]hey saw this as a couple of years of opportunity to get rid of their house mortgages.\"", "Lack of expertise arguably exacerbated many of the other problems facing U.S. policy. At times, Afghans reportedly exploited the lack of knowledge and institutional memory to shape U.S. policy to meet their own ends. In one extreme case, Afghanistan expert Thomas Johnson described how \"we were used by the tribes\" because suspects taken into custody by the United States as terrorists were actually \"traditional tribal enemies that [U.S. partners] claimed were Taliban\" (January 7, 2016). "], "subsections": []}, {"section_title": "Multinational Coalition: Too Many Cooks?", "paragraphs": ["U.S. efforts in Afghanistan have been aided from the outset by a multinational coalition. From combat, to training Afghan forces, to providing development assistance, U.S. allies and partners have made significant contributions. However, this work has not been without complications, and many of the SIGAR interviewees who worked on coordinating U.S. and international efforts discussed what they saw as deficiencies.", "The system that emerged in Afghanistan became known as the \"lead nation\" system, whereby each policy area was overseen by a different country: for example, Italy focused on developing Afghanistan's justice sector, Germany worked with Afghan police, and the British initially were responsible for counternarcotics. However, according to former National Security Advisor Stephen Hadley, \"With this [multilateral] approach, everyone had small pieces of the sector and it then meant that [their respective policy areas] became everyone's second or third order priority so nothing got done.\"", "Generally, interviewees who observed or participated in the system described it as disorganized: John Wood, NSC director for Afghanistan 2007-2009, said, \"Everyone has a piece of the pie but [there's] no coherence.... Each lead nation left to determine how to approach things\u00e2\u0080\u0094each changed frequently. Even if things lined up with the lead nation none of them moving at same pace\" (June 17, 2015). The difference in pacing and approach was explained by an unnamed NSC staffer, who argued \"tasks were conditioned by what countries were willing to do,\" which \"created some tensions between the coalition and the nation states\" (July 14, 2015). "], "subsections": []}, {"section_title": "Iraq as a Distraction", "paragraphs": ["Those U.S. officials SIGAR interviewed who worked on Afghanistan in the first decade of the war held a near-universal judgment that the U.S. invasion of Iraq in March 2003 distracted U.S. attention and diverted U.S. financial and other resources, allowing the Taliban to regroup. ", "Former U.S. Ambassador to NATO Nicholas Burns described Iraq as the \"higher priority\" and Afghanistan as \"the less acute theater.\" According to an unnamed NSC staffer (October 21, 2014) ", "More specifically regarding why the U.S. and Department of Defense were anxious for someone else to take a robust leading role in Afghanistan, it was so we could have greater resources and capability to prioritize Iraq. ... From early spring 2002, during my time at the Secretary's office, until 2011, Afghanistan has to be looked at with one eye on what is happening in Iraq. Even in the early and tail end (2009-2011) days, either materially or politically, it all seemed to be about Iraq.", "It was hard to come to terms with the reality that your whole portfolio is a secondary effort or, at worst, an \"economy of force\" mission. Your job was not to win, it was to not lose \u00e2\u0080\u00a6 We are bleeding resources away as things get worse in Iraq, and we were looking for more ways to make do in Afghanistan\u00e2\u0080\u00a6. In hindsight, there was a window between late 2002-2003 and early 2005 where there was relative peace in Afghanistan. The Taliban was on its heels and people were not that disillusioned.", "One official (interviewed on September 23, 2015) said that between 2005 and 2007, \"Iraq was all we could handle.\" Another said that a \"significant pressure in the 2003 to 2010 timeframe was the draw of resources toward Iraq and away from Afghanistan\" (April 13, 2015). By the time the United States began to draw down forces in Iraq and refocus on Afghanistan, many observers argued that the damage was already done: the Afghan state's military and governing capabilities (both effectively nonexistent in 2001) had not been adequately developed, allowing for the rise of a new Taliban insurgency that further undermined those abilities. One unnamed U.S. official said in a February 9, 2016, interview, \"In all honesty, Afghanistan got neglected when we went to Iraq and when we got back to Afghanistan, we didn't have enough capacity.\""], "subsections": []}, {"section_title": "Pakistan's Support for the Taliban", "paragraphs": ["The war in Iraq arguably distracted U.S. policymakers from dealing with Pakistan's role in facilitating the Taliban's comeback. Early on, Pakistan \"was not seen as bad guys,\" according to an international aid consultant in an October 9, 2015, interview. A number of interviewees, particularly senior U.S. officials, attributed the Taliban's resurgence, and the resulting failure of the U.S. to solidify gains in Afghanistan, to material support for the group from, and its safe havens in, Pakistan. A good deal of material related to the sensitive issue of Pakistani support for the Taliban appeared to be redacted, but the issue still emerged throughout the interviews. ", "Most interviewees who addressed the subject argued that U.S. and Pakistani interests in Afghanistan were fundamentally incompatible. One unnamed DOD or NSC staffer told SIGAR in an October 1, 2014, interview, \"The belief that Pakistan's national interest aligned with the US because [then-Pakistani leader Pervez] Musharraf joins the [U.S.] effort after 9/11 is a false belief.\" According to this view, the positive role Pakistan played with regard to Al Qaeda blinded U.S. policymakers to the Pakistanis' support for the Taliban. As Strmecki said in his October 19, 2015, interview,", "Because of people's personal confidence in Musharraf and because of things he was continuing to do in helping police up a bunch of the al-Qaeda in Pakistan, there was a failure to perceive the double game that he starts to play by late 2002, early 2003. You are seeing the security incidents start to go up and it is out of the safe havens. I think that the Afghans and Karzai himself, are bringing this up constantly even in the earlier parts of 2002. They are meeting unsympathetic ears because of the belief that Pakistan was helping us so much on al-Qaeda. ", "With U.S. attention to the issue reportedly low, Pakistan maintained support for the Taliban in order to maintain some of Pakistan's influence in Afghanistan. In at least one account, Pakistani leaders were forthright in private about this strategy. In the transcript of his January 11, 2016, interview with SIGAR, Ryan Crocker, who served as U.S. ambassador to both Pakistan (2004-2007) and Afghanistan (2011-2012), quoted then-head of Pakistan's intelligence agency (ISI, Inter-Services Intelligence) Ashfaq Kayani as telling him ", "You know, I know you think we're hedging our bets, you're right, we are because one day you'll be gone again, it'll be like Afghanistan the first time [when the United States turned away from Afghanistan after the Soviet withdrawal in 1989], you'll be done with us, but we're still going to be here because we can't actually move the country. And the last thing we want with all of our other problems is to have turned the Taliban into a mortal enemy, so, yes, we're hedging our bets."], "subsections": []}, {"section_title": "Other Problems", "paragraphs": ["Beyond the main themes discussed above, other issues impacting U.S. policymaking in Afghanistan surfaced throughout the SIGAR interviews:", "Positivity bias (e.g., Flynn interview on November 11, 2015: \"As intelligence makes it way up higher [within the bureaucracy], it gets consolidated and really watered down; it gets politicized \u00e2\u0080\u00a6 because once policymakers get their hands on it, and frankly once operational commanders get their hands on it, they put their twist to it\u00e2\u0080\u00a6. Operational commanders, State Department policymakers, and Department of Defense policymakers are going to be inherently rosy in their assessments.\") Not considering greater inclusion of or interaction with the Taliban at the outset (e.g., U.N. official on August 27, 2015: \"Lesson learned: if you get a chance to talk to the Taliban, talk to them\u00e2\u0080\u00a6. At that moment [2001], most \u00e2\u0080\u00a6 Taliban commanders were interested in joining the government.\") Powers granted to Afghanistan's central government (e.g., unnamed U.S. official, October 18, 2016: \"why did we create centralized gov't in a place that has never had one \u00e2\u0080\u00a6 set us up for failure\")"], "subsections": []}, {"section_title": "Other Voices: U.S. Efforts as Relatively Successful", "paragraphs": ["Some of the officials interviewed by SIGAR lauded arguable gains made and facilitated by the international community's work in Afghanistan since 2001, a perspective not generally included in the Washington Post stories. ", "A number of interviewees argued, as one unnamed U.S. official did on June 2, 2015, \"There's not enough recognition of the scale of achievements in Afghanistan\u00e2\u0080\u00a6. Afghanistan has given a higher return on investment than almost any other reconstruction effort. From 2002-2012, [Afghanistan] made more progress in human development than any other country.\" Others contended (as referenced above) that one cannot assess the success or failure of U.S. efforts without considering the state of the country in 2002: \"We have to remember what we were starting with in Afghanistan. Afghans were starting with nothing. Social and economic development was at the lowest level possible. And that's why Taliban and al Qaeda found a home there, and why we went in\u00e2\u0080\u00a6. You must look at where we were, what we tried to do, and where we got to\" (unnamed senior State Department official April 26, 2016).", "Some officials outside the United States echoed these sentiments in their interviews. A Danish official said on June 30, 2015, despite corruption and all of the other problems, \"we'd be worse off without our [Afghanistan] intervention. The development side has had an impressive record.\" Abdul Jabar Naimee, who has served as governor of several eastern Afghan provinces, said in his March 6, 2017, interview ", "I am seeing that in the [W]est a thinking is going that they helped the Afghans but it was useless. This is a completely a wrong assumption. In the three provinces where I have been working as governor, in all the three places when I have share[d] programs with the people, or I have participated in the projects['] events, I have seen people are happy with the help they have received\u00e2\u0080\u00a6. The assumption that people of Afghanistan are not happy with the help that was done for their improvement, this assumption is wrong, people are grateful for the help and they still benefit from the work that was done. "], "subsections": []}]}, {"section_title": "Snowflakes (Rumsfeld Memos)8", "paragraphs": ["Former Secretary of Defense Donald Rumsfeld's \"snowflakes\" (the last of which is dated December 22, 2004), unlike the SIGAR interviews, provide a contemporaneous view into one senior policymaker's thinking over the first several years of the U.S. effort in Afghanistan. Because they are brief and relatively informal, there are risks in taking them as representative of U.S. policy as a whole, but their on-the-ground perspective could still be useful in assessing U.S. policy in Afghanistan. They may also demonstrate that various perceptions noted in the SIGAR interviews\u00e2\u0080\u0094such as that Afghanistan was less of a priority than Iraq\u00e2\u0080\u0094had merit. Many of the approximately 200 snowflakes are minor; some notable excerpts are below.", "Rumsfeld apparently did not anticipate long-term U.S. financial support for Afghan security forces. In an April 8, 2002, memo to Secretary of State Colin Powell, Rumsfeld wrote, \"The U.S. spent billions freeing Afghanistan and providing security. We are spending a fortune every day. There is no reason on earth for the U.S. to commit to pay 20 percent for the Afghan army. I urge you to get DoS turned around on this\u00e2\u0080\u0094the U.S. position should be zero [underline original]. We are already doing more than anyone.\" Rumsfeld expressed continual concern about not having a plan (e.g., \"I am convinced we have to have a plan for Afghanistan and that nobody else in the government is going to do it unless we do. What do you propose?\" (October 17, 2002) Rumsfeld expressed an eagerness to reduce U.S. commitments in Afghanistan. In a September 25, 2003, memo to Under Secretary of Defense for Policy Doug Feith, he wrote, \"We need a good conceptual speech that describes where the responsibility is (and moves the blame if it fails away from the U.S.), namely on the Afghan people and on the international community.\" Rumsfeld sought greater input over non-Department of Defense equities. He wrote to White House Chief of Staff Andrew Card on August 19, 2002, requesting \"that I have an opportunity to interview any person who is proposed for Ambassador to Afghanistan, before the selection gets made and before the President is involved. The post is very important for the Department of Defense and I would like to have a good sense of who it might be and why.\" There is some evidence that Afghanistan, by 2003, may not have been a major focus for Rumsfeld. Rumsfeld received a November 7, 2003, letter from Afghan Uzbek leader Abdul Rashid Dostum, who painted a picture of widespread Taliban activity and said \"please do not forget the battle against terrorist and extremists in Afghanistan.\" Rumsfeld forwarded the letter in a memo to CENTCOM Commander General John Abizaid on November 18, 2003, describing the letter as \"worrisome\" and saying \"if he [Dostum] is correct that the Taliban are in control of that many areas within Afghanistan, that is news to me.\""], "subsections": []}, {"section_title": "Reactions to \"the Afghanistan Papers\"", "paragraphs": ["The Washington Post 's \"Afghanistan Papers\" have attracted significant attention, though policymakers and outside analysts disagree about whether they contain new and relevant information and, if so, what effect this information should have on U.S. policy in Afghanistan going forward.", "In Congress, most of the Members who reacted publicly did so to reiterate previous calls to remove U.S. troops from Afghanistan. Senator Tom Udall spoke on the Senate floor about the Papers on December 12, voicing support for S.J.Res. 12 , introduced in March 2019 by Udall and Senator Rand Paul. The resolution would, among other provisions, mandate the removal of all U.S. forces from Afghanistan within a year of enactment. Senator Kirsten Gillibrand called for Senate hearings to investigate \"these deeply concerning revelations about the Afghan war,\" and Representative Max Rose said that the Papers demonstrated that \"the time to end this war and bring our troops home honorably is now.\"", "Top U.S. defense officials largely defended the U.S. conduct of the war, arguing that the Papers did not constitute evidence that former officials had lied to the American public, and that the Papers, as part of a Lessons Learned project, were structured to invite criticism, in hindsight, of the war effort. Pentagon Spokesman Jonathan Hoffman said on December 12, 2019, ", "I would quibble with the idea that we weren't providing [accurate information] in the past. I think what we see from the report from the Washington Post is, looking at individuals giving retrospectives years later on what they may have believed at the time ... those statements appeared for the most part to be people looking back retrospectively on things that they had said previously\u00e2\u0080\u0094and using hindsight to speak to comments they had made.", "Secretary of Defense Mark Esper dismissed claims that officials had lied, saying, \"For 18 years now, the media has been over there [in Afghanistan]\u00e2\u0080\u00a6. The Congress has been there multiple times\u00e2\u0080\u00a6. We've had the SIGAR there. We've had IGs there. This has been a very transparent\u00e2\u0080\u0094it's not like this war was hiding somewhere and now all of a sudden there's been a revelation\u00e2\u0080\u00a6. So [the] insinuation that there's been this large-scale conspiracy is just, to me, ridiculous.\" Chairman of the Joint Chiefs of Staff General Mark Milley, appearing alongside Esper, said, \"I know that I and many, many others gave assessments at the time based on facts that we knew at the time. And those were honest assessments, and they were never intended to deceive neither the Congress nor the American people.\" ", "SIGAR Special Inspector General John Sopko wrote a December 17, 2019, letter to the editor of the Washington Post disputing some of the Post 's characterizations and saying that \"the Afghanistan Papers is an important contribution to public discourse about the war in Afghanistan. But it is not a 'secret' history. SIGAR has written about these issues for years, including in seven Lessons Learned reports and more than 300 audits and other products.\" On January 15, 2020, Sopko testified in front of the House Foreign Affairs Committee that U.S. policy in Afghanistan has been characterized by \"institutional hubris and mendacity\" and that \"We have incentivized lying to Congress.... [T]he whole incentive is to show success and to ignore failure and when there's too much failure, classify it or don't report it.\" ", "Outside observers have offered differing views of the Papers. One concurred with the Post 's assessment that in the Papers, \"officials' indictment of policies for which they themselves were responsible lays bare the massive institutional deceit that forms the heart of what the United States has done\" in Afghanistan. Other observers have taken a softer line. One wrote, \"it is apparent from the documents that many officials in power attempted to 'spin' a spiraling Afghanistan conflict for the public,\" though they did so because \"the U.S. government has every incentive to paint a better picture of progress than is the reality on the ground.\"", "Still others have argued that the Papers contain little that has not already been readily and publicly available for years: \"the only new information here is the identity of those making the criticisms.\" Those making this argument have pointed to reports from SIGAR (including their seven publicly released Lessons Learned reports for which the interviews in \"the Afghanistan Papers\" were conducted) and other inspectors general, as well as media, academic, and other public accounts. One summarizes, \"In short, if you're surprised by the Afghanistan Papers, you haven't been paying attention.\" Another observer criticizes the Post for \"putting sensationalist spin on information that was not classified, has already been described in publicly available reports, only covers a fraction of the 18 years of the war, and falls far short of convincingly demonstrating a campaign of deliberate lies and deceit.\" Given that there has been evidence of shortcomings in the U.S. war and development effort for years, one observer argues that \"Afghanistan is best seen, not as a morality play, but as a classic foreign policy dilemma in which all the options are bad ones\":", "Reasonable people can debate, with the benefit of hindsight, whether the United States should have accepted these risks as the price of avoiding another two decades of war. But the tragic dilemma of Afghanistan is that there have always been costs of withdrawal as well as costs of continued intervention."], "subsections": []}]}, {"section_title": "Possible Questions for Congress", "paragraphs": ["\"The Afghanistan Papers\" raise a number of potential questions for Congress to consider as Members evaluate the Trump Administration's Afghanistan policies.", "U.S. Strategy . What role, if any, has Congress played in compelling successive executive branch administrations to articulate U.S. strategy and/or policy goals in Afghanistan? What are the means by which Congress has attempted to shape or influence those goals? What have been the most and least effective of those means? Congressional Oversight . Members of Congress have conducted oversight of executive branch policy through various means, including appointing a special inspector general, public and closed hearings, Member and staff delegations to Afghanistan, letters to executive branch officials, and public statements. What have been the most and least effective methods of congressional oversight? U.S Aid: Budgeting. To what extent has Congress scrutinized executive branch funding requests? Have appropriated U.S. funding levels differed from those requests and if so, what changes have been made and why? To what extent have congressional budgeting decisions in Afghanistan been made due to political expediency? How, if at all, can Members of Congress insulate budgeting or other policymaking processes from political pressures? U.S. Aid: Conditionality. What conditions has Congress imposed on U.S. aid to Afghanistan and why? How, if at all, have those conditions impacted the delivery of U.S. aid, Afghan government actions, U.S.-Afghan relations, and congressional interactions with the executive branch? What kinds of changes, if any, to the Foreign Assistance Act or other relevant pieces of legislation might make U.S. development assistance more effective? Reporting . What has been the impact of congressionally mandated reporting on policy or outcomes? How, if at all, does Congress use these reports? What are the most and least useful reports that Congress receives on U.S. military and development efforts in Afghanistan? How, if at all, does Congress require agencies to evaluate their programs, and how does this inform reports to Congress? Has there been any evolution in specific monitoring and evaluation requirements? Bureaucracy. How has Congress shaped executive branch structure? Have these efforts been helpful? How direct a role should Congress play in mandating the establishment or nature of offices or other bureaucratic structures within the executive branch that work on Afghanistan? Personnel Issues . To what extent have U.S. efforts in Afghanistan been hampered by the frequent personnel turnover cited by many SIGAR interviewees? How, if at all, have congressional actions improved, undermined, or otherwise affected the ability of federal agencies to train and deploy capable workforces in Afghanistan? What congressional action, if any, is needed to help the executive branch, or individual departments, address this issue? Recommendations . What are the most important things that Congress could have been doing over the past 18 years to ensure U.S. success in Afghanistan? What can (and should) Congress do going forward?"], "subsections": []}]}}
{"id": "R44874", "title": "The Budget Control Act: Frequently Asked Questions", "released_date": "2019-10-01T00:00:00", "summary": ["When there is concern with deficit or debt levels, Congress will sometimes implement budget enforcement mechanisms to mandate specific budgetary policies or fiscal outcomes. The Budget Control Act of 2011 (BCA; P.L. 112-25 ), which was signed into law on August 2, 2011, includes several such mechanisms.", "The BCA as amended has three main components that currently affect the annual budget. One component imposes annual statutory discretionary spending limits for defense and nondefense spending. A second component requires annual reductions to the initial discretionary spending limits triggered by the absence of a deficit reduction agreement from a committee formed by the BCA. Third are annual automatic mandatory spending reductions triggered by the same absence of a deficit reduction agreement. Each of those components is described in further detail in this report. The discretionary spending limits (and annual reductions) are currently scheduled to remain in effect through FY2021, while the mandatory spending reductions are scheduled to remain in effect through FY2029.", "Congress may modify or repeal any aspect of the BCA procedures, but such changes require the enactment of legislation. Several pieces of legislation have changed the spending limits or enforcement procedures included in the BCA with respect to each year from FY2013 through FY2029. These include the American Taxpayer Relief Act of 2012 (ATRA; P.L. 112-240 ), the Bipartisan Budget Act of 2013 (BBA 2013; P.L. 113-67 , also referred to as the Murray-Ryan agreement), the Bipartisan Budget Act of 2015 (BBA 2015; P.L. 114-74 ), the Bipartisan Budget Act of 2018 (BBA 2018; P.L. 115-123 ), and the Bipartisan Budget Act of 2019 (BBA 2019; P.L. 116-37 ).", "Those laws included changes to the discretionary limits imposed by the BCA that increased deficits in each year from FY2013 to FY2021. Under current law there are no discretionary spending caps in place for FY2022 and beyond. Following enactment of BBA 2019, the discretionary caps in FY2020 are scheduled to be approximately $667 billion for defense activities and $622 billion for nondefense activities, and the FY2021 discretionary caps are scheduled to be $672 billion for defense activities and $627 billion for nondefense activities.", "This report addresses several frequently asked questions related to the BCA and the annual budget."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "1. What is the BCA?", "paragraphs": ["When there is concern with deficit or debt levels, Congress will sometimes implement budget enforcement mechanisms to mandate specific budgetary policies or fiscal outcomes. The Budget Control Act of 2011 (BCA; P.L. 112-25 ) was the legislative result of extended budget policy negotiations between congressional leaders and President Barack Obama. These negotiations occurred in conjunction with the government's borrowing authority approaching the statutory debt limit.", "Budget deficits in FY2009 through FY2011 averaged 9.0% of gross domestic product (GDP) and were higher than any other year since World War II. Those deficits were due to a number of factors, including reduced revenues and increased spending demands attributable to the Great Recession and costs associated with the economic stimulus package passed through the American Recovery and Reinvestment Act of 2009 ( P.L. 111-5 ). ", "The BCA includes several interconnected components related to the federal budget, some of which are no longer in effect. There are five primary components:", "1. An authorization to the executive branch to increase the debt limit in three installments, subject to a disapproval process by Congress. (Those provisions were temporary and are no longer in effect.) 2. A one-time requirement for Congress to vote on an amendment to the Constitution to require a balanced budget . 3. The establishment of limits on defense discretionary spending and nondefense discretionary spending, enforced by sequestration (automatic, across-the-board reductions) in effect through FY2021. Under this mechanism, sequestration is intended to deter enactment of legislation violating the spending limits or, in the event that legislation is enacted violating these limits, to automatically reduce discretionary spending to the limits specified in law. 4. The establishment of the Joint Select Committee on Deficit Reduction (often referred to as \"the Joint Committee\" or \"the super committee\"), which was directed to develop a proposal that would reduce the deficit by at least $1.5 trillion over FY2012 to FY2021. 5. The establishment of an automatic process to reduce spending, beginning in 2013, in the event that Congress and the President did not enact a bill reported by the Joint Committee reducing the deficit by at least $1.2 trillion. (Such a bill was not enacted.) This automatic process requires annual downward adjustments of the discretionary spending limits, as well as a sequester (automatic, across-the-board reduction) of nonexempt mandatory spending programs. In this case, sequestration was included to encourage the Joint Committee to agree on deficit reduction legislation or, in the event that such agreement was not reached, to automatically reduce spending so that an equivalent budgetary goal would be achieved. "], "subsections": []}, {"section_title": "2. What components of the BCA currently affect the annual budget?", "paragraphs": ["The BCA as amended has three main components that currently affect the annual budget. One component imposes annual statutory discretionary spending limits for defense and nondefense spending. A second component requires annual reductions to the initial discretionary spending limits, triggered by the absence of a deficit reduction agreement from the Joint Committee. Third are annual automatic mandatory spending reductions triggered by the same absence of a deficit reduction agreement. Each of those components is described in further detail below. "], "subsections": [{"section_title": "Discretionary Spending Limits", "paragraphs": ["The BCA established statutory limits on discretionary spending for FY2012-FY2021. (Such discretionary spending limits were first in effect between FY1991 and FY2002. ) There are currently separate annual limits for defense discretionary and nondefense discretionary spending. The defense category consists of discretionary spending in budget function 050 (national defense) only. The nondefense category includes discretionary spending in all other budget functions.", "If discretionary appropriations are enacted that exceed a statutory limit for a fiscal year, across-the-board reductions (i.e., sequestration) of nonexempt budgetary resources within the applicable category are required to eliminate the excess spending. The BCA further stipulates that some spending is effectively exempt from the limits. Specifically, the BCA specifies that the enactment of certain discretionary spending\u00e2\u0080\u0094such as appropriations designated as emergency requirements or for overseas contingency operations\u00e2\u0080\u0094allows for an upward adjustment of the discretionary limits (meaning that such spending is effectively exempt from the limits)."], "subsections": []}, {"section_title": "Annual Reductions to the Discretionary Spending Limits", "paragraphs": ["Another component of the BCA requires reductions to these discretionary spending limits annually. Due to the absence of the enactment of Joint Committee legislation to reduce the deficit by at least $1.2 trillion over the 10-year period (described above), the BCA requires these reductions to the statutory limits on both defense and nondefense discretionary spending for each year through FY2021. ", "These reductions are often referred to as a sequester, but they are not a sequester per se because they do not make automatic, across-the-board cuts to programs. Instead, they lower the spending limits, allowing Congress the discretion to develop legislation within the reduced limits.", "For information on the spending limit amounts, see the section below titled \" 9. How is discretionary spending currently affected by the BCA? \" "], "subsections": []}, {"section_title": "Annual Mandatory Spending Sequester", "paragraphs": ["Because legislation from the Joint Committee to reduce the deficit by at least $1.2 trillion over the 10-year period (described above) was not enacted, the BCA requires the annual sequester (automatic, across-the-board reductions) of nonexempt mandatory spending programs. This sequester was originally intended to occur each year through FY2021 but has been extended to continue through FY2029. ", "Many programs are exempt from sequestration, such as Social Security, Medicaid, the Children's Health Insurance Program (CHIP), Temporary Assistance for Needy Families (TANF), and Supplemental Nutrition Assistance Program (SNAP, formerly food stamps). In addition, special rules govern the sequestration of certain programs, such as Medicare, which is limited to a 2% reduction. To see a list of direct spending programs included in the most recent sequester report, see the annual Office of Management and Budget (OMB) report to Congress on the Joint Committee sequester for FY2020.", "For more information on the budgetary impact of the mandatory spending sequester, see the section below titled How is mandatory spending currently affected by the BCA? "], "subsections": []}]}, {"section_title": "3. What is a sequester and when will it occur?", "paragraphs": ["A sequester provides for the enforcement of budgetary limits established in law through the automatic cancellation of previously enacted spending. This cancellation of spending makes largely across-the-board reductions to nonexempt programs, activities, and accounts. A sequester is implemented through a sequestration order issued by the President as required by law. ", "The purpose of a sequester is to enforce certain statutory budget requirements\u00e2\u0080\u0094either to discourage Congress from enacting legislation violating a specific budgetary goal or to encourage Congress to enact legislation that would fulfill a specific budgetary goal. One of the authors of the law that first employed the sequester recently stated, \"It was never the objective ... to trigger the sequester; the objective ... was to have the threat of the sequester force compromise and action.\"", "As mentioned above, sequestration is currently used as the enforcement mechanism for policies established in the BCA:", "For the discretionary spending limits, a sequester will occur only if appropriations are enacted that exceed either the defense or nondefense discretionary limits. In such a case, sequestration is generally enforced when OMB issues a final sequestration report within 15 calendar days after the end of a session of Congress. In addition, a separate sequester may be triggered if the enactment of appropriations causes a breach in the discretionary limits during the second and third quarter of the fiscal year. In such an event, sequestration would take place 15 days after the enactment of the appropriation. If the enactment of appropriations causes the discretionary spending limits to be breached in the last quarter of the fiscal year, the spending limit for the following fiscal year for that category must be reduced by the amount of the breach. As mentioned above, the BCA requires reductions to these discretionary spending limits annually. These reductions are to be calculated by OMB and included annually in the OMB Sequestration Preview Report to the President and Congress , which is to be issued with the President's annual budget submission. The reductions would then apply to the discretionary spending limits for the budget year corresponding to the President's submission. While these reductions are often referred to as a sequester, they are not a sequester per se because they do not make automatic, across-the-board cuts to programs. Instead, they lower the spending limits, allowing Congress the discretion to develop legislation within the reduced limits. A sequester of nonexempt mandatory spending programs will take place each year through FY2029. These levels are also calculated by OMB and are included in the annual OMB report to Congress on the Joint Committee reductions, which is also to be issued with the President's budget submission. The sequester does not occur, however, until the beginning of the upcoming fiscal year."], "subsections": []}, {"section_title": "4. What statutory changes have been made to the BCA?", "paragraphs": ["Legislation has been enacted making changes to the spending limits or enforcement procedures included in the BCA for each year from FY2013 through FY2021. Some of the most significant of these changes are the following:", "The American Taxpayer Relief Act of 2012 (ATRA; P.L. 112-240 ) postponed the start of FY2013 sequester from January 2 to March 3 and reduced the amount of the spending reductions by $24 billion, among other things. The Bipartisan Budget Act of 2013 (BBA 2013; P.L. 113-67 , referred to as the Murray-Ryan agreement) increased discretionary spending limits for both defense and nondefense for FY2014, each by about $22 billion. In addition, it increased discretionary spending limits for both defense and nondefense for FY2015, each by about $9 billion. It also extended the mandatory spending sequester by two years through FY2023. Soon after the enactment of the Bipartisan Budget Act of 2013, a bill was enacted to \"ensure that the reduced annual cost-of-living adjustment to the retired pay of members and former members of the armed forces under the age of 62 required by the Bipartisan Budget Act of 2013 will not apply to members or former members who first became members prior to January 1, 2014, and for other purposes ( P.L. 113-82 ).\" This legislation extended the direct spending sequester by one year through FY2024. The Bipartisan Budget Act of 2015 (BBA 2015; P.L. 114-74 ) increased discretionary spending limits for both defense and nondefense for FY2016, each by $25 billion. In addition, it increased discretionary spending limits for both defense and nondefense for FY2017, each by $15 billion. It also extended the direct spending sequester by one year through FY2025. In addition, it established nonbinding spending targets for Overseas Contingency Operations/Global War on Terrorism (OCO/GWOT) levels for FY2016 and FY2017 and amended the limits of adjustments allowed under the discretionary spending limits for Program Integrity Initiatives. The Bipartisan Budget Act of 2018 (BBA 2018; P.L. 115-123 ) increased nondefense and defense discretionary limits in FY2018 and FY2019. In FY2018 BBA 2018 increased the defense limit by $80 billion (to $629 billion) and increased the nondefense limit by $63 billion (to $579 billion); in FY2019 it increased the defense limit by $85 billion (to $647 billion) and increased the nondefense limit by $68 billion (to $597 billion). BBA 2018 also extended the mandatory spending sequester by two years through FY2027. The Bipartisan Budget Act of 2019 (BBA 2019; P.L. 116-37 ) increased discretionary spending limits for FY2020 and FY2021. In FY2020, it increased the discretionary defense cap by $90 billion, to $667 billion, and increased the nondefense cap by $78 billion, to $622 billion. In FY2021, it increased the discretionary defense cap by $81 billion, to $672 billion, and increased the nondefense cap by $72 billion, to $627 billion. BBA 2019 also extended the mandatory spending sequester by two years, through FY2029."], "subsections": []}, {"section_title": "5. Is Congress bound by the BCA?", "paragraphs": ["Congress may modify or repeal any aspect of the BCA procedures at its discretion, but such changes require the enactment of legislation. Since enactment of the BCA, subsequent legislation has modified both the discretionary spending limits and the mandatory spending sequester (as described above).", "In considering the potential for Congress to reach agreement on future modifications to the BCA, particularly the discretionary spending limits, it may be worth noting the following:", "Legislation that would modify the discretionary spending limit would be subject to the regular legislative process. Such legislation would therefore require House and Senate passage, as well as signature by the President or congressional override of a presidential veto. In the House, such legislation would require the support of a simple majority of Members voting, but in the Senate, consideration of such legislation would likely require cloture to be invoked, which requires a vote of three-fifths of all Senators (normally 60 votes) to bring debate to a close. Previous legislative increases to the discretionary spending limits have been coupled with future spending reductions, such as extensions of the mandatory spending sequester. For example, BBA 2013 extended the mandatory spending sequester by two years (from FY2021 to FY2023). Previous legislative increases to the discretionary spending limits have adhered to what has been referred to as the \"parity principle.\" In essence, this means that some Members of Congress have insisted that any legislation changing the limits must increase each of the two limits (defense and nondefense) by equal amounts. For example, BBA 2015 increased discretionary spending limits for both defense and nondefense for FY2016, each by $25 billion. In addition, it increased discretionary spending limits for both defense and nondefense for FY2017, each by $15 billion. "], "subsections": []}, {"section_title": "6. Which types of legislation are subject to the discretionary spending limits?", "paragraphs": [], "subsections": [{"section_title": "Budget Resolutions", "paragraphs": ["Although the budget resolution may act as a plan for the upcoming budget year, it does not provide budget authority and therefore cannot trigger a sequester for violation of the discretionary spending limits. Nevertheless, budget resolutions are often referred to in terms of complying with, or not complying with, the discretionary spending limits. ", "Even if a budget resolution were agreed to that included planned levels of spending in excess of the discretionary spending limits, this would not supersede the discretionary spending limits stipulated by the BCA. While Congress may modify or cancel the discretionary spending limits at its discretion, such changes require the enactment of legislation."], "subsections": []}, {"section_title": "Authorizations of Appropriations", "paragraphs": ["Authorizations of discretionary appropriations, such as the National Defense Authorization Act (NDAA), do not provide budget authority and therefore cannot trigger a sequester for violation of the discretionary spending limits. Although authorizations often include recommendations for funding levels, budget authority is subsequently provided in appropriations legislation. It is, therefore, appropriations legislation that could trigger a sequester. Nevertheless, authorizations (the NDAA in particular) are often discussed in terms of whether or not the authorized level of funding, if appropriated, would comply with the discretionary spending limits. ", "Even if an authorization bill were enacted that authorized appropriations at levels in excess of the discretionary spending limits, this authorization would not supersede the statutory discretionary spending limits stipulated by the BCA. While Congress may modify or cancel the discretionary spending limits at its discretion, such changes require the enactment of legislation."], "subsections": []}, {"section_title": "Regular, Supplemental, and Continuing Appropriations", "paragraphs": ["Appropriations legislation that provides budget authority for discretionary spending programs in excess of the discretionary spending limits can trigger a sequester for violation of the discretionary spending limits. This includes regular appropriations legislation, supplemental appropriations legislation, and continuing resolutions (CRs).", "Any appropriations legislation enacted into law that provides budget authority in excess of the levels stipulated by the BCA would trigger a sequester, canceling previously enacted spending through automatic, largely across-the-board reductions of nonexempt budgetary resources within the category of the breach.", "The statutory limits established by the BCA as amended apply to budget authority and not outlays. Budget authority is what federal agencies are legally permitted to obligate, and it is controlled by Congress through appropriation acts in the case of discretionary spending or through other acts in the case of mandatory spending. Budget authority gives federal officials the ability to spend. Outlays are disbursed federal funds. Until the federal government disburses funds to make payments, no outlays occur. Therefore, there is generally a lag between when Congress grants budget authority and when outlays occur."], "subsections": []}]}, {"section_title": "7. Is some spending \"exempt\" or \"excluded\" from the BCA?", "paragraphs": ["Some spending is regarded as \"exempt\" from the BCA. A distinction should be noted between categories of spending that are \"excluded\" from the discretionary spending limits and spending programs that are \"exempt\" from sequestration.", "Some categories of spending are considered \"exempt\" or \"excluded\" from the discretionary spending limits, meaning that when an assessment is made as to whether the discretionary spending limits have been breached, they are not counted. (In precise terms, the BCA does not \"exempt\" such spending but allows for an upward adjustment of the discretionary limits to accommodate such spending.) ", "For example, spending designated as emergency requirements or for OCO/GWOT is effectively excluded from the discretionary spending limits up to any amount (meaning that the designation of such spending allows for an upward adjustment of the discretionary limits to accommodate that spending). The BCA does not define what constitutes this type of funding, nor does it limit the level or amount of spending that may be designated as being for such purposes.", "Similarly, \"disaster funding\" and spending for \"continuing disability reviews and redeterminations\" and \"healthcare fraud and abuse control\" are effectively exempt up to a certain amount (again meaning that such spending allows for an upward adjustment of the discretionary limits to accommodate that spending), as are other programs.", "Some programs are exempt from a sequester, such as Social Security, Medicaid, CHIP, TANF, and SNAP. In addition, special rules govern the sequestration of certain programs, such as Medicare, which is limited to a 2% reduction. These exemptions and special rules are found in Sections 255 and 256 of the BBEDCA, as amended, respectively. ", "It may also be helpful to review OMB sequester reports detailing programs that have been subject to sequester. To see a list of both discretionary and direct spending programs subject to the FY2013 sequester, see the OMB report to Congress on the Joint Committee sequestration for FY2013. To see a list of direct spending programs included in the most recent sequester report, see the annual OMB report to Congress on the Joint Committee sequester for FY2020."], "subsections": []}, {"section_title": "8. How does the \"parity principle\" apply to the BCA?", "paragraphs": ["The \"parity principle\" refers to the equality between changes made to defense and nondefense budget authority through some deficit reduction measures established by the BCA. While there has never been a statutory requirement to uphold the parity principle, budget parity has followed from deficit reduction measures imposed by the BCA and some of the subsequent amendments to its deficit reduction measures. The specific type of parity in each law evolved over time.", "The BCA and ATRA reflected parity in the budgetary impact of changes to defense and nondefense budget authority across both discretionary and mandatory spending categories . Subsequent BCA amendments in BBA 2013 and BBA 2015 reflected parity between defense and nondefense budget authority for discretionary spending only , as those laws also extended automatic mandatory deficit reduction measures that had larger budget reductions for nondefense activities than for defense programs.", "BBA 2018 reflected yet another type of parity, as the amended discretionary cap levels in FY2018 and FY2019 were increased by an equivalent amount relative to the initial BCA levels as established in August 2011. As compared with the caps after the automatic reductions took effect, BBA 2018 included larger increases to the defense caps than to the nondefense caps. As with BBA 2013 and BBA 2015, BBA 2018 also included an extension to the automatic mandatory spending reductions with a larger set of reductions for nondefense programs than for defense programs. BBA 2019 did not include increases that reflected any definition of the parity principle: as with BBA 2018 it imposed larger increases to defense programs than nondefense programs for FY2020 and FY2021, but the difference between the nondefense and defense caps in each year was smaller than the gap initially established by the BCA.", "The BCA provides for upward adjustments to the discretionary caps, sometimes called spending \"outside the caps,\" for budget authority devoted to OCO, emergency requirements, and other purposes. Budget authority for BCA upward adjustments has not reflected parity between defense and nondefense activities in any effective year of the BCA to date, as upward adjustments have allowed for more defense spending than nondefense spending in each year from FY2012 through FY2017 and FY2019, while upward adjustments were larger for defense spending than nondefense spending in FY2018. "], "subsections": []}, {"section_title": "9. How is discretionary spending currently affected by the BCA?", "paragraphs": ["The BCA includes annual statutory caps that limit how much discretionary budget authority can be provided for defense and nondefense activities. These limits are in effect through FY2021 and are enforced by sequestration, meaning that a breach of the discretionary spending limit for either category would trigger a sequester of resources within that category only to make up for the amount of the breach. ", "A second component of the BCA makes automatic decreases to these caps annually. In the absence of the enactment of a Joint Committee bill to reduce the deficit by at least $1.2 trillion, the BCA required downward adjustments (or reductions) to the statutory limit on both defense and nondefense spending each year through FY2021. While these reductions are often referred to as sequesters, they are not technically sequesters because they do not make automatic, across-the-board cuts to programs. The reductions instead lower the spending limits, allowing Congress the discretion to develop legislation within the reduced limits. These reductions are to be calculated annually by O MB and are included in the OMB Sequestration Preview Report to the President and Congress , which is issued with the President's annual budget submission.", "The BCA stipulates that certain discretionary funding, such as appropriations designated as OCO or for emergency requirements, allows for an upward adjustment of the discretionary limits. OCO funding is therefore sometimes described as being \"exempt\" from the discretionary spending limits. The BCA does not define what constitutes this type of funding, nor does it limit the level of spending that may be designated as being for such purposes."], "subsections": [{"section_title": "Budgetary Impact", "paragraphs": ["The BCA as enacted was estimated to reduce budget deficits by a cumulative amount of roughly $2 trillion over the FY2012-FY2021 period. Subsequent modifications enacted through ATRA, BBA 2013, and BBA 2015 lessened the level of deficit reduction projected to be achieved by the BCA in selected years. ATRA postponed FY2013 spending reductions and made them smaller. In contrast, BBA 2013, BBA 2015, BBA 2018, and BBA 2019 limited the deficit-reducing impact through increases in the discretionary budget authority caps in FY2014-FY2021. ", " Table 1 shows the evolution of discretionary spending limits established by the BCA from August 2011 through August 2019. The discretionary caps in FY2020 are currently scheduled to be $667 billion for defense activities and $622 billion for nondefense activities, higher than their totals of $647 billion and $597 billion, respectively, in FY2019. The combined discretionary limit in FY2020 ($1,288 billion) is $45 billion higher than its FY2019 value."], "subsections": []}]}, {"section_title": "10. How is mandatory spending currently affected by the BCA?", "paragraphs": ["The absence of an agreement by the Joint Committee triggered automatic spending reductions (as provided for in the BCA) for all mandatory programs that were not explicitly exempted from FY2013 through FY2021. Notably, Social Security payments were exempted from the automatic reductions, and the effect on Medicare spending was limited to 2% of annual payments made to certain Medicare programs. Extensions of the mandatory spending reductions were included in BBA 2013, BBA 2015, BBA 2018, and BBA 2019 and are currently scheduled to remain in place through FY2029. A recent OMB sequestration report estimated that such measures will reduce mandatory outlays by $20.7 billion in FY2020, with $19.86 billion of that total applied to nondefense programs and $0.84 billion applied to defense programs."], "subsections": []}, {"section_title": "11. Why do discretionary outlays differ from the spending limits established by the BCA?", "paragraphs": ["The limits on discretionary spending established by the BCA apply to budget authority, which is the amount that federal agencies are legally permitted to obligate. Outlays, meanwhile, are disbursed federal funds: In other words, they represent amounts that are actually spent by the government. There is generally a lag between when Congress grants budget authority and when outlays occur, and that lag can vary depending on the agency and specific purpose of the obligation. Furthermore, the budget may classify certain types of spending in a certain way when measuring budget authority and another way when measuring outlays. For example, much of the spending attached to the Highway Trust Fund is classified as mandatory spending when measuring budget authority and as discretionary spending when measuring outlays. "], "subsections": []}, {"section_title": "12. How has federal spending changed since enactment of the\u00c2 BCA?", "paragraphs": ["Budget deficits declined for much of the 1990s due to decreased spending, rising revenues, and an improved economy. The federal budget recorded surpluses from FY1998 through FY2001. Prior to that, the last budget surplus occurred in FY1969. Budget deficits returned starting in FY2002 and slowly increased over the next several years due to reduced revenues and increased spending. Net deficits peaked during the Great Recession from FY2009 to FY2011, as negative and low economic growth coupled with increased spending commitments provided for by the American Recovery and Reinvestment Act ( P.L. 111-5 ) contributed to real deficits averaging 9.0% of gross domestic product (GDP) in those years. ", "Real deficits have declined since FY2011, due to the modifications made by the BCA, increased revenues, and the winding down of stimulus programs. However, the FY2019 deficit (4.3% of GDP, or $665 billion) remains higher than the average deficit since FY1969 (2.9% of GDP).The CBO baseline projects that real budget deficits will increase in future years. "], "subsections": []}, {"section_title": "13. How do modifications to the BCA affect baseline projections?", "paragraphs": ["Modifications to the limits on discretionary spending, established by the BCA, change authorizations levels, which in turn affect outlays. CBO provides estimates of both discretionary spending effects and mandatory spending effects in its legislative cost estimates. Whether proposed legislation affects discretionary or mandatory spending may have ramifications for congressional budgetary enforcement procedures, however. ", "CBO's baseline projections assume that the discretionary limits imposed by the BCA as amended will proceed as scheduled through FY2021 and that discretionary spending levels will grow with the economy in subsequent years. Such methodology uses the discretionary spending levels in FY2021 as the basis for discretionary spending projections for the remainder of the budget window. "], "subsections": []}]}}
{"id": "RL30023", "title": "Federal Employees\u2019 Retirement System: Budget and Trust Fund Issues", "released_date": "2019-12-13T00:00:00", "summary": ["Most of the civilian federal workforce is covered by one of two retirement systems: (1) the Civil Service Retirement System (CSRS) for individuals hired before 1984 or (2) the Federal Employees' Retirement System (FERS) for individuals hired in 1984 or later. FERS annuities are fully funded by the sum of employee and employer contributions and interest earned by the Treasury bonds held by the Civil Service Retirement and Disability Fund (CSRDF). The federal government makes supplemental payments into the CSRDF on behalf of employees covered by the CSRS because employee and agency contributions and interest earnings do not meet the full cost of the benefits earned by employees covered by that system.", "The Office of Management and Budget (OMB), in its FY2020 Budget, estimated that in FY2019, obligations from the CSRDF would total $88.4 billion, of which $87.9 billion will represent annuity payments to retirees and survivors. Other outlays consist of refunds, payments to estates, and administrative expenses. Obligations from the fund are projected to increase by 3.7% to $91.7 billion in FY2020, of which $91.3 billion will represent annuity payments. OPM estimated that receipts to the CSRDF from all sources would be $104.4 billion in FY2019 and $108.8 billion in FY2020. The year-end balance of the CSRDF was projected to increase from $915.3 billion at the end of FY2018 to $931.4 billion at the end of FY2019.", "According to the most recent reporting from the Office of Personnel Management, the total annual income of the CSRDF will increase from $124.9 billion in FY2018 to an estimated $151.0 billion in FY2025 and to $759.9 billion in FY2090. The total expenses of the fund are projected to rise more slowly, increasing from $85.8 billion in FY2018 to an estimated $104.9 billion in FY2025 and to $506.6 billion in FY2090. Consequently, the assets held by the CSRDF also are projected to increase steadily, rising from $947.8 billion in FY2018 to an estimated $1.2 trillion in FY2025 and $10.6 trillion in FY2090. Expenditures from the CSRDF currently are about 40% as large as federal expenditures for the salaries and wages paid to federal employees. Pension expenditures are projected to decline relative to the government's wage and salary expenses, beginning around FY2020. By FY2090, the expenditures of the CSRDF are estimated to be only about 32% as large as the government's expenditures for wage and salary payments to employees.", "Because CSRS retirement benefits have never been fully funded by employer and employee contributions, the CSRDF has an unfunded liability. The total unfunded liability of the CSRDF was $968.1 billion in FY2017. According to actuarial estimates, the unfunded liability of the CSRDF has already peaked, will steadily decline, and is projected to be eliminated by FY2085. Actuarial estimates indicate that the unfunded liability of the CSRS does not pose a threat to the solvency of the trust fund. There is no point over the next 80 years at which the assets of the Civil Service Retirement and Disability Fund are projected to run out."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["Pensions for civilian federal employees are provided through two programs, the Civil Service Retirement System (CSRS) and the Federal Employees' Retirement System (FERS). CSRS was authorized by the Civil Service Retirement Act of 1920 (P.L. 66-215) and FERS was established by the Federal Employees' Retirement System Act of 1986 ( P.L. 99-335 ). Under both CSRS and FERS, employees and their employing agencies make contributions to the Civil Service Retirement and Disability Fund (CSRDF), from which pension benefits are paid to retirees and their surviving dependents. Retirement and disability benefits under FERS are fully funded by employee and employer contributions and interest earned by the bonds in which the contributions are invested. The cost of the retirement and disability benefits earned by employees covered by CSRS, on the other hand, are not fully funded by agency and employee contributions and interest income. The federal government therefore makes supplemental payments each year into the civil service trust fund on behalf of employees covered by CSRS. Even with these additional payments into the trust fund, however, CSRS pensions are not fully pre-funded.", "Prior to 1984, federal employees did not pay Social Security payroll taxes and did not earn Social Security benefits. The Social Security Amendments of 1983 ( P.L. 98-21 ) mandated Social Security coverage for civilian federal employees hired on or after January 1, 1984. This change was made in part because the Social Security system needed additional cash contributions to remain solvent. Enrolling federal workers in both CSRS and Social Security, however, would have resulted in duplication of some benefits and would have required employee contributions equal to more than 13% of workers' salaries. Consequently, Congress directed the development of the FERS, with Social Security as the cornerstone. The FERS is composed of three elements: (1) Social Security, (2) the FERS basic retirement annuity and the FERS supplement, and (3) the Thrift Savings Plan (TSP). Most permanent federal employees initially hired on or after January 1, 1984, are enrolled in the FERS, as are employees who voluntarily switched from CSRS to FERS during \"open seasons\" held in 1987 and 1998."], "subsections": []}, {"section_title": "Fundamentals of Pension Plan Financing", "paragraphs": ["Retirement plans are classified as either defined benefit (DB) plans or defined contribution (DC) plans. In a DB plan, the retirement benefit typically is based on an employee's salary and years of service. Under federal law, a DB plan must offer participants the option to take their benefit as a life annuity. A DC plan\u00e2\u0080\u0094for example, a 401(k)\u00e2\u0080\u0094is much like a savings account maintained by the employer on behalf of each participating employee. The employer or the employee or both contribute to an account, which is invested in assets such as stocks and bonds. In some DC plans, the amount of the employer contribution depends on how much the employee contributes from his or her pay. When the worker retires, he or she receives the balance in the account, which is the sum of all the contributions that have been made plus interest, dividends, and capital gains (or losses). This is usually paid as a lump-sum, but the employee sometimes has the option to receive benefits as a series of fixed payments over a period of years or as an annuity.", "An important difference between DB plans and DC plans is that the employer bears the financial risk in a DB plan, whereas the employee bears the financial risk in a DC plan. In a DB plan, the employer promises to provide retirement benefits equal to a certain dollar amount or a specific percentage of the employee's pay. Under federal law, employers in the private sector are required to pre-fund these benefits by setting aside money in a trust fund, which is typically invested in stocks, bonds, and other assets. The employer is at risk for the full amount of retirement benefits its employees have earned. If the assets held in the pension fund are worth less than the present value of the benefits that have been accrued under the plan, the employer is required by law to make up this deficit\u00e2\u0080\u0094called an unfunded liability\u00e2\u0080\u0094through additional contributions over a period of years.", "In a DC plan, it is the employee who bears several types of risk, including the risk that markets will decline ( market risk ), the risk that specific investments he or she chooses will fall in value ( investment risk ), and the risk that the employee may outlive their retirement assets ( longevity risk ). If the contributions to the account are inadequate, or if the securities in which the account is invested lose value or increase in value too slowly, the employee risks having an income in retirement that is too small to maintain his or her desired standard of living. If this situation occurs, the worker might find it necessary to delay retirement. "], "subsections": [{"section_title": "Pre-funding of Pension Benefits in the Private Sector", "paragraphs": ["Private-sector employers are not required to provide retirement plans for their employees, but those that do must comply with the Employee Retirement Income Security Act of 1974 (ERISA; P.L. 93-406 ). ERISA sets standards that plans must meet with respect to reporting and disclosure, employee participation and vesting, plan funding, and fiduciary standards.", "Because employers cannot be certain that their revenues in future years will be sufficient to pay the pension benefits they owe to retired workers, ERISA requires companies to pre-fund DB pension obligations. Pre-funding of DB pensions protects employees who have earned the right to receive a pension, even if the firm goes out of business. Employers in the private sector pre-fund their DB pension liabilities by establishing pension trusts, which are invested in assets such as stocks and bonds. ERISA also established the Pension Benefit Guaranty Corporation (PBGC), which pays pension benefits (up to limits set in law) in the event that a company goes out of business with an underfunded pension plan. The PBGC is funded by premiums paid by employers that sponsor defined benefit pensions. It does not insure defined contribution plans.", "Pre-funding DB pension benefits is consistent with the principles of accrual accounting, in which a firm's assets and liabilities are recognized in its financial records as they accrue, as opposed to waiting until cash is received or paid out. By providing for future pension liabilities as they are incurred, the firm is recognizing that the pension benefits that it must pay in the future are part of the cost of doing business today. When an employer fails to set aside enough money each year to pay the retirement benefits accrued by its workers that year, it accumulates an \"unfunded liability.\" ERISA requires any employer that develops an unfunded liability in its defined benefit pension plan to make additional contributions over a period of years until the plan's assets equal the present value of its liabilities."], "subsections": []}, {"section_title": "Pre-funding of Federal Employee Pension Benefits", "paragraphs": ["When CSRS was established in 1920, it was not pre-funded. Benefits paid to federal retirees were paid from current contributions to the plan. Because the federal government is not likely to go out of business, it could have continued to pay the pensions earned by federal employees on a pay-as-you-go basis. Nevertheless, when Congress established FERS in 1986, it required all pension benefits earned under FERS to be fully pre-funded by the sum of employer and employee contributions and the interest earned by the U.S. Treasury bonds held by the Civil Service Retirement and Disability Fund. Congress required pre-funding of FERS retirement benefits so that federal agencies would have to recognize these costs in their budgets. Pre-funding promotes more efficient allocation of resources between personnel costs and other expenses because it forces federal agencies to recognize the full cost of employee compensation when they prepare their annual budget requests."], "subsections": []}, {"section_title": "Investment of Trust Fund Assets", "paragraphs": ["The assets in private-sector pension funds represent a \"store of wealth\" that firms can use to meet pension obligations as they come due. The CSRDF, however, is not a store of wealth for the federal government. The fund is required by law to invest exclusively in U.S. Treasury bonds. These bonds represent budget authority , which is the legal basis for the Treasury to disburse funds. When the CSRDF redeems the Treasury bonds that it holds, the Treasury must raise an equivalent amount of cash by collecting taxes or borrowing from the public.", "If the CSRDF held assets that earned a higher average rate of return than U.S. Treasury bonds, some of the future cost of civil service retirement annuities could be paid from these higher investment returns. However, in the short run, allowing the CSRDF to invest in private-sector securities such as corporate stocks and bonds would result in higher federal expenditures, which would be required to purchase such private-sector securities. The trust fund's two main sources of income are employee contributions and contributions from federal agencies on behalf of their employees. Employee contributions are income both to the federal government and to the trust fund. Agency contributions, however, are income to the trust fund, but they are not income to the federal government. Agency contributions to the CSRDF are intragovernmental transfers that have no effect on the government's annual budget deficit or surplus.", "Currently, most outlays from the trust fund are benefit payments to annuitants. If the CSRDF were to purchase private-sector assets rather than U.S. Treasury bonds, an outlay from the trust fund would be required to purchase these assets. If employee contributions were used to purchase private-sector assets, they would no longer be income to the Treasury, and they would increase the federal budget deficit by the amount diverted to purchase private-sector assets. Agency contributions\u00e2\u0080\u0094currently an intragovernmental transfer\u00e2\u0080\u0094would instead be used to purchase private-sector assets and would be a new outlay of funds from the Treasury.", "Over the long run, however, purchasing private-sector assets would not increase the budget deficit, and could reduce it. Outlays would be moved from the future\u00e2\u0080\u0094where they would have occurred as benefit payments\u00e2\u0080\u0094to the present, where they would occur to purchase assets. If the net rate of return on private-sector securities exceeded the rate of return on Treasury bonds, the extra investment income earned by the trust fund would reduce the amount of tax revenue that would have to be raised from the public in the future to pay pension benefits under CSRS and FERS. Such a change in policy, however, would raise important questions about the federal government owning private-sector assets, and also could result in greater volatility in the value of the assets held by the trust funds."], "subsections": []}]}, {"section_title": "Financing Retirement Annuities for Federal\u00c2 Employees", "paragraphs": ["Under both CSRS and FERS, retirement annuities are based on (1) the employee's years of service, (2) the average of the employee's highest three consecutive years of salary, and (3) the benefit accrual rate. Workers covered by CSRS accrue benefits equal to 1.5% of pay for their first five years of service, 1.75% for the next five years, and 2.0% of pay for each year of service beyond the 10 th year. Under CSRS, an employee with 30 years of service will have earned an annuity equal to 56.25% of the average of his or her highest three consecutive years of pay. Employees enrolled in FERS accrue benefits equal to 1.0% of pay for each year of service. If they have worked for the federal government for 20 or more years and retire at age 62 or older, the accrual rate under FERS is 1.1% for each year of service. With 30 years of service, an employee enrolled in FERS will have earned a pension equal to 30% of the average of his or her highest three consecutive years of pay, or 33% if the individual is 62 or older at retirement.", "Federal agencies pre-fund employee pensions by deferring some of their budget authority until it is needed to pay pensions to retired workers. Federal agencies defer this budget authority by transferring it to the CSRDF. The Treasury credits the fund with the appropriate amount of budget authority in the form of special-issue bonds that earn interest equal to the average rate on the Treasury's outstanding long-term debt. The CSRDF can redeem these bonds to pay pensions to retirees and survivors."], "subsections": [{"section_title": "Employee Contributions", "paragraphs": ["Federal employees have mandatory contributions to the CSRDF deducted from their paychecks. Employees who are under the CSRS contribute 7.0% of basic pay to the CSRDF. Employees under FERS first hired before 2013 contribute 0.8% of pay to the CSRDF and 6.2% of wages to the Social Security trust fund for Old-Age, Survivors, and Disability Insurance (OASDI) up to the Social Security taxable wage base. In 2019, wages up to $132,900 are subject to the OASDI tax. Employees under FERS first hired (or rehired with less than five years of FERS service) in calendar year 2013 contribute 3.1% of pay to the CSRDF and 6.2% of taxable wages to the Social Security trust fund. FERS employees first hired (or rehired with less than five years of FERS service) after December 31, 2013, contribute 4.4% of pay to the CSRDF and 6.2% of taxable wages to the Social Security trust fund."], "subsections": []}, {"section_title": "Employer Contributions", "paragraphs": ["Whether a federal employee is enrolled in CSRS or FERS, his or her employing agency contributes money to the CSRDF. Agency contributions differ between CSRS and FERS. The Office of Personnel Management (OPM) estimates the cost of CSRS annuities to be equal to 36.6% of employee pay. This is the amount that would have to be contributed to the CSRDF each year to fully fund the benefits that employees earn under the CSRS. Under CSRS, employees and their employing agencies each contribute an amount equal to 7.0% of pay the CSRDF. Agency and employee contributions total 14.0% of pay. The Treasury makes an annual contribution to the CSRDF that covers most of the costs of the CSRS that are not covered by employee and agency contributions. On September 30, 2018, the Treasury made a payment $34.16 billion for CSRS to the CSRDF. However, the CSRS continues to have an unfunded liability, which is estimated to be $813.1 billion in FY2018.", "Effective as of October 1, 2019, OPM estimates the cost of FERS at an amount equal to 16.8% of pay for employees first hired before 2013, 17.3% for employees first hired in 2013, and 17.5% for employees first hired after 2013. The employee contribution of 0.8% of pay under FERS for employees first hired before 2013 is equal to the difference between the CSRS contribution rate (7.0%) and the Social Security payroll tax rate (6.2%). Federal agencies are required to contribute to the CSRDF the full cost of the FERS benefits that employees earn each year, minus the employee contribution. Thus, federal agencies contribute an amount equal to 16.0% of payroll to the CSRDF for FERS employees hired before 2013 (16.8 - 0.8 = 16.0).", "Under P.L. 112-96 , FERS employees first hired in 2013 contribute 3.1% of pay toward their FERS annuity. The cost for this category of FERS employees is equal to 14.2% of payroll (17.3 - 3.1 = 14.2). Under P.L. 113-67 , the normal cost of the basic annuity for FERS employees first hired after 2013 is 17.5%. These employees contribute 4.4%, while their employing agencies contribute 13.1% (17.5 - 4.4 = 13.1). (The additional amounts provided by the increased employee contributions [i.e., 4.4% vs. 3.1%] are applied toward reducing the CSRS unfunded liability until it is eliminated.)", "Therefore, FERS benefits are fully funded by employer and employee contributions and interest earnings with the exception of FERS benefits for employees first hired (or rehired with less than five years of FERS service) after December 31, 2013. On behalf of these employees, the employee and agency contributions amount to more than the full cost of the FERS benefit until the point at which OPM determines that there is no longer a CSRS unfunded liability."], "subsections": []}]}, {"section_title": "Operation of the Civil Service Retirement and Disability Fund", "paragraphs": ["The CSRDF is a record of the budget authority available to pay retirement and disability benefits to federal employees. Each year, the trust fund is credited by the Treasury with contributions from current employees and their employing agencies, interest on the securities held by the fund, interest on previous service for which benefits have been accrued but for which budget authority has not yet been provided, and a transfer from the general revenues of the Treasury. Only a small part of the income to the fund\u00e2\u0080\u0094mainly contributions from employees\u00e2\u0080\u0094is income to both the trust fund and to the government. The remainder of these transactions are intragovernmental transfers in which budget authority is transferred from federal agencies to the trust fund. Intragovernmental transfers have no effect on the size of the government's annual budget deficit or surplus.", "The CSRDF is similar to the Social Security trust fund in that, by law, 100% of its assets are invested in special-issue U.S. Treasury bonds or other bonds backed by the full faith and credit of the U.S. government. When the trust fund needs cash to pay retirement benefits, it redeems the bonds and the Treasury disburses an equivalent dollar value of payments to civil service annuitants. Because the bonds held by the trust fund are a claim on the U.S. Treasury, they ultimately are paid for by the taxpayers. According to the U.S. Office of Management and Budget (OMB), balances in the trust fund are", "available for future benefit payments and other trust fund expenditures, but only in a bookkeeping sense. The holdings of the trust funds are not assets of the Government as a whole that can be drawn down in the future to fund benefits. Instead, they are claims on the Treasury. From a cash perspective, when trust fund holdings are redeemed to authorize the payment of benefits, the Department of the Treasury finances the expenditure in the same way as any other Federal expenditure\u00e2\u0080\u0094by using current receipts or by borrowing from the public. The existence of large trust fund balances, therefore, does not, by itself, increase the Government's ability to pay benefits. Put differently, these trust fund balances are assets of the program agencies and corresponding liabilities of the Treasury, netting to zero for the Government as a whole."], "subsections": []}, {"section_title": "Civil Service Retirement Fund Financial Status", "paragraphs": [], "subsections": [{"section_title": "The Short-Term Picture", "paragraphs": ["The CSRDF held a balance of $915.3 billion at the start of FY2019. (See Table 1 .) Obligations from the fund totaled $86.2 billion in FY2018, consisting mostly of annuity payments. Annuity payments totaled $85.6 billion in FY2018. Payments to the estates of decedents and refunds to separating employees accounted for another $421 million. The administrative expenses of the fund were $149 million, or about 0.17% of total obligations. In FY2018, an additional $2 million was transferred from the CSRDF to the Merit Systems Protection Board, which hears federal employee appeals (including federal retirement decisions).", "Each year, the CSRDF receives cash contributions and intragovernmental transfers. Cash contributions from required employee contributions, other employee deposits, and the District of Columbia amounted to $4.5 billion in FY2018. The largest payments into the CSRDF were contributions from federal agencies ($27.4 billion in FY2018) and the Postal Service ($3.5 billion in FY2018) on behalf of their employees, interest payments ($25.6 billion), and a payment from the general fund of the Treasury to make up for the insufficient funding of benefits accrued under CSRS ($42.9 billion in FY2018). In FY2018, there was also a $38 million payment into the CSRDF due to offsets from the re-employment of annuitants. These payments are intragovernmental transfers. The CSRDF receives Treasury bonds as a record of available budget authority. It redeems bonds periodically as annuity payments come due."], "subsections": []}, {"section_title": "The Long-Term Picture", "paragraphs": [" Table 2 presents the annual income and expenditures of the CSRDF through FY2090, as estimated by OPM. Table 2 also shows the year-end balance of the trust fund and its estimated unfunded actuarial liability at the end of the year. The unfunded actuarial liability represents the difference between the present value of the fund's future benefit obligations and the present value of future credits to the fund plus the value of the securities it holds. The final two columns of the table show, respectively, the expenditures of the CSRDF relative to the government's total payroll expense for employee wages and salaries and CSRDF expenditures relative to the nation's annual gross domestic product (GDP).", "The estimates presented in Table 2 show the income to the CSRDF rising over the projection period from $103.5 billion in FY2017 to $151.0 billion in FY2025 and to $759.9 billion in FY2090. The total expenses of the fund are projected to rise more slowly, increasing from $85.8 billion in FY2018 to $104.9 billion in FY2025 and t o $506.6 billion in FY2090. Consequently, the assets held by the CSRDF also are projected to increase steadily from $947.8 billion in FY2018 to about $1.2 trillion in FY2025 and to $10.6 trillion in FY2090. According to actuarial projections, the unfunded liability of the CSRDF peaked in FY2017, when it was $968.1 billion. From that point onward, the unfunded liability has and is projected to steadily decline until it is projected to be eliminated by FY2085.", "In FY2018, expenditures from the CSRDF totaled $85.8 billion. The federal government's payroll expense for employees in FY2018 was approximately $213.0 billion (not presented in Table 2 ). Therefore, expenditures from the CSRDF were equal to about 40% of the amount paid as salaries and wages to federal employees. CSRDF expenditures are projected to decline relative to the government's wage and salary expenses, beginning around FY2025. By FY2090, the expenditures of the CSRDF are estimated to be equal to about 32% of the government's wage and salary payments to its employees. The decline in the ratio of CSRDF outlays to salary expense after FY2020 will occur mainly because future retirees will receive smaller pension benefits under FERS than they would have received under CSRS.", "The final column of Table 2 shows federal outlays for civil service pensions as a percentage of GDP. Relative to the total economic resources of the economy, the expenditures of the CSRDF are expected to remain roughly steady for the next 10 years before declining substantially from FY2020 to FY2090. Federal expenditures for civil service retirement annuities were estimated to equal 0.48% of GDP in FY2012, down from a high of 0.55% in FY1991 (not presented in Table 2 ). Between FY2013 and FY2020, the annual expenditures of the CSRDF are projected to remain in the range of 0.47% to 0.41% of GDP. From that point on, outlays from the CSRDF will fall steadily to about 0.13% of GDP by FY2090.", "CSRDF expenditures will fall relative to GDP mainly as a result of the decline in the proportion of civil service annuitants who are covered by CSRS and the increase in the number who are covered by FERS. The FERS basic annuity was designed to be smaller relative to high-three average pay than a CSRS annuity because FERS annuitants also receive benefits from Social Security and the Thrift Savings Plan. Because the transition from CSRS to FERS is mandated by law, the constant-dollar value of CSRDF outlays per annuitant will decline due to the different benefit formulas between CSRS and FERS. Consequently, outlays for civil service annuities are almost certain to decline relative to GDP, even if GDP grows more slowly than is assumed in the projections displayed in Table 2 ."], "subsections": []}]}, {"section_title": "The Civil Service Retirement and Disability Fund in the Federal Budget", "paragraphs": ["In FY2019, the total receipts of the CSRDF are estimated to be approximately $104.4 billion, and obligations from the fund are estimated to be about $88.4 billion. Only a small part of the revenues to the fund ($4.9 billion) in this year were cash receipts. The remainder will consist of budget authority transferred from other federal agencies. The cash receipts of the fund come primarily from the contributions of federal employees toward their future retirement benefits. Other cash income to the fund comes from payments made by the District of Columbia on behalf of its employees covered by CSRS or FERS. Cash payments into the CSRDF are income to both the U.S. government and to the trust fund. These cash receipts reduce the government's budget deficit. Benefit payments to retirees and survivors are cash outlays of the federal government.", "Most of the payments into the CSRDF\u00e2\u0080\u0094an estimated $124.8 billion in FY2018\u00e2\u0080\u0094are intragovernmental transfers. These transactions are income to the fund, but they are not income to the U.S. government. Intragovernmental transactions rarely involve cash. They do not affect the government's budget deficit or surplus because no money is received or spent by the government. Cash is rarely involved in intragovernmental transfers because individual government agencies, in general, have no cash to spend. What Congress appropriates to federal agencies each year is budget authority . Budget authority is legal permission for an agency to spend money from the accounts of the U.S. Treasury. The Treasury takes in money from the public by collecting taxes and by borrowing, and in most cases it is only the Treasury that disburses cash to the public.", "It has been suggested from time to time that the CSRDF should be taken \"off budget,\" as has already been done with the financing of Social Security benefits (but not Social Security administrative costs). Taking an account off budget means that its income and expenditures are not included in calculations of the government's annual budget surplus or deficit. Off-budget accounts are portrayed separately in the budget documents prepared by the Office of Management and Budget and the Congressional Budget Office (CBO). However, both OMB and CBO also publish unified budget accounts that include Social Security and other programs that are off budget. This is done because taking an account off budget does not end the activity or remove its effects from the U.S. economy. Whether Social Security\u00e2\u0080\u0094or civil service retirement\u00e2\u0080\u0094is on-budget or off-budget, it still collects revenues from the public, pays benefits to the public, and affects the nation's financial markets by influencing the amount of private capital that is absorbed by government borrowing.", "Taking the CSRDF off-budget would not affect the government's revenues or outlays in the unified budget accounts, but it would affect the size of the budget deficit or surplus as portrayed in any budget documents that excluded the CSRDF. For example, employee contributions to CSRS and FERS that are now counted as revenue to the Treasury would not be treated as revenue if they were paid to an off-budget CSRDF. The money that federal agencies now send to the trust fund in the form of intragovernmental transfers would instead be recorded as outlays, and would therefore increase the government's reported budget deficit or reduce the budget surplus in the year that the transfer occurs rather than in the future when benefits are paid. The outlays made by the fund to pay civil service annuitants would not appear at all in the federal budget. The net effect of these changes if the CSRDF had been off-budget in FY2018 would have been an increase of about $17.6 billion in the government's reported budget deficit, even though the amount of money collected from the public and the amount of money paid to civil service annuitants would have been no different than under current law.", "One purpose of the federal budget is to show whether the government's revenues and outlays are in balance or out of balance. Therefore, taking any account off-budget distorts the picture of the government's fiscal condition. It is for this reason that financial analysts and economists focus almost exclusively on the unified budget totals when evaluating the effect of the federal budget on the nation's financial markets and the economy. If \"outlays\" were to include amounts not actually paid from the Treasury in the current year (as would be the case if the CSRDF were off-budget), then no revenue from the public would be needed in that year to pay for them. In years of budget deficits, some of the deficit would require borrowing from the public, and some of it would not. In years of modest budget surplus, there might appear to be a deficit because transfers to an off-budget account would be recorded as outlays, even though they do not involve payments from the Treasury to the public. For these reasons, taking the CSRDF off-budget might lead to greater confusion about the size of the real budget deficit or surplus, as has been the case with the off-budget status of Social Security."], "subsections": []}, {"section_title": "Civil Service Retirement: Funding and Accounting\u00c2 Issues", "paragraphs": [], "subsections": [{"section_title": "Accounting for Pension Costs Under CSRS and FERS", "paragraphs": ["Actuaries use a concept called \"normal cost\" to estimate the amount of money that must be set aside each year from employer and employee contributions to pre-fund pension benefits. Normal cost is usually expressed as a percentage of payroll. There are two measures of normal cost: static and dynamic.", "Static normal cost is the amount, expressed as a percentage of payroll, that must be set aside each year to fund pension benefits based on current employee pay with no future pay raises, no future COLAs for retirees, and a fixed rate of interest. Dynamic normal cost is the amount, expressed as a percentage of payroll, that must be set aside each year to fully fund pension benefits for workers who will continue to accrue new benefits, including the effects of employee pay raises, post-retirement COLAs, and changes in the rate of interest.", "By law, the FERS basic retirement annuity and FERS supplement must be pre-funded according to its dynamic normal cost. Every year, OPM estimates the dynamic normal cost of FERS retirement annuities for employees entering the federal work force that year. For each group of new employees, OPM must estimate average job tenure, turnover, future salaries, age at retirement, rates of disability, death rates, the number of employees who will become annuitants, and how many will leave surviving dependents. OPM periodically re-estimates the dynamic normal cost of FERS to reflect anticipated changes in interest rates, inflation, and employee and retiree demographic characteristics.", "OPM has estimated the current normal cost of the FERS to be 16.8% of payroll for employees first hired before 2013, 17.3% for employees first hired in 2013, and 17.5% for employees first hired after 2013. Federal agencies are required to contribute to the CSRDF the full cost of the FERS benefits that employees earn each year, minus the employee contribution. Thus, federal agencies contribute an amount equal to 16.0% of payroll to the CSRDF for FERS employees hired before 2013 (16.8 - 0.8 = 16.0). Under\u00c2\u00a0 P.L. 112-96 , FERS employees first hired in 2013 contribute 3.1% of pay toward their FERS annuity. The cost for this category of FERS employees is equal to 14.2% of payroll (17.3 - 3.1 = 14.2). Under P.L. 113-67 , the normal cost of the basic annuity for FERS employees first hired after 2013 is 17.5%. These employees contribute 4.4%, while their employing agencies contribute 13.1% (17.5 - 4.4 = 13.1). If the assumptions underlying these cost estimates prove to be accurate, FERS will be \"fully funded.\" OPM has estimated the dynamic normal cost of CSRS, using the same economic assumptions used in FERS, at 29.3% of payroll. The financing of CSRS has at times been a topic of controversy, however, because it is not funded according to its dynamic normal cost. CSRS is funded through a combination of employee and agency contributions that together are equal to the static normal cost of CSRS, along with contributions from the general fund of the U.S. Treasury that make up some of the difference between the static normal cost of CSRS and its dynamic normal cost."], "subsections": []}, {"section_title": "Why Are CSRS Revenues Less Than the Present Value of Benefits?", "paragraphs": ["At the time that Congress established the CSRS in 1920, it set up a trust fund from which benefits would be paid. From the beginning, however, CSRS was funded on a \"pay-as-you-go\" basis. The trust fund was used to pay benefits to already-retired workers, rather than to pre-fund the pension benefits of current workers. Initially, only employees made regular payroll contributions to the fund. Regularly scheduled agency contributions were not mandated until the 1950s. For many years, there were so few federal retirees that the fund was able to meet its financial obligations to beneficiaries from employee contributions alone.", "In 1956, Congress passed P.L. 84-854, which required federal agencies to make contributions to the Civil Service Retirement Trust Fund on behalf of their eligible employees. The contributions made by federal agencies were equal in amount to the money paid into the fund by their employees, and were made from appropriations that agencies received specifically for this purpose. Even with regular contributions from the employing agencies, however, the CSRS was still being funded on a pay-as-you-go basis. Contributions to the fund were sufficient to meet current benefit obligations but not to pre-fund the future retirement benefits of federal employees.", "As the federal civil service pension system matured (that is, as the ratio of annuitants to workers began to rise), it became necessary to establish a formal system of accounting for the pension obligations that had been incurred by the federal government but for which funds had not yet been set aside. In response to this need, Congress enacted P.L. 91-93 in 1969. This law set the employee contribution to CSRS at 7.0% of pay and required an equal amount to be contributed from funds appropriated to federal agencies. This amount (equal to 14.0% of payroll) represented the total contribution required to pay the costs of pension liabilities accrued by federal employees, using \"static\" assumptions: no future pay increases, no COLAs, and a 5.0% annual rate of return on the securities in the Civil Service Retirement and Disability Fund. Agency and employee contributions under CSRS have remained at the same percentage of payroll since 1969.", "P.L. 91-93 also requires three payments to be made annually from the general revenues of the U.S. Treasury into the CSRDF. These payments are", "the amount necessary to amortize (pay off with interest) over a 30-year period any increase in pension liability that results from pay increases (but not retiree COLAs) or from bringing newly covered groups of workers into the CSRS; the amount of the employer's share of the cost of benefits attributable to military service; and interest, fixed at a rate of 5%, on the estimated amount of the previously accrued liabilities of the CSRS for which contributions have not yet been made to the fund.", "Thus, while the static costs of the CSRS were shared equally between federal employees and their employing agencies, the Treasury was given responsibility for pension liabilities that are not part of the pension system's static normal costs. By including the 30-year amortized cost of pay raises in the annual transfer from the general fund, the Treasury assumed the additional pension expenses that result from pay raises. All costs of the CSRS that are not paid by employee and agency contributions or through the transfers to the CSRDF mandated by P.L. 91-93 ultimately will be paid from the general revenues of the Treasury. The costs of retiree COLAs, which also are not part of the static normal cost of the CSRS, are not included in the annual transfer from the Treasury to the CSRDF, and ultimately will be paid from the general fund of the Treasury.", "Because the full costs of CSRS are not met by the combined total of employee contributions, agency contributions, interest earnings, and the supplemental payments from the Treasury, some future CSRS benefits will of necessity be paid from contributions that were made to the CSRDF on behalf of employees who are enrolled in FERS. This will create an unfunded liability for FERS, which will be paid off through a new series of 30-year amortization payments from the general fund of the Treasury to the CSRDF. As stated by OPM:", "When the non-Postal CSRS account is depleted, projected to occur in 2022, the resulting transfers from the FERS account to the CSRS account create supplemental liabilities for the non-Postal FERS account. These supplement liabilities for non-Postal FERS must then be amortized by means of 30-year payments made by the Treasury.", "Current law specifies that funds that were paid into the CSRDF on behalf of employees covered by FERS will be used to pay the unfunded liability of CSRS. FERS will then be reimbursed by a series of payments with interest from the general fund of the Treasury to the CSRDF."], "subsections": []}, {"section_title": "Accounting Issues Raised by the Way CSRS Benefits Are Financed", "paragraphs": ["Actuarial estimates indicate that the unfunded liability of the CSRS does not pose a threat to the solvency of the Civil Service Retirement and Disability Fund. In its current annual report, OPM has stated that \"total assets of the CSRDF ... including both CSRS and FERS are expected to continue to grow throughout the term of the projection under the existing statutory funding provisions.\" Nevertheless, the current method of funding the CSRS has in recent years been a source of debate for at least two reasons:", "(1) Because employee and government contributions do not account for the full actuarial cost of CSRS pension obligations as they accrue each year, the CSRS continues to accumulate additional unfunded liabilities. Consequently, some of the pension costs that are incurred each year will not be reflected in the government's budget until those benefits are paid at some time in the future. Some budget experts argue that these costs should be accounted for in each agency's budget as they accrue, just as is done in the FERS.", "(2) The supplemental payments to the trust fund that are required by the 1969 law come from the general revenues of the Treasury rather from the budgets of the various federal agencies where these costs are incurred. As a result, the amount of employee compensation for which agencies must account in their budgets each year understates the full costs of employment. Critics say that this contributes to an inefficient allocation of resources in the federal government by making labor costs appear lower than they really are.", "If agencies were required to fully fund the current and future costs of the CSRS through increased contributions, they could do so from their current-law appropriations or they could be granted additional budget authority for this purpose. The two approaches would have different effects on the federal budget. For agencies to be held harmless for the increased contributions, they would have to receive additional appropriations to their salary and expense accounts. Because agencies would transfer the appropriated funds to the CSRDF, which would in turn use them to purchase Treasury bonds, no additional outlays would occur as a result of these appropriations, and they would not affect the federal budget deficit or surplus. The outlays would occur in the future when retired employees collect their CSRS annuities, just as under current law.", "An alternative means of fully financing the normal cost of the CSRS would be to require agencies to increase their contributions to the CSRDF without receiving any additional appropriations to their salary and expense accounts. Pre-funding the full costs of the CSRS in this way would reduce the federal budget deficit, because the outlays of each agency would have to be cut by the amount of its additional transfers to the CSRDF. Outlays to CSRS annuitants would still occur in the future just as under current law. However, these future outlays would be offset by a reduction in current outlays so that the future payments to CSRS annuitants could be fully pre-funded. The reduction in resources available for current spending, however, would force federal agencies to cut spending elsewhere in their budgets.", "Paying the full normal cost of CSRS through employee and agency contributions would prevent the system from accruing additional unfunded liabilities, but it would not reduce the previously accumulated liability of the CSRS. Under current law, this liability will be paid off eventually through a series of 30-year amortization payments from the general fund of the Treasury to the CSRDF. Some observers favor starting these amortization payments sooner. They note that private-sector employers are required by ERISA to begin paying down accumulated liabilities when they occur. Others advocate paying down the liability now as a way to forestall proposals calling for reduced pension benefits or increased employee contributions in the future."], "subsections": []}]}, {"section_title": "Conclusion", "paragraphs": ["Proposals to pre-fund CSRS in the same manner as required under FERS have grappled with the question of whether additional budget authority should be granted to federal agencies, or whether agencies should make higher contributions from their current budget authority. Many policymakers believe that greater pre-funding of CSRS retirement annuities would lead to improved accounting of personnel costs among federal agencies. However, CSRS has been closed to new enrollment since 1984, and the percentage of federal employees enrolled in CSRS is declining rapidly as these workers retire. At the beginning of FY2018, about 4% of federal employees, including Postal employees, were enrolled in CSRS. With the proportion of federal employees enrolled in CSRS declining each year, the budgetary treatment of government contributions toward their retirement annuities is becoming a less pressing issue. ", "Some observers have suggested that investing the CSRDF entirely in U.S. Treasury bonds does not represent true \"pre-funding\" of CSRS and FERS annuities because these bonds are merely a claim held by the government against its own future revenues. They suggest that at least part of the trust fund's assets should be invested in private-sector stocks and bonds where they could earn a higher rate of return than is available from U.S. Treasury securities (albeit at greater risk). In addition to issues of investment risk, however, this proposal would raise questions about how purchases of private-sector assets would be scored under current budget rules, and also whether it would be appropriate for federal trust funds to own the stocks and bonds of private-sector companies."], "subsections": []}]}}
{"id": "R46236", "title": "Brazil: Background and U.S. Relations", "released_date": "2020-02-24T00:00:00", "summary": ["Occupying almost half of South America, Brazil is the fifth-largest and fifth-most-populous country in the world. Given its size and tremendous natural resources, Brazil has long had the potential to become a world power and periodically has been the focal point of U.S. policy in Latin America. Brazil's rise to prominence has been hindered, however, by uneven economic performance and political instability. After a period of strong economic growth and increased international influence during the first decade of the 21 st century, Brazil has struggled with a series of domestic crises in recent years. Since 2014, the country has experienced a deep recession, record-high homicide rate, and massive corruption scandal. Those combined crises contributed to the controversial impeachment and removal from office of President Dilma Rousseff (2011-2016). They also discredited much of Brazil's political class, paving the way for right-wing populist Jair Bolsonaro to win the presidency in October 2018.", "Since taking office in January 2019, President Bolsonaro has maintained the support of his political base by taking socially conservative stands on cultural issues and proposing hard-line security policies intended to reduce crime and violence. He also has begun implementing economic and regulatory reforms favored by international investors and Brazilian businesses. Bolsonaro's confrontational approach to governance has alienated many potential congressional allies, however, slowing the enactment of his policy agenda. Brazilian civil society groups also have pushed back against Bolsonaro and raised concerns about environmental destruction and the erosion of democratic institutions, human rights, and the rule of law in Brazil.", "In international affairs, the Bolsonaro Administration has moved away from Brazil's traditional commitment to autonomy and toward alignment with the United States. Bolsonaro has coordinated closely with the Trump Administration on challenges such as the crisis in Venezuela. On other matters, such as commercial ties with China, Bolsonaro has adopted a pragmatic approach intended to ensure continued access to Brazil's major export markets. The Trump Administration has welcomed Bolsonaro's rapprochement and sought to strengthen U.S.-Brazilian relations. In 2019, the Trump Administration took steps to bolster bilateral cooperation on counternarcotics and counterterrorism efforts and designated Brazil as a m ajor n on-NATO a lly . The United States and Brazil also agreed to several measures intended to facilitate trade and investment. Nevertheless, some Brazilians have questioned the benefits of partnership with the United States, as the Trump Administration has maintained certain import restrictions and threatened to impose tariffs on other key Brazilian products.", "The 116 th Congress has expressed renewed interest in Brazil and U.S.-Brazilian relations. Environmental conservation has been a major focus, with Congress appropriating $15 million for foreign assistance programs in the Brazilian Amazon, including $5 million to address fires in the region, in the Further Consolidated Appropriations Act, 2020 ( P.L. 116-94 ). Likewise, Members introduced legislative proposals that would express support for Amazon conservation efforts ( S.Res. 337 ) and restrict U.S. defense and trade relations with Brazil in response to deforestation ( H.R. 4263 ). Congress also has expressed concerns about the state of democracy and human rights in Brazil. A provision of the National Defense Authorization Act for FY2020 ( P.L. 116-92 ) directs the Secretary of Defense, in coordination with the Secretary of State, to submit a report to Congress regarding Brazil's human rights climate and U.S.-Brazilian security cooperation. Another resolution ( H.Res. 594 ) would express concerns about threats to human rights, the rule of law, democracy, and the environment in Brazil."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["As the fifth-largest country and the ninth-largest economy in the world, Brazil plays an important role in global governance (see Figure 1 for a map of Brazil). Over the past 20 years, Brazil has forged coalitions with other large, developing countries to push for changes to multilateral institutions and to ensure that global agreements on issues ranging from trade to climate change adequately protect their interests. Brazil also has taken on a greater role in promoting peace and stability, contributing to U.N. peacekeeping missions and mediating conflicts in South America and further afield. Although recent domestic challenges have led Brazil to turn inward and weakened its appeal globally, the country continues to exert considerable influence on international policy issues that affect the United States.", "U.S. policymakers have often viewed Brazil as a natural partner in regional and global affairs, given its status as a fellow multicultural democracy. Repeated efforts to forge a close partnership have left both countries frustrated, however, as their occasionally divergent interests and policy approaches have inhibited cooperation. The Trump Administration has viewed the 2018 election of Brazilian President Jair Bolsonaro as a fresh opportunity to deepen the bilateral relationship. Bolsonaro has begun to shift Brazil's foreign policy to bring the country into closer alignment with the United States, and President Trump has designated Brazil a m ajor n on-NATO a lly . Nevertheless, ongoing differences over trade protections and relations with China threaten to leave both the United States and Brazil with unmet expectations once again.", "The 116 th Congress has expressed renewed interest in Brazil, recognizing Brazil's potential to affect U.S. initiatives and interests. Some Members view Brazil as a strategic partner for addressing regional and global challenges. They have urged the Trump Administration to forge stronger economic, security, and military ties with Brazil to bolster the bilateral relationship and counter the influence of extra-hemispheric powers, such as China and Russia. Other Members have expressed reservations about a close partnership with the Bolsonaro Administration. They are concerned that Bolsonaro is presiding over an erosion of democracy and human rights in Brazil and that his environmental policies threaten the Amazon and global efforts to mitigate climate change. Congress may continue to assess these differing approaches to U.S.-Brazilian relations as it carries out its oversight responsibilities and considers FY2021 appropriations and other legislative initiatives. "], "subsections": []}, {"section_title": "Brazil's Political and Economic Environment", "paragraphs": [], "subsections": [{"section_title": "Background", "paragraphs": ["Brazil declared independence from Portugal in 1822, initially establishing a constitutional monarchy and retaining a slave-based, plantation economy. Although the country abolished slavery in 1888 and became a republic in 1889, economic and political power remained concentrated in the hands of large rural landowners and the vast majority of Brazilians remained outside the political system. The authoritarian government of Get\u00c3\u00balio Vargas (1930-1945) began the incorporation of the working classes but exerted strict control over labor as part of its broader push to centralize power in the federal government. Vargas also began to implement a state-led development model, which endured for much of the 20 th century as successive governments supported the expansion of Brazilian industry.", "Brazil experienced two decades of multiparty democracy from 1945 to 1964 but struggled with political and economic instability, which ultimately led the military to seize power. A 1964 military coup, encouraged and welcomed by the United States, ushered in two decades of authoritarian rule. Although repressive, the military government was not as brutal as the dictatorships established in several other South American nations. It nominally allowed the judiciary and congress to function during its tenure but stifled representative democracy and civic action, carefully preserving its influence during one of the most protracted transitions to democracy to occur in Latin America. Brazilian security forces killed more than 8,000 indigenous people and at least 434 political dissidents during the dictatorship, and they detained and tortured an estimated 30,000-50,000 others.", "Brazil restored civilian rule in 1985, and a national constituent assembly, elected in 1986, promulgated a new constitution in 1988. The constitution established a liberal democracy with a strong president, a bicameral congress consisting of the 513-member chamber of deputies and the 81-member senate, and an independent judiciary. Power is somewhat decentralized under the country's federal structure, which includes 26 states, a federal district, and some 5,570 municipalities.", "Brazil experienced economic recession and political uncertainty during the first decade after its political transition. Numerous efforts to control runaway inflation failed, and two elected presidents did not complete their terms; one died before taking office, and the other was impeached on corruption charges and resigned.", "The situation began to stabilize, however, under President Fernando Henrique Cardoso (1995-2002) of the center-right Brazilian Social Democracy Party ( Partido da Social Democracia Brasileira , or PSDB). Initially elected on the success of the anti-inflation Real Plan that he implemented as finance minister under President Itamar Franco (1992-1994), Cardoso ushered in a series of market-oriented economic reforms. His administration privatized some state-owned enterprises, gradually opened the economy to foreign trade and investment, and adopted the three main pillars of Brazil's macroeconomic policy: a floating exchange rate, a primary budget surplus, and an inflation-targeting monetary policy. Nevertheless, the Brazilian state maintained an influential role in the economy.", "The Cardoso Administration's economic reforms and a surge in international demand (particularly from China) for Brazilian commodities\u00e2\u0080\u0094such as oil, iron, and soybeans\u00e2\u0080\u0094fostered a period of strong economic growth in Brazil during the first decade of the 21 st century. The center-left Workers' Party ( Partido dos Trabalhadores , or PT) administration of President Luiz In\u00c3\u00a1cio Lula da Silva (Lula, 2003-2010) used increased export revenues to improve social inclusion and reduce inequality. Among other measures, the PT-led government expanded social welfare programs and raised the minimum wage by 64% above inflation. Between 2003 and 2010, the Brazilian economy expanded by an average of 4.1% per year and the poverty rate fell from 28.2% to 13.6%. The growth of the middle class fueled a domestic consumption boom that reinforced Brazil's economic expansion. Although the poverty rate initially continued to decline under the PT-led administration of President Dilma Rousseff (2011-2016)\u00e2\u0080\u0094reaching a low of 8.4% in 2014\u00e2\u0080\u0094socioeconomic conditions deteriorated during Rousseff's final two years in office."], "subsections": []}, {"section_title": "Recession, Insecurity, and Corruption (2014-2018)", "paragraphs": ["After nearly two decades of relative stability, Brazil has struggled with a series of crises since 2014. The country fell into a deep recession in late 2014, due to a decline in global commodity prices and the Rousseff Administration's economic mismanagement. Brazil's real gross domestic product (GDP) contracted by 8.2% over the course of 2015 and 2016. Although Brazil emerged from recession in mid-2017, recovery has been slow. The economy expanded by just over 1% in 2017 and 2018, and unemployment, which peaked at 13.7% in the first quarter of 2017, has remained above 10% for nearly four years. Largely due to the weak labor market, the real incomes of the bottom half of Brazilian workers have declined by 17% since the onset of the recession, pushing more than 6 million people into poverty. The downturn has disproportionately affected Afro-Brazilians, who comprise about half of the Brazilian population but 64% of the unemployed. Large fiscal deficits at all levels of government have exacerbated the situation, limiting the resources available to provide social services.", "The deep recession also has hindered federal, state, and local government efforts to address serious challenges such as crime and violence. A record-high 64,000 Brazilians were killed in 2017, and the country's homicide rate of 30.9 per 100,000 residents was more than five times the global average. Although homicides declined by nearly 11% in 2018, feminicide (gender-motivated murders of women) and reports of sexual violence increased. The deterioration in the security situation, like the economic crisis, has disproportionately affected Afro-Brazilians, who account for more than 75% of homicide victims, 75% of those killed by police, and 61% of feminicide victims.", "A series of corruption scandals have further discredited the country's political establishment. The so-called Car Wash ( Lava Jato ) investigation, launched in 2014, has implicated politicians from across the political spectrum and many prominent business executives. The initial investigation revealed that political appointees at the state-controlled oil company, Petr\u00c3\u00b3leo Bra s ileiro S.A. (Petrobras), colluded with construction firms to fix contract bidding processes. The firms then provided kickbacks to Petrobras officials and politicians in the ruling coalition. Parallel investigations have discovered similar practices throughout the public sector, with businesses providing bribes and illegal campaign donations in exchange for contracts or other favorable government treatment. The scandals sapped President Rousseff's political support, contributing to her controversial impeachment and removal from office in August 2016. Michael Temer, who presided over a center-right government for the remainder of Rousseff's term (2016-2018), was entangled in several corruption scandals but managed to hold on to power. Several other high-level politicians, including former President Lula, have been convicted and face potentially lengthy prison sentences (see the text box, below).", "The inability of Brazil's political leadership to overcome these crises has undermined Brazilians' confidence in their democratic institutions. As of mid-2018, 33% of Brazilians expressed trust in the judiciary, 26% expressed trust in the election system, 12% expressed trust in congress, 7% expressed trust in the federal government, and 6% expressed trust in political parties. Moreover, only 9% of Brazilians expressed satisfaction with the way democracy was working in their country\u00e2\u0080\u0094the lowest percentage in all of Latin America."], "subsections": []}, {"section_title": "Bolsonaro Administration (2019-Present)", "paragraphs": ["Brazilian voters registered their intense dissatisfaction with the situation in the country in the 2018 elections. In addition to ousting 75% of incumbents running for reelection to the senate and 43% of incumbents running for reelection to the chamber of deputies, they elected as president, Jair Bolsonaro, a far-right congressman and retired army captain. Prior to the election, most observers considered Bolsonaro to be a fringe figure in the Brazilian congress. He exercised little influence over policy and was best known for his controversial remarks defending the country's military dictatorship (1964-1985) and expressing prejudice toward marginalized sectors of Brazilian society . Backed by the small Social Liberal Party (PSL), Bolsonaro also lacked the finances and party machinery of his principal competitors. Nevertheless, his social media-driven campaign and populist, law-and-order message attracted a strong base of support. He outflanked his opponents by exploiting anti-PT and antiestablishment sentiment and aligning himself with the few institutions that Brazilians still generally trust: the military and the churches. Bolsonaro largely remained off the campaign trail in the weeks leading up to the election after being stabbed in an assassination attempt, but he easily defeated the PT's Fernando Haddad 55%-45% in a second-round runoff. Bolsonaro's PSL also won the second-most seats in the lower house.", "Since Bolsonaro began his four-year term on January 1, 2019, he has struggled to advance portions of his agenda due to cabinet infighting and the lack of a working majority in Brazil's fragmented congress, which includes 24 political parties. Whereas previous Brazilian presidents stitched together governing coalitions by distributing control of government jobs and resources to parties in exchange for their support, Bolsonaro has refused to enter into such arrangements. Moreover, he generally has avoided negotiating the details of his proposed policies with legislators. Instead, Bolsonaro has sought to keep his political base mobilized by frequently taking socially conservative stands on cultural issues and verbally attacking perceived enemies, such as the press, nongovernmental organizations (NGOs), and other branches of government. Bolsonaro's confrontational approach to governance has alienated many of his potential allies within the conservative-leaning congress. In November 2019, for example, Bolsonaro abandoned the PSL after a series of disagreements with the party's leadership; he intends to create a new Alliance for Brazil party to contest future elections.", "During its first year in office, the Bolsonaro Administration began implementing key aspects of its market-oriented ec onomic agenda. As part of a far-reaching privatization program, the Brazilian government began selling off assets, including subsidiaries of state-owned enterprises, stakes in private companies, and infrastructure and energy concessions, yielding revenues of approximately $66 billion in 2019. The Brazilian congress also enacted a major pension reform expected to reduce government expenditures by at least $194 billion over the next decade. Those policies build on a 2016 constitutional amendment that froze inflation-adjusted government spending for 20 years. Although the Bolsonaro Administration has proposed additional measures to simplify the tax system, cut and decentralize government expenditures, and decrease compensation and job security for government employees, political parties may be reluctant to enact austerity measures in the lead-up to Brazil's October 2020 municipal elections. The International Monetary Fund estimates that the Brazilian economy expanded by 1.2% in 2019 and will expand by 2.2% in 2020, due to improved business sentiment following recent market-oriented policy changes. About 11% of Brazilians remain unemployed, however, and some economists argue that rather than reducing the size of the state, Brazil should reorient expenditures to programs that protect the most vulnerable and to productivity-enhancing investments, such as education, training, and infrastructure.", "Bolsonaro has had difficulty advancing the hard-line security platform that was the centerpiece of his campaign. The Brazilian congress has blocked Bolsonaro's proposal to shield from prosecution police who kill suspected criminals and has pushed back against Bolsonaro's decrees loosening gun controls. Other Bolsonaro Administration proposals, including measures to modernize police investigations and impose stricter criminal sentences, were enacted in December 2019. Preliminary data suggest that security conditions in Brazil improved in 2019, but the number of individuals killed by police in states such as Rio de Janeiro increased significantly. The Bolsonaro Administration has claimed credit for falling crime rates, but some security analysts argue the situation has been improving since late 2017 due to state and municipal initiatives and reduced conflict between the country's largest criminal groups. (See the \" Counternarcotics \" section for more information.)", "Anti-corruption efforts in Brazil have experienced a series of recent setbacks. Although President Bolsonaro campaigned on an anti-corruption platform, he has repeatedly interfered in law enforcement agencies, potentially hindering investigations and calling into question the political independence of Brazilian institutions. In August 2019, he dismissed the head of the Brazilian federal police office in Rio de Janeiro, which is investigating potential corruption and money laundering by Bolsonaro's son, Fl\u00c3\u00a1vio. In September 2019, Bolsonaro disregarded a norm in place since 2003 of selecting an attorney general from a shortlist approved by the public prosecutors' association. Observers also have questioned changes Bolsonaro has made to Brazil's tax collection agency, financial intelligence unit, and antitrust regulator. At the same time, the Brazilian congress has been reluctant to adopt anti-corruption reforms and the supreme court has issued a series of rulings that could jeopardize convictions obtained in the Car Wash investigation and make it more difficult to investigate and prosecute corruption cases.", "Many analysts argue there has been an erosion of democracy in Brazil under Bolsonaro. During his first year in office, the president continued to celebrate Brazil's military dictatorship and those installed in other South American countries, and his sons and members of his administration occasionally suggested they could impose authoritarian measures under certain circumstances. Bolsonaro also took steps to weaken the press, exert control over civil society, and roll back rights previously granted to marginalized groups. Civil-military relations have shifted as Bolsonaro has appointed retired and active-duty officers to lead more than a third of his cabinet ministries and to dozens of other positions throughout the government. The Brazilian military is now more involved in politics than it has been at any time since the end of the dictatorship. Some analysts maintain, however, that the military has had a moderating influence on the government. Brazil's civil society, congress, and judiciary also have served as checks on Bolsonaro. Nevertheless, human rights advocates argue the president's statements and actions have fueled attacks against journalists and activists.", "Polls conducted at the conclusion of his first year in office suggest Brazilian public opinion toward Bolsonaro remains divided. About 32% of Brazilians consider Bolsonaro's government \"good\" or \"great,\" 32% consider it \"average,\" and 35% consider it \"bad\" or \"terrible.\""], "subsections": []}]}, {"section_title": "Amazon Conservation and Climate Change", "paragraphs": ["A 30% increase in fires in the Brazilian Amazon in 2019 compared to the previous year led many Brazilians and international observers to express concern about the rainforest and the extent to which its destruction is contributing to regional and global climate change. Covering nearly 2.7 million square miles across seven countries, the Amazon Basin is home to the largest and most biodiverse tropical forest in the world. Scientific studies have found that the Amazon plays an important role in the global carbon cycle by absorbing and sequestering carbon. Although findings vary, one recent study estimated the forest absorbs 560 million tons of carbon dioxide per year and its biomass holds 76 billion tons of carbon\u00e2\u0080\u0094an amount equivalent to seven years of global carbon emissions. The Amazon also pumps water into the atmosphere, affecting regional rainfall patterns throughout South America. An estimated 17% of the Amazon basin has been deforested, however, and some scientists have warned that the forest may be nearing a tipping point at which it is no longer able to sustain itself and transitions to a drier, savanna-like ecosystem.", "Efforts to conserve the forest often focus on Brazil, since the country encompasses about 69% of the Amazon Basin. Within Brazil, the government has established an administrative zone known as the Legal Amazon, which includes nine states: Acre, Amap\u00c3\u00a1, Amazonas, Maranh\u00c3\u00a3o, Mato Grosso, Par\u00c3\u00a1, Rond\u00c3\u00b4nia, Roraima, and Tocantins (see Figure 1 ). Although rainforest covers most of the Legal Amazon, savanna ( Cerrado ) and wetlands ( Pantanal ) are present in portions of the region. The Legal Amazon was largely undeveloped until the 1960s, when the military-led government began subsidizing the settlement and development of the region as a matter of national security. Partially due to those incentives, the human population in the Legal Amazon grew from 6 million in 1960 to 25 million in 2010. Forest cover in the Legal Amazon has declined by approximately 20% as settlements, roads, logging, ranching, farming, and other activities have proliferated in the region."], "subsections": [{"section_title": "Brazilian Policies and Deforestation Trends", "paragraphs": ["In 2004, the Brazilian government adopted an action plan to prevent and control deforestation in the Legal Amazon. It increased surveillance in the Amazon region, began to enforce environmental laws and regulations more rigorously, and took steps to consolidate and expand protected lands. Nearly 20% of the Brazilian Amazon now has some sort of federal or state protected status, and the Brazilian government has recognized an additional 22% of the Brazilian Amazon as indigenous territories. Brazil's forest code also requires private landowners in the Legal Amazon to maintain native vegetation on 80% of their properties.", "Other Brazilian initiatives have sought to support sustainable development in the Amazon while limiting the extent to which the country's agricultural sector drives deforestation. In 2008, the Brazilian government began conditioning credit on farmers' compliance with environmental laws; in 2009, the government banned new sugarcane plantations in the Legal Amazon. The Brazilian government also supported private sector conservation initiatives. Those included a 2006 voluntary agreement among most major soybean traders not to purchase soybeans grown on lands deforested after 2006 (later revised to 2008) and a 2009 voluntary agreement among meatpackers not to purchase cattle raised on lands deforested in the Amazon after 2008. ", "Brazil's public and private conservation efforts, combined with economic factors that made agricultural commodity exports less profitable, led to an 83% decline in deforestation in the Legal Amazon between 2004 and 2012. Deforestation has been trending upward in recent years, however, rising from a low of 1,765 square miles in 2012 to 3,769 square miles in the 12-month monitoring period that ended in July 2019 (see Figure 2 ). Analysts have linked the increase in deforestation to a series of policy reversals that have cut funding for environmental enforcement, reduced the size of protected areas, and relaxed conservation requirements. Market incentives, such as the growth in Chinese imports of Brazilian beef and soybeans, also have contributed to recent deforestation trends. For example, China purchased nearly 76% of its soybean imports from Brazil in 2018, up from roughly 50% in prior years, after imposing a retaliatory tariff on U.S. soybeans.", "Although changes that weakened Brazil's environmental policies began under President Rousseff and continued under President Temer, some analysts argue that the Bolsonaro Administration's approach to the Amazon has led to further increases in deforestation. Bolsonaro has fiercely defended Brazil's sovereignty over the Legal Amazon and its right to develop the region. Since taking office, his administration has lifted the ban on new sugarcane plantations in the Legal Amazon and called for an end to the soy moratorium. It also has proposed measures to allow commercial agriculture, mining, and hydroelectric projects in indigenous territories, arguing that such economic activities will benefit those living in the region and reduce incentives for illegal deforestation. At the same time, Bolsonaro has questioned the Brazilian government's deforestation data and repeatedly criticized the agencies responsible for enforcing environmental laws. ", "Those statements and actions reportedly have emboldened some loggers, miners, and ranchers, contributing to the surge in fires in 2019 and a 30% increase in deforestation in the annual monitoring period that included the first seven months of Bolsonaro's term. Bolsonaro initially dismissed environmental concerns about the Amazon, asserting that deforestation and burning are cultural practices that will never end. In January 2020, however, he announced the creation of a new security force to protect the environment and a new Amazon Council, headed by Vice President Hamilton Mour\u00c3\u00a3o, to coordinate conservation and sustainable development efforts. As of the close of 2019, a majority (54%) of Brazilians disapproved of Bolsonaro's environmental policies."], "subsections": []}, {"section_title": "Paris Agreement", "paragraphs": ["The rising levels of Amazon deforestation call into question whether Brazil will meet its Paris Agreement commitment to reduce greenhouse gas emissions by 37% below 2005 levels (to 1.3 gigatonnes of carbon dioxide equivalent (GtCO\u00e2\u0082\u0082e) by 2025. According to a 2018 assessment by the U.N. Environment Program, Brazil's greenhouse gas emissions declined by 12% per year from 2006 to 2016, as significant declines in deforestation offset slight increases in emissions from other sources. Those reductions had put Brazil on track to meet its Paris Agreement commitment, but emissions have begun to rise again due to increased deforestation. In 2018, Brazil's greenhouse gas emissions increased by an estimated 0.3% (to 1.9 GtCO\u00e2\u0082\u0082e), even as emissions from the energy sector declined by nearly 5%.", "President Bolsonaro had pledged to withdraw from the Paris Agreement during his 2018 election campaign, but he reversed course following his inauguration, stating that Brazil would remain in the agreement \"for now.\" At the 25 th Conference of Parties to the U.N. Framework Convention on Climate Change (COP 25), Brazil pushed developed countries to meet their 2009 goal to mobilize $100 billion from public and private sources, annually, by 2020, to help developing countries mitigate and adapt to climate change. Brazil's environmental minister has asserted that Brazil should receive at least 10% of those funds. Brazil also insisted that carbon credits developed under the 1997 Kyoto Protocol should carry over into the Paris Agreement's new international carbon markets and that countries that host emissions-cutting projects should not have to report the transfers of those credits to other countries. Many other negotiators expressed concern that Brazil's proposals could allow poorly validated credits from the Kyoto mechanisms to undermine the new Paris Agreement markets, as well as risk double-counting the credits both internationally and toward the host countries' domestic mitigation goals. Those disagreements reportedly impeded efforts to finalize rules for new carbon markets under the Paris Agreement.", "Even as the Brazilian government has called for greater international financial support, it has deprioritized domestic efforts to combat climate change. During Bolsonaro's first year in office, his administration closed the climate change departments within the environment and foreign ministries and cut funding for the implementation of Brazil's National Plan on Climate Change by 95%. Moreover, the Bolsonaro Administration lost one of Brazil's primary sources of international assistance when it unilaterally restructured the governance of the Amazon Fund\u00e2\u0080\u0094a mechanism launched in 2008 to attract funding for conservation and sustainable development efforts. In response, the governments of Norway and Germany, which have donated nearly $1.3 billion to the fund since 2009, suspended their contributions in August 2019. State governments in the Legal Amazon have sought to negotiate directly with Norway and Germany to restore the funding."], "subsections": []}]}, {"section_title": "U.S.-Brazilian Relations", "paragraphs": ["The United States and Brazil historically have enjoyed robust political and economic relations, but the countries' divergent perceptions of their national interests have inhibited the development of a close partnership. Those perceptions have changed somewhat under President Bolsonaro. Whereas the past several Brazilian administrations sought to maintain autonomy in foreign affairs, Bolsonaro has called for close alignment with the United States. Within Latin America, for example, the Bolsonaro Administration has adopted a more confrontational approach toward Cuba and has closely coordinated with the Trump Administration on measures to address the crisis in Venezuela. The Bolsonaro Administration also has expressed support for controversial U.S. actions outside the region, such as the killing of Iranian military commander Qaasem Soleimani.", "Bolsonaro's realignment of Brazilian foreign policy has been controversial domestically, with some analysts arguing it has not resulted in many concrete benefits for Brazil. They note, for example, that the Trump Administration maintained\u00e2\u0080\u0094and threatened to impose\u00e2\u0080\u0094trade barriers on key Brazilian exports, such as beef and steel, despite having signed several bilateral commercial agreements during Bolsonaro's official visit to the White House in March 2019 (see \" Recent Trade Negotiations \"). Likewise, U.S. officials reportedly have warned Brazil that the closer defense ties implied by President Trump's designation of Brazil as a major non-NATO ally could be in jeopardy if Brazil allows Chinese telecommunications company Huawei to participate in Brazil's 5G cellular network (see the \" Defense Cooperation \" section). Some Brazilian analysts also argue that abandoning the country's commitment to autonomy in foreign affairs has weakened Brazil's international standing and caused tensions in its relations with other important partners, such as fellow members of the BRICS (Brazil, Russia, India, China, and South Africa) group. There does not appear to be public support for the Trump Administration's foreign policy within Brazil; in 2019, 60% of Brazilians expressed no confidence in President Trump to \"do the right thing regarding world affairs.\"", "In some cases, domestic opposition has prevented Bolsonaro from aligning Brazilian foreign policy more closely with the United States. For example, during his 2018 presidential campaign, Bolsonaro indicated he would follow President Trump's lead in withdrawing from the Paris Agreement on climate change and taking a more confrontational approach toward Chinese trade and investment. He has backed away from those positions since taking office, reportedly due to concerns about losing access to foreign markets, particularly within the powerful agribusiness sector, which accounts for 21% of Brazil's GDP and is a major component of Bolsonaro's political base. ", "Although some Members of the 116 th Congress have urged the Trump Administration to seize on Bolsonaro's goodwill to develop a strategic partnership with Brazil, others have expressed reservations about the current Brazilian administration. They are concerned about Bolsonaro's commitment to democracy, human rights, and the rule of law, as well as about changes to Brazil's environmental policies that appear to have contributed to fires and deforestation in the Brazilian Amazon (see \" U.S. Support for Amazon Conservation \")."], "subsections": [{"section_title": "Commercial Relations", "paragraphs": ["Trade policy often has been a contentious issue in U.S.-Brazilian relations. Since the early 1990s, Brazil's trade policy has prioritized integration with its South American neighbors through the Southern Common Market ( Mercosur ) and multilateral negotiations at the World Trade Organization (WTO). Brazil is the industrial hub of Mercosur, which it established in 1991 with Argentina, Paraguay, and Uruguay. Although the bloc was intended to advance incrementally toward full economic integration, only a limited customs union has been achieved thus far. Mercosur also has evolved into a somewhat protectionist arrangement, shielding its members from external competition rather than serving as a platform for insertion into the global economy, as originally envisioned. Within the WTO, Brazil traditionally has joined with other developing nations to push the United States and other developed countries to reduce their agricultural tariffs and subsidies while resisting developed countries' calls for increased access to developing countries' industrial and services sectors. Those differences blocked conclusion of the most recent round of multilateral trade negotiations (the WTO's Doha Round), as well as U.S. efforts in the 1990s and 2000s to establish a hemisphere-wide Free Trade Area of the Americas."], "subsections": [{"section_title": "Recent Trade Negotiations", "paragraphs": ["The Bolsonaro and Trump Administrations have negotiated several agreements intended to strengthen the bilateral commercial relationship. During Bolsonaro's March 2019 official visit to Washington, the United States and Brazil agreed to take steps toward lowering trade barriers for certain agricultural products. Brazil agreed to adopt a tariff rate quota\u00e2\u0080\u0094implemented in November 2019\u00e2\u0080\u0094to allow the importation of 750,000 tons of U.S. wheat annually without tariffs. Brazil also agreed to adopt \"science-based conditions\" that could enable imports of U.S. pork. In exchange, the United States agreed to send a U.S. Department of Agriculture Food Safety and Inspection Service (FSIS) team to Brazil to audit the country's raw beef inspection system. ", "The United States had suspended imports of raw beef from Brazil in June 2017, after Brazilian investigators discovered that some of the country's top meat processing companies, including JBS and BRF, had bribed food inspectors to approve the sale of tainted products. FSIS began inspecting all meat products arriving from Brazil and refused entry to 11% of Brazilian fresh beef products in the months leading up to the suspension. The Bolsonaro Administration had hoped an FSIS audit would quickly reopen the U.S. market to Brazilian beef and expressed frustration that U.S. import restrictions remained in place through the end of 2019. On February 21, 2020, however, the Trump Administration reportedly lifted the suspension after determining that \"Brazil's food safety inspection system governing raw intact beef is equivalent to that of the [United States].\" Some consumer advocates, industry groups, and Members of Congress remained concerned about Brazilian meat. A bill introduced in April 2019 ( S. 1124 , Tester) would suspend all beef and poultry imports from Brazil while a working group evaluates the extent to which those imports pose a threat to food safety.", "The United States and Brazil announced several other agreements during Bolsonaro's March 2019 official visit. A technology safeguards agreement, which the Brazilian congress ratified in November 2019, will enable the launch of U.S.-licensed satellites from Alc\u00c3\u00a2ntara space center in Brazil's northeastern state of Maranh\u00c3\u00a3o. The United States also endorsed Brazil's accession to the Organisation for Economic Co-operation and Development in exchange for Brazil agreeing to gradually give up its \"special and differential treatment\" status, which grants special rights to developing nations at the WTO. ", "Building on those measures, U.S. and Brazilian officials reportedly have begun discussing a more comprehensive trade agreement. Barring changes to Mercosur's rules, any agreement to reduce tariffs would need to be negotiated with the broader bloc. In 2019, Mercosur signed free trade agreements with the European Union and the European Free Trade Association. Those agreements have yet to be ratified, however, and the recent political shift in Argentina could make the negotiation of new agreements more difficult. ", "It is not clear that the Bolsonaro and Trump Administrations would be willing to expose their domestic producers to increased foreign competition. Industry associations in Brazil reportedly have been lobbying the Bolsonaro Administration to focus on reducing costs for domestic business before pursuing trade liberalization. U.S. businesses also have sought protections, and President Trump has occasionally threatened to impose tariffs on Brazilian products (see the text box, below)."], "subsections": []}, {"section_title": "Trade and Investment Flows", "paragraphs": ["U.S.-Brazilian trade has increased significantly over the past two decades but has suffered from economic volatility, such as the 2007-2008 global financial crisis and Brazil's 2014-2017 recession (see Figure 3 ). In 2019, total bilateral merchandise trade amounted to $73.9 billion. U.S. goods exports to Brazil totaled $43.1 billion, and U.S. goods imports from Brazil totaled $30.9 billion, giving the United States a $12.2 billion trade surplus. The top U.S. exports to Brazil were mineral fuels, aircraft, machinery, and organic chemicals. The top U.S. imports from Brazil included mineral fuels, iron and steel, aircraft, machinery, and wood and wood pulp. In 2019, Brazil was the 14 th -largest trading partner of the United States. The United States was Brazil's second-largest trading partner, accounting for 14.8% of Brazil's total merchandise trade, compared to 24.4% for China.", "Brazil benefits from the Generalized System of Preferences program, which provides nonreciprocal, duty-free tariff treatment to certain products imported from designated developing countries. Brazil was the fourth-largest beneficiary of the program in 2019, with duty-free imports to the United States valued at $2.3 billion\u00e2\u0080\u0094equivalent to 7.4% of all U.S. merchandise imports from Brazil.", "U.S.-Brazilian services trade is also significant. In 2018 (the most recent year for which data are available), total bilateral services trade amounted to $34.4 billion. U.S. services exports to Brazil totaled $28.2 billion, and U.S. services imports from Brazil totaled $6.1 billion, giving the United States a $22.1 billion surplus. Travel, transport, and telecommunications were the top categories of U.S. services exports to Brazil, and business services was the top category of U.S. imports from Brazil. In 2018, more than 2.2 million Brazilians visited the United States, spending $11.5 billion on travel and tourism. Brazil began exempting U.S. citizens from the country's tourist and business visa requirements in June 2019, which could increase U.S. travel to Brazil in the coming years.", "U.S. foreign direct investment (FDI) in Brazil has increased by more than 60% since 2008. As of 2018 (the most recent year for which data are available), the accumulated stock of U.S. FDI in Brazil was $70.9 billion, with significant investments in manufacturing, finance, and mining, among other sectors."], "subsections": []}]}, {"section_title": "Security Cooperation", "paragraphs": ["Although U.S.-Brazilian cooperation on security issues traditionally has been limited, law enforcement and military ties have grown closer in recent years. In 2018, the countries launched a new Permanent Forum on Security that aims to foster \"strategic, intense, on-going bilateral cooperation\" on a range of security challenges, including arms and drug trafficking, cybercrime, financial crimes, and terrorism. The United States and Brazil also engage in high-level security discussions under the long-standing Political-Military Dialogue and a new Strategic Partnership Dialogue, which met for the first time in September 2019."], "subsections": [{"section_title": "Counternarcotics", "paragraphs": ["Brazil is not a major drug-producing country, but it is the world's second-largest consumer of cocaine hydrochloride and likely the world's largest consumer of cocaine base. It is also a major transit country for cocaine bound for Europe. Organized crime in Brazil has increased in scope and scale over the past decade, as some of the country's large, well-organized, and heavily armed criminal groups\u00e2\u0080\u0094such as the Red Command ( Comando Vermelho , or CV) and the First Capital Command ( Primeiro Comando da Capital , or PCC)\u00e2\u0080\u0094have increased their transnational operations. Security analysts have attributed much of the recent violence in Brazil, particularly in the northern portion of the country, to clashes among the CV, PCC, and their local affiliates over control of strategic trafficking corridors.", "The Brazilian government has responded to the challenges posed by organized crime by bolstering security along the 9,767-mile border it shares with 10 nations, including the region's cocaine producers\u00e2\u0080\u0094Bolivia, Colombia, and Peru. Under its Strategic Border Plan, introduced in 2011, the Brazilian government has deployed interagency resources, including unmanned aerial vehicles, to monitor illicit activity in high-risk locations along its borders and in the remote Amazon region. It also has carried out joint operations with neighboring countries. More recently, the Brazilian government has begun acquiring low-altitude mobile radars and other equipment to support its Integrated Border Monitoring System. That system was initially scheduled to be operational along the entire Brazilian border in 2022, but the Brazilian government now estimates that the system may not be completely in place until 2035 due to budget constraints.", "The United States supports counternarcotics capacity-building efforts in Brazil under a 2008 U.S.-Brazil Memorandum of Understanding on Narcotics Control and Law Enforcement. In 2018, the United States trained nearly 1,000 Brazilian police officers on combatting money laundering and community policing, among other topics."], "subsections": []}, {"section_title": "Counterterrorism", "paragraphs": ["Despite having little history of terrorism, Brazil began working closely with the United States and other international partners to assess and mitigate potential terrorist threats in the lead-up to hosting the 2014 World Cup and the 2016 Summer Olympic Games. Among other support, U.S. authorities trained Brazilian law enforcement on topics such as countering international terrorism, preventing attacks on soft targets, and identifying fraudulent documents. The Brazilian government also enacted legislation that criminalized terrorism and terrorist financing in 2016, closing a long-standing legal gap that reportedly had hindered counterterrorism investigations and prosecutions. Brazil further strengthened its legal framework for identifying and freezing terrorist assets in 2019 to address deficiencies identified by the intergovernmental Financial Action Task Force. ", "Brazilian officials have used the new legal framework several times in recent years. In the weeks leading up to the 2016 Olympics, they dismantled a loose, online network of Islamic State sympathizers; 12 individuals were detained, and 8 ultimately were convicted and sentenced to between 5 and 15 years in prison for promoting the Islamic State and terrorist attacks through social media. In 2018, Brazilian prosecutors charged 11 individuals with planning to establish an Islamic State cell in Brazil and attempting to recruit fighters to send to Syria. Although some observers have applauded such efforts, others argue that Brazilian authorities are improperly surveilling, and stoking prejudice toward, the country's small Muslim population.", "Brazil historically had been reluctant to adopt specific antiterrorism legislation due to concerns about criminalizing the activities of social movements and other groups that engage in actions of political dissent. President Bolsonaro has reinvigorated those concerns by comparing Brazil's Landless Workers' Movement ( Movimento dos Trabalhadores Sem Terra , or MST) and protesters in Chile to terrorists. The Brazilian congress recently restricted the ability of the country's financial intelligence unit to report on terrorist financing, reportedly to prevent Bolsonaro from targeting political and social activists. That restriction could jeopardize Brazil's compliance with global anti-money laundering and antiterrorism financing standards.", "In December 2019, the U.S. Department of State allocated $700,000 of FY2019 Nonproliferation, Anti-Terrorism, Demining and Related Programs aid to Brazil to improve Brazilian law enforcement's capability to deter, detect, and respond to terrorism-related activities. The assistance will fund border security training and other initiatives, with a particular focus on preventing suspected terrorists and terrorist facilitators from transiting the so-called Tri-Border Area (TBA) of Brazil, Argentina, and Paraguay. The TBA has long been a haven for smuggling, money laundering, and other illicit activities. In September 2018, for example, Brazilian police arrested an alleged Hezbollah financier in the TBA who the U.S. Department of the Treasury had previously sanctioned as a Specially Designated Global Terrorist pursuant to Executive Order 13224. Brazil does not consider Hezbollah a terrorist organization, but the Bolsonaro Administration reportedly is considering measures to designate it as such."], "subsections": []}, {"section_title": "Defense Cooperation", "paragraphs": ["U.S.-Brazilian military ties have grown considerably over the past decade but have faced occasional setbacks. In the aftermath of a massive January 2010 earthquake in Haiti, U.S. and Brazilian military forces providing humanitarian assistance engaged in their largest combined operations since World War II. Later in 2010, the countries signed a Defense Cooperation Agreement and a General Security of Military Information Agreement intended to facilitate the sharing of classified information. The Brazilian congress did not approve those agreements until 2015, however, due to a cooling of relations after press reports revealed that the U.S. National Security Agency had engaged in extensive espionage in Brazil. A Master Information Exchange Agreement, signed in 2017, implemented the two previous agreements and enabled the countries to pursue bilateral defense-related technology projects. ", "In July 2019, President Trump designated Brazil as a major non-NATO ally for the purposes of the Arms Export Control Act (22 U.S.C. 2751 et seq.). Among other benefits, that designation offers Brazil privileged access to the U.S. defense industry and increased joint military exchanges, exercises, and training. In FY2019, the U.S. government provided an estimated $666,000 in International Military Education and Training (IMET) assistance to Brazil to strengthen military-to-military relationships, increase the professionalization of Brazilian forces, and enhance the Brazilian military's capabilities. The U.S. government also delivered to Brazil $11.2 million of equipment under the Excess Defense Articles program and $96.7 million of equipment and services under the Foreign Military Sales program. The Further Consolidated Appropriations Act, 2020 ( P.L. 116-94 ), does not specifically allocate any military assistance for Brazil, but the Trump Administration requested $625,000 in IMET for Brazil in FY2020. The Trump Administration's FY2021 budget proposal also includes $625,000 in IMET for Brazil.", "Although recent bilateral agreements and the U.S. designation of Brazil as a major non-NATO ally have laid a foundation for closer military ties, the long-term trajectory of the defense relationship may depend on broader geopolitical considerations. For example, U.S. officials reportedly have warned that bilateral military and intelligence cooperation could be in jeopardy if Brazil allows the Chinese telecommunications company Huawei to participate in Brazil's5G cellular network. Brazil may be reluctant to exclude Huawei, however, since the financial and economic benefits of using the company's lower cost components to deploy Brazil's 5G network more quickly may outweigh the less tangible benefits of closer defense ties with the United States. Moreover, the Bolsonaro Administration generally has sought to avoid confrontations with China\u00e2\u0080\u0094Brazil's top trade partner and an important source of foreign investment. During his first year in office, Bolsonaro shifted from expressing concern that China was exerting too much control over key sectors of the Brazilian economy to lauding the strategic partnership between Brazil and China and calling for closer bilateral cooperation in various areas, including science and technology. More broadly, influential sectors of Brazil's military and foreign policy establishments are wary of becoming embroiled in global power rivalries or becoming technologically dependent on any one country.", "Congress has expressed interest in ensuring that U.S. military engagement with Brazil does not contribute to human rights abuses. The National Defense Authorization Act for Fiscal Year 2020 ( P.L. 116-92 ) directs the Secretary of Defense, in coordination with the Secretary of State, to submit a report to Congress regarding U.S.-Brazilian security cooperation. The report is to assess the capabilities of Brazil's military forces and describe the U.S. security cooperation relationship with Brazil, including U.S. objectives, ongoing or planned activities, and the Brazilian military capabilities that U.S. cooperation could enhance. The report is also to assess the human rights climate in Brazil, including the Brazilian military's adherence to human rights and an identification of any Brazilian military or security forces credibly alleged to have engaged in human rights violations that have received or purchased U.S. equipment or training. Moreover, the report is to describe ongoing or planned U.S. cooperation activities with Brazil focused on human rights and the extent to which U.S. security cooperation with Brazil could encourage accountability and promote reform through training on human rights, rule of law, and rules of engagement.", "Some Members of Congress also have called for changes to U.S. security cooperation with Brazil. A resolution introduced in September 2019 expressing profound concerns about threats to human rights, the rule of law, democracy, and the environment in Brazil ( H.Res. 594 , Grijalva) would call for the United States to rescind Brazil's designation as a major non-NATO ally and suspend assistance to Brazilian security forces, among other actions. In contrast, other Members have called for closer U.S. security ties with Brazil, including its inclusion in NATO partnership programs."], "subsections": []}]}, {"section_title": "U.S. Support for Amazon Conservation", "paragraphs": ["The U.S. government has supported conservation efforts in Brazil since the 1980s. Current U.S. Agency for International Development (USAID) activities are coordinated through the U.S.-Brazil Partnership for the Conservation of Amazon Biodiversity (PCAB). Launched in 2014, the PCAB brings together U.S. and Brazilian governments, private sector companies, and NGOs to strengthen protected area management and promote sustainable development in the Amazon. In addition to providing assistance for federally and state-managed protected areas, USAID works with indigenous and quilombola communities to strengthen their capacities to manage their resources and improve their livelihoods. USAID also supports the private sector-led Partnership Platform for the Amazon, which facilitates private investment in innovative conservation and sustainable development activities. In November 2019, USAID helped establish the Athelia Biodiversity Fund, a Brazilian equity fund that aims to raise $100 million of mostly private capital to invest in similar efforts. In addition to those long-term development programs, USAID's Office of Foreign Disaster Assistance deployed a team of wildfire experts to assist Brazilian fire investigators in 2019.", "Several other U.S. agencies are engaged in Brazil, often in collaboration with or with funding transferred from USAID. The U.S. Forest Service, for example, provides technical assistance to the Brazilian government, NGOs, and cooperatives intended to improve protected area management, reduce the threat of fire, conserve migratory bird habitat, and facilitate the establishment of sustainable value chains for forest products. NASA also has provided data and technical support to Brazil to help the country better monitor Amazon deforestation.", "President Trump has not requested funding for environmental programs in Brazil in any of his budget proposals. Nevertheless, Congress has continued to fund conservation activities in the country. In the Further Consolidated Appropriations Act, 2020 ( P.L. 116-94 ), Congress appropriated $15 million for the Brazilian Amazon, including $5 million to address fires in the region.", "Some Members of Congress have called on the Brazilian and U.S. governments to do more to conserve the Amazon. For example, a resolution introduced in the Senate in September 2019 ( S.Res. 337 , Schatz) would express bipartisan concern about fires and illegal deforestation in the Amazon, call on the Brazilian government to strengthen environmental enforcement and reinstate protections for indigenous communities, and back continued U.S. assistance to the Brazilian government and NGOs. The Act for the Amazon Act ( H.R. 4263 , DeFazio), introduced in September 2019, would take a more punitive approach. It would ban the importation of certain fossil fuels and agricultural products from Brazil, prohibit certain types of military-to-military engagement and security assistance to Brazil, and forbid U.S. agencies from entering into free trade negotiations with Brazil."], "subsections": []}]}, {"section_title": "Outlook", "paragraphs": ["More than five years after the country fell into recession and more than three years after the controversial impeachment and removal from office of President Rousseff, Brazil remains mired in difficult domestic circumstances. There are some signs that economic growth may be accelerating slowly, but tens of millions of Brazilians continue to struggle with poverty and precarious employment conditions. Repeated budget cuts have reduced social services for the most vulnerable and have weakened the Brazilian government's capacity to address other challenges, such as high levels of crime and increasing deforestation. President Bolsonaro was elected, in part, on his pledge to clean up the political system, but his interference in justice sector agencies and frequent attacks on the press, civil society groups, and other branches of government have placed additional stress on the country's already-strained democratic institutions. Brazilian policymakers are likely to remain focused on these internal challenges for the next several years, limiting Brazil's ability to take on regional responsibilities or exert its influence internationally.", "U.S.-Brazilian relations have grown closer since 2019, as President Bolsonaro's foreign policy has prioritized alignment with the Trump Administration. In addition to coordinating on international affairs, the U.S. and Brazilian governments have taken steps to bolster commercial ties and enhance security cooperation. Nonetheless, policy differences have emerged over sensitive issues, such as bilateral trade barriers and relations with China, which affect the economic and geopolitical interests of both countries. Those disagreements suggest the Trump and Bolsonaro Administrations may need to engage in more extensive consultations and confidence-building measures if they intend to avoid the historic pattern of U.S.-Brazilian relations, in which heightened expectations give way to mutual disappointment and mistrust.", "The 116 th Congress may continue to shape U.S.-Brazilian relations using its legislative and oversight powers. Although there appears to be considerable support in Congress for forging a long-term strategic partnership with Brazil, many Members may be reluctant to advance major bilateral commercial or security cooperation initiatives in the near term, given their concerns about democracy, human rights, and the environment in Brazil. For the time being, Congress may continue appropriating funding for programs with broad support, such as Amazon conservation efforts, while Members continue to advocate for divergent policy approaches toward the Bolsonaro Administration."], "subsections": []}]}}
{"id": "R45834", "title": "Department of Veterans Affairs (VA): A Primer on Telehealth", "released_date": "2019-07-26T00:00:00", "summary": ["The Veterans Health Administration (VHA), of the Department of Veterans Affairs (VA), is leveraging the use of telehealth with the goal of expanding veterans' access to VA care. Telehealth generally refers to the use of information and communication technology to deliver a health care service. It is a mode of health care delivery that extends beyond the \"brick-and-mortar\" health care facilities of the VHA. VA telehealth services are generally provided on an outpatient basis and supplement in-person care. Such services do not replace VA in-person care. The VA copay requirements for telehealth are the same as for VA in-person care, but in some cases may be lower than the copays for VA in-person outpatient health care services delivered through the VHA. President Trump and Congress have recently enacted measures such as the VA Maintaining Internal Systems and Strengthening Integrated Outside Networks of 2018 (VA MISSION Act; P.L. 115-182 ) that aim to address the access barriers that veterans may experience when accessing VA telehealth services across states lines. The VA MISSION Act, among other things, removes all geographic and licensing barriers to VA telehealth, thereby allowing veterans to access VA telehealth services in their communities from any location in the United States, U.S. territories, District of Columbia, and Commonwealth of Puerto Rico.", "VA Telehealth Modalities", "In FY2018, more than 9.3 million veterans were enrolled in VA care. In that same fiscal year, the VA provided 2.29 million telehealth episodes of care to 782,000 veteran patients collectively using the following three VA telehealth modalities: (1) home telehealth, (2) store-and-forward telehealth, and (3) clinical video telehealth. The VA has developed VA mobile applications (apps), which refer to software programs that run on certain operating systems of mobile devices (e.g., smartphones and tablets) and computers that transmit data over the internet that veterans can access as telehealth applications. Veterans can access VA mobile apps on cellular and mobile devices that operate using either a web-based platform, an iOS platform, or an Android operating platform.", "VA Telehealth Partnerships and Access", "According to the VA, it cannot meet the health care demands of veteran patients in-house and therefore, it has established partnerships with private sector vendors to help address veterans' demand for VA care. For example, the VA's partnership with the wireless service provider T-Mobile would allow a veteran who has T-Mobile as a cellular wireless service provider to access the VA Video Connect app without incurring additional charges or reducing plan data allotments.", "VA Teleconsultations", "VA providers can use telehealth platforms and applications to consult with one another, which is referred to as a teleconsultation by section 1709A(b) of title 38 of the U.S. Code . The VA has adopted and modified the Project Extension for Community Healthcare Outcomes (Project ECHO) learning model, which the Expanding Capacity for Health Outcomes Act ( P.L. 114-270 ) required the Secretary of the Department of Health and Human Services to examine and report on, to create a Specialty Care Access Network-Extension for Community Healthcare Outcomes (SCAN-ECHO) learning model. The VA's SCAN-ECHO is a similar approach that aims to connect underproductive providers to assist access-challenged providers, using the hub-and- spoke model , which refers to a structure whereby a central point (referred to as the \"hub\") disseminates information to different connecting points (referred to as the \"spokes\").", "Topics Covered in This Report", "This report provides background information on VA telehealth, including veteran eligibility and enrollment criteria, VA telehealth copayment requirements, and VA providers' authority to provide telehealth services anywhere. The report also discusses the components of VA telehealth. It also discusses three issues that Congress could choose to consider: (1) access barriers to in-person VA care, (2) lack of access to the internet, and (3) conflicting guidelines for prescribing controlled substances via telehealth across state lines."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["In FY2019, an estimated 20 million veterans were living in the United States, of which 9.3 million were enrolled in care through the Department of Veterans Affairs (VA). Chapter 17 of Title 38, U.S.C. , requires the VA to provide health care services to eligible veterans through the Veterans Health Administration (VHA) of the VA, which is one of the largest integrated health care systems in the United States. The VHA is composed of nearly 1,700 VA medical facilities. VA care is not a health insurance program; it is primarily a direct provider of care. ", "Meeting veterans' demand for care has been challenging for the VA. Some veteran patients who seek health care services from the VHA experience barriers to receiving in-person care; for example, by being unable to schedule VA medical appointments in a timely manner or having to travel long distances to reach health care facilities. In conjunction with the Veterans Choice Program (VCP), the recently enacted VA Maintaining Internal Systems and Strengthening Integrated Outside Networks Act of 2018 (VA MISSION Act; P.L. 115-182 ), and other measures that aim to expand veterans' access to care, the VA has attempted to address barriers to in-person care using telehealth in VA health care facilities. According to the VHA, telehealth refers to the ", "use of health informatics, disease management and [t]elehealth technologies to enhance and extend care and case management to facilitate access to care and improve the health of designated individuals and populations with the specific intent of providing the right care in the right place at the right time."], "subsections": [{"section_title": "VA Telehealth Overview", "paragraphs": ["VA telehealth is a mode of health care delivery that extends outside of the \"brick-and-mortar\" health care facilities of the VHA. Telehealth, in contrast to in-person care, functions using information and communication technology (ICT) to transpire an episode of care to a veteran patient, without requiring the patient to visit a service provider in person. Although telehealth generally supplements in-person care, it does not replace VA in-person care. ", "In this context, the use of ICT to deliver telehealth services does not disrupt a veteran patient's daily life activities, such as working and going to school. Veterans do not need to meet their VA provider in-person to receive VA health care services. This type of nondisruptive access to health care services is likely more convenient than the traditional in-person care services used by veteran patients and their civilian counterparts. ", "Telehealth encourages veteran patients to be actively involved in their health care decisions, because it requires veterans to perform telehealth-related tasks such as downloading mobile applications (apps) to connect with VA providers and staff. A mobile app refers to a software program that runs on certain operating systems of mobile devices (e.g., smartphones and tablets) and computers that transmit data over the internet. (See the \" VA Mobile Health (VA Mobile) \" section in this report). "], "subsections": [{"section_title": "Rural Veterans", "paragraphs": ["Legislation and regulations that aim to expand veterans' access to VA telehealth services generally focus on the U.S. population of rural veterans. Many of these veterans experience geographic barriers to accessing in-person VA care, such as having to travel long distances to reach their nearest health care facilities. Of the estimated 9.2 million veterans who were enrolled in the VA health care system in FY2019, approximately 33% of them were rural veterans. According to the VA, \"[the U.S. population of rural veterans] is older (56% are over 65), poorer (52% earn less than $35,000 per year), and sicker (a greater number of co-morbidities) than their urban counterparts.\" In addition to having to travel long distances to reach their nearest health care facilities, rural veterans may experience access barriers to VA telehealth services because they lack access to broadband internet in their communities. Similarly, veterans who live in urban areas also experience access barriers to VA care such as having to wait more than 30 days to receive care through the VA. "], "subsections": []}, {"section_title": "Integration with the Private Sector", "paragraphs": ["According to former Under Secretary of the VHA, David J. Shulkin, MD, who later became the VA Secretary, \"[t]he fact is that demand for [v]eterans' health care is outpacing VA's ability to supply [the health care services] in-house.\" President Trump and the Congress have acknowledged the challenges the VA has faced in supplying VA care in-house by enacting measures such as the VA MISSION Act. The VA has since established new partnerships with private sector vendors, such as Philips Healthcare, T-Mobile USA, Inc. (T-Mobile), and Walmart Inc. (Walmart), under the VA's Advancing Telehealth through Local Access Stations program. The VA established these partnerships with the goal of reducing veterans' access barriers to VA in-person care by expanding their access to VA telehealth services. "], "subsections": []}]}]}, {"section_title": "Report Roadmap", "paragraphs": ["To assist Congress as it considers measures on VA telehealth, this report", "provides an overview of VA telehealth programs and requirements including veteran eligibility and enrollment criteria and VA telehealth copayment requirements; discusses VA providers' authority to provide telehealth services anywhere; discusses the components of VA telehealth; provides an overview of VA teleconsultations; discusses three issues that Congress could choose to consider: (1) access barriers to in-person VA care, (2) lack of access to the internet, and (3) conflicting guidelines for prescribing controlled substances via telehealth across state lines; provides, in Appendix A , a summary table with all abbreviations used in the report; provides, in Appendix B , the history of VA telehealth and a high-level overview of at least one legislative provision that was enacted into law and aims to address VA telehealth, beginning with the 109 th Congress; provides, in Appendix C , a discussion on the VA providers' authority to provide telehealth services anywhere; and provides, in Appendix D , the total number of veterans who received VA telehealth services and the total number of telehealth encounters that transpired during each of the fiscal years FY2009-FY2018."], "subsections": []}, {"section_title": "VA Telehealth Programs and Requirements", "paragraphs": ["On July 12, 2016, the VA established the Office of Connected Care (OCC) within the VHA. The goal of OCC is to \"deliver [information technology (IT)] health solutions that increase a [v]eteran's access to care and supports a [v]eteran's participation in their health care.\" OCC administers the following four VA telehealth programs:", "1. According to the VA, VA Telehealth Services \"[improve] convenience to [v]eterans by providing access to care from their homes or local communities when they need it.\" 2. My Health e Vet\u00c2\u00a0 is the web-based electronic health record (EHR) for veteran patients through which veterans can view, and download electronic protected health information (ePHI); 3. VHA Innovation Program is an annual competitive program that allows VA staff and key stakeholders in the private sector to submit innovative ideas on enhancing VA care; and 4. VA Mobile Health (VA Mobile) develops mobile apps.", "For its telehealth programs, the VA has requested an appropriation of $1.1 billion for FY2020 and an advanced appropriation of $1.7 billion for FY2021. "], "subsections": [{"section_title": "Veteran Eligibility, Enrollment, and Access", "paragraphs": ["Not all veterans are eligible to receive VA care, and not every veteran is automatically entitled to medical care from the VHA. Veterans' eligibility for enrollment in the VHA is based on veteran status (i.e., previous military service), service-connected disability, and income. Veterans enrolled in the VA health care system can receive a range of health care services, including primary care and specialty care via telehealth, as authorized under the VA's medical benefits package . The VA medical benefits package refers to a suite of health care services that are covered for eligible veterans, generally at no cost under certain circumstances. In a given year, however, not all enrolled veterans receive their care from the VA\u00e2\u0080\u0094either because they do not need services or because they have other forms of health coverage, such as Medicare, Medicaid, or private health insurance. In FY2018, more than 9.3 million veterans were enrolled in VA care.", "A veteran generally must be enrolled in the VA health care system to access VA telehealth services, which are typically provided on an outpatient basis. A veteran who is not enrolled in VA care can access VA telehealth services under certain circumstances. For example, a veteran who is not enrolled in VA care but who is \"tentatively\" eligible for VA care could access VA telehealth services on an outpatient basis. Of the 9.3 million veterans who were enrolled in VA care in FY2018, the VA provided 2.29 million telehealth episodes of care to 782,000 veteran patients. An episode of care generally refers to all of the health care services that a VA provider provides to a veteran patient, to treat the veteran's health condition/disability. ", "The Faster Care for Veterans Act of 2016 ( P.L. 114-286 ) required the VA, among other things, to ensure that veterans could schedule their own telehealth appointments. A recent U.S. Government Accountability Office (GAO) report found that neither the Veteran Appointment Request System nor the On-line Patient Self-Scheduling System (OPSS) had the capability to allow veterans to schedule their own telehealth appointments. According to the VHA, access to VA telehealth services is a joint decision between the veteran and his or her care team of VA providers and clinical staff. The care team tells the veteran which clinically appropriate VA care services he or she can access through the VHA. There may be instances when it is clinically appropriate for a veteran to receive in-person care rather than a telehealth service. When the care team decides that it is clinically appropriate for a veteran to receive telehealth services, the veteran would need to opt into accessing VA telehealth services. The veteran patient would then be able to schedule his or her telehealth appointment. "], "subsections": [{"section_title": "Telehealth Copayment Requirements", "paragraphs": ["A telehealth copayment refers to the out-of-pocket costs that a veteran patient pays for a telehealth encounter. A veteran patient generally pays $15 per primary care outpatient visit and $50 per specialty care visit at VA medical facilities. According to the VA, copay amounts for telehealth are usually less than for VA in-person care. ", "The VHA does not require veterans to pay a copay for health care services to treat a service-connected disability/condition, nor is a copay required if a veteran meets at least one of the following four main criteria:", "1. The veteran patient has a service-connected disability/condition that is rated at 50% percent or more. 2. The veteran patient is a former prisoner of war. 3. The veteran has an annual income that is below the income limit. 4. The veteran is a recipient of the Medal of Honor.", "Other veteran patients can receive free VA care when they receive care under certain circumstances, such as care for military sexual trauma, care that is part of a VA research project, and care that is provided for compensation and pension examinations.", "Veteran patients who are not exempt from paying VA copays incur the costs of their VA care. The VA determines a veteran patient's copay by evaluating the rendered telehealth encounter against two factors: (1) the location of the veteran patient when the telehealth encounter transpired and (2) the VA's internal business office protocols on copay amounts for VA care. ", "The Honoring America's Veterans and Caring for Camp Lejeune Families Act of 2012 ( P.L. 112-154 ), among other things, allows the VA Secretary to waive veteran patients' copay requirements for telehealth. In March 2012, the VA Secretary began waiving copays for telehealth services provided to veteran patients in their homes. "], "subsections": []}]}, {"section_title": "VA Provider Eligibility and Training on Telehealth", "paragraphs": ["The Department of Veterans Affairs Codification Act ( P.L. 102-83 ) requires the VA Secretary, among other things, to establish interrelationships and coordinate the delivery of VA health care services with the public and private sectors. Therefore, a health care provider who is either seeking a government position within the VA (referred to as a VA-employed provider ) or seeking to remain as a private sector provider while working with the VA under a contract (referred to as a VA-contracted provider ) is eligible to provide VA care to veterans. A VA provider, either VA-employed or VA-contracted, must hold at least one full, active, current, and unrestricted state license to be eligible to work for or with the VA. The provider can use his or her license to deliver in-person care and telehealth services through the VHA. Each VA provider can decide whether he or she wants to provide VA telehealth services to veteran patients across state lines. ", "The VA MISSION Act, among other things, allows a VA-employed health care provider to provide telehealth services to veteran patients across state lines using only one state license, even in states where the provider is not licensed to practice. ( Appendix C provides an overview of the VA-employed providers' authority to provide telehealth services across state lines using one state license.) A VA-employed provider who chooses to use a single license in this manner must meet the following four statutory requirements of a covered health care professional: ", "1. the VA provider must be an employee of the VA; 2. the VA Secretary must have authorized the VA provider to provide telehealth services across state lines; 3. the VA provider must agree to adhere to all standards for quality relating to the provision of medicine that is consistent with VA policies; and 4. the VA provider must hold an active, current, full, and unrestricted license, registration, or certification in at least one state to practice in his or her field of medicine.", "This authority does not extend to VA-contracted providers. Current law does not allow a VA-contracted provider to provide VA health care services, including telehealth, to veteran patients across states lines using a single license in states where the VA-contracted provider is not licensed to practice. A VA-contracted provider, in contrast to a VA-employed provider, must hold a license in each state where the provider chooses to practice. Neither type of provider is required to obtain a specialty license, registration, or certification to practice his or her field of medicine via telehealth through the VHA.", "The VA encourages its providers to complete the Telehealth Master Preceptor Certification Program. This program offers an educational curriculum on the delivery of VA telehealth, including the VA telehealth modalities used to deliver telehealth services (see the \" Telehealth Modalities \" section below). The VHA Telehealth Services National Training Center, which is a nationally accredited training center, oversees the program and other telehealth trainings. In FY2018, according to the VA, more than 56,000 VA providers and staff completed at least one training session on telehealth. In that same fiscal year, the VA had provided more than 100,720 telehealth trainings. "], "subsections": []}]}, {"section_title": "VA Telehealth Components", "paragraphs": ["VA telehealth encompasses four general components: (1) the internet and wireless data, (2) telehealth modalities, (3) VA Mobile Health, and (4) VA teleconsultations. Each of these components is discussed below. Health informatics and data visualizations are not discussed because they are beyond the scope of this report. "], "subsections": [{"section_title": "The Internet and Wireless Data", "paragraphs": ["A veteran patient who chooses to access VA telehealth services must be willing to perform telehealth related tasks, such as accessing a health care service and obtaining his or her ePHI (electronic protected health information), using the internet\u00e2\u0080\u0094the vehicle for which a telehealth episode of care transpires. A veteran patient must have access to the internet to access VA telehealth services on mobile devices and computers. In 2017, according to a VA study of 43,600 veteran enrollees, 77% reported using the internet on an occasional or more frequent basis. Of those 77% of veteran enrollees who reported using the internet, the enrollees performed the following telehealth related tasks:", "33% scheduled medical appointments, 45% accessed their EHRs (electronic health records), and 77% searched for information on health.", "The VA's findings reveal that veterans who are enrolled in the VA health care system are using the internet to perform telehealth-related tasks. However, veteran patients do not necessarily have to have their own internet service to perform telehealth related tasks and access VA telehealth services. For example, veteran patients can access the internet from a VA medical facility, a family member's home, or a local library (access to high-speed internet service typically yields the best internet performance). In addition, a veteran who chooses to access VA telehealth services via a mobile device (e.g., smartphones and tablets) must have adequate cellular data storage. The amount of wireless data storage on a mobile device determines whether the veteran will be able to download and use certain components of VA telehealth such as VA mobile apps. "], "subsections": [{"section_title": "Potential Cybersecurity and Privacy Risks", "paragraphs": ["A veteran patient who chooses to perform telehealth-related tasks on a personal mobile device and computer must consider the potential cybersecurity and privacy risks associated with accessing VA telehealth services. During a telehealth encounter, for example, a veteran patient can view, download, and transmit their ePHI over the internet. According to the Federal Bureau of Investigation, mobile devices and internet connections can be compromised when accessed by an unauthorized party. The VHA cannot ensure that a veteran is accessing VA telehealth services on a trustworthy device via a trustworthy connection\u00e2\u0080\u0094that responsibility falls upon the user when the user is accessing the service on their personal device. According to the VA, it \"will coordinate restoration activities\" with internal and external key stakeholders when veteran patients experience cybersecurity and privacy threats.", "Certain veteran patients can access VA telehealth services on VA issued mobile devices. According to the Federal Communications Commission, the VA provided 6,000 tablets with 4G LTE connectivity to low-income and rural veterans with the goal of reducing the veterans' broadband infrastructure barriers to telehealth in their homes. These veterans are accessing telehealth services on trustworthy devices via trustworthy connections. The VA's Cybersecurity Program ensures that, among other things, ePHI and personally identifiable information that are transmitted via VA devices and systems are protected against cybersecurity and privacy threats. Of course, cybersecurity and privacy risks are not limited to the U.S. veteran patient population."], "subsections": []}]}, {"section_title": "Telehealth Modalities", "paragraphs": ["A telehealth modality refers to the mode in which a telehealth episode of care transpires. VA providers offer telehealth services to veteran patients via one of the following three telehealth modalities: (1) home telehealth, (2) store-and-forward telehealth, and (3) clinical video telehealth. The three VA telehealth modalities are described in more detail below. Note that the VHA does not consider VA Mobile Health as a telehealth modality, even though veterans can use this technology to access telehealth services. The VA considers VA Mobile Health as an \"essential element of health care\" delivery rather than an ICT tool used to deliver telehealth services.", "In FY2019, the VA is to begin measuring the VHA's performance in addressing the health care needs of eligible veterans who receive telehealth services via these three VA telehealth modalities. For example, one new measurement would analyze the ratio of \"the number of unique [v]eterans served through telehealth services (numerator) and the number of unique [v]eterans that receive care through [the] VHA (denominator).\" Using this measurement, the VA anticipates that at least 15% of eligible veteran patients will access VA telehealth services in FY2019. "], "subsections": [{"section_title": "Home Telehealth (HT)", "paragraphs": ["The home telehealth (HT) modality allows a VA provider who is not located in the same location as a veteran patient to provide the patient with daily case management services for his or her chronic medical conditions, such as chronic heart disease or diabetes. The HT modality allows the VA provider to view medical data and information from a medical device, such as a heart monitor that the veteran patient wears. Telehealth episodes of care via the HT modality generally have no location restrictions unless the veteran patient is on bed rest. From FY2012 to FY2018, the VA provided 6.7 million telehealth encounters via the HT modality to 1.0 million veteran patients.", "In FY2018, the VA provided 872,705 telehealth episodes of care to 136,741 veteran patients through the HT modality. According to the VA, the case management service that VA providers most often provide to veteran patients via the HT modality is the management of hypertension (commonly known as high blood pressure). Figure 1 illustrates the distribution of services that transpired via the HT modality, for those veterans who received telehealth services for each of the fiscal years FY2012-FY2018.", "The number of veteran patients who have accessed telehealth services via the HT modality has increased, even though Figure 1 shows a downward trend for the percentage of veteran patients who accessed VA telehealth services via the HT modality. The total population of veteran patients accessing VA telehealth services via the HT modality increased by 142.1%, from 56,484 veteran patients in FY2009 to 136,741 veteran patients in FY2018. However, the number of telehealth encounters that transpired via the HT modality has fluctuated (see Figure 1 and Table D-2 ). ", "The VA provided its financial obligations for the delivery of telehealth services via the HT modality in the agency's FY2020 funding and FY2021 advanced appropriations budget request to the Congress. In FY2019, the VA estimates that $270.6 million was obligated to the delivery of telehealth services via the HT modality. The VA has requested an appropriation of $279.8 million for FY2020 and an advance appropriation of $291 million for FY2021 to deliver telehealth services via the HT modality. "], "subsections": []}, {"section_title": "Store-and-Forward Telehealth (SFT)", "paragraphs": ["The store-and-forward telehealth (SFT) modality facilitates the interpretation of patients' clinical information by allowing a VA provider who is not located in the same location as a veteran patient to assist another VA provider who is located in the same location and has provided in-person care to the veteran patient. Examples of the clinical information include data, images, sound, and video medical records from the veteran patient's radiology and dermatology examinations. The veteran patient does not have to be present during the electronic transfer of his or her clinical information. After receiving the clinical information, the VA provider interprets the clinical information for the other VA provider and provides follow-up care instructions for the veteran patient. From FY2009 to FY2018, the VA provided 2.7 million telehealth encounters via the SFT modality to 2.5 million veteran patients.", "In FY2018, the VA provided 344,853 telehealth episodes of care to 314,487 veteran patients through the SFT modality. According to the VA, it provides captures, stores, and forwards clinical information mostly for teleretinal i magining via the SFT modality to screen for diabetic eye disease in veteran patients. According to the VA, teleretinal imaging refers to a VA provider's use of a special camera to take a picture of a veteran patient's eye. The picture is electronically sent to an eye care specialist. After reviewing the picture, the specialist then reports his or her findings to the veteran patient's primary care provider. Figure 2 illustrates the distribution of services that transpired via the SFT modality, for those veterans who received telehealth services for each of the FY2009-FY2018.", "The increase in the number of telehealth encounters that have transpired via the SFT modality seems to indicate that VA providers are increasingly seeking the expertise of their peers. VA providers are presumably seeking additional expertise due to the lack of a given expertise in their respective geographic area and the VA's overall shortage of health care providers. "], "subsections": []}, {"section_title": "Clinical Video Telehealth (CVT)", "paragraphs": ["The clinical video telehealth (CVT) modality allows a VA provider who is not located in the same location as a veteran patient to view, diagnose, monitor, and treat medical conditions of the veteran patient in real-time. The CVT modality functions by allowing the VA provider and the veteran patient to see each other via an interactive live video technology. Telehealth episodes of care via the CVT modality transpire between different VA sites of care, such as from a VA medical center (VAMC) to a veteran patient's home or from a veteran patient's home to a VA provider's home office. From FY2009 to FY2018, the VA has provided 5.7 million telehealth encounters via the CVT modality to 2.1 million veteran patients.", "In FY2018, the VA provided 1,074,422 telehealth episodes of care to 393,370 veteran patients through the CVT modality. According to the VA, the telehealth service that veteran patients accessed the most via the CVT modality is telemental health , which refers to the delivery of a mental health service via telehealth. Figure 3 illustrates the percentage of veterans who received telehealth services and the number of telehealth encounters that transpired via the CVT modality, for each of the fiscal years FY2009-FY2018.", "The upward trends in both the percentage of veterans who received telehealth services and the number of telehealth encounters that transpired via the CVT program seem to illustrate that veteran patients are increasingly interested in receiving VA telehealth services via this modality. Veteran patients' interest in the CVT program might stem from it being well established and publicized. The program is the VA's oldest method of telehealth delivery. Additionally, veterans have been able to access telemental health care services via the CVT modality since the VA started providing telehealth services. This report discusses the history of VA telehealth in Appendix B ."], "subsections": []}]}, {"section_title": "VA Mobile Health (VA Mobile)", "paragraphs": ["VA Mobile allows veterans to access certain health services and ePHI via VA mobile apps on mobile devices (e.g. smartphones) and computers. According to the National Center for Veterans Analysis and Statistics (NCVAS), 97.9% of veterans who were enrolled in the VHA in 2016 owned a smartphone and 78.3% owned a computer (i.e., a laptop, desktop, or notebook computer). Veterans can access the VA mobile apps at any time, regardless of where the veteran is located. According to the VA, \"VA Mobile Health aims to improve the health of [v]eterans by providing technologies that expand clinical care beyond the traditional office visit [via mobile apps].\"", "VA Mobile has four overall functions: first, it allows veteran patients to connect and schedule medical appointments with VA providers; second, it provides veterans with access to health care information on topics such as mental health and weight management; third, it allows VA providers to provide case management of veteran patients' disabilities/illnesses from afar; and fourth, it allows VA providers to disseminate best practices among themselves, with the goal of improving the health outcomes of veteran patients. As a reminder, the VA does not consider VA Mobile to be one of the three modalities for the delivery of health diagnostics or health services. "], "subsections": [{"section_title": "VA App Store", "paragraphs": ["VA mobile apps, such as those illustrated in Figure 4 , are located in the virtual VA App Store. The VA App Store is a public-facing web-based store that offers 47 mobile apps available to veterans, their caregivers, and VA providers. About two-thirds of the mobile apps in the virtual VA App Store are for veterans and their caregivers. The remainder of the apps are for VA providers. Veterans who are not enrolled in the VHA may access some of the VA mobile apps.", "Not all of the mobile apps are specific to health care. VA mobile apps provide veterans with access to a range of VA benefit services and information, such as conferring with a VA pharmacist, reviewing current disability benefits, and obtaining information on depression. Veterans who are not enrolled in the VHA, for example, can also access social apps, such as the VA-Department of Defense (DOD) Veteran Link app, which is a secure social networking app for veterans and current servicemembers. "], "subsections": []}, {"section_title": "Required Login Credentials", "paragraphs": ["The public can view the different VA mobile apps in the VA App Store; however, only veterans, their caregivers, and VA providers with certain access accounts can download and use the apps. To download VA mobile apps, a veteran must have login credentials for at least one of the following three accounts: (1) a DOD Self-Service Logon (DS Logon) account, (2) a My Health e Vet account, or (3) an ID. me account. A general overview of each of the three accounts, which are all free to veterans, is provided below.", "DOD Self-Service L ogon (DS Logon) Account is a federal account that authenticates a veteran's affiliation with the VA and DOD. This secure self-service account allows the veteran to access multiple VA and DOD websites and apps. The veteran can request either a Level 1 (Basic) or a Level 2 (Premium) account, both of which are free.", "Level 1(Basic) Account allows a veteran to view general information located on a VA and DOD website. Level 2 (Premium) Account allows a veteran to view personal information on VA and DOD websites. The veteran must prove his or her identity to get a Premium Account by answering a set of questions. ", "MyHealth e Vet Premium Account is a federal account that authenticates a veterans' enrollment in VA care. It authorizes a veteran patient to complete health care-related tasks, such as viewing his or her electronic health record, reordering medications, and contacting his or her health care provider via a secure messaging technology. ", "ID. me Account is a private sector account that, in this context, authenticates a veterans' affiliation to the VA and DOD. This account \"provides secure identity proofing, authentication, and group affiliation verification for government and businesses across sectors.\" It is also free to veterans. "], "subsections": []}, {"section_title": "Required Operating Platforms", "paragraphs": ["The veteran's electronic device must operate using either a w eb-based platform , an iOS platform , or an Android platform for a VA mobile app to work on the device. A web-based platform refers to an operating system that has a web-browser such as Internet Explorer and Google Chrome. A VA web-based app such as MyHealth e Vet, which is the electronic health record (EHR) for veterans, is accessible over the internet. ", "An iOS platform refers to the operating system installed on Apple, Inc. (Apple) electronic devices such as the iPhone and iPad. A VA iOS-app is available to veterans who use Apple devices. A veteran who has an Apple device can download VA iOS apps from the VA App Store and from the Apple App Store. A veteran who does not have an Apple electronic device will not be able to access a VA iOS app on a non-Apple device. ", "An Android platform refers to the operating system installed on non-Apple electronic devices (e.g., companies such as Samsung and LG). A VA Android app is available to veterans with devices that do not have the iOS operating platform installed on them. A veteran who has an electronic device with an Android operating system can download VA Android apps from the VA App Store and the Google Play Store, which is a mobile app on an Android device. A veteran who does not have an Android device will not be able to access a VA Android app on a non-Android electronic device. "], "subsections": []}, {"section_title": "VA Video Connect (VVC)", "paragraphs": ["The VA Video Connect (VVC) is a mobile app that veteran patients can download from the virtual VA App Store. The VVC app functions by allowing a veteran patient to connect via live video with a VA provider regardless of where the veteran or provider is located, through the CVT modality. The veteran patient can use the VVC app on a mobile device. To access the VVC app, the veteran patient's mobile device must contain a web camera, speakers, and microphone. In addition, the device must be able to connect to and have access to the Internet. According to the VA, the VVC \"uses encryption to ensure privacy in each session.\" The VA launched the VVC app in August 2017 and has recorded 105,300 telehealth visits via the VVC app from October 2017 to September 2018. "], "subsections": []}, {"section_title": "The VA's Partnerships with Philips Healthcare and T-Mobile", "paragraphs": ["The VA has partnered with private sector vendors Philips Healthcare and T-Mobile to expand veterans' access to the VVC app. Philips Healthcare currently partners with the VA by providing veterans with a \"virtual connected care\" through the company's Virtual Medical Center. This new partnership with Philips Healthcare aims to place telehealth information and communication technology equipment in 10 posts at the facilities of two veteran service organizations (VSOs) recognized by the President, Congress, and the VA Secretary for the representation of veterans: Veterans of Foreign Wars and the American Legion. The placement of the equipment in the VSO posts would expand VA telehealth services to veterans who are likely to be members of and who frequently visit those two VSOs. However, the program would not exclude non-VSO members from accessing VA telehealth services at the VSO sites. A positive outcome from this pilot program could encourage veterans who are not members of VSOs to visit VSO sites to access VA telehealth services. ", "The VA's partnership with T-Mobile would allow veterans with this wireless service to access the VVC app via their mobile device without incurring additional charges or reducing plan data allotments. According to a VA press release, \"veterans will be able to connect to appointments on their mobile devices for no extra charge, regardless of their current data plan.\" The VA did not provide in its press release the amount of the \"extra charge\" that veteran patients would have incurred from accessing the VVC app on their mobile devices. It is likely that other veterans who do not have T-Mobile as their wireless service provider would incur the unknown extra charge for accessing the VVC app. The VA has not yet announced any plans to partner with all wireless service providers to ensure that veteran patients who access the VVC app on their mobile devices will not incur additional charges."], "subsections": []}]}]}, {"section_title": "VA Telehealth Services", "paragraphs": ["The telehealth services that the VA provides to veteran patients align with their respective VA in-patient care services. A VA health care service does not change when a VA provider delivers the service via telehealth. For example, a veteran patient who chooses to access telemental health services via the VVC app on a mobile device would receive the same type of mental health services he or she would have received in-person. ", "According to the VA Secretary, the VHA is the largest U.S. provider of telehealth services, having provided 2.29 million telehealth episodes of care to 782,000 veteran patients in FY2018. Of those 782,000 veteran patients, 9% of them were female and 45% of them live in rural areas. Veteran patients can access a range of telehealth services through the VHA. These telehealth services can be grouped into the following seven categories, in alphabetical order:", "1. consultative and evaluative telehealth services, 2. disease and illness-specific telehealth services, 3. gender-specific telehealth services, 4. preventative telehealth services, 5. rehabilitative telehealth services, 6. rural-specific telehealth services, and 7. wellness telehealth services. ", "According to the VA, the agency will provide general VA health care services to veteran patients and refer them to private health care providers for health care services that those providers provide \"most effectively and efficiently.\" The VA's decision to refer such services to the private sector might stem from the agency's shortage of VA providers.", "A veteran can access VA telehealth services from various VA sites of care , such as VA medical facilities, mobile telehealth clinics, and non-VA sites of care such as the homes, work places, and schools of veterans. A veteran, who seeks VA care, including VA telehealth services at non-VA medical facilities and nonfederal facilities from non-VA providers, must receive prior authorization from the VA before accessing such services. The VA generally authorizes a veteran to seek VA care from a non-VA provider when ", "[the existing] VA facilities or other government facilities are not capable of furnishing economical hospital care or medical services because of geographic inaccessibility or are not capable of furnishing care or services required. ", "The VA continues to develop new telehealth services to meet the needs of veterans. According to the VA FY2019 funding and FY2020 advanced appropriations budget request to Congress, for example, the Comprehensive Opioid Management in Patient Aligned Care Teams (COMPACT) team is \"testing a telehealth-based self-management training system to promote improved care for [v]eterans receiving chronic opioid therapy.\" "], "subsections": [{"section_title": "The VA's Partnership with Walmart", "paragraphs": ["On December 6, 2018, the VA announced a new partnership with Walmart that aims to reduce access barriers to VA care that underserved veterans experience. Through this partnership, which is part of the VA's Advancing Telehealth through Local Access Stations program, the VA is establishing a pilot program whereby underserved veterans in certain locations would access VA telehealth services in donated spaces at Walmart retail stores. Walmart would provide the VA with operational support. According to Walmart, the prospective locations will be based on \"the number of veterans and the health resources offered.\" ", "The VA has stated that its decision to partner with Walmart is based on the fact that more Americans live near a Walmart store than a VA medical center (VAMC). According to the VA,", "[90%] of Americans live within ten miles of a Walmart. Ninety percent of veterans [do not] live within ten miles of a [VAMC].", "The VA reported to Congress that there were an estimated 172 VAMCs in 2019. For that same calendar year, the VA also reported to Congress that there were other VA medical facilities within the VA health care system, including 23 health care centers, 300 vet centers, and 728 community-based outpatient clinics. The VA has not yet stated how many veterans live near other VA medical facilities in relation to Walmart stores. This information would be helpful to Congress as it considers measures relating to the use of existing VA spaces. This prospective pilot program has raised some concerns, however, because according to the Veterans Rural Health Advisory Committee (VRHAC), Walmart is encountering some of the same challenges that the VHA has met when expanding telehealth services to rural veterans, such as keeping pace with technology for virtual care and the expansion of bandwidth. However, such challenges could be location-specific and not representative of all Walmart retail store locations. "], "subsections": []}, {"section_title": "VA Teleconsultations", "paragraphs": ["Current law (Chapter 17 of Title 38 of the U.S. Code ) refers to teleconsultation as \"the use by a health care specialist of telecommunications to assist another health care provider in rendering a diagnosis or treatment.\" The law defines teleconsultation in relation to VA's delivery of mental health and traumatic brain injury assessments. The VA extends its use of teleconsultations in the delivery of VA care with the goal of improving veteran patients' health care outcomes, particularly those of rural veterans. ", "For example, the VA has adopted and modified the Project Extension for Community Healthcare Outcomes (Project ECHO) learning model, which the Expanding Capacity for Health Outcomes Act ( P.L. 114-270 ) required the HHS Secretary to examine and report on, to create a Specialty Care Access Network-Extension for Community Healthcare Outcomes (SCAN-ECHO) learning model. , Project ECHO is a global, technology-enabled collaborative learning model, whereby medical educators and specialty care health care providers disseminate best practices to primary care and rural health care providers, with the goal of improving the health outcomes of rural and underserved patients. The best practices are disseminated through different modalities such as teleECHO , which is the delivery of medical education such as patient case-based learning through a virtual network. TeleECHO is delivered through a hub-and - spoke model , which refers to a structure whereby a central point (the \"hub\") disseminates information to different connecting points (the \"spokes\"). ", "The VA launched SCAN-ECHO in 2011, with the goal of expanding VA care to rural veterans and veterans that live in medically underserved areas. According to the VA, SCAN-ECHO refers to ", "an approach to provide specialty care consultation, clinical training, and clinical support from specialty care teams to rural primary care providers (PCPs) using video teleconferencing equipment.", "VA teleconsultations generally transpire under SCAN-ECHO using the hub-and-spoke model. The \"hubs\" are the specialty care providers who are on specialty care teams, and the \"spokes\" are the PCPs who are on patient aligned care teams (PACTs). According to the VA, SCAN-ECHO transpires when", "[PCPs] present a patient's case using multi-site videoteleconferencing equipment. Providers then take information back to the patient for discussion and collaborative decision making. The specialty care team collaborates, culminating in a recommended treatment plan. In addition to case presentations, formal clinical education is provided.", "The Expanding Capacity for Health Outcomes Act (ECHO Act; P.L. 114-270 ) required the HHS Secretary to examine technology-enabled collaborative learning and capacity-building models and report the findings to Congress no later than two years after enactment. ", "In February 2019, the Office of the Assistant Secretary for Planning and Evaluation (ASPE), within HHS, submitted the required report to Congress. ASPE retrieved information about SCAN-ECHO from the VA and found that the VA has evaluated the use of SCAN-ECHO for medical conditions and health care services such as chronic liver disease, diabetes, and women's and transgender health care services. For example, ASPE found that the VA studied the difference in health outcomes of 62,750 veterans with chronic liver disease between 2011 and 2015. Of those 62,750 veteran patients, 513 of them had received virtual teleconsultations with VA providers who were participating in SCAN-ECHO. According to ASPE, \"those receiving the intervention were much less likely to die than those who had no SCAN-ECHO consultation over the same time period.\" SCAN-ECHO is an example of the VA's efforts to expand the capability of VA telehealth to \"underproductive providers to assist access-challenged providers.\""], "subsections": []}]}, {"section_title": "Issues for Congress", "paragraphs": ["The VA is leveraging the use of telehealth with the goal of expanding veterans' access to VA care. Based on its experience with telehealth to date, the VA has stated that increased access to telehealth could reduce the use of VA travel benefits by veterans and reduce hospital admissions. Telehealth is not a new form of health care delivery. It is a multibillion dollar industry in both the federal and private sectors, showing upward trends in telehealth access, utilization, innovation, and spending.", "Discussed below are three issues that Congress may choose to examine while considering additional topics related to veterans and telehealth services: (1) access barriers to in-person VA care continues to exist, (2) some veterans lack access to the internet, and (3) VA providers' guidelines for prescribing controlled substances via telehealth are different. "], "subsections": [{"section_title": "Access Barriers to In-Person VA Care Continue to Exist", "paragraphs": ["According to the VA, the agency cannot meet veterans' demand for VA in-patient care. Congress and the VA have considered measures and initiatives to expand veterans' access to VA care using telehealth. The expansion of VA telehealth does not address the access barriers that veteran patients' face when seeking in-person VA care. Instead, telehealth provides veterans with an alternate way to access health care services through the VHA. ", "The VA is predicting that the U.S. veteran population will decrease by 32%\u00e2\u0080\u0094from 20.0 million veterans in 2017 to 13.6 million veterans in 2037. This prediction does not equate to a lower number of veterans seeking, enrolling in, and accessing VA care in the future. For example, more than three-fourths of the 13.6 million veterans that the VA projects will be in the U.S. veteran population in 2037 might choose to enroll in and access care through the VA health care system. Congress may consider whether the VA should continue to expand veterans' access to VA in-person care in VA brick-and-mortar buildings and/or through VA telehealth services by assessing how such modes of delivery effect the cost and quality of care (in addition to timely access)."], "subsections": []}, {"section_title": "Some Veterans Lack Access to the Internet", "paragraphs": ["The overarching goal of the MISSION Act and VA final rule on telemedicine is to expand veteran patients' access to care using telehealth. The use of telehealth services requires that veteran patients have access to the internet to connect to VA telehealth providers. Veteran patients who do not have readily accessible internet connections would likely have difficulty reaching their VA providers. According to the National Center for Veterans Analysis and Statistics (NCVAS), an estimated 20.1% of veterans did not have internet access in 2016. In April 2018, for example, the GAO found that some veterans who live on the U.S. Pacific Islands such as Guam and American Samoa, could not access the internet because of damaged cables and equipment failures that occurred during inclement weather. The VA is investigating ways to expand veteran patients' access to VA telehealth services to address veterans' lack of access to the i nternet . Specifically, t he agency is evaluating the feasibility of non-VA facilities (e.g., libraries, schools, and post offices) serving as i nternet /online hotspots, and retaining VA kiosks where veteran patients can access telehealth services. ", "Congress and the President have responded to this divide by enacting measures such as the Repack Airwaves Yielding Better Access for Users of Modern Services Act of 2018 ( P.L. 115-141 ; RAY BAUM's Act of 2018). The RAY BAUM's Act of 2018 required, among other things, the Federal Communications Commission (FCC) to submit a report to Congress on promoting broadband internet access to veterans, particularly to rural veterans and veterans with low incomes. The FCC submitted the report to the Senate Committee on Commerce, Science, and Transportation and the House Committee on Energy and Commerce in May 2019. According to the FCC's report, the 2.2 million veteran households that do not have access to broadband internet experience barriers when adopting broadband such as the inability to pay for the service and the lack of broadband development in their geographic location. In future discussions regarding this issue, Congress may consider the costs associated with deploying broadband infrastructure in underserved geographic areas. According to the VA, some veteran patients are given tablets \"that operate over 4G LTE mobile broadband to support VA Video Connect,\" where infrastructure is lacking."], "subsections": []}, {"section_title": "Conflicting Guidelines for Prescribing Controlled Substances via Telehealth across State Lines", "paragraphs": ["Congress continues to address concerns regarding the prescribing of controlled substances such as opioids. The VA MISSION Act and the VA's final rule do not address the prescribing of controlled substances to veteran patients who are not receiving services from within VA medical facilities, or who are not in the same state as the prescribing physician, as permitted under the Ryan Haight Online Pharmacy Consumer Protection Act of 2008 (Ryan Haight Act; P.L. 110-425 ). Section 311(h)(1) of the Controlled Substance Act (CSA), which was added by Section 3 of the Ryan Haight Act, authorized the special registration for telemedicine with the goal of increasing patients' access to practitioners that can prescribe controlled substances via telemedicine in limited circumstances. Current law defines a practitioner as ", "a physician, dentist, veterinarian, scientific investigator, pharmacy, hospital, or other person licensed, registered, or otherwise permitted, by the United States or the jurisdiction in which he practices or does research, to distribute, dispense, conduct research with respect to, administer, or use in teaching or chemical analysis, a controlled substance in the course of professional practice or research.", "The registration would enable a practitioner to deliver, distribute, dispense, or prescribe via telemedicine a controlled substance to a patient who has not been medically examined in person by the prescribing practitioner. While the CSA authorized the special registration for telemedicine, practitioners have not been able to apply for this special registration. The Drug Enforcement Administration (DEA) has yet to finalize a rule on the registration's application process and procedures and the limited circumstances that warrant it. ", "The Ryan Haight Act expressly exempts VA providers and VA-contracted providers from needing to obtain a special registration in each state where the providers choose to practice, if they meet two conditions. First, the providers must prescribe the controlled substance within the scope of their employment at the VA. Second, the providers must either (1) hold at least one state registration to prescribe a controlled substance or (2) prescribe in a VA health care facility while using the registration of that facility. ", "The special registration, though not implemented yet by the DEA, the MISSION Act, or the VA's final rule on telehealth, might confuse VA providers about whether they must hold a license in each state where they intend to prescribe controlled substances to veteran patients. The special registration would allow a VA provider to prescribe a controlled substance in a state where the provider is not licensed to practice. The MISSION Act and the VA's final rule on telehealth, in contrast to the special registration, do not preempt state laws regarding the prescribing of controlled substances. VA providers must be licensed in each state where the provider intends to prescribe a controlled substance. Congress could consider encouraging the VA to develop guidelines on how its providers would prescribe controlled substances to veteran patients who are not receiving telehealth services from within VA health care facilities.", "Appendix A. Abbreviations Used in This Report ", "Appendix B. History of VA Telehealth", "For decades, the VA has provided telehealth services to veteran patients to improve health care access and to address delivery challenges, such as shortages of in-patient beds and health care providers skilled in the delivery of veteran-centric care. In the 1950s and 1960s, for example, the VA had difficulties in recruiting psychiatrists and neurologists. In FY1961, there were 18,722 eligible veterans on a waiting list to receive VA inpatient care for psychiatric and neurological health care conditions. That same year, the VA started testing the use of telehealth, with the goal of addressing the aforementioned challenges that veteran patients were experiencing when trying to access VA in-person care for psychiatry and neurology services. ", "According to the VA's Annual Report for FY1961, the VA tested the use of telehealth by using the closed-circuit television ( CCTV) technology as a telehealth modality. The CCTV technology refers to a system that \"links a camera to a video monitor using a direct transmission system.\" VA physicians and therapists at a VA medical facility in Oklahoma City, OK, had used the CCTV technology to disseminate best practices and trainings on therapy and psychiatry with the goal of improving veteran patients' health care outcomes. According to the VA, its use of telehealth using the CCTV technology was a success because ", "[t]he results indicate that this form of communication can be a valuable tool in the treatment of psychiatric patients and in the training of personnel in psychiatric service. In addition, it shows the potential in a number of other medical applications, such as, for example, an education technique in surgical training. ", "Since then, the VA has aimed to address veterans' access barriers to VA in-person care using updated telehealth technologies and equipment, which are discussed under the \" VA Telehealth Components \" heading in this report. ", "Legislative History of VA Telehealth ", "The Congress has passed several laws that address VA telehealth. Provided below is a high-level legislative history of VA telehealth, to help inform any future congressional discussion on this issue. For each Congress, beginning with the 109 th (January 3, 2005 to January 3, 2007) there is a brief narrative summarizing at least one legislative provision that aims to address VA telehealth. This list may not be comprehensive. ", "Veterans Benefits, Health Care, and Information Technology Act of 2006 (109 th Congress)", "The Veterans Benefits, Health Care, and Information Technology Act of 2006 ( P.L. 109-461 ), among other things, required the VA Secretary to increase the number of VA medical facilities that are capable of providing readjustment counseling services via telehealth.", "Veterans' Mental Health and Other Care Improvements Act of 2008 (110 th Congress )", "The Veterans' Mental Health and Other Care Improvements Act of 2008 ( P.L. 110-387 ), among other things, required the VA Secretary to develop a pilot program to assess the feasibility and advisability of providing certain veterans with peer outreach, peer support, readjustment counseling and other mental health services, using telehealth to the extent practicable.", "Caregivers and Veterans Omnibus Health Services Act of 2010 (111 th Congress)", "The Caregivers and Veterans Omnibus Health Services Act of 2010 ( P.L. 111-163 ), among other things, allows the VA Secretary to contract with community mental health centers and other qualified health entities with the goal of expanding veterans' access to VA telehealth services.", "Honoring America's Veterans and Caring for Camp Lejeune Families Act of 2012 (112 th \u00c2\u00a0 Congress)", "The Honoring America's Veterans and Caring for Camp Lejeune Families Act of 2012 ( P.L. 112-154 ), among other things, allows the VA Secretary to waive veteran patients' copay requirements for telehealth.", "The Veterans Access, Choice, and Accountability Act of 2014 (113 th Congress )", "The Veterans Access, Choice, and Accountability Act of 2014 ( P.L. 113-146 ), among other things, requires the VA Secretary to improve veterans' access to VA telehealth via mobile vet centers and mobile medical facilities.", "The Faster Care for Veterans Act of 2016 (114 th Congress)", "The Faster Care for Veterans Act of 2016 ( P.L. 114-286 ), among other things, requires the VA Secretary to ensure that veteran patients can schedule their own medical appointments for VA telehealth services. ", "John S. McCain III, Daniel K. Akaka, and Samuel R. Johnson VA Maintaining Internal Systems and Strengthening Integrated Outside Networks Act of 2018 (115 th Congress) ", "The John S. McCain III, Daniel K. Akaka, and Samuel R. Johnson VA Maintaining Internal Systems and Strengthening Integrated Outside Networks Act of 2018 ( P.L. 115-182 ; VA MISSION Act of 2018), among other things, removes all geographic barriers to VA telehealth and therefore allows veterans to access VA telehealth services in their communities from any location in the United States, U.S. territories, District of Columbia, and Commonwealth of Puerto Rico.", "Appendix C. VA Provider Authority to Provide Telehealth Services Anywhere", "Veteran patients who cannot access telehealth because of provider shortage gaps may benefit from having access to out-of-state telehealth providers in non-VA health care facilities. Generally, states determine whether a health care provider can provide a health care service across state lines because states handle provider licensure. Each state has the authority to establish its own licensure requirements, and each state licensing board has its own eligibility requirements for health care providers. Due to state-specific licensing laws, a health care provider licensed and certified in one state may not be able to provide health care services to patients located in another state where the provider is not licensed. State licensing laws can cause some health care providers to experience geographical and licensing-related barriers to providing health care services across state lines to rural and underserved populations.", "On August 3, 2017, the White House and the VA announced the Anywhere to Anywhere initiative, which aims to remove the geographic barriers that veterans might experience when accessing VA care. Under this initiative, a veteran patient can access VA telehealth services anywhere from a VA provider located outside of a VA health care facility. The initiative is a joint effort between the VHA, the White House Office of American Innovation, and the Department of Justice. The VA's attempt to expand veterans' access to VA care via telehealth under this initiative was threatened by its providers' experiences of geographic and licensing barriers to delivering the services across state lines. On October 30, 2017, a House Committee on Veterans Affairs report found that", "the continued expansion of telemedicine across the VA health care system is constrained by restrictions on the ability of VA providers to practice telemedicine across state lines without jeopardizing their state licensure and facing potential penalties for the unauthorized practice of medicine.", "On May 11, 2018, the VA published a final rule in the Federal Register to exempt its providers who deliver care via telehealth from certain state licensing laws and regulations. Two major elements of the final rule changed the VHA's existing practice delivery: (1) VA providers may deliver telehealth services outside of VA health care facilities and (2) state licensing boards may no longer deny or revoke a VA provider's license if he or she provides a telehealth service in a state where the provider is not licensed to practice in non-VA health care facilities. According to the VA, the prohibition addresses the concerns of some VA providers that chose not to provide telehealth services across state lines in non-VA health care facilities because their state licensing boards might take action against their licenses for doing so. In March 2018, for example, the VA Pacific Island Health Care System reported to the GAO that it had concerns about delivering a telehealth service to a veteran patient in his or her home because a state could require VA providers to be licensed in the state where the patient resides. The final rule does not preempt state laws regarding the prescribing of controlled substances, nor does it extend beyond the telehealth provider's employment at the VA or extend to VA-contracted providers. A VA-contracted provider must continue to practice under the laws and regulations of his or her state of licensure.", "The rule became effective on June 11, 2018, five days after the enactment of the VA MISSION Act. The VA MISSION Act, among other things, removed all geographic barriers to VA telehealth and therefore, allowed veterans to access VA telehealth services in their communities from any location in the United States, U.S. territories, District of Columbia, and Commonwealth of Puerto Rico. According to Chapter 17 of Title 38 of the U.S. Code ,", "(d) Relation to State Law. (1) The provisions of this section shall supersede any provisions of the law of any State to the extent that such provision of State law are inconsistent with this section. (2) No State shall deny or revoke the license, registration, or certification of a covered health care professional who otherwise meets the qualifications of the State for holding the license, registration, or certification on the basis that the covered health care professional has engaged or intends to engage in activity covered by subsection (a).", "The VA MISSION Act codified the core principles of the above-mentioned final rule with the goal of protecting VA providers against possible liability issues stemming from state licensure laws. This authority is given only to VA providers that meet the statutory requirement of a \"covered health care professional.\" According to the VA, nearly 10,000 VA providers gained the authority to provide out-of-state telehealth services to veteran patients in non-VA health care facilities in states where the provider is not licensed to practice.", "Appendix D. Total Number of Veteran Patients who Had Received VA Telehealth Services and Total Number of Telehealth Encounters that Transpired, FY2009-FY2018"], "subsections": []}]}]}}
{"id": "R46297", "title": "Federal Prisoners and COVID-19: Background and Authorities to Grant Release", "released_date": "2020-04-23T00:00:00", "summary": ["There is concern that coronavirus disease 2019 (COVID-19) could quickly spread among federal prisoners and prison staff because of the nature of the prison environment. Prisons are places where hundreds of prisoners and staff are living and working in close proximity to each other and where they are forced to have regular contact. Prisons are generally not conducive to social distancing. Also, prison infirmaries typically do not have the resources available to most hospitals, such as isolation beds, that would help prevent the spread of the disease. There are also concerns that if prison staff were hard hit by COVID-19, a significant number of staff would require quarantine; they would be unavailable to perform their duties, including providing care to sick prisoners; and the disease could spread.", "On March 13, 2020, the Bureau of Prisons (BOP) released a COVID-19 action plan. The action plan largely focuses on restricting access to federal prisons and limiting the movement of prisoners between prisons.", "On March 18, 2020, the American Civil Liberties Union (ACLU) sent a letter to the Department of Justice (DOJ) and its BOP seeking the release of prisoners in the custody of BOP and the U.S. Marshals Service (USMS) who might be at risk for serious illness because of COVID-19, and a reduction in the intake of new prisoners to avoid overcrowding. In addition, multiple Members of Congress have also urged DOJ and BOP to take steps \"to reduce the incarcerated population and guard against potential exposure to coronavirus,\" and legislation has been introduced that would require the release of some federal prisoners during a national emergency relating to a communicable disease.", "BOP updated its action plan on March 19, 2020, to clarify that while prisoner movement is limited under the plan, BOP will still move prisoners as needed to properly manage the prison population and to outline new conditions that must be met if a prisoner is transferred.", "On March 31, 2020, BOP announced that effective April 1, 2020, all prisoners will be placed on a 14-day lockdown in their assigned cells as a measure to prevent the spread of COVID-19. Prisoners will be allowed to leave their cells during this period for certain reasons, such as attending programming or to shower and use the phone.", "On April 14, 2020, BOP announced that its action plan, which was initially set to expire on April 12, 2020, would be extended until May 18, 2020.", "Regarding the release of federal criminal defendants in detention pending trial, 18 U.S.C. Section 3142 allows for federal courts to reopen pretrial detention hearings based on new information or permit temporary release of pretrial detainees for \"compelling\" reasons. With respect to the release of federal prisoners who are currently serving their court-imposed sentences, 18 U.S.C. Section 3582(c)(1)(A) permits a federal court to reduce a prisoner's sentence and impose a term of probation or supervised release if the court finds that \"extraordinary and compelling reasons warrant such a reduction,\" or the prisoner is at least 70 years of age, the prisoner has served at least 30 years of his or her sentence, and BOP has determined that the prisoner is not a danger to the safety of any other person or the community. Under 34 U.S.C. Section 60541(g), BOP is authorized to conduct a program whereby elderly and terminally ill prisoners who meet certain statutory requirements can be placed on home confinement. Under 18 U.S.C. Section 3624(c), BOP is authorized to place prisoners in a Residential Reentry Center (i.e., a halfway house) and/or on home confinement at the end of their sentences. The Coronavirus Aid, Relief, and Economic Security Act (the CARES Act; P.L. 116-136 ) permits the BOP Director to extend the maximum amount of time for which a prisoner may be placed on home confinement under Section 3624(c)(2) under certain circumstances. Under Article II, Section 2 of the U.S. Constitution, the President has broad authority to grant clemency for federal offenses, which can include commuting a prisoner's sentence to time served.", "The Attorney General has issued three memoranda outlining how DOJ will utilize the legal authorities available to it to respond to the COVID-19 pandemic. Two of the memoranda are to the BOP Director, and they direct BOP to increase the number of prisoners placed on home confinement and outline factors for BOP to consider when making decisions about which prisoners should be released from federal prison. The other memorandum is for all components of DOJ, including all United States Attorneys, and it provides a directive on how prosecutors should make decisions about the use of pretrial detention for federal defendants in light of possible exposure to COVID-19."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["On March 18, 2020, the American Civil Liberties Union (ACLU) sent a letter to Attorney General William Barr and Bureau of Prisons (BOP) Director Michael Carvajal asking them to release federal prisoners who might be at risk of serious illness due to coronavirus disease 2019 (COVID-19) infection and to reduce the intake of new prisoners to reduce overcrowding. The ACLU called on BOP to utilize authorities granted to it, such as compassionate release and home confinement for elderly offenders, to reduce the number of at-risk prisoners in the federal prison system. The ACLU also asked the Department of Justice (DOJ) to direct the U.S. Marshals Service (USMS) to release from custody any individuals who are at risk of serious illness related to COVID-19, such as those who are elderly and/or have chronic health conditions. Multiple Members of Congress have additionally urged DOJ and its BOP to take steps \"to reduce the incarcerated population and guard against potential exposure to coronavirus,\" and legislation has been introduced that would require the release of some prisoners during a national emergency relating to a communicable disease.", "BOP data indicate that COVID-19 has become widespread in the federal prison system. As of April 22, 2020, BOP reported that 566 federal prisoners and 342 BOP staff members in 47 prisons and 16 Residential Reentry Centers had tested positive for COVID-19 and 24 prisoners have died from the disease (no BOP staff have died). Prior to these positive tests, BOP released a COVID-19 action plan. The action plan, discussed below, largely focuses on restricting access to federal prisons and limiting the movement of prisoners. In addition, the Attorney General has issued three memoranda outlining how DOJ will use the legal authorities available to address the COVID-19 pandemic. Two of the memoranda direct BOP to use available authorities to place more prisoners on home confinement and the other memorandum provides directives for prosecutors when deciding whether to seek pretrial detention for federal defendants.", "This report provides information on DOJ's response to the threat of COVID-19 as it pertains to federal prisons and the authorities that may permit the release of some federal prisoners because of the pandemic. The report starts with a brief overview of why the prison environment is conducive to the spread of COVID-19 and the federal prisoners who might be at risk of serious complications if they contract the virus. Next, the report provides an overview of BOP's COVID-19 action plan. The report then turns to a discussion of current authorities that could allow for some federal prisoners to be released and directives from the Attorney General on how DOJ is to use those authorities to respond to the COVID-19 pandemic. The report concludes with a review of legislation introduced in the House and the Senate that would alter the operation of some of those authorities. "], "subsections": []}, {"section_title": "Background on People Confined in the Federal Criminal Justice System", "paragraphs": ["USMS is responsible for initially confining people who have been arrested and charged for a federal offense and are not granted pre-trial release. USMS does not operate any of its own jails. Rather, prisoners in USMS custody are housed in a combination of BOP-operated facilities, as well as state, local, and private facilities. While most facilities operated by BOP are prisons that hold people who have been convicted of federal offenses and sentenced to a period of incarceration, BOP operates a series of facilities that largely function in a manner similar to local jails (i.e., they hold people who have not been convicted and are awaiting the resolution of their case or people who have been convicted but are awaiting transfer to a prison where they will serve their sentence). These facilities\u00e2\u0080\u0094referred to as Metropolitan Detention Centers, Metropolitan Correctional Centers, or Federal Detention Centers\u00e2\u0080\u0094are generally located in metropolitan areas and can hold prisoners of any security designation (i.e., high, medium, low, or minimum). The majority of prisoners in USMS custody are housed in state and local facilities; data from USMS indicate that in FY2019, approximately 16% of USMS prisoners were housed in BOP-operated facilities. ", "USMS says it \"relies on state and local jails as well as Bureau of Prisons detention facilities to provide medical care inside the facilities.\" Therefore, defendants in the custody of USMS would be subject to any plan that the facility they are housed in implements to prevent the spread of COVID-19. For example, a USMS prisoner held in BOP-operated facility would be subject to BOP's COVID-19 action plan, outlined below, while a prisoner held in a local jail would be subject to any steps that facility takes to prevent the spread of COVID-19 in its facility.", "If a defendant is convicted of or pleads guilty to a federal offense, USMS is to turn the prisoner over to the custody of BOP, which is responsible for confining the prisoner until completion of his or her sentence. BOP is to assign prisoners to one of its facilities based on a series of factors, including the level of security and supervision the prisoner requires, the level of security and staff supervision the facility is able to provide, and the prisoner's program needs (i.e., sex offender, substance abuse treatment, educational/vocational training, individual counseling, group counseling, or medical/mental health treatment)."], "subsections": []}, {"section_title": "COVID-19 and the Prison Environment", "paragraphs": ["According to the Vera Institute of Justice, \"it is not a matter of if, but when, coronavirus shows up in courts, jails, detention centers, prisons, and other places where the work of the criminal and immigration systems occur.\" While prisons may appear to be closed environments, because prisoners cannot leave and return to the facility on their own volition, there are opportunities for the disease to be introduced into any prison. COVID-19 could be introduced by the prison's staff, who could be exposed when they are not at the prison and subsequently introduce it to the facility when they come to work. COVID-19 could also be transmitted to a prisoner though face-to-face visits with family, friends, or attorneys. Also, while prisoners cannot freely leave the facility, they do travel outside it for things such as court appearances or medical appointments. ", "The introduction of COVID-19 into a prison raises the concern that the nature of the prison environment can facilitate its spread. Prisons typically hold hundreds of prisoners who live in close proximity to one another. In some facilities, prisoners might live in dormitory-style housing where many share the same space. Even if prisoners are housed in individual cells, they typically share the same ventilation system with prisoners in other cells. There are also concerns about hygiene. Prisoners might not have regular access to soap and water to wash their hands, and hand sanitizer can be considered contraband because it contains alcohol. These concerns are especially acute for prison systems that are operating over capacity. ", "There are also concerns about whether prisoners will have access to adequate medical care if a prison's staff is hit hard by the disease. If COVID-19 were to spread among prison staff resulting in wide spread quarantines, there could be fewer medical staff to deliver care or fewer correctional staff available to transport critically ill prisoners to outside medical facilities. Also, prison infirmaries tend to have fewer medical resources, such as isolation beds, compared to hospitals. However, one expert at the National Commission on Correctional Health Care believes that the prisons are prepared to handle potential COVID-19 infections because prisons have experience with preventing the spread of communicable diseases. ", "As of April 16, 2020, BOP has approximately 172,300 prisoners under its jurisdiction, who are held in a combination of BOP-operated facilities (122 in total), privately operated prisons, Residential Reentry Centers (RRCs; i.e., halfway houses), and state prisons. While the federal prison population decreased by approximately 42,000 prisoners (19%) from FY2013 to FY2019, the federal prison system operated at 12% over its rated capacity in FY2019. According to USMS, in FY2019 they received approximately 248,900 prisoners and their average daily detention population was approximately 61,500 prisoners.", "While BOP does not publish data on the number of prisoners that have health conditions that might make them more susceptible to serious complications if they were to contract COVID-19, as of April 18, 2020, approximately 10,200 prisoners (6% of all prisoners) under BOP's jurisdiction were age 61 or older. BOP also notes, \"the average age of offenders in BOP-managed facilities is 41 years and average length of sentence is 128 months. The average age of offenders in BOP facilities has increased by 8 percent over the past decade. Approximately 45 percent of offenders have multiple chronic conditions that, despite management with medications and other therapeutic interventions, will progress and may result in serious complications.\" USMS does not publish data on the age or health issues of prisoners in their custody."], "subsections": []}, {"section_title": "BOP's COVID-19 Action Plan", "paragraphs": ["BOP's COVID-19 action plan was announced on March 13, 2020. BOP has modified its action plan as the situation in the federal prison system has dictated. On March 19, 2020, BOP clarified that while there are restrictions on the movement of prisoners between facilities, BOP will transfer prisoners if necessary to properly manage the prison population, subject to certain conditions. On March 31, 2020, BOP announced that effective April 1, 2020, all prisoners would be placed on lockdown, meaning that they may not leave their assigned cell unless it is to attend programs or services offered as a part of normal operating procedures, such as educational programs or mental health treatment. On April 14, 2020, BOP announced that its action plan, which was initially set to expire on April 12, 2020, would be extended until May 18, 2020.", "BOP's action plan includes the following measures:", "Sus pending social visits . BOP has suspended social visits for prisoners. To allow prisoners to maintain social ties while social visits are suspended, BOP is allowing prisoners to have 500 minutes per month (compared to the usual 300 minutes) of telephone time. Suspe nding attorney . Like social visits, BOP is suspending visits from attorneys, though BOP is to allow visits from attorneys on a case-by-case basis. Prisoners are to still be allowed to have confidential phone calls with their attorneys, which do not count against the 500 minutes per month limit. Limiting movement of prisoners . BOP is suspending transferring prisoners between facilities, with the exception of transfers for forensic studies, writs, Interstate Agreements on Detainers, medical or mental health treatment, and transfers to pre-release custody. BOP will continue to accept new prisoners, though BOP is working with USMS to limit the number of prisoners transferred from jail facilities to BOP's custody. Prisoners who are moved from one facility to another must have been in BOP's custody for at least 14 days. Prisoners are also to be screened for COVID-19 symptoms (e.g., fever, cough, shortness of breath) before being transferred, and those who present symptoms or have a temperature greater than 100.4 degrees are not to be transferred and instead are to be placed in isolation. Limiting official travel . BOP is suspending official staff travel, with the exception of relocation. Suspending tours . BOP is suspending prison tours, though it can grant exceptions on a case-by-case basis. Reducing staff training . BOP is suspending all staff training, with the exception of basic staff training for new employees at the Federal Law Enforcement Training Center. Limiting contractor access to prisons . BOP is only allowing access for contractors who are providing essential services or those who provide maintenance on essential systems. Essential services include medical or mental health care, religious services, and critical infrastructure repairs. Limiting volunteer access to prisons . BOP is suspending visits to prisons from volunteers, though it can grant some exceptions on a case-by-case basis. Alternative means of communication (e.g., telephone calls) will be provided to prisoners who want to speak privately with a religious volunteer. It is not clear if telephone calls with volunteers count against a prisoner's 500 minutes per month limit. Screening employees . BOP is instituting advanced health screenings of employees at prisons in areas with \"sustained community transmission\" as determined by the Centers for Disease Control and Prevention (CDC). Advanced health screening involves self-reporting of possible exposure to COVID-19 and temperature checks. Volunteers, contractors, attorneys, and tour participants who are granted access to a prison are subject to the same screening procedures. Screening prisoners . BOP maintains an infectious disease management program as a matter of course, but in response to the COVID-19 pandemic BOP has instituted practices specific to mitigating the spread of the disease in its facilities. All new arrivals to the prison are to be screened for COVID-19 exposure risk factors and symptoms, asymptomatic prisoners with noted exposure risk factors are quarantined, and symptomatic prisoners with noted exposure risk factors are to be isolated and tested for COVID-19. Modifications to operations . BOP is making modifications to its operations, if the facility's population and physical layout make modifications feasible, to allow for social distancing and to limit group gatherings. For example, prisons might stagger meal and recreation times.", "USMS has not released a COVID-19 prevention plan, but as discussed above, USMS does not operate its own jail system and prisoners are subject to any plans developed and implemented by the facility in which they are housed. However, if a prisoner develops complications from COVID-19 that could not be adequately treated in the facility in which he or she is housed, USMS would assume the cost of transporting the prisoner to a local medical facility and covering the cost of the medical care provided. "], "subsections": []}, {"section_title": "Existing Authorities to Grant Release to Prisoners", "paragraphs": ["DOJ lacks the authority to grant early release to prisoners for the specific purpose of mitigating the transmission of a communicable disease. However, there are authorities that may provide avenues for some federal prisoners to be released in response to the COVID-19 pandemic. These authorities include statutory provisions allowing (1) federal courts to reopen pretrial detention hearings or permit temporary release of prisoners under certain circumstances, (2) for federal prisoners to be released before completing their sentences, and (3) for federal prisoners to be placed in the community to serve the final portion of their sentences. Additionally, the President retains constitutional authority to grant clemency for federal offenses, which can include commuting a prisoner's sentence to time served."], "subsections": [{"section_title": "Pretrial Detention and Release", "paragraphs": ["A person arrested for a federal offense must be brought before a judge \"without unnecessary delay,\" and the judge \"shall order that such person be released or detained, pending judicial proceedings.\" 18 U.S.C. Section 3142 governs the circumstances under which a person charged with a federal offense may be ordered released or incarcerated pending trial. The statute reflects a preference for release on personal recognizance or unsecured appearance bond, subject to limited conditions, \"unless the judicial officer determines that such release will not reasonably assure the appearance of the person as required or will endanger the safety of any other person or the community.\" However, if after a hearing the judge finds by clear and convincing evidence that no condition or combination of conditions will reasonably assure the defendant's appearance and the safety of others, the judge must order the detention of the person before trial. Though the statute purports to establish an order of preference favoring release for federal criminal defendants, it appears that the majority of defendants accused of federal crimes and presented to a judge are, in fact, incarcerated. ", "Two provisions of Section 3142 provide means to seek court-ordered release from pretrial detention after a detention determination has been made. First, under Section 3142(f)(2) a detention hearing may be \"reopened\" at any time prior to trial if the judge \"finds that information exists that was not known to the movant at the time of the hearing and that has a material bearing on the issue\" of whether any conditions of release would reasonably assure the defendant's appearance and the safety of others. Second, under Section 3142(i) a judge who has entered a detention order may issue a subsequent order permitting the \"temporary release\" of the accused where \"necessary for preparation of the person's defense or for another compelling reason.\" Thus, release under either provision is necessarily dependent on judge-made determinations that may be highly case- and fact-specific. ", "Multiple federal courts have addressed requests for release under these provisions of Section 3142 in light of COVID-19 concerns, considering factors including \"(1) the original grounds for the defendant's pretrial detention, (2) the specificity of the defendant's stated COVID-19 concerns, (3) the extent to which [a] proposed release plan is tailored to mitigate or exacerbate other COVID-19 risks to the defendant, and (4) the likelihood that the defendant's proposed release would increase COVID-19 risks to others.\" The courts' responses to the requests have been mixed. In one case, the U.S. District Court for the Southern District of New York ruled that both provisions of Section 3142 supported a defendant's release subject to conditions of home incarceration and electronic location monitoring. At the outset, the court viewed the \"unprecedented and extraordinarily dangerous nature of the COVID-19 pandemic,\" in conjunction with new information that had come to light about the defendant's dangerousness, as sufficiently changed circumstances bearing on risk to the community to necessitate reconsideration of the defendant's detention. And in light of those changed circumstances, the court determined that the weight of the evidence now clearly and convincingly tipped in favor of concluding that the defendant did not pose a danger to the community and should be conditionally released. The court also ruled that the impact of the COVID-19 outbreak on the defendant's ability to prepare his defense constituted a \"compelling reason\" justifying temporary release under Section 3142(i), noting that BOP's suspension of visits except on a case-by-case basis limited the defendant's access to his attorney.", "By contrast, other federal courts have rejected arguments that the COVID-19 pandemic justifies release under Section 3142. In one case, where the defendant argued that his \"advanced age\" and medical conditions (which included a history of stroke and heart attack) warranted temporary release under Section 3142(i) in response to the ongoing outbreak, the court recognized that that provision has been used only \"sparingly\" and noted that (1) the defendant's medical conditions appeared to be \"well managed,\" (2) there were no reported incidents of COVID-19 within the defendant's detention center, and (3) BOP was taking \"system-wide precautions to mitigate the possibility of infection within its facilities.\" Accordingly, the court concluded that the possibility of an outbreak in the facility was not a \"compelling\" reason under Section 3142(i). Likewise, a district court in Maryland, while acknowledging that the health risk from COVID-19 can constitute new information with a material bearing on release under Section 3142(f)(2) and may even implicate constitutional concerns under the Due Process Clauses if conditions of confinement expose a defendant to serious illness, ruled that a defendant charged with a serious crime and who has an extensive criminal history should be detained despite health conditions like high blood pressure and diabetes. The court in that case viewed defendant's health conditions as insufficient on their own to rebut the government's proffer that precautionary measures were being implemented at the defendant's detention center to protect detainees from exposure to COVID-19. ", "In short, although a significant number of federal defendants have sought release under Section 3142 in light of the COVID-19 outbreak, the highly individualized and fact-specific nature of the inquiry makes Section 3142 a somewhat limited avenue for the release of federal prisoners in response to COVID-19."], "subsections": []}, {"section_title": "Compassionate Release", "paragraphs": ["Once a person has been convicted of a federal offense and sentenced to a term of imprisonment, a federal court can reduce the sentence under 18 U.S.C. Section 3582(c)(1)(A) and impose a term of probation or supervised release, with or without conditions, equal to the amount of time remaining on the prisoner's sentence if the court finds that \"extraordinary and compelling reasons warrant such a reduction,\" or, for certain offenders, if the prisoner is at least 70 years of age, the prisoner has served at least 30 years of his or her sentence, and a determination has been made by BOP that the prisoner is not a danger to the safety of any other person or the community. A petition for compassionate release can be filed by BOP itself. In the alternative, a prisoner can file such a petition if he or she has fully exhausted all administrative rights to appeal BOP's refusal to bring a motion on the prisoner's behalf or upon a lapse of 30 days from the receipt of such a request by the warden of the prisoner's facility, whichever is earlier. ", "Sentence reductions under Section 3582(c)(1)(A) must be consistent with any applicable policy statements issued by the U.S. Sentencing Commission. Under the current sentencing guidelines, \"extraordinary and compelling reasons\" for a sentence reduction include the following:", "The prisoner is suffering from a terminal illness (i.e., a serious and advanced illness with an end of life trajectory). A specific prognosis of life expectancy (i.e., a probability of death within a specific time period) is not required. The prisoner is suffering from a serious physical or medical condition, suffering from a serious functional or cognitive impairment, or experiencing deteriorating physical or mental health because of the aging process that substantially diminishes the ability of the prisoner to care for himself or herself while incarcerated and the prisoner is not expected to recover from the condition. The prisoner is at least 65 years old, is experiencing a serious deterioration in physical or mental health because of the aging process, and has served at least 10 years or 75% of his or her term of imprisonment, whichever is less. The caregiver of the prisoner's minor child or minor children dies or is incapacitated. The prisoner's spouse or registered partner is incapacitated, and the prisoner is the only available caregiver. BOP determines that there is an extraordinary and compelling reason other than, or in combination with, the reasons described above.", "There are limits on whether a prisoner can be released from BOP's custody using compassionate release. First, BOP cannot unilaterally release elderly or terminally ill offenders under this authority; a petition for compassionate release has to be approved by a federal court, based on consideration of multiple case-specific factors. Also, only certain prisoners 70 years of age or older can be released without a finding that there is a compelling and extraordinary circumstance for their release. While the compassionate release statute allows for prisoners who are under the age of 70 to be released from prison before completing their sentence, in cases where the prisoner would potentially be released for reasons related to the prisoner's health, the prisoner must be seriously ill. ", "A prisoner's ability to seek release from a federal court is also limited by the requirement contained in Section 3582 that the prisoner exhaust all administrative rights of review or wait 30 days. Courts have split on whether that requirement may be waived in the context of the COVID-19 pandemic. The U.S. Court of Appeals for the Third Circuit has viewed the exhaustion requirement as unwaivable, characterizing a prisoner's failure to comply with the requirement as \"a glaring roadblock foreclosing compassionate release\" and observing that \"strict compliance\" with the statutory obligation is of \"critical ... importance\" even during the ongoing pandemic. However, other lower federal courts have concluded that they have the discretion to waive the exhaustion requirement, indicating (among other things) that Congress could not \"have intended the 30-day waiting period of 3582(c)(1)(A) to rigidly apply in the highly unusual\" circumstances of the COVID-19 pandemic.", "Assuming the exhaustion requirement is not an impediment to judicial relief, a court still might not consider people with underlying medical conditions such as hypertension, heart disease, lung disease, or diabetes, which might make them more likely to suffer from serious complications if they were to contract COVID-19 to meet any of the \"extraordinary and compelling reasons\" specified in the U.S. Sentencing Guidelines. Multiple federal courts have rejected requests for release under Section 3582 in light of COVID-19 transmission risk. For instance, a prisoner in one case argued that he should be released to home confinement in part because the conditions of his confinement in a federal prison facility created \"the ideal environment for the transmission\" of COVID-19 and he was \"at a heightened risk\" in light of health conditions such as high blood pressure, high cholesterol, asthma, and allergies. The government opposed the prisoner's request, pointing to BOP's \"extensive action plan\" to address the pandemic, and the court sided with the government. Specifically, the court determined that the prisoner's motion did not meet the requirements for modifying a sentence for extraordinary and compelling reasons because, among other things, the prisoner had \"not shown that the plan proposed by the Bureau of Prisons is inadequate to manage the pandemic within [the prisoner's] correctional facility, or that the facility is specifically unable to adequately treat\" him. As such, though the court noted that \"public health recommendations are rapidly changing,\" it concluded that at least as of the ruling date, it could not assume that BOP would \"be unable to manage the outbreak or adequately treat [the prisoner] should it emerge at his correctional facility while he is still incarcerated.\" Nevertheless, some other courts have authorized compassionate release because of the COVID-19 pandemic. One federal court, for example, concluded that a prisoner with a compromised immune system had shown an extraordinary and compelling reason justifying release to home incarceration under Section 3582 in light of \"the COVID-19 public health crisis,\" though the government in that case did not oppose the request.", "Aside from the question of whether COVID-19 transmission risk would be considered an \"extraordinary and compelling reason[]\" to grant release, which could vary depending on the circumstances before the court considering the request, if a prisoner is granted compassionate release it does not mean that the prisoner is no longer involved in the criminal justice system. The court can impose a term of probation or supervised release for the prisoner, and there might be a question about whether U.S. Probation and Pretrial Services Offices has the necessary resources to handle an unexpected influx of probationers."], "subsections": []}, {"section_title": "Early Release Pilot Program", "paragraphs": ["Under 34 U.S.C. Section 60541(g), BOP is authorized to conduct a program that places eligible elderly and terminally ill prisoners on home confinement. The Attorney General is authorized to designate the prisons at which the program will be conducted. Elderly prisoners who are eligible for home confinement under the program are those who", "are at least 60 years old; have never been convicted of a violent, sex-related, espionage, or terrorism offense; are sentenced to less than life; have served two-thirds of their sentence; have not been determined by BOP to have a history of violence, or of engaging in conduct constituting a sex, espionage, or terrorism offense; have not escaped or attempted to escape; received a determination that release to home detention would result in a substantial reduction in cost to the federal government; and received a determination that he or she is not a substantial risk of engaging in criminal conduct or of endangering any person or the public if released to home detention. ", "Terminally ill prisoners who are eligible for early release under the program generally have to meet the same criteria as eligible elderly prisoners, except they can be of any age and have served any portion of their sentences, even life sentences.", "The ability of BOP to release prisoners under this authority has some limitations similar to those associated with compassionate release, except under this authority BOP can place prisoners on home confinement without the approval of a federal court."], "subsections": []}, {"section_title": "Community Confinement", "paragraphs": ["Under 18 U.S.C. Section 3624(c), BOP is authorized to place a prisoner in a Residential Reentry Center for up to 12 months at the end of his or her sentence. BOP is also ordinarily authorized to place a prisoner on home confinement for a period of time equal to 10% of his or her sentence or six months, whichever is shorter. Though BOP must make individualized determinations as to whether placement in an RRC or home confinement is appropriate, the statute \"grants considerable discretion to the BOP\" in making such determinations. ", "The Coronavirus Aid, Relief, and Economic Security Act (the CARES Act; P.L. 116-136 ), permits the BOP Director to lengthen the maximum amount of time for which a prisoner may be placed on home confinement under Section 3624(c)(2) \"as the Director determines appropriate\" when the Attorney General \"finds that emergency conditions will materially affect the functioning\" of BOP. The authority is limited, however, to \"the covered emergency period,\" which is defined as the period spanning from the President's declaration of a national emergency with respect to COVID-19 to the date that is 30 days after the date on which the declaration terminates. As discussed below, the Attorney General issued a memorandum to the BOP Director making the requisite finding under the CARES Act and thereby authorizing the director to make expanded use of home confinement."], "subsections": []}, {"section_title": "Executive Clemency", "paragraphs": ["Under Article II, Section 2 of the U.S. Constitution, the President has broad authority to grant relief from punishment for federal criminal offenses. One form of executive clemency is commutation of a sentence, whereby the sentence imposed by a federal court is replaced by a less severe punishment, such as reducing a prisoner's sentence to time served.", "While it is not required by the Constitution, there is a process for prisoners who want to have their sentences commuted to submit a petition for executive clemency through DOJ's Office of the Pardon Attorney. Regulations state that prisoners should not submit petitions for commutations if other forms of judicial or administrative relief are available, unless there is a showing of \"exceptional circumstances\" for submitting the petition. When a petition is received, the Pardon Attorney conducts an investigation to determine the merit of the petition, which can include collecting reports from or using the services of federal agencies, such as the Federal Bureau of Investigation. After the investigation is concluded, the Pardon Attorney submits a recommendation about the merits of the petition to the Attorney General through the Deputy Attorney General. The Attorney General makes a final recommendation to the President about whether the petition for clemency should be granted.", "Guidance issued by DOJ notes that commuting a sentence is an \"extraordinary remedy\" and that grounds for considering commutation include \"disparity or undue severity of sentence, critical illness or old age, and meritorious service rendered to the government by the petitioner\" (such as aiding the government in an investigation) and/or \"other equitable factors,\" such as demonstrating rehabilitation or \"exigent circumstances unforeseen by the court at the time of sentencing.\"", "The process for applying for executive clemency established by DOJ regulations and guidance does not \"restrict the authority granted to the President under Article II, Section 2 of the Constitution.\" Therefore, the President could grant commutations to federal prisoners who do not submit a petition to DOJ or to those who do not meet the standards outlined by DOJ. Some advocates and commentators have called for the President to exercise this authority to commute federal prison sentences for populations vulnerable to COVID-19."], "subsections": []}]}, {"section_title": "The Attorney General's Directives Regarding DOJ's Response to COVID-19", "paragraphs": ["As of April 6, 2020, Attorney General William Barr has issued three memoranda that provide direction on DOJ's response to the COVID-19 pandemic. Two of the memoranda were to BOP, and they outlined how BOP should use its home confinement authorities to reduce the spread of COVID-19 in federal prisons. The other memorandum was to all components of DOJ, including all U.S. Attorney's Offices, and it provides guidance regarding when prosecutors should seek pretrial detention for federal defendants in light of the risks some people might face if they were jailed pending adjudication of their cases. "], "subsections": [{"section_title": "Memoranda Regarding Home Confinement", "paragraphs": ["On March 26, 2020, Attorney General William Barr issued a memorandum to BOP Director Michael Carvajal directing him to \"prioritize the use of [BOP's] various statutory authorities to grant home confinement for inmates seeking transfer in connection with the ongoing COVID-19 pandemic.\" In the memorandum, the Attorney General notes that there are some at-risk prisoners who are incarcerated for nonviolent crimes, pose a minimal risk of recidivism, and might be safer serving their sentences on home confinement rather than in a BOP facility. However, the Attorney General also states that many prisoners will be safer in BOP facilities where the population is controlled and there is ready access to doctors and medical care.", "The memorandum requires BOP when making a decision about which prisoners to place on home confinement to consider the \"totality of the circumstances\" for each prisoner, statutory requirements for home confinement, and the following discretionary factors:", "the age and vulnerability of the prisoner to COVID-19, in accordance with CDC guidelines; the security level of the facility where the prisoner is held, with priority given to prisoners held in low- and minimum-security facilities; the prisoner's conduct in prison, with those who have engaged in violent or gang-related activities while incarcerated or who have been found to have violated institutional rules not receiving priority consideration for home confinement; the prisoner's risk assessment score under BOP's risk and needs assessment system, with prisoners who have more than a minimum score not receiving priority consideration for home confinement; whether the prisoner has a re-entry plan, which includes verification that the conditions under which the prisoner would be confined after release would present a lower risk of contracting COVID-19 than if the prisoner remained incarcerated in a BOP facility; the prisoner's crime of conviction and an assessment of the risk to public safety posed by him or her (the memorandum notes that some offenses, such as sex offenses, will make a prisoner ineligible for home confinement, while convictions for other \"serious\" offenses should weigh more heavily against placing the prisoner on home confinement).", "In addition to these factors, prisoners considered for home confinement must be assessed, based on CDC guidance, for risk factors for \"severe COVID-19 illness,\" risks of COVID-19 illness at the prisoner's current facility, and risk of COVID-19 illness at the location where the prisoner would be placed on home confinement. BOP is not to place prisoners on home confinement if it would increase their risk of contracting COVID-19 or increase the risk of spreading COVID-19 in the community. The memorandum also directs BOP to place prisoners in a 14-day quarantine before they are transferred to home confinement.", "In a subsequent memorandum issued on April 3, 2020, the Attorney General invokes the authority granted under the CARES Act and directs BOP to review all prisoners with risk factors for serious complications related to COVID-19 for possible placement on home confinement. The memorandum directs BOP to focus on prisoners incarcerated at Federal Correctional Institution (FCI) Oakdale, FCI Danbury, and FCI Elkton, and any other \"similarly situated facilities where [BOP] determine[s] that COVID-19 is materially affecting operations.\" ", "BOP is directed to immediately process all prisoners who are deemed to be suitable candidates for home confinement. Prisoners are to be placed on home confinement after a 14-day in-prison quarantine. BOP is also authorized on a case-by-case basis to place prisoners on home confinement without first quarantining them in prison. In these cases, a prisoner would be required to quarantine at home for a 14-day period. The Attorney General warns against potentially spreading COVID-19 by releasing prisoners to home confinement. Thus, BOP is directed to follow the criteria outlined in the March 26 memorandum when making decisions about which prisoners should be released, with the understanding that prisoners \"with a suitable confinement plan will generally be approved candidates for home confinement rather than continued detention at institutions in which COVID-19 is materially affecting their operations.\"", "In the memorandum, the Attorney General acknowledges that BOP has limited resources to monitor all prisoners on home confinement and the U.S. Probation Office is unable to monitor large numbers of prisoners in the community. Despite these limitations, the Attorney General authorizes BOP to place prisoners on home confinement even if electronic monitoring is not available, \"so long as BOP determines in every such instance that doing so is appropriate and consistent with [DOJ's] obligation to protect public safety.\" Regarding public safety, the Attorney General notes that while DOJ has an obligation to protect federal prisoners, DOJ also has an obligation to protect public safety and cannot \"simply release prison populations en masse onto the streets.\" The Attorney General notes that while he is directing BOP to expand the use of home confinement for prisoners at affected prisons, \"it is essential that [BOP] continue making careful, individualized determinations BOP makes in the typical case. Each inmate is unique and each requires the same individualized determinations [that] have always been made in this context.\""], "subsections": []}, {"section_title": "Memorandum Regarding Pretrial Detention", "paragraphs": ["On April 6, 2020, the Attorney General issued a memorandum to the U.S. Attorney's Offices and the heads of components of DOJ that provides guidance on when DOJ should seek pretrial detention for defendants. The Attorney General notes that under the Bail Reform Act (BRA), defendants must be detained pending trial where \"no condition or combination of conditions will reasonably assure the appearance of the person as required and the safety of any other person and the community\" and that for certain crimes it is assumed that \"no condition or combination of conditions will reasonably assure the appearance of the person as required and the safety of the community.\" The Attorney General encourages prosecutors to continue to seek pretrial detention for defendants that pose a risk to public safety or a flight risk as outlined in the BRA.", "The Attorney General also notes that a defendant's physical and mental condition can be considered when making determinations about pretrial detention under the BRA and prosecutors should consider the \"medical risks associated with individuals being remanded into federal custody during the COVID-19 pandemic.\" The Attorney General directs prosecutors to consider not seeking pretrial detention to the extent that they would under normal circumstances, especially for defendants who have \"not committed serious crimes and who pose little risk of flight (but no threat to the public) and who are clearly vulnerable to COVID-19 under CDC Guidelines.\" The memorandum directs prosecutors to conduct the same analysis when litigating motions filed by defendants who want the court to reconsider its decision to order pretrial detention in light of the pandemic. When considering motions filed by defendants, prosecutors are also directed to consider the risk a defendant poses of spreading COVID-19 in the community if he or she were released. "], "subsections": []}]}, {"section_title": "Current Legislation", "paragraphs": ["As described previously, Congress has passed legislation in response to the COVID-19 pandemic that modifies one of the authorities addressed in this report\u00e2\u0080\u0094release to home confinement under 18 U.S.C. Section 3624(c)(2). However, at least one bill has been introduced that would appear to further facilitate the release of some federal prisoners in the context of a national emergency related to a communicable disease. ", "Introduced legislation would appear to further supplement some of the authorities discussed above. S. 3579 and H.R. 6400 would require that certain federal prisoners in the custody of BOP or USMS\u00e2\u0080\u0094those who are pregnant, age 50 or older, have certain underlying medical conditions, or have 12 months or less to serve\u00e2\u0080\u0094immediately be placed in community supervision when a \"national emergency relating to a communicable disease\" has been declared and for 60 days after it has expired. In making such placements, the directors of BOP and USMS would be obligated to \"take into account and prioritize\" placements enabling \"adequate social distancing,\" with home confinement given as one example. Individuals falling into qualifying categories would be excepted from placement in community supervision under the bills, however, if the Director of BOP or Director of USMS determines by clear and convincing evidence that they are \"likely to pose a specific and substantial risk of causing bodily injury or using violent force against the person of another.\" ", "It thus appears that S. 3579 and H.R. 6400 would enhance current authorities that permit the release of federal prisoners in response to COVID-19. Specifically, under both bills some federal criminal defendants in pretrial detention would be eligible for immediate release to community supervision (assuming they meet the health or other criteria) without the need to file individual petitions seeking the reopening of their detention hearing based on new information or asserting a \"compelling reason\" for temporary release. And those detained solely because they were previously determined to be a flight risk would appear to qualify for relief under both bills, as the bills' only exception for those eligible for relief are detainees that are determined to pose a risk of causing bodily injury or using violent force against another. Additionally, for those currently serving federal sentences in BOP facilities, S. 3579 and H.R. 6400 would appear to establish another alternative for release to community confinement in the context of the COVID-19 pandemic beyond 18 U.S.C. Section 3624(c) and 34 U.S.C. Section 60541(g), as BOP would be required to release a prisoner over 50 years old, with a covered health condition, or who is within 12 months of release from incarceration unless the exception applied. "], "subsections": []}]}}
{"id": "R45767", "title": "The Rebuild America\u2019s Schools Act of 2019 (H.R. 865/S. 266): In Brief", "released_date": "2019-06-12T00:00:00", "summary": ["A 2014 study conducted by the National Center for Education Statistics within the U.S. Department of Education (ED) found that 53% of public elementary and secondary schools need to spend money on repairs, renovations, and modernizations to put their onsite buildings in good overall condition. The study estimated that the nationwide spending necessary to reach this standard would be approximately $197 billion, or about $4.5 million per school that needs improvements. This report provides a description of and background for selected provisions in the Rebuild America's Schools Act of 2019 ( H.R. 865 / S. 266 ), which would provide federal funding for public school construction. H.R. 865 was ordered to be reported by the House Committee on Education and Labor on February 26, 2019. As no action has been taken on the identical companion bill S. 266 since it was introduced in the Senate, this report addresses H.R. 865 .", "While the construction, renovation, repair, and maintenance of public school facilities are typically the responsibility of state and local governments, the federal government has provided some funding for construction and renovation for specific purposes. H.R. 865 proposes to authorize $70 billion in grants and facilitate $30 billion in school infrastructure tax credit bonds to be used toward the construction and repair of public elementary and secondary school facilities. Funds would be allocated to states proportionally based on their prior-year share of grant allocations under Title I-A of the Elementary and Secondary Education Act (ESEA), a grant program designed to provide educational and related services to low-achieving and other students attending schools with relatively high concentrations of students from low-income families. States are directed to award grant funds provided through the bill to local educational agencies (LEAs) with the highest numbers or percentages of students who are \"counted\" in the formulas used to allocate ESEA Title I-A grants\u00e2\u0080\u0094and among LEAs meeting this criterion, to those prioritizing improvement of facilities of public schools that serve the highest percentages of students who qualify for free or reduced price lunches. Additional consideration in the awarding of grants to LEAs may be given to those with school facilities that pose a severe health or safety threat. Funds would also be authorized under H.R. 865 for Impact Aid construction for FY2020 through FY2023 at levels substantially higher than current authorization of appropriations levels.", "H.R. 865 would place certain restrictions on how funds from grants or bonds may be used. For instance, it specifies for each fiscal year a certain percentage of covered funds that must be used for construction or renovation that is consistent with \"green\" standards. Additionally, LEAs that receive covered funds from grants or bonds authorized by the bill would be required to ensure that any iron, steel, and manufactured products used in projects are produced in the United States. However, the Secretary of Education would have authority to waive this requirement under certain circumstances.", "The bill would also require the Institute of Education Sciences to carry out and submit to the appropriate congressional committees a comprehensive study of the physical condition of all public schools in the United States at least once every five years.", "The Congressional Budget Office estimates that enactment of H.R. 865 would result in an increase of approximately $8.4 billion in direct spending, a decrease of approximately $1.2 billion in revenues, and an increase of approximately $55.6 billion in outlays subject to appropriation in the period from FY2019 to FY2029."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["According to a 2014 study conducted by the National Center for Education Statistics (NCES) within the U.S. Department of Education (ED), 53% of public elementary and secondary schools need to spend money on repairs, renovations, and modernizations to put their onsite buildings in good overall condition. The study estimated that the nationwide spending necessary to reach this standard would be approximately $197 billion, or about $4.5 million per school that needs improvements. The 2014 study was the first by NCES to estimate such costs since a 2000 report and is the most recent available. As there is no ongoing federal data collection on the physical condition of schools, it is difficult to assess the current state of the nation's school facilities and the need for infrastructure investment.", "While the construction, renovation, repair, and maintenance of public school facilities have primarily and typically been the responsibility of state and local governments, the federal government has provided some funding for construction and renovation for specific purposes. This report provides a description of and background for selected provisions of the Rebuild America's Schools Act of 2019 ( H.R. 865 / S. 266 ), which was ordered to be reported by the House Committee on Education and Labor on February 26, 2019. H.R. 865 proposes to authorize $70 billion in grants and facilitate $30 billion in school infrastructure tax credit bonds to be used toward the construction and repair of public elementary and secondary school facilities. Grant funds and school infrastructure bond limits would be allocated to states proportionally based on their prior-year local educational agency (LEA) grant allocations under Title I-A of the Elementary and Secondary Education Act (ESEA). Additional funds would also be authorized for Impact Aid construction payments authorized under Section 7007 of the ESEA for FY2020 through FY2023."], "subsections": []}, {"section_title": "Background", "paragraphs": ["Funding public schools has traditionally been primarily the responsibility of state and local governments. In school year 2015-2016, for instance, public elementary and secondary schools in the United States collectively received about 47% of their revenue from state governments and about 45% from local governments. Of the local revenue, the majority\u00e2\u0080\u0094approximately 81%\u00e2\u0080\u0094was derived from property taxes. While different states and LEAs have access to various other funding streams and mechanisms to finance school construction, a common practice to raise funds for this purpose is to issue a general obligation bond (backed by the credit of the state or local government) and repay the debt over time with revenue from sources such as property taxes. Nationwide, public schools spent approximately $48 billion on facilities acquisition and construction in the 2015-2016 school year. ", "While state and local governments typically provide the majority of support for facilities-related expenditures in public K-12 schools, the federal government also provides some direct and indirect support for school infrastructure. Federal direct support is provided through loans and grants to K-12 schools with specific needs or serving certain populations of students. For example, there are school infrastructure grant programs respectively for schools with high populations of students with disabilities or students who are Alaska Natives, Native Hawaiians, American Indians, or children of military parents. Funding is also available to schools affected by natural disasters or located in rural areas. Additionally, there are facilities financing assistance programs to encourage the development of charter schools. Although ED administers several of the grant programs funding facilities at elementary and secondary schools, other agencies, such as the Department of the Interior and the Department of Defense, also administer programs. ", "Aside from the targeted efforts, a one-time appropriation of $1.2 billion was made under the Consolidated Appropriations Act for FY2001 ( P.L. 106-554 ) for emergency school renovation and repair activities, as well as activities under Part B of the Individuals with Disabilities Education Act and technology activities. Most recently, Congress provided a one-time appropriation in 2009, as part of the response to the Great Recession, that could be used for renovation and construction, among other purposes. The American Recovery and Reinvestment Act of 2009 (ARRA; P.L. 111-5 ) authorized a $54 billion State Fiscal Stabilization Fund (SFSF). States were required to use at least 81.8% of their share of the SFSF to restore support of public elementary, secondary, and postsecondary schools, and, as applicable, early childhood education programs and services. Among the allowable uses of restoration funds were modernization, renovation, or repair of public school facilities. States were required to use the remaining 18.2% of their share of the SFSF for education, public safety, and other government services, which included modernization, renovation, or repair of public school and public or private college facilities, depending on the criteria that the state's governor used to allocate the funds. ED issued guidance specifically allowing a portion of the SFSF to be used for the construction of K-12 schools but not institutions of higher education.", "Another large source of federal contributions to school facilities\u00e2\u0080\u0094the forgone revenue attributable to the exemption of interest on state and local governmental bonds used for school construction, modernization, renovation, and repair\u00e2\u0080\u0094is indirect. The Internal Revenue Code (IRC, or Chapter 26 of the U.S. Code) provides for the federal government to exempt interest income earned on bonds issued by state, local, and tribal governments for a \"public\" purpose from federal income tax (26 U.S.C. \u00c2\u00a7103). \u00c2\u00a0Examples of public projects include elementary, secondary, and postsecondary schools; public buildings; and roads. The tax exemption lowers the cost of capital for state and local governments because investors are generally willing to accept a lower rate of return when it is not subject to federal taxation. There is no bond volume cap on tax exempt state and local government bonds. "], "subsections": []}, {"section_title": "Major Provisions of H.R. 865", "paragraphs": ["H.R. 865 would support public elementary and secondary school construction through several approaches. ED would administer federal grants, the Department of the Treasury would administer tax credit bonds, and regular reports on the condition and need for school facilities would fill a knowledge gap in order to inform future federal support. ", "The following sections summarize the major provisions of the four titles included in H.R. 865 . Title I would authorize grants for the long-term improvement of public school facilities, Title II would authorize school infrastructure bonds, Title III would cover general provisions, and Title IV would authorize a temporary increase in funding for Impact Aid construction."], "subsections": [{"section_title": "Title I: Grants", "paragraphs": ["H.R. 865 would authorize $7 billion in grants per fiscal year from FY2020 to FY2029 to support long-term improvements to public school facilities. Of the amounts appropriated, 0.5% would be reserved for the outlying areas, and 0.5% would be reserved for schools funded by the Bureau of Indian Education. The remainder would be allocated to the states in proportion to their share of all ESEA Title I-A state grants allocated during the prior fiscal year with no hold harmless provision applied. The states would then award competitive grants to qualified LEAs. ", "To be eligible for an allocation, a state would have to submit a plan to ED that describes how it would use the funds to make long-term improvements to public school facilities and how it would maintain fiscal effort for the funded activities after it no longer receives the allocation. The plan would also need to explain how the state would determine the eligibility and priority of grant recipients and carry out its state-level responsibilities. ", "States would be required to match 10% of the allocated amount from nonfederal sources to support the activities funded by the allocation. A maintenance of effort provision would also require that the fiscal effort per student or aggregate expenditure by the states on public school facilities could not be less than 90% of the level in the prior fiscal year. Further, states would be required to use their allocations to supplement not supplant federal, state, and local public funds that would otherwise be available for supported activities. ", "The bill would allow states to reserve no more than 1% of their allocation for their state-level responsibilities, including providing technical assistance to LEAs and developing an online database that contains an inventory of the infrastructure of all public school facilities in the state. Such funds could also be used for issuing and reviewing health and safety regulations and creating a plan to reduce exposure to toxins and chemicals. ", "To be eligible to receive a competitive grant from the state, an LEA would have to have received an ESEA Title I-A grant in the previous year. Further, an LEA would have to be among those with the highest number or percentage of children \"counted\" in the formulas used to allocate ESEA Title I-A state grants. LEAs meeting these criteria would also be required to prioritize improvement of facilities of public schools that serve the highest percentages of students who qualify for free or reduced price lunches. Additional consideration in the awarding of grants to LEAs may be given to those with school facilities that pose a severe health or safety threat. States would have to ensure that LEA grantees represent the geographic diversity of the state. In addition, states would have the option of including the need to improve facilities or having the most limited capacity to raise funds for that purpose in the LEA eligibility criteria.", "States would be required to prioritize applications from LEAs by comparing these eligibility criteria. Additionally, states would be able to prioritize applications for grants to improve access to broadband or grants for schools without access to broadband. ", "To be considered for a competitive grant, qualifying LEAs would have to submit an application to the state. Application requirements could be determined by the individual states, but H.R. 865 would require all applications to include certain information:", "information necessary for the state to determine eligibility and priority; a description of the projects that the LEA plans to carry out with the grant; an explanation of how such projects will reduce risks to the health and safety of staff and students at schools served by the LEA; and for charter schools, whether the operator has control or ownership of the facility, and the extent to which the charter schools lack access to funding through financing methods available to public schools or LEAs in the state.", "After grants are awarded, the bill would require certain actions by LEAs, states, and ED. Within 180 days of receiving a grant, an LEA would be required to submit to the state a 10-year facilities master plan. Each LEA that receives a grant would also be required to annually compile, publish, and submit to the state certain information about the LEA, its student population, and projects funded by the grant. States would then be required to compile, publish, and distribute such information to the LEAs, the public, and tribal governments in the state. In addition, states would be required to submit the information to the Secretary of Education. By the end of each fiscal year, the Secretary of Education would be required to submit a report to the House Committee on Education and Labor and the Senate Committee on Health, Education, Labor, and Pensions (hereinafter, the \"appropriate congressional committees\") containing the information collected from the states."], "subsections": []}, {"section_title": "Title II: Bonds", "paragraphs": ["H.R. 865 would reauthorize certain repealed tax credit bonds (TCBs) and authorize a new TCB, School Infrastructure Bonds. TCBs are an alternative to tax-exempt bonds that offer investors a federal tax credit or the issuer a direct payment proportional to the bond's value in lieu of a federal tax exemption. Before the 2017 tax revision ( P.L. 115-97 ) repealed the authority to issue new TCBs after December 31, 2017, Qualified School Construction Bonds (QSCBs) and Qualified Zone Academy Bonds (QZABs) were TCBs used to fund school construction and renovation, among other purposes. The bill would also apply certain wage rate requirements to any school infrastructure bond, as have been required for QZABs issued since the date of the enactment of the ARRA. ", "The remainder of this section provides more-detailed information about the various bond provisions included in H.R. 865 . "], "subsections": [{"section_title": "QSCBs and QZABs", "paragraphs": ["H.R. 865 would amend the Internal Revenue Code to authorize QSCBs and QZABs for the first time since 2017. QSCBs made bond proceeds available for the construction, rehabilitation, or repair of, or the acquisition of land for, a public school facility, including charter schools but excluding postsecondary facilities. They were generally allocated to states based on a state's share of ESEA Title I-A grants. The bonds had a national limit of $11 billion in each of 2009 and 2010. The authority to issue QSCBs expired at the end of calendar year 2010. H.R. 865 would not authorize a new bond limitation for QSCBs, but it would restore a subparagraph in statute (formerly 26 U.S.C. 54A(d)(1)(E)) listing QSCBs as a qualified tax credit bond. ", "H.R. 865 would also reauthorize QZABs, remove the former private business contribution requirement associated with them, and set the bond limitation at $1.4 billion for each calendar year into perpetuity. In addition to school renovation, the bill would authorize QZABs to be used to fund school construction as well. To be eligible to receive the proceeds from QZABs, a school must be public; be providing education or training below the postsecondary level in an empowerment zone or enterprise community, or have 35% or more of its students qualified for free or reduced price lunches; and cooperate with businesses to enhance the school's curriculum, increase graduation and employment rates, and prepare students for college and the workforce."], "subsections": []}, {"section_title": "School Infrastructure Bonds", "paragraphs": ["Under H.R. 865 , School Infrastructure Bonds would function as a new type of tax credit bond to support long-term improvements to public school facilities. The bill would authorize a national volume cap of $10 billion in School Infrastructure Bonds per calendar year from 2020 to 2022. As with the grant appropriation, 0.5% of the annual bond limitation of $10 billion would be allocated to possessions of the United States, and 0.5% would be allocated to the Secretary of the Interior for schools funded by the Bureau of Indian Education. The remainder would be allocated to the states in proportion to their share of all prior-year Title I-A state grants, as authorized under the ESEA, with no hold harmless provision applied. State educational agencies and the U.S. possessions would then allocate their share of the bond limitation to issuers within their jurisdictions using the same required eligibility and priority criteria established for the competitive grant program in Title I of H.R. 865 . ", "The new School Infrastructure Bond program would provide bond holders with a tax credit equal to 100% of the amount of interest payable by the issuer, and any unused credit could be carried over to the succeeding taxable year. The bill would require bond issuers to spend 100% of the available project proceeds within six years of the date of issuance. ", "By the end of each fiscal year, the Secretary of the Treasury would be required to submit an annual report on the bond program to the appropriate congressional committees. "], "subsections": []}]}, {"section_title": "Title III: General Provisions", "paragraphs": [], "subsections": [{"section_title": "Uses of Funds", "paragraphs": ["H.R. 865 would place certain restrictions on how funds from grants or bonds may be used. Allowable uses would generally include new construction, renovation, major repairs, site acquisition, the reduction or elimination of toxins and pests, the expansion of access to broadband, and compliance with the Americans with Disabilities Act, among other uses for public school facilities. Funds could also be used to develop the facilities master plans required by the bill. LEAs would be prohibited from using funds for routine and predictable maintenance, minor repairs, facilities used primarily for athletic contests or other events that charge admission, vehicles, or facilities that are not primarily used to educate students.", "The bill also specifies, for each year, a certain percentage of funds used for new construction or renovation that would have to be used for such activities that are certified, verified, or consistent with \"green\" standards. The applicable percentage would be 60% in FY2020, 70% in FY2021, 80% in FY2022, 90% in FY2023, and 100% in FY2024 through FY2029. For FY2030 and thereafter, there would be no such requirement for QZABs.", "LEAs that receive covered funds from grants or bonds authorized by H.R. 865 would be required to ensure that any iron, steel, and manufactured products used in projects are produced in the United States. However, the Secretary of Education would have authority to waive this requirement if applying it would be inconsistent with the national interest, if materials produced in the United States are not sufficiently available or of satisfactory quality, or if using materials produced in the United States would increase the cost of the overall project by more than 25%."], "subsections": []}, {"section_title": "Reporting and Information", "paragraphs": ["Within two years of enactment, H.R. 865 would require the Government Accountability Office (GAO) to submit a report on projects carried out by covered funds to the appropriate congressional committees. The report would include the types of projects carried out, their geographic distribution, and an assessment of their impacts on the health and safety of staff and students. The report would also address how the Secretary of Education or the states could make covered funds more accessible to schools with the highest numbers and percentages of students counted in ESEA Title I-A allocation formulas and schools with fiscal challenges in raising capital for school infrastructure projects. GAO would be required to prepare an updated version of the report between 5 and 6 years after enactment and again between 10 and 11 years after enactment. ", "The bill would also require ED's Institute of Education Sciences to carry out and submit to the appropriate congressional committees a comprehensive study of the physical condition of all public schools in the United States at least once every five years. The report would include an assessment of the effect of school facilities on health, safety, and academic outcomes; the condition of facilities, categorized by geographic region, racial and ethnic groups, and economic status of students; the accessibility of school facilities for students and staff with disabilities; and any differences in these areas of disaggregation between LEAs that received covered funds and those that did not. H.R. 865 does not include an authorization of appropriations for this purpose.", "Additionally, H.R. 865 would require the Secretary of Education to establish a clearinghouse to disseminate information on federal programs and financing mechanisms that may be used to assist schools in initiating, developing, and financing energy efficient, energy retrofitting, and distributed generation projects. The bill does not include an authorization of appropriations for this purpose."], "subsections": []}]}, {"section_title": "Title IV: Impact Aid", "paragraphs": ["The Impact Aid program, administered by ED and authorized by Title VII of the ESEA, compensates LEAs for a \"substantial and continuing financial burden\" resulting from federal activities, such as federal ownership of certain lands, as well as the enrollments in LEAs of children whose parents work or live on federal property and of children living on tribal lands. The Impact Aid program authorizes several types of payments, including a construction payment (ESEA, Section 7007). The construction payment provides funds for construction and facilities upgrades to certain LEAs, such as those serving high percentages of children living on tribal lands or children with parents on active duty in the uniformed services. These funds are used to make formula and competitive grants. For FY2019, Section 7007 was appropriated $17.4 million. Authorizations of appropriations for Section 7007 are provided through FY2020.", "H.R. 865 would extend the authorization of appropriations for Section 7007 through FY2023 at levels substantially higher than current authorization of appropriations levels. For FY2020, Section 7007 has an existing authorization of appropriations level of $18,756,765. H.R. 865 would increase that level to $50,406,000 for FY2021 and FY2022 and $52,756,765 for FY2023."], "subsections": []}]}, {"section_title": "Cost Estimate", "paragraphs": ["The Congressional Budget Office (CBO) estimates that enactment of H.R. 865 would result in an increase of approximately $8.4 billion in direct spending, a decrease of approximately $1.2 billion in revenues, and an increase of approximately $55.6 billion in outlays subject to appropriation in the period from FY2019 to FY2029. In producing this estimate, CBO assumes that H.R. 865 would be enacted near the end of FY2019 and that authorized and estimated funds would be appropriated every year."], "subsections": []}]}}
{"id": "R45736", "title": "The Economic Effects of the 2017 Tax Revision: Preliminary Observations", "released_date": "2019-05-22T00:00:00", "summary": ["The 2017 tax revision, P.L. 115-97, often referred to as the Tax Cuts and Jobs Act, and referred to subsequently as the Act, substantially revised the U.S. tax system. The Act permanently reduced the corporate tax rate to 21%, made a number of revisions in business tax deductions (including limits on interest deductions), and provided a major revision in the international tax rules. It also substantially revised individual income taxes, including an increase in the standard deduction and child credit largely offset by eliminating personal exemptions, along with rate cuts, limits on itemized deductions (primarily a dollar cap on the state and local tax deduction), and a 20% deduction for pass-through businesses (businesses taxed under the individual rather than the corporate tax, such as partnerships). These individual provisions are temporary and are scheduled to expire after 2025. The Act also adopted temporary provisions allowing the immediate deduction for equipment investment and an increase in the exemption for estate and gift taxes. The Joint Committee on Taxation (JCT) estimated that these changes would reduce tax revenue by $1.5 trillion over 10 years.", "In 2018, gross domestic product (GDP) grew at 2.9%, about the Congressional Budget Office's (CBO's) projected rate published in 2017 before the tax cut. On the whole, the growth effects tend to show a relatively small (if any) first-year effect on the economy. Although growth rates cannot indicate the tax cut's effects on GDP, they tend to rule out very large effects particularly in the short run. Although investment grew significantly, the growth patterns for different types of assets do not appear to be consistent with the direction and size of the supply-side incentive effects one would expect from the tax changes. This potential outcome may raise questions about how much longer-run growth will result from the tax revision.", "CBO, in its first baseline update post enactment, initially estimated that the Act would reduce individual income taxes by $65 billion, corporate income taxes by $94 billion, and other taxes by $3 billion, for a total reduction of $163 billion in FY2018. Corporate revenues were about $40 billion less than projected whereas individual revenues were higher, with an overall revenue reduction of about $9 billion. From 2017 to 2018, the estimated average corporate tax rate fell from 23.4% to 12.1% and individual income taxes as a percentage of personal income fell slightly from 9.6% to 9.2%.", "Real wages grew more slowly than GDP: at 2.0% (adjusted by the GDP deflator) compared with 2.9% for overall real GDP. Such slower growth has occurred in the past. The real wage rate for production and nonsupervisory workers grew by 1.2%.", "Although significant amounts of dividends were repatriated in 2018 compared with previous years, the data do not appear to show a significant increase in investment flows from abroad. While evidence does indicate significant repurchases of shares, either from tax cuts or repatriated revenues, relatively little was directed to paying worker bonuses, which had been announced by some firms.", "Although the legislation contained a number of provisions that discouraged inversions (shifting headquarters of U.S. firms abroad), these inversions had apparently already been significantly slowed by regulations adopted in 2014, 2015, and 2016."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["The 2017 tax revision, P.L. 115-97 , often referred to as the Tax Cuts and Jobs Act, and referred to subsequently as the Act, was estimated to reduce taxes by $1.5 trillion over 10 years. The Act permanently reduced the corporate tax rate to 21%, made a number of revisions in business tax deductions (including limits on interest deductions), and provided a major revision in the international tax rules. It also substantially revised individual income taxes, including an increase in the standard deduction and child credit largely offset by eliminating personal exemptions, along with rate cuts, limits on itemized deductions (primarily a dollar cap on the state and local tax deduction), and a 20% deduction for pass-through businesses (businesses taxed under the individual rather than the corporate tax, such as partnerships). These individual provisions are temporary and are scheduled to expire after 2025. The Act also adopted temporary provisions allowing the immediate deduction for equipment investment and an increase in the exemption for estate and gift taxes.", "The Congressional Budget Office (CBO) estimated in April of 2018 that the Act would result in a $65 billion reduction in individual income taxes, a $94 billion reduction in corporate taxes, and a $3 billion reduction in other taxes, for a total of $163 billion (after rounding) for FY2018.", "Numerous effects of the Act were projected during consideration of the law and shortly after, including ", "an increase in output and investment; an increase in the debt to GDP ratio; possible benefits for workers from tax cuts for businesses; the repatriation of income held abroad by U.S. subsidiaries in the form of dividends; and a decreased likelihood of inversions (U.S. companies moving their headquarters abroad). ", "Some claimed that business investment would increase because of (1) the flow of investment from abroad due to the lower corporate tax rate and (2) no longer imposing a tax penalty on paying dividends from foreign subsidiaries would free up resources. ", "This analysis examines the preliminary effects of the Act during the first year, 2018. In some cases it is difficult to determine the effects of the tax cuts (e.g., on economic growth) given the other factors that affect outcomes. In other cases, such as the level of repatriation and use of repatriated funds, the evidence is more compelling. This report discusses these potential consequences in light of the data available after the first year. "], "subsections": []}, {"section_title": "Effects on Output and Investment", "paragraphs": [], "subsections": [{"section_title": "Projections of Output Effects", "paragraphs": ["During consideration of the Act and subsequently, various claims were made about the growth effects of the tax change. A variety of organizations, including private and government forecasters, projected economic growth rates that tended to be modest. In its April 2018 report on the budget outlook, CBO projected the tax change to increase GDP by 0.3% in calendar year 2018. Prorating the FY2019 revenue loss estimate indicated that the tax cut in calendar year 2018 accounted for about 1.2% of GDP. Assuming a tax rate on marginal output of around 20%, this projection would imply a feedback effect of 5%. ", "The Joint Committee on Taxation (JCT) also projected the economic effects of the proposal, and while it did not report year-by-year estimates, its revenue feedback effect for calendar year 2018 was larger than that suggested by the CBO numbers\u2014around 20%, which in turn indicates a projected increase in GDP four times larger, 1.2%. Given the baseline prior to the Act, that effect would have suggested a growth rate of 4.2% in 2018. ", "The CBO output estimate (i.e., the amount of GDP growth attributed to the tax change) was compared with projections by other forecasters and organizations. Of the seven other forecasts projecting the effects of the Act for 2018, five ranged from 0.3% to 0.5%, one was for 0.1%, and another for 0.8%.", "CBO also disaggregated its output effect into an increase in potential GDP of 0.2%, with the remaining 0.1% reducing the gap between output with and without full employment. The increase in potential output reflects increases in investment and in the labor supply. The 0.1% increase might be characterized as a demand-side effect and the remainder as a supply-side effect. Because the economy was at full employment and most of the tax cut went to businesses and higher-income individuals who are less likely to spend the increases, a small demand-side effect would be expected. Demand-side effects are transitory, whereas supply-side effects are permanent. ", "CBO and other organizations also produced longer-term forecasts. CBO projected output effects rising to 0.6% in 2019, then rising slightly and peaking in 2022, and finally declining, with an estimated 0.5% effect in 2028, the last year reported. The decline in later years might be partially traced to the expiration of some provisions. Compared with other forecasts for the average over the 10-year period 2018-2027, CBO's 0.7% effect was similar to other forecasts. For the 10 th year, 2027, CBO projected an effect of 0.6%; there was considerably more divergence in the estimates for this year, with one organization projecting a negative effect by that time. This divergence presumably reflected competing views of the effects on capital formation due to lower tax rates on returns to investment and crowding out of private investment due to accumulating debt. ", "During the debate, some argued for much larger growth effects, including arguments that the tax cuts would produce so much growth that they would largely or entirely pay for themselves, or even raise revenues. These statements, however, were not supported by most of the published analysis. "], "subsections": []}, {"section_title": "Output Growth in 2018", "paragraphs": ["In April 2018, CBO projected real GDP growth for the calendar year 2018 of 3.3% (indicating a projected 3% growth rate without the tax cut). According to the National Income and Product Accounts (NIPA), actual growth rate was 2.9%, which is consistent with a small effect of the tax revision, perhaps even smaller than projected by most analysts. Quarterly growth rates are shown in Figure 1 . The revenue loss from the tax cut without incorporated growth effects was estimated at about 1.2% of GBP in 2018.", "The 2.9% annual growth rate for 2018 was higher than the 2.2% growth rate in 2017 and the 1.6% growth rate in 2016. In previous years, output grew by 2.9% in 2015 and 2.5% in 2014, thus the increase in growth is in line with the trend in growth over the period examined in Figure 1 . Forecasters had already projected an increase in growth rates in most cases that was similar to CBO's. In addition to the effect from the tax cuts, there was also some stimulus due to the increase in spending enacted in the Consolidated Appropriations Act of 2018 ( P.L. 115-141 ) and the Bipartisan Budget Act of 2018 ( P.L. 115-123 ). Growth may have also been negatively affected by tariffs.", "The high rate of growth in the second quarter of 2018 shown in Figure 1 may have been due to the demand-side stimulus of the tax cuts, which began to be reflected in withholding beginning in the first quarter, as well as the possibly delayed receipt of tax refunds.", "On the whole, the growth effects tend to show a relatively small (if any) first-year effect on the economy. Although examining the growth rates cannot indicate the effects of the tax cut on GDP, it does tend to rule out very large effects in the near term.", "The data appear to indicate that not enough growth occurred in the first year to cause the tax cut to pay for itself. Assuming a tax rate of 18% (based on CBO estimates), and estimating the tax cut to reduce revenue in calendar year 2018 by about 1.2% of GDP, a 6.7% GDP increase due to the tax cuts alone would be required. Rather, the combination of projections and observed effects for 2018 suggests a feedback effect of 0.3% of GDP or less\u20145% or less of the growth needed to fully offset the revenue loss from the Act."], "subsections": []}, {"section_title": "Contribution of Consumption Growth", "paragraphs": ["Consumption grew at 2.6% in 2018 in real terms, as shown in Figure 2 , about the same as 2017 (which was 2.5%) and below 2014-2016 (although higher than 2013). As shown in Figure 2 , there was a drop in the first quarter followed by a rise in the second quarter that was unexpected by most forecasters and may have reflected a delay in tax refunds. The initial effect of a demand side is likely to be reflected in increased consumption and the data indicate little growth in consumption in 2018. Much of the tax cut was directed at businesses and higher-income individuals who are less likely to spend. Fiscal stimulus is limited in an economy that is at or near full employment. "], "subsections": []}, {"section_title": "Contribution of Investment Growth", "paragraphs": ["Although it is difficult to determine the Act's overall first-year impact on GDP, other than to confirm that the evidence is consistent with a small projected first-year effect, it is possible to discuss supply-side effects on investment in more detail.", "CBO estimated that the 0.3% increase in growth from the Act is the result of a 0.4% increase in GDP due to private consumption and a 0.2% increase due to nonresidential fixed investment (with a negligible effect on residential investment and government consumption and investment). This 0.6% increase was projected to be offset by a decrease in net exports of 0.3% of GDP (from both a decline in imports and an increase in exports). This decrease is expected as a consequence of net capital flowing in from abroad to finance the deficit or due to capital inflows used for investment in response to tax changes.", "Given the shares of GDP that went to consumption (70%) and investment in nonresidential fixed investment (14%) in 2017, these growth contributions indicated an additional growth in consumption of 0.7% and in fixed nonresidential investment of 1.5%. ", "In 2018, consumption grew at 2.6% and nonresidential investment grew at 7%. Such numbers might suggest a supply-side effect. There are reasons, however, not to necessarily view that growth as a supply-side effect of the tax change.", "First, the growth rates of investment and its subcomponents are much more volatile than the growth rates of GDP, as shown in Figure 3 , making it hard to assign causation.", "Second, the largest effects occurred in the first and second quarters of 2018, which allowed very little time to be the result of investments that must be planned in advance (even if the tax cut was anticipated in late 2017). Furthermore, structures growth rates were negative in the last two quarters. ", "Third, real growth in the subcategories of equipment, structures, and intellectual property products is inconsistent with the incentive effects of the tax change. Over the entire year, intellectual property products grew at the fastest rate (7.7%), equipment at a slightly lower rate (7.5%), and structures at 5.0%. To assess the incentive effects of the tax changes (which included a lower tax rate and faster depreciation for equipment), consider the change in the user cost of capital (or rental price of capital). It is the equivalent of the \"price\" of capital as an input (just as the wage is the price of labor input). It includes two costs of using capital: the opportunity cost of using funds (i.e., the required pretax rate of return on the asset) and depreciation (i.e., the cost of using up the asset). The user cost reflects the required rate of return at the margin (i.e., for an investment that earns just enough to be worth making). Estimates indicate that the user cost of capital for equipment declined by 2.7% and the user cost of structures declined by 11.7%, but the user cost of R&D (intellectual property products) increased by 3.4%. (See the Appendix for details on the derivation of these results.) The user cost of capital for equipment declined by less than that of structures primarily because more of the cost for equipment is for depreciation. The decline in the required rate of return was somewhat smaller for equipment as well because it was already favorably treated (eligible for expensing half of the cost). The benefits of lower rates are also moderated by the use of debt-financed capital, where a lower tax rate reduces the subsidy (or negative tax rate) that applies to debt-financed investment because of the deduction of nominal interest by businesses.", "Thus, while it is possible that the Act increased the investment due to supply-side effects, it would be premature to conclude that the higher rate of growth of nonresidential fixed investment was due to the tax changes. Looking at changes in the user cost of capital, effects of investments in structures would be expected to be largest, with small (or negative) effects on intellectual property. To date this pattern has not been observed."], "subsections": []}]}, {"section_title": "Effects on Revenues", "paragraphs": ["Overall revenue changes were close to projections, with revenues only $9 billion smaller than projected, due to a $45 billion increase in individual income tax revenues, but a $7 billion decrease in payroll taxes, along with a $40 billion decline in corporate revenues. ", "As noted above, data on GDP are not consistent with a large growth effect in 2018, and thus the tax cut is unlikely to provide enough growth to significantly offset revenue losses in 2018. Data from FY2018 suggest that the tax cut for corporations may have been larger than the $94 billion CBO projected in its April 2018 baseline. That baseline projected corporate revenues of $243 billion, but actual corporate revenues were $38 billion lower at $205 billion, 16% lower than projected. CBO's January 2019 report on the budget and economic outlook indicated that these lower corporate tax revenues could not be explained by economic conditions and stated that the causes will not be apparent until information from tax returns becomes available over the next two years. CBO also expected this decline in revenues to dissipate over time. With little evidence of whether the decline will actually be temporary or permanent, CBO may have relied on the historical tendency of unexplained changes to dissipate over time. It is also possible that estimated revenue losses from the corporate tax changes were too low in their earlier estimates. ", "The overall revenues were close to those projected as the lower corporate revenues were offset by gains from other taxes: a $45 billion increase in individual income tax revenues and a $7 billion decrease in payroll taxes. These differences, particularly for payroll taxes, are much smaller as a percentage of revenue, and CBO does not indicate any need for an explanation of these changes outside of economic forces."], "subsections": []}, {"section_title": "Effects on Effective Tax Rates", "paragraphs": ["Effective tax rates fell, with corporate effective tax rates declining significantly and individual effective income tax rates by a small amount."], "subsections": [{"section_title": "Effective Corporate Tax Rate", "paragraphs": ["Much of the tax revision was focused on corporations. Although the statutory corporate tax rate was reduced from 35% to 21%, the average effective tax rate decline (taxes divided by profits) would be smaller because of existing tax benefits (which lead to a smaller initial effective tax rate) and base-broadening effects. Such an effective tax rate can be calculated using aggregate data from the national income and products accounts, which attempt to measure economic income. The effective average tax rate for corporations was 17.2% in calendar year 2017, and fell to 8.8% in calendar year 2018. This estimate includes worldwide income, but not worldwide taxes. Although actual data on the division of domestic and worldwide income are not available for 2018, using the ratios projected by CBO to eliminate foreign-source income from the measure results in an average effective tax rate of 23.4% in 2017, falling to 12.1% in 2018. Either scenario suggests that the ratio of effective to statutory tax rate dropped following the tax revision. The statutory tax rate dropped by 40%, but the effective rate dropped by 48% (although the percentage point drop was smaller for the effective tax rate).", "Another measure of effective rate is the marginal effective tax rate on income, a tax rate that is a component of the user cost of capital. These tax rates are prospective and capture the main elements of the tax code: tax rates, depreciation, and research credits. They also apply to domestic investment. Using a weighted average of equipment, structures, and intangibles, the effective marginal tax rate on equity investment was estimated to fall from 15.6% to 3.2% from 2017 to 2018. If the effects of reducing subsidies for debt-financed investment are accounted for, marginal tax rates are lower (actually slightly negative) and change less, from a -0.3% rate in 2017 to a -6.6% rate in 2018. Marginal tax rates are likely to be below average tax rates because they capture timing benefits (e.g., accelerated depreciation). Marginal effective tax rates are relevant to economic growth effects because they measure the incentive effects for investment. "], "subsections": []}, {"section_title": "Effective Individual Income Tax Rates", "paragraphs": ["The individual income tax changes for 2018 were smaller than the corporate tax changes in absolute size and substantially smaller as a percentage of income. The effective individual tax rate for federal income taxes as a percentage of personal income is estimated at 9.6% in 2017 and 9.2% in 2018, based on data in the National Income and Product Accounts. This change constitutes a reduction in effective tax rate of 4%. The Treasury Department's Office of Tax Analysis estimates a larger reduction in effective tax rate as a percentage of adjusted family cash income, with the rate falling from 10.1% in 2017 to 8.9% in 2019, although this estimate is based on projected rather than actual data. Both of these declines are smaller than the corporate tax rate decline. As noted earlier, the increase in the standard deduction and child and dependent credit was roughly offset by the elimination of the personal exemption. Statutory rate reductions for individuals were relatively small compared with the corporate rate reduction (the top rate of 39.6% was reduced by 2.6 percentage points, compared with 14 percentage points for the corporate rate), and the benefits of rate reductions were offset by restrictions on itemized deductions. Business income was in some cases eligible for a 20% reduction, which was more significant (an additional 20% deduction at the 37% rate is 7.4 percentage points), but not all business income qualified. ", "There are also effective marginal tax rates, although these are generally divided into rates on labor income and capital income. The marginal tax rate for labor income is typically above the average tax rates because of graduated tax rates and lack of timing benefits. CBO estimates that marginal tax rates on labor income fell from 29.4% to 27.2%. CBO also estimates the marginal tax rate for all capital income (which would include unincorporated businesses, owner-occupied housing, and taxes on interest, dividends, and capital gains, as well as corporate taxes). This value is estimated to fall from 16.5% to 14.7%. Although different from the marginal rates reported above for corporations, both estimated measures find small changes in marginal tax rates, which is consistent with an expected small behavioral response. "], "subsections": []}]}, {"section_title": "Effects on Wages", "paragraphs": ["Distributional analyses of the tax change suggested that the tax revision favored higher-income taxpayers, in part because most of the tax cut benefited corporations and in part because the individual income tax cut largely went to higher-income individuals. During the debate about taxes, however, arguments were made that these corporate tax cuts would benefit workers due to growth in investment and the capital stock. ", "After enactment, CBO projected these effects to be relatively small, with increases in labor productivity (which should affect the wage rate) negligible in 2018 and growing to 0.3% of GDP after 10 years. CBO projected that the total wage bill would grow because of the increase in employment and hours per worker of 0.2% in 2018. The labor supply response would rise through 2024, peaking at 0.8% and then decline as the individual tax cuts expired. ", "A Council of Economic Advisors (CEA) October 2017 study suggested a corporate rate reduction from 35% to 20%, if enacted, would eventually increase the average household's income by a conservative $4,000 a year. This was a longer-run estimate, but the study also estimated that workers would immediately get a significant share (30%) of the profits repatriated from abroad due to tax changes. Another CEA October 2017 report suggested wages could increase by up to $9,000 with such a corporate rate change using more optimistic assumptions. While the CEA study with respect to the $4,000 to $9,000 amounts referred to a long-term effect, the study was portrayed by the Administration as indicating an immediate effect. The amounts associated with repatriation were short term. A $4,000 to $9,000 effect per household, given the 126 million households that were estimated at that time, would produce a total effect ranging from $504 billion to $1,134 billion, or between 2.5% and 5.7% of GDP in 2018. The corporate rate cut from 35% to 21% cost about $125 billion over a full year, and it would cost about $133 billion with the additional percentage point rate reduction (to 20%) considered at that time. Thus, in these scenarios, the effects of the tax cuts would be many times (3.8 to 8.5) larger than the costs. The projections for long-run growth in the CEA study relied on a range of empirical economics literature, including the effects of changes in user cost on investment cost and corporate tax incidence. The econometric estimates of corporate tax incidence are problematic for a number of reasons, and the effects on investment considering user cost did not appear to take into account the direct effect of the tax rate change on the interest.", "In the absence of the tax cuts, wages should grow with the economy and wage rates should grow as the capital stock grows. In addition, tight labor markets resulting from the approach to full employment should have put upward pressure on wage rates in any case. Evidence from 2018 indicated that labor compensation, adjusted to real values by the price indices for personal consumption expenditures, grew slower than output in general, at a 2.3% rate compared with a 2.9% growth rate overall. If adjusted by the GDP deflator, labor compensation grew by 2.0%. With labor representing 53% of GDP, that implies that the other components grew at 3.8%. Thus, pretax profits and economic depreciation (the price of capital) grew faster than wages. ", " Figure 4 shows the growth rate of real wages compared with the growth rate of real GDP for 2013-2018, indicating that wage growth has sometimes been faster than GDP growth and sometimes slower. There is no indication of a surge in wages in 2018 either compared to history or relative to GDP growth. This finding is consistent with the CBO projection of a modest effect.", "The Department of Labor reports that average weekly wages of production and nonsupervisory workers were $742 in 2017 and $766 in 2018. Wages, assuming full-time work, increased by $1,248 annually. But this number must account for inflation and growth that would otherwise have occurred regardless of the tax change. The nominal growth rate in wages was 3.2%, but adjusting for the GDP price deflator, real wages increased by 1.2%. This growth is smaller than overall growth in labor compensation and indicates that ordinary workers had very little growth in wage rates. "], "subsections": []}, {"section_title": "Effects on Repatriation and International Investment Flows", "paragraphs": ["One of the major sources of anticipated increased investment through supply-side effects is international capital flows, particularly in the short and medium term. Savings rates tend to be relatively unresponsive to changes in the rate of return and savings accumulate slowly. Thus the increased investment in the United States (in the aggregate) would need to come from abroad. Some expected foreign investment to flow due to the reduction in the user cost of capital.", "Some also argued that eliminating the tax barrier to repatriating funds (as was done with the tax revision) would lead to reinvestment in the United States of unrepatriated earnings held abroad in U.S. subsidiaries. Under prior law, these earnings would have been taxed at 35%, adjusted for credits on foreign taxes paid, if paid as dividends to the parent company. The tax change exempted dividends from tax, imposed a transition tax on deemed repatriations of existing untaxed earnings at a rate lower than the new corporate rate of 21% (15.5% on liquid assets and 8% on illiquid assets), and imposed a global minimum tax on intangible income. These changes meant paying dividends resulted in no tax consequences. Although estimates varied, they indicated close to $3 trillion of unrepatriated earnings. There were a number of criticisms of the possibility that repatriation of these earnings would stimulate investment, considering the evidence that a repatriation holiday in 2004 had not affected investment.", "Not all of these amounts were held in cash, as some were earnings reinvested in physical assets (such as plant and equipment) and some might be invested in other assets that were not cash equivalents. A Federal Reserve study estimated that $1 trillion was held in cash. ", "A significant amount of repatriations occurred in 2018, as compared both to history and 2017. Dividends in the previous three years ranged from $144 billion to $158 billion, as shown in Figure 5 , whereas $664 billion was repatriated in 2018. Simultaneously, reinvested earnings declined sharply before returning to more normal levels in the 4 th quarter of 2018.", "It is important, however, to measure international capital flows in true terms that reflect the inflow of resources for capital investment and not by financial transactions, such as repatriation of income earned abroad through dividend payments from foreign subsidiaries. Capital investment involves resources that reflect actual investment in the United States. It could involve imports of investment goods directly, or it could involve imports of consumption goods that free up other resources for investment. In either case, the true capital invested in the United States is largely measured by the excess of exports over imports, or more precisely by the current account, which can also include a small amount of net income payments. In more fundamental terms, investment from abroad occurs in a real sense only when the amount of imported goods exceeds the amount of U.S. exports.", "To measure this aggregate change in net capital inflows, examine the balance on the current account, which is generally negative, indicating a net capital inflow (imports exceed exports, or a trade deficit). Adjusting these amounts by the GDP deflator and looking at the change, there was a small increase that amounted to 0.8% of private investment. This change is relatively small and is not out of line with historical fluctuations; see Figure 6 .", "Again, many factors can affect net capital inflows, including domestic borrowing by the government and domestic saving, but the evidence does not suggest a surge in investment from abroad in 2018."], "subsections": []}, {"section_title": "Use of Funds for Worker Bonuses and Share Repurchase", "paragraphs": ["Increased funds, whether accessed from abroad or through tax cuts, could be used in several ways: investment, paying down debt, increasing wages, paying wage bonuses, paying dividends, or repurchasing shares. ", "During the passage of the tax revision and in the immediate aftermath, some argued that firms would use these funds to pay worker bonuses (as discussed in the previous section on wages). Subsequently, a number of firms announced bonuses, which in some cases they attributed to the tax cut. One organization that tracks these bonuses has reported a total of $4.4 billion. With US employment of 157 million, this amount is $28 per worker. This amount is 2% to 3% of the corporate tax cut, and a smaller share of repatriated funds. It is consistent with what most economists would expect that a small percentage of increased corporate profits or repatriated funds (if any) would be used to compensate workers, as economic theory indicates that firms would pay workers their marginal product, a result of fundamental supply and demand forces. The bonus announcements could have reflected a desire to pay bonuses when they would be deducted at 35% rather than 21% (in late 2017 for firms with calendar tax years but in 2018 for firms with different tax years). Worker bonuses could also be a result of a tight labor market and attributed to the tax cut as a public relations move. ", "Much of these funds, the data indicate, has been used for a record-breaking amount of stock buybacks, with $1 trillion announced by the end of 2018. A similar share of repurchases happened in 2004, when a tax holiday allowed firms to voluntarily bring back earnings at a lower rate. "], "subsections": []}, {"section_title": "Effects on Inversions", "paragraphs": ["During the discussion of corporate tax revision over a number of years, one important issue repeatedly raised was the effect of the current tax system on incentives for firms to relocate abroad, or \"invert.\" Inversions involved firms relocating their headquarters to low-tax jurisdictions that generally had territorial taxes, allowing firms to shift profits out of their U.S. operations (so-called earnings stripping) as well as providing potential paths to repatriate earnings without taxes. The earliest of these inversions, beginning in the early 1980s, were called \"naked inversions,\" where a company simply relocated its headquarters without otherwise changing its activities. A number of legislative and regulatory actions largely ended these types of inversions. In 2004, the American Jobs Creation Act ( P.L. 108-357 ) required that any firm in which the former U.S. owners owned 80% or more of the new firm would continue to be treated as a U.S. firm. Firms with 60% to 80% ownership by former shareholders of the U.S. firm were considered inverted firms and subject to certain penalty taxes. This legislation allowed naked inversions in cases where the firm had substantial business activity in the new headquarters country, but regulations issued in 2012 tightened these requirements after a series of inversions used this rule to relocate.", "In 2014, a new wave of inversions that involved mergers with smaller foreign firms began, with one of the most prominent being an announcement that Pfizer, the pharmaceutical company, would acquire Astra-Zeneca with a UK headquarters (although this merger never took place). ", "These inversions gave rise to a number of legislative proposals, but also led to numerous regulatory proposals, which were released in 2014, 2015, and 2016. These regulations addressed a number of issues, including restricting the use of serial inversions to allow a firm to fall under the ownership limits, limiting the ability to access earnings of subsidiaries abroad, and limiting earnings stripping through locating debt in the United States.", "The 2017 Act contained several provisions that made inversions less attractive (aside from the lower corporate tax rate). One notable provision required firms that inverted in the next 10 years to pay a deemed repatriation tax at 35%, rather than at the lower rates of 8% for non-cash holdings and 15.5% for cash or cash equivalents. ", "The Act introduced a new minimum tax to address international profit shifting, the base erosion and anti-abuse tax (BEAT), which adds back payments between related domestic and foreign companies to base income and then taxes that base at a lower rate. BEAT excludes payments which reduce gross receipts with the result that payment for the cost of goods sold is not included under BEAT. An exception applies for firms that invert after November 9, 2017, where payments to a foreign parent or any foreign firm in the affiliated group for cost of goods sold is included in BEAT. The legislation also contained some other provisions making inversions less attractive.", "The Act also modified asset attribution rules. The constructive ownership rules for purposes of determining 10% U.S. shareholders, whether a corporation is a Controlled Foreign Corporation (CFC), and whether parties satisfy certain relatedness tests, which can trigger certain tax provisions including restrictive ones, were expanded in the 2017 tax revision. Specifically, the new law treats stock owned by a foreign person as attributable to a U.S. entity owned by the foreign person (so-called \"downward attribution\"). As a result, stock owned by a foreign person may generally be attributed to (1) a U.S. corporation, 10% of the value of the stock of which is owned, directly or indirectly, by the foreign person; (2) a U.S. partnership in which the foreign person is a partner; and (3) certain U.S. trusts if the foreign person is a beneficiary or, in certain circumstances, a grantor or a substantial owner.", "The downward attribution rule was originally conceived to deal with inversions. In an inversion, without downward attribution, a subsidiary of the original U.S. parent could lose CFC status if it sold enough stock to the new foreign parent so the U.S. parent no longer had majority ownership. With downward attribution, the ownership of stock by the new foreign parent in the CFC is attributed to the U.S. parent, so that the subsidiary continues its CFC status, making it subject to any tax rules that apply to CFCs (such as Subpart F and repatriation taxes under the old law, and Subpart F and Global Low-Taxed Income (GILTI) under the new law). ", "The Act also contained other provisions affecting stockholders and stock compensation. These provisions were intended to discourage inversions. Dividends (like capital gains) are taxed at lower rates than ordinary income. The rates are 0%, 15%, and 20% depending on the rate bracket that ordinary income falls into. Certain dividends received from foreign firms (those that do not have tax treaties and Passive Foreign Investment Companies (PFICs)) are not eligible for these lower rates. Dividends paid by firms that inverted after the date of enactment of P.L. 115-97 are added to the list of those not eligible for the lower rates. Also, in 2004, an excise tax of 15% was imposed on stock compensation received by insiders in an expatriated corporation; the 2017 Act increased it to 20%, effective on the date of enactment for corporations that first become expatriated after that date.", "These new laws did not change the definition of inverted firms but rather the consequences of inversions. ", "Although the legislative changes in the 2017 Act contributed to making inversions less attractive, announced inversions had already slowed substantially following the regulatory changes implemented in 2014, 2015, and 2016. In addition, data released by the Bureau of Economic Analysis indicated that foreign acquisitions of US companies, which rose substantially in 2015, fell by 15% in 2016 and 32% in 2017 (data not available for 2018). Some of the largest declines were in inversion-associated countries, such as Ireland, where acquisitions fell from $176 billion in 2015, to $35 billion in 2016, and to $7 billion in 2017. "], "subsections": [{"section_title": "Appendix. The User Cost of Capital", "paragraphs": ["The user cost of capital is the sum of the pretax required return for a marginal investment and the economic depreciation, or", "(1) C = R/(1-t)+d", "Where C is the user cost, R is the required after-tax return, t is the effective marginal rate, and d is the economic depreciation rate. Economic depreciation is the decline in the value of the asset in real terms, and belongs in the cost term because it compensates the investor for the wearing away, or using up, of the asset. The user cost calculations use a weighted pretax rate of return that reflects both debt and equity finance to simplify the analysis. The effective marginal tax rate, in turn, depends on the statutory tax rate, the present value of economic depreciation, the inflation rate, the return on equity, the share debt-financed, and the nominal interest rate. ", " Table A-1 reports the effective tax rate for corporate and non-corporate investment before and after the 2017 changes for the basic types of nonresidential fixed capital.", "The overall user cost also depends on the economic depreciation rates and the relative sizes of each type of capital stock in the corporate and non-corporate sector. For equipment, the economic depreciation rate is 12.95% per year, and corporate equipment comprises 67% of all equipment. Structures are composed of two types: (1) public utility structures (accounting for 23% of the total) with a depreciation rate of 2.24% and (2) buildings with a depreciation rate of 2.8%. Within public utility structures, corporations account for 84%; within buildings, corporate structures account for 55%. Intangible assets have a depreciation rate of 17%, and corporations account for 86%. User costs and their percentage changes are shown in Table A-2 ."], "subsections": []}]}, {"section_title": "", "paragraphs": [], "subsections": []}]}}
{"id": "R46260", "title": "The Payments in Lieu of Taxes (PILT) Program: An Overview", "released_date": "2020-03-17T00:00:00", "summary": ["The Payments in Lieu of Taxes (PILT; 31 U.S.C. \u00c2\u00a7\u00c2\u00a76901-6907) program provides compensation for certain tax-exempt federal lands, known as entitlement lands . PILT payments are made annually to units of general local government\u00e2\u0080\u0094typically counties\u00e2\u0080\u0094that contain entitlement lands. PILT was first enacted in 1976 () and later recodified in 1982 ( P.L. 97-258 ). PILT is administered by the Office of the Secretary in the Department of the Interior (DOI), which is responsible for the calculation and disbursement of payments. PILT has most commonly been funded through annual discretionary appropriations, though Congress has authorized mandatory funding for PILT in certain years, which has replaced or supplemented discretionary appropriations. Since the start of the program in the late 1970s, PILT payments have totaled approximately $9.2 billion (in current dollars). From FY2015 through FY2019, authorized PILT payments averaged $489 million each year and appropriations for PILT payments averaged $485 million each year.", "Although several federal programs exist to compensate counties and other local jurisdictions for the presence of federal lands within their boundaries, PILT applies to the broadest array of land types. Entitlement lands under PILT include lands administered by the Bureau of Land Management, the National Park Service, the U.S. Fish and Wildlife Service, all in the DOI; lands administered by the U.S. Forest Service in the Department of Agriculture; federal water projects; some military installations; and selected other lands. Nearly 2,000 counties and other local units of government received an annual PILT payment in FY2019.", "PILT comprises three separate payment mechanisms, which are named after the sections of law in which they are authorized: Section 6902 (31 U.S.C. \u00c2\u00a76902), Section 6904 (31 U.S.C. \u00c2\u00a76904), and Section 6905 (31 U.S.C. \u00c2\u00a76905). Section 6902 payments are the broadest of the three. They account for nearly all of the funding disbursed under the PILT program and are made to all but a few of the counties receiving PILT funding. In contrast, Section 6904 and Section 6905 payments are provided only under selected circumstances, account for a small fraction of PILT payments, and are made to a minority of counties (most of which also receive Section 6902 payments). In addition, whereas Section 6902 payments are provided each year based on the presence of entitlement lands, most payments under Section 6904 and Section 6905 are provided only for a short duration after certain land acquisitions.", "Section 6902 payments are determined based on a multipart formula (31 U.S.C. \u00c2\u00a76903). Payments are calculated according to several factors, including (1) the number of entitlement acres present within a local jurisdiction; (2) a per-acre calculation determined by one of two alternatives (Alternative A, also called the standard rate , or Alternative B, also called the minimum provision ); (3) a population-based maximum payment (ceiling); (4) selected prior-year payments made to the counties pursuant to certain other federal compensation programs; and (5) the amount appropriated to cover the payments. Section 6904 and Section 6905 payments are provided to counties after the federal acquisition of specific types of entitlement lands (Section 6904) or entitlement lands located in specific areas (Section 6905) and are based on the fair market value of the acquisitions. If the appropriated amount is insufficient to cover the total payment amounts authorized in Sections 6902, 6904, and 6905, payments are prorated in proportion to the authorized rate. Annual discretionary appropriations bills generally also have included additional provisions dictating the terms of payments.", "PILT is of perennial interest to many Members of Congress and stakeholders throughout the country, and many local governments consider PILT payments to be an integral part of their annual budgets. In contemplating the future of PILT, Congress may consider topics and legislation related to the eligibility of various federal lands for entitlement under PILT (such as Indian lands or other lands currently excluded from compensation), amendments to the formula for calculating payments (especially under Section 6902), and issues related to funding PILT, among other matters."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction to the Payments in Lieu of Taxes (PILT) Program", "paragraphs": ["The Payments in Lieu of Taxes (PILT) program provides compensation for certain entitlement lands that are exempt from state and local taxes. These lands include selected federal lands administered by the Bureau of Land Management, the National Park Service, and the U.S. Fish and Wildlife Service, all in the Department of the Interior (DOI); lands administered by the U.S. Forest Service in the Department of Agriculture; federal water projects; dredge disposal areas; and some military installations. Enacted in 1976, PILT is the broadest\u00e2\u0080\u0094in terms of federal land types covered\u00e2\u0080\u0094of several federal programs enacted to provide compensation to state or local governments for the presence of tax-exempt federal lands within their jurisdictions.", "PILT was enacted in response to a shift in federal policy from one that prioritized disposal of federal lands\u00e2\u0080\u0094one in which federal ownership was considered to be temporary\u00e2\u0080\u0094to one that prioritized retention of federal lands, in perpetuity, for public benefit. This shift began in the late 19 th century and continued into the 20 th century. Along with this shift came the understanding that, because these lands were exempt from state and local taxation and were no longer likely to return to the tax base in the foreseeable future, some compensation should be provided to the impacted local governments. Following several decades of commissions, studies, and proposed legislation, Congress passed PILT to at least partially ameliorate this hardship. PILT payments generally can be used for \"any governmental purpose,\" which could include assisting local governments with paying for local services, such as \"firefighting and police protection, construction of public schools and roads, and search-and-rescue operations.\" ", "The Office of the Secretary in DOI is responsible for the calculation and disbursement of payments under PILT. Payments under PILT are made annually to units of general local government\u00e2\u0080\u0094typically counties, though other types of governmental units also may be used (hereinafter, counties refers to units of general local government)\u00e2\u0080\u0094containing entitlement lands . PILT comprises three separate payment mechanisms: Section 6902, Section 6904, and Section 6905 payments, all named for the sections of law in which they are authorized. Section 6902 payments account for nearly all payments made through PILT. The Section 6902 authorized payment amount for each county is calculated according to a statutory formula that is subject to a maximum payment based on the county's population (see \" PILT Payments Under Section 6902 \"). The remaining payments are provided through Section 6904 and Section 6905 under selected circumstances and typically are limited in duration. Through FY2019, PILT payments have totaled approximately $9.2 billion (in current dollars). ", "Members of Congress routinely consider amending PILT within both appropriations and authorizing legislation. For example, legislation in the 116 th Congress would amend how PILT appropriations are provided and would change how payments are calculated under Section 6902. In addition, Members of Congress may address issues related to which federal lands should be eligible for payments under PILT.", "This report provides an overview of the PILT payment program and includes sections on ", "PILT's authorization and appropriations, which discusses the history of how Congress has provided funding for PILT; Section 6902 payments, which includes a breakdown of how Section 6902 payments are calculated; Section 6904 and Section 6905 payments, which outlines what situations result in payments under these mechanisms; and issues for Congress, which discusses several topics that have been or may be of interest to Members of Congress when considering the future of PILT."], "subsections": []}, {"section_title": "PILT Authorizations and Appropriations", "paragraphs": ["Congress has funded PILT through both discretionary and mandatory appropriations at various times since the program was first authorized. Some stakeholders and policymakers have routinely expressed concern about changes in the appropriations source, both the process of switching between mandatory and discretionary appropriations and the uncertainty that may accompany such changes. ", "From 1982 to 2008, Section 6906 provided an \"Authorization of Appropriations\" for PILT, which stated, \"Necessary amounts may be appropriated to the Secretary of the Interior to carry out [PILT].\" Further, it clarified that \"amounts are available only as provided in appropriation laws.\" Congress amended this language in 2008 and changed the section title from \"Authorization of Appropriations\" to \"Funding.\" Further, Congress changed the text to read", "For each of fiscal years 2008 through 2012-", "(1) each county or other eligible unit of local government shall be entitled to payment under this chapter; and", "(2) sums shall be made available to the Secretary of the Interior for obligation or expenditure in accordance with this chapter.", "This amendment effectively changed PILT funding from being discretionary to being mandatory for the years specified (see Table 1 for PILT funding since FY2005). Since 2008, Congress has amended Section 6906 several times by changing the fiscal year in the first line through both annual discretionary appropriations laws and other legislative vehicles ( Table 1 ).", "PILT was funded through discretionary appropriations from its enactment through FY2007. Since FY2008, Congress has provided funding for PILT through both discretionary and mandatory appropriations ( Table 1 ). From FY2008 through FY2014, Congress authorized mandatory funding for PILT through several laws . Since FY2015, funding has been provided, at least partially, through the annual appropriations process. In FY2015, PILT received both discretionary and mandatory appropriations. For FY2016 through FY2020, Congress funded PILT through the annual appropriations process. In FY2016 and FY2017, the appropriations laws provided specific funding levels for PILT, which was treated as discretionary spending. In FY2018, FY2019, and FY2020, the appropriations laws provided funding for PILT by amending the authority provided in 31 U.S.C. \u00c2\u00a76906, which was treated as mandatory spending. In each of these three years, funding was provided for PILT at the full statutory calculation levels. ", "Since FY2008, Congress has provided funding for PILT through both one-year and multiyear appropriations. Congress's actions have resulted in full funding and partial funding in different years ( Table 1 and Figure 1 ). These types of changes from year to year may have implications for counties that rely on PILT funding as part of their annual budgets. ", "In addition to appropriating funding for the program, Congress routinely provides other guidance on PILT within the annual appropriations process, such as minimum payment thresholds, set-asides for program administration, and provisions for prorating payments. When appropriated funding is insufficient to cover the full amount for authorized payments under Sections 6902, 6904, and 6905, counties typically receive a proportional payment known as a prorated payment ( Figure 1 shows the disparity between the authorized amount and the appropriated amount in recent years). Even in years in which appropriations are set equal to 100% of the full statutory calculation, payments to counties may be prorated if funding is set aside for purposes other than payments, such as administration."], "subsections": []}, {"section_title": "PILT Payments Under Section 6902", "paragraphs": ["Section 6902 payments are provided to units of local government jurisdictions (referred to as counties in this report) across the United States to compensate for the presence of entitlement lands within their boundaries. Section 6902 payments also are provided to the District of Columbia, Guam, Puerto Rico, and the Virgin Islands. Section 6902 payments account for nearly all of the payments made under PILT. In FY2019, 99.85% of all PILT payments were made through Section 6902. Further, more counties are eligible for Section 6902 payments than either Section 6904 or Section 6905 payments. In FY2019, of the 1,931 counties that received PILT payments, 1,927 received payments under Section 6902, and 134 received payments under Section 6904 and/or Section 6905 (130 counties received payments under both Section 6902 and Section 6904 and/or Section 6905)."], "subsections": [{"section_title": "Entitlement Lands", "paragraphs": ["There are nine categories of federal lands identified as entitlement lands in the PILT statute.", "1. Lands in the National Park System 2. Lands in the National Forest System 3. Lands administered by the Bureau of Land Management (BLM) 4. Lands in the National Wildlife Refuge System (NWRS) that are withdrawn from the public domain 5. Lands dedicated to the use of federal water resources development projects 6. Dredge disposal areas under the jurisdiction of the U.S. Army Corps of Engineers 7. Lands located in the vicinity of Purgatory River Canyon and Pi\u00c3\u00b1on Canyon, CO, that were acquired after December 31, 1981, to expand the Fort Carson military reservation 8. Lands on which are located semi-active or inactive Army installations used for mobilization and for reserve component training 9. Certain lands acquired by DOI or the Department of Agriculture under the Southern Nevada Public Land Management Act ( P.L. 105-263 )", "Of these categories, the first three (National Park System, National Forest System, and lands administered by BLM) largely account for all of the lands managed by the relevant agencies. The remaining categories are either lands tied to specific laws or actions (categories 7 and 9, above) or lands that represent a subset of the lands administered by a particular agency. For example, entitlement lands that are included within the NWRS (category 4) only account for lands within the system that have been withdrawn from the public domain, which excludes lands that have been purchased as additions to the NWRS. Further, lands administered by the U.S. Fish and Wildlife Service that are not included in the NWRS are not included within the definition of entitlement lands. Similarly, lands in the other categories (5, 6, and 8, above) may not include all, or even the majority of, lands administered by particular agencies or departments."], "subsections": []}, {"section_title": "Calculating Section 6902 Payments", "paragraphs": ["Section 6902 payments are determined based on a multipart formula (see Figure 2 ). The DOI Office of the Secretary calculates PILT payments according to several factors, including ", "the number of entitlement acres; a per-acre calculation determined by one of two alternatives (Alternative A, also called the standard rate , or Alternative B, also called the minimum provision ); a population-based maximum payment (ceiling); certain prior-year payments pursuant to other compensation programs; and the amount available to cover PILT payments. ", "To calculate a particular county's PILT payment, the DOI Office of the Secretary first must collect data from several federal agencies and the county's state to answer the following questions:", "How many acres of eligible lands are in the county? What is the population of the county? What was the increase in the Consumer Price Index for the 12 months ending the preceding June 30? What were the prior year's payments, if any, for the county under the other payment programs of federal agencies? Does the state have any laws requiring the payments from other federal land payment laws to be passed through to other local government entities, such as school districts, rather than stay with the county government?", "The first step in calculating a county's Section 6902 payment is to determine the number of entitlement acres within the county ( Figure 2 , Box A). ", "The next step is to calculate the population-based ceiling by multiplying the county's population by the population payment rate ( Figure 2 , Box B). County population data are provided by the U.S. Census Bureau. For this calculation, counties with different populations are treated differently ( Figure 3 ): ", "For counties with populations smaller than 5,000, a county's actual population is used in the calculation . For counties with populations larger than 5,000, a county's population is rounded to the nearest 1,000, and this rounded population is used in the calculation. All counties with populations greater than 50,000, regardless of their actual populations, are considered to have a population equal to 50,000 for the purposes of calculating the ceiling. ", "The population payment rate generally declines as population increases in 1,000 person increments (per statute), although the population-based ceiling generally increases ( Figure 4 ). However, this is not always the case. For example, in FY2019, payment rates for several populations are the same despite increasing populations, such as the rates for populations of 26,000; 27,000; and 28,000, which are all $94.98. Further, some payment ceilings do not increase with increasing populations. For example, counties with populations of 50,000 have a lower ceiling than those with populations of 49,000 (49,000 \u00c3\u0097 $76.33 = $3,740,170; and 50,000 \u00c3\u0097 $74.63 = $3,731,500, or $8,670 less for the more populous county). ", "The population payment rate is adjusted annually for inflation based on the change in the Consumer Price Index for the 12 months ending on the preceding June 30. For FY2019, the population payment rates ranged from $186.56 per person for counties with populations of 5,000 or fewer to $74.63 per person for counties with populations of 50,000 or greater.", "The next step is to calculate the payment level under alternatives A and B ( Figure 2 , Box C). Alternative A has a higher per-acre payment rate than Alternative B, but Alternative A is subject to a deduction for prior-year payments. Prior-year payments are those payments from the federal payment programs listed in statute:", "the Act of June 20, 1910 (ch. 310, 36 Stat. 557); Section 33 of the Bankhead-Jones Farm Tenant Act (7 U.S.C. \u00c2\u00a71012); the Act of May 23, 1908 (16 U.S.C. \u00c2\u00a7500), or the Secure Rural Schools and Community Self-Determination Act of 2000 (16 U.S.C. \u00c2\u00a7\u00c2\u00a77101 et seq.); Section 5 of the Act of June 22, 1948 (16 U.S.C. \u00c2\u00a7\u00c2\u00a7577g-577g\u00e2\u0080\u00931); Section 401(c)(2) of the Act of June 15, 1935 (16 U.S.C. \u00c2\u00a7715s(c)(2)); Section 17 of the Federal Power Act (16 U.S.C. \u00c2\u00a7810); Section 35 of the Act of February 25, 1920 (30 U.S.C. \u00c2\u00a7191); Section 6 of the Mineral Leasing Act for Acquired Lands (30 U.S.C. \u00c2\u00a7355); Section 3 of the Act of July 31, 1947 (30 U.S.C. \u00c2\u00a7603); and Section 10 of the Act of June 28, 1934 (known as the Taylor Grazing Act) (43 U.S.C. \u00c2\u00a7315i).", "However, if a state has a pass - through law that requires some or all of these prior-year payments to be paid directly to a sub-county recipient (e.g., a school district), these payments are not deducted from subsequent PILT payments in the following year. ", "Alternative B is calculated using a lower per-acre payment rate, but prior-year payments are not deducted. For FY2019, the per-acre payment rates were $2.77 per acre of entitlement land for Alternative A and $0.39 per acre of entitlement land for Alternative B. If the per-acre payment (number of acres multiplied by the per-acre payment rate) calculated under either alternative is greater than the population-based ceiling, then the population-based ceiling replaces the calculated amount. ", "Once each alternative is calculated, the greater of the two is the Section 6902 authorized payment for the county ( Figure 2 , Box D). ", "The Section 6902 authorized payments are calculated for every county, and this amount is added to the Section 6904 and Section 6905 authorized payments (for more information on Sections 6904 and 6905, see \" PILT Payments Under Sections 6904 and 6905 \"). This summed amount is the full statutory calculation for a given fiscal year ( Figure 2 , Box E). DOI compares the full statutory calculation with the amount appropriated and available for PILT payments to determine whether Congress has provided adequate funding to cover the full statutory calculation ( Figure 2 , Box F). If sufficient funding is available, each county receives its authorized amount; if funding is insufficient, each county receives a prorated payment that is proportional to its authorized payment ( Figure 2 , Box G). ", "The full statutory calculation and the amount available for PILT payments determine proration. Although there are additional adjustments made in the PILT proration calculation resulting from small idiosyncrasies related to the requirements for PILT payments\u00e2\u0080\u0094namely, the requirement of a minimum threshold of $100 for PILT payments \u00e2\u0080\u0094the proration is fundamentally the ratio of the appropriated funding available for PILT payments to the full statutory calculation: ", "As a result, counties may receive less than their authorized PILT payment in years when appropriated funding is insufficient to cover the full statutory calculation. This scenario can occur even when total PILT appropriations match the full statutory calculation; this has been the case in years with mandatory appropriations, when part of the appropriated amount is set aside for a use other than county payments. For example, laws providing appropriations for PILT routinely have allowed DOI to retain a small portion of PILT appropriations for administrative expenses. "], "subsections": []}]}, {"section_title": "PILT Payments Under Sections 6904 and 6905", "paragraphs": ["Section 6904 and Section 6905 payments account for a small fraction of total PILT payments. In FY2019, these payments were made to 134 counties and accounted for 0.15% of PILT payments ($750,605 of $514.7 million in total payments made). Once a county receives Section 6904 and Section 6905 payments, it is to disburse payments to governmental units and school districts within the county in proportion to the amount of property taxes lost because of the federal ownership of the entitled lands, as enumerated under these sections. County units and school districts may use these payments for any governmental purpose."], "subsections": [{"section_title": "Section 6904 Payments", "paragraphs": ["Section 6904 authorizes the Secretary of the Interior to make payments to counties that contain certain lands, or interests in lands, that are part of the National Park System and National Forest Wilderness Areas. However, Section 6904 specifies that these lands, or interests, are eligible only if (1) they have been acquired by the U.S. government for addition to these systems and (2) they were subject to local property taxes in the five-year period prior to this acquisition. Payment under Section 6904 is calculated as 1% of the fair market value of the land at the time it was acquired, not to exceed the amount of property taxes levied on the property during the fiscal year prior to its acquisition. Further, Section 6904 payments are made annually only for the five fiscal years after the land, or interest, is acquired by the U.S. government, unless otherwise mandated by law. "], "subsections": []}, {"section_title": "Section 6905 Payments", "paragraphs": ["Section 6905 authorizes the Secretary of the Interior to make payments to counties that contain lands, or interests, that are part of the Redwood National Park and are owned by the U.S. government or that are acquired by the U.S. government in the Lake Tahoe Basin under the Act of December 23, 1980. Section 6905 payments are paid at a rate of (1) 1% of the fair market value of the acquired land or interests or (2) the amount of taxes levied on the land in the year prior to acquisition, whichever is lesser. Payments on these lands continue for five years or until payments have totaled 5% of the fair market value of the land."], "subsections": []}]}, {"section_title": "Issues for Congress", "paragraphs": ["PILT is of perennial interest to many in Congress and to stakeholders throughout the country. County governments are particularly interested in the certainty of PILT payments, as well as in how payments are calculated, because many consider PILT payments to be an integral part of their annual budgets. Congressional and stakeholder interests include questions of how PILT should be funded, what lands should be included as entitlement lands, and how authorized payment levels are calculated under PILT, among others. ", "Congress annually addresses questions of how funding should be provided to PILT. Congress has funded PILT through both mandatory and discretionary appropriations (see \" PILT Authorizations and Appropriations \"). More often than not, PILT funding has been provided through the discretionary appropriations process for one fiscal year at a time. Although PILT has consistently received funding since its enactment, the appropriations process has created uncertainty among some stakeholders about the level of annual funding. Stakeholders also have asserted that greater certainty, in terms of both the guarantee of funding and the amount of funding (i.e., full statutory calculation) would be better. ", "Members of Congress typically contemplate the implications and tradeoffs of discretionary versus mandatory spending and may have different views than the counties that receive PILT payments. Congress, for example, may weigh its discretion to review and fund PILT on an annual basis through the appropriations process against the certainty of funding for specific activities that accompany mandatory appropriations. Several bills have been introduced to amend how PILT is funded. For example, legislation has been introduced in the 116 th Congress that would require mandatory funding for PILT for either a set period of time (e.g., 10 additional years) or indefinitely. ", "The question of which lands should be eligible for PILT payments is also of interest to many Members and stakeholders. In law, entitlement lands are restricted to the listed federal land types (see \" Entitlement Lands \"). However, this definition does not fully encompass the types of lands that are held by the federal government, nor does it account for the full suite of lands that are exempt from state and local taxes. Although some of these other lands may receive compensation through other federal programs, not all do, which may cause financial hardships for counties that otherwise might receive revenue through taxation. To address this concern, some Members of Congress have contemplated amending the definition of entitlement lands under PILT. For example, past Congresses have introduced legislation that would have amended PILT by expanding the definition of entitlement land to include ", "land \"that is held in trust by the United States for the benefit of a federally recognized Indian tribe or an individual Indian\"; lands under the jurisdiction of the Department of the Defense, other than those already included in PILT; lands acquired by the federal government for addition to the National Wildlife Refuge System; and lands administered by the Department of Homeland Security, among others. ", "Amending the definition of entitlement lands could have several implications. Adding additional acres of entitlement lands could increase the authorized amount of payments under PILT, which likely would benefit those states with the added lands but not states that lack additional lands. This, in turn, could influence how Congress elects to fund PILT. Additional entitled lands may be eligible for other compensation programs, which could further affect PILT payments. ", "The authorized payment level under Section 6902, which accounts for nearly all payments under PILT, is calculated pursuant to the statutory requirements. This section has remained largely unchanged since it was amended in 1994 to add the requirement to adjust for inflation, among other changes. The inflation adjustment clause has resulted in increasing payment and ceiling rates since that time. Congress routinely considers whether the current formula is the best means of calculating payments under PILT or whether the formula should be amended. For example, in the 116 th Congress, bills have been introduced that would adjust the payment structure for counties with a population of less than 5,000. This adjustment would have implications for how population or area would be incorporated into calculating PILT payments and whether PILT payments were provided in an equitable manner.", "PILT is of interest to a large number of counties and other state and local entities across the country, and it may remain of interest to many Members of Congress. In addition to the above issues, Congress may consider other issues related to PILT and how the program fits into the landscape of federal programs that compensate for the presence of tax-exempt federal lands."], "subsections": []}]}}
{"id": "R46343", "title": "Transportation Infrastructure Investment as Economic Stimulus: Lessons from the American Recovery and Reinvestment Act of 2009", "released_date": "2020-05-05T00:00:00", "summary": ["Congress is considering federal funding for infrastructure to revive an economy damaged by Coronavirus Disease 2019 (COVID-19). Congress previously provided infrastructure funding for economic stimulus in the American Recovery and Reinvestment Act of 2009 (ARRA; P.L. 111-5 ). Enacted on February 17, 2009, ARRA was a response to the \"Great Recession\" that officially ran from December 2007 through June 2009. This report discusses the economic impact of the transportation infrastructure funding in ARRA.", "ARRA provided $48.1 billion for programs administered by the U.S. Department of Transportation (DOT), with more than half, $27.5 billion, authorized for highways. Other funding included $8.4 billion for public transportation, $8.0 billion for high-speed rail, $1.3 billion for Amtrak, $1.3 billion for aviation programs, and $1.5 billion for Transportation Investment Generating Economic Recovery (TIGER) grants, which could be used for a wide range of transportation projects. Most of the ARRA funding was distributed by DOT agencies to their usual grantees via existing formula programs. The high-speed rail funding and TIGER grants required the establishment of two new discretionary programs.", "Based on approximately a decade or more of program and other data, the following are among the observations that can be made with regard to the economic effects of ARRA funding for transportation infrastructure:", "Infra structure s pending wa s s lower than o ther t ypes of s timulus . ARRA transportation funding was expended more slowly than other types of assistance, such as unemployment compensation. About 9% of DOT funding was spent within the first six months of availability compared with 44% of unemployment compensation. The majority of DOT's ARRA funding was spent in FY2010 (37%) and FY2011 (24%).", "Characteristics of i nfrastructure f unding a ffect ed e xpenditure t iming. Funding that was distributed by DOT agencies to their usual grantees via existing formula programs was expended relatively quickly. This included most of the funding for highways, public transportation, aviation, and maritime transportation. Discretionary funds for programs established in the law, such as for the high-speed rail program and TIGER grants, took much longer to expend on construction because DOT had to design the programs, issue rules, advertise the availability of funds, and wait for applications from state and local agencies, which then had to complete their own contracting procedures to get work under way.", "The l evel of i nfrastructure i nvestment d epend ed on n onfederal e ntities. State and local expenditures make up around 75% of transportation infrastructure expenditures. In some sectors, such as highways, the growth in federal spending due to ARRA was accompanied by a decline in state and local government spending.", "Maintenance-of- e ffort r equirements we re d ifficult to e nforce. The federal share of transportation projects using ARRA funds was generally 100%, but states were required to certify that they would spend amounts already planned. These maintenance-of-effort requirements in transportation were challenging to comply with and to administer.", "Employment e ffects w ere m odest . Employment in highway construction, for example, rose slightly in the year following the passage of ARRA. A sustained increase in employment did not begin until 2015.", "Financing i nfrastructure did l everage s tate r esources . ARRA included the Build America Bond (BAB) program, which permitted state and local governments to issue tax credit bonds for any type of capital investment. The attractiveness of BABs may have accelerated the timing of capital financings and, thus, capital investment. BABs had a relatively generous subsidy rate, but compared with ARRA grants, the issuance of BABs for infrastructure ensured a state funding match of 65%.", "Stimulus- f unded p rojects c an p rovide t ransportation b enefits . Most ARRA transportation funding went to routine projects such as highway paving and bus purchases that were quick to implement. According to DOT estimates, such projects often have higher benefit-cost ratios than large \"game changing\" projects that build new capacity."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["Congress is considering federal funding for infrastructure to revive an economy damaged by Coronavirus Disease 2019 (COVID-19). This is not the first occasion on which Congress has considered funding infrastructure for purposes of economic stimulus. This report discusses the economic impact of the trans portation infrastructure funding that was provided in the American Recovery and Reinvestment Act of 2009 (ARRA; P.L. 111-5 ). Enacted on February 17, 2009, ARRA was a response to the recession that officially ran from December 2007 through June 2009. This \"Great Recession\" proved to be the most severe economic downturn since the Great Depression of the 1930s. The recession was relatively deep and the recovery relatively slow. The unemployment rate, for example, rose from 4.4% in May 2007 to 10% in October 2009, and did not fall below 6% again until September 2014.", "ARRA was the largest fiscal stimulus measure passed by Congress in reaction to the Great Recession. When enacted, the Congressional Budget Office (CBO) estimated the law would cost the federal government $787 billion from FY2009 through FY2019. Of this amount, infrastructure accounted for approximately $100 billion to $150 billion (13% to 19%), depending on how the term is defined (see text box, 'What is Infrastructure?').", "Of the original $787 billion cost estimate, programs administered by the U.S. Department of Transportation (DOT) received a total of $48.1 billion, about 6% of the total. Other public works infrastructure funding in ARRA included $4.6 billion for Army Corps of Engineers projects, some of which were related to waterborne transportation; $4 billion for state clean water revolving funds; $2 billion for state drinking water revolving funds; and $2.5 billion for four major federal land management agencies. Authority for state and local governments to issue tax credit bonds for capital spending represented an additional federal subsidy of about $36 billion. These figures do not include ARRA funding for federal government buildings and facilities, communications technologies, and energy systems.", "As is the case with most federal infrastructure investment, the infrastructure support authorized in ARRA was provided in four different ways:", "direct spending on infrastructure the federal government owns and operates, including roads and bridges on federal lands and the air traffic control system; grants to nonfederal entities, especially state and local agencies such as state departments of transportation and local public transportation authorities; tax preferences to provide incentives for nonfederal investment in infrastructure, such as the authority granted state and local governments to issue bonds to finance capital spending on infrastructure; and credit assistance to nonfederal entities, such as loans and loan guarantees to public and private project sponsors."], "subsections": []}, {"section_title": "Transportation Infrastructure Funding in ARRA", "paragraphs": ["ARRA funding represented a 72% supplement to DOT's regular FY2009 funding of $67.2 billion. More than half of the DOT spending authorized in ARRA was for highways. The highway funding was predominantly distributed by formula, and, like most of the other funding, had to be obligated by the end of FY2010\u00e2\u0080\u009419 months after the date of enactment\u00e2\u0080\u0094and expended by the end of FY2015. Most of the funding for public transportation was also distributed by formula; the major exception was $750 million for the Federal Transit Administration's existing Capital Investment Grant program. The $8 billion for high-speed and intercity rail projects was an entirely new discretionary program. ARRA also created an entirely new discretionary program whose explicit purpose was economic stimulus, Transportation Investment Generating Economic Recovery (TIGER) grants, which could be used for a wide range of transportation projects ( Table 1 ).", "For most of these programs, the ARRA grants did not require any local match. States were required to certify that they would use these grants to supplement their planned transportation spending, rather than substituting the additional funding for their planned spending. This was known as maintenance-of-effort certification."], "subsections": []}, {"section_title": "Observations on the ARRA Experience", "paragraphs": [], "subsections": [{"section_title": "Infrastructure Spending Is Slower Than Other Types of Stimulus", "paragraphs": ["The timing of expenditures of ARRA transportation funding demonstrated that infrastructure funding is generally expended more slowly than other types of assistance, such as unemployment compensation, Medicaid payments, and Social Security payments. Of the funding allocated to DOT, about 9% was spent within the first six months or so of availability, compared with 44% of unemployment compensation ( Table 2 ). The majority of DOT's ARRA funding was spent in FY2010 (37%) and FY2011 (24%). Another 11% was spent in FY2012. As with regular federal funding provided though DOT programs, ARRA funding was provided on a reimbursable basis. State and local governments had to complete an eligible project, or a defined part of a project, before receiving federal payment, so at least some of the intended economic effects, such as wage payments and orders for construction materials, had occurred prior to each transfer of federal grant funds to a recipient.", "There was a good deal of criticism of infrastructure spending as an economic stimulus, asserting that the expenditures were too slow. The Obama Administration emphasized that the money could be used for \"shovel-ready\" projects, but critics complained that there is \"no such thing as shovel ready.\" CBO data show that almost half of DOT's ARRA funding was spent within about 18 months of enactment. The Obama Administration argued that the relatively slow expenditure of infrastructure funding could offer advantages in a deep and long economic downturn, such as the Great Recession, by noting that", "different types of stimulus affect the economy with different speeds. For instance, aid to individuals directly affected by the recession tends to be spent relatively quickly, while new investment projects require more time. Because of the need to provide broad support to the economy over an extended period, the Administration supported a stimulus plan that included a broad range of fiscal actions."], "subsections": []}, {"section_title": "Characteristics of Infrastructure Funding Can Affect Expenditure Timing", "paragraphs": ["Although the ARRA infrastructure funding was expended more slowly than most other types of support provided in the law, there were major differences in the rate of expenditures among infrastructure programs. Much of the highway and transit funding was distributed by DOT agencies to their usual grantees via existing formula programs, and was therefore available for use relatively quickly. Similarly, the Federal Aviation Administration distributed airport funds through the existing Airport Improvement Program, and the Maritime Administration awarded grants through its existing Assistance to Small Shipyards Program. More than 50% of funding for these programs was expended by grantees by January 2011, less than two years after the enactment of ARRA ( Table 3 ).", "Discretionary funds for programs established in the law, such as for the high-speed rail program and TIGER grants, took much longer to distribute and to use because DOT had to design the programs, issue rules, advertise the availability of funds, and wait for applications. Congress recognized that setting up new programs would take some time by including longer obligation deadlines in the law. High-speed rail funding was expended particularly slowly. DOT data showed that three years after ARRA enactment, 8% of high-speed rail funding had been expended. High-speed rail had been studied for decades, but there were almost no plans or projects that were ready for implementation. In addition, unlike other parts of DOT, the Federal Railroad Administration was inexperienced at administering large amounts of grant funds. ", "A major exception to the general distinction between the timing of formula and discretionary program expenditures was the ARRA funding for the Federal Transit Administration's Capital Investment Grant (CIG) Program. The CIG Program, also known as New Starts, funds the construction of new fixed-guideway public transportation systems and the expansion of existing systems. Eligible projects include transit rail, such as subway/elevated rail (heavy rail), light rail, and commuter rail, as well as bus rapid transit and ferries. The agency has discretion in selecting projects to receive funds and in determining the federal contribution to each approved project. ARRA provided $750 million for the CIG Program. The Federal Transit Administration distributed these funds to 11 projects already under construction that \"demonstrated some contract capacity to absorb additional revenues.\" The money was given to local transit authorities as various construction activities were completed. According to DOT, 63% of these funds were spent within one year of the ARRA's enactment and 100% were spent within two years.", "In general, it was easier for state and local agencies to quickly spend funds on the types of small-scale projects that are typically made possible by formula funds. The Government Accountability Office (GAO) found that more than two-thirds of highway funds were committed for pavement improvement projects, such as resurfacing, reconstruction, and rehabilitation of existing roadways, and three-quarters of transit funds were committed to upgrading existing facilities and purchasing or rehabilitating buses. Funding for airports was used to rehabilitate and reconstruct runways and taxiways, as well as to upgrade or purchase air navigation infrastructure such as air traffic control towers and engine generators."], "subsections": []}, {"section_title": "The Level of Infrastructure Investment Can Depend on Nonfederal Entities", "paragraphs": ["Public spending on transportation, measured in inflation-adjusted 2017 dollars, has been on a downward trend since peaking in 2003 ( Figure 1 ). Infrastructure funding provided by ARRA interrupted that trend, buoying total spending in 2010 and 2011. Except for 2009, however, state and local expenditures, which make up around 75% of total infrastructure expenditures, continued to fall. State and local spending on transportation infrastructure, adjusted for inflation, was 8% lower in 2013 than in 2007, reflecting the long-term damage the Great Recession did to state and local budgets. As the stimulus from ARRA faded, 2013 saw the lowest spending on these major infrastructure systems since the late 1990s.", "In some infrastructure sectors, such as highways, the growth in federal spending due to ARRA did not outweigh the decline in state and local government spending. Consequently, highway infrastructure spending fell over the period 2009 through 2013 ( Figure 2 ). Of course, there is no way to know exactly how highway spending would have changed in the absence of ARRA. Federal spending would have been lower, but it is possible that state and local government spending would have been higher if federal funding had not been available."], "subsections": []}, {"section_title": "Maintenance-of-Effort Requirements Were Difficult to Enforce", "paragraphs": ["Because of the Great Recession, state and local governments experienced a dramatic reduction in tax revenue even as demand for government services increased. For this reason, many jurisdictions found it difficult to maintain pre-recession levels of spending for at least some types of transportation infrastructure, leaving the possibility that additional federal dollars would simply replace state and local dollars. The federal share of transportation projects using ARRA funds was generally 100%, but states were required to certify that they would spend amounts already planned. This maintenance-of-effort requirement was in force from ARRA's enactment in February 2009, by which time the recession had been under way for over a year, through September 30, 2010.", "In its analysis of ARRA, GAO found that the maintenance-of-effort requirements in transportation were challenging to comply with and to administer. For example, governors had to certify maintenance of effort in several transportation programs, some administered by the state and some administered by local governments and independent authorities. Within each state, these various programs typically had different and complex revenue sources. In many cases, states did not have a way to identify planned expenditures. Because of ambiguities in the law and practicalities that come to light with experience, DOT issued maintenance-of-effort guidance to the states seven times in the first year after ARRA enactment.", "Some research on the effects of highway funding in ARRA on state highway spending found that, despite the maintenance-of-effort requirement, there was substantial substitution of federal dollars for state dollars. One analysis found that for every dollar of federal aid in ARRA for highways, on average, overall spending increased by 19 cents, meaning states decreased their own spending by 81 cents."], "subsections": []}, {"section_title": "Employment Effects Were Modest", "paragraphs": ["In many infrastructure sectors, the employment effects of ARRA funding were relatively modest. In highway construction, for example, employment dropped sharply from the end of 2007 through 2009. There was a slight increase through 2010, presumably related to the ARRA funding, but a sustained increase in employment did not begin again until 2015. The number of highway construction workers reached pre-recession levels in 2018 ( Figure 3 ).", "Although employment in highway construction was much higher before the recession began in late 2007, employment might have fallen further in the absence of ARRA funding. The transportation funding in ARRA, therefore, may have allowed state and local governments to maintain a certain level of employment in the transportation construction sector. Additionally, it likely permitted state and local governments to maintain employment in other, nontransportation, sectors by shifting state expenditures from transportation to other purposes. The slow recovery of highway construction jobs suggests the sector could have productively absorbed more funding after the ARRA funding had largely been expended, particularly during the 2013, 2014, and 2015 construction seasons."], "subsections": []}, {"section_title": "Financing Infrastructure May Leverage State Resources", "paragraphs": ["The financial crisis and the accompanying recession affected state and local credit markets. Among other things, declines in employment and business activity made it difficult for state and local governments to raise funds through the sale of tax-exempt municipal bonds whose repayment depended on tax revenue. Limited access to financing or to financing at much higher costs may have contributed to a decline in state and local government infrastructure investment. In more normal economic times, municipal bonds account for about 10% of the capital invested in highways and public transportation.", "In response to the problems in the municipal credit markets, ARRA included the Build America Bond (BAB) program, which permitted state and local governments to issue tax credit bonds from April 2009 through the end of 2010 to raise funds that could be used for any type of capital investment. Unlike traditional municipal bonds, which provide a subsidy to bondholders by exempting interest payments from federal income taxation and thereby allow issuers to sell bonds at low interest rates, BABs offered a higher taxable yield to investors; the federal government subsidized 35% of the issuer's interest costs. This subsidy rate was generally seen as generous, thereby reducing borrowing costs for state and local governments. Because the interest on BABs was taxable, the bonds were attractive to investors without federal tax liability, such as pension funds, enlarging the pool of possible investors. The taxable bond market is about 10 times the size of the traditional tax-exempt bond market. This larger market may have contributed to the reduction in borrowing costs. BABs were also considered more efficient than traditional municipal bonds because all of the federal subsidy went to the state or local government issuer. With traditional tax-exempt municipal bonds, some of the subsidy goes to investors.", "There were 2,275 BAB issuances over the 21 months of eligibility, for a total of $181 billion. About 30% of BAB funding went to educational facilities, followed by water and sewer projects (13.8%), highways (13.7%), and transit (8.7%). Without the BAB program, some of this capital would have been raised using traditional tax-exempt bonds, although likely at a higher cost to state and local government issuers. The Department of the Treasury stated that BAB issuance surged in the last quarter of 2010, suggesting that issuers were accelerating the timing of capital financings and, thus, capital investment. Although BABs had a generous subsidy rate relative to other municipal bonds, their structure ensured that issuers paid 65% of the interest costs, effectively requiring state and local governments to pay a larger share of infrastructure costs than under ARRA grant programs. Because the federal subsidy is paid to the issuer as the interest is due to the investor, the cost to the federal government of BABs was spread over the subsequent years ( Table 2 )."], "subsections": []}, {"section_title": "Stimulus-Funded Projects Can Provide Transportation Benefits", "paragraphs": ["Because the purpose of ARRA was to stimulate the economy, the law included time limits on the obligation and expenditure of transportation funds. As noted earlier, about half of the transportation funds appropriated by ARRA were expended by the end of FY2010, within 20 months of the law's enactment. Much of this funding went to routine projects such as highway paving and bus purchases that were quick to implement. Larger projects that required more detailed environmental reviews and complex design work were not \"shovel-ready,\" leading to assertions that ARRA did not \"fund investments that would provide long-term economic returns.\" ", "In its examination of ARRA transportation expenditures, GAO found that the focus on quick implementation did change the mix of highway projects chosen. Some state officials stated that the deadlines \"prohibited other, potentially higher-priority projects from being selected for funding.\" However, others noted that ARRA funding allowed them to complete so-called \"state-of-good-repair\" projects, presumably leaving greater financial capacity to undertake larger projects in the future. Furthermore, economic research shows that smaller state-of-good-repair projects often have higher benefit-cost ratios than new, large \"game changing\" projects whose benefits are often more speculative.", "In its biennial examination of the highway and public transportation systems, DOT typically finds that, for the United States as a whole, too little is spent on state-of good-repair projects versus building new capacity. In its latest report, DOT examined actual spending in 2014 and various investment scenarios for the period 2015 through 2034. DOT found that state-of-good-repair spending was 76% of total highway spending in 2014, whereas to maximize economic benefits about 79% should go to such projects. For public transportation, DOT found that 64% to 74% of total infrastructure spending should be devoted to state-of-good repair projects, whereas 60% was used for that purpose in 2014."], "subsections": []}]}]}}
{"id": "R45819", "title": "The Disaster Recovery Reform Act of 2018 (DRRA): A Summary of Selected Statutory Provisions", "released_date": "2019-07-08T00:00:00", "summary": ["The Disaster Recovery Reform Act of 2018 (DRRA, Division D of P.L. 115-254 ) was enacted on October 5, 2018. DRRA is the most comprehensive reform of the Federal Emergency Management Agency's (FEMA's) disaster assistance programs since the passage of the Sandy Recovery Improvement Act of 2013 (SRIA, Division B of P.L. 113-2 ) and the Post-Katrina Emergency Management Reform Act of 2006 (PKEMRA, P.L. 109-295 ). DRRA focuses on improving pre-disaster planning and mitigation, response, and recovery, and increasing FEMA accountability. As such, it amends many sections of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (Stafford Act, P.L. 93-288 , as amended; 42 U.S.C. \u00c2\u00a7\u00c2\u00a75121 et seq.) and also includes new standalone authorities. In addition, DRRA requires reports to Congress, rulemaking, and other actions.", "This report provides an overview of selected sections of DRRA that significantly change the provision of services or authorities under the Stafford Act, and includes:", "an overview of programs as they existed prior to DRRA's enactment, and how they were modified following DRRA; the context or rationale for program modifications or changes to disaster assistance policies following DRRA's enactment; potential considerations and issues for Congress; a table of amendments to the Stafford Act following DRRA's enactment; and tables of deadlines associated with DRRA's reporting, rulemaking and regulations, and other implementation actions and requirements.", "This report does not specifically address every section included in DRRA, nor does it address every subsection or paragraph of those DRRA sections which are addressed herein."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["Numerous natural disasters\u00e2\u0080\u0094including the 2017 hurricane season and devastating wildfires in California\u00e2\u0080\u0094served as catalysts for significant recent changes in federal emergency management policy. Most of these policy changes were included in the Disaster Recovery Reform Act of 2018 (DRRA), which was included as Division D of the FAA Reauthorization Act of 2018 ( P.L. 115-254 ). DRRA is the most comprehensive reform of the Federal Emergency Management Agency's (FEMA's) disaster assistance programs since the passage of the Sandy Recovery Improvement Act of 2013 (SRIA, Division B of P.L. 113-2 ) and the Post-Katrina Emergency Management Reform Act of 2006 (PKEMRA, P.L. 109-295 ). ", "As with past disaster legislation, lessons learned following recent disasters revealed areas that could be improved through legislative and programmatic changes, including the need for increased preparedness and pre-disaster mitigation. The legislative intent of DRRA includes improving disaster preparedness, response, recovery, and mitigation, including pre-disaster mitigation; clarifying assistance program eligibility, processes, and limitations, including on the recoupment of funding; and increasing FEMA's transparency and accountability. Thus, DRRA amends many sections of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (Stafford Act, P.L. 93-288 , as amended; 42 U.S.C. \u00c2\u00a7\u00c2\u00a75121 et seq.), which provides the authority for the President to issue declarations of emergency and major disasters, and provides a range of federal assistance to local, state, territorial, and Indian tribal governments, as well as certain private nonprofit organizations, and individuals and families. In addition to numerous amendments to the Stafford Act, DRRA includes new standalone authorities, and requires reports to Congress, rulemaking, and other actions. ", "This report is structured to first provide a tabular overview of the major changes that DDRA made to the Stafford Act (see Table 1 ). The report then provides detailed explanations of the programmatic and procedural modifications to various disaster assistance programs under DRRA. These DRRA modifications are grouped in the following sections: preparedness; mitigation; public assistance; individual assistance; flood plain management and flood insurance; and other provisions. In addition to a description of DRRA's changes to programs, each section includes potential policy considerations for Congress. Appendix A includes the following tables of deadlines associated with DRRA's reporting, rulemaking/regulatory, and other implementation actions and requirements: Table A-1 , DRRA Reporting Requirements (i.e., reports to Congress); Table A-2 , DRRA Rulemaking and Regulations Requirements; and Table A-3 , DRRA Guidance and Other Required Actions. A table of common acronyms used throughout this report is also included in Table B-1 of Appendix B . Finally, a brief legislative history of DRRA is included in Appendix C ."], "subsections": []}, {"section_title": "Preparedness5", "paragraphs": [], "subsections": [{"section_title": "Section 1208: Prioritization of Facilities", "paragraphs": ["DRRA Section 1208 requires the FEMA Administrator to provide guidance and annual training to state, local, and Indian tribal governments; first responders; and utility companies on", "the need to prioritize assistance to hospitals, nursing homes, and other long-term health facilities to ensure they remain functioning, or return to functioning as soon as possible, during power outages related to natural hazards and severe weather; how these medical facilities should prepare for power outages related to natural hazards and severe weather; and how local, state, territorial, and Indian tribal governments; first responders; utility companies; and these medical facilities should develop a strategy to coordinate and implement emergency response plans.", "Recent hurricanes have caused power outages affecting millions of individuals, including those in medical care facilities. For example, following Hurricane Harvey, 200,000 people lost power in south-east Texas. Additionally, in Florida, after Hurricane Irma made landfall, 4 million people lost power and failed air conditioning at a nursing home led to 11 deaths. DRRA Section 1208 may result in medical care facilities being better prepared for power outages and help mitigate the damage (and potential deaths) associated with power outages."], "subsections": []}, {"section_title": "Section 1209: Guidance on Evacuation Routes", "paragraphs": ["DRRA Section 1209 requires the FEMA Administrator, in coordination with the Administrator of the Federal Highway Administration (FHWA), to develop and issue guidance for state, local, and Indian tribal governments in identifying evacuation routes. Specifically, the FEMA Administrator is to revise existing guidance, or issue new guidance, on these evacuation routes.", "The FEMA Administrator, in developing this guidance, is to consider", "whether these evacuation routes have resisted disaster impacts and recovered quickly from disasters; the need to evacuate special needs populations; information sharing and public communications with evacuees; sheltering evacuees, including the care, protection, and sheltering of their animals; the return of evacuees to their homes; other issues or items the Administrator considers appropriate; methods that assist evacuation route planning and implementation; the ability of the evacuation routes to manage contraflow operations; the input of federal land management agencies where evacuation routes may cross or go through public land; and such other issues or items the FHWA Administrator considers appropriate.", "Section 1209 also states that the FEMA Administrator may, in coordination with the FHWA Administrator and local, state, territorial, and Indian tribal governments, conduct a study of the adequacy of available evacuation routes, and submit recommendations on how to assist with anticipated evacuation flow.", "Currently, FHWA uses various tools and technology for hurricane modeling, information sharing, and transportation (evacuation) modeling and analysis. DRRA Section 1209 codifies practices that FEMA and FHWA currently employ to address evacuation route planning and implementation of evacuations."], "subsections": []}, {"section_title": "Section 1236: Guidance and Training by FEMA on Coordination of Emergency Response Plans", "paragraphs": ["DRRA Section 1236 requires the FEMA Administrator, in coordination with other relevant agencies, to provide annual guidance and training on coordination of emergency response plans to local, state, territorial, and Indian tribal governments; first responders; and hazardous material storage facilities. Specifically, the annual guidance and training shall include:", "a list of required equipment for a release of hazardous substances and material; an outline of health risks associated with exposure to hazardous substances and materials; and published best practices for mitigating damage, and danger, to communities from hazardous materials.", "This required annual guidance and training is to be implemented not later than 180 days after DRRA's enactment (i.e., by April 3, 2019). Prior to DRRA and presently, the U.S. Department of Homeland Security (DHS) provides hazardous materials information from myriad sources, such as universities and other local and federal agencies. The available information includes procedures and resources for responding to different types of hazardous material releases, independent study training courses, and several resources related to medical management for chemical exposures, but the information is broadly distributed and may not be quickly accessible when responding to a hazardous materials incident. DRRA Section 1236 adds not only the plan coordination training requirement, but also requires the development of resources that may streamline information that can be incorporated into emergency response plans, such as the list of required equipment and health risks."], "subsections": []}]}, {"section_title": "Mitigation", "paragraphs": [], "subsections": [{"section_title": "Section 1234: National Public Infrastructure Pre-Disaster Hazard Mitigation14", "paragraphs": ["DRRA Section 1234 authorizes the National Public Infrastructure Pre-Disaster Mitigation Fund (NPIPDM), which allows the President to set aside 6% from the Disaster Relief F und (DRF) with respect to each major disaster, establishes limitations on the receipt of pre-disaster hazard mitigation funding, and expands the criteria considered in awarding mitigation funds.", "Pre-Disaster Mitigation (PDM) funding is authorized by Stafford Act Section 203\u00e2\u0080\u0094Pre-Disaster Hazard Mitigation, with the goal of reducing overall risk to the population and structures from future hazard events, while also reducing reliance on federal funding from future disasters. For FY2019, the PDM program is funded through the DRF . Pre-DRRA, the amount available for PDM was appropriated separately on an annual basis, and financial assistance was limited by the amount available in the National Pre-Disaster Mitigation Fund. FEMA awarded PDM grants competitively, and 56 states and jurisdictions, as well as federally-recognized Indian tribal governments, were eligible to apply. Local governments, including Indian tribes or authorized tribal organizations, were required to apply to their state/territory as subapplicants. In FY2018, each state, jurisdiction, and tribe was eligible for a baseline level of financial assistance in the amount of the lesser of 1% of appropriated funding, or $575,000, although additional funding could be awarded competitively. No applicant was eligible to receive more than 15% of the appropriated funding. In FY2018, FEMA set aside 10% of the appropriation for federally recognized tribes. FEMA sets priorities annually for the competitive PDM funding, with priority given to applicants that have little or no disaster funding available through the Hazard Mitigation Grant Program (HMGP). In FY2018, FEMA awarded $235.2 million in PDM funding . ", "DRRA authorizes the NPIPDM, for which the President may set aside from the DRF, with respect to each major disaster, an amount equal to 6% of the estimated aggregate amount of the grants to be made pursuant to the following sections of the Stafford Act: ", "Section 403\u00e2\u0080\u0094Essential Assistance; Section 406\u00e2\u0080\u0094Repair, Restoration, and Replacement of Damaged Facilities; Section 407\u00e2\u0080\u0094Debris Removal; Section 408\u00e2\u0080\u0094Federal Assistance to Individuals and Households; Section 410\u00e2\u0080\u0094Unemployment Assistance; Section 416\u00e2\u0080\u0094Crisis Counseling Assistance and Training; and Section 428\u00e2\u0080\u0094Public Assistance Program Alternative Procedures.", "The amount set aside for PDM shall not reduce the amounts otherwise available under the sections above. Funding from the NPIPDM may be used to provide technical and financial mitigation assistance pursuant to each major disaster. An additional clause in DRRA provides that NPIPDM funds may be used \"to establish and carry out enforcement activities and implement the latest published editions of relevant consensus-based codes, specifications, and standards that incorporate the latest hazard-resistant designs and establish minimum acceptable criteria for the design, construction, and maintenance of residential structures and facilities that may be eligible for assistance under this Act.... \" ", "The changes to PDM funding in DRRA may increase the focus on funding public infrastructure projects that improve community resilience before a disaster occurs, though FEMA has the discretion to shape the program in many ways. There is potential for significantly increased funding post-DRRA through the new transfer from the DRF, but it is not yet clear how FEMA will implement this new program. ", "In the Consolidated Appropriations Act, 2019 ( P.L. 116-6 ) , Congress made $250 million available for PDM for FY2019, which may be merged with funds for the NPIPDM once it is fully implemented. The FY2019 PDM program will be the last PDM cycle before the rollout of the new DRRA Building Resilient Infrastructure and Communities (BRIC) Program. FEMA has authority to operate the legacy PDM program for FY2019, after which BRIC will replace the current PDM program. Funding not used in FY2019 will remain for the first year of BRIC, which will likely begin in FY2020. PDM projects already in progress will continue through closeout under the current PDM guidance. Any unobligated PDM funds may be rolled into a \"carryover PDM\" funding account which could be used for obligations of PDM projects underway when BRIC is implemented. Once BRIC is fully implemented, legacy PDM funds may be merged with BRIC funds, which may then be used for both PDM and BRIC work.", "FEMA is in the process of determining how funds under the 6% set-aside will be allocated to local, state, territorial, and Indian tribal governments. FEMA expects that BRIC will be funded entirely by the 6% set-aside; however, nothing prohibits Congress from appropriating additional funds for the program. FEMA anticipates setting aside the full 6% estimate from each major disaster declaration within 180 days after declaration. Based on the recent funding trends of the DRF, FEMA assumes that it would be a rare circumstance in which there is no set-aside.", "Other provisions in DRRA Section 1234 establish that mitigation funds under Stafford Act Section 203 would only be provided to states which had received a major disaster declaration in the past seven years, or any Indian tribal governments located partially or entirely within the boundaries of such states. Other provisions would expand the criteria to be considered in awarding mitigation funds, including the extent to which the applicants have adopted hazard-resistant building codes and design standards, and the extent to which the funding would increase resiliency."], "subsections": []}, {"section_title": "Section 1235(a): Additional Mitigation Activities32", "paragraphs": ["DRRA Section 1235(a) amends Stafford Act Section 404(a)\u00e2\u0080\u0094Hazard Mitigation to include a provision authorizing the President to contribute up to 75% of the cost of hazard mitigation measures which the President has determined are cost effective and which increase resilience to future damage, hardship, loss, or suffering in any area affected by a major disaster. The pre-DRRA language only authorized funding for hazard mitigation measures which substantially reduce risk.", "DRRA does not include definitions of reducing risk or increasing resilience. However, DRRA Section 1235(d) requires FEMA to issue a rulemaking defining the terms resilient and resiliency , and although these definitions relate to Stafford Act Section 406\u00e2\u0080\u0094Repair, Restoration, and Replacement of Damaged Facilities, FEMA may consider using these definitions for mitigation activities as well."], "subsections": []}, {"section_title": "Section 1205: Additional Activities33", "paragraphs": ["DRRA Section 1205 amends Stafford Act Section 404\u00e2\u0080\u0094Hazard Mitigation by adding a section to allow recipients of hazard mitigation assistance provided under this section and Section 203\u00e2\u0080\u0094Pre-Disaster Hazard Mitigation to use the funding to conduct activities to help reduce the risk of future damage, hardship, loss, or suffering in any area affected by a wildfire or windstorm. The section includes a nonexclusive list of wildfire and windstorm mitigation activities that are eligible for funding. These activities were eligible for funding pre-DRRA, but this section is intended to clarify eligible uses of funding under FEMA's hazard mitigation grant programs."], "subsections": []}, {"section_title": "Section 1217: Additional Disaster Assistance37", "paragraphs": ["DRRA Section 1217 amends Section 209(c)(2) of the Public Works and Economic Development Act of 1965 such that, when assistance is given to communities whose economy has been injured by a major disaster or emergency and which have received a major disaster or emergency declaration under the Stafford Act, the Secretary of Commerce may encourage hazard mitigation if appropriate. The Public Works and Economic Development Act of 1965 did not have any previous mention of mitigation; however, this provision does not give the Secretary any additional tools by which to encourage hazard mitigation."], "subsections": []}, {"section_title": "Section 1204: Wildfire Mitigation39", "paragraphs": ["Section 1204 of DRRA amends Stafford Act Sections 420\u00e2\u0080\u0094Fire Management Assistance and 404(a)\u00e2\u0080\u0094Hazard Mitigation to include HMGP for Fire Management Assistance Grant (FMAG) declarations. The Stafford Act authorizes three types of declarations that provide federal assistance to states and localities: (1) FMAG declarations, (2) emergency declarations, and (3) major disaster declarations. FMAGs provide federal assistance for fire suppression activities. Emergency declarations trigger aid that protects property, public health, and safety and lessens or averts the threat of an incident becoming a catastrophic event. ", "A major disaster declaration constitutes the broadest authority for federal agencies to provide supplemental assistance to help state and local governments, families and individuals, and certain nonprofit organizations recover from the incident. Major disaster declarations also authorize statewide hazard mitigation grants to states and tribes through FEMA's HMGP. Authorized under Stafford Act Section 404\u00e2\u0080\u0094Hazard Mitigation, HMGP can be used to fund mitigation projects to protect either private or public property, provided that the project fits within local, state, territorial, and Indian tribal government mitigation strategies to address risk and complies with HMGP guidelines. ", "HMGP grant amounts are provided on a sliding scale based on the percentage of funds spent for Public and Individual Assistance for each presidentially-declared major disaster declaration. For states and federally-recognized tribes with a FEMA-approved Standard State or Tribal Mitigation Plan, the formula provides for up to 15% of the first $2 billion of estimated aggregate amounts of disaster assistance, up to 10% for amounts between $2 billion and $10 billion, and 7.5% for amounts between $10 billion and $35.333 billion.", "DRRA Section 1204 also requires the FEMA Administrator to submit a report one year after enactment and annually thereafter containing a summary of any mitigation projects carried out, and any funding provided to those projects, to the Senate Committee on Homeland Security and Governmental Affairs (HSGAC), the House Committee on Transportation and Infrastructure, and the House and Senate Committees on Appropriations.", "One potential issue of congressional concern is the cost implications of providing mitigation funding for FMAG declarations. All things being equal, making HMGP available for FMAGs will increase federal expenditures for HMGP because it expands the number of incidents eligible for HMGP. The additional costs, however, may not be significant compared to HMGP funding for major disaster declarations. As previously discussed, HMGP grants are based on the percentage of funds spent for Public and Individual Assistance. Though it is unclear how the HMGP formula will be applied to FMAG declarations, HMGP grant amounts would likely be less than what is typically provided for major disasters because funding for major disasters is significantly more than what is provided for FMAGs. For example, from FY2017 to FY2018, $12.3 million has been obligated for FMAG declarations. In contrast, $1.7 billion has been obligated for Hurricane Matthew. Furthermore, HMGP funding for FMAGs could be considered an investment because the projects they fund can help save recovery costs for future disasters."], "subsections": []}, {"section_title": "Section 1233: Additional Hazard Mitigation Activities46", "paragraphs": ["DRRA Section 1233 authorizes recipients of hazard mitigation assistance to use the assistance to reduce the risk of earthquake damage, hardship, loss, or suffering for areas in the United States affected by earthquake hazards. DRRA Section 1233 addresses three areas of earthquake mitigation, all related to improving the capability for an earthquake early-warning system:", "improvements to regional seismic networks;", "improvements to geodetic networks; and", "improvements to seismometers, global positioning system (GPS) receivers, and associated infrastructure.", "The earthquake hazards and mitigation community long ago shifted away from an early focus on predicting earthquakes to mitigating earthquake hazards and reducing risk, and more recently to a focus on activities that would enhance the effectiveness of an earthquake early-warning system. An earthquake early-warning system would send a warning after an earthquake occurred but before the damaging seismic waves reach a community that would be affected by the earthquake-induced shaking. In contrast, an earthquake prediction would provide a date, time, and location of a future earthquake.", "The National Earthquake Hazards Reduction Program Reauthorization Act of 2018 ( P.L. 115-307 ) removed statutory language referencing the goal of earthquake prediction, substituting instead the goal of issuing earthquake early warnings and alerts. Since 2006, the U.S. Geological Survey (USGS), together with several cooperating institutions, has been working to develop a U.S. earthquake early-warning system. According to the USGS, the goal is to create and operate such a system for the nation's highest-risk regions, beginning with California, Oregon, and Washington. Other seismically active western states, such as Alaska, also may eventually be incorporated into an early-warning system, and possibly a region in the Midwest known as the New Madrid Seismic Zone.", "The authority provided in DRRA Section 1233 could help improve the U.S. early-warning capability because it addresses many of the components for earthquake detection (e.g., seismometers, the instruments that detect shaking), location (e.g., GPS receivers and infrastructure for more precise mapping of where shaking will occur), and improvements to the connected regional networks of seismometers and geodetic instruments. Part of the challenge in implementing an effective earthquake early-warning system is communicating the timing and location of dangerous shaking once the earthquake occurs. The section does not appear to address that challenge directly; however, improvements to the components specified in the section would likely improve overall early-warning system performance."], "subsections": []}, {"section_title": "Section 1231: Guidance on Hazard Mitigation Assistance52", "paragraphs": ["DRRA Section 1231 requires FEMA, not later than 180 days after enactment (April 3, 2019), to issue guidance regarding the acquisition of property for open space as a mitigation measure under Stafford Act Section 404\u00e2\u0080\u0094Hazard Mitigation. This guidance shall include a process by which the State Hazard Mitigation Officer (SHMO) appointed for the acquisition shall provide written notification to the local government, not later than 60 days after the applicant for assistance enters into an agreement with FEMA regarding the acquisition, that includes (1) the location of the acquisition; (2) the state-local assistance agreement for the Hazard Mitigation Grant Program; (3) a description of the acquisition; and (4) a copy of the deed restrictions. The guidance shall also include recommendations for entering into and implementing a memorandum of understanding between units of local government and the grantee or subgrantee, the state, and the regional FEMA Administrator that includes provisions to (1) use and maintain the open space consistent with Section 404 and all associated regulations, standards and guidance, and consistent with all adjoining property, so long as the cost of the maintenance is borne by the local government; and (2) maintain the open space pursuant to standards exceeding any local government standards defined in the agreement with FEMA."], "subsections": []}, {"section_title": "Section 1215: Management Costs\u00e2\u0080\u0094Hazard Mitigation54", "paragraphs": ["DRRA Section 1215 amends Stafford Act Section 324(b)(2)(A)\u00e2\u0080\u0094Management Costs by setting out specific management cost caps for hazard mitigation. A grantee under Stafford Act Section 404\u00e2\u0080\u0094Hazard Mitigation may be reimbursed not more than 15% of the total award, of which not more than 10% may be used by the grantee and 5% by a subgrantee."], "subsections": []}]}, {"section_title": "Public Assistance58", "paragraphs": [], "subsections": [{"section_title": "Section 1207(c) and (d): Program Improvements", "paragraphs": ["DRRA Section 1207(c) amends Stafford Act Section 428(d)\u00e2\u0080\u0094Public Assistance Program Alternative Procedures to prohibit the conditioning of federal assistance under the Stafford Act on the election of an eligible entity to participate in the alternative procedures set forth in Section 428 of the Stafford Act. Prior to enactment of this provision of DRRA, FEMA had the discretion to impose conditions on the use of Section 428 procedures.", "DRRA Section 1207(d) amends Section 428(e)(1) to add a provision that requires cost estimates submitted under Section 428 procedures that are certified by a professionally licensed engineer and accepted by the FEMA Administrator to be presumed to be reasonable and eligible costs unless there is evidence of fraud. Prior to enactment of this provision, FEMA had the discretion to make case-by-case determinations regarding whether costs were reasonable and eligible, and FEMA had the discretion to change the determinations even after an original cost estimate had been approved."], "subsections": []}, {"section_title": "Section 1206(b): Eligibility for Code Implementation and Enforcement", "paragraphs": ["DRRA Section 1206(b) amends Stafford Act Section 406\u00e2\u0080\u0094Repair, Restoration, and Replacement of Damaged Facilities to add base and overtime wages for extra hires to facilitate implementation and enforcement of adopted building codes as an allowable expense. Allowable base and overtime wages are authorized for not more than 180 days after a major disaster declaration is issued."], "subsections": []}, {"section_title": "Section 1235(b), (c), and (d): Additional Mitigation Activities", "paragraphs": ["DRRA Section 1235(b) amends Stafford Act Section 406\u00e2\u0080\u0094Repair, Restoration, and Replacement of Damaged Facilities to specify that eligible costs for assistance provided under Section 406 be based on estimates of repairing, restoring, reconstructing, or replacing a public facility or private nonprofit facility in conformity with \"the latest published editions of relevant consensus-based codes, specifications, and standards that incorporate the latest hazard-resistant designs and establish minimum acceptable criteria for the design, construction, and maintenance of residential structures and facilities.\" DRRA Section 1235 also requires that such eligible costs include estimates of replacing eligible projects under Stafford Act Section 406 \"in a manner that allows the facility to meet the definition of resilient\" developed pursuant to Section 406(e)(1)(A). Prior to DRRA's enactment, FEMA required that such project cost estimates be based on more general language of \"codes, specifications, and standards\" in place at the time the disaster occurred. ", "DRRA Section 1235(c) amends Stafford Act Section 406 to authorize the contributions for eligible costs to be provided on an actual cost basis or based on cost-estimation procedures and DRRA Section 1235(d) directs the FEMA Administrator, in consultation with the heads of relevant federal agencies, to establish new rules regarding defining \"resilient\" and \"resiliency\" for the purposes of eligible costs under Section 406 of the Stafford Act. DRRA directs the President, acting through the FEMA Administrator, to issue a final rulemaking notice on the new rules not later than 18 months after DRRA's enactment (i.e., by April 5, 2020), and requires a final report summarizing the regulations and guidance issued defining \"resilient\" and \"resiliency\" to be submitted to Congress no later than two years after DRRA's enactment (i.e., by October 5, 2020). "], "subsections": []}, {"section_title": "Section 1228: Inundated and Submerged Roads", "paragraphs": ["DRRA Section 1228 requires the FEMA Administrator, in coordination with the FHWA Administrator, to develop and issue guidance for local, state, territorial, and Indian tribal governments regarding repair, restoration, and replacement of inundated and submerged roads damaged or destroyed by a major disaster. The guidance must address associated expenses incurred by the government for roads eligible for assistance under Stafford Act Section 406\u00e2\u0080\u0094Repair, Restoration, and Replacement of Damaged Facilities. Prior to DRRA's enactment, FEMA did not issue guidance specifically addressing inundated and submerged roads and alternatives in the use of federal disaster assistance for the repair, restoration, and replacement of roads damaged by a major disaster."], "subsections": []}, {"section_title": "Section 1215: Management Costs\u00e2\u0080\u0094Public Assistance", "paragraphs": ["DRRA Section 1215 amends Stafford Act Section 324(b)(2)(B)\u00e2\u0080\u0094Management Costs to place a cap on any direct administrative costs, and any other administrative associated expenses, of not more than 12% of the total award amount provided under Stafford Act Sections 403\u00e2\u0080\u0094Essential Assistance, 406\u00e2\u0080\u0094Repair, Restoration, and Replacement of Damaged Facilities, 407\u00e2\u0080\u0094Debris Removal, and 502\u00e2\u0080\u0094Federal Emergency Assistance. The 12% cap is to be divided between the primary grantee and subgrantees with the primary grantee receiving not more than 7%, and subgrantees receiving not more than 5% of the total award amount."], "subsections": []}]}, {"section_title": "Individual Assistance69", "paragraphs": [], "subsections": [{"section_title": "Section 1213: Multifamily Lease and Repair Assistance", "paragraphs": ["DRRA Section 1213 amends Stafford Act Section 408(c)(1)(B)(ii)\u00e2\u0080\u0094Federal Assistance to Individuals and Households, Temporary Housing, Direct Assistance, Lease and Repair of Rental Units for Temporary Housing to expand the eligible areas for multifamily lease and repair properties, and remove the requirement that the value of the improvements or repairs not exceed the value of the lease agreement. FEMA's Multifamily Lease and Repair program is a form of direct temporary housing assistance under Stafford Act Section 408. When eligible individuals and households are unable to use Rental Assistance due to a lack of available housing resources and when it is determined to be a cost-effective alternative to other temporary housing options, FEMA may enter into lease agreements with the owners of multifamily rental property units and may make improvements or repairs, in order to provide temporary housing. "], "subsections": [{"section_title": "Expanding the Areas Eligible for Multifamily Lease and Repair", "paragraphs": ["FEMA guidance includes limitations on the conditions of eligibility required to authorize properties for multifamily lease and repair. Prior to DRRA's enactment, multifamily lease and repair properties had to be located in areas covered by an emergency or major disaster declaration. Following DRRA's enactment, however, eligible properties also include those \"impacted by a major disaster.\" According to the House Transportation and Infrastructure Committee's Disaster Recovery Reform Act Report ( DRRA Report ), in amending this section of the Stafford Act, Congress intended to \"allow greater flexibility and options for housing disaster victims.\" Thus, DRRA Section 1213 expands program eligibility for properties, which may increase the number of FEMA-leased multifamily rental properties. This may:", "increase available housing stock for eligible individuals and households; and", "reduce FEMA's reliance on other, less cost-effective forms of direct assistance (e.g., Transportable Temporary Housing Units (TTHUs)).", "Although it was released following DRRA's enactment, FEMA's most recent guidance\u00e2\u0080\u0094the Individual Assistance Program and Policy Guide ( IAPPG ) \u00e2\u0080\u0094states that in order to be eligible for multifamily lease and repair, \"[t]he property must be located in an area designated for IA [Individual Assistance] included in a major disaster declaration,\" which is inconsistent with Stafford Act Section 408(c)(1)(B)(ii)(I)(aa), as amended by DRRA. The IAPPG does, however, add the ability for FEMA to add counties/jurisdictions to the major disaster declaration designed for IA \"specifically for the purpose of implementing MLR [Multifamily Lease and Repair].\" Thus, while FEMA's most recent guidance expands the agency's ability to implement MLR, it still states that properties must be in designated areas. In order to reflect the changes to the Multifamily Lease and Repair program post-DRRA, FEMA would need to update its guidance to be consistent with Stafford Act Section 408(c)(1)(B)(ii)(I)(aa), as amended, and may consider defining what it means for a property to be \"impacted by a major disaster,\" and any additional, related eligibility criteria."], "subsections": []}, {"section_title": "Determining the Cost-Effectiveness of Potential Multifamily Lease and Repair Properties", "paragraphs": ["Prior to DRRA's enactment, the value of the improvements or repairs were not permitted to exceed the value of the lease agreement, which, per FEMA policy, could not be greater than the Fair Market Rent (FMR). Post-DRRA, the restriction that improvements or repairs not exceed the value of the lease agreement has been removed from Stafford Act Section 408(c)(1)(B)(ii)(II)\u00e2\u0080\u0094Federal Assistance to Individuals and Households, Temporary Housing, Direct Assistance, Lease and Repair of Rental Units for Temporary Housing, as amended. Additionally, and as was the case prior to DRRA, the cost-effectiveness of the potential multifamily lease and repair property must still be considered when FEMA determines whether or not to enter into a lease agreement with a property owner for the purpose of providing Multifamily Lease and Repair assistance. As stated above, when eligible individuals and households are unable to use Rental Assistance and when it is determined to be a cost-effective alternative to other temporary housing options, FEMA may use multifamily lease and repair to provide temporary housing. According to FEMA's guidance, the process by which the agency determines the cost-effectiveness of a potential multifamily lease and repair property is that \"FEMA will determine the value of the lease agreement by multiplying the approved monthly Rental Assistance rate by the number of units, and then multiplying the number of months remaining between the date the repairs are completed and the end of the 18-month period of assistance.\" FEMA guidance, however, currently states that there are three steps that FEMA must take to determine the cost-effectiveness of a potential multifamily lease and repair property. FEMA would need to update the IAPPG to clarify the process by which FEMA determines cost-effectiveness and to reflect the fact that the cost-effectiveness determination is not based on a three-step test.", "Additionally, it is unclear whether the removal of the restriction that improvements or repairs not exceed the value of the lease agreement will have a significant impact on program administration. There are several reasons the impact of this legislative change may not be significant including: ", "the property must be found to be cost-effective even if a potential property requiring improvements or repairs in excess of the value of the lease agreement may be otherwise eligible; and", "prior to DRRA's enactment, it was possible for FEMA to enter into lease agreements when the value of the improvements or repairs exceeded the value of the lease agreement, provided the necessary written justification was submitted and approved.", "Finally, within two years (i.e., due by October 5, 2020), the Inspector General (IG) of DHS must assess the use of FEMA's direct assistance authority, including the adequacy of the benefit-cost analysis conducted, to justify this alternative to other temporary housing options, and submit a report to Congress."], "subsections": []}]}, {"section_title": "Section 1211: State Administration of Assistance for Direct Temporary Housing and Permanent Housing Construction", "paragraphs": [], "subsections": [{"section_title": "The State or Tribal Government's Role in Providing Direct Temporary Housing Assistance and Permanent Housing Construction", "paragraphs": ["DRRA Section 1211(a) amends Stafford Act Section 408(f)\u00e2\u0080\u0094Federal Assistance to Individuals and Households, State Role to expand the types of FEMA Individuals and Households Program (IHP) assistance that a state, territorial, or Indian tribal government may request to administer under Stafford Act Section 408(f)(1)(A) to include Direct Temporary Housing Assistance under Section 408(c)(1)(B) and Permanent Housing Construction under Section 408(c)(4), in addition to Other Needs Assistance (ONA) under Section 408(e). Prior to DRRA's enactment, Stafford Act Section 408(f)(1) only allowed state, territorial, and Indian tribal governments to request financial assistance to manage ONA.", "According to Senate HSGAC's Disaster Recovery Reform Act of 2018 Report ( DRRA Report ), this section of DRRA \"emphasizes the need for and provides tools to execute an effective local response to disasters ... [in part by] empowering states to administer housing assistance efforts.\" FEMA has also stated that:", "[s]tate and tribal officials have the best understanding of the temporary housing needs for survivors in their communities. This provision incentivizes innovation, cost containment and prudent management by providing general eligibility requirements while allowing them the flexibility to design their own programs.", "These statements highlight a key aspect of this amendment to the Stafford Act\u00e2\u0080\u0094that, because the federal share of eligible housing costs is 100%, in effect, FEMA may now provide state, territorial, and Indian tribal governments with a block grant for disaster housing assistance, provided certain requirements are met (see below). Allowing state, territorial, or Indian tribal governments to administer these housing programs, in addition to ONA, using a flexible, block-grant program that \"leverag[es] state autonomy\" \"to tailor a solution that specifically addresses the needs of disaster victims\" may expedite and enhance disaster recovery. Despite these benefits, the ability for state, territorial, or Indian tribal governments to design and administer customized versions of these programs has the potential to result in challenges. For example:", "individuals and households may face challenges to participating in these programs if application processes and program requirements are not clearly defined, or if their past participation in these programs differs from future program implementation; client advocates and case managers may have trouble supporting individuals and households seeking to and/or participating in these programs if application processes and program administration differ from jurisdiction to jurisdiction, or if a state/territorial/Indian tribal government implements the programs differently for different disasters; state, territorial, and Indian tribal governments seeking to administer these programs may also struggle to administer active programs with different application processes and program administration requirements, and may find it difficult to manage programs when future program implementation differs from past program implementation; and federal partners supporting state, territorial, and Indian tribal governments may find it difficult to keep track of application processes and program administration that differs from jurisdiction to jurisdiction, or when future program implementation differs from past program implementation. ", "In addition to the programmatic flexibility accorded by this amendment to the Stafford Act, state, territorial, or Indian tribal governments that elect to administer housing assistance and/or ONA under Section 408(f) are eligible to expend up to 5% of the amount of the grant for administrative costs. This may increase their capacity to quickly and effectively administer these programs. ", "With the addition of the ability of state, territorial, or Indian tribal governments to administer Direct Temporary Housing Assistance and Permanent Housing Construction, it is possible that the state, territorial, or Indian tribal government may be required to select an option for administration of assistance, as in the case with ONA. Within two years of DRRA's enactment (i.e., by October 5, 2020), FEMA is required to issue final regulations to establish how a state, territorial, or Indian tribal government is to administer Direct Temporary Housing Assistance and Permanent Housing Construction. In the intervening period, FEMA has the ability to administer this as a pilot program until the final regulations are promulgated (an example of such a regulation can be found in 44 C.F.R. \u00c2\u00a7206.120\u00e2\u0080\u0094State Administration of Other Needs Assistance, which sets out the regulations for state administration of ONA)."], "subsections": []}, {"section_title": "New Requirements", "paragraphs": ["In addition to expanding the types of assistance state, territorial, and Indian tribal governments may administer, DRRA adds requirements for the receipt of approval to administer such assistance. Prior to DRRA's enactment, in order to administer ONA, a governor had to request a grant to provide financial assistance. Post-DRRA, if a state, territorial, or Indian tribal government would like to administer Direct Temporary Housing Assistance, Permanent Housing Construction, and/or ONA, then it must \"submit to the President an application for a grant to provide financial assistance under the program [emphasis added].\" DRRA also includes criteria for the approval of applications, as follows:", "(i) a requirement that the State or Indian tribal government submit a housing strategy under subparagraph (C) [Requirement of Housing Strategy]; ", "(ii) the demonstrated ability of the State or Indian tribal government to manage the program under this section; ", "(iii) there being in effect a plan approved by the President as to how the State or Indian tribal government will comply with applicable Federal laws and regulations and how the State or Indian tribal government will provide assistance under its plan; ", "(iv) a requirement that the State or Indian tribal government comply with rules and regulations established pursuant to subsection (j); and ", "(v) a requirement that the President, or the designee of the President, comply with subsection (i) [Verification Measures].", "Three requirements intended to ensure the state, territorial, or Indian tribal government that seeks to administer these programs has the capacity to do so, include:", "the state, territorial, or Indian tribal government must have an approved housing strategy, which may encourage the development of disaster housing strategies to better enable effective local response to disasters; the state, territorial, or Indian tribal government must have the demonstrated ability to manage the program\u00e2\u0080\u0094although it is unclear what evidence may be used to demonstrate the capacity to manage the housing-related programs (note that FEMA is developing guidance for the administration of Direct Temporary Housing and Permanent Housing Construction). An approved State Administrative Plan is a requirement to administer ONA, and FEMA considers this sufficient to demonstrate the state, territorial, or Indian tribal government's capability to manage ONA; and the President or designee shall implement policies, procedures, and internal controls to prevent \"waste, fraud, abuse, and program mismanagement\"; it is possible for the President to withdraw the approval for the state, territorial, or Indian tribal government to administer Direct Temporary Housing Assistance, Permanent Housing Construction, or ONA. ", "FEMA may need to clarify the application and approval requirements because it is unclear (1) how concepts such as \"waste\" and \"abuse\" are defined in this context; (2) how the determination that \"the State or Indian tribal government is not administering the program ... in a manner satisfactory to the President\" will be made\u00e2\u0080\u0094although DRRA includes a requirement that the DHS IG periodically audit the programs administered by the state, territorial, or Indian tribal governments, and these audits may be used to assess program administration; and (3) how program administration will be managed following a withdrawal of approval and/or whether there will be an opportunity for the state, territorial, or Indian tribal government to remedy any issues identified with regard to program administration or appeal a decision withdrawing approval. ", "Within two years of DRRA's enactment (i.e., by October 5, 2020), FEMA is required to issue final regulations on the administration of this program, in which FEMA may consider addressing the administration of the application and approval processes and requirements, including the requirements for demonstrating the capacity to manage the program, and the process for the withdrawal of approval and any remedies the state, territorial, or Indian tribal government may have."], "subsections": []}, {"section_title": "State and Local Reimbursement for Implementing a Housing Solution", "paragraphs": ["DRRA Section 1211(b) provides a mechanism for state and local units of government to be reimbursed in the event they do not request a grant to administer housing assistance, if the solution they implement satisfies several conditions. Specifically, DRRA Section 1211(b) notes that FEMA shall reimburse state and local \"units of government\" for locally-implemented housing solutions that meet three requirements, provided the request for reimbursement is received within a three-year period after a major disaster declaration under Stafford Act Section 401\u00e2\u0080\u0094Procedure for Declaration. The three requirements are that the solution: ", "(1) costs 50 percent of comparable FEMA solution or whatever the locally implemented solution costs, whichever is lower; ", "(2) complies with local housing regulations and ordinances; and", "(3) the housing solution was implemented within 90 days of the disaster.", "It is unclear how and when a reimbursement will be provided when a housing solution meets the proper eligibility conditions set forth above. FEMA may issue a new rulemaking and/or policy guidance to establish how the cost of the locally-implemented solution will be assessed and compared with the FEMA solution, as well as how reimbursement requests will be processed."], "subsections": []}]}, {"section_title": "Section 1212: Assistance to Individuals and Households", "paragraphs": ["DRRA Section 1212 amends Stafford Act Section 408(h)\u00e2\u0080\u0094Federal Assistance to Individuals and Households, Maximum Amount of Assistance\u00e2\u0080\u0094to create separate caps for the maximum amount of financial assistance eligible individuals and households may receive for housing assistance and for ONA, and allow for accessibility-related costs. Under FEMA's IHP, financial assistance (e.g., assistance to rent alternate housing accommodations, conduct home repairs, and ONA) and/or direct assistance (e.g., Multifamily Lease and Repair and TTHUs) may be available to eligible individuals and households who, as a result of a disaster, have uninsured or under-insured necessary expenses and serious needs that cannot be met through other means or forms of assistance. Prior to DRRA, an individual or household could receive up to $33,300 (FY2017; adjusted annually) in financial assistance, which included both housing assistance and ONA. Post-DRRA, financial assistance for housing-related needs may not exceed $34,900 (FY2019; adjusted annually), and, separate from that , financial assistance for ONA may not exceed $34,900 (FY2019; adjusted annually). Thus, separate caps of equal amounts have been established for financial housing assistance and ONA. In addition, financial assistance to rent alternate housing accommodations is not subject to the cap . As of the date of this report's publication, FEMA's IAPPG has not been updated to reflect DRRA's changes to the maximum amount of financial assistance. It still notes that Rental Assistance is subject to the cap, which has the potential to create confusion for local, state, territorial, Indian tribal, and federal governments, nonprofit partners, and other entities that assist disaster survivors seeking to rely on the IAPPG as a resource for FEMA's IA policies and procedures. However, FEMA has posted a memorandum on the policy changes to its website, and has stated that the changes will be \"incorporated into a subsequent publication of the IAPPG.\"", "DRRA Section 1212 also amends Stafford Act Section 408(h) to create exclusions to the maximum amount of assistance for individuals with disabilities for expenses to repair or replace:", "accessibility-related property improvements under FEMA's Repair Assistance, Replacement Assistance, and Permanent Housing Construction; and accessibility-related personal property under Financial Assistance to Address Other Needs\u00e2\u0080\u0094Personal Property, Transportation, and Other Expenses Assistance. ", "Thus, the addition of Stafford Act Section 408(h)(4) may expand the eligibility of individuals with disabilities for financial assistance. ", "In response to the IHP changes post-DRRA, FEMA began processing retroactive payments to applicants who either reached or exceeded the financial cap for disasters declared on or after August 1, 2017, and stated that, in April 2019, it would begin evaluating applications to assess whether some survivors may be eligible for additional rental assistance, which may enable eligible applicants to receive additional funds. Administrative challenges may arise if eligible applicants who received the previous maximum amount of financial assistance now request additional financial assistance for programs to which they did not previously apply. For example, an eligible applicant may not have requested ONA if their request for Repair Assistance already equaled or exceeded the cap. ", "In the past, the combined\u00e2\u0080\u0094housing assistance and ONA\u00e2\u0080\u0094cap on the maximum amount of financial assistance that an individual or household was eligible to receive may have resulted in applicants with significant home damage and/or other needs having insufficient funding to meet their disaster-caused needs, including little to no remaining funding available to pay for rental assistance. Thus, changes to Stafford Act Section 408(h) post-DRRA have the potential to result in increased assistance to eligible disaster survivors, and increased federal spending on temporary disaster housing assistance and ONA. This may help to better meet the recovery-related needs of individuals and households who experience significant damage to their primary residence and personal property as a result of a major disaster. However, there is also the potential that this change may disincentivize sufficient insurance coverage because of the new ability for eligible individuals and households to receive separate and increased housing assistance and ONA awards that more comprehensively cover disaster-related real and personal property losses."], "subsections": []}, {"section_title": "Section 1216: Flexibility", "paragraphs": [], "subsections": [{"section_title": "Discretionary Ability to Waive Debts", "paragraphs": ["DRRA Section 1216(a) allows FEMA to waive debts owed to the United States related to assistance provided under Stafford Act Section 408\u00e2\u0080\u0094Federal Assistance to Individuals and Households.", "Federal laws require federal agencies, including FEMA, to identify and recover improper payments . Specifically, the Improper Payments Information Act of 2002 (IPIA, P.L. 107-300 ) and the Improper Payments Elimination and Recovery Act of 2010 (IPERA, P.L. 111-204 ) direct the head of each federal agency to review and identify all programs and activities administered by the agency that may be \"susceptible to significant improper payments.\" IPERA also includes the requirement that the agency take action to collect overpayments. Several federal programs account for a significant portion of improper payments, including FEMA's IHP. The dual\u00e2\u0080\u0094and sometimes conflicting\u00e2\u0080\u0094goals of (1) expediting FEMA assistance to disaster survivors and (2) maintaining administrative controls to ensure program eligibility may contribute to improper payments. Nonetheless, FEMA reviews disaster assistance payments following every disaster and works to collect overpayments. ", "FEMA does have some discretion not to pursue recoupment. Additionally, the need for FEMA to have discretion with regard to recoupment was previously identified\u00e2\u0080\u0094albeit for a limited period of time. Congressional \"concerns about the fairness of FEMA collecting improper payments caused by FEMA error especially when a significant amount of time had elapsed before FEMA provided actual notice to the debtors\" led to the passage of the Disaster Assistance Recoupment Fairness Act of 2011 (DARFA, Division D, Section 565 of the Consolidated Appropriations Act, 2012, P.L. 112-74 ). DARFA provided FEMA with the discretionary authority to waive debts arising from improper payments for disasters declared between August 28, 2005, and December 31, 2010\u00e2\u0080\u0094which included Hurricanes Katrina and Rita, as well as other disasters. ", "DRRA Section 1216(a) mirrors the factors included in DARFA. Following DRRA's enactment, FEMA may waive a debt related to covered assistance if:", "distributed in error by FEMA; there was no fault on behalf of the debtor; and collection would be \"against equity and good conscience.\" ", "This section is retroactive, and applies to major disasters or emergencies declared on or after October 28, 2012.", "Thus, DRRA Section 1216(a) expands FEMA's discretionary ability with regard to debt collection by authorizing FEMA to waive the collection of a debt as long as the above-listed factors are also satisfied\u00e2\u0080\u0094the exception is if the debt involves fraud, a false claim, or misrepresentation by the debtor or party having an interest in the claim. However, if FEMA's distributions of covered assistance based on federal agency error exceed 4% of the total amount of covered assistance distributed in any 12-month period, then the DHS IG, charged with monitoring the distribution of covered assistance, shall remove FEMA's waiver authority based on an excessive error rate. That said, according to the House Transportation and Infrastructure Committee's DRRA Report , \"FEMA has implemented controls to avoid improper payments ... [and] FEMA's current error rate for improper payments to individuals is less than two percent.\"", "It is unclear how FEMA will review and process waivers of improper payments, although FEMA may use the DHS IG's recommendations\u00e2\u0080\u0094put forth post-DARFA\u00e2\u0080\u0094for reviewing and processing future debt recoupment cases as outlined in its FEMA's Efforts to Recoup Improper Payments in Accordance with the Disaster Assistance Recoupment Fairness Act of 2011 report. FEMA may also consider issuing a rulemaking and/or policy guidance to", "require that FEMA's comprehensive quality assurance review procedures apply to the review of recoupment cases, per the DHS IG's recommendation; establish an audit trail for FEMA waiver of recoupment decisions, per the DHS IG's recommendation; and clarify the considerations for approving a waiver (e.g., defining the circumstances under which collection of the debt would be \"against equity and good conscience\"), which may be especially important given that disaster survivors may face financial hardship if required to repay assistance that they have already spent on recovering from a disaster."], "subsections": []}, {"section_title": "Prohibition on Collecting Certain Assistance", "paragraphs": ["DRRA Section 1216(b) restricts FEMA's ability to recoup assistance provided under Stafford Act Section 408\u00e2\u0080\u0094Federal Assistance to Individuals and Households. Specifically, Section 1216(b) states:", "unless there is evidence of civil or criminal fraud, [FEMA] may not take any action to recoup covered assistance ... if the receipt of such assistance occurred on a date that is more than 3 years before the date on which the Agency first provides to the recipient written notification of an intent to recoup [emphasis added].", "This section is retroactive, and applies to major disasters or emergencies declared on or after January 1, 2012. ", "According to the House Transportation and Infrastructure Committee's DRRA Report , this provision \"will help ensure that FEMA initiates any collection actions as quickly as possible, reduce administrative costs, and provide more certainty to individuals recovering from disasters.\" FEMA stated that the agency's understanding of this provision is that it establishes a three-year statute of limitations on the agency's ability to recoup debts provided under IHP. Despite apparent congressional and agency intent, FEMA's guidance states that:", "[w]hile there is no statute of limitations on initiating recoupment of IHP debt owed to the U.S. Government through administrative means, FEMA's goal is to notify applicants of any potential debt owed within three years after the date of the final IHP Assistance payment. FEMA's failure to meet this goal will not preclude it from initiating recoupment of potential debt when otherwise appropriate.... FEMA may notify applicants of any potential debt beyond three years after the date of the final IHP Assistance payment in cases where it considers recovery of funds to be in the best interest of the Federal government.... ", "Congress may require FEMA to update its guidance to reflect DRRA Section 1216(b).", "Additionally, the legislative language in DRRA Section 1216(b) may result in confusion when interpreting whether the section is discretionary or mandatory. This is because the legislation states that FEMA \" may not take any action to recoup covered assistance ... \"\u00e2\u0080\u0094as opposed to FEMA \" shall not take any action to recoup covered assistance.... \" Thus, confusion may exist despite the apparent congressional intent that FEMA should not be able to take any action to recoup covered assistance three years after its receipt and the fact that FEMA has stated it interprets the provision as being mandatory. One action available to Congress is to clarify, through legislation, that this section is mandatory (if that is the intent of Congress) in order to avoid potential ambiguity when interpreting the law.", "An additional consideration with regard to this provision is that the three-year window to recoup IHP payments will be different for each award to an individual/household, and this will likely pose an administrative challenge for FEMA given the volume of awards provided under the IHP program."], "subsections": []}, {"section_title": "Statute of Limitations\u00e2\u0080\u0094Public Assistance", "paragraphs": ["DRRA Section 1216(c) amends Stafford Act Section 705\u00e2\u0080\u0094Disaster Grant Closeout Procedures to change how the statute of limitations for Public Assistance (PA) is defined. Prior to DRRA's enactment, the statute of limitations on FEMA's ability to recover payments made to a state or local government was three years after the date of transmission of the final expenditure report for the disaster or emergency . DRRA amends the statute of limitations such that no administrative action to recover payments can be initiated \" after the date that is 3 years after the date of transmission of the final expenditure report for project completion as certified by the grantee [emphasis added] .\" Additionally, this provision applies retroactively to disaster or emergency assistance provided on or after January 1, 2004, and any pending administrative actions were terminated as of the date of DRRA's enactment, if prohibited under Stafford Act Section 705(a)(1), as amended by DRRA.", "It may take years to close all of the projects associated with a disaster, and, prior to DRRA, FEMA could recoup funding from projects that may have been completed and closed years prior to FEMA's pursuit of funding because the disaster was still open. This post-DRRA project-by-project statute of limitations is a significant change that has the potential to ease the administrative and financial burden that the management of disaster recovery programs places on state, territorial, and Indian tribal governments because it creates certainty as to the projects that may be subject to recoupment. It may also incentivize the timely closeout of PA projects by state and local governments, which may also ease FEMA's administrative and financial burdens. "], "subsections": []}]}]}, {"section_title": "Floodplain Management and Flood Insurance165", "paragraphs": [], "subsections": [{"section_title": "Section 1206(a): Eligibility for Code Implementation and Enforcement", "paragraphs": ["DRRA Section 1206(a) amends Stafford Act Section 402\u00e2\u0080\u0094General Federal Assistance to allow state and local governments to use general federal assistance funds for the administration and enforcement of building codes and floodplain management ordinances, including inspections for substantial damage compliance. If a building in a Special Flood Hazard Area (SFHA) is determined to be substantially damaged, it must be brought into compliance with local floodplain management standards. Local communities can require the building to be rebuilt to current floodplain management requirements even if the property previously did not need to do so. For instance, the new compliance standard may require the demolition and elevation of the rebuilt building to above the Base Flood Elevation.", "FEMA does not make a determination of substantial damage; this is the responsibility of the local government, generally by a building department official or floodplain manager. Similarly, the enforcement of building codes and floodplain management ordinances are the responsibility of local government. Particularly following a major flood, communities may be required to assess a large number of properties at the same time, and, as a result, additional resources may be needed. This provision affords an additional source of funding to support communities in carrying out such activities. "], "subsections": []}, {"section_title": "Section 1207(b): Program Improvements", "paragraphs": ["DRRA Section 1207(b) amends Stafford Act Section 406(d)(1)\u00e2\u0080\u0094Repair, Restoration, and Replacement of Damaged Facilities to provide relief from a reduction in disaster assistance for certain public facilities and private nonprofit facilities with multi-structure campuses which were damaged by disasters in 2016 to 2018. Applicants for Public Assistance (PA) for repair, restoration, reconstruction, and replacement are required to obtain flood insurance on damaged insurable facilities (buildings, equipment, contents, and vehicles) as a condition of receiving PA grant funding. Insurance coverage must be subtracted from all applicable PA grants in order to avoid duplication of financial assistance. In addition, the applicant must maintain flood insurance on these facilities in order to be eligible for PA funding in future disasters, whether or not a facility is in the SFHA. If an eligible insurable facility damaged by flooding is located in a SFHA that has been identified for more than one year and the facility is not covered by flood insurance or is underinsured, FEMA will reduce the amount of eligible PA funding for flood losses in the SFHA by the maximum amount of insurance proceeds that would have been received had the buildings and contents been fully covered by a standard National Flood Insurance Program (NFIP) policy. For nonresidential buildings, this is currently a maximum of $500,000 for contents and $500,000 for the building. The Stafford Act previously required that this reduction in disaster assistance should be applied to each individual building in the case of multi-unit campuses, which could result in a significant reduction in PA funding for entities with uninsured multi-structure campuses.", "The new provision in DRRA provides that the reduction in assistance shall not apply to more than one building of a multi-structure educational, law enforcement, correctional, fire, or medical campus. This amendment applies to disasters declared between January 1, 2016, and December 31, 2018. This means that organizations without flood insurance that had Public Assistance funding reduced under the pre-DRRA Stafford Act provisions will have funding restored for floods such as the 2016 Louisiana floods, and Hurricanes Matthew, Harvey, Irma, Maria, and Florence. "], "subsections": []}, {"section_title": "Section 1240: Report on Insurance Shortfalls", "paragraphs": ["DRRA Section 1240 requires FEMA to submit a report to Congress not later than two years after enactment, and each year after until 2023, on Public Assistance self-insurance shortfalls. As described in \" Section 1207(b): Program Improvements ,\" applicants for PA for repair, restoration, reconstruction, and replacement in an SFHA are required to obtain flood insurance on damaged insurable facilities as a condition of receiving PA grant funding, and maintain insurance on these facilities in order to be eligible for PA funding in future disasters. However, an applicant may apply in writing to FEMA to use a self-insurance plan to comply with the insurance requirement. The details required for the self-insurance plan are set out in FEMA guidance. The DHS IG has issued four reports on applicants' compliance with PA insurance requirements that have identified concerns with applicant compliance with these requirements and FEMA's tracking of applicants' compliance. However, these reports have not focused specifically on self-insurance. The new reports under DRRA Section 1240 will include information on the number of instances and the estimated amounts involved, by state, in which self-insurance amounts have been insufficient to address flood damages. "], "subsections": []}]}, {"section_title": "Other Provisions", "paragraphs": [], "subsections": [{"section_title": "Section 1224: Agency Accountability174", "paragraphs": ["DRRA Section 1224 amends Title IV of the Stafford Act to establish a new section, Section 430\u00e2\u0080\u0094Agency Accountability, addressing public assistance, mission assignments, disaster relief monthly reports, contracts, and the collection of public assistance recipient and subrecipient contracts.", "Subsection (a) of the new Stafford Act Section 430, established by DRRA Section 1224, requires the FEMA Administrator to publish on the FEMA website award information for grants awarded under Stafford Act Section 406\u00e2\u0080\u0094Repair, Restoration, and Replacement of Damaged Facilities in excess of $1,000,000. For each such grant, FEMA shall provide the following information: ", "FEMA region; declaration number; whether the grantee is a private nonprofit organization; damage category code; amount of the federal share obligated; and the date of the award.", "Prior to DRRA's enactment, FEMA did not publish contract information on the FEMA website. Stafford Act Section 430(d) requires the FEMA Administrator to publish information about each contract executed by FEMA in excess of $1,000,000 on the FEMA website within the first 10 days of each month. For each such contract, FEMA shall provide the following information: ", "contractor name; date of contract award; amount and scope of the contract; whether the contract was competitively bid; whether and why there was a no competitive bid; the authority used to bypass competitive bidding if applicable; declaration number; and the damage category code.", "Section 430(d) also requires the FEMA Administrator to provide a report to the appropriate congressional committees on the number of contracts awarded without competition, reasons why there was no competitive bidding process, total amount of the no-competition contracts, and the applicable damage category codes for such contracts.", "Section 430(e) requires the FEMA Administrator to initiate efforts to maintain and store information on contracts entered into by a Public Assistance recipient or subrecipient of funding through Stafford Act Sections 324\u00e2\u0080\u0094Management Costs, 403\u00e2\u0080\u0094Essential Assistance, 404\u00e2\u0080\u0094Hazard Mitigation, 406\u00e2\u0080\u0094Repair, Restoration, and Replacement of Damaged Facilities, 407\u00e2\u0080\u0094Debris Removal, 428\u00e2\u0080\u0094Public Assistance Program Alternative Procedures, and 502\u00e2\u0080\u0094Federal Emergency Assistance for contracts with an estimated value of more than $1,000,000. Collected contract information shall include the following: ", "disaster number; project worksheet number; category of work; name of contractor; date of the contract award; amount of the contract; scope of the contract; period of performance for the contract; and whether the contract was awarded through a competitive bid process.", "The FEMA Administrator is required to make such collected information available to the DHS IG, the Government Accountability Office (GAO), and appropriate congressional committees upon request. The FEMA Administrator is also required to submit a report to relevant committees within 365 days of DRRA's enactment on the efforts of FEMA to collect the required contract information (i.e., by October 5, 2019). Prior to DRRA's enactment, FEMA did not appear to have comprehensive contract information to make available upon request and did not submit annual reports to Congress regarding collection of such information."], "subsections": []}, {"section_title": "Section 1221: Closeout Incentives178", "paragraphs": ["DRRA Section 1221 amends Stafford Act Section 705\u00e2\u0080\u0094Disaster Grant Closeout Procedures to authorize the FEMA Administrator to develop incentives and penalties relating to grant closeout activities to encourage grantees to close out disaster-related expenditures on a timely basis. DRRA Section 1221 also requires the FEMA Administrator to improve closeout practices and reduce the time between awarding a grant under Stafford Act provisions and closing out expenditures for the award. The FEMA Administrator is also directed to issue regulations relating to facilitating grant closeout. Prior to DRRA's enactment, FEMA had discretion to engage in activities that would incentivize or penalize grantees for delayed closeouts. This provision made such activities a requirement rather than at FEMA's discretion. Congress designed Section 1221 to improve the timeliness of closeout procedures by limiting or preventing delays in the process."], "subsections": []}, {"section_title": "Section 1225: Audit of Contracts180", "paragraphs": ["DRRA Section 1225 prohibits the FEMA Administrator from reimbursing grantees for any activities made pursuant to a contract entered into after August 1, 2017, that prohibits the FEMA Administrator or the Comptroller General of the United States from auditing or reviewing all aspects relating to the contract."], "subsections": []}, {"section_title": "Section 1237: Certain Recoupment Prohibited182", "paragraphs": ["DRRA Section 1237 directs FEMA to \"deem any covered disaster assistance to have been properly procured, provided, and utilized, and shall restore any funding of covered disaster assistance previously provided but subsequently withdrawn or deobligated.\" \"Covered disaster assistance\" is defined as assistance provided to a local government under Stafford Act Sections 403\u00e2\u0080\u0094Essential Assistance, 406\u00e2\u0080\u0094Repair, Restoration, and Replacement of Damaged Facilities, or 407\u00e2\u0080\u0094Debris Removal in which the DHS IG has made a determination, through an audit, that the following conditions were present: ", "(A) the Agency deployed to the local government a Technical Assistance Contractor to review field operations, provide eligibility advice, and assist with day-to-day decisions; ", "(B) the Technical Assistance Contractor provided inaccurate information to the local government; and ", "(C) the local government relied on the inaccurate information to determine that relevant contracts were eligible, reasonable, and reimbursable."], "subsections": []}, {"section_title": "Section 1210: Duplication of Benefits185", "paragraphs": ["DRRA Section 1210 amends Stafford Act Section 312(b) by providing the President the authority to waive the prohibition on duplication of benefits (upon a gubernatorial request) if the \"waiver is in the public interest and will not result in waste, fraud, or abuse.\" When making the waiver decision, the President may consider (1) recommendations from the Administrator of FEMA or other agencies administering the duplicative program; (2) if granted, whether the assistance is cost effective; (3) \"equity and good conscience\"; and (4) \"other matters of public policy considered appropriate by the President.\"", "Duplication of benefits has been an ongoing issue of congressional concern and DRRA Section 1210 is the most recent attempt to reduce hardships caused by duplication of benefits recoupment. Individuals and households often need to use multiple sources of assistance to fully recover from a major disaster. If the assistance exceeds their unmet disaster needs, then the assistance is considered a \"duplication of benefits.\" Stafford Act Section 312(a)\u00e2\u0080\u0094Duplication of Benefits prohibits the \"financial assistance to persons, business concerns, or other entities suffering losses as a result of a major disaster or emergency ... [for] which he has received financial assistance under any other program or from insurance or any other source.\" Stafford Act Section 312(c) states that the recipient of duplicative assistance is liable to the United States and that the agency that provided the duplicative assistance is responsible for debt collection. The federal duplication of benefits policy is intended to prevent waste, fraud, and abuse of program assistance.", "44 C.F.R. \u00c2\u00a7206.191 provides procedural guidance known as a \"delivery sequence\" to prevent the duplication of benefits between federal assistance programs such as FEMA's Individuals and Households Program and the Small Business Administration's (SBA's) Disaster Loan Program, state assistance programs, other assistance programs (e.g., volunteer programs), and insurance benefits (see Figure 1 ). An organization's position within the delivery sequence determines the order in which it should provide assistance and what other resources need to be considered before that assistance is provided. The regulation requires individuals to repay all duplicated assistance to the agency providing the assistance based on the delivery sequence hierarchy that outlines the order assistance should be provided. Critics have argued that the delivery sequence lacks specificity. For example, the U.S. Department of Housing and Urban Development's (HUD's) Community Development Block Grant\u00e2\u0080\u0094Disaster Recovery (CDBG-DR) Program, which is often duplicated with other assistance sources, is not listed in the delivery sequence.", "However, in addition to prohibiting duplication of benefits, Stafford Act Section 312 also stipulates that assistance cannot be withheld. Section 312(b)(1) states:", "this section shall not prohibit the provision of federal assistance to a person who is or may be entitled to receive benefits for the same purposes from another source if such person has not received such other benefits by the time of application for federal assistance and if such person agrees to repay all duplicative assistance to the agency providing the federal assistance.", "The delivery sequence, therefore, is not rigid\u00e2\u0080\u0094it can be broken in certain cases. The most common example is when adhering to the delivery sequence prevents the timely receipt of essential assistance. In some cases, assistance can be provided more quickly by an organization or agency that is lower in the sequence than an agency or organization that is at a higher level. For example, SBA disaster loans can generally be processed more quickly than FEMA grants; CDBG-DR grants take longer still because CDBG-DR disaster funding generally requires Congress to pass an appropriation. Once appropriated, the funding is usually released to the state in the form of a block grant, which is then disbursed by the state to disaster survivors.", "The underlying rationale for providing assistance when it becomes immediately available instead of rigidly adhering to the delivery sequence is to make sure disaster survivors receive aid as quickly as possible. Advocates of this view argue that preventing duplication of benefits is of secondary importance\u00e2\u0080\u0094it can be rectified and recouped later. This practice, however, has led to problems, particularly for individuals and households. In some cases, the federal government may fail to identify the duplication. In others cases, it may take a prolonged period of time to identify the duplication and the recoupment notification that they owe money to the federal government may come as a surprise to disaster survivors who did not realize they exceeded their allowable assistance. In some cases they may have spent all of the assistance on recovery, and repaying duplicative assistance constitutes a financial burden to the disaster survivor. ", "One of the most significant changes instituted by DRRA Section 1210 is that it prohibits the President from determining loans as duplicative assistance provided all federal assistance is used toward loss resulting from an emergency or major disaster under the Stafford Act. This arguably removes SBA disaster loans from the delivery sequence. However, the rulemaking on this policy has not been issued. Thus, it remains to be seen how this provision of DRRA will be implemented.", "Finally, DRRA Section 1210(a)(5) requires the FEMA Administrator, in coordination with relevant federal agencies, to provide a report with recommendations to improve \"the comprehensive delivery of disaster assistance to individuals following a major disaster or emergency declaration.\" The report must include (1) actions planned or taken by the agencies as well as legislative proposals to improve coordination between agencies with respect to delivering disaster assistance; (2) a clarification of the delivery sequence; (3) a clarification of federal-wide interpretation of Stafford Act Section 312 when providing assistance to individuals and households; and (4) recommendations to improve communication to disaster assistance applicants, including the breadth of programs available and the potential impacts of utilizing one program versus another."], "subsections": []}, {"section_title": "Section 1239: Cost of Assistance Estimates; Section 1232: Local Impact192", "paragraphs": ["DRRA Section 1239\u00e2\u0080\u0094Cost of Assistance Estimates and Section 1232\u00e2\u0080\u0094Local Impact both require FEMA to review and initiate a rulemaking to update the factors considered when evaluating a governor's request for a major disaster declaration, including how FEMA estimates the cost of major disaster assistance. They also require FEMA to consider anything that may affect a local jurisdiction's capacity to respond to a disaster. Section 1232 in particular requires FEMA to give greater consideration to severe local impact or recent multiple disasters.", "Both sections address the way FEMA has made major disaster recommendations to Presidents. FEMA uses factors about the severity of the incident (including how the state was affected by the incident) to assess the state's need for federal assistance. The estimated cost of assistance (also known as the per capita threshold) has been a key factor used by FEMA to evaluate the disaster's severity and to determine if the state has the capacity to handle the disaster without federal assistance. Two thresholds are used for estimated cost of assistance: (1) $1 million in public infrastructure damages and (2) a formula based on the state's population (according to the most recent census data) and public infrastructure damages. Based on these thresholds, FEMA has generally recommended that a major disaster be declared if public infrastructure damages exceed $1 million and meet or exceed $1.50 per capita.", "The underlying rationale for using a per capita threshold is that state fiscal capacity should be sufficient to deal with the disaster if damages and costs fall under the per capita amount. However, concerns related to relying on the per capita threshold include that:", "the per capita threshold may be difficult to reach for some states. For example, a rural area in a highly populated state may be denied federal disaster assistance because damages and costs do not exceed the per capita threshold; these incidents still warrant federal assistance because they overwhelm local response and recovery capacity in spite of not exceeding the statewide threshold; and the application of the per capita threshold is inequitable because the same incident may affect multiple states but only result in a major disaster declaration for some states by virtue of differences in state population. ", "Pursuant to DRRA Section 1239, within two years of DRRA's enactment (i.e., by October 5, 2020), FEMA is required to initiate a rulemaking to update the factors considered when evaluating a governor's request for a major disaster declaration, including how the cost of assistance is estimated, as well as other impacts on the jurisdiction's response capacity. As part of the review and rulemaking, FEMA may consider whether the per capita threshold is an appropriate mechanism for evaluating capacity, and additional information, such as the results of the 2020 U.S. Census, may factor into the final rule. DRRA Section 1232 also requires FEMA to adjust agency policy and regulations to grant greater consideration to severe local impact or recent multiple disasters, which may enable jurisdictions that struggle to reach the per capita threshold to provide evidence supporting the request for a major disaster declaration as no single factor is dispositive and the determination to grant a request for a major disaster is at the President's discretion.", "FEMA currently uses nine factors to evaluate a state or territory's request for a major disaster declaration (see Table 2 ). To some, these factors entail a more nuanced evaluation of major disaster requests by assessing both damages and state and local resources. However, it appears that the per capita threshold is still being applied to determine the \"amount and type of damages caused by the incident.\" If that is the case, per capita damages may still figure more prominently than other factors\u00e2\u0080\u0094such as local impacts\u00e2\u0080\u0094when making major disaster declaration recommendations to the President."], "subsections": []}, {"section_title": "Section 1219: Right of Arbitration196", "paragraphs": ["DRRA Section 1219 amends Stafford Act Section 423\u00e2\u0080\u0094Appeals of Assistance Decisions to add a right of arbitration. Per Stafford Act Section 423, applicants for assistance have the right to appeal decisions regarding \"eligibility for, from, or amount of assistance\" within 60 days after receiving notification of award or denial of award. FEMA then has to render a decision within 90 days of receiving a notice of appeal. Prior to DRRA, the appeal process outlined in the Stafford Act only provided a way for FEMA to review its own decisions, and did not include a way for applicants to bring claims before an independent arbiter. The need for arbitration, however, was recognized by Congress following Hurricanes Katrina and Rita, which made landfall in 2005, due to disputes that arose from public assistance payments under Stafford Act Sections 403\u00e2\u0080\u0094Essential Assistance, 406\u00e2\u0080\u0094Repair, Restoration, and Replacement of Damaged Facilities, and 407\u00e2\u0080\u0094Debris Removal. Post-Hurricanes Katrina and Rita, the arbitration process was established pursuant to the authority granted under Section 601 of the American Recovery and Reinvestment Act of 2009 (ARRA, P.L. 111-5 ).", "Notwithstanding any other provision of law, the President shall establish an arbitration panel under the Federal Emergency Management Agency public assistance program to expedite the recovery efforts from Hurricanes Katrina and Rita within the Gulf Coast Region. The arbitration panel shall have sufficient authority regarding the award or denial of disputed public assistance applications for covered hurricane damage under section 403, 406, or 407 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5170b, 5172, or 5173) for a project the total amount of which is more than $500,000.", "FEMA's public assistance appeal process remains in effect following DRRA's enactment. In addition, post-DRRA a right of arbitration has been added to Stafford Act Section 423 under the authority granted under ARRA Section 601. Applicants, which are states in the context of this section, may request arbitration in order to \"dispute the eligibility for assistance or repayment of assistance provided for a dispute of more than $500,000 for any disaster that occurred after January 1, 2016.\" (Applicants in rural areas are eligible to pursue arbitration if the amount of assistance is $100,000. ) FEMA's Public Assistance Appeals and Arbitration Under the Disaster Recovery Reform Act fact sheet notes that applicants may file a second appeal or request arbitration pursuant to Section 423(d) either (1) within 60 days after receipt of the first appeal decision (if the decision is not appealed or arbitration is not requested, then the first level appeal decision becomes the final agency determination and the applicant no longer has a right to appeal or arbitrate); or (2) at any time after 180 days of filing a first level appeal if the applicant has not received a decision from the agency\u00e2\u0080\u0094in which case they may withdraw the first level appeal and request Section 423 arbitration.", "In the event an applicant requests arbitration, the Civilian Board of Contract Appeals (CBCA) will conduct the arbitration, and their decision shall be binding. FEMA has stated that the Agency intends to \"initiate rulemaking to implement Section 423 arbitration and revise 44 C.F.R. \u00c2\u00a7206.206,\" including amending regulations that provide for only a first and second level appeal process. In the interim, FEMA has stated that it will rely on the Public Assistance Appeals and Arbitration Under the Disaster Recovery Reform Act fact sheet and the CBCA's Interim Fact Sheet . The CBCA published proposed rules of procedure to implement Section 423 arbitration in the Federal Register on March 5, 2019. Additionally, while new regulations are being promulgated, FEMA will provide information on how applicants may request either a second level appeal or arbitration when FEMA provides first level appeal denials for disputes arising from declarations for disasters occurring after January 1, 2016. ", "There is disagreement regarding whether the arbitration process expedites dispute resolution. The House Transportation and Infrastructure Committee's DRRA Report states that the CBCA panel provides a faster resolution, citing that arbitration was used as a tool for resolving disputes following both Hurricanes Katrina and Sandy to facilitate recovery. FEMA, however, in an earlier version of its Public Assistance Arbitration fact sheet stated that the arbitration process often takes years to arrive at a resolution. This may be, in part, because of the process required\u00e2\u0080\u0094some steps may take multiple weeks or months to complete\u00e2\u0080\u0094which includes:", "a first level appeal; the applicant opting into arbitration; submission of responses; the selection of the arbitration panel; the preliminary conference; the hearing and any follow-up; and the panel's rendering of the final decision. ", "The length of the arbitration process may depend on the complexity of the disputed project and its associated costs for which the applicant is seeking an award of assistance. Additionally, the arbitration process may be costly as there are fees associated with the panel, experts, attorney's fees, and other fees, which are the responsibility of the parties, including both the applicant and FEMA. According to the Senate HSGAC's DRRA Report , the Congressional Budget Office (CBO) estimates that \"implementing this provision would cost $4 million over the 2019-2023 period\" based on information provided by FEMA on the expected number of arbitration requests. It is unclear, however, whether the evaluation of the cost of implementing this provision included considerations such as the individual cost of the project being arbitrated, the complexity of the project, and the nature of the dispute. Congress may consider tasking the Comptroller General of the United States with conducting a review of the arbitration process to evaluate its effectiveness, including whether arbitration expedites the disaster recovery process and if it is cost effective. Congress may also consider ways to improve the process's efficiency and effectiveness, if warranted based on the results of any such program evaluation."], "subsections": []}, {"section_title": "Section 1218: National Veterinary Emergency Teams219", "paragraphs": ["DRRA Section 1218 authorizes, but does not require, that the FEMA Administrator establish one or more national veterinary emergency teams at accredited colleges of veterinary medicine. Such a team(s) shall (1) deploy with Urban Search and Rescue (US&R) response teams to care for canine search teams, companion animals, service animals, livestock, and other animals; (2) recruit, train, and certify veterinary professionals, including veterinary students, regarding emergency response; (3) assist state governments, Indian tribal governments, local governments, and nonprofit organizations in emergency planning for animal rescue and care; and (4) coordinate with other federal, state, local, and Indian tribal governments, veterinary and health care professionals, and volunteers. ", "Veterinary professionals serve in several emergency support capacities\u00e2\u0080\u0094aiding in agriculture emergencies by controlling diseases in domestic animals; protecting natural resources by addressing wildlife health impacts; assisting with various emergency public health efforts, such as assuring food safety; and furnishing care to working animals such as search and rescue canines and service animals. ", "Several pre-existing authorities address veterinary support in emergencies in different contexts. The Stafford Act does not specifically mention veterinary services. However, among the work and services authorized for essential assistance is \"provision of rescue, care, shelter, and essential needs\u00e2\u0080\u0094(i) to individuals with household pets and service animals; and (ii) to such pets and animals,\" which could include veterinary services. In addition, the Stafford Act requires state and local recipients of emergency preparedness planning grants to address the needs of individuals with household pets and service animals in their emergency preparedness plans.", "The federal department principally responsible for coordinating veterinary support in emergencies often depends upon the principal work performed, in particular whether it involves public health or animal health. Authority for the National Disaster Medical System (NDMS), an operational emergency response asset of the U.S. Department of Health and Human Services (HHS), does not expressly list which health professionals shall constitute NDMS teams. Rather, it states that the system is intended to \"provide health services, health-related social services, other appropriate human services, and appropriate auxiliary services to respond to the needs of victims of a public health emergency\u00e2\u0080\u00a6.\" NDMS currently supports veterinary response teams. Another HHS asset, the Commissioned Corps of the U.S. Public Health Service (USPHS), supports a veterinary professional category. The U.S. Department of Agriculture (USDA) Animal and Plant Health Inspection Service (APHIS) maintains capacity to respond to animal health emergencies affecting domestic livestock and poultry. "], "subsections": []}, {"section_title": "Section 1229: Extension of Assistance226", "paragraphs": ["DRRA Section 1229 retroactively extended Disaster Unemployment Assistance (DUA). When the President declares a major disaster, individuals who would typically be ineligible for Unemployment Compensation (UC) may be eligible for DUA. After the disaster declaration, the DUA benefits are available to eligible individuals as long as the major disaster continues, for a period of up to 26 weeks. In some cases, UC beneficiaries who had an entitlement to UC benefits of fewer than 26 weeks and who became unemployed as a direct result of a disaster and exhausted their weeks of UC entitlement may be entitled to some DUA benefits. No more than a total of 26 weeks of total benefits (UC plus DUA) are allowable in this situation.", "The maximum number of available weeks of DUA has been temporarily extended three times, most recently by DRRA. DRRA Section 1229 retroactively extended DUA for an additional 26 weeks for persons who were unemployed in Puerto Rico and the U.S. Virgin Islands as a direct result of the 2017 Hurricane Irma or Hurricane Maria disasters. (This created a total potential entitlement to DUA of up to 52 weeks for some individuals.) Because the disasters had both been declared more than 52 weeks before DRRA's enactment, the remaining DUA weeks will be paid retroactively. Individuals who worked in these areas and exhausted entitlement to UC may be eligible for DUA benefits for any remaining uncompensated weeks, up to 52 weeks total (UC plus DUA)."], "subsections": []}, {"section_title": "Section 1226: Inspector General Audit of FEMA Contracts for Tarps and Plastic Sheeting233", "paragraphs": ["DRRA Section 1226 requires the DHS IG to audit the contracts that FEMA awarded for tarps and plastic sheeting for the Commonwealth of Puerto Rico and the U.S. Virgin Islands in response to Hurricanes Irma and Maria. Specifically, the DHS IG must review", "FEMA's contracting process for evaluating offerors and awarding contracts for tarps and plastic sheeting; FEMA's assessment of contractor past performance; FEMA's assessment of the contractors' capacity to carry out the contracts; how FEMA ensured contractors met the terms of the contracts; and whether the failure of contractors to meet the terms of the contracts, and FEMA's cancellation of the contracts affected the provision of tarps and plastic sheeting. ", "In addition, the DHS IG must submit a report containing the audit's findings and recommendations to the House Transportation and Infrastructure Committee and Senate HSGAC no later than 270 days after the audit is initiated. ", "According to the 2017 Hurricane Season FEMA After-Action Report , during Hurricanes Harvey and Irma response operations, FEMA exhausted its pre-negotiated contracts\u00e2\u0080\u0094including contracts to provide tarps. To meet the need for tarps in response to Hurricane Maria, FEMA awarded new contracts, reportedly awarding contracts to \"entities that were assessed as technically acceptable and committed to meeting the requirements, in accordance with the provisions of the Federal Acquisition Regulation.\" FEMA stated that, overall, it \"executed a successful acquisitions process, with the Agency canceling just three contracts.\" Included in the cancelled contracts were contracts for tarps and plastic sheeting. FEMA went on to state that, \"[t]hese cancellations did not hinder FEMA's ability to deliver on its mission.\" However, FEMA later acknowledged that the issues with the contracts delayed the delivery of plastic tarps to Puerto Rico.", "The DHS IG audit requirement included in DRRA may have arisen from congressional concerns regarding FEMA's management of contracts for tarps and plastic sheeting during its 2017 hurricane season response operations. For example, a 2018 report issued by the minority staff of Senate HSGAC concluded that FEMA's acquisition strategy and process, including the use of pre-negotiated, advance contracts during the 2017 hurricane season, was not successful. The Senate HSGAC minority staff report identified several deficiencies in FEMA's contracting process, including that:", "FEMA did not adequately use prepositioned contracts and awarded new contracts before using prepositioned contracts; FEMA awarded contracts without adequate vetting, including $73 million for tarps and plastic sheeting to two contractors with no relevant past performance, and these contracts were cancelled due to the companies' failure to deliver; and FEMA's bid process did not ensure adequate competition, in part due to limited notice provided to prospective vendors and short timeframes for proposal submission. ", "According to the Senate HSGAC minority staff report, the two contracts for tarps and plastic sheeting that were cancelled were intended to provide a total of 1.1 million tarps and 60 thousand rolls of plastic sheeting. The report also identified additional issues that delayed the delivery of tarps and plastic sheeting, such as other companies that were awarded contracts for tarps and plastic sheeting struggling to meet delivery timeframes, and other logistical issues, such as FEMA's exhausted inventory of commodities following Hurricanes Harvey and Irma, commodity delivery challenges (e.g., delivery truck and driver shortages), and shortages of contractors to perform repairs. The Chairman of the Senate Budget Committee, Senator Mike Enzi, also questioned how FEMA identified, vetted, and awarded contracts following Hurricane Maria, stating \"[i]t appears that FEMA has not properly vetted some of the companies that receive contracts and therefore may have wasted millions of taxpayer dollars, while simultaneously denying services to citizens in need of them.\"", "Following Hurricane Katrina and the passage of the Post-Katrina Emergency Management Reform Act of 2006 ( P.L. 109-295 ), FEMA worked to maximize the use of advance contracts for goods and services; however, in a 2015 report, the GAO found deficiencies with FEMA's contracting guidance. This remains an issue; in the GAO's assessment of FEMA's 2017 advance contracting, it recommended that FEMA, among other things", "update its strategy for advance contracting, including defining objectives and how advance contracts should be prioritized in relation to new post-disaster contract awards; update the Disaster Contracting Desk Guide to include guidance for using advance contracts prior to making new post-disaster contract awards, and provide semi-annual training to contracting officers on said guidance; and update and implement existing guidance to identify acquisition planning timeframes and considerations.", "The GAO also stated that \"an outdated strategy and lack of guidance to contracting officers resulted in confusion about whether and how to prioritize and use advance contracts to quickly mobilize resources in response to the three 2017 hurricanes.... \" ", "In May 2019, the DHS IG released a report concluding that FEMA should not have awarded two contracts to Bronze Star LLC\u00e2\u0080\u0094one for tarps and one for plastic sheeting. FEMA cancelled both contracts due to nondelivery. The findings of this audit, which are included in the DHS IG's report, FEMA Should Not Have Awarded Two Contracts to Bronze Star LLC , and accompanied by recommendations, may contribute to the audit and report requirements included in DRRA Section 1226. Depending on the DHS IG's findings, Congress may require FEMA to update its contracting strategy, as well as its policies and procedures related to prepositioning supplies and quickly ramping up procurement operations (i.e., using advance contracts and executing new contracts for commodities and services). FEMA's acquisition personnel may also benefit from additional guidance and training regarding advance contracting, including how to determine whether potential contractors have the capacity to successfully perform the requirements of the contract. "], "subsections": []}]}, {"section_title": "Concluding Observations", "paragraphs": ["DRRA amends many sections of the Stafford Act, and establishes numerous reporting and rulemaking requirements. The implementation of DRRA includes \"more than 50 provisions that require FEMA policy or regulation changes....\" Thus, it could be argued that much of DRRA's implementation is at FEMA's discretion. Although FEMA is working on DRRA implementation, it is unclear at this time how FEMA will address many of DRRA's requirements and recommendations.", "Congress may oversee the implementation of DRRA through hearings or other inquiries to ensure that the post-DRRA changes to disaster assistance programs and policies fulfill congressional intent and the interests of Congress. Congress may also review the effectiveness and impacts of FEMA's DRRA-related regulations and policy guidance, including assessing the effects of DRRA-related changes to federal assistance for past and future disasters.", "Appendix A. Tables of Deadlines Associated with the Implementation Actions and Requirements of the Disaster Recovery Reform Act of 2018 ", "In addition to numerous amendments to the Stafford Act, DRRA includes standalone authorities. DRRA requires reports to Congress, rulemaking/regulatory actions, and other actions to support disaster preparedness, and increase transparency and accountability with regard to FEMA. The following three tables of deadlines are associated with DRRA's reporting, rulemaking/regulatory, and other implementation actions and requirements: Table A-1 . DRRA Reporting Requirements (i.e., reports to Congress); Table A-2 . DRRA Rulemaking and Regulations Requirements; and Table A-3 . DRRA Guidance and Other Required Actions.", "The tables are organized by deadline for implementation in chronological order, and include: the relevant DRRA Section; referenced Stafford Act Section(s), if applicable; a brief description of the requirement; the entity responsible for accomplishing the requirement; the recipient of the information/action; the due date described in DRRA; and the deadline expressed as a calendar date. Some sections of DRRA include multiple implementation actions and requirements and, as such, are included in multiple tables and may appear multiple times. Additionally, some sections of DRRA do not specify the date by which the implementation action or requirement must be completed. For these sections, the due date and calendar deadline are listed as \"N/A.\" Some sections of DRRA include requirements for ongoing actions (e.g., monthly reporting requirements). For these sections, the deadline is listed as \"ongoing.\" Acronyms used in the tables are defined in the associated notes sections.", "Note that information included in the three tables of deadlines associated with DRRA implementation may be subject to change, and the following tables may not be up-to-date following the publication of this report.", "Appendix B. Acronym Table", "The following acronyms for entities, programs, and legislation are used throughout this report:", "Appendix C. Brief Legislative History", "DRRA includes provisions taken from numerous bills aimed at reforming aspects of FEMA. Some of these bills and the provisions incorporated into DRRA include:", "Disaster Recovery Reform Act ( H.R. 4460 , introduced) included many provisions duplicated or incorporated into DRRA with modifications; Disaster Recovery Reform Act of 2018 ( S. 3041 , introduced) included many provisions duplicated or incorporated into DRRA with modifications; Disaster Assistance Fairness and Accountability Act of 2017 ( H.R. 3176 , introduced) included the provision prohibiting the recoupment of certain assistance (incorporated into DRRA as Section 1216(b)\u00e2\u0080\u0094Flexibility); To amend the Robert T. Stafford Disaster Relief and Emergency Assistance Act concerning the statute of limitations for actions to recover disaster or emergency assistance payments, and for other purposes ( H.R. 1678 , passed House) amended the Stafford Act such that no administrative action to recover payments may be initiated after the date that is three years after the date of transmission of the final expenditure report for project completion as certified by the grantee (incorporated into DRRA as Section 1216(c)\u00e2\u0080\u0094Flexibility); Disaster Assistance Support for Communities and Homeowners Act of 2017 ( H.R. 1684 , passed House) included the provision requiring FEMA to provide technical assistance to a common interest community that provides essential services of a governmental nature on actions they may take to be eligible for reimbursement (incorporated into DRRA as Section 1230\u00e2\u0080\u0094Guidance and Recommendations); Community Empowerment for Mitigated Properties Act of 2017 ( H.R. 1735 , introduced) included a provision for the acquisition of property for open space as a mitigation measure (incorporated into DRRA as Section 1231\u00e2\u0080\u0094Guidance on Hazard Mitigation Assistance); Disaster Declaration Improvement Act ( H.R. 1665 , passed House) included the provision that the FEMA Administrator shall give greater weight and consideration to severe local impact or recent multiple disasters when recommending a major disaster declaration (incorporated into DRRA as Section 1232\u00e2\u0080\u0094Local Impact); Pacific Northwest Earthquake Preparedness Act of 2017 ( H.R. 654 , passed House) included a provision on the use of mitigation assistance to reduce the risk and impacts of earthquake hazards (incorporated into DRRA as Section 1233\u00e2\u0080\u0094Additional Hazard Mitigation Activities); Supporting Mitigation Activities and Resiliency Targets for Rebuilding Act, or SMART Rebuilding Act ( H.R. 4455 , introduced) included a provision on the National Public Infrastructure Pre-Disaster Hazard Mitigation Fund; however, it differed from DRRA Section 1234\u00e2\u0080\u0094National Public Infrastructure Pre-Disaster Hazard Mitigation in that the SMART Rebuilding Act established the fund as a separate account, but DRRA allows for a set-aside from the Disaster Relief Fund. It also includes a provision allowing the President to contribute up to 75% of the cost of hazard mitigation measures determined to be cost effective and which substantially reduce risk or increase resilience (incorporated into DRRA as Section 1235\u00e2\u0080\u0094Additional Mitigation Activities)."], "subsections": []}]}}
{"id": "R45386", "title": "Financial Services and General Government (FSGG) FY2019 Appropriations: Independent Agencies and General Provisions", "released_date": "2019-05-24T00:00:00", "summary": ["The Financial Services and General Government (FSGG) appropriations bill includes funding for more than two dozen independent agencies. Among them are the", "Consumer Product Safety Commission (CPSC), Election Assistance Commission (EAC), Federal Communications Commission (FCC), Federal Election Commission (FEC), Federal Labor Relations Authority (FLRA), Federal Trade Commission (FTC), General Services Administration (GSA), National Archives and Records Administration (NARA), Office of Personnel Management (OPM), Privacy and Civil Liberties Oversight Board (PCLOB), Securities and Exchange Commission (SEC), Selective Service System (SSS), Small Business Administration (SBA), and United States Postal Service (USPS).", "President Trump's FY2019 budget request included a total of $3 billion for the independent agencies funded through the FSGG appropriations bill, including $282 million for the Commodity Futures Trading Commission (CFTC) (which is considered through the Agriculture appropriations bill in the House and the FSGG bill in the Senate).", "In the 115th Congress, the House and Senate Committees on Appropriations reported FSGG appropriations bills (H.R. 6258, H.Rept. 115-792 and S. 3107, S.Rept. 115-281) and both houses passed different versions of a broader bill (H.R. 6147) that would have provided FY2019 appropriations. The House-passed H.R. 6147 would have provided a combined total of $1.4 billion for the FSGG agencies, while the Senate-passed H.R. 6147 would have provided $2.3 billion. In both cases, the largest differences compared to the President's request were in the funding for the General Services Administration (GSA). No full-year FY2019 FSGG bill was enacted prior to the end of FY2018. The FSGG agencies were provided continuing appropriations through December 7, 2018, in P.L. 115-245 and through December 21, 2018, in P.L. 115-298. No final bill, however, was enacted and funding for FSGG agencies along with much of the rest of the government lapsed on December 22, 2018. No further FY2019 appropriations occurred prior to the 116th Congress.", "In the 116th Congress, the House of Representatives passed H.R. 21 and H.R. 648, both containing six full FY2019 appropriations bills, including FSGG provisions. H.R. 21 was identical to the Senate-passed H.R. 6147, while H.R. 648 was based on a prospective conference report from the 115th Congress and contained $2.5 billion for the FSGG independent agencies. The Senate did not act on either of these bills.", "On February 14, 2019, both the House and the Senate agreed to a conference report (H.Rept. 116-9) for H.J.Res. 31, containing seven appropriations bills providing full FY2019 funding for the government's operations that had not been previously funded. This included FSGG provisions nearly identical to H.R. 648. The President signed the resolution on February 15, 2019, enacting it into law as P.L. 116-6. P.L. 116-6 provides a total of $1.9 billion in appropriations for FSGG independent agencies."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["The Financial Services and General Government (FSGG) appropriations bill includes funding for more than two dozen independent agencies. These agencies perform a wide range of functions, including the management of federal real property, the regulation of financial institutions and markets, and mail delivery. ", "This report focuses on funding for those independent agencies in Title V of the FSGG appropriations bill. It also addresses general provisions that apply government-wide, which appear in Title VII, and provisions on Cuba sanctions, which would typically appear in Title I. In addition, the FSGG bill funds agencies not covered in this report\u2014the Department of the Treasury (Title I), the Executive Office of the President (EOP; Title II), the judiciary (Title III), and the District of Columbia (Title IV). The bill typically funds mandatory retirement accounts in Title VI, which also contains general provisions applying to the FSGG agencies. ", "The FSGG bill occasionally addresses other issues, particularly those involving financial regulation, in additional titles. Although financial services are a major focus of the bill, the FSGG appropriations bill does not fund many financial regulatory agencies, which are instead funded outside of the appropriations process.", "The FSGG bill has existed in its current form since the 2007 reorganization of the House and Senate Committees on Appropriations. The House and Senate FSGG bills fund the same agencies, with one exception. Funding for the Commodity Futures Trading Commission (CFTC) is considered through the Agriculture appropriations bill in the House and the FSGG bill in the Senate. In this report, the CFTC funding is generally included in the combined funding totals for FSGG independent agencies."], "subsections": []}, {"section_title": "Administration and Congressional Action", "paragraphs": [], "subsections": [{"section_title": "115th Congress", "paragraphs": ["President Trump submitted his FY2019 budget request on February 12, 2018. The request included a total of $2.3 billion for independent agencies funded through the FSGG appropriations bill, including $282 million for the CFTC. ", "The House Committee on Appropriations reported a Financial Services and General Government Appropriations Act, 2019 ( H.R. 6258 , H.Rept. 115-792 ) on June 15, 2018. Total FY2019 funding in the reported bill would have been approximately $1.2 billion for the FSGG independent agencies, with another $255 million for the CFTC included in the Agriculture appropriations bill ( H.R. 5961 , H.Rept. 115-706 ). The combined total of $1.4 billion would have been about $0.9 billion below the President's FY2019 request, with the largest difference in the funding for the General Services Administration (GSA). Title IX of H.R. 6258 contained a number of legislative provisions involving financial regulation. This included a provision bringing the Bureau of Consumer Financial Protection (CFPB) into the appropriations process after 2020.", "H.R. 6258 was included as Division B of H.R. 6147 , the Interior appropriations bill, when it was considered by the House of Representatives beginning on July 17, 2018. The bill was amended numerous times, shifting funding among FSGG agencies but not changing the FSGG totals. H.R. 6147 passed the House on July 19, 2018.", "The Senate Committee on Appropriations reported a Financial Services and General Government Appropriations Act, 2019 ( S. 3107 , S.Rept. 115-281 ) on June 28, 2018. Funding in S. 3107 totaled $2.3 billion for the FSGG independent agencies, approximately the same overall as the President's FY2019 request, but with differences in funding for the individual components, notably the GSA.", "The Senate began floor consideration of H.R. 6147 on July 24, 2018, including the text of S. 3107 as Division B of the amendment in the nature of a substitute ( S.Amdt. 3399 ). The amendment also included three other appropriations bills. The amended version of H.R. 6147 was passed by the Senate on August 1, 2018. Among the various funding differences, which are detailed in Table 3 below, the Senate version of the bill did not include the Title IX legislative provisions, such as the shift in CFPB funding.", "The conference committee on H.R. 6147 convened on September 13, 2018. No conference report was reported, however, prior to the end of the fiscal year. Instead, Division C of P.L. 115-245 , enacted on September 28, 2018, generally provided for continuing appropriations at FY2018 levels for the FSGG agencies through December 7, 2018. A further continuing resolution ( P.L. 115-298 ) was passed providing funding through December 21, 2018. No additional appropriations were passed in the 115 th Congress, leading to a funding lapse for the FSGG agencies as well as those funded in six other appropriations bills beginning on December 22, 2018."], "subsections": []}, {"section_title": "116th Congress", "paragraphs": ["The House of Representatives passed two consolidated appropriations bills in January 2019. H.R. 21 , passed on January 3, 2019, contained six full FY2019 appropriations bills, including FSGG provisions nearly identical to those passed by the Senate in the 115 th Congress. H.R. 21 would have provided a total of $2.3 billion for the FSGG agencies, with the CFTC funding included in the FSGG division, following the Senate structure. On January 23, 2019, the House passed H.R. 648 , also containing the same six full FY2019 appropriations bills, which was reportedly based on a potential conference report from the 115 th Congress. H.R. 648 would have provided $2.5 billion for the FSGG agencies, with the FSGG portion, including CFTC funding, in Division C. Neither of these bills included the financial regulatory provisions in Title IX of the House-passed bill in the 115 th Congress. The Senate did not act on either of these bills. ", "On February 14, 2019, both the House and the Senate agreed to a conference report ( H.Rept. 116-9 ) on H.J.Re s . 31 , the Consolidated Appropriations Act, 2019, containing seven appropriations bills. This act provides full FY2019 funding for the government's operations that had not been previously funded, including FSGG provisions nearly identical to H.R. 648 with notable exceptions in the Treasury's asset forfeiture fund and the GSA. The President signed the resolution on February 15, 2019, enacting it into law as P.L. 116-6 .", "P.L. 116-6 , Division D provided $1.9 billion for the FSGG independent agencies, including the funding for the CFTC. It did not include the Title IX financial regulatory provisions passed by the House in the 115 th Congress. The final total was approximately $0.6 billion less than the President's request, with most of the difference coming from funding for the GSA. The conference report provided that language from the previous appropriations committees reports ( H.Rept. 115-792 and S.Rept. 115-281 ) should be considered as indicating congressional intent unless specifically addressed to the contrary in H.Rept. 116-9 .", " Table 1 below reflects the status of FSGG appropriations measures at key points in the appropriations process across the 115 th and 116 th Congress. Table 2 lists the broad amounts requested by the President and included in the various FSGG bills, largely by title, and Table 3 details the amounts for the independent agencies. Specific columns in Table 2 and Table 3 are FSGG agencies' enacted amounts for FY2018, the President's FY2019 request, the FY2019 amounts from the 115 th Congress bills ( H.R. 6147 as passed by the House, and H.R. 6147 as passed by the Senate), the FY2019 amounts from the 116 th Congress House-passed bills ( H.R. 21 and H.R. 648 ), and the final FY2019 enacted amounts from P.L. 116-6 ."], "subsections": []}]}, {"section_title": "Independent Agencies", "paragraphs": [], "subsections": [{"section_title": "Commodity Futures Trading Commission14", "paragraphs": ["The Commodity Futures Trading Commission is the independent regulatory agency charged with oversight of derivatives markets. The CFTC's functions include oversight of trading on the futures exchanges, oversight of the swaps markets, registration and supervision of futures industry personnel, self-regulatory organizations and major participants in the swaps markets, prevention of fraud and price manipulation, and investor protection. Although most futures trading is now related to financial variables, such as interest rates, currency prices, and stock indexes, congressional authorization jurisdiction remains vested in the House and Senate agriculture committees because of the market's historical origins as an adjunct to agricultural markets. Appropriations for the CFTC are under the jurisdiction of the Agriculture Appropriations Subcommittee in the House and the Financial Services and General Government Appropriations Subcommittee in the Senate. The location of the final enacted amounts for the CFTC typically switches from year to year between the Agriculture and FSGG bills.", "Following the financial crisis of 2008, concerns over the largely unregulated nature of the over-the-counter swaps markets led to various reforms passed in Title VII of the Dodd-Frank Wall Street and Consumer Protection Act. This act brought the bulk of the previously unregulated over-the-counter swaps markets under CFTC jurisdiction, as well as the previously regulated futures and options markets. Passage of the Dodd-Frank Act resulted in the CFTC's oversight of the economically significant swaps markets with an estimated notional value of roughly $240 trillion in the United States. This newly regulated market comes on top of the CFTC's prior jurisdiction over the futures and options markets, with an estimated $34 trillion notional value in the United States.", "The President requested $281.5 million for the CFTC in FY2019, an increase of $32.5 million from FY2018. In the 115 th Congress, H.R. 5961 as reported by the House Agriculture Committee, which was not considered by the full House, would have appropriated $255 million, whereas H.R. 6147 as passed by the Senate would have appropriated $281.5 million. ", "In the 116 th Congress, H.R. 21 would have appropriated $281.5 million, while H.R. 648 would have appropriated $268 million. P.L. 116-6 appropriated $268 million."], "subsections": []}, {"section_title": "Consumer Product Safety Commission18", "paragraphs": ["The Consumer Product Safety Commission (CPSC) is a federal regulatory agency whose mission is to reduce consumers' risk of harm from the use of a wide array of products. In carrying out its statutory responsibilities, the commission creates mandatory safety standards; works with industries to develop voluntary safety standards; bans products it deems unsafe when other options are not feasible; monitors the recall of defective products; informs and educates consumers about product hazards; conducts research on and develops testing methods for product safety; collects and publishes for public use a host of data on injuries and product hazards; and collaborates with state and local governments to establish uniform domestic product regulations.", "The Administration requested $123.5 million in appropriations for the commission in FY2019, or $2.5 million less than the enacted amount for FY2018. According to the CPSC's budget request for FY2019, $5.6 million of that amount would be channeled into workforce development, $72.6 million into preventing hazardous products from reaching consumers, $37.2 million into responding quickly to evidence that certain products can be harmful to consumers, and $8.1 million into communicating information about hazardous products to consumers and makers and sellers of such products. Employee compensation accounts for nearly two-thirds of the FY2019 budget request.", "H.R. 6147 as passed by the House would have provided $127 million in appropriations for the CPSC in FY2019, or $3.5 million more than the budget request. An administrative provision in the bill (Section 501) would have barred the commission from using any of the appropriated funds to \"finalize or implement\" a safety standard for off-road vehicles (ORVs) that was published in the Federal Register on November 19, 2014 (79 Fed. Reg. 68964) until two conditions were met. First, the National Academy of Sciences (in consultation with the Department of Defense and National Highway Traffic Safety Administration) completed a study that addresses (1) the feasibility of certain technical requirements proposed in the standard, (2) the number of rollovers that would be prevented if the requirements were adopted, and (3) the impact of the standard on ORVs used by the military. Second, the results were \"delivered\" to the House and Senate Appropriations Committees, the Senate Committee on Commerce, Science, and Transportation, and the House Committee on Energy and Commerce.", "In the 115 th Congress, H.R. 6147 as passed by the Senate would have appropriated $126 million, or $2.5 million more than the budget request. It included the same administrative provision (Section 501) dealing with ORVs as the House version of H.R. 6147 . ", "In the 116 th Congress, H.R. 21 would have appropriated $126 million, whereas H.R. 648 would have appropriated $127 million. P.L. 116-6 appropriated $127 million for the CPSC and included the Section 501 administrative provision dealing with ORVs. In addition, $800,000 of the appropriated amount is to remain available until expended to carry out the grant program mandated by Section 1405 of the Virginia Graeme Baker Pool and Spa Safety Act."], "subsections": []}, {"section_title": "Election Assistance Commission20", "paragraphs": ["The Election Assistance Commission (EAC) is an independent agency that is charged with helping improve the administration of federal elections. Established by the Help America Vote Act of 2002 (HAVA), the EAC is responsible for managing election administration grants and payments; providing for federal voting system standards, testing, and certification; adopting voluntary guidance for national election administration requirements; conducting election administration research; and facilitating information exchanges among election administration stakeholders. The EAC was not given new regulatory authority under HAVA, but the law transferred certain responsibilities for the National Voter Registration Act of 1993 (NVRA), including certain rulemaking authority, from the Federal Election Commission (FEC) to the EAC. The Department of Justice has enforcement authority under HAVA.", "The President's budget request for FY2019 included $9.2 million for the EAC. In the 115 th Congress, H.R. 6147 as passed by the House would have appropriated $10.1 million, whereas H.R. 6147 as passed by the Senate would have appropriated $9.2 million. Each of those figures included $1.5 million to be transferred to the National Institute of Standards and Technology (NIST) for work NIST performs under HAVA.", "In the 116 th Congress, H.R. 21 and H.R. 648 would have appropriated $9.2 million for the EAC, the same figure as was enacted in P.L. 116-6 . The funding in H.R. 21 would have included $1.5 million for transfer to NIST, and the funding in H.R. 648 would have included $1.25 million. The enacted bill included $1.25 million for NIST."], "subsections": []}, {"section_title": "Federal Communications Commission23", "paragraphs": ["The Federal Communications Commission (FCC) is an independent federal agency established by the Communications Act of 1934 and charged with regulating interstate and international communications by radio, television, wire, satellite, and cable. Its five commissioners are appointed by the President, subject to confirmation by the Senate.", "Since 2009, the FCC's entire budget is derived from regulatory fees collected by the agency rather than through a direct appropriation. The fees, often referred to as \"Section (9) fees,\" are collected from license holders and certain other entities (e.g., cable television systems) and deposited into an FCC account. The law gives the FCC authority to review the regulatory fees and to adjust the fees to reflect changes in its appropriation from year to year. ", "For FY2019, P.L. 116-6 provides the FCC with $339 million for salaries and expenses, all derived from offsetting collections, resulting in no net appropriation. The law also directs the FCC to take specific actions regarding its parental rating system and transmission of local television programming.", "Oversight Monitoring and Rating System: The FCC is directed to report to the Senate and House Committees on Appropriations within 90 days on the extent to which the rating system matches the video content that is being shown and the ability of the TV Parental Guidelines Oversight Monitoring Board to address concerns expressed by the public.", "Transmissions of Local Television Programming: With respect to the Satellite Television Extension and Localism Reauthorization (STELAR) Act of 2014, the FCC is directed to provide a full analysis to ensure decisions on market modification are comprehensively reviewed and STELAR's intent to promote localism is retained. The FCC is directed to adhere to statutory requirements and congressional intent when taking administrative action under STELAR.", "P.L. 116-6 also contains an administrative provision (Section 510) that prohibits the FCC from changing rules governing the Universal Service Fund regarding single connection or primary line restrictions."], "subsections": []}, {"section_title": "Federal Deposit Insurance Corporation's Office of the Inspector General25", "paragraphs": ["The Federal Deposit Insurance Corporation (FDIC) Office of the Inspector General's (OIG's) mission is to audit, investigate, and review the FDIC's operations and programs. The FDIC in general is funded through deposit insurance funds outside of the appropriations process. Its OIG is also funded from deposit insurance funds, but the amount is directly appropriated (through a transfer) to ensure the independence of the OIG. ", "The President's request included $43.0 million for the FDIC OIG in FY2019. In the 115 th Congress, H.R. 6147 as passed by the House and H.R. 6147 as passed by the Senate would both have appropriated the requested $43.0 million.", "In the 116 th Congress, P.L. 116-6 appropriated $43.0 million, the same amount as provided for in H.R. 21 and H.R. 648 ."], "subsections": []}, {"section_title": "Federal Election Commission26", "paragraphs": ["The Federal Election Commission (FEC) is an independent agency that administers and enforces civil compliance with the Federal Election Campaign Act (FECA) and campaign finance regulations. The agency does so through educational outreach, rulemaking, enforcement and litigation, and advisory opinion issuances. The FEC also administers the presidential public financing system. ", "For FY2019, the agency requested $71.3 million.", "In the 115 th Congress, H.R. 6147 as passed by the House and H.R. 6147 as passed by the Senate would have appropriated the requested $71.3 million.", "As in previous years, other sections of the FSGG legislation contained provisions related to campaign finance policy:", "Section 628 of the House-passed H.R. 6147 would have prohibited the Securities and Exchange Commission (SEC) from issuing rules \"regarding the disclosure of political contributions\" or payments for trade-association dues. The Senate-passed bill retains this language in Section 629. Section 630 of the House-passed H.R. 6147 would have prohibited spending appropriated funds to enforce a FECA provision known as the \"prior approval\" rule. This provision limits the number of trade associations that may solicit member-companies' employees. This language does not appear in the Senate-passed bill. Section 734 of the House-passed H.R. 6147 would have prohibited reporting certain political contributions or expenditures as a condition of the government-contracting process. The Senate-passed bill retains this language in Section 735.", "In the 116 th Congress, P.L. 116-6 appropriated $71.3 million, the same amount as included in H.R. 21 and H.R. 648 . General provisions in P.L. 116-6 prohibit spending appropriated funds on additional SEC disclosure (\u00a7629) or contractor disclosure (\u00a7735), as noted above, but do not include any prohibitions relating to the \"prior approval\" rule. In addition, report language accompanying P.L. 116-6 directs the FEC to update congressional appropriators on the agency's ongoing rulemaking on disclaimers for certain online political advertisements."], "subsections": []}, {"section_title": "Federal Trade Commission32", "paragraphs": ["The Federal Trade Commission (FTC) has two primary responsibilities: (1) to protect consumers from deceptive or illegal business practices, and (2) to maintain or enhance competition in a broad range of industries. The FTC enforces laws prohibiting anticompetitive, deceptive, or unfair business practices; issues new and revised regulations; and educates consumers and business owners to foster informed consumer choices, improved compliance with the law, and vigorous competition in free and open markets. ", "Operating funds for the agency come from three sources, listed in descending order of importance: (1) direct appropriations, (2) premerger filing fees under the Hart-Scott-Rodino (HSR) Antitrust Improvements Act of 1976, and (3) Do-Not-Call (DNC) Registry fees. ", "Under the President's FY2019 budget request, the FTC would have received $156.7 million in direct appropriations, and as much as $136 million in HSR filing fees and $17 million in DNC registry fees, for a total budget of $309.7 million. Enacted direct appropriations for the FTC in FY2018 totaled $164.3 million, and its total budget came to $306.3 million, or $3.4 million below the budget request. In FY2019, 55% of the requested appropriations were to go to activities intended to protect consumers, and the remaining 45% would have been used to promote competition in domestic markets.", "In the 115 th Congress, H.R. 6147 as passed by the House would have set the FTC's total budget in FY2019 at $311.7 million, or $2 million above the budget request. This assumed that the agency would collect no more than $136 million in HSR filing fees and $17 million in DNR fees, leaving a direct appropriation of $158.7 million. Under the bill, none of the funds available to the FTC in FY2019 could have been used to carry out its full responsibilities under Section 151 of the Federal Deposit Insurance Corporation Improvement Act of 1991 (FDICIA). (The budget request included the same restriction.)", "Like the budget request, the Senate-passed version of H.R. 6147 would have provided the FTC with a total budget of $309.7 million. This assumed, as in the House version of the bill, that the FTC would collect $136 million in HSR filing fees and $17 million in DNR fees, leaving a direct appropriation of $156.7 million. As with the House version of the bill, none of the funds could have been used to implement FTC's full responsibilities under Section 151 of the FDICIA.", "In the 116 th Congress, P.L. 116-6 provided the FTC with a total budget of $309.7 million. This assumes that the FTC will collect $136 million in HSR filing fees and $17 million in DNR fees, leaving a direct appropriation of $156.7 million. As with the 115 th Congress bills, none of the funds can be used to implement FTC's full responsibilities under Section 151 of the FDICIA. ( H.R. 21 and H.R. 641 contained identical provisions.)"], "subsections": []}, {"section_title": "General Services Administration35", "paragraphs": ["The General Services Administration (GSA) administers federal civilian procurement policies pertaining to the construction and management of federal buildings, disposal of real and personal property, and management of federal property and records. It is also responsible for managing the funding and facilities for former Presidents and presidential transitions.", "GSA's real property activities are funded through the Federal Buildings Fund (FBF). The FBF is a revolving fund into which rental payments are deposited from federal agencies that lease GSA space. The fund's revenue is then made available by Congress each year to pay for specific activities: construction or purchase of new space, repairs and alterations to existing space, rental payments for space that GSA leases, installment payments, and other building operations expenses. These amounts are referred to as limitations because GSA may not obligate FBF funds in excess of that permitted by Congress, regardless of how much revenue is available for obligation. Certain debts may also be paid for with FBF funds. A negative total for the FBF occurs when the amount of funds made available for expenditure in a fiscal year is less than the amount of new revenue expected to be deposited. A negative total does not mean that no funds are available from the FBF, but that there is a net gain to the fund under the proposed spending levels.", "GSA's operating accounts are funded through direct appropriations, separate from the FBF. GSA's total funding amount is calculated by adding the net FBF appropriations made available and appropriations provided to the operating accounts. Table 4 details GSA's enacted amounts for FY2018, the President's FY2019 request, and the FY2019 amounts from H.R. 6147 as passed by the House and the Senate. ", "As shown in Table 4 , the President proposed a limit of $10.132 billion from the FBF's available revenue for GSA's real property activities for FY2019, an increase of $1.058 billion more than the amount provided in FY2018. ", "In the 115 th Congress, the House-passed H.R. 6147 included a limit of $8.623 billion, a decrease of $451 million from FY2018-enacted appropriations and $1.509 billion less than the President's request for FY2019. The Senate-passed H.R. 6147 included a limit of $9.633 billion, $559 million more than the FY2018-enacted amount and $499 million less than the President requested.", "In the 116 th Congress, H.R. 21 would have provided a limit of $9.633 billion, whereas H.R. 648 would have provided a limit of $9.847 billion. P.L. 116-6 ultimately included a limit of $9.285 billion.", "The President also requested $551 million for GSA's operating accounts, an increase of $216 million more than the FY2018-enacted level. The President's request included $31 million for the Asset Proceeds and Space Management Fund (APSMF). Appropriations in the APSMF are to be used to carry out actions pursuant to the recommendations of the Public Buildings Reform Board, which was established by the Federal Assets Sale and Transfer Act of 2016 (FASTA). The President's request also included $6 million for the Environmental Review Improvement Fund, which would support activities related to reforming the environmental review process and the work of the Federal Permitting Improvement Steering Council. The council addresses issues surrounding modernization of federal permitting for major infrastructure projects and helps implement the FASTA. Finally, the President requested $210 million for the Technology Modernization Fund to support improvements in agency information technology systems. ", "In the 115 th Congress, the House-passed H.R. 6147 included $432 million for GSA's operating accounts, $97 million more than the FY2018-enacted amounts and $119 million less than the President requested. The Senate-passed H.R. 6147 included $267 million for GSA's operating accounts, $68 million less than the FY2018-enacted amounts and $284 million less than the President requested.", "In the 116 th Congress, H.R. 21 would have provided $267 million for GSA's operating accounts, and H.R. 648 would have provided $299 million. P.L. 116-6 ultimately appropriated $299 million for GSA's operating accounts."], "subsections": []}, {"section_title": "Independent Agencies Related to Personnel Management Appropriations", "paragraphs": ["The Financial Services and General Government (FSGG) Appropriations Act includes funding for four agencies with personnel management functions: the Federal Labor Relations Authority (FLRA), the Merit Systems Protection Board (MSPB), the Office of Personnel Management (OPM), and the Office of Special Counsel (OSC). Table 5 lists the FY2018 enacted appropriations, the FY2019 budget request, the FY2019 House-passed H.R. 6147 , and the FY2019 Senate-passed H.R. 6147 ."], "subsections": [{"section_title": "Federal Labor Relations Authority37", "paragraphs": ["The Federal Labor Relations Authority (FLRA) is an independent federal agency that administers and enforces Title VII of the Civil Service Reform Act of 1978. Title VII is called the Federal Service Labor-Management Relations Statute (FSLMRS). The FSLMRS gives federal employees the right to join or form a union and to bargain collectively over the terms and conditions of employment. Employees also have the right not to join a union that represents employees in their bargaining unit. The statute excludes specific agencies and gives the President the authority to exclude other agencies for reasons of national security. Agencies that are specifically excluded by law are the Federal Bureau of Investigation (FBI), Central Intelligence Agency (CIA), Government Accountability Office (GAO), National Security Agency (NSA), Tennessee Valley Authority (TVA), FLRA, Federal Service Impasses Panel (FSIP), and U.S. Secret Service.", "The FLRA is composed of a three-member authority, the Office of General Counsel, and the FSIP. The three members of the authority and the General Counsel are appointed to five-year terms by the President with the advice and consent of the Senate. The members of the FSIP are appointed by the President for five-year terms.", "The FLRA resolves disputes over the composition of bargaining units, charges of unfair labor practices, objections to representation elections, and other matters. The General Counsel's office conducts representation elections, investigates charges of unfair labor practices, and manages the FLRA's regional offices. The FSIP resolves labor negotiation impasses between federal agencies and labor organizations.", "For FY2019, the President requested appropriations of $26.2 million for the FLRA. This amount would fund 125 full-time equivalents (FTEs), 3 FTEs fewer than the FY2018 estimated level of 128 FTEs. In the 115 th Congress, H.R. 6147 as passed by the House and the Senate would have provided the same amount as the President requested. In the 116 th Congress, both H.R. 21 and H.R. 648 included the same $26.2 million, as did the enacted P.L. 116-6 ."], "subsections": []}, {"section_title": "Merit Systems Protection Board41", "paragraphs": ["The Merit Systems Protection Board (MSPB) is an independent, quasi-judicial agency established to protect the civil service merit system. The MSPB adjudicates appeals primarily involving personnel actions, certain federal employee complaints, and retirement benefits issues.", "The President's budget requested FY2019 appropriations of $44.5 million (including $42.1 million for salaries and expenses) for the MSPB. This amount would fund 235 FTEs, the same as the FY2018 enacted level. The justification that accompanied the MSPB budget submission explained that the request \"reflects the FTE level at 235; however, MSPB's revised FTE level is 226 to coincide with the personnel compensation and benefits decrease in [the] Congressional Budget Justification submission.\" It stated that, with the requested funding level, the agency would \"continue [its] efforts to maintain MSPB resources dedicated primarily to our Title 5 statutory responsibilities of processing appeals from Federal employees involving, among others, adverse actions, whistleblower claims and veterans concerns, and issuing study reports related to the civil service.\" ", "In the 115 th Congress, H.R. 6147 as passed by the House and the Senate would have provided funding of $46.8 million (including $44.5 million for salaries and expenses). This amount is $2.3 million more than the President requested. ", "In the 116 th Congress, both H.R. 21 and H.R. 648 included $46.8 million for the MSPB, as did the enacted P.L. 116-6 ."], "subsections": []}, {"section_title": "Office of Personnel Management45", "paragraphs": ["The Office of Personnel Management (OPM) is responsible for the personnel management of the federal government's civil service. The President's budget requested FY2019 appropriations of $132.2 million for OPM salaries and expenses. This amount included $14 million to remain available until expended for information technology (IT) infrastructure modernization and Trust Fund Federal Financial System migration or modernization. It also included $639,018 to strengthen the capacity and capabilities of the acquisition workforce, including the recruitment, hiring, training, and retention of the acquisition workforce, and to modernize IT in support of acquisition workforce effectiveness or management. The budget also requested appropriations of $133.5 million for trust fund transfers, $5 million for OPM OIG salaries and expenses, and $25.3 million for OIG trust fund transfers for FY2019. OPM requested an FTE employment level of 6,255 for FY2019, a decrease of 108 FTEs from the FY2018 enacted level of 6,363 FTEs.", "The agency's budget submission stated that the request \"will enable OPM to continue to address critical information technology (IT) infrastructure and investments necessary to maintain its security posture and respond to changing business needs and Federal mandates.\" In addition, the request is to allow the OPM OIG to conduct \"agency-wide audits, investigations, evaluations, and administrative sanctions which help to prevent and detect fraud, waste, abuse, and mismanagement\" and continue to provide oversight for \"OPM's agency-wide information technology (IT) infrastructure project, including data center consolidation and potential mainframe migrations.\" ", "In the 115 th Congress, H.R. 6147 as passed by the House and the Senate would have provided funding for OPM salaries and expenses, trust fund transfers for salaries and expenses, OIG salaries and expenses, and OIG trust fund transfers in the same amounts as requested by the President. In the 116 th Congress, H.R. 21 , H.R. 648 , and the enacted P.L. 116-6 also included the requested amounts, which totaled $295.9 million.", "The 115 th Congress reports that accompanied H.R. 6258 and S. 3107 included several directives to OPM as follows:", "Federal Retirement Processing Modernization \u2014The House committee expressed the expectation that OPM will \"continue to make retirement processing and disability processing a priority and move to a fully-automated electronic filing system.\" It directed OPM to continue to provide monthly reports to the House and Senate Appropriations Committees on progress in addressing backlogs. The Senate committee directed OPM to continue to provide information on progress made. ", "OPM Organizational Changes \u2014The House committee reminded OPM of the obligation to notify the House and Senate Appropriations Committees about \"any reorganizations, restructurings, new programs or elimination of programs,\" including \"changes that could impact the National Bureau of Investigations and the Human [Resources] Solutions program.\" The committee encouraged the OPM Inspector General (IG) \"to keep a pulse on\" and update the initiatives in reports to Congress.", "Critical Functions \u2014The House committee reminded OPM \"to not lose sight of its mission\" related to \"directing human resources and employee management services, and administering retirement benefits, managing healthcare and insurance programs, overseeing merit-based and inclusive hiring in to the civil service, and providing a secure employment process\" as the agency \"responds to critical IT challenges.\"", "Recruitment \u2014The House committee encouraged OPM \"to seek input from hiring managers on what challenges they face and what improvements could be made to make the federal hiring process more efficient and effective.\" It directed the agency to submit a report \"on a plan to reduce barriers to Federal employment, reduce delays in the hiring process, and how it intends to improve the overall federal recruitment and hiring process,\" to the House and Senate Appropriations Committees within 90 days after the act's enactment. In addition, the committee encouraged federal agencies \"to increase recruitment efforts within the United States and the territories and at Hispanic Serving Institutions and Historically Black Colleges and Universities.\"", "Federal Pay \u2014The House committee directed the OPM Director and the Chief Human Capital Officers Council to \"track government-wide data to establish a baseline and analyze the extent to which\" special pay \"authorities are effective in improving employee recruitment and retention, and determine what potential changes may be needed to improve\" their \"effectiveness.\"", "Federal Telework Programs \u2014Stating its support for \"cost savings and productivity improvements from well-managed telework programs,\" the House committee urged the federal sector to \"continue to track successes, compile best practices, and expand upon telework programs where appropriate.\" The Senate committee encouraged OPM to work with agencies to improve data collection methods, provide training on effective teleworking, set goals for telework results, and prepare progress assessments.", "National Background Investigations Bureau (NBIB) \u2014The Senate committee directed OPM and the bureau to provide quarterly updates to the House and Senate Appropriations Committees on developments in transitioning responsibility for Department of Defense (DOD) background investigations to DOD, and OPM's assessment of the transition's impact and implications on the agency.", "Official Time \u2014The Senate committee directed OPM to \"assist agencies in strengthening internal controls and increasing transparency and accountability for monitoring and reporting on\" official time.", "Information Technology ( IT Modernization ) \u2014The Senate committee directed OPM to implement recommendations made in GAO and IG reports on information security and provide quarterly briefings to the House and Senate Appropriations Committees on its progress on the IT Transformation and Cybersecurity Strategy.", "Trust Fund Federal Financial System (FFS) \u2014The Senate committee directed OPM to provide a spending plan to the House and Senate Appropriations Committees \"for the $18,400,000 dedicated to the FFS initiative; the options the agency is pursuing to modernize FFS; and a timeline for completion of the modernization of FFS,\" within 30 days of the act's enactment.", "Federal Security Clearances \u2014The Senate committee referenced the Title VI general provision that prevents \"contractors from conducting quality reviews of their own work\" and directed OPM to \"ensure that internal controls are implemented to prevent investigations from being closed prematurely.\"", "OIG's Semiannual Report to Congress \u2014The Senate committee encouraged the semiannual report to include \"OPM's efforts to improve and address cybersecurity challenges including steps taken to prevent, mitigate, and respond to data breaches involving sensitive personnel records and information; OPM's cybersecurity policies and procedures in place, including policies and procedures relating to IT best practices such as data encryption, multifactor authentication, and continuous monitoring; OPM's oversight of contractors providing IT services; and OPM's compliance with government-wide initiatives to improve cybersecurity.\"", "The 116 th Congress conference report ( H.Rept. 116-9 ) did not change any of these committee directives. The conference report included the following additional directive to OPM.", "Relocation of Human Resources Solutions (HRS) \u2014The conference committee directed OPM to submit a report to the House and Senate Appropriations Committees within 30 days after the act's enactment on \"the budgetary implications of moving HRS to [the General Services Administration] (GSA) and the legal authority under which it proposes to transfer the HRS function within the OPM Revolving Fund established by 5 U.S.C. \u00a71304(e)(1) to GSA.\" The conferees directed OPM \"to provide quarterly updates to the Committees on the status of the HRS program relocation and any other OPM program and office relocations.\"", "Section 619(a)(3), (4), and (5) of H.R. 6147 as passed by the House and the Senate in the 115 th Congress would have provided the mandatory appropriations for the health benefits, life insurance, and retirement accounts. According to the House Committee on Appropriations report that accompanied H.R. 6258 , \"these are accounts where authorizing language requires the payment of funds.\" The House report stated that the Congressional Budget Office (CBO) estimated $13.5 billion for the Government Payment for Annuitants, Employee Health Benefits; $49 million for the Government Payment for Annuitants, Employee Life Insurance; and $8 billion for Payment to the Civil Service Retirement and Disability Fund. In the 116 th Congress, H.R. 21 , H.R. 648 , and the enacted P.L. 116-6 included identical sections, resulting in a total of $21.628 billion in outlays."], "subsections": []}, {"section_title": "Office of Special Counsel56", "paragraphs": ["The Office of Special Counsel (OSC) is an independent federal investigative and prosecutorial agency whose mission is to safeguard the merit system by protecting federal employees and applicants from prohibited personnel practices, especially reprisal for whistleblowing. ", "The President's budget requested FY2019 appropriations of $26.3 million for the OSC. The agency's FTE employment level was estimated to be 144 for FY2019, an increase of 13 FTEs above the FY2018 enacted level of 131 FTEs. \"For 2018 and 2019,\" the agency projected \"intakes for whistleblower disclosure, Hatch Act, and prohibited personnel practice cases to follow recent trends and stabilize at around 6,000 total new cases received each year.\" The funding was requested to \"enable OSC to meet rising demand for [the agency's] services, protect the growing number of whistleblowers in the VA [Veterans Affairs] and other agencies, protect the employment rights of returning service members, manage continually rising case levels, and protect the federal merit system from prohibited personnel and political practices.\" ", "In the 115 th Congress, H.R. 6147 as passed by the House would have provided the funding requested by the President. As passed by the Senate, H.R. 6147 would have provided funding of $26.5 million, $283,000 more than the President's request. In the 116 th Congress, H.R. 21 , H.R. 648 , and the enacted P.L. 116-6 included $26.5 million in funding for the OSC.", "The 115 th Congress Senate committee report that accompanied S. 3107 included the following directive:", "Veterans Affairs (VA) C ases \u2014Noting the significant increase in cases over the past several fiscal years and that \"three-fourths of OSC's whistleblower disclosures that are substantiated in full or in part are from the VA,\" the committee expressed the expectation that, as the agency \"continues to move toward a more cohesive internal structure through its 'One OSC' initiative,\" personnel resources could be allocated more effectively to address the caseload.", "The 116 th Congress conference report ( H.Rept. 116-9 ) did not change this directive."], "subsections": []}]}, {"section_title": "National Archives and Records Administration61", "paragraphs": ["The National Archives and Records Administration (NARA) is an independent agency created to preserve the U.S. government's records, oversee recordkeeping in various government agencies, and make government records publicly available. ", "The Administration requested $376.8 million for NARA for FY2019. In the 115 th Congress, H.R. 6147 as passed by the House would have appropriated $390.7 million, whereas H.R. 6147 as passed by the Senate would have appropriated $393.4 million. In the 116 th Congress, H.R. 21 would have appropriated $393.4 million, whereas H.R. 648 would have appropriated $391.3 million. P.L. 116-6 appropriated $391.3 million. Approximately $27.2 million of NARA's funding is dedicated to paying down debt due to the construction of the Archives II facility, resulting in lower net total figures appearing in the committee reports."], "subsections": []}, {"section_title": "National Credit Union Administration64", "paragraphs": ["The National Credit Union Administration (NCUA) is an independent federal agency funded largely by the credit unions it charters, insures, and regulates. The NCUA manages the Community Development Revolving Loan Fund (CDRLF), established in 1979, to assist officially designated low-income credit unions in providing basic financial services to low-income communities. Low-interest loans and grants are made available to assist these credit unions. Loans are normally repaid in five years, although shorter repayment periods may be considered. Grants have been provided for a variety of purposes including improving operations and technical assistance. In addition to funds provided for specifically in appropriations acts, earnings generated from the CDRLF may be available to fund loans or grants. In the 115 th Congress, the President requested no money be appropriated for the CDRLF in FY2019, whereas House-passed H.R. 6147 and Senate-passed H.R. 6147 would both have appropriated $2 million, the same amount as appropriated in FY2018. In the 116 th Congress, H.R. 21 and H.R. 648 both included $2 million, as did the enacted P.L. 116-6 ."], "subsections": []}, {"section_title": "Office of Government Ethics65", "paragraphs": ["The Office of Government Ethics (OGE) is an independent federal agency, established by the Ethics in Government Act of 1978, charged with promulgating rules and regulations pertaining to financial disclosure, conflict of interest, and ethics in the executive branch. ", "OGE is headed by a director who is appointed to a five-year term by the President with Senate confirmation. OGE provides education and training to executive branch ethics officials. According to OGE, it \"does not adjudicate complaints, investigate matters within the jurisdiction of Inspectors General and other authorities, or prosecute ethics violations.\"", "For FY2019, the President's request for OGE was $16.3 million, a $0.1 million decrease from the FY2018 enacted amount. In the 115 th Congress, the House-passed H.R. 6147 would have appropriated $17 million and the Senate-passed H.R. 6147 would have appropriated $16.4 million. In the 116 th Congress, H.R. 21 would have appropriated $16.4 million, whereas H.R. 648 would have appropriated $17 million. P.L. 116-6 ultimately appropriated $17 million for OGE."], "subsections": []}, {"section_title": "Privacy and Civil Liberties Oversight Board68", "paragraphs": ["The Privacy and Civil Liberties Oversight Board (PCLOB) was originally established in 2004 by the Intelligence Reform and Terrorism Prevention Act as an agency within the Executive Office of the President. PCLOB was reconstituted as an independent agency within the executive branch by the Implementing Recommendations of the 9/11 Commission Act of 2007. The five-member board assumed its new status on January 30, 2008; its FY2009 appropriation was its first funding as an independent agency. ", "The board is directed to (1) ensure that privacy and civil liberties concerns are appropriately considered in the development and implementation of laws, regulations, and executive branch policies related to protecting the nation against terrorism; (2) review the implementation of laws, regulations, and executive branch policies related to protecting the nation from terrorism, including information-sharing guidelines; and (3) analyze and review actions the executive branch takes to protect the nation from terrorism, ensuring that the need for such actions is balanced with the need to protect privacy and civil liberties. In addition, the board is directed to (1) advise the President and the heads of executive branch departments and agencies on issues concerning, and findings pertaining to, privacy and civil liberties; and (2) provide annual reports to Congress detailing the board's activities during the year. Upon request, board members appear and testify before congressional committees. ", "For FY2019, the President requested $5 million for the PCLOB, compared with $8 million appropriated in FY2018. In the 116 th Congress, the House-passed H.R. 6147 and the Senate-passed H.R. 6147 both included the requested $5 million, as did H.R. 21 and H.R. 648 in the 116 th Congress. The enacted P.L. 116-6 appropriated the requested $5 million for the PCLOB."], "subsections": []}, {"section_title": "Public Company Accounting Oversight Board72", "paragraphs": ["The Public Company Accounting Oversight Board (PCAOB) was created by the Sarbanes-Oxley Act of 2002 (Sarbanes-Oxley) as a nonprofit corporation to provide independent oversight of audits of companies listed on public exchanges. Amendments in the Dodd-Frank Act provided that the PCAOB is generally funded outside the appropriations process through the annual accounting support fees assessed on public companies and other issuers, as well as fees on brokers and dealers registered with the SEC. ", "Sarbanes-Oxley created a merit scholarship for undergraduate and graduate students enrolled in accredited accounting degree programs that was to be funded by monetary penalties imposed by the PCAOB, notwithstanding other requirements of the act. The scholarship program is administered by an outside vendor under the rules established by the PCAOB. For FY2018, P.L. 115-141 , Division B, Section 620 specified that not more than $1 million should be spent on such scholarships. In the 115 th Congress, Section 620 of the Senate-passed version of H.R. 6147 would have provided for an \"amount not exceeding the amount of funds collected by the Board as of December 31, 2018, including accrued interest, as a result of the assessment of monetary penalties\" for these scholarships in FY2019. The committee report on this language estimated this amount at $1 million. The Administration did not submit any funding request for these scholarships in FY2019, nor was any included in H.R. 6147 as passed by the House. ", "In the 116 th Congress, H.R. 21 , H.R. 648 , and the enacted P.L. 116-6 all include the same Section 620 language noted above, and H.Rept. 116-9 attributes the same $1 million in spending resulting from it in FY2019."], "subsections": []}, {"section_title": "Securities and Exchange Commission76", "paragraphs": ["The SEC administers and enforces federal securities laws to protect investors from fraud, to ensure that corporate securities' sellers disclose accurate financial information, and to maintain fair and orderly trading markets. The SEC's budget is set through the normal appropriations process, but, under the Dodd-Frank Act, the agency's appropriations are offset by fees it collects from securities exchanges on stock sales and certain other securities transactions on those exchanges. The collections go directly to the Treasury Department. To achieve the offset, the act requires the agency to adjust its fees, making the agency's budget deficit-neutral.", "The President's FY2019 request for the SEC totaled $1.699 billion, with $40.8 million of that intended for lease costs for the relocation of the SEC's New York Regional Office headquarters. In the 115 th Congress, H.R. 6147 as passed by the House would have appropriated a total of $1.696 billion, as would H.R. 6147 as passed by the Senate; both would have included $37.2 million for leasing the new headquarters. In the 116 th Congress, H.R. 21 would have appropriated $1.696 billion, whereas H.R. 648 would have appropriated $1.712 billion. P.L. 116-6 appropriated $1.712 billion, including $37.3 million for the New York Regional Office lease.", "In addition to amounts approved in the regular appropriations process, the Dodd-Frank Act also established an SEC reserve fund to enable the agency to plan for certain long-term expenses, potentially freeing up other funds for agency use in areas such as enforcement and regulation. The reserve fund is funded by the agency's traditional collections on registration fees. In any single fiscal year, the fund cannot exceed $100 million nor can the SEC collect more than $50 million in fees for the fund. Any excess collections go to the Treasury Department. ", "For FY2019, the President requested $25 million be rescinded from the reserve fund. In the 115 th Congress, neither H.R. 6147 as passed by the House nor H.R. 6147 as passed by the Senate would have rescinded any monies from the reserve fund. In the 116 th Congress, the House-passed bills did not include such rescission language and neither did the enacted P.L. 116-6 ."], "subsections": []}, {"section_title": "Selective Service System77", "paragraphs": ["The Selective Service System (SSS) is an independent federal agency operating with permanent authorization under the Military Selective Service Act. It is not part of the Department of Defense, but its mission is to serve the military's emergency manpower needs by conscripting personnel when directed by Congress and the President. Most males aged 18 through 25 and living in the United States are required to register with the SSS. The induction of men into the military via Selective Service (i.e., the draft) terminated in 1973 and has not been renewed. In January 1980, President Carter asked Congress to authorize standby draft registration of both men and women. Congress approved funds for male-only registration in June 1980. Women are now allowed to serve in combat units and occupations, which may lead to the modification of registration to include women. ", "SSS's funding has remained relatively stable over previous years in terms of absolute dollars, but it has decreased in terms of inflation-adjusted funding. For FY2019, the President requested $26.4 million in funding. The 115 th Congress House-passed and Senate-passed versions of H.R. 6147 would have appropriated $26 million, and the same amount was included in the 116 th Congress H.R. 21 and H.R. 648 . P.L. 116-6 appropriated $26 million for SSS. This represents a $3.1 million increase over the $22.9 million appropriated for SSS in FY2018."], "subsections": []}, {"section_title": "Small Business Administration80", "paragraphs": ["The Small Business Administration (SBA) administers a number of programs intended to assist small businesses. For example, the SBA (1) guarantees loans made by banks and other financial institutions to small businesses; (2) makes low-interest loans to small businesses, nonprofit organizations, and households that are victims of natural disasters and acts of terrorism; (3) finances training and technical assistance programs for small business owners and prospective owners; (4) oversees several small business federal contracting programs, and (5) serves as an advocate for small business within the federal government.", "The President requested an appropriation of $834.1 million for the SBA for FY2019 ($628.9 million if recommended increases in fees and a $50 million rescission is approved). The request included $265 million for salaries and expenses, $192.5 million for entrepreneurial development and noncredit programs, $155.2 million for business loan administration, $4 million for business loan subsidy costs, $21.9 million for the Office of the Inspector General, $9.1 million for the Office of Advocacy, and $186.5 million for disaster assistance. The Administration also requested authorization levels of $30 billion for the 7(a) loan guaranty program, $7.5 billion for the 504/CDC loan guaranty program, $4 billion for the Small Business Investment Company (SBIC) program, and $12 billion for SBA-guaranteed trust certificates for the SBIC program. ", "In addition, the Administration requested a number of program revisions, including (1) authorization to increase SBA loan guarantee program levels that are established in the act and do not require budget authority by not more than 15% after notifying, in writing, the Committees on Appropriations and Small Business of both Houses of Congress at least 15 days in advance; (2) a permanent rescission of $50 million in prior year unobligated subsidy balances from the 504/CDC loan guarantee program; (3) an \"update\" of fee structures to offset $155 million in business loan administration expenses, including increases in the 7(a) loan guarantee program's upfront and annual servicing fees; and (4) an increase in the SBAExpress program's maximum loan amount from $350,000 to $1 million.", "The 115 th Congress House-passed H.R. 6147 would have appropriated $741.88 million for the SBA for FY2019, $92.2 million less than the Administration's request. Of the appropriated amount, $268.5 million was for salaries and expenses, $251.9 million was for entrepreneurial development and noncredit programs, and $31.308 million was for disaster assistance. The remaining budget account amounts, authorization levels, and rescission followed the request. The House-passed bill also would have repealed an expedited disaster assistance program authorized under the Food, Conservation, and Energy Act of 2008. It would not have authorized the SBA to increase loan guarantee program authorization levels beyond those established in the act, nor authorized changes to SBA fee structures, nor increased the SBAExpress program's maximum loan amount.", "The 115 th Congress Senate-passed H.R. 6147 would have appropriated $699.3 million for the SBA for FY2019, $134.8 million less than the Administration's request. Of the appropriated amount, $267.5 million was for salaries and expenses, $241.6 million was for entrepreneurial development and noncredit programs, and no funding was provided for disaster assistance. The remaining budget account amounts and authorization levels followed the request. It did not address the rescission, authorize the SBA to increase loan guarantee program authorization levels beyond those established in the act, increase SBA fee structures, or increase the SBAExpress program's maximum loan amount. ", "The Senate-passed H.R. 6147 would have prohibited SBA assistance to businesses headquartered in the People's Republic of China or for which more than 25% of the company's voting stock is owned by affiliates that are citizens of the People's Republic of China; required the SBA to study whether the provision of matchmaking services with various outside entities would enhance existing SBA veterans entrepreneurship programs; and required the SBA to work with federal agencies to review each Office of Small and Disadvantaged Business Utilization's efforts to comply with the requirements under Section 15(k) of the Small Business Act (relating to assisting small businesses obtain federal contracts).", "In the 116 th Congress, P.L. 116-6 appropriated $715.37 million for the SBA, $134.8 million less than the Administration's request (with the difference primarily due to lower appropriations for disaster assistance). The act provided $267.5 million for salaries and expenses, $247.7 million for entrepreneurial development and noncredit programs, $155.15 million for business loan administration, $4 million for business loan credit subsidies (for the Microloan program), $21.9 million for Office of Inspector General, $9.12 million for the Office of Advocacy, and $10 million for disaster assistance. ", "The act also set authorization levels of $30 billion for the 7(a) loan guaranty program, $7.5 billion for the 504/CDC loan guaranty program, $4 billion for the Small Business Investment Company (SBIC) program, and $12 billion for SBA-guaranteed trust certificates for the SBIC program, as requested by the Trump Administration. In addition, the act included a permanent rescission of $50 million in prior-year unobligated subsidy balances from the 504/CDC loan guarantee program, repealed the expedited disaster assistance loan program, and established a System Modernization and Working Capital Fund (IT WCF) to, among other goals, improve, retire, or replace existing information technology systems to enhance cybersecurity and transition to other innovative commercial platforms and technologies. The SBA was authorized to transfer, after receiving advance approval of the House and Senate Committees on Appropriations, not more than 3% of its funding under the salaries and expenses and business loans program accounts to the IT WCF. The amounts transferred to the IT WCF shall remain available for obligation through September 30, 2022."], "subsections": []}, {"section_title": "United States Postal Service84", "paragraphs": ["The U.S. Postal Service (USPS) generates almost all of its funding\u2014nearly $70 billion annually\u2014by charging mail users for the costs of the services it provides. Congress, however, does provide annual appropriations to compensate USPS for revenue it forgoes in providing free mailing privileges to the blind and overseas voters. Congress authorized appropriations for these purposes in the 1993 Revenue Forgone Reform Act (RFRA). This act also permitted Congress to provide USPS with a $29 million annual reimbursement until 2035 to compensate for lost revenue providing additional below-cost postal services during the RFRA's phase-in period. Funds appropriated to the USPS for the annual reimbursement and revenue forgone are deposited in the Postal Service Fund (PSF), which is an off-budget revolving fund comprised of revenue from the sale of postal products and services. The PSF is used to pay the operating expenses of USPS, the U.S. Postal Service Office of Inspector General (USPSOIG), and the Postal Regulatory Commission (PRC).", "The Postal Accountability and Enhancement Act (PAEA), which was enacted on December 20, 2006, first affected the postal appropriations process in FY2009. Under the PAEA, both the USPSOIG and the PRC must submit their budget requests directly to Congress and to OMB. The law requires that funding for these two agencies must be provided out of the Postal Service Fund. The law further requires that USPSOIG's budget be treated as a component of USPS's budget, whereas the PRC's budget, like the budgets of other independent regulators, is treated separately. ", " Table 6 summarizes the different appropriations for the USPS."], "subsections": [{"section_title": "Payment to the Postal Service Fund for Revenue Forgone", "paragraphs": ["For FY2019, the President requested $55.2 million for the Postal Service Fund, which is about $2.9 million less than the USPS's FY2018 appropriation. In the 115 th Congress, H.R. 6147 as passed by the House would have appropriated 58.1 million, whereas H.R. 6147 as passed by the Senate would have appropriated $55.2 million. In the 116 th Congress, H.R. 21 , H.R. 648 , and the enacted P.L. 116-6 included $55.2 million for the Postal Service Fund."], "subsections": []}, {"section_title": "U.S. Postal Service Office of Inspector General", "paragraphs": ["For FY2019, the President requested $234.7 million for the USPSOIG, which is about $10.4 million less than the USPSOIG's FY2018 appropriation. In the 115 th Congress, H.R. 6147 as passed by the House and as passed by the Senate would both have appropriated $250 million. In the 116 th Congress, H.R. 21 , H.R. 648 , and the enacted P.L. 116-6 included $250 million for the USPSOIG. "], "subsections": []}, {"section_title": "Postal Regulatory Commission", "paragraphs": ["For FY2019, the President requested $15.1 million for the PRC, which is about $0.1 million less than the PRC's FY2018 appropriation. In the 115 th Congress, both the House- and Senate-passed versions of H.R. 6147 would have appropriated $15.2 million, the same as the PRC's FY2018 appropriation. In the 116 th Congress, H.R. 21 , H.R. 648 , and the enacted P.L. 116-6 included $15.2 million for the PRC."], "subsections": []}, {"section_title": "USPS Policy Provisions", "paragraphs": ["The President's FY2019 Budget contained several \"operational reforms to reduce costs and improve revenue,\" including", "discontinuing six-day mail delivery and reducing delivery frequency to five days where there is a business case to do so; allowing USPS to shift to centralized and curbside delivery where appropriate; authorizing a one-time postal rate increase; and ensuring flexibility of the rate-setting process.", "In the 115 th Congress, the House-passed and Senate-passed versions of H.R. 6147 included several long-standing postal policy provisions. For example, the bills both would have", "required USPS to continue six-day mail delivery; required USPS to continue providing mail for overseas voting and mail for the blind free of charge; prohibited appropriated funds from being used to charge a fee to a child support enforcement agency seeking the address of a postal customer; and prohibited funds from being used to consolidate or close small rural and other small post offices.", "In the 116 th Congress, H.R. 21 , H.R. 648 , and the enacted P.L. 116-6 included the same long-standing postal policy provisions as the House- and Senate-passed versions of H.R. 6147 , but did not include the policy reforms requested in the President's FY2019 Budget."], "subsections": []}]}, {"section_title": "United States Tax Court100", "paragraphs": ["A court of record under Article I of the Constitution, the United States Tax Court (USTC) is an independent judicial body that has jurisdiction over various tax matters as set forth in Title 26 of the United States Code . The court is headquartered in Washington, DC, but its judges conduct trials in many cities across the country.", "The USTC was appropriated $50.7 million in FY2018. The President requested $55.6 million for FY2019. In the 115 th Congress, both the House- and Senate-passed versions of H.R. 6147 would have appropriated $51.5 million. In the 116 th Congress, H.R. 21 , H.R. 648 , and the enacted P.L. 116-6 included $51.5 million for the USTC."], "subsections": []}]}, {"section_title": "General Provisions Government-Wide101", "paragraphs": ["The FSGG Appropriations Act includes general provisions applying government-wide. Most of the provisions include language that has appeared under the General Provisions title for several years because Congress has decided to reiterate the language rather than make the provisions permanent. An Administration's proposed government-wide general provisions for a fiscal year are generally included in the Budget Appendix. Among the new provisions proposed for FY2019 were the following: ", "If new budget authority provided in FY2019 appropriations acts exceeds the discretionary spending limit for any category set forth in Section 251(c) of the Balanced Budget and Emergency Deficit Control Act of 1985 because of estimating differences with CBO, the OMB Director will make an adjustment to the FY2019 discretionary spending limit in such category in the amount of the excess. The total of all such adjustments would not exceed 0.2% of the sum of the adjusted FY2019 discretionary spending limits for all categories. (Section 736, FY2019 budget proposal, Section 745 of H.R. 6147 as passed by the House, Section 748 of H.R. 6147 as passed by the Senate, Section 748 of H.R. 21 as passed by the House, Section 747 of H.R. 648 as passed by the House, and Section 747 of P.L. 116-6 .) The head of a covered agency that has established an Information Technology System Modernization and Working Capital Fund (IT Fund) may transfer funds appropriated in this or any other act that become available upon or after this act's enactment date to such agency's IT Fund for the purposes specified in Section 1077 of P.L. 115-91 . Requirements for notification about the transfer apply. Amounts transferred to an agency's IT Fund would remain available for three fiscal years. (Section 737 of the FY2019 budget proposal. Not included in H.R. 21 as passed by the House, H.R. 648 as passed by the House, and P.L. 116-6 .) None of the funds made available by this act could be used to implement, administer, or enforce a rule issued pursuant to Section 13(p) of the Securities Exchange Act of 1934, which requires the SEC to promulgate rules requiring issuers with conflict minerals that are necessary to the functionality or production of a product manufactured by such person to disclose annually whether any of those minerals originated in the Democratic Republic of the Congo or an adjoining country. (Section 747 of H.R. 6147 as passed by the House. Not included in H.R. 21 as passed by the House, H.R. 648 as passed by the House, and P.L. 116-6 .) A pay adjustment of 1.9% for 2019 was authorized for federal civilian employees paid under the General Schedule, allocated as 1.4% base pay adjustment and 0.5% locality pay adjustment. (Section 749 of H.R. 6147 as passed by the Senate, Section 749 of H.R. 21 as passed by the House, Section 748 of H.R. 648 as passed by the House, Section748 of P.L. 116-6 .) "], "subsections": []}, {"section_title": "Cuba Sanctions106", "paragraphs": ["The Treasury Department's Office of Foreign Assets Control (OFAC) administers the main body of Cuba embargo regulations, the Cuban Assets Control Regulations, which were first issued in 1963, and have been amended many times over the years to reflect changes in U.S. policy toward Cuba. ", "In the 115 th Congress, H.R. 6147 as passed by the House included two FSGG provisions in Division B that would have tightened U.S. economic sanctions on Cuba. Section 128 provided that no funds made available by the act could have been used to approve, license, facilitate, authorize, or otherwise allow the use, purchase, trafficking, or import of property confiscated by the Cuban government. The provision appears to have been aimed at prohibiting the importation of rum and tobacco products by authorized U.S. travelers as accompanied baggage. ", "Section 129, which relates to trade sanctions on Cuba, provided that no funds made available by the act could have been used to authorize a general license or approve a specific license with respect to a mark, trade name, or commercial name that is substantially similar to one that was used in connection with a business or assets that were confiscated by the Cuban government unless the original owner expressly consented. The provision, which would have prohibited OFAC from licensing the payment of trademark registration fees, relates to a long-standing dispute between a Cuban company and the Bermuda-based Bacardi Limited over the Havana Club trademark. In January 2016, OFAC issued a specific license for the Cuban company to make payments related to the renewal of the Havana Club trademark, and the U.S. Patent and Trademark Office subsequently renewed the Havana Club trademark until 2026. ", "Both Cuba provisions had been included in House Appropriations Committee version of the FY2018 FSGG appropriations bill, H.R. 3280 , but were not included in the Consolidated Appropriations Act, 2018 ( P.L. 115-141 ). ", "H.R. 6147 as passed by the Senate did not include either Section 128 or Section 129.", "In the 116 th Congress, neither H.R. 21 nor H.R. 648 included either section and nor did the enacted P.L. 116-6 . "], "subsections": []}]}}
{"id": "R46325", "title": "Fourth COVID-19 Relief Package (P.L. 116-139): In Brief", "released_date": "2020-04-24T00:00:00", "summary": ["On April 23, 2020, Congress passed its fourth measure including supplemental appropriations to respond to the COVID-19 pandemic. The Paycheck Protection Program and Health Care Enhancement Act (the act; P.L. 116-139 ) includes enhancements for the Small Business Administration's Paycheck Protection Program (PPP), Economic Injury Disaster Loans (EIDL), and Emergency EIDL grants, and emergency supplemental appropriations for the Department of Health and Human Services (HHS) and Small Business Administration (SBA). The President signed the bill into law on April 24, 2020.", "The Congressional Budget Office estimates that the act will result in $321.3 billion in additional direct spending for the PPP, and $162.1 billion in additional discretionary spending, including $50 billion for EIDL and $10 billion for Emergency EIDL grants.", "This report provides a brief overview of that measure."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["On April 23, 2020, Congress passed its fourth measure including supplemental appropriations to respond to the Coronavirus Disease 2019 (COVID-19) pandemic. The Paycheck Protection Program and Health Care Enhancement Act (the act; P.L. 116-139 ) includes enhancements for the Small Business Administration's Paycheck Protection Program (PPP), Economic Injury Disaster Loans (EIDL), and Emergency EIDL grants, and emergency supplemental appropriations for the Department of Health and Human Services (HHS) and Small Business Administration (SBA). ", "The Congressional Budget Office estimates that the act will result in $321.3 billion in additional direct spending for the PPP, and $162.1 billion in additional discretionary spending, including $50 billion for EIDL and $10 billion for Emergency EIDL grants."], "subsections": [{"section_title": "Legislative History", "paragraphs": ["H.R. 266 was first passed by the House on January 11, 2019, as an FY2020 annual appropriations measure unrelated to COVID-19. The bill was read twice and placed on the Senate Legislative Calendar on January 15, 2019, but the Senate did not act on the original legislation. The Senate agreed to take up the measure on April 21, 2020. The bill was laid before the Senate by unanimous consent and an amendment in the nature of a substitute replaced the original text with that of the \"Paycheck Protection Program and Health Care Enhancement Act.\" The Senate passed the bill the same day by voice vote. ", "The House of Representatives took up the amended bill on April 23, 2020, suspending the rules and passing it by a vote of 388-5, with one Member voting present. The President signed the bill into law on April 24, 2020, as P.L. 116-139 . "], "subsections": []}]}, {"section_title": "Provisions of the Paycheck Protection Program and Health Care Enhancement Act", "paragraphs": [], "subsections": [{"section_title": "Division A\u00e2\u0080\u0094Small Business Programs", "paragraphs": ["The Coronavirus Aid, Relief, and Economic Security Act ( P.L. 116-136 ; the CARES Act) established the Paycheck Protection Program (PPP), and provided it $349 billion. The PPP authorized loans with a two-year term at a 1% interest rate to small businesses and other organizations adversely affected by COVID-19. Loan payments are deferred for six months and feature loan forgiveness up to the amount borrowed under specified conditions related to the borrower's retention of employees and employee wages.", "The SBA started accepting PPP loan applications on April 3, 2020. Because the program neared its $349 billion authorization limit, the SBA stopped accepting new PPP loan applications on April 15, 2020. Over 1.66 million loans were approved by nearly 5,000 lenders. Most of the loans (74%) were for under $150,000.", "The CARES Act also enhanced SBA Economic Injury Disaster Loans (EIDL) from January 31, 2020, through December 31, 2020, expanding eligibility and taking other steps, such as establishing Emergency EIDL grants of up to $10,000, to make resources more broadly and quickly available to small businesses. The Coronavirus Preparedness and Response Supplemental Appropriations Act, 2020 ( P.L. 116-123 ) had provided the SBA an additional $20 million to support EIDL. The CARES Act appropriated $10 billion for Emergency EIDL grants. ", "The SBA also stopped accepting new COVID-19-related EIDL loan applications on April 15, 2020, because that program neared its appropriations limit for credit subsidies. COVID-19-related EIDL applications which had already been received continue to be processed on a first-come first-served basis. The SBA approved nearly 30,000 COVID-19-related EIDLs totaling nearly $5.7 billion, and 755,476 Emergency EIDL grants totaling nearly $3.3 billion.", "Division A of P.L. 116-139 increases the PPP authorization limit from $349 billion to $659 billion, and increases the direct appropriation in the CARES Act for the program from $349 billion to more than $670 billion to support that authorization amount.", "Division A of the act also:", "requires that no less than $30 billion of the additional PPP authorization amount be set aside for loans issued by insured depository institutions and credit unions with consolidated assets of $10 billion to $50 billion; requires that no less than $30 billion of the additional PPP authorization amount be set aside for loans issued by community financial institutions (including community development financial institutions (CDFIs), minority depository institutions, community development corporations, and SBA microloan intermediaries), and insured depository institutions and credit unions with consolidated assets less than $10 billion; and makes agricultural enterprises with not more than 500 employees eligible for EIDL and Emergency EIDL grants during the covered period (January 31, 2020, through December 31, 2020)."], "subsections": []}, {"section_title": "Division B\u00e2\u0080\u0094Additional Emergency Appropriations for Coronavirus Response", "paragraphs": ["Division B of P.L. 116-139 is a supplemental appropriations measure providing $100 billion for the Department of Health and Human Services (HHS) through the Public Health and Social Services Emergency Fund (PHSSEF) and $62 billion for the Small Business Administration ($50 billion for EIDL, $10 billion for Emergency EIDL grants, and $2.1 billion for SBA salaries and expenses). All of the supplemental appropriations are designated as being emergency requirements under the Balanced Budget and Emergency Deficit Control Act of 1985 ( P.L. 99-177 , as amended), and thus do not count against the statutory limits on discretionary spending for FY2020. ", "Each appropriation in P.L. 116-139 , Division B, explicitly provides its resources \"to prevent, prepare for, and respond to coronavirus, domestically or internationally.\"", " Table 1 details the supplemental appropriations included in Division B, as well as subdivision and transfers of those appropriations outlined in P.L. 116-139 ."], "subsections": [{"section_title": "Title I\u00e2\u0080\u0094Department of Health and Human Services", "paragraphs": ["Title I provides $100 billion in emergency supplemental appropriations to the HHS Public Health and Social Services Emergency Fund (PHSSEF), an account used in appropriations acts to provide the HHS Secretary with one-time or emergency funding, as well as annual funding for the office of the HHS Assistance Secretary for Preparedness and Response (ASPR).", "Of the $100 billion, $75 billion is additional funding for the HHS \"Provider Relief Fund,\" established with an initial appropriation of $100 billion in the CARES Act. These funds remain available until expended, and are to be used \"to prevent, prepare for, and respond to coronavirus, domestically or internationally, for necessary expenses to reimburse, through grants or other mechanisms, eligible health care providers for health care related expenses or lost revenues that are attributable to coronavirus\u00e2\u0080\u00a6.\" Both P.L. 116-139 and the CARES Act define eligible providers broadly as any that provide \"diagnoses, testing, or care for individuals with possible or actual cases of COVID-19\u00e2\u0080\u00a6.\" HHS has made initial distributions from the Provider Relief Fund. ", "The remaining $25 billion, also available until expended, is provided to augment national capacity for COVID-19 containment, such as expanded testing capacity\u00e2\u0080\u0094including supplies such as personal protective equipment (PPE)\u00e2\u0080\u0094and workforce and technical capacity for disease surveillance and contact tracing. Among other allowable uses, these funds may be used to build, purchase, renovate, or rent non-federally owned facilities. Of the $25 billion, the act requires the HHS Secretary to transfer specified amounts to HHS agencies as follows:", "Not less than $11 billion for states, localities, territories, tribes, tribal organizations, urban Indian health organizations, or health service providers to tribes. Of this amount, not less than $2 billion is for states, localities, and territories according to the formula for the CDC Public Health Emergency Preparedness cooperative agreement in FY2019; and not less than $4.25 billion is for the same awardees according to a formula based on relative number of cases of COVID-19. Of that $4.25 billion, not less than $750 million is for tribes, tribal organizations, urban Indian health organizations, or health service providers to tribes. Not less than $1 billion for CDC for surveillance, epidemiology, and laboratory capacity expansion; contact tracing; data systems modernization; outreach; and workforce support to expand and improve COVID-19 testing. Not less than $1.806 billion for the National Institutes of Health (NIH) as follows: not less than $306 million for the National Cancer Institute to develop, validate, improve, and implement serological testing and associated technologies for COVID-19; not less than $500 million for the National Institute of Biomedical Imaging and Bioengineering for research, development, and implementation of point-of-care and other rapid testing for COVID-19; and not less than $1 billion for the NIH Office of the Director, broadly to support the agency's research and development efforts regarding COVID-19 testing. Not less than $1 billion for the Biomedical Advanced Research and Development Authority (BARDA) for advanced research, development, manufacturing, production, and purchase of diagnostic, serologic, or other COVID-19 tests or related supplies, and other activities related to COVID-19 testing. $22 million for the Food and Drug Administration (FDA), Salaries and Expenses, for activities associated with diagnostic, serological, antigen, and other COVID-19 tests, and related administrative activities. $600 million for the Health Resources and Services Administration (HRSA) for grants under the Health Centers program, covering a broader range of facilities than was previously eligible. $225 million for HRSA for rural health clinics, using the distribution procedures developed for the Provider Relief Fund established under the CARES Act. Not more than $1 billion to cover the cost of testing for the uninsured, using the National Disaster Medical System (NDMS) Definitive Care Reimbursement Program according to the Families First Coronavirus Response Act, P.L. 116-127 .", "Numerous reporting requirements apply to this $25 billion appropriation.", "General provisions in Title I allow the HHS Secretary to transfer PHSSEF funds to HHS agencies, as specified, with attendant reporting to the appropriations committees; and require the Secretary to transfer up to $6 million to the HHS Office of Inspector General for oversight of activities funded by this act through the PHSSEF. "], "subsections": []}, {"section_title": "Title II\u00e2\u0080\u0094Independent Agencies", "paragraphs": ["Because Division A provides significant additional authorization, resources, and direction for SBA's PPP and EIDL programs, the Title II provisions are for the most part straightforward. $50 billion is provided for the cost of EIDL, and $10 billion for Emergency EIDL grants, to fulfil the authorization in Division A. The $2.1 billion included for SBA's Salaries and Expenses appropriation remains available until the end of FY2021, to support the agency's increased rate of operations in providing COVID-19 pandemic relief. "], "subsections": []}]}]}]}}
{"id": "R46213", "title": "Oil Market Effects from U.S. Economic Sanctions: Iran, Russia, Venezuela", "released_date": "2020-02-05T00:00:00", "summary": ["Economic sanctions imposed by the United States\u00e2\u0080\u0094through enacted legislation and executive action\u00e2\u0080\u0094on Iran, Russia, and Venezuela aim to pressure the ruling governments to change their behavior and policies. Currently, these sanctions aim to either eliminate (Iran) or restrict (Venezuela) crude oil trade of as much as 3.3 million to 4.0 million barrels per day (bpd), roughly 3%-4% of global petroleum supply. Estimated oil production volumes affected to date have been approximately 1.7 million bpd from Iran. Venezuela oil production has also likely been affected, although accurately quantifying volumes is difficult due to monthly oil production declines over a period of years prior to U.S. sanctions affecting oil trade in January 2019. Sanctions imposed on Russia's oil sector generally target longer-term oil production and to date have not reduced Russian oil supply or trade. Oil production in Russia has increased since oil-sector sanctions began in 2014, although the country has arguably incurred economic costs in order to incentivize and support oil output levels.", "Sanctions targeting Iran's oil sector date back to the 1980s and affect virtually every element of Iran's oil sector (e.g., investment, shipping, insurance, and exports). Legislation enacted in 2011 ( P.L. 112-81 ) and 2013 ( P.L. 112-239 ), along with subsequent executive orders (E.O.s), created a sanctions framework designed to discourage oil importers\u00e2\u0080\u0094by sanctioning banks that transact with Iran or facilitate oil transactions, as well as entities that buy Iranian oil\u00e2\u0080\u0094from purchasing crude oil and other petroleum and petrochemical products from Iran. Iran oil export sanctions include design elements (e.g., significant reduction exceptions, requirements to certify oil markets are adequately supplied, and coordination with oil-producing countries) intended to minimize oil price escalation that could result from sanctions-related oil supply reductions. Iran oil export sanctions have been applied, waived, and reapplied since 2011. As of November 2019, the Trump Administration's stated goal has been to reduce Iran's oil exports to zero. Trade data indicate that observed Iranian crude oil exports declined by approximately 80% between April 2018 and October 2019. Should sanctions affecting Iran's oil exports be relieved or terminated, the reentry of 1 million to 2 million bpd of crude oil could, depending on market conditions and oil-producing country decisions, contribute to oil market oversupply that could lower oil prices. While U.S. petroleum product consumers may welcome such an outcome, severe and persistently low prices could have adverse effects on U.S. oil producers.", "Oil sector sanctions imposed on Russia via E.O. since 2014, and codified ( P.L. 115-44 ) in 2017, apply to certain Russian oil companies and target two activities: (1) accessing debt finance, and (2) accessing oil exploration and production technology for deepwater, Arctic offshore, and shale projects. Near-term Russian oil supply does not appear to have been affected by these sanctions to date; oil production has increased since 2014. Alternative financing, currency devaluation, and Russia's oil tax and export duty policies have provided Russian companies with capital and incentives to increase oil production and exports. Over the long term, Russian oil output could be affected by oil production technology sanctions, as some European and U.S. companies have terminated participation in certain oil exploration and development projects.", "Economic sanctions affecting Venezuela's oil trade are the product of E.O.s and U.S. Department of the Treasury designations in 2019 prohibiting transactions with Petroleo s de Venezuela S.A. (PdVSA). Petroleum trade between the United States and Venezuela has been eliminated. As a result, Venezuela has sought alternative buyers of crude oil previously destined for the United States and alternative suppliers of petroleum products previously sourced from U.S. exporters. Although U.S. economic sanctions do not explicitly prohibit non-U.S. entities from trading oil and petroleum products with PdVSA, Treasury has discretion to take action against foreign entities that provide material support to PdVSA. This sanctions framework element could make it difficult for PdVSA to secure alternative buyers and suppliers. Rosneft, a Russian-controlled oil company, has reportedly facilitated Venezuelan crude oil trade with independent oil refiners in China and has provided Venezuela with petroleum products previously sourced from U.S. suppliers. Enacted legislation in the 116 th Congress ( P.L. 116-94 ) requires the Administration to coordinate Venezuela sanctions with international partners and expresses concerns about certain PdVSA transactions with Rosneft.", "Sanctions-related oil supply constraints have affected oil production and trade. Oil market characteristics\u00e2\u0080\u0094generally inelastic supply and demand in the short term\u00e2\u0080\u0094could contribute to market conditions that could result in volatile price movements (both up and down) when supply and demand are imbalanced by as little as 1% to 2% for a brief or sustained period. To date, persistently high crude oil prices have been moderated by several factors, including increasing U.S. oil production and exports, trade flow adjustments, expectations of slowing demand growth rates, and sanctions design elements. However, oil trade sanctions have affected price differentials for certain crude oil types (e.g., light vs. heavy)."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction and Overview", "paragraphs": ["Economic sanctions are one foreign policy tool that can be used to potentially influence the behavior and actions of political leadership in other countries. Oil-related sanctions are one option that could be used to apply economic pressure on certain countries in order to achieve broader geopolitical and foreign policy objectives. Currently, the United States has active economic sanctions imposed on three major oil-producing and exporting countries: Iran, Russia, and Venezuela. Combined, these countries produced approximately 17.7 million barrels per day (bpd) of oil in 2018\u00e2\u0080\u0094approximately 18% of total world oil production\u00e2\u0080\u0094according to one estimate. Only a portion of these supply volumes might be directly affected by U.S. economic sanctions in the near term\u00e2\u0080\u0094potentially ranging from 3.3 million to 4.0 million bpd from both Iran (estimated to be 2.8 million bpd) and Venezuela (estimated to range from 0.5 million to as much as 1.2 million bpd). Estimated oil production volumes affected to date have been approximately 1.7 million bpd from Iran. Venezuela oil production has likely also been affected, although accurately quantifying volumes is challenging due to monthly oil production declines that had been occurring over a period of years prior to U.S. sanctions affecting oil trade in January 2019. ", "A sustained global petroleum supply imbalance of 1% to 2% could contribute to market conditions that could result in volatile price movements (both upward and downward) for crude oil and related petroleum products (e.g., gasoline and diesel fuel). To date, oil supply impacts related to economic sanctions have not generally resulted in significant upward price pressure for benchmark oil prices. Generally, sanctions-related supply losses have been counterbalanced by increased production and exports from the United States, Russia, and other countries; petroleum trade flow adjustments; indications of slowing global oil demand growth rates; and design elements of oil-related sanctions. Oil sanctions frameworks can include wind-down periods, requirements to consider and certify that global oil supply is adequate to compensate for supply reductions, and engagement with other oil producers before applying certain sanctions. These design elements are intended to mitigate sanctions-related market and price impacts and to build into the sanctions regime multilateral coordination and cooperation.", "Oil-related economic sanctions for each respective country discussed in this report differ in terms of design and potential market impacts. As a result, each framework is likely to have a different effect on oil production, trade, and potentially price levels. Generally, each sanctions framework is structured to reduce\u00e2\u0080\u0094either immediately or in the future\u00e2\u0080\u0094oil sales revenue to the subject country. Since 2011, sanctions targeting Iran's oil sector have aimed to eliminate the country's oil export revenue. Sanctions applied to Russia's oil sector generally target long-term, high-risk oil production projects. Venezuela sanctions imposed to date prohibit petroleum trade with the United States\u00e2\u0080\u0094historically one of the primary destinations for Venezuela's oil exports\u00e2\u0080\u0094and have the potential to affect Venezuela's petroleum trade with other countries. Table 1 provides a general overview of current oil-sector sanctions imposed on Iran, Russia, and Venezuela."], "subsections": []}, {"section_title": "Scope of Report", "paragraphs": ["The scope of this report is to assess the possible impact of current U.S. economic sanctions on oil production in and exports from Iran, Russia, and Venezuela. For each country, this report provides general background and historical information about the oil sector, followed by an overview of each oil-related sanctions framework and a discussion of oil production, supply, and trade impacts resulting from U.S. sanctions. European Union (EU) oil sector sanctions imposed on Iran and Russia are referenced but are not discussed in detail. Selected oil market impact observations\u00e2\u0080\u0094specifically price impacts and trade flow adjustments\u00e2\u0080\u0094and policy considerations are discussed. A detailed assessment of how oil-related sanctions might have affected each target country's overall economy and how these effects may have contributed to achieving U.S. foreign policy objectives is beyond the scope of this report."], "subsections": []}, {"section_title": "Iran7", "paragraphs": ["Iran holds the fourth largest proven oil reserves in the world\u00e2\u0080\u0094behind Venezuela, Saudi Arabia, and Canada\u00e2\u0080\u0094with an estimated 156 billion barrels as of the end of 2018. A founding member of the Organization of the Petroleum Exporting Countries (OPEC), commercial crude oil production in Iran started in 1913 and Iran has been both an oil producer and exporter for more than a century. Iran's oil industry was nationalized in 1951 by Prime Minister (PM) Mohammed Mossadeq, who expropriated the Anglo-Iranian oil company\u00e2\u0080\u0094today known as BP. Foreign policy concerns about PM Mossadeq's potential pivot toward the Soviet Union resulted in a U.S.- and British-sponsored intelligence operation that removed Mossadeq from power in 1953. Following that operation, a consortium of U.S. and European oil companies effectively took control of Iran's oil production and exports.", "Crude oil production in Iran was at its highest historical rate in the 1970s when it ranged between 5 million and 6 million bpd for much of the decade. Diplomatic relations between the United States and Iran in the late 1960s and for most of the 1970s were generally positive, with oil production and trade being one element of the relationship. During this period, the Shah of Iran (Iran's political leader at the time)\u00e2\u0080\u0094in an effort to increase oil revenues for military and domestic policy purposes\u00e2\u0080\u0094requested then-President Nixon to eliminate the Mandatory Oil Import Quota (MOIQ) system that limited U.S. crude oil import volumes from foreign countries. In 1969, the Shah also reportedly offered to sell the United States 1 million bpd of crude oil for 10 years at a price of $1/barrel for the United States to create a strategic oil stockpile. President Nixon declined the Shah's request and offer. As domestic U.S. oil production levels were not keeping pace with increasing U.S. oil demand, President Nixon replaced MOIQ with an import licensing fee system in April 1973. ", "Iran was not party to the October 1973 oil embargo\u00e2\u0080\u0094instituted by members of the Organization of Arab Petroleum Exporting Countries (OAPEC)\u00e2\u0080\u0094an event that contributed to rapidly rising petroleum prices, perceived supply shortages, and the enactment of U.S. laws to ensure domestic availability of oil supply. The oil market situation in late 1973 created an opportunity for Iran to increase oil revenue. U.S. crude oil imports from Iran more than doubled from 1973 to 1978, when imports reached approximately 550,000 bpd. However, U.S.-Iran relations changed in 1979 when the Iranian revolution culminated with the Shah abdicating, Iran becoming an Islamic republic, and Ayatollah Khomeini rising to power as Iran's supreme leader. Oil production in Iran started declining in late 1978, due to a labor strike in opposition to the Shah's policies, and the situation led to one of the largest (5.6 million bpd) and longest (nearly six months) supply disruptions in history. This supply loss contributed to one of the highest inflation-adjusted annual oil price periods on record. "], "subsections": [{"section_title": "Overview of U.S. Sanctions on Iran's Oil Sector", "paragraphs": ["Sanctions imposed on Iran have been a foreign policy tool used by the United States for nearly three decades with the goal of deterring state-supported terrorism, Iran's regional influence, and its nuclear program. Iran's oil sector has been the target of multiple U.S. sanctions initiatives. For example, imports of Iranian crude oil to the United States were prohibited in 1987. Prior to the prohibition, U.S. oil buyers imported as much as 550,000 bpd from Iran. Additional elements of Iran's oil sector are also subject to sanctions, including investments in Iran's oil production; insurance for Iranian oil entities and for shipping Iranian crude oil; the sale of goods and services that support Iran's oil production; oil transportation; and oil exports. Sanctions targeting Iran's oil sector are the product of enacted laws and issued executive orders (E.O.s) that span multiple Administrations. For a brief overview of relevant oil sanctions legislation, see the text box below titled Enacted Legislation that Affect s Iran's Oil Sector: Selected Examples . This section focuses on sanctions legislation enacted in December 2011\u00e2\u0080\u0094National Defense Authorization Act for Fiscal Year 2012 ( P.L. 112-81 )\u00e2\u0080\u0094and subsequent E.O.s designed to reduce Iran's oil export revenue. "], "subsections": []}, {"section_title": "Sanctions Framework Targeting Iran's Oil Exports", "paragraphs": ["Section 1245 of the National Defense Authorization Act for Fiscal Year 2012 (FY2012 NDAA; P.L. 112-81 ) created a sanctions framework designed to motivate Iran's oil buyers to reduce purchases, with the goal of limiting Iran's oil export revenue. The core element of this framework includes financial sanctions\u00e2\u0080\u0094prohibition on opening and accessing U.S. bank accounts\u00e2\u0080\u0094that are to be imposed on foreign financial institutions that conduct a \"significant financial transaction\" with Iran's Central Bank or with any sanctioned Iranian bank. However, these transactions can potentially continue should affected countries comply with other elements of the sanctions framework that incentivize oil buyers to reduce imports from Iran while mitigating potential oil supply and price impacts. Other design elements of this framework include the following: (1) a 180-day wind-down period for implementation; (2) a provision that allows for financial institutions to be excepted from sanctions based on reducing Iran oil purchases; (3) a requirement that the Administration consider impacts to global oil prices and supplies; and (4) outreach to other petroleum producing countries."], "subsections": [{"section_title": "Significant Reduction Exception (SRE)", "paragraphs": ["Sanctions do not apply to financial institutions under the jurisdiction of countries that the President determines to have \"significantly reduced\" oil purchases volumes from Iran\u00e2\u0080\u0094 significantly is not statutorily defined. SREs are valid for 180 days, and countries must continue reducing Iranian oil purchases during this period to receive a subsequent exception. The SRE design element provides the Administration with some discretion to determine the level of economic pressure to apply while considering possible global oil supply and price effects."], "subsections": []}, {"section_title": "Petroleum Market Assessment and Consideration", "paragraphs": ["The President is required to determine\u00e2\u0080\u009490 days following enactment and every 180 days thereafter\u00e2\u0080\u0094that the price and availability of petroleum from non-Iranian producers are adequate to enable Iran's crude oil buyers to significantly reduce purchase volumes. This determination must be based on petroleum price and availability reports submitted to Congress by the Energy Information Administration (EIA) every 60 days. Oil market conditions, should an undersupply situation result in escalated prices, could motivate some degree of sanctions relief even if such an action may not be consistent with sanctions-related policy objectives. However, the term adequate is not defined in enacted sanctions legislation. Therefore, the Administration could have flexibility in determining if oil markets are adequately supplied regardless of price levels."], "subsections": []}, {"section_title": "Outreach to Petroleum Producing Countries", "paragraphs": ["The sanctions framework also requires the President to encourage petroleum-producing countries to increase oil supplies and to minimize sanctions-related oil availability and price impacts. U.S. State Department officials reportedly have had discussions with oil-producing countries and have indicated that other countries\u00e2\u0080\u0094specifically Saudi Arabia and the United Arab Emirates (UAE)\u00e2\u0080\u0094would provide additional oil supply to compensate for reduced volumes from Iran."], "subsections": []}, {"section_title": "Executive Orders 13622 and 13846", "paragraphs": ["On July 30, 2012, President Obama issued E.O. 13622 to authorize additional Iran sanctions. The President revoked the E.O. in the course of implementing the U.S. obligations under the Iran nuclear deal, known as the Joint Comprehensive Plan of Action (JCPOA); President Trump reinstated the E.O.'s tenets on August 6, 2018, with the issuance of E.O. 13846. With respect to Iran's oil exports, E.O. 13846 strengthens the NDAA sanctions framework in two primary ways: ", "1. Prohibits access to the U.S. financial system for any foreign financial institution that conducts or facilitates a significant financial transaction with the National Iranian Oil Company or for the purchase of petroleum, petroleum products, or petrochemical products, and 2. Authorizes the imposition of Iran Sanctions Act ( P.L. 104-172 ) sanctions on any entity that engages in significant transactions for the purchase of petroleum, petroleum products, or petrochemical products from Iran.", "Financial institutions and entities subject to sanctions contained in E.O. 13846 can continue petroleum and petrochemical transactions if their country of primary jurisdiction receives an SRE (see \" Significant Reduction Exception (SRE) \" section). "], "subsections": []}]}, {"section_title": "Oil Export Sanctions Relief and Reimposition", "paragraphs": ["International negotiations with respect to Iran's nuclear development program resulted in two multilateral agreements that first relieved then waived FY2012 NDAA sanctions and revoked E.O. 13622 sanctions that target Iran's oil exports. President Trump ended U.S. participation in the agreements and reimposed Iran oil export sanctions. Following is a brief description of the oil-related aspects of the two multilateral agreements and the termination of U.S. participation.", "Joint Plan of Action ( JPA ) : an interim agreement in effect between January 20, 2014, and January 16, 2016, that, among other provisions, removed the requirement on Iran's oil buyers to continue reducing oil purchases to receive an SRE. Iran's oil purchasers at that time (China, India, Japan, Republic of Korea, Taiwan, and Turkey) were allowed to continue purchasing oil at the then-current average. Sanctions on insurance, transportation services, and petrochemical exports were suspended. JCPOA : implemented on January 16, 2016, when the Administration waived FY2012 NDAA Section 1245 financial sanctions and revoked E.O. 13622. These actions effectively removed secondary sanctions targeting Iran's oil exports. Buyers could resume importing unrestricted oil volumes from Iran. United States ends JCPOA participation (sanctions re imposed ) : President Trump announced on May 8, 2018, that the United States would terminate its JCPOA participation and sanctions would be re-imposed following a wind-down period (180 days for sanctions targeting Iran's oil exports). On November 5, 2018, FY2012 NDAA Section 1245 financial sanctions and petroleum, petroleum product, and petrochemical purchase sanctions were reinstated. SREs were issued to eight countries in November 2018 (for additional information see Figure 1 notes). However, SREs are no longer allowed as of May 2019. "], "subsections": []}, {"section_title": "Oil Supply Impacts", "paragraphs": ["Secondary sanctions that target Iran's oil exports have resulted in a direct and measurable effect on Iran's crude oil production and on observable export volumes of crude oil and condensate. As indicated in Figure 1 , crude oil and condensate exports declined by approximately 1.2 million bpd\u00e2\u0080\u0094nearly 57%\u00e2\u0080\u0094between December 2011 (upon enactment of the FY2012 NDAA) and July 2012. Iran's oil production volumes followed a similar trajectory. ", "During the JPA effective period (January 2014 to January 2016), Iran's crude oil production and export volumes stabilized, as countries were no longer required to continue reducing imports to receive SREs. With the implementation of the JCPOA, sanctions affecting oil exports were waived and Iran's production and exports returned to pre-FY2012 NDAA levels. Following the United States exiting the JCPOA in May 2018, production and exports declined and then stabilized once SREs were granted to eight countries in November 2018. As of May 2, 2019, it is the Trump Administration's intent to no longer grant SREs. According to Bloomberg L.P.'s oil tanker tracking service, observable exports from Iran have declined significantly (see Figure 1 notes for background about data challenges) based on October 2019 volumes. Iran's crude oil exports to certain independent refiners in China have carried on, and some analysts expect this trade relationship to continue."], "subsections": []}]}, {"section_title": "Russia", "paragraphs": ["Russia is one of the largest oil producers and exporters in the world. In 2018, crude oil and condensate production in Russia was larger than in any other country, at approximately 11.2 million bpd. The United States (11 million bpd) and Saudi Arabia (10.5 million bpd) were ranked second and third respectively. As of the end of 2018, Russia held the sixth largest amount of proven oil reserves with approximately 106 billion barrels.", "Commercial oil production in Russia and the former Soviet Union dates back to the 1870s when the first wells were drilled in Baku (today the capital of Azerbaijan). Increasing oil production and exports\u00e2\u0080\u0094along with oil refining to make kerosene for artificial lighting\u00e2\u0080\u0094in the late 1800s resulted in the emergence of a major competitor to the global monopoly held by U.S.-based Standard Oil at that time. The oil industry continued to grow and expand in the Russian Empire and growth continued to develop in the Soviet Union after the 1917 Bolshevik Revolution. Soviet oil policy decisions in the 1920s and 1950s resulted in depressed global oil prices that are credited with motivating two historical oil industry developments. The first was an export campaign in the 1920s that contributed to low prices and the signing of the historic Achnacarry Agreement in 1928 by multiple oil companies with the intent to restrict oil production in order to support oil prices. The second was an oil market-share campaign in the 1950s that led to lower prices and was one factor credited with motivating creation of OPEC in 1960. ", "By 1987, the Soviet Union was the largest oil producer in the world at nearly 12.5 million bpd, more than twice the production of Saudi Arabia that year. Soviet oil production had declined to 10.3 million bpd in 1991, the year the Soviet Union was formally dissolved and the Russian Federation (Russia) established. Oil production in the Russian Federation represented approximately 90% of Soviet oil production in 1991, at 9.3 million bpd. Russia's oil production declined to just over 6 million bpd in 1996 but recovered to 10.8 million bpd by 2013. Today, oil is a major element of Russia's economy; approximately 46% of federal revenue came from the oil and gas sector in 2018."], "subsections": [{"section_title": "Oil Sector Sanctions Framework41", "paragraphs": ["Following Russia's invasion and occupation of Ukraine's Crimea region in March 2014, President Obama declared a national emergency (E.O. 13660) with respect to Russia's actions in Ukraine. Subsequent E.O.s, Department of the Treasury directives, and enacted legislation created a sanctions framework, elements of which target Russia's oil sector.", "Oil sector sanctions imposed on Russia originated in E.O. 13662, which identified Russia's energy sector as an element of Russia's economy that could potentially be sanctioned. Sanctions imposed on Russia's oil sector target two general activities by prohibiting certain transactions with U.S. entities: (1) access to debt finance (Directive 2, described below), and (2) access to technology, goods, and services to support complex oil exploration and production projects (Directive 4, described below). Subsequently, the Department of the Treasury published\u00e2\u0080\u0094and has periodically updated\u00e2\u0080\u0094a list (Sectoral Sanctions Identification, or SSI, list) of Russian entities that are subject to these E.O. 13662 sectoral sanctions. Directives 2 and 4 issued by the Department of the Treasury, which apply to certain Russian oil companies, describe transactions and activities that are prohibited with entities included on the SSI list. Table 2 contains a list of Russian oil companies and indicates those that are subject to Directive 2 and Directive 4 sanctions.", "The Ukraine Freedom Support Act of 2014 ( P.L. 113-272 ) created a framework that would allow the President to impose secondary sanctions on foreign persons/entities that make significant investments\u00e2\u0080\u0094as determined by the President\u00e2\u0080\u0094in special Russian crude oil p rojects (i.e., projects that would extract crude oil from deepwater, Arctic offshore, and shale projects located in Russia).", "Enactment of the Countering Russian Influence in Europe and Eurasia Act of 2017 (CRIEEA; Title II of P.L. 115-44 , the Countering America's Adversaries Through Sanctions Act) in August 2017 codified and strengthened Directives 2 and 4, as described below. CRIEEA also modified the Ukraine Freedom Support Act to require the President to impose sanctions on persons/entities determined to have made significant investments in special Russian crude o il p rojects ."], "subsections": [{"section_title": "Directive 2: Access to Debt Finance45", "paragraphs": ["Directive 2 limits the ability of Russian oil companies on the SSI list to borrow from U.S. financial institutions and other lenders. The original version of Directive 2 (July 2014) prohibited access to U.S. debt with a maturity longer than 90 days for certain companies operating in Russia's energy sector. CRIEEA modified Directive 2 to prohibit entities on the SSI list from accessing U.S. debt with a maturity longer than 60 days. Some of Russia's largest oil companies, by production volume, are subject to this directive and now have reduced access to debt capital. Limited access to financial markets can potentially result in higher borrowing costs for the affected companies and could make it difficult for these companies to finance company activities. Directive 2 had the potential to affect Russia's near-term oil production. However, according to analyst reports, Russian oil companies on the Directive 2 SSI list were able to secure alternative sources of finance by accessing, through domestic borrowing, Russia's federal financial reserves. "], "subsections": []}, {"section_title": "Directive 4: Access to Oil Exploration and Production Technology48", "paragraphs": ["Directive 4 prohibits the sale and transfer of goods, services, and technology from U.S. entities to Russian companies on the SSI list that would support three types of Russian oil exploration and production projects: (1) deepwater, (2) Arctic offshore, and (3) shale. The original version of Directive 4 (September 2014) stipulated that these oil sector sanctions were applicable to projects located in Russian territory or claimed maritime waters. However, CRIEEA legislation enacted in 2017 expanded the applicability of Directive 4 to include deepwater, Arctic offshore, or shale projects in any location\u00e2\u0080\u0094inside or outside Russia\u00e2\u0080\u0094that are 33% or more owned or are subject to voting control by a sanctioned Russian entity.", "Directive 4 sanctions target complex and challenging oil exploration and production projects that are likely part of Russia's long-term oil resource development plans. In conjunction with Directive 4 sanctions, the U.S. Department of Commerce's Bureau of Industry and Security (BIS) announced export restrictions on Russia in July 2014 to prohibit the export of certain items that may be used for deepwater, Arctic offshore, and shale projects. BIS's announcement of the implementation of these export restrictions indicated the long-term nature of the energy technology sanctions: \"While these sanctions do not target or interfere with the current supply of energy from Russia or prevent Russian companies from selling oil and gas to any country, they make it difficult for Russia to develop long-term, technically challenging future projects.\""], "subsections": []}, {"section_title": "Secondary Sanctions on Special Russian Crude Oil Projects", "paragraphs": ["Section 4(b) of the Ukraine Freedom Support Act of 2014 ( P.L. 113-272 ) created a framework for secondary sanctions that could be imposed on non-U.S. persons/entities that invest in deepwater, Arctic offshore, and shale projects that extract crude oil\u00e2\u0080\u0094special Russian crude oil projects\u00e2\u0080\u0094located in Russia. The secondary sanctions framework includes a menu of nine sanctions. As amended by CRIEEA, should the President determine that foreign persons or entities have made a significant investment \u00e2\u0080\u0094a term not defined in enacted legislation\u00e2\u0080\u0094in certain Russian crude oil projects, the President is required to impose at least three of the nine sanctions on those foreign persons/entities. To date, secondary sanctions related to investments in these types of Russian crude oil projects have not been imposed."], "subsections": []}]}, {"section_title": "Oil Supply Impacts", "paragraphs": ["Oil production in Russia has increased since U.S. oil sector sanctions were first imposed in July 2014. Further, this increase occurred during a period of rapidly declining oil prices and Russia's participation in an oil production agreement with OPEC and other non-OPEC oil-producing countries (collectively referred to as OPEC+). Under the current sanctions framework, Russia could continue increasing oil production levels in the near term. However, future oil production in Russia is somewhat uncertain due in part to potential impacts that might result from Directive 2 and Directive 4 sanctions, as well as the potential for secondary sanctions that aim to limit foreign investment in certain Russian crude oil production projects. "], "subsections": [{"section_title": "Short-Term Supply: 2014-2019", "paragraphs": ["On a monthly basis, Russian oil production increased by approximately 1 million bpd between July 2014 (10.4 million bpd) and December 2018 (11.45 million bpd), as illustrated in Figure 2 . Annual oil production levels in Russia have been trending up from 2014 to 2018. Monthly oil production levels have declined since December 2018 to 11.1 million bpd as of May 2019. Two factors that likely contributed to this observed decline are (1) implementation of a voluntary OPEC+ oil production agreement and (2) oil contamination in Russia's Druzhba pipeline that temporarily disrupted oil shipments to Europe. ", "Russian oil production increased during periods of low and declining oil prices (see Figure 2 ) following the imposition of oil sector sanctions. This upward oil production trend during challenging market and price conditions is a result of several factors, including Russian companies securing alternative sources of finance, currency devaluation, and Russia's oil tax and export duty policy."], "subsections": [{"section_title": "Alternative Sources of Finance", "paragraphs": ["Directive 2 financial sanctions\u00e2\u0080\u0094in combination with similar EU financial sanctions \u00e2\u0080\u0094imposed on certain Russian oil companies required those firms to secure alternative sources of capital to manage corporate finance activities. Directive 2 sanctions had the potential to result in financial stress for Russian oil companies on the SSI list and potentially affect short-term oil production levels. However, reports indicate that sanctioned Russian oil companies were able to use Russia's international currency reserves\u00e2\u0080\u0094accumulated, in part, when oil prices were in the $100 per barrel range (2011-2014)\u00e2\u0080\u0094as an alternative source of finance. Russia's financial reserves enabled companies like Rosneft, a state-controlled Russian oil company, to borrow money from the domestic bond market to manage debt obligations and fund business operations. Additionally, Rosneft has sold minority ownership positions to Chinese and Indian companies as a means of funding oil production activities. Finally, Rosneft has raised cash through equity sales and sold a 19.5% ownership position to the Qatari Investment Authority and Glencore for $11.3 billion in 2016. "], "subsections": []}, {"section_title": "Currency Devaluation", "paragraphs": ["Following the imposition of sanctions in mid-2014, and as oil prices were declining rapidly, the Russian ruble began to lose value relative to the U.S. dollar. In November 2014, Russia's Central Bank announced it would limit its exchange rate interventions and allow the ruble exchange rate to be determined by the market. Weakening of the ruble relative to the dollar\u00e2\u0080\u0094each dollar being worth more rubles\u00e2\u0080\u0094continued. In June 2014, one U.S. dollar could be exchanged for approximately 34 rubles. This exchange rate reached 59 in December 2014 and was as high as 75 in January 2016. This currency devaluation, while arguably negative for the overall Russian economy, actually supported profitability and cash flow for Russian oil companies. Russian oil export sales are primarily denominated in dollars, and most Russian oil company expenses are denominated in rubles. At a given oil price, currency devaluation increases the amount of rubles received for dollar-denominated oil sales. However, the exchange rate does not directly affect ruble-denominated expenses. As a result, ruble-denominated profitability can be supported even when oil prices are relatively low. These factors, along with downward price pressure on oilfield equipment and service contractors following oil price declines in 2014 through early 2016, contributed to the general upward trend of Russia's oil production while oil prices steeply declined."], "subsections": []}, {"section_title": "Tax and Export Duty Policy", "paragraphs": ["Russia's oil tax policy motivates oil companies operating in the country to maintain and increase oil production, even when benchmark oil prices reach levels as low as $20 per barrel (/b). Russia's oil tax framework currently consists of two primary elements: (1) mineral extraction tax (MET), and (2) export duty (ED). MET and ED payments are linked to benchmark oil prices. Both are calculated using formulas\u00e2\u0080\u0094modified periodically to incentivize oil production from certain locations\u00e2\u0080\u0094that adjust the tax and duty based on the price of Urals crude oil, Russia's oil price benchmark. The effect of this tax and duty structure is that the Russian government assumes most of the financial risk from low oil prices and receives most of the benefits from high oil prices. Based on analysis of MET and ED base formulas, government tax and duty receipts can be zero at a $10/b oil price and more than $45/b when oil prices reach $70/b. Oil company cash flows also fluctuate but to a much lesser extent and are insulated to some degree from oil price fluctuations. As a result, Russian oil companies are motivated to maintain and increase oil production with limited consideration of the market price for crude oil. Russia has also started implementation of its \"tax maneuver\" that will gradually eliminate the ED and increase the MET by 2024 for crude oil production."], "subsections": []}]}, {"section_title": "Longer Term: Beyond 2019", "paragraphs": ["Russia's ability to maintain and possibly increase oil production beyond 2019, should the sector continue to be subject to U.S. and EU sanctions, is uncertain. The International Energy Agency projects that oil production in Russia is likely to continue increasing through 2021 (11.8 million bpd including crude oil, condensate, and natural gas liquids) and then decline slightly by 2024 (11.6 million bpd). Russian oil production post-2024 is less certain, with some forecasts indicating that Russian oil companies may need to develop new resources in order to maintain oil production levels in the 11 million bpd range.", "Exploration and production sanctions (Directive 4) imposed in 2014 were intended to affect future Russian oil production. Some specific projects have been affected by U.S. and EU oil sector sanctions. For example, Exxon has withdrawn from joint venture projects with Rosneft that would develop oil resources in deepwater, Arctic offshore, and shale locations. Additionally, certain European oil company joint venture projects have been affected by oil sector sanctions. French oil company Total sold its ownership stake in a shale joint venture project with Lukoil.", "According to the Energy Information Administration (EIA), large shale oil resources are present in Russia. Several U.S. and European oil companies had been participating in joint venture Russian shale oil projects prior to the 2014 sanctions. However, development of these projects has since slowed.", "Should Directive 4 and similar EU sanctions continue to be imposed, sustaining oil production growth in Russia will likely be a function, largely, of two factors: (1) the ability of Russian oil companies to develop or acquire oil production technology needed to produce resources in deepwater, Arctic offshore, and shale formations; and (2) the successful execution of exploration and development strategies that target oil production in areas outside the scope of sectoral sanctions (e.g., tight oil). Following the imposition of Directive 4 sanctions in 2014, Russia started developing plans to reduce its reliance on imports of oil production equipment. Furthermore, Russian oil companies reportedly have been increasing acquisition of oilfield equipment from Chinese suppliers."], "subsections": []}]}]}, {"section_title": "Venezuela", "paragraphs": ["Venezuela holds the largest proven oil reserves in the world, estimated at 303 billion barrels as of the end of 2018. A founding member of OPEC, Venezuela has produced oil commercially since 1914. U.S. oil companies began seeking agreements\u00e2\u0080\u0094also referred to as concessions\u00e2\u0080\u0094to explore for and produce oil in Venezuela as early as 1919. Venezuela was not a participant in the 1973 Organization of Arab Petroleum Exporting Countries embargo of oil shipments to the United States and other countries. However in 1976, consistent with developments in other oil-producing countries during the 1970s, Venezuela nationalized its oil industry and created Petroleos de Venezuela S.A. (PdVSA). U.S. oil companies, such as Exxon, reduced investments in the country leading up to nationalization but continued to be active in Venezuela in a limited service-based role following nationalization. Oil production in Venezuela was approximately 3.7 million bpd in 1970. Production declined 2.1 million bpd (54%) from 1971 to 1988 to reach 1.6 million bpd. ", "In the 1990s, PdVSA embarked on a program referred to as the apertura petrolera \u00e2\u0080\u0094or oil opening. As part of this program, international oil companies\u00e2\u0080\u0094including U.S.-firms Chevron, Exxon, and Conoco\u00e2\u0080\u0094were allowed to either control certain oil field operations or establish majority-owned oil production joint ventures with PdVSA. Oil production in Venezuela increased to approximately 3.4 million bpd by 1998. ", "During his campaign, former Venezuelan President Hugo Ch\u00c3\u00a1vez\u00e2\u0080\u0094elected in 1998\u00e2\u0080\u0094threatened to reverse the apertura program. Subsequently, President Ch\u00c3\u00a1vez enacted the Hydrocarbons Law of 2001, which restructured Venezuela's petroleum sector by requiring PdVSA to have majority ownership of future oil developments and raising royalty payments on existing projects to the Venezuelan government. Throughout the Ch\u00c3\u00a1vez presidency, oil companies operating in Venezuela were subject to periodic increases in royalty rates and taxes. These additional payment requirements reduced the financial attractiveness of investing in Venezuela's oil sector.", "In 2007, the Ch\u00c3\u00a1vez government enacted a law that required existing oil joint ventures to convert into new entities that would be majority-owned by PdVSA. Some companies (e.g., Chevron) complied with the new requirement. Other companies (e.g., Exxon and Conoco) ceased operations and sued PdVSA for damages resulting from unilateral changes to contractual agreements. Oil production in Venezuela trended a bit lower but was relatively stable from 2007 through 2013, in the range of 2.5 million bpd.", "Following the death of Ch\u00c3\u00a1vez in 2013, Nicol\u00c3\u00a1s Maduro was elected president of Venezuela. A series of antidemocratic actions and human rights violations by the Maduro government resulted in sanctions legislation and executive actions by the United States. In 2017, President Trump declared a national emergency in E.O. 13808 and the Administration imposed financial sanctions on PdVSA, including limiting PdVSA's access to U.S. debt finance. PdVSA is also prohibited from receiving dividends and cash distributions from its U.S.-based Citgo refining subsidiary. These limitations made it more difficult for PdVSA to purchase oil-related services and oil production equipment. ", "With the overall U.S. objective to pressure President Maduro to transfer government control, the United States recognized Juan Guaid\u00c3\u00b3 as interim president of Venezuela and imposed sanctions in January 2019 aimed at reducing Venezuela's oil revenues. These sanctions effectively terminate U.S.-Venezuela petroleum trade and potentially make it difficult for PdVSA to sell crude oil to and obtain petroleum products from non-U.S. entities."], "subsections": [{"section_title": "Oil Trade Sanctions Framework", "paragraphs": ["U.S. sanctions targeting Venezuela's oil trade are a function of PdVSA being designated to be subject to U.S. sanctions. This designation prohibits U.S. companies from engaging in transactions with PdVSA, including petroleum trade, oilfield service operations, and oil production operations in Venezuela. To date, Congress has not enacted legislation that specifies and requires oil sanctions be imposed on Venezuela. Rather, the sanctions framework is a result of E.O.s issued under national emergency authorities, and Treasury designations and general licenses (GLs) based on that emergency that allow for the wind down or continuation of certain activities\u00e2\u0080\u0094see list of actions below. ", "E.O. 13850 (November 1, 2018): authorized prohibiting U.S. persons from engaging in certain transactions with any person determined by the Secretary of the Treasury to have supported \"deceptive practices or corruption\" involving the Government of Venezuela. ", "E.O. 13857 (January 25, 2019): amended the \"Government of Venezuela\" definition in E.O. 13850 to include PdVSA. ", "Treasury designates PdVSA (January 28, 2019): the Secretary of the Treasury determined that persons operating in Venezuela's oil sector are subject to sanctions. PdVSA added to the Specifically Designated Nationals (SDN) list.", "GLs issued (January 28, 2019 and subsequent revisions): Office of Foreign Asset Control (OFAC) GLs authorize certain transactions and activities with PdVSA for certain periods, including oil purchases (wind down periods) and oil production operations (continuation).", "E.O. 13884 (August 5, 2019): blocks property and interests in property located in the United States for persons/entities determined to have assisted PdVSA and the Government of Venezuela.", "The Secretary of the Treasury's determination and designation affects several areas in which U.S. companies have business interests (e.g., debt and financial transactions, oil field services, and oil production activities) and effectively terminates U.S.-Venezuela petroleum (crude oil and petroleum products) trade. GL 12 allowed U.S. companies to continue purchasing and importing crude oil and petroleum products from PdVSA until April 28, 2019. However, any payment made for petroleum imported from PdVSA during the 90-day wind-down period must have been deposited in a U.S.-based blocked account. This requirement likely resulted in most of these transactions ending immediately, as PdVSA would have been motivated to seek alternative buyers. Some GLs explicitly stated that exporting diluents\u00e2\u0080\u0094typically light crude oil, condensate, or naphtha that is blended with Venezuelan heavy crude oil to facilitate transportation and processing \u00e2\u0080\u0094from the United States to Venezuela was prohibited immediately. ", "Chevron\u00e2\u0080\u0094currently participating in oil production joint ventures with PdVSA\u00e2\u0080\u0094and four oil service companies (Halliburton, Schlumberger, Baker Hughes, and Weatherford International) have been granted a GL to continue operating in Venezuela. This GL has been extended multiple times since January 2019 and is currently set to expire on April 22, 2020."], "subsections": []}, {"section_title": "Potential Secondary Sanctions", "paragraphs": ["Treasury guidance issued in January 2019 and E.O. 13884 create the potential for imposing sanctions on non-U.S. entities that transact with PdVSA. Following E.O. 13857, OFAC-issued Frequently Asked Questions (FAQs, #657) indicated that petroleum purchases by non-U.S. entities involving \"any other U.S. nexus (e.g., transactions involving the U.S. financial system or U.S. commodity brokers)\" are prohibited following the 90-day wind-down period. Most oil transactions are denominated in U.S. dollars and this guidance may create some difficulties for PdVSA to secure alternative buyers for crude oil volumes that were previously destined for the United States.", "E.O. 13884 provides for the blocking of property and interests in property in the United States for persons and entities determined by the Secretary of the Treasury to have materially assisted \u00e2\u0080\u0094term not defined in the E.O.\u00e2\u0080\u0094PdVSA. This potential for sanctions on entities that transact with PdVSA, and have interests in property within U.S. jurisdiction, may further complicate PdVSA's efforts to sell crude oil to non-U.S. buyers and acquire petroleum products from alternative suppliers."], "subsections": []}, {"section_title": "Oil Supply Impacts", "paragraphs": ["Following the 2017 imposition of PdVSA financial sanctions, Venezuela's monthly oil production declined by approximately 50%\u00e2\u0080\u0094between August 2017 and January 2019. Venezuelan oil production had been trending downward in prior years due to aging oil infrastructure and insufficient investment in, and maintenance of, oil production assets. As indicated in Figure 3 , crude oil production declined from approximately 2.8 million bpd in January of 2011 to approximately 1.9 million bpd in August 2017\u00e2\u0080\u0094when sanctions were imposed on PdVSA. U.S. imports of Venezuelan crude oil also declined by nearly 50%, on a monthly basis, during this period. ", "Sanctions imposed on PdVSA in 2017 made it difficult for the company to access financial resources from debt markets and to receive cash distributions from PDV Holding\u00e2\u0080\u0094PdVSA's U.S.-based subsidiary that owns Citgo, an oil refining and marketing company. This limitation likely created some operational difficulties for PdVSA with respect to short-term credit that might be needed to pay for oil-related services and acquire oil production and maintenance equipment from U.S. suppliers. Oil production data illustrated in Figure 3 indicate that the production decline accelerated following the 2017 financial sanctions. However, it is difficult to attribute specific production volume declines directly to these sanctions since production had been trending lower since 2014.", "Oil production continued declining and reached approximately 1 million bpd in January 2019, when Treasury's PdVSA determination, designation, and GLs took effect (see Figure 3 ). U.S. imports of Venezuelan crude oil declined 50% over a one-month period between January 2019 and February 2019, and consistent with the pressure applied under sanctions, have since been reduced to zero. Prohibiting petroleum trade between the two countries results in a constraint in the global oil logistics system that can potentially resolve itself as transportation modes, trade routes, and transactions adjust to the sanctions-related constraint. PdVSA has sought alternative buyers such as India and China, countries that historically have been two of the largest destinations for Venezuelan crude oil (see Figure 8 in the \" Trade Flow Adjustments \"). ", "Ship-tracking information indicates that Venezuela's crude oil exports to India and China increased 49% and 34% respectively between January 2019 and February 2019. However, export volumes to these countries in February 2019 were in the range of export volumes that have been observed since 2017. Although PdVSA sanctions do not explicitly prohibit non-U.S. entities from purchasing crude oil and petroleum products from Venezuela, these sanctions prohibit transactions that occur on or after April 28, 2019, that involve the U.S. financial system. Furthermore, E.O. 13884 provides Treasury with discretion to take action against foreign persons/entities that assist PdVSA. These sanctions framework elements may make it difficult for PdVSA to locate alternative buyers for crude oil barrels previously destined for the United States."], "subsections": []}]}, {"section_title": "Oil Market Impact Observations", "paragraphs": ["Sanctions-related oil supply losses and trade constraints have had an impact on oil markets. These impacts have been observed in the form of Iran and Venezuela supply reductions, as discussed above. Impacts have also been reflected in price relationships for specific crude oil types and adaptive changes to trade flow patterns. In terms of benchmark prices (i.e., West Texas Intermediate and Brent futures contracts that are often quoted in the media), potential price escalation that might be expected from Iran and Venezuela supply reductions appear to have been averted to date by an increase in oil production in other countries, trade flow adjustments, and indications of slowing oil demand growth rates. Higher oil production and export volumes from the United States, Russia, and other oil-producing and exporting countries have contributed toward mitigating potential upward price pressure. "], "subsections": [{"section_title": "Oil Prices", "paragraphs": ["Potential effects on oil and petroleum product (e.g., gasoline, diesel fuel, and aviation fuel) prices have been an explicit and implied consideration for sanctions that impact global oil supply and trade. Enacted sanctions legislation targeting Iran's oil exports requires the Administration to consider and certify that the world oil market is adequately supplied when imposing sanctions and to coordinate with other oil-producing countries to minimize price impacts (see \" Sanctions Framework Targeting Iran's Oil Exports \" and subsequent discussion). Additional policy design elements, such as wind-down periods, provide some time for markets to adjust for sanction-related trade constraints. These design elements serve to minimize potential price increases to oil buyers and petroleum product consumers. At the same time, existing oil-related sanctions policy does not include considerations for possible oil market oversupply\u00e2\u0080\u0094a circumstance that could contribute to market conditions that could result in sharply lower oil prices\u00e2\u0080\u0094should certain sanctions be relieved, waived, or terminated. While such an outcome may be a temporary benefit to U.S. petroleum consumers, a severe oil price decline over a sustained period could have a negative impact on U.S. oil exploration, production, and exports. This topic is discussed further in the \" Policy Considerations \" section."], "subsections": [{"section_title": "Benchmark Prices", "paragraphs": ["Oil prices that receive the most visibility are front month benchmark futures prices that are regularly reported in the news media. Benchmark prices represent the value of crude oil with certain quality characteristics at a specific location. Buyers and sellers use benchmark prices to establish a baseline oil price that is adjusted for various parameters such as quality differences and transportation costs (e.g., maritime, rail, and pipeline). Brent crude oil, a light/sweet crude oil that represents the price of North Sea (located between the United Kingdom, Norway, and Denmark) crude oil cargoes loaded on to shipping vessels, is one common benchmark price that is generally considered a proxy for global prices. As indicated in Figure 4 , Brent prices in August 2019 were more than 40% lower than in December 2011, when legislation targeting Iran oil exports was enacted. However, this macro-level pricing behavior does not suggest that oil sanctions imposed since 2011 have contributed to lower prices. Rather, benchmark prices generally reflect near-term expectations of global oil supply\u00e2\u0080\u0094potentially affected by oil-related sanctions\u00e2\u0080\u0094and demand balances that quickly can change due to unplanned production outages, economic and oil demand growth forecasts, supply growth in certain countries, OPEC oil production decisions, and other physical and financial market variables.", "Due to the different factors contributing to benchmark price directional movements, it is difficult to attribute any actual price change to a sanctions event that either reduced supply or allowed curtailed oil volumes to return. However, there was at least one period when uncertainty about sanctions targeting Iran's oil exports arguably contributed to temporary market oversupply and an oil price decline. ", "When the Trump Administration announced in May 2018 that the United States would exit the JCPOA, general market expectations were that the Administration would not grant SREs to countries that were importing crude oil from Iran. In response to this expectation, Saudi Arabia increased its oil production by approximately 1 million bpd between May 2018 and November 2018. Other producers, including Russia, also increased production over this period. However, the Administration granted SREs to eight countries in November 2018. A temporary oversupply resulted and arguably contributed to the Brent benchmark price declining by more than $20 per barrel between November 5, 2018, and December 24, 2018. Media reports indicate that the SREs created an oversupplied market condition that required Saudi Arabia, Russia, and other OPEC+ members to manage. "], "subsections": []}, {"section_title": "Price Differentials for Certain Crude Oil Types", "paragraphs": ["Petroleum sanctions imposed on Venezuela prohibit petroleum trade with the United States. The largest element of the U.S.-Venezuela petroleum trade relationship consisted of U.S. imports of Venezuelan crude oil (approximately 500,000 bpd in January 2019). A significant portion of these imports was classified as heavy/sour, indicating the crude oil's gravity and sulfur content. When Venezuela petroleum trade sanctions were announced in January 2019, U.S. refiners began seeking alternative suppliers during the 90-day wind-down period. The resulting price impact was an increase in prices for medium and heavy crude oils relative to light/sweet crude and a narrowing of the price differential between these crude oil types (see Figure 5 ). ", "As indicated in Figure 5 , the Louisiana Light Sweet (LLS) to Mars spot price differential has been negative on certain days in 2019 following the prohibition of U.S.-Venezuela petroleum trade in January. Lower quality Mars crude oil was temporarily more expensive than LLS crude oil. While this is not the first time this differential has been negative\u00e2\u0080\u0094the LLS/Mars price differential was also negative on certain days in 2009 and 2011\u00e2\u0080\u0094price signals in 2019 are indicative of the oil logistics system adjusting to a sanctions-related trade constraint. U.S. refiners that previously purchased heavy crude oil from Venezuela were required to source substitute crude oil from other suppliers (e.g., Colombia, Canada, Iraq, and Saudi Arabia), modify refinery operations to process other crude oil types, or a combination of both. Operating margins for U.S. refiners that are optimally configured to process heavy/sour crude oil could be adversely affected by a persistently narrow or negative light/heavy price differential. "], "subsections": []}]}, {"section_title": "Trade Flow Adjustments", "paragraphs": ["Sanctions imposed on Iran and Venezuela have resulted in oil export and trade constraints for which the global oil logistics system has had to adjust. For example, Iran's oil buyers have sourced oil from alternative suppliers, and some U.S. refiners have located alternative supplies to replace crude oil previously imported from Venezuela. The United States, Russia, Saudi Arabia, and other countries have provided alternative oil supplies to compensate for sanctions-related oil supply constraints. "], "subsections": [{"section_title": "U.S. Crude Oil Exports", "paragraphs": ["Crude oil exports from the United States have contributed to \"adequate\" global oil supply\u00e2\u0080\u0094a statutory requirement of the Iran oil export sanctions framework\u00e2\u0080\u0094that has enabled the Administration to pursue an objective of reducing Iran's oil exports to zero. Growth in U.S. crude oil exports has been enabled by increasing U.S. oil production, the 2015 repeal of a 40-year crude oil export prohibition, and global oil benchmark price differentials that financially motivate crude oil exports. Monthly U.S. crude oil export volumes have been as high as 3 million bpd in 2019. South Korea, following a U.S. policy decision to exit the JCPOA, provides an example of how U.S. crude oil exports provided an alternative source of oil supply as the country reduced imports from Iran (see Figure 6 ). ", "As indicated in Figure 6 , South Korea imports of Iranian crude oil declined to zero following the Trump Administration's May 2018 decision to exit the JCPOA in expectation that no SREs would be granted. At the same time, imports of U.S. crude oil to South Korea immediately increased and had more than quadrupled, month-over-month, by December 2018."], "subsections": []}, {"section_title": "China Oil Imports", "paragraphs": ["China's oil imports provide another example of how oil trade flows have adjusted to sanctions-related constraints. As illustrated in Figure 7 , imports of Iranian crude oil to China began to decline following the U.S. JCPOA exit\u00e2\u0080\u0094at a relatively slower pace than South Korea. As imports from Iran began to decline, imports from Saudi Arabia and Russia increased as refineries in China sought alternative oil supplies. China imports of U.S. crude oil declined to as low as zero (March 2019)\u00e2\u0080\u0094likely a result of U.S/China trade negotiations\u00e2\u0080\u0094following the JCPOA exit but have increased since. In September 2019, China imposed a 5% import tariff on U.S. crude oil, which could\u00e2\u0080\u0094in addition to crude oil quality considerations (see Figure 7 notes)\u00e2\u0080\u0094reduce incentives for refineries in China to increase U.S. crude oil purchases as an alternative to Iranian supplies. "], "subsections": []}, {"section_title": "Venezuela-Related Trade", "paragraphs": ["Sanctions imposed on PdVSA have effectively eliminated petroleum trade between the United States and Venezuela. In response to this trade constraint, PdVSA has sought alternative buyers for crude oil that was previously destined for the United States and has sought alternative suppliers of light crude oil and other diluents previously supplied by U.S. exporters. As indicated in Figure 8 , Venezuela crude oil exports to the United States immediately stopped following the January 2019 designation of PdVSA as a sanctioned entity. To date, crude oil exports to China and India have remained at levels similar to those observed since 2017. However, oil exports to countries categorized as \"other\" have trended up since January 2019. Potential secondary sanctions on entities that transact with PdVSA using the U.S. financial system, as well as entities determined to have materially supported the government of Venezuela, could motivate non-U.S. entities to reduce or eliminate purchases of Venezuelan crude oil at some point in the future. ", "PdVSA has also been sourcing diluent products from other suppliers. U.S. diluent exports to Venezuela were prohibited immediately in January 2019, with no wind-down period. According to trade reports, PdVSA has sourced diluents from Russia following the imposition of U.S. sanctions. However, total Venezuela diluent imports have reportedly been lower compared with import levels prior to January 2019. Lower diluent imports could be a leading indicator for lower crude oil production due to blending needs for certain Venezuelan crude oil types."], "subsections": []}]}]}, {"section_title": "Policy Considerations", "paragraphs": ["Sanctions imposed on Iran, Russia, and Venezuela have affected global oil markets, prices, and trade flows. As U.S. foreign policy objectives toward these countries evolve, sanctions relief, increased sanctions pressure, or both may have additional impacts on supply, prices, and potentially the U.S. oil production sector. Regarding Iran, options for additional sanctions that might affect Iran's oil sector appear to be limited as the current framework aims to eliminate Iranian oil exports. Should sanctions relief be provided to Iran, such an action could contribute to a market condition that could result in lower oil prices\u00e2\u0080\u0094actual price levels would depend on market conditions at such a time\u00e2\u0080\u0094and could adversely affect U.S. oil production and exports. Regarding Russia, some Members of Congress have called for additional sanctions, and several bills have been introduced in the 116 th Congress with certain provisions that could affect Russia's oil sector. Finally, the Administration has continued to strengthen oil-related sanctions on Venezuela through the use of E.O.s and administrative actions. Legislation introduced in the 116 th Congress would codify some of these sanctions. "], "subsections": [{"section_title": "Iran: Oil Market Impacts Should Sanctions Be Relieved or Eliminated", "paragraphs": ["Impacts to oil supply and the potential for high oil prices are explicit considerations for economic sanctions that affect Iran's oil trade. Iran oil trade sanctions are the most stringent of the three frameworks discussed in this report. This framework includes design elements that require a periodic assessment of global oil supply adequacy when sanctions are applied and maintained (see \" Sanctions Framework Targeting Iran's Oil Exports \" and subsequent discussion). However, the framework does not include provisions to assess the potential for global oil market oversupply should these sanctions be relieved, waived, or eliminated. Depending on oil market conditions (i.e., supply and demand balances) at the time of potential sanctions relief, the immediate reentry of 1 million to 2 million bpd of Iranian supply could contribute to a market condition that could result in downward oil price pressure that could range from moderate to severe. Iran's oil minister has indicated that, should U.S. oil export sanctions be removed, oil production and exports could return to pre-sanctions levels in as little as three days. ", "Although gasoline and diesel fuel consumers might welcome this result, oil producers could encounter challenging business and financial conditions should oil prices decline to, and be sustained at, extremely low levels. In 2018, total petroleum production (crude oil, condensate, and natural gas liquids) in the United States was larger than in any other country (Saudi Arabia and Russia ranked second and third, respectively). Low oil prices, depending on the actual price level and its duration, could contribute to reductions in both U.S. oil production growth and actual production levels, and could contribute to challenging business conditions for this sector of the U.S. economy.", "Historically, oil producers have generally relied on OPEC to attempt to manage oil supply and demand imbalances. However, as recently as 2014, OPEC\u00e2\u0080\u0094effectively led by Saudi Arabia\u00e2\u0080\u0094sometimes has elected not to adjust production levels when oil markets are oversupplied. Results from such decisions have included rapidly declining oil prices, financial strain on some U.S. oil producers, lower U.S. crude oil production, and proposed legislation to investigate OPEC anticompetitive practices because prices were too low. Subsequently, OPEC, along with Russia and other non-OPEC countries, entered into a voluntary production agreement in December 2016 to address market oversupply and low oil prices. As prices were rising, the No Oil Producing and Exporting Cartels (NOPEC) Act was introduced with the goal of reducing and moderating oil prices that were deemed too high. The United States' ongoing position as the world's largest petroleum consumer is now coupled with being one of the largest and fastest growing oil producers. As a result, economic sensitivity to oil price levels has been rebalanced to reflect the interests of both consumers and producers. Introduced legislation is indicative of this balance.", "Should oil export sanctions on Iran be relieved or eliminated, the current sanctions framework would require the market to adjust to additional Iranian barrels that quickly could reenter the market. Market adjustments could take the form of lower prices, OPEC+ production restraint, or both. Depending on market conditions at such a time and the volume of Iranian oil that reenters, global benchmark oil prices could experience downward pressure that could range from moderate to severe. Extremely low oil prices could possibly have a negative impact on all oil producers, including U.S. companies. Based on recent history, whether or not OPEC, along with other OPEC+ countries, might adjust production levels to accommodate additional Iranian barrels is uncertain. One possible option to address such an outcome, should this potential situation become a concern, may be to encourage, or perhaps require, consideration of oil market conditions and communication with other oil producers as a means to reduce downside price risk that might result from sanctions relief. "], "subsections": []}, {"section_title": "Russia: Is the Iran Oil Export Framework Applicable?", "paragraphs": ["Much of the congressional interest in additional economic sanctions directed toward Russia includes introduced legislation that would impose sanctions on various elements of Russia's energy sector, including oil production. The current Russia oil-sector sanctions framework has not affected near-term oil production but may affect future oil production. Comparing this near-term outcome with the measurable impacts of sanctions targeting Iran's oil exports, it might be of interest to explore the potential applicability of the Iran oil export sanctions framework to Russia. The size of Russia's and Iran's oil production (approximately 11 million bpd currently and 4 million bpd prior to oil export sanctions, respectively) is one consideration. Two additional considerations (discussed below) are Russia's pipeline integration with Europe and U.S. institutional investor ownership of certain Russian oil companies."], "subsections": [{"section_title": "Russia's Oil Pipeline Integration with Europe", "paragraphs": ["Transneft, Russia's state-controlled oil pipeline company that is on the SSI list, transports approximately 83% of crude oil produced in Russia. One element of the Transneft pipeline system is the Druzhba (Friendship) pipeline network that supplies Russian crude oil to several European refineries, many of which are optimally configured to process Russian crude oil. A sanctions framework\u00e2\u0080\u0094such as the one currently structured for Iran\u00e2\u0080\u0094that might require oil buyers to significantly reduce oil purchases from Russia could be difficult for some refiners due to pipeline logistics and access to alternative suppliers. Unlike Iran's crude oil buyers that can access alternative suppliers through easily-adaptable maritime trade, accessing and configuring pipeline infrastructure to source non-Russian supplies is a more complicated and potentially difficult endeavor. Such logistical constraints introduce complexities when considering the possibility of applying the Iran oil trade sanctions framework to Russia's oil sector."], "subsections": []}, {"section_title": "U.S. Institutional Investor Ownership of Russian Oil Companies", "paragraphs": ["Russia's oil sector is different compared with Iran's in that U.S. institutional investors have ownership positions in some of Russia's major oil companies. Banks, U.S. states, pension funds, and insurance companies have minority investment positions in companies such as Rosneft and Lukoil, which are on the SSI list. Sanctions that affect these companies, and that aim to reduce Russia's oil production and exports, could negatively affect the value of Russian oil companies and investments held by U.S. investors and their clients."], "subsections": []}]}, {"section_title": "Russia: Introduced Legislation", "paragraphs": ["A number of congressional concerns about Russia's influence in Europe, interference in U.S. elections, and other activities have resulted in legislation introduced in the 116 th Congress that, among other things, would impose additional sanctions targeting Russia's energy sector. Some of the proposed bills that could affect Russia's oil sector are listed below."], "subsections": [{"section_title": "S. 1830: Energy Security Cooperation with Allied Partners in Europe Act of 2019", "paragraphs": ["As originally introduced, the bill would have required mandatory sanctions on persons/entities that invest in\u00e2\u0080\u0094based on certain investment level thresholds\u00e2\u0080\u0094or support Russian energy export pipelines, including modernization and repair. Mandatory sanctions under this bill could include oil pipelines. Transneft, Russia's oil pipeline monopoly controlled by the Kremlin, transports 83% of oil produced in Russia. Transneft's pipeline system is used to transport crude oil to shipping ports and to export oil to refineries in European countries and in China. To the extent that the possibility of sanctions might reduce pipeline development and maintenance activities for Russia's oil pipeline network, this could affect oil flows and oil prices for certain European refineries that may not have easily accessible alternatives to Russian crude oil. Provisions related to export pipeline sanctions were removed from the bill when it was reported out of the Committee on Foreign Relations in December 2019."], "subsections": []}, {"section_title": "S. 1060: Defending Elections from Threats by Establishing Redlines Act of 2019", "paragraphs": ["The bill would prohibit any \"new investment\"\u00e2\u0080\u0094to be defined by the President after enactment\u00e2\u0080\u0094in a Russian energy company or in Russia's energy sector, including oil production. Investments made in the United States or by a U.S. person/entity would be prohibited. The bill would require the President to impose financial sanctions on certain property owned by any foreign firm that makes a new investment in Russia's energy sector or in a Russian energy company (i.e., secondary sanctions). "], "subsections": []}, {"section_title": "S. 482: Defending American Security from Kremlin Aggression Act of 2019", "paragraphs": ["As reported by the Committee on Foreign Relations, the bill would require sanctions to be imposed on individuals/entities that invest in energy projects outside of Russia that are supported by Russian-owned or parastatal entities. The bill would also require the imposition of sanctions on any person/entity that sells, leases, or provides goods, services, technology, financing, or support for any crude oil development in the Russian Federation\u00e2\u0080\u0094not just for deepwater, Arctic offshore, and shale developments currently included in the existing sanctions framework. "], "subsections": []}]}, {"section_title": "Venezuela: Sanctions Enforcement and Enacted Legislation", "paragraphs": ["Sanctions affecting Venezuela's oil sector prohibit U.S. entities from transacting with PdVSA and provide a potential pathway for the Administration to sanction non-U.S. entities that transact with PdVSA and support the government of Venezuela. Petroleum trade between the United States and Venezuela has been eliminated. To date, however, enforcement actions related to Venezuela oil sector sanctions that could be imposed on non-U.S. entities have largely targeted companies and shipping vessels that have transported oil to Cuba. Venezuela's crude oil exports have continued since U.S. sanctions were imposed in January 2019, with India and China being two of the largest destinations. ", "Trade reports indicate that much of Venezuela's oil exports are being managed by a Rosneft trading office. Rosneft has also provided PdVSA with diluent cargos as an alternative supplier to U.S. exporters and the company participates in multiple joint venture oil production projects in Venezuela. Whether or not these activities violate the U.S. sanctions framework, and are potentially subject to an enforcement action, is subject to a determination made by the Administration. Rosneft has argued that oil-trading with PdVSA is not a sanctions violation. To date, no sanctions enforcement action related to Rosneft transactions with PdVSA has been taken.", "Legislation enacted in December 2019 ( P.L. 116-94 ) includes provisions that require the Administration to engage with other countries and to coordinate an international effort to impose sanctions on the Maduro government. P.L. 116-94 also includes sections that express concern about PdVSA transactions with Rosneft\u00e2\u0080\u0094primarily related to a Rosneft loan to PdVSA collateralized by 49% ownership of PdVSA's U.S.-based Citgo refinery and marketing company. "], "subsections": []}]}, {"section_title": "Concluding Remarks", "paragraphs": ["In some cases, U.S. economic sanctions that target oil sectors in Iran, Russia, and Venezuela have observably affected oil markets in several ways, including reductions in supply, changes in price relationships, and adjustments to trade flows. Oil-related sanctions frameworks include design elements that aim to minimize upward price pressure that might result from the imposition of sanctions. However, design elements that consider possible oil market impacts in the event of oil-related sanctions relief or termination\u00e2\u0080\u0094that could contribute to market oversupply and downward price pressure\u00e2\u0080\u0094are not included in current oil-related sanctions frameworks. Arguably, potential sanctions-related price escalation has been counterbalanced by increased global supplies, lower global demand growth rate expectations, and market adjustments in response to oil supply and trade constraints. Should oil market conditions change to a persistent undersupply condition and benchmark prices escalate to levels deemed too high for U.S. consumers, sanctions relief is one available policy option that could possibly be considered to increase oil supply with the goal of rebalancing markets and moderating price levels; however, such an action could potentially conflict with broader foreign policy objectives."], "subsections": []}]}}
{"id": "R45813", "title": "An Overview of Consumer Finance and Policy Issues", "released_date": "2019-07-12T00:00:00", "summary": ["Consumer finance refers to the saving, borrowing, and investment choices that households make over time. These financial decisions can be complex and can affect households' financial well-being both now and in the future. Safe and affordable financial services are an important tool for most American households to avoid financial hardship, build assets, and achieve financial security over the course of their lives. Understanding why and how consumers make financial decisions is important when considering policy issues in consumer financial markets.", "Households borrow money for the following common reasons: investments\u00e2\u0080\u0094such as a home or education\u00e2\u0080\u0094to build future wealth, consumption smoothing (i.e., paying later to consume things now), and emergency expenses. Most households rely on credit to finance some of these expenses, because they do not have enough money saved to pay for them. According to the Federal Reserve Bank of New York, mortgage debt is by far the largest type of debt for households, accounting for approximately 67% of household debt. Student debt is the second-largest household debt, followed by auto loans and credit cards.", "Consumer financial markets generally share similar market dynamics. In all of these markets, consumers often act in similar ways when making financial decisions and firms tend to act in comparable ways to attract consumers. Therefore, the government tends to consider similar policy interventions when regulating in these markets.", "Competitive free markets generally lead to efficient distributions of goods and services to maximize value for society. Yet sometimes, free markets are inefficient when particular issues arise. Common issues in consumer financial markets include (1) information asymmetries between financial firms and consumers and (2) behavioral biases that predictably bias consumers when making financial decisions. In these cases, government policy can potentially correct market failures to bring the market to a more efficient outcome, maximizing social welfare. In consumer finance, three types of policy interventions are common: (1) standardized consumer disclosures; (2) regulation to prevent deceptive, unfair, or abusive financial institution practices; and (3) regulation to prevent discrimination in consumer-lending markets. Yet, policymakers need to be aware of unintended consequences of proposed policies, and often find it challenging to determine whether a policy intervention will help or harm a particular market's efficiency.", "In response to the 2007-2009 financial crisis, the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank; P.L. 111-203 ) established the Bureau of Consumer Financial Protection (CFPB) to implement and enforce federal consumer financial law while ensuring consumers can access financial products and services. The CFPB's authorities fall into three broad categories: rulemaking , writing regulations to implement laws under its jurisdiction ; supervision , the power to examine and impose reporting requirements on financial institutions; and enforcement of various consumer protection laws and regulations. The CFPB generally has regulatory authority over providers of an array of consumer financial products and services.", "The major consumer financial markets include mortgage lending, student loans, automobile loans, credit cards and payments, payday loans and other credit alternative financial products, and checking accounts and substitutes. In addition, two important market structures allow these consumer financial products to be offered: (1) the consumer credit reporting system and (2) the debt collection market. These aspects of the consumer credit system facilitate the pricing of credit offers and the resolution of delinquent consumer credit products for most consumer credit markets."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["Consumer finance encompasses the financial lives of individuals and households. Americans aspire for economic advancement and wealth building, a central part of the American dream. Safe and affordable financial services are an important tool for most American households to avoid financial hardship, build assets, and achieve financial security over the course of their lives. Households use three types of financial products regularly: credit, insurance, and financial investments. This report will focus on the first category\u00e2\u0080\u0094credit and deposit-taking financial products for personal, family, or household purposes. ", "Most households rely on credit to finance some expenses because they do not have enough assets saved to pay for them. Mortgage debt is by far the largest type of household debt. According to data from the Federal Reserve Bank of New York, as shown in Figure 1 , mortgages account for approximately 67% of household debt. Student loans are the second-largest type of household debt, followed by auto loans and credit cards. ", "These and other major consumer finance markets are discussed in more detail in this report under \" Overview of Major Consumer Finance Markets ,\" which provides a brief overview of each financial product, recent market developments, and related policy issues. Major consumer finance markets examined in this report include mortgage lending, student loans, automobile loans, credit cards and payments, payday loans and other credit alternative financial products, and checking accounts and substitutes. In general, this report will focus on the consumer and household perspective, and consumer protection policy issues in each market.", "This report also discusses two important market structures that allow these consumer financial products to be offered: (1) the consumer credit reporting system and (2) the debt collection market. These aspects of the consumer credit system are important because they facilitate the pricing of credit offers and the resolution of delinquent consumer credit products for most consumer credit markets. ", "The report begins with an overview of U.S. household finances, consumer finance markets, and common policy issues in these markets."], "subsections": []}, {"section_title": "Consumer Finance Policy Issues and Regulation", "paragraphs": ["Consumer finance refers to the saving, borrowing, and investment choices that households make over time. These financial decisions can be complex and can affect households' financial well-being both now and in the future. Understanding why and how consumers make financial decisions is important when considering policy issues in consumer financial markets.", "This section provides an introduction to U.S. households' finances, including a breakdown of a household balance sheet and its components. It then provides background on how consumer financial markets operate and general issues in these markets. The section also describes common policy interventions and considerations when using these policy tools. Lastly, this section provides an overview of the Bureau of Consumer Financial Protection (CFPB)\u00e2\u0080\u0094the main regulator responsible for consumer compliance of financial products and services."], "subsections": [{"section_title": "Household Balance Sheet Background", "paragraphs": ["A household's balance sheet is similar to a firm's in that it presents a full financial picture, including the following components of a household's financial position:", "Assets \u00e2\u0080\u0094A point-in-time value of what a household owns; can include liquid wealth , such as a savings account or other financial assets from which the household can easily access funds, and illiquid wealth , such as a car or home that the household owns. Debts \u00e2\u0080\u0094A point-in-time value of what a household owes; can include a home mortgage, a student loan, or other types of consumer loans. Net Worth \u00e2\u0080\u0094Equal to assets minus debts , measures the wealth of a household, including home equity. Income \u00e2\u0080\u0094Wages earned from a job or financial investment returns over a period of time (e.g., a year). Consumption \u00e2\u0080\u0094Household spending over a period of time, such as rent, food, clothing, and entertainment. Savings \u00e2\u0080\u0094The difference between income and consumption over a period of time. When a household's income is greater than its consumption, it can save or invest this unconsumed income, increasing the household's assets or paying off debt owed, reducing the household's total debts . Borrowing \u00e2\u0080\u0094New debts taken out over a period of time. When a household's consumption is greater than its income , it can either spend assets it owns or borrow money, increasing the household's debts .", "In general, research on household finance suggests that all of the components of a household balance sheet\u00e2\u0080\u0094assets, debts, net worth, income, consumption, savings, and borrowing\u00e2\u0080\u0094are important to understanding a household's financial experience over time. For example, in the event of a financial shock \u00e2\u0080\u0094an unexpected expense such as a car or home repair, a medical expense, or a pay cut\u00e2\u0080\u0094households with a lower income or little liquid savings are much more likely to experience difficulty making ends meet. As this example suggests, all of the balance sheet's components need to be accounted for when considering consumer decisionmaking.", "As demonstrated in Figure s 2 and 3 , household income and net worth in the United States are both distributed unevenly. According to the Federal Reserve Board's (Fed's) Survey of Consumer Finances, the bottom 20% of U.S. households ranked by income have an income below $25,300, whereas the top 10% have an income above $177,100. Likewise, the bottom 25% of U.S. households ranked by net worth have a net worth below $10,300, whereas the top 10% have a net worth above $1,186,300. These distributions reflect the variation of household balance sheets within the United States and are due to many factors, such as age, size of household, and household decisions about jobs, homeownership, and other factors."], "subsections": []}, {"section_title": "Consumer Finance Markets and Policy Considerations", "paragraphs": ["This report examines household borrowing, with a particular focus on consumer financial products, such as mortgages, credit cards, and auto loans, which allow a household to borrow and make payments. As described in the previous section, consumer behavior in these markets may be driven by other parts of the balance sheet, such as the need to build assets or withstand a financial shock. Three common reasons households use credit are as follows:", "Asset Building \u00e2\u0080\u0094Using credit to make investments can allow a household to build wealth over time. For example, a household can use a mortgage to pay for an asset, such as a house, that may appreciate over time. A household also can use student loans to fund education expenses to make a higher income in the future. In both cases, households are using credit to fund household investments that may lead to greater wealth in the future. Consumption Smoothing \u00e2\u0080\u0094Using credit to move income across time periods allows a household to consume future income now. For example, recent college graduates might use credit cards to pay for expenses before their new jobs begin. This money is more valuable to graduates now, before they have wages, than in the future, when they have enough income to meet living expenses. Financial Shocks or Emergencies \u00e2\u0080\u0094Using credit to pay for unexpected expenses allows a household to compensate for an emergency, such as a car or home repair, a medical expense, or a pay cut. For example, a consumer might take out a payday loan to repair a car and continue to go to work. This money is more valuable to the consumer during the financial emergency than in the future.", "Each consumer financial market is unique and governed by various distinct laws and regulations. However, consumer financial markets generally share similar market dynamics. In all of these markets, consumers often act in similar ways when making financial decisions, and firms tend to act in comparable ways across markets to attract consumers and make profits. Therefore, the government tends to consider similar policy interventions and factors when regulating these markets.", "Mainstream economic theory asserts that competitive free markets generally lead to efficient distributions of goods and services to maximize value for society. Under this theory, each market moves toward an efficient price, at which the supply of goods produced by firms and the amount of goods demanded by consumers equal one another. If consumers demand credit products, then banks or other lenders should want to provide these products to consumers if they can make a profit. Without major barriers for new lenders to enter the market, more lenders should start providing credit to consumers, until the price is no longer excessively profitable to lenders. At this point, the market is at equilibrium, its efficient outcome for society. If these conditions hold, policy interventions cannot improve on the financial decisions that consumers make based on their unique situations and preferences. For this reason, some policymakers are hesitant to disrupt free markets, on the theory that prices determined by market forces lead to efficient outcomes without intervention.", "The life-cycle model is a prevalent economic hypothesis that assumes households usually want to keep consumption levels and their lifestyles stable over time. For example, severely reducing a household's consumption one month may be more painful for a household than the pleasure of a much higher household consumption level in another month. Therefore, households save and invest during their careers in order to afford a stable income across their lives, including retirement. This model suggests that wealth increases as households age, which generally fits household data in the United States. However, income and wealth inequality continues to exist after controlling for household age, suggesting that age is not the only important factor.", "There are also circumstances where the life-cycle model fails to correspond to household behavior in the United States. A recent National Bureau of Economic Research (NBER) working paper on behavioral household finance identifies three facts about U.S. household balance sheets. First, income and consumption move together very closely, unlike the stable consumption that the life-cycle model would predict. Second, U.S. households on average tend to have low levels of liquid wealth, such as money in a savings account, and a high incidence of credit card borrowing. Third, most U.S. households have much of their wealth in illiquid assets, such as home equity. These patterns might fit the life-cycle model if borrowing money is inexpensive and illiquid assets have higher returns than liquid assets. However, these assumptions might not apply to all households and other explanations might fit these patterns better. Generally, these three facts are important background to better understand consumer behavior in financial markets. These facts suggest why many U.S. households depend on access to affordable credit and robust consumer financial markets, both for short-term needs and for building wealth over time.", "In these theoretical frameworks, m arket failures occur when a free market is inefficient due to departures from the standard economic framework, which includes assumptions about perfect information and perfect competition. Market failures can reduce economic efficiency and consumer welfare. In these cases, government policy can potentially correct market failures to bring the market to a more efficient outcome, maximizing social welfare. Yet, policymakers often find it challenging to determine whether a policy intervention will help or harm a particular market's efficiency.", "The following sections discuss two specific departures from the conditions associated with economic efficiency\u00e2\u0080\u0094imperfect information and behavioral biases. These market failures are important to understanding consumer credit markets."], "subsections": [{"section_title": "Imperfect Information", "paragraphs": ["Imperfect information, or information asymmetry, is when one party in a transaction (e.g., a firm) has more accurate or more detailed information than the other party (e.g., a consumer). This imbalance can result in inefficient outcomes. For example, ideally consumers in a mortgage market will shop around among lenders for the best interest rate, fees, and other terms for their own personal situations. Yet, acquiring information (e.g., contacting a variety of different lenders to compare loan terms) can be time consuming. Consumers might also be willing to spend more to save time or to have a better experience closing their mortgage. However, if information asymmetry exists\u00e2\u0080\u0094for example, if interest and fee costs are hidden, confusing, or difficult to obtain\u00e2\u0080\u0094some consumers might choose a mortgage loan that is not optimal based on the criteria they deem to be important. In this case, the mortgage market will not lead to efficient societal outcomes, possibly costing some consumers more for a loan than is necessary and dissuading some consumers who otherwise would from entering the market. Information asymmetries occur in the opposite way as well. Often, lenders might not have accurate or detailed information about a consumer, making it hard for them to estimate a consumer's likelihood of default on a loan. The credit reporting industry developed to give lenders more information about a consumer and make the markets for consumer credit more efficient. For more information on the credit reporting industry, see the section of this report titled \" Credit Reporting, Credit Bureaus, and Credit Scoring .\""], "subsections": []}, {"section_title": "Behavioral Biases in Consumer Decisionmaking", "paragraphs": ["Behavioral research suggests that humans tend to have biases in rather predictable patterns. This research suggests that the human brain has evolved to quickly make judgments in bounded, rational ways, using heuristics\u00e2\u0080\u0094or mental shortcuts\u00e2\u0080\u0094to make decisions. These heuristics generally help people make appropriate decisions quickly and easily, but sometimes, they can result in choices that make the decisionmaker worse off financially. Within consumer finance markets, a few of these biases tend to be particularly important:", "Choice Architecture \u00e2\u0080\u0094Research suggests that how financial decisions are framed can affect consumer decisionmaking in many ways. For example, people can be anchored by an initial number, even if it is different from their next choice. In one illustration of this concept, researchers had subjects spin a wheel of fortune with numbers between zero and 100, then asked them the percentage of African countries in the United Nations. The random number generated in the first stage subconsciously affected subjects' guesses in the second stage, even though they were not related. Another example of a decisionmaking bias is defaults . For example, employees are more likely to be enrolled in a 401(K) plan by employer defaults than if they actively need to make a choice. A third example of a framing bias is loss aversion , the idea that people tend to respond more strongly to potential losses than gains. Therefore, when choices are framed as a potential loss, such as \"an opportunity you don't want to miss,\" consumers respond more strongly than they do to potential benefits. Present Bias and Scarcity \u00e2\u0080\u0094When people tend to put more value on having something now, rather than in the future, even when there is a large benefit for waiting, this behavior is called present bias . In addition, even when people decide they should do something difficult, such as saving for the future or choosing a retirement plan, self-control and procrastination may prevent them from following through on their intentions. These human biases might lead consumers to make financial decisions that are not optimal. Furthermore, a scarcity mindset can make optimal decisionmaking more difficult. Difficult decisions, such as managing finances, require cognitive bandwidth. When under extreme stress, such as living in poverty, people may tunnel their vision, focusing on immediate needs (e.g., paying current bills), rather than prioritizing based on the big picture (e.g., increasing future income). Self-control might also be a limited resource for humans, where the more self-control a person needs to exert over a day, the harder it is to maintain. These limitations to human cognitive functioning can sometimes lead consumers to make flawed financial decisions. Budgeting Biases ( Mental accounting ) \u00e2\u0080\u0094Often, households use mental accounts, amounts of money mentally allocated in advance for different purposes, to make consumption decisions. For example, a household may have a monthly budget for food, clothing, and entertainment. Even though money is fungible, many households act as if spending in one category does not affect spending in another category. This categorization is an intuitive and simple way of thinking about a budget. Although this thinking reduces cognitive effort, it can also lead to predictable biases. For example, research suggests that people have trouble forecasting unusual or infrequent expenses. For this reason, these expenses are generally not fully accounted for in the mental budget, leading to overspending. ", "Although consumers might not be aware of these biases when making financial decisions, they are important because firms can take advantage of them to attract consumers. For example, choice architecture biases might influence how marketing materials are developed, emphasizing certain terms to make a financial product seem more desirable to consumers. In addition, product features may be developed to take advantage of people's present bias, scarcity mindset, or mental accounting mistakes. "], "subsections": []}]}, {"section_title": "Common Policy Interventions and Considerations", "paragraphs": ["In response to market failures, such as information asymmetry and behavioral biases, the government uses policy interventions intended to bring consumer markets to a more efficient market outcome. Three types of policy interventions are common in consumer finance: ", "Standardized Consumer Disclosures \u00e2\u0080\u0094Financial products can be complex and difficult for consumers to fully understand. Mandated consumer disclosures are a common policy intervention in consumer financial markets, generally intended to give consumers more information about the costs and terms before they take out a new financial product, thus reducing asymmetric information market failures. Standardized disclosures can also help consumers shop for the best terms, because all financial product terms are required to be disclosed in the same way. Furthermore, because disclosure structure and formatting are often standardized, mandated consumer disclosures can also account for choice architecture biases. Laws that mandate consumer disclosures in financial markets include the Truth in Lending Act (TILA), which requires standardized disclosures for certain consumer credit products, and the Truth in Savings Act, which requires standardized disclosures for certain bank accounts. Unfair, Deceptive, or Abusive Practices or Acts \u00e2\u0080\u0094Consumers seeking loans or financial services could be vulnerable because some consumers may lack financial knowledge or be susceptible to biases described in the above section. For this reason, certain consumer protection laws prohibit unfair, deceptive, or abusive acts or practices in consumer financial markets. These acts and practices can include both individual firm conduct and product features. Fair Lending \u00e2\u0080\u0094Fair lending laws prohibit discrimination in credit transactions based upon certain borrower characteristics, such as sex, race, religion, and age. These laws historically have been interpreted to prohibit both intentional discrimination and disparate impact discrimination, in which a facially neutral business decision has a discriminatory effect on a protected class. Federal fair lending laws in consumer financial markets include the Equal Credit Opportunity Act (ECOA), the Fair Housing Act (FHA), and the Home Mortgage Disclosure Act (HMDA)."], "subsections": [{"section_title": "Policy Considerations", "paragraphs": ["The market effects of new laws or regulations are important considerations. Does the policy on average lead the market closer to or farther from its efficient outcome? In consumer financial markets, both households and firms may react to new policy. If all of a policy's potential impacts are not considered, it can have unintended effects and perhaps fail to reach policymakers' objectives. ", "From a consumer perspective, new policy formulations should consider the policy's effect on consumer decisionmaking, the impact on household well-being over time, and whether these effects might vary across the population. For example, a new disclosure policy might improve consumer comprehension, but not consumer decisionmaking, thus failing to affect the market as intended. In other cases, a subset of consumers may be susceptible to a deceptive practice. If a new policy eliminates that deceptive practice in the market, the policy may only affect that subset of consumers who were susceptible, rather than the whole consumer population.", "From a firm's perspective, new policy formulation should consider both the cost for firms to implement the policy as well as its impact on the market's competitiveness, both within and outside of the regulated market. Another important consideration is the policy's impact on consumer prices and financial product availability. For example, complying with a new regulation might require a firm to bear costs. This might force lenders to raise prices, or lenders who cannot bear the additional costs may leave the market. Higher prices and less choice may result in consumers seeking other credit products outside of the market, or reduce consumers' ability to access credit. "], "subsections": []}]}, {"section_title": "Bureau of Consumer Financial Protection Bureau", "paragraphs": ["Most experts agree that an important factor in the 2008 financial crisis was a housing bubble that led lenders to relax their underwriting standards (or the process by which a lender determines whether a borrower is creditworthy), which in some cases led to consumer protection abuses. In response, the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) established the CFPB to implement and enforce federal consumer financial law while ensuring consumers can access financial products and services. The CFPB's statutory purpose is to enable markets for consumer financial services and products to be fair, transparent, and competitive. Dodd-Frank consolidated certain consumer finance-related responsibilities previously held by other regulators in the CFPB and created new authorities unique to the CFPB. The act also directed the CFPB to develop and implement financial education initiatives, collect consumer complaints, and conduct consumer finance research.", "The CFPB generally has regulatory authority over providers of an array of consumer financial products and services, including deposit taking, mortgages, credit cards and other extensions of credit, loan servicing, consumer reporting data collection, and debt collection associated with consumer financial products. The CFPB's authorities and the breadth of products, services, and entities that fall within its jurisdiction are considerable, but Dodd-Frank imposes some important exceptions to and limitations on those powers. The CFPB's authorities fall into three broad categories: rulemaking , writing regulations to implement laws under its jurisdiction ; supervision , the power to examine and impose reporting requirements on financial institutions; and enforcement of various consumer protection laws and regulations.", "The CFPB is authorized to prescribe regulations to implement 19 federal consumer protection laws that largely predated Dodd-Frank. These enumerated consumer laws govern a broad and diverse set of consumer financial services and generally apply to any entity offering those services. Dodd-Frank also provided CFPB new power to issue rules declaring certain acts or practices associated with consumer financial products and services to be unlawful because they are unfair, deceptive, or abusive. Other aspects of the CFPB's regulatory power\u00e2\u0080\u0094particularly the scope of its supervisory and enforcement authority\u00e2\u0080\u0094vary depending on a number of factors, including an institution's size and whether it holds a bank charter.", "The CFPB is headed by a director appointed by the President with the consent of the Senate for a five-year term. It is located within the Federal Reserve System (Fed), although the Fed does not influence the CFPB's budget or personnel decisions. The Fed also cannot veto a rule issued by the CFPB, but the Financial Stability Oversight Council can overturn a CFPB rule with the vote of two-thirds of its members. The CFPB is funded through the Fed's earnings, rather than through the typical appropriations process. The CFPB requests monetary transfers from the Fed, with a cap on the amount of these transfers based on a formula set in statute. For FY2018, the CFPB's funding cap was $663 million, and the agency's net operating costs were $553 million."], "subsections": []}]}, {"section_title": "Overview of Major Consumer Finance Markets", "paragraphs": ["The following sections examine specific issues within major consumer debt markets: mortgage lending, student loans, automobile loans, credit cards and payments, payday loans and other credit alternative financial products, and checking accounts and substitutes. The markets discussed are under the CFPB's jurisdiction, and sometimes that of other regulators as well. Each section briefly describes the financial product, recent market developments, and selected policy issues that may lead each market away from its efficient price or outcomes. These sections focus on the consumer and household perspective as well as consumer protection policy issues in each market. "], "subsections": [{"section_title": "Mortgage Lending Market", "paragraphs": ["A mortgage loan is a loan collateralized by a house and its land. Generally, consumers use these loans to purchase a new home or refinance an existing one. These types of mortgages are often called first liens, because if a consumer defaults on the loan, the lender is typically the first in line to be compensated through the proceeds of a home foreclosure. First-lien mortgage loans are usually installment loans, in which the consumer pays off the loan in monthly installments over 15 years or 30 years. Most mortgage loans in the United States have a fixed interest rate and fixed installment amount over the course of the loan, affected by the consumer's credit score and market conditions. ", "Households buying a new home and taking out a mortgage loan to purchase it generally cannot borrow for the house's full value. To limit the risk to the lender, borrowers are typically required to make a down payment, the difference between the house's value and the mortgage loan. If the down payment is less than 20% of the home's value, the borrower is often required to pay for additional insurance.", "In addition to first-lien purchase mortgages, a consumer may choose to take out a home equity line of credit (often referred to as HELOC) or a smaller installment mortgage loan, which often is a second lien. A second lien means that the lender is second in line, after the first lien holder, to be compensated if the consumer defaults and the home is foreclosed upon. These loans are underwritten using the home's value, but can be used for a variety of different purposes either related to the home or not. For example, second mortgages can be used to renovate the home, pay for college, or consolidate credit card debts.", "Mortgage loans are by far the largest consumer credit market in the United States, and homes are a large part of most households' wealth. According to the Fed, more than $9 trillion of mortgage debt is currently outstanding, and more than $15.5 trillion in real estate equity is owned by households. As of the first quarter of 2019, 64.2% of U.S. households owned their home. Many people view homeownership as an important way to build wealth over time, through both price appreciation and home equity gained by paying down their mortgages. Nevertheless, because home prices can fluctuate over time, this investment can be risky, especially if the homeowner only stays in the home for a short time. Although homeownership has certain benefits, such as tax benefits like the mortgage interest tax deduction, it also imposes costs on the household, such as mortgage loan closing costs and home maintenance.", "As noted above, most experts believe that a housing price bubble was a central cause of the 2008 financial crisis. In response, Dodd-Frank reformed the mortgage market by attempting to strengthen mortgage underwriting standards, to reduce the risk that consumers default on their mortgages even if house prices fluctuate in the future. Dodd-Frank also directed the CFPB to update federal mortgage disclosure forms (called the combined TILA/RESPA form) and improve standards for mortgage servicing (a company who manages mortgage loans after the loan is originated).", "During and after the financial crisis, mortgage lenders tightened underwriting standards, making it harder for consumers to qualify for a loan. Although most borrowers with good credit scores continued to qualify for mortgage credit, other borrowers in weaker financial positions found it more difficult to obtain a mortgage. As the economy has recovered, concerns exist about whether new consumer compliance regulation in the mortgage market has struck the right balance between prudent mortgage underwriting and access to credit for potential borrowers to build wealth. Certain features of mortgages during the mortgage boom that were considered to be particularly risky, such as teaser interest rates and loans with little or no income verification, are now uncommon in the mortgage market. However, research suggests that regulating underwriting standards may have caused lenders to prefer certain borrowers, such as those with lower debt-to-income ratios.", "Mortgage shopping is another policy issue in this market. Consumers do not tend to shop among lenders for more advantageous mortgage interest rates, even though large price differences exist in the market. According to the CFPB, nearly half of all borrowers only seriously consider one lender or broker before taking out a mortgage. Given the range of interest rates available to a consumer at any given time, the CFPB estimates that a consumer could save thousands of dollars on a mortgage by shopping for the best interest rates. ", "House price affordability has been another policy issue in recent years. In high-cost, large metropolitan areas, house prices rose quickly in the past decade, making it harder for consumers to buy a home in these cities. Likewise, the national homeownership rate has declined by almost 5 percentage points since 2005, from 69.1% to 64.2%. Given that homeownership can help a family build wealth over time, this trend concerns some policymakers."], "subsections": []}, {"section_title": "Student Loans", "paragraphs": ["Student loans allow students and their families to pay for postsecondary education expenses while they are enrolled in school. Education is an investment intended to allow students to earn higher incomes after they complete school and throughout the rest of their careers. In general, student loans are paid back in installments\u00e2\u0080\u0094for example, a fixed payment every month for 10 years. Student loan debt has more than doubled in the past decade. Since 2010, student loan debt has been the second-largest category of consumer debt, after mortgage debt. In academic year 2016-2017, the average amount of student loan debt for a bachelor's degree recipient who borrowed funds to complete the degree was $28,500.", "Unlike other consumer financial markets, most student loans are originated and owned by the federal government. In general, these federal loans are accessible to large portions of the postsecondary student population and their families with limited underwriting of their creditworthiness, estimated future income, or other estimates of their ability to repay the loan. The Department of Education (ED) manages most of the federal student loan programs. Congress sets interest rates and other loan terms and conditions in statute each year. ED contracts out student loan servicing, sets servicing standards in these contracts, and enforces these servicing standards. The CFPB is the primary regulator for private student loan lending and servicing and has also asserted a role in ensuring compliance with consumer protection laws related to federal student loan servicing.", "From a regulatory perspective, policymakers continue to debate what role the CFPB should play in the federal student loan industry. Consumer groups advocate for more active CFPB enforcement of consumer protection standards in federal student loan servicing. However, because ED already assumes a significant role in how its contractors service federal student loans\u00e2\u0080\u0094and taxpayers are responsible for additional servicing costs and default risk for nonpayment\u00e2\u0080\u0094some have questioned the need for the CFPB to regulate in the same space. ", "A major concern in the student loan market is whether students are able to manage their debt after graduation. Moreover, unlike other consumer debts, student loans are generally not dischargeable during a bankruptcy proceeding except in limited circumstances. These concerns have led to efforts to make loan repayment terms more flexible. For example, some federal student loan borrowers now have the option to choose income-driven repayment plans, under which a borrower's monthly loan payments are based on a percentage of the borrower's discretionary income. Loan forgiveness programs have also been developed and expanded in recent years, especially for borrowers in public service occupations. ED manages several of the student loan forgiveness and repayment loan programs. Reports from the CFPB student loan ombudsman have uncovered issues in these programs' implementation\u00e2\u0080\u0094such as with payment processing, billing, customer service, and borrower communication\u00e2\u0080\u0094that make it difficult for borrowers to know their options, understand the process, and qualify for forgiveness or repayment loan programs.", "Questions have also arisen regarding student loan availability and whether loans should be limited to certain types of educational programs that enable their students to gain quality employment and successfully pay back their loans. Many students make school choice and curriculum decisions at a young age, when they might not have much experience making financial decisions. In addition, information on program quality and student employment outcomes after graduation is limited. These information asymmetry problems can make it difficult for students to make good financial decisions for their future careers. Questions also exist about the extent to which student loan access causes tuition prices to rise. For example, if access to student loans makes it easier for schools to raise tuition, then it might lead to some students being worse off. Some question whether the availability of student loans might harm the larger economy. For example, researchers debate student loan debt's effects on future macroeconomic performance, including effects on career choice, family formation, home ownership, and retirement savings."], "subsections": []}, {"section_title": "Automobile Loans", "paragraphs": ["An automobile (auto) loan allows a consumer to finance the cost of a new or used car. Auto loans are usually structured as installment loans, in which a consumer pays a fixed amount of money each month for a predetermined time period, frequently three to seven years. Lenders often require consumers to make a down payment to obtain the loan. Auto loans are secured by the automobile, so if a consumer cannot pay the loan, the lender can repossess the car to recoup the loan's cost.", "Auto loans are the third-largest consumer credit market. At the end of 2018, 113 million consumers\u00e2\u0080\u0094roughly 45% American adults\u00e2\u0080\u0094had an auto loan, and auto loan debt outstanding totaled almost $1.3 trillion. According to the CFPB, auto loan terms have increased recently. In 2009, 26% of auto loans originated were for six or more years, whereas in 2017, these loans constituted 42% of originations. This trend may be due in part to rising vehicle costs and consumers keeping their cars longer.", "Reportedly, most auto loans are arranged at the auto dealership where the car is purchased, referred to as the indirect auto financing market . Indirect auto financing involves the auto dealer forwarding information about the prospective borrower to one or more lenders to solicit potential financing offers. The dealer is often compensated for originating the loan through a discretionary markup, which is the difference between the lender's interest rate and the rate a consumer is charged. The lender may cap the possible size of the dealer markup (e.g., 2.5%) to limit the loan from becoming too susceptible to default. Auto dealers and consumers can negotiate the loan's interest rate within this range, and therefore indirectly determine how much to compensate the auto dealer for the convenience of arranging the loan.", "Alternatively, consumers can go directly to a bank, credit union, or other lender for an auto loan before making their purchases, avoiding the dealer markup cost. Consumers may prefer arranging auto financing through an auto dealer or directly through a lender, depending on their preferences regarding convenience, cost, and other factors. In either case, the lender usually owns the loan and can service it itself or through a third-party company.", "In the indirect auto financing market, the dealer markup arrangement can incentivize the auto dealer to negotiate\u00e2\u0080\u0094and profit from\u00e2\u0080\u0094a higher interest rate with the consumer. The auto dealer may also choose the lender who compensates it the most\u00e2\u0080\u0094for example, the lender that allows the largest markup, rather than the lender offering the best terms for the consumer. Although other consumer credit markets include markups, it is less common for bank or credit union lenders to allow an outside broker in the transaction discretion as to the amount of the markup. For example, although the Real Estate Settlement Procedures Act restricts such practices in the mortgage market, after reports of mortgage brokers steering customers to more expensive loans due to \"kickbacks\"\u00e2\u0080\u0094unearned fees for a referral\u00e2\u0080\u0094in the lead-up to the financial crisis, Congress in 2010 took actions to further restrict these practices.", "The information asymmetry in the indirect auto finance market sometimes can lead to higher prices for consumers. Consumers are not always aware that they can negotiate on loan terms when obtaining dealer-arranged financing. For this reason, many consumers do not shop for auto loans. Consumers' lack of awareness\u00e2\u0080\u0094combined with auto dealers' discretion on markups\u00e2\u0080\u0094may leave them vulnerable to bad actors, making the auto loan market uncompetitive.", "The CFPB oversees consumer protection compliance for auto lenders, but not for auto dealers' typical activities. Dodd-Frank states that \"the Bureau may not exercise any [authority] over a motor vehicle dealer that is predominantly engaged in the sale and servicing of motor vehicles, the leasing and servicing of motor vehicles, or both.\" The scope of this exclusion continues to be debated, given the key role auto dealers play in the auto lending market.", "In 2013, the CFPB issued a controversial bulletin providing guidance to indirect auto lenders on how to comply with the Equal Credit Opportunity Act (ECOA). This guidance generally stated that indirect auto lenders should impose controls on or revise and monitor dealer markups to ensure they do not result in disparate impact based on race or other protected classes. From 2013 to 2016, the CFPB, in coordination with the Department of Justice, issued consent orders to settle enforcement actions against American Honda Finance Corporation, Toyota Motor Credit Corporation, Fifth Third Bank, and Ally Financial & Ally Bank for ECOA violations in indirect auto lending markets. The CFPB generally alleged that these institutions violated ECOA by permitting their dealers to charge markups that resulted in disparate impacts on the basis of race and ethnicity. Auto lenders generally do not collect information on the race or ethnicity of borrowers. In the absence of direct evidence, the CFPB used a new proxy methodology, a statistical method developed for estimating race and ethnicity using geography and surname-based information. Although this method may not be able to flawlessly identify race or ethnicity for an individual, aggregate, company-wide estimates of disparate impacts are much more precise. In general, these institutions did not admit or deny the allegations as part of the consent orders but, among other things, paid monetary penalties and agreed to limit their markups to reduce these alleged disparities. ", "The CFPB's indirect auto lender guidance and the resulting enforcement actions were the subject of significant attention and debate. For example, some expressed the view that the guidance went beyond what ECOA and the Dodd-Frank Act require of auto lenders, while others considered it an important step toward addressing discrimination. In 2018, Congress rescinded the guidance pursuant to the Congressional Review Act. Nevertheless, some observers argue that discrimination in auto lending markups continues to be an area of concern."], "subsections": []}, {"section_title": "Credit Cards and Payments", "paragraphs": ["Retail payment services allow consumers to pay merchants for goods and services without cash, sometimes called a payment transaction . Consumers can use these services to pay bills, make person-to-person payments, or withdraw cash. These services can be found in many consumer financial products, including credit, debit, and prepaid cards and checking accounts. Given the rise of internet shopping, retail payment services have become especially critical for consumers to be able to make daily purchases. The most common methods of payment are debit cards, cash, and credit cards, respectively. Debit and prepaid cards generally are associated with a funded account from which the consumer draws money to pay for transactions. In contrast, credit cards allow a consumer to pay for transactions using credit.", "According to the CFPB, in 2017, just under 170 million consumers, roughly 70% of the U.S. adult population, had a credit card. Credit cards provide consumers with unsecured revolving credit, meaning the loan is not secured with any collateral if the consumer defaults (and thus, the lender has no recourse to seize any property connected to the loan in case of consumer default). In some cases, credit cards are used for payment transaction convenience and paid in full each month without incurring interest. These types of users are sometimes called transactors . In other cases, credit card users borrow money up to a credit limit and make only a m inimum payment (generally a small portion of the outstanding balance) on the debt each month, incurring interest on the unpaid balance. These types of credit card users are called revolvers . In 2016, average interest rates for general purpose credit cards were just over 17%. Although a consumer can move between transacting and revolving, consumers tend to show persistent payment behavior. According to a Fed survey, roughly half of consumers transact and half revolve. ", "Credit cards are valuable to consumers in part because they are flexible\u00e2\u0080\u0094both the amount borrowed and the amount paid can vary each month according to the consumer's needs. For example, if a household experiences a financial shock, such as unemployment or a car or house repair, the household can use credit cards to borrow money quickly and easily, which the household can then pay back when it is able. Credit cards can also be used to smooth consumption over time, which may be particularly valuable to households with tight budgets. ", "However, credit cards also are structured in a way that can take advantage of many consumer decisionmaking biases, which can result in households incurring debt. For example, mental accounting biases can lead to overspending, and credit cards allow households to overspend easily, perhaps without even realizing it until their monthly bill is due. Research suggests that the half of credit card holders who are persistently in credit card debt are likely to be present biased and have little liquid savings. ", "The type of information disclosed in a typical credit card statement may play an important role in how revolving consumers repay credit card debt. Research suggests that many people are anchored by the minimum payment amounts included in each statement, which bias their decisions about how much to pay each month. Specifically, the research suggests these consumers are either paying the minimum payment or employing heuristics to pay near the minimum (e.g., twice the minimum or $20 above the minimum). This cue may unconsciously influence consumers to make a lower payment than they otherwise would.", "For these reasons, the Credit Card Accountability Responsibility and Disclosure Act of 2009 (CARD Act) established new disclosure requirements for credit cards. The CARD Act changed the periodic disclosure credit card companies are required to make to consumers to include information on how long it will take to pay off a consumer's debt if the consumer makes only the minimum payment. The disclosure also now includes the amount a consumer would have to pay to repay the debt in three years and how much interest the consumer would save by paying the debt off in three years compared with the minimum payment. These changes in the disclosure requirements were intended to nudge consumers to pay more on their credit cards each month, but research suggests that they did not have as big of an effect on consumer payment behavior as intended, in part because online portals\u00e2\u0080\u0094which have become a popular method of credit card payment\u00e2\u0080\u0094are not required to contain these disclosures. "], "subsections": []}, {"section_title": "Payday and Other Credit Alternative Financial Products106", "paragraphs": ["When consumers face financial shocks, such as unemployment or a car repair, sometimes they need credit to manage the unforeseen event. One option a consumer may access is a short-term, small-dollar loan, which tends to be outstanding for a short period of time and for a small amount of money, generally less than $1,000. Banks and credit unions sometimes provide these types of loans through cash advances or checking account overdraft programs. Many consumers, often those with a low credit score or no credit history, also turn to alternative financial products from a nonbank institution to provide credit when needed. Alternative financial products include payday loans, pawn shop loans, auto title loans, and other types of products from nonbank providers. According to the Federal Deposit Insurance Corporation (FDIC), in 2017, 19.7% of American households did not have access to mainstream credit and 6.9% used a credit alternative financial service. Households that rely on credit alternative financial services are more likely to be lower-income, younger, and a racial or ethnic minority compared to the general U.S. population. ", "Perhaps the best known of these products are payday loans, which have been the subject of significant regulatory, congressional, and media attention. Payday loans are structured as short-term advances that allow consumers to access cash before they receive a paycheck. These loans are designed to be paid back on a consumer's next payday. Payday loans are offered through storefront locations or online for a set fee. The underwriting of these loans is minimal, with consumers required to provide little more than a paystub and checking account information to take out a loan. Rather than paying off the loan entirely when it is due, many consumers roll over or renew these loans. Sequences of continuous rollovers may result in consumers being in debt for an extended period. Because consumers generally pay a fee for each new loan, payday loans can become expensive.", "In 2010, the Dodd-Frank Act authorized the CFPB to oversee payday lenders for the first time at the federal level, but prohibited the CFPB from imposing an interest rate limit on any type of credit, including payday loans. As of February 2019, 17 states and the District of Columbia either ban or limit the interest rates on these loans.", "In the payday market, policy disagreements tend to center on balancing access to credit with consumer protection. The academic research is mixed in terms of payday loans' effect on consumer well-being. When consumers have emergencies, short-term, small-dollar credit can help them make ends meet. Payday loans' product features, such as the option to roll over, can allow consumers to pay back their loan flexibly, but also can play into cognitive biases, including present biases and scarcity tunnel vision. Some consumers pay off payday loans quickly, but a sizable minority are in debt for a long period of time\u00e2\u0080\u0094a CFPB study found 36% of new payday loan sequences were repaid fully without rollovers, while 15% of sequences extended for 10 or more loans.", "In October 2017, during the leadership of then-Director Richard Cordray, the CFPB finalized a rule covering payday and other small-dollar, short-term loans that has not yet gone into effect . The 2017 rule asserts that it is \"an unfair and abusive practice\" for a lender to make certain types of short-term, small-dollar loans \"without reasonably determining that consumers have the ability to repay the loans.\" The rule would mandate underwriting provisions for short-term, small-dollar loans unless made with certain features. In February 2019, the CFPB under Trump-appointed Director Kathy Kraninger issued a proposed rule that would rescind the mandatory underwriting provisions before the 2017 final rule goes into effect. The 2019 proposed rule would leave unchanged other parts of the 2017 rule, such as other payment provisions relating to protections for consumers paying back these loans.", "Given the concerns about consumer harm from payday and other small-dollar, short-term loans , some financial institutions are interested in exploring other loan models that try to give consumers access to credit for short-term needs at a lower cost and with an easier re pay ment process . For this reason, prudential regulators, such as the Office of the Comptroller of the Currency (OCC) and the FDIC, are exploring ways to encourage banks to offer small-dollar credit products to consumers. However, i t is unclear whether these different types of products can improve outcomes for consumers compared to payday loans , given that the population of consumers these products would target and those consumers' biases concerning money management are likely similar."], "subsections": []}, {"section_title": "Checking Accounts and Substitutes", "paragraphs": ["Checking accounts allow consumers to deposit money and make payments, for example, using bill pay and paper checks. Frequently, a checking account includes access to a debit card, to increase a consumer's ability to make payment transactions through the account. Checking accounts are generally provided by a bank or credit union, and consumers' deposits are government insured (up to a certain amount) against the institution's failure.", "In recent years, the availability of free or low-cost checking accounts has reportedly diminished, and fees associated with checking accounts have grown. The most common fees that checking account consumers incur are overdraft and nonsufficient fund fees. Consumers can incur an overdraft when they transact below their account balance, and the bank or credit union covers the negative balance for the consumer for a fee. In general, negative balance episodes are short in duration. According to the CFPB, half of all episodes last three or fewer days, and more than three-quarters last a week or less. ", "Overdraft services can help consumers pay bills on time. However, overdraft fees can be costly, particularly for consumers who are inattentive or tend to overspend due to tight budgets and mental accounting biases. CFPB research suggests that a small number of checking account holders incur most overdraft fees, with 8.3% of consumers overdrafting more than 10 times per year and accounting for 73.7% of overdraft fees. According to the CFPB, these frequent overdrafters tend to be more credit constrained, have lower credit scores, and are less likely to have a general-purpose credit card than the general U.S. population. ", "In 2009, a provision of the CARD Act required consumers to affirmatively opt in for overdraft coverage of ATM withdrawals and nonrecurring deb i t card transactions. Since this requirement was implemented, opt-in rates have tended to vary by bank , from single-digit percentages to more than 40% within particular institutions . Frequent overdrafters who opt in to overdraft services seem to have similar characteristics to those who do not opt in, but tend to pay more in fees. Given this research, consumer advocates have raised concerns about whether overdraft programs are sufficiently transparent and whether consumers receive sufficient disclosures regarding these programs. Advocates have also questioned how financial institution practices influence the opt-in decision. ", "Overdrafts may be caused by the lapse of time between payment authorization, account settlement, and when funds are available to the consumer. Because of these time lapses in the payments system, some consumers may not realize no funds are available when they overdraft their account. For this reason, some argue that a faster payment system or other financial planning products may help consumers keep better track of their balances, preventing overdrafts.", "Overdraft fees may lead to involuntary checking account closures, leaving some households without access to a bank account. According to the FDIC, in 2017, 6.5% of households were unbanked , meaning that no one in the household had a checking or savings account from an insured institution. Unbanked households tend to be younger and are more likely to be racial or ethnic minorities than the general U.S. population. The main reasons households cite for not having a bank account include insufficient account funds, not trusting banks, and high account fees. Moreover, in 2017, an additional 18.7% of households were underbanked , meaning that the household obtained financial products or services outside of the banking system, products sometimes called alternative financial services. Certain observers contend that financial outcomes for the unbanked and underbanked would be improved if banks\u00e2\u0080\u0094which may be a more stable source of relatively inexpensive financial services relative to certain alternatives\u00e2\u0080\u0094were more active in serving these customers. For this reason, policymakers and observers will likely continue to explore ways to make banking more accessible to a greater portion of the population. However, it may be expensive for banks to serve these customers\u00e2\u0080\u0094for example, they might have low-balance accounts. At least some of these consumers may be served better by alternative financial providers if their products are less expensive or if they provide more customer service than banks.", "General-purpose prepaid cards may be considered an alternative to a traditional checking account, and they can be obtained through a bank, at retail stores, or online. These cards can be used in payment networks, such as Visa or MasterCard. It is also possible to direct deposit payroll checks onto these cards. But unlike checking accounts, funds on prepaid cards are not always federally insured against an institution's failure. According to the Federal Reserve Bank of Boston, almost half of all unbanked households use a general-purpose prepaid card."], "subsections": []}]}, {"section_title": "Overview of Consumer Finance Market Support Systems", "paragraphs": ["Although each consumer credit market is unique, certain common aspects of the consumer credit system facilitate the pricing of credit offers and the resolution of delinquencies and defaults for most consumer credit markets. This section discusses two of what this report will refer to as market support systems : the consumer credit reporting system (which helps lenders price consumer loans) and the debt collection market (which helps lenders to collect upon consumer default). Notably, in both these market support systems, consumers do not have the ability to choose the financial institution or entity with whom they engage, and therefore are unable to take their business elsewhere if issues arise. For this reason, when consumer abuses occur in these markets, consumer protection laws and regulations may be particularly important. According to the CFPB, credit reporting and debt collection are the consumer finance markets with by far the most complaints, together accounting for 63% of the total complaints the agency received in 2018 (38% and 25%, respectively). "], "subsections": [{"section_title": "Credit Reporting, Credit Bureaus, and Credit Scoring", "paragraphs": ["The consumer data industry collects information on consumers, such as financial payment history data, to predict their future financial product performance. This industry includes financial firms who report on consumers' payment behaviors, credit bureaus who collect and store this information, and credit scoring companies that use this data to develop algorithms to predict consumers' future payment behaviors. The three largest credit bureaus\u00e2\u0080\u0094Equifax, Experian, and TransUnion\u00e2\u0080\u0094provide credit reports nationwide. The consumer data industry is important because it significantly affects consumer access to financial products or opportunities. For example, negative or derogatory information on a credit report, such as information stating that a consumer has paid late or defaulted on a loan, may influence a lender to deny a consumer access to credit.", "The main statue regulating the credit reporting industry is the Fair Credit Reporting Act (FCRA), enacted in 1970. The FCRA requires \"that consumer reporting agencies adopt reasonable procedures for meeting the needs of commerce for consumer credit ... in a manner which is fair and equitable to the consumer, with regard to the confidentiality, accuracy, relevancy, and proper utilization of such information.\" Among other things, the FCRA establishes permissible uses of credit reports and imposes certain responsibilities on those who collect, furnish, and use the information contained in consumers' credit reports. ", "The FCRA also includes consumer protection provisions. Under the FCRA, a lender must advise a consumer when the lender has used their information from a credit reporting agency (CRA) in taking an adverse action (generally a denial of credit) against the consumer. That information must be disclosed free of charge. Consumers have a right to one free credit report every year (from each of the three largest nationwide credit reporting providers) even in the absence of an adverse action (e.g., credit denial). Consumers also have the right to dispute inaccurate or incomplete information in their reports. After a consumer alerts a CRA of such a discrepancy, the CRA must investigate and correct errors, usually within 30 days. The FCRA also limits the length of time negative information may remain on credit reports. Negative debt collection information typically stays on credit reports for 7 years, even if the consumer pays in full for the item in collection; information about a personal bankruptcy stays on a credit report for a maximum of 10 years. ", "The CFPB has rulemaking and enforcement authorities over all CRAs in connection with certain consumer protection laws, including the FCRA; it also has supervisory authority, or the authority to conduct examinations, over the larger CRAs. In July 2012, the CFPB announced that it would supervise CRAs with $7 million or more in annual receipts, which included 30 firms representing approximately 94% of the market.", "Inaccurate or disputed consumer data within the credit bureaus' reports is an ongoing concern in this market. Inaccurate information in a credit report may limit a consumer's access to credit in some cases or increase the costs to the consumer of obtaining credit in others. In response to this concern, the CFPB has recently encouraged credit bureaus and financial institutions to improve data accuracy in credit reporting. In 2017, the CFPB released a report of its supervisory work in the credit reporting system. The report discusses the CFPB's efforts to work with credit bureaus and financial institutions to improve credit reporting in three specific areas: data accuracy, dispute handling and resolution, and furnisher reporting. As the report describes, credit bureaus and financial firms have worked with the CFPB to develop data governance and quality control programs to monitor data accuracy. In addition, the CFPB has encouraged credit bureaus to improve their dispute and resolution processes, including making them easier and more informative for consumers.", "When credit reporting disputes arise, consumers sometimes find it difficult to advocate for themselves because they are not aware of their rights and how to exercise them. According to a CFPB report, some consumers are confused about what credit reports and scores are, find it challenging to obtain credit reports and scores, and struggle to understand the contents of their credit reports. The CFPB provides financial education resources on its website to help educate consumers about their rights regarding consumer reporting. The credit bureaus' websites also provide information about how to dispute inaccurate information, and consumers can contact the credit bureaus by phone or mail. However, debates continue regarding whether these efforts are enough to ensure that consumers can effectively advocate for themselves.", "Data protection and security are important issues in consumer data reporting, particularly following the announcement, on September 7, 2017, of the Equifax cybersecurity breach that potentially revealed sensitive consumer data information for 143 million U.S. consumers. CRAs are subject to the data protection requirements of Section 501(b) of the Gramm-Leach-Bliley Act (GLBA). Section 501(b) requires the federal financial institution regulators to ", "establish appropriate standards for the financial institutions subject to their jurisdiction relating to administrative, technical, and physical safeguard\u00e2\u0080\u0094(1) to insure the security and confidentiality of consumer records and information; (2) to protect against any anticipated threats or hazards to the security or integrity of such records; and (3) to protect against unauthorized access or use of such records or information which could result in substantial harm or inconvenience to any customer.", "The FTC has the authority to enforce Section 501(b) against CRAs, and it has promulgated rules implementing the GLBA requirement. However, because the FTC has little upfront supervisory or enforcement authority, the agency typically only exercises its enforcement authority after an incident has occurred."], "subsections": []}, {"section_title": "Debt Collection and Bankruptcy", "paragraphs": ["When a consumer defaults on a debt, her debt obligations are often collected not by the lender to whom she originally owed the debt, but rather by a third-party debt collector (here in after referred to as a debt collector ) that by contract receives a share of the amount collected on behalf of the original lender or buys the debt obligation in full. In general, a robust debt collection market allows lenders to recoup their losses to the maximum extent possible after a consumer defaults on a loan, leading to lower initial loan costs and more access to credit for consumers. ", "Many America ns experience debt collection. According to a CFPB survey, about one-third of consumers with a credit bureau file reported being contacted in the last year by at least one creditor or collector trying to collect on one or more debt s . Consumers with lower incomes and nonprime credit scores were more likely to report experience with debt collection than consumers with higher incomes and prime credit scores. In 2018, debt from unpaid loans or other financial services account ed for approximately 40 % of debt collection revenue. The other 60% of debt collection revenue includes medical, telecom, and other retail debt . ", "The Fair Debt Collection Practices Act (FDCPA), enacted in 1977, is the primary federal statue regulating the debt collection market and aims \"to eliminate abusive debt collection practices by debt collectors.\" Among other things, it prohibits debt collectors from engaging in certain types of conduct (such as misrepresentation or harassment) when seeking to collect debts from consumers, requires that debt collectors disclose certain information to consumers, and grants consumers the right to dispute an alleged debt. ", "The Dodd-Frank Act granted the CFPB authority to write regulations to implement the FDCPA, both regarding debt collectors as defined in the FDCPA and those who collect debt related to a consumer financial product service as defined in the Dodd-Frank Act. The CFPB also has enforcement authorities over the debt collection market and supervisory authority, or the authority to conduct examinations, over nonbank firms with more than $10 million in annual receipts from consumer debt collection activities.", "The FDCPA requires that, after a debt collector initially contacts a consumer, the collector must send the consumer a validation notice (generally, a notice disclosing certain information about the debt to the consumer). Thereafter, a debt collector can call, send letters, and use other methods to contact the consumer to collect an alleged debt. In general, debt collectors expect that they will collect only a fraction of the face value of any particular debt, knowing that some consumers will never pay back their debt in full. Therefore, when a third-party debt collector contacts a consumer, both parties can negotiate the amount and payment schedule of the debt. Although debt collectors are not required to furnish information about the debt to credit bureaus, they may do so. According to the CFPB, debt collectors generally choose not to furnish data to credit bureaus due to the cost and potential legal liability, though most debt collectors furnish data occasionally. ", "If a consumer does not settle a debt, the debt owner often has several options, such as seizing the collateral for secured loans (e.g., car, home) or garnishing a consumer's wages after obtaining a court order. According to CFPB research, \"the cost of filing a claim plays a large role in litigation decisions and varies significantly across jurisdictions based on differences in factors such as filing fees and what types of collections claims can be brought in small claims court.\" More than half of filed suits lead to default judgments in favor of the debt owner, often because consumers fail to appear in court.", "Consumers who cannot pay their debts may seek relief through the federal bankruptcy process, which is generally governed by the Bankruptcy Code. In general, the bankruptcy process allows a consumer to enter a court-administered proceeding by which the consumer can discharge certain debts and thus obtain a fresh start. However, consumers may face negative repercussions by choosing bankruptcy, for example, a lower credit score and reduced access to credit for several years afterward. In 2005, Congress enacted the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA), in response to what some perceived as a high number of consumer bankruptcy filings. While BAPCPA made a number of amendments to the Bankruptcy Code, for the purposes of this report, its most notable change was to impose a \"means test\" to determine whether consumers are eligible for certain relief under the Bankruptcy Code. In addition to the federal bankruptcy process, many states limit the length of time consumers are legally obligated to pay a debt. ", "Ongoing concerns relating to debt collection include debts incorrectly attributed to consumers or for incorrect amounts; consumers' inability to advocate for themselves through the process; and consumers' inability to avoid abusive practices from debt collectors. According to a CFPB survey, more than half of consumers who had been contacted about a debt in collection reported that there was an error as to at least one such debt, and over a quarter disputed the debt with the debt collector. People with higher incomes and older people were more likely than lower-income and younger people to report disputing a debt, although reported errors did not vary significantly based on demographics. These verification issues may exist because debt collectors are not required to obtain a debt's full files from the original lender. Sometimes, the original lender conveys only basic information to the debt collector unless a consumer disputes the debt, reducing costs for debt collectors. In addition, the minimum amount of information that must be included in debt validation notices under FCRA might not be sufficient for some consumers to recognize their debts, according to the CFPB. ", "Recent consumer complaints to the CFPB find similar verification issues. In 2018, the most common debt collection complaints to the CFPB asserted that debt collectors had attempted to collect a debt the consumer did not owe (44%); a consumer received insufficient written notification about a debt, such as not enough information to verify the debt or not learning about a debt until it was on a credit report (24%); and general complaints about a debt collector's communications tactics, such as frequent or repeated calls (12%). To address some of these concerns, the CFPB recently issued a proposed rule that would clarify what information debt collectors should disclose to consumers and how they should communicate with consumers under FCRA."], "subsections": []}]}, {"section_title": "Conclusion", "paragraphs": ["For all of the consumer financial markets described in this report, the societal goal is that each market will create a transparent and competitive price that leads to an efficient market outcome. As described earlier in the report, government policy can potentially correct market failures, such as information asymmetries or behavioral biases, to bring the market to a more efficient outcome, maximizing social welfare. Yet, government policy can lead to unintended consequences as well. Policy changes will typically impose costs and benefits, but these effects can be difficult to calculate in advance of a new law or regulation. It is often challenging to determine whether a policy intervention will help or harm market efficiency. "], "subsections": []}]}}
{"id": "R45899", "title": "Recent Recommendations by the Judicial Conference for New U.S. Circuit and District Court Judgeships: Overview and Analysis", "released_date": "2019-09-03T00:00:00", "summary": ["Congress determines through legislative action both the size and structure of the federal judiciary. Consequently, the creation of any new permanent or temporary U.S. circuit and district court judgeships must be authorized by Congress. A permanent judgeship , as the term suggests, permanently increases the number of judgeships in a district or circuit, while a temporary judgeship increases the number of judgeships for a limited period of time.", "Congress last enacted comprehensive judgeship legislation in 1990. Since then, there have been a relatively smaller number of district court judgeships created using appropriations or authorization bills.", "The Judicial Conference of the United States, the policymaking body of the federal courts, makes biennial recommendations to Congress that identify any circuit and district courts that, according to the Conference, require new permanent judgeships to appropriately administer civil and criminal justice in the federal court system. In evaluating whether a court might need additional judgeships, the Judicial Conference examines whether certain caseload levels have been met, as well as court-specific information that might uniquely affect a particular court. The caseload level of a court is expressed as filings per authorized judgeship, assuming all vacancies on the court are filled.", "The Judicial Conference's most recent recommendation, released in March 2019, calls for the creation of five permanent judgeships for the U.S. Court of Appeals for the Ninth Circuit (composed of California, eight other western states, and two U.S. territories). The Conference also recommends creating 65 permanent U.S. district court judgeships, as well as converting 8 temporary district court judgeships to permanent status.", "In making its recommendations to Congress, the Judicial Conference also identifies any courts that might have the most urgent need for new judgeships. These courts are considered, by the Conference, to have extraordinarily high and sustained workloads. In its most recent recommendations, the Conference identified six U.S. district courts it considers to have the most urgent need for new judgeships to be authorized by Congress."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["Article III, Section I of the Constitution provides that the \"judicial Power of the United States, shall be vested in one supreme Court, and in such inferior Courts as the Congress may from time to time ordain and establish.\" Consequently, Congress determines through legislative action both the size and structure of the federal judiciary. For example, the size of the federal judiciary is determined, in part, by the number of U.S. circuit and district court judgeships authorized by Congress. Congress has, at numerous times over the years, authorized an increase in the number of such judgeships in order to meet the workload-based needs of the federal court system.", "The Judicial Conference of the United States, the national policymaking body of the federal courts, makes biennial recommendations to Congress to assist it in identifying any U.S. circuit and district courts that may be in need of additional judgeships. The most recent recommendations for new U.S. circuit and district court judgeships were released by the Judicial Conference in March 2019."], "subsections": [{"section_title": "U.S. Circuit Courts", "paragraphs": ["U.S. courts of appeals, or circuit courts, take appeals from U.S. district court decisions and are also empowered to review the decisions of many administrative agencies. When hearing a challenge to a district court decision from a court located within its geographic circuit, the task of a court of appeals is to determine whether or not the law was applied correctly by the district court. Cases presented to U.S. circuit courts are generally considered by judges sitting in three-member panels (circuit courts do not use juries).", "The nation is divided into 12 geographic circuits, each with a U.S. court of appeals. There is also one nationwide circuit, the U.S. Court of Appeals for the Federal Circuit, which has specialized subject matter jurisdiction. ", "Altogether, 179 judgeships for these 13 circuit courts are currently authorized by law (167 for the 12 regional circuits and 12 for the Federal Circuit). The First Circuit (comprising Maine, Massachusetts, New Hampshire, Rhode Island, and Puerto Rico) has the fewest number of authorized judgeships, 6, while the Ninth Circuit (comprising Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon, and Washington) has the most, 29."], "subsections": []}, {"section_title": "U.S. District Courts", "paragraphs": ["U.S. district courts are the federal trial courts of general jurisdiction. These trial courts determine facts and apply legal principles to resolve disputes. Trials are conducted by a district court judge (although a U.S. magistrate judge may also conduct a trial involving a misdemeanor).", "Each state has at least one district court (there is also one district court in each of the District of Columbia and Puerto Rico). States with more than one district court are divided into judicial districts, with each district having one district court. For example, California is divided into four judicial districts\u00e2\u0080\u0094each with its own district court. Altogether there are 91 U.S. district courts.", "There are 673 Article III U.S. district court judgeships currently authorized by law. Congress has authorized between 1 and 28 judgeships for each U.S. district court. Specifically, the district court for the Eastern District of Oklahoma (Muskogee) has 1 authorized judgeship, the smallest number among U.S. district courts. The district courts located in the Southern District of New York (Manhattan) and the Central District of California (Los Angeles) each have 28 authorized judgeships, the most among U.S. district courts."], "subsections": []}]}, {"section_title": "The Role of Congress in Creating New Judgeships", "paragraphs": ["Congress first exercised its constitutional power to determine the size and structure of the federal judiciary with passage of the Judiciary Act of 1789. The act authorized 19 judgeships, 13 for district courts and 6 for the Supreme Court. Congress, however, began expanding the size of the judiciary almost immediately\u00e2\u0080\u0094adding two additional district court judgeships in 1790 and another in 1791. "], "subsections": [{"section_title": "Changes in the Number of U.S. Circuit and District Court Judgeships from 1891 through 2018", "paragraphs": ["As the population of the country increased, its geographic boundaries expanded, and federal case law became more complex, the number of judgeships authorized by Congress continued to increase during the 19 th and 20 th centuries. By the end of 1900 Congress had, under Article III, authorized a total of 28 U.S. circuit court judgeships and 67 district court judgeships. ", "By the end of 1950, there were an additional 37 circuit court judgeships authorized (for a total of 65) and 145 additional district court judgeships (for a total of 212). By the end of 2000, there were a total of 179 circuit court judgeships and 661 district court judgeships. At present, there remain 179 circuit court judgeships, while the number of district court judgeships has increased to 673.", " Figure 1 shows the change, over time, in the number of U.S. circuit and district court judgeships authorized by Congress from 1891 through 2018. "], "subsections": [{"section_title": "U.S. Circuit Court Judgeships", "paragraphs": ["The largest increase in the number of circuit court judgeships occurred in 1978 during the 95 th Congress when the number of judgeships increased by 35, from 97 to 132. The second-largest increase occurred in 1984 during the 98 th Congress when the number of judgeships increased by 24, from 144 to 168. The next-largest increase in circuit court judgeships also occurred during the 97 th Congress\u00e2\u0080\u0094in 1982 the number of circuit court judgeships increased by 12, from 132 to 144. The 12 judgeships authorized by Congress in 1982 were for the newly established U.S. Court of Appeals for the Federal Circuit.", "The number of circuit court judgeships increased to 179 in 1990 during the 101 st Congress and has remained at that number to the present day. This represents the longest period of time since the creation of the U.S. courts of appeals in 1891 that Congress has not authorized any new circuit court judgeships."], "subsections": []}, {"section_title": "U.S. District Court Judgeships", "paragraphs": ["The largest increase in the number of district court judgeships occurred in 1978 during the 95 th Congress when the number of judgeships increased by 117, from 394 to 511. The next-largest increase in district court judgeships occurred in 1990 during the 101 st Congress when the number of judgeships increased by 74, from 571 to 645. The third-largest increase in the number of district court judgeships occurred in 1961 during the 87 th Congress when the number of judgeships increased by 62, from 241 to 303.", "The number of permanent district court judgeships increased to 663 in 2003 during the 108 th Congress and has remained at that number to the present day. This represents the longest period of time since district courts were established in 1789 that Congress has not authorized any new permanent district court judgeships."], "subsections": []}, {"section_title": "Ratio of District Court Judgeships to Circuit Court Judgeships", "paragraphs": ["The ratio of the number of authorized district court judgeships to circuit court judgeships has also varied during this period. In 1899 there were 2.3 district court judgeships authorized for every circuit court judgeship (this was the lowest value in the ratio of district to circuit court judgeships). In contrast, in 1970 there were 4.1 district court judgeships authorized for every circuit court judgeship (this was the highest value in the ratio of district to circuit court judgeships).", "The median ratio of district court judgeships to circuit court judgeships during the entire period (from 1891 through 2018) was 3.5. Most recently, for each year from 2010 through 2018, there were 3.8 district court judgeships for every circuit court judgeship authorized by Congress."], "subsections": []}]}, {"section_title": "Temporary Judgeships", "paragraphs": ["In some instances, Congress has authorized the creation of temporary judgeships rather than permanent judgeships. A permanent judgeship , as the term suggests, permanently increases the number of judgeships in a district or circuit, while a temporary judgeship increases the number of judgeships in a district or circuit for a limited period of time. ", "Temporary judgeships are sometimes considered preferable by Congress if a court is dealing with an increased workload deemed to be temporary in nature (e.g., when workload increases as a result of new federal legislation or a recent Supreme Court ruling) or if Congress is uncertain about whether a recent workload increase is temporary or permanent in nature.", "Once a temporary judgeship is created, Congress may later choose to extend the existence of a temporary judgeship beyond the date it was initially set to lapse or expire. When extending a temporary judgeship, Congress specifies the number of years the judgeship will continue to exist. Congress can also convert a temporary judgeship to a permanent one. ", "If Congress does not extend a temporary judgeship or change it to a permanent one, the temporary judgeship eventually lapses. If a judgeship lapses it means that, for the court with the temporary judgeship, the first vacancy on or after a specified date is not filled. By not filling the first vacancy that arises after a temporary judgeship lapses, the number of judgeships for a court returns to the number authorized by Congress prior to the authorization of the temporary judgeship.", "At present, there are 179 permanent U.S. circuit court judgeships and no temporary circuit court judgeships. Additionally, there are 663 permanent U.S. district court judgeships and 10 temporary district court judgeships. These temporary judgeships are listed alphabetically by state in Table 1 . "], "subsections": []}, {"section_title": "Legislation Creating New Judgeships Since 1977", "paragraphs": ["Congress has a variety of legislative vehicles at its disposal to establish new U.S. circuit and district court judgeships. Legislation that authorizes new judgeships must pass both the House and Senate (and is also subject to a presidential veto). Such legislation does not always involve either or both of the House and Senate Judiciary Committees. As discussed further below, Congress has sometimes used the appropriations process to provide the judiciary with additional district court judgeships."], "subsections": [{"section_title": "Omnibus Judgeship Bills", "paragraphs": ["If it desires to create a relatively large number of judgeships at one time, Congress may choose to use an \"omnibus judgeships bill.\" ", "An omnibus judgeships bill, for the purposes of this report, is either a stand-alone bill or a title of a larger bill concerned exclusively or mostly with the creation of federal judgeships. Since 1977 Congress has enacted three omnibus judgeship bills, with the most recent omnibus bill enacted in 1990. Information related to these three pieces of legislation is presented in Table 2 .", "Each of the three omnibus bills was first introduced in the House and referred to the House Committee on the Judiciary. The Omnibus Judgeship Act of 1978 passed the House in its final form by a vote of 292-112 and the Senate by a vote of 67-15. The Bankruptcy Amendments and Federal Judgeship Act of 1984 passed the House in its final form by a vote of 394-0 and the Senate by voice vote. Most recently, the Federal Judgeship Act of 1990 passed both the House and Senate in its final form by voice vote.", "Each of the three bills was passed in a different political context (in terms of whether there was unified or divided party control of the presidency and Congress). In 1978, there was unified Democratic control of the presidency, the Senate, and the House. In 1984, there was divided party control\u00e2\u0080\u0094with Republicans controlling the presidency and Senate while Democrats were the majority party in the House. Finally, in 1990, there was also divided party control\u00e2\u0080\u0094with Republicans controlling the presidency and Democrats holding majorities in both the Senate and House.", "Since the last omnibus judgeships bill passed Congress in 1990, the overall workload of U.S. circuit and district courts has increased. From 1990 through the end of FY2018, filings in the U.S. courts of appeals increased by 15%, while filings in U.S. district courts increased by 39%. In terms of specific types of cases, civil cases increased by 34% during the same period, and cases involving criminal felony defendants increased by 60%. For civil cases, the greatest growth occurred in cases related to personal injury liability; many of these filings are part of multidistrict litigation actions involving pharmaceutical cases."], "subsections": []}, {"section_title": "Appropriations and Authorization Bills", "paragraphs": ["In the past, Congress has at times created a relatively smaller number of judgeships through other legislative vehicles. In recent years this has been the most common method of creating new judgeships, with Congress authorizing a relatively small number of new judgeships using appropriations and authorization bills.", "This has occurred on three occasions in the past 19 years and has involved only the creation of new district court judgeships (not circuit court judgeships). Overall, 34 new district court judgeships were created between 1999 and 2003 using appropriations and authorization bills. Information related to these three pieces of legislation is presented in Table 3 .", "The Consolidated Appropriations Act of 2000 received final approval in the House by a vote of 296-135 and in the Senate by a vote of 74-24. The District of Columbia Appropriations Act of 2001 passed in its final form in the House by a vote of 206-198 and in the Senate by a vote of 48-43. The 21 st Century Department of Justice Appropriations Authorization Act passed in its final form in the House by a vote of 400-4 and in the Senate by a vote of 93-5.", "Each of the three bills was passed during periods of divided party control. In 1999 and 2000, Democrats held the presidency while Republicans held both the House and Senate. In 2002, Republicans held the presidency and were the majority party in the House while Democrats were the majority party in the Senate.", "Congress has also routinely used appropriations bills to extend temporary district court judgeships that were initially authorized in prior years. Additionally, Congress has used an authorization bill to convert several temporary district court judgeships to permanent ones."], "subsections": []}, {"section_title": "Bills That Restructure the Judiciary", "paragraphs": ["Finally, Congress may choose to establish new judgeships when passing an act that would, at least in part, restructure the federal judiciary. This occurred, for example, in 1982 when Congress created the U.S. Court of Appeals for the Federal Circuit. The creation of the Federal Circuit was a partial restructuring of the judiciary by Congress, as it led to merging the U.S. Court of Customs and Patent Appeals with the appellate jurisdiction of the U.S. Court of Claims to create the new Federal Circuit. In creating the new court, Congress authorized 12 permanent circuit court judgeships. "], "subsections": []}]}]}, {"section_title": "Biennial Recommendations by the Judicial Conference for New Judgeships", "paragraphs": ["While Congress is constitutionally responsible for determining the size and structure of the federal judiciary, the judiciary itself can recommend legislation that alters or affects the size and structure of the federal court system. This includes legislation to increase the number of U.S. circuit and district court judgeships (and to identify which judicial circuits and districts are most in need of new judgeships).", "The Judicial Conference of the United States, the national policymaking body for the federal courts, is the institutional entity within the judiciary that is responsible for making the judiciary's recommendations for new judgeships. The Judicial Conference may recommend to Congress that new judgeships be either permanent or temporary. Additionally, the Judicial Conference may recommend that a temporary judgeship be extended or converted into a permanent one, or that a judgeship serving multiple districts be assigned to a single judicial district or dual districts.", "The Judicial Conference makes its judgeship recommendations biennially, typically in March or April at the beginning of a new Congress."], "subsections": [{"section_title": "Process Used to Evaluate Need for New Judgeships", "paragraphs": ["In long-standing practice, the Judicial Conference, through its committee structure, periodically reviews and evaluates the judgeship needs of all U.S. circuit and district courts. Specifically, the Conference uses a formal survey process to determine if any courts require additional judges in order to appropriately administer civil and criminal justice in the federal court system. ", "The multistep survey process is conducted biennially by the Conference's Subcommittee on Judicial Statistics and takes into account current workload factors and the local circumstances of each court. The process is very similar for both the courts of appeals and the district courts. ", "First, a court submits a detailed justification for additional judgeships to the Subcommittee on Judicial Statistics. The subcommittee then reviews and evaluates the court's request and prepares an initial recommendation that is given to both the court and the judicial council for the circuit where the requesting court is located. ", "The circuit judicial council itself then reviews the new judgeship request and makes its recommendation to the subcommittee (which subsequently does a second analysis using the most recent caseload data). The subcommittee prepares its final judgeship recommendation for approval by the Committee on Judicial Resources. The committee's recommendation is then provided to the Judicial Conference for final approval (prior to being transmitted to Congress). This multistep evaluation and recommendation process is used for each court that submitted a new judgeship request to the subcommittee. "], "subsections": []}, {"section_title": "Factors Used to Evaluate the Need for New Judgeships", "paragraphs": ["In evaluating a court's judgeship request the Judicial Conference examines whether certain caseload levels have been met, as well as court-specific information that might uniquely affect the court making the request."], "subsections": [{"section_title": "Filings per Authorized Judgeship", "paragraphs": ["The caseload levels of the courts determine the standards by which the Judicial Conference begins to consider any requests for additional judgeships. The caseload level of a court is expressed as filings per authorized judgeship, assuming all vacancies on the court are filled. ", "The specific measure or statistic related to case filings that the Judicial Conference examines for U.S. circuit courts is called adjusted filings per panel . The standard used by the Judicial Conference as its starting point for evaluating any judgeship request by a circuit court is 500 adjusted filings per panel (based on authorized judgeships). ", "The specific measure related to case filings that the Judicial Conference examines for U.S. district courts is called weighted filings per authorized judgeship . The standard used by the Judicial Conference as its starting point for evaluating any judgeship request by a district court is 430 weighted filings per authorized judgeship after accounting for any additional judgeships that would be recommended by the Conference. ", "For smaller district courts, however, with fewer than 5 authorized judgeships, the standard used is current weighted filings above 500 per judgeship (since accounting for any new judgeships in the calculation would often reduce, for these smaller courts, the weighted filings per authorized judgeship below the 430 level)."], "subsections": []}, {"section_title": "Other Considerations", "paragraphs": ["While caseload statistics are important in evaluating a court's request for additional judgeships, the Judicial Conference also considers court-specific information that might affect the judgeship needs of a particular court. According to the Administrative Office of U.S. Courts, \"other factors are also considered that would make a court's situation unique and provide support either for or against a recommendation for additional judgeships.\" These factors include the availability of senior, visiting, and magistrate judges to provide assistance; geographic factors; unusual caseload activity; temporary increases or decreases in a court's workload; and any other factors that an individual court highlights as important in the evaluation of its judgeship needs. "], "subsections": []}]}]}, {"section_title": "Most Recent Recommendations for New Judgeships (116th Congress)", "paragraphs": ["The Judicial Conference's most recent recommendations to Congress for new circuit and district court judgeships were made in March 2019. The Conference recommended that Congress authorize 5 new circuit court judgeships and 65 new permanent district court judgeships (as well as convert 8 existing temporary district court judgeships to permanent status)."], "subsections": [{"section_title": "Judicial Circuits Recommended for New Judgeships", "paragraphs": ["The Judicial Conference recommended that Congress establish five new judgeships for the U.S. Court of Appeals for the Ninth Circuit given its \"consistently high level of adjusted filings [per three-judge panel]\" and the court's \"heavy pending caseload.\"", "In June 2018, the Ninth Circuit had 740 adjusted filings per panel (the third highest among the 11 regional circuits).", "Congressional authorization of 5 additional judgeships for the Ninth Circuit would increase the number of authorized judgeships for the circuit from 29 to 34 and increase the total number of circuit court judgeships, nationally, from 179 to 184."], "subsections": []}, {"section_title": "Judicial Districts Recommended for New Judgeships", "paragraphs": ["The Judicial Conference recommended that Congress establish 65 new judgeships for 27 judicial districts (with more than one judgeship recommended for some districts) and convert 8 temporary district court judgeships to permanent positions.", " Figure 2 shows the 27 judicial districts for which the Conference has recommended new judgeships. Of the 27 districts, the Conference recommended the creation of more than one new judgeship in 15 (or 56% of districts). The greatest number of new judgeships, 10, was recommended for the Central District of California (composed of Los Angeles County and six other counties). The Central District of California is the most populous judicial district in the country, with a population of nearly 19.5 million.", "Of the 73 new district court judgeships recommended by the Judicial Conference (which includes converting 8 temporary judgeships to permanent positions), 45 (or 62%) are recommended for district courts located in the country's three most populous states\u00e2\u0080\u0094California, Texas, and Florida. Of the 45 judgeships, 23 are recommended for district courts in California, 11 for courts in Texas, and 11 for courts in Florida.", "Altogether, there are 10 new judgeships recommended for district courts located in four southwestern states (Arizona, Colorado, Nevada, and New Mexico). There are also nine new judgeships recommended for district courts located in three northeastern states (Delaware, New Jersey, and New York). The remaining nine judgeships are recommended for courts located in other states.", "Many of the U.S. district courts recommended to receive new judgeships hold court in some of the nation's most populous cities\u00e2\u0080\u0094including, but not limited to, Dallas (Northern District of Texas); Houston (Southern District of Texas); Jacksonville (Middle District of Florida); Los Angeles (Central District of California); New York City (Southern District of New York); Phoenix (District of Arizona); San Antonio (Western District of Texas); San Diego (Southern District of California); San Francisco (Northern District of California); and San Jose (Northern District of California). "], "subsections": [{"section_title": "U.S. District Courts Identified as Having Urgent Need for New Judgeships", "paragraphs": ["During the Judicial Conference's March 2011 proceedings, the Conference authorized the Director of the Administrative Office of U.S. Courts to pursue separate congressional legislation for Conference-approved additional judgeships for certain district courts meeting a designated threshold of weighted filings. The purpose of such a policy change was to enable the Director \"to focus Congress' attention on those courts determined to have the greatest need based on specific parameters.\"", "The Conference's most recent recommendations identified six district courts with an urgent need for new judgeships, stating that these particular courts \"continue to struggle with extraordinarily high and sustained workloads.\" These district courts include the Western District of Texas, Eastern District of California, Southern District of Florida, Southern District of Indiana, and the Districts of New Jersey and Delaware.", "The \"severity of conditions\" in these districts, according to the Conference, \"require immediate action.\" Consequently, the Conference urged Congress \"to establish, as soon as possible, new judgeships in those districts.\"", "The Conference's final judgeship recommendations describe select caseload statistics for each of these six district courts. These descriptions, provided in part below, are based upon the biennial survey process conducted by the Conference's Subcommittee on Judicial Statistics. ", "The Conference's recommendations, quoted at length below, note the change in different types of filings that occurred between September 2017 and June 2018. The September 2017 date was used as the \"cut-off date\" by the subcommittee to make its initial judgeship recommendations (it was the most recent date for which the subcommittee had caseload data prior to the start of the survey process). The June 2018 reporting date was used by the subcommittee to make its final judgeship recommendations (it was the most recent date for which the Conference had caseload data available prior to submitting its recommendations to Congress).", "Western District of Texas . From September 2017 to June 2018, overall filings in the court increased by 13% \"due to an increase in criminal felony filings. Criminal filings rose 28 percent due to a 48 percent increase in immigration filings. The increase was partially offset by moderate declines in drug and fraud prosecutions. Criminal filings are now the highest in the nation at 644 per judgeship. The number of civil cases filed fell three percent as declines in prisoner petitions and private contract litigation more than offset increases in tort actions, copyright litigation, and patent filings.\" The Conference also notes that the number of supervised release hearings declined 11% but is currently more than twice the national average at 109 per judgeship. Eastern District of California . The \"number of civil cases filed [excluding contract actions related to a multidistrict litigation action] rose four percent as cases related to the Fair Debt Collection Practices Act more than doubled and prisoner petitions rose substantially, more than offsetting a decline in real property litigation. Civil filings continue to exceed 700 per judgeship, among the highest in the nation [even if the multidistrict litigation action is excluded]. The number of criminal felony filings rose 12 percent as a result of increases in most types of offenses, the largest of which occurred in firearms prosecutions.\" The Conference also notes that criminal filings in the Eastern District of California, at 99 per judgeship, remain below the national average. Southern District of Florida . The overall filings in the district \"rose two percent due to moderate increases in both civil and criminal filings. The number of civil cases filed rose three percent as increases in insurance contract cases, torts filings, and civil rights litigations were partially offset by declines in Fair Labor Standards Act cases, prisoner petitions, cases related to the Fair Debt Collection Practices Act, and social security appeals....The number of criminal felony filings increased two percent as increases in most offense types, the largest of which occurred in fraud prosecutions, more than offset\" a decline in drug, burglary, larceny, and theft filings. The Conference also notes that the district court's pending caseload \"remains substantially below the national average.\" Southern District of Indiana . Since September 2017, \"the court experienced an influx of over 2,200 personal injury product liability filings related to a multidistrict litigation (MDL) action in which the district serves as the transferee court. Apart from these cases, overall filings fell two percent as a decline in civil filings was partially offset by an increase in criminal filings. The number of civil cases filed decreased four percent as declines in social security appeals, civil rights cases, and federal prisoner petitions were partially offset by an increase in state prisoner petitions. The number of criminal felony filings rose 16 percent due almost entirely to a 63 percent rise in firearms prosecutions.\" The Conference also notes, however, that criminal filings in the Southern District of Indiana, at 108 per judgeship, remain \"slightly below\" the national average. District of New Jersey . Excluding certain types of cases, \"overall filings rose 10 percent due to increases in both civil and criminal felony filings. The number of civil cases filed ... also rose 10 percent due primarily to increases in copyright litigation, civil rights actions, ERISA filings, land condemnation cases, and social security appeals. A 27 percent increase in criminal filings results from higher number of firearms, drug, fraud, and immigration prosecutions.\" Additionally, the pending caseload for the court \"nearly doubled as a result of the influx of personal injury product liability cases.\" The Judicial Conference also notes that \"despite the increase, criminal filings are among the lowest in the nation at 36 per judgeship.\" District of Delaware . From September 2017 to June 2018, \"overall filings rose seven percent due to an increase in civil filings. The number of civil cases filed rose eight percent due almost entirely to a 20 percent increase in patent litigation. The court has the highest number of patent filings in the nation, which have risen substantially since the Supreme Court's May 2017 decision in TC Heartland LLC v. Kraft Foods Group Brands LLC , which modified the venue standards for patent infringement lawsuits.... Civil filings are now well above the national average at 518 per judgeship.\" In contrast, the \"number of criminal felony filings declined ... as filings of all offense types remained relatively stable.\" Additionally, in its recommendation, the Judicial Conference states that criminal filings in the District of Delaware \"are the 2 nd lowest in the nation at 21 per judgeship.\""], "subsections": []}, {"section_title": "Weighted Case Filings of Judicial Districts Recommended for New Judgeships", "paragraphs": ["As discussed above, the specific statistic used by the Judicial Conference to compare caseloads across U.S. district courts is the number of weighted filings per authorized judgeship for each court. Figure 3 shows the number of weighted filings per judgeship for each of the 27 district courts included in the Conference's most recent recommendation to Congress. ", "The national average of 521 weighted filings per authorized judgeship is shown by the reference line in the figure. For the 27 district courts where the Judicial Conference recommends additional judgeships (including conversion of existing temporary judgeships to permanent status), weighted filings averaged 646 per authorized judgeship. ", "Of the 27 district courts recommended to receive additional judgeships, 5 courts have caseloads that fall below 500 weighted filings per authorized judgeship; 6 have 500 to 599 weighted filings; 8 courts have 600 to 699 weighted filings; 4 courts have 700 to 799 weighted filings; 1 court has 800 weighted filings; and 3 courts have more than 1,000 weighted filings.", "The five districts listed in Figure 3 with the greatest number of weighted filings are among the six U.S. district courts discussed above as having the most urgent need for additional judgeships (the remaining district, the Southern District of Florida, has the seventh-highest number of weighted filings).", "A plurality of the U.S. district courts listed in Figure 3 last had a permanent judgeship authorized in 1990 (10 of 27, or 37%). Another 8 district courts last had a permanent judgeship authorized prior to 1990 (2 in 1984, 5 in 1978, and 1 in 1954). And 9 district courts last had a permanent judgeship authorized after 1990 (1 in 1999, 5 in 2000, and 3 in 2002).", "Several of the courts listed in the figure have weighted filings that fall below the national average (521 weighted filings per judgeship), including the District of Nevada, Northern District of Iowa (Cedar Rapids), District of Puerto Rico, Western District of North Carolina (Charlotte), and the District of Kansas. ", "As noted previously, a court's caseload is not the only factor the Judicial Conference considers in evaluating a court's judgeship needs. Consequently, the Conference's recommendations can be based, in part, on additional factors. For example, in its evaluation of the judgeship needs for districts where weighted filings are below the national average, the Conference identifies various reasons why it recommends additional judgeships. Some of the reasons include a substantial decline in senior judge assistance in handling cases, the geographic challenges associated with managing workload imbalances between different courthouses in the district, a high pending caseload relative to other district courts in the nation, and a number of criminal filings that is well above the national average."], "subsections": []}]}]}, {"section_title": "Options for Congress", "paragraphs": ["As discussed above, Congress determines through legislative action the size of the federal judiciary. Consequently, creating additional U.S. circuit and district court judgeships requires congressional authorization of such judgeships. Such authorization can be accomplished by passing legislation devoted solely to judgeships (i.e., \"omnibus judgeships bills\") or by including the authorization in an appropriations bill or other legislative vehicle.", "Congress may decide not to authorize additional circuit and district court judgeships. If Congress were to authorize such judgeships, it has several options available to it. These include (but are not limited to) the following:", "Adopting all of the most recent recommendations of the Judicial Conference by creating 5 additional permanent judgeships for the Ninth Circuit and 65 additional permanent judgeships for the district courts specified by the Conference (as well as converting 8 temporary district court judgeships to permanent status). Adopting, in part, the recommendations of the Judicial Conference by creating additional permanent circuit and/or district court judgeships for some of the courts identified by the Conference's biennial review process as needing additional judgeships. Adopting, in part, the Conference's recommendations by authorizing new judgeships only for the six U.S. district courts identified by the Conference as having the most urgent need for such judgeships. It might also include only adopting the Conference's recommendations for converting eight temporary judgeships to permanent status. As presented in Table 1 , each of the current temporary judgeships is set to lapse in 2020 if not further extended or made permanent by Congress. Authorizing new judgeships for circuit and/or district courts that were not recommended for additional judgeships by the Judicial Conference (such judgeships might be permanent or temporary). Congress might conclude on the basis of its own review that there is a need for such judgeships in other courts not included in the Conference's most recent recommendations. For example, the Judicial Conference only assesses a circuit court's need for additional judgeships if at least a majority of active judges serving on the court approve of a request for additional judgeships. Congress may nonetheless decide to authorize additional judgeships for circuit courts where this threshold has not been met.", "Authorizing new judgeships for some of the courts recommended by the Judicial Conference as needing new judgeships, as well as authorizing new judgeships for other courts not included in the Conference's most recent recommendations. "], "subsections": []}]}}
{"id": "R45812", "title": "Illicit Drug Flows and Seizures in the United States: What Do We [Not] Know?", "released_date": "2019-07-03T00:00:00", "summary": ["Policy discussions around issues such as border security, drug trafficking, and the opioid epidemic include questions about illicit drug flows into the United States. While there are numerous data points involved in understanding the trafficking of illicit drugs into the United States, these data are often estimated, incomplete, imperfect, or lack nuance. For example, debates about drug flows and how best to counter drug trafficking into the country often rely on selected drug seizure data from border officials, which do not reflect all drug flows into the United States.", "One way of conceptualizing the flow of illicit drugs\u00e2\u0080\u0094both plant-based and synthetic\u00e2\u0080\u0094into the United States is as a funnel. At the top of this funnel is the universe of illicit drugs produced around the world, both foreign and domestic. Factors affecting actual illicit cultivation and/or production are numerous and diverse, as are those affecting analysts' and officials' abilities to measure total worldwide production. Of all the illicit drugs that are produced around the world, some portion is destined for the United States. Of the total amount of illicit drugs that reach the U.S. border by land, air, or sea, some portion is known because it was seized by border officials, and an unknown portion is successfully smuggled into the country. While the proportion of illicit drugs coming into the country that are seized is unknowable, the amount of drugs seized is. And, data on drug seizures at the U.S. borders have sometimes served as a reference for policy debates on border security and drug trafficking into the country, in part because it is a knowable portion of drug trafficking problem.", "The primary agency charged with safeguarding the U.S. borders (including seizing illicit drugs and other contraband) is the U.S. Customs and Border Protection (CBP). Within CBP, the Office of Field Operations (OFO) is responsible for managing ports of entry and seizes drugs being smuggled into the United States at ports of entry; the Border Patrol is responsible for securing the border between ports of entry and seizes drugs being smuggled into the country between ports of entry. CBP data from OFO and Border Patrol indicate that for cocaine, methamphetamine, heroin, and fentanyl, larger quantities by weight are seized at legal ports of entry than are seized between the ports. Conversely, a larger quantity by weight of illicit marijuana is seized between the ports of entry.", "CRS analysis of OFO drug seizure data from FY2014 to FY2018 indicate that across those five years, about 65% of seized illicit drugs, by weight, were seized at land ports of entry at the border, about 28% of seized drugs were seized at air ports of entry, and about 5% were seized at sea ports of entry. CRS analysis of these data also indicate that nearly 97% of drugs were seized during inbound inspections across those years. CBP is not the only agency that seizes illicit drugs in the United States or even in the border regions. Federal, state, local, and tribal law enforcement agencies are all involved in enforcement actions that\u00e2\u0080\u0094even if not focused on drug-related crimes\u00e2\u0080\u0094may involve drug seizures. Notably, though, there is no central database housing information on illicit drug seizures from all law enforcement agencies, federal or otherwise.", "Even though the quantity of total illicit drugs produced around the world that is destined for the United States\u00e2\u0080\u0094and successfully smuggled into the country\u00e2\u0080\u0094is unknown, the likely source of the drugs seized may, in some instances, be knowable. U.S. officials chemically analyze a portion of illicit drugs seized to identify the source and, in conjunction with drug intelligence, assess which countries may be the major suppliers of certain illicit drug types found in the country.", "In the absence of precise data on illicit drugs moving toward and into the United States, seizure data can provide insight into various elements of drug flows such as smuggling points into the United States and target markets within the country. If policymakers are interested in having a more robust view of drug seizures throughout the country, they could move, through mandates or incentives, to enhance data collection and consolidation of drug seizure data by law enforcement officials. Policymakers may also question how border officials use intelligence about drug flows and data on drug seizures to assess the risks posed by drug trafficking and appropriately allocate resources to counter the threat. They may also evaluate how well available data on drug seizures can help measure progress toward achieving goals outlined in national strategies aimed, at least in part, at reducing drug trafficking into and within the country."], "reports": {"section_title": "", "paragraphs": ["P olicy discussions around issues such as border security, drug trafficking, and the opioid epidemic often involve questions about illicit drug flows into the United States. For instance, while U.S. border officials are charged with facilitating the lawful flow of people and goods, they are also responsible for stopping unauthorized entries and preventing illicit drugs and other contraband from being smuggled into the country. Border security policy debates include questions of how to balance sometimes competing priorities and allocate finite border enforcement resources to respond to various threats. For example, some have questioned where to place border enforcement and drug detection resources to best target the flow of illicit opioids such as heroin, fentanyl, and synthetic opioid analogues being smuggled into the United States.", "Available data that can help policymakers understand how illicit drugs are trafficked into the United States are often estimated, incomplete, imperfect, or lack nuance. And debates about drug flows and how best to counter drug trafficking into the country often rely on selected data on drug seizures by border officials. This report provides a brief discussion of what data are and are not available to help understand the universe of illicit drugs produced globally as well as what data are and are not available to indicate how much of the illicit drugs produced are destined for and trafficked into the United States. The report illuminates available data on illicit drug seizures by U.S. border officials and discusses potential implications of using these data to inform U.S. policy on drug trafficking into and within the country. "], "subsections": [{"section_title": "Starting at the Beginning: Illicit Drug Production", "paragraphs": ["One way of conceptualizing the flow of illicit drugs into the United States is as a funnel. At the top of this funnel is the universe of illicit drugs produced around the world. These drugs generally fall into two categories: plant-based (e.g., cocaine, heroin, and marijuana) and synthetic (e.g., methamphetamine and fentanyl). Although some illicit drugs are produced in the United States, many originate elsewhere and are smuggled into the country. See Figure 1 for a depiction of the illicit drug supply chain."], "subsections": [{"section_title": "Plant-Based Illicit Drugs", "paragraphs": ["The illicit supply chain for plant-based drugs ultimately destined for the United States begins in the agricultural fields of cash crop farmers. These farmers cultivate coca bush, opium poppy, and cannabis plants in locations that are often remote, politically unstable, or insecure. Potential cultivation and its measurement are affected by a variety of factors. For instance, illicit drug crop productivity varies with each harvest and in each location where the crops are grown; it can be dependent on a mix of factors that include weather, plant disease, soil fertility, field maturity, and farming techniques. ", "There are also factors that limit officials' and analysts' abilities to detect, measure, and obtain comprehensive data on the universe of illicit drugs. For example, where ground-based measurements of the crop fields are impractical, analysts rely on satellite imagery of varying picture quality to estimate the amount of land used for illicit crop cultivation. These estimates can be hampered by cloud cover and techniques to obscure the true scale of cultivation (e.g., interspersing illicit crops between legitimate crops, cultivating smaller plots in new locations). While coca bush and opium poppy crop surveillance programs are ongoing in most major source countries, they do not capture all global cultivation. And, in the case of drug crops that can be cultivated indoors or grown in small amounts (such as cannabis), cultivation estimates are often unreliable or unavailable. Moreover, due to changes in survey methodologies and in the areas surveyed, cultivation estimates may not be directly comparable over time. Satellite imagery-based crop survey data are coupled with information derived from crop yield studies, drug processing efficiency tests, and government-reported eradication totals to arrive at estimates of illicit drug production. Where reported eradication cannot be independently verified, such data can be prone to errors. ", "In addition, variations in the process of refining illicit crops into finished products introduce a host of variables that limit the accuracy of drug production estimates. The U.S. Department of State notes \"differences in the origin and quality of the raw material and chemicals used, the technical processing method employed, the size and sophistication of laboratories, the skill and experience of local workers and chemists, and decisions made in response to enforcement pressures all affect production.\" Ultimately, drug production estimates are calculated in terms of \"potential pure\" illicit drugs by volume, which assumes that all harvested illicit drug crops are converted into illicit drugs, though this assumption may not hold in all circumstances. In Asia, for example, where opium poppy is often consumed as opium rather than processed further into heroin, the State Department acknowledges that the proportion of opium ultimately processed into heroin is \"unknown.\" At each stage in the illicit drug development cycle, added variables further complicate the ability of analysts to accurately estimate the true amount of illicit drugs produced."], "subsections": []}, {"section_title": "Synthetic Illicit Drugs", "paragraphs": ["Unlike plant-based drugs, whose cultivation footprint can provide a starting point for estimating potential drug production, the illicit supply chain for synthetic drugs ultimately destined for the United States begins in chemical manufacturing and pharmaceutical facilities. Although the import and export of some chemical inputs (precursors) used in illicit synthetic drug production are internationally regulated, others are not\u00e2\u0080\u0094and the trade data for such chemicals are not necessarily current, available for all countries, or indicative of diversion trends. ", "For example, the Combat Methamphetamine Epidemic Act of 2005 (CMEA; Title VII of P.L. 109-177 ) requires the State Department to conduct annual economic analyses on global production of and demand for three precursor chemicals commonly used in the production of methamphetamine, but its efforts have been hampered by data limitations. The State Department has noted that \"[e]phedrine and pseudoephedrine pharmaceutical products are not specifically listed chemicals under the 1988 U.N. Drug Convention. Therefore, reporting licit market trade and demand for ephedrine and pseudoephedrine as well as pharmaceutical products derived from them is voluntary\u00e2\u0080\u00a6. Thus far, the economic analysis required by the CMEA remains challenging because of outdated, insufficient, and unreliable data.\"", "Challenges in acquiring and analyzing relevant data on synthetic drug production and precursor chemicals used in illicit drug production are further compounded by the proliferation of new psychoactive substances (NPS)\u00e2\u0080\u0094molecularly altered variants, or synthetic analogues, of known illicit substances that are not internationally controlled and thus designed to avoid detection by authorities. NPS also include fentanyl analogues destined for the United States. Law enforcement authorities around the world have reported to the United Nations more than 850 uncontrolled NPS as of the end of 2018."], "subsections": []}]}, {"section_title": "Illicit Drugs in Transit to the United States", "paragraphs": ["The next step in the supply chain of illicit drugs produced abroad and destined for the United States is the transit of these substances toward and into the country, as depicted in Figure 1 . The United States, while a major consumer of illicit drugs, is just one of many drug consumption markets. Of the illicit drugs that are produced around the world, some may be consumed in the country of production, some may be destined for the United States, and some may be intended for an alternate market. Of those drugs intended to be moved to the United States, some may become degraded or lost in transit, some may be seized by law enforcement or otherwise destroyed or jettisoned by traffickers pursued by enforcement officials, and some reach the U.S. border.", "The challenge of estimating drug flows in transit is a longstanding one. While there are estimates of certain types of illicit drugs produced in certain countries that are subsequently bound for the U.S. market, there is not a comprehensive publicly available dataset detailing the estimated amount of each type of illicit drug produced in each source country that is suspected to be destined for the United States. However, snapshots of these data exist. One of these datasets is the Consolidated Counterdrug Database (CCDB), managed by the Office of the U.S. Interdiction Coordinator. According to the U.S. Government Accountability Office (GAO), the CCDB \"records drug trafficking events, including detections, seizures, and disruptions. The database is vetted quarterly by members of the interagency counterdrug community to minimize duplicate or questionable reported drug movements.\" Specifically, it records drug trafficking events, which helps provide estimates on illicit drugs, particularly cocaine, destined for the United States via the transit zone from South America.", "Of the unknown total amount of drugs that reach the U.S. border by land, air, or sea, some portion is seized by border officials, and some portion makes its way into the country. While the pro portion of illicit drugs coming into the country that are seized at the border is unknowable, the amount of illicit drugs seized is. It is this snapshot of seizure data that has served as a point of reference for current policy debates surrounding border security and drug flows into the country."], "subsections": []}, {"section_title": "Illicit Drugs Seized (or Not) at the Border", "paragraphs": ["There are no exact data on the total quantity of foreign-produced illicit drugs flowing into the United States. Indeed, a fundamental element to understanding drug smuggling is the acknowledgement that the total flow of drugs crossing the border\u00e2\u0080\u0094at and between ports of entry (POEs) \u00e2\u0080\u0094into the United States is unknowable. As reflected in Figure 1 , as illicit drugs are brought to the border of the United States, they generally fall into two initial categories:", "drugs that are detected and seized by officials at the border, and drugs that, whether detected or not, are not seized by officials at the border.", "Illicit drugs that are detected and seized at the border during inbound inspections are quantifiable. Those drugs that are not seized at the border are generally not quantifiable at the time they enter the country. However, some portion of illicit drugs successfully smuggled across the border may later be seized by law enforcement officers. The largely unknown subset of foreign-produced drugs that enter the country but are not seized by officials during inbound inspections at the border is divided into two categories:", "drugs that are later detected and seized by federal, state, local, or tribal officials; and drugs that, whether detected or not, are not seized by officials.", "Illicit drugs not seized at the border enter the United States where there are also domestically produced drugs. As such, drugs that are later seized by federal, state, local, or tribal officials in the United States may be of foreign or domestic origin. These drugs may be seized in the interior of the country or by border officials conducting outbound inspections of people and goods leaving the country."], "subsections": [{"section_title": "Border Seizure Data", "paragraphs": ["In the absence of data on the flow of all illicit drugs entering the United States\u00e2\u0080\u0094both those that are seized and those that successfully evade enforcement officials\u00e2\u0080\u0094policymakers can use certain drug seizure data to better understand how and where drugs are crossing U.S. borders. While a number of agencies may be involved in seizing illicit drugs in the border regions, the primary agency charged with safeguarding the U.S. border (including seizing illicit drugs and other contraband) is U.S. Customs and Border Protection (CBP). Within CBP, the Office of Field Operations (OFO) is responsible for staffing POEs, and drugs seized by OFO are generally seized at POEs . In addition, the Border Patrol is responsible for patrolling the land borders with Mexico and Canada, and the coastal waters surrounding Florida and Puerto Rico; given its responsibilities, drugs seized by the Border Patrol are generally drugs seized between POEs .", "CBP publishes selected enforcement statistics, including a snapshot of illicit drug seizures\u00e2\u0080\u0094of marijuana, cocaine, methamphetamine, heroin, and fentanyl\u00e2\u0080\u0094by OFO and the Border Patrol. CBP data indicate that larger quantities by weight of cocaine, methamphetamine, heroin, and fentanyl are seized at POEs than between the ports. Figure 2 illustrates seizures of these four drugs by OFO and the Border Patrol for FY2012\u00e2\u0080\u0093FY2018.", "Cocaine. From FY2012 to FY2018, CBP reported seizing 388,970 pounds of cocaine at and between POEs. OFO seized 86.1% of this cocaine at POEs, and the Border Patrol seized the remaining 13.9% between POEs.", "Methamphetamine. From FY2012 to FY2018, CBP reported seizing 266,828 pounds of methamphetamine at and between POEs; 82.2% was seized at POEs and the remaining 17.8% between POEs. Of note, the amount of methamphetamine seized by CBP increased more than three-fold, from 17,846 pounds in FY2012 to 67,676 pounds in FY2018. The consistent increase in methamphetamine seizures during this period was seen both at and between POEs.", "Heroin. From FY2012 to FY2018, CBP reported seizing 35,193 pounds of heroin at and between POEs. OFO seized 88.0% of this heroin at POEs, and the Border Patrol seized the remaining 12.0% between POEs. ", "Fentanyl. CPB started reporting fentanyl seizures by OFO in FY2015 and by the Border Patrol in FY2016. From FY2015 to FY2018, CBP seized 5,000 pounds of fentanyl at and between POEs; 85.5% was seized at POEs and the remaining 13.5% between POEs. Fentanyl seizures increased from the 70 pounds seized by OFO in FY2015 to 2,173 pounds seized across OFO and the Border Patrol in FY2018.", "Mar i juana. The landscape for CBP marijuana seizures is different than that for the four drugs discussed above. Whereas intelligence and seizure data indicate that most of these four drugs are moved through the legal POEs, a greater quantity of illicit foreign-produced marijuana is smuggled and seized between the ports (see Figure 3 ). From FY2012 to FY2018, CBP reported seizing 14,023,570 pounds of marijuana at and between POEs. The Border Patrol seized 77.1% of this marijuana between POEs, and OFO seized the remaining 22.9% at the ports. Marijuana seizures dropped from over 2.8 million pounds in FY2012 to 761,319 pounds in FY2018. The bulk of this decline can be seen in Border Patrol seizures, which fell from 2.3 million pounds in FY2012 to 461,030 pounds in FY2018."], "subsections": [{"section_title": "Nuances in Illicit Drug Seizure Data", "paragraphs": ["In current discussions of border security, policymakers and the media have relied on this snapshot of regularly published CBP data on seizures of certain illicit drugs (cocaine, methamphetamine, heroin, fentanyl, and marijuana) at and between POEs. While these data provide a summary view of certain CBP drug seizures and indicate generally where certain types of illicit drugs are most often seized by border officials, CBP's dataset that is the foundation for this regularly updated snapshot of seizure data provides a more nuanced view. For instance, the foundational seizure data provide additional information such as the type of POE (e.g., land, air, sea) where drugs were seized and whether the drugs were seized during inbound inspections, outbound inspections, or in operations away from the POEs. ", "Specifically, CRS analysis of OFO drug seizure data from FY2014 to FY2018 indicate that across those five years, about 65% of seized illicit drugs by weight were confiscated at land POEs. In addition, about 28% of seized drugs were confiscated at air POEs, and about 5% were seized at sea POEs (see Figure 4 ). ", "In addition, CRS analysis of OFO drug seizure data from FY2014 to FY2018 indicate that nearly 97% of seized drugs were confiscated during inbound inspections across those years. While nearly all OFO illicit drug seizures occur during inbound inspections, some are seized during outbound inspections of people and goods exiting the country, some may be seized at a POE but cannot be attributed to an inbound or outbound inspection, and some may be seized during enforcement activities occurring away from official POEs (see Figure 5 ).", "The enforcement statistics that CBP publishes on its website regarding seizures of cocaine, methamphetamine, heroin, fentanyl, and marijuana do not always distinguish between seizures at northern, southern, and coastal border areas. However, officials have noted that \"most illicit drug smuggling attempts occur at southwest [border] land POEs.\" Consistent with this testimony, CRS analysis of OFO drug seizure data indicates that, on average, over 65% of the illicit drugs seized by OFO from FY2014 to FY2018 were seized during inbound inspections at land POEs within the jurisdiction of the OFO field offices along the Southwest border."], "subsections": []}, {"section_title": "Illicit Drug Seizure Datasets", "paragraphs": ["CBP is not the only agency that seizes illicit drugs in the United States or even in the border regions. Federal, state, local, and tribal law enforcement agencies are all involved in enforcement actions that\u00e2\u0080\u0094even if not focused on drug-related crimes\u00e2\u0080\u0094may involve drug seizures. Notably, there is no central database housing information on illicit drug seizures from all law enforcement agencies. In addition, there is not a set of discrete, yet comprehensive, drug seizure datasets that, if combined, could tally illicit drug seizures for all of the United States. Rather, there are a number of datasets and systems that contain some information on drug seizures. ", "For instance, law enforcement agencies have case management systems, and case files may have certain information on drug seizures. However, this information may or may not exist in electronic format, and may or may not consistently appear in dedicated data fields that allow agencies to sort and tally drug seizure data. In addition, law enforcement case information, including that on drug seizures, may change throughout the course of an investigation, and there is always a chance that case management systems may not be updated to reflect final information, including results of forensic lab tests, on the drugs seized. For instance, an initial report on a case may contain estimates of quantities of drugs seized as well as suspicions or results from preliminary field testing regarding drug types involved. This information could all change as a case progresses and any drugs seized are more thoroughly measured and chemically analyzed. ", "In addition, the data that are available from law enforcement agencies throughout the United States provide imprecise insight into illicit drug smuggling into the country. Foreign-produced illicit drugs that cross the border into the United States without being seized enter the U.S. market along with domestically produced drugs; as such, seizure data from law enforcement agencies across the country may not in and of itself provide information as to the drug's source country\u00e2\u0080\u0094and thus cannot always add to an understanding of drug trafficking into the United States. This may be particularly so for marijuana, which has seen increased domestic cultivation coupled with decreased Mexican production and trafficking into the United States. ", "As border officials have noted, CBP seizure data include illicit drugs not just from inbound inspections of goods and people entering the country but from outbound inspections as well. In addition, there is a set of seizures for which it cannot be determined whether the intended flow of drugs seized was into, within, or out of the country. While most drugs flowing across U.S. borders may be coming into the country, some unknown portion of drugs crossing the borders are leaving the country. Drugs leaving the country include those produced in the United States\u00e2\u0080\u0094namely marijuana\u00e2\u0080\u0094as well as drugs that pass through in transshipment. ", "Despite an acknowledged imprecision in the completeness, accuracy, and nuance of seizure data, some systems can provide selected information on illicit drugs seized in the United States.", "National Seizure System (NSS). The DEA runs the NSS through the El Paso Intelligence Center (EPIC). This system allows law enforcement entities to submit data on illicit drug seizures around the country. Certain federal law enforcement agencies (DEA, FBI, CBP, ICE, and Coast Guard) are required to report drug seizures that surpass certain threshold levels, but reporting by other law enforcement agencies is voluntary. As such, while the NSS contains mandatory reported data on drug seizures of certain sizes made by specific federal agencies as well as other voluntarily reported drug seizure data, this reflects only a subset\u00e2\u0080\u0094and unknown proportion\u00e2\u0080\u0094of total illicit drugs seized across the country. Nonetheless, these seizure data can provide officials with information on the location and magnitude of seizures to help build knowledge of the U.S. illicit drug market, drug trafficking activity in the country, and enforcement strategies.", "National Forensic Laboratory Information System (NFLIS). The DEA runs the NFLIS, which \"collects results of forensic analysis, and other related information, from local, regional, and national entities.\" One component of NFLIS is NFLIS-Drug, which collects drug chemistry analysis results from \"50 State systems and 104 local or municipal laboratories/laboratory systems, representing a total of 283 individual laboratories.\" Currently, the NFLIS reports on the number of drug cases submitted to laboratories for testing as well as the number of distinct drug reports made from those cases. It does not report on the total quantity of drugs seized that are associated with those samples submitted for chemical testing. Because the NFLIS records drug reports from specific labs around the country, it is possible for law enforcement and analysts to gain a better understanding of trends in drug reports involving certain drugs or substances in certain areas of the United States."], "subsections": []}]}, {"section_title": "Sourcing Drugs Seized in the United States", "paragraphs": ["As discussed above, the quantities of illicit drugs produced in various countries around the world that are destined for the United States and that are successfully smuggled into the country are unknown, and are likely unknowable. Instead, U.S. officials look at the set of illicit drugs seized in the United States and, in conjunction with drug intelligence, produce estimates of which countries are the major suppliers of certain types of illicit drugs found in the United States. In formulating these estimates, officials submit samples from selected seizures of illicit drugs for chemical testing and analysis. For certain illicit drugs seized in the United States, this chemical analysis helps determine, among other things, the primary source countries and/or methods of production. The chemical testing reveals different information about plant-based drugs than it does about synthetic drugs. ", "Heroin. The DEA operates a heroin signature program (HSP) and a heroin domestic monitor program (HDMP) that helps identify the geographic source of heroin found in the United States. Chemical analysis of a given heroin sample can identify its \"signature,\" which indicates a particular heroin production process that has been linked to a specific geographic source region. The HSP analyzes wholesale-level samples of \"heroin seized at U.S. ports of entry (POEs), all non-POE heroin exhibits weighing more than one kilogram, randomly chosen samples, and special requests for analysis\" and the HDMP assesses the signature source of retail-level heroin samples seized in the United States. Of the heroin analyzed in the HSP, 86% was identified as originating from Mexico, 10% had inconclusive results, 4% was from South America, and less than 1% was from Southwest Asia in 2016. Cocaine. The DEA's Cocaine Signature Program (CSP) analyzes cocaine samples from bulk seizures for \"evidence of how and where the coca leaf was processed into cocaine base (geographical origin), and how cocaine base was converted into cocaine hydrochloride (processing method).\" Analyses of cocaine samples seized in 2017 indicate that 93% originated in Colombia, 4% originated in Peru, and 3% had an unknown origin. Methamphetamine. The DEA's methamphetamine profiling program (MPP) examines methamphetamine samples to help determine trends in production methods. The DEA notes, however, that because methamphetamine is synthetically produced, the MPP cannot determine the original source of the drug. Domestic production of methamphetamine commonly involves pseudoephedrine/ephedrine tablets along with household items like lithium batteries, camp fuel, starting fluid, and cold packs. In contrast, Mexican criminal networks \"produce methamphetamine using the reductive amination method, which uses the precursor, Phenyl-2-propanone (P2P) instead of pseudoephedrine\u00e2\u0080\u00a6. According to the DEA MPP, 97 percent of samples analyzed were produced using the reductive amination method, using P2P as the precursor chemical.\" This implies that most of the methamphetamine samples analyzed in the MPP were produced using techniques employed by Mexican criminal networks. Fentanyl. The DEA also has a Fentanyl Signature Profiling Program (FSPP), analyzing samples from fentanyl seizures to help \"identify the international and domestic trafficking networks responsible for many of the drugs fueling the opioid crisis.\" The DEA has indicated that fentanyl shipped directly from China often has purity levels above 90%, while fentanyl trafficked over the Southwest border from Mexico has purity levels below 10% on average. However, it is unclear how much of the fentanyl consumed in the United States is coming directly from China versus Mexico."], "subsections": []}]}, {"section_title": "Going Forward", "paragraphs": [], "subsections": [{"section_title": "Reliance on Border Seizure Data", "paragraphs": ["In the absence of comprehensive and precise data on illicit drugs trafficked into the United States, seizure data can provide some insight into various elements of drug flows such as smuggling points into the United States and target markets within the country. For instance, some have relied on selected border seizure data to help understand the locations at which federal enforcement efforts are stopping a portion of the illicit drugs produced abroad from entering the country and joining the domestic drug market. In current policy discussions regarding border security, CBP drug seizure data can help inform policy decisions that involve the most effective placement of counterdrug resources. In addition, drug seizures\u00e2\u0080\u0094both at the border and in the interior of the country\u00e2\u0080\u0094that are chemically analyzed can provide information on the likely geographic sources of certain illicit drugs found throughout the United States. Policymakers may ask a variety of questions as they debate how to target finite resources to countering illicit drug flows, including which types of illicit drugs are of the highest concern, what are the means traffickers most often employ to smuggle illicit drugs into and throughout the United States, and where can enforcement officials interdict the greatest quantity of top-priority illicit drugs?", "Border seizure data can also help inform efforts to act on certain policy priorities. If, for example, lawmakers and enforcement officials are particularly concerned with specific categories of illicit drugs such as illicit opioids, they may examine the sufficiency of existing enforcement efforts in the areas where intelligence and seizure data indicate that the flow of these substances may be the highest. For instance, the most recent DEA National Drug Threat Assessment notes that illicit opioids such as heroin are more often smuggled through than between POEs; likewise, CBP seizures of these substances have also been higher at the ports than between them, as reflected in greater seizures of illicit opioids by OFO than by the Border Patrol. As such, in order to counter threats posed by illicit opioids, and in balancing other law enforcement and counterdrug priorities, Congress may consider whether CBP should maintain or change the amount and types of resources allocated to screening for and interdicting illicit drugs at and between POEs.", "Notably, as reflected in Figure 1 , a focus on border seizures largely excludes a discussion of drug seizures by law enforcement officials throughout the interior of the country. As such, border seizures cannot speak to drug transportation and distribution throughout the U.S. market or law enforcement priorities in the interior of the country. A focus on border seizures also largely excludes a discussion of illicit drugs that are produced domestically. This is, in part, because border seizures largely reflect drugs detected during inbound inspections (and thus are more likely to reflect foreign-produced drugs being moved into the United States). However, drugs detected and seized during outbound inspections may reflect both foreign-produced drugs that were not seized when they entered the country as well as domestically produced drugs being taken out of the country. "], "subsections": []}, {"section_title": "Enhancing Seizure Data Collection and Reporting", "paragraphs": ["If policymakers are interested in having a more comprehensive view of drug seizures throughout the United States, they could move to enhance and consolidate data collection. With respect to federal agencies, Congress could take a variety of steps to enhance data availability on drug seizures, both at the border and in the interior of the country. As noted, the NSS at EPIC contains data on drug seizures of certain sizes by specific federal agencies, as well as additional voluntary reports from additional law enforcement entities, but these data are not comprehensive. Lawmakers could ask GAO to conduct a study on agencies' collection and reporting of drug seizure data; this could provide a better understanding of the portion of drug seizures currently included in the NSS. Another option is that Congress could require that all federal law enforcement agencies report information on a greater portion of\u00e2\u0080\u0094or all\u00e2\u0080\u0094drug seizures to a central database like the NSS. Congress could also direct the NSS to enhance outreach to state and local law enforcement agencies to encourage them to submit drug seizure data. Yet another option would be for policymakers to incentivize states\u00e2\u0080\u0094for example, by providing or withholding grant funding\u00e2\u0080\u0094to collect and report such data to help establish a more robust view of seizures in the United States. Enhanced data on drug seizures away from the border may not illuminate how these drugs entered the country; however, these data could help provide a more nuanced picture of the domestic drug market."], "subsections": []}, {"section_title": "Border Risk Management", "paragraphs": ["To counter threats at U.S. borders, the Department of Homeland Security (DHS) uses a risk management approach, which the department defines as \"the process for identifying, analyzing, and communicating risk and accepting, avoiding, transferring, or controlling it to an acceptable level considering associated costs and benefits of any actions taken.\" Border threats are continually evolving and include those posed by a wide range of actors, from terrorists who may have weapons of mass destruction and transnational criminals smuggling drugs and other contraband to migrants entering the country without authorization. Risks associated with various threats can be seen as a function of the likelihood that the threat will be realized and its potential consequences. However, threats are complex, threat actors are strategic and adaptive in their behaviors, and assessing the likelihood and gauging potential consequences of the various threats can be challenging. ", "For instance, in understanding the risks posed by threat actors smuggling drugs into the United States, one may consider the likelihood of drugs successfully flowing into the country. This likelihood may be complicated by a variety of factors including past and expected frequencies. As the true frequency of illicit drug smuggling is unknown, officials may rely on a combination of intelligence and known drug seizure levels to inform their expectations. Notably, seizure data reflect illicit drugs that were not successfully smuggled into the country; they reflect known, unsuccessful smuggling attempts. In addition, seizures vary across sectors of the border, differ on whether they were made at or between POEs, and are diverse in the associated modes of land, air, or sea transport; as such, they can help inform, along with intelligence, the likelihood of smuggling attempts at various locations and via a host of transport modes. However, seizure data do not speak to the portion of drugs successfully smuggled into the country. Moreover, expectations of future drug flows may combine knowledge about past flows with intelligence and analysis of additional information such as drug market forces in source and destination countries. ", "Policymakers may question how border officials use intelligence about drug flows and data on drug seizures to assess the risks posed by drug trafficking and appropriately allocate resources to counter the threat. Because there is a need to balance resources for sometimes competing priorities, some may also question whether DHS's risk management approach to countering threats at the borders is able to effectively evaluate and reduce threats posed by drug trafficking\u00e2\u0080\u0094and whether the data to make this evaluation exist."], "subsections": []}, {"section_title": "Evaluating Drug Trafficking-Related Strategies", "paragraphs": ["The United States has a number of strategies aimed, at least in part, at reducing drug trafficking into and within the country, and data on drug flows can help evaluate progress toward achieving goals outlined in them. For instance, the 2019 National Drug Control Strategy outlines that one of three key elements in the overarching goal of building a stronger, healthier, drug-free society is reducing the availability of illicit drugs in the United States. The strategy notes that some measures of performance are to \"significantly reduce the availability of illicit drugs in the United States by preventing their production outside the United States, disrupt their sale on the internet, and stop their flow into the country through the mail and express courier environments, and across our borders.\" It also notes that some measures of effectiveness are that \"[t]he production of plant-based and synthetic drugs outside the United States has been significantly reduced, illicit drugs are less available in the United States as reflected in increased price and decreased purity, and drug seizures at all U.S. ports of entry increase each year over five years.\" ", "A robust picture of drug production and movement toward and into the United States can help inform, for instance, whether changes in drug seizures at POEs\u00e2\u0080\u0094as outlined in the strategy\u00e2\u0080\u0094may be attributable to the effectiveness of U.S. drug control efforts. Intelligence and data on drug flows and seizures could also inform whether changes in seizures may be influenced by other factors such as the amount of drugs arriving at U.S. borders, the means by which traffickers attempt to smuggle drugs into the country, or the staffing levels at and between POEs. For instance, policymakers and officials may question whether fluctuations in drug seizures at ports of entry by OFO, as shown in Figure 2 and Figure 3 , taken with intelligence about other drug supply and demand factors, reflect progress toward meeting goals outlined by the National Drug Control Strategy.", "Other strategies, such as the National Southwest Border Counternarcotics Strategy and the Strategy to Combat Transnational Organized Crime, also provide action items that involve reducing drug trafficking. While these strategies do not outline specific effectiveness measures, as does the National Drug Control Strategy, the action items and goals could potentially be better evaluated with more specific data such as that on illicit drug production (both domestic and foreign), flows, and seizures. "], "subsections": []}]}]}}
{"id": "R46175", "title": "Kosovo: Background and U.S. Policy", "released_date": "2020-05-05T00:00:00", "summary": ["Kosovo, a country in the Western Balkans with a predominantly Albanian-speaking population, declared independence from Serbia in 2008, less than a decade after a brief but lethal war. It has since been recognized by about 100 countries. The United States and most European Union (EU) member states recognize Kosovo. Serbia, Russia, China, and various other countries (including some EU member states) do not.", "Key issues for Kosovo include the following:", "Resuming talks with Serbia. An EU-facilitated dialogue between Kosovo and Serbia, aimed at normalization of relations, stalled in 2018 when Kosovo imposed tariffs on Serbian goods in response to Serbia's efforts to undermine Kosovo's international legitimacy. Despite U.S. and EU pressure, the parties have not resumed talks. On April 1, 2020, acting Prime Minister Albin Kurti conditionally lifted tariffs against Serbian imports; this step was praised by EU officials but drew U.S. criticism because of the government's simultaneous pledge to gradually introduce measures to match Serbian barriers to the movement of goods and people. Government collapse . The governing coalition led by Albin Kurti of the Self-Determination Party (Vet\u00c3\u00abvendosje) lost a vote of confidence in March 2020, less than two months after it had formed. The outgoing government comprises two parties formerly in opposition, both of which had campaigned on an anti-corruption platform. Among other factors, the collapse was attributed to divisions over managing relations with Serbia amid U.S. pressure on the government to immediately lift tariffs against Serbian imports, as well as to domestic political infighting. Kosovo's leaders disagree over how to proceed from the current political crisis. Strengthening the rule of law. The victory of Kurti's Vet\u00c3\u00abvendosje in the October 2019 election partly reflected widespread voter dissatisfaction with corruption. Weakness in the rule of law contributes to Kosovo's difficulties in attracting foreign investment and complicates the country's efforts to combat transnational threats. Relations with the United States. Kosovo regards the United States as a key ally and security guarantor. Kosovo receives the largest share of U.S. foreign assistance to the Balkans, and the two countries cooperate on numerous security issues. The United States is the largest contributor of troops to the NATO-led Kosovo Force (KFOR), which has contributed to security in Kosovo since 1999. In 2019, the Trump Administration appointed a Special Representative for the Western Balkans and a Special Presidential Envoy for Serbia and Kosovo Peace Negotiations. These appointments are considered to reflect the Administration's interest in securing a comprehensive settlement between Kosovo and Serbia and may signal a potentially greater U.S. role in a process that the EU has largely facilitated to date. Leaders in Kosovo generally have welcomed greater U.S. engagement, but some observers expressed concern over reported U.S. pressure on the Kurti government to lift tariffs on Serbian goods\u00e2\u0080\u0094including pausing some U.S. assistance to Kosovo\u00e2\u0080\u0094and over perceived U.S. support for the no-confidence session that resulted in the March 2020 government collapse. U.S. officials maintain that the United States is committed to working with any government formed in compliance with constitutional processes. Transatlantic cooperation . Since the Kosovo war ended in 1999, the United States, the EU, and key EU member states have largely coordinated their efforts to promote regional stability in the Western Balkans, including efforts to normalize relations between Kosovo and Serbia. More recently, however, some observers have expressed concern that transatlantic coordination has weakened on some issues relating to the Kosovo-Serbia dialogue and to Kosovo's current political impasse.", "Congress was actively involved in debates over the U.S. response to a 1998-1999 conflict in Kosovo and subsequently supported Kosovo's declaration of independence. Today, many Members of Congress continue to support Kosovo through country- or region-specific hearings, congressional visits, and foreign assistance funding levels averaging around $50 million per year since 2015."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Overview", "paragraphs": ["The Republic of Kosovo declared independence from Serbia in 2008, nearly a decade after the end of a brief but lethal conflict between Serbian forces and a Kosovo Albanian insurgency led by the Kosovo Liberation Army (KLA). Since 2008, Kosovo has been recognized by more than 100 countries. The United States and most European Union (EU) member states recognize Kosovo. Serbia, Russia, China, and various other countries (including some EU member states) do not. The United States has strongly supported Kosovo's state-building and development efforts, as well as its ongoing dialogue with Serbia to normalize their relations. Kosovo regards the United States as a security guarantor and key ally. ", "Congress has maintained interest in Kosovo for many decades\u00e2\u0080\u0094from concerns over Serbia's treatment of ethnic Albanians in the former Yugoslavia to the armed conflict in Kosovo in 1998-1999 after the Yugoslav federation disintegrated. Many Members were active in debates over the U.S.- and NATO-led military intervention in the conflict. After Serbian forces withdrew in 1999, many Members backed Kosovo's independence. Today, many in Congress continue to support Kosovo through country- or region-specific hearings, congressional visits, and foreign assistance funding levels averaging around $50 million per year since 2015.", "Looking ahead, Members may consider how the United States can support the Kosovo-Serbia dialogue, Kosovo's Euro-Atlantic ambitions, transitional justice processes, the ongoing political crisis arising from the March 2020 government collapse, and regional security. "], "subsections": []}, {"section_title": "Domestic Issues", "paragraphs": ["Current key issues in Kosovo's domestic situation include the March 2020 collapse of the government; responding to the Coronavirus Disease 2019 (COVID-19) pandemic; managing relations with the country's ethnic Serb minority, particularly in northern Kosovo; and economic growth. "], "subsections": [{"section_title": "Politics", "paragraphs": ["Kosovo is a parliamentary republic with a prime minister, who serves as head of government, and an indirectly elected president, who serves as head of state and has largely ceremonial powers. The unicameral National Assembly has 120 seats, of which 20 are reserved for ethnic minorities. Albin Kurti currently serves as acting Prime Minister. In 2016, the National Assembly elected Hashim Tha\u00c3\u00a7i to a five-year term as president. Tha\u00c3\u00a7i previously served as prime minister and has long been a major political figure in the country.", "Kosovo's domestic politics have been volatile for much of the past year, marked by government turnover, escalating tension between the president and prime minister, and divisions over various issues\u00e2\u0080\u0094including a stalled dialogue to normalize relations with Serbia. More recently, the country entered a period of uncertainty when the Kurti government lost a vote of confidence on March 25, 2020, less than two months after it had formed (see textbox below, \"March 2020 Government Collapse and Aftermath\"). Many had viewed that government as a potentially pivotal shift in power from long-ruling parties to the opposition. The government breakdown coincided with the COVID-19 pandemic, and some have expressed concern that the ensuing political crisis could impede the public health response. ", "Outgoing governing partners Vet\u00c3\u00abvendosje and the Democratic League of Kosovo (LDK) were the top-performing parties in early parliamentary elections in October 2019 (see Table 1 ). Their victory was considered to reflect deep voter dissatisfaction with corruption and economic conditions, as well as a desire to hold accountable the small number of parties that have largely rotated in government over the past several decades. Prior to 2020, the Democratic Party of Kosovo (PDK), led by Tha\u00c3\u00a7i until 2016, had participated in all governments since independence. The PDK and several other former ruling parties grew out of factions of the KLA resistance and, along with several other parties, sometimes are referred to as the war wing . Critics charge that these parties became entrenched in state institutions. ", "By contrast, neither Vet\u00c3\u00abvendosje nor its leader, Albin Kurti, had been in national government prior to 2020. The party grew out of a 2000s-era protest movement that channeled popular frustration with government corruption. Vet\u00c3\u00abvendosje also railed against aspects of post-1999 administration of Kosovo, accusing international missions of failing to establish the rule of law despite their vast powers. The party has steadily built support across election cycles. In the past, Vet\u00c3\u00abvendosje was criticized for using obstructionist tactics (including releasing tear gas in parliament) and for seeking to subvert several agreements with Serbia and Montenegro that were seen as important to regional reconciliation. Kurti maintains that the party will govern responsibly and prioritize socioeconomic reforms and the rule of law. Vet\u00c3\u00abvendosje at times has floated the idea of eventual unification with Kosovo's neighbor and close ally, Albania; however, unification does not appear likely to become a serious proposal under current conditions, not least of all due to U.S. and EU objections. ", "Analysts generally have been positive in their assessments of Kosovo's democratic development since 2008, particularly its active civil society, pluralistic media sector, and track record of competitive elections. At the same time, U.S. and EU officials, as well as watchdog groups such as the U.S.-based nongovernmental organization Freedom House, have urged Kosovo to more rigorously enforce anti-corruption rules and uphold judicial independence. Many regard corruption and weak rule of law to be serious problems. The so-called Pronto Affair, one of several scandals to emerge in recent years, raised allegations of nepotism on the part of the then-governing PDK. In 2018, 11 PDK officials, including a minister and a lawmaker, were indicted for allegedly offering public jobs to party backers. According to the U.S.-based nongovernmental organization Freedom House, the Pronto case showed \"a systemic abuse of power and informal control over state structures.\" In April 2020, 19 individuals (thought to include former ministers) were indicted for abuse of position relating to the 2013 privatization of four hydropower plants and a distribution network. "], "subsections": []}, {"section_title": "Kosovo Serbs and Northern Kosovo", "paragraphs": ["About 100,000 to 120,000 Serbs live in Kosovo, primarily in semi-isolated rural communities. Kosovo Serbs are accorded various forms of representation and partial autonomy under the 2008 constitution and related legislation. This framework is partly the result of U.S. and other external pressure on Kosovo's leaders to incorporate power-sharing measures to bolster minority rights and protection. These provisions established a municipal level of governance with specific areas of responsibility (most Serbs live in municipalities where they form a majority). Power-sharing arrangements require Serb representation in parliament, the executive, and other institutions. Majority consent from minority members of parliament is mandatory on some votes, and Serbian has official language status. Nevertheless, some question the actual effectiveness of these measures in integrating Serbs.", "More than half of Kosovo Serbs live in minority-majority municipalities in central and southeastern Kosovo. These municipalities do not border Serbia and are largely integrated into Kosovo institutions, although wartime legacies of distrust and fear persist. By contrast, the situation in northern Kosovo is one of the most enduring challenges in Kosovo's state building since independence (see also \"Relations with Serbia,\" below). About 40% of the Serb population lives in four Serb-majority municipalities north of the Ibar River that are adjacent to Serbia (see map in Figure 1 ). ", "Pristina has been unable to exert full authority in northern Kosovo, whereas Serbia has retained strong influence (albeit not full authority) in the region despite the withdrawal of its forces in 1999. Kosovo Serbs turned to Serbian-supported parallel structures for security, health care, education, and other services. Due to its grey-zone status, northern Kosovo is considered a regional hub for smuggling and other illicit activities. ", "Serbian List ( Srpska Lista ), the party that has dominated recent elections in northern Kosovo, is considered to be close to the Serbian government. There have been reports of harassment and intimidation against opposition Serb politicians in the north, most recently in the October 2019 elections. The 2018 murder of opposition Serb politician Oliver Ivanovi\u00c4\u0087 raised questions about the power structures and vested interests that prevail in northern Kosovo. "], "subsections": []}, {"section_title": "Economy", "paragraphs": ["The 1998-1999 war with Serbia caused extensive damage to Kosovo's infrastructure and economy. Two decades later, economic recovery continues. Employment is an acute policy challenge; Kosovo's average 40% labor force participation rate is the lowest in the Western Balkans. The unemployment rate stood at about 26% in 2019, with disproportionately higher levels among working-age females and youth. The economy and perceived limits to upward socioeconomic mobility contribute to high rates of emigration. ", "Kosovo's gross domestic product (GDP) grew by 3.8% in 2018 and 4.2% in 2019. The International Monetary Fund (IMF) estimates that Kosovo's economy could contract by 5% in 2020 due to the COVID-19 pandemic. Foreign direct investment (FDI) in Kosovo in 2018 was \u00e2\u0082\u00ac214 million (about $232 million), the lowest in the Western Balkans. By contrast, remittances received from citizens abroad (primarily in European countries) amounted to \u00e2\u0082\u00ac801 million (about $868.6 million) in 2018, equivalent to 12% of GDP. ", "Kosovo's key trade partners are the EU and neighboring countries in the Western Balkans. Kosovo has largely liberalized trade with both blocs through its Stabilization and Association Agreement with the EU (a cooperation framework that includes steps to liberalize trade) and as a signatory to the Central European Free Trade Agreement (CEFTA) alongside other non-EU Balkan countries. Kosovo's 2019 exports totaled about \u00e2\u0082\u00ac382 million ($414 million), of which the largest shares went to CEFTA countries and the EU. India, Switzerland, and Turkey were other significant export markets. Kosovo's top exports are metals; mineral products; plastics and rubber; and prepared foods, beverages, and tobacco. ", "In lobbying for greater FDI, Kosovo officials tout the country's young workforce, natural resources, low corporate tax rate, use of the euro, and preferential access to the EU market. However, various impediments to investment remain, including corruption, weak rule of law, uncertainties over Kosovo's dispute with Serbia, and energy supply disruptions. "], "subsections": []}]}, {"section_title": "Relations with Serbia23", "paragraphs": ["Kosovo declared independence from Serbia in 2008 with U.S. support. Serbia does not recognize Kosovo and relies on Russia in particular for diplomatic support. Many believe that the lack of normalized relations between Kosovo and Serbia impedes both countries' prosperity and progress toward EU membership and imperils Western Balkan stability. "], "subsections": [{"section_title": "War and Independence", "paragraphs": ["After centuries of Ottoman rule, Kosovo became part of Serbia in the early 20 th century. After World War II, Kosovo eventually had the status of a province of Serbia, one of six republics of Yugoslavia. Some Serbian perspectives view Kosovo's incorporation as the rightful return of territory that was the center of a medieval Serbian kingdom and is prominent in national identity narratives. Kosovo Albanian perspectives, by contrast, largely view Kosovo's incorporation into Serbia as an annexation that resulted in the marginalization of the Albanian-majority population. ", "During the 1980s, Kosovo Albanians grew increasingly mobilized and sought separation from Serbia. In 1989, Serbia\u00e2\u0080\u0094then led by autocrat Slobodan Milo\u00c5\u00a1evi\u00c4\u0087, who leveraged Serbian nationalism to consolidate power\u00e2\u0080\u0094imposed direct rule in Kosovo. Throughout the 1990s, amid Yugoslavia's violent breakup and Milo\u00c5\u00a1evi\u00c4\u0087's continued grip on power in Serbia, human rights groups condemned Serbian repression of Albanians in Kosovo, including suppression of the Albanian language and culture, mass arrests, and purges of Albanians from the public sector and education institutions. In the late 1990s, the Albanian-led Kosovo Liberation Army (KLA) launched an insurgency against Serbian rule in Kosovo. Serbia responded with increasingly heavy force in 1998 and 1999 (see \"Transitional Justice,\" below). ", "Following a NATO air campaign against Serbian targets in early 1999, Serbia agreed to end hostilities and withdraw its forces from Kosovo. U.N. Security Council (UNSC) Resolution 1244 authorized the U.N. Interim Administration Mission (UNMIK) to provide transitional civil administration and the NATO-led KFOR mission to provide security (both missions still operate on a smaller scale). Milo\u00c5\u00a1evi\u00c4\u0087 lost power in 2000 amid mass protests in Serbia. ", "Kosovo's decision to declare independence in 2008 followed protracted and ultimately unsuccessful efforts on the part of the international community to broker a settlement with Serbia. Serbia challenged Kosovo's actions before the International Court of Justice (ICJ); however, the ICJ's 2010 advisory opinion found that Kosovo had not contravened international law. "], "subsections": []}, {"section_title": "European Union-Facilitated Dialogue", "paragraphs": ["Following the ICJ ruling, the EU and the United States urged Kosovo and Serbia to participate in a dialogue aimed at eventual normalization of relations, but with an initial focus on technical measures to facilitate the movement of goods and people and otherwise improve the quality of life. In 2012, the talks advanced to a political level, bringing together leaders from the two countries for EU-brokered meetings. Leaders in both countries are constrained by public opinion and a political climate that tends to make major concessions costly. ", "Kosovo and Serbia's goal to join the EU helps incentivize their participation in the dialogue; the EU maintains that neither country can join the union until they normalize relations. Kosovo's participation in the dialogue also is motivated by its desire to clear a path to U.N. membership and, eventually, NATO membership (Serbian approval is seen as a key step to unlocking Kosovo's U.N. membership).", "To date, the dialogue has produced 33 agreements, mostly of a technical nature. In 2013, Serbia and Kosovo reached the Brussels Agreement, which set out principles to normalize relations, including measures to dismantle Serbian-backed parallel structures in northern Kosovo and create an Association of Serb Municipalities (ASM) linking Kosovo's 10 Serb-majority municipalities. Implementation of the dialogue's agreements has progressed in some areas, such as Kosovo Serb electoral participation and the integration of law enforcement and the judiciary in the north into statewide institutions. It has lagged in other areas, such as in the energy sector and in the ASM. ", "Although the dialogue format does not predetermine a specific outcome, the EU has urged a \"comprehensive, legally binding\" agreement between the parties. Two particularly thorny issues in any such agreement are the scope of Serbian recognition of Kosovo and the situation in northern Kosovo. It remains undetermined whether Serbia would fully recognize Kosovo or accept Kosovo's institutions and U.N. membership without formal recognition. It is also uncertain how northern Kosovo would be addressed in any final settlement. Prior to 2018 (see below), U.S. and EU officials rejected local (primarily Serbian) leaders' occasional hints at partition as a potential solution. The United States and the EU feared that transferring territory or changing borders along ethnic lines could set a dangerous precedent and destabilize the region. Alternatively, some consider the integration of the north into statewide institutions through autonomy measures, such as the ASM, to be a potential compromise that could preserve Kosovo's territorial integrity while offering concessions to Kosovo Serbs. However, the ASM has faced resistance from some in Kosovo due to concerns that it could undermine state integrity if it is endowed with significant executive functions and formalized links to Serbia. ", "Since late 2015, there has been little progress in reaching new agreements or implementing existing ones. Further, a shift in focus absorbed some of the dialogue's energies: in 2018, President Tha\u00c3\u00a7i and Serbian President Aleksandar Vu\u00c4\u008di\u00c4\u0087 raised the prospect of redrawing borders as an approach to normalizing relations (sometimes described as a land swap , a partition, or a border adjustment ). Analysts believe such a measure could entail transferring Serb-majority municipalities in northern Kosovo to Serbia, possibly in exchange for Albanian-majority areas of Serbia's Pre\u00c5\u00a1evo Valley. To the surprise of some, Trump Administration officials broke with long-standing U.S. and EU opposition to redrawing borders/partition by signaling willingness to consider such a proposal if Kosovo and Serbia were to reach a mutually satisfactory agreement. However, some European allies, particularly Germany, remain opposed to any such proposal. Acting Prime Minister Kurti and much of Kosovo's political class and population also oppose ceding territory. ", "The dialogue has been suspended since late 2018, when Kosovo imposed tariffs on Serbian goods in retaliation for Serbia's campaign to block Kosovo's Interpol membership bid and its efforts to lobby countries to \"de-recognize\" Kosovo. Serbian leaders say they will not return to negotiations until the tariffs are lifted. U.S. and European officials repeatedly called upon the two parties to return to talks. ", "In March 2020, Prime Minister Kurti announced the repeal of tariffs on raw material imports from Serbia. The following month, amid continued U.S. pressure, he announced the decision to conditionally repeal tariffs against Serbian goods and replace them with gradual reciprocity measures to match existing Serbian measures impacting the movement of goods and people. EU officials welcomed the tariff removal; however, U.S. officials expressed dissatisfaction with the reciprocity measures. ", "Kosovo's parties and leaders have become increasingly divided over several aspects of the dialogue, particularly the terms of lifting tariffs against Serbia. Furthermore, acting Prime Minister Kurti has challenged President Tha\u00c3\u00a7i's leadership of Kosovo's participation in the dialogue, arguing that the authority of the government (rather than the head of state) to lead efforts was confirmed in a prior Constitutional Court ruling. ", "Separately, some observers caution that growing uncertainty over the Western Balkan countries' EU membership prospects could alter the incentive structure weaving together the dialogue and the accession process. Recently, the United States has played a more direct role in Kosovo-Serbia negotiations (see \"U.S.-Kosovo Relations\"). "], "subsections": []}, {"section_title": "Transitional Justice", "paragraphs": ["Transitional justice relating to the 1998-1999 war is a sensitive, emotionally charged issue in Kosovo and Serbia and a source of friction in efforts to normalize relations. Serbian police, soldiers, and paramilitary forces were accused of systematic, intentional human rights violations during the conflict. About 13,000 people were killed, and nearly half of the population was forcibly driven out of Kosovo. An estimated 20,000 people were victims of conflict-related sexual violence. The vast majority of all victims were ethnic Albanians. On a smaller scale, some KLA fighters\u00e2\u0080\u0094particularly at the local level\u00e2\u0080\u0094carried out retributive acts of violence against Serb civilians, other minority civilians, and Albanian civilians whom they viewed as collaborators. ", "Before closing in 2017, the International Criminal Tribunal for the former Yugoslavia tried several high-profile cases relating to the Kosovo conflict, including those of deposed Serbian leader Milo\u00c5\u00a1evi\u00c4\u0087, who died before his trial finished, and former Kosovo Prime Minister Haradinaj, who was twice acquitted of charges relating to his role as a KLA commander. Domestic courts in Kosovo and Serbia now handle most war crimes cases. Weak law enforcement and judicial cooperation between Kosovo and Serbia is an impediment in the many cases in which evidence, witnesses, victims, and alleged perpetrators are no longer in Kosovo. Critics assert that low political will in Serbia in particular hampers transitional justice. Officials from successive post-Milo\u00c5\u00a1evi\u00c4\u0087 Serbian governments have been criticized for downplaying or failing to acknowledge Serbia's role in the wars in Bosnia, Croatia, and Kosovo in the 1990s and for fostering a climate that is hostile to transitional justice and societal reconciliation with the past.", "Transitional justice processes concerning the KLA are controversial in Kosovo. Under U.S. and EU pressure, in 2015 the National Assembly adopted a constitutional amendment and legislation to create the Kosovo Specialist Chambers and Specialist Prosecutor's Office. These institutions are part of Kosovo's judicial system but are primarily staffed by international jurists and located in The Hague, Netherlands, to allay concerns over witness intimidation and political pressure. They are to investigate the findings of a 2011 Council of Europe report concerning allegations of war crimes committed by some KLA units. The Specialist Chambers is controversial in Kosovo, because it is to try only alleged KLA crimes. In 2017, lawmakers from the then-governing coalition moved to abrogate the Specialist Chambers but backed down after the United States and allies warned that doing so would have \"severe negative consequences.\" More than 120 former KLA fighters are reported to have received summons for questioning during 2019, and analysts believe some Kosovo politicians could face indictment. "], "subsections": []}]}, {"section_title": "Relations with the EU and NATO", "paragraphs": ["The EU and NATO have played key roles in Kosovo; these institutional relationships continue to evolve alongside Kosovo's state-building processes. "], "subsections": [{"section_title": "European Union", "paragraphs": ["The EU has played a large role in Kosovo's postwar development. A European Union Rule of Law Mission (EULEX) was launched in 2008, assuming some tasks that UNMIK had carried out since 1999. The mission's scope has decreased over time as domestic institutions assume more responsibilities; today, EULEX's primary role is to monitor and advise on rule-of-law issues, with some executive functions. EULEX's current mandate runs through June 2020. Additionally, the EU provided over \u00e2\u0082\u00ac1.48 billion (about $1.6 billion) in assistance from 2007 to 2020, as well as emergency support to address the COVID-19 pandemic (see \"Coronavirus Disease 2019 (COVID-19) Response\").", "Kosovo is a potential candidate for EU membership and signed a Stabilization and Association agreement with the EU in 2014. The next steps in Kosovo's EU membership bid are obtaining candidate status and launching accession negotiations, which would commence the lengthy process of harmonizing domestic legislation with that of the EU. Kosovo's EU membership bid is complicated by the fact that five EU member states do not recognize it.", "Kosovo's more immediate goal in its relationship with the EU is to obtain for its citizens visa-free entry into the EU's Schengen area of free movement, which allows individuals to travel without passport checks between most European countries. Kosovo is the only Western Balkan country that does not have this status, despite EU officials' assessment that it fulfilled key requirements in 2018. Some observers contend that the EU's continued denial of visa liberalization to Kosovo has undercut the bloc's credibility and influence in the country."], "subsections": []}, {"section_title": "NATO", "paragraphs": ["The NATO-led Kosovo Force (KFOR) was launched in 1999 with 50,000 troops as a peace-support operation with a mandate under UNSC Resolution 1244. KFOR's current role is to maintain safety and security, support free movement of citizens, and facilitate Kosovo's Euro-Atlantic integration. As the security situation in Kosovo improved, NATO defense ministers in 2009 resolved to shift KFOR's posture toward a deterrent presence. Some of KFOR's functions have been transferred to the Kosovo Police. The United States remains the largest contributor to KFOR, providing about 660 of the 3,500 troops deployed as of November 2019. Any changes to the size of the mission would require approval from the North Atlantic Council and be \"dictated by continued positive conditions on the ground.\" Many analysts assert that KFOR continues to play an important role in regional security.", "KFOR has played a key role in developing the lightly armed Kosovo Security Force (KSF) and bringing it to full operational capacity. KSF's current role is largely nonmilitary in nature and is focused instead on emergency response. A recurring issue is how KSF may transform into a regular army. In December 2018, Kosovo lawmakers amended existing legislation to gradually transform KSF, drawing sharp objections from Kosovo Serb leaders and Serbia. NATO Secretary-General Jens Stoltenberg called the measure \"ill timed\" given heightened tensions with Serbia, cautioned that the decision could jeopardize cooperation with NATO, and expressed concern that the decisionmaking process had not been inclusive. The United States, however, expressed support for the Kosovo government's decision and urged officials to ensure that the transformation is gradual and inclusive of all communities. "], "subsections": []}]}, {"section_title": "U.S.-Kosovo Relations", "paragraphs": ["The United States enjoys broad popularity in Kosovo due to its support during the Milo\u00c5\u00a1evi\u00c4\u0087 era, its leadership of NATO's 1999 intervention in the Kosovo war, its backing of Kosovo's independence in 2008, and its subsequent diplomatic support. The United States supports Kosovo's Euro-Atlantic ambitions. Kosovo regards the United States as a security guarantor and critical ally, and many believe the United States retains influence in domestic policymaking and politics. ", "The Trump Administration has signaled growing interest in securing a deal to resolve the Kosovo-Serbia dispute and stepping up U.S. engagement in the Western Balkans more broadly. U.S. officials assert that the full normalization of Kosovo-Serbia relations is a \"strategic priority.\" In August 2019, U.S. Secretary of State Michael Pompeo appointed Deputy Assistant Secretary of State Matthew Palmer as his Special Representative for the Western Balkans. Shortly thereafter, President Donald Trump appointed U.S. Ambassador to Germany (now also Acting Director of National Intelligence) Richard Grenell as Special Presidential Envoy for Serbia and Kosovo Peace Negotiations. Many officials in Kosovo and Serbia have welcomed the prospect of a greater U.S. role in efforts to normalize relations. In January 2020, U.S. officials announced two new Kosovo-Serbia agreements on transportation links, pursuant to a strategy that focuses on economic growth and job creation as foundations for the normalization process. In March 2020, the White House hosted informal talks between President Tha\u00c3\u00a7i and President Vu\u00c4\u008di\u00c4\u0087. U.S. efforts currently center on bringing the two parties back to negotiations. As mentioned, U.S. officials criticized the reciprocity principles that acting Prime Minister Kurti announced in April 2020 alongside the conditional lifting of tariffs. ", "The direct U.S. role in brokering the recent transportation agreements and greater U.S. involvement in efforts to normalize Kosovo-Serbia relations is largely a departure from the approach taken under previous Administrations, which strongly supported EU-led efforts to normalize relations but did not play a formal, direct role. News of the January 2020 U.S.-brokered agreements reportedly came as a surprise to some European officials, who in turn have underscored the EU's long-standing role in the normalization process and appointed an EU special representative for the dialogue. Some analysts, while welcoming greater U.S. involvement, assert that the United States is more effective in engaging the Western Balkans when its actions and positions are aligned with those of its European allies; they contend that recent gaps between the United States and allies such as Germany on the Kosovo-Serbia dialogue, as well as on the March 2020 no-confidence session, have undercut overall engagement efforts. ", "Some observers and several Members of Congress have expressed concern over recent U.S. policies toward Kosovo's government, such as pausing implementation of a $49 million Millennium Challenge Corporation (MCC) Threshold Program and delaying the development of its proposed Compact Program, until Kosovo rescinds the tariffs. Some Kosovo officials expressed dismay over what they describe as U.S. pressure on Kosovo to lift tariffs against Serbia without equivalent pressure on Serbia to cease its campaign to undercut Kosovo's international legitimacy. On April 13, 2020, the Chairman of the House Committee on Foreign Affairs and the Ranking Member of the Senate Committee on Foreign Relations released a joint letter to Secretary Pompeo that welcomed greater U.S. diplomatic engagement in efforts to normalize relations between Kosovo and Serbia but expressed concern over what they described as \"heavy-handed\" treatment of the weeks-old Kurti government. They urged greater cooperation with the EU and restarting implementation of Kosovo's MCC Threshold Program. ", "Separately, acting Prime Minister Kurti alleged that U.S. officials had aided efforts to unseat his government in the March 2020 no-confidence session in hopes that a more pliable government in Pristina would quickly reach a deal with Serbia. U.S. officials have underscored that the United States is \"committed to working with any government formed through the constitutional process\" and rejected speculation that the United States was brokering a \"secret plan for land swaps.\" "], "subsections": [{"section_title": "Foreign Aid", "paragraphs": ["The United States is a significant source of foreign assistance to Kosovo (see Figure 2 ). U.S. assistance aims to support the implementation of agreements from the Kosovo-Serbia dialogue and to improve transparent and responsive governance, among other goals. Additional assistance is provided through a $49 million Millennium Challenge Corporation (MCC) Threshold Program that launched in 2017, with focus on governance and energy efficiency and reliability. Threshold programs are intended to help countries become eligible to participate in a larger Compact Program; in December 2018 and again in December 2019, the MCC board determined that Kosovo was eligible to participate in a compact. As discussed above, MCC assistance is currently on hold."], "subsections": []}, {"section_title": "Cooperation on Transnational Threats and Security Issues", "paragraphs": ["The United States and Kosovo cooperate to combat transnational threats and bolster security. Like elsewhere in the Western Balkans, Kosovo is a transit country and in some cases a source country for trafficking in humans, contraband smuggling (including illicit drugs), and other criminal activities. Observers consider Kosovo to have a relatively strong legal framework to counter trafficking, smuggling, and other transborder crimes. At the same time, the United States and the EU have urged officials in Kosovo to better implement the country's domestic laws by more strenuously investigating, prosecuting, and convicting traffickers, as well as by improving victim support. ", "Combatting terrorism and violent extremism is a core area of U.S.-Kosovo security cooperation. Kosovo is a secular state with a moderate Islamic tradition, but an estimated 400 Kosovo citizens traveled to Syria and Iraq in the 2010s to support the Islamic State amid the terrorist group's growing recruitment efforts. As this policy challenge emerged, the United States assisted Kosovo with tightening its legal framework to combat recruitment, foreign fighter travel, and terrorism financing, as well as strengthening its countering violent extremism strategy. ", "The United States provides support to Kosovo law enforcement and judicial institutions to combat terrorism and extremism. The State Department's Antiterrorism Assistance program, for example, has provided training or capacity-building support for the Kosovo Police's Counterterrorism Directorate and for the Border Police. Kosovo and the United States agreed to an extradition treaty in March 2016. In April 2019, the United States provided diplomatic and logistical support for the repatriation of about 110 Kosovo citizens from Syria\u00e2\u0080\u0094primarily women and children\u00e2\u0080\u0094who had supported the Islamic State or were born to parents who had. Some repatriated persons were indicted on terrorism-related charges.", "Kosovo has a sister-state relationship with Iowa that grew out of a 2011 State Partnership Program (SPP) between the Iowa National Guard and the Kosovo Security Force. That relationship has been hailed as a \"textbook example\" of the scope and aims of the SPP. "], "subsections": []}, {"section_title": "Congressional Engagement", "paragraphs": ["Congressional interest in Kosovo predates Yugoslavia's disintegration. Through resolutions, hearings, and congressional delegations, many Members of Congress highlighted the status of ethnic Albanian minorities in Yugoslavia, engaged in heated debates over intervention during the Clinton Administration, urged the George W. Bush Administration to back Kosovo's independence, and supported continued financial assistance. ", "Congressional interest and support continues. In the 116 th Congress, several hearings have addressed Kosovo in part or in whole, including an April 2019 House Foreign Affairs Committee hearing on Kosovo's wartime victims and recent hearings on Western Balkan issues held by the Senate Armed Services Committee and the Senate Foreign Relations Committee's Subcommittee on Europe and Regional Security Cooperation.", "Given Kosovo's geography, history, and current challenges, the country also factors into wider U.S. foreign policy issues in which Congress remains engaged. Such issues include transitional justice, corruption and the rule of law, combatting human trafficking and organized crime, U.S. foreign assistance, security in Europe, and EU and NATO enlargement. "], "subsections": []}]}]}}
{"id": "R45957", "title": "Capital Markets: Asset Management and Related Policy Issues", "released_date": "2019-10-11T00:00:00", "summary": ["The asset management industry is large and complex. Asset management companies\u00e2\u0080\u0094also known as investment management companies, or asset managers\u00e2\u0080\u0094are companies that manage money for a fee with the goal of growing it for those who invest with them. The most well-known product these companies create are investment funds. Many types of investment funds exist, including mutual funds, exchange-traded funds (ETFs), hedge funds, private equity, and venture capital. Their business practices and the types of regulatory requirements to which they are subject are far from standardized. Investment funds differ by, among other things, asset risk profile, investor access, portfolio company operations, and the ease of buying or selling their shares. In addition to investment funds, the asset management industry also consists of entities that connect funds to investors and other services, such as investment advice providers and custodians.", "Asset managers collectively manage trillions in assets, including investment savings, of nearly half of all U.S. households. The industry has experienced periods of high growth largely attributable to retail investors' increased reliance on asset managers to invest their money for them rather than investing their own money themselves.", "The Securities and Exchange Commission (SEC) is the primary regulator overseeing the asset management industry. The industry is governed by a somewhat fragmented regulatory regime stemming from several different statutes. Most of the regulatory framework was created in the 1930s and 1940s, but the business practices and trends affecting the industry are evolving. Examples of this evolution include (1) the rapid growth of the industry; (2) the increasing dependency of American businesses on capital market financing; (3) the shift from active to passive investment style; and (4) the expansion of the private securities markets.", "Congress has shown interest in issues relating to the asset management industry. During the 116 th Congress, lawmakers have held related hearings on asset management, financial innovation, investor protection, financial stability, and leveraged lending. Three areas that have been of particular interest to many are as follows:", "Whether the asset management industry has any implications for financial stability in the United States. Some financial authorities state that asset management companies did not pose much concern to financial stability during the 2007-2009 financial crisis period, with the exception of money market mutual funds. This is because asset managers are generally agents who provide investment services to clients without taking direct risk of financial loss. But some argue that structural vulnerabilities do exist and could be observed in certain financial instruments. Their implications, however, are uncertain.", "Whether regulation of the asset management industry provides sufficient access and protection for retail investors. The investor protection concerns center on investor access restrictions, especially for private funds. Private funds are perceived to have a higher risk and return profile relative to public funds, thus leading to discussions of investor protection and equal access to investment opportunities.", "The impact of financial technology on the industry, and whether the current regulatory framework is adequate to address these new technologies. Financial innovation is an integral part of the asset management industry's development, and it creates policy and regulatory debates regarding the extent to which the new technologies are appropriately served by the existing regulatory regime. One of the common goals of policymaking in this area is to protect investors without hindering innovation."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["The asset management industry operates in a complex system with many components. Asset management companies have two major product categories\u00e2\u0080\u0094public funds and private funds. Additionally, a number of intermediaries, such as investment advisers and custodians, provide distribution channels, safeguards, and other essential services to investors and issuers. Nearly half, or 44.8%, of all U.S. households own some form of public funds. When operating as expected, the industry functions to pool assets, share risks, allocate resources, produce information, and protect investors.", "Asset management companies\u00e2\u0080\u0094also referred to as investment management companies, money managers, funds, or investment funds\u00e2\u0080\u0094are collective investment vehicles that pool money from various individual or institutional investor clients and invest on their behalf for financial returns. The Securities and Exchange Commission (SEC) is the primary regulator of the asset management industry. The main statutes that govern the asset management industry at the federal level include the Investment Company Act of 1940 (P.L. 76-768), the Investment Advisers Act of 1940 (P.L. 76-768), the Securities Act of 1933 (P.L. 73-22), and the Securities Exchange Act of 1934 (P.L. 73-291).", "Public and private funds are distinguished by the types of investors who can access them and by the regulation applied to them. Public funds, such as mutual funds, exchange-traded funds (ETFs), closed-end funds, and unit investment trusts (UITs), are broadly accessible to investors of all types. Private funds are limited to more sophisticated institutional and retail (individual) investors, thus the name private fund . The main types of private funds are hedge funds, venture capital funds, and private equity. ", "The first part of this report provides an overview of the asset management industry and its regulation. Although there is no single definition for the industry, the report generally covers public and private investment funds and the industry components that serve those funds. The report also illustrates some of the industry's key risk exposures and the regulations designed to disclose, monitor, and mitigate them. ", "The second part of this report considers current trends and policy issues, including (1) whether the asset management industry affects the financial stability of the United States; (2) whether regulation of the asset management industry provides sufficient protection for the retail investors who invest money in the industry; and (3) the impact of financial technology, or \"fintech,\" on the industry, and whether the current regulatory framework is adequate to address these new technologies."], "subsections": [{"section_title": "Industry Assets", "paragraphs": ["The asset management industry is large and highly concentrated. Exact statistics differ somewhat depending on the source, but one industry report on the world's 500 largest asset managers indicates that the largest U.S. asset managers (i.e., those within the global top 500 ranking) managed around $50 trillion in assets in 2017. The top 10 U.S. asset managers alone held $26.2 trillion in assets under management as of year-end 2017 ( Table 1 ). ", "The industry's assets are measured by assets under management (AUM) and net assets. AUM or gross assets refer to the sum of assets overseen by the asset manager. Net assets refer to the value of assets minus liabilities. U.S.-registered investment companies or \"public funds\" held $21.4 trillion in total net assets as of 2018. Private funds, which are not accessible by typical households, held $8.7 trillion in total net assets and $13.5 trillion in AUM as of December 2018. In addition, other market intermediaries, such as broker-dealers, held around $3.1 trillion AUM as of second quarter 2018. "], "subsections": []}]}, {"section_title": "Types of Asset Management Companies", "paragraphs": ["Many types of asset management companies exist. Further, the different types of asset management companies are subject to different regulatory requirements. This section highlights major types of asset management companies, including public funds, private funds, and other forms of asset management. "], "subsections": [{"section_title": "Public Funds", "paragraphs": ["Public funds are pooled investment vehicles that gather money from a wide variety of investors and invest the money in stocks, bonds, and other securities. They are SEC-registered investment companies that are open to all institutional and retail investors in the public, thus the name public funds. Asset holdings of public funds experienced significant growth in the past two decades ( Figure 1 ). At year-end 2018, public funds managed more than $21.4 trillion in assets, largely on behalf of more than 100 million U.S. retail investors. ", "The four basic types of public funds are mutual funds, closed-end funds, exchange-traded funds, and unit investment trusts."], "subsections": [{"section_title": "Mutual Funds", "paragraphs": ["Mutual funds are the most widely used pooled investment vehicle. They are also called open-ended funds, referring to their continuous offering of shares. Mutual funds do not have a limit on the number of shares they can issue. The shares are not traded on exchanges. When investors need to exit their investment positions, they \"redeem\" shares at net asset value (NAV). Redemption means selling shares back to the mutual fund. These technical features, including NAV and redemption, are revisited in the context of compliance and risk controls in \" Regulatory and Risk Mitigation Frameworks \" section of this report. "], "subsections": []}, {"section_title": "Closed-End Funds", "paragraphs": ["A closed-end fund is a publicly traded investment company that sells a limited number of shares rather than continuously offering them. Closed-end fund shares are not redeemable, meaning they cannot be returned to the fund for NAV, but they are traded in the secondary market. Investors can exit closed-end funds by buying or selling shares on securities exchanges. "], "subsections": []}, {"section_title": "Exchange-Traded Funds (ETF)", "paragraphs": ["ETFs are pooled investment vehicles that combine features of both mutual funds and closed-end funds. ETFs offer investors a way to pool their money into a fund with continuous share offerings that can also trade on exchanges like a stock. "], "subsections": []}, {"section_title": "Unit Investment Trusts (UIT)", "paragraphs": ["UITs invest money raised from many investors in a one-time public offering in a generally fixed portfolio of stocks, bonds, or other investments. It is an investment company organized under a trust or similar structure that issues redeemable securities, each of which represents an interest in a unit of specified securities. "], "subsections": []}]}, {"section_title": "Private Funds", "paragraphs": ["Private funds, in contrast, are investment companies that operate through exemptions from certain SEC regulation. Private funds are also called alternative investments. Relative to public funds, private funds tend to take on higher risk, and they are subject to more investor access restrictions. Private funds are available to only a limited number of qualified investors, thus the name private funds. ", "As of December 2018, private funds held $8.7 trillion in total net assets and $13.5 trillion in gross assets under management ( Figure 2 ). From the SEC's first available private funds statistics in the first quarter of 2013 to the fourth quarter of 2018, the private fund industry grew more than 60%, primarily led by increases in private equity and hedge funds. The rules governing the funds were established as part of the Investment Company Act in the 1940s, but some argue the drafters never foresaw the rise of private funds at such a scale. The current private fund landscape thus raises questions regarding if or how the regulations ought to be updated. ", "The main types of private funds include hedge funds, venture capital funds, private equity funds, and family offices, but these fund types are not mutually exclusive. Some use the term private equity interchangeably as a catch-all phrase to describe all types of private funds. This report uses the terminology set forth by the SEC in its private funds Form PF reporting system.", "Among all major types of private funds, only venture capital funds and family offices have legal definitions. In 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act (P.L. 111-203; Dodd-Frank Act) removed the historical exemption from SEC registration for investment advisers with fewer than 15 clients to \"fill a key gap in the regulatory landscape.\" The act also established legal definitions of venture capital funds and family offices, so that these selected private funds could be exempted from the new regulation requirement. In addition, private funds with less than $150 million in assets under management continue to be exempted."], "subsections": [{"section_title": "Private Equity Funds", "paragraphs": ["A private equity fund is a pooled investment vehicle that typically concentrates on investments not offered to the public, such as ownership stakes in privately held companies. Private equity fund investors include high-net-worth individuals and families, pension funds, endowments, banks and insurance companies. According to a 2017 survey, around 88% of institutional investors invested in private equity funds; nearly a third allocated more than 10% of their assets in private equity."], "subsections": []}, {"section_title": "Venture Capital Funds", "paragraphs": ["Venture capital funds are sources of startup financing for early stage, high-potential firms, such as high-tech startups. Pursuant to the Dodd-Frank Act, the SEC established a definition for venture capital funds in 2011. To be considered for the venture capital exemption from certain investment company regulatory requirements, the fund should generally pursue a venture strategy, cannot borrow funding to incur leverage, and should hold no more than 20% of its capital in nonqualifying investments, among other conditions. The legal definition of \"venture capital fund\" needs to be met in order to qualify for regulatory exemptions."], "subsections": []}, {"section_title": "Hedge Funds", "paragraphs": ["Hedge funds are pooled investment vehicles that often deploy more \"speculative\" investment practices than mutual funds, such as leverage and short-selling. Among investors, hedge funds are more controversial than other funds because of their high fee structure coupled with reported persistent underperformance. Hedge fund fee structures often include an annual asset management fee of 1% to 2% of assets under management as well as an additional 20% performance fee on any profits. This fee structure could motivate a hedge fund manager to take greater risks in the hope of generating a larger performance fee, yet only the investors, not the hedge funds, bear the downside risk. ", "Prior to the Dodd-Frank Act, hedge funds were virtually unregulated, and regulators were largely unaware of the hedge fund market's size, investment strategies, and number of players. The Dodd-Frank Act mandated more detailed reporting of hedge funds and other private funds. Confidential filings from hedge funds are now reported to the SEC. Despite continuous discussions of whether hedge funds' fees are excessive and their closings, the hedge fund industry remains at peak net assets levels of around $4 trillion ( Figure 2 ). "], "subsections": []}, {"section_title": "Family Offices", "paragraphs": ["Family offices are investment firms that solely manage the wealth of family clients. They do not offer their services to the public and are generally exempt from SEC registration requirements. According to a 2018 report, around two-thirds of family offices were established after 2000. Owing to their exclusivity, family offices receive minimal regulation and oversight. They have grown rapidly in recent years and are reportedly increasingly becoming an option for some hedge fund managers, who solely manage their own money. "], "subsections": []}]}, {"section_title": "Public Versus Private Funds", "paragraphs": [" Table 2 compares public and private funds' characteristics. The main differences between public and private funds include the following examples:", "Risk \u00e2\u0080\u0094private funds normally invest in higher-risk assets and deploy more volatile investment strategies. For example, certain private funds focus on funding for startups, which are inherently riskier with higher possibilities for business failure. Certain private funds also have a greater ability to borrow money to invest (leverage), which could multiply the funds' risks and returns. Regulation \u00e2\u0080\u0094private funds face less regulation relative to public funds. For example, whereas public funds generally have to calculate daily valuation and maintain periodic public reporting, private funds are not subject to such mandates. Investor access \u00e2\u0080\u0094 private funds are limited as to the type and the number of investors they can reach, while public funds are available to all investors. These restrictions are meant to protect certain retail investors who are perceived as less sophisticated, given the generally higher risk and lower levels of regulation. Portfolio company involvement \u00e2\u0080\u0094 a private equity or venture capital fund typically uses client funds to obtain a controlling interest in a nonpublicly traded company (called a portfolio company). This controlling interest normally allows the private fund to have a say in the portfolio company's operations. Public funds, in contrast, typically do not directly affect portfolio company management and operations, except through shareholder voting processes. Liquidity \u00e2\u0080\u0094 liquidity refers to how easy it is to buy and sell securities without affecting the price. Public funds are considered liquid for investors because of their redemption or exchange trading features, whereas private funds are considered illiquid. H olding period Private funds often invest in private securities that are not publicly traded. This causes private funds to normally have to wait for three to seven years before a \"liquidity event\" can occur. The liquidity events are typically company buyouts or initial public offerings (IPOs). Private funds typically realize the gains or losses of their investments only when portfolio companies are sold or go public. Public funds mostly invest in publicly traded companies that are considered to offer immediate liquidity. Public funds are not restricted from investing in private securities, but certain public fund regulatory requirements, such as daily valuation, make private investment operations less practical for public funds. As such, public funds largely focus on publicly traded securities and have not significantly undertaken private securities investments. Publicly traded private funds Some of the world's largest private fund managers are publicly traded, and thus able to offer company stock level liquidity. This means that public investors can directly purchase these fund companies' stocks and gain exposure to the companies' private fund investment portfolios as a whole. Publicly listed asset management firms include Amundi Group, Man Group, Och-Ziff Capital Management Group, Blackstone Group, and KKR. In 2017, they managed $2.4 trillion combined. Publicly traded private funds must concurrently adhere to private fund compliance requirements and restrictions, as well as public security offering standards. These private funds separately answer to both their direct fund investors and public shareholders. "], "subsections": []}, {"section_title": "Other Forms of Asset Management", "paragraphs": ["Other forms of asset management do not fit tightly into the public or private fund categorization."], "subsections": [{"section_title": "Business Development Companies", "paragraphs": ["Business development companies (BDCs) are closed-end funds that primarily invest in small and developing businesses, and that generally provide operational assistance to such businesses in addition to funding. Congress created BDCs in 1980 in amendments to the Investment Company Act of 1940 to \"make capital more readily available to small, developing, and financially troubled companies that are not able to access public markets or other forms of conventional financing.\" BDCs are not required to register with the SEC as investment companies, and thus face much less regulation than mutual funds. But they do offer their securities to the public, and their public offerings are subject to full SEC reporting requirements."], "subsections": []}, {"section_title": "Fund of Funds", "paragraphs": ["A fund of funds is an investment fund that invests in other funds. The fund of funds design aims to achieve asset allocation, diversification, hedging, or other investment objectives. The SEC estimates that almost half of all registered funds invest in other funds. "], "subsections": []}]}]}, {"section_title": "Operational Components", "paragraphs": ["The asset management industry operates in a complex system with many components, including different types of funds and various intermediaries. This section explains the operation of a typical public fund as well as other prominent actors supporting the fund and the efficient operations of the industry. "], "subsections": [{"section_title": "Operation of a Fund", "paragraphs": ["Funds typically operate through asset management companies (AMCs). The largest AMCs, as measured by assets under management, are shown in Table 1 . The AMCs can manage multiple funds of different types. Each fund has an Investment Management Agreement that designates the AMC to manage the fund's portfolio composition and trading. As Figure 3 illustrates, the end investors own the fund and contribute cash for its shares, custodians safeguard the fund assets, and the fund can also interact with certain counterparties for other transactions. "], "subsections": []}, {"section_title": "Key Intermediaries", "paragraphs": ["The main players supporting the asset management industry include those who are more directly related to the flow of capital, such as financial advisers and others who serve back-office or administrative functions, such as data and research, asset safekeeping, and shareholder voting. Because funds are also financial products that are sold to investors, investment advisers and broker-dealers are the most commonly used retail sales and distribution channels. This section discusses several selected groups of players that frequently appear in asset management policy discussions. "], "subsections": [{"section_title": "Investment Advisers", "paragraphs": ["An investment adviser is \"any person or firm that for compensation is engaged in the business of providing advice to others or issuing reports or analysis regarding securities.\" Investment advisers generally include money managers, investment consultants, financial planners, and others who provide advice about securities. Investment advisers meeting the SEC legal definition must register with the SEC. As of 2018, the SEC oversaw around 13,200 registered investment advisers."], "subsections": []}, {"section_title": "Broker-Dealers", "paragraphs": ["Brokers and dealers are often discussed together, but they are two different types of entities. Brokers conduct securities transactions for others. They are generally paid a commission on securities sales. Dealers conduct securities transactions for their own accounts. Most brokers and dealers must register with the SEC and also comply with the guidance of self-regulatory organizations (SROs). The Financial Industry Regulatory Authority (FINRA) is the main SRO for the broker-dealer industry. FINRA writes and enforces broker-dealer rules, conducts examinations, and provides investor education. As of 2018, FINRA supervises around 3,596 member firms and 626,127 individual registered reps."], "subsections": []}, {"section_title": "Custodians", "paragraphs": ["Custodians provide safekeeping of financial assets. They are financial institutions that do not have legal ownership of assets but are tasked with holding and securing the assets, among other administrative functions. As mentioned in more detail in the \" Asset Management Risks and Regulation \" section of this report, client assets are not owned by an adviser or fund. As part of the regulatory requirements to protect investors, client assets are generally required to be safeguarded by a qualified custodian who maintains possession and control of the assets. In the past 90 years, financial custody has evolved from a system of self-custody to custodians playing key component of asset management operations. Today, four banks (BNY Mellon, J.P. Morgan, State Street, and Citigroup) service around $114 trillion of global assets under custody. "], "subsections": []}, {"section_title": "Information Services", "paragraphs": ["The asset management industry in its essence is also an investment research industry that aggregates data and analysis for investment decision-making. Owing to the sophistication of the industry's technology and analysis, there are many data vendors and research providers, including national exchanges, data and technology aggregators, and sell-side researchers involved."], "subsections": []}, {"section_title": "The Proxy System", "paragraphs": ["A proxy vote is a vote cast by others on behalf of a shareholder who may not physically attend a shareholder meeting. This is how the vast majority of shareholder votes are cast. The SEC requires investment managers to vote as proxies in the best interest of their clients and disclose their voting policies and records to clients. During the 2018 shareholder meeting season, there were more than 4,000 shareholder meetings involving over 259 million proxy votes. Under the current system, shareholders cast their votes through a variety of intermediaries that assume the functions of forwarding proxy materials, collecting voting instructions, voting shares, soliciting proxies, tabulating proxies, and analyzing proxy issues. Different aspects of this complex system have attracted years-long policy debates regarding proxy reform."], "subsections": []}]}]}, {"section_title": "Regulatory and Risk Mitigation Frameworks", "paragraphs": ["The asset management industry's legislative history is relatively long and complex. The current regulatory regime governing the asset management industry was not a comprehensive design from inception, but rather developed through many iterations of adjustments and expansions. Therefore, the asset management industry is overseen by a somewhat fragmented regulatory regime with areas of disconnect between business practices and the legal definitions describing them. ", "Congress created the SEC during the Great Depression to restore public confidence in the U.S. capital markets. Early policymaking in the 1930s focused on full disclosure, with the specific intention that publicly traded companies tell the whole truth about any material issues pertaining to their securities and the risks associated with investing in them. However, Congress realized that the disclosure-based approach alone was not enough to deter fraudulent and abusive activities in the asset management industry, which flourished in the 1920s and 1930s. Congress thus directed the SEC to conduct a 1\u00c2\u00bd-year study of the issue in the Public Utility Holding Company Act of 1935. The SEC took four years, resulting in a four-part study with six additional supplemental reports. Based on the SEC research and subsequent hearings, in 1940, Congress introduced two new laws to govern the asset management industry\u00e2\u0080\u0094the Investment Company Act of 1940 and the Investment Advisers Act of 1940. These statutes and regulations required those who manage and distribute funds to treat investors fairly and honestly. The textbox below describes the individual laws, which generally apply to the asset management industry as follows:", "Asset management companies must comply with the Investment Company Act of 1940 or gain exemption from its requirements. Funds' portfolio managers or investment advisers generally must register with the SEC under the Investment Advisers Act of 1940. The funds themselves are securities, and thus subject to federal securities regulation in relation to securities offering and trading, including the Securities Act of 1933 and the Securities Exchange Act of 1934. "], "subsections": [{"section_title": "Asset Management Risks and Regulation Compared With Banking", "paragraphs": ["After the 2007-2009 financial crisis, Congress directed more attention toward financial services sector risks and policy solutions. In some congressional discussions, risks in the banking and asset management industries were jointly debated. Although similarities exist between the two industries' financial risks, there are fundamental differences. These differences are derived from the industries' different business models, risk controls, and risk mitigation backstops. "], "subsections": [{"section_title": "Agent-Based Versus Principal-Based Models", "paragraphs": ["The asset management framework is an agent-based model that separates investment management functions from investment ownership. This is different from the principal-based model for banking, in which banks own and retain the assets and risks. In many ways, asset managers are viewed as agents that perform investment management services. They are compensated through service or performance fees, but otherwise they are insulated from the investment returns or their clients' account losses. Because their clients' assets are not owned by the funds, asset managers routinely exit the market without significant market impact. ", "Even when under market stress, the risks associated with asset managers winding down differ greatly from those associated with bank liquidations. Whereas bank failures may lead to government financial intervention for either recovery or resolution, asset managers do not own or guarantee client assets. Their clients bear investment performance risks and can directly transfer assets out of failing asset management firms. With that said, macro-prudential tools for detecting and mitigating systemic risks in the banking sector have been considered for asset management firms. For example, the Dodd-Frank Act mandated the SEC implement annual stress testing for certain asset managers. "], "subsections": []}]}, {"section_title": "Disclosure Requirements", "paragraphs": ["Disclosure requirements are the cornerstone of securities regulation. The purposes of and requirements for disclosure differ for public and private funds. Public funds normally provide public disclosures to inform investors. Private funds normally provide SEC-only disclosures that allow the agency to monitor risks and inform policy, while maintaining confidentiality. "], "subsections": [{"section_title": "Public Disclosure", "paragraphs": ["Public disclosures allow the public to make informed judgments about whether to invest in specific funds by ensuring that investors receive significant information on the funds. The disclosure-based regulatory philosophy is consistent with Supreme Court Justice Louis Brandeis's famous dictum that \"sunlight is said to be the best of disinfectants; electric light the most efficient policeman.\" Public disclosures, including mutual fund and ETF prospectuses, are available for free from the SEC public disclosure portal. SEC-registered investment advisers, for example, are also required to publicly report their business operations and certain disciplinary events. "], "subsections": []}, {"section_title": "Nonpublic SEC-only Disclosure", "paragraphs": ["A number of SEC-only reporting requirements apply to public and private funds and their advisers. The private disclosures are often for purposes of regulatory review, risk monitoring, and policymaking. The SEC normally does not make information that identifies any particular registrant publicly available, although it can release certain information in aggregate and use the information in enforcement actions. Examples of private disclosure include public fund liquidity position reporting and periodic reporting of private funds by SEC-registered investment advisers pursuant to Dodd-Frank Act requirements."], "subsections": []}]}, {"section_title": "Investor Access Restrictions", "paragraphs": ["Public funds are open to all investors, but private funds' investor access is restricted by several intersecting federal laws that govern different regulatory requirements for securities offerings, investment management companies, and investment advisers. Only those investors who meet certain definitions can invest in private funds without triggering related regulatory requirements. Funds can avoid additional regulatory requirements by adhering to restrictions on the types of investors permitted to invest in the fund; some examples follows: ", "Accredited investor\u00e2\u0080\u0094if a fund's investors meet the definition, such a fund could qualify for private securities exemption. Qualified client\u00e2\u0080\u0094if a fund's investors meet the definition, the fund manager could receive performance-based compensation. Qualified purchaser\u00e2\u0080\u0094if a fund's investors meet the definition, the fund could be exempted from registering as an investment company. ", "Most private funds choose to comply with investor definitions to preserve their scaled-down regulatory requirements relative to public funds. The specifics of the investor access definitions, especially the accredited investor definition, have been a source of policy debate. "], "subsections": []}, {"section_title": "Examinations", "paragraphs": ["The SEC's Office of Compliance Inspections and Examinations (OCIE) is responsible for conducting examinations and certain other risk oversight of the asset management industry. In addition, self-regulatory agencies, such as FINRA, also conduct examinations of their members under SEC oversight. ", "OCIE examinations focus on compliance, fraud, risk monitoring, and informing policymaking. OCIE has 1,000 employees in 11 regional offices and headquarters. Approximately 10,000 mutual funds and ETFs, 13,200 investment advisers, and 3,800 broker-dealers, among other regulated entities are subject to potential examinations. The OCIE completed more than 3,000 examinations in fiscal year 2018. "], "subsections": []}, {"section_title": "Securities Investor Protection Corporation", "paragraphs": ["The federal government does not guarantee or insure the value and performance of investment management accounts. As the common investment disclaimer\u00e2\u0080\u0094\"past performance is no guarantee of future results\"\u00e2\u0080\u0094suggests, due to unpredictable market fluctuations, capital markets investors could experience underperformance or lose their principal. Investors should be prepared to absorb their own losses.", "When a capital markets firm fails, certain losses could possibly receive limited payouts for investors from the Securities Investor Protection Corporation (SIPC). However, the nature and the level of payouts are different than those associated with the banking insurer Federal Deposit Insurance Corporation (FDIC).", "SIPC is a nongovernment nonprofit corporation created by the Securities Investor Protection Act. It insures up to $500,000 of cash and securities (with a $250,000 limit for cash) in brokerage accounts to protect customers against cash and securities losses if their brokerage firm fails. SIPC only protects the custody function of the broker-dealers, which means it works to restore any assets missing from customers' accounts but it does not protect the principal against the decline in market value of investments. The FDIC, in contrast, is a government organization that insures up to $250,000 of deposits, including principal, in banks and thrift institutions when these institutions fail."], "subsections": []}, {"section_title": "Risk Mitigation Controls", "paragraphs": ["The asset management industry faces a number of risks. Some of them are inherent in the industry's agent-based business model whereas others are more common to financial services institutions. This section lays out examples of the risk factors and attendant mitigation controls to help policymakers better comprehend the rationale behind the regulatory requirements. This section also contains a summary table ( Table 3 ) providing context on how certain existing regulations fit into risk mitigation policy goals."], "subsections": [{"section_title": "Conflict of Interest", "paragraphs": ["Context : Conflicts of interest may occur in any principal-agent paradigm within which one entity (agent) makes decisions on behalf of another entity (principal). In the context of asset management industry client relationships, the central concern is that asset managers (agents) may not act in the best interest of investors (principals). An example of a conflict of interest would be an investment adviser directing clients' investments toward products that generate higher sales commissions, rather than products that best fit the clients' financial needs. Example s of mitigation controls : SEC-registered investment advisers are fiduciaries, meaning they have a legal obligation to act in the best interest of their clients. FINRA also casts a similar, yet less rigorous suitability requirement for broker-dealers. The standard requires broker-dealers to make investment recommendations to suit client financial needs. In addition, the SEC adopted Regulation Best Interest in June 2019 to address certain conflict of interest concerns in financial advisory services. The proposal aims to further prevent financial advisers from placing their own financial or other interests ahead of the best interest of their clients. "], "subsections": []}, {"section_title": "Liquidity", "paragraphs": ["Context : Liquidity, as mentioned previously, is commonly defined as the ease of buying or selling assets without affecting their prices. The easier the assets are to sell, the higher their liquidity. The liquidity issue could be especially important during market distress, when factors like cash needs and exceptional volatility in asset valuations could drive panic reactions in the market. Different funds have different types of liquidity risk concerns. Mutual funds that allow investors to redeem their shares daily need to maintain sufficient liquid assets to meet shareholder redemptions and minimize the impact of the redemptions on the funds' remaining shareholders. Private funds present different concerns because, in most cases, their investors enter into illiquid investments knowing that they could experience several years of holding periods. Private funds generally do not promise daily redemption, and investors in private funds cannot easily sell their positions to meet urgent cash needs. Example s of mitigation controls : Funds that offer frequent redemption as a product feature must maintain liquid assets to meet potential redemptions. Under the SEC liquidity rule, such funds must categorize their investments into four different types and limit their illiquid investments to no more than 15% of the funds' net assets. "], "subsections": []}, {"section_title": "Leverage", "paragraphs": ["Context : Leverage generally refers to the use of borrowed funding to invest, which may multiply risks and returns. High leverage could complicate funds' investment structures and increase risks to both individual investors and the financial system as a whole, due to its effects in multiplying both losses and returns. Examples of mitigation controls: Mutual funds and closed-end funds are subject to a 300% asset coverage requirement. This is a leverage ratio of 33%, meaning the fund cannot borrow an amount exceeding a third of its portfolio size. By contrast, most private funds do not have leverage restrictions."], "subsections": []}, {"section_title": "Operational Risks", "paragraphs": ["Context : Operational risks arise from operational challenges and business transaction issues. Operational risks are especially important for the asset management industry because the industry manages client accounts. Accurate client account recordkeeping and transfer, asset safeguards, information sharing, and cybersecurity are some areas of operational importance. Examples of mitigation controls: The SEC's custody rule requires registered investment advisers to engage qualified custodians to (1) have possession and control of assets, (2) undergo annual surprise examinations, (3) have a qualified custodian maintaining client assets, and (4) send account statements directly to the clients instead of to funds, among other requirements."], "subsections": []}]}]}, {"section_title": "Recent Trends", "paragraphs": ["Over the past several decades, the asset-management industry has undergone several changes that may have important implications for public policy. This section discusses a number of these changes, including (1) the industry's overall growth; (2) increased reliance on capital markets for financing rather than bank loans by American businesses; (3) a shift from active to passive investment style; and (4) the expansion of private securities markets."], "subsections": [{"section_title": "The Asset-Management Industry's Growth", "paragraphs": ["In the past two decades, the asset-management industry has grown significantly because of increased use of defined-contribution retirement plans, asset appreciation, and changes in investment styles and preferences, among other things (see Figure 1 and Figure 2 ). Over the past 70 years, investors have largely shifted from investing directly themselves to investing indirectly through asset managers. For example, in the 1940s, almost all corporate equities were held by households and nonprofits, whereas in 2017, direct holdings by individuals made up less than 40% of total holdings. Some argue that the percentage of equity directly held by individuals could be closer to 20%. As a result of these changes, asset managers now dominate the investment decisionmaking on behalf of retail investors and other institutions. Their influence on both investors and the companies they invest in has expanded. "], "subsections": []}, {"section_title": "Capital Market Financing Outpaces Bank Lending", "paragraphs": ["The importance of the asset-management industry has also increased because of changes in the relative importance of the capital markets and banks. Specifically, growth in capital markets financing (i.e., the issuance of bonds and other debt securities) significantly outpaced growth in bank loans ( Figure 4 ). ", "This general trend has increased the relative importance of asset managers, who represent major holders of such bonds and debt securities. For example, mutual funds and ETFs held about 21% of all U.S. corporate bonds in 2018, more than double their percentage of such holdings in 2009. The International Monetary Fund (IMF) has observed that this shift may be attributable to tighter banking regulation, rising compliance costs, and bank deleveraging following the 2007-2009 financial crisis. As Figure 4 illustrates, U.S. capital markets play a much more dominant role in business financing relative to the Euro area."], "subsections": []}, {"section_title": "Active to Passive Investment Style Shift", "paragraphs": ["The asset-management industry has also witnessed a trend away from active and toward passive management, whereby asset managers do not actively select funds' portfolio assets, instead pegging investments to an index, such as the S&P 500. In recent years, passive investment through index mutual funds and ETFs has displaced active investment ( Figure 5 ). This trend has mostly been driven by passive funds' lower costs through management fee savings and superior performance. According to a 2016 S&P Global study, for example, active stock managers underperformed their passive-fund targets more than 80% of the time over 1-year, 5-year, and 10-year periods. ", "The rise of passive investing has generated criticism from active asset managers. Some active managers are concerned that the growth of passive investing will undermine price discovery through reduced fundamental research by active asset managers. They argue this could create systemic risk concerns through correlations and volatility, affecting the efficient allocation of capital. Regarding financial stability, a recent Federal Reserve whitepaper concludes that the shift from active to passive investment has probably reduced liquidity transformation risks while amplifying market volatility and asset management industry concentration. Finally, some argued that actively managed funds perform better than passive strategies when markets are less efficient. If this argument is true, then actively managed funds may be able to capitalize on market inefficiencies caused by growth in passive investment, enabling continued growth in active management as well."], "subsections": []}, {"section_title": "Private Securities Offerings Outpace Public Offerings", "paragraphs": ["The asset-management industry has also taken on increased importance because of a significant rise in the volume of private securities offerings. Because many asset managers purchase large volumes of private securities, this shift has led the asset-management industry to occupy an increasingly central role in U.S. financial markets. In 2018, American companies raised roughly $2.9 trillion through private offerings\u00e2\u0080\u0094more than double the size of public offerings that year. ", "The increase in the volume of private securities offerings has also attracted the attention of policymakers, some of whom have proposed measures to increase investor access to private securities markets. For example, a type of closed-end fund, referred to as an interval fund, can conduct periodic repurchases generally every 3, 6, or 12 months. Because of the longer intervals, these funds are better able to involve less liquid assets such as private securities. In a 2017 report, the Treasury recommended the SEC review the rules governing interval funds. The SEC also explored the potential of interval funds in its 2019 concept release regarding private securities markets."], "subsections": []}]}, {"section_title": "Policy Issues", "paragraphs": ["The increased importance of the asset-management industry raises a variety of policy issues. This section discusses several of these issues, including financial stability, investor protection, and financial innovation. "], "subsections": [{"section_title": "Financial Stability", "paragraphs": ["Financial stability typically refers to the ability of the financial system to withstand economic shocks and satisfy its basic functions: financial intermediation, risk management, and capital allocation. Policymakers attempting to safeguard financial stability generally focus on the minimization of s ystemic risk \u00e2\u0080\u0094the risk that the entire financial system will cease to perform these functions. Former Federal Reserve Governor Daniel Tarullo has identified four possible sources of systemic risk: ", "Domino or spillover effects \u00e2\u0080\u0094 when one firm's failure imposes debilitating losses on its counterparties. Feedback loops \u00e2\u0080\u0094 when fire sales of assets depress market prices, thereby imposing losses on all investors holding the same asset class. Contagion effects \u00e2\u0080\u0094a run in which investors suddenly withdraw their funds from a class of institutions or assets. Disruptions to critical functions \u00e2\u0080\u0094 when a market can no longer operate because of a breakdown in market infrastructure. ", "According to an international financial organization, the Financial Stability Board, asset-management companies did not display particularly large financial stability concerns during the 2007-2009 financial crisis, with the exception of money market mutual funds (MMFs). This is a result of the fact that asset managers are generally agents who provide investment services to clients rather than principals who invest for themselves. They manage large amounts of assets, but do not have direct ownership of them. As such, asset managers are largely insulated from client account losses. This does not mean that the industry is free of financial stability concerns. Actual market events show that even perceived-to-be-safe funds could trigger financial system instability. For example, the money market mutual fund industry triggered market disruptions in 2008 and accelerated the 2007-2009 financial crisis. Before that, hedge fund Long-Term Capital Management's failure in 1998 also demonstrated that the transmission of risks from one event can broadly affect the functioning of the financial system. ", "The Financial Stability Board identified several asset management structural vulnerabilities that could present financial stability risks. These vulnerabilities include liquidity mismatch, leverage within investment funds, operational risk and challenges under stressed conditions, and certain lending activities of asset managers and funds. This section uses three examples\u00e2\u0080\u0094money market mutual funds, ETFs, and leveraged lending\u00e2\u0080\u0094to illustrate the context of selected asset management structural vulnerabilities and the extent to which these vulnerabilities could cause financial stability concerns."], "subsections": [{"section_title": "Money Market Mutual Funds139", "paragraphs": ["Money market mutual funds (MMFs) represent one corner of the asset-management industry that has generated systemic-risk issues. MMFs are mutual funds that invest in short-term debt securities, such as U.S. Treasury bills or commercial paper (a type of corporate debt). Because MMFs invest in high-quality, short-term debt securities, investors generally regard them as safe alternatives to bank deposits even though they are not federally insured like bank deposits. Like the shares of other mutual funds, MMF shares are generally redeemed at net asset value (NAV), meaning investors sell shares back to a fund at a per share value of the fund's assets minus its liabilities. ", "Some MMFs, however, operate somewhat differently than most other mutual funds. Specifically, some MMFs aim to keep a stable NAV at $1.00 per share, paying dividends as their value rises and thereby even more closely mimicking the features of bank deposits. If its stable NAV drops below $1.00, which rarely occurs, it is said that the MMF \"broke the buck.\" On September 15, 2008, Lehman Brothers Holdings Inc. filed for bankruptcy . The next day, one MMF, the Reserve Primary Fund, broke the buck when its shares fell to 97 cents after writing off the debt issued by Lehman Brothers. This event triggered an array of market reactions and accelerated the 2007-2009 financial crisis. Ultimately the Treasury Department intervened with an emergency guarantee program for MMFs as one of the ways to address the crises.", "MMFs thus became a known financial stability concern, demonstrating clearly that they are susceptible to sudden large redemptions (runs) that can cause dislocation in short-term funding markets. MMFs are vulnerable to runs because shareholders have an incentive to redeem their shares before others do when there is a perception that the fund could suffer a loss. To address this concern, the SEC promulgated MMF rules in 2010 and 2014 mandating that institutional municipal and institutional prime MMFs float their NAV from stable value. The SEC also provided new tools to the MMFs' boards, allowing them to impose fees and redemption gates to discourage runs. ", "Policy discussions continued after the 2014 revisions, especially about whether the MMFs' NAV should be floating or stable, generating controversy and attracting congressional interest. For example, the Consumer Financial Choice and Capital Markets Protection Act of 2019 (S. 733) would require the SEC to reverse the floating NAV back to a stable NAV for the affected MMFs. A floating NAV reflects more closely the actual market value of the fund. Proponents believe the floating NAV could (1) reduces investors' incentive in distressed markets to run because of the difference between stable value and the actual market value; (2) allows investors to understand price movements and market fluctuations, and (3) removes the implicit guarantee of zero investor losses through stable value that could lead to unrealistic expectations of safety. Opponents believe that floating NAV does not solve the issue of investors fleeing. For example, one academic research article concludes that European MMFs that offer similar structures to floating NAV did not experience significant reduction in run propensity during market distress. In addition, providing floating NAV requires calculation time and more tax, accounting, and disclosure related business model changes. Opponents also point to the volume decline of affected MMFs since the reform as an example of a shrinking MMF market that may create working capital shortages for business and municipal operations. Others argue that because the MMF reform has been fully implemented since October 2016, it makes sense to study the actual effectiveness and impact of the reform before considering changes. "], "subsections": []}, {"section_title": "Exchange-Traded Funds", "paragraphs": ["Some commentators have also argued that ETFs raise certain systemic-risk concerns. The vast majority of all ETF assets are passively managed or index-based; thus investors often view the high growth in ETFs as one of the driving forces behind the passive investment trend the report discusses in the previous section. With U.S. ETFs accounting for more than $3.4 trillion in assets under management and 30% of all U.S. equity trading volume in 2018, ETFs' scale and continued growth give rise to financial stability considerations.", "The key systemic-risk issue surrounding certain ETFs involves liquidity mismatch . Liquidity mismatch generally points to a relatively complex ETF operational structure that offers buying and selling activities at both the fund level and the portfolio asset level. If the amount of liquidity differs between the two levels, for example, if the ETF shares trade differently than the underlying portfolio ETF holdings of stocks or other assets, there could be a liquidity mismatch. Some argue this liquidity mismatch could amplify market distress and potentially trigger fire sales that further depress asset prices and worsen market conditions. In contrast, others have argued that liquidity provision through the ETF structure is additive, meaning an ETF's liquidity is at least as great as that of its underlying assets. Other commentators have argued that not all ETFs are created equal. The majority of ETFs are \"plain-vanilla\" index-tracking products that are considered lower risk. However, there is also a growing subset of complex, higher-risk ETFs that is a source of greater concern. To add to the confusion, the industry does not currently have a consistent naming convention to clearly differentiate between the types of products that are higher risk. ", "On September 26, 2019, the SEC established a comprehensive listing standard for ETFs only. Prior to that, prospective ETF issuers typically must have been approved by the SEC under an exemption to the Investment Company Act. The new ETF approval process replaces individual exemptive orders with a single rule for plain-vanilla ETFs. The approach excludes certain higher-risk ETFs and mandates new disclosures and other conditions on index-based and actively managed ETFs."], "subsections": []}, {"section_title": "Leveraged Lending", "paragraphs": ["Leveraged lending, also referred to as leveraged loans, is financing made to below investment grade companies (i.e., companies with a credit rating below BBB-/Baa3), which tend to be highly indebted. Leveraged lending received its name because of the recipients' high-debt-to-earnings leverage. Most leveraged loans are syndicated, meaning that a group of bank or nonbank lenders, including asset managers, collectively funds a single borrower, in contrast to a traditional loan held by a single bank. Some regulators consider syndicated loans to be an emerging regulatory gray area that is not fully overseen by either banking or securities regulators. ", "Leveraged loans generally present higher risks than other forms of lending because they involve riskier borrowers and often feature relatively weak investor safeguards (indicated by a weak \"covenant\") and relatively weak capabilities for loan repayment, indicated by high ratios of debt to earnings before interest, tax, depreciation and amortization (EBITDA). During the past decade, the U.S. leveraged loan market experienced rapid growth, deteriorating credit quality, and decreased repayment capabilities ( Table 4 ). However, the total amount of leveraged loans outstanding remained relatively low at around $1 trillion as of 2018. Nonbanks make up around 90% of the leveraged loan primary market investor base as of 2017. Mutual funds and hedge funds held 21% and 5% of leveraged loans in 2017 respectively, with mutual funds' share of the market more than doubling between 2006 and 2017. In addition, nearly 60% of U.S. leveraged loans are packaged into a type of structured credit called a collateralized loan obligation (CLO). CLOs are then sold to institutional investors, including asset managers, banks, and others, with the asset management industry holding the riskier CLO tranches and banks holding the higher-quality tranches. Mutual funds and other investment vehicles hold more than 20% of CLOs. ", "Multiple financial regulators and Members of Congress have voiced concerns about leveraged loans' risks and implications for financial stability. However, other commentators have argued that leveraged loans are resilient and stable, claiming unwarranted fears. ", "Leveraged lending raises a variety of policy issues, including the following: ", "Market o pacity . Leveraged lending, particularly the increase of covenant-lite loans, couples high risk with relative lack of transparency, potentially leading to unexpectedly high losses and shocks to the financial system ( Table 4 ). It is unclear, as discussed below, the degree to which contagion across the financial system would result from this. Liquidity mismatch. Public funds expect easy entry and exit through daily redemption or intraday trading, whereas leveraged loans, which could serve as underlying assets to funds, trade infrequently and take longer to settle. These features of leveraged loans have prompted the Chairman of the SEC to caution that investors should be aware of their relative illiquidity. The loan syndication process and federal oversight. Leveraged loans are usually syndicated by groups of institutional investors, including asset managers. Some regulators and researchers worry that certain leveraged loans are less regulated than other financial products like bonds and bank loans.", "Contagion risk . Given the leveraged loan market's size and investor composition, some experts have argued that leveraged lending raises concerns about financial contagion. However, most investors in leveraged loans are nonbanks, with the asset management industry holding a significant portion of total outstanding exposure. As a result, some commentators have argued that direct financial losses from leveraged loans would largely stop at the investor level, instead of being multiplied throughout the interconnected financial system by banks. The Chairman of the Federal Reserve, for example, has indicated that while leveraged loans raise some concerns, they \"do[es] not appear to present notable risks to financial stability.\"", "Data gap. Some analysts have argued that the lack of available information through data collection and sharing on CLO holdings has prevented the industry and the regulators from monitoring risks in the leveraged lending market."], "subsections": []}]}, {"section_title": "Investor Protection", "paragraphs": ["Investor protections attempt to prevent investors from being harmed due to inappropriate risk exposure, conflicts of interest, or abusive conduct. This section discusses certain policy debates concerning investors' access to private funds, fund disclosures, and asset managers' voting of clients' stocks."], "subsections": [{"section_title": "Defining Accredited Investors173", "paragraphs": ["Some private funds are limited to \"accredited investors\"\u00e2\u0080\u0094a limitation that has generated debate about which categories of investors should be eligible for this status. An individual can qualify as an accredited investor if he or she (1) earned more than $200,000 (or $300,000 together with a spouse) in annual gross income during each of the prior two years and can reasonably be expected to earn a gross income above that threshold in the current year, or (2) has a net worth of more than $1 million (either alone or together with a spouse), excluding the value of their primary residence. Institutions can also qualify as accredited investors if they own more than $5 million in assets. A number of regulated entities, such as banks, insurance companies, and registered investment companies, automatically qualify as accredited investors.", "Some commentators have criticized the SEC's existing rules for determining accredited investor status, arguing that income and net-worth criteria bear little relationship to investor sophistication. These critics contend that the current accredited investor definition is both over- and under-inclusive, capturing wealthy but unsophisticated investors while excluding those who are well-informed but less affluent. In addition, given the trend of private securities offerings outpacing public offerings, some observers are concerned about ensuring equal access to investment opportunities and the diversification benefits from allocating capital across the full spectrum of public and private securities and funds. Commentators have accordingly discussed expanding the accredited investor definition to (1) account for individuals with financial training or demonstrated financial experience, (2) allow investors to opt-in to private market investment opportunities, or (3) expand the eligible accredited investor base in other ways, subject to certain limitations. "], "subsections": []}, {"section_title": "Voting of Proxy Shares", "paragraphs": ["Proxy voting represents another issue involving investor protection that has taken on increased significance. Asset managers have fiduciary duties to vote the proxies of their public company voting shares on their clients' behalf. Some asset managers outsource proxy voting and research to proxy advisory firms, whereas others operate these functions in-house. Commentators have identified a number of policy issues involving the proxy system, including (1) stewardship\u00e2\u0080\u0094whether asset managers and proxy advisory firms are in fact voting in their clients' best interests; and (2) accuracy\u00e2\u0080\u0094whether the actual votes are tabulated correctly. These topics are critically important because proxy voting can often decide the strategic directions of publicly traded companies. To address these issues, the SEC issued a concept release soliciting public feedback on the proxy system in 2010. The SEC has also held multiple roundtables to discuss the proxy process, most recently in November 2018."], "subsections": []}, {"section_title": "Fund Disclosure", "paragraphs": ["Ensuring full and fair disclosure of material information is a key objective of the federal securities laws. To promote these goals, the SEC has implemented a series of initiatives to improve the investor experience by updating the design, delivery, and content of fund disclosure. For example, after longstanding policy debate, the SEC adopted Rule 30e-3 in June 2018 to allow certain investment funds to transmit shareholder reports digitally as the default option. Supporters of this rule point to its environmental and economic benefits, including its estimated $2 billion savings over a 10-year period. In contrast, the rule's opponents have voiced concerns over the usefulness of electronic reports for elderly and rural investors who may lack access to or familiarity with the Internet. The SEC continues to seek public input on the fund disclosure and retail investor experience, including shareholder reports, prospectuses, advertising, and other types of disclosure."], "subsections": []}]}, {"section_title": "Financial Innovation", "paragraphs": ["Financial innovation is an integral part of the asset management industry's development. Innovation raises policy and regulatory issues, including (1) whether new technologies and practices have outgrown or are sufficiently served by the existing regulatory system; (2) how the regulatory framework can achieve the goal of \"same business, same risk, same regulation\"; and (3) how to protect investors without hindering innovation. This section explains policy challenges involving these general issues. "], "subsections": [{"section_title": "Digital Asset Custody", "paragraphs": ["Digital-asset custody has recently attracted regulatory attention. Under the SEC's Custody Rule, custodians of client assets must abide by certain requirements designed to protect client funds from the possibility of being lost or misappropriated. This rule was developed for the traditional asset management industry that dealt in instruments with more tangible tracks of physical existence and recording, and thus could pose unique challenges for digital assets often without tangible representation. For example, the digital asset industry's common practice thus far focuses on the safeguarding of private keys. Private keys are unique numbers assigned mathematically to digital asset transactions to confirm ownership, raising questions about the nature of \"possession\" and \"control\" of a digital asset. ", "A March 2019 letter from the SEC to the digital asset industry solicited public input regarding the custody of digital assets. In the letter, the SEC summarized a number of policy issues involving the custody of digital assets, including the use of distributed ledger technology (DLT) to record ownership, the use of public and private cryptographic key pairings to transfer digital assets, the ability to restore or recover lost digital assets, the generally anonymous nature of DLT transactions, and the challenges auditors face in examining DLT and digital assets. Congressional hearings have also addressed the issue of digital asset custody. "], "subsections": []}, {"section_title": "Nonfinancial Technology Platforms", "paragraphs": ["A second recent development in financial technology that raises important policy questions involves the entry of nonfinancial technology platforms into the financial services industry. Large technology firms such as Amazon, Facebook, and Uber have all started financial-services operations as potential competitors and partners to the asset-management industry. Although the scale of this innovation has not been broadly felt, industry experts like the World Economic Forum predict that platforms offering the ability to engage with different financial institutions from a single channel will likely become the dominant model for the delivery of financial services. Technology firms have the potential to disrupt the asset-management industry through digital asset transactions, robo advisory services, and direct asset management product distribution to investors. Investment researchers argue that Amazon, for example, could use the trust of its brand and distribution channels to become \"an arms-length distributor of funds.\" The influence of technology platforms has already been realized in certain overseas markets. For example, Ant Financial\u00e2\u0080\u0094an affiliate of Alibaba Group\u00e2\u0080\u0094manages the world's largest MMF, with 588 million Alipay users, a third of the Chinese population, among its investors. This entry of technology companies into financial services raises a number of concerns related to these companies' power, their control over user data, and personal privacy. "], "subsections": []}, {"section_title": "Facebook Libra's ETF-Like Characteristics", "paragraphs": ["Facebook is among the technology companies that have expressed interest in entering financial services. In June 2019, the social media company announced its intention to develop a new cryptocurrency called Libra\u00e2\u0080\u0094a revelation that has attracted congressional interest. At a hearing addressing the issue, several Members of Congress questioned Facebook officials about how Libra should be regulated and whether it meets the existing regulatory definition of an ETF, among other issues. Some commentators have argued that because Libra will be backed by reserve assets that certain authorized sellers can exchange for units of the cryptocurrency, its operational structure is similar to that of ETFs, which rely on a roughly comparable creation and redemption process. Although Facebook officials acknowledged that Libra uses operational mechanisms that are similar to ETFs, the company maintained that the cryptocurrency should not be considered an ETF because it is intended to operate as a payment tool rather than an investment vehicle. If Libra did qualify as an ETF, it would fall under the SEC's oversight and require regulatory approval. The SEC is reportedly evaluating whether the cryptocurrency will fall within that category. ", "Some Members of Congress have also expressed opposition to Facebook's Libra project. Members of the House Financial Services Committee have circulated a discussion draft, the Keep Big Tech Out of Finance Act , which would prevent certain large technology firms from creating digital assets intended to be used widely as a medium of exchange, unit of account, or store of value."], "subsections": []}]}]}, {"section_title": "Conclusion", "paragraphs": ["The asset-management industry is large, complex, and governed by a host of intersecting federal regulations primarily overseen by the SEC. The industry has undergone a number of changes, including increases in its size, changes in the relative importance of capital markets and banks, shifts away from active and toward passive investment management, and increases in the volume of private securities offerings. Some of these trends raise important policy issues, including financial stability, investor protection, and the promotion of financial innovation. ", "As a general matter, asset-management companies have generated fewer financial-stability concerns than some other financial institutions. This is largely because asset managers generally are agents who provide investment services rather than principals who invest for their own accounts. But it does not mean that the industry is free of financial stability risks. Specific structural vulnerabilities, for example, redemption risk and liquidity mismatch, among other vulnerabilities, could be observed in the context of certain MMFs, ETFs, and leveraged lending, but their implications are uncertain. ", "The asset-management industry is governed by a range of investor-protection rules that raise various policy issues, including the appropriate level of investor access to certain types of funds, fund disclosure, and proxy voting. Finally, the need to balance financial innovation with investor protection has generated a number of important debates surrounding digital asset custody and the entry of technology firms into financial services. "], "subsections": [{"section_title": "Appendix. Related CRS Products", "paragraphs": ["CRS Report R45221, Capital Markets, Securities Offerings, and Related Policy Issues , by Eva Su.", "CRS Report R45318, Exchange-Traded Funds (ETFs): Issues for Congress , by Eva Su. ", "CRS Report R45308, JOBS and Investor Confidence Act (House-Amended S. 488): Capital Markets Provisions , coordinated by Eva Su. ", "CRS Report R43413, Costs of Government Interventions in Response to the Financial Crisis: A Retrospective , by Baird Webel and Marc Labonte.", "CRS In Focus IF10700, Introduction to Financial Services: Systemic Risk , by Marc Labonte. ", "CRS In Focus IF11062, Introduction to Financial Services: Capital Markets , by Eva Su.", "CRS In Focus IF11278, Accredited Investor Definition and Private Securities Markets , by Eva Su.", "CRS In Focus IF10747, Private Securities Offerings: Background and Legislation , by Eva Su. ", "CRS In Focus IF11004, Financial Innovation: Digital Assets and Initial Coin Offerings , by Eva Su. ", "CRS In Focus IF11256, SEC Securities Disclosure: Background and Policy Issues , by Eva Su. ", "CRS In Focus IF11320, Money Market Mutual Funds: A Financial Stability Case Study , by Eva Su. "], "subsections": []}]}]}}
{"id": "R45784", "title": "Poland: Background and U.S. Relations", "released_date": "2019-06-25T00:00:00", "summary": ["Over the past 30 years, the relationship between the United States and Poland has been close and cooperative. The United States strongly supported Poland's accession to the North Atlantic Treaty Organization (NATO) in 1999 and backed its entry into the European Union (EU) in 2004. Poland has made significant contributions to U.S.- and NATO-led military operations in Iraq and Afghanistan, and Poland and the United States continue to work together closely on a range of foreign policy and international security issues.", "Domestic Political and Economic Issues", "The 2015 Polish parliamentary election resulted in a victory for the conservative-nationalist Law and Justice party (PiS), which won an absolute majority of seats in the lower house of parliament ( Sejm ). Mateusz Morawiecki (PiS) is Poland's prime minister and head of government. The center-right Civic Platform (PO) party led the government of Poland from 2007 to 2015. Since winning the election, Law and Justice has made changes to the country's judicial system and enacted other reforms that have generated concerns about backsliding on democracy and triggered an EU rule-of-law investigation.", "Poland's next parliamentary election is due to occur in October or November 2019. European Parliament and regional election results indicate that support for Law and Justice remains strong, and the party is favored to win the 2019 election.", "Law and Justice candidate Andrzej Duda won Poland's 2015 presidential election. The president is Poland's head of state and exercises a number of limited but important functions. The next presidential election is due to occur in May 2020.", "Poland was one of the few EU economies to come through the 2008-2009 global economic crisis without major damage. As an EU member Poland is obligated to adopt the euro as its currency, but it has not set a target date for adoption and continues to use the z\u00c5\u0082oty as its national currency.", "Defense Modernization", "Poland has been implementing an armed forces modernization plan since 2013, and it intends to spend approximately $49\u00c2 billion on military equipment acquisitions and upgrades over the period 2017-2026. Completed and prospective purchases from U.S. suppliers, including advanced Patriot missiles and F-35 Joint Strike Fighters, have a large role in this initiative. Poland is one of seven NATO members to meet the alliance's benchmark of spending at least 2% of gross domestic product (GDP) on defense, and it plans to reach 2.5% of GDP by 2030.", "Defense Cooperation", "Under the United States' European Deterrence Initiative (EDI) and the U.S. military's Operation Atlantic Resolve, as well as NATO's Enhanced Forward Presence mission, U.S. forces have expanded their presence in Poland since 2014 and increased joint training and exercises with their Polish counterparts. While U.S. forces participate in these missions on a rotational basis, the Polish government has proposed the establishment of a permanent U.S. base on Polish territory.", "Visa Waiver Program", "Although relations between Poland and the United States are largely positive, Poland's exclusion from the U.S. Visa Waiver Program (VWP) has been a point of contention for many years. Some Members of Congress have advocated extending the VWP to include Poland.", "Relations with Russia", "Relations between Poland and Russia have long been tense, and Polish leaders have tended to view Russian intentions with wariness and suspicion. Poland remains a leading advocate for forceful EU sanctions against Russia over its 2014 annexation of Ukraine's Crimea region and fostering of separatist conflict in eastern Ukraine.", "Energy Security", "Poland has promoted European energy integration, including projects to expand pipeline and electric grid interconnectivity in order to decrease reliance on Russia. Poland is a leading critic of Nord Stream 2, a Russian-owned pipeline project that would allow Germany to increase the amount of natural gas it imports directly from Russia via the Baltic Sea.", "Outlook and Issues for Congress", "Given its role as a close U.S. ally and partner, Poland and its relations with the United States are of continuing congressional interest. The main areas of interest include defense cooperation, energy security, and concerns about rule-of-law and governance issues."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction and Issues for Congress", "paragraphs": ["Many U.S. officials and Members of Congress consider Poland to be a key ally of the United States and one of most pro-U.S. countries in Europe. According to the U.S. State Department, areas of close bilateral cooperation with Poland include \"NATO capabilities, counterterrorism, nonproliferation, missile defense, human rights, economic growth and innovation, energy security, and regional cooperation in Central and Eastern Europe.\" ", "The Congressional Caucus on Poland is a bipartisan group of Members of Congress who seek to maintain and strengthen the U.S.-Poland relationship and engage in issues of mutual interest to both countries.", "Of the Central European and Baltic countries that have joined the North Atlantic Treaty Organization (NATO) and the European Union (EU), Poland is by far the most populous, has the largest economy, and is the most significant military actor. In 1999, with strong backing from the United States, Poland was among the first group of post-communist countries to join NATO. In 2004, again with strong support from the United States, it was among a group of eight post-communist countries to join the EU. Many analysts assert that Poland, more than many other European countries, continues to look to the United States for foreign policy leadership. ", "Recently, developments related to Russia's resurgence and the attendant implications for U.S. policy and NATO are likely to have continuing relevance for Congress. A variety of factors make Poland a central interlocutor and partner for the United States in examining and responding to these challenges. Since Poland's 2015 parliamentary election, some Members of Congress also have expressed concerns about trends in the country's governance, discussed below."], "subsections": []}, {"section_title": "Domestic Overview", "paragraphs": [], "subsections": [{"section_title": "Political Dynamics", "paragraphs": ["The government of Poland is led by Prime Minister Mateusz Morawiecki of the conservative-nationalist Law and Justice party (PiS). Law and Justice won the October 2015 parliamentary election with 37.6% of the vote, giving the party 235 of the 460 seats in the Sejm (lower house of parliament). This was the first time since the end of communist rule in 1989 that a single party secured an absolute majority in parliament. Law and Justice had spent the previous eight years in opposition after leading the government from 2005 to 2007. The center-right Civic Platform (PO) party, which led the government of Poland from 2007 to 2015, came in second place in the 2015 election with 24.1% of the vote, dropping from 207 to 138 seats in the Sejm . The next parliamentary election is due to take place in October or November 2019.", "Poland's president is Andrzej Duda, who was the Law and Justice-backed candidate in the May 2015 presidential election. Law and Justice gained momentum five months prior to the parliamentary election with Duda's unexpected victory over the Civic Platform-supported incumbent. The president, who serves a five-year term, is Poland's head of state and resigns party membership upon election. The president exercises functions including making formal appointments, overseeing the country's executive authority, influencing legislation, representing the state in international affairs, and acting as commander-in-chief of the armed forces. ", "Jaros\u00c5\u0082aw Kaczy\u00c5\u0084ski is head of Law and Justice and a member of the Sejm . Despite his holding no formal post in the government, many observers assert that Kaczy\u00c5\u0084ski remains the most powerful politician in Poland who, as party chairman, exerts considerable influence behind the scenes. Jaros\u00c5\u0082aw Kaczy\u00c5\u0084ski co-founded Law and Justice with his twin brother Lech in 2001. Lech Kaczy\u00c5\u0084ski was the president of Poland from 2005 to 2010, when he died in an airplane crash in Russia that also killed 95 other people, including many high-ranking Polish officials.", "A number of factors contributed to the 2015 election outcome. Law and Justice tapped into public unease over surging non-European migration to Europe by criticizing Civic Platform's willingness to accept migrants under an EU relocation plan. Law and Justice also appeared to gain support by advocating increased public spending for social support programs benefitting families with children, lower-income citizens, and the elderly. During the campaign, the party argued that the benefits of Poland's economic development had fallen unevenly across society and failed to reach many ordinary citizens. ", "At the same time, observers believe there was a sense of voter fatigue toward Civic Platform and, relatedly, public discontent with the country's political establishment. Civic Platform was damaged by a scandal in which secretly recorded conversations led to the resignation of several government officials in 2015. A changeover in leadership with the 2014 appointment of then-Prime Minister Donald Tusk, who co-founded Civic Platform, as President of the European Council in Brussels was also a factor in the party's decline. ", "More broadly, the 2015 election and its aftermath appeared to confirm the observation that Polish politics have become characterized by an entrenched social divide between national-oriented social conservatives, represented by Law and Justice, and Western-oriented liberals, represented by Civic Platform. ", "Since taking office, the Law and Justice-led government has implemented numerous reforms that have proved contentious and raised tensions with the EU as well as domestic opponents; these reforms also have elicited some concern from the United States. Many members of Law and Justice maintain that Poland's post-communist development has been based in part on flawed institutions and values, and Law and Justice leaders interpreted the 2015 election results as a mandate to enact substantial reforms to the country's political system and public institutions. Some argue, therefore, that the party seeks to reduce the influence on national institutions of so-called liberal and secular \"European\" values and to recast those institutions in ways that promote what the party and its supporters view as traditional national-patriotic values, including close ties with the Catholic Church. Law and Justice also fiercely condemns the communist era and those associated with it, and the party holds a nationalist-oriented worldview that includes enduring suspicion toward Russia and unresolved tensions with Germany. ", "The results of regional elections in October 2018 and European Parliament (EP) elections in May 2019 indicate that support for the Law and Justice party has held relatively steady since Poland's 2015 election. ", "In the 2018 regional elections, Law and Justice won 34% of the vote and the most seats in 9 out of the country's 16 regional assemblies (with an absolute majority in 6). Previously, Law and Justice controlled one regional government. Law and Justice did well among more rural and less affluent voters, while a coalition of opposition parties including Civic Platform did well among more liberal and urban voters. Law and Justice won 4 out of 107 municipal elections. The opposition won mayoral races in Poland's largest cities, including Warsaw, Krak\u00c3\u00b3w, Wroc\u00c5\u0082aw, and Gda\u00c5\u0084sk. In the May 2019 EP elections, Law and Justice came in first place, winning 27 seats with approximately 45% of the Polish vote. A coalition of opposition parties including Civic Platform won 22 seats with approximately 38% of the vote.", "Despite numerous public protests over the past three years against the government's reforms, critics observe that opposition parties including Civic Platform have struggled to offer an effective alternate message. Support for Law and Justice, meanwhile, appears to have been mostly unaffected by controversy over its domestic reforms or by a series of corruption scandals reported in late 2018 and early 2019. Given its close association with the Catholic Church, the party came under pressure prior to the EP election with the release of a documentary film about the sexual abuse of children by Polish priests and subsequent efforts to cover up those crimes. After the film was released, the government adopted increased prison sentences for those convicted of sexual abuse of a child. "], "subsections": []}, {"section_title": "Controversial Reforms and Tensions with the EU", "paragraphs": ["The most prominent and controversial set of reforms undertaken by the Law and Justice-led government concerns the judicial system. Critics charge that several moves enacted since late 2015 subvert institutional checks and balances, undermine judicial independence and the rule of law, and place the country's courts under political control. The reforms have significantly increased executive and parliamentary powers to select and remove judges, decisions that previously were determined internally by professional bodies within Poland's judiciary. Law and Justice leaders, who blamed the courts for blocking many of the party's legislative priorities when it previously led the government (2005-2007), maintain that the judicial system needed extensive reform because it was slow and inefficient, judges were not properly re-vetted after the transition from communism to democracy, and procedures for selecting new judges lacked fairness and accountability. ", "Beyond the judicial system, a law adopted in 2016 granted the government the power to hire and fire management of public broadcasting stations, a function previously performed by an independent media supervisory committee. The government maintained that the move was needed to correct political bias and restore balance in the public media. Critics argue that it compromises the independence of state media and relegates it to publicizing the government's official narrative. The government also has cut public funding to some civil society organizations, particularly those supporting migrants and refugees. Critics charged that this move was intended to stifle opponents of government policies. ", "In 2018, Poland adopted reforms to the country's electoral system. The government asserted that these changes, expected to take effect after the 2019 parliamentary elections, would increase fairness and transparency. Opponents argued that they would politicize the administration of elections and were intended to advantage Law and Justice. The reforms replace seven of the nine members (currently all judges) of the National Electoral Commission (responsible for conducting and overseeing all elections in Poland) with new members chosen by the Sejm according to party proportion. The reforms also call for the National Electoral Commission to appoint new local election commissioners, who are no longer required to be independent of political parties.", "Overall, domestic political opponents and outside observers have expressed concern that the actions taken by the government amount to a rollback of Poland's democracy and a program to construct an \"illiberal\" state. Law and Justice leaders and supporters dispute this portrayal, alleging that their political opponents have crafted this narrative in an attempt to undo the results of the 2015 election and block the government's ability to implement its agenda.", "In 2016, the European Commission (the EU's executive institution) launched an inquiry into the effects of the judicial and public media reforms on the rule of law in Poland. The EU subsequently set a series of deadlines for Poland to respond to recommended amendments that would address EU concerns about the ability of the executive and legislature to interfere with the independence of the judiciary. In 2016 and 2017, the Polish government consistently rejected the EU's recommended measures, objecting that the EU was interfering with the country's sovereignty and did not fully understand the Polish legal system. In December 2017, the European Commission recommended the EU move toward imposing an \"Article 7\" sanction, under which Poland's voting rights in the Council of the EU could be suspended. The measure is unlikely to be enacted, however; Hungary, which has similar Article 7 issues with the EU, has said it would veto the imposition of such a sanction against Poland, which requires unanimity in the Council. ", "The EU also has been developing plans to link the amount of regional funding allocated to Poland (and other countries, such as Hungary) to judicial independence and rule-of-law standards in the next EU budget framework. Poland is the largest beneficiary of funding from the EU budget. In the EU's 2014-2020 budget framework, \u00e2\u0082\u00ac106 billion (approximately $120 billion) was allocated to Poland, with the majority of EU support funding regional and municipal infrastructure development.", "In October 2018, the Polish government complied with a ruling by the European Court of Justice (ECJ) ordering the suspension of a law that allowed the president to decide whether to retire Supreme Court judges over the age of 65. (The law affected 28 of 72 judges sitting on the appellate panels of the country's Supreme Court at the time it came into effect in July 2018.) The episode marked the first time Law and Justice backtracked on any major element of its controversial reform program. In April 2019, the European Commission launched a new complaint alleging that Poland's process for disciplinary proceedings against judges, enacted in 2017, infringes on EU requirements for judicial independence from political control. ", "Migration policy has been another source of tension between Poland and the EU. Poland has been a leading opponent of EU policies attempting to relocate migrants and refugees throughout the member states. In 2015, the Civic Platform-led government voted to approve a mandatory EU relocation plan, agreeing to take in approximately 4,600 migrants from outside the EU. The agreement became a significant campaign issue in Poland's 2015 election, with debates about the migration crisis highlighting divisions in Polish society and politics. ", "Law and Justice strongly criticized approval of the plan, and after the terrorist attacks in Paris in November 2015, the incoming Law and Justice-led government indicated that respecting the EU plan was not politically possible. Poland subsequently joined Hungary and the Czech Republic in defying the EU by refusing to the implement the plan, arguing that it infringed on their national sovereignty and that immigration policy was not a competence of the EU. In December 2017, the European Commission referred the three countries to the ECJ over their failure to implement the relocation plan. ", "Despite these tensions, Jaros\u00c5\u0082aw Kaczy\u00c5\u0084ski has stated that Law and Justice does not intend to take Poland out of the EU. Surveys show that a large majority of the Polish public views EU membership as beneficial."], "subsections": []}, {"section_title": "The Economy", "paragraphs": ["Poland's economy is among the most successful in Central Europe. Starting with post-communist reform programs in the 1990s and continuing beyond Poland's accession to the EU in 2004, pro-market policies and stable institutions have underpinned strong economic growth, an expanding private sector, and a steady increase in per capita gross domestic product (GDP). Poland's economy was hurt by the 2008 global financial crisis and the ensuing Eurozone crisis but was less affected than most other EU members. The Polish economy was the only European economy to sustain growth in 2008-2009, and Poland avoided a domestic banking crisis. ", "Although Poland joined the EU in 2004, it is not a member of the Eurozone. Poland continues to use the z\u00c5\u0082oty (PLN) as its national currency, and the Eurozone debt crisis that began in Greece in 2009 dampened Polish enthusiasm for adopting the euro. Under the terms of its EU accession treaty, Poland is bound to adopt the euro as its currency eventually, but there is no fixed target date for doing so. ", "Economic growth in Poland remains high compared to most other EU members. According to the International Monetary Fund (IMF), growth averaged 3.75% per year over the period 2014-2017 and reached 5.1% in 2018. Unemployment is low, decreasing from 10.3% in 2013 to an expected 3.6% in 2019. Forecasts project growth of 3.8% in 2019 and an average of 2.9% annually over the period 2020-2023. ", "The main drivers of the Polish economy recently have consisted of strong private consumption, investment derived from EU funding, and increased demand for exports. (Nearly 80% of Poland's exports are to other EU countries, with more than a quarter to Germany. ) Near-term risks to growth include a potential reduction in EU funding in the next EU budget framework (2021-2027) and a broader economic slowdown in the EU that could decrease demand for Polish exports.", "After the Civic Platform-led government of 2011-2015 sought to consolidate public finances through tax increases and entitlement cuts, the Law and Justice-led government has taken steps to loosen fiscal policy in order to benefit lower-income households and families, encourage higher birth rates, and appeal to older voters. Under the \"Family 500+\" program, families are eligible to receive a tax-free monthly subsidy of PLN 500 (approximately $132) per month for their second child and every subsequent child, with lower-income families eligible starting with their first child. Additionally, the government reversed its predecessor's reform raising the retirement age to 67, returning it to 65 for men and 60 for women. Similar to EU-wide averages, the median age in Poland was approximately 38 years old in 2012 and is expected to be 51 years old in 2050. Declining birth rates and net emigration have been the main factors in demographic change in Poland. The aging of the country's population is expected to have challenging implications for Poland's health care and retirement systems. ", "Concerns that increased government spending on child support and pensions (as well as on planned increases to defense spending) could negatively affect Poland's public finances have largely been balanced by the country's strong economic growth. The budget deficit was 0.6% of GDP in 2018 and is expected to be 2.2% of GDP in 2019. Public debt was approximately 43.6% of GDP in 2018, according to the IMF. (EU rules stipulate that deficits remain below 3% of GDP and that debt remain below 60% of GDP). "], "subsections": []}, {"section_title": "Defense Modernization", "paragraphs": ["Poland has repeatedly been invaded by external powers throughout its history. These experiences continue to shape Poland's security perceptions. Territorial defense is the core mission of the Polish military, and Poland's current security strategy is focused primarily on deterring potential Russian aggression. Armed forces modernization, NATO membership, and close ties with the United States are the main components of this strategy. Poland has sought to build a multilayered security policy around this foundation, with participation in EU defense initiatives and cooperation with regional partners such as the Nordic and Baltic countries, the Visegr\u00c3\u00a1d Group, and the Bucharest Nine.", "Poland has the ninth-largest army in NATO, with 61,200 active personnel. In all, Poland has 117,800 total active military personnel across all branches of the armed forces. Poland ended military conscription in 2009. Poland is one of seven NATO countries meeting the alliance's recommendation of allocating 2% of GDP for defense spending. According to NATO, Polish defense expenditures were 2.05% of GDP ($12.156 billion) in 2018. The Polish government plans to raise defense spending to 2.1% of GDP in 2020 and to gradually increase defense spending to 2.5% of GDP by 2030. ", "In 2016, the Polish Defense Ministry announced a revised \"Technical Modernization Plan\" prioritizing air defense, navy, cybersecurity, tanks and armored vehicles, and territorial defense capabilities. From 2017 to 2022, the plan called for approximately $14.5 billion in spending on weapons and equipment acquisition, including new air defense systems, helicopters, UAVs, coastal defense vessels, minesweeper ships, and submarines. In February 2019, the defense ministry announced that it had revised and expanded the plan to include approximately $49 billion in spending on armed forces modernization over the period of 2017-2026. Priorities in the revised plan include short-range anti-aircraft missiles, attack helicopters, submarines, cybersecurity, and the acquisition of fifth-generation combat aircraft.", "While foreign purchases continue to play a large role, the Polish government has linked the defense modernization program with efforts to develop Poland's defense-industrial base, seeking contracts and partnerships that include local manufacturing and technology transfers. ", "Another initiative of the Law and Justice-led government has been the establishment of a new territorial defense force, intended to eventually consist of 53,000 volunteers trained and equipped for tasks such as critical infrastructure protection and unconventional warfare. "], "subsections": []}]}, {"section_title": "Relations with the United States", "paragraphs": ["Since the end of the Cold War, Poland and the United States have had close relations. The United States strongly supported Poland's accession to NATO in 1999. Warsaw has been an ally in global counterterrorism efforts and contributed large deployments of troops to both the U.S.-led coalition in Iraq and the NATO-led mission in Afghanistan. Links between the United States and Poland are further anchored by extensive cultural ties; approximately 9.6 million Americans are of Polish heritage. ", "The Law and Justice-led government has sought to cultivate ties with the Trump Administration. In a visit to the United States in September 2018, Polish President Duda suggested that a permanent U.S. military base in Poland might be named \"Fort Trump.\" On February 13-14, 2019, Poland and the United States co-hosted the \"Ministerial to Promote a Future of Peace and Security in the Middle East,\" a conference attended by Vice President Mike Pence and Secretary of State Michael Pompeo. ", "President Trump earlier delivered a speech in Warsaw on July 6, 2017. The president's remarks on NATO, Russia, U.S.-Polish ties, and Poland's resilience throughout history were well received by many Polish observers, and especially by the Polish government and its supporters. At the same time, critics asserted that the tone of the President's visit, during which he apparently did not raise concerns about Poland's domestic policies, emboldened the government to move ahead with controversial new judicial bills shortly afterward. ", "While relations between Poland and the United States remain largely positive, there have been points of tension over the past several years. Following President Trump's Warsaw speech, the U.S. State Department released a statement expressing concern about judicial independence and the rule of law in Poland. Some Members of Congress also have expressed concerns about the Polish government's judicial and media reforms. In February 2016, for example, Senators McCain, Durbin, and Cardin co-authored a letter urging Poland to \"recommit to the core principles of the [Organization for Security and Cooperation in Europe] and the EU, including the respect for democracy, human rights, and rule of law.\" ", "U.S. officials (along with many of their European and Israeli counterparts) objected to controversial Holocaust-related legislation (amendment to the Act on the Institute of National Remembrance) passed by Poland's parliament and signed by President Duda in early 2018. The legislation initially criminalized attributing responsibility for Nazi crimes to the Polish state or nation, potentially punishable by a prison sentence of up to three years, with exemptions for art and academic research. Under continued international pressure, the Polish government amended the law in June 2018, making violations a civil (rather than criminal) offense. ", "In recent years, Polish officials have objected to instances in which commentators and press articles have referred to Auschwitz and other Nazi concentration camps on Polish soil as \"Polish death camps,\" preferring such phrasing as \"Nazi concentration camp in German-occupied Poland\" (President Obama apologized after using the term \"Polish death camp\" in 2012). Scholars agree that the term \"Polish death camp\" is inaccurate and misleading and that the Polish state did not collaborate in the Nazi genocide against Jews. At the same time, historical research has documented instances in which some Poles committed atrocities against Jews during and after World War II. Critics fear the 2018 legislation may serve to stifle debate about such issues and whitewash the culpability of individual Poles in such cases. ", "In November 2018, a leaked letter from U.S. Ambassador Georgette Mosbacher to Prime Minister Morawiecki reportedly angered some Polish officials by raising concerns about media freedom. The Polish government reportedly had contemplated prosecuting the Polish television station TVN, which is owned by U.S. company Discovery Communications, after it aired footage alleging to show a Polish neo-Nazi group celebrating Adolf Hitler's birthday. ", "Following the murder of Gda\u00c5\u0084sk Mayor Pawe\u00c5\u0082 Adamowicz in January 2019 by a mentally ill assailant, Representative Marcy Kaptur, a co-chair of the Congressional Caucus on Poland, expressed concern about whether Poland's divided political environment could have played a role in motivating the perpetrator. Adamowicz was a well-known liberal critic of the Law and Justice-led government.", "In February 2019, Representative Kaptur introduced the Pawe\u00c5\u0082 Adamowicz Democratic Leadership Exchange Act of 2019 ( H.R. 1270 ), a bill that would reauthorize the United States-Poland Parliamentary Exchange Program. "], "subsections": [{"section_title": "Defense Relations", "paragraphs": ["Defense cooperation between Poland and the United States is especially close and extensive. Poland has been a focus of U.S. and NATO efforts to deter potential Russian aggression in the region. In the wake of Russia's aggression against Ukraine starting in 2014, Polish officials reemphasized their wish to permanently base U.S. forces on their territory, despite concerns by some U.S. and European officials that doing so could violate the 1997 NATO-Russia Founding Act. In May 2018, the Polish government released a proposal under which it would contribute $2 billion toward establishing such a base. In a House Armed Services Committee hearing on March 13, 2019, acting Assistant Secretary of Defense for International Security Affairs Kathryn Wheelbarger stated that the related negotiations with Poland were under way. Section 1280 of the John S. McCain National Defense Authorization Act for Fiscal Year 2019 ( P.L. 115-232 ) required the Secretary of Defense to report to the congressional defense committees on the \"feasibility and advisability\" of permanently stationing U.S. forces in Poland by March 2019. (With discussions between Poland and the U.S. Administration still in progress, the report had not been received as of June 2019.) As part of the United States' missile defense for Europe, an \"Aegis-Ashore\" site with radar and 24 SM-3 missiles is to become operational in Poland in 2020. Russian officials have characterized the establishment of U.S. missile defense installations in Europe as a \"direct threat to global and regional security.\"", "Under the European Deterrence Initiative (EDI), launched in 2014 (originally called the European Reassurance Initiative), the United States has bolstered security in Central and Eastern Europe with an increased rotational military presence, additional exercises and training with allies and partners, improved infrastructure to allow greater responsiveness, enhanced prepositioning of U.S. equipment, and intensified efforts to build partner capacity for newer NATO members and other partners. Approximately 6,000 U.S. military personnel are involved in the associated Atlantic Resolve mission at any given time, with units typically operating in the region under a rotational nine-month deployment.", "The United States has not increased its permanent troop presence in Europe (currently about 67,000 troops, including two U.S. Army Brigade Combat Teams, or BCTs), but it has rotated additional forces into the region, including nine-month deployments of a third BCT based in the United States. The BCT is based largely in Poland, with units also conducting training and exercises in the Baltic states, Bulgaria, Hungary, and Romania. A combat aviation brigade supports the activities of the BCT. The 4 th Infantry Division Mission Command Element, based in Pozna\u00c5\u0084, Poland, acts as the headquarters overseeing rotational units. ", "Following a meeting between President Trump and President Duda in Washington, DC, on June 12, 2019, President Trump announced that an additional 1,000 troops would be added to the rotational U.S. deployments in Poland. The additional troops are expected to come from units based in Germany. The two sides also announced plans for the U.S. military to expand its logistical, administrative, and training infrastructure in Poland, boost the presence of special operations forces, and establish a squadron of aerial reconnaissance drones. ", "At the 2016 NATO Summit in Warsaw, the alliance agreed to deploy multinational battle groups (approximately 1,100 troops each) to Poland and the three Baltic countries. These \"enhanced forward presence\" units are intended to deter Russian aggression by acting as a \"tripwire\" that ensures a response from the entire alliance in the event of a Russian attack. The United States is leading the multinational battalion based in Orzysz, Poland. NATO continues to resist calls to deploy troops permanently in countries that joined after the collapse of the Soviet Union. Accordingly, the enhanced NATO presence has been referred to as \"continuous\" but rotational. ", "In recent years, Poland has made a number of significant defense purchases from the United States, and numerous elements of Poland's military equipment modernization plans are of interest and relevance to U.S. defense planners and the U.S defense industry:", "At a February 2019 press conference unveiling the updated Technical Modernization Plan for the Polish armed forces, Polish Defense Minister Mariusz B\u00c5\u0082aszczak indicated that the procurement of fifth-generation fighter aircraft was a top priority. In May 2019, Poland send a formal letter of request to the United States for the purchase of 32 F-35 Joint Strike Fighters, made by Lockheed Martin. In February 2019, Poland announced plans to sign a $414 million contract for the purchase of 20 High Mobility Artillery Rocket System (HIMARS) launchers, produced by Lockheed Martin. Delivery is expected by 2023. In March 2018, Poland signed a $4.75 billion deal for the purchase of two batteries (four total fire units) of the Patriot integrated air and missile defense system, made by Raytheon. Delivery is expected in 2022. In December 2017, the U.S. State Department approved the sale to Poland of F-16 support and sustainment services worth up to $200 million, potentially supplied by a number of U.S. contractors. In November 2017, the U.S. State Department approved the sale to Poland of up to 150 AIM-120C-7 Advanced Medium Range Air-to-Air Missiles (AMRAAM), made by Raytheon, for an estimated cost of $250 million. In November 2016, the U.S. State Department approved the sale to Poland of 70 AGM-158B extended range Joint Air-to Surface Standoff Missiles (JASSM-ER), an air-launched cruise made by Lockheed Martin with a range of approximately 900 kilometers. The deal was worth up to $200 million. In 2014, Poland purchased 40 AGM-158A JASSMs (also made by Lockheed Martin) and associated Mid-Life Update (MLU) packages for its F-16C/Ds, reportedly worth about $250 million in total. The A-variant JASSMs have a range of approximately 370 kilometers."], "subsections": []}, {"section_title": "Economic Ties", "paragraphs": ["Trade between the United States and Poland has increased significantly over the past 15 years. In 2004, for example, U.S. goods exports to Poland were valued at approximately $929 million and imports from Poland were about $1.8 billion. In 2018, U.S. goods exports to Poland were more than $5.4 billion and imports from Poland were more than $8 billion. Leading categories of U.S. exports to Poland include aircraft, machinery, electrical and medical equipment, and vehicles. U.S. imports from Poland represent a wide range of items, including heavy machinery, chemicals, and agricultural products. In 2017, U.S. services exports to Poland were valued at approximately $3.1 billion and services imports from Poland were approximately $2.25 billion.", "In 2017, U.S. foreign direct investment in Poland was approximately $12.6 billion. U.S. affiliates employ nearly 200,000 people in Poland. U.S. companies with significant investment in Poland include JP Morgan Chase, Citigroup, Hewlett Packard, UPS, 3M, IBM, United Technologies, General Electric, and Discovery Communications. "], "subsections": []}, {"section_title": "Visa Waiver Program", "paragraphs": ["Many Polish officials and citizens continue to express disappointment that the United States has not made Poland a Visa Waiver Program (VWP) country. Current U.S. visa policy requires Poles who wish to travel to the United States to apply for a visa by filling out an application, paying a $160 nonrefundable fee, and completing an interview at a U.S. embassy or consulate. These requirements are waived for citizens of most EU countries, since most of the countries qualify to be included in the VWP. The VWP allows for visa-free travel to the United States for up to 90 days. Under U.S. policy, Poland does not meet the VWP's qualifying criteria because its visitor visa refusal rate (the percentage of applications rejected by U.S. consular officers who cannot overcome the refusal) remains above the 3% limit. The refusal rate for Poland was 3.99% in FY2018 and 5.92% in FY2017. Nonimmigrant visas issued to Polish nationals increased nearly 60% from 2009 to 2018.", "Citing Poland's status as a close U.S. ally, some Members of Congress have attempted to change the law governing the VWP to allow Poland to qualify. In the 115 th Congress, Representative Mike Quigley introduced a bill ( H.R. 2388 , Poland Visa Waiver Act of 2017) that would have authorized the Secretary of Homeland Security to designate Poland a VWP country. Some opponents of extending the VWP to include Poland argue that such a step could allow a significant increase in the number of Poles who overstay their visas and remain illegally in the United States (i.e., become unauthorized aliens). Proponents of including Poland argue that such a move would increase U.S. tourism revenue, boost public diplomacy, and strengthen national security by extending the information-sharing elements of the VWP to Poland. "], "subsections": []}]}, {"section_title": "Relations with Russia", "paragraphs": ["Historically, Poland has had a difficult relationship with Russia. Poland's view of Russia remains affected by the experience of Soviet invasion during World War II and Soviet domination during the communist era. In more recent years, Polish leaders have consistently expressed warnings about the nature of Vladimir Putin's government in Russia, tending to view Russia as a potential threat to Poland and its neighbors. This perception predates Russia's invasion of Georgia in 2008, but events in Ukraine since 2014 have sharpened Polish concerns about Russia's intentions and have put security at the top of Poland's national agenda.", "The Law and Justice-led government has maintained a hard line in its approach to Russia and entrenched Poland's position as one of the EU's most hawkish countries on Russia policy. Poland has been one of the leading advocates for adopting and maintaining robust EU sanctions against Russia in response to its actions in Ukraine, although it has been one of the countries most affected by Russian retaliatory sanctions. ", "One area of particular relevance to Poland's security is Kaliningrad, a 5,800-square-mile Russian exclave wedged between Poland and Lithuania (see Figure 1 ). Ceded to Russia by Germany following World War II, Kaliningrad is a key strategic territory for Russia, allowing it to project military power into NATO's northern flank. The territory has a heavy Russian military presence, including the Baltic Fleet and two airbases. Russia has repeatedly deployed Iskander short-range nuclear-capable missiles in Kaliningrad, and reports indicated that a 2018 deployment could be permanent. According to NATO officials, Russia is using Kaliningrad to pursue an anti-access/area denial (A2/AD) strategy that involves layering surface-to-air missiles to potentially block off access to the Baltic states and much of Poland. Kaliningrad's geographic isolation also allows for a scenario in which Russia tries to seize the Suwa\u00c5\u0082ki Gap, the 100-kilometer border between Poland and Lithuania that separates Kaliningrad from Russia's ally Belarus. "], "subsections": []}, {"section_title": "Energy Security", "paragraphs": ["Poland has been a leading opponent and critic of the Nord Stream 2 pipeline that would allow Germany to increase the amount of natural gas it imports directly from Russia via the Baltic Sea. Poland argues that the completion of Nord Stream 2 would allow Gazprom, Russia's state-owned gas company, to further consolidate its monopoly over the Central European gas market, as Gazprom would have full control of all gas transmission routes and Russian gas would dominate the European network hubs in Germany and Austria. Poland maintains that Russia would further gain geopolitical leverage because it could arbitrarily shift supply corridors in Europe, giving it the ability to continue supplying European markets through Germany while restricting or completely halting gas transit through Poland and/or Ukraine. Polish officials have expressed the view that U.S. involvement, including the adoption of sanctions, is crucial for efforts to oppose construction of the pipeline. ", "While approximately two-thirds of the natural gas and most of the oil consumed in Poland comes from Russia, Poland continues to rely on domestically produced coal for much of its electricity generation. Russian gas accounts for less than 10% of Poland's primary energy supply. Successive Polish governments have prioritized efforts to diversify the country's energy sources. Poland has been taking steps to expand pipeline interconnectivity with its neighbors, including plans to develop the Baltic Pipe project, expected to be operational in 2022, which would connect Poland's gas infrastructure via Denmark to Norwegian supplies. Poland's supply contract with Gazprom expires in 2022, and Poland is unlikely to seek its renewal. Poland also has developed the ability to reverse the flow of gas in the Polish section of the Yamal pipeline, which runs from Russia to Germany via Belarus and Poland, in order to import natural gas from the west in the case of a crisis involving a cut-off of Russian gas from the east. A liquefied natural gas (LNG) terminal on the Baltic Sea coast near the German border (\u00c5\u009awinouj\u00c5\u009bcie) became operational in 2015, and in October 2018 the Polish state energy company signed a 20-year contract to purchase LNG from a U.S. supplier. ", "The Polish government also has been a leading advocate for a stronger EU energy policy that reduces collective dependence on Russia. Poland has been active in projects that enhance regional energy security by interconnecting national gas networks through the construction of new pipelines. The construction of new connectors with Slovakia and the Czech Republic is underway, and the planned Gas Interconnection Poland-Lithuania (GIPL), expected to become operational by 2022, would link the natural gas grid of the Baltic countries to the rest of the EU.", "Many U.S. officials and Members of Congress have regarded European energy security as a U.S. interest. In particular, there has been concern in the United States over the influence that Russian energy dominance could have on the ability to present a united transatlantic position when it comes to other issues related to Russia. Successive U.S. administrations have encouraged EU member states to reduce energy dependence on Russia through diversification of supply and supported European steps to develop alternative sources and increase energy efficiency. ", "In the 116 th Congress, related bills include the European Energy Security and Diversification Act 2019 (House-passed H.R. 1616 and S. 704 ) and the Protect European Energy Security Act ( H.R. 1081 ). Introduced by Representative Adam Kinzinger and Senator Christopher Murphy, the European Energy Security and Diversification Act 2019 aims to prioritize and enhance U.S. efforts to encourage European countries to diversify energy sources and supply routes and increase regional energy security. Introduced by Representative Denny Heck, the Protect European Energy Security Act would require reports to Congress by the Secretary of State, Secretary of the Treasury, and the Director of National Intelligence detailing U.S. diplomatic efforts to oppose the construction of Nord Stream 2 and to promote European energy security and decrease European dependence on Russian energy. "], "subsections": []}, {"section_title": "Conclusion", "paragraphs": ["Poland appears likely to remain a strong U.S. ally and an increasingly important U.S. security partner in Europe. Many analysts believe that close cooperation between the United States and Poland will continue for the foreseeable future in areas such as efforts to deter potential Russian aggression, the future of NATO, energy security, and economic issues. Statements by Polish leaders suggest that Poland is likely to continue looking to the United States for leadership on foreign policy and security issues.", "During the 116 th Congress, the issue of establishing a permanent U.S. military base in Poland or increasing the size of the U.S. military presence in Poland may remain of interest to Members of Congress. Contracted and prospective U.S. arms sales to Poland, including major items such as the F-35 and Patriot missile systems, also may be of congressional interest. Some Members may wish to consider Poland's status with regard to the U.S. Visa Waiver Program. Poland is likely to be of continuing importance in the area of European energy security. ", "Members of Congress also may wish to remain informed about legislative, governance, and rule-of-law issues in Poland, including with regard to the numerous controversial domestic reforms enacted over the past several years. Members of Congress may have an interest in monitoring political developments in relation to the Polish parliamentary election due to occur in October or November 2019."], "subsections": []}]}}
{"id": "R46259", "title": "Northern Ireland: The Peace Process, Ongoing Challenges, and U.S. Interests", "released_date": "2020-03-09T00:00:00", "summary": ["Between 1969 and 1999, almost 3,500 people died as a result of political violence in Northern Ireland, which is one of four component \"nations\" of the United Kingdom (UK). The conflict, often referred to as \"the Troubles,\" has its origins in the 1921 division of Ireland and has reflected a struggle between different national, cultural, and religious identities. Protestants in Northern Ireland (48% of the population) largely define themselves as British and support remaining part of the UK ( unionists ). Most Catholics in Northern Ireland (45% of the population) consider themselves Irish, and many desire a united Ireland ( nationalists ).", "Successive U.S. Administrations and many Members of Congress have actively supported the Northern Ireland peace process. For decades, the United States has provided development aid through the International Fund for Ireland (IFI). In recent years, congressional hearings have focused on the peace process, police reforms, human rights, and addressing Northern Ireland's legacy of violence (often termed dealing with the past ). Some Members also are concerned about how the UK's decision to withdraw from the European Union (EU)\u00e2\u0080\u0094known as Brexit \u00e2\u0080\u0094might affect Northern Ireland.", "The Peace Agreement: Progress to Date and Ongoing Challenges", "In 1998, the UK and Irish governments and key Northern Ireland political parties reached a negotiated political settlement. The resulting Good Friday Agreement, or Belfast Agreement, recognized that a change in Northern Ireland's constitutional status as part of the UK can come about only with the consent of a majority of the people in Northern Ireland (as well as with the consent of a majority in Ireland). The agreement called for devolved government\u00e2\u0080\u0094the transfer of specified powers from London to Belfast\u00e2\u0080\u0094with a Northern Ireland Assembly and Executive in which unionist and nationalist parties would share power. It also contained provisions on decommissioning (disarmament) of paramilitary weapons, policing, human rights, UK security normalization (demilitarization), and the status of prisoners.", "Despite a much-improved security situation since 1998, full implementation of the peace agreement has been difficult. For years, decommissioning and police reforms were key sticking points that generated instability in the devolved government. In 2007, the pro-British Democratic Unionist Party (DUP) and Sinn Fein, the nationalist political party traditionally associated with the Irish Republican Army (IRA), reached a landmark power-sharing deal. Tensions and distrust persisted, however, between the unionist and nationalist communities and their respective political parties.", "Ten years later, the devolved government led by the DUP and Sinn Fein collapsed, prompting snap Assembly elections in March 2017 amid several contentious regional issues and unease in Northern Ireland about Brexit. Negotiations to reestablish the devolved government repeatedly stalled. The DUP and Sinn Fein agreed to form a new devolved government in January 2020, but the long impasse renewed concerns about the stability of the power-sharing institutions and the fragility of community relations. Northern Ireland also faces a number of broad challenges in its search for peace and reconciliation, including reducing sectarian divisions, dealing with the past, addressing lingering concerns about paramilitary and dissident activity, and promoting further economic development.", "Brexit and Northern Ireland", "Brexit occurred on January 31, 2020, and may have significant political and economic repercussions for Northern Ireland. In the UK's 2016 public referendum on EU membership, voters in Northern Ireland favored remaining in the EU, 56% to 44% (the UK overall voted in favor of leaving, 52% to 48%). The future of the border between Northern Ireland and Ireland was a central issue in the UK's withdrawal negotiations with the EU. Since 1998, as security checkpoints were dismantled in accordance with the peace agreement and because both the UK and Ireland belonged to the EU single market and customs union, the circuitous 300-mile land border between Northern Ireland and Ireland effectively disappeared. Many on both sides of the sectarian divide viewed this open border as intrinsic to peace and crucial to fostering a dynamic cross-border economy. Preventing a hard border (with customs checks and physical infrastructure) post-Brexit was thus a key imperative and a major stumbling block in the UK-EU withdrawal negotiations. Although concerns about a hard border developing have receded in light of the solution found in the UK-EU withdrawal agreement, Brexit has added to divisions within Northern Ireland and revived questions about the region's constitutional status. Sinn Fein, for example, has called for a border poll , or referendum, on whether Northern Ireland should remain part of the UK. Also see CRS Report R45944, Brexit: Status and Outlook , coordinated by Derek E. Mix."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Overview", "paragraphs": ["Between 1969 and 1999, almost 3,500 people died as a result of political violence in Northern Ireland, which is a part of the United Kingdom (UK). The conflict, often referred to as \"the Troubles,\" has its origins in the 1921 division of Ireland (see map in Figure 1 ). At its core, the conflict reflects a struggle between different national, cultural, and religious identities. Protestants in Northern Ireland (48% of the population) largely define themselves as British and support Northern Ireland's continued incorporation in the UK ( unionists ). Catholics in Northern Ireland (45% of the population) consider themselves Irish, and many Catholics desire a united Ireland ( nationalists ). In the past, more militant unionists ( loyalists ) and more militant nationalists ( republicans ) were willing to use force and resort to violence to achieve their goals.", "The Troubles were sparked in late 1968, when a civil rights movement was launched in Northern Ireland mostly by Catholics, who had long faced discrimination in areas such as electoral rights, housing, and employment. This civil rights movement was met with violence by some unionists, loyalists, and the police, which in turn prompted armed action by nationalists and republicans. Increasing chaos and escalating violence led the UK government to deploy the British Army on the streets of Northern Ireland in 1969 and to impose direct rule from London in 1972 (between 1920 and 1972, Northern Ireland had its own regional government at Stormont, outside Belfast).", "For years, the UK and Irish governments sought to facilitate a negotiated political settlement to the conflict in Northern Ireland. Multiparty talks began in June 1996, led by former Senate Majority Leader George Mitchell, who was serving as U.S. President Bill Clinton's special adviser on Ireland. After many ups and downs, the UK and Irish governments and the Northern Ireland political parties participating in the peace talks announced an agreement on April 10, 1998. This accord became known as the Good Friday Agreement (for the day on which it was concluded); it is also known as the Belfast Agreement.", "Despite the significant decrease in the levels of violence since the Good Friday Agreement, implementation of the peace accord has been challenging. Tensions persist among Northern Ireland's political parties and between the unionist and nationalist communities more broadly. Northern Ireland remains a largely divided society and continues to grapple with a number of issues in its search for peace and reconciliation. Sectarian differences flare periodically, and addressing Northern Ireland's legacy of violence (often termed dealing with the past ) is particularly controversial. Many analysts assess that peace and security in Northern Ireland is fragile. The UK's withdrawal from the European Union (EU) in January 2020\u00e2\u0080\u0094or Brexit \u00e2\u0080\u0094has added to divisions within Northern Ireland. Brexit poses new challenges for Northern Ireland's peace process and economy and has renewed questions about Northern Ireland's constitutional status as part of the UK.", "Successive U.S. Administrations and many Members of Congress have actively supported the Northern Ireland peace process and encouraged the full implementation of the Good Friday Agreement, as well as subsequent accords and initiatives to further the peace process and promote long-term reconciliation. Some Members have been particularly interested in police reforms and human rights in Northern Ireland. Since 1986, the United States has provided development aid through the International Fund for Ireland (IFI) as a means to encourage economic development and foster reconciliation. Some Members of Congress also have demonstrated an interest in how Brexit might affect Northern Ireland in the years ahead."], "subsections": []}, {"section_title": "The 1998 Peace Agreement", "paragraphs": [], "subsections": [{"section_title": "Key Elements", "paragraphs": ["The Good Friday Agreement is a multilayered and interlocking document, consisting of a political settlement reached by Northern Ireland's political parties and an international treaty between the UK and Irish governments. At the core of the Good Friday Agreement is the consent principle \u00e2\u0080\u0094that is, a change in Northern Ireland's status can come about only with the consent of the majority of Northern Ireland's people, as well as with the consent of a majority in Ireland. Although the agreement acknowledged that a substantial section of Northern Ireland's population and a majority on the island desired a united Ireland, it recognized that the majority of people in Northern Ireland wished to remain part of the UK. If the preference of this majority were to change, the agreement asserted that the UK and Irish governments would have a binding obligation to bring about the wish of the people; thus, the agreement included provisions for future polls to be held in Northern Ireland on its constitutional status, should events warrant.", "The Good Friday Agreement set out a framework for devolved government\u00e2\u0080\u0094the transfer of specified powers over local governance from London to Belfast\u00e2\u0080\u0094and called for establishing a Northern Ireland Assembly and Executive in which unionist and nationalist parties would share power (known as Strand One ). The Good Friday Agreement also contained provisions on several issues viewed as central to the peace process: decommissioning (disarmament) of paramilitary weapons, policing, human rights, UK security normalization (demilitarization), and the status of prisoners. Negotiations on many of these areas had been extremely contentious. Experts assert that the final agreed text thus reflected some degree of \"constructive ambiguity\" on such issues.", "In addition, the Good Friday Agreement created new \"North-South\" and \"East-West\" institutions ( Strand Two and Strand Three , respectively). Among the key institutions called for in these two strands, a North-South Ministerial Council was established to allow leaders in the northern and southern parts of the island of Ireland to consult and cooperate on cross-border issues. A British-Irish Council also was formed to discuss matters of regional interest; the council comprises representatives of the two governments and the devolved administrations of Northern Ireland, Scotland, Wales, the Channel Islands, and the Isle of Man."], "subsections": []}, {"section_title": "Implementation", "paragraphs": ["Voters in Northern Ireland and the Republic of Ireland approved the Good Friday Agreement in separate referendums on May 22, 1998. Although considerable progress has been made in implementing the agreement, the process has been arduous. For years, decommissioning and police reforms were key sticking points that contributed to instability in Northern Ireland's devolved government. Sporadic violence from dissident republican and loyalist paramilitary groups that refused to accept the peace process and sectarian strife also helped to feed mistrust between the unionist and nationalist communities and their respective political parties."], "subsections": [{"section_title": "Democratic Power-Sharing Institutions", "paragraphs": ["As noted above, the Good Friday Agreement called for establishing a new Northern Ireland Assembly and Executive. To ensure that neither unionists nor nationalists could dominate the Assembly, the agreement specified that \"key decisions\" must receive cross-community support. The Executive would be composed of a first minister, deputy first minister, and other ministers with departmental responsibilities (e.g., health, education, jobs); positions would be allocated to political parties according to party strength in the Assembly.", "The first elections to the new 108-member Northern Ireland Assembly took place on June 25, 1998. The devolution of power from London to Belfast, however, did not follow promptly because of unionist concerns about decommissioning, or the paramilitaries' surrender of their weapons. Following 18 months of further negotiations, authority over local affairs was transferred to the Northern Ireland Assembly and Executive in December 1999. Over the next few years, the issue of decommissioning\u00e2\u0080\u0094especially by the Irish Republican Army (IRA)\u00e2\u0080\u0094contributed to the suspension of the devolved government and the reinstatement of direct rule from London several times between 2000 and 2002. (See \" Decommissioning ,\" below.)", "In May 2007, after a nearly five-year suspension, Northern Ireland's devolved government was restored following a landmark deal between the Democratic Unionist Party (DUP)\u00e2\u0080\u0094which strongly supports Northern Ireland's continued integration as part of the UK\u00e2\u0080\u0094and Sinn Fein, the staunchly nationalist political party traditionally associated with the IRA. The DUP and Sinn Fein have been the largest unionist and nationalist parties, respectively, in Northern Ireland since 2003. The 2007 DUP-Sinn Fein deal paved the way for greater stability in Northern Ireland's devolved government over the next decade. Regularly scheduled Assembly elections in 2011 and 2016 produced successive power-sharing governments, also led by the DUP and Sinn Fein.", "At the same time, tensions persisted within the devolved government and between the unionist and nationalist communities. Various incidents\u00e2\u0080\u0094including protests in 2012 and 2013 over the use of flags and emblems, a 2014 dispute over welfare reform, and the 2015 arrest of a Sinn Fein leader in connection with the murder of a former IRA member\u00e2\u0080\u0094periodically threatened the devolved government's stability. Following the collapse of the devolved government and snap Assembly elections in 2017, heightened tensions due to Brexit and other contentious issues largely stalled negotiations on forming a new devolved government for almost three years. This long impasse renewed concerns about political stability and highlighted divisions in Northern Ireland politics and society. (See \" 2017-2020 Crisis in the Devolved Government ,\" below.)"], "subsections": []}, {"section_title": "Decommissioning", "paragraphs": ["For years, decommissioning of paramilitary weapons was a prominent challenge in the implementation of the Good Friday Agreement. The text of the agreement states, \"those who hold office should use only democratic, non-violent means, and those who do not should be excluded or removed from office.\" Unionists were adamant that the IRA must fully decommission its weapons. The IRA had been observing a cease-fire since 1997, but it viewed decommissioning as tantamount to surrender and had long resisted such calls.", "Progress toward full IRA decommissioning was slow and incremental. A key milestone came in July 2005, when the IRA declared an end to its armed campaign and instructed all members to pursue objectives through \"exclusively peaceful means.\" In September 2005, Northern Ireland's Independent International Commission on Decommissioning (IICD) announced that the IRA had put all of its arms \"beyond use,\" asserting that the IRA weaponry dismantled or made inoperable matched estimates provided by the security forces. The IICD also confirmed decommissioning by other republican groups and loyalist organizations. The IICD concluded its work in 2011."], "subsections": []}, {"section_title": "Policing", "paragraphs": ["Although recognized as a central element in achieving a comprehensive peace in Northern Ireland, new policing structures and arrangements were a frequent point of contention between unionists and nationalists. In 2001, a new Police Service of Northern Ireland (PSNI) was established to replace the Royal Ulster Constabulary (RUC), Northern Ireland's former, 92% Protestant police force. Catholics viewed the RUC as an enforcer of Protestant domination, and human rights organizations accused the RUC of brutality and collusion with loyalist paramilitary groups. Defenders of the RUC pointed to its tradition of loyalty and discipline and its record in fighting terrorism. In accordance with policing recommendations made by an independent commission (known as the Patten Commission), increasing the proportion of Catholic officers (from 8% to 30% in 10 years) was a key goal for the new PSNI. To help fulfill this goal, the PSNI introduced a 50-50 Catholic/Protestant recruitment process.", "For several years, Sinn Fein refused to participate in the new Policing Board, a democratic oversight body. Many viewed Sinn Fein's stance as discouraging Catholics from joining the PSNI and preventing the nationalist community from fully accepting the new police force. In 2007, however, as part of the process to restore the devolved government, Sinn Fein members voted to support the police and join the Policing Board. Experts viewed Sinn Fein's decision as historic, given the IRA's traditional view of the police as a legitimate target. In 2010, the DUP and Sinn Fein reached an accord (the Hillsborough Agreement) to devolve policing and justice powers from London to Belfast (on which the parties had been unable to agree at the time of the Good Friday Agreement's signing).", "In 2011, the 50-50 recruitment process for Catholic and Protestant PSNI officers concluded. Officials asserted that the 50-50 process fulfilled the goals set out by the Patten Commission (including increasing the number of Catholic officers to 30%). In recent years, concerns resurfaced that not enough Catholics were seeking to join the PSNI; partly because of lingering suspicions about the police within the Catholic/nationalist community but also because of fears that Catholic police recruits were key targets of dissident republicans. In 2017, the PSNI introduced a number of procedural changes to help attract more Catholics (and more women)."], "subsections": []}, {"section_title": "Security Normalization", "paragraphs": ["The Good Friday Agreement called for \"as early a return as possible to normal security arrangements in Northern Ireland,\" including the removal of security installations. In February 2007, the last of more than 100 armored watchtowers in Northern Ireland was dismantled. In July 2007, the British Army ended its 38-year-long military operation in Northern Ireland. Although a regular garrison of 5,000 British troops remains based in Northern Ireland, British forces no longer have a role in policing and may be deployed worldwide."], "subsections": []}, {"section_title": "Rights, Safeguards, and Equality of Opportunity", "paragraphs": ["In accordance with the Good Friday Agreement's provisions related to human rights and equality, the UK government incorporated the European Convention on Human Rights into Northern Ireland law and established a new Human Rights Commission and a new Equality Commission for Northern Ireland. Some nationalists, however, continue to press for more progress in the area of human rights and equality. They argue that Northern Ireland needs its own Bill of Rights (consideration of which is provided for in the Good Friday Agreement) and a stand-alone Irish Language Act to give the Irish language the same official status as English in Northern Ireland. The Good Friday Agreement calls for tolerance of linguistic diversity in Northern Ireland and support for the Irish language. The subsequent St. Andrews Agreement of 2006 provided for an Irish Language Act, but this issue remains controversial."], "subsections": []}]}]}, {"section_title": "Initiatives to Further the Peace Process", "paragraphs": ["Many analysts view implementation of the most important aspects of the Good Friday Agreement as complete. Since 2013, however, the Northern Ireland political parties and the UK and Irish governments have made several attempts to reduce sectarian tensions and promote reconciliation. Major endeavors include the following:", "The 2013 Haass Initiative. In 2013, the Northern Ireland Executive appointed former U.S. diplomat and special envoy for Northern Ireland Richard Haass as the independent chair of interparty talks aimed at tackling some of the most divisive issues in Northern Ireland society. In particular, Haass was tasked with making recommendations on dealing with the past and the sectarian issues of parading, protests, and the use of flags and emblems. In December 2013, Haass released a draft proposal outlining the way forward in these areas, but he was unable to broker a final agreement among the Northern Ireland political parties. The 2014 Stormont House Agreement. In 2014, financial pressures and budgetary disputes related to UK-wide welfare reforms and austerity measures tested Northern Ireland's devolved government. The UK and Irish governments convened interparty talks to address government finances and governing structures, as well as the issues previously tackled by the Haass initiative. In the resulting December 2014 Stormont House Agreement, the Northern Ireland political parties agreed to support welfare reform (with certain mitigating measures), balance the budget, address Northern Ireland's heavy reliance on the public sector, and reduce the size of the Assembly and the number of Executive departments to improve efficiency and cut costs. The agreement also included measures on parading, flags, and dealing with the past. Continued disagreements over welfare reform between the DUP and Sinn Fein, however, stalled implementation of all aspects of the Stormont House Agreement. The 2015 Fresh Start Agreement. In November 2015, the UK and Irish governments, the DUP, and Sinn Fein reached a new Fresh Start Agreement. Like the Stormont House Agreement, the accord focused on implementing welfare reform and improving the stability and sustainability of Northern Ireland's budget and governing institutions. It confirmed a reduction in the size of the Assembly from 108 to 90 members (effective from the first Assembly election after the May 2016 election), decreased the number of Executive departments, and made provision for an official opposition in the Assembly. The Fresh Start Agreement also included provisions on parading and the use of flags, but the parties were unable to reach final agreement on establishing new institutions to deal with the past. In addition, the Fresh Start Agreement addressed ongoing concerns about paramilitary activity, sparked by the arrest of a senior Sinn Fein official in connection to the August 2015 murder of an ex-IRA member."], "subsections": []}, {"section_title": "Recent Issues and Ongoing Challenges", "paragraphs": ["Despite a much-improved security situation since the 1998 Good Friday Agreement, concerns linger about the stability of the devolved government and the fragility of community relations. As noted previously, the devolved government led by the DUP and Sinn Fein collapsed in January 2017 amid heightened tensions related to Brexit and other issues. It took nearly three years following the March 2017 snap Assembly elections to reestablish the devolved government.", "The search for peace and reconciliation remains challenging. Difficult issues include bridging sectarian divisions and managing key sticking points (especially parading, protests, and the use of flags and emblems); dealing with the past; addressing remaining paramilitary concerns and curbing dissident activity; and furthering economic development. The 2013 Haass initiative, the 2014 Stormont House Agreement, and the 2015 Fresh Start Agreement attempted to tackle some aspects of these long-standing challenges. Some measures agreed in these successive accords were delayed amid the absence of a devolved government between 2017 and 2020."], "subsections": [{"section_title": "2017-2020 Crisis in the Devolved Government", "paragraphs": [], "subsections": [{"section_title": "March 2017 Snap Assembly Elections", "paragraphs": ["The immediate impetus for the devolved government's January 2017 collapse was a renewable energy scandal involving DUP leader and Northern Ireland First Minister Arlene Foster. Then-Deputy First Minister Martin McGuiness of Sinn Fein called for Foster to stand aside as First Minister temporarily while an investigation was conducted into the energy scheme; Foster refused, and McGuinness resigned his position as Deputy First Minister in protest. McGuinness's resignation essentially forced new elections to be called for March 2, 2017. ", "Tensions between Sinn Fein and the DUP on several issues other than the energy scandal contributed to Sinn Fein's decision to force snap Assembly elections. The elections were called in the wake of the June 2016 UK referendum on EU membership and amid deep unease over Brexit's implications for Northern Ireland. Other points of contention included the introduction of a potential Irish Language Act and the legalization of same-sex marriage; Sinn Fein supported both measures, whereas the DUP opposed them. Arlene Foster led the DUP's election campaign, but Michelle O'Neill succeeded McGuinness as Sinn Fein's leader in Northern Ireland and led Sinn Fein's campaign (McGuinness was suffering from ill health and passed away a few weeks after the election).", "As seen in Table 1 , the number of Assembly seats contested in 2017 was 90 rather than 108 because of a previously agreed reduction in the size of the Assembly. The DUP retained the largest number of seats in the 2017 elections, but Sinn Fein was widely regarded as the biggest winner, given its success in reducing the previous gap between the two parties from 10 seats to 1. A high voter turnout of almost 65%\u00e2\u0080\u0094fueled by anger over the energy scandal and a perceived lack of concern from London about Brexit's impact on Northern Ireland\u00e2\u0080\u0094appears to have favored Sinn Fein and the cross-community Alliance Party. For the first time in the Assembly, unionist parties do not have an overall majority (a largely symbolic status because of the power-sharing rules but highly emblematic for the unionist community)."], "subsections": []}, {"section_title": "Reestablishing the Devolved Government", "paragraphs": ["Following the March 2017 snap Assembly elections, negotiations between the DUP, Sinn Fein, and the other main political parties (see text box ) on forming a new devolved government repeatedly stalled, primarily over a potential Irish Language Act. Divisions over Brexit exacerbated tensions. The DUP was the only major Northern Ireland political party to back Brexit, which Sinn Fein and the other main Northern Ireland parties strongly opposed. Some analysts suggest the DUP's support for the Conservative Party government in the UK Parliament following the UK's June 2017 snap general election further heightened distrust between Sinn Fein and the DUP and made reaching a new power-sharing agreement more difficult.", "In April 2019, journalist Lyra McKee was shot and killed while covering riots in Londonderry (also known as Derry). The New IRA, a dissident republican group opposed to the peace process, claimed responsibility (but also apologized, asserting that it had been aiming to shoot a police officer but hit McKee by accident). McKee's death sparked a significant public outcry and prompted the UK and Irish governments to intensify efforts to revive talks on forming a new devolved government. Negotiations remained largely deadlocked, however, throughout the summer and fall of 2019 amid ongoing uncertainty over Brexit.", "On December 16, 2019, the UK and Irish governments launched a new round of talks with the main political parties aimed at reestablishing the devolved government. These negotiations followed the UK's December 12, 2019, general election, in which Prime Minister Boris Johnson's Conservative Party won a convincing parliamentary majority, thereby negating the DUP's influence in the UK Parliament and improving the prospects for restoring Northern Ireland's devolved government. A functioning devolved government appeared to offer the DUP the best opportunity to ensure it has a voice in implementing the new post-Brexit border arrangements for Northern Ireland (discussed in \" Possible Implications of Brexit ,\" below) and in the upcoming negotiations on the UK-EU future political and trade relationship.", "On January 10, 2020, the DUP, Sinn Fein, and the other parties agreed to a deal put forward by the UK and Irish governments to reestablish the devolved government. The new Assembly convened the following day and elected a new Executive. The DUP's Arlene Foster and Sinn Fein's Michelle O'Neill were elected as First Minister and Deputy First Minister, respectively.", "The new power-sharing deal, known as New Decade, New Approach, is wide-ranging and addresses a number of key issues, including health and education concerns and measures to improve the sustainability and transparency of Northern Ireland's political institutions. The power-sharing deal does not include a stand-alone Irish Language Act, as initially demanded by Sinn Fein, but essentially seeks to strike a compromise that promotes the use of the Irish (Gaelic) language while protecting the Ulster-Scots language (a regional language similar to English) that many unionists consider important to their heritage. The deal provides for the official recognition in Northern Ireland of both the Irish and the Ulster-Scots languages, allows for their wider use in government settings, and establishes two new \"language commissioners\"\u00e2\u0080\u0094one for Irish and one for Ulster-Scots\u00e2\u0080\u0094to enhance, protect, and develop each language and associated cultural traditions. Both the UK and Irish governments promised additional financial support for Northern Ireland as part of the deal to restore the devolved government."], "subsections": []}]}, {"section_title": "Sectarian Divisions", "paragraphs": ["Observers suggest that Northern Ireland remains a largely divided society, with Protestant and Catholic communities existing largely in parallel. Peace walls that separate Protestant and Catholic neighborhoods are perhaps the most tangible sign of such divisions. Estimates of the number of peace walls vary depending on the definition. Northern Ireland's Department of Justice recognizes around 50 peace walls for which it has responsibility; when other types of \"interfaces\" are included\u00e2\u0080\u0094such as fences, gates, and closed roads\u00e2\u0080\u0094the number of physical barriers separating Protestant and Catholic communities is over 100. Northern Ireland's Executive is working to remove the peace walls, but a 2015 survey of public attitudes found that 30% of those interviewed want the walls to remain in place; it also found that more than 4 in 10 people have never interacted with anyone from the community living on the other side of the nearest peace wall. Furthermore, experts note that schools and housing developments in Northern Ireland remain mostly single-identity communities.", "Some analysts contend that sectarian divisions are particularly evident during the annual summer marching season , when many unionist cultural and religious organizations hold parades commemorating Protestant history. Although the vast majority of these annual parades are not contentious, some are held through or close to areas populated mainly by Catholics (some of whom perceive such unionist parades as triumphalist and intimidating). During the Troubles, the marching season often provoked fierce violence. Many Protestant organizations view the existing Parades Commission, which arbitrates disputes over parade routes, as largely biased in favor of Catholics and have repeatedly argued for abolishing the commission. Efforts over the years to address the contentious issue of parading and related protests have stalled repeatedly.", "A series of protests in late 2012 and early 2013 highlighted frictions between the unionist and nationalist communities. Protests began following a decision to fly the union (UK) flag at Belfast City Hall only on designated days rather than year-round. The protests, mostly by unionists and loyalists, occurred in Belfast and elsewhere in Northern Ireland, and some turned violent. Northern Ireland leaders on both sides of the sectarian divide received death threats, and some political party offices were vandalized.", "In June 2016, a Commission on Flags, Identity, Culture, and Tradition was established to assess these contentious issues\u00e2\u0080\u0094including the display of flags and emblems\u00e2\u0080\u0094and to recommend policies and solutions to help address them. This commission consists of 15 members, with 7 appointed by Northern Ireland's political parties and 8 drawn from outside the government; it was originally proposed by the Haass initiative and subsequently endorsed in the Stormont House Agreement and the Fresh Start Agreement. Although this commission was supposed to produce a report with its recommendations within 18 months, it has so far failed to deliver its findings. Commission officials contend that the collapse of the devolved government in 2017 and the subsequent impasse in its reestablishment stymied the commission's work to some degree."], "subsections": []}, {"section_title": "Dealing with the Past", "paragraphs": ["Fully addressing the legacy of violence in Northern Ireland remains controversial. The Good Friday Agreement asserted that, \"it is essential to acknowledge and address the suffering of the victims of violence as a necessary element of reconciliation.\" In 2008, the Northern Ireland Assembly established a Commission for Victims and Survivors aimed at supporting victims and their families. Several legal processes for examining crimes stemming from the Troubles also exist. These include police investigations into deaths related to the conflict; investigations by the Police Ombudsman for Northern Ireland of historical cases involving allegations of police misconduct; and public inquiries, such as the Saville inquiry (concluded in 2010) into the 1972 Bloody Sunday incident.", "Critics argue that these various legal processes represent a piecemeal approach and give some deaths or incidents priority over others. Some observers point out that more than 3,000 conflict-related deaths remain unsolved. In 2005, a Historical Enquiries Team (HET) was established within the PSNI to review over 3,200 deaths relating to the conflict between 1968 and 1998. Despite the HET's efforts, progress was slow and it wound down at the end of 2014. Other critics note the expense and time involved with some of these processes; for example, the Bloody Sunday inquiry cost \u00c2\u00a3195 million (more than $300 million) and took 12 years to complete.", "Some analysts and human rights advocates argue that Northern Ireland needs a comprehensive mechanism for dealing with its past, both to meet the needs of all victims and survivors and to contain costs. At the same time, many commentators assert there is no consensus in Northern Ireland on the best way to deal with the past. This is in large part because many unionists and nationalists continue to view the conflict differently and retain competing narratives.", "The 2014 Stormont House Agreement called for establishing four new bodies to address \"legacy issues\" (based largely on proposals made during the 2013 Haass initiative):", "Historical Investigations Unit (HIU) . This body would take forward outstanding cases from the HET process and the historical unit of the Police Ombudsman dealing with past police misconduct cases. The UK government pledged full disclosure to the HIU. Independent Commission for Information Retrieval (ICIR). The ICIR would enable victims and survivors to seek and privately receive information about conflict-related violence. It would be established by the UK and Irish governments but would be entirely separate from the justice systems in each jurisdiction. Any information provided to the ICIR would be inadmissible in criminal and civil proceedings, but individuals who provided information would not be immune to prosecution for any crime committed should evidentiary requirements be met by other means. Oral History Archive. This archive would provide a central place for people from all backgrounds to share experiences and narratives related to the Troubles. Implementation and Reconciliation Group. This body would oversee work on themes, archives, and information recovery in an effort to promote reconciliation and reduce sectarianism.", "Efforts to establish these four new institutions in UK law, however, largely stalled due to divisions between the UK government, on the one hand, and some nationalists and human rights advocates, on the other, over proposed \"national security caveats\" related to the disclosure of certain information. Victims groups and nationalists were concerned that \"national security\" could be used to cover up criminal wrongdoing by state agents. At the same time, unionists voiced concern that the proposed HIU could unfairly target former soldiers and police officers, and many argued that any measures to deal with the past in Northern Ireland should contain a statute of limitations or amnesty to prosecutions. Successive government crises and the stalemate in reestablishing the devolved government between 2017 and early 2020 also impeded work on implementing these mechanisms to address Northern Ireland's legacy of violence.", "In the January 2020 New Decade, New Approach deal to reestablish the devolved government, the UK government pledged to introduce legislation in the UK Parliament to set up the legacy bodies proposed in the 2014 Stormont House Agreement. Experts suggest, however, that the issue of national security caveats could still pose an obstacle. Others note that some in the UK Parliament could demand legislation to protect military veterans from prosecution for past actions in Northern Ireland in exchange for their support for establishing the new legacy institutions."], "subsections": []}, {"section_title": "Remaining Paramilitary Issues and Dissident Activity", "paragraphs": [], "subsections": [{"section_title": "Paramilitary Concerns", "paragraphs": ["Experts contend that the major paramilitary organizations active during the Troubles are now committed to the political process and remain on cease-fire. However, the apparent continued existence of some groups and their engagement in criminality worries many in both the unionist and nationalist communities. In response to heightened concerns about paramilitary activity in Northern Ireland in 2015, the UK government commissioned a study on the status of republican and loyalist paramilitary groups. This review found that all the main paramilitary groups operating during the Troubles still exist, but they are on cease-fire and the leadership of each group, \"to different degrees,\" is \"committed to peaceful means to achieve their political objectives.\" At the same time, the review concluded that individual members of paramilitary groups still represent a threat to national security, including through their involvement in organized crime, and \"there is regular unsanctioned activity including behavior in direct contravention of leadership instruction.\"", "The 2015 Fresh Start Agreement sought to address concerns about the main paramilitary groups in Northern Ireland. Among other measures, it enumerated a new set of principles that calls upon members of the Assembly and the Executive to work toward disbanding all paramilitary organizations and to take no instructions from such groups. The agreement also called for establishing a new, four-member international body to monitor paramilitary activity and to report annually on progress toward ending such activity. The resulting Independent Reporting Commission (IRC) began work in 2017; the UK and Irish governments each named one representative to the IRC, and the Northern Ireland Executive named two. In its second annual report, released in November 2019, the IRC asserted that paramilitarism remains a \"stark reality of life\" in Northern Ireland and is an obstacle to peace and reconciliation; the IRC also noted that the recent impasse in the devolved government and uncertainty regarding Brexit have made the task of ending paramilitary activity more difficult."], "subsections": []}, {"section_title": "The Dissident Threat", "paragraphs": ["Security assessments indicate that dissident republican and loyalist groups not on cease-fire and opposed to the 1998 peace accord continue to present serious threats. The aforementioned 2015 review of paramilitary groups maintained that the most significant terrorist threat in Northern Ireland was posed not by the groups evaluated in that report but rather by dissident republicans. The review described dissident loyalist groups as posing another, albeit \"smaller,\" threat. ", "At the same time, experts note that dissident groups do not have the same capacity to mount a sustained terror campaign as the IRA did between the 1970s and the 1990s. Most of the dissident republican groups are small in comparison to the IRA during the height of the Troubles. According to UK security services, there are currently four main dissident republican groups: the Continuity IRA (CIRA); \u00c3\u0093glaigh na h\u00c3\u0089ireann (\u00c3\u0093NH); Arm na Poblachta (ANP), and the New IRA (which reportedly was formed in 2012 and brought together the Real IRA, the Republican Action Against Drugs, or RAAD, and a number of independent republicans). These groups have sought to target police officers, prison officers, and other members of the security services in particular. Between 2009 and 2017, dissident republicans were responsible for the deaths of two PSNI officers, two British soldiers, and two prison officers.", "In January 2018, \u00c3\u0093NH declared itself on cease-fire. However, the other groups remain active, and authorities warn that the threat posed by the New IRA in particular is severe. Police suspect the New IRA was responsible for a January 2019 car bomb that exploded in Londonderry (or Derry). As noted above, the New IRA claimed responsibility for killing journalist Lyra McKee in April 2019. Many observers note a slight uptick in dissident republican activity over the last year, especially in border regions, as the New IRA and the Continuity IRA sought to exploit the stalemates over both Northern Ireland's devolved government and Brexit."], "subsections": []}]}, {"section_title": "Economic Development and Equal Opportunity", "paragraphs": ["Many assert that one of the best ways to ensure a lasting peace in Northern Ireland and deny dissident groups new recruits is to promote continued economic development and equal opportunity for Catholics and Protestants. Northern Ireland's economy has made considerable advances since the 1990s. Between 1997 and 2007, Northern Ireland's economy grew an average of 5.6% annually (marginally above the UK average of 5.4%). Unemployment decreased from over 17% in the 1980s to 4.3% by 2007. The 2008-2009 global recession significantly affected the region, however, and economic recovery has been slow and uneven. In the four quarters ending in September 2019, Northern Ireland's economic activity grew by 0.3%, as compared to 1.1% growth for the UK overall. Unemployment in Northern Ireland is currently 2.4%, lower than the UK average (3.8%) and that of the Republic of Ireland (4.8%) and the EU (6.3%).", "Income earned and living standards in Northern Ireland remain below the UK average. Of the UK's 12 economic regions, Northern Ireland had the fifth-lowest gross value added per capita in 2018 (\u00c2\u00a325,981, or about $33,900), below the UK's average (\u00c2\u00a332,216, or about $42,032). Northern Ireland also has both a high rate of economic inactivity (26%) and a high proportion of working-age individuals with no formal qualifications. Studies indicate that the historically poorest areas in Northern Ireland (many of which bore the brunt of the Troubles) remain so and that many of the areas considered to be the most deprived are predominantly Catholic.", "At the same time, Northern Ireland has made strides in promoting equality in its workforce. The gap in economic activity rates between Protestants and Catholics has shrunk considerably since 1992 (when there was a 10 percentage point difference) and has largely converged in recent years (in 2017, the economic activity rate was 70% for Protestants and 67% for Catholics). In addition, the percentage point gap in unemployment rates between the two communities has decreased from 9% in 1992 to 0% in 2017.", "To improve Northern Ireland's long-term economic performance, Northern Ireland leaders have sought to promote export-led growth, decrease Northern Ireland's economic dependency on the public sector by growing the private sector, and attract more foreign direct investment. Reducing Northern Ireland's economic dependency on the public sector (which accounts for about 70% of the region's gross domestic product and employs roughly 30% of its workforce) and devolving power over corporation tax from London to Belfast to help increase foreign investment were key issues addressed in the cross-party negotiations in both 2014 and 2015. The Fresh Start Agreement set April 2018 as the target date for introducing a devolved corporation tax rate of 12.5% in Northern Ireland (the same rate as in the Republic of Ireland). In the absence of devolved government between 2017 and early 2020, however, reducing Northern Ireland's corporation tax rate has been on hold."], "subsections": []}]}, {"section_title": "Possible Implications of Brexit", "paragraphs": ["The UK exited the EU on January 31, 2020. In the UK's June 2016 public referendum on EU membership, voters in Northern Ireland favored remaining in the EU, 56% to 44% (the UK overall voted in favor of leaving, 52% to 48%). Brexit has added to divisions within Northern Ireland and poses considerable challenges, with potential implications for Northern Ireland's peace process, economy, and, in the longer term, constitutional status."], "subsections": [{"section_title": "The Irish Border, the Peace Process, and the Withdrawal Agreement", "paragraphs": ["At the time of the 1998 Good Friday Agreement, the EU membership of both the UK and the Republic of Ireland was regarded as essential to underpinning the political settlement by providing a common European identity for unionists and nationalists in Northern Ireland. EU law also provided a supporting framework for guaranteeing the human rights, equality, and nondiscrimination provisions of the peace accord. Since 1998, as security checkpoints were dismantled in accordance with the peace agreement, and because both the UK and Ireland belonged to the EU's single market and customs union, the circuitous 300-mile land border between Northern Ireland and Ireland effectively disappeared. The open border served as an important political and psychological symbol on both sides of the sectarian divide and helped produce a dynamic cross-border economy.", "Preventing a hard border with customs checks and physical infrastructure on the island of Ireland was a key goal, and a major stumbling block, in negotiating the UK's withdrawal agreement with the EU. UK, Irish, and EU leaders asserted repeatedly that they did not desire a hard border post-Brexit. Security assessments suggested that if border or custom posts were reinstated, violent dissident groups opposed to the peace process would view such infrastructure as targets, endangering the lives of police and customs officers. Experts feared that such violence would threaten the region's security and stability and potentially put the entire peace process at risk.", "Many in Northern Ireland and Ireland also were eager to maintain an open border to ensure \"frictionless\" trade, safeguard the North-South economy, and protect community relations. People in border communities worried that any hardening of the border could affect daily travel across the border to work, shop, or visit family and friends. Estimates suggest there are upward of 300 public and private border crossing points along the border today; during the Troubles, only a fraction of crossing points were open, and hour-long delays due to security measures and bureaucratic hurdles were common.", "Devising a mechanism to maintain an open border, however, was complicated by the UK government's pursuit of a largely hard Brexit , which would keep the UK outside of the EU's single market and customs union. In early 2019, the UK Parliament rejected the initial UK-EU withdrawal agreement three times, in large part because of concerns about the backstop for the Irish border, which would have kept the UK inside the EU customs union until the UK and EU determined their future trade relationship. Some Brexit advocates contended that Ireland and the EU were exaggerating and exploiting the security concerns about the border to keep the UK close to the EU. Those of this view noted that although the Good Friday Agreement commits the UK to normalizing security arrangements, including the removal of security installations \"consistent with the level of threat,\" it does not explicitly require an open border. The Irish government and many in Northern Ireland\u00e2\u0080\u0094as well as most UK officials\u00e2\u0080\u0094argued that an open border had become intrinsic to peace on the island of Ireland.", "In October 2019, EU and UK negotiators reached a revised withdrawal agreement with new provisions for Northern Ireland to ensure an open border on the island of Ireland post-Brexit while safeguarding the rules of the EU single market. Under the new withdrawal agreement, following the end of the 11-month transition period in December 2020, Northern Ireland is to remain legally in the UK customs territory but is to maintain regulatory alignment with the EU. In effect, this arrangement keeps Northern Ireland for all practical purposes in the EU customs union, thus eliminating the need for regulatory checks on trade in goods between Northern Ireland and the Republic of Ireland but essentially creating a customs border in the Irish Sea. Any physical checks necessary to ensure customs compliance are to be conducted at ports or points of entry away from the Northern Ireland-Ireland land border, with no checks or infrastructure at this border. At the end of the transition period, the entire UK, including Northern Ireland, will leave the EU customs union and conduct its own national trade policy.", "The DUP strongly opposed these \"Northern Ireland-only\" arrangements, contending the effective customs border in the Irish Sea will divide Northern Ireland from the rest of the UK and threaten the UK's constitutional integrity. In light of the large majority won by Prime Minister Johnson's Conservative Party in the December 2019 UK parliamentary elections, however, the DUP lost political influence and was unable to block approval of the renegotiated withdrawal agreement. Both the UK and the EU subsequently ratified the withdrawal agreement, thus enabling the UK to end its 47-year membership in the EU.", "With the UK-EU withdrawal agreement in place, concerns have largely receded about a hard border developing on the island of Ireland. At the same time, EU and UK negotiators still must flesh out many of the details related to how the post-Brexit regulatory and customs arrangements for Northern Ireland will work in practice, including where and how customs checks will take place. In accordance with the terms of the withdrawal agreement, a Joint Committee of UK and EU officials is to decide such issues during the transition period. Implementation is likely to remain a work in progress.", "Uncertainty also persists about what the overall UK-EU relationship\u00e2\u0080\u0094including with respect to trade\u00e2\u0080\u0094will look like post-Brexit and whether the two sides can reach an agreement by the end of the transition period. However, the provisions related to the Northern Ireland land border are not expected to change pending the outcome of negotiations on the future UK-EU relationship. Prolongation of the post-Brexit arrangements to keep Northern Ireland aligned with EU regulatory and customs rules will be subject to the consent of the Northern Ireland Assembly in 2024. Should the Assembly fail to renew these arrangements (an unlikely scenario, given that pro-EU parties are expected to continue to hold a majority in the Assembly), the UK and the EU would need to agree on a new set of provisions to keep the border open.", "Many analysts assert that Brexit has further exacerbated political and societal divisions in Northern Ireland. As noted previously, the DUP was the only main political party in Northern Ireland to support Brexit, but it opposed the Northern Ireland provisions in the renegotiated withdrawal agreement because it viewed them as treating Northern Ireland differently from the rest of the UK and undermining the union. Amid ongoing demographic, societal, and economic changes in Northern Ireland that predate Brexit, some in the unionist community perceive a loss in unionist traditions and dominance in Northern Ireland. Some experts suggest the new post-Brexit border and customs arrangements for Northern Ireland could enhance this sense of unionist disenfranchisement, especially if Northern Ireland is drawn closer to the Republic of Ireland's economic orbit post-Brexit. Such unionist unease in turn could intensify frictions and political instability in Northern Ireland; observers also worry that heightened unionist frustration could prompt a resurgence in loyalist violence post-Brexit."], "subsections": []}, {"section_title": "Economic Concerns", "paragraphs": ["Some experts contend that Brexit could have serious negative economic consequences for Northern Ireland. According to a UK parliamentary report, Northern Ireland depends more on the EU market (and especially that of Ireland) for its exports than does the rest of the UK. In 2017, approximately 57% of Northern Ireland's exports went to the EU, including 38% to Ireland, which was Northern Ireland's top single export and import partner. Many manufacturers in Northern Ireland and Ireland also depend on integrated supply chains north and south of the border; raw materials in products such as milk, cheese, butter, and alcoholic drinks often cross the border between Northern Ireland and Ireland several times for processing and packaging.", "Trade with Ireland is especially important for small- and medium-sized companies in Northern Ireland. Although sales in 2017 to other parts of the UK (\u00c2\u00a311.3 billion, or about $14.8 billion) surpassed the value of all Northern Ireland exports (\u00c2\u00a310.1 billion, or about $13.2 billion) and were nearly three times the value of exports to Ireland (\u00c2\u00a33.9 billion, or about $5.1 billion), small- and medium-sized companies in Northern Ireland were responsible for the vast majority of the region's exports to Ireland. Large- and medium-sized Northern Ireland firms dominated in sales to the rest of the UK. UK and DUP leaders maintain that given the value of exports, the rest of the UK is overall more important economically to Northern Ireland than the EU.", "The DUP and others in Northern Ireland suggest the renegotiated withdrawal agreement could be detrimental to the economy. A UK government risk assessment released in October 2019 acknowledged that the lack of clarity about how the customs arrangements for Northern Ireland will operate in practice and possible regulatory divergence between Northern Ireland and the rest of the UK could lead to reduced business investment, consumer spending, and trade in Northern Ireland. The DUP also highlights the potential negative profit implications for Northern Ireland businesses engaged in trade with the rest of the UK. Northern Ireland firms that export goods to elsewhere in the UK would be required under EU customs rules to make exit declarations, which likely would increase costs and administrative burdens.", "Brexit could have other economic ramifications for Northern Ireland, as well. Some experts argue that access to the EU single market was one reason for Northern Ireland's success in attracting foreign direct investment since the end of the Troubles, and they express concern that Brexit could deter future investment. Post-Brexit, Northern Ireland will lose EU regional funding (roughly $1.3 billion between 2014 and 2020) and agricultural aid (direct EU farm subsidies to Northern Ireland are nearly $375 million annually).", "UK officials maintain that the government is determined to safeguard Northern Ireland's interests and \"make a success of Brexit\" for Northern Ireland. They insist that Brexit offers new economic opportunities for Northern Ireland outside the EU. Supporters of the renegotiated withdrawal agreement argue that it will help improve Northern Ireland's economic prospects. Northern Ireland will remain part of the UK customs union and thus will be able to participate in future UK trade deals, but it also will retain privileged access to the EU single market, which may make it a more attractive destination for foreign direct investment."], "subsections": []}, {"section_title": "Constitutional Status and Border Poll Prospects", "paragraphs": ["Brexit has revived questions about Northern Ireland's constitutional status. Sinn Fein argues that \"Brexit changes everything\" and could generate greater support for a united Ireland. Since the 2016 Brexit referendum, Sinn Fein has repeatedly called for a border poll (a referendum on whether Northern Ireland should remain part of the UK or join the Republic of Ireland) in the hopes of realizing its long-term goal of Irish unification. As noted previously, the Good Friday Agreement provides for the possibility of a border poll in Northern Ireland, in line with the consent principle.", "Any decision to hold a border poll in Northern Ireland on its constitutional status rests with the UK Secretary of State for Northern Ireland. In accordance with the Good Friday Agreement, the UK Secretary of State for Northern Ireland must call a border poll if it \"appears likely\" that \"a majority of those voting would express a wish that Northern Ireland should cease to be part of the United Kingdom and form part of a united Ireland.\" At present, experts believe the conditions required to hold a border poll in Northern Ireland do not exist. Most opinion polls indicate that a majority of people in Northern Ireland continue to support the region's position as part of the UK.", "At the same time, some surveys suggest that views on Northern Ireland's status may be shifting and that a \"damaging Brexit\" in particular could increase support for a united Ireland. A September 2019 survey found that 46% of those polled in Northern Ireland favored unification with Ireland, versus 45% who preferred remaining part of the UK. Analysts note that Northern Ireland's changing demographics (in which the Catholic, largely Irish-identifying population is growing while the Protestant, British-identifying population is declining)\u00e2\u0080\u0094combined with the post-Brexit arrangements for Northern Ireland that could lead to enhanced economic ties with the Republic of Ireland\u00e2\u0080\u0094could boost support for a united Ireland in the long term.", "Irish unification also would be subject to Ireland's consent and approval. Some question the current extent of public and political support in the Republic of Ireland for unification, given potential economic costs and concerns that unification could spark renewed loyalist violence in Northern Ireland. According to Irish Prime Minister Leo Varadkar, a border poll in Northern Ireland in the near future would be divisive amid an already contentious Brexit process.", "In Ireland's February 8, 2020, parliamentary election, however, Sinn Fein (which also has a political presence in the Republic of Ireland) secured the largest percentage of the vote for the first time in Ireland's history, surpassing both Varadkar's Fine Gael party and the main opposition party, Fianna Fail. Although Sinn Fein's election platform included a pledge to begin examining and preparing for Irish unification, the party appeared to benefit mostly from the Irish electorate's desire for domestic political change and concerns about housing, health care, and economic policy, rather than from its stance on a united Ireland. Nevertheless, some commentators suggest that Sinn Fein's electoral success could add momentum to calls for a united Ireland."], "subsections": []}]}, {"section_title": "U.S. Policy and Congressional Interests", "paragraphs": [], "subsections": [{"section_title": "Support for the Peace Process", "paragraphs": ["Successive U.S. Administrations have viewed the Good Friday Agreement as the best framework for a lasting peace in Northern Ireland. The Clinton Administration was instrumental in helping the parties forge the agreement, and the George W. Bush Administration strongly backed its full implementation. U.S. officials welcomed the end to the IRA's armed campaign in 2005 and the restoration of the devolved government in 2007. ", "The Obama Administration remained engaged in the peace process. In October 2009, then-U.S. Secretary of State Hillary Clinton visited Northern Ireland, addressed the Assembly, and urged Northern Ireland's leaders to reach an agreement on devolving policing and justice powers. In February 2010, President Obama welcomed the resulting Hillsborough Agreement. In June 2013, President Obama visited Northern Ireland and noted that the United States would always \"stand by\" Northern Ireland. The Obama Administration welcomed the conclusion of both the December 2014 Stormont House Agreement and the November 2015 Fresh Start Agreement.", "Like its predecessors, the Trump Administration has offered support and encouragement to Northern Ireland. In March 2017, Vice President Mike Pence noted that, \"the advance of peace and prosperity in Northern Ireland is one of the great success stories of the past 20 years.\" In November 2017, a U.S. State Department spokesperson expressed regret at the impasse in discussions to restore Northern Ireland's power-sharing institutions and asserted that the United States remained \"ready to support efforts that ensure full implementation of the Good Friday Agreement and subsequent follow-on cross-party agreements.\" On March 6, 2020, President Trump appointed his former acting Chief of Staff Mick Mulvaney as U.S. special envoy to Northern Ireland; leaders in Northern Ireland and Ireland welcomed Mulvaney's appointment.", "Many Members of Congress have actively supported the Northern Ireland peace process for decades. Over the last several years, congressional hearings have focused on the implementation of the Good Friday Agreement, policing reforms, and human rights in Northern Ireland. Some Members have been interested in the status of public inquiries into several past murders in Northern Ireland in which collusion between the security forces and paramilitary groups is suspected\u00e2\u0080\u0094including the 1989 slaying of Belfast attorney Patrick Finucane and the 1997 killing of Raymond McCord, Jr. Some Members also urged the Trump Administration to name a special envoy for Northern Ireland to signal continued U.S. commitment to the region.", "On the economic front, the United States is a key trading partner and an important source of investment for Northern Ireland. According to statistics from the Northern Ireland Executive, in 2017, exports to the United States accounted for 17% of total Northern Ireland exports, and imports from the United States accounted for 10% of total Northern Ireland imports. Foreign direct investment by U.S.-based companies totaled \u00c2\u00a31.8 billion (about $2.5 billion) between 2008 and 2018. Between 2009 and 2011, a special U.S. economic envoy to Northern Ireland worked to further economic ties between the United States and Northern Ireland and to underpin the peace process by promoting economic prosperity."], "subsections": []}, {"section_title": "Views on Brexit", "paragraphs": ["Since 2016, President Trump has repeatedly expressed his support for Brexit. The Trump Administration also backs a future U.S.-UK free trade agreement post-Brexit. In a September 2019 visit to Ireland, Vice President Pence reiterated the Administration's support for Brexit but asserted that the United States recognizes the \"unique challenges\" posed by the Irish border and \"will continue to encourage the United Kingdom and Ireland to ensure that any Brexit respects the Good Friday Agreement.\" At the same time, Vice President Pence urged Ireland and the EU to reach a Brexit withdrawal agreement that \"respects the United Kingdom's sovereignty,\" which many Irish commentators viewed as indicating a limited understanding of Brexit's potential implications for both Northern Ireland and Ireland.", "Some Members of Congress have demonstrated an interest in how Brexit might affect Northern Ireland and expressed continued support for the Good Friday Agreement. Although many Members back a future U.S.-UK free trade agreement post-Brexit, some Members also have tied their support to protecting the Northern Ireland peace process. In April 2019, House Speaker Nancy Pelosi said there would be \"no chance whatsoever\" for a U.S.-UK trade agreement if Brexit were to weaken the Northern Ireland peace process. On October 22, 2019, the House Foreign Affairs Committee's Subcommittee on Europe, Eurasia, Energy, and the Environment held a hearing titled \"Protecting the Good Friday Agreement from Brexit.\" On December 3, 2020, the House passed H.Res. 585 , reaffirming support for the Good Friday Agreement in light of Brexit and asserting that any future U.S.-UK trade agreement and other U.S.-UK bilateral agreements must include conditions to uphold the peace accord. Other Members of Congress have not directly tied their support for a bilateral U.S.-UK free trade agreement to protecting Northern Ireland post-Brexit."], "subsections": []}, {"section_title": "International Fund for Ireland", "paragraphs": ["The United States has provided development aid to Northern Ireland primarily through the International Fund for Ireland (IFI), which was created in 1986. The UK and Irish governments established the IFI based on objectives in the Anglo-Irish Agreement of 1985, but the IFI is an independent entity. It supports economic regeneration and social development projects in areas most affected by the conflict in Northern Ireland and in the border areas of the Republic of Ireland; in doing so, the IFI has sought to foster dialogue and reconciliation. The United States has contributed more than $540 million since the IFI's establishment, roughly half of total IFI funding. The EU, Canada, Australia, and New Zealand have provided funding for the IFI as well. In the 1980s and 1990s, U.S. appropriations for the IFI averaged around $23 million annually; in the 2000s, U.S. appropriations averaged $18 million each year.", "According to the IFI, the vast majority of projects it has supported with seed funding have been located in disadvantaged areas that have suffered from high unemployment, a lack of facilities, and little private sector investment. In its first two decades, IFI projects in Northern Ireland and the southern border counties focused on economic and business development and sectors such as tourism, agriculture, and technology. In 2006, the IFI announced it would begin shifting its focus toward projects aimed at promoting community reconciliation and overcoming past divisions.", "Successive U.S. Administrations and many Members of Congress have backed the IFI as a means to promote economic development and encourage divided communities to work together. Support for paramilitary and dissident groups in Northern Ireland traditionally has been strongest in communities with high levels of unemployment and economic deprivation. Thus, many observers have long viewed the creation of jobs and economic opportunity as a key part of resolving the conflict in Northern Ireland and have supported the IFI as part of the peace process. ", "Many U.S. officials and Members of Congress also encouraged the IFI to place greater focus on reconciliation activities and were pleased with the IFI's decision to do so in 2006. At the same time, some critics have questioned the IFI's effectiveness, viewing certain IFI projects as largely wasteful and unlikely to bridge community divides in any significant way.", "In FY2011, amid the U.S. economic and budget crisis, some Members of Congress began to call for an end to U.S. funding for the IFI as part of a raft of budget-cutting measures. Some Members asserted that U.S. contributions to the IFI were no longer necessary given Ireland and Northern Ireland's improved political and economic situation (relative to what it was in the 1980s). In the final FY2011 continuing budget resolution ( P.L. 112-10 ), Congress did not specify an allocation for the IFI (and has not done so in successive fiscal years).", "Since FY2011, however, the Obama and Trump Administrations have continued to allocate funds from Economic Support Fund (ESF) resources to the IFI in the form of a grant for specific IFI activities to support peace and reconciliation programs. The Obama Administration provided $2.5 million per year between FY2011 and FY2014 and $750,000 per year in FY2015 and FY2016 from ESF funding. The Trump Administration provided $750,000 per year from ESF funding to the IFI in FY2017 and FY2018."], "subsections": []}]}]}}
{"id": "R45747", "title": "Vehicle Electrification: Federal and State Issues Affecting Deployment", "released_date": "2019-06-03T00:00:00", "summary": ["Most of the 270 million cars, trucks, and buses on U.S. highways are powered by internal combustion engines using gasoline or diesel fuel. However, improvements in technology have led to the emergence of vehicle electrification as a potentially viable alternative to internal combustion engines. Several bills pending in the 116 th Congress address issues and incentives related to electric vehicles and charging infrastructure.", "Experience with fully electric vehicles is relatively recent: While a few experimental vehicles were marketed in the United States in the 1990s, the first contemporary all-electric passenger vehicles were introduced in 2010. Since then, newer models have increased the range an electric vehicle can travel on a single charge, and charging stations have become more readily available. These developments have been spurred by a range of government incentives, both in the United States and abroad. Transit buses are the fastest-growing segment of vehicle electrification in China, while in the United States and the European Union, the pace of bus electrification is slower.", "In the United States, federal incentives for electric passenger vehicle purchases have remained largely unchanged for more than a decade and are based primarily on tax credits for electric vehicle purchases and recharging infrastructure investments, and spending on battery chemistry research to develop less-expensive technologies:", "The plug-in electric tax credit permits a taxpayer to take a credit of up to $7,500 for each vehicle that can be recharged from the electricity grid; it phases out after a manufacturer has sold 200,000 eligible vehicles, a threshold that has been met by Tesla and General Motors. A tax credit for installation of alternative fuel vehicle refueling property expired in 2017; it had allowed a tax credit of $1,000 for equipment installed at a residence and up to $30,000 for business installations. I nvestment in transportation electrification research and development (R&D) , which has led to the gradual reduction in the cost of producing lithium-ion batteries, is administered by the U.S. Department of Energy (DOE) in cooperation with private industry. Although the Trump Administration has recommended large reductions in these programs, Congress has maintained annual funding for sustainable transportation of nearly $700 million in the past two fiscal years.", "Other programs that directly influence the level of vehicle electrification include the DOE Clean Cities Program, which supports local efforts to reduce fossil fuel-powered transportation, and the Department of Transportation's Alternative Fuel Corridors, which are designated Interstate Highway corridors with a sufficient number of alternative fueling stations, including electric vehicle chargers, to allow alternative fuel vehicles to travel long distances. The federal government also funds municipal transit bus electrification through Federal Transit Administration grants, which may be used for the purchase of all-electric buses. The pace of electrification also may be affected by proposals for less stringent federal standards for Corporate Average Fuel Economy (CAFE) and greenhouse gas emissions from vehicles.", "Beyond these federal programs, states and electric utilities provide a range of incentives for electrification. The National Conference of State Legislatures reports that 45 states and the District of Columbia offer incentives such as income tax credits for electric vehicle and charger purchases, reduced registration fees, and permitting solo drivers of electric vehicles to use carpool lanes. The California Zero Emission Vehicle program is spurring sales of electric vehicles in 10 states. Utilities can provide incentives to charge during off-peak hours, install public electric charging infrastructure, and utilize vehicle-to-grid (V2G) storage. V2G storage would allow idle vehicle batteries to supply electricity to the grid rather than drawing power from it during peak demand periods."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["Motor vehicle electrification has emerged in the past decade as a potentially viable alternative to internal combustion engines. Although only a small proportion of the current motor vehicle fleet is electrified, interest in passenger vehicle electrification has accelerated in several major industrial countries, including the United States, parts of Europe, and China. Despite advances in technology, electric vehicles (EVs) continue to be significantly more expensive than similarly sized vehicles with internal combustion engines. For this reason, governments in many countries have adopted policies to promote development and sales of electric vehicles. This report discusses federal and state government policies in the United States to support electrification of light vehicles and transit buses, as well as proposals to reduce or eliminate such support. "], "subsections": []}, {"section_title": "Background on Motor Vehicle Electrification", "paragraphs": ["More than 92 million light vehicles\u00e2\u0080\u0094passenger cars, pickup trucks, and SUVs\u00e2\u0080\u0094were sold worldwide in 2018. The three largest markets were China (27 million vehicles sold), Europe (20 million), and the United States (17 million). Most of these vehicles are powered by internal combustion engines. ", "The global market for electrified vehicles is small but growing: In 2018, more than 2 million plug-in hybrid and battery electric vehicles were sold worldwide, a 64% increase over 2017. These account for about 2% of all passenger vehicle sales, both worldwide and in the United States. Demand for electric vehicles is expected to continue to grow, as some countries have called for a complete shift away from sales of new fossil-fuel vehicles by 2030.", "The market for urban transit buses is smaller than the passenger car and SUV markets, but electric vehicles make up a larger part of its footprint. China leads in this category, with 106,000 electric buses put in service in 2017, bringing its total electric bus fleet to 384,000. It has been forecast to remain the largest electric bus market going forward. In the European Union (EU) and the United States, the pace of electrification is slower: More than 200 electric buses were sold in the EU in 2017, bringing the total in service to 1,700; in the United States, approximately 100 electric buses were sold, bringing the total to 300. ", "Two basic types of electric vehicles are now in use:", "Hybrid electric vehicles (HEVs) have both internal combustion engines and electric motors that store energy in batteries. They do not plug into external sources of electricity, but use regenerative braking and the internal combustion engine to recharge. Plug-in electric vehicles, of which there are two types: plug-in hybrid electric vehicles (PHEVs) use an electric motor and an internal combustion engine for power, and they use electricity from an external source to recharge the batteries. Battery electric vehicles (BEVs) use only batteries to power the motor and use electricity from an external source for recharging. In this report, electric vehicles refer to these two types of plug-in vehicles, unless otherwise noted.", "Electrification of vehicles has been limited by three factors: (1) the high cost of producing the lithium ion batteries (currently the preferred battery chemistry) that propel them; (2) their limited range; and (3) vehicle charging time and location. Not all motorists have easy access to charging stations at home or at work, and it can take several hours to fully charge the battery that powers the vehicle, depending on the type of charger used."], "subsections": [{"section_title": "U.S. Trends", "paragraphs": ["In 2018, more than 361,000 plug-in electric passenger vehicles (including PHEVs and BEVs) were sold in the United States, as well as more than 341,000 hybrid electric vehicles. This was the first year in which total sales of plug-in vehicles exceeded sales of hybrids ( Figure 1 ). Nearly all automakers offer electric vehicles for sale: 42 different models were sold in 2018, with Tesla and Toyota recording the largest number of vehicle sales. Sales of plug-in hybrid and battery electric vehicles in 2018 rose by over 80% from the previous year, bringing the total sales of plug-in vehicles since 2010 to just over 1 million. The plug-in hybrid and battery electric share of the U.S. light vehicle market in 2018 was 2.1%.", "The price of new electric vehicles is one factor inhibiting faster adoption. For example, the Leaf, a battery electric vehicle produced by Nissan, has a manufacturer's suggested retail price (MSRP) of $29,990, whereas the Nissan Sentra, a conventional vehicle similar in size and specifications to the Leaf, has an MSRP of $17,990. A smaller, less powerful vehicle with an internal combustion engine, the Nissan Versa, has an MSRP of $12,360; no electric counterpart is available in this price range. Electric vehicles are generally more expensive because of the high cost of producing the lithium-ion batteries that power them.", "The federal government has supported vehicle electrification in several ways. There have been tax incentives for the purchase of vehicles as well as for construction of vehicle infrastructure, such as charging stations. Federal research and development investments have sought to reduce battery costs, increase vehicle range, and decrease charging times. The federal government has also made other investments to build out EV infrastructure. "], "subsections": []}]}, {"section_title": "Federal Tax Incentives for Electrification", "paragraphs": ["Two types of tax incentives have been used to promote electric vehicles: consumer incentives for the purchase of plug-in electric vehicles and individual and business incentives to install electric-vehicle charging stations to expand the charging network."], "subsections": [{"section_title": "Tax Credits for Vehicle Purchases", "paragraphs": ["The credit for plug-in electric vehicles (Internal Revenue Code [IRC] \u00c2\u00a730D) is the primary federal tax incentive for electric vehicles. The credit ranges from $2,500 to $7,500 per vehicle, depending on the vehicle's battery capacity. The tax credit is not a function of the vehicle's price. Therefore, the subsidy amount is larger (as a percentage of a vehicle's price) for less-expensive vehicles. Generally, taxpayers claim tax credits for vehicle purchases. If the purchaser or lessee is a tax-exempt organization, the seller of the vehicle may be able to claim the credit. ", "The plug-in electric vehicle credit begins phasing out after a vehicle manufacturer has sold 200,000 qualifying vehicles for use in the United States. General Motors (GM) and Tesla have reached the 200,000-vehicle limit, and tax credits for their vehicles have begun to phase down. ", "Empirical studies have found that tax incentives lead to increased EV purchases. However, particularly for higher-income taxpayers, the tax credit may be claimed for purchases that would have occurred absent a federal tax incentive. Some studies have also found that incentives given closer to the point of sale, such as a rebate given at the time of purchase, are more effective in stimulating vehicle sales than tax credits. ", "The Joint Committee on Taxation (JCT) projects that the plug-in electric vehicle credit will reduce federal tax revenues by $7.5 billion between FY2018 and FY2022. Any extensions to or expansions of the credit could increase this amount. About half of the forgone revenue is from credits claimed on corporate tax returns. Additionally, the tax credits tend to be claimed by higher-income taxpayers. For 2016, 78% of the claimants filed returns with adjusted gross income (AGI) of $100,000 or more, and such returns accounted for 83% of the amount claimed. (By comparison, of all returns filed, about 17% have AGI above $100,000.)", "Legislation has been introduced in the 116 th Congress that would modify the plug-in electric vehicle tax credit. Some bills propose expanding the credit. For example, the Driving America Forward Act ( S. 1094 / H.R. 2256 ) would increase the per-manufacturer cap to 600,000 vehicles and modify the credit during the phase-out period. The Electric Credit Access Ready at Sale (Electric CARS) Act of 2019 ( S. 993 / H.R. 2042 ) would extend the credit through December 31, 2029, and would also allow the credit to be transferred to the financing entity. ", "Other proposals would eliminate the credit. The Fairness for Every Driver Act ( S. 343 / H.R. 1027 ) would eliminate the credit and impose federal highway user fees on alternative fuel vehicles."], "subsections": []}, {"section_title": "Tax Incentives for Infrastructure", "paragraphs": ["The primary federal tax incentive for EV infrastructure has been the tax credit for alternative fuel vehicle refueling property (IRC \u00c2\u00a730C), which expired in 2017. The credit was generally 30% of the cost of qualified property, with the credit limited to $30,000 for businesses at each separate location and $1,000 for property installed at a taxpayer's primary residence. For property sold to a tax-exempt entity, such as a school or a hospital, the seller of the property may have been able to claim the credit. Qualifying property included electric charging infrastructure as well as other forms of clean-fuel refueling property. ", "The credit for alternative fuel vehicle refueling property has been a temporary tax credit since first enacted in 2005. The credit has been extended six times, often retroactively. The credit most recently expired at the end of 2017, but could be extended again. The uncertainty surrounding temporary tax incentives that are often retroactively reinstated diminishes their effectiveness as an investment incentive. The Electric CARS Act of 2019 ( S. 993 / H.R. 2042 ) would extend the credit through 2029.", "Data are not available on how much of the revenue loss associated with this provision is for EV infrastructure. The most recent one-year extension of this incentive, for all types of alternative fuel refueling property, was estimated to reduce federal tax revenues by $67 million over the 10-year budget window. Making the credit permanent for all types of qualifying property would reduce federal revenue by an estimated $332 million between FY2018 and FY2027. ", "The tax credits for EV charging infrastructure that expired at the end of 2017, if extended, could support additional investment in Level 2 charging infrastructure. Expanded access to Level 2 charging at homes and workplaces could be a cost-effective solution to building out EV infrastructure in the near term. However, if electric vehicles are to be widely used for long-distance trips, a network of direct-current fast charger (DCFC) infrastructure (Level 3) is likely necessary. The tax credit is relatively small compared to the cost of a DCFC charging station. The high cost of this infrastructure, even if tax credits are extended, may continue to pose a barrier, especially if utilization rates are low. ", "Given the differences in the costs and benefits associated with Level 2 and DCFC chargers, tax incentives could be provided that reflect some of these differences. There are few DCFC public chargers, yet having access to such infrastructure may have strong network benefits. Broadly, access to charging infrastructure has been shown in some studies to be a driver of demand for EVs. If Congress wanted to encourage greater EV use, tax credits could be designed to provide a larger incentive for investments in public DCFC infrastructure, relative to Level 2 charging stations.", "Storage incentives are another policy option that could support investment in EV infrastructure. On-site battery storage systems can be installed to allow solar power to be used for EVs. Tax incentives for batteries that facilitate EV use could encourage more of this activity. The Energy Storage Tax Incentive and Deployment Act of 2019 ( S. 1142 / H.R. 2096 ) would provide an investment credit for business or home use of energy storage. ", "Tax-preferred bond financing options could also be used to support EV infrastructure investment. State and local financing for infrastructure solely or partially dedicated to EV charging projects may use tax-exempt bonds so long as the project is classified as serving a \"public purpose\" as defined in the federal code (IRC \u00c2\u00a7141). A federal infrastructure bank or \"green bank\" might also be used to support EV infrastructure investment. One option to capitalize this type of bank would be to issue tax-favored bonds."], "subsections": []}, {"section_title": "EVs and Federal Highway Taxes", "paragraphs": ["Since 1956, federal surface transportation programs have been funded largely by taxes on motor fuels that flow into the highway account of the Highway Trust Fund (HTF). A steady increase in the revenues flowing into the HTF due to increased motor vehicle use and occasional increases in fuel tax rates accommodated growth in surface transportation spending over several decades. In 2001, though, trust fund revenues stopped growing faster than spending. In 2008, Congress began providing Treasury general fund transfers to keep the highway account solvent.", "Electric vehicles do not burn motor fuels, and hence users do not pay motor fuels taxes. Several states have imposed some form of tax or fee on electric vehicles that is dedicated to transportation, such that EV drivers also contribute to paying for highway infrastructure. Legislation has been introduced in the 116 th Congress\u00e2\u0080\u0094the Fairness for Every Driver Act ( S. 343 / H.R. 1027 )\u00e2\u0080\u0094that would, in addition to repealing the existing tax credit for plug-in electric vehicles, impose an annual fee on alternative-technology vehicles that draw power from a source not subject to fuel excise taxes. This fee would be designed to compensate for plug-in electric vehicles not paying the gas tax (or other fuel excise tax). Imposing a fee on electric vehicles or other alternative vehicles would increase their cost of ownership, although as a share of the vehicle's total cost, the amount would likely be small. Exempting electric vehicles from taxes or fees imposed on other types of vehicles is one option for encouraging the purchase of electric vehicles. "], "subsections": []}]}, {"section_title": "Research and Development Priorities", "paragraphs": ["Investment in transportation electrification R&D is one approach to reducing the overall cost of electric vehicle technologies. The Obama Administration made vehicle electrification a national goal\u00e2\u0080\u0094including increased spending on battery R&D, stimulus funding for construction of battery manufacturing plants in the United States, and development of DOE electric vehicle research and demonstration programs such as the \"EV Everywhere Grand Challenge.\" The Trump Administration requested reductions in funding levels for vehicle technologies R&D for FY2018 and FY2019, but Congress instead increased the program's funding levels for those years. ", "Federal R&D funding for electric vehicles and electric vehicle charging infrastructure is primarily administered through the DOE's Office of Energy Efficiency and Renewable Energy (EERE). Within EERE, the Office of Transportation oversees the sustainable transportation R&D portfolio, which includes R&D programs in vehicle technologies, bioenergy technologies, and hydrogen and fuel cell technologies. Activities related to electric vehicles and charging infrastructure are within the Vehicle Technologies Office. ", "In the 116 th Congress, some legislative proposals would support R&D programs. The Vehicle Innovation Act of 2019 ( S. 1085 / H.R. 2170 ) would authorize R&D programs and other activities to develop innovative vehicle technologies (including electric vehicles and charging infrastructure)."], "subsections": [{"section_title": "Appropriations for Electric Vehicle Research", "paragraphs": ["Congress provides funding for electric vehicle technologies R&D through annual appropriations to EERE in the Energy and Water Development appropriations bill. The Trump Administration's budget request for EERE was $343 million for FY2020, $2,036 million (86%) less than the FY2019 enacted level of $2,379 million ( Table 1 ). The budget request, which \"focuses DOE resources toward early-stage R&D and reflects an increased reliance on the private sector to fund later-stage research, development, and commercialization of energy technologies,\" would provide $73.4 million to vehicle technologies for FY2020, $279.6 million (79%) less than the $344 million that was directed to vehicle technologies within the Joint Explanatory Statement of the FY2019 appropriations conferees.", "The FY2019 joint explanatory statement included support for various vehicle technologies to advance transportation electrification research:", "$163.2 million for the battery and electrification technologies subprogram ($38.1 million for electric drive research and development\u00e2\u0080\u0094including $7 million to enable extreme fast charging and advanced battery analytics); $10 million for continued funding of Section 131 of the 2007 Energy Independence and Security Act ( P.L. 110-140 ) for transportation electrification; and $37.8 million for the Clean Cities program, which provides competitive grants to support alternative fuel, infrastructure, and vehicle deployment activities.", "According to the FY2020 DOE budget request, the vehicle technologies program has set goals that \"are necessary for new technology options to be more efficient and at least as affordable compared to [the] baseline while also accounting for consumer pay- back period expectations.\" To advance vehicle electrification, DOE established the following research priorities:", "identify new battery chemistry and cell technologies with the potential to reduce the cost of electric vehicle batteries by more than half, to less than $100 per kilowatt hour (kWh) (with an ultimate goal of $80/kWh); increase vehicle range to 300 miles; and decrease charge time to 15 minutes or less by 2028.", "The request for FY2020 would reduce funding and prioritize \"early-stage activities,\" including the development of critical materials-free battery technologies. The request would eliminate funding for battery safety testing, battery thermal performance testing, and Clean Cities coalition support, training and technical assistance, and partnership activities. "], "subsections": [{"section_title": "Clean Cities Program", "paragraphs": ["The DOE Clean Cities program supports local actions to reduce petroleum use in transportation. The program funds transportation projects nationwide through a competitive application process, and leverages these funds with additional public- and private-sector matching funds and in-kind contributions. While the program supports a variety of alternative fuels and vehicles in an effort to reduce petroleum use, funding opportunities by Clean Cities that directly support EVs include the EV Everywhere Plug\u00e2\u0080\u0090In Electric Vehicle Local Showcases.", "EV Everywhere Plug\u00e2\u0080\u0090In Electric Vehicle Local Showcases were selected in 2016 and are in progress. The three projects were selected to promote and demonstrate plug-in electric vehicle (PEV) use by \"establishing local showcases that provide a hands-on consumer experience and in-depth education in a conveniently located, brand-neutral setting.\" The awardees plan to establish showcases in at least 14 states, including states in the Upper Midwest, California, the Pacific Northwest, and New England. ", "In the FY2019 joint explanatory statement, Congress directed DOE \"to continue to support the Clean Cities program, including competitive grants to support alternative fuel, infrastructure, and vehicle deployment activities.\" In the FY2020 budget request, the Trump Administration proposed eliminating funding for the Clean Cities program. In the 116 th Congress, two bills that pertain to electric vehicles would establish competitive grant programs within the Department of Transportation for electric vehicle charging infrastructure ( H.R. 2616 and S. 674 )."], "subsections": []}]}, {"section_title": "Alternative Fuel Corridors", "paragraphs": ["Purchases of electric vehicles in the near future will depend to some extent on the steps state and local governments and private entities take to build a reliable network of charging stations. Section 1413 of the Fixing America's Surface Transportation Act (FAST Act; P.L. 114-94 ) seeks to address that goal; it requires the Department of Transportation (DOT) to designate by 2020 national alternative fuel corridors (AFCs) to promote vehicle use of electricity, hydrogen, propane, and natural gas. The Federal Highway Administration (FHWA) has been working with other federal, state, and local officials and industry groups to plan AFC designations on interstate corridors ( Figure 2 ). FHWA has assigned designations to highways as either \"corridor ready\"\u00e2\u0080\u0094they have enough fueling stations to serve a corridor\u00e2\u0080\u0094or \"corridor pending,\" where alternative fueling is insufficient. In the case of electric vehicles, a corridor-ready designation would apply if there were EV charging stations at 50-mile intervals, with a goal of establishing Level 3 DC Fast Charge infrastructure. ", "Under this program, FHWA has developed standardized AFC signage and other forms of public education, and encouraged regional cooperation in planning new fueling networks. FHWA has undertaken three rounds of AFC nominations, the latest announced in April 2019. FHWA has identified building out alternative corridors on the most traveled Interstates, such as I-95 and I-80, as priorities for third-round funding. An additional goal is to secure nominations for areas targeted for EV investments by Electrify America in its Zero Emission Vehicle (ZEV) investment plan.", "Signage and installation of alternative fueling infrastructure along these corridors have been determined to be eligible expenses under FHWA's Congestion Mitigation and Air Quality Improvement (CMAQ) Program. In addition, the Department of Energy's Clean Cities program provides funding for fueling infrastructure, and some states have similar programs."], "subsections": []}, {"section_title": "Federal Support for Municipal Bus Electrification", "paragraphs": ["Until recently, the operation of battery electric buses in U.S. cities was seen as a long-term prospect because of their relatively high cost, range limits, and recharging infrastructure needs. But with technological improvements, public transportation agencies have begun to show interest in electric buses to replace vehicles powered by diesel and other fossil fuels. This interest is especially strong in metropolitan areas with air quality problems. The Federal Transit Administration (FTA) provides substantial support to transit agencies to purchase buses. Federal funds can be spent on most types of bus technology; the choice of technology is up to the transit agency concerned.", "Transit buses typically operate over short distances with fixed routes and frequent stops. In 1996, 95% of the buses in service were powered by diesel fuel ( Figure 3 ). More recently, transit agencies have integrated buses fueled by compressed natural gas (CNG), liquefied natural gas (LNG), and biodiesel into their fleets. Since the end of the last recession, the share of lower-emission hybrid buses\u00e2\u0080\u0094including diesel buses with electric motors\u00e2\u0080\u0094has also increased, rising from just under 5% of buses in use in 2009 to nearly 15% in 2016. Diesel-electric buses are powered by both an electric motor and a smaller-than-normal internal combustion engine; regenerative braking systems store energy from use of the bus's mechanical systems, giving the bus greater range. The purchase price of hybrids is less expensive than a fully electric bus, and hybrids reduce emissions compared to conventional diesel buses.", "There were 300 battery electric buses in operation domestically at the end of 2017, less than 0.5% of the 65,000 buses in public transit agencies' fleets. However, the two biggest transit bus systems in the United States, Los Angeles Metro and New York City Transit, have announced plans to move to zero-emission bus fleets, most likely using battery electric buses, by 2030 and 2040, respectively.", "Electric buses are typically expensive to purchase, costing as much as $300,000 more than conventional diesel buses, and require additional investment to build recharging infrastructure. On the other hand, electric buses are quieter than internal combustion engine vehicles, may have lower operating costs due to the absence of engines and transmissions requiring maintenance, and have low or zero direct emissions. The range an electric bus can travel on one charge has in the past been a limiting factor, but newer models can travel more than 200 miles, still short of the 600-mile or more range that conventional and other alternative fuel buses can travel. A study by Carnegie Mellon University found that when social costs, such as the health effects of diesel emissions, are taken into account, battery electric buses have lower total annualized costs than conventional diesel buses over the typical 12-year life cycle of a transit bus.", "Electric buses are generally eligible for FTA funding under several programs, including the Bus and Bus Facilities Program. One discretionary component of the FTA bus program is the Low or No Emission Vehicle (Low-No) program, which provides funding to state and local authorities for the purchase or lease of zero-emission and low-emission transit buses as well as acquisition, construction, and leasing of required supporting facilities. Electric buses are purchased through the Low-No bus program; mandatory spending of $55 million per year through FY2020 was authorized in the FAST Act. An additional $29.5 million was appropriated for FY2018. ", "School buses generally have diesel engines, and they are primarily funded locally. FTA does not fund school buses, but the Environmental Protection Agency (EPA) administers the School Bus Rebate Program, which assists school districts in reducing diesel emissions. In 2017, nearly $9 million was provided to replace diesel buses with diesel-electric hybrids.", "In the 116 th Congress, some legislative proposals would support vehicle fleet electrification, including transit buses. The Green Bus Act of 2019 ( H.R. 2164 ) would require that any bus purchased or leased with funds provided by the Federal Transit Administration for public transportation purposes be a zero-emission bus. The Federal Leadership in Energy Efficient Transportation (FLEET) Act ( H.R. 2337 ) would authorize the U.S. Postal Service to enter into energy savings performance contracts to purchase or lease low-emission and fuel-efficient vehicles (including electric vehicles) and to construct or maintain infrastructure, including electric vehicle charging stations, among other provisions. \u00c2\u00a0"], "subsections": []}]}, {"section_title": "Other Federal Policies Affecting Electrification", "paragraphs": ["The following policies were generally established for purposes not directly related to vehicle electrification, but they have dimensions that may support that goal. "], "subsections": [{"section_title": "Volkswagen Settlement", "paragraphs": ["In 2016, Volkswagen Group reached a number of legal settlements concerning violations of the Clean Air Act. As part of its settlement terms, Volkswagen pledged to invest $2 billion over a 10-year period in zero-emissions vehicle infrastructure and education in select U.S. cities through its Electrify America initiative. Of that amount, $800 million is to be spent in California. As an additional condition, Volkswagen was also required to fund a $2.7 billion national Environmental Mitigation Trust, funds from which are available to states and other beneficiaries for mitigating the negative impacts of the excess diesel emissions that were released by Volkswagen's noncompliant vehicles. States could choose to spend some of this special funding on bus electrification, including school buses."], "subsections": []}, {"section_title": "Federal Motor Vehicle Environmental Regulations", "paragraphs": ["The first motor vehicle fuel economy standards were enacted in 1975 in response to the oil embargo of 1973-1974 (Energy Policy and Conservation Act of 1975; P.L. 94-163 , as amended). The National Highway Traffic Safety Administration (NHTSA) sets and enforces the Corporate Average Fuel Economy (CAFE) standards for passenger cars and light trucks, which were most recently legislatively set in the Energy Independence and Security Act of 2007 ( P.L. 110-140 ) at 35 miles per gallon (mpg) by 2020. Because EPA has authority to regulate greenhouse gas (GHG) emissions, it joined with NHTSA during the Obama Administration to promulgate new, stricter combined CAFE/GHG standards for motor vehicles. These new standards established targets for reduced GHG emissions and rising CAFE fuel economy of nearly 50 mpg by model year (MY) 2025. Electrification was seen as one means of reaching the new CAFE/GHG targets.", "The Trump Administration has proposed to leave the current CAFE/GHG standards in place through model year 2026, based on its analysis that economic and technological factors have changed since the standards were put in place in 2010. EPA asserted in April 2018 that the goals established for MY2026 could be achieved only with more extensive vehicle electrification than now anticipated, and rejected previous EPA determinations that EV sales in future years would grow rapidly enough to enable automakers to comply with the MY2022-MY2025 standards: \"Based on consideration of the information provided, the Administrator believes that it would not be practicable to meet the MY 2022\u00e2\u0080\u00932025 emission standards without significant electrification and other advanced vehicle technologies that lack a requisite level of consumer acceptance.\""], "subsections": []}]}, {"section_title": "Prospects for Electrification of Autonomous Vehicles", "paragraphs": ["Fully autonomous passenger vehicles hold the potential for safer transportation and new mobility for the elderly, the disabled, and those who cannot afford to purchase a car. The projected timeline for emergence of fully autonomous vehicles varies from several years to several decades. ", "It is often assumed that autonomous vehicles\u00e2\u0080\u0094including those providing ride-sharing services\u00e2\u0080\u0094will employ electric motors instead of internal combustion engines, but that assumption is based on the types of federal and state policies that are put in place. In the absence of policies favoring EVs, future autonomous vehicles could be powered by fossil fuels. ", "There are several reasons why electrification may not be the ultimate choice for autonomous vehicles. Analyses by Ford and Volvo have for the following reasons led them to retain internal combustion engines for their ride-sharing ventures for the present: ", "Expense and I nconvenience . Electric vehicles remain expensive compared to conventional vehicles, and many models have short driving ranges and long refueling times. Shared vehicles, which may be on the road for many hours a day, magnify these shortcomings. Battery L ife . Frequent use of battery fast charging is known to lead to faster degradation of the battery. Energy- I ntensity . Autonomous vehicles rely on energy-intensive technologies. It has been estimated that operation of an autonomous driving system for two hours in an electric vehicle could use as much as 10% of its stored energy before the vehicle moves, requiring even more frequent recharging.", "These drawbacks are countered by the following factors that could make electrification of autonomous vehicles the more attractive power source:", "Compatibility . The extensive use of computers and sensors in autonomous vehicles may be easier to embed in electric vehicles, which have fewer mechanical\u00e2\u0080\u0094and more electronic\u00e2\u0080\u0094parts than a conventional vehicle. Operability . Electricity is generally less expensive than gasoline or diesel, and maintenance costs for electric vehicles, with many fewer parts, may be considerably lower. Emissions . The power demands of autonomous vehicle equipment and computers will reduce the fuel economy of gasoline and diesel vehicles and increase emissions. It has been estimated that increased power requirements will increase emissions from combustion vehicles by over 60 grams of CO 2 equivalent per mile, equal to reducing fuel economy of a 35 mpg vehicle to 29 mpg. Switching to electricity would diminish the direct emissions."], "subsections": []}, {"section_title": "State Incentives and Utility Issues", "paragraphs": ["Acceptance of electric vehicles and related infrastructure is affected by legislation, regulations, and policies adopted by state agencies and electric utilities."], "subsections": [{"section_title": "State Incentives", "paragraphs": ["Incentives vary widely from state to state. The National Conference of State Legislatures tracks vehicle and charger incentives on a state-by-state basis. Forty-five states and the District of Columbia currently offer incentives for certain hybrid or electric vehicles, or both. Those incentives include", "permitting solo drivers of electric and hybrid vehicles to use high-occupancy (carpool) lanes, income tax credits and rebates for the purchase of an electric vehicle, reduced registration fees, parking fee exemptions, excise tax and emission test waivers, and income tax credits for installation of a home or business charger. ", "These incentives have been found to vary in their effectiveness. Several analyses have shown that tax incentives for electric vehicles and infrastructure are the \"dominant factors in driving PEV adoption.\" Rebates\u00e2\u0080\u0094which happen at the point of sale or within a short time after a vehicle purchase\u00e2\u0080\u0094have been identified as the most effective incentive because their value is clear to buyers at the time of a vehicle transaction."], "subsections": []}, {"section_title": "Zero Emission Vehicle Program", "paragraphs": ["The California Air Resources Board (CARB) adopted low-emission vehicle regulations in 1990, requiring automakers to sell light vehicles in that state that meet progressively cleaner emissions standards. As part of these emission regulations, CARB also established the Zero-Emission Vehicle (ZEV) program, which requires automakers to offer for sale the lowest-emission vehicles available, with a focus on battery electric, plug-in hybrid electric, and hydrogen fuel cell vehicles. The number of ZEVs each automaker is required to sell is based upon its total light-vehicle sales in California. CARB has set ZEV sales percentages through a vehicle credit system, increasing annually to 2025. Nine other states have adopted the California ZEV regulations. The states affected by the regulations represent over one-third of all U.S. new light vehicle sales."], "subsections": []}, {"section_title": "Utilities and EVs and EV Infrastructure: Tax and Regulatory Issues", "paragraphs": ["Electric utilities, which are regulated by the state in which they are located, are in a unique position as the primary providers of electricity to aid in integrating EVs into the grid. Utilities can provide incentives to consumers to charge EVs during off-peak hours when there is excess generation. Utilities may also be in the position to install public electric charging infrastructure, assuming that there are no limits on their owning these assets. Many of the barriers utilities face with respect to electrification infrastructure are regulatory, and the role of tax policy in addressing such barriers may be limited.", "Sluggish growth in energy demand has posed a challenge for the electric utility sector. The industry has recognized EVs as an opportunity for growth. For this reason, electric utilities may have their own market-based incentives (absent federal intervention) to invest in EV infrastructure and take measures to support consumer EV adoption. Further, electric utilities may support extending current-law vehicle and infrastructure tax credits. At the same time, preparing the grid for a surge in electric car ownership could require substantial capital investments, if peak demand is increased. "], "subsections": [{"section_title": "Tax Incentives to Utilities for Electric Vehicle Infrastructure", "paragraphs": ["A number of challenges are associated with providing tax incentives to utilities that provide EV infrastructure. While 65% of electricity customers across the United States are customers of investor-owned utilities, most other users purchase electricity from cooperatives or municipal power providers. There are limited options for providing a direct federal tax benefit to cooperative or municipal utilities that do not pay federal income taxes. Further, in many states customers may purchase electricity from competing suppliers and pay the local electric utility for delivering it. A tax incentive to provide EV infrastructure might be made available only to utilities, to other electricity suppliers, or to both. Applicability of such an incentive would vary according to state policies or the type of utility.", "State regulatory commissions typically establish prices or rates that allow utilities to earn a rate of return that the regulator determines to be reasonable. This rate of return is fixed, such that additional tax incentives do not necessarily increase the return that a utility can realize. Federal taxes are an operating expense. In some states, tax incentives that reduce utilities' operating expenses result in lower rates for electricity customers (not higher returns for utilities). Hence, federal tax incentives may provide a limited near-term incentive for utilities to increase capital spending on EV infrastructure. "], "subsections": []}, {"section_title": "State Regulatory Considerations", "paragraphs": ["In the United States, the sale of electricity is governed by many different federal, state, and local regulations. When it comes to the sale of electricity for the purpose of charging EVs, the states generally have regulatory jurisdiction over retail electricity transactions, though federal and municipal authorities may also play a role. State approaches to regulation vary considerably.", "Rules and regulations governing the retail sale of electricity generally originate with a state public utility commission. An electric utility is defined in federal law as any person, state, or federal agency \"which sells electric energy.\" This definition could potentially be interpreted to mean that electric vehicle charging station operators are electric utilities by virtue of the fact that they sell electricity, and are therefore subject to all laws, requirements, and regulations pertaining to electric utilities. ", "Should charging station operators be subject to regulation as electric utilities, or is regulatory reform necessary to accommodate this new class of electricity transactions? Faced with the question of whether or how to regulate the operators, states have taken a variety of approaches: ", "Some states have issued new guidelines or regulations that define the requirements for regulated utilities to operate charging stations. For example, some states (e.g., Oregon) allow existing regulated utilities to invest in and operate EV charging stations as separate, nonregulated ventures. Others (e.g., Texas) have effectively limited the operation of charging stations to electric distribution utilities by requiring operators to meet high technical and financial standards. Still others (e.g., Kansas) have prevented electric utilities from owning and operating charging stations altogether. Other states (e.g., New York) have exempted charging station operators from public utility regulations. This leaves questions as to which regulatory agency, if any, is responsible for regulating the charging station operators, as well as whether additional regulation is needed in order to ensure fair market practices. Finally, some states have refrained from taking action altogether. Without regulatory changes, private charging station operators in these states may be subject to regulation as a utility by the state's public commission. Lack of clarity about how operators will be regulated is seen by some as an impediment to the spread of the technology in these states. In some cases, EV service providers have avoided regulation as a utility by providing charging services for free, or by charging customers by the minute rather than by the amount of electricity used. ", "Whether public utilities or private companies may operate electric vehicle charging stations and whether station operators are subject to regulation as a utility may affect deployment of EV charging infrastructure. State jurisdiction over retail electricity transactions may limit the potential role of the federal government in regulating the provision of EV charging services.", "An additional consideration is the potential for electric vehicle batteries to be used for storage, referred to as vehicle-to-grid (V2G) storage. V2G storage would allow idle vehicle batteries to be used for grid services, such as demand response. The batteries could reduce vehicle owners' electricity demand during peak periods or provide electricity to the grid during peak periods in response to time-based rates or other financial incentives. In the United States, utilities are beginning to test V2G performance in demonstration projects. In addition to technology, other identified challenges include regulation, market, and end-user acceptance."], "subsections": []}]}]}]}}
{"id": "R46355", "title": "The Strategic Petroleum Reserve: Background, Authorities, and Considerations", "released_date": "2020-05-13T00:00:00", "summary": ["Crude oil price volatility has consequences for the U.S. and global economy. The Strategic Petroleum Reserve (SPR), the U.S. stockpile of petroleum, has played a role in U.S. energy policy for over 40 years. The need for a stockpile of petroleum to help protect against supply disruptions became apparent after the 1973-1974 Arab oil embargo, during which time the average price of imported crude oil tripled.", "The oil embargo also fostered the establishment of the International Energy Agency (IEA), an intergovernmental organization, and the development of coordinated plans and measures among IEA members for emergency responses to energy crises. Strategic petroleum stock holdings are one policy included in the agency's International Energy Program (IEP) agreement. As an IEA member and IEP signatory, the United States must meet certain stock holding thresholds and be prepared for a coordinated response during an emergency. In 1975, Congress passed the Energy Policy and Conservation Act (EPCA, P.L. 94-163 ) authorizing the creation of the SPR for storage of petroleum products to reduce the impact of supply disruptions and to carry out IEP obligations.", "The United States uses the SPR to meet its IEP requirements. The U.S. federal government, through the U.S. Department of Energy (DOE), manages the SPR. EPCA authorizes the SPR to hold stocks of crude oil or any refined petroleum product. However, the SPR currently only holds crude oil.", "Since 1975, Congress has enacted several laws that have expanded the role of the SPR. Through 2019, the SPR has released over 230 million barrels of crude oil for various authorized purposes. Presidents have ordered releases on three occasions in response to severe energy supply interruptions in coordination with other IEA member countries. Other sales authorized for various reasons (e.g., to generate revenue to reduce the budget deficit as well as to modernize the SPR) have reached around 88 million barrels through 2019. Three test sales have confirmed SPR operability. The Secretary of Energy has several authorized methods to acquire petroleum for the SPR: direct purchases, royalty-in-kind transfers (RIK), deferrals and exchanges, or other means.", "Government analysis indicates that the United States has been a net exporter of crude oil and petroleum products from September 2019 through January 2020. The IEP does not require net exporters to maintain a petroleum stockpile. IEA members can use both public and commercial stocks to meet their obligation. Both public and privately held oil stocks have important roles to play in providing security in times of oil market disruptions. Similarly, both public and private oil stocks have some role in oil price determination and movements. However, there may be benefits to maintaining SPR oil stockpiles, as the oil market can often be unpredictable, as demonstrated by dramatic demand/supply shifts and subsequent low oil prices experienced in early 2020. Several signs have suggested oil markets may be more able to adjust to supply disruptions (though not necessarily an oversupply).", "The changing role of the United States in world petroleum markets has driven a debate on how best to utilize the SPR. Congress's motivation in creating the SPR focused on a deliberate and dramatic physical supply disruption and on mitigating the economic effects of a shortage stemming from international events. As market conditions continue to evolve, and the United States experiences new market conditions, Congress may consider options for utilizing the SPR in an oversupplied, low oil price environment."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["The Strategic Petroleum Reserve (SPR), the world's largest supply of emergency crude oil, has played a role in U.S. energy policy for over 40 years. The SPR's focus has evolved as conditions in the U.S. and world oil markets have changed. As created, the SPR's purpose was to \"diminish the vulnerability of the United States to the effects of a severe energy supply interruption, and provide limited protection from the short-term consequences of interruptions in supplies of petroleum products.\" Additionally, as a signatory to the International Energy Program (IEP) agreement, the United States is obligated to maintain strategic petroleum stock holdings in preparation for a coordinated response during an emergency. Due to changes to the oil market over the past several years, the role of the SPR may be of congressional interest. ", "From the mid-1970s through the present day, the United States has absorbed a number of significant spikes in the price of crude oil and petroleum products from supply disruptions. Whether driven by disruptions in the physical supply of petroleum, unexpected demand growth, or by uncertainties owing to international conflicts and instabilities, oil price volatility has had consequences for the U.S. economy. The price of crude oil historically rises or falls with the world economy. However, supply generally does not smoothly follow demand, and numerous factors can impact crude oil prices (e.g., supply, demand, available supply, value of the dollar, geopolitical risks). Thus, oil prices can be volatile. Volatility in crude oil prices can disrupt or enable oil industry investments and production\u00e2\u0080\u0094factors that can have a ripple effect on the global economy. The oil market also responds to geopolitical events. Crude oil and petroleum products are globally traded commodities and as such, global price fluctuations affect U.S. prices and the economy. ", "Several signs suggest an oil market that may be better equipped to respond to supply disruptions: a trend in lower crude oil prices beginning in 2014, the role of Organization of the Petroleum Exporting Countries (OPEC), new U.S. capacity in the market, and evolving consumption patterns. Technological advancements employed in the United States have added significantly to U.S. crude oil production. In December 2015, Congress lifted restrictions on U.S. crude oil exports. The United States is exporting crude oil at record levels, causing U.S. crude oil and petroleum product net imports to decline. According to U.S. Energy Information Administration (EIA) data, the United States was a net exporter of crude oil and petroleum products from September 2019 through January 2020, the most recent data. ", "However, oil markets remain volatile. An oversupplied oil market, as experienced in early 2020, can contribute to lower crude oil prices. While low crude oil prices can often mean lower gasoline prices for consumers, it also can create economic challenges for oil producers and others along the supply chain, some of which may lead to long-term impacts. During a time of oversupply and low prices, some policymakers have discussed the possibility of having the Department of Energy (DOE) purchase crude oil to increase oil stockpiles in the SPR. However, such a purchase would require appropriations from Congress. "], "subsections": []}, {"section_title": "Background", "paragraphs": ["The creation of the SPR came about because of events during the 1973 Arab-Israeli War. The Organization of Arab Petroleum Exporting Countries (OAPEC) reduced crude oil production and imposed an embargo on the United States and other countries supporting Israel. While some Arab crude oil did reach the United States, the average actual nominal price of imported crude oil tripled from 1973 to 1974.", "Petroleum, a globally traded commodity, is subject to international demand and supply conditions; in the absence of additional regulations, a petroleum-consuming nation pays the market price for petroleum, even in a supply emergency. However, the availability of strategic stocks can help mitigate the magnitude of the market's reaction to a crisis or guarantee supply to certain consumers (e.g., the military, strategic industries). Congress's motivation in creating the SPR focused on a deliberate and dramatic physical supply disruption and on mitigating the economic effects of a shortage stemming from international events. In the event of a supply interruption, proponents reasoned that introducing petroleum into the U.S. market from the SPR could offset the lost supply and in doing so help calm markets, mitigate sharp price spikes, and reduce economic disruptions. Congress did not necessarily design the SPR to provide price support in the event of an oversupplied market. However, 42 U.S.C. \u00c2\u00a76240 does authorize the Secretary of Energy to acquire crude oil for the SPR with the objective of minimizing costs, so long as there are appropriated funds to do so. "], "subsections": [{"section_title": "International Energy Agency", "paragraphs": ["The OAPEC embargo fostered the establishment of the International Energy Agency (IEA). The IEA develops coordinated plans and measures among member countries for emergency responses to energy crises. Strategic reserves are one of the policies included in the agency's International Energy Program (IEP) agreement. Signatories to the agreement, including the United States, are committed to maintain petroleum stocks equivalent to 90 days of their prior year's net imports, developing programs for demand restraint in the event of emergencies, and agreeing to participate in allocation of oil deliveries to balance a shortage among IEA members. Net-exporting members do not have a stock-holding obligation. These measures of days of protection assume a total curtailment of oil supply to importing nations, a scenario that is highly unlikely. ", "IEA member countries can meet the 90-day obligation through a combination of stock holdings by industry, a separate agency, and the government. Numerous oil industry firms hold commercial stocks of crude oil at refineries, bulk terminals, and in pipelines. The purpose of these stocks is to ensure the continuous operation of the refining industry, which transforms crude oil into petroleum products used by consumers. In the United States, commercial stocks do not necessarily provide a level of security proportional to that of the SPR, as they are inherently market driven, not government operated. Companies may have an economic rationale to lower commercial stocks in spite of a security context. In some other countries, this may not necessarily be the case, as the government may own or be the major shareholder in the oil companies (e.g., Equinor in Norway), also known as national oil companies (NOCs). NOCs operate under government ownership or are under the influence of national governments. "], "subsections": []}, {"section_title": "Energy Policy and Conservation Act", "paragraphs": ["In response to the embargo, and to fulfill IEP obligations, Congress authorized the creation of an SPR in 1975 under the Energy Policy and Conservation Act (EPCA, P.L. 94-163 ). In 1975, U.S. crude oil production averaged at 8.3 million barrels per day, while U.S. consumption of petroleum was nearly double, at 16.3 million barrels per day. The EPCA originally established the SPR to hold up to 1 billion barrels of \"petroleum products,\" defined in 42 U.S.C. \u00c2\u00a76202(3) as \"crude oil, residual fuel oil, or any refined petroleum product (including any natural liquid and any natural gas liquid product).\" Congress intended the SPR to help prevent or mitigate a repetition of the economic disruption that the 1973 Arab embargo had caused.", "The U.S. federal government, through the U.S. Department of Energy (DOE), manages the SPR. According to IEA data for January 2020, the SPR held emergency petroleum stocks equivalent to approximately 274 days of the previous year's net imports and U.S. industry had 423 days' worth of commercial stocks, for a total of around 697 days of net imports when combined, well above the IEA obligation. "], "subsections": []}, {"section_title": "SPR Specifications", "paragraphs": ["The SPR's current capacity is physically limited to 713.5 million barrels, with current inventory at about 635 million barrels. In 1975, EPCA required that the SPR provide enough storage for at least 150 million barrels of petroleum and up to 1 billion barrels. In 1978, Congress authorized an expansion of the SPR's physical capacity to 750 million barrels, and in 2005 directed further expansion to the authorized 1 billion barrels. Advocates for expansion argued that the SPR would need to be larger for the United States to be able to maintain stocks equivalent to 90 days of net imports. At this time the United States was viewed as a growing importer of crude oil. In 2005, DOE evaluated several sites in the Gulf Coast as a possible location for an additional 160 million barrels of new capacity. However, oil produced using hydraulic fracturing and horizontal drilling techniques started coming to market in significant amounts in 2010. In FY2011, the Obama Administration cancelled SPR expansion plans, citing a U.S. Energy Information Administration (EIA) projection that, \"U.S. petroleum consumption and dependence on imports will decline in the future and the current Reserve's projection will gradually increase to 90 days by 2025.\" "], "subsections": [{"section_title": "Petroleum Storage", "paragraphs": ["EPCA authorizes use of the SPR to hold stocks of crude oil or any refined petroleum product. However, the SPR only holds crude oil. It does not hold refined petroleum products, as some other countries' reserves do. According to DOE, this decision was based on findings from an analysis conducted in preparation for the 1977 SPR Plan. The findings suggested that then, as now, the United States had sufficient domestic refining capacity to meet domestic demand. The SPR could also buy time for the crisis to resolve or for diplomacy to seek some resolution before a potentially severe oil shortage escalated the crisis. Additionally, according to DOE, petroleum products are less flexible and degrade more quickly as compared to crude oil. Further, U.S. import dependency recently has largely been on crude oil, not petroleum products\u00e2\u0080\u0094the United States has been a net exporter of petroleum products since late 2010. As a result, potential supply disruptions would most likely affect the United States through the disruption of crude oil, and not necessarily petroleum products. ", "Generally, two key characteristics, density (i.e., specific gravity) and sulfur content, are the metrics used to classify crude oil types. The density is measured using API gravity, a scale developed by the American Petroleum Institute, that expresses the \"lightness\" or \"heaviness\" of crude oils on an inverted scale (i.e., the lower the API gravity, the heavier or denser the crude oil). The SPR does not contain heavy crude oil (i.e., crude oil with an API gravity below 22.3 degrees).", "Sulfur content of crude oil is generally rated on a scale of \"sweet\" to \"sour\"\u00e2\u0080\u0094sour crude oils have a higher sulfur content compared to sweet crude oils. The SPR contains both sweet and sour crude oils. Should the prospect of releasing SPR oil arise, the relevant question may be whether to release sweet or sour crude oil to the market. For example, in 2011, President Obama ordered a sale of 30 million barrels of light sweet crude oil to offset a curtailment in Libya's production of a similar crude during the First Libyan Civil War. In other situations, it may be more strategic to release heavier crude, as most U.S. Gulf Coast refineries are optimized to process heavy crude."], "subsections": []}, {"section_title": "SPR Sites", "paragraphs": ["The SPR physically comprises four sites, two in Texas and two in Louisiana. The sites offer access to both marine terminals and pipeline systems needed for moving crude oil to and from the SPR ( Figure 1 ). Crude oil at each site is stored in salt caverns created within naturally occurring geologic salt deposits along the coast. According to DOE, these sites provide a higher level of security and affordability, compared to other options such as above-ground tanks or rock mines. ", "A life extension program (LEP I), initiated in 1993, cost $324 million and addressed essential improvements to ensure drawdown capability across the four sites. While LEP I did address its objective of assuring maximum rate for drawdown capability, it did not address significant equipment needs across the systems. In 2015, a second life extension program (LEP II) began upgrading equipment at the four SPR sites."], "subsections": []}, {"section_title": "Drawdown Capacity", "paragraphs": ["The SPR has a maximum drawdown rate of roughly 4.4 million barrels per day for 90 days (396 million barrels over the 90-day period) due to capacity constraints in the pipelines and marine terminals servicing the reserve. After 90 days, the rate would begin to decline as the caverns deplete. According to DOE, the crude oil takes about 13 days from a presidential decision to enter the market, due to processing sales and preparation for distribution assets. The first major drawdown was in early 1991 (the Persian Gulf War). During the Persian Gulf War the peak lost production was around 4.3 million barrels per day of combined Iraqi and Kuwaiti crude oil.", "Refilling the SPR after an ordered drawdown remains at presidential discretion. This might be done at a time when the price of crude oil declines, or political and market conditions make it economically advantageous to do so. For example, to replace inventories sold in 2005 in response to Hurricane Katrina, DOE purchased crude oil on the open market in 2009. More recently, DOE purchased crude oil in 2015 to refill sold inventory during the 2014 test sale.", "The IEA obligates its members to hold a 90-day supply equivalent to net imports. The SPR infrastructure has a drawdown maximum of 396 million barrels over a 90-day period. If the U.S. obligation (previous year's net imports) were to exceed 396 million barrels, it could not draw it all down within 90 days. As long as the supply disruption remains below the maximum drawdown rate and others (countries or industry) are able to supply the market, there may not be cause for concern. Alternatively, Congress could authorize an expansion of SPR infrastructure to increase the maximum drawdown rate. "], "subsections": []}]}]}, {"section_title": "SPR Authorities", "paragraphs": ["Authority for drawdown and sale of petroleum from the SPR is codified into law under 42 U.S.C. \u00c2\u00a76241. There are several authorized reasons to release oil from the SPR. Presidential authority to authorize a drawdown depends on (1) making the determination that a severe energy supply interruption exists or (2) a finding that a drawdown would prevent an impact of a severe domestic supply disruption. Further, IEP obligates the United States to join in an IEA-coordinated response to a supply disruption. Other sales have been authorized for various reasons including to generate revenue to reduce the budget deficit, to test the functionality of the SPR, and to fund the modernization of the SPR. Additionally, authorities exist for the acquisition of crude oil to fill the SPR, and the option for exchanges in specific scenarios outlined below. ", "Once a drawdown is authorized, DOE releases SPR oil by conducting a public sale to the highest bidder in a competitive auction. DOE publishes a \"notice of sale\" that includes the volume, characteristics, and location of the petroleum for sale; delivery dates and procedures for submitting offers; and measures for assuring performance and financial responsibility. Bids are reviewed by DOE and awards offered. DOE estimates that oil could enter the market roughly two weeks after the appearance of a notice of sale. ", "Through 2019, the SPR released over 230 million barrels for various purposes ( Figure 2 ). Presidents have ordered releases on three occasions, some 58.9 million barrels in total, in response to severe energy supply interruptions in coordination with other IEA member countries. The SPR has also provided exchanges totaling around 75 million barrels through 2019 to mitigate temporary supply interruptions. The borrowers repay their loans by replacing the crude oil plus an additional smaller volume as a premium. The SPR has had three test sales. In 2014, DOE initiated a test sale to determine if recent infrastructure changes could impact the SPR's drawdown capabilities and to exercise sales procedures. The test ran successfully with some lessons learned, including some pipeline and storage capacity limitations. A number of other sales reached around 88 million barrels through 2019 were authorized for various reasons (e.g., to generate revenue to reduce the budget deficit as well as to modernize the SPR)."], "subsections": [{"section_title": "Emergency Drawdowns", "paragraphs": ["The 1975 EPCA authorizes drawdown of the SPR by obligation under the IEP or upon a finding by the President that there is a \"severe energy supply interruption.\" Codified in law under 42 U.S.C. \u00c2\u00a76241(d)(2), such an interruption exists when the President determines that", "A. An emergency situation exists and there is a significant reduction in supply which is of significant scope and duration;", "B. A severe increase in the price of petroleum products has resulted from such emergency situation; and", "C. Such price increase is likely to cause a major adverse impact on the national economy.", "One recent example of a coordinated IEA release occurred in 2011 to offset a curtailment in Libya's supply of crude during the First Libyan Civil War. The IEA announced a total release from all member countries of 60 million barrels. In accordance with IEA obligations and as directed by the President under the authority of 42 U.S.C. \u00c2\u00a76241(d)(2), the U.S. Department of Energy Secretary Chu announced a sale of 30 million barrels from the SPR. ", "In 1990, Congress amended EPCA via P.L. 101-383 to extend SPR drawdown and sales in the event of a domestic supply interruption. In 1989, the Exxon Valdez oil spill interrupted the shipment of Alaskan oil, triggering spot shortages and price increases. The amendment expanded authorities under EPCA by providing options for an SPR drawdown to prevent or reduce the impact of a severe domestic supply interruption if the President finds that", "A. a circumstance, other than those described in subsection (d), exists that constitutes, or is likely to become, a domestic or international energy supply shortage of significant scope or duration;", "B. action taken under this subsection would assist directly and significantly in preventing or reducing the adverse impact of such shortage;", "C. the Secretary has found that action taken under this subsection will not impair the ability of the United States to carry out obligations of the United States under the international energy program; and", "D. the Secretary of Defense has found that action taken under this subsection will not impair national security.", "This authority limits the Secretary of Energy to selling no more than 30 million barrels of SPR petroleum over a maximum 60-day period. Additionally, the authority permits a drawdown only when the SPR inventory is above 340 million barrels."], "subsections": []}, {"section_title": "Test Sale", "paragraphs": ["Under 42 U.S.C. \u00c2\u00a76241(g), the Secretary of Energy is authorized to test a drawdown and sale or exchange from the SPR to conduct an evaluation of the procedures. Tests have a maximum limit of up to 5 million barrels. Under law, the Secretary of Energy determines the appropriate sale price and it may not be at a price less than 95% of comparable crude oil sold at the time. The statute requires the Secretary of Energy to notify Congress 14 days before a test. "], "subsections": []}, {"section_title": "Acquisitions and Exchanges", "paragraphs": ["Since 1975, the Secretary of Energy has had several authorized methods to acquire petroleum for the SPR: direct purchases, royalty-in-kind transfers (RIK), deferrals and exchanges, or other means. The Secretary of Energy is authorized specific powers (including oil acquisition) outlined in 42 U.S.C. \u00c2\u00a76239 in order to maintain and operate the SPR. Initially, through an interagency agreement, the Department of Defense, on behalf of DOE, acquired crude oil for the SPR using appropriated funds to meet congressionally mandated target fill rates until those funds were exhausted.", "By December 1994, the SPR had been filled to 591.7 million barrels. Purchases for the SPR were then suspended to divert funds to SPR maintenance and life extension. Starting in 1999, filling of the SPR resumed via an RIK program. As an alternative to appropriated funds, DOE proposed accepting transfers of a portion of the royalty payments collected by the Department of the Interior (DOI) for Gulf of Mexico crude oil leases in the form of RIK crude oil rather than as revenues. While RIK avoided the necessity of making outlays for purchasing crude oil, it equivalently reduced royalty revenues by settling obligations in oil rather than in payments to the U.S. Treasury. In mid-November of 2001, President George W. Bush ordered the SPR filled to 700 million barrels, principally through crude oil acquired as RIK. Between fiscal year (FY) 2000 through FY2007, DOI estimates that RIK deliveries totaled roughly $4.6 billion. In 2009, Secretary of the Interior Ken Salazar announced the end of the RIK program.", "Additionally outlined in 42 U.S.C. \u00c2\u00a76240 are the various objectives and procedures for the Secretary of Energy to acquire crude oil for the SPR. Within the parameters codified into law, the Secretary may acquire petroleum products through purchase or exchange. For purchase, Congress must appropriate funds to the SPR. During an exchange (also sometimes referred to as a loan), an entity borrows SPR crude and later replaces it with a similar quality crude, \"plus payment of an in-kind premium determined according to the period negotiated for return.\" An entity can request an exchange if unexpected circumstances impede crude oil supplies and no other alternative is available. "], "subsections": []}, {"section_title": "Mandated and Modernization Sales", "paragraphs": ["In 2015, Congress began mandating sales of SPR oil. Mandated sales direct the Secretary of Energy to sell a specified quantity of SPR oil. There are mandated quantities prescribed for specific fiscal years from 2017 through 2028. Proceeds from mandated sales are deposited into the general fund of the U.S. Treasury. Since 2015, Congress has enacted seven laws containing provisions mandating the sale of SPR oil. These mandated sales from the SPR have committed 271 million barrels of oil for sale through FY2028. Actual sales through FY2019 total 34.93 million barrels, nearly consistent with the mandated sales required by enacted legislation of 35 million barrels. ", "In addition to mandated sales, modernization sales under various laws authorize the Secretary of Energy to draw down and sell SPR oil with sales restricted by a total dollar amount, rather than volume of oil, from FY2017 through FY2020. Proceeds from these sales are to be deposited in the Energy Security and Infrastructure Modernization Fund (ESIMF). Law requires the fund to be used for construction and maintenance of SPR facilities. Statutes that authorized SPR modernization crude oil sales, and appropriated money to the ESIMF, are for fiscal years 2017 through 2019."], "subsections": []}]}, {"section_title": "Policy Considerations", "paragraphs": ["Congress originally created the SPR to provide security against severe petroleum supply interruptions and to adhere to IEP obligations. The SPR's role has expanded over the years as conditions in the U.S. and world oil market have changed. Today those market conditions continue to shift and as such, Congress may consider further modifications to SPR legislation.", "Some policy considerations include", "If the United States maintains net export status, should Congress reconsider the size of the SPR? Further, U.S. public and commercial oil stocks are well over the 90-day IEP obligation. However, some view the oil in the SPR as a national security asset that the United States should maintain at current levels. Releases from oil reserves tend to balance supply disruptions in the short term and provide psychological support to the market that may stabilize oil prices. Should Congress consider expanding the role of the SPR to provide economic security by alleviating extreme price volatility?", "Given the change in conditions, Congress may consider different options for utilizing the SPR. The section that follows discusses some of these developments and possible policy options."], "subsections": [{"section_title": "Size of the SPR", "paragraphs": ["The role of the United States in the global oil market has shifted since the 1970s during a time of rapidly rising prices and perceived resource scarcity. In addition to creating the SPR, Congress, through the EPCA, restricted U.S.-produced crude oil exports. Trade policy with respect to oil has undergone significant changes in recent years to accommodate technological and market developments. As the U.S. oil market moved toward higher production levels, some policies have come into question. Consequently, in December 2015, Congress passed the Consolidated Appropriations Act, 2016 ( P.L. 114-113 ) which repealed Section 103 of EPCA ( P.L. 94-163 ), removing any restrictions to crude oil exports."], "subsections": [{"section_title": "Net Export Status", "paragraphs": ["Net-exporters of oil do not have a stockholding obligation under the IEP. Some have noted that with the reduction of net imports, the size of the SPR could be reconsidered. For similar reasons to lifting restriction on crude oil exports, and with the relatively recent increases in domestic crude oil production, some stakeholders see less need for an oil stockpile. They contend the change in oil markets warrants a reduction in the size of that stockpile. U.S. crude oil and petroleum product imports have been in decline. The EIA reports that in September 2019, the United States exported 89,000 million barrels per day more crude oil and petroleum products than it imported. The EIA further projected that, in most forecasts, the United States will be a net petroleum exporter on an annual basis around 2020. However, even if the United States reaches net export status, EIA and IEA projections indicate that the United States may return to a net importer between 2040 and 2050.", "Some contend maintaining the stockpile has value, regardless of net export status. For instance, Keisuke Sadamori, IEA's Director for Energy Markets and Security, testified during a Senate hearing in 2019, ", "oil security is not only an issue for net-importers, and security concerns such as regional extreme weather events and terrorist attacks can affect all countries. In a global market, even in net exporting countries, oil consumers will be economically harmed by spiking oil prices, and if a disruption tips the world economy into recession, the pain will be felt by exporting and importing countries alike. ", "Finally, the United States is not guaranteed to remain a net exporter indefinitely. In May 2018, the Government Accountability Office (GAO) released a report on the future of the SPR analyzing DOE's planning approach. GAO recommended that DOE should expand or amend their planning approach to include \"an additional analysis that takes into account private-sector response, oil market projections, and costs and benefits of a wide range of different SPR sizes.\" ", "Additionally, market conditions may be changing. Since January 2020, oil prices have fallen due to of a number of factors including overproduction and constrained demand, largely due to a reduction in travel from the COVID-19 pandemic. Prolonged periods of depressed prices could affect U.S. oil production, exports, employment, and industry consolidation. If U.S. production and subsequently exports were to decline, the prospect of the United States becoming a net exporter may be delayed or eliminated."], "subsections": []}, {"section_title": "Public vs. Commercial Stocks", "paragraphs": ["IEA members can use both public and commercial stocks to meet their 90-day obligation. In January 2020, the United States had 423 days of net imports of commercial crude oil stocks, equaling around 697 days when combined with SPR stocks, according to IEA methodology. Both public and privately held oil stocks have important roles to play in providing security in times of oil market disruptions. Similarly, both public and private oil stocks have some role in oil price determination and movements. As the world oil market and the U.S. market evolve, it is reasonable to reassess the role of each of these components of U.S. energy security.", "Management of commercial stocks can affect the price of oil in multiple ways. These effects are limited by the storage capacity of the system as a whole, but that capacity can be augmented or reduced. Numerous oil industry firms hold commercial stocks of crude oil at refineries, bulk terminals, and in pipelines. The purpose of these stocks is to ensure the continuous operation of the refining industry, which transforms crude oil into petroleum products used by consumers. Commercial oil companies are more likely to store oil for the short-term, rather than as a long-term security stock. Some experts contend that commercial stocks cannot provide a level of security proportional to that of the SPR.", "The role of sales from the SPR into the commercial market during a supply disruption is linked to the size of commercial stocks and the availability of additional production capacity. Generally, the level of private oil stocks closely follows the level of oil production and changes in the price of oil. If global supply is greater or less than current demand, commercial stocks of oil may rise or fall accordingly. In a market where there is no physical shortage, oil companies may have limited interest in purchasing SPR oil unless they want to build crude oil stocks or have spare refining capacity to turn the crude into useful products. Conversely, during a supply disruption, commercial stocks would likely move to market before the SPR, as DOE must solicit buyers through a Notice of Sale. Further, the SPR takes approximately 13 days from an initial decision to hold a sale to ultimate delivery of that oil. For instance, in response to the attack against Saudi Arabia's oil production in September 2019, President Trump authorized the release of oil from the SPR, as needed. In response to prior events, presidents have ordered a release in coordination with other IEA member countries. In this case, the IEA did not announce a coordinated release, but monitored the situation closely. Although the United States had the capacity to replace most of the Saudi oil taken off the market by the attack, no release from the SPR occurred as commercial stocks supplied the market and prices stabilized.", "Generally, according to GAO, most experts interviewed in the May 2018 report agreed that the private sector is in a better position to respond to supply disruptions than they were in the 1970s. Conversely, DOE noted in the same report that the United States does not have a requirement for the private sector to respond to a supply disruption. Further, according to GAO, DOE does not have analysis on how the private sector would respond to supply disruptions. "], "subsections": []}]}, {"section_title": "Price Volatility", "paragraphs": ["Petroleum is a globally traded commodity and subject to international demand and supply conditions. Volatility in crude oil prices can disrupt or enable oil industry investments and production\u00e2\u0080\u0094factors that can have a ripple effect on the global economy. However, the storage of petroleum can provide some price relief or even alleviate a physical shortage of supply to certain consumers (e.g., the military, strategic industries). Congress's motivation in creating the SPR focused on a deliberate and dramatic physical supply disruption and on mitigating the economic effects of a shortage stemming from international events. As market conditions continue to change, Congress may consider options for utilizing the SPR in an oversupplied low oil price environment. "], "subsections": [{"section_title": "Low Price Environment", "paragraphs": ["Global oil prices declined nearly 60% between January and mid-April 2020, as a result of a number of factors. These factors included reduced demand and economic impacts related to the evolving COVID-19 pandemic, and the failure of OPEC and a group of non-OPEC countries (OPEC+), including Russia, to come to an agreement regarding oil production during their March 2020 meeting. While low oil prices are generally positive for consumers (translating into lower gasoline prices) and oil refiners (translating into lower costs), sustained low prices could result in financial stress for companies operating in the U.S. oil exploration and production (E&P) sector. Due to these recent developments, a plan to sell crude oil\u00e2\u0080\u0094as required in FY2020 by P.L. 116-94 \u00e2\u0080\u0094from the SPR was suspended.", "Discussions transitioned from selling oil from the SPR to purchasing oil to fill it to capacity. Acquiring crude oil\u00e2\u0080\u0094direct purchases or royalty-in-kind\u00e2\u0080\u0094for SPR storage could absorb a limited amount of market oversupply. Physical SPR capacity is approximately 713.5 million barrels, while actual inventories are 635 million barrels. At the direction of President Trump, DOE issued a solicitation to purchase an initial 30 million barrels of crude oil as part of a plan to acquire 77 million barrels. However, on March 25, 2020, DOE cancelled this solicitation, noting, \"Given the current uncertainty related to adequate Congressional Appropriations for crude oil purchases associated with the March 19, 2020 solicitation, the Department is withdrawing the solicitation. Should funding become secure for the planned purchases, the Department will reissue the solicitation.\"", "Whether increasing SPR inventories might contribute to oil market rebalancing is uncertain. Even if Congress appropriated funding to purchase crude oil, the SPR's available capacity is limited (currently around 77 million barrels) and the impact could be marginal depending on a number of factors (i.e., duration and volume of crude oil oversupply). However, Congress authorized the SPR to store up to 1 billion barrels. While not an immediate solution, Congress could consider appropriating funds to expand the SPR's physical capacity to the authorized 1 billion barrels.", "On April 2, 2020, DOE (under exchange authority 42 U.S.C. \u00c2\u00a76239(f)(5)) announced a solicitation for the storage of 30 million barrels in exchange for a fixed premium of barrels, returning the difference by March 31, 2021. This would allow crude oil to be temporarily stored in the SPR sites, potentially providing some financial relief to some U.S. producers. Several petroleum associations applauded the effort, stating, for example, \"The oil producers of Louisiana praise the President, his administration, and Louisiana's federal delegation for taking swift, decisive action to help support the nation's energy producers with the SPR's exchange for storage.\"", "However, challenges remain, as spare storage capacity at Cushing, OK (the designated delivery point for NYMEX crude oil futures contracts) is limited or unavailable. The futures price is a contract, usually monthly, for delivery of a certain amount of crude oil, on a specified date in the future, and at a particular location (Cushing, OK, for West Texas Intermediate (WTI) crude oil). As available storage becomes more limited, futures prices may continue to fall as owners of crude oil discount their price in order to entice buyers. This apparently was the case with WTI where some traders grew concerned over storage availability in Cushing, forcing some to sell their futures contracts. Despite federal efforts to make capacity available at the SPR and other measures, Cushing storage capacity is a key factor for WTI prices.", "When acquiring petroleum for the SPR, the Secretary is to consider, to the extent possible, four objectives under 42 U.S.C. \u00c2\u00a76240. Among these, the Secretary is to minimize market impacts from purchases. Acquiring SPR crude oil to reduce oversupply and increase prices could conflict with that objective. However, the degree of impact on the market may be hard to determine, and a threshold level is not explicitly defined. Furthermore, included in DOE's objectives is to minimize the cost and presumably\u00e2\u0080\u0094depending on prices in March 2021 when the above noted exchange expires\u00e2\u0080\u0094DOE's exchange could result in a comparatively low-cost petroleum acquisition. "], "subsections": []}, {"section_title": "High Price Environment", "paragraphs": ["Crude oil price increases generally result from actual or anticipated market tightening; that is, an increase in demand, a reduction in supply, or both. There is a general recognition that a release from the SPR would likely only provide temporary relief from rising prices; however, high prices alone are not an authorized circumstance to trigger a release from the SPR. High prices are generally a consequence of a severe supply interruption. For instance, in 2011, the price increases were thought to be largely attributable to the loss of Libyan production during the revolution in that country. ", "The judgment that a release of crude oil from the SPR provides some temporary relief from rising prices seems well founded. The U.S. government bases its notice of sale on the previous five-day average of the price of the grade of crude oil it intends to sell, and accepts bids it considers responsive. If the notice itself does not prompt, or contribute to, a softening of prices, there may be limited interest on the part of the oil industry in bidding on SPR supply. Although the possibility exists that prices might decline if additional refined product is released into the market, it is impossible to predict what long-term quantitative effect an SPR crude drawdown would have. For example, in response to prolonged oil supply disruption from the Libyan Civil War, the IEA coordinated a petroleum release on June 23, 2011. Following the announcement of a 30 million barrel release of oil from the SPR, the price of crude oil declined by about 5% that day. About one week later, prices began to exceed pre-announcement levels. ", "The announcement of the SPR release stated that the oil would be delivered to market by the end of August 2011. Oil prices began to decline in that month and generally declined through September 2011. However, several other factors may have contributed to the price of crude oil. For instance, the prices of crude oil declined in May 2011 following the death of Osama bin Laden and a rise in the U.S. dollar. ", "Some observers do not support use of the SPR to mitigate high crude oil prices. These observers prefer allowing the market to resolve itself and for government not to intervene. Further, observers may contend that market conditions and current and anticipated geopolitical events are affecting prices more than short-term physical supply concerns or that speculative bidding in the oil commodity futures market has driven price volatility more than the current supply-demand balance. In this context, use of the SPR would have limited impact on market conditions.", "Congress could reduce the size of the SPR and sell off excess petroleum for the benefit of other programs while still maintaining the 90-day net import requirement. However, determining the optimal level of oil holdings in the SPR is likely to remain controversial. Analytical tools common in public policy analysis, such as cost-benefit analysis, dynamic programming, or other optimization techniques, depend on determining the value of variables that are highly uncertain in this case. The responsiveness of the adjustment of oil quantities on both the demand and the supply sides of the market, the price volatility of oil, and the probabilities of different degrees of political/military disruption in the oil market are all uncertain. In addition the 90-day net import requirement is a dynamic calculation based on a combination of market factors."], "subsections": [{"section_title": "Appendix. SPR Site Specifications", "paragraphs": ["Bayou Choctaw", "The Bayou Choctaw storage site is located in Iberville Parish, LA. The site has six storage caverns, with a storage capacity of 76 million barrels, and an inventory of 71.8 million barrels, as of April 2020. The Bayou Choctaw site began full operation in 1987 and has remained operational since then. In November 2011, DOE acquired a replacement cavern for Cavern 20, after it had experienced leaching, which posed an environmental risk. Bayou Choctaw has a design drawdown rate of 0.5 million barrels per day, and a design fill rate of 110 thousand barrels per day. (The other three SPR storage sites have a combined fill rate specified as 225 thousand barrels per day.)", "Big Hill", "The Big Hill storage site is located in Jefferson County, TX. The site has 14 storage caverns, a combined storage capacity of 170 million barrels, and a cavern inventory of 143.3 million barrels as of April 2020. The Big Hill site began full operation in 1991 and has remained operational since then. Big Hill has a design drawdown rate of 1.1 million barrels per day. ", "Section 168 of the EPCA authorizes foreign oil to be stored in unused space to increase world oil stockpiling. In 1998, the U.S. Commerce Department designated Big Hill as a special purpose Foreign Trade Zone, which exempts foreign oil storage from customs or certain taxes. DOE noted in their SPR calendar year 2016 annual report to Congress that despite this designation, Big Hill has not stored foreign oil.", "Bryan Mound", "The Bryan Mound storage site is located in Brazoria County, TX. The site has 19 storage caverns with a total storage capacity of 247.1 million barrels, and a cavern inventory of 230.2 million barrels as of April 2020. The Bryan Mound site began operation in 1986 and has remained operational since then.", "In 2013, after failing a Mechanical Integrity Test (MIT), one of Bryan Mound's then-20 storage caverns was determined to be at risk. It was subsequently emptied, bringing the total to 19 caverns. Pumping to transfer the oil to other caverns began in March 2015 and completed in December 2016. Additionally, in 2018, two of the three aboveground storage tanks at Bryan Mound were unusable and required maintenance. This reduces the site's drawdown rate from 1.5 million barrels per day to 1.35 million barrels per day. According to DOE's Strategic Petroleum Reserve Annual Report for Calendar Year 2018 , these tanks are to be converted to external floating roof tanks during the SPR Modernization Program\u00e2\u0080\u0094Life Extension 2 Project. ", "West Hackberry", "The West Hackberry storage site is located in Cameron Parish, LA. The site has 21 operable storage caverns with a combined storage capacity of 220.4 million barrels, and a cavern inventory of 189.7 million barrels as of April 2020. The West Hackberry site began full operation in 1988 and has remained operational since then.", "In 2012, Cavern 6 had a well stability issue and plans to remove oil from the cavern were instituted. In December 2017, all accessible oil was transferred out of Cavern 6 to the other 21 storage caverns. "], "subsections": []}]}]}]}]}}
{"id": "R46194", "title": "The Windfall Elimination Provision (WEP) in Social Security: Comparing Current Law with Proposed Proportional Formulas", "released_date": "2020-01-24T00:00:00", "summary": ["Social Security is a work-based federal insurance program that provides income support to workers and their eligible family members in the event of a worker's retirement, disability, or death. About 6% of workers in paid employment or self-employment in 2019 were not covered by Social Security. A quarter of state and local government employees and most permanent civilian federal employees hired before January 1, 1984, were not covered, and these groups constituted the majority of noncovered workers.", "For workers whose entire careers are covered by Social Security, the Social Security benefit formula is weighted to replace a greater share of career-average earnings (referred to as the replacement rate ) for low-paid workers than for high-paid workers. However, providing an appropriate replacement rate for beneficiaries whose careers are split between covered and noncovered employment (referred to hereinafter as split-career beneficiaries ) is challenging because years of noncovered earnings are marked as zeros in Social Security earnings records, so split-career beneficiaries appear to have low career-average earnings. Therefore, if there were no adjustment for noncovered earnings, split-career beneficiaries would receive a higher replacement rate than beneficiaries with the same earnings who spent their entire careers in covered employment. The windfall elimination provision (WEP) is a modified benefit formula that reduces certain retired or disabled workers' Social Security benefits if they also have earnings not covered by Social Security and are entitled to pension benefits based on those noncovered earnings. The WEP aims to provide split-career beneficiaries with approximately the same replacement rate as similar workers whose entire careers were covered by Social Security.", "Some have argued, however, that the current-law WEP formula generally fails to accurately adjust affected workers' benefits. They say it overadjusts some affected workers' benefits (i.e., it reduces them by too much), giving them a lower replacement rate than similar workers whose entire careers were covered by Social Security. In contrast, they argue it underadjusts some other affected workers' benefits, giving them a higher replacement rate than similar workers whose entire careers were covered. Estimates in 2018 showed the current-law WEP overadjusted 69% of affected beneficiaries' benefits and underadjusted for the remaining 31%.", "Legislative proposals have been introduced to substitute the WEP with a proportional formula that would calculate Social Security benefits based on earnings from both covered and noncovered employment. The proportional formula's supporters have argued it is a more accurate method to treat noncovered employment, because it would provide the same replacement rate for split-career beneficiaries and beneficiaries whose entire careers are covered by Social Security.", "Compared with current law, a proportional formula would increase Social Security benefits for beneficiaries whose current-law WEP benefits are overadjusted and decrease benefits for those whose benefits are underadjusted. It would also decrease benefits for many beneficiaries with earnings from noncovered employment who are exempt from the current WEP reduction because they (1) have 30 or more years of substantial covered earnings, or (2) do not receive a pension based on noncovered earnings.", "Proposals to establish a proportional formula have been discussed since the 1980s. However, applying the proportional formula requires a complete record of earnings from covered and noncovered employment, which were not readily available at that time. To obtain the complete earnings record, the Social Security Administration (SSA) would have needed a massive new operation system requiring extensive data reporting, maintenance, and correction processes, which could not have been accomplished quickly with limited costs. Therefore, the current-law WEP was enacted in 1983 as an approximate approach to adjust Social Security benefits for certain beneficiaries who had earnings in jobs not covered by Social Security. Today, SSA has 35 years of data on earnings from both covered and noncovered employment, implying that the proportional formula is now an option for Congress to consider. In 2019 (the 116 th Congress), H.R. 3934 and H.R. 4540 would replace the current-law WEP approach with a proportional formula for certain individuals who would become eligible for Social Security benefits in 2022 or later."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["Social Security provides insured workers and their eligible family members with a measure of protection against the loss of income due to the worker's retirement, disability, or death. The amount of the monthly benefit payable to workers and their family members is based on the worker's career-average earnings from jobs covered by Social Security (i.e., jobs in which the worker's earnings were subject to the Social Security payroll tax). Although participation in Social Security is compulsory for most workers, about 6% of all workers in paid employment or self-employment are not covered by Social Security. Most noncovered workers are state and local government employees who are covered by alternative staff-retirement systems or permanent civilian federal employees hired before January 1, 1984, most of whom are covered by the Civil Service Retirement System (CSRS) or other alternative retirement plans.", "Social Security benefits are designed to replace a certain percentage of a worker's career-average earnings (referred to as the replacement rate ) for those who remain in covered employment throughout their careers. The benefit formula is weighted to replace a greater share of career-average earnings (i.e., provide a higher replacement rate) for low-paid workers than for high-paid workers. However, providing an appropriate replacement rate for beneficiaries whose careers are split between covered and noncovered employment (referred to hereinafter as split-career beneficiaries ) is challenging because years of noncovered earnings are marked as zeros in Social Security earnings records, so split-career beneficiaries appear to have low career-average earnings. Therefore, without adjusting for noncovered earnings, split-career beneficiaries would receive a higher replacement rate than beneficiaries with the same earnings who spent their entire careers in Social Security-covered employment. ", "The windfall elimination provision (WEP) is a modified benefit formula that reduces Social Security benefits for certain retired or disabled workers who have earnings not covered by Social Security and are entitled to pension benefits based on those noncovered earnings (including certain foreign pensions). Its purpose is to remove an unintended advantage or windfall that these workers would otherwise receive as a result of the interaction between the regular Social Security benefit formula and the workers' relatively short careers in Social Security-covered employment. In December 2018, nearly 1.9 million people (or about 3% of all Social Security beneficiaries) were affected by the WEP.", "Some argue that the current-law WEP formula generally fails to provide the correct benefit adjustment (reduction) to affected beneficiaries. It overadjusts the benefit for some affected workers by producing a relatively large benefit reduction that gives them a lower replacement rate than similar workers whose entire careers were covered by Social Security; in contrast, it underadjusts the benefit for some other affected beneficiaries by producing a relatively small benefit reduction, giving them a higher replacement rate than similar workers whose entire careers were covered by Social Security. Legislative proposals have been introduced to substitute the current WEP with a proportional formula that would provide the same replacement rate to split-career beneficiaries and beneficiaries whose entire careers are covered. ", "This report explains how the proportional formula would work and how it differs from the current-law WEP formula. It also discusses how Social Security benefits would change under the proportional formula for workers with different levels of earnings, years of noncovered earnings, and timing of those noncovered earnings (i.e., early career, midcareer, or late career). Lastly, this report concludes with historical and recent legislative proposals that are based on the proportional formula."], "subsections": []}, {"section_title": "The Current-Law WEP", "paragraphs": [], "subsections": [{"section_title": "How Does the Current-Law WEP Work?", "paragraphs": ["Among other requirements, a worker generally needs 40 earnings credits (10 years of Social Security-covered employment) to be eligible for a Social Security retired-worker benefit. The Social Security regular benefit formula applies three replacement factors\u00e2\u0080\u009490%, 32%, and 15%\u00e2\u0080\u0094to three different brackets of a worker's average indexed monthly earnings (AIME), which is the monthly average of the 35 highest years of indexed covered earnings. The result is the primary insurance amount (PIA), which is the worker's basic benefit before any adjustments are made for factors such as cost-of-living adjustments (COLAs), early retirement, delayed retirement, or noncovered earnings. For workers who become eligible for benefits in 2020, the PIA is based on the formula in Table 1 . The dollar amounts in the table, known as bend points , are adjusted annually for average earnings growth. ", "Under current law, the WEP reduction is based on years of coverage (YOCs)\u00e2\u0080\u0094the larger the number of YOCs, the lower the WEP reduction. For people with 20 or fewer YOCs who become eligible for benefits in 2020, the WEP reduces the first replacement factor from 90% to 40% (referred to as the WEP replacement factor in this report), resulting in a maximum benefit reduction of $480 (90% of $960 minus 40% of $960). A worker with an AIME of $1,500 who becomes eligible for Social Security benefits in 2020 would receive an unadjusted monthly benefit of $1,036.80 if all earnings are covered by Social Security, compared to a WEP-reduced monthly benefit of $556.80 if he or she has 20 or fewer YOCs (see Table 1 ). For each YOC in excess of 20, the WEP replacement factor increases by 5%. For example, the WEP factor is 45% for those with 21 YOCs and 50% for those with 22 YOCs. The WEP factor reaches 90% for those with 30 or more YOCs, and at that point it is phased out (see Figure 1 ).", "The amount of substantial covered earnings needed for a YOC is $25,575 in 2020; the amount is adjusted annually by average wage growth. Workers with annual covered earnings below the level of substantial earnings do not receive a YOC. For example, a worker who earns $5,640 in 2020 (covered earnings) will receive four earnings credits for the purpose of Social Security eligibility, but will not qualify for a YOC for the WEP purpose. In December 2018, of the nearly 1.9 million beneficiaries affected by the WEP, nearly 1.6 million (84%) had 20 YOCs or fewer, and the remaining 0.3 million (16%) had 21-29 YOCs (see Figure 1 ). ", "Two groups of beneficiaries with noncovered employment are exempt from the WEP: (1) those with 30 or more YOCs; and (2) those not receiving a pension based on those noncovered earnings. SSA's Office of the Chief Actuary estimated that roughly 18 million Social Security worker beneficiaries with some noncovered earnings were exempt from the current WEP in 2018. Among them, about 9.4 million (52%) had 30 or more YOCs. Additionally, a guarantee provision in the WEP ensures that the WEP reduction cannot exceed one-half of the pension based on the worker's noncovered employment."], "subsections": []}, {"section_title": "Benefit Adjustments Under the Current-Law WEP", "paragraphs": ["The regular Social Security benefit formula is progressive, replacing a greater share of career-average earnings for low-paid workers than for high-paid workers. For example, Table 2 displays five types of scaled workers with hypothetical lifetime earnings from low to high, whose earnings patterns are based on actual Social Security-insured workers' career earnings. The replacement rate\u00e2\u0080\u0094the percentage of AIME replaced by the PIA\u00e2\u0080\u0094ranges from 83.3% for a very low-earning worker whose entire career is covered to 60.5% for a low-earning worker, 44.8% for a medium-earning working, 37.2% for a high-earning worker, and 29.4% for a worker who earns the taxable maximum every year. ", "If a person has earnings not covered by Social Security, those noncovered earnings are shown as zeros in their Social Security earnings records, thus resulting in relatively lower career-average earnings. The regular formula cannot distinguish between workers who have low career-average earnings because they worked for many years at low earnings in covered employment and workers who appear to have low career-average earnings because they worked for many years in jobs not covered by Social Security. Therefore, without a PIA reduction for noncovered earnings, a worker who split his or her career between covered and noncovered employment might receive a higher replacement rate than a worker with the same level of earnings who spent an entire career in covered employment. For example, a low-scaled worker is estimated to have annual career-average earnings of $22,588. If all career earnings were covered, the worker would receive a 60.5% replacement rate in Social Security benefits. However, if the second half of the low-scaled worker's career was in noncovered employment, the worker would receive a replacement rate of 90.0% based on the regular benefit formula before adjusting for noncovered earnings (see Table 2 ). The WEP PIA addresses this problem by reducing the replacement rate for certain workers who have noncovered earnings. For example, the replacement rate would be adjusted from 90.0% to 40.0% for a low-scaled worker if the second half of his career was not covered by Social Security. ", "The WEP's original intent was to ensure that Social Security beneficiaries with some earnings from noncovered employment received the same replacement rate as workers who spent their entire careers in covered employment. However, the current-law WEP formula can only approximately achieve that goal. ", "The current-law WEP formula over adjust s benefits for certain affected beneficiaries by producing a relatively large benefit reduction, resulting in a lower replacement rate than a similar worker whose entire career was covered by Social Security would receive. For example, a very low-scaled worker who spent the second half of his or her career in noncovered employment would receive a replacement rate of 40.0% using the WEP formula, which is substantially lower than the replacement rate a very low-scaled worker whose entire career was covered by Social Security (83.3%) would receive. The magnitude of such benefit overadjustment is smaller for affected beneficiaries with relatively higher lifetime earnings. For example, if the second half of a high-scaled worker's career was not covered by Social Security, the worker would receive a WEP benefit replacing 34.4% of covered AIME, which is slightly lower than the replacement rate for high-scaled workers whose entire careers are covered by Social Security (37.2%). ", "In addition, the current-law WEP formula under adjust s Social Security benefits for some other beneficiaries by producing a relatively small benefit reduction, resulting in a higher replacement rate than a similar worker whose entire career is covered would receive. Such underadjustment usually applies to workers with significantly high lifetime earnings and some earnings not covered by Social Security. For example, a taxable-maximum worker who earned the taxable-maximum amount each year of work history is estimated to have career-average earnings of $123,232. If the second half of the taxable-maximum worker's career was not covered by Social Security, the worker would receive a 33.2% replacement rate in Social Security benefits under the WEP, compared to 29.4% if the entire career had been covered by Social Security (see Table 2 ). "], "subsections": []}]}, {"section_title": "The Proportional Formula for the WEP", "paragraphs": [], "subsections": [{"section_title": "How Would the Proportional Formula Work?", "paragraphs": ["The proportional formula for the WEP would apply the regular Social Security benefit formula to all past earnings up to the taxable maximum from both covered and noncovered employment. The resulting benefit would then be multiplied by the ratio of career-average earnings (AIME) from covered employment only to career-average earnings (AIME) from both covered and noncovered employment. By concept, the PIA under the proportional formula (i.e., proportional PIA) would be as follows:", "Proportional PIA=PIA for all Earnings\u00c3\u0097AIME for Covered EarningsAIME for all Earnings", "In other words, a Social Security benefit would be calculated based on a worker's combined covered and noncovered earnings, but only the portion based on covered earnings would be payable as a Social Security benefit."], "subsections": []}, {"section_title": "Benefit Adjustments Under the Proportional Formula", "paragraphs": ["Under the proportional formula, Social Security beneficiaries with some earnings from noncovered employment would receive the same replacement rate (ratio of PIA to AIME) for covered earnings as similarly situated workers who spent their entire careers in covered employment, regardless of earnings levels, years of covered earnings, or the timing of those covered earnings. Figure 3 illustrates this, showing that a medium-scaled worker would receive a 44.8% replacement rate under the proportional formula whether the worker's entire career or only half of the worker's career was covered by Social Security. This 44.8% replacement rate for the split-career worker would be lower than the windfall replacement rate under the regular PIA without any adjustment for noncovered earnings (60.2%), but higher than the rate under the current WEP PIA (35.9%), which overadjusts the benefit reduction for noncovered earnings. ", "The proportional formula would provide a higher benefit than the WEP for workers whose Social Security benefits are currently overadjusted, such as the very low-, low-, medium-, and high-scaled workers shown in Table 3 . Because scaled workers with relatively lower lifetime earnings receive a larger overadjustment under the current WEP, those workers would receive a larger monthly benefit increase under the proportional formula. For example, the monthly benefit increase under the proportional formula relative to the current WEP would be $213.90 for very low-scaled workers if their careers' second halves were not covered by Social Security, compared to $182.20 for low-scaled workers, $176.50 for medium-scaled workers, and $87.10 for high-scaled workers. In contrast, workers whose Social Security benefits are underadjusted by the current WEP, such as taxable-maximum workers, would receive a lower benefit under the proportional formula."], "subsections": []}]}, {"section_title": "Comparing the Proportional Formula with Current Law", "paragraphs": ["The proportional formula discussed above would differ from the current-law WEP formula in terms of monthly benefit amounts, improper payments, and notification to beneficiaries. "], "subsections": [{"section_title": "Differences in Monthly Benefits", "paragraphs": ["Given the current-law WEP formula's design, the proportional formula would increase Social Security benefits for some beneficiaries with noncovered employment and decrease benefits for others. Beneficiaries who would receive a lower benefit under the proportional formula than under current law include ", "beneficiaries with noncovered earnings who are exempt from the current-law WEP, such as those with 30 or more YOCs or those not receiving a noncovered pension; and beneficiaries whose benefits are underadjusted using the current WEP PIA, such as those who have relatively high lifetime earnings, are close to 30 YOCs, or are affected by the current-law guarantee provision. ", "If the proportional formula had applied to current beneficiaries in 2018, SSA's Office of the Chief Actuary (OCACT) estimates that about 1.1 million beneficiaries affected by the current WEP (or 69%) would have received a higher benefit and about 0.5 million beneficiaries affected by the current WEP (or 31%) would have received a lower benefit. In addition, 13.5 million beneficiaries with some noncovered earnings who were exempted from the current WEP in 2018 would have received a lower benefit under the proportional formula."], "subsections": [{"section_title": "Exemptions and the Guarantee Provision Under Current Law", "paragraphs": ["Beneficiaries who are eligible for either of the two exemptions to the current-law WEP would receive a lower benefit under the proportional formula. Beneficiaries with 30 or more YOCs are exempted from the current WEP, but under the proportional formula, workers with 30 or more YOCs and very few years of noncovered employment (even less than a year) would probably receive proportional reductions in their Social Security benefits. For example, a medium scaled-worker who earned 30 YOCs in his earlier career would not be affected by the current WEP even if he took a noncovered position afterward and was entitled to a noncovered pension (see case [1] in Table 4 ). In this case, the worker would receive an unreduced Social Security benefit of $1,707.30, which would be higher than the proportional PIA ($1,612.00) based on earnings from noncovered employment. SSA's OCACT estimates that, in 2018, roughly 9.4 million Social Security retired-worker and disabled-worker beneficiaries with some noncovered earnings were exempt from the current WEP because they had 30 or more YOCs. Because those beneficiaries have relatively few years of noncovered earnings, their benefit reductions under the proportional formula would be relatively small.", "The other exemption applies to beneficiaries with noncovered earnings who do not receive a pension based on those noncovered earnings. Those beneficiaries could receive a lower benefit under the proportional formula because their earnings from noncovered employment could reduce the proportion of overall career-average earnings from covered jobs. For example, under current law, a medium-scaled worker who worked in a noncovered position from age 55 to age 61 but received no noncovered pension benefits would be exempt from the WEP and receive a Social Security benefit equal to $1,551.10 (see case [2] in Table 4 ). This amount would be higher than the benefit computed by the proportional formula ($1,432.80) because those seven years of noncovered employment would proportionally reduce the Social Security benefit. Estimates from OCACT find that about 8.6 million Social Security retired-worker and disabled-worker beneficiaries with some noncovered earnings and less than 30 YOCs were exempt from the current WEP in 2018 because they had no pension based on those noncovered earnings. ", "In addition, the guarantee provision under current law limits benefit reductions by ensuring that the WEP reduction cannot exceed one-half of the noncovered pension benefit. This provision typically leads to small benefit reductions for beneficiaries who receive small pension benefits based on relatively short careers in noncovered employment. The proportional formula would not limit reductions in this way, so those workers' benefits would be lower under the proportional formula than under the WEP. For example, a low-scaled worker who worked in a noncovered position from age 52 to age 61 and received a monthly benefit from a noncovered pension equal to $100 would receive a WEP reduction of no more than $50 under current law (see case [3] in Table 4 ). Therefore, this worker would receive $896.10 under the current WEP, but $770.90 under the proportional formula with no guarantee provision. "], "subsections": []}, {"section_title": "Years of Coverage", "paragraphs": ["In addition to the exemptions and the guarantee provision, whether a worker with noncovered earnings would receive a lower Social Security benefit under the proportional formula relative to current law also depends on YOCs based on substantial earnings. The number of YOCs determines the WEP replacement factor under current law (see Figure 1 ). In general, the larger the number of YOCs, the higher the WEP replacement factor. Workers who have employment not covered by Social Security also need to earn the substantial covered amount ($25,575 in 2020) to receive one YOC, which is much higher than the earnings required for Social Security eligibility ($5,640 in 2020). Because of the WEP's higher YOC earnings threshold, workers with relatively lower covered earnings who are affected by the WEP may be entitled to Social Security benefits based on earnings credits but not qualify for a YOC for WEP purposes. ", "Although YOCs are a critical factor for determining the PIA under the current-law WEP, they are not relevant for the proportional formula. To compare monthly benefits based on the two formulas by YOCs, Figure 4 shows a medium-scaled worker's monthly benefit amounts under the current WEP PIA and the proportional PIA. If the medium-scaled worker took a job covered by Social Security in the earlier part of her career and the number of YOCs was relatively small (less than 27 for a medium-scaled worker), the proportional formula would provide a higher benefit than the current WEP. However, if the number of YOCs were relatively large (more than 27 for a medium-scaled worker), the proportional formula would provide a lower benefit than the current\u00e2\u0080\u0093law WEP. ", "Two reasons may explain why the proportional formula would provide a lower benefit than the current-law WEP at the higher level of YOCs. First, current law exempts beneficiaries from the WEP if they have 30 or more YOCs, resulting in a higher benefit amount than under the proportional formula. Second, when YOCs are close to 30, the current-law WEP replacement factor is relatively large, such as 85% for 29 YOCs (see Figure 1 ), so the current-law WEP PIA underadjusts and produces a higher benefit than the proportional formula. ", "The monthly benefit difference between the proportional formula and the current-law WEP formula also depends on earning levels. For example, the very low- and low-scaled workers in Figure 5 had fewer than 20 YOCs because their annual earnings were typically less than the substantial earnings required for a YOC. They would receive a current-law WEP PIA based on the lowest WEP replacement factor (40%). Therefore, the proportional PIA for these workers would generally be higher than the WEP PIA, because the 40% WEP replacement factor overreduces their Social Security benefits for noncovered earnings. The proportional PIA would also be higher than the WEP PIA for medium- and high-scaled workers with relatively fewer YOCs, such as Figure 5 's medium-scaled workers with fewer than 29 years of covered earnings and high-scaled workers with YOCs between 11 and 22. However, as YOCs increase, the WEP replacement factor goes up, so the WEP PIA is higher than the proportional PIA for medium- and high-scaled workers with more YOCs. For workers with substantially high earnings, such as taxable maximum workers, the proportional PIA would generally be lower than the WEP PIA."], "subsections": []}, {"section_title": "Timing of Noncovered Employment", "paragraphs": ["The size of the monthly benefit difference between the proportional PIA and the WEP PIA also depends on the timing of covered and noncovered employment. Figure 6 compares three medium-scaled workers with 20 years of covered employment in early career, midcareer, and late career, respectively. Because early-career earnings are relatively lower than earnings in later years, a medium-scaled worker whose early career is covered by Social Security would tend to have a lower WEP PIA, a lower proportional PIA, and a lower monthly benefit difference between the two formulas than a medium-scaled worker with covered earnings at midcareer or late career. This example indicates that the WEP PIA and proportional PIA amounts depend on the timing of noncovered employment, as well as earning levels from both covered and noncovered employment."], "subsections": []}]}, {"section_title": "Administration and Improper Payments", "paragraphs": ["The current-law WEP and the proportional formula differ not only in benefit calculation, but also in administration and associated costs.", "SSA's ability to administer the current WEP depends in large part on the type of noncovered employment on which a beneficiary's pension is based. For most federal retirees and survivors, SSA relies primarily on noncovered pension data matched from the Office of Personnel Management (OPM). However, for state or local retirees and certain retirees with foreign pensions, SSA relies primarily on beneficiaries to self-report noncovered pension amounts. Based on the information matched and provided, SSA determines whether and to what extent to apply the WEP. Unreported state and local government pensions lead to improper payments. According to SSA, WEP has been a leading cause of computational errors related to overpayments. For FY2013 through FY2017, WEP accounted for 63% of reported computation overpayment errors, and average overpayments related to WEP totaled approximately $520 million annually.", "In contrast, the proportional formula is applied based on covered and noncovered earnings records, which are reported to SSA on Internal Revenue Service (IRS) Form W-2. Without other provisions, benefits based solely on the proportional formula would likely have fewer errors compared to benefits computed with the current-law WEP formula."], "subsections": []}, {"section_title": "Notification to Beneficiaries", "paragraphs": ["The annual Social Security statements that SSA makes available to all eligible workers provide benefit estimates based only on covered employment, with no estimates of the WEP adjustment because SSA is not provided with information on receipt of noncovered pensions until an individual self-reports this benefit when applying for Social Security. Because of this limitation, beneficiaries have argued that they were not given sufficient notice of how much their benefits would be reduced due to the WEP. To address this issue, the Social Security Protection Act of 2004 ( P.L. 108-203 ) requires state and local government employers to disclose the WEP's effect to affected employees hired on or after January 1, 2005. SSA also responded to those communication issues by inserting a description of the WEP into the statement beginning in 2007.", "However, communication challenges remain. The statement provides no estimates of the current WEP adjustment. The WEP adjustment is difficult to estimate without information on noncovered pensions, which is generally not available until the worker is entitled to such pension at a later date.", "Compared to the current WEP, the estimate of noncovered earnings used in the proportional formula and the corresponding proportional PIA would be relatively easier to include in the statement. The proportional PIA estimate would have to be based on certain assumptions regarding future employment type, but it would not require noncovered pension information."], "subsections": []}]}, {"section_title": "Legislative Proposals Based on the Proportional Formula", "paragraphs": [], "subsections": [{"section_title": "Proposals in the 1980s", "paragraphs": [], "subsections": [{"section_title": "1981", "paragraphs": ["In 1981, proposals to address Social Security benefits for individuals receiving pensions from noncovered employment were discussed as part of broad reform efforts to address Social Security's financing issues, which were a major concern at the time.", "Some of the proposals called for worker PIA computations to use both covered and noncovered earnings, and for the PIA based on combined earnings to then be reduced by the ratio of noncovered earnings to combined earnings. This method is commonly referred to as the proportional formula , as discussed earlier in this report. This proposal was recommended by the National Commission on Social Security and included in Section 301 of H.R. 3207 , the Social Security Amendments of 1981 as introduced in the 97 th Congress.", "Other proposals called for a modified benefit formula that would change the first replacement factor in the regular benefit formula for workers with pensions based on noncovered work, which is similar to current law. For example, a May 1981 Reagan Administration proposal would have substituted the 90% replacement factor in the regular benefit formula with a 32% replacement factor for affected beneficiaries. The proposal would have guaranteed that the Social Security benefit reduction could not exceed one-half of the noncovered pension."], "subsections": []}, {"section_title": "1983", "paragraphs": ["In January 1983, the National Commission on Social Security Reform (NCSSR, better known as the Greenspan Commission) recommended eliminating the windfall portion of benefits for individuals who received a pension based on noncovered employment. The two methods discussed above were suggested: (1) the proportional formula based on covered and noncovered earnings, and (2) the modified benefit formula, substituting the 90% replacement factor with 32%.", "In the same year, SSA offered comments on the two methods. The agency indicated that the proportional formula would be the most conceptually appropriate, but would require SSA to maintain detailed records on workers' noncovered earnings in a manner comparable to the current covered earnings record operations, which would have required extensive data reporting, maintenance, and correction processes, and could likely not have been done with limited cost at that time. In contrast, SSA indicated the modified benefit formula based on the replacement factor would achieve the proportional formula's approximate results and be vastly easier to administer. SSA also recommended lowering the 90% replacement factor to 61% (the midpoint between the 90% factor and the 32% factor), as the 32% replacement factor would overadjust for the windfall.", "In March 1983, Congress incorporated the NCSSR's recommendations (with some modifications), along with additional provisions to resolve the remaining long-range deficit, into the Social Security Amendments of 1983 ( P.L. 98-21 ). The conference agreed that the 90% replacement factor in the regular benefit formula would be substituted with a 40% replacement factor (phased in over five years), as in current law."], "subsections": []}]}, {"section_title": "Proposals from 2004 to Present", "paragraphs": ["Since 2004, various bills have been introduced to replace the current WEP formula with the proportional formula based on both covered and noncovered earnings. Partly because all covered and noncovered earnings have been reported to SSA on Form W-2 since 1978, sufficient earnings records are now available to apply the proportional formula. Thus, a previous major area of concern for administering a proportional formula has been alleviated. ", "Legislative proposals based on the proportional formula usually address two essential questions: (1) whether the proportional formula would be applied to beneficiaries affected by the current WEP; and (2) how to treat beneficiaries who would receive a lower benefit under the proportional formula compared to current law. For the first question, proposals either apply the proportional formula to all current and future affected beneficiaries, or apply the proportional formula only to certain future beneficiaries and provide an additional monthly benefit (usually referred to as a rebate ) to those affected by the current WEP. For the second question, some proposals include a no-benefit-cut provision such that the beneficiary would receive a benefit based on the higher of the current WEP formula and the proportional formula.", "For example, S. 113 and H.R. 2797 in the 112 th Congress would have applied the proportional formula to all beneficiaries (both current and future beneficiaries) after 1985 and provided a no-benefit-cut or hold harmless provision to beneficiaries who had worked in noncovered positions prior to one year after the bill's enactment. In a somewhat different approach, H.R. 3934 and H.R. 4540 in the 116 th Congress would apply the proportional formula to beneficiaries becoming eligible after a certain date, such as December 31, 2021; provide a rebate to beneficiaries affected by the current-law WEP; and mandate a no-benefit-cut provision for some or all future beneficiaries. The above two bills introduced in the 116 th Congress also include provisions to require SSA to show noncovered as well as covered earnings records on Social Security statements and to require studies on ways to facilitate data exchanges between SSA and state and local governments to improve current-law WEP administration."], "subsections": []}]}]}}
{"id": "R46235", "title": "Rural Development Provisions in the 2018 Farm Bill (P.L. 115-334)", "released_date": "2020-02-20T00:00:00", "summary": ["The U.S. Department of Agriculture's (USDA) Rural Development agency (RD) administers programs to support rural infrastructure and economic development. This includes programs focused on rural housing, rural business development, rural water and energy infrastructure, and, more recently, rural broadband deployment. Congress considers reauthorizing these programs in periodic omnibus farm bills. In December 2018, President Trump signed the 2018 farm bill (Agriculture Improvement Act of 2018, P.L. 115-334 ) into law. This legislation reauthorizes and amends RD programs, establishes new rural development programs and initiatives, and repeals other programs.", "Economic trends and social issues prevalent in rural America during the drafting of a farm bill typically influence the law's rural development provisions. Issues that influenced the rural development provisions of the 2018 farm bill include:", "rural population decline; the changing nature of rural employment, especially the decline in agriculture and manufacturing employment; rural health challenges, including an increasing number of rural hospital closures and increasing rates of drug overdose deaths related to opioids; aging rural infrastructure and a lack of access to broadband internet in rural areas; and a shift among some scholars and policymakers toward regional approaches to rural economic development.", "The 2018 farm bill establishes new rural development programs and initiatives. Among the new provisions, the law directs USDA to temporarily prioritize funding under certain rural development programs for projects that address substance use disorder. It also authorizes USDA to make similar temporary prioritizations in the future, to respond to public health disruptions in rural areas. P.L. 115-334 also establishes a new rural broadband program to finance middle mile infrastructure \u00e2\u0080\u0094infrastructure that connects a local network to the internet backbone. The law also authorizes a new grant program to support high-wage jobs and new businesses in rural areas. P.L. 115-334 directs USDA to establish Tribal Promise Zones, which are to receive priority consideration for certain federal grant programs. Other new rural development provisions relate to broadband deployment, precision agriculture, and rural community development.", "P.L. 115-334 reauthorizes and amends a number of existing rural development programs. It adds a grant component to the Rural Broadband Access Loan Program and increases the authorization of appropriations from $25 million to $350 million per year for FY2019-FY2023. To be eligible for newly authorized grants, at least 90% of households in a service area must lack access to sufficient broadband service. The law also amends eligibility criteria for program loans, raising the percentage of households in an eligible service area that must lack access to sufficient broadband service from 15% to 50% of households. P.L. 115-334 codifies the Community Connect Grant Program and authorizes appropriations of $50 million per year for FY2019-FY2023. It also increases the authorizations of appropriations for the Emergency and Imminent Community Water Assistance Program, the Rural Decentralized Water Systems Program (formerly the Household Well Water Systems Program), and water and wastewater technical assistance and training programs. The law also amends the Cushion of Credit Program to terminate deposit authority and incrementally reduce the interest rate that accrues to borrowers.", "P.L. 115-334 amends certain definitions of rural used to determine eligibility for RD programs. It amends the definition of rural for certain housing and broadband programs to exclude incarcerated populations and the first 1,500 people residing on a military base. It also increases to 50,000 the maximum population of communities eligible for guaranteed loans under the Community Facilities and Water and Waste Disposal programs. The law reestablishes the position of Under Secretary of Agriculture for Rural Development as a permanent position within USDA, subject to Senate confirmation. USDA had eliminated the position in 2017 and replaced it with the Assistant to the Secretary for Rural Development, a position that did not require Senate confirmation. The 2018 farm bill also repeals the Rural Telephone Bank and grants to rural broadcasting systems, among other programs."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["While periodic, omnibus farm bills focus on agricultural and food policy, they also contain provisions addressing rural community and economic development. The U.S. Department of Agriculture (USDA), through its Rural Development agency (RD), administers a broad portfolio of programs focused on rural housing, rural infrastructure, and rural business and employment. Congress considers reauthorizing and amending many of these programs in periodic farm bills. The most recent is the Agriculture Improvement Act of 2018 (2018 farm bill, P.L. 115-334 ). The 2018 farm bill generally authorizes programs and funding levels for the period FY2019-FY2023, though some provisions apply to different periods, such as FY2019-FY2025.", "Since 1973, farm bills have included a title dedicated to rural development. The Rural Development title (Title VI) of the 2018 farm bill generally addresses (1) rural infrastructure, including housing, electrical generation and transmission, water and wastewater, and more recently, broadband deployment; (2) rural economic development; and (3) rural business creation and expansion. The Miscellaneous title (Title XII) also includes certain rural development provisions related to RD personnel, federal task forces or working groups, and other federal rural development programs. Programs authorized in other titles of P.L. 115-334 may benefit rural areas, especially rural areas with economies reliant on agriculture. However, most rural development provisions in the Rural Development and Miscellaneous titles specifically target rural areas.", "A number of issues influenced the rural development provisions of the 2018 farm bill. Many rural communities have experienced decreasing populations over the last decade. In addition, some rural residents struggle to access employment opportunities, especially in high-wage jobs. The ongoing opioid crisis and an increasing number of rural hospital closures have raised concerns about the health of rural residents. Aging infrastructure, such as electric or drinking water infrastructure, also presents a challenge to some rural communities. The digital divide \u00e2\u0080\u0094lower rates of broadband access in rural areas compared to urban areas\u00e2\u0080\u0094has raised concerns that rural residents may be less able to access opportunities and services such as distance learning, telemedicine, and e-commerce. In addition, policymakers and scholars have increasingly examined regional approaches to rural economic development rather than approaches focused on individual communities.", "The 2018 farm bill includes new provisions and programs related to rural broadband deployment, health care, and community development. The law also reauthorizes and amends existing programs related to broadband deployment, other rural infrastructure, and community development. P.L. 115-334 amends multiple definitions of rural used to determine eligibility for RD programs. The law also amends programs that address regional approaches to rural economic development. Further, P.L. 115-334 repeals some rural development programs and makes technical corrections to statutory language authorizing other programs.", "This report provides a brief overview of federal rural development programs. It then analyzes issues that influenced the development of rural development provisions in the 2018 farm bill. Next, the report details new rural development programs and entities created and changes made to existing rural development programs, in P.L. 115-334 . The Appendix provides a side-by-side comparison of each provision in the Rural Development title, as well as each rural development provision in the Miscellaneous title, of the 2018 farm bill with prior law."], "subsections": []}, {"section_title": "Federal Rural Development Programs", "paragraphs": ["The Rural Development Policy Act of 1980 ( P.L. 96-355 ) named USDA as the lead federal agency for rural development. RD is the mission area within USDA responsible for rural infrastructure and economic development assistance. Three agencies comprise RD: the Rural Business-Cooperative Service, the Rural Housing Service, and the Rural Utilities Service (RUS). RD programs are largely loan and grant programs that assist communities with small populations to finance development projects.", "Many RD programs have statutory authority in the Consolidated Farm and Rural Development Act of 1972 (the ConAct, P.L. 87-128) or the Rural Electrification Act of 1936 (7 U.S.C. 901 et seq.). RD programs typically rely on annual appropriations for funding, but omnibus farm bills also authorize mandatory funding for some RD programs. The most recent of these, the 2018 farm bill, reauthorizes or amends existing RD programs and authorizes new RD programs by amending the ConAct, the Rural Electrification Act, or other authorizing legislation. The 2018 farm bill also authorizes some rural development programs or entities administered outside USDA. For example, the law authorizes the Federal Communications Commission (FCC) to establish a new task force on precision agriculture connectivity. It also reauthorizes federal regional commissions, such as the Appalachian Regional Commission."], "subsections": []}, {"section_title": "Issues Influencing the 2018 Farm Bill's Rural Development Provisions", "paragraphs": ["A number of economic and social issues in rural America influenced the rural development provisions of the 2018 farm bill. Rural policy issues that influenced the 2018 farm bill include:", "rural population decline; rural underemployment; rural health issues, including the ongoing opioid crisis and an increasing rate of hospital closures in rural areas; aging rural infrastructure and a lack of access to broadband internet in rural areas; and a shift among some scholars and policymakers towards supporting regional approaches to rural economic development.", "Between 2010 and 2017, the number of people living in nonmetropolitan counties declined by approximately 223,000. Additionally, over 1,300 nonmetropolitan counties experienced population loss ( Figure 2 ). While the overall U.S. rural population declined, rates of population change varied among rural areas. Populations declined in many rural counties dependent on agriculture and manufacturing, while populations increased in many rural counties dependent on recreation. Population decline results from a combination of out-migration, declining birth rates, and increased mortality. Research has attributed rural out-migration to many factors, including lack of employment opportunities and less access to education, health care, and cultural amenities. Congress sought to address rural population decline in the 2018 farm bill through rural infrastructure, business development, and community development.", "Historically, agriculture and rural policy were closely linked due to the high percentage of rural Americans employed in agriculture. This link has weakened due to the changing nature of rural employment. In 2017, the agriculture sector accounted for 5.6% of rural jobs, down from 6.8% in 2001. In addition, USDA estimates that approximately 80% of total farm household income in 2019 will come from off-farm activities. Manufacturing has also been an important source of employment in rural areas, being responsible for a larger share of jobs in rural counties than in urban counties. In 2017, manufacturing employed 10.8% of the rural workforce, declining from 14.1% in 2001. Congress sought to address rural employment in the 2018 farm bill through entrepreneurship, business development, broadband deployment, and access to credit.", "Rural health issues also influenced the 2018 farm bill's rural development provisions. Policymakers continue to look for solutions to address the opioid epidemic that began in the 1990s. Though this epidemic has affected urban, suburban, and rural areas, the drug overdose death rate in rural areas increased at a faster rate than in urban areas between 1990 and 2015. In addition, many scholars and interest groups have asserted that the federal government's approach to mitigating the opioid crisis in rural areas should differ from the strategy for urban areas. While federal, state, and local governments have addressed the epidemic, drug overdose rates remain high. In addition, a rise in the number of rural hospital closures has increased concerns about access to health care in rural areas. According to the U.S. Government Accountability Office (GAO), 64 rural hospitals closed between 2013 and 2017, more than twice as many as during the previous five-year period. These hospital closures will likely result in rural residents having to travel greater distances for emergency medical care. In the 2018 farm bill, Congress included provisions related to refinancing of rural hospital debt, funding for opioid abuse prevention and treatment, and coordination of federal rural health efforts.", "Aging infrastructure continues to be a concern for rural areas. According to GAO, \"many rural communities face significant challenges in financing the costs of replacing or upgrading aging and obsolete drinking water and wastewater infrastructure.\" Because communities typically pay for drinking water infrastructure through rates charged to users, more sparsely populated communities have difficulty financing major infrastructure construction or upgrades. Some rural communities also lack the resources to assess infrastructure needs. Similar challenges exist to upgrading and maintaining rural housing and electricity infrastructure. The 2018 farm bill includes provisions related to rural infrastructure loan and grant programs, technical assistance for infrastructure planning, and prioritizing water infrastructure funding to address a public health crisis. ", "Additionally, scholars and policymakers have asserted that access to broadband internet is important for economic and community development in rural areas. According to the most recent FCC deployment data, as of December 2017, 26% of Americans in rural areas and 32% of Americans on tribal lands lack access to broadband at speeds of at least 25 megabits per second (Mbps) download and 3 Mbps upload. In comparison, 1.7% of Americans in urban areas lack access to broadband at 25/3 Mbps. The 2018 farm law includes provisions related to broadband deployment, federal program coordination, and the use of broadband for precision agriculture. ", "Some scholars and policymakers increasingly support a regional approach to rural economic development. Rather than focus on individual towns or communities, which may compete for jobs and residents, a regional approach draws on the strengths and opportunities of different localities within a region and involves coordination across communities. The 2018 farm bill contained provisions related to federal regional commissions, technical assistance for regional planning, and prioritizing projects that support a strategic community development plan."], "subsections": []}, {"section_title": "Rural Development Provisions in the Agriculture Improvement Act of 2018 (P.L. 115-334)", "paragraphs": ["This section summarizes the rural development provisions in the 2018 farm bill. It provides an overview of new rural development provisions. It also summarizes provisions that reauthorize or amend federal statutes related to existing rural development programs and requirements. In addition to amending programs, the farm bill authorizes programs to receive mandatory or discretionary funding. Congress controls the level of discretionary funding through the subsequent enactment of annual appropriations. Congress controls the level of mandatory funding outside of the appropriations process based on payments made as a direct consequence of statutory requirements. Most RD programs rely on discretionary funding."], "subsections": [{"section_title": "New Provisions in the 2018 Farm Bill", "paragraphs": ["Section 6101 directs USDA to set aside at least 20% of annual funds appropriated for the Distance Learning and Telemedicine Program for FY2019-FY2025 for telemedicine projects that provide substance use disorder treatment services. It also directs USDA to prioritize funding for Community Facilities Direct Loans and Grants and Rural Health and Safety Education Grants for projects that provide substance use disorder treatment, education, and prevention. The provision also authorizes the Secretary of Agriculture to temporarily prioritize assistance under certain RD programs to help rural communities respond to a significant public health disruption .", "Section 6202 of the 2018 farm bill authorizes a new rural broadband deployment program to fund middle mile infrastructure . Middle mile infrastructure is infrastructure that does not connect directly to an end user (such as a business or household) but rather connects a local network to the larger internet backbone. The provision authorizes $10 million per year for loans and grants for FY2019-FY2023, subject to annual appropriations.", "Section 6208 adds a new section to the Rural Electrification Act that addresses environmental reviews for rural broadband programs. The new language authorizes USDA to obligate, but not disburse, loan or grant funds before the completion of an environmental, historical, or other review. The funds may be obligated if USDA determines that a subsequent review will be adequate and easily accomplished. Section 6213 authorizes USDA to use existing regulations for the Rural Broadband Access and Community Connect programs for up to one year until USDA issues a final rule implementing the 2018 farm bill changes. ", "Section 6212 establishes procedures for federal broadband program coordination . It directs the National Telecommunications and Information Administration (NTIA) at the U.S. Department of Commerce to assist USDA with verifying applicant eligibility for USDA rural broadband programs. The provision also directs USDA and the FCC to coordinate before providing broadband assistance to prevent duplication. It requires USDA, NTIA, and the FCC to submit a report to Congress within one year of the farm bill's enactment on how to best coordinate federal broadband programs and activities. ", "Section 6214 establishes a Broadband Integration Working Group to conduct a survey of all current federal assistance for broadband deployment. The provision also directs the working group to make recommendations to address regulatory barriers and incentivize investment in broadband deployment and adoption. The working group includes numerous federal agencies. The administrator of RUS, Assistant Secretary for Communications and Information at the Department of Commerce, director of the National Economic Council, and director of the Office of Science and Technology Policy at the White House co-chair the working group. Section 12511 directs the FCC to establish a task force on precision agriculture . Duties of the task force include identifying and measuring current gaps in broadband internet access on agricultural land and making policy recommendations to promote broadband deployment on unserved agricultural land.", "Section 6419 authorizes USDA to make grants to eligible entities to provide technical assistance and training to support applications for Rural Business-Cooperative Service programs . Eligible entities may use grants to assist communities in planning for business and economic development needs, identifying public and private financing options, and preparing applications and materials to request financial assistance. The law authorizes appropriations of $5 million per year for the program for FY2019-FY2023. Section 6302 directs USDA to provide technical assistance to t ribal entities to improve the entities' access to RD programs. The provision requires technical assistance to address the unique challenges faced by tribal governments, producers, businesses, and tribally designated housing entities in accessing RD programs. ", "Section 12510 directs USDA to establish Tribal Promise Zones that are to receive priority consideration for federal grant programs and initiatives. Criteria for Tribal Promise Zones include unemployment rates, poverty rates, vacancy rates, household income, and the effectiveness of a competitiveness plan submitted by nominating entities. Prior to the 2018 farm bill's enactment, the federal government had designated certain tribal areas as Tribal Promise Zones under an existing Promise Zones initiative at the Department of Housing and Urban Development (HUD). Section 12510 directs the Secretary of Agriculture to re-designate any previously designated Tribal Promise Zone. ", "Section 6424 establishes a new Rural Innovation Stronger Economy Grant Program to establish job accelerators in rural regions. Grant awards may be between $500,000 and $2 million, and applicants must provide at least 20% of project funds. Eligible applicants may use funds for a variety of purposes, including linking rural communities and entrepreneurs to markets, facilitating the repatriation of high-wage jobs to the United States, and identifying and building assets in rural communities. The provision authorizes annual appropriations of $10 million per year for FY2019-FY2023. ", "Section 6306 creates a Council on Rural Community Innovation and Economic Development , comprised of various executive branch departments and agencies, to coordinate federal engagement with rural stakeholders and make recommendations to streamline and leverage federal investments in rural areas. The provision also establishes a Rural Smart Communities Working Group and a Jobs Accelerator Working Group within the council. ", "Section 6103 authorizes USDA to use loans or loan guarantees under certain rural business or infrastructure programs to refinance rural hospital debt . Congress permits USDA to assist a rural hospital with refinancing debt if \"the assistance would help preserve access to a health service in a rural community, meaningfully improve the financial position of the hospital, and otherwise meet the financial feasibility and adequacy of security requirements of the Rural Development Agency.\" Section 12409 directs USDA to establish a Rural Health Liaison who would integrate rural health activities across USDA, coordinate with the Secretary of Health and Human Services, and provide technical assistance to USDA outreach, extension, and county offices."], "subsections": []}, {"section_title": "Other Major Provisions", "paragraphs": [], "subsections": [{"section_title": "Broadband and Telecommunications", "paragraphs": ["Section 6201 reauthorizes and makes a number of amendments to the Rural Broadband Access Program (also known as the Farm Bill Loan Program):", "Increases authorized funding for the program from $25 million to $350 million per year for the period FY2019-FY2023. Authorizes 3%-5% of annual program funding for technical assistance and training to applicants applying to provide broadband service to communities that lack broadband at speeds of at least 10/1 Mbps. Adds a grant component to the program to the existing direct and guaranteed loan components. To be eligible for a grant, at least 90% of households in the proposed service area \u00e2\u0080\u0094the area in which an applicant proposes to deploy broadband\u00e2\u0080\u0094must lack access to broadband at minimum speeds. Applicants must provide matching funds of 25%-75% of the project cost, depending on the population density of the proposed service area. Amends the eligibility criteria for loans to require at least 50% of households in proposed service areas to lack access to broadband service at minimum speeds. Under prior law, this threshold was 15% of households. Increases the minimum acceptable broadband speeds for the program from 4/1 Mbps to 25/3 Mbps. These minimum speeds determine both eligibility criteria and buildout requirements. USDA uses the minimum speeds to determine whether areas lack sufficient broadband service and are therefore eligible for program funding (see above two bullet points). USDA also requires all loan or grant recipients to provide broadband service that meets the minimum speeds. Directs USDA to prioritize applications that serve communities with a population of fewer than 10,000 residents; serve communities experiencing out-migration; provide broadband to cropland and ranchland for use in precision agriculture; and were developed with, and received funding from, community stakeholders, among other prioritization criteria. Increases the maximum time to complete buildout of broadband infrastructure to five years. Under prior law, the maximum buildout time was three years from when USDA made assistance available. Directs USDA to establish broadband buildout requirements \u00e2\u0080\u0094the level of internet service an applicant must provide for the duration of a project agreement. Section 6201 also directs USDA to project minimum acceptable service standards for projects with agreements of 5-10, 11-15, 16-20, and more than 20 years. Applicants must demonstrate the ability to furnish or improve service in order to meet the broadband buildout requirements. The conference report contains language further explaining congressional intent. Authorizes USDA to provide payment assistance for certain loan and grant recipients. This includes reduced interest rates or allowing borrowers to defer payments. Directs USDA to charge fees to lenders in amounts that reduce the cost of subsidies for guaranteed loans but are not a barrier to program participation. Moves certain provisions regarding notice requirements, default and deobligation, and service area assessment to other sections of the Rural Electrification Act and makes amendments to these relocated provisions. These provisions still apply to the Rural Broadband Access Program. Section 6201 also removes language regarding paperwork reduction, the preapplication process, and the number of application evaluation periods per year.", "Section 6102 reauthorizes the Distance Learning and Telemedicine Program through FY2023 and increases the authorization for annual appropriations from $75 million to $82 million per year. Section 6204 codifies the Community Connect Program and authorizes funding of $50 million per year for FY2019-FY2023. Previously, Congress had authorized the program in annual Agriculture appropriations bills.", "Section 6203 reauthorizes the Rural Gigabit Network Pilot Program and renames it the Innovative Broadband Advancement Program . Congress authorizes USDA to provide loans or grants to decrease the cost of broadband deployment and increase broadband speeds. Eligible applicants must agree to complete project buildout within five years and increase broadband speeds to at least the minimum broadband buildout requirements established for the Rural Broadband Access Program. Congress authorizes appropriations of $10 million per year for FY2019-FY2023. ", "Section 6205 establishes criteria for outdated broadband systems . Beginning October 1, 2020, USDA must consider any portion of a service territory that is subject to an outstanding USDA grant agreement to be unserved if broadband speeds in that portion of a service territory are less than 10/1 Mbps. The provision includes an exception for broadband service providers that have constructed, or begun to construct, broadband facilities that meet the minimum speeds for the Rural Broadband Access Program. As mentioned earlier in this section, Section 6201 set minimum broadband speeds for the Rural Broadband Access Program at 25/3 Mbps.", "Section 6207 creates a new section of the Rural Electrification Act that addresses public notices, service area assessments, and reporting requirements under USDA rural broadband programs. The provision includes both new language and language moved from other sections of the Rural Electrification Act. It moves language related to public notice requirements, service area assessments, and reporting from the section of the Rural Electrification Act that authorizes the Rural Broadband Access Program to this newly created section. Moving this language makes it applicable to certain other programs authorized in the Rural Electrification Act in addition to the Rural Broadband Access Program.", "Section 6207 also makes the following amendments:", "Directs USDA to publish information on applications and funding awards for rural broadband programs in a searchable database on the RUS website. The database must be available to the public. Gives internet service providers at least 45 days to respond to a public notice of application, in contrast to at least 15 days under prior law. Providers may submit information on any broadband service the provider currently offers in the area identified in an application. This information helps USDA determine whether a proposed area meets program eligibility requirements. Exempts from certain Freedom of Information Act requirements information submitted by internet service providers in response to public notices. Includes language regarding assessing unserved communities for Rural Broadband Access Program eligibility. Under the program, USDA gives priority to unserved communities \u00e2\u0080\u0094communities that lack residential broadband service at speeds of at least 10/1 Mbps. Section 6207 directs USDA to coordinate with the FCC and NTIA, obtain data from any other relevant source, and perform site-specific testing to verify that communities given priority are eligible for program funding. Requires loan or grant recipients to report annually to USDA, rather than semiannually as under prior law. The provision also adds reporting requirements for middle mile projects. It directs USDA to submit a single report to Congress each year detailing assistance provided under all USDA rural broadband loan and grant programs. Authorizes not less than 3% and not more than 5% of funding appropriated for certain rural broadband programs be set aside for oversight, reporting, and accountability measures.", "Section 6210 authorizes recipients of certain RD loans, loan guarantees, or grants authorized by the Rural Electrification Act or the ConAct to use up to 10% of the award amount for rural broadband infrastructure projects . Recipients can use funding only for projects in areas that lack broadband service at speeds of at least 25/3 Mbps. The provision also directs USDA not to provide funding if it would result in competitive harm to another recipient of RD loans or grants. ", "Section 6206 moves language regarding default and deobligation from the section authorizing the Rural Broadband Access Program to a new section of the Rural Electrification Act. It also authorizes USDA to establish a deferral period of not shorter than the project buildout period in order to support the financial feasibility of a project.", "Section 6209 moves existing language regarding refinancing telecommunications loans to a new section of the Rural Electrification Act and amends this language. Prior law allowed a loan recipient to use any USDA telecommunications loan to refinance another USDA telecommunications loan if refinancing would support broadband deployment in rural areas. The amended language allows a loan recipient to refinance any outstanding loan that would have been used for an eligible telecommunications purpose under the Rural Electrification Act. ", "Sections 6211 and 6502 of P.L. 115-334 amend Section 922 of the Rural Electrification Act, which authorizes USDA to make loans for rural telephone service . Section 6211 authorizes telephone loans to be used to refinance other loans authorized by the Rural Electrification Act. It removes the limit that 40% or less of the telephone loan may be used to refinance other loans. Section 6502 removes the word rural from the section title of the Rural Electrification Act, amending it to read, \"Loans for telephone service.\" Section 6502 also removes the requirement for loan applicants to submit to USDA a certificate of convenience from a state regulatory body."], "subsections": []}, {"section_title": "Rural Infrastructure", "paragraphs": ["Section 6403 amends the Water and Wastewater Revolving Loan Fund Program . It increases the maximum project award amount from $100,000 to $200,000 and decreases the authorization of annual appropriations from $30 million to $15 million per year for FY2019-FY2023. Section 6404 amends the Rural Water and Wastewater Technical Assistance Program . It increases the authorization of annual appropriations to between 3%-5% of annual appropriations for Water and Waste Disposal Grants, as opposed to 1%-3% under prior law. It also amends eligible projects to include addressing the long-term sustainability of water and wastewater systems and contamination of drinking and surface water. ", "Section 6405 reauthorizes the Rural Water and Wastewater Circuit Rider Program. It also increases the authorization of annual appropriations from $20 million to $25 million per year for FY2019-FY2023. Section 6408 reauthorizes grants for water systems for rural and Native villages in Alaska . It amends the eligible grant recipients to include Native villages, as defined in the Alaska Native Claims Settlement Act, and consortiums formed pursuant to the Department of Interior and Related Agencies Appropriations Act, 1998 ( P.L. 105-83 ). Section 6408 authorizes USDA to set aside up to 2% of annual program funds for consortiums to provide training and technical assistance for water and waste disposal operation and management.", "Section 6409 reauthorizes and amends the Household Well Water Systems Grant Program . It also authorizes subgrants, as well as previously authorized subloans. It limits subloans and subgrants to a maximum of $15,000 for each water well system or decentralized wastewater system. Section 6409 amends the definition of eligible individual to include one whose household incomes does not exceed 60% of the median nonmetropolitan household income for the state or territory. It also increases the authorization of annual appropriations from $5 million to $20 million per year for FY2019-FY2023.", "Section 6407 reauthorizes the Emergency and Imminent Community Water Assistance Grant Program . The law funds this program through both a set-aside of Rural Water and Wastewater Grant funding and a standalone appropriation. Section 6407 increases the set-aside from 3%-5% to 5%-7% of annual Rural Water and Wastewater Grant funding. It also increases the authorization for the standalone appropriation from $35 million to $50 million per year for FY2019-FY2023. This provision also directs USDA to prioritize projects that address water contamination posing a threat to human health or the environment. It increases the maximum grant amount from $500,000 to $1 million for projects that respond to a significant decline in water quality or quantity.", "Section 6407 also establishes an Interagency Task Force on Rural Water Quality to examine drinking water and surface water contamination in rural communities, particularly those in close proximity to active or decommissioned military installations in the United States. The task force must be composed of representatives from certain federal agencies and state and community stakeholders. The task force is to submit a report to relevant committees and make recommendations to address water contamination issues.", "Section 6303 amends the Rural Energy Savings Program to authorize financing of off-grid and renewable energy storage systems. It also directs USDA to streamline borrower accounting requirements and to publish an annual report on the program. It increases the maximum interest rate for program loans from 3% to 5%. It also directs USDA to exclude any debt incurred under the program in the calculation of a borrower's eligibility for other loans made under the Rural Electrification Act. The provision also reauthorizes annual appropriations of $75 million per year for FY2019-FY2023. ", "Section 6501 authorizes USDA to refinance electric and telephone loans made by RUS. It also directs USDA to enter into a memorandum of understanding with the Department of Energy, under which the Department of Energy will provide technical assistance to USDA on making electric and telephone loans. Section 6505 reauthorizes USDA's ability to guarantee payments on bonds and notes issued for electrification or telephone purposes . It amends the purpose of bond or note guarantees to be for financing utility infrastructure. It also adds terms for bond or note guarantees, including a 30-year maximum length. Section 6505 removes the prohibition on guarantees for bonds or notes that will finance electricity generation. It also directs USDA to continue carrying out specified sections of the Rural Electrification Act until the full implementation of any new regulations required by the 2018 farm bill. ", "Section 6506 reauthorizes the use of certain telecommunications loans for expansion of 911 access . It also amends the eligible loan purposes to include multiuse emergency communications networks that provide critical transportation-related information services. Section 6507 authorizes USDA to make or guarantee electric loans for cybersecurity and grid security improvements . Section 6418 authorizes USDA to collect loan fees for certain loans authorized by the ConAct in such amounts as to bring down the costs of loan subsidies. It also specifies that loan fees shall be consistent with current practices in the marketplace and shall not act as a barrier to participation in the loan programs.", "The 2018 farm bill also reauthorizes additional programs through FY2023. Section 6406 reauthorizes Tribal College and University Essential Community Facilities Grants, Section 6410 reauthorizes Solid Waste Management Grants, and Section 6412 reauthorizes grants for National Oceanic and Atmospheric Administration Weather Radio Transmitters."], "subsections": []}, {"section_title": "Business and Community Development", "paragraphs": ["Section 6422 reauthorizes the Rural Microentrepreneur Assistance Program through FY2023. It eliminates mandatory funding for the program (previously $3 million per year) and decreases the authorization of appropriations from $40 million to $20 million per year for FY2019-FY2023. It also adds a minimum grant amount of 20% of the total outstanding balance of microloans made by the intermediary, subject to availability of funding. Section 6412 reauthorizes the Rural Cooperative Development Grant Program through FY2023. It also directs academic institutions conducting research under the program to include economic census data in their research on the economic impacts of cooperatives.", "Section 6427 reauthorizes appropriations of $20 million per year for the Rural Business Investment Program through FY2023. Section 6426 amends the program by revising the definitions of development venture capital and equity capital . The provision also removes the $500 maximum amount for fees, replacing it with language authorizing USDA to charge \"such fees as the Secretary [of Agriculture] considers appropriate, so long as those fees are proportionally equal for each rural business investment company.\" It also prohibits rural business investment companies from investing in entities that are not otherwise eligible for Farm Credit System financing if a Farm Credit System institution holds more than 50% of the shares of the investment company. Under prior law, this threshold was 25%. Section 6426 also prohibits USDA from requiring that an entity applying to be a rural business investment company provide investment or capital beyond the requirements listed in statute. ", "Section 6416 reauthorizes appropriations of $25 million per year through FY2023 for the Intermediary Relending Program . The provision also sets a maximum loan amount that an intermediary may make for a project at the lesser of $400,000 or 50% of the loan made by USDA to the intermediary. It adds criteria for evaluating applications, directs USDA to establish a schedule for the return of equity contributions, and directs USDA to reduce the administrative requirements on intermediaries.", "Section 6503 amends the Cushion of Credit Program to terminate all deposit authority into cushion of credit accounts effective December 20, 2018. It reduces the interest rate for borrowers from 5% per year to 4% per year for FY2021 and then to the applicable one-year Treasury rate thereafter. The provision allows a borrower to reduce the cushion of credit account balance in order to prepay loans made or guaranteed under the Rural Electrification Act. Borrowers may make these prepayments through September 2020. The provision prohibits collection of prepayment premiums from borrowers. Section 6503 also authorizes such sums as necessary from the U.S. Treasury to cover any loan modification costs.", "Section 6504 reauthorizes and amends the Rural Economic Development Loan and Grant Program . It moves language regarding the program from the section of the Rural Electrification Act authorizing the Cushion of Credit Program to a new section of the act. Section 6504 authorizes annual appropriations of $10 million per year for FY2019-FY2023. It also provides for mandatory funding, financed through the Commodity Credit Corporation, of $5 million per year for FY2022 and FY2023.", "Section 12608 reauthorizes the Rural Emergency Medical Service Training and Equipment Assistance Program and authorizes annual appropriations of such sums as necessary for FY2019-FY2023. It amends eligibility to include only emergency medical service agencies operated by a local or tribal government and tax-exempt emergency medical services agencies. It also amends eligible grant activities to include public education concerning first aid, illness prevention, and emergency preparedness. The provision amends prioritization criteria and decreases the matching requirement for grants from 25% to 10% of the grant amount. It also amends the definition of emergency medical services to include medical care delivered outside of a medical facility under emergency conditions resulting from a natural disaster.", "The 2018 farm bill also reauthorizes the following programs through FY2023. Section 6411 reauthorizes Rural Business Development Grants, Section 6413 reauthorizes Loans for Locally or Regionally Produced Agricultural Food Products, Section 6414 reauthorizes the Appropriate Technology Transfer for Rural Areas Program, and Section 6423 reauthorizes Delta Health Care Services Grants."], "subsections": []}, {"section_title": "Definition of Rural", "paragraphs": ["The 2018 farm bill includes three provisions that amend the definition of rural for certain RD programs. USDA uses population thresholds to determine whether an area is rural for the purposes of RD programs. Rural population thresholds vary across RD programs. Section 6301 amends the ConAct to direct USDA to exclude individuals incarcerated on a long-term or regional basis and the first 1,500 individuals residing on a military base when determining whether an area is a rural area for certain RD programs . It also amends the Rural Electrification Act and the Food, Agriculture, Conservation, and Trade Act of 1990 to exclude the same populations when determining whether an area is a rural area for certain RD broadband programs .", "Section 6305 amends the definition s of rural and rural area in the Housing Act of 1949 . The amended definition allows any area classified as rural or a rural area prior to 1990 to remain so until the next decennial census, if the area has a population between 10,000 and 35,000 and has \"a serious lack of mortgage credit for lower and moderate-income families.\" Section 6402 amends the definition of rural for determining eligibility for guaranteed loans under the Water and Waste Disposal and the Community Facilities programs. It increases the population threshold for guaranteed loans to 50,000 or fewer. Under prior law, the population thresholds were 10,000 or fewer for Water and Waste Disposal Guaranteed Loans and 20,000 or fewer for Community Facilities Guaranteed Loans. Section 6402 also directs USDA to prioritize guaranteed loan applications for areas with a population of 10,000 or fewer for the Water and Waste Disposal Program and 20,000 or fewer for the Community Facilities Program. The population thresholds for grant and direct loan eligibility remain unchanged at 10,000 or fewer for the Water and Waste Disposal Program and 20,000 or fewer for the Community Facilities Program."], "subsections": []}, {"section_title": "Regional Development", "paragraphs": ["Section 6401 amends the Strategic Economic and Community Development provision of the ConAct. This provision allows USDA to prioritize funding under certain RD programs for projects that support multijurisdictional strategic community development plans. Section 6401 expands the provision to apply to all RD programs as determined by the Secretary of Agriculture. It increases the portion of funding USDA may reserve for projects under this section from 10% to 15% of program funding made available for a fiscal year. Section 6401 also authorizes annual appropriations of $5 million for FY2019-FY2023 for technical assistance to rural communities in developing strategic community investment plans. ", "Sections 6425 and 6304 reauthorize and amend federal regional commissions and authorities. Section 6425 reauthorizes the Delta Regional Authority through October 1, 2023. It also reauthorizes annual appropriations of $30 million per year for the authority for FY2019-FY2023. Section 6304 reauthorizes three federal regional commissions \u00e2\u0080\u0094the Southeast Crescent Regional Commission, the Southwest Border Regional Commission, and the Northern Border Regional Commission\u00e2\u0080\u0094and increases authorized appropriations for each commission from $30 million to $33 million per year through FY2023. Federal statute directs the commissions to set aside 40% of grant funding in a given fiscal year for certain eligible activities, including transportation, telecommunications, or other public infrastructure. Section 6304 adds promoting development of renewable and alternative energy sources as an eligible activity for set-aside funding. The 2018 farm bill did not reauthorize the Northern Great Plains Regional Authority .", "Section 6304 also authorizes a new State Capacity Building Grant Program for the Northern Border Regional Commission . Congress authorizes the commission to provide grants to Maine, New Hampshire, New York, or Vermont for economic development activities. An eligible state must submit to the commission an annual work plan that includes the purpose of the grant. Section 6304 authorizes appropriations of $5 million per year for FY2019-FY2023 for the grant program. ", "Section 6415 reauthorizes the Rural Economic Area Partnership (REAP) Program through FY2023. USDA has established REAP Zones to address critical issues related to economic growth, employment, and isolation. REAP Zones typically consist of multiple counties within a state and receive technical assistance and funding from USDA for strategic planning and community development activities. Section 6420 reauthorizes the National Rural Development Partnership through FY2023. This partnership, coordinated by USDA, includes state rural development councils and a national coordinating committee. State rural development councils facilitate collaboration among local government, private sector, and nonprofit entities in planning and implementing programs related to rural development. The national coordinating committee oversees and provides support for state rural development council activities."], "subsections": []}, {"section_title": "Other Provisions", "paragraphs": ["Section 12407 amends the Federal Crop Insurance Reform and Department of Agriculture Reorganization Act of 1994 ( P.L. 103-354 ) to reestablish the Under Secretary of Agriculture for Rural Development as a permanent position within USDA. USDA eliminated the Under Secretary position in a 2017 reorganization, replacing it with an Assistant to the Secretary for Rural Development who reported directly to the Secretary of Agriculture and was not a Senate-confirmed position. The Under Secretary position reports to the Deputy Secretary of Agriculture and requires Senate confirmation. ", "USDA asserted that the 2017 reorganization \"recognizes and promotes the importance of rural development by placing it under the direct oversight of the Secretary.\" However, some stakeholder organizations opposed eliminating the Under Secretary position. For example, a letter to the House and Senate Agriculture Appropriations subcommittees signed by 578 organizations stated that RD \"needs the time and attention of a management team led by an Under Secretary who is empowered to direct and administer rural development programs and field staff.\"", "Section 6417 grants the Secretary of Agriculture and the Secretary's designees access to certain information from the Department of Health and Human Services in order to verify income for individuals participating in certain Rural Housing Service programs . Prior law granted the HUD Secretary access to certain information to verify income of participants for certain HUD housing programs. Section 6417 allows the Secretary of Agriculture and the Secretary's designees access to the same information, subject to the same requirements, as the HUD Secretary.", "Sections 6601 through 6603 repeal certain rural development programs. Section 6602 repeals the Rural Telephone Bank. Section 6603 repeals all sections of the Launching our Communities' Access to Local Television Act of 2000 (Title X of H.R. 5548 , as enacted by Section 1(a)(2) of P.L. 106-553 ) except Section 1008 of the act. Section 6601 of the 2018 farm bill repeals the following programs, which were previously authorized in the ConAct or the Rural Electrification Act:", "Multijurisdictional regional planning organizations (Section 306(a)(23) of the ConAct), Grants to broadcasting systems (Section 310B(f) of the ConAct), Rural telework organizations (Section 379 of the ConAct), Historical barn preservation (Section 379A of the ConAct), Grants to train farm workers in new technologies and to train farm workers in specialized skills necessary for high-value crops (Section 379C of the ConAct), Grants to the Delta Regional Agricultural Economic Development Program (Section 379D of the ConAct), Grants for expansion of employment opportunities for individuals with disabilities in rural areas (Section 379F of the ConAct), Regional rural collaborative investment program (Subtitle I of the ConAct), Certain electric and telephone loans (Section 314 of the Rural Electrification Act), and The National Center for Rural Telecommunications Assessment (Section 602 of the Rural Electrification Act)."], "subsections": []}, {"section_title": "Technical Corrections", "paragraphs": ["Sections 6701 and 6702 make technical corrections to the ConAct and Rural Electrification Act. Section 6701 amends the ConAct to correct the reference to the definition of Indian tribe for the Community Facilities Loan and Grant Program. It also clarifies the eligible activities for Rural Business Development Grants. Further, Section 6701 amends the ConAct to include Alabama as a participating state in the Delta Regional Authority. Congress initially made this amendment in the Consolidated Appropriations Act, 2001 ( P.L. 106-554 , \u00c2\u00a71(a)(4)). However, the amendment did not take effect at the time because it referred to the incorrect authorizing legislation. Section 6701 of the 2018 farm bill directs the correction to take effect as if included in P.L. 106-554 . Section 6702 corrects misspellings in the Rural Electrification Act."], "subsections": [{"section_title": "Appendix. Comparison of Rural Development Provisions in Titles VI and XII of the 2018 Farm Bill (P.L. 115-334) with Prior Law", "paragraphs": [], "subsections": []}]}]}]}]}}
{"id": "R45769", "title": "The Impeachment Process in the House of Representatives", "released_date": "2019-11-14T00:00:00", "summary": ["Under the U.S. Constitution, the House of Representatives has the power to formally charge a federal officer with wrongdoing, a process known as impeachment. The House impeaches an individual when a majority agrees to a House resolution containing explanations of the charges. The explanations in the resolution are referred to as \"articles of impeachment.\" After the House agrees to impeach an officer, the role of the Senate is to conduct a trial to determine whether the charged individual should be removed from office. Removal requires a two-thirds vote in the Senate.", "The House impeachment process generally proceeds in three phases: (1) initiation of the impeachment process; (2) Judiciary Committee investigation, hearings, and markup of articles of impeachment; and (3) full House consideration of the articles of impeachment.", "Impeachment proceedings are usually initiated in the House when a Member submits a resolution through the hopper (in the same way that all House resolutions are submitted). A resolution calling for the impeachment of an officer will be referred to the Judiciary Committee; a resolution simply authorizing an investigation of an officer will be referred to the Rules Committee. In either case, the committee could then report a privileged resolution authorizing the investigation. In the past, House committees, under their general investigatory authority, have sometimes sought information and researched charges against officers prior to the adoption of a resolution to authorize an impeachment investigation.", "Impeachment proceedings could also be initiated by a Member on the floor. A Member can offer an impeachment resolution as a \"Question of the Privileges of the House.\" The House, when it considers a resolution called up this way, might immediately vote to refer it to the Judiciary Committee, leaving the resolution in the same status as if it had been submitted through the hopper. Alternatively, the House might vote to table the impeachment resolution. The House could also vote directly on the resolution, but in modern practice, it has not chosen to approve articles of impeachment called up in this fashion. Instead, the House has relied on the Judiciary Committee to first conduct an investigation, hold hearings, and report recommendations to the full House.", "Committee consideration is therefore typically the second stage of the impeachment process. In recent decades, it has been more common than not that the Judiciary Committee used information provided from another outside investigation. The committee might create a task force or a subcommittee to review this material and collect any other information through subpoenas, depositions, and public hearings. Impeachment investigations are governed by the standing rules of the House that govern all committee investigations, the terms of the resolution authorizing the investigation, and perhaps additional rules adopted by the committee specifically for the inquiry.", "If the committee determines that impeachment is warranted, it will mark up articles of impeachment using the same procedures followed for the markup of other legislation. If the Judiciary Committee reports a resolution impeaching a federal officer, that resolution qualifies for privileged consideration on the House floor; its consideration is the third stage of the impeachment process. The resolution can be called up at the direction of the committee and considered immediately under the hour rule in the House. If called up this way, amendments could be precluded if a majority voted to order the previous question. A motion to recommit, with or without instructions, is in order but is not subject to debate. Alternatively, the House might alter these procedures by unanimous consent to, for example, set a longer time for debate or to allow brief debate on a motion to recommit. A resolution reported from the Rules Committee could also be used to structure floor debate.", "If the House approves the impeachment resolution, it will appoint managers to present and argue its case against the federal officer in front of the Senate."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["The U.S. Constitution establishes a two-step process for the House and Senate to remove federal officials\u00e2\u0080\u0094including the President, Vice President, judges, and other civil officers\u00e2\u0080\u0094for \"Treason, Bribery, or other high Crimes and Misdemeanors.\" Under the Constitution, the House alone has the power to formally charge\u00e2\u0080\u0094that is, impeach\u00e2\u0080\u0094a federal official. A House majority can accomplish this by adopting articles of impeachment, which are effectively written accusations (similar to an indictment in ordinary criminal proceedings). The Senate alone has the power to try an impeachment and render a verdict regarding whether the individual should be removed from office and possibly barred from holding future office. Two-thirds of Senators voting must agree to convict and remove an official from office. The Senate could also separately decide to disqualify an officer from holding future federal office. Disqualification requires only a majority vote.", "The procedures the House has developed for accomplishing this constitutional responsibility are described below. The House has used this process mostly to impeach federal judges, although the House has also impeached two Presidents and one Cabinet official. The Senate has voted to remove eight of these officials, and all of them were federal judges.", "The summary of the rules and procedures the House might use to impeach a federal official presented here is drawn from published sources of congressional rules and precedents, as well as the public record of past impeachment proceedings. It relies as well upon in-depth research conducted by Betsy Palmer and Susan Navarro Smelcer, formerly of CRS, on the practice in both chambers with respect to the impeachment of federal judges. This report provides an overview of the procedures and should not be treated or cited as an authority on congressional proceedings. Consultation with the Parliamentarian of the House is always advised regarding the possible application of rules and precedents.", "For more information on impeachment, including a discussion of which federal officers are subject to impeachment and possible grounds for impeachment, see CRS Report R44260, Impeachment and Removal , by Jared P. Cole and Todd Garvey."], "subsections": []}, {"section_title": "Overview", "paragraphs": ["The impeachment process may be initiated as the result of various actions and events, including the receipt and referral of information from an outside source, investigations by congressional committees under their general authority, or the introduction of articles of impeachment in the form of a House resolution. ", "Regardless of what might instigate an inquiry into whether impeachment is warranted, there are normally three formal stages of congressional action. First, an impeachment inquiry is authorized, and this is most often accomplished through the adoption of a simple resolution (H.Res.___) directing the Judiciary Committee to investigate an official. Second, the committee conducts its investigation, prepares articles of impeachment, and reports them to the House. Third, the full House considers the articles of impeachment and, if they are adopted, appoints managers from the committee to present the articles in the Senate. As discussed in detail below, the House relies upon many of its usual procedures to consider the resolution explicitly initiating an investigation, conduct the investigation, and consider the articles of impeachment."], "subsections": []}, {"section_title": "Initiation of the Process", "paragraphs": [], "subsections": [{"section_title": "Introduction of a Simple Resolution", "paragraphs": ["A Member can initiate an impeachment process by drafting a simple resolution and placing it in the House hopper, the way all simple resolutions are submitted to the House. If the resolution directly calls for an impeachment, it will be referred to the Committee on the Judiciary. If it instead calls for an investigation of an official by a standing committee or proposes the creation of a special committee for that purpose, the resolution will be referred to the Committee on Rules, which has jurisdiction over the authorization of committee investigations. No special procedures restrict when such a resolution can be submitted, although historically they have been submitted relatively infrequently. "], "subsections": []}, {"section_title": "Raising a Question of the Privileges of the House", "paragraphs": ["A resolution calling for an impeachment can also be offered on the floor by any Member as a question of the privileges of the House instead of being submitted through the hopper. To do so, a Member gives notice of his or her intent to call up such a resolution. The Speaker must then schedule a time to consider the resolution within two legislative days. (The majority and the minority leader do not need to give notice; if either leader raises a qualifying question of privileges of the House on the floor, it is considered immediately.) The full House could dispose of an impeachment resolution raised in this fashion in any number of ways, including by referring it to the Judiciary Committee instead of by voting on the resolution directly. The House could also agree to a motion to table the resolution and thereby dispose of it permanently and adversely. ", "Impeachment has been attempted using this method in recent years, but none of the attempts has resulted in approval of articles of impeachment. In cases in which an official has been impeached, the House has always chosen to conduct an investigation first. A resolution offered from the floor that proposed a committee investigation, instead of directly impeaching an officer, would not give rise to a proper question of the privileges of the House."], "subsections": []}, {"section_title": "Outside and Preliminary Investigations", "paragraphs": ["Material related to the conduct of a federal official might reach the House and be referred to committee prior to the adoption of a resolution directing a committee to conduct an investigation. Historically, this has included petitions and materials from citizens. In addition, standing committees, under their general investigatory authority, can seek information and research charges against officers prior to the approval of a resolution to authorize an impeachment investigation. ", "With respect to federal judges, the Judicial Conduct and Disability Act of 1980 established a process within the judicial branch for responding to complaints about judges. Findings from those investigations could result in the Judicial Conference of the United States informing the House that the impeachment of a judge may be warranted. A letter reporting that the Judicial Conference had reached such a determination would be referred to the Judiciary Committee. Recent impeachments of federal judges were initiated by resolutions submitted after (or near the time of) the receipt of such a determination from the Judicial Conference. ", "In the last presidential impeachment, a communication from the independent counsel appointed to investigate President Bill Clinton was referred to the Committee on the Judiciary pursuant to an original resolution reported by the Rules Committee. The resolution also directed the Judiciary Committee to review the information from the independent counsel \"to determine whether sufficient grounds exist to recommend to the House that an impeachment inquiry be commenced.\" The House, in this case, later adopted a resolution reported by the Judiciary Committee to authorize an investigation by the committee. "], "subsections": []}]}, {"section_title": "Authorization of Committee Investigation", "paragraphs": ["If a resolution authorizing an impeachment investigation was introduced through the hopper and referred to the Rules Committee, that committee would then choose whether to report the resolution to the full House for consideration. If reported, the resolution would be privileged, which means a Member could call it up on the floor, though only at the direction of the Rules Committee. The resolution would then be considered under the hour rule, a method of considering legislation in the House that permits Members to speak for up to an hour\u00e2\u0080\u0094but also allows a numerical majority to vote to end debate and limit the opportunity for amendment. Specifically, the Member who called up the resolution would be recognized for one hour. Debate on the resolution would likely last for that hour or even less, because a majority in the House could agree to order the previous question on the resolution. When the House votes to order the previous question, it ends debate and any opportunity for amendment. A motion to recommit the resolution with or without instructions could be offered after the previous question was ordered, but it would not be debatable. The House could also, however, choose to consider the resolution under any of its other regular processes, including suspension of the rules (requiring a two-thirds vote for passage), a rule from the Rules Committee (requiring only a majority vote), or unanimous consent.", "The two most recent resolutions adopted by the House to authorize an impeachment investigation were taken up by unanimous consent at the request of the Rules Committee chair. Rather than convene a committee meeting to order the resolutions reported with a quorum present, the chair asked unanimous consent that the House discharge the Rules Committee and agree to the resolution. Both of these resolutions concerned federal judges, and they were agreed to without debate. ", "In the three previous instances of judicial impeachments, however, the House did not approve a resolution explicitly authorizing an impeachment inquiry. The Rules of the House since 1975 have granted committees the power to subpoena witnesses and materials, administer oaths, and meet at any time within the United States\u00e2\u0080\u0094powers that were previously granted through resolutions providing blanket investigatory authorities that were agreed to at the start of a Congress or through authorizing resolutions for each impeachment investigation. In two of the three recent cases, the House agreed to separate resolutions to allow committee counsel to take affidavits and depositions. ", "If the House does approve an authorizing resolution, then in addition to the Rules Committee, the Judiciary Committee can report an original resolution authorizing an impeachment investigation if impeachment resolutions have been referred to the committee. In the case of the most recent authorization of a presidential impeachment inquiry, the Judiciary Committee reported such a resolution, and the full House debated it. As mentioned above, pursuant to a resolution agreed to by the House, the Judiciary Committee reviewed material submitted by an independent counsel appointed to investigate President Bill Clinton. The Judiciary Committee then reported a resolution ( H.Res. 581 , 105 th Congress) authorizing an investigation into whether sufficient grounds existed for the impeachment of the President. The resolution was privileged for immediate consideration. The chair of the Judiciary Committee called up the resolution and asked unanimous consent that instead of being recognized for the normal one hour, his time be extended to two hours, half of which he would yield to the ranking member of the Judiciary Committee for purposes of debate only. After debate under the terms of this unanimous consent agreement, the House ordered the previous question on the resolution by voice vote, ending further debate of the resolution. A minority-party Representative offered a motion to recommit, and, pursuant to a unanimous consent agreement, the motion was debated for 10 minutes before being defeated on a roll call vote. As noted, absent this unanimous consent agreement, the motion to recommit would not have been debatable. The resolution was then agreed to by a record vote, 258-176. ", "In the 93 rd Congress (1973-1974), multiple resolutions to impeach President Richard M. Nixon were introduced and referred to the Judiciary Committee. The committee began an examination of the charges against the President under its general investigatory authority. The House also approved a resolution, reported by the House Rules Committee, providing additional investigation authority that did not specifically mention impeachment. In late 1973, the House agreed to another resolution that provided for additional expenses of the committee, and floor debate and the report from the Committee on House Administration indicate that the funds were intended in part for the impeachment inquiry. On February 1, 1974, the Judiciary Committee reported an original resolution ( H.Res. 803 ; H.Rept. 93-774) mandating an investigation to determine whether the House should impeach President Nixon and continuing the availability of funds. On February 6, 1974, the chairman of the Judiciary Committee called up the resolution as a question of privilege. It was debated under the hour rule, with the chairman yielding time to other Members for purposes of debate only. The Judiciary Committee chair moved the previous question before any other Member was recognized to control time under the hour rule, and the House ordered the previous question 342-70. The resolution authorizing the investigation was then agreed to, 410-4. "], "subsections": []}, {"section_title": "Committee Action", "paragraphs": ["The standing rules of the House that affect committee investigations apply as well to impeachment investigations by the Judiciary Committee. A resolution authorizing an impeachment investigation might place additional limitations, or grant additional authorities, to the committee. In addition, the committee itself might adopt rules specific to an impeachment inquiry. It has not been unusual for the Judiciary Committee to authorize subcommittees or to create task forces to conduct impeachment investigations, and in that case the full committee would establish the authority of the subcommittee or task force. "], "subsections": [{"section_title": "Investigation and Hearings", "paragraphs": ["Under House Rule XI, committees have the authority to subpoena persons or written records, conduct hearings, and incur expenses (including travel expenses) in connection with investigations. Rule XI, clause 2(h)(2), requires two committee members to take testimony or receive evidence. In past impeachment proceedings, the House has agreed to resolutions authorizing committee staff to take depositions without Members present, and the Judiciary Committee has agreed to internal guidelines for the mode and conduct of depositions. In the 116 th Congress, pursuant to H.Res. 6 , the chairs of all standing committees (except the Rules Committee) as well as the Permanent Select Committee on Intelligence may order the taking of depositions by committee counsel. In modern practice, the federal official under investigation is generally allowed certain rights, including the right to be represented by counsel.", "If a committee were to conduct hearings, these proceedings would generally be governed by House and committee rules (and any specific rules agreed to in the authorizing resolution). Under House Rule XI, notice of hearings must be provided one week in advance, and members of the committee are guaranteed the right to question witnesses under the five-minute rule. ", "Hearings are generally public, but they could be closed pursuant to regular House rules that allow the committee to agree, by holding a vote in public session with a majority of the committee present, to close a hearing for three specific reasons: the evidence or testimony would endanger national security, compromise sensitive law enforcement information, or would tend to \"defame, degrade, or incriminate the witness.\" Again, the resolution authorizing an impeachment investigation could alter these procedures.", "The Judiciary Committee conducted multiple public hearings in connection with the impeachment of federal judges in 2009. The committee had created a task force to investigate whether two federal judges should be impeached. The task force conducted hearings during which they heard from a variety of witnesses, including law professors with expertise on impeachable offenses, individuals with information about the crimes the judges were accused of committing, and task force attorneys who reported on the status of the investigation. ", "In 1998, the Judiciary Committee held four hearings in connection with the impeachment of President Clinton. The committee received testimony from 19 experts on the history of impeachment at one hearing and from the independent counsel at another. Various witnessed testified at a third hearing on the consequences of perjury and related crimes. Over two days of hearing in early December 1998, at the request of the Administration, the committee also heard testimony from White House counsel. ", "In recent decades, it has been more common than not that a congressional committee used information provided from another outside investigation. In four of the five judicial impeachment investigations undertaken by the Judiciary Committee since 1980, \"the accused judge had either been subject to a federal criminal trial or pled guilty to a federal criminal charge prior to the initiation of impeachment proceedings in the House.\" In the case of the impeachment of President Bill Clinton, as mentioned above, the results of an independent counsel investigation alleging impeachable offenses were submitted to the House and referred to the Judiciary Committee. "], "subsections": []}, {"section_title": "Markup of Articles of Impeachment", "paragraphs": ["A committee charged with investigating impeachable offences might, after conducting its investigation and reviewing any evidence submitted from other investigations, meet to consider articles of impeachment, and such a meeting is referred to as a markup. The articles of impeachment are in the form of a simple resolution (H.Res.___). The procedures for considering and reporting out an impeachment resolution are the same as those used for other legislation. Notice must generally be given of the proposed meeting, and the text of the articles of impeachment must generally be available 24 hours in advance of the meeting, although House Rule XI, clause 2 (g)(3)(B), provides some exceptions to these requirements. Members of the committee could expect an opportunity to offer amendments to the articles of impeachment, which would be debated under the five-minute rule. Importantly, a majority of the committee must be physically present at the time of the vote to report. Alternatively, after an investigation, the committee might also choose to report a recommendation that impeachment was not warranted.", "In the case of the two most recent presidential impeachments, the Judiciary Committee held a public, televised markup of the impeachment articles for several days. A motion to recommend a resolution to impeach President Nixon was considered by the Judiciary Committee for six days at the end of July 1974. The committee agreed to special procedures for the markup, such as a 10-hour period for \"general debate,\" and each article of impeachment was considered separately for amendment. The resolution included two articles of impeachment, which were both agreed to, as amended. A third article of impeachment was proposed as an amendment and agreed to, and two additional articles offered as amendments were rejected. The President resigned before the committee reported an impeachment resolution to the full House.", "In 1998, the Judiciary Committee considered articles impeaching President Clinton for three days in December under procedures modelled after those used in 1974. A unanimous consent agreement provided that the four articles of impeachment included in the chairman's draft resolution would be debated, amended, and voted on separately. Each member of the committee was allotted 10 minutes for an opening statement. The committee considered and agreed to an amendment to Article I and an amendment to Article IV. All four articles were agreed to, and a resolution ( H.Res. 611 , 105 th Congress) was reported to the House. A written report was prepared and several Members submitted additional, minority, and dissenting views, a right protected under House Rule XI, clause 2(l), if notice of intent is given at the time a committee approves a matter."], "subsections": []}, {"section_title": "Member Access to Information Prior to Full House Consideration", "paragraphs": ["Under House Rule XI, clause 2(e), committee records are the property of the House, and all Members can have access to them. The committee may, however, place reasonable restrictions on where, when, and how Members might access the records. In addition, access to committee investigatory material might be limited, at least for a time, while the committee determines if it qualifies as a committee record under House Rule XI, and, if so, if release is prohibited pursuant to other House rules. A committee might also take actions to protect the confidentiality of investigative materials.", "The primary mechanism by which an investigating committee can and has chosen to limit access to inquiry information is through the use of executive\u00e2\u0080\u0094or closed\u00e2\u0080\u0094session. Under House Rule XI, clause 2(g)(1), a committee can operate in executive session by majority vote, a quorum being present, to restrict attendance at a business session to only committee members or others authorized by the committee. Similarly, a committee can receive evidence or testimony as if in executive session, which, under Rule XI, clause 2(k)(7), may only be released through authorization by the committee. Even when access to information received in executive session is granted to Members, the material may be subject by the committee to further conditions under which it may be viewed. In addition, the copying, releasing, or taking notes on materials received in executive session is strictly prohibited without permission of the committee. Executive sessions were periodically used during the inquiries into Presidents Nixon and Clinton.", "Further restrictions on access to information can be adopted by the House or the investigating committee. As previously mentioned, the Judiciary Committee adopted special procedures by unanimous consent in 1974 that, among other provisions, limited access to information to select individuals within the committee and laid out rules for staff. As a precursor to the formal impeachment inquiry of President Clinton, the House agreed to H.Res. 525 during the 105 th Congress directing the Judiciary Committee to review the independent counsel's report to Congress to determine if impeachment proceedings were warranted. Section 4 of the resolution limited access to executive session material to the Judiciary Committee and employees designated by the chairman and ranking member\u00e2\u0080\u0094a more strict requirement than called for under House Rule XI. Notably, the resolution also made 445 pages of the independent counsel's report immediately available to the public and set a deadline by which the rest of the report would be released from its executive session status based on recommendations by the committee. Prior to the adoption of H.Res. 525 , House leadership reportedly discussed at length the issue of access to the independent counsel report by the public, the President, and Members of the House."], "subsections": []}]}, {"section_title": "Consideration of Articles of Impeachment on the House Floor", "paragraphs": ["Although floor consideration of an impeachment resolution largely resembles floor consideration of legislation, there is one difference regarding disorderly language: Under regular House procedures, it is not in order to use language that is personally offensive toward the President, which would include accusations that the President committed a crime or allusions to unethical behavior. During consideration of an impeachment resolution, however, remarks in debate can refer to the alleged misconduct of the President that is under consideration by the House. Members should still abstain from other language \"personally offensive\" to the President. "], "subsections": [{"section_title": "Reported by the Judiciary Committee", "paragraphs": ["Articles of impeachment reported by the Judiciary Committee are privileged for immediate consideration on the House floor. The chair of the committee (or a designee) could call up the resolution containing the articles at any time other business is not pending, and the resolution would be considered immediately under the hour rule. Under this procedure, a majority of the House controls the length of debate and can prevent amendment. After some debate, the majority could vote to order the previous question, which, as mentioned above, brings the House to an immediate vote on the main question: whether to agree to the impeachment resolution, in this case. Passage is by simple majority vote.", "A motion to recommit the impeachment resolution, with or without instructions, would be in order after the previous question was ordered but before the vote on the resolution. This motion, however, would not be subject to debate. As is always the case, any instructions in the motion to recommit must be germane to the resolution. ", "In the two most recent instances in which the House considered an impeachment resolution of a federal judge, the resolution was called up as privileged and debated for an hour, and no Member offered a motion to recommit. In both cases, a Member demanded a division of the resolution, which allowed the House to vote separately on each article of impeachment.", "When the House considered a resolution ( H.Res. 611 , 105 th Congress) to impeach President Clinton, the reported resolution was called up as a question of privilege. A unanimous consent request propounded by the majority floor manager that provided for four hours of debate on the resolution, equally divided, and 10 minutes of debate on a motion to recommit was objected to. The House then considered the resolution for several hours, as no Member moved the previous question, until another unanimous consent agreement was propounded and agreed to. This agreement allowed debate to continue until 10 p.m. that night and provided for an additional hour of debate the next day, a Saturday. It further provided that if a motion to recommit with instructions was offered, it would be debatable for 10 minutes. ", "On the second day of consideration, after the previous question was ordered, a Member moved to recommit the impeachment resolution with instructions. The instructions proposed an amendment to censure the President. The Speaker, however, ruled that the amendment in the instructions was not germane. The House sustained the ruling of the Speaker by voting to table an appeal. A Member demanded a division of the resolution, and the House agreed to two of the four articles of impeachment under consideration. ", "In the case of the Nixon impeachment proceedings, the full House never acted on a resolution of impeachment. As noted, President Nixon resigned before the Judiciary Committee reported its recommendation that the President be impeached. The House approved a resolution using the suspension of the rules procedure acknowledging that the Judiciary Committee had approved articles of impeachment, commending the members of the Judiciary Committee for their work, and providing for the printing of its report. ", "Rather than considering an impeachment resolution under the hour rule, the House could also choose to consider an impeachment resolution under the terms of a resolution reported by the Rules Committee (a special rule). This process would operate in the same two-step way it does for major legislation in the House. The House would first debate the Rules Committee-reported resolution setting the terms for consideration of the impeachment resolution. The rule from the Rules Committee could provide for a particular length of debate, structure any amendment process, and potentially structure voting to allow each article to be voted on separately. It could preclude motions that would otherwise be in order under the hour rule, such as a motion to table the resolution. After the House agreed to the rule, it would then consider the impeachment resolution under the terms established by that rule.", "Finally, consideration and debate of an impeachment resolution could be governed by a unanimous consent agreement. The House might take up the resolution by unanimous consent or call it up as a question of privilege and change the terms of its consideration by unanimous consent, such as was described above in the case of the Clinton impeachment resolution. A unanimous consent agreement can structure consideration just like a special rule, but it is agreed to without a vote and usually with little or no floor debate. The major difference is that, procedurally, it is necessary for all Representatives to support a unanimous consent agreement, while only a simple majority is necessary to agree to a special rule. The fact that the same terms for consideration could be established through a rule can influence unanimous consent agreements."], "subsections": []}, {"section_title": "Offered on the Floor as a Question of the Privileges of the House", "paragraphs": ["As described in an earlier section of this report, any Member of the House could also offer on the floor a resolution containing articles of impeachment as a \"question of the privileges of the House.\" Taking this action will not necessarily result in a direct vote on the articles of impeachment or even debate of the articles, because the House could choose instead to take a different action on the resolution, such as to refer it to the Judiciary Committee. ", "To raise a question of the privileges of the House, a Member would take the following steps:", "Draft a resolution containing articles of impeachment. Consult with the Office of the House Parliamentarian to ensure that the resolution qualifies as a question of the privileges of the House. On the House floor, rise to give notice of intent to offer a question of the privileges of the House. The Member giving notice reads the draft resolution in full on the floor. (The majority and minority leader do not need to give notice; a question of the privileges of the House raised by either leader would be considered immediately.) The Speaker is required to schedule consideration of the question of the privileges of the House within two legislative days. At a time scheduled by the Speaker, rise to offer the resolution as a question of the privileges of the House. The Speaker will rule as to whether the resolution constitutes a proper question of the privileges of the House. If it does, the resolution will be assigned a number and will be pending before the House for consideration.", "A question of the privileges of the House is considered under the hour rule. Often, the House votes to dispose of such resolutions by referring them to committee or by tabling them. The House could also order the previous question to end debate on the resolution and then vote directly on it. However, the House has never impeached an officer without a committee investigation. "], "subsections": []}]}, {"section_title": "Appointment and Role of House Managers in the Senate Trial", "paragraphs": ["After the House has agreed to articles of impeachment, it then appoints Members to serve as managers in the Senate trial. In recent practice, the House has appointed managers by agreeing to a House resolution. The House also, by resolution, informs the Senate that it has adopted articles of impeachment and authorizes the managers to conduct the trial in the Senate. The House could agree to separate resolutions or, as has been the case with recent impeachments, to a single resolution accomplishing each of these purposes. Such resolutions are privileged, and sometimes they have been taken up and agreed to by unanimous consent. ", "After the Senate receives the resolution(s) from the House, the Senate informs the House when the managers can present the articles of impeachment to the Senate. At the appointed time, the House managers read the resolution authorizing their appointment and the resolution containing the articles of impeachment on the Senate floor and then leave until the Senate invites them back for the trial. At the trial, the House managers, who might be assisted by outside counsel, present evidence against the accused and could be expected to respond to the defense presented by the accused (or his or her counsel) or to questions submitted in writing by Senators. ", "A full description of Senate procedures in an impeachment trial is beyond the scope of this report. The Senate has a special set of rules\u00e2\u0080\u0094agreed to in the 19 th century\u00e2\u0080\u0094that provide some guidance for impeachment trial proceedings. However, in modern practice the Senate has agreed to alternative or supplemental procedures both for judicial impeachment trials and the impeachment trial of President Clinton. ", "The 19 th -century impeachment trial rules seemingly require a series of actions by the Senate upon the receipt of articles of impeachment from the House. The Senate, however, just like the House, can set aside its rules by, for example, agreeing to a simple resolution. Under the regular rules of the Senate that govern consideration of legislation, such a resolution would not be subject to any debate restrictions. As a result, in that circumstance, a cloture process, requiring the support of three-fifths of the Senate, would be necessary to reach a vote on the resolution. Once the Senate has convened as a Court of Impeachment, however, the impeachment trial rules, not the regular rules of the Senate, will apply. The Senate impeachment trial rules and related precedents restrict debate on many resolutions and motions. The debate restrictions could allow a simple majority to determine some procedures for responding to articles of impeachment sent from the House."], "subsections": []}]}}
{"id": "R45916", "title": "The TIGER/BUILD Program at 10 Years: An Overview", "released_date": "2019-09-16T00:00:00", "summary": ["The Transportation Investments Generating Economic Recovery (TIGER) grant program is a discretionary program providing grants to surface transportation projects on a competitive basis, with recipients selected by the U.S. Department of Transportation (DOT). It originated in the American Recovery and Reinvestment Act of 2009 (ARRA; P.L. 111-5 ), where it was called \"national infrastructure investment\" (as it has been in subsequent appropriations acts); in FY2018 the program was renamed the Better Utilizing Investments to Leverage Development (BUILD) program.", "Although the program's stated purpose is to fund projects of national, regional, and metropolitan area significance, in practice its funding has gone more toward projects of regional and metropolitan-area significance. In large part this is a function of congressional intent, as Congress has directed that the funds be distributed equitably across geographic areas, between rural and urban areas, and among transportation modes, and has set relatively low minimum grant thresholds (currently $5 million for urban projects, $1 million for rural projects). The average grant size has been in the $10 million to $15 million range; such sums are only a small portion of the funding requirements for projects of national significance.", "The TIGER/BUILD program is not a statutory program. Congress has continued the program by providing funding for it each year in the annual DOT appropriations act. It is a popular program in part because for most of its existence it has been one of a few transportation grant programs that offer regional and local governments the opportunity to apply directly to the federal government for funding, and one of a few that offer states additional funding beyond their annual highway and public transportation formula funding. The program is heavily oversubscribed; over the 10-year period FY2009-F2018, the amount of funding applied for totaled around 24 times the amount of money available for grants.", "The U.S. Government Accountability Office (GAO) has reported that, while DOT has selection criteria for the TIGER grant program, it has sometimes awarded grants to lower-ranked projects while bypassing higher-ranked projects without explaining why it did so, raising questions about the integrity of the selection process. DOT has responded that while its project rankings are based on transportation-related criteria, such as safety and economic impact, it must sometimes select lower-ranking projects over higher-ranking ones to comply with other selection criteria established by Congress, such as geographic balance and a balance between rural and urban awards.", "Although Congress established the parameters of the program, since the grantees are selected by DOT the Administration controls the grant process. The Obama Administration distributed grants relatively evenly across modes and population areas. The Trump Administration has prioritized grants to road projects in rural areas; in the FY2018 round, 69% of the grant funds went to rural areas. DOT also announced that it would favor projects that provided new nonfederal sources of revenue (\"better utilizing investments to leverage development\"). Congress subsequently rejected that initiative, directing DOT not to favor projects that provided additional revenue or even projects that requested a low federal share. Congress also capped the share of funding that can go to rural areas in response to the Administration's tilt toward awarding grants to rural areas.", "DOT has published two reports on the topic of the performance of projects that received TIGER grants. The reports note that measuring the performance of the array of projects in several modes eligible for TIGER grants is challenging. DOT has required grantees to develop performance plans and measures for each project, beginning before the construction of the project and continuing for years. The reports themselves largely consist of case studies of several projects."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Background", "paragraphs": ["The Transportation Investments Generating Economic Recovery (TIGER) grant program is a discretionary program providing grants to projects of national, regional, or metropolitan-area significance in various surface transportation modes on a competitive basis, with recipients selected by the federal Department of Transportation (DOT). It originated in the American Recovery and Reinvestment Act (ARRA; P.L. 111-5 ), where it was called \"national infrastructure investment\" (as it has been in subsequent appropriations acts). Beginning with the FY2018 round of grants, DOT renamed the program the Better Utilizing Investments to Leverage Development (BUILD) program.", "Unless otherwise noted, all dollar amounts in this report are expressed in 2019 dollars to adjust for inflation over the life of the program, and all percentages are calculated on that basis. These figures therefore do not correspond to DOT data, which in general are not adjusted for inflation."], "subsections": []}, {"section_title": "The Origin of the Program", "paragraphs": ["The TIGER program began in the depths of the 2007-2009 recession as a way to both improve transportation infrastructure and stimulate economic activity. For much of its existence it was virtually the only significant discretionary surface transportation grant program, and virtually the only program that allowed local communities to apply for and receive highway funding directly from the federal government rather than through their state's department of transportation, which might have different priorities than the community.", "One of President Obama's first acts after taking office in January 2009 was to propose an economic stimulus bill. Congress passed ARRA after roughly a month of intense debate. The bill provided over $700 billion to stimulate the economy, mostly through reductions in taxes. It authorized $43 billion for transportation infrastructure, including $1.5 billion for a discretionary grant program to make capital investments in surface transportation infrastructure, which Congress labeled \"national infrastructure investment.\" In implementing this new program, DOT retitled it Transportation Investments Generating Economic Recovery, although the annual DOT appropriations act continues to refer to it as national infrastructure investment.", "The program initially had two goals: to make investments that would improve the condition of the nation's surface transportation infrastructure, and to do so quickly to provide immediate stimulus to the economy. Thus ARRA required DOT to give priority to projects that were expected to be completed by February 17, 2012, three years after the legislation was enacted. Since it took nearly a year for DOT to set up an office to manage the program, solicit applications, review them, and select which projects to award, the process favored projects that could be completed within two years. The initial awards were announced on February 17, 2010.", "In that first round, DOT received 1,497 applications requesting $72.5 billion. It awarded 51 grants totaling $1.69 billion. See Table 3 for details about annual applications and awards.", "Unless otherwise noted, all dollar amounts in this report are expressed in 2019 dollars to adjust for inflation over the life of the program, and all percentages are calculated on that basis. These figures therefore do not correspond to DOT data, which in general are not adjusted for inflation."], "subsections": []}, {"section_title": "After Earmarks Ended", "paragraphs": ["During the early 2000s, transportation authorization and appropriations bills included growing numbers of earmarks directing discretionary grants to specific projects. In response to criticism of this practice, in 2011 the Republican conferences in both the House and the Senate prohibited Members from requesting earmarks. In his State of the Union Address on January 25, 2011, President Obama vowed to veto any legislation containing earmarks.", "In the 2012 surface transportation reauthorization legislation, the Moving Ahead for Progress in the 21 st Century Act (MAP-21; P.L. 112-141 ), Congress reduced opportunities for earmarking by abolishing most of DOT's discretionary grant programs, providing virtually all federal surface transportation funding to recipients based on formulas. The TIGER grant program, which has been funded in the annual DOT appropriations acts and was not included in MAP-21, became one of the few remaining discretionary transportation grant programs.", "The Obama Administration did not support continuing the program in its FY2010 and FY2011 budgets, but requested funding in FY2012 and following years. A pattern emerged in which the Republican majority in the House of Representatives proposed cutting funding or eliminating it altogether, the Senate supported the program, and the program ultimately received funding in each year's appropriations legislation. Since the Democratic Party regained the House majority in the 2018 midterm election, the House has supported sizable increases in the program ( Table 1 )."], "subsections": []}, {"section_title": "Evolution of the Program's Grant Criteria", "paragraphs": ["Since Congress has continued the TIGER/BUILD program on an annual basis, the annual DOT appropriations act gives Congress the opportunity to adjust the criteria for the program each year. Some criteria, such as a requirement that DOT must ensure an equitable distribution of grant funds geographically and between urban and rural areas, have been the same since the first year. Other criteria, such as the minimum and maximum grant size, have changed frequently. In general, the trend has been toward distributing the funding to a larger number of grantees (through such measures as lowering the maximum grant size). Table A-1 summarizes the changes in many of the program's grant criteria over the past decade."], "subsections": [{"section_title": "Merit Criteria: Considerations Beyond Economic Stimulus", "paragraphs": ["Born in the anxious days of early 2009, when there was genuine concern about the state of the U.S. economy, the initial focus of the TIGER/BUILD grant program was twofold: to make grants to surface transportation projects that would improve the nation's transportation infrastructure and that would be able to spend the money quickly in order to stimulate the economy. Other considerations included the likelihood of on-time completion and the benefits of the project compared to the costs.", "In subsequent years, as the economy began to recover, DOT added additional merit criteria to its project selection, as shown in Table 2 .These criteria were determined administratively, and have not been specified in appropriations legislation providing funds for the program.", "Some of these criteria can conflict with each other in specific instances. For example, a project could reduce congestion-related emissions on a roadway by supporting alternatives (e.g., transit improvements) or by altering the roadway to reduce congestion (e.g., adding lanes, adjusting traffic signal timing, reshaping intersections). The first option might also reduce dependence on oil, whereas the second might increase dependence on oil while reducing emissions and improving the efficiency of the movement of goods and people. How DOT reconciles such conflicts has not been disclosed."], "subsections": []}]}, {"section_title": "Program Issues", "paragraphs": [], "subsections": [{"section_title": "Demand and Supply in Program Funding", "paragraphs": ["Beginning with the first round of awards in FY2009, each annual grant announcement has noted that the amount of funding applied for has greatly exceeded the amount of funding available through the program (see Table 3 ). After the relatively large first-year appropriation, in succeeding years the amount provided was around one-third of the first year of funding. The total amount applied for also dropped significantly after the first year. The reasons for the decline in funding may include the opposition of the House of Representatives to funding the program (see Table 1 ), the general limitations on the amounts provided in appropriations bills, and the competition for that funding among the proponents and constituencies of different programs.", "One possible reason for the dramatic decline in the amount applied for from FY2016 to FY2017 was the reduction in the maximum grant size that Congress decreed for FY2017 (and succeeding years), from a maximum of $100 million in FY2016 to $25 million in FY2017. Of the $9.8 billion applied for in FY2016, $3.8 billion was represented by a total of 87 applications that exceeded $25 million (nominal) and thus exceeded the maximum limit for FY2017. The combination of that lowered cap on grant amounts, combined with the introduction of several new discretionary transportation grant programs beginning in FY2017, may explain part of the decline in the amount applied for in FY2017. The amount applied for rose in FY2018, when the amount of funding available tripled."], "subsections": []}, {"section_title": "Congressional Directives for Distribution of Grants", "paragraphs": [], "subsections": [{"section_title": "Geographic Distribution", "paragraphs": ["One of the directives Congress gave DOT regarding the distribution of TIGER/BUILD grants was that DOT \"shall ensure an equitable geographic distribution.\" Beyond using the term \"equitable,\" the only other legislative guidance on this point is the limitation on the amount of the program funding that can be awarded to projects in a single state. That limit ranged from a high of 25% to a single state during the FY2010-FY2015 rounds to a low of 10% during the FY2017-FY2019 rounds.", "There have been a total of 553 grants awarded over the period FY2009-FY2018. Every state and most territories have received at least one grant; America Samoa and the Northern Marianas Islands have not received a grant. California has received the most funding, 6.9% of the total over that period; that is considerably less than California's share of the total U.S. population (12.1%). Of the top 10 states by share of grant funding received, Texas, New York, Pennsylvania, and Florida also received smaller shares of funding than their shares of the nation's population, while Illinois, Washington, Massachusetts, and Missouri received larger shares of funding than their shares of the population (see Table 4 ).", "It would be difficult for DOT to match the funding awarded to each state's share of the nation's population, since projects are not distributed proportionally among the states on the bases of cost, merit, and number."], "subsections": []}, {"section_title": "Urban and Rural Area Grants", "paragraphs": ["Another congressional directive, in place since the second year of the program, is that DOT \"shall ensure an appropriate balance in addressing the needs of urban and rural areas.\" DOT has responded to this directive in different ways over time."], "subsections": [{"section_title": "FY2009-FY2016", "paragraphs": ["In the first year (FY2009) of the program, 7% of the funding went to projects in rural areas. Since then, Congress has directed that a specific minimum share of the grant funding go to projects located in rural areas. That share has typically been around 20% to 30% (see Table 5 and Figure 1 ).", "The definition of rural and urban areas used by the TIGER/BUILD Grant program has varied from that used by the U.S. Census Bureau. The Census Bureau defines urban areas as both", "Urbanized Areas of 50,000 or more people;", "Urban Clusters of at least 2,500 and less than 50,000 people.", "Rural areas are defined as those areas not included within an urban area.", "By this definition, 81% of the U.S. population lived in urban areas and 19% in rural areas over the 2011-2015 period.", "For most of its history, the TIGER/BUILD program has defined urban areas as areas located in an Urbanized Area, and rural areas as everything else. Urban Clusters as defined by the Census Bureau were thus considered rural areas for purposes of the program. By this definition, roughly 70% of the U.S. population lived in urban areas and 30% in rural areas in 2015. During the period FY2009-FY2016, the proportion of TIGER/BUILD grant funding awarded to projects in rural areas as defined by the program, measured in 2019 dollars, was around 21%."], "subsections": []}, {"section_title": "FY2017-FY2018", "paragraphs": ["In the program's 2017 Notice of Funding Opportunity (NOFO), the new Trump Administration announced that it would give special consideration to projects in rural areas. No rationale for this special consideration has been given, but one is implied in the observation that \"While only 19 percent of the nation's population lives in rural areas, 51 percent of all traffic fatalities occurred on rural roads (2014).\"", "In announcing the FY2017 round of awards, the Secretary of Transportation noted that \"an effort was made to re-balance the under-investment in rural communities\u00e2\u0080\u0094to address overlooked needs.\" This assertion that there had been under-investment in the transportation needs of rural communities was reiterated in the FY2018 NOFO; that assertion is not included in the FY2019 NOFO, but that document reiterates that special consideration will be given to project applications from rural areas.", "Under this new policy, the proportion of program funding requested for rural areas rose from 35% in the FY2016 round to 44% in the FY2017 round, and the share of program funding awarded to rural areas rose from 21% to 65% (see Table 5 ). Another factor that may have influenced this shift is that although the amount of grant funding available in the FY2017 round ($500 million) was the same as in the previous couple of rounds, the number of applications and amount of funding applied for dropped significantly in FY2017, particularly from urban areas (see Table 6 ). Why that happened is not clear. The current surface transportation authorization act (MAP-21), which was enacted in December 2015, created several new discretionary grant programs for surface transportation; that, combined with the new lowered cap of $25 million on maximum TIGER/BUILD grant sizes that took effect in FY2017, may have led sponsors of more expensive projects, which are often located in urban areas, to seek funding from the new grant programs rather than from the TIGER/BUILD program.", "The Administration's stated rationales for prioritizing funding for projects in rural areas are open to question. While 71% of the nation's roads are in rural areas, they account for only 30% of total vehicle miles traveled, and over the period FY2009-FY2015, 37% of federal highway funding went to rural roads. Rural roads are on average in better condition than urban roads; in 2012 93% of the vehicle miles traveled on rural roads were on roads with pavement conditions rated as acceptable or good, compared with 78% of the vehicle miles traveled on urban roads.", "The Administration's claim that safety factors justify directing two-thirds of BUILD grants to rural areas is only partially supported by available data. While a disproportionate share of highway deaths occurs on rural roads, that proportion has been trending downward, declining from around 60% in the early 2000s to 46% in 2017. The number of traffic fatalities in rural areas declined by 18% from 2008-2017, while the number of fatalities in urban areas increased by 17% over the same period. Moreover, road conditions are only one factor among the reasons why the share of highway fatalities in rural areas exceeds the share of population in those areas. Other factors include driver behavior (e.g., higher typical speeds, lower rates of seat belt use, and higher driver fatigue rates), typically longer travel times for emergency medical care, and vehicle condition.", "In the FY2019 DOT appropriations act, Congress made two changes that may constrain the Administration's discretion to steer funding toward projects in rural areas: limiting the share of program funding that can go to rural areas to 50%, and changing the definitions of urban and rural areas used in the BUILD program. Urban areas would be defined as areas \"located within (or on the boundary of) a Census-designated urbanized area that had a population greater than 200,000 in the 2010 Census.\" Areas outside that are considered rural. By this definition, roughly 60% of the U.S. population lived in urban areas, and roughly 40% in rural areas, in 2015. Thus, some areas that in previous rounds of applications would have been considered urban areas would now be considered rural for the purposes of the BUILD program. How this change will affect the distribution of funds in FY2019 and subsequent years is unclear."], "subsections": []}]}, {"section_title": "Grants to a Variety of Modes", "paragraphs": ["Since the second year of the program, Congress has directed DOT to ensure that the program makes \"investment in a variety of transportation modes.\" A unique feature of the BUILD grant program is its flexibility: any surface transportation infrastructure is eligible for funding. Throughout most of the program's life, this flexibility has been reflected in the grants awarded; while road projects received more funding than projects in other modes, other modes collectively received two-thirds of the total program funding (see Table 7 ). This situation changed beginning with the FY2017 round of grants; for FY2017-FY2018, road projects received over two-thirds of the funding awarded, with the remainder divided among four other modes, one of which\u00e2\u0080\u0094bicycle-pedestrian projects\u00e2\u0080\u0094receiving no funding at all."], "subsections": []}]}, {"section_title": "Distribution Requirements Versus Economic Impact in Grant\u00c2 Awards", "paragraphs": ["From the first round of funding through FY2017, Congress directed that grants be made for projects that will have a significant impact on the nation, a metropolitan area, or a region. Surface transportation projects that are likely to have a significant impact on the nation, or even a multistate region, are typically quite expensive; for example, Amtrak's Hudson River Tunnel Project, to replace the deteriorating tunnels that carry Amtrak and commuter trains under the Hudson River between New Jersey and New York, is estimated to cost over $11 billion.", "Given the relatively modest amounts of funding available for TIGER/BUILD grants each year and Congress's directive that grant funding be awarded equitably across the nation, between rural and urban areas, and among surface transportation modes, the amount of money any single project is likely to receive limits the ability of the TIGER/BUILD program to provide more than a small share of the funding needed to complete projects that could have a significant impact on the nation. The largest single grant awarded during the FY2009-FY2018 period was for $118.5 million, and that was for a project that spanned two states (see Table 8 ). Three grants have been awarded for more than $100 million; of the 553 grants awarded, few have been for more than $50 million. Of the 10 largest grants awarded, nine were awarded in the first year of the program, when available funding was far larger than in any subsequent year (see Table 8 ). Even though the maximum grant size permitted was $200 million from FY2010 to FY2015 and $100 million in FY2016, the largest grant awarded since FY2010 has been $25 million.", "The first year of grants also saw the largest average grant size, $33 million; in subsequent rounds of funding, the average size of grants in each round has fluctuated between $9 million and $17 million (see Table 9 ). In addition to the lower limit on the maximum grant amount, one factor that may have led to the decrease in the average size of grants after the first year was that the total amount of TIGER/BUILD grant funding available in each year until FY2018 was less than half the amount in FY2009, so DOT may have chosen to make smaller grants in order to distribute the available funding widely.", "In a 2014 review of the program, the U.S. Government Accountability Office (GAO) reported that while DOT had selection criteria for the TIGER grant program, it had sometimes awarded grants to lower-ranked projects while bypassing higher-ranked projects without explaining why it did so, raising questions about the integrity of the selection process. DOT responded that while its project rankings were based on transportation-related criteria, such as safety and economic impact, sometimes it had to select lower-ranking projects over higher-ranking ones to comply with other selection criteria established by Congress, such as geographic balance and a balance between rural and urban awards."], "subsections": []}, {"section_title": "Attempt to Increase the Program's Funding Leverage", "paragraphs": ["In FY2018, the Notice of Funding Opportunity soliciting grant applications noted two changes to the program under the Trump Administration: the program was renamed the Better Utilizing Investments to Leverage Development (BUILD), and the practical reflection of that name change was a statement that DOT would give priority to grant applicants that provided new, nonfederal revenue for projects for which they were seeking BUILD funding. \"New revenue\" was defined as \"revenue that is not included in current and projected funding levels and results from specific actions taken to increase transportation infrastructure investment.\" Examples given in the notice included sales or gas tax increases, tolling, tax-increment financing, and asset recycling. Borrowing (issuing bonds) did not count as a new revenue source. DOT would not consider any source of revenue that had been authorized prior to January 1, 2015, as new revenue.", "The Administration presented this new stance as a way of increasing the leverage of federal funding to raise more revenue from other sources. Critics charged that the policy penalized states and localities that had already acted to raise more revenue for transportation projects. Critics also noted the irony of the Administration encouraging states and localities to provide additional revenue for transportation investment when Congress had been unable to increase the federal excise tax on motor fuel, the primary source of federal surface transportation revenues, since 1993. Critics also noted that favoring projects involving additional revenue from new sources posed a particular challenge for rural areas, as the number of residents who might pay a new sales tax or highway toll is by definition relatively low.", "Despite that concern, in the FY2018 round of awards, projects in rural areas received a higher proportion of the program's funding than ever before in the history of the program: 69% (see Table 5 ). The information about the projects receiving grants is not sufficiently detailed to show how much additional nonfederal revenue was raised in connection to the projects. In the FY2019 DOT Appropriations Act, Congress directed DOT not to use an applicant's ability to generate nonfederal revenue as a selection criterion in approving future BUILD grants."], "subsections": []}, {"section_title": "Measures of Program Impact", "paragraphs": ["In 2016 and 2018 DOT published reports measuring the performance of projects that received TIGER grants. The reports state that, given the array of projects that can receive TIGER grants, measuring their performance is challenging and, for the same reason, valuable. DOT has required grantees to develop performance plans and measures for each project, beginning before the construction of the project and continuing for years after the project is completed. The sponsor of each project is responsible for setting up performance measures it considers relevant to its project. There is no requirement for comparability of the measures across projects.", "The DOT reports do not summarize the projects and their benefits. Rather, each presents a number of case studies of individual projects, including the performance measures chosen by each grantee."], "subsections": [{"section_title": "Appendix. TIGER/BUILD Grant Program Criteria, FY2009-FY2019", "paragraphs": [], "subsections": []}]}]}]}}
{"id": "R45746", "title": "Technological Convergence: Regulatory, Digital Privacy, and Data Security Issues", "released_date": "2019-05-30T00:00:00", "summary": ["Technological convergence, in general, refers to the trend or phenomenon where two or more independent technologies integrate and form a new outcome. One example is the smartphone. A smartphone integrated several independent technologies\u2014such as telephone, computer, camera, music player, television (TV), and geolocating and navigation tool\u2014into a single device. The smartphone has become its own, identifiable category of technology, establishing a $350 billion industry.", "Of the three closely associated convergences\u2014technological convergence, media convergence, and network convergence\u2014consumers most often directly engage with technological convergence. Technological convergent devices share three key characteristics. First, converged devices can execute multiple functions to serve blended purpose. Second, converged devices can collect and use data in various formats and employ machine learning techniques to deliver enhanced user experience. Third, converged devices are connected to a network directly and/or are interconnected with other devices to offer ubiquitous access to users.", "Technological convergence may present a range of issues where Congress may take legislative and/or oversight actions. Three selected issue areas associated with technological convergence are regulatory jurisdiction, digital privacy, and data security. First, merging and integrating multiple technologies from distinct functional categories into one converged technology may pose challenges to defining regulatory policies and responsibilities. Determining oversight jurisdictions and regulatory authorities for converged technologies can become unclear as the boundaries that once separated single-function technologies blend together. A challenge for Congress may be in delineating which government agency has jurisdiction over various converged technologies. Defining policies that regulate technological convergence industry may not be simple or straightforward. This may further complicate how Congress oversees government agencies and converged industries due to blending boundaries of existing categories.", "Second, converged technologies collect and use personal and machine data which may raise digital privacy concerns for consumers. Data collection and usage are tied to digital privacy issues because a piece or aggregation of information could identify an individual or reveal patterns in one's activities. Converged or smart technologies leverage large volumes of data to try to improve the user experience by generating more tailored and anticipatory results. However, such data can potentially identify, locate, track, and monitor an individual without the person's knowledge. Such data can also potentially be sold to third-party entities without an individual's awareness. As the use of converged technologies continues to propagate, digital privacy issues will likely remain central.", "Third, data security concerns are often associated with smart devices' convenient ubiquitous features that may double as vulnerabilities exploited by malicious actors. Data security, a component of cybersecurity, protects data from unauthorized access and use. Along with digital privacy, data security is a pertinent issue to technological convergence. As converged devices generate and consume large volumes of data, multiple data security concerns have emerged: potentially increased number of access points susceptible to cyberattacks, linkage to physical security, and theft of data.", "Relatively few policies are in place for specifically overseeing technological convergence, and current federal data protection laws have varied privacy and data security provisions for different types of personal data. To address regulatory, digital privacy, and data security issues, Congress may consider the role of the federal government in an environment where technological evolution changes quickly and continues to disrupt existing regulatory frameworks. Regulating technological convergence may entail policies for jurisdictional deconfliction, harmonization, and expansion to address blended or new categories of technology. One approach could be for Congress to define the role of federal government oversight of digital privacy and data security by introducing new legislation that comprehensively addresses digital privacy and data security issues or by expanding the current authorities of federal agencies. When considering new legislation or expanding the authorities of federal agencies, three potential policy decisions are (1) whether data privacy and data security should be addressed together or separately, (2) whether various types of personal data should be treated equally or differently, and (3) which agencies should be responsible for implementing any new laws."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["Technological convergence, in general, refers to the trend or phenomenon where two or more independent technologies integrate and form a new outcome. One example is the smartphone. A smartphone integrates several independent technologies\u2014such as telephone, computer, camera, music player, television (TV), and geolocating and navigation tool\u2014into a single device. The smartphone has become its own, identifiable category of technology. Currently, over 35% of the global population are smartphone users and over 3 billion active devices are in circulation. In the United States, about 80% of the U.S. population are smartphone users, and over 280 million active devices are in circulation. The technological convergence has resulted in establishing a new and prominent smartphone industry sector, worth over $350 billion globally, according to some estimates.", "Technological convergence may present a range of issues where Congress may take legislative and/or oversight actions. Three selected issue areas associated with technological convergence are regulatory jurisdiction, digital privacy, and data security. First, merging and integrating multiple technologies from distinct functional categories into one converged technology may pose challenges to defining regulatory policies, roles, and responsibilities. Determining oversight jurisdictions and regulatory authorities for converged technologies may become complicated as the boundaries that once separated single-function technologies are blended together. In other words, delineating which policy authorizes which government agency to apply which standards to regulate which industry is no longer simple and straightforward. How Congress chooses to oversee certain industries and government agencies may also become complicated due to converging technologies that blur and blend existing categorical boundaries.", "Second, digital privacy concerns stem from converged technologies' collection and usage of personal and machine data. Technological convergence facilitates increasing consumption and collection of data, which poses potential digital privacy concerns for consumers. Data collection and usage are tied to digital privacy issues because a piece or aggregation of information could identify an individual or reveal patterns in their activities. Converged technologies leverage large volumes of data to try to improve the user experience by generating more tailored and anticipatory results. This data can also potentially be used to identify, locate, track, and monitor an individual without the person's knowledge. The same data can potentially be sold to third-party entities without an individual's awareness. As the use of converged technologies continues to propagate, digital privacy issues will likely remain central to the policy debate.", "Third, data security concerns are often associated with smart devices. As devices are able to interconnect, the convenient ubiquitous features may create vulnerabilities that could be exploited by malicious actors. Data security, a component of cybersecurity, protects data from unauthorized access and use. Along with digital privacy, data security is a pertinent issue for converged technologies, which generate and consume large volumes of data. Technological convergence poses three potential data security concerns: increased number of access points susceptible to cyberattacks, linkage to physical security, and theft of data.", "The first section of this report describes technological convergence along with closely associated media convergence and network convergence. The report uses the Internet of Things (IoT) and smart home devices as primary examples. Of these three convergences, consumers most often directly engage with converged technologies. In contrast, general consumers may not have the same level of engagement or understanding of media and network convergences, as they often occur in the background.", "The second section of this report presents regulatory, digital privacy, and data security issues pertaining to technological convergence. The current state, challenges, and recent legislative activities are discussed.", "The third section of this report concludes with potential considerations for Congress. An overarching consideration for regulatory, digital privacy, and data security issues may be determining the role, if any, of the federal government in an environment where technological evolution changes quickly and continues to disrupt existing frameworks. Policies governing these three issues\u2014regulations, digital privacy, and data security\u2014may be of interest to Congress as well as other stakeholders, including U.S. government agencies, commercial entities, and the general public. "], "subsections": []}, {"section_title": "Description of Technological Convergence", "paragraphs": ["\"Technological convergence\" is a concept whereby merging, blending, integration, and transformation of independent technologies leads to a completely new converged technology. This broad, complex concept encompasses a wide range of technologies, including IoT and smart home devices. When a converged technology emerges, it often replaces single-function technologies or renders them obsolete. In this sense, technological convergence can be viewed as a progression or evolution of technology.", "A discussion of technological convergence in isolation is difficult because technological convergence is closely associated with media convergence and network convergence. Technological, media, and network convergences are interdependent, but each possesses subtle distinctions. These three terms are often used interchangeably, further complicating the discussion of an already complex topic. Figure 1 illustrates relationships between technological, media, and network convergences.", "Technological convergence : This occurs when the functions of different technologies are merged and interoperate as a single unit. A converged unit can typically process multiple types of media that correspond to each technology that merged. Technological convergence includes devices and systems that interface with end users. For example, a user interacts with converged devices, such as a smart television (TV), to access the contents that are distributed over a network. A smart TV has combined the functions of a traditional TV, a computer, and several other devices that used to have one specific purpose. In addition to displaying over-the-air broadcast TV channels, smart TVs interface with users to surf the internet, view photos taken from smartphones and stored in the \"cloud,\" display feeds from home security cameras connected to a network, play music, notify users of incoming calls and messages, and allow video teleconferencing. Smart TVs can process a variety of formats of media to perform multiple functions.", "Media convergence : This refers to content that is made available through multiple forms, formats, and access points. Media convergence proliferated as analog mediums of communication became digitized. For example, the contents on a newspaper used to be available only in print. The same content is currently available in both print and digital forms, as text, visual, and/or audio formats, and through multiple devices and platforms including social media. ", "Network convergence : This refers to a single network infrastructure that handles and distributes multiple types of media. Network convergence became prominent when telecommunications and information networks integrated; it became prevalent when mobile cellular communications incorporated access to the internet and made it widespread. For example, today's cable companies process information in forms of voice, video, and data on a single network and often offer their services as a bundle package (e.g., phone, television, and internet services). Similarly, cellular networks, which distribute information to and from mobile devices and fixed platforms, process voice, video, and data. ", "Prior to network, media, and technological convergences, a separate, independent network was dedicated to handling and distributing one particular type of media that was processed by a single-function device. For example, a telephone network distributed audio information (i.e., voice) between telephone handsets. A broadcasting network delivered video to television sets. Convergence removes such pairing (i.e., \"decouples\") between media, network, and device. Decoupling gives convergence its versatility, flexibility, and complexity. "], "subsections": [{"section_title": "Characteristics of Smart Devices", "paragraphs": ["Many technological convergence devices are called \"smart\" devices, which often include IoT devices. (Examples of IoT devices are discussed in following sections.) Despite a wide range of applications, smart converged technologies share key characteristics: ", "Smart devices can execute multiple functions to serve blended purposes; Smart devices can collect and use data in various formats and employ machine learning algorithms to deliver optimized and enhanced user experience; and Smart devices are connected to a network directly and/or are interconnected with other smart devices, offering ubiquitous access to users from anywhere on any platform.", "These key characteristics may present potential policy questions for Congress, including the following:", "Who will provide oversight and how will regulatory authorities be applied to technologies that serve multiple functions or that do not belong to an established category? How should consumer data be collected and used to protect digital privacy without limiting technology innovation? How to shape data security practices to safeguard personal information and physical security from malicious actors?"], "subsections": []}, {"section_title": "An Overview of Internet of Things", "paragraphs": ["The IoT is a common example of technological convergence. The IoT is a system of devices that are connected to a network and each other, exchanging data without necessarily requiring human-to-human or human-to-computer interaction. In other words, IoT is a collection of electronic devices that can share information among themselves (e.g., smart home devices). The IoT possess all three characteristics of converged technologies: multiple functions, data collection and use, and ubiquitous access. Various categories of IoT include industrial Internet of Things, Internet of Medical Things, smart city infrastructures, and smart home devices.", "IoT industry is a growing market both globally and in the United States. According to some estimates, in 2018, the IoT retail market in the United States was almost $4 billion, and over 700 million consumer IoT devices were in use in 2017 in the United States. Figure 2 illustrates global revenue of the IoT from 2012 to 2018, according to Statista, a company that consolidates statistical data, based on information from IC Insights. In 2018, consumer IoT devices, such as wearable and connected smart home devices, generated over $14 billion globally. The connected cities category, or smart cities, was the largest (41%) of 2018 global IoT revenue. The industrial Internet of Things, such as smart factories, had the biggest growth in terms of global revenue between 2017 and 2018 among the different categories of the IoT. An estimate of various IoT markets by McKinsey also shows the industrial IoT as potentially increasing the most by 2025 compared to other IoT systems. The development, application, and usage of IoT will likely continue to grow with Fifth-Generation (5G) Technologies cellular service, which will allow a larger number of devices to be connected simultaneously to a network, supporting not only consumer but industrial use of IoT devices and systems. ", "IoT devices are used in many different fields and serve a variety of functions. The IoT encompasses a broad range of applications. Selected categories of IoT devices are discussed below.", "Industrial Internet of Things (IIoT): Examples of commercial application of the IoT can be found in the manufacturing industry. Referred to as industrial Internet of Things (IIoT), networked machines in a production facility can communicate and share information to improve efficiency, productivity, and performance. The application of IIoT can vary significantly, from detecting corrosion inside a refinery pipe to providing real-time production data. Also, IIoTs can enable a variety of industries, such as manufacturing, chemicals, food and beverage, automotive, and steel, to transform their operations and potentially yield financial benefits. Currently in North America, there are more consumer IoT connections than IIoT connections, but this may change in the future. Incorporation of IIoT and analytics is considered by some as the Fourth Industrial Revolution (4IR).", "Internet of Medical Things (IoMT): Some experts project the use of Internet of Medical Things (IoMT) is increasing. IoMT devices, such as heart monitors and pace makers, collect and send a patient's health statistics over various networks to healthcare providers for monitoring, remote configuration, and preventions. In 2017, over 300 million IoT devices in the medical sector were connected worldwide, and, in 2018, over 400 million devices were connected. At a personal health level, wearable IoT devices, such as smart watches and fitness trackers, can track a user's physical activities, basic vitals, and sleeping patterns. In 2017, over 40 million fitness tracker IoT were in use in the United States.", "Smart Cities: IoT devices and systems in transportation, utilities, and infrastructure sectors may be grouped under the category of \"smart city.\" An example of utilities IoT in a smart city is \"smart\" grid and meters for electricity, water, and gas where sensors collect and share customer usage data to enable the central control system to optimize production and distribution to meet demand real-time. An example of transportation IoT in a smart city is fare readers and status trackers or locaters that interface across all public transportation platforms. Columbus, OH's winning proposal for the Department of Transportation's (DOT) Smart City Challenge of 2016, included connected infrastructure that interacts with vehicles, trip planning and common payment system across multiple transit system, and electric autonomous vehicles and shuttles. Other finalists of the DoT Smart City Challenge were Austin, TX; Denver, CO; Kansas City, MO; Pittsburgh, PA; Portland, OR; and San Francisco, CA. Smart cities is currently the largest segment of IoT in terms of revenue.", "Smart Home: Consumer product IoT devices used in homes and buildings are often grouped under the \"smart home\" category. Included in this categories are smart appliances, smart TV, smart entertainment systems, smart thermostats, and network-connected light bulbs, outlets, door locks, door bells, and home security systems. These smart home IoT devices are connected to a single network and can be controlled remotely over the internet. Eight of 11 categories of consumer IoT devices used in 2017 were related to smart home. In 2018, the size of the global smart home market was estimated to be over $30 billion."], "subsections": []}, {"section_title": "An Example: Smart Home", "paragraphs": ["A smart home contains a collection of consumer IoT devices intended for personal use where user experience is improved by connecting various features of a house to a network. For example, smart home IoT devices may be interconnected to each other and to a central control system for a home with voice interface, often referred to as a virtual assistant. Commonly known examples of virtual assistants are Amazon's Alexa, Apple's Siri, Google Assistant, Microsoft's Cortana, and Samsung's Bixby. A virtual assistant is a platform that can manage and relay information to smart home devices based on user-established criteria.", "Moreover, a smart home may have a doorbell with a video camera and a speaker that allows a user to see who is at the door and to speak to the person at the door from anywhere over the internet. A smart home may have a smart door lock that can be locked and unlocked remotely. In addition, the thermostat, lights, electrical outlets, and appliances in a smart home may be remotely controlled by a user over the internet. A smart appliance, such as a smart refrigerator that is networked, can use its sensors to identify items and can notify a user based on set criteria, such as restocking alerts or suggested recipes. ", "Some smart home devices resemble traditional devices, but with cross-over functions or networking abilities. Examples include smart lightbulbs, smart electrical outlet plugs, smart TV, and smart appliances. Some smart home devices are establishing a new category of industry segment that did not exist previously. An example is Amazon's Echo products with virtual assistant Alexa as voice user interface. Whether it is the former (evolutionary technologies) or the latter (new/revolutionary technologies), the smart home industry is fast emerging and growing.", "Smart home devices, which are a type of IoT, possess the three characteristics of converged technologies: multiple or blended functions, collection and use of data, and ubiquitous access through network connection. Thus, potential policy interests associated with technological convergence can be also observed in smart home devices. Potential smart home issues for Congress include the following.", "Congress may decide it is necessary to resolve oversight jurisdictions and regulatory authorities of smart home devices, especially for products like virtual assistants, which may not belong to an established category of technology. The mission of the Federal Trade Commission (FTC) includes both protecting consumers and promoting business competition. Congress may choose to review the FTC's current authorities to ensure that they are sufficient to oversee emerging smart home technologies. In addition, potentially deconflicting or harmonizing jurisdictions may be discussed if other federal government organizations and their mission are impacted by emerging smart home technologies.", "Congress may decide that new or expanded policies are necessary to protect consumer digital privacy, including personal data that are collected and used by smart home devices, such as a smart TV, in private spaces, such as a user's home. Although the FTC does promote a level of digital privacy through its consumer protection authorities, emerging digital privacy issues are linked to practices that are legal as opposed to fraud, theft, or other malicious activities. Congress may examine whether a federal law that comprehensively addresses personal digital privacy is necessary or an expansion of the FTC's consumer data protection authorities is required.", "Emerging smart home technologies may further necessitate safeguarding data from malicious actors. In addition to collecting and using personal data, smart home devices bridge physical security and cybersecurity. Malicious actors may have more means to exploit a user's information and home through smart home devices, which offer ubiquitous access as a key convenience feature. Whether current policies adequately addresses data, cyber, and physical security concerns may also be considered."], "subsections": []}]}, {"section_title": "Selected Issues Associated with Technological Convergence", "paragraphs": ["Regulation, digital privacy, and data security are three selected issues associated with technological convergence that may be of interest to many stakeholders, including Congress. As identified in the smart home example in the previous section, each of these three issues is discussed further in subsequent subsections. The three selected issues are tied to the three characteristics of converged technologies discussed previously in the \" Characteristics of Smart Devices \" section. First, convergence of technologies blend and blur existing categorical distinctions for each technology because a converged technology can perform multiple functions. Second, technological convergence consumes, collects, and generates a large volume of both personal and machine data. Third, converged technologies allow ubiquitous access points to the end users. These characteristics are typically observed as a result of decoupling the devices from media and network."], "subsections": [{"section_title": "Regulatory Issues", "paragraphs": ["Congress may consider policies that address blending standards and boundaries as converged technologies and companies merge and replace traditionally independent and distinct categories. Policy issues may include oversight jurisdictions, regulatory authorities, and commercial competitiveness since a converged technology could fall within multiple domains. An example may be delineating the Federal Communications and Commission's (FCC) and the FTC's authorities on convergence technologies as more devices and services become mobile and wirelessly connected. ", "Merging and integrating multiple technologies from distinct functional categories into one converged technology pose challenges to regulatory policies and responsibilities. Determining oversight jurisdictions and regulatory authorities for converged technologies becomes unclear as the boundaries that once separated single-function technologies blend and blur together. A challenge for policymakers may be in delineating which government agency and which policies and standards would best apply to certain technologies or certain industries. Where there were once clear lines of authority by industry or media type (e.g., voice, video, data), they are no longer simple and straightforward for technologies where these functionalities have converged. How Congress oversees which industries and government agencies may become complicated due to converging technologies that blend existing categorical boundaries. Congress may decide that it is necessary for specific legislative committees to effectively oversee a converged technology that serves multiple functions. As a result, the alignment of converged technologies to regulatory authorities may shift as technologies evolve.", "The complexities in setting regulatory jurisdiction can be further subdivided into regulating converging technologies and regulating evolving technology companies . They are discussed below."], "subsections": [{"section_title": "Regulating Converging Technologies", "paragraphs": ["Regulating a converging technology, which is a result of blending or integrating multiple technologies, can be challenging. This is because (1) the one-to-one relationship between a converging technology and a regulatory entity is no longer clear, and (2) a converging technology may create a new sector where a regulatory entity has not been identified. ", "Initially, the standards and oversight policies for a specific technology were established independently. They were not necessarily developed with merging or interoperability in mind. For example, telephony (when providing voice), cable TV (when providing video), and mobile cellular technologies each follow their respective standards, and these services were regulated by policies specific to each type. When a converged technology utilizes differing communications technologies, it may be required to adhere to multiple standards and regulations.", "In such cases, multiple agencies may need to regulate a single converged technology. This may require extended timelines for regulatory reviews. Industry may incur additional costs to meet standards and reporting requirements for converged technologies.", "In other situations, as technologies converge, the outcome may yield a completely new technology for which a regulatory category did not previously exist. Examples include social media, IoTs, and virtual assistants. Without a clear regulatory and oversight framework in place, new converged technologies may be left unregulated, partially regulated, or regulated under a newly developed framework. They could also be left to self-regulate by the industry; or they could be overlooked as governing bodies remain indeterminate on which jurisdictional boundaries need to be stretched to cover emerging technology fields."], "subsections": []}, {"section_title": "Regulating Evolving Companies", "paragraphs": ["Regulating companies that offer converged technologies is challenging because the services and product lines evolve and expand such that they do not fall within a single category. Although diversification is considered normal business practice, technological convergence broadens the operational range for companies, spanning multiple industry sectors. Antitrust concerns could arise, or companies may not be subjected to the same level of oversight and regulation due to lack of classification. ", "For example, companies such as Amazon, Apple, and Google each offer smart home devices and platforms. Some of these devices, such as a smart doorbell with a video camera, smart doors and locks, and networked contact sensors and video cameras, may function as home security devices. Many of these products are bundled as a starting kit for home security. However, these technology convergence companies may not be required to follow state and local regulations as traditional home security companies that provide monitored security service do.", "Another example discussed widely in Congress is social media\u2014whether social media companies should be classified as information technology companies, as advertising and marketing firms, as communications platforms, or as the press. As converged technologies and associated companies straddle or fall between jurisdictional boundaries, regulatory roles and responsibilities become more complex."], "subsections": []}]}, {"section_title": "Digital Privacy Issues", "paragraphs": ["Congress may be interested in digital privacy concerns of converged technologies, which often collect and use personal information and machine data as they directly interface with end-users. Current federal laws protect certain types of data pertaining to privacy by specifying collection, storage, use, and dissemination practices. As converged technologies generate and innovatively leverage more types and volumes of data that can identify, locate, or track a person, consumer concerns for protecting digital privacy may intensify.", "Technological convergence facilitates increased consumption and collection of data, posing potential digital privacy concerns for consumers. Data collection and usage are tied to digital privacy issues because a piece or aggregation of information could identify an individual or reveal patterns in their activities. Converged technologies leverage large volumes of data to try to improve the user experience by generating more tailored and anticipatory results. However, such data can potentially identify, locate, track, and monitor an individual without the person's knowledge. As the use of converged technologies continues to propagate, digital privacy issues will likely remain central."], "subsections": [{"section_title": "Current Data Protection Laws", "paragraphs": ["While a federal law that comprehensively addresses digital privacy does not currently exist, many laws are in place to protect certain types of data and their impact on specific aspects of privacy. Current U.S. data protection laws include the following, as taken from CRS Report R45631, Data Protection Law: An Overview :", "Gramm-Leach-Bliley Act (GLBA): The GLBA imposes several data protection obligations on financial institutions. These obligations are centered on a category of data called \"consumer\" \"nonpublic personal information\" (NPI), and generally relate to: (1) sharing NPI with third parties, (2) providing privacy notices to consumers, and (3) security NPI from unauthorized access.", "Health Insurance Portability and Accountability Act (HIPAA): Under the HIPAA, the Department of Health and Human Services (HHS) has enacted regulations protecting a category of medical information called \"protected health information\" (PHI). These regulations apply to health care providers, health plans, and health care clearinghouses (covered entities), as well as certain \"business associates\" of such entities. The HIPAA regulations generally speak to covered entities': (1) using or sharing of PHI, (2) disclosure of information to consumers, (3) safeguards for securing PHI, and (4) notification of consumers following a breach of PHI.", "Fair Credit Reporting Act (FCRA): The FCRA covers the collection and use of information bearing on a consumer's creditworthiness. FCRA and its implementing regulations govern the activities of three categories of entities: (1) credit reporting agencies (CRAs), (2) entities furnishing information to CRAs (furnishers), and (3) individuals who use credit reports issued by CRAs (users). In contrast to HIPAA or GLBA, there are no privacy provisions in FCRA requiring entities to provide notice to a consumer or to obtain his opt-in or opt-out consent before collecting or disclosing the consumer's data to third parties. FCRA further has no data security provisions requiring entities to maintain safeguards to protect consumer information from unauthorized access. Rather, FCRA's requirements generally focus on ensuring that the consumer information reported by CRAs and furnishers is accurate and that it is used only for certain permissible purposes.", "The Communications Act : The Communications Act of 1934 (Communications Act or Act), as amended, established the Federal Communications Commission (FCC) and provides a \"comprehensive scheme\" for the regulations of interstate communication. [T]he Communications Act includes data protection provisions applicable to common carriers, cable operators, and satellite carriers.", "Video Privacy Protection Act (VPPA): The VPPA was enacted in 1988 in order to \"preserve personal privacy with respect to the rental, purchase, or delivery of video tapes or similar audio visual materials.\" The VPPA does not have any data security provisions requiring entities to maintain safeguards to protect consumer information from unauthorized access. However, it does have privacy provisions restricting when covered entities can share certain consumer information. Specifically, the VPPA prohibits \"video tape service providers\"\u2014a term that includes both digital video streaming services and brick-and-mortar video rental stores\u2014from knowingly disclosing [personally identifiable information] (PII) concerning any \"consumer\" without that consumer's opt-in consent. The VPPA does not empower any federal agency to enforce violations or the Act and there are no criminal penalties for violations, but it does provide for a private right of action for persons aggrieved by the Act. ", "Family Educational Rights and Privacy Act (FERPA): The FERPA creates privacy protections for student education records. \"Education records\" are defined broadly to generally include any \"materials which contain information directly related to a student\" and are \"maintained by an educational agency or institution.\" FERPA defines an \"educational agency of institution\" to include \"any public or private agency or institution which is the recipient of funds under any applicable program.\" FERPA generally requires that any \"educational agency or institution\" (i.e., covered entities) give parents or, depending on their age, the student (1) control over the disclosure of the student's educational records, (2) an opportunity to review those records, and (3) an opportunity to challenge them as inaccurate.", "Federal Securities Laws : While federal securities statutes and regulations do not explicitly address data protection, two requirements under these laws have implications for how companies prevent and respond to data breaches. First, federal securities laws may require companies to adopt controls designed to protect against data breaches. Second, federal securities laws may require companies to discuss data breaches when making required disclosures under securities laws.", "Children's Online Privacy Protection Act (COPPA): The COPPA and the FTC's implementing regulations regulate the online collection and use of children's information. Specifically, COPPA's requirements apply to: (1) any \"operator\" of a website or online service that is \"directed to children,\" or (2) any operator that has any \"actual knowledge that it is collecting personal information from a child\" (i.e., covered operators). Covered operators must comply with various requirements regarding data collection and use, privacy policy notifications, and data security.", "Electronic Communications Privacy Act (ECPA): The ECPA was enacted in 1986, and is composed of three acts: the Wiretap Act, the Stored Communications Act (SCA), and the Pen Register Act. Much of ECPA is directed at law enforcement, providing \"Fourth Amendment like privacy protections\" to electronic communications. However, \"ECPA's three acts also contain privacy obligations relevant to non-governmental actors. ECPA is perhaps the most compressive federal law on electronic privacy, as it is not sector-specific, and many of its provisions apply to a wide range of private and public actors. Nevertheless, its impact on online privacy has been limited. As some commentators have observed, ECPA \"was designed to regulate wiretapping and electronic snooping rather than commercial data gathering,\" and litigants attempting to apply ECPA to online data collection have generally been unsuccessful.", "Computer Fraud and Abuse Act (CFAA): The CFAA was originally intended as a computer hacking statute and is centrally concerned with prohibiting unauthorized intrusions into computers, rather than addressing other data protection issues such as the collection or use of data. Specifically, the CFAA imposes liability when a person \"intentionally accesses a computer without authorization or exceeds authorized access, and thereby obtains\u2026 information from any protected computer.\" A \"protected computer\" is broadly defined as any computer used in or affecting interstate commerce or communications, functionally allowing the statute to apply to any computer that is connected to the internet.", "Federal Trade Commission Act (FTC Act): The FTC Act has emerged as a critical law relevant to data privacy and security. As some commentators have noted, the FTC has used its authority under the Act to become the \"go-to agency for privacy,\" effectively filling in gaps left by the aforementioned federal statutes. While the FTC Act was originally enacted in 1914 to strengthen competition law, the 1938 Wheeler-Lea amendment revised Section 5 of the Act to prohibit a broad range of unscrupulous or misleading practices harmful to consumers. The Act gives the FTC jurisdiction over most individuals and entities, although there are several exemptions. For instance, the FTC Act exempts common carriers, nonprofits, and financial institutions such as banks, savings and loan institutions, and federal credit unions.", "Consumer Financial Protection Act (CFPA): Similar to the FTC Act, the CFPA prohibits covered entities from engaging in certain unfair, deceptive, or abusive acts. Enacted in 2010 as Title X of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the CFPA created the Consumer Financial Protection Bureau (CFPB) as an independent agency within the Federal Reserve System. The Act gives the CFPB certain \"organic\" authorities, including the authority to take any action to prevent any \"covered person\" from \"committing or engaging in an unfair, deceptive, or abusive act or practice\" (UDAAP) in connection with offering or providing a \"consumer financial product or service.\"", "State laws, such as California Consumer Privacy Act (CCPA), and international laws, such as European Union's General Data Protection Regulations (GDPR), aim to provide a comprehensive guidance on digital privacy.", "The FTC Act and the Clayton Act are the primary statutes that give the FTC investigative, law enforcement, and litigating authority to protect consumers and promote competition (i.e., antitrust). The FTC \"has enforcement or administrative responsibilities under more than 70 laws.\" The FTC's consumer protection mission currently focuses more on data security issues\u2014such as identity theft, violation of Do Not Call or Do Not Track, and deceptive advertising\u2014than digital privacy concerns associated with lawful activities. While consumer protection and digital privacy are increasingly becoming synonymous, consumer protection law alone may not provide sufficient jurisdiction and authority to encompass digital privacy and data security issues for all data on all devices."], "subsections": []}, {"section_title": "Data Privacy and Data Security", "paragraphs": ["Digital privacy discussions often involve two closely associated topics: data privacy and data security. Data privacy is the governing of data collection, use, and sharing. Data security is protection of data from unauthorized or malicious actors. These two topics often differ in the lawfulness of activities, the intended use of data, and the effect on an individual.", "Data security is an aspect of cybersecurity more so than privacy. Data security defends against illicit activities such as theft of data. Data security practices include proactive measures against cyber-attacks and responsive measures such as sending notifications to affected individuals upon a data breach.", "Data security issues typically involve actors whose intents are malicious, who carry out unlawful activities, and use data in ways that harm an individual. Examples include breaking into a database or sending spear phishing emails to steal identity and financial information. Stolen identity and financial information are often exploited, causing financial damage to individuals and businesses. Privacy implications arise when personal information is compromised during a data security incident.", "D ata privacy practices determine how and to what extent data are collected, used, and with whom the data are shared. Data privacy sets the scope for control of personal information\u2014this may include data ownership and responsibilities of involved entities. ", "Data privacy issues typically arise from lawful activities, but personal information may have been collected, used, or shared beyond given permission or awareness of an individual. The process or results may reveal aspects of an individual that were unexpected. Examples of data privacy issues include mobile apps and websites collecting and using an individual's online activity and location data to suggest targeted ads. In general, such activities are a lawful commercial marketing strategy, from which the customers may benefit in forms of enhanced user experience and discounts. But, these activities become an issue when they lack transparency (i.e., when customers are not aware of what information is collected on them, who shares the information with whom, and how the information is used and for what purpose). Individuals may experience that their rights to privacy have been violated when aggregation of information reveals highly targeted information that an individual did not anticipate. ", "Key aspects of data privacy\u2014such as data collection, storage, sharing, access, and use\u2014are not defined for digital data that are often leveraged by convergent technologies. These key aspects are defined only for certain types of information, such as medical and financial, where federal laws are in place. Similar guidance is limited or not available for other personal data, such as the following:", "Geolocation data collected by apps; Contact information and other user-generated content on social media; Video recordings made by smart home IoT devices; Voice recordings made by virtual assistants; and Vitals and health data collected by fitness tracking wearable IoT devices. ", "Committees in both the House and the Senate of the 115 th Congress held several hearings where technology companies were present as witnesses. Over a dozen bills were introduced in the 115 th Congress to address various aspects of data privacy and security; but, none became a law. Committees in both the House and the Senate of the 116 th Congress have already held multiple hearings on privacy. Several bills were introduced by the 116 th Congress to address data privacy concerns as they relate to technological convergence. These bills include the following:", "H.R. 1282 (Representative Bobby Rush), introduced on February 14, 2019, as the Data Accountability and Trust Act, would \"require certain entities who collect and maintain personal information of individuals to secure such information and to provide notice to such individuals in the case of a breach of security involving such information\u2026.\" This bill would define the term personal information; outline special requirements for information brokers; and assign specific responsibilities to the FTC to regulate commercial entities' data security policies and procedures for using and protecting personal information. S. 142 (Senator Marco Rubio), introduced on January 16, 2019, as the American Data Dissemination (ADD) Act of 2019, would \"impose privacy requirements on providers of internet services similar to the requirement imposed on Federal agencies under the Privacy Act of 1974.\" This bill would require the FTC to submit recommendations for privacy requirements for internet service providers. S. 189 (Senator Amy Klobuchar), introduced on January 17, 2019, as the Social Media Privacy Protection and Consumer Rights Act of 2019, would \"protect the privacy of users of social media and other online platforms.\" This bill would require commercial entities with an online platform to clearly disclose their practices for personal data collection and use prior to obtaining user consents. This bill also outlines enforcement of privacy requirements by the FTC and the attorney general of each state. S. 583 (Senator Catherine Cortez Masto), introduced on February 27, 2019, as the Digital Accountability and Transparency to Advance (DATA) Privacy Act, would provide \"digital accountability and transparency.\" This bill would require commercial entities to clearly disclose its privacy practices for various collected data. This bill also would require the FTC to enforce privacy practices to ensure that the minimum requirements are satisfied."], "subsections": []}, {"section_title": "Data Brokers", "paragraphs": ["According to the FTC, data brokers are ", "companies that collect consumers' personal information and resell or share that information with others. Data brokers collect personal information about consumers from a wide range of sources and provide it for a variety of purposes, including verifying an individual's identity, marking products, and detecting fraud. Because these companies generally never interact with consumers, consumers are often unaware of their existence, much less the variety of practices in which they engage. ", "The FTC classifies data brokers into three categories:", "1. Entities subject to the FCRA; 2. Entities that maintain data for marketing purposes; and 3. Non-FCRA covered entities that maintain data for non-marketing purposes that fall outside of the FCRA.", "The FCRA governs the activities of credit reporting agencies, such as Equifax, Experian, and TransUnion; entities furnishing information to credit reporting agencies; and individuals who use credit reports issued by credit reporting agencies. These entities subjected to the FCRA fall within the first of the three categories of data brokers listed above. However, the FCRA does not have privacy or data security provisions. ", "Regarding the second and third categories of data brokers, the FTC report notes that \"while the FCRA addresses a number of critical transparency issues associated with companies that sell data for credit, employment, and insurance purposes, data brokers within the other two categories remain opaque.\" Data brokerage companies include Acxiom, Cambridge Analytica, Corelogic, Datalogix, Epsilon, Exactis, ID Analytics, Intelius, PeekYou, Rapleaf, and Recorded Future in addition to the \"big three\" credit reporting agencies (Equifax, Experian, and TransUnion). ", "Many data brokers, which are conducting lawful activities, are self-regulated. As depicted in Figure 3 , data brokerage companies purchase and aggregate information from various sources, which are also self-regulated. These sources include app developers, websites, and social media.", "As technological convergence continues to proliferate, more data will likely be generated and consumed. Aggregations of seemingly simple and benign pieces of data when examined together could expose highly personal aspects in detail. Data brokers and entities that collect data could significantly impact digital privacy especially if individuals remain unaware of activities pertaining to their personal data."], "subsections": []}]}, {"section_title": "Data Security Issues", "paragraphs": ["Congress may be interested in data and physical security aspects of converged technologies because ubiquitous access equates to more possible entry points for both authorized and unauthorized users. This is often referred to as increase in attack surface. As more converged devices become connected to each other and to the internet, the overall impact of a compromise increases, along with the possibility of a cascading effect of a cyberattack. In policies, the requirements and responsibilities of data protection may be addressed separately from privacy concerns associated with legal use of personal data.", "Data security, a component of cybersecurity, protects data from unauthorized access and use. Along with digital privacy, data security is a pertinent issue to technological convergence, which generates and consumes large volumes of data. Technological convergence poses a number of different types of potential data security concerns, including the following: potentially increased number of access points susceptible to cyberattacks, linkage to physical security, and theft of data.", "Increased connectivity generally translates to increased risk of cyberattack. Converged technologies, such as IoT devices, offer the users ubiquitous access: access from anywhere, at any time, using any device. While this is an extremely convenient characteristic, it also poses cybersecurity concerns. Multiple access points equate to increased points or opportunities for potential exploitation by malicious actors. This is often described as increased attack vectors, or broadening attack surface, which is a sum of attack vectors. The same entry points a user may use for remote access can be exploited by an adversary to steal personal information. From the data security perspective, this is a tradeoff to consider between convenience and vulnerability. ", "Cybersecurity and physical security are directly linked through converged technologies. For example, when smart doors and smart locks are remotely controlled by a malicious actor through cyberattack, the physical security of that building also becomes compromised. The damage may not be limited to loss of digital content or information. Loss of personal data stored in the compromised location as well as personal security could be in jeopardy. ", "Potential loss or theft of personal data may be a data security concern for converged technologies because IoT devices often do not employ strong encryption at the device or user interface level. Not implementing strong encryption may be intentional due to associated benefits\u2014it usually keeps the cost low, increases battery life of devices, minimizes memory requirements, reduces device size, and is easier to use or implement. This means, not only is the attack vector increased, but a system is also easier to break into. IoT devices may be the most vulnerable points of a system targeted by malicious actors for exploitation. Some experts note that IoT security currently lacks critical elements such as end-to-end security solutions, common security standards across the IoT industry, and customers' willingness to pay additional cost for enhanced security. "], "subsections": []}]}, {"section_title": "Congressional Considerations for Technological Convergence", "paragraphs": ["With relatively few policies in place for specifically overseeing technological convergence, Congress may consider potential policy options to address the issues discussed in this report. The fundamental policy considerations to identifying options may be determining the role, if any, of the federal government in overseeing technological convergence, digital privacy, and data security."], "subsections": [{"section_title": "Regulatory Considerations", "paragraphs": ["Regulating technological convergence may entail policies for jurisdictional deconfliction, harmonization, and expansion to address blended or new categories of technology. Currently, aspects of converged technologies may be regulated by different agencies based on the individual technologies that compose the convergence, but not as a whole. Regulating a converged technology as a whole can also be challenging because the combinations of technologies may generate too many possible outcomes. When converged technologies establish a new domain and fall outside of existing regulatory jurisdictions, they are often left to self-regulate. ", "Congress and the Administration could take a number of approaches in regulating technological convergence. Three potential approaches are discussed here. First, the federal government could continue to allow industry to self-regulate, especially where technology evolves quickly. This may promote innovative space, but relies on the industry to exercise responsible and accountable practices. ", "Second, Congress and the Administration could maintain current regulatory jurisdiction but leverage a deconfliction or harmonization policy so that convergent technologies are regulated under one primary authority instead of potentially multiple authorities. Preserving existing regulatory jurisdiction may require minimal restructuring and allow relatively short timeline for implementation. While a deconfliction or harmonization policy could increase coordination, overlaying such policy on an existing regulatory framework may not present the most efficient process. ", "Third, the Administration could consider expanding regulatory jurisdictions and authorities to include new and emerging convergent technologies that are self-regulated. This may require a complete overhaul of the technology regulatory framework, requiring congressional action and a relatively lengthy adaptation timeline for the affected industries. Some could also view such actions as extensive regulation that stifles innovation and commercial growth. On the other hand, this approach could present an opportunity to update policies on par with technology progressions and posture for emerging capabilities. "], "subsections": []}, {"section_title": "Digital Privacy Considerations", "paragraphs": ["Federal data protection laws currently in place apply to specific types of data and have varied privacy and data security provisions. A federal law that comprehensively addresses digital privacy for all types of data is not in place. While illegal use of personal information (such as identity theft and fraud) is defined and enforced by federal agencies, legal use of data generated by users or converged technologies (such as social media and IoT) is not regulated to the same extent. Transparency into the activities of legal data brokers and collectors is limited.", "Congress may choose to define the role of the federal government overseeing digital privacy by introducing new comprehensive federal law(s) and/or by determining minimal required standards of digital privacy. An alternative option could be expanding existing digital privacy authorities. This could include deciding whether federal entities, such as the FTC, should have their rulemaking abilities clarified or expanded. ", "An expanded or new federal digital privacy policy may require a variety of decisions by Congress. Two of many potential decisions pertaining to federal digital privacy policy are determining how data privacy and data security could be addressed legislatively and determining whether various types, or categories, of personal data should be treated equally or differently under varied guidance. "], "subsections": []}, {"section_title": "Data Security Considerations", "paragraphs": ["Data security, as it pertains to technological convergence, may impact both the cyber and physical fronts. Some of the federal data protection laws currently in place have data security provisions, though they vary and may be focused predominantly on the cyber-aspect. This also means that different data security protocols apply to different types of data. For instance, the guidance for notifying users when personal data gets compromised is different for health, financial, and location data. ", "Similar to the digital privacy considerations, Congress could begin by determining whether overarching legislation for data security is necessary. Congress may consider new legislation explicitly addressing data security concerns pertaining to technological convergence. Or, Congress may consider new legislation to expand existing cybersecurity missions to address data security issues. Data security is often considered as a component of cybersecurity, but protection of the data is equally important as safeguarding a network or a system.", "As with any security challenge, finding the right balance between convenience and security measures is a key component of an effective security policy. A data security policy that predominantly focuses on security measures to address potential vulnerabilities created by converged technologies could negate convenient features and beneficial capabilities, such as ubiquitous access, offered by the converged technologies. On the other hand, allowing maximum accessibility without a security measure exposes both the data and the system to risks. Not having an updated data security policy relies on existing cybersecurity measures to address potential vulnerabilities introduced by technological convergence. ", "Congress may determine whether data privacy and data security should be addressed in one policy. Data privacy and data security are linked and complementary, especially for digital information. While two coupled topics could be addressed in a single policy, data privacy and data security are two distinct issues. Having separate complementary policies could potentially focus more clearly on specific aspects of each issue."], "subsections": []}]}]}}
{"id": "R45866", "title": "Words Taken Down: Calling Members to Order for Disorderly Language in the House", "released_date": "2019-08-13T00:00:00", "summary": ["Rule XVII, clause 4, of the standing rules of the House of Representatives describes a parliamentary mechanism whereby a Member may call another Member to order for the use of disorderly language. Disorderly, or unparliamentary, remarks are a violation of House rules of decorum. This mechanism, which is referred to as \"words taken down,\" may be invoked during debate on the House floor, in the Committee of the Whole, or in the standing and select committees of the House.", "To call a Member to order for allegedly disorderly remarks, a Member would state the following: \"I demand that the gentleman's/gentlewoman's words be taken down.\" This call to order is to occur immediately after the words are spoken. If the demand comes after additional debate or business, the presiding officer may rule that it is untimely. (The presiding officer's decision on timeliness, however, may be appealed.)", "The phrase taken down refers to the writing down of the words objected to so they may be read out loud by the House Clerk. Following the reading, the presiding officer will rule on whether the remarks are in order.", "In the moments between the formal demand that words be taken down and the Clerk's reading of the words, the Member who made the allegedly disorderly remarks may seek unanimous consent to have them stricken from the Congressional Record . If the unanimous consent request is granted, the House may resume its business without the reading of the words or a ruling thereon. Alternatively, the Member who demanded that the words be taken down can withdraw the request. If neither occurs, then the Clerk will read the words and the Speaker or committee chair will rule on whether the words are in order, which is subject to an appeal. (If the demand for words taken down occurs in the Committee of the Whole, the committee will rise and report the words back to the House, so the Speaker can rule on the words.)", "When determining whether the words are unparliamentary, the Speaker will consider the words themselves, as well as the context in which they were used, and base the ruling on House rules and precedents. Rule XVII, clause 1(b), of the standing rules of the House prohibits Members from engaging in \"personalities\" in debate, but the text of the rule does not state explicitly what language is unparliamentary. Rather, House precedents include examples of words and phrases that were previously determined to be in order and those that were ruled out of order. On the House floor, the Parliamentarian advises the Speaker based on these precedents. The Office of the Parliamentarian is not responsible for providing procedural assistance during committee meetings, although the chair could attempt to consult with the Parliamentarian in advance of or during such meetings.", "If the Member's words are ruled out of order, the words may be stricken from the Congressional Record by unanimous consent on the initiative of the presiding officer. The words may also be stricken by a motion, which means the House will vote on whether to strike the remarks. In addition, Members whose words are determined to be unparliamentary may not be recognized to speak for the rest of the day (even on yielded time) unless the Member is allowed to proceed in order by unanimous consent or a motion. They may, however, vote and demand the yeas and the nays.", "The demand for words to be taken down was invoked 170 times on the House floor or Committee of the Whole between January 1, 1971, and July 24, 2019. In practice, when this demand occurs, the Member being called to order is usually permitted to revise the words or to strike them from the Congressional Record before the Clerk reads the words back to the House. Therefore, the Speaker does not rule on whether the remarks violate the rules of decorum. When there is a ruling, the Speaker often states that the basis for the ruling is whether the words include a personal criticism of an identifiable person (usually a Member or the President)."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["The rules of the House of Representatives have included provisions related to preserving order and decorum in the chamber since the 1 st Congress (1789-1790). Under current House rules, Members may violate decorum if they engage in certain behaviors, such as using disorderly language. Members may be called to order by colleagues for the use of allegedly disorderly, or unparliamentary, language, which may include a formal demand that their words be taken down. This demand initiates a series of procedures to determine whether the words are, in fact, unparliamentary and to decide whether a Member who uses such language should be allowed to proceed in debate. ", "This report covers these procedures, which are provided for in the standing rules of the House as a mechanism to maintain decorum in debate. The sections below present details about how and when a Member might invoke the demand that words be taken down, the procedural steps that may follow the demand, and an overview of the rule's history in the House. The report concludes with information about the practice of invoking this rule in the House in recent decades. "], "subsections": []}, {"section_title": "The \"Words Taken Down\" Rule", "paragraphs": ["The standing rules of the House establish a parliamentary mechanism\u00e2\u0080\u0094referred to as \"words taken down\"\u00e2\u0080\u0094whereby a Member may call another Member to order for the use of disorderly language. Members may invoke this mechanism during debate on the House floor or in the Committee of the Whole. It may also be invoked in the standing and select committees of the House. ", "A Member initiates the call to order by demanding that a colleague's \"words be taken down.\" The phrase taken down , as described in the rule, refers to the writing down of the words objected to so they may be read back to the House by the Clerk. In current practice, all deba te in the House and in standing and select committees is transcribed by the official reporters of debate. Therefore, when a Member demands that the words of a colleague be taken down, the Clerk will consult with the transcriber to identify the words objected to, which the Clerk will then read out loud. ", "Following the reading of the allegedly unparliamentary remarks, the Speaker of the House (or, if the words are spoken in a committee, the chair of the committee) will determine whether the words are in order. ", "The standing rules of the House do not state explicitly what language is considered to be disorderly, although clause 1(b) of Rule XVII prohibits Members from engaging in \"personalities\" in debate. House precedents catalog words and phrases previously deemed to be in order and those that were ruled out of order, or unparliamentary. When ruling on the words objected to, the presiding officer considers the words themselves, as well as the context in which they were used, and bases the ruling on these precedents. On the floor, the Parliamentarian advises the Speaker based on recorded precedents. The Office of the Parliamentarian is not responsible for providing procedural assistance during committee meetings, although the chair could attempt to consult with the Parliamentarian in advance of or during such meetings.", "Rule XVII, clause 4, details the procedure for demanding that words be taken down:", "(a) If a Member, Delegate, or Resident Commissioner, in speaking or otherwise, transgresses the Rules of the House, the Speaker shall, or a Member, Delegate, or Resident Commissioner may, call to order the offending Member, Delegate, or Resident Commissioner, who shall immediately sit down unless permitted on motion of another Member, Delegate, or the Resident Commissioner to explain. If a Member, Delegate, or Resident Commissioner is called to order, the Member, Delegate, or Resident Commissioner making the call to order shall indicate the words excepted to, which shall be taken down in writing at the Clerk's desk and read aloud to the House.", "(b) The Speaker shall decide the validity of a call to order. The House, if appealed to, shall decide the question without debate. If the decision is in favor of the Member, Delegate, or Resident Commissioner called to order, the Member, Delegate, or Resident Commissioner shall be at liberty to proceed, but not otherwise. If the case requires it, an offending Member, Delegate, or Resident Commissioner shall be liable to censure or such other punishment as the House may consider proper. A Member, Delegate, or Resident Commissioner may not be held to answer a call to order, and may not be subject to the censure of the House therefor, if further debate or other business has intervened."], "subsections": []}, {"section_title": "Demanding That a Member's Words Be Taken Down", "paragraphs": ["According to clause 4(b) of Rule XVII, the demand for words to be taken down must be timely: It must generally occur before intervening business or debate. Therefore, immediately after the allegedly offensive words are spoken, the Member would state:", "Mr./Madam Speaker (or Chair), I demand that the gentleman's/gentlewoman's words be taken down.", "Debate is not in order at this point, but the Member demanding that the words be taken down may briefly state the reason for objecting to the language (e.g., the words include an improper personal reference to the President). ", "A Member will be allowed to explain the remarks only if prompted by the presiding officer or if another Member makes a motion to allow an explanation and the motion is agreed to by the House. Usually, the presiding officer orders the Member who spoke the allegedly disorderly words to suspend and asks the Clerk to report the words. (On the House floor, the Member whose words were objected to may be asked by the Speaker to sit down.)", "The gentleman/gentlewoman from [state] will suspend. The Clerk will report the words.", "It may take several minutes for the Clerk to review the transcript and read the words out loud. During this pause in proceedings, the Member who spoke the allegedly offensive words may ask unanimous consent to withdraw the words:", "Mr./Madam Speaker (or Chair), I ask unanimous consent to withdraw my words.", "Alternatively, the Member who demanded that the words be taken down may withdraw the request, which does not require unanimous consent:", "Mr./Madam Speaker (or Chair), I withdraw my demand that the gentleman's/gentlewoman's words be taken down.", "If neither occurs, then the Clerk will read the words to the House, and the presiding officer will make a ruling on the remarks:", "In the opinion of the Chair, the words in question [were/were not] in order.", "The presiding officer's ruling is subject to appeal, and that appeal is subject to a motion to table. If the presiding officer rules that the words are not unparliamentary (and if this ruling is sustained following any appeal), then the House continues with the business pending prior to the demand that words be taken down. ", "If the presiding officer rules that the words are out of order (and if this ruling is sustained following any appeal), the words are usually stricken from the Congressional Record by unanimous consent. The presiding officer might initiate this by stating:", "Without objection, the words are stricken from the Record .", "Alternatively, a Member (although not the Member whose words were taken down) may make a motion to remove the disorderly language from the Record , on which the House will vote:", "I move that the words of the gentleman/gentlewoman from [state] be stricken from the Record .", "In the event that a Member's words are ruled out of order, that Member may not be recognized to speak for the rest of the day (even on yielded time) or insert undelivered remarks into the Record unless the Member is allowed to proceed in order by the House. The Member may be permitted to proceed in order by unanimous consent, which is often initiated by the presiding officer: ", "Without objection, the gentleman/gentlewoman from [state] will proceed in order.", "A Member may also make a motion to allow the Member whose words were ruled out of order to proceed in order, and the House will vote on the motion.", "I move that the gentleman/gentlewoman from [state] be allowed to proceed in order.", "If a Member is not allowed to proceed in order, the Member may vote and demand the yeas and the nays."], "subsections": []}, {"section_title": "History of the \"Words Taken Down\" Rule", "paragraphs": ["The concept of taking disorderly words down in writing is provided for in the principles of general parliamentary law. Although the rules of the House have, since its inception, included provisions related to preserving order and decorum in the chamber, the formal call for a Member's words to be taken down was not adopted as part of the standing rules of the House in the 1 st Congress (1789-1790). The rules of the House initially provided for the Speaker to call a Member to order for disorderly remarks or for a Member to make a point of order against a Member's language, on which the Speaker would rule. (These parliamentary mechanisms are still available today under clause 4 of Rule XVII.) ", "The practice of taking down words began in 1808 when a Member called a colleague to order for disorderly language and the Speaker asked that Member to put the words objected to down in writing. This practice was formally adopted as part of the standing rules of the House in 1837. The original rule, which introduced the need for the demand to be timely, stated:", "If a member be called to order for words spoken in debate, the person calling him to order shall repeat the words excepted to, and they shall be taken down in writing at the Clerk's table; and no member shall be held to answer, or be subject to the censure of the House, for words spoken in debate, if any other member has spoken, or other business has intervened, after the words spoken, and before exception to them shall have been taken.", "An amendment to the rule in 1880 modified the procedure by which a Member demanded that words be taken down. The amended rule removed the provision that the Member calling another to order should repeat the objectionable words. This version, which is similar to the corresponding sentences of the rule in effect today, provided for the words to be taken down in writing and repeated by the Clerk. The 1880 version of the rule states: ", "If a member is called to order for words spoken in debate, the member calling him to order shall indicate the words excepted to, and they shall be taken down in writing at the Clerk's desk and read aloud to the House; but he shall not be held to answer, nor be subject to the censure of the House therefor, if further debate or other business has intervened.", "The rule took its current form when the House comprehensively recodified its rules in the 106 th Congress, although the changes were largely technical. During the recodification, the previously separate clauses in the House rules for addressing unparliamentary language\u00e2\u0080\u0094one providing for a Member to make a point of order against a colleague's remarks and the other providing for a demand that a Member's words be taken down\u00e2\u0080\u0094were combined. The text of the rule was also amended to clarify that the rule applies to a \"Member, Delegate, or Resident Commissioner\" (both for calling someone to order and for being called to order)."], "subsections": []}, {"section_title": "Recent Practice", "paragraphs": ["CRS conducted full-text searches of the Congressional Record to identify instances in which a Member demanded that another Member's words be taken down on the House floor (or in the Committee of the Whole) since January 1, 1971. ", "Throughout this nearly 50-year period, the formal demand that words be taken down was invoked 170 times. These calls to order took place in the Committee of the Whole, as well as in the House proper, including during periods of time arranged for Members to speak on topics of their choice rather than on legislation, such as one-minute speeches and special order speeches. ", "In contemporary practice, it is uncommon that the full procedure presented above\u00e2\u0080\u0094in which the Speaker rules whether or not the words are in order\u00e2\u0080\u0094occurs in the House. Of the 170 demands that words be taken down, 107, or more than half, were settled before the Speaker made a ruling, usually before the Clerk reported the words. In 75 of these instances, the Member whose words were taken down asked to withdraw or revise the words, and in another 32 cases, the Member who demanded that the words be taken down withdrew the request. There were an additional 13 occasions on which the Speaker ruled that a Member's call for words to be taken down was untimely.", "Throughout this time period the Speaker ruled on the words taken down 50 times. Twenty-seven, or more than half, of these rulings took place in the 1990s, with only nine rulings by the Speaker since 2000. ", "In 25 of the 50 rulings following a demand that words be taken down, the Speaker ruled that the words were not disorderly. These occurrences are identified in Table 1 in reverse chronological order. When the Speaker provided a reason for the ruling, it was often that the Member's remarks did not constitute an improper personal reference toward another Member. For example, after words were taken down during debate on February 5, 1992, the Speaker, when ruling on the words, stated: \"The Chair will rule that since the gentleman from Louisiana is generically speaking and not specifically alleging improper conduct by any individual Member, the words are in order.\"", "The Speaker ruled that the words were out of order 25 times during this time period. These 25 occurrences are presented in Table 2 in reverse chronological order. As the fourth column of the table indicates, in nearly every instance in which a rationale was given for the ruling, the Speaker stated that the Member was engaging in personalities toward an identifiable individual, often another Member. ", "Following the determination that the remarks were out of order, the words were usually stricken from the Record by unanimous consent at the initiative of the Speaker. This happened in all but five instances presented in Table 2 . The words were ultimately stricken, either by unanimous consent or motion, in 17 of the 25 cases. It is also common for the Member whose words were ruled out of order to be allowed to proceed in order, usually by unanimous consent initiated by the Speaker. Indeed, the Speaker initiated such a request in 14 of the cases presented in Table 2 . Members whose words were ruled out of order were given permission to proceed in 17 of the 25 instances, either by unanimous consent or motion. "], "subsections": []}]}}
{"id": "R45743", "title": "USDA Domestic Food Assistance Programs: FY2019 Appropriations", "released_date": "2019-05-24T00:00:00", "summary": ["The Consolidated Appropriations Act, 2019 (P.L. 116-6) was enacted on February 15, 2019. This omnibus bill included appropriations for the U.S. Department of Agriculture (USDA), of which USDA's domestic food assistance programs are a part. Prior to its enactment, the federal government had continued to operate for the first six months of the fiscal year under continuing resolutions (CRs). This report focuses on the enacted appropriations for USDA's domestic food assistance programs and, in some instances, policy changes provided by the omnibus law. CRS Report R45230, Agriculture and Related Agencies: FY2019 Appropriations provides an overview of the entire FY2019 Agriculture and Related Agencies portion of the law as well as a review of the reported bills and CRs preceding it. USDA experienced a 35-day lapse in FY2019 funding and partial government shutdown prior to the enactment of P.L. 116-6.", "Domestic food assistance funding is primarily mandatory but also includes discretionary funding. Most of the programs' funding is for open-ended, appropriated mandatory spending\u2014that is, terms of the authorizing law require full funding and funding may vary with program participation (and in some cases inflation). The largest mandatory programs include the Supplemental Nutrition Assistance Program (SNAP, formerly the Food Stamp Program) and the child nutrition programs (including the National School Lunch Program and School Breakfast Program). Though their funding levels are dictated by the authorizing law, in most cases, appropriations are needed to make funds available for obligation and expenditure. The three largest discretionary budget items are the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC); the Commodity Supplemental Food Program (CSFP); and federal nutrition program administration.", "The domestic food assistance funding is, for the most part, administered by USDA's Food and Nutrition Service (FNS). The enacted FY2019 appropriation provides over $103 billion for domestic food assistance (Table 1). This is a decrease of approximately $1.7 billion from FY2018. Declining participation in SNAP is responsible for most of the difference. Approximately 94% of the FY2018 appropriations for domestic food assistance are for mandatory spending. Highlights of the associated appropriations accounts are summarized below.", "For SNAP and other programs authorized by the Food and Nutrition Act, such as The Emergency Food Assistance Program (TEFAP) commodities, the FY2019 appropriations law provides approximately $73.5 billion. Certain provisions of the law affect SNAP policies. For example, it continues a policy in the FY2017 and FY2018 appropriations laws that limited USDA's implementation of December 2016 regulations regarding SNAP retailers' inventory requirements. USDA must amend its final rule to define \"variety\" more expansively and must \"apply the requirements regarding acceptable varieties and breadth of stock.\"", "For the child nutrition programs (the National School Lunch Program and others), the enacted law provides approximately $23.1 billion. This includes discretionary funding for school meals equipment grants ($30 million) and Summer Electronic Benefit Transfer (EBT) demonstration projects ($28 million), and a general provision that provides an additional $5 million for farm-to-school grants. The law includes policy provisions related to processed poultry from China, requirements for schools' paid lunch pricing, vegetables in school breakfasts, and the use of commodities in child nutrition programs.", "For the WIC program, the law provides nearly $6.1 billion while also rescinding $500 million in prior-year carryover funding. The law includes new funding for telehealth grants.", "For the Commodity Assistance Program account, which includes funding for the Commodity Supplemental Food Program (CSFP), TEFAP administrative and distribution costs, and other programs, the law provides over $322 million. The law increases discretionary funding for TEFAP administrative and distribution costs through the annual appropriation and through a $30 million transfer of prior-year CSFP funds.", "For Nutrition Programs Administration, the law provides nearly $165 million."], "reports": {"section_title": "", "paragraphs": ["T he Consolidated Appropriations Act, 2019 ( P.L. 116-6 ) was enacted on February 15, 2019.This omnibus bill included appropriations for the U.S. Department of Agriculture (USDA), of which USDA's domestic food assistance is a part. Prior to its enactment, the government had continued to operate for the first six months of the fiscal year under continuing resolutions (CRs). USDA experienced a 35-day lapse in FY2019 funding and partial government shutdown prior to the enactment of the Further Additional Continuing Appropriations Act, 2019 ( P.L. 116-5 ), a continuing resolution enacted prior to the Omnibus bill. (See the Appendix .)", "This report focuses on USDA's domestic food assistance programs; their funding; and, in some instances, policy changes provided by the enacted FY2018 appropriations law. USDA's domestic food assistance programs include the Supplemental Nutrition Assistance Program (SNAP, formerly the Food Stamp Program), Special Supplemental Nutrition Program for Women, Infants, and Children (WIC), and the child nutrition programs (such as the National School Lunch Program). The domestic food assistance funding is, for the most part, administered by USDA's Food and Nutrition Service (FNS). CRS Report R45230, Agriculture and Related Agencies: FY2019 Appropriations provides an overview of the entire FY2019 Agriculture and Related Agencies appropriations law as well as a review of the reported bills and CRs preceding its enactment.", "With its focus on appropriations, this report discusses programs' eligibility requirements and operations minimally. See CRS Report R42353, Domestic Food Assistance: Summary of Programs for more background."], "subsections": [{"section_title": "Overview of FY2019 USDA-FNS Funding", "paragraphs": ["Domestic food assistance\u2014SNAP and child nutrition programs in the mandatory spending accounts, and WIC and other programs in the discretionary spending accounts\u2014represents over two-thirds of the FY2018 Agriculture appropriations act ( Figure 1 ). ", "The federal budget process treats discretionary and mandatory spending differently. ", "Discretionary spending is controlled by annual appropriations acts and receives most of the attention during the appropriations process. The annual budget resolution process sets spending limits for discretionary appropriations. Agency operations (salaries and expenses) and many grant programs are discretionary. Mandatory spending \u2014though carried in the appropriation\u2014is controlled by budget rules during the authorization process. Appropriations acts then provide funding to match the parameters required by the mandatory programs' authorizing laws. For the domestic food assistance programs, these laws are typically reauthorized in farm bill and child nutrition reauthorizations. ", "Domestic food assistance funding ( Table 1 ) largely consists of open-ended, appropriated mandatory programs\u2014that is, it varies with program participation (and in some cases inflation) under the terms of the underlying authorization law. The largest mandatory programs include SNAP and the child nutrition programs (including the National School Lunch Program and School Breakfast Program). Though their funding levels are dictated by the authorizing law, in most cases appropriations are needed to make funds available.", "The three largest discretionary budget items are WIC, the Commodity Supplemental Food Program (CSFP), and federal nutrition program administration.", "The enacted FY2019 appropriation would provide over $103 billion for domestic food assistance ( Table 1 ). This is a decrease of approximately $1.7 billion from FY2018. Declining participation in SNAP is responsible for most of the difference. Over 95% of the FY2019 appropriations are for mandatory spending.", " Table 1 summarizes funding for the domestic food assistance programs, comparing FY2019 levels to those of prior years. In addition to the accounts' appropriations language, the enacted appropriation's general provisions include additional funding, rescissions, and/or policy changes. These are summarized in this report. "], "subsections": [{"section_title": "President's FY2019 Budget Request", "paragraphs": [" Table 1 compares the enacted funding to the House- and Senate-reported bills, prior years' enacted funding, and the President's FY2019 budget request. The President's budget request includes the Administration's forecast for programs with open-ended funding such as SNAP and the child nutrition programs; this assists the appropriations committees in providing funding levels expected to meet obligations. The budget also includes the Administration's requests for discretionary programs. Additionally, it is a place for the Administration to include legislative requests. The FY2019 request did include SNAP legislative proposals.", "Most significantly for the FNS programs, the President's FY2019 budget request did the following: ", "It included 14 legislative proposals pertaining to SNAP. The majority of these would have restricted SNAP eligibility and made changes to the benefit calculation. This request also proposed to replace a portion of the SNAP benefit with a box of USDA-purchased foods and to limit federal funding for states' administrative costs, nutrition education, and performance bonuses. Together, these proposals were estimated by both the Administration and Congressional Budget Office (CBO) to reduce program spending in FY2019 and over the 10-year budget window. None of these policies were enacted as part of the FY2019 appropriation. Some of these policies were debated in the formulation of the 2018 farm bill (Agriculture Improvement Act of 2018, P.L. 115-334 ), but ultimately only the elimination of performance bonus funding was enacted in the December 2018 law. It requested no funding for a number of discretionary spending programs, including the following: school meals equipment grants, which have received discretionary funding since FY2009; the WIC Farmers' Market Nutrition Program (FMNP), which has received annual discretionary funding since 1992; and the Commodity Supplemental Food Program (CSFP), which has received annual discretionary funding since 1969."], "subsections": []}]}, {"section_title": "Domestic Food Assistance Appropriations Accounts and Related General Provisions", "paragraphs": [], "subsections": [{"section_title": "Office of the Under Secretary for Food, Nutrition, and Consumer Services", "paragraphs": ["For the Under Secretary's office, the enacted FY2019 appropriation provides approximately $0.8 million. This office received approximately equal funding in FY2018.", "The enacted appropriation (\u00a7734) continues to require the coordination of FNS research efforts with USDA's Research, Education and Economics mission area. This is to include a research and evaluation plan submitted to Congress."], "subsections": []}, {"section_title": "SNAP and Other Programs under the Food and Nutrition Act", "paragraphs": ["Appropriations under the Food and Nutrition Act (formerly the Food Stamp Act) support (1) SNAP (and related grants); (2) a nutrition assistance block grant for Puerto Rico and nutrition assistance block grants to American Samoa and the Commonwealth of the Northern Mariana Islands (all in lieu of SNAP); (3) the cost of food commodities as well as administrative and distribution expenses under the Food Distribution Program on Indian Reservations (FDPIR); (4) the cost of commodities for TEFAP, but not administrative/distribution expenses, which are covered under the Commodity Assistance Program budget account; and (5) Community Food Projects. ", "The enacted appropriation provides approximately $73.5 billion for programs under the Food and Nutrition Act. This FY2019 level is approximately $540 million less than FY2018 appropriations. This difference is largely due to a forecasted reduction in SNAP participation. The enacted appropriation provides $3 billion for the SNAP contingency reserve fund. ", "The SNAP account also includes mandatory funding for TEFAP commodities. The enacted appropriation provides nearly $295 million, according to the terms of the Food and Nutrition Act. This is an increase ($5.0 million, 1.7%) over $289.5 million provided in FY2018. (TEFAP also receives discretionary funding for storage and distribution costs, as discussed later in \" Commodity Assistance Program .\")"], "subsections": [{"section_title": "SNAP Account: Other General Provisions and Committee Report Language", "paragraphs": ["SNAP-Authorized Retailers. The FY2017 and FY2018 appropriations law limited USDA's implementation of December 2016 regulations regarding SNAP retailers' inventory requirements, and the enacted FY2019 appropriation (\u00a7727) continues those limits. ", "Only SNAP-authorized retailers may accept SNAP benefits. On December 15, 2016, FNS published a final rule to change retailer requirements for SNAP authorization. The final rule would have implemented the 2014 farm bill's changes to inventory requirements for SNAP-authorized retailers ( P.L. 113-79 , \u00a74002). Namely, the 2014 farm bill increased both the varieties of \"staple foods\" and the perishable items within those varieties that SNAP retailers must stock. In addition to codifying the farm bill's changes, the final rule would have changed how staple foods are defined, clarified limitations on retailers' sale of hot foods, and increased the minimum number of stocking units. ", "Section 727 in the enacted appropriation continues to require that USDA amend its final rule to define \"variety\" more expansively and that USDA \"apply the requirements regarding acceptable varieties and breadth of stock\" that were in place prior to P.L. 113-79 until such regulatory amendments are made. In the meantime, USDA-FNS implemented other aspects of the 2016 final rule, such as increased stocking units. On April 5, 2019, USDA did publish a proposed rule, proposing amendments to the definition of \"variety\"."], "subsections": []}]}, {"section_title": "Child Nutrition Programs16", "paragraphs": ["Appropriations under the child nutrition account fund a number of programs and activities authorized by the Richard B. Russell National School Lunch Act and the Child Nutrition Act. These include the National School Lunch Program (NSLP), School Breakfast Program (SBP), Child and Adult Care Food Program (CACFP), Summer Food Service Program (SFSP), Special Milk Program (SMP), assistance for state administrative expenses, procurement of commodities (in addition to transfers from separate budget accounts within USDA), state-federal reviews of the integrity of school meal operations (\"Administrative Reviews\"), \"Team Nutrition\" and education initiatives to improve meal quality and food safety, and support activities such as technical assistance to providers and studies/evaluations. (Child nutrition efforts are also supported by permanent mandatory appropriations and other funding sources discussed in the section \" Other Nutrition Funding Support .\")", "The enacted FY2019 appropriation provides approximately $23.1 billion for child nutrition programs. This is approximately $1.1 billion less (-4.6%) than the amount provided in FY2018, and reflects a transfer of more than $9.1 billion from the Section 32 account. ", "The enacted appropriation funds certain child nutrition discretionary grants. These include the following: ", "School Meals Equipment Grants. The law provides $30 million, the same amount as FY2018. Summer EBT (Electronic Benefit Transfer) Demonstration Projects. These projects provide electronic food benefits over summer months to households with children in order to make up for school meals that children miss when school is out of session and as an alternative to Summer Food Service Program meals. The projects were originally authorized and funded in the FY2010 appropriations law ( P.L. 111-80 ). The enacted appropriation provides $28 million, the same amount as FY2018. ", "The child nutrition programs and WIC were up for reauthorization in 2016, but it was not completed. Many provisions of the operating law nominally expired at the end of FY2015, but nearly all operations continued via funding provided in appropriations laws since that time, including the enacted FY2018 appropriation. The enacted appropriation also continued to extend, through September 30, 2019, two expiring provisions: mandatory funding for an Information Clearinghouse and food safety audits. (See the Appendix for information about the child nutrition programs during the partial government shutdown.)"], "subsections": [{"section_title": "Child Nutrition Programs: General Provisions", "paragraphs": ["One general provision in the enacted FY2019 appropriation included additional funding for child nutrition programs: ", "Farm to School Grants. Section 754 of the enacted appropriation provides $5 million for competitive grants to assist schools and nonprofit entities in establishing farm-to-school programs. The same amount was provided in FY2018. This is in addition to $5 million in permanent mandatory funding (provided annually by Section 18 of the Richard B. Russell National School Lunch Act), for a total of $10 million available in FY2019.", "FY2019 general provisions also included policy provisions : ", "Processed Poultry from China. The enacted appropriation includes a policy provision (\u00a7749) to prevent any processed poultry imported from China from being included in the National School Lunch Program, School Breakfast Program, Child and Adult Care Food Program, and Summer Food Service Program. This policy has been included in enacted appropriations laws since FY2015. Paid Lunch Pricing . For school year 2019-2020, Section 760 of the enacted appropriation changes federal policy on the pricing of paid (full-price) meals. Included in the 2010 child nutrition reauthorization, and first implemented in the 2011-2012 school year, this policy required schools annually to review their revenue from paid lunches and to determine, using a calculation specified in law and regulation, whether paid prices had to be increased. The purpose of the calculation was to ensure that federal funding intended for F/RP meals was not instead subsidizing full-price meals. For school year 2019-2020, the enacted appropriation requires a smaller subset of schools\u2014only those with a negative balance in their nonprofit school food service account as of December 31, 2018\u2014to be subject to this calculation and potentially to be required to raise prices. The same provision was included in the FY2018 enacted appropriation for school year 2018-2019. Vegetables in School Breakfasts. Section 768 of the enacted appropriation increases the frequency with which starchy vegetables can be substituted for fruits in the School Breakfast Program. Under current regulations, schools are allowed to substitute vegetables for the required servings of fruits (at least one cup daily, and at least five cups weekly) in school breakfasts. The regulations also specify that, \"the first two cups per week of any such substitution must be from the dark green, red/orange, beans and peas (legumes) or 'Other vegetables' subgroups.\" This excludes the starchy vegetable subgroup, which includes corn, plantains, and white potatoes. The enacted appropriation specifies that FY2019 funds cannot be used to enforce this requirement, thereby allowing schools to substitute any type of vegetables for any or all of the required daily and weekly servings of fruits. Child Nutrition Program Commodities. Section 775 of the enacted appropriation changes the calculation of commodity assistance in child nutrition programs. Under current law, commodity assistance in child nutrition programs must comprise at least 12% of total funding provided under Sections 4 and 11 (reimbursements for school lunches) and Section 6 (commodity assistance) of the Richard B. Russell National School Lunch Act. Section 775 eliminates the inclusion of bonus commodities in this calculation as of September 30, 2018, thereby ensuring that only appropriated funds inform the required level of commodity assistance. "], "subsections": []}]}, {"section_title": "WIC Program24", "paragraphs": ["Although WIC is a discretionary funded program, since the late 1990s the practice of the appropriations committees has been to provide enough funds for WIC to serve all projected participants.", "The enacted FY2019 appropriation provides $6.075 billion for WIC; however, the law also rescinds available carryover funds from past years. This funding level is $175 million less than the FY2018 appropriation. The enacted appropriation also includes set-asides for WIC breastfeeding peer counselors and related activities (\"not less than $60 million\") and infrastructure ($19.0 million). The peer counselor set-aside is equal to FY2018 levels. The infrastructure set-aside is an increase of $5 million from FY2018, and further sets aside $5 million for telehealth competitive grants to increase WIC access as specified in the law. ", "The enacted law (\u00a7723) rescinds $500 million in prior-year (or carryover) WIC funds. The House-reported and Senate-passed bills also would have rescinded carryover funds: H.R. 5961 (\u00a7723) would have rescinded $300 million; H.R. 6147 (\u00a7724) would have rescinded $400 million. "], "subsections": []}, {"section_title": "Commodity Assistance Program", "paragraphs": ["The Commodity Assistance Program budget account supports several discretionary programs and activities: (1) Commodity Supplemental Food Program (CSFP), (2) funding for TEFAP administrative and distribution costs, (3) the WIC Farmers' Market Nutrition Program (FMNP), and (4) special Pacific Island assistance for nuclear-test-affected zones in the Pacific (the Marshall Islands) and areas affected by natural disasters.", "The enacted appropriation provides over $322 million for this account, no change from FY2018. Within the account,", "CSFP receives just below $223 million (a decrease of approximately $15 million or 6.8%); TEFAP Administrative Costs receives nearly $110 million\u2014this includes $79.6 million in FY2019 funding (+$15.2 million compared to FY2018) as well as a transfer of $30.0 million in prior-year (carryover) CSFP funds; in addition to this discretionary TEFAP funding, the law allows the conversion of up to 15% of TEFAP entitlement commodity funding (included in the SNAP account discussed above) to administrative and distribution costs; and WIC FMNP receives $18.5 million, the same level as FY2018."], "subsections": []}, {"section_title": "Nutrition Programs Administration", "paragraphs": ["This budget account funds federal administration of all the USDA domestic food assistance program areas noted previously; special projects for improving the integrity and quality of these programs; and the Center for Nutrition Policy and Promotion, which provides nutrition education and information to consumers (including various dietary guides). ", "The enacted appropriation provides nearly $165 million for this account, an increase of approximately $11 million from FY2018. As in FY2018 and prior years, the law sets aside $2 million for the fellowship programs administered by the Congressional Hunger Center. "], "subsections": []}]}, {"section_title": "Other Nutrition Funding Support", "paragraphs": ["Domestic food assistance programs also receive funds from sources other than appropriations:", "In addition to appropriated funds from the child nutrition account for commodity foods (which provides over $1.4 billion), USDA purchases commodity foods for the child nutrition programs using \"Section 32\" funds\u2014a permanent appropriation. For FY2019, the enacted appropriation specifies that up to $485 million from Section 32 is to be available for child nutrition entitlement commodities, compared to $465 million in FY2018. The Fresh Fruit and Vegetable Program (FFVP) for selected elementary schools nationwide is financed with permanent, mandatory funding from Section 32. The underlying law (Section 19 of the Richard B. Russell National School Lunch Act) provides funds at the beginning of every school year (July). For FY2019, there is $171.5 million available for FFVP, which is consistent with the FY2018 base amount adjusted for inflation. The Food Service Management Institute (technical assistance to child nutrition providers, also known as the Institute of Child Nutrition) is funded through a permanent annual appropriation of $5 million. The Senior Farmers' Market Nutrition program receives nearly $21 million of mandatory funding per year (FY2002-FY2023) outside of the regular appropriations process."], "subsections": [{"section_title": "Appendix. USDA-FNS Programs during the FY2019 Partial Government Shutdown", "paragraphs": ["USDA was one of the departments affected by a lapse in FY2019 funding and the resulting 35-day partial government shutdown (during parts of December 2018 and January 2019). ", "Most of USDA's Food and Nutrition Service (FNS) programs, whether mandatory or discretionary, rely on funding provided in appropriations acts. As a result, the lapse in FY2019 appropriations required the execution of contingency plans, including staff furloughs, and at times the operating status of programs was in flux.", "FNS program operations during a government shutdown vary based on the different programs' available resources, determined by factors such as contingency or carryover funds and terms of the expired appropriations acts as well as USDA's decisionmaking. Beginning in late December 2018, FNS released program-specific memoranda to states and program operators describing the status of different nutrition assistance programs during the funding lapse. ", "In addition to the impact on programs' funding discussed below, furloughs of FNS staff during this time period may have affected program operations (for example, the availability of technical assistance) on a case-by-case basis. ", "This appendix summarizes some of the key issues and impacts on the SNAP, Child Nutrition, and WIC programs during this partial government shutdown. Further detail can be found in the FNS documents referenced above. It is important to note that because circumstances during a lapse in appropriations and executive-branch decisionmaking can vary, operations during this partial shutdown are not necessarily how a future shutdown would proceed.", "SNAP Benefits", "States issue SNAP benefits on a monthly basis. As in the FY2019 appropriations law, the FY2018 appropriations law ( P.L. 115-141 ) provided one year of SNAP funding as well as a contingency fund of $3 billion that can be spent in FY2018 or FY2019. The $3 billion is less than the cost of one month of SNAP benefits, so the contingency fund alone would not fund a month of SNAP benefits in the case of a lapse of funding.", "At the start of the partial shutdown, when a continuing resolution ( P.L. 115-298 ) expired after December 21, 2018, December 2018 benefits had already been provided. In addition, during the shutdown period, a provision of the continuing resolution allowed for payments to be made 30 days after the continuing resolution's expiration; this allowed states to issue January 2019 benefits. On January 8, 2019, USDA interpreted the provision to authorize issuance of February 2019 benefits as well, so long as states conducted early issuance\u2014before January 20, 2019. ", "By the end of the partial shutdown, recipients had received their December 2018, January 2019, and February 2019 benefits. However, at the beginning of the shutdown, it was not clear that benefits would be provided for these months. USDA-FNS provided a series of memoranda to states during the shutdown that included answers to frequently asked questions.", "Child Nutrition and WIC", "Unlike SNAP, the appropriations language for the child nutrition programs (National School Lunch Program and others) and WIC accounts provides funding that can be obligated over a two-year period. WIC also has a contingency fund. In addition, the child nutrition programs may have more flexibility to continue operating during a shutdown because federal funds are generally provided retroactively (on a reimbursement basis).", "During the FY2019 lapse in funding, the Administration had carryover and contingency funds to maintain program operations. This includes FY2018 appropriations that are available for spending through FY2019 and contingency funds (in the case of WIC). Programs with this source of funding potentially available are those with two-year funding from the Child Nutrition Programs account and the WIC account. How long these operations could continue would depend on (1) the funding lapse's duration and (2) the amount of carryover or contingency funding available. ", "Ultimately, for child nutrition and WIC programs,", "USDA continued operating the child nutrition programs \"with funding provided under the terms and conditions of the prior continuing resolution [P.L. 115-245]\"; USDA stated that the programs had enough funding to continue operating at least through March 2019 if the shutdown were to continue; and USDA continued WIC and WIC FMNP operations using funding that had already been allocated to states and, for WIC, prior-year carryover funding. "], "subsections": []}]}]}}
{"id": "R46119", "title": "Cloud Computing: Background, Status of Adoption by Federal Agencies, and Congressional Action", "released_date": "2020-03-25T00:00:00", "summary": ["Cloud computing is a new name for an old concept: the delivery of computing services from a remote location, analogous to the way electricity, water, and other utilities are provided to most customers. Cloud computing services are delivered through a network, usually the internet. Utilities are also delivered through networks, whether the electric grid, water delivery systems, or other distribution infrastructure. In some ways, cloud computing is reminiscent of computing before the advent of the personal computer, where users shared the power of a central mainframe computer through video terminals or other devices. Cloud computing, however, is much more powerful and flexible, and information technology advances may permit the approach to become ubiquitous.", "As cloud computing has developed, varied and sometimes nebulous descriptions of what it is and what it is not have been commonplace. Such ambiguity can create uncertainties that may impede innovation and adoption. The National Institute of Standards and Technology has developed standardized language describing cloud computing to help clear up that ambiguity:", "Cloud computing is a model for enabling ubiquitous, convenient, on-demand network access to a shared pool of configurable computing resources (e.g., networks, servers, storage, applications, and services) that can be rapidly provisioned and released with minimal management effort or service provider interaction. This cloud model promotes availability and is composed of five essential characteristics, three service models, and four deployment models.", "Since 2009, the federal government has been shifting its data storage needs to cloud-based services and away from agency-owned, in-house data centers. This shift is intended to achieve two goals: reduce the total investment by the federal government in information technology (IT), which currently stands at about $90 billion each year, and realize other stated advantages of cloud adoption: efficiency, accessibility, collaboration, rapidity of innovation, reliability, and security. However, challenges remain as agencies shift to cloud services. According to a survey conducted in September 2018, federal IT managers expressed concerns about security in certain cloud environments, the complexity of migrating existing (\"legacy\") applications to the cloud, a lack of skilled staff to manage certain cloud environments, and uncertain funding.", "Planning for cloud adoption by federal agencies began with the 2010 publication of \"A 25-Point Implementation Plan to Reform Federal IT Management.\" More recently, in the 2017 \"Report to the President on Federal IT Modernization,\" the Office of Management and Budget (OMB) pledged to update the government's legacy Federal Cloud Computing Strategy (\"Cloud First\"). Fulfilling this requirement, the Administration developed a new strategy, \"Cloud Smart,\" which was published on September 24, 2018. The new strategy is founded on what the Administration considers the three key pillars of successful cloud adoption: security, procurement, and workforce.", "In the 116 th Congress, there has been one cloud-related bill introduced and two hearings directly related to cloud computing:", "The Federal Risk and Authorization Management Program (FedRAMP) Authorization Act ( H.R. 3941 ) was introduced on July 24, 2019, by Representative Gerald Connolly. The bill would formally establish within the General Services Administration a risk management, authorization, and continuous monitoring process consistent with the Federal Information Security Modernization Act of 2014.\" On July 17, 2019, the House Committee on Government Reform Subcommittee on Government Operations held a hearing, \"To the Cloud! The Cloudy Role of FedRAMP in IT Modernization.\" The purpose of the hearing was to examine the extent to which FedRAMP has reduced duplicative efforts, inconsistencies, and cost inefficiencies associated with the cloud security authorization process. On October 18, 2019, the Committee on Financial Services Task Force on Artificial Intelligence (AI) held a hearing, \"AI and the Evolution of Cloud Computing: Evaluating How Financial Data Is Stored, Protected, and Maintained by Cloud Providers.\" Among other topics, the hearing explored how AI could be used to improve cloud management functions.", "Additionally, there have been two hearings on the implementation status of the Federal Information Technology Acquisition Reform Act. These hearings provide an update on data center optimization, which is an indication of the extent of agency adoption of cloud computing."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["Since 2009, the federal government has been shifting its data storage needs to cloud-based services and away from agency-owned, in-house data centers. This shift is intended to achieve two goals: reduce the total investment by the federal government in information technology (IT), which currently stands at about $90 billion each year, and realize other stated advantages of cloud adoption , including efficiency, accessibility, collaboration, reliability, and security. However, challenges remain as agencies shift to cloud services. According to a survey conducted in September 2018, federal IT managers continue to express long-held concerns about security in certain cloud environments, the complexity of migrating existing (\"legacy\") applications to the cloud, a lack of skilled staff to manage certain cloud environments, and uncertain funding.", "This report explains what cloud computing is, including different models for cloud deployment and services, and describes the federal government's planning for IT reform. It also provides information on assessments that have been conducted on agency cloud adoption. Finally, the report provides a summary of recent congressional action and presents some possible mechanisms for Congress to monitor agencies as they implement cloud computing."], "subsections": []}, {"section_title": "What Is Cloud Computing?", "paragraphs": ["Cloud computing is a new name for an old concept: the delivery of computing services from a remote location. Cloud computing services are delivered through a network, usually the internet. Some analysts see this approach as analogous to the networked delivery of electricity, water, and other utilities through the electric grid, water delivery systems, and other distribution infrastructure. In some ways, cloud computing is reminiscent of computing before the advent of the personal computer, when users shared the power of a central mainframe computer through video terminals or other devices. Cloud computing, however, is much more powerful and flexible, and information technology advances may permit the approach to become nearly ubiquitous. ", "Cloud computing differs from local computing, in which local machines perform most tasks and store the relevant data. Some cloud services are adaptations of familiar applications, such as email and word processing. Others are new services that never existed as a local application, such as social networks. ", "As cloud computing has developed, varied and sometimes nebulous descriptions of what it is and what it is not have been commonplace. Such ambiguity can create uncertainties that may impede innovation and adoption. The National Institute of Standards and Technology (NIST) has developed standardized language describing cloud computing to help clear up that ambiguity: ", "Cloud computing is a model for enabling ubiquitous, convenient, on-demand network access to a shared pool of configurable computing resources (e.g., networks, servers, storage, applications, and services) that can be rapidly provisioned and released with minimal management effort or service provider interaction. This cloud model promotes availability and is composed of five essential characteristics, three service models, and four deployment models.", "The first sentence of the definition basically states that cloud computing is a way of providing convenient, flexible access to a broad range of computing resources over a network. The characteristics and models referred to in the second sentence provide the specificity necessary to clarify what cloud computing is and is not, described below."], "subsections": [{"section_title": "Characteristics of Cloud Computing6", "paragraphs": ["Cloud computing differs from local computing in many ways. NIST has identified five characteristics in particular: ", "On-demand self-service: A user can directly access the needed computing capabilities from the source, no matter what specific resource is required. An analogy is that a television viewer or radio listener can change stations at will. Broad network access: A user is not tied to one location but can access resources from anywhere the network (typically the internet) is available. Resource pooling: Many users share the same overall set of resources from a provider, using what they need, without having to concern themselves with where those resources originate. An analogy is that homeowners and businesses do not need to know which specific power plants generated the electricity they are using [although some do care, and specifically buy power from \"green\" sources]. Rapid elasticity: Users can quickly increase or decrease their use of a computing resource in response to their immediate needs. An analogy is that electricity customers can use as little or as much power as they need, within the capacity of their connections to the grid. Measured service: The amount of usage by a customer is monitored by the provider and can be used for billing or other purposes. An analogy is the metered use of electricity, water, natural gas, and other utilities. "], "subsections": []}, {"section_title": "Deployment Models7", "paragraphs": ["NIST has identified four standard models, or types, of cloud computing that can be implemented to satisfy the varying needs of users or providers. Those models\u00e2\u0080\u0094public, private, community, and hybrid\u00e2\u0080\u0094vary in where the hardware is located, what entity is responsible for maintaining the system, and who can use system resources. An extensive list of deployment model adoption by federal agencies is in the April 2019 report by the Government Accountability Office, Cloud Computing: Agencies Have Increased Usage and Realized Benefits, but Cost and Savings Data Need to Be Better Tracked . "], "subsections": [{"section_title": "Public", "paragraphs": ["In public cloud (sometimes called external cloud ) computing, a provider supplies one or more cloud-computing services to a large group of independent customers, such as the general public. Customers use the service over the internet through web browsers or other software applications. Providers usually sell these services on a metered basis, an approach that is sometimes called \"utility computing.\" Some common examples of services using a public cloud model include internet backup and file synchronization and web-based media services. Public clouds may have price and flexibility advantages over other deployment models, but security and other concerns could restrict federal use. The public cloud deployment model is used predominantly by businesses with low privacy concerns. "], "subsections": []}, {"section_title": "Private", "paragraphs": ["A private cloud (sometimes called an internal cloud ) works like public cloud computing, but on a private network controlled and used by a single organization. It is a cloud used by a company itself\u00e2\u0080\u0094rather than its customers. Private clouds may provide services that are similar to those provided by public cloud providers, but potentially with fewer risks. Potential disadvantages include cost and logistical challenges associated with purchasing and managing the required hardware and software. Private clouds can provide internal services such as data storage as well as external services to the public or other users."], "subsections": []}, {"section_title": "Community", "paragraphs": ["A community cloud allows a group of organizations with similar requirements to share infrastructure, thereby potentially realizing more of the benefits of public cloud computing than is possible with a purely private cloud. Because a community cloud has a much smaller user base than a public cloud, it may be more expensive to establish and operate, but it may also allow for more customization to meet the users' needs. It may also meet user-specific security and other requirements more effectively than a public cloud. Just like private cloud, community cloud is technically no different from public cloud. The only difference is who is allowed to use it."], "subsections": []}, {"section_title": "Hybrid", "paragraphs": ["A hybrid cloud uses a combination of internal (private or community) and external (public) providers. For example, a user could employ a private or community cloud to provide applications and store current data, but use a public cloud for archiving data. The flexibility of this deployment model may make it particularly attractive to many organizations. By combining different deployment models, users can choose the right balance for their organization between legal compliance, security, and scalability."], "subsections": []}]}, {"section_title": "Service Models11", "paragraphs": ["Cloud computing can provide various kinds of services, ranging from basic computing tasks to the provision of sophisticated applications. While these services can be categorized in different ways, the NIST definition uses three basic service models , described below."], "subsections": [{"section_title": "Software as a Service (SaaS)", "paragraphs": ["In the SaaS model, customers use applications that the provider supplies and makes available remotely on demand, rather than using applications installed on a local workstation or server. SaaS is the most readily visible and simplest service model to the end user. In many cases, SaaS applications are accessible through hardware or software \"thin clients.\" Examples include web-based services such as Google Apps and online storage such as DropBox. "], "subsections": []}, {"section_title": "Platform as a Service (PaaS)", "paragraphs": ["With PaaS, customers create applications on the provider's infrastructure using tools, such as programming languages, supplied by the provider. Facebook is one example of such an application. Such a platform could include hosting capability and development tools to facilitate building, testing, and launching a web application. The user controls the applications created via the platform, and the provider controls and maintains the underlying infrastructure, including networks, servers, and platform upgrades. "], "subsections": []}, {"section_title": "Infrastructure as a Service (IaaS)", "paragraphs": ["IaaS providers supply fundamental computing resources that customers can use however they wish. Customers can install, use, and control whatever operating systems and applications they desire, as they might otherwise do on desktop computers or local servers. The provider maintains the underlying cloud infrastructure. Examples of IaaS are Amazon Web Services and Microsoft Azure."], "subsections": []}, {"section_title": "Service Model Comparison", "paragraphs": ["A simple local-computing analogy for these three kinds of services would be the purchase of a desktop computer, which serves as infrastructure on which the user installs a chosen operating system such as Windows or Linux and uses it as a platform to create custom applications and run whatever software is needed. By providing these infrastructure, platform, and software services remotely, a cloud provider frees its customers from having to provide local infrastructure and support. In the case of IaaS, the user need not have a local workstation, using instead a thin client with minimal need for computing power."], "subsections": []}]}]}, {"section_title": "Federal Agency Cloud Adoption16", "paragraphs": ["Planning for cloud adoption by federal agencies began with the 2010 publication by the Federal Chief Information Officer (CIO) of \"A 25-Point Implementation Plan to Reform Federal IT Management.\" The reforms put forth in the plan were focused on eliminating barriers that were impeding effective management of IT programs throughout the federal government. In the plan, the Federal CIO recognized that too many past federal IT projects had run over budget, fallen behind schedule, or failed to deliver promised functionality. The plan stated that the federal government would shift to a \"Cloud First\" strategy, which it stated would be more economical, faster, and more flexible.", "Increased cloud adoption is also a stated goal of the Federal Information Technology Acquisition Reform Act (FITARA), enacted on December 19, 2014. Among other provisions, FITARA required the Federal CIO, in conjunction with federal agencies, to refocus the Federal Data Center Consolidation Initiative (FDCCI) to include adoption of cloud services. The FDCCI was superseded by the Data Center Optimization Initiative (DCOI) in August 2016. ", "In the 2017 \"Report to the President on Federal IT Modernization,\" the Office of Management and Budget (OMB) pledged to update the federal government's legacy Federal Cloud Computing Strategy (\"Cloud First\"). Fulfilling this requirement, the Administration developed a new strategy, Cloud Smart, published as a draft on September 24, 2018.", "The DCOI was updated in June 2019. Among other requirements, the updated DCOI placed a freeze on funds or resources to build new agency-owned data centers or significantly expand existing agency-owned data centers without approval from OMB. It also requires agencies to evaluate options for the consolidation and closure of existing data centers, in alignment with the Cloud Smart Strategy."], "subsections": [{"section_title": "The Cloud Smart Strategy", "paragraphs": ["On June 24, 2019, the Federal CIO issued the Cloud Smart Strategy to provide agencies with practical implementation guidance to achieve the potential of cloud-based technologies. The new strategy is founded on three pillars: ", "Security: Modernize security policies to focus on risk-based decisionmaking, automation, and moving protections closer to data. Procurement: Improve the ability of agencies to purchase cloud solutions through repeatable practices and sharing knowledge. Workforce: Upskill, retrain, and recruit key talent for cybersecurity, acquisition, and cloud engineering.", "Across these areas, the strategy identifies 22 \"action items\" to be completed not later than December 2020. As of November 2019, over half had been completed. (See Table 1 and Table 2 . )"], "subsections": []}]}, {"section_title": "2019 GAO Report", "paragraphs": ["In April 2019, the Government Accountability Office (GAO) published a report examining the status of cloud adoption at 16 agencies. GAO found that 10 of the agencies reported increasing their use of cloud services from FY2016 through FY2019. All 16 agencies had made progress in implementing cloud services, meaning they had established assessment guidance, performed assessments, and implemented services, but the extent of their progress varied. For example, not all had followed OMB guidance that directs agencies to review all IT investments for compatibility with cloud services. GAO also found that", "16 agencies reported an increase in their cloud service spending since 2015. 13 of the 16 agencies saved a total of $291 million to date from using cloud services. 15 of the 16 agencies identified significant benefits from acquiring cloud services, including improved customer service and the acquisition of more cost-effective options for managing IT services. 15 of the 16 agencies identified nine cloud investments that enhanced the availability of weather-related information; facilitated collaboration and information sharing among federal, state, and local agencies related to homeland security; and provided benefits information to veterans.", "In collecting the information requested by GAO, agency CIOs identified the following challenges:", "Spending data were not consistently tracked. Different methods were used to calculate cloud spending costs. Interpreting changes in OMB and related guidance created confusion regarding what spending data should be tracked.", "As a result of these challenges, GAO concluded that agency-reported cloud spending and savings figures were likely underreported.", "GAO made one recommendation to OMB on cloud savings reporting, and 34 recommendations to the 16 agencies on cloud assessments and savings. To OMB, GAO recommended that agencies be required to explicitly report, at least on a quarterly basis, the savings and cost avoidance associated with cloud computing investments. The 34 recommendations to the agencies included directing CIOs to", "establish guidance to assess new and existing IT investments for suitability for cloud computing services; complete an assessment of existing IT investments for suitability for migration to a cloud computing service; and establish a consistent and repeatable mechanism to track savings and cost avoidances from the migration and deployment of cloud services."], "subsections": []}, {"section_title": "Congressional Activity: 116th Congress", "paragraphs": ["Congress has conducted ongoing oversight of IT acquisitions, including cloud computing activity, for many years. This section summarizes cloud-related legislation and hearings in the 116 th Congress."], "subsections": [{"section_title": "Legislation", "paragraphs": ["The Federal Risk and Authorization Management Program (FedRAMP) Authorization Act ( H.R. 3941 ), introduced on July 24, 2019, by Representative Gerald Connolly, would establish a risk management, authorization, and continuous monitoring process to \"leverage cloud computing services using a risk-based approach consistent with the Federal Information Security Modernization Act of 2014.\""], "subsections": []}, {"section_title": "Hearings", "paragraphs": ["On July 17, 2019, the House Committee on Oversight and Reform Subcommittee on Government Operations held a hearing titled \"To the Cloud! The Cloudy Role of FedRAMP in IT Modernization.\" The purpose of this hearing was to examine the extent to which FedRAMP has reduced duplicative efforts, inconsistencies, and cost inefficiencies associated with the cloud security authorization process.", "On October 18, 2019, the Committee on Financial Services Task Force on Artificial Intelligence (AI) held a hearing, \"AI and the Evolution of Cloud Computing: Evaluating How Financial Data Is Stored, Protected, and Maintained by Cloud Providers.\" Among other topics, the hearing explored how AI could be used to improve cloud management functions. "], "subsections": [{"section_title": "FITARA Scorecard", "paragraphs": ["Since November 2015, a year after FITARA became law, the House Committee on Oversight and Reform has held two FITARA oversight hearings per year. These hearings provide a \"scorecard\" on various aspects of FITARA implementation, including data center optimization, which is an indication of the extent of agency adoption of cloud computing. Thus far in the 116 th Congress, these hearings were held on June 26, 2019, and December 11, 2019."], "subsections": []}]}]}, {"section_title": "Options for Congress", "paragraphs": ["As Congress monitors the progress of federal departments and agencies in implementing cloud computing, its options for ongoing oversight include holding hearings; requesting review of an agency's status by either the agency itself or the GAO; and assessing the agency's progress and projected goals against the stated goals of the Cloud Smart Strategy."], "subsections": [{"section_title": "Hearings", "paragraphs": ["Committees might choose to focus hearings on OMB, which oversees the management of the Cloud Smart Strategy at the agency level. This role makes OMB the central point of information regarding the status of agency planning and implementation. If OMB management practices for cloud computing are lacking, the impact could potentially affect the performance of all agencies. Consistent congressional review of OMB's management practices with respect to the Cloud Smart Strategy could help to detect and correct problems in a timely manner.", "Alternatively, or in addition, committees might choose to hold hearings to receive status reports directly from the CIOs of particular agencies under their jurisdictions."], "subsections": []}, {"section_title": "Review of Agency Cloud Computing Plans and Implementation Assessments", "paragraphs": ["As plans to migrate to cloud services within the federal government are created and implemented, policymakers may choose to monitor how agencies are following federal directives and responding to GAO assessments. Such monitoring could be achieved through assessments conducted internally by a department or agency itself, externally by GAO, or directly by a committee of jurisdiction. A model for internal assessments and reporting could be based on progress made on the uncompleted items of the Cloud Smart Strategy."], "subsections": []}, {"section_title": "Review of External Status Reports", "paragraphs": ["GAO conducts status reports on cloud adoption across the federal agencies, such as the April 2019 report discussed above, but it has not issued separate reports focused on the status of individual departments or agencies. ", "When examining shortcomings in individual agencies' implementation of the Cloud Smart Strategy, as identified by GAO, Congress might consider requesting follow-up reviews focused on particular challenges. "], "subsections": []}]}]}}
{"id": "R46330", "title": "Proposals for a COVID-19 Congressional Advisory Commission: A Comparative Analysis", "released_date": "2020-04-28T00:00:00", "summary": ["Throughout U.S. history, Congress has created advisory commissions to assist in the development of public policy. Among other contexts, commissions have been used following crisis situations, including the September 11, 2001, terrorist attacks and the 2008 financial crisis. In such situations, advisory commissions may potentially provide Congress with a high-visibility forum to assemble expertise that might not exist within the legislative environment; allow for the in-depth examination of complex, cross-cutting policy issues; and lend bipartisan credibility to a set of findings and recommendations. Others may determine that the creation of an advisory commission is unnecessary and instead prefer to utilize existing congressional oversight structures, such as standing or select committees.", "This report provides a comparative analysis of five congressional advisory commissions proposed to date that would investigate various aspects of the COVID-19 outbreak, governmental responses, governmental pandemic preparedness, and the virus's impact on the American economy and society. The overall structures of each of the proposed commissions are similar in many respects, both to each other and to previous independent advisory commissions established by Congress. Specifically, the proposed commissions would (1) exist temporarily; (2) serve in an advisory capacity; and (3) report a work product detailing the commission's findings, conclusions, and recommendations. That said, each proposed commission has unique elements, particularly concerning its membership structure, appointment structure, and time line for reporting to Congress.", "Specifically, this report compares and discusses the (1) membership structure, (2) appointment structure, (3) rules of procedure and operation, (4) duties and reporting requirements, (5) commission powers, (6) staffing, and (7) funding of the five proposed commission structures. The five proposals are found in H.R. 6429 (the National Commission on COVID-19 Act), H.R. 6431 (the Made in America Emergency Preparedness Act), H.R. 6440 (the Pandemic Rapid Response Act), H.R. 6455 (the COVID-19 Commission Act), and H.R. 6548 (the National Commission on the COVID-19 Pandemic in the United States Act)."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["Throughout U.S. history, Congress has created advisory commissions to assist in the development of public policy. Among other contexts, commissions have been used following crisis situations, including the September 11, 2001, terrorist attacks and the 2008 financial crisis. In such situations, advisory commissions may potentially provide Congress with a high-visibility forum to assemble expertise that might not exist within the legislative environment; allow for the in-depth examination of complex, cross-cutting policy issues; and lend bipartisan credibility to a set of findings and recommendations.", "As Congress considers its range of responses to the coronavirus pandemic, the creation of one or more congressional advisory commissions is an option that could provide a platform for evaluating various pandemic-related policy issues over time. Past congressional advisory commissions have retrospectively evaluated policy responses, brought together diverse groups of experts, and supplemented existing congressional oversight mechanisms. Policymakers may determine that creating an advisory commission is unnecessary and instead prefer to utilize existing congressional oversight structures, such as standing or select committees, or already established oversight entities.", "This report provides a comparative analysis of five proposed congressional advisory commissions that would investigate various aspects of the COVID-19 pandemic. The five proposed commissions are found in H.R. 6429 (the National Commission on COVID-19 Act, sponsored by Representative Stephanie Murphy), H.R. 6431 (the Made in America Emergency Preparedness Act, sponsored by Representative Brian Fitzpatrick), H.R. 6440 (the Pandemic Rapid Response Act, sponsored by Representative Rodney Davis), H.R. 6455 (the COVID-19 Commission Act, sponsored by Representative Bennie Thompson), and H.R. 6548 (the National Commission on the COVID-19 Pandemic in the United States Act, sponsored by Representative Adam Schiff). The overall structures of each of the proposed commissions are similar in many respects, both to each other and to previous independent advisory entities established by Congress. Specifically, the proposed commissions would (1) exist temporarily; (2) serve in an advisory capacity; and (3) report a work product detailing the commission's findings, conclusions, and recommendations. That said, each particular proposed commission has distinctive elements, particularly concerning its membership structure, appointment structure, and time line for reporting its work product to Congress.", "This report compares the (1) membership structure, (2) appointment structure, (3) rules of procedure and operation, (4) duties and reporting requirements, (5) powers of the commission, (6) staffing issues, and (7) funding for each of the proposed COVID-19 commissions. Table 1 (at the end of this report) provides a side-by-side comparison of major provisions of the five proposals."], "subsections": []}, {"section_title": "Membership Structure", "paragraphs": ["Several matters related to a commission's membership structure might be considered. They include the size of a commission, member qualifications, compensation of commission members, and requirements for partisan balance. "], "subsections": [{"section_title": "Size of Commission", "paragraphs": ["In general, there is significant variation in the size of congressional advisory commissions. Among 155 identified congressional commissions created between the 101 st Congress and the 115 th Congress, the median size was 12 members, with the smallest commission having 5 members and the largest 33 members.", "The membership structure of each of the five proposed commissions is similar to previous independent advisory entities created by Congress. H.R. 6429 , H.R. 6431 , H.R. 6440 , and H.R. 6548 would each create a 10-member entity. H.R. 6455 would create a 25-member entity."], "subsections": []}, {"section_title": "Qualifications", "paragraphs": ["Past legislation creating congressional commissions has often required or suggested that commission members possess certain substantive qualifications. Such provisions arguably make it more likely that the commission is populated with genuine experts in the policy area, which may improve the commission's final work product.", "H.R. 6455 would provide that commissioners \"shall be a United States person with significant expertise\" in a variety of fields related to public health and public administration. H.R. 6440 , H.R. 6429 , H.R. 6431 , and H.R. 6548 would provide \"the sense of Congress\" that commission members should be \"prominent U.S. citizens\" who are nationally recognized experts in a variety of fields relevant to the pandemic and response efforts. In addition, H.R. 6429 , H.R. 6431 , H.R. 6440 , and H.R. 6548 all prohibit the appointment of federal, state, and local government employees and officers. H.R. 6455 would prohibit federal employees from being commission members."], "subsections": []}, {"section_title": "Compensation of Commission Members", "paragraphs": ["Some congressional commissions have compensated their members. For example, the National Commission on Terrorist Attacks Upon the United States (9/11 Commission) and the Financial Crisis Inquiry Commission provided that commission members could be compensated at a daily rate of basic pay. Nearly all have reimbursed members for travel expenses. Those that have provided for commissioner compensation most frequently provided compensation at the daily equivalent of level IV of the Executive Schedule.", "Each of the five proposals would provide that commission members be compensated at a rate \"not to exceed the daily equivalent of the annual rate of basic pay\" for level IV of the Executive Schedule, \"for each day during which that member is engaged in the actual performance of duties of the Commission.\" Members of three proposed commissions would receive travel expenses, including a per diem."], "subsections": []}, {"section_title": "Partisan Limitations", "paragraphs": ["Each proposal provides a limit on the number of members appointed from the same political party. H.R. 6455 would provide that not more than 13 of its 25 members may be from the same party. H.R. 6429 , H.R. 6431 , H.R. 6440 , and H.R. 6548 would provide that not more than 5 (of 10) members are from the same party. Most previous advisory entities created by Congress do not impose formal partisan restrictions on the membership structure. It may also be difficult to assess the political affiliation of potential members, who may have no formal affiliation (voter registration, for example) with a political party. Instead, most past advisory commissions usually achieve partisan balance through the appointment structure; for instance, by providing equal (or near-equal) numbers of appointments to congressional leaders of each party."], "subsections": []}]}, {"section_title": "Appointment Structure", "paragraphs": ["Past congressional commissions have used a wide variety of appointment structures. Considerations regarding appointment structures include partisan balance, filling vacancies, and the time line for making commission appointments.", "The statutory scheme may directly designate members of the commission, such as a specific cabinet official or a congressional leader. In other cases, selected congressional leaders, often with balance between the parties, appoint commission members. A third common statutory scheme is to have selected leaders, such as committee chairs and ranking members, recommend candidates for appointment to a commission. These selected leaders may act either in parallel or jointly, and the recommendation may be made either to other congressional leaders, such as the Speaker of the House and President pro tempore of the Senate, or to the President.", "Each of the five commission proposals would delegate most or all appointment authority to congressional leaders (including chamber, party, and committee leaders; see Table 1 for details). Additionally, H.R. 6429 , H.R. 6431 , H.R. 6440 , and H.R. 6548 provide for one appointment to be made by the President. H.R. 6429 , H.R. 6431 , and H.R. 6548 would have the President appoint the commission's chair. H.R. 6455 has its membership appointed by the chairs and ranking members of designated House and Senate committees, and the Joint Economic Committee. H.R. 6455 does not provide any executive branch appointments.", "Attention to the proper balance between the number of members appointed by congressional leaders and by other individuals (such as the President), or to the number of Members of Congress required to be among the appointees, or to the qualifications of appointees, can be significant factors in enabling a commission to fulfill its congressional mandate.", "In general, a commission's appointment scheme can impact both the commission's ability to fulfill its statutory duties and its final work product. For instance, if the scheme provides only for the appointment of Members of Congress to the commission, it arguably might not have the technical expertise or diversity of knowledge to complete its duties within the time given by statute. Similarly, if the appointment scheme includes qualifying provisos so specific that only a small set of private citizens could serve on the panel, the commission's final work product may arguably only represent a narrow range of viewpoints. None of the proposed COVID-19 commissions specify whether Members of Congress may serve on the commission."], "subsections": [{"section_title": "Partisan Balance in Appointment Authority", "paragraphs": ["Most previous congressional advisory commissions have been structured to be bipartisan, with an even (or near-even) split of appointments between leaders of the two major parties. By achieving a nonpartisan or bipartisan character, congressional commissions may make their findings and recommendations more politically acceptable to diverse viewpoints. The bipartisan or nonpartisan arrangement can give recommendations strong credibility, both in Congress and among the public, even when dealing with divisive public policy issues. Similarly, commission recommendations that are perceived as partisan may have difficulty gaining support in Congress.", "In some cases, however, bipartisanship also can arguably impede a commission's ability to complete its mandate. In situations where a commission is tasked with studying divisive or partisan issues, the appointment of an equal number of majority and minority commissioners may serve to promote partisanship within the commission rather than suppress it, raising the possibility of deadlock where neither side can muster a majority to act.", "Each of the five proposals employs a structure where leaders in both the majority and minority parties in Congress would make appointments. H.R. 6429 , H.R. 6431 , and H.R. 6548 would provide for five majority and five minority appointments, including one for the President. H.R. 6440 would include two each by the Senate majority leader, the Senate minority leader, and the Speaker of the House, with one appointment by the House minority leader and one by the President, and the chair appointed by the Speaker and vice chair appointed by the Senate majority leader. H.R. 6455 would have 12 majority and 12 minority appointments made by the 12 committee chairs and ranking members and one member jointly appointed by the chair and vice chair of the Joint Economic Committee."], "subsections": []}, {"section_title": "Vacancies", "paragraphs": ["All five proposals provide that vacancies on the commission will not affect its powers and would be filled in the same manner as the original appointment."], "subsections": []}, {"section_title": "Deadline for Appointments", "paragraphs": ["Three of the bills propose specific deadlines for the appointment of commissioners. H.R. 6429 and H.R. 6548 provide that appointments are made between specific dates in January or February 2021. Further, H.R. 6429 provides that commission members could be appointed in September 2020, if there is no longer a COVID-19 public health emergency in effect\u00e2\u0080\u0094as determined by the Secretary of Health and Human Services\u00e2\u0080\u0094as of August 31, 2020. H.R. 6440 would require all appointments be made by December 15, 2020. H.R. 6455 would require appointments to be made within 45 days after enactment. H.R. 6429 , H.R. 6440 , and H.R. 6548 would start the commission's work in early 2021, as the commission cannot operate without the appointment of members. H.R. 6429 , however would provide that the proposed commission's work would begin no later than October 31, 2020, if members are appointed in September 2020. H.R. 6431 does not specify a deadline for the appointment of members.", "Typically, deadlines for appointment can range from several weeks to several months. For example, the deadline for appointments to the Antitrust Modernization Commission was 60 days after the enactment of its establishing act. The deadline for appointment to the Commission on Wartime Contracting in Iraq and Afghanistan was 120 days from the date of enactment. The deadline for appointment to the 9/11 Commission was December 15, 2002, 18 days after enactment of the act."], "subsections": []}]}, {"section_title": "Rules of Procedure and Operations", "paragraphs": ["While most statutes that authorize congressional advisory commissions do not provide detailed procedures for how the commission should conduct its business, the statutory language may provide a general structure, including a mechanism for selecting a chair and procedures for creating rules. None of the five COVID-19 commission proposals contain language that directs the process for potentially adopting rules of procedure. For a comparison of each proposed commission's specified rules of procedures and operations, see Table 1 ."], "subsections": [{"section_title": "Chair Selection", "paragraphs": ["Each bill provides for the selection of a chair and/or vice chair of the commission. H.R. 6429 , H.R. 6431 , and H.R. 6548 would have the chair appointed by the President and the vice chair appointed by congressional leaders of the political party opposite the President. H.R. 6440 would have the chair appointed by the Speaker of the House (in consultation with the Senate majority leader and the House minority leader) and the vice chair appointed by the Senate majority leader (in consultation with the Speaker of the House and the Senate minority leader). H.R. 6455 would have the chair and vice chair chosen from among commission members by a majority vote of the commission, and would require the chair and vice chair to have \"significant experience\" in areas to be studied by the commission."], "subsections": []}, {"section_title": "Initial Meeting Deadline", "paragraphs": ["As with the timing of commission appointments, some authorizing statutes are prescriptive in when the commission's first meeting should take place. Three of the bills analyzed here provide specific time lines for the commission's first meeting. H.R. 6429 would require the first meeting to be no later than March 15, 2021, unless members are appointed in September 2020 (if no public health emergency exists). H.R. 6455 would require the first meeting within 45 days after the appointment of all commission members, which is\u00e2\u0080\u0094given the 45-day deadline for appointment\u00e2\u0080\u0094effectively a maximum of 90 days after enactment. H.R. 6548 would direct the commission to hold its initial meeting \"as soon as practicable,\" but not later than March 5, 2021. H.R. 6431 and H.R. 6440 do not provide for an initial meeting deadline. Instead, they direct the commission to meet \"as soon as practicable.\" "], "subsections": []}, {"section_title": "Quorum", "paragraphs": ["Most commission statutes provide that a quorum will consist of a particular number of commissioners, usually a majority, but occasionally a supermajority. All five bills would provide for a quorum requirement. H.R. 6429 , H.R. 6431 , H.R. 6440 , and H.R. 6548 would define a quorum as 6 (of 10) members. H.R. 6455 would provide that a quorum is 18 of 25 members (72%)."], "subsections": []}, {"section_title": "Public Access", "paragraphs": ["All five commission bills would require commission meetings to be open to the public. Each bill would also require that reports be made publicly available."], "subsections": []}, {"section_title": "Formulating Other Rules of Procedure and Operations", "paragraphs": ["Absent statutory guidance (eithe r in general statutes or in individual statutes authorizing commissions), advisory entities vary widely in how they adopt their rules of procedure. In general, three models exist: formal written rules, informal rules, and the reliance on norms. Any individual advisory entity might make use of all three of these models for different types of decisionmaking. ", "The choice to adopt written rules or rely on informal norms to guide commission procedure may be based on a variety of factors, such as the entity's size, the frequency of meetings, member preferences regarding formality, the level of collegiality among members, and the amount of procedural guidance provided by the entity's authorizing statute. Regardless of how procedural issues are handled, protocol for decisionmaking regarding the following operational issues may be important for the commission to consider at the outset of its existence: eligibility to vote and proxy rules; staff hiring, compensation, and work assignments; hearings, meetings, and field visits; nonstaff expenditures and contracting; reports to Congress; budgeting; and procedures for future modification of rules. None of the five COVID-19 commission proposals specify that the proposed commission must adopt written rules."], "subsections": []}, {"section_title": "FACA Applicability", "paragraphs": ["The Federal Advisory Committee Act (FACA) mandates certain structural and operational requirements, including formal reporting and oversight procedures, for certain federal advisory bodies that advise the executive branch. Three proposals ( H.R. 6429 , H.R. 6431 , and H.R. 6548 ) specifically exempt the proposed commission from FACA. Of the remaining two, FACA would also likely not apply to the commission proposed in H.R. 6455 because it would be appointed entirely by Members of Congress, although it only specifies that its final report is public, not whether it is specifically sent to Congress and/or the President. It is not clear that FACA would apply to the commission proposed in H.R. 6440 . Although it includes a presidential appointment and its report would be sent to both Congress and the President, its establishment clause specifies that the commission \"is established in the legislative branch,\" and a super-majority of its members would be appointed by Congress."], "subsections": []}]}, {"section_title": "Duties and Reporting Requirements", "paragraphs": ["Most congressional commissions are generally considered policy commissions\u00e2\u0080\u0094temporary bodies that study particular policy problems and report their findings to Congress or review a specific event. "], "subsections": [{"section_title": "General Duties", "paragraphs": ["All five of the proposed commissions would be tasked with duties that are analogous to those of past policy commissions. While the specific mandates differ somewhat, all proposed commissions are tasked with investigating aspects of the COVID-19 pandemic and submitting one or more reports that include the commission's findings, conclusions, and recommendations for legislative action. H.R. 6440 would specifically require the commission to avoid unnecessary duplication of work being conducted by the Government Accountability Office (GAO), congressional committees, and executive branch agency and independent commission investigations."], "subsections": []}, {"section_title": "Reports", "paragraphs": ["Each proposed commission would be tasked with issuing a final report detailing its findings, conclusions, and recommendations. H.R. 6429 , H.R. 6431 , H.R. 6440 , and H.R. 6548 would provide that the commission \"may submit\" interim reports to Congress and the President, but do not provide time lines on when those reports might be submitted. In each case, the interim report would need to be agreed to by a majority of commission members. H.R. 6431 would also require the commission to submit a report on actions taken by the states and a report on essential products, materials, ingredients, and equipment required to fight pandemics.", "H.R. 6429 , H.R. 6431 , H.R. 6440 , and H.R. 6548 also specify that final reports shall be agreed to by a majority of commission members. H.R. 6455 does not specify a vote threshold for approval of its report.", "None of the bills make specific provisions for the inclusion of minority viewpoints. Presumably this would leave each commission with discretion on whether to include or exclude minority viewpoints. Past advisory entities have been proposed or established with a variety of statutory reporting conditions, including the specification of majority or super-majority rules for report adoption and provisions requiring the inclusion of minority viewpoints. In practice, advisory bodies that are not given statutory direction on these matters have tended to work under simple-majority rules for report adoption."], "subsections": []}, {"section_title": "Report Deadlines", "paragraphs": ["H.R. 6429 would require a final report one year after the commission's initial meeting. H.R. 6431 and H.R. 6440 would require a final report not later than 18 months after enactment. H.R. 6455 would require a final report to be published not later than 18 months after the commission's first meeting. ", "H.R. 6548 would require a final report by October 15, 2021. This deadline could be extended by 90 days upon a vote of no fewer than 8 (out of 10) commission members. The commission could vote to extend its final report deadline up to three times, and would be required to notify Congress, the President, and the public of any such extension.", "While such a deadline would potentially give the commission a defined period of time to complete its work, setting a particular date for report completion could potentially create unintended time constraints. Any delay in the passage of the legislation or in the appointment process would reduce the amount of time the commission has to complete its work, even with the opportunity for the commission to extend its own deadline up to three times.", "The length of time a congressional commission has to complete its work is arguably one of the most consequential decisions when designing an advisory entity. If the entity has a short window of time, the quality of its work product may suffer or it may not be able to fulfill its statutory mandate on time.", "On the other hand, if the commission is given a long period of time to complete its work, it may undermine one of a commission's primary legislative advantages, the timely production of expert advice on a current matter. A short deadline may also affect the process of standing up a new commission. The selection of commissioners, recruitment of staff, arrangement of office space, and other logistical matters may require expedited action if short deadlines need to be met."], "subsections": []}, {"section_title": "Report Submission", "paragraphs": ["Of the five proposed commissions, four ( H.R. 6429 , H.R. 6431 , H.R. 6440 , and H.R. 6548 ) are directed to submit their reports to both Congress and the President. H.R. 6455 requires that the report is made public.", "Most congressional advisory commissions are required to submit their reports to Congress, and sometimes to the President or an executive department or agency head. For example, the National Commission on Severely Distressed Public Housing's final report was submitted to both Congress and the Secretary of Housing and Urban Development."], "subsections": []}, {"section_title": "Commission Termination", "paragraphs": ["Congressional commissions are usually statutorily mandated to terminate. Termination dates for most commissions are linked to either a fixed period of time after the establishment of the commission, the selection of members, or the date of submission of the commission's final report. Alternatively, some commissions are given fixed calendar termination dates.", "All five commission proposals would provide for the commission to terminate within a certain period of time following submission of its final report. H.R. 6429 , H.R. 6431 , H.R. 6440 , and H.R. 6455 would each direct the commission to terminate 60 days after the submission; H.R. 6548 specifies a time line of 90 days after submission."], "subsections": []}]}, {"section_title": "Commission Powers", "paragraphs": ["Each of the five proposals would provide the proposed commission with certain powers to carry out its mission (see Table 1 for specifics). One general issue for commissions is who is authorized to execute such powers. In some cases, the commission itself executes its powers, with the commission deciding whether to devise rules and procedures for the general use of such power. In other cases, the legislation specifically authorizes the commission to give discretionary power to subcommittees or individual commission members. Finally, the legislation itself might grant certain powers to individual members of the commission, such as the chair."], "subsections": [{"section_title": "Hearings and Evidence", "paragraphs": ["All five bills would provide the proposed commission with the power to hold hearings, take testimony, and receive evidence. All five commissions would also be provided the power to administer oaths to witnesses."], "subsections": []}, {"section_title": "Subpoenas", "paragraphs": ["Four of the bills would provide the commission with subpoena power. H.R. 6440 would not provide subpoena power to the commission. H.R. 6429 , H.R. 6431 , and H.R. 6548 would provide that subpoenas could only be issued by either (1) agreement of the chair and vice chair, or (2) the affirmative vote of 6 (of 10) commission members. H.R. 6455 would require that a subpoena could only be issued by either agreement of the chair and vice chair or an affirmative vote of 18 (of 25) commission members. All four bills that would provide subpoena power contain substantially similar judicial methods of subpoena enforcement."], "subsections": []}, {"section_title": "Administrative Support", "paragraphs": ["All five of the bills would provide that the commission receive administrative support from the General Services Administration (GSA). The GSA provides administrative support to dozens of federal entities, including congressional advisory commissions. Each of the five bills would provide that GSA be reimbursed for its services by the commission. Each bill also provides that other departments or agencies may provide funds, facilities, staff, and other services to the commission."], "subsections": []}, {"section_title": "Other Powers", "paragraphs": ["Without explicit language authorizing certain activities, commissions often cannot gather information, enter into contracts, use the U.S. mail like an executive branch entity, or accept donations or gifts. ", "All five bills direct that federal agencies provide information to the commission upon request. H.R. 6429 , H.R. 6431 , and H.R. 6548 would also provide that the commission could use the U.S. mails in the same manner as any department or agency, enter into contracts, and accept gifts or donations of services or property."], "subsections": []}]}, {"section_title": "Staffing", "paragraphs": ["The proposed COVID-19 commissions contain staffing provisions commonly found in congressional advisory commission legislation. Congressional advisory commissions are usually authorized to hire staff. Most statutes specify that the commission may hire a lead staffer, often referred to as a \"staff director,\" \"executive director,\" or another similar title, in addition to additional staff as needed. Rather than mandate a specific staff size, many commissions are instead authorized to appoint a staff director and other personnel as necessary, subject to the limitations of available funds.", "Most congressional commissions are also authorized to hire consultants, procure intermittent services, and request that federal agencies detail personnel to aid the work of the commission."], "subsections": [{"section_title": "Director and Commission Staff", "paragraphs": ["Four of the bills provide that the commission may hire staff without regard to certain laws regarding the competitive service; H.R. 6440 does not specifically exempt the commission from such laws. Four bills ( H.R. 6429 , H.R. 6431 , H.R. 6455 , and H.R. 6548 ) would authorize, but not require, the commission to hire a staff director and additional staff, as appropriate. Four proposals would limit staff salaries to level V of the executive schedule. Three of the bills would specifically designate staff as federal employees for the purposes of certain laws, such as workman's compensation, retirement, and other benefits."], "subsections": []}, {"section_title": "Detailees", "paragraphs": ["When authorized, some commissions can have federal agency staff detailed to the commission. All five bills would provide that federal employees could be detailed to the commission. Four bills would provide that the detailee would be without reimbursement to his or her home agency. H.R. 6440 would allow detailees on a reimbursable basis. "], "subsections": []}, {"section_title": "Experts and Consultants", "paragraphs": ["All five bills would provide the commission with the authority to hire experts and consultants. Four of the bills limit the rate of pay for consultants to level IV of the Executive Schedule. H.R. 6440 does not specify a specific limit."], "subsections": []}, {"section_title": "Security Clearances", "paragraphs": ["Four bills would provide that federal agencies and departments shall cooperate with the commission to provide members and staff appropriate security clearances. H.R. 6440 does not contain a security clearance provision."], "subsections": []}]}, {"section_title": "Funding and Costs", "paragraphs": ["Commissions generally require funding to help meet their statutory goals. When designing a commission, therefore, policymakers may consider both how the commission will be funded, and how much funding the commission will be authorized to receive. Four of the five proposals specify a funding mechanism for the commission.", "How commissions are funded and the amounts that they receive vary considerably. Several factors can contribute to overall commission costs. These factors might include the cost of hiring staff, contracting with outside consultants, and engaging administrative support, among others. Additionally, most commissions reimburse the travel expenditures of commissioners and staff, and some compensate their members. The duration of a commission can also significantly affect its cost; past congressional commissions have been designed to last anywhere from several months to several years."], "subsections": [{"section_title": "Costs", "paragraphs": ["It is difficult to estimate or predict the potential overall cost of any commission. Annual budgets for congressional advisory entities range from several hundred thousand dollars to millions of dollars annually. Overall expenses for any individual advisory entity depend on a variety of factors, the most important of which are the number of paid staff and the commission's duration and scope. Some commissions have few full-time staff; others employ large numbers, such as the National Commission on Terrorist Attacks Upon the United States, which had a full-time paid staff of nearly 80. Secondary factors that can affect commission costs include the number of commissioners, how often the commission meets or holds hearings, whether or not the commission travels or holds field hearings, and the publications the commission produces."], "subsections": []}, {"section_title": "Authorized Funding", "paragraphs": ["Three of the bills ( H.R. 6429 , H.R. 6440 , and H.R. 6548 ) would authorize the appropriation of \"such sums as may be necessary\" for the commission, to be derived in equal amounts from the contingent fund of the Senate and the applicable accounts of the House of Representatives. H.R. 6429 and H.R. 6548 would provide that funds are available until the commission terminates. H.R. 6455 would authorize the appropriation of $4 million for the commission, to remain available until the commission terminates. H.R. 6431 does not include an authorization of appropriations."], "subsections": []}]}, {"section_title": "Comparison of Proposals to Create a COVID-19 Commission", "paragraphs": [" Table 1 provides a side-by-side comparison of major provisions of the five proposals. For each bill, the membership structure, appointment structure, rules of procedure and operation, duties and reporting requirements, proposed commission powers, staffing provisions, and funding are compared."], "subsections": []}]}}
{"id": "R45865", "title": "Farm Policy: USDA\u2019s 2019 Trade Aid Package", "released_date": "2019-11-26T00:00:00", "summary": ["On May 23, 2019, Secretary of Agriculture Sonny Perdue announced that the U.S. Department of Agriculture (USDA) would undertake a second trade aid package in 2019 valued at up to $16 billion\u00e2\u0080\u0094similar to a trade aid package initiated in 2018 valued at $12 billion\u00e2\u0080\u0094to assist farmers in response to trade damage from continued tariff retaliation and trade disruptions.", "Under the 2019 trade aid package, USDA will use its authority under the Commodity Credit Corporation (CCC) Charter Act to fund three separate programs to assist agricultural producers in 2019 while the Administration works to resolve the ongoing trade disputes with certain foreign nations, most notably China. The three programs are similar to the 2018 trade aid package but are funded at different levels:", "1. The Market Facilitation Program (MFP) for 2019, administered by USDA's Farm Service Agency, is to provide up to $14.5 billion in direct payments to producers of affected commodities (compared with up to $10 billion in 2018). 2. A Food Purchase and Distribution Program , administered through USDA's Agricultural Marketing Service, will use $1.4 billion (compared with $1.2 billion in 2018) to purchase surplus commodities affected by trade retaliation, such as fruits, vegetables, some processed foods, beef, pork, lamb, poultry, and milk, for distribution by USDA's Food and Nutrition Service to food banks, schools, and other outlets serving low-income individuals. 3. The Agricultural Trade Promotion Program , administered by USDA's Foreign Agriculture Service, will be provided $100 million ($200 million in 2018) to assist in developing new export markets on behalf of U.S. agricultural producers.", "The broad discretionary authority granted to the Secretary under the CCC Charter Act to implement the trade aid package also allows the Secretary to determine how the aid is to be calculated and distributed. Some important differences between the 2018 and 2019 trade aid packages include the following.", "The 2019 package includes an expanded funding commitment of $16 billion versus $12 billion under the 2018 package. The 2019 package focuses on the same three commodity groups\u00e2\u0080\u0094non-specialty crops (grains and oilseeds), specialty crops (nuts and fruit), and animal products (hogs and dairy)\u00e2\u0080\u0094but includes an expanded list of eligible commodities (41 eligible commodities in 2019 compared with nine in 2018). The MFP payment formula for 2019 is modified for non-specialty crops to be a single county payment rate rather than commodity-specific rates that were applied in 2018. This is done to minimize influencing producer crop choices and avoid large payment-rate discrepancies across commodities. MFP payments for non-specialty crops will be based on planted acres in 2019, not harvested production as in 2018. This change will avoid having MFP payments reduced by the lower yields that are expected across major growing regions due to the widespread wet spring and delayed plantings. The 2019 package includes expanded payment limits per individual per commodity group ($250,000 versus $125,000 under the 2018 initiative) and an expanded maximum combined payment limit across commodity groups ($500,000 versus $375,000). It continues the expanded adjusted gross income (AGI) criteria (no restriction if at least 75% of AGI is from farming operations) adopted under the 2019 Supplemental Appropriations for Disaster Relief Act ( P.L. 116-20 ) and applied to 2018 MFP payments retroactively.", "Payments may be made in up to three tranches, with the second and third tranches dependent on market developments. The first payment started in August and consisted of the higher of either 50% of a producer's calculated payment or $15 per acre. USDA announced on November 15, 2019, that the second tranche of payments would go out on November 18, 2019. The third tranche would depend on USDA's evaluation of market and trade conditions. If deemed necessary, they would occur in January 2020. As of November 25, 2019, USDA had made $10.2 billion in 2019 MFP payments.", "USDA's use of CCC authority to initiate and fund agricultural support programs without congressional involvement is not without precedent, but the scope and scale of its use for the two trade aid packages\u00e2\u0080\u0094at $28 billion\u00e2\u0080\u0094has increased congressional and public interest. Some have questioned whether MFP payments have established a precedent that might persist as long as trade disputes remain unresolved. Others have questioned the equity of their distribution across commodity sectors and regions. Finally, some economists worry that large MFP payments might contribute to a violation of U.S. trade commitments to the World Trade Organization."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["On May 23, 2019, Secretary of Agriculture Sonny Perdue announced that USDA would undertake a second round of trade aid in 2019 to assist farmers in response to trade damage from continued tariff retaliation and trade disruptions. Partial details of the new initiative were announced on July 25, 2019. Final program details\u00e2\u0080\u0094such as calculation of the individual commodity-specific payment rates used in the formulation of the county-level payment rates for non-specialty crops\u00e2\u0080\u0094were released on August 23, 2019.", "The 2019 trade aid package builds on the 2018 trade aid package in that it is based on the same legislative authority: Section 5 of the Commodity Credit Corporation (CCC) Charter Act of 1948 (P.L. 80-806; 15 U.S.C. 714 et seq. ), as amended. Specifically, the President has authorized USDA to provide up to $16 billion in new funding for the 2019 initiative. This new funding authority is in addition to the $12 billion in funding authority that was announced for the previous 2018 trade aid package. ", "The 2019 trade aid package is to be implemented using the same three trade assistance programs that were used under the 2018 trade aid package\u00e2\u0080\u0094a Market Facilitation Program (MFP), a Food Purchase and Distribution Program (FPDP), and an Agricultural Trade Promotion (ATP) program\u00e2\u0080\u0094but at generally higher funding levels ( Table 1 ), except for ATP. ", "Also similar to the 2018 initiative, the 2019 trade aid package funding authority corresponds with USDA's estimate of the trade damage to the U.S. agricultural sector from retaliatory tariffs\u00e2\u0080\u0094imposed on U.S. agricultural goods in response to previous U.S. trade actions\u00e2\u0080\u0094and other trade disruptions in 2019. The 2019 programs are intended to assist agricultural producers while the Administration works to resolve the ongoing trade disputes with certain foreign nations, most notably China. ", "This report describes the new trade aid package authorized for 2019, including its constituent parts, and identifies distinguishing differences from the 2018 trade aid package. An appendix provides additional details on USDA's implementation of the FPDP and ATP programs and on the evolution of USDA's formulation of the MFP payment rates under the 2018 and 2019 MFP programs. "], "subsections": []}, {"section_title": "2019 Trade Aid Package Components", "paragraphs": ["Under the 2019 trade aid package, USDA is to use up to $16 billion to fund three programs to assist producers of affected commodities in 2019:", "1. A Market Facilitation Program , administered by USDA's Farm Service Agency (FSA), to provide up to $14.5 billion in direct payments to producers of USDA-specified eligible commodities (described below). 2. A Food Purchase and Distribution Program , administered through USDA's Agricultural Marketing Service (AMS), to use $1.4 billion to purchase surplus commodities affected by trade retaliation, such as fruits, vegetables, some processed foods, beef, pork, lamb, poultry, and milk for distribution by the Food and Nutrition Service to food banks, schools, and other outlets serving low-income individuals. 3. An Agricultural Trade Promotion Program , administered by USDA's Foreign Agriculture Service (FAS), to use $100 million to assist in developing new export markets on behalf of U.S. agricultural producers.", "Some important differences between the 2018 and 2019 trade aid packages include the following:", "The 2019 package includes an expanded funding commitment of up to $16 billion versus $12 billion under the previous package. The 2019 package includes an expanded list of eligible commodities (41 eligible commodities in 2019 versus 9 in 2018). The MFP payment formula for 2019 is modified for non-specialty crops (field crops) to be a single county payment rate rather than commodity-specific rates. This is done to minimize influencing producer crop choices and avoid large payment-rate discrepancies across commodities. MFP payments for non-specialty crops in 2019 are to be based on planted acres, not harvested production as in 2018. This change would avoid having MFP payments reduced by the lower yields that are expected across major growing regions due to the widespread wet spring and delayed plantings. The 2019 package includes 1. expanded payment limits per individual per commodity group ($250,000 versus $125,000 for 2018 MFP payments); 2. an expanded maximum combined payment limit across commodity groups ($500,000 versus $375,000); and 3. adjusted gross income (AGI) eligibility criteria based on the average AGI for 2015, 2016, and 2017. AGI criteria used to assess eligibility for 2018 MFP payments were based on AGI for 2013, 2014, and 2015.", "Initially, 2018 MFP payment recipients were subject to an AGI limit of $900,000 for eligibility. However, the 2019 Supplemental Appropriations for Disaster Relief Act ( P.L. 116-20 ) included a provision that retroactively eliminated the AGI threshold if at least 75% of a farm's AGI came from farming operations. This expanded AGI interpretation is retained for 2019 MFP payments but based on the different three-year period described above."], "subsections": [{"section_title": "Market Facilitation Program", "paragraphs": ["The MFP program is authorized to make direct payments to producers of eligible commodities. Eligible producers must submit application forms as part of the signup for the MFP program. Signup runs from Monday, July 29, through Friday, December 6, 2019. Program information\u00e2\u0080\u0094including MFP application forms (CCC-913), program eligibility requirements, commodity coverage, and county-level payment rates\u00e2\u0080\u0094is available at USDA's MFP program website. Key program details are summarized below."], "subsections": [{"section_title": "Payment Qualifications", "paragraphs": ["Producers of MFP-eligible commodities (listed below) may apply for MFP payments, provided that they also ", "have an ownership interest in the commodity and are actively engaged in the farming operation; have an average AGI for tax years 2015, 2016, and 2017 of less than $900,000 per year or an AGI in excess of $900,000 with at least 75% of AGI derived from farming, ranching, or forestry-related activities; comply with the provisions of the \"Highly Erodible Land and Wetland Conservation\" regulations, often called the conservation compliance provisions; and have filed a 2019 acreage report with their county FSA offices.", "Producers are not required to have purchased crop insurance or coverage under the Noninsured Crop Disaster Assistance Program to be eligible for participation, nor are they required to participate in any other CCC programs."], "subsections": []}, {"section_title": "Covered Commodities and Payment Determination", "paragraphs": ["With respect to 2019 MFP payments, USDA has categorized the eligible commodities into three groups: ", "1. non-specialty crops (field crops including grains and oilseeds), 2. specialty crops (tree nuts and fruits), and 3. animal products (dairy and hogs). ", "Each of these three commodity groupings has different payment structures. In particular, producers of non-specialty crops will be eligible for a single county payment rate multiplied by their farms' total acres of MFP-eligible non-specialty crops planted in a county in 2019. In contrast, dairy, hogs, and specialty crops will each have a single national payment rate to be multiplied by their production history, inventory, or acres under cultivation in 2019, respectively ( Table 2 ). "], "subsections": [{"section_title": "Non-Specialty Crops", "paragraphs": ["Eligible non-specialty crops include alfalfa hay, barley, canola, corn, crambe, dried beans, dry peas, extra-long-staple cotton, flaxseed, lentils, long- and medium-grain rice, millet, mustard seed, oats, peanuts, rapeseed, rye, safflower, sesame seed, small and large chickpeas, sorghum, soybeans, sunflower seed, temperate japonica rice, triticale, upland cotton, and wheat.", "Unlike 2018, where MFP payment rates were specific for each eligible non-specialty crop, 2019 MFP payment rates are fixed at the county level and do not vary with a producer's mix of crops. This change in payment structure was done to minimize influencing producer crop choices (as the announcement was made before planting was finished) and avoid large payment-rate discrepancies across commodities. Thus, under the 2019 MFP payment format, producers of MFP-eligible non-specialty crops, within a particular county, are to receive MFP payments based on that county's MFP payment rate multiplied by the farms' total plantings to eligible crops in that county in 2019. USDA is requiring that a producer's total MFP-eligible plantings in 2019 may not exceed total 2018 plantings. ", "The MFP payment rate for non-specialty crops is fixed within each county. However, MFP payment rates will vary across counties based on each county's historical average share of eligible crops planted, average planted acres per eligible crop, and average yields of eligible crops. Within this construct, USDA has set minimum and maximum county MFP payment rates of $15 and $150 per acre.", "Producers who were prevented from planting MFP-eligible crops due to adverse weather but filed prevented-planting claims under crop insurance and planted FSA-certified cover crops (with the potential to be harvested) on the unplanted acres are also eligible for the minimum $15 per acre payment rate. Acres that were never planted in 2019 are not eligible for MFP payments. Acreage of non-specialty crops and cover crops must have been planted by August 1, 2019, to be eligible for MFP payments."], "subsections": []}, {"section_title": "Dairy and Hogs", "paragraphs": ["Dairy producers who were in business as of June 1, 2019, are to receive a $0.20 per hundredweight payment on their milk production history as reported for the Dairy Margin Coverage program. Hog producers are to receive a payment of $11 per head based on the number of live hogs owned on a date to be selected by the producer between April 1 and May 15, 2019. "], "subsections": []}, {"section_title": "Specialty Crops", "paragraphs": ["MFP payments are to also be made to producers of almonds, cranberries, cultivated ginseng, fresh grapes, fresh sweet cherries, hazelnuts, macadamia nuts, pecans, pistachios, and walnuts. Per-acre MFP payment rates will vary across specialty crops ( Table 2 ) based on their 2019 acres of fruit- or nut-bearing plants or, in the case of ginseng, harvested acres in 2019."], "subsections": []}]}, {"section_title": "MFP Payment Start Dates", "paragraphs": ["Payments are to be made in up to three tranches. The first payment is to consist of the higher of either 50% of a producer's calculated payment or $15 per acre. On August 22, 2019, news media announced that USDA had begun to process the first tranche of MFP payments. ", "USDA announced on November 15, 2019, that the second tranche of payments would go out on November 18, 2019. For producers with overall MFP payment rates equal to $15 per acre, there will be no second or third tranche payment. For producers with payment rates less than $30 per acre but greater than $15 per acre, the second tranche would equal the remaining unpaid balance. For producers with payment rates greater than $30 per acre, the second payment would be up to 75% of a producer's calculated payment (less the portion already received in the first tranche). As of November 25, 2019, USDA reported that $10.2 billion had been paid out under the first and second tranches. ", "The third tranche would depend on USDA's evaluation of market and trade conditions. If deemed necessary, the third and final payment would be for the remainder of a producer's calculated payment and would begin in January 2020."], "subsections": []}, {"section_title": "MFP Payment Limits", "paragraphs": ["MFP payments are limited to a combined $250,000 for each crop year for non-specialty crops per person or legal entity. MFP payments are also limited to a combined $250,000 for dairy and hog producers and a combined $250,000 for specialty crop producers. However, no applicant can receive more than $500,000 across the three commodity groups. ", "MFP payments do not count against other 2018 farm bill payment limitations. There are no criteria in place to calculate whether MFP might duplicate losses covered under revenue support programs such as the Agricultural Risk Coverage (ARC) and Price Loss Coverage (PLC) programs of the 2018 farm bill. As a result, the same program acres that are eligible for ARC or PLC payments may be eligible for MFP payments."], "subsections": []}, {"section_title": "MFP Payment Distribution by State", "paragraphs": ["Under the 2018 MFP program, payments were skewed toward major soybean producing states\u00e2\u0080\u0094particularly states in the Corn Belt \u00e2\u0080\u0094as the payments were based on commodity-specific payment rates and soybeans were allocated the largest payment rate at $1.65 per bushel ( Figure 1 ). When combined with a record soybean crop of over 4.5 billion in 2018, U.S. soybean producers received total outlays estimated at about $7 billion (or 82%) of 2018 MFP payments.", "For the 2019 MFP program, USDA released the MFP county-level payment rates for nearly 3,000 counties in the United States on July 25, 2019. Unlike 2018, when MFP payments centered on soybean-producing regions, the areas with the highest payment rates in 2019 are regions with heavy cotton and sorghum production ( Figure 2 ). Nationally, MFP payment rates range between $15 and $150 per acre. Some 22 counties are to receive the maximum payment\u00e2\u0080\u0094five counties each in Alabama, Georgia, and Texas; three counties in Mississippi and Arizona; and one county in New Mexico\u00e2\u0080\u0094while nearly 400 counties across the country are to receive the minimum $15 per acre payment. Some economists suggest that cotton acreage likely played a role in higher MFP payments rates in 2019 across southern states. In 2019, cotton acres averaged 52% of all MFP-eligible acres in counties with rates over $100 per acre. Peanut acreage could also play a role in higher payments."], "subsections": []}]}, {"section_title": "Food Purchase and Distribution Program", "paragraphs": ["USDA is to use CCC Charter Act authority to implement a 2019 FPDP program, valued at up to $1.4 billion, through AMS. FPDP is to purchase surplus commodities affected by trade retaliation, such as fruits, vegetables, some processed foods, beef, pork, lamb, poultry, and milk, for distribution by USDA's Food and Nutrition Service to food banks, schools, and other outlets serving low-income individuals ( Table B-1 ). The premise is that removing products from normal marketing channels helps to reduce supply and thereby increase prices and farm income."], "subsections": []}, {"section_title": "Agricultural Trade Promotion Program", "paragraphs": ["FAS will administer the ATP under authorities of the CCC. The ATP is to provide cost-share assistance to eligible U.S. organizations for activities\u00e2\u0080\u0094such as consumer advertising, public relations, point-of-sale demonstrations, participation in trade fairs and exhibits, market research, and technical assistance\u00e2\u0080\u0094to boost exports for U.S. agriculture, food, fish, and forestry products. On July 19, 2019, USDA awarded $100 million to 48 organizations through the ATP to help U.S. farmers and ranchers identify and access new export markets ( Table C-1 ). Many of the 2019 ATP award recipients are among the cooperator organizations that had been awarded funding from the $200 million in 2018 ATP funds."], "subsections": []}]}, {"section_title": "Conclusion", "paragraphs": ["The broad discretionary authority granted to the Secretary under the CCC Charter Act to implement the trade aid package also allows the Secretary to determine how the aid is to be calculated and distributed. In 2018, when the first trade aid package was announced with funding of $12 billion, USDA officials declared that it would be a temporary, one-time response to foreign tariffs imposed on selected U.S. commodities. However, on May 23, 2019, Secretary Perdue announced a second round of trade aid package valued at $16 billion in 2019. USDA's use of CCC authority to initiate and fund agricultural support programs without congressional involvement is not without precedent, but the scope and scale of its use for the two trade aid packages\u00e2\u0080\u0094at $28 billion\u00e2\u0080\u0094has increased congressional and public interest. ", "Some have suggested that the effects of tariffs and retaliatory tariffs could be long-lasting because they have created uncertainty about U.S. trade policy behavior and have called into question U.S. reliability as a trading partner. Furthermore, the use of CCC authority to mitigate tariff-related losses may establish a precedent for future situations. Some trade economists and market watchers have suggested that annual trade aid packages might continue as long as the trade disputes remain unresolved. ", "Most farm commodity and advocacy groups have been supportive of the trade aid package even as they have called for solutions that restore export activity. However, some stakeholders have questioned the equity of the distribution of 2018 MFP payments and the rationale for determining payments based on \"trade damage\" rather than a broader \"market loss\" measure. Some economists have suggested that, even under the 2019 formulation, USDA is overpaying farmers for trade losses and that USDA's calculations failed to fully incorporate last year's record soybean harvest or new trade patterns that have emerged following China's reluctance to buy U.S. soybeans.", "Due to their price tag ($12 billion in 2018 and $16 billion in 2019) and the coupled nature of the MFP payments to planted acres, there is considerable interest from policymakers, market observers, and trading partners about whether these payments will be fully compliant with World Trade Organization (WTO) commitments. In particular, there is some interest in whether large MFP payments might cause the United States to breach its $19.1 billion annual WTO spending limit on trade-distorting farm subsidies.", "Appendix A. MFP Payment Formula", "On August 23, 2019, USDA published the details on the calculation of MFP payment rates for USDA-designated eligible commodities under the 2019 trade aid package\u00e2\u0080\u0094including county-level MFP rates for non-specialty crops and national MFP rates for hogs, dairy, and specialty crops. ", "For both the 2018 and the 2019 trade aid packages, USDA defined economic losses due to foreign retaliatory trade actions narrowly in terms of gross trade damages rather than broadly as lost market value. Gross trade damages is defined as the total amount of expected export sales lost to the retaliating trade partner due to the additional tariffs. Gross trade damages were estimated for each of the major farm commodities affected by the retaliatory tariffs. The estimated trade damages were then used to derive both commodity-specific MFP payment rates and FPDP purchase targets for pork (hogs) and milk (dairy). ", "Both the 2018 and 2019 trade aid packages used the same methodology to estimate gross trade damages for USDA-designated commodities. However, the two estimates used different time frames to calculate the trade damages, thus producing different commodity-specific MFP payment rates ( Table A-1 ). The 2018 calculations of gross trade damages compared trade data from 2017 (pre-retaliatory tariffs) with 2018 data (post-retaliatory tariffs). The 2019 calculations used a longer historical time series, extending the \"look-back\" over a 10-year period from 2009 through 2018 compared with 2019 trade. ", "In a further change from the 2018 methodology, the 2019 MFP payment rates for non-specialty crops combined commodity-specific MFP payments rates at the county level in a formula (weighted by historical county planted acres and yields) to derive a single county-level MFP payment rate rather than separate national commodity-specific rates. Hogs, dairy, and specialty crops retained their national MFP payment rates but at different values due to the longer \"look-back\" period used to estimate gross trade damages.", "This appendix section briefly reviews the methodology used to derive the 2018 MFP commodity-specific payment rates. Then it discusses the adaptations made by USDA for 2019 to derive both the county-level payments for non-specialty crops and the national-level payment rates for specialty crops, hogs, and dairy. ", "2018 MFP Payment-Rate and Payment Methodology", "USDA calculated a unique national MFP payment rate for each affected commodity (as determined by USDA). A producer's MFP payment calculation involved three steps:", "First, USDA estimated the level of direct trade-related damage caused by 2018 retaliatory tariffs\u00e2\u0080\u0094imposed by Canada, China, the European Union, Mexico, and Turkey\u00e2\u0080\u0094to U.S. exports for each affected commodity. Direct trade loss is the difference in expected trade value for each affected commodity with and without the retaliatory tariffs. To measure this, USDA compared U.S. exports for 2017 (the year prior to the imposition of retaliatory tariffs) with 2018 export levels when trade was subject to the retaliatory tariffs. ", "Much of the affected 2018 agricultural production had yet to be harvested and sold at the time the MFP payment rates were calculated. In addition, the final trade effect, with or without retaliatory tariffs, was not observable, and markets had yet to fully adjust to whatever new trade patterns would emerge from the trade dispute. As a result, USDA estimated both export values (with and without retaliatory tariffs) using a global trade model that accounted for the availability of both substitute supplies from export competitors and demand for U.S. agricultural exports from alternate importers. Indirect effects\u00e2\u0080\u0094such as any decline in market prices due to record 2018 soybean production and the build-up of domestic stocks, or resultant economy-wide \"lost value\" for non-producer owners of the affected commodities\u00e2\u0080\u0094were not included in the payment calculation. ", "Second, the estimated trade damage for each affected commodity was divided by the crop's production in 2017 to calculate a national commodity-specific, per-unit damage rate. This per-unit damage rate is the commodity-specific MFP payment rate. In the case of both pork and milk, FPDP purchases were subtracted from the estimated trade damage before the per-unit MFP payment rates for hogs and milk were calculated.", "Finally, a producer's 2018 MFP payment was equal to the commodity-specific MFP payment rate multiplied by the producer's 2018 production for corn, cotton, sorghum, soybeans, wheat, fresh sweet cherries, and shelled almonds. For hog producers, the MFP payment rate was multiplied by a producer-selected hog inventory from July 15 to August 15, 2018. For milk producers, the MFP payment rate was multiplied by the farm's production history as reported for the Margin Protection Program of the 2014 farm bill. ", "2019 MFP Payment-Rate and Payment Methodology", "To calculate the 2019 MFP payment rates, USDA made several adaptations to the 2018 methodology. As a result, a producer's MFP payment calculation in 2019 involved an additional fourth step.", "First, USDA again calculated the level of direct trade-related damage caused by retaliatory tariffs to U.S. exports for each commodity. However, USDA used 2019 retaliatory tariffs (not 2018) that were being imposed by China, the European Union, and Turkey. Canada and Mexico were removed from the calculations, as they were no longer imposing retaliatory tariffs on U.S. agricultural exports. In addition, USDA adjusted the calculation of direct trade damage by using 10 years of historical U.S. export data (2009-2018) rather than a single year. This larger period captured trade losses for certain commodities that experienced fluctuating trade patterns in recent years and where trade levels during the 2017 data period were unrepresentative of historical trade volumes. ", "Second, the estimated trade damage for each affected commodity was divided by the crop's average production during the three-year period 2015-2017 to calculate a national commodity-specific, per-unit damage rate. In the case of both pork and milk, FPDP purchases were subtracted from the estimated trade damage before the per-unit MFP payment rates for hogs and milk were calculated.", "Third, the commodity-specific damage rates were then used to establish county-level, per-acre payment rates based on historical county data for average planted area and yields of the affected commodities. For each county, USDA multiplied three terms together to estimate the county-level trade damage for each MFP-eligible crop: (1) the three-year (2015-2017) average yield for each crop\u00e2\u0080\u0094taken from USDA's Risk Management Agency's (RMA) crop insurance data, (2) the four-year (2015-2018) average planted acres of each crop in the county\u00e2\u0080\u0094taken from FSA's database of crop acreage reports\u00e2\u0080\u0094and (3) the commodity-specific, per-unit damage rate for each crop (from step two above). Then, for each county, the crop damage estimates were added across all MFP-eligible crops produced in the county to generate an estimate of the county's total trade damages. The county's total trade damage estimate was then divided by total planted acres of MFP-eligible crops within the county. The result is a unique county-level MFP payment rate. Under this formulation, MFP county-level rates will vary across counties based on the average crop mix, the average planted acres per crop, and average crop yields.", "Finally, a producer's 2019 MFP non-specialty-crop payment is equal to the county-level MFP non-specialty-crop payment rate (for the county where production occurs) multiplied by the total acreage of all non-specialty crops planted in that county by that producer. Thus, the 2019 MFP non-specialty-crop payment is independent of an individual farmer's crop mix (from among MFP-eligible non-specialty crops). ", "In 2019, many producers were prevented from planting acreage due to wet, cool conditions. These acres were not eligible for MFP non-specialty crop payments. However, if a USDA-approved cover crop was planted on the \"prevent-plant\" acres with the potential to be harvested, then those producers qualified for a $15-per-acre payment on \"prevent-plant\" acres.", "USDA suggests that this independence from individual crop choices prevents the county-level MFP payment from distorting producer planting decisions that were ongoing at the time of the initial trade aid package announcement on May 23, 2019. However, planting of an MFP-eligible crop was a requirement for MFP eligibility. Thus, the 2019 MFP payments may be non-commodity-specific outlays, but they are coupled to the planting of an MFP-eligible crop. These distinctions, although subtle, are important considerations for how the resultant outlays may be notified under WTO domestic-support program disciplines.", "Appendix B. FPDP Implementation", "The Administration is allocating about $1.4 billion of its 2019 trade aid package to USDA's AMS for purchasing various agricultural commodities and distributing them through domestic nutrition assistance programs ( Table B-1 ). ", "Under the 2019 FPDP program, AMS is to buy affected products in four phases, starting after October 1, 2019, with deliveries beginning in January 2020. The products purchased can be adjusted between phases to accommodate changes due to growing conditions, product availability, market conditions, trade negotiation status, and program capacity.", "AMS maintains purchase specifications for a variety of commodities based on recipient needs. The products discussed in this plan are to be distributed to states for use in the network of food banks and food pantries that participate in the Emergency Feeding Assistance Program, elderly feeding programs such as the Commodity Supplemental Foods Program, and tribes that operate the Food Distribution Program on Indian Reservations. These outlets are in addition to child nutrition programs such as the National School Lunch Program, which may also benefit from these purchases.", "Appendix C. ATP Program Implementation", "USDA announced funding allocations under the ATP program for both the 2018 and 2019 trade aid packages in 2019 ( Table C-1 ). A total of 59 organizations have received $300 million in awards under the two ATP programs, including 57 organization receiving $200 million under the 2018 ATP program and 48 organizations sharing $100 million under the 2019 program. "], "subsections": []}]}}
{"id": "R46308", "title": "Bureau of Reclamation Rural Water Projects", "released_date": "2020-04-07T00:00:00", "summary": ["Congress has authorized projects and programs through various federal agencies to address water supply needs. Since 1980, Congress has authorized the Bureau of Reclamation (Reclamation), among other agencies, to develop municipal and industrial (M&I) water supply projects in rural areas and on tribal lands. Congress has authorized these projects, known as rural water supply projects, for several locations throughout the West.", "From 1980 through 2009, Congress authorized Reclamation to undertake the design and construction, and sometimes the operations and maintenance (O&M), of specific rural water supply projects intended to deliver potable water supplies to rural communities in western states. These projects are largely located in North Dakota, South Dakota, Montana, and New Mexico. The rural communities served by these projects included tribal reservations and nontribal rural communities with nonexistent, substandard, or declining water supply or water quality. Many rural water projects are large in scope\u00e2\u0080\u0094taking water from one location and moving it across long distances to tie to existing systems. Although M&I portions of most Reclamation water supply facilities require 100% repayment with interest, Congress has authorized rural water projects that receive some or all costs from the federal government on a nonreimbursable basis (i.e., a de facto grant). For example, the federal government pays up to 100% of costs for tribal rural water supply projects, including O&M. For nontribal rural water supply projects, the federal cost share for current projects ranges from 75% to 80%.", "The Rural Water Supply Act of 2006 (Title I of P.L. 109-451 ) created the Rural Water Supply Program, a structured program for developing and recommending future rural water supply projects. This program was to replace the previous process of authorizing projects individually\u00e2\u0080\u0094often without the level of analysis and review (e.g., feasibility studies) required for Reclamation's other projects. Under the Rural Water Supply Program, Congress authorized Reclamation to work with rural communities and tribes to identify M&I water needs and options to address such needs through appraisal investigations and feasibility studies. Congress would then consider feasibility studies recommended by the Administration before authorizing specific project construction in legislation. Ultimately, Reclamation did not recommend and Congress did not authorize any projects through this process, and the authority for the program expired in 2016. Members have introduced legislation in the 116 th Congress to reauthorize the Rural Water Supply Program through FY2026: the Water Justice Act ( H.R. 4033 ) and the Securing Access for the Central Valley and Enhancing (SAVE) Water Resources Act ( H.R. 2473 ). Other bills would authorize individual activities (i.e., a feasibility study and a project) previously considered by the Rural Water Supply Program or would address rural water needs by creating authorities for rural water grants or water technology programs.", "Reclamation continues to construct rural water projects (and to provide O&M assistance for some tribal components) authorized and initiated outside of the Rural Water Supply Program. Enacted funding for rural water supply projects in FY2020 provided $145.1 million for construction and O&M at seven authorized rural water projects, which was $117.4 million above the Administration's FY2020 budget request. Five projects received construction funding in FY2020: Garrison Diversion Unit of the Pick-Sloan Missouri Basin Program, Fort Peck Reservation/Dry Prairie Rural Water System, Lewis and Clark Rural Water System, Rocky Boy's/North Central Montana Rural Water System, and Eastern New Mexico Water Supply. For FY2021, the Administration requested $30.3 million for rural water projects. As of early 2020, Reclamation reported that $1.2 billion was needed to construct authorized, ongoing rural water projects."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["According to a 2019 study, 2 million Americans lack access to running water, indoor plumbing, or wastewater services. Many of the communities with inadequate water supply infrastructure are in rural areas or on tribal lands. Over time, Congress has authorized projects and programs through various federal agencies to address rural water supply needs. Since 1980, Congress has authorized the Bureau of Reclamation (Reclamation), among other federal agencies, to develop municipal and industrial (M&I) water supply projects in rural areas and on tribal lands. ", "Reclamation was established to implement the Reclamation Act of 1902, which authorized the construction of water works to provide water for irrigation in arid western states. Reclamation owns and manages 491 dams and 338 reservoirs, which are capable of storing a combined 140 million acre-feet of water. Reclamation has incorporated M&I water resource projects into larger projects that serve various other authorized purposes (e.g., irrigation, power). Reclamation-funded M&I water deliveries total approximately 10 trillion gallons of water per year. As part of Reclamation's M&I responsibilities, Congress has expressly authorized the agency to undertake the design and construction of rural water supply projects intended to deliver potable water supplies to defined rural communities.", "From 1980 through 2009, Congress authorized Reclamation to undertake the design and construction, and in some cases the operations and maintenance (O&M), of specific projects intended to deliver potable water supplies to rural communities in western Reclamation states. These projects were largely located in North Dakota, South Dakota, Montana, and New Mexico. The rural communities include tribal reservations and nontribal rural communities with nonexistent, substandard, or declining water supply or water quality. Many rural water projects are large in scope\u00e2\u0080\u0094taking water from one location and moving it long distances to tie to existing systems. M&I portions of Reclamation water supply facilities typically require 100% repayment of construction costs to the federal treasury with interest. Congress also has authorized rural water projects that receive funding from the federal government for some or all costs on a nonreimbursable basis (i.e., a de facto grant). For example, the federal government pays up to 100% of the cost of tribal rural water supply projects, including O&M. For nontribal rural water supply projects, the federal cost share for current projects ranges from 75% to 80%.", "The Rural Water Supply Act of 2006 (Title I of P.L. 109-451 ) created the Rural Water Supply Program, a structured program for developing and recommending rural water supply projects. This program was to replace the previous process of authorizing projects individually\u00e2\u0080\u0094often without the level of analysis and review (e.g., feasibility studies) consistent with Reclamation's other projects. Under the Rural Water Supply Program, Congress authorized Reclamation to work with rural communities and tribes to identify M&I water needs and options to address such needs through appraisal investigations and feasibility studies. Congress would then consider feasibility studies recommended by the Administration before authorizing specific projects for construction in legislation. Ultimately, Congress did not authorize any projects for construction through this process, and the authority for the program expired in 2016. ", "Reclamation continues to construct rural water projects (and to provide O&M assistance for some tribal components) that were authorized and initiated outside of the Rural Water Supply Program. In 2012, Reclamation developed prioritization criteria for budgeting these projects: ", "inclusion of tribal components amount of financial resources committed urgency and severity of need financial need and potential economic impact regional and watershed approach water, energy, and other priority objectives ", "According to Reclamation, the criteria aim to reflect both the priorities identified in the statutes that authorized individual projects and the goals of the Rural Water Supply Act of 2006.", "For FY2020, Congress appropriated $145.1 million for construction and O&M at seven authorized rural water projects, which was $117.4 million above the Administration's FY2020 budget request. As of early 2020, Reclamation reported that $1.2 billion was still needed to construct authorized, ongoing rural water projects. For FY2021, the Administration requested $30.3 million for Reclamation rural water activities, of which $8.1 million is for construction.", "This report provides an overview of Reclamation rural water projects, including completed and ongoing rural projects and efforts under Reclamation's Rural Water Supply Program. The report also discusses considerations for Congress (e.g., funding prioritization, potential nexus with other federal programs) and presents recent legislation relating to authorizing additional projects and reauthorizing the Rural Water Supply Program. "], "subsections": []}, {"section_title": "Rural Water Projects", "paragraphs": ["Congress has funded water supply projects in rural areas for more than four decades. Reclamation first became involved in these efforts beginning with authorization of the WEB Rural Water Supply Project in 1980 ( P.L. 96-355 ). Since that time, Congress has authorized Reclamation to fund the construction of several other rural water supply projects (see Table 1 ). These projects have individual authorizations and generally aim to provide water exclusively for M&I water uses in rural areas\u00e2\u0080\u0094a departure from the historical mission of providing water for irrigation, with M&I water use as an incidental project purpose. According to a U.S. Government Accountability Office (GAO) report, Reclamation became involved in such projects because communities proposed projects directly to Congress and, in response, Congress created specific authorizations for these rural water supply projects, with Reclamation overseeing funding and construction. In addition to projects authorized only in Reclamation states, Congress specifically authorized Reclamation's involvement in the Lewis and Clark Rural Water Supply Project located in South Dakota, Iowa, and Minnesota.", "Reclamation reported that, prior to authorization, some rural water projects did not go through the level of analysis and review that is consistent with Reclamation's other projects and did not meet the economic, environmental, and design standards that are required to determine the feasibility of federal water resources development projects. In these instances, following authorization, Reclamation was to complete the analysis that was necessary to execute the project while adhering to the project configuration and designs specified by the authorizing statutes and in accordance with other laws (e.g., Clean Water Act [33 U.S.C. \u00c2\u00a7\u00c2\u00a71251-1387], National Environmental Policy Act [42 U.S.C. \u00c2\u00a74321 et seq.]). Critics have sometimes expressed concerns over this approach\u00e2\u0080\u0094specifically, whether the authorized project would have emerged as the most cost-effective preferred alternative had a feasibility study been performed prior to authorization. ", "Each rural water project authorization required that the cost ceilings authorized in the legislation be indexed to adjust for inflation to include the rising cost of materials and labor, which was estimated to be 4% annually. The result of these indexing requirements is that the overall cost of authorized rural water projects has risen and continues to rise due in part to actual federal appropriations for projects falling short of the optimal funding scenarios that were assumed under planning projections. As of early 2020, Reclamation reported that $1.2 billion was needed to construct authorized, ongoing rural water projects.", "For FY2021, the Administration's budget proposal requested $30.3 million: $8.1 million for ongoing construction at four authorized rural water projects and $22.2 million for O&M of tribal systems (e.g., $14.5 million for the Mni Wiconi Project, $7.7 million for the Garrison Diversion Unit M&I, and $20,000 for the Mid-Dakota Rural Water System). The FY2021 request is $114.8 million less than FY2020 enacted funding of $145.1 million. The FY2021 request continues a trend since FY2014 in which the President's budget requested reduced funding for rural water projects from prior-year enacted levels. Reclamation also has emphasized its authority to accept nonfederal contributions in excess of cost-sharing requirements as one way to expedite projects in the absence of increased federal funding. In the FY2021 budget request, Reclamation noted that nonfederal parties have the ability to move forward with important investments in water resources infrastructure by contributing amounts in excess of minimum contributions. "], "subsections": [{"section_title": "Rural Water Projects Under Construction in FY2020", "paragraphs": ["In FY2020, Reclamation funded $125.4 million in construction work at five projects ( Table 2 ). Reclamation's FY2020 budget request included $8.0 million in construction for four projects, but Congress provided $117.4 million in appropriations above the President's budget request. The Administration distributed the funds above the request among five authorized projects, as described in Reclamation's additional funding spend plan. The following briefly describes the projects under construction in FY2020 based on Reclamation budget documents."], "subsections": [{"section_title": "Garrison Diversion Unit of the Pick-Sloan Missouri Basin Program", "paragraphs": ["The Garrison Diversion Unit of the Pick-Sloan Missouri-Basin Program was authorized in 1965 (P.L. 89-108) and was amended in 1986 by the Garrison Diversion Unit Reformulation Act ( P.L. 99-294 ) to include rural water services. Garrison Diversion Unit water supply facilities are associated with Garrison Dam of the Pick-Sloan Missouri Basin Program. They are located in eight counties in the central and eastern part of North Dakota and serve four tribal reservations (Spirit Lake, Fort Berthold, Turtle Mountain, and Standing Rock Indian Reservations). The multipurpose project principally provides tribal and nontribal M&I water, along with fish and wildlife, recreation, and flood control benefits. "], "subsections": []}, {"section_title": "Fort Peck Reservation/Dry Prairie Rural Water System", "paragraphs": ["The Fort Peck Reservation Rural Water System Act of 2000 ( P.L. 106-382 ), as amended, authorized rural water projects in northeastern Montana for the Fort Peck Reservation, serving the Assiniboine and Sioux Tribes, and for the Dry Prairie Rural Water Authority, serving towns outside of the reservation. The total service area population is around 25,000 people; rural water use is also available for commercial users and livestock. Currently, groundwater from shallow alluvial aquifers is the primary water source for the municipal systems, but groundwater quality is generally poor. The regional rural water project is to provide for a single water treatment plant located on the Missouri River, which is to distribute up to 13.6 million gallons of treated water per day through 3,200 miles of pipeline. "], "subsections": []}, {"section_title": "Lewis and Clark Rural Water System", "paragraphs": ["The Lewis and Clark Rural Water System Act of 2000 (Division B, Title IV of P.L. 106-246 ) authorized the Lewis and Clark Rural Water System to serve over 300,000 people in southeast South Dakota, southwest Minnesota, and northwest Iowa. The project aims to address concerns regarding low water quality, contamination, and insufficient supplies of existing drinking water sources throughout the project area. The water source for the Lewis and Clark Rural Water System is the sand and gravel aquifers of the Missouri River near Vermillion, SD. The project is to collect, treat, and distribute water through a network of wells, pipelines, pump stations, and storage reservoirs to each of 15 municipalities (including the city of Sioux Falls) and five rural systems. As of February 2020, completed facilities delivered water to the first 14 of 20 members, serving more than 200,000 individuals in Iowa, Minnesota, and South Dakota."], "subsections": []}, {"section_title": "Rocky Boy's/North Central Montana Rural Water System", "paragraphs": ["The Rocky Boy's/North Central Montana Regional Water System Act of 2002 (Title IX of P.L. 107-331 ) authorized a rural water system to serve the Rocky Boy's Indian Reservation (Chippewa Cree Tribe) and surrounding communities in northern Montana. The system is designed to serve a total projected population of 43,000 (14,000 on reservation and 29,000 off reservation) by providing infrastructure to ensure existing water systems within the project service area comply with federal Safe Drinking Water Act (42 U.S.C. \u00c2\u00a7\u00c2\u00a7300f-300j-26) regulations. A core pipeline is to provide potable water from Tiber Reservoir to the Rocky Boy's Reservation, and non-core pipelines are to serve 21 surrounding towns and rural water districts. A $20 million trust fund established with Bureau of Indian Affairs appropriations is to fund O&M and replacement for the core and on-reservation systems initially; eventually, water users are expected to entirely fund the project. Reclamation states that the current authorization is not adequate to cover the project."], "subsections": []}, {"section_title": "Eastern New Mexico Water Supply", "paragraphs": ["Section 9103 of the Omnibus Public Land Management Act of 2009 ( P.L. 111-11 ) authorized the Eastern New Mexico Water Supply project to deliver water from Ute Reservoir on the Canadian River to eight member communities. The use of Ute Reservoir water aims to provide long-term water supply and reduce the eight communities' dependence on groundwater in the Ogallala Aquifer. Current funding is for planning, design, and construction of interim projects to deliver groundwater to the communities before treated surface water is delivered from the Ute Reservoir Pipeline."], "subsections": []}]}]}, {"section_title": "Rural Water Supply Act of 2006", "paragraphs": ["The Rural Water Supply Act of 2006 (Title I of P.L. 109-451 ) authorized the Rural Water Supply Program and directed the Secretary of the Interior to undertake certain activities to implement the program. Specifically, the act directed Reclamation to conduct appraisal investigations and feasibility studies (or to ensure that nonfederal entities conducted such studies) and to recommend proposed projects to Congress for construction authorization and subsequent funding.", "In 2008, Reclamation published an interim final rule (43 C.F.R. \u00c2\u00a7404) that established operating criteria for the program and defined the criteria for the prioritization, eligibility, and evaluation of appraisal investigations and feasibility studies, in accordance with the act. To be eligible under the rule, a rural community must have a population under 50,000. The rule prioritized domestic, residential, and municipal uses and prohibited the use of water for commercial irrigation purposes. Interested entities (e.g., Reclamation states and western tribes) may request that either (1) Reclamation complete an appraisal investigation or feasibility study or (2) Reclamation provide financial assistance so the entity can conduct an appraisal investigation or feasibility study. ", "Reclamation began to implement the Rural Water Supply Program in FY2010 on a pilot basis, providing assistance to nonfederal entities to conduct appraisal investigations and feasibility studies. Between FY2009 and FY2012, Congress provided Reclamation a total of $7.9 million for the program. After FY2012, Reclamation no longer requested funding for the program and Congress did not appropriate funds for it. Overall, Reclamation reported using this authority to study approximately 22 projects to varying extents (see Appendix ). Twelve were located in the Reclamation's Great Plains region, five in the Upper Colorado region, four in the Lower Colorado region, and one in the Pacific Northwest region. Of these, Reclamation finalized and approved two feasibility reports: the Musselshell-Judith Rural Water System Feasibility Report (Montana) and the Payson-Cragin Reservoir Water Supply Project Feasibility Report (Arizona). Reclamation did not recommend these or any other projects for authorization, and Congress did not authorize any projects. In justifying its lack of construction recommendations, Reclamation pointed to existing rural water construction obligations, which it argued precluded recommendation of new projects with completed feasibility studies. ", "The authority for the Rural Water Supply Program expired at the end of FY2016 and has not been renewed. Members of Congress have introduced legislation in the 116 th Congress that would reauthorize both the Rural Water Supply Program and particular projects and studies previously considered through the expired program (see \" Legislation in the 116th Congress \")."], "subsections": []}, {"section_title": "Issues for Congress", "paragraphs": ["Congress continues to fund construction and O&M (only required for tribal components) of authorized rural water projects; however, since the FY2016 expiration of the Rural Water Supply Program, Reclamation has for the most part ceased activities relating to new project study and authorization. Congress may consider conducting oversight or legislating changes to Reclamation's rural water activities, including those related to existing or new program and project authorizations, funding prioritization criteria, and Reclamation's role in supporting rural water projects. "], "subsections": [{"section_title": "Addressing Ongoing Rural Water Needs", "paragraphs": ["The Rural Water Supply Act of 2006 required the Secretary of the Interior to assess the demand for new rural water supply projects in Reclamation states. In FY2009, Reclamation estimated that identified needs for potable water supply systems in rural areas ranged from $5 billion to $8 billion for nontribal needs; in the same year, it estimated approximately $1.2 billion for specific tribal water supply projects. However, the Administration has not recommended, and Congress has not authorized, any new Reclamation rural water projects since 2009. Additionally, because authorization of Reclamation's Rural Water Supply Program lapsed at the end of FY2016, Reclamation lacks a structured program for developing and recommending rural water supply projects. "], "subsections": [{"section_title": "Legislation in the 116th Congress", "paragraphs": ["In the 116 th Congress, House and Senate companion bills H.R. 967 and S. 334 , both titled the Clean Water for Rural Communities Act, would authorize $5 million for a feasibility study for the Dry Redwater Rural Water System and $56.7 million (2014 price levels) for construction of the Musselshell-Judith Rural Water System. As noted, a feasibility report for the Musselshell-Judith Rural Water System was completed through Reclamation's Rural Water Supply Program, but the Administration did not recommend the project to Congress for authorization. ", "Congress also is considering legislation to reauthorize the Rural Water Supply Program through FY2026. In the 116 th Congress, both the Water Justice Act ( H.R. 4033 ) and the Securing Access for the Central Valley and Enhancing (SAVE) Water Resources Act ( H.R. 2473 ) would reauthorize the existing program. ", "Congress may consider other legislative proposals to address the demand for rural water assistance in the West. For example, the Disadvantaged Community Drinking Water Assistance Act ( H.R. 5347 ) would require the Secretary of the Interior to establish a grant program to provide financial assistance to disadvantaged communities of less than 60,000 residents that have experienced a significant decline in quantity or quality of drinking water. The grants could fund technical assistance, initial operating and capital costs for edible facilities, and up to 25% of such facilities' O&M. Other legislative proposals would address rural water needs by amending authorities to specific water technology and programs. For example, the Western Water Security Act of 2019 ( H.R. 4891 ) would amend the Water Desalination Act of 1996, as amended ( P.L. 104-298 ; 42 U.S.C. \u00c2\u00a710301 note), to add a classification for rural desalination projects with a higher federal cost share than desalination projects serving more than 40,000 individuals."], "subsections": []}]}, {"section_title": "Funding of Current and Future Projects", "paragraphs": ["In early 2020, Reclamation stated that $1.2 billion was needed to complete authorized rural water projects under construction by the agency. In addition, Reclamation has previously estimated nontribal rural water supply needs in excess of $5 billion, and some observers have reported that assistance for communities is needed to address these needs. Some stakeholders have requested continued and increased funding for Reclamation rural water projects. In the 115 th Congress, representatives of the National Water Resources Association and the Family Farm Alliance asked Congress to compel Reclamation and the Office of Management and Budget to implement the Rural Water Supply Program and investigate opportunities to develop loan and loan guarantee programs that can help fund new water infrastructure projects.", "Over the years, Reclamation has provided its views regarding funding for rural water projects. In general, Reclamation has testified that rural water projects must compete with a long list of other priorities, including aging infrastructure, environmental compliance and restoration actions, and dam safety. During the consideration of authorizing existing rural water projects, Reclamation stated that long-standing agency policy was that local sponsors, particularly those that are nontribal, should reimburse Reclamation for 100% of the costs incurred for rural water supply from multipurpose projects. Reclamation notes in its budget requests to Congress that constrained federal budgets do not preclude nonfederal sponsors' ability to move forward with rural water projects by funding in excess of the minimum nonfederal contributions. Reclamation has recommended that tribes, where possible, and other project beneficiaries be responsible for the O&M expenses of their rural water projects. ", "Congress has appropriated funds for rural water projects on a nonreimbursable basis (i.e., as de facto grants). In some cases, local and tribal sponsors do not have funds or have not prioritized funds to increase their funding contributions. Should Congress continue to support rural water projects through Reclamation, Congress may consider various options. These might include", "Continue to provide Reclamation annual appropriations for the agency to allocate funds to individually authorized rural water projects based on established agency criteria. Establish mandatory funding for Reclamation to allocate funds to individually authorized rural water projects based on established agency criteria. For example, the Authorized Rural Water Projects Completion Act ( S. 1556 ) in the 115 th Congress would have created a Reclamation Rural Water Construction Account to receive $80 million annually that otherwise would be deposited into the Reclamation Fund. Funds in the Reclamation Rural Water Construction Account, in addition to amounts appropriated for rural water projects, would be available for the construction of authorized rural water projects. Provide grant funding through a competitive process for nonfederal sponsors to support local projects, such as the grant program the Disadvantaged Community Drinking Water Assistance Act ( H.R. 5347 ) would establish for communities with fewer than 60,000 residents. Direct appropriations to individually authorized rural water projects. "], "subsections": []}, {"section_title": "Other Rural Water Options", "paragraphs": ["As GAO noted in a 2007 report, numerous federal entities provide funding for water supply and wastewater projects. In addition to Reclamation (which funds only water supply projects), the U.S. Department of Agriculture (USDA), Environmental Protection Agency (EPA), Army Corps of Engineers (USACE), Department of Housing and Urban Development (HUD), and Department of Commerce (DOC) all provide funding for both water supply and wastewater projects. USDA, EPA, HUD, and DOC have formal, nationwide programs with standardized eligibility criteria and processes under which communities compete for funding. In contrast, Reclamation and USACE fund water projects in defined geographic locations under explicit congressional authorizations. According to GAO, Congress has chosen Reclamation to fill a void for projects that are larger and more complex than other rural water projects and that do not meet the criteria of other rural water programs.", "Some might argue that these projects would be better accomplished via other existing federal water quality or water supply programs. However, as GAO has observed, as designed, some of Reclamation's authorized rural water projects do not fit criteria of other agency's programs due to their cost and regional focus; thus, project proponents have looked to Reclamation for funding. For example, Reclamation may assist rural areas with populations in excess of 10,000 residents that may not be eligible for funding under other programs. Reclamation rural water projects also may serve more than one community (i.e., a regional area, as opposed to a single area).", "Reclamation developed its Rural Water Supply Program with the intent to complement, rather than duplicate, the efforts of the other agencies' programs and activities. In creating the program, Reclamation signed memoranda of understanding and related documents with other agencies to coordinate efforts. Reclamation has stated that it participates in a variety of broad coordination activities among agencies related to ongoing authorized projects. With the expiration of the Rural Water Supply Program, this formal coordination between Reclamation and other agencies' programs is no longer required."], "subsections": [{"section_title": "Appendix. Rural Water Supply Program Appraisal Investigations and Feasibility Studies", "paragraphs": ["The Bureau of Reclamation (Reclamation) provided the Congressional Research Service with a list of appraisal investigations and feasibility studies conducted for potential projects under the Rural Water Supply Program. Before the program authorization expired in FY2016, 22 appraisal investigations were conducted, with nine recommendations for a feasibility study. Five feasibility studies were conducted. Reclamation did not recommend any projects for construction funding, although two studies found feasible alternatives for rural water supply. Reclamation issued concluding reports for appraisal investigations and feasibility studies of projects that were not recommended for construction funding. Reclamation provided a range of reasons for issuing concluding reports: studies being incomplete, no found feasible alternatives, lack of funding, and program expiration. According to Reclamation, some concluding reports were not issued due to a lack of time or resources. In these cases, Reclamation considered the appraisal reports as concluding reports for the purposes of the Rural Water Supply Program. A feasibility report for the Musselshell-Judith Rural Water System was completed through Reclamation's Rural Water Supply Program. Legislation introduced in the 116 th congress, the Clean Water for Rural Communities Act ( H.R. 967 and S. 334 ), would authorize the Central Montana Musselshell-Judith Rural Water System. "], "subsections": []}]}]}]}}
{"id": "R45846", "title": "Major Votes on Free Trade Agreements and Trade Promotion Authority", "released_date": "2020-03-30T00:00:00", "summary": ["Through Trade Promotion Authority (TPA), Congress has delegated authority to the President to negotiate free trade agreements (FTAs). This authority requires congressional approval (through implementation legislation) of comprehensive FTAs. Since 1979, Congress has passed 17 implementation measures for FTAs and multilateral trade agreements. The majority of these trade agreements\u00e2\u0080\u0094including the recent United States-Mexico-Canada Agreement (USMCA) \u00e2\u0080\u0094 were considered in Congress under TPA, which provides for expedited consideration of FTAs in Congress. Since 1979, Congress has passed six measures extending TPA for limited time periods. As with many international trade issues, TPA has been politically contentious over time, resulting in vigorous debate and two multi-year lapses in authority.", "USMCA is the most recent free trade agreement (FTA) to be approved by Congress under TPA."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Congress and Free Trade Agreements", "paragraphs": ["This report compiles the final congressional votes on free trade agreements (FTAs), trade promotion authority (TPA), and U.S membership to the World Trade Organization (WTO).", "In the past 30 years, the United States has pursued bilateral, regional, and multilateral trade agreements in an attempt to liberalize markets and reduce trade and investment barriers. Congress has played a central role in shaping this trade policy. Congress\u00e2\u0080\u0094through debate and legislation\u00e2\u0080\u0094defines trade negotiation priorities, approves FTAs, and helps oversee agreements' implementation and enforcement. ", "While the President has the authority to negotiate treaties with foreign countries, Congress has sole constitutional authority to regulate international trade. Since 1934, Congress has periodically delegated some authority to negotiate trade agreements to the President. In the Trade Act of 1974, Congress outlined many of the congressional and executive roles regarding trade agreements; Congress delegated negotiation authority to the President, but required congressional approval (through implementation legislation) of free trade agreements. Congress also created a process to allow for expedient consideration in Congress of FTAs, provided that the President observe certain statutory requirements. This expedient consideration is known as TPA or, formerly, \"fast-track\" consideration."], "subsections": [{"section_title": "Free Trade Agreements: Bilateral, Regional, and Multilateral", "paragraphs": ["The United States is currently party to 12 bilateral FTAs (with Australia, Bahrain, Chile, Colombia, Israel, Jordan, South Korea, Morocco, Oman, Panama, Peru, and Singapore) and to 2 regional free trade agreements (the North American Free Trade Agreement (NAFTA) and the Dominican Republic-Central America-United States Free Trade Agreement (CAFTA-DR)). The United States has also signed an agreement with Canada and Mexico to replace NAFTA. The United States-Mexico-Canada Agreement (USMCA) has been ratified by all three parties, and the agreement will enter into force, after the necessary legal and regulatory measures are in place for each party to meet its commitments. For a list and timeline of trade agreements where negotiations were concluded, see Table 1 . For a compilation of final congressional votes on FTAs considered in Congress, see Table 2 .", "In addition to bilateral and regional FTAs, the United States is also party to multilateral agreements that outline membership in the WTO, a 164-member international organization. The WTO was created in 1995 to oversee and administer multilateral trade rules, serve as a forum for trade liberalization negotiations, and resolve trade disputes. When Congress approved the WTO Uruguay Round Agreement, it included a set of procedures to allow Congress to reconsider U.S. membership in the WTO by passing a joint resolution calling for withdrawal from the organization. Congress may vote every five years on withdrawal from the WTO. Resolutions were introduced in the 106 th and 109 th Congress; neither passed. See Table 3 for a compilation of major legislation and votes concerning U.S. membership to the WTO."], "subsections": []}, {"section_title": "Trade Promotion Authority", "paragraphs": ["All U.S. FTAs, except the agreement with Jordan, were considered in Congress under Trade Promotion Authority (TPA). TPA is the process by which Congress enables FTA legislation to be considered under expedited legislative procedures, provided the President observes certain statutory obligations. Because TPA is extended only for limited periods, Congress periodically reconsiders legislation to extend it and to outline future negotiation objectives. Since 1974, Congress has passed seven measures extending TPA. TPA, like many issues related to international trade, has been politically contentious in Congress over time, resulting in vigorous debate and two multi-year lapses in authority. For a list of major votes on TPA, see Table 4 ."], "subsections": []}, {"section_title": "Congressional Votes on Select Trade Legislation", "paragraphs": ["Congressional consideration of bills can be a complex process, sometimes requiring multiple votes. For clarity's sake, this report only provides the final vote for each measure. More complete bill information can be found on Congress.gov\u00e2\u0080\u0094including roll call votes for all legislation back to 1993. The bill numbers listed in the following tables link to Congress.gov, and the vote tallies link to the House and Senate roll call votes, for all votes back to 1993.", " Table 1 provides a timeline of trade agreements including the date the agreement was signed, the date implementing legislation was enacted, and the date the agreement went into force. The table also notes the TPA legislation under which the trade agreement was considered in Congress. The table includes fully implemented trade agreements, as well as two recent agreements: the USMCA, which has not yet entered into force, and the Trans-Pacific Partnership, a trade agreement that the United States signed, but later announced that it would not ratify. ", " Table 2 provides major votes on FTAs, including the final House and Senate votes on FTA implementing legislation. ", " Table 3 provides major votes on U.S. membership to the WTO, including implementing legislation for multilateral agreements and resolutions calling for the United States to withdraw from the WTO.", " Table 4 provides major votes on TPA legislation. It includes the final House and Senate votes on TPA-related provisions. Votes are grouped by the trade agreement authority granted to the President. ", "For a selected list of CRS products on FTAs and TPA, see the Appendix ."], "subsections": [{"section_title": "Appendix. Selected CRS Reports and Resources", "paragraphs": [], "subsections": []}]}, {"section_title": "On Trade Promotion Authority", "paragraphs": ["CRS In Focus IF10297, TPP-Trade Promotion Authority (TPA) Timeline , by Ian F. Fergusson", "CRS Report R43491, Trade Promotion Authority (TPA): Frequently Asked Questions , by Ian F. Fergusson and Christopher M. Davis ", "CRS Report RL33743, Trade Promotion Authority (TPA) and the Role of Congress in Trade Policy , by Ian F. Fergusson ", "CRS Infographic IG10001, Trade Promotion Authority (TPA) and U.S. Trade Agreements , by Brock R. Williams "], "subsections": []}, {"section_title": "On Select Free Trade Agreements", "paragraphs": ["CRS Report R45198, U.S. and Global Trade Agreements: Issues for Congress , by Brock R. Williams ", "CRS Report R44981, NAFTA and the United States-Mexico-Canada Agreement (USMCA) , by M. Angeles Villarreal and Ian F. Fergusson.", "CRS In Focus IF10997, U.S.-Mexico-Canada (USMCA) Trade Agreement , by M. Angeles Villarreal and Ian F. Fergusson", "CRS Legal Sidebar LSB10399, USMCA: Implementation and Considerations for Congress , by Nina M. Hart ", "CRS In Focus IF10733, U.S.-South Korea (KORUS) FTA , coordinated by Brock R. Williams ", "CRS Report RL34470, The U.S.-Colombia Free Trade Agreement: Background and Issues , by M. Angeles Villarreal and Edward Y. Gracia ", "CRS Report RS22164, DR-CAFTA: Regional Issues , by Clare Ribando Seelke", "CRS In Focus IF10394, Dominican Republic-Central America-United States Free Trade Agreement (CAFTA-DR) , by M. Angeles Villarreal ", "CRS Insight IN10903, CRS Products on the North American Free Trade Agreement (NAFTA) , by M. Angeles Villarreal", "CRS In Focus IF10000, TPP: Overview and Current Status , by Brock R. Williams and Ian F. Fergusson "], "subsections": []}, {"section_title": "On Multilateral Trade Agreements", "paragraphs": ["CRS Report R45417, World Trade Organization: Overview and Future Direction , coordinated by Cathleen D. Cimino-Isaacs "], "subsections": []}]}]}}
{"id": "R45783", "title": "Improving Intercity Passenger Rail Service in the United States", "released_date": "2019-06-25T00:00:00", "summary": ["The federal government has been involved in preserving and improving passenger rail service since 1970, when the bankruptcies of several major railroads threatened the continuance of passenger trains. Congress responded by creating Amtrak\u00e2\u0080\u0094officially, the National Railroad Passenger Corporation\u00e2\u0080\u0094to preserve a basic level of intercity passenger rail service, while relieving private railroad companies of the obligation to maintain a business that had lost money for decades. In the years since, the federal government has funded Amtrak and, in recent years, has funded passenger-rail efforts of varying size and complexity through grants, loans, and tax subsidies.", "Efforts to improve intercity passenger rail can be broadly grouped into two categories: incremental improvement of existing services operated by Amtrak and implementation of new rail service where none currently exists. Efforts have been focused on identifying corridors where passenger rail travel times would be competitive with driving or flying (generally less than 500 miles long) and where population density and intercity travel demand create favorable conditions for rail service.", "Improving existing routes: On the busy Northeast Corridor line owned by Amtrak, several projects to modernize or extend the life of existing infrastructure have been completed using federal grants overseen by the Federal Railroad Administration (FRA). Amtrak has also received annual appropriations above authorized levels for use on the Northeast Corridor in recent years, but proposed projects to add capacity or reduce trip times require a level of investment that outstrips existing options for passenger rail funding. Federal grants have enabled state-supported routes off the Northeast Corridor to add additional trains per day and/or to reduce trip times (whether by increasing speeds or rerouting trains onto more direct alignments). Some grant funds have also preserved service on Amtrak's long-distance lines, which account for under 15% of ridership but incur the largest operating subsidies.", "State-supported and long-distance routes generally operate over tracks owned and maintained by freight railroads (called \"host\" railroads), which can interfere with existing service and complicate plans to add trains to already congested freight lines. Interference by freight trains has been cited by Amtrak as a major contributor to its trains' poor on-time performance, although freight railroads sometimes dispute this. A federal law passed in 2008 was designed to hold host railroads to new performance standards, but has been the subject of court challenges for nearly a decade. While legal issues surrounding on-time performance standards may be resolved in the short term, on-time performance has fallen from its system-wide high of 80% (four trains out of five arriving at all stops on time) achieved in 2012 and has been slow to rebound.", "New rail services: Amtrak has partnered with several states to extend existing routes beyond their former termini to serve new stations, sometimes using additional federal grant money. A high-profile project to build a truly high-speed rail system in California was awarded nearly $4 billion out of the roughly $10 billion appropriated for intercity rail projects in 2009-2010, but projected costs exceed earlier estimates and current funding is sufficient to build only an initial segment. The Trump Administration is now seeking the return of some federal grants. A smaller and less technically complex project to introduce new rail service connecting Chicago, IL, and Iowa City, IA, received federal funding but was delayed at the state level, and it is not clear when or if it will be completed. Meanwhile, several efforts are under way in the private sector to bring intercity passenger rail to major urban corridors. One of these, the Brightline service in Florida, has already begun serving Miami and West Palm Beach on a line that will eventually reach Orlando. While privately funded and operated, these projects do benefit from public assistance in other ways, as Brightline was allowed to issue tax-subsidized qualified private activity bonds to finance construction. Pilot programs to allow private railroads to compete for the right to serve existing Amtrak routes have been less successful.", "Rail programs were included in the most recent surface transportation authorization, which expires at the end of FY2020. Issues in reauthorization include whether and how to fund plans to build new infrastructure for improved rail services, especially on the federally owned Northeast Corridor; federal support for operating intercity rail services; the process by which rail lines are planned; the obligations of freight railroads to carry passenger trains; and whether other opportunities exist for the private sector to build or operate passenger rail services."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["Intercity passenger rail in America dates to the rail industry's origins in the 19 th century. As common carriers engaged in interstate commerce, railroad companies built hundreds of thousands of miles of track across the country offering both freight and passenger transportation, making the distinction between a freight railroad and a passenger railroad a relatively recent one. Federal regulation was important in the industry's development. The Hepburn Act of 1906 (34 Stat. 584) authorized the Interstate Commerce Commissi on (ICC) to regulate maximum interstate passenger fares to ensure that they were \"just and reasonable.\" The Transportation Act of 1958 (P.L. 85-625, 72 Stat. 571) gave the ICC authority to allow a railroad to discontinue passenger service on a line while continuing freight service.", "By the mid-20 th century, passenger services faced increased competition from jet airliners offering faster travel times and private automobiles offering convenient access to a network of new federally funded highways. The rail industry's worsening financial health meant that infrastructure conditions also worsened as maintenance was deferred, contributing to reduced speeds and reliability. With ridership declining, the ICC permitted railroads to discontinue many passenger services and focus on carrying freight. In an effort to shore up flagging passenger rail service, Congress passed the High Speed Ground Transportation Act of 1965 (P.L. 89-221), creating an office in the Department of Commerce to foster research and development of new transportation technologies (the Department of Transportation did not yet exist). This contributed to the establishment of the nation's fastest rail service, the Metroliner, on the Washington, DC, to New York City portion of the Northeast Corridor (NEC), when that line was still under private ownership.", "In the years since, Congress has taken an active role in preserving and improving passenger rail service. Although ridership is much lower than in the heyday of long-distance trains, the federal government continues to support passenger rail through a variety of grants, loans, and tax preferences. There continues to be debate over whether federal subsidies for passenger rail are justified, given competing alternatives by air or highway that dominate most intercity travel markets (though these alternatives may also receive subsidies). The Trump Administration has called for \"the end of the [federal] Government subsidizing operating losses\" on passenger trains, shifting decisionmaking and cost responsibility to states."], "subsections": []}, {"section_title": "The Federal Role in Passenger Rail", "paragraphs": ["As several freight railroads, including the Pennsylvania Central, the nation's largest, entered bankruptcy in 1970, Congress created Amtrak\u00e2\u0080\u0094officially, the National Railroad Passenger Corporation\u00e2\u0080\u0094to preserve a basic level of intercity passenger rail service, while relieving private railroad companies of the obligation to run passenger trains that had lost money for decades. Amtrak is structured as a private company, but virtually all of its shares are held by the U.S. Department of Transportation (U.S. DOT).", "Amtrak owned no infrastructure at the time of its creation. It was originally structured as a contracting agency, and Amtrak trains were operated by private railroads over tracks they owned. Under the Railroad Revitalization and Regulatory Reform Act (4R Act) of 1976, ownership of the NEC was transferred from the bankrupt Penn Central Railroad to Amtrak. At the same time, Congress initiated the Northeast Corridor Improvement Program, which required travel times of 3 hours and 40 minutes between New York and Boston, and of 2 hours and 40 minutes between New York and Washington, by 1981. While the act funded many improvements along the corridor, these goals were not achieved.", "The law that created Amtrak also stipulated that Amtrak pay host railroads for the incremental costs specific to Amtrak's usage of tracks\u00e2\u0080\u0094for instance, the additional track maintenance costs required for passenger trains. Amtrak is not required to contribute to a freight railroad's overhead costs. Then, in 1973, Congress granted Amtrak \"preference\" over freight trains in using a rail line, junction, or crossing ( P.L. 93-146 , \u00c2\u00a710(2), 87 Stat. 548), but Amtrak has been unable to enforce this preference to ensure that host railroads operate its trains on schedule. ", "Several railroads continued to operate long-distance passenger services after 1970 rather than contracting with Amtrak. The last of these services was discontinued in 1983. Amtrak itself discontinued a number of the routes it originally operated, but has been required by Congress to maintain a \"national network\" of long-distance trains. Amtrak has received federal funds to cover operating losses and capital expenditures since its creation. "], "subsections": [{"section_title": "Federally Designated High-Speed Rail Corridors", "paragraphs": ["In 1991, the Intermodal Surface Transportation Efficiency Act (ISTEA, P.L. 102-240 ) empowered the Secretary of Transportation to designate up to five high-speed rail corridors. These were required to be \"rail lines where railroad speeds of 90 miles per hour are occurring or can reasonably be expected to occur in the future\" (\u00c2\u00a71010). ISTEA created an annual set-aside of $5 million from a highway funding program to fund railway-highway crossing safety improvements on these corridors. As the presence of grade crossings can restrict how fast trains can travel, this provision funded projects that had the potential to boost maximum speeds.", "The Transportation Equity Act for the 21 st Century (TEA-21, P.L. 105-178 ) increased the number of high-speed rail corridors to 11 (see Table A-1 ). These have a total length of roughly 9,600 miles, less than half the length of the current Amtrak network. Several of the designated \"corridors\" are in fact networks of interlocking or diverging lines. For example, the Midwest high-speed rail corridor, as initially designated, consisted of lines radiating outward from Chicago to Milwaukee, St. Louis, and Detroit; further extensions to these lines have since been added to the corridor designation, which now goes by the name of the Chicago Hub Network. Most corridors were designated at the discretion of U.S. DOT, but three\u00e2\u0080\u0094the Gulf Coast, Keystone, and Empire State corridors\u00e2\u0080\u0094were designated by statute. Almost all corridors are between 100 and 500 miles in length, the distance range in which rail is expected to be competitive with other modes.", "Most federally designated corridors already receive some intercity passenger rail service, and roughly half of all federally designated corridors are served by Amtrak's NEC or state-supported routes. Approximately 1,500 miles of federally designated high-speed rail corridors currently receive no intercity passenger rail service of any kind. Some of these segments were regularly served by Amtrak trains as recently as 2005; others have not seen intercity passenger rail service since before Amtrak initiated operations in 1971. There is no longer a dedicated funding program for this network as there had been under ISTEA, but federal designation was incorporated into later efforts to improve passenger rail as discussed below."], "subsections": []}, {"section_title": "Rail Corridor Improvement Grants", "paragraphs": ["The Passenger Rail Investment and Improvement Act (PRIIA, P.L. 110-432 , Division B), enacted in 2008, created discretionary grant programs to expand or otherwise improve passenger rail service. Sections 301, 302, and 501 of PRIIA authorized up to $3.725 billion in grants to states to develop intercity passenger rail service. One of these new programs, which authorized $1.5 billion specifically for high-speed rail corridor improvements, explicitly defined \"corridor\" as a federally designated corridor established by ISTEA or TEA-21.", "With PRIIA in effect, the 111 th Congress appropriated a total of $10.6 billion to develop intercity passenger rail services in the American Recovery and Reinvestment Act of 2009 (ARRA, P.L. 111-5 ) and the FY2009 and FY2010 Department of Transportation Appropriations Acts (Division A, Title I, P.L. 111-117 ), well in excess of authorized levels. That same year, the Federal Railroad Administration (FRA) published its High-Speed Rail Strategic Plan, which outlined the Obama Administration's priorities to improve intercity passenger rail service using the programs created by PRIIA and the infusion of funds provided by ARRA. This document indicated that the federally designated high-speed rail corridors were to be prioritized in the coming solicitations for intercity passenger rail grant funds.", "FRA ultimately used this money to award 158 grants under the new High-Speed Intercity Passenger Rail (HSIPR) Grant Program. Some 80% of the funding went to a relatively small number of large-scale projects, each within a federally designated priority corridor. These included multi-billion-dollar grants to California and Florida for new high-speed rail lines; Florida subsequently turned down its grant. Most grants funded projects that made incremental improvements to existing services, rather than the establishment of new lines (with the notable exception of California's high-speed rail project, discussed later in this report). HSIPR also offered grants for passenger rail planning, which previously had not been addressed by departments of transportation in some states. The 112 th Congress rescinded $400 million of the $10.6 billion previously appropriated and did not adopt the Obama Administration's requests for additional funding. No subsequent HSIPR funding has been provided. ", "Several states ultimately declined HSIPR grants to improve or expand intercity passenger rail service. That funding was reallocated to other states. Some of the remaining projects encountered delays in delivery, meaning their effects on passenger rail service have only recently begun to be felt. Other projects are still years away from completion, and still others funded planning and engineering work that requires additional funding for construction. Specific improvements in rail service brought about by these grants are discussed in later sections of this report."], "subsections": []}, {"section_title": "Intercity Passenger Rail in the FAST Act", "paragraphs": ["Authority for passenger rail programs lapsed when PRIIA expired at the end of 2013. After a gap of two years, passenger rail programs were reauthorized by the Passenger Rail Reform and Investment Act of 2015, enacted as Title XI of the Fixing America's Surface Transportation Act (FAST Act, P.L. 114-94 ). ", "In the FAST Act, Congress did not continue the approach taken in PRIIA of authorizing large sums for capital grants to implement or improve passenger rail service over entire corridors. The FAST Act did, however, contain a number of measures intended to improve passenger rail in other ways. The collective effect of these programs has been to advance some passenger rail projects initiated under PRIIA, but on a comparatively smaller scale. Some intercity passenger rail projects have also been advanced using funds from U.S. DOT's TIGER/BUILD grant program, a discretionary program that supports infrastructure investments deemed to have significant local or regional impact. "], "subsections": [{"section_title": "Consolidated Rail Infrastructure and Safety Improvements Program (CRISI)", "paragraphs": ["Section 11301 of the FAST Act created this grant program, which merged eligibility from several programs, including the Intercity Passenger Rail and Congestion Reduction programs created by Sections 301 and 302 of PRIIA. A total of $1.103 billion was authorized for this program from FY2016 through FY2020; to date, $916 million has been appropriated by Congress. The program has not yet resulted in any increases in speed or frequency within the intercity passenger rail system. However, it has been used to fund implementation of Positive Train Control (PTC) systems in many areas. PTC is primarily a crash-avoidance technology, but in certain cases it can allow trains to travel faster."], "subsections": []}, {"section_title": "Federal-State Partnership for State of Good Repair Program", "paragraphs": ["In Section 11302 of the FAST Act, Congress created the Federal-State Partnership for State of Good Repair program to fund the rehabilitation or replacement of aging infrastructure used for passenger rail service. A total of $997 million was authorized for this program; to date, $675 million has been appropriated. By statute, preference is given to grant applications with at least a 50% nonfederal share of project costs, to applications submitted jointly by multiple applicants, and to projects sponsored by other entities than Amtrak alone. The Partnership program is more explicitly directed to intercity passenger rail projects by statute, but similarly to CRISI it is primarily designed to fund the replacement or rehabilitation of aging infrastructure rather than to implement new or dramatically improved passenger rail service."], "subsections": []}, {"section_title": "Restoration and Enhancements Grant Program", "paragraphs": ["In Section 11303 of the FAST Act, Congress created the Restoration and Enhancements program to cover the operating costs of reinitiating passenger rail services that have been suspended. This sets it apart from other grant programs administered by FRA, which generally fund capital grants for infrastructure improvements. Many corridors are potentially eligible for these funds, as many passenger routes have been discontinued by Amtrak since its creation, but the program was primarily aimed at restoring service along the coast of the Gulf of Mexico. A section of Amtrak's long-distance Sunset Limited ran between New Orleans and Orlando from 1993 until it was suspended after sustaining damage during Hurricane Katrina in 2005. ", "Funding was made available for the program in FY2017, which did not result in any successful applications. However, a $33 million CRISI grant was awarded to the Southern Rail Commission (a multi-state coalition formed to promote passenger rail in Southern states) in 2019 for capital improvements necessary to reinstate service between New Orleans and Mobile. Such a service would be eligible to receive Restoration and Enhancements grant funding to support its operating costs. "], "subsections": []}]}, {"section_title": "Improvements to Rolling Stock", "paragraphs": ["The federal government has taken several steps to improve passenger rail by supporting the acquisition of new rail cars and locomotives. Rail equipment can have an effect on the speed and frequency of rail service. Older equipment may not be capable of running at high speeds or be compatible with modern train control systems or accessibility laws. Amtrak periodically rehabilitates and expands its own fleet of rail cars and locomotives, although some states have purchased specialized rail equipment to supplement Amtrak's existing fleet.", "Section 305 of PRIIA tasked Amtrak with creating a Next Generation Corridor Equipment Pool Committee to design, develop specifications for, and procure standardized rail equipment for use on state-supported short distance corridors. The committee developed specifications for diesel locomotives and bi-level passenger cars. Five states\u00e2\u0080\u0094California, Illinois, Michigan, Missouri, and Washington\u00e2\u0080\u0094agreed to jointly procure a total of 130 passenger cars and 32 locomotives for use on their state-supported rail corridors. They did so using a mix of state funds, federal funds awarded for corridor improvements, and a $268 million HSIPR grant awarded specifically for equipment procurement. ", "The locomotive procurement was awarded to Siemens, and Siemens-built \"Charger\" diesel locomotives are now in service on several Amtrak routes, with the potential for additional follow-up orders. The regional passenger car procurement was awarded to Sumitomo Corporation of America, and subcontractor Nippon Sharyo was to assemble the cars at a newly expanded factory in Rochelle, IL. However, a prototype car failed an important structural test, and the requisite design changes would have delayed the project beyond certain deadlines imposed by the federal funding agreement. Ultimately, Nippon Sharyo was replaced by Siemens, and the procurement was modified to substitute single-level rail cars for the bi-levels originally contracted. The delays resulted in a portion of the $268 million grant expiring and being returned to the Treasury.", "Procurement of new rail equipment can be constrained by certain federal regulations. Purchases of rail equipment using federal funds are subject to \"Buy America\" requirements for domestic content and final assembly. FRA safety standards require passenger rail cars that operate in mixed traffic with freight trains to be able to withstand certain crush forces. This makes most passenger rail equipment designed for use in Europe or Asia impossible to deploy in the United States without major modifications, increasing unit production costs. The safety standards also make passenger rail equipment heavier, which in turn makes it more difficult for trains to accelerate and decelerate quickly, increasing trip times. Regulations promulgated by FRA in 2018 attempt to address this, creating a category of Tier III passenger rail equipment permitted to operate at speeds up to 220 miles per hour (mph) on dedicated tracks or up to 125 mph on lines also used by freight trains. The regulation also modifies certain crashworthiness and occupant-protection requirements on Tier I equipment (designed for speeds below 125 mph) to permit a greater variety of train car designs to operate on the U.S. network."], "subsections": []}, {"section_title": "Federal Loans for Passenger Rail Projects", "paragraphs": ["Passenger rail projects are eligible under two federal loan programs, the Railroad Rehabilitation and Improvement Financing (RRIF) program and the Transportation Infrastructure Finance and Innovation Act (TIFIA) program. Neither of these programs was designed with passenger rail specifically in mind; RRIF was intended for use primarily by freight railroads, and TIFIA has primarily been used for toll road and transit projects. Because loans require a revenue source to establish creditworthiness (the ability to repay a loan), and because passenger rail lines rarely generate an operating profit, these programs have seen limited application to intercity rail. However, Amtrak has used RRIF loans to purchase new locomotives for the Northeast Corridor, which does generate an operating profit. Amtrak's two active RRIF loans, totaling over $3 billion, now represent almost 60% of total nominal RRIF loan amounts."], "subsections": []}, {"section_title": "Metrics and Standards to Improve Performance", "paragraphs": ["Only 73% of Amtrak trains arrived at all stations on time in 2018, and Amtrak routes often fall short of internal on-time performance goals. Among trains on long-distance routes, half arrived at their final destinations within 15 minutes of the scheduled time in 2018. The freight lines used by most Amtrak services may have little incentive to give priority to Amtrak trains at the expense of their own more profitable operations. However, trains on the Amtrak-owned NEC also reached their final destinations late on one trip out of five. Figure 1 below illustrates the fluctuations in endpoint on-time performance for Amtrak's three business lines over the last 15 years. In general, reliability on state-supported routes and on the NEC has been relatively stable compared to long-distance routes. Where state-supported routes used to lag behind the NEC, they are now more or less equal in terms of reliability, though both have dipped from their historic highs.", "Amtrak has made forceful statements blaming host railroads for poor on-time performance. In one recent example from February 2019, a Twitter account used by Amtrak to alert riders of service issues identified host railroad Norfolk Southern by name as the cause of a delay. In response, Norfolk Southern issued a letter disputing the cause of the delay, accusing Amtrak of damaging Norfolk Southern's reputation, and threatening further action. Amtrak's response continued to blame Norfolk Southern, listing additional delays it attributed to the company and suggesting that it take \"immediate action to improve the on-time performance of Amtrak trains on your railroad.\"", "The 110 th Congress attempted to address on-time performance in Section 207 of PRIIA. This section directed FRA, Amtrak, and the Surface Transportation Board (STB), which regulates competition in the rail industry, to develop minimum performance standards, incorporate those standards into rail service contracts, and resolve disputes arising from these standards in arbitration. Another section in PRIIA, Section 213, gave STB enforcement power over railroads that failed to meet their performance standards. Final metrics and standards went into effect in 2010. ", "The Association of American Railroads, an industry group representing freight rail companies, sued to block the metrics and standards in 2011, asserting that Congress improperly gave Amtrak, defined in statute as a private entity, the power to regulate other private entities and that exercising such power deprived host railroads of their right to due process. A series of federal court decisions culminated in a unanimous Supreme Court ruling that Amtrak could be considered part of the government for the purposes of deciding the case. The 2010 standards were suspended during much of the legal proceedings, and Amtrak on-time performance has decreased since reaching a systemwide high of roughly 80% in 2012. ", "On July 20, 2018, the U.S. Court of Appeals for the District of Columbia Circuit ruled that without an arbitrator to enforce the standards, Amtrak is not exercising undue coercive power over its competitors. The Supreme Court declined AAR's appeal of this decision on June 3, 2019, allowing the federal government's power to set performance standards to remain in place. The 2010 standards remain vacated, but FRA is free to establish new standards with Amtrak's input."], "subsections": []}]}, {"section_title": "Recent Improvements to the Existing Network", "paragraphs": ["Most recent attempts to improve intercity passenger rail have involved making improvements to infrastructure and equipment on existing routes, rather than the planning and implementation of new routes. However, the geography of existing lines can constrain efforts to increase speeds, and the freight railroads that control most of the lines Amtrak uses have little incentive to allow higher speeds or more frequent passenger service without concessions in return, such as capital improvements that also serve to improve freight flows. This section describes federally funded programs to improve Amtrak's route network in order to extend the life of existing infrastructure, improve reliability, increase service frequency, and/or reduce scheduled trip times. "], "subsections": [{"section_title": "The Northeast Corridor", "paragraphs": ["The Northeast Corridor (NEC), already the busiest intercity passenger rail line in the nation at the time of PRIIA's enactment, received nearly $1 billion in HSIPR funds divided among several projects. Some of these projects resulted in the construction of infrastructure intended to improve train service or prevent its deterioration, while others completed prerequisite environmental and engineering studies for large projects that remain unfunded."], "subsections": [{"section_title": "NEC Future", "paragraphs": ["Apart from funding specific infrastructure projects, PRIIA also called for a corridor improvement plan for the NEC. The planning project, NEC Future, has identified goals for rail service along the corridor and recommended specific infrastructure investments necessary to bring about the desired level of service. A corridor-level Environmental Impact Statement evaluated several alternatives, from maintaining the corridor at what are essentially current service levels to building a brand new corridor adjacent to the existing one capable of much faster trips but at a considerably higher capital cost. The Selected Alternative, approved in a Record of Decision (ROD) issued in July 2017, fell in between these two options, improving speed and capacity on existing infrastructure without building an entirely new parallel route. ", "One limitation of the existing Northeast Corridor is the path taken by trains along the coast of Long Island Sound in southeastern Connecticut. The tight curves along the shore reduce speeds and lengthen trip times. NEC Future planners initially recommended the construction of new tracks set farther inland along a straighter path, but this was met with opposition from local groups that objected to the construction of new rail lines in their towns. The Selected Alternative considered in the Final Environmental Impact Statement recommended further study of this segment of the corridor."], "subsections": []}, {"section_title": "The Gateway Program", "paragraphs": ["Amtrak says that no further significant expansion of intercity service on the NEC is possible without increasing capacity into and through Manhattan. Also, the reliability of that service is threatened due to the aftereffects of the flooding of the rail tunnel under the Hudson River during Hurricane Sandy in 2012. The Gateway Program is a package of projects proposed to increase both reliability and capacity. The centerpiece is a new two-track tunnel under the Hudson River, supplementing the current tunnel, and conceived in the aftermath of the 2010 cancellation by the State of New Jersey of a similar tunnel project called Access to the Region's Core (ARC). The cost estimates for the entire program of work are in the range of $24 billion to $29 billion.", "One challenge facing the Gateway Program is that Amtrak, the infrastructure owner, and New Jersey Transit, the other primary beneficiary of the improvements, have limited ability to fund the improvements. New Jersey Transit does not earn a profit and needs several billion dollars for other projects. Amtrak earned an operating profit of $526 million on its NEC operations in FY2018, but at least a portion of its NEC operating profit is pledged starting in 2022 to repay a $2.45 billion federal loan Amtrak received in 2016 to purchase new train cars. Amtrak also has several billion dollars in other needs, including a backlog of projects to restore its infrastructure to a state of good repair. ", "A second challenge facing the program is that while assistance may be sought from the federal government, current federal transportation grant programs are not structured to provide large amounts of funding to a particular project on a predictable basis over many years. Funding under discretionary programs depends on the amount that Congress appropriates each year. Since the Gateway Program would improve both intercity passenger rail service and commuter rail service, the individual projects that are part of the program could be eligible for assistance from federal programs that focus on either intercity passenger rail or public transit, but no program of either type currently provides multi-year funding in the amount sought by Gateway project sponsors.", "The two projects within the Gateway program that are farthest along in their planning and design phases\u00e2\u0080\u0094the Portal North Bridge and Hudson Tunnel Projects\u00e2\u0080\u0094are in project development for Federal Transit Administration (FTA) Capital Investment Grant (CIG) funding, but FTA has cast doubt on the strength of their local financial commitments. Sponsors of both projects have planned to use federal RRIF and TIFIA loans\u00e2\u0080\u0094to be repaid with local funds\u00e2\u0080\u0094as part of the nonfederal share of project costs, but FTA has not accepted this approach. "], "subsections": []}]}, {"section_title": "The National Network", "paragraphs": ["Most federal grant funding to improve the existing passenger rail system has gone to routes on Amtrak's National Network, outside the Northeast Corridor. These routes do not routinely generate the operating surpluses found on the NEC and are generally operated over tracks owned by private freight railroads, so the HSIPR program involved spending public funds to improve privately owned rail infrastructure, or else to facilitate the purchase of that infrastructure by a public agency. ", "One criticism of the HSIPR program has been that investments were spread out so thinly that they could fund only limited service improvements. Building a true high-speed rail line under HSIPR would have required FRA to concentrate considerable funding on a single project, something Congress did not direct FRA to do. Developing true high-speed passenger rail services with federal assistance will be challenging given the inevitable pressures to distribute federal funding widely."], "subsections": [{"section_title": "State-Supported Routes", "paragraphs": ["Half of all Amtrak trips are taken on state-supported routes, and state-supported routes have accounted for a large portion of the growth in Amtrak's ridership over the last two decades. To build on this growth, several states received infusions of federal funding to increase speeds, add additional frequencies, extend service to new stations, or generally improve reliability by replacing aging infrastructure.", " Table 2 below contains a list of selected improvements to state-supported routes to receive HSIPR grants. Some of these projects are already complete and have been successful; others, especially the larger and more complex corridor improvement projects, have encountered delays and have not yet delivered their intended benefits. Status updates for three of these projects appear beneath the table."], "subsections": [{"section_title": "Chicago-St. Louis", "paragraphs": ["The Chicago-St. Louis corridor improvement program, though it was dubbed Illinois HSR, did not have as its immediate objective the implementation of true high-speed rail along the corridor. Rather, a series of targeted investments was planned to create additional rail capacity, reducing interference from freight trains and allowing passenger trains to reach speeds of 110 mph. In 2012, 110-mph service was initiated on the 15-mile segment between Dwight and Pontiac, IL, but not on the remaining segments from Dwight to Joliet and Pontiac to Alton. Portions of the route\u00e2\u0080\u0094from Chicago to Joliet, from St. Louis to Alton, and passing through Springfield\u00e2\u0080\u0094are congested with freight and/or commuter traffic and impose lower speed limits, further hampering efforts to reduce trip time.", "A federally funded environmental study identified alternatives for double-tracking the entire corridor, including the segments not improved by the HSIPR corridor development grant. These alternatives would double existing service levels to eight round trips daily, and have the potential to reduce end-to-end travel times by nearly two hours. The corridor-level study estimated the costs of implementing these alternatives at between $4.9 billion and $5.2 billion, including building new tracks in the congested areas in Springfield and just outside Chicago and St. Louis. A project in Springfield that would reroute passenger and freight trains onto separate tracks is under construction with the support of TIGER grants, but the environmental reviews for the Chicago-Joliet and Granite City-St. Louis segments were suspended in November 2018. FRA indicated that the project sponsors did not want to pursue the environmental reviews at that time."], "subsections": []}, {"section_title": "Chicago-Detroit", "paragraphs": ["Freight railroad Norfolk Southern no longer wished to maintain a 135-mile section of the corridor from Kalamazoo, MI, to Dearborn, MI, to the standards necessary to run passenger trains at 79 mph, meaning speeds would have decreased and trip times would have increased without outside intervention. The State of Michigan used HSIPR grant funds to purchase the section from Norfolk Southern, bringing it into public ownership and making improvements that would allow top speeds of 110 mph. In 2012, 110-mph service was initiated on a separate 97-mile segment from Porter, IN, to Kalamazoo, the result of upgrades paid for with ARRA funds awarded directly to Amtrak, which owns that segment. As of 2019, the cumulative effect of these improvements has been to reduce average trip times between Chicago and Detroit by approximately 25 minutes. Further reductions may be possible as additional segments are upgraded to 110 mph.", "A federally funded environmental study for the corridor resulted in a Draft Environmental Impact Statement that identified alternatives for further improvements on the route, increasing service to six or 10 daily round trips (from the existing three) and making further reductions to trip time. Key among these improvements would be the selection of a new route from Chicago to Michigan City, IN. On November 30, 2018, FRA announced it was rescinding the Notice of Intent issued as part of this environmental review, effectively halting the planning process before reaching the Final EIS or Record of Decision stage. However, FRA also noted that planning work completed to that point could be reused in future projects, given sufficient interest and funding."], "subsections": []}, {"section_title": "Portland-Seattle", "paragraphs": ["On December 18, 2017, a southbound Amtrak Cascades train derailed near DuPont, WA, killing three and injuring 62. The train was the first in regular service to use the Point Defiance Bypass, an inland rail route upgraded using some of Washington State's HSIPR funds. The Bypass was to reduce travel times between Seattle and Portland by 10 minutes without raising the maximum allowable speed on the track. In the aftermath of the derailment, Amtrak has been operating trains on its original route and schedule. ", "On May 21, 2019, the National Transportation Safety Board (NTSB) published an abstract of its final report and recommendations following an investigation of the 2017 derailment. NTSB recommended that Amtrak no longer operate the route with a certain type of passenger car. Amtrak and the Washington State Department of Transportation (WSDOT) have announced they will comply with the recommendation, reducing the fleet of usable cars. "], "subsections": []}]}, {"section_title": "Long-Distance Routes", "paragraphs": ["Some efforts to put Amtrak on more stable financial footing have centered on reforming the long-distance routes that Amtrak operates as part of the National Network. These routes require the largest operating subsidies, have the lowest on-time performance of Amtrak's three business lines, and make many stops at small communities that are not major generators of passenger traffic. At the same time, those communities may see Amtrak service as an important link to other cities or as a point of local pride. This has led to the federal government pursuing policies, sometimes simultaneously, that preserve existing long-distance train service while pushing Amtrak to reduce or eliminate operating losses. "], "subsections": [{"section_title": "Grants to Improve or Retain Existing Long-Distance Routes", "paragraphs": ["Congress has supported long-distance routes primarily through annual appropriations to the National Network, which help cover operating subsidies and some capital projects necessary to maintain service. The FAST Act authorized gradual increases in grants to the National Network, from $1 billion in FY2016 rising to $1.2 billion in FY2020. Appropriators have generally met or exceeded these authorized levels.", "For FY2019, appropriations to the National Network included $50 million to support capital grants necessary to maintain long-distance service over tracks where \"Amtrak is the sole operator on a host railroad's line and a positive train control system is not required by law or regulation.\" These funds were allowed by statute to be used as nonfederal matching funds for competitive discretionary grants that would lead to such projects. ", "This measure was instrumental in sustaining operations of the Southwest Chief route that runs from Chicago to Los Angeles. A segment of the route, between La Junta, CO, and Lamy, NM, receives no freight service; track owner BNSF Railway did not wish to pay to maintain the tracks for Amtrak's exclusive benefit, instead offering to reroute the train on different tracks between Kansas and New Mexico. Local communities along the route applied for and received federal TIGER grants, which required $3 million in matching funds from Amtrak. In 2018, Amtrak signaled it would not contribute these matching funds and would instead consider replacing trains with buses in certain areas. However, the $50 million set-aside from FY2019 appropriations funded the remaining share of project costs, allowing the project to proceed and train service to continue along the entirety of the route."], "subsections": []}, {"section_title": "Proposals to Convert Long-Distance Routes to State-Supported Corridors", "paragraphs": ["Both the Administration and Amtrak itself have proposed changes to long-distance train service. These changes closely parallel Amtrak's plan, ultimately suspended, to replace a section of the Southwest Chief with bus service. In its FY2020 budget request, the Administration proposed eliminating operating support for long-distance trains and a corresponding reduction in National Network grants, but an increase in funding to the Restoration and Enhancements grant program. To replace federal operating support for a route, states would be eligible to apply for Restoration and Enhancements funding to bridge the funding gap until funds could be raised locally to support the service. Federal funding would be gradually phased down over the five-year duration of a grant agreement, with the states concerned assuming full responsibility for operating costs on the route by FY2024. States could potentially negotiate with Amtrak about changes to schedules or service levels, or about retaining certain segments while discontinuing others. Trains could be replaced with bus service or discontinued if a state did not wish to support rail service on the route.", "In its own FY2020 grant request, Amtrak has shown some willingness to alter how long-distance routes are funded and operated, stating that \"a modernization of the National Network, with the right level of dedicated and enhanced federal funding, would allow Amtrak to serve more passengers efficiently while preserving our ability to maintain appropriate Long Distance routes\" (emphasis added). In a recent letter to Senator Moran, Amtrak CEO Richard Anderson stated,", "While we strongly believe that there is a permanent place for high-quality long-distance trains in our network, the time to closely examine the size and nature of that role is upon us for numerous reasons. ...[Congress] will need to decide whether to continue to fund the operation of all existing long-distance trains with funding to buy new rolling stock and increased levels of financial support or consider changes to the network that could either enhance transportation value or reduce capital and operating expenses.", "Nevertheless, the FY2019 Consolidated Appropriations Act contained a Sense of Congress that \"long-distance passenger rail routes provide much-needed transportation access for 4,700,000 riders in 325 communities in 40 states and are particularly important in rural areas; and long-distance passenger rail routes and services should be sustained to ensure connectivity throughout the National network.\" While there were 4.7 million trips on long-distance routes in 2017, and 4.5 million in 2018, many stations that receive only long-distance train service have very few daily boardings and alightings."], "subsections": []}, {"section_title": "Long-Distance Competitive Pilot Program", "paragraphs": ["One way Congress has attempted to control or reduce operating subsidies for passenger rail is to open the network to a greater degree of competition. This has proven to be difficult given Amtrak's advantages over other operators, including a statutory requirement that freight railroads grant Amtrak trains preference in using their tracks, and another requiring Amtrak to be charged only the incremental cost of using another railroad's tracks.", "Section 214 of PRIIA required FRA to implement a program that would allow other operators to submit competing bids to take over certain routes operated by Amtrak. This program would be open to any of the railroad companies that serve as hosts to Amtrak long-distance routes, with Amtrak able to respond to any outside bid with one of its own. FRA would then select a winning bidder, which would be entitled to receive an annual operating subsidy of no more than the prior fiscal year's subsidy amount, adjusted for inflation. Up to two routes could be operated in this manner for up to five years, selected from among the worst-performing routes according to a classification system contained elsewhere within PRIIA. FRA promulgated its final rule establishing this program in 2011, but no bids were submitted.", "The program was revisited in the FAST Act, which increased the number of available routes from two to three, reduced the operation period from five years to four with the possibility of reapplication for a second four-year term, and capped operating subsidies at 10% below its level in the prior fiscal year. The list of eligible bidders was also expanded to include not just host railroads, but also to one or more states, and to partnerships between a state and a host railroad. FRA promulgated its final rule reestablishing this program in 2017, but again no bids have been submitted. "], "subsections": []}]}]}]}, {"section_title": "High-Speed Rail and Other New Lines", "paragraphs": ["Projects to retain or improve existing Amtrak services, as described in the previous section, routinely require investments amounting to tens or hundreds of millions of dollars. High-speed rail systems of the type in use in Europe and Asia, which can make only limited use of infrastructure designed for conventional rail, require significant investments in new infrastructure. Even when built for conventional rail equipment compatible with existing lines, establishing new rail service is a capital-intensive, time-consuming process. For example, a federally funded study of rail options in New York State estimated that instituting 125-mph service from New York City to Albany and Buffalo would require $14.7 billion in capital funding. ", "A list of active or recently completed corridor plans and their cost estimate ranges can be found in Appendix B ."], "subsections": [{"section_title": "California High-Speed Rail", "paragraphs": ["The California High-Speed Rail (CAHSR) program is a project led by the State of California with the goal of implementing a true high-speed rail system, capable of speeds in excess of 200 mph, between Los Angeles and San Francisco via the Central Valley cities of Fresno and Bakersfield. Ground was broken on the Central Valley section on January 6, 2015. Since that time, the California High-Speed Rail Authority (CHSRA) has completed civil works such as construction of viaducts or grade separations along the route. Construction of the full \"Phase 1\" system connecting San Francisco to Los Angeles, originally anticipated to be completed in 2028, is now expected to take until 2033.", "Funding for CAHSR has never been committed in sufficient quantities to cover the entire projected cost of construction. In 2008, California voters approved ballot measure Proposition 1A, which authorized the state to issue $9 billion in bonds. At the time Proposition 1A was approved, California assumed a level of federal and private sector support that ultimately never materialized. The project did receive a total of $3.9 billion in federal HSIPR grants, some from ARRA and some from FY2010 appropriations. While estimates for the cost of the project have fluctuated, the 2018 business plan estimates the capital cost of the Central Valley segment alone at $10.6 billion, and the Phase 1 system at $77.3 billion.", "In February 2019, California Governor Gavin Newsom announced in his State of the State Address that there \"simply isn't a path\" to complete the full system without additional funding. He later clarified that his comments were not intended to convey that the project was canceled; the section under construction is expected to result in improved passenger rail service in the central valley, and may still result in improved connections to San Francisco once other infrastructure projects are complete. The federal government has taken steps to reclaim federal grant money awarded to the project, on the grounds that the scope of the project has changed too much to be an eligible recipient of federal funding under the terms of the grant agreement. California is challenging these efforts in court; of the two largest grants CHSRA received, a $2.6 billion grant has already been fully spent in accordance with a federal deadline, while a second $929 million grant that has no such deadline remains untouched."], "subsections": []}, {"section_title": "All Aboard Florida/Brightline/XpressWest/Virgin Trains USA", "paragraphs": ["After the State of Florida turned down a federal HSIPR grant and canceled its Tampa-Orlando rail project, the private company All Aboard Florida (AAF) began making plans to initiate a new intercity passenger rail line between Miami and Orlando via West Palm Beach. That service, which would come to be called Brightline, does not use the same tracks used by Amtrak, instead using tracks owned by a regional freight railroad, Florida East Coast Industries (FECI; AAF and FECI were at the time both owned by asset management firm Fortress Investment Group). The diesel-powered trains are expected to provide faster service than Amtrak's route between Miami and Orlando, which currently provides two daily long-distance trains in each direction with poor on-time performance.", "All Aboard Florida initially sought a $1.6 billion federal RRIF loan to finance construction of the portion of the route between West Palm Beach and Orlando, but no loan was authorized. Instead, AAF applied to U.S. DOT for allocations to sell $600 million of qualified private activity bonds to finance work on the Miami-West Palm Beach segment and another $2.25 billion for the West Palm Beach-Orlando segment. The interest on these bonds is exempt from federal income tax; hence, the federal government is subsidizing the project by allowing it to borrow money at a lower interest rate than it would have to pay without the federal tax exemption. Brightline rail service between Fort Lauderdale and West Palm Beach began on January 13, 2018, with service expanding to Miami by May 19 of that year. Service to Orlando is expected to begin in 2022.", "In 2018, All Aboard Florida acquired XpressWest, a private company planning to build and operate a passenger rail service between Las Vegas, NV, and the Los Angeles area. XpressWest had been in the early stages of applying for a RRIF loan that was ultimately not issued. XpressWest was to be a true high-speed rail line with a connection to the California HSR system in Palmdale, and it is not clear whether California Governor Gavin Newsom's changes to the CAHSR plan will have repercussions for the project. In 2019, British based Virgin Group announced a partnership with All Aboard Florida, rebranding both Brightline and XpressWest as Virgin Trains USA. Other Virgin Group subsidiaries have operated intercity trains in the United Kingdom since the 1990s. Virgin Trains USA announced in January 2019 it would sell stock in an initial public offering, but in February the share offering was postponed. On May 30, Virgin Trains announced that construction of the Las Vegas-Southern California line would be delayed for two years."], "subsections": []}, {"section_title": "Texas Central Railway", "paragraphs": ["A private company, Texas Central Partners, is moving forward with plans to construct a true high-speed rail line between the cities of Dallas and Houston. The project, which has the backing of a Japanese rail operator and would use Japanese high-speed rail technology and equipment, would reach top speeds of 186 mph and take 90 minutes end-to-end. There is currently no direct rail service of any kind linking Dallas and Houston. Although the sponsors have stated, \"This project is not backed by public funds,\" news reports have indicated that the project is likely to depend on long-term loans from the federal government's RRIF and TIFIA programs.", "The project is not yet under construction. One obstacle has been the acquisition of land on which to build the new tracks. There have been conflicting county-level court rulings on whether Texas Central can take the land it needs using eminent domain. Despite these legal issues, the company has stated it could begin construction on the line in 2019 or 2020."], "subsections": []}]}, {"section_title": "Issues for Congress", "paragraphs": [], "subsections": [{"section_title": "Corridor Plans Outstrip Historical Funding Availability", "paragraphs": ["Many HSIPR grants funded studies of new or improved passenger rail corridors. A few of these studies were ultimately canceled before reaching completion, but others have resulted in near-finished plans to enhance intercity passenger rail. These plans often feature capital cost projections in the billions of dollars, even for projects with comparatively conservative speed and frequency objectives. ", "The federal government's current approach to funding passenger rail differs from its approach to funding highways and transit. Although PRIIA and the FAST Act set authorized spending levels over multi-year periods, Amtrak funding is subject to the annual appropriations process, while many highway and transit programs are funded automatically out of Highway Trust Fund balances. Likewise, the HSIPR program lacked predictable funding in part because there was no dedicated revenue source for the program. ", "In the context of the federal appropriations process it is difficult to provide significant amounts of funding on a predictable basis to a grant program that depends on the Treasury general fund, as it must compete with many other programs for funding each year. This problem is exacerbated by the limits on overall discretionary spending that were imposed by the Budget Control Act of 2011. Supporters of passenger rail service have long called for a dedicated funding source for rail projects, and previous administrations have echoed such calls. To date, however, Congress has not taken such a step."], "subsections": []}, {"section_title": "Rail Plans Are Not Always Coordinated", "paragraphs": ["Rail planning in the United States is not centralized, relying on project sponsors (usually states) to formulate their own plans. Congress and several presidents have, at times, identified corridors as investment priorities or set out trip time goals for certain routes, but these have usually not been backed by any financial commitment or implementation plan. The lack of reliable funding for passenger rail capital projects and operations is one obstacle to rail planning, as some states may not wish to invest time and resources into a plan that may not be achievable without additional federal support.", "PRIIA contained a requirement for FRA to develop a National Rail Plan (NRP), which has not taken the form of a standalone document. Instead, FRA has issued guidance for states to follow when drafting their own rail plans, as well as cost estimation and cost-benefit analysis guidance for project sponsors to follow when planning new or improved rail lines. FRA has also worked with groups of states to create regional rail plans, identifying service goals and rough cost estimates for passenger rail service between major cities. A rail study in the Southwest is complete, while rail studies in the Midwest and Southeast are ongoing. Regional rail plans are nonbinding and have no construction funding attached. Follow-on policies, including new dedicated funding for rail investment programs, were contained within U.S. DOT legislative proposals that were not enacted."], "subsections": []}, {"section_title": "Legal and Regulatory Hurdles to Competition", "paragraphs": ["The short-lived experiment contracting with an equipment provider for the Hoosier State and the failure of the long-distance competitive pilot program to generate any applications show that efforts to foster competition have not resulted in improvements to intercity passenger rail. Part of this may be attributed to the de facto monopoly status enjoyed by Amtrak since its private sector competitors ended their passenger businesses.", "Amtrak has statutory privileges that currently would not extend to startup passenger rail operating companies hoping to compete over existing routes. Under current laws and regulations, a new entrant to passenger rail not wishing to negotiate with Amtrak or freight railroads for track access must either have a prior affiliation with an existing freight railroad (as with All Aboard Florida) or must plan to construct its own tracks (as with Texas Central). Congress could re-impose some obligation to accommodate passenger service on freight railroads. The freight rail industry would likely be opposed to such a step. ", "Appendix A. Federally Designated HSR Corridors", "Appendix B. New, Improved, and Planned Intercity Passenger Rail Lines"], "subsections": []}]}]}}
{"id": "R46211", "title": "National Security Space Launch", "released_date": "2020-02-03T00:00:00", "summary": ["The United States is making significant efforts to pursue a strategy that ensures continued access to space for national security missions. The current strategy is embodied in the National Security Space Launch (NSSL) program. The NSSL supersedes the Evolved Expendable Launch Vehicle (EELV) program, which started in 1995 to ensure that National Security Space (NSS) launches were affordable and reliable. For the same reasons, policymakers provide oversight for the current NSSL program and encourage competition, as there was only one provider for launch services from 2006 to 2013. Moreover, Congress now requires DOD to consider both reusable and expendable launch vehicles for solicitations after March 1, 2019. To date, only expendable, or single-use, launch vehicles have been used for NSSL missions.", "The NSSL program is the primary provider for NSS launches. Factors that prompted the initial EELV effort in 1995 are still manifest\u00e2\u0080\u0094significant increases in launch costs and concerns over procurement and competition. In addition, the Russian backlash over the 2014 U.S. sanctions against Russian actions in Ukraine exacerbated a long-standing undercurrent of concern over U.S. reliance on a Russian rocket engine (RD-180) for critical national security space launches. Moreover, significant overall program cost increases and unresolved questions over individual launch costs, along with legal challenges to the Air Force rocket development and launch procurement contract awards, have resulted in legislative action.", "In 2015, the Air Force began taking steps to transition from reliance on the Russian made RD-180 engine used on the Atlas V rocket. Some in Congress pressed for a more flexible transition to replace the RD-180 that allowed for development of a new launch vehicle, while others in Congress sought legislation that would move the transition process forward more quickly with a focus on developing an alternative U.S. rocket engine. Transitioning away from the RD-180 to a domestic U.S. alternative provided opportunities for space launch companies that sought to compete for NSS space launches. Because of the technical, program, and schedule risk, as a worst-case scenario, the transition could leave the United States in a situation in which some of its national security space payloads lack an available certified launcher.", "The Space and Missile System Center (SMC), together with the National Reconnaissance Office (NRO), released a request for proposals in May 2019 to award two domestic launch service contracts. DOD plans to select two separate space launch companies in the summer of 2020 that will be responsible for launching U.S. military and intelligence satellites through 2027. NSS launch has been a leading legislative priority in the defense bills over the past few years and may continue to be so into the future."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["The National Security Space Launch (NSSL) program aims to acquire launch services and ensure continued access to space for critical national security missions. The U.S. Air Force implemented the original program in 1995\u00e2\u0080\u0094Evolved Expendable Launch Vehicle (EELV)\u00e2\u0080\u0094and awarded four companies contracts to design a cost-effective launch vehicle system. The DOD acquisition strategy was to select one company and ensure that NSS launches were affordable and reliable. The EELV effort was prompted by significant increases in launch costs, procurement concerns, and the lack of competition among U.S. companies. ", "A major challenge and long-standing undercurrent of concern over U.S. reliance on a Russian rocket engine (RD-180), used on one of the primary national security rockets for critical national security space launches, was exacerbated by the Russian backlash over the 2014 U.S. sanctions against its actions in Ukraine. Moreover, significant overall NSSL program cost increases and unresolved questions over individual launch costs, along with legal challenges to the Air Force contract awards by space launch companies, prompted legislative action. In the John S. McCain National Defense Authorization Act (NDAA) for FY2019, Congress renamed the EELV to the NSSL program to reflect a wider mission that would consider both reusable and expendable launch vehicles. ", "The origins of the NSSL program date back to 1995, after years of concerns within the Air Force and space launch community over increasing cost and decreasing confidence in the continued reliability of national access to space. The purpose of EELV was to provide the United States affordable, reliable, and assured access to space with two families of space launch vehicles. Initially only two companies were in competition: Boeing produced the Delta IV launch vehicle, and Lockheed Martin developed the Atlas V. Overall, the program provided critical space lift capability to support DOD and intelligence community satellites, together known as National Security Space (NSS) missions. ", "The EELV program evolved modestly in response to changing circumstances, and the Air Force approved an EELV acquisition strategy in November 2011, further revising it in 2013. That strategy was designed to (1) sustain two major independent rocket-powered launch vehicle families to reduce the chance of launch interruptions and to ensure reliable access to space; (2) license and stockpile the Russian-made RD-180 heavy-lift rocket engine, a critical component of the Atlas V; (3) pursue a block-buy commitment to a number of launches through the end of the decade to reduce launch costs; and (4) increase competition to reduce overall launch costs. The Air Force and others viewed the overall EELV acquisition strategy as having successfully reduced launch costs while demonstrating highly reliable access to space for DOD and the intelligence community. Others in Congress and elsewhere, however, argued that the program remained far too costly and was not as competitive as it should be. ", "The NSSL program is managed by the Launch Enterprise Systems Directorate of the Space and Missile Systems Center, Los Angeles Air Force Base (El Segundo, CA). The NSSL program consists of four launch vehicles: Atlas V and Delta IV Heavy (both provided by United Launch Alliance [ULA] of Denver, CO) and Falcon 9 and Falcon Heavy (both provided by Space Exploration Technologies Corporation [SpaceX] of Hawthorne, CA). NSS launches support the Air Force, Navy, and National Reconnaissance Office (NRO). More specifically, the Atlas V has launched commercial, civil, and NSS satellites into orbit, including commercial and military communications satellites, lunar and other planetary orbiters and probes, earth observation, military research, and weather satellites, missile warning and NRO reconnaissance satellites, a tracking and data relay satellite, and the X-37B space plane (a military orbital test vehicle). The Delta IV has launched commercial and military communications and weather satellites, and missile warning and NRO satellites.", "The Atlas V and Delta IV Heavy launch vehicles are produced by ULA, which was formed in 2006 as a joint venture of The Boeing Company (of Chicago, IL) and Lockheed Martin (of Bethesda, MD). In addition to the launch vehicles themselves, the NSSL program consists of an extensive array of support capabilities and infrastructure to permit safe operations of U.S. launch ranges. ULA operates five space launch complexes, two at Cape Canaveral Air Force Station, FL (Space Launch Complex-37 and Space Launch Complex-41), and three at Vandenberg Air Force Base, CA (Space Launch Complex-2, Space Launch Complex-3F, and Space Launch Complex-6). A large number of key suppliers for ULA are spread throughout 46 states. ", "DOD certified SpaceX to compete for NSS launches in 2015. The Falcon 9 flew its first NSSL mission on December 23, 2018, which delivered the Global Positioning System (GPS) III to orbit. SpaceX developed a more capable launch capability in the Falcon Heavy, which DOD certified in June 2018 and later awarded NSS missions under Phase 1A of the NSSL program. SpaceX maintains three launch sites, one at Cape Canaveral Air Force Station, FL (Space Launch Complex 40); one at Kennedy Space Center (Launch Complex 39A); and one at Vandenberg Air Force Base, CA (Space Launch Complex 4E).", "On October 10, 2018, the Air Force awarded three Launch Service Agreement (LSA) Other Transaction Authority (OTA) agreements to space launch companies. The LSA OTA agreements are \"public-private partnerships [that] leverage industry's commercial launch solutions to ensure those systems meet NSS requirements.\" They also \"facilitate development of three NSSL launch system prototypes and maturing those launch systems prior to selecting two NSS launch service providers for launch service procurements beginning in FY2020.\" The Air Force released request for proposals (RFP) in May 2019 for Phase 2 of the NSSL program, with plans to award two separate Launch Service Procurement (LSP) contracts in the summer of 2020. The selected companies will be responsible for launching national security satellites through 2027. However, the Air Force acquisition strategy of down-selecting no more than two launch providers may mitigate short-term risk but could have second- and third-order effects for resiliency in the future. ", "Congress may consider whether the strategy's cost-benefit analysis warrants further research. Should no more than two launch providers be chosen for LSP contracts in Phase 2, the companies not selected would lose the LSA funds received from the Air Force and could potentially be faced with (1) the choice of abandoning NSSL development to focus on competing in the commercial launch sector or (2) investing vast company reserves to continue development on its own. Furthermore, DOD investment in only two launch providers could mean fewer options for an increasingly diverse range of national space security missions and possibly limit competition, once again, in the launch market. "], "subsections": []}, {"section_title": "Evolution of the EELV", "paragraphs": [], "subsections": [{"section_title": "1990s-2011", "paragraphs": ["By the early 1990s, the U.S. space industrial base supported the production of a number of launch vehicles (i.e., Titan II, Delta II, Atlas I/II/IIAS, and Titan IV) and their associated infrastructure. Although launch costs were increasing and operational and procurement deficiencies were noted by many decisionmakers, no clear consensus formed over how best to proceed. Congress took the initiative in the National Defense Authorization Act for Fiscal Year 1994 (NDAA; P.L. 103-160 , \u00c2\u00a7213) by directing DOD to develop a Space Launch Modernization Plan (SLMP) that would \"establish and clearly define priorities, goals, and milestones regarding modernization of space launch capabilities for the Department of Defense or, if appropriate, for the Government as a whole.\" ", "The recommendations of the SLMP led DOD to implement the EELV program as the preferred alternative. The primary objective of the EELV program was to reduce costs by 25%. The program also sought to ensure 98% launch vehicle design reliability and to standardize EELV system launch pads and the interface between satellites and their launch vehicles. Congress supported these recommendations through the FY1995 NDAA ( P.L. 103-337 , \u00c2\u00a7211), directing DOD to develop an integrated space launch vehicle strategy to replace or consolidate the then-current fleet of medium and heavy launch vehicles and to devise a plan to develop new or upgraded expendable launch vehicles. Congress recommended spending $30 million for a competitive reusable rocket technology program and $60 million for expendable launch vehicle development and acquisition.", "The original EELV acquisition strategy, initiated in 1994, called for a competitive down-select to a single launch provider and development of a system that could handle the entire NSS launch manifest. In 1995, the Air Force selected four launch providers for the initial competition: Lockheed Martin, Boeing, McDonnell Douglas, and Alliant Techsystems. After the first round of competition, the Air Force selected Lockheed Martin and McDonnell Douglas to continue. When Boeing acquired McDonnell Douglas in 1997, Boeing took over the contract to develop an EELV. Soon thereafter, however, the Air Force revised the EELV acquisition strategy, concluding that there was now a sufficient space launch market to sustain two EELV providers.", "Throughout the acquisition process, DOD maintained that competition between Lockheed Martin and Boeing was essential. At the time, the Government Accountability Office (GAO) reported that sufficient growth in the commercial launch business would sustain both companies, a premise that, in turn, would lead to lower launch prices for the government. But \"the robust commercial market upon which DOD based its acquisition strategy of maintaining two launch companies [throughout the life-cycle of the program] never materialized, and estimated prices for future contracts, along with total program costs, increased.\"", "Retaining two launch providers, however, did provide DOD with some confidence in its ability to maintain \"assured access to space.\" This confidence soon collapsed, when in the late 1990s, the United States suffered six space launch failures in less than a year. These failures included the loss of three national security satellites in 1998-1999, at a cost of over $3 billion. One, a critical national security communications satellite (MILSTAR\u00e2\u0080\u0094Military Strategic and Tactical Relay), was lost on a failed Titan IV launch in 1999. That satellite capability was not replaced until 2010 with an AEHF (Advanced Extremely High Frequency) satellite, which experienced substantial acquisition challenges and frequent changes in both design and requirements. The other two losses were an NRO reconnaissance satellite and a DSP (Defense Support Program) satellite. In addition to the cost, schedule, and operational impacts of these lost missions, including a classified national security loss in coverage with MILSTAR, these failures significantly influenced the transition to the EELV program, which had an initial goal to make national security space launches more affordable and reliable. ", "President Clinton directed a review of these failures and sought recommendations for any necessary changes. The subsequent Broad Area Review (BAR) essentially concluded that the U.S. government should no longer rely on commercial launch suppliers alone to provide confidence and reliability in the EELV program. Instead, the BAR recommended more contractor and government oversight through increasing the number of independent reviews, pursuing performance guarantees from the launch providers, and greater government involvement in the mission assurance process. Although these additional oversight activities eventually proved to significantly increase EELV costs, they also eventually led to notable improvements in launch successes.", "The early 2000s saw considerable turmoil within the Air Force space community and among the EELV launch service providers due to competition in the shrinking space launch industrial base, cost increases, and the growing need for reliable access to space. During this time, the poor business prospects in the space launch market drove Lockheed and Boeing to consider leaving the market altogether. Therefore, to protect its objective of assured access to space, the U.S. government began to shoulder much of the EELV program's fixed costs. ", "To further protect the United States' ability to deliver NSS satellites into orbit, the George W. Bush Administration conducted a number of internal reviews that culminated in the 2004 National Security Policy Directive (NSPD)-40. This directive established the requirement for \"assured access to space\" and obliged DOD to fund the annual fixed launch costs for both Lockheed and Boeing until such time as DOD could certify that assured access to space could be maintained without two launch providers.", "DOD thus revised its EELV acquisition strategy because of the collapse of the commercial launch market and the ongoing erosion of the space industrial base. GAO wrote that \"in acknowledging the government's role as the primary EELV customer, the new strategy maintained assured access to space by funding two product lines of launch vehicles.\" ", "In 2006, The Boeing Company and Lockheed Martin announced plans to consolidate their launch operations into a joint venture\u00e2\u0080\u0094ULA. The companies argued that by combining their resources, infrastructure, expertise, and capabilities, they could assure access to space at lower cost. DOD believed that having two launch vehicle families (Atlas V and Delta IV) under one entity (i.e., ULA) provided significant benefits that outweighed the loss of competition. In October 2006, the Federal Trade Commission granted ULA antitrust clearance allowing the new company to form on December 1, 2006. As a result, \"unparalleled EELV mission success\" ensued, and the tradeoff over increased costs and reduced competition outside ULA was largely deemed acceptable."], "subsections": []}, {"section_title": "2011-Current Status", "paragraphs": ["Since 2006, the Air Force has procured space launches from ULA on a sole-source basis. The former EELV program focused primarily on mission success\u00e2\u0080\u0094not cost control. GAO reported, however, that by 2010 \"DOD officials predicted EELV program costs would increase at an unsustainable rate\" due to possible instabilities in the launch industrial base and the inefficient buying practice of purchasing one launch vehicle at a time. In 2009, SpaceX, a new entrant to the space launch industrial base, became the first private company to successfully develop a liquid fuel rocket that delivered a commercial satellite to orbit. However, SpaceX was not certified to compete for national security missions until 2005. ", "In response, DOD recognized a need to again reorganize the way it acquired launch services. Additional studies and internal reviews evaluated alternatives to the EELV business model, which in turn led to a new EELV acquisition strategy adopted in November 2011. The new acquisition strategy advocated a steady launch vehicle production rate. This production rate was designed to provide economic benefits to the government through larger buys, or block-buys, of launch vehicles, providing a predictable production schedule to stabilize the space launch industrial base. The new EELV acquisition strategy also announced the government's intent to renew competition in the program.", "In addition to revising its acquisition strategy, DOD undertook significant efforts to obtain greater insight into ULA program costs in advance of contract negotiations. In May 2011, DOD solicited a Request for Information to prospective launch providers. In March 2012, DOD issued a sole-source solicitation for the block-buy to ULA, and in April 2012, the EELV program incurred a critical Nunn-McCurdy cost breach. ", "In December 2013, DOD followed through on its new EELV strategy, signing a contract modification with ULA committing the government to buy 35 launch vehicle booster cores over a five-year period, along with the associated infrastructure capability to launch them. DOD viewed this contract modification as a significant effort on its part to negotiate better launch prices through improved knowledge of ULA contractor costs. DOD officials expected the new contract to realize significant savings, primarily through stable unit pricing for all launch vehicles. However, some in Congress, and some analysts outside government, strongly disputed the DOD estimates of cost savings. ", "DOD announced that it would add up to 14 additional NSS launches to broader competition. However, in the FY2015 budget request, the Air Force announced that the number of EELV launches open to broader competition through FY2017 would be reduced from 14 to 7. Some Members of Congress, and SpaceX officials, raised questions about how many launches would ultimately be openly competed.", "Perhaps resulting from turmoil associated with the Nunn-McCurdy cost breach, as well as the perceived instabilities mentioned above, the EELV acquisition strategy proceeded to a three-phased approach: ", "Phase 1 (FY2013-FY2019) would consist of the sole-source block-buy awarded to ULA to procure up to 36 cores and to provide 7 years of NSS launch infrastructure capability. Phase 1A (FY2015-FY2017) emerged as a modification to Phase 1 that would consist of opening up competition for NSS launches to new space launch entrants (such as SpaceX). The Air Force said it could award up to 14 cores to a new entrant over 3 years, if a new entrant became certified. Phase 2 (FY2018-FY2022) envisioned full competition among all launch service providers. The operational requirements, budget, and potential for competition are currently being worked on. Phase 3 (FY2023-FY2030) envisioned full competition with the award of any or all required launch services to any certified provider.", "The Air Force's strategy appeared to fulfill the mandates to maintain assured access to space and introduce competition into the space launch market. To date, the NSSL program has launched more than 70 successful missions in support of the Air Force, the National Reconnaissance Office, and the U.S. Navy. ULA's Delta IV and Atlas V launch vehicles (which are older than the NNSL program) have performed over 90 consecutive successful missions, whereas SpaceX has performed five successful NSS launches. "], "subsections": []}]}, {"section_title": "Factors That Complicated EELV Acquisition Strategy", "paragraphs": ["Several interrelated factors created uncertainty over the Air Force's ability to continue with the three-phased EELV acquisition strategy. These included ongoing concerns over program and launch costs, U.S. national security vulnerability from dependence on a Russian component in the EELV program (the RD-180 main engine), legal challenges to the acquisition strategy, and legislation that could change the EELV program."], "subsections": [{"section_title": "Cost Growth in the EELV", "paragraphs": ["In March 2012, the EELV program reported two critical Nunn-McCurdy unit cost breaches, which resulted in a reassessment of the program. The cost of the newly restructured program was estimated by GAO in March 2013 at $69.6 billion. This amount represented an increase of $34.6 billion, or about 100%, over the program's estimated cost of $35 billion from a year earlier. GAO identified several causes for this cost growth, including an extension of the program's life cycle from 2020 to 2030, an increase of the planned number of launch vehicles to be procured from 91 to 150 (an increase of 59%), the inherently unstable nature of demand for launch services, and instability in the industrial base. These causes related to changes in the scope of the program and reflected the industrial-base conditions under which the program was being undertaken; they did not appear to imply poor performance by the Air Force or the industry in executing the program. Even so, the overall increase in estimated program costs complicated the Air Force's challenge in funding the program within available resources without reducing funding for other program priorities. It also contributed to focusing attention on modifying their EELV acquisition strategy.", "In addition, the costs of individual launches themselves came under renewed scrutiny. SpaceX and others asserted that the launch costs charged by ULA were significantly higher than what SpaceX would charge the U.S. government once it was certified by the Air Force to conduct NSS launches. Part of the challenge in verifying these claims, however, is that much of the detailed cost data are proprietary, not readily comparable, and some are speculative to the extent that there is little empirical data on which those costs are provided. Although the Air Force, GAO, ULA, and SpaceX have provided some launch cost data, it is not apparent the data are directly comparable or are calculated using the same cost model assumptions. In addition, because SpaceX has limited data directly related to NSS launches, its cost figures are not likely based on a long history of actual cost, performance, and reliability. Thus, the issue of reliable and consistent cost data for comparative purposes has been a source of frustration for many in Congress."], "subsections": []}, {"section_title": "Reliance on the Russian RD-180 Main Engine", "paragraphs": ["The original impetus for licensing the Russian RD-180 as the main engine for the Atlas V launch vehicle grew out of concerns associated with the 1991 collapse of the Soviet Union. At the time, the CIA and others expressed serious concern about the potential export and proliferation of Russian scientific and missile expertise to countries hostile to U.S. interests. These concerns in turn spurred a U.S.-Russian partnership to acquire some of Russia's heavy lift rocket engine capabilities, thus expanding upon existing Cold War civil space cooperation. Initially, this took the form of a license agreement between Energomash NPO and RD Amross (of Palm Beach, FL) for the coproduction of the RD-180 engine as part of the EELV acquisition strategy. This later changed in an acquisition revision to simply purchase and stockpile roughly two years' worth of the engines for the Atlas V, an approach that was then viewed as highly cost-competitive. The existing license agreement for purchasing RD-180 engines extends to 2022.", "In subsequent years, some Members of Congress and policy experts occasionally expressed concern over the potential vulnerability of the EELV program based on reliance on a single critical Russian component. For instance, the FY2005 defense authorization act ( P.L. 108-375 , \u00c2\u00a7912) directed DOD to examine future space launch requirements. The resulting 2006 RAND study concluded that \"the use of the Russian-manufactured RD-180 engines in the Atlas V common core is a major policy issue that must be addressed in the near term.\" Similar concern was noted by GAO in 2011: \"the EELV program is dependent on Russian RD-180 engines for its Atlas line of launch vehicles, which according to the Launch Enterprise Transformation Study, is a significant concern for policymakers.\" ", "In the FY2013 defense authorization act ( P.L. 112-239 , \u00c2\u00a7916), Congress directed DOD to undertake an \"independent assessment of the national security implications of continuing to use foreign component and propulsion systems for the launch vehicles under the evolved expendable launch vehicle program.\" None of these concerns, however, led the Air Force to change its EELV acquisition strategy or to seek a change in legislation governing that strategy. ", "After Russian incursions in Ukraine triggered U.S. sanctions in 2014, Russian backlash against those sanctions heightened alarm over the potential vulnerability of the EELV program and catalyzed the desire for change. In March 2014, the United States imposed sanctions on various Russian entities and persons, including Deputy Prime Minister Dimitry Rogozin, the official overseeing export licenses for the RD-180 rocket engine. In retaliation, Rogozin announced that \"we can no longer deliver these engines to the United States unless we receive guarantees that our engines are used only for launching civilian payloads.\" Precise details of what Rogozin meant, and whether any changes would be implemented, were unclear. ", "Many observers in the United States were increasingly concerned, however, that Russia could suddenly ban all exports of the engine to the United States, or ban exports for military use to some degree. To many outside of the Air Force and ULA, that uncertainty raised serious questions about the longer-term viability of the EELV program, and pointed to a need to completely shed U.S. reliance on the RD-180 as soon as practicable. Congress has since taken steps in each of the past several defense authorization bills (described below) to end this reliance and develop an alternative, domestic-produced U.S. main engine.", "Although the Air Force committed in principle to this ultimate outcome, some in Congress questioned if Air Force efforts were proceeding at an acceptable pace. As the Air Force pursues the congressional mandates to eliminate dependence on the RD-180 engine and continue to transition to a truly competitive launch market, it foresees major challenges. These include ULA's recent retirement of the Delta IV Medium in August 2019, the fact that SpaceX is currently the only other space launch provider awarded NSS mission requirements, and restrictions on acquisition of the RD-180 engine during this interim period that affect the Atlas V launch schedules."], "subsections": []}, {"section_title": "Legislative and Industry Options to Replace the RD-180", "paragraphs": ["In spring 2014, DOD formed a commission to bring together various experts to examine the risks, costs, and options for dealing with the potential loss of the Russian RD-180 rocket engine in the EELV program. The 2014 Mitchell Commission recommended accelerating purchases of the RD-180 under the existing licensing agreement to preserve the EELV Phase 1 block-buy schedule and to facilitate competition in Phases 1A and Phase 2. The commission did not recommend coproducing the RD-180 in the United States, but instead recommended spending $141 million to begin development of a new U.S. liquid rocket engine to be available by 2022, to coincide with the end of Phase 2 in the EELV acquisition strategy. ", "Congress has remained supportive of sustaining current space access capabilities while working toward developing a U.S.-made main rocket engine to replace the RD-180. The FY2015 NDAA permitted ULA to use RD-180 Russian engines purchased before Russia's intervention in Ukraine for continued national security space launch missions if the Secretary of Defense determined it was in the national security interest of the United States to do so. The FY2016 NDAA increased this number to nine RD-180s in order to help maintain competitors in the NSS launch market for a longer period, while the market transitions away from the RD-180 and toward a new domestic-produced rocket engine. ", "The FY2017 NDAA increased the number of the Russian RD-180 rocket engines authorized to be used to a total of 18 rocket engines, beginning with the enactment of the FY2017 NDAA and ending on December 31, 2022. The defense bills since the FY2017 NDAA have not amended the total number of Russian RD-180 rocket engines authorized to be used."], "subsections": []}, {"section_title": "The NSSL Program Today", "paragraphs": ["The Air Force identified four main priorities in NSSL: mission success, innovative mission assurance, transitioning to new launch vehicles, and assured access for future space architectures. ", "DOD expects to achieve cost saving through acquisitions and operability improvements that consist of the use of common components and infrastructure, standard payload interfaces, standardized launch pads, and reducing on-pad processing. To improve acquisitions, the program offers block buys of launch vehicles and competition between certified providers. The competitions are accomplished through two contract vehicles: Launch Service Agreements (LSA) and Launch Service Procurement (LSP) awards:", "Launch Service Agreement (LSA) awards are a set of three Air Force RDT&E awards intended to facilitate the development of three domestic launch system prototypes. DOD awarded LSA's to ULA, Northrop Grumman, and Blue Origin in October 2018. Launch Service Procurement (LSP) is an ongoing procurement competition that is currently in Phase 2. The second phase is a 5-year procurement of approximately 34 launches starting in 2022. The Air Force plans to select two space launch providers in 2020. ", "United Launch Alliance, Northrop Grumman, SpaceX, and Blue Origin have submitted bids for phase two, with each company proposing their rocket designs: Vulcan, OmegA, Falcon, and New Glenn, respectively. The two companies selected will share the NSSL notional manifest for the next five years. Phase 1 and Phase 1A awards were made to ULA and SpaceX. DOD has identified 18 active contracts for the NSSL program with obligations awarded to six companies (see Figure 1 ).", "ULA and SpaceX are currently the only space launch providers certified to launch NSS payloads into orbit. The main focus for ULA is on developing a next-generation launch vehicle called the Vulcan. In July 2014, ULA signed commercial contracts with multiple U.S. liquid rocket engine manufacturing companies to investigate next-generation engine concepts. ULA selected Blue Origin (Kent, WA) BE-4 engine to power its Vulcan launch vehicle. "], "subsections": []}]}, {"section_title": "Conclusion", "paragraphs": ["Although there are important differences in how to achieve it, widespread support appears to exist across the space community and within Congress for the NSS requirement for robust competition and assured access to space. The recurring challenge since the start of the NSSL program has been how best to pursue this requirement while driving down costs through competition and ensuring launch reliability and performance. The Air Force decision of down-selecting no more than two launch providers and award two separate Launch Service Procurement (LSP) contracts in the summer of 2020 is not without potential implications and could have second- and third-order effects. Congress may consider the following: ", "Directing the Air Force to provide a report on the cost-benefit analysis of selecting more than two launch providers. Drafting legislative in the NDAA for FY2021 authorizing additional funds that allows the Air Force to diversify its launch provider options by continuing to provide development funds through LSA awards to launch companies not selected for LSP contracts in Phase 2. Directing the Air Force to provide a report on the cost saving and associated risk using both reusable and expendable launch vehicles for future solicitations. ", "Lastly, efforts to transition away from the RD-180 to a domestic U.S. alternative engine or launch vehicle are not without technical, program, or schedule risks. Even with a smooth, on-schedule transition away from the RD-180 to an alternative engine or launch vehicle, the performance and reliability record achieved with the RD-180 to date would likely not be replicated until well beyond 2030 because the RD-180 has approximately 81 consecutive successful civil, commercial, and NSS launches since 2000."], "subsections": []}]}}
{"id": "R46109", "title": "Agency-Related Nonprofit Research Foundations and Corporations", "released_date": "2019-12-09T00:00:00", "summary": ["Federal research and development (R&D) has played a significant role in strengthening the innovative capacity of the United States to achieve goals such as economic competitiveness, national security, improved healthcare, and protection of the environment. The results of federal R&D have led to scientific breakthroughs and new technologies with broad social and economic impacts, including artificial intelligence, the internet, and magnetic resonance imaging. The global landscape for innovation is rapidly evolving\u00e2\u0080\u0094the pace of innovation has increased and the composition of R&D funding has changed (e.g., public versus private funding and the U.S. share of global R&D has declined ). These changes have led some to call for new approaches and the expansion of existing federal authorities to help the United States maintain its leadership in innovation, research, and technology.", "Over the years, Congress has created several agency-related nonprofit research foundations and corporations to advance the R&D needs of the federal government. The stated goals and potential benefits of these quasi-governmental entities include: (1) providing a flexible and efficient mechanism for establishing public-private R&D partnerships; (2) enabling the solicitation, acceptance, and use of private donations to supplement the work performed with federal R&D funds; (3) increasing technology transfer and the commercialization of federally funded R&D; (4) improving the ability of federal agencies to attract and retain scientific talent; and (5) enhancing public education and awareness regarding the role and value of federal R&D.", "This report provides an overview of the purpose and intent, governance structure, and federal funding associated with selected congressionally mandated, agency-related nonprofit research foundations and corporations: the Foundation for the National Institutes of Health, the National Foundation for the Centers for Disease Control and Prevention, the Reagan-Udall Foundation for the Food and Drug Administration, the Foundation for Food and Agriculture Research, the Henry M. Jackson Foundation for the Advancement of Military Medicine and the nonprofit research and education corporations associated with the Department of Veterans Affairs.", "The report also identifies potential issues for consideration related to oversight of existing agency-related nonprofit research foundations and corporations as well as potential issues for consideration should Congress elect to establish additional ones. Specifically, while government agencies are, with certain exceptions, subject to management laws and regulations designed to ensure accountability, transparency, and fairness, agency-related research foundations and corporations are generally exempt from them. This situation may raise questions about how Congress and federal agencies can protect the public interest and ensure confidence in the decisionmaking of such entities. Additionally, recent concerns that some have raised related to conflict of interest, the potential for industry influence, and questions about effectiveness may prompt further examination of these entities.", "Among the options that Congress might consider are:", "crafting a broad, general nonprofit research foundation authority that federal science agencies could draw on to create an entity that meets their specific needs; examining the existing authorities of individual federal science agencies and, as appropriate, supplementing those authorities to increase the flexibility of an agency to enter into public-private partnerships; creating additional agency-related nonprofit research foundations on a case-by-case basis, tailored to the specific needs of particular federal science agencies; and maintaining the status quo, i.e., allowing agency-related nonprofit research foundations and corporations that currently exist to continue, and requiring other federal agencies to use their existing authorities to enter into public-private R&D partnerships and transfer federal technologies to the marketplace."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["Congress maintains an ongoing interest in the pace of U.S. innovation and technological advancement due to its influence on the economy, national security, public health, and other national goals. Historically, the federal government has played a significant role in supporting research and development (R&D)\u00e2\u0080\u0094especially basic research\u00e2\u0080\u0094that has led to scientific breakthroughs and new technologies. The global landscape for innovation is rapidly evolving\u00e2\u0080\u0094the pace of innovation has increased and the composition of R&D funding has changed (i.e., private R&D investments are larger than public R&D investments and the U.S. share of global R&D has declined). These changes have led some to call for new approaches and the expansion of existing mechanisms to help the United States maintain its leadership role in innovation and technology. One mechanism that has received some attention is the possibility of establishing additional agency-related entities that would facilitate the use of private donations in federally generated research projects. In addition, such entities might play a role in the commercialization of new technologies. The potential establishment of such entities in statute raises several questions: What kinds of organizations has Congress established in the past to address similar needs in the federal government? What are the strengths and weaknesses of these potential models? What are the opportunities and risks of developing a new entity for federal R&D using one of these models?", "The varied organizational arrangements of the executive branch have resulted from more than two centuries of legislative and administrative actions. These arrangements reflect a diversity of viewpoints, policy preferences, and political goals among the thousands of elected and appointed officials who have played a role in creating and shaping them. During the middle of the 20 th century, hybrid organizational forms\u00e2\u0080\u0094incorporating both public and private characteristics\u00e2\u0080\u0094began to grow in number. These organizational forms, sometimes collectively referred to as \"quasi-governmental entities,\" differ from one another in their specific features, relationship to the federal government, funding mechanisms, purposes, levels of accountability to elected officials, and use of private sector incentives and efficiencies, among other characteristics. Agency-related nonprofit research foundations and corporations fall into this category of organizations."], "subsections": [{"section_title": "Background on Quasi-Governmental Entities", "paragraphs": ["Working with successive administrations, Congress has established, or provided for the establishment of, many quasi-governmental entities. Some of the considerations that contributed to their creation and development were linked to political and policymaking dynamics that were idiosyncratic to the specific time and issue at hand. Nonetheless, observers have identified some common purposes for, and expected benefits of, establishing such entities:", "providing for stable funding during federal budget tightening and uncertainty; freeing a program from general government management laws, particularly those pertaining to caps on personnel and compensation; harnessing business principles and mechanisms with the aim of providing government-driven solutions without the \"red tape\" associated with the federal bureaucracy; and providing authorities tailored to the desired mission and functions that allow flexible approaches not typically allowed under statutes or regulations, such as those in the area of financial management.", "In comparison to traditional government agencies, quasi-governmental entities of various kinds have been touted for their potential to harness business-like entrepreneurial incentives and drive, greater managerial flexibility, and increased employee input in decisionmaking to better carry out the entity's responsibilities.", "As quasi-governmental organizations have grown in number and variety, some observers have criticized the exemption from government management laws of many such entities. A complex legal framework has been established over time to guide government agencies so that their actions adhere to the values of democratic governance, such as accountability, transparency, and fairness. It might be difficult for stakeholders to verify on an ongoing basis that the activities of a quasi-governmental entity, established by statute and vested with the power to carry out some public purpose, are directed to the public good rather than private gain without the routine accountability and transparency provided by this legal framework. Many of these laws and regulations specify the processes by which action must be taken. Some have criticized such governmental processes as \"red tape,\" particularly in cases where they appear to have been applied overzealously, slowly, or seemingly without regard for an individual's or business's need for a service or flexibility. Arguably, quasi-governmental entities involve a tradeoff: What appears to some to be red tape during an administrative encounter may appear to others to be an essential accountability or transparency mechanism.", "Most federal agencies are funded through the annual appropriations process, and Congress has sometimes used the \"power of the purse\" to influence agency priorities and activities. Most federal agencies are headed by appointees of the President subject to Senate advice and consent, and the confirmation process provides Senators with an opportunity to discuss agency issues and concerns with these leaders. Congress establishes, or provides for the establishment of, quasi-governmental entities, but it might not have the same level of influence over them as it does over conventional federal agencies. Congressional committees have reviewed the actions and structure of some of these entities during oversight hearings, and Congress has sometimes enacted changes to their enabling statutes. At the same time, many quasi-governmental entities do not receive appropriated funds and are not led by advice and consent appointees, shielding them from two potential avenues of congressional influence. ", "In addition to criticisms related to oversight, accountability, and transparency, some have questioned whether private sector management techniques are always appropriate for managing government functions. Most public administration scholars have agreed that public enterprises can benefit from some general management mechanisms developed in the private sector. Some scholars have argued, however, that the blanket application of private sector management assumptions to the public sector might miss important differences between the two. ", "These differences include, for example, the role of constitutional law. As one public administration scholar stated, \"although politicians, reformers, and media pundits often call for running government like a business, constitutional law makes the public's business very different from others.\" Some observers also have noted differences in the \"bottom line\" of the two sectors, and the consequent complexity associated with measuring performance in accomplishing a public purpose. ", "This report discusses a specific category of quasi-governmental entities: agency-related nonprofit organizations that have been established in statute for the express purpose of advancing or facilitating the R&D mission of a federal agency. It describes the characteristics of several illustrative organizations of this type. It examines the available record of these entities' performances and discusses related praise and criticism of these organizational arrangements. Finally, the report identifies potential issues for consideration related to oversight of existing quasi-governmental R&D support organizations as well as potential issues for consideration should Congress elect to establish similar organizations."], "subsections": []}]}, {"section_title": "Existing Agency-Related Nonprofit R&D Organizations", "paragraphs": ["Congress has created a number of agency-related nonprofit research foundations and corporations to advance the R&D needs of the federal government and to overcome perceived barriers associated with federal agencies' ability to partner or otherwise engage with industry, academia, and other entities. The stated goals and potential benefits of these quasi-governmental R&D support organizations are that they may:", "provide a flexible and efficient mechanism for establishing public-private R&D partnerships (see the box, \"What Are Public-Private Partnerships?\" for more information); enable the solicitation, acceptance, and use of private donations to supplement the work performed with federal R&D funds; increase technology transfer and the commercialization of federally funded R&D; improve the ability of federal agencies to attract and retain scientific talent, including through the use of fellowships, personnel exchanges, and endowed positions; and enhance public education and awareness regarding the role and value of federal R&D.", "The following sections provide a brief overview of the purpose and intent, governance structure, and federal funding of selected congressionally mandated, federal agency-related nonprofit research foundations and corporations. The foundations discussed include those connected with the work of the National Institutes of Health (NIH), the Centers for Disease Control and Prevention (CDC), the U.S. Food and Drug Administration (FDA), the U.S. Department of Agriculture (USDA), and the Uniformed Services University of the Health Sciences (USU). Nonprofit research and education corporations associated with the work of the Department of Veterans Affairs (VA) are also discussed. ", "All the foundations discussed have been funded through a combination of public and private monies and foster public-private R&D partnerships. However, the level of public support received by the foundations differs, as do the composition and appointment of their governing boards. ", "Federal agencies and Congress have also initiated the creation of other organizations and entities to advance the R&D needs of federal agencies. Federally initiated venture capital firms and strategic investment initiatives, including In-Q-Tel, are often mentioned as an effective model. See the Appendix , \"Federally Initiated and Funded Venture Capital Firms,\" for more information and illustrative examples of such organizations. "], "subsections": [{"section_title": "Foundation for the National Institutes of Health (FNIH)", "paragraphs": ["In 1990, Congress directed the Secretary of Health and Human Services (HHS) to establish a nonprofit corporation\u00e2\u0080\u0094the National Foundation for Biomedical Research, which is now known as the Foundation for the National Institutes of Health (FNIH). Initially, the foundation was tasked with attracting and retaining internationally known scientists to NIH \"by offering competitive support for salaries, equipment, and space\" through privately funded endowed positions. In 1993, Congress broadened the purpose of the foundation to include \"support [for] the National Institutes of Health in its mission, and to advance collaboration with biomedical researchers from universities, industry, and nonprofit organizations.\" ", "According to FNIH, the foundation creates public-private partnerships and alliances to advance breakthrough biomedical discoveries that can change and improve the quality of people's lives. FNIH raises funds, provides scientific expertise, and administers research programs to address a wide range of health challenges in support of NIH's mission. FNIH also supports the training of new researchers, supports patient programs, and organizes health-related educational events and symposia. ", "One example of an FNIH-initiated project is the Biomarkers Consortium. FNIH manages the consortium\u00e2\u0080\u0094consisting of 32 companies, 15 nonprofit organizations, NIH, and FDA\u00e2\u0080\u0094with the goal of increasing the identification, development, and regulatory approval of biomarkers to support and improve drug development, preventative medicine, and medical diagnostics. In 2018, FDA approved the use of a new biomarker\u00e2\u0080\u0094supported by the consortium\u00e2\u0080\u0094that is expected to improve the detection of kidney injury in healthy volunteers participating in clinical drug trials. ", "FNIH's governance structure and powers are specified in its organic act and bylaws. FNIH is governed by a board of directors composed of non-voting, ex officio members and voting, appointed members with day-to-day operations overseen by an executive director. Congress designated certain Members of Congress and federal officials as ex officio board members and tasked them with appointing the initial members of the board from a list of candidates provided by the National Academy of Sciences. According to FNIH's bylaws, the number of appointed board members must be at least 6 and no more than 32; the term of an appointed member is 3 to 5 years; there is no limit on the number of terms an appointed member may serve; and any vacancies in the membership of the board shall be filled through election by the board. Congress empowered the board to establish bylaws to govern the general operations of the foundation, including policies for the acceptance, solicitation, and disposition of donations and grants. It also required the board to ensure that the bylaws do not compromise, appear to compromise, or reflect unfavorably on NIH and the ability of NIH to fulfill its responsibilities to the public. Furthermore, Congress made the board of directors accountable for \"the integrity of the operations of the Foundation\" through the development and enforcement of standards of conduct, financial disclosure statements, and conflict of interest policies and procedures.", "FNIH operations and activities have been funded through a combination of private donations and a share of NIH appropriations. According to FNIH, since its initial incorporation in 1996, the foundation has raised more than $1 billion in support of NIH's mission. According to tax filings, FNIH provided NIH with $22.6 million in assistance in 2017 and $16.9 million in 2016. Congress authorized the Director of NIH to \"provide facilities, utilities and support services to the Foundation if it is determined by the Director to be advantageous to the research programs of the National Institutes of Health\" and to transfer no less than $500,000 and no more than $1.25 million of the agency's annual appropriations to FNIH. Between FY2015 and FY2019, NIH transferred between $1 million and $1.25 million annually to FNIH for administrative and operational expenses (less than 0.01% of NIH's annual budget). In the President's FY2020 budget, NIH requested $1.1 million for this purpose. Additionally, since FY2008, FNIH has received $602,803 in federal grants, contracts, and other financial assistance. "], "subsections": []}, {"section_title": "National Foundation for the Centers for Disease Control and Prevention", "paragraphs": ["In 1992, Congress authorized the establishment of the National Foundation for the Centers for Disease Control and Prevention (CDC Foundation) to \"support and carry out activities for the prevention and control of diseases, disorders, injuries, and disabilities, and for promotion of public health.\" A House committee report stated: ", "In the midst of budget restraint and personnel limitations, CDC itself is often strained to meet the basic demands of its mission. Efforts to experiment (some of which will necessarily fail), to do long-term planning, and to recruit and retain temporary staff are usually luxuries that the agency cannot afford, however productive they may ultimately be.", "The Committee has, therefore, undertaken to create a mechanism for the establishment of a private non-profit foundation to provide these innovative and supplementary activities in public health in association with the CDC. Once established, such a foundation could seek private support for these efforts from both individuals and organizations, and could bring charitable funds and flexibility to these goals.", "The CDC Foundation is authorized to support a number of activities, including using private funds to establish endowed positions at CDC; creating programs for state, local, and international public health officials to work and study at CDC; conducting forums for the exchange of public health information; and funding research and other public health studies. The foundation guidelines state that it:", "helps CDC pursue innovative ideas that might not be possible without the support of external partners.... CDC Foundation partnerships help CDC launch new programs, expand existing programs that show promise, or establish a proof of concept through a pilot project before scaling it up. In each partnership, external support gives CDC the flexibility to quickly and effectively connect with other experts, information and technology needed to address a public health challenge.", "For example, in 2018, the CDC Foundation used funding from the United Nation Children's Fund (UNICEF) to create a partnership between researchers from CDC, the Georgia Institute of Technology, and Micron Biomedical to develop a dissolving measles and rubella microneedle vaccination patch. While the current measles and rubella vaccination is effective, challenges associated with delivery of the vaccine that have impeded eradication efforts. For example, the vaccine must be refrigerated until it is injected, and it must be administered by a trained medical professional. The dissolving microneedle patch has the potential to overcome such challenges and improve vaccination coverage.", "The CDC Foundation's governance structure and powers are specified in statute and through the foundation's bylaws. The CDC Foundation is governed by a board of directors composed of appointed members and overseen by an executive director. Congress created a committee composed of representatives from the public health and nonprofit sectors to incorporate the foundation, to establish its general policies and initial bylaws, and to appoint the initial members of the board of directors. The term of service of a board member is five years, and any vacancies in the membership of the board are filled through appointment by the board. Congress tasked the CDC Director with serving as a liaison between the agency and the CDC Foundation, but did not designate the CDC Director as an ex officio member of the board. According to the CDC Foundation, such an arrangement guarantees that the foundation remains independent from CDC, while ensuring that the CDC Foundation's \"programs and activities have the greatest possible impact for CDC and public health.\" Additionally, Congress required the board of directors to establish bylaws and general policies for the foundation, including policies for ethical standards, the acceptance and disposition of donations, and the general operation of the foundation. Congress required that the bylaws not reflect unfavorably upon the ability of the foundation or CDC to carry out its responsibilities or official duties in a fair and objective manner; or compromise, or appear to compromise, the integrity of any governmental program or any officer or employee involved in such program.", "CDC Foundation operations and activities have been funded through a combination of private donations and a share of CDC appropriations. Since 1995, the CDC Foundation has raised more than $800 million in support of CDC and its mission. In both 2015 and 2016, the CDC Foundation transferred $5.6 million to CDC. Additionally, the CDC Foundation provided the agency with $38.5 million in noncash donations (e.g., insecticides and contraceptives in response to the Zika virus) over that same period. Congress authorized the CDC to provide the CDC Foundation with $1.25 million annually (roughly 0.02% of CDC's annual budget). According to the CDC Foundation's audited financial statements, CDC has provided the foundation with a $1.25 million for operating expenses each year since 2012. Additionally, since FY2008, the CDC Foundation has received $55.4 million in federal grants, contracts, and other financial assistance."], "subsections": []}, {"section_title": "Reagan-Udall Foundation for the Food and Drug Administration", "paragraphs": ["In 2007, Congress established the Reagan-Udall Foundation for the Food and Drug Administration (Reagan-Udall Foundation) with the purpose of advancing FDA's mission \"to modernize medical, veterinary, food, food ingredient, and cosmetic product development, accelerate innovation, and enhance product safety.\" The duties of the Reagan-Udall Foundation include identifying unmet needs and supporting regulatory science research and other programs to improve the development, manufacture, and evaluation (including post-market evaluation) of FDA-regulated products. According to the Reagan-Udall Foundation, it accomplishes its tasks by establishing public-private research collaborations, ensuring new knowledge is in the public domain, allowing broad-based participation, training the next generation of regulatory scientists, and leveraging outside resources for its activities.", "In 2017, the Reagan-Udall Foundation launched the Innovation in Medical Evidence Development and Surveillance (IMEDS) program which provides FDA regulated industries, universities, and nonprofits with access to distributed electronic healthcare data that can be used to evaluate medical product safety and assess drug effectiveness. Thus far, IMEDS is the largest program supported and managed by the foundation.", "The governing structure, purposes, and powers of the Reagan-Udall Foundation are specified in the statute establishing the foundation and further defined by the foundation's bylaws. The Reagan-Udall Foundation is governed by a board of directors composed of appointed and ex officio members, including the FDA Commissioner and the Director of NIH. A board-appointed executive director oversees the day-to-day operations of the foundation. ", "Congress directed federal officials\u00e2\u0080\u0094FDA Commissioner, NIH Director, CDC Director, and the Director of the Agency for Healthcare Research and Quality\u00e2\u0080\u0094to appoint the initial board members from candidates provided by the National Academy of Sciences, patient and consumer advocacy groups, professional scientific and medical societies, and industry trade organizations. Subsequent to these initial appointments, board vacancies are to be filled through appointment by the board. According to the foundation's bylaws, the board of directors shall be composed of no more than 17 appointed members, including no more than 5 members from the general pharmaceutical, device, food, cosmetic and biotechnology industries and at least 3 members from academic research organizations, 2 members representing patient or consumer advocacy organizations, and 1 member representing health care providers. ", "Furthermore, Congress directed the board of directors to craft bylaws for the foundation, including establishing policies for ethical standards, conflicts of interest, the acceptance, solicitation, and disposition of donations and grants, carrying out memoranda of understanding and cooperative agreements, and for review and awarding of grants and contracts.", "As detailed in financial reports, the Reagan-Udall Foundation has raised or received nearly $21 million in support of the foundation since 2009, including grants, contributions, and funds transferred from FDA. Congress authorized FDA to provide the Reagan-Udall Foundation with between $500,000 and $1.25 million annually. FDA transferred $1.25 million to the Reagan-Udall Foundation in 2017 and $1 million in 2016 (less than 0.03% of FDA's annual budget). Additionally, since FY2008, the Reagan-Udall Foundation has received $1 million in federal grants, contracts, and other financial assistance."], "subsections": []}, {"section_title": "Foundation for Food and Agriculture Research (FFAR)", "paragraphs": ["In 2014, Congress created the Foundation for Food and Agriculture Research (FFAR) to advance the research mission of the U.S. Department of Agriculture (USDA) by focusing on agricultural issues of national and international significance, including food security and safety. In establishing FFAR, Congress expressed the importance of American leadership in meeting the needs of a growing population, cited the difficulty associated with overcoming declining federal investments in agriculture research, and highlighted the potential role of the foundation in \"supplementing USDA's basic and applied research activities.\" According to the conference report:", "The Managers do not intend for the Foundation to be duplicative of current funding or research efforts, but rather to foster public-private partnerships among the agricultural research community, including federal agencies, academia, non-profit organizations, corporations and individual donors to identify and prioritize the most pressing needs facing agriculture. It is the Managers view that the Foundation will complement the work of USDA basic and applied research activities and further advance USDA's research mission. Furthermore, the Managers do not intend in any way for the Foundation's funding to offset or allow for a reduction in the appropriated dollars that go to agricultural research.", "FFAR is authorized to award grants, or enter into contracts, memoranda of understanding, or cooperative agreements with universities, industry, non-profits, USDA, or consortia, to \"efficiently and effectively advance the goals and priorities of the Foundation.\" It is required to identify unmet and emerging needs, facilitate technology transfer, and to coordinate its activities with those of USDA to minimize duplication and avoid potential conflicts with the department. ", "The foundation currently supports research in six challenge areas\u00e2\u0080\u0094soil health, sustainable water management, next generation crops, advanced animal systems, urban food systems, and the health-agriculture nexus\u00e2\u0080\u0094in addition to supporting graduate fellowships and early and mid-career awards for agricultural researchers. FFAR also supports strategic initiatives with the potential to further the foundation's mission. For example, in 2017, FFAR awarded researchers at the University of Illinois $15 million to expand their work in improving photosynthesis efficiency and crop yields to soybeans and other crops critical to food security in developing countries. FFAR's investment was matched by $30 million from the Bill and Melinda Gates Foundation and the United Kingdom Department for International Development. According to FFAR, public-private partnerships are generally funded through a competitive grants process or through direct contract; however, the foundation also uses prize competitions to encourage the development of new technologies. ", "The governance structure of FFAR is specified in the statute establishing the foundation and further defined by the foundation's bylaws. FFAR is governed by a board of directors composed of appointed and ex officio members. The day-to-day operations of FFAR are overseen by an executive director, who is appointed by the board. Congress required the ex officio members of the board\u00e2\u0080\u0094the Secretary of Agriculture, the Under Secretary of Agriculture for Research, Education and Economics, the Administrator of the Agriculture Research Service, the Director of the National Institute of Food and Agriculture, and the Director of the National Science Foundation\u00e2\u0080\u0094to select the initial appointed board members from lists of candidates provided by the National Academy of Sciences and by industry. According to FFAR's bylaws, the board must consist of no less than 15 and no more than 21 appointed members; any vacancies in the membership of the board shall be filled through appointment by the board; a board member's term of service is 5 years; and a board member may be reappointed, but may not serve for more than 10 years. Additionally, Congress tasked the board of directors with crafting bylaws for the general operation of the foundation and with establishing ethical standards for the acceptance, solicitation, and disposition of donations and grants. Congress also required that the bylaws and policies of FFAR preserve the integrity of the foundation and USDA, including the development and enforcement of a conflict of interest policy.", "In addition to the board of directors, FFAR has established advisory councils for each of the foundation's challenge areas. According to FFAR, advisory council members provide board members and foundation staff with advice and recommendations on \"program development and implementation, potential partnerships and other matters of significance\" and represent a diverse set of industries, professional backgrounds, and geographic areas. ", "FFAR activities and operations have been funded through a combination of public and private funds. Through the Agricultural Act of 2014 (), Congress provided FFAR with $200 million to enter into public-private partnerships and advanced agricultural research. However, federal funds can only be expended if the foundation secures matching funds from a non-federal source. In testimony before the Senate, the executive director of FFAR, Dr. Sally Rockey, stated:", "What we have discovered over the past two years is that we have two distinct advantages over other government-established research foundations. First is our public funding, which gives FFAR the flexibility to seek out diverse partnerships, especially with the private sector. Rather than raising money for a government agency, which is the model for most government established research foundations, FFAR leverages public funding\u00e2\u0080\u0094more than doubling that funding\u00e2\u0080\u0094for the public good and, in the process, develops a new community of partners. Second is our independence, which allows us to focus almost exclusively on results. When partners are focused just on the science and equally invested in seeing measurable outcomes as soon as possible, new partnerships may develop.", "In 2017, FFAR awarded 39 grants and $45.8 million in funding ($110.6 million when matching funds are included). In 2018, FFAR awarded 55 grants and $32.2 million in funding (more than $60 million when matching funds are included). USDA's Agricultural Research Service (ARS) was the recipient of three grants and $1.7 million in funding from FFAR ($3.6 million when matching funds are included) in 2018. ", "In the Agriculture Improvement Act of 2018 ( P.L. 115-334 ), Congress directed the Secretary of Agriculture to transfer an additional $185 million to FFAR \"to leverage private funding, matched with federal dollars to support public agricultural research\"; however, these federal funds were not to be transferred until FFAR provided Congress with a strategic plan detailing how the foundation will become self-sustaining. Congress required the strategic plan to describe agricultural research opportunities and objectives identified by FFAR's advisory councils and approved by the board, and to provide transparency into the foundation's grant review and awards process. FFAR released the required strategic plan in 2019; the plan outlines several actions that the foundation will pursue to diversify its funding base, but also indicates that federal funds are a \"critical component of FFAR's model.\""], "subsections": []}, {"section_title": "Henry M. Jackson Foundation for the Advancement of Military Medicine", "paragraphs": ["In 1983, Congress created the Foundation for the Advancement of Military Medicine\u00e2\u0080\u0094now known as the Henry M. Jackson Foundation for the Advancement of Military Medicine (HJF)\u00e2\u0080\u0094to carry out and participate in cooperative medical research and education projects with the Uniformed Services University of the Health Sciences (USU). In describing the purpose and role of HJF, Congress stated:", "The Foundation will be a nonprofit, charitable corporation which will receive gifts, grants and legacies on behalf of both itself and the Uniformed Services University\u00e2\u0080\u00a6. [By] channeling private resources to the Uniformed Services University, the Foundation will help the University and military medicine maintain advanced scientific teaching and research. In addition, the Foundation will support the growing international role of the University in its cooperative research in other countries and in its programs with medical schools training military officers both here and abroad.", "In general, HJF implements its mandate by offering research support and services to USU and other military research centers and facilities, including proposal development, research program administration and management, regulatory compliance, technical staffing, and technology transfer assistance. P.L. 98-132 authorized HJF to enter into contracts with USU \"for the purposes of carrying out cooperative enterprises in medical research, medical consultation, and medical education, including contracts for the provision of such personnel and services as may be necessary to carry out such cooperative enterprises.\"", "According to HJF, more than 1,100 of HJF's employees participated in or supported collaborative research and education projects at USU in FY2018. For example, HJF entered into a license agreement from the USU-HJF Joint Office of Technology Transfer with Profectus BioSciences to develop a human vaccine for the Nipah virus\u00e2\u0080\u0094an infection that can lead to inflammation of the brain and respiratory illness\u00e2\u0080\u0094based on a technology created more than 15 years ago by a USU scientist. Specifically, HJF, USU, and Profectus are collaborating on the development of a clinical assay to evaluate the Nipah virus vaccine response. The collaborative research is supported, in part, by NIH.", "HJF is governed by a council of directors composed of appointed and ex officio members, including the chair and ranking members of the Senate and House Committees on Armed Services and the Dean of USU. The ex officio members are responsible for appointing the other members of the council of directors. In 2018, Congress increased the number of appointed members from four to six. A council-appointed executive director oversees the day-to-day operations of HJF.", "In 1986, Congress appropriated $10 million to HJF \"to support the purposes of the Foundation, its on-going educational and public services programs and to serve as a memorial to the late Senator Henry M. Jackson.\" However, HJF's revenue is generally derived from the administration of grants and contracts\u00e2\u0080\u0094HJF manages or administers grants and contracts on behalf of USU or other military research centers and collects indirect costs or overhead associated with the provided services. According to HJF, in FY2018, the foundation received $483.9 million in grants and contracts and expended $468.7 million on program services associated with research grants and contracts. According to USAspending.gov, since FY2008, HJF has received $6.1 billion in federal grants, contracts, and other financial assistance, primarily from the Department of Defense. "], "subsections": []}, {"section_title": "Department of Veterans Affairs Nonprofit Research and Education Corporations", "paragraphs": ["In 1988, Congress authorized the Secretary of Veterans Affairs (VA) to establish a nonprofit corporation (NPC) at any of the VA medical centers \"to provide a flexible funding mechanism\" and facilitate the conduct of approved research. Congress extended the authority of NPCs in 1999 to include approved education and training activities (e.g., educational courses for patients and families and training for VA employees associated with new technologies or specialties). Congress also authorized any NPC to facilitate the conduct of approved research and education activities at more than one VA medical center (such NPCs are known as multi-medical center research corporations). In general, NPCs implement their mandate by providing research and management services to VA medical researchers conducting projects using non-VA funds.", "In describing the need for NPCs, Congress indicated that support for research from non-VA funding sources, including NIH, DOD, private foundations, and companies, benefited veteran patients, where existing mechanisms for administering non-VA funds had disadvantages. A committee report on the authorizing legislation stated:", "Funds that are channeled through affiliated medical schools [to VA medical centers] are subject to the terms and conditions which the school applies to funds obtained by researchers employed by the school. In many cases, this means that a percentage, which varies from 15 to 40 percent or more, of the funds obtained is retained by the medical school for \"overhead\" and related expenses of the school.", "In contrast, by authorizing NPCs to accept, administer, retain, and spend non-VA research funding on behalf of VA investigators, indirect costs or overhead derived from such funds could be applied to the VA medical center. According to the U.S. Government Accountability Office (GAO):", "Nonprofit corporations support VA's research environment by funding a portion of the department's research needs, such as laboratory equipment and improvements to infrastructure, and by providing flexible personnel and contracting arrangements to respond to investigators' needs.", "The governance structure of NPCs is specified in the statute providing the authority for their establishment and further defined by VA procedures and instructions. Each NPC is governed by a board of directors with its day-to-day operations overseen by an executive director. The VA Secretary is responsible for appointing all members of an NPC's board of directors. Each board of directors must include the director of the VA medical center, the chief of staff, and associate chief(s) of staff of the medical center\u00e2\u0080\u0094all acting within their official capacities\u00e2\u0080\u0094and two non-federal members. Additionally, the board of directors of a multi-medical research corporation must include the director of each of the VA medical centers served by the NPC. The executive director of an NPC is appointed by its board of directors with the concurrence of the VA Under Secretary of Health. ", "Congress placed NPCs under the jurisdiction of VA's Inspector General; required each NPC to conduct regular audits and provide an annual statement of operations, activities, and accomplishments to VA; and made all NPC employees, including members of the board of directors, subject to conflict of interest policies adopted by the NPC. Additionally, VA conducts oversight of NPCs through the agency's Nonprofit Program Oversight Board (NPOB), the Nonprofit Program Office (NPPO), and the Veteran Health Administration's Chief Financial Officer (VHA CFO). Specifically:", "The NPOB is VA's senior management oversight body for NPCs. It reviews the activities of NPCs to ensure they are consistent with VA policies and makes recommendations to the VA Secretary (through the Under Secretary of Health) regarding any changes in NPC policy. The NPPO serves as a liaison between VHA and the NPCs. It provides oversight, guidance, and education to the NPCs to ensure compliance with VA policies and regulations, conducts triennial reviews of NPCs, compiles NPC data for an annual report to Congress, and ensures any corrective measures are implemented. The VHA CFO provides financial oversight of NPCs.", "There are currently 83 NPCs located in 42 states, Puerto Rico, and the District of Columbia. According to VA, in 2017, NPCs generated $261 million in revenue\u00e2\u0080\u0094spending 84% on research, 15% on administrative overhead, and 1% on education related activities. VA describes NPCs as \"self-sustaining\u00e2\u0080\u00a6. [F]unds are not received into a government account. No appropriation is required to support these activities.\" However, approximately 70% of the revenue generated by NPCs in 2017 ($183 million) was from federal sources\u00e2\u0080\u0094primarily NIH and DOD grants and contracts. VA states that from 2008 to 2017 NPCs contributed $2.2 billion to VA research. In 2018, NPCs generated $236 million in revenues."], "subsections": []}]}, {"section_title": "Issues for Congress", "paragraphs": ["In an April 2019 report, the National Institute of Standards and Technology described benefits that might be realized if Congress provided all federal R&D agencies with the authority to establish agency-related nonprofit research foundations. For example, they can actively seek \"gifts and other monetary donations from private donors and organizations,\" and they \"have facilitated technology commercialization and generated revenue to reinvest in R&D.\" ", "In addition, while government agencies are, with certain exceptions, subject to management laws designed to ensure accountability, transparency, and fairness, agency-related foundations may be exempt from them. Such exemptions may facilitate flexibility, but they may also make it difficult for stakeholders to verify on an ongoing basis that the foundation's activities are directed to the public good rather than private gain.", "Prior to extending the authority to establish agency-related nonprofit research foundations and corporations to additional federal agencies and laboratories there are a number of issues that Congress might consider. The following sections examine some of these issues, including transparency, independence, and effectiveness. "], "subsections": [{"section_title": "Conflict of Interest and Industry Influence", "paragraphs": ["To date, most federal agencies with affiliated nonprofit research foundations or corporations work in the area of medicine and public health\u00e2\u0080\u0094an area where public trust is considered essential. The conflict of interest policies of affiliated nonprofit research foundations and corporations vary. For example, all HJF employees are required to submit annual conflict disclosure and certification forms; under its cooperative agreement with the CDC, the CDC Foundation is required to conduct a conflict of interest review prior to accepting a gift for the CDC from a potential donor; and VA employees serving as NPC directors are subject to federal conflict of interest laws and regulations.", "Recent media reports and investigations have nevertheless raised concerns about conflicts of interest and the potential for undue industry influence in public-private R&D partnerships formed and managed by agency-related nonprofit foundations. According to some, industry involvement in R&D partnerships has the potential to erode public trust and confidence in federal agency decisionmaking, which may be based, in part, on the results of R&D supported by the public-private partnership. Others assert that issues associated with conflict of interest are overstated and rare, that other biases\u00e2\u0080\u0094beyond financial ties\u00e2\u0080\u0094also influence research, and that policy responses to such concerns have been overly burdensome and are impeding the translation of R&D into new products and technologies. Three recent examples illustrate these conflict of interest and undue influence concerns. "], "subsections": [{"section_title": "R&D Partnership Between the National Football League and NIH", "paragraphs": ["In 2015 and 2016, reporting by ESPN and others alleged that the National Football League (NFL) attempted to influence the selection of a grant recipient by NIH for a study on a\u00c2\u00a0degenerative brain disease known as CTE, or chronic traumatic encephalopathy. NIH had planned to fund the CTE study from a $30 million NFL donation to NIH through FNIH. Democratic committee staff of the House Committee on Energy and Commerce launched an investigation of the allegations and issued a report in May 2016. The report stated:", "Democratic Committee staff received evidence to support the allegations that the NFL inappropriately attempted to influence the selection of NIH research applicants funded by the NFL's $30 million donation to NIH\u00e2\u0080\u00a6. Despite the NFL's attempts to influence the selection of research applicants, the integrity of the peer review process was preserved and funding decisions were made solely based on the merit of the research applications.", "The report included findings and recommendations directed at FNIH and its role in the creation and management of R&D partnerships between NIH and the private sector. Specifically, the investigation found that \"FNIH did not adequately fulfill its role of serving as an intermediary between NIH and the NFL\" and recommended the following actions:", "FNIH must establish clearer guidelines regarding donor communications with NIH. ", "FNIH must come to a mutual understanding with donors at the beginning of the process regarding their degree of influence over the research they are funding and remind donors that NIH policy prohibits them from exerting influence at any point in the grant decision-making process. ", "FNIH should provide donors with the clear, unambiguous language from the NIH Policy Manual, which states that a donor may not dictate terms that include \"any delegation of NIH's inherently governmental responsibilities or decision-making,\" or \"participation in peer review or otherwise exert real or potential influence in grant or contract decision-making.\" ", "NIH and FNIH should jointly develop a process to address concerns about donors acting improperly. ", "FNIH issued the following statement in response to the report:", "The FNIH acted appropriately, with integrity and transparency, in fulfilling its mandate under SHRP [Sports and Health Research Program]. As acknowledged by the Democratic Staff report, the governing documents among the FNIH, NIH and NFL made clear that the NIH had exclusive control over the scientific and administrative aspects of the program. ", "The report makes recommendations regarding communication issues that the FNIH has already identified and taken steps to address. The FNIH has strengthened protocols around communications among NIH, NIH researchers and FNIH donors that will prevent unauthorized contact among parties.", "The FNIH has had a long history of successful and productive public-private partnerships in support of the NIH mission. These adjustments to governing agreements will help ensure the success of future scientific partnerships in support of human health.", "On September 15, 2016, four Republican members of the House Committee on Energy and Commerce sent a letter to the Inspector General of the Department of Health and Human Services related to the allegations of undue influence by the NFL. The letter stated:", "There appear to be important questions and concerns related to these events that have not been adequately vetted or addressed\u00e2\u0080\u00a6. This grant award has become the source of tremendous public debate and, therefore, clear answers and lessons are necessary. For these the reasons, the Committee refers this matter to your attention and requests a thorough and objective review by the Office of the Inspector General to assess whether the policies and procedures concerning public-private partnerships under the authority of FNIH were followed, and if not, what revisions or reforms should be considered. This will help SHRP, and other public-private partnerships, avoid similar distractions in the future so all parties can focus on what matters most\u00e2\u0080\u0094the science."], "subsections": []}, {"section_title": "Opioid Epidemic Public-Private Partnership", "paragraphs": ["In 2018, NIH was engaged with FNIH and potential donors, including pharmaceutical companies, regarding the development of a public-private partnership that would seek to address the opioid crisis. Potential conflicts of interest and ethical concerns were raised by both NIH and FNIH. The Director of NIH asked a working group of the Advisory Committee to the NIH Director (ACD) and the FNIH Board to examine the appropriateness of establishing a partnership between NIH, FNIH, and various pharmaceutical companies. On March 16, 2018, the FNIH Board held a meeting to discuss the possibility of forming such a partnership. The FNIH Board decided", "that an approach that relies disproportionately on input and financing from pharmaceutical companies is not appropriate in this circumstance. The FNIH is uncomfortable seeking or receiving monetary donations from any pharmaceutical company or industry representative at this time to support implementation of the research plan as presented. Doing so poses unacceptably high risk of public skepticism concerning the eventual scientific outcomes given the responsibility some companies may bear in having created the crisis. Also, it would likely undermine public confidence in the many other valuable public-private partnerships that the NIH and FNIH have created and will create to improve human health.", "The principal recommendation of the A CD working g roup was that \"to mitigate the risk of real or perceived conflict of interest, it would be preferable if only Federal funds were used to support the research efforts included in this public-private partnership.\" The working group also offered a number of recommendations if a public-private partnership were to be established, including that any industry funding should be provided without preconditions and in full, that NIH should publicly disclose its research plan for the partnership, and that the agency should clarify and define the governance structure associated with the collaboration.", "In April 2018, NIH launched the Helping to End Addiction Long-term (HEAL) Initiative\u00e2\u0080\u0094an agency-wide \"effort to speed scientific solutions to stem the national opioid public health crisis.\" In a press release on the use of public-private partnerships as part of HEAL, the Director of NIH stated:", "I fully embrace [the ACD Working Group's] recommendation that NIH should vigorously address the national opioid crisis with government funds and decline cash contributions through partnerships from the private sector.", "It is clear, however, that the opioid crisis is beyond the scope of any one organization or sector. NIH and biopharmaceutical companies bring unique skills and assets to bear on this crisis. NIH will use the ACD guidance as we continue our discussions with biopharmaceutical organizations to advance focused medication development for addiction and pain\u00e2\u0080\u00a6We agree with and appreciate the ACD's guidance to verify donated assets and tailor the governance structures for each initiative that may be pursued through public-private partnerships to ensure appropriate oversight and guidance. Any partnerships that NIH does establish with biopharmaceutical organizations as part of the HEAL Initiative will be done with the utmost transparency."], "subsections": []}, {"section_title": "Coca-Cola Funding for Obesity Research", "paragraphs": ["Some have raised concerns regarding the ability of industry to influence CDC and FDA decisionmaking by way of donations to the CDC Foundation and Reagan-Udall Foundation. For example, some have questioned donations made by the Coca-Cola Company to the CDC Foundation for research and other activities associated with obesity and diet issues. In February, two members of Congress sent a letter asking the Department of Health and Human Services' Inspector General to \"investigate the relationship between the CDC and Coca-Cola outlined in this report [a 2019 paper by Hessari et al.], determine whether there is a broader pattern of inappropriate industry influence at the agency, and make recommendations to address this issue.\"", "In addition to managing conflicts of interest that may result from public-private partnerships facilitated by an agency-related nonprofit foundation, a 2016 report by a working group of the Advisory Committee to the CDC Director noted the need for clarity in managing conflict of interest between the nonprofit foundation and the federal agency itself. The working group pointed out that the CDC Foundation \"benefits financially from the grants it accepts and manages on the CDC's behalf,\" and noted that \"ongoing oversight and management transparency are essential components of a conflict-of-interest policy, particularly where, as here, one of the partners is an agency whose greatest asset is the confidence of the public in its impartiality and integrity.\""], "subsections": []}]}, {"section_title": "Transparency and Accountability", "paragraphs": ["In response to concerns regarding conflict of interest and the potential for industry influence, in addition to the need to maintain public confidence in related decisionmaking, some have called for additional transparency in the development and management of public-private partnerships. These calls extend to agency-related nonprofit research foundations. ", "For example, the Advisory Committee to the Director of the CDC recommended that the CDC should expect the CDC Foundation to provide the agency with a \"complete record of evidence\" and a \"fully reasoned analysis\" as to why a proposed public-private partnership would meet the agency's standards for entering into a private financial relationship. The advisory committee recommended that CDC only enter into a private financial relationship if the proposed project aligns with a stated CDC priority, the projected benefits to public health outweigh any potential risks to public trust in CDC, and the proposed project does not primarily benefit the private funder or position the private funder to exercise undue influence over CDC. ", "Some have also called for the harmonization of policies, procedures, and standards used by federal agencies and agency-related nonprofit research foundations in the evaluation of proposed public-private partnerships and in addressing conflict of interest and undue influence concerns associated with such partnerships.", "In 2018, House appropriations report language directed both the CDC Foundation and FNIH to abide by existing reporting requirements and include in their respective annual reports", "the source and amount of all monetary gifts to the Foundation, as well as the source and description of all gifts of real or personal property. Each annual report shall disclose a specification of any restrictions on the purposes for which gifts to the Foundation may be used. The annual report shall not list \"anonymous\" as a source for any gift that includes a specification of any restrictions on the purpose for which the gift may be used.", "According to media reports, officials from FNIH and the CDC Foundation assert they are in compliance with existing disclosure requirements as outlined in their governing statutes and their annual reporting is similar to other nonprofit organizations."], "subsections": []}, {"section_title": "Independence and Oversight", "paragraphs": ["By design, quasi-governmental entities, including agency-related nonprofit research foundations and corporations, are independent from the federal government. Congress explicitly states in the statutes creating each of the organizations described above that the entity is \"not an agency or instrumentality of the United States.\" In addition, these entities generally are not controlled by federal officials. However, Congress also structured these organizations so they would be associated with and in some instances largely reliant on the federal agencies they were created to support. The degree of independence an agency-related nonprofit research foundation or corporation has\u00e2\u0080\u0094and by extension the degree of congressional oversight and influence\u00e2\u0080\u0094varies (i.e., the more independent, the less opportunity for oversight and vice versa). This variability can be ascribed, in large part, to the primary function of the organization and the governance structure established by Congress. ", "For example, the primary function of HJF and the VA NPCs is to provide research and grant management services to USU and VA medical researchers, respectively. These researchers are full- or part-time federal employees who are, in general, conducting approved research using federal funds from other agencies (NIH and DOD). The financial strength of these entities is thus closely tied to the ability of USU and VA researchers to compete successfully for NIH, DOD, and other research grants. Additionally, the boards governing HJF and VA NPCs include Members of Congress and federal officials. Specifically, the board of a VA NPC must include the director, chief of staff, and associate chief(s) of staff of the VA medical center\u00e2\u0080\u0094all acting in their official capacities\u00e2\u0080\u0094and the board of HJF includes the chair and ranking members of the Senate and House Committees on Armed Services. These factors likely make HJF and VA NPCs less independent than some of the other agency-related nonprofit foundations described in this report. However, given their dependency\u00e2\u0080\u0094in particular on other federal funds\u00e2\u0080\u0094several questions arise: Why are these entities needed? Are there alternative mechanisms for administering research funds from other federal agencies? Should these entities be soliciting more private funds?", "Comparatively, FNIH, the CDC Foundation, and the Reagan-Udall Foundation likely have more autonomy given their primary function of raising funds from the private sector to benefit and advance the mission of their affiliated federal agencies. Nonetheless, the success of these entities requires some level of interconnectedness to ensure their efforts are closely aligned with the priorities and needs of the federal agencies they support. Additionally, FNIH, the CDC Foundation, and the Reagan-Udall Foundation all receive administrative and operating costs from their affiliated federal agencies, in addition to having federal officials as ex officio members of their boards. These factors likely provide the federal agencies with the ability to influence and shape the relationship. The use of federal funds in supporting the operating expenses of these entities also provides a mechanism for congressional oversight. ", "FFAR's purpose to advance the research mission of USDA is similar to that of FNIH, the CDC Foundation, and the Reagan-Udall Foundation. However, the way in which FFAR executes its mission\u00e2\u0080\u0094primarily as a grant-making organization\u00e2\u0080\u0094may offer more independence. Congress tasked FFAR with developing and pursuing an agricultural R&D agenda that minimizes the duplication of existing USDA efforts and is focused on unmet needs and emerging areas of national and international significance. Currently, FFAR executes its R&D agenda by leveraging federal funds with non-federal sources. The use of federal funds provides Congress with an effective oversight mechanism. Congressional intent, however, is for FFAR to become self-sufficient. In the Agriculture Improvement Act of 2018 ( P.L. 115-334 ), Congress made the transfer of federal funds contingent upon the development of a strategic plan detailing how FFAR will become self-sustaining. Opportunities for congressional oversight or influence may diminish as FFAR becomes self-sustaining. That being said, FFAR's strategic plan states:", "This strategic planning and sustainability exploration demonstrates that FFAR requires Congressional funding to remain relevant, viable, to maintain velocity, and increase impact toward conquering the food and agriculture challenges of this time\u00e2\u0080\u00a6. In the event that public funding for FFAR diminishes, the Foundation would be severely limited in its ability to deliver on the ambition and scale of impact that Congress originally envisioned. In this scenario, FFAR's capacity to fund ambitious, potentially transformative research projects would be restricted. Indeed, stakeholders indicate that FFAR will find it much more challenging to bring partners to the table and mobilize private funding as its credibility and matching power will be weakened without the \"halo effect\" of its Congressional funding and mandate.", "FFAR's strategic plan also indicates that the foundation will increase the non-federal matching requirement for some projects, diversify its co-funders, develop an annual fundraising program, pursue fees for services, and expand the size and number of consortia as part of its sustainability plan."], "subsections": []}, {"section_title": "Effectiveness and Need", "paragraphs": ["To date, the effectiveness of agency-affiliated nonprofit research foundations or corporations has not been formally assessed. In a 2002 report on the VA NPCs, GAO noted, \"VA headquarters has not evaluated nonprofit corporations to measure their effectiveness or compare their operations. This type of high-level oversight and evaluation is a critical element of success.\" It is also unclear what might constitute an appropriate measure of success: number of partnerships formed? amount of private funds raised? number of technologies commercialized? ", "Some have argued\u00e2\u0080\u0094based on the amount of private funds raised\u00e2\u0080\u0094that the Reagan-Udall Foundation is not meeting expectations and is less successful than the CDC Foundation and FNIH. The Reagan-Udall Foundation has raised approximately $21 million over the last decade for FDA. In comparison, FNIH provided NIH with that amount in a single year ($22 million in 2017). Lower than expected fundraising efforts have led some to question the purpose and need for the Reagan-Udall Foundation.", "It is difficult to determine the degree to which the partnerships developed and managed by some of the agency-affiliated nonprofit research foundations would have occurred in the absence of such foundations. Federal agencies engage in public-private partnerships through other mechanisms, including cooperative research and development agreements, and while federal agencies are not permitted to solicit gifts from the private sector, many are authorized to accept donations. ", "Report language in the Senate energy and water appropriations bill for FY2020 directs the Department of Energy (DOE) to contract with the National Academy of Public Administration for a study that would assess existing agency-affiliated nonprofit research foundations to assist Congress in evaluating the merits of creating a DOE-related nonprofit research foundation. House appropriators included similar language in their version of the energy and water appropriations bill, but directed DOE to undertake the review on its own."], "subsections": []}]}, {"section_title": "Concluding Observations", "paragraphs": ["Congress established each of the agency-related nonprofit research foundations and corporations described in this report with the aim of advancing the R&D mission of the associated federal agency. While the way each organization pursues its mandate varies, three broad categories of activity emerge: (1) soliciting private funds to support R&D performed by federal scientists; (2) soliciting private funds (leveraged against federal funds in the case of FFAR) to support R&D performed by non-federal researchers; and (3) administering and managing research funds from federal and non-federal sources. These activities are often carried out as part of public-private R&D partnerships formed and managed by an agency-related nonprofit research foundation or corporation. While public-private partnerships are generally viewed as an effective mechanism for advancing the state of science and facilitating the transfer and commercialization of technologies to the marketplace, some say it is less clear whether agency-related nonprofit research foundations and corporations represent an effective model for the formation and management of such partnerships. Federal science agencies already have the authority to create partnerships, and many have the authority to accept gifts from individuals, nonprofits, and private sector firms in support of federal R&D and other agency activities. Federal agencies, however, are not permitted to solicit private funds, and many argue that the \"red tape\" associated with the establishment of public-private partnerships by federal agencies is a deterrent. ", "This situation may cause some observers to raise the question\u00e2\u0080\u0094would a federal agency have achieved similar results in the absence of its agency-related nonprofit research foundation or corporation? While this question cannot be answered with any certainty, it does offer an opportunity for consideration of potential policy options. Among the options that Congress might consider are:", "crafting a broad, general nonprofit research foundation authority that federal science agencies could draw on to create an entity that meets their specific needs; examining the existing authorities of individual federal science agencies and, as appropriate, supplementing those authorities to increase the flexibility of an agency to enter into public-private partnerships; creating additional agency-related nonprofit research foundations on a case-by-case basis, tailored to the specific needs of particular federal science agencies; and maintaining the status quo, i.e., allowing agency-related nonprofit research foundations and corporations that currently exist to continue, and requiring other federal agencies to use their existing authorities to enter into public-private R&D partnerships and transfer federal technologies to the marketplace.", "If Congress decides to create additional agency-related nonprofit research foundations, clear articulation of purpose, role, and governance structure may be needed to maintain an appropriate balance between the flexibility associated with being a nongovernmental entity and the need for accountability, transparency, and public confidence in the results of R&D partnerships and other supported activities."], "subsections": [{"section_title": "Appendix. Federally Initiated and Funded Venture Capital Firms", "paragraphs": ["Over the last two decades, federal agencies and Congress have established several venture capital (VC) firms. The intent of these firms, including In-Q-Tel (IQT), the Army Venture Capital Initiative (AVCI), and Red Planet Capital (RPC), has been to help ensure agency access to leading-edge technologies and input into technology development to address mission needs. Several factors have contributed to the initiation of these organizations: a long-term shift in the composition of U.S. research and development funding from the federal government to the private sector; the substantial role of small start-ups in driving innovation, especially in information technology; and expanded U.S. and global commercial market opportunities that have diminished the relative attractiveness of serving the federal government market. ", "In-Q-Tel. The Central Intelligence Agency (CIA), with congressional approval, established the first federal government-sponsored VC firm, In-Q-Tel, in 1999 . IQT is an independent, not-for-profit, non-stock company. It is a strategic investor that works closely with intelligence community (IC) entities and the Department of Defense (DOD). IQT's portfolio includes data analytics, cybersecurity, artificial intelligence, machine learning, ubiquitous computing, information technology solutions, communications, novel materials, electronics, commercial space, remote sensing, power and energy, and biotechnology. While the CIA has broad statutory authority in how it may expend its funds, according to a RAND Corporation report, the agency reportedly used an approach based on DOD's \"other transaction\" authority (10 U.S.C. 2371) for developing its contract with IQT.", "IQT has a management team and a board of trustees. The CIA is the executive agent for IQT. Federal agencies, primarily the CIA, provide funding to IQT, which in turn provides investments to selected firms based on needs articulated by the CIA. The In-Q-Tel Interface Center (QIC), a small group of CIA employees, serves as a liaison between the CIA and IQT.", "IQT investments generally range from $500,000 to $3 million. IQT asserts that for each dollar it has invested, private investors have provided $16. IQT pairs its investment with a development agreement in which IQT and the company work together to adapt the technology to meet IC needs. If successful, IC customers can buy the product directly from the company. IQT asserts that its model delivers rapid, cost-effective solutions:", "IQT identifies and adapts \"ready-soon\" technologies\u00e2\u0080\u0094off-the-shelf products that can be modified, tested, and delivered for use within 6 to 36 months depending on the difficulty of the problem. Approximately 75% of our deals involve multiple agencies from the [IC] and defense communities, which means a more cost efficient use of taxpayers' dollars.", "Profits from the liquidation of an IQT investment are allocated between additional IQT investing activity and other strategic information technology initiatives defined by the CIA, in accordance with a memorandum of understanding between the CIA and IQT.", "Army Venture Capital Initiative. In January 2002, Congress directed the Secretary of the Army to establish a venture capital investment corporation using $25 million previously appropriated to the Army for basic and applied research. The Army and Arsenal Venture Capital (formerly Military Commercial Technologies, Inc. (MILCOM)) jointly manage the AVCI through OnPoint Technologies, LLC (OPT), a not-for-profit corporation. In this relationship, the Army serves as strategic investor; provides guidance on technology priorities to OPT through its Communications Electronics Command (CECOM); and, through CECOM, provides administrative and contractual support to OPT. Army funds provided to OPT support investments and OPT expenses. Proceeds from the liquidation of investments are used in part to pay compensation to Arsenal Venture Capital with the balance used for new investments. In addition to providing $25 million in FY2002, Congress appropriated $12.6 million in FY2003 and $14.3 million in FY2005 for the AVCI. In addition, in FY2004, the Army reprogrammed $10 million for the AVCI. Since FY2005, Congress has not appropriated funds to the AVCI.", "AVCI invests alongside other VC firms at all stages of development, making investments of $500,000 to $2 million. AVCI asserts that for each dollar it has invested, private investors have provided $22. Focused initially on innovative power and energy technologies, AVCI's technology focus areas have expanded to include emerging technologies such as autonomy, cyber, health information systems, and advanced materials. AVCI seeks to foster the development of these technologies and their transfer to the soldier while attaining net returns for the investing organizations from commercial and defense markets. AVCI asserts that it is able to engage technology firms outside the traditional reach of DOD.", "Red Planet Capital. In September 2006, the National Aeronautics and Space Administration (NASA) announced a partnership with Red Planet Capital, Inc., a non-profit organization, to establish a venture capital fund, Red Planet Capital (RPC). The fund was \"to support innovative, dual-use technologies [to] help NASA achieve its mission, [and] better position these technologies for future commercial use.\" ", "NASA was to provide strategic direction and technical input to RPC, while the organization's principals were to identify investment opportunities, perform due diligence, and manage its equity investments. NASA intended to invest approximately $75 million over five years. Congress provided $6 million for RPC in FY2007. In FY2008, President George W. Bush proposed termination of the program: ", "Government-sponsored venture capital funds provide a mechanism for Government agencies to indirectly take equity stakes in private firms, which potentially creates significant conflicts of interest and market distortions. The Administration believes that this mechanism poses difficult challenges to Government oversight and should only be used in exceptional situations\u00e2\u0080\u00a6. The Administration further evaluated the fund and determined that, for NASA, these funds are better directed towards current priorities that will produce cost-effective, ascertainable outcomes.", "Congress provided no further appropriations for RPC. According to NASA, the fund was eliminated before it took an equity stake in any company. A RAND Corporation study states that RPC made a single investment prior to its termination, though it did not specify the amount.", "Over the last two decades, federal agencies and Congress have established several venture capital (VC) firms. The intent of these firms, including In-Q-Tel (IQT), the Army Venture Capital Initiative (AVCI), and Red Planet Capital (RPC), has been to help ensure agency access to leading-edge technologies and input into technology development to address mission needs. Several factors have contributed to the initiation of these organizations: a long-term shift in the composition of U.S. research and development funding from the federal government to the private sector; the substantial role of small start-ups in driving innovation, especially in information technology; and expanded U.S. and global commercial market opportunities that have diminished the relative attractiveness of serving the federal government market. ", "In-Q-Tel. The Central Intelligence Agency (CIA), with congressional approval, established the first federal government-sponsored VC firm, In-Q-Tel, in 1999 . IQT is an independent, not-for-profit, non-stock company. It is a strategic investor that works closely with intelligence community (IC) entities and the Department of Defense (DOD). IQT's portfolio includes data analytics, cybersecurity, artificial intelligence, machine learning, ubiquitous computing, information technology solutions, communications, novel materials, electronics, commercial space, remote sensing, power and energy, and biotechnology. While the CIA has broad statutory authority in how it may expend its funds, according to a RAND Corporation report, the agency reportedly used an approach based on DOD's \"other transaction\" authority (10 U.S.C. 2371) for developing its contract with IQT.", "IQT has a management team and a board of trustees. The CIA is the executive agent for IQT. Federal agencies, primarily the CIA, provide funding to IQT, which in turn provides investments to selected firms based on needs articulated by the CIA. The In-Q-Tel Interface Center (QIC), a small group of CIA employees, serves as a liaison between the CIA and IQT.", "IQT investments generally range from $500,000 to $3 million. IQT asserts that for each dollar it has invested, private investors have provided $16. IQT pairs its investment with a development agreement in which IQT and the company work together to adapt the technology to meet IC needs. If successful, IC customers can buy the product directly from the company. IQT asserts that its model delivers rapid, cost-effective solutions:", "IQT identifies and adapts \"ready-soon\" technologies\u00e2\u0080\u0094off-the-shelf products that can be modified, tested, and delivered for use within 6 to 36 months depending on the difficulty of the problem. Approximately 75% of our deals involve multiple agencies from the [IC] and defense communities, which means a more cost efficient use of taxpayers' dollars.", "Profits from the liquidation of an IQT investment are allocated between additional IQT investing activity and other strategic information technology initiatives defined by the CIA, in accordance with a memorandum of understanding between the CIA and IQT.", "Army Venture Capital Initiative. In January 2002, Congress directed the Secretary of the Army to establish a venture capital investment corporation using $25 million previously appropriated to the Army for basic and applied research. The Army and Arsenal Venture Capital (formerly Military Commercial Technologies, Inc. (MILCOM)) jointly manage the AVCI through OnPoint Technologies, LLC (OPT), a not-for-profit corporation. In this relationship, the Army serves as strategic investor; provides guidance on technology priorities to OPT through its Communications Electronics Command (CECOM); and, through CECOM, provides administrative and contractual support to OPT. Army funds provided to OPT support investments and OPT expenses. Proceeds from the liquidation of investments are used in part to pay compensation to Arsenal Venture Capital with the balance used for new investments. In addition to providing $25 million in FY2002, Congress appropriated $12.6 million in FY2003 and $14.3 million in FY2005 for the AVCI. In addition, in FY2004, the Army reprogrammed $10 million for the AVCI. Since FY2005, Congress has not appropriated funds to the AVCI.", "AVCI invests alongside other VC firms at all stages of development, making investments of $500,000 to $2 million. AVCI asserts that for each dollar it has invested, private investors have provided $22. Focused initially on innovative power and energy technologies, AVCI's technology focus areas have expanded to include emerging technologies such as autonomy, cyber, health information systems, and advanced materials. AVCI seeks to foster the development of these technologies and their transfer to the soldier while attaining net returns for the investing organizations from commercial and defense markets. AVCI asserts that it is able to engage technology firms outside the traditional reach of DOD.", "Red Planet Capital. In September 2006, the National Aeronautics and Space Administration (NASA) announced a partnership with Red Planet Capital, Inc., a non-profit organization, to establish a venture capital fund, Red Planet Capital (RPC). The fund was \"to support innovative, dual-use technologies [to] help NASA achieve its mission, [and] better position these technologies for future commercial use.\" ", "NASA was to provide strategic direction and technical input to RPC, while the organization's principals were to identify investment opportunities, perform due diligence, and manage its equity investments. NASA intended to invest approximately $75 million over five years. Congress provided $6 million for RPC in FY2007. In FY2008, President George W. Bush proposed termination of the program: ", "Government-sponsored venture capital funds provide a mechanism for Government agencies to indirectly take equity stakes in private firms, which potentially creates significant conflicts of interest and market distortions. The Administration believes that this mechanism poses difficult challenges to Government oversight and should only be used in exceptional situations\u00e2\u0080\u00a6. The Administration further evaluated the fund and determined that, for NASA, these funds are better directed towards current priorities that will produce cost-effective, ascertainable outcomes.", "Congress provided no further appropriations for RPC. According to NASA, the fund was eliminated before it took an equity stake in any company. A RAND Corporation study states that RPC made a single investment prior to its termination, though it did not specify the amount."], "subsections": []}]}]}}
{"id": "R45888", "title": "DHS Border Barrier Funding", "released_date": "2020-01-29T00:00:00", "summary": ["The purpose of barriers on the U.S.-Mexico border has evolved over time. In the late 19 th and early 20 th centuries, fencing at the border was more for demarcation, or discouraging livestock from wandering over the border, rather than deterring smugglers or illegal migration.", "Physical barriers to deter migrants are a relatively new part of the border landscape, first being built in the 1990s in conjunction with counterdrug efforts. This phase of construction, extending into the 2000s, was largely driven by legislative initiatives. Specific authorization for border barriers was provided in 1996 in the Illegal Immigration Reform and Immigrant Responsibility Act (IIRIRA), and again in 2006 in the Secure Fence Act. These authorities were superseded by legislation included in the Consolidated Appropriations Act, 2008, which rewrote key provisions of IIRIRA and replaced most of the Secure Fence Act. The result of these initiatives was construction of more than 650 miles of barriers along the nearly 2,000-mile border.", "The Trump Administration has driven the second phase of construction of border barriers. On January 25, 2017, the Administration issued Executive Order 13767, \"Border Security and Immigration Enforcement Improvements.\" Section 2(a) of the E.O. indicates that it is the policy of the executive branch to \"secure the southern border of the United States through the immediate construction of a physical wall on the southern border, monitored and supported by adequate personnel so as to prevent illegal immigration, drug and human trafficking, and acts of terrorism.\"", "The debate over funding for and construction of a \"border wall system\" in this phase has created congressional interest in the historical context of border barrier funding.", "There has not been an authoritative compilation of data on the level of federal investment in border barriers over time. This is in part due to the evolving structure of the appropriations for agencies charged with protecting the border\u00e2\u0080\u0094account structures have shifted, initiatives have come and gone, and appropriations typically have not specified a precise level of funding for barriers as opposed to other technologies that secure the border. Funding was not specifically designated for border barrier construction until FY2006.", "The nearly $4.5 billion in appropriations provided by Congress for border barrier planning and construction since the signing of the E.O. exceeds the amount provided for those purposes from FY2007 to FY2016 combined by almost $2 billion. Most of the contracts that have been awarded thus far are for improvements to, or replacements of, the existing barriers at the border. However, a significant portion of the funds appropriated to the Department of Homeland Security (DHS) is available for construction of barriers where they do not currently exist.", "The Administration took steps in FY2019 to secure funding beyond the levels approved by Congress for border barriers. These included:", "transferring roughly $601 million from the Treasury Forfeiture Fund to U.S. Customs and Border Protection (CBP); using $2.5 billion in Department of Defense funds transferred to the Department's counterdrug programs to construct border barriers; and reallocating up to $3.6 billion from other military construction projects using authorities under the declaration of a national emergency.", "This report provides an overview of the funding appropriated for border barriers, based on data from CBP and congressional documents, and a primer on the Trump Administration's efforts to enhance the funding for border barriers, with a brief discussion of the legislative and historical context of construction of barriers at the U.S-Mexico border. It concludes with a number of unanswered questions Congress may wish to explore as this debate continues. An appendix tracks reported barrier construction mileage on the U.S.-Mexico border by year."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["Congress and the Donald J. Trump Administration are debating enhancing and expanding barriers on the southwest border. The extent of these barriers, and how construction of these barriers will be funded has become a central part of the interactions between Congress and the Trump Administration on border security and funding legislation for the broader federal government. ", "The debate has revealed the lack of an authoritative compilation of data on the details of federal investment in border barriers. This is in part due to the evolving structure of the appropriations for agencies charged with protecting the border\u00e2\u0080\u0094account structures have shifted, initiatives have come and gone, and appropriations prior to FY2017 typically did not specify a precise level of funding for barriers as opposed to other technologies that secure the border. The Trump Administration's continued advocacy for funding for a \"border wall system\" has led to a congressional interest in the historical context for border barrier funding. ", "This report briefly contextualizes the history of U.S. enforcement of the U.S.-Mexico border, before turning to funding for border barriers within the contemporary period, accounting for changing appropriations structures. "], "subsections": []}, {"section_title": "Historical Context", "paragraphs": [], "subsections": [{"section_title": "Establishment and Policing of the U.S.-Mexico Border", "paragraphs": ["The Treaty of Guadalupe Hidalgo in 1848, with the cession of land to the United States, ended the Mexican-American War and set forth an agreed-upon boundary line between the United States and Mexico. The physical demarcation of the boundary was essentially set by the Gadsden Purchase, finalized in 1854, with some minor adjustments since then.", "Securing U.S. borders has primarily been the mission of the U.S. Border Patrol, which was established by Congress by an appropriations act in 1924. Initially, a relatively small force of 450 officers patrolled both the northern and southern borders between inspection stations, guarding against the smuggling of contraband and unauthorized migrants. ", "The Immigration Act of 1924 established immigration quotas for most countries, with the exception of those in the Western Hemisphere, including Mexico. (While some specific limitations existed, per-country quotas for Western Hemisphere countries did not exist until 1976. ) Earlier policies had set categorical exclusions to entry (e.g., for Chinese and other Asian immigrants) that were exceptions to an otherwise open immigration policy. Between 1942 and 1964, the Bracero Program brought in nearly 5 million Mexican agricultural workers to fill the labor gap caused by World War II. Both employers and employees became used to the seasonal work, and when the program ended, many continued this employment arrangement without legal authorization. Debates about enhancing enforcement of immigration laws ensued in the late 1970s and 1980s, largely in concert with counter-drug smuggling efforts and interest in curbing the rise in unauthorized flows of migrant workers. "], "subsections": []}, {"section_title": "Emergence of Barriers as Deterrence", "paragraphs": ["A significant effort to construct barriers on the southern border as a deterrent to illegal entry by migrants or smugglers into the United States began in the early 1990s. In 1991, U.S. Navy engineers built a ten-foot-high corrugated steel barrier between San Diego and Tijuana made of surplus aircraft landing mats, an upgrade to the previous chain-link fencing. ", "In 1994, the Border Patrol (then part of the Department of Justice under the Immigration and Naturalization Service, INS) released a strategic plan for enforcing immigration laws along the U.S. border, as a part of a series of immigration reform initiatives. The plan, developed by Chief Patrol Agents, Border Patrol headquarters staff, and planning experts from the Department of Defense Center for Low Intensity Conflict, described their approach to improving control of the border through a strategy of \"prevention through deterrence,\" under which resources were concentrated in major entry corridors to establish control of those areas and force traffic to more difficult crossing areas.", "The Border Patrol will increase the number of agents on the line and make effective use of technology, raising the risk of apprehension high enough to be an effective deterrent. Because the deterrent effect of apprehensions does not become effective in stopping the flow until apprehensions approach 100 percent of those attempting entry, the strategic objective is to maximize the apprehension rate. Although a 100 percent apprehension rate is an unrealistic goal, we believe we can achieve a rate of apprehensions sufficiently high to raise the risk of apprehension to the point that many will consider it futile to continue to attempt illegal entry. ", "Prior to 1996, federal statute neither explicitly authorized nor required barrier construction along international borders. In 1996, the Illegal Immigration Reform and Immigrant Responsibility Act (IIRIRA) was enacted, and Section 102(a) specifically directed the Attorney General to \"install additional physical barriers and roads ... in the vicinity of the United States border to deter illegal crossings in areas of high illegal entry into the United States.\" "], "subsections": []}, {"section_title": "From INS (in Department of Justice) to CBP (in Homeland Security)", "paragraphs": ["Following the terrorist attacks of September 11, 2001, the U.S. government changed its approach to homeland security issues, including control of the border. As a part of the establishment of the Department of Homeland Security (DHS) in 2003, INS was dismantled, and the Border Patrol and its responsibility for border security were moved from the Department of Justice to DHS as a part of U.S. Customs and Border Protection (CBP). DHS and CBP were stood up in 2003, and received their first annual appropriations in FY2004."], "subsections": []}]}, {"section_title": "DHS Border Barriers: Legislative Era (2005-2016)", "paragraphs": ["During the 109 th and the first session of the 110 th Congresses (2005-2007), comprehensive immigration reform legislation and narrower border security measures were debated. One result was that Congress explicitly authorized and funded new construction of border barriers, significantly increasing their presence. "], "subsections": [{"section_title": "Enacted Authorizations and Appropriations", "paragraphs": ["In the 109 th Congress, two bills were enacted that amended Section 102 of IIRIRA, easing the construction of additional border barriers. Section 102 of the REAL ID Act of 2005 ( P.L. 109-13 , Div. B) included broad waiver authority that allowed for expedited construction of border barriers. The Secure Fence Act of 2006 ( P.L. 109-367 ) directed the Secretary of Homeland Security to \"achieve and maintain operational control over the entire international land and maritime borders of the United States,\" mandated the construction of certain border barriers and technology on the border with Mexico by the end of 2008, and required annual reports on progress on border control. ", "This was a different approach in border barrier legislation. Past immigration policy bills had included border barriers as a part of a suite of remedies across government to the border security problem in the context of immigration policy. The Secure Fence Act instead provided authorization for DHS alone to achieve \"operational control\" of the border through barriers, tactical infrastructure, and surveillance while largely not addressing the broader set of immigration policies that could contribute to improved border security. In addition, the Secure Fence Act substantially revised IIRIRA Section 102(b) to include five specific border areas to be covered by the installation of fencing, additional barriers, and technology.", "The FY2006 DHS Appropriations Act ( P.L. 109-90 ) provided the first appropriations specifically designated for the Border Patrol (now under CBP and a part of DHS) to construct border barriers. The act specified $35 million for CBP's San Diego sector fencing. This funding was part of a surge in CBP construction spending from $91.7 million in FY2005\u00e2\u0080\u0094and $93.4 million in the FY2006 request\u00e2\u0080\u0094to $270.0 million for FY2006 enacted appropriations. This direction also represented the first specific statutory direction provided to CBP on the use of its construction funds.", "Toward the end of 2007, Congress amended Section 102 of IIRIRA through Section 564 of the Consolidated Appropriations Act, 2008. Congress again required the construction of reinforced fencing along at least 700 miles of the U.S.-Mexico border, where it would be \"most practical and effective,\" but also included flexibility in implementing this requirement, stating that:", "nothing in this paragraph shall require the Secretary of Homeland Security to install fencing, physical barriers, roads, lighting, cameras, and sensors in a particular location along an international border of the United States, if the Secretary determines that the use or placement of such resources is not the most appropriate means to achieve and maintain operational control over the international border at such location."], "subsections": [{"section_title": "The \"BSFIT\" Appropriation", "paragraphs": ["Starting in FY2007 and continuing through FY2016, border barrier funding in CBP's budget was included in the \"Border Security Fencing, Infrastructure, and Technology\" (BSFIT) appropriation. When BSFIT was established in the Department of Homeland Security Appropriations Act, 2007 ( P.L. 109-295 ), it consolidated border technology and tactical infrastructure funding from other accounts, including CBP's Construction appropriation and Salaries and Expenses appropriation. ", "According to the FY2007 DHS appropriations conference report, Congress provided $1,512,565,000 for BSFIT activities for FY2007: $1,187,565,000 from annual appropriations in P.L. 109-295 , and $325,000,000 in prior enacted supplemental appropriations from P.L. 109-234 and other legislation. Congress directed portions of that initial appropriation to two specific border security projects, and withheld $950 million until a spending plan for a border barrier was provided. Starting in FY2008, a PPA for \"Development and Deployment\" of technology and tactical infrastructure was included at congressional direction under the BSFIT appropriation.", "The BSFIT Development and Deployment PPA is, over the tenure of CBP, the most consistently structured year-to-year direction from Congress to CBP regarding putting border security technology and infrastructure in the field, covering FY2008-FY2016. ", "The BSFIT Development and Deployment structure remained unchanged until the implementation of the Common Appropriations Structure (CAS) for DHS in the FY2017 appropriations cycle, which redistributed BSFIT funding to the Operations and Support (OS) appropriation and the Procurement, Construction, and Improvements (PC&I) appropriation. Border barrier design and construction funding, other than ports of entry, is now included in the Border Security Assets and Infrastructure PPA along with several other activities.", " Figure 1 shows the requested and enacted levels for the Development and Deployment PPA from FY2008 through FY2016. Although it doesn't show an almost $1.2 billion FY2007 appropriation for border infrastructure before the Development and Deployment PPA was implemented, it does indicate the early high levels of investment in border infrastructure, which then tapered off. The dashed line shows the size of the budget request for these elements."], "subsections": []}]}, {"section_title": "Identifying Border Barrier Funding", "paragraphs": ["While the new structure of appropriations made it clear that funding was being directed to border security enhancements, the level of detail was not always sufficient to identify the funding level for barrier construction. CRS was able to obtain this more granular information directly from CBP, which provided a breakdown to CRS of its spending on border barriers beginning with FY2007. The primary program that funded barrier construction in this period was the Tactical Infrastructure (TI) Program. ", " Figure 2 and Table 1 present funding data provided by CBP for border barriers under the TI program. The funding provided in FY2007 to FY2009 resulted in increased border barrier construction (which extended for a few years into the early 2010s). As the funds for construction were expended, CBP transitioned its border barrier activities to primarily maintenance and minor repairs, until FY2017.", "CBP has indicated in follow-up communications that no further historical data are available, as barrier construction was conducted by several entities within CBP, and not centrally tracked. In addition, the definitions of tactical infrastructure may allow for inclusion of some elements only peripherally related to border barriers. Taking these factors into account, given the limited mileage constructed prior to FY2007 (see Appendix for details), the above data present the best available understanding of appropriations and spending on border barriers in the 2007-2016 period."], "subsections": []}]}, {"section_title": "DHS Border Barriers: Executive Era (2017-Present)", "paragraphs": ["On January 25, 2017, the Trump Administration issued Executive Order 13767, \"Border Security and Immigration Enforcement Improvements.\" Section 2(a) of the EO indicates that it is the policy of the executive branch to \"secure the southern border of the United States through the immediate construction of a physical wall on the southern border, monitored and supported by adequate personnel so as to prevent illegal immigration, drug and human trafficking, and acts of terrorism.\" The EO goes on to define \"wall\" as \"a contiguous, physical wall or other similarly secure, contiguous, and impassable physical barrier.\""], "subsections": [{"section_title": "Enacted Appropriations", "paragraphs": [], "subsections": [{"section_title": "Changes in Structure", "paragraphs": ["For FY2017, changes were made both in the structure of how funds were appropriated, and how CBP organized those funds among its authorized activities. This complicates efforts to make detailed comparisons in funding levels between the present and time periods prior to FY2016."], "subsections": [{"section_title": "Appropriations", "paragraphs": ["When DHS was established in 2003, components of other agencies were brought together over a matter of months, in the midst of ongoing budget cycles. Rather than developing a new structure of appropriations for the entire department, Congress and the Executive continued to provide resources through existing account structures when possible. CBP's budget structure evolved over the DHS's early years, including the institution of the Border Security Fencing, Infrastructure, and Technology (BSFIT) account in FY2007.", "At the direction of Congress, in 2014 DHS began to work on a new Common Appropriations Structure (CAS), which would standardize the format of DHS appropriations across components.", "After several years of negotiations with Congress, DHS made its first budget request in the CAS for FY2017, and implemented the new budget structure while operating under a continuing resolution in October 2016. This resulted in the BSFIT structure being eliminated. The funding that had been provided under its appropriation would now be provided under the CBP Operations and Support (OS) and Procurement, Construction, and Improvements (PC&I) appropriations."], "subsections": []}, {"section_title": "Execution of Funding", "paragraphs": ["Aside from the appropriations structure, changes within CBP's internal account structure occurred during FY2017. The \"Wall Program\" was established at CBP during FY2017. The Wall Program is a lower-level PPA nested within the new Border Security Assets and Infrastructure activity, which in turn is a part of the CBP PC&I appropriation. According to CBP, the Wall Program oversees the execution of the FY2017 TI program funding and \"will be responsible for all future wall construction.\" CBP first directed appropriations to the Wall Program in FY2018 ($1.375 billion). ", "CBP's TI Program continues to manage the funding for maintenance of new and replacement border barriers, as it has since FY2007. ", " Table 2 shows appropriations for border barriers requested by the Administration and provided by Congress in the DHS appropriations acts. Each fiscal year is discussed in detail after Table 2 ."], "subsections": []}]}, {"section_title": "FY2017", "paragraphs": ["The Trump Administration submitted a supplemental appropriations request in March 2017 for a variety of priorities, including CBP staffing and border wall construction. The request for additional CBP PC&I funding included $1.38 billion, of which $999 million was for \"planning, design, and construction of the first installment of the border wall.\"", "The FY2017 DHS Appropriations bill included a sixth title with the congressional response to the supplemental appropriations request. It included $341.2 million to replace approximately 40 miles of existing primary pedestrian and vehicle barriers along the southwest border \"using previously deployed and operationally effective designs, such as currently deployed steel bollard designs, that prioritize agent safety\" and to add gates to existing barriers."], "subsections": []}, {"section_title": "FY2018", "paragraphs": ["The Administration requested $1.72 billion for the Border Security Assets and Infrastructure PPA, including $1.57 million for construction of border barriers. In the FY2018 appropriations measure, Congress provided $1.74 billion, which, according to a House Appropriations Committee summary, included funding for \"over 90 miles of physical barrier construction along the southern border\u00e2\u0080\u0094including replacement, bollards, and levee improvements.\" Section 230 of the bill specified the following $1.375 billion for the following activities under the CBP PC&I appropriation:", "$445 million for 25 miles of primary pedestrian levee fencing in Rio Grande Valley (RGV) sector; $196 million for primary pedestrian fencing in RGV sector; $251 million for secondary replacement fencing in San Diego sector; $445 million for replacement of existing primary pedestrian fencing; and $38 million for border barrier planning and design.", "The section went on to note that the funding for primary fencing \"shall only be available for operationally effective designs deployed as of [May 5, 2017], such as currently deployed steel bollard designs that prioritize agent safety.\""], "subsections": []}, {"section_title": "FY2019", "paragraphs": ["The Administration initially requested $1.647 billion for the Border Security Assets and Infrastructure PPA. Budget justification documents noted that $1.6 billion was requested for the border wall. The Administration reportedly requested $5.0 billion for the wall from Republican congressional leadership. However, no publicly available modification of its request was presented to Congress until January 6, 2019. At that time, in the midst of a lapse in annual appropriations due in part to conflict over border barrier funding, the acting head of the Office of Management and Budget (OMB) submitted a letter seeking $7 billion in additional border related funding. The $7 billion included $4.1 billion more for \"the wall\" than the Administration originally requested. The letter indicated that the total request of $5.7 billion would pay for \"approximately 234 miles of new physical barrier and fully fund the top 10 priorities in CBP's Border Security Improvement Plan.\"", "P.L. 116-6 , the Consolidated Appropriations Act, 2019, included $1.375 billion for CBP \"for the construction of primary pedestrian fencing, including levee pedestrian fencing, in the Rio Grande Valley Sector.\" Funding could only be used for \"operationally effective designs deployed as of [May 5, 2017], such as currently deployed steel bollard designs that prioritize agent safety.\""], "subsections": [{"section_title": "Border Barrier Funding Outside the Appropriations Process", "paragraphs": ["The same day that the President signed the FY2019 consolidated appropriations act into law, he declared a national emergency on the southern border of the United States. A fact sheet accompanying the declaration indicated the President's intent to make additional funding available for border barriers through three methods, sequentially. These methods and related actions are:", "1. Drawing about $601 million from the Treasury Forfeiture Fund A letter from the Department of the Treasury on February 15, 2019, indicated that those funds would be made available to DHS for \"law enforcement border security efforts\" ($242 million available March 2, and $359 million after additional forfeitures were received). According to court documents, Treasury transferred the full $601 million to DHS on September 27, 2019. CBP will reportedly use the funds as follows: $261 million for future-year real estate planning and acquisition for border barrier construction along the southwest border. $340 million for border barrier projects in the Rio Grande Valley Sector, of which $124 million is for construction; and $216 million is for construction management costs, increased project costs, and real estate planning and acquisition. 2. Making up to $2.5 billion available through the Department of Defense's support for counterdrug activities (authorized under 10 U.S.C. \u00c2\u00a7284) $1 billion has been reprogrammed within the Department of Defense to its Drug Interdiction and Counter Drug Activities account, and that funding, in turn, was transferred for the U.S. Army Corps of Engineers to do certain DHS-requested work on border barriers. On May 10, 2019, the Department of Defense announced an additional $1.5 billion reprogramming of funding that had been dedicated to a variety of initiatives, including training and equipping Afghan security forces, programs to dismantle chemical weapons, and other activity for which savings or program delays had been identified. The DOD indicated that the funding would construct an additional 80 miles of border barriers. Use of both of these tranches of reprogrammed funds to pay for border barrier projects had been blocked by a court injunction until July 26, 2019, when the Supreme Court ruled that the government could proceed with the use of the funds while a lower court determines the legality of the transfer that made the funds available. 3. Reallocating up to $3.6 billion from various military construction projects under the authority invoked by the emergency declaration On September 3, 2019, Secretary of Defense Mark Esper issued a memorandum with the determination that \"11 military construction projects \u00e2\u0080\u00a6 along the international border with Mexico, with an estimated total cost of $3.6 billion, are necessary to support the use of the armed forces in connection with the national emergency [at the southern border].\" The memorandum indicates $1.8 billion in unobligated military construction funding for overseas projects would be made available immediately, while $1.8 billion in domestic military construction projects would be provided once it is needed."], "subsections": []}]}, {"section_title": "FY2020", "paragraphs": ["In February 2019, The Administration requested $5 billion in border barrier funding for FY2020, to support the construction of approximately 206 miles of border wall system.", "The House Appropriations Committee included no funding for border barriers when it reported its FY2020 DHS appropriations bill. In addition, the bill would have restricted the ability to transfer or reprogram funds for border barrier construction and proposed rescinding $601 million from funding appropriated for border barriers in FY2019. The Senate Appropriations Committee took the opposite approach when it reported S. 2582 , recommending $5 billion for border barrier construction. It also did not include any of the House bill's proposed restrictions or the rescission. Neither the House nor the Senate considered these appropriations bills on the floor.", "The FY2020 DHS Appropriations Act ( P.L. 116-93 , Div. D)\u00e2\u0080\u0094which was passed as part of the Consolidated Appropriations Act, 2020\u00e2\u0080\u0094included $1.375 billion for \"construction of barrier system along the southwest border.\" The barrier system design restrictions are similar to prior years, with a new exception for designs that help \"mitigate community or environmental impacts.\" There is an additional requirement that the barriers are to be built in the highest priority locations identified in CBP's Border Security Improvement Plan."], "subsections": []}]}, {"section_title": "Comparing DHS Border Barrier Funding Across Eras", "paragraphs": [" Figure 3 presents a comparison of the total funding made available in the first and second eras of DHS efforts to support planning and construction of barriers on the U.S.-Mexico border. ", "This comparison is made with two important caveats: the data sources and funding structures are different in the two eras. In the legislative era (FY2007-FY2016), detailed information was provided directly to CRS in a communication from CBP. It was tracked for \"tactical infrastructure,\" which included funding for border roads and other TI. In the executive era (FY2017 to the present), data from CBP and appropriations measures (which has been more detailed with respect to barrier planning and construction) are generally consistent, but the Administration uses the specifically defined \"border wall\" program to track most of the funding. A small amount of funding for barrier replacement and supporting infrastructure was provided through the tactical infrastructure PPA in FY2018."], "subsections": []}]}, {"section_title": "Questions Relevant to Future DHS Border Barrier Funding", "paragraphs": ["Section 4 of E.O. 13767, \"Physical Security of the Southern Border of the United States,\" focuses almost entirely on the construction of \"a physical wall\" on the U.S.-Mexico border as a means of obtaining operational control of the nearly 2,000-mile border. CBP has indicated that it cannot provide authoritative historical data prior to FY2007 on the level of funding invested in border barrier planning and construction. To briefly recap the funding that has been provided by Congress in response to the Trump Administration's initiative, the $4.47 billion in appropriations provided by Congress to CBP for border barrier planning and construction during the Trump Administration exceeds the amount provided for those purposes in the BSFIT account for the 10 years from FY2007 to FY2016 by $2 billion. Of the $4.47 billion:", "$1.04 billion was specifically directed to barrier replacement projects; ", "$2.02 billion was specifically directed to construction needs in the Rio Grande Valley Sector; and ", "$1.41 billion has been provided for planning and construction of border barriers without specific direction in regards to location or whether the funding was for barrier replacement or construction of additional miles of barriers. ", "Despite the historically high volume of resources provided, the Administration has taken unprecedented steps\u00e2\u0080\u0094noted above\u00e2\u0080\u0094in an attempt to more than double the funding level appropriated to CBP by Congress for barrier construction since the signing of E.O. 13767. ", "$601 million was provided to DHS in FY2019 from the Treasury Forfeiture Fund. As noted in \" Border Barrier Funding Outside the Appropriations Process ,\" $124 million of that funding is being used for construction, while $477 million is for real estate planning and acquisition, increased project costs, and construction management costs. ", "Generally, the Administration, in its discussion about border barriers, relies on the U.S. Border Patrol Impedance and Denial Prioritization Strategy , which includes a list of projects for barrier construction. There are no known authoritative cost estimates for the total construction or operation and maintenance costs of these projects if they are all completed, or publicly available assessments of how completion of various projects might affect CBP's operational costs. Furthermore, GAO reported in 2016 that the border barriers' contributions to CBP goals were not being adequately measured. GAO reported in 2018 that CBP's methodology for prioritizing border barrier deployments did not use cost estimates that included data on topography, land ownership, and other factors that could impact the costs of individual barrier projects.", "The Administration's stated intent is to expand the amount of border barriers on the southwest border, and this issue will likely be part of debates on the budgets for the current and future fiscal years. Congress may wish to obtain the following information and explore the following questions in assessing border barrier funding proposals:", "1. What are the projected operation and maintenance costs for the existing southwest border barriers? How will those change with additional replacements, upgrades, or new construction of barriers? 2. What are the projected land acquisition and construction costs of CBP's remaining top priority border barrier projects, based on unique topography, land ownership, and strategic intent of the projects? What steps is CBP taking to control the growth of those costs? Who within the Administration is providing oversight of how these funds are used, and are they reporting their findings to Congress? 3. Are existing barriers and completed improvements having measurable impacts on attempted illegal entry into the U.S. and smuggling of contraband? How are CBP and other stakeholders making their assessments? Is CBP getting its desired tactical or strategic outcomes? 4. Are the operational benefits worth the financial and operational costs, or are there more efficient ways to achieve the desired tactical or strategic outcomes? 5. How should Congress respond to the Administration's exercise of reprogramming and transfer authorities to provide funding for border barrier work above the amount Congress provided to CBP for that purpose? "], "subsections": [{"section_title": "Appendix. Tracking Barrier Construction on the U.S.-Mexico Border", "paragraphs": ["The United States' southern border with Mexico runs for nearly 2,000 miles over diverse terrain, through varied population densities, and across discontinuous sections of public, private, and tribal land ownership. The Department of Homeland Security (DHS) Customs and Border Protection (CBP) is primarily responsible for border security, including the construction and maintenance of tactical infrastructure, but also the installation and monitoring of surveillance technology, and the deployment of border patrol agents to impede unlawful entries of people and contraband into the United States (e.g., unauthorized migrants, terrorists, firearms, and narcotics).", "Built barriers, such as fencing, are a relatively new feature on the southern border. These structures vary in age, purpose, form, and location. At the end of FY2015, approximately 653 miles\u00e2\u0080\u0094roughly one-third of the international boundary\u00e2\u0080\u0094had a primary layer of barriers. Approximately 300 miles of the \"primary fence\" was designed to prevent vehicles from entering, and approximately 350 additional miles was designed to block people on foot\u00e2\u0080\u0094\"pedestrian fencing.\" CBP has used various materials for pedestrian fencing, including bollard, steel mesh, and chain link, and employed bollard and Normandy-style fencing for vehicle barriers. Across 37 discontinuous miles, the primary layer is backed by a secondary layer of pedestrian fencing as well as an additional 14 miles of tertiary fencing (typically to delineate property lines). ", "On January 10, 2020, the Administration announced the completion of the first 100 miles of the \"new border wall system\" under the Trump Administration. Based on CBP's information, the 100 miles of new border wall system largely replaces less formidable existing barriers with 18- to 30-foot bollard style fencing designed to obstruct both vehicles and pedestrians. It does not represent additional miles of the primary layer of border barriers. ", "CBP has not announced the completion of any additional miles of primary fencing since 2015, but sections of legacy fencing and breached areas have been replaced or repaired and other improvements have been made.", "An interactive online project by inewsource (a nonprofit, nonpartisan investigative online newsroom in San Diego) and KPBS (a Public Broadcasting Service television and radio station in San Diego, California) used data obtained via a Freedom of Information Act (FOIA) request to Customs and Border Protection to account for every mile of existing border fencing by the year built. The data are used in this appendix to produce Figure A-1 showing the number of miles of primary border barrier constructed for the period 1960-2018 (annual data shown in Table A-1 ). ", "Small areas of the border had fencing prior to 1990. By 1993, fencing in the San Diego area had been completed, covering the first 14 miles of the border east from the Pacific Ocean and a few other areas. Under the provisions of IIRIRA, the Secretary of Homeland Security\u00e2\u0080\u0094and, prior to 2003, the Attorney General\u00e2\u0080\u0094has the discretion to determine the appropriate amount of additional barriers to build, as well as their location. Approximately 40 additional miles of primary fence were constructed on the southern border through 2005. The vast majority of the existing primary barriers\u00e2\u0080\u0094more than 525 miles\u00e2\u0080\u0094were constructed between 2007 and 2009 (see Table A-1 and Figure A-1 )."], "subsections": []}]}]}}
{"id": "R46249", "title": "U.S. Farm Income Outlook: February 2020 Forecast", "released_date": "2020-03-03T00:00:00", "summary": ["This report uses the U.S. Department of Agriculture's (USDA) farm income projections (as of February 5, 2020) to describe the U.S. farm economic outlook for 2020. Two major indicators of U.S. farm well-being are net farm income and net cash income. Net farm income represents an accrual of the value of all goods and serviced produced on the farm during the year\u00e2\u0080\u0094similar in concept to gross domestic product. In contrast, net cash income uses a cash flow concept to measure farm well-being: Only cash transactions for the year are included. Thus, crop production is recorded as net farm income immediately after harvest, whereas net cash income records a crop's value only after it has been sold in the marketplace.", "According to USDA's Economic Research Service (ERS), national net farm income is forecast at $96.7 billion in 2020, up $3.1 billion (+3.3%) from 2019. The forecast rise in 2020 net farm income stands in contrast with a projected decline of over $10.8 billion in net cash income (-9.0%). Last year's (2019) net cash income forecast included $14.7 billion in sales of on-farm crop inventories, which helped to inflate the 2019 net cash income value to $120.4 billion. The 2020 net cash income forecast includes a much smaller amount ($0.5 billion) in sales from on-farm inventories, thus contributing to the decline from 2019.", "Government direct support payments to the agricultural sector are expected to continue to play an important role in farm income projections. USDA projects $15 billion in farm support outlays for 2020, including the $3.7 billion of 2019 Market Facilitation Program (MFP) payments\u00e2\u0080\u0094the third and final tranche of payments under the $14.5 billion program. If realized, the 2020 government payments of $15 billion would represent a 36.6% decline from 2019 but would still be the second largest since 2006. The $23.6 billion in federal payments in 2019 was the largest taxpayer transfer to the agriculture sector (in absolute dollars) since 2005. The surge in federal subsidies in 2019 was driven by large payments (estimated at $14.3 billion) under the MFP initiated by USDA in response to the U.S.-China trade dispute. The Administration has not announced a new MFP for 2020.", "Weather conditions and planting prospects for 2020 are unknown this early in the year. Commodity prices are under pressure from abundant global supplies and uncertain export prospects. Despite the signing of a Phase I trade agreement with China on January 15, 2020, it is unclear how soon\u00e2\u0080\u0094if at all\u00e2\u0080\u0094the United States may resume normal trade with China or how international demand may evolve in 2020.", "Farm asset value in 2020 is projected up year-to-year at $3.1 trillion (+1.3%). Farm asset values reflect farm investors' and lenders' expectations about long-term profitability of farm sector investments. Another critical measure of the farm sector's well-being is aggregate farm debt, which is projected to be at a record $425.3 billion in 2020\u00e2\u0080\u0094up 2.3% from 2019. Both the debt-to-asset and the debt-to-equity ratios have risen for eight consecutive years, potentially suggesting a continued slow erosion of the U.S. farm sector's financial situation.", "At the farm household level, average farm household incomes have been well above average U.S. household incomes since the late 1990s. However, this advantage derives primarily from off-farm income as a share of farm household total income. Since 2014, over half of U.S. farm operations have had negative income from their agricultural operations.", "This report uses the U.S. Department of Agriculture's (USDA) farm income projections (as of February 5, 2020) to describe the U.S. farm economic outlook for 2020. Two major indicators of U.S. farm well-being are net farm income and net cash income. Net farm income represents an accrual of the value of all goods and serviced produced on the farm during the year\u00e2\u0080\u0094similar in concept to gross domestic product. In contrast, net cash income uses a cash flow concept to measure farm well-being: Only cash transactions for the year are included. Thus, crop production is recorded as net farm income immediately after harvest, whereas net cash income records a crop's value only after it has been sold in the marketplace.", "According to USDA's Economic Research Service (ERS), national net farm income is forecast at $96.7 billion in 2020, up $3.1 billion (+3.3%) from 2019. The forecast rise in 2020 net farm income stands in contrast with a projected decline of over $10.8 billion in net cash income (-9.0%). Last year's (2019) net cash income forecast included $14.7 billion in sales of on-farm crop inventories, which helped to inflate the 2019 net cash income value to $120.4 billion. The 2020 net cash income forecast includes a much smaller amount ($0.5 billion) in sales from on-farm inventories, thus contributing to the decline from 2019.", "Government direct support payments to the agricultural sector are expected to continue to play an important role in farm income projections. USDA projects $15 billion in farm support outlays for 2020, including the $3.7 billion of 2019 Market Facilitation Program (MFP) payments\u00e2\u0080\u0094the third and final tranche of payments under the $14.5 billion program. If realized, the 2020 government payments of $15 billion would represent a 36.6% decline from 2019 but would still be the second largest since 2006. The $23.6 billion in federal payments in 2019 was the largest taxpayer transfer to the agriculture sector (in absolute dollars) since 2005. The surge in federal subsidies in 2019 was driven by large payments (estimated at $14.3 billion) under the MFP initiated by USDA in response to the U.S.-China trade dispute. The Administration has not announced a new MFP for 2020.", "Weather conditions and planting prospects for 2020 are unknown this early in the year. Commodity prices are under pressure from abundant global supplies and uncertain export prospects. Despite the signing of a Phase I trade agreement with China on January 15, 2020, it is unclear how soon\u00e2\u0080\u0094if at all\u00e2\u0080\u0094the United States may resume normal trade with China or how international demand may evolve in 2020.", "Farm asset value in 2020 is projected up year-to-year at $3.1 trillion (+1.3%). Farm asset values reflect farm investors' and lenders' expectations about long-term profitability of farm sector investments. Another critical measure of the farm sector's well-being is aggregate farm debt, which is projected to be at a record $425.3 billion in 2020\u00e2\u0080\u0094up 2.3% from 2019. Both the debt-to-asset and the debt-to-equity ratios have risen for eight consecutive years, potentially suggesting a continued slow erosion of the U.S. farm sector's financial situation.", "At the farm household level, average farm household incomes have been well above average U.S. household incomes since the late 1990s. However, this advantage derives primarily from off-farm income as a share of farm household total income. Since 2014, over half of U.S. farm operations have had negative income from their agricultural operations."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["The U.S. farm sector is vast and varied. It encompasses production activities related to traditional field crops (such as corn, soybeans, wheat, and cotton) and livestock and poultry products (including meat, dairy, and eggs), as well as fruits, tree nuts, and vegetables. In addition, U.S. agricultural output includes greenhouse and nursery products, forest products, custom work, machine hire, and other farm-related activities. The intensity and economic importance of each of these activities, as well as their underlying market structure and production processes, vary regionally based on the agro-climatic setting, market conditions, and other factors. As a result, farm income and rural economic conditions may vary substantially across the United States. ", "Annual U.S. net farm income is the single most-watched indicator of farm sector well-being, as it captures and reflects the entirety of economic activity across the range of production processes, input expenses, and marketing conditions that have prevailed during a specific time period (see box \"Measuring Farm Profitability\" for a definition of net farm income ). When national net farm income is reported together with a measure of the national farm debt-to-asset ratio, the two summary statistics provide a quick and widely referenced indicator of the economic well-being of the national farm economy."], "subsections": []}, {"section_title": "USDA's February 2020 Farm Income Forecast", "paragraphs": ["In the first of three official U.S. farm income outlook releases scheduled for 2020 (see box \"ERS's Annual Farm Income Forecasts\" below), the U.S. Department of Agriculture's (USDA) Economic Research Service (ERS) projects that U.S. net farm income will rise 3.3% year-over-year in 2020 to $96.7 billion, up $3.1 billion from last year ( Figure 1 and Table A-1 ). The February forecast of $96.7 billion is 6.3% above the 10-year average of $89.9 billion (in nominal dollars) but is well below 2013's record high of $123.7 billion. In contrast, net cash income (calculated on a cash-flow basis) is projected lower in 2020 (down 10.8% from 2019) at $109.6 billion\u00e2\u0080\u00944.7% below the 10-year average of $115.0 billion. ", "The divergence in year-to-year changes between the two measures of net income is due to their different treatment of harvested crops. Net farm income includes a crop's value after harvest even if it remains in on-farm storage. In contrast, net cash income includes a crop's value only when it is sold. Thus, crops placed in on-farm storage are included in net farm income but not net cash income. ", "In 2018, U.S. farmers harvested a record soybean crop and the third-largest corn crop on record. That same year the U.S.-China trade dispute emerged as an impediment to trade and contributed to a widespread drop in soybean prices. However, the Administration assured producers that the trade dispute was temporary and would soon be resolved in their favor. As a result, many producers of soybeans and other crops held on to their crops in the hopes of capturing higher prices after the trade dispute was resolved. However, by mid-2019 there was no end in sight to the trade dispute, and farmer cash flows necessitated selling from on-farm inventories to meet household and farm operation needs. As a result, the net cash farm income forecast for 2019 included $14.7 billion in sales from on-farm crop inventories, whereas the 2020 forecast includes a much smaller amount ($0.5 billion) in sales from on-farm inventories. This difference accounts for much of the decline in the 2020 net cash farm income projection."], "subsections": [{"section_title": "Highlights", "paragraphs": ["When adjusted for inflation and represented in 2019 dollars ( Figure 2 ), both the net farm income and net cash income for 2019 are projected to be above their average values since 1940 of $88.2 billion and $101 billion, respectively. For historical perspective, both net cash income and net farm income achieved record nominal highs in 2013 but fell to recent lows in 2016 ( Figure 1 ) before trending higher during 2017-2019. Government farm subsidies are projected at $15 billion in 2020\u00e2\u0080\u0094down nearly 37% from 2019 but still the second-highest since 2006 ( Figure 12 ). In 2019, support from traditional farm programs was bolstered by large direct government payments in response to trade retaliation under the trade dispute with China. Direct government payments of $23.6 billion in 2019 represented 25.2% of net farm income\u00e2\u0080\u0094the largest share since a 27.6% share in 2006. The share of net farm income from government sources in 2020 is projected to decline to 15.5% ( Figure 11 ). Farm asset values and debt levels are projected to reach record levels in 2020\u00e2\u0080\u0094asset values at $3.1 trillion (+1.3% year-over-year) and farm debt at $425.3 billion (+2.3%)\u00e2\u0080\u0094pushing the projected debt-to-asset ratio up to 13.5%, the highest level since 2003 ( Figure 19 ). For the 2019-2020 marketing year for crops and the 2020 calendar year for livestock, USDA forecasts a mixed outlook for major commodity prices: Corn, soybeans, sorghum, oats, rice, hogs, and milk will be up slightly from 2019, while prices for barley, cotton, wheat, choice steers, broilers, and eggs are expected to be lower ( Table A-4 ). ", "Abundant domestic and international supplies of grains and oilseeds contributed to a fifth-straight year of relatively weak commodity prices in 2019 ( Figure A-1 through Figure A-4 , and Table A-4 ). However, the commodity price projections for 2020 are subject to substantial uncertainty associated with as-yet-unknown domestic production and international commodity market developments. Three major factors dominated U.S. agricultural markets during 2019 and have contributed to uncertainty over the supply, demand, and price prospects for most major commodities heading into 2020: surplus stocks, wet weather, and international trade disputes. ", "First, large corn and soybean stocks kept pressure on commodity prices throughout the grain and feed complex in 2019 ( Figure 3 ). Second, adverse weather conditions during the spring planting and fall harvesting periods contributed to market uncertainty regarding the size of the 2019 corn and soybean crops. Third, the U.S.-China trade dispute led to declines in U.S. exports to China\u00e2\u0080\u0094a major market for U.S. agricultural products\u00e2\u0080\u0094and added to market uncertainty. In particular, the United States was displaced by Brazil as the world's preeminent exporter of soybeans to China. ", "Weather conditions and planting prospects for 2020 are unknown this early in the year. Also, despite the signing of a Phase I trade agreement with China on January 15, 2020, it is unclear how soon\u00e2\u0080\u0094if at all\u00e2\u0080\u0094the United States may resume normal trade with China or how international demand may evolve heading in 2020."], "subsections": []}, {"section_title": "USDA Projects Corn, Soybean, and Wheat Stocks Lower in 2019", "paragraphs": ["Corn and soybeans are the two largest U.S. commercial crops in terms of both value and acreage. For the past several years, U.S. corn and soybean crops have experienced strong growth in both productivity and output, thus helping to build stockpiles at the end of several successive marketing years through the 2018 season. ", "In 2018, U.S. farmers produced a record U.S. soybean harvest of 4.4 billion bushels and record-ending stocks (909 million bushels or a 22.9% stocks-to-use ratio) that year ( Figure 3 ). The record soybean harvest in 2018, combined with the sudden loss of the Chinese soybean market, kept downward pressure on U.S. soybean prices. Despite a smaller crop and lower stocks in 2019, the reduction in volume of U.S. soybean exports to China has prevented a major price recovery.", "Similarly, several consecutive years of bumper U.S. corn crops have built domestic corn supplies. U.S. corn ending stocks in 2019 are projected down slightly to 1.8 billion bushels after three consecutive years of above 2-billion-bushel ending stock totals. U.S. wheat and cotton supplies are also expected to decline relative to use levels in 2019 but remain high relative to the historical average thus limiting price recovery."], "subsections": []}, {"section_title": "Livestock Outlook for 2020", "paragraphs": ["Because the livestock sectors (particularly dairy and cattle but hogs and poultry to a lesser degree) have longer biological lags and often require large capital investments up front, they are slower to adjust to changing market conditions than is the crop sector. As a result, USDA projects livestock and dairy production and prices an extra year into the future (compared with the crop sector) through 2020, and market participants consider this expanded outlook when deciding their market interactions (e.g., buy, sell, expand herd sizes). "], "subsections": [{"section_title": "Background on the U.S. Cattle-Beef Sector", "paragraphs": ["During the 2007-2014 period, high feed and forage prices plus widespread drought in the Southern Plains\u00e2\u0080\u0094the largest U.S. cattle production region\u00e2\u0080\u0094resulted in an 8% contraction of the U.S. cattle inventory. Reduced beef supplies led to higher producer and consumer prices and record profitability among cow-calf producers in 2014. This was coupled with a subsequent improvement in forage conditions, all of which helped to trigger the slow rebuilding phase in the cattle cycle that started in 2014 ( Figure 4 ). The expansion continued through 2019 despite weakening profitability, primarily due to the lag in the biological response to the strong market price signals of late 2014.", "However, the cattle expansion appears to show the first signs of contraction in USDA's January 2020 U.S. cattle inventory report. The estimated cattle and calf population was down slightly from a year earlier at 94.4 million (compared with 94.8 million in January 2019). A factor working against continued expansion in cattle numbers is that producers are now producing more beef with fewer cattle as a result of heavier weights for marketed cattle."], "subsections": []}, {"section_title": "Robust Production Growth Projected Across the Livestock Sector", "paragraphs": ["Similar to the cattle sector, U.S. hog and poultry flocks have been growing in recent years, but unlike cattle they are expected to continue to expand in 2020. USDA projects production of beef (+1.2%), pork (+4.5%), broilers (+4.3%), and eggs (+1.8%) to expand robustly through 2020. A key uncertainty for the meat-producing sector is whether demand will expand rapidly enough to absorb the continued growth in output or whether surplus production will begin to pressure prices lower. USDA projects that combined domestic and export demand for 2020 will flatten for red meat (+0.0%) but expand for poultry (+3.9%)."], "subsections": []}, {"section_title": "Livestock-Price-to-Feed-Cost Ratios Signal Lower Profitability Outlook", "paragraphs": ["The changing conditions for the U.S. livestock sector may be tracked by the evolution of the ratios of livestock output prices to feed costs ( Figure 5 ). A higher ratio suggests greater profitability for producers. The cattle-, hog-, and broiler-to-feed ratios have all exhibited significant volatility during the 2017-2019 period but in general have trended downward during 2018 and 2019, suggesting eroding profitability. The milk-to-feed price ratio has trended upward since mid-2018 into 2020. This result varies widely across the United States. Many marginally profitable cattle, hog, broiler, and milk producers face continued financial difficulties. ", "Continued strong production growth of between 1% and 5% for red meat and poultry suggests that prices are vulnerable to weakness in demand. USDA projects that the price increase for hogs will slow in 2020, up 2.2% after 4.4% growth in 2019 ( Table A-4 ). Similarly, U.S. milk production is projected to continue growing in 2020 (+1.7%). Despite this production growth, USDA projects U.S. milk prices up slightly in 2020 (+1.3%). "], "subsections": []}]}, {"section_title": "Gross Cash Income Highlights", "paragraphs": ["Projected farm-sector revenue sources in 2020 include crop revenues (46% of sector revenues), livestock receipts (43%), government payments (3%), and other farm-related income (7%), including crop insurance indemnities, machine hire, and custom work. Total farm sector gross cash income for 2020 is projected down (-0.3%) to $430.9 billion, driven by declines in both direct government payments (-36.6%) and other farm-related income (-8.0%). Cash receipts from crop receipts (+1.0%) and livestock product (+4.6%) are up a combined (+4.6%) ( Figure 6 ). "], "subsections": [{"section_title": "Crop Receipts", "paragraphs": ["Total crop sales peaked in 2012 at $231.6 billion when a nationwide drought pushed commodity prices to record or near-record levels. In 2020, crop sales are projected at $198.6 billion, up 1.0% from 2019 ( Figure 7 and Figure 8 ). Projections for 2020 and percentage changes from 2019 include", "Feed crops\u00e2\u0080\u0094corn, barley, oats, sorghum, and hay: $60.1 billion (+2.0%); Oil crops\u00e2\u0080\u0094soybeans, peanuts, and other oilseeds: $36.8 billion (-2.3%); Fruits and nuts: $31.0 billion (+6.3%); Vegetables and melons: $20.1 billion (-1.8%); Food grains\u00e2\u0080\u0094wheat and rice: $11.3 billion (+1.4%); Cotton: $7.1 billion (+2.1%); and Other including tobacco, sugar, greenhouse, and nursery: $31.2 billion (-0.6%)."], "subsections": []}, {"section_title": "Livestock Receipts", "paragraphs": ["The livestock sector includes cattle, hogs, sheep, poultry and eggs, dairy, and other minor activities. Cash receipts for the livestock sector grew steadily from 2009 to 2014, when it peaked at a record $212.3 billion. However, the sector turned downward in 2015 (-10.7%) and again in 2016 (-14.1%), driven largely by projected year-over-year price declines across major livestock categories ( Table A-4 , Figure 9 , and Figure 10 ). ", "In 2017, livestock sector cash receipts recovered with year-to-year growth of 8.1% to $175.6 billion. Cash receipts increased slightly in 2018 (+0.5%) and 2019 (+0.6%). In 2020, cash receipts are projected up strongly (+4.6%) for the sector at $185.8 billion as increased cattle, hogs, and dairy sales offset declines in poultry. Projections for 2020 (and percentage changes from 2019) include", "Cattle and calf sales: $69.0 billion (+1.6%), Poultry and egg sales: $40.1 billion (+1.7%), Dairy sales: $42.5 billion (+5.2%), Hog sales: $27.1 billion (+18.4%), and Miscellaneous livestock: $7.1 billion (+2.0%)."], "subsections": []}, {"section_title": "Government Payments", "paragraphs": ["Historically, direct government farm program payments have included", "Direct payments (decoupled payments based on historical planted acres); Price-contingent payments (both coupled and decoupled program outlays linked to market conditions); Conservation payments (including the Conservation Reserve Program and other environmental-based outlays); Ad hoc and emergency disaster assistance payments (including emergency supplemental crop and livestock disaster payments and market loss assistance payments for relief of low commodity prices); and Other miscellaneous outlays, including payments under ad hoc programs initiated by the Administration such as the Market Facilitation Program (MFP) or the cotton ginning cost-share programs but also legislatively authorized programs such as the biomass crop assistance program, peanut quota buyout, milk income loss, tobacco transition, and other miscellaneous programs.", "Projected government payments of $15.0 billion in 2020, if realized, would represent a 36.6% decline from 2019 but would still be the second-largest since 2006. The $23.6 billion in federal payments in 2019 was the largest taxpayer transfer to the agriculture sector (in absolute dollars) since 2005 ( Figure 12 and Table A-1 ). The surge in federal subsidies in 2019 was driven by large \"trade-damage\" payments made under the MFP initiated by USDA in response to the U.S.-China trade dispute. MFP payments (reported to be $14.6 billion) in 2019 include outlays from the 2018 MFP program that were not received by producers until 2019, as well as payments under the first and second tranches of the 2019 MFP program. In 2020, MFP payments are projected to decline to $3.7 billion representing the third and final tranche of payments from the 2019 MFP program. No new MFP program has been announced for 2020 by the Administration.", "USDA permanent disaster assistance is projected higher year-over-year in 2020 at $2.5 billion (+14.2%). Most of the $2.5 billion comes from a new, temporary program, the Wildfire and Hurricane Indemnity Program Plus, enacted through the Disaster Relief Act of 2019 ( P.L. 116-20 ). Payments under the Price Loss Coverage program are projected at $3.9 billion in 2020, up from $1.9 billion in 2019. In contrast, Agricultural Risk Coverage outlays are projected to decline to $39 million, down from $641 million in 2019 (see \"Price Contingent\" in Figure 12 ). ", "Conservation programs include all conservation programs operated by USDA's Farm Service Agency and the Natural Resources Conservation Service that provide direct payments to producers. Estimated conservation payments of $4.2 billion are forecast for 2020, up (+4.4%) from $4.0 billion in 2019.", "Total government payments of $15.0 billion represents a 3.5% share of projected gross cash income of $432.2 billion in 2020 ( Figure 6 ). In contrast, government payments are expected to represent 15.5% of the projected net cash income of $109.6 billion ( Figure 11 ). The government share of net farm income reached a peak of 65.2% in 1984 during the height of the farm crisis of the 1980s. The importance of government payments as a percentage of net farm income varies nationally by crop and livestock sector and by region."], "subsections": []}, {"section_title": "Dairy Margin Coverage Program Outlook", "paragraphs": ["The 2018 farm bill ( P.L. 115-334 ) made several changes to the previous Margin Protection Program (MPP) for dairy, including a new name\u00e2\u0080\u0094the Dairy Margin Coverage (DMC) program\u00e2\u0080\u0094and expanded margin coverage choices from the original range of $4.00-$8.00 per hundredweight (cwt.). Under the 2018 farm bill, as a cushion against low milk prices, producers have the option of buying coverage to insure a margin between the national farm price of milk and the cost of feed up to a threshold of $9.50/cwt. on the first 5 million pounds of milk coverage. ", "The DMC margin differs from the USDA-reported milk-to-feed ratio (shown in Figure 5 ) but reflects the same market forces. In August 2019, the formula-based milk-to-feed margin used to determine government payments rose to $9.85/cwt., thus exceeding the newly instituted $9.50/cwt. payment threshold ( Figure 13 ) and decreasing the likelihood of DMC payments in the near future. Since then, the DMC margin continued its rise to $12.21 in November 2019. These increases in the DMC margin decrease the likelihood that DMC payments will be available during the first half of 2020. Despite these price movements, USDA projects that the DMC program will make $637 million in payments in 2020, up from $279 million in 2019."], "subsections": []}]}, {"section_title": "Production Expenses", "paragraphs": ["Total production expenses for 2020 for the U.S. agricultural sector are projected to be up by $10.4 billion (+3.0%) from 2019 in nominal dollars at $354.7 billion ( Figure 14 ). Production expenses peaked in both nominal and inflation-adjusted dollars in 2014 then declined for five consecutive years in inflation-adjusted dollars but are projected to turn up again in 2020. ", "Production expenses affect crop and livestock farms differently. The principal expenses for livestock farms are feed costs, purchases of feeder animals and poultry, and hired labor. In contrast, fuel, seed, pesticides, interest, and fertilizer costs are major crop production expenses. USDA projects that all expense categories with the exception of interest rates will be up in 2020 ( Figure 15 ). But how have production expenses moved relative to revenues? A comparison of the indexes of prices paid (an indicator of expenses) versus prices received (an indicator of revenues) reveals that the prices received index generally declined from 2014 through 2016, rebounded in 2017, then trended lower through 2019 ( Figure 16 ). Farm input prices (as reflected by the prices paid index) showed a similar pattern but with a smaller decline from their 2014 peak and have climbed steadily since mid-2016, suggesting that farm sector profit margins have been squeezed since 2016."], "subsections": []}]}, {"section_title": "Farm Asset Values and Debt", "paragraphs": ["A measure of the farm sector's financial well-being is net worth as measured by farm assets minus farm debt. A summary statistic that captures this relationship is the debt-to-asset ratio.", "The U.S. farm income and asset-value situation and outlook suggest a slowly eroding financial situation heading into 2020 for the agriculture sector as a whole. Considerable uncertainty clouds the economic outlook for the sector, reflecting the mixed outlook for prices and market conditions, an increasing dependency on international markets to absorb domestic surpluses, and an increasing dependency on federal support to offset lost trade opportunities due to ongoing trade disputes.", "Farm asset values (see box \"Measuring Farm Wealth: The Debt-to-Asset Ratio\" below for details)\u00e2\u0080\u0094which reflect farm investors' and lenders' expectations about long-term profitability of farm sector investments\u00e2\u0080\u0094are projected to be up 1.3% in 2020 to a nominal $3.1 trillion ( Table A-3 ). The projected rise in asset value is due to increases in both real estate values (+1.5%) and non-real-estate values (+0.6%). Real estate is projected to account for 83% of total farm sector asset value. Inflation-adjusted farm asset values (using 2019 dollars) are projected lower in 2020 (-0.6%). In inflation-adjusted terms, farm asset values peaked in 2014 ( Figure 17 ). Crop land values are closely linked to commodity prices. The leveling off of crop land values since 2015 reflects stagnant commodity prices ( Figure 18 ).", " Total farm debt is forecast to rise to a record $425.3 billion in 2020 (+2.3%) ( Table A-3 ). Farm equity\u00e2\u0080\u0094or net worth, defined as asset value minus debt\u00e2\u0080\u0094is projected to be up slightly (+1.1%) at $2.7 trillion in 2020 ( Table A-3 ). The farm debt-to-asset ratio is forecast up in 2020 at 13.6%, the highest level since 2003 but still relatively low by historical standards ( Figure 19 ). If realized, this would be the eighth consecutive year of increase in the debt-to-asset ratio."], "subsections": []}, {"section_title": "Average Farm Household Income", "paragraphs": ["A farm can have both an on-farm and an off-farm component to its income statement and balance sheet of assets and debt. Thus, the well-being of farm operator households is not equivalent to the financial performance of the farm sector or of farm businesses because of the inclusion of nonfarm investments, jobs, and other links to the nonfarm economy. ", "Average farm household income (sum of on- and off-farm income) is projected at $118,908 in 2020 ( Table A-2 ), down 1.5% from 2019 and 11.4% below the record of $134,165 in 2014. About 18% ($20,926) of total farm household income in 2020 is projected to be from farm production activities, while the overwhelming majority, at 82% ($97,982), is earned off the farm (including financial investments). The share of farm income derived from off-farm sources had increased steadily for decades but peaked at about 95% in 2000 ( Figure 20 ). Since 2014, over half of U.S. farm operations have had negative income from their agricultural operations. "], "subsections": [{"section_title": "Total vs. Farm Household Average Income", "paragraphs": ["Since the late 1990s, farm household incomes have surged ahead of average U.S. household incomes ( Figure 21 ). In 2018 (the last year for which comparable data were available), the average farm household income of $112,211 was about 25% higher than the average U.S. household income of $90,021 ( Table A-2 )."], "subsections": [{"section_title": "Appendix. Supporting Charts and Tables", "paragraphs": [" Figure A-1 to Figure A-4 present USDA data on monthly farm prices received for several major farm commodities\u00e2\u0080\u0094corn, soybeans, wheat, upland cotton, rice, milk, cattle, hogs, and chickens. The data are presented in an indexed format where monthly price data for year 2010 = 100 to facilitate comparisons. ", "USDA Farm Income Data Tables", " Table A-1 to Table A-3 present aggregate farm income variables that summarize the financial situation of U.S. agriculture. In addition, Table A-4 presents the annual average farm price received for several major commodities, including the USDA forecast for the 2019-2020 marketing year for major program crops and 2020-2021 for livestock products."], "subsections": []}]}]}]}}
{"id": "R46341", "title": "Federal Research and Development (R&D) Funding: FY2021", "released_date": "2020-04-30T00:00:00", "summary": ["President Trump's budget request for FY2021 includes approximately $142.2 billion for research and development (R&D) for FY2021, $13.8 billion (8.8%) below the FY2020 enacted level of $156.0 billion. In constant FY2020 dollars, the President's FY2021 R&D request would result in a decrease of $16.6 billion (10.6%) from the FY2020 level.", "F ederal Research and Development Funding, FY2019-FY2021 In billions of dollars", "In 2017, the Office of Management and Budget (OMB) adopted a change to the definition of development, applying a more narrow treatment that it describes as \"experimental development.\" This change was intended to harmonize the reporting of U.S. R&D funding data with the approach used by other nations. The new definition is used in this report.", "Funding for R&D is concentrated in a few departments and agencies. In FY2020, five federal agencies received 93.2% of total federal R&D funding, with the Department of Defense (DOD, 41.4%) and the Department of Health and Human Services (HHS, 26.2%) combined accounting for more than two-thirds of all federal R&D funding. In the FY2021 request, the top five R&D agencies would account for 93.8%, with DOD accounting for 42.1% and HHS for 26.6%.", "Under the President's FY2021 budget request, nearly all federal agencies would see their R&D funding decline relative to FY2020. The only exception is the Department of Veterans Affairs, which would increase by $38 million (2.9%) in FY2021 to $1.351 billion. The largest dollar reductions in R&D funding would be made to the DOD (down $4.713 billion), the Department of Energy (down $3.168 billion), and HHS (down $2.843 billion). The largest percentage declines in R&D funding would be at the Department of Transportation (down 47.6%), the Environmental Protection Agency (down 35.4%), and Department of the Interior (down 25.5%)", "The President's FY2021 budget request would reduce funding for basic research by $2.822 billion (6.5%), applied research by $5.125 billion (11.7%), development by $3.466 billion (5.5%), and facilities and equipment by $2.375 billion (39.6%).", "Several multiagency R&D initiatives continue under the President's FY2021 budget. Some activities supporting these initiatives are discussed in agency budget justifications and are reported in the agency analyses in this report. However, comprehensive aggregate budget information on these initiatives will likely not be available until budget supplements for each are released later in the year.", "The request represents the President's R&D priorities. Congress may opt to agree with none, part, or all of the request, and it may express different priorities through the appropriations process. In recent years, Congress has completed the annual appropriations process after the start of the fiscal year. Completing the process after the start of the fiscal year and the accompanying use of continuing resolutions can affect agencies' execution of their R&D budgets, including the delay or cancellation of planned R&D activities and the acquisition of R&D-related equipment.", "It is not yet clear how the national response to the Coronavirus Disease 2019 (COVID-19) pandemic will affect Administration and congressional priorities for FY2021 R&D funding, or the congressional authorization and appropriations processes for enacting that funding."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["The 116 th Congress continues its interest in U.S. research and development (R&D) and in evaluating support for federal R&D activities. The federal government has played an important role in supporting R&D efforts that have led to scientific breakthroughs and new technologies, from jet aircraft and the internet to communications satellites, shale gas extraction, and defenses against disease. In recent years, federal budget caps have driven executive and legislative branch decisions about the prioritization of R&D, both in the context of the entire federal budget and among competing needs within the federal R&D portfolio. The Bipartisan Budget Act of 2019, among other things, increased the previously established FY2020 and FY2021 discretionary spending limits for defense and nondefense spending. This act reduced some of the budgetary constraints affecting R&D decisions.", "The U.S. government supports a broad range of scientific and engineering R&D. Its purposes include addressing national defense, health, safety, the environment, and energy security; advancing knowledge generally; developing the scientific and engineering workforce; and strengthening U.S. innovation and competitiveness in the global economy. Most of the R&D funded by the federal government is performed in support of the unique missions of individual funding agencies.", "The federal R&D budget is an aggregation of the R&D activities of these agencies. There is no single, centralized source of R&D funds. Agency R&D budgets are developed internally as part of each agency's overall budget development process. R&D funding may be included either in accounts that are entirely devoted to R&D or in accounts that also include funding for non-R&D activities. Agency budgets are subjected to review, revision, and approval by the Office of Management and Budget (OMB) and become part of the President's annual budget submission to Congress. The federal R&D budget is then calculated by aggregating the R&D activities of each federal agency. ", "Congress plays a central role in defining the nation's R&D priorities as it makes decisions about the level and allocation of R&D funding\u00e2\u0080\u0094overall, within agencies, and for specific programs. In recent years, some Members of Congress have expressed concerns about the level of federal spending (for R&D and for other purposes) in light of the federal deficit and debt. Other Members of Congress have expressed support for increased federal spending for R&D as an investment in the nation's future competitiveness. As Congress acts to complete the FY2021 appropriations process, it faces two overarching issues: the amount of the federal budget to be spent on federal R&D and the prioritization and allocation of the available funding.", "This report begins with a discussion of the overall level of R&D in President Trump's FY2021 budget request, followed by analyses of R&D funding in the request from a variety of perspectives and for selected multiagency R&D initiatives. The remainder of the report discusses and analyzes the R&D budget requests of selected federal departments and agencies that, collectively, account for approximately 98% of total federal R&D funding. ", "Selected terms associated with federal R&D funding are defined in the text box on the next page. Appendix A provides a list of acronyms and abbreviations."], "subsections": []}, {"section_title": "The President's FY2021 Budget Request", "paragraphs": ["On February 10, 2020, President Trump released his proposed FY2021 budget. President Trump is proposing $142.2 billion for R&D for FY2021, a decrease of $13.8 billion (8.8%) below the FY2020 level of $156.0 billion. Adjusted for inflation to FY2021 dollars, the President's FY2021 R&D request represents a constant-dollar decrease of 10.6% from the FY2020 actual level.", "The President's request includes continued R&D funding for existing single-agency and multiagency programs and activities, as well as new initiatives. This report provides government-wide, multiagency, and individual agency analyses of the President's FY2021 request as it relates to R&D and related activities. Additional information and analysis will be included as the House and Senate act on the President's budget request through appropriations bills.", "It is not yet clear how the national response to the Coronavirus Disease 2019 (COVID-19) pandemic will affect Administration and congressional priorities for FY2021 R&D funding, or the congressional authorization and appropriations processes for enacting that funding."], "subsections": []}, {"section_title": "Federal R&D Funding Perspectives", "paragraphs": ["Federal R&D funding can be analyzed from a variety of perspectives that provide different insights. The following sections examine the data by agency, by the character of the work supported, and by a combination of these two perspectives."], "subsections": [{"section_title": "Federal R&D by Agency", "paragraphs": ["Congress makes decisions about R&D funding through the authorization and appropriations processes primarily from the perspective of individual agencies and programs. Table 1 provides data on R&D funding by agency for FY2019 (actual), FY2020 (enacted), and FY2021 (request). ", "Under the request, eight federal agencies would receive nearly 98% of total federal R&D funding in FY2021: the Department of Defense (DOD), 42.1%; Department of Health and Human Services (HHS), primarily the National Institutes of Health (NIH), 26.6%; Department of Energy (DOE), 11.3%; National Aeronautics and Space Administration (NASA), 9.4%; National Science Foundation (NSF), 4.5%; Department of Agriculture (USDA), 1.9%; Department of Commerce (DOC), 1.1%; and Department of Veterans Affairs (VA), 1.0%. This report provides an analysis of the R&D budget requests for these agencies, as well as for the Department of Homeland Security (DHS), Department of the Interior (DOI), Department of Transportation (DOT), and Environmental Protection Agency (EPA). ", "All but one federal agency would see their R&D funding decrease under the President's FY2021 request compared to their FY2020 enacted level. The only agency that would see an increase in R&D funding in FY2021 relative to the FY2020 level would be the VA (up $38 million, 2.9%).", "The agencies with the largest R&D funding declines (measured in dollars) in the FY2021 request compared to FY2020 enacted level are DOD (down $4.713 billion), DOE (down $3.168 billion), HHS (down $2.943 billion), NASA (down $723 million), and DOT (down $540 million). See Table 1 .", "The agencies with the largest percentage declines in R&D funding in the FY2021 request compared to FY2020 enacted level are DOT (down 47.6%), EPA (down 35.4%), DOI (down 25.5%), DOC (down 22.7%), and DOE (down 16.5%). See Table 1 ."], "subsections": []}, {"section_title": "Federal R&D by Character of Work, Facilities, and Equipment", "paragraphs": ["Federal R&D funding can also be examined by the character of work it supports\u00e2\u0080\u0094basic research, applied research, or development\u00e2\u0080\u0094and by funding provided for construction of R&D facilities and acquisition of major R&D equipment. (See Table 2 .) President Trump's FY2021 request includes $40.638 billion for basic research, down $2.822 billion (6.5%) from FY2020 enacted level; $38.805 billion for applied research, down $5.125 billion (11.7%); $59.112 billion for development, down $3.466 billion (5.5%); and $3.630 billion for facilities and equipment, down $2.375 billion (39.6%). "], "subsections": []}, {"section_title": "Federal Role in U.S. R&D by Character of Work", "paragraphs": ["A primary policy justification for public investments in basic research and for incentives (e.g., tax credits) for the private sector to conduct research is the view, widely held by economists, that the private sector will, left on its own, underinvest in basic research from a societal perspective. The usual argument for this view is that the social returns (i.e., the benefits to society at large) exceed the private returns (i.e., the benefits accruing to the private investor, such as increased revenues or higher stock value). Other factors that may inhibit corporate investment in basic research include long time horizons for achieving commercial applications (diminishing the potential returns due to the time value of money), high levels of technical risk and uncertainty, shareholder demands for shorter-term returns, and asymmetric and imperfect information. ", "The federal government is the nation's largest supporter of basic research, funding 42% of U.S. basic research in 2018 (the most recent year for which comprehensive data are available). Business funded 29% of U.S. basic research in 2018, with state governments, universities, and other nonprofit organizations funding the remaining 30%. For U.S. applied research, business is the primary funder, accounting for an estimated 54% in 2018, while the federal government accounted for an estimated 34%. State governments, universities, and other nonprofit organizations funded the remaining 11%. Business also provides the vast majority of U.S. funding for development. Business accounted for 85% of development funding in 2018, while the federal government provided 13%. State governments, universities, and other nonprofit organizations funded the remaining 2% (see Figure 1 )."], "subsections": []}, {"section_title": "Federal R&D by Agency and Character of Work Combined", "paragraphs": ["Federal R&D funding can also be viewed from the combined perspective of each agency's contribution to basic research, applied research, development, and facilities and equipment. Table 3 lists the three agencies with the most funding in each of these categories as proposed in the President's FY2021 budget. The overall federal R&D budget reflects a wide range of national priorities, including supporting advances in spaceflight, developing new and affordable sources of energy, and understanding and deterring terrorist groups. These priorities and the mission of each individual agency contribute to the composition of that agency's R&D spending (i.e., the allocation of R&D funding among basic research, applied research, development, and facilities and equipment). ", "In the President's FY2021 budget request, the Department of Health and Human Services, primarily NIH, would account for nearly half (47.1%) of all federal funding for basic research. HHS would also be the largest federal funder of applied research, accounting for about 47.3% of all federally funded applied research in the President's FY2021 budget request. DOD would be the primary federal funder of development, accounting for 88.0% of total federal development funding in the President's FY2021 budget request. DOE would be the primary federal funder of facilities and equipment, accounting for 58.7% of total federal facilities and equipment funding in the President's FY2021 budget request."], "subsections": []}]}, {"section_title": "Multiagency R&D Initiatives", "paragraphs": ["For many years, presidential budgets have reported on multiagency R&D initiatives. Often, they have also provided details of agency funding for these initiatives. Some of these efforts have a statutory basis\u00e2\u0080\u0094for example, the Networking and Information Technology Research and Development (NITRD) program, the National Nanotechnology Initiative (NNI), and the U.S. Global Change Research Program (USGCRP). These programs generally produce annual budget supplements identifying objectives, activities, funding levels, and other information, usually published shortly after the presidential budget release. Other multiagency R&D initiatives have operated at the discretion of the President, without such a basis, and may be eliminated at the discretion of the President. President Trump's FY2021 budget is largely silent on funding levels for these efforts and whether any or all of the nonstatutory initiatives will continue. Some activities related to these initiatives are discussed in agency budget justifications and may be addressed in the agency analyses later in this report. This section provides available multiagency information on these initiatives and will be updated as additional information becomes available."], "subsections": [{"section_title": "Networking and Information Technology Research and Development Program (NITRD)8", "paragraphs": ["Established by the High-Performance Computing Act of 1991 ( P.L. 102-194 ), the Networking and Information Technology Research and Development program is the primary mechanism by which the federal government coordinates its unclassified networking and information technology R&D investments in areas such as supercomputing, high-speed networking, cybersecurity, software engineering, and information management. According to NITRD, it coordinates the information technology R&D activities of 24 federal agency members and more than 45 other participating agencies with program interests and activities in IT R&D. NITRD efforts are coordinated by the National Science and Technology Council (NSTC) Subcommittee on Networking and Information Technology Research and Development.", "P.L. 102-194 , as reauthorized by the American Innovation and Competitiveness Act of 2017 ( P.L. 114-329 ), requires the director of NITRD to prepare an annual report to be delivered to Congress along with the President's budget request. This annual report, often referred to as a budget supplement, is to include, among other things, detailed information on the program's budget for the current and previous fiscal years and the proposed budget for the next fiscal year. The latest annual report was published in September 2019 and related to the FY2020 budget request. President Trump requested $5.506 billion for NITRD research in FY2020, a decrease of $195 million (3.4%) from the estimated FY2019 level (see Table 4 ). For additional information on the NITRD program, see CRS Report RL33586, The Federal Networking and Information Technology Research and Development Program: Background, Funding, and Activities , by Patricia Moloney Figliola. Additional NITRD information also can be obtained at https://www.nitrd.gov ."], "subsections": []}, {"section_title": "U.S. Global Change Research Program (USGCRP)11", "paragraphs": ["The U.S. Global Change Research Program coordinates and integrates federal research and applications to understand, assess, predict, and respond to human-induced and natural processes of global change. The program seeks to advance global climate change science and to \"build a knowledge base that informs human responses to climate and global change through coordinated and integrated Federal programs of research, education, communication, and decision support.\" In FY2019, 10 departments and agencies received appropriations for their USGCRP participation. USGCRP efforts are coordinated by the NSTC Subcommittee on Global Change Research. Each agency develops and carries out its activities as its contribution to the USGCRP, and funds are appropriated to each agency for those activities; those activities may or may not be identified as associated with the USGCRP in agency budget justifications or other program materials available publicly. Complementing USGCRP activities are many federal climate change or global change-related activities with programmatic missions, not predominantly scientific. These are reported separately in budget justifications.", "The Global Change Research Act of 1990 (GCRA) ( P.L. 101-606 ) requires each federal agency or department involved in global change research to report annually to Congress on each element of its proposed global change research activities, as well as the portion of its budget request allocated to each element of the program. The President is also required to identify those activities and the annual global change research budget in the President's annual budget request. The President's budget requests for years later than FY2017 do not report these budget data required by the GCRA, although some agencies report their contributions in their budget justifications to Congress. ", "In addition, in the 20 years prior to FY2018, language in appropriations laws required the President to submit a comprehensive report to the appropriations committees \"describing in detail all Federal agency funding, domestic and international, for climate change programs, projects, and activities \u00e2\u0080\u00a6 including an accounting of funding by agency\u00e2\u0080\u00a6.\" As these are no longer reported by the Office of Management and Budget, Table 5 presents data compiled by CRS from communications with departments and agencies that participated in the USGCRP in FY2018. ", "For additional information on the USGCRP, see CRS Report R43227, Federal Climate Change Funding from FY2008 to FY2014 , by Jane A. Leggett, Richard K. Lattanzio, and Emily Bruner. Additional USGCRP information can be obtained at http://www.globalchange.gov ."], "subsections": []}, {"section_title": "National Nanotechnology Initiative (NNI)15", "paragraphs": ["Launched in FY2001, the National Nanotechnology Initiative is a multiagency R&D initiative to advance understanding and control of matter at the nanoscale, where the physical, chemical, and biological properties of materials differ in fundamental and sometimes useful ways from the properties of individual atoms or bulk matter. In 2003, Congress enacted the 21 st Century Nanotechnology Research and Development Act ( P.L. 108-153 ), providing a legislative foundation for some of the activities of the NNI. NNI efforts are coordinated by the NSTC Subcommittee on Nanoscale Science, Engineering, and Technology (NSET). For FY2020, the President's request included NNI funding for 15 federal departments and independent agencies and commissions with budgets dedicated to nanotechnology R&D. The NSET includes other federal departments and independent agencies and commissions with responsibilities for health, safety, and environmental regulation; trade; education; intellectual property; international relations; and other areas that might affect or be affected by nanotechnology. ", "P.L. 108-153 requires the NSTC to prepare an annual report to be delivered to Congress at the time the President's budget request is sent to Congress. This annual report, often referred to as a budget supplement, is to include detailed information on the program's budget for the current fiscal year and the program's proposed budget for the next fiscal year, as well as additional information and data related to the performance of the program. The latest annual report was published in August 2019 and related to the FY2020 budget request. President Trump requested $1.469 billion for NNI research in FY2020, a decrease of $103 million (6.6%) from the estimated FY2019 level. ", "For additional information on the NNI, see CRS Report RL34401, The National Nanotechnology Initiative: Overview, Reauthorization, and Appropriations Issues , by John F. Sargent Jr. Additional NNI information can be obtained at http://www.nano.gov ."], "subsections": []}, {"section_title": "Other Highlighted R&D in the President's FY2021 Budget", "paragraphs": ["The President's FY2021 budget highlights R&D spending in several areas discussed in the following sections."], "subsections": [{"section_title": "Science and Technology Supporting the \"Industries of the Future\"", "paragraphs": ["The President's FY2021 budget states the Administration's prioritization for areas of science and technology that it asserts will underpin the Industries of the Future (IotF), among other prioritizations and reallocations in lower priority areas. ", "For 2021, the Administration is prioritizing the science and technology that underpin the Industries of the Future (IotF)\u00e2\u0080\u0094artificial intelligence (AI), quantum information science (QIS), 5G/advanced communications, biotechnology, and advanced manufacturing. Relative to the 2020 President's Budget, this includes major increases in QIS and non-defense AI R&D as part of a commitment to double Federal AI and QIS R&D investments by 2022. R&D investments in AI and QIS, in particular, act as innovation multipliers and employment drivers, not only by promoting S&T progress across many disciplines, but also by helping to build a highly-skilled American workforce. Other IotF areas, such as biotechnology and advanced manufacturing, are poised for potentially transformative advances. Together, IotF investments are vital to the Nation's global competitiveness and the health, prosperity, and security of the American people."], "subsections": [{"section_title": "Artificial Intelligence (AI)20", "paragraphs": ["On February 11, 2019, President Trump issued Executive Order 13859, \"Maintaining American Leadership in Artificial Intelligence,\" launching the American AI Initiative and later that year defined the effort's priority investment areas in The National Artificial Intelligence Research and Development Strategic Plan: 2019 Update .", "The FY2021 budget states that AI \"is transforming every segment of American life, with applications ranging from medical diagnostics and precision agriculture, to autonomous transportation, job reskilling and upskilling and national defense, and beyond.\"", "The FY2021 budget includes increases in the AI R&D budget as part of its efforts to double non-defense AI R&D funding by FY2022. The President's proposed AI R&D funding for FY2021 includes", "A 76% increase in the AI R&D budget of the National Science Foundation to $868 million over the FY2020 level, for AI-related research and the creation of several National AI Research Institutes, in collaboration with USDA, DHS, DOT, and VA. The institutes are to support multisector, multidisciplinary research and workforce efforts among academia, industry, federal agencies, and nonprofits. An additional $100 million for the USDA Agriculture and Food Research Initiative (AFRI) for AI and machine learning research to promote advanced manufacturing in the food and agricultural sciences, as well as to continue efforts in robotics and the application of big data to precision agriculture. $125 million for DOE's Office of Science, a $54 million increase over the FY2020 request. $50 million for NIH research on chronic diseases using AI and related approaches. $459 million for DARPA AI R&D, an increase of $50 million from the FY2020 request. $290 million for DOD's Joint AI Center, up from $242 million in FY2020."], "subsections": []}, {"section_title": "Quantum Information Science25", "paragraphs": ["The FY2021 budget seeks an increase of more than 50% for federal quantum information science (QIS) funding over the FY2020 budget as part of the Administration's goal of doubling funding for QIS by FY2022. The President's proposed QIS R&D funding for FY2021 includes", "$230 million for NSF to support the National Quantum Initiative, $120 million above the FY2020 level. $237 million for the DOE Office of Science, an increase of approximately $75 million, for QIS work at the national laboratories and in academia and industry. $25 million for the DOE Office of Science to support early stage research for a quantum internet. ", "Additionally, the budget provides", "funding for NIST work in QIS standards and engineering efforts in quantum systems; funding for the defense and intelligence community for QIS science and technology, new applications, and industrial engagement; and initial funding for NASA to explore the potential for a space-based quantum entanglement experiment.", "The President's budget also includes an additional $50 million for NSF, compared to the 2020 budget, for education and workforce development for AI and QIS, with focused outreach efforts to community colleges, Historically Black Colleges and Universities (HBCUs), and Minority Serving Institutions (MSIs)."], "subsections": []}]}, {"section_title": "National Security", "paragraphs": ["The President's FY2021 budget also highlights investments in national security-related R&D, including more than $59 billion in research, engineering, and prototyping activities in FY2021 to enable advanced military capabilities, including work in \"offensive and defensive hypersonic weapons capabilities, resilient national security space systems, and modernized and flexible strategic and nonstrategic nuclear deterrent capabilities.\"", "The FY2021 budget request for Department of Homeland Security R&D includes $83 million for detection and defense against radiological, nuclear, chemical, and biological threats; $44 million for improving resilience to natural disasters and physical threats, for first responder technologies and public safety, and for cross-border threat screening and supply chain defense; and $38 million for cybersecurity."], "subsections": []}]}]}, {"section_title": "Department of Defense28", "paragraphs": ["The mission of the Department of Defense is to provide \"the military forces needed to deter war and ensure our nation's security.\" Congress supports research and development activities at DOD primarily through the department's Research, Development, Test, and Evaluation (RDT&E) funding. These funds support the development of the nation's future military hardware and software and the science and technology base upon which those products rely.", "Most of what DOD spends on RDT&E is appropriated in Title IV of the annual defense appropriations bill. (See Table 7 .) Title IV RDT&E funds support activities such as R&D performed by academic institutions, DOD laboratories, and companies, as well as test and evaluation activities at specialized DOD facilities, among other things. However, RDT&E funds are also appropriated in other parts of the bill. For example, RDT&E funds are appropriated as part of the Defense Health Program, the Chemical Agents and Munitions Destruction Program, and the National Defense Sealift Fund. The Defense Health Program (DHP) supports the delivery of health care to DOD personnel and their families. DHP funds (including the RDT&E funds) are requested through the Defense-wide Operations and Maintenance appropriations request. The program's RDT&E funds support congressionally directed research on breast, prostate, and ovarian cancer; traumatic brain injuries; orthotics and prosthetics; and other medical conditions. Congress appropriates funds for this program in Title VI (Other Department of Defense Programs) of the defense appropriations bill. The Chemical Agents and Munitions Destruction Program supports activities to destroy the U.S. inventory of lethal chemical agents and munitions to avoid future risks and costs associated with storage. Funds for this program are requested through the Defense-wide Procurement appropriations request. Congress appropriates funds for this program also in Title VI. The National Defense Sealift Fund supports the procurement, operation and maintenance, and research and development associated with the nation's naval reserve fleet and supports a U.S. flagged merchant fleet that can serve in time of need. In some fiscal years, RDT&E funding for this effort is requested in the Navy's Procurement request and appropriated in Title V (Revolving and Management Funds) of the appropriations bill.", "RDT&E funds also have been requested and appropriated as part of DOD's separate funding to support efforts in what the George W. Bush Administration termed the Global War on Terror (GWOT) and what the Obama and Trump Administrations have referred to as Overseas Contingency Operations (OCO). In appropriations bills, the term Overseas Contingency Operations/Global War on Terror (OCO/GWOT) has been used; President Trump's FY2021 budget uses the term Overseas Contingency Operations. Typically, the RDT&E funds appropriated for OCO activities go to specified Program Elements (PEs) in Title IV. ", "According to the Comptroller of the Department of Defense, the FY2021 OCO request is divided into two requirement categories\u00e2\u0080\u0094direct and enduring war, and OCO for base requirements. For purposes of this report, these categories of OCO funding requests are reported collectively.", "In addition, OCO/GWOT-related requests/appropriations have included money for a number of transfer funds. In the past, these have included the Iraqi Freedom Fund (IFF), the Iraqi Security Forces Fund, the Afghanistan Security Forces Fund, and the Pakistan Counterinsurgency Capability Fund. Congress typically has made a single appropriation into each such fund and authorized the Secretary of Defense to make transfers to other accounts, including RDT&E, at his discretion. These transfers are eventually reflected in Title IV prior-year funding figures. ", "For FY2021, the Trump Administration is requesting $106.555 billion for DOD's Title IV RDT&E PEs (base plus OCO), $1.159 billion (1.1%) above the enacted FY2020 level. (See Table 7 .) In addition, the FY2021 request includes $562.5 million in RDT&E through the Defense Health Program (DHP; down $1.744 billion, 75.6% from FY2020), $782.2 million in RDT&E through the Chemical Agents and Munitions Destruction program (down $93.7 million, 10.7% from FY2020), and $1.1 million for the Inspector General for RDT&E-related activities (down $1.9 million, 63.0% from FY2020). The FY2021 budget includes no RDT&E funding via the National Defense Sealift Fund, the same as the FY2020 enacted level.", "RDT&E funding can be analyzed in different ways. RDT&E funding can be characterized organizationally. Each military department requests and receives its own RDT&E funding. So, too, do various DOD agencies (e.g., the Missile Defense Agency and the Defense Advanced Research Projects Agency), collectively aggregated within the Defense-Wide account. RDT&E funding also can be characterized by budget activity (i.e., the type of RDT&E supported). Those budget activities designated as 6.1, 6.2, and 6.3 (basic research, applied research, and advanced technology development, respectively) constitute what is called DOD's Science and Technology (S&T) program and represent the more research-oriented part of the RDT&E program. Budget activities 6.4 and 6.5 focus on the development of specific weapon systems or components for which an operational need has been determined and an acquisition program established. Budget activity 6.6 provides management support, including support for test and evaluation facilities. Budget activity 6.7 supports the development of system improvements in existing operational systems. Budget activity 6.8 was added in the FY2021 budget and supports software and digital technology pilot programs.", "Many congressional policymakers are particularly interested in DOD S&T program funding, since these funds support the development of new technologies and the science that underlies them. Some in the defense community see ensuring adequate support for S&T activities as imperative to maintaining U.S. military superiority into the future. The knowledge generated at this stage of development may also contribute to advances in commercial technologies. The FY2021 request for Title IV S&T funding (base plus OCO) is $14.070 billion, $1.991 billion (12.4%) below the FY2020 enacted level. Within the S&T program, basic research (6.1) receives special attention, particularly by the nation's universities, as over half of DOD's basic research budget is spent at universities. The Trump Administration is requesting $2.319 billion for DOD basic research for FY2021, $284.2 million (10.9%) below the FY2020 enacted level. While DOD is not the largest federal funder of basic research, it is a substantial source of federal funds for university R&D in certain fields, such as aerospace, aeronautical, and astronautical engineering (60%); electrical, electronic, and communications engineering (58%); industrial and manufacturing engineering (48%); mechanical engineering (46%); computer and information sciences (44%); metallurgical and materials engineering (39%); and materials science (33%). "], "subsections": []}, {"section_title": "Department of Health and Human Services", "paragraphs": ["The mission of the Department of Health and Human Services (HHS) is \"to enhance and protect the health and well-being of all Americans ... by providing for effective health and human services and fostering advances in medicine, public health, and social services.\" This section focuses on HHS research and development funded through the National Institutes of Health (NIH), an HHS agency that accounts for nearly 97% of total HHS R&D funding. Other HHS agencies that support R&D include the Centers for Disease Control and Prevention (CDC), Centers for Medicare and Medicaid Services (CMS), Food and Drug Administration (FDA), Agency for Healthcare Research and Quality (AHRQ), Health Resources and Services Administration (HRSA), and Administration for Children and Families (ACF); additional R&D funding is attributed to departmental management."], "subsections": [{"section_title": "National Institutes of Health36", "paragraphs": ["NIH is the primary agency of the federal government charged with performing and supporting biomedical and behavioral research. It also has major roles in training biomedical researchers and disseminating health information. The NIH mission is \"to seek fundamental knowledge about the nature and behavior of living systems and the application of that knowledge to enhance health, lengthen life, and reduce illness and disability.\" The agency consists of the NIH Office of the Director (OD) and 27 institutes and centers (ICs). Each IC plans and manages its own research programs in coordination with OD. As shown in Table 8 , separate appropriations are provided to 24 of the 27 ICs, as well as to OD, the Innovation Account (established by the 21 st Century Cures Act in 2016, P.L. 114-255 ), and an intramural Buildings and Facilities account. The other three centers, which perform centralized support services, are funded through transfers from the other ICs.", "According to NIH, about 10% of the NIH budget supports intramural research projects conducted by the nearly 6,000 NIH federal scientists, most of whom are located on the NIH campus in Bethesda, MD. All research ICs have an intramural research program of varying sizes. More than 80% of NIH's budget goes to the extramural research community in the form of grants, contracts, and other awards. This funding supports research performed by more than 300,000 nonfederal scientists and technical personnel who work at more than 2,500 universities, hospitals, medical schools, and other research institutions. ", "Funding for NIH comes primarily from the annual Labor, HHS, and Education (LHHS) appropriations act, with an additional amount for Superfund-related activities from the Interior/Environment appropriations act. Those two appropriations acts provide NIH's discretionary budget authority. In addition, NIH received mandatory funding of $150 million annually until FY2019 provided in the Public Health Service Act (PHSA), Section 330B, for a special program on type 1 diabetes research. A temporary funding extension has been enacted for FY2020, and under current law, no new funding will be available for this program after May 22, 2020.", "Some funding is also pursuant to the \"PHS Evaluation Tap\" transfer authority, under Section 241 of the PHS Act (42 U.S.C. \u00c2\u00a7238j). This provision allows the Secretary of HHS, with the approval of appropriators, to redistribute a portion of eligible PHS agency appropriations across HHS for program evaluation purposes. Although the PHS Act limits the tap to no more than 1% of eligible appropriations, in recent years, annual LHHS appropriations acts have specified a higher amount (2.5% in FY2020, P.L. 116-94 ) and have typically directed specific amounts of funding from the tap for transfer to a number of HHS programs. The assessment has the effect of redistributing appropriated funds for specific purposes among PHS and other HHS agencies. NIH, with the largest budget among the PHS agencies, has historically been the largest \"donor\" of program evaluation funds; until recently, it had been a relatively minor recipient. Provisions in recent LHHS appropriations acts have directed specific tap transfers to NIH, making NIH a net recipient of tap funds.", "President Trump's FY2021 budget request would provide NIH with a total program level of $38.694 billion, a decrease of $2.992 billion (-7.2%) from FY2020 enacted levels. The proposed FY2020 program level would be made up of ", "$37.630 billion in LHHS budget authority, $741 million pursuant to the PHS Evaluation Tap authority, $74 million for the Superfund Research Program in Interior/Environment appropriations, and $150 million in proposed annual funding for the mandatory type 1 diabetes program.", "Under the President's FY2021 request, all existing IC accounts would receive a decrease compared to FY2020 enacted levels (see Table 8 ). The Building and Facilities account would receive an increase in terms of LHHS budget authority, from $200 million in FY2020 to $300 million in FY2021. In addition, the full amount ($404 million) authorized by the 21 st Century Cures Act for FY2021 ( P.L. 114-255 ; see text box ) would be appropriated to the Innovation Account. ", "Additionally, the FY2021 budget request proposes consolidating the Agency for Healthcare Research and Quality (AHRQ) into NIH, forming a 28 th IC\u00e2\u0080\u0094the National Institute for Research on Safety and Quality (NIRSQ). The creation of a new NIH institute would require amendments to the PHSA, especially Section 401(d), which specifies that \"[i]n the National Institutes of Health, the number of national research institutes and national centers may not exceed a total of 27.\" Under the FY2021 request, NISRQ would receive a total appropriation of $355.1 million, including $256.7 million in discretionary LHHS budget authority and $98.5 million in mandatory appropriations from the Patient-Centered Outcomes Research Trust Fund (PCORTF) in Social Security Act Section 1181. Congress did not adopt the Administration's similar proposals to consolidate AHRQ into NIH as NIRSQ in FY2018, FY2019, or FY2020.", "Additionally, the budget request proposes select specified FY2021 funding levels for programs and activities within and across the NIH accounts based on the Administration's research priorities. For instance, for FY2021, the Administration's budget proposes specific funding levels for the opioid and methamphetamine epidemic ($1.4 billion across the NIH ICs), a childhood cancer data initiative ($50 million), influenza research ($423 million), and tick-borne diseases research ($115 million), among others. If adopted, these funding levels would likely be specified in report and/or explanatory statement language accompanying LHHS appropriations bills. For the most part, Congress does not specify NIH funding for particular diseases or areas of research, instead allowing the ICs to award funding on a competitive basis through various funding mechanisms intended to balance scientific opportunity with health priorities. "], "subsections": []}]}, {"section_title": "Department of Energy48", "paragraphs": ["The Department of Energy was established in 1977 by the Department of Energy Organization Act ( P.L. 95-91 ), which combined energy-related programs from a variety of agencies with defense-related nuclear programs that dated back to the Manhattan Project. Today, DOE conducts basic scientific research in fields ranging from nuclear physics to the biological and environmental sciences; basic and applied R&D relating to energy production and use; and R&D on nuclear weapons, nuclear nonproliferation, and defense nuclear reactors. The department has a system of 17 national laboratories around the country, mostly operated by contractors, that together account for about 40% of all DOE expenditures.", "The Administration's FY2021 budget request for DOE includes about $13.853 billion for R&D and related activities, including programs in three broad categories: science, national security, and energy. This request is about 19.1% less than the comparable enacted FY2020 amount of $17.124 billion. (See Table 9 for details.)", "The request for the DOE Office of Science is $5.838 billion, a decrease of 16.6% from the FY2020 appropriation of $7.000 billion. Funding would decrease for five of the office's six major research programs. In the largest program, Basic Energy Sciences, almost two-thirds of the proposed 16.6% decrease would result from spending less on facility construction. Most of the remainder would result from spending less on existing scientific user facilities, in some cases by reducing hours of operation. Funding for Biological and Environmental Research would decrease by 31.1%, with reductions concentrated in the Earth and Environmental Systems Sciences subprogram as proposed in other recent Administration budgets. Funding for Fusion Energy Sciences would decrease by 36.6%. Within Fusion Energy Sciences, the U.S. contribution to construction of the International Thermonuclear Experimental Reactor (ITER), a fusion energy demonstration and research facility in France, would be $107 million (down from $242 million in FY2020). The one major research program receiving an increase would be Advanced Scientific Computing Research (up 0.8%). Within Advanced Scientific Computing Research, an increase of $109 million for research would be partly offset by a decrease of $81 million for facilities; the Office of Science Exascale Computing Project would receive $169 million, down from $189 million in FY2020. ", "The request for DOE national security R&D is $5.066 billion, an increase of 6.3% from $4.765 billion in FY2020. In Weapons Activities, the request for Stockpile Research, Technology, and Engineering would be an increase of 9.0% above the comparable FY2020 amount. The bulk of the increase would be for Assessment Science ($773 million, up from $595 million in FY2020) and Weapon Technology and Manufacturing Maturation ($298 million, up from $222 million in FY2020). A proposed increase of 7.2% for R&D in the Defense Nuclear Nonproliferation account reflects $40 million requested for a program in National Technical Nuclear Forensics R&D, formerly funded in DHS.", "The request for DOE energy R&D is $2.949 billion, a decrease of 45.0% from $5.360 billion in FY2020. Many of the proposed reductions in this category are similar to the Administration's FY2019 and FY2020 budget proposals. Funding for energy efficiency and renewable energy R&D would decrease by 70.1%, with reductions in all major research areas and a shift in emphasis toward early-stage R&D rather than later-stage development and deployment. In the Fossil Energy R&D account, an increase of $172 million for Advanced Energy Systems would be largely offset by decreases for carbon capture, utilization, and storage ($123 million, down from $218 million in FY2020), natural gas technologies ($15 million, down from $51 million), and oil technologies ($17 million, down from $46 million). The request for nuclear fuel cycle R&D is $187 million (down from $305 million), and nuclear energy as a whole would decrease by 20.1%, with no funding requested for the Integrated University Program ($5 million in FY2020) or the Supercritical Transformational Electric Power (STEP) R&D initiative ($5 million in FY2020). The Advanced Research Projects Agency-Energy (ARPA-E), which is intended to advance high-impact energy technologies that have too much technical and financial uncertainty to attract near-term private-sector investment, would be terminated."], "subsections": []}, {"section_title": "National Aeronautics and Space Administration51", "paragraphs": ["The National Aeronautics and Space Administration (NASA) was created in 1958 by the National Aeronautics and Space Act (P.L. 85-568) to conduct civilian space and aeronautics activities. NASA has research programs in planetary science, Earth science, heliophysics, astrophysics, and aeronautics, as well as development programs for future human spacecraft and for multipurpose space technology such as advanced propulsion systems. In addition, NASA operates the International Space Station (ISS) as a facility for R&D and other purposes.", "The Administration has requested about $22.243 billion for NASA R&D in FY2021. This would be 14.4% more than the FY2020 level of about $19.439 billion. For a breakdown of these amounts, see Table 10 . NASA R&D funding comes through five accounts: Science; Aeronautics; Space Technology (called Exploration Technology in the Administration's budget request); Exploration (Deep Space Exploration Systems in the request); and the ISS, Commercial Crew, and Commercial Low Earth Orbit (LEO) Development portions of Space Operations (called LEO and Spaceflight Operations in the request). The OMB figures presented in Table 1 indicate a substantially smaller amount for NASA R&D than the figures presented in this section, and a decrease in the FY2021 request relative to FY2020 rather than an increase. The main reason for this appears to be that OMB treats only about half of the Exploration account as R&D (somewhat more than half in FY2020, somewhat less than half in FY2021). As systems being developed under that account move from R&D to testing and ultimately operations, the share of the account spent on R&D may decrease. In order to allow consistent tracking as Congress acts on FY2021 appropriations legislation, this section treats the entirety of the Exploration account as R&D.", "The FY2021 request for Science is $6.307 billion, a decrease of 11.7% from FY2020. Within this total, funding for Earth Science would decrease by $204 million (10.4%) and funding for Astrophysics would decrease by $475 million (36.4%). In Earth Science, the Administration proposes to terminate the Pre-Aerosol, Clouds, and Ocean Ecosystem (PACE) and Climate Absolute Radiance and Refractivity Observatory (CLARREO) Pathfinder missions ($131 million and $26 million respectively in FY2020). In Astrophysics, it proposes to terminate the Wide Field Infrared Space Telescope (WFIRST) and Stratospheric Observatory for Infrared Astronomy (SOFIA) missions ($511 million and $85 million in FY2020). PACE and CLARREO Pathfinder were also proposed for termination in the FY2018 through FY2020 budgets, and WFIRST was also proposed for termination in the FY2019 and FY2020 budgets, but in each case they were funded by Congress. The Planetary Science request includes $404 million (down from $593 million in FY2020) for a mission to orbit Jupiter's moon Europa. Despite direction otherwise in the FY2020 explanatory statement, the Europa mission would be launched on a commercial rocket and would not include a lander.", "The FY2021 request for Aeronautics is $819 million, an increase of 4.5% from $784 million in FY2020. As projected in prior budgets, the request includes $79 million for the Low Boom Flight Demonstrator program, intended to demonstrate quiet supersonic flight.", "The FY2021 request for Exploration Technology (currently Space Technology) is $1.578 billion, an increase of 43.5% from FY2020. The combined RESTORE-L/SPIDER mission to demonstrate in-space satellite servicing and robotic manufacturing would receive $134 million (down from $227 million in FY2020). A newly integrated Space Nuclear Technologies portfolio would receive $100 million for development of space nuclear power and propulsion technologies. The budget justification emphasizes Exploration Technology's support of NASA's Artemis human exploration initiative and its plans for a human lunar landing in 2024. In contrast, FY2020 congressional report language emphasized \"broad technology development goals \u00e2\u0080\u00a6 independent of mission-specific needs\" ( H.Rept. 116-101 ) and technologies that \"can serve all NASA mission directorates and are not solely focused on enabling human spaceflight\" ( S.Rept. 116-127 ).", "The FY2021 request for Deep Space Exploration Systems (currently Exploration) is $8.762 billion, an increase of 45.6% from FY2020. Within this account, the request for Exploration Systems Development includes $1.401 billion for the Orion crew capsule (down from $1.407 billion in FY2020) and $2.257 billion for the Space Launch System heavy-lift rocket (SLS, down from $2.586 billion in FY2020). The proposed 228.9% increase for Exploration R&D reflects a request for $3.370 billion for development of a human lunar landing system. Exploration R&D funding would also include $739 million (up from $450 million in FY2020) for development of the Gateway lunar-orbiting platform, intended to support human and robotic missions to the lunar surface.", "In the LEO and Spaceflight Operations account (currently Space Operations), the request includes $1.401 billion for the ISS; $100 million for the Commercial Crew program (down from $102 million in FY2020); and $150 million for Commercial LEO Development (up from $15 million in FY2020). Commercial crew activities are transitioning from development to operations (which is funded separately); following additional test flights to obtain safety certification from NASA, the first post-certification crewed commercial flight to the ISS is expected during 2020. The Commercial LEO Development program, intended to stimulate a commercial space economy in low Earth orbit, was initiated in the FY2019 budget. The Administration has requested $150 million for it each year since then; Congress has so far appropriated a total of $55 million."], "subsections": []}, {"section_title": "National Science Foundation52", "paragraphs": ["The National Science Foundation supports basic research and education in the nonmedical sciences and engineering. Congress established the foundation as an independent federal agency in 1950 and directed it to \"promote the progress of science; to advance the national health, prosperity, and welfare; to secure the national defense; and for other purposes.\" The NSF is a primary source of federal support for U.S. university research, especially in computer science, biology, mathematics and the social and psychological sciences. It is also responsible for significant shares of the federal science, technology, engineering, and mathematics (STEM) education program portfolio and federal STEM student aid and support.", "NSF has six appropriations accounts: Research and Related Activities (RRA, the main research account), Education and Human Resources (EHR, the main education account), Major Research Equipment and Facilities Construction (MREFC), Agency Operations and Award Management (AOAM), the National Science Board (NSB), and the Office of Inspector General (OIG). Appropriations are generally provided at the account level, while program-specific direction may be included in appropriations acts, or accompanying conference reports or explanatory statements. ", "Funding for R&D is included in the RRA, EHR, and MREFC accounts. (The RRA and EHR accounts also include non-R&D funding.) Together, these three accounts comprise over 95% of the total requested funding for NSF. Actual R&D obligations for each account are known after NSF allocates funding appropriations to specific activities and reports those figures. The budget request specifies R&D funding for the conduct of research, including basic and applied research, and for physical assets, including R&D facilities and major equipment. Funding amounts for FY2019 actual and FY2021 requested levels are reported by account, including amounts for R&D conduct and physical assets where applicable, in Table 11 .", "Funding for NSF for FY2020 was enacted on December 20, 2019. Funding details below the account level were not available at the time the FY2021 budget request was prepared. Therefore, at the account level, the FY2021 request amounts are compared to the FY2020 enacted amounts, as well as to the FY2019 actual amounts in this analysis; below the account level and for R&D totals, the FY2021 request amounts are compared to FY2019 actual amounts. This section will be updated when FY2020 R&D breakouts and subaccount funding amounts are available for comparison. FY2019 actual, FY2020 enacted, and FY2021 requested amounts are reported by account in Table 11 ; funding for R&D conduct and facilities and equipment is included for FY2021 requested and FY2019 actual amounts.", "Overall . The Administration is requesting $7.741 billion for the NSF in FY2021, $537 million (6.5%) less than the FY2020 enacted amount, and $409 million (5.0%) less than the FY2019 actual amount. The request would decrease budget authority in all three of the R&D accounts relative to the FY2020 enacted level: RRA by $524 million (7.8%), EHR by $9.1 million (1.0%), and MREFC by $13.5 million (5.5%). Overall, NSF estimates that, under the FY2021 request, agency-wide funding rates (i.e., the percentage of submitted proposals that are successfully awarded funding) would decrease slightly from 27% to 25%, with 500 fewer new competitive awards, compared to FY2019.", "As a proportion of NSF's total funding, R&D activities account for approximately 80%. For FY2021, $6.33 billion is requested for R&D activities, a 4.8% decrease from FY2019 actual funding for R&D of $6.65 billion. The total request includes $5.80 billion (92%) for the conduct of R&D, and $523 million (8%) for R&D facilities and major equipment. Of funding requested for the conduct of R&D, 86% is requested for basic research, and 14% for applied research. Overall funding for R&D facilities and major equipment supports not only the construction and acquisition phases, funded through MREFC ($230 million requested), but also the planning, design, and postconstruction operations and maintenance, funded through RRA ($293 million requested).", "Research . The Administration seeks $6.21 billion for RRA in FY2021, a $524 million (7.8%) decrease compared to the FY2020 enacted funding, and a $365 million (5.6%) decrease compared to FY2019 actual funding. Compared to the FY2019 actual levels, the FY2021 request includes decreases for 8 of the 10 RRA subaccounts. The largest percentage decrease would go to the Office of Polar Programs (14.1%, down $69 million). The Computer and Information Science and Engineering (CISE) subaccount would receive the largest dollar increase (7.8%, up $77 million). The FY2021 request also includes $164 million for the RRA Established Program to Stimulate Competitive Research (EPSCoR) program, a $12 million (6.8%) decrease compared to FY2019 actual funding.", "Within the RRA account, the FY2021 request includes $5.61 billion for R&D, a decrease of $284 million (4.8%) compared to the FY2019 actual amount. Of this amount, the majority ($5.32 billion, 95%) is requested for the conduct of research, including $4.85 billion for basic research and $469 million for applied research.", "Education . The FY2021 request for the EHR account is $931 million, $9.1 million (1.0%) less than the FY2020 enacted amount and $3.6 million (0.4%) less than the FY2019 actual level. By program division, the Division of Graduate Education would receive an increase of $28.7 million (11.3%) over the FY2019 actual level. The Divisions of Research on Learning in Formal and Informal Settings, and Undergraduate Education would receive decreases of 2.1% ($224 million requested), and 10.7% ($237 million requested), respectively. The Division on Human Resource Development would receive approximately the same amount of funding ($189 million requested).", "EHR programs of particular interest to congressional policymakers include the Graduate Research Fellowship Program (GRFP) and National Research Traineeship (NRT) programs. The FY2021 request for GRFP is $275 million, a reduction of $9.27 million (3.3%) from the FY2019 actual level. The FY2021 request for NRT is $61.9 million, a $7.78 million increase (14.4%) from FY2019.", "Within EHR, requested funding for R&D is $485 million, which is $17.9 million (3.8%) more than the FY2019 actual funding amount and accounts for approximately 7.7% of the agency's total R&D request. All of the requested funding would support the conduct of R&D, including $167 million for basic research and $318 million for applied research.", "Construction . The MREFC account supports large construction projects and scientific instruments, with all of the funding supporting R&D facilities. The construction phases of such large-scale projects tend to span multiple years; therefore, NSF provides out-year estimates of funding for major facilities for the duration of the anticipated timeline, which are updated annually. This section of the analysis includes comparisons to FY2020 estimated funding, based on these projections. The Administration is seeking $230 million for MREFC in FY2021, $13.5 million (5.5%) less than the FY2020 enacted amount, and $55.5 million (19.5%) less than the FY2019 actual amount. ", "Requested MREFC funding would support continued construction of the Vera C. Rubin Observatory ($40.8 million requested, down 12.1% from the FY2020 estimate)\u00e2\u0080\u0094previously called the Large Synoptic Survey Telescope (LSST)\u00e2\u0080\u0094and the Antarctic Infrastructure Modernization for Science project (AIMS, $90.0 million requested, down 8.1% from FY2020 estimate). The request includes $33.0 million for upgrades to the Large Hadron Collider in Switzerland, which would represent the second year of a five-year project. Additionally, $65.0 million is requested for Mid-scale Research Infrastructure projects (those projects with funding amounts in the $20 million to $70 million range); this was a new funding line-item in the MREFC account as of FY2020, meant to manage support for upgrades to major facilities and stand-alone projects in this range as a portfolio.", "Other initiatives . The FY2021 NSF budget request includes funding for multiple agency-wide investments, including the Big Ideas and Convergence Accelerator, as well as three multiagency initiatives. This funding is included in multiple NSF appropriations accounts, and R&D amounts are not separately provided. ", "The Big Ideas, which include six Research and three Enabling Big Ideas, first proposed in 2016, \"endeavor to break down the silos of conventional scientific research \u00e2\u0080\u00a6 to define and push the frontiers of global science and engineering leadership and to invest in fundamental research.\" Requested funding amounts for each of the Big Ideas compared to the FY2019 actual amounts include the following: ", "Harnessing the Data Revolution for 21 st -Century Science and Engineering (HDR): $45 million requested, up $15 million (50%) from FY2019. The Future of Work at the Human Technology Frontier (FW-HTF): $45 million requested, up $15 million (50%) from FY2019. The Quantum Leap (QL): Leading the Next Quantum Revolution: $50 million requested, up $20 million (67%) from FY2019. Navigating the New Arctic (NNA): $30 million requested, equal to FY2019. Understanding the Rules of Life (URoL): Predicting Phenotype: $30 million requested, equal to FY2019. Windows on the Universe (WoU): The Era of Multi-Messenger Astrophysics: $30 million requested, equal to FY2019. Inclusion across the Nation of Communities of Learners of Underrepresented Discoverers in Engineering and Science (NSF INCLUDES): $18.9 million requested, down $1.3 million (6.3%) from FY2019. Growing Convergence Research at NSF (GCR): $15.2 million requested, down $0.6 million (3.8%) from FY2019. Mid-Scale Research Infrastructure: $97.7 million requested, up $37.6 million (62.7%) from FY2019.", "The Convergence Accelerator (CA) ", "is an organizational framework that stands separately from the NSF research directorates, with its own budget, staff, and initiatives. Each CA research track will be a time-limited entity focused on specific research topics and themes. Therefore, CA research tracks will evolve over time and will be informed by external stakeholder input. The CA will reward high-risk, innovative thinking by multidisciplinary teams of researchers who want to accelerate discovery and innovation. The CA is a way of achieving rapid lab-to-market or research outcomes.", "The initial CA research tracks have focused on a subset of the Big Ideas, though the CA investments \"are distinguished from the corresponding Big Ideas by the nature of the research, the time scale of the activities supported, and the more hands-on, agile approach to project management and support that is envisioned [by the CA program].\" NSF has requested $70 million for the CA in FY2021, which is $28.6 million more than the FY2019 actual amount. The budget request states that NSF anticipates financial contributions from external partners to begin in FY2021 (amount unspecified).", "The budget request also includes three multi-agency initiatives. The National Nanotechnology Initiative would receive $454 million, $67.2 million (12.9%) less than in FY2019. The Networking and Information Technology Research and Development program would receive $1.57 billion, an increase of $151 million (10.7%). The U.S. Global Change Research Program would receive $217 million, $24 million (9.8%) less than in FY2019."], "subsections": []}, {"section_title": "Department of Agriculture59", "paragraphs": ["The U.S. Department of Agriculture (USDA) was created in 1862 to support agricultural research in an expanding, agriculturally dependent country. Today, USDA conducts intramural research at federal facilities with federally employed scientists and supports extramural research at universities and other facilities through competitive grants and capacity (formula-based) funding. The breadth of contemporary USDA research spans traditional agricultural production practices, organic and sustainable agriculture, bioenergy, nutritional needs and food composition, food safety, animal and plant health, pest and disease management, economic decisionmaking, and other social sciences affecting consumers, farmers, and rural communities. ", "The four agencies of USDA's Research, Education, and Economics (REE) mission area carry out the Department's research and education activities. These agencies are the Agricultural Research Service (ARS), the principal intramural research agency; the National Institute of Food and Agriculture (NIFA), the principal extramural research agency; the National Agricultural Statistics Service (NASS), which undertakes a variety of surveys to capture relevant data; and the Economic Research Service (ERS), which applies economic analysis to a wide range of topics related to food and agriculture. In addition to the four REE agencies, the Office of the Chief Scientist (OCS), a staff office within the Office of the Under Secretary of REE, coordinates science activities across the department. ", "The FY2020 enacted appropriations ( P.L. 116-94 ) provide a total of $3,399.5 million in discretionary spending for the REE agencies. The Administration is requesting a total of $3,248.3 million for these agencies in FY2021, a 4.4% reduction ($151.2 million). The Administration request reflects a reduction of $189.2 million for ARS. The overall reduction also includes proposed decreases in certain activities at NIFA, NASS, and ERS. The Administration is requesting increases for NIFA competitive research grants ($175.0 million) and NASS's Census of Agriculture ($1.0 million). USDA's FY2020 enacted discretionary appropriations and the Administration's FY2021 request for the four research agencies and OCS are discussed below, with funding amounts presented in Table 12 . In addition to discretionary appropriations, agricultural research is funded by state matching contributions and private donations or grants, as well as certain mandatory funding authorized by the 2018 farm bill ( P.L. 115-334 )."], "subsections": [{"section_title": "Agricultural Research Service", "paragraphs": ["The Agricultural Research Service is USDA's in-house basic and applied research agency, and it has major responsibilities for conducting and leading the national agricultural research effort. ARS operates approximately 90 laboratories in the United States and abroad, with about 5,000 permanent employees, including approximately 2,000 research scientists. ARS laboratories focus on efficient food and fiber production, development of new products and uses for agricultural commodities, development of effective controls for pest management, and support of USDA regulatory and technical assistance programs. ARS also operates the National Agricultural Library (NAL). NAL is the world's largest agricultural research library, and is a primary information repository for food, agriculture, and natural resource sciences.", "For FY2020, P.L. 116-94 provides $1,414.4 million for ARS salaries and expenses, and $192.7 million for buildings and facilities. For FY2021, the Administration is requesting $1,367.9 million for ARS salaries and expenses, a decrease of $46.5 million (3.3%) from the FY2020 appropriation. For FY2021, the request for the buildings and facilities account is $50.0 million, a reduction of $142.7 million (74.1%), from the FY2020 appropriation, largely due to eliminating funds for ARS co-located facilities (as opposed to those facilities owned and operated by ARS). ", "The FY2020 explanatory statement accompanying the FY2020 appropriations bill ( H.R. 1865 ) does not support the Administration's request to terminate or redirect various ARS research programs, and it encourages ARS to fill numerous vacant positions.", "ARS has been coordinating with the Department of Homeland Security on the new National Bio and Agro-Defense Facility (NBAF), which DHS is constructing to replace the outdated Plum Island Animal Disease Center (PIADC). In January 2019, USDA and DHS signed a Memorandum of Agreement to govern the transition of NBAF from DHS to USDA, with ownership to transfer upon its completion and commissioning in December 2022 . The FY2020 appropriations for ARS provide $13.1 million to address one-time costs associated with the transfer of operations from PIADC to NBAF, in addition to $66.0 million for operations and maintenance, as reported by USDA. For FY2021, the Administration is requesting a total of $81.3 million within ARS Salaries and Expenses for NBAF operations, and maintenance, a $15.3 million increase from the FY2020 appropriation. The FY2021 budget request for ARS also includes an $8 million increase for NBAF research under ARS's livestock research program."], "subsections": []}, {"section_title": "National Institute of Food and Agriculture", "paragraphs": ["The National Institute of Food and Agriculture is USDA's principal extramural research agency. It provides federal funding for research, education, and extension projects conducted in partnership with land-grant colleges and universities (LGUs), State Agricultural Experiment Stations, the Cooperative Extension System, other research and education institutions, private organizations, and individuals. NIFA partnerships include the three types of LGUs\u00e2\u0080\u00941862 (original) Institutions, 1890 (historically black) Institutions, and 1994 (tribal) Institutions\u00e2\u0080\u0094as well as other higher education institutions. Federal funds awarded through NIFA capacity (formula-based) and competitive grants enhance research capacity at these institutions. NIFA headquarters are located in Washington, DC. In October 2019, USDA relocated the majority of NIFA staff positions to Kansas City, MO.", "For FY2020, P.L. 116-94 provides $1,527.4 million in discretionary funds for NIFA activities. For FY2021, the Administration requests $1,590.8 million, an increase of $63.4 million (4.2%).", "Research and Education. Hatch Act and Evans-Allen Act funds support capacity grants for research and education activities at 1862 and 1890 Institutions, respectively. For Hatch Act programs, the enacted FY2020 bill provides $259.0 million, and the Administration is requesting $243.2 million for FY2021, a 6.1% reduction. For Evans-Allen programs, the FY2020 appropriation provides $67.0 million, and for FY2021 the Administration is requesting $53.8 million, a 19.7% reduction.", "For competitive research grants at 1994 Institutions, the FY2020 appropriation provides $3.8 million, and the Administration requests the same funding level for FY2021. For education grant programs for the insular areas and for Alaska native and native Hawaiian-serving institutions, the FY2020 appropriation provides $2.0 million and $3.2 million, respectively. For FY2021, the Administration requests $0 for both programs, and in lieu of these it proposes to create a new, combined program with requested funding of $5.0 million. ", "The McIntire-Stennis program provides capacity funds for forestry research. For FY2020, P.L. 116-94 provides $36.0 million, and for FY2021 the Administration is requesting $28.9 million, a 20% reduction. ", "The Agriculture and Food Research Initiative (AFRI) is USDA's flagship competitive research grants program, and currently represents about 31% of the total of NIFA's discretionary budget. The FY2020 enacted bill provides $425.0 million for AFRI, and the Administration is requesting $600.0 million for FY2021, a 41.2% increase. NIFA also funds the Sustainable Agriculture Research and Education (SARE) program. For FY2020, P.L. 116-94 provides $37.0 million for SARE, and the Administration requests the same level of funding for FY2021.", "Extension. Smith-Lever Act 3(b) and 3(c) programs provide capacity grants to 1862 Institutions to support cooperative extension. The FY2020 enacted appropriation provides $315.0 million for these programs, and the Administration requests $299.4 million for them in FY2021, a reduction of 4.9%. ", "Smith-Lever 3(d) programs provide competitive grants to 1862, 1890, and 1994 Institutions to support cooperative extension. These programs include grants for food and nutrition education; new technologies for agricultural extension; federally recognized tribes; children, youth, and families at risk; and farm safety education. For FY2020, P.L. 116-94 provides $87.8 million for Smith-Lever 3(d) programs. For FY2021, the Administration is requesting $83.6 million, a reduction of 4.8%. Of this total, $69.0 million would support the Expanded Food and Nutrition Education Program (EFNEP), and $3.0 million would support the Federally-Recognized Tribes Extension Program. "], "subsections": []}, {"section_title": "National Agricultural Statistics Service", "paragraphs": ["The National Agricultural Statistics Service conducts the quinquennial Census of Agriculture and provides official statistics on agricultural production and indicators of the economic and environmental status of the farm sector. NASS is one of the 13 principal statistical agencies of the Federal Statistical System of the United States.", "For FY2020, P.L. 116-94 provides $180.3 million to NASS, of which up to $45.3 million is reserved to support the Census of Agriculture. The Administration is requesting $177.5 million for NASS in FY2021, of which up to $46.3 million is to support the Census of Agriculture. NASS has begun preparing for the 2022 Census of Agriculture. The explanatory statement accompanying FY2020 appropriations ( H.R. 1865 ) commented on the Administration's FY2020 budget request, rejecting its proposals to eliminate and reduce specific ongoing activities. The Administration's request for FY2021 proposes increases for some programs, as well as reductions for the Acreage, Crop Production, and Grain Stocks program (reduced by $13.2 million) as well as the Chemical Use Program (reduced by $3.5 million)."], "subsections": []}, {"section_title": "Economic Research Service", "paragraphs": ["The Economic Research Service supports economic and social science analysis about agriculture, rural development, food, commodity markets, and the environment. It also collects and disseminates data concerning USDA programs and policies. Like NASS, ERS is one of the 13 principal statistical agencies of the Federal Statistical System of the United States. ERS headquarters is located in Washington, DC. In October 2019, USDA relocated the majority of ERS staff positions to Kansas City, MO. ", "For FY2020, P.L. 116-94 provides $84.8 million for ERS activities. The Administration is requesting $62.1 million for FY2021, a 26.7% decrease. The Administration's budget request attributes $11.3 million of this decrease to its proposal to \"discontinue research relative to farm, conservation and trade policy, and returns on investments in agricultural research and development.\" It proposes to eliminate research on special initiatives that include \"research innovations for policy effectiveness, new energy sources ..., local and regional food markets, beginning farmers and ranchers, invasive species, and markets for environmental services.\" The Administration's budget request attributes $8.4 million of this decrease (and 52 staff years) to elimination of some research on food assistance, nutrition, and diet quality."], "subsections": []}, {"section_title": "Office of the Chief Scientist", "paragraphs": ["Congress created the Office of the Chief Scientist in 2008 when it established the dual role of the Under Secretary for REE as the USDA Chief Scientist (7 U.S.C. \u00c2\u00a76971). The OCS purpose is to coordinate research programs and activities across USDA. Administratively, because it is situated within the Office of the Under Secretary of REE, OCS is a component of the Office of the Secretary (OSEC). Since its establishment, OCS has not received an independent appropriation. Rather, it has been funded via interagency agreement among the four REE agencies. The FY2021 President's budget request for OSEC includes the first separate request for OCS, in the amount of $6 million and 29 staff years."], "subsections": []}]}, {"section_title": "Department of Commerce", "paragraphs": ["Two agencies of the Department of Commerce have major R&D programs: the National Institute of Standards and Technology (NIST) and the National Oceanic and Atmospheric Administration (NOAA). "], "subsections": [{"section_title": "National Institute of Standards and Technology70", "paragraphs": ["The mission of the National Institute of Standards and Technology is \"to promote U.S. innovation and industrial competitiveness by advancing measurement science, standards, and technology in ways that enhance economic security and improve our quality of life.\" NIST research provides measurement, calibration, and quality assurance methods and techniques that support U.S. commerce, technological progress, product reliability, manufacturing processes, and public safety. NIST's responsibilities include the development, maintenance, and custodial retention of the national standards of measurement; providing the means and methods for making measurements consistent with those standards; and ensuring the compatibility of U.S. national measurement standards with those of other nations.", "The President is requesting $737.5 million for NIST in FY2021, a decrease of $296.5 million (28.7%) from the FY2020 enacted appropriation of $1,034.0 million. (See Table 13 .) NIST discretionary funding is provided through three accounts: Scientific and Technical Research and Services (STRS), Industrial Technology Services (ITS), and Construction of Research Facilities (CRF). ", "The President's FY2021 request includes $652 million for R&D, standards coordination, and related services in the STRS account, a decrease of $102.0 million (13.5%) from the FY2020 enacted level. According to NIST, the reductions would be necessary to address the President's priorities:", "To meet the topline funding levels proposed in the FY 2021 President's Budget request and support the Administration's stated priorities for Industries of the Future (IoTF) in quantum information science, artificial intelligence, advanced communications, advanced manufacturing, and biotechnology \u00e2\u0080\u00a6 NIST will have to make substantial reductions to its current R&D and program portfolio that impact work in advanced materials, physical infrastructure and resilience, and areas across NIST. The funding for the NIST laboratory programs will be reduced by $115.5 million and this reduction proposes the elimination of 391 employees.", "In particular, the budget proposes funding reductions in the following areas:", "Advanced Manufacturing and Material Measurements, down $37.5 million (31.3%) from FY2020, including a reduction of 178 positions. Fundamental Measurement, Quantum Science, and Measurement Dissemination, down $17.8 million (9.3%) from FY2020, including a reduction of 73 positions. According to NIST, \"to prioritize work focused on advancing quantum science (including efforts focused on quantum networking) and transforming how NIST disseminates measurements through the NIST-on-A-Chip program, NIST will discontinue several measurement service and dissemination activities that are currently provided to our stakeholders in industry, government and academia.\" Advanced Communications, Networks, and Scientific Data Systems, down $35.8 million (52%) from FY2020, including 83 positions. Health and Biological Systems Measurements, down $3 million (8.6%) from FY2020. Physical Infrastructure and Resilience, down $16.4 million (28%) from FY2020, including 42 positions. NIST User Facilities, down $5 million (9.2%) from FY2020, including 15 positions.", "NIST is requesting $27.4 million for its Measurement Tools and Testbeds to Power the Industries of the Future (IotF) efforts, to create measurement tools and testbeds to support deployment of IotF technologies at scale. Of these funds, $25 million would support acceleration of the development and adoption of artificial intelligence, $1.4 million would support 5G standards development for telecommunication, and $1 million would support acceleration of efforts to develop profiles for Position, Navigation, and Timing.", "The FY2021 request would provide $25.3 million for the ITS account, down $136.7 million (84.4%) from the FY2020 enacted level. Within the ITS account, the request would provide no funding for the Manufacturing Extension Partnership (MEP) program, a reduction of $146.0 million from the FY2020 enacted level; MEP centers in each state would be required to become entirely self-supporting. In his FY2019 and FY2020 requests, President Trump also proposed ending federal funding for MEP; in his FY2018 request, the President sought $6.0 million \"for an orderly shutdown of the program.\" The FY2021 request for ITS consists of $25.3 million for Manufacturing USA (also referred to as the National Network for Manufacturing Innovation or NNMI), $9.3 million (58.1%) higher than the FY2020 enacted level of $16.0 million. Of these funds, $11.2 million would be for continued support of NIST's first Manufacturing USA institute, the National Institute for Innovation in Manufacturing Biopharmaceuticals (NIIMBL); $9.1 million would be for the award of a second Manufacturing USA institute; and $5.0 million would be for coordination of the Manufacturing USA network.", "The President is requesting $60.2 million for the NIST CRF account for FY2021, down $57.8 million (49.0%) from the FY2020 enacted level. Part of the decrease ($36.5 million) in requested FY2021 funding is due to a proposed deferral of safety, capacity, maintenance, and major repairs projects from FY2021 to FY2022. The balance of the decrease would result from the effect of the Administration's proposed new funding approach on the renovation of NIST Building 1, in Boulder, CO."], "subsections": []}, {"section_title": "National Oceanic and Atmospheric Administration78", "paragraphs": ["The National Oceanic and Atmospheric Administration conducts scientific research in areas such as ecosystems, atmosphere, global climate change, weather, and oceans; collects and provides data on the oceans and atmosphere; and manages coastal and marine organisms and environments. NOAA was created in 1970 by Reorganization Plan No. 4. The reorganization was intended to unify elements of the nation's environmental programs and to provide a systematic approach for monitoring, analyzing, and protecting the environment.", "NOAA's administrative structure is organized into six line offices: the National Ocean Service (NOS); National Marine Fisheries Service (NMFS); National Environmental Satellite, Data, and Information Service (NESDIS); National Weather Service (NWS); Office of Oceanic and Atmospheric Research (OAR); and the Office of Marine and Aviation Operations (OMAO). The line offices are supported by an additional office, Mission Support, which provides cross-cutting administrative functions related to education, planning, information technology, human resources, and infrastructure. Congress provides most of the discretionary funding for the line offices and Mission Support through two accounts: (1) Operations, Research, and Facilities, and (2) Procurement, Acquisition, and Construction.", "In 2010, NOAA published its Next Generation Strategic Plan . The strategic plan is organized into four categories of long-term goals: (1) climate adaptation and mitigation, (2) a weather-ready nation, (3) healthy oceans, and (4) resilient coastal communities and economies. The strategic plan also lists three groups of enterprise objectives related to (1) stakeholder engagement, (2) data and observations, and (3) integrated environmental modeling. The strategic plan serves as a guide for NOAA's R&D plan. The most recent R&D plan was published in 2013, and includes R&D objectives to reach strategic plan goals and objectives and targets to track progress toward R&D objectives over time. NOAA released a draft 2020-2026 R&D plan in June 2019. The draft plan identifies three vision areas: (1) reducing societal impacts from severe weather and other environmental phenomena, (2) sustainable use and stewardship of ocean and coastal resources, and (3) a robust and effective research, development, and transition enterprise. It is unclear when the draft plan will be finalized.", "For FY2021, President Trump requested $670.3 million in discretionary appropriations for NOAA R&D funding, a decrease of $301.6 million (31%) below the FY2020 enacted level of $972.0 million, and an increase of $19.2 million (3%) from the FY2020 request of $651.1 million. The President's FY2021 request for NOAA R&D was 14.5% of the total FY2021 NOAA requested amount of $4.634 billion. The FY2021 request includes $378.6 million for research (56.5% of the total requested for NOAA R&D), $94.9 million for development (14.1%), and $197.0 million (29.4%) for R&D equipment and facilities. Table 14 provides R&D amounts enacted in FY2020 and requested by the Administration for FY2021.", "OAR accounts for the majority of NOAA R&D in most years, including FY2021. The Administration requested $352.7 million for OAR R&D in FY2021, a decrease of $199.9 million (36.2%) below the FY2020 enacted funding level of $552.6 million and an increase of $17.6 million (5.3%) from the FY2020 request of $335.1 million. OAR conducts research in three major areas: (1) weather and air chemistry; (2) climate; and (3) oceans, coasts, and the Great Lakes. A significant portion of these efforts is implemented through OAR's laboratories and cooperative research institutes. The President requested $167.6 million for OAR labs and cooperative institutes in FY2021, $16.5 million (8.9%) less than the FY2020 enacted amount of $184.0 million and $2.1 million (1.2%) less than the FY2020 requested amount.", "Among other R&D activities, the Administration requested to terminate federal support of the National Sea Grant College Program and its related Marine Aquaculture Research program in FY2021, as it had in FY2020. The National Sea Grant College Program is composed of 33 university-based state programs and supports scientific research and stakeholder engagement to identify and solve problems faced by coastal communities. Congress provided $74 million to the National Sea Grant College Program and $13 million to the Marine Aquaculture Research program in FY2020. "], "subsections": []}]}, {"section_title": "Department of Veterans Affairs93", "paragraphs": ["The Department of Veterans Affairs operates and maintains a national health care delivery system to provide eligible veterans with medical care, benefits, and social support. As part of the agency's mission, it seeks to advance medical R&D in areas most relevant to the diseases and conditions that affect the health care needs of veterans.", "The President is proposing $1.456 billion for VA R&D in FY2021, an increase of $58 million (4%) from FY2020 enacted levels. (See Table 15 .) According to the President's request, FY2021 strategic priorities for VA R&D include increasing the access of veterans to clinical trials; increasing the transfer and translation of VA R&D; and the effective use of VA data for veterans. Additionally, crosscutting priorities for VA R&D include efforts to treat veterans at risk of suicide and research to address chronic pain and opioid addiction, posttraumatic stress disorder, traumatic brain injury, precision oncology, and Gulf War illness and military exposures.", "VA R&D is funded through two accounts\u00e2\u0080\u0094the Medical and Prosthetic Research account and the Medical Care Support account. The Medical Care Support account also includes non-R&D funding, and the amount of funding that will be allocated to support R&D through appropriations legislation is unclear unless funding is provided at the precise level of the request. In general, R&D funding levels from the Medical Care Support account are only known after the VA allocates its appropriations to specific activities and reports those figures. ", "The FY2021 request includes $787 million for VA's Medical and Prosthetic Research account, a decrease of $37 million (5%) compared to FY2020 enacted levels. The request includes $669 million in funding for research supported by the agency's Medical Care Support account, an increase of $21 million (3%) compared to FY2020. The Medical Care Support account provides administrative and other support for VA researchers and R&D projects, including infrastructure maintenance.", "The Medical and Prosthetics R&D program is an intramural program managed by the Veteran Health Administration's Office of Research and Development (ORD) and conducted at VA Medical Centers and VA-approved sites nationwide. According to ORD, the mission of VA R&D is \"to improve Veterans' health and well-being via basic, translational, clinical, health services, and rehabilitative research and to apply scientific knowledge to develop effective individualized care solutions for Veterans.\" ORD consists of four main research services, each headed by a director:", "Biomedical Laboratory R&D conducts preclinical research to understand life processes at the molecular, genomic, and physiological levels. Clinical Science R&D supports clinical trials and other human subjects research to determine the feasibility and effectiveness of new treatments such as drugs, therapies, or devices; compare existing therapies; and improve clinical care and practice. Health Services R&D conducts studies to identify and promote effective and efficient strategies to improve the quality and accessibility of the VA health system and patient outcomes, and to minimize health care costs. Rehabilitation R&D conducts research and develops novel approaches to improving the quality of life of impaired and disabled veterans.", "In addition to intramural support, VA researchers are eligible to obtain funding for their research from extramural sources, including other federal agencies, private foundations and health organizations, and commercial entities. According to the President's FY2021 budget request, these additional R&D resources are estimated at $540 million in FY2021. However, unlike other federal agencies, such as the National Institutes of Health and the Department of Defense, VA does not have the authority to support extramural R&D by providing research grants to colleges, universities, or other non-VA entities. ", " Table 15 summarizes R&D program funding for VA in the Medical and Prosthetic Research and the Medical Care Support accounts. Table 16 details amounts to be spent in Designated Research Areas (DRAs), which VA describes as \"areas of importance to our veteran patient population.\" Funding for research projects that span multiple areas may be included in several DRAs; thus, the amounts in Table 16 total to more than the appropriation or request for VA R&D."], "subsections": []}, {"section_title": "Department of Transportation98", "paragraphs": ["The Department of Transportation was established by the Department of Transportation Act (P.L. 89-670) on October 15, 1966. The primary purposes of DOT research and development activities as defined by Section 6019 of the Fixing America's Surface Transportation Act ( P.L. 11 4-94 ) are improving mobility of people and goods; reducing congestion; promoting safety; improving the durability and extending the life of transportation infrastructure; preserving the environment; and preserving the existing transportation system.", "Funding for DOT R&D is generally included in appropriations line items that also include non-R&D activities. The amount of funding provided by appropriations legislation that is allocated to R&D is unclear unless funding is provided at the precise level of the request. In general, R&D funding levels are known only after DOT agencies allocate their final appropriations to specific activities and report those figures.", "In FY2021, the Administration is requesting a total of $593.8 million for DOT R&D activities and facilities at the Federal Aviation Administration (FAA), the National Highway Traffic Safety Administration (NHTSA), the Federal Railroad Administration (FRA), the Pipeline and Hazardous Materials Safety Administration (PHMSA), and the Office of the Secretary (OST) (see Table 17 ). The Administration is not requesting funding for DOT R&D activities and facilities associated with the Federal Highway Administration (FHWA), the Federal Transit Administration (FTA), or the Federal Motor Carrier Safety Administration (FMCSA), citing the need for surface transportation reauthorization legislation. In FY2020, three DOT agencies\u00e2\u0080\u0094FAA, NHTSA, and FHWA\u00e2\u0080\u0094accounted for nearly 90% of DOT R&D funding."], "subsections": [{"section_title": "Federal Aviation Administration", "paragraphs": ["The President's FY2021 request of $446.9 million for R&D activities and facilities at FAA would be a decrease of $86 million (16.1%) from the FY2020 enacted amount. The request includes $170 million for the agency's Research, Engineering, and Development (RE&D) account, a reduction of $22.7 million (11.8%) from FY2020. Funding within the RE&D account seeks to improve aircraft safety through research in fields such as fire safety, advanced materials, propulsion systems, aircraft icing, and continued airworthiness, in addition to safety research related to unmanned aircraft systems and the integration of commercial space operations into the national airspace. "], "subsections": []}, {"section_title": "National Highway Traffic Safety Administration", "paragraphs": ["The President is requesting $62.9 million in R&D and R&D facilities funding in FY2021 for NHTSA, $15.0 million (19.3%) below FY2020. NHTSA R&D focuses on automation and the study of human machine interfaces, advanced vehicle safety technology, ways of improving vehicle crashworthiness and crash avoidance, reducing unsafe driving behaviors, and alternative fuels vehicle safety."], "subsections": []}, {"section_title": "Other DOT Components", "paragraphs": ["R&D activities are also supported by several other DOT components or agencies (see Table 17 ). The President's FY2021 request includes DOT R&D activities and facilities funding for:", "the Federal Railroad Administration, totaling $41.0 million, $0.4 million (1.0%) above the FY2020 enacted level of $40.6 million; the Pipeline and Hazardous Materials Safety Administration, totaling $24.5 million, the same amount as FY2020; and the Office of the Secretary, totaling $18.4 million, $8.5 million (31.7%) below the FY2020 level of $27.0 million."], "subsections": []}]}, {"section_title": "Department of the Interior100", "paragraphs": ["The Department of the Interior (DOI) was created to conserve and manage the nation's natural resources and cultural heritage, to provide scientific and other information about those resources, and to uphold \"the nation's trust responsibilities or special commitments to American Indians, Alaska Natives, and affiliated island communities to help them prosper.\" DOI has a wide range of responsibilities, including, among other things, mapping, geological, hydrological, and biological science; migratory bird, wildlife, and endangered species conservation; surface-mined lands protection and restoration; and historic preservation. The Administration is requesting $12.8 billion in net discretionary funding for DOI in FY2021. Of that amount, $725 million is proposed for R&D, $248 million (25%) below the FY2020 estimated level of $973 million. The U.S. Geological Survey (USGS) is the only DOI component that conducts basic research.", "Funding for DOI R&D is generally included in appropriations line items that also include non-R&D activities. How much of the funding provided in appropriations legislation is allocated to R&D specifically is unclear unless funding is provided at the precise level of the request. In general, R&D funding levels are known only after DOI components allocate their appropriations to specific activities and report those figures."], "subsections": [{"section_title": "Other DOI Components", "paragraphs": ["The President's FY2021 request also includes R&D funding for the following DOI components, none of which would receive an increase:", "Bureau of Reclamation (BOR): $76 million for FY2021, down $39 million (34%) from the FY2020 estimate. Bureau of Ocean Energy Management (BOEM): $93 million for FY2021, down $7 million (7%) from the FY2020 estimate. Fish and Wildlife Service (FWS): $15 million for FY2021, equal to the FY2020 estimate. National Park Service (NPS): $26 million for FY2021, equal to the FY2020 estimate. Bureau of Safety and Environmental Enforcement (BSEE): $25 million for FY2021, down $2 million (7%) from the FY2020 estimate. Bureau of Land Management (BLM): $21 million for FY2021, equal to the FY2020 estimate. Bureau of Indian Affairs (BIA): $5 million for FY2021, equal to the FY2020 estimate. Wildland Fire Management (WFM): No funding requested for R&D for FY2021. Office of Surface Mining Reclamation and Enforcement (OSMRE): $1 million for FY2021, equal to the FY2020 estimate.", " Table 18 summarizes FY2020 estimated R&D funding and the President's FY2021 R&D funding request for DOI components."], "subsections": []}]}, {"section_title": "Department of Homeland Security107", "paragraphs": ["The Department of Homeland Security (DHS) has identified five core missions: to prevent terrorism and enhance security, to secure and manage the borders, to enforce and administer immigration laws, to safeguard and secure cyberspace, and to ensure resilience to disasters. New technology resulting from research and development can contribute to achieving all these goals. The Directorate of Science and Technology (S&T) has primary responsibility for establishing, administering, and coordinating DHS R&D activities. Other components, such as the Countering Weapons of Mass Destruction Office, the U.S. Coast Guard, and the Transportation Security Administration, conduct R&D relating to their specific missions.", "The President's FY2021 budget request for DHS includes $439 million for activities identified as R&D. This would be a reduction of 19.6% from $546 million in FY2020. The total includes $340\u00c2\u00a0million for the R&D account in the S&T Directorate and smaller amounts for four other DHS components. See Table 19 .", "The S&T Directorate performs R&D in several laboratories of its own and funds R&D performed by the DOE national laboratories, industry, universities, and others. It also conducts testing and other technology-related activities in support of acquisitions by other DHS components. The Administration's FY2021 request of $340 million for the S&T Directorate R&D account would be a decrease of 19.5% from $422 million in FY2020. Five of the six thrust areas in the S&T Directorate's Research, Development, and Innovation budget line would decrease, by amounts ranging from 18.3% (Cyber Security/Information Analysis) to 32.4% (Chemical, Biological, and Explosives Defense), while funding for the sixth thrust area, Innovative Research and Foundational Tools, would increase by 35.2%. Funding for university centers of excellence would decrease from $37 million in FY2020 to $18 million in FY2021 (Congress rejected a similar proposal in the FY2020 budget).", "In addition to its R&D account, the S&T Directorate receives funding for laboratory facilities and other R&D-related expenses through two other accounts (not shown in the table). The total request for the directorate is $644 million, a decrease of 12.7% from $737 million in FY2020. The directorate's Procurement, Construction, and Improvements account would receive $19 million in the Administration's request (versus zero in FY2020) for closure of the Plum Island Animal Disease Center\u00e2\u0080\u0094which is being replaced by the National Bio and Agro-Defense Facility (NBAF)\u00e2\u0080\u0094and for preparation of Plum Island itself for sale.", "The request for R&D in the Countering Weapons of Mass Destruction Office is $58 million, down from $69 million in FY2019. No funding is requested for the National Technical Nuclear Forensics program ($7 million in FY2020), which the Administration is proposing to transfer to the DOE National Nuclear Security Administration."], "subsections": []}, {"section_title": "Environmental Protection Agency109", "paragraphs": ["The U.S. Environmental Protection Agency (EPA), the federal regulatory agency responsible for administering a number of environmental pollution control laws, funds a broad range of R&D activities to provide scientific tools and knowledge that support decisions relating to preventing, regulating, and abating environmental pollution. Since FY2006, Congress has funded EPA through the Interior, Environment, and Related Agencies appropriations acts.", "Appropriations for EPA R&D are generally included in line-items that also include non-R&D activities. Annual appropriations bills and the accompanying committee reports do not identify precisely how much funding provided in appropriations bills is allocated to EPA R&D alone. EPA determines its R&D funding levels in operation through allocating its appropriations to specific activities and reporting those amounts. ", "The agency's Science and Technology (S&T) appropriations account funds much of EPA's scientific research activities, which include R&D conducted by the agency at its own laboratories and facilities, and R&D and related scientific research conducted by universities, foundations, and other nonfederal entities that receive EPA grants. The S&T account receives a base appropriation and a transfer from the Hazardous Substance Superfund (Superfund) account for research on more effective methods for remediating contaminated sites.", "EPA's Office of Research and Development (ORD) is the primary manager of R&D at EPA headquarters and laboratories around the country, as well as external R&D. A large portion of the S&T account funds EPA R&D activities managed by ORD, including research grants. Programs implemented by other offices within EPA also may have a research component, but the research component is not necessarily the primary focus of the program.", "As with the President's FY2020 budget request, the FY2021 request proposes reductions and eliminations of funding for FY2021 across a number of EPA programs and activities. The President's FY2021 request includes a total of $6.66 billion for EPA (after rescissions ), $2.40 billion (26.5%) less than the total $9.06 billion FY2020 enacted appropriations (no rescissions ) for EPA provided in Title II of the Further Consolidated Appropriations Act, 2020 ( P.L. 116- 94 ), and $435.6 million (7.0%) more than the FY2020 request of $6.22 billion for EPA (after rescissions ).", "Reductions proposed in the President's FY2021 request are distributed across EPA operational functions and activities as well as grants for states, tribes, and local governments. With the exception of the Building and Facilities account, the President's FY2021 request proposes funding reductions below FY2020 enacted levels for the nine other EPA appropriations accounts, although funding for some program areas within the accounts would remain constant or increase. Some Members of Congress expressed concerns regarding proposed reductions of funding for EPA scientific research programs during hearings on the President's FY2021 budget request. Similar proposed reductions in the FY2020 budget request were generally not included in the FY2020 enacted appropriations.", "Including a $19.1 million transfer from the Superfund account, the President's FY2021 budget request proposes $503.8 million for EPA's S&T account, $243.4 million (32.6%) less than the FY2020 enacted $747.2 million for the S&T account provided in P.L. 116-94 , which included a $30.7 million transfer from the Superfund. The FY2021 request would provide an increase of 4.8% for the S&T account compared to the FY2020 request of $480.8 million, which included a $17.8 million transfer from the Superfund account. ", " Table 20 at the end of this section includes the President's FY2021 request for program areas and activities within EPA's S&T account as presented in EPA's FY2021 Congressional Budget Justification compared to the FY2020 enacted appropriations as reported in the Explanatory Statement accompanying P.L. 116-94 that includes the Department of Interior, Environment, and Related Agencies appropriations.", "House and Senate Appropriations Committee reports and explanatory statements accompanying recent fiscal year EPA proposed and enacted appropriations have not specified funding for all subprogram areas reported in EPA's budget justifications. S&T subprogram areas not directly reported in House and Senate Appropriations Committee reports are noted in Table 20 as \"NR\" (not reported). Additionally, the President's FY2018 through FY2021 budget requests and EPA's associated congressional budget justifications have modified the titles for some of the program areas relative to previous Administrations' budget requests and congressional committee reports' presentations. The House and Senate Appropriations Committees have generally adopted the modified program area titles as presented in the recent budget requests.", "As shown in Table 20 , with few exceptions the requested FY2021 amount for individual EPA program area and activity line items within the S&T account would be less than the FY2020 enacted appropriations. The FY2021 request did not propose to completely eliminate funding for the broader program areas; however, eliminations (no funding is requested for FY2021) are proposed for line-item activities below the program areas as indicated in Table 20 . These program areas include", "Atmospheric Protection Program (formerly GHG [greenhouse gas] Reporting Program and Climate Protection Program), Indoor Air Radon Program, and Reduce Risks from Indoor Air. ", "For other program areas, proposed reductions in funding included eliminations of certain activities within those program areas. For example, the proposed reduction in funding for Research: Air and Energy, Research: Safe and Sustainable Water Resources, Research: Sustainable and Healthy Communities, and Research: Chemical Safety and Sustainability program areas for FY2021 included the proposed elimination of funding for the Science to Achieve Results (STAR) program.", "The FY2020 enacted appropriations for the S&T account included $6.0 million for Research: National Priorities within the S&T account for FY2020, an increase compared to $5.0 million included for FY2019. As in the previous Administration's fiscal year requests, the President's FY2021 budget request did not include funding for Research: National Priorities.", "The size and structure of the EPA's workforce has been a topic of debate during congressional committee hearings, particularly in recent fiscal years. \"Workforce reshaping\" was introduced in the FY2018 request and described as agency-wide organizational restructuring, \"reprioritization of agency activities,\" and reallocation of resources. Workforce reshaping was most recently proposed in the FY2020 request. As with the FY2018 and FY2019 enacted appropriations, P.L. 116-94 did not fund the President's FY2020 request for EPA workforce reshaping for FY2020. The FY2021 request does not include similar funding for EPA workforce reshaping; however, according to the EPA's FY2021 Congressional budget justification, the number of full-time-equivalents (FTEs) would be reduced from 14,172.0 FTEs in FY2020 to 12,610.2 FTEs in FY2021.", "Appendix A. Acronyms and Abbreviations", "Appendix B. CRS Contacts for Agency R&D", "The following table lists the primary CRS experts on R&D funding for the agencies covered in this report."], "subsections": []}]}}
{"id": "R46344", "title": "U.S. Foreign Assistance to the Middle East: Historical Background, Recent Trends, and the FY2021 Request", "released_date": "2020-05-05T00:00:00", "summary": ["Since 1946, the United States has provided an estimated total of $346 billion (obligations in current dollars) in foreign assistance to the Middle East and North Africa (MENA) region. For FY2021, overall bilateral aid requested for MENA countries amounts to $6.6 billion, or about 15% of the State Department's International Affairs budget request. The State Department estimates that the Middle East stands to receive 42% of the geographically specific assistance in the budget request, more than any other region. As in previous years, more than 90% would support assistance for Israel, Egypt, and Jordan. The region also receives a sizable portion of annual emergency humanitarian assistance appropriations, which are not included in the region-specific aid figures.", "Policy changes during the Trump Administration, coupled with legislation passed by Congress, have halted various types of U.S. aid to the Palestinians. The Administration withheld FY2017 bilateral economic assistance, reprogramming it elsewhere, and ceased requesting bilateral economic assistance after Palestinian leadership broke off high-level political contacts to protest President Trump's December 2017 recognition of Jerusalem as Israel's capital. After Congress passed the Anti-Terrorism Clarification Act of 2018 (ATCA, P.L. 115-253 ), the Palestinian Authority (PA) ceased accepting any U.S. aid in January 2019, including security assistance and legacy economic assistance from prior fiscal years. Amidst the COVID-19 outbreak, some Members of Congress are concerned that, due to the uncertainty surrounding the status of U.S. aid to the Palestinians, humanitarian aid to combat the disease may not reach the Palestinian population. In April, the Administration announced that it would provide $5 million in International Disaster Assistance (IDA) to the West Bank as part of its global COVID-19 response.", "The foreign aid data in this report is based on a combination of resources, including the U.S. Agency for International Development's (USAID) U.S. Overseas Loans and Grants (also known as the \"Greenbook\"), appropriations data collected by the Congressional Research Service from the State Department and USAID, data extrapolated from executive branch agencies' notifications to Congress, and information published annually in the State Department and USAID Congressional Budget Justifications. For foreign aid terminology and acronyms, see the glossary appended to the report.", "In order to more accurately compare the Administration's FY2021 foreign assistance request to previous years' appropriations, aid figures in this report (except where otherwise indicated) refer only to funding that is administered by the State Department or USAID and requested for individual countries or regional programs. While this represents the majority of U.S. assistance to the Middle East, it is important to note that there are several other sources of U.S. aid to the region, such as International Disaster Assistance (IDA), Migration and Refugee Assistance (MRA), and Transition Initiatives (TI). Likewise, other U.S. federal entities\u00e2\u0080\u0094such as the Departments of Defense, Commerce, and the Treasury, and the Millennium Challenge Corporation\u00e2\u0080\u0094administer additional types of assistance. Funding for such activities is generally not requested for individual countries and regions, and it is largely excluded here.", "Much of the data presented in this report pre-dates the global spread of the Coronavirus Disease 2019, or COVID-19. All MENA countries, particularly poorer nations that receive foreign assistance, are expected to be affected by the outbreak; however, the extent and scale of the damage to public health and economies across the region is unknown, as is the pandemic's full impact on U.S. aid programs.", "As of mid-April 2020, the Administration had allocated some emergency humanitarian assistance to the region as a first response to the COVID-19 pandemic. On April 16, the State Department announced that it would provide an estimated $79 million in health assistance to various MENA countries to help prepare laboratory systems, implement a public-health emergency plan for points of entry, and activate case-finding and event-based surveillance for influenza-like illnesses. To date, Congress has appropriated almost $1.8 billion in emergency foreign assistance funds through two supplemental appropriations bills to address the impact of COVID-19. See CRS In Focus IF11496, COVID-19 and Foreign Assistance: Issues for Congress , by Nick M. Brown, Marian L. Lawson, and Emily M. Morgenstern."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["This report is an overview of U.S. foreign assistance to the Middle East and North Africa (MENA). It includes a brief historical review of foreign aid levels, a description of specific country programs, and analysis of current foreign aid issues. It also provides analysis of the Administration's FY2021 budget request for State Department and U.S. Agency for International Development (USAID) Foreign Operations and Related Programs (SFOPS) appropriations in the MENA region. ", "Congress authorizes and appropriates foreign assistance and conducts oversight of executive agencies' management of aid programs. As the largest regional recipient of U.S. economic and security assistance ( see Figure 1 below ), the Middle East is perennially a major focus of interest as Congress exercises these powers.", "The foreign aid data in this report is based on a combination of resources, including USAID's U.S. Overseas Loans and Grants Database (also known as the \"Greenbook\"), appropriations data collected by the Congressional Research Service from the State Department and USAID, data extrapolated from executive branch agencies' notifications to Congress, and information published annually in the State Department and USAID Congressional Budget Justifications.", "The release of this report has coincided with the global spread of the Coronavirus Disease 2019, or COVID-19 ( see text box below ). The COVID-19 pandemic is expected to affect all MENA countries, and may significantly affect poorer nations that benefit from U.S. and other international assistance. Much of the data presented in this report predates the COVID-19 pandemic."], "subsections": []}, {"section_title": "Foreign Aid to Support Key U.S. Policy Goals", "paragraphs": ["U.S. bilateral assistance to MENA countries is intended to support long-standing U.S. foreign policy goals for the region, such as containing Iranian influence, countering terrorism, preventing the proliferation of weapons of mass destruction, preserving the free-flow of maritime commerce and energy resources, promoting Israeli-Arab peace, and preserving the territorial integrity and stability of the region's states. U.S. foreign assistance (from global accounts/non-bilateral) also is devoted to ameliorating major humanitarian crises stemming from ongoing conflicts in Syria, Yemen, and elsewhere.", "As in previous years, the bulk of U.S. foreign aid to the MENA region continues to be focused on assistance (mostly military) to three countries: Israel, Egypt, and Jordan. Israel is the largest cumulative recipient of U.S. foreign assistance since World War II. Almost all current U.S. aid to Israel is in the form of military assistance, and U.S. military aid for Israel has been designed to maintain Israel's \"qualitative military edge\" (QME) over neighboring militaries. U.S. military aid to Egypt and Jordan (which have been at peace with Israel since 1979 and 1994, respectively) is designed to encourage continued Israeli-Arab cooperation on security issues while also ensuring interoperability between the United States and its Arab partners in the U.S. Central Command (CENTCOM) area of responsibility. ", "The United States also has provided economic assistance to some MENA countries focusing on education, water, health, and economic growth initiatives. In part, U.S. bilateral economic assistance is premised on the idea that governments across the MENA region have had increasing difficulty meeting the expectations of their young citizens. Public dissatisfaction over quality of life issues and lack of economic opportunities persist in many MENA countries. According to the Arab Youth Survey , the rising cost of living and unemployment are the two main obstacles facing Middle East youth today. Arab Barometer , a U.S.-funded, nonpartisan research network that provides insight into Arab public attitudes, also notes that widespread youth discontent about their economic prospects translates into broad frustration with government efforts to create employment opportunities. In recent years, as popular protests have proliferated across the MENA region, governments have continued to grapple with systemic socioeconomic challenges, such as corruption, over-reliance on oil, inefficient public sectors, low rates of spending on health and education, and soaring public debt."], "subsections": []}, {"section_title": "The Trump Administration's FY2021 Aid Budget Request for the MENA Region", "paragraphs": ["Since 1946, the MENA region has received the most U.S. foreign assistance worldwide, reflecting significant support for U.S. partners in Israel, Egypt, Jordan, and Iraq ( see Figure 2 ). For FY2021, Israel, Egypt, and Jordan combined would account for nearly 13.5% of the total international affairs request.", "Reducing MENA Aid. For FY2021, the Administration proposes to spend an estimated $6.6 billion on bilateral assistance to the MENA region, a figure that would be nearly equal to the 2020 request but 12% less than what Congress appropriated for 2019 ( see Figure 3 ). In order to achieve this 12% proposed reduction, the Administration's FY2021 request would reduce total military and economic assistance to Iraq, Lebanon, and Tunisia by a combined $544 million. It also seeks to reduce total aid to Jordan by $250 million and, as it did the previous year, does not request Economic Support Fund/Economic Support and Development Fund (ESF/ESDF) for stabilization programs in Syria. In its FY2021 request to Congress, the Administration reiterated from the previous year that it seeks to \"share the burden\" of economically aiding MENA countries with the international community while aiming to build countries' \"capacities for self-reliance.\"", "Stabilization Support for Iraq, Syria, and Beyond. For FY2021, the Administration is again requesting that Congress provide it flexibility in allowing up to $160 million in funding appropriated to various bilateral aid accounts to be used for the Relief and Recovery Fund (RRF). The RRF is designed to assist areas liberated or at risk from the Islamic State (IS, also known as ISIL, ISIS, or the Arabic acronym Da'esh ) and other terrorist organizations (see \"Potential Foreign Aid Issues for Congress\" below). According to the Congressional Budget Justification (CBJ), \"ESDF funding in the RRF will allow the State Department and USAID to support efforts in places like Syria, Iraq, Libya, and Yemen, where the situation on the ground changes rapidly, and flexibility is required.\" Among other things, funds designated for RRF purposes have supported Iraqi communities through contributions to the United Nations Development Program's Funding Facility for Stabilization (UNDP-FFS). The Trump Administration had ended U.S. contributions to stabilization efforts in Syria, but notified Congress of an intended obligation in 2020 and indicates that it may use FY2021 funds for programs in Syria.", "No Funds for the Palestinians. For the first time in over a decade, an Administration has not requested any U.S. bilateral economic or security assistance aid for the Palestinians (see \"Potential Foreign Aid Issues for Congress\" section below). The Trump Administration, having clashed repeatedly with Palestinian Authority President Mahmoud Abbas, has significantly reduced bilateral funding to the West Bank and Gaza, and has discontinued contributions to U.N. Relief and Works Agency for Palestine Refugees in the Near East (UNRWA) for Palestinian refugees. Moreover, as a result of provisions in the Anti-Terrorism Clarification Act of 2018 (ATCA, P.L. 115-253 ), no bilateral assistance has been delivered to the Palestinians since January 2019. The Administration did suggest that funds from its re-proposed \"Diplomatic Progress Fund\" ($225 million) could be used to \"resume security assistance in the West Bank\" or support critical diplomatic efforts, such as \"a plan for Middle East peace.\" In FY2020, the Administration requested $175 million in ESDF for the Diplomatic Progress Fund, though Congress did not fund it in the FY2020 Further Consolidated Appropriations Act, P.L. 116-94 (referred to herein as P.L. 116-94 )."], "subsections": []}, {"section_title": "Select Country Summaries", "paragraphs": [], "subsections": [{"section_title": "Israel20", "paragraphs": ["Israel is the largest cumulative recipient of U.S. foreign assistance since World War II. To date, the United States has provided Israel $142.3 billion (current, or noninflation-adjusted, dollars) in bilateral assistance and missile defense funding. Almost all U.S. bilateral aid to Israel is in the form of military assistance.", "In 2016, the U.S. and Israeli governments signed a 10-year Memorandum of Understanding (MOU) on military aid, covering FY2019 to FY2028. Under the terms of the MOU, the United States pledges (pending congressional appropriation) to provide Israel $38 billion in military aid ($33 billion in Foreign Military Financing or FMF grants plus $5 billion in missile defense appropriations). This MOU replaced a previous $30 billion 10-year agreement, which ran through FY2018.", "Israel is the largest recipient of FMF. For FY2021, the President's request for Israel would encompass approximately 59% of total requested FMF funding worldwide.", "Israel uses most FMF to finance the procurement of advanced U.S. weapons systems. In March 2020, the Defense Security Cooperation Agency (DSCA) notified Congress of a planned sale to Israel of eight KC-46A Boeing \"Pegasus\" aircraft for an estimated $2.4 billion. According to Boeing, the KC-46A Pegasus is a multirole tanker (can carry passengers, fuel, and equipment) that can refuel all U.S. and allied military aircraft. The Israeli Air Force's current fleet of tankers was originally procured in the 1970s, and it is anticipated that Israel will be able to use the KC-46A to refuel its F-35 fighters. Israel is the first international operator of the F-35 Joint Strike Fighter, the Department of Defense's fifth-generation stealth aircraft considered to be the most technologically advanced fighter jet ever made. After Japan, Israel will become the second foreign user of the KC-46A."], "subsections": []}, {"section_title": "Egypt21", "paragraphs": ["Since the 1979 Israeli-Egyptian Peace Treaty, the United States has provided Egypt with large amounts of foreign assistance. U.S. policymakers have routinely justified this aid to Egypt as an investment in regional stability, built primarily on long-running military cooperation and the perceived need to sustain the treaty. Egypt has used FMF to purchase major U.S. defense systems, such as the F-16 fighter aircraft, the M1A1 Abrams battle tank, and the AH-64 Apache attack helicopter. ", "U.S. economic aid to Egypt (funded through ESF) is divided into two components: (1) USAID-managed programs (public health, education, economic development, democracy and governance); and (2) the U.S.-Egyptian Enterprise Fund (EAEF). Since its inception in FY2012, Congress has appropriated $300 million in ESF for the EAEF. ", "Egypt's governance and human rights record has sparked regular criticism from U.S. officials and some Members of Congress (see \"Potential Foreign Aid Issues for Congress\" section below). Since FY2012, Congress has passed appropriations legislation that withholds the obligation of FMF to Egypt until the Secretary of State certifies that Egypt is taking various steps toward supporting democracy and human rights. With the exception of FY2014, lawmakers have included a national security waiver to allow the Administration to waive these congressionally mandated certification requirements under certain conditions. For FY2019, the Trump Administration has obligated $1 billion in FMF for Egypt, of which $300 million in FY2019 FMF remains withheld until the Secretary issues a determination pursuant to Section 7041(a)(3)(B) of P.L. 116-6 , the FY2019 Consolidated Appropriations Act. The Further Consolidated Appropriations Act, 2020 ( P.L. 116-94 ) also withholds $300 million in FMF until a certification or waiver is issued.", "For the past three fiscal years ( see Table 3 ), Congress has appropriated over $1.4 billion in total bilateral aid for Egypt and has added $30 million to $50 million in ESF above the president's request for USAID programs in Egypt. "], "subsections": []}, {"section_title": "Jordan23", "paragraphs": ["The Hashemite Kingdom of Jordan is also one of the largest recipients of U.S. foreign aid globally. Like Israel, the United States and Jordan have signed an MOU on foreign assistance, most recently in 2018. The MOU, the third such agreement between the United States and Jordan, commits the United States (pending congressional appropriation) to provide $1.275 billion per year in bilateral foreign assistance over a five-year period for a total of $6.375 billion (FY2018-FY2022). ", "U.S. military assistance primarily enables the Jordanian military to procure and maintain U.S.-origin conventional weapons systems. FMF overseen by the State Department supports the Jordanian Armed Forces' multi-year (usually five-year) procurement plans, while DOD-administered security assistance supports ad hoc defense systems to respond to emerging threats. ", "The United States provides economic aid to Jordan for (1) budgetary support (cash transfer), (2) USAID programs in Jordan, and (3) loan guarantees. The cash transfer portion of U.S. economic assistance to Jordan is the largest amount of budget support given to any U.S. foreign aid recipient worldwide. U.S. cash assistance is provided to help the kingdom with foreign debt payments, Syrian refugee support, and fuel import costs (Jordan is almost entirely reliant on imports for its domestic energy needs). ESF cash transfer funds are deposited in a single tranche into a U.S.-domiciled interest-bearing account and are not commingled with other funds. The U.S. State Department estimates that, since large-scale U.S. aid to Syrian refugees began in FY2012, it has allocated more than $1.3 billion in humanitarian assistance from global accounts for programs in Jordan."], "subsections": []}, {"section_title": "Iraq27", "paragraphs": ["The United States funds military, economic, stabilization, and security programs in Iraq, with most assistance funding provided through the Defense Department Counter-ISIS Train and Equip Fund (CTEF). From FY2015 through FY2020, Congress authorized and appropriated more than $6.5 billion in Defense Department funding for train and equip assistance in Iraq.", "Iraq began purchasing U.S.-origin weapons systems using its own national funds through the Foreign Military Sales program in 2005, and the United States began providing FMF to Iraq in 2012 in order to help Iraq sustain U.S.-origin systems. Between 2014 and 2015, as Iraq and the United States battled the Islamic State throughout northern and western Iraq, FMF funds were \"redirected to urgent counterterrorism requirements\" including ammunition and equipment.\" A $250 million FY2016 FMF allocation subsidized the costs of a $2.7 billion FMF loan to support acquisition, training, and continued sustainment of U.S.-origin defense systems.", "U.S. economic assistance to Iraq has supported public financial management reform, United Nations-coordinated stabilization programs, and loan guarantees. The Obama Administration and Congress provided a U.S. loan guarantee in 2017 to encourage other lenders to purchase bonds issued by Iraq to cover budget shortfalls. The Trump Administration has directed U.S. stabilization support since 2017 to prioritize programs benefitting persecuted Iraqi religious minority groups. P.L. 116-94 directs stabilization assistance to Anbar province and appropriates bilateral economic assistance, international security assistance, and humanitarian assistance for the Kurdistan Region of Iraq. The act also directs funds to support transitional justice and accountability programs for genocide, crimes against humanity, and war crimes in Iraq."], "subsections": []}, {"section_title": "Tunisia30", "paragraphs": ["As of early 2020, Tunisia remained the sole MENA country to have made a durable transition to democracy since the 2011 wave of Arab uprisings. U.S. bilateral aid has increased significantly since then, supporting economic growth initiatives, good governance, and security assistance. ", "U.S.-Tunisia security cooperation has expanded since 2011, as Tunisia has sought to maintain its U.S.-origin defense materiel, reform its security institutions, and respond to evolving terrorist threats. The United States has supported Tunisia's security sector reform efforts with $12 million to $13 million per year in State Department-administered funding for law enforcement strengthening and reform. Over the last five years, Congress has appropriated $65 million to $95 million per year in bilateral FMF for Tunisia ( see Table 6 ). DOD has provided substantial additional counterterrorism and border security assistance for Tunisia under its \"global train and equip\" authority (currently, 10 U.S.C. 333) and separate nonproliferation authorities.", "Since the Trump Administration issued its first aid budget request (for FY2018), Congress has appropriated, on average, $104 million more in bilateral aid to Tunisia each year than the President requested. As part of its justification for requesting global FMF loan authority in FY2021, the Administration cited a \"request from the Government of Tunisia for a $500 million FMF loan to procure U.S.-manufactured light attack aircraft for the Tunisian Armed Forces.\" Congress did not enact FMF loan authority in prior years in response to previous Trump Administration requests. "], "subsections": []}, {"section_title": "Lebanon32", "paragraphs": ["The United States has sought to bolster forces that could help counter Syrian and Iranian influence in Lebanon through a variety of military and economic assistance programs. U.S. security assistance priorities reflect increased concern about the potential for Sunni jihadist groups such as the Islamic State to target Lebanon, as well as long-standing U.S. concerns about Hezbollah and preserving Israel's qualitative military edge (QME). U.S. economic aid to Lebanon seeks to promote democracy, stability, and economic growth, particularly in light of the challenges posed by the ongoing conflict in neighboring Syria. Congress places several certification requirements on U.S. assistance funds for Lebanon annually in an effort to prevent their misuse or the transfer of U.S. equipment to Hezbollah or other designated terrorists. Hezbollah's participation in the Syria conflict on behalf of the Asad government is presumed to have strengthened the group's military capabilities and has increased concern among some in Congress over the continuation of U.S. assistance to the Lebanese Armed Forces (LAF).", "FMF has been one of the primary sources of U.S. funding for the LAF, along with the Counter-ISIL Train and Equip Fund (CTEF). According to the State Department, between FY2015 and FY2019, security assistance has averaged $224 million annually in combined State Department and Department of Defense military grant assistance. These funds have been used to procure, among other things, light attack helicopters, unmanned aerial vehicles, and night vision devices.", "The United States has long provided relatively modest amounts of ESF to Lebanon for scholarships and USAID programs. Since the start of the Syrian civil war, U.S. programs have been aimed at increasing the capacity of the public sector to provide basic services to both refugees and Lebanese host communities, including reliable access to potable water, sanitation, and health services. U.S. programs have also aimed to increase the capacity of the public education system to cope with the refugee influx. ", "For FY2021, the President is requesting $133 million in total bilateral aid to Lebanon, which is 46% less than what Congress provided for Lebanon in FY2020. For the past three fiscal years, Congress has appropriated, on average, $113.5 million per year above the President's request. "], "subsections": []}]}, {"section_title": "Regional Program Aid", "paragraphs": ["In addition to assistance provided directly to certain countries, the United States provides aid to Middle Eastern countries through regional programs, including the following.", "Middle East Regional Partnership Initiative (MEPI) . MEPI is an office within the Bureau for Near Eastern Affairs at the State Department that specifically supports political reform, women's and youth empowerment, quality education, and promoting economic opportunity in the Arab world. Since MEPI's inception in 2002, Congress has allocated it an estimated $1.1 billion in ESF. One of MEPI's contributions to U.S. democracy promotion in the Arab world has been to directly fund indigenous nongovernmental organizations (NGOs). MEPI's Local Grants Program awards grants to NGOs throughout the Middle East in order to build capacity for small organizations. However, in countries with legal restrictions prohibiting foreign funding of local NGOs, U.S. officials and grant recipients may weigh the potential risks of cooperation. Between 2011 and 2013, Egypt arrested and convicted local and foreign NGO specialists on election monitoring, political party training, and government transparency in Egypt. Middle East Regional (MER) . A USAID-managed program funded by ESF, MER supports programs that work in multiple countries on issues such as women's rights, public health, water scarcity, and education. For FY2021, the Administration is requesting $50 million in ESF funding for MER. In recent years, USAID has allocated $10 million to $15 million annually for MER. Near East Regional Democracy (NERD) . A State Department-managed program funded through ESF, NERD promotes democracy and human rights in Iran (though there is no legal requirement to focus exclusively on Iran). NERD-funded training (e.g., internet freedom, legal aid) for Iranian activists takes place outside the country due to the clerical regime's resistance to opposition activities supported by foreign donors. For FY2021, the Administration has bundled its NERD request together with MEPI as part of an $84.5 million ESF request for what it calls \"State NEA Regional.\" For FY2020, Appropriators specified $70 million in ESF for NERD ($55 million base allocation plus $15 million to the State Department's Bureau of Democracy, Human Rights, and Labor or DRL) in Division G of the Joint Explanatory Statement accompanying P.L. 116-94 . Middle East Regional Cooperation (MERC). A USAID-managed program funded through ESF, MERC supports scientific cooperation between Israelis and Arabs. First established in an amendment to the Foreign Operations bill in 1979, MERC was designed to encourage cooperation between Egyptian and Israeli scientists. Today, MERC is an open-topic, peer-reviewed competitive grants program that funds joint Arab-Israeli research covering the water, agriculture, environment, and health sectors. For FY2021, the Administration is not requesting any ESF for MERC. Appropriators specified $5 million for MERC in FY2020 appropriations (Division G of the Joint Explanatory Statement accompanying P.L. 116-94 ). Middle East Multilaterals (MEM) . A small State Department-managed program funded through ESF, MEM supports initiatives aimed at promoting greater technical cooperation between Arab and Israeli parties, such as water scarcity, environmental protection, and renewable energy. For FY2021, the Administration is not requesting any ESF for MEM, and the last time the program was allocated funding was in FY2018 ($400,000). Trans-Sahara Counter-Terrorism Partnership (TSCTP) . A State Department-led, interagency initiative funded through multiple foreign assistance accounts (PKO, NADR, INCLE, DA, and ESF), TSCTP supports programs aimed at improving the capacity of countries in North and West Africa to counter terrorism and prevent Islamist radicalization. Three North African countries \u00e2\u0080\u0094Tunisia, Algeria, and Morocco\u00e2\u0080\u0094participate in TSCTP; Libya is also formally part of the partnership, but the majority of funding has been implemented in West Africa's Sahel region to date. "], "subsections": []}, {"section_title": "Funding for Complex Humanitarian Crises", "paragraphs": ["For nearly a decade, the United States has continued to devote significant amounts of foreign assistance resources toward several major humanitarian crises stemming from ongoing conflicts in Syria, Yemen, and elsewhere ( see Figure 4 ). Since 2010, the United States has provided about $16.4 billion in humanitarian response funding to the Middle East.", "The United States is the largest donor of humanitarian assistance to the Syria crisis and since FY2012 has allocated more than $10.6 billion to meet humanitarian needs using existing funding from global humanitarian accounts and some reprogrammed funding. According to the United Nations, Yemen's humanitarian crisis is the worst in the world, with close to 80% of Yemen's population of nearly 30 million needing some form of assistance. The United States, Saudi Arabia, the United Arab Emirates, and Kuwait are the largest donors to annual U.N. appeals for aid. Since 2011, the United States has provided over $3 billion in emergency humanitarian aid for Yemen. Most of these funds are provided through USAID's Office of Food for Peace to support the World Food Programme in Yemen. During the government of Iraq's confrontation with the Islamic State , the United States was also one of the largest donors of humanitarian assistance. Since 2014, it has provided more than $2.6 billion in humanitarian assistance for food, improved sanitation and hygiene, and assistance for displaced and vulnerable communities to rebuild their livelihoods.", "The State Department and USAID provide this humanitarian assistance through implementing partners, including international aid organizations and nongovernmental organizations Humanitarian assistance is primarily managed by USAID's Office of Foreign Disaster Assistance (OFDA), USAID's Office of Food for Peace (FFP), and the U.S. Department of State's Bureau of Population, Refugees, and Migration (State/PRM) using \"global accounts\" (rather than bilateral), such as IDA, FFP, and MRA."], "subsections": []}, {"section_title": "Foreign Aid Issues for Potential Consideration", "paragraphs": [], "subsections": [{"section_title": "Major Changes in U.S. Aid to the Palestinians36", "paragraphs": ["Policy changes during the Trump Administration ( see Chronology below ), coupled with legislation passed by Congress, have halted various types of U.S. aid ( see \"U.S. Aid to the Palestinians Since 1950\" Text Box ) to the Palestinians. The Administration withheld FY2017 bilateral economic assistance, reprogramming it elsewhere, and ceased requesting bilateral economic assistance after Palestinian leadership broke off high-level political contacts to protest President Trump's December 2017 recognition of Jerusalem as Israel's capital. In January 2019, after Congress passed the Anti-Terrorism Clarification Act of 2018 (ATCA, P.L. 115-253 ), the Palestinian Authority (PA) ceased accepting any U.S. aid, including security assistance and legacy economic assistance from prior fiscal years. ATCA provided for a defendant's consent to U.S. federal court jurisdiction over the defendant for lawsuits related to international terrorism if the defendant accepted U.S. foreign aid from any of the three accounts from which U.S. bilateral aid to the Palestinians has traditionally flowed (ESF, INCLE, and NADR). The PA made the decision not to accept bilateral aid, most likely to avoid being subjected to U.S. jurisdiction in lawsuits filed by U.S. victims of Palestinian terrorism.", "Some sources suggested that the Administration and Congress belatedly realized ATCA's possible impact, and began considering how to resume security assistance to the PA\u00e2\u0080\u0094and perhaps other types of aid to the Palestinian people\u00e2\u0080\u0094after the PA stopped accepting bilateral aid in 2019. In December 2019, Congress passed the Promoting Security and Justice for Victims of Terrorism Act of 2019, or PSJVTA as \u00c2\u00a7 903 of the Further Consolidated Appropriations Act, 2020, P.L. 116-94 . PSJVTA changes the legal framework applicable to terrorism-related offenses by replacing the provisions in ATCA that triggered Palestinian consent to personal jurisdiction for accepting U.S. aid. However, because PSJVTA did include other possible triggers of consent to personal jurisdiction\u00e2\u0080\u0094based on actions that Palestinian entities might find difficult to stop for domestic political reasons\u00e2\u0080\u0094it is unclear whether the Palestinians will accept this \"legislative fix\" and resume accepting U.S. bilateral aid.", "Congress also appropriated $75 million in PA security assistance for the West Bank and $75 million in economic assistance in FY2020 ( P.L. 116-94 ), with appropriators noting in the joint explanatory statement that \"such funds shall be made available if the Anti-Terrorism Clarification Act of 2018 is amended to allow for their obligation.\" It is unclear whether the executive branch will implement the aid provisions. The Trump Administration had previously suggested that restarting U.S. aid for Palestinians could depend on a resumption of PA/PLO diplomatic contacts with the Administration. Such a resumption of diplomacy may be unlikely in the current U.S.-Israel-Palestinian political climate, particularly following the January 2020 release of a U.S. peace plan that the PA/PLO strongly opposes and possible discussion of Israeli annexation of parts of the West Bank. ", "The Administration's omission of any bilateral assistance\u00e2\u0080\u0094security or economic\u00e2\u0080\u0094for the West Bank and Gaza in its FY2021 budget request, along with its proposal in the request for a $200 million \"Diplomatic Progress Fund\" ($25 million in security assistance and $175 million in economic) to support future diplomatic efforts, may potentially convey some intent by the Administration to condition aid to Palestinians on PA/PLO political engagement with the U.S. peace plan. The Administration also had requested funds for a Diplomatic Progress Fund in FY2020, but Congress instead provided the $150 million in bilateral aid in P.L. 116-94 . ", "Amidst the COVID-19 outbreak, some Members of Congress are concerned that the uncertainty surrounding the status of U.S. aid to the Palestinians may prevent humanitarian aid to combat the disease from reaching the Palestinian population. In late March 2020, several Senators sent a letter to Secretary of State Pompeo urging the Administration \"to take every reasonable step to provide medicine, medical equipment and other necessary assistance to the West Bank and Gaza Strip (Palestinian territories) to prevent a humanitarian disaster.\" In April, the Administration announced that it would provide $5 million in International Disaster Assistance (IDA) to the West Bank as part of its global COVID-19 response. One media report stated that the $5 million in health assistance for hospitals in the West Bank does not \"represent a change of policy regarding aid to the Palestinians, but is rather part of a larger decision to fight the spread of the pandemic across the Middle East, according to sources within the administration.\""], "subsections": []}, {"section_title": "Debate over Military Aid to Lebanon45", "paragraphs": ["Since the United States began providing military assistance to the Lebanese Armed Forces (LAF) following the 2006 summer war between Israel and Hezbollah, policymakers and foreign policy experts have debated the efficacy of such aid. U.S. military commanders have repeatedly testified before Congress that assistance to the LAF helps foster U.S.-Lebanese cooperation and strengthens the Lebanese government's capacity to counter terrorism. On the other hand, critics of such support have charged that U.S. aid to the LAF risks U.S. equipment falling into the hands of Hezbollah or other designated terrorists. They also contend that the LAF, even with U.S. aid, is unable or unwilling to enforce United Nations Security Council Resolution 1701 (passed after the 2006 war), which calls for the \"disarmament of all armed groups in Lebanon.\" More recently, as Hezbollah has played a key role in supporting the Asad regime in Syria, opponents of U.S. aid to Lebanon assert that Hezbollah and the LAF have more closely coordinated militarily and politically along the Lebanese-Syrian border.", "In 2019, the Trump Administration withheld $105 million in FMF to the LAF as part of a policy review over the efficacy of its military assistance program to Lebanon. In 2019, lawmakers in the House and Senate also introduced the \"Countering Hezbollah in Lebanon's Military Act of 2019,\" ( S. 1886 and H.R. 3331 ) which would withhold 20% of U.S. military assistance to the LAF unless the President can certify that the LAF is taking measurable steps to limit Hezbollah's influence over the force.", "According to various reports, both the State and Defense Departments opposed the hold on FMF, calling the LAF a stabilizing institution in Lebanon that has served as a U.S. partner in countering Sunni Muslim extremist groups there. On November 8, 2019, Chairman of the House Foreign Affairs Committee Eliot Engel and Chairman of its Subcommittee on the Middle East, North Africa, and International Terrorism Ted Deutch wrote a letter to the Office of Management and Budget agreeing with previous expert testimony by former U.S. officials who praised the LAF's capabilities. ", "In December 2019, the Administration lifted its hold on FMF to Lebanon (DOD aid to Lebanon had not been withheld). The policy debate coincided with mass protests throughout Lebanon, which forced the LAF to deploy in the streets to maintain order. In December 2019, the Government Accountability Office (GAO) issued its review on U.S. security assistance to Lebanon concluding that \"The Departments of State and Defense reported progress in meeting security objectives in Lebanon, but gaps in performance information limit their ability to fully assess the results of security-related activities.\"", "In January 2020, Lebanon formed a new government, which drew international scrutiny for being composed entirely of parties allied with the March 8 political bloc (headed by the Christian Free Patriotic Movement, Hezbollah, and the Amal Movement). Nevertheless, U.S. Secretary of Defense Mark Esper remarked in February 2020 that \"In terms of security assistance, we've committed a lot to the Lebanese Armed Forces and we will continue that commitment.\" "], "subsections": []}, {"section_title": "Fiscal Pressures Mount in Iraq53", "paragraphs": ["Years of war, corruption, and economic mismanagement have strained Iraq's economy and state finances, leading to widespread popular frustration toward the political system, and culminating in popular protests across central and southern Iraq. The 2019 national budget ran its largest ever one-year deficit, and in 2020, the COVID-19 pandemic and steep declines in world oil prices delivered two additional shocks to Iraq's already stretched fiscal position. Iraqi authorities have expressed confidence in their ability to withstand low oil prices for the short term. However, with approximately 30% of all Iraqi workers employed by the government, some observers express concern that sustained pressure on state finances and economic activity could lead to more intense street violence and unrest, and/or contribute to an Islamic State resurgence.", "Iraq's draft 2020 budget assumed an oil export price of $56 per barrel. According to one projection from mid-March 2020\u00e2\u0080\u0094when prices were less than half that level\u00e2\u0080\u0094Iraq would have been \"likely to earn less than $3 billion per month, given its recent rate of exports\u00e2\u0080\u0094leaving a monthly deficit of more than $2 billion just to pay current expenditures.\" As of May 2020, it appears that without outside assistance, Iraq will need to draw on reserves (around $65 billion as of early 2020), cut salaries, and/or limit social spending to meet budget needs. ", "International financial institutions (IFIs), such as the International Monetary Fund (IMF), could be one source of external financing for Iraq, but Iraq has not met reform targets set under its last round of agreements with the IMF. From 2016 to 2019, the IMF provided over $5 billion in loans to Iraq to help the country cope with lower oil prices and ensure debt sustainability. Iraq would likely face higher borrowing costs for new sovereign debt offerings, and obtaining commitments from Iraqi authorities as preconditions on further U.S. or IFI support may be complicated by Iraq's contested domestic politics and uncertainty over the future of U.S.-Iraq ties.", "Secretary of State Michael Pompeo announced on April 7 that U.S. officials would engage Iraqi counterparts in a high-level strategic dialogue in June to address the future of the bilateral partnership, including U.S. assistance and the presence of U.S. forces. U.S. forces consolidated their presence to a reduced number of Iraqi facilities in March and April 2020, and the Administration has informed Congress of reductions in U.S. civilian personnel since 2019. "], "subsections": []}, {"section_title": "Stabilization in Areas Liberated from the Islamic State", "paragraphs": ["As Congress considers the President's FY2021 budget request for MENA, Members have continued to discuss what the appropriate level of U.S. assistance should be to stabilize and reconstruct areas recaptured from the Islamic State group (IS, aka ISIS/ISIL). Recent U.S. intelligence estimates warn that an IS-fueled insurgent campaign has begun in Syria and Iraq, foresee billions of dollars in reconstruction costs in liberated areas, and suggest that a host of complex, interconnected political, social, and economic challenges may rise from the Islamic State's ashes. According to the International Crisis Group, ", "In the two years since defeating ISIS, the Iraqi government has made only minimal progress rebuilding post-ISIS areas and reviving their local economies\u00e2\u0080\u00a6. There is no reason to assume local resentment will lead residents directly back to ISIS, particularly given their bitter recent experience with the group's rule. Still, both Iraqis and Iraq's foreign partners worry about what might happen if these areas remain ruined and economically depressed.", "Since FY2017, Congress has appropriated over $1 billion in aid from various accounts (ESF, INCLE, NADR, PKO, and FMF ) as part of a \"Relief and Recovery Fund (RRF)\" to help areas liberated or at risk from the Islamic State and other terrorist organizations. Among several conditions on RRF spending, lawmakers have repeatedly mandated in appropriations language that funds designated for the RRF \"shall be made available to the maximum extent practicable on a cost-matching basis from sources other than the United States.\" ", "Over time, lawmakers have adjusted the RRF's authorities to ensure that assistance be made available for \"vulnerable ethnic and religious minority communities affected by conflict.\" In addition, lawmakers have removed the geographic limitation (Iraq and Syria) on funds appropriated for RRF, and have specified either in bill text or accompanying explanatory statements that RRF funding be made available for Jordan, Tunisia, Yemen, Libya, Lebanon, for countries in East and West Africa, the Sahel, and the Lake Chad Basin region. Congress also has appropriated funding specifically to address war crimes, genocide, and crimes against humanity in Iraq and Syria in recent years, including through the designation of RRF-eligible funds.", "For stabilization efforts in Iraq, USAID has used ESF and ESF-OCO (Overseas Contingency Operations) funds to contribute to the United Nations Development Program's Funding Facility for Stabilization (FFS). To date, more than $396 million in U.S. stabilization aid has flowed to liberated areas of Iraq, largely through the FFS\u00e2\u0080\u0094which remains the main international conduit for post-IS stabilization assistance in liberated areas of Iraq. The Trump Administration also has directed U.S. contributions to the FFS to address the needs of vulnerable religious and ethnic minority communities in Ninewa Plain, western Ninewa, and communities displaced from those areas to other parts of northern Iraq.", "As U.S. officials continue to seek greater Iraqi and international contributions to stabilization efforts in Iraq, the scale of what is needed to rebuild Iraq has far exceeded international efforts to date. In 2018, experts from the World Bank and the Iraqi government concluded that the country would need $45 billion to repair civilian infrastructure that had been damaged or destroyed since 2014. At the 2018 Kuwait International Conference for Reconstruction of Iraq, the Iraqi government requested $88 billion from the international community for rebuilding efforts \u00e2\u0080\u0093 it received pledges of $30 billion. According to one United Nations official, as of late 2019, just over $1 billion in reconstruction pledges have been delivered from donors.", "Stabilization needs in Syria also are extensive\u00e2\u0080\u0094the conflict has entered its tenth year and analysts have estimated that the cost of conflict damage and lost economic activity could exceed $388 billion. The Trump Administration generally has supported stabilization programming in areas of Syria controlled by U.S.-backed Kurdish forces and liberated from the Islamic State, while seeking to prevent such aid from flowing to areas of Syria controlled by the government of Syrian President Bashar al Asad. However, in 2018 and 2019, the Administration sought to shift responsibility for the funding of stabilization activities to other coalition partners. In contrast to prior years, the Administration's FY2020 and FY2021 foreign assistance budget requests have sought no Syria-specific funding, but as noted above, the FY2021 request states that \"ESDF funding in the RRF will allow the State Department and USAID to support efforts in places like Syria\" and other countries. In late 2019, USAID reported that donor funds for stabilization activities in Syria were nearly depleted. In October 2019, the Trump Administration announced that it was releasing $50 million in stabilization funding for Syria to support civil society groups, ethnic and religious minorities affected by the conflict, the removal of explosive remnants, and the documentation of human rights abuses. These funds were notified to Congress in early 2020, and consist primarily of FY2019 ESF-OCO funds, with $14 million in RRF-designated funds from various accounts. ", "The Trump Administration has stated its intent not to contribute to the reconstruction of Asad-controlled areas of Syria absent a political settlement to the country's civil conflict, and to use U.S. diplomatic influence to discourage other international assistance to Asad-controlled Syria. Congress also has acted to restrict the availability of U.S. funds for assistance projects in Asad-held areas. In the absence of U.S. engagement, other actors such as Russia or China could conceivably provide additional assistance for reconstruction purposes, but may be unlikely to mobilize sufficient resources or adequately coordinate investments with other members of the international community to meet Syria's considerable needs. Predatory conditional assistance could also further indebt the Syrian government to these or other international actors and might strengthen strategic ties between Syria and third parties in ways inimical to U.S. interests. A lack of reconstruction, particularly of critical infrastructure, could delay the country's recovery and exacerbate the legacy effects of the conflict on the Syrian population, with negative implications for the country's security and stability."], "subsections": []}, {"section_title": "Human Rights and Foreign Aid to MENA", "paragraphs": ["In conducting diplomacy in the Middle East and providing foreign aid to friendly states, it has been an ongoing challenge for the United States to balance short-term national security interests with the promotion of democratic principles. At times, executive branch officials and some Members of Congress have judged that cooperation necessary to ensure stability and facilitate counterterrorism cooperation requires partnerships with governments that do not meet basic standards of democracy, good governance, or respect for human rights. ", "Nevertheless, successive Administrations and Congress also at times have used policy levers, such as conditional foreign aid, to demand changes in behavior from partner governments accused of either suppressing their own populations or committing human rights abuses in military operations. In some instances, policymakers have taken action intended to reinforce democratic principles in U.S.-MENA diplomacy and to comply with U.S. and international law, while preserving basic security cooperation. ", "Examples of provisions of U.S. law that limit the provision of U.S. foreign assistance in instances when a possible gross violation of human rights has occurred include, among others:", "The Foreign Assistance Act (FAA) of 1961, as amended, contains general provisions on the use of U.S.-supplied military equipment (e.g., Section 502B, Human Rights - 22 U.S.C. 2304). Section 502B(a)(2) of the FAA stipulates that, absent the exercise of a presidential waiver, \"no security assistance may be provided to any country the government of which engages in a consistent pattern of gross violations of internationally recognized human rights.\" The Arms Export Control Act (AECA), as amended, contains several general provisions and conditions for the export of U.S.-origin defense articles that may indirectly address human rights concerns. For example, Section 4 of the AECA (22 U.S.C. 2754) states that defense articles may be sold or leased for specific purposes only, including internal security, legitimate self-defense, and participation in collective measures requested by the United Nations or comparable organizations. Section 3(c)(1)(B) of the AECA (22 U.S.C. 2753(c)(1)(B)) prohibits the sale or delivery of U.S.-origin defense articles when either the President or Congress find that a recipient country has used such articles in substantial violation of an agreement with the United States governing their provision or \"for a purpose not authorized\" by Section 4 of the AECA or Section 502 of the FAA. The \"Leahy Laws\" Section 620M of the FAA (22 U.S.C. 2378d) and 10 U.S.C. 362 prohibit U.S. security assistance to a foreign security force unit when there is credible information that such unit has committed a gross violation of human rights.", "In addition to the U.S. Code, annual appropriations legislation contains several general and MENA-specific provisions that restrict aid to human rights violators. Recent annual appropriations legislation conditioning U.S. aid to Egypt is one of the more prominent examples of how policymakers have attempted to leverage foreign aid as a tool to promote U.S. values abroad.", "Section 7041(a) of P.L. 116-94 contains the most recent legislative language conditioning aid to Egypt. The Act includes a provision that withholds $300 million of FMF funds until the Secretary of State certifies that the Government of Egypt is taking effective steps to advance, among other things, democracy and human rights in Egypt. The Secretary of State may waive this certification requirement, though any waiver must be accompanied by a justification to the appropriations committees. ", "Members of Congress and the broader foreign policy community continue to debate the efficacy of using foreign aid as leverage to promote greater respect for human rights in the Middle East and elsewhere. After the January 2020 death of an American citizen incarcerated in Egypt, one report suggests that the State Department's Bureau of Near Eastern Affairs has raised the option of possibly cutting up to $300 million in foreign aid to Egypt. In 2017, the Trump Administration reduced FMF aid to Egypt by $65.7 million, citing \"Egyptian inaction on a number of critical requests by the United States, including Egypt's ongoing relationship with the Democratic People's Republic of Korea, lack of progress on the 2013 convictions of U.S. and Egyptian nongovernmental organization (NGO) workers, and the enactment of a restrictive NGO law that will likely complicate ongoing and future U.S. assistance to the country.\""], "subsections": []}]}, {"section_title": "FY2020 MENA Legislative Summary in P.L. 116-94", "paragraphs": ["Appendix A. Common Foreign Assistance Acronyms and Abbreviations"], "subsections": []}]}}
{"id": "R46244", "title": "The Renewable Fuel Standard (RFS): Frequently Asked Questions About Small Refinery Exemptions (SREs)", "released_date": "2020-03-02T00:00:00", "summary": ["In the Energy Policy Act of 2005 ( P.L. 109-58 ; EPAct05), Congress required the U.S. Environmental Protection Agency (EPA) to implement the Renewable Fuel Standard (RFS)\u00e2\u0080\u0094a mandate that requires U.S. transportation fuel to contain a minimum volume of renewable fuel. Since expansion of the RFS in 2007 under the Energy Independence and Security Act ( P.L. 110-140 ; EISA), Congress has had interest in the RFS for various reasons (e.g., limited cellulosic biofuel production, EPA's use of programmatic waiver authority, and RFS compliance costs). Over the last several months, Congress has expressed repeated interest in small refinery exemptions (SRE) from the RFS.", "The RFS allows small refineries to receive an exemption from the RFS, if they can prove compliance would subject them to disproportionate economic hardship. There is no statutory definition for disproportionate economic hardship, and a small refinery may apply for an exemption at any time. When deciding whether to grant an exemption, EPA is to consult with the Secretary of Energy. This consultation comes in the form of a recommendation from the Department of Energy (DOE) to EPA. The EPA Administrator has 90 days to act on (i.e., grant or deny) an exemption. A small refinery must apply each year for an exemption from compliance for that year.", "EPA categorizes the majority of small refinery exemption information as confidential business information (CBI). EPA does make publicly available some exemption information, but only in aggregate (e.g., total number of exemptions granted, total exempted volume of gasoline and diesel); there are no publicly available data on individual SREs.", "There have been legal challenges about small refinery exemptions. Small refineries can and have challenged EPA's denials of their petitions for SREs in court. Various stakeholders have also challenged EPA's methodology for evaluating small refinery exemption petitions. In 2020, the Tenth Circuit vacated EPA's decision to grant three small refinery exemption petitions. It is unclear how this court decision will affect how EPA evaluates SRE petitions in the future.", "Congress may be interested in small refinery exemptions for multiple reasons. Foremost, Congress may seek clarification on how EPA is currently evaluating SRE petitions, and whether that has changed over time. Some in Congress have raised concerns over transparency in EPA's decision process on SREs, as there is limited public information on the process.", "Congress may also value additional information about how SREs are being accounted for in annual rulemakings for the RFS. Each year, EPA issues a final rule for the RFS with the coming year's volume requirements (e.g., EPA is to issue the 2021 volume requirements by November 30, 2020). This final rule contains percentage standards that\u00e2\u0080\u0094once obligated parties (e.g., refiners and importers) apply them to their gasoline and diesel sales\u00e2\u0080\u0094are intended to ensure the volumes required are met. The formula for calculating the annual percentage standard includes a variable that accounts for small refinery exemptions granted by the time of the rulemaking. Depending on when the small refinery exemption is granted\u00e2\u0080\u0094prior to the release of a final rule or after\u00e2\u0080\u0094that exemption may or may not be accounted for in the annual percentage standard (to date, most SREs have been granted afterward). In December 2019, EPA announced that it will change how it calculates the annual percentage standard in order to account for volumes of gasoline and diesel that will be exempted from the renewable volume obligations. The impact small refinery exemptions have on the RFS depends on the number of SREs granted, when they are granted, and the amount of gasoline and diesel exempted. Congress may consider several items as it seeks to understand the impact of SREs on the RFS, including transparency, agency discretion, a potential RFS reset, and U.S. gasoline consumption."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["Congress directs the U.S. Environmental Protection Agency (EPA) to implement the Renewable Fuel Standard (RFS)\u00e2\u0080\u0094a mandate that requires U.S. transportation fuel to contain a minimum volume of renewable fuel. Every year obligated parties (including small refiners) demonstrate to EPA their compliance with the mandate. The EPA may grant small refineries an exemption from the RFS for a compliance period, if they can prove compliance would subject them to disproportionate economic hardship. Over the last few years, this programmatic action, once routine, has come under increasing scrutiny from some Members of Congress and stakeholders. The debate regarding small refinery exemptions (SREs) for the RFS has intensified, as both the number of SREs granted and the total exempted volume of gasoline and diesel has increased in recent years. At the core of the SRE policy discussion are three factors: (1) the SRE statutory requirements, (2) the EPA's SRE issuance process, and (3) the impact of SREs on meeting the statutory RFS volume requirements. ", "There are various perspectives about SREs. Some Members of Congress and stakeholders have expressed their dissatisfaction with the SREs granted under the Trump Administration. For example, some biofuel organizations argue that the method used to grant SREs, the number of SREs issued in recent years, and the accounting for the exempted fuel in recent annual rulemakings, have undercut demand for biofuel, created market uncertainty, and violated the statute, among other things. Other Members of Congress and stakeholders contend that SREs alleviate the economic burden of complying with the mandate for some refineries, that SREs do not directly impact biofuel demand, and that SREs are a symptom of a larger policy problem, among other things. ", "This report\u00e2\u0080\u0094in a question and answer format\u00e2\u0080\u0094provides information about SREs for the RFS and discusses related congressional and Executive Branch actions. More specifically, the report provides an overview of small refineries, the small refinery exemption process, challenges to EPA decisions on petitions and to its methodology for evaluating petitions, and gives a synopsis of recent RFS activity, including the new SRE projection methodology finalized by EPA. As discussed later in this report, much of the information about how EPA manages the SRE process is not publicly available because it involves confidential business information (CBI). The information provided in this report is based on a review of the statute and agency materials, as well as general knowledge about the program gleaned from various sources. The report also summarizes congressional bills that address small refinery exemptions and presents other items to consider when discussing small refinery exemptions. The report does not analyze the opportunities and challenges stakeholders may encounter from potential action taken by Congress or the Executive Branch. "], "subsections": []}, {"section_title": "Frequently Asked Questions", "paragraphs": ["The following sections respond to 17 frequently asked questions about the RFS and small refinery exemptions."], "subsections": [{"section_title": "1. What is the RFS?", "paragraphs": ["The RFS requires U.S. transportation fuel to contain a minimum volume of renewable fuel. The RFS statute specifies minimum annual volume targets (in billions of gallons)\u00e2\u0080\u0094requiring 12.95 billion gallons of renewable fuel in 2010 and ascending to 36 billion gallons in 2022 ( Figure 1 ). The EPA Administrator has statutory authority to determine the volume amounts after 2022. The statute outlines the volume requirements in tables for four categories: total renewable fuel, total advanced biofuel, cellulosic biofuel, and biomass-based diesel. Both cellulosic biofuel and biomass-based diesel are a subset of advanced biofuel. Thus, the total renewable fuel statutory volume required for any given year equates to the sum of conventional biofuel (i.e., corn starch-based ethanol, which is unspecified in statute) and advanced biofuel (which is specified in statute). For each year, EPA converts the total volume requirement into a percentage standard that each obligated party must meet (based on projected gasoline and diesel consumption in that year).", "The statute requires that EPA regulate RFS compliance using a tradable credit system. Obligated parties (generally, refiners and importers) submit credits\u00e2\u0080\u0094called renewable identification numbers (RINs)\u00e2\u0080\u0094to EPA for each gallon in their annual obligation. In short, this annual obligation, referred to as the renewable volume obligation (RVO), is the obligated party's total gasoline and diesel sales multiplied by the annual renewable fuel percentage standards announced by EPA for each category of renewable fuel.", "The statute gives the EPA Administrator the authority to waive the RFS requirements, in whole or in part, if certain conditions outlined in statute prevail. More specifically, the statute provides a general waiver authority for the overall RFS and waivers for two types of advanced biofuel: cellulosic biofuel and biomass-based diesel. Also, the statute requires that the EPA Administrator modify the applicable volumes of the RFS in 2016 and the years thereafter if certain conditions are met (this action is referred to by some as the RFS \"reset\"). "], "subsections": []}, {"section_title": "2. What is a small refinery?", "paragraphs": ["A refinery is a facility that converts raw materials (e.g., crude oil) into finished products (e.g., gasoline). The statute defines a \"small\" refinery as \"a refinery for which the average aggregate daily crude oil throughput for a calendar year (as determined by dividing the aggregate throughput for the calendar year by the number of days in the calendar year) does not exceed 75,000 barrels.\" The statutory definition does not mention ownership.", "Based on the above definition, a small refinery for the RFS is any refinery that processes no more than about 3.2 million gallons of crude oil each day, or no more than about 1 billion gallons of crude oil per year. An analysis of U.S. Energy Information Administration (EIA) data for refineries based on calendar day operation appears to indicate that there were 53 small refineries\u00e2\u0080\u0094as defined in the RFS statute\u00e2\u0080\u0094operating as of January 1, 2019 ( Figure 2 ). Further, EIA data appears to indicate there is a total of 132 operating refineries overall. Thus, small refineries consist of about 40% of the nation's total number of operating refineries. Additionally, the small refineries comprise about 12% of total crude oil distillation capacity in the United States."], "subsections": []}, {"section_title": "3. What are small refinery exemptions?", "paragraphs": ["A small refinery exemption releases a small refinery from having to comply with the RFS mandate for a given compliance period. The exemption is only applicable to small refineries as defined in statute for the program. The statute mentions two instances whereby EPA may issue a small refinery exemption: (1) a temporary exemption and (2) an extension of the exemption based on disproportionate economic hardship. The latter instance is currently of concern to most stakeholders and is the exemption referred to in this report. ", "The statute required a temporary exemption for all small refineries up until calendar year 2011. EPA then proceeded with an exemption for 21 small refineries for an additional two years, 2011 and 2012, based on the results of a DOE study that these small refineries would suffer a disproportionate hardship if required to participate in the program.", "For petitions based on disproportionate economic hardship, the small refinery itself must petition the EPA Administrator for an exemption. A small refinery may only petition for an exemption based on the reason of disproportionate economic hardship. The EPA Administrator is to consult with the Secretary of Energy when evaluating a petition. This consultation comes in the form of a DOE recommendation. EPA has the ultimate authority and may accept or reject the DOE recommendation."], "subsections": []}, {"section_title": "4. What is \"disproportionate economic hardship\"?", "paragraphs": ["The statute does not define disproportionate economic hardship, but requires DOE to complete a study to determine if RFS compliance would impose a disproportionate economic hardship on small refineries. DOE reports that ", "Disproportionate economic hardship must encompass two broad components: a high cost of compliance relative to the industry average, and an effect sufficient to cause a significant impairment of the refinery operations.", "DOE developed a scoring matrix \"to evaluate the full impact of disproportionate economic hardship on small refiners and used to assess the individual degree of potential impairment . \" The matrix consists of disproportionate structural impact metrics (e.g., access to capital) , disproportionate economic impact metrics (e.g., relative refining margin measure) , and viability metrics (e.g., compliance cost eliminates efficiency gains) . ", "Congress addressed disproportionate economic hardship in the Joint Explanatory Statement accompanying the 2016 Consolidated Appropriations Act ( P.L. 114-113 ) by stating tha t \"If the Secretary finds that either of these two components [from the DOE March 2011 Small Refinery Exemption Study] exists, the Secretary is directed to recommend to the EPA Administrator a 50 percent waiver of RFS requirements for the petitioner.\" In report language for the 2017 appropriations bill for EPA , C ongress direct ed EPA to follow DOE's recommendation, and to notify both Congress and DOE if the Administrator disagrees with DOE's waiver recommendation and to deliver such notification 10 days prior to issuing a decision . "], "subsections": []}, {"section_title": "5. What are the relevant sections in the statute that address small refinery exemption under the RFS?", "paragraphs": ["There are three sections in the statute most relevant to small refinery exemptions: 42 U.S.C. 7545(o)(1)(K), 42 U.S.C. 7545(o)(3)(C), and 42 U.S.C. 7545(o)(9)."], "subsections": []}, {"section_title": "6. What information must be submitted to EPA to petition for a small refinery exemption?", "paragraphs": ["EPA reports that a petition for a small refinery exemption ", "must specify the factors that demonstrate a disproportionate economic hardship and must provide a detailed discussion regarding the hardship the refinery would face in producing transportation fuel meeting the requirements of \u00c2\u00a780.1405 and the date the refiner anticipates that compliance with the requirements can reasonably be achieved at the small refinery. ", "EPA reports that to fulfill these requirements, companies would likely submit \"company business plans, financial statements, tax filings, communications with potential suppliers or lenders, and other records that demonstrate the petitioner satisfies the underlying substantive requirements to be accorded relief.\" To qualify for an exemption, a refinery must meet the definition of a small refinery for both the calendar year before and during the year for which an exemption is sought. Submissions are not publicly available. ", "EPA addressed the financial and other information required for 2016 RFS small refinery exemption requests. In its memorandum, EPA reports it considers the findings of the DOE Small Refinery Study and a variety of economic factors when evaluating a petition. EPA reports the economic factors include, but are not limited to, profitability, net income, cash flow and cash balances, gross and net refining margins, ability to pay for small refinery improvement projects, corporate structure, debt and other financial obligations, RIN prices, and the cost of compliance through RIN purchases. "], "subsections": []}, {"section_title": "7. Is there a deadline to apply for an exemption?", "paragraphs": ["No. A small refinery may submit a petition to the EPA Administrator for a small refinery exemption at any time."], "subsections": []}, {"section_title": "8. Is there a date by which EPA is to act on an application for an exemption?", "paragraphs": ["The EPA Administrator is required by statute to act on a petition for a small refinery exemption within 90 days of having received the petition. EPA reports it \"will issue a decision within 90 days of receiving complete supporting information for the request from the small refinery.\" It is unclear what information must be submitted to EPA before the agency considers a petition \"complete.\" There is no deadline as to when or whether EPA must publicly announce its decision."], "subsections": []}, {"section_title": "9. How frequently may a small refiner apply for an exemption?", "paragraphs": ["A small refiner must apply separately for an exemption for each compliance year. According to EPA, \"[b]eginning with the 2013 compliance year, small refineries may petition EPA annually for an exemption from their RFS obligations.\""], "subsections": []}, {"section_title": "10. How are the RFS Renewable Volume Obligations (RVOs) calculated?", "paragraphs": ["The statute specifies annual renewable fuel volume amounts (in gallons) required for each category in the RFS through 2022. The EPA converts the statutory volumes\u00e2\u0080\u0094or the volumes EPA has finalized using its waiver authority\u00e2\u0080\u0094into annual percentage standards to ensure that obligated parties meet the volume amount. Obligated parties use this annual percentage to compute their RVOs. The RVO is the obligated party's total gasoline and diesel sales multiplied by the annual renewable fuel percentage standards announced by EPA plus any deficit of renewable fuel from the previous year. It is the RVO that informs an obligated party how many gallons of the particular renewable fuel type the party must account for in order to be in compliance. The obligated party is then responsible for submitting to EPA credits (i.e., renewable identification numbers or RINs) for each gallon in its RVO. Once all obligated parties have demonstrated compliance by meeting their RVOs, the volume of renewable fuel required to be blended into the nation's transportation fuel supply is met, minus any SREs.", "The statute contains volume amounts for four fuel categories: total renewable fuel, advanced biofuel, cellulosic biofuel, and biomass-based diesel. Thus, there are four annual percentage standards, one for each renewable fuel category. Accordingly, there are also four RVO calculations.", "There are six steps to understanding the relationship between an annual standard, an RVO, and RFS compliance:", "1. The statute specifies a volume amount for a given year (e.g., 30 billion gallons for total renewable fuel for 2020); 2. EPA announces the final volume requirement which is either (a) the statutory volume amount or (b) a reduced volume requirement based on EPA's waiver authority (e.g., 20.09 billion gallons for total renewable fuel for 2020); 3. EPA issues an annual percentage standard (e.g., 11.56% for total renewable fuel for 2020); 4. The obligated party multiplies the annual percentage standard by its operational sales to compute its RVO for a particular fuel category; 5. The obligated party obtains the RINs needed to meet its RVO; and 6. The obligated party submits its RINs to EPA to demonstrate compliance.", "Obligated parties\u00e2\u0080\u0094generally, refiners and importers\u00e2\u0080\u0094must prove compliance with the RFS each year. Obligated parties include small refineries. However, if a small refinery receives a small refinery exemption, it is exempt from complying with the mandate for a given year. EPA reports \"[t]he exempted refinery is not subject to the requirements of an obligated party for fuel produced during the compliance year for which the exemption has been granted.\" The small refineries that receive a small refinery exemption continue their operations, which may include blending renewable fuel and possibly acquiring RINs (which they can bank for future use or trade with other parties). "], "subsections": []}, {"section_title": "11. How do small refinery exemptions impact annual RFS requirements (or RVOs)?", "paragraphs": ["The impact of small refinery exemptions on annual RFS requirements, or RVOs, depends on how much fuel is exempted and when. In general, if a small refinery exemption is granted prior to a final rule setting the annual percentage standards being released, it may be accounted for in the annual percentage standard calculation for that year. If the exemption is granted after the final rule has been released, EPA reports that, under its prior approach, it did not revise its annual percentage standard calculation to account for the later-granted exemptions. The situation where the exemption is not included in the annual percentage calculation is of concern to some stakeholders (e.g., renewable fuel producers) as the renewable fuel volumes for which the small refineries were responsible for are not redistributed to the other obligated parties, and therefore those volumes are not accounted for by the RVOs. ", "For example, in December 2017, EPA set the 2018 total renewable fuel percentage standard at 10.67%. EPA did not include any small refinery exemptions in its percentage standard calculations for 2018. Further, EPA stated that any exemptions granted after 2018 would not be reflected in the 2018 percentage standards. In August 2019, EPA announced 31 small refinery exemptions for 2018. EPA estimates that the 31 exemptions will account for nearly 13.4 billion gallons of gasoline and diesel being exempted for the 2018 compliance period. If EPA were to account for the exempted 13.4 billion gallons, it would lead to a different annual percentage standard than the standard contained in the final rule. The non-exempt obligated parties would be required to meet this different standard. Some refer to this as \"reallocating the waived gallons.\" However, as EPA has implemented the program for 2018, the remaining obligated parties will not have to meet this different standard. "], "subsections": []}, {"section_title": "12. How many small refinery exemptions have been issued?", "paragraphs": ["Since 2013, the number of small refinery exemptions issued based on disproportionate economic hardship has varied, ranging from 7 to 31 in a given year ( Figure 3 ). EPA reports it has not yet received any SRE petitions for 2020."], "subsections": []}, {"section_title": "13. Does the statute require EPA to account for small refinery exemptions in annual standards?", "paragraphs": ["The statute requires that EPA adjust the annual percentage standard to \"account for the use of renewable fuel during the previous calendar year by small refineries that are exempt under paragraph (9) [Small refineries].\" In 2010, EPA reported that it considers the amount of renewable fuel used in such instance would be negligible and assigns it a value of zero. ", "CAA section 211(o) requires that the small refinery adjustment also account for renewable fuels used during the prior year by small refineries that are exempt and do not participate in the RFS2 program. Accounting for this volume of renewable fuel would reduce the total volume of renewable fuel use required of others, and thus directionally would reduce the percentage standards. However, as we discussed in RFS1, the amount of renewable fuel that would qualify, i.e., that was used by exempt small refineries and small refiners but not used as part of the RFS program, is expected to be very small. In fact, these volumes would not significantly change the resulting percentage standards. Whatever renewable fuels small refineries and small refiners blend will be reflected as RINs available in the market; thus there is no need for a separate accounting of their renewable fuel use in the equations used to determine the standards. We proposed and are finalizing this value as zero.", "In 2018, EPA stated that, regarding Clean Air Act direction that the agency account for renewable fuel used by exempt small refineries, EPA complies through the RIN trading program. In 2019, EPA further explained that ", "the use of renewable fuel by exempt small refineries is accounted for by the RIN system. That is, since exempt small refineries have no obligation to comply with the applicable percentage standards, they can sell all the RINs associated with any renewable fuel they use. These RINs become part of the overall pool of RINs available to all obligated parties. Thus, no additional adjustment needs to be made to comply with this statutory provision.", "Some stakeholders argue that the amounts exempted in recent years are not negligible, and that reallocating these exempted volumes (as opposed to accounting for them through the RIN trading program) would lead to total renewable fuel consumption closer to the amount finalized by EPA for that year. Others contend that reallocating small refinery exemptions \"punishes complying parties and creates an unlevel playing field among competing refineries putting additional pressure on the blendwall and increasing the overall cost of the program.\""], "subsections": []}, {"section_title": "14. How does EPA account for small refinery exemptions in the 2020 annual standards?", "paragraphs": ["In recent years, the number of SREs granted and the total exempted volume of gasoline and diesel has changed, which could indicate the old methodology may no longer suffice. In December 2019, EPA issued a final rule that changes how it calculates the annual percentage standard to account for volumes of gasoline and diesel that will be exempted from the renewable volume obligations. In this final rule, EPA adopted the percentage standard calculation change it proposed in October 2019. In the final rule, EPA reports it is finalizing \"a projection methodology based on a 2016\u00e2\u0080\u009318 annual average of exempted volumes had EPA strictly followed DOE recommendations in those years.\u00e2\u0080\u00a6\" EPA is to do this by amending two factors in the annual percentage standard calculation from: ", "1. GE i = the amount of gasoline projected to be produced by exempt small refineries and small refiners, in year i and 2. DE i = the amount of diesel fuel projected to be produced by exempt small refineries and small refiners in year i. ", "to", "1. GE i = the total amount of gasoline projected to be exempt in year i, in gallons, per \u00c2\u00a7\u00c2\u00a780.1441 and 80.1442 and 2. DE i = the total amount of diesel projected to be exempt in year i, in gallons, per \u00c2\u00a7\u00c2\u00a780.1441 and 80.1442.", "EPA reports this calculation modification leads to higher percentage standards, which \"would have the effect of ensuring that the required volumes of renewable fuel are met when small refineries are granted exemptions from their 2020 obligations after the issuance of the final rule, provided EPA's projection of the exempted volume is accurate.\" Further, EPA reports that \"[b]y projecting exempted volumes in advance of issuing annual standards, we can issue a single set of standards for each year without the need for periodic revisions and the associated uncertainty for obligated parties.\" Lastly, EPA reports that\u00e2\u0080\u0094for petitions for 2019 and going forward\u00e2\u0080\u0094it \"intends to grant relief consistent with DOE's recommendations where appropriate\" (e.g., grant 50% relief where DOE recommends 50% relief). In the past, EPA has granted full exemptions to small refinery petitions where DOE recommended 50% relief."], "subsections": []}, {"section_title": "15. Have there been any legal challenges involving small refinery exemptions?81", "paragraphs": ["Yes. The legal challenges have generally taken one of two forms: (1) refineries challenging the EPA's denial of an exemption petition or (2) parties challenging EPA's methodology for granting and accounting for small refinery exemptions. As discussed below, individual challenges to EPA's exemption denials have at times succeeded, but courts have generally dismissed methodological challenges on procedural grounds. "], "subsections": [{"section_title": "Challenges to Small Refinery Exemption Decisions", "paragraphs": ["Several individual refineries have challenged EPA's denials of their exemption petitions. For example, in December 2019 Suncor Energy petitioned for review of its denied exemption petition with the U.S. Court of Appeals for the Tenth Circuit. Refineries have specifically challenged EPA's adoption of DOE's scoring index (as noted in question 4), its reliance on DOE's refinery-specific assessments, and EPA's independent analysis. DOE's scoring matrix assesses whether a small refinery would incur a \"disproportionate economic hardship\" from complying with the RFS standard using two sets of components: disproportionate impacts metrics and viability metrics. Challenges to exemption denials have generally focused on the viability metrics. ", "In general, courts have upheld as reasonable EPA's adoption of the DOE's scoring matrix, including its use of viability as a metric. The D.C. and the Eighth Circuits have each held that EPA reasonably interpreted the statutory phrase \"disproportionate economic hardship\" to require, as reflected in DOE's scoring matrix, that the refinery's viability be affected to demonstrate \"hardship.\" However, the Tenth Circuit subsequently held that EPA cannot give such weight to viability, and particularly to the long-term threat of closure, that it effectively reads \"disproportionate\" out of \"disproportionate economic hardship\" in the statute. ", "Courts have allowed EPA to rely on DOE's assessments but invalidated exemption denials for errors in the refinery-specific analyses. For example, the D.C. Circuit vacated and remanded an exemption denial because EPA's independent analysis contained two miscalculations that could have affected its ultimate decision to deny the exemption petition. Similarly, the Fourth Circuit vacated and remanded an exemption denial after finding that EPA had relied on a DOE assessment that was facially deficient. The court held that while EPA could rely on DOE's assessment and need not conduct its own independent analysis of DOE's conclusions concerning a specific exemption request, EPA cannot \"blindly adopt [those] conclusions\" or rely on a report that is \"facially-flawed.\" ", "Several biofuels associations challenged EPA's decision to grant three small refinery exemption petitions on a number of grounds. The Tenth Circuit vacated EPA's decisions for three reasons. First, the court interpreted the phrase \" extension of the exemption,\" found in the statutory language authorizing small refinery exemption petitions, to require that the small refinery have received the exemption each year to be eligible. Second, the court concluded that EPA erred in its analysis by considering sources of economic hardship other than those associated with RFS compliance. The court held that the statute only allowed the exemption to be granted on the basis of disproportionate economic hardship from RFS compliance, not other economic factors such as a downturn in industry profit margins. Finally, the court held that when evaluating whether a small refinery incurs disproportionate economic hardship from RFS compliance\u00e2\u0080\u0094specifically from having to purchase RINs\u00e2\u0080\u0094EPA must take into account its position that refineries are able to pass the cost of RINs on to consumers in the fuel's price. The court acknowledged that EPA could either depart from this position, which it has previously taken, with an adequate explanation or could explain why the theory did not apply to the small refinery at issue in the petition. But the court held that failing to address the theory at all or how it affected EPA's analysis was arbitrary and capricious. "], "subsections": []}, {"section_title": "Challenges to EPA's Methodology", "paragraphs": ["Parties have raised multiple challenges to how EPA administers the small refinery exemptions. To date, each of these challenges has been dismissed or transferred to another court on procedural grounds without reaching the merits of the parties' arguments. ", "First, in 2018 the Producers of Renewables United for Integrity Truth and Transparency (PRUITT) challenged in the D.C. Circuit how EPA remedied small refinery exemptions it granted on remand after the relevant compliance year had ended. Specifically, PRUITT challenged EPA's decision to issue 2018 RINs to two Wyoming refineries whose 2014 and 2015 exemption petitions were granted after a court vacated and remanded EPA's initial denials in 2017. EPA issued the 2018 RINs to compensate for the 2014 and 2015 RINs that the refineries had retired for compliance before the exemptions were granted. EPA issued 2018 RINs because the 2014 and 2015 RINs the refineries used for compliance had since expired. The D.C. Circuit transferred this portion of the petition to the Tenth Circuit because EPA's issuance of the 2018 replacement RINs to the Wyoming refineries was regionally rather than nationally applicable. Litigation is ongoing.", "PRUITT also challenged EPA's interpretation of the statutory provision that small refineries \"may at any time petition [EPA] for an extension of the exemption.\" The agency had interpreted that provision to allow it to grant exemptions after it sets the annual standards. The petitioner alleged that EPA violated its statutory duty to ensure the required volumes of renewable fuels are met by granting \"retroactive\" exemptions. The court dismissed this claim for lack of jurisdiction and, accordingly, did not reach the merits of this argument. ", "Rather than challenging EPA's ability to grant exemptions after it sets the annual standards, the National Biodiesel Board (NBB) challenged how EPA accounts for these exemptions as part of the 2018 rulemaking setting the annual standards. EPA adjusts the annual standards for any exemptions granted before the standards are set, which by statute must occur by November 30 th the prior year. But EPA does not account for those exemptions granted later, either by adjusting the standards retroactively or by accounting for them prospectively using projections. NBB alleged that this approach violates the statute because it does not \"ensure\" that the volumes are met. The petitioner argued that EPA should project small refinery exemptions EPA was \"reasonably likely to grant\" after the standards are set, adjust the percentages accordingly, and then adjust for any deficiencies in EPA's projections by incorporating the shortfall into the following year's annual standards. ", "The D.C. Circuit held that NBB had not preserved this challenge to the 2018 rule because it had failed to raise the argument with \"reasonable specificity\" during the public comment period, as the Clean Air Act requires. Although other parties had submitted comments regarding how EPA accounts for small refinery exemption volumes, the court determined that those comments either requested that EPA \"cease granting retroactive exemptions\" or \"adjust the applicable volumes for the same year in which the retroactive exemptions are later granted.\" The court concluded that these comments were sufficiently different from NBB's argument that EPA had not had an opportunity to address the argument in its final rule. Accordingly, the D.C. Circuit held that NBB had forfeited the issue.", "Finally, based on media reports that EPA was increasing the number of exemptions granted, the American Biofuels Association challenged EPA's \"decision to modify the criteria or lower the threshold by which [it] determines whether to grant small refineries an exemption.\" The number of filed and granted exemptions was not public when the lawsuit was filed. EPA subsequently created a small refinery exemption \"dashboard\" on its website and, in August 2019, issued a formal memorandum documenting its revised standards for granting small refinery exemptions. In the memorandum, EPA explains that it now only requires small refineries to experience either the disproportionate impacts or viability impairment to qualify for the exemption, whereas previously it required small refineries to demonstrate both criteria. In addition, EPA announced that it would grant full waivers when the Department of Energy recommended partial waivers, on the basis that this approach was more consistent with congressional intent. ", "The D.C. Circuit dismissed American Biofuels Association's petition for lack of jurisdiction because the petition was based on a general pattern in agency decisionmaking rather than challenging a particular final agency action as required by the Administrative Procedure Act. The court noted, however, that EPA had acknowledged in oral argument that the August 2019 Memorandum is a final agency action that could be challenged if timely filed. "], "subsections": []}]}, {"section_title": "16. What legislative proposals has Congress introduced that address small refinery exemptions?", "paragraphs": ["Some members in the 116 th Congress have introduced bills that address small refinery exemptions. Table 1 provides a summary of each bill."], "subsections": []}, {"section_title": "17. What other issues might one consider when discussing small refinery exemptions?", "paragraphs": ["The statute gives the EPA Administrator the authority to grant small refinery exemptions, if a small refinery can prove that compliance would subject it to disproportionate economic hardship. Some Members of Congress contend this authority is being applied improperly and could harm rural economies (e.g., biofuel producers). Others contend that the use of the authority protects small refineries and employment in the oil industry. Below are items Congress may consider as it debates EPA's authority to issue small refinery exemptions.", "Transparency. Information about certain parts of the small refinery exemption process is limited. For example, it is unclear who is applying for an exemption, what specific information is included in an SRE application, or how an application is evaluated. Further, it is not clear if the same criteria to evaluate an application are used consistently year-to-year. Lastly, EPA does not regularly announce when it has issued an SRE. The statute does not require EPA to share such information publicly. EPA considers an SRE application to contain confidential business information as it includes proprietary information which if disclosed could cause harm to the applicant. EPA states that it \"treats both the names of individual petitioners and EPA's decisions on those individual petitions as Confidential Business Information (CBI) under FOIA Exemption 4 (5 U.S.C. \u00c2\u00a7\u00c2\u00a0522(b)(4)) pending a final CBI determination by the Office of General Counsel.\" With such transparency issues, it could be difficult for Congress to conduct oversight of EPA's authority to grant small refinery exemptions. Application and decision timeline. Small refinery exemptions are not applied for or granted on a schedule. A small refinery may petition the EPA for an exemption at any time. In theory, once an exemption is issued for a certain year, the small refinery is no longer obligated to meet its RVO for that year. In actuality, the small refinery may not be able to receive the benefit of the exemption for the year it was granted (e.g., if an SRE is granted after the end of a compliance period and the small refinery has already complied with its obligation). Instead, in some cases the small refinery has been credited the RINs it retired to demonstrate compliance with the year that was exempted, and it may use those RINs in a future year. Also, it is not clear what information must be submitted to EPA for the agency to consider a petition \"complete\"\u00e2\u0080\u0094which would start the 90-day timeline for EPA to make a decision. The current application and decision timeline for small refinery exemptions may contribute to an ultimate annual volume requirement that may not match what was announced in a final rule. Inclusion of SREs in annual standards. The statute requires the EPA Administrator to adjust the percentage standards (i.e., annual volume amounts) for a given year by accounting for renewable fuel from the previous calendar year by small refineries that received an exemption. EPA accounts for volumes attributable to exempt small refineries in its formula for calculating the annual percentage standards. EPA complies with this provision through the RIN trading program. ", "Because SRE petitions can be submitted at any time, EPA has two time periods during which it may address SREs in annual standard calculations: prior to a final rule being issued and after a final rule has been issued. EPA reports in its annual rulemaking if it has approved any SREs prior to issuing a final rule and adjusted its calculation accordingly. For instance, in the 2019 final rule, EPA states:", "at this time no exemptions have been approved for 2019, and therefore we have calculated the percentage standards for 2019 without any adjustment for exempted volumes. We are maintaining our approach that any exemptions for 2019 that are granted after the final rule is released will not be reflected in the percentage standards that apply to all gasoline and diesel produced or imported in 2019. ", "Since 2011 it has been EPA's policy to not account for the SREs that it issues following the release of a final rule. EPA justifies its position based on the November 30 th statutory deadline for setting annual percentage standards and the need to provide the regulated community with certainty and advance notice of the standards. Based on a review of the RFS final rules from 2014 to the present, most or all SREs have been granted after the November 30 th deadline. In 2019, EPA changed how it calculates the annual percentage standard in order to account for volumes of gasoline and diesel that will be exempted from the renewable volume obligations (see question 14). This may be an issue for Congress if Congress intended small refinery exemptions to be accounted for prior to the release of a final rule. ", "Agency discretion. The statute gives the EPA Administrator certain discretion to evaluate an SRE petition. Data provided by EPA in its small refinery exemption dashboard ( Figure 3 ) suggests the Trump Administration has received more SRE petitions and approved more SREs than the Obama Administration on an annual basis. The extent to which discretion should be a factor in the granting of small refinery exemptions may be an issue for Congress. RFS reset. The statute requires that the EPA Administrator modify the applicable volumes of the RFS in future years starting in 2016 if certain conditions are met (the aforementioned RFS \"reset\"). According to the Office of Management and Budget (OMB), this \"reset\" has been triggered for total renewable fuel, advanced biofuel, and cellulosic biofuel. It is unclear when or how EPA will carry out such a reset. Congress may consider the impact a reset would have on many parts of the RFS, including small refinery exemptions. U.S. gasoline consumption. The RFS is a volume mandate, not a percentage mandate. The statutory renewable fuel volumes required to be blended are not tied to U.S. gasoline consumption rates. A general guideline is that most passenger vehicles in the U.S. are equipped to handle E10 (a fuel mixture comprised of 10% ethanol and 90% gasoline). Some might interpret this passenger vehicle acceptance rate as indicating that renewable fuel production should be about 10% of the conventional fuel market. Others might interpret this as an opportunity to push for more renewable fuel use (e.g., E15 year-round, flex-fuel vehicles). In any case, this means the statutory volumes could call for renewable fuel volume amounts that are out of alignment with actual gasoline consumption. It also means that EPA has the authority\u00e2\u0080\u0094which it has used multiple times\u00e2\u0080\u0094to reduce the RFS statutory volume amounts to more closely match actual conditions. Gasoline consumption has trended downwards for years for a variety of reasons (e.g., fuel economy standards, behavioral choices, economic conditions) and is currently steady, while the statutory renewable fuel portion trends upwards. In short, if the RFS cannot in real-time respond to gasoline consumption changes, it could be argued that the RFS renewable fuel targets become more difficult for some to achieve. If the targets are more difficult to achieve, RFS compliance may become a concern for some (e.g., an increase in compliance costs). This compliance burden may lead to more small refineries requesting an exemption. This may be an issue for Congress, if Congress wants market conditions, not projections, to play a role in renewable fuel use. "], "subsections": []}]}]}}
{"id": "R46266", "title": "The Abandoned Mine Reclamation Fund: Reauthorization Issues in the 116th Congress", "released_date": "2020-03-12T00:00:00", "summary": ["Coal mining and production in the United States during the 20 th century contributed to the nation meeting its energy requirements and left a legacy of unreclaimed lands. Title IV of the Surface Mining Control and Reclamation Act of 1977 (SMCRA, P.L. 95-87 ) established the Abandoned Mine Reclamation Fund. The Office of Surface Mining Reclamation and Enforcement (OSMRE) administers grants from the Abandoned Mine Reclamation Fund to eligible states and tribes to reclaim affected lands and waters resulting from coal mining sites abandoned or otherwise left unreclaimed prior to the enactment of SMCRA.", "Title IV of SMCRA authorized the collection of fees on the production of coal, which are credited to the Abandoned Mine Reclamation Fund. The use of this funding is limited to the reclamation of coal mining sites abandoned or unreclaimed as of August 3, 1977 (the date of SMCRA enactment). Title V of SMCRA authorized the regulation of coal mining sites operating after the law's enactment. Coal mining sites regulated under Title V are ineligible for grants from the Abandoned Mine Reclamation Fund.", "The balance of the Abandoned Mine Reclamation Fund is provided by fees collected from coal mining operators based on the volume or value of coal produced, whichever is less. The coal reclamation fee collection authorization in Title IV expires at the end of FY2021. If Congress does not reauthorize the collection of reclamation fees, SMCRA directs the remaining balance of the Abandoned Mine Reclamation Fund to be distributed among states and tribes receiving grants from the fund based on the FY2022 grant amounts. The FY2022 grant amounts would depend on the fees collected in FY2021, and payments from the fund would begin in FY2023, continuing annually until the balance has been expended. As of November 11, 2018, OSMRE reported that the unappropriated balance of the Abandoned Mine Reclamation Fund was approximately $2.3 billion. Reclamation grants to eligible states and tribes receiving grants from the Abandoned Mine Reclamation Fund would continue for some years until the balance is expended if coal reclamation fees are not reauthorized.", "The balance of the Abandoned Mine Reclamation Fund is several times less than the estimated unfunded reclamation costs. OSMRE recently reported estimates of the unfunded reclamation costs as $12.4 billion. Congress may consider whether and how to fund the remaining unfunded coal reclamation needs. If the fees are reauthorized, the adequacy of those receipts to pay the remaining unfunded reclamation needs would depend in part on decisions made by Congress (e.g., source of funds, duration of the fee extension, and fee rate). Additional factors include the status of domestic coal production, upon which the fees are based, and the potential emergence of additional reclamation needs. As introduced, H.R. 4248 and S. 1193 would amend SMCRA to extend the fee collection authorization at the current fee rates until September 30, 2036.", "SMCRA also authorizes federal financial assistance to United Mine Workers of America (UMWA) health and pension benefit plans for retired coal miners and family members who are eligible to be covered under those plans. Two sources of federal financial assistance to UMWA plans include interest transfers from the Abandoned Mine Reclamation Fund and supplemental payments from the General Fund of the U.S. Treasury. Should Congress not reauthorize the coal reclamation fees, as the balance from the Abandoned Mine Reclamation Fund is paid down, the interest transfers from the Abandoned Mine Reclamation Fund would make a relatively smaller contribution to the UMWA plans, increasing the reliance on General Fund payments for these plans.", "In the 116 th Congress, House and Senate versions of the RECLAIM Act ( H.R. 2156 and S. 1232 ) would authorize $1 billion over five years from the unappropriated balance of the Abandoned Mine Reclamation Fund for the reclamation of abandoned coal mining sites as a means of facilitating economic and community development in coal production states. Either of these bills would accelerate the expenditure of the remaining balance of the fund but would not reauthorize the reclamation fee."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["Coal mining and production in the United States during in the 20 th century contributed to the nation meeting its energy requirements and left a legacy of unreclaimed lands. Prior to the enactment of the Surface Mining Control and Reclamation Act in 1977 (SMCRA; P.L. 95-87 ), no federal law had authorized reclamation requirements for coal mining operators to restore lands and waters affected by mining practices. Title IV of SMCRA established the Abandoned Mine Lands (AML) program to address the public health, safety, and environmental hazards at these legacy abandoned coal mining sites.", "The objective of reclamation under Title IV of SMCRA is to restore lands or waters adversely affected by past coal mining to a condition that would mitigate potential hazards to public health, safety, and the environment. The actions necessary to attain these objectives may vary from site to site depending on the nature of the hazards and the technical or engineering feasibility of reclamation alternatives to mitigate the hazards. The severity of the hazard would also determine the prioritization of funding for reclamation. Examples of reclamation activities include removing or stabilizing coal mining waste piles, re-contouring and re-vegetating affected lands, mitigating the potential for subsidence, filling voids or sealing tunnels, and treating acid mine drainage. The costs to complete reclamation at a particular site would depend on the scope and nature of actions necessary to mitigate the potential hazards and any technical or engineering challenges to implement the selected actions.", "The Abandoned Mine Reclamation Fund, established under Section 401 of SMCRA, provides funding to eligible states and tribes for the reclamation of surface mining impacts associated with historical mining of coal. Title IV of SMCRA applies only to sites that were abandoned or left unreclaimed prior to the enactment of SMCRA on August 3, 1977, and for which there is no continuing reclamation responsibility under other federal or state law. SMCRA also established the Office of Surface Mining Reclamation and Enforcement (OSMRE) in the Department of the Interior. OSMRE is the federal office responsible for administering SMCRA in coordination with eligible states and tribes.", "The balance of the Abandoned Mine Reclamation Fund is provided by fees collected on coal mining operators in coal producing states. The fee rates in current law are based on a per-ton fee for the volume of coal produced at a mine annually or the percentage value of the coal produced at a mine, whichever is less each year as determined by the Secretary of the Interior. SMCRA authorizes annual grants to eligible states and tribes for the reclamation of abandoned coal mining sites. ", "SMCRA also authorizes two sources of federal financial assistance to three United Mine Workers of America (UMWA) coal mineworker health benefits plans and the UMWA pension plan. These federal payments augment employer contributions to these plans. Interest transfers from the Abandoned Mine Reclamation Fund have supported the UMWA health benefit plans since FY1996, supplemented by payments from the General Fund of the U.S. Treasury since FY2008. As amended in the 116 th Congress, SMCRA authorizes additional General Fund payments to support the UMWA pension plan.", "The coal reclamation fee collection authorization is set to expire at the end of FY2021 absent the enactment of legislation extending the sunset date. If the authority to collect reclamation fees is not reauthorized, SMCRA directs the remaining balance of the fund to be distributed among states and tribes receiving grants from the Abandoned Mine Reclamation Fund based on the FY2022 grant amounts. The FY2022 grant amounts would depend on the fees collected in FY2021, and payments from the fund would begin in FY2023, continuing annually until the balance has been expended. Given that scenario, reclamation grants to eligible states would continue for some years. This report discusses funding for eligible states and tribes, reclamation priorities, annual receipts and appropriations, reauthorization issues, and other related bills that would authorize the use of the existing balance of the fund.", "This report does not discuss issues associated with Title V of SMCRA, which authorized the regulation of coal mining sites operating after the law's enactment. SMCRA requires coal mining operators regulated under Title V to be responsible for providing financial assurance for completing site reclamation. Coal mining sites regulated under SMCRA after August 3, 1977, are ineligible for grants from the Abandoned Mine Reclamation Fund. If financial assurances are inadequate to meet reclamation needs, the availability of federal funding to pay reclamation costs would be subject to the enactment of legislation. "], "subsections": []}, {"section_title": "Abandoned Mine Reclamation Fund", "paragraphs": ["Section 401 of SMCRA established the Abandoned Mine Reclamation Fund as a trust fund within the U.S. Treasury. As enacted in 1977, SMCRA originally did not authorize the Abandoned Mine Reclamation Fund as an interest-bearing trust fund. The Abandoned Mine Reclamation Act of 1990 amended SMCRA for various purposes and authorized the investment of the unexpended balance of the Abandoned Mine Reclamation Fund in U.S. Treasury securities. The portion of the balance available for investment in U.S. Treasury securities is the amount that the Secretary of the Interior determines is not needed to meet current withdrawals. Interest began accruing on the invested balance in FY1992. "], "subsections": [{"section_title": "Coal Reclamation Fees", "paragraphs": ["Receipts credited to the Abandoned Mine Reclamation Fund are sourced from fees collected from coal mining operators based on coal production. The coal reclamation fee rates are authorized in Section 402 of SMCRA. The fees are specified in current law and based on a per-ton fee for the amount of coal produced at a mine annually or the percentage value of the coal produced annually at a mine, whichever is less each year as determined by the Secretary of the Interior. The fees are 28 cents per ton of coal produced by surface mining, 12 cents per ton of coal produced by underground mining, or 10% of the value of the coal, whichever is less. The fee for lignite coal is different from non-lignite coal and is 8 cents per ton or 2% of the value of the coal, whichever is less. Congress decreased the fee rates authorized in the original enactment of SMCRA to these fee rates in the 2006 amendments to SMCRA.", "Annual receipts credited to the Abandoned Mine Reclamation Fund from these fees therefore depend on the fee rates applied to the amount or value of coal production each year. SMCRA does not set or guarantee any particular amount of receipts on an annual basis. Regardless of the fee rates, this framework may result in receipts fluctuating annually with changes in the amount or value of coal production in the United States. Coal reclamation fees generally increased until FY2007, after which the trend in fee revenue decreased from FY2008 to FY2019. During these years, coal reclamation fees collected by OSMRE decreased by approximately 49% in nominal dollars (i.e., without adjusting for inflation) ( Figure 1 ). U.S. coal production declined during that same time period by approximately 34%. While the nominal coal reclamation fees collected peaked in FY2007, the inflation-adjusted value of the coal reclamation fees have generally decreased since FY1979. The extent to which the reduced fee rates in 2006 contributed to the decline in fee receipts during this time period would depend on whether the fee receipts were based on the tonnage or value of coal produced. "], "subsections": []}, {"section_title": "Eligible Lands and Waters", "paragraphs": ["Section 404 of SMCRA limits eligible lands and waters affected by coal mining to those left abandoned or unreclaimed prior to August 3, 1977, and for which there is no continuing reclamation responsibility under other federal or state laws. U.S. territories, states, and tribes without such lands and waters are excluded from eligibility for grants from the Abandoned Mine Reclamation Fund.", "The reclamation and regulatory programs authorized in SMCRA apply only to coal production states and tribal lands, and coal has not been mined in all states, U.S. territories, and tribal lands. States and tribes with lands on which coal was mined prior to the enactment of SMCRA on August 3, 1977, with an OSMRE-approved reclamation program are eligible for grants from the Abandoned Mine Reclamation Fund pursuant to Section 401 of SMCRA. "], "subsections": []}, {"section_title": "Reclamation Priorities", "paragraphs": ["SMCRA describes differing types and priorities of AML reclamation projects eligible for reclamation funding from the Abandoned Mine Reclamation Fund. Examples of eligible AML projects include the reclamation of land subsidence, vertical openings, hazardous equipment and facilities, dangerous highways, and acid mine drainage (AMD) that originated from historical coal mining operations. Section 403 of SMCRA directs the prioritization of AML reclamation projects under a tier of three categories:", "1. Priority 1 projects involve the reclamation of lands and waters to protect public health, safety, and property from extreme danger. 2. Priority 2 projects involve the reclamation of lands and waters to protect public health and safety from adverse effects of coal mining practices. 3. Priority 3 projects involve the reclamation of lands and waters previously degraded by adverse effects of coal mining practices for the conservation and development of soil, water (excluding channelization), woodland, fish and wildlife, recreation resources, and agricultural productivity.", "The reclamation of Priority 2 projects may be similar in scope and nature as Priority 1 projects but generally present a lesser degree of danger. In some instances, the proximity of hazards and risks of AML lands to communities may elevate the risks to public health and safety in a way that similar circumstances would merit a lower priority if they occurred at a more isolated and remote location. However, proximity alone is not necessarily an indicator of risk if contamination may migrate from the mining site to an affected community. The geographic scope of the site may be larger than where the coal was mined, because it includes all the affected lands and waters. ", "AMD causes persistent water quality impairment when minerals within coal are exposed to atmospheric oxygen and water, which causes a reaction generating sulfuric acid. The production of acid creates low-pH conditions in the water, enhancing the solubility of iron, sulfate, and other trace metals from the exposed ore. Those dissolved constituents may discharge to downgradient streams and water bodies and may generate secondary minerals within the stream and on the stream beds. Streams and other ecosystems impacted by AMD can become functionally impaired. States may consider reclamation projects to abate AMD water quality issues as a higher priority if that impaired water could pose a risk to public health. ", "Section 402 allows states receiving grants from the Abandoned Mine Reclamation Fund to deposit up to 30% of their annual grants into an acid mine drainage abatement fund. The state may establish an acid mine drainage abatement fund in accordance with that state's law, and the monies in the fund are not subject to SMCRA's three-year limitation on expenditure and may accrue interest. SMCRA allows states to expend monies in their abatement fund without a time limit because water quality issues associated with AMD may persist for decades or longer."], "subsections": []}, {"section_title": "State and Tribal Reclamation Programs", "paragraphs": ["States and tribes with lands on which coal is mined may be eligible for annual grants from the Abandoned Mine Reclamation Fund to support the reclamation of abandoned coal mining sites within their respective jurisdictions. To be eligible for these federal funds, pursuant to Section 405 of SMCRA, states and tribes first must obtain OSMRE approval of their reclamation programs. ", "OSMRE approval of a reclamation program depends upon the state or tribe demonstrating that it has developed its own requirements that do not conflict with the federal requirements but may be more stringent and that it has the ability to carry out these requirements in lieu of the federal government. OMSRE has approved mine reclamation programs for 25 states and three tribes. "], "subsections": [{"section_title": "State Certification", "paragraphs": ["Pursuant to Section 411 of SMCRA, OSMRE may certify a state or tribe with an OSMRE-approved state reclamation program once it demonstrates that it has reclaimed all of its priority abandoned coal mining sites identified pursuant to Section 403. States and tribes may apply to OSMRE for certification, and the final determination is subject to notice in the Federal Register and public comment. Certified states and tribes may use annual grants for the reclamation of abandoned non-coal sites and other uses. ", "Section 411 includes certain limitations. SMCRA prohibits certified states and tribes from spending annual payments on sites remediated under the Uranium Mill Tailings Radiation Control Act of 1978, as amended, and sites designated for remedial action pursuant to the Comprehensive Environmental Response, Compensation, and Liability Act, as amended (CERCLA). To date, OSMRE has certified five states and three tribes as having reclaimed all of their priority coal mining sites that were abandoned or unreclaimed prior to the enactment of SMCRA on August 3, 1977.", "A state with an OSMRE-approved state reclamation program that has not reclaimed all of its priority abandoned coal mining sites is an uncertified state . OSMRE provides annual grants to uncertified states from the Abandoned Mine Reclamation Fund for the reclamation of the priorities described under Section 403. "], "subsections": []}]}, {"section_title": "Grants to Eligible States and Tribes", "paragraphs": ["For uncertified states, OSMRE administers grants from the Abandoned Mine Reclamation Fund. For certified states and tribes, OSMRE administers annual payments from the General Fund in lieu of the Abandoned Mine Reclamation Fund. OSMRE administers grants among eligible states and tribes based on a statutory formula to calculate their respective shares of annual coal reclamation fee receipts. OSMRE publishes grant distribution summaries on an annual basis. OSMRE administered grants to states and tribes for FY2019 are presented in Table 1 and Table 2 . The following sections describe the grants administered to eligible states and tribes. ", "The Surface Mining Control and Reclamation Act Amendments of 2006 ( P.L. 109-432 , Division C, Title II, of the Tax Relief and Health Care Act of 2006) authorized General Fund payments to certified states and tribes beginning in FY2008 to focus the expenditure of coal reclamation fees on the reclamation of abandoned coal mining sites. The 2006 amendments also authorized permanent appropriations of coal reclamation fees for mine reclamation grants in FY2008 and subsequent fiscal years."], "subsections": [{"section_title": "Uncertified States", "paragraphs": ["Just over 80% of annual coal reclamation fee collections since FY2008 are authorized as permanent (mandatory) appropriations that are distributed to eligible uncertified states during the fiscal year following their collection. Section 402 of SMCRA authorizes the distribution of the fee collections credited to the Abandoned Mine Reclamation Fund based on a statutory formula that allocates to uncertified states:", "Uncertified State Share: shares of 50% of the coal reclamation fees collected within that state. Historic Coal Funds: shares of 30% of the fee collections based on historic coal production prior to the enactment of SMCRA on August 3, 1977. The historic coal payments are based on the total coal tonnage produced by each respective state prior to enactment. Coal reclamation fees collected in certified states and on tribal lands therefore affect the amount available in the Abandoned Mine Reclamation Fund for annual reclamation grants to uncertified states. Fees collected in certified states and on tribal lands are distributed to uncertified states as part of their historic coal payment. Minimum Program Make Up Funds: additional shares of the fee collections if necessary to guarantee that each uncertified state receives an annual grant of at least $3 million if its 50% state share payment and historic coal payment combined would not equal this threshold.", "The formula leaves 20% of the annual fee collections available for the minimum program make up funds and discretionary spending through annual appropriations to fund the activities of OSMRE to oversee and assist state mine reclamation programs and to administer the Abandoned Mine Reclamation Fund.", "Under Section 402, any amount of the 50% state share grant to an uncertified state not expended within three years of the date when the grant was awarded would become redistributed as historic coal payments, with the exception of the AMD abatement funds discussed earlier. ", "The formula does not allocate any of the fee collections to support the UMWA health or pension benefit plans. The interest that accrues on the invested balance of the Abandoned Mine Reclamation Fund via an intergovernmental transfer from the General Fund is available to support UMWA health benefit plans. Direct payments from the General Fund supplement the interest for the UMWA health benefit plans. Additionally, the UMWA pension plan is eligible for General Fund payments, but it is not eligible to receive payments from the Abandoned Mine Reclamation Fund. See the discussion in \"Federal Financial Assistance for UMWA Health and Pension Benefit Plans\" later in this report. ", "Section 401(f)(5)(B) of SMCRA authorized a four year \"phase-in\" period during FY2008-FY2011 for the newly established mandatory payments to uncertified states for their state share, historic coal, and minimum make up grants. During this period, grants to uncertified states were reduced by 50% for FY2008 and FY2009 and 25% for FY2010 and FY2011. "], "subsections": []}, {"section_title": "Certified States and Tribes", "paragraphs": ["Section 411(h)(2) of SMCRA authorized certified states and tribes to receive annual payments from the General Fund equivalent to 50% of annual coal reclamation fees collected within their jurisdictions. The fees collected from coal mining operations in certified states, and on lands of certified tribes, are credited to the Abandoned Mine Reclamation Fund. However, as authorized in Section 411 of SMCRA, certified states and tribes receive their payments from the General Fund of the U.S. Treasury in lieu of the Abandoned Mine Reclamation Fund and may use these funds for addressing the impacts of non-coal mineral development. Unlike uncertified states, certified states and tribes are not eligible to receive historic coal payments or minimum program make up funds.", "Section 411(h)(3)(B) of SMCRA authorized a three-year \"phase-in\" period between FY2009 and FY2011 for annual payments to certified states and tribes. During those fiscal years, annual state and tribal share payments were reduced to 25% in FY2009, 50% in FY2010, and 75% in FY2011. OSMRE paid the total amount reduced during the three-year phase-in period to certified states and tribes in two equal payments from the General Fund in FY2018 and FY2019. Certified states and tribes would no longer receive these payments in FY2020 and subsequent fiscal years because they have been fully paid out. ", "In 2012, Congress amended Section 411(h) of SMCRA to place an annual $15 million cap on payments to each certified state or tribe. The cap applied to both in lieu payments and prior balance payments (described below) to certified states and tribes. Congress increased the cap to $28 million for FY2014 and $75 million for FY2015 by amending Section 411(h) of SMCRA again in 2013. Wyoming was the only state whose payments were reduced in FY2013 and FY2014 because of the caps. The higher cap in FY2015 did not affect Wyoming's payment. No other certified state or tribe exceeded caps for any of these fiscal years. ", "In 2015, Congress removed these caps on payments to certified states and tribes by amending Section 411(h) of SMCRA. This amendment also authorized a retroactive payment for amounts that were reduced under the caps. Wyoming received a one-time retroactive payment of approximately $242 million in FY2016. This retroactive payment was included in the total payment to Wyoming in FY2016 as reported in the FY2018 Office of Management and Budget (OMB) budget in addition to the annual in lieu payments to certified states and tribes for FY2016."], "subsections": []}, {"section_title": "Prior Balance Payments", "paragraphs": ["The majority of the unappropriated balance of the Abandoned Mine Reclamation Fund accumulated prior to the 2006 amendments. Prior to the enactment of the 2006 amendments to SMCRA, OSMRE distributed payments to both certified and uncertified states and tribes from the Abandoned Mine Reclamation Fund subject to annual appropriations. Annual appropriations were generally lower than annual coal reclamation fees collected by OSMRE prior to the 2006 amendments, resulting in an accumulation in the unappropriated balance of the Abandoned Mine Reclamation Fund. ", "Section 411(h)(1) of SMCRA authorized \"Prior Balance\" payments equivalent to state and tribal share of the unappropriated balance of past coal reclamation fee receipts through annual federal payments to both uncertified and certified states and tribes from FY2008 through FY2014 from the General Fund of the U.S. Treasury. The Prior Balance payments were fully paid out by the end of FY2014, with the exception of the state of Wyoming (discussed above), which received a retroactive payment in FY2016 for amounts owed to the state because of statutory caps that were lifted. States and tribes no longer receive these prior balance payments. The accumulated balance of past coal reclamation fees collected prior to the 2006 amendments has remained credited to the Abandoned Mine Reclamation Fund and continues to accrue interest annually from investments in U.S. Treasury securities."], "subsections": []}]}]}, {"section_title": "Unfunded Reclamation Cost Estimates", "paragraphs": ["States and tribes report site specific information to OSMRE about the reclamation of eligible AML projects. OSMRE hosts the Abandoned Mine Land Inventory System (AMLIS) database that presents information on total eligible mine reclamation costs by state and tribe, which may be categorized by unfunded, funded, and completed costs. The costs to complete reclamation at a particular site would depend on the scope and nature of actions necessary to mitigate the potential hazards and any technical or engineering challenges to implement the selected actions. ", "OSMRE tracks AML reclamation project costs under three separate categories to identify the costs of completed projects and to estimate funding needs for future projects: ", "1. \"Unfunded Costs\" are based on estimates by states and tribes to implement projects for which funding is not available or has not been approved by OSMRE. 2. \"Funded Costs\" are based on estimates by states and tribes to implement projects for which funding is available and for which OSMRE has approved the funds. 3. \"Completed Costs\" are the actual costs of projects upon completion that states or tribes report to OSMRE.", "According to AMLIS, the total unfunded costs for uncertified and certified states and tribes was approximately $12.4 billion as of January 21, 2020. Of that total amount, the total unfunded cost estimates for uncertified states were approximately $12 billion, representing roughly 97% of the remaining unfunded reclamation needs. ", "Unfunded reclamation cost estimates depend on the number of unreclaimed sites and on the severity of the reclamation problems as defined by the \"Priority\" level, per Section 403, for each unclaimed site in the state ( Table 1 ). Uncertified states reported Priority 2 costs as approximately $7.5 billion, or approximately 62% of the total uncertified unfunded reclamation costs. The remaining 38% of the unfunded costs for uncertified states are associated with Priority 1 and Priority 3 issues. ", "Uncertified states reported Priority 1 issues as the smallest portion of unfunded cost estimates, but these sites generally represent the most severe hazards and most urgent priorities. Uncertified states reported the total unfunded reclamation cost for Priority 1 sites as roughly $1.8 billion. Two states, Pennsylvania and West Virginia, reported combined unfunded reclamation costs as $8.4 billion, representing approximately 66% of the total unfunded reclamation costs reported for all uncertified states. Pennsylvania reported the highest unfunded reclamation costs of any state, as reclamation cost estimates exceed $5 billion. ", "OSMRE periodically updates funding estimates for sites in the AMLIS inventory. Thus, the number of priority sites in each funding category may change periodically. Future funding requirements may change as unforeseen contamination and remediation may be discovered or arise. Recent congressional hearing testimony by a Pennsylvania state official describes the challenges state programs face when attempting to catalog AML issues:", "Identifying and categorizing AML sites was among the first objectives for the AML program at its outset, and many of the cost estimates contained in the federal eAMLIS inventory were developed when the sites were initially inventoried in the early to mid-1980s. With time, the scale and depth of the AML problem has become better understood. However, it is in the nature of AML's that previously unknown sites will continue to manifest (particularly those associated with abandoned underground mines) and that known sites will continue to degrade, both of which increase the number of sites and the total cost to complete remaining AML reclamation work. With advancements in technology, the collection of more complete maps and mining records, and increased awareness and identification of these sites by local residents, many additional AML hazards have been and will continue to be identified and added to the AML inventory.", "Annual reclamation grants to states and tribes are based on the statutory formula described previously, and these grants are not based on reclamation needs. For example, several uncertified states reported similar unfunded reclamation costs: Indiana, Illinois, Oklahoma, and Missouri. The FY2020 grants received by those states, however, varied between $2.82 million and $11.7 million. ", "Comparing FY2020 grants to the total unfunded reclamation costs suggests that some states or tribes may require annual grants for additional years or decades to completely fund reclamation needs. For example, Kansas reported $810 million in unfunded reclamation costs while receiving the minimum program make up fund amount of $2.82 million in FY2020.", "States and tribes may identify additional reclamation needs post-certification ( Table 2 ). A Wyoming state official described the ongoing reclamation challenges that the state continues to manage under their AML program. According to his written testimony, he described the state's awareness of AML issues as improved since the state achieved certification in 1984:", "Wyoming became a certified state under Title IV on May 25, 1984. Wyoming became certified on the basis of the best available information at the time. Early work to develop the inventory was essentially done through \"boots on the ground.\" As our understanding of historic mining in the state has improved our AML inventory has continued to grow."], "subsections": []}, {"section_title": "Federal Financial Assistance for UMWA Health and Pension Benefit Plans", "paragraphs": ["Eligible UMWA members (including family members) receive post-retirement health and pension benefits from one of three multiemployer health benefit plans and one multiemployer pension plan. These plans include the Combined Benefit Fund, the 1992 Benefit Plan, the 1993 Benefit Plan, and the 1974 UMWA pension plan. ", "These plans are funded by premiums paid by employer contributions and two sources of federal financial assistance authorized under SMCRA. Section 402(h) authorizes transfers of interest from the Abandoned Mine Reclamation Fund to the UMWA health plans on an annual basis if the annual contributions from employers are not sufficient to cover liabilities for benefit coverage each year. Section 402(i) also authorizes supplemental payments from the General Fund of the U.S. Treasury on an annual basis if the interest that accrues on the balance of the Abandoned Mine Reclamation Fund is not sufficient to ensure benefit coverage each year. General Fund payments to the UMWA plans and to certified states and tribes combined are subject to a statutory cap of $750 million per year.", "Each of these sources is authorized in SMCRA as permanent appropriations that result in direct federal spending (i.e., mandatory spending not subject to discretionary spending controlled through annual appropriations acts). Figure 2 shows the transfers of monies from the Abandoned Mine Reclamation Fund and the General Fund to eligible states and tribes for AML reclamation projects and other uses and to the UMWA plans."], "subsections": [{"section_title": "Interest Transfers from the Abandoned Mine Reclamation Fund", "paragraphs": ["In response to rising concern in the early 1990s about the potential insolvency of UMWA health benefit plans, the Coal Industry Retiree Health Benefit Act of 1992 ( P.L. 102-486 , Title XIX, Subtitle C of the Energy Policy Act of 1992) authorized the annual transfer of interest from the Abandoned Mine Reclamation Fund to three UMWA health benefit plans beginning in FY1996. ", "Like other federal trust funds invested in U.S. Treasury securities, the interest that accrues on the invested balance of the Abandoned Mine Reclamation Fund is derived from the General Fund of the U.S. Treasury through an intergovernmental transfer. Receipts from coal reclamation fees invested in U.S. Treasury securities serve as the basis for calculating the interest that accrues to the Abandoned Mine Reclamation Fund. However, the fees do not function as \"principal\" in the same manner as private investments. Because the interest is sourced from existing receipts in the General Fund, the interest does not increase total receipts in the U.S. Treasury. ", "The interest payments to the UMWA health plans are supplemented by payments from the General Fund if the interest is insufficient. The General Fund is therefore the source of receipts within the federal budget for both the interest and the supplemental payments to support the UMWA health and pension benefit plans. The General Fund consists of receipts from individual and corporate income taxes and other miscellaneous receipts not dedicated to other accounts of the U.S. Treasury. None of the coal reclamation fees credited to the Abandoned Mine Reclamation Fund are available to fund the UMWA benefit plans in current law."], "subsections": []}, {"section_title": "Supplemental Payments from the General Fund of the U.S. Treasury", "paragraphs": ["If employer contributions and the interest accrued to the Abandoned Mine Reclamation Fund are not sufficient to ensure UMWA health benefit coverage each year, the 2006 amendments to SMCRA authorized permanent appropriations for supplemental payments from the General Fund to pay the balance of benefits that would otherwise not be covered. The amendments authorized permanent appropriations for these General Fund supplemental payments beginning in FY2008 and \"each fiscal year thereafter\" without a termination date. The supplemental payments from the General Fund have become the larger source of federal funding to help ensure health benefit coverage under the UMWA plans (see Figure 3 and Figure 4 ), as the benefit obligations of the plans have exceeded the availability of interest that annually accrues on the invested balance of the Abandoned Mine Reclamation Fund."], "subsections": []}, {"section_title": "Bipartisan American Miners Act of 2019", "paragraphs": ["In the 116 th Congress, the Bipartisan American Miners Act of 2019 ( P.L. 116-94 ; Further Consolidated Appropriations Act, 2020, Division M) increased the availability of federal financial assistance to address the solvency of the UMWA health and pension benefit plans, subject to a new statutory funding cap to control federal direct spending for this purpose. The act amended Section 402(h) of SMCRA to expand the eligibility of the UMWA health benefit plans for interest transfers from the Abandoned Mine Reclamation Fund and General Fund supplemental payments. The act also amended Section 402(i) of SMCRA to authorize General Fund payments for the 1974 UMWA pension plan and increased the total spending cap on Title IV General Fund payments from $490 million to $750 million annually to help fund the UMWA pension plan.", "The 2006 amendments to SMCRA authorized General Fund supplemental payments for the UMWA health benefit plans beginning in FY2008 but no federal funding for the 1974 UMWA pension plan. The 2006 amendments limited the eligibility of the UMWA health benefit plans for federal funding based on beneficiaries enrolled to receive health benefits as December 31, 2006. Funding needs for the 1993 UMWA health benefit plan continued to increase after this cut-off date as additional beneficiaries enrolled in that plan in later years. Certain coal mining company bankruptcies after 2006 also affected health benefit coverage for other retirees.", "Subsequent amendments to SMCRA in the 114 th and 115 th Congresses expanded the populations of beneficiaries who could be eligible for federal payments to the UMWA health benefit plans. Prior to the Bipartisan American Miners Act, Section 402(h)(2)(C) of SMCRA limited General Fund supplemental payments for the 1993 UMWA health benefit plan based on funding needs to cover beneficiaries enrolled in that plan as of May 5, 2017 (with coverage retroactive to January 1, 2017) and retirees whose benefits were denied or reduced as a result of coal mining company bankruptcies commenced in 2012 and 2015. ", "Since that time, funding needs to cover health benefits for additional populations of retirees have increased. The Bipartisan American Miners Act amended Section 402(h)(2)(C) of SMCRA again to expand the eligibility of the 1993 UMWA health benefit plan for General Fund supplemental payments to cover beneficiaries eligible as of January 1, 2019, and retirees whose benefits were denied or reduced as a result of coal mining company bankruptcies commenced in 2018 and 2019. This expansion of eligibility for federal funding to ensure health benefit coverage for these additional populations of beneficiaries may lead to increases in General Fund supplemental payments to the UMWA health benefit plans.", "The Bipartisan American Miners Act of 2019 also authorized annual General Fund payments to the 1974 UMWA pension plan to address the solvency of that plan. The act established a new cap of $750 million annually on the aggregate amount of General Fund payments to certified states and tribes, UMWA health benefit plans, and the UMWA pension plan combined. The cap serves as a mechanism to control federal direct spending from the U.S. Treasury. After in lieu payments to certified states and tribes and supplemental payments to the UMWA health benefit plans each fiscal year, the act authorizes any remaining amount within the $750 million annual cap to be transferred to the UMWA pension plan.", "If the aggregate annual certified state and tribal payments and the supplemental payment for the UMWA health plans would exceed $750 million in a fiscal year, the UMWA health plans would be reduced to the cap, and the UMWA pension plan would not receive a federal payment that fiscal year. SMCRA gives funding priority to certified state and tribal payments that would not be reduced by the $750 million annual cap unless the amount for this purpose alone otherwise would exceed the cap. Given that certified state and tribal payments are based on shares of coal reclamation fees, these payments would not reach the cap unless coal production in certified state and tribal lands were to rise several fold compared to recent fiscal years. ", "Supplemental payments to UMWA health plans may vary depending on the availability of interest accrued on the unappropriated balance of the Abandoned Mine Reclamation Fund, the annual funding needs of the plans, and the amount available within the $750 million annual cap for supplemental payments. General Fund payments to the 1974 UMWA pension plan would also depend on how much funding is remaining each year within the $750 million annual cap after certified state and tribal payments and the supplemental payment to the UMWA health benefit plans."], "subsections": []}]}, {"section_title": "Title IV SMCRA Appropriations: FY2008-FY2020", "paragraphs": ["Appropriations from the Abandoned Mine Reclamation Fund include uncertified state shares, historic coal funds, minimum program make up funds, interest transfers to UMWA health benefit plans, and OSMRE administrative program funding ( Figure 3 and Figure A-1 ). Annual grants to uncertified states from the Abandoned Mine Reclamation Fund are permanent appropriations except for the OSMRE program funding, which Congress provides to OSMRE through annual appropriations. Total appropriations from the Abandoned Mine Reclamation Fund from FY2008 to FY2020 have totaled approximately $3.1 billion ( Table 3 ).", "Permanent appropriations from the General Fund of the U.S. Treasury include in lieu state share payments to certified states and tribes and UMWA supplemental payments. The General Fund also provided prior balance payments to certified states and tribes and uncertified states in several installments from FY2008 through FY2014, with a retroactive payment to the state of Wyoming in FY2016 (See the discussion of \"Prior Balance Payments\" earlier in this report). From FY2008 to FY2020, General Fund payments authorized in Title IV of SMCRA totaled approximately $6.0 billion ( Table 3 ). Appropriations vary from year to year based on statutory requirements (such as the phase-in reductions and payments), the amount of coal fees collected in a given year (which determine the amount available for state and tribal payments), and the amount of supplement payments required for UMWA health benefit plans ( Figure 4 ).", "The Bipartisan American Miners Act of 2019 authorized annual payments from the General Fund to the UMWA pension plan retroactively back to FY2017 and subsequent fiscal years, among other provisions. The FY2020 payment of $1.6 billion to the UMWA pension plan included cumulative payments from FY2017 through FY2020. The amount available for each of these fiscal years was subject to the $750 million annual cap and was based on the remainder within the cap after the certified state and tribal payments and the supplemental payments for the UMWA health benefit plans. The $1.6 billion payment to the UMWA pension plan in FY2020 was the largest annual General Fund payment authorized under Title IV of SMCRA ( Figure 4 ). For FY2021 and subsequent fiscal years, General Fund payments to certified states and tribes and the UMWA health and pension benefit plans will remain subject to the $750 million annual cap. Certified state and tribal payments would cease after FY2022 in current law absent the reauthorization of coal reclamation fees upon which these payments are based.", "Since FY2008, supplemental payments to UMWA health benefit plans from the General Fund have contributed a greater amount than have interest transfers from the Abandoned Mine Reclamation Fund ( Table 3 ). Absent reauthorization of the coal reclamation fees, as the balance from the Abandoned Mine Reclamation Fund is paid down after FY2023, the interest payments would continue to have a relatively smaller contribution to UMWA health plans. Thus, the supplemental payments from the General Fund for the UMWA health plans would continue to contribute a larger share of contributions to the plans as the amount of interest payments decrease. ", "From FY2008 to FY2020, UMWA health and pension plans received approximately $3.91 billion of the total $6.04 billion in General Fund payments authorized in Title IV of SMCRA ( Table 3 ). That amount was nearly twice the total amount of grants paid to uncertified states from the Abandoned Mine Reclamation Fund (approximately $2.03 billion from the aggregate of the uncertified state shares, historic coal funds, and minimum program make up funds for FY2008 to FY2020) for the reclamation of abandoned coal mining sites during that same time period. Whereas funding for reclamation grants is dependent on coal reclamation fee collections, most of the UMWA plan funding is tied to the $750 million annual cap on General Fund payments, which are not financed with these fees. OMB estimates that coal reclamation fee receipts would continue to decline through FY2021, after which time the fee collection authority expires in current law.", "The Budget Control Act of 2011 provides a measure to control federal spending by placing a percent reduction on permanent appropriations to remain within prescribed caps. The percent reduction may vary each year depending on how much of a reduction is needed to remain within the cap. Sequestration reductions apply to permanent appropriations from General Fund and Abandoned Mine Reclamation Fund permanent appropriations as of FY2013.", "Congress has also appropriated monies from the General Fund for the Abandoned Mine Land Reclamation Economic Development Pilot Program. These appropriations have been authorized in annual appropriations and are not authorized in Title IV of SMCRA."], "subsections": []}, {"section_title": "Reauthorization Issues and Related Legislation", "paragraphs": ["Congress previously reauthorized the fee under the Surface Mining Control and Reclamation Act Amendments of 2006, and that authorization is set to expire at the end of FY2021. Some Members of Congress have introduced legislation in the 116 th Congress that would reauthorize the coal reclamation fee and authorize funds from the existing balance of the Abandoned Mine Reclamation Fund for economic and community development. Various issues are discussed in the following sections. "], "subsections": [{"section_title": "Fee Reauthorization", "paragraphs": ["Given that the balance of the Abandoned Mine Reclamation Fund is less than 20% of the estimated unfunded reclamation needs, Congress may consider whether and how to fund the remaining coal reclamation needs. Abandoned coal mining sites that remain unreclaimed are expected to continue to pose hazards to public health, safety, and the environment. If the coal reclamation fees are not reauthorized beyond FY2021, Section 401 of SMCRA directs the unappropriated balance of the Abandoned Mine Reclamation Fund to be distributed among eligible states over a series of fiscal years beginning in FY2023 based on what the state received in FY2022 as its share of fee collections from the prior year. Those payments would continue in that same amount each fiscal year thereafter until the balance of the fund is expended. In FY2020, OSMRE reported that the unappropriated balance of the Abandoned Mine Reclamation Fund was approximately $2.2 billion. Reclamation grants to eligible states therefore would likely continue for some years, even if coal reclamation fees were not reauthorized after FY2021. ", "If the fee collection is not reauthorized, the fees collected in FY2022 will dictate the annual rate of grants to eligible states starting in FY2023 until the unappropriated balance is expended. Those amounts are based on coal production or the value of the coal produced in FY2022, whichever is less.", "If the coal reclamation fees are not reauthorized, one potential option for Congress would be to appropriate from the General Fund to meet remaining needs after the balance of the Abandoned Mine Reclamation Fund is expended. Congress was faced with a similar issue in the debate over the reauthorization of Superfund excise taxes for the Superfund Trust Fund under CERCLA ( P.L. 96-510 ). From the enactment of CERCLA in 1980 through FY1995, the balance of the Superfund Trust Fund was provided by revenues from the collection of a Superfund excise tax on petroleum, chemical feedstocks, corporate income, transfers from the General Fund, and other receipts. The authority to collect those Superfund excise taxes expired in FY1995, leaving revenues from the General Fund as the primary source of money to the Superfund Trust Fund. "], "subsections": [{"section_title": "Reauthorizing Legislation", "paragraphs": ["The Abandoned Mine Land Reclamation Fee Extension Act ( S. 1193 ), introduced in the 116 th Congress, would amend Section 402(b) of SMCRA, extending the fee collection authorization date until September 30, 2036. As introduced, S. 1193 would authorize OSMRE to collect coal reclamation fees under Section 402, and OSMRE would begin fixed payments from the unappropriated balance on the Abandoned Mine Reclamation Fund to uncertified states beginning in FY2023 based upon their FY2022 grants, according to Section 401(f)(2)(B). ", "The Surface Mining Control and Reclamation Act Amendments of 2019 ( H.R. 4248 ) would amend Section 402(b) of SMCRA and Section 401(f) of SMCRA. This bill would extend the fee collection authorization date until September 30, 2036, and grants to eligible states and tribes would continue to be paid out annually according to the statutory formula until after FY2037. The bill would also increase the minimum payments to uncertified states from $3 million to $5 million and authorize compensation to uncertified states from the Abandoned Mine Reclamation Fund for the total amount reduced by sequestration between FY2013 and FY2018. ", "In FY2020, 11 uncertified states together received approximately $21.9 million in minimum program make up funds, and 3 other uncertified states received less than $5 million. Raising the cap would increase payments to uncertified states receiving less than the current $3 million cap and may change the number of uncertified states eligible for minimum program make up funds. The extent to which more uncertified states become eligible would depend on future coal production in that state, coal production in certified states contributing to historic payments, and the value of coal generated. ", "In the event the Congress enacts legislation reauthorizing the coal reclamation fee, the adequacy of those receipts to pay for the remaining unfunded reclamation costs would depend on domestic coal production, the duration of fee extension, and the emergence of additional reclamation needs. Given that the unfunded reclamation costs may be updated or subject to change based on the discovery or the occurrence of new health and safety or environmental issues, predicting the duration to reauthorize the fees to fund the remaining unfunded reclamation costs is challenging. Additionally, eligible states and tribes continuously update unfunded costs estimates as new problems are discovered or arise."], "subsections": []}]}, {"section_title": "Economic and Community Development", "paragraphs": ["Other legislation introduced in the 116 th Congress would use a portion of the unappropriated balance of the Abandoned Mine Reclamation Fund to provide funding for AML reclamation projects that promote economic and community development, as well as the purposes and priorities of reclamation described in Section 403 of SMCRA. However, some have argued expending funding for AML projects to prioritize economic and community development deviates from the original congressional intent of prioritizing the reclamation of lands and waters impacted by historic coal mining sites to address health and safety issues. "], "subsections": [{"section_title": "Abandoned Mine Land Reclamation Economic Development Pilot Program", "paragraphs": ["Congress authorized the Abandoned Mine Land Reclamation Economic Development Pilot Program (AML Pilot Program) in the Consolidated Appropriations Act, 2016 to determine the feasibility of reclaiming abandoned coal mining sites to facilitate economic and community development. Congress provides funding for the AML pilot program through annual appropriations from the General Fund of the U.S. Treasury, not from the Abandoned Mine Reclamation Fund financed with coal reclamation fees. From FY2016 to FY2020, Congress has appropriated a total $540 million from the General Fund to the AML pilot program. ", "For states and tribes that receive discretionary appropriations for the AML pilot program, those funds are in addition to the permanent appropriations as reclamation grants to eligible states and tribes from the Abandoned Mine Reclamation Fund. ", "Annual appropriations have limited the use of AML pilot program grants to fund reclamation projects only in Appalachian counties of eligible states in areas where the project would have the potential to facilitate economic or community development. SMCRA authorizes the broader use of grants from the Abandoned Mine Reclamation Fund to fund reclamation projects in any counties within an eligible state."], "subsections": []}, {"section_title": "RECLAIM Act", "paragraphs": ["In the 116 th Congress, House and Senate versions of the Revitalizing the Economy of Coal Communities by Leveraging Local Activities and Investing More Act of 2019 (RECLAIM Act) have been introduced ( H.R. 2156 and S. 1232 ). Those bills would authorize $1 billion over five years from the existing unappropriated balance of the Abandoned Mine Reclamation Fund for the reclamation of abandoned coal mining sites as a means to facilitate economic and community development in states and tribes with eligible reclamation programs under Title IV of SMCRA. ", "The RECLAIM Act would distribute $195 million annually to uncertified states based on historic payments and averaged state share grants. House and Senate versions of the RECLAIM Act differ by the allocation of these funds to uncertified states. For uncertified states to obligate RECLAIM monies on AML projects, the state would be required to demonstrate that those projects satisfy the reclamation priorities described in Section 403 and would contribute to future economic or community development. Both introduced versions of the RECLAIM Act would provide $5 million annually to certified states and tribes. Certified states and tribes would submit an application for funds, and OSMRE would determine the distribution of those funds based on the demonstration of needs. ", "Neither introduced version of the RECLAIM Act would reauthorize the collection of the coal reclamation fees. RECLAIM grants to eligible states and tribes would be in addition to the annual grants paid to states and tribes. If the RECLAIM Act were enacted and the fee collection authority were not reauthorized, the unappropriated balance of the Abandoned Mine Reclamation Fund would be paid out sooner compared to a scenario where neither RECLAIM nor fee reauthorization legislation were enacted. ", "Both House and Senate versions of the RECLAIM Act would increase the minimum program make up funds to uncertified states from the Abandoned Mine Reclamation Fund from $3 million to $5 million annually."], "subsections": [{"section_title": "Appendix.", "paragraphs": [], "subsections": []}]}]}]}]}}
{"id": "R46262", "title": "Congressional Staff: Duties, Qualifications, and Skills Identified by Members of Congress for Selected Positions", "released_date": "2020-03-10T00:00:00", "summary": ["The roles, duties, and activities of congressional staff are matters of ongoing interest to Members of Congress, congressional staff, and observers of Congress. Members of the House and Senate establish their own employment policies and practices for their personal offices. It is arguably the case that within Member offices, a common group of activities is executed for which staff are necessary. Accordingly, a group of job advertisements for those positions from a number of different offices can shed light on the expectations Members have for position duties, as well as staff skills, characteristics, experience, and other expectations. This report provides a set of 39 widely expected job duties, applicant skills, characteristics, prior experiences, and other expectations based on a sample of ads placed by Members of Congress between approximately December 2014 and September 2019 seeking staff in their offices for 33 position titles:", "Sample position expectations might assist Congress from multiple perspectives, including assessment of staffing needs in Member offices; guidance in setting position expectations, qualifications, and experience when offices need to hire staff; and informing current and potential congressional employees of position expectations. At the same time, categorizing congressional staff positions by position title relies on an assumption that similarly titled positions in House and Senate personal offices carry out the same tasks under essentially similar circumstances. Although personal offices may carry out similar activities, the assumption might be questionable given the differences in staff resources in House and Senate offices, as well as potential differences among offices of each chamber, particularly the Senate. Genera lizations about staff roles and duties may also be limited in some ways due to the broad discretion Members have with regard to running their office activities. Variations from office to office, which might include differences in job duties, work schedules, office emphases, and other factors, may limit the extent to which sample position expectations might match operational practices in all congressional offices.", "This is one of several CRS products on congressional staff. To access those products, see CRS Report R44688, Congressional Staff: CRS Products on Size, Pay, and Job Tenure ."], "reports": {"section_title": "", "paragraphs": ["C ongressional employees are retained to perform public duties that include assisting Members in official responsibilities in personal, committee, leadership, or administrative office settings. The roles, duties, and activities of congressional staff are matters of ongoing interest to Members of Congress, congressional staff, groups, and individuals, including those who raise concerns about congressional operations. Most observers recognize that Congress does not function without staff, but there is little systematic attention to what staff do, or what Members expect of them.", "In congressional offices, there may be interest in identifying Member expectations of congressional staff duties by position from multiple perspectives, including assessment of staffing needs in Member offices; guidance in setting position expectations, qualifications, and experience when offices choose to hire staff; and informing current and potential congressional employees of position expectations. Members of the House and Senate generally establish their own employment policies and practices for their personal offices. It is arguably the case that within Member offices, a common group of activities is executed for which staff with relevant skillsets and other qualifications are necessary. A body of publicly available job advertisements for staff positions from a number of different offices can shed light on the expectations Members have for position duties, as well as staff skills, characteristics, experience, and other expectations.", "For 33 commonly used congressional staff position titles, this report describes the most frequently listed job duties, applicant skills, characteristics, prior experiences, and other expectations found in a sample of job advertisements placed by Members of Congress between approximately December 2014 and September 2019 seeking staff in their offices. Table 1 lists the position titles and the frequency with which advertisements for them appeared in the sample."], "subsections": [{"section_title": "Identifying Job Advertisements for Congressional Staff Positions", "paragraphs": ["Data used in developing sample position expectations were taken from several publicly available sources, including the following, over the periods specified:", "The House Employment Bulletin, published weekly by the House Vacancy Announcement and Placement Service (HVAPS) in the Human Resources Office of the House Chief Administrative Officer (CAO). Data were collected from ads published between approximately January 2015 and September 2019. The Employment Bulletin, published online by the Senate \"as a service to Senate offices choosing to advertise staff vacancies.\" Data were collected from ads, which were not dated, appearing from approximately July 2016 to July 2019. The House GOP Job and Resume Bank, which posts ads on behalf of the House Republican Conference on Facebook. Ads were collected between approximately January and June 2017. Other ads were collected from the period between approximately December 2014 and January 2017 from the House GOP Job Bank web page on the website of Representative Virginia Foxx during part of her tenure as the House Republican Conference Secretary. The Job Announcements Board hosted by Representative Steny Hoyer during part of his tenure as House Minority Whip. Data were collected from ads posted between approximately January 2016 and December 2017."], "subsections": []}, {"section_title": "Categorizing and Coding Job Advertisements", "paragraphs": ["More than 1,800 ads were collected from all sources. Duplicate ads resulting from posts to more than one source, and ads that appear to have been frequently reposted, were removed, as were ads for positions in congressional settings other than personal offices, yielding 880 ads for positions in Member personal offices. Substantially similar position titles (e.g., deputy scheduler and state deputy scheduler) for which there were five or more ads were identified and grouped together, as were related job titles (e.g., positions designated as district, field, or regional representative that had essentially similar job duties and expectations) for which there were five or more substantially similar ads, yielding a total of 704 ads. Ads for the 33 identified position titles were further categorized if there were five or more ads that specified the advertised position as \"not entry level\" or other signifier of presumptive advanced status. The 704 ads were coded against a variety of variables within eight categories, including ad tracking information; ad details; position responsibilities and responsibility areas; expected job skills, qualifications, and credentials; application materials; and office type. The distribution of ads by job title and level is provided in Table 1 .", "Solicitations of applicants for congressional staff appear to originate in a highly decentralized manner. Means of identifying appropriate candidates might potentially include reassigning staff within offices, placing ads in services that make them available by subscription, word of mouth, and other nonpublic means of identifying potential applicants for congressional staff positions. Consequently, it cannot be determined whether the dataset of ads analyzed in this report is representative of all congressional employment solicitations. In addition, the process by which candidates for some Member office senior staff positions are identified may not be public-facing.", "Based on information specified within the ads, most position titles were identified by one of the following four primary responsibility areas (some positions were identified by up to three responsibility areas):", "Legislative, Policy, and Oversight, Media, Messaging, and Speeches, Constituent Communications, Outreach, and Service, and Office Administration and Support.", "For each position, at least one sample position description was created based on the coded data. Information includes the most frequently occurring of the following:", "primary responsibility areas; widely expected duties, typically up to six of the most frequently occurring duties specified in all ads for that position; other potential duties, typically up to six other duties mentioned in more than one ad; applicant information, including characteristics, skills, and knowledge and prior experience; and other expectations."], "subsections": []}, {"section_title": "Concluding Observations", "paragraphs": ["Categorizing congressional staff positions by position title relies on an assumption that similarly titled positions in House and Senate personal offices carry out the same tasks under essentially similar circumstances. While personal offices may carry out similar activities, the assumption might be questionable given the differences in staff resources in House and Senate offices, as well as potential differences within offices of each chamber.", "Generalizations about staff roles and duties may also be limited in some ways due to the broad discretion Members have with regard to running their office activities. Variations from office to office, which might include differences in job duties, work schedules, office emphases, and other factors, may limit the extent to which sample position expectations provided here match operational practices in all congressional offices."], "subsections": []}, {"section_title": "Sample Position Expectations", "paragraphs": [], "subsections": [{"section_title": "Caseworker18", "paragraphs": [], "subsections": []}, {"section_title": "Communications Director19", "paragraphs": [], "subsections": []}, {"section_title": "Communications Director, \"Senior Level\" or \"Not Entry Level\"20", "paragraphs": [], "subsections": []}, {"section_title": "Constituent Services Representative21", "paragraphs": [], "subsections": []}, {"section_title": "Correspondence Manager22", "paragraphs": [], "subsections": []}, {"section_title": "Deputy Press Secretary23", "paragraphs": [], "subsections": []}, {"section_title": "Deputy Scheduler24", "paragraphs": [], "subsections": []}, {"section_title": "Deputy Scheduler/Assistant to Chief of Staff25", "paragraphs": [], "subsections": []}, {"section_title": "Digital Director/Press Assistant26", "paragraphs": [], "subsections": []}, {"section_title": "Digital Media Director27", "paragraphs": [], "subsections": []}, {"section_title": "District Director28", "paragraphs": [], "subsections": []}, {"section_title": "Executive Assistant29", "paragraphs": [], "subsections": []}, {"section_title": "Executive Assistant/Scheduler30", "paragraphs": [], "subsections": []}, {"section_title": "Executive Assistant/Scheduler, \"Not Entry Level\"31", "paragraphs": [], "subsections": []}, {"section_title": "Field, District, or Regional Representative32", "paragraphs": [], "subsections": []}, {"section_title": "Field Representative/Caseworker33", "paragraphs": [], "subsections": []}, {"section_title": "Legislative Aide34", "paragraphs": [], "subsections": []}, {"section_title": "Legislative Assistant35", "paragraphs": [], "subsections": []}, {"section_title": "Legislative Assistant, \"Not Entry Level\"36", "paragraphs": [], "subsections": []}, {"section_title": "Legislative Correspondent37", "paragraphs": [], "subsections": []}, {"section_title": "Legislative Correspondent/Press Assistant38", "paragraphs": [], "subsections": []}, {"section_title": "Legislative Correspondent/Staff Assistant39", "paragraphs": [], "subsections": []}, {"section_title": "Legislative Counsel40", "paragraphs": [], "subsections": []}, {"section_title": "Legislative Director, House41", "paragraphs": [], "subsections": []}, {"section_title": "Legislative Director \"Senior Level,\" or \"Not Entry Level\"42", "paragraphs": [], "subsections": []}, {"section_title": "Legislative Director, Senate43", "paragraphs": [], "subsections": []}, {"section_title": "Military Legislative Assistant44", "paragraphs": [], "subsections": []}, {"section_title": "Press Assistant45", "paragraphs": [], "subsections": []}, {"section_title": "Press Secretary46", "paragraphs": [], "subsections": []}, {"section_title": "Regional Coordinator47", "paragraphs": [], "subsections": []}, {"section_title": "Scheduler48", "paragraphs": [], "subsections": []}, {"section_title": "Scheduler, \"Not Entry Level\"49", "paragraphs": [], "subsections": []}, {"section_title": "Scheduler/Office Manager50", "paragraphs": [], "subsections": []}, {"section_title": "Senior Legislative Assistant51", "paragraphs": [], "subsections": []}, {"section_title": "Speechwriter52", "paragraphs": [], "subsections": []}, {"section_title": "Staff Assistant53", "paragraphs": [], "subsections": []}, {"section_title": "Staff Assistant/Driver54", "paragraphs": [], "subsections": []}, {"section_title": "Staff Assistant/Press Assistant55", "paragraphs": [], "subsections": []}, {"section_title": "Systems Administrator56", "paragraphs": [], "subsections": []}]}]}}
{"id": "R45906", "title": "Congressional Action on FY2019 Appropriations Measures: 115th and 116th Congresses", "released_date": "2019-09-10T00:00:00", "summary": ["Congress annually considers 12 regular appropriations measures to provide discretionary funding for federal government activities and operations. For FY2019, appropriations actions spanned two Congresses, between which there was a change in the majority party in the House.", "The process of drafting, considering, and enacting FY2019 appropriations began in early 2018 and included the House and Senate Appropriations Committees each marking up and reporting all 12 annual appropriations bills by the end of July. Five appropriations bills in the 115 th Congress were enacted into law by the start of the fiscal year. An additional seven appropriations bills remained in various stages of consideration. Continuing resolutions (CRs) were enacted in order to extend funding of government operations covered in these seven bills. The first CR for FY2019 provided funding through December 7, 2018. A second CR provided funding through December 21, 2018. When the second CR expired, funding lapsed for the agencies and activities covered in the remaining seven appropriations bills, and a partial government shutdown ensued. The shutdown ended on January 25, 2019, when the 116 th Congress enacted a third CR to provide funding through February 15, 2019. Appropriations actions were subsequently completed when H.J.Res . 31 , an omnibus measure covering the seven remaining appropriations measures, was signed into law on February 15, 2019 ( P.L. 116-6 ).", "These and other actions are detailed in this report to provide overview information and a chronology of FY2019 appropriations measures. For information on tracking appropriations and related products, congressional clients may access the CRS FY2019 Appropriations Status Table at https://www.crs.gov/AppropriationsStatusTable ."], "reports": {"section_title": "", "paragraphs": [], "subsections": [{"section_title": "Introduction", "paragraphs": ["Congress annually considers 12 regular appropriations bills for the fiscal year that begins on October 1. These bills\u00e2\u0080\u0094together with other legislative measures providing appropriations known as supplemental and continuing appropriations (also referred to as continuing resolutions or CRs)\u00e2\u0080\u0094provide annual appropriations for the agencies, projects, and activities funded therein.", "The annual appropriations cycle is often initiated after the President's budget submission. The House and Senate Appropriations Committees then hold hearings at which agencies provide further information and details about the President's budget. These hearings may be followed by congressional consideration of a budget resolution establishing a ceiling on overall spending within appropriations bills for the upcoming fiscal year. Committee and floor consideration of the annual appropriations bills occurs during the spring and summer months and may continue through the fall and winter until annual appropriations actions are completed. ", "This report discusses FY2019 congressional appropriations actions and the impacts of the statutory budget enforcement framework established in the Budget Con trol Act of 2011 (BCA; P.L. 112-25 ) and the Bipartisan Budget Act of 2018 (BBA 2018; P.L. 115-123 ). It includes a chronological discussion and timeline ( Figure 1 ) of these actions."], "subsections": []}, {"section_title": "FY2019 Appropriations and the Bipartisan Budget Act of 2018", "paragraphs": ["FY2019 appropriations actions were impacted by the BCA, which placed statutory limits on spending for FY2012-FY2021, divided between defense and nondefense. In addition, the law created procedures that would automatically lower those caps if specified deficit-reducing legislation were not enacted.", "Congress has adjusted these statutory caps, including through the Bipartisan Budget Acts (BBAs) of 2013 (for FY2014 and FY2015), 2015 (for FY2016 and FY2017), 2018 (for FY2018 and FY2019), and 2019 (for FY2020 and FY2021), which provided for spending cap increases in both defense and nondefense categories. ", "BBA 2018 capped FY2019 discretionary spending for defense at $647 billion and for nondefense at $597 billion. It also provided that in the absence of agreement on a budget resolution for FY2019, the Budget Committees in the House and Senate could make committee allocations that could function as enforceable limits under Section 302 of the Congressional Budget Act. In May 2018, the House and Senate submitted these filings. With a \"top-line\" for FY2019 funding established, the Appropriations Committees could proceed with consideration of the 12 appropriations bills and provide enforceable 302(b) suballocations for each regular appropriations bill. ", "The House and Senate Appropriations Committees completed their drafting and consideration of all 12 regular appropriations bills by the end of July 2018. "], "subsections": []}, {"section_title": "Consideration and Enactment of Regular Appropriations Measures", "paragraphs": ["In the 115 th Congress and prior to the start of FY2019 on October 1, 2018, the House passed half of the regular bills (6 out of 12), and the Senate passed 9 bills (see Table 2 and Table 3 ). In both chambers, separate regular appropriations bills were combined for floor consideration into consolidated appropriations bills, commonly referred to as \"minibuses\" (in contrast to an omnibus bill comprising most or all regular appropriations bills). These appropriations bill groupings were also used for resolving differences between the House and Senate through conference committees.", "Three appropriations bills were combined for initial consideration in the House: Energy and Water, Legislative Branch, and Military Construction and Veterans Affairs ( H.R. 5895 ). The House passed this combined measure on June 8, 2018. The Senate subsequently agreed to the combined measure with amendment on June 25. A final measure was negotiated in a conference committee. The Senate passed the final measure on September 12. The House passed it on September 13. It was enacted into law on September 21, 2018 ( P.L. 115-244 ).", "The House passed the Defense appropriations bill ( H.R. 6157 ) on June 28, 2018. The Senate added the text of the Labor, HHS, and Education appropriations bill and passed the combined measure on August 23, 2018. The combined measure was then sent to conference. The Senate passed the final measure on September 18. The House passed it on September 26. It was enacted into law on September 28, 2018 ( P.L. 115-245 ).", "In addition, the House passed a measure combining the Interior and Environment appropriations bill with the Financial Services appropriations bill ( H.R. 6147 ) on July 19, 2018. The Senate added the text of the Agriculture appropriations bill and the Transportation and HUD appropriations bill and passed the combined measure on August 1, 2018. Although a conference committee was appointed to negotiate on this measure, it did not report an agreement back to the House and Senate.", "FY2019 thus began on October 1, 2018, with five of the regular appropriations bills enacted. Funding for agencies, projects, and activities covered by the remaining seven regular appropriations bills was provided through December 7, 2018, in a CR (Division C of P.L. 115-245 , the same measure that provided funding for Defense and Labor, HHS, and Education). ", "A second CR was enacted on December 7, extending funding for the remaining seven appropriations bills through December 21, 2018 ( P.L. 115-298 )."], "subsections": []}, {"section_title": "Expiration of Second CR and the Shutdown", "paragraphs": ["In the Senate, a third CR for FY2019 ( H.R. 695 ) was passed by voice vote on December 19, 2018. This CR would have extended funding through February 8, 2019. The House subsequently considered and amended it the following day, adding $5.7 billion to the U.S. Customs and Border Protection's \"Procurement, Construction, and Improvements\" account to remain available until FY2024, as well as $7.8 billion for disaster relief. The amended CR passed the House by a vote of 217-185 and was sent back to the Senate for further consideration. On December 21, the Senate agreed to a motion to proceed to the House amendment by a vote of 48-47, with Vice President Pence casting the tie-breaking vote. Following the vote, Senate Majority Leader Mitch McConnell stated the following:", "However, obviously, since any eventual solution requires 60 votes here in the Senate, it has been clear from the beginning that two things are necessary: support from enough Senate Democrats to pass the proposal at 60 and a Presidential signature.", "As a result, the Senate has voted to proceed to legislation before us in order to preserve maximum flexibility for a productive conversation to continue between the White House and our Democratic colleagues. I hope Senate Democrats will work with the White House on an agreement that can pass both Houses of Congress and receive the President's signature.", "Colleagues, when an agreement is reached, it will receive a vote here on the Senate floor. ", "Without such an agreement, the Senate did not complete action on the House's proposal. The House and Senate adjourned later that day. ", "When the second CR\u00e2\u0080\u0094which provided funding for the agencies, programs, and activities covered by the remaining seven FY2019 appropriations bills\u00e2\u0080\u0094expired at midnight on December 21, funding lapsed and a partial government shutdown ensued. While the Senate continued consideration of the House amendment on December 22, December 27, and January 2, no further votes on appropriations occurred during the 115 th Congress. The 115 th Congress adjourned sine die on January 3, 2019, and the 116 th Congress took office the same day."], "subsections": []}, {"section_title": "Actions in the 116th Congress", "paragraphs": ["Majority control of the House in the 116 th Congress changed from the Republican Party to the Democratic Party. In addition, any appropriations measures introduced and only reported or considered in the 115 th Congress were no longer pending. New measures needed to be introduced for the 116 th Congress to complete action on FY2019 appropriations.", "During January 2019, the House introduced and considered a number of measures concerning FY2019 appropriations. These measures are listed below, along with information on their content and corresponding floor votes.", "January 3, 2019, H.J.Res. 1 , a CR to provide FY2019 appropriations for Homeland Security, lasting through February 8, 2019. The resolution passed the House by a vote of 239-192. No further action was taken in the Senate. January 3, 2019, H.R. 21 , a measure to provide full-year FY2019 funding for six regular appropriations bills (Agriculture; CJS; Financial Services; Interior and Environment; State and Foreign Operations; and Transportation and HUD). The bill passed the House by a vote of 241-190. No further action was taken in the Senate. January 9, 2019, H.R. 264 , a measure to provide full-year FY2019 regular appropriations for Financial Services. The bill passed the House by a vote of 240-188. No further action was taken in the Senate. January 10, 2019, H.R. 267 , a measure to provide full-year FY2019 regular appropriations for Transportation and HUD. The bill passed the House by a vote of 244-180. No further action was taken in the Senate. January 10, 2019, H.R. 265 , a measure to provide full-year regular appropriations for Agriculture. The bill passed the House by a vote of 243-183. No further action was taken in the Senate. January 11, 2019, H.R. 266 , a measure to provide full-year regular appropriations for Interior and Environment. The bill passed the House by a vote of 240-179. No further action was taken in the Senate. January 15, 2019, H.J.Res. 27 , a CR to provide funding through February 1 for the seven remaining regular FY2019 appropriations bills. The resolution was brought up under suspension of the rules requiring a two-thirds majority for passage. The motion failed to achieve the necessary two-thirds on a vote of 237-187 . January 16, 2019, H.R. 268 , supplemental appropriations for disaster relief. The legislation included a CR providing FY2019 continuing appropriations through February 8. The bill passed the House by a vote of 237-187. On January 24, 2019, the Senate considered two separate amendments to the House-passed bill: a Republican amendment ( S.Amdt. 5 ) and a Democratic amendment ( S.Amdt. 6 ). The Senate failed to invoke cloture (requiring a vote of three-fifths of all Senators, or 60 votes) to end consideration of either amendment. No further action occurred. January 17, 2019, H.J.Res. 28 , a CR to provide FY2019 appropriations for the seven remaining regular appropriations measures through February 28. The resolution passed the House on a voice vote, but the House later, by unanimous consent, vacated the proceedings by which the CR had passed and allowed further proceedings to be postponed through the legislative day of January 23, 2019. The resolution subsequently passed the House by a vote of 229-184 on January 23. The measure was passed by the Senate on January 25 by voice vote, with an amendment providing for continuing appropriations through February 15. The House then passed the measure as amended, clearing it for the President. It was signed into law on the same day ( P.L. 116-5 ), ending the partial shutdown. January 23, 2019, H.R. 648 , a bill to provide full-year FY2019 funding for six of the remaining regular appropriations measures (Agriculture; CJS; Financial Services; Interior and Environment; State and Foreign Operations; and Transportation and HUD). The bill passed the House by a vote of 234-180. No further action was taken in the Senate. January 24, 2019, H.J.Res. 31 , a CR to provide FY2019 appropriations for Homeland Security through February 28. The resolution passed the House by a vote of 231-180. The measure was amended in the Senate to provide full-year funding for the seven remaining regular appropriations bills and agreed to by voice vote on January 25. The two chambers then agreed to convene a conference committee to negotiate a final version of these bills. ", "A conference report to accompany H.J.Res . 31 was filed on February 13 and agreed to in the Senate, 83-16, on February 14 and in the House, 300-128, the same day. It was signed into law on February 15 ( P.L. 116-6 ). This ended action on regular appropriations bills for FY2019.", "For information about particular funding provisions in each of the 12 bills, congressional clients may access CRS's appropriations issue page at https://www.crs.gov/iap/appropriations ."], "subsections": []}]}}